<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
FORM 10-Q
/X/ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15 (d) OF
THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended June 30, 1997
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934 (NO FEE REQUIRED)
_____________________________
Commission File Number 1-4393
_____________________________
PUGET SOUND ENERGY, INC.
(Exact name of registrant as specified in its charter)
Washington 91-0374630
(State or other (IRS Employer
jurisdiction of Identification No.)
incorporation or
organization)
411 - 108th Avenue N.E., Bellevue, Washington 98004-5515
(Address of principal executive offices)
(206) 454-6363
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange Act
of 1934 during the preceding 12 months (or for such shorter period that
the registrant was required to file for such reports), and (2) has been
subject to such filing requirements for the past 90 days.
Yes /X/ No / /
The number of shares of registrant's common stock outstanding at July 31,
1997 was 84,560,805.
<PAGE>
Part I - FINANCIAL INFORMATION
Item 1 - Financial Statements
PUGET SOUND ENERGY, INC.
CONSOLIDATED STATEMENTS OF INCOME
Three Months Ended June 30, 1996
(Thousands except shares and per share amounts) 1997 Restated
- ------------------------------------------------- --------- ---------
(Unaudited)
OPERATING REVENUES:
Electric $ 269,977 $ 257,318
Gas 71,930 78,694
Other 10,711 7,808
--------- ---------
Total operating revenue 352,618 343,820
--------- ---------
OPERATING EXPENSES:
Energy costs:
Purchased electricity 111,324 96,862
Purchased gas 29,384 33,395
Utility operations and maintenance 72,490 66,014
Other operations and maintenance 5,904 7,114
Depreciation and amortization 38,131 36,378
Taxes other than federal income taxes 35,328 34,922
Federal income taxes 14,824 16,048
--------- ---------
Total operating expenses 307,385 290,733
--------- ---------
OPERATING INCOME 45,233 53,087
OTHER INCOME 17,804 (33)
--------- ---------
INCOME BEFORE INTEREST CHARGES 63,037 53,054
INTEREST CHARGES 29,597 29,256
--------- ---------
INCOME FROM CONTINUING OPERATIONS 33,440 23,798
DISCONTINUED OPERATIONS -- (327)
--------- ---------
NET INCOME 33,440 23,471
Less: Preferred stock dividends accrual 5,415 5,518
--------- ---------
INCOME FOR COMMON STOCK $ 28,025 $ 17,953
========= =========
COMMON SHARES OUTSTANDING - WEIGHTED AVERAGE 84,561,055 84,441,732
========== ==========
EARNINGS (LOSS) PER COMMON SHARE:
From continuing operations $ 0.33 $ 0.22
From discontinued operations -- (0.01)
--------- ---------
EARNINGS PER COMMON SHARE $ 0.33 $ 0.21
========= =========
The accompanying notes are an integral part of the financial statements.
<PAGE>
Part I - FINANCIAL INFORMATION
Item 1 - Financial Statements
PUGET SOUND ENERGY, INC.
CONSOLIDATED STATEMENTS OF INCOME
Six Months Ended June 30, 1996
(Thousands except shares and per share amounts) 1997 Restated
- ------------------------------------------------- --------- ---------
(Unaudited)
OPERATING REVENUES:
Electric $ 569,545 $ 588,326
Gas 228,419 227,367
Other 18,070 15,335
--------- ---------
Total operating revenue 816,034 831,028
--------- ---------
OPERATING EXPENSES:
Energy costs:
Purchased electricity 241,644 219,962
Purchased gas 101,345 102,860
Utility operations and maintenance 145,268 135,685
Other operations and maintenance 11,745 14,111
Depreciation and amortization 76,568 72,809
Merger and related costs 55,789 --
Taxes other than federal income taxes 81,475 80,429
Federal income taxes (81) 57,434
--------- ---------
Total operating expenses 713,753 683,290
--------- ---------
OPERATING INCOME 102,281 147,738
OTHER INCOME 22,707 1,448
--------- ---------
INCOME BEFORE INTEREST CHARGES 124,988 149,186
INTEREST CHARGES 58,940 58,772
--------- ---------
INCOME FROM CONTINUING OPERATIONS 66,048 90,414
DISCONTINUED OPERATIONS (2,622) (746)
--------- ---------
NET INCOME 63,426 89,668
Less: Preferred stock dividends accrual 10,963 11,016
--------- ---------
INCOME FOR COMMON STOCK $ 52,463 $ 78,652
========= =========
COMMON SHARES OUTSTANDING - WEIGHTED AVERAGE 84,559,600 84,420,233
========== ==========
EARNINGS (LOSS) PER COMMON SHARE:
From continuing operations $ 0.65 $ 0.94
From discontinued operations (0.03) (0.01)
--------- ---------
EARNINGS PER COMMON SHARE $ 0.62 $ 0.93
========= =========
The accompanying notes are an integral part of the financial statements.
<PAGE>
PUGET SOUND ENERGY, INC.
CONSOLIDATED BALANCE SHEETS
ASSETS
December 31
June 30 1996
(Dollars in Thousands) 1997 Restated
- ------------------------------------------------- --------- ---------
(Unaudited)
UTILITY PLANT:
Electric $3,533,035 $3,479,653
Gas 1,195,794 1,129,849
Less: Accumulated depreciation and amortization (1,551,813) (1,493,024)
--------- ---------
Net utility plant 3,177,016 3,116,478
--------- ---------
OTHER PROPERTY AND INVESTMENTS:
Investment in Bonneville Exchange Power Contract 82,881 86,772
Investment in Cabot 70,496 69,352
Subsidiary properties and investments 70,637 80,770
Other 38,262 43,105
--------- ---------
Total other property and investments 262,276 279,999
--------- ---------
CURRENT ASSETS:
Cash 18,898 4,335
Accounts receivable 213,524 263,245
Less: Allowance for doubtful accounts (2,304) (1,700)
Materials and supplies, at average cost 57,699 61,638
Prepayments and other 4,664 10,458
PRAM accrued revenues -- 40,470
--------- ---------
Total current assets 292,481 378,446
--------- ---------
LONG-TERM ASSETS:
Regulatory asset for deferred income taxes 271,988 242,454
Unamortized energy conservation charges 41,599 44,673
Other 133,887 165,420
--------- ---------
Total long-term assets 447,474 452,547
--------- ---------
TOTAL ASSETS $4,179,247 $4,227,470
========= =========
The accompanying notes are an integral part of the financial statements.
<PAGE>
PUGET SOUND ENERGY, INC.
CONSOLIDATED BALANCE SHEETS
CAPITALIZATION AND LIABILITIES
December 31
June 30 1996
(Dollars in Thousands) 1997 Restated
- ------------------------------------------------- --------- ---------
(Unaudited)
CAPITALIZATION:
Common shareholders' investment:
Common stock, $10 stated value,
150,000,000 shares authorized,
84,560,844 and 84,511,270 shares outstanding $ 845,608 $ 845,113
Additional paid-in capital 447,814 446,909
Earnings reinvested in the business 76,710 86,355
--------- ---------
1,370,132 1,378,377
Preferred stock not subject to
mandatory redemption 200,037 215,000
Preferred stock subject to
mandatory redemption 86,640 87,839
Corporation obligated, mandatorily redeemable
preferred securities of subsidiary
trust holding solely junior subordinated
debentures of the corporation 100,000 --
Long-term debt 1,162,686 1,165,584
--------- ---------
Total capitalization 2,919,495 2,846,800
--------- ---------
CURRENT LIABILITIES:
Accounts payable 77,132 95,736
Short-term debt 104,673 298,122
Current maturities of long-term debt 102,894 102,842
Purchased gas liability 16,673 41,368
Accrued expenses:
Taxes 99,934 57,419
Salaries and wages 21,719 28,215
Interest 30,424 27,173
Other 34,194 49,126
--------- ---------
Total current liabilities 487,643 700,001
--------- ---------
DEFERRED INCOME TAXES 616,999 586,661
--------- ---------
OTHER DEFERRED CREDITS 155,110 94,008
--------- ---------
TOTAL CAPITALIZATION AND LIABILITIES $4,179,247 $4,227,470
========= =========
The accompanying notes are an integral part of the financial statements.
<PAGE>
PUGET SOUND ENERGY, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
Six Months Ended June 30
1996
(Dollars in Thousands) 1997 Restated
- ------------------------------------------------- --------- ---------
(Unaudited)
OPERATING ACTIVITIES:
- --------------------
Net income $ 63,426 $ 86,158
Adjustments to reconcile net income to
net cash provided by operating activities:
Pre-tax loss on writedown of coal properties 4,044 --
Depreciation and amortization 76,568 73,127
Deferred income taxes and tax credits - net 1,845 5,137
PRAM accrued revenues 40,737 36,565
Other 88,489 (8,862)
Change in certain current assets
and liabilities (Note c) 21,953 82,882
- ---------------------------------------------------------------------------
Net Cash Provided by Operating Activities 297,062 275,007
- ---------------------------------------------------------------------------
INVESTING ACTIVITIES:
- --------------------
Construction expenditures - excluding equity AFUDC (115,742) (110,005)
Additions to energy conservation program (508) (3,323)
Other 15,975 (7,327)
- ---------------------------------------------------------------------------
Net Cash Provided (Used) by
Investing Activities (100,275) (120,655)
- ---------------------------------------------------------------------------
FINANCING ACTIVITIES:
- --------------------
Decrease in short-term debt (181,890) (51,719)
Dividends paid (83,907) (78,138)
Issuance of common and preferred securities 100,070 1,858
Issuance of bonds -- 17
Redemption of bonds and notes -- (35,001)
Redemption of preferred stock (15,788) (1,199)
Issue costs of bonds and stock (748) (18)
- ---------------------------------------------------------------------------
Net Cash Used by Financing Activities (182,263) (164,200)
- ---------------------------------------------------------------------------
Increase (Decrease) in Cash 14,524 (9,848)
Cash at Beginning of year 4,335 21,813
Adjustment to conform fiscal year of WECo 39 (1,623)
- ---------------------------------------------------------------------------
Cash at End of Period $ 18,898 $ 10,342
===========================================================================
The accompanying notes are an integral part of the financial statements.
<PAGE>
NOTES TO FINANCIAL STATEMENTS
(1) SUMMARY OF CONSOLIDATION POLICY
The consolidated financial statements include the accounts of Puget Sound
Energy, Inc. ("the Company"), formerly Puget Sound Power & Light Company
("PSPL"), and its wholly-owned subsidiaries, after elimination of all
significant intercompany items and transactions.
The financial statements contained in this Form 10-Q are unaudited. In the
opinion of management, all adjustments necessary for a fair presentation of
the results for the interim periods have been reflected and were of a normal
recurring nature other than as described in footnotes 2 & 5.
It is suggested that these condensed financial statements be read in
conjunction with the financial statements and the notes thereto contained in
the Annual Report to Stockholders and Form 10-K filed with the Securities and
Exchange Commission for the Company and Washington Energy Company ("WECo")
for the fiscal years ended December 31, 1996 and September 30, 1996,
respectively.
On February 10, 1997, the Company consummated its merger with WECo. The
merger has been accounted for as a pooling of interests. Accordingly, the
consolidated financial statements have been retroactively restated to include
the results of operations, financial position and cash flows of WECo for all
periods prior to consummation of the merger.
Effective with the merger, WECo's 1996 fiscal year-end was changed from
September 30 to December 31 to conform to the Company's year-end.
Accordingly, WECo's operations for the three months ended December 31, 1996,
have been reported as an adjustment of $10.8 million to consolidated retained
earnings in the first quarter of 1997. WECo's revenues for the three months
ended December 31, 1996, were $148.6 million, net income was $16.9 million,
common stock issued was $1.0 million and common stock dividends declared were
$6.1 million for the same period.
(2) MERGER WITH WASHINGTON ENERGY COMPANY
Effective February 10, 1997, WECo and its wholly-owned subsidiary,
Washington Natural Gas Company ("WNG") were merged into PSPL which then
changed its name to Puget Sound Energy, Inc.
Pursuant to the Agreement and Plan of Merger ("Merger Agreement") between
the two companies, each share of WECo common stock was exchanged for 0.86
share of the Company's common stock (approximately 20,921,000 shares of
Company stock were issued). On February 10, 1997, the Company increased the
number of authorized shares to 150,000,000. Based on the capitalization of
the Company and WECo on February 10, 1997, holders of the Company's and
WECo's common stock held approximately 75% and 25% respectively, of the
aggregate number of outstanding shares of the merged company's common stock.
In accordance with the Merger Agreement, the preferred stock of Washington
Natural Gas Company, a wholly-owned subsidiary of WECo, was converted into
preferred shares of the merged company. The merger has been structured as a
tax-free exchange of shares, and has been accounted for as a pooling of
interests for financial statement purposes.
The Merger Agreement approvorder approving the merger, issued by the
Washington Commission, contains a rate plan that is designed to provide a
five-year period of rate certainty for customers and provide the Company
with an opportunity to achieve a reasonable return on investment. As
required under the stipulated settlementmerger order, the Company filed
tariffs, effective February 8, 1997, that resulted in an average electric
rate decrease of 5.6% related to the termination of the Periodic Rate
Adjustment Mechanism ("PRAM"), and an increase in electric general rates of
between 1.0% and 2.5%, depending on rate class. The general rate increase
has a positive impact on earnings while the decrease related to the PRAM
does not affect earnings because all previously accrued PRAM revenues were
fully collected. The net impact on customer rates was an average rate
decrease of 3.7%, including a decrease in residential rates of 3.24%.
General electric rates for residential and industrial customers will
increase by 1.5% on January 1 of each of the four following years, while
those for small commercial customers will increase by 1.0% in each of the
following three years. General rates for all classes of natural gas
customers will remain unchanged until January 1, 1999, when they will
decrease sufficiently to reduce utility margin by 1 percent.
In connection with the merger, the Company recognized direct and indirect
merger-related expenses of $55.8 million during the first quarter of 1997.
The charge consisted primarily of severance costs of $15.5 million, benefit-
related curtailment costs of $9.1 million, transaction costs of $13.7
million and systems and facilities integration costs of $7.2 million. The
nonrecurring charge reduced net income by approximately $36.3 million ($0.43
per share) in the six months ended June 30, 1997. In addition, merger
related costs of $4.8 million were recognized in the fourth quarter of 1996
by PSPL.
(3) EARNINGS PER COMMON SHARE
Earnings per common share for the three and six months ended June 30, 1997
and 1996 have been computed by dividing income for common stock by the
weighted average number of common shares outstanding after adjusting WECo's
historical amounts for the conversion into .86 shares of the Company's common
stock.
(4) UNAMORTIZED ENERGY CONSERVATION COSTS
Certain of the Company's energy conservation expenditures are accumulated as
unamortized conservation charges. These costs are amortized over various
future periods up to ten years at the direction of the Washington
Commission. The Company's total remaining unamortized conservation balance
at June 30, 1997, was $41.6 million. On August 6, 1997, the Company sold
its remaining $35.2 million unamortized investment in customer-owned energy
conservation measures to a grantor trust. The proceeds of the sale were
used to pay down short-term debt. The Company recognized no gain or loss on
the sale.
(5) DISCONTINUED OPERATIONS
On March 5, 1997, the Company conveyed its interests in undeveloped coal
properties through its wholly-owned subsidiary Thermal Energy, Inc. to Wesco
Resources, Inc. effective February 1, 1997. In return for this conveyance,
Wesco Resources, Inc. agreed to assume future coal property obligations and
liabilities and to pay the Company a 2% royalty on coal mined from the
transferred coal properties now held by Wesco Resources, Inc. In the
September 1996 consolidated financial statements of WECo these activities
were reflected as discontinued operations. The Company has determined, based
on a report by mining consultants, that the development of the transferred
coal properties in the foreseeable future is speculative. As a result, the
Company does not expect to receive any amounts under the 2% royalty
agreement. Therefore, in March 1997, the Company's remaining $4.0 million
investment in Thermal Energy, Inc. was written off to expense and appears in
the consolidated financial statements as discontinued operations. Prior
periods have been restated to include Thermal Energy, Inc. operations as
discontinued operations.
(6) Consolidated Statements of Cash Flows
The following provides additional information concerning cash flow
activities:
Six Months Ended June 30 1997 1996
- --------------------------------------------------------------------------
Changes in current asset and current liabilities:
Accounts receivable $ 69,993 $ 67,361
Materials and supplies 40 11,726
Prepayments and Other 6,567 2,718
Purchased gas liability (19,168) 19,684
Accounts payable (40,635) (8,530)
Accrued expenses and Other 5,156 (10,077)
- --------------------------------------------------------------------------
Net change in current assets and current liabilities $ 21,953 $ 82,882
==========================================================================
Cash payments:
Interest (net of capitalized interest) $ 56,595 $ 59,133
Income taxes $(48,684) $ 41,000
- --------------------------------------------------------------------------
(7) Other
In the first quarter of 1997, the Company recorded an income tax refund of
$57 million associated with the method of accounting for taxes related to
conservation expenditures for the years 1991-1994. The benefit of the tax
refund, as a result of an agreement between the Company and the Washington
Commission, was passed on to retail customers as a $48.6 million reduction of
the PRAM accrued revenue balance. The $48.6 million reduction in revenues
was offset by a $17 million decrease in federal income taxes related to the
reduction in PRAM revenues, a $26.5 million reduction in federal income taxes
as a result of the change in accounting for conservation expenditures, $4.6
million in interest income (net of tax) relating to the tax refund and a $.8
million reduction in other taxes. The overall affect of recording the
conservation tax refund and the related PRAM entries was an increase to net
income of approximately $.3 million.
On June 26, 1997, the Company received a $48.9 million payment from the
Internal Revenue Service ("IRS") with regard to the abandonment of terminated
nuclear project ("WNP-3") of the Washington Public Power Supply System. The
$48.9 million was comprised of a tax refund in the amount of $24 million and
interest owed the Company by the IRS in the amount of $24.9 million. The
Company did not take a federal income tax deduction for the abandoned plant
in 1985 because the Company exchanged the investment in WNP-3 for a power
contract in settlement of its lawsuit against BPA and did not believe the IRS
would allow the deduction. However, the Company did file a protective claim
with the IRS pending the outcome of the IRS ruling related to the WNP-3
abandonment deductions claimed by other investor-owned utilities involved.
The IRS subsequently ruled that the investor-owned utilities could take the
WNP-3 investment as an abandoned plant deduction. The Company recorded, in
June 1997, the tax refund together with a corresponding deferred tax
liability and interest income of $13.6 million after tax.
In June 1997, Puget Sound Energy Capital Trust I issued $100 million
principal amount of 8.231% Capital Securities. The proceeds from the sale of
the Capital Securities were invested in 8.231% Junior Subordinated Deferrable
Interest Debentures issued by the Company, which are scheduled to mature on
June 1, 2027. The accounts of Puget Sound Energy Capital Trust I have been
consolidated with the Company.
In February 1997, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 128, "Earnings Per Share" ("Statement
No. 128"). Statement No. 128 will change the computation, presentation and
disclosure requirements for earnings per share. Statement No. 128 is
effective for financial statements for periods ending after December 15, 1997
and requires restatement of all prior period earnings per share amounts.
Management believes that Statement No. 128 will not have a material impact on
the computation of earnings per share.
On June 30, 1997, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 130, "Comprehensive Income" ("Statement
No. 130"). Statement No. 130 establishes standards for reporting and display
of comprehensive income and its components in a full set of general purpose
financial statements. Statement No. 130 is effective for fiscal years
beginning after December 15, 1997 and requires restatement of earlier periods
presented. Management is currently evaluating the requirements of Statement
No. 130.
On June 30, 1997, the Financial Accounting Standards Board issued Statement
of Financial Accounting Standards No. 131, "Disclosures about Segments of an
Enterprise and Related Information" ("Statement No. 131"). Statement No. 131
establishes standards for the way that a public enterprise reports
information about operating segments in annual financial statements and
requires that those enterprises report selected information about operating
segments in interim financial reports issued to shareholders. Statement No.
131 is effective for fiscal years beginning after December 15, 1997 and
requires restatement of earlier periods presented. Management is currently
evaluating the requirements of Statement No. 131.
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following discussion reflects the combined results of the Company,
formerly Puget Sound Power & Light Company, and Washington Energy Company.
Net income for the three months ended June 30, 1997, was $33.4 million on
operating revenues of $352.6 million, compared with net income of $23.5
million on operating revenues of $343.8 million for the same period in 1996.
Income for common stock was $28.0 million for the second quarter of 1997
compared to $18.0 million for the second quarter of 1996. Earnings per
common share were $0.33 for the second quarter of 1997 compared to $0.21 for
the second quarter of 1996 based on 84.6 million and 84.4 million weighted
average common shares outstanding, respectively.
The increase in net income and earnings per share for the three months ended
June 30, 1997, includes after-tax interest income of $13.6 million (16 cents
per share) associated with income tax refunds on amended returns for prior
years. Excluding the interest income related to the tax refunds, income for
common stock from continuing operations was $14.4 million (17 cents per
share) for the second quarter compared to $18.3 million (22 cents per share)
or a decrease of 21.3% from the same period in 1996. The decrease from 1996
is a result of increased electric energy costs and higher operations and
maintenance expense.
For the first six months of 1997, net income was $63.4 million on operating
revenues of $816.0 million, compared with net income of $89.7 million on
operating revenues of $831.0 million for the corresponding period in 1996.
Income for common stock was $52.5 million for the first half of 1997 and
$78.7 million for the same period in 1996. Earnings per common share were
$0.62 for the six months ended June 30, 1997 and $0.93 for the same period in
1996 based on 84.6 million and 84.4 million weighted average common shares
outstanding, respectively.
The decrease in net income and earnings per share for the first six months of
1997 reflects an after-tax charge of $36.3 million (43 cents per share) for
costs related to the merger including transaction expenses, employee
separation and system and facilities integration. Net income also includes an
after-tax charge of $2.6 million (3 cents per share), to write off the
Company's remaining investment in undeveloped coal reserves and related
activities in southeastern Montana. These charges were partially offset by
the aforementioned interest income related to income tax refunds. Excluding
the impact of these charges and credits to income, continuing operations for
the first six months of 1997 produced earnings of $.92 per share, a slight
decrease compared to combined earnings of $.94 per share for the Company and
WECo during the same six month period last year.
Total kilowatt-hour sales were 6.0 billion, including 1.3 billion in sales to
other utilities, for the second quarter of 1997, compared to 5.4 billion,
including 0.8 billion in sales to other utilities, for the second quarter of
1996. For the six month periods ended June 30, 1997 and 1996, total kilowatt-
hour sales were 12.8 billion, including 2.4 billion in sales to other
utilities, and 12.1 billion, including 1.8 billion in sales to other
utilities, respectively.
Total gas sales in the second quarter were $71.9 million compared to $78.7
million in the second quarter of 1996, a decrease of 8.6% on a 4.3% decrease
in gas volumes sold and transported. Total gas sales for the six months ended
June 30, 1997, were $228.4 million compared to $227.4 million in the six
months ended June 30, 1996, an increase of .4% on a 1.7% increase in gas
volumes sold and transported.
The Company's operating revenues and associated expenses are not generated
evenly during the year. Variations in energy usage by customers do occur
from season to season and from month to month within a season, primarily as
a result of changing weather conditions. The Company normally experiences
its highest energy sales in the first and fourth quarters of the year.
Electric sales to other utilities also vary by quarter and year depending
principally upon water conditions for the generation of hydroelectric power,
customer usage, energy requirements of other utilities and market
conditions.
Temperatures during the three months ended June 30, 1997, averaged 55.3
degrees, compared to a 30-year average of 55.1 degrees and an average of 54.4
degrees during the same period in 1996. Temperatures during the six months
ended June 30, 1997, averaged 48.7 degrees, compared to a 30-year average of
49.1 degrees and an average of 48.8 degrees during the first half of 1996.
<PAGE>
Comparative Periods Ending
June 30, 1997 vs. June 30, 1996
Increase (Decrease)
Three Six
Month Month
Period Period
-------------------
(In Millions)
Operating revenue changes
PRAM revenues $ (41.1) $(127.3)
BPA Residential Purchase & Sale Agreement 0.6 .3
Sales to other utilities 10.8 15.5
Load and other changes 45.3 95.5
Gas revenue change (6.8) 1.0
---- -----
Total operating revenue change 8.8 (15.0)
Operating expense changes
Energy costs:
Purchased electricity 14.4 21.7
Purchased gas (4.0) (1.5)
Utility operations and maintenance 6.4 9.6
Other operations and maintenance (1.2) (2.4)
Depreciation and amortization 1.8 3.8
Merger costs -.- 55.8
Taxes other than federal income taxes .4 1.0
Federal income taxes (1.2) (57.5)
----- -----
Total operating expense change 16.6 30.5
Other income 17.8 21.3
Interest charges .3 .2
----- -----
Income from continuing operations $ 9.7 $ (24.4)
Discontinued operations (.3) 1.8
----- -----
Net income change $ 10.0 $ (26.2)
===== =====
The following is additional information pertaining to the changes outlined
in the above table.
Operating Revenues - Electric
Electric operating revenues for both the three and six month periods ended
June 30, 1997, increased compared to the same period in 1996 due to
continued growth in the number of electric customers and a general rate
increase effective February 8, 1997, of between 1.0% and 2.5% depending on
rate class.
Electric operating revenues for the six months ended June 30, 1997 include
a $48.6 reduction due to the IRS tax refund and related interest received
in the first quarter associated with conservation expenditures for the
years 1991-1994. Based on the Company's agreement with the Washington
Commission, the benefit of the tax refund was passed on to retail
customers as a reduction of the PRAM accrued revenue balance. The $48.6
million reduction in revenues was offset by reductions in federal and
state taxes, by a reduction in interest expense and an increase in
interest income.
PRAM revenues also decreased in 1997 compared to the prior year due to the
elimination of the PRAM effective September 30, 1996, under a stipulated
negotiated settlement approved by the Washington Commission.
Overcollection of the PRAM which resulted from the pass-through of the
conservation tax refunds discussed above, was refunded to customers in the
second quarter of 1997. Also, on September 30, 1996, the Washington
Commission issued an order granting a joint motion by the Company and the
Washington Commission Staff to transfer annual revenues of $165.5 million
which were being collected in PRAM rates to the Company's permanent rate
schedules.
Revenues in 1997 and 1996 were reduced because of the credit that the
Company received through the Residential Purchase and Sale Agreement with
the Bonneville Power Administration ("BPA"). The agreement enables the
Company's residential and small farm customers to receive the benefits of
lower-cost federal power. On January 29, 1997, the Company and BPA signed
a Residential Exchange Termination Agreement. The Agreement ends the
Company's participation in the Residential Purchase and Sale agreement
with BPA. As part of the Termination Agreement, the Company will receive
payments by the BPA of approximately $235 million over five years. Under
the rate plan approved by the Washington Commission in its merger order,
the Company will continue to reflect, in customers' bills, the current
level of Residential Exchange benefits. Over the five year period, it is
projected that the Company will credit customers approximately $250
million more than it will receive from BPA. The Company expects the
difference will be made up through a series of annual electric customer
general rate increases approved in the merger order and additional
reductions in operating expenses. Revenues were reduced by $22.2 million
and $56.4 million during the three and six month periods ended June 30,
1997, respectively, as a result of BPA Residential Exchange Credits which
were partially offset by reductions in purchase power costs of $14.3
million and $36.9 million for the three and six month periods ended June
30, 1997, respectively, representing BPA Residential Exchange benefits in
accordance with the Residential Exchange Termination Agreement.
Operating Revenues - Gas
Gas operating revenues for the quarter ended June 30, 1997 decreased by
$6.8 million or 8.6% from the prior year quarter. Total gas volumes
decreased 4.2% from 195.3 million therms to 187.0 million therms. During
the quarter, there was some shifting of commercial and industrial
customers from firm sales to transportation service. In the current rate
design, the Company earns the same margin on transportation service as it
does on large volume gas sales. Gas sales were adversely impacted in the
second quarter by warmer temperatures in 1997 as compared to 1996. The
average temperature during the quarter ended June 30, 1997, was 55.3
degrees as compared to an average of 54.4 degrees during the quarter ended
June 30, 1996.
Gas sales margin (regulated utility sales less the cost of gas sold) of
$42.5 million declined by $2.8 million compared to the same quarter last
year.
For the six months ended June 30, 1997, gas revenues of $228.4 million
increased $1.0 million from the prior year while total gas volumes
increased 1.7%. Gas margin for the six months increased by $2.6 million
or 2.1% due primarily to a 4.2% increase in the average number of gas
customers.
Operating Expenses
Purchased electricity expenses increased $14.4 million and $21.7 million
for the three and six month periods ended June 30, 1997, respectively,
compared to the same periods in 1996. The increase was due primarily to
decreased credits associated with the Residential Purchase and Sale
Agreement with BPA and increased secondary purchases from power marketers.
Purchased gas expenses decreased $4.0 million for the three months ended
June 30, 1997, and $1.5 million for the six months ended June 30, 1997,
compared to the prior year primarily due to reduced purchases to serve gas
customers as a result of warmer weather in May 1997.
Operations and maintenance expenses increased $5.2 million and $7.2
million for the three and six month periods ended June 30, 1997,
respectively, compared to the same periods in 1996. The increase was due
primarily to transition activities, costs of fuel used for electric
generation, increased amortization expense associated with the Company's
conservation program and transmission and distribution system maintenance.
Depreciation and amortization expense increased $1.8 million and $3.8
million for the three and six month periods June 30, 1997, respectively,
from the same periods in 1996 due to the effects of new plant placed into
service during the past year.
Merger related costs recorded in the six months ended June 30, 1997, were
$55.8 million including amounts related to transaction expenses, employee
separation and systems and facilities integration. On an after-tax basis
the charge was $36.3 million or 43 cents per share during the first six
months of 1997. (See Footnote 2 to the Consolidated Financial
Statements.)
Federal income taxes decreased $1.2 million for the three months ended
June 30, 1997, compared to the same period in 1996, due to lower pre-tax
operating income from continuing operations for the quarter.
Federal income taxes decreased $57.5 million for the six months ended June
30, 1997 from the same period in 1996 due to a number of factors. A
federal income tax refund related to the method of accounting for taxes on
conservation expenditures during the first quarter decreased federal
income taxes by $26.5 million. In addition, there was a $17.0 million
reduction associated with a decrease in PRAM revenues of $48.6 million.
Merger costs expensed in the first quarter further reduced federal income
taxes by $19.3 million. These decreases were partially offset by an
increase of $5.3 million due to higher pre-tax operating income from
continuing operations.
Other Income
Other income, net of federal income tax, increased $17.8 million and $21.3
million for the three months and six months periods ending June 30, 1997,
respectively from the same periods in 1996. The increases were due
primarily to interest income received from the IRS on tax refunds for
prior years in connection with a plant abandonment loss, conservation tax
refunds and certain additional research and experimental credits claimed
for tax purposes.
Interest Charges
Interest charges, which consist of interest and amortization on long-term
debt and other interest, increased slightly for the three and six month
periods ended June 30, 1997, as compared to the same periods in 1996, due
to higher levels of short-term debt and higher interest rates.
Construction expenditures (excluding Allowance for Funds Used During
Construction("AFUDC") and Allowance for Funds Used to Conserve Energy
("AFUCE")) for the second quarter of 1997 were $50.2 million, including $.1
million of energy conservation expenditures, compared to $58.0 million,
including $1.2 million of energy conservation expenditures, for the second
quarter of 1996. Year-to-date construction expenditures (excluding AFUDC
and AFUCE) totaled $114.0 million, including $.5 million of conservation
expenditures, compared to $105 million, including $2.7 million of
conservation expenditures, for the same period in 1996. Construction
expenditures (excluding AFUDC and AFUCE) for 1997 and 1998 are expected to
be $247 million and $249 million, respectively. Construction expenditure
estimates are subject to periodic review and adjustment.
On June 30, 1997, the Company had available $400.0 million in lines of
credit with various banks, which provide credit support for outstanding
commercial paper in the amount of $22.7 million, effectively reducing the
available borrowing capacity under these lines of credit to $377.3 million.
In addition, the Company has agreements with several banks to borrow on an
uncommitted, as available, basis at money-market rates quoted by the banks.
There are no costs, other than interest, for these uncommitted arrangements.
For a discussion of Financial Accounting Standards Board ("FASB") Statement
No. 128, "Earnings Per Share", see Note 7 to the Consolidated Financial
Statements.
For a discussion of FASB Statement No. 130, "Comprehensive Income", see Note
7 to the Consolidated Financial Statements.
For a discussion of FASB Statement No. 131, "Disclosures About Segments of
an Enterprise and Related Information", see Note 7 to the Consolidated
Financial Statements.
PART II - OTHER INFORMATION
Item 1. Legal Proceedings
Contingencies arising out of the normal course of the Company's business,
exist at June 30, 1997. The ultimate resolution of these issues is not
expected to have a material adverse impact on the financial condition,
results of operations or liquidity of the Company.
Item 4. Submission of Matters to a Vote of Security Holders
At the Company's Annual Meeting held on May 19, 1997, the following persons
were elected as directors: Robert C. Dryden, Sally G. Narodick, Charles W.
Bingham, Donald J. Covey, John W. Ellis, Tomio Moriguchi and Richard R.
Sonstelie. Each of the directors received at least 97% of the total of 69.3
million shares cast.
In addition, the Company's Employee Stock Purchase Plan was approved by a
vote of 65.5 million shares of Common Stock out of a total of 69.3 million
shares cast.
Item 6. Exhibits and Reports on Form 8-K
(a) The following exhibits are filed herewith:
3 Puget Sound Energy company by-laws adopted May 19, 1997.
4.1 Indenture between Puget Sound Energy, Inc. and the
First National Bank of Chicago, dated June 6, 1997.
4.2 Amended and Restated Declaration of Trust between
Puget Sound Energy Capital Trust I and the First
National Bank of Chicago, dated June 6, 1997.
4.3 Series A Capital Securities Guarantee Agreement between
Puget Sound Energy, Inc. and the First National Bank of
Chicago, dated June 6, 1997.
4.4 Registration Rights Agreement between Puget Sound
Energy, Inc., Puget Sound Energy Capital Trust I and
Smith Barney, Inc., Goldman Sachs & Co., and Salomon
Brothers Inc., as initial purchasers, dated June 6, 1997.
4.5 Liquidated Damages Agreement between Puget Sound Energy,
Inc., Puget Sound Energy Capital Trust I and Smith
Barney, Inc., Goldman Sachs & Co., and Salomon
Brothers Inc., dated June 6, 1997.
27 Financial Data Schedule
(b) Reports on Form 8-K
None
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
PUGET SOUND ENERGY, INC.
James W. Eldredge
_____________________________
James W. Eldredge
Corporate Secretary and Controller
Date: August 14, 1997 Chief accounting officer and officer
duly authorized to sign this report
on behalf of the registrant
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<PAGE>
Exhibit 3
BYLAWS
OF
PUGET SOUND ENERGY, INC.
____________________________________________________________________________
Originally adopted on: May 19, 1997
CONTENTS
SECTION 1. OFFICES................................................. 1
SECTION 2. SHAREHOLDERS............................................ 1
2.1 Annual Meeting............................................. 1
2.2 Special Meetings........................................... 1
2.3 Date, Time and Place of Meeting............................ 1
2.4 Business for Shareholders' Meetings........................ 1
2.4.1 Business at Annual Meetings....... .................. 1
2.4.2 Business at Special Meetings...... .................. 2
2.4.3 Notice to Corporation................ ............... 2
2.5 Notice of Meeting.......................................... 2
2.6 Fixing of Record Date for Determining Shareholders......... 2
2.7 Voting Record.............................................. 3
2.8 Quorum..................................................... 3
2.9 Manner of Acting........................................... 3
2.10 Proxies.................................................... 4
2.11 Voting for Directors....................................... 4
SECTION 3. BOARD OF DIRECTORS...................................... 4
3.1 General Powers................................................ 4
3.2 Number and Tenure............................................. 4
3.3 Nomination and Election....................................... 4
3.3.1 Nomination.............................................. 4
3.3.2 Election................................................ 5
3.4 Annual and Regular Meetings................................... 5
3.5 Special Meetings.............................................. 6
3.6 Meetings by Communications Equipment.......................... 6
3.7 Notice of Special Meetings.................................... 6
3.7.1 Personal Delivery....................................... 7
3.7.2 Delivery by Mail....................................... 7
3.7.3 Delivery by Private Carrier............................. 7
3.7.4 Facsimile Notice........................................ 7
3.7.5 Delivery by Telegraph................................... 7
3.7.6 Oral Notice............................................. 8
3.7.7 In Emergency............................................ 8
3.8 Waiver of Notice.............................................. 8
3.8.1 In Writing.............................................. 8
3.8.2 By Attendance........................................... 8
3.9 Quorum........................................................ 8
3.10 Manner of Acting.............................................. 8
3.11 Action by Board or Committees Without a Meeting............... 8
3.12 Resignation................................................... 8
3.13 Removal....................................................... 8
3.14 Vacancies..................................................... 8
3.15 Compensation.................................................. 8
3.16 Executive and Other Committees................................ 9
3.16.1 Creation of Committees................................. 9
3.16.2 Authority of Committees................................ 9
SECTION 4. OFFICERS................................................ 9
4.1 Election and Term............................................. 9
4.2 Resignation................................................... 9
4.3 Removal....................................................... 9
4.4 Chief Executive Officer....................................... 10
4.5 Chairman of the Board......................................... 10
4.6 President..................................................... 10
4.7 Vice President................................................ 10
4.8 Secretary..................................................... 10
4.9 Treasurer..................................................... 11
4.10 Salaries...................................................... 11
SECTION 5. CERTIFICATES FOR SHARES AND THEIR TRANSFER.............. 11
5.1 Issuance of Shares 11
5.2 Certificates for Shares....................................... 11
5.3 Stock Records................................................. 11
5.4 Transfer of Shares............................................ 12
5.5 Lost or Destroyed Certificates................................ 12
SECTION 6. INDEMNIFICATION......................................... 12
6.1 Right to Indemnification...................................... 12
6.2 Right of Indemnitee to Bring Suit............................. 13
6.3 Nonexclusivity of Rights...................................... 13
6.4 Insurance, Contracts and Funding.............................. 13
6.5 Indemnification of Employees and Agents of the Corporation.... 14
6.6 Persons Serving Other Entities................................ 14
SECTION 7. AMENDMENTS.............................................. 14
BYLAWS
OF
PUGET SOUND ENERGY, INC.
SECTION 1. OFFICES
The principal office of the corporation shall be located at the
principal place of business or such other place as the Board of Directors
("Board") may designate. The corporation may have such other offices as the
Board may designate or as the business of the corporation may require from
time to time.
SECTION 2. SHAREHOLDERS
2.1 Annual Meeting
The annual meeting of the shareholders shall be held the second Tuesday
of May in each year, or on such other date as the Board shall determine, for
the purpose of electing Directors and transacting such other business as may
properly come before the meeting. If the day fixed for the annual meeting is
a legal holiday at the place of the meeting, the meeting shall be held on the
next succeeding business day. In the event that such annual meeting is not
held on the date herein provided or as designated by the Board, the Board
shall cause such meeting to be held as soon thereafter as shall be
convenient.
2.2 Special Meetings
Special meetings of the shareholders may be called by the Board for any
purpose. Further, a special meeting of the shareholders shall be held if the
holders of not less than 10% of all the votes entitled to be cast on any
issue proposed to be considered at such special meeting have dated, signed
and delivered to the Secretary one or more written demands for such meeting,
describing the purpose or purposes for which it is to be held.
2.3 Date, Time and Place of Meeting
Except as otherwise provided herein, all meetings of shareholders,
including those held pursuant to demand by shareholders as provided herein,
shall be held on such date and at such time and place designated by or at the
direction of the Board.
2.4 Business for Shareholders' Meetings
2.4.1 Business at Annual Meetings
In addition to the election of directors, other proper business may be
transacted at an annual meeting of shareholders, provided that such business
is properly brought before such meeting. To be properly brought before an
annual meeting, business must be (a) brought by or at the direction of the
Board or (b) brought before the meeting by a shareholder pursuant to written
notice thereof, in accordance with subsection 2.4.3 hereof, and received by
the Secretary not fewer than 120 nor more than 150 days prior to the date of
such annual meeting established pursuant to subsection 2.1 hereof (or, if
less than 120 days' notice or prior public disclosure of the date of the
1
annual meeting is given or made to the shareholders, not later than the tenth
day following the day on which the notice of the date of the annual meeting
was mailed or such public disclosure was made). Any shareholder notice shall
set forth (i) the name and address of the shareholder proposing such
business; (ii) a representation that the shareholder is entitled to vote at
such meeting and a statement of the number of shares of the corporation that
are beneficially owned by the shareholder; (iii) a representation that the
shareholder intends to appear in person or by proxy at the meeting to propose
such business; and (iv) as to each matter the shareholder proposes to bring
before the meeting, a brief description of the business desired to be brought
before the meeting, the reasons for conducting such business at the meeting,
the language of the proposal (if appropriate), and any material interest of
the shareholder in such business. No business shall be conducted at any
annual meeting of shareholders except in accordance with this subsection
2.4.1. If the facts warrant, the Board, or the chairman of an annual meeting
of shareholders, may determine and declare that (a) a proposal does not
constitute proper business to be transacted at the meeting or (b) business
was not properly brought before the meeting in accordance with the provisions
of this subsection 2.4.1 and, if, in either case, it is so determined, any
such business not properly brought before the meeting shall not be
transacted. The procedures set forth in this subsection 2.4.1 for business
to be properly brought before an annual meeting by a shareholder are in
addition to, and not in lieu of, the requirements set forth in Rule 14a-8
under Section 14 of the Securities Exchange Act of 1934, or any successor
provision.
2.4.2 Business at Special Meetings
At any special meeting of the shareholders, only such business as is
specified in the notice of such special meeting given by or at the direction
of the person or persons calling such meeting, in accordance with
subsection 2.5 hereof, shall come before such meeting.
2.4.3 Notice to Corporation
Any written notice required to be delivered by a shareholder to the
corporation pursuant to subsection 2.4.1 or subsection 2.4.2 hereof must be
given, either by personal delivery or by registered or certified mail,
postage prepaid, to the Secretary at the corporation's executive offices in
the City of Bellevue, State of Washington.
2.5 Notice of Meeting
Written notice stating the place, day and hour of the meeting and, in
the case of a special meeting, the purpose or purposes for which the meeting
is called shall be given by or at the direction of the Board, the Chairman of
the Board, the President or the Secretary to each shareholder entitled to
notice of or to vote at the meeting not less than 10 nor more than 60 days
before the meeting, except as may be otherwise required by law.
2.6 Fixing of Record Date for Determining Shareholders
For the purpose of determining shareholders entitled (a) to notice of or
to vote at any meeting of shareholders or any adjournment thereof, (b) to
demand a special meeting, or (c) to receive payment of any dividend, or in
2
order to make a determination of shareholders for any other purpose, the
Board may fix a future date as the record date for any such determination.
Such record date shall be not more than 70 days, and in case of a meeting of
shareholders not less than 10 days, prior to the date on which the particular
action requiring such determination is to be taken. If no record date is
fixed for the determination of shareholders entitled to notice of or to vote
at a meeting, the record date shall be the day immediately preceding the date
on which notice of the meeting is first given to shareholders. Such a
determination shall apply to any adjournment of the meeting unless the Board
fixes a new record date, which it shall do if the meeting is adjourned to a
date more than 120 days after the date fixed for the original meeting. If no
record date is fixed for the determination of shareholders entitled to
receive payment of any stock dividend or distribution (other than one
involving a purchase, redemption or other acquisition of the corporation's
shares), the record date shall be the date the Board authorizes the stock
dividend or distribution.
2.7 Voting Record
At least 10 days before each meeting of shareholders, an alphabetical
list of the shareholders entitled to notice of such meeting shall be made,
arranged by voting group and by each class or series of shares therein, with
the address of and number of shares held by each shareholder. This record
shall be kept at the principal office of the corporation for 10 days prior to
such meeting, and shall be kept open at such meeting, for the inspection of
any shareholder or any shareholder's agent.
2.8 Quorum
A majority of the votes entitled to be cast on a matter by the holders
of shares that, pursuant to the Articles of Incorporation or the Washington
Business Corporation Act, are entitled to vote and be counted collectively
upon such matter, represented in person or by proxy, shall constitute a
quorum of such shares at a meeting of shareholders. If less than a majority
of such votes are represented at a meeting, a majority of the votes so
represented may adjourn the meeting from time to time without further notice
if the new date, time or place is announced at the meeting before
adjournment. Any business may be transacted at a reconvened meeting that
might have been transacted at the meeting as originally called, provided a
quorum is present or represented thereat. Once a share is represented for
any purpose at a meeting other than solely to object to holding the meeting
or transacting business thereat, it is deemed present for quorum purposes for
the remainder of the meeting and any adjournment thereof (unless a new record
date is or must be set for the adjourned meeting) notwithstanding the
withdrawal of enough shareholders to leave less than a quorum.
2.9 Manner of Acting
If a quorum is present, action on a matter other than the election of
Directors shall be approved if the votes cast in favor of the action by the
shares entitled to vote and be counted collectively upon such matter exceed
the votes cast against such action by the shares entitled to vote and be
counted collectively thereon, unless the Articles of Incorporation or the
Washington Business Corporation Act requires a greater number of affirmative
votes.
3
2.10 Proxies
A shareholder may vote by proxy executed in writing by the shareholder
or by his or her attorney-in-fact or agent. Such proxy shall be effective
when received by the Secretary or other officer or agent authorized to
tabulate votes. A proxy shall become invalid 11 months after the date of its
execution, unless otherwise provided in the proxy. A proxy with respect to a
specified meeting shall entitle the holder thereof to vote at any reconvened
meeting following adjournment of such meeting but shall not be valid after
the final adjournment thereof.
2.11 Voting for Directors
Each shareholder entitled to vote at an election of Directors may vote,
in person or by proxy, the number of shares owned by such shareholder for as
many persons as there are Directors to be elected and for whose election such
shareholder has a right to vote, or (unless otherwise provided in the
Articles of Incorporation) each such shareholder may cumulate such
shareholder's votes by distributing among one or more candidates as many
votes as are equal to the number of such Directors multiplied by the number
of such shareholder's shares. Unless otherwise provided in the Articles of
Incorporation, the candidates elected shall be those receiving the largest
number of votes cast, up to the number of Directors to be elected.
SECTION 3. BOARD OF DIRECTORS
3.1 General Powers
All corporate powers shall be exercised by or under the authority of,
and the business and affairs of the corporation shall be managed under the
direction of, the Board, except as may be otherwise provided in these Bylaws,
the Articles of Incorporation or the Washington Business Corporation Act.
3.2 Number and Tenure
The Board shall be composed of not less than nine Directors, the exact
number to be specified by the Board. The number of Directors may be changed
from time to time by the Board, but may not be fewer than nine nor more than
25. No decrease in the number of Directors shall have the effect of
shortening the term of any incumbent Director. Whenever under the provisions
of the Articles of Incorporation the holders of Preferred Stock or Preference
Stock of the corporation shall be entitled, voting as a separate group, to
elect Directors, the provisions of the Articles of Incorporation with regard
to fixing the number of Directors constituting the full Board, the election
of Directors, their tenure of office, the filling of vacancies on the Board
and the removal of Directors, shall control.
3.3 Nomination and Election
3.3.1 Nomination
Only persons who are nominated in accordance with the following
procedures shall be eligible for election as Directors. Nominations for the
election of Directors may be made (a) by or at the direction of the Board or
(b) by any shareholder of record entitled to vote for the election of
4
Directors at such meeting; provided, however, that a shareholder may nominate
persons for election as Directors only if written notice (in accordance with
subsection 2.4.3 hereof) of such shareholder's intention to make such
nominations is received by the Secretary (i) with respect to an election to
be held at an annual meeting of the shareholders, not fewer than 120 nor more
than 150 days prior to the date of such annual meeting established pursuant
to subsection 2.1 hereof (or if less than 120 days' notice or prior public
disclosure of the date of the annual meeting is given or made to the
shareholders, not later than the tenth day following the day on which such
notice of the date of the annual meeting was mailed or such public disclosure
was made) and (ii) with respect to an election to be held at a special
meeting of the shareholders for the election of Directors, not later than the
close of business on the seventh business day following the date on which
notice of such meeting is first given to shareholders. Any such
shareholder's notice shall set forth (a) the name and address of the
shareholder who intends to make a nomination; (b) a representation that the
shareholder is entitled to vote at such meeting and a statement of the number
of shares of the corporation that are beneficially owned by the shareholder;
(c) a representation that the shareholder intends to appear in person or by
proxy at the meeting to nominate the person or persons specified in the
notice; (d) as to each person the shareholder proposes to nominate for
election or re-election as a Director, the name and address of such person
and such other information regarding such nominee as would be required in a
proxy statement filed pursuant to the proxy rules of the Securities and
Exchange Commission had such nominee been nominated by the Board, and a
description of any arrangements or understandings, between the shareholder
and such nominee and any other persons (including their names), pursuant to
which the nomination is to be made; and (e) the consent of each such nominee
to serve as a Director if elected. If the facts warrant, the Board, or the
chairman of a shareholders' meeting at which Directors are to be elected,
shall determine and declare that a nomination was not made in accordance with
the foregoing procedure and, if it so determined, the defective nomination
shall be disregarded. The right of shareholders to make nominations pursuant
to the foregoing procedure is subject to the rights of the holders of any
class or series of shares having a preference over the Common Stock as to
dividends or upon liquidation. The procedures set forth in this
subsection 3.3.1 for nomination for the election of Directors by shareholders
are in addition to, and not in limitation of, any procedures now in effect or
hereafter adopted by or at the direction of the Board or any committee
thereof.
3.3.2 Election
Unless otherwise provided in the Articles of Incorporation, at each
election of Directors, the persons receiving the greatest number of votes, up
to the number of Directors to be elected, shall be the Directors.
3.4 Annual and Regular Meetings
By resolution, the Board, or any committee thereof, may specify the time
and place for holding regular and annual meetings thereof without notice
other than such resolution.
5
3.5 Special Meetings
Special meetings of the Board or any committee designated by the Board
may be called by or at the request of the Chairman of the Board, the Chief
Executive Officer, the President, a Vice President, the Secretary or, in the
case of special Board meetings, any two Directors and, in the case of any
special meeting of any committee designated by the Board, by the Chairman
thereof. The person or persons authorized to call special meetings may fix
any place either within or without the State of Washington as the place for
holding any special Board or committee meeting called by them.
3.6 Meetings by Communications Equipment
Members of the Board or any committee designated by the Board may
participate in a meeting of such Board or committee by, or conduct the
meeting through the use of, any means of communication by which all Directors
participating in the meeting can hear each other during the meeting.
Participation by such means shall constitute presence in person at a meeting.
3.7 Notice of Special Meetings
Notice of a special Board or committee meeting stating the place, day
and hour of the meeting shall be given to a Director in writing or orally.
Neither the business to be transacted at, nor the purpose of, any special
meeting need be specified in the notice of such meeting.
3.7.1 Personal Delivery
If notice is given by personal delivery, the notice shall be effective
if delivered to a Director at least one day before the meeting.
3.7.2 Delivery by Mail
If notice is delivered by mail, the notice shall be deemed effective if
deposited in the official government mail at least five days before the
meeting, properly addressed to a Director at his or her address shown on the
records of the corporation, with postage thereon prepaid.
3.7.3 Delivery by Private Carrier
If notice is given by private carrier, the notice shall be deemed
effective when dispatched to a Director at his or her address shown on the
records of the corporation at least two days before the meeting.
3.7.4 Facsimile Notice
If notice is delivered by wire or wireless equipment that transmits a
facsimile of the notice, the notice shall be deemed effective when dispatched
at least one day before the meeting to a Director at his or her telephone
number or other number appearing on the records of the corporation.
3.7.5 Delivery by Telegraph
If notice is delivered by telegraph, the notice shall be deemed
effective if the content thereof is delivered to the telegraph company for
delivery to a Director at his or her address shown on the records of the
corporation at least two days before the meeting.
6
3.7.6 Oral Notice
If notice is delivered orally, by telephone or in person, the notice
shall be deemed effective if personally given to the Director at least one
day before the meeting.
3.7.7 In Emergency
The foregoing notwithstanding, in case of exigency, the Chairman of the
Board or President, or in their absence the Secretary, may prescribe that
shorter notice be given in person or by telephone, telegraph, private carrier
or facsimile.
3.8 Waiver of Notice
3.8.1 In Writing
Whenever any notice is required to be given to any Director under the
provisions of these Bylaws, the Articles of Incorporation or the Washington
Business Corporation Act, a waiver thereof in writing, signed by the person
or persons entitled to such notice and delivered to the corporation, whether
before or after the date and time of the meeting, shall be deemed equivalent
to the giving of such notice. Neither the business to be transacted at, nor
the purpose of, any regular or special meeting of the Board or any committee
designated by the Board need be specified in the waiver of notice of such
meeting.
3.8.2 By Attendance
A Director's attendance at or participation in a Board or committee
meeting shall constitute a waiver of notice of such meeting, unless the
Director at the beginning of the meeting, or promptly upon his or her
arrival, objects to holding the meeting or transacting business thereat and
does not thereafter vote for or assent to action taken at the meeting.
3.9 Quorum
One-third of the number of Directors fixed by or in the manner provided
in these Bylaws, but not less than three Directors, shall constitute a quorum
for the transaction of business at any Board meeting but, if less than such
number are present at a meeting, a majority of the Directors present may
adjourn the meeting from time to time without further notice.
3.10 Manner of Acting
If a quorum is present when the vote is taken, the act of the majority
of the Directors present at a Board meeting shall be the act of the Board,
unless the vote of a greater number is required by these Bylaws, the Articles
of Incorporation or the Washington Business Corporation Act.
3.11 Action by Board or Committees Without a Meeting
Any action that could be taken at a meeting of the Board or of any
committee created by the Board may be taken without a meeting if one or more
written consents setting forth the action so taken are signed by each of the
7
Directors or by each committee member either before or after the action is
taken and delivered to the corporation. Action taken by written consent of
Directors without a meeting is effective when the last Director signs the
consent, unless the consent specifies a later effective date. Any such
written consent shall be inserted in the minute book as if it were the
minutes of a Board or a committee meeting.
3.12 Resignation
Any Director may resign at any time by delivering written notice to the
Chairman of the Board, the President, the Secretary or the Board. Any such
resignation is effective upon delivery thereof unless the notice of
resignation specifies a later effective date and, unless otherwise specified
therein, the acceptance of such resignation shall not be necessary to make it
effective.
3.13 Removal
At a meeting of shareholders called expressly for that purpose, one or
more members of the Board, including the entire Board, may be removed with or
without cause (unless the Articles of Incorporation permit removal for cause
only) by the holders of the shares entitled to elect the Director or
Directors whose removal is sought if the number of votes cast to remove the
Director exceeds the number of votes cast not to remove the Director. If the
Articles of Incorporation permit cumulative voting in the election of
Directors, then a Director may not be removed if the number of votes
sufficient to elect such Director if then cumulatively voted at an election
of the entire Board or, if there are classes of Directors, at an election of
the class of Directors of which such Director is a part, is voted against the
Director's removal.
3.14 Vacancies
Unless the Articles of Incorporation provide otherwise, any vacancy
occurring on the Board may be filled by the shareholders, the Board or, if
the Directors in office constitute fewer than a quorum, by the affirmative
vote of a majority of the remaining Directors. Any vacant office held by a
Director elected by the holders of one or more classes or series of shares
entitled to vote and be counted collectively thereon shall be filled only by
the vote of the holders of such class or series of shares. A Director
elected to fill a vacancy shall serve only until the next election of
Directors by the shareholders.
3.15 Compensation
Directors shall receive such compensation for their services as
Directors and as members of committees, as may be fixed from time to time by
resolution of the Board and expenses, if any, may be allowed for attendance
at meetings of the Board or committees thereof; provided that nothing herein
contained shall be construed to preclude any Director from serving the
corporation in any other capacity and receiving compensation therefor. Any
compensation so fixed by the Board shall be subject to revision by the
shareholders.
8
3.16 Executive and Other Committees
3.16.1 Creation of Committees
By resolution, the Board may create standing or temporary committees,
including an Executive Committee, and appoint members thereto from its own
number and invest such committees with such powers as it may see fit, subject
to such conditions as may be prescribed by the Board, these Bylaws and
applicable law, including the Washington Business Corporation Act. Each
committee must have two or more members, who shall serve at the pleasure of
the Board.
3.16.2 Authority of Committees
Each committee shall have and may exercise all the authority of the
Board to the extent provided in the resolution of the Board creating the
committee and any subsequent resolutions pertaining thereto and adopted in
like manner, except that no such committee shall have the authority to: (1)
authorize or approve a distribution except according to a general formula or
method prescribed by the Board, (2) approve or propose to shareholders
actions or proposals required by the Washington Business Corporation Act to
be approved by shareholders, (3) fill vacancies on the Board or any committee
thereof, (4) adopt, amend or repeal Bylaws, (5) amend the Articles of
Incorporation pursuant to RCW 23B.10.020, (6) approve a plan of merger not
requiring shareholder approval, or (7) authorize or approve the issuance or
sale or contract for sale of shares, or determine the designation and
relative rights, preferences and limitations of a class or series of shares
except that the Board may authorize a committee or a senior executive officer
of the corporation to do so within limits specifically prescribed by the
Board.
SECTION 4. OFFICERS
4.1 Election and Term
The officers of the corporation shall be those officers elected or
appointed from time to time by the Board and shall hold office for such
period, have such authority and perform such duties as may be prescribed.
Any two or more offices may be held by the same person. Unless otherwise
provided in a resolution of the Board, a duly elected or appointed officer
may appoint one or more officers or assistant officers. Unless an officer
dies, resigns or is removed from office, he or she shall hold office until
his or her successor is appointed.
4.2 Resignation
Any officer may resign at any time by delivering written notice thereof
to the corporation. Any such resignation is effective upon delivery thereof,
unless the notice of resignation specifies a later effective date, and,
unless otherwise specified therein, the acceptance of such resignation shall
not be necessary to make it effective.
4.3 Removal
Any officer may be removed by the Board at any time, with or without
cause.
9
4.4 Chief Executive Officer
If appointed, the Chief Executive Officer shall preside at all meetings
of the Board and shareholders and shall have such other powers as the Board
shall by resolution from time to time prescribe. The Chief Executive Officer
shall, subject to the control of the Board, supervise and control all the
assets, business and affairs of the corporation. The Chief Executive Officer
need not be a Director of the corporation.
4.5 Chairman of the Board
If appointed, the Chairman of the Board shall preside over the meetings
of the Board and shareholders in the absence of the Chief Executive Officer
and shall perform duties commonly incident to his office, except that if
there shall be a Chief Executive Officer, the Chairman of the Board shall
not, unless the Chief Executive Officer is absent or disabled, perform such
duties as are by these Bylaws or by resolution of the Board delegated
exclusively to the Chief Executive Officer. The Chairman of the Board must
be a Director of the corporation.
4.6 President
If appointed, the President shall preside over meetings of the Board and
shareholders in the absence of both the Chairman of the Board and the Chief
Executive Officer and shall perform the duties commonly incident to his
office, except that if there shall be a Chairman of the Board or a Chief
Executive Officer the President shall not, unless the Chairman of the Board
and the Chief Executive Officer are absent or disabled, perform such duties
as are by these Bylaws or by resolution of the Board delegated exclusively to
the Chairman of the Board or the Chief Executive Officer, as the case may be.
The President shall perform such other duties as are prescribed by the Board
from time to time. The President need not be a Director of the corporation.
4.7 Vice President
In the event of the death or disability of the President or his or her
inability to act, any Vice President shall perform the duties and have the
powers of the President, except as may be limited by resolution of the Board,
with all the powers of and subject to all the restrictions upon the
President. Vice Presidents shall perform such other duties as from time to
time may be assigned to them by or at the direction of the Board.
4.8 Secretary
If appointed, the Secretary shall be responsible for preparation of
minutes of the meetings of the Board and shareholders, maintenance of the
corporation records and stock registers, and authentication of the
corporation's records and shall in general perform all duties incident to the
office of Secretary and such other duties as from time to time may be
assigned to him by or at the direction of the Board. In the absence of the
Secretary, an Assistant Secretary may perform the duties of the Secretary.
10
4.9 Treasurer
If appointed, the Treasurer shall have charge and custody of and be
responsible for all funds and securities of the corporation, receive and give
receipts for moneys due and payable to the corporation from any source
whatsoever, and deposit all such moneys in the name of the corporation in
banks, trust companies or other depositories selected in accordance with the
provisions of these Bylaws, and in general perform all of the duties incident
to the office of Treasurer and such other duties as from time to time may be
assigned to him or her by or at the direction of the Board. In the absence
of the Treasurer, an Assistant Treasurer may perform the duties of the
Treasurer. The Treasurer shall be the chief financial and accounting officer
of the corporation unless the Board shall have designated to a Vice President
or Controller to serve as principal financial or accounting officer. If
required by the Board, the Treasurer or any Assistant Treasurer shall give a
bond for the faithful discharge of his or her duties in such amount and with
such surety or sureties as the Board shall determine.
4.10 Salaries
The salaries of the officers shall be fixed from time to time by the
Board or by any person or persons to whom the Board has delegated such
authority. No officer shall be prevented from receiving such salary by
reason of the fact that he or she is also a Director of the corporation.
SECTION 5. CERTIFICATES FOR SHARES AND THEIR TRANSFER
5.1 Issuance of Shares
No shares of the corporation shall be issued unless authorized by the
Board, or by a committee designated by the Board to the extent such committee
is empowered to do so.
5.2 Certificates for Shares
Certificates representing shares of the corporation shall be signed,
either manually or in facsimile, by the Chief Executive Officer, the Chairman
of the Board, the President or any Vice President and by the Treasurer or any
Assistant Treasurer or the Secretary or any Assistant Secretary and shall
include on their face written notice of any restrictions that may be imposed
on the transferability of such shares. To the extent any certificate
requires signature by the corporation's transfer agent or registrar, such
signatures may be either manual or in facsimile. All certificates shall be
consecutively numbered or otherwise identified.
5.3 Stock Records
The stock transfer books shall be kept at the principal office of the
corporation or at the office of the corporation's transfer agent or
registrar. The name and address of each person to whom certificates for
shares are issued, together with the class and number of shares represented
by each such certificate and the date of issue thereof, shall be entered on
the stock transfer books of the corporation. The person in whose name shares
stand on the books of the corporation shall be deemed by the corporation to
be the owner thereof for all purposes.
11
5.4 Transfer of Shares
The transfer of shares of the corporation shall be made only on the
stock transfer books of the corporation pursuant to authorization or document
of transfer made by the holder of record thereof or by his or her legal
representative, who shall furnish proper evidence of authority to transfer,
or by his or her attorney-in-fact authorized by power of attorney duly
executed and filed with the Secretary of the corporation. All certificates
surrendered to the corporation for transfer shall be cancelled and no new
certificate shall be issued until the former certificates for a like number
of shares shall have been surrendered and cancelled.
5.5 Lost or Destroyed Certificates
In the case of a lost, destroyed or mutilated certificate, a new
certificate may be issued therefor upon such terms and indemnity to the
corporation as the Board may prescribe.
SECTION 6. INDEMNIFICATION
6.1 Right to Indemnification
Each person who was, is or is threatened to be made a named party to or
is otherwise involved (including, without limitation, as a witness) in any
actual or threatened action, suit or proceeding, whether civil, criminal,
administrative or investigative (hereinafter, a "Proceeding"), by reason of
the fact that he or she is or was a Director or officer of the corporation
or, that being or having been such a Director or officer or an employee of
the corporation, he or she is or was serving at the request of an executive
officer of the corporation as a Director, officer, employee or agent of
another corporation or of a partnership, joint venture, trust or other
enterprise (hereinafter, an "Indemnitee"), whether the basis of a Proceeding
is alleged action in an official capacity as such a Director, officer,
employee or agent or in any other capacity while serving as such a Director,
officer, employee or agent, shall be indemnified and held harmless by the
corporation to the full extent permitted by applicable laws as then in effect
against all expense, liability and loss (including counsel fees, judgments,
fines, ERISA excise taxes or penalties and amounts to be paid in settlement)
actually and reasonably incurred or suffered by such Indemnitee in connection
therewith, and such indemnification shall continue as to an Indemnitee who
has ceased to be a Director, officer, employee or agent and shall inure to
the benefit of the Indemnitee's heirs, executors and administrators;
provided, however, that no indemnification shall be provided to any such
Indemnitee if the corporation is prohibited by the nonexclusive provisions of
the Washington Business Corporation Act or other applicable laws then in
effect from paying such indemnification; and provided, further, that except
as provided in subsection 6.2 hereof with respect to proceedings seeking to
enforce rights to indemnification, the corporation shall indemnify any such
Indemnitee in connection with a Proceeding (or part thereof) initiated by
such Indemnitee only if a Proceeding (or part thereof) was authorized or
ratified by the Board. The right to indemnification conferred in this
Section shall be a contract right and shall include the right to be paid by
the corporation the expenses incurred in defending any Proceeding in advance
of its final disposition (hereinafter, an "Advancement of Expenses"). Any
Advancement of Expenses shall be made only upon delivery to the corporation
12
of an undertaking (hereinafter, an "Undertaking") by or on behalf of such
Indemnitee, to repay all amounts so advanced if it shall ultimately be
determined by final judicial decision from which there is no further right to
appeal that such Indemnitee is not entitled to be indemnified for such
expenses under this Section and (a) upon delivery to the corporation of a
written affirmation (hereinafter, an "Affirmation") by the Indemnitee of his
or her good faith belief such Indemnitee has met the standard of conduct
necessary for indemnification by the corporation pursuant to this Section or
(b) upon such determination (hereinafter, a "Determination") as may be
permitted or required by the Washington Business Corporation Act or other
applicable law.
6.2 Right of Indemnitee to Bring Suit
If a claim under subsection 6.1 hereof is not paid in full by the
corporation within 60 days after a written claim has been received by the
corporation, except in the case of a claim for an Advancement of Expenses, in
which case the applicable period shall be 20 days, the Indemnitee may at any
time thereafter bring suit against the corporation to recover the unpaid
amount of the claim. If successful in whole or in part, in any such suit or
in a suit brought by the corporation to recover an Advancement of Expenses
pursuant to the terms of an Undertaking, the Indemnitee shall be entitled to
be paid also the expense of prosecuting or defending such suit. The
Indemnitee shall be presumed to be entitled to indemnification under this
Section upon submission of a written claim (and, in an action brought to
enforce a claim for an Advancement of Expenses, where the required
Undertaking and Affirmation or Determination have been tendered to or made by
the corporation) and thereafter the corporation shall have the burden of
proof to overcome the presumption that the Indemnitee is so entitled.
Neither the failure of the corporation (including its Board, independent
legal counsel or shareholders) to have made a determination prior to the
commencement of such suit that indemnification of the Indemnitee is proper in
the circumstances nor an actual determination by the corporation (including
its Board, independent legal counsel or shareholders) that the Indemnitee is
not so entitled to indemnification shall be a defense to the suit or create a
presumption that the Indemnitee is not so entitled.
6.3 Nonexclusivity of Rights
The right to indemnification and the Advancement of Expenses conferred
in this Section shall not be exclusive of any other right that any person may
have or hereafter acquire under any statute, provision of the Articles of
Incorporation or Bylaws of the corporation, general or specific action of the
Board, contract or otherwise.
6.4 Insurance, Contracts and Funding
The corporation may maintain insurance, at its expense, to protect
itself and any Director, officer, employee or agent of the corporation or
another corporation, partnership, joint venture, trust or other enterprise
against any expense, liability or loss, whether or not the corporation would
have the power to indemnify such person against such expense, liability or
loss under the Washington Business Corporation Act. The corporation may
enter into contracts with any Director, officer, employee or agent of the
13
corporation in furtherance of the provisions of this Section and may create a
trust fund, grant a security interest or use other means (including, without
limitation, a letter of credit) to ensure the payment of such amounts as may
be necessary to effect indemnification as provided in this Section.
6.5 Indemnification of Employees and Agents of the Corporation
The corporation may, by action of the Board, grant rights to
indemnification and Advancement of Expenses to employees and agents of the
corporation with the same scope and effect as the provisions of this Section
with respect to the indemnification and Advancement of Expenses of Directors
and officers of the corporation or pursuant to rights granted pursuant to, or
provided by, the Washington Business Corporation Act or otherwise.
6.6 Persons Serving Other Entities
Any person who is or was a Director, officer or employee of the
corporation who is or was serving (a) as a Director or officer of another
corporation of which a majority of the shares entitled to vote in the
election of its Directors is held by the corporation or (b) in an executive
or management capacity in a partnership, joint venture, trust or other
enterprise of which the corporation or a wholly owned subsidiary of the
corporation is a general partner or has a majority ownership shall be deemed
to be so serving at the request of an executive officer of the corporation
and entitled to indemnification and Advancement of Expenses under
subsection 6.1 hereof.
SECTION 7. AMENDMENTS
These Bylaws may be altered, amended or repealed and new Bylaws may be
adopted by a majority vote of the entire Board, except that the Board may not
repeal or amend any Bylaw that the shareholders have expressly provided, in
amending or repealing such Bylaw, may not be amended or repealed by the
Board. The shareholders may also alter, amend and repeal these Bylaws or
adopt new Bylaws. All Bylaws made by the Board may be amended, repealed,
altered or modified by the shareholders.
The foregoing Bylaws were adopted by the Board of Directors on April 8,
1997.
s/s James W. Eldredge
---------------------
James W. Eldredge
Secretary
14
<PAGE>
Exhibit 4.1
- -----------------------------------------------------------------------------
INDENTURE
Dated as of June 6, 1997
BETWEEN
PUGET SOUND ENERGY, INC.
AND
THE FIRST NATIONAL BANK OF CHICAGO
JUNIOR SUBORDINATED DEFERRABLE INTEREST DEBENTURES
- -----------------------------------------------------------------------------
TIE-SHEET
of provisions of Trust Indenture Act of 1939 with Indenture dated as of
June 6, 1997 between Puget Sound Energy, Inc. and The First National Bank of
Chicago, as Trustee:
ACT SECTION INDENTURE SECTION
310(a)(1)...........................................................6.09
(a)(2)...........................................................6.09
310(a)(3)............................................................N/A
(a)(4)............................................................N/A
310(a)(5) ....................................................6.10, 6.11
310(b)...............................................................N/A
310(c)..............................................................6.13
311(a) and (b) N/A
311(c).....................................................4.01, 4.02(a)
312(a)............................................................. 4.02
312(b) and (c)......................................................4.04
313(a)..............................................................4.04
313(b)(1)...........................................................4.04
313(b)(2)...........................................................4.04
313(c)..............................................................4.04
313(d)..............................................................4.04
314(a)..............................................................4.03
314(b)...............................................................N/A
314(c)(1) and (2)...................................................6.07
314(c)(3)............................................................N/A
314(d) ..............................................................N/A
314(e)..............................................................6.07
314(f) ..............................................................N/A
315(a)(c) and (d)...................................................6.01
315(b)..............................................................5.08
315(e)..............................................................5.09
316(a)(1)...........................................................5.07
316(a)(2)............................................................N/A
316(a) last sentence................................................2.09
316(b)..............................................................9.02
317(a)..............................................................5.05
317(b)..............................................................6.05
318(a).............................................................13.08
_________________________________
THIS TIE-SHEET IS NOT PART OF THE INDENTURE AS EXECUTED.
TABLE OF CONTENTS
ARTICLE I DEFINITIONS
1.01. Definitions
ARTICLE II SECURITIES
2.01. Forms Generally
2.02. Execution and Authentication
2.03. Form and Payment
2.04. Legends
2.05. Global Security
2.06 Interest
2.07. Transfer and Exchange
2.08. Replacement Securities
2.09. Temporary Securities
2.10. Cancellation
2.11. Defaulted Interest
2.12. CUSIP Numbers
ARTICLE III PARTICULAR COVENANTS OF THE COMPANY
3.01. Payment of Principal, Premium and Interest
3.02. Offices for Notices and Payments, etc.
3.03. Appointments to Fill Vacancies in Trustee's Office
3.04. Provision as to Paying Agent
3.05. Certificate to Trustee
3.06. Compliance with Consolidation Provisions
3.07. Limitation on Dividends
3.08. Covenants as to Puget Sound Energy Trust
3.09. Payment of Expenses
3.10. Payment Upon Resignation or Removal
ARTICLE IV SECURITYHOLDERS' LISTS AND REPORTS BY THE COMPANY AND THE TRUSTEE
4.01. Securityholders' Lists
4.02. Preservation and Disclosure of Lists
4.03. Reports by Company
4.04. Reports by the Trustee
ARTICLE V REMEDIES OF THE TRUSTEE AND SECURITYHOLDERS ON EVENT OF DEFAULT
5.01. Events of Default
5.02. Payment of Securities on Default; Suit Therefor
5.03. Application of Moneys Collected by Trustee
5.04. Proceedings by Securityholders
5.05. Proceedings by Trustee
5.06. Remedies Cumulative and Continuing
5.07. Direction of Proceedings and Waiver of Defaults by Majority of
Securityholders
5.08. Notice of Defaults
5.09. Undertaking to Pay Costs
ARTICLE VI CONCERNING THE TRUSTEE
6.01. Duties and Responsibilities of Trustee
6.02. Reliance on Documents, Opinions, etc.
6.03. No Responsibility for Recitals, etc.
6.04. Trustee, Authenticating Agent, Paying Agents, Transfer Agents
or Registrar May Own Securities
6.05. Moneys to be Held in Trust
6.06. Compensation and Expenses of Trustee
6.07. Officers' Certificate as Evidence
6.08. Conflicting Interest of Trustee
6.09. Eligibility of Trustee
6.10. Resignation or Removal of Trustee
6.11. Acceptance by Successor Trustee
6.12. Succession by Merger, etc.
6.13. Limitation on Rights of Trustee as a Creditor
6.14. Authenticating Agents
ARTICLE VII CONCERNING THE SECURITYHOLDERS
7.01. Action by Securityholders
7.02. Proof of Execution by Securityholders
7.03. Who Are Deemed Absolute Owners
7.04. Securities Owned by Company Deemed Not Outstanding
7.05. Revocation of Consents; Future Holders Bound
ARTICLE VIII SECURITYHOLDERS' MEETINGS
8.01. Purposes of Meetings
8.02. Call of Meetings by Trustee
8.03. Call of Meetings by Company or Securityholders
8.04. Qualifications for Voting
8.05. Regulations
8.06. Voting
ARTICLE IX AMENDMENTS
9.01. Without Consent of Securityholders
9.02. With Consent of Securityholders
9.03. Compliance with Trust Indenture Act; Effect of
SupplementalIndentures
9.04. Notation on Securities
9.05. Evidence of Compliance of Supplemental Indenture to be
Furnished Trustee
ARTICLE X CONSOLIDATION, MERGER, SALE, CONVEYANCE AND LEASE
10.01. Company May Consolidate, etc., on Certain Terms
10.02. Successor Corporation to be Substituted for Company
10.03. Opinion of Counsel to be Given Trustee
ARTICLE XI SATISFACTION AND DISCHARGE OF INDENTURE
11.01. Discharge of Indenture
11.02. Deposited Moneys and U.S. Government Obligations to be Held in
Trust by Trustee
11.03. Paying Agent to Repay Moneys Held
11.04. Return of Unclaimed Moneys
11.05. Defeasance Upon Deposit of Moneys or U.S. Government
Obligations
ARTICLE XII IMMUNITY OF INCORPORATORS, SHAREHOLDERS, OFFICERS AND DIRECTORS
12.01. Indenture and Securities Solely Corporate Obligations
ARTICLE XIII MISCELLANEOUS PROVISIONS
13.01. Successors
13.02. Official Acts by Successor Corporation
13.03. Surrender of Company Powers
13.04. Addresses for Notices, etc.
13.05. Governing Law
13.06. Evidence of Compliance with Conditions Precedent
13.07. Business Days
13.08. Trust Indenture Act to Control
13.09. Table of Contents, Headings, etc.
13.10. Execution in Counterparts
13.11. Separability
13.12. Assignment
13.13. Acknowledgement of Rights
ARTICLE XIV REDEMPTION OF SECURITIES -- MANDATORY AND OPTIONAL SINKING FUND
14.01. Tax Event Redemption
14.02. Optional Redemption by Company
14.03. No Sinking Fund
14.04. Notice of Redemption; Selection of Securities
14.05. Payment of Securities Called for Redemption
ARTICLE XV SUBORDINATION OF SECURITIES
15.01. Agreement to Subordinate
15.02. Default on Senior Indebtedness
15.03. Liquidation; Dissolution; Bankruptcy
15.04. Subrogation
15.05. Trustee to Effectuate Subordination
15.06. Notice by the Company
15.07. Rights of the Trustee; Holders of Senior Indebtedness
15.08. Subordination May Not Be Impaired
ARTICLE XVI EXTENSION OF INTEREST PAYMENT PERIOD
16.01. Extension of Interest Payment Period
16.02. Notice of Extension
EXHIBIT A (FORM OF FACE OF SECURITY)
Testimonium
Signatures
Acknowledgements
THIS INDENTURE, dated as of June 6, 1997, between Puget Sound Energy,
Inc., a Washington corporation (hereinafter sometimes called the "Company"),
and The First National Bank of Chicago, a national banking association, as
trustee (hereinafter sometimes called the "Trustee"),
W I T N E S S E T H :
In consideration of the premises, and the purchase of the Securities
by the holders thereof, the Company covenants and agrees with the Trustee for
the equal and proportionate benefit of the respective holders from time to
time of the Securities, as follows:
ARTICLE I
DEFINITIONS
1.01. Definitions
The terms defined in this Section 1.01 (except as herein otherwise
expressly provided or unless the context otherwise requires) for all purposes
of this Indenture shall have the respective meanings specified in this
Section 1.01. All other terms used in this Indenture which are defined in
the Trust Indenture Act of 1939, as amended (the "Trust Indenture Act"), or
which are by reference therein defined in the Securities Act, shall (except
as herein otherwise expressly provided or unless the context otherwise
requires) have the meanings assigned to such terms in said Trust Indenture
Act and in said Securities Act as in force at the date of this Indenture as
originally executed. The following terms have the meanings given to them in
the Declaration: (i) Clearing Agency; (ii) Delaware Trustee; (iii) Property
Trustee; (iv) Administrative Trustees; (v) Direct Action; (vi) Purchase
Agreement; (vii) Distributions; (viii) Series A Capital Securities and
(ix) Series B Capital Securities. All accounting terms used herein and not
expressly defined shall have the meanings assigned to such terms in
accordance with generally accepted accounting principles and the term
"generally accepted accounting principles" means such accounting principles
as are generally accepted at the time of any computation. 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. Headings are used for convenience of reference only and do not
affect interpretation. The singular includes the plural and vice versa.
"Additional Interest" shall have the meaning set forth in
Section 2.06(c).
"Adjusted Treasury Rate" means, with respect to any redemption date,
the rate per annum equal to (i) the yield, under the heading which represents
the average for the immediately prior week, appearing in the most recently
published statistical release designated "H.15 (519)" or any successor
publication which is published weekly by the Federal Reserve and which
establishes yields on actively traded United States Treasury securities
adjusted to constant maturity under the caption "Treasury Constant
Maturities," for the maturity corresponding to the Maturity Date (if no
maturity is within three months before or after the Maturity Date, yields for
the two published maturities most closely corresponding to the Maturity Date
shall be interpolated, and the Adjusted Treasury Rate shall be interpolated
or extrapolated from such yields on a straight-line basis, rounding to the
nearest month) or (ii) if such release (or any successor release) is not
published during the week preceding the calculation date or does not contain
such yields, the rate per annum equal to the semi-annual equivalent yield to
maturity of the Comparable Treasury Issue, assuming a price for the
Comparable Treasury Issue (expressed as a percentage of its principal amount)
equal to the Comparable Treasury Price for such redemption date plus, in
either case, (a) 1.05% if such redemption date occurs on or prior to June 1,
1998, and (b) 0.50% in all other cases.
"Affiliate" means, with respect to a specified Person, (a) any Person
directly or indirectly owning, controlling or holding the power to vote 10%
or more of the outstanding voting securities or other ownership interests of
the specified Person, (b) any Person 10% or more of whose outstanding voting
securities or other ownership interests are directly or indirectly owned,
controlled or held with power to vote by the specified Person, (c) any Person
directly or indirectly controlling, controlled by, or under common control
with the specified Person, (d) a partnership in which the specified Person is
a general partner, (e) any officer or director of the specified Person, and
(f) if the specified Person is an individual, any entity of which the
specified Person is an officer, director or general partner.
"Authenticating Agent" shall mean any agent or agents of the Trustee
which at the time shall be appointed and acting pursuant to Section 6.14.
"Bankruptcy Law" shall mean Title 11, U.S. Code, or any similar
federal or state law for the relief of debtors.
"Board of Directors" shall mean either the Board of Directors of the
Company or any duly authorized committee of that board.
"Board Resolution" shall mean 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" shall mean, with respect to any series of Securities,
any day other than a Saturday or a Sunday or a day on which banking
institutions in The City of New York or in The City of Seattle, Washington
are authorized or required by law or executive order to close.
"Capital Securities" shall mean undivided beneficial interests in the
assets of Puget Sound Energy Trust which rank pari passu with the Common
Securities issued by Puget Sound Energy Trust; provided, however, that if an
Event of Default has occurred and is continuing, no payments in respect of
Distributions on, or payments upon liquidation, redemption or otherwise with
respect to, the Common Securities shall be made until the holders of the
Capital Securities shall be paid in full the Distributions and the
liquidation, redemption and other payments to which they are entitled.
References to "Capital Securities" shall include collectively any Series A
Capital Securities and Series B Capital Securities.
"Capital Securities Guarantee" shall mean any guarantee that the
Company may enter into with The First National Bank of Chicago in its
capacity as trustee of the Puget Sound Energy Trust or other Persons that
operates directly or indirectly for the benefit of holders of Capital
Securities of Puget Sound Energy Trust and shall include a Series A Capital
Securities Guarantee and a Series B Capital Securities Guarantee with respect
to the Series A Capital Securities and the Series B Capital Securities,
respectively.
"Commission" shall mean the Securities and Exchange Commission, as
from time to time constituted, created under the Exchange Act, or if at any
time after the execution of this Indenture such Commission is not existing
and performing the duties now assigned to it under the Trust Indenture Act,
then the body performing such duties at such time.
"Common Securities" shall mean undivided beneficial interests in the
assets of Puget Sound Energy Trust which rank pari passu with Capital
Securities issued by Puget Sound Energy Trust; provided, however, that if an
Event of Default has occurred and is continuing, no payments in respect of
Distributions on, or payments upon liquidation, redemption or otherwise with
respect to, the Common Securities shall be made until the holders of the
Capital Securities shall be paid in full the Distributions and the
liquidation, redemption and other payments to which they are entitled.
"Common Securities Guarantee" shall mean any guarantee that the
Company may enter into with any Person or Persons that operates directly or
indirectly for the benefit of holders of Common Securities of Puget Sound
Energy Trust.
"Common Stock" shall mean the Common Stock, stated value $10 per
share, of the Company or any other class of stock resulting from changes or
reclassifications of such Common Stock consisting solely of changes in par
value, or from par value to no par value, or from no par value to par value.
"Company" shall mean Puget Sound Energy, Inc., a Washington
corporation, and, subject to the provisions of Article X, shall include its
successors and assigns.
"Company Request" or "Company Order" shall mean a written request or
order signed in the name of the Company by the Chairman, the Chief Executive
Officer, the President, a Vice President, the Treasurer or an Assistant
Treasurer, the Controller or an Assistant Controller, the Secretary or an
Assistant Secretary of the Company, and delivered to the Trustee.
"Comparable Treasury Issue" means the United States Treasury security
selected by the Quotation Agent as having a maturity date corresponding to
the Maturity Date that would be utilized, at the time of selection and in
accordance with customary financial practice, in pricing new issues of
corporate debt securities with a maturity date corresponding to the Maturity
Date. If no United States Treasury security has a maturity date which is
within three months before or after the Maturity Date, the two most closely
corresponding United States Treasury securities shall be used as the
Comparable Treasury Issue, and the calculation of the Adjusted Treasury Rate
pursuant to clause (ii) of the definition thereof shall be interpolated or
extrapolated on a straight-line basis, rounding to the nearest month.
"Comparable Treasury Price" means, with respect to any redemption
date pursuant to Section 14.01, (i) the average of the bid and asked prices
for the Comparable Treasury Issue (expressed in each case as a percentage of
its principal amount) on the third Business Day preceding such redemption
date, as set forth in the daily statistical release (or any successor
release) published by the Federal Reserve Bank of New York and designated
"Composite 3:30 p.m. Quotations for U.S. Government Securities" or (ii) if
such release (or any successor release) is not published or does not contain
such prices on such Business Day, (A) the average of five Reference Treasury
Dealer Quotations for such redemption date, after excluding the highest and
lowest such Reference Treasury Dealer Quotations, or (B) if the Trustee
obtains fewer than three such Reference Treasury Dealer Quotations, the
average of all such Quotations.
"Compounded Interest" shall have the meaning set forth in
Section 16.01.
"Custodian" shall mean any receiver, trustee, assignee, liquidator, or
similar official under any Bankruptcy Law.
"Declaration" means the Amended and Restated Declaration of Trust of
Puget Sound Energy Trust, dated as of the Issue Date.
"Default" means any event, act or condition that with notice or lapse
of time, or both, would constitute an Event of Default.
"Deferred Interest" shall have the meaning set forth in
Section 16.01.
"Definitive Securities" shall mean those securities issued in fully
registered certificated form not otherwise in global form.
"Depositary" shall mean, with respect to Securities of any series,
for which the Company shall determine that such Securities will be issued as
a Global Security, The Depository Trust Company, New York, New York, another
clearing agency, or any successor registered as a clearing agency under the
Exchange Act or other applicable statute or regulation, which, in each case,
shall be designated by the Company pursuant to Section 2.05(d).
"Dissolution Event" means the liquidation of the Trust pursuant to
the Declaration, and the distribution of the Securities held by the Property
Trustee to the holders of the Trust Securities issued by the Trust pro rata
in accordance with the Declaration.
"Event of Default" shall mean any event specified in Section 5.01,
continued for the period of time, if any, and after the giving of the notice,
if any, therein designated.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended.
"Exchange Offer" means the offer that may be made pursuant to the
Registration Rights Agreement (i) by the Company to exchange Series B
Securities for Series A Securities and to exchange a Series B Capital
Securities Guarantee for a Series A Capital Securities Guarantee and (ii) by
Puget Sound Energy Trust to exchange Series B Capital Securities for Series A
Capital Securities.
"Extended Interest Payment Period" shall have the meaning set forth in
Section 16.01.
"Federal Reserve" shall mean the Board of Governors of the Federal
Reserve System.
"Global Security" means, with respect to the Securities, a Security
executed by the Company and delivered by the Trustee to the Depositary or
pursuant to the Depositary's instruction, all in accordance with the
Indenture, which shall be registered in the name of the Depositary or its
nominee.
"Indebtedness for Money Borrowed" shall mean any obligation of, or
any obligation guaranteed by, the Company for the repayment of borrowed
money, whether or not evidenced by bonds, debentures, notes or other written
instruments, but shall not include (i) any trade accounts payable in the
ordinary course of business, (ii) any such indebtedness that by its terms
ranks pari passu with or junior in right of payment to the Securities, (iii)
all other debt securities, and guarantees in respect of those debt
securities, issued to any other trust, or a trustee of such trust,
partnership or other entity affiliated with the Company that is a financing
vehicle of the Company (a "financing entity") in connection with the issuance
by such financing entity of equity securities or other securities guaranteed
by the Company pursuant to an instrument that ranks pari passu with or junior
in right of payment to the Guarantee, and (iv) any other indebtedness that
would otherwise qualify as "Indebtedness for Money Borrowed" to the extent
that such indebtedness by its terms ranks pari passu with or junior in right
of payment to any of the indebtedness described in clauses (i), (ii) or (iii)
above.
"Indenture" shall mean this instrument as originally executed or, if amended
as herein provided, as so amended.
"Initial Optional Redemption Date" means June 1, 2007.
"Interest Payment Date" shall have the meaning set forth in
Section 2.06.
"Issue Date" means June 6, 1997.
"Liquidated Damages" shall have the meaning set forth in the
Registration Rights Agreement.
"Maturity Date" shall mean June 1, 2027.
"Mortgage" shall mean and include any mortgage, pledge, lien, security
interest, conditional sale or other title retention agreement or other
similar encumbrance.
"Non Book-Entry Capital Securities" shall have the meaning set forth
in Section 2.05.
"Officers" shall mean any of the Chairman, the Chief Executive
Officer, the President, a Vice President, the Treasurer, any Assistant
Treasurer, the Controller or the Secretary of the Company.
"Officers' Certificate" shall mean a certificate signed by two
Officers and delivered to the Trustee.
"Opinion of Counsel" shall mean a written opinion of counsel, who may
be an employee of the Company, and who shall be acceptable to the Trustee.
"Optional Redemption Price" shall have the meaning set forth in
Section 14.02.
"Other Debentures" means all junior subordinated debentures issued by
the Company from time to time and sold to trusts to be established by the
Company (if any), in each case similar to the Trust.
"Other Guarantees" means all guarantees issued by the Company with
respect to capital securities (if any) and issued to other trusts established
by the Company (if any), in each case similar to the Trust.
The term "outstanding" when used with reference to Securities, shall, subject
to the provisions of Section 7.04, mean, as of any particular time, all
Securities authenticated and delivered by the Trustee or the Authenticating
Agent under this Indenture, except
(a) Securities theretofore cancelled by the Trustee or the
Authenticating Agent or delivered to the Trustee for cancellation;
(b) Securities, or portions thereof, for the payment or
redemption of which moneys in the necessary amount shall have been deposited
in trust with the Trustee or with any paying agent (other than the Company)
or shall have been set aside and segregated in trust by the Company (if the
Company shall act as its own paying agent); provided that, if such
Securities, or portions thereof, are to be redeemed prior to maturity
thereof, notice of such redemption shall have been given as provided in
Article XIV or provision satisfactory to the Trustee shall have been made for
giving such notice; and
(c) Securities in lieu of or in substitution for which other
Securities shall have been authenticated and delivered pursuant to the terms
of Section 2.08 unless proof satisfactory to the Company and the Trustee is
presented that any such Securities are held by bona fide holders in due
course.
"Person" shall mean any individual, corporation, estate, partnership,
joint venture, association, joint-stock company, limited liability company,
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 Section 2.08 in
lieu of a lost, destroyed or stolen Security shall be deemed to evidence the
same debt as the lost, destroyed or stolen Security.
"Principal Office of the Trustee", or other similar term, shall mean
the office of the Trustee, at which at any particular time its corporate
trust business shall be principally administered.
"Purchase Agreement" shall mean the Purchase Agreement dated June 5,
1997 among the Company, Puget Sound Energy Trust and the initial purchasers
named therein.
"Property Trustee" shall have the same meaning as set forth in the
Declaration.
"Puget Sound Energy Trust" shall mean Puget Sound Energy Capital
Trust I, a Delaware business trust created for the purpose of issuing its
undivided beneficial interests in connection with the issuance of Securities
under this Indenture.
"Quotation Agent" means the Reference Treasury Dealer appointed by
the Company.
"Redemption Price" means the Tax Event Redemption Price or the
Optional Redemption Price, as the context requires.
"Reference Treasury Dealer" means (i) Smith Barney Inc. and its respective
successors; provided, however, that if the foregoing shall cease to be a
primary U.S. Government securities dealer in New York City (a "Primary
Treasury Dealer"), the Company shall substitute therefor another Primary
Treasury Dealer, and (ii) any other Primary Treasury Dealer selected by the
Company.
"Reference Treasury Dealer Quotations" means, with respect to each
Reference Treasury Dealer and any date pursuant to Section 14.01, the
average, as determined by the Trustee, of the bid and asked prices for the
Comparable Treasury Issue (expressed in each case as a percentage of its
principal amount) quoted in writing to the Trustee by such Reference Treasury
Dealer at 5:00 p.m., New York City time on the third Business Day preceding
such redemption date.
"Registration Rights Agreement" means the Registration Rights
Agreement, dated as of the Issue Date, by and among the Company, the Puget
Sound Energy Trust and the Initial Purchasers named therein as such agreement
may be amended, modified or supplemented from time to time.
"Responsible Officer", when used with respect to the Trustee, shall
mean 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, the cashier, any assistant cashier, the secretary, any assistant
secretary, the treasurer, any assistant treasurer or senior trust officer,
any trust officer or assistant trust officer, the controller or any assistant
controller or any other officer or assistant 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 Security" shall mean Securities that bear or are required
to bear the Securities Act legends set forth in Exhibit A hereto.
"Rule 144A" means Rule 144A under the Securities Act, as such Rule may be
amended from time to time, or under any similar rule or regulation hereafter
adopted by the Commission.
"Securities" means, collectively, the Series A Securities and the
Series B Securities.
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Securityholder", "holder of Securities", or other similar terms,
shall mean any person in whose name at the time a particular Security is
registered on the register kept by the Company or the Trustee for that
purpose in accordance with the terms hereof.
"Security Register" shall mean (i) prior to a Dissolution Event, the
list of holders provided to the Trustee pursuant to Section 4.01, and
(ii) following a Dissolution Event, any security register maintained by a
security registrar for the Securities appointed by the Company following the
execution of a supplemental indenture providing for transfer procedures as
provided for in Section 2.07(a).
"Senior Indebtedness" shall mean, all Indebtedness for Money
Borrowed, whether outstanding on the date of execution of this Indenture or
thereafter created, assumed or incurred, unless the terms thereof
specifically provide that it is not superior in right of payment to the
Securities, and any deferrals, renewals or extensions thereof.
"Series A Securities" means the Company's 8.231% Series A Junior
Subordinated Deferrable Interest Debentures due June 1, 2027, as
authenticated and issued under this Indenture.
"Series B Securities" means the Company's Series B 8.231% Junior
Subordinated Deferrable Interest Debentures due June 1, 2027, as
authenticated and issued under this Indenture.
"Subsidiary" shall mean with respect to any Person, (i) any
corporation at least a majority of whose outstanding voting stock is owned,
directly or indirectly, by such Person or by one or more of its Subsidiaries,
or by such Person and one or more of its Subsidiaries, (ii) any general
partnership, joint venture or similar entity, at least a majority of whose
outstanding partnership or similar interests shall at the time be owned by
such Person, or by one or more of its Subsidiaries, or by such Person and one
or more of its Subsidiaries and (iii) any limited partnership of which such
Person or any of its Subsidiaries is a general partner. For the purposes of
this definition, "voting stock" means shares, interests, participations or
other equivalents in the equity interest (however designated) in such Person
having ordinary voting power for the election of a majority of the directors
(or the equivalent) of such Person, other than shares, interests,
participations or other equivalents having such power only by reason of the
occurrence of a contingency.
"Tax Event" shall mean the receipt by Puget Sound Energy Trust and the
Company of an opinion of counsel experienced in such matters to the effect
that, as a result of any amendment to, or change (including any announced
prospective change) in, the laws or any regulations thereunder of the United
States or any political subdivision or taxing authority thereof or therein or
any amendment to or change in an interpretation or application of such laws
or regulations by any legislative body, court, governmental agency or
regulatory agency, which amendment or change is effective or announced after
the Issue Date (including the enactment of any legislation and the
publication of any judicial decision or regulatory determination on or after
such date), there is more than an insubstantial risk that (i) the Puget Sound
Energy Trust would be subject to United States federal income tax with
respect to income received or accrued on the Securities (ii) interest payable
to the Puget Sound Energy Trust on the Securities would not be deductible by
the Company for United States federal income tax purposes or (iii) the Puget
Sound Energy Trust will be subject to more than a de minimis amount of other
taxes, duties or other governmental charges.
"Tax Event Redemption Price" shall mean, with respect to any
redemption of the Securities pursuant to Section 14.01 hereof, an amount in
cash equal to the greater of (i) 100% of the principal amount to be redeemed
or (ii) the sum, as determined by a Quotation Agent, of the present values of
the remaining scheduled payments of principal and interest on the Securities
to the Maturity Date, together with scheduled payments of interest on the
Securities from the redemption date to and including the Initial Optional
Redemption Date, discounted to the redemption date on a semi-annual basis
(assuming a 360-day year consisting of twelve 30-day months) at the Adjusted
Treasury Rate, plus, in each case, any accrued and unpaid interest thereon,
including Compounded Interest and Additional Interest, if any, to the date of
such redemption.
"Trustee" shall mean the Person identified as "Trustee" in the first
paragraph hereof, and, subject to the provisions of Article VI hereof, shall
also include its successors and assigns as Trustee hereunder. The term
"Trustee" as used with respect to a particular series of the Securities shall
mean the trustee with respect to that series.
"Trust Indenture Act of 1939" shall mean the Trust Indenture Act of
1939 as in force at the date of execution of this Indenture, except as
provided in Section 9.03.
"Trust Securities" shall mean the Capital Securities and the Common
Securities, collectively.
"U.S. Government Obligations" shall mean securities that are
(i) direct obligations of the United States of America for the payment of
which its full faith and credit is pledged or (ii) obligations of a Person
controlled or supervised by and acting as an agency or instrumentality of the
United States of America the payment of which is unconditionally guaranteed
as a full faith and credit obligation by the United States of America, which,
in either case under clauses (i) or (ii) are not callable or redeemable at
the option of the issuer thereof, and shall also include a depository receipt
issued by a bank or trust company as custodian with respect to any such U.S.
Government Obligation or a specific payment of interest on or principal of
any such U.S. Government Obligation held by such custodian for the account of
the holder of a depository receipt, provided that (except as required by law)
such custodian is not authorized to make any deduction from the amount
payable to the holder of such depository receipt from any amount received by
the custodian in respect of the U.S. Government Obligation or the specific
payment of interest on or principal of the U.S. Government Obligation
evidenced by such depository receipt.
ARTICLE II
SECURITIES
2.01. Forms Generally
The Securities and the Trustee's certificate of authentication shall
be substantially in the form of Exhibit A, the terms of which are
incorporated in and 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 or usage. Each Security shall be
dated the date of its authentication. The Securities shall be issued in
denominations of $1,000 and integral multiples thereof.
2.02. Execution and Authentication
Two Officers shall sign the Securities for the Company by manual or
facsimile signature in the manner set forth in Exhibit A. If an Officer
whose signature is on a Security no longer holds that office at the time the
Security is authenticated, the Security shall nevertheless be valid.
A Security shall not be valid until authenticated by the manual
signature of an authorized officer of the Trustee. The signature of the
Trustee shall be conclusive evidence that the Security has been authenticated
under this Indenture. The form of Trustee's certificate of authentication to
be borne by the Securities shall be substantially as set forth in Exhibit A
hereto.
The Trustee shall, upon a Company Order, authenticate for original
issue up to, and the aggregate principal amount of Securities outstanding at
any time may not exceed the sum of $103,093,000 principal amount of the
Securities, except as provided in Sections 2.07, 2.08, 2.09 and 14.05. The
series of Securities to be initially issued hereunder shall be the Series A
Securities.
2.03. Form and Payment
Except as provided in Section 2.05, the Securities shall be issued in
fully registered certificated form without interest coupons. Principal of,
premium, if any, and interest on the Securities issued in certificated form
will be payable, the transfer of such Securities will be registrable and such
Securities will be exchangeable for Securities bearing identical terms and
provisions at the office or agency of the Company maintained for such purpose
under Section 3.02; provided, however, that payment of interest with respect
to the Securities may be made at the option of the Company (i) by check
mailed to the holder at such address as shall appear in the Security Register
or (ii) by transfer to an account maintained by the Person entitled thereto,
provided that proper transfer instructions have been received in writing by
the relevant record date. Notwithstanding the foregoing, so long as the
holder of any Securities is the Property Trustee, the payment of the
principal of, premium, if any, and interest (including Compounded Interest
and Additional Interest, if any) on such Securities held by the Property
Trustee will be made at such place and to such account as may be designated
by the Property Trustee.
2.04. Legends
(a) Except as permitted by subsection (b) of this Section 2.04 or as
otherwise determined by the Company in accordance with applicable law, each
Security shall bear the applicable legends relating to restrictions on
transfer pursuant to the securities laws in substantially the form set forth
on Exhibit A hereto.
(b) The Company shall issue and the Trustee shall authenticate
Series B Securities in exchange for Series A Securities accepted for exchange
in the Exchange Offer, which Series B Securities shall not bear the legends
required by subsection (a) above, in each case unless the holder of such
Series A Securities is either (A) a broker-dealer who purchased such Series A
Securities directly from the Company for resale pursuant to Rule 144A or any
other available exemption under the Securities Act, (B) a Person
participating in the distribution of the Series A Securities or (C) a Person
who is an affiliate (as defined in Rule 144 under the Securities Act) of the
Company.
2.05. Global Security
(a) In connection with a Dissolution Event,
(i) if any Capital Securities are held in book-entry form, the
related Definitive Securities shall be presented to the Trustee (if an
arrangement with the Depositary has been maintained) by the Property Trustee
in exchange for one or more Global Securities (as may be required pursuant to
Section 2.07) in an aggregate principal amount equal to the aggregate
principal amount of all outstanding Securities, 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 Administrative Trustees; the Company upon any such
presentation shall execute one or more Global Securities in such aggregate
principal amount and deliver the same to the Trustee for authentication and
delivery in accordance with this Indenture; and payments on the Securities
issued as a Global Security will be made to the Depositary; and
(ii) if any Capital Securities are held in certificated form,
the related Definitive Securities may be presented to the Trustee by the
Property Trustee and any Capital Security certificate which represents
Capital Securities other than Capital Securities in book-entry form ("Non
Book-Entry Capital 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 Capital Securities until such Capital Security
certificates are presented to the Security registrar for transfer or
reissuance, at which time such Capital Security certificates will be
cancelled and a Security, registered in the name of the holder of the Capital
Security certificate or the transferee of the holder of such Capital Security
certificate, as the case may be, with an aggregate principal amount equal to
the aggregate liquidation amount of the Capital Security certificate
cancelled, will be executed by the Company and delivered to the Trustee for
authentication and delivery in accordance with the Indenture. Upon the
issuance 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) The Global Securities shall represent the aggregate amount of
outstanding Securities from time to time endorsed thereon; provided, that the
aggregate amount of outstanding Securities represented thereby may from time
to time be reduced or increased, as appropriate, to reflect exchanges and
redemptions. Any endorsement of a Global Security to reflect the amount of
any increase or decrease in the amount of outstanding Securities represented
thereby shall be made by the Trustee, in accordance with instructions given
by the Company as required by this Section 2.05.
(c) The Global Securities may be transferred, in whole but not in
part, only to the Depositary, another nominee of the Depositary, or to a
successor Depositary selected or approved by the Company or to a nominee of
such successor Depositary.
(d) If at any time the Depositary notifies the Company that it is
unwilling or unable to continue as Depositary or the Depositary has ceased to
be a clearing agency registered under the Exchange Act, and a successor
Depositary 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 the Trustee, upon written notice from the
Company, will authenticate and make available for delivery the Definitive
Securities, in authorized denominations, and in an aggregate principal amount
equal to the principal amount of the Global Security in exchange for such
Global Security. If there is an Event of Default, the Depositary shall have
the right to exchange the Global Securities for Definitive Securities. In
addition, the Company may at any time determine that the Securities shall no
longer be represented by a Global Security. In the event of such an Event of
Default or such a determination, the Company shall execute, and subject to
Section 2.07, the Trustee, upon receipt of an Officers' Certificate
evidencing such determination by the Company, will authenticate and make
available for delivery the Definitive Securities, 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 Definitive Securities, in
authorized denominations, the Global Security shall be cancelled by the
Trustee. Such Definitive Securities 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 Trustee. The Trustee
shall deliver such Definitive Securities to the Depositary for delivery to
the Persons in whose names such Definitive Securities are so registered.
2.06. Interest
(a) Each Security will bear interest at the rate of 8.231% per annum
from the most recent date to which interest has been paid or duly provided
for or, if no interest has been paid or duly provided for, from the Issue
Date, until the principal thereof becomes due and payable, and at the rate of
8.231% per annum on any overdue principal (and premium, if any) and (to the
extent that payment of such interest is enforceable under applicable law) on
any overdue installment of interest, compounded semi-annually, payable
(subject to the provisions of Article XVI) semi-annually in arrears on June 1
and December 1 of each year (each, an "Interest Payment Date") commencing on
December 1, 1997, to the Person in whose name such Security or any
predecessor Security is registered, at the close of business on the regular
record date for such interest installment, which shall be the fifteenth day
of the month immediately preceding the month in which the relevant Interest
Payment Date occurs.
(b) Interest will be computed on the basis of a 360-day year
consisting of twelve 30-day months and, for any period of less than a full
calendar month, the number of days lapsed in such month. In the event that
any Interest Payment Date falls on a day that 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), with the same force and effect as if made on such
date.
(c) During such time as the Property Trustee is the holder of any
Securities, the Company shall pay any additional amounts on the Securities as
may be necessary in order that the amount of Distributions then due and
payable by the Puget Sound Energy Trust on the outstanding Capital Securities
shall not be reduced as a result of any additional taxes, duties and other
governmental charges to which the Puget Sound Energy Trust has become subject
as a result of a Tax Event ("Additional Interest").
(d) Notwithstanding Section 2.06(c) above, neither the Company nor
the Trust will be responsible for, nor will the Company or the Trust be
required to compensate holders of or investors in the Capital Securities (or
Securities that may be distributed by the Trust) for, any withholding taxes
that are imposed on interest payments on the Securities or on distributions
with respect to the Capital Securities.
2.07. Transfer and Exchange
(a) Transfer Restrictions. The Series A Securities, and those
Series B Securities with respect to which any Person described in
Section 2.04(b)(A), (B) or (C) is the beneficial owner, may not be
transferred except in compliance with the legend contained in Exhibit A
unless otherwise determined by the Company in accordance with applicable law.
Upon any distribution of the Securities following a Dissolution Event, the
Company and the Trustee shall enter into a supplemental indenture pursuant to
Section 9.01 to provide for the transfer restrictions and procedures with
respect to the Securities substantially similar to those contained in the
Declaration to the extent applicable in the circumstances existing at such
time.
(b) General Provisions Relating to Transfers and Exchanges. Upon
surrender for registration of transfer of any Security at the office or
agency of the Company maintained for the purpose pursuant to Section 3.02,
the Company shall execute, and the Trustee shall authenticate and deliver, in
the name of the designated transferee or transferees, one or more new
Securities of the same series, of any authorized denominations and of a like
aggregate principal amount.
At the option of the holder, Securities of any series may be
exchanged for other Securities of the same series, of any authorized
denominations and of a like aggregate principal amount, upon surrender of the
Securities to be exchanged at such office or agency. Whenever any Securities
are so surrendered for exchange, the Company shall execute, and the Trustee
shall authenticate and deliver, the Securities which the holder making the
exchange is entitled to receive.
Every Security presented or surrendered for registration of transfer
or 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.
All Definitive Securities and Global Securities issued upon any
registration of transfer or exchange of Definitive Securities or Global
Securities shall be the valid obligations of the Company, evidencing the same
debt, and entitled to the same benefits under this Indenture, as the
Definitive Securities or Global Securities surrendered upon such registration
of transfer or exchange.
No service charge shall be made to a holder for any registration of
transfer or exchange, but the Company may require payment of a sum sufficient
to cover any transfer tax or similar governmental charge payable in
connection therewith.
The Company shall not be required to (i) issue, register the transfer
of or exchange Securities during a period beginning at the opening of
business 15 days before the day of mailing of a notice of redemption or any
notice of selection of Securities for redemption under Article XIV hereof and
ending at the close of business on the day of such mailing; or (ii) 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.
(c) Exchange of Series A Securities for Series B Securities. The
Series A Securities may be exchanged for Series B Securities pursuant to the
terms of the Exchange Offer. The Trustee shall make the exchange as follows:
The Company shall present the Trustee with an Officers' Certificate
certifying the following:
(A) upon issuance of the Series B Securities, the transactions
contemplated by the Exchange Offer have been consummated; and
(B) the principal amount of Series A Securities properly
tendered in the Exchange Offer that are represented by a Global Security and
the principal amount of Series A Securities properly tendered in the Exchange
Offer that are represented by Definitive Securities, the name of each holder
of such Definitive Securities, the principal amount properly tendered in the
Exchange Offer by each such holder and the name and address to which
Definitive Securities for Series B Securities shall be registered and sent
for each such holder.
The Trustee, upon receipt of (i) such Officers' Certificate, (ii) an
Opinion of Counsel (x) to the effect that the Series B Securities have been
registered under Section 5 of the Securities Act and the Indenture has been
qualified under the Trust Indenture Act and (y) with respect to the matters
set forth in Section 3(p) of the Registration Rights Agreement and (iii) a
Company Order, shall authenticate (A) a Global Security for Series B
Securities in aggregate principal amount equal to the aggregate principal
amount of Series A Securities represented by a Global Security indicated in
such Officers' Certificate as having been properly tendered and
(B) Definitive Securities representing Series B Securities registered in the
names of, and in the principal amounts indicated in, such Officers'
Certificate.
If the principal amount of the Global Security for the Series B
Securities is less than the principal amount of the Global Security for the
Series A Securities, the Trustee shall make an endorsement on such Global
Security for Series A Securities indicating a reduction in the principal
amount represented thereby.
The Trustee shall deliver such Definitive Securities for Series B
Securities to the holders thereof as indicated in such Officers' Certificate.
2.08. Replacement Securities
If any mutilated Security is surrendered to the Trustee, or the
Company and the Trustee receive evidence to their satisfaction of the
destruction, loss or theft of any Security, the Company shall issue and the
Trustee shall authenticate a replacement Security if the Trustee's
requirements for replacements of Securities are met. An indemnity bond must
be supplied by the holder that is sufficient in the judgment of the Trustee
and the Company to protect the Company, the Trustee, any agent thereof or any
authenticating agent from any loss that any of them may suffer if a Security
is replaced. The Company or the Trustee may charge for its expenses in
replacing a Security.
Every replacement Security is an obligation of the Company and shall
be entitled to all of the benefits of this Indenture equally and
proportionately with all other Securities duly issued hereunder.
2.09. Temporary Securities
Pending the preparation of Definitive Securities, the Company may
execute, and upon Company Order the Trustee shall authenticate and make
available for delivery, temporary Securities that are printed, lithographed,
typewritten, mimeographed or otherwise reproduced, 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 officers executing such Securities
may determine, as conclusively evidenced by their execution of such
Securities.
If temporary Securities are issued, the Company shall cause
Definitive Securities to be prepared without unreasonable delay. The
Definitive Securities shall be printed, lithographed or engraved, or provided
by any combination thereof, or in any other manner permitted by the rules and
regulations of any applicable securities exchange, all as determined by the
officers executing such Definitive Securities. After the preparation of
Definitive Securities, the temporary Securities shall be exchangeable for
Definitive Securities upon surrender of the temporary Securities at the
office or agency maintained by the Company for such purpose pursuant to
Section 3.02 hereof, 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 the same aggregate 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.
2.10. Cancellation
The Company at any time may deliver Securities to the Trustee for
cancellation. The Trustee and no one else shall cancel all Securities
surrendered for registration of transfer, exchange, payment, replacement or
cancellation and shall retain or dispose of cancelled Securities in
accordance with its normal practices (subject to the record retention
requirement of the Exchange Act) unless the Company directs them to be
returned to it. The Company may not issue new Securities to replace
Securities that have been redeemed or paid or that have been delivered to the
Trustee for cancellation.
2.11. Defaulted Interest
Any interest on any Security that 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 shall be paid by the Company, at its election, as
provided in clause (a) or clause (b) below:
(a) The Company may make payment of any Defaulted Interest on
Securities to the Persons in whose names such Securities (or their respective
Predecessor Securities) are registered at the close of business on a special
record date for the payment of such Defaulted Interest, which shall be fixed
in the following manner: the Company shall notify the Trustee in writing of
the amount of Defaulted Interest proposed to be paid on each such 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 Defaulted Interest as in this
clause provided. Thereupon the Trustee shall fix a special record date for
the payment of such Defaulted Interest which shall not be more than 15 nor
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
Securityholder at his or her 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 mailed as aforesaid, such Defaulted Interest shall be
paid to the Persons in whose names such Securities (or their respective
Predecessor Securities) are registered on such special record date and shall
be no longer payable pursuant to the following clause (b).
(b) The Company may make payment of any Defaulted Interest on any
Securities in any other lawful manner not inconsistent with the requirements
of any securities exchange on which such Securities may be listed, and 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.
2.12. 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 Securityholders; 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. The
Company will promptly notify the Trustee of any change in the CUSIP numbers.
ARTICLE III
PARTICULAR COVENANTS OF THE COMPANY
3.01. Payment of Principal, Premium and Interest
The Company covenants and agrees for the benefit of the holders of
the Securities that it will duly and punctually pay or cause to be paid the
principal of and premium, if any, and interest on the Securities at the
place, at the respective times and in the manner provided herein. Except as
provided in Section 2.03, each installment of interest on the Securities may
be paid by mailing checks for such interest payable to the order of the
holders of the Securities entitled thereto as they appear in the Security
Register. The Company further covenants to pay any and all amounts
including, without limitation, Liquidated Damages, if any, on the dates and
in the manner required under the Registration Rights Agreement.
3.02. Offices for Notices and Payments, etc.
So long as any of the Securities remain outstanding, the Company will
maintain in the Borough of Manhattan, The City of New York, an office or
agency where the Securities may be presented for payment, an office or agency
where the Securities may be presented for registration of transfer and for
exchange as in this Indenture provided and an office or agency where notices
and demands to or upon the Company in respect of the Securities or of this
Indenture may be served. The Company will give to the Trustee written notice
of the location of any such office or agency and of any change of location
thereof. Until otherwise designated from time to time by the Company in a
notice to the Trustee, any such office or agency for all of the above
purposes shall be the Principal Office of the Trustee. In case the Company
shall fail to maintain any such office or agency in the Borough of Manhattan,
The City of New York, or shall fail to give such notice of the location or of
any change in the location thereof, presentations and demands may be made and
notices may be served at the Principal Office of the Trustee.
In addition to any such office or agency, the Company may from time to time
designate one or more offices or agencies outside the Borough of Manhattan,
The City of New York, where the Securities may be presented for payment,
registration of transfer and for exchange in the manner provided in this
Indenture, and the Company may from time to time rescind such designation, as
the Company may deem desirable or expedient; provided, however, that no such
designation or rescission shall in any manner relieve the Company of its
obligation to maintain any such office or agency in the Borough of Manhattan,
The City of New York, for the purposes above mentioned. The Company will
give to the Trustee prompt written notice of any such designation or
rescission thereof.
3.03. Appointments to Fill Vacancies in Trustee's Office
The Company, whenever necessary to avoid or fill a vacancy in the
office of Trustee, will appoint, in the manner provided in Section 6.10, a
Trustee, so that there shall at all times be a Trustee hereunder.
3.04. Provision as to Paying Agent
(a) If the Company shall appoint a paying agent other than the
Trustee with respect to the Securities, it will cause such paying agent to
execute and deliver to the Trustee an instrument in which such agent shall
agree with the Trustee, subject to the provision of this Section 3.04,
(1) that it will hold all sums held by it as such agent for the
payment of the principal of and premium, if any, or interest on the
Securities (whether such sums have been paid to it by the Company or by any
other obligor on the Securities of such series) in trust for the benefit of
the holders of the Securities;
(2) that it will give the Trustee notice of any failure by the
Company (or by any other obligor on the Securities) to make any payment of
the principal of and premium or interest on the Securities when the same
shall be due and payable; and
(3) that it will at any time during the continuance of any such
failure, upon the written request of the Trustee, forthwith pay to the
Trustee all sums so held in trust by it as such paying agent.
(b) If the Company shall act as its own paying agent, it will, on or before
each due date of the principal of and premium, if any, or interest on the
Securities, set aside, segregate and hold in trust for the benefit of the
holders of the Securities a sum sufficient to pay such principal, premium or
interest so becoming due and will notify the Trustee of any failure to take
such action and of any failure by the Company (or by any other obligor under
the Securities) to make any payment of the principal of and premium, if any,
or interest on the Securities when the same shall become due and payable.
(c) Anything in this Section 3.04 to the contrary notwithstanding,
the Company may, at any time, for the purpose of obtaining a satisfaction and
discharge with respect to the Securities hereunder, or for any other reason,
pay or cause to be paid to the Trustee all sums held in trust for any such
series by the Trustee or any paying agent hereunder, as required by this
Section 3.04, such sums to be held by the Trustee upon the trusts herein
contained.
(d) Anything in this Section 3.04 to the contrary notwithstanding,
the agreement to hold sums in trust as provided in this Section 3.04 is
subject to Sections 11.03 and 11.04.
3.05. Certificate to Trustee
The Company will deliver to the Trustee on or before 120 days after
the end of each fiscal year, commencing with the first fiscal year ending
after the date hereof, so long as Securities are outstanding hereunder, an
Officers' Certificate, one of the signers of which shall be the principal
executive, principal financial or principal accounting officer of the Company
stating that in the course of the performance by the signers of their duties
as officers of the Company they would normally have knowledge of any default
by the Company in the performance of any covenants contained herein, stating
whether or not they have knowledge of any such default and, if so, specifying
each such default of which the signers have knowledge and the nature thereof.
3.06. Compliance with Consolidation Provisions
The Company will not, while any of the Securities remain
outstanding, consolidate with, or merge into, or merge into itself, or sell
or convey all or substantially all of its property to any other Person
unless the provisions of Article X hereof are complied with.
3.07. Limitation on Dividends
The Company will not (i) declare or pay any dividends or
distributions on, or redeem, purchase, acquire, or make a liquidation payment
with respect to, any of the Company's capital stock (which includes common
and preferred stock) or (ii) make any payment of principal, interest or
premium, if any, on or repay or repurchase or redeem any debt securities of
the Company (including any Other Debentures) that rank pari passu with or
junior in right of payment to the Securities or (iii) make any guarantee
payments with respect to any guarantee by the Company of any securities of
any Subsidiary of the Company (including any Other Guarantees) if such
guarantee ranks pari passu or junior in right of payment to the Securities
(other than (a) dividends or distributions in shares of, or options, warrants
or rights to subscribe for or purchase shares of, Common Stock of the
Company; (b) any declaration of a dividend in connection with the
implementation of a shareholder's rights plan, or the issuance of stock under
any such plan in the future, or the redemption or repurchase of any such
rights pursuant thereto; (c) payments under the Capital Securities Guarantee;
(d) as a direct result of, and only to the extent required in order to avoid
the issuance of fractional shares of capital stock, following a
reclassification of the Company's capital stock or the exchange or conversion
of one class or series of the Company's capital stock for another class or
series of the Company's capital stock; and (e) the purchase of fractional
interests in shares of the Company's capital stock pursuant to the conversion
or exchange provisions of such capital stock or the security being converted
or exchanged) if at such time (i) an Event of Default shall have occurred and
be continuing, (ii) there shall have occurred any event of which the Company
has actual knowledge that (a) is, or with the giving of notice or the lapse
of time, or both, would constitute an Event of Default and (b) in respect of
which the Company shall not have taken reasonable steps to cure, (iii) the
Company shall be in default with respect to its payment obligations under the
Capital Securities Guarantee or (iv) the Company shall have given notice of
its election of the exercise of its right to extend the interest payment
period, or any extension thereof, pursuant to Section 16.01 and shall not
have rescinded such notice, and such exercise of its right to extend the
interest payment period, or any extension thereof, shall have commenced.
3.08. Covenants as to Puget Sound Energy Trust
In the event Securities are issued to Puget Sound Energy Trust or a
trustee of such trust in connection with the issuance of Trust Securities by
Puget Sound Energy Trust, for so long as such Trust Securities remain
outstanding, the Company will (i) maintain 100% direct ownership of the
Common Securities of Puget Sound Energy Trust; provided, however, that any
successor of the Company, permitted pursuant to Article X, may succeed to the
Company's ownership of such Common Securities, (ii) not cause, as sponsor of
Puget Sound Energy Trust or permit, as a holder of Common Securities, the
dissolution, winding up or termination of the Trust, except in connection
with a distribution of the Securities to holders of Trust Securities, as
provided in the Declaration; (iii) use its reasonable efforts to cause Puget
Sound Energy Trust (a) to remain a business trust, except in connection with
a distribution of Securities, the redemption of all of the Trust Securities
or certain mergers, consolidations or amalgamations, each as permitted by the
Declaration and (b) to otherwise continue to be treated as a grantor trust
and not an association taxable as a corporation for United States federal
income tax purposes and (iv) use its reasonable efforts to cause each holder
of Trust Securities to be treated as owning an undivided beneficial interest
in the Securities.
3.09. Payment of Expenses
In connection with the offering, sale and issuance of the Securities
to the Puget Sound Energy Trust and in connection with the sale of the Trust
Securities by the Puget Sound Energy Trust, the Company, in its capacity as
borrower with respect to the Securities, shall:
(a) pay all costs and expenses relating to the offering, sale and
issuance of the Securities, including commissions to the initial purchasers
payable pursuant to the Purchase Agreement, fees and expenses in connection
with any exchange offer or other action to be taken pursuant to the
Registration Rights Agreement and compensation of the Trustee in accordance
with the provisions of Section 6.06;
(b) pay all costs and expenses of the Puget Sound Energy Trust
(including, but not limited to, costs and expenses relating to the
organization of the Puget Sound Energy Trust, the offering, sale and issuance
of the Trust Securities (including commissions to the initial purchasers
payable pursuant to the Purchase Agreement), the fees and expenses of the
Property Trustee and the Delaware Trustee, the costs and expenses relating to
the operation of the Puget Sound Energy Trust, including without limitation,
costs and expenses of accountants, attorneys, statistical or bookkeeping
services, expenses for printing and engraving and computing or accounting
equipment, paying agent(s), registrar(s), transfer agent(s), duplicating,
travel and telephone and other telecommunications expenses and costs and
expenses incurred in connection with the acquisition, financing, and
disposition of assets of the Puget Sound Energy Trust;
(c) be primarily and fully liable for any indemnification obligations
arising with respect to the Declaration;
(d) pay any and all taxes (other than United States withholding taxes
attributable to the Puget Sound Energy Trust or its assets) and all
liabilities, costs and expenses with respect to such taxes of the Puget Sound
Energy Trust; and
(e) pay all other fees, expenses, debts and obligations (other than
payments of principal of, premium, if any, or interest on the Trust
Securities) related to the Puget Sound Energy Trust.
3.10. Payment Upon Resignation or Removal
Upon termination of this Indenture or the removal or resignation of
the Trustee, unless otherwise stated, the Company shall pay to the Trustee
all amounts accrued and owing to the date of such termination, removal or
resignation. Upon termination of the Declaration or the removal or
resignation of the Delaware Trustee or the Property Trustee, as the case may
be, pursuant to Section 5.7 of the Declaration, the Company shall pay to the
Delaware Trustee or the Property Trustee, as the case may be, all amounts
accrued and owing to the date of such termination, removal or resignation.
ARTICLE IV
SECURITYHOLDERS' LISTS AND REPORTS BY THE COMPANY AND THE TRUSTEE
4.01. Securityholders' Lists
The Company covenants and agrees that it will furnish or cause to be
furnished to the Trustee:
(a) on a semi-annual basis on each regular record date for the
Securities, a list, in such form as the Trustee may reasonably require, of
the names and addresses of the Securityholders as of such record date; 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 with respect to the Securityholders as of a date
not more than 15 days prior to the time such list is furnished,
except that, no such lists need be furnished so long as the Trustee is in
possession thereof by reason of its acting as Security registrar.
4.02. Preservation and Disclosure of Lists
(a) The Trustee shall preserve, in as current a form as is
reasonably practicable, all information as to the names and addresses of the
holders of the Securities (1) contained in the most recent list furnished to
it as provided in Section 4.01 or (2) received by it in the capacity of
Securities registrar (if so acting) hereunder. The Trustee may destroy any
list furnished to it as provided in Section 4.01 upon receipt of a new list
so furnished.
(b) In case three or more holders of Securities (hereinafter
referred to as "applicants") apply in writing to the Trustee and furnish to
the Trustee reasonable proof that each such applicant has owned a Security
for a period of at least six months preceding the date of such application,
and such application states that the applicants desire to communicate with
other holders of Securities or with holders of all Securities with respect
to their rights under this Indenture and is accompanied by a copy of the
form of proxy or other communication which such applicants propose to
transmit, then the Trustee shall within 5 Business Days after the receipt of
such application, at its election, either:
(1) afford such applicants access to the information preserved
at the time by the Trustee in accordance with the provisions of
subsection (a) of this Section 4.02, or
(2) inform such applicants as to the approximate number of
holders of all Securities, whose names and addresses appear in the
information preserved at the time by the Trustee in accordance with the
provisions of subsection (a) of this Section 4.02, and as to the approximate
cost of mailing to such Securityholders the form of proxy or other
communication, if any, specified in such application.
If the Trustee shall elect not to afford such applicants access to
such information, the Trustee shall, upon the written request of such
applicants, mail to each Securityholder whose name and address appear in the
information preserved at the time by the Trustee in accordance with the
provisions of subsection (a) of this Section 4.02 a copy of the form of
proxy or other communication which is specified in such request with
reasonable promptness after a tender to the Trustee of the material to be
mailed and of payment, or provision for the payment, of the reasonable
expenses of mailing, unless within five days after such tender, the Trustee
shall mail to such applicants and file with the Commission, together with a
copy of the material to be mailed, a written statement to the effect that,
in the opinion of the Trustee, such mailing would be contrary to the best
interests of the holders of Securities of such series or all Securities, as
the case may be, or would be in violation of applicable law. Such written
statement shall specify the basis of such opinion. If the Commission, after
opportunity for a hearing upon the objections specified in the written
statement so filed, shall enter an order refusing to sustain any of such
objections or if, after the entry of an order sustaining one or more of such
objections, the Commission shall find, after notice and opportunity for
hearing, that all the objections so sustained have been met and shall enter
an order so declaring, the Trustee shall mail copies of such material to all
such Securityholders with reasonable promptness after the entry of such
order and the renewal of such tender; otherwise the Trustee shall be
relieved of any obligation or duty to such applicants respecting their
application.
(c) Each and 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 paying agent shall be held accountable by reason of
the disclosure of any such information as to the names and addresses of the
holders of Securities in accordance with the provisions of subsection (b) of
this Section 4.02, regardless of the source from which such information was
derived, and that the Trustee shall not be held accountable by reason of
mailing any material pursuant to a request made under said subsection (b).
4.03. Reports by Company
(a) The Company covenants and agrees to file with the Trustee,
within 15 days after the date on which the Company is required to file the
same with the Commission, copies of the annual reports and of the
information, documents and other reports (or copies of such portions of any
of the foregoing as said Commission may from time to time by rules and
regulations prescribe) which the Company may be required to file with the
Commission pursuant to Section 13 or Section 15(d) of the Exchange Act; or,
if the Company is not required to file information, documents or reports
pursuant to either of such sections, then to file with the Trustee and the
Commission, in accordance with rules and regulations prescribed from time to
time by the Commission, such of the supplementary and periodic information,
documents and reports which may be required pursuant to Section 13 of the
Exchange Act in respect of a security listed and registered on a national
securities exchange as may be prescribed from time to time in such rules and
regulations.
(b) The Company covenants and agrees to file with the Trustee and
the Commission, in accordance with the rules and regulations prescribed from
time to time by said Commission, such additional information, documents and
reports with respect to compliance by the Company with the conditions and
covenants provided for in this Indenture as may be required from time to
time by such rules and regulations.
(c) The Company covenants and agrees to transmit by mail to all
holders of Securities, as the names and addresses of such holders appear
upon the Security Register, within 30 days after the filing thereof with the
Trustee, such summaries of any information, documents and reports required
to be filed by the Company pursuant to subsections (a) and (b) of this
Section 4.03 as may be required by rules and regulations prescribed from
time to time by the Commission.
(d) 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).
(e) So long as is required for an offer or sale of the Securities
to qualify for an exemption under Rule 144A under the Securities Act, the
Company shall, upon request, provide the information required by clause
(d)(4) thereunder to each Holder and to each beneficial owner and
prospective purchaser of Securities identified by any holder of Restricted
Securities, unless such information is furnished to the Commission pursuant
to Section 13 or 15(d) of the Exchange Act.
4.04. Reports by the Trustee
(a) The Trustee shall transmit to Securityholders such reports
concerning the Trustee and its actions under this Indenture as may be
required pursuant to the Trust Indenture Act at the times and in the manner
provided pursuant thereto. If required by Section 313(a) of the Trust
Indenture Act, the Trustee shall, within 60 days after each December 31
following the date of this Indenture, commencing December 31, 1997, deliver
to Securityholders a brief report which complies with the provisions of such
Section 313(a).
(b) A copy of each such report shall, at the time of such
transmission to Securityholders, be filed by the Trustee with each stock
exchange, if any, upon which the Securities are listed, with the Commission
and with the Company. The Company will promptly notify the Trustee when the
Securities are listed on any stock exchange.
ARTICLE V
REMEDIES OF THE TRUSTEE AND SECURITYHOLDERS ON EVENT OF DEFAULT
5.01. Events of Default
One or more of the following events of default shall constitute an
Event of Default hereunder (whatever the reason for such Event of Default
and whether it shall be voluntary or be effected by operation of law or
pursuant to any judgment, decree or order of any court or any order, rule or
regulation of any administrative or governmental body):
(a) default in the payment of any interest upon any Security or any Other
Debentures when it becomes due and payable, and continuance of such default
for a period of 30 days; provided, however, that a valid extension of an
interest payment period by the Company in accordance with the terms hereof
shall not constitute a default in the payment of interest for this purpose;
or
(b) default in the payment of all or any part of the principal of
(or premium, if any, on) any Security or any Other Debentures as and when
the same shall become due and payable either at maturity, upon redemption,
by declaration or otherwise; or
(c) default in the performance, or breach, of any covenant or
warranty of the Company in this Indenture (other than a covenant or warranty
a default in whose performance or whose breach is elsewhere in this
Section specifically dealt with), and continuance of such default or breach
for a period of 90 days after there has been given, by registered or
certified mail, to the Company by the Trustee or to the Company and the
Trustee by the holders of at least 25% in aggregate 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
(d) a court having jurisdiction in the premises shall enter a
decree or order for relief in respect of the Company in an involuntary case
under any applicable bankruptcy, insolvency or other similar law now or
hereafter in effect, or appointing a receiver, liquidator, assignee,
custodian, trustee, sequestrator (or similar official) of the Company or for
any substantial part of its property, or ordering the winding-up or
liquidation of its affairs and such decree or order shall remain unstayed
and in effect for a period of 90 consecutive days; or
(e) the Company shall commence a voluntary case under any
applicable bankruptcy, insolvency or other similar law now or hereafter in
effect, shall consent to the entry of an order for relief in an involuntary
case under any such law, or shall consent to the appointment of or taking
possession by a receiver, liquidator, assignee, trustee, custodian,
sequestrator (or other similar official) of the Company or of any
substantial part of its property, or shall make any general assignment for
the benefit of creditors, or shall fail generally to pay its debts as they
become due.
If an Event of Default with respect to Securities at the time
outstanding occurs and is continuing, then in every such case the Trustee or
the holders of not less than 25% in aggregate principal amount of the
Securities then outstanding may declare the principal amount of all
Securities to be due and payable immediately, by a notice in writing to the
Company (and to the Trustee if given by the holders of the outstanding
Securities), and upon any such declaration the same shall become immediately
due and payable.
The foregoing provisions, however, are subject to the condition that
if, at any time after the principal of the Securities shall have been so
declared due and payable, and before any judgment or decree for the payment
of the moneys due shall have been obtained or entered as hereinafter
provided, (i) the Company shall pay or shall deposit with the Trustee a sum
sufficient to pay (A) all matured installments of interest upon all the
Securities and the principal of and premium, if any, on any and all
Securities which shall have become due otherwise than by acceleration (with
interest upon such principal and premium, if any, and, to the extent that
payment of such interest is enforceable under applicable law, on overdue
installments of interest, at the same rate as the rate of interest specified
in the Securities to the date of such payment or deposit) and (B) such
amount as shall be sufficient to cover reasonable compensation to the
Trustee and each predecessor Trustee, their respective agents, attorneys and
counsel, and all other expenses and liabilities incurred, and all advances
made, by the Trustee and each predecessor Trustee except as a result of
negligence or bad faith, and (ii) any and all Events of Default under the
Indenture, other than the non-payment of the principal of the Securities
which shall have become due solely by such declaration of acceleration,
shall have been cured, waived or otherwise remedied as provided herein,
then, in every such case, the holders of a majority in aggregate principal
amount of the Securities then outstanding, by written notice to the Company
and to the Trustee, may rescind and annul such declaration and its
consequences, but no such waiver or rescission and annulment shall extend to
or shall affect any subsequent default or shall impair any right consequent
thereon.
In case the Trustee shall have proceeded to enforce any right under
this Indenture and such proceedings shall have been discontinued or
abandoned because of such rescission or annulment or for any other reason or
shall have been determined adversely to the Trustee, then and in every such
case the Company, the Trustee and the holders of the Securities shall be
restored respectively to their several positions and rights hereunder, and
all rights, remedies and powers of the Company, the Trustee and the holders
of the Securities shall continue as though no such proceeding had been
taken.
5.02. Payment of Securities on Default; Suit Therefor
The Company covenants that (a) in case default shall be made in the
payment of any installment of interest upon any of the Securities as and
when the same shall become due and payable, and such default shall have
continued for a period of 30 days, or (b) in case default shall be made in
the payment of the principal of or premium, if any, on any of the Securities
as and when the same shall have become due and payable, whether at maturity
of the Securities or upon redemption or by declaration or otherwise, then,
upon demand of the Trustee, the Company will pay to the Trustee, for the
benefit of the holders of the Securities, the whole amount that then shall
have become due and payable on all such Securities for principal and
premium, if any, or interest, or both, as the case may be, with interest
upon the overdue principal and premium, if any, and (to the extent that
payment of such interest is enforceable under applicable law and, if the
Securities are held by Puget Sound Energy Trust or a trustee of such trust,
without duplication of any other amounts paid by Puget Sound Energy Trust or
a trustee in respect thereof) upon the overdue installments of 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 a reasonable compensation to the Trustee, its agents, attorneys
and counsel, and any expenses or liabilities incurred by the Trustee
hereunder other than through its negligence or bad faith.
In case the Company shall fail forthwith to pay such amounts upon
such demand, the Trustee, in its own name and as trustee of an express
trust, shall be entitled and empowered to institute any actions or
proceedings at law or in equity for the collection of the sums so due and
unpaid, and may prosecute any such action or proceeding to judgment or final
decree, and may enforce any such judgment or final decree against the
Company or any other obligor on the Securities and collect in the manner
provided by law out of the property of the Company or any other obligor on
the Securities wherever situated the moneys adjudged or decreed to be
payable.
In case there shall be pending proceedings for the bankruptcy or for
the reorganization of the Company or any other obligor on the Securities
under Title 11, United States Code, or any other applicable law, or in case
a receiver or trustee shall have been appointed for the property of the
Company or such other obligor, or in the case of any other similar judicial
proceedings relative to the Company or other obligor upon the Securities, or
to the creditors or property of the Company or such other obligor, the
Trustee, irrespective of whether the principal of the Securities shall then
be due and payable as therein expressed or by declaration or otherwise and
irrespective of whether the Trustee shall have made any demand pursuant to
the provisions of this Section 5.02, shall be entitled and empowered, by
intervention in such proceedings or otherwise, to file and prove a claim or
claims for the whole amount of principal and interest owing and unpaid in
respect of the Securities and, in case of any judicial proceedings, to file
such proofs of claim and other papers or documents as may be necessary or
advisable in order to have the claims of the Trustee (including any claim
for reasonable compensation to the Trustee and each predecessor Trustee, and
their respective agents, attorneys and counsel, and for reimbursement of all
expenses and liabilities incurred, and all advances made, by the Trustee and
each predecessor Trustee, except as a result of negligence or bad faith) and
of the Securityholders allowed in such judicial proceedings relative to the
Company or any other obligor on the Securities, or to the creditors or
property of the Company or such other obligor, unless prohibited by
applicable law and regulations, to vote on behalf of the holders of the
Securities in any election of a trustee or a standby trustee in arrangement,
reorganization, liquidation or other bankruptcy or insolvency proceedings or
person performing similar functions in comparable proceedings, and to
collect and receive any moneys or other property payable or deliverable on
any such claims, and to distribute the same after the deduction of its
charges and expenses; and any receiver, assignee or trustee in bankruptcy or
reorganization is hereby authorized by each of the Securityholders 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 Securityholders, to
pay to the Trustee such amounts as shall be sufficient to cover reasonable
compensation to the Trustee, each predecessor Trustee and their respective
agents, attorneys and counsel, and all other expenses and liabilities
incurred, and all advances made, by the Trustee and each predecessor Trustee
except as a result of negligence or bad faith.
Nothing herein contained shall be construed to authorize the Trustee
to authorize or consent to or accept or adopt on behalf of any
Securityholder 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
Securityholder in any such proceeding.
All rights of action and of asserting claims under this Indenture,
or under any of the Securities, may be enforced by the Trustee without the
possession of any of the Securities, or the production thereof on any trial
or other proceeding relative thereto, and any such suit or proceeding
instituted by the Trustee shall be brought in its own name as trustee of an
express trust, and any recovery of judgment shall be for the ratable benefit
of the holders of the Securities.
In any proceedings brought by the Trustee (and also any proceedings
involving the interpretation of any provision of this Indenture to which the
Trustee shall be a party) the Trustee shall be held to represent all the
holders of the Securities, and it shall not be necessary to make any holders
of the Securities parties to any such proceedings.
5.03. Application of Moneys Collected by Trustee
Any moneys collected by the Trustee shall be applied in the order
following, at the date or dates fixed by the Trustee for the distribution of
such moneys, upon presentation of the Securities in respect of which moneys
have been collected, and stamping thereon the payment, if only partially
paid, and upon surrender thereof if fully paid:
First: To the payment of costs and expenses of collection
applicable to the Securities and reasonable compensation to the Trustee, its
agents, attorneys and counsel, and of all other expenses and liabilities
incurred, and all advances made, by the Trustee except as a result of its
negligence or bad faith;
Second: To the payment of all Senior Indebtedness of the Company if
and to the extent required by Article XV;
Third: To the payment of the amounts then due and unpaid upon
Securities for principal of (and premium, if any) and interest on the
Securities, in respect of which or for the benefit of which money has been
collected, ratably, without preference of priority of any kind, according to
the amounts due on such Securities for principal (and premium, if any) and
interest, respectively; and
Fourth: To the Company.
5.04. Proceedings by Securityholders
No holder of any Security shall have any right by virtue of or by
availing of any provision of this Indenture to institute any suit, action or
proceeding in equity or at law upon or under or with respect to this
Indenture or for the appointment of a receiver or trustee, or for any other
remedy hereunder, unless such holder previously shall have given to the
Trustee written notice of an Event of Default and of the continuance thereof
with respect to the Securities specifying such Event of Default, as
hereinbefore provided, and unless also the holders of not less than 25% in
aggregate principal amount of the Securities then outstanding shall have
made written request upon the Trustee to institute such action, suit or
proceeding in its own name as Trustee hereunder and shall have offered to
the Trustee such reasonable indemnity as it may require against the costs,
expenses and liabilities to be incurred therein or thereby, and the Trustee
for 60 days after its receipt of such notice, request and offer of indemnity
shall have failed to institute any such action, suit or proceeding, it being
understood and intended, and being expressly covenanted by the taker and
holder of every Security with every other taker and holder and the Trustee,
that no one or more holders of Securities 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 holder of Securities,
or to obtain or seek to obtain priority over or preference to any other such
holder, or to enforce any right under this Indenture, except in the manner
herein provided and for the equal, ratable and common benefit of all holders
of Securities.
Notwithstanding any other provisions in this Indenture, however, the
right of any holder of any Security to receive payment of the principal of
(premium, if any) and interest on such Security, on or after the same shall
have become due and payable, or to institute suit for the enforcement of any
such payment, shall not be impaired or affected without the consent of such
holder and by accepting a Security hereunder it is expressly understood,
intended and covenanted by the taker and holder of every Security with every
other such taker and holder and the Trustee, that no one or more holders of
Securities shall have any right in any manner whatsoever by virtue or by
availing of any provision of this Indenture to affect, disturb or prejudice
the rights of the holders of any other Securities, or to obtain or seek to
obtain priority over or preference to any other such holder, or to enforce
any right under this Indenture, except in the manner herein provided and for
the equal, ratable and common benefit of all holders of Securities. For the
protection and enforcement of the provisions of this Section, each and every
Securityholder and the Trustee shall be entitled to such relief as can be
given either at law or in equity.
The Company and the Trustee acknowledge that pursuant to the
Declaration, the holders of Capital Securities are entitled, in the
circumstances and subject to the limitations set forth therein, to commence
a Direct Action with respect to any Event of Default under this Indenture
and the Securities.
5.05. Proceedings by Trustee
In case an Event of Default occurs with respect to Securities and is
continuing, the Trustee may in its discretion proceed to protect and enforce
the rights vested in it by this Indenture by such appropriate judicial
proceedings as the Trustee shall deem most effectual to protect and enforce
any of such rights, either by suit in equity or by action at law or by
proceeding in bankruptcy or otherwise, whether for the specific enforcement
of any covenant or agreement contained in this Indenture or in aid of the
exercise of any power granted in this Indenture, or to enforce any other
legal or equitable right vested in the Trustee by this Indenture or by law.
5.06. Remedies Cumulative and Continuing
All powers and remedies given by this Article V to the Trustee or to
the Securityholders shall, to the extent permitted by law, be deemed
cumulative and not exclusive of any other powers and remedies available to
the Trustee or the holders of the Securities, by judicial proceedings or
otherwise, to enforce the performance or observance of the covenants and
agreements contained in this Indenture or otherwise established with respect
to the Securities, and no delay or omission of the Trustee or of any holder
of any of the Securities to exercise any right or power accruing upon any
Event of Default occurring and continuing as aforesaid shall impair any such
right or power, or shall be construed to be a waiver of any such default or
an acquiescence therein; and, subject to the provisions of Section 5.04,
every power and remedy given by this Article V or by law to the Trustee or
to the Securityholders may be exercised from time to time, and as often as
shall be deemed expedient, by the Trustee or by the Securityholders.
5.07. Direction of Proceedings and Waiver of Defaults by Majority of
Securityholders
The holders of a majority in aggregate principal amount of the
Securities at the time outstanding 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, however, that (subject to the provisions of Section 6.01) the
Trustee shall have the right to decline to follow any such direction if the
Trustee shall determine that the action so directed would be unjustly
prejudicial to the holders not taking part in such direction or if the
Trustee being advised by counsel determines that the action or proceeding so
directed may not lawfully be taken or if the Trustee in good faith by its
board of directors or trustees, executive committee, or a trust committee of
directors or trustees and/or Responsible Officers shall determine that the
action or proceedings so directed would involve the Trustee in personal
liability. Prior to any declaration accelerating the maturity of the
Securities, the holders of a majority in aggregate principal amount of the
Securities at the time outstanding may on behalf of the holders of all of
the Securities waive any past default or Event of Default and its
consequences except a default (a) in the payment of principal of or premium,
if any, or interest on any of the Securities or (b) in respect of covenants
or provisions hereof which cannot be modified or amended without the consent
of the holder of each Security affected; provided, however, that if the
Securities are held by the Property Trustee, such waiver or modification to
such waiver shall not be effective until the holders of a majority in
aggregate liquidation amount of Trust Securities shall have consented to
such waiver or modification 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 Trust Securities shall have
consented to such waiver. Upon any such waiver, the default covered thereby
shall be deemed to be cured for all purposes of this Indenture and the
Company, the Trustee and the holders of the Securities shall be restored to
their former positions and rights hereunder, respectively; but no such
waiver shall extend to any subsequent or other default or impair any right
consequent thereon. Whenever any default or Event of Default hereunder
shall have been waived as permitted by this Section 5.07, said default or
Event of Default shall for all purposes of the Securities and this Indenture
be deemed to have been cured and to be not continuing.
5.08. Notice of Defaults
The Trustee shall, within 90 days after the occurrence of a default
with respect to the Securities mail to all Securityholders, as the names and
addresses of such holders appear upon the Security register, notice of all
defaults known to the Trustee, unless such defaults shall have been cured
before the giving of such notice (the term "defaults" for the purpose of
this Section 5.08 being hereby defined to be the events specified in clauses
(a), (b), (c), (d) and (e) of Section 5.01, not including periods of grace,
if any, provided for therein, and irrespective of the giving of written
notice specified in clause (c) of Section 5.01); and provided that, except
in the case of default in the payment of the principal of or premium, if
any, or interest on any of the Securities, the Trustee shall be protected in
withholding such notice if and so long as the board of directors, the
executive committee, or a trust committee of directors and/or Responsible
Officers of the Trustee in good faith determines that the withholding of
such notice is in the interests of the Securityholders; and provided
further, that in the case of any default of the character specified in
Section 5.01(c) no such notice to Securityholders shall be given until at
least 60 days after the occurrence thereof but shall be given within 90 days
after such occurrence.
5.09. Undertaking to Pay Costs
All parties to this Indenture agree, and each holder of any Security
by his acceptance thereof shall be deemed to have agreed, that any court may
in its discretion require, in any suit for the enforcement of any right or
remedy under this Indenture, or in any suit against the Trustee for any
action taken or omitted by it as Trustee, the filing by any party litigant
in such suit of an undertaking to pay the costs of such suit, and that such
court may in its discretion assess reasonable costs, including reasonable
attorneys' fees and expenses, against any party litigant in such suit,
having due regard to the merits and good faith of the claims or defenses
made by such party litigant; but the provisions of this Section 5.09 shall
not apply to any suit instituted by the Trustee, to any suit instituted by
any Securityholder, or group of Securityholders, holding in the aggregate
more than 10% in aggregate principal amount of the Securities outstanding,
or to any suit instituted by any Securityholder for the enforcement of the
payment of the principal of (or premium, if any) or interest on any Security
against the Company on or after the same shall have become due and payable.
ARTICLE VI
CONCERNING THE TRUSTEE
6.01. Duties and Responsibilities of Trustee
With respect to the holders of the Securities issued hereunder, the
Trustee, prior to the occurrence of an Event of Default and after the curing
or waiving of all Events of Default which may have occurred, undertakes to
perform such duties and only such duties as are specifically set forth in
this Indenture. In case an Event of Default has occurred (which has not
been cured or waived) the Trustee shall exercise such of the rights and
powers vested in it by this Indenture, and use the same degree of care and
skill in their exercise, as a prudent man would exercise or use under the
circumstances in the conduct of his own affairs.
No provision of this Indenture shall be construed to relieve the
Trustee from liability for its own negligent action, its own negligent
failure to act or its own willful misconduct, except that
(a) prior to the occurrence of an Event of Default and after the
curing or waiving of all Events of Default which may have occurred
(1) the duties and obligations of the Trustee shall be
determined solely by the express provisions of this Indenture, and the
Trustee shall not be liable except for the performance of such duties and
obligations as are specifically set forth in this Indenture, and no implied
covenants or obligations shall be read into this Indenture against the
Trustee; and
(2) in the absence of bad faith on the part of the Trustee, the
Trustee may conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon any certificates or
opinions furnished to the Trustee and conforming to the requirements of this
Indenture; but, in the case of any such certificates or opinions which by
any provision hereof are specifically required to be furnished to the
Trustee, the Trustee shall be under a duty to examine the same to determine
whether or not they conform to the requirements of this Indenture;
(b) the Trustee shall not be liable for any error of judgment made
in good faith by a Responsible Officer or Officers of the Trustee, unless it
shall be proved that the Trustee was negligent in ascertaining the pertinent
facts; and
(c) the Trustee shall not be liable with respect to any action
taken or omitted to be taken by it in good faith, in accordance with the
direction of the Securityholders pursuant to Section 5.07, relating to the
time, method and place of conducting any proceeding for any remedy available
to the Trustee, or exercising any trust or power conferred upon the Trustee,
under this Indenture.
None of the provisions contained in this Indenture shall require the
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 there is reasonable ground for
believing that the repayment of such funds or liability is not reasonably
assured to it under the terms of this Indenture or adequate indemnity
against such risk is not reasonably assured to it.
6.02. Reliance on Documents, Opinions, etc.
Except as otherwise provided in Section 6.01:
(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, consent, order, bond, note,
debenture 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, direction, order or demand of the Company mentioned
herein may be sufficiently evidenced by an Officers' Certificate (unless
other evidence in respect thereof be herein specifically prescribed), and
any Board Resolution may be evidenced to the Trustee by a copy thereof
certified by the Secretary or an Assistant Secretary of the Company;
(c) the Trustee may consult with counsel of its selection and any
advice or Opinion of Counsel shall be full and complete authorization and
protection in respect of any action taken or suffered to be taken or omitted
by it hereunder in good faith and in accordance with such advice or Opinion
of Counsel;
(d) the Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture at the request, order or
direction of any of the Securityholders, pursuant to the provisions of this
Indenture, unless such Securityholders shall have offered to the Trustee
reasonable security or indemnity against the costs, expenses and liabilities
which may be incurred therein or thereby;
(e) the Trustee shall not be liable for any action taken or omitted
by it in good faith and believed by it to be authorized or within the
discretion or rights or powers conferred upon it by this Indenture; nothing
contained herein shall, however, relieve the Trustee of the obligation, upon
the occurrence of an Event of Default (that has not been cured or waived),
to exercise such of the rights and powers vested in it by this Indenture,
and to use the same degree of care and skill in their exercise, as a prudent
man would exercise or use under the circumstances in the conduct of his own
affairs;
(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, consent, order, approval,
bond, debenture, coupon or other paper or document, unless requested in
writing to do so by the holders of a majority in aggregate principal amount
of the outstanding Securities; provided, however, that if the payment within
a reasonable time to the Trustee of the costs, expenses or liabilities
likely to be incurred by it in the making of such investigation is, in the
opinion of the Trustee, not reasonably assured to the Trustee by the
security afforded to it by the terms of this Indenture, the Trustee may
require reasonable indemnity against such expense or liability as a
condition to so proceeding; and
(g) the Trustee may execute any of the trusts or powers hereunder or
perform any duties hereunder either directly or by or through agents
(including any Authenticating Agent) or attorneys, and the Trustee shall not
be responsible for any misconduct or negligence on the part of any such
agent or attorney appointed by it with due care.
6.03. No Responsibility for Recitals, etc.
The recitals contained herein and in the Securities (except in the
certificate of authentication of the Trustee or the Authenticating Agent)
shall be taken as the statements of the Company and the Trustee and the
Authenticating Agent assume no responsibility for the correctness of the
same. The Trustee and the Authenticating Agent make no representations as
to the validity or sufficiency of this Indenture or of the Securities. The
Trustee and the Authenticating Agent shall not be accountable for the use or
application by the Company of any Securities or the proceeds of any
Securities authenticated and delivered by the Trustee or the Authenticating
Agent in conformity with the provisions of this Indenture.
6.04. Trustee, Authenticating Agent, Paying Agents, Transfer Agents or
Registrar May Own Securities
The Trustee or any Authenticating Agent or any paying agent or any
transfer agent or any Security registrar, in its individual or any other
capacity, may become the owner or pledgee of Securities with the same rights
it would have if it were not Trustee, Authenticating Agent, paying agent,
transfer agent or Security registrar.
6.05. Moneys to be Held in Trust
Subject to the provisions of Section 11.04, all moneys received by
the Trustee or any paying agent shall, until used or applied as herein
provided, be held in trust for the purpose for which they were received, but
need not be segregated from other funds except to the extent required by
law. The Trustee and any paying agent shall be under no liability for
interest on any money received by it hereunder except as otherwise agreed in
writing with the Company. So long as no Event of Default shall have
occurred and be continuing, all interest allowed on any such moneys shall be
paid from time to time upon the written order of the Company, signed by the
Chairman of the Board of Directors, the President or a Vice President or the
Treasurer or an Assistant Treasurer of the Company.
6.06. Compensation and Expenses of Trustee
The Company, as borrower, covenants and agrees to pay to the Trustee
from time to time, and the Trustee shall be entitled to, such compensation
as shall be agreed to in writing between the Company and the Trustee (which
shall not be limited by any provision of law in regard to the compensation
of a trustee of an express trust), and the Company will pay or reimburse the
Trustee upon its request for all reasonable expenses, disbursements and
advances incurred or made by the Trustee in accordance with any of the
provisions of this Indenture (including the reasonable compensation and the
expenses and disbursements of its counsel and of all persons not regularly
in its employ) except any such expense, disbursement or advance as may arise
from its negligence or bad faith. The Company also covenants to indemnify
each of the Trustee or any predecessor Trustee (and its officers, agents,
directors and employees) for, and to hold it harmless against, any and all
loss, damage, claim, liability or expense including taxes (other than taxes
based on the income of the Trustee) incurred without negligence or bad faith
on the part of the Trustee and 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 of liability in the premises. The
obligations of the Company under this Section 6.06 to compensate and
indemnify the Trustee and to pay or reimburse the Trustee for expenses,
disbursements and advances shall constitute additional indebtedness
hereunder. Such additional indebtedness shall be secured by a lien prior to
that of the Securities upon all property and funds held or collected by the
Trustee as such, except funds held in trust for the benefit of the holders
of particular Securities.
Without prejudice to any other rights available to the Trustee under
applicable law, when the Trustee incurs expenses or renders services in
connection with an Event of Default specified in Section 5.01(d) or
Section 5.01(e), 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.
6.07. Officers' Certificate as Evidence
Except as otherwise provided in Sections 6.01 and 6.02, whenever in
the administration of the provisions of this Indenture the Trustee shall
deem it necessary or desirable that a matter be proved or established prior
to taking or omitting any action hereunder, such matter (unless other
evidence in respect thereof is herein specifically prescribed) may, in the
absence of negligence or bad faith on the part of the Trustee, be deemed to
be conclusively proved and established by an Officers' Certificate delivered
to the Trustee, and such certificate, in the absence of negligence or bad
faith on the part of the Trustee, shall be full warrant to the Trustee for
any action taken or omitted by it under the provisions of this Indenture
upon the faith thereof.
6.08. Conflicting Interest of Trustee
If the Trustee has or shall acquire any "conflicting interest" within the
meaning of Section 310(b) of the Trust Indenture Act, the Trustee and the
Company shall in all respects comply with the provisions of Section 310(b)
of the Trust Indenture Act.
6.09. Eligibility of Trustee
The Trustee hereunder shall at all times 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 other Person permitted to act as trustee by the Commission 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
aforesaid supervising or examining authority, then for the purposes of this
Section 6.09 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.
The Company may not, nor may any Person directly or indirectly controlling,
controlled by, or under common control with the Company, serve as Trustee.
In case at any time the Trustee shall cease to be eligible in accordance
with the provisions of this Section 6.09, the Trustee shall resign
immediately in the manner and with the effect specified in Section 6.10.
6.10. Resignation or Removal of Trustee
(a) The Trustee, or any trustee or trustees hereafter appointed, may
at any time resign by giving written notice of such resignation to the
Company and by mailing notice thereof to the holders of the Securities at
their addresses as they shall appear on the Security register. Upon
receiving such notice of resignation, the Company shall promptly appoint a
successor trustee or trustees by written instrument, in duplicate, one copy
of which instrument shall be delivered to the resigning Trustee and one copy
to the successor trustee. If no successor trustee shall have been so
appointed and have accepted appointment within 60 days after the mailing of
such notice of resignation to the Securityholders, the resigning Trustee may
petition any court of competent jurisdiction for the appointment of a
successor trustee, or any Securityholder who has been a bona fide holder of
a Security for at least six months may, subject to the provisions of
Section 5.09, on behalf of himself and all others similarly situated,
petition any such court for the appointment of a successor trustee. Such
court may thereupon, after such notice, if any, as it may deem proper and
prescribe, appoint a successor trustee.
(b) In case at any time any of the following shall occur:
(1) the Trustee shall fail to comply with the provisions of
Section 6.08 after written request therefor by the Company or by any
Securityholder who has been a bona fide holder of a Security or Securities
for at least six months, or
(2) the Trustee shall cease to be eligible in accordance with
the provisions of Section 6.09 and shall fail to resign after written
request therefor by the Company or by any such Securityholder, or
(3) the Trustee shall become incapable of acting, or shall be
adjudged a bankrupt or insolvent, or a receiver of the Trustee or of its
property shall be appointed, or any public officer shall take charge or
control of the Trustee or of its property or affairs for the purpose of
rehabilitation, conservation or liquidation,
then, in any such case, the Company may remove the Trustee and
appoint a successor trustee by written instrument, in duplicate, one copy of
which instrument shall be delivered to the Trustee so removed and one copy
to the successor trustee, or, subject to the provisions of Section 5.09, any
Securityholder 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. Such court may thereupon, after
such notice, if any, as it may deem proper and prescribe, remove the Trustee
and appoint a successor trustee.
(c) The holders of a majority in aggregate principal amount of the
Securities at the time outstanding may at any time remove the Trustee and
nominate a successor trustee, which shall be deemed appointed as successor
trustee unless within 10 days after such nomination the Company objects
thereto or if no successor trustee shall have been so appointed and shall
have accepted appointment within 30 days after such removal, in which case
the Trustee so removed or any Securityholder, upon the terms and conditions
and otherwise as in subsection (a) of this Section 6.10 provided, may
petition any court of competent jurisdiction for an appointment of a
successor trustee.
(d) Any resignation or removal of the Trustee and appointment of a
successor trustee pursuant to any of the provisions of this Section 6.10
shall become effective upon acceptance of appointment by the successor
trustee as provided in Section 6.11.
6.11. Acceptance by Successor Trustee
Any successor trustee appointed as provided in Section 6.10 shall
execute, acknowledge and deliver to the Company and to its predecessor
trustee an instrument accepting such appointment hereunder, 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, duties and obligations of
its predecessor hereunder, with like effect as if originally named as
trustee herein; but, nevertheless, on the written request of the Company or
of the successor trustee, the trustee ceasing to act shall, upon payment of
any amounts then due it pursuant to the provisions of Section 6.06, execute
and deliver an instrument transferring to such successor trustee all the
rights and powers of the trustee so ceasing to act and shall duly assign,
transfer and deliver to such successor trustee all property and money held
by such retiring trustee thereunder. Upon request of any such successor
trustee, the Company shall execute any and all instruments in writing for
more fully and certainly vesting in and confirming to such successor trustee
all such rights and powers. Any trustee ceasing to act shall, nevertheless,
retain a lien upon all property or funds held or collected by such trustee
to secure any amounts then due it pursuant to the provisions of
Section 6.06.
No successor trustee shall accept appointment as provided in this
Section 6.11 unless at the time of such acceptance such successor trustee
shall be qualified under the provisions of Section 6.08 and eligible under
the provisions of Section 6.09.
Upon acceptance of appointment by a successor trustee as provided in
this Section 6.11, the Company shall mail notice of the succession of such
trustee hereunder to the holders of Securities at their addresses as they
shall appear on the Security Register. If the Company fails to mail such
notice within 10 days after the acceptance of appointment by the successor
trustee, the successor trustee shall cause such notice to be mailed at the
expense of the Company.
6.12. Succession by Merger, etc.
Any corporation into which the Trustee may be merged or converted or
with which it may be consolidated, or any corporation resulting from any
merger, conversion or consolidation to which the Trustee shall be a party,
or any corporation succeeding to all or substantially all of the corporate
trust business of the Trustee, shall be the successor of the Trustee
hereunder without the execution or filing of any paper or any further act on
the part of any of the parties hereto.
In case at the time such successor to the Trustee shall succeed to
the trusts created by this Indenture any Securities shall have been
authenticated but not delivered, any such successor to the Trustee may adopt
the certificate of authentication of any predecessor trustee, and deliver
such Securities so authenticated; and in case at that time any of the
Securities shall not have been authenticated, any successor to the Trustee
may authenticate such Securities either in the name of any predecessor
hereunder or in the name of the successor trustee; and in all such cases
such certificates shall have the full force which the Securities or this
Indenture elsewhere provides that the certificate of the Trustee shall have;
provided, however, that the right to adopt the certificate of authentication
of any predecessor Trustee or authenticate Securities in the name of any
predecessor Trustee shall apply only to its successor or successors by
merger, conversion or consolidation.
6.13. Limitation on Rights of Trustee as a Creditor
The Trustee shall comply with Section 311(a) of the Trust Indenture
Act, excluding any creditor relationship described in Section 311(b) of the
Trust Indenture Act. A Trustee who has resigned or been removed shall be
subject to Section 311(a) of the Trust Indenture Act to the extent included
therein.
6.14. Authenticating Agents
There may be one or more Authenticating Agents appointed by the Trustee upon
the request of the Company with power to act on its behalf and subject to
its direction in the authentication and delivery of Securities issued upon
exchange or transfer thereof as fully to all intents and purposes as though
any such Authenticating Agent had been expressly authorized to authenticate
and deliver Securities; provided, that the Trustee shall have no liability
to the Company for any acts or omissions of the Authenticating Agent with
respect to the authentication and delivery of Securities. Any such
Authenticating Agent shall at all times be a corporation organized and doing
business under the laws of the United States or of any state or territory
thereof or of the District of Columbia authorized under such laws to act as
Authenticating Agent, having a combined capital and surplus of at least
$5,000,000 and being 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 the
requirements of such authority, then for the purposes of this Section 6.14
the combined capital and surplus of such corporation shall be deemed to be
its combined capital and surplus as set forth in its most recent report of
condition so published. If at any time an Authenticating Agent shall cease
to be eligible in accordance with the provisions of this Section, it shall
resign immediately in the manner and with the effect herein specified in
this Section.
Any corporation into which any Authenticating Agent may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, consolidation or conversion to which any Authenticating
Agent shall be a party, or any corporation succeeding to all or
substantially all of the corporate trust business of any Authenticating
Agent, shall be the successor of such Authenticating Agent hereunder, if
such successor corporation is otherwise eligible under this Section 6.14
without the execution or filing of any paper or any further act on the part
of the parties hereto or such Authenticating Agent.
Any Authenticating Agent may at any time resign by giving written
notice of resignation to the Trustee and to the Company. The Trustee may at
any time terminate the agency of any Authenticating Agent by giving written
notice of termination to such Authenticating Agent and to the Company. Upon
receiving such a notice of resignation or upon such a termination, or in
case at any time any Authenticating Agent shall cease to be eligible under
this Section 6.14, the Trustee may, and upon the request of the Company
shall, promptly appoint a successor Authenticating Agent eligible under this
Section 6.14, shall give written notice of such appointment to the Company
and shall mail notice of such appointment to all Securityholders as the
names and addresses of such holders appear on the Security Register. Any
successor Authenticating Agent upon acceptance of its appointment hereunder
shall become vested with all rights, powers, duties and responsibilities of
its predecessor hereunder, with like effect as if originally named as
Authenticating Agent herein.
The Company, as borrower, agrees to pay to any Authenticating Agent
from time to time reasonable compensation for its services. Any
Authenticating Agent shall have no responsibility or liability for any
action taken by it as such in accordance with the directions of the Trustee.
ARTICLE VII
CONCERNING THE SECURITYHOLDERS
7.01. Action by Securityholders
Whenever in this Indenture it is provided that the holders of a
specified percentage in aggregate principal amount of the Securities may take
any action (including the making of any demand or request, the giving of any
notice, consent or waiver or the taking of any other action) the fact that at
the time of taking any such action the holders of such specified percentage
have joined therein may be evidenced (a) by any instrument or any number of
instruments of similar tenor executed by such Securityholders in person or by
agent or proxy appointed in writing, or (b) by the record of such holders of
Securities voting in favor thereof at any meeting of such Securityholders
duly called and held in accordance with the provisions of Article VIII, or
(c) by a combination of such instrument or instruments and any such record of
such a meeting of such Securityholders.
If the Company shall solicit from the Securityholders any request,
demand, authorization, direction, notice, consent, waiver or other action,
the Company may, at its option, as evidenced by an Officers' Certificate, fix
in advance a record date for the determination of Securityholders entitled to
give such request, demand, authorization, direction, notice, consent, waiver
or other action or to revoke any such action, but the Company shall have no
obligation to do so. If such a record date is fixed, such request, demand,
authorization, direction, notice, consent, waiver or other action or
revocation may be given before or after the record date, but only the
Securityholders of record at the close of business on the record date shall
be deemed to be Securityholders for the purposes of determining whether
Securityholders of the requisite proportion of Outstanding Securities have
authorized or agreed or consented to such request, demand, authorization,
direction, notice, consent, waiver or other action, and for that purpose the
Outstanding Securities shall be computed as of the record date; provided,
however, that no such authorization, agreement or consent by such
Securityholders on the record date shall be deemed effective unless it shall
become effective pursuant to the provisions of this Indenture not later than
six months after the record date.
7.02. Proof of Execution by Securityholders
Subject to the provisions of Section 6.01, 6.02 and 8.05, proof of
the execution of any instrument by a Securityholder or his agent or proxy
shall be sufficient if made in accordance with such reasonable rules and
regulations as may be prescribed by the Trustee or in such manner as shall be
satisfactory to the Trustee. The ownership of Securities shall be proved by
the Security Register or by a certificate of the Security registrar. The
Trustee may require such additional proof of any matter referred to in this
Section as it shall deem necessary.
The record of any Securityholders' meeting shall be proved in the manner
provided in Section 8.06.
7.03. Who Are Deemed Absolute Owners
Prior to due presentment for registration of transfer of any
Security, the Company, the Trustee, any Authenticating Agent, any paying
agent, any transfer agent and any Security registrar may deem the person in
whose name such Security shall be registered upon the Security Register to
be, and may treat him as, the absolute owner of such Security (whether or not
such Security shall be overdue) for the purpose of receiving payment of or on
account of the principal of and premium, if any, and (subject to
Section 2.06) interest on such Security and for all other purposes; and
neither the Company nor the Trustee nor any Authenticating Agent nor any
paying agent nor any transfer agent nor any Security registrar shall be
affected by any notice to the contrary. All such payments so made to any
holder for the time being or upon his order shall be valid, and, to the
extent of the sum or sums so paid, effectual to satisfy and discharge the
liability for moneys payable upon any such Security.
7.04. Securities Owned by Company Deemed Not Outstanding
In determining whether the holders of the requisite aggregate
principal amount of Securities have concurred in any direction, consent or
waiver under this Indenture, Securities which are owned by the Company or any
other obligor on the Securities or by any person directly or indirectly
controlling or controlled by or under direct or indirect common control with
the Company or any other obligor on the Securities shall be disregarded and
deemed not to be outstanding for the purpose of any such determination;
provided that for the purposes of determining whether the Trustee shall be
protected in relying on any such direction, consent or waiver, only
Securities which the Trustee actually knows are so owned shall be so
disregarded. Securities so owned which have been pledged in good faith may
be regarded as outstanding for the purposes of this Section 7.04 if the
pledgee shall establish to the satisfaction of the Trustee the pledgee's
right to vote such Securities and that the pledgee is not the Company or any
such other obligor or person directly or indirectly controlling or controlled
by or under direct or indirect common control with the Company or any such
other obligor. In the case of a dispute as to such right, any decision by
the Trustee taken upon the advice of counsel shall be full protection to the
Trustee.
7.05. Revocation of Consents; Future Holders Bound
At any time prior to (but not after) the evidencing to the Trustee,
as provided in Section 7.01, of the taking of any action by the holders of
the percentage in aggregate principal amount of the Securities specified in
this Indenture in connection with such action, any holder of a Security (or
any Security issued in whole or in part in exchange or substitution
therefor), subject to Section 7.01, the serial number of which is shown by
the evidence to be included in the Securities the holders of which have
consented to such action may, by filing written notice with the Trustee at
its principal office and upon proof of holding as provided in Section 7.02,
revoke such action so far as concerns such Security (or so far as concerns
the principal amount represented by any exchanged or substituted Security).
Except as aforesaid any such action taken by the holder of any Security shall
be conclusive and binding upon such holder and upon all future holders and
owners of such Security, and of any Security issued in exchange or
substitution therefor, irrespective of whether or not any notation in regard
thereto is made upon such Security or any Security issued in exchange or
substitution therefor.
ARTICLE VIII
SECURITYHOLDERS' MEETINGS
8.01. Purposes of Meetings
A meeting of Securityholders may be called at any time and from time
to time pursuant to the provisions of this Article VIII for any of the
following purposes:
(a) to give any notice to the Company or to the Trustee, or to give
any directions to the Trustee, or to consent to the waiving of any default
hereunder and its consequences, or to take any other action authorized to be
taken by Securityholders pursuant to any of the provisions of Article V;
(b) to remove the Trustee and nominate a successor trustee pursuant
to the provisions of Article VI;
(c) to consent to the execution of an indenture or indentures
supplemental hereto pursuant to the provisions of Section 9.02; or
(d) to take any other action authorized to be taken by or on behalf
of the holders of any specified aggregate principal amount of such Securities
under any other provision of this Indenture or under applicable law.
8.02. Call of Meetings by Trustee
The Trustee may at any time call a meeting of Securityholders to take
any action specified in Section 8.01, to be held at such time and at such
place in the Borough of Manhattan, The City of New York, as the Trustee shall
determine. Notice of every meeting of the Securityholders, setting forth the
time and the place of such meeting and in general terms the action proposed
to be taken at such meeting, shall be mailed to holders of Securities at
their addresses as they shall appear on the Securities Register. Such notice
shall be mailed not less than 20 nor more than 180 days prior to the date
fixed for the meeting.
8.03. Call of Meetings by Company or Securityholders
In case at any time the Company pursuant to a resolution of the Board
of Directors, or the holders of at least 10% in aggregate principal amount of
the Securities then outstanding, shall have requested the Trustee to call a
meeting of Securityholders, by written request setting forth in reasonable
detail the action proposed to be taken at the meeting, and the Trustee shall
not have mailed the notice of such meeting within 20 days after receipt of
such request, then the Company or such Securityholders may determine the time
and the place in said Borough of Manhattan for such meeting and may call such
meeting to take any action authorized in Section 8.01, by mailing notice
thereof as provided in Section 8.02.
8.04. Qualifications for Voting
To be entitled to vote at any meeting of Securityholders a person
shall (a) be a holder of one or more Securities or (b) a person appointed by
an instrument in writing as proxy by a holder of one or more Securities. The
only persons who shall be entitled to be present or to speak at any meeting
of Securityholders shall be the persons entitled to vote at such meeting and
their counsel and any representatives of the Trustee and its counsel and any
representatives of the Company and its counsel.
8.05. Regulations
Notwithstanding any other provisions of this Indenture, the Trustee
may make such reasonable regulations as it may deem advisable for any meeting
of Securityholders, in regard to proof of the holding of Securities and of
the appointment of proxies, and in regard to the appointment and duties of
inspectors of votes, the submission and examination of proxies, certificates
and other evidence of the right to vote, and such other matters concerning
the conduct of the meeting as it shall think fit.
The Trustee shall, by an instrument in writing, appoint a temporary
chairman of the meeting, unless the meeting shall have been called by the
Company or by Securityholders as provided in Section 8.03, in which case the
Company or the Securityholders calling the meeting, as the case may be, shall
in like manner appoint a temporary chairman. A permanent chairman and a
permanent secretary of the meeting shall be elected by majority vote of the
meeting.
Subject to the provisions of Section 8.04, at any meeting each holder
of Securities or proxy therefor shall be entitled to one vote for each $1,000
principal amount of Securities held or represented by him; provided, however,
that no vote shall be cast or counted at any meeting in respect of any
Security challenged as not outstanding and ruled by the chairman of the
meeting to be not outstanding. The chairman of the meeting shall have no
right to vote other than by virtue of Securities held by him or instruments
in writing as aforesaid duly designating him as the person to vote on behalf
of other Securityholders. Any meeting of Securityholders duly called
pursuant to the provisions of Section 8.02 or 8.03 may be adjourned from time
to time by a majority of those present, whether or not constituting a quorum,
and the meeting may be held as so adjourned without further notice.
8.06. Voting
The vote upon any resolution submitted to any meeting of holders of
Securities shall be by written ballots on which shall be subscribed the
signatures of such holders or of their representatives by proxy and the
serial number or numbers of the Securities held or represented by them. The
permanent chairman of the meeting shall appoint two inspectors of votes who
shall count all votes cast at the meeting for or against any resolution and
who shall make and file with the secretary of the meeting their verified
written reports in triplicate of all votes cast at the meeting. A record in
duplicate of the proceedings of each meeting of Securityholders shall be
prepared by the secretary of the meeting and there shall be attached to said
record the original reports of the inspectors of votes on any vote by ballot
taken thereat and affidavits by one or more persons having knowledge of the
facts setting forth a copy of the notice of the meeting and showing that said
notice was mailed as provided in Section 8.02. The record shall show the
serial numbers of the Securities voting in favor of or against any
resolution. The record shall be signed and verified by the affidavits of the
permanent chairman and secretary of the meeting and one of the duplicates
shall be delivered to the Company and the other to the Trustee to be
preserved by the Trustee, the latter to have attached thereto the ballots
voted at the meeting. The holders of the Series A Securities and the
Series B Securities shall vote for all purposes as a single class.
Any record so signed and verified shall be conclusive evidence of the
matters therein stated.
ARTICLE IX
AMENDMENTS
9.01. Without Consent of Securityholders
The Company and the Trustee may from time to time and at any time
amend the Indenture, without the consent of the Securityholders, for one or
more of the following purposes:
(a) to evidence the succession of another corporation to the Company,
or successive successions, and the assumption by the successor corporation of
the covenants, agreements and obligations of the Company pursuant to
Article X hereof;
(b) to add to the covenants of the Company such further covenants,
restrictions or conditions for the protection of the Securityholders as the
Board of Directors and the Trustee shall consider to be for the protection of
the Securityholders, and to make the occurrence, or the occurrence and
continuance, of a default in any of such additional covenants, restrictions
or conditions a default or an Event of Default permitting the enforcement of
all or any of the remedies provided in this Indenture as herein set forth;
provided, however, that in respect of any such additional covenant,
restriction or condition such amendment may provide for a particular period
of grace after default (which period may be shorter or longer than that
allowed in the case of other defaults) or may provide for an immediate
enforcement upon such default or may limit the remedies available to the
Trustee upon such default;
(c) to provide for the issuance under this Indenture of Securities
in coupon form (including Securities registrable as to principal only) and to
provide for exchangeability of such Securities with the Securities issued
hereunder in fully registered form and to make all appropriate changes for
such purpose;
(d) to cure any ambiguity or to correct or supplement any provision
contained herein or in any supplemental indenture which may be defective or
inconsistent with any other provision contained herein or in any supplemental
indenture, or to make such other provisions in regard to matters or questions
arising under this Indenture; provided that any such action shall not
materially adversely affect the interests of the holders of the Securities;
(e) to evidence and provide for the acceptance of appointment
hereunder by a successor trustee with respect to the Securities;
(f) to make provision for transfer procedures, certification, book-
entry provisions, the form of restricted securities legends, if any, to be
placed on Securities, minimum denominations and all other matters required
pursuant to Section 2.07 or otherwise necessary, desirable or appropriate in
connection with the issuance of Securities to holders of Capital Securities
in the event of a distribution of Securities by Puget Sound Energy Trust
following a Dissolution Event;
(g) to qualify or maintain qualification of this Indenture under
the Trust Indenture Act; or
(h) to make any change that does not adversely affect the rights of
any Securityholder in any material respect.
The Trustee is hereby authorized to join with the Company in the
execution of any supplemental indenture to effect such amendment, to make any
further appropriate agreements and stipulations which may be therein
contained and to accept the conveyance, transfer and assignment of any
property thereunder, but the Trustee shall not be obligated to, but may in
its discretion, enter into any such supplemental indenture which affects the
Trustee's own rights, duties or immunities under this Indenture or otherwise.
Any amendment to the Indenture authorized by the provisions of this
Section 9.01 may be executed by the Company and the Trustee without the
consent of the holders of any of the Securities at the time outstanding,
notwithstanding any of the provisions of Section 9.02.
9.02. With Consent of Securityholders
With the consent (evidenced as provided in Section 7.01) of the
holders of a majority in aggregate principal amount of the Securities at the
time outstanding, the Company, when authorized by a Board Resolution, and the
Trustee may from time to time and at any time amend the Indenture for the
purpose of adding any provisions to or changing in any manner or eliminating
any of the provisions of this Indenture or of modifying in any manner the
rights of the holders of the Securities; provided, however, that no such
amendment shall without the consent of the holders of each Security then
outstanding and affected thereby (i) extend the Maturity Date of any
Security, or reduce the rate or extend the time of payment of interest
thereon (except as contemplated by Article XVI), or reduce the principal
amount thereof, or reduce any amount payable on redemption thereof, or make
the principal thereof or any interest or premium thereon payable in any coin
or currency other than that provided in the Securities, or impair or affect
the right of any Securityholder to institute suit for payment thereof, or
(ii) reduce the aforesaid percentage of Securities the holders of which are
required to consent to any such amendment to the Indenture, provided,
however, that if the Securities are held by Puget Sound Energy Trust, such
amendment shall not be effective until the holders of a majority in
liquidation amount of Trust Securities shall have consented to such
amendment; provided, further, that if the consent of the holder of each
outstanding Security is required, such amendment shall not be effective until
each holder of the Trust Securities shall have consented to such amendment.
Upon the request of the Company accompanied by a copy of a resolution
of the Board of Directors certified by its Secretary or Assistant Secretary
authorizing the execution of any supplemental indenture affecting such
amendment, and upon the filing with the Trustee of evidence of the consent of
Securityholders as aforesaid, the Trustee shall join with the Company in the
execution of such supplemental indenture unless such supplemental indenture
affects the Trustee's own rights, duties or immunities under this Indenture
or otherwise, in which case the Trustee may in its discretion, but shall not
be obligated to, enter into such supplemental indenture.
Promptly after the execution by the Company and the Trustee of any
supplemental indenture pursuant to the provisions of this Section, the
Trustee shall transmit by mail, first class postage prepaid, a notice,
prepared by the Company, setting forth in general terms the substance of such
supplemental indenture, to the Securityholders as their names and addresses
appear upon the Security Register. Any failure of the Trustee to mail such
notice, or any defect therein, shall not, however, in any way impair or
affect the validity of any such supplemental indenture.
It shall not be necessary for the consent of the Securityholders
under this Section 9.02 to approve the particular form of any proposed
supplemental indenture, but it shall be sufficient if such consent shall
approve the substance thereof.
9.03. Compliance with Trust Indenture Act; Effect of Supplemental
Indentures
Any supplemental indenture executed pursuant to the provisions of
this Article IX shall comply with the Trust Indenture Act. Upon the
execution of any supplemental indenture pursuant to the provisions of this
Article IX, this Indenture shall be and be deemed to be modified and amended
in accordance therewith and the respective rights, limitations of rights,
obligations, duties and immunities under this Indenture of the Trustee, the
Company and the holders of Securities shall thereafter be determined,
exercised and enforced hereunder subject in all respects to such
modifications and amendments and all the terms and conditions of any such
supplemental indenture shall be and be deemed to be part of the terms and
conditions of this Indenture for any and all purposes.
9.04. Notation on Securities
Securities authenticated and delivered after the execution of any
supplemental indenture affecting such series pursuant to the provisions of
this Article IX may bear a notation in form approved by the Trustee as to any
matter provided for in such supplemental indenture. If the Company or the
Trustee shall so determine, new Securities so modified as to conform, in the
opinion of the Trustee and the Board of Directors, to any modification of
this Indenture contained in any such supplemental indenture may be prepared
and executed by the Company, authenticated by the Trustee or the
Authenticating Agent and delivered in exchange for the Securities then
outstanding.
9.05. Evidence of Compliance of Supplemental Indenture to be Furnished
Trustee
The Trustee, subject to the provisions of Sections 6.01 and 6.02, may
receive an Officers' Certificate and an Opinion of Counsel as conclusive
evidence that any supplemental indenture executed pursuant hereto complies
with the requirements of this Article IX.
The Trustee may receive an Opinion of Counsel as conclusive evidence that any
supplemental indenture executed pursuant to this Article is authorized or
permitted by, and conforms to, the terms of this Article and that it is
proper for the Trustee under the provisions of this Article to join in the
execution thereof.
ARTICLE X
CONSOLIDATION, MERGER, SALE, CONVEYANCE AND LEASE
10.01. Company May Consolidate, etc., on Certain Terms
Nothing contained in this Indenture or in any of the Securities shall
prevent any consolidation or merger of the Company with or into any other
Person (whether or not affiliated with the Company, as the case may be), or
successive consolidations or mergers in which the Company, or its successor
or successors, as the case may be, shall be a party or parties, or shall
prevent any sale, conveyance, transfer or lease of the property of the
Company, or its successor or successors, as the case may be, as an entirety,
or substantially as an entirety, to any other Person (whether or not
affiliated with the Company, or its successor or successors, as the case may
be) authorized to acquire and operate the same; provided, that (a) the
Company is the surviving Person, or the Person formed by or surviving any
such consolidation or merger (if other than the Company) or to which such
sale, conveyance, transfer or lease of property is made is a Person organized
and existing under the laws of the United States or any State thereof or the
District of Columbia, and (b) upon any such consolidation, merger, sale,
conveyance, transfer or lease, the due and punctual payment of the principal
of (and premium, if any) and interest on the Securities according to their
tenor and the due and punctual performance and observance of all the
covenants and conditions of this Indenture to be kept or performed by the
Company shall be expressly assumed, by supplemental indenture (which shall
conform to the provisions of the Trust Indenture Act, as then in effect)
satisfactory in form to the Trustee executed and delivered to the Trustee by
the Person formed by such consolidation, or into which the Company, shall
have been merged, or by the Person which shall have acquired such property,
as the case may be, and (c) after giving effect to such consolidation,
merger, sale, conveyance, transfer or lease, no Default or Event of Default
shall have occurred and be continuing.
10.02. Successor Corporation to be Substituted for Company
In case of any such consolidation, merger, conveyance or transfer and
upon the assumption by the successor corporation, by supplemental indenture,
executed and delivered to the Trustee and satisfactory in form to the
Trustee, of the due and punctual payment of the principal of and premium, if
any, and interest on all of the Securities and the due and punctual
performance and observance of all of the covenants and conditions of this
Indenture to be performed or observed by the Company, such successor Person
shall succeed to and be substituted for the Company, with the same effect as
if it had been named herein as the party of the first part, and the Company
thereupon shall be relieved of any further liability or obligation hereunder
or upon the Securities. Such successor Person thereupon may cause to be
signed, and may issue either in its own name or in the name of Puget Sound
Energy, Inc., any or all of the Securities issuable hereunder which
theretofore shall not have been signed by the Company and delivered to the
Trustee or the Authenticating Agent; and, upon the order of such successor
Person instead of the Company and subject to all the terms, conditions and
limitations in this Indenture prescribed, the Trustee or the Authenticating
Agent shall authenticate and deliver any Securities which previously shall
have been signed and delivered by the officers of the Company to the Trustee
or the Authenticating Agent for authentication, and any Securities which such
successor Person thereafter shall cause to be signed and delivered to the
Trustee or the Authenticating Agent for that purpose. All the Securities so
issued shall in all respects have the same legal rank and benefit under this
Indenture as the Securities theretofore or thereafter issued in accordance
with the terms of this Indenture as though all of such Indentures had been
issued at the date of the execution hereof.
10.03. Opinion of Counsel to be Given Trustee
The Trustee, subject to the provisions of Sections 6.01 and 6.02, may
receive an Opinion of Counsel as conclusive evidence that any consolidation,
merger, sale, conveyance, transfer or lease, and any assumption, permitted or
required by the terms of this Article X complies with the provisions of this
Article X.
ARTICLE XI
SATISFACTION AND DISCHARGE OF INDENTURE
11.01. Discharge of Indenture
When (a) the Company shall deliver to the Trustee for cancellation
all Securities theretofore authenticated (other than any Securities which
shall have been destroyed, lost or stolen and which shall have been replaced
or paid as provided in Section 2.08) and not theretofore cancelled, or
(b) all the Securities not theretofore cancelled or delivered to the Trustee
for cancellation shall have become due and payable, or are by their terms to
become due and payable within one year or are to be called for redemption
within one year under arrangements satisfactory to the Trustee for the giving
of notice of redemption, and the Company shall deposit with the Trustee, in
trust, funds sufficient to pay on the Maturity Date or upon redemption all of
the Securities (other than any Securities which shall have been destroyed,
lost or stolen and which shall have been replaced as provided in
Section 2.08) not theretofore cancelled or delivered to the Trustee for
cancellation, including principal and premium, if any, and interest due or to
become due to the Maturity Date or redemption date, as the case may be, but
excluding, however, the amount of any moneys for the payment of principal of
or premium, if any, or interest on the Securities (1) theretofore repaid to
the Company in accordance with the provisions of Section 11.04, or (2) paid
to any State or to the District of Columbia pursuant to its unclaimed
property or similar laws, and if in either case the Company shall also pay or
cause to be paid all other sums payable hereunder by the Company, then this
Indenture shall cease to be of further effect except for the provisions of
Sections 2.02, 2.07, 2.08, 3.01, 3.02, 3.04, 6.06, 6.10 and 11.04 hereof,
which shall survive until such Securities shall mature and be paid.
Thereafter, Sections 6.06, 6.10 and 11.04 shall survive, and the Trustee, on
demand of the Company accompanied by any Officers' Certificate and an Opinion
of Counsel and at the cost and expense of the Company, shall execute proper
instruments acknowledging satisfaction of and discharging this Indenture, the
Company, however, hereby agreeing to reimburse the Trustee for any costs or
expenses thereafter reasonably and properly incurred by the Trustee in
connection with this Indenture or the Securities.
11.02. Deposited Moneys and U.S. Government Obligations to be Held in Trust
by Trustee
Subject to the provisions of Section 11.04, all moneys and U.S.
Government Obligations deposited with the Trustee pursuant to Sections 11.01
or 11.05 shall be held in trust and applied by it to the payment, either
directly or through any paying agent (including the Company if acting as its
own paying agent), to the holders of the particular Securities for the
payment of which such moneys or U.S. Government Obligations have been
deposited with the Trustee, of all sums due and to become due thereon for
principal, premium, if any, and interest.
The Company shall pay and indemnify the Trustee against any tax, fee
or other charge imposed on or assessed against the U.S. Government
Obligations deposited pursuant to Section 11.05 or the principal and interest
received in respect thereof other than any such tax, fee or other charge
which by law is for the account of the holders of outstanding Securities.
11.03. Paying Agent to Repay Moneys Held
Upon the satisfaction and discharge of this Indenture all moneys then
held by any paying agent of the Securities (other than the Trustee) shall,
upon written demand of the Company, be repaid to it or paid to the Trustee,
and thereupon such paying agent shall be released from all further liability
with respect to such moneys.
11.04. Return of Unclaimed Moneys
Any moneys deposited with or paid to the Trustee or any paying agent
for payment of the principal of or premium, if any, or interest on Securities
and not applied but remaining unclaimed by the holders of Securities for two
years after the date upon which the principal of or premium, if any, or
interest on such Securities, as the case may be, shall have become due and
payable, shall be repaid to the Company by the Trustee or such paying agent
on Company Request; and the holder of any of the Securities shall thereafter
look only to the Company for any payment which such holder may be entitled to
collect and all liability of the Trustee or such paying agent with respect to
such moneys shall thereupon cease.
11.05. Defeasance Upon Deposit of Moneys or U.S. Government Obligations
The Company shall be deemed to have been Discharged (as defined
below) from its obligations with respect to the Securities on the 91st day
after the conditions set forth below have been satisfied:
(1) The Company shall have deposited or caused to be deposited
irrevocably with the Trustee or the Defeasance Agent (as defined below) as
trust funds in trust, specifically pledged as security for, and dedicated
solely to, the benefit of the holders of the Securities (i) money in an
amount, or (ii) U.S. Government Obligations which through the payment of
interest and principal in respect thereof in accordance with their terms will
provide, not later than one day before the due date of any payment, money in
an amount, or (iii) a combination of (i) and (ii), sufficient, in the opinion
(with respect to (ii) and (iii)) of a nationally recognized firm of
independent public accountants expressed in a written certification thereof
delivered to the Trustee and the Defeasance Agent, if any, to pay and
discharge each installment of principal of and interest and premium, if any,
on the outstanding Securities on the dates such installments of principal,
interest or premium are due;
(2) if the Securities are then listed on any national securities
exchange, the Company shall have delivered to the Trustee and the Defeasance
Agent, if any, an Opinion of Counsel to the effect that the exercise of the
option under this Section 11.05 would not cause such Securities to be
delisted from such exchange;
(3) no Default or Event of Default with respect to the Securities
shall have occurred and be continuing on the date of such deposit; and
(4) the Company shall have delivered to the Trustee and the
Defeasance Agent, if any, an Opinion of Counsel to the effect that holders of
the Securities will not recognize income, gain or loss for United States
federal income tax purposes as a result of the exercise of the option under
this Section 11.05 and will be subject to United States federal income tax on
the same amount and in the same manner and at the same times as would have
been the case if such option had not been exercised, and such opinion shall
be based on a statute so providing or be accompanied by a private letter
ruling to that effect received from the United States Internal Revenue
Service or a revenue ruling pertaining to a comparable form of transaction to
that effect published by the United States Internal Revenue Service.
"Discharged" means that the Company shall be deemed to have paid and
discharged the entire indebtedness represented by, and obligations under, the
Securities and to have satisfied all the obligations under this Indenture
relating to the Securities (and the Trustee, at the expense of the Company,
shall execute proper instruments acknowledging the same), except (A) the
rights of holders of Securities to receive, from the trust fund described in
clause (1) above, payment of the principal of and the interest and premium,
if any, on the Securities when such payments are due; (B) the Company's
obligations with respect to the Securities under Sections 2.02, 2.07, 2.08,
3.02, 3.04, 6.10 and 11.04; and (C) the rights, powers, trusts, duties and
immunities of the Trustee hereunder.
"Defeasance Agent" means another financial institution which is
eligible to act as Trustee hereunder and which assumes all of the obligations
of the Trustee necessary to enable the Trustee to act under this Article. In
the event such a Defeasance Agent is appointed pursuant to this Section, the
following conditions shall apply:
(1) The Trustee shall have approval rights over the document
appointing such Defeasance Agent and the document setting forth such
Defeasance Agent's rights and responsibilities;
(2) The Defeasance Agent shall provide verification to the Trustee
acknowledging receipt of sufficient money and/or U. S. Government Obligations
to meet the applicable conditions set forth in this Section 11.05.
ARTICLE XII
IMMUNITY OF INCORPORATORS, SHAREHOLDERS, OFFICERS AND DIRECTORS
12.01. Indenture and Securities Solely Corporate Obligations
No recourse for the payment of the principal of or premium, if any,
or interest on any Security, or for any claim based thereon or otherwise in
respect thereof, and no recourse under or upon any obligation, covenant or
agreement of the Company in this Indenture, or in any Security, or because of
the creation of any indebtedness represented thereby, shall be had against
any incorporator, shareholder, officer or director, as such, past, present or
future, of the Company or of any successor Person to the Company, either
directly or through the Company or any successor Person to the Company,
whether by virtue of any constitution, statute or rule of law, or by the
enforcement of any assessment or penalty or otherwise; it being expressly
understood that all such liability is hereby expressly waived and released as
a condition of, and as a consideration for, the execution of this Indenture
and the issue of the Securities.
ARTICLE XIII
MISCELLANEOUS PROVISIONS
13.01. Successors
All the covenants, stipulations, promises and agreements in this
Indenture contained by the Company shall bind its successors and assigns
whether so expressed or not.
13.02. Official Acts by Successor Corporation
Any act or proceeding by any provision of this Indenture authorized or
required to be done or performed by any board, committee or officer of the
Company shall and may be done and performed with like force and effect by the
like board, committee or officer of any corporation that shall at the time be
the lawful sole successor of the Company.
13.03. Surrender of Company Powers
The Company by instrument in writing executed by authority of 2/3
(two-thirds) of its Board of Directors and delivered to the Trustee may
surrender any of the powers reserved to the Company, and thereupon such power
so surrendered shall terminate both as to the Company, as the case may be,
and as to any successor Person.
13.04. Addresses for Notices, etc.
Any notice or demand which by any provision of this Indenture is
required or permitted to be given or served by the Trustee or by the holders
of Securities on the Company may be given or served by being deposited
postage prepaid by registered or certified mail in a post office letter box
addressed (until another address is filed by the Company with the Trustee for
the purpose) to the Company, 411 - 108th Avenue N.E., Bellevue, Washington
98004-5515, Attention: Vice President, Treasurer or Secretary. Any notice,
direction, request or demand by any Securityholder to or upon the Trustee
shall be deemed to have been sufficiently given or made, for all purposes, if
given or made in writing at the office of the Trustee, One First National
Plaza, Suite 0126, Chicago, IL 60670-0126, Attention: Corporate Trust
Services Division (unless another address is provided by the Trustee to the
Company for the purpose).
Any notice or communication to a Holder shall be mailed by first
class mail to his or her address shown on the register kept by the Registrar.
Failure to mail a notice or communication to a Holder or any defect in it
shall not affect its sufficiency with respect to other Holders.
13.05. Governing Law
This Indenture and each Security shall be deemed to be a contract
made under the laws of the State of New York, and for all purposes shall be
governed by and construed in accordance with the laws of said State, without
regard to conflicts of laws principles thereof.
13.06. Evidence of Compliance with Conditions Precedent
Upon any application or demand by the Company to the Trustee to take
any action under any of the provisions of this Indenture, the Company shall
furnish to the Trustee an Officers' Certificate stating that in the opinion
of the signers all conditions precedent, if any, provided for in this
Indenture relating to the proposed action have been complied with and an
Opinion of Counsel stating that, in the opinion of such counsel, all such
conditions precedent have been complied with.
Each certificate or opinion provided for in this Indenture and delivered to
the Trustee with respect to compliance with a condition or covenant provided
for in this Indenture (except pursuant to Section 3.05) shall include (1) a
statement that the person making such certificate or opinion has read such
covenant or condition; (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 such person, he has made such examination or investigation as
is necessary to enable him to express an informed opinion as to whether or
not such covenant or condition has been complied with; and (4) a statement as
to whether or not, in the opinion of such person, such condition or covenant
has been complied with.
13.07. Business Days
In any case where the date of payment of principal of or premium, if
any, or interest on the Securities will not be a Business Day, the payment of
such principal of or premium, if any, or interest on the Securities need not
be made on such date but may be made on the next succeeding Business Day,
with the same force and effect as if made on the date of payment and no
interest shall accrue for the period from and after such date.
13.08. Trust Indenture Act to Control
If and to the extent that any provision of this Indenture limits,
qualifies or conflicts with the duties imposed by Sections 310 to 317,
inclusive, of the Trust Indenture Act of 1939, such imposed duties shall
control.
13.09. Table of Contents, Headings, etc.
The table of contents and the titles and headings of the articles and
sections of this Indenture have been inserted for convenience of reference
only, are not to be considered a part hereof, and shall in no way modify or
restrict any of the terms or provisions hereof.
13.10. Execution in Counterparts
This Indenture may be executed in any number of counterparts, each of
which shall be an original, but such counterparts shall together constitute
but one and the same instrument.
13.11. Separability
In case any one or more of the provisions contained in this Indenture
or in the Securities shall for any reason be held to be invalid, illegal or
unenforceable in any respect, such invalidity, illegality or unenforceability
shall not affect any other provisions of this Indenture or of the Securities,
but this Indenture and the Securities shall be construed as if such invalid
or illegal or unenforceable provision had never been contained herein or
therein.
13.12. Assignment
The Company will have the right at all times to assign any of its
respective rights or obligations under this Indenture to a direct or indirect
wholly owned Subsidiary of the Company, provided that, in the event of any
such assignment, the Company will remain primarily liable for all its
obligations. Subject to the foregoing, the Indenture is binding upon and
inures to the benefit of the parties thereto and their respective successors
and assigns. This Indenture may not otherwise be assigned by the parties
thereto.
13.13. Acknowledgement of Rights
The Company acknowledges that, with respect to any Securities held by
Puget Sound Energy Trust or a trustee of such trust, if the Property Trustee
of such Trust fails to enforce its rights under this Indenture as the holder
of the Securities held as the assets of Puget Sound Energy Trust any holder
of Capital Securities may institute legal proceedings directly against the
Company to enforce such Property Trustee's rights under this Indenture
without first instituting any legal proceedings against such Property Trustee
or any other person or entity. 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 principal of or premium, if any, or interest on
the Securities when due, the Company acknowledges that a holder of Capital
Securities may directly institute a proceeding for enforcement of payment to
such holder of the principal of or premium, if any, or interest on the
Securities having a principal amount equal to the aggregate liquidation
amount of the Capital Securities of such holder on or after the respective
due date specified in the Securities.
ARTICLE XIV
REDEMPTION OF SECURITIES -- MANDATORY AND OPTIONAL SINKING FUND
14.01. Tax Event Redemption
If a Tax Event has occurred and is continuing then, notwithstanding
Section 14.02(a) , the Company shall have the right at any time prior to the
Initial Optional Redemption Date, upon (i) not less than 45 days written
notice to the Trustee, which notice shall be accompanied by an Officers'
Certificate certifying that a Tax Event entitling the Company to redeem the
Securities pursuant to this Section, has occurred and (ii) not less than 30
days nor more than 60 days written notice to the Securityholders, to redeem
the Securities, in whole (but not in part), within 90 days following the
occurrence of such Tax Event at the Tax Event Redemption Price. Following a
Tax Event, the Company shall take such action as is necessary to promptly
determine the Tax Event Redemption Price, including without limitation the
appointment by the Company of a Quotation Agent. The Tax Event Redemption
Price shall be paid prior to 12:00 noon, New York time, on the date of such
redemption or such earlier time as the Company determines, provided that the
Company shall deposit with the Trustee an amount sufficient to pay the Tax
Event Redemption Price by 10:00 a.m., New York time, on the date such Tax
Event Prepayment Price is to be paid. The Company shall provide the Trustee
with written notice of the Tax Event Redemption Price promptly after the
calculation thereof, which notice shall include any calculation made by the
Quotation Agent in connection with the determination of the Tax Event
Redemption Price.
14.02. Optional Redemption by Company
Subject to the provisions of this Article XIV, the Company shall have
the right to redeem the Securities, in whole or in part, from time to time,
on or after the Initial Optional Redemption Date at a redemption price (the
"Optional Redemption Price") equal to the percentage of the outstanding
principal amount of the Securities specified below, plus, in each case,
accrued interest thereon to the date of redemption if redeemed during the 12-
month period beginning June 1 of the years indicated below.
YEAR PERCENTAGE
2007 104.116%
2008 103.704%
2009 103.292%
2010 102.881%
2011 102.469%
2012 102.058%
2013 101.646%
2014 101.235%
2015 100.823%
2016 100.412%
2017 and thereafter 100.00%
If the Securities are only partially redeemed pursuant to this
Section 14.02, the Securities will be redeemed pro rata or by lot or by any
other method utilized by the Trustee; provided, that if at the time of
redemption the Securities are registered as a Global Security, the Depositary
shall determine, in accordance with its procedures, the principal amount of
such Securities held for the account of its participants to be redeemed. The
Optional Redemption Price shall be paid prior to 12:00 noon, New York time,
on the date of such redemption or at such earlier time as the Company
determines, provided that the Company shall deposit with the Trustee an
amount sufficient to pay the Optional Redemption Price by 10:00 a.m., New
York time, on the date such Optional Redemption Price is to be paid.
14.03. No Sinking Fund
The Securities are not entitled to the benefit of any sinking fund.
14.04. Notice of Redemption; Selection of Securities
In case the Company shall desire to exercise the right to redeem all,
or, as the case may be, any part of the Securities in accordance with their
terms, it shall fix a date for redemption and shall mail a notice of such
redemption at least 30 and not more than 60 days prior to the date fixed for
redemption to the holders of Securities so to be redeemed as a whole or in
part at their last addresses as the same appear on the Security Register.
Such mailing shall be by first class mail. The notice if mailed in the
manner herein provided shall be conclusively presumed to have been duly
given, whether or not the holder receives such notice. In any case, failure
to give such notice by mail or any defect in the notice to the holder of any
Security designated for redemption as a whole or in part shall not affect the
validity of the proceedings for the redemption of any other Security.
Each such notice of redemption shall specify the CUSIP number of the
Securities to be redeemed, the date fixed for redemption, the redemption
price at which the Securities are to be redeemed (or the method by which such
redemption price is to be calculated), the place or places of payment, that
payment will be made upon presentation and surrender of the Securities, that
interest accrued to the date fixed for redemption will be paid as specified
in said notice, and that on and after said date interest thereon or on the
portions thereof to be redeemed will cease to accrue. If less than all the
Securities are to be redeemed the notice of redemption shall specify the
numbers of the Securities to be redeemed. In case any Security is to be
redeemed in part only, the notice of redemption shall state the portion of
the principal amount thereof to be redeemed and shall state that on and after
the date fixed for redemption, upon surrender of such Security, a new
Security or Securities in principal amount equal to the unredeemed portion
thereof will be issued.
By 10:00 a.m. New York time on the redemption date specified in the
notice of redemption given as provided in this Section, the Company will
deposit with the Trustee or with one or more paying agents an amount of money
sufficient to redeem on the redemption date all the Securities so called for
redemption at the appropriate Redemption Price, together with accrued
interest to the date fixed for redemption.
The Company will give the Trustee notice not less than 45 days prior
to the redemption date as to the aggregate principal amount of Securities to
be redeemed and the Trustee shall select, in such manner as in its sole
discretion it shall deem appropriate and fair, the Securities or portions
thereof (in integral multiples of $1,000, except as otherwise set forth in
the applicable form of Security) to be redeemed.
14.05. Payment of Securities Called for Redemption
If notice of redemption has been given as provided in Section 14.04,
the Securities or portions of Securities with respect to which such notice
has been given shall become due and payable on the date and at the place or
places stated in such notice at the applicable Redemption Price, together
with interest accrued to the date fixed for redemption (subject to the rights
of holders of Securities on the close of business on a regular record date in
respect of an Interest Payment Date occurring on or prior to the redemption
date), and on and after said date (unless the Company shall default in the
payment of such Securities at the Redemption Price, together with interest
accrued to said date) interest on the Securities or portions of Securities so
called for redemption shall cease to accrue. On presentation and surrender
of such Securities at a place of payment specified in said notice, the said
Securities or the specified portions thereof shall be paid and redeemed by
the Company at the applicable Redemption Price, together with interest
accrued thereon to the date fixed for redemption (subject to the rights of
holders of Securities on the close of business on a regular record date in
respect of an Interest Payment Date occurring on or prior to the redemption
date).
Upon presentation of any Security redeemed in part only, the Company
shall execute and the Trustee shall authenticate and make available for
delivery to the holder thereof, at the expense of the Company, a new Security
or Securities of authorized denominations, in principal amount equal to the
unredeemed portion of the Security so presented.
ARTICLE XV
SUBORDINATION OF SECURITIES
15.01. Agreement to Subordinate
The Company covenants and agrees, and each holder of Securities
issued hereunder likewise covenants and agrees, that the Securities shall be
issued subject to the provisions of this Article XV; 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 (including redemption
payments), premium, if any, and interest 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 all Senior Indebtedness, whether
outstanding at the date of this Indenture or thereafter incurred.
No provision of this Article XV shall prevent the occurrence of any
Default or Event of Default hereunder.
15.02. 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, in the event that any applicable grace period
with respect to such default has ended and such default has not been cured or
waived or ceased to exist, or in the event that the maturity of any Senior
Indebtedness has been accelerated because of a default, then, in any of these
cases, no payment shall be made by the Company with respect to the principal
(including redemption payments) of or premium, if any, or interest on the
Securities.
In the event of the acceleration of the maturity of the Securities,
then no payment shall be made by the Company with respect to the principal
(including redemption payments) of or premium, if any, or interest on the
Securities until the holders of all Senior Indebtedness outstanding at the
time of such acceleration shall receive payment in full.
In the event that, notwithstanding the foregoing, any payment shall
be received by the Trustee when such payment is prohibited by the preceding
paragraphs of this Section 15.02, 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 representatives, 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 payment of the amounts then due and owing on
such Senior Indebtedness and only the amounts specified in such notice to the
Trustee shall be paid to the holders of such Senior Indebtedness.
15.03. 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, winding-up, liquidation, reorganization,
assignment for the benefit of creditors, marshaling of assets or any
bankruptcy, insolvency, debt restructuring or similar proceedings in
connection with any insolvency or bankruptcy proceeding of the Company, all
Senior Indebtedness of the Company must first be paid in full, or payment
thereof provided for in money in accordance with its terms, before any
payment is made by the Company 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 Securityholders or the Trustee
would be entitled to receive from the Company, except for the provisions of
this Article XV, 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 Securityholders or by the Trustee under the Indenture
if received by them or it, directly to the holders of Senior Indebtedness of
the Company (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 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, as their respective interests may appear,
to the extent necessary to pay all 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 Securityholders 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 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 such 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, as 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 all 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 benefit of the
holders of such Senior Indebtedness.
For purposes of this Article XV, 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 XV with respect to the Securities to the payment of Senior
Indebtedness that may at the 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 into, another Person or the
liquidation or dissolution of the Company following the sale, conveyance,
transfer or lease of its property as an entirety, or substantially as an
entirety, to another Person upon the terms and conditions provided for in
Article X of this Indenture shall not be deemed a dissolution, winding-up,
liquidation or reorganization for the purposes of this Section 15.03 if such
other Person shall, as a part of such consolidation, merger, sale,
conveyance, transfer or lease, comply with the conditions stated in Article X
of this Indenture.
15.04. Subrogation
Subject to the payment in full of all Senior Indebtedness, the rights
of the Securityholders 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 Securityholders
or the Trustee would be entitled except for the provisions of this
Article XV, and no payment over pursuant to the provisions of this Article XV
to or for the benefit of the holders of such Senior Indebtedness by
Securityholders or the Trustee, shall, as between the Company, its creditors
other than holders of Senior Indebtedness of the Company, 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 XV 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 XV 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 of the Company,
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 of the Company, as the case may be, 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 the Indenture, subject to the rights, if any, under this
Article XV of the holders of such Senior Indebtedness in respect of cash,
property or securities of the Company, as the case may be, received upon the
exercise of any such remedy.
15.05. Trustee to Effectuate Subordination
Each Securityholder by such Securityholder's acceptance thereof
authorizes and directs the Trustee on such Securityholder's behalf to take
such action as may be necessary or appropriate to effectuate the
subordination provided in this Article XV and appoints the Trustee such
Securityholder's attorney-in-fact for any and all such purposes.
15.06. 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 that 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 XV. Notwithstanding
the provisions of this Article XV or any other provision of this Indenture,
the Trustee shall not be charged with knowledge of the existence of any facts
that 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 XV,
unless and until a Responsible Officer of the Trustee assigned to its
Principal Office shall have received written notice thereof 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 Article VI of this Indenture, shall be entitled in all
respects to assume that no such facts exist; provided, however, that if the
Trustee shall not have received the notice provided for in this Section 15.06
at least two Business Days prior to the date (i) upon which by the terms
hereof any money may become payable for any purpose (including, without
limitation, the payment of the principal of (or premium, if any) or interest
on any Security), or (ii) moneys and/or U.S. Government Obligations are
deposited in trust pursuant to Article XI, then anything herein contained to
the contrary notwithstanding, the Trustee shall have full power and authority
to receive such money and U.S. Government Obligations and to apply the same
to the purposes for which they were received, and shall not be affected by
any notice to the contrary that may be received by it within two Business
Days prior to such date.
The Trustee, subject to the provisions of Article VI of this
Indenture, shall be entitled to conclusively rely on the delivery to it of a
written notice by a Person representing himself to be a holder of Senior
Indebtedness of the Company (or a trustee or representative on behalf of such
holder), as the case may be, to establish that such notice has been given by
a holder of such Senior Indebtedness or a trustee or representative 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 such Senior Indebtedness to participate in any payment
or distribution pursuant to this Article XV, the Trustee may request such
Person to furnish evidence to the reasonable satisfaction of the Trustee as
to the amount of such Senior Indebtedness held by such Person, the extent to
which such Person is entitled to participate in such payment or distribution
and any other facts pertinent to the rights of such Person under this
Article XV, 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.
Upon any payment or distribution of assets of the Company referred to
in this Article XV, the Trustee and the Securityholders shall be entitled to
rely upon any order or decree entered by any court of competent jurisdiction
in which such insolvency, bankruptcy, receivership, liquidation,
reorganization, dissolution, winding up or similar case or proceeding is
pending, or a certificate of the trustee in bankruptcy, liquidating trustee,
custodian, receiver, assignee for the benefit of creditors, agent or other
person making such payment or distribution, delivered to the Trustee or to
the Securityholders, for the purpose of ascertaining the persons entitled to
participate in such payment or distribution, the holders of Senior
Indebtedness and other indebtedness of the Company, the amount thereof or
payable thereon, the amount or amounts paid or distributed thereon and all
other facts pertinent thereto or to this Article XV.
15.07. 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 XV 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, the Trustee
undertakes to perform or to observe only such of its covenants and
obligations as are specifically set forth in this Article XV, and no implied
covenants or obligations with respect to the holders of 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 Senior Indebtedness
and, subject to the provisions of Article VI of this Indenture, the Trustee
shall not be liable to any holder of Senior Indebtedness if it shall pay over
or deliver to Securityholders, the Company or any other Person money or
assets to which any holder of Senior Indebtedness shall be entitled by virtue
of this Article XV or otherwise.
Nothing in this Article XV shall apply to claims of, or payments to,
the Trustee under or pursuant to Section 6.06.
15.08. 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 that 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 time
to time, without the consent of or notice to the Trustee or the
Securityholders, without incurring responsibility to the Securityholders and
without impairing or releasing the subordination provided in this Article XV
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 XVI
EXTENSION OF INTEREST PAYMENT PERIOD
16.01. Extension of Interest Payment Period
So long as no Event of Default has occurred and is continuing, the
Company shall have the right, at any time and from time to time during the
term of the Securities, to defer payments of interest by extending the
interest payment period of such Securities for a period not exceeding 10
consecutive semi-annual periods, including the first such semi-annual period
during such extension period (the "Extended Interest Payment Period"), during
which Extended Interest Payment Period no interest shall be due and payable;
provided that no Extended Interest Payment Period shall end on a date other
than an Interest Payment Date or 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 pursuant to
this Section 16.01, will bear interest thereon at the annual rate of 8.231%
compounded semi-annually for each semi-annual period of the Extended Interest
Payment Period ("Compounded Interest"). At the end of the Extended Interest
Payment Period, the Company shall pay all interest accrued and unpaid on the
Securities, including any Additional Interest and Compounded Interest
(together, "Deferred Interest") that shall be payable to the holders of the
Securities in whose names the Securities are registered in the Security
Register on the first record date preceding the end of the Extended Interest
Payment Period. Before the termination of any Extended Interest Payment
Period, the Company may further defer payments of interest by further
extending such period, provided that such period, together with all such
previous and further extensions within such Extended Interest Payment Period,
shall not exceed 10 consecutive semi-annual periods, including the first such
semi-annual period during such Extended Interest Payment Period, or extend
beyond the Maturity Date. Upon the termination of any Extended Interest
Payment Period and the payment of all Deferred Interest 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, but the Company may
prepay at any time all or any portion of the interest accrued during an
Extended Interest Payment Period.
16.02. Notice of Extension
(a) If the Property Trustee is the only registered holder of the
Securities at the time the Company selects an Extended Interest Payment
Period, the Company shall give written notice to the Administrative Trustees,
the Property Trustee and the Trustee of its selection of such Extended
Interest Payment Period five Business Days before the earlier of (i) the next
succeeding date on which Distributions on the Trust Securities issued by
Puget Sound Energy Trust are payable, or (ii) the date Puget Sound Energy
Trust is required to give notice of the record date, or the date such
Distributions are payable, to any national securities exchange or to holders
of the Capital Securities issued by Puget Sound Energy Trust, but in any
event at least five Business Days before such record date.
(b) If the Property Trustee is not the only 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 such Extended Interest Payment Period at least 10
Business Days before the earlier of (i) the next succeeding Interest Payment
Date, or (ii) the date the Company is required to give notice of the record
or payment date of such interest payment to any national securities exchange.
(c) The semi-annual period in which any notice is given pursuant to
paragraphs (a) or (b) of this Section 16.02 shall be counted as one of the 10
semi-annual periods permitted in the maximum Extended Interest Payment Period
permitted under Section 16.01.
The First National Bank of Chicago, as Trustee, hereby accepts the
trusts in this Indenture declared and provided, upon the terms and conditions
hereinabove set forth.
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to
be duly executed by their respective officers thereunto duly authorized, as
of the day and year first above written.
PUGET SOUND ENERGY, INC.
By /s/ Donald E. Gaines
Name: Donald E. Gaines
Title: Treasurer
THE FIRST NATIONAL BANK OF CHICAGO,
as Trustee
By /s/ Richard D. Manella
Name: Richard D. Manella
Title: Vice President
EXHIBIT A
(FORM OF FACE OF SECURITY)
[IF THE SECURITY IS A GLOBAL SECURITY, INSERT: - THIS SECURITY IS A
GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE HEREINAFTER REFERRED TO
AND IS REGISTERED IN THE NAME OF A DEPOSITARY OR A NOMINEE OF A DEPOSITARY.
THIS SECURITY IS EXCHANGEABLE FOR SECURITIES REGISTERED IN THE NAME OF A
PERSON OTHER THAN THE DEPOSITARY OR ITS NOMINEE ONLY IN THE LIMITED
CIRCUMSTANCES DESCRIBED IN THE INDENTURE, AND NO TRANSFER OF THIS SECURITY
(OTHER THAN A TRANSFER OF THIS SECURITY AS A WHOLE BY THE DEPOSITARY TO A
NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY
OR ANOTHER NOMINEE OF THE DEPOSITARY) MAY BE REGISTERED EXCEPT IN LIMITED
CIRCUMSTANCES.
UNLESS THIS SECURITY IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC") TO THE ISSUER OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY SECURITY
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT HEREON 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 IN AS MUCH AS SINCE THE REGISTERED
OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.]
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE "SECURITIES ACT") OR ANY STATE SECURITIES LAWS OR ANY OTHER
APPLICABLE SECURITIES LAW. NEITHER THIS SECURITY NOR ANY INTEREST OR
PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED,
ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR
UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, REGISTRATION.
THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF AGREES TO OFFER,
SELL OR OTHERWISE TRANSFER THIS SECURITY, PRIOR TO THE DATE (THE "RESALE
RESTRICTION TERMINATION DATE") WHICH IS THREE YEARS AFTER THE LATER OF THE
ORIGINAL ISSUANCE DATE HEREOF AND THE LAST DATE ON WHICH THE COMPANY OR ANY
"AFFILIATE" OF THE COMPANY WAS THE OWNER OF THIS SECURITY (OR ANY PREDECESSOR
OF THIS SECURITY) ONLY (A) TO THE COMPANY, (B) PURSUANT TO A REGISTRATION
STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C) SO
LONG AS THIS SECURITY IS 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) TO AN INSTITUTIONAL "ACCREDITED INVESTOR" WITHIN THE MEANING OF
SUBPARAGRAPH (A)(1), (2), (3) OR (7) OF RULE 501 UNDER THE SECURITIES ACT
THAT IS ACQUIRING THIS SECURITY FOR ITS OWN ACCOUNT, OR FOR THE ACCOUNT OF
SUCH AN INSTITUTIONAL ACCREDITED INVESTOR, FOR INVESTMENT PURPOSES AND NOT
WITH A VIEW TO, OR FOR OFFER OR SALE IN CONNECTION WITH, ANY DISTRIBUTION IN
VIOLATION OF THE SECURITIES ACT, OR (E) PURSUANT TO ANY OTHER AVAILABLE
EXEMPTION FROM THE REGISTRATION REQUIREMENTS UNDER THE SECURITIES ACT,
SUBJECT TO THE RIGHT OF THE COMPANY PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER
(i) PURSUANT TO CLAUSE (D) OR (E) TO REQUIRE THE DELIVERY OF AN OPINION OF
COUNSEL, CERTIFICATIONS AND/OR OTHER INFORMATION SATISFACTORY TO THE COMPANY,
AND (ii) PURSUANT TO CLAUSE (D), TO REQUIRE THAT A CERTIFICATE OF TRANSFER IN
THE FORM APPEARING ON THE REVERSE OF THIS SECURITY IS COMPLETED AND DELIVERED
BY THE TRANSFEREE TO THE COMPANY. SUCH HOLDER FURTHER AGREES THAT IT WILL
DELIVER TO EACH PERSON TO WHOM THIS SECURITY IS TRANSFERRED A NOTICE
SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND.
No. ___________ CUSIP No. ______________
PUGET SOUND ENERGY, INC.
8.231% SERIES JUNIOR SUBORDINATED DEFERRABLE INTEREST DEBENTURE
DUE JUNE 1, 2027
Puget Sound Energy, Inc., a Washington corporation (the "Company", which
term includes any successor Person under the Indenture hereinafter referred
to), for value received, hereby promises to pay to Puget Sound Energy Capital
Trust I, or registered assigns, the principal sum of One Hundred Three
Million Ninety Three Thousand Dollars on June 1, 2027 (the "Maturity Date"),
unless previously redeemed, and to pay interest on the outstanding principal
amount hereof from June 6, 1997, or from the most recent interest payment
date (each such date, an "Interest Payment Date") to which interest has been
paid or duly provided for, semi-annually (subject to deferral as set forth
herein) in arrears on June 1 and December 1 of each year, commencing
December 1, 1997 at the rate of 8.231% per annum until the principal hereof
shall have become due and payable, and at the same rate per annum on any
overdue principal and premium, if any, and (without duplication and to the
extent that payment of such interest is enforceable under applicable law) on
any overdue installment of interest at the same rate per annum compounded
semi-annually. The amount of interest payable on any Interest Payment Date
shall be computed on the basis of a 360-day year of twelve 30-day months and,
for any period less than a full calendar month, the number of days elapsed in
such month. In the event that any date on which the principal of (or
premium, if any) or interest on this Security is payable is not a Business
Day, then the payment payable on such date will be made on the next
succeeding day that is a Business Day (and without any interest or other
payment in respect of any such delay), with the same force and effect as if
made on such date. Pursuant to the Registration Rights Agreement, in certain
limited circumstances the Company will be required to pay Liquidated Damages
(as defined in the Registration Rights Agreement) with respect to this
Security.
The interest installment so payable, and punctually paid or duly
provided for, on any Interest Payment Date will, as provided in the
Indenture, be paid to the person in whose name this Security (or one or more
Predecessor Securities, as defined in said Indenture) is registered at the
close of business on the regular record date for such interest installment,
which shall be the May 15 or November 15 immediately preceding the relevant
interest payment date. Any such interest installment not punctually paid or
duly provided for shall forthwith cease to be payable to the holders on such
regular record date and may 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 to be fixed by the Trustee for the payment
of such defaulted interest, notice whereof shall be given to the holders of
Securities not less than 10 days prior to such special record date, or may be
paid at any time in any other lawful manner not inconsistent with the
requirements of any securities exchange on which the Securities may be
listed, and upon such notice as may be required by such exchange, all as more
fully provided in the Indenture.
The principal of (and premium, if any) and interest on this Security
shall be payable at the office or agency of the Trustee maintained for that
purpose in any coin or currency of the United States of America that at the
time of payment is legal tender for payment of public and private debts;
provided, however, that, payment of interest may be made at the option of the
Company by (i) check mailed to the holder at such address as shall appear in
the Security Register or (ii) by transfer to an account maintained by the
Person entitled thereto, provided that proper written transfer instructions
have been received by the relevant record date. Notwithstanding the
foregoing, so long as the Holder of this Security is the Property Trustee,
the payment of the principal of (and premium, if any) and interest on this
Security will be made at such place and to such account as may be designated
by the Property Trustee.
The indebtedness evidenced by this Security is, to the extent provided
in the Indenture, subordinate and junior in right of payment to the prior
payment in full of all Senior Indebtedness, and this Security is issued
subject to the provisions of the Indenture with respect thereto. Each holder
of this Security, by accepting the same, (a) agrees to and shall be bound by
such provisions, (b) authorizes and directs the Trustee on his or her behalf
to take such action as may be necessary or appropriate to acknowledge or
effectuate the subordination so provided and (c) appoints the Trustee his or
her attorney-in-fact for any and all such purposes. Each holder hereof, by
his or her acceptance hereof, hereby waives all notice of the acceptance of
the subordination provisions contained herein and in the Indenture by each
holder of Senior Indebtedness, whether now outstanding or hereafter incurred,
and waives reliance by each such holder upon said provisions.
This Security shall not be entitled to any benefit under the Indenture
hereinafter referred to, or be valid or become obligatory for any purpose
until the Certificate of Authentication hereon shall have been signed by or
on behalf of the Trustee.
The provisions of this Security are continued on the reverse side hereof
and such provisions shall for all purposes have the same effect as though
fully set forth at this place.
IN WITNESS WHEREOF, the Company has caused this instrument to be
executed.
PUGET SOUND ENERGY, INC.
By __________________________
Name:
Title:
Attest:
By: ___________________________
Name:
Title:
(FORM OF CERTIFICATE OF AUTHENTICATION)
CERTIFICATE OF AUTHENTICATION
This is one of the Securities referred to in the within-mentioned Indenture.
Dated ______________
THE FIRST NATIONAL BANK OF CHICAGO
as Trustee
By____________________
Authorized Officer
(FORM OF REVERSE OF SECURITY)
This Security is one of the Securities of the Company (herein sometimes
referred to as the "Securities"), specified in the Indenture, all issued or
to be issued under and pursuant to an Indenture, dated as of June 6, 1997
(the "Indenture"), duly executed and delivered between the Company and The
First National Bank of Chicago, as Trustee (the "Trustee"), to which
Indenture reference is hereby made for a description of the rights,
limitations of rights, obligations, duties and immunities thereunder of the
Trustee, the Company and the holders of the Securities.
Upon the occurrence and continuation of a Tax Event, the Company shall
have the right at any time, within 90 days following the occurrence of a Tax
Event, prior to June 1, 2007 (the "Initial Optional Redemption Date"), to
redeem this Security in whole (but not in part) at the Tax Event Redemption
Price. "Tax Event Redemption Price" shall mean, with respect to any
redemption of the Securities following a Tax Event, an amount in cash equal
to the greater of (i) 100% of the principal amount to be redeemed or (ii) the
sum, as determined by a Quotation Agent, of the present values of the
remaining scheduled payments of principal and interest on the Securities to
Maturity Date, discounted to the redemption date on a semi-annual basis
(assuming a 360-day year consisting of twelve 30-day months) at the Adjusted
Treasury Rate, plus, in each case, any accrued and unpaid interest thereon,
including Compounded Interest and Additional Interest, if any, to the date of
such redemption.
In addition, the Company shall have the right to redeem this Security,
in whole or in part, at any time on or after the Initial Optional Redemption
Date (an "Optional Redemption"), at a redemption price (the "Optional
Redemption Price") equal to the percentage of the outstanding principal
amount of the Debentures specified below, plus, in each case, accrued
interest thereon to the date of redemption if redeemed during the 12-month
period beginning June 1 of the years indicated below.
YEAR PERCENTAGE
2007 104.116%
2008 103.704%
2009 103.292%
2010 102.881%
2011 102.469%
2012 102.058%
2013 101.646%
2014 101.235%
2015 100.823%
2016 100.412%
2017 and thereafter 100.00%
The Optional Redemption Price or the Tax Event Redemption Price, as the
case requires, shall be paid prior to 12:00 noon, New York time, on the date
of such redemption or at such earlier time as the Company determines,
provided, that the Company shall deposit with the Trustee an amount
sufficient to pay the applicable Redemption Price by 10:00 a.m., New York
City time, on the date such Redemption Price is to be paid. Any redemption
pursuant to this paragraph will be made upon not less than 30 days nor more
than 60 days notice. If the Securities are only partially redeemed by the
Company pursuant to an Optional Redemption, the Securities will be redeemed
pro rata or by lot or by any other method utilized by the Trustee; provided
that if, at the time of redemption, the Securities are registered as a Global
Security, the Depositary shall determine in accordance with its procedures
the principal amount of such Securities held for the account of its
participants to be redeemed.
In the event of redemption of this Security in part only, a new Security
or Securities for the unredeemed portion hereof will be issued in the name of
the holder hereof upon the cancellation hereof.
Notwithstanding the foregoing, any redemption of Securities by the
Company shall be subject to the receipt by the Company of any required
regulatory approval.
In case an Event of Default, as defined in the Indenture, shall have
occurred and be continuing, the principal of all of the Securities may be
declared, and upon such declaration shall become, due and payable, in the
manner, with the effect and subject to the conditions provided in the
Indenture.
The Indenture contains provisions permitting the Company and the
Trustee, with the consent of the holders of a majority in aggregate principal
amount of the Securities at the time outstanding, as defined in the
Indenture, to execute supplemental indentures for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions
of the Indenture or of modifying in any manner the rights of the holders of
the Securities; provided, however, that no such supplemental indenture shall,
without the consent of each holder of Securities then outstanding and
affected thereby, (i) extend the Maturity Date of any Securities, or reduce
the principal amount thereof, or reduce any amount payable on redemption
thereof, or reduce the rate or extend the time of payment of interest thereon
(subject to Article XVI of the Indenture), or make the principal of, or
interest or premium on, the Securities payable in any coin or currency other
than U.S. dollars, or impair or affect the right of any holder of Securities
to institute suit for the payment thereof, or (ii) reduce the aforesaid
percentage of Securities, the holders of which are required to consent to any
such supplemental indenture. The Indenture also contains provisions
permitting the holders of a majority in aggregate principal amount of the
Securities at the time outstanding, on behalf of all of the holders of the
Securities, to waive any past default in the performance of any of the
covenants contained in the Indenture, or established pursuant to the
Indenture, and its consequences, except a default in the payment of the
principal of or premium, if any, or interest on any of the Securities or a
default in respect of any covenant or provision under which the Indenture
cannot be modified or amended without the consent of each holder of
Securities then outstanding. Any such consent or waiver by the holder of
this Security (unless revoked as provided in the Indenture) shall be
conclusive and binding upon such Holder and upon all future holders and
owners of this Security and of any Security issued in exchange herefor or in
place hereof (whether by registration of transfer or otherwise), irrespective
of whether or not any notation of such consent or waiver is made upon this
Security.
No reference herein to the Indenture and no provision of this Security
or of the Indenture shall alter or impair the obligation of the Company,
which is absolute and unconditional, to pay the principal of and premium, if
any, and interest on this Security at the time and place and at the rate and
in the money herein prescribed.
The Company shall have the right, at any time and from time to time
during the term of the Securities, to defer payments of interest by extending
the interest payment period of such Securities for a period not exceeding 10
consecutive semi-annual periods, including the first such semi-annual period
during such extension period, and not to extend beyond the Maturity Date of
the Securities (an "Extended Interest Payment Period"), at the end of which
period the Company shall pay all interest then accrued and unpaid (together
with interest thereon at the rate specified for the Securities to the extent
that payment of such interest is enforceable under applicable law). Before
the termination of any such Extended Interest Payment Period, the Company may
further defer payments of interest by further extending such Extended
Interest Payment Period, provided that such Extended Interest Payment Period,
together with all such previous and further extensions within such Extended
Interest Payment Period, shall not exceed 10 consecutive semi-annual periods,
including the first semi-annual period during such Extended Interest Payment
Period shall not end on any date other than an Interest Payment Date, or
extend beyond the Maturity Date of the Securities. Upon the termination of
any such Extended Interest Payment Period and the payment of all accrued and
unpaid interest and any additional amounts then due, the Company may commence
a new Extended Interest Payment Period, subject to the foregoing
requirements.
The Company has agreed that it will not (i) declare or pay any dividends
or distributions on, or redeem, purchase, acquire, or make a liquidation
payment with respect to, any of the Company's capital stock (which includes
common and preferred stock) or (ii) make any payment of principal, interest
or premium, if any, on or repay or repurchase or redeem any debt securities
of the Company that rank pari passu with or junior in right of payment to the
Securities or (iii) make any guarantee payments with respect to any guarantee
by the Company of any securities or any Subsidiary of the Company (including
any Other Guarantees) if such guarantee ranks pari passu or junior in right
of payment to the Securities (other than (a) dividends or distributions in
shares of, or options, warrants or rights to subscribe for or purchase shares
of, Common Stock of the Company; (b) any declaration of a dividend in
connection with the implementation of a stockholder's rights plan, or the
issuance of stock under any such plan in the future, or the redemption or
repurchase of any such rights pursuant thereto; (c) payments under the
Capital Securities Guarantee; (d) as a direct result of, and only to the
extent required in order to avoid the issuance of fractional shares of
capital stock, following a reclassification of the Company's capital stock or
the exchange or conversion of one class or series of the Company's capital
stock for another class or series of the Company's capital stock; and (e) the
purchase of fractional interests in shares of the Company's capital stock
pursuant to the exchange or conversion of such capital stock or the security
being exchanged or converted) if at such time (i) an Event of Default shall
have occurred and be continuing, (ii) there shall have occurred any event of
which the Company has actual knowledge that (a) is, or with the giving of
notice or the lapse of time, or both, would be, an Event of Default and
(b) in respect of which the Company shall not have taken reasonable steps to
cure, (iii) the Company shall be in default with respect to its payment
obligations under the Capital Securities Guarantee or (iv) the Company shall
have given notice of its election of the exercise of its right to extend the
interest payment period, or any extension thereof, pursuant to Section 16.01
of the Indenture and shall not have rescinded such notice, and such exercise
of its right to extend the interest payment period, or any extension thereof,
shall have commenced.
The Securities are issuable only in registered form without coupons in
denominations of $1,000.00 and any integral multiple thereof. As provided in
the Indenture and subject to the transfer restrictions limitations as may be
contained herein and therein from time to time, this Security is transferable
by the holder hereof on the Security Register of the Company, upon surrender
of this Security for registration of transfer at the office or agency of the
Company in the City and State of New York accompanied by a written instrument
or instruments of transfer in form satisfactory to the Company or 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 and series will be
issued to the designated transferee or transferees. No service charge will be
made for any such transfer, but the Company may require payment of a sum
sufficient to cover any tax or other governmental charge payable in relation
thereto.
Prior to due presentment for registration of transfer of this Security,
the Company, the Trustee, any authenticating agent, any paying agent, any
transfer agent and the registrar may deem and treat the holder hereof as the
absolute owner hereof (whether or not this Security shall be overdue and
notwithstanding any notice of ownership or writing hereon made by anyone
other than the Security registrar) for the purpose of receiving payment of or
on account of the principal hereof and premium, if any, and (subject to the
Indenture) interest due hereon and for all other purposes, and neither the
Company nor the Trustee nor any authenticating agent nor any paying agent nor
any transfer agent nor any registrar shall be affected by any notice to the
contrary.
No recourse shall be had for the payment of the principal of or premium,
if any, or interest on this Security, or for any claim based hereon, or
otherwise in respect hereof, or based on or in respect of the Indenture,
against any incorporator, stockholder, officer or director, past, present or
future, as such, of the Company or of any predecessor or successor Person,
whether by virtue of any constitution, statute or rule of law, or by the
enforcement of any assessment or penalty or otherwise, all such liability
being, by the acceptance hereof and as part of the consideration for the
issuance hereof, expressly waived and released.
All terms used in this Security that are defined in the Indenture shall
have the meanings assigned to them in the Indenture.
THE INDENTURE AND THE SECURITIES SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO CONFLICT
OF LAW PROVISIONS THEREOF.
<PAGE>
Exhibit 4.2
- -----------------------------------------------------------------------------
AMENDED AND RESTATED DECLARATION OF TRUST
Dated as of June 6, 1997
BETWEEN
PUGET SOUND ENERGY CAPITAL TRUST I
AND
THE FIRST NATIONAL BANK OF CHICAGO
- -----------------------------------------------------------------------------
TABLE OF CONTENTS
ARTICLE I INTERPRETATION AND DEFINITIONS
1.1 Definitions
ARTICLE II TRUST INDENTURE ACT
2.1 Trust Indenture Act; Application
2.2 Lists of Holders of Securities
2.3 Reports by the Property Trustee
2.4 Periodic Reports to Property Trustee
2.5 Evidence of Compliance with Conditions Precedent
2.6 Events of Default; Waiver
2.7 Event of Default; Notice
ARTICLE III ORGANIZATION
3.1 Name
3.2 Office
3.3 Purpose
3.4 Authority
3.5 Title to Property of the Trust
3.6 Powers and Duties of the Administrative Trustees
3.7 Prohibition of Actions by the Trust and the Trustees
3.8 Powers and Duties of the Property Trustee
3.9 Certain Duties and Responsibilities of the Property Trustee
3.10 Certain Rights of Property Trustee
3.11 Delaware Trustee
3.12 Execution of Documents
3.13 Not Responsible for Recitals or Issuance of Securities
3.14 Duration of Trust
3.15 Mergers
ARTICLE IV SPONSOR
4.1 Sponsor's Purchase of Common Securities
4.2 Responsibilities of the Sponsor
4.3 Right to Proceed
ARTICLE V TRUSTEES
5.1 Number of Trustees: Appointment of Co-Trustee
5.2 Delaware Trustee
5.3 Property Trustee; Eligibility
5.4 Certain Qualifications of Administrative Trustees and Delaware
Trustee Generally
5.5 Administrative Trustees
5.6 Delaware Trustee
5.7 Appointment, Removal and Resignation of Trustees
5.8 Vacancies among Trustees
5.9 Effect of Vacancies
5.10 Meetings
5.11 Delegation of Power
5.12 Merger, Conversion, Consolidation or Succession to Business
ARTICLE VI DISTRIBUTIONS
6.1 Distributions
ARTICLE VII ISSUANCE OF SECURITIES
7.1 General Provisions Regarding Securities
7.2 Execution and Authentication
7.3 Form and Dating
7.4 Registrar, Paying Agent and Exchange Agent
7.5 Paying Agent to Hold Money in Trust
7.6 Replacement Securities
7.7 Outstanding Capital Securities
7.8 Capital Securities in Treasury
7.9 Temporary Securities
7.10 Cancellation
7.11 CUSIP Numbers
ARTICLE VIII TERMINATION OF TRUST
8.1 Termination of Trust
ARTICLE IX TRANSFER OF INTERESTS
9.1 Transfer of Securities
9.2 Transfer Procedures and Restrictions
9.3 Deemed Security Holders
9.4 Book Entry Interests
9.5 Notices to Clearing Agency
9.6 Appointment of Successor Clearing Agency
ARTICLE X LIMITATION OF LIABILITY OF HOLDERS OF SECURITIES, TRUSTEES OR
OTHERS
10.1 Liability
10.2 Exculpation
10.3 Fiduciary Duty
10.4 Indemnification
10.5 Outside Businesses
ARTICLE XI ACCOUNTING
11.1 Fiscal Year
11.2 Certain Accounting Matters
11.3 Banking
11.4 Withholding
ARTICLE XII AMENDMENTS AND MEETINGS
12.1 Amendments
12.2 Meetings of the Holders; Action by Written Consent
ARTICLE XIII REPRESENTATIONS OF PROPERTY TRUSTEE AND DELAWARE TRUSTEE
13.1 Representations and Warranties of Property Trustee
13.2 Representations and Warranties of Delaware Trustee
ARTICLE XIV REGISTRATION RIGHTS
14.1 Registration Rights Agreement; Liquidated Damages
ARTICLE XV MISCELLANEOUS
15.1 Notices
15.2 Governing Law
15.3 Intention of the Parties
15.4 Headings
15.5 Successors and Assigns
15.6 Partial Enforceability
15.7 Counterparts
AMENDED AND RESTATED
DECLARATION OF TRUST
OF
PUGET SOUND ENERGY CAPITAL TRUST I
June 6, 1997
AMENDED AND RESTATED DECLARATION OF TRUST ("Declaration") dated and
effective as of June 6, 1997, by the Trustees (as defined herein), the
Sponsor (as defined herein) and by the holders, from time to time, of
undivided beneficial interests in the Trust to be issued pursuant to this
Declaration;
WHEREAS, the Trustees and the Sponsor established Puget Sound Energy
Capital Trust I (the "Trust"), a trust formed under the Delaware Business
Trust Act pursuant to a Declaration of Trust dated as of June 1, 1997 (the
"Original Declaration"), and a Certificate of Trust filed with the Secretary
of State of the State of Delaware on June 3, 1997, 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 of the Debenture Issuer (each as hereinafter defined);
WHEREAS, as of the date hereof, no interests in the Trust have been
issued; and
WHEREAS, all of the Trustees and the Sponsor, by this Declaration, amend
and restate each and every term and provision of the Original Declaration.
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.
ARTICLE I
INTERPRETATION AND DEFINITIONS
1.1 Definitions
Unless the context otherwise requires:
(a) Capitalized terms used in this Declaration but not defined
in the preamble above have the respective meanings assigned to them in this
Section 1.1;
(b) a term defined anywhere in this Declaration has the same
meaning throughout;
(c) all references to "the Declaration" or "this Declaration"
are to this Declaration as modified, supplemented or amended from time to
time;
(d) all references in this Declaration to Articles and Sections
and Annexes and Exhibits are to Articles and Sections of 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.
"Administrative Trustee" has the meaning set forth in Section 5.1.
"Affiliate" has the same meaning as given to that term in Rule 405 under
the Securities Act or any successor rule thereunder.
"Agent" means any Paying Agent, Registrar or Exchange Agent.
"Authorized Officer" of a Person means any other Person that is
authorized to legally bind such former Person.
"Book Entry Interest" means a beneficial interest in a Global
Certificate registered in the name of a Clearing Agency or its nominee,
ownership and transfers of which shall be maintained and made through book
entries by a Clearing Agency as described in Section 9.4.
"Business Day" means any day other than a Saturday or a Sunday or a day
on which banking institutions in The City of New York, New York, The City of
Chicago, Illinois or The City of Seattle, Washington are authorized or
required by law or executive order to close.
"Business Trust Act" means Chapter 38 of Title 12 of the Delaware Code,
12 Del. C. 3801 et seq., as it may be amended from time to time, or any
successor legislation.
"Capital Security Beneficial Owner" means, with respect to a Book Entry
Interest, a Person who is the beneficial owner of such Book Entry Interest,
as reflected on the books of the Clearing Agency, or on the books of a Person
maintaining an account with such Clearing Agency (directly as a Clearing
Agency Participant or as an indirect participant, in each case in accordance
with the rules of such Clearing Agency).
"Capital Securities" means, collectively, the Series A Capital
Securities and the Series B Capital Securities.
"Capital Securities Guarantee" means, collectively, the Series A Capital
Securities Guarantee and the Series B Capital Securities Guarantee.
"Clearing Agency" means an organization registered as a "Clearing
Agency" pursuant to Section 17A of the Exchange Act that is acting as
depositary for the Capital Securities and in whose name or in the name of a
nominee of that organization shall be registered a Global Certificate and
which shall undertake to effect book entry transfers and pledges of the
Capital Securities.
"Clearing Agency Participant" means a broker, dealer, bank, other
financial institution or other Person for whom from time to time the Clearing
Agency effects book entry transfers and pledges of securities deposited with
the Clearing Agency.
"Closing Time" means the "Closing Time" under the Purchase Agreement.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time, or any successor legislation.
"Commission" means the United States Securities and Exchange Commission
as from time to time constituted, or if any time after the execution of this
Declaration such Commission is not existing and performing the duties now
assigned to it under applicable Federal securities laws, then the body
performing such duties at such time.
"Common Securities" has the meaning specified in Section 7.1(a).
"Common Securities Guarantee" means the guarantee agreement dated as of
June 6, 1997 of the Sponsor in respect of the Common Securities.
"Company Indemnified Person" means (a) any Administrative Trustee;
(b) any Affiliate of any Administrative Trustee; (c) any officers, directors,
shareholders, members, partners, employees, representatives or agents of any
Administrative Trustee; or (d) any officer, employee or agent of the Trust or
its Affiliates.
"Corporate Trust Office" means the office of the Property Trustee at
which the corporate trust business of the Property Trustee shall, at any
particular time, be principally administered, which office at the date of
execution of this Agreement is located at One First National Plaza,
Suite 0126, Chicago, IL 60670-0126.
"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 Puget Sound Energy, Inc., a Washington
corporation, or any successor entity resulting from any consolidation,
amalgamation, merger or other business combination, in its capacity as issuer
of the Debentures under the Indenture.
"Debenture Trustee" means The First National Bank of Chicago, a national
banking association, as trustee under the Indenture until a successor is
appointed thereunder, and thereafter means such successor trustee.
"Debentures" means, collectively, the Series A Debentures and the
Series B Debentures.
"Default" means an event, act or condition that with notice of lapse of
time, or both, would constitute an Event of Default.
"Definitive Capital Securities" shall have the meaning set forth in
Section 7.3(c).
"Delaware Trustee" has the meaning set forth in Section 5.2.
"Direct Action" shall have the meaning set forth in Section 3.8(e).
"Distribution" means a distribution payable to Holders in accordance
with Section 6.1.
"DTC" 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) that 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.
"Exchange Agent" has the meaning set forth in Section 7.4.
"Exchange Offer" means the offer that may be made pursuant to the
Registration Rights Agreement (i) by the Trust to exchange Series B Capital
Securities for Series A Capital Securities and (ii) by the Debenture Issuer
to exchange Series B Debentures for Series A Debentures and the Series B
Capital Securities Guarantee for the Series A Capital Securities Guarantee.
"Fiduciary Indemnified Person" has the meaning set forth in
Section 10.4(b).
"Global Capital Securities" has the meaning set forth in Section 7.3(a).
"Global Capital Security" has the meaning set forth in Section 7.3(a).
"Holder" means a Person in whose name 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 June 6, 1997, among the
Debenture Issuer and the Debenture Trustee, as amended from time to time.
"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.
"Legal Action" has the meaning set forth in Section 3.6(g).
"Liquidated Damages Agreement" means the Liquidated Damages Agreement
dated as of June 6, 1997, by and among the Trust, the Debenture Issuer and
the Initial Purchasers named therein, as amended from time to time.
"Majority in liquidation amount" means, with respect to the Trust
Securities, except as provided in the terms of the Capital Securities or by
the Trust Indenture Act, Holder(s) of outstanding Trust Securities voting
together as a single class or, as the context may require, Holders of
outstanding Capital Securities or Holders of outstanding Common Securities
voting separately as a class, who are the record owners of more than 50% of
the aggregate liquidation amount (including the stated amount that would be
paid on redemption, liquidation or otherwise, plus accrued and unpaid
Distributions to the date upon which the voting percentages are determined)
of all outstanding Securities of the relevant class.
"Ministerial Action" has the meaning set forth in Annex I hereto.
"Offering Memorandum" has the meaning set forth in Section 3.6(b).
"Officers' Certificate" means, with respect to any Person, a certificate
signed by any two of the following officers of such person: the Chairman,
the Chief Executive Officer, the President, a Vice President, the Controller
or an Assistant Controller, the Treasurer or an Assistant Treasurer, or the
Secretary or an Assistant Secretary. Any Officers' Certificate delivered
with respect to compliance with a condition or covenant provided for in this
Declaration shall include:
(a) a statement that each 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 by each officer in rendering the
Certificate;
(c) a statement that each such officer has made such
examination or investigation as, in such officer's opinion, is necessary to
enable such officer to express an informed opinion as to whether or not such
covenant or condition has been complied with; and
(d) a statement as to whether, in the opinion of each such
officer, such condition or covenant has been complied with.
"Opinion of Counsel" shall mean a written opinion of counsel, who may be
an employee of the Sponsor, and who shall be acceptable to the Property
Trustee.
"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.
"Property Trustee" has the meaning set forth in Section 5.3(a).
"Property Trustee Account" has the meaning set forth in Section 3.8(c).
"Purchase Agreement" means the Purchase Agreement for the initial
offering and sale of Capital Securities.
"QIBs" shall mean qualified institutional buyers as defined in
Rule 144A.
"Quorum" means a majority of the Administrative Trustees or, if there
are only two Administrative Trustees, both of them.
"Registrar" has the meaning set forth in Section 7.4.
"Registration Rights Agreement" means the Registration Rights Agreement
dated as of June 6, 1997, by and among the Trust, the Debenture Issuer and
the Initial Purchasers named therein, as amended from time to time.
"Registration Statement" has the meaning set forth in the Registration
Rights Agreement.
"Related Party" means, with respect to the Sponsor, any direct or
indirect wholly owned subsidiary of the Sponsor or any other Person that
owns, directly or indirectly, 100% of the outstanding voting securities of
the Sponsor.
"Responsible Officer" means, with respect to the Property Trustee, any
officer within the Corporate Trust Office of the Property Trustee, including
any vice-president, any assistant vice-president, any assistant secretary,
the treasurer, any assistant treasurer or other officer of the Corporate
Trust Office 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 Capital Securities" has the meaning set forth in
Section 7.3(c).
"Restricted Capital Security" means a Capital Security required by
Section 9.2 to contain a Restricted Securities Legend.
"Restricted Global Capital Security" has the meaning set forth in
Section 7.3(a).
"Restricted Securities Legend" has the meaning set forth in Section 7.3.
"Rule 3a-5" means Rule 3a-5 under the Investment Company Act, or any
successor rule or regulation.
"Rule 144" means Rule 144 under the Securities Act, as such rule may be
amended from time to time, or any similar rule or regulation hereafter
adopted by the Commission.
"Rule 144A" means Rule 144A under the Securities Act, as such rule may
be amended from time to time, or any similar rule or regulation hereafter
adopted by the Commission.
"Securities" or "Trust Securities" means the Common Securities and the
Capital Securities.
"Securities Act" means the Securities Act of 1933, as amended from time
to time, or any successor legislation.
"Securities Guarantees" means the Common Securities Guarantee and the
Capital Securities Guarantee.
"Series A Capital Securities" has the meaning specified in
Section 7.1(a).
"Series B Capital Securities" has the meaning specified in
Section 7.1(a).
"Series A Capital Securities Guarantee" means the guarantee agreement
dated as of June 6, 1997, by the Sponsor in respect of the Series A Capital
Securities.
"Series B Capital Securities Guarantee" means the guarantee agreement to
be entered in connection with the Exchange Offer by the Sponsor in respect of
the Series B Capital Securities.
"Series A Debentures" means the Series A 8.231% Junior Subordinated
Deferrable Interest Debentures due June 1, 2027 of the Debenture Issuer
issued pursuant to the Indenture.
"Series B Debentures" means the Series B 8.231% Junior Subordinated
Deferrable Interest Debentures due June 1, 2027 of the Debenture Issuer
issued pursuant to the Indenture.
"Sponsor" means Puget Sound Energy, Inc., a Washington corporation, or
any successor entity resulting from any merger, consolidation, amalgamation
or other business combination, in its capacity as sponsor of the Trust.
"Super Majority" has the meaning set forth in Section 2.6(a)(ii).
"10% in liquidation amount" means, with respect to the Trust Securities,
except as provided in the terms of the Capital Securities or by the Trust
Indenture Act, Holder(s) of outstanding Trust Securities voting together as a
single class or, as the context may require, Holders of outstanding Capital
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 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 Global Capital Security" has the meaning set forth in
Section 9.2(b).
ARTICLE II
TRUST INDENTURE ACT
2.1 Trust Indenture Act; Application
(a) This Declaration is subject to the provisions of the Trust
Indenture Act that are required to be part of this Declaration and shall, to
the extent applicable, be governed by such provisions.
(b) The Property Trustee shall be the only Trustee which is a
Trustee for the purposes of the Trust Indenture Act.
(c) If and to the extent that any provision of this
Declaration limits, qualifies or conflicts with the duties imposed by
Sections 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.
2.2 Lists of Holders of Securities
(a) Each of the Sponsor and the Administrative Trustees on
behalf of the Trust shall provide the Property Trustee, unless the Property
Trustee is Registrar for the Securities (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
("List of Holders") as of such record date, provided that neither the Sponsor
nor the Administrative 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 Administrative Trustees on behalf of the Trust, and (ii) at
any other time, within 30 days of receipt by the Trust of a written request
for a List of Holders as of a date no more than 14 days before such List of
Holders is given to the Property Trustee. The Property Trustee shall
preserve, in as current a form as is reasonably practicable, all information
contained in Lists of Holders given to it or which it receives in the
capacity as Paying Agent (if acting in such capacity), provided that the
Property Trustee may destroy any List of Holders previously given to it on
receipt of a new List of Holders.
(b) The Property Trustee shall comply with its obligations
under Sections 311(a), 311(b) and 312(b) of the Trust Indenture Act.
2.3 Reports by the Property Trustee
Within 60 days after December 31 of each year, commencing December 31,
1997, the Property Trustee shall provide to the Holders of the Capital
Securities such reports as are required by Section 313 of the Trust Indenture
Act, if any, in the form and in the manner provided by Section 313 of the
Trust Indenture Act. The Property Trustee shall also comply with the
requirements of Section 313(d) of the Trust Indenture Act.
2.4 Periodic Reports to Property Trustee
Each of the Sponsor and the Administrative Trustees on behalf of the
Trust shall provide to the Property Trustee such documents, reports and
information as are 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(a)(4) of the Trust
Indenture Act, such compliance certificate to be delivered annually on or
before 120 days after the end of each fiscal year of the Sponsor.
2.5 Evidence of Compliance with Conditions Precedent
Each of the Sponsor and the Administrative Trustees on behalf of the
Trust shall provide to the Property Trustee such evidence of compliance with
any conditions precedent provided for in this Declaration that relate to any
of the matters set forth in Section 314(c) of the Trust Indenture Act. Any
certificate or opinion required to be given by an officer pursuant to
Section 314(c) (1) of the Trust Indenture Act may be given in the form of an
Officers' Certificate.
2.6 Events of Default; Waiver
(a) The Holders of a Majority in liquidation amount of Capital
Securities may, by vote, on behalf of the Holders of all of the Capital
Securities, waive any past Event of Default in respect of the Capital
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 aggregate 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 aggregate liquidation amount of the Capital
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
Section 316(a)(1)(B) of the Trust Indenture Act and such Section 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 Capital 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 Capital Securities or impair any right consequent thereon. Any waiver
by the Holders of the Capital Securities of an Event of Default with respect
to the Capital 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
further act, vote, or consent of the Holders of the Common Securities.
The Holders of a Majority in liquidation amount of the Capital
Securities shall have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Property Trustee or
to direct the exercise of any trust or power conferred upon the Property
Trustee, including the right to direct the Property Trustee to exercise the
remedies available to it as holder of the Debentures; provided, however, that
(subject to the provisions of Section 3.9) the Property Trustee shall have
the right to decline to follow any such direction if the Property Trustee
shall determine that the action so directed would be unjustly prejudicial to
the Holders not taking part in such direction or if the Property Trustee,
being advised by counsel, determines that the action or proceeding so
directed may not lawfully be taken or if the Property Trustee, in good faith,
by its board of directors or trustees, executive committee, or a trust
committee of directors or trustees and/or Responsible Officers, shall
determine that the action or proceedings so directed would involve the
Property Trustee in personal liability.
(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 aggregate
liquidation amount of the Common Securities that the relevant Super Majority
represents of the aggregate principal amount of the Debentures outstanding;
provided further, 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 if all Events of Default with
respect to the Capital 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 Capital Securities and only the Holders of
the Capital 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 Sections 316(a)(1)(A) and
316(a)(1)(B) of the Trust Indenture Act and such Sections 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 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 Capital 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 Section 316(a)(1)(B) of the Trust Indenture Act and such Section
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.
2.7 Event of Default; Notice
(a) The Property Trustee shall, within 90 days after the
occurrence of an Event of Default actually known to a Responsible Officer of
the Property Trustee, transmit by mail, first class postage prepaid, to the
Holders notice of all such defaults with respect to the Securities, 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, the
Property Trustee shall be protected in withholding such notice if and so long
as a Responsible Officer of the Property Trustee in good faith determines
that the withholding of such notice is in the interests of the Holders.
(b) The Property Trustee shall not be deemed to have knowledge
of any default except:
(i) a default under Sections 5.01(a) and 5.01(b) of the
Indenture; or
(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.
(c) The Sponsor and the Administrative Trustees shall file
annually with the Property Trustee a certification as to whether or not they
are in compliance with all the conditions and covenants applicable to them
under this Declaration.
ARTICLE III
ORGANIZATION
3.1 Name
The Trust is named "Puget Sound Energy Capital Trust I" as such name may
be modified from time to time by the Administrative 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 Administrative Trustees.
3.2 Office
The address of the principal office of the Trust is c/o Puget Sound
Energy, Inc., 411 - 108th Avenue N.E., Bellevue, Washington 98004-5515,
Attention: James P. Torgerson, Administrative Trustee. On ten Business Days
written notice to the Holders of Securities, the Administrative Trustees may
designate another principal office.
3.3 Purpose
The exclusive purposes and functions of the Trust are (a) to issue and
sell Securities, (b) use the proceeds from the sale of the Securities to
acquire the Debentures, and (c) except as otherwise limited herein, to engage
in only those other activities necessary, advisable or incidental thereto.
The Trust shall not borrow money, issue debt or reinvest proceeds derived
from investments, mortgage or 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.
3.4 Authority
Subject to the limitations provided in this Declaration and to the
specific duties of the Property Trustee, the Administrative Trustees shall
have exclusive and complete authority to carry out the purposes of the Trust.
An action taken by the Administrative 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.
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 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.
3.6 Powers and Duties of the Administrative Trustees
The Administrative 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 Securities in accordance with this
Declaration; provided, however, that except, in the case of (i) and (ii), as
contemplated in Section 7.1(a), (i) the Trust may issue no more than one
series of Capital Securities and no more than one series of Common
Securities, (ii) there shall be no interests in the Trust other than the
Securities, and (iii) the issuance of Securities shall be limited to a
simultaneous issuance of both Capital Securities and Common Securities at any
Closing Time;
(b) in connection with the issue and sale of the Capital
Securities and the
consummation of the Exchange Offer, at the direction of the Sponsor, to:
(i) prepare and execute, if necessary, an offering
memorandum (the "Offering Memorandum") in preliminary and final form prepared
by the Sponsor, in relation to the offering and sale of Series A Capital
Securities to qualified institutional buyers in reliance on Rule 144A under
the Securities Act and to institutional "accredited investors" (as defined in
Rule 501(a)(1), (2), (3) or (7) of Regulation D under the Securities Act),
and to execute and file with the Commission, at such time as determined by
the Sponsor, any Registration Statement, including any amendments thereto, as
contemplated by the Registration Rights Agreement;
(ii) execute and file any documents prepared by the
Sponsor, or take any acts as determined by the Sponsor to be necessary in
order to qualify or register all or part of the Capital Securities in any
State in which the Sponsor has determined to qualify or register such Capital
Securities for sale;
(iii) at the direction of the Sponsor, execute and file an
application, prepared 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 Capital Securities;
(iv) to execute and deliver letters, documents, or
instruments with DTC and other Clearing Agencies relating to the Capital
Securities;
(v) if required, execute and file with the Commission a
registration statement on Form 8-A, including any amendments thereto,
prepared by the Sponsor, relating to the registration of the Capital
Securities under Section 12(b) of the Exchange Act; and
(vi) execute and enter into the Purchase Agreement and the
Registration Rights Agreement providing for the sale of the Capital
Securities;
(c) to acquire the Series A Debentures with the proceeds of the
sale of the Series A Capital Securities and the Common Securities and to
exchange the Series A Debentures for a like principal amount of Series B
Debentures, pursuant to the Exchange Offer; provided, however, that the
Administrative 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;
(d) to give the Sponsor and the Property Trustee prompt written
notice of the occurrence of a Tax Event;
(e) to establish a record date with respect to all actions to
be taken hereunder that require a record date be established, including and
with respect to, for the purposes of Section 316(c) of the Trust Indenture
Act, Distributions, voting rights, redemptions and exchanges, and to issue
relevant notices to the Holders of Capital 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 Administrative 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 Section 314(a)(4) of
the Trust Indenture Act to the Property Trustee, which certificate may be
executed by any Administrative 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 Exchange Agent for the Securities or to appoint a Paying Agent for the
Securities as provided in Section 7.4 except for such time as such power to
appoint a Paying Agent is vested in the Property Trustee;
(m) to give prompt written notice to the Property Trustee and
to Holders 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;
(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 Capital
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 Administrative 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.
(q) to take all action necessary to consummate the Exchange
Offer or otherwise cause the Capital Securities to be registered pursuant to
an effective registration statement in accordance with the provisions of the
Registration Rights Agreement.
(r) 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 Administrative
Trustees, on behalf of the Trust.
The Administrative 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 Administrative Trustees shall not
take any action that is inconsistent with the purposes and functions of the
Trust set forth in Section 3.3.
Subject to this Section 3.6, the Administrative 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 Administrative Trustees pursuant to this
Section 3.6 shall be reimbursed by the Debenture Issuer.
3.7 Prohibition of Actions by the Trust and the Trustees
(a) The Trust shall not, and the Trustees (including the
Property Trustee) shall cause the Trust not to, engage in any activity other
than as required or authorized by this Declaration. The Trust shall not:
(i) invest any proceeds received by the Trust from holding
the Debentures, but shall distribute all such proceeds to Holders 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, (A) direct the time, method and place of conducting any proceeding with
respect to any remedy available to the Debenture Trustee, or 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 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 a nationally recognized independent tax counsel experienced in
such matters 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.
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. 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 5.7. 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 Administrative 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
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 Capital 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 equal to the rating assigned to the Capital 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 shall be
necessary or appropriate to effect the redemption of the Common Securities to
the extent the Debentures are redeemed or mature; and
(iii) upon written notice of distribution issued by the
Administrative Trustees in accordance with the terms of the Securities,
engage in such ministerial activities as shall be necessary or appropriate to
effect the distribution of the Debentures to Holders of Securities upon the
occurrence of certain events.
(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) Subject to Section 3.9(a), 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 and if such Property Trustee shall
have failed to take such Legal Action, the Holders of the Capital Securities
may take such Legal Action, to the same extent as if such Holders of Capital
Securities held an aggregate principal amount of Debentures equal to the
aggregate liquidation amount of such Capital Securities, without first
proceeding against the Property Trustee or the Trust; provided however, that
if an Event of Default has occurred and is continuing and such event is
attributable to the failure of the Debenture Issuer to pay the principal of
or premium, if any, or interest on the Debentures on the date such principal,
premium, if any, or interest is otherwise payable (or in the case of
redemption, on the redemption date), then a Holder of Capital Securities may
directly institute a proceeding for enforcement of payment to such Holder of
the principal of or premium, if any, or interest on the Debentures having a
principal amount equal to the aggregate liquidation amount of the Capital
Securities of such Holder (a "Direct Action") on or after the respective due
date specified in the Debentures. In connection with such Direct Action, the
rights of the Holders of the Common Securities will be subrogated to the
rights of such Holder of Capital Securities to the extent of any payment made
by the Debenture Issuer to such Holder of Capital Securities in such Direct
Action. Except as provided in the preceding sentences, the Holders of
Capital Securities will not be able to exercise directly any other remedy
available to the holders of the Debentures.
(f) The Property Trustee shall continue to serve as a Trustee
until either:
(i) the Trust has been completely liquidated and the
proceeds of the liquidation distributed to the Holders 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 5.7 (a "Successor
Property Trustee").
(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, 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 shall be authorized to undertake any
actions set forth in Section 317(a) of the Trust Indenture Act.
(i) For such time as the Property Trustee is the Paying Agent,
the Property Trustee may authorize one or more Persons to act as additional
Paying Agents and 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 Section 317(b) of the Trust Indenture Act.
Any such additional Paying Agent may be removed by the Property Trustee at
any time the Property Trustee remains as Paying Agent and a successor Paying
Agent or additional Paying Agents may be (but are not required to be)
appointed at any time by the Property Trustee while the Property Trustee is
so acting as Paying Agent.
(j) Subject to this Section 3.8, the Property Trustee shall
have none of the duties, liabilities, powers or the authority of the
Administrative 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.
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 Trust Events of Default that may have
occurred, shall undertake to perform only such duties as are specifically set
forth in this Declaration and in the Securities 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 person would exercise or use under the
circumstances in the conduct of his or her own affairs.
(b) No provision of this Declaration shall be construed to
relieve the Property Trustee from liability for its own negligent action, its
own negligent failure to act, or its own willful misconduct, except that:
(i) prior to the occurrence of 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
in the Securities 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 in the Securities, and no implied covenants or
obligations shall be read into this Declaration or the Securities 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; provided, however, that in the case
of any such certificates or opinions that by any provision hereof are
specifically required to be furnished to the Property Trustee, the Property
Trustee shall be under a duty to examine the same to determine whether or not
they conform to the requirements of this Declaration;
(ii) the Property Trustee shall not be liable for any
error of judgment made in good faith by a Responsible Officer of the Property
Trustee, unless it shall be proved that the Property Trustee was negligent in
ascertaining the pertinent facts;
(iii) the Property Trustee shall not be liable with respect
to any action taken or omitted to be taken by it in good faith in accordance
with the direction of the Holders of not less than a Majority in liquidation
amount of the Capital 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;
(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 Administrative 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 Administrative
Trustees or the Sponsor.
3.10 Certain Rights of Property Trustee
(a) Subject to the provisions of Section 3.9:
(i) the Property Trustee may conclusively 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
Administrative Trustees contemplated by this Declaration may be sufficiently
evidenced by an Officers' Certificate;
(iii) whenever in the administration of this Declaration,
the Property Trustee shall deem it desirable that a matter be proved or
established before taking, suffering or omitting any action hereunder, the
Property Trustee (unless other evidence is herein specifically prescribed)
may, in the absence of bad faith on its part, request and conclusively rely
upon an Officers' Certificate which, upon receipt of such request, shall be
promptly delivered by the Sponsor or the Administrative Trustees;
(iv) the Property Trustee shall have no duty to see to any
recording, filing or registration of any instrument (including any financing
or continuation statement or any filing under tax or securities laws) or any
rerecording, refiling or registration thereof;
(v) the Property Trustee may consult with counsel or
other experts of its selection 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 security and indemnity, reasonably satisfactory to the
Property Trustee, against the costs, expenses (including reasonable
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 stated in any resolution,
certificate, statement, instrument, opinion, report, notice, request,
direction, consent, order, bond, debenture, note, other evidence of
indebtedness or other paper or document, but the Property Trustee, in its
discretion, may make such further inquiry or investigation into such facts or
matters as it may see fit;
(viii) the Property Trustee may execute any of the trusts or
powers hereunder or perform any duties hereunder either directly or by or
through agents, custodians, nominees 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 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 conclusively relying on or acting in or
accordance with such instructions;
(xi) except as otherwise expressly provided by this
Declaration, the Property Trustee shall not be under any obligation to take
any action that is discretionary under the provisions of this Declaration;
and
(xii) the Property Trustee shall not be liable for any
action taken, suffered, or omitted to be taken by it in good faith, without
negligence, 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.
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 Trustees described in this Declaration (except as
required under the Business Trust Act). Except as set forth in Section 5.2,
the Delaware Trustee shall be a Trustee for the sole and limited purpose of
fulfilling the requirements of Section 3807 of the Business Trust Act.
3.12 Execution of Documents
Unless each Administrative Trustee is authorized to execute on behalf of
the Trust any documents that the Administrative Trustees have the power and
authority to execute pursuant to Section 3.6; provided that, the registration
statement referred to in Section 3.6(b)(i), including any amendments thereto,
shall be signed by a majority of the Administrative Trustees.
3.13 Not Responsible for Recitals or Issuance of Securities
The recitals contained in this Declaration and the Securities shall be
taken as the statements of the Sponsor, and the Trustees do not assume any
responsibility for their correctness. The Trustees make no representations
as to the value or condition of the property of the Trust or any part
thereof. The Trustees make no representations as to the validity or
sufficiency of this Declaration or the Securities.
3.14 Duration of Trust
The Trust, unless terminated pursuant to the provisions of Article VIII
hereof, shall have existence up to June 1, 2028.
3.15 Mergers
(a) The Trust may not merge with or into, consolidate,
amalgamate, or be replaced by, or convey, transfer or lease its properties
and assets substantially as an entirety to any Person, except as described in
Section 3.15(b) and (c).
(b) The Trust may, at the request of the Sponsor, with the
consent of the Administrative Trustees or, if there are more than two, a
majority of the Administrative Trustees and without the consent of the
Holders, the Delaware Trustee or the Property Trustee, merge with or into,
consolidate, amalgamate, or be replaced by, or convey, transfer or lease its
properties and assets as an entirety or substantially as an entirety to, a
trust organized as such under the laws of any State; provided that:
(i) such successor entity (the "Successor Entity") either:
(A) expressly assumes all of the obligations of the
Trust under the Securities; or
(B) substitutes for the Securities other securities
having substantially the same terms as the Securities (the "Successor
Securities") so long as the Successor Securities rank the same as the
Securities rank with respect to Distributions and payments upon liquidation,
redemption and otherwise;
(ii) the Sponsor expressly appoints 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 Successor Securities are listed, or any Successor
Securities will be listed upon notification of issuance, on any national
securities exchange or with another organization on which the Capital
Securities are then listed or quoted;
(iv) such merger, consolidation, amalgamation,
replacement, conveyance, transfer or lease does not cause the Capital
Securities (including any Successor Securities) to be downgraded by any
nationally recognized statistical rating organization;
(v) such merger, consolidation, amalgamation,
replacement, conveyance, transfer or lease does not adversely affect the
rights, preferences and privileges of the Holders (including any Successor
Securities) in any material respect (other than with respect to any dilution
of such Holders' interests in the new entity);
(vi) such Successor Entity has a purpose substantially
identical to that of the Trust;
(vii) prior to such merger, consolidation, amalgamation,
replacement, conveyance, transfer or lease, the Sponsor has received an
opinion of an independent counsel to the Trust experienced in such matters to
the effect that:
(A) such merger, consolidation, amalgamation,
replacement, conveyance, transfer or lease does not adversely affect the
rights, preferences and privileges of the Holders (including any Successor
Securities) in any material respect (other than with respect to any dilution
of the Holders' interest in the new entity); and
(B) following such merger, consolidation,
amalgamation, replacement, conveyance, transfer or lease, neither the Trust
nor the Successor Entity will be required to register as an Investment
Company; and
(viii) the Sponsor or any permitted successor or assignee
owns all of the common securities of such Successor Entity and guarantees the
obligations of such Successor Entity under the Successor Securities at least
to the extent provided by the Capital Securities Guarantee and the Common
Securities Guarantee.
(c) Notwithstanding Section 3.15(b), the Trust shall not,
except with the consent of Holders of 100% in liquidation amount of the
Securities, consolidate, amalgamate, merge with or into, or be replaced by,
or convey, transfer or lease its properties and assets as an entirety or
substantially as an entirety to, any other entity or permit any other entity
to consolidate, amalgamate, merge with or into, or replace it if such
consolidation, amalgamation, merger, replacement, conveyance, transfer or
lease would cause the Trust or the Successor Entity not to be classified as a
grantor trust for United States federal income tax purposes.
ARTICLE IV
SPONSOR
4.1 Sponsor's Purchase of Common Securities
At the Closing Time, the Sponsor will purchase all of the Common
Securities then issued by the Trust, in an amount at least equal to 3% of the
capital of the Trust, at the same time as the Series A Capital Securities are
issued and sold.
4.2 Responsibilities of the Sponsor
In connection with the issue and sale of the Capital Securities, the
Sponsor shall have the exclusive right and responsibility to engage in the
following activities:
(a) to prepare the Offering Memorandum and to prepare for
filing by the Trust with the Commission any Registration Statement, including
any amendments thereto as contemplated by the Registration Rights Agreement;
(b) to determine the States in which to take appropriate action
to qualify or register for sale all or part of the Capital Securities and to
do any and all such acts, other than actions which must be taken by the
Trust, and advise the Trust of actions it must take, and prepare for
execution and filing any documents to be executed and filed by the Trust, as
the Sponsor deems necessary or advisable in order to comply with the
applicable laws of any such States;
(c) if deemed necessary or advisable by the Sponsor, to prepare
for filing by the Trust an application to the New York Stock Exchange or any
other national stock exchange or the Nasdaq National Market for listing or
quotation of the Capital 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
Capital Securities under Section 12(b) of the Exchange Act, including any
amendments thereto; and
(e) to negotiate the terms of the Purchase Agreement and the
Registration Rights Agreement providing for the sale of the Capital
Securities.
4.3 Right to Proceed
The Sponsor acknowledges the rights of the Holders of Capital
Securities, in the event that a failure of the Trust to pay Distributions on
the Capital Securities is attributable to the failure of the Company to pay
interest or principal on the Debentures, to institute a proceeding directly
against the Debenture Issuer for enforcement of its payment obligations on
the Debentures.
ARTICLE V
TRUSTEES
5.1 Number of Trustees: Appointment of Co-Trustee
The number of Trustees initially shall be five (5), and:
(a) at any time before the issuance of any Securities, the
Sponsor may, by written instrument, increase or decrease the number of
Trustees; and
(b) after the issuance of any Securities, the number of
Trustees may be increased or decreased by vote of the Holders of a majority
in liquidation amount of the 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, 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 which has its principal place of
business in the State of Delaware; (2) there shall be at least one Trustee
who is an employee or officer of, or is affiliated with the Sponsor (an
"Administrative Trustee"); 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. Notwithstanding the above, unless
an Event of Default shall have occurred and be continuing, at any time or
times, for the purpose of meeting the legal requirements of the Trust
Indenture Act or of any jurisdiction in which any part of the Trust's
property may at the time be located, the Holders of a Majority in liquidation
amount of the Common Securities acting as a class at a meeting of the Holders
of the Common Securities, and the Administrative Trustees shall have power to
appoint one or more persons either to act as a co-trustee, jointly with the
Property Trustee, of all or any part of the Trust's property, or to act as
separate trustee of any such property, in either case with such powers as may
be provided in the instrument of appointment, and to vest in such person or
persons in such capacity any property, title, right or power deemed necessary
or desirable, subject to the provisions of this Declaration. In case an
Event of Default has occurred and is continuing, the Property Trustee alone
shall have power to make any such appointment of a co-trustee.
5.2 Delaware Trustee
If required by the Business Trust Act, one Trustee (the "Delaware
Trustee") shall be:
(a) a natural person who is a resident of the State of
Delaware; or
(b) if not a natural person, an entity which has its principal
place of business in the State of Delaware, and otherwise meets the
requirements of applicable law,
provided that, if the Property Trustee has its principal place of business in
the State of Delaware and otherwise meets the requirements of applicable law,
then the Property Trustee shall also be the Delaware Trustee and Section 3.11
shall have no application.
5.3 Property Trustee; Eligibility
(a) There shall at all times be one Trustee (the "Property
Trustee") which shall act as Property Trustee which shall:
(I) not be an Affiliate of the Sponsor; and
(ii) be a corporation organized and doing business under
the laws of the United States of America or any State or Territory thereof or
of the District of Columbia, or a corporation or Person permitted by the
Commission to act as an institutional trustee under the Trust Indenture Act,
authorized under such laws to exercise corporate trust powers, having a
combined capital and surplus of at least 50 million U.S. dollars
($50,000,000), and subject to supervision or examination by Federal, State,
Territorial or District of Columbia authority. If such corporation publishes
reports of condition at least annually, pursuant to law or to the
requirements of the supervising or examining authority referred to above,
then for the purposes of this Section 5.3(a)(ii), the combined capital and
surplus of such corporation shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so published.
(b) If at any time the Property Trustee shall cease to be
eligible to so act under Section 5.3(a), the Property Trustee shall
immediately resign in the manner and with the effect set forth in
Section 5.7(c).
(c) If the Property Trustee has or shall acquire any
"conflicting interest" within the meaning of Section 310(b) of the Trust
Indenture Act, the Property Trustee and the Holder of the Common Securities
(as if it were the obligor referred to in Section 310(b) of the Trust
Indenture Act) shall in all respects comply with the provisions of
Section 310(b) of the Trust Indenture Act.
(d) The Capital 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:
The First National Bank of Chicago
One First National Plaza, Suite 0126
Chicago, IL 60670-0126
Attention: Corporate Trust Services Division
5.4 Certain Qualifications of Administrative Trustees and Delaware
Trustee Generally
Each Administrative 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.
5.5 Administrative Trustees
The initial Administrative Trustees shall be:
James P. Torgerson
Donald E. Gaines
Tommy G. Leong
(a) Except as expressly set forth in this Declaration and
except if a meeting of the Administrative Trustees is called with respect to
any matter over which the Administrative Trustees have power to act, any
power of the Administrative Trustees may be exercised by, or with the consent
of, any one such Administrative Trustee.
(b) Unless otherwise determined by the Administrative Trustees,
and except as otherwise required by the Business Trust Act or applicable law,
any Administrative Trustee is authorized to execute on behalf of the Trust
any documents which the Administrative 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 Administrative Trustees; and
(c) An Administrative Trustee may, by power of attorney
consistent with applicable law, delegate to any other natural person over the
age of 21 his or her power for the purposes of signing any documents which
the Administrative Trustees have power and authority to cause the Trust to
execute pursuant to Section 3.6.
5.6 Delaware Trustee
The initial Delaware Trustee shall be:
First Chicago Delaware Inc.
300 King Street
Wilmington, DE 19801
5.7 Appointment, Removal and Resignation of Trustees
(a) Subject to Section 5.7(b) of this Declaration and to
Section 6(b) of Annex I hereto, 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;
(ii) unless an Event of Default shall have occurred and be
continuing 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; and
(iii) if an Event of Default shall have occurred and be
continuing after the issuance of the Securities, with respect to the Property
Trustee or the Delaware Trustee, by vote of Holders of a Majority in
liquidation amount of the Capital Securities voting as a class at a meeting
of Holders of the Capital Securities.
(b) (i) The Trustee that acts as Property Trustee shall not be
removed in accordance with Section 5.7(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
Administrative Trustees and the Sponsor; and
(ii) the Trustee that acts as Delaware Trustee shall not be
removed in accordance with this Section 5.7(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 Administrative Trustees and the Sponsor.
(c) A Trustee appointed to office shall hold office until his
successor shall have been appointed or until his death, removal or
resignation. Any Trustee may resign from office (without need for prior or
subsequent accounting) by an instrument in writing signed by the Trustee and
delivered to the Sponsor and the Trust, which resignation shall take effect
upon such delivery or upon such later date as is specified therein; provided,
however, that:
(i) No such resignation of the Trustee that acts as the
Property Trustee shall be effective:
(A) until a Successor Property Trustee has been
appointed and has accepted such appointment by instrument executed by such
Successor Property Trustee and delivered to the Trust, the Sponsor and the
resigning Property Trustee; or
(B) until the assets of the Trust have been
completely liquidated and the proceeds thereof distributed to the holders of
the Securities; and
(ii) no such resignation of the Trustee that acts as the
Delaware Trustee shall be effective until a Successor Delaware Trustee has
been appointed and has accepted such appointment by instrument executed by
such Successor Delaware Trustee and delivered to the Trust, the Sponsor and
the resigning Delaware Trustee.
(d) The Holders of the Common Securities shall use their best
efforts to promptly appoint a Successor Delaware Trustee or Successor
Property Trustee, as the case may be, if the Property Trustee or the Delaware
Trustee delivers an instrument of resignation in accordance with this
Section 5.7.
(e) If no Successor Property Trustee or Successor Delaware
Trustee shall have been appointed and accepted appointment as provided in
this Section 5.7 within 60 days after delivery 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.
(f) 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.
5.8 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 Administrative Trustees or,
if there are more than two, a majority of the Administrative Trustees shall
be conclusive evidence of the existence of such vacancy. The vacancy shall
be filled with a Trustee appointed in accordance with Section 5.7.
5.9 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 dissolve, terminate or annul the Trust. Whenever a
vacancy in the number of Administrative Trustees shall occur, until such
vacancy is filled by the appointment of an Administrative Trustee in
accordance with Section 5.7, the Administrative Trustees in office,
regardless of their number, shall have all the powers granted to the
Administrative Trustees and shall discharge all the duties imposed upon the
Administrative Trustees by this Declaration.
5.10 Meetings
If there is more than one Administrative Trustee, meetings of the
Administrative Trustees shall be held from time to time upon the call of any
Administrative Trustee. Regular meetings of the Administrative Trustees may
be held at a time and place fixed by resolution of the Administrative
Trustees. Notice of any in-person meetings of the Administrative Trustees
shall be hand delivered or otherwise delivered in writing (including by
facsimile, with a hard copy by overnight courier) not less than 24 hours
before such meeting. Notice of any telephonic meetings of the Administrative
Trustees or any committee thereof shall be hand delivered or otherwise
delivered in writing (including by facsimile, with a hard copy by overnight
courier) not less than 24 hours before a meeting. Notices shall contain a
brief statement of the time, place and anticipated purposes of the meeting.
The presence (whether in person or by telephone) of an Administrative Trustee
at a meeting shall constitute a waiver of notice of such meeting except where
an Administrative 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 Administrative Trustees may be taken at a
meeting by vote of a majority of the Administrative 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 Administrative Trustees. In the event there is only
one Administrative Trustee, any and all action of such Administrative Trustee
shall be evidenced by a written consent of such Administrative Trustee.
5.11 Delegation of Power
(a) Any Administrative Trustee may, by power of attorney
consistent with applicable law, delegate to any other natural person over the
age of 21 his or her power for the purpose of executing any documents
contemplated in Section 3.6, including any registration statement or
amendment thereto filed with the Commission, or making any other governmental
filing; and
(b) the Administrative Trustees shall have power to delegate
from time to time to such of their number or to 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 Administrative Trustees or otherwise as the
Administrative Trustees may deem expedient, to the extent such delegation is
not prohibited by applicable law or contrary to the provisions of the Trust,
as set forth herein.
5.12 Merger, Conversion, Consolidation or Succession to Business
Any corporation into which the Property Trustee or the Delaware Trustee
or any Administrative Trustee that is not a natural person, as the case may
be, 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 Property Trustee, the Delaware Trustee or the Administrative 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.
ARTICLE VI
DISTRIBUTIONS
6.1 Distributions
Holders shall receive Distributions in accordance with the applicable
terms of the relevant Holder's Securities. 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 or Liquidated Damages (as defined in the Registration Rights
Agreement) or any other payments pursuant to the Registration Rights
Agreement with respect to 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
7.1 General Provisions Regarding Securities
(a) The Administrative Trustees shall on behalf of the Trust
issue one class of capital securities representing undivided beneficial
interests in the assets of the Trust having such terms as are set forth in
Annex I (the "Series A Capital Securities") and one class of common
securities representing undivided beneficial interests in the assets of the
Trust having such terms as are set forth in Annex I (the "Common
Securities"). The Administrative Trustees shall on behalf of the Trust issue
one class of capital securities representing undivided beneficial interests
in the Trust having such terms as set forth in Annex I (the "Series B Capital
Securities") in exchange for Series A Capital Securities accepted for
exchange in the Exchange Offer, which Series B Capital Securities shall not
bear the legends required by Section 9.2(i) unless the Holder of such Series
A Capital Securities is either (A) a broker-dealer who purchased such Series
A Capital Securities directly from the Trust for resale pursuant to Rule 144A
or any other available exemption under the Securities Act, (B) a Person
participating in the distribution of the Series A Capital Securities or (C) a
Person who is an affiliate (as defined in Rule 144A) of the Trust. The Trust
shall issue no securities or other interests in the assets of the Trust other
than the Securities.
(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.
(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 non-assessable undivided beneficial interests in the assets of
the Trust.
(d) Every Person, by virtue of having become a Holder or a
Capital 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.
7.2 Execution and Authentication
(a) The Securities shall be signed on behalf of the Trust by an
Administrative Trustee. In case any Administrative Trustee of the Trust who
shall have signed any of the Securities shall cease to be such Administrative
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 Administrative 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 Administrative
Trustees of the Trust, although at the date of the execution and delivery of
the Declaration any such person was not such a Administrative Trustee.
(b) One Administrative Trustee shall sign the Capital
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 Capital 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 Capital Security has been authenticated
under this Declaration.
Upon a written order of the Trust signed by one Administrative Trustee,
the Property Trustee shall authenticate the Capital Securities for original
issue. The aggregate number of Capital 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.
The Property Trustee may appoint an authenticating agent acceptable to
the Trust to authenticate Capital Securities. An authenticating agent may
authenticate Capital 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 Sponsor or an Affiliate.
7.3 Form and Dating
The Capital 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 representing the Securities may be printed,
lithographed or engraved or may be produced in any other manner as is
reasonably acceptable to the Administrative Trustees, as evidenced by their
execution thereof. The Securities may have letters, CUSIP or other 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 Capital 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. Securities offered and sold to QIBs,
shall be issued in the form of one or more, permanent global Securities in
definitive, fully registered form without distribution coupons, with the
global legend and, if sold in reliance on Rule 144A, as provided in the
Purchase Agreement, the Restricted Securities Legend set forth in Exhibit A-1
hereto (a "Restricted Global Capital Security"), and shall be deposited on
behalf of the purchasers of the Capital Securities represented thereby with
the Property Trustee, at its New York office, as custodian for the Clearing
Agency, and registered in the name of the Clearing Agency or a nominee of the
Clearing Agency, duly executed by the Trust and authenticated by the Property
Trustee as hereinafter provided. The number of Capital Securities
represented by the Global Capital Security may from time to time be increased
or decreased by adjustments made on the records of the Property Trustee and
the Clearing Agency or its nominee as hereinafter provided.
(b) Book-Entry Provisions. This Section 7.3(b) shall apply
only to the Global Capital Security and such other Capital Securities in
global form as may be authorized by the Trust to be deposited with or on
behalf of the Clearing Agency.
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 Global Capital Securities that (i) shall be registered in the
name of Cede & Co. or other nominee of such Clearing Agency and (ii) shall be
delivered by the Trustee to such Clearing Agency or pursuant to such Clearing
Agency's written instructions or held by the Property Trustee as custodian
for the Clearing Agency.
Members of, or participants in, the Clearing Agency ("Participants")
shall have no rights under this Declaration with respect to any Global
Capital Security held on their behalf by the Clearing Agency or by the
Property Trustee as the custodian of the Clearing Agency or under such Global
Capital Security, and the Clearing Agency 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 Global Capital 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 Clearing Agency or impair, as between the Clearing Agency
and its Participants, the operation of customary practices of such Clearing
Agency governing the exercise of the rights of a holder of a beneficial
interest in any Global Capital Security.
(c) Definitive Capital Securities. Except as provided in
Section 7.9, owners of beneficial interests in a Global Capital Security will
not be entitled to receive physical delivery of certificated Capital
Securities ("Definitive Capital Securities"). Purchasers of Securities who
are "accredited investors" (as defined in Rule 501(a)(1), (2), (3) or (7) of
Regulation D under the Securities Act) will receive Capital 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 Capital Securities"); provided,
however, that upon transfer of such Restricted Definitive Capital Securities
to a QIB, such Restricted Definitive Capital Securities will, unless the
Global Capital Security has previously been exchanged, be exchanged for an
interest in a Global Capital Security pursuant to the provisions of
Section 9.2. Restricted Definitive Capital 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.
(d) Authorized Denominations. The Capital Securities are
issuable only in denominations of $1,000 and any integral multiple thereof.
7.4 Registrar, Paying Agent and Exchange Agent
The Trust shall maintain in the Borough of Manhattan, The City of New
York, (i) an office or agency where Capital Securities may be presented for
registration of transfer ("Registrar"), (ii) an office or agency where
Capital Securities may be presented for payment ("Paying Agent") and (iii) an
office or agency where Securities may be presented for exchange ("Exchange
Agent"). The Registrar shall keep a register of the Capital Securities and
of their transfer. The Trust may appoint the Registrar, the Paying Agent and
the Exchange Agent and may appoint one or more co-registrars, one or more
additional paying agents and one or more additional exchange agents in such
other locations as it shall determine. The term "Registrar" includes any
additional registrar, "Paying Agent" includes any additional paying agent and
the term "Exchange Agent" includes any additional exchange agent. The Trust
may change any Paying Agent, Registrar, co-registrar or Exchange Agent
without prior notice to any Holder. The Paying Agent shall be permitted to
resign as Paying Agent upon 30 days' written notice to the Administrative
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 Exchange
Agent, the Property Trustee shall act as such. The Trust or any of its
Affiliates may act as Paying Agent, Registrar, or Exchange Agent. The Trust
shall act as Paying Agent, Registrar, co-registrar, and Exchange Agent for
the Common Securities.
The Trust initially appoints the New York affiliate of the Property
Trustee as Registrar, Paying Agent, and Exchange Agent for the Capital
Securities.
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 liquidation amounts or Distributions on the Securities,
and will notify the Property Trustee if there are insufficient funds for such
purpose. 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.
7.6 Replacement Securities
If a Holder claims that a Security owned by it 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 Capital 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. An indemnity bond must be provided by the
Holder which, in the judgment of the Property Trustee, is sufficient to
protect the Trustees, the Sponsor or any authenticating agent from any loss
which any of them may suffer if a Security is replaced. The Trust may charge
such Holder for its expenses in replacing a Security.
Every replacement Security is an additional beneficial interest in the
Trust.
7.7 Outstanding Capital Securities
The Capital Securities outstanding at any time are all the Capital
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 Capital 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
Capital Security is held by a bona fide purchaser.
If Capital Securities are considered paid in accordance with the terms
of this Declaration, they cease to be outstanding and Distributions on them
shall cease to accumulate.
A Capital Security does not cease to be outstanding because one of the
Trust, the Sponsor or an Affiliate of the Sponsor holds the Security.
7.8 Capital Securities in Treasury
In determining whether the Holders of the required amount of Securities
have concurred in any direction, waiver or consent, Capital 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 actually knows are so owned shall be so disregarded.
7.9 Temporary Securities
(a) Until Definitive Securities are ready for delivery, the
Trust may prepare and, in the case of the Capital 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 Capital
Securities, the Property Trustee shall authenticate Definitive Securities in
exchange for temporary Securities.
(b) A Global Capital Security deposited with the Clearing
Agency or with the Property Trustee as custodian for the Clearing Agency
pursuant to Section 7.3 shall be transferred to the beneficial owners thereof
in the form of certificated Capital Securities only if such transfer complies
with Section 9.2 and (i) the Clearing Agency notifies the Company that it is
unwilling or unable to continue as Clearing Agency for such Global Capital
Security or if at any time such Clearing Agency ceases to be a "clearing
agency" registered under the Exchange Act and a clearing agency is not
appointed by the Sponsor within 90 days of such notice, (ii) a Default or an
Event of Default has occurred and is continuing or (iii) the Trust at its
sole discretion elects to cause the issuance of certificated Capital
Securities.
(c) Any Global Capital Security that is transferable to the
beneficial owners thereof in the form of certificated Capital Securities
pursuant to this Section 7.9 shall be surrendered by the Clearing Agency to
the Property Trustee, to be so transferred, in whole or from time to time in
part, without charge, and the Property Trustee shall authenticate and make
available for delivery, upon such transfer of each portion of such Global
Capital Security, an equal aggregate liquidation amount of Securities of
authorized denominations in the form of certificated Capital Securities. Any
portion of a Global Capital Security transferred pursuant to this
Section shall be registered in such names as the Clearing Agency shall
direct. Any Capital Security in the form of certificated Capital Securities
delivered in exchange for an interest in the Restricted Global Capital
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 Holder of
a Global Capital Security may grant proxies and otherwise authorize any
person, including Participants and persons that may hold interests through
Participants, to take any action which such Holder is entitled to take under
this Declaration or the Securities.
(e) In the event of the occurrence of any of the events
specified in Section 7.9(b), the Trust will promptly make available to the
Property Trustee a reasonable supply of certificated Capital Securities in
fully registered form without distribution coupons.
7.10 Cancellation
The Trust at any time may deliver Capital Securities to the Property
Trustee for cancellation. The Registrar, Paying Agent and Exchange Agent
shall forward to the Property Trustee any Capital Securities surrendered to
them for registration of transfer, redemption, exchange or payment. The
Property Trustee shall promptly cancel all Capital Securities, surrendered
for registration of transfer, redemption, exchange, payment, replacement or
cancellation and shall dispose of cancelled Capital Securities as the Trust
directs, provided that the Property Trustee shall not be obligated to destroy
Capital Securities. The Trust may not issue new Capital Securities to
replace Capital Securities that it has paid or that have been delivered to
the Property Trustee for cancellation or that any holder has exchanged.
7.11 CUSIP Numbers
The Trust in issuing the Capital Securities may use "CUSIP" numbers (if
then generally in use), and, if so, the Property Trustee shall use "CUSIP"
numbers in notices of redemption as a convenience to Holders of Capital
Securities; provided that any such notice may state that no representation is
made as to the correctness of such numbers either as printed on the Capital
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 Capital
Securities, and any such redemption shall not be affected by any defect in or
omission of such numbers. The Sponsor will promptly notify the Property
Trustee of any change in the CUSIP numbers.
ARTICLE VIII
TERMINATION OF TRUST
8.1 Termination of Trust
(a) The Trust shall automatically terminate:
(I) upon the bankruptcy of the Sponsor;
(ii) upon the filing of a certificate of dissolution or
liquidation or its equivalent with respect to the Sponsor; or the revocation
of the Sponsor's charter and the expiration of 90 days after the date of
revocation without a reinstatement thereof;
(iii) following the distribution of a Like Amount of the
Debentures to the Holders, provided that, the Property Trustee has received
written notice from the Sponsor directing the Property Trustee to terminate
the Trust (which direction is optional, and except as otherwise expressly
provided below, within the discretion of the Sponsor) and provided, further,
that such direction and such distribution is conditioned on (i) the receipt
by the Sponsor or the Trust, as the case requires, of any required regulatory
approval, (ii) the Administrative Trustees' receipt of an opinion of counsel
experienced in such matters (a "No Recognition Opinion"), which opinion may
rely on published rulings of the Internal Revenue Service, to the effect that
the Holders will not recognize any gain or loss for United States federal
income tax purposes as a result of the dissolution of the Trust and the
distribution of Debentures;
(iv) upon the entry of a decree of judicial dissolution of
the Trust by a court of competent jurisdiction;
(v) 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;
(vi) upon the repayment of the Debentures or at such time
as no Debentures
are outstanding; or
(vii) the expiration of the term of the Trust provided in
Section 3.14.
(b) As soon as is practicable after the occurrence of an event
referred to in Section 8.1(a), the Administrative Trustees shall file a
certificate of cancellation with the Secretary of State of the State of
Delaware.
(c) The provisions of Section 3.9 and Article X shall survive
the termination of the Trust.
ARTICLE IX
TRANSFER OF INTERESTS
9.1 Transfer of Securities
(a) Securities may only be transferred, in whole or in part, in
accordance with the terms and conditions set forth in this Declaration and in
the terms of the Securities. Any transfer or purported transfer of any
Security not made in accordance with this Declaration shall be null and void.
(b) Subject to this Article IX, Capital Securities may only be
transferred, in whole or in part, in accordance with the terms and conditions
set forth in this Declaration. Any transfer or purported transfer of any
security not made in accordance with this Declaration shall be null and void.
(c) The Common Securities may not be transferred except to the
Sponsor or an Affiliate of the Sponsor.
(d) The Administrative Trustees shall provide for the
registration of Capital Securities and of the transfer of Securities, which
will be effected without charge but only upon payment (with such indemnity as
the Administrative 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 Capital Securities, the Administrative
Trustees shall cause one or more new Securities to be issued in the name of
the designated transferee or transferees. Every Capital Security surrendered
for registration of transfer shall be accompanied by a written instrument of
transfer in form satisfactory to the Administrative Trustees and the
Registrar duly executed by the Holder or such Holder's attorney duly
authorized in writing. Each Capital Security surrendered for registration of
transfer shall be canceled by the Property Trustees. A transferee of a
Capital Security shall be entitled to the rights and subject to the
obligations of a Holder hereunder upon the receipt by such transferee of a
Capital Security. By acceptance of a Security, each transferee shall be
deemed to have agreed to be bound by this Declaration.
9.2 Transfer Procedures and Restrictions
(a) General. Except as otherwise provided in Section 9.2(b),
if Capital Securities are issued upon the transfer, exchange or replacement
of Capital 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 Capital Securities, the Capital 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 Property Trustee such satisfactory evidence, which shall
include an Opinion of Counsel experienced in such matters, as may be
reasonably required by the Sponsor and the Property Trustee, that neither the
legend nor the restrictions on transfer set forth therein are required to
ensure that transfers thereof are made pursuant to an exception from the
registration requirements of the Securities Act or, with respect to
Restricted Securities, that such Securities are not "restricted" within the
meaning of Rule 144. Upon provision of such satisfactory evidence, the
Property Trustee, at the written direction of the Trust, shall authenticate
and deliver Capital Securities that do not bear the legend.
(b) Transfers After Effectiveness of a Registration Statement.
After the effectiveness of a Registration Statement with respect to any
Capital Securities, all requirements pertaining to legends on such Capital
Securities will cease to apply, and beneficial interests in a Capital
Security in global form without legends will be available to transferees of
such Capital Securities, upon exchange of the transferring holder's
Restricted Definitive Capital Security or directions to transfer such
Holder's beneficial interest in the Global Capital Security. No transfer or
exchange of a Restricted Definitive Series A Capital Security or of an
interest in the Global Capital Security shall be effective unless the
transferor delivers to the Trust a certificate in a form substantially
similar to that attached hereto as the "Form of Assignment" in Exhibit A-1.
Except as otherwise provided in Section 9.2(m), after the effectiveness of a
Registration Statement, the Trust shall issue and the Property Trustee, upon
a written order of the Trust signed by one Administrative Trustee, shall
authenticate a Capital Security in global form without the Restricted
Securities Legend (the "Unrestricted Global Capital Security") to deposit
with the Clearing Agency to evidence transfers of beneficial interests from
the (i) Global Capital Security and (ii) Restricted Definitive Capital
Securities.
(c) Transfer and Exchange of Definitive Capital Securities.
When Definitive Capital Securities are presented to the Registrar
(x) to register the transfer of such Definitive Capital Securities; or
(y) to exchange such Definitive Capital Securities for an equal number
of Definitive Capital Securities, 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 Capital 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 Capital Securities that are
Restricted Definitive Capital Securities:
(A) if such Restricted Capital 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; or
(B) if such Restricted Capital Securities are being
transferred: (i) a certification from the transferor in a form substantially
similar to that attached hereto as the "Form of Assignment" in Exhibit A-1,
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.
(d) Restrictions on Transfer of a Definitive Capital Security
for a Beneficial Interest in a Global Capital Security. A Definitive Capital
Security may not be exchanged for a beneficial interest in a Global Capital
Security except upon satisfaction of the requirements set forth below. Upon
receipt by the Property Trustee of a Definitive Capital Security, duly
endorsed or accompanied by appropriate instruments of transfer, in form
satisfactory to the Property Trustee and the Administrative Trustees,
together with:
(i) if such Definitive Capital Security is a Restricted
Capital Security, certification (in a form substantially similar to that
attached hereto as the "Form of Assignment" in Exhibit A-1); and
(ii) whether or not such Definitive Capital Security is a
Restricted Capital Security, written instructions directing the Property
Trustee to make, or to direct the Clearing Agency to make, an adjustment on
its books and records with respect to the appropriate Global Capital Security
to reflect an increase in the number of the Capital Securities represented by
such Global Capital Security, then the Property Trustee shall cancel such
Definitive Capital Security and cause, or direct the Clearing Agency to
cause, the aggregate number of Capital Securities represented by the
appropriate Global Capital Security to be increased accordingly. If no
Global Capital Securities are then outstanding, the Trust shall issue and the
Property Trustee shall authenticate, upon written order of any Administrative
Trustee, an appropriate number of Capital Securities in global form.
(e) Transfer and Exchange of Global Capital Securities.
Subject to Section 9.02(f), the transfer and exchange of Global Capital
Securities or beneficial interests therein shall be effected through the
Clearing Agency, in accordance with this Declaration (including applicable
restrictions on transfer set forth herein, if any) and the procedures of the
Clearing Agency therefor.
(f) Transfer of a Beneficial Interest in a Restricted Global
Capital Security for a Definitive Restricted Capital Security.
(i) Any Person having a beneficial interest in a
Restricted Global Capital Security may, upon transfer of such beneficial
interest to a Person who is an "accredited investor" (as defined in
Rule 501(a)(1)(2)(3) or (7) under Regulation D under the Securities Act,
exchange such beneficial interest for a Restricted Definitive Capital
Security representing the same number of Capital Securities. Upon receipt by
the Property Trustee from the Clearing Agency or its nominee on behalf of any
Person having a beneficial interest in a Restricted Global Capital Security
of written instructions or such other form of instructions as is customary
for the Clearing Agency or the Person designated by the Clearing Agency as
having such a beneficial interest in a Restricted Capital Security and a
certification from the transferor (in a form substantially similar to that
attached hereto as the "Form of Assignment" in Exhibit A-1), which may be
submitted by facsimile, the Property Trustee will cause the aggregate number
of Capital Securities represented by Restricted Global Capital Securities to
be reduced on its books and records and, following such reduction, the Trust
will execute and the Property Trustee will authenticate and make available
for delivery to the transferee a Restricted Definitive Capital Security.
(ii) Definitive Capital Securities issued in exchange for
a beneficial interest in a Restricted Global Capital Security pursuant to
this Section 9.2(f) shall be registered in such names and in such authorized
denominations as the Clearing Agency, pursuant to instructions from its
Participants or indirect participants or otherwise, shall instruct the
Property Trustee in writing. The Property Trustee shall deliver such Capital
Securities to the persons in whose names such Capital Securities are so
registered in accordance with such instructions of the Clearing Agency.
(g) Restrictions on Transfer and Exchange of Global Capital
Securities. Notwithstanding any other provisions of this Declaration (other
than the provisions set forth in subsection (h) of this Section 9.2), a
Global Capital Security may not be transferred as a whole except by the
Clearing Agency to a nominee of the Clearing Agency or another nominee of the
Clearing Agency or by the Clearing Agency or any such nominee to a successor
Clearing Agency or a nominee of such successor Clearing Agency.
(h) Authentication of Definitive Capital Securities. If at any
time:
(i) there occurs a Default or an Event of Default which
is continuing, or
(ii) the Administrative Trustees, in their sole
discretion, notify the Property Trustee in writing that they elect to cause
the issuance of Definitive Capital Securities under this Declaration, then
the Administrative Trustees will execute, and the Property Trustee, upon
receipt of a written order of the Trust signed by one Administrative Trustee
requesting the authentication and delivery of Definitive Capital Securities
to the Persons designated in such notice, will authenticate and make
available for delivery Definitive Capital Securities, equal in number to the
number of Capital Securities represented by the Global Capital Securities, in
exchange for such Global Capital Securities.
(i) Legend.
(i) Except as permitted by the following paragraph (ii),
each Capital Security certificate evidencing the Global Capital Securities
and the Definitive Capital Securities (and all Capital Securities issued in
exchange therefor or substitution thereof) shall bear a legend (the
"Restricted Securities Legend") in substantially the following form:
THE CAPITAL SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") OR ANY STATE
SECURITIES LAWS OR ANY OTHER APPLICABLE SECURITIES LAW. NEITHER THIS CAPITAL
SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD,
ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE
ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR
NOT SUBJECT TO, REGISTRATION.
THE HOLDER OF THIS CAPITAL SECURITY BY ITS ACCEPTANCE HEREOF AGREES TO
OFFER, SELL OR OTHERWISE TRANSFER THIS CAPITAL SECURITY, PRIOR TO THE DATE
(THE "RESALE RESTRICTION TERMINATION DATE") WHICH IS TWO YEARS AFTER THE
LATER OF THE ORIGINAL ISSUANCE DATE HEREOF AND THE LAST DATE ON WHICH THE
CORPORATION OR ANY "AFFILIATE" OF THE CORPORATION WAS THE OWNER OF THIS
CAPITAL SECURITY (OR ANY PREDECESSOR OF THIS CAPITAL SECURITY) ONLY (A) TO
THE CORPORATION, (B) PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BEEN
DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C) SO LONG AS THIS CAPITAL
SECURITY IS 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) TO AN
INSTITUTIONAL "ACCREDITED INVESTOR" WITHIN THE MEANING OF SUBPARAGRAPH
(A)(1), (2), (3) OR (7) OF RULE 501 OF REGULATION D UNDER THE SECURITIES ACT
THAT IS ACQUIRING THIS CAPITAL SECURITY FOR ITS OWN ACCOUNT, OR FOR THE
ACCOUNT OF SUCH AN INSTITUTIONAL ACCREDITED INVESTOR, FOR INVESTMENT PURPOSES
AND NOT WITH A VIEW TO, OR FOR OFFER OR SALE IN CONNECTION WITH, ANY
DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT, OR (E) PURSUANT TO ANY OTHER
AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS UNDER THE SECURITIES
ACT, SUBJECT TO THE RIGHT OF THE TRUST AND THE CORPORATION PRIOR TO ANY SUCH
OFFER, SALE OR TRANSFER (i) PURSUANT TO CLAUSE (D) OR (E) TO REQUIRE THE
DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATIONS AND/OR OTHER INFORMATION
SATISFACTORY TO EACH OF THEM, AND (ii) PURSUANT TO CLAUSE (D), TO REQUIRE
THAT THE TRANSFEROR DELIVER TO THE TRUST A LETTER FROM THE TRANSFEREE
SUBSTANTIALLY IN THE FORM OF ANNEX A TO THE OFFERING MEMORANDUM DATED JUNE 5,
1997. SUCH HOLDER FURTHER AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM
THIS CAPITAL SECURITY IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF
THIS LEGEND.
(ii) Upon any sale or transfer of a Restricted Capital
Security (including any Restricted Capital Security represented by a Global
Capital Security) pursuant to an effective registration statement under the
Securities Act or pursuant to Rule 144 under the Securities Act after such
registration statement ceases to be effective:
(A) in the case of any Restricted Capital Security
that is a Definitive Capital Security, the Registrar shall permit the Holder
thereof to exchange such Restricted Capital Security for a Definitive Capital
Security that does not bear the Restricted Securities Legend and rescind any
restriction on the transfer of such Restricted Capital Security; and
(B) in the case of any Restricted Capital Security
that is represented by a Global Capital Security, the Registrar shall permit
the Holder of such Global Capital Security to exchange such Global Capital
Security for another Global Capital Security that does not bear the
Restricted Securities Legend.
(j) Cancellation or Adjustment of Global Capital Security. At
such time as all beneficial interests in a Global Capital Security have
either been exchanged for Definitive Capital Securities to the extent
permitted by this Declaration or redeemed, repurchased or canceled in
accordance with the terms of this Declaration, such Global Capital Security
shall be returned to the Property Trustee for cancellation or retained and
canceled by the Property Trustee. At any time prior to such cancellation, if
any beneficial interest in a Global Capital Security is exchanged for
Definitive Capital Securities, Capital Securities represented by such Global
Capital Security shall be reduced and an adjustment shall be made on the
books and records of the Property Trustee (if it is then the custodian for
such Global Capital Security) with respect to such Global Capital Security,
by the Property Trustee or the Securities Custodian, to reflect such
reduction.
(k) Obligations with Respect to Transfers and Exchanges of
Capital Securities.
(i) To permit registrations of transfers and exchanges,
the Trust shall execute and the Property Trustee shall authenticate
Definitive Capital Securities and Global Capital Securities at the
Registrar's or co-Registrar's request in accordance with the terms of this
Declaration.
(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) Capital Securities during a
period beginning at the opening of business 15 days before the day of mailing
of a notice of redemption or any notice of selection of Capital Securities
for redemption and ending at the close of business on the day of such
mailing; or (b) any Capital Security so selected for redemption in whole or
in part, except the unredeemed portion of any Capital Security being redeemed
in part.
(iv) Prior to the due presentation for registrations of
transfer of any Capital 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 Capital Security is registered as the absolute owner of such
Capital Security for the purpose of receiving Distributions on such Capital
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 Capital 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 Capital Securities surrendered upon such transfer or exchange.
(l) No Obligation of the Property Trustee.
(i) The Property Trustee shall have no responsibility or
obligation to any beneficial owner of a Global Capital Security, a
Participant in the Clearing Agency or other Person with respect to the
accuracy of the records of the Clearing Agency or its nominee or of any
Participant thereof, with respect to any ownership interest in the Capital
Securities or with respect to the delivery to any Participant, beneficial
owner or other Person (other than the Clearing Agency) of any notice
(including any notice of redemption) or the payment of any amount, under or
with respect to such Capital Securities. All notices and communications to
be given to the Holders and all payments to be made to Holders under the
Capital Securities shall be given or made only to or upon the order of the
registered Holders (which shall be the Clearing Agency or its nominee in the
case of a Global Capital Security). The rights of beneficial owners in any
Global Capital Security shall be exercised only through the Clearing Agency
subject to the applicable rules and procedures of the Clearing Agency. The
Property Trustee may conclusively rely and shall be fully protected in
relying upon information furnished by the Clearing Agency 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 Capital Security
(including any transfers between or among Clearing Agency Participants or
beneficial owners in any Global Capital 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.
(m) Exchange of Series A Capital Securities for Series B
Capital Securities. The Series A Capital Securities may be exchanged for
Series B Securities pursuant to the terms of the Exchange Offer. The
Property Trustee shall make the exchange as follows:
The Sponsor shall present the Property Trustee with an Officers'
Certificate certifying the following:
(A) upon issuance of the Series B Capital Securities,
the transactions contemplated by the Exchange Offer have been consummated;
and
(B) the number of Series A Capital Securities
properly tendered in the Exchange Offer that are represented by a Global
Capital Security and the number of Series A Capital Securities properly
tendered in the Exchange Offer that are represented by Definitive Capital
Securities, the name of each Holder of such Definitive Capital Securities,
the liquidation amount of Capital Securities properly tendered in the
Exchange Offer by each such Holder and the name and address to which
Definitive Capital Securities for Series B Capital Securities shall be
registered and sent for each such Holder.
The Property Trustee, upon receipt of (i) such Officers' Certificate,
(ii) an Opinion of Counsel (x) to the effect that the Series B Capital
Securities have been registered under Section 5 of the Securities Act and the
Indenture has been qualified under the Trust Indenture Act and (y) with
respect to the matters set forth in Section 3(p) of the Registration Rights
Agreement and (iii) a Company Order, shall authenticate (A) a Global Capital
Security for Series B Capital Securities in aggregate liquidation amount
equal to the aggregate liquidation amount of Series A Capital Securities
represented by a Global Capital Security indicated in such Officers'
Certificate as having been properly tendered and (B) Definitive Capital
Securities representing Series B Capital Securities registered in the names
of, and in the liquidation amounts indicated in such Officers' Certificate.
If, upon consummation of the Exchange Offer, less than all the
outstanding Series A Capital Securities shall have been properly tendered and
not withdrawn, the Property Trustee shall make an endorsement on the Global
Capital Security for Series A Capital Securities indicating the reduction in
the number and aggregate liquidation amount represented thereby as a result
of the Exchange Offer.
The Trust shall deliver such Definitive Capital Securities for Series B
Capital Securities to the Holders thereof as indicated in such Officers'
Certificate.
(n) Minimum Transfers. Series A Capital Securities may only be
transferred in minimum blocks of $100,000 aggregate liquidation amount until
such Series A Capital Securities are registered pursuant to an effective
registration statement filed under the Securities Act.
9.3 Deemed Security Holders
The Trustees may treat the Person in whose name any Security shall be
registered on the books and records of the Trust as the sole owner of such
Security 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 Security on the part of any Person,
whether or not the Trust shall have actual or other notice thereof.
9.4 Book Entry Interests
Global Capital Securities shall initially be registered on the books and
records of the Trust in the name of Cede & Co., the nominee of the Clearing
Agency, and no Capital Security Beneficial Owner will receive a definitive
Capital Security Certificate representing such Capital Security Beneficial
Owner's interests in such Global Capital Securities, except as provided in
Section 9.2 and Section 7.9. Unless and until definitive, fully registered
Capital Securities certificates have been issued to the Capital Security
Beneficial Owners pursuant to Section 9.2 or Section 7.9:
(a) the provisions of this Section 9.4 shall be in full force
and effect;
(b) the Trust and the Trustees shall be entitled to deal with
the Clearing Agency for all purposes of this Declaration (including the
payment of Distributions on the Global Capital Securities and receiving
approvals, votes or consents hereunder) as the Holder of the Capital
Securities and the sole holder of the Global Certificates and shall have no
obligation to the Capital 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 Capital Security Beneficial Owners shall
be exercised only through the Clearing Agency and shall be limited to those
established by law and agreements between such Capital Security Beneficial
Owners and the Clearing Agency and/or the Clearing Agency Participants and
receive and transmit payments of Distributions on the Global Certificates to
such Clearing Agency Participants. DTC will make book entry transfers among
the Clearing Agency Participants; provided, that solely for the purposes of
determining whether the Holders of the requisite amount of Capital Securities
have voted on any matter provided for in this Declaration, so long as
Definitive Capital Securities have not been issued, the Trustees may
conclusively rely on, and shall be protected in relying on, any written
instrument (including a proxy) delivered to the Trustees by the Clearing
Agency setting forth the Capital Security Beneficial Owners' votes or
assigning the right to vote on any matter to any other Persons either in
whole or in part.
9.5 Notices to Clearing Agency
Whenever a notice or other communication to the Capital Security Holders
is required under this Declaration, the Trustees shall give all such notices
and communications specified herein to be given to the Holders of Global
Capital Securities to the Clearing Agency, and shall have no notice
obligations to the Capital Security Beneficial Owners.
9.6 Appointment of Successor Clearing Agency
If any Clearing Agency elects to discontinue its services as securities
depositary with respect to the Capital Securities, the Administrative
Trustees may, in their sole discretion, appoint a successor Clearing Agency
with respect to such Capital Securities.
ARTICLE X
LIMITATION OF LIABILITY OF HOLDERS OF SECURITIES, TRUSTEES OR OTHERS
10.1 Liability
(a) Except as expressly set forth in this Declaration, 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 Debenture Issuer shall be liable for all of the debts
and obligations of the Trust (other than with respect to the payment of
principal, interest and premium, if any, on the Securities) to the extent not
satisfied out of the Trust's assets.
(c) Pursuant to Section 3803(a) of the Business Trust Act, the
Holders of the Capital 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.
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 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.
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 any Covered Persons; or
(ii) whenever this Declaration or any other agreement
contemplated herein or therein provides that an Indemnified Person shall act
in a manner that is, or provides terms that are, fair and reasonable to the
Trust or any Holder of Securities, the Indemnified Person shall resolve such
conflict of interest, take such action or provide such terms, considering in
each case the relative interest of each party (including its own interest) to
such conflict, agreement, transaction or situation and the benefits and
burdens relating to such interests, any customary or accepted industry
practices, and any applicable generally accepted accounting practices or
principles. In the absence of bad faith by the Indemnified Person, the
resolution, action or term so made, taken or provided by the Indemnified
Person shall not constitute a breach of this Declaration or any other
agreement contemplated herein or of any duty or obligation of the Indemnified
Person at law or in equity or otherwise.
(c) Whenever in this Declaration an Indemnified Person is
permitted or required to make a decision:
(i) in its "discretion" or under a grant of similar
authority, the Indemnified Person shall be entitled to consider such
interests and factors as it desires, including its own interests, and shall
have no duty or obligation to give any consideration to any interest of or
factors affecting the Trust or any other Person; or
(ii) in its "good faith" or under another express
standard, the Indemnified Person shall act under such express standard and
shall not be subject to any other or different standard imposed by this
Declaration or by applicable law.
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 (other than an action by or in the right of the Trust) 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
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
Administrative Trustees by a majority vote of a quorum consisting of such
Administrative 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 Administrative 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 upon receipt of an undertaking by or on behalf of such Company
Indemnified Person to repay such amount if it shall ultimately be determined
that he is not entitled to be indemnified by the Debenture Issuer as
authorized in this Section 10.4(a). Notwithstanding the foregoing, no
advance shall be made by the Debenture Issuer if a determination is
reasonably and promptly made (i) by the Administrative Trustees by a majority
vote of a quorum of disinterested Administrative Trustees, (ii) if such a
quorum is not obtainable, or, even if obtainable, if a quorum of
disinterested Administrative 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 Administrative 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. In no event shall any advance be made in instances where the
Administrative Trustees, independent legal counsel or Common Security Holder
reasonably determine that such person deliberately breached his duty to the
Trust or its Common or Capital Security Holders.
(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 Capital 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 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 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, damage, claim 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 of 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 provisions of this Section 10.4(b) shall survive the
satisfaction and discharge of this Declaration or the resignation or removal
of the Property Trustee or the Delaware Trustee, as the case may be.
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 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
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.
11.2 Certain Accounting Matters
(a) At all times during the existence of the Trust, the
Administrative Trustees shall keep, or cause to be kept, full books of
account, records and supporting documents, which shall reflect in reasonable
detail, each transaction of the Trust. The books of account shall be
maintained on the accrual method of accounting, in accordance with generally
accepted accounting principles, consistently applied. The Trust shall use
the accrual method of accounting for United States federal income tax
purposes. The books of account and the records of the Trust shall be
examined by and reported upon as of the end of each Fiscal Year of the Trust
by a firm of independent certified public accountants selected by the
Administrative Trustees.
(b) The Administrative Trustees shall cause to be duly prepared
and delivered to each of the Holders, 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 Administrative Trustees shall
endeavor to deliver all such information statements within 30 days after the
end of each Fiscal Year of the Trust.
(c) The Administrative 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 Administrative Trustees on behalf of the Trust
with any state or local taxing authority.
11.3 Banking
The Trust shall maintain one or more bank accounts in the name and for
the sole benefit of the Trust; provided, however, that all payments of funds
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 Administrative Trustees; provided,
however, that the Property Trustee shall designate the signatories for the
Property Trustee Account.
11.4 Withholding
The Trust and the Administrative 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
Administrative Trustees shall file required forms with applicable
jurisdictions and, unless an exemption from withholding is properly
established by a Holder, shall remit amounts withheld with respect to the
Holder to applicable jurisdictions. To the extent that the Trust is required
to withhold and pay over any amounts to any authority with respect to
Distributions or allocations to any Holder, the amount withheld shall be
deemed to be a Distribution in the amount of the withholding to the Holder.
In the event of any claimed over withholding, Holders shall be limited to an
action against the applicable jurisdiction. If the amount required to be
withheld was not withheld from actual Distributions made, the Trust may
reduce subsequent Distributions by the amount of such withholding.
ARTICLE XII
AMENDMENTS AND MEETINGS
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 the Administrative Trustees (or
if there are more than two Administrative Trustees a majority of the
Administrative Trustees) and
(i) if the amendment affects the rights, powers, duties,
obligations or immunities of the Property Trustee, also by the Property
Trustee; and
(ii) if the amendment affects the rights, powers, duties,
obligations or immunities of the Delaware Trustee, also by the Delaware
Trustee.
(b) No amendment shall be made, and any such purported
amendment shall be void and ineffective:
(i) unless, in the case of any proposed amendment, the
Property Trustee shall have first received an Officers' Certificate from each
of the Trust and the Sponsor that such amendment is permitted by, and
conforms to, the terms of this Declaration (including the terms of the
Securities);
(ii) unless, in the case of any proposed amendment which
affects the rights, powers, duties, obligations or immunities of the Property
Trustee, the Property Trustee shall have first received:
(A) an Officers' Certificate from each of the Trust
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 amendment is permitted by, and conforms to,
the terms of this Declaration (including the terms of the Securities),
provided, however, that the Property Trustee shall not be required to sign
any such amendment, and
(iii) to the extent the result of such amendment would be
to:
(A) cause the Trust to fail to continue to be
classified for purposes of United States federal income taxation as a grantor
trust;
(B) reduce or otherwise adversely affect the powers
of the Property Trustee in contravention of the Trust Indenture Act; or
(C) cause the Trust to be deemed to be an Investment
Company required to be registered under the Investment Company Act;
(c) At such time after the Trust has issued any Securities that
remain outstanding, any amendment that would adversely affect the rights,
privileges or preferences of any Holder of Securities may be effected only
with such additional requirements as may be set forth in the terms of such
Securities;
(d) Section 9.1(c) and this Section 12.1 shall not be amended
without the consent of all of the Holders of the Securities;
(e) Article Four 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 Five 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, correct or supplement any
provision in this Declaration that may be inconsistent with any other
provision of this Declaration or to make any other provisions with respect to
matters or questions arising under this Declaration which shall not be
inconsistent with the other provisions of the Declaration; and
(ii) to modify, eliminate or add to any provisions of the
Declaration to such extent as shall be necessary to ensure that the Trust
will be classified for United States federal income tax purposes as a grantor
trust at all times that any Securities are outstanding or to ensure that the
Trust will not be required to register as an Investment Company under the
Investment Company Act.
provided, however, such action shall not adversely affect in any material
respect the interests of the Holders, and any amendments of this Declaration
shall become effective when notice thereof is given to the Holders.
12.2 Meetings of the Holders; Action by Written Consent
(a) Meetings of the Holders of any class of Securities may be
called at any time by the Administrative 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 Capital Securities are listed or admitted for trading. The
Administrative Trustees shall call a meeting of the Holders of such class if
directed to do so by the Holders of at least 10% in liquidation amount of
such class of Securities. Such direction shall be given by delivering to the
Administrative Trustees one or more notice 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 calling a meeting shall specify in writing the Security Certificates
held by the Holders exercising the right to call a meeting and only those
Securities specified shall be counted for purposes of determining whether the
required percentage set forth in the second sentence of this paragraph has
been met.
(b) Except to the extent otherwise provided in the terms of the
Securities, the following provisions shall apply to meetings of Holders of
Securities:
(i) notice of any such meeting shall be given to all the
Holders of Securities having a right to vote thereat at least seven days and
not more than 60 days before the date of such meeting. Whenever a vote,
consent or approval of the Holders is permitted or required under this
Declaration or the rules of any stock exchange on which the Capital
Securities are listed or admitted for trading, such vote, consent or approval
may be given at a meeting of the Holders. 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 having a right to vote thereon were present
and voting. Prompt notice of the taking of action without a meeting shall be
given to the Holders entitled to vote who have not consented in writing. The
Administrative Trustees may specify that any written ballot submitted to the
Security Holder for the purpose of taking any action without a meeting shall
be returned to the Trust within the time specified by the Administrative
Trustees;
(ii) each Holder may authorize any Person to act for it by
proxy on all matters in which a Holder 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 were stockholders of a
Delaware corporation;
(iii) each meeting of the Holders shall be conducted by the
Administrative Trustees or by such other Person that the Administrative
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 Capital Securities are then listed or trading,
otherwise provides, the Administrative Trustees, in their sole discretion,
shall establish all other provisions relating to meetings of Holders,
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
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 national banking association with
trust powers 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, insolvency, and other similar laws affecting
creditors' rights generally and to general principles of equity and the
discretion of the court (regardless of whether the enforcement of such
remedies is considered in a proceeding in equity or at law);
(c) The execution, delivery and performance of this Declaration
by the Property Trustee does not conflict with or constitute a breach of the
charter or by-laws of the Property Trustee; and
(d) No consent, approval or authorization of, or registration
with or notice to, any State or federal banking authority is required for the
execution, delivery or performance by the Property Trustee of this
Declaration.
13.2 Representations and Warranties of Delaware Trustee
The Trustee that acts as initial Delaware Trustee represents and
warrants to the Trust and to the Sponsor at the date of this Declaration, and
each Successor Delaware Trustee represents and warrants to the Trust and the
Sponsor at the time of the Successor Delaware Trustee's acceptance of its
appointment as Delaware Trustee that:
(a) The Delaware Trustee, if an entity, is duly organized,
validly existing and in good standing under the laws of the State of
Delaware, with corporate 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 this Declaration has been duly authorized by all necessary
corporate action on the part of the Delaware Trustee. This 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);
(c) 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; and
(d) The Delaware Trustee is a natural person who is a resident
of the State of Delaware or, if not a natural person, an entity which has its
principal place of business in the State of Delaware.
ARTICLE XIV
REGISTRATION RIGHTS
14.1 Registration Rights Agreement; Liquidated Damages
The Holders of the Capital Securities, the Debentures and the Capital
Securities Guarantee (collectively, the "Registrable Securities") are
entitled to the benefits of the Registration Rights Agreement.
ARTICLE XV
MISCELLANEOUS
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 first class mail, as follows:
(a) if given to the Trust, in care of the Administrative
Trustees at the Trust's mailing address set forth below (or such other
address as the Trust may give notice of to the Holders):
Puget Sound Energy Capital Trust I
c/o Puget Sound Energy, Inc.
411 - 108th Avenue N.E.
Bellevue, WA 98004-5515
Attention: Donald E. Gaines, Administrative Trustee
(b) if given to the Delaware Trustee, at the mailing address
set forth below (or such other address as Delaware Trustee may give notice of
to the Holders):
First Chicago Delaware Inc.
300 King Street
Wilmington, DE 19801
Attention: Michael J. Majchrzak
(c) if given to the Property Trustee, at the Property Trustee's
mailing address set forth below (or such other address as the Property
Trustee may give notice of to the Holders):
The First National Bank of Chicago
One First National Plaza, Suite 0126
Chicago, IL 60670-0126
Attention: Corporate Trust Services Division
(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):
Puget Sound Energy, Inc.
411 - 108th Avenue N.E.
Bellevue, Washington 98004-5515
Attention: Treasurer
(e) if given to any other Holder, at the address set forth on
the books and records of the Trust.
All such notices shall be deemed to have been given when received in
person, telecopied with receipt confirmed, or mailed by first class mail,
postage prepaid except that if a notice or other document is refused delivery
or cannot be delivered because of a changed address of which no notice was
given, such notice or other document shall be deemed to have been delivered
on the date of such refusal or inability to deliver.
15.2 Governing Law
This Declaration and the rights of the parties hereunder shall be
governed by and interpreted in accordance with the laws of the State of
Delaware and all rights and remedies shall be governed by such laws without
regard to principles of conflict of laws.
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.
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.
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.
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.
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.
IN WITNESS WHEREOF, the undersigned has caused these presents to be
executed as of the day and year first above written.
/s/ James P. Torgerson
----------------------
James P. Torgerson, as Administrative Trustee
/s/ Donald E. Gaines
----------------------
Donald E. Gaines, as Administrative Trustee
/s/ Tommy G. Leong
----------------------
Tommy G. Leong, as Administrative Trustee
FIRST CHICAGO DELAWARE INC., as Delaware Trustee
By: /s/ Richard D. Manella
----------------------
Name: Richard D. Manella
Title: Vice President
THE FIRST NATIONAL BANK OF CHICAGO,
as Property Trustee
By: /s/ Richard D. Manella
----------------------
Name: Richard D. Manella
Title: Vice President
PUGET SOUND ENERGY, INC.,
as Sponsor
By: /s/ Donald E. Gaines
----------------------
Name: Donald E. Gaines
Title: Treasurer
ANNEX I
TERMS OF
8.231% SERIES A/SERIES B CAPITAL SECURITIES
8.231% COMMON SECURITIES
Pursuant to Section 7.1 of the Amended and Restated Declaration of
Trust, dated as of June 6, 1997 (as amended from time to time, the
"Declaration"), the designation, rights, privileges, restrictions,
preferences and other terms and provisions of the 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 Memorandum referred to below in Section 2(c) of this Annex
I):
1. Designation and Number
(a) Capital Securities. 100,000 Series A Capital Securities of
the Trust and 100,000 Series B Capital Securities of the Trust, each series
with a maximum aggregate liquidation amount with respect to the assets of the
Trust of one hundred million dollars ($100,000,000), and each with a
liquidation amount with respect to the assets of the Trust of $1,000 per
security, are hereby designated for the purposes of identification only as
"8.231% Series A Capital Securities" and "8.231% Series B Capital
Securities", respectively (collectively, the "Capital Securities"). The
certificates evidencing the Capital 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 required by ordinary usage, custom
or practice or to conform to the rules of any stock exchange on which the
Capital Securities are listed.
(b) Common Securities. 3,093 Common Securities of the Trust
with an aggregate liquidation amount with respect to the assets of the Trust
of three million ninety three thousand dollars ($3,093,000) and a liquidation
amount with respect to the assets of the Trust of $1,000 per security, are
hereby designated for the purposes of identification only as "8.231% Common
Securities" (the "Common Securities"). The 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 8.231% (the "Coupon Rate") of the liquidation amount of
$1,000 per Security (the "Liquidation Amount"), 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 semi-annual period will bear
additional distributions thereon compounded semi-annually at the Coupon Rate
(to the extent permitted by applicable law). Pursuant to the Registration
Rights Agreement, in certain limited circumstances the Debenture Issuer will
be required to pay Liquidated Damages (as defined in the Registration Rights
Agreement) with respect to the Debentures. The term "Distributions," as used
herein, includes distributions of any such Liquidated Damages 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 on hand legally available therefor.
(b) Distributions on the Securities will be cumulative, will
accumulate from the most recent date to which Distributions have been paid
or, if no Distributions have been paid, from June 6, 1997, and will be
payable semi-annually in arrears on June 1 and December 1 of each year,
commencing on December 1, 1997 (each, a "Distribution Date"), except as
otherwise described below. Distributions will be computed on the basis of a
360-day year consisting of twelve 30-day months and for any period less than
a full calendar month on the basis of the actual number of days elapsed in
such month. As long as no Event of Default has occurred and is continuing
under the Indenture, the Debenture Issuer has the right under the Indenture
to defer payments of interest by extending the interest payment period at any
time and from time to time on the Debentures for a period not exceeding 10
consecutive semi-annual periods, including the first such semi-annual period
during such period (each an "Extension Period"), during which Extension
Period no interest shall be due and payable on the Debentures, provided that
no Extension Period shall end on a day other than an Interest Payment Date
for the Debentures or shall extend beyond the Maturity Date of the
Debentures. As a consequence of such deferral, Distributions will also be
deferred. Despite such deferral, Distributions will continue to accumulate
with additional Distributions thereon (to the extent permitted by applicable
law) at the Coupon Rate compounded semi-annually during any such Extension
Period. Prior to the termination of any such Extension Period, the Debenture
Issuer may further defer payments of interest by further extending such
Extension Period; provided that such Extension Period, together with all such
previous and further extensions within such Extension Period, may not exceed
10 consecutive semi-annual periods, including the first semi-annual period
during such Extension Period, or extend beyond the Maturity Date of the
Debentures. Upon the termination of any Extension Period and the payment of
all amounts then due, subject to the foregoing limitations, 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
fifteenth day of the month immediately preceding the month in which the
relevant Distribution Date occurs, which Distribution Dates correspond to the
interest payment dates on the Debentures. Subject to any applicable laws and
regulations and the provisions of the Declaration, each such payment in
respect of the Capital Securities will be made as described under the heading
"Description of the Capital Securities -- Form, Denomination, Book-Entry
Procedures and Transfer" in the Offering Memorandum dated June 5, 1997, of
the Debenture Issuer and the Trust relating to the Securities and the
Debentures. Payments in respect of Capital Securities held in certificated
form will be made by check mailed to the Holder entitled thereto. The
relevant record dates for the Common Securities shall be the same as the
record dates for the Capital Securities. Distributions payable on any
Securities that are not punctually paid on any Distribution Date, as a result
of the Debenture Issuer having failed to make a payment under the Debentures,
will cease to be payable to the Holder 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 special record date or other specified
date determined in accordance with the Indenture. If any date on which
Distributions are payable on the Securities is not a Business Day, then
payment of the Distribution payable on such date will be made on the next
succeeding day that is a Business Day (except that if such next succeeding
day which is a Business Day falls in a subsequent calendar year, such payment
shall be payable on the Business Day next preceding such date) (and without
any interest or other payment in respect of any such delay), with the same
force and effect as if made on such date.
(d) In the event that there is any money or other property held
by or for the Trust that is not accounted for hereunder, such property shall
be distributed Pro Rata (as defined herein) among the Holders of the
Securities.
3. Liquidation Distribution Upon Dissolution
If a termination occurs as described in Sections 8.1(a)(i), (ii), (iii),
(iv) and (vii), the Trust shall be liquidated by the Trustees as
expeditiously as the Trustees determine to be possible by distributing, after
satisfaction of liabilities to creditors of the Trust as provided by
applicable law, to the holders of the Trust Securities a Like Amount of the
Debentures, unless such distribution is determined by the Property Trustee
not to be practicable, in which event such holders will be entitled to
receive out of the assets of the Trust legally available for distribution to
holders, after satisfaction of liabilities to creditors of the Trust as
provided by applicable law, an amount equal to the aggregate of the
Liquidation Amount plus accumulated and unpaid Distributions thereon to the
date of payment (such amount being the "Liquidation Distribution"). If such
Liquidation Distribution can be paid only in part because the Trust has
insufficient assets on hand legally available to pay in full the aggregate
Liquidation Distribution, then the amounts payable directly by the Trust on
the Capital Securities and the Common Securities shall be paid on a Pro Rata
basis.
"Like Amount" means (i) with respect to a redemption of the Securities,
Securities having a Liquidation Amount equal to the principal amount of
Debentures to be paid in accordance with their terms and (ii) with respect to
a distribution of Debentures upon the liquidation of the Trust, Debentures
having a principal amount equal to the Liquidation Amount of the Securities
of the Holder to whom such Debentures are distributed.
4. Redemption and Distribution
(a) Upon the repayment of the Debentures in whole or in part,
at maturity or upon early redemption (either at the option of the Debenture
Issuer or pursuant to a Tax Event, as described below), the proceeds from
such repayment shall be simultaneously applied by the Property Trustee
(subject to the Property Trustee having received notice no later than 45 days
prior to such repayment) to redeem a Like Amount of the Securities at a
redemption price equal to (i) in the case of the repayment of the Debentures
at maturity, the Maturity Redemption Price (as defined below), (ii) in the
case of the optional prepayment of the Debentures upon the occurrence and
continuation of a Tax Event, the Tax Event Redemption Price (as defined
below) and (iii) in the case of the optional prepayment of the Debentures,
the Optional Redemption Price (as defined below). The Maturity Redemption
Price, the Tax Event Redemption Price and the Optional Redemption Price are
referred to collectively as the "Redemption Price". Holders will be given
not less than 30 nor more than 60 days notice of such redemption.
(b) (i) The "Maturity Redemption Price", with respect to a
redemption of Securities, shall mean an amount equal to the principal of and
accrued and unpaid interest on the Debentures as of the maturity date
thereof.
(ii) In the case of an optional redemption, if fewer than
all the outstanding Securities are to be so redeemed, the Capital Securities
will be redeemed Pro Rata and the Capital Securities to be redeemed will be
determined as described in Section 4(f)(ii) below.
The Debenture Issuer shall have the right (subject to the conditions in
the Indenture) to elect to redeem the Debentures in whole or in part at any
time on or after June 1, 2007 (the "Initial Optional Redemption Date"), upon
not less than 30 days and not more than 60 days notice, at the Optional
Redemption Price and, simultaneously with such redemption, to cause a Like
Amount of the Securities to be redeemed by the Trust at the Optional
Redemption Price on a Pro Rata basis. "Optional Redemption Price" shall mean
a price equal to the percentage of the liquidation amount of Securities to be
redeemed plus accumulated and unpaid Distributions thereon, if any, to the
date of such redemption if redeemed during the 12-month period beginning
June 1 of the years indicated below:
Year Percentage
2007 104.116%
2008 103.704%
2009 103.292%
2011 102.469%
2012 102.058%
2013 101.646%
2014 101.235%
2015 100.823%
2016 100.412%
2017 and thereafter 100.000%
(c) If a Tax Event shall occur and be continuing, the Debenture
Issuer may at its option prepay the Debentures in whole (but not in part) at
any time prior to the Initial Optional Redemption Date, within the 90 days of
the occurrence of such Tax Event (the "90 Day Period") at the Tax Event
Prepayment Price (as defined in the Indenture), and, simultaneously with such
prepayment, cause a Like Amount of the Securities to be redeemed by the Trust
at the Tax Event Redemption Price on a Pro Rata basis.
"Tax Event" means the receipt by the Debenture Issuer and the Trust of
an opinion of counsel (a "Tax Event Opinion") 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 agency (which amendment or change is
effective or is announced on or after June 6, 1997), there is more than an
insubstantial risk that (i) the Trust would be subject to United States
federal income tax with respect to income received or accrued on the
Debentures, (ii) interest payable by the Debenture Issuer on the Debentures
would not be deductible by the Debenture Issuer for United States federal
income tax purposes or (iii) the Trust will be subject to more than a de
minimis amount of other taxes, duties or other governmental charges.
"Tax Event Redemption Price" shall mean, with respect to a redemption of
Securities, a price equal to the greater of (i) 100% of the principal amount
of a Like Amount of Debentures to be prepaid or (ii) the sum, as determined
by a Quotation Agent (as defined in the Indenture), of the present values of
the remaining scheduled payments of principal and interest on the Debentures
to the maturity date thereof, discounted to the prepayment date on a semi-
annual basis (assuming a 360-day year consisting of twelve 30-day months) at
the Adjusted Treasury Rate (as defined in the Indenture), plus, in each case,
accrued Distributions thereon, to the date of redemption.
(d) On and from the date fixed by the Administrative Trustees
for any distribution of Debentures and liquidation of the Trust: (i) the
Securities will no longer be deemed to be outstanding, (ii) the Clearing
Agency or its nominee (or any successor Clearing Agency or its nominee), as
the Holder of the Capital Securities, will receive a registered global
certificate or certificates representing the Debentures to be delivered upon
such distribution and any certificates representing Securities not held by
the Clearing Agency or its nominee (or any successor Clearing Agency or its
nominee) will be deemed to represent beneficial interests in a Like Amount of
Debentures until such certificates are presented to the Debenture Issuer or
its agent for transfer or reissue.
(e) The Trust may not redeem fewer than all the outstanding
Securities unless all accumulated and unpaid Distributions have been paid on
all Securities for all semi-annual Distribution periods terminating on or
before the date of redemption.
(f) The procedure with respect to redemptions of Securities or
distributions of Debentures shall be as follows:
(i) Notice of any redemption of, or notice of distribution
of Debentures in exchange for, the Securities (a "Redemption/Distribution
Notice") will be given by the Trust by mail to each Holder to be redeemed or
exchanged not fewer than 30 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 exchange and the dates on which
notices are given pursuant to this Section 4(f)(i), a Redemption/Distribution
Notice shall be deemed to be given on the day such notice is first mailed by
first-class mail, postage prepaid, to Holders. Each Redemption/Distribution
Notice shall be addressed to the Holders of Securities at the address of each
such Holder appearing in the books and records of the Trust. No defect in
the Redemption/Distribution Notice or in the mailing of either thereof with
respect to any Holder shall affect the validity of the redemption 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 Capital Securities, it being understood
that, in respect of Capital Securities registered in the name of and held of
record by the Clearing Agency or its nominee (or any successor Clearing
Agency or its nominee) or any nominee, the distribution of the proceeds of
such redemption will be made to the Clearing Agency and disbursed by such
Clearing Agency 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 will be irrevocable), then
(A) with respect to Capital Securities issued 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 sufficient amount of cash in
connection with the related redemption or maturity of the Debentures by 10:00
a.m., New York City time, on the maturity date or the date of redemption, as
the case requires, the Property Trustee will deposit irrevocably with the
Clearing Agency or its nominee (or successor Clearing Agency or its nominee)
funds sufficient to pay the applicable Redemption Price with respect to such
Capital Securities and will give the Clearing Agency irrevocable instructions
and authority to pay the Redemption Price to the relevant Clearing Agency
Participants, and (B) with respect to Capital Securities issued in
certificated form and Common Securities, provided that the Debenture Issuer
has paid the Property Trustee a sufficient amount of cash in connection with
the related redemption or maturity of the Debentures, the Property Trustee
will pay the relevant Redemption Price to the Holders by check mailed to the
address of the relevant Holder appearing on the books and records of the
Trust on the redemption date. If a Redemption/Distribution Notice shall have
been given and funds deposited as required, if applicable, then immediately
prior to the close of business on the date of such deposit, or on the
redemption date, as applicable, Distributions will cease to accumulate on the
Securities so called for redemption and all rights of Holders so called for
redemption will cease, except the right of the Holders of such Securities to
receive the Redemption Price, but without interest on such Redemption Price,
and such Securities shall cease to be outstanding.
(iv) Payment of accumulated and unpaid Distributions on
the Redemption Date of the Securities will be subject to the rights of
Holders of Securities on the close of business on a regular record date in
respect of a Distribution Date occurring on or prior to such Redemption Date.
Neither the Administrative Trustees nor the Trust shall be required to
register or cause to be registered the transfer of (i) any Securities
beginning on the opening of business 15 days before the day of mailing of a
notice of redemption or any notice of selection of Securities for redemption
or (ii) any Securities selected for redemption except the unredeemed portion
of any Security being redeemed. If any date fixed for redemption of
Securities is not a Business Day, then payment of the Redemption Price
payable on such date will be made on the next succeeding day that is a
Business Day (except that if such next succeeding day which is a Business Day
falls in a subsequent calendar year, such payment shall be payable on the
Business Day next preceding such date) (and without any interest or other
payment in respect of any such delay), with the same force and effect as if
made on such date fixed for redemption. If payment of the Redemption Price in
respect of any Securities is improperly withheld or refused and not paid
either by the Property Trustee or by the Sponsor as guarantor pursuant to the
relevant Securities Guarantee, Distributions on such Securities will continue
to accumulate from the original redemption date to the actual date of
payment, in which case the actual payment date will be considered the date
fixed for redemption for purposes of calculating the Redemption Price.
(v) Redemption/Distribution Notices shall be sent by the
Property Trustee on behalf of the Trust to (A) in respect of the Capital
Securities, the Clearing Agency or its nominee (or any successor Clearing
Agency or its nominee) if the Global Certificates have been issued or, if
Definitive Capital Security Certificates have been issued, to the Holder
thereof, and (B) in respect of the Common Securities to the Holder thereof.
(vi) Subject to the foregoing and applicable law
(including, without limitation, United States federal securities laws and
banking laws), provided the acquiror is not the Holder of the Common
Securities or the obligor under the Indenture, the Sponsor or any of its
subsidiaries may at any time and from time to time purchase outstanding
Capital Securities by tender, in the open market or by private agreement.
5. Voting Rights - Capital Securities
(a) Except as provided under Sections 5(b) and 7 and as
otherwise required by law and the Declaration, the Holders of the Capital
Securities will have no voting rights.
(b) So long as any Debentures are held by the Property Trustee,
the Trustees shall not (i) direct the time, method and place of conducting
any proceeding for any remedy available to the Debenture Trustee, or
executing any trust or power conferred on such Debenture Trustee with respect
to the Debentures, (ii) waive any past default that is waivable under
Section 5.07 of the Indenture, (iii) exercise any right to rescind or annul a
declaration of acceleration of the maturity of the principal of the
Debentures or (iv) consent to any amendment, modification or termination of
the Indenture or the Debentures, where such consent shall be required,
without, in each case, obtaining the prior approval of the Holders of a
majority in liquidation amount of all outstanding Capital Securities;
provided, however, that where a consent under the Indenture would require the
consent of each holder of Debentures affected thereby, no such consent shall
be given by the Property Trustee without the prior approval of each Holder of
the Capital Securities. The Trustees shall not revoke any action previously
authorized or approved by a vote of the Holders of the Capital Securities
except by subsequent vote of such Holders. The Property Trustee shall notify
each Holder of Capital Securities of any notice of default with respect to
the Debentures. In addition to obtaining the foregoing approvals of such
Holders of the Capital Securities, prior to taking any of the foregoing
actions, the Trustees shall obtain an opinion of counsel experienced in such
matters to the effect that the Trust will not be classified as an association
taxable as a corporation for United States federal income tax purposes on
account of such action.
If an Event of Default under the Declaration has occurred and is
continuing and such event is attributable to the failure of the Debenture
Issuer to pay principal of or premium, if any, or interest on the Debentures
on the due date (or in the case of redemption, on the redemption date), then
a Holder of Capital Securities may directly institute a proceeding for
enforcement of payment to such Holder of the principal of or premium, if any,
or interest on a Like Amount of Debentures (a "Direct Action") on or after
the respective due date specified in the Debentures. In connection with such
Direct Action, the rights of the Common Securities Holder will be subrogated
to the rights of such Holder of Capital Securities to the extent of any
payment made by the Debenture Issuer to such Holder of Capital Securities in
such Direct Action. Except as provided in the second preceding sentence, the
Holders of Capital Securities will not be able to exercise directly any other
remedy available to the holders of the Debentures.
Any approval or direction of Holders of Capital Securities may be given
at a separate meeting of Holders of Capital Securities convened for such
purpose, at a meeting of all of the Holders of Securities in the Trust or
pursuant to written consent. The Property Trustees will cause a notice of
any meeting at which Holders of Capital 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 Capital Securities. Each
such notice will include a statement setting forth (i) the date of such
meeting or the date by which such action is to be taken, (ii) a description
of any resolution proposed for adoption at such meeting on which such Holders
are entitled to vote or of such matter upon which written consent is sought
and (iii) instructions for the delivery of proxies or consents.
No vote or consent of the Holders of the Capital Securities will be
required for the Trust to redeem and cancel Capital Securities or to
distribute the Debentures in accordance with the Declaration and the terms of
the Securities.
Notwithstanding that Holders of Capital Securities are entitled to vote
or consent under any of the circumstances described above, any of the Capital
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 they were not outstanding.
6. Voting Rights - Common Securities
(a) Except as provided under Sections 6(b), 6(c), and 7 as
otherwise required by law and the Declaration, the Holders of the Common
Securities will have no voting rights.
(b) Unless a Debenture Event of Default shall have occurred and
be continuing, any Trustee may be removed at any time by the holder of the
Common Securities. If a Debenture Event of Default has occurred and is
continuing, the Property Trustee and the Delaware Trustee may be removed at
such time by the holders of a majority in liquidation amount of the
outstanding Capital Securities. In no event will the holders of the Capital
Securities have the right to vote to appoint, remove or replace the
Administrative Trustees, which voting rights are vested exclusively in the
Sponsor as the holder of the Common Securities. No resignation or removal of
a Trustee and no appointment of a successor trustee shall be effective until
the acceptance of appointment by the successor trustee in accordance with the
provisions of the Declaration.
(c) So long as any Debentures are held by the Property Trustee,
the Trustees shall not (i) direct the time, method and place of conducting
any proceeding for any remedy available to the Debenture Trustee, or
executing any trust or power conferred on such Debenture Trustee with respect
to the Debentures, (ii) waive any past default that is waivable under
Section 5.07 of the Indenture, (iii) exercise any right to rescind or annul a
declaration of acceleration of the maturity of the principal of the
Debentures or (iv) consent to any amendment, modification or termination of
the Indenture or the Debentures, where such consent shall be required,
without, in each case, obtaining the prior approval of the Holders of a
majority in liquidation amount of all outstanding Common Securities;
provided, however, that where a consent under the Indenture would require the
consent of each holder of Debentures affected thereby, no such consent shall
be given by the Property Trustee without the prior approval of each Holder of
the Common Securities. The Trustees shall not revoke any action previously
authorized or approved by a vote of the Holders of the Common Securities
except by subsequent vote of such Holders. The Property Trustee shall notify
each Holder of Common Securities of any notice of default with respect to the
Debentures. In addition to obtaining the foregoing approvals of such Holders
of the Common Securities, prior to taking any of the foregoing actions, the
Trustees shall obtain an opinion of counsel experienced in such matters to
the effect that the Trust will not be classified as an association taxable as
a corporation for United States federal income tax purposes on account of
such action.
If an Event of Default under the Declaration has occurred and is
continuing and such event is attributable to the failure of the Debenture
Issuer to pay principal of or premium, if any, or interest on the Debentures
on the due date (or in the case of redemption, on the redemption date), then
a Holder of Common Securities may institute a Direct Action for enforcement
of payment to such Holder of the principal of or premium, if any, or interest
on a Like Amount of Debentures on or after the respective due date specified
in the Debentures. In connection with Direct Action, the rights of the
Common Securities Holder will be subordinated to the rights of such Holder of
Capital Securities to the extent of any payment made by the Debenture Issuer
to such Holder of Common Securities in such Direct Action. Except as
provided in the second preceding sentence, the Holders of Common Securities
will not be able to exercise directly any other remedy available to the
holders of the Debentures.
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 Administrative 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 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.
7. Amendments to Declaration
In addition to the requirements set out in Section 12.1 of the
Declaration, the Declaration may be amended from time to time by the Sponsor,
the Property Trustee and the Administrative Trustees, without the consent of
the Holders of the Securities (i) to cure any ambiguity, correct or
supplement any provisions in the Declaration that may be inconsistent with
any other provisions, or to make any other provisions with respect to matters
or questions arising under the Declaration which shall not be inconsistent
with the other provisions of the Declaration, or (ii) to modify, eliminate or
add to any provisions of the Declaration to such extent as shall be necessary
to ensure that the Trust will be classified for United States federal income
tax purposes as a grantor trust at all times that any Securities are
outstanding or to ensure that the Trust will not be required to register as
an "Investment Company" under the Investment Company Act; provided, however,
such action shall not adversely affect in any material respect the interests
of any Holder of Securities, and any amendments of the Declaration shall
become effective when notice thereof is given to the holders of the
Securities. The Declaration may be amended by the Trustees and the Sponsor
with (i) the consent of Holders representing a majority in liquidation amount
of all outstanding Securities, and (ii) receipt by the Trustees of an Opinion
of Counsel to the effect that such amendment or the exercise of any power
granted to the Trustees in accordance with such amendment will not affect the
Trust's status as a grantor trust for United States federal income tax
purposes or the Trust's exemption from status as an Investment Company under
the Investment Company Act, provided that, without the consent of each Holder
of Trust Securities, the Declaration may not be amended to (i) change the
amount or timing of any Distribution on or redemption of the Trust Securities
or otherwise adversely affect the amount of any Distribution required to be
made in respect of the Trust Securities as of a specified date or
(ii) restrict the right of a holder of Trust Securities to institute suit for
the enforcement of any such payment on or after such date.
8. 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 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
Capital Securities pro rata according to the aggregate liquidation amount of
Capital Securities held by the relevant Holder relative to the aggregate
liquidation amount of all Capital Securities outstanding, and only after
satisfaction of all amounts owed to the Holders of the Capital 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.
9. Ranking
The Capital Securities rank pari passu with the Common Securities and
payment thereon shall be made Pro Rata with the Common Securities, except
that, if an Event of Default under the Declaration occurs and is continuing,
no payments in respect of Distributions on, or payments upon liquidation,
redemption or otherwise with respect to, the Common Securities shall be made
until the Holders of the Capital Securities shall be paid in full the
Distributions, Redemption Price, Liquidation Distribution and other payments
to which they are entitled at such time.
10. Acceptance of Securities Guarantee and Indenture
Each Holder of Capital Securities and Common Securities, by the
acceptance thereof, agrees to the provisions of the Capital Securities
Guarantee and the Common Securities Guarantee, respectively, including the
subordination provisions therein and to the provisions of the Indenture.
11. No Preemptive Rights
The Holders of the Securities shall have no preemptive rights to
subscribe for any additional securities.
12. Miscellaneous
These terms constitute a part of the Declaration.
The Sponsor will provide a copy of the Declaration, the Capital
Securities Guarantee or the Common Securities Guarantee (as may be
appropriate), the Indenture (including any supplemental indenture) to a
Holder without charge on written request to the Sponsor at its principal
place of business.
EXHIBIT A-1
FORM OF CAPITAL SECURITY CERTIFICATE
[FORM OF FACE OF SECURITY]
[IF THIS GLOBAL SECURITY IS A GLOBAL CAPITAL SECURITY, INSERT: THIS
CAPITAL SECURITY IS A GLOBAL CAPITAL SECURITY WITHIN THE MEANING OF THE
DECLARATION HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF THE
DEPOSITORY TRUST COMPANY (THE "CLEARING AGENCY") OR A NOMINEE OF THE CLEARING
AGENCY. THIS CAPITAL SECURITY IS EXCHANGEABLE FOR CAPITAL SECURITIES
REGISTERED IN THE NAME OF A PERSON OTHER THAN THE CLEARING AGENCY OR ITS
NOMINEE ONLY IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE DECLARATION AND NO
TRANSFER OF THIS CAPITAL SECURITY (OTHER THAN A TRANSFER OF THIS CAPITAL
SECURITY AS A WHOLE BY THE CLEARING AGENCY TO A NOMINEE OF THE CLEARING
AGENCY OR BY A NOMINEE OF THE CLEARING AGENCY TO THE CLEARING AGENCY OR
ANOTHER NOMINEE OF THE CLEARING AGENCY) MAY BE REGISTERED EXCEPT IN LIMITED
CIRCUMSTANCES.]
UNLESS THIS CAPITAL SECURITY IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (55 WATER STREET, NEW YORK,
NEW YORK) TO THE TRUST OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR
PAYMENT, AND ANY CAPITAL SECURITY ISSUED IS REGISTERED IN THE NAME OF CEDE &
CO. OR SUCH OTHER NAME AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY AND ANY PAYMENT HEREON IS MADE TO CEDE & CO., ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY A PERSON IS
WRONGFUL SINCE THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.]
[IF THIS SECURITY IS A RESTRICTED CAPITAL SECURITY, INSERT: THE CAPITAL
SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") OR ANY STATE SECURITIES LAWS
OR ANY OTHER APPLICABLE SECURITIES LAW. NEITHER THIS CAPITAL SECURITY NOR
ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED,
TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF
SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT
TO, REGISTRATION.
THE HOLDER OF THIS CAPITAL SECURITY BY ITS ACCEPTANCE HEREOF AGREES TO
OFFER, SELL OR OTHERWISE TRANSFER THIS CAPITAL SECURITY, PRIOR TO THE DATE
(THE "RESALE RESTRICTION TERMINATION DATE") WHICH IS TWO YEARS AFTER THE
LATER OF THE ORIGINAL ISSUANCE DATE HEREOF AND THE LAST DATE ON WHICH THE
COMPANY OR ANY "AFFILIATE" OF THE COMPANY WAS THE OWNER OF THIS CAPITAL
SECURITY (OR ANY PREDECESSOR OF THIS CAPITAL SECURITY) ONLY (A) TO THE
COMPANY, (B) PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BEEN DECLARED
EFFECTIVE UNDER THE SECURITIES ACT, (C) SO LONG AS THIS CAPITAL SECURITY IS
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) TO AN INSTITUTIONAL
"ACCREDITED INVESTOR" WITHIN THE MEANING OF SUBPARAGRAPH (A)(1), (2), (3) OR
(7) OF RULE 501 OF REGULATION D UNDER THE SECURITIES ACT THAT IS ACQUIRING
THIS CAPITAL SECURITY FOR ITS OWN ACCOUNT, OR FOR THE ACCOUNT OF SUCH AN
INSTITUTIONAL ACCREDITED INVESTOR, FOR INVESTMENT PURPOSES AND NOT WITH A
VIEW TO, OR FOR OFFER OR SALE IN CONNECTION WITH, ANY DISTRIBUTION IN
VIOLATION OF THE SECURITIES ACT, OR (E) PURSUANT TO ANY OTHER AVAILABLE
EXEMPTION FROM THE REGISTRATION REQUIREMENTS UNDER THE SECURITIES ACT,
SUBJECT TO THE RIGHT OF THE TRUST AND THE COMPANY PRIOR TO ANY SUCH OFFER,
SALE OR TRANSFER (i) PURSUANT TO CLAUSE (D) OR (E) TO REQUIRE THE DELIVERY OF
AN OPINION OF COUNSEL, CERTIFICATIONS AND/OR OTHER INFORMATION SATISFACTORY
TO EACH OF THEM, AND (ii) PURSUANT TO CLAUSE (D), TO REQUIRE THAT A
CERTIFICATE OF TRANSFER IN THE FORM APPEARING ON THE REVERSE OF THIS CAPITAL
SECURITY IS COMPLETED AND DELIVERED BY THE TRANSFEREE TO THE TRUST. SUCH
HOLDER FURTHER AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM THIS
CAPITAL SECURITY IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS
LEGEND.
Certificate Number Number of Capital Securities
CUSIP NO.
Certificate Evidencing Capital Securities
of
Puget Sound Energy Capital Trust I
8.231% Series __ Capital Securities
(liquidation amount $1,000 per Capital Security)
Puget Sound Energy Capital Trust I, a statutory business trust created
under the laws of the State of Delaware (the "Trust"), hereby certifies that
______________ (the "Holder") is the registered owner of [$_________ in
aggregate liquidation amount of Capital Securities of the Trust] [the
aggregate liquidation amount of Capital Securities of the Trust specified in
Schedule A hereto.] representing undivided beneficial interests in the
assets of the Trust designated the 8.231% Series __ Capital Securities
(liquidation amount $1,000 per Capital Security) (the "Capital Securities").
The Capital 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 Capital 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 June 6, 1997, as the same may be amended
from time to time (the "Declaration"), including the designation of the terms
of the Capital Securities as set forth in Annex I to the Declaration.
Capitalized terms used but not defined herein shall have the meaning given
them in the Declaration. The Sponsor will provide a copy of the Declaration,
the Capital Securities Guarantee and the Indenture to a Holder without charge
upon written request to the Trust at its principal place of business.
Upon receipt of this certificate, the Holder is bound by the Declaration
and is entitled to the benefits thereunder and to the benefits of the Capital
Securities Guarantee to the extent provided therein.
By acceptance, the Holder agrees to treat, for United States federal
income tax purposes, the Debentures as indebtedness and the Capital
Securities as evidence of indirect beneficial ownership in the Debentures.
IN WITNESS WHEREOF, the Trust has executed this certificate this ____
day of __________, ____.
PUGET SOUND ENERGY CAPITAL TRUST I
By:________________________________
Name: ____________________________
Administrative Trustee
PROPERTY TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Capital Securities referred to in the within-mentioned
Declaration.
Dated:
THE FIRST NATIONAL BANK OF CHICAGO,
as Property Trustee
By:
Authorized Signatory
[FORM OF REVERSE OF SECURITY]
Distributions payable on each Capital Security will be fixed at a rate
per annum of 8.231% (the "Coupon Rate") of the liquidation amount of $1,000
per Capital 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 semi-annual period will bear interest thereon compounded semi-
annually at the Coupon Rate (to the extent permitted by applicable law).
Pursuant to the Registration Rights Agreement, in certain limited
circumstances the Debenture Issuer will be required to pay Liquidated Damages
(as defined in the Registration Rights Agreement) with respect to the
Debentures. The term "Distributions", as used herein, includes such cash
distributions and any such interest and such Liquidated Damages 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 on hand legally available
therefor.
Distributions on the Capital Securities will be cumulative, will
accumulate from the most recent date to which Distributions have been paid
or, if any Distributions have been paid, from June 6, 1997 and will be
payable semi-annually in arrears, on June 1 and December 1 of each year,
commencing on December 1, 1997, except as otherwise described below.
Distributions will be computed on the basis of a 360-day year consisting of
twelve 30-day months and, for any period less than a full calendar month, the
number of days elapsed in such month. As long as no Event of Default has
occurred and is continuing under the Indenture, the Debenture Issuer has the
right under the Indenture to defer payments of interest by extending the
interest payment period at any time and from time to time on the Debentures
for a period not exceeding 10 consecutive calendar semi-annual periods,
including the first such semi-annual period during such extension period
(each an "Extension Period"), provided that no Extension Period shall extend
beyond the Maturity Date of the Debentures. As a consequence of such
deferral, Distributions will also be deferred. Despite such deferral, semi-
annual Distributions will continue to accumulate with interest thereon (to
the extent permitted by applicable law) at the Coupon Rate compounded semi-
annually during any such Extension Period. Prior to the termination of any
such Extension Period, the Debenture Issuer may further defer payments of
interest by further extending such Extension Period; provided that such
Extension Period, together with all such previous and further extensions
within such Extension Period, may not exceed 10 consecutive semi-annual
periods, including the first semi-annual period during such Extension Period,
or extend beyond the Maturity Date of the Debentures. Payments of
accumulated Distributions will be payable to Holders as they appear on the
books and records of the Trust on the first record date after the end of the
Extension Period. Upon the termination of any Extension Period and the
payment of all amounts then due, the Debenture Issuer may commence a new
Extension Period, subject to the above requirements.
Subject to the prior obtaining of any regulatory approval then required
and to certain other conditions set forth in the Declaration and the
Indenture, the Property Trustee may, at the direction of the Sponsor, at any
time liquidate the Trust and cause the Debentures to be distributed to the
holders of the Securities in liquidation of the Trust or, simultaneous with
any redemption of the Debentures, cause a Like Amount of the Securities to be
redeemed by the Trust.
The Capital Securities shall be redeemable as provided in the
Declaration.
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned assigns and transfers this Capital
Security Certificate to:
(Insert assignee's social security or tax identification number)
(Insert address and zip code of assignee)
and irrevocably appoints
to transfer this Capital 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 Capital 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 that 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 and Exchange Act of 1934, as amended.
[Include the following if the Capital Security bears a Restricted Capital
Securities Legend]
In connection with any transfer of any of the Capital Securities evidenced by
this certificate, the undersigned confirms that such Capital 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
(4) [ ] transferred to an institutional "accredited investor" within
the meaning of subparagraph (a)(1), (2), (3) or (7) of Rule 501 of Regulation
D under the Securities Act of 1933 that is acquiring the Capital Securities
for its own account, or for the account of such an institutional "accredited
investor," for investment purposes and not with a view to, or for offer or
sale in connection with, any distribution in violation of the Securities Act
of 1933; or
(5) [ ] transferred pursuant to another available exemption from the
registration requirements of the Securities Act of 1933; or
(6) [ ] transferred pursuant to an effective registration statement.
Unless one of the boxes is checked, the Exchange Agent will refuse to
register any of the Capital Securities evidenced by this certificate in the
name of any person other than the registered Holder thereof; provided,
however, that if box (3), (4) or (5) is checked, the Registrar may require,
prior to registering any such transfer of the Capital 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 (i) if box 2 is checked, the
transferee must also certify that it is a qualified institutional buyer as
defined in Rule 144A or (ii) if box (4) is checked, the transferee must also
provide to the Registrar a Transferee Letter of Representation in the form
attached to the Offering Memorandum of the Trust dated June 5, 1997;
provided, further, that after the date that a Registration Statement has been
filed and so long as such Registration Statement continues to be effective,
the Registrar may only permit transfers for which box (5) has been checked.
Signature
SCHEDULE A
The initial aggregate liquidation amount of Capital Securities evidenced
by the Certificate to which this Schedule is attached is $__________
(equivalent to ________ Capital Securities). The notations on the following
table evidence decreases and increases in the number of Capital Securities
evidenced by such Certificate.
Decrease in Increase in Liquidation Amount
Liquidation Liquidation of Capital Securities
Amount of Capital Amount of Capital Remaining After Such Notation by
Securities Securities Decrease or Increase Registration
EXHIBIT A-2
FORM OF COMMON SECURITY CERTIFICATE
THIS COMMON SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT") OR ANY STATE SECURITIES LAWS OR ANY
OTHER APPLICABLE SECURITIES LAW. NEITHER THIS COMMON SECURITY NOR ANY
INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED,
TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF
SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT
TO, REGISTRATION.
THE HOLDER OF THIS COMMON SECURITY BY ITS ACCEPTANCE HEREOF AGREES TO
OFFER, SELL OR OTHERWISE TRANSFER THIS COMMON SECURITY, PRIOR TO THE DATE
(THE "RESALE RESTRICTION TERMINATION DATE") WHICH IS TWO YEARS AFTER THE
LATER OF THE ORIGINAL ISSUANCE DATE HEREOF AND THE LAST DATE ON WHICH THE
COMPANY OR ANY "AFFILIATE" OF THE COMPANY WAS THE OWNER OF THIS CAPITAL
SECURITY (OR ANY PREDECESSOR OF THIS CAPITAL SECURITY) ONLY (A) TO THE
COMPANY, (B) PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BEEN DECLARED
EFFECTIVE UNDER THE SECURITIES ACT, (C) SO LONG AS THIS COMMON SECURITY IS
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) TO AN INSTITUTIONAL
"ACCREDITED INVESTOR" WITHIN THE MEANING OF SUBPARAGRAPH (A)(1), (2), (3) OR
(7) OF RULE 501 OF REGULATION D UNDER THE SECURITIES ACT THAT IS ACQUIRING
THIS COMMON SECURITY FOR ITS OWN ACCOUNT, OR FOR THE ACCOUNT OF SUCH AN
INSTITUTIONAL ACCREDITED INVESTOR, FOR INVESTMENT PURPOSES AND NOT WITH A
VIEW TO, OR FOR OFFER OR SALE IN CONNECTION WITH, ANY DISTRIBUTION IN
VIOLATION OF THE SECURITIES ACT, OR (E) PURSUANT TO ANY OTHER AVAILABLE
EXEMPTION FROM THE REGISTRATION REQUIREMENTS UNDER THE SECURITIES ACT,
SUBJECT TO THE RIGHT OF THE TRUST AND THE COMPANY PRIOR TO ANY SUCH OFFER,
SALE OR TRANSFER (i) PURSUANT TO CLAUSE (D) OR (E) TO REQUIRE THE DELIVERY OF
AN OPINION OF COUNSEL, CERTIFICATIONS AND/OR OTHER INFORMATION SATISFACTORY
TO EACH OF THEM, AND (ii) PURSUANT TO CLAUSE (D), TO REQUIRE THAT A
CERTIFICATE OF TRANSFER IN THE FORM APPEARING ON THE REVERSE OF THIS COMMON
SECURITY IS COMPLETED AND DELIVERED BY THE TRANSFEREE TO THE TRUST. SUCH
HOLDER FURTHER AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM THIS COMMON
SECURITY IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND.
Certificate Number Number of Common Securites
Certificate Evidencing Common Securities
of
Puget Sound Energy Capital Trust I
8.231% Common Securities
(liquidation amount $1,000 per Common Security)
Puget Sound Energy Capital Trust I, a statutory business trust formed
under the laws of the State of Delaware (the "Trust"), hereby certifies that
Puget Sound Energy, Inc. (the "Holder") is the registered owner of 3,093
common securities of the Trust representing undivided beneficial interests in
the assets of the Trust designated the 8.231% Common Securities (liquidation
amount $1,000 per 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 and shall in all respects be
subject to the provisions of the Amended and Restated Declaration of Trust of
the Trust dated as of June 6, 1997, 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 but not defined herein shall have the meaning given them in the
Declaration. The Sponsor will provide a copy of the Declaration, the Common
Securities Guarantee and the Indenture (including any supplemental indenture)
to a Holder without charge upon written request to the Sponsor at its
principal place of business.
Upon receipt of this certificate, the Sponsor is bound by the
Declaration and is entitled to the benefits thereunder and to the benefits of
the Common Securities Guarantee to the extent provided therein.
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.
IN WITNESS WHEREOF, the Trust has executed this certificate this ___ day
of ____________, ____.
PUGET SOUND ENERGY CAPITAL TRUST I
By:________________________________
Name: __________________________
Administrative Trustee
[FORM OF REVERSE OF SECURITY]
Distributions payable on each Common Security will be fixed at a rate
per annum of 8.231% (the "Coupon Rate") of the liquidation amount of $1,000
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 semi-annual period will bear interest thereon compounded semi-
annually at the Coupon Rate (to the extent permitted by applicable law).
Pursuant to the Registration Rights Agreement, in certain limited
circumstances the Debenture Issuer will be required to pay Liquidated Damages
(as defined in the Registration Rights Agreement) with respect to the
Debentures. The term "Distributions", as used herein, includes such cash
distributions and any such interest and such Liquidated Damages 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.
Distributions on the Common Securities will be cumulative, will accrue
from the most recent date to which Distributions have been paid or, if no
Distributions have been paid, from June 6, 1997 and will be payable semi-
annually in arrears, on June 1 and December 1 of each year, commencing on
December 1, 1997, except as otherwise described below. Distributions will be
computed on the basis of a 360-day year consisting of twelve 30-day months
and, for any period less than a full calendar month, the number of days
elapsed in such month. As long as no Event of Default has occurred and is
continuing under the Indenture, the Debenture Issuer has the right under the
Indenture to defer payments of interest by extending the interest payment
period at any time and from time to time on the Debentures for a period not
exceeding 10 consecutive calendar semi-annual periods, including the first
such semi-annual period during such extension period (each an "Extension
Period"), provided that no Extension Period shall extend beyond the Maturity
Date of the Debentures. As a consequence of such deferral, Distributions
will also be deferred. Despite such deferral, Distributions will continue to
accumulate with interest thereon (to the extent permitted by applicable law)
at the Coupon Rate compounded semi-annually during any such Extension Period.
Prior to the termination of any such Extension Period, the Debenture Issuer
may further defer payments of interest by further extending such Extension
Period; provided that such Extension Period, together with all such previous
and further extensions within such Extension Period, may not exceed 10
consecutive semi-annual periods, including the first semi-annual period
during such Extension Period, or extend beyond the Maturity Date 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 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.
Subject to the Sponsor obtaining any regulatory prior approval then
required and to certain other conditions set forth in the Declaration and the
Indenture, the Property Trustee may, at the direction of the Sponsor, at any
time liquidate the Trust and cause the Debentures to be distributed to the
holders to the Securities in liquidation of the Trust or, simultaneous with
any redemption of the Debentures, cause a Like Amount of the Securities to be
redeemed by the Trust.
The Common Securities shall be redeemable as provided in the
Declaration.
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:
[Include the following if the Common Security bears a Restricted Common
Securities Legend]
In connection with any transfer of any of the Common Securities evidenced by
this certificate, the undersigned confirms that such Common 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
(4) [ ] to an institutional "accredited investor" within the meaning
of subparagraph (a)(1), (2), (3) or (7) of Rule 501 of Regulation D under the
Securities Act that is acquiring the Preferred Security for its own account,
or for the account of such an institutional "accredited investor," for
investment purposes and not with a view to, or for offer or sale in
connection with, any distribution in violation of the Securities Act; or
(5) [ ] transferred pursuant to another available exemption from the
registration requirements of the Securities Act of 1933; or
(6) [ ] transferred pursuant to an effective Registration Statement.
Unless one of the boxes is checked, the Exchange Agent will refuse to
register any of the Common Securities evidenced by this certificate in the
name of any person other than the registered Holder thereof; provided,
however, that if box (3), (4) or (5) is checked, the Exchange Agent 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 (i) if box 2 is checked,
the transferee must also certify that it is a qualified institutional buyer
as defined in Rule 144A or (ii) if box 4 is checked, the transferee must also
provide a Transferee Representation Letter in the form attached to the
Offering Memorandum of the Trust, dated __________ __, 1997, after the date
that a Registration Statement has been filed and so long as such Registration
Statement continues to be effective, the Exchange Agent may only permit
transfers for which box (5) has been checked.
Signature
<PAGE>
Exhibit 4.3
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SERIES A CAPITAL SECURITIES GUARANTEE AGREEMENT
Dated as of June 6, 1997
BETWEEN
PUGET SOUND ENERGY, INC.
AND
THE FIRST NATIONAL BANK OF CHICAGO
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CONTENTS
ARTICLE I - DEFINITIONS AND INTERPRETATION
1.1 Definitions and Interpretation
ARTICLE II - TRUST INDENTURE ACT
2.1 Trust Indenture Act; Application
2.2 Lists of Holders of Securities
2.3 Reports by the Capital Securities Guarantee Trustee
2.4 Periodic Reports to Capital Securities Guarantee Trustee
2.5 Evidence of Compliance with Conditions Precedent
2.6 Events of Default; Waiver
2.7 Event of Default; Notice
2.8 Conflicting Interests
ARTICLE III - POWERS, DUTIES AND RIGHTS OF CAPITAL SECURITIES GUARANTEE
TRUSTEE
3.1 Powers and Duties of the Capital Securities Guarantee Trustee
3.2 Certain Rights of Capital Securities Guarantee Trustee
3.3 Not Responsible for Recitals or Issuance of Series A Capital
Securities Guarantee
ARTICLE IV - CAPITAL SECURITIES GUARANTEE TRUSTEE
4.1 Capital Securities Guarantee Trustee; Eligibility
4.2 Appointment, Removal and Resignation of Capital Securities
Guarantee Trustee
ARTICLE V - GUARANTEE
5.1 Guarantee
5.2 Waiver of Notice and Demand
5.3 Obligations Not Affected
5.4 Rights of Holders
5.5 Guarantee of Payment
5.6 Subrogation
5.7 Independent Obligations
ARTICLE VI - LIMITATION OF TRANSACTIONS; SUBORDINATION
6.1 Limitation of Transactions
6.2 Ranking
ARTICLE VII - TERMINATION
7.1 Termination
ARTICLE VIII - COMPENSATION AND EXPENSES OF CAPITAL SECURITIES GUARANTEE
TRUSTEE
ARTICLE IX - INDEMNIFICATION
9.1 Exculpation
9.2 Indemnification
ARTICLE X - MISCELLANEOUS
10.1 Successors and Assigns
10.2 Amendments
10.3 Notices
10.4 Exchange Offer
10.5 Benefit
10.6 Governing Law
SERIES A CAPITAL SECURITIES GUARANTEE AGREEMENT
This GUARANTEE AGREEMENT (the "Series A Capital Securities Guarantee"),
dated as of June 6, 1997, is executed and delivered by Puget Sound Energy,
Inc., a Washington corporation (the "Guarantor"), and The First National Bank
of Chicago, a national banking association, as trustee (the "Capital
Securities Guarantee Trustee"), for the benefit of the Holders (as defined
herein) from time to time of the Series A Capital Securities (as defined
herein) of Puget Sound Energy Capital Trust I, a Delaware statutory business
trust (the "Issuer").
WHEREAS, pursuant to an Amended and Restated Declaration of Trust (the
"Declaration"), dated as of June 6, 1997, among the trustees of the Issuer,
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 100,000 capital securities, having an aggregate liquidation
amount of $100,000,000, such capital securities being designated the 8.231%
Series A Capital Securities (collectively the "Series A Capital Securities")
and, in connection with an Exchange Offer (as defined in the Declaration) has
agreed to execute and deliver the Series B Capital Securities Guarantee (as
defined in the Declaration) for the benefit of holders of the Series B
Capital Securities (as defined in the Declaration).
WHEREAS, as incentive for the Holders to purchase the Series A Capital
Securities, the Guarantor desires irrevocably and unconditionally to agree,
to the extent set forth in this Series A Capital Securities Guarantee, to pay
to the Holders the Guarantee Payments (as defined below). The Guarantor
agrees to make certain other payments on the terms and conditions set forth
herein.
WHEREAS, the Guarantor is executing and delivering a guarantee agreement
(the "Common Securities Guarantee"), with substantially identical terms to
this Series A Capital 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 Declaration) 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 extent and in the manner
set forth in the Common Securities Guarantee, to the rights of holders of
Series A Capital Securities and the Series B Capital Securities to receive
Guarantee Payments under this Series A Capital Securities Guarantee and the
Series B Capital Securities Guarantee, as the case may be.
NOW, THEREFORE, in consideration of the purchase by each Holder, which
purchase the Guarantor hereby acknowledges shall benefit the Guarantor, the
Guarantor executes and delivers this Series A Capital Securities Guarantee
for the benefit of the Holders.
ARTICLE I - DEFINITIONS AND INTERPRETATION
1.1 Definitions and Interpretation
In this Series A Capital Securities Guarantee, unless the context
otherwise requires:
(a) Capitalized terms used in this Series A Capital Securities
Guarantee but not defined in the preamble above have the respective meanings
assigned to them in this Section 1.1;
(b) Terms defined in the Declaration as at the date of
execution of this Series A Capital Securities Guarantee have the same meaning
when used in this Series A Capital Securities Guarantee unless otherwise
defined in this Series A Capital Securities Guarantee;
(c) a term defined anywhere in this Series A Capital Securities
Guarantee has the same meaning throughout;
(d) all references to "the Series A Capital Securities
Guarantee" or "this Series A Capital Securities Guarantee" are to this Series
A Capital Securities Guarantee as modified, supplemented or amended from time
to time;
(e) all references in this Series A Capital Securities
Guarantee to Articles and Sections are to Articles and Sections of this
Series A Capital Securities Guarantee, unless otherwise specified;
(f) a term defined in the Trust Indenture Act has the same
meaning when used in this Series A Capital Securities Guarantee, unless
otherwise defined in this Series A Capital Securities Guarantee or unless the
context otherwise requires; and
(g) a reference to the singular includes the plural and vice
versa.
"Affiliate" has the same meaning as given to that term in Rule 405 under
the Securities Act of 1933, as amended, or any successor rule thereunder.
"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 or The City of Chicago,
Illinois are authorized or required by law or executive order to close.
"Capital Securities Guarantee Trustee" means The First National Bank of
Chicago, a national banking association, until a Successor Capital Securities
Guarantee Trustee has been appointed and has accepted such appointment
pursuant to the terms of this Series A Capital Securities Guarantee and
thereafter means each such Successor Capital Securities Guarantee Trustee.
"Common Securities" means the securities representing common undivided
beneficial interests in the assets of the Issuer.
"Corporate Trust Office" means the office of the Capital Securities
Guarantee Trustee at which the corporate trust business of the Capital
Securities Guarantee Trustee shall, at any particular time, be principally
administered, which office at the date of execution of this Agreement is
located at One First National Plaza, Suite 0126, Chicago, IL 60670-0126.
"Covered Person" means any Holder or beneficial owner of Series A
Capital Securities.
"Debentures" means the series of subordinated debt securities of the
Guarantor designated the 8.231% Series A Junior Subordinated Deferrable
Interest Debentures due June 1, 2027 held by the Property Trustee (as defined
in the Declaration) of the Issuer.
"Event of Default" means a default by the Guarantor on any of its
payment or other obligations under this Series A Capital Securities
Guarantee.
"Guarantee Payments" means the following payments or distributions,
without duplication, with respect to the Series A Capital Securities, to the
extent not paid or made by the Issuer: (i) any accumulated and unpaid
Distributions (as defined in the Declaration) that are required to be paid on
such Series A Capital Securities to the extent the Issuer has funds on hand
legally available therefor at such time, (ii) the redemption price, including
all accumulated and unpaid Distributions to the date of redemption (the
"Redemption Price") to the extent the Issuer has funds on hand legally
available therefor at such time, with respect to any Series A Capital
Securities called for redemption by the Issuer, and (iii) upon a voluntary or
involuntary termination and liquidation of the Issuer (other than in
connection with the distribution of Debentures to the Holders in exchange for
Series A Capital Securities as provided in the Declaration), the lesser of
(a) the aggregate of the liquidation amount and all accumulated and unpaid
Distributions on the Series A Capital Securities to the date of payment, to
the extent the Issuer has funds on hand legally available therefor, and (b)
the amount of assets of the Issuer remaining available for distribution to
Holders in liquidation of the Issuer. If an Event of Default has occurred
and is continuing, no Guarantee Payments under the Common Securities
Guarantee with respect to the Common Securities or any guarantee payment
under any Other Common Securities Guarantees shall be made until the Holders
shall be paid in full the Guarantee Payments to which they are entitled under
this Series A Capital Securities Guarantee.
"Holder" shall mean any holder, as registered on the books and records
of the Issuer, of any Series A Capital Securities; provided, however, that,
in determining whether the holders of the requisite percentage of Series A
Capital 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 Capital Securities Guarantee Trustee, any
Affiliate of the Capital Securities Guarantee Trustee, or any officers,
directors, shareholders, members, partners, employees, representatives,
nominees, custodians or agents of the Capital Securities Guarantee Trustee.
"Indenture" means the Indenture dated as of June 6, 1997, among the
Guarantor (the "Debenture Issuer") and The First National Bank of Chicago, as
trustee (the "Debenture Trustee"), pursuant to which the Debentures are to be
issued to the Property Trustee of the Issuer.
"Indenture Event of Default" shall mean any event specified in Section
5.01 of the Indenture.
"Majority in liquidation amount of the Series A Capital Securities"
means, except as provided by the Trust Indenture Act, a vote by Holder(s) of
more than 50% of the aggregate liquidation amount (including the stated
amount that would be paid on redemption, liquidation or otherwise, plus
accumulated and unpaid Distributions to the date upon which the voting
percentages are determined) of all Series A Capital Securities.
"Officers' Certificate" means, with respect to any person, a certificate
signed by any two of the following officers of such person: the Chairman, a
Vice Chairman, the Chief Executive Officer, the President, a Vice President,
the Controller or an Assistant Controller, the Secretary or an Assistant
Secretary, the Treasurer or an Assistant Treasurer. Any Officers'
Certificate delivered with respect to compliance with a condition or covenant
provided for in this Series A Capital Securities Guarantee (other than
pursuant to Section 314(d)(4) of the Trust Indenture Act) shall include:
(a) a statement that each officer signing the Officers'
Certificate has read the covenant or condition and the definitions relating
thereto;
(b) a statement that each such officer has made such
examination or investigation as, in such officer's opinion, is necessary to
enable such officer to express an informed opinion as to whether or not such
covenant or condition has been complied with; and
(c) a statement as to whether, in the opinion of each such
officer, such condition or covenant has been complied with.
"Other Common Securities Guarantees" shall have the same meaning as
"Other Guarantees" in the Common Securities Guarantee.
"Other Debentures" means all junior subordinated debentures issued by
the Guarantor from time to time and sold to trusts to be established by the
Guarantor (if any), in each case similar to the Issuer.
"Other Guarantees" means all guarantees to be issued by the Guarantor
with respect to capital securities (if any) similar to the Series A Capital
Securities issued by other trusts to be established by the Guarantor (if
any), in each case similar to the Issuer.
"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.
"Registration Rights Agreement" means the Registration Rights
Agreement, dated as of June 6, 1997, by and among the Guarantor, the Issuer
and the Initial Purchasers named therein as such agreement may be amended,
modified or supplemented from time to time.
"Responsible Officer" means, with respect to the Capital Securities
Guarantee Trustee, any officer within the Corporate Trust Office of the
Capital Securities Guarantee Trustee, including any vice president, any
assistant vice president, any assistant secretary, the treasurer, any
assistant treasurer, any trust officer, any senior trust officer or other
officer in the Corporate Trust Office of the Capital Securities 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 Capital Securities Guarantee Trustee" means a successor
Capital Securities Guarantee Trustee possessing the qualifications to act as
Capital Securities Guarantee Trustee under Section 4.1.
"Trust Indenture Act" means the Trust Indenture Act of 1939, as amended.
"Trust Securities" means the Common Securities and the Series A Capital
Securities and Series B Capital Securities, collectively.
ARTICLE II - TRUST INDENTURE ACT
2.1 Trust Indenture Act; Application
(a) This Series A Capital Securities Guarantee is subject to
the provisions of the Trust Indenture Act that are required to be part of
this Series A Capital Securities Guarantee and shall, to the extent
applicable, be governed by such provisions; and
(b) if and to the extent that any provision of this Series A
Capital Securities Guarantee limits, qualifies or conflicts with the duties
imposed by Section 310 to 317, inclusive, of the Trust Indenture Act, such
imposed duties shall control.
2.2 Lists of Holders of Securities
(a) The Guarantor shall provide the Capital Securities
Guarantee Trustee (unless the Capital Securities Guarantee Trustee is
otherwise the registrar of the Capital Securities) with a list, in such form
as the Capital Securities Guarantee Trustee may reasonably require, of the
names and addresses of the Holders ("List of Holders") as of such date, (i)
within 14 days after each record date for payment of Distributions, and (ii)
at any other time within 30 days of receipt by the Guarantor of a written
request for a List of Holders as of a date no more than 14 days before such
List of Holders is given to the Capital Securities 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 Capital Securities Guarantee Trustee by the
Guarantor. The Capital Securities Guarantee Trustee may destroy any List of
Holders previously given to it on receipt of a new List of Holders.
(b) The Capital Securities Guarantee Trustee shall comply with
its obligations under Sections 311(a), 311(b) and Section 312(b) of the Trust
Indenture Act.
2.3 Reports by the Capital Securities Guarantee Trustee
Within 60 days after December 31 of each year, commencing December 31,
1997, the Capital Securities Guarantee Trustee shall provide to the Holders
such reports as are required by Section 313(a) of the Trust Indenture Act, if
any, in the form and in the manner provided by Section 313 of the Trust
Indenture Act. The Capital Securities Guarantee Trustee shall also comply
with the other requirements of Section 313 of the Trust Indenture Act.
2.4 Periodic Reports to Capital Securities Guarantee Trustee
The Guarantor shall provide to the Capital Securities Guarantee Trustee
such documents, reports and information as required by Section 314 of the
Trust Indenture Act (if any) and the compliance certificate required by
Section 314 of the Trust Indenture Act in the form, in the manner and at the
times required by Section 314 of the Trust Indenture Act provided that such
compliance certificate shall be delivered on or before 120 days after the end
of each fiscal year of the Guarantor. Delivery of such reports, information
and documents to the Capital Securities Guarantee Trustee is for
informational purposes only and the Capital Securities Guarantee Trustee's
receipt of such shall not constitute constructive notice of any information
contained therein or determinable from information contained therein,
including the Guarantor's compliance with any of its covenants hereunder (as
to which the Capital Securities Guarantee Trustee is entitled to rely
exclusively on Officers' Certificates).
2.5 Evidence of Compliance with Conditions Precedent
The Guarantor shall provide to the Capital Securities Guarantee Trustee
such evidence of compliance with any conditions precedent, if any, provided
for in this Series A Capital Securities Guarantee that relate to any of the
matters set forth in Section 314(c) of the Trust Indenture Act. Any
certificate or opinion required to be given by an officer pursuant to Section
314(c)(1) may be given in the form of an Officers' Certificate.
2.6 Events of Default; Waiver
The Holders of a Majority in liquidation amount of Series A Capital
Securities may, by vote, on behalf of all the Holders, waive any past Event
of Default and its consequences. Upon such waiver, any such Event of Default
shall cease to exist, and any Event of Default arising therefrom shall be
deemed to have been cured, for every purpose of this Series A Capital
Securities Guarantee, but no such waiver shall extend to any subsequent or
other default or Event of Default or impair any right consequent thereon.
2.7 Event of Default; Notice
(a) The Capital Securities Guarantee Trustee shall, within 90
days after the occurrence of a default with respect to this Capital
Securities Guarantee actually known to a Responsible Officer of the Capital
Securities Guarantee Trustee, mail by first class postage prepaid, to all
Holders, notices of all such defaults, unless such defaults have been cured
before the giving of such notice, provided, that, except in the case of
default in the payment of any Guarantee Payment, the Capital Securities
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 Capital Securities Guarantee
Trustee in good faith determines that the withholding of such notice is in
the interests of the holders of the Series A Capital Securities.
(b) The Capital Securities Guarantee Trustee shall not be
deemed to have knowledge of any Event of Default unless the Capital
Securities Guarantee Trustee shall have received written notice from the
Guarantor or a Holder, or a Responsible Officer of the Capital Securities
Guarantee Trustee charged with the administration of the Declaration shall
have obtained actual knowledge, of such Event of Default.
2.8 Conflicting Interests
The Declaration shall be deemed to be specifically described in this
Series A Capital 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 CAPITAL
SECURITIES GUARANTEE TRUSTEE
3.1 Powers and Duties of the Capital Securities Guarantee Trustee
(a) This Series A Capital Securities Guarantee shall be held by
the Capital Securities Guarantee Trustee for the benefit of the Holders, and
the Capital Securities Guarantee Trustee shall not transfer this Series A
Capital Securities Guarantee to any Person except a Holder exercising his or
her rights pursuant to Section 5.4(b) below or to a Successor Capital
Securities Guarantee Trustee on acceptance by such Successor Capital
Securities Guarantee Trustee of its appointment to act as Successor Capital
Securities Guarantee Trustee. The right, title and interest of the Capital
Securities Guarantee Trustee shall automatically vest in any Successor
Capital Securities Guarantee Trustee, and such vesting and succession of
title shall be effective whether or not conveyancing documents have been
executed and delivered pursuant to the appointment of such Successor Capital
Securities Guarantee Trustee.
(b) If an Event of Default actually known to a Responsible
Officer of the Capital Securities Guarantee Trustee has occurred and is
continuing, the Capital Securities Guarantee Trustee shall enforce this
Series A Capital Securities Guarantee for the benefit of the Holders.
(c) The Capital Securities Guarantee Trustee, before the
occurrence of any Event of Default and after the curing of all Events of
Default that may have occurred, shall undertake to perform only such duties
as are specifically set forth in this Series A Capital Securities Guarantee,
and no implied covenants shall be read into this Series A Capital Securities
Guarantee against the Capital Securities Guarantee Trustee. In case an Event
of Default has occurred (that has not been cured or waived pursuant to
Section 2.6 above) and is actually known to a Responsible Officer of the
Capital Securities Guarantee Trustee, the Capital Securities Guarantee
Trustee shall exercise such of the rights and powers vested in it by this
Series A Capital 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 Series A Capital Securities Guarantee
shall be construed to relieve the Capital Securities 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 Capital
Securities Guarantee Trustee shall be determined solely by the express
provisions of this Series A Capital Securities Guarantee, and the Capital
Securities Guarantee Trustee shall not be liable except for the performance
of such duties and obligations as are specifically set forth in this Series A
Capital Securities Guarantee, and no implied covenants or obligations shall
be read into this Series A Capital Securities Guarantee against the Capital
Securities Guarantee Trustee; and
(B) in the absence of bad faith on the part of the
Capital Securities Guarantee Trustee, the Capital Securities 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 Capital Securities Guarantee Trustee and conforming
to the requirements of this Series A Capital Securities Guarantee; but in the
case of any such certificates or opinions that by any provision hereof are
specifically required to be furnished to the Capital Securities Guarantee
Trustee, the Capital Securities Guarantee Trustee shall be under a duty to
examine the same to determine whether or not they conform to the requirements
of this Series A Capital Securities Guarantee;
(ii) the Capital Securities Guarantee Trustee shall not be
liable for any error of judgment made in good faith by a Responsible Officer
of the Capital Securities Guarantee Trustee, unless it shall be proved that
the Capital Securities Guarantee Trustee was negligent in ascertaining the
pertinent facts upon which such judgment was made;
(iii) the Capital Securities 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 a Majority in
liquidation amount of the Series A Capital Securities relating to the time,
method and place of conducting any proceeding for any remedy available to the
Capital Securities Guarantee Trustee, or exercising any trust or power
conferred upon the Capital Securities Guarantee Trustee under this Series A
Capital Securities Guarantee; and
(iv) no provision of this Series A Capital Securities
Guarantee shall require the Capital Securities 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 Capital Securities 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 Series A Capital Securities
Guarantee or indemnity, reasonably satisfactory to the Capital Securities
Guarantee Trustee, against such risk or liability is not reasonably assured
to it.
3.2 Certain Rights of Capital Securities Guarantee Trustee
(a) Subject to the provisions of Section 3.1:
(i) The Capital Securities Guarantee Trustee may
conclusively rely, and shall be fully protected in acting or refraining from
acting, upon any resolution, certificate, statement, instrument, opinion,
report, notice, request, direction, consent, order, bond, debenture, note,
other evidence of indebtedness or other paper or document believed by it to
be genuine and to have been signed, sent or presented by the proper party or
parties.
(ii) Any direction or act of the Guarantor contemplated by
this Series A Capital Securities Guarantee may be sufficiently evidenced by
an Officers' Certificate.
(iii) Whenever, in the administration of this Series A
Capital Securities Guarantee, the Capital Securities Guarantee Trustee shall
deem it desirable that a matter be proved or established before taking,
suffering or omitting any action hereunder, the Capital Securities Guarantee
Trustee (unless other evidence is herein specifically prescribed) may, in the
absence of bad faith on its part, request and conclusively rely upon an
Officers' Certificate which, upon receipt of such request, shall be promptly
delivered by the Guarantor.
(iv) The Capital Securities 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 Capital Securities 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 omitted by the Capital
Securities Guarantee Trustee hereunder in good faith and in accordance with
such advice or opinion. Such counsel may be counsel to the Guarantor or any
of its Affiliates and may include any of its employees. The Capital
Securities Guarantee Trustee shall have the right at any time to seek
instructions concerning the administration of this Series A Capital
Securities Guarantee from any court of competent jurisdiction.
(vi) The Capital Securities Guarantee Trustee shall be under
no obligation to exercise any of the rights or powers vested in it by this
Series A Capital Securities Guarantee at the request or direction of any
Holder, unless such Holder shall have provided to the Capital Securities
Guarantee Trustee such security and indemnity, reasonably satisfactory to the
Capital Securities Guarantee Trustee, against the costs, expenses (including
attorneys' fees and expenses and the expenses of the Capital Securities
Guarantee 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 Capital
Securities Guarantee Trustee; provided that, nothing contained in this
Section 3.2(a)(vi) shall be taken to relieve the Capital Securities Guarantee
Trustee, upon the occurrence of an Event of Default, of its obligation to
exercise the rights and powers vested in it by this Series A Capital
Securities Guarantee.
(vii) The Capital Securities 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 Capital Securities Guarantee
Trustee, in its discretion, may make such further inquiry or investigation
into such facts or matters as it may see fit.
(viii) The Capital Securities Guarantee Trustee may execute
any of the trusts or powers hereunder or perform any duties hereunder either
directly or by or through agents, nominees, custodians or attorneys, and the
Capital Securities 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 Capital Securities Guarantee
Trustee or its agents hereunder shall bind the Holders, and the signature of
the Capital Securities 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 Capital Securities Guarantee
Trustee to so act or as to its compliance with any of the terms and
provisions of this Series A Capital Securities Guarantee, both of which shall
be conclusively evidenced by the Capital Securities Guarantee Trustee's or
its agent's taking such action.
(x) Whenever in the administration of this Series A Capital
Securities Guarantee the Capital Securities Guarantee Trustee shall deem it
desirable to receive instructions with respect to enforcing any remedy or
right or taking any other action hereunder, the Capital Securities Guarantee
Trustee (i) may request instructions from the Holders of a Majority in
liquidation amount of the Series A Capital Securities, (ii) may refrain from
enforcing such remedy or right or taking such other action until such
instructions are received and (iii) shall be protected in conclusively
relying on or acting in accordance with such instructions.
(xi) The Capital Securities Guarantee Trustee shall not be
liable for any action taken, suffered or omitted to be taken by it in good
faith, without negligence, and reasonably believed by it to be authorized or
within the discretion or rights or powers conferred upon it by this Series A
Capital Securities Guarantee.
(b) No provision of this Series A Capital Securities Guarantee
shall be deemed to impose any duty or obligation on the Capital Securities
Guarantee Trustee to perform any act 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 Capital Securities Guarantee Trustee shall be
unqualified or incompetent in accordance with applicable law, to perform any
such act or acts or to exercise any such right, power, duty or obligation.
No permissive power or authority available to the Capital Securities
Guarantee Trustee shall be construed to be a duty.
3.3 Not Responsible for Recitals or Issuance of Series A Capital
Securities Guarantee
The recitals contained in this Series A Capital Securities Guarantee
shall be taken as the statements of the Guarantor, and the Capital Securities
Guarantee Trustee does not assume any responsibility for their correctness.
The Capital Securities Guarantee Trustee makes no representation as to the
validity or sufficiency of this Series A Capital Securities Guarantee.
ARTICLE IV - CAPITAL SECURITIES GUARANTEE TRUSTEE
4.1 Capital Securities Guarantee Trustee; Eligibility
(a) There shall at all times be a Capital Securities Guarantee
Trustee which shall:
(i) not be an Affiliate of the Guarantor; and
(ii) be a corporation organized and doing business under
the laws of the United States of America or any State or Territory thereof or
of the District of Columbia, or a corporation or Person 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 $50,000,000,
and subject to supervision or examination by Federal, State, Territorial or
District of Columbia authority. If such corporation publishes reports of
condition at least annually, pursuant to law or to the requirements of the
supervising or examining authority referred to above, then, for the purposes
of this Section 4.1(a)(ii), the combined capital and surplus of such
corporation shall be deemed to be its combined capital and surplus as set
forth in its most recent report of condition so published.
(b) If at any time the Capital Securities Guarantee Trustee
shall cease to be eligible to so act under Section 4.1(a), the Capital
Securities Guarantee Trustee shall immediately resign in the manner and with
the effect set out in Section 4.2(c).
(c) If the Capital Securities Guarantee Trustee has or shall
acquire any "conflicting interest" within the meaning of Section 310(b) of
the Trust Indenture Act, the Capital Securities Guarantee Trustee and
Guarantor shall in all respects comply with the provisions of Section 310(b)
of the Trust Indenture Act, subject to the penultimate paragraph thereof.
4.2 Appointment, Removal and Resignation of Capital Securities Guarantee
Trustee
(a) Subject to Section 4.2(b), the Capital Securities Guarantee
Trustee may be appointed or removed without cause at any time by the
Guarantor except during an Event of Default.
(b) The Capital Securities Guarantee Trustee shall not be
removed in accordance with Section 4.2(a) until a Successor Capital
Securities Guarantee Trustee has been appointed and has accepted such
appointment by written instrument executed by such Successor Capital
Securities Guarantee Trustee and delivered to the Guarantor.
(c) The Capital Securities Guarantee Trustee shall hold office
until a Successor Capital Securities Guarantee Trustee shall have been
appointed or until its removal or resignation. The Capital Securities
Guarantee Trustee may resign from office (without need for prior or
subsequent accounting) by an instrument in writing executed by the Capital
Securities Guarantee Trustee and delivered to the Guarantor, which
resignation shall not take effect until a Successor Capital Securities
Guarantee Trustee has been appointed and has accepted such appointment by
instrument in writing executed by such Successor Capital Securities Guarantee
Trustee and delivered to the Guarantor and the resigning Capital Securities
Guarantee Trustee.
(d) If no Successor Capital Securities 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
Capital Securities Guarantee Trustee resigning or being removed may petition
any court of competent jurisdiction for appointment of a Successor Capital
Securities Guarantee Trustee. Such court may thereupon, after prescribing
such notice, if any, as it may deem proper, appoint a Successor Capital
Securities Guarantee Trustee.
(e) No Capital Securities Guarantee Trustee shall be liable for
the acts or omissions to act of any Successor Capital Securities Guarantee
Trustee.
(f) Upon termination of this Series A Capital Securities
Guarantee or removal or resignation of the Capital Securities Guarantee
Trustee pursuant to this Section 4.2, the Guarantor shall pay to the Capital
Securities Guarantee Trustee all amounts due to the Capital Securities
Guarantee Trustee accrued to the date of such termination, removal or
resignation.
ARTICLE V - GUARANTEE
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.
5.2 Waiver of Notice and Demand
The Guarantor hereby waives notice of acceptance of this Series A
Capital 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.
5.3 Obligations Not Affected
The obligations, covenants, agreements and duties of the Guarantor under
this Series A Capital 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 Series A Capital
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, Redemption Price, Liquidation
Distribution or any other sums payable under the terms of the Series A
Capital Securities or the extension of time for the performance of any other
obligation under, arising out of, or in connection with, the Series A Capital
Securities (other than an extension of time for payment of Distributions,
Redemption Price, Liquidation Distribution or other sum payable that results
from the extension of any interest payment period on 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 Series
A Capital 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 Series A
Capital Securities;
(f) the settlement or compromise of any obligation guaranteed
hereby or hereby incurred;
(g) the consummation of the Exchange Offer; or
(h) any other circumstance whatsoever that might otherwise
constitute a legal or equitable discharge or defense of a guarantor, it being
the intent of this Section 5.3 that the obligations of the Guarantor with
respect to the Guarantee Payments shall be absolute and unconditional under
any and all circumstances.
There shall be no obligation of the Holders to give notice to, or obtain
consent of, the Guarantor with respect to the happening of any of the
foregoing.
5.4 Rights of Holders
(a) The Holders of a Majority in liquidation amount of the
Series A Capital Securities have the right to direct the time, method and
place of conducting any proceeding for any remedy available to the Capital
Securities Guarantee Trustee in respect of this Series A Capital Securities
Guarantee or exercising any trust or power conferred upon the Capital
Securities Guarantee Trustee under this Series A Capital Securities
Guarantee; provided, however, that, subject to the duties and
responsibilities of the Trustee pursuant to the Indenture, the Capital
Securities Guarantee Trustee shall have the right to decline to follow any
such direction if the Capital Securities Guarantee Trustee shall determine
that the action so directed would be unjustly prejudicial to the Holders not
taking part in such direction or if the Capital Securities Guarantee Trustee
being advised by counsel determines that the action or proceeding so directed
may not lawfully be taken or if the Capital Securities Guarantee Trustee in
good faith by its board of directors or trustees, executive committee, or a
trust committee of directors or trustees and/or Responsible Officers shall
determine that the action or proceedings so directed would involve the
Capital Securities Guarantee Trustee in personal liability.
(b) If the Capital Securities Guarantee Trustee fails to
enforce such Series A Capital Securities Guarantee, any Holder may institute
a legal proceeding directly against the Guarantor to enforce the Capital
Securities Guarantee Trustee's rights under this Series A Capital Securities
Guarantee, without first instituting a legal proceeding against the Issuer,
the Capital Securities Guarantee Trustee or any other person or entity. The
Guarantor waives any right or remedy to require that any action be brought
first against the Issuer or any other person or entity before proceeding
directly against the Guarantor.
5.5 Guarantee of Payment
This Series A Capital Securities Guarantee creates a guarantee of
payment and not of collection.
5.6 Subrogation
The Guarantor shall be subrogated to all (if any) rights of the Holders
against the Issuer in respect of any amounts paid to such Holders by the
Guarantor under this Series A Capital 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 Series A
Capital Securities Guarantee, if, at the time of any such payment, any
amounts are due and unpaid under this Series A Capital 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.
5.7 Independent Obligations
The Guarantor acknowledges that its obligations hereunder are
independent of the obligations of the Issuer with respect to the Series A
Capital Securities, and that the Guarantor shall be liable as principal and
as debtor hereunder to make Guarantee Payments pursuant to the terms of this
Series A Capital Securities Guarantee notwithstanding the occurrence of any
event referred to in subsections (a) through (h), inclusive, of Section 5.3
hereof.
ARTICLE VI - LIMITATION OF TRANSACTIONS; SUBORDINATION
6.1 Limitation of Transactions
So long as any Capital Securities remain outstanding, the Guarantor
shall not (I) declare or pay any dividends or distributions on, or redeem,
purchase, acquire or make a liquidation payment with respect to, any of the
Guarantor's capital stock (which includes common and preferred stock) or (ii)
make any payment of principal of or premium, if any, or interest on or repay,
repurchase or redeem any debt securities of the Guarantor (including Other
Debentures) that rank pari passu with or junior in right of payment to the
Debentures or (iii) make any guarantee payments with respect to any guarantee
by the Guarantor of the debt securities of any subsidiary of the Guarantor
(including Other Guarantees) if such guarantee ranks pari passu with or
junior in right of payment to the Debentures (other than (a) dividends or
distributions in shares of, or options, warrants, rights to subscribe for or
purchase shares of, common stock of the Guarantor, (b) any declaration of a
dividend in connection with the implementation of a shareholders' rights
plan, or the issuance of stock under any such plan in the future, or the
redemption or repurchase of any such rights pursuant thereto, c payments
under the Series A Capital Securities Guarantee, (d) the purchase of
fractional shares resulting from a reclassification of the Guarantor's
capital stock, (e) the exchange or the conversion of one class, or series of
the Guarantor's capital stock for another class or series of the Guarantor's
capital stock, and (f) the purchase of fractional interests in shares of the
Guarantor's capital stock pursuant to the conversion or exchange provisions
of such capital stock or the security being converted or exchanged) if at
such time (1) there shall have occurred and be continuing an event of default
under the Declaration, (2) there shall have occurred and be continuing an
Event of Default under the Indenture, (3) there shall have occurred and be
continuing a payment default under the Declaration or the Indenture, (4) if
the Debentures are held by the Issuer, the Guarantor shall be in default with
respect to its payment of any obligations under this Agreement, or (5) the
Guarantor shall have given notice of its election of an Extension Period as
provided in the Indenture and shall not have rescinded such notice, and such
Extension Period, or any extension thereof, shall have commenced.
6.2 Ranking
This Series A Capital Securities Guarantee will constitute an unsecured
obligation of the Guarantor and will rank (i) subordinate and junior in right
of payment to Senior Indebtedness (as defined in the Indenture), to the same
extent and in the same manner that the Debentures are subordinated to Senior
Indebtedness pursuant to the Indenture, it being understood that the terms of
Article XV of the Indenture shall apply to the obligations of the Guarantor
under this Series A Capital Securities Guarantee as if (x) such Article XV
were set forth herein in full and (y) such obligations were substituted for
the term "Securities" appearing in such Article XV, (ii) pari passu with the
Debentures, the Other Debentures and with the most senior preferred or
preference stock now or hereafter issued by the Guarantor and with any Other
Guarantee (as defined herein) and any Other Common Securities Guarantee and
any guarantee now or hereafter entered into by the Guarantor in respect of
any preferred or preference stock of any Affiliate of the Guarantor, and
(iii) senior to the Guarantor's common stock.
ARTICLE VII - TERMINATION
7.1 Termination
This Series A Capital Securities Guarantee shall terminate (i) upon full
payment of the Redemption Price (as defined in the Declaration) of all Series
A Capital Securities, (ii) upon liquidation of the Issuer, the full payment
of the amounts payable in accordance with the Declaration or the distribution
of the Debentures to the Holders of all of the Series A Capital Securities or
(iii) upon exchange of all the Series A Capital Securities for the Series B
Capital Securities in the Exchange Offer. Notwithstanding the foregoing,
this Series A Capital Securities Guarantee will continue to be effective or
will be reinstated, as the case may be, if at any time any Holder must
restore payment of any sums paid under the Series A Capital Securities or
under this Series A Capital Securities Guarantee.
ARTICLE VIII - COMPENSATION AND EXPENSES OF
CAPITAL SECURITIES GUARANTEE TRUSTEE
The Guarantor covenants and agrees to pay to the Capital Securities
Guarantee Trustee from time to time, and the Capital Securities Guarantee
Trustee shall be entitled to, such compensation as shall be agreed to in
writing between the Guarantor and the Capital Securities Guarantee Trustee
(which shall not be limited by any provision of law in regard to the
compensation of a trustee of an express trust), and the Guarantor will pay or
reimburse the Capital Securities Guarantee Trustee upon its request for all
reasonable expenses, disbursements and advances incurred or made by the
Capital Securities Guarantee Trustee in accordance with any of the provisions
of this Capital Securities Guarantee (including the reasonable compensation
and the expenses and disbursements of its counsel and of all persons not
regularly in its employ) except any such expense, disbursement or advance as
may arise from its negligence or bad faith. The Guarantor also covenants to
indemnify each of the Capital Securities Guarantee Trustee (and its officers,
agents, directors and employees) for, and to hold it harmless against, any
and all loss, damage, claim, liability or expense including taxes (other than
taxes based on the income of the Capital Securities Guarantee Trustee)
incurred without negligence or bad faith on the part of the Capital
Securities Guarantee Trustee and arising out of or in connection with the
acceptance or administration of this guarantee, including the costs and
expenses of defending itself against any claim of liability in the premises.
The obligations of the Guarantor under this Article VIII to compensate and
indemnify the Capital Securities Guarantee Trustee and to pay or reimburse
the Capital Securities Guarantee Trustee for expenses, disbursements and
advances shall be secured by a lien prior to that of the Series A Capital
Securities upon all property and funds held or collected by the Capital
Securities Guarantee Trustee as such, except funds held in trust for the
benefit of the holders of particular Series A Capital Securities.
The provisions of this Article shall survive the termination of this Capital
Securities Guarantee or the resignation or removal of the Capital Securities
Guarantee Trustee.
ARTICLE IX - INDEMNIFICATION
9.1 Exculpation
(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 Series A Capital 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 Series A Capital
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 might properly be
paid.
9.2 Indemnification
The Guarantor agrees to indemnify each Indemnified Person for, and to
hold each Indemnified Person harmless against, any and all loss, liability,
damage, claim or expense incurred without negligence or bad faith on its
part, arising out of or in connection with the acceptance or administration
of the trust or trusts hereunder, including the costs and expenses (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 9.2 shall survive the termination of
this Series A Capital Securities Guarantee or the resignation or removal of
the Capital Securities Guarantee Trustee.
ARTICLE X - MISCELLANEOUS
10.1 Successors and Assigns
All guarantees and agreements contained in this Series A Capital
Securities Guarantee shall bind the successors, assigns, receivers, trustees
and representatives of the Guarantor and shall inure to the benefit of the
Holders then outstanding.
10.2 Amendments
Except with respect to any changes that do not materially adversely
affect the rights of Holders (in which case no consent of Holders will be
required), this Series A Capital Securities Guarantee may only be amended
with the prior approval of the Holders of a Majority in liquidation amount of
the Securities (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). The provisions of the
Declaration with respect to consents to amendments thereof (whether at a
meeting or otherwise) shall apply to the giving of such approval.
10.3 Notices
All notices provided for in this Series A Capital 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 Issuer, in care of the Administrative
Trustee at the Issuer's mailing address set forth below (or such other
address as the Issuer may give notice of to the Holders and the Capital
Securities Guarantee Trustee):
Puget Sound Energy Capital Trust I
c/o Puget Sound Energy, Inc.
411 - 108th Avenue N.E.
Bellevue, Washington 98004-5515
Attention: James P. Torgerson, Administrative Trustee
Telecopy: (425) 462-3300
(b) If given to the Capital Securities Guarantee Trustee, at
the Capital Securities Guarantee Trustee's mailing address set forth below
(or such other address as the Capital Securities Guarantee Trustee may give
notice of to the Holders and the Issuer):
The First National Bank of Chicago
One First National Plaza, Suite 0126
Chicago, IL 60670-0126
Attention: Corporate Trust Services Division
Telecopy:
(c) 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 Series A Capital Securities and the Capital
Securities Guarantee Trustee):
Puget Sound Energy, Inc.
411 - 108th Avenue N.E.
Bellevue, Washington 98004-5515
Attention: Treasurer
Telecopy: (425) 462-3300
(d) If given to any Holder of Series A Capital 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.
10.4 Exchange Offer
In the event an Exchange Offer Registration Statement (as defined in the
Registration Rights Agreement) becomes effective and the Issuer issues any
Series B Capital Securities in the Exchange Offer, the Guarantor will enter
into a new capital Securities Guarantee agreement, in substantially the same
form as this Series A Capital Securities Guarantee, with respect to the
Series B Capital Securities.
10.5 Benefit
This Series A Capital Securities Guarantee is solely for the benefit of
the Holders and subject to Section 3.1(a), is not separately transferable
from the Series A Capital Securities.
10.6 Governing Law
THIS SERIES A CAPITAL SECURITIES GUARANTEE SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW
YORK, WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES THEREOF.
THIS SERIES A CAPITAL SECURITIES GUARANTEE is executed as of the day and year
first above written.
PUGET SOUND ENERGY, INC.,
as Guarantor
By: /s/ Tommy G. Leong
Name: Tommy G. Leong
Title: Assistant Treasurer
THE FIRST NATIONAL BANK OF CHICAGO,
as Capital Securities Guarantee Trustee
By: /s/ Richard D. Manella
Name: Richard D. Manella
Title: Vice President
<PAGE>
Exhibit 4.4
- -----------------------------------------------------------------------------
REGISTRATION RIGHTS AGREEMENT
Dated June 6, 1997
BETWEEN
PUGET SOUND ENERGY, INC.
PUGET SOUND ENERGY CAPITAL TRUST I
and
SMITH BARNEY INC.
GOLDMAN, SACHS & CO.
SALOMON BROTHERS INC
as Initial Purchasers
- -----------------------------------------------------------------------------
REGISTRATION RIGHTS AGREEMENT
THIS REGISTRATION RIGHTS AGREEMENT (the "Agreement") is made and entered
into as of June 6, 1997, among PUGET SOUND ENERGY, INC., a Washington
corporation (the "Company"), PUGET SOUND ENERGY CAPITAL TRUST I, a business
trust formed under the laws of the state of Delaware (the "Trust"), and SMITH
BARNEY INC. ("Smith Barney"), GOLDMAN, SACHS & CO. and SALOMON BROTHERS INC
(each an "Initial Purchaser" and, collectively, the "Initial Purchasers").
This Agreement is made pursuant to the Purchase Agreement dated June 5,
1997 (the "Purchase Agreement"), among the Company, as issuer of the Series A
8.231% Junior Subordinated Deferrable Interest Debentures due June 1, 2027
(the "Subordinated Debentures"), the Trust and the Initial Purchasers, which
provides for, among other things, the sale by the Trust to the Initial
Purchasers of 100,000 of the Trust's Series A 8.231% Capital Securities,
liquidation amount $1,000 per Capital Security (the "Capital Securities"),
the proceeds of which will be used by the Trust to purchase the Subordinated
Debentures. The Capital Securities, together with the Subordinated
Debentures and the Company's guarantee of the Capital Securities (the
"Capital Securities Guarantee"), are collectively referred to as the
"Securities". In order to induce the Initial Purchasers to enter into the
Purchase Agreement, the Company and the Trust have agreed to provide to the
Initial Purchasers and their direct and indirect transferees the registration
rights set forth in this Agreement. The execution and delivery of this
Agreement is a condition to the closing under the Purchase Agreement.
In consideration of the foregoing, the parties hereto agree as follows:
1. Definitions. As used in this Agreement, the following
capitalized defined terms shall have the following meanings:
"Additional Distributions" shall have the meaning set forth in Section
2(e) hereof.
"Advice" shall have the meaning set forth in the last paragraph of
Section 3 hereof.
"Affiliate" shall have the meaning given to that term in Rule 405 under
the Securities Act or any successor rule thereunder.
"Applicable Period" shall have the meaning set forth in Section 3(t)
hereof.
"Business Day" means any day other than a Saturday, a Sunday, or a day
on which banking institutions in the City of New York are authorized or
required by law or executive order to close.
"Closing Time" shall mean the Closing Time as defined in the Purchase
Agreement.
"Company" shall have the meaning set forth in the preamble to this
Agreement and also includes the Company's successors and permitted assigns.
"Declaration" or "Declaration of Trust" shall mean the Amended and
Restated Declaration of Trust of Puget Sound Energy Capital Trust I, dated as
of June 6, 1997, by the trustees named therein and the Company as sponsor.
"Depositary" shall mean The Depository Trust Company, or any other
depositary appointed by the Trust; provided, however, that such depositary
must have an address in the Borough of Manhattan, in The City of New York.
"Effectiveness Period" shall have the meaning set forth in Section 2(b)
hereof.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended from time to time.
"Exchange Offer" shall mean the offer by the Company and the Trust to
the Holders to exchange all of the Registrable Securities (other than Private
Exchange Securities) for a like principal amount of Exchange Securities
pursuant to Section 2(a) hereof.
"Exchange Offer Registration" shall mean a registration under the
Securities Act effected pursuant to Section 2(a) hereof.
"Exchange Offer Registration Statement" shall mean an exchange offer
registration statement on Form S-4 (or, if applicable, on another appropriate
form), and all amendments and supplements to such registration statement, in
each case including the Prospectus contained therein, all exhibits thereto
and all material incorporated by reference therein.
"Exchange Period" shall have the meaning set forth in Section 2(a)
hereof.
"Exchange Securities" shall mean (i) with respect to the Subordinated
Debentures, the Series B 8.231% Junior Subordinated Deferrable Interest Deben
tures due June 1, 2027 (the "Exchange Debentures") containing terms
substantially identical to the Subordinated Debentures (except that they will
not contain terms with respect to the transfer restrictions under the Securi
ties Act, will not require transfers thereof to be in minimum blocks of
$100,000 aggregate principal amount and will not provide for any Liquidated
Damages thereon), (ii) with respect to the Capital Securities, the Trust's
Series B 8.231% Capital Securities, liquidation amount $1,000 per Capital
Security (the "Exchange Capital Securities") which will have terms
substantially identical to the Capital Securities (except they will not
contain terms with respect to transfer restrictions under the Securities Act,
will not require transfers thereof to be in minimum blocks of $100,000 aggre
gate liquidation amount and will not provide for any increase in Additional
Distributions thereon) and (iii) with respect to the Capital Securities
Guarantee, the Company's guarantee (the "Exchange Capital Securities Guaran
tee") of the Exchange Capital Securities which will have terms substantially
identical to the Capital Securities Guarantee.
"Holder" shall mean each Initial Purchaser, for so long as it owns any
Registrable Securities, and each of its respective successors, assigns and
direct and indirect transferees who become registered owners of Registrable
Securities under the Indenture or Declaration of Trust.
"Indenture" shall mean the Indenture relating to the Subordinated
Debentures and the Exchange Debentures dated as of June 6, 1997, between the
Company, as issuer, and The First National Bank of Chicago, as trustee, as
the same may be amended from time to time in accordance with the terms there
of.
"Initial Purchasers" shall have the meaning set forth in the preamble to
this Agreement.
"Inspectors" shall have the meaning set forth in Section 3(n) hereof.
"Issue Date" shall mean the date of original issuance of the Securities.
"Liquidated Damages" shall have the meaning set forth in Section 2(e)
hereof.
"Majority Holders" shall mean the Holders of a majority of the aggregate
liquidation amount of outstanding Capital Securities.
"Participating Broker-Dealer" shall have the meaning set forth in
Section 3(t) hereof.
"Person" shall mean an individual, partnership, corporation, trust or
unincorporated organization, limited liability company, or a government or
agency or political subdivision thereof.
"Private Exchange" shall have the meaning set forth in Section 2(a)
hereof.
"Private Exchange Securities" shall have the meaning set forth in
Section 2(a) hereof.
"Prospectus" shall mean the prospectus included in a Registration
Statement, including any preliminary prospectus, and any such prospectus as
amended or supplemented by any prospectus supplement, including a prospectus
supplement with respect to the terms of the offering of any portion of the
Registrable Securities covered by a Shelf Registration Statement, and by all
other amendments and supplements to a prospectus, including post-effective
amendments, and in each case including all material incorporated by reference
therein.
"Purchase Agreement" shall have the meaning set forth in the preamble to
this Agreement.
"Records" shall have the meaning set forth in Section 3(n) hereof.
"Registrable Securities" shall mean the Securities and, if issued, the
Private Exchange Securities; provided, however, that Securities or Private
Exchange Securities, as the case may be, shall cease to be Registrable
Securities when (i) a Registration Statement with respect to such Securities
or Private Exchange Securities for the exchange or resale thereof, as the
case may be, shall have been declared effective under the Securities Act and
such Securities or Private Exchange Securities, as the case may be, shall
have been disposed of pursuant to such Registration Statement, (ii) such
Securities or Private Exchange Securities, as the case may be, shall have
been sold or are eligible to be sold to the public pursuant to Rule 144(k)
(or any similar provision then in force, but not Rule 144A) under the
Securities Act, (iii) such Securities or Private Exchange Securities, as the
case may be, shall have ceased to be outstanding or (iv) with respect to the
Securities, such Securities shall have been exchanged for Exchange Securities
upon consummation of the Exchange Offer and are thereafter freely tradeable
by the holder thereof (other than an Affiliate of the Company).
"Registration Expenses" shall mean any and all expenses incident to
performance of or compliance by the Company with this Agreement, including
without limitation: (i) all SEC or National Association of Securities
Dealers, Inc. (the "NASD") registration and filing fees, including, if
applicable, the fees and expenses of any "qualified independent underwriter"
(and its counsel) that is required to be retained by any Holder of
Registrable Securities in accordance with the rules and regulations of the
NASD, (ii) all fees and expenses incurred in connection with compliance with
state securities or blue sky laws (including reasonable fees and
disbursements of counsel for any underwriters or Holders in connection with
blue sky qualification of any of the Exchange Securities or Registrable
Securities) and compliance with the rules of the NASD, (iii) all expenses of
any Persons in preparing or assisting in preparing, word processing, printing
and distributing any Registration Statement, any Prospectus and any amend
ments or supplements thereto, and in preparing or assisting in preparing,
printing and distributing any underwriting agreements, securities sales
agreements and other documents relating to the performance of and compliance
with this Agreement, (iv) all rating agency fees, (v) the fees and
disbursements of counsel for the Company and of the independent certified
public accountants of the Company, including the expenses of any "cold
comfort" letters required by or incident to such performance and compliance,
(vi) the fees and expenses of the Trustee and its counsel, and any exchange
agent or custodian, (vii) all fees and expenses incurred in connection with
the listing, if any, of any of the Exchange Securities or the Registrable
Securities on any securities exchange or exchanges, and (viii) the reasonable
fees and expenses of any special experts retained by the Company in
connection with any Registration Statement.
"Registration Statement" shall mean any registration statement of the
Company and the Trust which covers any of the Exchange Securities or
Registrable Securities pursuant to the provisions of this Agreement, and all
amendments and supplements to any 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.
"Rule 144(k) Period" shall mean the period of two years (or such shorter
period as may hereafter be referred to in Rule 144(k) under the Securities
Act (or similar successor rule)) commencing on the Issue Date.
"SEC" shall mean the Securities and Exchange Commission.
"Securities" shall have the meaning set forth in the preamble to this
Agreement.
"Securities Act" shall mean the Securities Act of 1933, as amended from
time to time.
"Shelf Registration" shall mean a registration effected pursuant to
Section 2(b) hereof.
"Shelf Registration Event" shall have the meaning set forth in Section
2(b) hereof.
"Shelf Registration Event Date" shall have the meaning set forth in
Section 2(b) hereof.
"Shelf Registration Statement" shall mean a "shelf" registration
statement of the Company and the Trust pursuant to the provisions of Section
2(b) hereof which covers all of the Registrable Securities or all of the
Private Exchange Securities, as the case may be, on an appropriate form under
Rule 415 under the Securities Act, or any similar rule that may be adopted by
the SEC, and all 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.
"TIA" shall have the meaning set forth in Section 3(l) hereof.
"Trustees" shall mean any and all trustees with respect to (i) the
Capital Securities under the Declaration, (ii) the Subordinated Debentures
under the Indenture and (iii) the Capital Securities Guarantee.
2. Registration Under the Securities Act.
(a) Exchange Offer. To the extent not prohibited by any
applicable law or applicable interpretation of the staff of the SEC, the
Company and the Trust shall, for the benefit of the Holders, at the Company's
cost, use its best efforts to (i) cause to be filed with the SEC within 150
days after the Issue Date an Exchange Offer Registration Statement on an
appropriate form under the Securities Act covering the Exchange Offer, (ii)
cause such Exchange Offer Registration Statement to be declared effective
under the Securities Act within 180 days after the Issue Date, and (iii) keep
such Exchange Offer Registration Statement effective for not less than 30
calendar days (or longer if required by applicable law) after the date notice
of the Exchange Offer has been mailed to the Holders. Upon the effectiveness
of the Exchange Offer Registration Statement, the Company and the Trust shall
promptly commence the Exchange Offer, it being the objective of such Exchange
Offer to enable each Holder eligible and electing to exchange Registrable
Securities for a like principal amount of Exchange Debentures or a like
liquidation amount of Exchange Capital Securities, together with the Exchange
Guarantee, as applicable (assuming that such Holder (i) is not an Affiliate
of the Company, (ii) is not a broker-dealer tendering Registrable Securities
acquired directly from the Company for its own account, (iii) acquires the
Exchange Securities in the ordinary course of such Holder's business and (iv)
has no arrangements or understandings with any Person to participate in the
Exchange Offer for the purpose of distributing the Exchange Securities) to
transfer such Exchange Securities from and after their receipt without any
limitations or restrictions under the Securities Act and under state securi
ties or blue sky laws.
In connection with the Exchange Offer, the Company and the Trust shall:
(i) mail or cause to be mailed to each Holder a copy of the Prospec
tus forming part of the Exchange Offer Registration Statement, together with
an appropriate letter of transmittal and related documents;
(ii) keep the Exchange Offer open for acceptance for a period of not
less than 30 days after the date notice thereof is mailed to the Holders (or
longer if required by applicable law) (such period referred to herein as the
"Exchange Period");
(iii) utilize the services of the Depositary for the Exchange Offer;
(iv) permit Holders to withdraw tendered Securities at any time prior
to the close of business, New York time, on the last Business Day of the
Exchange Period, by sending to the institution specified in the notice, a
telegram, telex, facsimile transmission or letter setting forth the name of
such Holder, the principal amount of Securities delivered for exchange, and a
statement that such Holder is withdrawing its election to have such
Securities exchanged;
(v) notify each Holder that any Security not tendered by such Holder
in the Exchange Offer will remain outstanding and continue to accrue interest
or accumulate distributions, as the case may be, but will not retain any
rights under this Agreement (except in the case of the Initial Purchasers and
Participating Broker-Dealers as provided herein); and
(vi) otherwise comply in all respects with all applicable laws
relating to the Exchange Offer.
If an Initial Purchaser determines upon advice of its counsel
that it is not eligible to participate in the Exchange Offer with respect to
the exchange of Securities constituting any portion of an unsold allotment in
the initial distribution, as soon as practicable upon receipt by the Company
and the Trust of a written request from such Initial Purchaser, the Company
and the Trust, as applicable, shall issue and deliver to such Initial Purchas
er in exchange (the "Private Exchange") for the Securities held by such
Initial Purchaser, a like liquidation amount of Capital Securities of the
Trust or, in the event the Trust is liquidated and Subordinated Debentures
are distributed, a like principal amount of the Subordinated Debentures of
the Company, together with the Exchange Guarantee, in each case that are
identical (except that such securities may bear a customary legend with
respect to restrictions on transfer pursuant to the Securities Act) to the Ex
change Securities (the "Private Exchange Securities") and which are issued
pursuant to the Indenture, the Declaration or the Guarantee (which provides
that the Exchange Securities will not be subject to the transfer restrictions
set forth in the Indenture or the Declaration, as applicable, and that the
Exchange Securities, the Private Exchange Securities and the Securities will
vote and consent together on all matters as one class and that neither the Ex
change Securities, the Private Exchange Securities nor the Securities will
have the right to vote or consent as a separate class on any matter). The
Private Exchange Securities shall be of the same series as the Exchange
Securities and the Company and the Trust will seek to cause the CUSIP Service
Bureau to issue the same CUSIP Numbers for the Private Exchange Securities as
for the Exchange Securities issued pursuant to the Exchange Offer.
As soon as practicable after the close of the Exchange Offer
and, if applicable, the Private Exchange, the Company and the Trust, as the
case requires, shall:
(i) accept for exchange all Securities or portions thereof tendered
and not validly withdrawn pursuant to the Exchange Offer or the Private
Exchange;
(ii) deliver, or cause to be delivered, to the applicable Trustee for
cancellation all Securities or portions thereof so accepted for exchange by
the Company; and
(iii) issue, and cause the applicable Trustee under the Indenture, the
Declaration or the Guarantee, as applicable, to promptly authenticate and
deliver to each Holder, new Exchange Securities or Private Exchange Securi
ties, as applicable, equal in principal amount to the principal amount of the
Subordinated Debentures or equal in liquidation amount to the liquidation
amount of the Capital Securities (together with the guarantee thereof) as are
surrendered by such Holder.
Distributions on each Exchange Capital Security and interest on
each Exchange Debenture and Private Exchange Security issued pursuant to the
Exchange Offer and in the Private Exchange will accrue from the last date on
which a Distribution or interest was paid on the Capital Security or the
Subordinated Debenture surrendered in exchange therefor or, if no Distribu
tion or interest has been paid on such Capital Security or Subordinated
Debenture, from the Issue Date. To the extent not prohibited by any law or
applicable interpretation of the staff of the SEC, the Company and the Trust
shall use their best efforts to complete the Exchange Offer as provided
above, and shall comply with the applicable requirements of the Securities
Act, the Exchange Act and other applicable laws in connection with the
Exchange Offer. Except as provided herein, the Exchange Offer shall not be
subject to any conditions, other than that the Exchange Offer does not
violate applicable law or any applicable interpretation of the staff of the
SEC. Each Holder of Registrable Securities who wishes to exchange such
Registrable Securities for Exchange Securities in the Exchange Offer will be
required to make certain customary representations in connection therewith,
including, in the case of any Holder of Capital Securities, representations
that (i) it is not an Affiliate of the Trust or the Company, (ii) the Ex
change Securities to be received by it were acquired in the ordinary course
of its business and (iii) at the time of the Exchange Offer, it has no
arrangement with any person to participate in the distribution (within the
meaning of the Securities Act) of the Exchange Capital Securities. The
Company and the Trust shall inform the Initial Purchasers, after consultation
with the applicable Trustees, of the names and addresses of the Holders to
whom the Exchange Offer is made, and each Initial Purchaser shall have the
right to contact such Holders and otherwise facilitate the tender of
Registrable Securities in the Exchange Offer.
Upon consummation of the Exchange Offer in accordance with this
Section 2(a), the provisions of this Agreement shall continue to apply,
mutatis mutandis, solely with respect to Registrable Securities that are
Private Exchange Securities and Exchange Securities held by Participating
Broker-Dealers, and the Company and the Trust shall have no further
obligation to register the Registrable Securities (other than Private
Exchange Securities) pursuant to Section 2(b) of this Agreement.
(b) Shelf Registration. If prior to the expiration of the
Exchange Offer: (i) the Company, the Trust or the Majority Holders reason
ably determine, after conferring with counsel (which may be in-house
counsel), that the Exchange Offer Registration provided in Section 2(a) above
is not available under applicable law and regulations and currently prevail
ing interpretations of the staff of the SEC, (ii) the Company shall determine
in good faith that there is a reasonable likelihood that, or a material uncer
tainty exists as to whether, consummation of the Exchange Offer would result
in interest payable by the Company on the Subordinated Debentures not being
deductible by the Company for United States federal income tax purposes,
(iii) the Exchange Offer Registration Statement is not declared effective
within 180 days after the Issue Date or (iv) upon the request of any Initial
Purchaser with respect to any Registrable Securities held by it, if, in the
reasonable opinion of Skadden, Arps, Slate, Meagher & Flom LLP or other
counsel experienced in such matters, such Initial Purchaser is not permitted
pursuant to applicable law or applicable interpretations of the staff of the
SEC, to participate in the Exchange Offer and thereby receive securities that
are freely tradeable without restriction under the Securities Act and
applicable blue sky or state securities laws (any of the events specified in
(i)-(iv) being a "Shelf Registration Event" and the date of occurrence
thereof, the "Shelf Registration Event Date"), then in addition to or in lieu
of effecting the registration of the Exchange Securities pursuant to the
Exchange Offer Registration Statement, the Administrative Trustees (as
defined in the Declaration) on behalf of the Trust will (x) promptly deliver
to the Holders and the Delaware Trustee (as defined in the Declaration)
written notice thereof and (y) at the Company's sole expense: (a) as soon as
practicable after such Shelf Registration Event Date, and, in any event,
within 30 days after such Shelf Registration Event Date (but shall not be
required to do so earlier than 75 days after the Closing Time), file a Shelf
Registration Statement providing for the sale by the Holders of all of the
Registrable Securities, and (b) shall use their best efforts to have such
Shelf Registration Statement declared effective by the SEC as soon as
practicable. No Holder of Registrable Securities shall be entitled to include
any of its Registrable Securities in any Shelf Registration pursuant to this
Agreement unless and until such Holder agrees in writing to be bound by all
of the provisions of this Agreement applicable to such Holder and furnishes
to the Company and the Trust in writing, within 15 days after receipt of a
request therefor, such information as the Company and the Trust may, after
conferring with counsel with regard to information relating to Holders that
would be required by the SEC to be included in such Shelf Registration
Statement or Prospectus included therein, reasonably request for inclusion in
any Shelf Registration Statement or Prospectus included therein. Each Holder
as to which any Shelf Registration is being effected agrees to furnish to the
Company and the Trust all information with respect to such Holder necessary
to make the information previously furnished to the Company by such Holder
not materially misleading.
The Company and the Trust agree to use their best efforts to keep
the Shelf Registration Statement continuously effective and usable for
resales for (a) the Rule 144(k) Period in the case of a Shelf Registration
Statement filed pursuant to Section 2(b)(i), (ii) or (iii) or (b) 180 days in
the case of a Shelf Registration Statement filed pursuant to Section 2(b)(iv)
(subject in each case to extension pursuant to the last paragraph of Section
3 hereof), or for such shorter period which will terminate when all of the
Registrable Securities covered by the Shelf Registration Statement have been
sold pursuant to the Shelf Registration Statement or cease to be outstanding
(the "Effectiveness Period"). The Company and the Trust shall not permit any
securities other than Registrable Securities to be included in the Shelf
Registration. The Company and the Trust will, in the event a Shelf Registra
tion Statement is declared effective, provide to each Holder a reasonable
number of copies of the Prospectus which is a part of the Shelf Registration
Statement, notify each such Holder when the Shelf Registration has become
effective and take certain other actions as are required to permit certain
unrestricted resales of the Registrable Securities. The Company and the
Trust further agree, if necessary, to supplement or amend the Shelf Registra
tion Statement, if required by the rules, regulations or instructions
applicable to the registration form used by the Company for such Shelf
Registration Statement or by the Securities Act or by any other rules and
regulations thereunder for shelf registrations, and the Company and the Trust
agree to furnish to the Holders of Registrable Securities copies of any such
supplement or amendment promptly after its being used or filed with the SEC.
(c) Expenses. The Company, as issuer of the Subordinated
Debentures, shall pay all Registration Expenses in connection with the
registration pursuant to Section 2(a) and/or 2(b) hereof and will reimburse
the Initial Purchasers for the reasonable fees and disbursements of Skadden,
Arps, Slate, Meagher & Flom LLP, counsel for the Initial Purchasers, incurred
in connection with the Exchange Offer and, if applicable, the Private
Exchange, and either Skadden, Arps, Slate, Meagher & Flom LLP or any one
other counsel designated in writing by the Majority Holders to act as counsel
for the Holders of the Registrable Securities in connection with a Shelf
Registration Statement, which other counsel shall be reasonably satisfactory
to the Company. Except as provided herein, each Holder shall pay all
expenses of its counsel, underwriting discounts and commissions and transfer
taxes, if any, relating to the sale or disposition of such Holder's Regis
trable Securities pursuant to the Shelf Registration Statement.
(d) Effective Registration Statement. An Exchange Offer
Registration Statement pursuant to Section 2(a) hereof or a Shelf
Registration Statement pursuant to Section 2(b) hereof will not be deemed to
have become effective unless it has been declared effective by the SEC;
provided, however, that if, after it has been declared effective, the
offering of Registrable Securities pursuant to such Exchange Offer
Registration Statement or Shelf Registration Statement is interfered with by
any stop order, injunction or other order or requirement of the SEC or any
other governmental agency or court, such Registration Statement will be
deemed not to have been effective during the period of such interference,
until the offering of Registrable Securities pursuant to such Registration
Statement may legally resume. The Company and the Trust will be deemed not
to have used their best efforts to cause the Exchange Offer Registration
Statement or the Shelf Registration Statement, as the case may be, to become,
or to remain, effective during the requisite period if either of them volun
tarily take any action that would result in any such Registration Statement
not being declared effective or that would result in the Holders of
Registrable Securities covered thereby not being able to exchange or offer
and sell such Registrable Securities during that period unless such action is
required by applicable law.
(_) (e) Liquidated Damages. If:
(i) neither the Exchange Offer Registration Statement is
filed with the SEC on or prior to the 150th day after the Issue Date nor a
Shelf Registration Statement is filed with the SEC on or prior to the 45th
day after the Shelf Registration Event Date in respect of a Shelf
Registration Event attributable to any of the events set forth in Sections
2(b)(i), (ii) and (iii) then commencing on the day after the applicable re
quired filing date, liquidated damages ("Liquidated Damages") shall accrue on
the principal amount of the Subordinated Debentures, and additional distribu
tions ("Additional Distributions") shall accumulate on the liquidation amount
of the Trust Securities (as such term is defined in the Declaration), each at
a rate of .25% per annum; or
(ii) neither the Exchange Offer Registration Statement nor a
Shelf Registration Statement is declared effective by the SEC on or prior to
the 180th day after the Issue Date (in the case of an Exchange Offer
Registration Statement) or on or prior to the later of (A) the 45th day after
the date such Shelf Registration Statement was required to be filed and (B)
the 180th day after the Issue Date (in the case of a Shelf Registration State
ment, in respect of a Shelf Registration Event attributable to any of the
events set forth in Sections 2(b)(i), (ii) and (iii)), then, commencing on
the 181st day after the Issue Date (in the case of an Exchange Offer Registra
tion Statement) or the later of (A) the 46th day after the day such Shelf
Registration Statement was required to be filed and (B) the 181st day after
the Issue Date (in the case of a Shelf Registration Statement in respect of a
Shelf Registration Event attributable to any of the events set forth in
Sections 2(b)(i), (ii) and (iii)), Liquidated Damages shall accrue on the
principal amount of the Subordinated Debentures, and Additional Distributions
shall accumulate on the liquidation amount of the Trust Securities, each at a
rate of .25(_)% per annum;
(iii) (A) the Trust has not exchanged Exchange Capital
Securities for all Capital Securities validly tendered or the Company has not
exchanged Exchange Guarantees or Exchange Subordinated Debentures for all
Guarantees or Subordinated Debentures, as the case may be, validly tendered,
in accordance with the terms of the Exchange Offer on or prior to the 45th
day after the date on which the Exchange Offer Registration Statement was
declared effective or (B) if applicable, the Shelf Registration Statement in
respect of a Shelf Registration Event attributable to any of the events set
forth in Sections 2(b)(i), (ii) and (iii) has been declared effective and
such Shelf Registration Statement ceases to be effective or available to a
Holder of Registrable Securities for use in connection with the sale of such
Registrable Securities (whether as a result of an event contemplated by
Section 3(e) or otherwise) at any time prior to the expiration of the Rule
144(k) Period (other than after such time as all Securities have been
disposed of thereunder or otherwise cease to be Registrable Securities) and
continues to be so unavailable for a period exceeding 30 consecutive days or
an aggregate of 90 days (whether or not consecutive) in any 360 day period,
then Liquidated Damages shall accrue on the principal amount of Subordinated
Debentures, and Additional Distributions shall accumulate on the liquidation
amount of the Trust Securities, each at a rate of .25% per annum commencing
on (x) the 46th day after such effective date, in the case of (A) above, or
(y) the 31st consecutive day or the 91st day in any 360 day period after the
day such Shelf Registration Statement ceases to be effective or available in
the case of (B) above;
provided, however, that neither the Liquidated Damages rate on the Subordinat
ed Debentures, nor the Additional Distribution rate on the liquidation amount
of the Trust Securities, may exceed in the aggregate .25% per annum;
provided, further, however, that (1) upon the filing of the Exchange Offer
Registration Statement or a Shelf Registration Statement (in the case of
clause (i) above), (2) upon the effectiveness of the Exchange Offer Regis
tration Statement or a Shelf Registration Statement (in the case of clause
(ii) above), or (3) upon the exchange of Exchange Capital Securities,
Exchange Guarantees and Exchange Debentures for all Capital Securities,
Guarantees and Subordinated Debentures tendered (in the case of clause
(iii)(A) above), or at such time as the Shelf Registration Statement which
had ceased to remain effective or available for use again becomes effective
and available for use (in the case of clause (iii)(B) above), Liquidated
Damages on the principal amount of the Subordinated Debentures and Additional
Distributions on the liquidation amount of the Trust Securities as a result
of such clause (or the relevant subclause thereof) shall cease to accrue and
accumulate.
Any amounts of Liquidated Damages and Additional Distributions due
pursuant to Section 2(e)(i), (ii) or (iii) above will be payable in cash on
the next succeeding June 1 and December 1, as the case may be, to Holders on
the relevant record dates for the payment of interest and distributions
pursuant to the Indenture and the Declaration, respectively.
(f) Specific Enforcement. Without limiting the remedies
available to the Holders, the Company and the Trust acknowledge that any
failure by the Company or the Trust to comply with its obligations under
Section 2(a) and Section 2(b) hereof may result in material irreparable
injury to the Holders for which there is no adequate remedy at law, that it
would not be possible to measure damages for such injuries precisely and
that, in the event of any such failure, any Holder may obtain such relief as
may be required to specifically enforce the Company's and the Trust's obliga
tions under Section 2(a) and Section 2(b) hereof.
3. Registration Procedures. In connection with the obligations of
the Company and the Trust with respect to the Registration Statements
pursuant to Sections 2(a) and 2(b) hereof, the Company and the Trust shall
use their best efforts to:
(a) prepare and file with the SEC a Registration Statement or
Registration Statements as prescribed by Sections 2(a) and 2(b) hereof within
the relevant time period specified in Section 2 hereof on the appropriate
form under the Securities Act, which form (i) shall be selected by the
Company and the Trust, (ii) shall, in the case of a Shelf Registration, be
available for the sale of the Registrable Securities by the selling Holders
thereof and, in the case of an Exchange Offer, be available for the exchange
of Registrable Securities, and (iii) shall comply as to form in all material
respects with the requirements of the applicable form and include all finan
cial statements required by the SEC to be filed therewith; and use its best
efforts to cause such Registration Statement to become effective and remain
effective (and, in the case of a Shelf Registration Statement, available for
use) in accordance with Section 2 hereof; provided, however, that if (1) such
filing is pursuant to Section 2(b), or (2) a Prospectus contained in an Ex
change Offer Registration Statement filed pursuant to Section 2(a) is
required to be delivered under the Securities Act by any Participating
Broker-Dealer who seeks to sell Exchange Securities, before filing any Regis
tration Statement or Prospectus or any amendments or supplements thereto, the
Company and the Trust shall furnish to and afford the Holders of the
Registrable Securities and each such Participating Broker-Dealer, as the case
may be, covered by such Registration Statement, their counsel and the
managing underwriters, if any, a reasonable opportunity to review copies of
all such documents (including copies of any documents to be incorporated by
reference therein and all exhibits thereto) proposed to be filed. The
Company and the Trust shall not file any Registration Statement or Prospectus
or any amendments or supplements thereto in respect of which the Holders must
be afforded an opportunity to review prior to the filing of such document if
the Majority Holders or such Participating Broker-Dealer, as the case may be,
their counsel or the managing underwriters, if any, shall reasonably object;
(b) prepare and file with the SEC such amendments and post-effective
amendments to each Registration Statement as may be necessary to keep such
Registration Statement effective for the Effectiveness Period or the
Applicable Period, as the case may be; and cause each Prospectus to be supple
mented, if so determined by the Company or the Trust or requested by the SEC,
by any required prospectus supplement and as so supplemented to be filed
pursuant to Rule 424 (or any similar provision then in force) under the
Securities Act, and comply with the provisions of the Securities Act, the Ex
change Act and the rules and regulations promulgated thereunder applicable to
it with respect to the disposition of all securities covered by each
Registration Statement during the Effectiveness Period or the Applicable
Period, as the case may be, in accordance with the intended method or methods
of distribution by the selling Holders thereof described in this Agreement
(including sales by any Participating Broker-Dealer);
(c) in the case of a Shelf Registration, (i) notify each Holder of
Registrable Securities included in the Shelf Registration Statement, at least
three Business Days prior to filing, that a Shelf Registration Statement with
respect to the Registrable Securities is being filed and advising such Holder
that the distribution of Registrable Securities will be made in accordance
with the method selected by the Majority Holders; and (ii) furnish to each
Holder of Registrable Securities included in the Shelf Registration Statement
and to each underwriter of an underwritten offering of Registrable
Securities, if any, without charge, as many copies of each Prospectus,
including each preliminary Prospectus, and any amendment or supplement
thereto and such other documents as such Holder or underwriter may reasonably
request, in order to facilitate the public sale or other disposition of the
Registrable Securities; and (iii) consent to the use of the Prospectus or any
amendment or supplement thereto by each of the selling Holders of Registrable
Securities included in the Shelf Registration Statement in connection with
the offering and sale of the Registrable Securities covered by the Prospectus
or any amendment or supplement thereto;
(d) in the case of a Shelf Registration, register or qualify the
Registrable Securities under all applicable state securities or "blue sky"
laws of such jurisdictions by the time the applicable Registration Statement
is declared effective by the SEC as any Holder of Registrable Securities
covered by a Registration Statement and each underwriter of an underwritten
offering of Registrable Securities shall reasonably request in writing in
advance of such date of effectiveness, and do any and all other acts and
things which may be reasonably necessary or advisable to enable such Holder
and underwriter to consummate the disposition in each such jurisdiction of
such Registrable Securities owned by such Holder; provided, however, that the
Company and the Trust shall not be required to (i) qualify as a foreign
corporation or as a dealer in securities in any jurisdiction where it would
not otherwise be required to qualify but for this Section 3(d), (ii) file any
general consent to service of process in any jurisdiction where it would not
otherwise be subject to such service of process or (iii) subject itself to
taxation in any such jurisdiction if it is not then so subject;
(e) (1) in the case of a Shelf Registration or (2) if Participating
Broker-Dealers from whom the Company or the Trust has received prior written
notice that they will be utilizing the Prospectus contained in the Exchange
Offer Registration Statement as provided in Section 3(t) hereof, are seeking
to sell Exchange Securities and are required to deliver Prospectuses,
promptly notify each Holder of Registrable Securities, or such Participating
Broker-Dealers, as the case may be, their counsel and the managing underwrit
ers, if any, and promptly confirm such notice in writing (i) when a Registra
tion Statement has become effective and when any post-effective amendments
and supplements thereto become effective, (ii) of any request by the SEC or
any state securities authority for amendments and supplements to a
Registration Statement or Prospectus or for additional information after the
Registration Statement has become effective, (iii) of the issuance by the SEC
or any state securities authority of any stop order suspending the effec
tiveness of a Registration Statement or the qualification of the Registrable
Securities or the Exchange Securities to be offered or sold by any
Participating Broker-Dealer in any jurisdiction described in paragraph 3(d)
hereof or the initiation of any proceedings for that purpose, (iv) in the
case of a Shelf Registration, if, between the effective date of a Registra
tion Statement and the closing of any sale of Registrable Securities covered
thereby, the representations and warranties of the Company and the Trust
contained in any purchase agreement, securities sales agreement or other simi
lar agreement, cease to be true and correct in all material respects, (v) of
the happening of any event or the failure of any event to occur or the
discovery of any facts or otherwise, during the Effectiveness Period which
makes any statement made in such Registration Statement or the related
Prospectus untrue in any material respect or which causes such Registration
Statement or Prospectus to omit to state a material fact necessary to make
the statements therein, in the light of the circumstances under which they
were made, not misleading, and (vi) the Company and the Trust's reasonable
determination that a post-effective amendment to the Registration Statement
would be appropriate;
(f) make every reasonable effort to obtain the withdrawal of any order
suspending the effectiveness of a Registration Statement at the earliest
possible moment;
(g) in the case of a Shelf Registration, furnish to each Holder of
Registrable Securities included within the coverage of such Shelf
Registration Statement, without charge, at least one conformed copy of each
Registration Statement relating to such Shelf Registration and any
post-effective amendment thereto (without documents incorporated therein by
reference or exhibits thereto, unless requested);
(h) in the case of a Shelf Registration, cooperate with the selling
Holders of Registrable Securities to facilitate the timely preparation and
delivery of certificates representing Registrable Securities to be sold and
not bearing any restrictive legends and in such denominations (consistent
with the provisions of the Indenture and the Declaration) and registered in
such names as the selling Holders or the underwriters may reasonably request
at least two Business Days prior to the closing of any sale of Registrable
Securities pursuant to such Shelf Registration Statement;
(i) in the case of a Shelf Registration or an Exchange Offer
Registration, upon the occurrence of any circumstance contemplated by Section
3(e)(ii), 3(e)(iii), 3(e)(v) or 3(e)(vi) hereof, use its best efforts to
prepare a supplement or post-effective amendment to such Registration State
ment or the related Prospectus or any document incorporated therein by
reference or file any other required document so that, as thereafter
delivered to the purchasers of the Registrable Securities, such Prospectus
will not contain any untrue statement of a material fact or omit to state a
material fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading; and to notify each
Holder to suspend use of the Prospectus as promptly as practicable after the
occurrence of such an event, and each Holder hereby agrees to suspend the
sale of Securities pursuant to such Prospectus until the Company has amended
or supplemented such Prospectus to correct such misstatement or omission and
has furnished copies of the amended or supplemented prospectus to such holder
(or Participating Broker-Dealer, as the case may be) or the Company has given
notice that the sale of the Securities may be resumed, as the case may be;
(j) in the case of a Shelf Registration, a reasonable time prior to
the filing of any document which is to be incorporated by reference into a
Registration Statement or a Prospectus after the initial filing of a
Registration Statement, provide a reasonable number of copies of such
document to the Holders; and make such of the representatives of the Company
and the Trust as shall be reasonably requested by the Holders of Registrable
Securities or an Initial Purchaser on behalf of such Holders available for
discussion of such document;
(k) obtain a CUSIP number for all Exchange Capital Securities and the
Capital Securities (and if the Trust has made a distribution of the
Subordinated Debentures to the Holders of the Capital Securities, the
Subordinated Debentures or the Exchange Debentures) as the case may be, not
later than the effective date of a Registration Statement, and provide the
Trustee with printed certificates for the Exchange Securities or the
Registrable Securities, as the case may be, in a form eligible for deposit
with the Depositary;
(l) cause the Indenture, the Declaration, the Guarantee and the
Exchange Guarantee to be qualified under the Trust Indenture Act of 1939 (the
"TIA") in connection with the registration of the Exchange Securities or
Registrable Securities, as the case may be, and effect such changes to such
documents as may be required for them to be so qualified in accordance with
the terms of the TIA and execute, and use its best efforts to cause the
relevant trustee to execute, all documents as may be required to effect such
changes, and all other forms and documents required to be filed with the SEC
to enable such documents to be so qualified in a timely manner;
(m) in the case of a Shelf Registration, enter into such agreements
(including underwriting agreements) as are customary in underwritten
offerings and take all such other appropriate actions as are reasonably
requested in order to expedite or facilitate the registration or the
disposition of such Registrable Securities, and in such connection, whether
or not an underwriting agreement is entered into and whether or not the
registration is an underwritten registration, if requested by (x) an Initial
Purchaser, in the case where such Initial Purchaser holds Securities acquired
by it as part of its initial allotment and (y) other Holders of the
Registrable Securities covered thereby: (i) make such representations and
warranties to Holders of such Registrable Securities and the underwriters (if
any), with respect to the business of the Trust, the Company and its
subsidiaries as then conducted and the Registration Statement, Prospectus and
documents, if any, incorporated or deemed to be incorporated by reference
therein, in each case, as are customarily made by issuers to underwriters in
underwritten offerings, and confirm the same if and when requested;
(ii) obtain opinions of counsel to the Company and the Trust and updates
thereof (which may be in the form of a reliance letter) in form and substance
reasonably satisfactory to the managing underwriters (if any) and the Holders
of a majority in principal amount of the Registrable Securities being sold,
addressed to each selling Holder and the underwriters (if any) covering the
matters customarily covered in opinions requested in underwritten offerings
and such other matters as may be reasonably requested by such underwriters
(it being agreed that the matters to be covered by such opinion may be sub
ject to customary qualifications and exceptions); (iii) obtain "cold comfort"
letters and updates thereof in form and substance reasonably satisfactory to
the managing underwriters from the independent certified public accountants
of the Company and the Trust (and, if necessary, any other independent
certified public accountants of any subsidiary of the Company and the Trust
or of any business acquired by the Company and the Trust for which financial
statements and financial data are, or are required to be, included in the
Registration Statement), addressed to each of the underwriters, such letters
to be in customary form and covering matters of the type customarily covered
in "cold comfort" letters in connection with underwritten offerings and such
other matters as reasonably requested by such underwriters in accordance with
Statement on Auditing Standards No. 72; and (iv) if an underwriting agreement
is entered into, the same shall contain indemnification provisions and
procedures no less favorable to the underwriters and the Holders of
Registrable Securities than those set forth in Section 4 hereof (or such
other provisions and procedures acceptable to Holders of a majority in
aggregate principal amount or liquidation amount, as the case may be, of
Registrable Securities covered by such Registration Statement and the manag
ing underwriters and agents) customary for such agreements with respect to
all parties to be indemnified pursuant to said Section (including, without
limitation, such underwriters and selling Holders). The above shall be done
at each closing under such underwriting agreement, or as and to the extent re
quired thereunder;
(n) if (1) a Shelf Registration is filed pursuant to Section 2(b) or
(2) a Prospectus contained in an Exchange Offer Registration Statement filed
pursuant to Section 2(a) is required to be delivered under the Securities Act
by any Participating Broker-Dealer who seeks to sell Exchange Securities
during the Applicable Period, make reasonably available for inspection by any
selling Holder of such Registrable Securities being sold, or each such
Participating Broker-Dealer, as the case may be, any underwriter participat
ing in any such disposition of Registrable Securities, if any, and any
attorney, accountant or other agent retained by any such selling Holder or
each such Participating Broker-Dealer, as the case may be, or underwriter
(collectively, the "Inspectors"), at the offices where normally kept, during
reasonable business hours, all financial and other records, pertinent
corporate documents and properties of the Trust, the Company and its
subsidiaries (collectively, the "Records") as shall be reasonably necessary
to enable them to exercise any applicable due diligence responsibilities, and
cause the officers, directors and employees of the Trust, the Company and its
subsidiaries to supply all relevant information in each case reasonably
requested by any such Inspector in connection with such Registration State
ment; provided, however, that the foregoing inspection and information
gathering shall be coordinated on behalf of the Purchasers by the
Representatives and on behalf of the other parties, by one counsel designated
by the Representatives and on behalf of such other parties as described in
Section 2(c) hereof. Records which the Company and the Trust determine, in
good faith, to be confidential and any records which it notifies the Inspec
tors are confidential shall not be disclosed by the Inspectors unless (i) the
disclosure of such Records is necessary to avoid or correct a material mis
statement or omission in such Registration Statement, (ii) the release of
such Records is ordered pursuant to a subpoena or other order from a court of
competent jurisdiction or is necessary in connection with any action, suit or
proceeding or (iii) the information in such Records has been made generally
available to the public. Each selling Holder of such Registrable Securities
and each such Participating Broker-Dealer will be required to agree in
writing that information obtained by it as a result of such inspections shall
be deemed confidential and shall not be used by it as the basis for any
market transactions in the securities of the Trust or the Company unless and
until such is made generally available to the public. Each selling Holder of
such Registrable Securities and each such Participating Broker-Dealer will be
required to further agree in writing that it will, upon learning that
disclosure of such Records is sought in a court of competent jurisdiction,
give notice to the Company and allow the Company at its expense to undertake
appropriate action to prevent disclosure of the Records deemed confidential;
(o) comply with all applicable rules and regulations of the SEC so
long as any provision of this Agreement shall be applicable and make
generally available to its securityholders earning statements satisfying the
provisions of Section 11(a) of the Securities Act and Rule 158 thereunder (or
any similar rule promulgated under the Securities Act) no later than 45 days
after the end of any 12-month period (or 90 days after the end of any 12-
month period if such period is a fiscal year) (i) commencing at the end of
any fiscal quarter in which Registrable Securities are sold to underwriters
in a firm commitment or best efforts underwritten offering and (ii) if not
sold to underwriters in such an offering, commencing on the first day of the
first fiscal quarter of the Company after the effective date of a Regis
tration Statement, which statements shall cover said 12-month periods;
(p) upon consummation of an Exchange Offer or a Private Exchange, if
requested by a Trustee, obtain an opinion of counsel to the Company addressed
to the Trustee for the benefit of all Holders of Registrable Securities
participating in the Exchange Offer or the Private Exchange, as the case may
be, substantially to the effect that (i) the Company and the Trust, as the
case requires, has duly authorized, executed and delivered the Exchange
Securities and Private Exchange Securities, and (ii) each of the Exchange
Securities or the Private Exchange Securities, as the case may be,
constitutes a legal, valid and binding obligation of the Company or the
Trust, as the case requires, enforceable against the Company or the Trust, as
the case requires, in accordance with its respective terms (in each case,
with customary exceptions);
(q) if an Exchange Offer or a Private Exchange is to be consummated,
upon delivery of the Registrable Securities by Holders to the Company or the
Trust, as applicable (or to such other Person as directed by the Company or
the Trust, respectively), in exchange for the Exchange Securities or the Pri
vate Exchange Securities, as the case may be, the Company or the Trust, as
applicable, shall mark, or cause to be marked, on such Registrable Securities
delivered by such Holders that such Registrable Securities are being
cancelled in exchange for the Exchange Securities or the Private Exchange
Securities, as the case may be; in no event shall such Registrable Securities
be marked as paid or otherwise satisfied;
(r) cooperate with each seller of Registrable Securities covered by
any Registration Statement and each underwriter, if any, participating in the
disposition of such Registrable Securities and their respective counsel in
connection with any filings required to be made with the NASD;
(s) use its best efforts to take all other steps necessary to effect
the registration of the Registrable Securities covered by a Registration
Statement contemplated hereby;
(t) (A) in the case of the Exchange Offer Registration Statement (i)
include in the Exchange Offer Registration Statement a section entitled "Plan
of Distribution," which section shall be reasonably acceptable to the Initial
Purchasers or another representative of the Participating Broker-Dealers, and
which shall contain a summary statement of the positions taken or policies
made by the staff of the SEC with respect to the potential "underwriter"
status of any broker-dealer (a "Participating Broker-Dealer") that holds
Registrable Securities acquired for its own account as a result of market-
making activities or other trading activities and that will be the beneficial
owner (as defined in Rule 13d-3 under the Exchange Act) of Exchange
Securities to be received by such broker-dealer in the Exchange Offer,
whether such positions or policies have been publicly disseminated by the
staff of the SEC or such positions or policies, in the reasonable judgment of
the Initial Purchasers or such other representative, represent the prevailing
views of the staff of the SEC, including a statement that any such broker-
dealer who receives Exchange Securities for Registrable Securities pursuant
to the Exchange Offer may be deemed a statutory underwriter and must deliver
a prospectus meeting the requirements of the Securities Act in connection
with any resale of such Exchange Securities, (ii) furnish to each
Participating Broker-Dealer who has delivered to the Company the notice
referred to in Section 3(e), without charge, as many copies of each
Prospectus included in the Exchange Offer Registration Statement, including
any preliminary prospectus, and any amendment or supplement thereto, as such
Participating Broker-Dealer may reasonably request (each of the Company and
the Trust hereby consents to the use of the Prospectus forming part of the
Exchange Offer Registration Statement or any amendment or supplement thereto
by any Person subject to the prospectus delivery requirements of the
Securities Act, including all Participating Broker-Dealers, in connection
with the sale or transfer of the Exchange Securities covered by the Prospec
tus or any amendment or supplement thereto), (iii) use its best efforts to
keep the Exchange Offer Registration Statement effective and to amend and
supplement the Prospectus contained therein in order to permit such Prospec
tus to be lawfully delivered by all Persons subject to the prospectus
delivery requirements of the Securities Act for such period of time as such
Persons must comply with such requirements under the Securities Act and
applicable rules and regulations in order to resell the Exchange Securities;
provided, however, that such period shall not be required to exceed 180 days
(or such longer period if extended pursuant to the last sentence of Section 3
hereof) (the "Applicable Period"), and (iv) include in the transmittal letter
or similar documentation to be executed by an exchange offeree in order to
participate in the Exchange Offer (x) the following provision:
"If the exchange offeree is a broker-dealer holding
Registrable Securities acquired for its own account as a
result of market-making activities or other trading
activities, it will deliver a prospectus meeting the re
quirements of the Securities Act in connection with any resale
of Exchange Securities received in respect of such Registrable
Securities pursuant to the Exchange Offer";
and (y) a statement to the effect that by a broker-dealer making the
acknowledgment described in clause (x) and by delivering a Prospectus in
connection with the exchange of Registrable Securities, the broker-dealer
will not be deemed to admit that it is an underwriter within the meaning of
the Securities Act; and
(B) in the case of any Exchange Offer Registration Statement, the
Company and the Trust agree to deliver to the Initial Purchasers or to
another representative of the Participating Broker-Dealers, if requested
by an Initial Purchaser or such other representative of the Participat
ing Broker-Dealers, on behalf of the Participating Broker-Dealers upon
consummation of the Exchange Offer (i) an opinion of counsel in form and
substance reasonably satisfactory to the Initial Purchasers or such
other representative of the Participating Broker- Dealers, covering the
matters customarily covered in opinions requested in connection with
Exchange Offer Registration Statements and such other matters as may
be reasonably requested (it being agreed that the matters to be covered
by such opinion may be subject to customary qualifications and
exceptions), (ii) an officers' certificate contain ing certifications
substantially similar to those set forth in Section 5(f) of the Pur
chase Agreement and such additional certifications as are customarily
delivered in a public offering of debt securities and (iii) as well as
upon the effectiveness of the Exchange Offer Registration Statement, a
comfort letter, in each case, in customary form if permitted by
Statement on Auditing Standards No. 72.
The Company or the Trust may require each seller of Registrable
Securities as to which any registration is being effected to furnish to the
Company or the Trust, as applicable, such information regarding such seller
as may be required by the staff of the SEC to be included in a Registration
Statement. The Company or the Trust may exclude from such registration the
Registrable Securities of any seller who unreasonably fails to furnish such
information within a reasonable time after receiving such request. The
Company shall have no obligation to register under the Securities Act the
Registrable Securities of a seller who so fails to furnish such information.
In the case of a Shelf Registration Statement, or if Participating
Broker-Dealers who have notified the Company and the Trust that they will be
utilizing the Prospectus contained in the Exchange Offer Registration
Statement as provided in Section 3(t) hereof, are seeking to sell Exchange
Securities and are required to deliver Prospectuses, each Holder agrees that,
upon receipt of any notice from the Company or the Trust of the happening of
any event of the kind described in Section 3(e)(ii), 3(e)(iii), 3(e)(v) or
3(e)(vi) hereof, such Holder will forthwith discontinue disposition of
Registrable Securities pursuant to a Registration Statement until such
Holder's receipt of the copies of the supplemented or amended Prospectus
contemplated by Section 3(i) hereof or until it is advised in writing (the
"Advice") by the Company and the Trust that the use of the applicable Prospec
tus may be resumed, and, if so directed by the Company and the Trust, such
Holder will deliver to the Company or the Trust (at the Company's or the
Trust's expense, as the case requires) all copies in such Holder's posses
sion, other than permanent file copies then in such Holder's possession, of
the Prospectus covering such Registrable Securities or Exchange Securities,
as the case may be, current at the time of receipt of such notice. If the
Company or the Trust shall give any such notice to suspend the disposition of
Registrable Securities or Exchange Securities, as the case may be, pursuant
to a Registration Statement, the Company and the Trust shall use their best
efforts to file and have declared effective (if an amendment) as soon as
practicable an amendment or supplement to the Registration Statement and
shall extend the period during which such Registration Statement shall be
maintained effective pursuant to this Agreement by the number of days in the
period from and including the date of the giving of such notice to and
including the date when the Company and the Trust shall have made available
to the Holders (x) copies of the supplemented or amended Prospectus necessary
to resume such dispositions or (y) the Advice.
4. Indemnification and Contribution. (a) In connection with any
Registration Statement, the Company and the Trust agree, jointly and
severally, to indemnify and hold harmless each Initial Purchaser, each
Holder, each underwriter who participates in an offering of the Registrable
Securities, each Participating Broker-Dealer, each agent, employee, officer
and director of any of the foregoing parties and each person that controls
each of the foregoing parties within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act, and agents, employees, offi
cers and directors of any such controlling person (each, a "Section 4(a)
Indemnified Party") from and against any and all losses, claims, damages,
judgments, liabilities and expenses (including the reasonable fees and
expenses of counsel and other expenses in connection with investigating,
defending or settling any such action or claim) as they are incurred which
arise out of or based upon any untrue statement or alleged untrue statement
of a material fact contained in any Registration Statement covering
Registrable Securities or Exchange Securities or any amendment or supplement
thereto or arising out of or based upon any omission or alleged omission to
state therein a material fact required to be stated therein or necessary to
make the statements therein not misleading, except (i) the Company and the
Trust shall not be liable to any Section 4(a) Indemnified Party in any such
case insofar as such losses, claims, damages, judgments, liabilities or
expenses arise out of, or are based upon, any such untrue statement or
omission or alleged untrue statement or omission based upon information fur
nished in writing by such Holder, Initial Purchaser, Participating Broker-
Dealer or any underwriter to the Company or the Trust expressly for use
therein and (ii) the Company and the Trust shall not be liable to any Section
4(a) Indemnified Party under the indemnity agreement in this Section 4(a)
with respect to any untrue statement or alleged untrue statement or omission
or alleged omission in any preliminary Prospectus to the extent that any such
loss, claim, damage, judgment, liability or expense of any Holder, Initial
Purchaser, Participating Broker-Dealer, any underwriter or controlling person
results from the fact that such Holder, Initial Purchaser, any underwriter or
Participating Broker-Dealer sold Securities to a person to whom there was not
sent or given, at or prior to the written confirmation of such sale, a copy
of the final Prospectus as then amended or supplemented if the Company had
previously furnished copies thereof to such Holder, Initial Purchaser, under
writer or Participating Broker-Dealer and the loss, claim, damage, judgment,
liability or expense of such Holder, Initial Purchaser, underwriter, Partic
ipating Broker-Dealer or controlling person results from an untrue statement
or omission of a material fact contained in the preliminary Prospectus which
was corrected in the final Prospectus.
(b) If any action or proceeding (including any governmental or
regulatory investigation or proceeding) shall be brought or asserted against
any Section 4(a) Indemnified Party with respect to which indemnity may be
sought against the Company and the Trust pursuant to this Section 4, such
Section 4(a) Indemnified Party shall promptly notify the Company and the
Trust in writing, and the Company and the Trust shall have the right to
assume the defense thereof, including the employment of counsel reasonably
satisfactory to such Section 4(a) Indemnified Party and payment of all fees
and expenses; provided, however, that the omission so to notify the Company
and the Trust shall not relieve the Company or the Trust from any liability
that they may have to any Section 4(a) Indemnified Party (except to the
extent that the Company and the Trust are materially prejudiced or otherwise
forfeit substantive rights or defenses by reason of such failure). A Section
4(a) Indemnified Party shall have the right to employ separate counsel in any
such action or proceeding and to participate in the defense thereof, but the
fees and expenses of such counsel shall be at the expense of such Section
4(a) Indemnified Party unless (i) the Company and the Trust agree in writing
to pay such fees and expenses, (ii) the Company and the Trust have failed
promptly to assume the defense and employ counsel satisfactory to the Section
4(a) Indemnified Party or (iii) the named parties to any such action or
proceeding (including any unpleaded parties) include the Section 4(a)
Indemnified Party and the Company and/or the Trust and such Section 4(a)
Indemnified Party shall have been advised in writing by its counsel that
representation of them and the Company and/or the Trust by the same counsel
would be inappropriate under applicable standards of professional conduct
(whether or not such representation has been proposed) due to actual or
potential differing interests between them (in which case the Company and/or
the Trust shall not have the right to assume the defense of such action on
behalf of such Section 4(a) Indemnified Party). It is understood that the
Company and the Trust shall not, in connection with any one such action or
separate but substantially similar or related actions in the same jurisdic
tion arising out of the same general allegations or circumstances, be liable
for the fees and expenses of more than one separate firm of attorneys (in
addition to any local counsel) at any time for such Section 4(a) Indemnified
Party, and that all such fees and expenses shall be reimbursed as they are
incurred. The Company and the Trust shall not be liable for any settlement
of any such action effected without the written consent of the Company and
the Trust, but if settled with the written consent of the Company and the
Trust, or if there is a final judgment with respect thereto, the Company and
the Trust agree to indemnify and hold harmless each Section 4(a) Indemnified
Party from and against any loss or liability by reason of such settlement or
judgment. The Company and the Trust shall not, without the prior written
consent of each Section 4(a) Indemnified Party affected thereby, effect any
settlement of any pending or threatened proceeding in which such Section 4(a)
Indemnified Party has sought indemnity hereunder, unless such settlement
includes an unconditional release of such Section 4(a) Indemnified Party from
all liability arising out of such action, claim, litigation or proceeding.
(c) Each Holder agrees to indemnify and hold harmless the
Company, the Trust, any underwriter and the other selling Holders and each of
their respective directors, officers (including each officer of the Company
and the Trust who signed the Registration Statement) and any person control
ling the Company, the Trust, any underwriter or any other selling Holder
within the meaning of Section 15 of the Act or Section 20 of the Exchange Act
(each such party, a "Section 4(c) Indemnified Party") to the same extent as
the foregoing indemnity from the Company and the Trust to any Section 4(a)
Indemnified Party, but only with respect to information furnished to the
Company or the Trust in writing by such Holder, expressly for use in the
Registration Statement, Prospectus (or any amendment or supplement thereto),
or any preliminary Prospectus, provided, however, that, in the case of a
Shelf Registration Statement, no such Holder shall be liable for any amount
hereunder in excess of the amount by which the net proceeds received by such
Holder from the sale of Registrable Securities pursuant to such Shelf Regis
tration Statement exceeds the amount of any damages which such Holder has
otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. In case any action shall be
brought against any Section 4(c) Indemnified Party based on the Registration
Statement, Prospectus (or any amendment or supplement thereto), or any
preliminary Prospectus and in respect of which indemnification may be sought
against each Holder pursuant to this Section 4(c), each Holder shall have the
rights and duties given to the Company and the Trust by Section 4(a) (except
that if the Company and the Trust shall have assumed the defense thereof,
each Holder may, but shall not be required to, employ separate counsel
therein and participate in the defense thereof and the fees and expenses of
such counsel shall be at the expense of the Holder) and the Section 4(c)
Indemnified Parties shall have the rights and duties given to the Section
4(a) Indemnified Parties by Section 4(b).
(d) If the indemnification provided for in this Section 4 is
unavailable to any party entitled to indemnification pursuant to Section 4(a)
or 4(c), then each indemnifying party, in lieu of indemnifying such
indemnified party, shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages, judgments,
liabilities and expenses in such proportion as is appropriate to reflect the
relative fault of the Company and the Trust, on the one hand, and each Hold
er, on the other, in connection with the statements or omissions which
resulted in such losses, claims, damages, judgments, liabilities or expenses,
as well as any other relevant equitable considerations. The relative fault
of the Company and the Trust, on the one hand, and each Holder, on the other,
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
Company or the Trust, on the one hand, or by each Holder, on the other, and
the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission.
(e) The Company, the Trust and each Holder agree that it would
not be just and equitable if contribution pursuant to Section 4(d) were
determined by pro rata allocation or by any other method of allocation that
does not take account of the equitable considerations referred to in Section
4(d). No person found guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Act) shall be entitled to contribution from
any person who was not found guilty of such fraudulent misrepresentation.
(f) The indemnity and contribution agreements contained in this
Section 4 are in addition to any liability that any indemnifying party may
otherwise have to any indemnified party.
(5) Miscellaneous.
(a) Rule 144 and Rule 144A. For so long as the Company or the
Trust is subject to the reporting requirements of Section 13 or 15 of the
Exchange Act and any Registrable Securities remain outstanding, each of the
Company and the Trust, as the case may be, will use its best efforts to file
the reports required to be filed by it under the Securities Act and Section
13(a) or 15(d) of the Exchange Act and the rules and regulations adopted by
the SEC thereunder, or, if it ceases to be so required to file such reports,
it will, upon the request of any Holder of Registrable Securities (a) make
publicly available such information as is necessary to permit sales of its
securities pursuant to Rule 144 under the Securities Act, (b) deliver such
information to a prospective purchaser as is necessary to permit sales of its
securities pursuant to Rule 144A under the Securities Act and it will take
such further action as any Holder of Registrable Securities may reasonably
request, and (c) take such further action that is reasonable in the circum
stances, in each case, to the extent required from time to time to enable
such Holder to sell its Registrable Securities without registration under the
Securities Act within the limitation of the exemptions provided by (i) Rule
144 under the Securities Act, as such rule may be amended from time to time,
(ii) Rule 144A under the Securities Act, as such rule may be amended from
time to time, or (iii) any similar rules or regulations hereafter adopted by
the SEC. Upon the request of any Holder of Registrable Securities, each of
the Company and the Trust will deliver to such Holder a written statement as
to whether it has complied with such requirements.
(b) No Inconsistent Agreements. The Company or the Trust has
not entered into, nor will the Company or the Trust on or after the date of
this Agreement enter into, any agreement which is inconsistent with the
rights granted to the Holders of Registrable Securities in this Agreement or
otherwise conflicts with the provisions hereof. The rights granted to the
Holders hereunder do not in any way conflict with and are not inconsistent
with the rights granted to the holders of the Company's or the Trust's other
issued and outstanding securities under any such agreements.
(c) Amendments and Waivers. The provisions of this Agreement,
including the provisions of this sentence, may not be amended, modified or
supplemented, and waivers or consents to departures from the provisions
hereof may not be given, unless the Company and the Trust has obtained the
written consent of Holders of at least a majority in aggregate principal
amount of the outstanding Registrable Securities affected by such amendment,
modification, supplement, waiver or departure; provided that no amendment,
modification or supplement or waiver or consent to the departure with respect
to the provisions of Section 4 hereof shall be effective as against any
Holder of Registrable Securities unless consented to in writing by such
Holder of Registrable Securities. Notwithstanding the foregoing sentence,
(i) this Agreement may be amended, without the consent of any Holder of
Registrable Securities, by written agreement signed by the Company, the Trust
and Smith Barney, to cure any ambiguity, correct or supplement any provision
of this Agreement that may be inconsistent with any other provision of this
Agreement or to make any other provisions with respect to matters or
questions arising under this Agreement which shall not be inconsistent with
other provisions of this Agreement, (ii) this Agreement may be amended,
modified or supplemented, and waivers and consents to departures from the
provisions hereof may be given by written agreement signed by the Company,
the Trust and Smith Barney to the extent that any such amendment, modifica
tion, supplement, waiver or consent is, in their reasonable judgment, neces
sary or appropriate to comply with applicable law (including any interpre
tation of the Staff of the SEC) or any change therein and (iii) to the extent
any provision of this Agreement relates to the Initial Purchaser, such
provision may be amended, modified or supplemented, and waivers or consents
to departures from such provisions may be given, by written agreement signed
by Smith Barney, the Company and the Trust.
(d) Notices. All notices and other communications provided for
or permitted hereunder shall be made in writing by hand-delivery, registered
first-class mail, telex, telecopier, or any courier guaranteeing overnight
delivery (i) if to a Holder, at the most current address given by such Holder
to the Company or the Trust by means of a notice given in accordance with the
provisions of this Section 7(d), which address initially is, with respect to
the Initial Purchasers, the address set forth in the Purchase Agreement; and
(ii) if to the Company or the Trust, initially at the Company's address set
forth in the Purchase Agreement and thereafter at such other address, notice
of which is given in accordance with the provisions of this Section 7(d).
All such notices and communications shall be deemed to have been
duly given: at the time delivered by hand, if personally delivered; five
Business Days after being deposited in the mail, postage prepaid, if mailed;
when answered back, if telexed; when receipt is acknowledged, if telecopied;
and on the next Business Day, if timely delivered to an air courier
guaranteeing overnight delivery.
Copies of all such notices, demands, or other communications shall
be concurrently delivered by the Person giving the same to the Trustee, at
the address specified in the Indenture.
(e) Successors and Assigns. This Agreement shall inure to the
benefit of and be binding upon the respective successors, assigns and
transferees of the Initial Purchasers, including, without limitation and
without the need for an express assignment, subsequent Holders; provided,
however, that nothing herein shall be deemed to permit any assignment,
transfer or other disposition of Registrable Securities in violation of the
terms of the Purchase Agreement or the Indenture. If any transferee of any
Holder shall acquire Registrable Securities, in any manner, whether by
operation of law or otherwise, such Registrable Securities shall be held
subject to all of the terms of this Agreement, and by taking and holding such
Registrable Securities, such Person shall be conclusively deemed to have
agreed to be bound by and to perform all of the terms and provisions of this
Agreement and such Person shall be entitled to receive the benefits hereof.
(f) Third Party Beneficiary. Each of the Initial Purchasers
shall be a third party beneficiary of the agreements made hereunder between
the Company and the Trust, on the one hand, and the Holders, on the other
hand, and shall have the right to enforce such agreements directly to the
extent it deems such enforcement necessary or advisable to protect its rights
or the rights of Holders hereunder.
(g) 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.
(h) Headings. The headings in this Agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.
(i) GOVERNING LAW. THIS AGREEMENT SHALL BE DEEMED TO HAVE BEEN
MADE IN THE STATE OF NEW YORK. THE VALIDITY AND INTERPRETATION OF THIS
AGREEMENT, AND THE TERMS AND CONDITIONS SET FORTH HEREIN, SHALL BE GOVERNED
BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT
GIVING EFFECT TO ANY PROVISIONS RELATING TO CONFLICTS OF LAWS. EACH OF THE
PARTIES HERETO AGREES TO SUBMIT TO THE JURISDICTION OF THE COURTS OF THE
STATE OF NEW YORK IN ANY ACTION OR PROCEEDING ARISING OUT OF OR RELATING TO
THIS AGREEMENT.
(j) Severability. In the event that any one or more of the
provisions contained herein, or the application thereof in any circumstance,
is held invalid, illegal or unenforceable, the validity, legality and
enforceability of any such provision in every other respect and of the
remaining provisions contained herein shall not be affected or impaired
thereby.
(k) Securities Held by the Company, the Trust or its Affili
ates. Whenever the consent or approval of Holders of a specified percentage
of Registrable Securities is required hereunder, Registrable Securities held
by the Company, the Trust or its Affiliates shall not be counted in
determining whether such consent or approval was given by the Holders of such
required percentage.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
PUGET SOUND ENERGY, INC.
By: /s/ Donald E. Gaines
Name: Donald E. Gaines
Title: Treasurer
PUGET SOUND ENERGY CAPITAL
TRUST I
By: /s/ Donald E. Gaines
Name: Donald E. Gaines
Title: Administrative Trustee
Confirmed and accepted as of
the date first above
written:
SMITH BARNEY INC.
GOLDMAN, SACHS & CO.
SALOMON BROTHERS INC
By: SMITH BARNEY INC.
By: /s/ Robert L. Gaeckle
Name: Robert L. Gaeckle
Title: Managing Director
<PAGE>
Exhibit 4.5
- -----------------------------------------------------------------------------
LIQUIDATED DAMAGES AGREEMENT
Dated June 6, 1997
BETWEEN
PUGET SOUND ENERGY, INC.
PUGET SOUND ENERGY CAPITAL TRUST I
AND
SMITH BARNEY INC.
GOLDMAN, SACHS & CO.
SALOMON BROTHERS INC
- -----------------------------------------------------------------------------
LIQUIDATED DAMAGES AGREEMENT
THIS LIQUIDATED DAMAGES AGREEMENT (the "Agreement") is made and entered
into as of June 6, 1997, among PUGET SOUND ENERGY, INC., a Washington corpora
tion (the "Company"), PUGET SOUND ENERGY CAPITAL TRUST I, a business trust
formed under the laws of the state of Delaware (the "Trust"), and SMITH
BARNEY INC., GOLDMAN, SACHS & CO. and SALOMON BROTHERS INC (each an "Initial
Purchaser" and, collectively, the "Initial Purchasers").
WHEREAS, as an inducement to the Initial Purchasers to enter into the
Purchase Agreement, dated June 5, 1997 (the "Purchase Agreement"), among the
Company, the Trust and the Initial Purchasers (providing for, among other
things, the sale by the Trust to the Initial Purchasers of 100,000 of the
Trust's Series A 8.231% Capital Securities, liquidation amount $1,000 per
Capital Security (the "Capital Securities"), the proceeds of which will be
used by the Trust to purchase Series A 8.231% Junior Subordinated Deferrable
Interest Debentures due 2027 of the Company (the "Subordinated Debentures")),
and as a condition to the several obligations of the Initial Purchasers there
under, the Company and the Trust have agreed to provide to the Initial
Purchasers and their direct and indirect transferees certain registration and
related rights pursuant to and in accordance with the terms of the
Registration Rights Agreement, of even date herewith (the "Registration
Rights Agreement"), among the Company, the Trust and the Initial Purchasers;
WHEREAS, notwithstanding the fact that the Company and the Trust have
consummated or will consummate an Exchange Offer, pursuant to Section
2(b)(iv) of the Registration Rights Agreement, the Initial Purchasers may,
under certain circumstances, require the Company and the Trust to file a
Shelf Registration Statement for the resale of certain Registrable Securities
held by them;
WHEREAS, the Registration Rights Agreement contains certain provisions
concerning the time within which the Company and the Trust must file the
Shelf Registration Statement and the period for which such Shelf Registration
Statement must remain effective and usable for resales; and
WHEREAS, the Company, the Trust and the Initial Purchasers desire to
provide for the payment of liquidated damages by the Company directly to the
Initial Purchasers in the event that the Company and the Trust fail to comply
with such contractual provisions, as more fully set forth herein.
NOW, THEREFORE, in consideration of the foregoing, and for other good
and valuable consideration the receipt of which is hereby acknowledged, the
parties hereto agree as follows:
1. Definitions. Capitalized terms used herein (including in the
foregoing recitals) but not defined shall have the meanings given to such
terms in the Registration Rights Agreement, except that (a) the term "Shelf
Registration Statement" shall refer only to a Shelf Registration Statement
filed by the Company and the Trust pursuant to Section 2(b)(iv) of the
Registration Rights Agreement, and (b) the term "Registrable Securities"
shall refer only to those Registrable Securities held at such time by an
Initial Purchaser.
2. Payment of Liquidated Damages. (a) If: (i) the Shelf
Registration Statement is not filed with the SEC on or prior to the 45th day
after a request for such filing is made by an Initial Purchaser pursuant to
Section 2(b)(iv) of the Registration Rights Agreement; or (ii) the Shelf
Registration Statement is not declared effective by the SEC on or prior to
the later of the 45th day after the date such Shelf Registration Statement
was required to be filed pursuant to the terms of the Registration Rights
Agreement and the 180th date after the Issue Date; or (iii) the Shelf Regis
tration Statement has been declared effective and such Shelf Registration
Statement ceases at any time to be effective and available to an Initial
Purchaser for use in connection with the resale of Registrable Securities
held by that Initial Purchaser (whether or not that cessation is a result of
an event contemplated by Section 3(e) of the Registration Rights Agreement),
and such cessation continues for more than either (A), 30 consecutive days,
or (B), an aggregate of 90 days (whether or not consecutive), in the case of
(A) or (B), during the 180-day period (and any extensions of such period
pursuant to the last paragraph of Section 3 of the Registration Rights Agree
ment) immediately following the date on which the Shelf Registration State
ment is first declared effective (other than after such time as all
Registrable Securities have been disposed of thereunder or otherwise cease to
be Registrable Securities pursuant to the terms of the Registration Rights
Agreement), then in each case the Company shall pay liquidated damages to
each Initial Purchaser, at a rate of .25% per annum in respect of the aggre
gate liquidation amount of Capital Securities held by that Initial Purchaser
or, if the Trust is liquidated and Subordinated Debentures are distributed to
holders of Capital Securities, the aggregate principal amount of Subordinated
Debentures held by that Initial Purchaser, as the case may be, in respect of
the period: (x) in the case of clause (i) above, commencing on the 46th day
after such request for the filing of a Shelf Registration Statement is made
by the Initial Purchaser and terminating upon the filing of the Shelf Regis
tration Statement; (y) in the case of clause (ii) above, commencing on the
later of the 46th day after the date the Shelf Registration Statement was
required to be filed and the 181st day after the Issue Date and terminating
upon the effectiveness of the Shelf Registration Statement; or (z) in the
case of clause (iii) above, commencing on, either (A), the 31st consecutive
day, or (B), the 91st day, after the day the Shelf Registration Statement
ceases to be effective or available for use and terminating on the day that
the Shelf Registration Statement again becomes effective and available for
use.
(b) Any amounts of liquidated damages payable by the Company
pursuant to this Section 2 shall be paid in cash directly to each Initial
Purchaser on the next succeeding June 1 and December 1, as the case may be,
following the period in respect of which such Liquidated Damages have become
due and payable hereunder.
3. General.
(a) 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.
(b) Amendments. This Agreement may be amended by the parties
hereto by a written instrument duly executed on behalf of each of the parties
hereto.
(c) Entire Agreement. This Agreement and the Registration
Rights Agreement constitute the entire agreement, and supersede all prior
agreements and understandings, both written and oral, among the parties with
respect to the subject matter hereof.
(d) GOVERNING LAW. THIS AGREEMENT SHALL BE DEEMED TO HAVE BEEN
MADE IN THE STATE OF NEW YORK. THE VALIDITY AND INTERPRETATION OF THIS
AGREEMENT, AND THE TERMS AND CONDITIONS SET FORTH HEREIN, SHALL BE GOVERNED
BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT
GIVING EFFECT TO ANY PROVISIONS RELATING TO CONFLICTS OF LAWS. EACH OF THE
PARTIES HERETO AGREES TO SUBMIT TO THE EXCLUSIVE JURISDICTION OF THE COURTS
OF THE STATE OF NEW YORK IN ANY ACTION OR PROCEEDING ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR ANY OF THE MATTERS CONTEMPLATED HEREBY,
IRREVOCABLY WAIVES ANY DEFENSE OF LACK OF PERSONAL JURISDICTION AND
IRREVOCABLY AGREES THAT ALL CLAIMS IN RESPECT OF ANY SUIT, ACTION OR
PROCEEDING MAY BE HEARD AND DETERMINED IN ANY SUCH COURT. THE COMPANY, ON
BEHALF OF ITSELF AND ITS SUBSIDIARIES (INCLUDING, WITHOUT LIMITATION, THE
TRUST), IRREVOCABLY WAIVES, TO THE FULLEST EXTENT IT MAY EFFECTIVELY DO SO
UNDER APPLICABLE LAW, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE
LAYING OF VENUE OF SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT
AND ANY CLAIM THAT ANY SUCH SUIT, ACTION OR PROCEEDING BROUGHT IN ANY SUCH
COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.
(e) Notices. All notices and other communications hereunder
shall be in writing and shall be deemed given if delivered to the parties at
the addresses set forth in, and in a manner contemplated by, the Registration
Rights Agreement.
IN WITNESS WHEREOF, the parties have executed this Agreement as of
the date first written above.
PUGET SOUND ENERGY, INC.
By: /s/ Donald E. Gaines
Name: Donald E. Gaines
Title: Treasurer
PUGET SOUND ENERGY CAPITAL
TRUST I
By: /s/ Donald E. Gaines
Name: Donald E. Gaines
Title: Administrative Trustee
SMITH BARNEY INC.
GOLDMAN, SACHS & CO.
SALOMON BROTHERS INC
By: SMITH BARNEY INC.
By: /s/ Robert L. Gaeckle
Name: Robert L. Gaeckle
Title: Managing Director
