AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 20, 1995
REGISTRATION NO. 33-
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-------------------
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
-------------------
<TABLE>
<S> <C>
RJR NABISCO HOLDINGS CAPITAL TRUST I RJR NABISCO HOLDINGS CORP.
(Exact name of Registrant as specified in its charter) (Exact name of Registrant as specified in its charter)
DELAWARE DELAWARE
(State or other jurisdiction of (State or other jurisdiction of
incorporation or organization) incorporation or organization)
APPLIED FOR 13-3490602
(I.R.S. Employer Identification No.) (I.R.S. Employer Identification No.)
1301 AVENUE OF THE AMERICAS 1301 AVENUE OF THE AMERICAS
NEW YORK, NEW YORK 10019 NEW YORK, NEW YORK 10019
(212) 258-5600 (212) 258-5600
(Address and telephone number (Address and telephone number
of principal executive offices) of principal executive offices)
</TABLE>
-------------------
JO-ANN FORD, ESQ.
RJR NABISCO HOLDINGS CORP.
1301 AVENUE OF THE AMERICAS
NEW YORK, NEW YORK 10019
(212) 258-5600
(Name, address and telephone number
of agent for service)
-------------------
COPIES TO:
<TABLE>
<S> <C>
DAVID W. FERGUSON, ESQ. DAVID J. SORKIN, ESQ.
DAVIS POLK & WARDWELL SIMPSON THACHER & BARTLETT
450 LEXINGTON AVENUE 425 LEXINGTON AVENUE
NEW YORK, NEW YORK 10017 NEW YORK, NEW YORK 10017
(212) 450-4000 (212) 455-2000
</TABLE>
-------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after this Registration Statement becomes effective and all other
conditions to the Exchange Offer (the "Offer") described in the enclosed
Prospectus have been satisfied or waived.
If the securities being registered on this form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box: / /
-------------------
CALCULATION OF REGISTRATION FEE
<TABLE><CAPTION>
<S> <C> <C> <C> <C>
MAXIMUM MAXIMUM AMOUNT OF
TITLE OF EACH CLASS OF AMOUNT TO BE OFFERING PRICE AGGREGATE REGISTRATION
SECURITIES TO BE REGISTERED REGISTERED PER UNIT OFFERING PRICE FEE
<S> <C> <C> <C> <C>
Preferred Securities of RJR
Nabisco Holdings Capital
Trust I and/or Junior
Subordinated Debentures of
RJR Nabisco Holdings Corp.. 49,000,000 $24.75(2) $1,212,750,000(3) $418,188.93
Guarantees of the Preferred
Securities by Holdings..... -- (4)
Total........................ 49,000,000 $24.75 $1,212,750,000 $418,188.93
</TABLE>
(1) Estimated maximum amount of each class of securities listed above issuable
by RJR Nabisco Holdings Corp. and RJR Nabisco Holdings Capital Trust I
pursuant to the Offer as described herein.
(2) Each holder of a Series B Depositary Share representing 1/1000 of a share of
Series B Cumulative Preferred Stock will receive one Preferred Security.
(3) Calculated in accordance with Rule 457(f) under the Securities Act of 1933.
(4) Pursuant to Rule 457(n) under the Securities Act of 1933, no fee is payable
with respect to the Guarantees.
THE REGISTRANTS HEREBY AMEND THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANTS
SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THIS REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
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<PAGE>
CROSS REFERENCE SHEET
RJR NABISCO HOLDINGS CORP.
RJR NABISCO HOLDINGS CAPITAL TRUST I
CROSS REFERENCE SHEET
PURSUANT TO ITEM 501(B) OF REGULATION S-K SHOWING
LOCATION IN PROSPECTUS OF ITEMS OF FORM S-4
<TABLE>
<CAPTION>
FORM S-4 ITEM NO. CAPTION IN PROSPECTUS
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<C> <S> <C>
1. Forepart of Registration Statement and
Outside Front Cover Page of Prospectus..... Outside Front Cover Page; Inside Front
Cover Page
2. Inside Front and Outside Back Cover Pages
of Prospectus.............................. Inside Front Cover Page; Available
Information; Incorporation of Certain
Documents by Reference; Table of Contents
3. Risk Factors, Ratio of Earnings to Fixed
Charges and Other Information.............. Prospectus Summary; Special Considerations
Relating to the Offer; Holdings; RJR
Nabisco Holdings Capital Trust I; Selected
Consolidated Financial Data
4. Terms of the Transaction................... The Offer; Description of the Preferred
Securities; Description of the Junior
Subordinated Debentures; Description of the
Preferred Securities Guarantee; Taxation
5. Pro Forma Financial Information............ Not Applicable
6. Material Contacts with the Company Being
Acquired................................... Not Applicable
7. Additional Information Required for
Reoffering by Persons and Parties Deemed to
be Underwriters............................ Not Applicable
8. Interests of Named Experts and Counsel..... Legal Matters
9. Disclosure of Commission Position on
Indemnification for Securities Act
Liabilities................................ Not Applicable
10. Information with Respect to S-3
Registrants................................ Not Applicable
11. Incorporation of Certain Information by
Reference.................................. Incorporation of Certain Documents by
Reference
12. Information with Respect to S-2 or S-3
Registrants................................ Not Applicable
13. Incorporation of Certain Information by
Reference.................................. Not Applicable
14. Information with Respect to Registrants
Other than S-3 or S-2 Registrants.......... Not Applicable
15. Information With Respect to S-3 Companies.. Not Applicable
16. Information with Respect to S-2 or S-3
Companies.................................. Not Applicable
17. Information with Respect to Companies Other
Than S-3 or S-2 Companies.................. Not Applicable
18. Information if Proxies, Consents or
Authorizations are to be Solicited......... Not Applicable
19. Information if Proxies, Consents or
Authorizations are not to be Solicited or
in an Exchange Offer....................... Incorporation of Certain Documents by
Reference
</TABLE>
<PAGE>
SUBJECT TO COMPLETION, DATED JUNE 20, 1995
PROSPECTUS
RJR NABISCO HOLDINGS CAPITAL TRUST I
OFFER TO EXCHANGE ITS
% TRUST ORIGINATED PREFERRED SECURITIES ("TOPRSSM")
(LIQUIDATION AMOUNT $25 PER
PREFERRED SECURITY AND
GUARANTEED TO THE EXTENT SET FORTH HEREIN
BY RJR NABISCO HOLDINGS CORP.)
FOR UP TO 49,000,000 OUTSTANDING SERIES B DEPOSITARY SHARES,
EACH REPRESENTING 1/1000 OF A SHARE OF
SERIES B CUMULATIVE PREFERRED STOCK
OF
RJR NABISCO HOLDINGS CORP.
THE OFFER, THE PRORATION PERIOD
AND WITHDRAWAL RIGHTS WILL EXPIRE
AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON , 1995,
UNLESS THE OFFER IS EXTENDED.
RJR Nabisco Holdings Capital Trust I, a Delaware statutory business trust
(the "Trust"), hereby offers, upon the terms and subject to the conditions set
forth in this Prospectus and the accompanying Letter of Transmittal (the "Letter
of Transmittal" which, together with this Prospectus, constitute the "Offer"),
to exchange its % Trust Originated Preferred Securities ("TOPrS"),
representing preferred undivided beneficial interests in the assets of the Trust
(the "Preferred Securities"), for up to 49,000,000 of the outstanding Series B
Depositary Shares ("Depositary Shares"), each representing 1/1000 of a share of
Series B Cumulative Preferred Stock (the "Series B Preferred") of RJR Nabisco
Holdings Corp., a Delaware corporation ("Holdings"). Exchanges will be made on
the basis of one Preferred Security for each Depositary Share validly tendered
and accepted for exchange in the Offer. As of the date of this Prospectus, there
are 50,000,000 Depositary Shares outstanding. Depositary Shares not accepted for
exchange because of proration will be returned. Concurrently with the issuance
of Preferred Securities in exchange for Depositary Shares validly tendered in
the Offer, Holdings will deposit in the Trust as trust assets its % Junior
Subordinated Debentures due 2044 (the "Junior Subordinated Debentures"), having
an aggregate principal amount equal to the aggregate stated liquidation amount
of the Preferred Securities to be issued by the Trust.
(cover page continues)
SEE "RISK FACTORS" STARTING ON PAGE 16 FOR A DISCUSSION OF CERTAIN FACTORS
RELATING TO THE PREFERRED SECURITIES THAT SHOULD BE CONSIDERED BY INVESTORS,
INCLUDING THE PERIOD AND CIRCUMSTANCES DURING AND UNDER WHICH PAYMENTS ON THE
JUNIOR SUBORDINATED DEBENTURES AND THE PREFERRED SECURITIES MAY BE DEFERRED AND
THE RELATED FEDERAL INCOME TAX CONSEQUENCES.
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR BY ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS, AND ANY REPRESENTATION TO THE CONTRARY
IS A CRIMINAL OFFENSE.
Merrill Lynch & Co., Lehman Brothers, Morgan Stanley & Co. Incorporated,
PaineWebber Incorporated and Smith Barney Inc. have been retained as Dealer
Managers to solicit exchanges of Depositary Shares for Preferred Securities. See
"The Offer--Dealer Managers; Soliciting Dealers". First Chicago Trust Company of
New York has been retained as Exchange Agent in connection with the Offer.
MacKenzie Partners, Inc. has been retained to act as Information Agent to assist
in connection with the Offer.
The Dealer Managers for the Offer are:
MERRILL LYNCH & CO.
LEHMAN BROTHERS Morgan Stanley & Co.
Incorporated
PAINEWEBBER INCORPORATED SMITH BARNEY INC.
The date of this Prospectus is , 1995.
SM"Trust Originated Preferred Securities" and "TOPrS" are service marks of
Merrill Lynch & Co.
<PAGE>
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY STATE.
<PAGE>
NEITHER THE BOARD OF DIRECTORS OF HOLDINGS NOR HOLDINGS NOR THE TRUSTEES NOR
THE TRUST MAKES ANY RECOMMENDATION TO HOLDERS OF DEPOSITARY SHARES AS TO WHETHER
TO TENDER OR REFRAIN FROM TENDERING IN THE OFFER. HOLDERS OF DEPOSITARY SHARES
ARE URGED TO CONSULT THEIR FINANCIAL AND TAX ADVISORS IN MAKING THEIR DECISIONS
ON WHAT ACTION TO TAKE IN LIGHT OF THEIR OWN PARTICULAR CIRCUMSTANCES.
Holders of Depositary Shares may participate in the Offer by properly
completing and signing the Letter of Transmittal and tendering their Depositary
Shares as described in "The Offer--Procedures for Tendering" in accordance with
the instructions contained herein and in the Letter of Transmittal prior to the
Expiration Date (as defined herein). IN ORDER TO PARTICIPATE IN THE OFFER,
HOLDERS OF DEPOSITARY SHARES MUST SUBMIT A LETTER OF TRANSMITTAL AND COMPLY WITH
THE OTHER PROCEDURES FOR TENDERING IN ACCORDANCE WITH THE INSTRUCTIONS CONTAINED
HEREIN AND IN THE LETTER OF TRANSMITTAL PRIOR TO THE EXPIRATION DATE.
For a description of the other terms of the Offer, see "The Offer--Terms of
the Offer", "-- Expiration Date; Extensions; Amendments; Termination",
"--Withdrawal of Tenders" and "--Acceptance of Shares and Proration".
Consummation of the Offer is conditioned on, among other things, receipt of at
least 15,000,000 validly tendered Depositary Shares (which condition may be
waived). Application will be made to list the Preferred Securities on the New
York Stock Exchange (the "NYSE"). In order to satisfy the NYSE listing
requirements, acceptance of Depositary Shares validly tendered in the Offer is
subject to the condition that as of the Expiration Date there be at least 400
record or beneficial holders of Preferred Securities to be issued in exchange
for such Depositary Shares, which condition may not be waived. See "The
Offer--Expiration Date; Extensions; Amendments; Termination" and "--Conditions
to the Offer".
The Trust expressly reserves the right, in its sole discretion, subject to
applicable law, to (i) terminate the Offer, and not accept for exchange any
Depositary Shares and promptly return all Depositary Shares upon the failure of
any of the conditions specified above or in "The Offer-- Conditions to the
Offer", (ii) waive any condition to the Offer and accept all Depositary Shares
previously tendered pursuant to the Offer, (iii) extend the Expiration Date of
the Offer and retain all Depositary Shares tendered pursuant to such Exchange
Offer until the Expiration Date, subject, however, to all withdrawal rights of
holders, see "The Offer--Withdrawal of Tenders", (iv) amend the terms of the
Offer or (v) modify the form of the consideration to be paid pursuant to the
Offer. Any amendment applicable to the Offer will apply to all Depositary Shares
tendered pursuant to the Offer. The minimum period during which the Offer must
remain open following material changes in the terms of the Offer or the
information concerning the Offer, other than a change in the percentage of
securities sought or the price, depends upon the facts and circumstances,
including the relative materiality of such terms or information. See "The
Offer--Expiration Date; Extensions; Amendments; Termination".
Holdings will own directly or indirectly all of the securities representing
common undivided beneficial interests in the assets of the Trust (the "Common
Securities" and, together with the Preferred Securities, the "Trust
Securities"). The Trust exists for the purpose of (a) issuing (i) its Preferred
Securities in exchange for Depositary Shares validly tendered in the Offer and
delivering such Depositary Shares to Holdings in consideration for the deposit
by Holdings of Junior Subordinated Debentures having an aggregate stated
principal amount equal to the aggregate stated liquidation amount of such
Preferred Securities in the Trust as trust assets and (ii) its Common Securities
to Holdings in exchange for cash and investing the proceeds thereof in an
equivalent amount of Junior Subordinated Debentures and (b) engaging in such
other activities as are necessary and incidental thereto. The Preferred
Securities and the Common Securities will rank pari passu with each other and
will have equivalent terms; provided that (i) if an Event of Default (as defined
herein) under the Declaration (as defined herein) occurs and is continuing, the
holders of Preferred Securities will have a priority over holders of the Common
Securities with respect to payments in respect of distributions and payments
upon liquidation, redemption or otherwise and (ii) holders of Common Securities
have the exclusive right (subject to the terms of the Declaration) to appoint,
replace or remove Trustees and to increase or decrease the number of Trustees,
subject to the right of holders of Preferred Securities to appoint a Trustee
(the "Special Regular Trustee") upon the occurrence of certain events described
herein. See "Prospectus Summary--Description of Preferred Securities and Junior
Subordinated Debentures".
Cash distributions on the Preferred Securities will be cumulative from the
first day following the Expiration Date (the "Accrual Date") at an annual rate
of % of the liquidation amount of $25 per Preferred Security, and will be
payable quarterly in arrears on the last day of March, June, September and
December of each year, commencing on September 30, 1995 ("distributions"). Cash
distributions in arrears for more than one quarter will bear interest thereon at
the rate per annum of % of the stated liquidation amount of $25 per
Preferred Security, compounded quarterly to the extent permitted by applicable
law. The term "distributions" as used herein includes such cash distributions
and any such interest payable unless otherwise stated. In addition, holders of
the Preferred Securities will be entitled to an additional cash distribution at
the rate of 9.25% per annum of the
ii
<PAGE>
liquidation amount thereof from June 1, 1995 through the Expiration Date in lieu
of dividends accumulating and unpaid after June 1, 1995 on their Depositary
Shares accepted for exchange, such additional distribution to be made on
September 30, 1995 to holders of the Preferred Securities on the record date for
such distribution. The distribution rate and the distribution and other payment
dates for the Preferred Securities will correspond to the interest rate and the
interest and other payment dates on the Junior Subordinated Debentures deposited
in the Trust as trust assets. As a result, if principal or interest is not paid
on the Junior Subordinated Debentures, including as a result of Holdings'
election to extend the interest payment period on the Junior Subordinated
Debentures as described below, the Trust will not make payments on the Trust
Securities. The Junior Subordinated Debentures provide that, so long as Holdings
shall not be in default in the payment of interest on the Junior Subordinated
Debentures, Holdings shall have the right to defer payments of interest on the
Junior Subordinated Debentures by extending the interest payment period from
time to time for a period not exceeding 20 consecutive quarterly interest
periods (each, an "Extension Period"). No interest shall be due and payable
during an Extension Period and, as a consequence, distributions on the Trust
Securities will also be deferred, but at the end of such Extension Period
Holdings shall pay all interest then accrued and unpaid on the Junior
Subordinated Debentures, together with interest thereon at the rate specified
for the Junior Subordinated Debentures compounded quarterly to the extent
permitted by applicable law ("Compounded Interest"), and corresponding
distributions will be paid by the Trust on the Trust Securities. All references
herein to interest shall include Compounded Interest unless otherwise stated.
There could be multiple Extension Periods of varying lengths (up to nine
Extension Periods of 20 consecutive quarterly interest periods each or more
numerous shorter Extension Periods) throughout the term of the Junior
Subordinated Debentures, provided that no Extension Period may extend beyond the
maturity of the Junior Subordinated Debentures. During any such Extension
Period, Holdings may not declare or pay dividends on, or redeem, purchase,
acquire or make a distribution or liquidation payment with respect to, any of
its common stock or preferred stock; provided that Holdings will be permitted to
pay accrued dividends (and cash in lieu of fractional shares) upon the
conversion, other than at the option of Holdings, of any of its preferred stock,
including its Series C Conversion Preferred Stock and ESOP Convertible Preferred
Stock, in accordance with the terms of such stock. See "Risk Factors",
"Description of the Junior Subordinated Debentures--Interest" and "--Option to
Extend Interest Payment Period".
The obligations of Holdings under the Junior Subordinated Debentures are
unsecured obligations of Holdings and will be subordinate and junior in right of
payment, to the extent set forth herein, to all Senior Obligations (as defined
herein) of Holdings, except obligations and securities made pari passu or
subordinate by their terms, but senior to all capital stock now or hereafter
issued by Holdings and to any guarantee now or hereafter entered into by
Holdings in respect of its capital stock. Holdings' obligations under the
Preferred Securities Guarantee are unsecured and will rank (i) subordinate and
junior in right of payment to all Senior Obligations of Holdings, and to the
Junior Subordinated Debentures, and (ii) senior to all capital stock now or
hereafter issued by Holdings and to any guarantee now or hereafter entered into
by Holdings in respect of its capital stock.
The payment of distributions out of moneys held by the Trust (as defined
herein) and payments on liquidation of the Trust and the redemption of Preferred
Securities, as set forth below, are guaranteed by Holdings on a subordinated
basis as and to the extent described herein (the "Preferred Securities
Guarantee"). See "Description of the Preferred Securities Guarantee". The
Preferred Securities Guarantee is a full and unconditional guarantee from the
time of issuance of the Preferred Securities, but the Preferred Securities
Guarantee covers distributions and other payments on the Preferred Securities
only if and to the extent that Holdings has made a payment of interest or
principal on the Junior Subordinated Debentures deposited in the Trust as trust
assets.
For a description of redemption rights with respect to the Preferred
Securities, the possible dissolution of the Trust and distribution of Junior
Subordinated Debentures held by the Trust to holders of the Trust Securities and
the liquidation amount on the Preferred Securities, see "Risk Factors",
"Description of the Preferred Securities--Special Event Redemption or
Distribution", "--Liquidation Distribution Upon Dissolution" and "Description of
the Junior Subordinated Debentures".
The Depositary Shares are listed and principally traded on the NYSE. On June
19, 1995, the last full day of trading prior to the first public announcement of
the Offer, the closing sales price of the Depositary Shares on the NYSE as
reported on the Composite Tape was $24.875 per share. The closing sales price of
the Depositary Shares on the NYSE on , 1995 was $ . STOCKHOLDERS ARE
URGED TO OBTAIN CURRENT MARKET QUOTATIONS FOR THE DEPOSITARY SHARES. To the
extent that Depositary Shares are tendered and accepted in the Offer, the terms
on which untendered Depositary Shares could subsequently be sold could be
adversely affected. See "Listing and Trading of Preferred Securities and
Depositary Shares".
Holdings will pay to Soliciting Dealers (as defined herein) designated by
the record or beneficial owner, as appropriate, of Depositary Shares a
solicitation fee of $0.50 per Depositary Share validly tendered and accepted for
exchange pursuant to the Offer, subject to certain conditions. Soliciting
Dealers are not entitled to a solicitation fee for Depositary Shares
beneficially owned by such Soliciting Dealer. See "The Offer--Dealer Managers;
Soliciting Dealers".
iii
<PAGE>
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS IN CONNECTION WITH THE OFFER OTHER THAN THOSE CONTAINED IN THIS
PROSPECTUS. IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATIONS SHOULD NOT BE
RELIED UPON AS HAVING BEEN AUTHORIZED BY HOLDINGS, THE TRUST, THE TRUSTEES OR
THE DEALER MANAGERS. NEITHER THE DELIVERY OF THIS PROSPECTUS NOR ANY EXCHANGE
MADE HEREUNDER SHALL, UNDER ANY CIRCUMSTANCES, CREATE ANY IMPLICATION THAT THERE
HAS BEEN NO CHANGE IN THE AFFAIRS OF HOLDINGS OR THE TRUST SINCE THE RESPECTIVE
DATES AS OF WHICH INFORMATION IS GIVEN HEREIN. THE OFFER IS NOT BEING MADE TO
(NOR WILL TENDERS BE ACCEPTED FROM OR ON BEHALF OF) HOLDERS OF DEPOSITARY SHARES
IN ANY JURISDICTION IN WHICH THE MAKING OF THE OFFER OR THE ACCEPTANCE THEREOF
WOULD NOT BE IN COMPLIANCE WITH THE LAWS OF SUCH JURISDICTION. HOWEVER, HOLDINGS
AND THE TRUST MAY, AT THEIR DISCRETION, TAKE SUCH ACTION AS THEY MAY DEEM
NECESSARY TO MAKE THE OFFER IN ANY SUCH JURISDICTION AND EXTEND THE OFFER TO
HOLDERS OF DEPOSITARY SHARES IN SUCH JURISDICTION. IN ANY JURISDICTION THE
SECURITIES LAWS OR BLUE SKY LAWS OF WHICH REQUIRE THE OFFER TO BE MADE BY A
LICENSED BROKER OR DEALER, THE OFFER IS BEING MADE ON BEHALF OF THE TRUST BY THE
DEALER MANAGERS OR ONE OR MORE REGISTERED BROKERS OR DEALERS WHICH ARE LICENSED
UNDER THE LAWS OF SUCH JURISDICTION.
AVAILABLE INFORMATION
Holdings is subject to the information requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information concerning Holdings can be inspected and copied
at the public reference facilities maintained by the Commission at Judiciary
Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, Room 1024; Citicorp
Center, 500 West Madison Street, Suite 1400, Chicago, Illinois 60661-2511; and 7
World Trade Center, Suite 1300, New York, New York 10048. Copies of such
material can be obtained from the Public Reference Section of the Commission at
450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates. Such
material can also be inspected and copied at the offices of the NYSE, 20 Broad
Street, New York, N.Y. 10005.
This Prospectus constitutes a part of a registration statement on Form S-4
(together with all amendments and exhibits, the "Registration Statement") filed
by Holdings and the Trust with the Commission under the Securities Act of 1933,
as amended (the "Securities Act"). This Prospectus does not contain all of the
information included in the Registration Statement, certain parts of which are
omitted in accordance with the rules and regulations of the Commission.
Statements contained herein concerning the provisions of any document do not
purport to be complete and, in each instance, are qualified in all respects by
reference to the copy of such document filed as an exhibit to the Registration
Statement or otherwise filed with the Commission. Each such statement is subject
to and qualified in its entirety by such reference. Reference is made to such
Registration Statement and to the exhibits relating thereto for further
information with respect to Holdings, the Trust and the securities offered
hereby.
No separate financial statements of the Trust have been included or
incorporated by reference herein. Holdings and the Trust do not consider that
such financial statements would be material to holders of Preferred Securities
because the Trust is a newly-formed special purpose entity, has no operating
history, has no independent operations and is not engaged in, and does not
propose to engage in, any activity other than its holding as trust assets the
Junior Subordinated Debentures of Holdings
1
<PAGE>
and its issuance of Trust Securities. See "RJR Nabisco Holdings Capital Trust
I", "Description of the Preferred Securities", "Description of the Preferred
Securities Guarantee" and "Description of the Junior Subordinated Debentures".
The Trust is a statutory business trust formed under the laws of the State of
Delaware. Holdings, as of the date hereof, beneficially owns all of the
beneficial interests in the Trust.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
Holdings' Annual Report on Form 10-K for the year ended December 31, 1994
("Holdings 10-K"), its Quarterly Report on Form 10-Q for the quarter ended March
31, 1995 ("Holdings 10-Q") and its Proxy Statement dated March 20, 1995 have
been filed with the Commission and are incorporated herein by reference.
All documents filed by Holdings pursuant to Section 13(a), 13(c), 14 or
15(d) of the Exchange Act subsequent to the date of this Prospectus and prior to
the Expiration Date shall be deemed to be incorporated by reference in this
Prospectus and to be a part hereof from the date of filing of such documents.
Any statement contained in a document incorporated or deemed to be incorporated
herein by reference shall be deemed to be modified or superseded for purposes of
this Prospectus to the extent that a statement contained herein or in any other
subsequently filed document which also is or is deemed to be incorporated by
reference herein modifies or supersedes such statement. Any such statement so
modified or superseded shall not be deemed, except as so modified and
superseded, to constitute a part of this Prospectus.
This Prospectus incorporates documents by reference which are not presented
herein or delivered herewith. Holdings will provide without charge to each
person, including any beneficial owner of Depositary Shares, to whom this
Prospectus is delivered, upon the written or oral request of such person, a copy
of any or all of the documents incorporated herein by reference, other than
exhibits to such documents (unless such exhibits are specifically incorporated
by reference into such documents). Requests for such documents should be
directed to Holdings at 1301 Avenue of the Americas, New York, New York
(Telephone (212) 258-5600). In order to ensure timely delivery of the documents,
any request should be made not later than five business days prior to the
Expiration Date.
2
<PAGE>
TABLE OF CONTENTS
<TABLE><CAPTION>
PAGE
----
<S> <C>
Prospectus Summary.................................................................... 4
Risk Factors.......................................................................... 16
Comparison of Preferred Securities and Depositary Shares.............................. 22
RJR Nabisco Holdings Corp............................................................. 25
RJR Nabisco Holdings Capital Trust I.................................................. 27
Selected Consolidated Financial Data.................................................. 30
Capitalization........................................................................ 32
The Offer............................................................................. 33
Listing and Trading of Preferred Securities and Depositary Shares..................... 41
Transactions and Arrangements Concerning the Offer.................................... 42
Fees and Expenses; Transfer Taxes..................................................... 42
Price Range of Depositary Shares...................................................... 43
Description of the Preferred Securities............................................... 44
Description of the Preferred Securities Guarantee..................................... 56
Description of the Junior Subordinated Debentures..................................... 59
Description of the Series B Preferred and Depositary Shares........................... 67
Relationship Between the Preferred Securities, the Junior Subordinated Debentures and
the Preferred Securities Guarantee.................................................. 70
Taxation.............................................................................. 72
Legal Matters......................................................................... 75
Experts............................................................................... 75
ERISA Matters......................................................................... 75
</TABLE>
3
<PAGE>
PROSPECTUS SUMMARY
The following summary does not purport to be complete and is qualified in
its entirety by the detailed information contained elsewhere in, or incorporated
by reference in, this Prospectus.
RJR NABISCO HOLDINGS CORP.
The operating subsidiaries of Holdings owned through RJR Nabisco, Inc.
("RJRN") comprise one of the largest tobacco and food companies in the world. In
the United States, the tobacco business is conducted by R.J. Reynolds Tobacco
Company ("RJRT"), the second largest manufacturer of cigarettes, and the
packaged foods business is conducted by Nabisco Holdings Corp. ("Nabisco
Holdings") through its wholly owned subsidiary, Nabisco, Inc. ("Nabisco"), the
largest manufacturer and marketer of cookies and crackers. RJRN owns
approximately 80.5% of the economic interest and approximately 97.6% of the
voting power of Nabisco Holdings. Tobacco operations outside the United States
are conducted by R.J. Reynolds Tobacco International, Inc. ("Tobacco
International") and packaged food operations outside the United States are
conducted by Nabisco International, Inc. ("Nabisco International") and Nabisco
Ltd., subsidiaries of Nabisco. RJRT's and Tobacco International's tobacco
products are sold around the world under a variety of brand names. Food products
are sold in the United States, Canada, Latin America and certain other
international markets.
TOBACCO
RJRT's largest selling cigarette brands in the United States include
WINSTON, DORAL, CAMEL, SALEM, VANTAGE and MONARCH. RJRT's other cigarette
brands, including NOW, MORE, BEST VALUE, STERLING, MAGNA and CENTURY, are
marketed to meet a variety of smoker preferences. All RJRT brands are marketed
in a variety of styles. Tobacco International operates in over 160 markets
around the world and is the second largest of two international cigarette
producers that have significant positions in the American Blend segment of the
international tobacco market.
FOOD
Nabisco's domestic operations represent one of the largest packaged food
businesses in the world. Through its domestic divisions, Nabisco manufactures
and markets cookies, crackers, snack foods, hard and bite-size candy, gum, nuts,
hot cereals, margarine, pet foods, dry-mix dessert products and other grocery
products under established and well-known trademarks, including OREO, CHIPS
AHOY!, NEWTONS, SNACKWELL'S, RITZ, PREMIUM, LIFE SAVERS, PLANTERS, A.1, GREY
POUPON, MILK-BONE, CREAM OF WHEAT, FLEISCHMANN'S and BLUE BONNET. Nabisco
International is also a leading producer of biscuits, baking powder, powdered
desserts, industrial yeasts and processed milk products in many of the 17 Latin
American countries in which it has operations. Nabisco Ltd. conducts Nabisco's
Canadian operations through a biscuit division and a grocery division. Excluding
private label brands, the biscuit division produced nine of the top ten cookies
and nine of the top ten crackers in Canada in 1994.
RJR NABISCO HOLDINGS CAPITAL TRUST I
RJR Nabisco Holdings Capital Trust I is a statutory business trust that was
formed under the Delaware Business Trust Act (the "Business Trust Act") on June
20, 1995. The Trust's original declaration of trust will be amended and restated
in its entirety as of the date the Trust accepts Depositary Shares in the Offer
(as so amended and restated, the "Declaration") substantially in the form filed
as an exhibit to the Registration Statement of which this Prospectus forms a
part. See "The
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Offer--Terms of the Offer" and "--Acceptance of Shares and Proration" for
information regarding the Trust's acceptance of Depositary Shares in the Offer.
The Declaration will be qualified under the Trust Indenture Act of 1939, as
amended (the "Trust Indenture Act"). Upon issuance of the Preferred Securities,
the holders thereof will own all of the issued and outstanding Preferred
Securities. Holdings has agreed to acquire Common Securities in an amount equal
to at least 3% of the total capital of the Trust and will own, directly or
indirectly, all of the issued and outstanding Common Securities. The Preferred
Securities and the Common Securities will have equivalent terms; provided that
(i) if an Event of Default under the Declaration occurs and is continuing, the
holders of Preferred Securities will have a priority over the holders of the
Common Securities with respect to payments in respect of distributions and
payments upon liquidation, redemption and maturity and (ii) holders of Common
Securities have the exclusive right (subject to the terms of the Declaration) to
appoint, replace or remove Trustees and to increase or decrease the number of
Trustees, subject to the right of holders of Preferred Securities to appoint one
additional Trustee of the Trust (the "Special Regular Trustee") upon the
occurrence of certain events described herein.
The number of trustees (the "Trustees") of the Trust shall initially be
five. Three of the Trustees (the "Regular Trustees") are individuals who are
employees or officers of Holdings. The fourth trustee is The Bank of New York
(the "Institutional Trustee"), which will act as the indenture trustee for
purposes of the Trust Indenture Act. The fifth trustee is The Bank of New York
(Delaware), which has its principal place of business in the State of Delaware
(the "Delaware Trustee"). Pursuant to the Declaration, the Institutional Trustee
will have the power to exercise all rights, powers and privileges under the
Indenture (as hereinafter defined) pursuant to which the Junior Subordinated
Debentures will be issued. The Institutional Trustee, acting on behalf of the
Trust, will promptly make distributions to the holders of the Trust Securities
out of funds in the Trust. The Preferred Securities Guarantee, which will be
separately qualified under the Trust Indenture Act, will be held by The Bank of
New York, acting in its separate capacity as indenture trustee with respect to
the Preferred Securities Guarantee, for the benefit of the holders of the
Preferred Securities. As used in this Prospectus, the term "Institutional
Trustee" refers to The Bank of New York acting either in its capacity as the
trustee under the Declaration or in its capacity as indenture trustee under, and
the holder of, the Preferred Securities Guarantee, as the context may require.
The Trust exists for the purpose of (a) issuing (i) its Preferred Securities
in exchange for Depositary Shares validly tendered in the Offer and delivering
such Depositary Shares to Holdings in consideration for the deposit by Holdings
of Junior Subordinated Debentures, having an aggregate stated principal amount
equal to the aggregate stated liquidation amount of such Preferred Securities,
in the Trust as trust assets, and (ii) its Common Securities to Holdings in
exchange for cash and investing the proceeds thereof in an equivalent amount of
Junior Subordinated Debentures and (b) engaging in such other activities as are
necessary and incidental thereto. The rights of the holders of the Trust
Securities, including economic rights, rights to information and voting rights,
are as set forth in the Declaration, the Business Trust Act and the Trust
Indenture Act. See "RJR Nabisco Holdings Capital Trust I" and "Description of
the Preferred Securities". The Declaration does not permit the incurrence by the
Trust of any indebtedness for borrowed money or the making of any investment
other than in the Junior Subordinated Debentures. In the Declaration, Holdings
has agreed to pay for all debts and obligations (other than with respect to the
Trust Securities) and all costs and expenses of the Trust, including the fees
and expenses of the Trustees and any income taxes, duties and other governmental
charges, and all costs and expenses with respect thereto, to which the Trust may
become subject, except for United States withholding taxes. See "Risk Factors",
"RJR Nabisco Holdings Capital Trust I" and "Description of the Preferred
Securities".
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CERTAIN POTENTIAL BENEFITS AND RISKS TO INVESTORS
Prospective investors should carefully review the information contained
elsewhere in this Prospectus prior to making a decision regarding the Offer and
should particularly consider the following matters:
POTENTIAL BENEFITS TO EXCHANGING HOLDERS
. The cash distributions rate on the Preferred Securities will be
basis points greater than the dividend rate on the Depositary Shares. See
"Comparison of Preferred Securities and Depositary Shares".
. Although the obligations of Holdings under the Junior Subordinated
Debentures and the Preferred Securities Guarantee are unsecured and will be
subordinated and junior in right of payment to all Senior Obligations of
Holdings, they will be senior to all capital stock of Holdings now or hereafter
issued by Holdings (including the Depositary Shares).
. While no dividends are required to be paid with respect to the Depositary
Shares, interest payments on the Junior Subordinated Debentures and therefore
distributions on the Preferred Securities may only be deferred for a maximum of
20 consecutive quarterly interest periods. See "Description of the Preferred
Securities".
. The Offer will allow Holdings to achieve certain tax efficiencies because,
in contrast to dividend payments with respect to the Depositary Shares which are
not deductible by Holdings, Holdings will be able to deduct interest payments on
the Junior Subordinated Debentures for United States federal income tax
purposes. See "The Offer--Purpose of the Offer".
. So long as payments of interest and other payments are made when due on
the Junior Subordinated Debentures, such payments will be sufficient to cover
cash distributions and other payments made on the Preferred Securities (and the
Common Securities) because (i) the aggregate principal amount of Junior
Subordinated Debentures deposited as trust assets will be equal to the sum of
(x) the aggregate stated liquidation amount of the Preferred Securities issued
by the Trust in exchange for the Depositary Shares accepted in the Offer and (y)
the amount of proceeds received by the Trust from the issuance of the Common
Securities to Holdings, which proceeds will be used by the Trust to purchase an
equal principal amount of Junior Subordinated Debentures, (ii) the interest rate
and interest and other payment dates on the Junior Subordinated Debentures will
match the distribution rate and distribution and other payment dates for the
Preferred Securities, (iii) the Declaration provides that Holdings shall pay for
all debts and obligations (other than with respect to the Trust Securities) and
all costs and expenses of the Trust, and (iv) the Declaration further provides
that the Trustees shall not permit the Trust to, among other things, engage in
any activity that is not consistent with the purposes of the Trust. See "The
Offer--Description of Preferred Securities and Junior Subordinated Debentures"
and "RJR Nabisco Holdings Capital Trust I".
. The Trust will have no independent operations and will exist for the sole
purpose of effecting the Offer and issuing the Trust Securities as described
herein and owning and holding the Junior Subordinated Debentures. See "RJR
Nabisco Holdings Capital Trust I".
. If (i) the Trust fails to pay distributions in full on the Preferred
Securities for six consecutive regularly scheduled quarterly distribution
periods; or (ii) an Event of Default under the Declaration occurs and is
continuing (each, an "Appointment Event"), then the Declaration provides that
the holders of the Preferred Securities may appoint a Special Regular Trustee of
the Trust who need not be an officer or employee of or otherwise affiliated with
Holdings. Under the Declaration, any such Special Regular Trustee shall have the
same rights, powers and privileges as a Regular Trustee. See "Description of the
Preferred Securities--Voting Rights".
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. The Institutional Trustee will have the power to exercise all rights,
powers and privileges under the Indenture with respect to the Junior
Subordinated Debentures, including its rights to enforce Holdings' obligations
under the Junior Subordinated Debentures upon the occurrence of an Indenture
Event of Default, and will also have the right to enforce the Preferred
Securities Guarantee on behalf of the holders of the Preferred Securities. In
addition, the holders of of the Preferred Securities will have certain rights to
direct the Institutional Trustee with respect to certain matters under the
Declaration and the Preferred Securities Guarantee. If the Institutional Trustee
fails to enforce its rights under the Indenture or fails to enforce the
Preferred Securities Guarantee, any holder of Preferred Securities may, after a
period of 90 days has elapsed from such holder's written request to the
Institutional Trustee to enforce such rights or the Preferred Securities
Guarantee, institute a legal proceeding against Holdings to enforce such rights
or the Preferred Securities Guarantee, as the case may be. See "Description of
the Preferred Securities" and "Description of the Preferred Securities
Guarantee".
POTENTIAL RISKS TO EXCHANGING HOLDERS
. Participation in the Offer will be a taxable event for holders of
Depositary Shares. See "Risk Factors--Tax Consequences of the Offer".
. The obligations of Holdings under (i) the Junior Subordinated Debentures
and the Preferred Securities Guarantee are subordinate in right of payment to
all Senior Obligations (as defined herein) of Holdings, except obligations or
securities made pari passu or subordinate by their terms, and (ii) the Preferred
Securities Guarantee is also subordinate in right of payment to the Junior
Subordinated Debentures. See "Risk Factors--Ranking of Subordinated Obligations
under the Preferred Securities Guarantee and Junior Subordinated Debentures;
Dependence on Holdings".
. The Trust's ability to make distributions on the Preferred Securities is
entirely dependent upon Holdings making interest payments on the Junior
Subordinated Debentures when and as required, and the interest payment period on
the Junior Subordinated Debentures may be extended under certain circumstances
by Holdings in its sole discretion for up to 20 consecutive quarterly interest
periods. See "Risk Factors--Ranking of Subordinated Obligations under Preferred
Securities Guarantee and Junior Subordinated Debentures; Dependence on
Holdings", "--Option to Extend Interest Payment Period; Tax Impact of Extension"
and "--Potential Market Volatility During Extension Period".
. Should Holdings not make interest or other payments on the Junior
Subordinated Debentures for any reason, including as a result of Holdings'
election to defer payments of interest on the Junior Subordinated Debentures by
extending the interest payment period on the Junior Subordinated Debentures, the
Trust will not make distributions or other payments on the Trust Securities. In
such an event, holders of the Preferred Securities would not be able to rely on
the Preferred Securities Guarantee since the Preferred Securities Guarantee
covers distributions and other payments on the Preferred Securities only if and
to the extent that Holdings has made a payment to the Trust of interest or
principal on the Junior Subordinated Debentures deposited in the Trust as trust
assets. See "Risk Factors--Ranking of Subordinated Obligations under Preferred
Securities Guarantee and Junior Subordinated Debentures; Dependence on
Holdings".
. If Holdings elects to defer payments of interest on the Junior
Subordinated Debentures by extending the interest period on the Junior
Subordinated Debentures, distributions on the Preferred Securities would also be
deferred but the Trust will continue to accrue interest income (as original
issue discount) in respect of such Debentures which will be taxable to
beneficial owners of Preferred Securities. As a result, beneficial owners of
Preferred Securities during an Extension Period will include their pro rata
share of the interest in gross income in advance of the receipt of cash. See
"Taxation-- Income from the Preferred Securities".
. Holders of Preferred Securities will have limited voting rights and,
subject to the right of holders of Preferred Securities to appoint a Special
Regular Trustee upon the occurrence of an Appointment
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Event, will not be able to appoint, remove or replace, or to increase or
decrease the number of, Trustees, which rights are vested exclusively in the
Common Securities.
. While the Depositary Shares are not redeemable prior to August 19, 1998,
the Junior Subordinated Debentures (and thus the Preferred Securities) in
certain circumstances will be redeemable prior to that date upon the occurrence
of a Tax Event (as defined herein).
. While dividends with respect to Depositary Shares are eligible for the
dividends received deduction for corporate holders, distributions on the
Preferred Securities are not eligible for the dividends received deduction for
corporate holders. See "Comparison of Preferred Securities and Depositary
Shares" and "Taxation--Accrual of Original Issue Discount and Premium".
. While application will be made to list the Preferred Securities on the
NYSE, the Preferred Securities are a new issue of securities with no established
trading market. In addition, liquidity of the Preferred Securities will be
affected by the number of Depositary Shares exchanged in the Offer. See
"Risk Factors--Listing and Trading of Preferred Securities and Depositary
Shares".
. Under certain circumstances, Junior Subordinated Debentures could be
distributed to holders of Preferred Securities. In such event, the Trust would
be dissolved and the holders would become holders of Junior Subordinated
Debentures. While Holdings will use its best efforts in such a situation to have
the Junior Subordinated Debentures listed on the NYSE, there is no guarantee
that such listing will take place or that a market will exist for such Junior
Subordinated Debentures. See "Description of the Preferred Securities--Special
Event Redemption or Distribution."
POTENTIAL RISK TO NON-EXCHANGING HOLDERS
. The liquidity and trading market for untendered Depositary Shares could be
adversely affected to the extent Depositary Shares are tendered and accepted in
the Offer. See "Risk Factors--Listing and Trading of Preferred Securities and
Depositary Shares".
. The Junior Subordinated Debentures will rank senior in right of payment to
the untendered Depositary Shares.
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THE OFFER
PURPOSE OF THE OFFER
The purpose of the Offer is to refinance the Series B Preferred with the
Preferred Securities and to achieve certain tax efficiencies. This refinancing
will permit Holdings to deduct interest payable on the Junior Subordinated
Debentures for United States federal income tax purposes; dividends payable on
the Series B Preferred are not deductible. See "The Offer--Purpose of the
Offer".
TERMS OF THE OFFER
Upon the terms and subject to the conditions set forth herein and in the
Letter of Transmittal, the Trust hereby offers to exchange its Preferred
Securities for up to 49,000,000 of the outstanding Depositary Shares of
Holdings. Exchanges will be made on the basis of one Preferred Security for each
Depositary Share validly tendered and accepted for exchange in the Offer. See
"The Offer--Terms of the Offer".
EXPIRATION DATE; WITHDRAWALS
Upon the terms and conditions of the Offer, including the provisions
relating to proration described herein, the Trust will accept for exchange up to
49,000,000 Depositary Shares validly tendered and not withdrawn prior to 12:00
Midnight, New York City time, on , 1995, or if the Offer is extended by
the Trust, in its sole discretion, the latest date and time to which the Offer
has been extended (the "Expiration Date"). Tenders of Depositary Shares pursuant
to the Offer may be withdrawn at any time prior to the Expiration Date and,
unless accepted for exchange by the Trust, may be withdrawn at any time after 40
Business Days (as defined herein) after the date of this Prospectus. Depositary
Shares not accepted because of proration will be returned to the tendering
holders at the Trust's expense as promptly as practicable following the
Expiration Date. A "Business Day" shall mean any day other than a day on which
banking institutions in The City of New York are authorized or required by law
to close. See "The Offer--Expiration Date; Extensions; Amendments; Termination",
"--Withdrawal of Tenders" and "--Acceptance of Shares and Proration". Tenders
must be made to the Exchange Agent in order to be valid.
CONDITIONS TO THE OFFER; EXTENSIONS; AMENDMENTS; TERMINATION
Consummation of the offer is conditioned on, among other things, (i) receipt
of at least 15,000,000 validly tendered Depositary Shares (which condition may
be waived by the Trust) and (ii) tenders by a sufficient number of holders of
Depositary Shares such that there are at least 400 record or beneficial holders
of Preferred Securities to be issued in exchange for such Depositary Shares
(which condition may not be waived). See "The Offer--Conditions to the Offer"
and "--Expiration Date; Extensions; Amendments; Termination".
The Trust expressly reserves the right, in its sole discretion, subject to
applicable law, to (i) terminate the Offer, and not accept for exchange any
Depositary Shares and promptly return all Depositary Shares, upon the failure of
any of the conditions specified above, (ii) waive any condition to the Offer and
accept all Depositary Shares previously tendered pursuant to the Offer, (iii)
extend the Expiration Date of the Offer and retain all Depositary Shares
tendered pursuant to such Exchange Offer until the expiration date, subject,
however, to all withdrawal rights of holders, see "The Offer-- Withdrawal of
Tenders", (iv) amend the terms of the Offer or (v) modify the form of the
consideration to be paid pursuant to the Offer. Any amendment applicable to the
Offer will apply to all Depositary Shares tendered pursuant to the Offer. The
minimum period during which the Offer must remain open following material
changes in the terms of the Offer or the information concerning the Offer, other
than a change in the percentage of securities sought or the price, depends upon
the facts and circumstances,
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including the relative materiality of such terms or information. See "The
Offer--Conditions to the Offer" and "Expiration Date; Extensions; Amendments;
Termination".
PROCEDURES FOR TENDERING
Each Holder of Depositary Shares wishing to participate in the Offer must
(i) properly complete and sign the Letter of Transmittal or a facsimile thereof
(all references in this Prospectus to the Letter of Transmittal shall be deemed
to include a facsimile thereof) in accordance with the instructions contained
herein and in the Letter of Transmittal, together with any required signature
guarantees, and deliver the same to First Chicago Trust Company of New York as
Exchange Agent, at one of its addresses set forth on the back cover page hereof,
prior to the Expiration Date and either (a) certificates for the Depositary
Shares must be received by the Exchange Agent at such address or (b) such
Depositary Shares must be transferred pursuant to the procedures for book-entry
transfer described herein and a confirmation of such book-entry transfer must be
received by the Exchange Agent, in each case prior to the Expiration Date, or
(ii) comply with the guaranteed delivery procedures described herein.
IN ORDER TO PARTICIPATE IN THE OFFER, HOLDERS OF DEPOSITARY SHARES MUST
SUBMIT A LETTER OF TRANSMITTAL AND COMPLY WITH THE OTHER PROCEDURES FOR
TENDERING IN ACCORDANCE WITH THE INSTRUCTIONS CONTAINED HEREIN AND IN THE LETTER
OF TRANSMITTAL PRIOR TO THE EXPIRATION DATE.
LETTERS OF TRANSMITTAL, DEPOSITARY SHARES AND ANY OTHER REQUIRED DOCUMENTS
SHOULD BE SENT ONLY TO THE EXCHANGE AGENT, NOT TO HOLDINGS, THE TRUST, THE
DEALER MANAGERS OR THE INFORMATION AGENT.
SPECIAL PROCEDURE FOR BENEFICIAL OWNERS
Any beneficial owner whose Depositary Shares are registered in the name of a
broker, dealer, commercial bank, trust company or other nominee and who wishes
to tender such Depositary Shares should contact such registered Holder promptly
and instruct such registered Holder to tender on such beneficial owner's behalf.
If such beneficial owner wishes to tender on its own behalf, such owner must,
prior to completing and executing a Letter of Transmittal and delivering its
Depositary Shares, either make appropriate arrangements to register ownership of
the Depositary Shares in such owner's name or obtain a properly completed stock
power from the registered Holder. The transfer of registered ownership may take
considerable time and may not be able to be completed prior to the Expiration
Date. See "The Offer--Procedures for Tendering--Special Procedure for Beneficial
Owners".
GUARANTEED DELIVERY PROCEDURES
If a Holder desires to accept the Offer and time will not permit a Letter of
Transmittal or Depositary Shares to reach the Exchange Agent before the
Expiration Date or the procedure for book-entry transfer cannot be completed on
a timely basis, a tender may be effected in accordance with the guaranteed
delivery procedures set forth in "The Offer--Procedures for
Tendering--Guaranteed Delivery".
ACCEPTANCE OF SHARES AND PRORATION
Upon the terms and subject to the conditions of the Offer, if 49,000,000 or
fewer Depositary Shares have been validly tendered and not withdrawn prior to
the Expiration Date, the Trust will accept for exchange all such Depositary
Shares. Upon the terms and subject to the conditions of the Offer, if more than
49,000,000 Depositary Shares (or, if decreased as described herein, such lesser
number as the Trust may elect to purchase pursuant to the Offer) have been
validly tendered and not withdrawn prior to the Expiration Date, the Trust will
accept for exchange Depositary Shares from each tendering
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Holder on a pro rata basis, subject to adjustment to avoid the acceptance for
exchange of fractional shares.
If the Trust decides, in its sole discretion, to increase or decrease the
number of Depositary Shares sought in the Offer or to increase or decrease the
consideration offered to holders of Depositary Shares, and if the Offer is
scheduled to expire less than ten Business Days from and including the date that
notice of such decrease is first published, sent or given in the manner
specified in "The Offer--Terms of the Offer" and "--Expiration Date; Extensions;
Amendments; Termination", then the Offer will remain open for a minimum of ten
Business Days from and including the date of such notice.
All Depositary Shares not accepted pursuant to the Offer, including shares
not purchased because of proration, will be returned to the tendering Holders at
the Trust's expense as promptly as practicable following the Expiration Date.
DELIVERY OF PREFERRED SECURITIES
Subject to the terms and conditions of the Offer, the delivery of the
Preferred Securities to be issued pursuant to the Offer will occur as promptly
as practicable following the Expiration Date. See "The Offer--Terms of the
Offer" and "--Expiration Date; Extensions; Amendments; Termination".
If proration of tendered Depositary Shares is required, because of the
difficulty in determining the number of Depositary Shares validly tendered
(including shares tendered by the guaranteed delivery procedures described in
"The Offer--Procedures for Tendering"), the Trust does not expect that it would
be able to announce the final proration factor or to commence the exchange for
any shares of Depositary Shares pursuant to the Offer until approximately seven
Business Days after the Expiration Date. Preliminary results of the proration
will be announced by press release as promptly as practicable after the
Expiration Date. Holders of Depositary Shares may obtain such preliminary
information from the Dealer Managers or the Information Agent and may also be
able to obtain such information from their brokers.
Until the final proration factors are known, the Trust will not issue any
Preferred Securities in exchange for any Depositary Shares accepted for exchange
pursuant to the Offer or return Depositary Shares delivered to the Exchange
Agent but not tendered or return Depositary Shares tendered but not accepted for
exchange because of proration.
DESCRIPTION OF PREFERRED SECURITIES AND JUNIOR SUBORDINATED DEBENTURES
The Preferred Securities evidence preferred undivided beneficial interests
in the assets of the Trust and will have terms equivalent to the Common
Securities; provided that (i) if an Event of Default under the Declaration
occurs and is continuing, the holders of Preferred Securities will have a
priority over holders of the Common Securities with respect to payments in
respect of distributions and payments upon liquidation, redemption or otherwise
and (ii) holders of Common Securities have the exclusive right (subject to the
terms of the Declaration) to appoint, remove and replace Trustees (other than
the Special Regular Trustee) and to increase or decrease the number of Trustees,
subject to the right of holders of Preferred Securities to appoint a Special
Regular Trustee upon the occurrence of an Appointment Event. The Declaration
does not permit the issuance by the Trust of any securities or beneficial
interests in the assets of the Trust other than the Preferred Securities and the
Common Securities, the incurrence of any indebtedness for borrowed money by the
Trust or the making of any investments other than in the Junior Subordinated
Debentures. The Declaration defines an event of default with respect to the
Trust Securities (an "Event of Default") as the occurrence and continuance of an
"event of default" under the Indenture with respect to the Junior Subordinated
Debentures (an "Indenture Event of Default").
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Periodic cash distributions on each Preferred Security will be fixed at a
rate per annum of % of the stated liquidation amount of $25 per Preferred
Security. Distributions in arrears for more than one quarter will bear interest
thereon at the rate per annum of % of the stated liquidation amount of $25
per Preferred Security, compounded quarterly to the extent permitted by law.
Distributions on the Preferred Securities will be cumulative, will accrue from
the Accrual Date and, except as otherwise described herein, will be made
quarterly in arrears, on the last day of March, June, September and December of
each year, commencing on September 30, 1995, but only if and to the extent that
interest payments are made in respect of the Junior Subordinated Debentures held
by the Trust. In addition, holders of Preferred Securities will be entitled to
an additional cash distribution at the rate of 9.25% per annum of the
liquidation amount thereof from June 1, 1995 through the Expiration Date in lieu
of dividends accumulating and unpaid after June 1, 1995 on their Depositary
Shares accepted for exchange, such additional distribution to be made on
September 30, 1995 to holders of the Preferred Securities on the record date for
such distribution.
The distribution rate and the distribution and other payment dates for the
Preferred Securities will correspond to the interest rate and the interest and
other payment dates on the Junior Subordinated Debentures deposited in the Trust
as trust assets. As a result, if principal or interest is not paid on the Junior
Subordinated Debentures, including as a result of Holdings' election to extend
the interest payment period on the Junior Subordinated Debentures as described
below, the Trust will not make payments on the Trust Securities. The Junior
Subordinated Debentures provide that, so long as Holdings shall not be in
default in the payment of interest on the Junior Subordinated Debentures,
Holdings has the right under the Indenture to defer payments of interest on the
Junior Subordinated Debentures by extending the interest payment period from
time to time on the Junior Subordinated Debentures for a period not exceeding 20
consecutive quarterly interest periods (each, an "Extension Period") and, as a
consequence, quarterly distributions on the Preferred Securities would not be
made (but would continue to accrue with interest thereon at the rate of %
per annum, compounded quarterly to the extent permitted by applicable law) by
the Trust during any such Extension Period. During an Extension Period, Holdings
may not declare or pay dividends on, or redeem, purchase, acquire or make a
distribution or liquidation payment with respect to, any of its common stock or
preferred stock or make any guarantee payments with respect thereto during such
Extension Period; provided that Holdings will be permitted to pay accrued
dividends (and cash in lieu of fractional shares) upon the conversion, other
than at the option of Holdings, of any of its preferred stock, including Series
C Conversion Preferred Stock and ESOP Convertible Preferred Stock, in accordance
with the terms of such stock. Prior to the termination of any such Extension
Period, Holdings may further extend such Extension Period; provided that such
Extension Period together with all such previous and further extensions thereof
may not exceed 20 consecutive quarterly interest periods. Upon the termination
of any Extension Period and the payment of all amounts then due, Holdings may
commence a new Extension Period, subject to the above requirements. Holdings may
also prepay at any time all or any portion of the interest accrued during an
Extension Period. Consequently, there could be multiple Extension Periods of
varying lengths (up to nine Extension Periods of 20 consecutive quarterly
interest periods each or more numerous shorter Extension Periods) throughout the
term of the Junior Subordinated Debentures, provided that no Extension Period
may extend beyond the maturity of the Junior Subordinated Debentures. See "Risk
Factors", "Description of the Junior Subordinated Debentures-- Interest" and
"--Option to Extend Interest Payment Period".
Holdings shall give the Institutional Trustee notice of its selection of
such Extension Period one Business Day prior to the earlier of (i) the date the
distributions on the Preferred Securities are payable or (ii) the date the Trust
is required to give notice to the NYSE or other applicable self-regulatory
organization or to holders of the Preferred Securities of the record date or the
date such distribution is payable, but in any event not less than one Business
Day prior to such record date. The Trust shall give notice of Holdings'
selection of such Extension Period to the holders of the Preferred Securities.
See "Description of the Junior Subordinated Debentures--Option to Extend
Interest Payment Period".
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There will be deposited in the Trust as trust assets (i) Junior Subordinated
Debentures having an aggregate principal amount equal to the aggregate stated
liquidation amount of the Preferred Securities issued by the Trust in exchange
for the Depositary Shares accepted in the Offer and (ii) Junior Subordinated
Debentures having an aggregate principal amount equal to the amount of proceeds
received by the Trust from the sale of the Common Securities to Holdings. Under
the Declaration, if and to the extent Holdings does make interest payments on
the Junior Subordinated Debentures deposited in the Trust as trust assets, the
Institutional Trustee is obligated to make distributions promptly on the
Preferred Securities. The payment of distributions on the Preferred Securities
and payments on liquidation of the Trust and the redemption of Preferred
Securities, as set forth below, in each case out of moneys held by the Trust,
are guaranteed by Holdings on a subordinated basis as and to the extent set
forth under "Description of the Preferred Securities Guarantee". The Preferred
Securities Guarantee is a full and unconditional guarantee from the time of
issuance of the Preferred Securities, but the Preferred Securities Guarantee
covers distributions and other payments on the Preferred Securities only if and
to the extent that Holdings has made a payment to the Trust of interest or
principal on the Junior Subordinated Debentures deposited in the Trust as trust
assets.
The Preferred Securities and Common Securities are redeemable on a Pro Rata
Basis (as defined below) from time to time, in whole or in part, to the same
extent as the Junior Subordinated Debentures are redeemed by Holdings, at any
time on or after August 19, 1998, upon not less than 30 nor more than 60 days'
notice, at $25 per Preferred Security plus accrued and unpaid distributions
thereon to the date of redemption (the "Redemption Price"), including
distributions accrued as a result of Holdings' election to defer payments of
interest on the Junior Subordinated Debentures, payable in cash. The Preferred
Securities will be redeemed upon the maturity or earlier redemption of the
Junior Subordinated Debentures. See "Description of the Preferred
Securities--Mandatory Redemption". As used in this Prospectus the term "Pro Rata
Basis" shall mean pro rata to each holder of Trust Securities according to the
aggregate liquidation amount of the Trust Securities held by the relevant holder
in relation to the aggregate liquidation amount of all Trust Securities
outstanding unless, in relation to a payment, an Event of Default under the
Declaration has occurred and is continuing, in which case any funds available to
make such payment shall be paid first to each holder of the Preferred Securities
pro rata according to the aggregate liquidation amount of the Preferred
Securities held by the relevant holder in relation to the aggregate liquidation
amount of all Preferred Securities outstanding, and, only after satisfaction of
all amounts owed to the holders of the Preferred Securities, to each holder of
Common Securities pro rata according to the aggregate liquidation amount of the
Common Securities held by the relevant holder in relation to the aggregate
liquidation amount of all the Common Securities outstanding.
In addition, upon the occurrence and during the continuation of a Tax Event
or an Investment Company Event (each as hereinafter defined) arising from a
change in law or a change in legal interpretation or other specified
circumstances, the Trust shall, unless the Junior Subordinated Debentures are
redeemed in the limited circumstances described below and subject to certain
other limited exceptions, be dissolved, with the result that the Junior
Subordinated Debentures will be distributed to the holders of the Preferred
Securities and the Common Securities on a Pro Rata Basis, in lieu of any cash
distribution. In the case of a Tax Event, Holdings will have the right in
certain circumstances to redeem the Junior Subordinated Debentures at any time,
in which event the Trust will redeem the Trust Securities on a Pro Rata Basis to
the same extent as the Junior Subordinated Debentures are redeemed. If the
Junior Subordinated Debentures are distributed to the holders of the Preferred
Securities, Holdings will use its best efforts to have the Junior Subordinated
Debentures listed on the New York Stock Exchange or on such other exchange as
the Preferred Securities are then listed. See "Description of the Preferred
Securities--Special Event Redemption or Distribution".
The Junior Subordinated Debentures will be issued pursuant to an indenture,
to be dated as of , 1995 (as supplemented by the First Supplemental
Indenture (the "First Supplemental Indenture") to be dated as of , 1995,
the "Indenture") between Holdings and The Bank of New York,
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as trustee (the "Indenture Trustee"). See "Description of the Junior
Subordinated Debentures". The Junior Subordinated Debentures will mature on
December 31, 2044 and will bear interest at an annual rate of % from the
Accrual Date. Interest will be payable quarterly in arrears on the last day of
March, June, September and December of each year, commencing on September 30,
1995; provided that, as described above, so long as Holdings shall not be in
default in the payment of interest on the Junior Subordinated Debentures,
Holdings shall have the right to extend the interest payment period from time to
time for a period not exceeding 20 consecutive quarterly interest periods.
Holdings has no current intention of exercising its right to extend an interest
payment period. However, should Holdings determine to exercise such right in the
future, the market price of the Preferred Securities is likely to be affected.
See "Risk Factors" and "Description of the Junior Subordinated
Debentures--Option to Extend Interest Payment Period".
The Junior Subordinated Debentures will also accrue interest at the rate of
9.25% per annum of the principal amount thereof from June 1, 1995 through the
Expiration Date, payable at the time of the first interest payment on the Junior
Subordinated Debentures to holders of the Junior Subordinated Debentures on the
record date for such distribution. No extension of interest will be permitted
with respect to interest accruing from June 1, 1995 through the Expiration Date.
Holdings shall have the right to redeem the Junior Subordinated Debentures,
in whole or in part, from time to time, on or after August 19, 1998, upon not
less than 30 nor more than 60 days' notice, at a redemption price equal to 100%
of the principal amount to be redeemed, plus any accrued and unpaid interest to
the redemption date, including interest accrued as a result of Holdings'
election to defer payments of interest on the Junior Subordinated Debentures,
payable in cash. In addition, upon the occurrence of a Tax Event, Holdings will
also have the right if certain conditions are met to redeem the Junior
Subordinated Debentures at any time. If Holdings redeems the Junior Subordinated
Debentures, then the Trust will redeem the Trust Securities on a Pro Rata Basis
to the same extent as the Junior Subordinated Debentures are redeemed.
CERTAIN UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS
The exchange of Depositary Shares for Preferred Securities pursuant to the
Offer will be a taxable event. Gain or loss generally will be recognized in an
amount equal to the difference between the fair market value on the Expiration
Date of the holder's pro rata share of the Junior Subordinated Debentures
represented by the Preferred Securities received in the exchange and the
exchanging Holder's tax basis in the Depositary Shares surrendered. For this
purpose, the fair market value of the Junior Subordinated Debentures deemed
issued in exchange for Depositary Shares on the Expiration Date will equal the
fair market value of the Preferred Securities on that date. See "Taxation--
Exchange of Depositary Shares for Preferred Securities".
The Junior Subordinated Debentures will be treated as issued with "original
issue discount" for United States federal income tax purposes. Holders of
Preferred Securities will be required to include their pro rata share of
original issue discount in gross income as it accrues on the Junior Subordinated
Debentures in advance of the receipt of cash. Generally, all of a
Securityholder's taxable interest income with respect to the Junior Subordinated
Debentures will be accounted for as "original issue discount" and actual
distributions of stated interest will not be separately reported as taxable
income. See "Taxation--Accrual of Original Issue Discount and Premium" and
"--Potential Extension of Payment Period on the Junior Subordinated Debentures".
While dividends on the Series B Preferred are eligible for the dividends
received deduction for corporate holders, dividends on the Preferred Securities
are not eligible for the dividends received deduction for corporate holders.
The Preferred Securities may trade at a price that does not fully reflect
the value of accrued but unpaid interest with respect to the underlying Junior
Subordinated Debentures. A Securityholder who
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disposes of his Preferred Securities between record dates for payments of
distributions thereon will nevertheless be required to include accrued but
unpaid interest on the Junior Subordinated Debentures through the date of
disposition in income as ordinary income, and to add such amount to the adjusted
tax basis in his or her pro rata share of the underlying Junior Subordinated
Debentures deemed disposed of. Accordingly, such a Securityholder will recognize
a capital loss to the extent the selling price (which may not fully reflect the
value of accrued but unpaid interest) is less than the Securityholder's adjusted
tax basis (which will include accrued but unpaid interest). Subject to certain
limited exceptions, capital losses cannot be applied to offset ordinary income
for United States federal income tax purposes.
ACCOUNTING FOR EXCHANGE
The refinancing of the Series B Preferred with the Preferred Securities may
increase or decrease income applicable to common stockholders depending upon the
difference between the fair market value of the Series B Preferred represented
by the Depositary Shares and its liquidation price at the time of the exchange.
UNTENDERED SHARES
Holders of Depositary Shares who do not tender their Depositary Shares in
the Offer or whose Depositary Shares are not accepted for exchange will continue
to hold such Depositary Shares and will be entitled to all the rights and
preferences, and will be subject to all of the limitations, applicable thereto.
To the extent that Depositary Shares are tendered and accepted in the Offer,
the terms on which untendered Depositary Shares could subsequently be sold could
be adversely affected. See "Risk Factors--Listing and Trading of Preferred
Securities and Depositary Shares".
EXCHANGE AGENT AND INFORMATION AGENT
First Chicago Trust Company of New York has been appointed as Exchange Agent
in connection with the Offer. Questions and requests for assistance, requests
for additional copies of this Prospectus or of the Letter of Transmittal and
requests for Notices of Guaranteed Delivery should be directed to MacKenzie
Partners, Inc. which has been retained by Holdings and the Trust to act as
Information Agent for the Offer. The addresses and telephone numbers of the
Exchange Agent and the Information Agent are set forth in "The Offer--Exchange
Agent and Information Agent" and on the outside back cover of this Prospectus.
DEALER MANAGERS
Merrill Lynch & Co., Lehman Brothers, Morgan Stanley & Co. Incorporated,
PaineWebber Incorporated and Smith Barney Inc. have been retained as Dealer
Managers in connection with the Offer. For information regarding fees payable to
the Dealer Managers and Soliciting Dealers (as defined herein), see "The
Offer--Dealer Managers; Soliciting Dealers".
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RISK FACTORS
Prospective exchanging holders of Depositary Shares who plan to participate
in the Offer should carefully consider, in addition to the other information set
forth elsewhere in this Prospectus, the following:
TAX CONSEQUENCES OF THE OFFER
The exchange of Depositary Shares for Preferred Securities pursuant to the
Offer will be a taxable event. Generally, gain or loss will be recognized in an
amount equal to the difference between the fair market value on the Expiration
Date of the holder's pro rata share of the Junior Subordinated Debentures
represented by the Preferred Securities received in the exchange and the
exchanging Holder's tax basis in the Depositary Shares exchanged therefor. See
"Taxation--Exchange of Depositary Shares for Preferred Securities". All Holders
of Depositary Shares are advised to consult their tax advisors regarding the
United States federal, state, local and foreign tax consequences of the exchange
of Depositary Shares and the issuance of Preferred Securities.
While dividends with respect to the Depositary Shares are eligible for the
dividends received deduction for corporate holders, distributions on the
Preferred Securities are not eligible for the dividends received deduction for
corporate holders.
RANKING OF SUBORDINATED OBLIGATIONS UNDER PREFERRED SECURITIES GUARANTEE AND
JUNIOR SUBORDINATED DEBENTURES; DEPENDENCE ON HOLDINGS
The obligations of Holdings under the Junior Subordinated Debentures are
unsecured obligations of Holdings and will be subordinate and junior in right of
payment, to the extent set forth herein, to all Senior Obligations (as defined
herein) of Holdings, except obligations and securities made pari passu or
subordinate by their terms, but senior to all capital stock now or hereafter
issued by Holdings and to any guarantee now or hereafter entered into by
Holdings in respect of its capital stock. Holdings' obligations under the
Preferred Securities Guarantee are unsecured and will rank (i) subordinate and
junior in right of payment to all Senior Obligations of Holdings, and to the
Junior Subordinated Debentures, and (ii) senior to all capital stock now or
hereafter issued by Holdings and to any guarantee now or hereafter entered into
by Holdings in respect of its capital stock. At March 31, 1995, liabilities of
Holdings (on an unconsolidated basis) aggregated approximately $427 million.
Because Holdings is a holding company, the Junior Subordinated Debentures (and
Holdings' obligations under the Preferred Securities Guarantee) are also
effectively subordinated to all existing and future liabilities, including trade
payables, of Holdings' subsidiaries, except to the extent that Holdings is a
creditor of the subsidiaries recognized as such. Claims on Holdings'
subsidiaries by creditors other than Holdings include liabilities incurred in
the ordinary course of business. At March 31, 1995, Holdings' subsidiaries had
outstanding approximately $19.8 billion of liabilities. The terms of the
Preferred Securities, the Junior Subordinated Debentures or the Preferred
Securities Guarantee do not limit Holdings' ability to incur additional
indebtedness, including indebtedness that ranks senior to or pari passu with the
Junior Subordinated Debentures and the Preferred Securities Guarantee, or the
ability of its subsidiaries to incur additional indebtedness. See "Description
of the Preferred Securities Guarantee--Status of the Preferred Securities
Guarantee" and "Description of the Junior Subordinated
Debentures--Subordination".
The Trust's ability to make distributions and other payments on the
Preferred Securities is solely dependent upon Holdings making interest and other
payments on the Junior Subordinated Debentures deposited as trust assets as and
when required. If Holdings were not to make distributions or other payments on
the Junior Subordinated Debentures for any reason, including as a result of
Holdings' election to defer the payment of interest on the Junior Subordinated
Debentures by extending the interest period on the Junior Subordinated
Debentures, the Trust will not make payments on the Trust Securities. In such an
event, holders of the Preferred Securities would not be able to rely on the
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Preferred Securities Guarantee since distributions and other payments on the
Preferred Securities are subject to such Guarantee only if and to the extent
that Holdings has made a payment to the Trust of interest or principal on the
Junior Subordinated Debentures deposited in the Trust as trust assets. Instead,
holders of Preferred Securities would rely on the enforcement by the
Institutional Trustee of its rights against Holdings pursuant to the terms of
the Indenture and may vote to appoint a Special Regular Trustee. However, if the
Trust's failure to make distributions on the Preferred Securities is a
consequence of Holdings' exercise of its right to extend the interest payment
period for the Junior Subordinated Debentures, the Institutional Trustee will
have no right to enforce the payment of distributions on the Preferred
Securities until an Event of Default under the Declaration shall have occurred;
provided that to the extent the extension is for more than six regularly
scheduled dividend periods, holders may vote to appoint a Special Regular
Trustee.
The Declaration provides that Holdings shall pay for all debts and
obligations (other than with respect to the Trust Securities) and all costs and
expenses of the Trust, including any taxes and all costs and expenses with
respect thereto, to which the Trust may become subject, except for United States
withholding taxes. No assurance can be given that Holdings will have sufficient
resources to enable it to pay such debts, obligations, costs and expenses on
behalf of the Trust.
OPTION TO EXTEND INTEREST PAYMENT PERIOD; TAX IMPACT OF EXTENSION
So long as Holdings shall not be in default in the payment of interest on
the Junior Subordinated Debentures, Holdings has the right under the Indenture
to defer payments of interest on the Junior Subordinated Debentures by extending
the interest payment period from time to time on the Junior Subordinated
Debentures for an Extension Period not exceeding 20 consecutive quarterly
interest periods, during which no interest shall be due and payable, provided
that no Extension Period may extend beyond the maturity of the Junior
Subordinated Debentures. In such an event, quarterly distributions on the
Preferred Securities would not be made (but would continue to accrue with
interest thereon at the rate of % per annum, compounded quarterly to the
extent permitted by applicable law) by the Trust during any such Extension
Period. If Holdings exercises the right to extend an interest payment period,
Holdings may not during such Extension Period declare or pay dividends on, or
redeem, purchase, acquire or make a distribution or liquidation payment with
respect to, any of its common stock or preferred stock; provided that Holdings
will be permitted to pay accrued dividends (and cash in lieu of fractional
shares) upon the conversion of any of its Series C Conversion Preferred Stock
and ESOP Convertible Preferred Stock.
Prior to the termination of any Extension Period, Holdings may further
extend such Extension Period; provided that such Extension Period together with
all such previous and further extensions thereof may not exceed 20 consecutive
quarterly interest periods. Upon the termination of any Extension Period and the
payment of all amounts then due, Holdings may commence a new Extension Period,
subject to the above requirements. Holdings may also prepay at any time all or
any portion of the interest accrued during an Extension Period. Consequently,
there could be multiple Extension Periods of varying lengths (up to nine
Extension Periods of 20 consecutive quarterly interest periods each or more
numerous shorter Extension Periods) throughout the term of the Junior
Subordinated Debentures. See "Description of the Preferred
Securities--Distributions" and "Description of the Junior Subordinated
Debentures--Option to Extend Interest Payment Period".
Because Holdings has the right to extend the interest payment period up to
20 consecutive quarterly interest periods on various occasions, the Junior
Subordinated Debentures will be treated as issued with "original issue discount"
for United States federal income tax purposes. As a result, holders of Preferred
Securities will be required to include their pro rata share of original issue
discount in gross income as it accrues for United States federal income tax
purposes in advance of the receipt of cash. Generally, all of a Securityholder's
taxable interest income with respect to the Junior Subordinated Debentures will
be accounted for as "original issue discount" and actual distributions of stated
interest
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will not be separately reported as taxable income. See "Taxation--Accrual of
Original Issue Discount and Premium" and "--Potential Extension of Payment
Period on the Junior Subordinated Debentures".
POTENTIAL MARKET VOLATILITY DURING EXTENSION PERIOD
As described above, Holdings has the right to extend an interest payment
period on the Junior Subordinated Debentures from time to time for periods not
exceeding 20 consecutive quarterly interest periods. If Holdings determines to
extend an interest payment period, or if Holdings thereafter extends an
Extension Period or prepays interest accrued during an Extension Period as
described above, the market price of the Preferred Securities is likely to be
adversely affected. In addition, as a result of such rights, the market price of
the Preferred Securities (which represent an undivided interest in Junior
Subordinated Debentures) may be more volatile than other securities on which
original issue discount accrues that do not have such rights. A holder that
disposes of its Preferred Securities during an Extension Period, therefore, may
not receive the same return on its investment as a holder that continues to hold
its Preferred Securities. See "Description of the Junior Subordinated
Debentures-- Option to Extend Interest Payment Period".
LISTING AND TRADING OF PREFERRED SECURITIES AND DEPOSITARY SHARES
The Preferred Securities constitute a new issue of securities of the Trust
with no established trading market. While application will be made to list the
Preferred Securities on the NYSE, there can be no assurance that an active
market for the Preferred Securities will develop or be sustained in the future
on such exchange. Although the Dealer Managers have indicated to Holdings and
the Trust that they intend to make a market in the Preferred Securities
following the Expiration Date, as permitted by applicable laws and regulations
prior to the commencement of trading on the NYSE, they are not obligated to do
so and may discontinue any such market-making at any time without notice.
Accordingly, no assurance can be given as to the liquidity of, or trading
markets for, the Preferred Securities. In order to satisfy the NYSE listing
requirements, acceptance of Depositary Shares validly tendered in the Offer is
subject to the condition that as of the Expiration Date there be at least 400
record or beneficial holders of Preferred Securities to be issued in exchange
for such Depositary Shares, which condition may not be waived by Holdings or the
Trust.
To the extent Depositary Shares are tendered and accepted in the Offer, the
liquidity and trading market for the Depositary Shares to be outstanding
following the Offer, and the terms upon which such Depositary Shares could be
sold, could be adversely affected. In addition, if the Offer is substantially
subscribed or oversubscribed, there would be a significant risk that round lot
holdings of Depositary Shares outstanding following the Offer would be limited.
See "Listing and Trading of Preferred Securities and Depositary Shares".
The Offer is for up to 49,000,000 Depositary Shares (or 98% of the
50,000,000 Depositary Shares outstanding), rather than for all the outstanding
Depositary Shares, to reduce the risk that the Depositary Shares would be
subject to delisting following consummation of the Offer.
Under the rules of the NYSE, preferred securities such as the Depositary
Shares are subject to delisting if (i) the aggregate value of publicly-held
shares is less than $2 million and (ii) the number of publicly-held shares is
less than 100,000. Since at least 1,000,000 Depositary Shares will remain
outstanding following consummation of the Offer, the number of outstanding
Depositary Shares will exceed the delisting criteria set forth in clause (ii)
above. In addition, based on the market price of the Depositary Shares on the
NYSE ($24.875 on June 19, 1995, the closing sales price of the Depositary Shares
on the NYSE on the last full trading day immediately prior to Holdings' first
public announcement of the Offer, and $ on , 1995), the Company
believes that the aggregate value of the minimum number (1,000,000) of
Depositary Shares which will be outstanding following consummation
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of the Offer should exceed the delisting criteria set forth in clause (i) above.
See "Price Range of Depositary Shares". If less than 49,000,000 Depositary
Shares are validly tendered, then the number of Depositary Shares remaining
outstanding, and the market value thereof, will be even greater.
SPECIAL EVENT REDEMPTION OR DISTRIBUTION
Upon the occurrence and during the continuation of a Tax Event or Investment
Company Event (each as defined herein), which may occur at any time, the Trust
shall, unless the Junior Subordinated Debentures are redeemed in the limited
circumstances described below, be dissolved, with the result that, in the manner
described in "Description of the Preferred Securities--Liquidation Distribution
Upon Dissolution", Junior Subordinated Debentures having an aggregate principal
amount equal to the aggregate stated liquidation amount of, and bearing accrued
and unpaid interest equal to accrued and unpaid distributions on, the Preferred
Securities and Common Securities would be distributed on a Pro Rata Basis to the
holders of the Preferred Securities and Common Securities in liquidation of the
Trust. In the case of a Tax Event, in certain circumstances, Holdings shall have
the right to redeem at any time the Junior Subordinated Debentures, in whole or
in part, in which event the Trust will redeem Preferred Securities and Common
Securities on a Pro Rata Basis to the same extent as the Junior Subordinated
Debentures are redeemed. There can be no assurance as to the market prices for
Preferred Securities or the Junior Subordinated Debentures which may be
distributed in exchange for Preferred Securities if a dissolution and
liquidation of the Trust were to occur. Accordingly, the Junior Subordinated
Debentures which the investor may receive on dissolution and liquidation of the
Trust, may trade at a discount to the price of the Depositary Shares exchanged.
See "Description of the Preferred Securities--Special Event Redemption or
Distribution" and "Description of the Junior Subordinated Debentures-- General".
Under current United States federal income tax law, a distribution of the
Junior Subordinated Debentures upon a Tax Event or Investment Company Event
would not be a taxable event to holders of the Preferred Securities. See
"Taxation--Distribution of Junior Subordinated Debentures to Holders of
Preferred Securities".
LIMITED VOTING RIGHTS
Holders of Preferred Securities will have limited voting rights and, subject
to the rights of holders of Preferred Securities to appoint a Special Regular
Trustee upon the occurrence of an Appointment Event, will not be able to
appoint, remove or replace, or to increase or decrease the number of, Trustees,
which rights are vested exclusively in the Common Securities.
EXPOSURE TO TOBACCO-RELATED LITIGATION
Various legal actions, proceedings and claims are pending or may be
instituted against RJRT or its affiliates or indemnitees, including those
claiming that lung cancer and other diseases have resulted from the use of or
exposure to RJRT's tobacco products. The plaintiffs in these actions seek
recovery on a variety of legal theories, including strict liability in tort,
design defect, negligence, breach of warranty, failure to warn, fraud,
misrepresentation, unfair trade practices, conspiracy, unjust enrichment,
indemnity and common law public nuisance. Seven of these cases purport to be
class actions brought on behalf of thousands of individuals. Purported classes
include individuals claiming to be addicted to cigarettes, flight attendants
alleging personal injury from exposure to environmental tobacco smoke ("ETS") in
their workplace and, in one case, parents claiming that an RJRT advertising
campaign constitutes an unfair trade practice. In two such cases, Florida state
court judges granted plaintiffs' motions to certify a class. Defendants have
appealed both of these rulings to the Florida District Court of Appeals. In
another such case, a United States District Court judge has granted plaintiffs'
motion to certify a class, and defendants are seeking appellate review. In
addition, four states, including Florida, have sued RJRT (and in two cases,
RJRN) and other industry members on various theories to recoup expenses
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incurred by the states in the treatment of diseases purportedly associated with
cigarette smoking and to enjoin certain marketing practices. Litigation is
subject to many uncertainties, and it is possible that some of the
tobacco-related legal actions, proceedings or claims could be decided against
RJRT or its affiliates or indemnitees. Determinations of liability or adverse
rulings against other cigarette manufacturers that are defendants in similar
actions, even if such rulings are not final, could adversely affect the
litigation against RJRT or its affiliates or indemnitees and increase the number
of such claims. Although it is impossible to predict the outcome of such events
or their effect on RJRT, a significant increase in litigation activities could
have an adverse effect on RJRT. RJRT believes that it has a number of valid
defenses to any such actions, and intends to defend vigorously all such actions.
Holdings believes that the ultimate outcome of all pending tobacco litigation
matters should not have a material adverse effect on the financial position of
RJRN; however, it is possible that the results of operations or cash flows of
RJRN in particular quarterly or annual periods or the financial condition of
RJRN could be materially affected by the ultimate outcome of certain pending
litigation matters.
For additional information on legislation and litigation relating to the
cigarette industry and RJRT, see the Holdings 10-K under
"Business--Tobacco--Legislation and Other Matters Affecting the Cigarette
Industry" and "--Litigation Affecting the Cigarette Industry" and Holdings 10-Q
under Part II. Item 1. "Legal Proceedings", Part I. Item 1 "Note 7 to the
Consolidated Condensed Financial Statements" and Part I. Item 2 "Management's
Discussion and Analysis of Financial Condition and Results of
Operations--Tobacco" incorporated herein by reference.
LEVERAGE AND DEBT SERVICE
Holdings, together with its subsidiaries, had, at March 31, 1995, a ratio of
consolidated total debt to total stockholders' equity of .90 to 1.
Although Holdings has significantly reduced its consolidated indebtedness
and improved its consolidated debt-to-equity ratios, the indebtedness and
debt-to-equity ratio of Holdings and its subsidiaries continue to have the
effect, generally, of restricting the flexibility of Holdings and its
subsidiaries in responding to changing business and economic conditions insofar
as they affect the financial condition and financing requirements of Holdings
and its subsidiaries. Moreover, the New Credit Agreements (as defined herein)
and the terms governing certain other indebtedness (including indebtedness of
its subsidiaries) impose significant operating and financial restrictions on
Holdings and its subsidiaries. These restrictions limit the ability of Holdings
and its subsidiaries to incur indebtedness, pay dividends, engage in
transactions with stockholders and affiliates, create liens, sell or dispose of
certain assets and certain subsidiaries' stock and engage in certain mergers or
consolidations.
HOLDING COMPANY STRUCTURE
Holdings' cash flow and consequent ability to meet its obligations under its
indebtedness, including the Junior Subordinated Debentures, are substantially
dependent upon the earnings and cash flow available after debt service of RJRN
and the availability of such earnings and cash flows to Holdings by way of
dividends, distributions, loans and other advances.
The Board of Directors of Holdings has adopted a policy stating that
Holdings will limit, until December 31, 1998, the aggregate amount of cash
dividends on its capital stock. Under this policy, during that period, Holdings
will not pay any extraordinary cash dividends and will limit the aggregate
amount of its cash dividends, cash distributions and repurchases for cash of
capital stock and subordinated debt to an amount equal to the sum of $500
million plus (i) 65% of Holdings' cumulative consolidated net income before
extraordinary gains or losses and restructuring charges subsequent to December
31, 1994 and (ii) net cash proceeds of up to $250 million in any year from the
sale of capital stock of Holdings or its subsidiaries (other than proceeds from
the offering of Nabisco Holdings common stock) to the extent used to repay,
purchase or redeem debt or preferred stock.
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The Board of Directors of Holdings has also adopted an additional policy
providing that Holdings will not declare a dividend or distribution to its
stockholders of the shares of capital stock of a subsidiary before December 31,
1996. Holdings has also adopted a policy setting forth its intention not to make
such a distribution of the shares of capital stock of a subsidiary prior to
December 31, 1998 if that distribution would cause the ratings of the senior
indebtedness of RJRN to be reduced from investment grade to non-investment grade
or if, after giving effect to such distribution, any publicly-held senior
indebtedness of the distributed company would not be rated investment grade.
Additional policies provide that an amount equal to the net cash proceeds from
any issuance and sale of equity by Holdings or from any sale outside the
ordinary course of business of material assets owned or used by subsidiaries in
the tobacco business, in each case before December 31, 1998, will be used either
to repay, purchase or redeem consolidated indebtedness or to acquire properties,
assets or businesses to be used in existing or new lines of business and that an
amount equal to the net cash proceeds of any secondary sale of shares of Nabisco
Holdings before December 31, 1998 will be used to repay, purchase or redeem
consolidated debt. No assurance can be given that Holdings will issue or sell
any equity or any material assets outside the ordinary course of business.
Holdings has indicated that, under normal circumstances, it does not plan to
issue additional equity securities for purposes of balance sheet improvements
other than the transactions contemplated herein.
21
<PAGE>
COMPARISON OF PREFERRED SECURITIES AND DEPOSITARY SHARES
The following is a brief summary of certain terms of the Preferred
Securities and the Depositary Shares. For a more complete description of the
Preferred Securities, see "Description of the Preferred Securities". For a
complete description of the Junior Subordinated Debentures which will be
deposited in the Trust as trust assets and will represent the sole source for
the payment of distributions and other payments on the Preferred Securities, see
"Description of the Junior Subordinated Debentures".
<TABLE><CAPTION>
PREFERRED SECURITIES DEPOSITARY SHARES
---------------------------------- ----------------------------------
<S> <C> <C>
Issuer The Trust. Payment of Holdings.
distributions and on liquidation
or redemption is guaranteed on a
subordinated basis, as and to the
extent described herein, by
Holdings.
Distribution/Dividend
Rate % per annum distribution payable 9.25% per annum dividend payable
quarterly in arrears on the last on the 1st business day of March,
day of March, June, September and June, September and December of
December of each year, commencing each year, out of funds legally
September 30, 1995, from and available therefor, when, as and
including the Accrual Date, but if declared by Holdings' Board of
only if, and to the extent that, Directors. Dividends are
interest payments are made in cumulative. Accrued but unpaid
respect of the Junior Subordinated dividends do not bear interest.
Debentures held by the Trust. Dividends accrue whether or not
During any Extension Period on the Holdings has earnings, whether or
Junior Subordinated Debentures, not there are funds legally
distribution payments on the available for the payment of such
Preferred Securities will not be dividends and whether or not such
made but would continue to accrue, dividends are declared.
and, in the case of distributions
in arrears for more than one
quarter, would bear interest at
the rate of % per annum,
compounded quarterly to the extent
permitted by applicable law.
Maturity/Mandatory and
Optional Redemption The Preferred Securities will be No maturity or mandatory
redeemed upon the maturity or redemption. The Depositary Shares
earlier redemption of the Junior are redeemable at the option of
Subordinated Debentures, at a Holdings on and after August 19,
redemption price equal to 100% of 1998, in whole or in part, at a
the liquidation amount of the redemption price equivalent to $25
Preferred Securities to be per Depositary Share to be
redeemed, plus accrued and unpaid redeemed, plus accrued and unpaid
distributions, if any, to the dividends thereon, to the
redemption date, including redemption date.
distributions accrued as a result
of Holdings' election to defer
payments of interest on the Junior
Subordinated Debentures. The
Junior Subordinated Debentures are
redeemable at the option of
Holdings, in whole or in part, on
or after August 19, 1998, at a
redemption price equivalent to $25
per Junior Subordinated Debenture
to be redeemed, plus accrued and
unpaid interest thereon, to the
redemption date. In the event that
the Junior Subordinated Debentures
are redeemed, the proceeds thereof
will be promptly applied to redeem
the Preferred Securities and the
Common Securities. The Junior
Subordinated Debentures have a
final maturity of December 31,
2044. See "Description
</TABLE>
22
<PAGE>
<TABLE>
<CAPTION>
PREFERRED SECURITIES DEPOSITARY SHARES
---------------------------------- ----------------------------------
<S> <C> <C>
of the Preferred
Securities--Special Event
Redemption or Distribution" and
"--Mandatory Redemption".
Subordination Subordinated to claims of Subordinated to claims of
creditors of the Trust, if any. creditors of Holdings, including
The Preferred Securities and the the Junior Subordinated
Common Securities will have Debentures, and effectively
equivalent terms; provided that subordinated to all obligations of
(i) if an Event of Default under Holdings' subsidiaries, but senior
the Declaration occurs and is to the common stock of Holdings
continuing, the holders of and pari passu with all other
Preferred Securities will have a outstanding series of preferred
priority over holders of the stock of Holdings.
Common Securities with respect to
payments in respect of
distributions and payments upon
liquidation, redemption or
otherwise and (ii) holders of
Common Securities have the
exclusive right (subject to the
terms of the Declaration) to
appoint, remove or replace
Trustees and to increase or
decrease the number of Trustees,
subject to the right of holders of
Preferred Securities to appoint a
Special Regular Trustee upon the
occurrence of an Appointment
Event.
The Trust is not permitted to
incur any indebtedness for
borrowed money. The Declaration
provides that Holdings shall pay
for all debts and obligations
(other than with respect to the
Trust Securities) and all costs
and expenses of the Trust,
including any income taxes, duties
and other governmental charges,
and all costs and expenses with
respect thereto, to which the
Trust may become subject, except
for United States withholding
taxes.
The Junior Subordinated Debentures
will rank subordinate and junior
to all Senior Obligations of
Holdings, except obligations and
securities made pari passu or
subordinate by their terms, and
will be effectively subordinated
to all obligations of Holdings'
subsidiaries, and senior to all
capital stock now or hereafter
issued by Holdings and to any
guarantee now or hereafter entered
into by Holdings in respect of any
of its capital stock (including
the Depositary Shares). Holdings'
obligations under the Preferred
Securities Guarantee will rank
subordinate and junior to all
Senior Obligations of Holdings,
except obligations and securities
made pari passu or subordinate by
their terms, and to the Junior
Subordinated Debentures, and will
be effectively subordinated to all
obligations of Holdings'
subsidiaries, and senior to all
capital stock now or hereafter
issued by Holdings and to any
guarantee now or hereafter entered
into by Holdings in respect of any
of its capital stock.
Listing Application will be made to list The Depositary Shares are listed
the Preferred Securities on the on the NYSE.
NYSE. In
</TABLE>
23
<PAGE>
<TABLE>
<CAPTION>
PREFERRED SECURITIES DEPOSITARY SHARES
---------------------------------- ----------------------------------
<S> <C> <C>
order to satisfy the NYSE listing
requirements, acceptance of
Depositary Shares validly tendered
in the Offer is subject to the
condition that as of the
Expiration Date there be at least
400 record or beneficial holders
of Preferred Securities to be
issued in exchange for such
Depositary Shares, which condition
may not be waived.
Dividends Received
Deduction Distributions on the Preferred Dividends are eligible for the
Securities are not eligible for the dividends received deduction for
dividends received deduction for corporate holders.
corporate holders.
Voting Rights/
Enforcement Holders of Preferred Securities If dividends shall be in arrears
have no voting rights other than in an aggregate amount equivalent
as provided under the Business to six quarterly dividend periods,
Trust Act or the Trust Indenture the Holders have the right
Act unless either (i) (together with other classes of
distributions on the Preferred preferred stock ranking on a
Securities shall be in arrears for parity with the Series B Preferred
six consecutive regularly either as to dividends or on the
scheduled quarterly distribution distribution of assets upon
periods; or (ii) an Event of liquidation) to elect two
Default under the Declaration directors.
occurs and is continuing with
respect to the Junior Subordinated
Debentures, in which case holders
have the right to appoint a
Special Regular Trustee. The
Institutional Trustee has the
power to exercise all rights under
the Indenture with respect to the
Junior Subordinated Debentures and
is also authorized to enforce the
Preferred Securities Guarantee on
behalf of holders of the Preferred
Securities. If the Trust's failure
to make distributions is a
consequence of Holdings' exercise
of its right to extend the
interest payment period for the
Junior Subordinated Debentures as
described under
"Distribution/Dividend Rate", the
Institutional Trustee will have no
right to enforce the payment of
distributions until an Event of
Default under the Declaration
shall have occurred. The holders
of at least a majority in
liquidation amount of the
Preferred Securities will have the
right to direct the Institutional
Trustee with respect to certain
matters under the Declaration and
the Preferred Securities
Guarantee. If the Institutional
Trustee fails to enforce its
rights under the Indenture or
fails to enforce the Preferred
Securities Guarantee, any holder
of Preferred Securities may, after
a period of 90 days has elapsed
from such holder's written request
to the Institutional Trustee to
enforce such rights or the
Preferred Securities Guarantee,
institute a legal proceeding
against Holdings to enforce such
rights or the Preferred Securities
Guarantee, as the case may be.
</TABLE>
24
<PAGE>
RJR NABISCO HOLDINGS CORP.
The operating subsidiaries of Holdings owned through RJRN, comprise one of
the largest tobacco and food companies in the world. In the United States, the
tobacco business is conducted by RJRT, the second largest manufacturer of
cigarettes, and the packaged foods business is conducted by Nabisco Holdings
through its wholly-owned subsidiary, Nabisco, the largest manufacturer and
marketer of cookies and crackers. RJRN owns approximately 80.5% of the economic
interest and approximately 97.6% of the voting power of Nabisco Holdings.
Tobacco operations outside the United States are conducted by Tobacco
International and packaged food operations outside the United States are
conducted by Nabisco International and Nabisco Ltd., subsidiaries of Nabisco.
RJRT's and Tobacco International's tobacco products are sold around the world
under a variety of brand names. Food products are sold in the United States,
Canada, Latin America and certain other international markets.
TOBACCO
RJRT's largest selling cigarette brands in the United States include
WINSTON, DORAL, CAMEL, SALEM, VANTAGE and MONARCH. RJRT's other cigarette
brands, including NOW, MORE, BEST VALUE, STERLING, MAGNA and CENTURY, are
marketed to meet a variety of smoker preferences. All RJRT brands are marketed
in a variety of styles. Tobacco International operates in over 160 markets
around the world and is the second largest of two international cigarette
producers that have significant positions in the American Blend segment of the
international tobacco market.
FOOD
Nabisco's domestic operations represent one of the largest packaged food
businesses in the world. Through its domestic divisions, Nabisco manufactures
and markets cookies, crackers, snack foods, hard and bite-size candy, gum, nuts,
hot cereals, margarine, pet foods, dry-mix dessert products and other grocery
products under established and well-known trademarks, including OREO, CHIPS
AHOY!, NEWTONS, SNACKWELL'S, RITZ, PREMIUM, LIFE SAVERS, PLANTERS, A.1, GREY
POUPON, MILK-BONE, CREAM OF WHEAT, FLEISCHMANN'S and BLUE BONNET. Nabisco
International is also a leading producer of biscuits, baking powder, powdered
desserts, industrial yeasts and processed milk products in many of the 17 Latin
American countries in which it has operations. Nabisco Ltd. conducts Nabisco's
Canadian operations through a biscuit division and a grocery division. Excluding
private label brands, the biscuit division produced nine of the top ten cookies
and nine of the top ten crackers in Canada in 1994.
RECENT DEVELOPMENTS
On April 28, 1995, Holdings and RJRN entered into (a) a new $2.75 billion
three year revolving credit agreement with various financial institutions and
(b) a new $750 million 364 day credit agreement to support RJRN commercial paper
(collectively, the "New Credit Agreements"). Among other things, the New Credit
Agreements were designed to remove restrictions which limit the ability of
Nabisco to incur debt and to allow RJRN to reduce the aggregate amount of
commitments under its existing credit agreements (the "Old Credit Agreements")
from $6 billion to $3.5 billion.
On April 28, 1995, Nabisco Holdings and Nabisco entered into a credit
agreement (the "1995 Nabisco Credit Agreement") with various financial
institutions to replace the credit agreement (the "1994 Nabisco Credit
Agreement") dated December 6, 1994 between Nabisco and various other financial
institutions. Among other things, the 1995 Nabisco Credit Agreement was designed
to permit the prepayment of intercompany debt and the issuance of indebtedness
represented by the New Notes, to increase Nabisco's committed facility from $1.5
billion to $3.5 billion and to extend its term from 364 days to five years.
25
<PAGE>
On June 5, 1995 (the "Exchange Date"), RJRN and Nabisco consummated offers
to exchange notes and debentures (the "New Notes") of Nabisco for the same
amount of notes and debentures (the "Old Notes") issued by RJRN (the "Exchange
Offers") and solicitations of consents (the "Consent Solicitations") to certain
modifications of existing indentures from holders of the Old Notes. Nabisco
issued approximately $1.8 billion principal amount of New Notes in exchange for
a corresponding reduction in the amount of intercompany notes from Nabisco to
RJRN. Nabisco then borrowed approximately $2.5 billion under the 1995 Nabisco
Credit Agreement to (a) repay or purchase an additional $2.1 billion of
intercompany notes of Nabisco and its subsidiaries; (b) repay the approximately
$220 million of outstanding borrowings under the 1994 Nabisco Credit Agreement;
and (c) pay the approximately $90 million balance of a note and a $78 million
dividend to Nabisco Holdings. Nabisco Holdings used these payments to satisfy
the balance of a $168 million intercompany note to RJRN in full.
On June 5, 1995, RJRN applied the approximately $2.3 billion that it
received from Nabisco and Nabisco Holdings in repayment of the intercompany
notes to repay a portion of its borrowings under the Old Credit Agreements. RJRN
used an additional approximately $330 million of borrrowings under the New
Credit Agreements to repay the balance of its obligations under the Old Credit
Agreements and to pay certain expenses associated with the Exchange Offers, the
Consent Solicitations and the related transactions.
26
<PAGE>
RJR NABISCO HOLDINGS CAPITAL TRUST I
The Trust is a statutory business trust that was formed under the Business
Trust Act on June 19, 1995 pursuant to a declaration of trust dated June 19,
1995 among the Trustees and Holdings and the filing of a certificate of trust
with the Secretary of State of Delaware. Such declaration of trust will be
amended and restated in its entirety as of the date the Trust accepts Depositary
Shares in the Offer (see "The Offer--Terms of the Offer") substantially in the
form filed as an exhibit to the Registration Statement of which this Prospectus
forms a part. The Declaration is qualified under the Trust Indenture Act. Upon
issuance of the Preferred Securities, the holders thereof will own all of the
issued and outstanding Preferred Securities. Holdings has agreed to acquire
Common Securities in an amount equal to at least 3% of the total capital of the
Trust and will own, directly or indirectly, all of the issued and outstanding
Common Securities. The Preferred Securities and the Common Securities will have
equivalent terms; provided that (i) if an Event of Default under the Declaration
occurs and is continuing, the holders of Preferred Securities will have a
priority over holders of the Common Securities with respect to payments in
respect of distributions and payments upon liquidation, redemption or otherwise
and (ii) holders of Common Securities have the exclusive right (subject to the
terms of the Declaration) to appoint, remove or replace Trustees (other than the
Special Regular Trustee) and to increase or decrease the number of Trustees,
subject to the right of holders of Preferred Securities to appoint a Special
Regular Trustee upon the occurrence of an Appointment Event.
The number of Trustees of the Trust shall initially be five. Three of the
Trustees will be the Regular Trustees. The fourth trustee is The Bank of New
York, which will act as the indenture trustee for purposes of the Trust
Indenture Act. The fifth trustee is The Bank of New York (Delaware) which will
serve as the Delaware Trustee. Pursuant to the Declaration, the Institutional
Trustee will have the power to exercise all rights, powers and privileges under
the Indenture with respect to the Junior Subordinated Debentures. The
Institutional Trustee will promptly make distributions to the holders of the
Trust Securities, out of any funds in the Trust. The Preferred Securities
Guarantee will be separately qualified under the Trust Indenture Act and will be
held by The Bank of New York, acting in its separate capacity as indenture
trustee with respect to the Preferred Securities Guarantee for the benefit of
the holders of the Preferred Securities.
The Trust exists for the purpose of (a) issuing (i) its Preferred Securities
in exchange for Depositary Shares validly tendered in the Offer and delivering
such Depositary Shares to Holdings in consideration of the deposit by Holdings
of Junior Subordinated Debentures having an aggregate stated principal amount
equal to the aggregate stated liquidation amount of such Preferred Securities in
the Trust as trust assets, and (ii) its Common Securities to Holdings in
exchange for cash and investing the proceeds thereof in an equivalent amount of
Junior Subordinated Debentures and (b) engaging in such other activities as are
necessary or incidental thereto. The rights of the holders of the Preferred
Securities, including economic rights, rights to information and voting rights,
are set forth in the Declaration, the Business Trust Act and the Trust Indenture
Act.
Under the Declaration, the Trust shall not, and the Trustees (including the
Institutional Trustee) shall cause the Trust not to, engage in any activity
other than in connection with the purposes of the Trust or other than as
required or authorized by the Declaration. In particular, the Trust shall not
and the Trustees (including the Institutional Trustee) shall not (a) invest any
proceeds received by the Trust from holding the Junior Subordinated Debentures
but shall promptly distribute all such proceeds to holders of Trust Securities
pursuant to the terms of the Declaration and of the Trust Securities; (b)
acquire any assets other than as expressly provided in the Declaration; (c)
possess Trust property for other than a Trust purpose; (d) make any investments,
other than investments represented by the Junior Subordinated Debentures; (e)
possess any power or otherwise act in such a way as to vary the Trust assets or
the terms of the Trust Securities in any way whatsoever; (f) issue any
securities or other evidences of beneficial ownership of, or beneficial
interests in, the Trust other than the Trust Securities; (g) incur any
indebtedness for borrowed money or (h)(i) direct the time, method and place of
exercising
27
<PAGE>
any trust or power conferred upon the Indenture Trustee with respect to the
Junior Subordinated Debentures or the Institutional Trustee with respect to the
Preferred Securities, (ii) waive any past default that is waivable under the
Indenture or the Declaration, (iii) exercise any right to rescind or annul any
declaration that the principal of all of the Junior Subordinated Debentures
shall be due and payable or (iv) consent to any amendment, modification or
termination of the Indenture or the Junior Subordinated Debentures or the
Declaration, in each case where such consent shall be required, unless in the
case of this clause (h) the Institutional Trustee shall have received an
unqualified opinion of nationally recognized independent tax counsel recognized
as expert in such matters to the effect that such action will not cause the
Trust to be classified for United States federal income tax purposes as an
association taxable as a corporation or a partnership and that the Trust will
continue to be classified as a grantor trust for United States federal income
tax purposes.
The books and records of the Trust will be maintained at the principal
office of the Trust and will be open for inspection by a holder of Preferred
Securities or the duly authorized representative of such holder for any purpose
reasonably related to its interest in the Trust during normal business hours.
Except as provided below or under the Business Trust Act and the Trust
Indenture Act, holders of Preferred Securities will have no voting rights. If
(i) distributions on the Preferred Securities are in arrears for six consecutive
regularly scheduled quarterly distribution periods or (ii) an Event of Default
under the Declaration occurs and is continuing, holders of Preferred Securities
shall have the right to vote, as a single class, for the appointment of a
Special Regular Trustee who need not be an employee or officer of or otherwise
affiliated with Holdings. The Special Regular Trustee shall have the same
rights, powers and privileges under the Declaration as a Regular Trustee. See
"Description of the Preferred Securities--Voting Rights".
The Institutional Trustee, for the benefit of the holders of the Trust
Securities, is authorized under the Declaration to exercise all rights under the
Indenture with respect to the Junior Subordinated Debentures and to enforce
Holdings' obligations under the Junior Subordinated Debentures upon the
occurrence of an Indenture Event of Default. The Institutional Trustee shall
also be authorized to enforce the rights of holders of Preferred Securities
under the Preferred Securities Guarantee. If the Trust's failure to make
distributions on the Preferred Securities is a consequence of Holdings' exercise
of its right to extend the interest payment period for the Junior Subordinated
Debentures, the Institutional Trustee will have no right to enforce the payment
of distributions on the Preferred Securities until an Event of Default shall
have occurred. Holders of at least a majority in liquidation amount of the
Preferred Securities will have the right to direct the Institutional Trustee
with respect to certain matters under the Declaration and the Preferred
Securities Guarantee. If the Institutional Trustee fails to enforce its rights
under the Indenture or fails to enforce the Preferred Securities Guarantee, any
holder of Preferred Securities may, after a period of 90 days has elapsed from
such holder's written request to the Institutional Trustee to enforce such
rights or the Preferred Securities Guarantee, institute a legal proceeding
against Holdings to enforce such rights or the Preferred Securities Guarantee,
as the case may be. See "Description of the Preferred Securities--Voting
Rights".
If an Indenture Event of Default occurs and is continuing with respect to
Junior Subordinated Debentures, an Event of Default under the Declaration will
occur and be continuing with respect to the Trust Securities. In such event, the
Declaration provides that the holders of Common Securities will be deemed to
have waived any such Event of Default with respect to the Common Securities
until all Events of Default with respect to the Preferred Securities have been
cured or waived. Until all such Events of Default with respect to the Preferred
Securities have been so cured or waived, the Institutional Trustee will be
deemed to be acting solely on behalf of the holders of the Preferred Securities
and only the holders of the Preferred Securities will have the right to direct
the Institutional Trustee with respect to certain matters under the Declaration
and consequently under the Indenture. If any Event of Default with respect to
the Preferred Securities is waived by the holders of the Preferred Securities as
28
<PAGE>
provided in the Declaration, the holders of Common Securities pursuant to the
Declaration have agreed that such waiver also constitutes a waiver of such Event
of Default with respect to the Common Securities for all purposes under the
Declaration without any further act, vote or consent of the holders of the
Common Securities. See "Description of the Preferred Securities".
The Declaration provides that the Trustees may treat the person in whose
name a Preferred Security is registered on the books and records of the Trust as
the sole holder thereof and of the Preferred Securities represented thereby for
purposes of receiving distributions and for all other purposes and, accordingly,
shall not be bound to recognize any equitable or other claim to or interest in
such certificate or in the Preferred Securities represented thereby on the part
of any person, whether or not the Trust shall have actual or other notice
thereof. Preferred Securities will be issued in fully registered form. Investors
may elect to hold their Preferred Securities directly or, subject to the rules
and procedures of The Depository Trust Company, Midwest Securities Trust Company
and Philadelphia Depository Trust Company (the "Depository Institutions")
described under "Description of the Preferred Securities--Book-Entry; Delivery
and Form", hold interests in a global certificate registered on the books and
records of the Trust in the name of a Depository Institution or its nominee.
Under the Declaration:
(i) the Trust and the Trustees shall be entitled to deal with a
Depository Institution (or any successor depositary) for all purposes,
including the payment of distributions and receiving approvals, votes or
consents under the Declaration, and except as set forth in the Declaration,
shall have no obligation to persons owning Preferred Securities ("Preferred
Security Beneficial Owners") registered in the name of and held by a
Depository Institution or its nominee; and
(ii) the rights of Preferred Security Beneficial Owners shall be
exercised only through a Depository Institution (or any successor
depository) and shall be limited to those established by law and agreements
between such Preferred Security Beneficial Owners and a Depository
Institution and/or its participants. See "Description of the Preferred
Securities--Book-Entry; Delivery and Form". With respect to Preferred
Securities registered in the name of and held by a Depository Institution or
its nominee, all notices and other communications required under the
Declaration shall be given to, and all distributions on such Preferred
Securities shall be given or made to, a Depository Institution (or its
successor).
In the Declaration, Holdings has agreed to pay for all debts and obligations
(other than with respect to the Trust Securities) and all costs and expenses of
the Trust, including the fees and expenses of the Trustees and any taxes and all
costs and expenses with respect thereto, to which the Trust may become subject,
except for United States withholding taxes. See "Risk Factors" and "Description
of the Preferred Securities". The foregoing obligations of Holdings under the
Declaration are for the benefit of, and shall be enforceable by, any person to
whom any such debts, obligations, costs, expenses and taxes are owed (a
"Creditor") whether or not such Creditor has received notice thereof. Any such
Creditor may enforce such obligations of Holdings directly against Holdings and
Holdings has irrevocably waived any right or remedy to require that any such
Creditor take any action against the Trust or any other person before proceeding
against Holdings. Holdings has agreed in the Declaration to execute such
additional agreements as may be necessary or desirable in order to give full
effect to the foregoing.
The foregoing summary of certain provisions of the Declaration does not
purport to be complete and is qualified in its entirety by reference to the
Declaration which has been filed as an exhibit to the Registration Statement of
which this Prospectus is a part.
The business address of the Trust is c/o RJR Nabisco Holdings Corp., 1301
Avenue of the Americas, New York, New York 10019, telephone number (212)
258-5600.
29
<PAGE>
SELECTED CONSOLIDATED FINANCIAL DATA
The selected consolidated financial data presented below as of March 31,
1995 and for the three months ended March 31, 1995 and 1994 was derived from the
unaudited consolidated condensed financial statements of Holdings (the
"Consolidated Condensed Financial Statements") incorporated herein by reference.
The summary consolidated financial data presented below as of December 31, 1994
and 1993 and for each of the years in the three-year period ended December 31,
1994 was derived from the consolidated financial statements of Holdings (the
"Consolidated Financial Statements") incorporated herein by reference, which
have been audited by Deloitte & Touche LLP, independent auditors. In addition,
the consolidated financial data presented below as of December 31, 1992, 1991
and 1990 and for each of the years in the two-year period ended December 31,
1991 was derived from the audited consolidated financial statements of Holdings
as of December 31, 1992, 1991 and 1990 and for the years ended December 31, 1991
and 1990, not incorporated herein by reference. The data should be read in
conjunction with the Consolidated Condensed Financial Statements and the
Consolidated Financial Statements incorporated herein by reference.
<TABLE><CAPTION>
THREE MONTHS
ENDED MARCH 31, FOR THE YEARS ENDED DECEMBER 31,
----------------- -----------------------------------------------
1995 1994 1994 1993 1992 1991 1990
------- ------ ------- ------- ------- ------- -------
(DOLLARS IN MILLIONS EXCEPT PER SHARE AMOUNTS)
<S> <C> <C> <C> <C> <C> <C> <C>
RESULTS OF OPERATIONS
Net sales............................. $ 3,540 $3,572 $15,366 $15,104 $15,734 $14,989 $13,879
------- ------ ------- ------- ------- ------- -------
Cost of products sold................. 1,625 1,572 6,977 6,640 6,326 6,088 5,652
Selling, advertising, administrative
and general expenses................ 1,136 1,212 5,210 5,731 5,788 5,358 4,801
Amortization of trademarks and
goodwill............................ 159 156 629 625 616 609 608
Restructuring expense................. -- -- -- 730 106 -- --
------- ------ ------- ------- ------- ------- -------
Operating income(1)................. 620 632 2,550 1,378 2,898 2,934 2,818
Interest and debt expense............. (220) (291) (1,065) (1,209) (1,449) (2,217) (3,176)
Other income (expense), net........... (36) (12) (110) (58) 7 (69) (44)
------- ------ ------- ------- ------- ------- -------
Income (loss) before income taxes... 364 329 1,375 111 1,456 648 (402)
Provision for income taxes............ 159 135 611 114 680 280 60
------- ------ ------- ------- ------- ------- -------
Income (loss) before minority
interest in income of Nabisco..... 205 194 764 (3) 776 368 (462)
Minority interest in income of
Nabisco........................... 7 -- -- -- -- -- --
------- ------ ------- ------- ------- ------- -------
Income (loss) before extraordinary
item.............................. 198 194 764 (3) 776 368 (462)
Extraordinary item--(loss) gain on
early extinguishments of debt, net
of income taxes..................... -- 1 (245) (142) (477) -- 33
------- ------ ------- ------- ------- ------- -------
Net income (loss)..................... 198 195 519 (145) 299 368 (429)
Preferred stock dividends............. 33 33 131 68 31 173 50
------- ------ ------- ------- ------- ------- -------
Net income (loss) applicable to common
stock............................... $ 165 $ 162 $ 388 $ (213) $ 268 $ 195 $ (479)
------- ------ ------- ------- ------- ------- -------
------- ------ ------- ------- ------- ------- -------
PER SHARE DATA
Income (loss) before extraordinary
item per common and common
equivalent share(2)(3).............. $ 0.51 $ 0.59 $ 2.06 $ (0.26) $ 2.73 $ 1.10 $ (5.93)
------- ------ ------- ------- ------- ------- -------
------- ------ ------- ------- ------- ------- -------
Dividends per share of Series A
Preferred Stock(4).................. -- $ .835 $ 2.92 $ 3.34 $ 3.34 $ 0.49 --
Dividends per share of Series C
Preferred Stock(4).................. $ 1.503 $ 3.94 -- -- -- --
Dividends Per Share of Common
Stock(5)............................ $ .375 -- -- -- -- --
OTHER DATA
Ratio of earnings to fixed charges
and preferred stock dividends(6).... 1.70 1.45 1.60 1.10
Deficiency in the coverage of fixed
charges and preferred stock
dividends by earnings before fixed
charges(6) $ 264 $ 490
BALANCE SHEET DATA (AT END OF PERIODS)
Working capital (deficiency)(7)....... $ 427 $(1,231) $ 202 $ 730 $ 165 $(1,089)
Total assets.......................... 31,551 31,408 31,295 32,041 32,131 32,915
Total debt(7)......................... 10,242 11,149 12,448 14,218 14,531 18,918
Redeemable preferred stock(8)......... -- -- -- -- -- 1,795
Stockholders' equity(9)............... 11,321 10,908 9,070 8,376 8,419 2,494
</TABLE>
(Footnotes on following page)
30
<PAGE>
(Footnotes for preceding page)
- - - ------------
(1) The 1992 amount includes a gain of $98 million on the sale of the
ready-to-eat cold cereal business.
(2) The loss before extraordinary item per common equivalent share reported for
the year ended December 31, 1993 would have increased by $.17 per share if
the weighted average number of shares of Series A Depositary Shares (as
defined below) outstanding during the period had been excluded from the
earnings per share calculation.
(3) Amounts reflect a one-for-five reverse split approved by Holdings'
stockholders on April 12, 1995.
(4) On November 8, 1991, Holdings issued 52,500,000 shares of Series A
Conversion Preferred Stock, par value $.01 per share ("Series A Preferred
Stock"), and sold 210,000,000 $.835 depositary shares (the "Series A
Depositary Shares"), each of which represented one-quarter of a share of
Series A Preferred Stock. On May 6, 1994, Holdings issued 26,675,000 shares
of Series C Conversion Preferred Stock, par value $.01 per share (the
"Series C Conversion Preferred Stock"), and sold 266,750,000 Series C
Depositary Shares (the "Series C Depositary Shares"), each of which
represented one-tenth of a share of Series C Conversion Preferred Stock. On
November 15, 1994, each outstanding Series A Depositary Share converted into
one share of Holdings Common Stock.
(5) The Board of Directors of Holdings declared an initial quarterly dividend of
$.375 per share (or $1.50 per annum) which was paid on April 1, 1995 to
stockholders of record on March 10, 1995.
(6) For purposes of these computations, earnings before fixed charges consist of
income (loss) before extraordinary item before provision (benefit) for
income taxes plus fixed charges. Income (loss) before provision (benefit)
for income taxes includes amortization of trademarks and goodwill and
depreciation expense. Fixed charges consist of interest on indebtedness,
amortization of debt issuance costs and that portion of operating rental
expense representative of the interest factor. Also, for purposes of these
computations, preferred stock dividends have been increased to present the
equivalent pre-tax amount, as applicable.
(7) Working capital (deficiency) at December 31, 1994 included $1.35 billion of
borrowings under the Nabisco 1994 Credit Agreement, a substantial portion of
which was used in connection with the refinancing of certain debt. On
January 26, 1995, such borrowings were substantially reduced through the
application of approximately $1.2 billion of net proceeds received from the
initial public offering of 51,750,000 shares of Nabisco's Class A Common
Stock.
(8) On December 16, 1991, an amendment to the Amended and Restated Certificate
of Incorporation of Holdings was filed which deleted the provisions
providing for the mandatory redemption of the redeemable preferred stock of
Holdings on November 1, 2015. Accordingly, such securities were presented as
a component of Holdings' stockholders' equity as of December 31, 1992 and
1991. Such securities were redeemed on December 6, 1993.
(9) Holdings' stockholders' equity at March 31, 1995 and 1994, and December 31
of each year from 1994 to 1990 includes non-cash expenses related to
accumulated trademarks and goodwill amortization of $3.803 billion, $3.171
billion, $3.644 billion, $3.015 billion, $2.390 billion, $1.774 billion and
$1.165 billion, respectively.
See Notes to Consolidated Financial Statements.
31
<PAGE>
CAPITALIZATION
The following table sets forth the historical capitalization of Holdings at
March 31, 1995 and as adjusted to give effect to the issuance of Preferred
Securities in exchange for the Depositary Shares. This table does not reflect
the Exchange Offers, the Consent Solicitations, and related fees. The "As
Adjusted" capitalization described in the table below assumes that holders of
49,000,000 Depositary Shares elect to participate in the Offer. To the extent
holders of Depositary Shares elect not to participate in the Offer, Preferred
Securities of the Trust would be reduced and Series B Preferred would be
increased by an equal amount.
<TABLE>
<CAPTION>
MARCH 31,1995
-------------------------
HISTORICAL AS ADJUSTED
---------- -----------
(IN MILLIONS)
<S> <C> <C>
Current debt:
Notes payable........................................................ $ 365 $ 365
Current maturities of long-term debt:
Debentures......................................................... 300 300
Notes.............................................................. 136 136
Other indebtedness................................................. 241 241
---------- -----------
Total current debt............................................... 1,042 1,042
---------- -----------
Long-term debt:
Debentures........................................................... 634 634
Notes................................................................ 4,916 4,916
1991 Credit Agreement................................................ 2,000 2,000
1994 Nabisco Credit Agreement........................................ 220 220
Commercial paper..................................................... 836 836
Other indebtedness................................................... 594 594
---------- -----------
Total long-term debt............................................. 9,200 9,200
---------- -----------
Total debt..................................................... 10,242 10,242
---------- -----------
Preferred Securities of the Trust...................................... -- 1,225
---------- -----------
Stockholders' equity:
ESOP convertible preferred stock..................................... 244 244
Series B Preferred................................................... 1,250 25
Series C conversion preferred stock.................................. 3 3
Common stock......................................................... 3 3
Paid-in capital...................................................... 10,394 10,394
Retained earnings (accumulated deficit).............................. (166) (166)
Receivable from ESOP................................................. (176) (176)
Other stockholders' equity........................................... (231) (231)
---------- -----------
Total stockholders' equity....................................... 11,321 10,096
---------- -----------
Total capitalization........................................... $ 21,563 $21,563
---------- -----------
---------- -----------
</TABLE>
- - - ------------
32
<PAGE>
THE OFFER
PURPOSE OF THE OFFER
The purpose of the Offer is to refinance the Depositary Shares with the
Preferred Securities and to achieve certain tax efficiencies. This refinancing
will permit Holdings to deduct interest payable on the Junior Subordinated
Debentures for United States federal income tax purposes; dividends payable with
regard to the Depositary Shares are not deductible.
GENERAL
PARTICIPATION IN THE OFFER IS VOLUNTARY AND HOLDERS OF DEPOSITARY SHARES
SHOULD CAREFULLY CONSIDER WHETHER TO ACCEPT. NEITHER THE BOARD OF DIRECTORS OF
HOLDINGS NOR HOLDINGS NOR THE TRUSTEES NOR THE TRUST MAKES ANY RECOMMENDATION TO
HOLDERS AS TO WHETHER TO TENDER OR REFRAIN FROM TENDERING IN THE OFFER. HOLDERS
OF DEPOSITARY SHARES ARE URGED TO CONSULT THEIR FINANCIAL AND TAX ADVISORS IN
MAKING THEIR DECISIONS ON WHAT ACTION TO TAKE IN LIGHT OF THEIR OWN PARTICULAR
CIRCUMSTANCES.
Unless the context requires otherwise, the term "Holder" with respect to the
Offer means (i) any person in whose name any Depositary Shares are registered on
the books of Holdings or (ii) any other person who has obtained a properly
completed stock power from the registered holder, or (iii) any person whose
Depositary Shares are held of record by a Depository Institution.
TERMS OF THE OFFER
Upon the terms and subject to the conditions set forth herein and in the
Letter of Transmittal, the Trust will exchange its Preferred Securities for up
to 49,000,000 of the outstanding Depositary Shares. The Offer will be effected
on a basis of one Preferred Security for each Depositary Share validly tendered
and accepted for exchange. See "--Procedures for Tendering". Upon the terms and
subject to the conditions set forth herein and in the Letter of Transmittal, the
Trust will accept up to 49,000,000 Depositary Shares validly tendered and not
withdrawn prior to the Expiration Date and, unless the Offer has been withdrawn
or terminated, will deliver Preferred Securities in exchange therefor to
tendering Holders of Depositary Shares as promptly as practicable following the
Expiration Date. The Trust expressly reserves the right, in its sole discretion,
to delay acceptance for exchange of Depositary Shares tendered under the Offer
and the delivery of the Preferred Securities with respect to the Depositary
Shares accepted for exchange (subject to Rules 13e-4 and 14e-1 under the
Exchange Act, which require that the Trust consummate the Offer or return the
Depositary Shares deposited by or on behalf of the Holders thereof promptly
after the termination or withdrawal of the Offer), or to amend, withdraw or
terminate the Offer at any time prior to the Expiration Date for any of the
reasons set forth in "--Conditions to the Offer" and "--Expiration Date;
Extensions; Amendments; Termination.".
In all cases, except to the extent waived by the Trust, delivery of
Preferred Securities issued with respect to the Depositary Shares accepted for
exchange pursuant to the Offer will be made only after timely receipt by the
Exchange Agent of Depositary Shares (or confirmation of book-entry transfer
thereof), a properly completed and duly executed Letter of Transmittal and any
other documents required thereby.
As of the date of this Prospectus, there are 50,000,000 Depositary Shares
outstanding. This Prospectus, together with the Letter of Transmittal, is being
sent to all registered Holders as of , 1995.
The Trust shall be deemed to have accepted validly tendered Depositary
Shares (or defectively tendered Depositary Shares with respect to which the
Trust has waived such defect) when, as and if the Trust has given oral or
written notice thereof to the Exchange Agent. The Exchange Agent will act as
agent for the tendering Holders for the purpose of receiving Depositary Shares
from, and remitting
33
<PAGE>
Preferred Securities to, tendering Holders who are participating in the Offer.
Upon the terms and subject to the conditions of the Offer, delivery of Preferred
Securities to tendering Holders will be made as promptly as practicable
following the Expiration Date.
If proration of tendered Depositary Shares is required, because of the
difficulty in determining the number of Depositary Shares validly tendered
(including shares tendered by the guaranteed delivery procedures described in
"--Procedures for Tendering"), the Trust does not expect that it would be able
to announce the final proration factor or to commence the exchange for any
Depositary Shares pursuant to the Offer until approximately seven Business Days
after the Expiration Date. Preliminary results of the proration will be
announced by press release as promptly as practicable after the Expiration Date.
Holders of Depositary Shares may obtain such preliminary information from the
Dealer Managers, the Information Agent or the Exchange Agent and may also be
able to obtain such information from their brokers.
Until the final proration factors are known, the Trust will not issue any
Preferred Securities in exchange for any Depositary Shares accepted for exchange
pursuant to the Offer or return Depositary Shares delivered to the Exchange
Agent but not tendered or return Depositary Shares tendered but not accepted for
exchange because of proration.
If any tendered Depositary Shares are not accepted for exchange because of
an invalid tender, proration, the occurrence of certain other events set forth
herein or otherwise, unless otherwise requested by the Holder under "Special
Delivery Instructions" in the Letter of Transmittal, such Depositary Shares will
be returned, without expense, to the tendering Holder thereof (or in the case of
Depositary Shares tendered by book-entry transfer into the Exchange Agent's
account at a Depository Institution, such Depositary Shares will be credited to
an account maintained at the Depository Institution designated by the
participant therein who so delivered such Depositary Shares), as promptly as
practicable after the Expiration Date or the withdrawal or termination of the
Offer.
Holders of Depositary Shares will not have any appraisal or dissenters'
rights under the Delaware General Corporation Law in connection with the Offer.
The Trust intends to conduct the Offer in accordance with the applicable
requirements of the Exchange Act and the rules and regulations of the Commission
thereunder.
Holders who tender Depositary Shares in the Offer will not be required to
pay brokerage commissions or fees or, subject to the instructions in the Letter
of Transmittal, transfer taxes with respect to the exchange of Depositary Shares
pursuant to the Offer. See "Fees and Expenses; Transfer Taxes".
Holders tendering Depositary Shares held in global form shall receive
Preferred Securities in global form and holders tendering Depositary Shares held
directly in certificated form shall receive Preferred Securities in certificated
form, in each case unless otherwise specified in the Letter of Transmittal. See
"--Procedures for Tendering".
CONDITIONS TO THE OFFER
Notwithstanding any other provisions of any of the Offer, or any extension
of the Offer, the Trust will not be required to deliver Preferred Securities in
respect of any properly tendered Depositary Shares and may terminate the Offer
by oral or written notice to the Exchange Agent and the holders of Depositary
Shares, or, at its option, may modify or otherwise amend the Offer with respect
to such Depositary Shares if any of the following conditions are not satisfied
at or prior to the Expiration Date in the case of clauses (a) and (b) below or
if any of the events specified in clauses (c) through (e) occurs at or prior to
the Expiration Date, whether prior to or simultaneously with the completion of
the Offer:
(a) receipt of at least 15,000,000 validly tendered Depositary Shares in
the Offer;
34
<PAGE>
(b) tenders by a sufficient number of holders of Depositary Shares such
that there will be at least 400 record or beneficial holders of Preferred
Securities to be issued in exchange for such Depositary Shares;
(c) there shall not have been any action taken or threatened, or any
statute, rule, regulation, judgment, order, stay, decree or injunction
promulgated, enacted, entered, enforced or deemed applicable to the Offer,
by or before any court or governmental regulatory or administrative agency
or authority or tribunal, domestic or foreign, which (i) challenges the
making of the Offer, or might directly or indirectly prohibit, prevent,
restrict or delay consummation of the Offer, or otherwise and adversely
affect in any material manner the Offer or (ii) could materially adversely
affect the business, condition (financial or otherwise), income, operations,
properties, assets, liabilities or prospects of Holdings and its
subsidiaries, taken as a whole or materially impair the contemplated
benefits of the Offer to Holdings:
(d) there shall not have occurred or be likely to occur any event
affecting the business or financial affairs of Holdings that would or might
prohibit, prevent, restrict or delay consummation of the Offer or that will,
or is reasonably likely to, materially impair the contemplated benefits of
the Offer or might be material to holders of Depositary Shares in deciding
whether to accept the Offer; and
(e) there shall not have occurred (i) any general suspension of or
limitation on trading in securities on the NYSE or in the over-the-counter
market (whether or not mandatory), (ii) any significant adverse change in
the price of the Depositary Shares or in the United States securities or
financial markets, (iii) a material impairment in the trading market for
debt or equity securities, (iv) a declaration of a banking moratorium or any
suspension of payments in respect of banks by federal or state authorities
in the United States (whether or not mandatory), (v) a commencement of a
war, armed hostilities or other national or international crisis directly or
indirectly relating to the United States, (vi) any limitation (whether or
not mandatory) by any governmental authority on, or other event having a
reasonable likelihood of affecting, the extension of credit by banks or
other lending institutions in the United States, (vii) any significant
adverse change in United States securities or financial markets generally or
in the case of any of the foregoing existing at the time of the commencement
of the Offer, a material acceleration or worsening thereof.
The foregoing conditions are for the sole benefit of the Trust and Holdings
and may be waived by the Trust and Holdings, in whole or in part, in their sole
discretion. Any determination made by Holdings or the Trust concerning an event,
development or circumstance described or referred to above will be final and
binding on all parties.
EXPIRATION DATE; EXTENSIONS; AMENDMENTS; TERMINATION
The Offer will expire on the Expiration Date. The Trust expressly reserves
the right, in its sole discretion, subject to applicable law, to (i) terminate
the Offer, and not accept for exchange any Depositary Shares and promptly return
all Depositary Shares upon the failure of any of the conditions specified above
in "--Conditions to the Offer", (ii) waive any condition to the Offer and accept
all Depositary Shares previously tendered pursuant to the Offer, (iii) extend
the Expiration Date of the Offer and retain all Depositary Shares tendered
pursuant to such Exchange Offer until the expiration date, subject, however, to
all withdrawal rights of holders, see "--Withdrawal of Tenders", (iv) amend the
terms of the Offer or (v) modify the form of the consideration to be paid
pursuant to the Offer. Any amendment applicable to the Offer will apply to all
Depositary Shares tendered pursuant to the Offer. During any extension of the
Offer, all Depositary Shares previously tendered pursuant to the Offer and not
withdrawn will remain subject to the Offer. See "--Expiration Date; Extensions;
Amendments; Termination".
35
<PAGE>
If the Trust makes a material change in the terms of the Offer, the Trust
will extend the Offer. The minimum period for which the Offer will be extended
following a material change, other than a change in the amount of Depositary
Shares sought for exchange, will depend upon the facts and circumstances,
including the relative materiality of the change. With respect to an increase or
decrease in the number of Depositary Shares sought in the Offer or an increase
or decrease in the consideration offered to holders of Depositary Shares, if
required, the Offer will remain open for a minimum of ten Business Days
following public announcement of such change. In the case of any amendment,
withdrawal or termination of the Offer, a public announcement will be issued no
later than 9:00 a.m., New York City time, on the next business day after the
previously scheduled Expiration Date of the Offer subject to such extension. If
the Trust withdraws or terminates the Offer, it will give immediate notice to
the Exchange Agent, and all Depositary Shares theretofore tendered pursuant to
the Offer will be returned promptly to the tendering Holders thereof. See
"--Withdrawal of Tenders". In order to satisfy the NYSE listing requirements,
acceptance of Depositary Shares validly tendered in the Offer is subject to the
condition that as of the Expiration Date there be at least 400 record or
beneficial holders of Preferred Securities to be issued in exchange for such
Depositary Shares, which condition may not be waived.
PROCEDURES FOR TENDERING
The tender of Depositary Shares by a Holder thereof pursuant to one of the
procedures set forth below will constitute an agreement between such Holder and
the Trust in accordance with the terms and subject to the conditions set forth
herein and in the Letter of Transmittal.
Each Holder of Depositary Shares wishing to participate in the Offer must
(i) properly complete and sign the Letter of Transmittal in accordance with the
instructions contained herein and in the Letter of Transmittal, together with
any required signature guarantees, and deliver the same to the Exchange Agent,
at one of its addresses set forth on the back cover page hereof prior to the
Expiration Date and either (a) certificates for the Depositary Shares must be
received by the Exchange Agent at such address or (b) such Depositary Shares
must be transferred pursuant to the procedures for book-entry transfer described
below and a confirmation of such book-entry transfer must be received by the
Exchange Agent, in each case prior to the Expiration Date, or (ii) comply with
the guaranteed delivery procedures described below.
IN ORDER TO PARTICIPATE IN THE OFFER, HOLDERS OF DEPOSITARY SHARES MUST
SUBMIT A LETTER OF TRANSMITTAL AND COMPLY WITH THE OTHER PROCEDURES FOR
TENDERING IN ACCORDANCE WITH THE INSTRUCTIONS CONTAINED HEREIN AND IN THE LETTER
OF TRANSMITTAL PRIOR TO THE EXPIRATION DATE.
LETTERS OF TRANSMITTAL, DEPOSITARY SHARES AND ANY OTHER REQUIRED DOCUMENTS
SHOULD BE SENT ONLY TO THE EXCHANGE AGENT, NOT TO THE TRUST, HOLDINGS, THE
DEALER MANAGERS OR THE INFORMATION AGENT.
Special Procedure for Beneficial Owners. Any beneficial owner whose
Depositary Shares are registered in the name of a broker, dealer, commercial
bank, trust company or other nominee and who wishes to tender should contact
such registered Holder promptly and instruct such registered Holder to tender on
such beneficial owner's behalf. If such beneficial owner wishes to tender on its
own behalf, such owner must, prior to completing and executing the Letter of
Transmittal and delivering its Depositary Shares, either make appropriate
arrangements to register ownership of the Depositary Shares in such owner's name
or obtain a properly completed stock power from the registered Holder. The
transfer of registered ownership may take considerable time and may not be able
to be completed prior to the Expiration Date.
THE METHOD OF DELIVERY OF DEPOSITARY SHARES AND ALL OTHER DOCUMENTS IS AT
THE ELECTION AND RISK OF THE HOLDER. IF SENT BY MAIL, IT IS
36
<PAGE>
RECOMMENDED THAT REGISTERED MAIL, RETURN RECEIPT REQUESTED, BE USED, INSURANCE
BE OBTAINED, AND THE MAILING BE MADE SUFFICIENTLY IN ADVANCE OF THE EXPIRATION
DATE TO PERMIT DELIVERY TO THE EXCHANGE AGENT ON OR BEFORE THE EXPIRATION DATE.
Signature Guarantees. If tendered Depositary Shares are registered in the
name of the signer of the Letter of Transmittal and the Preferred Securities to
be issued in exchange therefor are to be issued (and any untendered Depositary
Shares are to be reissued) in the name of the registered Holder, the signature
of such signer need not be guaranteed. If the tendered Depositary Shares are
registered in the name of someone other than the signer of the Letter of
Transmittal, or if Preferred Securities issued in exchange therefor are to be
issued in the name of any person other than the signer of the Letter of
Transmittal, such tendered Depositary Shares must be endorsed or accompanied by
written instruments of transfer in form satisfactory to the Trust and duly
executed by the registered Holder, and the signature on the endorsement or
instrument of transfer must be guaranteed by a financial institution (including
most banks, savings and loans associations and brokerage houses) that is a
participant in the Security Transfer Agents Medallion Program or the Stock
Exchange Medallion Program (any of the foregoing hereinafter referred to as an
"Eligible Institution"). If the Preferred Securities and/or the Depositary
Shares are not exchanged or are to be delivered to an address other than that of
the registered Holder appearing on the register for the Depositary Shares, the
signature in the Letter of Transmittal must be guaranteed by an Eligible
Institution.
Book-Entry Transfer. The Trust understands that the Exchange Agent will make
a request promptly after the date of this Prospectus to establish accounts with
respect to the Depositary Shares at a Depository Institution for the purpose of
facilitating the Offer, and subject to the establishment thereof, any financial
institution that is a participant in a Depository Institution's system may make
book-entry delivery of Depositary Shares by causing the Depository Institution
to transfer such Depositary Shares into the Exchange Agent's account with
respect to the Depositary Shares in accordance with such Depository
Institution's Automated Tender Offer Program ("ATOP") procedures for such
book-entry transfers. However, the exchange for the Depositary Shares so
tendered will only be made after timely confirmation (a "Book-Entry
Confirmation") of such Book-Entry Transfer of Depositary Shares into the
Exchange Agent's account, and timely receipt by the Exchange Agent of an Agent's
Message (as such term is defined in the next sentence) and any other documents
required by the Letter of Transmittal. The term "Agent's Message" means a
message, transmitted by a Depository Institution and received by the Exchange
Agent and forming a part of a Book-Entry Confirmation, which states that such
Depository Institution has received an express acknowledgment from a participant
tendering Depositary Shares that is the subject of such Book-Entry Confirmation
that such participant has received and agrees to be bound by the terms of the
Letter of Transmittal, and that the Trust may enforce such agreement against
such participant.
Guaranteed Delivery. If a Holder desires to participate in the Offer and
time will not permit a Letter of Transmittal or Depositary Shares to reach the
Exchange Agent before the Expiration Date or the procedure for book-entry
transfer cannot be completed on a timely basis, a tender may be effected if the
Exchange Agent has received at one of its addresses on the back cover page
hereof prior to the Expiration Date, a letter, telegram or facsimile
transmission from an Eligible Institution setting forth the name and address of
the tendering Holder, the name(s) in which the Depositary Shares are registered
and, if the Depositary Shares are held in certificated form, the certificate
numbers of the Depositary Shares to be tendered, and stating that the tender is
being made thereby and guaranteeing that within five NYSE trading days after the
date of execution of such letter, telegram or facsimile transmission by the
Eligible Institution, the Depositary Shares in proper form for transfer together
with a properly completed and duly executed Letter of Transmittal (and any other
required documents), or a confirmation of book-entry transfer of such Depositary
Shares into the Exchange Agent's account at a Depository Institution, will be
delivered by such Eligible Institution. Unless the Depositary Shares being
tendered by the above-described method are deposited with the Exchange Agent
within the time
37
<PAGE>
period set forth above (accompanied or preceded by a properly completed Letter
of Transmittal and any other required documents) or a confirmation of book-entry
transfer of such Depositary Shares into the Exchange Agent's account at the
Depository Institution in accordance with such Depository Institution's ATOP
procedures is received, the Trust may, at its option, reject the tender. In
addition to the copy being transmitted herewith, copies of a Notice of
Guaranteed Delivery which may be used by Eligible Institutions for the purposes
described in this paragraph are available from the Exchange Agent and the
Information Agent.
Miscellaneous. All questions as to the validity, form, eligibility
(including time of receipt) and acceptance for exchange of any tender of
Depositary Shares will be determined by the Trust, whose determination will be
final and binding. The Trust reserves the absolute right to reject any or all
tenders not in proper form or the acceptance for exchange of which may, in the
opinion of the Trust's counsel, be unlawful. The Trust also reserves the
absolute right to waive any defect or irregularity in the tender of any
Depositary Shares, and the Trust's interpretation of the terms and conditions of
the Offer (including the instructions in the Letter of Transmittal) will be
final and binding. None of the Trust, the Exchange Agent, the Dealer Managers,
the Information Agent or any other person will be under any duty to give
notification of any defects or irregularities in tenders or incur any liability
for failure to give any such notification.
Tenders of Depositary Shares involving any irregularities will not be deemed
to have been made until such irregularities have been cured or waived.
Depositary Shares received by the Exchange Agent that are not validly tendered
and as to which the irregularities have not been cured or waived will be
returned by the Exchange Agent to the tendering Holder (or in the case of
Depositary Shares tendered by book-entry transfer into the Exchange Agent's
account at a Depository Institution, such Depositary Shares will be credited to
an account maintained at the Depository Institution designated by the
participant therein who so delivered such Depositary Shares), unless otherwise
requested by the Holder in the Letter of Transmittal, as promptly as practicable
after the Expiration Date or the withdrawal or termination of the Offer.
LETTER OF TRANSMITTAL
The Letter of Transmittal contains, among other things, the following terms
and conditions, which are part of the Offer.
The party tendering Depositary Shares for exchange (the "Transferor")
exchanges, assigns and transfers the Depositary Shares to the Trust, and
irrevocably constitutes and appoints the Exchange Agent as the Transferor's
agent and attorney-in-fact to cause the Depositary Shares to be assigned,
transferred and exchanged. The Transferor represents and warrants that it has
full power and authority to tender, exchange, assign and transfer the Depositary
Shares and the underlying Series B Preferred and to acquire Preferred Securities
issuable upon the exchange of such tendered Depositary Shares and that, when
such Transferor's Depositary Shares are accepted for exchange, the Trust will
acquire good and unencumbered title to such tendered Depositary Shares and the
underlying Series B Preferred, free and clear of all liens, restrictions,
charges and encumbrances and not subject to any adverse claim. The Transferor
also warrants that it will, upon request, execute and deliver any additional
documents deemed by the Trust to be necessary or desirable to complete the
exchange, assignment and transfer of tendered Depositary Shares or transfer
ownership of such Depositary Shares on the account books maintained by the
Depository Institution. All authority conferred by the Transferor will survive
the death, bankruptcy or incapacity of the Transferor and every obligation of
the Transferor shall be binding upon the heirs, legal representatives,
successors, assigns, executors and administrators of such Transferor.
38
<PAGE>
WITHDRAWAL OF TENDERS
Tenders of Depositary Shares pursuant to the Offer may be withdrawn at any
time prior to the Expiration Date and, unless accepted for exchange by the
Trust, may be withdrawn at any time after 40 Business Days after the date of
this Prospectus.
To be effective, a written notice of withdrawal delivered by mail, hand
delivery or facsimile transmission must be timely received by the Exchange Agent
at one of its addresses set forth on the back cover page hereof. The method of
notification is at the risk and election of the Holder. Any such notice of
withdrawal must specify (i) the Holder named in the Letter of Transmittal as
having tendered Depositary Shares to be withdrawn, (ii) if the Depositary Shares
are held in certificated form, the certificate numbers of the Depositary Shares
to be withdrawn, (iii) that such Holder is withdrawing his election to have such
Depositary Shares exchanged and (iv) the name of the registered Holder of such
Depositary Shares, and must be signed by the Holder in the same manner as the
original signature on the Letter of Transmittal (including any required
signature guarantees) or be accompanied by evidence satisfactory to the Trust
that the person withdrawing the tender has succeeded to the beneficial ownership
of the Depositary Shares being withdrawn. The Exchange Agent will return the
properly withdrawn Depositary Shares promptly following receipt of notice of
withdrawal. If Depositary Shares have been tendered pursuant to the procedure
for book-entry transfer, any notice of withdrawal must specify the name and
number of the account at a Depository Institution to be credited with the
withdrawn Depositary Shares and otherwise comply with such Depository
Institution procedures. All questions as to the validity of notice of
withdrawal, including time of receipt, will be determined by the Trust, and such
determination will be final and binding on all parties. Withdrawals of tenders
of Depositary Shares may not be rescinded and any Depositary Shares withdrawn
will thereafter be deemed not validly tendered for purposes of the Offer.
Properly withdrawn Depositary Shares, however, may be retendered by following
the procedures therefor described elsewhere herein at any time prior to the
Expiration Date. See "--Procedures for Tendering".
ACCEPTANCE OF SHARES AND PRORATION
Upon the terms and subject to the conditions of the Offer, if 49,000,000 or
fewer Depositary Shares have been validly tendered and not withdrawn prior to
the Expiration Date, the Trust will accept for exchange all such Depositary
Shares. Upon the terms and subject to the conditions of the Offer, if more than
49,000,000 Depositary Shares have been validly tendered and not withdrawn prior
to the Expiration Date, the Trust will accept for exchange Depositary Shares
from each tendering Holder on a pro rata basis, subject to adjustment to avoid
the acceptance for exchange of fractional shares.
If the Trust decides, in its sole discretion, to increase or decrease the
number of Depositary Shares sought in the Offer or to increase or decrease the
consideration offered to holders of Depositary Shares, and if the Offer is
scheduled to expire less than ten Business Days from and including the date that
notice of such increase or decrease is first published, sent or given in the
manner specified in "--Expiration Date; Extensions; Amendments; Termination",
then the Offer will be extended for ten Business Days from and including the
date of such notice.
All Depositary Shares not accepted pursuant to the Offer, including shares
not purchased because of proration, will be returned to the tendering Holders at
the Trust's expense as promptly as practicable following the Expiration Date.
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<PAGE>
EXCHANGE AGENT AND INFORMATION AGENT
First Chicago Trust Company of New York has been appointed as Exchange Agent
for the Offer.
THE EXCHANGE AGENT:
First Chicago Trust Company of New York
By Hand or Overnight Courier:
Attention: Tenders and Exchanges
Suite 4680-RNH
14 Wall Street
8th Floor
New York, New York 10005
By Mail:
Attention: Tenders and Exchanges
Suite 4460-RNH
P.O. Box 2559
Jersey City, New Jersey 07303-2559
By Facsimile Transmission
(For Eligible Institutions Only):
(201) 222-4720 or 4721
Confirm Receipt of Notice of Guaranteed Delivery
by Telephone:
(201) 222-4707
MacKenzie Partners, Inc. has been retained as the Information Agent to
assist in connection with the Offer. Questions and requests for assistance
regarding the Offer, requests for additional copies of this Prospectus, the
Letter of Transmittal and requests for Notice of Guaranteed Delivery may be
directed to the Information Agent. Banks and brokers call collect: (212)
929-5500; all others telephone (800) 322-2885.
Holdings will pay the Exchange Agent and Information Agent reasonable and
customary fees for their services and will reimburse them for all their
reasonable out-of-pocket expenses in connection therewith.
DEALER MANAGERS; SOLICITING DEALERS
Merrill Lynch & Co., Lehman Brothers, Morgan Stanley & Co. Incorporated,
PaineWebber Incorporated and Smith Barney Inc., as Dealer Managers, have agreed
to solicit exchanges of Depositary Shares for Preferred Securities. Holdings
will pay the Dealer Managers a fee of $.125 per Depositary Share accepted
pursuant to the Offer. The maximum fee payable to the Dealer Managers is
approximately $6,125,000 plus any amount that the Dealer Managers may be
entitled to pursuant to the next paragraph. Holdings will also reimburse the
Dealer Managers for certain reasonable out-of-
40
<PAGE>
pocket expenses in connection with the Offer and will indemnify the Dealer
Managers against certain liabilities, including liabilities under the Securities
Act. The Dealer Managers engage in transactions with, and from time to time have
performed services for, Holdings, including acting as underwriters for the
issuance of the Depositary Shares.
The Company will pay to a Soliciting Dealer a solicitation fee of $0.50 per
Depositary Share validly tendered and accepted for exchange pursuant to the
Offer. As used in this Prospectus, "Soliciting Dealer" includes (i) any broker
or dealer in securities, including a Dealer Manager in its capacity as a broker
or dealer, who is a member of any national securities exchange or of the
National Association of Securities Dealers, Inc. (the "NASD"), (ii) any foreign
broker or dealer not eligible for membership in the NASD who agrees to conform
to the NASD's Rules of Fair Practice in soliciting tenders outside the United
States to the same extent as though it were an NASD member, or (iii) any bank or
trust company, any one of whom has solicited and obtained a tender pursuant to
the Offer. No solicitation fee shall be payable to a Soliciting Dealer with
respect to the tender of depositary receipts evidencing Depositary Shares by a
Holder unless the Letter of Transmittal accompanying such tender designates such
Soliciting Dealer as such in the box captioned "Solicited Tenders".
If tendered Depositary Shares are being delivered by book-entry transfer
made to an account maintained by the Exchange Agent with Depository
Institutions, the Soliciting Dealer must return a Notice of Solicited Tenders
(included in the materials provided to brokers and dealers) to the Exchange
Agent within five trading days after the Expiration Date in order to receive a
solicitation fee. No solicitation fee shall be payable to a Soliciting Dealer in
respect of Depositary Shares (i) beneficially owned by such Soliciting Dealer or
(ii) registered in the name of such Soliciting Dealer unless such Depositary
Shares are held by such Soliciting Dealer as nominee and such Depositary Shares
are being tendered for the benefit of one or more beneficial owners identified
on the Letter of Transmittal or the Notice of Solicited Tenders. No solicitation
fee shall be payable to the Soliciting Dealer with respect to the tender of
Depositary Shares by the Holder of record, for the benefit of the beneficial
owner, unless the beneficial owner has designated such Soliciting Dealer.
No solicitation fee shall be payable to a Soliciting Dealer if such
Soliciting Dealer is required for any reason to transfer any portion of such fee
to a tendering Holder (other than itself). No broker, dealer, bank, trust
company or fiduciary shall be deemed to be the agent of Holdings, the Exchange
Agent, the Information Agent or the Dealer Managers for purposes of the Offer.
Other than as described above, Holdings will not pay any solicitation fees
to any broker, dealer, bank, trust company or other person for any Depositary
Shares exchanged in connection with the Offer. Holdings will reimburse such
persons for customary handling and mailing expenses incurred in connection with
the Offer.
Additional solicitations may be made by telephone or in person by officers
and regular employees of Holdings and its affiliates. No additional compensation
will be paid to any such officers and employees who engage in soliciting
tenders.
LISTING AND TRADING OF PREFERRED SECURITIES AND DEPOSITARY SHARES
The Preferred Securities constitute a new issue of securities with no
established trading market. While an application will be filed to list the
Preferred Securities on the NYSE, there can be no assurance that an active
market for the Preferred Securities will develop or be sustained in the future
on such exchange. Although the Dealer Managers have indicated to the Trust that
they intend to make a market in the Preferred Securities following the
Expiration Date as permitted by applicable laws and regulations prior to the
commencement of trading on the NYSE, they are not obligated to do so and may
discontinue any such market-making at any time without notice. Accordingly, no
assurance can be given as to the liquidity of, or trading markets for, the
Preferred Securities. In order to satisfy the
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<PAGE>
NYSE listing requirements, acceptance of Depositary Shares validly tendered in
the Offer is subject to the condition that as of the Expiration Date there be at
least 400 record or beneficial holders of Preferred Securities to be issued in
exchange for such Depositary Shares, which condition may not be waived.
To the extent that Depositary Shares are tendered and accepted in the Offer,
the terms on which untendered Depositary Shares could subsequently be sold could
be adversely affected. In addition, if the Offer is substantially subscribed or
oversubscribed, there would be a significant risk that round lot holdings of
Depositary Shares outstanding following the Offer would be limited. See "Risk
Factors-- Listing and Trading of Preferred Securities and Depositary Shares.
TRANSACTIONS AND ARRANGEMENTS CONCERNING THE OFFER
Except as described herein, there are no contracts, arrangements,
understandings or relationships in connection with the Offer between Holdings or
any of its directors or executive officers, the Trust or the Trustees and any
person with respect to any securities of Holdings or the Trust, including the
Junior Subordinated Debentures, the Series B Preferred, the Depositary Shares
and the Preferred Securities.
FEES AND EXPENSES; TRANSFER TAXES
The expenses of soliciting tenders of the Depositary Shares will be borne by
Holdings. For compensation to be paid to the Dealer Managers and Soliciting
Dealers, see "The Offer--Dealer Managers; Soliciting Dealers". The total cash
expenditures to be incurred by Holdings in connection with the Offer, other than
fees payable to the Dealer Managers and Soliciting Dealers, but including the
expenses of the Dealer Managers, printing, accounting and legal fees, and the
fees and expenses of the Exchange Agent, the Information Agent, the
Institutional Trustee, the Delaware Trustee and the Indenture Trustee, are
estimated to be approximately $ .
Holdings will pay all transfer taxes, if any, applicable to the exchange of
Depositary Shares pursuant to the Offer. If, however, certificates representing
Preferred Securities or Depositary Shares not tendered or accepted for exchange,
are to be delivered to, or are to be issued in the name of, any person other
than the registered Holder of the Depositary Shares tendered or if a transfer
tax is imposed for any reason other than the exchange of Depositary Shares
pursuant to the Offer, then the amount of any such transfer taxes (whether
imposed on the registered Holder or any other persons) will be payable by the
tendering Holder. If satisfactory evidence of payment of such taxes or exemption
therefrom is not submitted with the Letter of Transmittal, the amount of such
transfer taxes will be billed directly to such tendering Holder.
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<PAGE>
PRICE RANGE OF DEPOSITARY SHARES
The Depositary Shares are listed and principally traded on the NYSE. The
following table sets forth, for each period shown, the high and low sales prices
of the Depositary Shares as reported on the NYSE Composite Tape.
<TABLE><CAPTION>
YEAR ENDED
DECEMBER 31, 1993 HIGH LOW
- - - ---------------------------------------------------------- ------- -------
<S> <C> <C>
3rd Quarter............................................... $26 $23.75
4th Quarter............................................... 25.625 24.25
<CAPTION>
YEAR ENDED
DECEMBER 31, 1994
- - - ----------------------------------------------------------
<S> <C> <C>
1st Quarter............................................... 26.25 21.75
2nd Quarter............................................... 23 20
3rd Quarter............................................... 23.375 20.625
4th Quarter............................................... 23 20
<CAPTION>
YEAR ENDED
DECEMBER 31, 1995
- - - ----------------------------------------------------------
<S> <C> <C>
1st Quarter............................................... 23.875 20.50
2nd Quarter (through June 19)............................. 24.875 23
</TABLE>
On June 19, 1995, the last full day of trading prior to the first public
announcement of the Offer, the closing sales price of Depositary Shares on the
NYSE as reported on the Composite Tape was $24.875 per share. Stockholders are
urged to obtain a current market quotation for Depositary Shares.
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<PAGE>
DESCRIPTION OF THE PREFERRED SECURITIES
The Preferred Securities will be issued pursuant to the terms of the
Declaration which will be qualified under the Trust Indenture Act. The Bank of
New York, as the Institutional Trustee, but not the other Trustees of the Trust,
will act as the indenture trustee for purposes of the Trust Indenture Act. The
terms of the Preferred Securities and the Declaration include those stated in
the Declaration and those made part of the Declaration by the Trust Indenture
Act. The summary of certain material terms and provisions of the Preferred
Securities and the Declaration set forth below does not purport to be complete
and is subject to, and qualified in its entirety by reference to, the
Declaration, which has been filed as an exhibit to the Registration Statement of
which this Prospectus forms a part, the Business Trust Act and the Trust
Indenture Act.
GENERAL
The Declaration authorizes the Trust to issue the Preferred Securities,
which represent preferred undivided beneficial interests in the assets of the
Trust, and the Common Securities, which represent common undivided beneficial
interests in the assets of the Trust. All of the Common Securities will be
owned, directly or indirectly, by Holdings. The Common Securities and the
Preferred Securities will have equivalent terms except that (i) if an Event of
Default under the Declaration occurs and is continuing, the rights of the
holders of the Common Securities to payment in respect of periodic distributions
and payments upon liquidation, redemption or otherwise are subordinated to the
rights of the holders of the Preferred Securities and (ii) holders of Common
Securities have the exclusive right (subject to the terms of the Declaration) to
appoint, remove or replace Trustees and to increase or decrease the number of
Trustees, subject to the right of holders of Preferred Securities to appoint a
Special Regular Trustee upon the occurrence of an Appointment Event. The
Declaration does not permit the issuance by the Trust of any securities or other
evidences of beneficial ownership of, or beneficial interests in, the Trust
other than the Preferred Securities and the Common Securities, the incurrence of
any indebtedness for borrowed money by the Trust or the making of any investment
other than in the Junior Subordinated Debentures. The payment of distributions
out of moneys held by the Trust and payments on redemption of the Preferred
Securities or liquidation of the Trust are guaranteed by Holdings on a
subordinated basis as and to the extent described under "Description of the
Preferred Securities Guarantee". The Institutional Trustee will hold the
Preferred Securities Guarantee for the benefit of holders of the Preferred
Securities. The Preferred Securities Guarantee is a full and unconditional
guarantee from the time of issuance of the Preferred Securities, but the
Preferred Securities Guarantee covers distributions and other payments on the
Preferred Securities only if and to the extent that Holdings has made a payment
to the Institutional Trustee of interest or principal on the Junior Subordinated
Debentures deposited in the Trust as trust assets.
DISTRIBUTIONS
Distributions on the Preferred Securities will be fixed at a rate per annum
of % of the stated liquidation amount of $25 per Preferred Security.
Distributions in arrears for more than one quarter will bear interest thereon at
the rate per annum of % of the stated liquidation amount of $25 per
Preferred Security (to the extent permitted by law), compounded quarterly. The
term "distributions" as used herein includes any such cash distributions and any
such interest payable unless otherwise stated. The amount of distributions
payable for any period will be computed on the basis of a 360-day year of twelve
30-day months and for any period shorter than a full quarterly period for which
distributions are computed, the amount of the distribution payable will be
computed on the basis of the actual number of days elapsed in such a 30-day
month.
Distributions on the Preferred Securities will be cumulative, will accrue
from the first day following the Accrual Date and, except as otherwise described
below, will be payable quarterly in
44
<PAGE>
arrears, on March 31, June 30, September 30 and December 31 of each year,
commencing on September 30, 1995, but only if, and to the extent that, interest
payments are made in respect of Junior Subordinated Debentures held by the
Trust. In addition, holders of Preferred Securities will be entitled to an
additional cash distribution at the rate of 9.25% per annum of the liquidation
amount thereof from June 1, 1995 through the Expiration Date in lieu of
dividends accumulating after June 1, 1995 on their Depositary Shares accepted
for exchange, such additional distribution to be made on September 30, 1995 to
holders of the Preferred Securities on the record date for such distribution.
So long as Holdings shall not be in default in the payment of interest on
the Junior Subordinated Debentures, Holdings has the right under the Indenture
to defer payments of interest on the Junior Subordinated Debentures by extending
the interest payment period from time to time on the Junior Subordinated
Debentures for a period not exceeding 20 consecutive quarterly interest periods
and, as a consequence, quarterly distributions on the Preferred Securities would
not be made (but would continue to accrue with interest thereon at the rate of
% per annum, compounded quarterly, to the extent permitted by applicable
law) by the Trust during any such Extension Period. If Holdings exercises the
right to extend an interest payment period, Holdings may not declare or pay
dividends on, or redeem, purchase, acquire or make a distribution or liquidation
payment with respect to, any of its common stock or preferred stock during such
Extension Period; provided that Holdings will be permitted to pay accrued
dividends (and cash in lieu of fractional shares) upon the conversion, other
than at the option of Holdings, of any of its preferred stock, including its
Series C Conversion Preferred Stock and ESOP Convertible Preferred Stock, in
accordance with the terms of such stock. Prior to the termination of any such
Extension Period, Holdings may further extend such Extension Period; provided
that such Extension Period together with all such previous and further
extensions thereof may not exceed 20 consecutive quarterly interest periods.
Upon the termination of any Extension Period and the payment of all amounts then
due, Holdings may commence a new Extension Period, subject to the above
requirements. Holdings may also prepay at any time all or any portion of the
interest accrued during an Extension Period. Consequently, there could be
multiple Extension Periods of varying lengths (up to nine Extension Periods of
20 consecutive quarterly interest periods each or more numerous shorter
Extension Periods) throughout the term of the Junior Subordinated Debentures,
provided that no Extension Period may extend beyond the maturity of the Junior
Subordinated Debentures. See "Risk Factors"; "Description of the Junior
Subordinated Debentures--Interest" and "--Option to Extend Interest Payment
Period". Payments of accrued distributions will be payable to holders of
Preferred Securities as they appear on the books and records of the Trust on the
first record date after the end of an Extension Period.
Distributions on the Preferred Securities must be paid on the dates payable
to the extent that the Institutional Trustee has cash on hand to permit such
payment. The funds available for distribution to the holders of the Preferred
Securities will be limited to payments received by the Trust in respect of the
Junior Subordinated Debentures that are deposited in the Trust as trust assets.
See "Description of the Junior Subordinated Debentures". If Holdings does not
make interest payments on the Junior Subordinated Debentures, the Trust will not
make distributions on the Preferred Securities. Under the Declaration, if and to
the extent Holdings does make interest payments on the Junior Subordinated
Debentures deposited in the Trust as trust assets, the Trust is obligated to
make distributions on the Trust Securities on a Pro Rata Basis. The payment of
distributions on the Preferred Securities is guaranteed by Holdings on a
subordinated basis as and to the extent set forth under "Description of the
Preferred Securities Guarantee". The Preferred Securities Guarantee is a full
and unconditional guarantee from the time of issuance of the Preferred
Securities but the Preferred Securities Guarantee covers distributions and other
payments on the Preferred Securities only if and to the extent that Holdings has
made a payment to the Trust of interest or principal on the Junior Subordinated
Debentures deposited in the Trust as trust assets. As used in this Prospectus
the term "Pro Rata Basis" shall mean pro rata to each holder of Trust Securities
according to the aggregate liquidation amount of the Trust Securities held by
the relevant holder in relation to the aggregate liquidation amount of all
45
<PAGE>
Trust Securities outstanding unless, in relation to a payment, an Event of
Default under the Declaration has occurred and is continuing, in which case any
funds available to make such payment shall be paid first to each holder of the
Preferred Securities pro rata according to the aggregate liquidation amount of
the Preferred Securities held by the relevant holder in relation to the
aggregate liquidation amount of all the Preferred Securities outstanding, and
only after satisfaction of all amounts owed to the holders of the Preferred
Securities, to each holder of Common Securities pro rata according to the
aggregate liquidation amount of the Common Securities held by the relevant
holder in relation to the aggregate liquidation amount of all the Common
Securities outstanding. The liquidation amount of each Common Security is $25
per share.
Distributions on the Preferred Securities will be made to the holders
thereof as they appear on the books and records of the Trust on the relevant
record dates, which will be the Business Day immediately prior to the relevant
distribution dates. The Declaration provides that the payment dates or record
dates for the Preferred Securities shall be the same as the payment dates and
record dates for the Junior Subordinated Debentures. Distributions payable on
any Preferred Securities that are not punctually paid on any distribution date
as a result of Holdings having failed to make the corresponding interest payment
on the Junior Subordinated Debentures will forthwith cease to be payable to the
person in whose name such Preferred Security is registered on the relevant
record date, and such defaulted distribution will instead be payable to the
person in whose name such Preferred Security is registered on the special record
date established by the Regular Trustees, which record date shall correspond to
the special record date or other specified date determined in accordance with
the Indenture; provided, however, that distributions shall not be considered
payable on any distribution payment date falling within an Extension Period
unless Holdings has elected to make a full or partial payment of interest
accrued on the Junior Subordinated Debentures on such distribution payment date.
Distributions on the Preferred Securities will be paid by the Trust. All
distributions paid with respect to the Trust Securities shall be paid on a Pro
Rata Basis to the holders thereof entitled thereto. If any date on which
distributions are to be made on the Preferred Securities is not a Business Day,
then payment of the distribution to be made on such date will be made on the
next succeeding day that is a Business Day (and without any interest or other
payment in respect of any such delay) except that, if such Business Day is in
the next succeeding calendar year, such payment shall be made on the immediately
preceding Business Day, in each case with the same force and effect as if made
on such date.
SPECIAL EVENT REDEMPTION OR DISTRIBUTION
If, at any time, a Tax Event or an Investment Company Event (each as
hereinafter defined, and each a "Special Event") shall occur and be continuing,
the Trust shall, unless the Junior Subordinated Debentures are redeemed in the
limited circumstances described below, be dissolved with the result that, after
satisfaction of creditors of the Trust, Junior Subordinated Debentures with an
aggregate principal amount equal to the aggregate stated liquidation amount of
the Preferred Securities and the Common Securities would be distributed on a Pro
Rata Basis to the holders of the Preferred Securities and the Common Securities
in liquidation of such holders' interests in the Trust, within 90 days following
the occurrence of such Special Event; provided, however, that in the case of the
occurrence of a Tax Event, as a condition of such dissolution and distribution,
the Regular Trustees shall have received an opinion of nationally recognized
independent tax counsel experienced in such matters (a "No Recognition
Opinion"), which opinion may rely on any then applicable published revenue
rulings of the Internal Revenue Service, to the effect that the holders of the
Preferred Securities will not recognize any gain or loss for United States
federal income tax purposes as a result of such dissolution and distribution of
Junior Subordinated Debentures; and, provided, further, that, if at the time
there is available to the Trust the opportunity to eliminate, within such 90-day
period, the Special Event by taking some ministerial action, such as filing a
form or making an election, or pursuing some other similar reasonable measure,
which has no adverse effect on the Trust or Holdings or the holders of the
Preferred Securities, the Trust will pursue such measure in lieu of dissolution.
Furthermore, if in the
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<PAGE>
case of the occurrence of a Tax Event, (i) the Regular Trustees have received an
opinion (a "Redemption Tax Opinion") of nationally recognized independent tax
counsel experienced in such matters that, as a result of a Tax Event, there is
more than an insubstantial risk that Holdings would be precluded from deducting
the interest on the Junior Subordinated Debentures for United States federal
income tax purposes even if the Junior Subordinated Debentures were distributed
to the holders of Preferred Securities and Common Securities in liquidation of
such holders' interests in the Trust as described above or (ii) the Regular
Trustees shall have been informed by such tax counsel that a No Recognition
Opinion cannot be delivered to the Trust, Holdings shall have the right, upon
not less than 30 nor more than 60 days' notice, to redeem the Junior
Subordinated Debentures in whole or in part for cash within 90 days following
the occurrence of such Tax Event, and promptly following such redemption
Preferred Securities and Common Securities with an aggregate liquidation amount
equal to the aggregate principal amount of the Junior Subordinated Debentures so
redeemed will be redeemed by the Trust at the Redemption Price on a Pro Rata
Basis; provided, however, that if at the time there is available to Holdings or
the Regular Trustees the opportunity to eliminate, within such 90-day period,
the Tax Event by taking some ministerial action, such as filing a form or making
an election, or pursuing some other similar reasonable measure, which has no
adverse effect on the Trust, Holdings or the holders of the Preferred
Securities, Holdings will pursue such measure in lieu of redemption and provided
further that Holdings shall have no right to redeem the Junior Subordinated
Debentures while the Regular Trustees on behalf of the Trust are pursuing any
such ministerial action. The Common Securities will be redeemed on a Pro Rata
Basis with the Preferred Securities, except that if an Event of Default under
the Declaration has occurred and is continuing, the Preferred Securities will
have a priority over the Common Securities with respect to payment of the
Redemption Price.
"Tax Event" means that the Regular Trustees shall have obtained an opinion
of nationally recognized independent tax counsel experienced in such matters (a
"Dissolution Tax Opinion") to the effect that on or after the Expiration Date 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, (b) any amendment
to, or change in, an interpretation or application of any such laws or
regulations by any legislative body, court, governmental agency or regulatory
authority (including the enactment of any legislation and the publication of any
judicial decision or regulatory determination), (c) any interpretation or
pronouncement that provides for a position with respect to such laws or
regulations that differs from the theretofore generally accepted position or (d)
any action taken by any governmental agency or regulatory authority, which
amendment or change is enacted, promulgated, issued or effective or which
interpretation or pronouncement is issued or announced or which action is taken,
in each case on or after the Expiration Date, there is more than an
insubstantial risk that (i) the Trust is, or will be within 90 days of the date
thereof, subject to United States federal income tax with respect to income
accrued or received on the Junior Subordinated Debentures, (ii) the Trust is, or
will be within 90 days of the date thereof, subject to more than a de minimis
amount of other taxes, duties or other governmental charges or (iii) interest
payable by Holdings to the Trust on the Junior Subordinated Debentures is not,
or within 90 days of the date thereof will not be, deductible by Holdings for
United States federal income tax purposes.
"Investment Company Event" means that the Regular Trustees shall have
received an opinion of nationally recognized independent counsel experienced in
practice under the Investment Company Act of 1940, as amended (the "1940 Act"),
that as a result of the occurrence of a change in law or regulation or a change
in interpretation or application of law or regulation by any legislative body,
court, governmental agency or regulatory authority (a "Change in 1940 Act Law"),
there is more than an insubstantial risk that the Trust is or will be considered
an "investment company" which is required to be registered under the 1940 Act,
which Change in 1940 Act Law becomes effective on or after the Expiration Date.
On the date fixed for any distribution of Junior Subordinated Debentures,
upon dissolution of the Trust, (i) the Preferred Securities and the Common
Securities will no longer be deemed to be
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<PAGE>
outstanding and (ii) certificates representing Preferred Securities will be
deemed to represent Junior Subordinated Debentures having an aggregate principal
amount equal to the stated liquidation amount of, and bearing accrued and unpaid
interest equal to accrued and unpaid distributions on, such Preferred Securities
until such certificates are presented to Holdings or its agent for transfer or
reissuance.
There can be no assurance as to the market price for the Junior Subordinated
Debentures which may be distributed in exchange for Preferred Securities if a
dissolution and liquidation of the Trust were to occur. Accordingly, the Junior
Subordinated Debentures which the investor may subsequently receive on
dissolution and liquidation of the Trust may trade at a discount to the price of
the Preferred Securities exchanged. If the Junior Subordinated Debentures are
distributed to the holders of Preferred Securities upon the dissolution of the
Trust, Holdings will use its best efforts to list the Junior Subordinated
Debentures on the NYSE or on such other exchange on which the Preferred
Securities are then listed.
MANDATORY REDEMPTION
Upon the repayment of the Junior Subordinated Debentures, whether at
maturity, upon redemption or otherwise, the proceeds from such repayment or
payment will be promptly applied to redeem Preferred Securities and Common
Securities having an aggregate liquidation amount equal to the Junior
Subordinated Debentures so repaid, upon not less than 30 nor more than 60 days'
notice, at the Redemption Price. The Common Securities will be entitled to be
redeemed on a Pro Rata Basis with the Preferred Securities, except that if an
Event of Default under the Declaration has occurred and is continuing, the
Preferred Securities will have a priority over the Common Securities with
respect to payment of the Redemption Price. Subject to the foregoing, if fewer
than all outstanding Preferred Securities and Common Securities are to be
redeemed, the Preferred Securities and Common Securities will be redeemed on a
Pro Rata Basis. In the event fewer than all outstanding Preferred Securities are
to be redeemed, Preferred Securities registered in the name of and held by a
Depository Institution or its nominee will be redeemed pro rata as described
under "--Book-Entry-Only; Delivery and Form" below.
REDEMPTION PROCEDURES
The Trust may not redeem fewer than all the outstanding Preferred Securities
unless all accrued and unpaid distributions have been paid on all Preferred
Securities for all quarterly distribution periods terminating on or prior to the
date of redemption.
If the Trust gives a notice of redemption in respect of Preferred Securities
(which notice will be irrevocable), then immediately prior to the close of
business on the redemption date, provided that Holdings has paid to the Trust a
sufficient amount of cash in connection with the related redemption or maturity
of the Junior Subordinated Debentures, distributions will cease to accrue on the
Preferred Securities called for redemption, such Preferred Securities shall no
longer be deemed to be outstanding and all rights of holders of such Preferred
Securities so called for redemption will cease, except the right of the holders
of such Preferred Securities to receive the Redemption Price, but without
interest on such Redemption Price. Neither the Trustees nor the Trust shall be
required to register or cause to be registered the transfer of any Preferred
Securities which have been so called for redemption. If any date fixed for
redemption of Preferred Securities is not a Business Day, then payment of the
Redemption Price payable on such date will be made on the next succeeding day
that is a Business Day (and without any interest or other payment in respect of
any such delay) except that, if such Business Day falls in the next calendar
year, such payment will be made on the immediately preceding Business Day, in
each case with the same force and effect as if made on such date fixed for
redemption. If Holdings fails to repay Junior Subordinated Debentures on
maturity or on the date fixed for this redemption or if payment of the
Redemption Price in respect of Preferred Securities is improperly withheld or
refused and not paid by the Trust or by Holdings pursuant to the Preferred
Securities Guarantee described
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under "Description of the Preferred Securities Guarantee", distributions on such
Preferred Securities will continue to accrue from the original redemption date
of the Preferred Securities to the date of payment with interest compounded
quarterly to the extent permitted by applicable law, in which case the actual
payment date will be considered the date fixed for redemption for purposes of
calculating the Redemption Price.
If a partial redemption of the Preferred Securities would result in the
delisting of the Preferred Securities by any national securities exchange or
other organization on which the Preferred Securities are then listed, Holdings
pursuant to the Indenture will only redeem the Junior Subordinated Debentures in
whole and, as a result, the Trust may only redeem the Preferred Securities in
whole.
Subject to the foregoing and applicable law (including, without limitation,
United States federal securities laws), Holdings or any of its subsidiaries may
at any time and from time to time purchase outstanding Preferred Securities by
tender, in the open market or by private agreement.
LIQUIDATION DISTRIBUTION UPON DISSOLUTION
In the event of any voluntary or involuntary dissolution, liquidation,
winding-up or termination of the Trust, the holders of the Preferred Securities
and Common Securities at the date of dissolution, winding-up or termination of
the Trust will be entitled to receive on a Pro Rata Basis solely out of the
assets of the Trust, after satisfaction of liabilities of creditors (to the
extent not satisfied by Holdings as provided in the Declaration), an amount
equal to the aggregate of the stated liquidation amount of $25 per Trust
Security plus accrued and unpaid distributions thereon to the date of payment
(such amount being the "Liquidation Distribution"), unless, in connection with
such dissolution, liquidation, winding-up or termination, Junior Subordinated
Debentures in an aggregate principal amount equal to the aggregate stated
liquidation amount of such Trust Securities, and bearing accrued and unpaid
interest in an amount equal to the accrued and unpaid distributions on such
Trust Securities, shall be distributed on a Pro Rata Basis to the holders of the
Preferred Securities and Common Securities in exchange therefor.
If, upon any such dissolution, the Liquidation Distribution can be paid only
in part because the Trust has insufficient assets available to pay in full the
aggregate Liquidation Distribution, then the amounts payable directly by the
Trust on the Preferred Securities and the Common Securities shall be paid on a
Pro Rata Basis. The holders of the Common Securities will be entitled to receive
distributions upon any such dissolution on a Pro Rata Basis with the holders of
the Preferred Securities, except that if an Event of Default under the
Declaration has occurred and is continuing, the Preferred Securities shall have
a priority over the Common Securities with respect to payment of the Liquidation
Distribution.
Pursuant to the Declaration, the Trust shall terminate: (i) on December 31,
2044, (ii) when all of the Trust Securities shall have been called for
redemption and the amounts necessary for redemption thereof shall have been paid
to the holders of Trust Securities in accordance with the terms of the Trust
Securities, or (iii) when all of the Junior Subordinated Debentures shall have
been distributed to the holders of Trust Securities in exchange for all of the
Trust Securities in accordance with the terms of the Trust Securities.
NO MERGER, CONSOLIDATION OR AMALGAMATION OF THE TRUST
The Trust may not consolidate, amalgamate, merge with or into, or be
replaced by, or convey, transfer or lease its properties and assets to, any
corporation or other entity.
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DECLARATION EVENTS OF DEFAULT
An Indenture Event of Default will constitute an event of default under the
Declaration with respect to the Trust Securities (an "Event of Default");
provided that pursuant to the Declaration, the holder of the Common Securities
will be deemed to have waived any such Event of Default with respect to the
Common Securities until all Events of Default with respect to the Preferred
Securities have been cured or waived. Until all such Events of Default with
respect to the Preferred Securities have been cured or waived, the Institutional
Trustee will be deemed to be acting solely on behalf of the holders of the
Preferred Securities, and only the holders of the Preferred Securities will have
the right to direct the Institutional Trustee with respect to certain matters
under the Declaration and consequently under the Indenture. In the event that
any Event of Default with respect to the Preferred Securities is waived by the
holders of the Preferred Securities as provided in the Declaration, the holders
of Common Securities pursuant to the Declaration have agreed that such waiver
also constitutes a waiver of such Event of Default with respect to the Common
Securities for all purposes under the Declaration without any further act, vote
or consent of the holders of the Common Securities. See "--Voting Rights".
Upon the occurrence of an Event of Default, the Institutional Trustee will
have the right under the Indenture to declare the principal of and interest on
the Junior Subordinated Debentures to be immediately due and payable. In
addition, the Institutional Trustee will have the power to exercise all rights,
powers and privileges under the Indenture. See "Description of the Junior
Subordinated Debentures".
VOTING RIGHTS
Except as provided below, under "--Modification and Amendment of the
Declaration" and "Description of the Preferred Securities Guarantee--Amendments
and Assignment" and as otherwise required by the Business Trust Act, the Trust
Indenture Act and the Declaration, the holders of the Preferred Securities will
have no voting rights.
If (i) the Trust fails to make distributions in full on the Preferred
Securities for six consecutive regularly scheduled quarterly distribution
periods; or (ii) an Event of Default under the Declaration occurs and is
continuing (each, an "Appointment Event"), then the holders of the Preferred
Securities, acting as a single class, will be entitled, by the vote of holders
of Preferred Securities representing a majority in aggregate liquidation amount
of the outstanding Preferred Securities, to appoint a Special Regular Trustee
(who need not be an officer or an employee of or otherwise affiliated with
Holdings) who shall have the same rights, powers and privileges under the
Declaration as a Regular Trustee. Any holder of Preferred Securities (other than
Holdings or any of its affiliates) shall have the right to nominate any person
to be appointed as Special Regular Trustee. For purposes of determining whether
the Trust has failed to pay distributions in full for six consecutive regularly
scheduled quarterly distribution periods, distributions shall be deemed to
remain in arrears, notwithstanding any payments in respect thereof, until full
cumulative distributions have been or contemporaneously are paid with respect to
all quarterly distribution periods terminating on or prior to the date of
payment of such cumulative distributions. Not later than 30 days after such
right to appoint a Special Regular Trustee arises, the Regular Trustees will
convene a meeting for the purpose of appointing a Special Regular Trustee. If
the Regular Trustees fail to convene such meeting within such 30-day period, the
holders of Preferred Securities representing 10% in liquidation amount of the
outstanding Preferred Securities will be entitled to convene such meeting. The
provisions of the Declaration relating to the convening and conduct of the
meetings of the holders will apply with respect to any such meeting. If, at any
such meeting, holders of less than a majority in aggregate liquidation amount of
Preferred Securities entitled to vote for the appointment of a Special Regular
Trustee vote for such appointment, no Special Regular Trustee shall be
appointed. Any Special Regular Trustee may be removed without cause at any time
by holders of Preferred Securities representing a majority in liquidation amount
of the Preferred Securities and holders of Preferred Securities representing 10%
in liquidation amount of the Preferred Securities shall be entitled to convene a
meeting for such purpose. Any Special Regular Trustee appointed shall
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cease to be a Special Regular Trustee if the Appointment Event pursuant to which
the Special Regular Trustee was appointed and all other Appointment Events have
been cured and cease to be continuing. Notwithstanding the appointment of any
such Special Regular Trustee, Holdings shall retain all rights under the
Indenture, including the right to extend the interest payment period as provided
under "Description of the Junior Subordinated Debentures--Option to Extend
Interest Payment Period". If such an extension occurs, there will be no
Indenture Event of Default for failure to make any scheduled interest payment
during the Extension Period on the date originally scheduled.
Subject to the requirements of the second to last sentence of this
paragraph, the holders of a majority in aggregate liquidation amount of the
Preferred Securities have the right (i) on behalf of all holders of Trust
Securities, to waive any past default that is waivable under the Declaration and
(ii) to direct the time, method and place of conducting any proceeding for any
remedy available to the Institutional Trustee, or exercising any trust or power
conferred upon the Institutional Trustee under the Declaration; provided,
however, that the holders of the Preferred Securities will vote as a single
class with any holders of any other undivided interests, such as the Preferred
Securities, similarly situated with respect to the Junior Subordinated
Debentures, or any other debt securities issued pursuant to the Indenture with
respect to the right to direct the Institutional Trustee, to (x) direct the
time, method and place of conducting any proceeding for any remedy available to
the Trustee, under the Indenture for the Junior Subordinated Debentures
("Indenture Trustee") or exercising any trust or power conferred on the
Indenture Trustee with respect to the Junior Subordinated Debentures, (y) waive
any past default that is waivable under Section 5.1 of the Indenture with
respect to the Junior Subordinated Debentures or (z) exercise any right to
rescind or annul a declaration that the principal of all the Junior Subordinated
Debentures shall be due and payable; provided that where a consent under the
Indenture would require the consent of (1) holders of Junior Subordinated
Debentures representing a specified percentage greater than a majority in
principal amount of the Junior Subordinated Debentures or (2) each holder of
Junior Subordinated Debentures affected thereby, no such consent shall be given
by the Institutional Trustee without the prior consent of, in the case of clause
(1) above, holders of Preferred Securities representing such specified
percentage of the aggregate liquidation amount of the Preferred Securities or,
in the case of clause (2) above, each holder of all Preferred Securities
affected thereby, together, in each case, if applicable with the holders of any
other undivided interests. The Institutional Trustee shall not revoke any action
previously authorized or approved by a vote of the holders of Preferred
Securities. The Institutional Trustee shall notify all holders of record of
Preferred Securities of any notice of default received from the Indenture
Trustee with respect to the Junior Subordinated Debentures. Other than with
respect to directing the time, method and place of conducting any proceeding for
any remedy available to the Institutional Trustee or the Indenture Trustee as
set forth above, the Institutional Trustee shall be under no obligation to take
any of the foregoing actions at the direction of the holders of the Preferred
Securities unless the Institutional Trustee shall have obtained an opinion of
nationally recognized independent tax counsel recognized as expert in such
matters to the effect that the Trust will not be classified for United States
federal income tax purposes as an association taxable as a corporation or a
partnership on account of such action and will be treated as a grantor trust for
United States federal income tax purposes following such action. If the
Institutional Trustee fails to enforce its rights under the Declaration, any
holder of Preferred Securities may, after a period of 90 days has elapsed from
such holder's written request to the Institutional Trustee to enforce such
rights, institute a legal proceeding directly against Holdings to enforce the
Institutional Trustee's rights under the Declaration, without first instituting
a legal proceeding against the Institutional Trustee or any other Person.
A waiver of an Indenture Event of Default by the Institutional Trustee at
the direction of holders of the Preferred Securities will constitute a waiver of
the corresponding Event of Default under the Declaration in respect of the Trust
Securities.
In the event the consent of the Trust as the holder of the Junior
Subordinated Debentures is required under the Indenture with respect to any
amendment, modification or termination of the
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Indenture or the Junior Subordinated Debentures, the Institutional Trustee shall
request the direction of the holders of the Trust Securities with respect to
such amendment, modification or termination and shall vote with respect to such
amendment, modification or termination as directed by a majority in liquidation
amount of the Trust Securities voting together as a single class together with
the holders of any other undivided interests, similarly situated, provided,
however, that where any such amendment, modification or termination under the
Indenture would require the consent of holders of Junior Subordinated Debentures
representing a specified percentage greater than a majority in principal amount
of the Junior Subordinated Debentures, the Institutional Trustee may only give
such consent at the direction of the holders of Trust Securities representing
such specified percentage of the aggregate liquidation amount of the Trust
Securities together with the holders of any other undivided interests similarly
situated; and, provided, further, that the Institutional Trustee shall be under
no obligation to take any such action in accordance with the directions of the
holders of the Trust Securities unless the Institutional Trustee has obtained an
opinion of nationally recognized independent tax counsel recognized as expert in
such matters to the effect that the Trust will not be classified for United
States federal income tax purposes as an association taxable as a corporation or
a partnership on account of such action and will be treated as a grantor trust
for United States federal income tax purposes following such action.
Any required approval or direction of holders of Preferred Securities may be
given at a separate meeting of holders of Preferred Securities convened for such
purpose, at a meeting of all of the holders of Trust Securities or pursuant to
written consent. The Regular Trustees will cause a notice of any meeting at
which holders of Preferred Securities are entitled to vote, or of any matter
upon which action by written consent of such holders is to be taken, to be
mailed to each holder of record of Preferred Securities. Each such notice will
include a statement setting forth (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 Preferred Securities will be required
for the Trust to redeem and cancel Preferred Securities or distribute Junior
Subordinated Debentures in accordance with the Declaration.
Notwithstanding that holders of Preferred Securities are entitled to vote or
consent under any of the circumstances described above, any of the Preferred
Securities at such time that are owned by Holdings or by any entity directly or
indirectly controlling or controlled by or under direct or indirect common
control with Holdings 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.
The procedures by which persons owning Preferred Securities registered in
the name of and held by DTC or its nominee may exercise their voting rights are
described under "--Book-Entry; Delivery and Form" below.
Subject to the right of holders of Preferred Securities to appoint a Special
Regular Trustee upon the occurrence of an Appointment Event, holders of the
Preferred Securities will have no rights to increase or decrease the number of
Trustees or to appoint, remove or replace a Trustee, which rights are vested
exclusively in the holders of the Common Securities.
MODIFICATION AND AMENDMENT OF THE DECLARATION
The Declaration may be modified and amended on approval of a majority of the
Regular Trustees, provided that, (i) if any proposed modification or amendment
provides for, or the Regular Trustees otherwise propose to effect, (A) any
action that would adversely affect the powers, preferences or special rights of
the Trust Securities, whether by way of amendment to the Declaration or
otherwise, or (B) the dissolution, winding-up or termination of the Trust other
than pursuant to the terms of the Declaration, then the holders of the
outstanding Trust Securities as a class will be entitled to vote on such
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amendment or proposal and such amendment or proposal shall not be effective
except with the approval of at least a majority in liquidation amount of the
Trust Securities, provided that if any amendment or proposal referred to in
clause (i) above would adversely affect only the Preferred Securities or the
Common Securities, then only the affected class will be entitled to vote on such
amendment or proposal and such amendment or proposal shall not be effective
except with the approval of a majority in liquidation amount of such class of
Securities.
Notwithstanding the foregoing, (i) no amendment or modification may be made
to the Declaration unless the Regular Trustees shall have obtained (A) either a
ruling from the Internal Revenue Service or an unqualified opinion of nationally
recognized independent tax counsel experienced in such matters to the effect
that such amendment will not cause the Trust to be classified for United States
federal income tax purposes as an association taxable as a corporation or a
partnership and to the effect that the Trust will continue to be treated as a
grantor trust for purposes of United States federal income taxation and (B) a
written unqualified opinion of nationally recognized independent counsel
experienced in such matters to the effect that such amendment will not cause the
Trust to be an "investment company" which is required to be registered under the
1940 Act; (ii) certain specified provisions of the Declaration may not be
amended without the consent of all of the holders of the Trust Securities, (iii)
no amendment which adversely affects the rights, powers and privileges of the
Institutional Trustee shall be made without the consent of the Institutional
Trustee, (iv) Article IV of the Declaration relating to the obligation of
Holdings to purchase the Common Securities and to pay certain obligations and
expenses of the Trust as described under "RJR Nabisco Holdings Capital Trust I"
may not be amended without the consent of Holdings, (v) the rights of holders of
Common Securities under Article V of the Declaration to increase or decrease the
number of, and to appoint, replace or remove, Trustees (other than a Special
Regular Trustee) shall not be amended without the consent of each holder of
Common Securities and (vi) the rights of holders of Preferred Securities under
the Declaration to appoint or remove a Special Regular Trustee shall not be
amended without the consent of each holder of Preferred Securities.
The Declaration further provides that it may be amended without the consent
of the holders of the Trust Securities to (i) cure any ambiguity, (ii) correct
or supplement any provision in this Declaration that may be defective or
inconsistent with any other provision of this Declaration, (iii) to add to the
covenants, restrictions or obligations of Holdings, and (iv) to conform to
changes in, or a change in interpretation or application of certain 1940 Act
requirements by the Commission, which amendment does not adversely affect the
rights, preferences or privileges of the holders.
BOOK-ENTRY; DELIVERY AND FORM
Preferred Securities will be issued in fully registered form. Investors may
elect to hold their Preferred Securities directly or, subject to the rules and
procedures of a Depository Institution described below, hold interests in a
global certificate (the "Preferred Securities Global Certificate") registered in
the name of a Depository Institution or its nominee. However, tendering holders
of Depositary Shares held in global form shall initially receive an interest in
the Preferred Securities Global Certificate and tendering holders of Depositary
Shares held directly in certificated form shall initially receive Preferred
Securities in certificated form, in each case unless otherwise specified in the
Letter of Transmittal. See "The Offer--Procedures for Tendering".
The laws of some jurisdictions require that certain purchasers of securities
take physical delivery of securities in definitive form. Such laws may impair
the ability to transfer beneficial interests in a global Preferred Security.
A Depository Institution holds securities that its participants
("Participants") deposit with the Depository Institution. A Depository
Institution also facilitates the settlement among Participants of
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securities transactions, such as transfers and pledges, in deposited securities
through electronic computerized book-entry changes in Participants' accounts,
thereby eliminating the need for physical movement of securities certificates.
Direct Participants include securities brokers and dealers, banks, trust
companies, clearing corporations, and certain other organizations ("Direct
Participants"). A Depository Institution is owned by a number of its Direct
Participants and by the NYSE, the American Stock Exchange, Inc., and the
National Association of Securities Dealers, Inc. Access to the Depository
Institution's system is also available to others such as securities brokers and
dealers, banks and trust companies that clear through or maintain a custodial
relationship with a Direct Participant, either directly or indirectly ("Indirect
Participants"). The rules applicable to a Depository Institution and its
Participants are on file with the Commission.
Upon issuance of a Preferred Securities Global Certificate, the Depository
Institution will credit on its book-entry registration and transfer system the
number of Preferred Securities represented by such Preferred Securities Global
Certificate to the accounts of institutions that have accounts with the
Depository Institution. Ownership of beneficial interests in a Preferred
Securities Global Certificate will be limited to Participants or persons that
may hold interests through Participants. The ownership interest of each actual
purchaser of each Preferred Security ("Beneficial Owner") is in turn to be
recorded on the Direct and Indirect Participants' records. Beneficial Owners
will not receive written confirmation from the Depository Institution of their
purchases, but Beneficial Owners are expected to receive written confirmations
providing details of the transactions, as well as periodic statements of their
holdings, from the Direct or Indirect Participants through which the Beneficial
Owners purchased Preferred Securities. Transfers of ownership interests in the
Preferred Securities are to be accomplished by entries made on the books of
Participants acting on behalf of Beneficial Owners.
A Depository Institution has no knowledge of the actual Beneficial Owners of
the Preferred Securities; a Depository Institution's records reflect only the
identity of the Direct Participants to whose accounts such Preferred Securities
are credited, which may or may not be the Beneficial Owners. The Participants
will remain responsible for keeping account of their holdings on behalf of their
customers. So long as a Depository Institution, or its nominee, is the owner of
a Preferred Securities Global Certificate, a Depository Institution or such
nominee, as the case may be, will be considered the sole owner and holder of
record of the Preferred Securities represented by such Preferred Securities
Global Certificate for all purposes.
Conveyance of notices and other communications by a Depository Institution
to Direct Participants, by Direct Participants to Indirect Participants, and by
Direct Participants and Indirect Participants to Beneficial Owners will be
governed by arrangements among them, subject to any statutory or regulatory
requirements as may be in effect from time to time.
Redemption notices shall be sent to the Depository Institution If less than
all of the Preferred Securities are being redeemed, the Depository Institution
will reduce pro rata (subject to adjustment to eliminate fractional Preferred
Securities) the amount of interest of each Direct Participant in the Preferred
Securities to be redeemed.
Although voting with respect to the Preferred Securities is limited, in
those instances in which a vote is required, neither the Depository Institution
nor the Depository Institution itself will consent or vote with respect to
Preferred Securities. Under its usual procedures, the Depository Institution
would mail an Omnibus Proxy to the Trust as soon as possible after the record
date. The Omnibus Proxy assigns the Depository Institution's consenting or
voting rights to those Direct Participants to whose accounts the Preferred
Securities are credited on the record date (identified in a listing attached to
the Omnibus Proxy).
Distribution payments on the Preferred Securities represented by a Preferred
Series Global Certificate will be made by the Trust to the Depository
Institution. The Depository Institution's practice is to credit Direct
Participants' accounts on the relevant payment date in accordance with their
respective holdings shown on a Depository Institution's records unless the
Depository Institution has
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reason to believe that it will not receive payments on such payment date.
Payments by Participants to Beneficial Owners will be governed by standing
instructions and customary practices and will be the responsibility of such
Participants and not of a Depository Institution, the Trust or Holdings, subject
to any statutory or regulatory requirements as may be in effect from time to
time. Payment of distributions to a Depository Institution is the responsibility
of the Trust, disbursement of such payments to Direct Participants is the
responsibility of the Depository Institution, and disbursement of such payments
to the Beneficial Owners is the responsibility of Direct and Indirect
Participants.
A Depository Institution may discontinue providing its services as
securities depository with respect to the Preferred Securities at any time by
giving reasonable notice to the Trust. Under such circumstances, if a successor
securities depository is not obtained, Preferred Security certificates will be
required to be printed and delivered. Additionally, the Trust may decide to
discontinue use of the system of book-entry transfers through the Depository
Institution (or a successor depository). In that event, certificates for the
Preferred Securities will be printed and delivered.
The information in this section concerning the Depository Institution and
the Depository Institution's book-entry system has been obtained from sources
that the Trust and Holdings believe to be reliable, but the Trust and Holdings
take no responsibility for the accuracy thereof.
REGISTRAR, TRANSFER AGENT AND PAYING AGENT
Payment of distributions and payments on redemption of the Preferred
Securities will be payable, the transfer of the Preferred Securities will be
registrable, and Preferred Securities will be exchangeable for Preferred
Securities of other denominations of a like aggregate liquidation amount, at the
principal corporate trust office of the Institutional Trustee in The City of New
York; provided that payment of distributions may be made at the option of the
Regular Trustees on behalf of the Trust by check mailed to the address of the
persons entitled thereto and payment on redemption of any Preferred Security
will be made only upon surrender of such Preferred Security to the Institutional
Trustee.
First Chicago Trust Company of New York or one of its affiliates will act as
registrar and transfer agent for the Preferred Securities. First Chicago Trust
Company of New York will also act as paying agent and, with the consent of the
Regular Trustees, may designate additional paying agents.
Registration of transfers of Preferred Securities will be effected without
charge by or on behalf of the Trust, but upon payment (with the giving of such
indemnity as the Trust or Holdings may require) in respect of any tax or other
governmental charges that may be imposed in relation to it.
The Trust will not be required to register or cause to be registered the
transfer of Preferred Securities after such Preferred Securities have been
called for redemption.
INFORMATION CONCERNING THE INSTITUTIONAL TRUSTEE
The Institutional Trustee, prior to a default with respect to the Trust
Securities, undertakes to perform only such duties as are specifically set forth
in the Declaration and, after default, shall exercise the same degree of care as
a prudent individual would exercise in the conduct of his or her own affairs.
Subject to such provision, the Institutional Trustee is under no obligation to
exercise any of the powers vested in it by the Declaration at the request of any
holder of Preferred Securities, unless offered reasonable indemnity by such
holder against the costs, expenses and liabilities which might be incurred
thereby. The Institutional Trustee is not required to expend or risk its own
funds or otherwise incur personal financial liability in the performance of its
duties if the Institutional Trustee reasonably believes that repayment or
adequate indemnity is not reasonably assured to it.
Holdings and certain of its affiliates maintain a deposit account and
banking relationship with the Institutional Trustee.
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GOVERNING LAW
The Declaration and the Preferred Securities will be governed by, and
construed in accordance with, the internal laws of the State of Delaware.
MISCELLANEOUS
Application will be made to list the Preferred Securities on the NYSE. The
Regular Trustees are authorized and directed to take such action as they deem
reasonable in order that the Trust will not be deemed to be an "investment
company" required to be registered under the 1940 Act or that the Trust will not
be classified for United States federal income tax purposes as an association
taxable as a corporation or a partnership and will be treated as a grantor trust
for United States federal income tax purposes. In this connection, the Regular
Trustees are authorized to take any action, not inconsistent with applicable
law, the certificate of trust or the Declaration, that the Regular Trustees
determine in their discretion to be reasonable and necessary or desirable for
such purposes, as long as such action does not adversely affect the interests of
holders of the Trust Securities.
Holdings and the Regular Trustees on behalf of the Trust will be required to
provide to the Institutional Trustee annually a certificate as to whether or not
Holdings and the Trust, respectively, are in compliance with all the conditions
and covenants under the Declaration.
DESCRIPTION OF THE PREFERRED SECURITIES GUARANTEE
Set forth below is a summary of information concerning the Preferred
Securities Guarantee that will be executed and delivered by Holdings for the
benefit of the holders from time to time of Preferred Securities. The Preferred
Securities Guarantee is separately qualified under the Trust Indenture Act and
will be held by The Bank of New York, acting in its capacity as indenture
trustee with respect thereto, for the benefit of the holders of the Preferred
Securities. The terms of the Preferred Securities Guarantee include those stated
in such Guarantee and those made part of the Preferred Securities Guarantee by
the Trust Indenture Act. The summary set forth below does not purport to be
complete and is subject in all respects to the provisions of, and is qualified
in its entirety by reference to, the Preferred Securities Guarantee, which is
filed as an exhibit to the Registration Statement of which this Prospectus forms
a part, and the Trust Indenture Act.
GENERAL
Pursuant to the Preferred Securities Guarantee, Holdings will irrevocably
and unconditionally agree, to the extent set forth therein, to pay in full, to
the holders of the Preferred Securities, the Guarantee Payments (as defined
below) (without duplication of amounts theretofore paid by the Trust), to the
extent not paid by the Trust, regardless of any defense, right of set-off or
counterclaim that the Trust may have or assert. The following payments or
distributions with respect to the Preferred Securities to the extent not paid or
made by the Trust (the "Guarantee Payments") will be subject to the Guarantee
(without duplication): (i) any accrued and unpaid distributions on the Preferred
Securities and the redemption price, including all accrued and unpaid
distributions to the date of the redemption, with respect to the Preferred
Securities called for redemption by the Trust but only if and to the extent that
in each case Holdings has made a payment to the Institutional Trustee of
interest or principal on the Junior Subordinated Debentures and (ii) upon a
voluntary or involuntary dissolution, winding-up or termination of the Trust
(other than in connection with the distribution of Junior Subordinated
Debentures to holders of Preferred Securities or the redemption of all of the
Preferred Securities upon the maturity or redemption of the Junior Subordinated
Debentures) the lesser of (a) the aggregate of the liquidation amount and all
accrued and unpaid distributions on the Preferred Securities to the date of
payment, to the extent the Trust has funds available therefor, and (b) the
amount of assets of the Trust remaining available for distribution to holders of
Preferred Securities in liquidation of the Trust. Holdings' obligation to make a
Guarantee Payment may be satisfied by direct
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payment of the required amounts by Holdings to the holders of Preferred
Securities or by paying the required amount by Holdings and by causing the Trust
to pay such amounts to such holders.
CERTAIN COVENANTS OF HOLDINGS
In the Preferred Securities Guarantee, Holdings will covenant that, so long
as the Preferred Securities remain outstanding, Holdings will not declare or pay
any dividends on, or redeem, purchase, acquire or make a distribution or
liquidation payment with respect to, any of its common stock or preferred stock
or make any guarantee payment with respect thereto if at such time (i) Holdings
shall be in default with respect to its Guarantee Payments or other payment
obligations under the Preferred Securities Guarantee, (ii) there shall have
occurred any Event of Default under the Declaration or (iii) Holdings shall have
given notice of its selection of an Extension Period as provided in the
Indenture and such period, or any extension thereof, is continuing; provided
that Holdings will be permitted to pay accrued dividends (and cash in lieu of
fractional shares) upon the mandatory conversion of any of its preferred stock
including its Series C Conversion Preferred Stock and ESOP Convertible Preferred
Stock, in accordance with the terms of such stock. In addition, so long as the
Preferred Securities remain outstanding, Holdings has agreed (i) to remain the
sole direct or indirect owner of all of the outstanding Common Securities and
shall not cause or permit the Common Securities to be transferred except to the
extent permitted by the Declaration; provided that any permitted successor of
Holdings under the Indenture may succeed to Holdings' ownership of the Common
Securities and (ii) to use reasonable efforts to cause the Trust to continue to
be treated as a grantor trust for United States federal income tax purposes
except in connection with a distribution of Junior Subordinated Debentures.
AMENDMENTS AND ASSIGNMENT
Except with respect to any changes that do not adversely affect the rights
of holders of Preferred Securities (in which case no consent will be required),
the Preferred Securities Guarantee may be amended only with the prior approval
of the holders of not less than a majority in liquidation amount of the
outstanding Preferred Securities. The manner of obtaining any such approval of
holders of the Preferred Securities will be as set forth under "Description of
the Preferred Securities--Voting Rights". All guarantees and agreements
contained in the Preferred Securities Guarantee shall bind the successors,
assigns, receivers, trustees and representatives of Holdings and shall inure to
the benefit of the holders of the Preferred Securities then outstanding. Except
in connection with a consolidation, merger or sale involving Holdings that is
permitted under the Indenture, Holdings may not assign its obligations under the
Preferred Securities Guarantee.
TERMINATION OF THE PREFERRED SECURITIES GUARANTEE
The Preferred Securities Guarantee will terminate and be of no further force
and effect as to the Preferred Securities upon full payment of the Redemption
Price of all Preferred Securities, or upon distribution of the Junior
Subordinated Debentures to the holders of Preferred Securities in exchange for
all of the Preferred Securities, or upon full payment of the amounts payable
upon liquidation of the Trust. Notwithstanding the foregoing, the Preferred
Securities Guarantee will continue to be effective or will be reinstated, as the
case may be, if at any time any holder of Preferred Securities must restore
payment of any sums paid with respect to the Preferred Securities or the
Preferred Securities Guarantee.
STATUS OF THE PREFERRED SECURITIES GUARANTEE
Holdings' obligations under the Preferred Securities Guarantee to make the
Guarantee Payments will constitute an unsecured obligation of Holdings and will
rank (i) subordinate and junior in right of payment to all Senior Obligations of
Holdings, except obligations and securities made pari passu or subordinate by
their terms, and to the Junior Subordinated Debentures, and (ii) senior to all
capital
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stock now or hereafter issued by Holdings, including the Depositary Shares, and
to any guarantee now or hereafter entered into by Holdings in respect of any of
its capital stock. Because Holdings is a holding company, Holdings' obligations
under the Preferred Securities Guarantee are also effectively subordinated to
all existing and future liabilities, including trade payables, of Holdings'
subsidiaries, except to the extent that Holdings is a creditor of the
subsidiaries recognized as such. The Declaration provides that each holder of
Preferred Securities by acceptance thereof agrees to the subordination
provisions and other terms of the Preferred Securities Guarantee.
The Preferred Securities Guarantee will constitute a guarantee of payment
and not of collection (that is, the guaranteed party may institute a legal
proceeding directly against the guarantor to enforce its rights under the
guarantee without first instituting a legal proceeding against any other person
or entity). The Preferred Securities Guarantee will be deposited with the
Institutional Trustee, as indenture trustee, to be held for the benefit of the
holders of the Preferred Securities. The Institutional Trustee shall enforce the
Preferred Securities Guarantee on behalf of the holders of the Preferred
Securities. The holders of not less than a majority in aggregate liquidation
amount of the Preferred Securities have the right to direct the time, method and
place of conducting any proceeding for any remedy available in respect of the
Preferred Securities Guarantee, including the giving of directions to the
Institutional Trustee. If the Institutional Trustee fails to enforce the
Preferred Securities Guarantee as above provided, any holder of Preferred
Securities may, after a period of 90 days has elapsed from such holder's written
request to the Institutional Trustee to enforce the Preferred Securities
Guarantee, institute a legal proceeding directly against Holdings to enforce its
rights under the Preferred Securities Guarantee, without first instituting a
legal proceeding against the Trust or any other person or entity.
GOVERNING LAW
The Preferred Securities Guarantee will be governed by and construed in
accordance with the laws of the State of New York.
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DESCRIPTION OF THE JUNIOR SUBORDINATED DEBENTURES
Set forth below is a description of the Junior Subordinated Debentures which
will be deposited in the Trust as trust assets. The terms of the Junior
Subordinated Debentures include those stated in the Indenture dated ,
1995 between Holdings and The Bank of New York, as trustee (the "Indenture
Trustee"), as supplemented by the First Supplemental Indenture dated
, 1995 between Holdings and the Indenture Trustee (as so
supplemented, the "Indenture"), forms of which have been filed as exhibits to
the Registration Statement of which this Prospectus forms a part, and those made
part of the Indenture by the Trust Indenture Act. The following description does
not purport to be complete and is qualified in its entirety by reference to the
Indenture and the Trust Indenture Act. Whenever particular provisions or defined
terms in the Indenture are referred to herein, such provisions or defined terms
are incorporated by reference herein. Section and Article references used herein
are references to provisions of the Indenture.
The Indenture provides for the issuance of debentures, notes (including the
Junior Subordinated Debentures) or other evidences of indebtedness by Holdings
("Securities") in an unlimited amount from time to time. The Junior Subordinated
Debentures constitute a separate series under the Indenture.
Under certain circumstances involving the dissolution of the Trust following
the occurrence of a Special Event, Junior Subordinated Debentures may be
distributed to the holders of the Trust Securities in liquidation of the Trust.
See "Description of the Preferred Securities--Special Event Redemption or
Distribution".
GENERAL
The Junior Subordinated Debentures are unsecured, subordinated obligations
of Holdings, limited in aggregate principal amount to (i) the aggregate
liquidation preference of the Preferred Securities issued by the Trust in the
Offer and (ii) the proceeds received by the Trust upon issuance of the Common
Securities to Holdings (which proceeds will be used to purchase an equal
principal amount of Junior Subordinated Debentures).
The entire principal amount of the Junior Subordinated Debentures will
become due and payable, together with any accrued and unpaid interest thereon,
on December 31, 2044. The Junior Subordinated Debentures are not subject to any
sinking fund.
If Junior Subordinated Debentures are distributed to holders of Preferred
Securities in dissolution of the Trust, such Junior Subordinated Debentures will
be so issued in fully registered certificated form in denominations of $25 and
integral multiples thereof and may be transferred or exchanged at the offices
described below.
Payments of principal and interest on Junior Subordinated Debentures will be
payable, the transfer of the Junior Subordinated Debentures will be registrable,
and Junior Subordinated Debentures will be exchangeable for Junior Subordinated
Debentures of other denominations of a like aggregate principal amount, at the
corporate trust office of the Indenture Trustee in The City of New York;
provided that payments of interest may be made at the option of Holdings by
check mailed to the address of the persons entitled thereto and that the payment
of principal with respect to any Junior Subordinated Debenture will be made only
upon surrender of such Junior Subordinated Debenture to the Indenture Trustee.
If the Junior Subordinated Debentures are distributed to the holders of
Preferred Securities upon the dissolution of the Trust, Holdings will use its
best efforts to list the Junior Subordinated Debentures on the NYSE or on such
other exchange on which the Preferred Securities are then listed.
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OPTIONAL REDEMPTION
Except as provided below, the Junior Subordinated Debentures may not be
redeemed prior to August 19, 1998. Holdings shall have the right to redeem the
Junior Subordinated Debentures, in whole or in part, from time to time, on or
after September 30, 1998, upon not less than 30 nor more than 60 days' notice,
at a redemption price equal to 100% of the principal amount to be redeemed, plus
any accrued and unpaid interest, to the redemption date, including interest
accrued during an Extension Period. Holdings will also have the right to redeem
the Junior Subordinated Debentures at any time upon the occurrence of a Tax
Event if certain conditions are met as described under "Description of the
Preferred Securities--Special Event Redemption or Distribution".
If Holdings gives a notice of redemption in respect of Junior Subordinated
Debentures (which notice will be irrevocable) then, by 12:00 noon, New York City
time, on the redemption date, Holdings will deposit irrevocably with the
Indenture Trustee funds sufficient to pay the applicable redemption price and
will give irrevocable instructions and authority to pay such redemption price to
the holders of the Junior Subordinated Debentures. If notice of redemption shall
have been given and funds deposited as required, then upon the date of such
deposit, interest will cease to accrue on the Junior Subordinated Debentures
called for redemption, such Junior Subordinated Debentures will no longer be
deemed to be outstanding and all rights of holders of such Junior Subordinated
Debentures so called for redemption will cease, except the right of the holders
of such Junior Subordinated Debentures to receive the applicable redemption
price, but without interest on such redemption price. If any date fixed for
redemption of Junior Subordinated Debentures is not a Business Day, then payment
of the redemption price payable on such date will be made on the next succeeding
day that is a Business Day (and without any interest or other payment in respect
of any such delay) except that, if such Business Day falls in the next calendar
year, such payment will be made on the immediately preceding Business Day, in
each case with the same force and effect as if made on such date fixed for
redemption. If payment of the redemption price in respect of Junior Subordinated
Debentures is improperly withheld or refused and not paid by Holdings, interest
on such Junior Subordinated Debentures will continue to accrue compounded
quarterly, from the original redemption date to the date of payment, in which
case the actual payment date will be considered the date fixed for redemption
for purposes of calculating the applicable redemption price. If fewer than all
of the Junior Subordinated Debentures are to be redeemed, the Junior
Subordinated Debentures to be redeemed shall be selected by lot or pro rata or
in some other equitable manner determined by the Indenture Trustee.
In the event of any redemption in part, Holdings shall not be required to
(i) issue, register the transfer of or exchange of any Junior Subordinated
Debentures during a period beginning at the opening of business 15 days before
any selection for redemption of Junior Subordinated Debentures and ending at the
close of business on the earliest date on which the relevant notice of
redemption is deemed to have been given to all holders of Junior Subordinated
Debentures to be redeemed and (ii) register the transfer of or exchange of any
Junior Subordinated Debentures so selected for redemption, in whole or in part,
except the unredeemed portion of any Junior Subordinated Debentures being
redeemed in part. (Section 2.8).
INTEREST
The Junior Subordinated Debentures will bear interest at an annual rate of
% from the Accrual Date. In addition, holders of the Junior Subordinated
Debentures will be entitled to interest ("Pre-issuance Accrued Interest") at the
rate of 9.25% per annum of the principal amount thereof from June 1, 1995
through the Expiration Date, payable on September 30, 1995 to holders of the
Preferred Securities on the record date for such distributions. Interest will be
payable quarterly in arrears on March 31, June 30, September 30 and December 31
of each year (each, an "Interest Payment Date"), commencing on September 30,
1995, to the person in whose name such Junior Subordinated Debenture is
registered, subject to certain exceptions, at the close of business on the
Business Day next preceding
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such Interest Payment Date. Interest payable on any Junior Subordinated
Debenture that is not punctually paid or duly provided for on any interest
payment date will forthwith cease to be payable to the person in whose name such
Junior Subordinated Debenture is registered on the relevant record date, and
such defaulted interest will instead be payable to the person in whose name such
Junior Subordinated Debenture is registered on the special record date or other
specified date determined in accordance with the Indenture; provided, however,
that interest shall not be considered payable by Holdings on any interest
payment date falling within an Extension Period unless Holdings has elected to
make a full or partial payment of interest accrued on the Junior Subordinated
Debentures on such interest payment date.
The amount of interest payable for any period will be computed on the basis
of a 360-day year of twelve 30-day months and for any period shorter than a full
quarterly period for which interest is computed, the amount of interest payable
will be computed on the basis of the actual number of days elapsed in such a
30-day month. If any date on which interest is payable on the Junior
Subordinated Debentures is not a Business Day, then payment of the interest
payable on such date will be made on the next succeeding day that is a Business
Day (and without any interest or other payment in respect of any such delay),
except that, if such Business Day is in the next succeeding calendar year, such
payment shall be made on the immediately preceding Business Day, in each case
with the same force and effect as if made on such date.
OPTION TO EXTEND INTEREST PAYMENT PERIOD
So long as Holdings shall not be in default in the payment of interest on
the Junior Subordinated Debentures, Holdings shall have the right to extend the
interest payment period from time to time for a period not exceeding 20
consecutive quarterly interest periods. Holdings has no current intention of
exercising its right to extend an interest payment period. No extension of
interest will be permitted with respect to interest accruing from June 1, 1995
through the Expiration Date. No interest shall be due and payable during an
Extension Period, except at the end thereof. During any Extension Period,
Holdings shall not declare or pay any dividends on, or redeem, purchase, acquire
or make a distribution or liquidation payment with respect to, any of its common
stock or preferred stock or make any guarantee payments with respect thereto;
provided that Holdings will be permitted to pay accrued dividends (and cash in
lieu of fractional shares) upon the conversion, at the option of Holdings, of
any of its preferred stock, including its Series C Conversion Preferred Stock
and ESOP Convertible Preferred Stock, in accordance with the terms of such
stock. Prior to the termination of any such Extension Period, Holdings may
further extend the interest payment period; provided that such Extension Period
together with all such previous and further extensions thereof may not exceed 20
consecutive quarterly interest periods. On the interest payment date occurring
at the end of each Extension Period, Holdings shall pay to the holders of Junior
Subordinated Debentures of record on the record date for such interest payment
date (regardless of who the holders of record may have been on other dates
during the Extension Period) all accrued and unpaid interest on the Junior
Subordinated Debentures, together with interest thereon at the rate specified
for the Junior Subordinated Debentures and with Compounded Interest. Upon the
termination of any Extension Period and the payment of all amounts then due,
Holdings may commence a new Extension Period, subject to the above requirements.
Holdings may also prepay at any time all or any portion of the interest accrued
during an Extension Period. Consequently, there could be multiple Extension
Periods of varying lengths (up to nine Extension Periods of 20 consecutive
quarterly interest periods each or more numerous shorter Extension Periods)
throughout the term of the Junior Subordinated Debentures provided that no
Extension Period may extend beyond the maturity of the Junior Subordinated
Debentures. The failure by Holdings to make interest payments during an
Extension Period would not constitute a default or an event of default under the
Indenture or Holdings' currently outstanding indebtedness.
If the Trust shall be the sole holder of the Junior Subordinated Debentures,
Holdings shall give the Institutional Trustee notice of its selection of such
Extension Period one Business Day prior to the
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earlier of (i) the date the distributions on the Preferred Securities are
payable or (ii) the date the Trust is required to give notice to the NYSE or
other applicable self-regulatory organization or to holders of the Preferred
Securities of the record date or the date such distribution is payable, but in
any event not less than one Business Day prior to such record date. The Trust
shall give notice of Holdings' selection of such Extension Period to the holders
of the Preferred Securities.
If Junior Subordinated Debentures have been distributed to holders of Trust
Securities, Holdings shall give the holders of the Junior Subordinated
Debentures notice of its selection of such Extension Period ten Business Days
prior to the earlier of (i) the next succeeding interest payment date or (ii)
the date Holdings is required to give notice to the NYSE (if the Junior
Subordinated Debentures are then listed thereon) or other applicable
self-regulatory organization or to holders of the Junior Subordinated Debentures
of the record or payment date of such related interest payment.
CERTAIN COVENANTS OF HOLDINGS APPLICABLE TO THE JUNIOR SUBORDINATED DEBENTURES
In the Indenture, Holdings will covenant that, so long as the Preferred
Securities remain outstanding, Holdings will not declare or pay any dividends
on, or redeem, purchase, acquire or make a distribution or liquidation payment
with respect to, any of its common stock or preferred stock or make any
guarantee payment with respect thereto if at such time (i) Holdings shall be in
default with respect to its Guarantee Payments or other payment obligations
under the Preferred Securities Guarantee, (ii) there shall have occurred any
Indenture Event of Default with respect to the Junior Subordinated Debentures or
(iii) Holdings shall have given notice of its selection of an Extension Period
as provided in the Indenture and such period, or any extension thereof, is
continuing; provided that Holdings will be permitted to pay accrued dividends
(and cash in lieu of fractional shares) upon the mandatory conversion of any of
its preferred stock, including its Series C Conversion Preferred Stock and ESOP
Convertible Preferred Stock, in accordance with the terms of such stock. In
addition, so long as the Preferred Securities remain outstanding, Holdings has
agreed (i) to remain the sole direct or indirect owner of all of the outstanding
Common Securities and shall not cause or permit the Common Securities to be
transferred except to the extent permitted by the Declaration; provided that any
permitted successor of Holdings under the Indenture may succeed to Holdings'
ownership of the Common Securities, (ii) to comply fully with all of its
obligations and agreements contained in the Declaration and (iii) not to take
any action which would cause the Trust to cease to be treated as a grantor trust
for United States federal income tax purposes except in connection with a
distribution of Junior Subordinated Debentures.
SUBORDINATION
The Indenture provides that the Junior Subordinated Debentures are
subordinate and junior in right of payment to all Senior Obligations of
Holdings. In the event (a) of any insolvency or bankruptcy proceedings, or any
receivership, liquidation, reorganization or other similar proceedings in
respect of Holdings or its property or any proceeding for voluntary liquidation,
dissolution or other winding up of Holdings, or (b) that Junior Subordinated
Debentures of any series are declared due and payable before their expressed
maturity because of the occurrence of an Event of Default under the Indenture
(under circumstances other than as set forth in clause (a) above), then the
holders of all Senior Obligations shall first be entitled to receive payment of
the full amount due thereon in money, before the holders of any of the
Subordinated Debentures are entitled to receive a payment on account of the
principal of, premium, if any, or interest on the indebtedness evidenced by such
Subordinated Debentures. In the event and during the continuation of any default
in payment of any Senior Obligations or if any event of default shall exist
under any Senior Obligations, as "event of default" is defined therein or in the
agreement under which the same is outstanding, no payment of the principal of,
premium, if any, or interest on the Junior Subordinated Debentures shall be
made.
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The term "Senior Obligations" means (a) the principal of and premium, if
any, and interest on all indebtedness of Holdings, whether outstanding on the
date of the Indenture or thereafter created, (i) for money borrowed by Holdings,
(ii) for money borrowed by, or obligations of, others and either assumed or
guaranteed, directly or indirectly, by Holdings, (iii) in respect of letters of
credit and acceptances issued or made by banks, or (iv) constituting purchase
money indebtedness, or indebtedness secured by property included in the
property, plant and equipment accounts of Holdings at the time of the
acquisition of such property by Holdings, for the payment of which Holdings is
directly liable, (b) all deferrals, renewals, extensions and refundings of, and
amendments, modifications and supplements to, any such indebtedness, and (c) all
other general unsecured obligations and liabilities of the Company, including
without limitation, trade payables. As used in the preceding sentence the term
"purchase money indebtedness" means indebtedness evidenced by a note, debenture,
bond or other instrument (whether or not secured by any lien or other security
interest) issued or assumed as all or a part of the consideration for the
acquisition of property, whether by purchase, merger, consolidation or
otherwise, unless by its terms such indebtedness is subordinate to other
indebtedness of Holdings.
The Indenture does not limit the aggregate amount of indebtedness, including
Senior Obligations, that may be issued. As of December 31, 1994, Senior
Obligations of Holdings (on an unconsolidated basis) aggregated approximately
$427 million. Because Holdings is a holding company, the Junior Subordinated
Debentures are also effectively subordinated to all existing and future
liabilities, including trade payables, of Holdings' subsidiaries, except to the
extent that Holdings is a creditor of the subsidiaries recognized as such.
Claims on Holdings' subsidiaries by creditors other than Holdings include
liabilities incurred in the ordinary course of business. At December 31, 1994,
Holdings' subsidiaries had outstanding approximately $19.8 billion of
liabilities. There are no terms in the Preferred Securities, the Junior
Subordinated Debentures or the Preferred Securities Guarantee that limit
Holdings' ability to incur additional indebtedness, including indebtedness that
ranks senior to or pari passu with the Junior Subordinated Debentures and the
Preferred Securities Guarantee, or the ability of its subsidiaries to incur
additional indebtedness. See "Description of the Preferred Securities
Guarantee--Status of the Preferred Securities Guarantee".
RESTRICTIONS ON MERGERS AND SALES OF ASSETS
Nothing contained in the Indenture or in the Securities will prevent any
consolidation of Holdings with, or merger of Holdings into, any other
corporation or corporations (whether or not affiliated with Holdings), or
successive consolidations or mergers to which Holdings or its successor will be
a party, or will prevent any sale, lease or conveyance of the property of
Holdings, as an entirety or substantially as an entirety; provided that upon any
such consolidation, merger, sale, lease or conveyance to which Holdings is a
party and in which Holdings is not the surviving corporation, the due and
punctual performance and observance of all of the covenants and conditions of
the Indenture to be performed or observed by Holdings and the due and punctual
payment of the principal of and interest on all of the Securities, according to
their tenor, shall be expressly assumed by supplemental indenture satisfactory
in form to the Indenture Trustee, executed and delivered to the Indenture
Trustee, by the corporation formed by such consolidation, or into which Holdings
shall have been merged, or which shall have acquired such property. (Section
9.1)
EVENTS OF DEFAULT
An Event of Default is defined under the Indenture as being: (a) default in
payment of any principal of the Securities of such series, either at maturity
(or upon any redemption), by declaration or otherwise; (b) default for 30 days
in payment of any interest on any Securities of such series, provided that a
declaration of a valid Extension Period by Holdings shall not constitute a
default in the payment of interest for this purpose; (c) default in the payment
of any sinking fund installment on the Securities of such series when the same
shall become due and payable; (d) default for 90 days after written notice in
the observance or performance of any other covenant or agreement in the
Securities of such series or
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the Indenture other than a covenant included in such Indenture solely for the
benefit of a series of Securities other than such series; and (e) certain events
of bankruptcy, insolvency or reorganization. (Section 5.1)
The Indenture provides that (a) if an Event of Default due to the default in
payment of principal of, premium, if any, or any interest on, any series of
Securities or due to the default in the performance or breach of any other
covenant or warranty of Holdings applicable to the Securities of such series but
not applicable to all outstanding Securities shall have occurred and be
continuing, either the Trustee or the holders of not less than 25% in principal
amount of the Securities of all affected series (treated as one class) (and, in
the case of any series of Securities held as trust assets of an RJR Nabisco
Holdings Capital Trust and with respect to which a Security Exchange has not
theretofore occurred, such consent of holders of the Preferred Securities and
the Common Securities of such RJR Nabisco Holdings Capital Trust as may be
required under the Declaration of Trust of such RJR Nabisco Holdings Capital
Trust), then outstanding may then declare the principal of all Securities of
each such affected series and interest accrued thereon to be due and payable
immediately; and (b) if an Event of Default due to a default in the performance
of any of the other covenants or agreements in the Indenture applicable to all
outstanding Securities or due to certain events of bankruptcy, insolvency and
reorganization of Holdings shall have occurred and be continuing, either the
Trustee or the holders of not less than 25% in principal amount of all
Securities then outstanding (treated as one class) (and, in the case of any
series of Securities held as trust assets of an RJR Nabisco Holdings Capital
Trust and with respect to which a Security Exchange has not theretofore
occurred, such consent of holders of the Preferred Securities and the Common
Securities of such RJR Nabisco Holdings Capital Trust as may be required under
the Declaration of Trust of such RJR Nabisco Holdings Capital Trust), may
declare the principal of all such Securities and interest accrued thereon to be
due and payable immediately, but upon certain conditions such declarations may
be annulled and past defaults may be waived (except a continuing default in
payment of principal of, premium, if any, or any interest on such Securities) by
the holders of a majority in principal amount of the Securities of all such
affected series then outstanding (and, in the case of any series of Securities
held as trust assets of an RJR Nabisco Holdings Capital Trust and with respect
to which a Security Exchange has not theretofore occurred, such consent of
holders of the Preferred Securities and the Common Securities of such RJR
Nabisco Holdings Capital Trust as may be required under the Declaration of Trust
of such RJR Nabisco Holdings Capital Trust). (Section 5.1)
The Indenture contains a provision entitling the Trustee, subject to the
duty of the trustee during a default to act with the required standard of care,
to be indemnified by the holders of Securities (treated as one class) (and, in
the case of any series of Securities held as trust assets of an RJR Nabisco
Holdings Capital Trust and with respect to which a Security Exchange has not
theretofore occurred, such consent of holders of the Preferred Securities and
the Common Securities of such RJR Nabisco Holdings Capital Trust as may be
required under the Declaration of Trust of such RJR Nabisco Holdings Capital
Trust), before proceeding to exercise any right or power under the Indenture at
the request of such holders. (Section 5.6) Subject to such provisions in the
Indenture for the indemnification of the Trustee and certain other limitations,
the holders of a majority in principal amount of the outstanding Securities
(treated as one class) (and, in the case of any series of Securities held as
trust assets of an RJR Nabisco Holdings Capital Trust and with respect to which
a Security Exchange has not theretofore occurred, such consent of holders of the
Preferred Securities and the Common Securities of such RJR Nabisco Holdings
Capital Trust as may be required under the Declaration of Trust of such RJR
Nabisco Holdings Capital Trust), may 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. (Section 5.9)
The Indenture provides that no holder of Securities may institute any action
against Holdings under the Indenture (except actions for payment of overdue
principal or interest, provided that a declaration of a valid Extension Period
by Holdings shall not constitute a failure to pay interest for this
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purpose) unless such holder previously shall have given to the Trustee written
notice of default and continuance thereof and unless the holders of not less
than 25% in principal amount of the Securities of all affected series (treated
as one class) (and, in the case of any series of Securities held as trust assets
of an RJR Nabisco Holdings Capital Trust and with respect to which a Security
Exchange has not theretofore occurred, such consent of holders of the Preferred
Securities and the Common Securities of such RJR Nabisco Holdings Capital Trust
as may be required under the Declaration of Trust of such RJR Nabisco Holdings
Capital Trust), then outstanding shall have requested the Trustee to institute
such action and shall have offered the Trustee reasonable indemnity, the Trustee
shall not have instituted such action within 60 days of such request and the
Trustee shall not have received direction inconsistent with such written request
by the holders of a majority in principal amount of the Securities of all
affected series (treated as one class). (and, in the case of any series of
Securities held as trust assets of an RJR Nabisco Holdings Capital Trust and
with respect to which a Security Exchange has not theretofore occurred, such
consent of holders of the Preferred Securities and the Common Securities of such
RJR Nabisco Holdings Capital Trust as may be required under the Declaration of
Trust of such RJR Nabisco Holdings Capital Trust). (Section 5.6 and Section 5.7)
The Indenture contains a covenant that Holdings will file annually, not more
than four months after the end of its fiscal year, with the Trustee a
certificate that no default existed or a certificate specifying any default that
existed, each as of the end of the fiscal year so ended. (Section 3.5)
DISCHARGE, DEFEASANCE AND COVENANT DEFEASANCE
The Indenture provides with respect to each series of Securities that,
except to the extent the terms of such series of Securities provide otherwise,
Holdings may elect either (a) to defease and be discharged from any and all
obligations with respect to the Securities of such series (except for the
obligations to register the transfer or exchange of the Securities of such
series, to replace temporary or mutilated, destroyed, lost or stolen Securities
of such series, to maintain an office or agency in respect of the Securities of
such series and to hold moneys for payment in trust) ("legal defeasance") or (b)
to be released from its obligations with respect to the Debt Securities of such
series (except for the obligations set forth as exceptions in the preceding
clause (a) and except for the obligations to pay the principal of and interest,
if any, on the Debt Securities, to compensate and indemnify the Trustee, to
appoint a successor Trustee, to repay certain moneys held by the Paying Agent
and to return certain unclaimed moneys held by the Trustee and Paying Agent)
("covenant defeasance"), upon the deposit with the Trustee (or other qualifying
trustee), in trust for such purpose, of money or, in the case of Securities
payable in U.S. dollars, U.S. Government Obligations (as defined in the
Indenture) which through the payment of principal and interest in accordance
with their terms will provide money in an amount sufficient to pay the principal
of, premium, if any, and any interest on the Securities of such series, and any
mandatory sinking fund or analogous payments thereon, on the due date thereof.
Such a trust may (except to the extent the terms of the Securities of such
series otherwise provide) only be established, if among other things, Holdings
has delivered to the Trustee an opinion of counsel (as specified in the
Indenture) to the effect that the Holders of the Securities of such series will
not recognize income, gain or loss for Federal income tax purposes as a result
of such legal defeasance or covenant defeasance and will be subject to Federal
income tax on the same amounts, in the same manner and at the same time as would
have been the case if such legal defeasance or covenant defeasance had not
occurred. Such opinion, in the case of legal defeasance under clause (a) above,
must (except to the extent the terms of the Securities of the relevant series
otherwise provide) refer to and be based upon a ruling of the Internal Revenue
Service or a change in applicable Federal income tax law occurring after the
date of the Indenture. (Section 10.1)
MODIFICATION OF THE INDENTURE
The Indenture provides that Holdings and the Trustee may enter into
supplemental indentures without the consent of the holders of Securities to: (a)
secure any Securities, (b) evidence the
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assumption by a successor corporation of the obligations of Holdings, (c) add
covenants for the protection of the holders of Securities, (d) cure any
ambiguity or correct any inconsistency in the Indenture, (e) establish the forms
or terms of Securities of any series, (f) provide for uncertificated Securities
and (g) evidence the acceptance of appointment by a successor trustee. (Section
8.1)
The Indenture also contains provisions permitting Holdings and the Trustee,
with the consent of the holders of not less than a majority in principal amount
of all Securities then outstanding and affected (treated as one class) (and, in
the case of any series of Securities held as trust assets of an RJR Nabisco
Holdings Capital Trust and with respect to which a Security Exchange has not
theretofore occurred, such consent of holders of the Preferred Securities and
the Common Securities of such RJR Nabisco Holdings Capital Trust as may be
required under the Declaration of Trust of such RJR Nabisco Holdings Capital
Trust), to add any provisions to, or change in any manner or eliminate any of
the provisions of, the Indenture or modify in any manner the rights of the
holders of the Securities of each series so affected; provided that Holdings and
the Trustee may not, without the consent of the holder of each outstanding
Security affected thereby, (a) extend the stated maturity of the principal of
any Security, or reduce the principal amount thereof or reduce the rate or
extend the time of payment of interest thereon (except that a declaration of a
valid Extension Period by Holdings shall not constitute an extension of time of
payment of interest for this purpose), or reduce any amount payable on the
redemption thereof or change the currency in which the principal thereof
(including any amount in respect of original issue discount), premium, if any,
or any interest thereon is payable or reduce the amount of any original issue
discount security payable upon acceleration or provable in bankruptcy or alter
certain provisions of the Indenture relating to the Securities issued thereunder
not denominated in U.S. dollars or impair the right to institute suit for the
enforcement of any payment on any Security when due or (b) reduce the aforesaid
percentage in principal amount of Securities of any series, the consent of the
holders of which is required for any such modification. (Section 8.2)
CONCERNING THE INDENTURE TRUSTEE
Holdings and its subsidiaries maintain ordinary banking relationships with
The Bank of New York and its affiliates and a number of other banks.
BOOK-ENTRY AND SETTLEMENT
If any Junior Subordinated Debentures are distributed to holders of
Preferred Securities (see "Description of the Preferred Securities"), such
Junior Subordinated Debentures will be issued in fully registered form. In such
event, investors may elect to hold their Junior Subordinated Debentures directly
or, subject to the rules and procedures of a Depository Institution, hold
interests in a global certificate registered in the name of a Depository
Institution or its nominee.
For a description of a Depository Institution and a Depository Institution's
book-entry system, see "Description of the Preferred Securities--Book-Entry;
Delivery and Form". As of the date of this Prospectus, the description herein of
a Depository Institution's book-entry system and Depository Institution's
practices as they relate to purchases, transfers, notices and payments with
respect to the Preferred Securities apply in all material respects to any Junior
Subordinated Debentures registered in the name of and held by a Depository
Institution or its nominee.
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DESCRIPTION OF THE SERIES B PREFERRED AND DEPOSITARY SHARES
The summary of the terms of the Series B Preferred and the Depositary Shares
set forth below does not purport to be complete and is subject to, and is
qualified in its entirety by reference to, the provisions of Holdings'
Certificate of Incorporation and the Certificate of Designation for the Series B
Preferred and the Deposit Agreement, copies of which may be obtained from
Holdings upon request.
GENERAL
The Series B Preferred consists of 50,000 shares. The Series B Preferred is
not convertible into, or exchangeable for, shares of any other class or series
of stock of Holdings. The Series B Preferred, with respect to dividend rights
and rights upon liquidation, dissolution or winding up, ranks (i) senior to the
common stock of Holdings and all other securities junior to the Series B
Preferred ("Junior Securities"), (ii) on a parity with the outstanding preferred
stock of Holdings and all other securities on a parity with the Series B
Preferred ("Parity Securities") and (iii) junior to all securities senior to the
Series B Preferred Stock.
Each Depositary Share represents ownership of 1/1000 of a share of Series B
Preferred. Subject to the terms of the deposit agreement among Holdings, the
Depositary and holders of Depositary Shares, each holder of a Depositary Share
is entitled to all the rights and preferences of 1/1000 of a share of Series B
Preferred (including dividend, voting, redemption and liquidation rights and
preferences). The Depositary is First Chicago Trust Company of New York, and its
principal office is currently located at 14 Wall Street, Suite 4680, New York,
New York 10005.
DIVIDENDS
Holders of shares of the Series B Preferred are entitled to receive, when,
as and if declared by the board of directors of Holdings, out of funds legally
available for the payment of dividends, cumulative preferential cash dividends
at the rate per annum of 9.25% per share or $2.3125 per Depositary Share. Such
dividends are cumulative from the date of original issue and are payable
quarterly in arrears on the first business day that is not a legal holiday of
each March, June, September and December, respectively. Such dividend and any
dividend payable on the Series B Preferred for any partial dividend period is
computed on the basis of a 360-day year consisting of twelve 30-day months. Each
dividend is payable to holders of record as they appear in the stock records of
Holdings at the close of business on each record date, which is the 15th day
prior to the payment date.
Dividends on the Series B Preferred accrue whether or not Holdings has
earnings, whether or not there are funds legally available for the payment of
such dividends and whether or not such dividends are declared. Accrued but
unpaid dividends on the Series B Preferred do not bear interest. Holders of
Series B Preferred are not entitled to any dividends in excess of full
cumulative dividends as described above.
No full dividends shall be declared or paid or set apart for payment by
Holdings on any Parity Security for any period unless full dividends for all
series of preferred stock that are Parity Securities (including any accumulation
in respect of unpaid dividends for prior dividend periods, if dividends on such
preferred stock are cumulative) have been or contemporaneously are declared and
paid or declared and a sum sufficient for the payment thereof through the most
recent dividend payment date is set apart for such payment. When dividends are
not so paid in full (or a sum sufficient for such full payment is not so set
apart) upon the Series B Preferred and any other such Parity Security, all
dividends declared (if any) on the Series B Preferred and any such Parity
Security shall be declared pro rata so that the amount of dividends declared per
share on the Series B Preferred an any such Parity Security shall in all cases
bear to each other the same ratio that accrued dividends (including any
accumulation with respect
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to unpaid dividends for prior dividend periods, if dividends for such series are
cumulative) per share for the Series B Preferred and any such Parity Securities
bear to each other.
Unless full dividends (including any accumulation with respect to unpaid
dividends for prior periods, if dividends for such series are cumulative) on the
Series B Preferred have been or contemporaneously are declared and paid or
declared and a sum set apart sufficient for such payment through the most recent
dividend payment date, no dividend shall be declared and paid or set apart for
payment or other distribution declared or made on the Common Stock or on any
other Junior Securities (other than a dividend or distribution paid in shares
of, or warrants, rights or options exercisable for or convertible into, Common
Stock or any other Junior Securities), nor shall any Common Stock nor any other
be redeemed, purchased or otherwise retired for any consideration, nor may any
moneys be paid to or made available for a sinking fund for the redemption of any
shares of any such securities, by Holdings (other than redemptions and purchases
pursuant to or in accordance with employee stock subscription agreements entered
into between Holdings and certain of its subsidiaries' directors, officers and
key employees), except by conversion into or exchange for Junior Securities.
Payment of dividends on Series B Preferred are and may be further restricted
by loan agreements, indentures or other transactions entered into by the
Company.
REDEMPTION
The Series B Preferred is not redeemable prior to August 19, 1998. On and
after August 19, 1998, Holdings, at its option upon not less than 30 nor more
than 60 days' notice, may redeem shares of the Series B Preferred (and the
Depositary will redeem the number of Depositary Shares representing the shares
of Series B Preferred so redeemed upon not less than 30 days' notice to the
holders thereof), as a whole or in part, at any time, at a redemption price
equivalent to $25 per Depositary Share, plus accrued and unpaid dividends
thereon to the date fixed for redemption, without interest, to the extent
Holdings has funds legally available therefor. Each holder of Depositary Shares
to be redeemed shall surrender the receipts evidencing such Depositary Shares at
the place designated in such notice and shall be entitled to the redemption
price and any accrued and unpaid dividends payable upon such redemption
following such surrender and following the date of such redemption. If fewer
than all the outstanding Depositary Shares are to be redeemed, the Depositary
Shares to be redeemed shall be selected by lot or pro rata (as nearly as may be
practicable without creating fractional shares) or by any other equitable method
determined by Holdings.
The holders of Depositary Shares at the close of business on a dividend
payment record date are entitled to receive the dividend payable with respect to
such Depositary Shares on the corresponding dividend payment date
notwithstanding the redemption thereof (except that holders of Depositary Shares
called for redemption on a date occurring between such record date and the
dividend payment date shall not be entitled to receive such dividend on such
dividend payment date) or Holdings' default in payment of the dividend due.
Except as provided above, Holdings makes no payment or allowance for unpaid
dividends, whether or not in arrears, on called Series B Preferred or Depositary
Shares.
The Series B Preferred has no stated maturity and is not be subject to any
sinking fund or mandatory redemption.
LIQUIDATION PREFERENCE
In the event of any voluntary of involuntary liquidation, dissolution or
winding up of Holdings, the holders of shares of Series B Preferred then
outstanding shall be entitled to be paid out of the assets of Holdings available
for distribution to its stockholders, after payment or provision for payment of
any Senior Securities, an amount per share of Series B Preferred in cash
equivalent to $25 per Depositary Share plus all accrued and unpaid dividends
thereon to the date of liquidation, dissolution or winding
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up, before any payment shall be made or any assets distributed to the holders of
any of the securities junior to the Series B Preferred.
VOTING
The holders of the Series B Preferred do not have any voting rights, except
as otherwise provided by law and as provided below.
In the event that dividends on all series of Preferred Stock, including the
Series B Preferred, are in arrears and unpaid for six quarterly periods, the
Board of Directors shall be increased by two directors and the holders of Series
B Preferred, together with the holders of all other series of Preferred Stock
then entitled to vote thereon (other than the Series C Conversion Preferred
Stock and ESOP Convertible Preferred Stock), shall be entitled to elect two
directors of the expanded Board of Directors; provided that such directors do
not exceed 25% of such expanded Board of Directors and provided, further, that
such holders shall be entitled to elect at least one director notwithstanding
the foregoing proviso. Such voting rights will continue until such time as all
dividends in arrears have been paid or declared and set aside for payment at
which time the term of office of all directors so elected shall terminate.
In addition, the Certificate of Incorporation provides that Holdings will
not authorize a new class of securities senior to the Series B Preferred, or
designate a new series of securities senior to the Series B Preferred from the
existing class of Preferred Stock, without the approval of the holders of at
least two-thirds of the then outstanding shares of Series B Preferred and any
other series of Preferred Stock entitled to vote thereon then outstanding,
together as one class. The Certificate of Incorporation also provides that
Holdings may not amend the Certificate of Incorporation so as to affect
materially and adversely the specified rights, preferences, privileges or voting
rights of the Preferred Stock without the approval of the holders of at least
two-thirds of the then outstanding shares of Series B Preferred and any other
series of Preferred Stock entitled to vote thereon then outstanding, together as
one class. These voting rights with respect to the Series B Preferred will
terminate if Holdings has given notice of the redemption of all outstanding
shares of Series B Preferred and the funds required for such redemption have
been deposited in trust for such redemption.
The Certificate of Incorporation provides that the following events do not
require the approval of the holders of the Series B Preferred or any other
series of Preferred Stock currently outstanding and will not be deemed to affect
materially and adversely the rights, preferences, privileges or voting rights of
the Series B Preferred or any other series of Preferred Stock currently
outstanding:
(a) the designation of any series of securities on a parity with the
Series B Preferred from the existing authorized class Preferred;
(b) the increase or decrease in the amount of authorized capital stock of
any class, including the existing authorized class of Preferred
Stock;
(c) the creation of any shares of securities junior to the Series B
Preferred; or
(d) the creation of any indebtedness of any kind of Holdings.
TRANSFER AGENT AND REGISTRAR
First Chicago Trust Company of New York is the transfer agent and registrar
for the Series B Preferred.
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RELATIONSHIP BETWEEN THE PREFERRED SECURITIES, THE JUNIOR
SUBORDINATED DEBENTURES AND THE PREFERRED SECURITIES GUARANTEE
As long as payments of interest and other payments are made when due on the
Junior Subordinated Debentures, such payments will be sufficient to cover
distributions and other payments due on the Preferred Securities primarily
because (i) the aggregate principal amount of Junior Subordinated Debentures
held as trust assets will be equal to the sum of the aggregate stated
liquidation amount of the Preferred Securities and the proceeds received by the
Trust upon issuance of the Common Securities to Holdings; (ii) the interest rate
and interest and other payment dates on the Junior Subordinated Debentures will
match the distribution rate and distribution and other payment dates for the
Preferred Securities; (iii) the Declaration provides that Holdings shall pay for
all debts and obligations (other than with respect to the Trust Securities) and
all costs and expenses of the Trust, including any taxes and all costs and
expenses with respect thereto, to which the Trust may become subject, except for
United States withholding taxes; and (iv) the Declaration further provides that
the Trustees shall not cause or permit the Trust, among other things, to engage
in any activity that is not consistent with the limited purposes of the Trust.
With respect to clause (iii) above, however, no assurance can be given that
Holdings will have sufficient resources to enable it to pay such debts,
obligations, costs and expenses on behalf of the Trust.
Payments of distributions and other payments due on the Preferred Securities
are guaranteed by Holdings on a subordinated basis as and to the extent set
forth under "Description of the Preferred Securities Guarantee". If Holdings
does not make interest or other payments on the Junior Subordinated Debentures,
the Trust will not make distributions or other payments on the Preferred
Securities. Under the Declaration, if and to the extent Holdings does make
interest or other payments on the Junior Subordinated Debentures, the
Institutional Trustee is obligated to make distributions or other payments on
the Preferred Securities. The Preferred Securities Guarantee is a full and
unconditional guarantee from the time of issuance of the Preferred Securities,
but the Preferred Securities Guarantee covers distributions and other payments
on the Preferred Securities only if and to the extent that Holdings has made a
payment of interest or principal on the Junior Subordinated Debentures deposited
in the Trust as trust assets.
If an Appointment Event occurs, the Declaration provides that the holders of
the Preferred Securities may appoint a Special Regular Trustee who will have the
same rights, powers and privileges under the Declaration as a Regular Trustee.
The Institutional Trustee will have the power to exercise all rights, powers and
privileges under the Indenture with respect to the Junior Subordinated
Debentures, including its rights as the holder of the Junior Subordinated
Debentures to enforce Holdings' obligations under the Junior Subordinated
Debentures upon the occurrence of an Indenture Event of Default, and will also
have the right to enforce the Preferred Securities Guarantee on behalf of the
holders of the Preferred Securities. In addition, the holders of at least a
majority in liquidation amount of the Preferred Securities will have the right
to direct the Institutional Trustee with respect to certain matters under the
Declaration and the Preferred Securities Guarantee. If the Institutional Trustee
fails to enforce its rights under the Indenture or fails to enforce the
Preferred Securities Guarantee, any holder of Preferred Securities may, after a
period of 90 days has elapsed from such holder's written request to the
Institutional Trustee to enforce such rights or the Preferred Securities
Guarantee, institute a legal proceeding against Holdings to enforce such rights
or the Preferred Securities Guarantee, as the case may be. See "Description of
the Preferred Securities" and "Description of the Preferred Securities
Guarantee".
Holdings and the Trust believe that for accounting purposes the above
mechanisms and obligations, taken together, are equivalent to a full and
unconditional guarantee by Holdings of payments due on the Preferred Securities.
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If a Special Event shall occur and be continuing, the Trust shall be
dissolved unless the Junior Subordinated Debentures are redeemed in the limited
circumstances described below, with the result that Junior Subordinated
Debentures held by the Trust having an aggregate principal amount equal to the
aggregate stated liquidation amount of the Preferred Securities and Common
Securities will be distributed on a Pro Rata Basis in exchange for the
outstanding Preferred Securities and Common Securities, subject in the case of a
Tax Event to Holdings' right in certain circumstances to redeem Junior
Subordinated Debentures as described under "Description of the Preferred
Securities -- Special Event Redemption or Distribution". The Preferred
Securities represent preferred undivided beneficial interests in the assets of
the Trust, a statutory business trust which exists for the purpose of (a)
issuing (i) its Preferred Securities in exchange for Depositary Shares validly
tendered in the Offer and delivering such Depositary Shares to Holdings in
consideration for the deposit by Holdings of Junior Subordinated Debentures in
the Trust as trust assets, and (ii) its Common Securities to Holdings in
exchange for cash and investing the proceeds thereof in an equivalent amount of
Junior Subordinated Debentures and (b) engaging in such other activities as are
necessary or incidental thereto.
Upon any voluntary or involuntary dissolution, winding-up or termination of
the Trust, the holders of Preferred Securities will be entitled to receive the
Liquidation Distribution in cash or Junior Subordinated Debentures and will be
entitled to the benefits of the Preferred Securities Guarantee with respect to
any such distribution. See "Description of the Preferred Securities--Liquidation
Distribution Upon Dissolution". Upon any voluntary or involuntary liquidation or
bankruptcy of Holdings, the holders of Junior Subordinated Debentures would be
subordinated creditors of Holdings, subordinated in right of payment to all
Senior Obligations, but entitled to receive payment in full of principal,
premium, if any, and interest, before any stockholders of Holdings receive
payments or distributions.
A default or event of default under any Senior Obligations would not
constitute a default or event of default under the Junior Subordinated
Debentures. However, in the event of payment defaults under, or acceleration of,
Senior Obligations, the subordination provisions of the Junior Subordinated
Debentures provide that no payments may be made in respect of the Junior
Subordinated Debentures. Failure to make required payments on the Junior
Subordinated Debentures would constitute an event of default under the
Indenture.
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TAXATION
In the opinion of Davis Polk & Wardwell, counsel to Holdings and the Trust,
the following are the material United States federal income tax consequences of
the issuance of Preferred Securities in exchange for the Depositary Shares
pursuant to the Offer, and of the ownership and disposition of Preferred
Securities. Unless otherwise stated, this summary deals only with Preferred
Securities held as capital assets by holders who acquire the Preferred
Securities pursuant to the Offer ("Initial Holders"). It does not deal with
special classes of holders, such as dealers in securities or currencies, life
insurance companies, persons holding Preferred Securities as a hedge against or
which are hedged against currency risks or as part of a straddle, or persons
whose functional currency is not the United States dollar. This summary is based
on the Internal Revenue Code of 1986, as amended (the "Code"), Treasury
Regulations thereunder and administrative and judicial interpretations thereof,
as of the date hereof, all of which are subject to change (possibly on a
retroactive basis).
ALL HOLDERS OF DEPOSITARY SHARES ARE ADVISED TO CONSULT THEIR TAX ADVISORS AS TO
THE UNITED STATES FEDERAL INCOME TAX CONSEQUENCES OF THE EXCHANGE OF DEPOSITARY
SHARES FOR PREFERRED SECURITIES AND OF THE OWNERSHIP AND DISPOSITION OF
PREFERRED SECURITIES IN LIGHT OF THEIR PARTICULAR CIRCUMSTANCES, AS WELL AS THE
EFFECT OF ANY STATE, LOCAL OR OTHER TAX LAWS.
EXCHANGE OF DEPOSITARY SHARES FOR PREFERRED SECURITIES
The exchange of Depositary Shares for Preferred Securities pursuant to the
Offer will be a taxable transaction. In the case of an Initial Holder who owns
solely Depositary Shares, or not more than one percent of such stock and not
more than one percent of any other class of Holdings stock, gain or loss will be
recognized in an amount equal to the difference between the fair market value on
the Expiration Date of the Preferred Securities (representing an undivided
interest in the Junior Subordinated Debentures) received in the exchange and the
exchanging Holder's tax basis in the Depositary Shares exchanged therefor and
will be long-term capital gain or loss if the Depositary Share has been held for
more than one year as of such date. A holder's aggregate tax basis in his pro
rata share of the underlying Junior Subordinated Debentures will be equal to his
pro rata share of their "issue price" on the Expiration Date as defined below.
Holders of Depositary Shares who actually or constructively own more than
one percent of any other class of Holdings stock are advised to consult their
tax advisors as to the income tax consequences of exchanging Depositary Shares.
CLASSIFICATION OF THE TRUST
In connection with the issuance of the Preferred Securities, Davis Polk &
Wardwell, counsel to Holdings and the Trust, will render its opinion generally
to the effect that, under then current law and assuming full compliance with the
terms of the Declaration, the Trust will be classified for United States federal
income tax purposes as a grantor trust and not as an association taxable as a
corporation. Accordingly, each holder of Preferred Securities (a
"Securityholder") will be considered the owner of a pro rata portion of the
Junior Subordinated Debentures held by the Trust. Accordingly, each
Securityholder will be required to include in gross income his pro rata share of
the income accrued on the Junior Subordinated Debentures.
ACCRUAL OF ORIGINAL ISSUE DISCOUNT AND PREMIUM
The Junior Subordinated Debentures will be considered to have been issued
with "original issue discount" and each Securityholder, including a taxpayer who
otherwise uses the cash method of
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accounting, will be required to include his pro rata share of original issue
discount on the Junior Subordinated Debentures in income as it accrues, in
accordance with a constant yield method based on a compounding of interest,
before the receipt of cash distributions on the Preferred Securities. Generally,
all of a Securityholder's taxable interest income with respect to the Junior
Subordinated Debentures will be accounted for as "original issue discount" and
actual distributions of stated interest will not be separately reported as
taxable income. So long as the interest payment period is not extended, cash
distributions received by an initial Holder for any quarterly interest period
(assuming no disposition prior to the record date for such distribution) will
equal or exceed the sum of the daily accruals of income for such quarterly
interest period, unless the issue price of the Junior Subordinated Debentures
(as defined below) is less than $25.
The total amount of "original issue discount" on the Junior Subordinated
Debentures will equal the difference between the "issue price" of the Junior
Subordinated Debentures and their "stated redemption price at maturity." Because
Holdings has the right to extend the interest payment period of the Junior
Subordinated Debentures, all of the stated interest payments on the Junior
Subordinated Debentures will be includible in determining their "stated
redemption price at maturity." The "issue price" of each $25 principal amount of
the Junior Subordinated Debentures will be equal to the fair market value of a
Preferred Security on the Expiration Date, which may be more or less than $25,
with the result that the total amount of original issue discount on the Junior
Subordinated Debentures may be more or less than the amount of stated interest
payable with respect thereto. The issue price of each $25 principal amount of
the Junior Subordinated Debentures may be reduced by the Pre-Issuance Accrued
Interest. If a Securityholder computes the issue price of his pro rata share of
the Junior Subordinated Debentures in this manner, then the payment of such
amount will be treated as a return of capital rather than as an interest
payment. Holdings and the Trust may elect to compute the issue price of the
Junior Subordinated Debentures in this manner and, if so, will report the gain
or loss on Form 1099-B.
A Securityholder's initial tax basis for his pro rata share of the Junior
Subordinated Debentures will be equal to his pro rata share of their "issue
price," as defined above, and will be increased by original issue discount
accrued with respect thereto, and reduced by the amount of cash distributions
(including the amount of Pre-issuance Accrued Interest) paid to such
Securityholder. No portion of the amounts received on the Preferred Securities
will be eligible for the dividends received deduction for corporate holders.
POTENTIAL EXTENSION OF PAYMENT PERIOD ON THE JUNIOR SUBORDINATED DEBENTURES
Securityholders will continue to accrue original issue discount with respect
to their pro rata share of the Junior Subordinated Debentures during an extended
interest payment period, and any holders who dispose of Preferred Securities
prior to the record date for the payment of interest following such extended
interest payment period will not receive from the Trust any cash related
thereto.
DISTRIBUTION OF JUNIOR SUBORDINATED DEBENTURES TO HOLDERS OF PREFERRED
SECURITIES
Under current law, a distribution by the Trust of the Junior Subordinated
Debentures as described under the caption "Description of the Preferred
Securities--Special Event Redemption or Distribution", will be non-taxable and
will result in the Securityholder receiving directly his pro rata share of the
Junior Subordinated Debentures previously held indirectly through the Trust,
with a holding period and tax basis equal to the holding period and adjusted tax
basis such Securityholder was considered to have had in his pro rata share of
the underlying Junior Subordinated Debentures prior to such distribution.
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MARKET DISCOUNT AND BOND PREMIUM
Securityholders other than Initial Holders may be considered to have
acquired their pro rata interest in the Junior Subordinated Debentures with
market discount, acquisition premium or amortizable bond premium. Such holders
are advised to consult their tax advisors as to the income tax consequences of
the acquisition, ownership and disposition of the Preferred Securities.
DISPOSITION OF THE PREFERRED SECURITIES
Upon a sale, exchange or other disposition of the Preferred Securities
(including a distribution of cash in redemption of a Securityholder's Preferred
Securities upon redemption or repayment of the underlying Junior Subordinated
Debentures, but excluding the distribution of Junior Subordinated Debentures), a
Securityholder will be considered to have disposed of all or part of his pro
rata share of the Junior Subordinated Debentures, and will recognize gain or
loss equal to the difference between the amount realized and the
Securityholder's adjusted tax basis in his pro rata share of the underlying
Junior Subordinated Debentures deemed disposed of. Gain or loss will be capital
gain or loss (except to the extent of any accrued market discount with respect
to such Securityholder's pro rata share of the Junior Subordinated Debentures
not previously included in income). See "--Market Discount and Bond Premium"
above. Such gain or loss will be long-term capital gain or loss if the Preferred
Securities have been held for more than one year.
UNITED STATES ALIEN HOLDERS
For purposes of this discussion, a "United States Alien Holder" is any
corporation, individual, partnership, estate or trust that is, as to the United
States, a foreign corporation, a non-resident alien individual, a foreign
partnership or a non-resident fiduciary of a foreign estate or trust.
Under present United States federal income tax law:
(i) payments by the Trust or any of its paying agents to any holder of a
Preferred Security who or which is a United States Alien Holder will not be
subject to United States federal withholding tax, provided that (a) the
beneficial owner of the Preferred Security does not actually or
constructively own 10% or more of the total combined voting power of all
classes of stock of Holdings entitled to vote, (b) the beneficial owner of
the Preferred Security is not a controlled foreign corporation that is
related to Holdings through stock ownership, and (c) either (A) the
beneficial owner of the Preferred Security certifies to the Trust or its
agent, under penalties of perjury, that it is not a United States holder and
provides its name and address or (B) a securities clearing organization,
bank or other financial institution that holds customers' securities in the
ordinary course of its trade or business (a "Financial Institution") and
holds the Preferred Security certifies to the Trust or its agent under
penalties of perjury that such statement has been received from the
beneficial owner by it or by a Financial Institution between it and the
beneficial owner and furnishes the Trust or its agent with a copy thereof;
(ii) a United States Alien Holder of a Preferred Security will not be
subject to United States federal withholding tax on any gain realized upon
the sale or other disposition of a Preferred Security; and
(iii) any gain realized by a United States Alien Holder upon the
exchange of Series B Preferred for Preferred Securities will not be subject
to United States federal withholding tax.
INFORMATION REPORTING TO HOLDERS
The Trust will report the original issue discount that accrued during the
year with respect to the Junior Subordinated Debentures, and any gross proceeds
received by the Trust from the retirement or
74
<PAGE>
redemption of the Junior Subordinated Debentures, annually to the holders of
record of the Preferred Securities and the Internal Revenue Service. The Trust
currently intends to deliver such reports to holders of record prior to January
31 following each calendar year. It is anticipated that persons who hold
Preferred Securities as nominees for beneficial holders will report the required
tax information to beneficial holders on Form 1099.
BACKUP WITHHOLDING
Payments made on, and proceeds from the sale of Preferred Securities may be
subject to a "backup" withholding tax of 31% unless the holder complies with
certain identification requirements. Any withheld amounts will generally be
allowed as a credit against the holder's federal income tax, provided the
required information is timely filed with the Internal Revenue Service.
LEGAL MATTERS
Certain matters of Delaware law relating to the validity of the Preferred
Securities will be passed upon for the Trust by Morris, Nichols, Arsht &
Tunnell, special Delaware counsel to the Trust. The validity of the Preferred
Securities Guarantee and the Junior Subordinated Debentures will be passed upon
for the Trust and Holdings by Davis Polk & Wardwell, New York, New York, special
counsel to Holdings and the Trust. Steven F. Goldstone, a partner at Davis Polk
& Wardwell, is General Counsel of Holdings. Certain legal matters in connection
with the Preferred Securities, the Preferred Securities Guarantee and the Junior
Subordinated Debentures will be passed upon for the Trust and Holdings by Jo-Ann
Ford, Senior Vice President, Law and Secretary of Holdings. Ms. Ford holds
options to purchase in the aggregate less than 0.1% of Holdings' common stock.
Certain legal matters in connection with the Preferred Securities will be passed
upon for the Co-Dealer Managers by Simpson Thacher & Bartlett (a partnership
which includes professional corporations), New York, New York. Davis Polk &
Wardwell and Simpson Thacher & Bartlett have in the past provided, and may
continue to provide, legal services to Holdings and its affiliates.
EXPERTS
The consolidated financial statements incorporated in this Prospectus by
reference to the Annual Report on Form 10-K for the year ended December 31, 1994
have been so incorporated in reliance on the report of Deloitte & Touche LLP,
independent accountants, given on the authority of said firm as experts in
auditing and accounting.
ERISA MATTERS
Holdings and certain affiliates of Holdings may each be considered a "party
in interest" within the meaning of the Employee Retirement Income Security Act
of 1974, as amended ("ERISA"), or a "disqualified person" within the meaning of
the Code with respect to many employee benefit plans. Prohibited transactions
within the meaning of ERISA or the Code may arise, for example, if the
securities offered hereby are acquired by a pension or other employee benefit
plan with respect to which Holdings or any of its affiliates is a service
provider, unless such securities are acquired pursuant to an exemption for
transactions effected on behalf of such plan by a "qualified professional asset
manager" or pursuant to any other available exemption. Any such pension or
employee benefit plan proposing to invest in the securities offered hereby
should consult with its legal counsel.
75
<PAGE>
Facsimile copies of the Letter of Transmittal will be accepted. Letters of
Transmittal, certificates representing Depositary Shares and any other required
documents should be sent by each Holder of Depositary Shares or his broker,
dealer, commercial bank, trust company or other nominee to the Exchange Agent at
one of the addresses as set forth below:
THE EXCHANGE AGENT IS:
First Chicago Trust Company of New York
By Hand or Overnight Courier
Attention: Tenders and Exchanges
Suite 4680-RNH
14 Wall Street
8th Floor
New York, New York 10005
By Mail:
Attention: Tenders and Exchanges
Suite 4460-RNH
P.O. Box 2559
Jersey City, New Jersey 07303-2559
By Facsimile Transmission
(For Eligible Institutions Only):
(201) 222-4720 or 4721
Confirm Receipt of Notice of Guaranteed Delivery
by Telephone:
(201) 222-4707
THE INFORMATION AGENT IS:
MACKENZIE
PARTNERS, INC.
156 Fifth Avenue
New York, New York 10010
1-212-929-5500 (call collect) or
1-800-322-2885 (Toll Free)
Any questions or requests for assistance or additional copies of this
Prospectus, the Letter of Transmittal or for copies of the Notice of Guaranteed
Delivery may be directed to the Information Agent at its telephone number and
location set forth above. You may also contact your broker, dealer, commercial
bank or trust company or other nominee for assistance concerning the Offer.
THE DEALER MANAGERS FOR THE OFFER ARE:
MERRILL LYNCH & CO.
World Financial Center
<PAGE>
North Tower--Seventh Floor
New York, New York 10281
(212) 236-4565 (collect)
LEHMAN BROTHERS Morgan Stanley & Co.
3 World Financial Center Incorporated
New York, New York 10285 1221 Avenue of the Americas
(800) 438-3242 (Toll-Free) New York, New York 10020
(800) 422-6464 ext. 6620 (Toll-Free)
PAINEWEBBER INCORPORATED SMITH BARNEY INC.
1285 Avenue of the Americas 388 Greenwich Street
New York, New York 10019 New York, New York 10013
(800) 324-0210 (212) 723-7599 (collect)
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the General Corporation Law of the State of Delaware (the
"Delaware Law") empowers a Delaware corporation to indemnify any persons who
are, or are threatened to be made, parties to any threatened, pending or
completed legal action, suit or proceeding, whether civil, criminal,
administrative or investigative (other than an action by or in the right of such
corporation), by reason of the fact that such person was an officer or director
of such corporation, or is or was serving at the request of such corporation as
a director, officer, employee or agent of another corporation or enterprise. The
indemnity may include expenses (including attorneys' fees), judgments, fines and
amounts paid in settlement actually and reasonably incurred by such person in
connection with such action, suit or proceeding, provided that such officer or
director acted in good faith and in a manner he reasonably believed to be in or
not opposed to the corporation's best interests, and, for criminal proceedings,
had no reasonable cause to believe his conduct was illegal. A Delaware
corporation may indemnify officers and directors against expenses (including
attorneys' fees) in connection with the defense or settlement of an action by or
in the right of the corporation under the same conditions, except that no
indemnification is permitted without judicial approval if the officer or
director is adjudged to be liable to the corporation. Where an officer or
director is successful on the merits or otherwise in the defense of any action
referred to above, the corporation must indemnify him against the expenses which
such officer or director actually and reasonably incurred.
In accordance with the Delaware Law, the Certificate of Incorporation of
Holdings contains a provision to limit the personal liability of the directors
of Holdings for violations of their fiduciary duty. This provision eliminates
each director's liability to Holdings or its stockholders for monetary damages
except (i) for any breach of the director's duty of loyalty to Holdings or its
stockholders, (ii) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (iii) under Section 174 of
the Delaware Law providing for liability of directors for unlawful payment of
dividends or unlawful stock purchases or redemptions, or (iv) for any
transaction from which a director derived an improper personal benefit. The
effect of this provision is to eliminate the personal liability of directors for
monetary damages for actions involving a breach of their fiduciary duty of care,
including any such actions involving gross negligence.
Section of the form of dealer manager agreement filed as Exhibit 1 to this
Registration Statement provides for indemnification of directors, officers who
sign the Registration Statement and controlling persons of the Registrant by the
dealer managers, and for indemnification of each dealer manager and its
controlling persons by the Registrant, against certain liabilities. Similar
provisions are contained in agreements entered into between the Registrant and
groups of dealer managers or underwriters on past occasions.
The Declaration provides that no Trustee, affiliate of any Trustee or any
officers, directors, shareholders, members, partners, employees, representatives
or agents of any Trustee or any employee or agent of the Trust or its affiliates
(each, an "Indemnified Person") shall be liable, responsible or accountable in
damages or otherwise to any employee or agent of the Trust or its affiliates, or
any officers, directors, shareholders, employees, representatives or agents of
Holdings or its affiliations or to any holders of Trust Securities of the Trust
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 the
Declaration or by law, except that an Indemnified Person shall be liable for any
such loss, damage or claim incurred by reason of such Indemnified Person's gross
negligence (or, in the case of the Institutional Trustee, negligence) or willful
misconduct with respect to
II-1
<PAGE>
such acts or omission. The Declaration also provides that, to the fullest extent
permitted by applicable law, Holdings shall indemnify and hold harmless each
Trustee, any affiliate of a Trustee or any officers, directors, shareholders,
members, partners, employees, representatives or agents of the Trustees, or any
employee or agent of the Trust or its affiliates (each, an "Indemnified Person")
from and against any loss, damage or claim incurred by such Indemnified Person
by reason of any act or omission performed or omitted by such Indemnified Person
in good faith on behalf of the Trust and in a manner such Indemnified Person
reasonably believed to be within the scope of authority conferred on such
Indemnified Person by the Declaration, except that no Indemnified Person shall
be entitled to be indemnified in respect of any loss, damage or claim incurred
by such Indemnified Person by reason of gross negligence (or, in the case of the
Institutional Trustee, negligence) or willful misconduct with respect to such
acts or omissions. The Declaration further provides that to the fullest extent
permitted by applicable law, expenses (including legal fees) incurred by an
Indemnified Person in defending any claim, demand, action, suit or proceeding
shall, from time to time, be advanced by Holdings prior to the final disposition
of such claim, demand, action, suit or proceeding upon receipt by Holdings of an
undertaking by or on behalf of the Indemnified Person to repay such amount if it
shall be determined that the Indemnified Person is not entitled to be
indemnified pursuant to the Declaration.
ITEM 21. EXHIBITS.
<TABLE><CAPTION>
EXHIBIT NO. DOCUMENT
- - - ----------- ---------------------------------------------------------------------------------
<S> <C>
1 --Form of Dealer Managers Agreement
4.1 --Form of Indenture between Holdings and The Bank of New York, as Trustee
4.2 --Form of First Supplemental Indenture to Indenture
4.3 --Declaration of Trust of RJR Nabisco Holdings Capital Trust I
4.4 --Certificate of Trust of RJR Nabisco Holdings Capital Trust I (included in
Exhibit 4.3 above)
4.5 --Form of Amended and Restated Declaration of Trust of RJR Nabisco Holdings
Capital Trust I
4.6 --Form of Preferred Security (included in Exhibit 4.5 above)
4.7 --Form of Junior Subordinated Debenture (included in Exhibit 4.2 above)
4.8 --Form of Guarantee Agreement with respect to Preferred Securities
5.1 --Opinion of Davis Polk & Wardwell
5.2 --Opinion of Morris, Nichols, Arsht & Tunnell
8.1 --Tax Opinion of Davis Polk & Wardwell
12.1 --RJR Nabisco Holdings Corp. Computation of Earnings to Combined Fixed Charges
and Preferred Stock Dividends/Deficiency in the coverage of Fixed Charges and
Preferred Stock Dividends by Earnings before Fixed Charges for each of the
years in the four year period ended December 31, 1993 (incorporated by
reference to Exhibits 12.2, 12.3 and 12.4 to Form S-3, Registration Statement
No. 33-52381).
12.2 --RJR Nabisco Holdings Corp. Computation of Earnings to Combined Fixed Charges
and Preferred Stock Dividends for the year ended December 31, 1994 and the
three month period ended March 31, 1995.
23.1 --Consent of Deloitte & Touche LLP
23.2 --Consents of Davis Polk & Wardwell (included in Exhibits 5.1 and 8.1 above)
23.3 --Consent of Morris, Nichols, Arsht & Tunnell (included in Exhibit 5.2 above)
24.1 --Powers of Attorney for Holdings (included on signature pages)
24.2 --Powers of Attorney for Holdings, as sponsor, to sign this Registration
Statement on behalf of RJR Nabisco Holdings Capital Trust I (included in
Exhibit 4.3 above)
25.1 --Statement of Eligibility under the Trust Indenture Act of 1939, as amended, of
The Bank of New York, as Trustee under the Indenture
25.2 --Statement of Eligibility under the Trust Indenture Act of 1939, as amended, of
The Bank of New York, as Institutional Trustee under the Amended and Restated
Declaration of Trust
</TABLE>
II-2
<PAGE>
<TABLE>
<CAPTION>
EXHIBIT NO. DOCUMENT
- - - ----------- ---------------------------------------------------------------------------------
<S> <C>
25.3 --Statement of Eligibility under the Trust Indenture Act of 1939, as amended, of
The Bank of New York, as indenture trustee under the Preferred Securities
Guarantee
99.1 --Proposed Form of Letter of Transmittal
99.2 --Proposed Form of Notice of Guaranteed Delivery
99.3 --Proposed Form of Letter to Brokers, Dealers, Commercial Banks, Trust Companies
and Other Nominees
99.4 --Proposed Form of Letter to Clients
99.5 --Form of Exchange Agent Agreement
99.6 --Form of Information Agent Agreement
99.7 --Form of Newspaper Announcement
99.8 --Proposed Form of Holdings Letter to Holders of 9.25% Preferred Stock, Series B
</TABLE>
- - - ------------
* Incorporated by reference
ITEM 22. UNDERTAKINGS.
Each of the Registrants hereby undertakes:
(1) That, for purposes of determining any liability under the Securities Act
of 1933, each filing of Holdings' Annual Report pursuant to Section 13(a) or
Section 15(d) of the Securities Exchange Act of 1934 (and, where applicable,
each filing of an employee benefit plan's annual report pursuant to Section
15(d) of the Securities Exchange Act of 1934) that is incorporated by reference
in the Registration Statement shall be deemed to be a new Registration Statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
(2) Insofar as indemnification for liabilities arising under the Securities
Act of 1933 may be permitted to directors, officers and controlling persons of
the Registrants pursuant to the foregoing provisions, or otherwise, the
Registrants have been advised that in the opinion of the Securities and Exchange
Commission such indemnification is against public policy as expressed in the Act
and is, therefore, unenforceable. In the event that a claim for indemnification
against such liabilities (other than the payment by the Registrants of expenses
incurred or paid by a director, officer or controlling person of the Registrants
in the successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrants will, unless in the opinion of their counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Act and will be governed by the final
adjudication of such issue.
(3) To respond to requests for information that is incorporated by reference
into the Prospectus pursuant to Item 4, 10(b), 11 or 13 of Form S-4, within one
business day of receipt of such request, and to send the incorporated documents
by first-class mail or equally prompt means. This includes information contained
in documents filed subsequent to the effective date of the Registration
Statement through the date responding to the request.
(4) To supply by means of a post-effective amendment all information
concerning a transaction, and the company being acquired involved therein, that
was not the subject of and included in the Registration Statement when it became
effective.
II-3
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, RJR NABISCO
HOLDINGS CORP. HAS DULY CAUSED THIS REGISTRATION STATEMENT ON FORM S-4 TO BE
SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY
OF NEW YORK, STATE OF NEW YORK, ON THIS 20TH DAY OF JUNE, 1995.
RJR NABISCO HOLDINGS CORP.
By /s/ JO-ANN FORD
...................................
(Jo-Ann Ford)
Senior Vice President, Law
and Secretary
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE><CAPTION>
SIGNATURE TITLE DATE
- - - -------------------------------------- ----------------------------- --------------
<S> <C> <C>
* Chairman, and Chief Executive June 20, 1995
...................................... Officer (Principal Executive
(Charles M. Harper) Officer)
* Senior Vice President and June 20, 1995
...................................... Chief Financial Officer
(Robert S. Roath) (Principal Financial Officer)
* Senior Vice President and June 20, 1995
...................................... Corporate Controller
(Richard Russell) (Principal Accounting
Officer)
* Director June 20, 1995
......................................
(John T. Chain, Jr.)
* Director June 20, 1995
......................................
(Julius L. Chambers)
* Director June 20, 1995
......................................
(John L. Clendenin)
* Director June 20, 1995
......................................
(H. John Greeniaus)
...................................... Director June 20, 1995
(James W. Johnston)
</TABLE>
II-4
<PAGE>
<TABLE><CAPTION>
SIGNATURE TITLE DATE
- - - -------------------------------------- ----------------------------- --------------
<S> <C> <C>
* Director June 20, 1995
......................................
(John G. Medlin, Jr.)
* Director June 20, 1995
......................................
(Rozanne L. Ridgway)
*By /s/ JO-ANN FORD
..................................
(Jo-Ann Ford)
Attorney-in-Fact
</TABLE>
II-5
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, RJR NABISCO
HOLDINGS CAPITAL TRUST I HAS DULY CAUSED THIS REGISTRATION STATEMENT ON FORM S-4
TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE
CITY OF NEW YORK, STATE OF NEW YORK, ON THIS 20TH DAY OF JUNE, 1995.
RJR NABISCO HOLDINGS CAPITAL TRUST I
By: RJR Nabisco Holdings Corp., as
Sponsor
By /s/ JO-ANN FORD
...................................
Name: Jo-Ann Ford
Title Senior Vice President, Law
and Secretary
II-6
<PAGE>
EXHIBIT INDEX
<TABLE><CAPTION>
EXHIBIT
NO. DOCUMENT PAGE
- - - ----- ---------------------------------------------------------------------------- ----
<C> <S> <C>
1.1 -- Form of Dealer Managers Agreement
4.1 -- Form of Indenture between Holdings and The Bank of New York, as Trustee
4.2 -- Form of First Supplemental Indenture to Indenture
4.3 -- Declaration of Trust of RJR Nabisco Holdings Capital Trust I
4.4 -- Certificate of Trust of RJR Nabisco Holdings Capital Trust I (included in
Exhibit 4.3 above)
4.5 -- Form of Amended and Restated Declaration of Trust of RJR Nabisco Holdings
Capital Trust I
4.6 -- Form of Preferred Security (included in Exhibit 4.5 above)
4.7 -- Form of Junior Subordinated Debenture (included in Exhibit 4.2 above)
4.8 -- Form of Guarantee Agreement with respect to Preferred Securities
5.1 -- Opinion of Davis Polk & Wardwell
5.2 -- Opinion of Morris, Nichols, Arsht & Tunnell
8.1 -- Tax Opinion of Davis Polk & Wardwell
12.1 -- RJR Nabisco Holdings Corp. Computation of Earnings to Combined Fixed Charges
and Preferred Stock Dividends/Deficiency in the coverage of Fixed Charges
and Preferred Stock Dividends by Earnings before Fixed for each of the years
in the four year period ended December 31, 1993 (incorporated by reference
to Exhibits 12.2, 12.3 and 12.4 to Form S-3, Registration Statement No.
33-52381).
12.2 -- RJR Nabisco Holdings Corp. Computation of Earnings to Combined Fixed Charges
and Preferred Stock Dividends for the year ended December 31, 1994 and the
three month period ended March 31, 1995
23.1 -- Consent of Deloitte & Touche LLP
23.2 -- Consents of Davis Polk & Wardwell (included in Exhibits 5.1 and 8.1 above)
23.4 -- Consent of Morris, Nichols, Arsht & Tunnell (included in Exhibit 5.2 above)
24.1 -- Powers of Attorney for Holdings (included on signature pages)
24.2 -- Powers of Attorney for Holdings, as sponsor, to sign this Registration
Statement on behalf of RJR Nabisco Holdings Capital Trust I (included in
Exhibit 4.3 above)
25.1 -- Statement of Eligibility under the Trust Indenture Act of 1939, as amended,
of The Bank of New York, as Trustee under the Indenture
25.2 -- Statement of Eligibility under the Trust Indenture Act of 1939, as amended,
of The Bank of New York, as Institutional Trustee under the Amended and
Restated Declaration of Trust (bound separately)
25.3 -- Statement of Eligibility under the Trust Indenture Act of 1939, as amended,
of The Bank of New York, as indenture trustee under the Preferred Securities
Guarantee (bound separately)
99.1 -- Proposed Form of Letter of Transmittal
99.2 -- Proposed Form of Notice of Guaranteed Delivery
99.3 -- Proposed Form of Letter to Brokers, Dealers, Commercial Banks, Trust
Companies and Other Nominees
99.4 -- Proposed Form of Letter to Clients
99.5 -- Form of Exchange Agent Agreement
99.6 -- Form of Information Agent Agreement
99.7 -- Form of Newspaper Announcement
99.8 -- Proposed Form of Holdings Letter to Holders of 9.25% Preferred Stock,
Series B
</TABLE>
Exhibit 1
DEALER MANAGER AGREEMENT
June 20, 1995
MERRILL LYNCH & CO.
MERRILL LYNCH, PIERCE, FENNER & SMITH INCORPORATED
Merrill Lynch World Headquarters
North Tower
World Financial Center
New York, New York 10281-1329
LEHMAN BROTHERS
3 World Financial Center
New York, New York 10285
MORGAN STANLEY & CO. INCORPORATED
1251 Avenue of the Americas
New York, New York 10020
PAINEWEBBER INCORPORATED
1285 Avenue of the Americas
New York, New York 10019
SMITH BARNEY INC.
388 Greenwich Street
New York, New York 10013
Gentlemen:
RJR Nabisco Holdings Capital Trust I (the "Trust"), a statutory
business trust organized under the Business Trust Act (the "Delaware Act") of
the State of Delaware (Chapter 38, Title 12, of the Delaware Code, 12 Del. C.
Sec.3801 et seq.), proposes to issue its Trust Originated Preferred Securities
-- ---
("TOPrS") (the "Preferred Securities") in exchange for up to 49,000,000
depositary shares (the "Target Securities"), each representing one-
thousandth of a share of Series B Cumulative Preferred Stock (par value $.01
per share) of RJR Nabisco Holdings Corp., a Delaware corporation (the
"Company"). The Preferred Securities will be guaranteed (the "Guarantee") by
the Company to the extent described in the Prospectus (as hereinafter
defined). The exchange described above is herein referred to as the "Exchange
Offer" and any exchange of Preferred Securities for Target Securities
pursuant to the Exchange Offer is herein referred to as an "Exchange". In
connection with the Exchange Offer, the Company will deposit in the Trust as
trust assets its Junior Subordinated Debentures due 2044 (the "Debentures") as
set forth in the Prospectus.
<PAGE>
2
Each of the Company and the Trust hereby confirms its agreement
with Merrill Lynch & Co. of Merrill Lynch, Pierce, Fenner & Smith
Incorporated ("Merrill Lynch"), Lehman Brothers ("Lehman"), Morgan Stanley &
Co. Incorporated ("Morgan Stanley"), PaineWebber Incorporated ("PaineWebber")
and Smith Barney Inc. ("Smith Barney" and together with Merrill Lynch,
Lehman, Morgan Stanley and PaineWebber, the "Co-Dealer Managers") as follows:
1. Registration Statement, Prospectus and Offering Materials.
---------------------------------------------------------
The Company and the Trust have prepared and filed with the Securities and
Exchange Commission (the "Commission"), under the Securities Act of 1933, as
amended, and the rules and regulations of the Commission promulgated
thereunder (collectively, the "Securities Act"), a registration statement on
Form S-4 covering the registration of the Preferred Securities, the Guarantee
and the Debentures, including the related preliminary prospectus (the
"prospectus"), and will prepare and file, on or prior to the effective date
of such registration statement, amendments to such registration statement,
including a final prospectus. Each prospectus used before the time such
registration statement becomes effective is herein called a "preliminary
prospectus". Such registration statement, including the exhibits thereto and
any documents incorporated by reference therein, as amended at the time it
becomes effective or as thereafter amended or supplemented from time to time,
is herein called the "Registration Statement". The final prospectus included
in the Registration Statement (including any documents incorporated in the
prospectus by reference) is herein called the "Prospectus", except that if
the final prospectus furnished to the Co-Dealer Managers for use in
connection with the Exchange Offer differs from the prospectus set forth in
the Registration Statement (whether or not such prospectus is required to be
filed pursuant to Rule 424(b)), the term "Prospectus" shall refer to the
final prospectus furnished to the Co-Dealer Managers for such use. The terms
"supplement" and "amendment" or "amend" as used herein with respect to the
Prospectus shall include all documents deemed to be incorporated by reference
in the Prospectus that are filed subsequent to the date of the Prospectus and
prior to the termination of the Exchange Offer by the Company with the
Commission pursuant to the Exchange Act.
The Registration Statement, Prospectus and the related letters from
the Co-Dealer Managers to securities brokers, dealers, commercial banks,
trust companies and other nominees, letters to beneficial owners of Target
Securities, letters of transmittal (the "Letters of Transmittal"), notices of
guaranteed delivery (the "Notices of Guaranteed Delivery") and any newspaper
announcements, press releases and other offering materials and information
the Company may use or prepare, approve or authorize for use in connection
with the Exchange Offer, as amended or supplemented from time to time are
herein collectively referred to as the "Offering Materials".
<PAGE>
3
2. Exchange Offer; Agreement to Act as Co-Dealer Managers. (a)
------------------------------------------------------
The Company and the Trust intend to commence the Exchange Offer as soon as
practicable after the Registration Statement becomes effective under the
Securities Act by publicly announcing its commencement and by mailing, or
causing to be mailed on its behalf, copies of the Prospectus, the related
Letters of Transmittal and such of the other Offering Materials as is
required or as the Company elects to each holder of Target Securities (the
date of the commencement of such distribution being herein called the
"Commencement Date").
(b) The Company and the Trust hereby retain the Co-Dealer Managers
to advise them with respect to the terms and timing of the Exchange Offer and
to assist them in the preparation of the Offering Materials and retain and
authorize the Co-Dealer Managers to act as co-dealer managers and to assist
the Company with the solicitation of Exchanges (each a "Solicitation" and
collectively the "Solicitations"). On the basis of the representations and
warranties and agreements of the Company and the Trust herein contained and
subject to and in accordance with the terms and conditions hereof and of the
Offering Materials, the Co-Dealer Managers agree to advise the Company and
the Trust with respect to the terms and timing of the Exchange Offer and to
act as co-dealer managers in connection with the Exchange Offer and to assist
the Company with the Solicitations. The Co-Dealer Managers agree to use
their reasonable best efforts to solicit Exchanges.
(c) The Company shall furnish the Co-Dealer Managers, or cause the
transfer agent or registrar for the Target Securities (respectively, the
"Transfer Agent" and "Registrar") to furnish the Co-Dealer Managers, as soon
as practicable after the date hereof (to the extent not previously
furnished), with cards or lists in reasonable quantities or copies thereof
showing the names of persons who were the holders of record or, to the extent
available to the Company, the beneficial owners of the Target Securities as
of a recent date, together with their addresses, and the number of shares of
Target Securities held by them. Additionally, the Company shall use its best
efforts to update, or to cause the Transfer Agent or Registrar to update,
such information from time to time during the term of this Agreement as may
be reasonably requested by the Co-Dealer Managers. Except as otherwise
provided herein, the Co-Dealer Managers agree to use such information only in
connection with the Solicitations. The Co-Dealer Managers shall act
hereunder as independent contractors and nothing herein contained shall make
the Co-Dealer Managers agents of the Trust, the Company or any of its
subsidiaries in connection with any Solicitation. Nothing contained in this
Agreement shall constitute the Co-Dealer Managers partners of or joint
venturers with the Trust, the Company or any of its subsidiaries.
(d) The Trust and the Company authorize the Co-Dealer Managers to
use the Offering Materials in connection with the
<PAGE>
4
Solicitations and for such period of time as any Offering Materials are
required by law to be delivered in connection therewith. The Co-Dealer
Managers shall not have any obligation to cause any Offering Materials to be
transmitted generally to the holders of the Target Securities. The Co-Dealer
Managers agree not to give any written information and not to make any
representations to holders of the Target Securities in connection with any
Solicitation other than as contained in the Offering Materials.
(e) The Trust and the Company authorize the Co-Dealer Managers to
communicate with any information agent (the "Information Agent") or exchange
agent (the "Exchange Agent") appointed by the Company to act in such capacity
in connection with the Exchange Offer with respect to matters relating to the
Exchange Offer.
(f) The Trust and the Company agree that any reference to any Co-
Dealer Manager in any Offering Materials or in any newspaper announcement or
press release or other document or communication is subject to such Co-Dealer
Manager's prior consent, which consent shall not be unreasonably withheld.
3. Compensation. (a) The Company hereby agrees to pay to the Co-
------------
Dealer Managers for services rendered and to be rendered by them in
connection with the Exchange Offer a fee (the "Management Fee") equal to
$0.125 per share of Target Securities validly submitted for exchange and not
withdrawn in connection with the Exchange Offer. The Management Fee shall be
paid only if the Exchange Offer is consummated, and shall be paid within one
week of the consummation of the Exchange Offer. The Management Fee shall be
divided 40% to Merrill Lynch and 60% to the other Co-Dealer Managers, who
shall divide their portion of the Management Fee equally among themselves.
In addition, the Company agrees to reimburse each Co-Dealer Manager directly
for all of its reasonable out-of-pocket expenses, including, without
limitation, the reasonable fees and expenses of the law firm acting as legal
counsel for the Co-Dealer Managers. Fees, if any, related to all other
transactions with respect to the Target Securities not contemplated hereby
will be negotiated in good faith by the parties hereto at the time thereof.
(b) The Company agrees to pay, or cause to be paid to, each
soliciting dealer (including any Co-Dealer Manager acting as a soliciting
dealer) whose name has been inserted in the space provided in the Letter of
Transmittal for that purpose a fee (the "Soliciting Dealer Fee") equal to
$0.50 per share of Target Securities validly submitted for exchange and not
withdrawn in connection with the Exchange Offer; provided, however, that no
such fee shall be paid with respect to Target Securities tendered, directly
or indirectly, by soliciting dealers for their own account and such fee shall
not be remitted, in whole or in part, to the beneficial owner of such Target
Securities. The
<PAGE>
5
Soliciting Dealer Fee shall be payable to the soliciting dealers within one
week of the consummation of the Exchange Offer.
4. Certain Covenants of the Trust and the Company. Each of the
----------------------------------------------
Company and the Trust jointly and severally covenants with the Co-Dealer
Managers:
(a) To use its best efforts to cause the Registration Statement,
including any post-effective amendment thereto, to become effective and
will notify the Co-Dealer Managers immediately and, if requested by any
Co-Dealer Manager, will confirm the notice in writing, (i) when any
post-effective amendment to the Registration Statement shall have become
effective, or any supplement to the Prospectus or any amended Prospectus
or any amended or additional Offering Materials shall have been filed,
(ii) of the receipt of any comments from the Commission relating to the
Exchange Offer, (iii) of any request by the Commission to amend the
Registration Statement or amend or supplement the Prospectus or the
other Offering Materials or for additional information relating to the
Exchange Offer and (iv) of (A) the issuance by the Commission of any
stop order suspending the effectiveness of the Registration Statement or
(B) the issuance by the Commission of any order preventing or suspending
the use of any of the Offering Materials or (C) the suspension of the
qualification of the Preferred Securities for offering or sale in
connection with the Exchange Offer in any jurisdiction, (D) the
institution or threatening of any proceedings for any of such purposes
or (E) the occurrence of any event which could cause the Company to
withdraw, rescind, terminate or modify the Exchange Offer or would
permit the Company to exercise any right not to accept the Target
Securities tendered pursuant to the Exchange Offer. The Company and the
Trust will make every reasonable effort to prevent the issuance of any
such stop order, the issuance of any order preventing or suspending such
use and the suspension of any such qualification and, if any such order
is issued or qualification suspended, to obtain the lifting of such
order or suspension at the earliest practicable time.
(b) Prior to the termination of the Exchange Offer, before
amending or supplementing the Registration Statement or the Prospectus,
to furnish copies of drafts to, and consult with, the Co-Dealer Managers
and their counsel within a reasonable time in advance of filing with the
Commission of any amendment or supplement to the Registration Statement,
the Prospectus or the other Offering Materials. Neither the Company nor
the Trust shall file any such amendment or supplement to which any Co-
Dealer Manager shall reasonably object; provided, however, that the
-------- -------
foregoing shall not apply to any of the Company's filings with the
Commission required to be filed pursuant to Section
<PAGE>
6
13(a), 13(c), 14 or 15(d) of the Exchange Act, copies of which such
filings the Company will cause to be delivered to each Co-Dealer Manager
promptly after being transmitted for filing with the Commission.
(c) To furnish promptly to each Co-Dealer Manager, without charge,
one signed copy of the Registration Statement, all amendments thereto
and any other filing with the Commission in connection with the Exchange
Offer, whether filed before or after the Registration Statement becomes
effective.
(d) To furnish promptly to each Co-Dealer Manager, without charge,
from time to time until the effective date of the Registration
Statement, as many copies of each preliminary prospectus as the Co-
Dealer Managers may reasonably request, and the Company hereby consents
to the use of such copies for purposes permitted by the Securities Act
and the Exchange Act. The Company will furnish promptly to each Co-
Dealer Manager, without charge, as soon as the Registration Statement
shall have become effective and during the period mentioned in the
second sentence of paragraph (e) below such number of copies of the
Prospectus and the other Offering Materials (as supplemented or amended)
as such Co-Dealer Manager may reasonably request and will cause all
amendments and supplements filed with the Commission to be distributed
to holders of Target Securities as may be required by the Securities Act
and the Exchange Act.
(e) To comply in all material respects with the Securities Act,
the Exchange Act and the Trust Indenture Act of 1939, as amended (the
"Trust Indenture Act"), in connection with the Offering Materials, the
Exchange Offer and the transactions contemplated hereby and thereby, as
applicable. If at any time when the Prospectus is required by the
Securities Act or Exchange Act to be delivered in connection with any
Solicitation or Exchange any event shall occur or condition shall exist
as a result of which it is necessary, in the opinion of counsel for the
Co-Dealer Managers or counsel for the Company, to amend the Registration
Statement or amend or supplement the Prospectus or any other Offering
Materials in order that the Prospectus or such other Offering Materials
will not include an untrue statement of a material fact or omit to state
a material fact necessary in order to make the statements in the
Prospectus or such other Offering Materials, in the light of the
circumstances under which they were made, not misleading or if, in the
opinion of either such counsel, it shall be necessary to amend the
Registration Statement or amend or supplement the Prospectus or any
other Offering Materials to comply with the requirements of the
Securities Act or Exchange Act, the Trust will promptly prepare, file
with the Commission, subject to Section 4(b) of this Agreement, and
<PAGE>
7
furnish, at its own expense, to each Co-Dealer Manager and to the
dealers (whose names and address will be furnished to the Company by the
Co-Dealer Managers) to which Preferred Securities may have been
exchanged, such amendment or supplement as may be necessary to correct
such untrue statement or omission or to make the Registration Statement
or the Prospectus or such other Offering Materials comply with such
requirements.
(f) To endeavor, in cooperation with the Co-Dealer Managers, to
qualify the Preferred Securities for offering and sale in connection
with the Exchange Offer under the applicable securities or Blue Sky laws
of such jurisdictions as the Company and the Trust may elect and to
maintain such qualifications in effect for such time as may be required
for the consummation of the Exchange Offer; provided, however, that
-------- -------
neither the Company nor the Trust shall be obligated to file any general
consent to service of process or to qualify as a foreign corporation or
as a dealer in securities in any jurisdiction in which it is not so
qualified or to subject itself to taxation in respect of doing business
in any jurisdiction in which it is not otherwise so subject; provided
--------
further that the Co-Dealer Managers shall not be obligated to solicit
-------
tenders in jurisdictions where the Preferred Securities are not
qualified for offer and sale. The Company and the Trust will file such
statements and reports as may be required by the laws of each
jurisdiction in which the Preferred Securities have been qualified as
above provided.
(g) To make generally available to its security holders and to the
Co-Dealer Managers as soon as practicable an earnings statement covering
a twelve-month period beginning on the first day of the first full
fiscal quarter after the date of this Agreement, which earning statement
shall satisfy the provisions of Section 11(a) of the Securities Act.
(h) To use its best efforts to effect the listing of the Preferred
Securities on the New York Stock Exchange ("NYSE"), subject to official
notice of issuance, as soon as practicable after the date hereof.
(i) To timely file any report or other document required to be
filed by the Company or the Trust with the Commission pursuant to
Section 13, 14 or 15 of the Exchange Act during the period of time
referred to in the second sentence of Section 4(e) hereof.
(j) To pay all costs and expenses incurred in connection with the
performance of its obligations in connection with this Agreement and the
Solicitations including, without limitation, (i) the preparation,
printing and filing of the Registration Statement (including
<PAGE>
8
financial statements and exhibits), as originally filed and as amended,
the preliminary prospectuses, the Prospectus and the other Offering
Materials and any amendments or supplements to any of the foregoing, and
the cost of furnishing copies thereof to the Co-Dealer Managers,
(ii) the preparation and distribution of this Agreement, certificates
for the Preferred Securities and any Blue Sky surveys and the printing
of certificates for the Preferred Securities, (iii) the distribution of
the Offering Materials to the holders of the Target Securities, (iv) the
fees and disbursements of counsel to the Company and the Trust, counsel
to the Co-Dealer Managers and the Company's and the Trust's accountants,
(v) the qualification of the Preferred Securities under the applicable
securities laws in accordance with Section 4(f) and any filing for
review of the Exchange Offer with the NASD (including filing fees and
fees and disbursements of counsel for the Co-Dealer Managers in
connection with such filing with the NASD), (vi) the fees and expenses
of the Transfer Agent, the Registrar, the Trustees of the Trust (the
"Trustees"), the Indenture Trustee (as defined herein), the Information
Agent and the Exchange Agent and (vii) all other costs and expenses
incident to the Solicitations incurred by the Trust and the Company and
its subsidiaries. The Company agrees to pay all of the aforementioned
costs and expenses whether or not the Exchange Offer is consummated.
(k) To advise or cause the Exchange Agent to advise the Co-Dealer
Managers at 5:00 P.M., New York City time, or as promptly as practicable
thereafter, daily (or more frequently if requested), by telephone or
facsimile transmission, as of 4:00 P.M. on such day with respect to
Target Securities tendered as follows:
(A)(i) the number of shares of Target Securities validly
tendered represented by certificates physically held by the
Exchange Agent (or for which the Exchange Agent has received
confirmation of receipt of book-entry transfer of such Target
Securities into the Exchange Agent's account at a Book-Entry
Transfer Facility (as defined in the Prospectus) pursuant to the
procedures set forth in the Exchange Offer) on such day; (ii) the
number of shares of Target Securities represented by Notices of
Guaranteed Delivery on such day; (iii) the number of shares of
Target Securities properly withdrawn on such day; and (iv) the
cumulative number of shares of Target Securities in categories
(A)(i) through (A)(iii) above.
On the day following such oral communication, the Company shall furnish
or cause the Exchange Agent to furnish to the Co-Dealer Managers a
written report confirming the above information which has been
communicated orally. The Company shall furnish or cause the Exchange
Agent to furnish to the
<PAGE>
9
Co-Dealer Managers such reasonable information on the tendering holders
of Targeted Securities as may be requested from time to time.
(l) To give the Co-Dealer Managers notice of any change of the
expiration time of the Exchange Offer (the "Expiration Time").
5. Representations and Warranties of the Company and the Trust.
-----------------------------------------------------------
Each of the Company and the Trust jointly and severally represents and
warrants to and agrees with each of the Co-Dealer Managers that:
(a) Each preliminary prospectus filed as part of the Registration
Statement as originally filed or as part of any amendment thereto, or
filed pursuant to Rule 424 of the Securities Act, will comply when so
filed, in all material respects, as to form with the Securities Act and
the Exchange Act; the Registration Statement at the time it becomes
effective and the Prospectus and any other Offering Materials, on the
Commencement Date and on the date on which the Company commences
delivery of the Preferred Securities for exchange of the Target
Securities pursuant to the Exchange Offer (such date, the "Exchange
Date"), will comply, in all material respects, as to form with the
Securities Act and the Exchange Act; each part of the Registration
Statement when such part becomes effective will not contain and each
such part, as amended, if applicable, will not contain any untrue
statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein not
misleading; and as of the Commencement Date and the Exchange Date, none
of the Prospectus or the other Offering Materials or any amendments or
supplements to such Offering Materials will contain any untrue statement
of a material fact or omit to state a material fact necessary in order
to make the statements therein, in the light of the circumstances under
which they were made, not misleading, except that the representations
and warranties set forth in this Section 5(a) do not apply (A) to
statements or omissions made based upon and in conformity with
information supplied in writing by a Co-Dealer Manager expressly for use
in the Registration Statement, Prospectus, any other Offering Materials
or any amendments or supplements to any of the foregoing or (B) to that
part of the Registration Statement that constitutes the Statements of
Eligibility and Qualification on Form T-1 (the "Forms T-1") under the
Trust Indenture Act of The Bank of New York as trustee (the "Indenture
Trustee") under the Indenture (as defined herein), as institutional
trustee under the Declaration (as defined herein) and as trustee under
the Guarantee.
(b) The Company has the corporate power and authority to execute,
deliver and perform its obligations under this
<PAGE>
10
Agreement, the Declaration, the Indenture and the Guarantee; and this
Agreement has been duly authorized, executed and delivered by the
Company. The Trust has the business trust power and authority to
execute, deliver and perform its obligations under this Agreement; and
this Agreement has been duly authorized, executed and delivered by the
Trust.
(c) The Preferred Securities to be issued pursuant to the Exchange
Offer will be duly authorized by the Trust's Amended and Restated
Declaration of Trust (the "Declaration") and, when issued in exchange
for Target Securities pursuant to the Exchange Offer, will be validly
issued and (subject to the terms of the Declaration) fully paid and
nonassessable undivided beneficial interests in the assets of the Trust,
not subject to any preemptive or similar rights, and will conform to all
statements relating thereto contained in the Prospectus. Holders of
Preferred Securities will be entitled to the same limitation of personal
liability extended to stockholders of private corporations for profit.
(d) The Declaration and the Guarantee have been duly authorized by
the Company and, as of the Exchange Date, will have been duly executed
and delivered by the Company. Assuming due authorization, execution and
delivery of the Declaration by the Trustees, the Declaration will, as
of the Exchange Date, be a valid and binding obligation of the Company
and the Trustees, enforceable against the Company and the Trustees in
accordance with its terms, subject to applicable bankruptcy, insolvency
and similar laws affecting creditors' rights and remedies generally and
to general principles of equity (regardless of whether enforcement is
sought in a proceeding at law or in equity). As of the Exchange Date,
the Guarantee will be a valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms, subject to
the effect of bankruptcy, insolvency, reorganization, receivership,
moratorium and other similar laws affecting the rights and remedies of
creditors generally and of general principles of equity.
(e) The Indenture between the Company and the Indenture Trustee
(including the related supplemental indenture governing the Debentures
to be deposited in the Trust, the "Indenture"), will be duly qualified
under the Trust Indenture Act and, assuming due authorization, execution
and delivery of the Indenture by the Indenture Trustee and upon
execution and delivery by the Company, will be enforceable against the
Company in accordance with its terms, subject to the effect of
bankruptcy, insolvency, reorganization, receivership, moratorium and
other similar laws affecting the rights and remedies of creditors
generally and of general principles of equity.
<PAGE>
11
(f) The Debentures to be deposited in the Trust as trust assets in
connection with the Exchange Offer have been duly and validly
authorized, and assuming due authorization, execution and delivery of
the Indenture by the Indenture Trustee, when executed and authenticated
in accordance with the provisions of the Indenture and delivered to the
Trust pursuant to the terms of the Exchange Offer will be entitled to
the benefits of the Indenture and will be valid and binding obligations
of the Company enforceable against the Company in accordance with its
terms, subject to the effect of bankruptcy, insolvency, reorganization,
receivership, moratorium and other similar laws affecting the rights and
remedies of creditors generally and of general principles of equity.
(g) The Company has been duly incorporated, is validly existing as
a corporation and is in good standing under the laws of the State of
Delaware, has the corporate power and authority to own its property and
to conduct its business as described in the Prospectus and is duly
qualified to transact business and is in good standing in each
jurisdiction in which the conduct of its business or its ownership or
leasing of property requires such qualification, except to the extent
that the failure to be so qualified or to be in good standing would not
have a material adverse effect on the financial condition or results of
operations of the Company and its subsidiaries, taken as a whole.
(h) The Trust has been duly created and is validly existing in
good standing as a business trust under the Delaware Act, is and will be
treated as a "grantor trust" for Federal income tax purposes under
existing law, has the business trust power and authority to conduct its
business as presently conducted and as described in the Prospectus, and
is not required to be authorized to do business in any other
jurisdiction.
(i) Each of RJR Nabisco, Inc. ("RJRN"), R.J. Reynolds Tobacco
Company, R.J. Reynolds Tobacco International, Inc. and Nabisco Holdings
Corp. ("Nabisco") (collectively, the "Principal Operating Subsidiaries")
has been duly incorporated, is validly existing as a corporation in good
standing under the laws of its jurisdiction of incorporation, has the
corporate power and authority to own its property and to conduct its
business as described in the Prospectus and is duly qualified to
transact business and is in good standing in each jurisdiction in which
the conduct of its business or its ownership or leasing of property
requires such qualification, except to the extent that the failure to be
so qualified or to be in good standing would not have a material adverse
effect on the financial condition or results of operations of the
Company and its subsidiaries, taken as a whole.
<PAGE>
12
(j) (i) The authorized capital stock of the Company conforms as
to legal matters to the description thereof contained in the Prospectus;
(ii) except as set forth in the Prospectus and except for 51,750,000
shares of Class A Common Stock of Nabisco, all of the outstanding
capital stock of each of the Principal Operating Subsidiaries which is
owned by the Company is owned directly or indirectly by the Company free
and clear of any security interest, claim, lien or other encumbrance or
preemptive rights; and (iii) except for (A) options to acquire common
stock of Nabisco granted to certain directors, officers and employees of
the Company and Nabisco and (B) the option granted to RJRN to acquire
shares of Class B Common Stock of Nabisco pursuant to the Corporate
Agreement between RJRN and Nabisco dated as of January 26, 1995 and the
rights of holders of the Class A Common Stock and Class B Common Stock
of Nabisco to convert their shares into shares of the other class in
accordance with the Certificate of Incorporation of Nabisco under
certain circumstances, there are no outstanding rights (including,
without limitation, preemptive rights), warrants or options to acquire,
or instruments convertible into or exchangeable for, any shares of
capital stock or other equity interest in any of the Principal Operating
Subsidiaries or any contract, commitment, agreement, understanding or
arrangement of any kind relating to the issuance of any such capital
stock, any such convertible or exchangeable securities or any such
rights, warrants or options.
(k) The execution and delivery by the Company and the Trust of,
and the performance by the Company and the Trust of their obligations
under, this Agreement, the execution and delivery by the Company of, and
the performance by the Company of its obligations under, the
Declaration, the Indenture and the Guarantee, the issuance and delivery
by the Trust of the Preferred Securities and the consummation of the
Exchange Offer and the fulfillment of the terms herein contemplated will
not contravene any provision of applicable law or the certificate of
incorporation or by-laws of the Company or the declaration of trust of
the Trust or any agreement or other instrument binding upon the Trust or
the Company or any of its subsidiaries or any judgment, order or decree
of any governmental body, agency or court having jurisdiction over the
Trust or the Company or any of its subsidiaries, except for such
contraventions that would not, individually or in the aggregate, have a
material adverse effect on the financial condition or results of
operations of the Company and its subsidiaries, taken as a whole, or the
Trust and no consent, approval or authorization or order of, or
qualification with, any governmental body or agency is required for the
performance by the Company and the Trust of their obligations under this
Agreement, the issuance and delivery of the Preferred Securities and the
consummation of the Exchange Offer,
<PAGE>
13
except such as will be obtained under the Securities Act, the Exchange
Act or the Trust Indenture Act and as may be required by the securities
or Blue Sky laws of the various states or the securities laws of non-U.S.
jurisdictions in connection with the Exchange Offer.
(l) There are no legal or governmental proceedings pending or, to
the best of the Company's knowledge, threatened to which the Trust or
the Company or any of its subsidiaries is a party or to which any of the
properties of the Trust or the Company or any of its subsidiaries is
subject that are required to be described in the Registration Statement
or the Prospectus and are not so described or any statutes, regulations,
contracts or other documents that are required to be described in the
Registration Statement or the Prospectus or to be filed as an exhibit to
the Registration Statement that are not described or filed as required.
(m) Neither the Company nor the Trust is, or after giving effect
to the consummation of the Exchange Offer, will be, and neither the
Company nor the Trust is directly or indirectly controlled by, or acting
on behalf of any person which is, an investment company within the
meaning of the Investment Company Act of 1940, as amended.
(n) Each of the Company and the Trust has complied with all
provisions of Section 517.075 Florida Statutes (Chapter 92-198, Laws of
Florida).
6. Indemnification and Contribution. (a) Each of the Company
--------------------------------
and the Trust jointly and severally agrees: (A) to indemnify and hold each
Co-Dealer Manager harmless against any loss, damage, expense, liability or
claim (i) which (1) with respect to the Registration Statement, is caused by
any untrue statement or alleged untrue statement of a material fact contained
therein or which is caused by the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make
the statements therein, in the light of the circumstances under which they
were made, not misleading, or (2) with respect to the Offering Materials or
in any amendment or supplement thereto, is caused by any untrue statement or
alleged untrue statement of a material fact contained in such Offering
Materials or which is caused by the omission or alleged omission to state
therein a material fact necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not misleading,
except, in any such case, as to any Co-Dealer Manager insofar as such loss,
damage, expense, liability or claim is caused by any such untrue statement or
omission or alleged untrue statement or omission based upon information
relating to such Co-Dealer Manager furnished to the Company or the Trust in
writing by such Co-Dealer Manager expressly for use in such Offering
Materials, or (ii) which arises out of or is based upon a withdrawal,
<PAGE>
14
rescission or modification of or a failure to make or consummate the Exchange
Offer; and (B) to indemnify and hold each Co-Dealer Manager harmless against
any other loss, damage, expense, liability or claim which otherwise arises
out of or is related to this Agreement or the Exchange Offer or the services
provided by the Co-Dealer Managers in connection with this Agreement or the
Exchange Offer, except to the extent any such loss, damage, expense,
liability or claim referred to in this clause (B) is found by a final
judgment of a court of competent jurisdiction to have resulted from such Co-
Dealer Manager's gross negligence, bad faith or wilful misconduct. The
Company and the Trust each jointly and severally agrees to indemnify and hold
each Co-Dealer Manager harmless against and reimburse each Co-Dealer Manager
for any and all reasonable expenses (including reasonable legal fees and
expenses) as such expenses are incurred by such Co-Dealer Manager in
connection with investigating, preparing for or defending against any such
loss, damage, expense, liability or claim, whether or not resulting in any
liability, whether or not such Co-Dealer Manager is a named party in
connection therewith and whether or not such loss, damage, expense, liability
or claim results from action initiated or brought by or on behalf of the
Company or any of its subsidiaries (including the Trust), and any amount paid
in settlement of any litigation, commenced or threatened, or of any claim
whatsoever as set forth herein if such settlement is effected with the prior
written consent of the Company and the Trust; provided, however, with respect
--------
to clause (B) above, that neither the Company nor the Trust shall be liable
for any of the foregoing expenses and any amounts previously paid shall be
promptly repaid to the extent that any loss, damage, liability or claim is
found by a final judgment of a court of competent jurisdiction to have
resulted from such Co-Dealer Manager's gross negligence, bad faith or wilful
misconduct. The Company and the Trust also agree that no Co-Dealer Manager
shall have any liability (whether direct or indirect, in tort, contract or
otherwise) to the Company or any of its subsidiaries (including the Trust) or
its or their security holders or creditors related to or arising out of this
Agreement or the Exchange Offer or the services provided by such Co-Dealer
Manager in connection with this Agreement or the Exchange Offer, except to
the extent such liability is found by a final judgment of a court of
competent jurisdiction to have resulted from such Co-Dealer Manager's gross
negligence, bad faith or wilful misconduct and except as expressly provided
in the next succeeding paragraph.
Each Co-Dealer Manager agrees, severally and not jointly, to
indemnify and hold harmless the Company and the Trust to the same extent as
the foregoing indemnity from the Company and the Trust to each Co-Dealer
Manager contained in Section 6(a)(A)(i) above, but only with reference to
information relating to such Co-Dealer Manager furnished to the Company in
writing by such Co-Dealer Manager expressly for use in the Offering
Materials.
<PAGE>
15
(b) Promptly after receipt by a person indemnified under this
Section 6 of notice of any suit, action, proceeding or investigation with
respect to which an indemnified party may be entitled to indemnification
hereunder, such indemnified person shall notify the person against whom such
indemnity may be sought in writing of the commencement or the written
assertion thereof; but the omission so to notify such indemnifying person
shall not relieve such indemnifying person from any liability which it may
have to such indemnified person unless the indemnifying person has been
materially prejudiced by such omission. Following such notification, such
indemnifying person may elect in writing to assume the defense of such suit,
action, proceeding or investigation and, upon such election, such
indemnifying person shall not be liable for any legal costs subsequently
incurred by such indemnified person (other than reasonable costs of
investigation and providing evidence) in connection therewith, unless (i)
such indemnifying person has failed to provide counsel reasonably
satisfactory to such indemnified person in a timely manner, (ii) counsel
which has been provided by such indemnifying person reasonably determines
that its representation of such indemnified person would present it with a
conflict of interest or (iii) such indemnified person reasonably determines
that there may be legal defenses available to it which are different from or
in addition to those available to such indemnifying person. In the event of
a determination pursuant to clause (i), (ii) or (iii) above, such indemnified
person shall be entitled to retain separate counsel of their choice and the
fees and expenses of such separate counsel shall be borne by such
indemnifying person. Such indemnifying person shall not in any event be
liable for the fees and expenses of more than one separate firm of attorneys
(in addition to any local counsel) for all Co-Dealer Managers in any one
action or group of related actions, except as provided in the immediately
preceding sentence. Whether or not such indemnifying person shall have
assumed the defense of any suit, action, proceeding or investigation, the
Company, the Trust and the Co-Dealer Managers agree to cooperate in the
defense thereof and shall furnish such records, information, testimony, and
attend such conferences, discovery proceedings, hearings, trials and appeals,
as may be reasonably requested in connection therewith.
(c) If the indemnification provided for in this Section 6 is
unavailable to or insufficient to hold harmless an indemnified person to the
extent provided under subsection (a) above in respect of any losses, damages,
expenses, liabilities or claims referred to therein, then the indemnifying
person shall contribute to the amount paid or payable by such indemnified
person as a result of such losses, damages, expenses, liabilities or claims
(i) in such proportion as is appropriate to reflect the relative benefits
received by the Company and its subsidiaries (including the Trust) on the one
hand and such Co-Dealer Manager on the other from the Exchange Offer or (ii)
if the allocation provided by clause (i) above is not permitted by applicable
law, in such proportion as is appropriate to reflect not only the relative
benefits referred to in clause (i) but also the relative
<PAGE>
16
fault of the Company and its subsidiaries (including the Trust) on the one
hand and such Co-Dealer Manager on the other in connection with any
statements or omissions or any other matters which resulted in such losses,
damages, expenses, liabilities or claims, as well as any other relevant
equitable considerations. The relative benefits received by the Company and
its subsidiaries (including the Trust) on the one hand and such Co-Dealer
Manager on the other shall be deemed to be in the same proportion as the
maximum aggregate liquidation preference of Preferred Securities issuable
pursuant to the Exchange Offer bears to the maximum amount of fees payable to
such Co-Dealer Manager pursuant to Section 3 hereof. The relative fault of
the Company and its subsidiaries (including the Trust) on the one hand and
such Co-Dealer Manager on the other (i) in the case of any untrue or alleged
untrue statement of a material fact or the omission or alleged omission to
state a material fact, shall be determined by reference to, among other
things, whether such statement or omission relates to information supplied by
the Company or any of its subsidiaries (including the Trust) or their
affiliates or such Co-Dealer Manager, and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission and (ii) in the case of any other action or omission,
shall be determined by reference to, among other things, whether such action
or omission was taken or omitted to be taken by the Company or any of its
subsidiaries (including the Trust) or their affiliates or by such Co-Dealer
Manager, and the parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such action or omission. The Company
and each Co-Dealer Manager agree that it would not be just and equitable if
contribution pursuant to this subsection (c) were determined by pro rata
allocation or by any other method of allocation which does not take account
of the equitable considerations referred to in this subsection (c).
Notwithstanding the provisions of this Section 6(c), no Co-Dealer Manager
shall be required to contribute any amount in excess of the fee paid to such
Co-Dealer Manager as provided in Section 3 hereof. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act of 1933, as amended) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation.
7. Conditions to Co-Dealer Managers' Obligations. The
---------------------------------------------
obligations of the Co-Dealer Managers hereunder are subject as of the
Commencement Date and as of the Exchange Date to the accuracy of the
representations and warranties of the Company and the Trust contained herein
or in certificates of any officer of the Company or the Trust delivered
pursuant to the provisions hereof, to the performance, in all material
respects, by the Company and the Trust of their obligations hereunder to be
performed, and the following additional conditions:
(a) On the Commencement Date and the Exchange Date, the
Registration Statement shall have become effective under the Securities
Act; no stop order suspending the
<PAGE>
17
effectiveness of the Registration Statement shall be in effect, and no
proceedings for such purpose shall be pending before or, to the
Company's or the Trust's knowledge, threatened by the Commission.
(b) On the Commencement Date and the Exchange Date, there shall
not have been since the respective date as of which information is given
in the Registration Statement, any material adverse change, or any
development involving a prospective material adverse change, in the
financial condition or results of operations of the Company and its
subsidiaries, taken as a whole.
(c) The Co-Dealer Managers shall have received on the Commencement
Date and the Exchange Date a certificate, dated such date and signed by
an executive officer of the Company, to the effect set forth in clause
(b) above and to the effect that the representations and warranties of
the Company contained in this Agreement are true and correct in all
material respects as of such date and that the Company has complied in
all material respects with all of the agreements and satisfied in all
material respects all of the conditions on its part to be performed or
satisfied on or before such date. The officer signing and delivering
such certificate may rely upon the best of such officer's knowledge as
to proceedings threatened.
(d) On the Commencement Date and the Exchange Date, there shall
not have been since the respective date as of which information is given
in the Registration Statement, any material adverse change, or any
development involving a prospective material adverse change, in the
financial condition or results of operations of the Trust.
(e) The Co-Dealer Managers shall have received on the Commencement
Date and the Exchange Date a certificate, dated such date and signed by
an executive officer of the Trust, to the effect set forth in clause (d)
above and to the effect that the representations and warranties of the
Trust contained in this Agreement are true and correct in all material
respects as of such date and that the Trust has complied in all material
respects with all of the agreements and satisfied in all material
respects all of the conditions on its part to be performed or satisfied
on or before such date. The officer signing and delivering such
certificate may rely upon the best of such officer's knowledge as to
proceedings threatened.
(f) On the Commencement Date and the Exchange Date, the Co-Dealer
Managers shall have received a signed opinion of Davis Polk & Wardwell,
counsel for the Company and the Trust, dated as of such date, to the
effect that:
<PAGE>
18
(i) The Company is validly existing as a corporation, is in
good standing under the laws of the State of Delaware and has the
corporate power and authority to own its property and to conduct
its business as described in the Prospectus;
(ii) this Agreement has been duly authorized, executed and
delivered by the Company;
(iii) the Indenture has been duly qualified under the Trust
Indenture Act and, assuming due authorization, execution and
delivery of the Indenture by the Company, the Indenture will be
enforceable against the Company in accordance with its terms,
subject to the effect of bankruptcy, insolvency, reorganization,
receivership, moratorium and other similar laws affecting the
rights and remedies of creditors generally and of general
principles of equity;
(iv) assuming due authorization, execution and delivery of the
Debentures by the Company and due authorization, execution and
delivery of the Indenture by the Company and the Indenture Trustee,
the Debentures when executed and authenticated in accordance with
the provisions of the Indenture and delivered pursuant to the terms
of the Exchange Offer will be entitled to the benefits of the
Indenture and will be valid and binding obligations of the Company
enforceable against the Company in accordance with its terms,
subject to the effect of bankruptcy, insolvency, reorganization,
receivership, moratorium and other similar laws affecting the
rights and remedies of creditors generally and of general
principles of equity;
(v) assuming due authorization, execution and delivery of the
Guarantee by the Company, the Guarantee will be enforceable against
the Company in accordance with its terms, subject to the effect of
bankruptcy, insolvency, reorganization, receivership, moratorium
and other similar laws affecting the rights and remedies of
creditors generally and of general principles of equity;
(vi) the statements made in the Prospectus under the captions
"Description of the Preferred Securities," "Description of the
Junior Subordinated Debentures," and "Description of the
Guarantee", insofar as such statements constitute summaries of the
legal matters or documents referred to therein are accurate in all
material respects;
<PAGE>
19
(vii) such counsel confirms its opinion under the caption
"Taxation";
(viii) neither the Company nor the Trust is, or after giving
effect to the consummation the Exchange Offer, will be, and neither
the Company nor the Trust is directly or indirectly controlled by,
or acting on behalf of any person which is, an investment company
within the meaning of the Investment Company Act of 1940, as
amended.
(ix) such counsel (1) has no reason to believe that (except
for financial statements and schedules and financial and
statistical data as to which such counsel need not express any
belief and except for that part of the Registration Statement that
constitutes the Forms T-1) (i) as of its effective date, the
Registration Statement or any further amendment thereto made prior
to the date of such counsel's opinion, contained any untrue
statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements
therein not misleading or (ii) that, as of the date of such
counsel's opinion, the Prospectus or any further amendment or
supplement to the Prospectus made prior to the date of such
counsel's opinion (except as aforesaid), contains any untrue
statement of a material fact or omits to state a material fact
necessary in order to make the statements therein in the light of
the circumstances under which they were made, not misleading, and
(2) is of the opinion that the Registration Statement and
Prospectus and any further amendments and supplements thereto made
prior to the date of such counsel's opinion (except as aforesaid),
as of their respective effective or issue dates, comply as to form
in all material respects with the Securities Act.
In rendering such opinion, such counsel may rely as to certain
matters of fact on certificates of officers of the Company and of public
officials and may state that such counsel expresses no opinion as to the
laws of any jurisdiction other than the State of New York, the federal
law of the United States and the Delaware General Corporation Law.
With respect to paragraph (ix) above, such counsel may state that
it has not independently verified the accuracy, completeness or fairness
of the statements made or included or incorporated by reference therein
and takes no responsibility therefor and that such opinion is based upon
such counsel's examination of the Registration Statement, the Prospectus
as amended or supplemented and any documents incorporated by reference
thereto, its investigations made in connection with the preparation of
the Registration
<PAGE>
20
Statement and Prospectus and its participation in conferences with
certain officers and employees of the Company and its subsidiaries and
with representatives of Deloitte & Touche and any others referred to in
such opinion.
(g) On the Commencement Date and the Exchange Date, the Co-Dealer
Managers shall have received a signed opinion of Morris, Nichols, Arsht
& Tunnell, Delaware counsel for the Company, dated as of such date, to
the effect that:
(i) the Trust has been duly organized and is validly existing
in good standing as a business trust under the Delaware Act and has
the business trust power and authority to conduct its business as
described in the Prospectus;
(ii) assuming due authorization, execution and delivery of the
Declaration by the Company and the Trustees, the Declaration is a
legal, valid and binding agreement of the Company and the Trustees,
enforceable against the Company and the Trustees in accordance with
its terms, subject to the effect of bankruptcy, insolvency,
reorganization, receivership, fraudulent conveyance, moratorium and
other similar laws affecting the rights and remedies of creditors
generally as from time to time in effect, general principles of
equity (regardless of whether such enforceability is considered in
a proceeding in equity or at law), and considerations of public
policy or the effect of applicable law relating to fiduciary
duties;
(iii) under the Declaration and the Delaware Act, the execution
and delivery of this Agreement by the Trust, and the performance by
the Trust of its obligations hereunder, have been duly authorized
by all requisite business trust action on the part of the Trust;
(iv) the Preferred Securities have been duly authorized by the
Declaration and are duly and validly issued and, subject to the
terms of the Declaration, fully paid and nonassessable beneficial
interests in the Trust. The holders of Preferred Securities will
be, subject to the terms of the Declaration, 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; and
(v) under the Declaration and the Delaware Act, the issuance
of the Preferred Securities is not subject to preemptive rights.
<PAGE>
21
(h) On the Commencement Date and the Exchange Date, the Co-Dealer
Managers shall have received a signed opinion of Jo-Ann Ford, Senior
Vice-President, Law and Secretary, counsel for the Company, dated as of
such date, to the effect that:
(i) The Company has been duly incorporated, is validly
existing as a corporation in good standing under the laws of the
State of Delaware, has the corporate power and authority to own its
property and to conduct its business as described in the Prospectus
and is duly qualified to transact business and is in good standing
in each jurisdiction in which the conduct of its business or the
ownership or leasing of its property requires such qualification,
except to the extent that the failure to be so qualified or be in
good standing would not have a material adverse effect on the
financial condition or results of operations of the Company and its
subsidiaries, taken as a whole (such counsel being entitled to rely
in respect of the opinion in this clause upon opinions of local
counsel);
(ii) each Principal Operating Subsidiary has been duly
incorporated, is validly existing as a corporation in good standing
under the laws of the jurisdiction of its incorporation, has the
corporate power and authority to own its property and to conduct
its business as described in the Prospectus and is duly qualified
to transact business and is in good standing in each jurisdiction
in which the conduct of its business or its ownership or leasing of
property requires such qualification, except to the extent that the
failure to be so qualified or be in good standing would not have a
material adverse effect on the Company and its subsidiaries, taken
as a whole (such counsel being entitled to rely in respect of the
opinion in this clause upon opinions of local counsel);
(iii) (a) The authorized capital stock of the Company
conforms as to legal matters to the description thereof contained
in the Prospectus; (b) except for 51,750,000 shares of Class A
Common Stock of Nabisco, all of the outstanding capital stock of
each of the Principal Operating Subsidiaries is owned directly or
indirectly by the Company free and clear of any security interest,
claim, lien or other encumbrance or preemptive rights; and (c)
except for (i) options to acquire common stock of Nabisco granted
to certain directors, officers and employees of the Company and
Nabisco and their subsidiaries and (ii) the option granted to RJRN
to acquire shares of Class B Common Stock of Nabisco pursuant to
the Corporate Agreement between RJRN and Nabisco dated as of
January 26, 1995 and the rights of holders of the Class A Common
Stock
<PAGE>
22
and Class B Common Stock of Nabisco to convert their shares into
shares of the other class in accordance with the Certificate of
Incorporation of Nabisco under certain circumstances, there are no
outstanding rights (including, without limitation, preemptive
rights), warrants or options to acquire, or instruments convertible
into or exchangeable for, any shares of capital stock or other
equity interest in any of the Principal Operating Subsidiaries or
any contract, commitment, agreement, understanding or arrangement
of any kind relating to the issuance of any such capital stock, any
such convertible or exchangeable securities or any such rights,
warrants or options.
(iv) this Agreement, the Declaration, the Indenture, the
Debentures and the Guarantee have been duly authorized, executed
and delivered by the Company;
(v) the execution and delivery by the Company of, and the
performance by the Company of its obligations under, this
Agreement, the Declaration, the Indenture, the Debentures and the
Guarantee, and the consummation of the Exchange Offer and the
fulfillment of the terms herein contemplated (including the
issuance of the Preferred Securities by the Trust) will not
contravene any provision of applicable law or the certificate of
incorporation or by-laws of the Company or any of its subsidiaries
(including the Trust) or, to the best of such counsel's knowledge,
any agreement or other instrument binding upon the Company or any
of its subsidiaries (including the Trust) or, to the best of such
counsel's knowledge, any judgment, order or decree of any
governmental body, agency or court having jurisdiction over the
Company or any subsidiary (including the Trust), except for such
contraventions that would not, individually or in the aggregate,
have a material adverse effect on the financial condition or
results of operations of the Company and its subsidiaries, taken as
a whole, and no consent, approval or authorization or order of, or
qualification with, any governmental body or agency is required for
the performance by either the Trust or the Company of its
obligations under this Agreement, the Declaration, the Indenture,
the Debentures and the Guarantee, and the consummation of the
Exchange Offer, except such as have been obtained under the
Securities Act or the Exchange Act and as may be required by the
securities or Blue Sky laws of the various states or the securities
laws of non-U.S. jurisdictions in connection with the Exchange
Offer;
(vi) after due inquiry, to the best of such counsel's
knowledge, such counsel does not know of any legal or governmental
proceeding pending or threatened
<PAGE>
23
to which the Company or any of its subsidiaries (including the
Trust) is a party or to which any of the properties of the Company
or any of its subsidiaries (including the Trust) is subject that is
required to be described in the Registration Statement or the
Prospectus and is not so described or of any statutes, regulations,
contracts or other documents that are required to be described in
the Registration Statement or the Prospectus or to be filed as
exhibits to the Registration Statement that are not described or
filed as required;
(vii) such counsel (1) is of the opinion that each document, if
any, filed pursuant to the Exchange Act and incorporated by
reference in the Registration Statement or Prospectus (except for
financial statements and schedules and other financial and
statistical data included therein as to which such counsel need not
express any opinion and except for that part of the Registration
Statement that constitutes the Forms T-1) complied when so filed as
to form in all material respects with the Exchange Act, (2) has no
reason to believe that (except for financial statements and
schedules and financial and statistical data as to which such
counsel need not express any belief and except for that part of the
Registration Statement that constitutes the Forms T-1) (i) as of
its effective date, the Registration Statement, contained any
untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary to make the
statements therein not misleading or (ii) the Prospectus or any
further amendment or supplement to the Prospectus made prior to the
date of such counsel's opinion (except as aforesaid), on the date
of such counsel's opinion, contains any untrue statement of a
material fact or omits to state a material fact necessary in order
to make the statements therein in the light of the circumstances
under which they were made, not misleading and (3) is of the
opinion that the Registration Statement and Prospectus and any
further amendments and supplement thereto prior to the date of such
counsel's opinion (except as aforesaid), on their respective
effectiveness or issue dates, comply as to form in all material
respects with the Securities Act.
In rendering such opinion, such counsel may rely as to certain
matters of fact on certificates of officers of the Company and of public
officials and may state that such counsel expresses no opinion as to the
laws of any jurisdiction other than the State of New York, the federal
law of the United States and the Delaware General Corporation Law.
<PAGE>
24
With respect to paragraph (vii) above, counsel for the Company may
state that such counsel's opinion and belief are based upon such
counsel's participation in the preparation of the Registration Statement
and Prospectus and any amendments or supplements thereto and documents
incorporated therein by reference and review and discussion of the
contents thereof, but are without independent check or verification,
except as specified.
(i) The Co-Dealer Managers shall have received the favorable
opinion of Simpson Thacher & Bartlett, counsel for the Co-Dealer
Managers, dated as of the Commencement Date and the Exchange Date,
covering the incorporation and legal existence of the Company, the
issuance and delivery of the Preferred Securities, this Agreement, the
Registration Statement, the Prospectus and such other related matters as
the Co-Dealer Managers may require. In giving such opinion such counsel
may rely, as to all matters governed by the laws of jurisdictions other
than the law of the State of New York, and the Federal law of the United
States and the corporate law of the State of Delaware, upon the opinions
of counsel satisfactory to the Co-Dealer Managers. Such counsel may
also state that, insofar as such opinion involves factual matters, they
have relied, to the extent they deem proper, upon certificates of
officers of the Company and certificates of public officials.
(j) On the Commencement Date, the Co-Dealer Managers shall have
received from the Company's independent public accountants, in form and
substance satisfactory to the Co-Dealer Managers and dated as of such
date, containing statements and information of the type ordinarily
included in accountants' "comfort letters" to underwriters with respect
to the financial statements and certain financial information contained
in or incorporated by reference into the Prospectus.
(k) At the Exchange Date, the Co-Dealer Managers shall have
received from the Company's independent public accountants, in form and
substance satisfactory to the Co-Dealer Managers and dated as of such
dates, to the effect that such accountants reaffirm the statements made
in the letter furnished pursuant to Section 7(j).
(l) By the Exchange Date, RJRN shall have entered into appropriate
agreements with the Information Agent and the Exchange Agent for
purposes of the Exchange Offer.
8. Termination. (a) This Agreement shall terminate upon the
-----------
earliest to occur of (i) the Exchange Date, (ii) the date on which the Co-
Dealer Managers give notice to the Company and the Trust that any of the
conditions specified in Section 7 have not been fulfilled as of any date such
conditions are required to be fulfilled pursuant to Section 7 or (iii) the
date
<PAGE>
25
on which the Company terminates or withdraws the Exchange Offer for any
reason (the earliest to occur of clauses (i), (ii) or (iii) being referred to
as the "Termination Date").
(b) Notwithstanding termination of this Agreement pursuant to
subsection (a) of this Section 8, the obligations of the Company to
compensate the Co-Dealer Managers pursuant to Section 3, the representations
and warranties contained in Section 5 and the provisions of Section 6 shall
survive any termination of this Agreement.
9. Notices. All notices and other communications hereunder shall
-------
be in writing and shall be deemed to have been duly given if delivered,
mailed or transmitted by any standard form of telecommunication. Notices to
the Co-Dealer Managers shall be directed to Merrill Lynch & Co., World
Financial Center, North Tower, New York, New York 10281-1307, attention
Samuel R. Chapin, with a copy to David Sorkin, Esq., Simpson Thacher &
Bartlett, 425 Lexington Avenue, New York, New York 10017, and notices to the
Company and the Trust shall be directed to either of them c/o RJR Nabisco
Holdings Corp., 1301 Avenue of the Americas, New York, New York 10019,
attention of Jo-Ann Ford, Esq., with a copy to David W. Ferguson, Esq.,
Davis Polk & Wardwell, 450 Lexington Avenue, New York, New York 10017. Any
notice under Section 6 hereof may be made by telex or telephone, but if so
made, shall be subsequently confirmed promptly in writing.
10. Tombstone. The Company and the Trust acknowledge that the Co-
---------
Dealer Managers may, with the prior review and approval of the Company, which
approval shall not be unreasonably withheld, place an announcement in such
newspapers and periodicals as the Co-Dealer Managers may choose, stating that
the Co-Dealer Managers are or were acting as co-dealer managers and financial
advisors to the Company and the Trust in connection with the Exchange Offer.
The costs relating to any such tombstone shall be borne by the Co-Dealer
Managers.
11. Survival of Certain Provisions. The representations,
------------------------------
warranties, indemnities and agreements of the Company and the Trust will
remain operative and in full force and effect regardless of any investigation
made by or on behalf of any Co-Dealer Manager or any affiliate or controlling
person thereof and, subject to Section 8(b), will survive the consummation of
the Exchange Offer.
12. Governing Law. This Agreement shall be construed in
-------------
accordance with and governed by the laws of the State of New York, without
giving effect to principles of conflicts of laws.
13. Counterparts. This Agreement may be executed in one or more
------------
counterparts, and by different parties hereto on separate counterparts, each
of which counterparts, when so executed and delivered, shall be deemed to be
an original and all
<PAGE>
26
of which counterparts, taken together, shall constitute one and the same
Agreement.
14. Successors. This Agreement is made solely for the benefit of
----------
the Co-Dealer Managers, the Company and the Trust and, to the extent
expressed, the parties indemnified pursuant to Section 6, and no other
persons shall acquire or have any right under or by virtue of this Agreement.
Nothing in this Agreement, expressed or implied, is intended to confer on any
person other than the parties hereto or their respective successors and
assigns, and, to the extent expressly set forth herein, the parties
indemnified pursuant to Section 6 hereof, any rights or remedies under or by
reason of this Agreement. Without limiting the generality of the foregoing,
the parties acknowledge that nothing in this Agreement, expressed or implied,
is intended to confer on holders of the securities of the Trust, the Company
or any of its subsidiaries or creditors of the Company or any of its
subsidiaries or the respective successors and assigns of such creditors, any
rights or remedies under or by reason of this Agreement.
<PAGE>
27
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to us a counterpart hereof, whereupon this
instrument will become a binding agreement among the Company, the Trust and
the Co-Dealer Managers in accordance with its terms.
Very truly yours,
RJR NABISCO HOLDINGS CORP.
By:________________________________
RJR NABISCO HOLDINGS CAPITAL
TRUST I
By RJR NABISCO HOLDINGS CORP.
By:________________________________
Confirmed and accepted as of
the date first above written:
MERRILL LYNCH & CO.
MERRILL LYNCH, PIERCE, FENNER
& SMITH INCORPORATED
LEHMAN BROTHERS
MORGAN STANLEY & CO. INCORPORATED
PAINEWEBBER INCORPORATED
SMITH BARNEY INC.
By: Merrill Lynch, Pierce, Fenner
& Smith Incorporated
By: ______________________
Exhibit 4.1
========================================================
RJR NABISCO HOLDINGS CORP,
Issuer
AND
THE BANK OF NEW YORK
Trustee
Indenture
Dated as of
________, 1995
__________
========================================================
<PAGE>
TABLE OF CONTENTS
__________
Page
PARTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
RECITALS
Authorization of Indenture . . . . . . . . . . . . . . . . . . . . . 1
Compliance with Legal Requirements . . . . . . . . . . . . . . . . . 1
Purpose of and Consideration for Indenture . . . . . . . . . . . . . 1
ARTICLE ONE
DEFINITIONS
SECTION 1.1 Certain Terms Defined . . . . . . . . . . . . . . . . . . 1
Authenticating Agent . . . . . . . . . . . . . . . . . . . 2
Authorized Newspaper . . . . . . . . . . . . . . . . . . . 2
Board of Directors . . . . . . . . . . . . . . . . . . . . 2
Board Resolution . . . . . . . . . . . . . . . . . . . . . 2
Business Day . . . . . . . . . . . . . . . . . . . . . . . 2
Commission . . . . . . . . . . . . . . . . . . . . . . . . 3
Common Securities . . . . . . . . . . . . . . . . . . . . 3
Composite Rate . . . . . . . . . . . . . . . . . . . . . . 3
Consolidated Net Worth . . . . . . . . . . . . . . . . . . 3
Corporate Trust Office . . . . . . . . . . . . . . . . . . 4
Coupon . . . . . . . . . . . . . . . . . . . . . . . . . . 4
covenant defeasance . . . . . . . . . . . . . . . . . . . 4
Declaration of Trust . . . . . . . . . . . . . . . . . . . 4
Depositary . . . . . . . . . . . . . . . . . . . . . . . . 4
Dollar . . . . . . . . . . . . . . . . . . . . . . . . . . 5
ECU . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Event of Default . . . . . . . . . . . . . . . . . . . . . 5
Foreign Currency . . . . . . . . . . . . . . . . . . . . . 5
Holder, Holder of Securities, Securityholder . . . . . . . 5
Indenture . . . . . . . . . . . . . . . . . . . . . . . . 5
Interest . . . . . . . . . . . . . . . . . . . . . . . . . 5
Issuer . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Issuer Order . . . . . . . . . . . . . . . . . . . . . . . 5
Judgment Currency . . . . . . . . . . . . . . . . . . . . 5
Officers' Certificate . . . . . . . . . . . . . . . . . . 6
Opinion of Counsel . . . . . . . . . . . . . . . . . . . . 6
original issue date . . . . . . . . . . . . . . . . . . . 6
<PAGE>
Page
----
Original Issue Discount Security . . . . . . . . . . . . . 6
Outstanding . . . . . . . . . . . . . . . . . . . . . . . 6
Periodic Offering . . . . . . . . . . . . . . . . . . . . 7
Person . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Preferred Securities . . . . . . . . . . . . . . . . . . . 7
principal . . . . . . . . . . . . . . . . . . . . . . . . 7
RJR Nabisco Holdings Capital Trust . . . . . . . . . . . . 7
Registered Global Security . . . . . . . . . . . . . . . . 8
Registered Security . . . . . . . . . . . . . . . . . . . 8
Responsible Officer . . . . . . . . . . . . . . . . . . . 8
Restricted Subsidiary . . . . . . . . . . . . . . . . . . 8
Security or Securities . . . . . . . . . . . . . . . . . . 8
Securities Act . . . . . . . . . . . . . . . . . . . . . . 9
Security Exchange . . . . . . . . . . . . . . . . . . . . 9
Senior Obligations . . . . . . . . . . . . . . . . . . . . 9
Subsidiary . . . . . . . . . . . . . . . . . . . . . . . . 10
Trust Indenture Act of 1939 . . . . . . . . . . . . . . . 10
Trustee . . . . . . . . . . . . . . . . . . . . . . . . . 10
U.S. Government Obligations . . . . . . . . . . . . . . . 10
Unregistered Security . . . . . . . . . . . . . . . . . . 10
Vice President . . . . . . . . . . . . . . . . . . . . . . 10
Yield to Maturity . . . . . . . . . . . . . . . . . . . . 10
ARTICLE TWO
SECURITIES
SECTION 2.1 Forms Generally . . . . . . . . . . . . . . . . . 11
SECTION 2.2 Form of Trustee's Certificate of
Authentication. . . . . . . . . . . . . . . . . 11
SECTION 2.3 Amount Unlimited; Issuable in Series . . . . . . . 12
SECTION 2.4 Authentication and Delivery of Securities . . . . 16
SECTION 2.5 Execution of Securities . . . . . . . . . . . . . 19
SECTION 2.6 Certificate of Authentication . . . . . . . . . . 19
SECTION 2.7 Denomination and Date of Securities;
Payments of Interest. . . . . . . . . . . . . . 20
SECTION 2.8 Registration, Transfer and Exchange . . . . . . . 21
SECTION 2.9 Mutilated, Defaced, Destroyed, Lost and
Stolen Securities . . . . . . . . . . . . . . . 25
SECTION 2.10 Cancellation of Securities; Destruction
Thereof . . . . . . . . . . . . . . . . . . . . 26
SECTION 2.11 Temporary Securities . . . . . . . . . . . . . . 27
SECTION 2.12 CUSIP Numbers . . . . . . . . . . . . . . . . . . 28
SECTION 2.13 Series May Include Tranches. . . . . . . . . . . 28
tranche . . . . . . . . . . . . . . . . . . . . 28
ii
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Page
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ARTICLE THREE
COVENANTS OF THE ISSUER
SECTION 3.1 Payment of Principal and Interest . . . . . . . . 29
SECTION 3.2 Offices for Payments, etc . . . . . . . . . . . . 30
SECTION 3.3 Appointment to Fill a Vacancy in Office of
Trustee . . . . . . . . . . . . . . . . . . . . 31
SECTION 3.4 Paying Agents . . . . . . . . . . . . . . . . . . 31
SECTION 3.5 Certificate to Trustee . . . . . . . . . . . . . . 33
SECTION 3.6 Luxembourg Publications . . . . . . . . . . . . . 33
ARTICLE FOUR
SECURITYHOLDERS LISTS AND REPORTS BY THE
ISSUER AND THE TRUSTEE
SECTION 4.1 Issuer to Furnish Trustee Information as to
Names and Addresses of Securityholders . . . . . . . . . . 33
SECTION 4.2 Reports by the Issuer . . . . . . . . . . . . . . 34
SECTION 4.3 Reports by the Trustee . . . . . . . . . . . . . . 34
ARTICLE FIVE
REMEDIES OF THE TRUSTEE AND SECURITYHOLDERS
ON EVENT OF DEFAULT
SECTION 5.1 Event of Default Defined; Acceleration of
Maturity; Waiver of Default . . . . . . . . . . 34
SECTION 5.2 Collection of Indebtedness by Trustee;
Trustee May Prove Debt. . . . . . . . . . . . . 38
SECTION 5.3 Application of Proceeds . . . . . . . . . . . . . 41
SECTION 5.4 Suits for Enforcement . . . . . . . . . . . . . . 42
SECTION 5.5 Restoration of Rights on Abandonment of
Proceedings . . . . . . . . . . . . . . . . . . 42
SECTION 5.6 Limitations on Suits by Securityholders . . . . . 43
SECTION 5.7 Unconditional Right of Securityholders to
Institute Certain Suits . . . . . . . . . . . . 43
SECTION 5.8 Powers and Remedies Cumulative; Delay or
Omission Not Waiver of Default. . . . . . . . . 44
SECTION 5.9 Control by Securityholders . . . . . . . . . . . . 44
SECTION 5.10 Waiver of Past Defaults . . . . . . . . . . . . . 45
iii
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Page
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SECTION 5.11 Trustee to Give Notice of Default, But May
Withhold in Certain Circumstances . . . . . . . 46
SECTION 5.12 Right of Court to Require Filing of
Undertaking to Pay Costs. . . . . . . . . . . . 46
ARTICLE SIX
CONCERNING THE TRUSTEE
SECTION 6.1 Duties and Responsibilities of the Trustee;
During Default; Prior to Default. . . . . . . . 47
SECTION 6.2 Certain Rights of the Trustee . . . . . . . . . . 49
SECTION 6.3 Trustee Not Responsible for Recitals,
Disposition of Securities or Application of
Proceeds Thereof. . . . . . . . . . . . . . . . 50
SECTION 6.4 Trustee and Agents May Hold Securities;
Collections, etc. . . . . . . . . . . . . . . . 51
SECTION 6.5 Moneys Held by Trustee . . . . . . . . . . . . . . 51
SECTION 6.6 Compensation and Indemnification of Trustee
and Its Prior Claim . . . . . . . . . . . . . . 51
SECTION 6.7 Right of Trustee to Rely on Officers'
Certificate, etc. . . . . . . . . . . . . . . . 52
SECTION 6.8 Indentures Not Creating Potential
Conflicting Interests for the Trustee . . . . . 52
SECTION 6.9 Persons Eligible for Appointment as Trustee . . . 52
SECTION 6.10 Resignation and Removal; Appointment of
Successor Trustee . . . . . . . . . . . . . . . 53
SECTION 6.11 Acceptance of Appointment by Successor
Trustee . . . . . . . . . . . . . . . . . . . . 55
SECTION 6.12 Merger, Conversion, Consolidation or
Succession to Business of Trustee . . . . . . . 56
SECTION 6.13 Appointment of Authenticating Agent . . . . . . . 57
ARTICLE SEVEN
CONCERNING THE SECURITYHOLDERS
SECTION 7.1 Evidence of Action Taken by Securityholders . . . 58
SECTION 7.2 Proof of Execution of Instruments and of
Holding of Securities; Record Date. . . . . . . 59
SECTION 7.3 Holders to be Treated as Owners . . . . . . . . . 60
iv
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SECTION 7.4 Right of Revocation of Action Taken . . . . . . . 61
ARTICLE EIGHT
SUPPLEMENTAL INDENTURES
SECTION 8.1 Supplemental Indentures Without Consent of
Securityholders . . . . . . . . . . . . . . . . 61
SECTION 8.2 Supplemental Indentures With Consent of
Securityholders . . . . . . . . . . . . . . . . 63
SECTION 8.3 Effect of Supplemental Indenture . . . . . . . . . 65
SECTION 8.4 Documents to Be Given to Trustee . . . . . . . . . 66
SECTION 8.5 Notation on Securities in Respect of
Supplemental Indentures . . . . . . . . . . . . 66
ARTICLE NINE
CONSOLIDATION, MERGER, SALE OR CONVEYANCE
SECTION 9.1 Covenant Not to Merge, Consolidate, Sell or
Convey Property Except Under Certain
Conditions. . . . . . . . . . . . . . . . . . . 66
SECTION 9.2 Successor Corporation Substituted . . . . . . . . 67
SECTION 9.3 Opinion of Counsel to Trustee . . . . . . . . . . 67
ARTICLE TEN
SATISFACTION AND DISCHARGE OF INDENTURE;
UNCLAIMED MONEYS.
SECTION 10.1 Satisfaction and Discharge of Indenture . . . . . 68
SECTION 10.2 Application by Trustee of Funds Deposited
for Payment of Securities . . . . . . . . . . . 73
SECTION 10.3 Repayment of Moneys Held by Paying Agent . . . . 73
SECTION 10.4 Return of Moneys Held by Trustee and Paying
Agent Unclaimed for Two Years . . . . . . . . . 73
v
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Page
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ARTICLE ELEVEN
MISCELLANEOUS PROVISIONS
SECTION 11.1 Incorporators, Stockholders, Officers and
Directors of Issuer Exempt from
Individual Liability . . . . . . . . . . . . . 74
SECTION 11.2 Provisions of Indenture for the Sole
Benefit of Parties and Securityholders . . . . 74
SECTION 11.3 Successors and Assigns of Issuer Bound by
Indenture . . . . . . . . . . . . . . . . . . 74
SECTION 11.4 Notices and Demands on Issuer, Trustee and
Securityholders . . . . . . . . . . . . . . . 74
SECTION 11.5 Officers' Certificates and Opinions of
Counsel; Statements to Be Contained Therein. . 75
SECTION 11.6 Payments Due on Saturdays, Sundays and
Holidays . . . . . . . . . . . . . . . . . . . 77
SECTION 11.7 Conflict of Any Provision of Indenture with
Trust Indenture Act of 1939 . . . . . . . . . 77
SECTION 11.8 New York Law to Govern . . . . . . . . . . . . . 77
SECTION 11.9 Counterparts . . . . . . . . . . . . . . . . . . 77
SECTION 11.10 Effect of Headings. . . . . . . . . . . . . . . 77
SECTION 11.11 Securities in a Foreign Currency or in ECU. . . 77
SECTION 11.12 Judgment Currency . . . . . . . . . . . . . . . 78
SECTION 11.13 Severability of Provisions. . . . . . . . . . . 79
SECTION 11.14 Company Released from Indenture
Requirements Under Certain Circumstances. . . 79
ARTICLE TWELVE
REDEMPTION OF SECURITIES AND SINKING FUNDS
SECTION 12.1 Applicability of Article . . . . . . . . . . . . 80
SECTION 12.2 Notice of Redemption; Partial Redemptions . . . . 80
SECTION 12.3 Payment of Securities Called for Redemption . . . 82
SECTION 12.4 Exclusion of Certain Securities from
Eligibility for Selection for Redemption. . . . 83
SECTION 12.5 Mandatory and Optional Sinking Funds . . . . . . 83
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Page
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ARTICLE THIRTEEN
SUBORDINATION OF SECURITIES
SECTION 13.1 Subordination . . . . . . . . . . . . . . 87
SECTION 13.2 Rights of Holders of Senior
Obligations . . . . . . . . . . . . . . . 87
SECTION 13.3 Payments and Distributions . . . . . . . . 88
SECTION 13.4 Payments by the Company . . . . . . . . . 90
SECTION 13.5 Appointment of the Trustee by
Securityholders . . . . . . . . . . . . . 90
SECTION 13.6 Notice to Trustee . . . . . . . . . . . . 91
SECTION 13.7 Rights of Trustee . . . . . . . . . . . . 91
SECTION 13.8 Paying Agent . . . . . . . . . . . . . . . 91
TESTIMONIUM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92
SIGNATURES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92
ACKNOWLEDGMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 93
vii
<PAGE>
THIS INDENTURE, dated as of ________, 1995 between RJR NABISCO
HOLDINGS CORP., a Delaware corporation (the "Issuer"), and THE BANK OF NEW
YORK, a national association (the "Trustee"),
W I T N E S S E T H:
WHEREAS, the Issuer has duly authorized the issue from time to time
of its debentures, notes or other evidences of indebtedness to be issued in
one or more series (the "Securities") up to such principal amount or amounts
as may from time to time be authorized in accordance with the terms of this
Indenture and to provide, among other things, for the authentication,
delivery and administration thereof, the Issuer has duly authorized the
execution and delivery of this Indenture; and
WHEREAS, the Issuer has duly authorized the execution and delivery
of this Indenture to provide, among other things, for the authentication,
delivery and administration of the Securities; and
WHEREAS, all things necessary to make this Indenture a valid
indenture and agreement according to its terms have been done;
NOW, THEREFORE:
In consideration of the premises and the purchases of the
Securities by the holders thereof, the Issuer and the Trustee mutually
covenant and agree for the equal and proportionate benefit of the respective
holders from time to time of the Securities or of series thereof and of the
Coupons, if any, appertaining thereto as follows:
ARTICLE ONE
DEFINITIONS
-----------
SECTION 1.1 Certain Terms Defined. The following terms (except as
---------------------
otherwise expressly provided or unless the context otherwise clearly
requires) for all purposes of this Indenture and of any indenture
supplemental hereto shall have the respective meanings specified in this
Section. All other terms used in this Indenture that are defined in the
Trust Indenture Act of 1939 or the definitions of which in the Securities Act
of 1933 are referred to in the Trust Indenture Act of 1939, including terms
defined therein by reference to the Securities Act of 1933 (except as herein
<PAGE>
otherwise expressly provided or unless the context otherwise clearly
requires), shall 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. 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. The terms defined in
this Article have the meanings assigned to them in this Article and include
the plural as well as the singular.
"Authenticating Agent" shall have the meaning set forth in Section
--------------------
6.13.
"Authorized Newspaper" means a newspaper (which, in the case of The
--------------------
City of New York, will, if practicable, be The Wall Street Journal (Eastern
Edition), in the case of the United Kingdom, will, if practicable, be the
Financial Times (London Edition) and, in the case of Luxembourg, will, if
practicable, be the Luxemburger Wort) published in an official language of
the country of publication customarily published at least once a day for at
least five days in each calendar week and of general circulation in The City
of New York, the United Kingdom or in Luxembourg, as applicable. If it shall
be impractical in the opinion of the Trustee to make any publication of any
notice required hereby in an Authorized Newspaper, any publication or other
notice in lieu thereof which is made or given with the approval of the
Trustee shall constitute a sufficient publication of such notice.
"Board of Directors" means either the Board of Directors of the
------------------
Issuer or any committee of such Board duly authorized to act hereunder.
"Board Resolution" means a copy of one or more resolutions
----------------
certified by the Secretary or any Assistant Secretary of the Issuer to have
been duly adopted or consented to by the Board of Directors and as being in
full force and effect as of the date of certification, which copy is
delivered to the Trustee.
"Business Day" means any day, other than a Saturday or Sunday, that
------------
is neither a legal holiday nor a day on which banking institutions are
authorized or required by law or regulation to close in The City of New York
and
2
<PAGE>
(i) with respect to any Note the interest of which is based on LIBOR, in the
City of London, (ii) with respect to Notes denominated in a specified
currency other than U.S. dollars, Australian dollars or European Currency
Units, in the principal financial center of the country of the specified
currency, (iii) with respect to Notes denominated in Australian dollars, in
Sydney and (iv) with respect to Notes denominated in European Currency Units,
in Luxembourg and that is not a non-European Currency Units clearing day, as
determined by the European Currency Units Banking Association in Paris.
"Commission" means the Securities and Exchange Commission, as from
----------
time to time constituted, created under the Securities Exchange Act of 1934,
as amended or if at any time after the execution and delivery of this
Indenture such Commission is not existing and performing the duties now
assigned to it under the Trust Indenture Act of 1939, then the body
performing such duties on such date.
"Common Securities" means the common undivided beneficial interests
-----------------
in the assets of the applicable RJR Nabisco Holdings Capital Trust.
"Composite Rate" means, at any time, the rate of interest, per
--------------
annum, compounded semiannually, equal to the sum of the rates of interest
borne by each of the Securities of a series Outstanding hereunder (as
specified on the face of each of the Securities, provided, that, in the case
--------
of the Securities with variable rates of interest, the interest rate to be
used in calculating the Composite Rate shall be the interest rate applicable
to such Securities at the beginning of the year in which the Composite Rate
is being determined and, provided, further, that, in the case of Securities
--------
of a series which do not bear interest, the interest rate to be used in
calculating the Composite Rate shall be a rate equal to the yield to maturity
on such Securities, calculated at the time of issuance of such Securities)
multiplied, in the case of each of the Securities of a series, by the
percentage of the aggregate principal amount of all of the Securities then
Outstanding represented by such Security. For the purposes of this
calculation, the aggregate principal amounts of Outstanding Securities of a
series that are denominated in a foreign currency, shall be calculated in the
manner set forth in Section 11.11.
"Consolidated Net Worth" means, at any date of determination, the
----------------------
consolidated stockholder's equity of the Issuer, as set forth on the then
most recently available consolidated balance sheet of the Issuer and its
3
<PAGE>
consolidated Subsidiaries; provided that if at such date Nabisco Holdings
--------
Corp., including its successors and assigns, is a consolidated Subsidiary of
the Issuer, such calculation shall be increased by (i) the amount of the
minority interest in Nabisco Holdings Corp., including its successors and
assigns, as set forth on the then most recently available consolidated
balance sheet of the Issuer and its consolidated Subsidiaries, and reduced by
(ii) the consolidated stockholders' equity of Nabisco Holdings Corp.,
including its successors and assigns, as set forth on the then most recently
available consolidated balance sheet of Nabisco Holdings Corp. and its
consolidated subsidiaries; provided, further, that if at such date Nabisco
--------
Holdings Corp., including its successors and assigns, is not a consolidated
Subsidiary of the Issuer, such calculation shall be reduced by the amount of
the Issuer's investment in Nabisco Holdings Corp., including its successors
and assigns, if any, as set forth on the then most recently available
consolidated balance sheet of the Issuer and its consolidated Subsidiaries.
"Corporate Trust Office" means the office of the Trustee at which
----------------------
the corporate trust business of the Trustee shall, at any particular time, be
principally administered, which office is, as of the date hereof, located at
120 Wall Street, 13th Floor, New York, New York 10043, Attention: Corporate
Trust Administration.
"Coupon" means any interest coupon appertaining to a Security.
------
"covenant defeasance" shall have the meaning set forth in Section
-------------------
10.1(C).
"Declaration of Trust" means the Declaration of Trust of the RJR
--------------------
Nabisco Holdings Capital Trust, if any, specified in the applicable Board
Resolution or supplemental indenture establishing a particular series of
Securities pursuant to Section 2.3 hereof.
"Depositary" means, with respect to the Securities of any series
----------
issuable or issued in the form of one or more Registered Global Securities,
the Person designated as Depositary by the Company pursuant to Section 2.3
until a successor Depositary shall have become such pursuant to the
applicable provisions of this Indenture, and thereafter "Depositary" shall
mean or include each Person who is then a Depositary hereunder, and if at any
time there is more than one such Person, "Depositary" as used with respect to
the Securities of any such series shall mean the Depositary with respect to
the Registered Global Securities of that series.
4
<PAGE>
"Dollar" means the coin or currency of the United States of America
------
as at the time of payment is legal tender for the payment of public and
private debts.
"ECU" means the European Currency Unit as defined and revised from
---
time to time by the Council of European Communities.
"Event of Default" means any event or condition specified as such
----------------
in Section 5.1, continued for the period of time, if any, therein designated.
"Foreign Currency" means either (i) a currency issued by the
----------------
government of a country other than the United States or (ii) ECU's or another
composite currency the value of which is determined by reference to the
values of the currencies of any group of countries.
@@
"Holder", "Holder of Securities", "Securityholder" or other similar
------ -------------------- --------------
terms mean (a) in the case of any Registered Security, the person in whose
name such Security is registered in the security register kept by or on
behalf of the Issuer for that purpose in accordance with the terms hereof,
and (b) in the case of any Unregistered Security, the bearer of such
Security, or any Coupon appertaining thereto, as the case may be.
"Indenture" means this instrument as originally executed and
---------
delivered or, if amended or supplemented as herein provided, as so amended or
supplemented or both, and shall include the forms and terms of particular
series of Securities established as contemplated hereunder.
"Interest" means, when used with respect to non-interest bearing
--------
Securities, interest payable after maturity.
"Issuer" means (except as otherwise provided in Article Five) RJR
------
Nabisco Holdings Corp., a Delaware corporation, and, its successors and
assigns through the operation of or pursuant to the provisions of Article
Nine.
"Issuer Order" means a written statement, request or order of the
------------
Issuer signed in its name by the Chief Executive Officer, the President, any
Vice President, the Treasurer or the Controller of the Issuer and delivered
to the Trustee.
"Judgment Currency" shall have the meaning set forth in Section
-----------------
11.12.
5
<PAGE>
"Officers' Certificate" means a certificate signed by the Chairman
---------------------
of the Board of Directors or Vice Chairman of the Board of Directors or the
President or the Chief Executive Officer or any Vice President and by the
Treasurer or Controller or the Secretary or any Assistant Treasurer or
Assistant Controller or Assistant Secretary of the Issuer and delivered to
the Trustee. Each such certificate shall comply with Section 314 of the
Trust Indenture Act of 1939 and include (except as otherwise provided in this
Indenture) the statements provided for in Section 11.5.
"Opinion of Counsel" means an opinion in writing signed by legal
------------------
counsel who may be an employee of or counsel to the Issuer. Each such
opinion shall comply with Section 314 of the Trust Indenture Act of 1939 and
include the statements provided for in Section 11.5, if and to the extent
required hereby.
"original issue date" of any Security (or portion thereof) means
-------------------
the earlier of (a) the date of authentication of such Security or (b) the
date of any Security (or portion thereof) for which such Security was issued
(directly or indirectly) on registration of transfer, exchange or
substitution.
"Original Issue Discount Security" means any Security that provides
--------------------------------
for an amount less than the principal amount thereof to be due and payable
upon a declaration of acceleration of the maturity thereof pursuant to
Section 5.1.
"Outstanding", when used with reference to Securities, shall mean,
-----------
as of any particular time, all Securities authenticated and delivered by the
Trustee under this Indenture, except
(a) Securities theretofore cancelled by the Trustee or delivered
to the Trustee for cancellation;
(b) Securities, or portions thereof, for the payment or redemption
of which moneys or U.S. Government Obligations (as provided in Section
10.1) in the necessary amount shall have been deposited in trust with
the Trustee or with any paying agent (other than the Issuer) or shall
have been set aside, segregated and held in trust by the Issuer for the
Holders of such Securities (if the Issuer shall act as its own paying
agent), provided that if such Securities, or portions thereof, are to be
--------
redeemed prior to the maturity thereof, notice of such redemption shall
have been given as herein provided, or provision satisfactory to
6
<PAGE>
the Trustee shall have been made for giving such notice; and
(c) Securities in substitution for which other Securities shall
have been authenticated and delivered, or which shall have been paid,
pursuant to the terms of Section 2.9 (except with respect to any such
Security as to which proof satisfactory to the Trustee is presented that
such Security is held by a person in whose hands such Security is a
legal, valid and binding obligation of the Issuer).
In determining whether the Holders of the requisite principal
amount of Outstanding Securities of any or all series have given any request,
demand, authorization, direction, notice, consent or waiver hereunder, the
principal amount of an Original Issue Discount Security that shall be deemed
to be Outstanding for such purposes shall be the amount of the principal
thereof that would be due and payable as of the date of such determination
upon a declaration of acceleration of the maturity thereof pursuant to
Section 5.1.
"Periodic Offering" means an offering of Securities of a series
-----------------
from time to time, the specific terms of which Securities, including, without
limitation, the rate or rates of interest, if any, thereon, the stated
maturity or maturities thereof and the redemption provisions, if any, with
respect thereto, are to be determined by the Company or its agents upon the
issuance of such Securities.
"Person" means any individual, corporation, partnership, joint
------
venture, association, joint stock company, trust, unincorporated organization
or government or any agency or political subdivision thereof.
"Preferred Securities" means the preferred undivided beneficial
--------------------
interests in the assets of the applicable RJR Nabisco Holdings Capital Trust.
"principal" whenever used with reference to the Securities or any
---------
Security or any portion thereof, shall be deemed to include "and premium, if
any".
"RJR Nabisco Holdings Capital Trust" shall mean any statutory
----------------------------------
business trust created under the laws of the State of Delaware specified in
the applicable Board Resolution or supplemental indenture establishing a
particular series of Securities pursuant to Section 2.3 hereof.
7
<PAGE>
"Registered Global Security", means a Security evidencing all or a
--------------------------
part of a series of Registered Securities, issued to the Depositary for such
series in accordance with Section 2.4, and bearing the legend prescribed in
Section 2.4.
"Registered Security" means any Security registered on the Security
-------------------
register of the Issuer.
"Responsible Officer" means, when used with respect to the Trustee,
-------------------
any Senior Trust Officer, any Vice President, any Trust Officer, any
Assistant Trust Officer, or any other officer or assistant officer of the
Trustee customarily performing functions similar to those performed by the
persons who at the time shall be such officers, respectively, or to whom any
corporate trust matter is referred because of his knowledge of and
familiarity with the particular subject.
"Restricted Subsidiary" means any Subsidiary organized and existing
---------------------
under the laws of the United States of America and the principal business of
which is carried on within the United States of America which owns or is a
lessee pursuant to a capital lease of any Principal Property and in which the
investment of the Issuer and all its Subsidiaries exceeds 5% of Consolidated
Net Worth as of the date of such determination other than:
(i) each Subsidiary the major part of whose business consists
of finance, banking, credit, leasing, insurance, financial services
or other similar operations, or any combination thereof;
(ii) each Subsidiary formed or acquired after the date hereof
for the purpose of acquiring the business or assets of another
Person and which does not acquire all or any substantial part of
the business or assets of the Issuer or any Restricted Subsidiary;
and
(iii) Nabisco Holdings Corp., each subsidiary of Nabisco Holdings
Corp. and each of their successors and assigns,
provided, however, that the Board of Directors of the Issuer may by Board
-------- -------
Resolution declare any such Subsidiary to be a Restricted Subsidiary,
effective as of the date such resolution is adopted.
"Security" or "Securities" has the meaning stated in the first
-------- ----------
recital of this Indenture, and to the extent a
8
<PAGE>
Security is issued as an Unregistered Security, the term Security or
Securities shall also include the Coupon (if any) appertaining to such
Security if the context so requires, or, as the case may be, Securities that
have been authenticated and delivered under this Indenture.
"Securities Act" means the Securities Act of 1933, as amended.
--------------
"Security Exchange" when used with respect to the Securities of any
-----------------
series which are held as trust assets of a RJR Nabisco Holdings Capital Trust
pursuant to the Declaration of Trust of such RJR Nabisco Holdings Capital
Trust, means the distribution of the Securities of such series by such RJR
Nabisco Holdings Capital Trust in exchange for the Preferred Securities and
Common Securities of such RJR Nabisco Holdings Capital Trust in dissolution
of such RJR Nabisco Holdings Capital Trust pursuant to the Declaration of
Trust of such RJR Nabisco Holdings Capital Trust.
"Senior Obligations" means (a) the principal of and premium, if
------------------
any, and interest on all indebtedness of the Company, whether outstanding on
the date of this Indenture or thereafter created, (i) for money borrowed by
the Company (including, without limitation, ______________), (ii) for money
borrowed by, or obligations of, others and either assumed or guaranteed,
directly or indirectly, by the Company, (iii) in respect of letters of credit
and acceptances issued or made by banks, (iv) constituting purchase money
indebtedness, or indebtedness secured by property included in the property,
plant and equipment accounts of the Company at the time of the acquisition of
such property by the Company, for the payment of which the Company is
directly liable, or (v) constituting unsecured indebtedness of the Company,
(b) all deferrals, renewals, extensions and refundings of, and amendments,
modifications and supplements to, any such indebtedness and (c) all other
general unsecured obligations, including without limitation, trade payables.
As used in the preceding sentence the term "purchase money indebtedness"
means indebtedness evidenced by a note, debenture, bond or other instrument
(whether or not secured by any lien or other security interest) issued or
assumed as all or a part of the consideration for the acquisition of
property, whether by purchase, merger, consolidation or otherwise, unless by
its terms such indebtedness is subordinate to other indebtedness of the
Company. Notwithstanding anything to the contrary in this Indenture or the
Securities, Senior Obligations shall not include (i) any indebtedness of the
Company which, by its terms or the terms of the instrument creating or
evidencing
9
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it, is subordinate in right of payment to or pari passu with the Securities,
---- -----
as the case may be, and, in particular, the Securities shall rank pari passu
with all other debt securities and guarantees in respect of those debt
securities, issued to (y) any other RJR Nabisco Holdings Capital Trust and
(z) any other trusts, partnerships or any other entity affiliated with the
Company which is a financing vehicle of the Company ("Financing Entity") in
connection with an issuance of preferred securities by such Financing Entity,
or (ii) any indebtedness of the Company to a Subsidiary.
"Subsidiary" means any corporation of which at least a majority of
----------
all outstanding stock having by the terms thereof ordinary voting power in
the election of directors of such corporation (irrespective of whether or not
at the time stock of any class or classes of such corporation shall have or
might have voting power by reason of the happening of any contingency) is at
the time, directly or indirectly, owned by the Issuer, or by one or more
Subsidiaries of the Issuer or by the Issuer and one or more Subsidiaries.
"Trust Indenture Act of 1939" means the Trust Indenture Act of
---------------------------
1939, as amended, as in force at the date as of which this Indenture was
originally executed.
"Trustee" means the Person identified as "Trustee" in the first
-------
paragraph hereof and, pursuant to the provisions of Article Five, shall also
include any successor trustee. "Trustee" shall also mean or include each
Person who is then a trustee hereunder and if at any time there is more than
one such Person, "Trustee" as used with respect to the Securities of any
series shall mean the trustee with respect to the Securities of such series.
"U.S. Government Obligations" shall have the meaning set forth in
---------------------------
Section 10.1(A).
"Unregistered Security" means any Security other than a Registered
---------------------
Security.
"Vice President" when used with respect to the Issuer or the
--------------
Trustee, means any vice president, whether or not designated by a number or a
word or words added before or after the title of "Vice President".
"Yield to Maturity" means as the context may require the yield to
-----------------
maturity (i) on a series of Securities or (ii) if the Securities of a series
are issuable from time to time, on a Security of such series, calculated at
the
10
<PAGE>
time of issuance of such series in the case of clause (i) or at the time of
issuance of such Security of such series in the case of clause (ii), or, if
applicable, at the most recent redetermination of interest on such series or
on such Security, and calculated in accordance with the constant interest
method or such other accepted financial practice as is specified in the terms
of such Security.
ARTICLE TWO
SECURITIES
----------
SECTION 2.1 Forms Generally. The Securities of each series and
---------------
the Coupons, if any, to be attached thereto shall be substantially in such
form (not inconsistent with this Indenture) as shall be established by or
pursuant to one or more Board Resolutions (as set forth, in a Board
Resolution or, to the extent established pursuant to, rather than set forth,
in a Board Resolution, an Officer's Certificate detailing such establishment)
or in one or more indentures supplemental hereto, in each case with such
appropriate insertions, omissions, substitutions and other variations as are
required or permitted by this Indenture and may have imprinted or otherwise
reproduced thereon such legend or legends or endorsements, not inconsistent
with the provisions of this Indenture, as may be required to comply with any
law or with any rules or regulations pursuant thereto, or with any rules of
any securities exchange or to conform to general usage, all as may be
determined by the officers executing such Securities and Coupons, if any, as
evidenced by their execution of the Securities and Coupons.
Unless otherwise specified as contemplated by Section 2.3,
Unregistered Securities shall have coupons attached. The definitive
Securities and Coupons, if any, shall be printed, lithographed or engraved on
steel engraved borders or may be produced in any other manner, all as
determined by the officers executing such Securities, as evidenced by their
execution of such Securities and Coupons, if any.
SECTION 2.2 Form of Trustee's Certificate of Authentication. The
-----------------------------------------------
Trustee's certificate of authentication on all Securities shall be in
substantially the following form:
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<PAGE>
This is one of the Securities of the series designated herein and
referred to in the within-mentioned Indenture.
Dated: THE BANK OF NEW YORK
as Trustee
By______________________
Authorized Signatory
If at any time there shall be an Authenticating Agent appointed
with respect to any series of Securities, then the Trustee's Certificate of
Authentication to be borne by the Securities of each such series shall be
substantially as follows:
"This is one of the Securities referred to in the within-mentioned
Indenture."
THE BANK OF NEW YORK
as Trustee
_________________________,
as Authenticating Agent
By_______________________
Authorized Signatory
SECTION 2.3 Amount Unlimited; Issuable in Series. The aggregate
------------------------------------
principal amount of Securities which may be authenticated and delivered under
this Indenture is unlimited.
The Securities may be issued in one or more series and each such
series shall rank equally and pari passu with all other senior and
unsubordinated debt of the Issuer. There shall be established in or pursuant
to one or more Board Resolutions (and to the extent established pursuant to
rather than set forth in a Board Resolution, in an Officers' Certificate
detailing such establishment) or established in one or more indentures
supplemental hereto, prior to the initial issuance of Securities of any
series,
(1) the designation of the Securities of the series, which shall
distinguish the Securities of the series from the Securities of all
other series;
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<PAGE>
(2) any limit upon the aggregate principal amount of the
Securities of the series that may be authenticated and delivered under
this Indenture and any limitation on the ability of the Issuer to
increase such aggregate principal amount after the initial issuance of
the Securities of that Series (except for Securities authenticated and
delivered upon registration of transfer of, or in exchange for, or in
lieu of, other Securities of the series pursuant to Section 2.8, 2.9,
2.11, 8.5 or 12.3);
(3) if other than Dollars, the coin or currency in which the
Securities of that series are denominated (including, but not limited
to, any Foreign Currency);
(4) the date or dates on which the principal of the Securities of
the series is payable (which date or dates may be fixed or extendible);
(5) the rate or rates (which may be fixed on variable) per annum
at which the Securities of the series shall bear interest, if any, the
date or dates from which such interest shall accrue, on which such
interest shall be payable and (in the case of Registered Securities) on
which a record shall be taken for the determination of Holders to whom
interest is payable and/or the method by which such rate or rates or
date or dates shall be determined;
(6) the place or places where the principal of and any interest on
Securities of the series shall be payable (if other than as provided in
Section 3.2), any Registered Securities of the series may be surrendered
for exchange, notices, demands to or upon the Company in respect of the
Securities of the series and this Indenture may be served and where
notice to Holders pursuant to Section 11.4 may be published;
(7) the right, if any, of the Issuer to redeem Securities of such
series, in whole or in part, at its option and the period or periods
within which, the price or prices at which and any terms and conditions
upon which Securities of the series may be so redeemed, pursuant to any
sinking fund or otherwise;
(8) the obligation, if any, of the Issuer to redeem, purchase or
repay Securities of the series pursuant to any mandatory redemption,
sinking fund or analogous provisions or at the option of a Holder
thereof and the price or prices at which and the period or periods
within which and any of the terms and
13
<PAGE>
conditions upon which Securities of the series shall be redeemed,
purchased or repaid, in whole or in part, pursuant to such obligation;
(9) if other than denominations of $1,000 and any integral
multiple thereof in case of Registered Securities, or $1,000 and $5,000
in the case of Unregistered Securities, the denominations in which
Securities of the series shall be issuable;
(10) if other than the principal amount thereof, the portion of the
principal amount of Securities of the series which shall be payable upon
declaration of acceleration of the maturity thereof;
(11) if other than the coin or currency in which the Securities of
that series are denominated, the coin or currency in which payment of
the principal of or interest on the Securities of such series shall be
payable;
(12) if the principal of or interest on the Securities of such
series are to be payable, at the election of the Issuer or a Holder
thereof, in a coin or currency other than that in which the Securities
are denominated, the period or periods within which, and the terms and
conditions upon which, such election may be made;
(13) if the amount of payments of principal of and interest on the
Securities of the series may be determined with reference to an index
based on a coin or currency other then that in which the Securities of
the series are denominated, the manner in which such amounts shall be
determined;
(14) whether the Securities of the series will be issuable as
Registered Securities (and if so, whether such Securities will be
issuable as Registered Global Securities) or Unregistered Securities
(with or without Coupons), or any combination of the foregoing, any
restrictions applicable to the offer, sale or delivery of Unregistered
Securities or the payment of interest thereon and, if other than as
provided in Section 2.8, the terms upon which Unregistered Securities of
any series may be exchanged for Registered Securities of such series and
vice versa;
(15) whether and under what circumstances the Issuer will pay
additional amounts on the Securities of the series held by a person who
is not a U.S. person in
14
<PAGE>
respect of any tax, assessment or governmental charge withheld or
deducted and, if so, whether the Issuer will have the option to redeem
such Securities rather than pay such additional amounts;
(16) if the Securities of such series are to be issuable in
definitive form (whether upon original issue or upon exchange of a
temporary Security of such series) only upon receipt of certain
certificates or other documents or satisfaction of other conditions, the
form and terms of such certificates, documents or conditions;
(17) any trustees, depositaries, authenticating or paying agents,
transfer agents or registrars or any other agents with respect to the
Securities of such series;
(18) the terms of any warrants attached to the Securities of the
series;
(19) provisions, if any, for the defeasance of Securities of a
particular series (including provisions permitting defeasance of less
than all Securities of a particular series), which provisions may be in
addition to, in substitution for, in subtraction from, or in
modification of (or any combination of the foregoing) the provisions of
Article Ten;
(20) whether the Securities of the series are issuable in whole or
in part as one or more global Securities and, in such case, the identity
of the Depositary for such global Security or Securities;
(21) any other events of default or covenants with respect to
the Securities of such series; and
(22) any other terms of the series (which terms shall not be
inconsistent with the provisions of this Indenture).
All Securities of any one series and Coupons, if any, appertaining
thereto, shall be substantially identical, except in the case of Registered
Securities as to denomination and except as may otherwise be provided by or
pursuant to the Board Resolution or Officers' Certificate referred to above
or as set forth in any such indenture supplemental hereto. All Securities of
any one series need not be issued at the same time and may be issued from
time to time, consistent with the terms of this Indenture, if so provided by
or pursuant to such Board Resolution, such
15
<PAGE>
Officer's Certificate or in any such indenture supplemental hereto. If any
of the terms of the series are established by action taken pursuant to a
Board Resolution, a copy of an appropriate record of such action shall be
certified by a Secretary or Assistant Secretary of the Issuer and delivered
to the trustee at or prior to the delivery of the Officer's Certificate
setting forth the terms of the series.
SECTION 2.4 Authentication and Delivery of Securities. At any
-----------------------------------------
time and from time to time after the execution and delivery of this
Indenture, the Issuer may deliver Securities of any series having attached
thereto appropriate Coupons, if any, executed by the Issuer to the Trustee
for authentication together with the applicable documents referred to below
in this Section, and the Trustee shall thereupon authenticate and deliver
such Securities to or upon the order of the Issuer (contained in the Issuer
Order referred to below in this Section) or pursuant to such procedures
acceptable to the Trustee and to such recipients as may be specified from
time to time by an Issuer Order. The maturity date, original issue date,
interest rate and any other terms of the Securities of such series and
Coupons, if any, appertaining thereto shall be determined by or pursuant to
such Issuer Order and procedures. If provided for in such procedures, such
Issuer Order may authorize authentication and delivery pursuant to oral
instructions from the Issuer or its duly authorized agent, which instructions
shall be promptly confirmed in writing in the form of an Issuer Order or in
the form of instructions delivered by a person who is authorized under an
Issuer Order previously delivered to the Trustee by facsimile or electronic
transmission. In authenticating such Securities and accepting the additional
responsibilities under this Indenture in relation to such Securities, the
Trustee shall be entitled to receive (in the case of subparagraphs 2, 3 and 4
below only at or before the time of the first request of the Issuer to the
Trustee to authenticate Securities of such series) and (subject to Section
6.1) shall be fully protected in relying upon, unless and until such
documents have been superseded or revoked:
(1) an Issuer Order requesting such authentication and
setting forth delivery instructions if the Securities and Coupons,
if any, are not to be delivered to the Issuer, provided that, with
respect to Securities of a series subject to a Periodic Offering,
(a) such Issuer Order may be delivered by the Issuer to the Trustee
prior to the delivery to the Trustee of such Securities for
authentication and delivery, (b) the Trustee shall authenticate and
deliver Securities of such series
16
<PAGE>
for original issue from time to time, in an aggregate principal amount
not exceeding the aggregate principal amount established for such
series, pursuant to an Issuer Order or pursuant to procedures acceptable
to the Trustee as may be specified from time to time by an Issuer Order,
(c) the maturity date or dates, original issue date or dates, interest
rate or rates and any other terms of Securities of such series shall be
determined by an Issuer Order or pursuant to such procedures and (d) if
provided for in such procedures, such Issuer Order may authorize authen-
tication and delivery pursuant to oral or electronic instructions from
the Issuer or its duly authorized agent or agents, which oral instruc-
tions shall be promptly confirmed in writing;
(2) any Board Resolution, Officers' Certificate and/or
executed supplemental indenture referred to in Sections 2.1 and 2.3
by or pursuant to which the forms and terms of the Securities of a
series and Coupons, if any, were established;
(3) an Officers' Certificate setting forth the form or forms
and terms of the Securities and Coupons, if any, stating that the
form or forms and terms of the Securities of such series and
Coupons, if any, have been established pursuant to Sections 2.1 and
2.3 and comply with this Indenture, and covering such other matters
as the Trustee may reasonably request; and
(4) At the option of the Issuer, either an Opinion of
Counsel, or a letter addressed to the Trustee permitting it to rely
on an Opinion of Counsel, substantially to the effect that the
Securities have been duly authorized and, if executed and
authenticated in accordance with the provisions of the Indenture
and delivered to and duly paid for by the purchasers thereof on the
date of such opinion, would be entitled to the benefits of the
Indenture and would be valid and binding obligations of the Issuer,
enforceable against the Issuer in accordance with their respective
terms, subject to the effect of bankruptcy, insolvency,
reorganization, receivership, moratorium and other similar laws
affecting the rights and remedies of creditors generally and of
general principles of equity whether applied by a court of law or
equity.
17
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Such counsel may rely, as to all matters governed by the laws of
jurisdictions other than the State of New York and the federal law of the
United States, upon opinions of other counsel (copies of which shall be
delivered to the Trustee), who shall be counsel reasonably satisfactory to
the Trustee, in which case the opinion shall state that such counsel believes
he and the Trustee are entitled so to rely. Such counsel may also state
that, insofar as such opinion involves factual matters, he has relied, to the
extent he deems proper, upon certificates of officers of the Issuer and its
subsidiaries and certificates of public officials.
The Trustee shall have the right to decline to authenticate and
deliver any Securities under this Section if the Trustee, being advised by
counsel, determines that such action may not lawfully be taken by the Issuer
or if the Trustee in good faith by its board of directors or board of
trustees, executive committee, or a trust committee of directors or trustees
or Responsible Officers shall determine that such action would expose the
Trustee to personal liability to existing Holders or would affect the
Trustee's own rights, duties or immunities under the Securities, this
Indenture or otherwise.
If the Issuer shall establish pursuant to Section 2.3 that the
Securities of a series are to be issued in the form of one or more Registered
Global Securities, then the Issuer shall execute and the Trustee shall, in
accordance with this Section and the Issuer Order with respect to such
series, authenticate and deliver one or more Registered Global Securities
that (i) shall represent and shall be denominated in an amount equal to the
aggregate principal amount of all of the Securities of such series issued and
not yet cancelled, (ii) shall be registered in the name of the Depositary for
such Registered Global Security or Securities or the nominee of such
Depositary, (iii) shall be delivered by the Trustee to such Depositary or
pursuant to such Depositary's instructions and (iv) shall bear a legend
substantially to the following effect: "Unless and until it is exchanged in
whole or in part for Securities in definitive registered form, this Security
may not be transferred except as a whole by the Depositary to the nominee of
the Depositary or by a nominee of the Depositary to the Depositary or another
nominee of the Depositary or by the Depositary or any such nominee to a
successor Depositary or a nominee of such successor Depositary."
Each Depositary designated pursuant to Section 2.3 must, at the
time of its designation and at all times while it serves as Depositary, be a
clearing agency registered
18
<PAGE>
under the Securities Exchange Act of 1934 and any other applicable statute or
regulation.
SECTION 2.5 Execution of Securities. The Securities and, if
-----------------------
applicable, each Coupon appertaining thereto shall be signed on behalf of the
Issuer by both (a) the Chairman of its Board of Directors or any Vice
Chairman of its Board of Directors or its President or any Vice President and
(b) by its Treasurer or any Assistant Treasurer or its Secretary or any
Assistant Secretary, under its corporate seal (except in the case of Coupons
and in the case of any Registered Global Security) which may, but need not,
be attested. Such signatures may be the manual or facsimile signatures of
the present or any future such officers. The seal of the Issuer may be in
the form of a facsimile thereof and may be impressed, affixed, imprinted or
otherwise reproduced on the Securities. Typographical and other minor errors
or defects in any such reproduction of the seal or any such signature shall
not affect the validity or enforceability of any Security that has been duly
authenticated and delivered by the Trustee.
In case any officer of the Issuer who shall have signed any of the
Securities or Coupons, if any, shall cease to be such officer before the
Security or Coupon so signed (or the Security to which the Coupon so signed
appertains) shall be authenticated and delivered by the Trustee or disposed
of by the Issuer, such Security or Coupon nevertheless may be authenticated
and delivered or disposed of as though the person who signed such Security or
Coupon had not ceased to be such officer of the Issuer; and any Security or
Coupon may be signed on behalf of the Issuer by such persons as, at the
actual date of the execution of such Security or Coupon, shall be the proper
officers of the Issuer, although at the date of the execution and delivery of
this Indenture any such person was not such an officer.
SECTION 2.6 Certificate of Authentication. Only such Securities
-----------------------------
as shall bear thereon a certificate of authentication substantially in the
form hereinbefore recited, executed by the Trustee by the manual signature of
one of its authorized signatories, shall be entitled to the benefits of this
Indenture or be valid or obligatory for any purpose. No Coupon shall be
entitled to the benefits of this Indenture or shall be valid and obligatory
for any purpose until the certificate of authentication on the Security to
which such Coupon appertains shall have been duly executed by the Trustee.
The execution of such certificate by the Trustee upon any Security or Coupon
executed by the Issuer shall be conclusive evidence that the Security or
Coupon so authenticated has been duly
19
<PAGE>
authenticated and delivered hereunder and that the holder is entitled to the
benefits of this Indenture.
SECTION 2.7 Denomination and Date of Securities; Payments of
------------------------------------------------
Interest. The Securities of each series shall be issuable as Registered
--------
Securities or Unregistered Securities in denominations established as
contemplated by Section 2.3. or, with respect to Registered Securities of any
series, if any so established, in denominations of $1,000 and any integral
multiple thereof. If the denominations of Unregistered Securities of any
series are not so established, such Securities shall be issuable in
denominations of $1,000 and $5,000. The Securities of each series shall be
numbered, lettered, or otherwise distinguished in such manner or in
accordance with such plan as the officers of the Issuer executing the same
may determine, as evidenced by the execution thereof.
Each Registered Security shall be dated the date of its
authentication. Each Unregistered Security shall be dated as provided in the
resolution or resolutions of the Board of Directors of the Issuer referred to
in Section 2.3. The Securities of each series shall bear interest, if any,
from the date, and such interest and shall be payable on the dates,
established as contemplated by Section 2.3.
The person in whose name any Registered Security of any series is
registered at the close of business on any record date applicable to a
particular series with respect to any interest payment date for such series
shall be entitled to receive the interest, if any, payable on such interest
payment date notwithstanding any transfer or exchange of such Registered
Security subsequent to the record date and prior to such interest payment
date, except if and to the extent the Issuer shall default in the payment of
the interest due on such interest payment date for such series, in which case
such defaulted interest shall be paid to the persons in whose names
Outstanding Registered Securities for such series are registered at the close
of business on a subsequent record date (which shall be not less than five
Business Days prior to the date of payment of such defaulted interest)
established by notice given by mail by or on behalf of the Issuer to the
Holders of Registered Securities not less than 15 days preceding such
subsequent record date. The term "record date" as used with respect to any
interest payment date (except a date for payment of defaulted interest) for
the Securities of any series shall mean the date specified as such in the
terms of the Registered Securities of such series established as contemplated
by Section 2.3, or, if no such date is so established, if such interest
payment date is the first day
20
<PAGE>
of a calendar month, the fifteenth day of the next preceding calendar month
or, if such interest payment date is the fifteenth day of a calendar month,
the first day of such calendar month, whether or not such record date is a
Business Day.
SECTION 2.8 Registration, Transfer and Exchange. The Issuer will
-----------------------------------
keep or cause to be kept at each office or agency to be maintained for the
purpose as provided in Section 3.2, for each series of Securities, a register
or registers in which, subject to such reasonable regulations as it may
prescribe, it will provide for the registration of Registered Securities of
such series and the registration of transfer of Registered Securities of such
series. Such register shall be in written form in the English language or in
any other form capable of being converted into such form within a reasonable
time. At all reasonable times such register or registers shall be open for
inspection by the Trustee.
Upon due presentation for registration of transfer of any
Registered Security of any series at any such office or agency to be
maintained for the purpose as provided in Section 3.2, the Issuer shall
execute and the Trustee shall authenticate and deliver in the name of the
transferee or transferees a new Registered Security or Registered Securities
of the same series, maturity date, interest rate and original issue date in
authorized denominations for a like aggregate principal amount.
Unregistered Securities (except for any temporary global
Unregistered Securities) and Coupons (except for Coupons attached to any
temporary global Unregistered Securities) shall be transferable by delivery.
At the option of the Holder thereof, Registered Securities of any
series (other than a Registered Global Security, except as set forth below)
may be exchanged for a Registered Security or Registered Securities of such
series having authorized denominations and an equal aggregate principal
amount, upon surrender of such Registered Securities to be exchanged at the
agency of the Issuer that shall be maintained for such purpose in accordance
with Section 3.2 and upon payment, if the Issuer shall so require, of the
charges hereinafter provided. If the Securities of any series are issued in
both registered and unregistered form, except as otherwise specified pursuant
to Section 2.3, at the option of the Holder thereof, Unregistered Securities
of any series may be exchanged for Registered Securities of such series
having authorized denominations and an equal aggregate principal amount, upon
21
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surrender of such Unregistered Securities to be exchanged at the agency of
the Issuer that shall be maintained for such purpose in accordance with
Section 3.2, with, in the case of Unregistered Securities that have Coupons
attached, all unmatured Coupons and all matured Coupons in default thereto
appertaining, and upon payment, if the Issuer shall so require, of the
charges hereinafter provided. At the option of the Holder thereof, if
Unregistered Securities of any series, maturity date, interest rate and
original issue date are issued in more than one authorized denomination,
except as otherwise specified pursuant to Section 2.3, such Unregistered
Securities may be exchanged for Unregistered Securities of such series having
authorized denominations and an equal aggregate principal amount, upon
surrender of such Unregistered Securities to be exchanged at the agency of
the Issuer that shall be maintained for such purpose in accordance with
Section 3.2 or as specified pursuant to Section 2.3, with, in the case of
Unregistered Securities that have Coupons attached, all unmatured Coupons and
all matured Coupons in default thereto appertaining, and upon payment, if the
Issuer shall so require, of the charges hereinafter provided. Unless
otherwise specified pursuant to Section 2.3, Registered Securities of any
series may not be exchanged for Unregistered Securities of such series.
Whenever any Securities are so surrendered for exchange, the Issuer shall
execute, and the Trustee shall authenticate and deliver, the Securities which
the Holder making the exchange is entitled to receive. All Securities and
Coupons surrendered upon any exchange or transfer provided for in this
Indenture shall be promptly cancelled and returned to the Issuer.
All Registered Securities presented for registration of transfer,
exchange, redemption or payment shall (if so required by the Issuer or the
Trustee) be duly endorsed by, or be accompanied by a written instrument or
instruments of transfer in form satisfactory to the Issuer and the Trustee
duly executed by, the holder or his attorney duly authorized in writing.
The Issuer may require payment of a sum sufficient to cover any tax
or other governmental charge that may be imposed in connection with any
exchange or registration of transfer of Securities. No service charge shall
be made for any such transaction.
The Issuer shall not be required to exchange or register a transfer
of (a) any Securities of any series for a period of 15 days next preceding
the first mailing of notice of redemption of Securities of such series to be
redeemed, or (b) any Securities of such series selected,
22
<PAGE>
called or being called for redemption, in whole or in part, except, in the
case of any Security of such series where public notice has been given that
such Security is to be redeemed in part, the portion thereof not so to be
redeemed.
Notwithstanding any other provision of this Section 2.8, unless and
until it is exchanged in whole or in part for Securities in definitive
registered form, a Registered Global Security representing all or a portion
of the Securities of a series may not be transferred except as a whole by the
Depositary for such series to a nominee of such Depositary or by a nominee of
such Depositary to such Depositary or another nominee of such Depositary or
by such Depositary or any such nominee to a successor Depositary for such
series or a nominee of such successor Depositary.
If at any time the Depositary for any Registered Securities of a
series represented by one or more Registered Global Securities notifies the
Issuer that it is unwilling or unable to continue as Depositary for such
Registered Securities or if at any time the Depositary for such Registered
Securities shall no longer be eligible under Section 2.4, the Issuer shall
appoint a successor Depositary eligible under Section 2.4 with respect to
such Registered Securities. If a successor Depositary eligible under Section
2.4 for such Registered Securities is not appointed by the Issuer within 90
days after the Issuer receives such notice or becomes aware of such
ineligibility, the Issuer's election pursuant to Section 2.3 that such
Registered Securities be represented by one or more Registered Global
Securities shall no longer be effective and the Issuer will execute, and the
Trustee, upon receipt of an Officer's Certificate for the authentication and
delivery of definitive Securities of such series, will authenticate and
deliver, Securities of such series in definitive registered form without
coupons, in any authorized denominations, in an aggregate principal amount
equal to the principal amount of the Registered Global Security or Securities
representing such Registered Securities in exchange for such Registered
Global Security or Securities.
The Issuer may at any time and in its sole discretion determine
that the Registered Securities of any series issued in the form of one or
more Registered Global Securities shall no longer be represented by a
Registered Global Security or Securities. In such event the Issuer will
execute, and the Trustee, upon receipt of an Officer's Certificate for the
authentication and delivery of definitive Securities of such series, will
authenticate and deliver, Securities of such series in definitive registered
form without coupons, in any authorized denominations, in an
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<PAGE>
aggregate principal amount equal to the principal amount of the Registered
Global Security or Securities representing such Registered Securities, in
exchange for such Registered Global Security or Securities.
Any time the Securities are not represented by Registered Global
Securities pursuant to the preceding two paragraphs, the Issuer agrees to
supply the Trustee with a reasonable supply of certificated Securities
without the legend required by Section 2.4 hereof and the Trustee agrees to
hold such Securities in safekeeping until authenticated pursuant to the terms
of this Indenture.
If specified by the Issuer pursuant to Section 2.3 with respect to
Securities represented by a Registered Global Security, the Depositary for
such Registered Global Security may surrender such Registered Global Security
in exchange in whole or in part for Securities of the same series in
definitive registered form on such terms as are acceptable to the Issuer and
such Depositary. Thereupon, the Issuer shall execute, and the Trustee shall
authenticate and deliver, without service charge,
(i) to the Person specified by such Depositary a new
Registered Security or Securities of the same series, of any
authorized denominations as requested by such Person, in an
aggregate principal amount equal to and in exchange for such
Person's beneficial interest in the Registered Global Security; and
(ii) to such Depositary a new Registered Global Security in a
denomination equal to the difference, if any, between the principal
amount of the surrendered Registered Global Security and the
aggregate principal amount of Registered Securities authenticated
and delivered pursuant to clause (i) above.
Upon the exchange of a Registered Global Security for Securities in
definitive registered form without coupons, in authorized denominations, such
Registered Global Security shall be cancelled by the Trustee or an agent of
the Issuer or the Trustee. Securities in definitive registered form without
Coupons issued in exchange for a Registered Global Security pursuant to this
Section 2.8 shall be registered in such names and in such authorized
denominations as the Depositary for such Registered Global Security, pursuant
to instructions from its direct or indirect participants or otherwise, shall
instruct the Trustee or an agent of the Issuer or the Trustee. The
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<PAGE>
Trustee or such agent shall deliver such Securities to or as directed by the
Persons in whose names such Securities are so registered.
All Securities issued upon any transfer or exchange of Securities
shall be valid obligations of the Issuer, evidencing the same debt, and
entitled to the same benefits under this Indenture, as the Securities
surrendered upon such transfer or exchange.
Notwithstanding anything herein or in the terms of any series of
Securities to the contrary, none of the Issuer, the Trustee or any agent of
the Issuer or the Trustee (any of which, other than the Issuer, shall be
entitled to rely on an Officer's Certificate and an Opinion of Counsel) shall
be required to exchange any Unregistered Security for a Registered Security
if such exchange would result in adverse Federal income tax consequences to
the Issuer (such as, for example, the inability of the Issuer to deduct from
its income, as computed for Federal income tax purposes, the interest payable
on the Unregistered Securities) under then applicable United States Federal
income tax laws.
SECTION 2.9 Mutilated, Defaced, Destroyed, Lost and Stolen
----------------------------------------------
Securities. In case any temporary or definitive Security or any Coupon
----------
appertaining to any Security shall become mutilated, defaced or be destroyed,
lost or stolen, the Issuer in its discretion may execute, and upon the
written request of any officer of the Issuer, the Trustee shall authenticate
and deliver, a new Security of the same series, maturity date, interest rate
and original issue date, bearing a number or other distinguishing symbol not
contemporaneously outstanding, in exchange and substitution for the mutilated
or defaced Security, or in lieu of and in substitution for the Security so
destroyed, lost or stolen with Coupons (if any) corresponding to the Coupons
appertaining to the Securities so mutilated, defaced, destroyed, lost or
stolen, or in exchange or substitution for the Security to which such
mutilated, defaced, destroyed, lost or stolen Coupon appertained, with
Coupons appertaining thereto corresponding to the Coupons so mutilated,
defaced, destroyed, lost or stolen. In every case the applicant for a
substitute Security or Coupon shall furnish to the Issuer and to the Trustee
and any agent of the Issuer or the Trustee such security or indemnity as may
be required by them to indemnify and defend and to save each of them harmless
and, in every case of destruction, loss or theft, evidence to their
satisfaction of the destruction, loss or theft of such Security or Coupon and
of the ownership thereof and in the case of mutilation or
25
<PAGE>
defacement shall surrender the Security and related Coupons (if any) to the
Trustee or such agent.
Upon the issuance of any substitute Security or Coupon, the Issuer
may require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto and any other
expenses (including the fees and expenses of the Trustee or its agent)
connected therewith. In case any Security or Coupon which has matured or is
about to mature or has been called for redemption in full shall become
mutilated or defaced or be destroyed, lost or stolen, the Issuer may instead
of issuing a substitute Security or Coupon, pay or authorize the payment of
the same or the relevant Coupon (without surrender thereof except in the case
of a mutilated or defaced Security or Coupon), if the applicant for such
payment shall furnish to the Issuer and to the Trustee and any agent of the
Issuer or the Trustee such security or indemnity as any of them may require
to save each of them harmless, and, in every case of destruction, loss or
theft, the applicant shall also furnish to the Issuer and the Trustee and any
agent of the Issuer or the Trustee evidence to their satisfaction of the
destruction, loss or theft of such Security or Coupon and of the ownership
thereof.
Every substitute Security or Coupon of any series issued pursuant
to the provisions of this Section by virtue of the fact that any such
Security or Coupon is destroyed, lost or stolen shall constitute an
additional contractual obligation of the Issuer, whether or not the
destroyed, lost or stolen Security or Coupon shall be at any time enforceable
by anyone and shall be entitled to all the benefits of (but shall be subject
to all the limitations of rights set forth in) this Indenture equally and
proportionately with any and all other Securities or Coupons of such series
duly authenticated and delivered hereunder. All Securities and Coupons shall
be held and owned upon the express condition that, to the extent permitted by
law, the foregoing provisions are exclusive with respect to the replacement
or payment of mutilated, defaced or destroyed, lost or stolen Securities and
Coupons and shall preclude any and all other rights or remedies
notwithstanding any law or statute existing or hereafter enacted to the
contrary with respect to the replacement or payment of negotiable instruments
or other securities without their surrender.
SECTION 2.10 Cancellation of Securities; Destruction Thereof. All
-----------------------------------------------
Securities and Coupons surrendered for payment, redemption, registration of
transfer or exchange, or for credit against any payment in respect of a
sinking or analogous fund, if surrendered to the Issuer or
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<PAGE>
any agent of the Issuer or the Trustee or any agent of the Trustee, shall be
delivered to the Trustee or its agent for cancellation or, if surrendered to
the Trustee, shall be cancelled by it; and no Securities or Coupons shall be
issued in lieu thereof except as expressly permitted by any of the provisions
of this Indenture. The Trustee shall destroy cancelled Securities held by it
and deliver a certificate of destruction to the Issuer. If the Issuer shall
acquire any of the Securities or Coupons, such acquisition shall not operate
as a redemption or satisfaction of the indebtedness represented by such
Securities unless and until the same are delivered to the Trustee or its
agent for cancellation.
SECTION 2.11 Temporary Securities. Pending the preparation of
--------------------
definitive Securities for any series, the Issuer may execute and upon Issuer
Order the Trustee shall authenticate and deliver temporary Securities for
such series (printed, lithographed, typewritten or otherwise reproduced, in
each case in form satisfactory to the Trustee). Temporary Securities of any
series shall be issuable as Registered Securities without coupons, or as
Unregistered Securities with or without coupons attached thereto, of any
authorized denomination, and substantially in the form of the definitive
Securities of such series but with such omissions, insertions and variations
as may be appropriate for temporary Securities, all as may be determined by
the Issuer with the concurrence of the Trustee as evidenced by the execution
and authentication thereof. Temporary Securities may contain such references
to any provisions of this Indenture as may be appropriate. Every temporary
Security shall be executed by the Issuer and be authenticated by the Trustee
upon the same conditions and in substantially the same manner, and with like
effect, as the definitive Securities. Without unreasonable delay the Issuer
shall execute and shall furnish definitive Securities of such series and
thereupon temporary Registered Securities of such series may be surrendered
in exchange therefor without charge at each office or agency to be maintained
by the Issuer for that purpose pursuant to Section 3.2 and, in the case of
Unregistered Securities, at an agency maintained by the Issuer for such
purpose as specified pursuant to Section 2.3, and the Trustee shall
authenticate and deliver in exchange for such temporary Securities of such
series an equal aggregate principal amount of definitive Securities of the
same series having authorized denominations and, in the case of Unregistered
Securities, having attached thereto any appropriate Coupons. Until so
exchanged, the temporary Securities of any series shall be entitled to the
same benefits under this Indenture as definitive Securities of such series,
unless otherwise established pursuant to
27
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Section 2.3. The provisions of this Section are subject to any restrictions
or limitations on the issue and delivery of temporary Unregistered Securities
of any series that may be established pursuant to Section 2.3 (including any
provision that Unregistered Securities of such series initially be issued in
the form of a single global Unregistered Security to be delivered to a
depositary or agency located outside the United States and the procedures
pursuant to which definitive or global Unregistered Securities of such series
will be issued in exchange for such temporary global Unregistered Security).
SECTION 2.12 CUSIP Numbers. The Issuer in issuing the Securities
-------------
may use "CUSIP" numbers (if then generally in use), and, if so, the Trustee
shall use "CUSIP" numbers in notices of redemption as a convenience to
Holders; provided that any such notice may state that no representation is
--------
made as to the correctness of such numbers either as printed on the
Securities or as contained in any notice of a redemption and that reliance
may be placed only on the other identification numbers printed on the
Securities, and any such redemption shall not be affected by any defect in or
omission of such numbers.
SECTION 2.13 Series May Include Tranches. A series of Securities
---------------------------
may include one or more tranches (each a "tranche") of Securities, including
-------
Securities issued in a Periodic Offering. The Securities of different
tranches may have one or more different terms, including authentication dates
and public offering prices, but all the Securities within each such tranche
shall have identical terms, including authentication date and public offering
price. Notwithstanding any other provision of this Indenture, with respect
to Sections 2.3, 2.4 (other than the first paragraph thereof), 2.5, 2.7, 2.8,
2.11, 3.2, 5.1 through 5.12, 8.2, 10.1, and 12.1 through 12.5, if any series
of Securities includes more than one tranche, all provisions of such sections
applicable to any series of Securities shall be deemed equally applicable to
each tranche of any series of Securities in the same manner as though
originally designated a series unless otherwise provided with respect to such
series or tranche pursuant to Section 2.3. In particular, and without
limiting the scope of the next preceding sentence, any of the provisions of
such sections which provide for or permit action to be taken with respect to
a series of Securities shall also be deemed to provide for and permit such
action to be taken instead only with respect to Securities of one or more
tranches within that series (and such provisions shall be deemed satisfied
thereby), even if no comparable action is taken with respect to Securities in
the remaining tranches of that series.
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<PAGE>
ARTICLE THREE
COVENANTS OF THE ISSUER
-----------------------
SECTION 3.1 Payment of Principal and Interest. The Issuer
---------------------------------
covenants and agrees for the benefit of each series of Securities that it
will duly and punctually pay or cause to be paid the principal of, and
interest on, each of the Securities of such series (together with any
additional amounts payable pursuant to the terms of such Securities) at the
place or places, at the respective times and in the manner provided in such
Securities and in the Coupons, if any, appertaining thereto and in this
Indenture. The interest on Securities with Coupons attached (together with
any additional amounts payable pursuant to the terms of such Securities)
shall be payable only upon presentation and surrender of the several Coupons
for such interest installments as are evidenced thereby as they severally
mature. The interest on any temporary Unregistered Securities (together with
any additional amounts payable pursuant to the terms of such Securities)
shall be paid, as to the installments of interest evidenced by Coupons
attached thereto, if any, only upon presentation and surrender thereof, and,
as to the other installments of interest, if any, only upon presentation of
such Securities for notation thereon of the payment of such interest. The
interest on Registered Securities (together with any additional amounts
payable pursuant to the terms of such Securities) shall be payable only to or
upon the written instructions of the Holders thereof and at the option of the
Issuer may be paid by wire transfer or mailing checks for such interest
payable to or upon the written order of such Holders at their last addresses
as they appear on the registry books of the Issuer.
Notwithstanding any provisions of this Indenture and the Securities
of any series to the contrary, if the Issuer and a Holder of Registered
Securities so agree, payments of interest on, and any portion of the
principal of any Securities (other than interest payable at maturity or on
any redemption or repayment date or the final payment of principal on a
Security), shall be made by the Paying Agent upon receipt from the Issuer of
immediately available funds by 11:00 A.M., New York City time (or such other
time as may be agreed to between the Company and the Trustee), directly to
the Holder of such Security (whether by Federal funds, wire transfer or
otherwise) if the Holder has delivered written instructions to the Trustee 15
days prior to such payment date requesting that such payment will be so made
and designating the bank account to which such payments
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<PAGE>
shall be so made and in the case of payments of principal surrenders the same
to the Trustee in exchange for a Security or Securities aggregating the same
principal amount as the unredeemed principal amount of the Securities
surrendered. The Trustee shall be entitled to rely on the last instruction
delivered by the Holder pursuant to this Section 3.1 unless a new instruction
is delivered 15 days prior to a payment date. The Issuer will indemnify and
hold the Trustee harmless against any loss, liability or expense (including
attorneys' fees) resulting from any act or omission to act on the part of the
Issuer or any such Holder in connection with any such agreement or which the
Paying Agent may incur as a result of making any payment in accordance with
any such agreement.
SECTION 3.2 Offices for Payments, etc. The Issuer will maintain
--------------------------
in the Borough of Manhattan, The City of New York, an agency where the
Registered Securities of each series may be presented for payment, an agency
where the Securities of each series may be presented for exchange as is
provided in this Indenture and, if applicable, pursuant to Section 2.3 an
agency where the Registered Securities of each series may be presented for
registration of transfer as in this Indenture provided. Unless otherwise
provided pursuant to Section 2.3, the Issuer initially appoints the Corporate
Trust Office of the Trustee, in New York, New York, as such office or agency
for the purposes of this Section.
The Issuer will maintain one or more agencies in a city or cities
located outside the United States (including any city in which such an agency
is required to be maintained under the rules of any stock exchange on which
the Securities of such series are listed) where the Unregistered Securities,
if any, of each series and Coupons, if any, appertaining thereto may be
presented for payment. No payment on any Unregistered Security or Coupon
will be made upon presentation of such Unregistered Security or Coupon at an
agency of the Issuer within the United States nor will any payment be made by
transfer to an account in, or by mail to an address in, the United States
unless pursuant to applicable United States laws and regulations then in
effect such payment can be made without adverse tax consequences to the
Issuer. Notwithstanding the foregoing, if full payment in Dollars at each
agency maintained by the Issuer outside the United States for payment on such
Unregistered Securities or Coupons appertaining thereto is illegal or
effectively precluded by exchange controls or other similar restrictions,
payments in Dollars of Unregistered Securities of any series and Coupons
appertaining thereto which are payable in Dollars may be
30
<PAGE>
made at an agency of the Issuer maintained in the Borough of Manhattan, The
City of New York.
The Issuer will maintain in the Borough of Manhattan, The City of
New York, an agency where notices and demands to or upon the Issuer in
respect of the Securities of any series, the Coupons appertaining thereto or
this Indenture may be served.
The Issuer will give to the Trustee written notice of the location
of each such agency and of any change of location thereof. In case the
Issuer shall fail to maintain any agency required by this Section to be
located 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 of any of
the above agencies, presentations and demands may be made and notices may be
served at the Corporate Trust Office of the Trustee.
The Issuer may from time to time designate one or more additional
agencies where the Securities of a series and Coupons appertaining thereto
may be presented for payment, where the Securities of that series may be
presented for exchange as provided in this Indenture and pursuant to Section
2.3 where the Registered Securities of that series may be presented for
registration of transfer as in this Indenture provided, and the Issuer may
from time to time rescind any such designation, as the Issuer may deem
desirable or expedient; provided, however, that no such designation or
-------- -------
rescission shall in any manner relieve the Issuer of its obligation to
maintain the agencies provided for in the immediately preceding paragraphs.
The Issuer will give to the Trustee prompt written notice of any such
designation or rescission thereof.
SECTION 3.3 Appointment to Fill a Vacancy in Office of Trustee.
--------------------------------------------------
The Issuer, whenever necessary to avoid or fill a vacancy in the office of
Trustee, will appoint, in the manner provided in Section 6.10, a successor
Trustee, so that there shall at all times be a Trustee with respect to each
series of Securities hereunder.
SECTION 3.4 Paying Agents. Whenever the Issuer shall appoint a
-------------
paying agent other than the Trustee with respect to the Securities of any
series, 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 provisions of this Section that such paying agent,
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(a) will hold all sums received by it as such agent for the
payment of the principal of or interest on the Securities of such series
(whether such sums have been paid to it by the Issuer or by any other
obligor on the Securities of such series) in trust for the benefit of
the holders of the Securities of such series, or Coupons appertaining
thereto, or of the Trustee, until such sums shall be paid to such
holders or otherwise disposed of as herein provided;
(b) will give the Trustee notice of any failure by the Issuer (or
by any other obligor on the Securities of such series) to make any
payment of the principal of or interest on the Securities of such series
when the same shall be due and payable, and
(c) at any time during the continuance of any such failure, upon
the written request of the Trustee, it will forthwith pay to the Trustee
all sums so held in trust by such paying agent.
The Issuer will, on or prior to each due date of the principal of
or interest on the Securities of such series, deposit with the paying agent a
sum sufficient to pay such principal or interest so becoming due, and (unless
such paying agent is the Trustee) the Issuer will promptly notify the Trustee
of its action or of any failure to take such action.
If the Issuer shall act as its own paying agent with respect to the
Securities of any series, it will, on or before each due date of the
principal of or interest on the Securities of such series, set aside,
segregate and hold in trust for the benefit of the holders of the Securities
of such series or the Coupons appertaining thereto a sum sufficient to pay
such principal or interest so becoming due. The Issuer will promptly notify
the Trustee of its action or of any failure to take such action.
The Issuer hereby initially appoints the Trustee as registrar and
paying agent. Anything in this Section to the contrary notwithstanding, the
Issuer may at any time, for the purpose of obtaining a satisfaction and
discharge with respect to one or more or all series of Securities hereunder,
or for any other reason, pay or cause to be paid, or by Issuer Order direct
any paying agent to pay to the Trustee all sums held in trust for any such
series by the Issuer or any paying agent hereunder, as required by this
Section, such sums to be held by the Trustee upon the trusts herein
contained.
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Anything in this Section to the contrary notwithstanding, the
agreement to hold sums in trust as provided in this Section is subject to the
provisions of Section 10.3 and 10.4.
SECTION 3.5 Certificate to Trustee. The Issuer will furnish to
----------------------
the Trustee annually, on or before a date not more than four months after the
end of its fiscal year (which, on the date hereof, is a calendar year), a
brief certificate (which need not comply with Section 11.5) from its
principal executive, financial or accounting officer as to his or her
knowledge of the compliance of the Issuer with all conditions and covenants
under the Indenture (such compliance to be determined without regard to any
period of grace or requirement of notice provided under the Indenture).
SECTION 3.6 Luxembourg Publications. In the event of the
-----------------------
publication of any notice pursuant to Section 5.11, 6.10(a), 6.11, 8.2, 12.2
or 12.5, the party making such publication in the Borough of Manhattan, The
City of New York and London shall also, to the extent that notice is required
to be given to Holders of Securities of any series listed on The Luxembourg
exchange by applicable Luxembourg law or stock exchange regulation, make a
similar publication in Luxembourg.
ARTICLE FOUR
SECURITYHOLDERS LISTS AND REPORTS BY THE
ISSUER AND THE TRUSTEE
----------------------
SECTION 4.1 Issuer to Furnish Trustee Information as to Names and
-----------------------------------------------------
Addresses of Securityholders. If and so long as the Trustee shall not be the
----------------------------
Security registrar for the Securities of any series, the Issuer and any other
obligor on the Securities will furnish or cause to be furnished to the
Trustee a list in such form as the Trustee may reasonably require of the
names and addresses of the Holders of the Registered Securities of such
series pursuant to Section 312 of the Trust Indenture Act of 1939 (a)
semi-annually not more than 15 days after each record date for the payment of
interest on such Registered Securities, as hereinabove specified, as of such
record date and on dates to be determined pursuant to Section 2.3 for
non-interest bearing Registered Securities in each year as of a date not more
than 15 days prior to the time such information is furnished, and (b) at such
other times as the Trustee may request in writing, within 30 days after
receipt
33
<PAGE>
by the Issuer of any such request as of a date not more than 15 days prior to
the time such information is furnished.
SECTION 4.2 Reports by the Issuer. The Issuer covenants to file
---------------------
with the Trustee, within 15 days after the Issuer is required to file the
same with the Commission, copies of the annual reports and of the
information, documents, and other reports which the Issuer may be required to
file with the Commission pursuant to Section 13 or Section 15(d) of the
Securities Exchange Act of 1934 or pursuant to Section 314 of the Trust
Indenture Act of 1939.
SECTION 4.3 Reports by the Trustee. Any Trustee's report required
----------------------
under Section 313(a) of the Trust Indenture Act of 1939 shall be transmitted
on or before July 15 in each year following the date hereof, so long as any
Securities are outstanding hereunder, and shall be dated as of a date
convenient to the Trustee no more than 60 nor less than 45 days prior
thereto.
ARTICLE FIVE
REMEDIES OF THE TRUSTEE AND SECURITYHOLDERS
ON EVENT OF DEFAULT
-------------------
SECTION 5.1 Event of Default Defined; Acceleration of Maturity;
---------------------------------------------------
Waiver of Default. "Event of Default" with respect to Securities of any
-----------------
series wherever used herein, means each one of the following events which
shall have occurred and be continuing (whatever the reason for such Event of
Default and whether it shall be voluntary or involuntary or be effected by
operation of law or pursuant to any judgment, decree or order of any court or
any order, rule or regulation of any administrative or governmental body):
(a) default in the payment of any installment of interest upon any
of the Securities of such series as and when the same shall become 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 Issuer in accordance with the terms of any indenture supplemental
hereto, 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 on
any of the Securities of such series as and when the same shall become
due and payable
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<PAGE>
either at maturity, upon any redemption, by declaration or otherwise; or
(c) default in the payment of any sinking fund installment as and
when the same shall become due and payable by the terms of the
Securities of such series; or
(d) default in the performance, or breach, of any covenant or
agreement of the Issuer in respect of the Securities of such series
(other than a covenant or agreement in respect of the Securities of such
series 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 Issuer by the Trustee or to the
Issuer and the Trustee by the Holders of at least 25% in principal
amount of the Outstanding Securities of all series affected thereby, a
written notice specifying such default or breach and requiring it to be
remedied and stating that such notice is a "Notice of Default"
hereunder; or
(e) a court having jurisdiction in the premises shall enter a
decree or order for relief in respect of the Issuer or any Restricted
Subsidiary 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 or
sequestrator (or similar official) of the Issuer 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 60 consecutive days; or
(f) the Issuer or any Restricted Subsidiary shall commence a
voluntary case under any applicable bankruptcy, insolvency or other
similar law now or hereafter in effect, or consent to the entry of an
order for relief in an involuntary case under any such law, or consent
to the appointment of or taking possession by a receiver, liquidator,
assignee, custodian, trustee or sequestrator (or similar official) of
the Issuer or for any substantial part of its property, or make any
general assignment for the benefit of creditors; or
(g) any other Event of Default provided in the supplemental
indenture or Board Resolution under which
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<PAGE>
such series of Securities is issued or in the form of Security for such
series.
If an Event of Default described in clauses (a), (b), (c), (d) or (g) above
(if the Event of Default under clause (d) or (g) is with respect to less than
all series of Securities then Outstanding) occurs and is continuing, then,
and in each and every such case, except for any series of Securities the
principal of which shall have already become due and payable, either the
Trustee or the Holders of not less than 25% in aggregate principal amount of
the Securities of all such affected series then Outstanding hereunder (voting
as a single class) (and, in the case of any series of Securities held as
trust assets of an RJR Nabisco Holdings Capital Trust and with respect to
which a Security Exchange has not theretofore occurred, such consent of
holders of the Preferred Securities and the Common Securities of such RJR
Nabisco Holdings Capital Trust as may be required under the Declaration of
Trust of such RJR Nabisco Holdings Capital Trust) by notice in writing to the
Issuer (and to the Trustee if given by Securityholders), may declare the
entire principal (or, if the Securities of any such affected series are
Original Issue Discount Securities, such portion of the principal amount as
may be specified in the terms of such series) of all Securities of all such
affected series, and the interest accrued thereon, if any, to be due and
payable immediately, and upon any such declaration the same shall become
immediately due and payable. If an Event of Default described in clause (d)
or (g) (if the Event of Default under clause (d) or (g), as the case may be,
is with respect to all series of Securities then Outstanding), (e) or (f)
occurs and is continuing, then and in each and every such case, unless the
principal of all the Securities shall have already become due and payable,
either the Trustee or the Holders of not less than 25% in aggregate principal
amount of all the Securities then Outstanding hereunder (treated as one
class) (and, in the case of any series of Securities held as trust assets of
an RJR Nabisco Holdings Capital Trust and with respect to which a Security
Exchange has not theretofore occurred, such consent of holders of the
Preferred Securities and the Common Securities of such RJR Nabisco Holdings
Capital Trust as may be required under the Declaration of Trust of such RJR
Nabisco Holdings Capital Trust), by notice in writing to the Issuer (and to
the Trustee if given by Securityholders), may declare the entire principal
(or, if any Securities are Original Issue Discount Securities, such portion
of the principal as may be specified in the terms thereof) of all the
Securities then Outstanding and interest accrued thereon, if any, to be due
and payable immediately, and upon
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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 (or, if the Securities are Original
Issue Discount Securities, such portion of the principal as may be specified
in the terms thereof) of the Securities of any series (or of all the
Securities, as the case may be) 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, the Issuer shall pay
or shall deposit with the Trustee a sum sufficient to pay all matured
installments of interest upon all the Securities of each such series (or of
all the Securities, as the case may be) and the principal of any and all
Securities of each such series (or of all the Securities, as the case may be)
which shall have become due otherwise than by acceleration (with interest
upon such principal 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 or Yield to Maturity (in the case of
Original Issue Discount Securities) specified in the Securities of each such
series (or at the respective rates of interest or Yields to Maturity of all
the Securities, as the case may be) to the date of such payment or deposit)
and 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 if any and all Events of Default under the
Indenture, other than the non-payment of the principal of Securities which
shall have become due by acceleration, shall have been cured, waived or
otherwise remedied as provided herein, then and in every such case the
Holders of a majority in aggregate principal amount of all the Securities of
each such series, or of all the Securities, in each case voting as a single
class (and, in the case of any series of Securities held as trust assets of
an RJR Nabisco Holdings Capital Trust and with respect to which a Security
Exchange has not theretofore occurred, such consent of holders of the
Preferred Securities and the Common Securities of such RJR Nabisco Holdings
Capital Trust as may be required under the Declaration of Trust of such RJR
Nabisco Holdings Capital Trust), then Outstanding, by written notice to the
Issuer and to the Trustee, may waive all defaults with respect to each such
series (or with respect to all the Securities, as the case may be) and
rescind and annul such declaration and its consequences, but no such waiver
or rescission and annulment shall extend to
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or shall affect any subsequent default or shall impair any right consequent
thereon.
For all purposes under this Indenture, if a portion of the
principal of any Original Issue Discount Securities shall have been
accelerated and declared due and payable pursuant to the provisions hereof,
then, from and after such declaration, unless such declaration has been
rescinded and annulled, the principal amount of such Original Issue Discount
Securities shall be deemed, for all purposes hereunder, to be such portion of
the principal thereof as shall be due and payable as a result of such
acceleration, and payment of such portion of the principal thereof as shall
be due and payable as a result of such acceleration, together with interest,
if any, thereon and all other amounts owing thereunder, shall constitute
payment in full of such Original Issue Discount Securities.
SECTION 5.2 Collection of Indebtedness by Trustee; Trustee May
--------------------------------------------------
Prove Debt. The Issuer covenants that (a) in case default shall be made in
----------
the payment of any installment of interest on any of the Securities of any
series when such interest shall have 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 all or any part of the principal of any of the
Securities of any series when the same shall have become due and payable,
whether upon maturity of the Securities of such series or upon any redemption
or by declaration or otherwise, then upon demand of the Trustee, the Issuer
will pay to the Trustee for the benefit of the Holders of the Securities of
such series the whole amount that then shall have become due and payable on
all Securities of such series and such Coupons for principal or interest, as
the case may be (with interest to the date of such payment upon the overdue
principal 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 or Yield to Maturity (in the case of Original Issue
Discount Securities) specified in the Securities of such series); and in
addition thereto, such further amount as shall be sufficient to cover the
costs and expenses of collection, including reasonable compensation to the
Trustee and each predecessor Trustee, their respective agents, attorneys and
counsel, and any reasonable expenses and liabilities incurred, and all
advances made, by the Trustee and each predecessor Trustee except as a result
of its negligence or bad faith.
Until such demand is made by the Trustee, the Issuer may pay the
principal of and interest on the
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Securities of any series to the Holders, whether or not the principal of and
interest on the Securities of such series be overdue.
In case the Issuer 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 action or proceedings at law
or in equity for the collection of the sums so due and unpaid, and may
prosecute any such action or proceedings to judgment or final decree, and may
enforce any such judgment or final decree against the Issuer or other obligor
upon the Securities and collect in the manner provided by law out of the
property of the Issuer or other obligor upon the Securities, wherever
situated, the moneys adjudged or decreed to be payable.
In case there shall be pending proceedings relative to the Issuer
or any other obligor upon the Securities under Title 11 of the United States
Code or any other applicable Federal or state bankruptcy, insolvency or other
similar law, or in case a receiver, assignee or trustee in bankruptcy or
reorganization, liquidator, sequestrator or similar official shall have been
appointed for or taken possession of the Issuer or its property or such other
obligor, or in case of any other comparable judicial proceedings relative to
the Issuer or other obligor upon the Securities, or to the creditors or
property of the Issuer 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, shall be entitled and empowered, by intervention in such proceedings
or otherwise:
(a) to file and prove a claim or claims for the whole amount of
principal and interest (or, if the Securities of any series are Original
Issue Discount Securities, such portion of the principal amount as may
be specified in the terms of such series) owing and unpaid in respect of
the Securities, and to file such other papers or documents as may be
necessary or advisable in order to have the claims of the Trustee
(including any claim for 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
any
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judicial proceedings relative to the Issuer or other obligor upon the
Securities or to the creditors or property of the Issuer or such other
obligor,
(b) unless prohibited by applicable law and regulations, to vote
on behalf of the holders of the Securities of any series 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
(c) to collect and receive any moneys or other property payable or
deliverable on any such claims, and to distribute all amounts received
with respect to the claims of the Securityholders and of the Trustee on
their behalf; and any trustee, receiver, or liquidator, custodian or
other similar official is hereby authorized by each of the
Securityholders to make payments to the Trustee, and, in the event that
the Trustee shall consent to the making of 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 deemed to authorize the Trustee
to authorize or consent to or vote for or accept or adopt on behalf of any
Securityholder any plan of reorganization, arrangement, adjustment or
composition affecting the Securities of any series 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 except, as aforesaid, to vote
for the election of a trustee in bankruptcy or similar person.
All rights of action and of asserting claims under this Indenture,
or under any of the Securities of any series or Coupons appertaining to such
Securities, may be enforced by the Trustee without the possession of any of
the Securities of such series or Coupons appertaining to such Securities or
the production thereof at any trial or other proceedings relative thereto,
and any such action or proceedings instituted by the Trustee shall be brought
in its own name as trustee of an express trust, and any recovery of judgment,
subject to the payment of the expenses, disbursements and compensation of the
Trustee, each predecessor Trustee and their respective agents and
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attorneys, shall be for the ratable benefit of the Holders of such Securities
or Coupons appertaining to such Securities in respect of which such action
was taken.
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 or Coupons appertaining to such Securities in
respect of which such action was taken, and it shall not be necessary to make
any Holders of such Securities or Coupons appertaining to such Securities
parties to any such proceedings.
SECTION 5.3 Application of Proceeds. Any moneys collected by the
-----------------------
Trustee pursuant to this Article in respect of any series shall be applied in
the following order at the date or dates fixed by the Trustee and, in case of
the distribution of such moneys on account of principal or interest, upon
presentation of the several Securities and Coupons appertaining to such
Securities in respect of which monies have been collected and stamping (or
otherwise noting) thereon the payment, or issuing Securities of such series
in reduced principal amounts in exchange for the presented Securities of like
series if only partially paid, or upon surrender thereof if fully paid:
FIRST: To the payment of costs and expenses applicable to such
series in respect of which monies have been collected, including
reasonable compensation to the Trustee and each predecessor Trustee and
their respective agents and attorneys and of all expenses and
liabilities incurred, and all advances made, by the Trustee and each
predecessor Trustee and their respective agents and attorneys except as
a result of negligence or bad faith;
SECOND: In case the principal of the Securities of such series in
respect of which moneys have been collected shall not have become and be
then due and payable, to the payment of interest on the Securities of
such series in default in the order of the maturity of the installments
of such interest, with interest (to the extent that such interest has
been collected by the Trustee) upon the overdue installments of interest
at the same rate as the rate of interest or Yield to Maturity (in the
case of Original Issue Discount Securities) specified in such
Securities, such payments to be made ratably to the persons entitled
thereto, without discrimination or preference;
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THIRD: In case the principal of the Securities of such series in
respect of which moneys have been collected shall have become and shall
be then due and payable, to the payment of the whole amount then owing
and unpaid upon all the Securities of such series for principal and
interest, with interest upon the overdue principal, and (to the extent
that such interest has been collected by the Trustee) upon overdue
installments of interest at the same rate as the rate of interest or
Yield to Maturity (in the case of Original Issue Discount Securities)
specified in the Securities of such series; and in case such moneys
shall be insufficient to pay in full the whole amount so due and unpaid
upon the Securities of such series, then to the payment of such
principal and interest or Yield to Maturity, without preference or
priority of principal over interest or Yield to Maturity, or of interest
or Yield to Maturity over principal, or of any installment of interest
over any other installment of interest, or of any Security of such
series over any other Security of such series, ratably to the aggregate
of such principal and accrued and unpaid interest or Yield to Maturity;
and
FOURTH: To the payment of the remainder, if any, to the Issuer or
any other person lawfully entitled thereto.
SECTION 5.4 Suits for Enforcement. In case an Event of Default
---------------------
has occurred, has not been waived 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 at law or in
equity or 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.
SECTION 5.5 Restoration of Rights on Abandonment of Proceedings.
---------------------------------------------------
In case the Trustee shall have proceeded to enforce any right under this
Indenture and such proceedings shall have been discontinued or abandoned for
any reason, or shall have been determined adversely to the Trustee, then and
in every such case the Issuer and the Trustee shall be restored respectively
to their former positions and rights hereunder, and all rights, remedies and
powers of the Issuer, the Trustee and the Securityholders shall continue as
though no such proceedings had been taken.
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SECTION 5.6 Limitations on Suits by Securityholders. No Holder of
---------------------------------------
any Security of any series or of any Coupon appertaining thereto shall have
any right by virtue or by availing of any provision of this Indenture to
institute any action or proceeding at law or in equity or in bankruptcy or
otherwise upon or under or with respect to this Indenture, or for the
appointment of a trustee, receiver, liquidator, custodian or other similar
official or for any other remedy hereunder, unless such Holder previously
shall have given to the Trustee written notice of default and of the
continuance thereof, as hereinbefore provided, and unless also the Holders of
not less than 25% in aggregate principal amount of the Securities of all
affected series then Outstanding (treated as a single class) (and, in the
case of any series of Securities held as trust assets of an RJR Nabisco
Holdings Capital Trust and with respect to which a Security Exchange has not
theretofore occurred, such consent of holders of the Preferred Securities and
the Common Securities of such RJR Nabisco Holdings Capital Trust as may be
required under the Declaration of Trust of such RJR Nabisco Holdings Capital
Trust), shall have made written request upon the Trustee to institute such
action or proceedings 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 or proceeding and no
direction inconsistent with such written request shall have been given to the
Trustee pursuant to Section 5.9; it being understood and intended, and being
expressly covenanted by the taker and Holder of every Security or Coupon with
every other taker and Holder and the Trustee, that no one or more Holders of
Securities of any series or Coupons appertaining to such Securities shall
have any right in any manner whatever by virtue or by availing of any
provision of this Indenture to affect, disturb or prejudice the rights of any
other such Holder of Securities or Coupons appertaining to such 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 of the applicable series and Coupons appertaining to such
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.
SECTION 5.7 Unconditional Right of Securityholders to Institute
---------------------------------------------------
Certain Suits. Notwithstanding
-------------
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any other provision in this Indenture and any provision of any Security or
Coupon, the right of any Holder of any Security or Coupon to receive payment
of the principal of and interest on such Security or Coupon on or after the
respective due dates expressed in such Security or Coupon, or to institute
suit for the enforcement of any such payment on or after such respective
dates, shall not be impaired or affected without the consent of such Holder
provided, however, that a valid extension of an interest payment period by
-------- -------
the Issuer in accordance with the terms of any indenture supplemental hereto,
shall not constitute the failure to pay interest for this purpose.
SECTION 5.8 Powers and Remedies Cumulative; Delay or Omission Not
-----------------------------------------------------
Waiver of Default. Except as provided in Section 5.6, no right or remedy
-----------------
herein conferred upon or reserved to the Trustee or to the Holders of
Securities or Coupons is intended to be exclusive of any other right or
remedy, and every right and remedy shall, to the extent permitted by law, be
cumulative and in addition to every other right and remedy given hereunder or
now or hereafter existing at law or in equity or otherwise. The assertion or
employment of any right or remedy hereunder, or otherwise, shall not prevent
the concurrent assertion or employment of any other appropriate right or
remedy.
No delay or omission of the Trustee or of any Holder of Securities
or Coupons 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 Event of Default or an
acquiescence therein; and, subject to Section 5.6, every power and remedy
given by this Indenture or by law to the Trustee or to the Holders of
Securities or Coupons may be exercised from time to time, and as often as
shall be deemed expedient, by the Trustee or by the Holders of Securities or
Coupons.
SECTION 5.9 Control by Securityholders. The Holders of a majority
--------------------------
in aggregate principal amount of the Securities of all series affected (with
all such series voting as a single class) (and, in the case of any series of
Securities held as trust assets of an RJR Nabisco Holdings Capital Trust and
with respect to which a Security Exchange has not theretofore occurred, such
consent of holders of the Preferred Securities and the Common Securities of
such RJR Nabisco Holdings Capital Trust as may be required under the
Declaration of Trust of such RJR Nabisco Holdings Capital Trust) 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
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exercising any trust or power conferred on the Trustee with respect to the
Securities of such series by this Indenture; provided that such direction
--------
shall not be otherwise than in accordance with law and the provisions of this
Indenture and provided further that (subject to the provisions of Section
-------- -------
6.1) the Trustee shall have the right to decline to follow any such direction
if the Trustee, being advised by counsel, shall determine that the action or
proceeding so directed may not lawfully be taken or if the Trustee in good
faith by its board of directors, the executive committee, or a trust
committee of directors or Responsible Officers of the Trustee shall determine
that the action or proceedings so directed would involve the Trustee in
personal liability or if the Trustee in good faith shall so determine that
the actions or forebearances specified in or pursuant to such direction would
be unduly prejudicial to the interests of Holders of the Securities of all
series so affected not joining in the giving of said direction, it being
understood that (subject to Section 6.1) the Trustee shall have no duty to
ascertain whether or not such actions or forebearances are unduly prejudicial
to such Holders.
Nothing in this Indenture shall impair the right of the Trustee in
its discretion to take any action deemed proper by the Trustee and which is
not inconsistent with such direction or directions by Securityholders.
SECTION 5.10 Waiver of Past Defaults. Prior to the acceleration
-----------------------
of the maturity of the Securities as provided in Section 5.1, the Holders of
a majority in aggregate principal amount of the Securities of all series at
the time Outstanding with respect to which an event of default shall have
occurred and be continuing (voting as a single class) (and, in the case of
any series of Securities held as trust assets of an RJR Nabisco Holdings
Capital Trust and with respect to which a Security Exchange has not
theretofore occurred, such consent of holders of the Preferred Securities and
the Common Securities of such RJR Nabisco Holdings Capital Trust as may be
required under the Declaration of Trust of such RJR Nabisco Holdings Capital
Trust) may on behalf of the Holders of all such Securities waive any past
default or Event of Default described in Section 5.1 and its consequences,
except a default in respect of a covenant or provision hereof which cannot be
modified or amended without the consent of the Holder of each Security
affected. In the case of any such waiver, the Issuer, the Trustee and the
Holders of all such Securities of each series affected 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.
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Upon any such waiver, such default shall cease to exist and be
deemed to have been cured and not to have occurred, and any Event of Default
arising therefrom shall be deemed to have been cured, and not to have
occurred for every purpose of this Indenture; but no such waiver shall extend
to any subsequent or other default or Event of Default or impair any right
consequent thereon.
SECTION 5.11 Trustee to Give Notice of Default, But May Withhold
---------------------------------------------------
in Certain Circumstances. The Trustee shall, within ninety days after the
------------------------
occurrence of a default with respect to the Securities of any series, give
notice of all defaults with respect to that series known to the Trustee (i)
if any Unregistered Securities of that series are then Outstanding, to the
Holders thereof, by publication at least once in an Authorized Newspaper in
the Borough of Manhattan, The City of New York and at least once in an
Authorized Newspaper in London (and, if required by Section 3.9, at least
once in an Authorized Newspaper in Luxembourg) and (ii) to all Holders of
Securities of such series in the manner and to the extent provided in Section
313(c) of the Trust Indenture Act of 1939, unless in each case such defaults
shall have been cured before the mailing or publication of such notice (the
term "default" or "defaults" for the purposes of this Section being hereby
defined to mean any event or condition which is, or with notice or lapse of
time or both would become, an Event of Default); provided that, except in the
--------
case of default in the payment of the principal of or interest on any of the
Securities of such series, or in the payment of any sinking fund installment
on such series, the Trustee shall be protected in withholding such notice if
and so long as the board of directors, the executive committee, or a trust
committee of directors or trustees and/or Responsible Officers of the Trustee
in good faith determines that the withholding of such notice is in the
interests of the Securityholders of such series.
SECTION 5.12 Right of Court to Require Filing of Undertaking to
--------------------------------------------------
Pay Costs. All parties to this Indenture agree, and each Holder of any
---------
Security or Coupon by his acceptance thereof shall be deemed to have agreed,
that any court may in its discretion require, in any suit for the enforcement
of any right or remedy under this Indenture or in any suit against the
Trustee for any action taken, suffered or omitted by it as Trustee, the
filing by any party litigant in such suit of an undertaking to pay the costs
of such suit, and that such court may in its discretion assess reasonable
costs, including reasonable attorneys' fees, against any party litigant in
such suit, having due regard to the merits and good faith of the claims
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or defenses made by such party litigant; but the provisions of this Section
shall not apply to:
(A) any suit instituted by the Trustee,
(B) any suit instituted by any Securityholder or group of
Securityholders of any series holding in the aggregate more than 10% in
aggregate principal amount of the Securities of such series, or, in the case
of any suit relating to or arising under clauses (d) or (g) of Section 5.1
(if the suit relates to Securities of more than one but less than all
series), 10% in aggregate principal amount of Securities Outstanding affected
thereby, or in the case of any suit relating to or arising under clauses (d)
or (g) (if the suit under (d) or (g) relates to all the Securities then
Outstanding), (c), (e) or (f) of Section 5.1, 10% in aggregate principal
amount of all Securities Outstanding, or
(C) any suit instituted by any Securityholder for the enforcement
of the payment of the principal of or interest on any Security on or after
the due date expressed in such Security or any date fixed for redemption.
ARTICLE SIX
CONCERNING THE TRUSTEE
----------------------
SECTION 6.1 Duties and Responsibilities of the Trustee; During
--------------------------------------------------
Default; Prior to Default. With respect to the Holders of any series of
-------------------------
Securities issued hereunder, the Trustee, prior to the occurrence of an Event
of Default with respect to the Securities of a particular series and after
the curing or waiving of all Events of Default which may have occurred with
respect to such series, undertakes to perform such duties and only such
duties as are specifically set forth in this Indenture. In case an Event of
Default with respect to the Securities of a series has occurred (which has
not been cured or waived) the Trustee shall exercise with respect to such
series of Securities 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 wilful misconduct, except that
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(a) prior to the occurrence of an Event of Default with respect to
the Securities of any series and after the curing or waiving of all such
Events of Default with respect to such series which may have occurred:
(i) the duties and obligations of the Trustee with
respect to the Securities of any series 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
(ii) 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 statements, certificates or opinions
furnished to the Trustee and conforming to the requirements of
this Indenture; but in the case of any such statements,
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 Responsible 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 Holders pursuant to Section 5.9 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
48
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of any of its duties or in the exercise of any of its rights or powers,
if there shall be reasonable ground for believing that the repayment of such
funds or adequate indemnity against such liability is not reasonably assured
to it.
The provisions of this Section 6.1 are in furtherance of and
subject to Sections 315 and 316 of the Trust Indenture Act of 1939.
SECTION 6.2 Certain Rights of the Trustee. In furtherance of and
-----------------------------
subject to the Trust Indenture Act of 1939, and subject to Section 6.1:
(a) the Trustee may rely and shall be protected in acting or
refraining from acting upon any resolution, Officers' Certificate,
Opinion of Counsel (or both) or any other certificate, statement,
instrument, opinion, report, notice, request, consent, order, bond,
debenture, note, coupon, security or other paper or document believed by
it to be genuine and to have been signed or presented by the proper
party or parties;
(b) any request, direction, order or demand of the Issuer
mentioned herein shall be sufficiently evidenced by an Officers'
Certificate (unless other evidence in respect thereof be herein
specifically prescribed); and any resolution of the Board of Directors
may be evidenced to the Trustee by a copy thereof certified by the
secretary or an assistant secretary of the Issuer;
(c) whenever in the administration of this Indenture the Trustee
shall deem it desirable that a matter be proved or established prior to
taking, suffering or omitting any action hereunder, the Trustee (unless
other evidence be herein specifically prescribed) may, in the absence of
bad faith on its part, rely upon an Officers' Certificate;
(d) the Trustee may consult with counsel and any written advice or
any Opinion of Counsel shall be full and complete authorization and
protection in respect of any action taken, suffered or omitted to be
taken by it hereunder in good faith and in reliance thereon in
accordance with such advice or Opinion of Counsel;
(e) the Trustee shall be under no obligation to exercise any of
the trusts or powers vested in it by this Indenture at the request,
order or direction of any of the Securityholders pursuant to the
provisions
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of this Indenture, unless such Securityholders shall have offered to the
Trustee reasonable security or indemnity against the costs, expenses and
liabilities which might be incurred therein or thereby;
(f) 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, rights or powers conferred upon it by this
Indenture;
(g) prior to the occurrence of an Event of Default hereunder and
after the curing or waiving of all Events of Default, 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, appraisal, bond, debenture,
note, coupon, security, or other paper or document unless requested in
writing so to do by the Holders of not less than a majority in aggregate
principal amount of the Securities of all series affected then
Outstanding; provided 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 expenses or liabilities as a condition to
proceeding; the reasonable expenses of every such investigation shall be
paid by the Issuer or, if paid by the Trustee or any predecessor
trustee, shall be repaid by the Issuer upon demand; and
(h) the Trustee may execute any of the trusts or powers hereunder
or perform any duties hereunder either directly or by or through agents
or attorneys not regularly in its employ and the Trustee shall not be
responsible for any misconduct or negligence on the part of any such
agent or attorney appointed with due care by it hereunder.
SECTION 6.3 Trustee Not Responsible for Recitals, Disposition of
----------------------------------------------------
Securities or Application of Proceeds Thereof. The recitals contained herein
---------------------------------------------
and in the Securities, except the Trustee's certificates of authentication,
shall be taken as the statements of the Issuer, and the Trustee assumes no
responsibility for the correctness of the same. The Trustee makes no
representation as to the validity or sufficiency of this Indenture or of the
Securities
50
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or Coupons. The Trustee shall not be accountable for the use or
application by the Issuer of any of the Securities or of the proceeds
thereof.
SECTION 6.4 Trustee and Agents May Hold Securities; Collections,
----------------------------------------------------
etc. The Trustee or any agent of the Issuer or the Trustee, 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 the Trustee or
such agent and may otherwise deal with the Issuer and receive, collect, hold
and retain collections from the Issuer with the same rights it would have if
it were not the Trustee or such agent.
SECTION 6.5 Moneys Held by Trustee. Subject to the provisions of
----------------------
Section 10.4 hereof, all moneys received by the Trustee shall, until used or
applied as herein provided, be held in trust for the purposes for which they
were received, but need not be segregated from other funds except to the
extent required by mandatory provisions of law. Neither the Trustee nor any
agent of the Issuer or the Trustee shall be under any liability for interest
on any moneys received by it hereunder.
SECTION 6.6 Compensation and Indemnification of Trustee and Its
---------------------------------------------------
Prior Claim. The Issuer covenants and agrees to pay to the Trustee from time
-----------
to time, and the Trustee shall be entitled to, reasonable compensation (which
shall not be limited by any provision of law in regard to the compensation of
a trustee of an express trust) and the Issuer covenants and agrees to pay or
reimburse the Trustee and each predecessor Trustee upon its request for all
reasonable expenses, disbursements and advances incurred or made by or on
behalf of it in accordance with any of the provisions of this Indenture and
the Securities or the issuance of the Securities or of series thereof
(including the reasonable compensation and the expenses and disbursements of
its counsel and of all agents and other persons not regularly in its employ)
except to the extent any such expense, disbursement or advance may arise from
its negligence or bad faith. The Issuer also covenants to indemnify the
Trustee and each predecessor Trustee for, and to hold it harmless against,
any loss, liability or expense arising out of or in connection with the
acceptance or administration of this Indenture and the Securities or the
issuance of the Securities or of series thereof or the trusts hereunder and
the performance of its duties hereunder, including the costs and expenses of
defending itself against or investigating any claim of liability in the
premises, except to the extent such loss liability or expense is due to the
negligence or bad faith of the Trustee
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or such predecessor Trustee. The obligations of the Issuer under this
Section to compensate and indemnify the Trustee and each predecessor Trustee
and to pay or reimburse the Trustee and each predecessor Trustee for
expenses, disbursements and advances shall constitute additional indebtedness
hereunder and shall survive the satisfaction and discharge of this Indenture
or the rejection or termination of this Indenture under bankruptcy law. Such
additional indebtedness shall be a senior claim 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
or Coupons, and the Securities are hereby subordinated to such senior claim.
If the Trustee renders services and incurs expenses following an Event of
Default under Section 5.1(e) or Section 5.1(f) hereof, the parties hereto and
the holders by their acceptance of the Securities hereby agree that such
expenses are intended to constitute expenses of administration under any
bankruptcy law.
SECTION 6.7 Right of Trustee to Rely on Officers' Certificate,
--------------------------------------------------
etc. Subject to Sections 6.1 and 6.2, whenever in the administration of the
----
trusts of this Indenture the Trustee shall deem it necessary or desirable
that a matter be proved or established prior to taking or suffering or
omitting any action hereunder, such matter (unless other evidence in respect
thereof be 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,
suffered or omitted by it under the provisions of this Indenture upon the
faith thereof.
SECTION 6.8 Indentures Not Creating Potential Conflicting
---------------------------------------------
Interests for the Trustee. The following indentures are hereby specifically
-------------------------
described for the purposes of Section 310(b)(l) of the Trust Indenture Act of
1939: Indenture dated as of April 15, 1991, as amended, and Amended and
Restated Indenture dated as of May 18, 1992.
SECTION 6.9 Persons Eligible for Appointment as Trustee. The
-------------------------------------------
Trustee for each series of Securities hereunder shall at all times be a
corporation having a combined capital and surplus of at least $50,000,000,
and which is eligible in accordance with the provisions of Section 310(a) of
the Trust Indenture Act of 1939. If such corporation publishes reports of
condition at least annually, pursuant to law or to the requirements of a
Federal,
52
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State or District of Columbia supervising or examining authority, then for
the purposes of this Section, the combined capital and surplus of such
corporation shall be deemed to be its combined capital and surplus as set
forth in its most recent report of condition so published.
SECTION 6.10 Resignation and Removal; Appointment of Successor
-------------------------------------------------
Trustee. (a) The Trustee, or any trustee or trustees hereafter appointed,
-------
may at any time resign with respect to one or more or all series of
Securities by giving written notice of resignation to the Issuer and (i) if
any Unregistered Securities of a series affected are then Outstanding, by
giving notice of such resignation to the Holders thereof, by publication at
least once in an Authorized Newspaper in the Borough of Manhattan, the City
of New York, and at least once in an Authorized Newspaper in London (and, if
required by Section 3.9, at least once in an Authorized Newspaper in
Luxembourg), (ii) if any Unregistered Securities of a Series affected are
then Outstanding, by mailing notice of such resignation to the Holders
thereof who have filed their names and addresses with the Trustee pursuant to
Section 313(c)(2) of the Trust Indenture Act of 1939 at such addresses as
were so furnished to the Trustee and (iii) by mailing notice of such
resignation to the Holders of then Outstanding Registered Securities of each
series affected at their addresses as they shall appear on the registry
books. Upon receiving such notice of resignation, the Issuer shall promptly
appoint a successor trustee or trustees with respect to the applicable series
by written instrument in duplicate, executed by authority of the Board of
Directors, one copy of which instrument shall be delivered to the resigning
Trustee and one copy to the successor trustee or trustees. If no successor
trustee shall have been so appointed with respect to any series and have
accepted appointment within 30 days after the mailing of such notice of
resignation, 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 or Securities of
the applicable series for at least six months may, subject to the provisions
of Section 5.12, 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:
(i) the Trustee shall fail to comply with the provisions of
Section 310(b) of the Trust Indenture Act
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of 1939 with respect to any series of Securities after written request
therefor by the Issuer or by any Securityholder who has been a bona fide
Holder of a Security or Securities of such series for at least six
months; or
(ii) the Trustee shall cease to be eligible in accordance with the
provisions of Section 6.9 hereunder and Section 310(a) of the Trust
Indenture Act of 1939 and shall fail to resign after written request
therefor by the Issuer or by any Securityholder; or
(iii) the Trustee shall become incapable of acting with respect to
any series of Securities, or shall be adjudged a bankrupt or insolvent,
or a receiver or liquidator 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 Issuer may remove the Trustee with respect to the
applicable series of Securities and appoint a successor trustee for such
series by written instrument, in duplicate, executed by order of the Board of
Directors of the Issuer, 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 315(e) of the Trust Indenture Act of 1939, any
Securityholder who has been a bona fide Holder of a Security or Securities of
such series for at least six months may on behalf of himself and all others
similarly situated, petition any court of competent jurisdiction for the
removal of the Trustee and the appointment of a successor trustee with
respect to such series. 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 of each series then Outstanding may at any time remove the Trustee
with respect to Securities of such series and appoint a successor trustee
with respect to the Securities of such series by delivering to the Trustee so
removed, to the successor trustee so appointed and to the Issuer the evidence
provided for in Section 7.1 of the action in that regard taken by the
Securityholders.
(d) Any resignation or removal of the Trustee with respect to any
series and any appointment of a successor
54
<PAGE>
trustee with respect to such series pursuant to any of the provisions
of this Section 6.9 shall become effective upon acceptance of appointment by
the successor trustee as provided in Section 6.10.
SECTION 6.11 Acceptance of Appointment by Successor Trustee. Any
----------------------------------------------
successor trustee appointed as provided in Section 6.9 shall execute and
deliver to the Issuer and to its predecessor trustee an instrument accepting
such appointment hereunder, and thereupon the resignation or removal of the
predecessor trustee with respect to all or any applicable series shall become
effective and such successor trustee, without any further act, deed or
conveyance, shall become vested with all rights, powers, duties and
obligations with respect to such series of its predecessor hereunder, with
like effect as if originally named as trustee for such series hereunder; but,
nevertheless, on the written request of the Issuer or of the successor
trustee, upon payment of its charges then unpaid, the trustee ceasing to act
shall, subject to Section 10.4, pay over to the successor trustee all moneys
at the time held by it hereunder and shall execute and deliver an instrument
transferring to such successor trustee all such rights, powers, duties and
obligations. Upon request of any such successor trustee, the Issuer 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 prior claim
upon all property or funds held or collected by such trustee to secure any
amounts then due it pursuant to the provisions of Section 6.6.
If a successor trustee is appointed with respect to the Securities
of one or more (but not all) series, the Issuer, the predecessor Trustee and
each successor trustee with respect to the Securities of any applicable
series shall execute and deliver an indenture supplemental hereto which shall
contain such provisions as shall be deemed necessary or desirable to confirm
that all the rights, powers, trusts and duties of the predecessor Trustee
with respect to the Securities of any series as to which the predecessor
Trustee is not retiring shall continue to be vested in the predecessor
Trustee, and shall add to or change any of the provisions of this Indenture
as shall be necessary to provide for or facilitate the administration of the
trusts hereunder by more than one trustee, it being understood that nothing
herein or in such supplemental indenture shall constitute such trustees
co-trustees of the same trust and that each such trustee shall be trustee of
a trust or trusts under separate indentures.
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No successor trustee with respect to any series of Securities shall
accept appointment as provided in this Section 6.11 unless at the time of
such acceptance such successor trustee shall be qualified under Section
310(b) of the Trust Indenture Act of 1939 and eligible under the provisions
of Section 6.9.
Upon acceptance of appointment by any successor trustee as provided
in this Section 6.11, the Issuer shall give notice thereof (a) if any
Unregistered Securities of a series affected are then Outstanding, to the
Holders thereof, by publication of such notice at least once in an Authorized
Newspaper in the Borough of Manhattan, the City of New York and at least once
in an Authorized Newspaper in London (and, if required by Section 3.9, at
least once in an Authorized Newspaper in Luxembourg), (b) if any Unregistered
Securities of a series affected are then Outstanding, to the Holders thereof
who have filed their names and addresses with the Trustee pursuant to Section
313(c)(2) of the Trust Indenture Act of 1939, by mailing such notice to such
Holders at such addresses as were so furnished to the Trustee (and the
Trustee shall make such information available to the Issuer for such purpose)
and (c) to the Holders of Registered Securities of each series affected, by
mailing such notice to such Holders at their addresses as they shall appear
on the registry books. If the acceptance of appointment is substantially
contemporaneous with the resignation, then the notice called for by the
preceding sentence may be combined with the notice called for by Section
6.10. If the Issuer fails to give such notice within ten days after
acceptance of appointment by the successor trustee, the successor trustee
shall cause such notice to be given at the expense of the Issuer.
SECTION 6.12 Merger, Conversion, Consolidation or Succession to
--------------------------------------------------
Business of Trustee. 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 the corporate trust business of the
Trustee, shall be the successor of the Trustee hereunder, provided that such
--------
corporation shall be qualified under Section 310(b) of the Trust Indenture
Act of 1939 and eligible under the provisions of Section 6.9, without the
execution or filing of any paper or any further act on the part of any of the
parties hereto, anything herein to the contrary notwithstanding.
In case at the time such successor to the Trustee shall succeed to
the trusts created by this Indenture any of the Securities or Coupons (if
any) of any series shall have
56
<PAGE>
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 or Coupons so authenticated; and, in case at that
time any of the Securities or Coupons (if any) of any series shall not have
been authenticated, any successor to the Trustee may authenticate such
Securities or Coupons either in the name of any predecessor hereunder or in
the name of the successor Trustee; and in all such cases such certificate
shall have the full force which it is anywhere in the Securities or Coupons
of such series or in this Indenture provided that the certificate of the
Trustee shall have; provided, that the right to adopt the certificate of
--------
authentication of any predecessor Trustee or to authenticate Securities or
Coupons (if any) of any series in the name of any predecessor Trustee shall
apply only to its successor or successors by merger, conversion or
consolidation.
SECTION 6.13 Appointment of Authenticating Agent. As long as any
-----------------------------------
Securities of a series remain Outstanding, the Trustee may, by an instrument
in writing, appoint with the approval of the Issuer and authenticating agent
(the "Authenticating Agent") which shall be authorized to act on behalf of
the Trustee to authenticate Securities, including Securities issued upon
exchange, registration of transfer, partial redemption or pursuant to Section
2.9. Securities of each such series authenticated by such Authenticating
Agent shall be entitled to the benefits of this Indenture and shall be valid
and obligatory for all purposes as if authenticated by the Trustee. Whenever
reference is made in this Indenture to the authentication and delivery of
Securities of any series by the Trustee or to the Trustee's Certificate of
Authentication, such reference shall be deemed to include authentication and
delivery on behalf of the Trustee by an Authenticating Agent for such series
and a Certificate of Authentication executed on behalf of the Trustee by such
Authenticating Agent. Such Authenticating Agent shall at all times be a
corporation organized and doing business under the laws of the United States
of America or of any State, authorized under such laws to exercise corporate
trust powers, having a combined capital and surplus of at least $10,000,000
(determined as provided in Section 6.9 with respect to the Trustee) and
subject to supervision or examination by Federal or State authority.
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, conversion or consolidation to which any
Authenticating Agent shall be a party, or any corporation succeeding to the
corporate agency business of any Authenticating Agent, shall
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<PAGE>
continue to be the Authenticating Agent with respect to all series of
Securities for which it served as Authenticating Agent without the execution
or filing of any paper or any further act on the part of the Trustee or such
Authenticating Agent. Any Authenticating Agent may at any time, and if it
shall cease to be eligible shall, resign by giving written notice of
resignation to the Trustee and to the Issuer.
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 in accordance with the provisions of this Section 6.13 with
respect to one or more series of Securities, the Trustee shall upon receipt
of an Issuer Order appoint a successor Authenticating Agent. 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. The Issuer agrees to pay to the Authenticating Agent
for such series from time to time reasonable compensation. The
Authenticating Agent for the Securities of any series shall have no
responsibility or liability for any action taken by it as such at the
direction of the Trustee.
Sections 6.2, 6.3, 6.4, 6.6, 6.9 and 7.3 shall be applicable to any
Authenticating Agent.
ARTICLE SEVEN
CONCERNING THE SECURITYHOLDERS
------------------------------
SECTION 7.1 Evidence of Action Taken by Securityholders. Any
-------------------------------------------
request, demand, authorization, direction, notice, consent, waiver or other
action provided by this Indenture to be given or taken by a specified
percentage in principal amount of the Securityholders of any or all series
may be embodied in and evidenced by one or more instruments of substantially
similar tenor signed by such specified percentage of Securityholders in
person or by agent duly appointed in writing; and, except as herein otherwise
expressly provided, such action shall become effective when such instrument
or instruments are delivered to the Trustee. Proof of execution of any
instrument or of a writing appointing any such agent shall be sufficient for
any purpose of this Indenture and (subject to Sections 6.1 and 6.2)
conclusive in favor of the Trustee and the Issuer, if made in the manner
provided in this Article.
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SECTION 7.2 Proof of Execution of Instruments and of Holding of
---------------------------------------------------
Securities; Record Date. Subject to Sections 6.1 and 6.2, the execution of
-----------------------
any instrument by a Securityholder or his agent or proxy may be proved in the
following manner:
(a) The fact and date of the execution by any Holder of any
instrument may be proved by the certificate of any notary public or
other officer of any jurisdiction authorized to take acknowledgments of
deeds or administer oaths that the person executing such instruments
acknowledged to him the execution thereof, or by an affidavit of a
witness to such execution sworn to before any such notary or other such
officer. Where such execution is by or on behalf of any legal entity
other than an individual, such certificate or affidavit shall also
constitute sufficient proof of the authority of the person executing the
same. The fact of the holding by any Holder of an Unregistered Security
of any series, and the identifying number of such Security and the date
of his holding the same, may be proved by the production of such
Security or by a certificate executed by any trust company, bank, banker
or recognized securities dealer wherever situated satisfactory to the
Trustee, if such certificate shall be deemed by the Trustee to be
satisfactory. Each such certificate shall be dated and shall state that
on the date thereof a Security of such series bearing a specified
identifying number was deposited with or exhibited to such trust
company, bank, banker or recognized securities dealer by the person
named in such certificate. Any such certificate may be issued in
respect of one or more Unregistered Securities of one or more series
specified therein. The holding by the person named in any such
certificate of any Unregistered Securities of any series specified
therein shall be presumed to continue for a period of one year from the
date of such certificate unless at the time of any determination of such
holding (1) another certificate bearing a later date issued in respect
of the same Securities shall be produced, or (2) the Security of such
series specified in such certificate shall be produced by some other
person, or (3) the Security of such series specified in such certificate
shall have ceased to be Outstanding. Subject to Sections 6.1 and 6.2,
the fact and date of the execution of any such instrument and the amount
and numbers of Securities of any series held by the person so executing
such instrument and the amount and numbers of any Security or Securities
for such series may also be proven in accordance with such reasonable
rules and
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regulations as may be prescribed by the Trustee for such series or in
any other manner which the Trustee for such series may deem sufficient.
(b) In the case of Registered Securities, the ownership of such
Securities shall be proved by the Security register or by a certificate
of the Security registrar.
The Issuer may set a record date for purposes of determining the
identity of holders of Securities of any series entitled to vote or consent
to any action referred to in Section 7.1, which record date may be set at any
time or from time to time by notice to the Trustee, for any date or dates (in
the case of any adjournment or reconsideration) not more than 60 days nor
less than five days prior to the proposed date of such vote or consent, and
thereafter, notwithstanding any other provisions hereof with respect to
Registered Securities of any series, only Holders of Registered Securities of
such series of record on such record date shall be entitled to so vote or
give such consent or revoke such vote or consent.
SECTION 7.3 Holders to be Treated as Owners. The Issuer, the
-------------------------------
Trustee and any agent of the Issuer or the Trustee may deem and treat the
person in whose name any Security shall be registered upon the Security
register for such series as the absolute owner of such Security (whether or
not such Security shall be overdue and notwithstanding any notation of
ownership or other writing thereon) for the purpose of receiving payment of
or on account of the principal of and, subject to the provisions of this
Indenture, interest on such Security and for all other purposes; and neither
the Issuer nor the Trustee nor any agent of the Issuer or the Trustee shall
be affected by any notice to the contrary. The Issuer, the Trustee and any
agent of the Issuer or the Trustee may treat the Holder of any Unregistered
Security and the Holder of any Coupon as the absolute owner of such
Unregistered Security or Coupon (whether or not such Unregistered Security or
Coupon shall be overdue) for the purpose of receiving payment thereof or on
account thereof and for all other purposes and neither the Issuer, the
Trustee, nor any agent of the Issuer or the Trustee shall be affected by any
notice to the contrary. All such payments so made to any such person, 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 Registered Security, Unregistered Security or Coupon.
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SECTION 7.4 Right of Revocation of Action Taken. At any time
-----------------------------------
prior to (but not after) the evidencing to the Trustee, as provided in
Section 7.1, of the taking of any action by the Holders of the percentage in
aggregate principal amount of the Securities of any or all series, as the
case may be, specified in this Indenture in connection with such action, any
Holder of a Security the serial number of which is shown by the evidence to
be included among the serial numbers of the Securities the Holders of which
have consented to such action may, by filing written notice at the Corporate
Trust Office and upon proof of holding as provided in this Article, revoke
such action so far as concerns such 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 Securities issued in exchange or substitution therefor or on
registration of transfer thereof, irrespective of whether or not any notation
in regard thereto is made upon any such Security. Any action taken by the
Holders of the percentage in aggregate principal amount of the Securities of
any or all series, as the case may be, specified in this Indenture in
connection with such action shall be conclusively binding upon the Issuer,
the Trustee and the Holders of all the Securities affected by such action.
ARTICLE EIGHT
SUPPLEMENTAL INDENTURES
-----------------------
SECTION 8.1 Supplemental Indentures Without Consent of
------------------------------------------
Securityholders. The Issuer, when authorized by a Board Resolution (which
---------------
resolution may provide general terms or parameters for such action and may
provide that the specific terms of such action may be determined in
accordance with or pursuant to an Issuer Order), and the Trustee may from
time to time and at any time enter into an indenture or indentures
supplemental hereto for one or more of the following purposes:
(a) to convey, transfer, assign, mortgage or pledge to the Trustee
as security for the Securities of one or more series any property or
assets;
(b) to evidence the succession of another corporation to the
Issuer, or successive successions, and the assumption by the successor
corporation of the covenants, agreements and obligations of the Issuer
pursuant to Article Nine;
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(c) to add to the covenants of the Issuer such further covenants,
restrictions, conditions or provisions as its Board of Directors and the
Trustee shall consider to be for the protection or benefit of the
Holders of all or any Series of Securities or Coupons, (and if such
covenants, restrictions, conditions or provisions are for the protection
or benefit of less than all series of Securities, stating that they are
expressly being included solely for the benefit or protection of such
series), and to make the occurrence, or the occurrence and continuance,
of a default in any such additional covenants, restrictions, conditions
or provisions an Event of Default permitting the enforcement of all or
any of the several remedies provided in this Indenture as herein set
forth; provided, that in respect of any such additional covenant,
--------
restriction, condition or provision such supplemental indenture 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 an Event of Default
or may limit the remedies available to the Trustee upon such an Event of
Default or may limit the right of the Holders of a majority in aggregate
principal amount of the Securities of such series to waive such an Event
of Default;
(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 or under any
supplemental indenture as the Board of Directors may deem necessary or
desirable and which shall not adversely affect the interests of the
Holders of the Securities or Coupons in any material respect;
(e) to establish the form or forms or terms of Securities of any
series or of the Coupons appertaining to such Securities as permitted by
Sections 2.1 and 2.3;
(f) to evidence and provide for the acceptance of appointment
hereunder by a successor trustee with respect to the Securities of one
or more series and to add to or change any of the provisions of this
Indenture as shall be necessary to provide for or facilitate the
administration of the trusts hereunder
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by more than one trustee, pursuant to the requirements of Section 6.11;
(g) to provide for uncertificated Securities and to make all
appropriate changes for such purpose; and
(h) to comply with the requirements of the Trust Indenture Act of
1939.
The Trustee is hereby authorized to join with the Issuer in the
execution of any such supplemental indenture, to make any further appropriate
agreements and stipulations which may be therein contained and to accept the
conveyance, transfer, assignment, mortgage or pledge of any property
thereunder, but the Trustee shall not be obligated to enter into any such
supplemental indenture which affects the Trustee's own rights, duties or
immunities under this Indenture or otherwise.
Any supplemental indenture authorized by the provisions of this
Section may be executed without the consent of the Holders of any of the
Securities at the time outstanding, notwithstanding any of the provisions of
Section 8.2.
SECTION 8.2 Supplemental Indentures With Consent of
---------------------------------------
Securityholders. With the consent (evidenced as provided in Article Seven)
---------------
of the Holders of not less than a majority in aggregate principal amount of
the Securities at the time Outstanding of all series affected by such
supplemental indenture (voting as one class) (and, in the case of any series
of Securities held as trust assets of an RJR Nabisco Holdings Capital Trust
and with respect to which a Security Exchange has not theretofore occurred,
such consent of holders of the Preferred Securities and the Common Securities
of such RJR Nabisco Holdings Capital Trust as may be required under the
Declaration of Trust of such RJR Nabisco Holdings Capital Trust), the Issuer,
when authorized by a Board Resolution (which resolution may provide general
terms or parameters for such action and may provide that the specific terms
of such action may be determined in accordance with or pursuant to an Issuer
Order), and the Trustee may, from time to time and at any time, enter into an
indenture or indentures supplemental hereto for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions
of this Indenture or of any supplemental indenture or of modifying in any
manner the rights of the Holders of the Securities of each such series or of
the Coupons appertaining to such Securities; provided, that no such
--------
supplemental indenture shall (a) extend the final maturity of any Security,
or
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reduce the principal amount thereof, or reduce the rate or extend the time of
payment of interest thereon (except that a valid extension of an interest
payment period by the Issuer in accordance with the terms of any indenture
supplemental hereto, shall not constitute an extension of interest for this
purpose), or reduce any amount payable on redemption thereof or make the
principal thereof (including any amount in respect of original issue
discount), or interest thereon payable in any coin or currency other than
that provided in the Securities and Coupons or in accordance with the terms
thereof, or reduce the amount of the principal of an Original Issue Discount
Security that would be due and payable upon an acceleration of the maturity
thereof pursuant to Section 5.1 or the amount thereof provable in bankruptcy
pursuant to Section 5.2, or alter the provisions of Sections 11.11 or 11.12
or impair or affect the right of any Securityholder to institute suit for the
payment thereof or, if the Securities provide therefor, any right of
repayment at the option of the Securityholder in each case without the
consent of the Holder of each Security so affected (and, in the case of any
series of Securities held as trust assets of an RJR Nabisco Holdings Capital
Trust and with respect to which a Security Exchange has not theretofore
occurred, such consent of holders of the Preferred Securities and the Common
Securities of such RJR Nabisco Holdings Capital Trust as may be required
under the Declaration of Trust of such RJR Nabisco Holdings Capital Trust),
or (b) reduce the aforesaid percentage in principal amount of Securities of
any series, the consent of the Holders of which is required for any such
supplemental indenture, without the consent of the Holders of each Security
so affected.
A supplemental indenture which changes or eliminates any covenant
or other provision of this Indenture which has expressly been included solely
for the benefit of one or more particular series of Securities, or which
modifies the rights of Holders of Securities with respect to such covenant or
provision, shall be deemed not to affect the rights under this Indenture of
the Holders of Securities of any other series or of the Coupons appertaining
to such Securities.
Upon the request of the Issuer, accompanied by a copy of a Board
Resolution (which resolution may provide general terms or parameters for such
action and may provide that the specific terms of such action may be
determined in accordance with or pursuant to an Issuer Order) certified by
the secretary or an assistant secretary of the Issuer authorizing the
execution of any such supplemental indenture, and upon the filing with the
Trustee of evidence
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of the consent of Securityholders as aforesaid and other documents, if any,
required by Sections 7.1 and 8.4, the Trustee shall join with the Issuer 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.
It shall not be necessary for the consent of the Securityholders
under this Section to approve the particular form of any proposed
supplemental indenture, but it shall be sufficient if such consent shall
approve the substance thereof.
Promptly after the execution by the Issuer and the Trustee of any
supplemental indenture pursuant to the provisions of this Section, the
Trustee shall give notice thereof (i) to the Holders of then Outstanding
Registered Securities of each series affected thereby, by mailing a notice
thereof by first class mail to such Holders at their addresses as they shall
appear on the Security register, (ii) if any Unregistered Securities of a
series affected thereby are then Outstanding, to the Holders thereof who have
filed their names and addresses with the Trustee pursuant to Section
313(c)(2) of the Trust Indenture Act of 1939, by mailing a notice thereof by
first class mail to such Holders at such addresses as were so furnished to
the Trustee and (iii) if any Unregistered Securities of a series affected
thereby are then Outstanding, to all Holders thereof, by publication of a
notice thereof at least one in an Authorized Newspaper in the Borough of
Manhattan, The City of New York and at least once in an Authorized Newspaper
in London (and, if required by Section 3.9, at least once in an Authorized
Newspaper in Luxembourg), and in each case such notice shall set forth in
general terms the substance of such supplemental indenture. Any failure of
the Issuer to give such notice, or any defect therein, shall not, however, in
any way impair or affect the validity of any such supplemental indenture.
SECTION 8.3 Effect of Supplemental Indenture. Upon the execution
--------------------------------
of any supplemental indenture pursuant to the provisions hereof, 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 Issuer and the
Holders of Securities of each series affected thereby shall thereafter be
determined, exercised and enforced hereunder subject in all respects to such
modifications and amendments, and all the terms and
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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.
SECTION 8.4 Documents to Be Given to Trustee. The Trustee,
--------------------------------
subject to the provisions of Sections 6.1 and 6.2, may receive an Officers'
Certificate and an Opinion of Counsel as conclusive evidence that any
supplemental indenture executed pursuant to this Article Eight complies with
the applicable provisions of this Indenture.
SECTION 8.5 Notation on Securities in Respect of Supplemental
-------------------------------------------------
Indentures. Securities of any series authenticated and delivered after the
----------
execution of any supplemental indenture pursuant to the provisions of this
Article may bear a notation in form approved by the Trustee for such series
as to any matter provided for by such supplemental indenture or as to any
action taken at any such meeting. If the Issuer or the Trustee shall so
determine, new Securities of any series 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
by the Issuer, authenticated by the Trustee and delivered in exchange for the
Securities of such series then Outstanding.
ARTICLE NINE
CONSOLIDATION, MERGER, SALE OR CONVEYANCE
-----------------------------------------
SECTION 9.1 Covenant Not to Merge, Consolidate, Sell or Convey
--------------------------------------------------
Property Except Under Certain Conditions. Nothing contained in this
----------------------------------------
Indenture or in any of the Securities shall prevent any consolidation or
merger of the Issuer into any other corporation or corporations (whether or
not affiliated with the Issuer), or successive consolidations or mergers to
which the Issuer or its respective successor or successors shall be a party
or parties, or shall prevent any sale, lease or conveyance of the property of
the Issuer as an entirety or substantially as an entirety; provided, that
--------
upon any such consolidation, merger, sale, lease or conveyance to which the
Issuer is a party and in which the Issuer is not the surviving corporation,
the due and punctual performance and observance of all of the covenants and
conditions of this Indenture to be performed or observed by the Issuer and
the due and punctual payment of the principal of and interest on all of the
Securities, according to their tenor, shall be expressly assumed by
supplemental indenture satisfactory in form to the Trustee, executed and
delivered to the Trustee, by the
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corporation formed by such consolidation, or into which the Issuer shall have
been merged, or which shall have acquired such property.
SECTION 9.2 Successor Corporation Substituted. In case of any
---------------------------------
such consolidation, merger, sale or conveyance, and following such an
assumption by the successor corporation, such successor corporation shall
succeed to and be substituted for the Issuer, with the same effect as if it
had been named herein. Such successor corporation may cause to be signed,
and may issue either in its own name or in the name of the Issuer prior to
such succession any or all of the Securities issuable hereunder which
theretofore shall not have been signed by the Issuer and delivered to the
Trustee; and, upon the order of such successor corporation instead of the
Issuer and subject to all the terms, conditions and limitations in this
Indenture prescribed, the Trustee shall authenticate and shall deliver any
Securities which previously shall have been signed and delivered by the
officers of the Issuer to the Trustee for authentication, and any Securities
which such successor corporation thereafter shall cause to be signed and
delivered to the Trustee for that purpose. All of the Securities so issued
shall in all respects have the same legal rank and benefit under this
Indenture as the Securities theretofore or thereafter issued in accordance
with the terms of this Indenture as though all of such Securities had been
issued at the date of the execution hereof.
In case of any such consolidation, merger, sale, lease or
conveyance such changes in phraseology and form (but not in substance) may be
made in the Securities or Coupons thereafter to be issued as may be
appropriate.
In the event of any such sale or conveyance (other than a
conveyance by way of lease) the Issuer or any successor corporation which
shall theretofore have become such in the manner described in this Article
shall be discharged from all obligations and covenants under this Indenture
and the Securities and may be liquidated and dissolved.
SECTION 9.3 Opinion of Counsel to Trustee. The Trustee, subject
-----------------------------
to the provisions of Sections 6.1 and 6.2, may receive an Opinion of Counsel,
prepared in accordance with Section 11.5, as conclusive evidence that any
such consolidation, merger, sale, lease or conveyance, and any such
assumption, and any such liquidation or dissolution, complies with the
applicable provisions of this Indenture.
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ARTICLE TEN
SATISFACTION AND DISCHARGE OF INDENTURE;
UNCLAIMED MONEYS.
----------------
SECTION 10.1 Satisfaction and Discharge of Indenture. (A) If at
---------------------------------------
any time (a) the Issuer shall have paid or caused to be paid the principal of
and interest on all the Securities of any series Outstanding hereunder and
all unmatured Coupons appertaining thereto (other than Securities of such
series and Coupons appertaining thereto which have been destroyed, lost or
stolen and which have been replaced or paid as provided in Section 2.9) as
and when the same shall have become due and payable, or (b) the Issuer shall
have delivered to the Trustee for cancellation all Securities of any series
theretofore authenticated and all unmatured Coupons appertaining thereto
(other than any Securities of such series and Coupons appertaining thereto
which shall have been destroyed, lost or stolen and which shall have been
replaced or paid as provided in Section 2.9) or (c) in the case of any series
of Securities where the exact amount (including the currency of payment) of
principal of and interest due on which can be determined at the time of
making the deposit referred to in clause (ii) below, (i) all the Securities
of such series and all unmatured Coupons appertaining thereto not theretofore
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 (ii) the Issuer shall
have irrevocably deposited or caused to be deposited with the Trustee as
trust funds the entire amount in cash (other than moneys repaid by the
Trustee or any paying agent to the Issuer in accordance with Section 10.4)
or, in the case of any series of Securities the payments on which may only be
made in Dollars, direct obligations of, or obligations guaranteed by, the
United States of America, backed by its full faith and credit ("U.S.
Government Obligations"), maturing as to principal and interest at such times
and in such amounts as will insure the availability of cash, or a combination
thereof, sufficient in the opinion of a nationally recognized firm of
independent public accountants expressed in a written certification thereof
delivered to the Trustee, to pay (X) the principal and interest on all
Securities of such series and Coupons appertaining thereto on each date that
such principal or interest is due and payable and (Y) any mandatory sinking
fund payments on the dates on which such payments are due and payable in
accordance with the terms of the Indenture
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and the Securities of such series; and if, in any such case, the Issuer shall
also pay or cause to be paid all other sums payable hereunder by the Issuer,
then this Indenture shall cease to be of further effect (except as to (i)
rights of registration of transfer and exchange of Securities of such series
and of Coupons appertaining thereto and the Issuer's right of optional
redemption, if any, (ii) substitution of mutilated, defaced, destroyed, lost
or stolen Securities or Coupons, (iii) rights of Holders of Securities and
Coupons appertaining thereto to receive payments of principal thereof and
interest thereon, upon the original stated due dates therefor (but not upon
acceleration), and remaining rights of the Holders to receive mandatory
sinking fund payments, if any, (iv) the rights, obligations, duties and
immunities of the Trustee hereunder, (v) the rights of the Holders of
Securities of such series and Coupons appertaining thereto as beneficiaries
hereof with respect to the property so deposited with the Trustee payable to
all or any of them, and (vi) the obligations of the Issuer under Section 3.2)
and the Trustee, on demand of the Issuer accompanied by an Officer's
Certificate and an Opinion of Counsel which comply with Section 11.5 and at
the cost and expense of the Issuer, shall execute proper instruments
acknowledging such satisfaction of and discharging this Indenture; provided,
--------
that the rights of Holders of the Securities and Coupons to receive amounts
in respect of principal of and interest on the Securities and Coupons held by
them shall not be delayed longer than required by then-applicable mandatory
rules or policies of any securities exchange upon which the Securities are
listed. The Issuer agrees to reimburse the Trustee for any costs or
expenses thereafter reasonably and properly incurred and to compensate the
Trustee for any services thereafter reasonably and properly rendered by the
Trustee in connection with this Indenture or the Securities of such series.
Notwithstanding the satisfaction and discharge of this Indenture, the
obligations of the Issuer to the Trustee under Section 6.6 and the
obligations of the Trustee under Section 10.1 shall survive.
(B) The following provisions shall apply to the Securities of each
series unless specifically otherwise provided in a Board Resolution,
Officers' Certificate or indenture supplemental hereto provided pursuant to
Section 2.3. In addition to discharge of the Indenture pursuant to the next
preceding paragraph, in the case of any series of Securities the exact
amounts (including the currency of payment) of principal of and interest due
on which can be determined at the time of making the deposit referred to in
clause (a) below, the Issuer shall be deemed to have paid and discharged the
entire indebtedness on all the Securities
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of such a series and the Coupons appertaining thereto on the 91st day after
the date of the deposit referred to in subparagraph (a) below, and the
provisions of this Indenture with respect to the Securities of such series
and Coupons appertaining thereto shall no longer be in effect (except as to
(i) rights of registration of transfer and exchange of Securities of such
series and of Coupons appertaining thereto and the Issuer's right of optional
redemption, if any, (ii) substitution of mutilated, defaced, destroyed, lost
or stolen Securities or Coupons, (iii) rights of Holders of Securities and
Coupons appertaining thereto to receive payments of principal thereof and
interest thereon, upon the original stated due dates therefor (but not upon
acceleration), and remaining rights of the Holders to receive mandatory
sinking fund payments, if any, (iv) the rights, obligations, duties and
immunities of the Trustee hereunder, (v) the rights of the Holders of
Securities of such series and Coupons appertaining thereto as beneficiaries
hereof with respect to the property so deposited with the Trustee payable to
all or any of them and (vi) the obligations of the Issuer under Section 3.2)
and the Trustee, at the expense of the Issuer, shall at the Issuer's request,
execute proper instruments acknowledging the same, if
(a) with reference to this provision the Issuer has
irrevocably deposited or caused to be irrevocably deposited with
the Trustee as trust funds in trust, specifically pledged as
security for, and dedicated solely to, the benefit of the Holders
of the Securities of such series and Coupons appertaining thereto
(i) cash in an amount, or (ii) in the case of any series of
Securities the payments on which may only be made in Dollars, U.S.
Government Obligations, maturing as to principal and interest at
such times and in such amounts as will insure the availability of
cash or (iii) a combination thereof, sufficient, in the opinion of
a nationally recognized firm of independent public accountants
expressed in a written certification thereof delivered to the
Trustee, to pay (A) the principal and interest on all Securities of
such series and Coupons appertaining thereto on each date that such
principal or interest is due and payable and (B) any mandatory
sinking fund payments on the dates on which such payments are due
and payable in accordance with the terms of the Indenture and the
Securities of such series;
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(b) such deposit will not result in a breach or violation of,
or constitute a default under, any agreement or instrument to which
the Issuer is a party or by which it is bound;
(c) the Issuer has delivered to the Trustee an Opinion of
Counsel based on the fact that (x) the Issuer has received from, or
there has been published by, the Internal Revenue Service a ruling
or (y) since the date hereof, there has been a change in the
applicable Federal income tax law, in either case to the effect
that, and such opinion shall confirm that, the Holders of the
Securities of such series and Coupons appertaining thereto will not
recognize income, gain or loss for Federal income tax purposes as a
result of such deposit, defeasance and discharge and will be
subject to 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
deposit, defeasance and discharge had not occurred; and
(d) the Issuer has delivered to the Trustee an Officer's
Certificate and an Opinion of Counsel, each stating that all
conditions precedent provided for relating to the defeasance
contemplated by this provision have been complied with.
(C) The Issuer shall be released from its obligations with respect
to the Securities of any series, and any Coupons appertaining thereto,
Outstanding (except for: (i) the obligations set forth as exceptions above
in paragraph (A); (ii) the obligations to (w) compensate and indemnify the
Trustee, (x) to appoint a successor Trustee, (y) to repay certain moneys held
by the Paying Agent and (z) to return certain unclaimed moneys held by the
Trustee; and (iii) such obligations of the Issuer as are required by the
Trust Indenture Act) on and after the date the conditions set forth below are
satisfied (hereinafter, "covenant defeasance"). For this purpose, such
covenant defeasance means that, with respect to the Outstanding Securities of
any series, the Issuer is required only to comply with the above obligations
and shall have no liability in respect of any term, condition or limitation
set forth in any other Section, whether directly or indirectly by reason of
any reference to such Section by any other remaining provision or in any
other document and such compliance only to the above obligations shall not
constitute an Event of Default under Section 5.1. The following shall be the
conditions to application of this subsection C of this Section 10.1:
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(a) The Issuer has irrevocably deposited or caused to be
deposited with the Trustee as trust funds in trust for the purpose
of making the following payments, specifically pledged as security
for, and dedicated solely to, the benefit of the holders of the
Securities of such series and coupons appertaining thereto, (i)
cash in an amount, or (ii) in the case of any series of Securities
the payments on which may only be made in Dollars, U.S. Government
Obligations maturing as to principal and interest at such times and
in such amounts as will insure the availability of cash or (iii) a
combination thereof, sufficient, in the opinion of a nationally
recognized firm of independent public accountants expressed in a
written certification thereof delivered to the Trustee, to pay (X)
the principal and interest on all Securities of such series and
Coupons appertaining thereto and (Y) any mandatory sinking fund
payments on the day on which such payments are due and payable in
accordance with the terms of the Indenture and the Securities of
such series.
(b) Such covenant defeasance shall not cause the Trustee to
have a conflicting interest as defined in Section 6.8 and for
purposes of the Trust Indenture Act of 1939 with respect to any
securities of the Issuer.
(c) Such covenant defeasance shall not result in a breach or
violation of, or constitute a default under, this Indenture or any
other agreement or instrument to which the Issuer is a party or by
which it is bound.
(d) The Issuer shall have delivered to the Trustee an Opinion
of Counsel to the effect that the Holders of the Securities of such
series and Coupons appertaining thereto will not recognize income,
gain or loss for Federal income tax purposes as a result of such
covenant defeasance and will be subject to Federal income tax on
the same amounts, in the same manner and at the same times as would
have been the case if such covenant defeasance had not occurred.
(e) The Issuer shall have delivered to the Trustee an
Officers' Certificate and an Opinion of Counsel, each stating that
all conditions precedent provided for relating to the covenant
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defeasance contemplated by this provision have been complied with.
SECTION 10.2 Application by Trustee of Funds Deposited for Payment
-----------------------------------------------------
of Securities. Subject to Section 10.4, all moneys deposited with the
-------------
Trustee pursuant to Section 10.1 shall be held in trust and applied by it to
the payment, either directly or through any paying agent (including the
Issuer acting as its own paying agent), to the Holders of the particular
Securities of such series and of Coupons appertaining thereto for the payment
or redemption of which such moneys have been deposited with the Trustee, of
all sums due and to become due thereon for principal and interest; but such
money need not be segregated from other funds except to the extent required
by law.
SECTION 10.3 Repayment of Moneys Held by Paying Agent. In
----------------------------------------
connection with the satisfaction and discharge of this Indenture with respect
to Securities of any series, all moneys then held by any paying agent under
the provisions of this Indenture with respect to such series of Securities
shall, upon demand of the Issuer, 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.
SECTION 10.4 Return of Moneys Held by Trustee and Paying Agent
-------------------------------------------------
Unclaimed for Two Years. Any moneys or Government Securities deposited with
-----------------------
or paid to the Trustee or any paying agent for the payment of the principal
of or interest on any Security of any series or Coupons appertaining thereto
and not applied but remaining unclaimed for two years after the date upon
which such principal or interest shall have become due and payable, shall,
upon the written request of the Issuer and unless otherwise required by
mandatory provisions of applicable escheat or abandoned or unclaimed property
law, be repaid to the Issuer by the Trustee for such series or such paying
agent, and the Holder of the Security of such series shall, unless otherwise
required by mandatory provisions of applicable escheat or abandoned or
unclaimed property laws, thereafter look only to the Issuer for any payment
which such Holder may be entitled to collect, and all liability of the
Trustee or any paying agent with respect to such moneys shall thereupon
cease.
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ARTICLE ELEVEN
MISCELLANEOUS PROVISIONS
------------------------
SECTION 11.1 Incorporators, Stockholders, Officers and Directors
---------------------------------------------------
of Issuer Exempt from Individual Liability. No recourse under or upon any
------------------------------------------
obligation, covenant or agreement contained in this Indenture, or in any
Security or Coupons, or because of any indebtedness evidenced thereby, shall
be had against any incorporator, as such or against any past, present or
future stockholder, officer or director, as such, of the Issuer or of any
successor, either directly or through the Issuer or any successor, under any
rule of law, statute or constitutional provision or by the enforcement of any
assessment or by any legal or equitable proceeding or otherwise, all such
liability being expressly waived and released by the acceptance of the
Securities and the Coupons appertaining thereto by the holders thereof and as
part of the consideration for the issue of the Securities and the Coupons
appertaining thereto.
SECTION 11.2 Provisions of Indenture for the Sole Benefit of
-----------------------------------------------
Parties and Securityholders. Nothing in this Indenture or in the Securities
---------------------------
and the Coupons appertained thereto, expressed or implied, shall give or be
construed to give to any person, firm or corporation, other than the parties
hereto and their successors and the Holders of the Securities and the Coupons
appertaining thereto, any legal or equitable right, remedy or claim under
this Indenture or under any covenant or provision herein contained, all such
covenants and provisions being for the sole benefit of the parties hereto and
their successors and of the Holders of the Securities or Coupons, if any.
SECTION 11.3 Successors and Assigns of Issuer Bound by Indenture.
---------------------------------------------------
All the covenants, stipulations, promises and agreements in this Indenture
contained by or in behalf of the Issuer shall bind its successors and
assigns, whether so expressed or not.
SECTION 11.4 Notices and Demands on Issuer, Trustee and
------------------------------------------
Securityholders. 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 to or on the Issuer may be given or served (i) in
the case of the Trustee, by telecopier, confirmed by overnight courier, and
(ii) in the case of the Holders of Securities, by being deposited postage
prepaid, first-class mail (except as otherwise specifically provided herein)
addressed (until another address of the Issuer is filed by
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the Issuer with the Trustee) to RJR Nabisco, Inc. at 1301 Avenue of the
Americas, New York, New York, 10019, (telefax 212-969-9230), Attention:
General Counsel. Any notice, direction, request or demand by the Issuer or
any Securityholder to or upon the Trustee shall be deemed to have been
sufficiently given or made, for all purposes, if given or made (i) in the
case of the Issuer, by telecopier and confirmed by overnight courier and (ii)
in the case of any Securityholder, at the Corporate Trust Office which is on
the date hereof 120 Wall Street, New York, New York 10043, Attention:
Corporate Trust Administration (telefax 212-480-1614).
Where this Indenture provides for notice to Holders of Registered
Securities, such notice shall be sufficiently given (unless otherwise herein
expressly provided) if in writing and mailed, first class postage prepaid, to
each such Holder entitled thereto, at his last address as it appears in the
Security register. In any case where notice to such Holders is given by
mail, neither the failure to mail such notice, nor any defect in any notice
so mailed, to any particular Holder shall affect the sufficiency of such
notice with respect to other Holders. Where this Indenture provides for
notice in any manner, such notice may be waived in writing by the person
entitled to receive such notice, either before or after the event, and such
waiver shall be the equivalent of such notice. Waivers of notice by Holders
shall be filed with the Trustee, but such filing shall not be a condition
precedent to the validity of any action taken in reliance upon such waiver.
In case, by reason of the suspension of or irregularities in
regular mail service, it shall be impracticable to mail notice to the Issuer
and Securityholders when such notice is required to be given pursuant to any
provision of this Indenture, then any manner of giving such notice as shall
be satisfactory to the Trustee shall be deemed to be a sufficient giving of
such notice.
SECTION 11.5 Officers' Certificates and Opinions of Counsel;
-----------------------------------------------
Statements to Be Contained Therein. Upon any application or demand by the
----------------------------------
Issuer to the Trustee to take any action under any of the provisions of this
Indenture, the Issuer shall furnish to the Trustee an Officers' Certificate
stating that all conditions precedent 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, except that in the case of any such application or
demand as to which the furnishing of such
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documents is specifically required by any provision of this Indenture
relating to such particular application or demand, no additional certificate
or opinion need be furnished.
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 shall include (a) a statement that
the person making such certificate or opinion has read such covenant or
condition, (b) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions contained
in such certificate or opinion are based, (c) a statement that, in the
opinion of 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 (d) a statement as to
whether or not, in the opinion of such person, such condition or covenant has
been complied with.
Any certificate, statement or opinion of an officer of the Issuer
may be based, insofar as it relates to legal matters, upon a certificate or
opinion of or representations by counsel, unless such officer knows that the
certificate or opinion or representations with respect to the matters upon
which his certificate, statement or opinion may be based as aforesaid are
erroneous, or in the exercise of reasonable care should know that the same
are erroneous. Any certificate, statement or opinion of counsel may be
based, insofar as it relates to factual matters, information with respect to
which is in the possession of the Issuer, upon the certificate, statement or
opinion of or representations by an officer of officers of the Issuer, unless
such counsel knows that the certificate, statement or opinion or
representations with respect to the matters upon which his certificate,
statement or opinion may be based as aforesaid are erroneous, or in the
exercise of reasonable care should know that the same are erroneous.
Any certificate, statement or opinion of an officer of the Issuer
or of counsel may be based, insofar as it relates to accounting matters, upon
a certificate or opinion of or representations by an accountant or firm of
accountants in the employ of the Issuer, unless such officer or counsel, as
the case may be, knows that the certificate or opinion or representations
with respect to the accounting matters upon which his certificate, statement
or opinion may be based as aforesaid are erroneous, or in the exercise of
reasonable care should know that the same are erroneous.
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Any certificate or opinion of any independent firm of public
accountants filed with the Trustee shall contain a statement that such firm
is independent.
SECTION 11.6 Payments Due on Saturdays, Sundays and Holidays. If
-----------------------------------------------
the date of maturity of interest on or principal of the Securities of any
series or any Coupons appertaining thereto or the date fixed for redemption
or repayment of any such Security or Coupon shall not be a Business Day, then
payment of interest or principal need not be made on such date, but may be
made on the next succeeding Business Day (unless otherwise provided in the
terms of the Security) with the same force and effect as if made on the date
of maturity or the date fixed for redemption, and no interest shall accrue
for the period after such date.
SECTION 11.7 Conflict of Any Provision of Indenture with Trust
-------------------------------------------------
Indenture Act of 1939. If and to the extent that any provision of this
---------------------
Indenture limits, qualifies or conflicts with another provision included in
this Indenture by operation of Sections 310 to 317, inclusive, of the Trust
Indenture Act of 1939 (an "incorporated provision"), such incorporated
provision shall control.
SECTION 11.8 New York Law to Govern. This Indenture and each
----------------------
Security shall be deemed to be a contract under the laws of the State of New
York, and for all purposes shall be construed in accordance with the laws of
such State, regardless of the laws that might otherwise govern under
applicable New York principles of conflicts of law and except as may
otherwise be required by mandatory provisions of law.
SECTION 11.9 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.
SECTION 11.10 Effect of Headings. The Article and Section
------------------
headings herein and the Table of Contents are for convenience only and shall
not affect the construction hereof.
SECTION 11.11 Securities in a Foreign Currency or in ECU. Unless
------------------------------------------
otherwise specified in an Officers' Certificate delivered pursuant to Section
2.3 of this Indenture with respect to a particular series of Securities,
whenever for purposes of this Indenture any action may be taken by the
Holders of a specified percentage in aggregate principal amount of Securities
of all series or all series
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affected by a particular action at the time Outstanding and, at such time,
there are Outstanding Securities of any series which are denominated in a
coin or currency other than Dollars (including ECUs), then the principal
amount of Securities of such series which shall be deemed to be Outstanding
for the purpose of taking such action shall be that amount of Dollars that
could be obtained for such amount at the Market Exchange Rate. For purposes
of this Section 11.11, Market Exchange Rate shall mean the noon Dollar buying
rate in New York City for cable transfers of that currency as published by
the Federal Reserve Bank of New York; provided, however, in the case of ECUs,
-------- -------
Market Exchange Rate shall mean the rate of exchange determined by the
Commission of the European Communities (or any successor thereto) as
published in the Official Journal of the European Communities (such
publication or any successor publication, the "Journal"). If such Market
Exchange Rate is not available for any reason with respect to such currency,
the Trustee shall use, in its sole discretion and without liability on its
part, such quotation of the Federal Reserve Bank of New York or, in the case
of ECUs, the rate of exchange as published in the Journal, as of the most
recent available date, or quotations or, in the case of ECUs, rates of
exchange from one or more major banks in The City of New York or in the
country of issue of the currency in question, which for purposes of the ECU
shall be Brussels, Belgium, or such other quotations or, in the case of ECU,
rates of exchange as the Trustee shall deem appropriate. The provisions of
this paragraph shall apply in determining the equivalent principal amount in
respect of Securities of a series denominated in a currency other than
Dollars in connection with any action taken by Holders of Securities pursuant
to the terms of this Indenture.
All decisions and determinations of the Trustee regarding the Market
Exchange Rate or any alternative determination provided for in the preceding
paragraph shall be in its sole discretion and shall, in the absence of
manifest error, be conclusive to the extent permitted by law for all purposes
and irrevocably binding upon the Issuer and all Holders.
SECTION 11.12 Judgment Currency. The Issuer agrees, to the
-----------------
fullest extent that it may effectively do so under applicable law, that (a)
if for the purpose of obtaining judgment in any court it is necessary to
convert the sum due in respect of the principal of or interest on the
Securities of any series (the "Required Currency") into a currency in which a
judgment will be rendered (the "Judgment Currency"), the rate of exchange
used shall be the rate at which in accordance with normal banking procedures
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the Trustee could purchase in The City of New York the Required Currency with
the Judgment Currency on the day on which final unappealable judgment is
entered, unless such day is not a New York Banking Day, then, to the extent
permitted by applicable law, the rate of exchange used shall be the rate at
which in accordance with normal banking procedures the Trustee could purchase
in The City of New York the Required Currency with the Judgment Currency on
the New York Banking Day preceding the day on which final unappealable
judgment is entered and (b) its obligations under this Indenture to make
payments in the Required Currency (i) shall not be discharged or satisfied by
any tender, or any recovery pursuant to any judgment (whether or not entered
in accordance with subsection (a)), in any currency other than the Required
Currency, except to the extent that such tender or recovery shall result in
the actual receipt, by the payee, of the full amount of the Required Currency
expressed to be payable in respect of such payments, (ii) shall be
enforceable as an alternative or additional cause of action for the purpose
of recovering in the Required Currency the amount, if any, by which such
actual receipt shall fall short of the full amount of the Required Currency
so expressed to be payable and (iii) shall not be affected by judgment being
obtained for any other sum due under this Indenture. For purposes of the
foregoing, "New York Banking Day" means any day except a Saturday, Sunday or
a legal holiday in The City of New York or a day on which banking
institutions in The City of New York are authorized or required by law or
executive order to close.
SECTION 11.13 Severability of Provisions. Any prohibition,
--------------------------
invalidity or unenforceability of any provision of this Indenture in any
jurisdiction shall not invalidate or render unenforceable the remaining
provisions hereof in such jurisdiction and shall not invalidate or render
unenforceable such provision in any other jurisdiction.
SECTION 11.14 Company Released from Indenture Requirements Under
--------------------------------------------------
Certain Circumstances. Whenever in this Indenture the Issuer shall be
---------------------
required to do or not to do anything so long as any of the Securities of any
series shall be Outstanding, the Issuer shall, notwithstanding any such
provision, not be required to comply with such provisions if it shall be
entitled to have this Indenture satisfied and discharged pursuant to the
provisions hereof, even though in either case the Holders of any of the
Securities of that series shall have failed to present and surrender them for
payment pursuant to the terms of this Indenture.
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ARTICLE TWELVE
REDEMPTION OF SECURITIES AND SINKING FUNDS
------------------------------------------
SECTION 12.1 Applicability of Article. The provisions of this
------------------------
Article shall be applicable to the Securities of any series which are
redeemable before their maturity or to any sinking fund for the retirement of
Securities of a series except as otherwise specified as contemplated by
Section 2.3 for Securities of such series.
SECTION 12.2 Notice of Redemption; Partial Redemptions. Notice of
-----------------------------------------
redemption to the Holders of Registered Securities of any series to be
redeemed as a whole or in part at the option of the Issuer shall be given by
mailing notice of such redemption by first class mail, postage prepaid, at
least 30 days and not more than 60 days prior to the date fixed for
redemption to such Holders of Registered Securities of such series at their
last addresses as they shall appear upon the registry books. Notice of
redemption to the Holders of Unregistered Securities to be redeemed as a
whole or in part, who have filed their names and addresses with the Trustee
pursuant to Section 313(c)(2) of the Trust Indenture Act of 1939, shall be
given by mailing notice of such redemption, by first class mail, postage
prepaid, at least 30 days and not more than 60 prior to the date fixed for
redemption, to such Holders at such addresses as were so furnished to the
Trustee (and, in the case of any such notice given by the Issuer, the Trustee
shall make such information available to the Issuer for such purpose).
Notice of redemption to all other Holders of Unregistered Securities shall be
published in an Authorized Newspaper in the Borough of Manhattan, The City of
New York and in an Authorized Newspaper in London (and, if required by
Section 3.9, in an Authorized Newspaper in Luxembourg), in each case, once in
each of three successive calendar weeks, the first publication to be not less
than 30 nor more than 60 days prior to the date fixed for redemption. Any
notice which is mailed in the manner herein provided shall be conclusively
presumed to have been duly given, whether or not the Holder receives the
notice. Failure to give notice by mail, or any defect in the notice to the
Holder of any Security of a series designated for redemption as a whole or in
part shall not affect the validity of the proceedings for the redemption of
any other Security of such series.
The notice of redemption to each such Holder shall specify the
principal amount of each Security of such series held by such Holder to be
redeemed, the date fixed for redemption, the redemption price, the place or
places of payment, that payment will be made upon presentation and
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surrender of such Securities and, in the case of Securities with Coupons
attached thereto, of all Coupons appertaining thereto maturing after the date
fixed for redemption, that such redemption is pursuant to the mandatory or
optional sinking fund, or both, if such be the case, that interest accrued to
the date fixed for redemption will be paid as specified in such notice and
that on and after said date interest thereon or on the portions thereof to be
redeemed will cease to accrue. In case any Security of a series 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 of such series in principal amount equal to the unredeemed portion
thereof will be issued.
The notice of redemption of Securities of any series to be redeemed
at the option of the Issuer shall be given by the Issuer or, at the Issuer's
request, by the Trustee in the name and at the expense of the Issuer.
On or before the redemption date specified in the notice of
redemption given as provided in this Section, the Issuer will deposit with
the Trustee or with one or more paying agents (or, if the Issuer is acting as
its own paying agent, set aside, segregate and hold in trust as provided in
Section 3.4) an amount of money sufficient to redeem on the redemption date
all the Securities of such series so called for redemption at the appropriate
redemption price, together with accrued interest to the date fixed for
redemption. If less than all the outstanding Securities of a series are to
be redeemed, the Issuer will deliver to the Trustee at least 15 days prior to
the last date on which notice of redemption may be given to Holders pursuant
to the first paragraph of this Section 12.2 (or such shorter period as shall
be acceptable to the Trustee) an Officers' Certificate stating the aggregate
principal amount of Securities to be redeemed. In case of a redemption at
the election of the Issuer prior to the expiration of any restriction on such
redemption, the Issuer shall deliver to the Trustee, prior to the giving of
any notice of redemption to Holders pursuant to this Section, an Officer's
Certificate stating that such redemption is not prohibited by such
restriction.
If less than all the Securities of a series are to be redeemed, the
Trustee shall select, in such manner as it shall deem appropriate and fair,
Securities of such Series to be redeemed in whole or in part. Securities may
be redeemed in part in multiples equal to the minimum authorized denomination
for Securities of such series or any multiple thereof. The Trustee shall
promptly notify the
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Issuer in writing of the Securities of such series selected for redemption
and, in the case of any Securities of such series selected for partial
redemption, the principal amount thereof to be redeemed. For all purposes of
this Indenture, unless the context otherwise requires, all provisions
relating to the redemption of Securities of any series shall relate, in the
case of any Security redeemed or to be redeemed only in part, to the portion
of the principal amount of such Security which has been or is to be redeemed.
If all of the outstanding Securities of a series are to be
redeemed, the Issuer will deliver to the Trustee at least 10 days prior to
the last date on which notice of redemption may be given to Holders pursuant
to the first paragraph of this Section 12.2 an Officers' Certificate stating
that all such Securities are to be redeemed. In case of a redemption at the
election of the Issuer prior to the expiration of any restriction on such
redemption, the Issuer shall deliver to the Trustee, prior to the giving of
any notice of redemption to Holders pursuant to this Section, an Officer's
Certificate stating that such redemption is not prohibited by such
restriction.
SECTION 12.3 Payment of Securities Called for Redemption. If
-------------------------------------------
notice of redemption has been given as above provided, the Securities or
portions of Securities specified in such notice shall become due and payable
on the date and at the place stated in such notice at the applicable
redemption price, together with interest accrued to the date fixed for
redemption, and on and after said date (unless the Issuer 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, and the unmatured
Coupons, if any, appertaining thereto shall be void and, except as provided
in Sections 6.5 and 10.4, such Securities shall cease from and after the date
fixed for redemption to be entitled to any benefit or security under this
Indenture, and the Holders thereof shall have no right in respect of such
Securities except the right to receive the redemption price thereof and
unpaid interest to the date fixed for redemption. On presentation and
surrender of such Securities at a place of payment specified in said notice,
together with all Coupons, if any, appertaining thereto maturing after the
date fixed for redemption, said Securities or the specified portions thereof
shall be paid and redeemed by the Issuer at the applicable redemption price,
together with interest accrued thereon to the date fixed for redemption;
provided that payment of interest becoming due on or prior to the date fixed
--------
for redemption shall be payable in the case of Securities with Coupons
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attached thereto, to the Holders of the Coupons for such interest upon
surrender thereof, and in the case of Registered Securities, to the Holders
of such Registered Securities registered as such on the relevant record date
subject to the terms and provisions of Sections 2.3 and 2.7 hereof.
If any Security called for redemption shall not be so paid upon
surrender thereof for redemption, the principal shall, until paid or duly
provided for, bear interest from the date fixed for redemption at the rate of
interest or Yield to Maturity (in the case of an Original Issue Discount
Security) borne by such Security.
If any Security with Coupons attached thereto is surrendered for
redemption and is not accompanied by all appurtenant Coupons maturing after
the date fixed for redemption, the surrender of such missing Coupon or
Coupons may be waived by the Issuer and the Trustee, if there be furnished to
each of them such security or indemnity as they may require to save each of
them harmless.
Upon presentation of any Security redeemed in part only, the Issuer
shall execute and the Trustee shall authenticate and deliver to or on the
order of the Holder thereof, at the expense of the Issuer, a new Security or
Securities of such series (with Coupons attached, if any), of authorized
denominations, in principal amount equal to the unredeemed portion of the
Security so presented.
SECTION 12.4 Exclusion of Certain Securities from Eligibility for
----------------------------------------------------
Selection for Redemption. Securities shall be excluded from eligibility for
------------------------
selection for redemption if they are identified by registration and
certificate number in a written statement signed by an authorized officer of
the Issuer and delivered to the Trustee at least 40 days prior to the last
date on which notice of redemption may be given as being owned of record and
beneficially by, and not pledged or hypothecated by either (a) the Issuer or
(b) an entity specifically identified in such written statement directly or
indirectly controlling or controlled by or under direct or indirect common
control with the Issuer.
SECTION 12.5 Mandatory and Optional Sinking Funds. The minimum
------------------------------------
amount of any sinking fund payment provided for by the terms of Securities of
any series is herein referred to as a "mandatory sinking fund payment", and
any payment in excess of such minimum amount provided for by the terms of the
Securities of any series is herein referred to as an "optional sinking fund
payment". The date
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on which a sinking fund payment is to be made is herein referred to as the
"sinking fund payment date".
In lieu of making all or any part of any mandatory sinking fund
payment with respect to any series of Securities in cash, the Issuer may at
its option (a) deliver to the Trustee Securities of such series theretofore
purchased or otherwise acquired (except upon redemption pursuant to the
mandatory sinking fund) by the Issuer or receive credit for Securities of
such series (not previously so credited) theretofore purchased or otherwise
acquired (except as aforesaid) by the Issuer and delivered to the Trustee for
cancellation pursuant to Section 2.10, (b) receive credit for optional
sinking fund payments (not previously so credited) made pursuant to this
Section, or (c) receive credit for Securities of such series (not previously
so credited) redeemed by the Issuer through any optional redemption provision
contained in the terms of such series. Securities so delivered or credited
shall be received or credited by the Trustee at the sinking fund redemption
price specified in such Securities.
On or before the sixtieth day next preceding each sinking fund
payment date for any series, the Issuer will deliver to the Trustee an
Officer's Certificate (which need not contain the statements required by
Section 11.5) (a) specifying the portion of the mandatory sinking fund
payment to be satisfied by payment of cash and the portion to be satisfied by
credit of Securities of such series and the basis for such credit, (b)
stating that none of the Securities of such series has theretofore been so
credited, (c) stating that no defaults in the payment of interest or Events
of Default with respect to such series have occurred (which have not been
waived or cured) and are continuing and (d) stating whether or not the Issuer
intends to exercise its right to make an optional sinking fund payment with
respect to such series and, if so, specifying the amount of such optional
sinking fund payment which the Issuer intends to pay on or before the next
succeeding sinking fund payment date. Any Securities of such series to be
credited and required to be delivered to the Trustee in order for the Issuer
to be entitled to credit therefor as aforesaid which have not theretofore
been delivered to the Trustee shall be delivered for cancellation pursuant to
Section 2.10 to the Trustee with such Officer's Certificate (or reasonably
promptly thereafter if acceptable to the Trustee). Such Officer's
Certificate shall be irrevocable and upon its receipt by the Trustee the
Issuer shall become unconditionally obligated to make all the cash payments
or payments therein referred to, if any, on or before the next succeeding
sinking fund payment date. Failure of the
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Issuer, on or before any such sixtieth day, to deliver such Officer's
Certificate and Securities specified in this paragraph, if any, shall not
constitute a default but shall constitute, on and as of such date, the
irrevocable election of the Issuer (i) that the mandatory sinking fund
payment for such series due on the next succeeding sinking fund payment date
shall be paid entirely in cash without the option to deliver or credit
Securities of such series in respect thereof and (ii) that the Issuer will
make no optional sinking fund payment with respect to such series as provided
in this Section.
If the sinking fund payment or payments (mandatory or optional or
both) to be made in cash on the next succeeding sinking fund payment date
plus any unused balance of any preceding sinking fund payments made in cash
shall exceed $50,000 (or the equivalent thereof in any Foreign Currency or
ECU) or a lesser sum if the Issuer shall so request with respect to the
Securities of any particular series, such cash shall be applied on the next
succeeding sinking fund payment date to the redemption of Securities of such
series at the sinking fund redemption price together with accrued interest to
the date fixed for redemption. If such amount shall be $50,000 (or the
equivalent thereof in any Foreign Currency or ECU) or less and the Issuer
makes no such request then it shall be carried over until a sum in excess of
$50,000 (or the equivalent thereof in any Foreign Currency or ECU) is
available. The Trustee shall select, in the manner provided in Section 12.2,
for redemption on such sinking fund payment date a sufficient principal
amount of Securities of such series to absorb said cash, as nearly as may be,
and shall (if requested in writing by the Issuer) inform the Issuer of the
serial numbers of the Securities of such series (or portions thereof) so
selected. Securities shall be excluded from eligibility for redemption under
this Section if they are identified by registration and certificate number in
an Officer's Certificate delivered to the Trustee at least 60 days prior to
the sinking fund payment date as being owned of record and beneficially by,
and not pledged or hypothecated by either (a) the Issuer or (b) an entity
specifically identified in such Officer's Certificate as directly or
indirectly controlling or controlled by or under direct or indirect common
control with the Issuer. The Trustee, in the name and at the expense of the
Issuer (or the Issuer, if it shall so request the Trustee in writing) shall
cause notice of redemption of the Securities of such series to be given in
substantially the manner provided in Section 12.2 (and with the effect
provided in Section 12.3) for the redemption of Securities of such series in
part at the option of the Issuer. The amount of any sinking fund payments
not so applied or
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allocated to the redemption of Securities of such series shall be added to
the next cash sinking fund payment for such series and, together with such
payment, shall be applied in accordance with the provisions of this Section.
Any and all sinking fund moneys held on the stated maturity date of the
Securities of any particular series (or earlier, if such maturity is
accelerated), which are not held for the payment or redemption of particular
Securities of such series shall be applied, together with other moneys, if
necessary, sufficient for the purpose, to the payment of the principal of,
and interest on, the Securities of such series at maturity.
On or before each sinking fund payment date, the Issuer shall pay
to the Trustee in cash or shall otherwise provide for the payment of all
interest accrued to the date fixed for redemption on Securities to be
redeemed on the next following sinking fund payment date.
The Trustee shall not redeem or cause to be redeemed any Securities
of a series with sinking fund moneys or mail any notice of redemption of
Securities for such series by operation of the sinking fund during the
continuance of a default in payment of interest on such Securities or of any
Event of Default except that, where the mailing of notice of redemption of
any Securities shall theretofore have been made, the Trustee shall redeem or
cause to be redeemed such Securities, provided that it shall have received
from the Issuer a sum sufficient for such redemption. Except as aforesaid,
any moneys in the sinking fund for such series at the time when any such
default or Event of Default shall occur, and any moneys thereafter paid into
the sinking fund, shall, during the continuance of such default or Event of
Default, be deemed to have been collected under Article Five and held for the
payment of all such Securities. In case such Event of Default shall have
been waived as provided in Section 5.10 or the default cured on or before the
sixtieth day preceding the sinking fund payment date in any year, such moneys
shall thereafter be applied on the next succeeding sinking fund payment date
in accordance with this Section to the redemption of such Securities.
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ARTICLE THIRTEEN
SUBORDINATION OF SECURITIES
SECTION 13.1 Subordination. The Company, for itself, its
-------------
successors and assigns, covenants and agrees, and each holder of a Security,
by its acceptance thereof, likewise covenants and agrees, that the payment of
the principal of, premium, if any, and interest on, each and all of the
Securities is hereby expressly subordinated, to the extent and in the manner
hereinafter in this Article Thirteen set forth, in right of payment to the
prior payment in full of all Senior Obligations.
SECTION 13.2 Rights of Holders of Senior Obligations. (a) In
---------------------------------------
the event of any insolvency or bankruptcy proceedings, and any receivership,
liquidation, reorganization or other similar proceedings in connection
therewith, relative to the Company or to its creditors, as such, or to its
property, and in the event of any proceedings for voluntary liquidation,
dissolution or other winding up of the Company, whether or not involving
insolvency or bankruptcy, and in the event of any execution sale, then the
holders of Senior Obligations shall be entitled to receive payment in full of
principal thereof and interest due thereon (including without limitation,
except to the extent, if any, prohibited by mandatory provisions of law,
post-petition interest in any such proceedings) in money of all Senior
Obligations before the holders of Securities are entitled to receive any
payment on account of the principal of or interest on the indebtedness
evidenced by the Securities, and to that end the holders of Senior
Obligations shall be entitled to receive for application in payment thereof
any payment or distribution of any kind or character, whether in cash or
property or securities, which may be payable or deliverable in connection
with any such proceedings or sale in respect of the principal of or interest
on the Securities other than securities 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
subordinate, at least to the extent provided in this Article Thirteen with
respect to the Securities, to the payment of all indebtedness of the nature
of Senior Obligations, provided that the rights of the holders of the Senior
Obligations are not altered by such reorganization or readjustment;
(b) In the event and during the continuation of any default in
payment of any Senior Obligations or if any event of default, as therein
defined, shall exist under any
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Senior Obligations or any agreement pursuant to which any Senior Obligations
is issued, no payment of the principal of, premium if any, or interest on the
Securities shall be made and the Company covenants that it will, upon
ascertaining any such default or event of default, provide written notice to
the Trustee of such default or event of default;
(c) In the event that the Securities of any series are declared
due and payable before their expressed maturity because of the occurrence of
an Event of Default (under circumstances when the provisions of subsection
(a) of this Section 13.2 shall not be applicable), the holders of all Senior
Obligations shall be entitled to receive payment in full in money of such
Senior Obligations before such holders of Securities are entitled to receive
any payment on account of the principal of or interest on the Securities; and
(d) No holder of Senior Obligations shall be prejudiced in his
right to enforce subordination of the Securities by any act or failure to act
on the part of the Company.
SECTION 13.3 Payments and Distributions. In the event that,
--------------------------
notwithstanding the provisions of Section 13.2, any payment or distribution
of assets of the Company of any kind or character, whether in cash, property
or securities (other than securities 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
subordinate, at least to the extent provided in this Article 11 with respect
to the Securities, to the payment of all indebtedness of the nature of Senior
Obligations, provided that the rights of the holders of the Senior
Obligations are not altered by such reorganization or readjustment) shall be
received by the holders or by the Trustee for their benefit in connection
with any proceedings or sale referred to in subsection (a) of Section 13.2
before all Senior Obligations is paid in full in money, such payment or
distribution shall be paid over to the holders of such Senior Obligations or
their representative or representatives or to the trustee or trustees under
any indenture under which any instruments evidencing any of such Senior
Obligations may have been issued, ratably according to the aggregate amounts
remaining unpaid on account of the Senior Obligations held or represented by
each, for application to the payment of all Senior Obligations remaining
unpaid until all such Senior Obligations shall have been paid in full in
money, after
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giving effect to any concurrent payment or distribution to the holders of
such Senior Obligations.
From and after the payment in full in money of all Senior
Obligations, the holders of Securities (together with the holders of any
other indebtedness of the Company which is subordinate in right of payment to
the payment in full of all Senior Obligations, which is not subordinate in
right of payment to the Securities and which by its terms grants such right
of subrogation to the holder thereof) shall be subrogated to the rights of
the holders of Senior Obligations to receive payments or distributions of
assets or securities of the Company applicable to the Senior Obligations
until the Securities shall be paid in full, and, for the purposes of such
subrogation, no such payments or distributions to the holders of Senior
Obligations of assets or securities, which otherwise would have been payable
or distributable to holders of Securities, shall, as between the Company, its
creditors other than the holders of Senior Obligations, and the holders, be
deemed to be a payment by the Company to or on account of the Senior
Obligations, it being understood that the provisions of this Article 11 are
and are intended solely for the purpose of defining the relative rights of
the holders, on the one hand, and the holders of the Senior Obligations, on
the other hand, and nothing contained in this Article 11 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 Obligations, and the
holders, the obligation of the Company, which is unconditional and absolute,
to pay to the holders the principal of and interest on the Securities as and
when the same shall become due and payable in accordance with their terms, or
to affect the relative rights of the holders and creditors of the Company
other than the holders of the Senior Obligations, nor shall anything herein
or therein prevent the Trustee or the holder of any Security from exercising
all remedies otherwise permitted by applicable law upon default under this
Indenture subject to the rights of the holders of Senior Obligations, under
Section 11.2, to receive cash, property or securities of the Company
otherwise payable or deliverable to the holders of the Securities.
Upon any distribution or payment in connection with any proceedings
or sale referred to in subsection (a) of Section 13.2, the Trustee, subject
as between the Trustee and the holders to the provisions of Sections 7.1 and
7.2 hereof, shall be entitled to rely upon a certificate of the liquidating
trustee or agent or other person making any distribution or payment to the
Trustee for the purpose of ascertaining the holders of Senior Obligations
entitled to
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participate in such payment or distribution, the amount of such Senior
Obligations or the amount payable thereon, the amount or amounts paid or
distributed thereon and all other facts pertinent thereto or to this Article
11. In the event that the Trustee determines, in good faith, that further
evidence is required with respect to the right of any person as a holder of
Senior Obligations to participate in any payment or distribution pursuant to
this Section 11.3, the Trustee may request such person to furnish evidence to
the reasonable satisfaction of the Trustee as to the amount of Senior
Obligations held by such person, as to the extent to which such person is
entitled to participate in such payment or distribution, and as to other
facts pertinent to the rights of such person under this Section 11.3, 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.
The Trustee, however, shall not be deemed to owe any fiduciary duty
to the holders of Senior Obligations, and shall not be liable to any such
holders if it shall in good faith pay over or distribute to holders of
Securities or the Company or any other person moneys or assets to which any
holders of Senior Obligations shall be entitled by virtue of Article 11 of
this Indenture or otherwise.
SECTION 13.4 Payments by the Company. Nothing contained in this
-----------------------
Article 11 or elsewhere in this Indenture, or in any of the Securities, shall
prevent at any time, (a) the Company from making payments at any time of
principal of or interest on the Securities, except under the conditions
described in Section 11.2 or during the pendency of any proceedings or sale
therein referred to, provided, however, that payments of principal of or
-------- -------
interest on the Securities shall only be made by the Company within three
business days of the due dates for such payments or (b) the application by
the Trustee of any moneys deposited with it hereunder to the payment of or on
account of the principal of or interest on the Securities, if at the time of
such deposit the Trustee did not have written notice in accordance with
Section 13.6 of any event prohibiting the making of such deposit by the
Company or if in the event of redemption, the Trustee did not have such
written notice prior to the time that the notice of redemption pursuant to
Section 12.2 was given (which notice of redemption shall in no event be given
more than 60 days prior to the date fixed for redemption).
SECTION 13.5 Appointment of the Trustee by Securityholders. Each
---------------------------------------------
Securityholder by his acceptance of a Security authorizes and directs the
Trustee on his behalf to take such action as may be necessary or appropriate
to
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acknowledge or effectuate the subordination as provided in this Article 11
and appoints the Trustee as attorney-in-fact for any and all such purposes,
including, in the event of any dissolution, winding up, liquidation or
reorganization of the Company (whether in bankruptcy, insolvency or
receivership proceedings or upon an assignment for the benefit of creditors
or otherwise) tending towards liquidation of the business and assets of the
Company, the immediate filing of a claim for the unpaid balance of such
Securityholder's Securities in the form required in said proceedings and
cause said claim to be approved.
SECTION 13.6 Notice to Trustee. Notwithstanding the provisions
-----------------
of this Article Thirteen or any other provisions of this Indenture, the
Trustee shall not be charged with the knowledge of the existence of any facts
which would prohibit the making of any payment of moneys to the Trustee,
unless and until the Trustee shall have received written notice thereof from
the Company or from the holder or the representative of any class of Senior
Obligations; provided, however, that if at least two business days prior to
-------- -------
the date upon which by the terms hereof any such monies may become payable
for any purpose (including, without limitation, the payment of either the
cash amount payable at maturity or interest on any Security) the Trustee
shall not have received with respect to such monies the notice provided for
in this Section 13.6, then, anything herein contained to the contrary
notwithstanding, the Trustee shall have full power and authority to receive
such monies and to apply the same to the purpose for which they were
received, and shall not be affected by any notice to the contrary, which may
be received by it on or after such two business days prior to such date.
SECTION 13.7 Rights of Trustee. The Trustee shall be entitled to
-----------------
all the rights set forth in this Article 11 with respect to any Senior
Obligations which may at any time be held by it, to the same extent as any
other holder of Senior Obligations.
SECTION 13.8 Paying Agent. In case at any time any paying agent
------------
other than the Trustee shall be appointed by the Company and be then acting
hereunder, the term "Trustee" as used in this Article 11 shall in such case
(unless the context shall otherwise require) be construed as extending to and
including such paying agent within its meaning as fully for all intents and
purposes as if such paying agent were named in this Article Thirteen in place
of the Trustee.
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IN WITNESS WHEREOF, the parties hereto have caused this Indenture
to be duly executed, and their respective corporate seals to be hereunto
affixed and attested, all as of the date first written above.
RJR NABISCO HOLDINGS CORP., ISSUER
By:
---------------------------------
Name:
Title:
Attest:
By:
-----------------------
Name:
Title:
THE BANK OF NEW YORK
By:
-------------------------
Name:
Title:
[CORPORATE SEAL]
Attest:
By:
-----------------------
Name:
Title:
92
<PAGE>
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On this ____ day of ______ before me personally
came __________________ to me personally known, who, being by me duly
sworn, did depose and say that he resides at New York, NY
that he is a __________________ of RJR NABISCO HOLDINGS CORP., one of
the corporations described in and which executed the above
instrument; and that he signed his name thereto by authority
of the Board of Directors of said corporation.
[NOTARIAL SEAL]
--------------------------
Notary Public
93
<PAGE>
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK )
On this ____ day of ____, 1995 before me personally
came __________ to me personally known, who, being by me
duly sworn, did depose and say that she resides at ____________
that she is a ____________________ of The Bank of New York, one of
the corporations described in and which executed the above
instrument; that she knows the corporate seal of said
corporation; that the seal affixed to said instrument is
such corporate seal; that it was so affixed by authority of
the Board of Directors of said corporation, and that she
signed her name thereto by like authority.
[NOTARIAL SEAL]
-------------------------
Notary Public
94
Exhibit 4.2
------------------------------------------------------------
RJR NABISCO HOLDINGS CORP.
AND
THE BANK OF NEW YORK
as Trustee
-------------------
FIRST SUPPLEMENTAL INDENTURE
Dated as of ________, 1995
TO
INDENTURE
Dated as of ________, 1995
-------------------
____% Junior Subordinated Debentures
Due 2044
------------------------------------------------------------
<PAGE>
FIRST SUPPLEMENTAL INDENTURE, dated as of the ____ day of ______,
1995 (the "First Supplemental Indenture"), between RJR NABISCO HOLDINGS
CORP., a corporation duly organized and existing under the laws of the State
of Delaware (hereinafter sometimes referred to as the "Company"), and The
Bank of New York, a national banking association, as trustee (hereinafter
sometimes referred to as the "Trustee") under the Indenture dated as of
________, 1995 between the Company and the Trustee (the "Indenture"; all
terms used and not defined herein are used as defined in the Indenture),
WHEREAS, the Company executed and delivered the Indenture to the
Trustee to provide for the future issuance of its notes, debentures and other
evidences of indebtedness (the "Securities"), said Securities to be issued
from time to time in series as might be determined by the Company under the
Indenture, in an unlimited aggregate principal amount which may be
authenticated and delivered thereunder as in the Indenture provided; and
WHEREAS, pursuant to the terms of the Indenture, the Company
desires to provide for the establishment of a series of its junior
subordinated debentures ("Debentures") to be known as its ____% Junior
Subordinated Debentures Due 2044 (said series being hereinafter referred to
as the "Junior Subordinated Debentures"), the form and substance of such
Junior Subordinated Debentures and the terms, provisions and conditions
thereof to be as provided in the Indenture and this First Supplemental
Indenture; and
WHEREAS, the Company has caused to be formed RJR Nabisco Holdings
Capital Trust I (the "Trust") as a statutory business trust under the
Business Trust Act of the State of Delaware (12 Del. Code Sec. 3801 et seq.)
--- ---- -- ---
pursuant to a declaration of trust dated June 20, 1995 (the "Original
Declaration") and the filing of a certificate of trust with the Secretary of
State of the State of Delaware on June 20, 1995; and
WHEREAS, the Original Declaration is to be amended and restated in
its entirety pursuant to an Amended and Restated Declaration of Trust dated
as of ______, 1995 (such Amended and Restated Declaration of Trust, as
amended from time to time, the "Declaration of Trust") with The Bank of New
York, as Institutional Trustee; and
WHEREAS, the Trust has offered (the "Offer") to issue its ____%
Trust Originated Preferred Securities (the "Preferred Securities") to holders
of Series B Depositary Shares ("Depositary Shares") each representing 1/1000
of a
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<PAGE>
share of the Series B Cumulative Preferred Stock ("Series B Preferred") of
the Company in exchange for such Depositary Shares; and
WHEREAS, in connection with such Offer and the purchase by the
Company of the Common Securities (as defined in the Declaration of Trust) of
the Trust, the Company will deposit, and the Trust will purchase,
respectively, as trust assets Junior Subordinated Debentures; and
WHEREAS, pursuant to the Declaration of Trust, the legal title to
the Junior Subordinated Debentures shall be owned and held of record in the
name of the Trust in trust for the benefit of holders of the Preferred
Securities and the Common Securities; and
WHEREAS, upon the occurrence of a Special Event (as defined in the
Declaration of Trust) the Regular Trustees (as defined in the Declaration of
Trust) of the Trust shall, unless the Junior Subordinated Debentures are
redeemed as described herein, dissolve the Trust and cause to be distributed
to the holders of the Preferred Securities and Common Securities, on a Pro
Rata basis (determined as provided in the terms of the Preferred Securities
and Common Securities attached as Exhibits B and C to the Declaration of
Trust), Junior Subordinated Debentures and in connection with a Liquidation
Distribution (as defined in the Declaration of Trust) the Regular Trustees
may cause to be distributed to holders of Preferred Securities and Common
Securities, on such a Pro Rata basis, Junior Subordinated Debentures (each a
"Dissolution Event"); and
WHEREAS, the Company desires and has requested the Trustee to join
with it in the execution and delivery of this First Supplemental Indenture,
and all requirements necessary to make this First Supplemental Indenture a
valid instrument, in accordance with its terms, and to make the Junior
Subordinated Debentures, when executed by the Company and authenticated and
delivered by the Trustee, the valid obligations of the Company, have been
performed and fulfilled, and the execution and delivery hereof have been in
all respects duly authorized;
NOW THEREFORE, in consideration of the purchase and acceptance of
the Junior Subordinated Debentures by the holders thereof, and for the
purpose of setting forth, as provided in the Indenture, the form and
substance of the Junior Subordinated Debentures and the terms, provisions and
conditions thereof, the Company covenants and agrees with the Trustee as
follows:
3
<PAGE>
ARTICLE ONE
General Terms and Conditions of
the Junior Subordinated Debentures
SECTION 1.01. There shall be and is hereby authorized a series of
Debentures designated the "___% Junior Subordinated Debentures Due 2044",
limited in aggregate principal amount to the sum of (i) $__________ plus (ii)
a dollar amount equal to the principal amount of Junior Subordinated
Debentures purchased by the Trust with the proceeds received by the Trust
from the purchase by the Company of the Common Securities of the Trust, which
amount shall be as set forth in any written order of the Company for the
authentication and delivery of Junior Subordinated Debentures. The Junior
Subordinated Debentures shall mature and the principal shall be due and
payable together with all accrued and unpaid interest thereon, including
Compounded Interest (as hereinafter defined) on December 31, 2044, and shall
be issued in the form of registered Junior Subordinated Debentures without
coupons.
SECTION 1.02. The Junior Subordinated Debentures shall be issued
in certificated form. Principal and interest on the Junior Subordinated
Debentures issued in certificated form will be payable, the transfer of such
Junior Subordinated Debentures will be registrable and such Junior
Subordinated Debentures will be exchangeable for Junior Subordinated
Debentures bearing identical terms and provisions at the office or agency of
the Company in the Borough of Manhattan, The City and State of New York;
provided, however, that payment of interest may be made at the option of the
Company by check mailed to the registered holder at such address as shall
appear in the Debenture register and that the payment of principal with
respect to the Junior Subordinated Debentures will only be made upon
surrender of the Junior Subordinated Debentures to the Trustee.
SECTION 1.03. Each Junior Subordinated Debenture will bear
interest at the rate of ___% per annum from ______, 1995 until the principal
thereof becomes due and payable, and on any overdue principal and (to the
extent that payment of such interest is enforceable under applicable law) on
any overdue installment of interest at the same rate per annum, compounded
quarterly, payable (subject to the provisions of Article Three) quarterly in
arrears on March 31, June 30, September 30 and December 31 of each year
(each, an "Interest Payment Date", commencing on September 30, 1995), to the
person in whose name such Junior Subordinated Debenture or any predecessor
Junior
4
<PAGE>
Subordinated Debenture is registered, at the close of business on the regular
record date for such interest installment, which, except as set forth below,
shall be the close of business on the business day next preceding that
Interest Payment Date. In addition, each Junior Subordinated Debenture will
bear interest at the rate of 9 1/4% per annum from June 1, 1995 through
______, 1995 ("Pre-issuance Interest"), payable on September 30, 1995, to the
person in whose name such Junior Subordinated Debenture is registered at the
close of business on the regular record date for such Interest Payment Date.
With the exception of the interest payment described in the immediately
preceding sentence, any such interest installment not punctually paid or duly
provided for shall forthwith cease to be payable to the registered holders on
such regular record date, and may be paid to the person in whose name the
Junior Subordinated Debenture (or one or more Predecessor Debentures) 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 registered holders of the Junior Subordinated Debentures 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 Junior Subordinated Debentures may be
listed, and upon such notice as may be required by such exchange, all as more
fully provided in the Indenture.
The amount of interest payable for any period will be computed on
the basis of a 360-day year of twelve 30-day months and for any period
shorter than a full quarterly interest period for which interest is computed,
the amount of interest payable will be computed on the basis of the actual
number of days elapsed in such a 30-day month. In the event that any date on
which interest is payable on the Junior Subordinated Debentures is not a
business day, then payment of interest payable on such date will be made on
the next succeeding day which is a business day (and without any interest or
other payment in respect of any such delay), except that, if such business
day is in the next succeeding calendar year, such payment shall be made on
the immediately preceding business day (and the regular record date for such
interest installment shall be the business day next preceding such Interest
Payment Date), in each case with the same force and effect as if made on such
date.
5
<PAGE>
ARTICLE TWO
Optional Redemption
of the Junior Subordinated Debentures
SECTION 2.01. Except as provided in Section 2.02, Junior
Subordinated Debentures may not be redeemed by the Company prior to August
19, 1998. Subject to the terms of Article Three of the Indenture, the
Company shall have the right to redeem the Junior Subordinated Debentures, in
whole or in part, from time to time, on or after August 19, 1998, at a
redemption price equal to 100% of the principal amount to be redeemed plus
any accrued and unpaid interest thereon, including Compounded Interest, if
any, to the date of such redemption (the "Optional Redemption Price"). Any
redemption pursuant to this paragraph will be made upon not less than 30 nor
more than 60 days' notice, at the Optional Redemption Price.
SECTION 2.02. If, at any time, a Tax Event (as defined below)
shall occur or be continuing and (i) the Regular Trustees and the Company
shall have received an opinion (a "Redemption Tax Opinion") of a nationally
recognized independent tax counsel experienced in such matters that, as a
result of a Tax Event, there is more than an insubstantial risk that the
Company would be precluded from deducting the interest on the Junior
Subordinated Debentures for United States federal income tax purposes even if
the Junior Subordinated Debentures were distributed to the holders of
Preferred Securities and Common Securities in liquidation of such holder's
interest in the Trust as set forth in the Declaration of Trust or (ii) the
Regular Trustees shall have been informed by such tax counsel that a No
Recognition Opinion (as defined below) cannot be delivered to the Trust, the
Company shall have the right at any time, upon not less than 30 nor more than
60 days' notice, to redeem the Junior Subordinated Debentures in whole or in
part for cash at the Optional Redemption Price within 90 days following the
occurrence of such Tax Event; provided, however, that, if at the time there
is available to the Company or the Regular Trustees on behalf of the Trust
the opportunity to eliminate, within such 90 day period, the Tax Event by
taking some ministerial action ("Ministerial Action"), such as filing a form
or making an election, or pursuing some other similar reasonable measure,
which has no adverse effect on the Trust, the Company or the holders of the
Preferred Securities, the Company or the Regular Trustees on behalf of the
Trust will pursue such measure in lieu of redemption and provided further
that the Company shall have no right to redeem the Junior
6
<PAGE>
Subordinated Debentures while the Regular Trustees on behalf of the Trust are
pursuing any such Ministerial Action.
"Tax Event" means that the Company and the Regular Trustees shall
have obtained an opinion of nationally recognized independent tax counsel
experienced in such matters (a "Dissolution Tax Opinion") to the effect that
on or after ______, 1995, 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, (b) any amendment to, or change in, an
interpretation or application of any such laws or regulations by any
legislative body, court, governmental agency or regulatory authority
(including the enactment of any legislation and the publication of any
judicial decision or regulatory determination), (c) any interpretation or
pronouncement that provides for a position with respect to such laws or
regulations that differs from the theretofore generally accepted position or
(d) any action taken by any governmental agency or regulatory authority,
which amendment or change is enacted, promulgated, issued or announced or
which interpretation or pronouncement is issued or announced or which action
is taken, in each case on or after ______, 1995, there is more than an
insubstantial risk that (i) the Trust is, or will be within 90 days of the
date thereof, subject to United States federal income tax with respect to
income accrued or received on the Junior Subordinated Debentures, (ii) the
Trust is, or will be within 90 days of the date thereof, subject to more than
a de minimis amount of taxes, duties or other governmental charges or (iii)
interest payable by the Company to the Trust on the Junior Subordinated
Debentures is not, or within 90 days of the date thereof will not be,
deductible by the Company for United States federal income tax purposes.
"No Recognition Opinion" means an opinion of a nationally
recognized independent tax counsel experienced in such matters, which opinion
may rely on any then applicable published revenue ruling of the Internal
Revenue Service, to the effect that the holders of the Preferred Securities
will not recognize any gain or loss for United States federal income tax
purposes as a result of a dissolution of the Trust and distribution of the
Junior Subordinated Debentures as provided in the Declaration of Trust.
SECTION 2.03. If the Junior Subordinated Debentures are only
partially redeemed pursuant to this Article Two, the Junior Subordinated
Debentures will be redeemed pro rata or by lot or by any other method
utilized by the Trustee. Notwithstanding the foregoing, if a partial
7
<PAGE>
redemption of the Junior Subordinated Debentures would result in the
delisting of the Preferred Securities by any national securities exchange or
other organization on which the Preferred Securities are then listed, the
Company shall not be permitted to effect such partial redemption and will
only redeem the Junior Subordinated Debentures in whole.
ARTICLE THREE
Extension of Interest Payment Period
SECTION 3.01. So long as the Company is not in default in the
payment of interest on the Junior Subordinated Debentures, the Company shall
have the right, at any time during the term of the Junior Subordinated
Debentures, from time to time to extend the interest payment period of such
Junior Subordinated Debentures (other than with respect to Pre-issuance
Interest) for up to 20 consecutive quarterly interest periods (the "Extended
Interest Payment Period"), at the end of which period the Company shall pay
all interest accrued and unpaid thereon (together with interest thereon at
the rate of ___% per annum to the extent permitted by applicable law,
compounded quarterly ("Compounded Interest")). During such Extended Interest
Payment Period the Company shall not declare or pay any dividend on, or
redeem, purchase, acquire or make a distribution or liquidation payment with
respect to, any of its common stock or preferred stock, or make any guarantee
payments with respect thereto; provided that the Company may pay accrued
dividends (and cash in lieu of fractional shares) upon mandatory conversion
of any of its preferred stock, including its Series C Conversion Preferred
Stock and ESOP Convertible Preferred Stock, in accordance with the terms of
such stock. Prior to the termination of any such Extended Interest Payment
Period, the Company may pay all or any portion of the interest accrued on the
Junior Subordinated Debentures on any Interest Payment Date to holders of
record on the regular record date for such Interest Payment Date or from time
to time further extend such Period, provided that such Period together with
all such further extensions thereof shall not exceed 20 consecutive quarterly
interest periods. Upon the termination of any Extended Interest Payment
Period and upon the payment of all accrued and unpaid interest then due,
together with Compounded Interest, the Company may select 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. At the end of the Extended Interest Payment Period the
Company shall pay all interest accrued
8
<PAGE>
and unpaid on the Junior Subordinated Debentures including any Compounded
Interest which shall be payable to the holders of the Junior Subordinated
Debentures in whose names the Junior Subordinated Debentures are registered
in the Debenture register on the record date for the first interest payment
date occurring on or after the end of the Extended Interest Payment Period.
SECTION 3.02. (a) So long as the Trust is the legal owner and
holder of record of the Junior Subordinated Debentures, at the time the
Company selects an Extended Interest Payment Period, the Company shall give
both the Institutional Trustee and the Trustee written notice of its
selection of such Extended Interest Payment Period one business day prior to
the earlier of (i) the next succeeding date on which distributions on the
Preferred Securities are payable or (ii) the date the Trust is required to
give notice of the record date or the date such distributions are payable to
the New York Stock Exchange or other applicable self-regulatory organization
or to holders of the Preferred Securities, but in any event not less than one
business day prior to such record date. The Company shall cause the Trust to
give notice of the Company's selection of such Extended Interest Payment
Period to the holders of the Preferred Securities.
(b) If as a result of a Dissolution Event, Junior Subordinated
Debentures have been distributed to holders of Preferred Securities and
Common Securities, at the time the Company selects an Extended Interest
Payment Period, the Company shall give the holders of the Junior Subordinated
Debentures and the Trustee written notice of its selection of such Extended
Interest Payment Period 10 business days prior to 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 the New
York Stock Exchange or other applicable self-regulatory organization or to
holders of the Junior Subordinated Debentures.
SECTION 3.03. The quarter in which any notice is given pursuant to
Section 3.02 shall be counted as one of the 20 quarters permitted in the
maximum Extended Interest Payment Period permitted under this Article Three.
ARTICLE FOUR
Covenants Applicable to Junior Subordinated Debentures
9
<PAGE>
SECTION 4.01. So long as any Preferred Securities remain
outstanding, the Company will not declare or pay any dividend on, or redeem,
purchase, acquire or make a distribution or liquidation payment with respect
to, any of its common stock or preferred stock, or make any guarantee
payments with respect thereto, if at such time (i) the Company shall be in
default with respect to its Guarantee Payments (as defined in the Guarantee
Agreement) or other payment obligations under the Guarantee Agreement, (ii)
there shall have occurred any Event of Default under the Indenture with
respect to the Junior Subordinated Debentures or (iii) the Company shall have
given notice of its selection of an Extended Interest Payment Period and such
Period, or any extension thereof, is continuing; provided that the Company
will be permitted to pay accrued dividends (and cash in lieu of fractional
shares) upon the conversion of any of its preferred stock, including its
Series C Conversion Preferred Stock and ESOP Convertible Preferred Stock, in
accordance with the terms of such stock.
SECTION 4.02. In connection with the distribution of the Junior
Subordinated Debentures to the holders of the Preferred Securities upon a
Dissolution Event, the Company will use its best efforts to list such Junior
Subordinated Debentures on the New York Stock Exchange or on such other
exchange as the Preferred Securities are then listed and traded.
SECTION 4.03. The Company covenants and agrees for the benefit of
the holders of the Preferred Securities to comply fully with all of its
obligations and agreements under the Declaration of Trust, including, without
limitation, its obligations under Article IV thereof.
SECTION 4.04. Prior to the distribution of Junior Subordinated
Debentures to the holders of Preferred Securities upon a Dissolution Event,
the Company covenants and agrees for the benefit of the holders of the
Preferred Securities (i) not to cause or permit the Common Securities to be
transferred except as permitted by the Declaration of Trust and (ii) not to
take any action which would cause the Trust to cease to be treated as a
grantor trust for United States federal income tax purposes, except in
connection with a distribution of the Junior Subordinated Debentures as
provided in the Declaration of Trust.
ARTICLE FIVE
Form of Junior Subordinated Debentures
10
<PAGE>
SECTION 5.01. The Junior Subordinated Debentures and the Trustee's
Certificate of Authentication to be endorsed thereon are to be substantially
in the following forms:
(FORM OF FACE OF DEBENTURE)
No. $
CUSIP NO. _________
RJR NABISCO HOLDINGS CORP.
___% JUNIOR SUBORDINATED DEBENTURE,
SERIES A, DUE 2044
RJR Nabisco Holdings Corp., a corporation duly organized and
existing under the laws of the State of Delaware (herein referred to as the
"Company", which term includes any successor corporation under the Indenture
hereinafter referred to), for value received, hereby promises to payto
------
, or registered assigns, the principal sum of _________ Dollars
-------------
on December 31, 2044, and to pay interest on said principal sum from ______,
1995 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, quarterly (subject to deferral as set forth herein) in arrears on March
31, June 30, September 30 and December 31 of each year commencing September
30, 1995 at the rate of ___% per annum plus Compounded Interest, if any,
until the principal hereof shall have become due and payable, and 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. In addition,
the Company promises to pay to such holder or registered assigns interest at
the rate of 9 1/4% per annum from June 1, 1995 through ______, 1995 ("Pre-
issuance Interest"), payable on September 30, 1995. 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 shorter than a full
quarterly interest period for which interest is computed, the amount of
interest payable will be computed on the basis of the actual number of days
elapsed in such a 30-day month. In the event that any date on which interest
is payable on this Debenture 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
11
<PAGE>
delay), except that, if such business day is in the next succeeding calendar
year, such payment shall be made on the immediately preceding business day,
in each case with the same force and effect as if made on such date. 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 Debenture (or one or more Predecessor Debentures,
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 close
of business on the business day next preceding such Interest Payment Date.
With the exception of the Pre-Issuance Interest, any such interest
installment not punctually paid or duly provided for shall forthwith cease to
be payable to the registered holders on such regular record date, and may be
paid to the person in whose name this Debenture (or one or more Predecessor
Debentures) 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 registered holders of this series of Debentures
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 Debentures 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 the interest on this
Debenture shall be payable at the office or agency of the Company maintained
for that purpose in the Borough of Manhattan, The City and State of New York,
in any coin or currency of the United States of America which 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
check mailed to the registered holder at such address as shall appear in the
Debenture register and that the payment of principal will only be made upon
the surrender of this Debenture to the Trustee. Notwithstanding the
foregoing, so long as the owner and record holder of this Debenture is the
Trust (as defined in the Indenture referred to on the reverse hereof), the
payment of the principal of (and premium, if any) and interest (including
Compounded Interest, if any) on this Debenture will be made at such place and
to such account of the Trust as may be designated by the Institutional
Trustee.
The indebtedness evidenced by this Debenture is, to the extent
provided in the Indenture, subordinate and subject in right of payment to the
prior payment in full of all Senior Obligations, and this Debenture is issued
subject to the provisions of the Indenture with respect thereto.
12
<PAGE>
Each Holder of this Debenture, by accepting the same, (a) agrees to and shall
be bound by such provisions, (b) authorizes and directs the Trustee on his
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
attorney-in-fact for any and all such purposes. Each Holder hereof, by his
acceptance hereof, hereby waives all notice of the acceptance of the
subordination provisions contained herein and in the Indenture by each holder
of Senior Obligations, whether now outstanding or hereafter incurred, and
waives reliance by each such Holder upon said provisions.
This Debenture shall not be entitled to any benefit under the
Indenture hereinafter referred to, 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.
Unless the Certificate of Authentication hereon has been executed
by the Trustee referred to on the reverse side hereof, this Debenture shall
not be entitled to any benefit under the Indenture or be valid or obligatory
for any purpose.
The provisions of this Debenture are continued on the reverse side
hereof and such continued 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.
Dated
------------------
RJR NABISCO HOLDINGS CORP.
By
---------------------------
Attest:
By
--------------------
Secretary
(FORM OF CERTIFICATE OF AUTHENTICATION)
CERTIFICATE OF AUTHENTICATION
13
<PAGE>
This is one of the Debentures of the series of Debentures described
in the within-mentioned Indenture.
________________________________,
as Trustee
-------------------------
or as Authentication Agent
By
------------------------ -------------------------
Authorized Signatory Authorized Signatory
(FORM OF REVERSE OF DEBENTURE)
This Debenture is one of a duly authorized series of debentures of
the Company (herein sometimes referred to as the "Debentures"), all issued or
to be issued in one or more series under and pursuant to an Indenture dated
as of ________, 1995 duly executed and delivered between the Company and The
Bank of New York, a national banking association, as Trustee (herein referred
to as the "Trustee"), as supplemented by the First Supplemental Indenture
dated as of ________, 1995 between the Company and the Trustee (said
Indenture as so supplemented being hereinafter referred to as the
"Indenture"), to which Indenture and all indentures supplemental thereto
reference is hereby made for a description of the rights, limitations of
rights, obligations, duties and immunities thereunder of the Trustee, the
Company and the holders of the Debentures, and, to the extent specifically
set forth in the Indenture, the holders of Senior Indebtedness and Preferred
Securities. By the terms of the Indenture, the Debentures are issuable in
series which may vary as to amount, date of maturity, rate of interest and in
other respects as in the Indenture provided. This series of Debentures is
designated the ___% Junior Subordinated Debentures due 2044 and is limited in
aggregate principal amount as specified in said First Supplemental Indenture.
Except as provided in the next paragraph, the Debentures may not be
redeemed by the Company prior to August 19, 1998. The Company shall have the
right to redeem this Debenture at the option of the Company, without premium
or penalty, in whole or in part at any time on or after August 19, 1998 (an
"Optional Redemption"), at a redemption price equal to 100% of the principal
amount plus any accrued but unpaid interest, including any Compounded
Interest, if any, to the date of such redemption (the "Optional
14
<PAGE>
Redemption Price"). Any redemption pursuant to this paragraph will be made
upon not less than 30 nor more than 60 days' notice, at the Optional
Redemption Price.
If, at any time, a Tax Event (as defined below) shall occur or be
continuing after receipt of a Dissolution Tax Opinion (as defined below) and
(i) the Regular Trustees and the Company shall have received an opinion (a
"Redemption Tax Opinion") of a nationally recognized independent tax counsel
experienced in such matters that, as a result of a Tax Event, there is more
than an insubstantial risk that the Company would be precluded from deducting
the interest on the Junior Subordinated Debentures for United States federal
income tax purposes even if the Junior Subordinated Debentures were
distributed to the holders of Preferred Securities and Common Securities in
liquidation of such holder's interest in the Trust as set forth in the
Declaration of Trust or (ii) the Regular Trustees shall have been informed by
such tax counsel that a No Recognition Opinion (as defined below) cannot be
delivered to the Trust, the Company shall have the right at any time, upon
not less than 30 nor more than 60 days' notice, to redeem the Junior
Subordinated Debentures in whole or in part for cash at the Optional
Redemption Price within 90 days following the occurrence of such Tax Event;
provided, however, that, if at the time there is available to the Company or
the Regular Trustees on behalf of the Trust the opportunity to eliminate,
within such 90 day period, the Tax Event by taking some ministerial action
("Ministerial Action"), such as filing a form or making an election, or
pursuing some other similar reasonable measure, which has no adverse effect
on the Trust, the Company or the holders of the Preferred Securities, the
Company or the Regular Trustees on behalf of the Trust will pursue such
measure in lieu of redemption and provided further that the Company shall
have no right to redeem the Junior Subordinated Debentures while the Regular
Trustees on behalf of the Trust are pursuing any such Ministerial Action.
"Tax Event" means that the Company and the Regular Trustees shall
have obtained an opinion of nationally recognized independent tax counsel
experienced in such matters (a "Dissolution Tax Opinion") to the effect that
on or after ______, 1995, 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, (b) any amendment to, or change in, an
interpretation or application of any such laws or regulations by any
legislative body, court, governmental agency or regulatory authority
(including the enactment of
15
<PAGE>
any legislation and the publication of any judicial decision or regulatory
determination), (c) any interpretation or pronouncement that provides for a
position with respect to such laws or regulations that differs from the
theretofore generally accepted position or (d) any action taken by any
governmental agency or regulatory authority, which amendment or change is
enacted, promulgated, issued or announced or which interpretation or
pronouncement is issued or announced or which action is taken, in each case
on or after ______, 1995, there is more than an insubstantial risk that (i)
the Trust is, or will be within 90 days of the date thereof, subject to
United States federal income tax with respect to income accrued or received
on the Junior Subordinated Debentures, (ii) the Trust is, or will be within
90 days of the date thereof, subject to more than a de minimis amount of
taxes, duties or other governmental charges or (iii) interest payable by the
Company to the Trust on the Junior Subordinated Debentures is not, or within
90 days of the date thereof will not be, deductible by the Company for United
States federal income tax purposes.
"No Recognition Opinion" means an opinion of a nationally
recognized independent tax counsel experienced in such matters, which opinion
may rely on any then applicable published revenue ruling of the Internal
Revenue Service, to the effect that the holders of the Preferred Securities
will not recognize any gain or loss for United States federal income tax
purposes as a result of a dissolution of the Trust and distribution of the
Junior Subordinated Debentures as provided in the Declaration of Trust.
If the Debentures are only partially redeemed by the Company
pursuant to an Optional Redemption or as a result of a Tax Event as described
above, the Debentures will be redeemed pro rata or by lot or in some other
equitable manner determined by the Trustee. Notwithstanding the foregoing,
if a partial redemption of the Junior Subordinated Debentures would result in
the delisting of the Preferred Securities by any national securities exchange
or other organization on which the Preferred Securities are then listed, the
Company shall not be permitted to effect such partial redemption and will
only redeem the Junior Subordinated Debentures in whole.
In the event of redemption of this Debenture in part only, a new
Debenture or Debentures of this series for the unredeemed portion hereof will
be issued in the name of the Holder hereof upon the cancellation hereof.
In case an Event of Default, as defined in the Indenture, shall
have occurred and be continuing, the
16
<PAGE>
principal of all of the Debentures 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 for defeasance at any time of the
entire indebtedness of this Debenture upon compliance by the Company with
certain conditions set forth therein.
The Indenture contains provisions permitting the Company and the
Trustee, with the consent of the Holders of not less than a majority in
aggregate principal amount of the Debentures of all series affected at the
time outstanding, as defined in the Indenture (and, in the case of any series
of Debentures held as trust assets of a RJR Nabisco Holdings Capital Trust
and with respect to which a Security Exchange has not theretofore occurred,
such consent of holders of the Preferred Securities and the Common Securities
of such RJR Nabisco Holdings Capital Trust as may be required under the
Declaration of Trust of such RJR Nabisco Holdings Capital Trust), 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 any supplemental indenture or of modifying in any manner the rights of
the Holders of the Debentures; provided, however, that no such supplemental
indenture shall (i) extend the fixed maturity of any Debentures of any
series, or reduce the principal amount thereof, or reduce the rate or extend
the time of payment of interest thereon, or reduce any premium payable upon
the redemption thereof, without the consent of the holder of each Debenture
so affected or (ii) reduce the aforesaid percentage of Debentures, the
holders of which are required to consent to any such supplemental indenture,
without the consent of the holders of each Debenture (and, in the case of any
series of Debentures held as trust assets of a RJR Nabisco Holdings Capital
Trust and with respect to which a Security Exchange has not theretofore
occurred, such consent of the holders of the Preferred Securities and the
Common Securities of such RJR Nabisco Holdings Capital Trust as may be
required under the Declaration of Trust of such RJR Nabisco Holdings Capital
Trust) then outstanding and affected thereby. The Indenture also contains
provisions permitting the Holders of a majority in aggregate principal amount
of the Debentures of all series at the time outstanding affected thereby
(subject, in the case of any series of Debentures held as trust assets of a
RJR Nabisco Holdings Capital Trust and with respect to which a Securities
Exchange has not theretofore occurred, to such consent of holders of
Preferred Securities and Common
17
<PAGE>
Securities of such RJR Nabisco Holdings Capital Trust as may be required
under the Declaration of Trust of such RJR Nabisco Holdings Capital Trust),
on behalf of the Holders of the Debentures of such series, to waive any past
default in the performance of any of the covenants contained in the
Indenture, or established pursuant to the Indenture with respect to such
series, and its consequences, except a default in the payment of the
principal of or premium, if any, or interest on any of the Debentures of such
series. Any such consent or waiver by the registered Holder of this
Debenture (unless revoked as provided in the Indenture) shall be conclusive
and binding upon such Holder and upon all future Holders and owners of this
Debenture and of any Debenture 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 Debenture.
Subject to Section 13.13 of the Indenture, no reference herein to
the Indenture (other than such Section) and no provision of this Debenture or
of the Indenture shall alter or impair the obligation of the Company, which
is absolute and unconditional, to pay the principal of and premium, if any,
and interest on this Debenture at the time and place at the rate and in the
money herein prescribed.
So long as the Company is not in default in the payment of interest
on the Debentures, the Company shall have the right, at any time during the
term of the Debentures, from time to time to extend the interest payment
period of such Debentures (other than with respect to Pre-issuance Interest)
for up to 20 consecutive quarterly interest periods (the "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
of ___% per annum compounded quarterly to the extent permitted by applicable
law ("Compounded Interest")). During such Extended Interest Payment Period
the Company shall not declare or pay any dividend on, or redeem, purchase,
acquire or make a distribution or liquidation payment with respect to, any of
its common stock or preferred stock, or make any guarantee payments with
respect thereto, provided that the Company may pay accrued dividends (and
cash in lieu of fractional shares) upon mandatory conversion of any of its
preferred stock, including its Series C Conversion Preferred Stock and ESOP
Convertible Preferred Stock, in accordance with the terms of such Stock.
Prior to the termination of any such Extended Interest Payment Period, the
Company may pay all or any portion of the interest accrued on the Debentures
on any Interest Payment Date to holders of record on the regular
18
<PAGE>
record date for such Interest Payment Date or from time to time further
extend such Extended Interest Payment Period, provided that such Period
together with all such further extensions thereof shall not exceed 20
consecutive quarterly interest periods. At the termination of any such
Extended Interest Payment Period and upon the payment of all accrued and
unpaid interest then due, together with Compounded Interest, the Company
may select a new Extended Interest Payment Period, subject to the foregoing
requirements. No interest on this Debenture shall be due and payable during
an Extended Interest Payment Period, except at the end thereof. At the end
of the Extended Interest Payment Period the Company shall pay all interest
accrued and unpaid on the Junior Subordinated Debentures including any
Compounded Interest which shall be payable to the holders of the Junior
Subordinated Debentures in whose names the Junior Subordinated Debentures
are registered in the Debenture register on the record date for the first
interest payment date occurring on or after the end of the Extended Interest
Payment Period.
As provided in the Indenture and subject to certain limitations
therein set forth, this Debenture is transferable by the registered holder
hereof on the Debenture register of the Company, upon surrender of this
Debenture for registration of transfer at the office or agency of the Company
in the Borough of Manhattan, The City and State of New York accompanied by a
written instrument or instruments of transfer in form satisfactory to the
Company or the Trustee duly executed by the registered holder hereof or his
attorney duly authorized in writing, and thereupon one or more new Debentures
of authorized denominations and for the same aggregate principal amount 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
Debenture, the Company, the Trustee, any paying agent and any Debenture
Registrar may deem and treat the registered holder hereof as the absolute
owner hereof (whether or not this Debenture shall be overdue and
notwithstanding any notice of ownership or writing hereon made by anyone
other than the Debenture Registrar) for the purpose of receiving payment of
or on account of the principal hereof and premium, if any, and interest due
hereon and for all other purposes, and neither the Company nor the Trustee
nor any paying agent nor any Debenture Registrar shall be affected by any
notice to the contrary.
19
<PAGE>
No recourse shall be had for the payment of the principal of or the
interest on this Debenture, 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 corporation, 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.
The Debentures of this series are issuable only in registered form
without coupons in denominations of $25 and any integral multiple thereto.
As provided in the Indenture and subject to certain limitations therein set
forth, Debentures of this Series are exchangeable for a like aggregate
principal amount of Debentures of this series of a different authorized
denomination, as requested by the Holder surrendering the same.
All terms used in this Debenture which are defined in the Indenture
shall have the meanings assigned to them in the Indenture.
ARTICLE SIX
Original Issue of Junior Subordinated Debentures
SECTION 6.01. Junior Subordinated Debentures in the aggregate
principal amount equal to the sum of $__________ plus a dollar amount equal
to the principal amount of Junior Subordinated Debentures purchased by the
Trust with the proceeds received by the Trust from the purchase by the
Company of the Common Securities of the Trust, may, upon execution of this
First Supplemental Indenture, be executed by the Company and delivered to the
Trustee for authentication, and the trustee shall thereupon authenticate and
deliver said Debentures to or upon the written order of the Company, signed
by its Chairman, its President, or any Vice President and its Treasurer or an
Assistant Treasurer, without any further action by the Company.
20
<PAGE>
ARTICLE SEVEN
Miscellaneous Provisions
SECTION 7.01. Except as otherwise expressly provided in this First
Supplemental Indenture or in the form of Junior Subordinated Debenture or
otherwise clearly required by the context hereof or thereof, all terms used
herein or in said form of Junior Subordinated Debenture that are defined in
the Indenture shall have the several meanings respectively assigned to them
thereby.
SECTION 7.02. The Indenture, as supplemented by this First
Supplemental Indenture, is in all respects ratified and confirmed, and this
First Supplemental Indenture shall be deemed part of the Indenture in the
manner and to the extent herein and therein provided.
SECTION 7.03. The recitals herein contained are made by the
Company and not by the Trustee, and the Trustee assumes no responsibility for
the correctness thereof. The Trustee makes no representation as to the
validity or sufficiency of this First Supplemental Indenture.
SECTION 7.04. This First Supplemental 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.
21
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this First
Supplemental Indenture to be duly executed, and their respective corporate
seals to be hereunto affixed and attested, on the date or dates indicated in
the acknowledgments and as of the day and year first above written.
RJR NABISCO HOLDINGS CORP.
By
---------------------------
Name:
Title:
Attest:
-------------------------
Name:
Title:
THE BANK OF NEW YORK, as Trustee
By
----------------------------
Name:
Title:
Attest:
--------------------------
Assistant Secretary
22
<PAGE>
STATE OF NEW YORK )
) ss.:
COUNTY OF New York ) _______, 1995
On the ______ day of ____, in the year one
thousand nine hundred ninety-five, before me personally came
________________ to me known, who, being by me duly sworn,
did depose and say that he resides at ____________________
___________________________________; that he is ____________
______________________ of RJR NABISCO HOLDINGS CORP., one of
the corporations described in and which executed the above
instrument; that he knows the corporate seal of said
corporation; that the seal affixed to the said instrument is
such corporation seal; that it was so affixed by authority
of the Board of Directors of said corporation, and that he
signed his name thereto by like authority.
------------------------
NOTARY PUBLIC
My Commission Expires
STATE OF NEW YORK )
) ss.:
COUNTY OF New York ) _______, 1995
On the ______ day of ____, in the year one
thousand nine hundred ninety-five, before me personally came
____________ to me known, who, being by me duly sworn, did
depose and say that he resides at ________________________
________________, that he is a __________________of The Bank
of New York, one of the corporations described in and which
executed the above instrument; that he knows the corporate
seal of said corporation; that the seal affixed to said
instrument is such corporate seal; that it was so affixed by
authority of the Board of Directors of said corporation and
that he signed his name thereto by like authority.
------------------------
NOTARY PUBLIC
My Commission Expires
23
Exhibit 4.3
DECLARATION OF TRUST, dated as of June 20, 1995, between RJR
Nabisco Holdings Corp., a Delaware corporation, as Sponsor, and The Bank of
New York, a New York banking corporation and The Bank of New York (Delaware),
a Delaware banking corporation, not in their individual capacities but solely
as Trustees. The Sponsor and the Trustees hereby agree as follows:
1. The trust created hereby shall be known as "RJR Nabisco
Holdings Capital Trust I", in which name the Trustees, or the Sponsor to the
extent provided herein, may conduct the business of the Trust, make and
execute contracts, and sue and be sued.
2. The Sponsor hereby assigns, transfers, conveys and sets over to
the Trustees the sum of $10. The Trustees hereby acknowledge receipt of such
amount in trust from the Sponsor, which amount shall constitute the initial
trust estate. The Trustees hereby declare that they will hold the trust
estate in trust for the Sponsor. It is the intention of the parties hereto
that the Trust created hereby constitute a business trust under Chapter 38 of
Title 12 of the Delaware Code, 12 Del. C. Sec. 3801 et seq. (the "Business
------- -- ---
Trust Act"), and that this document constitute the governing instrument of
the Trust. The Trustees are hereby authorized and directed to execute and
file a certificate of trust with the Delaware Secretary of State in the form
attached hereto.
3. The Sponsor and the Trustees will enter into an amended and
restated Declaration of Trust, satisfactory to each such party and
substantially in the form to be included as Exhibit 4.5 to the Registration
Statement referred to below, to provide for the contemplated operation of the
Trust created hereby and the issuance of the Preferred Securities and Common
Securities referred to therein. Prior to the execution and delivery of such
amended and restated Declaration of Trust, the Trustees shall not have any
duty or obligation hereunder or with respect to the trust estate, except as
otherwise required by applicable law or as may be necessary to obtain prior
to such execution and delivery any licenses, consents or approvals required
by applicable law or otherwise.
4. The Sponsor and the Trustees hereby authorize and direct the
Sponsor, as the sponsor of the Trust, (i) to file with the Securities and
Exchange Commission (the "Commission") and execute, in each case on behalf of
the Trust, (a) a Registration Statement on Form S-4 (the "Registration
Statement") and any pre-effective or post-effective amendments to such
Registration Statement, relating to the registration under the Securities Act
of
<PAGE>
1933, as amended, of the Preferred Securities of the Trust, (b) a
Registration Statement on Form 8-A (the "1934 Act Registration Statement")
(including all pre-effective and post-effective amendments thereto) relating
to the registration of the Preferred Securities of the Trust under Section
12(b) of the Securities Exchange Act of 1934, as amended and (c) an Issuer
Tender Offer Statement on Schedule 13E-4 and any other tender offer statement
required to be filed by the Trust with the Commission (including, if
necessary, Schedule 14D-1) relating to the exchange offer (the "Offer")
described in the Registration Statement (collectively, the "Tender Offer
Schedules") and any amendment or supplement thereto; (ii) to file with the
New York Stock Exchange and execute on behalf of the Trust a listing
application and all other applications, statements, certificates, agreements
and other instruments as shall be necessary or desirable to cause the
Preferred Securities to be listed on the New York Stock Exchange; (iii) to
file and execute on behalf of the Trust such applications, reports, surety
bonds, irrevocable consents, appointments of attorneys for service of process
and other papers and documents as shall be necessary or desirable to register
the Preferred Securities under the securities or "Blue Sky" laws of such
jurisdictions as the Sponsor, on behalf of the Trust, may deem necessary or
desirable and (iv) to execute on behalf of the Trust that certain Dealer
Manager Agreement among the Trust, the Sponsor and Merrill Lynch, Pierce,
Fenner & Smith Incorporated, Lehman Brothers, Morgan Stanley & Co.
Incorporated, PaineWebber Incorporated and Smith Barney Inc. relating to the
Offer, substantially in the form to be included as Exhibit 1.1 to the
Registration Statement. In the event that any filing referred to in clauses
(i)-(iii) above is required by the rules and regulations of the Commission,
the New York Stock Exchange or state securities or blue sky laws, to be
executed on behalf of the Trust by the Trustees, the Sponsor is hereby
authorized and directed to join in any such filing and to execute on behalf
of the Trust any and all of the foregoing, it being understood that The Bank
of New York and The Bank of New York (Delaware), in their capacities as
Trustees of the Trust shall not be required to join in any such filing or
execute on behalf of the Trust any such document unless required by the rules
and regulations of the Commission, the New York Stock Exchange or state
securities or blue sky laws. In connection with all of the foregoing, the
Sponsor and each Trustee, solely in its capacity as Trustee of the Trust,
hereby constitutes and appoints Jo-Ann Ford, as his, her or its, as the case
may be, true and lawful attorney-in-fact and agent, with full power of
substitution and resubstitution, for the Sponsor or such Trustee or in the
Sponsor's or such Trustee's name, place and stead, in any and all capacities,
2
<PAGE>
to sign any and all amendments (including post-effective amendments) to the
Registration Statement, the 1934 Act Registration Statement and the Tender
Offer Schedules and to file the same, with all exhibits thereto, and other
documents in connection therewith, with the Commission, granting unto said
attorney-in-fact and agent full power and authority to do and perform each
and every act and thing requisite and necessary to be done in connection
therewith, as fully to all intents and purposes as the Sponsor or such
Trustee might or could do in person, hereby ratifying and confirming all that
said attorney-in-fact and agent, or her substitute or substitutes, shall do
or cause to be done by virtue hereof.
5. This Declaration of Trust may be executed in one or more
counterparts.
6. The number of Trustees initially shall be two (2) and
thereafter the number of Trustees shall be such number as shall be fixed from
time to time by a written instrument signed by the Sponsor which may increase
or decrease the number of Trustees; provided that to the extent required by
the Business Trust Act, one Trustee shall either be a natural person who is a
resident of the State of Delaware or, if not a natural person, an entity
which has its principal place of business in the State of Delaware. Subject
to the foregoing, the Sponsor is entitled to appoint or remove without cause
any Trustee at any time. The Trustees may resign upon thirty days prior
notice to the Sponsor.
3
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Declaration
of Trust to be duly executed as of the day and year first above written.
RJR Nabisco Holdings Corp.
as Sponsor
By:
--------------------------
Name:
Title:
THE BANK OF NEW YORK,
not in its individual capacity
but solely as Trustee
By:
---------------------------
Name:
Title:
THE BANK OF NEW YORK (Delaware),
not in its individual capacity
but solely as Trustee
By:
-----------------------------
Name:
Title:
4
Exhibit 4.4
CERTIFICATE OF TRUST
OF
RJR NABISCO HOLDINGS CAPITAL TRUST I
------------------------------------
This Certificate of Trust of RJR Nabisco Holdings
Capital Trust I (the "Trust"), dated June 20, 1995, is being
duly executed and filed by the undersigned, as trustees, to
form a business trust under the Delaware Business Trust Act
(12 Del.C. Sec. 3801 et seg.).
------ -- ---
1. Name. The name of the business trust formed
----
hereby is RJR Nabisco Holdings Capital Trust I.
2. Delaware Trustee. The name and business address
----------------
of the trustee of the Trust with a principal place of business
in the State of Delaware is The Bank of New York (Delaware), a
Delaware banking corporation, White Clay Center, Route 273,
Newark, Delaware.
3. Effective Date. This Certificate of Trust shall
--------------
be effective as of its filing.
IN WITNESS WHEREOF, the undersigned, being the sole
trustees of the Trust, have executed this Certificate of Trust
as of the date first above written.
THE BANK OF NEW YORK,
as trustee
By:
---------------------------
Name:
Title:
THE BANK OF NEW YORK (Delaware),
as trustee
By:
----------------------------
Name:
Title:
Exhibit 4.5
AMENDED AND RESTATED
DECLARATION OF TRUST
OF
RJR Nabisco Holdings Capital Trust I
June __, 1995
AMENDED AND RESTATED DECLARATION OF TRUST
("Declaration") dated and effective as of June __, 1995 by
the undersigned trustees (together with all other Persons
from time to time duly appointed and serving as trustees in
accordance with the provisions of this Declaration, the
"Trustees"), RJR Nabisco Holdings Corp., a Delaware
corporation, as trust sponsor ("Holdings" or the "Sponsor"),
and by the holders, from time to time, of undivided
beneficial interests in the assets of the Trust to be issued
pursuant to this Declaration.
WHEREAS, the Sponsor and the Trustees entered into
a Declaration of Trust dated as of June __, 1995 (the
"Original Declaration") in order to establish a statutory
business trust (the "Trust") under the Business Trust Act
(as hereinafter defined);
WHEREAS, the Certificate of Trust (the
"Certificate of Trust") of the Trust was filed with the
office of the Secretary of State of the State of Delaware on
June __, 1995;
WHEREAS, the Trustees and the Sponsor desire to
continue the Trust pursuant to the Business Trust Act for
the purpose of, as described more fully in Section 3.3
hereof, (i) issuing Preferred Securities (as defined herein)
representing undivided beneficial interests in the assets of
the Trust in exchange for Series B Depositary Shares
("Depositary Shares") each representing 1/1000 of a share of
Series B Preferred Stock (as hereinafter defined) of
Holdings pursuant to the Offer (as hereinafter defined) and
delivering such Depositary Shares to Holdings in
consideration for the deposit by Holdings as trust assets of
Debentures (as hereinafter defined) of Holdings issued under
the Indenture (as hereinafter defined) and (ii) issuing and
selling Common Securities (as defined herein) representing
undivided beneficial interests in the assets of the Trust to
<PAGE>
Holdings in exchange for cash and investing the proceeds
thereof in additional Debentures of Holdings issued under
the Indenture to be held as assets of the Trust; and
NOW, THEREFORE, it being the intention of the
parties hereto that the Trust constitute a business trust
under the Business Trust Act, that the Original Declaration
be amended and restated in its entirety as provided herein
and that this Declaration constitute the governing
instrument of such business trust, the Trustees declare that
all assets referred to in clauses (i) and (ii) of the
previous Whereas clause contributed to or purchased by the
Trust will be held in trust for the benefit of the Holders
(as defined herein) from time to time, of the Certificates
(as defined herein) representing undivided beneficial
interests in the assets of the Trust issued hereunder,
subject to the provisions of this Declaration.
ARTICLE I
DEFINITIONS
SECTION 1.1 Definitions.
-----------
(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 Amended and Restated Declaration of
Trust (including Exhibits A, B and C hereto (the
"Exhibits")) as modified, supplemented or amended from time
to time;
(d) all references in this Declaration to
Articles and Sections and Exhibits are to Articles and
Sections of and Exhibits to this Declaration unless
otherwise specified;
(e) a term defined in the Trust Indenture Act has
the same meaning when used in this Declaration unless
otherwise defined in this Declaration or unless the context
otherwise requires; and
(f) a reference to the singular includes the
plural and vice versa.
2
<PAGE>
"Affiliate" has the same meaning as given to that
---------
term in Rule 405 of the Securities Act or any successor rule
thereunder.
"Appointment Event" means an event defined in the
-----------------
terms of the Preferred Securities set forth in Exhibit B
which entitles the Holders of a Majority in liquidation
amount of the Preferred Securities to appoint a Special
Regular Trustee.
"Book Entry Interest" means a beneficial interest
-------------------
in a Certificate registered in the name of a Clearing Agency
or a nominee thereof, ownership and transfers of which shall
be maintained and made through book entries by such Clearing
Agency as described in Section 9.4.
"Business Day" means any day other than a day on
------------
which banking institutions in New York, New York are
authorized or required by law to close.
"Business Trust Act" means Chapter 38 of Title 12
------------------
of the Delaware Code, 12 Del. Code Sec. 3801 et seq., as it may
------------ -- ---
be amended from time to time.
"Certificate" means a Common Security Certificate
-----------
or a Preferred Security Certificate.
"Certificate of Trust" has the meaning set forth
--------------------
in the second Whereas clause above.
"Clearing Agency" means an organization registered
---------------
as a "Clearing Agency" pursuant to Section 17A of the
Exchange Act that is acting as depository for the Preferred
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 Preferred 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.
"Code" means the Internal Revenue Code of 1986, as
----
amended from time to time or any successor legislation. A
reference to a specific section ((Sec.)) of the Code refers
not only to such specific section but also to any
corresponding provision of any federal tax statute enacted
after the date of this Declaration, as such specific section
or corresponding provision is in effect on the date of
3
<PAGE>
application of the provisions of this Declaration containing
such reference.
"Commission" means the Securities and Exchange
----------
Commission.
"Common Security" has the meaning specified in
---------------
Section 7.1(b).
"Common Security Certificate" means a definitive
---------------------------
certificate in fully registered form representing a Common
Security substantially in the form of Annex I to Exhibit C.
"Covered Person" means (i) any officer, director,
--------------
shareholder, partner, member, representative, employee or
agent of the Trust or its Affiliates, (ii) any officer,
director, shareholder, employees, representatives or agents
of Holdings or its Affiliates and (iii) the Holders from
time to time of the Securities.
"Dealer Manager Agreement" means the dealer
------------------------
manager agreement entered into among Holdings, the Trust and
Merrill Lynch, Pierce, Fenner & Smith Incorporated, Morgan
Stanley & Co. Incorporated, Lehman Brothers, PaineWebber
Incorporated and Smith Barney Inc. with respect to, among
other things, the Offer and the Preferred Securities.
"Debenture Trustee" means The Bank of New York, as
-----------------
trustee under the Indenture until a successor is appointed
thereunder and thereafter means such successor trustee.
"Debentures" means the series of Junior
----------
Subordinated Debentures issued by Holdings under the
Indenture to the Institutional Trustee and entitled the
"_____% Junior Subordinated Debentures due 2044".
"Delaware Trustee" has the meaning set forth in
----------------
Section 5.1(a)(3).
"Distribution" means a distribution payable to
------------
Holders of Securities 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 Indenture Event of Default has occurred and is
continuing in respect of the Debentures.
4
<PAGE>
"Exchange Act" means the Securities Exchange Act
------------
of 1934, as amended from time to time or any successor
legislation.
"Expiration Date" has the meaning set forth in the
---------------
Prospectus.
"Fiscal Year" has the meaning specified in Section
-----------
11.1.
"Holder" means a Person in whose name a
------
Certificate representing a Security is registered, such
Person being a beneficial owner within the meaning of the
Business Trust Act.
"Indemnified Person" means any Trustee, any
------------------
Affiliate of any Trustee, any officers, directors,
shareholders, members, partners, employees, representatives
or agents of any Trustee, or any employee or agent of the
Trust or its Affiliates.
"Indenture" means the Indenture dated as of _____,
---------
1995 between Holdings and the Debenture Trustee and the
First Supplemental Indenture thereto dated such date
pursuant to which the Debentures are to be issued.
"Indenture Event of Default" means any event or
--------------------------
condition defined as an "Event of Default" with respect to
the Debentures under Section 6.1 of the Indenture has
occurred and is continuing.
"Institutional Trustee" means the Trustee meeting
---------------------
the eligibility requirements set forth in Section 5.1(c) and
having the duties set forth for the Institutional Trustee
herein.
"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 specified in
------------
Section 3.6(g).
"Liquidation Distribution" has the meaning set
------------------------
forth in Exhibits B and C hereto establishing the terms of
the Securities.
5
<PAGE>
"Majority in liquidation amount of the Securities"
------------------------------------------------
means, except as otherwise required by the Trust Indenture
Act and except as provided in the penultimate paragraph of
paragraph 5 of Exhibit B hereto, Holder(s) of outstanding
Securities voting together as a single class or, as the
context may require, Holder(s) of outstanding Preferred
Securities or Common Securities voting separately as a
class, who are the record owners of a relevant class of
Securities whose 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) represents
more than 50% of the liquidation amount of all outstanding
Securities of such class.
"Ministerial Action" has the meaning set forth in
------------------
the terms of the Securities as set forth in Exhibits B and C
hereto.
"Offer" means the offer by the Trust to exchange
-----
Preferred Securities of the Trust for outstanding Depositary
Shares of Holdings in consideration for the deposit by
Holdings as trust assets of Debentures issued under the
Indenture, all as described in the Prospectus.
"Original Declaration" has the meaning set forth
--------------------
in the first WHEREAS clause above.
"Paying Agent" has the meaning specified in
------------
Section 3.8(g).
"Person" means a legal person, including any
------
individual, corporation, estate, partnership, joint venture,
association, joint stock company, limited liability company,
trust, unincorporated association, or government or any
agency or political subdivision thereof, or any other entity
of whatever nature.
"Preferred Guarantee" means the Guarantee
-------------------
Agreement to be dated as of ______, 1995 of Holdings in
respect of the Preferred Securities.
"Preferred Security" has the meaning specified in
------------------
Section 7.1(b).
"Preferred Security Beneficial Owner" means, with
-----------------------------------
respect to a Book Entry Interest, a Person who is the
beneficial owner of such Book Entry Interest, as reflected
on the books of the Clearing Agency, or on the books of a
Person maintaining an account with such Clearing Agency
(directly as a Clearing Agency Participant or as an indirect
6
<PAGE>
participant, in each case in accordance with the rules of
such Clearing Agency).
"Preferred Security Certificate" means a
------------------------------
definitive certificate in fully registered form representing
a Preferred Security substantially in the form of Annex I to
Exhibit B.
"Prospectus" means the Prospectus dated ______,
----------
1995 relating to the Offer.
"Quorum" means a majority of the Regular Trustees
------
or, if there are only two Regular Trustees, both such
Regular Trustees.
"Regular Trustee" means any Trustee other than the
---------------
Institutional Trustee and the Delaware Trustee.
"Related Party" means any direct or indirect
-------------
wholly owned subsidiary of Holdings or any other Person
which owns, directly or indirectly, 100% of the outstanding
voting securities of Holdings.
"Resignation Request" has the meaning specified in
-------------------
Section 5.2(d).
"Responsible Officer" means, with respect to the
-------------------
Institutional Trustee, the chairman of the board of
directors, the president, any vice-president, any assistant
vice-president, the secretary, any assistant secretary, the
treasurer, any assistant treasurer, any trust officer or
assistant trust officer or any other officer of the
Institutional 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.
"RJR Nabisco Holdings Capital Trust" shall mean
----------------------------------
any statutory business trust created under the laws of the
State of Delaware specified in the applicable board
resolution or supplemental indenture establishing a
particular series of Securities pursuant to Section 2.3 of
the Indenture.
"Rule 3a-5" means Rule 3a-5 under the Investment
---------
Company Act or any successor rule thereunder.
"Securities" means the Common Securities and the
----------
Preferred Securities.
7
<PAGE>
"Securities Act" means the Securities Act of 1933,
--------------
as amended from time to time or any successor legislation.
"Series B Preferred Stock" means the Series B
------------------------
Cumulative Preferred Stock of Holdings.
"Special Event" has the meaning set forth in the
-------------
terms of the Securities as set forth in Exhibits B and C
hereto.
"Special Regular Trustee" means a Regular Trustee
-----------------------
appointed by the Holders of a Majority in liquidation amount
of the Preferred Securities in accordance with Section
5.2(a)(ii)(B).
"Sponsor" or "Holdings" means RJR Nabisco Holdings
------- --------
Corp., a Delaware corporation, or any successor entity in a
merger, in its capacity as sponsor of the Trust.
"Successor Delaware Trustee" has the meaning
--------------------------
specified in Section 5.2(b)(ii).
"Successor Institutional Trustee" means a
-------------------------------
successor Trustee possessing the qualifications to act as
Institutional Trustee under Section 5.1(c).
"10% in liquidation amount of the Securities"
-------------------------------------------
means, except as otherwise required by the Trust Indenture
Act and except as provided in the penultimate paragraph of
paragraph 5 of Exhibit B hereto, Holder(s) of outstanding
Securities voting together as a single class or, as the
context may require, Holder(s) of outstanding Preferred
Securities or Common Securities, voting separately as a
class, who are the record owners of a relevant class of
Securities whose 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) represents
10% or more of the liquidation amount of all outstanding
Securities of such 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
8
<PAGE>
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.
ARTICLE II
TRUST INDENTURE ACT
SECTION 2.1 Trust Indenture Act; Application.
--------------------------------
(a) This Declaration is subject to the provisions
of the Trust Indenture Act that are required to be part of
this Declaration and shall, to the extent applicable, be
governed by such provisions;
(b) if and to the extent that any provision of
this Declaration limits, qualifies or conflicts with the
duties imposed by Sec.Sec. 310 to 317, inclusive, of the Trust
Indenture Act, such imposed duties shall control;
(c) the Institutional Trustee, to the extent
permitted by applicable law and/or the rules and regulations
of the Commission, shall be the only Trustee which is a
trustee for the purposes of the Trust Indenture Act; and
(d) the application of the Trust Indenture Act to
this Declaration shall not affect the nature of the
Securities as equity securities representing undivided
beneficial interests in the assets of the Trust.
SECTION 2.2 Lists of Holders of Preferred Securities.
----------------------------------------
(a) Each of the Sponsor and the Regular Trustees
on behalf of the Trust shall provide the Institutional
Trustee with such information as is required under Sec. 312(a)
of the Trust Indenture Act at the times and in the manner
provided in Sec. 312(a); and
(b) the Institutional Trustee shall comply with
its obligations under Sec.Sec. 310(b), 311 and 312(b) of the Trust
Indenture Act.
9
<PAGE>
SECTION 2.3 Reports by the Institutional Trustee.
------------------------------------
Within 60 days after May 15 of each year, the
Institutional Trustee shall provide to the Holders of the
Securities such reports as are required by Sec. 313 of the
Trust Indenture Act, if any, in the form, in the manner and
at the times provided by Sec. 313 of the Trust Indenture Act.
The Institutional Trustee shall also comply with the
requirements of Sec. 313(d) of the Trust Indenture Act.
SECTION 2.4 Periodic Reports to Institutional Trustee.
-----------------------------------------
Each of the Sponsor and the Regular Trustees on
behalf of the Trust shall provide to the Institutional
Trustee, the Commission and the Holders of the Securities,
as applicable, such documents, reports and information as
required by Sec. 314(a)(1)-(3) (if any) of the Trust Indenture
Act and the compliance certificates required by Sec. 314(a)(4)
and (c) of the Trust Indenture Act, any such certificates to
be provided in the form, in the manner and at the times
required by Sec. 314(a)(4) and (c) of the Trust Indenture Act
(provided that any certificate to be provided pursuant to Sec.
314(a)(4) of the Trust Indenture Act shall be provided
within 120 days of the end of each Fiscal Year).
SECTION 2.5 Evidence of Compliance with
Conditions Precedent.
---------------------------
Each of the Sponsor and the Regular Trustees on
behalf of the Trust shall provide to the Institutional
Trustee such evidence of compliance with any conditions
precedent, if any, provided for in this Declaration which
relate to any of the matters set forth in Sec. 314(c) of the
Trust Indenture Act. Any certificate or opinion required to
be given pursuant to Sec. 314(c) shall comply with Sec. 314(e) of
the Trust Indenture Act.
SECTION 2.6 Events of Default; Waiver
-------------------------
(a) Subject to Section 2.6(c), Holders of
Preferred Securities may by vote of at least a Majority in
liquidation amount of the Preferred Securities (A) in
accordance with the terms of the Preferred Securities,
direct the time, method and place of conducting any
proceeding for any remedy available to the Institutional
Trustee, or exercising any trust or power conferred upon the
Institutional Trustee or (B) on behalf of the Holders of all
Preferred Securities waive any past Event of Default in
respect of the Preferred Securities and its consequences,
provided that if the Event of Default arises out of an
Indenture Event of Default:
10
<PAGE>
(i) which is not waivable under the Indenture,
the Event of Default under this Declaration shall also
not be waivable; or
(ii) which requires the consent or vote of (1)
holders of Debentures representing a specified
percentage greater than a majority in principal amount
of the Debentures, or (2) each holder of Debentures,
the Event of Default under this Declaration may only be
waived by, in the case of clause (1) above, the vote of
Holders of Preferred Securities representing such
specified percentage of the aggregate liquidation
amount of the Preferred Securities, or, in the case of
clause (2) above, each Holder of Preferred Securities.
Upon such waiver, any such default shall cease to exist, and
any Event of Default with respect to the Preferred
Securities arising therefrom shall be deemed to have been
cured, for every purpose of this Declaration, but no such
waiver shall extend to any subsequent or other default or
Event of Default with respect to the Preferred Securities or
impair any right consequent thereon.
(b) Subject to Section 2.6(c), Holders of Common
Securities may by vote of at least a Majority in liquidation
amount of the Common Securities, (A) in accordance with the
terms of the Common Securities, direct the time, method and
place of conducting any proceeding for any remedy available
to the Institutional Trustee, or exercising any trust or
power conferred upon the Institutional Trustee or (B) 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 Event
of Default arises out of an Indenture Event of Default:
(i) which 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, the Event of Default
under this Declaration shall also not be waivable; or
(ii) which requires the consent or vote of (1)
holders of Debentures representing a specified
percentage greater than a majority in principal amount
of the Debentures or (2) each holder of Debentures,
except where the holders of the Common Securities are
deemed to have waived such Event of Default under this
Declaration as provided below, the Event of Default
under this Declaration may only be waived by, in the
case of clause (1) above, the vote of Holders of Common
11
<PAGE>
Securities representing such specified percentage of
the aggregate liquidation amount of the Common
Securities, or, in the case of clause (2) above, each
holder of Common Securities; and
provided, further that, each Holder of Common Securities
-------- ------- ----
will be deemed to have waived any Event of Default with
respect to the Common Securities and its consequences until
all Events of Default with respect to the Preferred
Securities have been cured, waived by the Holders of
Preferred Securities as provided in this Declaration or
otherwise eliminated and until all Events of Default with
respect to the Preferred Securities have been so cured,
waived or otherwise eliminated, the Institutional Trustee
will be deemed to be acting solely on behalf of the Holders
of the Preferred Securities and only the Holders of the
Preferred Securities will have the right to direct the
Institutional Trustee in accordance with the terms of this
Declaration or the Securities. If any Event of Default with
respect to the Preferred Securities is waived by the Holders
of Preferred Securities as provided in this Declaration, the
Holders of Common Securities agree that such waiver shall
also constitute the waiver of such Event of Default with
respect to the Common Securities for all purposes under this
Declaration without any further act, vote or consent of the
Holders of the Common Securities. 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) The right of any Holder of Securities to
receive payment of Distributions on the Securities in
accordance with this Declaration and the terms of the
Securities set forth in Exhibits B and C on or after the
respective payment dates therefor, or to institute suit for
the enforcement of any such payment on or after such payment
dates, shall not be impaired without the consent of each
such Holder.
(d) As provided in the terms of the Securities
set forth in Exhibits B and C hereto, a waiver of an
Indenture Event of Default by the Institutional Trustee at
the written direction of the Holders of the Preferred
Securities constitutes a waiver of the corresponding Event
of Default under this Declaration in respect of the
Securities.
12
<PAGE>
SECTION 2.7 Disclosure of Information
-------------------------
The disclosure of information as to the names and
addresses of the Holders of the Securities in accordance
with Sec. 312 of the Trust Indenture Act, regardless of the
source from which such information was derived, shall not be
deemed to be a violation of any existing law, or any law
hereafter enacted which does not specifically refer to Sec. 312
of the Trust Indenture Act, nor shall the Institutional
Trustee be held accountable by reason of mailing any
material pursuant to a request made under Sec. 312(b) of the
Trust Indenture Act.
ARTICLE III
ORGANIZATION
SECTION 3.1 Name.
----
The Trust continued by this Declaration is named
"RJR Holdings Capital Trust I" as such name may be modified
from time to time by the Regular Trustees following written
notice to the Holders of Securities. The Trust's activities
may be conducted under the name of the Trust or any other
name deemed advisable by the Regular Trustees.
SECTION 3.2 Office.
------
The address of the principal office of the Trust
is c/o RJR Nabisco Holdings Corp., 1301 Avenue of the
Americas, New York, New York 10019. Upon ten days' written
notice to the Holders, the Regular Trustees may change the
location of the Trust's principal office. The name of the
registered agent and office of the Trust in the State of
Delaware is __________________________. At any time, the
Regular Trustees may designate another registered agent
and/or registered office.
SECTION 3.3 Purpose.
-------
The exclusive purposes and functions of the Trust
are: (a)(i) to issue Preferred Securities in exchange for
Depositary Shares pursuant to the Offer to deliver such
Depositary Shares to Holdings in consideration for the
deposit by Holdings as trust assets of Debentures issued
under the Indenture having an aggregate principal amount
equal to the aggregate liquidation amount of the Preferred
Securities so delivered; (ii) to enter into such agreements
and arrangements as may be necessary in connection with the
Offer and to take all action, and exercise such discretion,
13
<PAGE>
as may be necessary or desirable in connection with the
Offer and to file such registration statements or make such
other filings under the Securities Act, the Exchange Act or
state securities or "Blue Sky" laws as may be necessary or
desirable in connection with the Offer and the issuance of
the Preferred Securities; and (iii) to issue and sell Common
Securities to Holdings for cash and use the proceeds of such
sale to purchase as trust assets an equal aggregate
principal amount of Debentures issued under the Indenture;
and (b) except as otherwise limited herein, to engage in
only those other activities necessary, or incidental
thereto. The Trust shall not borrow money, issue debt or
reinvest proceeds derived from investments, pledge any of
its assets or at any time while the Securities are
outstanding, otherwise undertake (or permit to be
undertaken) any activity that would result in or cause the
Trust to be treated as anything other than a grantor trust
for United States federal income tax purposes.
SECTION 3.4 Authority.
---------
Subject to the limitations provided in this
Declaration and to the specific duties of the Institutional
Trustee, the Regular Trustees shall have exclusive and
complete authority to carry out the purposes of the Trust.
An action taken by the Regular Trustees in accordance with
their powers shall constitute the act of and serve to bind
the Trust and an action taken by the Institutional Trustee
in accordance with its powers shall constitute the act of
and serve to bind the Trust. In dealing with the Trustees
acting on behalf of the Trust, no Person shall be required
to inquire into the authority of the Trustees to bind the
Trust. Persons dealing with the Trust are entitled to rely
conclusively on the power and authority of the Trustees as
set forth in this Declaration.
SECTION 3.5 Title to Property of the Trust.
------------------------------
Unless otherwise provided in this Declaration,
legal title to all assets of the Trust shall be vested in
the Trust. The Holders of Certificates shall not have legal
title to any part of the assets of the Trust, but shall have
an individual undivided beneficial interest in the assets of
the Trust.
SECTION 3.6 Powers and Duties of the Regular Trustees.
-----------------------------------------
The Regular Trustees shall have the exclusive
power, authority and duty to cause the Trust, and shall
cause the Trust, to engage in the following activities:
14
<PAGE>
(a) to issue Preferred Securities and Common
Securities, in each case in accordance with this
Declaration; provided, however, that the Trust may issue no
more than one series of Preferred Securities and no more
than one series of Common Securities, and, provided further,
there shall be no interests in the Trust other than the
Securities and the issuance of Securities shall be limited
to a one-time, simultaneous issuance of both Preferred
Securities and Common Securities;
(b) in connection with the Offer and the issuance
of the Preferred Securities, at the direction of the
Sponsor, to effect or cause to be effected the filings, and
to execute or cause to be executed, the documents, set forth
in Section 3.11;
(c) to acquire as trust assets Debentures upon
consummation of the Offer in connection with the exchange of
Preferred Securities for Depositary Shares pursuant to the
Offer and to acquire as trust assets additional Debentures
with the proceeds of the sale of the Common Securities;
(d) to cause the Trust to enter into the Dealer
Manager Agreement and such other agreements and arrangements
as may be necessary or desirable in connection with the
Offer and the consummation thereof, and to take all action,
and exercise all discretion, as may be necessary or
desirable in connection with the Offer or the consummation
thereof;
(e) to give the Sponsor and the Institutional
Trustee prompt written notice of the occurrence of a Special
Event provided, that the Regular Trustees shall consult with
-------- ----
the Sponsor and the Institutional Trustee before taking or
refraining to take any Ministerial Action in relation to a
Special Event;
(f) to establish a record date with respect to
all actions to be taken hereunder that require a record date
be established, including for the purposes of Section 316(c)
of the Trust Indenture Act and with respect to
Distributions, voting rights, redemptions, and exchanges,
and to issue relevant notices to Holders of the Preferred
Securities and Common Securities as to such actions and
applicable record dates;
(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(c), the Institutional Trustee
has the exclusive power to bring such Legal Action;
15
<PAGE>
(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 to the Institutional
Trustee required by Sec. 314(a)(4) of the Trust Indenture Act
which certificate may be executed by any Regular Trustee;
(k) to incur expenses which are necessary or
incidental to carry out any of the purposes of the Trust;
(l) to act as, or appoint another Person to act
as, registrar and transfer agent for the Securities, the
Regular Trustees hereby initially appointing the
Institutional Trustee for such purposes;
(m) to take all actions and perform such duties
as may be required of the Regular Trustee pursuant to the
terms of the Securities set forth in Exhibits B and C
hereto;
(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 which 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 Securities or to enable the Trust to
effect the purposes for which the Trust has been created;
(p) to take all action, not inconsistent with
this Declaration or with applicable law, which the Regular
Trustees determine in their discretion to be reasonable and
necessary or desirable in carrying out the activities of the
Trust as set out in this Section 3.6, in order that:
(i) the Trust will not be deemed to be an
Investment Company required to be registered under the
Investment Company Act;
(ii) the Trust will not be classified for United
States federal income tax purposes as an association
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taxable as a corporation or a partnership and will be
treated as a grantor trust for United States federal
income tax purposes; and
(iii) the Trust will comply with any requirements
imposed by any taxing authority on holders of
instruments treated as indebtedness for United States
federal income tax purposes;
provided that such action does not adversely affect the
interests of Holders;
(q) to take all action necessary to cause all
applicable tax returns and tax information reports that are
required to be filed with respect to the Trust to be duly
prepared and filed by the Regular Trustees, on behalf of the
Trust; and
(r) subject to the requirements of Rule 3a-5 and
Sec. 317(b) of the Trust Indenture Act, to appoint one or more
Paying Agents in addition to the Institutional Trustee.
The Regular Trustees must exercise the powers set
forth in this Section 3.6 in a manner which is consistent
with the purposes and functions of the Trust set out in
Section 3.3 and the Regular Trustees shall not take any
action which is inconsistent with the purposes and functions
of the Trust set forth in Section 3.3.
Subject to this Section 3.6, the Regular Trustees
shall have none of the powers nor any of the authority of
the Institutional Trustee set forth in Section 3.8.
SECTION 3.7 Prohibition of Actions by Trust and Trustees.
--------------------------------------------
The Trust shall not, and the Trustees (including
the Institutional Trustee) shall cause the Trust not to,
engage in any activity other than as required or authorized
by this Declaration. In particular, the Trust shall not and
the Trustees (including the Institutional Trustee) shall
not:
(a) invest any proceeds received by the Trust
from holding the Debentures but shall promptly distribute
all such proceeds to Holders of Securities pursuant to the
terms of this Declaration and of the Securities;
(b) acquire any assets other than as expressly
provided herein;
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(c) possess Trust property for other than a Trust
purpose;
(d) make any investments, other than investments
represented by the Debentures;
(e) 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;
(f) issue any securities or other evidences of
beneficial ownership of, or beneficial interests in, the
Trust other than the Securities;
(g) incur any indebtedness for borrowed money; or
(h) (i) direct the time, method and place of
exercising any trust or power conferred upon the Debenture
Trustee with respect to the Debentures, (ii) waive any past
default that is waivable under Section 5.1 of the Indenture,
(iii) exercise any right to rescind or annul any declaration
that the principal of all of the Debentures shall be due and
payable or (iv) consent to any amendment, modification or
termination of the Indenture or the Debentures, where such
consent shall be required, unless in the case of this clause
(h) the Institutional Trustee shall have received an
unqualified opinion of nationally recognized independent tax
counsel recognized as expert in such matters to the effect
that such action will not cause the Trust to be classified
for United States federal income tax purposes as an
association taxable as a corporation or partnership and that
the Trust will continue to be classified as a grantor trust
for United States federal income tax purposes.
SECTION 3.8 Powers and Duties of the Institutional Trustee.
----------------------------------------------
(a) The Institutional Trustee shall:
(i) on the receipt of payments of funds made in
respect of the Debentures held by the Trust, without
any further acts of the Institutional Trustee or the
Regular Trustees, promptly make payments to the Holders
of the Preferred Securities and Common Securities in
accordance with Section 6.1. Funds held in the Trust
may be held uninvested, and without liability for
interest thereon, until disbursed in accordance with
this Declaration;
(ii) engage in such ministerial activities as
shall be necessary or appropriate to effect promptly
the redemption of the Preferred Securities and the
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Common Securities to the extent the Debentures are
redeemed or mature;
(iii) upon notice of distribution issued by the
Regular Trustees in accordance with the terms of the
Preferred Securities and the Common Securities, engage
in such ministerial activities as shall be necessary or
appropriate to effect promptly the distribution
pursuant to terms of the Securities of Debentures to
Holders of Securities upon the occurrence of a Special
Event; and
(iv) have the legal power to exercise all of the
rights, powers and privileges of a holder of the
Debentures under the Indenture and, if an Event of
Default occurs and is continuing, the Institutional
Trustee, subject to Section 2.6(b), shall for the
benefit of the Holders of the Securities, enforce its
rights as holder of the Debentures under the Indenture,
subject to the rights of the Holders of the Preferred
Securities pursuant to the terms of this Declaration
and the Trust Indenture Act.
(b) The Institutional Trustee shall take all
actions and perform such duties as may be specifically
required of the Institutional Trustee pursuant to the terms
of the Securities set forth in Exhibits B and C hereto.
(c) The Institutional Trustee shall take any
Legal Action which arises out of or in connection with an
Event of Default or the Institutional Trustee's duties and
obligations under this Declaration or the Trust Indenture
Act.
(d) All moneys and all Debentures held by the
Trust will not be subject to any right, charge, security
interest, lien or claim of any kind in favor of, or for the
benefit of the Institutional Trustee or its agents or their
creditors.
(e) The Institutional Trustee shall, within 90
days after the occurrence of a default with respect to the
Securities, transmit by mail, first class postage prepaid,
to the holders of the Securities, as their names and
addresses appear upon the register, notice of all defaults
with respect to the Securities known to the Institutional
Trustee, unless such defaults shall have been cured before
the giving of such notice (the term "defaults" for the
purposes of this Section 3.8(e) being hereby defined to be
an Indenture Event of Default, not including any periods of
grace provided for in the Indenture and irrespective of the
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giving of any notice provided therein); 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
Debentures, the Institutional 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 Institutional
Trustee in good faith determine that the withholding of such
notice is in the interests of the Holders of the Securities.
The Institutional Trustee shall not be deemed to have
knowledge of any default, except (i) a default in the
payment of principal, premium or interest on the Debentures
or (ii) any default as to which the Institutional Trustee
shall have received written notice or a Responsible Officer
charged with the administration of this Declaration shall
have obtained written notice.
(f) The Institutional Trustee shall not resign as
a Trustee unless either:
(i) the Trust has been completely liquidated
and the proceeds thereof distributed to
the Holders of Securities pursuant to
the terms of the Securities; or
(ii) a Successor Institutional Trustee has
been appointed and accepted that
appointment in accordance with Article
V.
(g) The Institutional Trustee shall act as paying
agent in respect of the Securities and, subject to Section
3.6(r), may authorize one or more Persons (each, a "Paying
Agent") to pay Distributions, redemption payments or
liquidation payments on behalf of the Trust with respect to
the Preferred Securities. Any such Paying Agent shall
comply with Sec. 317(b) of the Trust Indenture Act. Any Paying
Agent may be removed by the Institutional Trustee, after
consultation with the Regular Trustees, at any time and a
successor Paying Agent or additional Paying Agents may be
appointed at any time by the Institutional Trustee, subject
to Section 3.6(r).
(h) The Institutional Trustee shall give prompt
written notice to the Holders of the Securities of any
notice received by it from Holdings of its election to defer
payments of interest on the Debentures by extending the
interest payment period with respect thereto.
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(i) Subject to this Section 3.8, the
Institutional Trustee shall have none of the powers or the
authority of the Regular Trustees set forth in Section 3.6.
(j) The Institutional Trustee shall exercise the
powers, duties and rights set forth in this Section 3.8 and
Section 3.10 in a manner which is consistent with the
purposes and functions of the Trust set out in Section 3.3
and the Institutional Trustee shall not take any action
which is inconsistent with the purposes and functions of the
Trust set forth in Section 3.3.
SECTION 3.9 Delaware Trustee.
----------------
Notwithstanding any other provision of this
Declaration other than Section 5.1(a)(3), the Delaware
Trustee shall not be entitled to exercise any powers, nor
shall the Delaware Trustee have any of the duties and
responsibilities of the Regular Trustees and the
Institutional Trustee described in this Declaration. Except
as set forth in Section 5.1(a)(3), the Delaware Trustee
shall be a Trustee for the sole and limited purpose of
fulfilling the requirements of Sec. 3807 of the Business Trust
Act. No implied covenants or obligations shall be read into
this Declaration against the Delaware Trustee.
SECTION 3.10 Certain Rights and Duties of the
--------------------------------
Institutional Trustee.
---------------------
(a) The Institutional Trustee, before the
occurrence of an Event of Default and after the curing of
all Events of Default that may have occurred, shall
undertake to perform only such duties as are specifically
set forth in this Declaration, and no implied covenants
shall be read into this Declaration against the
Institutional Trustee. In case an Event of Default has
occurred (that has not been cured or waived pursuant to
Section 2.6), the Institutional 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 Institutional 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:
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(A) the duties and obligations of the
Institutional Trustee shall be determined
solely by the express provisions of this
Declaration, and the Institutional Trustee
shall not be liable except for the
performance of such duties and obligations as
are specifically set forth in this
Declaration, and no implied covenants or
obligations shall be read into this
Declaration against the Institutional
Trustee; and
(B) in the absence of bad faith on the part of
the Institutional Trustee, the Institutional
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
Institutional Trustee and conforming to the
requirements of this Declaration; but in the
case of any such certificates or opinions
that by any provision hereof are specifically
required to be furnished to the Institutional
Trustee, the Institutional 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 Institutional Trustee shall not be liable
for any error of judgment made in good faith by a
Responsible Officer of the Institutional Trustee,
unless it shall be proved that the Institutional
Trustee was negligent in ascertaining the pertinent
facts;
(iii) the Institutional 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 as provided herein relating to the time,
method and place of conducting any proceeding for any
remedy available to the Institutional Trustee hereunder
or under the Indenture, or exercising any trust or
power conferred upon the Institutional Trustee under
this Declaration; and
(iv) no provision of this Declaration shall
require the Institutional 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 ground for believing that the
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<PAGE>
repayment of such funds or liability is not reasonably
assured to it under the terms of this Declaration or
adequate indemnity against such risk or liability is
not reasonably assured to it.
(c) Subject to the provisions of Section 3.10(a)
and (b):
(i) whenever in the administration of this
Declaration, the Institutional Trustee shall deem it
desirable that a matter be proved or established prior
to taking, suffering or omitting any action hereunder,
the Institutional Trustee (unless other evidence is
herein specifically prescribed) may, in the absence of
bad faith on its part and, if the Trust is excluded
from the definition of Investment Company solely by
means of Rule 3a-5, subject to the requirements of Rule
3a-5, request and rely upon a certificate, which shall
comply with the provisions of Sec. 314(e) of the Trust
Indenture Act, signed by any two of the Regular
Trustees or by an authorized officer of the Sponsor, as
the case may be;
(ii) The Institutional Trustee (A) may consult
with counsel (which may be counsel to the Sponsor or
any of its Affiliates and may include any of its
employees) selected by it in good faith and with due
care and the written advice or opinion of such counsel
with respect to legal matters shall be full and
complete authorization and protection in respect of any
action taken, suffered or omitted by it hereunder in
good faith and in reliance thereon and in accordance
with such advice and opinion and (B) shall have the
right at any time to seek instructions concerning the
administration of this Declaration from any court of
competent jurisdiction;
(iii) The Institutional Trustee may execute any of
the trusts or powers hereunder or perform any duties
hereunder either directly or by or through agents or
attorneys and the Institutional Trustee shall not be
responsible for any misconduct or negligence on the
part of any agent or attorney appointed by it in good
faith and with due care;
(iv) The Institutional 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 Holders, unless such Holders shall
have offered to the Institutional Trustee reasonable
security and indemnity against the costs, expenses
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<PAGE>
(including attorneys' fees and expenses) and
liabilities that might be incurred by it in complying
with such request or direction; provided that nothing
contained in this clause (iv) shall relieve the
Institutional Trustee of the obligation, upon the
occurrence of an Event of Default (which has not been
cured or waived) to exercise such of the rights and
powers vested in it by this Declaration, and to use the
same degree of care and skill in this exercise, as a
prudent person would exercise or use under the
circumstances in the conduct of his or her own affairs;
and
(v) Any action taken by the Institutional Trustee
or its agents hereunder shall bind the Holders of the
Securities and the signature of the Institutional
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 Institutional 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 Institutional Trustee's or its agent's
taking such action.
SECTION 3.11 Registration Statement and Related Matters.
------------------------------------------
In accordance with the Original Declaration,
Holdings and the Trustees have authorized and directed, and
hereby confirm the authorization of, Holdings, as the
sponsor of the Trust, (i) to file with the Commission and
execute, in each case on behalf of the Trust, (a) the
Registration Statement on Form S-4 (File No. 33- )
(the "1933 Act Registration Statement") and any pre-
effective or post-effective amendments to such Registration
Statement, relating to the registration under the Securities
Act of the Preferred Securities of the Trust, (b) a
Registration Statement on Form 8-A or other appropriate form
(the "1934 Act Registration Statement") (including all pre-
effective and post-effective amendments thereto) relating to
the registration of the Preferred Securities of the Trust
under Section 12(b) of the Exchange Act and (c) an Issuer
Tender Offer Statement on Schedule 13E-4 and any other
tender offer statement required to be filed by the Trust
with the Commission (including, if necessary, Schedule
14D-1) relating to the Offer (collectively, the "Tender
Offer Schedules") and any amendment or supplement thereto;
(ii) to file with the New York Stock Exchange ("NYSE") and
execute on behalf of the Trust a listing application and all
other applications, statements, certificates, agreements and
other instruments as shall be necessary or desirable to
24
<PAGE>
cause the Preferred Securities to be listed on the NYSE;
(iii) to file and execute on behalf of the Trust such
applications, reports, surety bonds, irrevocable consents,
appointments of attorney for service of process and other
papers and documents as shall be necessary or desirable to
register the Preferred Securities under the securities or
"Blue Sky" laws of such jurisdictions as Holdings on behalf
of the Trust, may deem necessary or desirable and (iv) to
execute on behalf of the Trust the Dealer Manager Agreement,
relating to the Offer, substantially in the form included as
Exhibit 1.1 to the 1933 Act Registration Statement. In the
event that any filing referred to in clauses (i)-(iii) above
is required by the rules and regulations of the Commission,
the NYSE or state securities or blue sky laws, to be
executed on behalf of the Trust by the Trustees, the Regular
Trustees, in their capacities as Trustees of the Trust, are
hereby authorized and directed to join in any such filing
and to execute on behalf of the Trust any and all of the
foregoing, it being understood that the Institutional
Trustee and the Delaware Trustee, in their capacities as
Trustees of the Trust, shall not be required to join in any
such filing or execute on behalf of the Trust any such
document unless required by the rules and regulations of the
Commission, the NYSE or state securities or blue sky laws.
In connection with all of the foregoing, Holdings and each
Trustee, solely in its capacity as Trustee of the Trust,
have constituted and appointed, and hereby confirm the
appointment of, _____________________, and each of them, as
his, her or its, as the case may be, true and lawful
attorneys-in-fact, and agents, with full power of
substitution and resubstitution, for Holdings or such
Trustee or in Holdings's or such Trustee's name, place and
stead, in any and all capacities, to sign any and all
amendments (including post-effective amendments) to the 1933
Act Registration Statement, the 1934 Act Registration
Statement and the Tender Offer Schedules and to file the
same, with all exhibits thereto, and other documents in
connection therewith, with the Commission, granting unto
said attorneys-in-fact and agents full power and authority
to do and perform each and every act and thing requisite and
necessary to be done in connection therewith, as fully to
all intents and purposes as Holdings or such Trustee might
or could do in person, hereby ratifying and confirming all
that said attorneys-in-fact and agents or any of them, or
their or his or her substitute or substitutes, shall do or
cause to be done by virtue hereof.
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SECTION 3.12 Filing of Amendments to Certificate of Trust.
--------------------------------------------
The Certificate of Trust as filed with the
Secretary of State of the State of Delaware on June __, 1995
is attached hereto as Exhibit A. On or after the date of
execution of this Declaration, the Trustees shall cause the
filing with the Secretary of State of the State of Delaware
of such amendments to the Certificate of Trust as the
Trustees shall deem necessary or desirable.
SECTION 3.13 Execution of Documents by Regular Trustees.
------------------------------------------
Unless otherwise determined by the Regular
Trustees and except as otherwise required by the Business
Trust Act with respect to the Certificate of Trust or
otherwise, a majority of, or if there are only two, both of,
the Regular Trustees are authorized to execute and deliver
on behalf of the Trust any documents which the Regular
Trustees have the power and authority to execute or deliver
pursuant to this Declaration.
SECTION 3.14 Trustees Not Responsible for Recitals or
Issuance of Securities.
----------------------------------------
The recitals contained in this Declaration and the
Securities shall be taken as the statements of the Sponsor
and the Trustees do not assume any responsibility for their
correctness. The Trustees make no representations as to the
value or condition of the property of the Trust or any part
thereof. The Trustees make no representations as to the
validity or sufficiency of this Declaration or the
Securities.
SECTION 3.15 Duration of Trust.
-----------------
The Trust, absent termination pursuant to the
provisions of Article VIII hereof, shall have existence
until December 31, 2044.
26
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ARTICLE IV
SPONSOR
SECTION 4.1 Purchase of Common Securities by Sponsor.
----------------------------------------
The Sponsor will purchase Common Securities issued
by the Trust at the same time as the Preferred Securities
are issued in exchange for Depositary Shares pursuant to the
Offer, such purchase to be in an amount equal to 3% of the
sum of (i) the aggregate stated liquidation amount of the
Preferred Securities issued in exchange for Depositary
Shares pursuant to the Offer and (ii) the proceeds derived
from the sale of the Common Securities.
SECTION 4.2 Expenses.
--------
(a) The Sponsor shall be responsible for and
shall pay for all debts and obligations (other than with
respect to the Securities) and all costs and expenses of the
Trust (including, but not limited to, costs and expenses
relating to the organization of the Trust, the issuance of
the Preferred Securities pursuant to the Offer, the fees and
expenses (including reasonable counsel fees and expenses) of
the Trustees (including any amounts payable under Article
X), the costs and expenses relating to the operation of the
Trust, including without limitation, costs and expenses of
accountants, attorneys, statistical or bookkeeping services,
expenses for printing and engraving and computing or
accounting equipment, paying agent(s), registrar(s),
transfer agent(s), duplicating, travel and telephone and
other telecommunications expenses and costs and expenses
incurred in connection with the disposition of Trust
assets).
(b) The Sponsor will pay any and all taxes (other
than United States withholding taxes attributable to the
Trust or its assets) and all liabilities, costs and expenses
with respect to such taxes of the Trust.
(c) The Sponsor's obligations under this Section
4.2 shall be for the benefit of, and shall be enforceable
by, any Person to whom any such debts, obligations, costs,
expenses and taxes are owed (a "Creditor") whether or not
such Creditor has received notice hereof. Any such Creditor
may enforce the Sponsor's obligations under this Section 4.2
directly against the Sponsor and the Sponsor irrevocably
waives any right or remedy to require that any such Creditor
take any action against the Trust or any other Person before
proceeding against the Sponsor. The Sponsor agrees to
execute such additional agreements as may be necessary or
27
<PAGE>
desirable in order to give full effect to the provisions of
this Section 4.2.
ARTICLE V
TRUSTEES
SECTION 5.1 Number of Trustees; Qualifications.
----------------------------------
(a) The number of Trustees initially shall be
five (5). At any time (i) before the issuance of the
Securities, the Sponsor may, by written instrument, increase
or decrease the number of, and appoint, remove and replace
the, Trustees, and (ii) after the issuance of the Securities
and except as provided in clause (5) below and Section
5.2(a)(ii)(B) with respect to the Special Regular Trustee,
the number of Trustees may be increased or decreased solely
by, and Trustees may be appointed, removed or replaced
solely by, vote of Holders of Common Securities representing
a Majority in liquidation amount of the Common Securities
voting as a class; provided that in any case:
(1) the number of Trustees shall be at least
five (5) unless the Trustee that acts as the
Institutional Trustee also acts as the Delaware
Trustee, in which cases the number of Trustees
shall be at least three (3);
(2) unless a Special Regular Trustee has been
appointed (which appointment shall not impair the
right of the Holders of Common Securities to
increase or decrease the number of, or to appoint,
remove or replace, Trustees (other than the
Special Regular Trustee) as provided above), at
least a majority of the Trustees shall at all
times be officers, directors or employees of
Holdings;
(3) if required by the Business Trust Act,
one Trustee (the "Delaware Trustee") shall be
either a natural person who is a resident of the
State of Delaware or, if not a natural person, an
entity which has its principal place of business
in the State of Delaware and otherwise is
permitted to act as a Trustee hereunder under the
laws of the State of Delaware, except that if the
Institutional Trustee has its principal place of
business in the State of Delaware and otherwise is
permitted to act as a Trustee hereunder under the
laws of the State of Delaware, then the
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Institutional Trustee shall also be the Delaware
Trustee and Section 3.9 shall have no application;
(4) there shall at all times be an
Institutional Trustee hereunder which shall
satisfy the requirements of Section 5.1(c); and
(5) the number of Trustees shall be
increased automatically by one (1) if an
Appointment Event has occurred and is continuing
and the Holders of a Majority in liquidation
amount of the Preferred Securities appoint a
Special Regular Trustee in accordance with
Section 5.2(a)(ii)(B) and the terms of the
Preferred Securities.
Each Trustee shall be either a natural person at least 21
years of age or a legal entity which shall act through one
or more duly appointed representatives.
(b) The initial Regular Trustees shall be:
c/o RJR Nabisco Holding Corp.
1301 Avenue of the Americas
New York, New York 10019
(c) There shall at all times be one Trustee which
shall act as Institutional Trustee. In order to act as
Institutional Trustee hereunder, such Trustee 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 $50,000,000, 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
5.1(c)(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.
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If at any time the Institutional Trustee shall cease to
satisfy the requirements of clauses (i)-(ii) above, the
Institutional Trustee shall immediately resign in the manner
and with the effect set out in Section 5.2(d). If the
Institutional Trustee has or shall acquire any "conflicting
interest" within the meaning of Sec. 310(b) of the Trust
Indenture Act, the Institutional Trustee and the Holders of
the Common Securities (as if such Holders were the obligor
referred to in Sec. 310(b) of the Trust Indenture Act) shall in
all respects comply with the provisions of Sec. 310(b) of the
Trust Indenture Act. The Preferred Guarantee shall be
deemed to be specifically described in this Declaration for
the purposes of clause (i) of the first proviso contained in
Sec. 310(b) of the Trust Indenture Act.
The initial Trustee which shall serve as the
Institutional Trustee is The Bank of New York, whose address
is as set forth in Section 14.1(b).
(d) The initial Trustee which shall serve as the
Delaware Trustee is The Bank of New York (Delaware), whose
address is as set forth in Section 14.1(c).
(e) Any action taken by (i) Holders of Common
Securities pursuant to this Article V or (ii) Holders of
Preferred Securities pursuant to this Article V to appoint
or remove a Special Regular Trustee upon the occurrence of
an Appointment Event, shall be taken at a meeting of Holders
of Common Securities or Preferred Securities, as the case
may be, convened for such purpose or by written consent as
provided in Section 12.2.
(f) No amendment may be made to this Section 5.1
which would change any rights with respect to the number,
existence or appointment and removal of Trustees (other than
any Special Regular Trustee), except with the consent of
each Holder of Common Securities.
(g) No amendment may be made to this Section 5.1
or Section 5.2(a)(ii)(B), which would change the rights of
Holders of Preferred Securities to appoint, remove or
replace a Special Regular Trustee except with the consent of
each Holder of Preferred Securities.
SECTION 5.2 Appointment, Removal and Resignation of
---------------------------------------
Trustees.
--------
(a) Subject to Section 5.2(b), Trustees may be appointed or
removed without cause at any time:
30
<PAGE>
(i) until the issuance of the Securities, by written
instrument executed by the Sponsor; and
(ii) after the issuance of the Securities,
(A) other than with respect to the Special
Regular Trustee, by vote of the Holders of
a Majority in liquidation amount of the
Common Securities voting as a class; and
(B) if an Appointment Event has occurred and is
continuing, one (1) additional Regular
Trustee (the "Special Regular Trustee") may
be appointed, who need not be an Affiliate
of the Sponsor, by vote of the Holders of a
Majority in liquidation amount of the
Preferred Securities, voting as a class and
such Special Regular Trustee may only be
removed (otherwise than by the operation of
Section 5.2(c)), by vote of the Holders of
a Majority in liquidation amount of the
Preferred Securities voting as a class.
(b) (i) The Trustee that acts as Institutional Trustee
shall not be removed in accordance with Section
5.2(a) until a Successor Institutional Trustee
possessing the qualifications to act as
Institutional Trustee under Section 5.1(c) has
been appointed and has accepted such appointment
by written instrument executed by such Successor
Institutional Trustee and delivered to the Regular
Trustees, the Sponsor and the Institutional
Trustee being removed; and
(ii) the Trustee that acts as Delaware Trustee shall
not be removed in accordance with Section 5.2(a)
until a successor Trustee possessing the
qualifications to act as Delaware Trustee under
Section 5.1(a)(3) (a "Successor Delaware Trustee")
has been appointed and has accepted such
appointment by written instrument executed by such
Successor Delaware Trustee and delivered to the
Regular Trustees, the Sponsor and the Delaware
Trustee being removed.
(c) A Trustee appointed to office shall hold office until
his successor shall have been appointed or until his
death, removal or resignation, provided that a Special
-------- ----
Regular Trustee shall only hold office while an
Appointment Event is continuing and shall cease to hold
office immediately after the Appointment Event pursuant
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to which the Special Regular Trustee was appointed and
all other Appointment Events cease to be continuing.
(d) Any Trustee may resign from office (without need for
prior or subsequent accounting) by an instrument (a
"Resignation Request") 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 Institutional Trustee shall be
effective until a Successor Institutional
Trustee possessing the qualifications to
act as Institutional Trustee under Section
5.1(c) has been appointed and has accepted
such appointment by instrument executed by
such Successor Institutional Trustee and
delivered to the Trust, the Sponsor and the
resigning Institutional Trustee;
(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; and
(iii) no such resignation of a Special Regular
Trustee shall be effective until the 60th
day following delivery of the Resignation
Request to the Sponsor and the Trust or
such later date specified in the
Resignation Request during which period the
Holders of the Preferred Securities shall
have the right to appoint a successor
Special Regular Trustee as provided in this
Article V.
(e) If no Successor Institutional Trustee or Successor
Delaware Trustee shall have been appointed and accepted
appointment as provided in this Section 5.2 within 60
days after delivery to the Sponsor and the Trust of a
Resignation Request, the resigning Institutional
Trustee or Delaware Trustee may petition any court of
competent jurisdiction for appointment of a Successor
Institutional Trustee or Successor Delaware Trustee.
Such court may thereupon after such notice, if any, as
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it may deem proper and prescribe, appoint a Successor
Institutional Trustee or Successor Delaware Trustee, as
the case may be.
SECTION 5.3 Vacancies Among Trustees.
------------------------
If a Trustee ceases to hold office for any reason
and the number of Trustees is not reduced pursuant to
Section 5.1 or if the number of Trustees is increased
pursuant to Section 5.1, a vacancy shall occur. A
resolution certifying the existence of such vacancy by a
majority of the Regular Trustees shall be conclusive
evidence of the existence of such vacancy. The vacancy
shall be filled with a Trustee appointed in accordance with
the requirements of this Article V.
SECTION 5.4 Effect of Vacancies.
-------------------
The death, resignation, retirement, removal,
bankruptcy, dissolution, liquidation, incompetence or
incapacity to perform the duties of a Trustee, or any one of
them, shall not operate to annul the Trust. Whenever a
vacancy in the number of Regular Trustees shall occur until
such vacancy is filled as provided in this Article V, the
Regular Trustees in office, regardless of their number,
shall have all the powers granted to the Regular Trustees
and shall discharge all the duties imposed upon the Regular
Trustees by this Declaration.
SECTION 5.5 Meetings.
--------
Meetings of the Regular Trustees shall be held
from time to time upon the call of any Trustee. Regular
meetings of the Regular Trustees may be held at a time and
place fixed by resolution of the Regular Trustees. Notice
of any in-person meetings of the Regular Trustees shall be
hand delivered or otherwise delivered in writing (including
by facsimile, with a hard copy by overnight courier) not
less than 48 hours before such meeting. Notice of any
telephonic meetings of the Regular Trustees or any committee
thereof shall be hand delivered or otherwise delivered in
writing (including by facsimile, with a hard copy by
overnight courier) not less than 24 hours before a meeting.
Notices shall contain a brief statement of the time, place
and anticipated purposes of the meeting. The presence
(whether in person or by telephone) of a Regular Trustee at
a meeting shall constitute a waiver of notice of such
meeting except where a Regular Trustee attends a meeting for
the express purpose of objecting to the transaction of any
activity on the ground that the meeting has not been
lawfully called or convened. Unless provided otherwise in
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this Declaration, any action of the Regular Trustees may be
taken at a meeting by vote of a majority of the Regular
Trustees present (whether in person or by telephone) and
eligible to vote with respect to such matter, provided that
a Quorum is present, or without a meeting by the unanimous
written consent of the Regular Trustees.
SECTION 5.6 Delegation of Power.
-------------------
(a) Any Regular Trustee may, by power of attorney
consistent with applicable law, delegate to any other
natural person over the age of 21 his or her power for the
purpose of executing any registration statement or amendment
thereto or other document or schedule filed with the
Commission or making any other governmental filing
(including, without limitation to filings referred to in
Section 3.11).
(b) The Regular Trustees shall have power to
delegate from time to time to such of their number or to
officers of the Trust the doing of such things and the
execution of such instruments either in the name of the
Trust or the names of the Regular Trustees or otherwise as
the Regular Trustees may deem expedient, to the extent such
delegation is not prohibited by applicable law or contrary
to the provisions of the Trust, as set forth herein.
ARTICLE VI
DISTRIBUTIONS
SECTION 6.1 Distributions.
-------------
Holders shall receive periodic distributions,
redemption payments and liquidation distributions in
accordance with the applicable terms of the relevant
Holder's Securities ("Distributions"). Distributions shall
be made to the Holders of Preferred Securities and Common
Securities in accordance with the terms of the Securities as
set forth in Exhibits B and C hereto. If and to the extent
that Holdings makes a payment of interest (including
Compounded Interest (as defined in the Indenture)), premium
and principal on the Debentures held by the Institutional
Trustee (the amount of any such payment being a "Payment
Amount"), the Institutional Trustee shall and is directed to
promptly make a Distribution of the Payment Amount to
Holders in accordance with the terms of the Securities as
set forth in Exhibits B and C hereto.
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ARTICLE VII
ISSUANCE OF SECURITIES
SECTION 7.1 General Provisions Regarding Securities.
---------------------------------------
(a) The Regular Trustees shall issue on behalf of
the Trust securities in fully registered form representing
undivided beneficial interests in the assets of the Trust in
accordance with Section 7.1(b) and for the consideration
specified in Section 3.3.
(b) The Regular Trustees shall issue on behalf of
the Trust one class of preferred securities representing
undivided beneficial interests in the assets of the Trust
having such terms as are set forth in Exhibit B (the
"Preferred Securities") which terms are incorporated by
reference in, and made a part of, this Declaration as if
specifically set forth herein, and one class of common
securities representing undivided beneficial interests in
the assets of the Trust having such terms as are set forth
in Exhibit C (the "Common Securities") which terms are
incorporated by reference in, and made a part of, this
Declaration as if specifically set forth herein. The Trust
shall have no securities or other interests in the assets of
the Trust other than the Preferred Securities and the Common
Securities.
(c) The Certificates shall be signed on behalf of
the Trust by the Regular Trustees (or if there are more than
two Regular Trustees by any two of the Regular Trustees).
Such signatures may be the manual or facsimile signatures of
the present or any future Regular Trustee. Typographical
and other minor errors or defects in any such reproduction
of any such signature shall not affect the validity of any
Security. In case any Regular Trustee of the Trust who
shall have signed any of the Certificates shall cease to be
such Regular Trustee before the Certificate so signed shall
be delivered by the Trust, such Certificate nevertheless may
be delivered as though the person who signed such
Certificate had not ceased to be such Regular Trustee; and
any Certificate may be signed on behalf of the Trust by such
persons as, at the actual date of the execution of such
Security, shall be the Regular Trustees of the Trust,
although at the date of the execution and delivery of the
Declaration any such person was not such a Regular Trustee.
Certificates shall be printed, lithographed or engraved or
may be produced in any other manner as is reasonably
acceptable to the Regular Trustees, as evidenced by their
execution thereof, and may have such letters, numbers or
other marks of identification or designation and such
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<PAGE>
legends or endorsements as the Regular Trustees may deem
appropriate, or as may be required to comply with any law or
with any rule or regulation made pursuant thereto or with
any rule or regulation of any stock exchange on which
Securities may be listed, or to conform to usage. Pending
the preparation of definitive Certificates, the Regular
Trustees on behalf of the Trust may execute temporary
Certificates (printed, lithographed or typewritten), in
substantially in the form of the definitive Certificates in
lieu of which they are issued, but with such omissions,
insertions and variations as may be appropriate for
temporary Certificates all as may be determined by the
Regular Trustees. Each temporary Certificate shall be
executed by the Regular Trustees on behalf of the Trust upon
the same conditions and in substantially the same manner,
and with like effect, as definitive Certificates. Without
unnecessary delay, the Regular Trustees on behalf of the
Trust will execute and furnish definitive Certificates and
thereupon any or all temporary Certificates may be
surrendered to the transfer agent and registrar in exchange
therefor (without charge to the Holders). Each Certificate
whether in temporary or definitive form shall be
countersigned by the manual or facsimile signature of an
authorized signatory of the Person acting as registrar and
transfer agent for the Securities, which shall initially be
the Institutional Trustee.
(d) 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.
(e) 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.
(f) Every Person, by virtue of having become a
Holder or a Preferred Security Beneficial Owner in
accordance with the terms of this Declaration, shall be
deemed to have expressly assented and agreed to the terms
of, and shall be bound by this Declaration.
(g) Upon issuance of the Securities as provided
in this Declaration, the Regular Trustees on behalf of the
Trust shall return to Holdings the $10 constituting initial
trust assets as set forth in the Original Declaration.
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ARTICLE VIII
TERMINATION OF TRUST
SECTION 8.1 Termination of Trust.
--------------------
This Declaration and the Trust shall terminate and
be of no further force or effect when:
(i) all of the Securities shall have been called
for redemption and the amounts necessary for redemption
thereof shall have been paid to the Holders of
Securities in accordance with the terms of the
Securities; or
(ii) all of the Debentures shall have been
distributed to the Holders of Securities in exchange
for all of the Securities in accordance with the terms
of the Securities; or
(iii) upon the expiration of the term of the Trust
as set forth in Section 3.15,
and a certificate of cancellation is filed by the Trustees
with the Secretary of State of the State of Delaware. The
Trustees shall so file such a certificate as soon as
practicable after the occurrence of an event referred to in
this Section 8.1.
The provisions of Sections 3.10 and 4.2 and
Article X shall survive the termination of the Trust.
ARTICLE IX
TRANSFER OF INTERESTS
SECTION 9.1 Transfer of Securities.
----------------------
(a) Securities may only be transferred, in whole
or in part, in accordance with the terms and conditions set
forth in this Declaration. 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, Preferred
Securities shall be freely transferable.
(c) Subject to this Article IX, Holdings and any
Related Party may only transfer Common Securities to
Holdings or a Related Party, provided that any such transfer
shall be subject to the condition that the transferor shall
have obtained (1) either a ruling from the Internal Revenue
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<PAGE>
Service or an unqualified written opinion addressed to the
Trust and delivered to the Trustees of nationally recognized
independent tax counsel experienced in such matters to the
effect that such transfer will not (i) cause the Trust to be
treated as issuing a class of interests in the Trust
differing from the class of interests represented by the
Common Securities originally issued to Holdings, (ii) result
in the Trust acquiring or disposing of, or being deemed to
have acquired or disposed of, an asset, or (iii) result in
or cause the Trust to be treated as anything other than a
grantor trust for United States federal income tax purposes
and (2) an unqualified written opinion addressed to the
Trust and delivered to the Trustees of a nationally
recognized independent counsel experienced in such matters
that such transfer will not cause the Trust to be an
Investment Company or controlled by an Investment Company.
SECTION 9.2 Transfer of Certificates.
------------------------
The Regular Trustees shall provide for the
registration of Certificates and of transfers of
Certificates, which will be effected without charge but only
upon payment (with such indemnity as the Regular Trustees
may require) in respect of any tax or other government
charges which may be imposed in relation to it. Upon
surrender for registration of transfer of any Certificate,
the Regular Trustees shall cause one or more new
Certificates to be issued in the name of the designated
transferee or transferees. Every Certificate surrendered
for registration of transfer shall be accompanied by a
written instrument of transfer in form satisfactory to the
Regular Trustees duly executed by the Holder or such
Holder's attorney duly authorized in writing. Each
Certificate surrendered for registration of transfer shall
be canceled by the Regular Trustees. A transferee of a
Certificate shall be entitled to the rights and subject to
the obligations of a Holder hereunder upon the receipt by
such transferee of a Certificate. By acceptance of a
Certificate, each transferee shall be deemed to have agreed
to be bound by this Declaration.
SECTION 9.3 Deemed Security Holders.
-----------------------
The Trustees may treat the Person in whose name
any Certificate shall be registered on the books and records
of the Trust as the sole holder of such Certificate and of
the Securities represented by such Certificate for purposes
of receiving Distributions and for all other purposes
whatsoever and, accordingly, shall not be bound to recognize
any equitable or other claim to or interest in such
Certificate or in the Securities represented by such
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Certificate on the part of any Person, whether or not the
Trustees shall have actual or other notice thereof.
SECTION 9.4 Book Entry Interests.
--------------------
The Preferred Securities Certificates, on original
issuance, will be issued in fully registered form. With
respect to any Certificates registered on the books and
records of the Trust in the name of a Clearing Agency or the
nominee of a Clearing Agency:
(i) 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 such Certificates and receiving
approvals, votes or consents hereunder) as the
Preferred Security Holder and the sole holder of such
Certificates and, except as set forth herein, shall
have no obligation to the Preferred Security Beneficial
Owners;
(ii) 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
(iii) the rights of the Preferred Security
Beneficial Owners shall be exercised only through the
Clearing Agency and shall be limited to those
established by law and agreements between such
Preferred Security Beneficial Owners and the Clearing
Agency and/or the Clearing Agency Participants. The
Clearing Agency will make book entry transfers among
Clearing Agency Participants and receive and transmit
payments of Distributions on such Certificates to such
Clearing Agency Participants.
SECTION 9.5 Notices to Holders of Certificates.
----------------------------------
Whenever a notice or other communication to the
Holders is required to be given under this Declaration, the
relevant Trustees shall give such notices and communications
to the Holders and, with respect to any Preferred Security
Certificate registered in the name of a Clearing Agency or
the nominee of a Clearing Agency, the Trustees shall, except
as set forth herein, have no obligations to the Preferred
Security Beneficial Owners.
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SECTION 9.6 Appointment of Successor Clearing Agency.
----------------------------------------
If any Clearing Agency elects to discontinue its
services as securities depository with respect to the
Preferred Securities, the Regular Trustees may, in their
sole discretion, appoint a successor Clearing Agency with
respect to the Preferred Securities.
SECTION 9.7 Definitive Preferred Securities Certificates.
--------------------------------------------
If (i) a Clearing Agency elects to discontinue its
services as securities depository with respect to the
Preferred Securities and a successor Clearing Agency is not
appointed within 90 days after such discontinuance pursuant
to Section 9.6 or (ii) the Regular Trustees elect after
consultation with the Sponsor to terminate the book entry
system through the Clearing Agency with respect to the
Preferred Securities, then upon surrender of the
Certificates representing the Book Entry Interests with
respect to the Preferred Securities by the Clearing Agency,
accompanied by registration instructions, the Regular
Trustees shall cause definitive Preferred Security
Certificates to be delivered to Preferred Security
Beneficial Owners in accordance with the instructions of the
Clearing Agency. Neither the Trustees nor the Trust shall
be liable for any delay in delivery of such instructions and
each of them may conclusively rely on and shall be protected
in relying on, such instructions.
SECTION 9.8 Mutilated, Destroyed, Lost or Stolen
Certificates.
------------------------------------
If (a) any mutilated Certificates should be
surrendered to the Regular Trustees, or if the Regular
Trustees shall receive evidence to their satisfaction of the
destruction, loss or theft of any Certificate; and (b)
there shall be delivered to the Regular Trustees such
security or indemnity as may be required by them to keep
each of them harmless, then in the absence of notice that
such Certificate shall have been acquired by a bona fide
purchaser, any two Regular Trustees on behalf of the Trust
shall execute and deliver, in exchange for or in lieu of any
such mutilated, destroyed, lost or stolen Certificate, a new
Certificate of like denomination. In connection with the
issuance of any new Certificate under this Section 9.8, the
Regular Trustees may require the payment of a sum sufficient
to cover any tax or other governmental charge that may be
imposed in connection therewith. Any duplicate Certificate
issued pursuant to this Section shall constitute conclusive
evidence of an ownership interest in the relevant
Securities, as if originally issued, whether or not the
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lost, stolen or destroyed Certificate shall be found at any
time.
ARTICLE X
LIMITATION OF LIABILITY; INDEMNIFICATION
SECTION 10.1 Exculpation.
-----------
(a) No Indemnified Person shall be liable,
responsible or accountable in damages or otherwise to the
Trust or any Covered Person for any loss, damage or claim
incurred by reason of any act or omission performed or
omitted by such Indemnified Person in good faith on behalf
of the Trust and in a manner such Indemnified Person
reasonably believed to be within the scope of the authority
conferred on such Indemnified Person by this Declaration or
by law, except that an Indemnified Person shall be liable
for any such loss, damage or claim incurred by reason of
such Indemnified Person's gross negligence (or, in the case
of the Institutional Trustee, negligence) or willful
misconduct with respect to such acts or omissions.
(b) An Indemnified Person shall be fully
protected in relying in good faith upon the records of the
Trust and upon such information, opinions, reports or
statements presented to the Trust by any Person as to
matters the Indemnified Person reasonably believes are
within such other Person's professional or expert competence
and who has been selected with reasonable care by or on
behalf of the Trust, including information, opinions,
reports or statements as to the value and amount of the
assets, liabilities, profits, losses, or any other facts
pertinent to the existence and amount of assets from which
Distributions to Holders of Securities might properly be
paid.
(c) Pursuant to Sec. 3803 (a) of the Business Trust
Act, the Holders of Securities, in their capacities as
Holders, shall be entitled to the same limitation of
liability extended to stockholders of private corporations
for profit organized under the General Corporation Law of
the State of Delaware.
SECTION 10.2 Indemnification.
---------------
(a) To the fullest extent permitted by applicable
law, the Sponsor shall indemnify and hold harmless each
Indemnified Person from and against any loss, damage or
claim incurred by such Indemnified Person by reason of any
act or omission performed or omitted by such Indemnified
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Person in good faith on behalf of the Trust and in a manner
such Indemnified Person reasonably believed to be within the
scope of authority conferred on such Indemnified Person by
this Declaration, except that no Indemnified Person shall be
entitled to be indemnified in respect of any loss, damage or
claim incurred by such Indemnified Person by reason of gross
negligence (or, in the case of the Institutional Trustee,
negligence) or willful misconduct with respect to such acts
or omissions.
(b) To the fullest extent permitted by applicable
law, expenses (including legal fees) incurred by an
Indemnified Person in defending any claim, demand, action,
suit or proceeding shall, from time to time, be advanced by
the Sponsor prior to the final disposition of such claim,
demand, action, suit or proceeding upon receipt by the
Sponsor of an undertaking by or on behalf of the Indemnified
Person to repay such amount if it shall be determined that
the Indemnified Person is not entitled to be indemnified as
authorized in Section 10.2(a).
ARTICLE XI
ACCOUNTING
SECTION 11.1 Fiscal Year.
-----------
The fiscal year ("Fiscal Year") of the Trust shall
be the calendar year, or such other year as is required by
the Code.
SECTION 11.2 Certain Accounting Matters.
--------------------------
(a) At all times during the existence of the
Trust, the Regular Trustees shall keep, or cause to be kept,
full books of account, records and supporting documents,
which shall reflect in reasonable detail, each transaction
of the Trust. The books of account shall be maintained on
the accrual method of accounting, in accordance with
generally accepted accounting principles, consistently
applied. The Trust shall use the accrual method of
accounting for United States federal income tax purposes.
The books and records of the Trust, together with a copy of
this Declaration and a certified copy of the Certificate of
Trust, or any amendment thereto, shall at all times be
maintained at the principal office of the Trust and shall be
open for inspection for any examination by any Holder or its
duly authorized representative for any purpose reasonably
related to its interest in the Trust during normal business
hours.
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(b) The Regular Trustees shall, as soon as
available after the end of each Fiscal Year of the Trust,
cause to be prepared and mailed to each Holder of Securities
unaudited financial statements of the Trust for such Fiscal
Year, prepared in accordance with generally accepted
accounting principles, provided that if the Trust is
required to comply with the periodic reporting requirements
of Sections 13(a) or 15(d) of the Exchange Act, such
financial statements for such Fiscal Year shall be examined
and reported on by a firm of independent certified public
accountants selected by the Regular Trustees (which firm may
be the firm used by the Sponsor).
(c) The Regular Trustees shall cause to be
prepared and mailed to each Holder of Securities, an annual
United States federal income tax information statement, on
such form as is required by the Code, containing such
information with regard to the Securities held by each
Holder as is required by the Code and the Treasury
Regulations. Notwithstanding any right under the Code to
deliver any such statement at a later date, the Regular
Trustees shall endeavor to deliver all such statements
within 30 days after the end of each Fiscal Year of the
Trust.
(d) The Regular Trustees shall cause to be
prepared and filed with the appropriate taxing authority,
an annual United States federal income tax return, on such
form as is required by the Code, and any other annual income
tax returns required to be filed by the Regular Trustees on
behalf of the Trust with any state or local taxing
authority, such returns to be filed as soon as practicable
after the end of each Fiscal Year of the Trust.
SECTION 11.3 Banking.
-------
The Trust shall maintain one or more bank accounts
in the name and for the sole benefit of the Trust. The sole
signatories for such accounts shall be designated by the
Regular Trustees.
SECTION 11.4 Withholding.
-----------
The Trust and the 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,
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its withholding obligations. The Trust shall file required
forms with applicable jurisdictions and, unless an exemption
from withholding is properly established by a Holder, shall
remit amounts withheld with respect to the Holder to
applicable jurisdictions. To the extent that the Trust is
required to withhold and pay over any amounts to any
authority with respect to distributions or allocations to
any Holder, the amount withheld shall be deemed to be a
distribution in the amount of the withholding to the Holder.
In the event of any claimed overwithholding, Holders shall
be limited to an action against the applicable jurisdiction.
If the amount to be withheld was not withheld from a
Distribution, the Trust may reduce subsequent Distributions
by the amount of such withholding.
ARTICLE XII
AMENDMENTS AND MEETINGS
SECTION 12.1 Amendments.
----------
(a) Except as otherwise provided in this
Declaration or by any applicable terms of the Securities,
this Declaration may be amended by, and only by, a written
instrument executed by a majority of the Regular Trustees;
provided, however, that (i) no amendment to this Declaration
-------- -------
shall be made unless the Regular Trustees shall have
obtained (A) either a ruling from the Internal Revenue
Service or a written unqualified opinion of nationally
recognized independent tax counsel experienced in such
matters to the effect that such amendment will not cause the
Trust to be classified for United States federal income tax
purposes as an association taxable as a corporation or a
partnership and to the effect that the Trust will continue
to be treated as a grantor trust for purposes of United
States federal income taxation and (B) a written unqualified
opinion of nationally recognized independent counsel
experienced in such matters to the effect that such
amendment will not cause the Trust to be an Investment
Company which is required to be registered under the
Investment Company Act, (ii) at such time after the Trust
has issued any Securities which remain outstanding, any
amendment which 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, (iii) Section
4.2, Section 9.1(c) and this Section 12.1 shall not be
amended without the consent of all of the Holders of the
Securities, (iv) no amendment which adversely affects the
rights, powers and privileges of the Institutional Trustee
shall be made without the consent of the Institutional
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Trustee, (v) Article IV shall not be amended without the
consent of the Sponsor, (vi) the rights of Holders of Common
Securities under Article V to increase or decrease the
number of, and to appoint, replace or remove, Trustees
(other than a Special Regular Trustee) shall not be amended
without the consent of each Holder of Common Securities and
(vii) the rights of Holders of Preferred Securities to
appoint or remove a Special Regular Trustee shall not be
amended without the consent of each Holder of Preferred
Securities.
(b) Notwithstanding Section 12.2(a)(ii), this
Declaration may be amended without the consent of the
Holders of the Securities to (i) cure any ambiguity, (ii)
correct or supplement any provision in this Declaration that
may be defective or inconsistent with any other provision of
this Declaration, (iii) to add to the covenants,
restrictions or obligations of the Sponsor, and (iv) to
conform to any changes in Rule 3a-5 or any change in
interpretation or application of Rule 3a-5 by the
Commission, which amendment does not adversely affect the
rights, preferences or privileges of the Holders.
SECTION 12.2 Meetings of the Holders of Securities;
Action by Written Consent.
--------------------------------------
(a) Meetings of the Holders of Preferred
Securities and/or Common Securities may be called at any
time by the Regular Trustees (or as provided in the terms of
the Securities) to consider and act on any matter on which
Holders of such class of Securities are entitled to act
under the terms of this Declaration, the terms of the
Securities or the rules of any stock exchange on which the
Preferred Securities are listed or admitted for trading.
The Regular Trustees shall call a meeting of Holders of
Preferred Securities or Common Securities, if directed to do
so by Holders of at least 10% in liquidation amount of such
class of Securities. Such direction shall be given by
delivering to the Regular Trustees one or more calls in a
writing stating that the signing Holders of Securities wish
to call a meeting and indicating the general or specific
purpose for which the meeting is to be called. Any Holders
of Securities calling a meeting shall specify in writing the
Certificates held by the Holders of Securities exercising
the right to call a meeting and only those specified
Certificates shall be counted for purposes of determining
whether the required percentage set forth in the second
sentence of this paragraph has been met.
45
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(b) Except to the extent otherwise provided in
the terms of the Securities, the following provision shall
apply to meetings of Holders of Securities:
(i) Notice of any such meeting shall be given by
mail to all the Holders of Securities having a right to
vote thereat not less than 7 days nor more than 60 days
prior to the date of such meeting. Whenever a vote,
consent or approval of the Holders of Securities is
permitted or required under this Declaration or the
rules of any stock exchange on which the Preferred
Securities are listed or admitted for trading, such
vote, consent or approval may be given at a meeting of
the Holders of Securities. Any action that may be
taken at a meeting of the Holders of Securities may be
taken without a meeting if a consent in writing setting
forth the action so taken is signed by Holders of
Securities owning not less than the minimum aggregate
liquidation amount of Securities that would be
necessary to authorize or take such action at a meeting
at which all Holders of Securities having a right to
vote thereon were present and voting. Prompt notice of
the taking of action without a meeting shall be given
to the Holders of Securities entitled to vote who have
not consented in writing. The Regular Trustees may
specify that any written ballot submitted to the
Holders of Securities for the purpose of taking any
action without a meeting shall be returned to the Trust
within the time specified by the Regular Trustees.
(ii) Each Holder of a Security may authorize any
Person to act for it by proxy on all matters in which a
Holder of a Security 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 the
Security executing it. Except as otherwise provided
herein or in the terms of the Securities, all matters
relating to the giving, voting or validity of proxies
shall be governed by the General Corporation Law of the
State of Delaware relating to proxies, and judicial
interpretations thereunder, as if the Trust were a
Delaware corporation and the Holders of the Securities
were stockholders of a Delaware corporation.
(iii) Each meeting of the Holders of the Securities
shall be conducted by the Regular Trustees or by such
other Person that the Regular Trustees may designate.
46
<PAGE>
(iv) Unless otherwise provided in the Business
Trust Act, this Declaration or the rules of any stock
exchange on which the Preferred Securities are then
listed or admitted for trading, the Regular Trustees,
in their sole discretion, shall establish all other
provisions relating to meetings of Holders of
Securities, including notice of the time, place or
purpose of any meeting at which any matter is to be
voted on by any Holders of Securities, waiver of any
such notice, action by consent without a meeting, the
establishment of a record date, quorum requirements,
voting in person or by proxy or any other matter with
respect to the exercise of any such right to vote.
ARTICLE XIII
REPRESENTATIONS OF INSTITUTIONAL TRUSTEE
AND DELAWARE TRUSTEE
SECTION 13.1 Representations and Warranties of
Institutional Trustee.
---------------------------------
(a) The Trustee which acts as initial
Institutional Trustee represents and warrants to the Trust
and to the Sponsor at the date of this Declaration, and each
Successor Institutional Trustee represents and warrants to
the Trust and the Sponsor at the time of the Successor
Institutional Trustee's acceptance of its appointment as
Institutional Trustee that:
(i) The Institutional Trustee is a banking
corporation with trust powers, duly organized,
validly existing and in good standing under the
laws of the State of its incorporation, with trust
power and authority to execute and deliver, and to
carry out and perform its obligations under the
terms of, this Declaration.
(ii) The execution, delivery and performance
by the Institutional Trustee of this Declaration
has been duly authorized by all necessary
corporate action on the part of the Institutional
Trustee. The Declaration has been duly executed
and delivered by the Institutional Trustee, and
constitutes a legal, valid and binding obligation
of the Institutional 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
47
<PAGE>
court (regardless of whether the enforcement of
such remedies is considered in a proceeding in
equity or at law).
(iii) The execution, delivery and performance
of this Declaration by the Institutional Trustee
does not conflict with or constitute a breach of
the Charter or By-laws of the Institutional
Trustee.
(iv) No consent, approval or authorization
of, or registration with or notice to, any banking
authority which supervises or regulates the
Institutional Trustee is required for the
execution, delivery or performance by the
Institutional Trustee, of this Declaration.
(v) The Institutional Trustee satisfies the
qualifications set forth in Section 5.1(c).
(b) The Trustee which acts as initial Delaware
Trustee represents and warrants to the Trust and 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 it satisfies
the qualifications set forth in Section 5.1(a)(3).
ARTICLE XIV
MISCELLANEOUS
SECTION 14.1 Notices.
-------
All notices provided for in this Declaration shall
be in writing, duly signed by the party giving such notice,
and shall be delivered, telecopied or mailed by first class
mail, as follows:
(a) if given to the Trust, in care of the Regular
Trustees at the Trust's mailing address set forth below
(or such other address as the Regular Trustees on
behalf of the Trust may give notice of to the Holders
of the Securities):
48
<PAGE>
RJR Nabisco Holdings Capital Trust I
c/o RJR Nabisco Holdings Corp.
1301 Avenue of the Americas
New York, New York 10019
Attention: Trustees
Facsimile No: (212) 969-9173
(b) if given to the Institutional Trustee, at the
mailing address of the Institutional Trustee set forth
below (or such other address as the Institutional
Trustee may give notice of to the Holders of the
Securities):
The Bank of New York
101 Barclay Street
New York, New York 10286
Attention: Corporate Trust
Facsimile No: (212) 571-3050
(c) if given to the Delaware Trustee, at the
mailing address of the Delaware Trustee set forth below
(or such other address as the Delaware Trustee may give
notice of to the Holders of the Securities):
The Bank of New York (Delaware)
[Address]
Wilmington, Delaware [ ]
Attention: [ ]
Facsimile No: [ ]
(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):
RJR Nabisco Holdings Corp.
1301 Avenue of the Americas
New York, New York 10019
Facsimile No. (212) 969-9173
(e) if given to any other Holder, at the address
set forth on the books and records of the Trust.
A copy of any notice to the Institutional Trustee
or the Delaware Trustee shall also be sent to the Trust.
All 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
49
<PAGE>
have been delivered on the date of such refusal or inability
to deliver.
SECTION 14.2 Undertaking for Costs.
---------------------
All parties to this Declaration agree, and each
Holder of any Securities by his or her 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 Declaration, or in any suit
against the Institutional Trustee for any action taken or
omitted by it as Institutional Trustee, the filing by any
party litigant in such suit of an undertaking to pay the
costs of such suit, and that such court may in its
discretion assess reasonable costs, including reasonable
attorneys' fees, against any party litigant in such suit,
having due regard to the merits and good faith of the claims
or defenses made by such party litigant; but the provisions
of this Section 14.2 shall not apply to any suit instituted
by the Institutional Trustee, to any suit instituted by any
Holder of Preferred Securities, or group of Holders of
Preferred Securities, holding more than 10% in aggregate
liquidation amount of the outstanding Preferred Securities,
or to any suit instituted by any Holder of Preferred
Securities for the enforcement of the payment of the
principal of (or premium, if any) or interest on the
Debentures, on or after the respective due dates expressed
in such Debentures.
SECTION 14.3 Governing Law.
-------------
This Declaration and the rights of the parties
hereunder shall be governed by and interpreted in accordance
with the laws of the State of Delaware and all rights and
remedies shall be governed by such laws without regard to
principles of conflict of laws.
SECTION 14.4 Headings.
--------
Headings contained in this Declaration are
inserted for convenience of reference only and do not affect
the interpretation of this Declaration or any provision
hereof.
SECTION 14.5 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
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<PAGE>
circumstances other than those to which it is held invalid,
shall not be affected thereby.
SECTION 14.6 Counterparts.
------------
This Declaration may contain more than one
counterpart of the signature pages and this Declaration may
be executed by the affixing of the signature of the Sponsor
and 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.
SECTION 14.7 Intention of the Parties.
------------------------
It is the intention of the parties hereto that the
Trust not be classified for United States federal income tax
purposes an association taxable as a corporation or
partnership but that the Trust be treated as a grantor trust
for United States federal income tax purposes. The
provisions of this Declaration shall be interpreted to
further this intention of the parties.
SECTION 14.8 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.
51
<PAGE>
IN WITNESS WHEREOF, the undersigned has caused
these presents to be executed as of the day and year first
above written.
RJR Nabisco Holdings Corp.
as Sponsor
By:______________________________
Name:
Title:
________________________________
as Trustee
--------------------------------
as Trustee
--------------------------------
as Trustee
as Trustee
By:
----------------------------
Name:
Title:
as Trustee
By:
----------------------------
Name:
Title:
52
<PAGE>
There personally appeared before me ________ (on
behalf of RJR Nabisco Holdings Corp.) and
______________________________ who acknowledged the
foregoing instrument to be his or its free act and deed and
the free act and deed of RJR Nabisco Holdings Corp. and the
Trustees of RJR Nabisco Holdings Capital Trust I.
Before me,
-----------------------------
Notary Public
My Commission Expires:
-------------------------
53
<PAGE>
There personally appeared before me
__________________ (on behalf of ____________________, as
Trustee) who acknowledged the foregoing instrument to be his
or its free act and deed and the free act and deed of
____________________, as Trustee.
Before me,
-----------------------------
Notary Public
My Commission Expires:
-------------------------
There personally appeared before me
__________________ (on behalf of ____________________
(Delaware), as Trustee) who acknowledged the foregoing
instrument to be his or its free act and deed and the free
act and deed of _______________________________, as Trustee.
Before me,
-----------------------------
Notary Public
My Commission Expires:
-------------------------
54
<PAGE>
EXHIBIT A
CERTIFICATE OF TRUST
OF
RJR NABISCO HOLDINGS CAPITAL TRUST I
THIS Certificate of Trust of RJR Nabisco Holdings
Capital Trust I (the "Trust"), dated ________, 1995, is
being duly executed and filed by the undersigned, as
trustees, to form a business trust under the Delaware
Business Trust Act (12 Del. Code Sec. 3801 et seq.).
--- ---- -- ---
1. Name. The name of the business trust being
----
formed hereby is RJR Nabisco Holdings Capital Trust I.
2. Delaware Trustee. The name and business
----------------
address of the trustee of the Trust with a principal place
of business in the State of Delaware is ____________________
____________________________________________________________
__________________________________________________________.
3. Effective Date. This Certificate of Trust
--------------
shall be effective as of its filing.
IN WITNESS WHEREOF, the undersigned, being the sole
trustees of the Trust, have executed this Certificate of Trust
as of the date first above written.
_______________________________,
as Trustee
By:
------------------------
Name:
Title:
<PAGE>
____________________,
as Trustee
By:
------------------------
Name:
Title:
----------------------------
________________,
as Trustee
----------------------------
_________________,
as Trustee
----------------------------
_________________,
as Trustee
<PAGE>
EXHIBIT B
TERMS OF
PREFERRED SECURITIES
Pursuant to Section 7.1 of the Amended and
Restated Declaration of Trust of RJR Nabisco Holdings
Capital Trust I dated as of June __, 1995 (as amended from
time to time, the "Declaration"), the designations, rights,
privileges, restrictions, preferences and other terms and
provisions of the Preferred Securities are set forth below
(each capitalized term used but not defined herein having
the meaning set forth in the Declaration):
1. Designation and Number. Preferred Securities
of the Trust with an aggregate liquidation amount in the
assets of the Trust of ______________________________
______________________________________________________ and a
liquidation amount in the assets of the Trust of $25 per
Preferred Security, are hereby designated as "____% Trust
Originated Preferred Securities". The Preferred Security
Certificates evidencing the Preferred Securities shall be
substantially in the form attached hereto as Annex I, 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
Preferred Securities are listed. The Preferred Securities
shall be issued to former holders of Depositary Shares
("Depository Shares") each representing 1/1000 of a share of
Series B Cumulative Preferred Stock (the "Series B
Preferred"), of RJR Nabisco Holdings Corp. ("Holdings") in
exchange for such Depository Shares pursuant to the Offer.
In connection with such Offer and the purchase by Holdings
of the Common Securities, Holdings will deposit in the
Trust, and the Trust will purchase, respectively, as trust
assets Debentures of Holdings having an aggregate principal
amount equal to $__________, and bearing interest at an
annual rate equal to the annual Distribution rate on the
Preferred Securities and Common Securities and having
payment and redemption provisions which correspond to the
payment and redemption provisions of the Preferred
Securities and Common Securities.
<PAGE>
2. Distributions. (a) Periodic distributions
payable on each Preferred Security will be fixed at a rate
per annum of ____% (the "Coupon Rate") of the stated
liquidation amount of $25 per Preferred Security.
Distributions in arrears for more than one quarter will bear
interest at the rate per annum of ____% thereof, compounded
quarterly to the extent permitted by law. The term
"Distributions" as used in these terms means such periodic
cash distributions and any such interest payable unless
otherwise stated. A Distribution will be made by the
Institutional Trustee only to the extent that interest
payments are made in respect of the Debentures held by the
Trust. The amount of Distributions payable for any period
will be computed for any full quarterly Distribution period
on the basis of a 360-day year of twelve 30-day months, and
for any period shorter than a full quarterly Distribution
period for which Distributions are computed, Distributions
will be computed on the basis of the actual number of days
elapsed in such a 30-day month.
(b) Distributions on the Preferred Securities
will be cumulative, will accrue from ______, 1995 and will
be payable quarterly in arrears, on March 31, June 30,
September 30 and December 31 of each year, commencing on
September 30, 1995, except as otherwise described below, but
only if and to the extent that interest payments are made in
respect of the Debentures held by the Trust. In addition,
holders of Preferred Securities will be entitled to a cash
distribution at the rate of 9 1/4% per annum of the
liquidation amount thereof from June 1, 1995 through ______,
1995, payable on September 30, 1995 ("Pre-Issuance
Interest"). With the exception of Pre-Issuance Interest, so
long as Holdings shall not be in default in the payment of
interest on the Debentures, Holdings has the right under the
Indenture for the Debentures to defer payments of interest
by extending the interest payment period from time to time
on the Debentures for a period not exceeding 20 consecutive
quarterly interest periods (each, an "Extension Period")
and, as a consequence, quarterly Distributions will continue
to accrue with interest thereon (to the extent permitted by
applicable law) at the rate of ____% per annum, compounded
quarterly to the extent permitted by law during any such
Extension Period. Prior to the termination of any such
Extension Period, Holdings may further extend such Extension
Period; provided that such Extension Period together with
all such previous and further extensions thereof may not
exceed 20 consecutive quarterly interest periods and
provided further that no Extension Period may extend beyond
the maturity of the Debentures. Upon the termination of any
Extension Period and the payment of all amounts then due,
Holdings may commence a new Extension Period, subject to the
2
<PAGE>
above requirements. Payments of accrued Distributions will
be payable to Holders of Preferred Securities as they appear
on the books and records of the Trust on the record date for
the first payment occurring on or after the end of the
Extension Period.
(c) Distributions on the Preferred Securities
will be payable promptly by the Institutional Trustee (or
other Paying Agent) upon receipt of immediately available
funds to the Holders thereof as they appear on the books and
records of the Trust on the relevant record dates, which
will be the Business Day immediately prior to the relevant
Distribution date, which record and payment dates correspond
to the record and interest payment dates on the Debentures.
Distributions payable on any Preferred Securities that are
not punctually paid on any Distribution payment date as a
result of Holdings having failed to make the corresponding
interest payment on the Debentures will forthwith cease to
be payable to the person in whose name such Preferred
Security is registered on the relevant record date, and such
defaulted Distribution will instead be payable to the person
in whose name such Preferred Security is registered on the
special record date established by the Regular Trustees,
which record date shall correspond to the special record
date or other specified date determined in accordance with
the Indenture; provided, however, that Distributions shall
-------- -------
not be considered payable on any Distribution payment date
falling within an Extension Period unless Holdings has
elected to make a full or partial payment of interest
accrued on the Debentures on such Distribution payment date.
Subject to any applicable laws and regulations and the
provisions of the Declaration, each payment in respect of
the Preferred Securities will be made as described paragraph
9 hereof. If any date on which Distributions are payable on
the Preferred Securities is not a Business Day, then payment
of the Distribution payable on such date will be made on the
next succeeding day that is a Business Day (and without any
interest or other payment in respect of any such delay)
except that, if such Business Day is in the next succeeding
calendar year, such payment shall be made on the immediately
preceding Business Day, in each case with the same force and
effect as if made on such date and the record date for such
payment shall be the immediately preceding Business Day.
(d) All Distributions paid with respect to the
Preferred Securities and the Common Securities will be paid
Pro Rata to the Holders thereof entitled thereto. If an
Event of Default has occurred and is continuing, the
Preferred Securities shall have a priority over the Common
Securities with respect to Distributions.
3
<PAGE>
(e) In the event that there is any money or other
property held by or for the Trust that is not accounted for
under the Declaration, such money or property shall be
distributed Pro Rata among the Holders of the Preferred
Securities and Common Securities.
3. Liquidation Distribution Upon Dissolution. In
the event of any voluntary or involuntary dissolution,
winding-up or termination of the Trust, the Holders of the
Preferred Securities and Common Securities at the date of
the dissolution, winding-up or termination, as the case may
be, will be entitled to receive Pro Rata solely out of the
assets of the Trust available for distribution to Holders of
Preferred Securities and Common Securities after
satisfaction of liabilities to creditors, an amount equal to
the aggregate of the stated liquidation amount of $25 per
Preferred Security and Common Security plus accrued and
unpaid Distributions thereon to the date of payment (such
amount being the "Liquidation Distribution"), unless, in
connection with such dissolution, winding-up or termination,
and after satisfaction of liabilities to creditors,
Debentures in an aggregate principal amount equal to the
aggregate stated liquidation amount of such Preferred
Securities and Common Securities and bearing accrued and
unpaid interest in an amount equal to the accrued and unpaid
Distributions on, such Preferred Securities and Common
Securities, shall be distributed Pro Rata to the Holders of
the Preferred Securities and Common Securities in exchange
for such Securities.
If, upon any such dissolution, the Liquidation
Distribution can be paid only in part because the Trust has
insufficient assets available to pay in full the aggregate
Liquidation Distribution, then the amounts payable directly
by the Trust on the Preferred Securities and Common
Securities shall be paid, subject to the next paragraph, on
a Pro Rata basis.
Holders of Common Securities will be entitled to
receive Liquidation Distributions upon any such dissolution
Pro Rata with Holders of Preferred Securities, except that
if an Event of Default has occurred and is continuing, the
Preferred Securities shall have a priority over the Common
Securities with respect to such Liquidation Distribution.
4. Redemption and Distribution of Debentures.
The Preferred Securities and Common Securities may only be
redeemed if Debentures having an aggregate principal amount
equal to the aggregate liquidation amount of the Preferred
Securities and Common Securities are repaid, redeemed or
distributed as set forth below:
4
<PAGE>
(a) Upon the repayment of the Debentures, in
whole or in part, whether at maturity, upon redemption at
any time or from time to time on or after August 19, 1998,
the proceeds of such repayment will be promptly applied to
redeem Pro Rata Preferred Securities and Common Securities
having an aggregate liquidation amount equal to the
aggregate principal amount of the Debentures so repaid or
redeemed, upon not less than 30 nor more than 60 days'
notice, at a redemption price of $25 per Preferred and
Common Security plus an amount equal to accrued and unpaid
Distributions thereon to the date of redemption, payable in
cash (the "Redemption Price"). The date of any such
repayment or redemption of Preferred Securities and Common
Securities shall be established to coincide with the
repayment or redemption date of the Debentures.
(b) If fewer than all the outstanding Preferred
Securities and Common Securities are to be so redeemed, the
Preferred Securities and the Common Securities will be
redeemed Pro Rata and the Preferred Securities to be
redeemed will be redeemed as described in paragraph 4(f)(ii)
below. If a partial redemption would result in the
delisting of the Preferred Securities by any national
securities exchange or other organization on which the
Preferred Securities are then listed, Holdings pursuant to
the Indenture will only redeem Debentures in whole and, as a
result, the Trust may only redeem the Preferred Securities
in whole.
(c) If, at any time, a Tax Event or an Investment
Company Event (each as hereinafter defined, and each a
"Special Event") shall occur and be continuing, the Regular
Trustees shall, unless the Debentures are redeemed in the
limited circumstances described below, dissolve the Trust
and, after satisfaction of creditors, cause Debentures held
by the Institutional Trustee having an aggregate principal
amount equal to the aggregate stated liquidation amount of
and accrued and unpaid interest equal to accrued and unpaid
Distributions on, and having the same record date for
payment as the Preferred Securities and Common Securities,
to be distributed to the Holders of the Preferred Securities
and Common Securities on a Pro Rata basis in liquidation of
such Holders' interests in the Trust, within 90 days
following the occurrence of such Special Event (the "90 Day
Period"), provided, however, that in the case of the
-------- -------
occurrence of a Tax Event, as a condition of such
dissolution and distribution, the Regular Trustees shall
have received an opinion of a nationally recognized
independent tax counsel experienced in such matters (a "No
Recognition Opinion"), which opinion may rely on any then
applicable published revenue ruling of the Internal Revenue
5
<PAGE>
Service, to the effect that the Holders of the Preferred
Securities will not recognize any gain or loss for United
States federal income tax purposes as a result of the
dissolution of the Trust and distribution of Debentures; and
provided, further, that, if and as long as at the time there
is available to the Trust the opportunity to eliminate,
within the 90 Day Period, the Special Event by taking some
ministerial action, such as filing a form or making an
election, or pursuing some other similar reasonable measure
that has no adverse effect on the Trust, Holdings, or the
Holders of the Preferred Securities ("Ministerial Action"),
the Trust will pursue such measure in lieu of dissolution.
If in the case of the occurrence of a Tax Event,
(i) the Regular Trustees have received an opinion (a
"Redemption Tax Opinion") of nationally recognized
independent tax counsel experienced in such matters that, as
a result of a Tax Event, there is more than an insubstantial
risk that Holdings would be precluded from deducting the
interest on the Debentures for United States federal income
tax purposes even if the Debentures were distributed to the
Holders of Preferred Securities and Common Securities in
liquidation of such Holder's interest in the Trust as
described in this paragraph 4(c) or (ii) the Regular
Trustees shall have been informed by such tax counsel that a
No Recognition Opinion cannot be delivered to the Trust,
Holdings shall have the right at any time, upon not less
than 30 nor more than 60 days notice, to redeem the
Debentures in whole or in part for cash at the Redemption
Price within 90 days following the occurrence of such Tax
Event, and promptly following such redemption Preferred
Securities and Common Securities with an aggregate
liquidation amount equal to the aggregate principal amount
of the Debentures so redeemed will be redeemed by the Trust
at the Redemption Price on a Pro Rata basis; provided,
however, that, if at the time there is available to Holdings
or the Regular Trustees on behalf of the Trust the
opportunity to eliminate, within such 90 day period, the Tax
Event by taking some Ministerial Action, Holdings or the
Regular Trustees on behalf of the Trust will pursue such
measure in lieu of redemption and provided further that
Holdings shall have no right to redeem the Debentures while
the Regular Trustees on behalf of the Trust are pursuing
such Ministerial Action. The Common Securities will be
redeemed Pro Rata with the Preferred Securities, except if
an Event of Default under the Indenture has occurred and is
continuing, the Preferred Securities will have a priority
over the Common Securities with respect to payment of the
Redemption Price.
6
<PAGE>
"Tax Event" means that the Regular Trustees shall
have obtained an opinion of nationally recognized
independent tax counsel experienced in such matters (a
"Dissolution Tax Opinion") to the effect that on or after
______, 1995 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, (b) any amendment to, or change in, an
interpretation or application of any such laws or
regulations by any legislative body, court, governmental
agency or regulatory authority (including the enactment of
any legislation and the publication of any judicial decision
or regulatory determination), (c) any interpretation or
pronouncement that provides for a position with respect to
such laws or regulations that differs from the theretofore
generally accepted position or (d) any action taken by any
governmental agency or regulatory authority, which amendment
or change is enacted, promulgated, issued or announced or
which interpretation or pronouncement is issued or announced
or which action is taken, in each case on or after ______,
1995, there is more than an insubstantial risk that (i) the
Trust is, or will be within 90 days of the date thereof,
subject to United States federal income tax with respect to
income accrued or received on the Debentures, (ii) the Trust
is, or will be within 90 days of the date thereof, subject
to more than a de minimis amount of taxes, duties or other
governmental charges or (iii) interest payable by Holdings
to the Trust on the Debentures is not, or within 90 days of
the date thereof will not be, deductible by Holdings for
United States federal income tax purposes.
"Investment Company Event" means that the Regular
Trustees shall have received an opinion of nationally
recognized independent counsel experienced in practice under
the Investment Company Act that, as a result of the
occurrence of a change in law or regulation or a change in
interpretation or application of law or regulation by any
legislative body, court, governmental agency or regulatory
authority (a "Change in 1940 Act Law"), there is more than
an insubstantial risk that the Trust is or will be
considered an Investment Company which is required to be
registered under the Investment Company Act, which Change in
1940 Act Law becomes effective on or after ______, 1995.
On the date fixed for any distribution of
Debentures, upon dissolution of the Trust, (i) the Preferred
Securities will no longer be deemed to be outstanding and
(ii) certificates representing Preferred Securities will be
deemed to represent beneficial interests in the Debentures
having an aggregate principal amount equal to the stated
7
<PAGE>
liquidation amount of, and bearing accrued and unpaid
interest equal to accrued and unpaid Distributions on, such
Preferred Securities until such certificates are presented
to Holdings or its agent for transfer or reissuance.
(d) The Trust may not redeem fewer than all the
outstanding Preferred Securities unless all accrued and
unpaid Distributions have been paid on all Preferred
Securities for all quarterly Distribution periods
terminating on or prior to the date of redemption.
(e) If Debentures are distributed to Holders of
the Preferred Securities, Holdings, pursuant to the terms of
the Indenture, will use its best efforts to have the
Debentures listed on the New York Stock Exchange or on such
other exchange as the Preferred Securities were listed
immediately prior to the distribution of the Debentures.
(f) (i) Notice of any redemption of, or notice
of distribution of Debentures in exchange for, the Preferred
Securities and Common Securities (a "Redemption/Distribution
Notice") will be given by the Regular Trustees on behalf of
the Trust by mail to each Holder of Preferred Securities and
Common Securities to be redeemed or exchanged not less than
30 nor more than 60 days prior to the date fixed for
redemption or exchange thereof. For purposes of the
calculation of the date of redemption or exchange and the
dates on which notices are given pursuant to this paragraph
(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 of Preferred
Securities and Common Securities. Each Redemption/
Distribution Notice shall be addressed to the Holders of
Preferred Securities and Common 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 Preferred Securities are to be redeemed, the
Preferred Securities to be redeemed will be redeemed Pro
Rata from each Holder of Preferred Securities, it being
understood that, in respect of Preferred Securities
registered in the name of and held of record by DTC (or
successor Clearing Agency) or any other nominee, the
distribution of the proceeds of such redemption will be made
to each Clearing Agency Participant (or person on whose
behalf such nominee holds such securities) in accordance
with the procedures applied by such agency or nominee.
8
<PAGE>
(iii) If the Trust gives a Redemption/
Distribution Notice in respect of a redemption of Preferred
Securities as provided in this paragraph 4 (which notice
will be irrevocable) then immediately prior to the close of
business on the redemption date, provided that Holdings has
paid to the Trust in immediately available funds a
sufficient amount of cash in connection with the related
redemption or maturity of the Debentures, Distributions will
cease to accrue on the Preferred Securities called for
redemption, such Preferred Securities will no longer be
deemed to be outstanding and all rights of Holders of such
Preferred Securities so called for redemption will cease,
except the right of the Holders of such Preferred Securities
to receive the Redemption Price, but without interest on
such Redemption Price. Neither the Trustees nor the Trust
shall be required to register or cause to be registered the
transfer of any Preferred Securities which have been so
called for redemption. If any date fixed for redemption of
Preferred Securities is not a Business Day, then payment of
the Redemption Price payable on such date will be made on
the next succeeding day that is a Business Day (and without
any interest or other payment in respect of any such delay)
except that, if such Business Day falls in the next calendar
year, such payment will be made on the immediately preceding
Business Day, in each case with the same force and effect as
if made on such date fixed for redemption. If payment of
the Redemption Price in respect of Preferred Securities is
improperly withheld or refused and not paid either by the
Trust or by Holdings pursuant to the Preferred Securities
Guarantee, Distributions on such Preferred Securities will
continue to accrue, from the original redemption date to the
date of payment, in which case the actual payment date will
be considered the date fixed for redemption for purposes of
calculating the Redemption Price.
(iv) Redemption/Distribution Notices shall be
sent by the Regular Trustees on behalf of the Trust to the
Holders of the Preferred Securities.
(v) Upon the date of dissolution of the Trust and
distribution of Debentures as a result of the occurrence of
a Special Event, Preferred Security Certificates shall be
deemed to represent beneficial interests in the Debentures
so distributed, and the Preferred Securities will no longer
be deemed outstanding and may be canceled by the Regular
Trustees. The Debentures so distributed shall have an
aggregate principal amount equal to the aggregate
liquidation amount of the Preferred Securities so
distributed.
9
<PAGE>
(vi) Subject to the foregoing and applicable law
(including, without limitation, United States federal
securities laws), Holdings or any of its subsidiaries may at
any time and from time to time purchase outstanding
Preferred Securities by tender, in the open market or by
private agreement.
5. Voting Rights. (a) Except as provided under
paragraph 5(b) below and as otherwise required by law and
the Declaration, the Holders of the Preferred Securities
will have no voting rights.
(b) If (i) the Trust fails to make Distributions
in full on the Preferred Securities for 6 consecutive
quarterly Distribution periods; or (ii) an Event of Default
occurs and is continuing, (each, an "Appointment Event"),
then the Holders of the Preferred Securities, acting as a
single class, will be entitled by the vote of Holders of
Preferred Securities representing a Majority in liquidation
amount of the Preferred Securities to appoint a Special
Regular Trustee in accordance with paragraph 5.2(a)(ii)(B)
of the Declaration. Any Holder of Preferred Securities
(other than the Sponsor or any Affiliate of the Sponsor)
will have the right to nominate any Person to be appointed
as Special Regular Trustee. For purposes of determining
whether the Trust has failed to pay Distributions in full
for 6 consecutive quarterly Distribution periods,
Distributions shall be deemed to remain in arrears,
notwithstanding any payments in respect thereof, until full
cumulative Distributions have been or contemporaneously are
paid with respect to all quarterly Distribution periods
terminating on or prior to the date of payment of such
cumulative Distributions. Not later than 30 days after such
right to appoint a Special Regular Trustee arises, the
Regular Trustees will convene a meeting for the purpose of
appointing a Special Regular Trustee. If the Regular
Trustees fail to convene such meeting within such 30-day
period, the Holders of Preferred Securities representing 10%
in liquidation amount of the outstanding Preferred
Securities will be entitled to convene such meeting in
accordance with Section 12.2 of the Declaration. The record
date for such meeting will be the close of business on the
Business Day next preceding the day on which notice of the
meeting is sent to Holders of Preferred Securities. The
provisions of the Declaration relating to the convening and
conduct of the meetings of the Holders will apply with
respect to any such meeting. If, at any such meeting,
Holders of less than a Majority in liquidation amount of
Preferred Securities entitled to vote for the appointment of
a Special Regular Trustee vote for such appointment, no
Special Regular Trustee shall be appointed. Any Special
10
<PAGE>
Regular Trustee may be removed without cause at any time by
the Holders of Preferred Securities representing a Majority
in liquidation amount of the Preferred Securities in
accordance with Section 5.2(a)(ii)(B) of the Declaration.
The Holders of 10% in liquidation amount of the Preferred
Securities will be entitled to convene such a meeting in
accordance with Section 12.2 of the Declaration. The record
date for such meeting will be the close of business on the
Business Day next preceding the day on which notice of the
meeting is sent to Holders of Preferred Securities. Any
Special Regular Trustee appointed shall cease to be a
Special Regular Trustee as provided in Section 5.2(c) of the
Declaration. Notwithstanding the appointment of any such
Special Regular Trustee, Holdings shall retain all rights
under the Indenture, including the right to extend the
interest payment period on Debentures, and any extension for
a period not exceeding 20 quarterly interest periods will
not constitute an Event of Default under the Indenture.
If any proposed amendment to the Declaration
provides for, or the Regular Trustees otherwise propose to
effect, (i) any action that would adversely affect the
powers, preferences or special rights of the Securities,
whether by way of amendment to the Declaration or otherwise,
or (ii) the dissolution, winding-up or termination of the
Trust, other than in connection with the distribution of
Debentures held by the Institutional Trustee, upon the
occurrence of a Special Event or in connection with the
redemption of Preferred Securities as a consequence of a
redemption of Debentures, then the Holders of outstanding
Securities will be entitled to vote on such amendment or
proposal as a class and such amendment or proposal shall not
be effective except with the approval of the Holders of
Securities representing Majority in liquidation amount of
such Securities, provided, however, (A) if any amendment or
proposal referred to in clause (i) above would adversely
affect only the Preferred Securities or the Common
Securities, then only the affected class will be entitled to
vote on such amendment or proposal and such amendment or
proposal shall not be effective except with the approval of
Majority in liquidation amount of such class of Securities,
(B) the rights of Holders of Preferred Securities under
Article V of the Declaration to appoint and remove a Special
Regular Trustee shall not be amended without the consent of
each Holder of Preferred Securities, and (C) amendments to
the Declaration shall be subject to such further
requirements as are set forth in Sections 12.1 and 12.2 of
the Declaration.
In the event the consent of the Institutional
Trustee, as the holder of the Debentures, is required under
11
<PAGE>
the Indenture with respect to any amendment, modification or
termination of the Indenture or the Debentures, the
Institutional Trustee shall request the written direction of
the Holders of the Securities with respect to such
amendment, modification or termination. The Institutional
Trustee shall vote with respect to such amendment,
modification or termination as directed by a Majority in
liquidation amount of the Securities voting together as a
single class (and in the case of any other RJR Nabisco
Holdings Capital Trust holding Debentures issued under the
Indenture, voting with the holders of preferred securities
of such other RJR Nabisco Holdings Capital Trust); provided
that where such amendment, modification or termination of
the Indenture requires the consent or vote of (1) holders of
Debentures representing a specified percentage greater than
a majority in principal amount of the Debentures or (2) each
holder of Debentures, the Institutional Trustee may only
vote with respect to that amendment, modification or
termination as directed by, in the case of clause (1) above,
the vote of Holders of Securities representing such
specified percentage of the aggregate liquidation amount of
the Securities, or, in the case of clause (2) above, each
Holder of Securities; and provided, further, that the
Institutional Trustee shall be under no obligation to take
any action in accordance with the directions of the Holders
of Securities unless the Institutional Trustee shall have
received, at the expense of the Sponsor, an opinion of
nationally recognized independent tax counsel recognized as
expert in such matters to the effect that the Trust will not
be classified for United States federal income tax purposes
as an association taxable as a corporation or a partnership
on account of such action and will be treated as a grantor
trust for United States federal income tax purposes
following such action.
Subject to Section 2.6 of the Declaration, and the
provisions of this and the next succeeding paragraph, the
Holders of a Majority in liquidation amount of the Preferred
Securities, voting separately as a class shall have the
right to (A) on behalf of all Holders of Preferred
Securities, waive any past default that is waivable under
the Declaration (subject to, and in accordance with the
Declaration) and (B) direct the time, method, and place of
conducting any proceeding for any remedy available to the
Institutional Trustee, or exercising any trust or power
conferred upon the Institutional Trustee under the
Declaration, including the right to direct the Institutional
Trustee, as the holder of the Debentures (and in the case of
any other RJR Nabisco Holdings Capital Trust holding
Debentures issued under the Indenture, voting with the
holders of preferred securities of such other RJR Nabisco
12
<PAGE>
Holdings Capital Trust), to (i) direct the time, method and
place of conducting any proceeding for any remedy available
to the Debenture Trustee, or exercising any trust or power
conferred on the Debenture Trustee with respect to the
Debentures, (ii) waive any past default that is waivable
under Section 5.1 of the Indenture, or (iii) exercise any
right to rescind or annul a declaration that the principal
of all the Debentures shall be due and payable; provided
that where the taking of any action under the Indenture
requires the consent or vote of (1) holders of Debentures
representing a specified percentage greater than a majority
in principal amount of the Debentures or (2) each holder of
Debentures, the Institutional Trustee may only take such
action if directed by, in the case of clause (1) above, the
vote of Holders of Preferred Securities representing such
specified percentage of the aggregate liquidation amount of
the Preferred Securities, or, in the case of clause (2)
above, each Holder of Preferred Securities. The
Institutional Trustee shall not revoke any action previously
authorized or approved by a vote of the Holders of the
Preferred Securities. Other than with respect to directing
the time, method and place of conducting any proceeding for
any remedy available to the Institutional Trustee or the
Debenture Trustee as set forth above, the Institutional
Trustee shall be under no obligation to take any of the
foregoing actions at the direction of the Holders of
Preferred Securities unless the Institutional Trustee shall
have received, at the expense of the Sponsor, an opinion of
nationally recognized independent tax counsel recognized as
expert in such matters to the effect that the Trust will not
be classified for United States federal income tax purposes
as an association taxable as a corporation or a partnership
on account of such action and will be treated as a grantor
trust for United States federal income tax purposes
following such action. If the Institutional Trustee fails
to enforce its rights under the Declaration (including,
without limitation, its rights, powers and privileges as a
holder of the Debentures under the Indenture), any Holder of
Preferred Securities may, after a period of 30 days has
elapsed from such Holder's written request to the
Institutional Trustee to enforce such rights, institute a
legal proceeding directly against Holdings to enforce the
Institutional Trustee's rights under the Declaration,
without first instituting a legal proceeding against the
Institutional Trustee or any other Person.
A waiver of an Indenture Event of Default by the
Institutional Trustee at the direction of the Holders of the
Preferred Securities will constitute a waiver of the
corresponding Event of Default under the Declaration in
respect of the Securities.
13
<PAGE>
Any required approval or direction of Holders of
Preferred Securities may be given at a separate meeting of
Holders of Preferred Securities convened for such purpose,
at a meeting of all of the Holders of Securities of the
Trust or pursuant to written consent. The Regular Trustees
will cause a notice of any meeting at which Holders of
Preferred Securities are entitled to vote, or of any matter
upon which action by written consent of such Holders is to
be taken, to be mailed to each Holder of record of Preferred
Securities. Each such notice will include a statement
setting forth (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 Preferred
Securities will be required for the Trust to redeem and
cancel Preferred Securities in accordance with the
Declaration.
Notwithstanding that Holders of Preferred
Securities are entitled to vote or consent under any of the
circumstances described above, any of the Preferred
Securities at such time that are owned by Holdings or by any
entity directly or indirectly controlling or controlled by
or under direct or indirect common control with Holdings
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.
Except as provided in this paragraph 5, Holders of
the Preferred Securities will have no rights to increase or
decrease the number of Trustees or to appoint, remove or
replace a Trustee, which voting rights are vested solely in
the Holders of the Common Securities.
6. Pro Rata Treatment. A reference in these
terms of the Preferred Securities to any payment,
distribution or treatment as being "Pro Rata" shall mean pro
rata to each Holder of Securities according to the aggregate
liquidation amount of the Securities held by the relevant
Holder in relation to the aggregate liquidation amount of
all Securities outstanding unless, in relation to a payment,
an Event of Default has occurred and is continuing, in which
case any funds available to make such payment shall be paid
first to each Holder of the Preferred Securities pro rata
according to the aggregate liquidation amount of Preferred
Securities held by the relevant Holder relative to the
aggregate liquidation amount of all Preferred Securities
14
<PAGE>
outstanding, and only after satisfaction of all amounts owed
to the Holders of the Preferred Securities, to each Holder
of Common Securities pro rata according to the aggregate
liquidation amount of Common Securities held by the relevant
Holder relative to the aggregate liquidation amount of all
Common Securities outstanding.
7. Ranking. The Preferred Securities rank pari
----
passu and payment thereon will be made Pro Rata with, the
-----
Common Securities except that where an Event of Default
occurs and is continuing, the rights of Holders of Preferred
Securities to payment in respect of Distributions and
payments upon liquidation, redemption or otherwise rank in
priority to the rights of Holders of the Common Securities.
8. Mergers, Consolidations or Amalgamations. The
Trust may not consolidate, amalgamate, merge with or into,
or be replaced by, or convey, transfer or lease its
properties and assets to, any corporation or other body.
9. Transfer, Exchange, Method of Payments.
Payment of Distributions and payments on redemption of the
Preferred Securities will be payable, the transfer of the
Preferred Securities will be registrable, and Preferred
Securities will be exchangeable for Preferred Securities of
other denominations of a like aggregate liquidation amount,
at the principal corporate trust office of the Institutional
Trustee in The City of New York; provided that payment of
Distributions may be made at the option of the Regular
Trustees on behalf of the Trust by check mailed to the
address of the persons entitled thereto and that the payment
on redemption of any Preferred Security will be made only
upon surrender of such Preferred Security to the
Institutional Trustee.
10. Acceptance of Indenture and Preferred
Guarantee. Each Holder of Preferred Securities, by the
acceptance thereof, agrees to the provisions of (i) the
Preferred Guarantee, including the subordination provisions
therein and (ii) the Indenture and the Debentures, including
the subordination provisions of the Indenture.
11. No Preemptive Rights. The Holders of
Preferred Securities shall have no preemptive rights to
subscribe to any additional Preferred Securities or Common
Securities.
12. Miscellaneous. These terms shall constitute
a part of the Declaration. The Trust will provide a copy of
the Declaration and the Indenture to a Holder without charge
15
<PAGE>
on written request to the Trust at its principal place of
business.
16
<PAGE>
Annex I
Number [ ] Preferred Securities
B-
CUSIP NO.
Certificate Evidencing Preferred Securities
of
RJR Nabisco Holdings Capital Trust I
____% Trust Originated Preferred Securities
(liquidation amount $25 per Preferred Security)
RJR Nabisco Holdings 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 _____ (______)
preferred securities of the Trust representing undivided
beneficial interests in the assets of the Trust designated
the ____% Trust Originated Preferred Securities (liquidation
amount $25 per Preferred Security) (the "Preferred
Securities"). The Preferred Securities are transferable on
the books and records of the Trust, in person or by a duly
authorized attorney, upon surrender of this certificate duly
endorsed and in proper form for transfer. The designations,
rights, privileges, restrictions, preferences and other
terms and provisions of the Preferred Securities are set
forth in, and this certificate and the Preferred Securities
represented hereby are issued and shall in all respects be
subject to the terms and provisions of, the Amended and
Restated Declaration of Trust of the Trust dated as of June
__, 1995, as the same may be amended from time to time (the
"Declaration") including the designation of the terms of
Preferred Securities as set forth in Exhibit B thereto. The
Preferred Securities and the Common Securities issued by the
Trust pursuant to the Declaration represent undivided
beneficial interests in the assets of the Trust, including
the Debentures (as defined in the Declaration) issued by RJR
Nabisco Holdings Corp., a Delaware corporation ("Holdings"),
to the Trust pursuant to the Indenture referred to in the
Declaration. The Holder is entitled to the benefits of the
Guarantee Agreement of Holdings dated as of June __ , 1995
(the "Guarantee") to the extent provided therein. The Trust
will furnish a copy of the Declaration, the Guarantee and
the Indenture to the Holder without charge upon written
<PAGE>
request to the Trust at its principal place of business or
registered office.
The Holder of this Certificate, by accepting this
Certificate, is deemed to have (i) agreed to the terms of
the Indenture and the Debentures, including that the
Debentures are subordinate and junior in right of payment to
all Senior Debt (as defined in the Indenture) as and to the
extent provided in the Indenture and (ii) agreed to the
terms of the Guarantee, including that the Guarantee is
subordinate and junior in right of payment to all other
liabilities of Holdings, including the Debentures, except
those made pari passu or subordinate by their terms, and
senior to all capital stock now or hereafter issued by
Holdings and to any guarantee now or hereafter entered into
by Holdings in respect of any of its capital stock.
Upon receipt of this certificate, the Holder is
bound by the Declaration and is entitled to the benefits
thereunder.
IN WITNESS WHEREOF, the Trustees of the Trust have
executed this certificate this __ day of ____, 1995.
RJR NABISCO HOLDINGS CAPITAL TRUST I
By:_________________________, as trustee
Name:
Title:
By:_________________________, as trustee
Name:
Title:
Dated:
Countersigned and Registered:
______________________________
Transfer Agent and Registrar
By:___________________________
Authorized Signature
2
<PAGE>
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned assigns and transfers
this Preferred Security to:
____________________________________________________________
____________________________________________________________
____________________________________________________________
(Insert assignee's social security or tax identification
number)
____________________________________________________________
____________________________________________________________
____________________________________________________________
(Insert address and zip code of assignee)
and irrevocably appoints
____________________________________________________________
____________________________________________________________
____________________________________________________________
agent to transfer this Preferred Security Certificate on the
books of the Trust. The agent may substitute another to act
for him or her.
Date: _________________________
Signature: ____________________
NOTICE: THE SIGNATURE(S) TO THIS ASSIGNMENT MUST CORRESPOND
WITH THE NAME(S) AS WRITTEN UPON THE FACE OF THE CERTIFICATE
IN EVERY PARTICULAR, WITHOUT ALTERATION OR ENLARGEMENT OR
ANY CHANGE WHATEVER.
3
<PAGE>
EXHIBIT C
TERMS OF
COMMON SECURITIES
Pursuant to Section 7.1 of the Amended and
Restated Declaration of Trust of RJR Nabisco Holdings
Capital Trust I dated as of June __, 1995 (as amended from
time to time, the "Declaration"), the designations, rights,
privileges, restrictions, preferences and other terms and
provisions of the Common Securities are set forth below
(each capitalized term used but not defined herein having
the meaning set forth in the Declaration):
1. Designation and Number. Common Securities of
the Trust with an aggregate liquidation amount in the assets
of the Trust of ___________________________________________
(_________) and a liquidation amount in the assets of the
Trust of $25 per Common Security, are hereby designated as
"____% Trust Originated Common Securities". The Common
Security Certificates evidencing the Common Securities shall
be substantially in the form attached hereto as Annex I,
with such changes and additions thereto or deletions
therefrom as may be required by ordinary usage, custom or
practice. The Common Securities are to be issued and sold
to RJR Nabisco Holdings Corp. ("Holdings") in consideration
of $_________ in cash. In connection with the Offer and the
purchase by Holdings of the Common Securities, Holdings will
deposit in the Trust, and the Trust will purchase,
respectively, as trust assets Debentures of Holdings having
an aggregate principal amount equal to $__________, and
bearing interest at an annual rate equal to the annual
Distribution rate on the Preferred Securities and Common
Securities and having payment and redemption provisions
which correspond to the payment and redemption provisions of
the Preferred Securities and Common Securities.
<PAGE>
2. Distributions. (a) Periodic distributions
payable on each Common Security will be fixed at a rate per
annum of ____% (the "Coupon Rate") of the stated liquidation
amount of $25 per Common Security. Distributions in arrears
for more than one quarter will bear interest at the rate per
annum of ____% thereof (to the extent permitted by
applicable law), compounded quarterly to the extent
permitted by law. The term "Distributions" as used in these
terms means such periodic cash distributions and any such
interest payable unless otherwise stated. A Distribution
will be made by the Institutional Trustee only to the extent
that interest payments are made in respect of the Debentures
held by the Institutional Trustee. The amount of
Distributions payable for any period will be computed for
any full quarterly Distribution period on the basis of a
360-day year of twelve 30-day months, and for any period
shorter than a full quarterly Distribution period for which
Distributions are computed, Distributions will be computed
on the basis of the actual number of days elapsed in such a
30-day month.
(b) Distributions on the Common Securities will
be cumulative, will accrue from ______, 1995 and will be
payable quarterly in arrears, on March 31, June 30, Septem-
ber 30 and December 31 of each year, commencing on September
30, 1995, except as otherwise described below, but only if
and to the extent that interest payments are made in respect
of the Debentures held by the Trust. In addition, holders
of Common Securities will be entitled to a cash distribution
at the rate of 9 1/4% per annum of the liquidation amount
thereof from June 1, 1995 through ______, 1995, payable on
September 30, 1995 ("Pre-Issuance Interest"). With the
exception of Pre-Issuance Interest, so long as Holdings
shall not be in default in the payment of interest on the
Debentures, Holdings has the right under the Indenture for
the Debentures to defer payments of interest by extending
the interest payment period from time to time on the
Debentures for a period not exceeding 20 consecutive
quarterly interest periods (each, an "Extension Period")
and, as a consequence, quarterly Distributions will continue
to accrue with interest thereon (to the extent permitted by
applicable law) at the rate of ____% per annum, compounded
quarterly to the extent permitted by law during any such
Extension Period. Prior to the termination of any such
Extension Period, Holdings may further extend such Extension
Period; provided that such Extension Period together with
all such previous and further extensions thereof may not
exceed 20 consecutive quarterly interest periods and
provided further that no Extension Period may extend beyond
the maturity of the Debentures. Upon the termination of any
Extension Period and the payment of all amounts then due,
2
<PAGE>
Holdings may commence a new Extension Period, subject to the
above requirements. Payments of accrued Distributions will
be payable to Holders of Common Securities as they appear on
the books and records of the Trust on the record date for
the first payment occurring on or after the end of the
Extension Period.
(c) Distributions on the Common Securities will
be payable promptly by the Institutional Trustee (or other
Paying Agent) upon receipt of immediately available funds to
the Holders thereof as they appear on the books and records
of the Trust on the relevant record dates which will be the
Business Day immediately prior to the relevant Distribution
date which record and payment dates correspond to the record
and interest payment dates on the Debentures. Distributions
payable on any Common Securities that are not punctually
paid on any Distribution date as a result of Holdings having
failed to make the corresponding interest payment on the
Debentures will forthwith cease to be payable to the person
in whose name such Common Security is registered on the
relevant record date, and such defaulted Distribution will
instead be payable to the person in whose name such Common
Security is registered on the special record date
established by the Regular Trustees, which record date shall
correspond to the special record date or other specified
date determined in accordance with the Indenture; provided,
--------
however, that Distributions shall not be considered payable
-------
on any Distribution payment date falling within an Extension
Period unless Holdings has elected to make a full or partial
payment of interest accrued on the Debentures on such
Distribution payment date. Subject to any applicable laws
and regulations and the provisions of the Declaration, each
payment in respect of the Common Securities will be made as
described in paragraph 9 hereof. If any date on which
Distributions are payable on the Common Securities is not a
Business Day, then payment of the Distribution payable on
such date will be made on the next succeeding day that is a
Business Day (and without any interest or other payment in
respect of any such delay) except that, if such Business Day
is in the next succeeding calendar year, such payment shall
be made on the immediately preceding Business Day, in each
case with the same force and effect as if made on such date
and the record date for such payment should be the
immediately preceding Business Day.
(d) All Distributions paid with respect to the
Common Securities and the Preferred Securities will be paid
Pro Rata to the Holders thereof entitled thereto. If an
Event of Default has occurred and is continuing, the
Preferred Securities shall have a priority over the Common
Securities with respect to Distributions.
3
<PAGE>
(e) In the event that there is any money or other
property held by or for the Trust that is not accounted for
under the Declaration, such money or property shall be
distributed Pro Rata among the Holders of the Preferred
Securities and Common Securities.
3. Liquidation Distribution Upon Dissolution. In
the event of any voluntary or involuntary dissolution,
winding-up or termination of the Trust, the Holders of the
Preferred Securities and Common Securities at the date of
the dissolution, winding-up or termination, as the case may
be, will be entitled to receive Pro Rata solely out of the
assets of the Trust available for distribution to Holders of
Preferred Securities and Common Securities, after
satisfaction of liabilities to creditors, an amount equal to
the aggregate of the stated liquidation amount of $25 per
Preferred Security and Common Security plus accrued and
unpaid Distributions thereon to the date of payment (such
amount being the "Liquidation Distribution"), unless, in
connection with such dissolution, winding-up or termination,
and after satisfaction of liabilities to creditors,
Debentures in an aggregate principal amount equal to the
aggregate stated liquidation amount of such Preferred
Securities and Common Securities bearing accrued and unpaid
interest in an amount equal to the accrued and unpaid
Distributions on, such Preferred Securities and Common
Securities, shall be distributed Pro Rata to the Holders of
the Preferred Securities and Common Securities in exchange
for such Securities.
If, upon any such dissolution, the Liquidation
Distribution can be paid only in part because the Trust has
insufficient assets available to pay in full the aggregate
Liquidation Distribution, then the amounts payable directly
by the Trust on the Preferred Securities and Common
Securities shall be paid, subject to the next paragraph, on
a Pro Rata basis.
Holders of Common Securities will be entitled to
receive Liquidation Distributions upon any such dissolution
Pro Rata with Holders of Preferred Securities, except that
if an Event of Default has occurred and is continuing, the
Preferred Securities shall have a priority over the Common
Securities with respect to such Liquidation Distribution.
4. Redemption and Distribution of Debentures.
The Preferred Securities and Common Securities may only be
redeemed if Debentures having an aggregate principal amount
equal to the aggregate liquidation amount of the Preferred
Securities and Common Securities are repaid, redeemed or
distributed as set forth below:
4
<PAGE>
(a) Upon the repayment of the Debentures, in
whole or in part, whether at maturity, upon redemption at
any time or from time to time on or after August 19, 1998,
the proceeds of such repayment will be promptly applied to
redeem Pro Rata Preferred Securities and Common Securities
having an aggregate liquidation amount equal to the
aggregate principal amount of the Debentures so repaid or
redeemed, upon not less than 30 nor more than 60 days'
notice, at a redemption price of $25 per Preferred and
Common Security plus an amount equal to accrued and unpaid
Distributions thereon to the date of redemption, payable in
cash (the "Redemption Price"). The date of any such
repayment or redemption of Preferred Securities and Common
Securities shall be established to coincide with the
repayment or redemption date of the Debentures.
(b) If fewer than all the outstanding Preferred
Securities and Common Securities are to be so redeemed, the
Preferred Securities and the Common Securities will be
redeemed Pro Rata and the Common Securities to be redeemed
will be redeemed as described in paragraph 4(e)(ii) below.
If a partial redemption would result in the delisting of the
Preferred Securities by any national securities exchange or
other organization on which the Preferred Securities are
then listed, Holdings pursuant to the Indenture will only
redeem Debentures in whole and, as a result, the Trust may
only redeem the Common Securities in whole.
(c) If, at any time, a Tax Event or an Investment
Company Event (each as hereinafter defined, and each a
"Special Event") shall occur and be continuing, the Regular
Trustees shall, unless the Debentures are redeemed in the
limited circumstances described below, dissolve the Trust
and, after satisfaction of creditors, cause Debentures held
by the Institutional Trustee having an aggregate principal
amount equal to the aggregate stated liquidation amount of
and accrued and unpaid interest equal to accrued and unpaid
Distributions on, and having the same record date for
payment as the Preferred Securities and Common Securities,
to be distributed to the Holders of the Preferred Securities
and Common Securities on a Pro Rata basis in liquidation of
such Holders' interests in the Trust, within 90 days
following the occurrence of such Special Event (the "90 Day
Period"), provided, however, that in the case of the
-------- -------
occurrence of a Tax Event, as a condition of such
dissolution and distribution, the Regular Trustees shall
have received an opinion of a nationally recognized
independent tax counsel experienced in such matters (a "No
Recognition Opinion"), which opinion may rely on any then
applicable published revenue rulings of the Internal Revenue
Service, to the effect that the Holders of the Preferred
5
<PAGE>
Securities will not recognize any gain or loss for United
States federal income tax purposes as a result of the
dissolution of the Trust and distribution of Debentures; and
provided, further, that, if and as long as at the time there
is available to the Trust the opportunity to eliminate,
within the 90 Day Period, the Special Event by taking some
ministerial action, such as filing a form or making an
election, or pursuing some other similar reasonable measure
that has no adverse effect on the Trust, Holdings, or the
Holders of the Preferred Securities ("Ministerial Action")
the Trust will pursue such measure in lieu of dissolution.
If in the case of the occurrence of a Tax Event,
(i) the Regular Trustees have received an opinion (a
"Redemption Tax Opinion") of nationally recognized
independent tax counsel experienced in such matters that, as
a result of a Tax Event, there is more than an insubstantial
risk that Holdings would be precluded from deducting the
interest on the Debentures for United States federal income
tax purposes even if the Debentures were distributed to the
Holders of Preferred Securities and Common Securities in
liquidation of such Holder's interest in the Trust as
described in this paragraph 4(c) or (ii) the Regular
Trustees shall have been informed by such tax counsel that a
No Recognition Opinion cannot be delivered to the Trust,
Holdings shall have the right at any time, upon not less
than 30 nor more than 60 days notice, to redeem the
Debentures in whole or in part for cash at the Redemption
Price within 90 days following the occurrence of such Tax
Event, and promptly following such redemption Preferred
Securities and Common Securities with an aggregate
liquidation amount equal to the aggregate principal amount
of the Debentures so redeemed will be redeemed by the Trust
at the Redemption Price on a Pro Rata basis: provided,
however, that, if at the time there is available to Holdings
or the Regular Trustees on behalf of the Trust the
opportunity to eliminate, within such 90 day period, the Tax
Event by taking some Ministerial Action, Holdings or the
Holders of the Preferred Securities, Holdings or the Regular
Trustees on behalf of the Trust will pursue such measure in
lieu of redemption, and provided further that Holdings shall
have no right to redeem the Debentures while the Regular
Trustees on behalf of the Trust are pursuing such
Ministerial Action. The Common Securities will be redeemed
Pro Rata with the Preferred Securities, except if an Event
of Default under the Indenture has occurred and is
continuing, the Preferred Securities will have a priority
over the Common Securities with respect to payment of the
Redemption Price.
6
<PAGE>
"Tax Event" means that the Regular Trustees shall
have obtained an opinion of nationally recognized
independent tax counsel experienced in such matters (a
"Dissolution Tax Opinion") to the effect that on or after
June 5, 1995 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, (b) any amendment to, or change in, an
interpretation or application of any such laws or
regulations by any legislative body, court, governmental
agency or regulatory authority (including the enactment of
any legislation and the publication of any judicial decision
or regulatory determination), (c) any interpretation or
pronouncement that provides for a position with respect to
such laws or regulations that differs from the theretofore
generally accepted position or (d) any action taken by any
governmental agency or regulatory authority, which amendment
or change is enacted, promulgated, issued or announced or
which interpretation or pronouncement is issued or announced
or which action is taken, in each case on or after ______,
1995, there is more than an insubstantial risk that (i) the
Trust is, or will be within 90 days of the date thereof,
subject to United States federal income tax with respect to
income accrued or received on the Debentures, (ii) the Trust
is, or will be within 90 days of the date thereof, subject
to more than a de minimis amount of taxes, duties or other
governmental charges or (iii) interest payable by Holdings
to the Trust on the Debentures is not, or within 90 days of
the date thereof will not be, deductible by Holdings for
United States federal income tax purposes.
"Investment Company Event" means that the Regular
Trustees shall have received an opinion of nationally
recognized independent counsel experienced in practice under
the Investment Company Act that, as a result of the
occurrence of a change in law or regulation or a change in
interpretation or application of law or regulation by any
legislative body, court, governmental agency or regulatory
authority (a "Change in 1940 Act Law"), there is more than
an insubstantial risk that the Trust is or will be
considered an Investment Company which is required to be
registered under the Investment Company Act, which Change in
1940 Act Law becomes effective on or after ______, 1995.
On the date fixed for any distribution of
Debentures, upon dissolution of the Trust, (i) the Common
Securities will no longer be deemed to be outstanding and
(ii) any certificates representing Common Securities will be
deemed to represent beneficial interests in the Debentures
having an aggregate principal amount equal to the stated
7
<PAGE>
liquidation amount of, and bearing accrued and unpaid
interest equal to accrued and unpaid Distributions on, such
Common Securities until such certificates are presented to
Holdings or its agent for transfer or reissuance.
(d) The Trust may not redeem fewer than all the
outstanding Common Securities unless all accrued and unpaid
Distributions have been paid on all Common Securities for
all quarterly Distribution periods terminating on or prior
to the date of redemption.
(e)(i) Notice of any redemption of, or notice of
distribution of Debentures in exchange for, the Preferred
Securities and Common Securities (a "Redemption/Distribution
Notice") will be given by the Regular Trustees on behalf of
the Trust by mail to each Holder of Preferred Securities and
Common Securities to be redeemed or exchanged not less than
30 nor more than 60 days prior to the date fixed for
redemption or exchange thereof. For purposes of the
calculation of the date of redemption or exchange and the
dates on which notices are given pursuant to this paragraph
(e)(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 of Preferred
Securities and Common Securities. Each
Redemption/Distribution Notice shall be addressed to the
Holders of Preferred Securities and Common 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 Common Securities are to be redeemed, the Common
Securities to be redeemed will be redeemed Pro Rata from
each Holder of Common Securities (subject to adjustment to
eliminate fractional Common Securities).
(iii) If the Trust gives a Redemption/
Distribution Notice in respect of a redemption of Common
Securities as provided in this paragraph 4 (which notice
will be irrevocable) then immediately prior to the close of
business on the redemption date, provided that Holdings has
paid to the Trust in immediately available funds a
sufficient amount of cash in connection with the related
redemption or maturity of the Debentures, Distributions will
cease to accrue on the Common Securities called for
redemption, such Common Securities will no longer be deemed
to be outstanding and all rights of Holders of such Common
Securities so called for redemption will cease, except the
8
<PAGE>
right of the Holders of such Common Securities to receive
the Redemption Price, but without interest on such
Redemption Price. Neither the Trustees nor the Trust shall
be required to register or cause to be registered the
transfer of any Common Securities which have been so called
for redemption. If any date fixed for redemption of Common
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 (and without any
interest or other payment in respect of any such delay)
except that, if such Business Day falls in the next calendar
year, such payment will be made on the immediately preceding
Business Day, in each case with the same force and effect as
if made on such date fixed for redemption. If payment of
the Redemption Price in respect of Common Securities is
improperly withheld or refused and not paid by the Trust,
Distributions on such Common Securities will continue to
accrue, from the original redemption date to the date of
payment, in which case the actual payment date will be
considered the date fixed for redemption for purposes of
calculating the Redemption Price.
(iv) Redemption/Distribution Notices shall be
sent by the Regular Trustees on behalf of the Trust to the
Holders of the Common Securities.
(v) Upon the date of dissolution of the Trust and
distribution of Debentures as a result of the occurrence of
a Special Event, Common Security Certificates shall be
deemed to represent beneficial interests in the Debentures
so distributed, and the Common Securities will no longer be
deemed outstanding and may be canceled by the Regular
Trustees. The Debentures so distributed shall have an
aggregate principal amount equal to the aggregate
liquidation amount of the Common Securities so distributed.
5. Voting Rights. (a) Except as provided under
paragraph 5(b) below and as otherwise required by law and
the Declaration, the Holders of the Common Securities will
have no voting rights.
(b) Except as provided in the Declaration with
respect to a Special Regular Trustee, Holders of Common
Securities have the sole right under the Declaration to
increase or decrease the number of Trustees, and to appoint,
remove or replace a Trustee, any such increase, decrease,
appointment, removal or replacement to be approved by
Holders of Common Securities representing a Majority in
liquidation amount of the Common Securities.
9
<PAGE>
If any proposed amendment to the Declaration
provides for, or the Regular Trustees otherwise propose to
effect, (i) any action that would adversely affect the
powers, preferences or special rights of the Securities,
whether by way of amendment to the Declaration or otherwise,
or (ii) the dissolution, winding-up or termination of the
Trust, other than in connection with the distribution of
Debentures held by the Institutional Trustee, upon the
occurrence of a Special Event or in connection with the
redemption of Common Securities as a consequence of a
redemption of Debentures, then the Holders of outstanding
Securities will be entitled to vote on such amendment or
proposal as a class and such amendment or proposal shall not
be effective except with the approval of the Holders of
Securities representing a Majority in liquidation amount of
such Securities; provided, however, (A) if any amendment or
proposal referred to in clause (i) above would adversely
affect only the Preferred Securities or the Common
Securities, then only the affected class will be entitled to
vote on such amendment or proposal and such amendment or
proposal shall not be effective except with the approval of
a Majority in liquidation amount of such class of
Securities, (B) the rights of Holders of Common Securities
under Article V of the Declaration to increase or decrease
the number of, and to appoint, replace or remove, Trustees
(other than a Special Regular Trustee) shall not be amended
without the consent of each Holder of Common Securities, and
(C) amendments to the Declaration shall be subject to such
further requirements as are set forth in Sections 12.1 and
12.2 of the Declaration.
In the event the consent of the Institutional
Trustee is required under the Indenture with respect to any
amendment, modification or termination of the Indenture or
the Debentures, the Institutional Trustee shall request the
written direction of the Holders of the Securities with
respect to such amendment, modification or termination. The
Institutional Trustee shall vote with respect to such
amendment, modification or termination as directed by a
Majority in liquidation amount of the Securities voting
together as a single class; provided that where such
amendment, modification or termination of the Indenture
requires the consent or vote of (1) holders of Debentures
representing a specified percentage greater than a majority
in principal amount of the Debentures or (2) each holder of
Debentures, the Institutional Trustee may only vote with
respect to that amendment, modification or termination as
directed by, in the case of clause (1) above, the vote of
Holders of Securities representing such specified percentage
of the aggregate liquidation amount of the Securities, or,
in the case of clause (2) above, each Holder of Securities;
10
<PAGE>
and provided, further, that the Institutional Trustee shall
be under no obligation to take any action in accordance with
the directions of the Holders of the Securities unless the
Institutional Trustee shall have received, at the expense of
the Sponsor, an opinion of nationally recognized independent
tax counsel recognized as an expert in such matters to the
effect that the Trust will not be classified for United
States federal income tax purposes as an association taxable
as a corporation or a partnership on account of such action
and will be treated as a grantor trust for United States
federal income tax purposes following such action.
Subject to Section 2.6 of the Declaration, and the
provisions of this and the next succeeding paragraph, the
Holders of a Majority in liquidation amount of the Common
Securities, voting separately as a class shall have the
right to (A) on behalf of all Holders of Common Securities,
waive any past default that is waivable under the
Declaration (subject to, and in accordance with the
Declaration) and (B) direct the time, method, and place of
conducting any proceeding for any remedy available to the
Institutional Trustee, or exercising any trust or power
conferred upon the Institutional Trustee under the
Declaration, including the right to direct the Institutional
Trustee, as holder of the Debentures, to (i) direct the
time, method and place of conducting any proceeding for any
remedy available to the Debenture Trustee, or exercising any
trust or power conferred on the Debenture Trustee with
respect to the Debentures, (ii) waive any past default and
its consequences that is waivable under Section 6.4 of the
Indenture, or (iii) exercise any right to rescind or annul a
declaration that the principal of all the Debentures shall
be due and payable; provided that where the taking of any
action under the Indenture requires the consent or vote of
(1) holders of Debentures representing a specified
percentage greater than a majority in principal amount of
the Debentures or (e) each holder of Debentures, the
Institutional Trustee may only take such action if directed
by, in the case of clause (1) above, the vote of Holders of
Common Securities representing such specified percentage of
the aggregate liquidation amount of the Common Securities,
or, in the case of clause (2) above, each Holder of Common
Securities. Pursuant to this paragraph, the Institutional
Trustee shall not revoke, or take any action inconsistent
with, any action previously authorized or approved by a vote
of the Holders of the Preferred Securities, and shall not
take any action in accordance with the direction of the
Holders of the Common Securities under this paragraph if the
action is prejudicial to the Holders of Preferred
Securities. Other than with respect to directing the time,
method and place of conducting any proceeding for any remedy
11
<PAGE>
available to the Institutional Trustee or the Debenture
Trustee as set forth above, the Institutional Trustee shall
be under no obligation to take any of the foregoing actions
at the direction of the Holders of Common Securities unless
the Properties Trustee shall have received, at the expense
of the Sponsor, an opinion of nationally recognized
independent tax counsel recognized as expert in such matters
to the effect that the Trust will not be classified for
United States federal income tax purposes as an association
taxable as a corporation or a partnership on account of such
action and will be treated as a grantor trust for United
States income tax purposes following such action.
Notwithstanding any other provision of these
terms, each Holder of Common Securities will be deemed to
have waived any Event of Default with respect to the Common
Securities and its consequences until all Events of Default
with respect to the Preferred Securities have been cured,
waived by the Holders of Preferred Securities as provided in
the Declaration or otherwise eliminated, and until all
Events of Default with respect to the Preferred Securities
have been so cured, waived by the Holders of Preferred
Securities or otherwise eliminated, the Institutional
Trustee will be deemed to be acting solely on behalf of the
Holders of Preferred Securities and only the Holders of the
Preferred Securities will have the right to direct the
Institutional Trustee in accordance with the terms of the
Declaration or of the Securities. In the event that any
Event of Default with respect to the Preferred Securities is
waived by the Holders of Preferred Securities as provided in
the Declaration, the Holders of Common Securities agree that
such waiver shall also constitute the waiver of such Event
of Default with respect to the Common Securities for all
purposes under the Declaration without any further act, vote
or consent of the Holders of the Common Securities.
A waiver of an Indenture Event of Default by the
Institutional Trustee at the direction of the Holders of the
Preferred Securities will constitute a waiver of the
corresponding Event of Default under the Declaration in
respect of the Securities.
Any required approval 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 of the Trust or pursuant to
written consent. The Regular Trustees will cause a notice
of any meeting at which Holders of Common Securities are
entitled to vote, or of any matter upon which action by
written consent of such Holders is to be taken, to be mailed
to each Holder of record of Common Securities. Each such
12
<PAGE>
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 Common
Securities will be required for the Trust to redeem and
cancel Common Securities in accordance with the Declaration.
6. Pro Rata Treatment. A reference in these
terms of the Common Securities to any payment, distribution
or treatment as being "Pro Rata" shall mean pro rata to each
Holder of Securities according to the aggregate liquidation
amount of the Securities held by the relevant Holder in
relation to the aggregate liquidation amount of all
Securities outstanding unless, in relation to a payment, an
Event of Default has occurred and is continuing, in which
case any funds available to make such payment shall be paid
first to each Holder of the Preferred Securities pro rata
according to the aggregate liquidation amount of Preferred
Securities held by the relevant Holder relative to the
aggregate liquidation amount of all Preferred Securities
outstanding, and only after satisfaction of all amounts owed
to the Holders of the Preferred Securities, to each Holder
of Common Securities pro rata according to the aggregate
liquidation amount of Common Securities held by the relevant
Holder relative to the aggregate liquidation amount of all
Common Securities outstanding.
7. Ranking. The Common Securities rank pari
----
passu with the Preferred Securities except that where an
-----
Event of Default occurs and is continuing, the rights of
Holders of Common Securities to payment in respect of
Distributions and payments upon liquidation, redemption or
otherwise are subordinate to the rights of Holders the
Preferred Securities.
8. Mergers, Consolidations or Amalgamations. The
Trust may not consolidate, amalgamate, merge with or into,
or be replaced by, or convey, transfer or lease its
properties and assets to, any corporation or other body.
9. Transfers, Exchanges, Method of Payments.
Payment of Distributions and payments on redemption of the
Common Securities will be payable, the transfer of the
Common Securities will be registrable, and Common Securities
will be exchangeable for Common Securities of other
denominations of a like aggregate liquidation amount, at the
13
<PAGE>
principal corporate trust office of the Institutional
Trustee in The City of New York; provided that payment of
Distributions may be made at the option of the Regular
Trustees on behalf of the Trust by check mailed to the
address of the persons entitled thereto and that the payment
on redemption of any Common Security will be made only upon
surrender of such Common Security to the Institutional
Trustee. Notwithstanding the foregoing, transfers of Common
Securities are subject to conditions set forth in Section
9.1(c) of the Declaration.
10. Acceptance of Indenture. Each Holder of
Common Securities, by the acceptance thereof, agrees to the
provisions of the Indenture and the Debentures, including
the subordination provisions thereof.
11. No Preemptive Rights. The Holders of Common
Securities shall have no preemptive rights to subscribe to
any additional Common Securities or Preferred Securities.
12. Miscellaneous. These terms shall constitute
a part of the Declaration. The Trust will provide a copy of
the Declaration and the Indenture to a Holder without charge
on written request to the Trust at its principal place of
business.
14
<PAGE>
Annex I
TRANSFER OF THIS CERTIFICATE
IS SUBJECT TO THE CONDITIONS
SET FORTH IN THE DECLARATION
REFERRED TO BELOW
Certificate Number Number of Common Securities
C-1 ______
Certificate Evidencing Common Securities
of
RJR Nabisco Holdings Capital Trust I
____% Trust Originated Common Securities
(liquidation amount $25 per Common Security)
RJR Nabisco Holdings Capital Trust I, a statutory
business trust formed under the laws of the State of
Delaware (the "Trust"), hereby certifies that RJR Nabisco
Holdings Corp. (the "Holder") is the registered owner of
_____________________________ (______) common securities of
the Trust representing undivided beneficial interests in the
assets of the Trust designated the ____% Trust Originated
Common Securities (liquidation amount $25 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 and satisfaction of the other conditions set forth
in the Declaration (as defined below) including, without
limitation Section 9.1(c) thereof. The designations,
rights, privileges, restrictions, preferences and other
terms and provisions of the Common Securities are set forth
in, and this certificate and the Common Securities
represented hereby are issued and shall in all respects be
subject to the terms and provisions of, the Amended and
Restated Declaration of Trust of the Trust dated as of
_____, 1995, as the same may be amended from time to time
(the "Declaration") including the designation of the terms
of Common Securities as set forth in Exhibit C thereto. The
Common Securities and the Preferred Securities issued by the
Trust pursuant to the Declaration represent undivided
<PAGE>
beneficial interests in the assets of the Trust, including
the Debentures (as defined in the Declaration) issued by
Holdings Inc., a Maryland corporation, to the Trust pursuant
to the Indenture referred to in the Declaration. The Trust
will furnish a copy of the Declaration and the Indenture to
the Holder without charge upon written request to the Trust
at its principal place of business or registered office.
The Holder of this Certificate, by accepting this
Certificate, is deemed to have agreed to the terms of the
Indenture and the Debentures, including that the Debentures
are subordinate and junior in right of payment to all Senior
Debt (as defined in the Indenture) as and to the extent
provided in the Indenture.
Upon receipt of this certificate, the Holder is
bound by the Declaration and is entitled to the benefits
thereunder.
IN WITNESS WHEREOF, the Trustees of the Trust have
executed this certificate this __th day of ____, 1995.
RJR NABISCO HOLDINGS CAPITAL TRUST I
By________________________, as trustee
Name:
Title:
By_________________________, as trustee
Name:
Title: Trustee
Dated:
Countersigned and Registered:
_____________________________
Transfer Agent and Registrar
By:___________________________
Authorized Signature
2
<PAGE>
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned assigns and transfer
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)
3
Exhibit 4.8
GUARANTEE AGREEMENT
This GUARANTEE AGREEMENT, dated as of June __, 1995, is executed
and delivered by RJR Nabisco Holdings Corp., a Delaware corporation (the
"Guarantor"), and The Bank of New York as the initial Guarantee Trustee (as
defined herein) for the benefit of the Holders (as defined herein) from time
to time of the Preferred Securities (as defined herein) of RJR Nabisco
Holdings 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 ________, 1995 among the trustees of the
Issuer named therein, RJR Nabisco Holdings Corp., as Sponsor, and the Holders
from time to time of undivided beneficial interests in the assets of the
Issuer, the Issuer is issuing as of the date hereof in accordance with the
Offer (as defined herein) $_______ aggregate liquidation amount of its ___%
Trust Originated Preferred Securities (the "Preferred Securities")
representing undivided beneficial interests in the assets of the Issuer and
having the terms set forth in Exhibit B to the Declaration;
WHEREAS, the Preferred Securities will be issued by the Issuer upon
deposit of the Guarantor's Debentures (as defined herein) with the Issuer as
trust assets; and
WHEREAS, as incentive for the Holders to exchange Series B
Depositary Shares ("Depositary Shares") representing 1/1000 of a share of
Guarantor's Series B Preferred Stock (as defined herein) for Preferred
Securities pursuant to the Offer, the Guarantor desires to irrevocably and
unconditionally agree, to the extent set forth herein, to pay to the Holders
of the Preferred Securities the Guarantee Payments (as defined herein) and to
make certain other payments on the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the exchange of Depositary
Shares for Preferred Securities, which exchange the Guarantor hereby agrees
shall benefit the Guarantor, the Guarantor executes and delivers this
Guarantee Agreement for the benefit of the Holders from time to time of the
Preferred Securities.
<PAGE>
ARTICLE I
SECTION 1.1 Definitions.
-----------
(a) Capitalized terms used in this Guarantee Agreement 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 Guarantee Agreement has the
same meaning throughout;
(c) all references to "the Guarantee Agreement" or "this Guarantee
Agreement" are to this Guarantee Agreement as modified, supplemented or
amended from time to time;
(d) all references in this Guarantee Agreement to Articles and
Sections are to Articles and Sections of this Guarantee Agreement unless
otherwise specified;
(e) a term defined in the Trust Indenture Act has the same meaning
when used in this Guarantee Agreement unless otherwise defined in this
Guarantee Agreement or unless the context otherwise requires; and
(f) a reference to the singular includes the plural and vice
versa.
"Affiliate" has the same meaning as given to that term in Rule 405
of the Securities Act of 1933, as amended, or any successor rule thereunder.
"Commission" means the Securities and Exchange Commission.
"Common Securities" means the securities representing undivided
beneficial interests in the assets of the Issuer, having the terms set forth
in Exhibit C to the Declaration.
"Covered Person" means any Holder of Preferred Securities.
"Debentures" means the series of Junior Subordinated Debentures
issued by the Guarantor under the Indenture and entitled the "___% Junior
Subordinated Debentures due 2044".
2
<PAGE>
"Distributions" means the periodic distributions and other payments
payable to Holders of Preferred Securities in accordance with the terms of
the Preferred Securities set forth in Exhibit B to the Declaration.
"ESOP Convertible Preferred Stock" means the ESOP Convertible
Preferred Stock of the Guarantor
"Event of Default" means a default by the Guarantor on any of its
payment or other obligations under this Guarantee Agreement.
"Guarantee Payments" shall mean the following payments or
distributions, without duplication, with respect to the Preferred Securities,
to the extent not paid or made by the Issuer: (i) any accrued and unpaid
Distributions and the redemption price, including all accrued and unpaid
Distributions to the date of redemption (the "Redemption Price"), with
respect to the Preferred Securities called for redemption by the Issuer but
if and only to the extent that in each case the Guarantor has made a payment
to the Trust of interest or principal on the Debentures and (ii) upon a
voluntary or involuntary dissolution, winding-up or termination of the Issuer
(other than in connection with the distribution of Debentures to Holders or
the redemption of all the Preferred Securities upon the maturity or
redemption of the Debentures as provided in the Declaration), the lesser of
(a) the aggregate of the liquidation amount and all accrued and unpaid
Distributions on the Preferred Securities to the date of payment, to the
extent the Issuer has funds available therefor, and (b) the amount of assets
of the Issuer remaining available for distribution to Holders in liquidation
of the Issuer (in either case, the "Liquidation Distribution").
"Guarantee Trustee" means The Bank of New York until a Successor
Guarantee Trustee has been appointed and accepted such appointment pursuant
to the terms of this Guarantee Agreement and thereafter means each such
Successor Guarantee Trustee.
"Holder" shall mean any holder, as registered on the books and
records of the Issuer, of any Preferred Securities; provided, however, that
in determining whether the holders of the requisite percentage of Preferred
Securities have given any request, notice, consent or waiver hereunder,
"Holder" shall not include the Guarantor or any entity directly or indirectly
controlling or controlled by or under direct or indirect common control with
the Guarantor.
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"Indemnified Person" means the Guarantee Trustee, any Affiliate of
the Guarantee Trustee, and any officers, directors, shareholders, members,
partners, employees, representatives or agents of the Guarantee Trustee.
"Indenture" means the Indenture dated as of ______ __, 1995 between
the Guarantor and The Bank of New York, as trustee, and the First
Supplemental Indenture thereto dated such date, pursuant to which the
Debentures are to be issued.
"Majority in liquidation amount of the Preferred Securities" means,
except as otherwise required by the Trust Indenture Act, Holder(s) of
outstanding Preferred Securities voting together as a single class, who are
the record owners of Preferred Securities whose 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) represents more than 50% of the liquidation
amount of all outstanding Preferred Securities.
"Offer" means the offer by the Issuer to exchange Preferred
Securities for outstanding Depositary Shares in consideration for the deposit
by the Guarantor of Debentures as trust assets of the Issuer, all as
described in a Prospectus dated June __, 1995.
"Person" means a legal person, including any individual,
corporation, estate, partnership, joint venture, association, joint stock
company, limited liability company, trust, unincorporated association, or
government or any agency or political subdivision thereof, or any other
entity of whatever nature.
"Preferred Securities" has the meaning set forth in the first
WHEREAS clause above.
"Redemption Price" means the amount payable on redemption of the
Preferred Securities in accordance with the terms of the Preferred
Securities.
"Responsible Officer" means, with respect to the Guarantee Trustee,
the chairman of the board of directors, the president, any vice-president,
any assistant vice-president, the secretary, any assistant secretary, the
treasurer, any assistant treasurer, any trust officer or assistant trust
officer or any other officer of the 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
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matter, any other officer to whom such matter is referred because of that
officer's knowledge of and familiarity with the particular subject.
"Series B Preferred Stock" means the Series B Cumulative Preferred
Stock of the Guarantor.
"Series C Preferred Stock" means the Series C Conversion Preferred
Stock of the Guarantor.
"Successor Guarantee Trustee" means a successor Guarantee Trustee
possessing the qualifications to act as a Guarantee Trustee under Section
4.1.
"Trust Indenture Act" means the Trust Indenture Act of 1939, as
amended.
ARTICLE II
TRUST INDENTURE ACT
SECTION 2.1 Trust Indenture Act; Application.
--------------------------------
(a) This Guarantee Agreement is subject to the provisions of the
Trust Indenture Act that are required to be part of this Guarantee Agreement
and shall, to the extent applicable, be governed by such provisions;
(b) if and to the extent that any provision of this Guarantee
Agreement limits, qualifies or conflicts with the duties imposed by Sec.
Sec. 310 to 317, inclusive, of the Trust Indenture Act, such imposed
duties shall control; and
(c) the application of the Trust Indenture Act to this Guarantee
Agreement shall not affect the nature of the Preferred Securities as equity
securities representing undivided beneficial interests in the assets of the
Issuer.
SECTION 2.2 Lists of Holders of Preferred Securities.
----------------------------------------
(a) The Guarantor shall provide the Guarantee Trustee with such
information as is required under Sec. 312(a) of the Trust Indenture Act at
the times and in the manner provided in Sec. 312(a); and
(b) the Guarantee Trustee shall comply with its obligations under
Sec.Sec. 310(b), 311 and 312(b) of the Trust Indenture Act.
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SECTION 2.3 Reports by the Guarantee Trustee.
--------------------------------
Within 60 days after May 15 of each year, the Guarantee Trustee
shall provide to the Holders of the Preferred Securities such reports as are
required by Sec. 313 of the Trust Indenture Act, if any, in the form, in the
manner and at the times provided by Sec. 313 of the Trust Indenture Act. The
Guarantee Trustee shall also comply with the requirements of Sec. 313(d) of
the Trust Indenture Act.
SECTION 2.4 Periodic Reports to Guarantee Trustee.
-------------------------------------
The Guarantor shall provide to the Guarantee Trustee, the
Commission and the Holders of the Preferred Securities, as applicable, such
documents, reports and information as required by Sec. 314(a)(1)-(3) (if any)
of the Trust Indenture Act and the compliance certificates required by
Sec. 314(a)(4) and (c) of the Trust Indenture Act, any such certificates to be
provided in the form, in the manner and at the times required by Sec. 314(a)(4)
and (c) of the Trust Indenture Act (provided that any certificate to be
provided pursuant to Sec. 314(a)(4) of the Trust Indenture Act shall be provided
within 120 days of the end of each fiscal year of the Issuer).
SECTION 2.5 Evidence of Compliance with
Conditions Precedent.
---------------------------
The Guarantor shall provide to the Guarantee Trustee such evidence
of compliance with any conditions precedent, if any, provided for in this
Guarantee Agreement which relate to any of the matters set forth in Sec. 314(c)
of the Trust Indenture Act. Any certificate or opinion required to be given
pursuant to Sec. 314(c) shall comply with Sec. 314(e) of the Trust Indenture
Act.
SECTION 2.6 Events of Default; Waiver.
-------------------------
(a) Subject to Section 2.6(b), Holders of Preferred Securities may
by vote of at least a Majority in liquidation amount of the Preferred
Securities, (A) direct the time, method and place of conducting any
proceeding for any remedy available to the Guarantee Trustee, or exercising
any trust or power conferred upon by the Guarantee Trustee or (B) on behalf
of the Holders of all Preferred Securities waive any past Event of Default
and its consequences. Upon such waiver, any such default shall cease to
exist, and any Event of Default arising therefrom shall be deemed to have
been cured, for every purpose of this Guarantee Agreement, but no such waiver
shall extend to any subsequent or other
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default or Event of Default or impair any right consequent thereon.
(b) The right of any Holder of Preferred Securities to receive
payment of the Guarantee Payments in accordance with this Guarantee
Agreement, or to institute suit for the enforcement of any such payment,
shall not be impaired without the consent of each such Holder.
SECTION 2.7 Disclosure of Information.
-------------------------
The disclosure of information as to the names and addresses of the
Holders of the Preferred Securities in accordance with Sec. 312 of the Trust
Indenture Act, regardless of the source from which such information was
derived, shall not be deemed to be a violation of any existing law, or any
law hereafter enacted which does not specifically refer to Sec. 312 of the Trust
Indenture Act, nor shall the Guarantee Trustee be held accountable by reason
of mailing any material pursuant to a request made under Sec. 312(b) of the
Trust Indenture Act.
SECTION 2.8 Conflicting Interest.
--------------------
The Declaration shall be deemed to be specifically described in
this Guarantee Agreement for the purposes of clause (i) of the first proviso
contained in Section 310(b) of the Trust Indenture Act.
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ARTICLE III
POWERS, DUTIES AND RIGHTS OF GUARANTEE TRUSTEE
SECTION 3.1 Powers and Duties of the Guarantee Trustee.
------------------------------------------
(a) This Guarantee Agreement shall be held by the Guarantee
Trustee in trust for the benefit of the Holders of the Preferred Securities.
The Guarantee Trustee shall not transfer its right, title and interest in the
Guarantee Agreement to any Person except a Successor Guarantee Trustee on
acceptance by such Successor Guarantee Trustee of its appointment to act as
Guarantee Trustee or to a Holder of Preferred Securities exercising his or
her rights pursuant to Section 5.4. The right, title and interest of the
Guarantee Trustee to the Guarantee Agreement shall vest automatically in each
Person who may hereafter be appointed as Guarantee Trustee in accordance with
Article IV. Such vesting and cessation of title shall be effective whether
or not conveyancing documents have been executed and delivered.
(b) If an Event of Default occurs and is continuing, the Guarantee
Trustee shall enforce this Guarantee Agreement for the benefit of the Holders
of the Preferred Securities.
(c) This Guarantee Agreement and all moneys received by the Trust
hereunder in respect of the Guarantee Payments will not be subject to any
right, charge, security interest, lien or claim of any kind in favor of, or
for the benefit of that Guarantee Trustee or its agents or their creditors.
(d) The Guarantee Trustee shall, within 90 days after the
occurrence of an Event of Default, transmit by mail, first class postage
prepaid, to the holders of the Preferred Securities, as their names and
addresses appear upon the register, notice of all Events of Default known to
the Guarantee Trustee, unless such defaults shall have been cured before the
giving of such notice; provided, that, the Guarantee Trustee shall be
protected in withholding such notice if and so long as the board of
directors, the executive committee, or a trust committee of directors and/or
Responsible Officers, of the Guarantee Trustee in good faith determine that
the withholding of such notice is in the interests of the Holders of the
Preferred Securities. The Guarantee Trustee shall not be deemed to have
knowledge of any default except any default as to which the Guarantee Trustee
shall have received written notice or a Responsible Officer charged with the
administration of this Guarantee Agreement shall have obtained written
notice.
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(e) The Guarantee Trustee shall not resign as a Trustee unless a
Successor Guarantee Trustee has been appointed and accepted that appointment
in accordance with Article IV.
SECTION 3.2 Certain Rights and Duties of the
--------------------------------
Guarantee Trustee.
-----------------
(a) The Guarantee Trustee, before the occurrence of an Event of
Default and after the curing of all Events of Default that may have occurred,
shall undertake to perform only such duties as are specifically set forth in
this Guarantee Agreement, and no implied covenants shall be read into this
Guarantee Agreement against the Guarantee Trustee. In case an Event of
Default has occurred (that has not been cured or waived pursuant to Section
2.6(a)), the Guarantee Trustee shall exercise such of the rights and powers
vested in it by this Guarantee Agreement, and use the same degree of care and
skill in 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 Guarantee Agreement shall be construed to
relieve the Guarantee Trustee from liability for its own negligent action,
its own negligent failure to act or its own willful misconduct, except that:
(i) prior to the occurrence of 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 Guarantee Trustee shall be
determined solely by the express provisions of this Guarantee
Agreement, and the Guarantee Trustee shall not be liable
except for the performance of such duties and obligations as
are specifically set forth in this Guarantee Agreement, and no
implied covenants or obligations shall be read into this
Guarantee Agreement against the Guarantee Trustee; and
(B) in the absence of bad faith on the part of the Guarantee
Trustee, the Guarantee Trustee may conclusively rely, as to
the truth of the statements and the correctness of the
opinions expressed therein, upon any certificates or opinions
furnished to the Guarantee Trustee and conforming to the
requirements of this Guarantee Agreement; but in the case of
any such certificates or
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opinions that by any provision hereof are specifically
required to be furnished to the Guarantee Trustee, the
Guarantee Trustee shall be under a duty to examine the same to
determine whether or not they conform to the requirements of
this Guarantee Agreement;
(ii) the Guarantee Trustee shall not be liable for any error of
judgment made in good faith by a Responsible Officer of the Guarantee
Trustee, unless it shall be proved that the Guarantee Trustee was
negligent in ascertaining the pertinent facts;
(iii) the Guarantee Trustee shall not be liable with respect to any
action taken or omitted to be taken by it in good faith in accordance
with the direction of the Holders of Preferred Securities as provided
herein relating to the time, method and place of conducting any
proceeding for any remedy available to the Guarantee Trustee, or
exercising any trust or power conferred upon the Guarantee Trustee under
this Guarantee Agreement; and
(iv) no provision of this Guarantee Agreement shall require the
Guarantee Trustee to expend or risk its own funds or otherwise incur
personal financial liability in the performance of any of its duties or
in the exercise of any of its rights or powers, if it shall have
reasonable ground for believing that the repayment of such funds or
liability is not reasonably assured to it under the terms of this
Guarantee Agreement or adequate indemnity against such risk or liability
is not reasonably assured to it.
(c) Subject to the provisions of Section 3.2(a) and (b):
(i) Whenever in the administration of this Guarantee Agreement,
the Guarantee Trustee shall deem it desirable that a matter be proved or
established prior to taking, suffering or omitting any action hereunder,
the Guarantee Trustee (unless other evidence is herein specifically
prescribed) may, in the absence of bad faith on its part, request and
rely upon a certificate, which shall comply with the provisions of
Sec. 314(e) of the Trust Indenture Act, signed by any authorized officer of
the Guarantor;
(ii) The Guarantor Trustee (A) may consult with counsel (which may
be counsel to the Guarantor or any of its Affiliates and may include any
of its employees)
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selected by it in good faith and with due care and the written advice or
opinion of such counsel with respect to legal matters shall be full and
complete authorization and protection in respect of any action taken,
suffered or omitted by it hereunder in good faith and in reliance
thereon and in accordance with such advice and opinion and (B) shall
have the right at any time to seek instructions concerning the
administration of this Guarantee Agreement from any court of competent
jurisdiction;
(iii) The Guarantee Trustee may execute any of the trusts or powers
hereunder or perform any duties hereunder either directly or by or
through agents or attorneys and the Guarantee Trustee shall not be
responsible for any misconduct or negligence on the part of any agent or
attorney appointed by it in good faith and with due care;
(iv) The Guarantee Trustee shall be under no obligation to exercise
any of the rights or powers vested in it by this Guarantee Agreement at
the request or direction of any Holders of Preferred Securities, unless
such Holders shall have offered to the Guarantee Trustee reasonable
security and indemnity against the costs, expenses (including attorneys'
fees and expenses) and liabilities that might be incurred by it in
complying with such request or direction; provided that nothing
contained in this clause (iv) shall relieve the Guarantee Trustee of the
obligation, upon the occurrence of an Event of Default (which has not
been cured or waived) to exercise such of the rights and powers vested
in it by this Guarantee Agreement, and to use the same degree of care
and skill in this exercise, as a prudent person would exercise or use
under the circumstances in the conduct of his or her own affairs; and
(v) Any action taken by the Guarantee Trustee or its agents
hereunder shall bind the Holders of the Preferred Securities and the
signature of the Guarantee 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 Guarantee
Trustee to so act, or as to its compliance with any of the terms and
provisions of this Guarantee Agreement, both of which shall be
conclusively evidenced by the Guarantee Trustee's or its agent's taking
such action.
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SECTION 3.3 Not Responsible for Recitals or Issuance of Guarantee.
-----------------------------------------------------
The recitals contained in this Guarantee shall be taken as the
statements of the Guarantor and the Guarantee Trustee does not assume any
responsibility for their correctness. The Guarantee Trustee makes no
representations as to the validity or sufficiency of this Guarantee
Agreement.
ARTICLE IV
GUARANTEE TRUSTEE
SECTION 4.1 Qualifications.
--------------
(a) There shall at all times be a Guarantee Trustee which shall:
(i) not be an Affiliate of the Guarantor; and
(ii) be a corporation organized and doing business under the laws
of the United States of America or any State or Territory thereof or of
the District of Columbia, or a corporation or Person 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 $50,000,000, 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.
If at any time the Guarantee Trustee shall cease to satisfy the
requirements of clauses (i)-(ii) above, the Guarantee Trustee shall
immediately resign in the manner and with the effect set out in Section 4.2.
If the Guarantee Trustee has or shall acquire any "conflicting interest"
within the meaning of Sec. 310(b) of the Trust Indenture Act, the Guarantee
Trustee and the Guarantor shall in all respects comply with the provisions of
Sec. 310(b) of the Trust Indenture Act.
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SECTION 4.2 Appointment, Removal and Resignation of
---------------------------------------
Guarantee Trustee.
-----------------
(a) Subject to Section 4.2(b), the Guarantee Trustee may be appointed or
removed without cause at any time by the Guarantor.
(b) The Guarantee Trustee shall not be removed in accordance with Section
4.2(a) until a Successor Guarantee Trustee possessing the qualifications
to act as Guarantee Trustee under Section 4.1(a) has been appointed and
has accepted such appointment by written instrument executed by such
Successor Guarantee Trustee and delivered to the Guarantor and the
Guarantee Trustee being removed.
(c) The Guarantee Trustee appointed to office shall hold office until his
successor shall have been appointed or until its removal or resignation.
(d) The Guarantee Trustee may resign from office (without need for prior or
subsequent accounting) by an instrument (a "Resignation Request") in
writing signed by the Guarantee Trustee and delivered to the Guarantor,
which resignation shall take effect upon such delivery or upon such
later date as is specified therein; provided, however, that no such
-------- -------
resignation of the Guarantee Trustee shall be effective until a
Successor Guarantee Trustee possessing the qualifications to act as
Guarantee Trustee under Section 4.1(a) has been appointed and has
accepted such appointment by instrument executed by such Successor
Guarantee Trustee and delivered to Guarantor and the resigning Guarantee
Trustee.
(e) If no Successor Guarantee Trustee shall have been appointed and accepted
appointment as provided in this Section 4.2 within 60 days after
delivery to the Guarantor of a Resignation Request, the resigning
Guarantee Trustee may petition any court of competent jurisdiction for
appointment of a Successor Guarantee Trustee. Such court may thereupon
after such notice, if any, as it may deem proper and prescribe, appoint
a Successor Guarantee Trustee.
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ARTICLE V
GUARANTEE
SECTION 5.1 Guarantee.
---------
The Guarantor irrevocably and unconditionally agrees to pay in full
to the Holders the Guarantee Payments (without duplication of amounts
theretofore paid by the Issuer) regardless of any defense, right of set-off
or counterclaim which the Issuer may have or assert. The Guarantor's
obligation to make a Guarantee Payment may be satisfied by direct payment of
the required amounts by the Guarantor to the Holders or by causing the Issuer
to pay such amounts to the Holders.
SECTION 5.2 Waiver of Notice.
----------------
The Guarantor hereby waives notice of acceptance of this Guarantee
Agreement and of any liability to which it applies or may apply, presentment,
demand for payment, any right to require a proceeding first against the
Issuer or any other Person before proceeding against the Guarantor, protest,
notice of nonpayment, notice of dishonor, notice of redemption and all other
notices and demands.
SECTION 5.3 Obligations Not Affected.
------------------------
The obligations, covenants, agreements and duties of the Guarantor
under this Guarantee Agreement shall in no way be affected or impaired by
reason of the happening from time to time of any of the following:
(a) the release or waiver, by operation of law or otherwise, of
the performance or observance by the Issuer of any express or implied
agreement, covenant, term or condition relating to the Preferred
Securities to be performed or observed by the Issuer;
(b) the extension of time for the payment by the Issuer of all or
any portion of the Distributions (other than an extension of time for
payment of Distributions that results from the extension of any interest
payment period on the Debentures), Redemption Price, Liquidation
Distribution or any other sums payable under the terms of the Preferred
Securities or the extension of time for the performance of any other
obligation under, arising out of, or in connection with, the Preferred
Securities;
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(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
Preferred Securities, or any action on the part of the Issuer granting
indulgence or extension of any kind;
(d) the voluntary or involuntary liquidation, dissolution, sale of
any collateral, receivership, insolvency, bankruptcy, assignment for the
benefit of creditors, reorganization, arrangement, composition or
readjustment of debt of, or other similar proceedings affecting, the
Issuer or any of the assets of the Issuer;
(e) any invalidity of, or defect or deficiency in, the Preferred
Securities;
(f) the settlement or compromise of any obligation guaranteed
hereby or hereby incurred; or
(g) any other circumstance whatsoever that might otherwise
constitute a legal or equitable discharge or defense of a guarantor, it
being the intent of this Section 5.3 that the obligations of the
Guarantor hereunder shall be absolute and unconditional under any and
all circumstances.
There shall be no obligation of the Holders to give notice to, or obtain
consent of, the Guarantor with respect to the happening of any of the
foregoing.
SECTION 5.4 Enforcement of Guarantee.
------------------------
The Guarantor and the Guarantee Trustee expressly acknowledge that
(i) this Guarantee Agreement will be deposited with the Guarantee Trustee to
be held for the benefit of the Holders; (ii) the Guarantee Trustee has the
right to enforce this Guarantee Agreement on behalf of the Holders; (iii)
Holders representing not less than a Majority in liquidation amount of the
Preferred Securities have the right to direct the time, method and place of
conducting any proceeding for any remedy available in respect of this
Guarantee Agreement including the giving of directions to the Guarantee
Trustee, or exercising any trust or other power conferred upon the Guarantee
Trustee under this Guarantee Agreement, and (iv) if the Guarantee Trustee
fails to enforce this Guarantee Agreement, any Holder of Preferred Securities
may, after a period of 90 days has elapsed from such Holder's written request
to the Guarantee Trustee to enforce this Guarantee Agreement, institute a
legal
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proceeding directly against the Guarantor to enforce its rights under this
Guarantee Agreement, without first instituting a legal proceeding against the
Issuer, the Guarantee Trustee, or any other Person.
SECTION 5.5 Guarantee of Payment.
--------------------
This Guarantee Agreement creates a guarantee of payment and not
merely of collection. This Guarantee Agreement will not be discharged except
by payment of the Guarantee Payments in full (without duplication of amounts
theretofore paid by the Issuer).
SECTION 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 the Holders by
the Guarantor under this Guarantee Agreement; provided, however, that the
Guarantor shall not (except to the extent required by mandatory provisions of
law) be entitled to enforce or exercise any rights which it may acquire by
way of subrogation or any indemnity, reimbursement or other agreement, in all
cases as a result of payment under this Guarantee Agreement, if, at the time
of any such payment, any amounts are due and unpaid under this Guarantee
Agreement. If any amount shall be paid to the Guarantor in violation of the
preceding sentence, the Guarantor agrees to hold such amount in trust for the
Holders and to pay over such amount to the Holders.
SECTION 5.7 Independent Obligations.
-----------------------
The Guarantor acknowledges that its obligations hereunder are
independent of the obligations of the Issuer with respect to the Preferred
Securities and that the Guarantor shall be liable as principal and as debtor
hereunder to make Guarantee Payments pursuant to the terms of this Guarantee
Agreement notwithstanding the occurrence of any event referred to in
subsections (a) through (g), inclusive, of Section 5.3 hereof.
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ARTICLE VI
LIMITATION OF TRANSACTIONS; SUBORDINATION
SECTION 6.1 Limitation of Transactions.
--------------------------
So long as any Preferred Securities remain outstanding, the
Guarantor will not declare or pay any dividend on, or redeem, purchase,
acquire or make a distribution or liquidation payment with respect to, any of
its common stock or preferred stock, or make any guarantee payments with
respect thereto, if at such time (i) the Guarantor shall be in default with
respect to its Guarantee Payments or other payment obligations hereunder,
(ii) there shall have occurred any event of default under the Indenture or
(iii) the Guarantor shall have given notice of its selection of an Extension
Period (as defined in the Indenture) and such period, or any extension
thereof, is continuing; provided that the Guarantor will be permitted to pay
accrued dividends (and cash in lieu of fractional shares) upon the mandatory
conversion of any of its preferred stock, including its Series C Preferred
Stock and ESOP Convertible Preferred Stock, in accordance with the terms of
such stock. In addition, so long as any Preferred Securities remain
outstanding, the Guarantor (i) will remain the sole direct or indirect owner
of all of the outstanding Common Securities and shall not cause or permit the
Common Securities to be transferred except to the extent such transfer is
permitted under Section 9.1(c) of the Declaration; provided that any
permitted successor of the Guarantor under the Indenture may succeed to the
Guarantor's ownership of the Common Securities and (ii) will not take any
action which would cause the Issuer to cease to be treated as a grantor trust
for United States federal income tax purposes except in connection with a
distribution of Debentures as provided in the Declaration.
SECTION 6.2 Subordination.
-------------
This Guarantee Agreement will constitute an unsecured obligation of
the Guarantor and will rank (i) subordinate and junior in right of payment to
all other liabilities of the Guarantor, including the Debentures, except
those made pari passu or subordinate by their terms, and (ii) senior to all
capital stock now or hereafter issued by the Guarantor and to any guarantee
now or hereafter entered into by the Guarantor in respect of any of its
capital stock.
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ARTICLE VII
TERMINATION
SECTION 7.1 Termination.
-----------
This Guarantee Agreement shall terminate and be of no further force
and effect upon full payment of the Redemption Price of all Preferred
Securities, upon the distribution of Debentures to Holders of Preferred
Securities and Common Securities in exchange for all of the Preferred
Securities and Common Securities or upon full payment of the amounts payable
in accordance with the Declaration upon liquidation of the Issuer.
Notwithstanding the foregoing, this Guarantee Agreement will continue to be
effective or will be reinstated, as the case may be, if at any time any
Holder must restore payment of any sums paid with respect to the Preferred
Securities or this Guarantee Agreement.
ARTICLE VIII
LIMITATION OF LIABILITY; INDEMNIFICATION
SECTION 8.1 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 and in a manner
such Indemnified Person reasonably believed to be within the scope of the
authority conferred on such Indemnified Person by this Guarantee Agreement or
by law, except that an Indemnified Person shall be liable for any such loss,
damage or claim incurred by reason of such Indemnified Person's negligence or
willful misconduct with respect to such acts or omissions.
(b) An Indemnified Person shall be fully protected in relying in
good faith upon the records of the Guarantor and upon such information,
opinions, reports or statements presented to the Guarantor by any Person as
to matters the Indemnified Person reasonably believes are within such other
Person's professional or expert competence 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
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Distributions to Holders of Preferred Securities might properly be paid.
SECTION 8.2 Indemnification.
---------------
(a) To the fullest extent permitted by applicable law, the
Guarantor shall indemnify and hold harmless each Indemnified Person from and
against any loss, damage or claim incurred by such Indemnified Person by
reason of any act or omission performed or omitted by such Indemnified Person
in good faith and in a manner such Indemnified Person reasonably believed to
be within the scope of authority conferred on such Indemnified Person by this
Guarantee Agreement, except that no Indemnified Person shall be entitled to
be indemnified in respect of any loss, damage or claim incurred by such
Indemnified Person by reason of negligence or willful misconduct with respect
to such acts or omissions.
(b) To the fullest extent permitted by applicable law, expenses
(including legal fees) incurred by an Indemnified Person in defending any
claim, demand, action, suit or proceeding shall, from time to time, be
advanced by the Guarantor prior to the final disposition of such claim,
demand, action, suit or proceeding upon receipt by the Guarantor of an
undertaking by or on behalf of the Indemnified Person to repay such amount if
it shall be determined that the Indemnified Person is not entitled to be
indemnified as authorized in Section 8.2(a).
ARTICLE IX
MISCELLANEOUS
SECTION 9.1 Successors and Assigns.
----------------------
All guarantees and agreements contained in this Guarantee Agreement
shall bind the successors, assigns, receivers, trustees and representatives
of the Guarantor and shall inure to the benefit of the Holders of the
Preferred Securities then outstanding. Except in connection with a
consolidation, merger or sale involving the Guarantor that is permitted under
Article Ten of the Indenture, the Guarantor shall not assign its obligations
hereunder.
SECTION 9.2 Amendments.
----------
Except with respect to any changes which do not adversely affect
the rights of Holders (in which case no consent of Holders will be required),
this Guarantee
19
<PAGE>
Agreement may only be amended with the prior approval of the Holders of not
less than a Majority in liquidation amount of the Preferred Securities. The
provisions of Section 12.2 of the Declaration concerning meetings of Holders
shall apply to the giving of such approval.
SECTION 9.3 Notices.
-------
Any notice, request or other communication required or permitted to
be given hereunder shall be in writing, duly signed by the party giving such
notice, and delivered, telecopied or mailed by first class mail as follows:
(a) if given to the Guarantor, to the address set forth below or
such other address as the Guarantor may give notice of to the Holders:
RJR Nabisco Holdings Corp.
1301 Avenue of the Americas
New York, New York 10019
Facsimile No.: (212) 969-9173
Attention: Treasurer
(b) if given to the Guarantee Trustee, to the address set forth
below or such other address as the Guarantee Trustee may give notice to the
Holders:
The Bank of New York:
101 Barclay Street
New York, New York 10286
Facsimile No.:
Attention: Corporate Trust
(c) if given to any Holder of Preferred Securities, at the address
set forth on the books and records of the Issuer.
All notices hereunder shall be deemed to have been given when
received in person, telecopied with receipt confirmed, or mailed by first
class mail, postage prepaid except that if a notice or other document is
refused delivery or cannot be delivered because of a changed address of which
no notice was given, such notice or other document shall be deemed to have
been delivered on the date of such refusal or inability to deliver.
20
<PAGE>
SECTION 9.4 Genders.
-------
The masculine, feminine and neuter genders used herein shall
include the masculine, feminine and neuter genders.
SECTION 9.5 Benefit.
-------
This Guarantee Agreement is solely for the benefit of the Holders
and subject to Section 3.1(a) is not separately transferable from the
Preferred Securities.
SECTION 9.6 Governing Law.
-------------
THIS GUARANTEE AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED AND
INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
SECTION 9.7 Counterparts
------------
This Guarantee Agreement may be executed in counterparts, each of
which shall be an original; but such counterparts shall together constitute
one and the same instrument.
21
<PAGE>
THIS GUARANTEE AGREEMENT is executed as of the day and year first
above written.
RJR NABISCO HOLDINGS CORP.
By:____________________________
Name:
Title:
THE BANK OF NEW YORK,
as Guarantee Trustee
By:________________________
Name:
Title:
22
Exhibit 5.1
June __, 1995
RJR Nabisco Holdings Corp.
1301 Avenue of the Americas
New York, New York 10019
Ladies and Gentlemen:
We have acted as counsel for RJR Nabisco Holdings Corp., a Delaware
corporation ("Holdings"), and RJR Nabisco Holdings Capital Trust I, a
statutory business trust created under the Business Trust Act of the State of
Delaware (the "Trust"), in connection with the preparation and filing with
the Securities and Exchange Commission (the "Commission") under the
Securities Act of 1933, as amended (the "Act"), of a Registration Statement
on Form S-4 (Registration No. ___________ ), as amended (the "Registration
Statement"), relating to (i) the offer by the Trust (the "Offer") to exchange
its _____% Trust Originated Preferred Securities ("TOPrS") (the "Preferred
Securities") for up to 49,000,000 outstanding Series B Depositary Shares
("Depositary Shares") each representing 1/1000 of a share of Series B
Cumulative Preferred Stock of Holdings and (ii) in connection therewith, the
deposit by Holdings with the Trust as trust assets of its _____% Junior
Subordinated Debentures due 2044 (the "Junior Subordinated Debentures").
Concurrently with the delivery of Junior Subordinated Debentures to the
Trust, Holdings will make a cash contribution to the Trust, the proceeds of
which will be used by the Trust to purchase as trust assets additional Junior
Subordinated Debentures. The Junior Subordinated Debentures are to be issued
under an Indenture dated as of June __, 1995 (as supplemented by the First
Supplemental Indenture dated as of June __, 1995, the "Indenture"), to be
entered into by and between Holdings and The Bank of New York, as trustee.
The Preferred Securities will be guaranteed (the "Guarantee") by Holdings to
the extent described in the Prospectus forming a part of the Registration
Statement.
<PAGE>
RJR Nabisco Holdings Corp. 2 June __, 1995
We have examined originals or copies, certified or otherwise
identified to our satisfaction, of such documents, corporate records,
certificates of public officials and other instruments as we have deemed
necessary or advisable for the purpose of rendering this opinion.
Based on the foregoing, we are of the opinion that:
1. Assuming that the Indenture and the Junior Subordinated
Debentures have been duly authorized, when (i) the Registration
Statement has become effective under the Act, (ii) the Indenture has
been duly executed and delivered, (iii) the terms of the Junior
Subordinated Debentures have been duly established in accordance with
the Indenture and (iv) the Junior Subordinated Debentures have been duly
executed and authenticated in accordance with the Indenture and duly
issued and delivered to the Trust as contemplated by the Registration
Statement, the Junior Subordinated Debentures will constitute valid and
binding obligations of Holdings, enforceable in accordance with their
terms, except as (i) the enforceability thereof may be limited by
bankruptcy, insolvency, reorganization, fraudulent transfer, moratorium
or other similar laws now or hereinafter in effect relating to or
affecting the enforcement of creditors' rights generally and (ii) the
availability of equitable remedies may be limited by equitable
principles of general applicability (regardless of whether considered in
a proceeding at law or in equity).
2. Assuming that the Guarantee has been duly authorized, when (i)
the Registration Statement has become effective under the Act, (ii) the
Guarantee has been duly executed and delivered, (iii) the Preferred
Securities have been duly issued and delivered in exchange for the
Depositary Shares as contemplated by the Registration Statement, the
Guarantee will constitute a valid and binding obligation of Holdings,
enforceable in accordance with its terms, except as (i) the
enforceability thereof may be limited by bankruptcy, insolvency,
reorganization, fraudulent transfer, moratorium or similar laws now or
hereinafter in effect relating to or affecting the enforcement of
creditors' rights generally and (ii) the availability of equitable
remedies may be limited by equitable principles of general applicability
(regardless of
<PAGE>
RJR Nabisco Holdings Corp. 3 June __, 1995
whether considered in a proceeding at law or in equity).
We are members of the Bar of the State of New York and our opinion
is limited to the Federal laws of the United States, the laws of the State of
New York and the General Corporation Law of the State of Delaware.
We hereby consent to the filing of this opinion as an exhibit to
the Registration Statement and to the use of our name under the heading
"Legal Matters" in the Prospectus forming a part of the Registration
Statement.
Very truly yours,
EXHIBIT 5.2
June 20, 1995
RJR Nabisco Holdings
Capital Trust I
1301 Avenue of the Americas
New York, NY 10019
Re: RJR Nabisco Holdings Capital Trust I
------------------------------------
Ladies and Gentlemen:
We have acted as special Delaware counsel to RJR Nabisco Holdings
Capital Trust I, a Delaware statutory business trust (the "Trust"), in
connection with certain matters relating to the organization of the Trust and
the proposed issuance of Preferred Securities to beneficial owners pursuant to
and as described in the Trust's Registration Statement (and the Prospectus
forming a part thereof) on Form S-4 to be filed with the Securities and Exchange
Commission on or about the date hereof (the "Registration Statement").
Capitalized terms used herein and not otherwise herein defined are used as
defined in the Amended and Restated Declaration of Trust of the Trust in the
form attached as an exhibit to the Registration Statement (the "Governing
Instrument").
In rendering this opinion, we have examined copies of the following
documents in the forms provided to us: the Certificate of Trust of the Trust as
filed in the Office of the Secretary of State of the State of Delaware (the
"State Office") on June 20, 1995 (the "Certificate"); a Declaration of Trust
dated as of June 20, 1995 (the "Original Governing Instrument"); the Governing
Instrument; the Guarantee Agreement by RJR Nabisco Holdings Corp. relating to
the Preferred Securities; the Dealer Manager Agreement relating to the Preferred
Securities; the Registration Statement; and a certificate of good standing of
the Trust obtained as of the date hereof from the State Office. In such
examinations, we have assumed the genuineness of all signatures, the conformity
to original documents of all documents submitted to us as drafts or copies or
forms of documents to be executed and the legal capacity of natural persons to
complete the execution of documents. We have further assumed for purposes of
this opinion: (i) the due formation or organization, valid existence and good
standing of each entity
<PAGE>
RJR Nabisco Holdings
Capital Trust I
June 20, 1995
Page 2
(other than the Trust) that is a party to any of the documents reviewed by us
under the laws of the jurisdiction of its respective formation or organization;
(ii) the due authorization, execution and delivery by, or on behalf of, each of
the parties thereto of the above-referenced documents (including, without
limitation, the due execution and delivery of the Governing Instrument and the
Dealer Manager Agreement prior to the first issuance of Preferred Securities);
(iii) that no event has occurred subsequent to the filing of the Certificate
that would cause a dissolution or liquidation of the Trust under the Original
Governing Instrument or the Governing Instrument, as applicable; (iv) that the
activities of the Trust have been and will be conducted in accordance with the
Original Governing Instrument or the Governing Instrument, as applicable, and
the Delaware Business Trust Act, 12 Del. C. Sec. 3801 et seq. (the "Delaware
---- -- -- ----
Act"); (v) that each Holder of a Preferred Security has validly tendered a
Depository Share in exchange therefor, that such Depository Share has been duly
accepted, and that such Holder has duly received a Preferred Securities
Certificate in consideration thereof, all in accordance with the terms and
conditions of the Governing Instrument, Registration Statement and Dealer
Manager Agreement; (vi) that the Preferred Securities are issued and sold to
the Preferred Securities Holders in accordance with the terms, conditions,
requirements and procedures set forth in the Governing Instrument,
Registration Statement and Dealer Manager Agreement; and (vii) that the
documents examined by us are in full force and effect, express the entire
understanding of the parties thereto with respect to the subject matter
thereof and have not been modified, supplemented or otherwise amended, except
as herein referenced. No opinion is expressed with respect to the requirements
of, or compliance with, federal or state securities or blue sky laws. We have
not participated in the preparation of the Registration Statement or any other
offering materials relating to the Preferred Securities and we assume no
responsibility for their contents. As to any fact material to our opinion,
other than those assumed, we have relied without independent investigation on
the above-referenced documents and on the accuracy, as of the date hereof, of
the matters therein contained.
Based on and subject to the foregoing, and limited in all respects to
matters of Delaware law, it is our opinion that:
1. The Trust is a duly organized and validly existing business trust
in good standing under the laws of the State of Delaware.
2. The Preferred Securities, upon issuance, will constitute validly
issued and, subject to the qualifications set forth in paragraph 3 below, fully
paid and nonassessable beneficial interests in the Trust.
<PAGE>
RJR Nabisco Holdings
Capital Trust I
June 20, 1995
Page 3
3. Under the Delaware Act and the terms of the Governing Instrument,
each Preferred Security Holder of the Trust, in such capacity, will be entitled
to the same limitation of personal liability as that extended to stockholders of
private corporations for profit organized under the General Corporation Law of
the State of Delaware; provided, however, we express no opinion with respect to
the liability of any Preferred Security Holder who is, was or may become a named
Trustee of the Trust. Notwithstanding the foregoing, we note that pursuant to
Sec. 11.4 of the Governing Instrument, the Trust may withhold amounts otherwise
distributable to a Holder and pay over such amounts to the applicable
jurisdictions in accordance with federal, state and local law and any amount
withheld will be deemed to have been distributed to such Holder and that,
pursuant to the Governing Instrument, Preferred Security Holders may be
obligated to make payments or provide indemnity or security under the
circumstances set forth therein.
We hereby consent to the filing of this opinion as an exhibit to the
Registration Statement and to the use of our name under the heading "Legal
Matters" in the Prospectus. In giving this consent, we do not thereby admit
that we come within the category of persons whose consent is required under
Section 7 of the Securities Act of 1933, as amended, or the rules and
regulations of the Securities and Exchange Commission thereunder. This opinion
speaks only as of the date hereof and is based on our understandings or
assumptions as to present facts, and on our review of the above referenced
documents and the application of Delaware law as the same exist as of the date
hereof, and we undertake no obligation to update or supplement this opinion
after the date hereof for the benefit of any person or entity with respect to
any facts or circumstances that may hereafter come to our attention or any
changes in facts or law that may hereafter occur or take effect. This opinion
is intended solely for the benefit of the addressee hereof in connection with
the matters contemplated hereby and may not be relied on by any other person
or entity or for any other purpose without our prior written consent.
Very truly yours,
MORRIS, NICHOLS, ARSHT & TUNNELL
Exhibit 8.1
[LETTERHEAD OF DAVIS POLK & WARDWELL]
___________, 1995
RJR Nabisco Holdings Corp.
RJR Nabisco Holdings Capital Trust I
1301 Avenue of the Americas
New York, New York 10019
Re: Registration Statement on Form S-4
Registration No.
----------------------------------
Ladies and Gentlemen:
We have acted as special counsel for RJR Nabisco Holdings Corp., a
Delaware corporation ("Holdings"), and RJR Nabisco Holdings Capital Trust I,
a statutory business trust created under the Business Trust Act of the State
of Delaware (the "Trust"), in connection with the Trust's offer (the "Offer")
to issue its ___% Trust Originated Preferred Securities ("TOPrS") (the
"Preferred Securities") for up to 49,000,000 outstanding Series B Depositary
Shares ("Depositary Shares") each representing 1/1000 of a share of Series B
Cumulative Preferred Stock of Holdings. In connection therewith, we have
prepared the discussion set forth under the caption "Taxation" (the
"Discussion") in the Prospectus (the "Prospectus") that is part of the
Registration Statement on Form S-4 (Registration No. ___________) filed by
Holdings and the Trust with the Securities and Exchange Commission.
In rendering our opinion, we have examined the form of Amended and
Restated Declaration of Trust of RJR Nabisco Holdings Capital Trust I dated
as of June __, 1995 (the "Declaration") included as an Exhibit to the
Registration Statement, and have assumed that the Trustees will conduct the
affairs of the Trust in accordance with the Declaration. We hereby confirm
our opinion as set forth in the Discussion, which is a summary of the
material United
<PAGE>
RJR Nabisco Holdings Corp. 2 June __, 1995
RJR Nabisco Holdings
Capital Trust I
States federal income tax consequences of the exchange of Depositary Shares
for the Preferred Securities pursuant to the Offer, and of the ownership and
disposition of the Preferred Securities.
We hereby consent to the filing of this opinion as an exhibit to
the Registration Statement and to the use of our name under the caption
"Taxation" in the Offering Circular/Prospectus. The issuance of such consent
does not concede that we are an "expert" for the purposes of the Securities
Act of 1933.
Very truly yours,
EXHIBIT 12.2
RJR NABISCO HOLDINGS CORP.
COMPUTATION OF EARNINGS TO COMBINED FIXED CHARGES
AND PREFERRED STOCK DIVIDENDS
(DOLLARS IN MILLIONS)
<TABLE><CAPTION>
YEAR ENDED THREE MONTHS ENDED
DECEMBER 31, 1994 MARCH 31, 1995
----------------- ------------------
<S> <C> <C>
Earnings before fixed charges:
Income before extraordinary item....................... $ 764 $ 198
Provision for income taxes............................. 611 159
------- -------
Income before income taxes............................. 1,375 357
Interest expense....................................... 1,046 217
Amortization of debt issuance costs.................... 19 3
Interest portion of rental expense..................... 51 13
------- -------
Earnings before fixed charges............................ $ 2,491 $ 590
------- -------
------- -------
Combined fixed charges and preferred stock dividends:
Interest expense....................................... $ 1,046 $ 217
Amortization of debt issuance costs.................... 19 3
Interest portion of rental expense..................... 51 13
Capitalized interest................................... 11 3
Preferred stock dividends.............................. 593(1) 110(2)
------- -------
Combined fixed charges and preferred stock dividends..... $ 1,720 $ 346
------- -------
------- -------
Ratio of earnings to combined fixed charges and preferred
stock dividends........................................ 1.448 1.705
</TABLE>
- - - ------------
(1) Represents dividends of $15 million on ESOP Preferred Stock and pre-tax
equivalent amount on dividends of $175 million on the Series A PERCS, $116
million on the Series B Preferred and $85 million on the Series C PERCS.
(2) Represents dividends of $4 million on ESOP Preferred Stock and pre-tax
equivalent amount on dividends of $29 million on the Series B Preferred and
$40 million on the Series C PERCS.
EXHIBIT 23.1
INDEPENDENT AUDITORS' CONSENT
We consent to the incorporation by reference in this Registration Statement
of RJR Nabisco Holdings Capital Trust I and RJR Nabisco Holdings Corp. on Form
S-4 (the "Registration Statement") of our report dated January 30, 1995
(February 21, 1995 as to Notes 11 and 17) appearing in RJR Nabisco Holdings
Corp.'s Annual Report on Form 10-K for the fiscal year ended December 31, 1994.
We also consent to the reference to us under the headings "Selected
Consolidated Financial Data" and "Experts" in the Prospectus, which is part of
this Registration Statement.
/s/ Deloitte & Touche LLP
New York, New York
June 16, 1995
Exhibit 25.1
CONFORMED COPY
================================================================================
FORM T-1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE
ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(b)(2) |__|
THE BANK OF NEW YORK
(Exact name of trustee as specified in its charter)
New York 13-5160382
(State of incorporation (I.R.S. employer
if not a U.S. national bank) identification no.)
48 Wall Street, New York, N.Y. 10286
(Address of principal executive offices) (Zip code)
RJR NABISCO HOLDINGS CORP.
(Exact name of obligor as specified in its charter)
Delaware 13-3490602
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
1301 Avenue of the Americas
New York, New York 10019
(Address of principal executive offices) (Zip code)
______________________
Junior Subordinated Debentures
(Title of the indenture securities)
================================================================================
<PAGE>
1. General information. Furnish the following information as to the
Trustee:
(a) Name and address of each examining or supervising authority
to which it is subject.
- - - --------------------------------------------------------------------------------
Name Address
- - - --------------------------------------------------------------------------------
Superintendent of Banks of the State of 2 Rector Street, New York,
New York N.Y. 10006, and Albany, N.Y.
12203
Federal Reserve Bank of New York 33 Liberty Plaza, New York,
N.Y. 10045
Federal Deposit Insurance Corporation Washington, D.C. 20429
New York Clearing House Association New York, New York
(b) Whether it is authorized to exercise corporate trust powers.
Yes.
2. Affiliations with Obligor.
If the obligor is an affiliate of the trustee, describe each such affilia-
tion.
None. (See Note on page 3.)
16. List of Exhibits.
Exhibits identified in parentheses below, on file with the Commission, are
incorporated herein by reference as an exhibit hereto, pursuant to Rule
7a-29 under the Trust Indenture Act of 1939 (the "Act") and Rule 24 of the
Commission's Rules of Practice.
1. A copy of the Organization Certificate of The Bank of New York
(formerly Irving Trust Company) as now in effect, which contains the
authority to commence business and a grant of powers to exercise
corporate trust powers. (Exhibit 1 to Amendment No. 1 to Form T-1
filed with Registration Statement No. 33-6215, Exhibits 1a and 1b to
Form T-1 filed with Registration Statement No. 33-21672 and Exhibit 1
to Form T-1 filed with Registration Statement No. 33-29637.)
4. A copy of the existing By-laws of the Trustee. (Exhibit 4 to Form T-1
filed with Registration Statement No. 33-31019.)
-2-
<PAGE>
6. The consent of the Trustee required by Section 321(b) of the Act.
(Exhibit 6 to Form T-1 filed with Registration Statement No.
33-44051.)
7. A copy of the latest report of condition of the Trustee published
pursuant to law or to the requirements of its supervising or examining
authority.
NOTE
Inasmuch as this Form T-1 is filed prior to the ascertainment by the
Trustee of all facts on which to base a responsive answer to Item 2, the
answer to said Item is based on incomplete information.
Item 2 may, however, be considered as correct unless amended by an
amendment to this Form T-1.
- 3 -
<PAGE>
SIGNATURE
Pursuant to the requirements of the Act, the Trustee, The Bank of New York,
a corporation organized and existing under the laws of the State of New York,
has duly caused this statement of eligibility to be signed on its behalf by the
undersigned, thereunto duly authorized, all in The City of New York, and State
of New York, on the 19th day of June, 1995.
THE BANK OF NEW YORK
By: /S/ MARY JANE MORRISSEY
----------------------------------
Name: MARY JANE MORRISSEY
Title: ASSISTANT VICE PRESIDENT
- 4 -
<PAGE>
Exhibit 7
Consolidated Report of Condition of
THE BANK OF NEW YORK
of 48 Wall Street, New York, N.Y. 10286
And Foreign and Domestic Subsidiaries,
a member of the Federal Reserve System, at the close of business
March 31, 1995, published in accordance with a call made by the
Federal Reserve Bank of this District pursuant to the provisions
of the Federal Reserve Act.
Dollar Amounts
ASSETS in Thousands
Cash and balances due from depos-
itory institutions:
Noninterest-bearing balances and
currency and coin .................. $ 3,575,856
Interest-bearing balances .......... 747,540
Securities:
Held-to-maturity securities ........ 1,283,680
Available-for-sale securities ...... 1,615,292
Federal funds sold in domestic
offices of the bank ................ 5,577,896
Loans and lease financing
receivables:
Loans and leases, net of unearned
income .................24,763,265
LESS: Allowance for loan and
lease losses ..............532,411
LESS: Allocated transfer risk
reserve .....................28,558
Loans and leases, net of unearned
income, allowance, and reserve 24,202,296
Assets held in trading accounts ...... 1,502,750
Premises and fixed assets (including
capitalized leases) ................ 618,958
Other real estate owned .............. 47,755
Investments in unconsolidated
subsidiaries and associated
companies .......................... 184,149
Customers' liability to this bank on
acceptances outstanding ............ 1,018,696
Intangible assets .................... 101,149
Other assets ......................... 1,227,291
-----------
Total assets ......................... $41,703,316
===========
<PAGE>
LIABILITIES
Deposits:
In domestic offices ................ $18,543,633
Noninterest-bearing .......6,949,896
Interest-bearing .........11,593,737
In foreign offices, Edge and
Agreement subsidiaries, and IBFs ... 11,303,075
Noninterest-bearing ..........65,927
Interest-bearing .........11,237,148
Federal funds purchased and secu-
rities sold under agreements to re-
purchase in domestic offices of
the bank and of its Edge and
Agreement subsidiaries, and in
IBFs:
Federal funds purchased ............ 1,327,537
Securities sold under agreements
to repurchase .................... 37,400
Demand notes issued to the U.S.
Treasury ........................... 97,827
Trading liabilities .................. 1,349,293
Other borrowed money:
With original maturity of one year
or less .......................... 2,027,148
With original maturity of more than
one year ......................... 313,877
Bank's liability on acceptances exe-
cuted and outstanding .............. 1,018,848
Subordinated notes and debentures .... 1,056,320
Other liabilities .................... 1,435,093
-----------
Total liabilities .................... 38,510,051
-----------
EQUITY CAPITAL
Common stock ........................ 942,284
Surplus ............................. 525,666
Undivided profits and capital
reserves .......................... 1,753,592
Net unrealized holding gains
(losses) on available-for-sale
securities ........................ ( 22,501)
Cumulative foreign currency transla-
tion adjustments .................. ( 5,776)
-----------
Total equity capital ................ 3,193,265
-----------
Total liabilities and equity
capital ........................... $41,703,316
===========
I, Robert E. Keilman, Senior Vice President and Comptroller of
the above-named bank do hereby declare that this Report of
Condition has been prepared in conformance with the instructions
issued by the Board of Governors of the Federal Reserve System and
is true to the best of my knowledge and belief.
Robert E. Keilman
We, the undersigned directors, attest to the correctness of this
Report of Condition and declare that it has been examined by us and
to the best of our knowledge and belief has been prepared in
conformance with the instructions issued by the Board of Governors
of the Federal Reserve System and is true and correct.
J. Carter Bacot
Thomas A. Renyi Directors
Alan R. Griffith
-4-
Exhibit 25.2
CONFORMED COPY
================================================================================
FORM T-1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE
ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(b)(2) |__|
THE BANK OF NEW YORK
(Exact name of trustee as specified in its charter)
New York 13-5160382
(State of incorporation (I.R.S. employer
if not a U.S. national bank) identification no.)
48 Wall Street, New York, N.Y. 10286
(Address of principal executive offices) (Zip code)
RJR NABISCO HOLDINGS CAPITAL TRUST I
(Exact name of obligor as specified in its charter)
Delaware Applied For
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
1301 Avenue of the Americas
New York, New York 10019
(Address of principal executive offices) (Zip code)
______________________
Junior Subordinated Debentures
(Title of the indenture securities)
================================================================================
<PAGE>
1. General information. Furnish the following information as to the Trustee:
(a) Name and address of each examining or supervising authority to which
it is subject.
- - - --------------------------------------------------------------------------------
Name Address
- - - --------------------------------------------------------------------------------
Superintendent of Banks of the State of 2 Rector Street, New York,
New York N.Y. 10006, and Albany, N.Y.
12203
Federal Reserve Bank of New York 33 Liberty Plaza, New York,
N.Y. 10045
Federal Deposit Insurance Corporation Washington, D.C. 20429
New York Clearing House Association New York, New York
(b) Whether it is authorized to exercise corporate trust powers.
Yes.
2. Affiliations with Obligor.
If the obligor is an affiliate of the trustee, describe each such affilia-
tion.
None. (See Note on page 3.)
16. List of Exhibits.
Exhibits identified in parentheses below, on file with the Commission, are
incorporated herein by reference as an exhibit hereto, pursuant to Rule
7a-29 under the Trust Indenture Act of 1939 (the "Act") and Rule 24 of the
Commission's Rules of Practice.
1. A copy of the Organization Certificate of The Bank of New York
(formerly Irving Trust Company) as now in effect, which contains the
authority to commence business and a grant of powers to exercise
corporate trust powers. (Exhibit 1 to Amendment No. 1 to Form T-1
filed with Registration Statement No. 33-6215, Exhibits 1a and 1b to
Form T-1 filed with Registration Statement No. 33-21672 and Exhibit 1
to Form T-1 filed with Registration Statement No. 33-29637.)
4. A copy of the existing By-laws of the Trustee. (Exhibit 4 to Form T-1
filed with Registration Statement No. 33-31019.)
-2-
<PAGE>
6. The consent of the Trustee required by Section 321(b) of the Act.
(Exhibit 6 to Form T-1 filed with Registration Statement No.
33-44051.)
7. A copy of the latest report of condition of the Trustee published
pursuant to law or to the requirements of its supervising or examining
authority.
NOTE
Inasmuch as this Form T-1 is filed prior to the ascertainment by the
Trustee of all facts on which to base a responsive answer to Item 2, the
answer to said Item is based on incomplete information.
Item 2 may, however, be considered as correct unless amended by an
amendment to this Form T-1.
- 3 -
<PAGE>
SIGNATURE
Pursuant to the requirements of the Act, the Trustee, The Bank of New York,
a corporation organized and existing under the laws of the State of New York,
has duly caused this statement of eligibility to be signed on its behalf by the
undersigned, thereunto duly authorized, all in The City of New York, and State
of New York, on the 19th day of June, 1995.
THE BANK OF NEW YORK
By: /S/ ROBERT F. MCINTYRE
-----------------------------------
Name: ROBERT F. MCINTYRE
Title: ASSISTANT VICE PRESIDENT
- 4 -
<PAGE>
Exhibit 7
Consolidated Report of Condition of
THE BANK OF NEW YORK
of 48 Wall Street, New York, N.Y. 10286
And Foreign and Domestic Subsidiaries,
a member of the Federal Reserve System, at the close of business
March 31, 1995, published in accordance with a call made by the
Federal Reserve Bank of this District pursuant to the provisions
of the Federal Reserve Act.
Dollar Amounts
ASSETS in Thousands
Cash and balances due from depos-
itory institutions:
Noninterest-bearing balances and
currency and coin .................. $ 3,575,856
Interest-bearing balances .......... 747,540
Securities:
Held-to-maturity securities ........ 1,283,680
Available-for-sale securities ...... 1,615,292
Federal funds sold in domestic
offices of the bank ................ 5,577,896
Loans and lease financing
receivables:
Loans and leases, net of unearned
income .................24,763,265
LESS: Allowance for loan and
lease losses ..............532,411
LESS: Allocated transfer risk
reserve .....................28,558
Loans and leases, net of unearned
income, allowance, and reserve 24,202,296
Assets held in trading accounts ...... 1,502,750
Premises and fixed assets (including
capitalized leases) ................ 618,958
Other real estate owned .............. 47,755
Investments in unconsolidated
subsidiaries and associated
companies .......................... 184,149
Customers' liability to this bank on
acceptances outstanding ............ 1,018,696
Intangible assets .................... 101,149
Other assets ......................... 1,227,291
-----------
Total assets ......................... $41,703,316
===========
<PAGE>
LIABILITIES
Deposits:
In domestic offices ................ $18,543,633
Noninterest-bearing .......6,949,896
Interest-bearing .........11,593,737
In foreign offices, Edge and
Agreement subsidiaries, and IBFs ... 11,303,075
Noninterest-bearing ..........65,927
Interest-bearing .........11,237,148
Federal funds purchased and secu-
rities sold under agreements to re-
purchase in domestic offices of
the bank and of its Edge and
Agreement subsidiaries, and in
IBFs:
Federal funds purchased ............ 1,327,537
Securities sold under agreements
to repurchase .................... 37,400
Demand notes issued to the U.S.
Treasury ........................... 97,827
Trading liabilities .................. 1,349,293
Other borrowed money:
With original maturity of one year
or less .......................... 2,027,148
With original maturity of more than
one year ......................... 313,877
Bank's liability on acceptances exe-
cuted and outstanding .............. 1,018,848
Subordinated notes and debentures .... 1,056,320
Other liabilities .................... 1,435,093
-----------
Total liabilities .................... 38,510,051
-----------
EQUITY CAPITAL
Common stock ........................ 942,284
Surplus ............................. 525,666
Undivided profits and capital
reserves .......................... 1,753,592
Net unrealized holding gains
(losses) on available-for-sale
securities ........................ ( 22,501)
Cumulative foreign currency transla-
tion adjustments .................. ( 5,776)
-----------
Total equity capital ................ 3,193,265
-----------
Total liabilities and equity
capital ........................... $41,703,316
===========
I, Robert E. Keilman, Senior Vice President and Comptroller of
the above-named bank do hereby declare that this Report of
Condition has been prepared in conformance with the instructions
issued by the Board of Governors of the Federal Reserve System and
is true to the best of my knowledge and belief.
Robert E. Keilman
We, the undersigned directors, attest to the correctness of this
Report of Condition and declare that it has been examined by us and
to the best of our knowledge and belief has been prepared in
conformance with the instructions issued by the Board of Governors
of the Federal Reserve System and is true and correct.
J. Carter Bacot
Thomas A. Renyi Directors
Alan R. Griffith
-4-
EXHIBIT 99.1
LETTER OF TRANSMITTAL
To Tender Series B Depositary Shares (CUSIP 74960K 70 8), each representing
1/1000 of a share of Series B Cumulative Preferred Stock (the "Depositary
Shares"),
of
RJR NABISCO HOLDINGS CORP.
Pursuant to the offer by RJR NABISCO HOLDINGS CAPITAL TRUST I to exchange
its ___% Trust Originated Preferred Securities(sm) ("TOPrS(sm)")
for up to 49,000,000 outstanding Depositary Shares
THE OFFER, PRORATION PERIOD AND WITHDRAWAL RIGHTS WILL EXPIRE AT MIDNIGHT,
NEW YORK CITY TIME, ON ______, 1995, UNLESS THE OFFER IS EXTENDED.
The Exchange Agent for the Offer is:
First Chicago Trust Company of New York
By Hand or Overnight Courier:
Attention: Tenders and Exchanges
Suite 4680-RNH
14 Wall Street
8th Floor
New York, New York 10005
By Mail:
(registered or certified mail recommended)
Attention: Tenders and Exchanges
Suite 4460-RNH
P.O. Box 2559
Jersey City, New Jersey 07303-2559
DELIVERY OF THIS LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET FORTH
ABOVE WILL NOT CONSTITUTE A VALID DELIVERY.
THE INSTRUCTIONS ACCOMPANYING THIS LETTER OF TRANSMITTAL SHOULD BE READ
CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED.
Subject to the terms and conditions set forth in the Prospectus and herein,
the Trust will accept for exchange up to 49,000,000 Depositary Shares validly
tendered and not withdrawn.
This Letter of Transmittal is to be completed by holders of Depositary
Shares, either (i) if certificates for Depositary Shares are to be forwarded
herewith or (ii) unless an Agent's Message (as defined in the accompanying
Prospectus of RJR Nabisco Holdings Corp. and RJR Nabisco Holdings Capital Trust
I dated _______, 1995 (as amended or supplemented (including documents
incorporated by reference), the "Prospectus")) is utilized, if tenders of
Depositary Shares are to be made by book-entry transfer into the account of
First Chicago Trust Company of New York, as Exchange Agent (the "Exchange
Agent"), at The Depository Trust Company, Midwest Securities Trust Company and
Philadelphia Depository Trust Company (together, the "Depository Institutions")
pursuant to the procedures described under "The Offer--Procedures for Tendering"
in the Prospectus. Holders of Depositary Shares who tender Depositary Shares by
book-entry transfer are referred to herein as "Book-Entry Shareholders."
- - - ---------------------
(sm) "Trust Originated Preferred Securities" and "TOPrS" are service marks of
Merrill Lynch & Co.
<PAGE>
Any holder of Depositary Shares who submits this Letter of Transmittal and
tenders Depositary Shares in accordance with the instructions contained
herein prior to the Expiration Date (as defined in the Prospectus) will thereby
have directed RJR Nabisco Holdings Capital Trust I (the "Trust") to deliver
its ____% Trust Originated Preferred Securities ("TOPrS") (the "Preferred
Securities") in exchange for such holder's Depositary Shares and in
consideration of the deposit by RJR Nabisco Holdings Corp. ("Holdings") with
the Trust as trust assets of its ____% Junior Subordinated Debentures due 2044
(the "Junior Subordinated Debentures") as set forth in the Prospectus. Tenders
of Depositary Shares pursuant to this Letter of Transmittal are subject to
withdrawal as described in the Prospectus under the caption "The
Offer--Withdrawal of Tenders".
<TABLE><CAPTION>
DESCRIPTION OF DEPOSITARY SHARES TENDERED
- - - --------------------------------------------------------------------------------------------------------
Name(s) and Address(es) of Registered Holder(s) Depositary Shares Tendered
(Please fill in, if blank) (Attach additional list if necessary)
- - - --------------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
Certificate Total Number of Number of
Number(s)* Shares Represented Shares
by Certificate(s)* Tendered**
----------------------------------------------------
----------------------------------------------------
----------------------------------------------------
----------------------------------------------------
----------------------------------------------------
----------------------------------------------------
Total Shares
----------------------------------------------------
</TABLE>
* Need not be completed by shareholders tendering by book-entry transfer.
** Unless otherwise indicated, the holder will be deemed to have tendered the
full number of Depositary Shares represented by the tendered certificates.
See Instruction 4.
[ ] CHECK HERE IF TENDERED DEPOSITARY SHARES ARE BEING DELIVERED BY BOOK-ENTRY
TRANSFER TO THE EXCHANGE AGENT'S ACCOUNT AT A DEPOSITARY INSTITUTION AND
COMPLETE THE FOLLOWING:
Name of Tendering Institution...................................................
Account No ...........................
Transaction Code No. ...........................................................
[ ] CHECK HERE IF TENDERED DEPOSITARY SHARES ARE BEING DELIVERED PURSUANT TO A
NOTICE OF GUARANTEED DELIVERY PREVIOUSLY SENT TO THE EXCHANGE AGENT AND
COMPLETE THE FOLLOWING:
Name(s) of Tendering Shareholder(s).........................................
Date of Execution of Notice of Guaranteed Delivery .........................
Name of Institution which Guaranteed Delivery ..............................
If delivery is by book-entry transfer:
Name of Tendering Institution ......................................
Account No. ..........................
Transaction Code No. .......................................................
__________________
2
<PAGE>
SOLICITED TENDERS
(SEE INSTRUCTION 11)
Holdings will pay to any Soliciting Dealer, as defined in Instruction 11, a
solicitation fee of $0.50 per Depositary Share validly tendered and accepted for
exchange pursuant to the Offer (as herein defined).
The undersigned represents that the Soliciting Dealer which solicited and
obtained this tender is:
Name of Firm:
------------------------------------------------------------------
(Please Print)
Name of Individual Broker or Financial Consultant:
-----------------------------
Identification Number (if known):
----------------------------------------------
Address:
-----------------------------------------------------------------------
- - - --------------------------------------------------------------------------------
(Include Zip Code)
The acceptance of compensation by such Soliciting Dealer will constitute a
representation by it that: (i) it has complied with the applicable requirements
of the Securities Exchange Act of 1934 and the applicable rules and regulations
thereunder, in connection with such solicitations; (ii) it is entitled to such
compensation for such solicitation under the terms and conditions of the Offer;
(iii) in soliciting tenders of Depositary Shares, it has used no soliciting
materials other than those furnished by Holdings and the Trust; and (iv) if it
is a foreign broker or dealer not eligible for membership in the National
Association of Securities Dealers, Inc. (the "NASD"), it has agreed to conform
to the NASD's Rules of Fair Practice in making solicitations outside the United
States to the same extent as though it were an NASD member.
If tendered Depositary Shares are being delivered by book-entry transfer made
to an account maintained by the Exchange Agent with a Depository Institution,
the Soliciting Dealer must return a Notice of Solicited Tenders to the Exchange
Agent to receive a solicitation fee.
SOLICITING DEALERS ARE NOT ENTITLED TO A FEE FOR DEPOSITARY SHARES
BENEFICIALLY OWNED BY SUCH SOLICITING DEALER.
3
<PAGE>
NOTE: SIGNATURES MUST BE PROVIDED BELOW
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
Ladies and Gentlemen:
The undersigned hereby tenders to RJR Nabisco Holdings Capital Trust I, a
Delaware statutory business trust (the "Trust"), the above-described Depositary
Shares, pursuant to the offer by the Trust to exchange its ___% Trust Originated
Preferred Securities (the "Preferred Securities") for up to 49,000,000 Series B
Depositary Shares ("Depositary Shares") of RJR Nabisco Holdings Corp.
("Holdings"), upon the terms and subject to the conditions set forth in the
Prospectus, receipt of which is hereby acknowledged, and in this Letter of
Transmittal (which, together with the Prospectus, constitute the "Offer").
Depositary Shares not accepted for exchange because of proration will be
returned.
Subject to and effective upon acceptance for exchange of the Depositary
Shares tendered herewith, the undersigned hereby sells, assigns and transfers to
or upon the order of the Trust all right, title and interest in and to all the
Depositary Shares that are being tendered hereby and appoints the Exchange Agent
the true and lawful agent and attorney-in-fact of the undersigned with respect
to such Depositary Shares, with full power of substitution (such power of
attorney being deemed to be an irrevocable power coupled with an interest), to
(a) deliver certificates for such Depositary Shares or transfer ownership of
such Depositary Shares on the account books maintained by a Depository
Institution, together, in any such case, with all accompanying evidences of
transfer and authenticity, to the Exchange Agent for the account of the Trust,
(b) present such Depositary Shares for transfer on the books of Holdings and (c)
receive all benefits and otherwise exercise all rights of beneficial ownership
of such Depositary Shares, all in accordance with the terms of the Offer.
The undersigned hereby represents and warrants that the undersigned has full
power and authority to tender, exchange, assign and transfer the Depositary
Shares and the underlying Series B Preferred tendered hereby and to acquire
Preferred Securities issuable upon the exchange of such tendered Depositary
Shares and that, when the undersigned's Depositary Shares are accepted for
exchange, the Trust will acquire good and unencumbered title to such shares of
tendered Depositary Shares and the underlying Series B Preferred, free and clear
of all liens, restrictions, charges and encumbrances and not subject to any
adverse claim. The undersigned will, upon request, execute and deliver any
additional documents deemed by the Trust to be necessary or desirable to
complete the exchange, assignment and transfer of tendered Depositary Shares or
transfer ownership of such Depositary Shares.
All authority herein conferred or agreed to be conferred shall survive the
death, bankruptcy or incapacity of the undersigned and every obligation of the
undersigned hereunder shall be binding upon the heirs, legal representatives,
successors, assigns, executors and administrators of the undersigned. Except as
stated in the
Offer, this tender is irrevocable.
The undersigned understands that tenders of Depositary Shares pursuant to any
one of the procedures described in "The Offer--Procedures for Tendering" in the
Prospectus and in the instructions hereto will constitute agreements between the
undersigned and the Trust upon the terms and subject to the conditions of the
Offer.
Unless otherwise indicated under "Special Exchange Instructions", please
cause Preferred Securities to be issued, and return any Depositary Shares not
tendered or not accepted for exchange, in the name(s) of the undersigned (and,
in the case of Depositary Shares tendered by book-entry transfer, by credit to
the account at a Depository Institution). Similarly, unless otherwise indicated
under "Special Delivery Instructions", please mail any certificates for
Depositary Shares not tendered or not accepted for exchange (and accompanying
documents, as appropriate), and any certificates for Depositary Shares, to the
undersigned at the address shown below the undersigned's signature(s). If both
"Special Exchange Instructions" and "Special Delivery Instruction" are
completed, please cause Preferred Securities to be issued, and return any
Depositary Shares not tendered or not accepted for exchange, in the name(s) of,
and deliver any certificates for such Depositary Shares to, the person(s) so
indicated (and in the case of Depositary Shares tendered by book-entry transfer,
by credit to the account at the Depository Institution so indicated). The
undersigned recognizes that the Trust has no obligation, pursuant to the
"Special Exchange Instructions", to transfer any Depositary Shares from the name
of the registered holder(s) thereof if the Trust does not accept for exchange
any of the Depositary Shares so tendered.
4
<PAGE>
SPECIAL DELIVERY INSTRUCTIONS SPECIAL DELIVERY INSTRUCTIONS
(See Instructions 1, 5, 6 and 7) (See Instructions 1, 5 and 7)
To be completed ONLY if certificates for To be completed ONLY if
Preferred Securities are to be issued, certificates for Depositary Shares
or beneficial interests in certificates not tendered or not accepted for
representing Preferred Securities are to exchange, or certificates for
be recorded, or certificates for Preferred Securities, are to be
Depositary Shares not tendered or not mailed to someone other than the
accepted for exchange are to be issued, undersigned, or to the undersigned
or beneficial interests in global at an address other than that shown
securities representing Depositary below the undersigned's
Shares not accepted for exchange are to signature(s).
be recorded, in the name of someone
other than the undersigned.
Issue [ ] certificates for Mail [ ] certificates for
Preferred Securities in Depositary Shares
name of: to:
[ ] certificates for [ ] certificates for
Depositary Shares to: Preferred
Securities to:
Name . . . . . . . . . . . . . . . . . Name . . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(Please Print) (Please Print)
Address . . . . . . . . . . . . . . . . Address . . . . . . . . . . . . . .
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
(Zip Code) (Zip Code)
. . . . . . . . . . . . . . . . . . . .
(Taxpayer Identification No.)
5
<PAGE>
SIGN HERE
(Please complete Substitute Form W-9 below)
.........................................
.........................................
Signature(s) of Owner(s)
Dated ................., 1995
Name(s)................................
.........................................
(Please Print)
Capacity (full title)...................
Address................................
.........................................
(Include Zip Code)
Area Code and
Telephone No. .......................
(Must be signed by registered holder(s) exactly as name(s)
appear(s) on certificate(s) for Depositary Shares or on a
security position listing or by person(s) authorized to become
registered holder(s) by certificates and documents transmitted
herewith. If signature is by a trustee, executor, administrator,
guardian, attorney-in-fact, officer of a corporation or other
person acting in a fiduciary or representative capacity, please
set forth full title and see Instruction 5.)
Guarantee of Signature(s)
(See Instructions 1 and 5)
Authorized
Signature...................................
Name.......................................
Title........................................
Address....................................
Name of Firm..............................
Area Code and
Telephone Number.........................
Dated ........................, 1995
6
<PAGE>
PAYER'S NAME: RJR NABISCO HOLDINGS CAPITAL TRUST I
Names(s) as shown above on certificate(s) for Depositary Shares (if joint
ownership, list first and circle the name of the person or entity whose number
you enter in Part I below).
Address (if holder does not complete, signature in Part III below will
constitute a certification that the address on the reverse hereof is correct).
City, State, and Zip Code
<TABLE>
<S> <C> <C>
SUBSTITUTE Part I -- Taxpayer Identification No. -- Part II -- For Payee Exempt
FORM W-9 For All Accounts from Backup
Withholding (see
Enter your taxpayer enclosed Guidelines
identification number in
the appropriate box. For
Department of the most individuals and sole
Treasury Internal proprietors, this is your
Revenue Service social security number.
For other entities, it is
your Employer
Identification Number. If
you do not have a number,
see How to Obtain a TIN in Social Security Number
the enclosed Guidelines.
OR
Note: If the account is
in more than one name, see
Payer's Request the chart on page 2 of the
for Taxpayer enclosed Guidelines to
Identification No. determine what number to Employer Identification
enter. Number
</TABLE>
Certification -- Under penalties of perjury, I certify that:
(1) The number shown on this form is my correct Taxpayer Identification
Number (or I am waiting for a number to be issued to me), and either
(a) I have mailed or delivered an application to receive a taxpayer
identification number to the appropriate Internal Revenue Service
Center or Social Security Administration Office or (b) I intend to mail
or deliver an application in the near future. I understand that if I
do not provide a taxpayer identification number within sixty (60) days,
31% of all reportable payments made to me thereafter will be withheld
until I provide a number;
(2) I am not subject to backup withholding either because (a) I am exempt
from backup withholding, or (b) I have not been notified by the
Internal Revenue Service ("IRS") that I am subject to backup
withholding as a result of a failure to report all interest or
dividends, or (c) the IRS has notified me that I am no longer subject
to backup withholding; and
(3) Any other information provided on this form is true, correct and
complete.
SIGNATURE ..........................................DATE .............., 1995.
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING
OF 31% OF ANY PAYMENTS MADE TO YOU WITH RESPECT TO THE PREFERRED SECURITIES.
PLEASE REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER
IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS.
7
<PAGE>
INSTRUCTIONS
Forming Part of the Terms and Conditions of the Offer
1. Guarantee of Signatures. No signature guarantee is required on this
-----------------------
Letter of Transmittal (i) if tendered Depositary Shares are registered in the
name(s) of the undersigned and the Preferred Securities to be issued in exchange
therefor are to be issued (and any Depositary Shares not tendered or not
accepted for exchange are to be returned) in the name of the registered
holder(s) (which term, for the purposes described herein, shall include any
participant in a Depository Institution whose name appears on a security listing
as the owner of Depositary Shares) and (ii) such holder(s) have not completed
the instruction entitled "Special Exchange Instructions" or "Special Delivery
Instructions" on this Letter of Transmittal. If the tendered Depositary Shares
are registered in the name(s) of someone other than the undersigned or if the
Preferred Securities to be issued in exchange therefor are to be issued (or
Depositary Shares not tendered or not accepted for exchange are to be returned)
in the name of any other person, such tendered Depositary Shares must be
endorsed or accompanied by written instruments of transfer in form satisfactory
to the Trust and duly executed by the registered holder, and the signature on
the endorsement or instrument of transfer must be guaranteed by a financial
institution (including most banks, savings and loan associations and brokerage
houses) that is a participant in the Security Transfer Agents Medallion Program
or the Stock Exchange Medallion Program (any of the foregoing hereinafter
referred to as an "Eligible Institution"). See Instruction 5.
2. Delivery of Letter of Transmittal and Depositary Shares. This
-------------------------------------------------------
Letter of Transmittal is to be completed by holders of Depositary Shares either
if certificates are to be forwarded herewith or, unless an Agent's Message (as
defined in the Prospectus) is utilized, if tenders are to be made pursuant to
the procedure for tender by book-entry transfer set forth under "The
Offer--Procedures for Tendering" and "--Book-Entry Transfer" in the Prospectus.
Certificates for Depositary Shares, or timely confirmation (a "Book-Entry
Confirmation") of a book-entry transfer of such Depositary Shares into the
Exchange Agent's account at a Depository Institution, as well as this Letter of
Transmittal (or a facsimile hereof), properly completed and duly executed, with
any required signature guarantees, or an Agent's Message in the case of a book-
entry delivery, and any other documents required by this Letter of Transmittal,
must be received by the Exchange Agent at one of its addresses set forth herein
prior to the Expiration Date.
If a holder of Depositary Shares desires to participate in the Offer and
time will not permit this Letter of Transmittal or Depositary Shares to reach
the Exchange Agent before the Expiration Date or the procedure for book-entry
transfer cannot be completed on a timely basis, a tender may be effected if the
Exchange Agent has received at one of the addresses set forth herein prior to
the Expiration Date, a letter, telegram or facsimile transmission from an
Eligible Institution setting forth the name and address of the tendering Holder,
the name(s) in which the Depositary Shares are registered and, if the Depositary
Shares are held in certificated form, the certificate numbers of the Depositary
Shares to be tendered, and stating that the tender is being made thereby and
guaranteeing that within five New York Stock Exchange, Inc. ("NYSE") trading
days after the date of execution of such letter, telegram or facsimile
transmission by the Eligible Institution, the Depositary Shares in proper form
for transfer together with a properly completed and duly executed Letter of
Transmittal (and any other required documents), or a confirmation of book-entry
transfer of such Depositary Shares into the Exchange Agent's account at a
Depository Institution, will be delivered by such Eligible Institution. Unless
the Depositary Shares being tendered by the above-described method are deposited
with the Exchange Agent within the time period set forth above (accompanied or
preceded by a properly completed Letter of Transmittal and any other required
documents) or a confirmation of book-entry transfer of such Depositary Shares
into the Exchange Agent's account at a Depository Institution in accordance with
such Depositary Institution's Automated Tender Offer Program ("ATOP") procedures
is received, the Trust may, at its option, reject the tender.
The method of delivery of Depositary Shares and all other required
------------------------------------------------------------------
documents, including delivery through a Depository Institution, is at the option
- - - --------------------------------------------------------------------------------
and risk of the tendering shareholder. If certificates for Depositary Shares
- - - -----------------------------------------------------------------------------
are sent by mail, registered mail with return receipt requested, properly
- - - -------------------------------------------------------------------------
insured, is recommended. In all cases, sufficient time should be allowed to
- - - ----------------------------------------------------------------------------
ensure timely delivery.
- - - ----------------------
No alternative, conditional or contingent tenders will be accepted, and
no fractional Depositary Shares will be accepted for exchange. By executing
this Letter of Transmittal (or facsimile hereof), the tendering holder waives
any right to receive any notice of the acceptance of the Depositary Shares for
exchange.
3. Inadequate Space. If the space provided herein is inadequate, the
----------------
certificate numbers and/or the number of Depositary Shares should be listed on a
separate signed schedule attached hereto.
4. Partial Tenders. (Not applicable to Book-Entry Shareholders) If
---------------
fewer than all the Depositary Shares represented by any certificate delivered to
the Exchange Agent are to be tendered, fill in the number of Depositary Shares
which are to be tendered in the box entitled "Number of Shares Tendered". In
such case, a new certificate for the remainder of the Depositary Shares
represented by the old certificate will be sent to the person(s) signing
8
<PAGE>
this Letter of Transmittal, unless otherwise provided in the appropriate box on
this Letter of Transmittal, as promptly as practicable following the Expiration
Date. All Depositary Shares represented by certificates delivered to the
Exchange Agent will be deemed to have been tendered unless otherwise indicated.
5. Signatures on Letter of Transmittal; Stock Powers and Endorsements.
------------------------------------------------------------------
If this Letter of Transmittal is signed by the registered holder(s) of the
Depositary Shares tendered hereby, the signature(s) must correspond with the
name(s) as written on the face of the certificates without alteration,
enlargement or any change whatsoever.
If any of the Depositary Shares tendered hereby are held of record by
two or more persons, all such persons must sign this Letter of Transmittal.
If any of the Depositary Shares tendered hereby are registered in
different names on different certificates, it will be necessary to complete,
sign and submit as many separate Letters of Transmittal as there are different
registrations of certificates.
If this Letter of Transmittal is signed by the registered holder(s) of
the Depositary Shares tendered hereby, no endorsements of certificates or
separate stock powers are required unless Preferred Securities issued in
exchange therefor are to be issued, or Depositary Shares not tendered or not
exchanged are to be returned, in the name of any person other than the
registered holder(s). Signatures on any such certificates or stock powers must
be guaranteed by an Eligible Institution.
If this Letter of Transmittal is signed by a person other than the
registered holder(s) of the Depositary Shares tendered hereby, certificates must
be endorsed or accompanied by appropriate stock powers, in either case, signed
exactly as the name(s) of the registered holder(s) appear(s) on the certificates
for such Depositary Shares. Signature(s) on any such certificates or stock
powers must be guaranteed by an Eligible Institution.
If this Letter of Transmittal or any certificate or stock power is
signed by a trustee, executor, administrator, guardian, attorney-in-fact,
officer of a corporation or other person acting in a fiduciary or representative
capacity, such person should so indicate when signing, and proper evidence
satisfactory to the Trust of the authority of such person so to act must be
submitted.
6. Stock Transfer Taxes. Holdings will pay all stock transfer taxes,
--------------------
if any, applicable to the exchange of any Depositary Shares pursuant to the
Offer. If, however, certificates representing Preferred Securities are to be
delivered to, or Depositary Shares not tendered or accepted for exchange, are to
be issued in the name of, any person other than the registered holder of the
Depositary Shares tendered or if a transfer tax is imposed for any reason other
than the exchange of Depositary Shares pursuant to the Offer, then the amount of
any such transfer taxes (whether imposed on the registered holder or any other
persons) will be payable by the tendering holder. If satisfactory evidence of
payment of such taxes or exemption therefrom is not submitted with this Letter
of Transmittal, the amount of such transfer taxes will be billed directly to
such tendering holder.
7. Special Exchange and Delivery Instructions. If certificates
------------------------------------------
representing Preferred Securities are to be issued in the name of, or any
Depositary Shares not tendered or not accepted for exchange are to be issued or
to be returned to, a person other than the person(s) signing this Letter of
Transmittal or any certificates for Preferred Securities or certificates for
Depositary Shares not tendered or not accepted for exchange are to be mailed to
someone other than the person(s) signing this Letter of Transmittal or to the
person(s) signing this Letter of Transmittal at an address other than that shown
above, the appropriate boxes on this Letter of Transmittal should be completed.
8. Substitute Form W-9. Under the federal income tax laws, the Trust
-------------------
may be required to withhold 31% of the amount of any payments made to certain
shareholders with respect to the Preferred Securities. In order to avoid such
backup withholding, each tendering shareholder, and, if applicable, each other
payee, must provide such shareholder's or payee's correct taxpayer
identification number and certify that such shareholder or payee is not subject
to such backup withholding by completing the Substitute Form W-9 set forth
above. In general, if a shareholder or payee is an individual, the taxpayer
identification number is the Social Security number of such individual. If the
Trust is not provided with the correct taxpayer identification numbers, the
shareholder or payee may be subject to a $50 penalty imposed by the Internal
Revenue Service. Certain shareholders or payees (including, among others, all
corporations and certain foreign individual(s) are not subject to these backup
withholding and reporting requirements. In order to satisfy the Trust that a
foreign individual qualifies as an exempt recipient, such shareholder or payee
must submit a statement, signed under penalties of perjury, attesting to that
individual's exempt status. Such statements can be obtained from the
Institutional Trustee. For further information concerning backup withholding
and instructions for completing the Substitute Form W-9 (including how to obtain
a taxpayer identification number if you do not have one and how to complete the
Substitute Form W-9 if Shares are held in more than one name), consult the
enclosed Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9.
9. Waiver of Conditions. The conditions of the Offer may be waived by
--------------------
the Trust from time to time in accordance with, and subject to the limitations
described in, the Prospectus, provided that acceptance of Depositary Shares
validly tendered in the Offer is subject to the condition that as of the
Expiration Date there be
9
<PAGE>
at least 400 record or beneficial holders of Preferred Securities to be issued
in exchange of such Depositary Shares, which condition may not be waived.
10. Requests for Assistance or Additional Copies. Requests for
--------------------------------------------
assistance or additional copies of the Prospectus and this Letter of Transmittal
may be obtained from the Trust or the Information Agent at their respective
addresses or telephone numbers set forth below.
11. Solicited Tenders. Holdings will pay to a Soliciting Dealer (as
-----------------
defined herein) a solicitation fee of $0.50 per Depositary Share validly
tendered and accepted for exchange pursuant to the Offer. For purposes of this
Instruction 11, "Soliciting Dealer" includes (i) any broker or dealer in
securities, including the Dealer Manager in its capacity as a dealer or broker,
who is a member of any national securities exchange or of the National
Association of Securities Dealers, Inc. (the "NASD"), (ii) any foreign broker or
dealer not eligible for membership in the NASD who agrees to conform to the
NASD's Rules of Fair Practice in soliciting tenders outside the United States to
the same extent as though it were an NASD member, or (iii) any bank or trust
company, any one of whom has solicited and obtained a tender pursuant to the
Offer. No such fee shall be payable to a Soliciting Dealer in respect of
Depositary Shares registered in the name of such Soliciting Dealer unless such
Depositary Shares are held by such Soliciting Dealer as nominee and such
Depositary Shares are being tendered for the benefit of one or more beneficial
owners identified on the Letter of Transmittal or on the Notice of Solicited
Tenders (included in the materials provided to brokers and dealers). No
solicitation fee shall be payable to a Soliciting Dealer with respect to the
tender of Depositary Shares unless the Letter of Transmittal accompanying such
tender designates such Soliciting Dealer as such in the box captioned "Solicited
Tenders".
If tendered Depositary Shares are being delivered by book-entry transfer
made to an account maintained by the Exchange Agent with a Depository
Institution, the Soliciting Dealer must return a Notice of Solicited Tenders to
the Exchange Agent within five New York Stock Exchange trading days after the
Expiration Date in order to receive a solicitation fee. No solicitation fee
shall be payable to a Soliciting Dealer in respect of Depositary Shares (i)
beneficially owned by such Soliciting Dealer or (ii) registered in the name of
such Soliciting Dealer unless such Depositary Shares are held by such Soliciting
Dealer as nominee and such Depositary Shares are being tendered for the benefit
of one or more beneficial owners identified on the Letter of Transmittal or the
Notice of Solicited Tenders. No solicitation fee shall be payable to the
Soliciting Dealer with respect to the tender of Depositary Shares by the holder
of record, for the benefit of the beneficial owner, unless the beneficial owner
has designated such Soliciting Dealer.
10
<PAGE>
RJR Nabisco Holdings Capital Trust I
c/o RJR Nabisco Holdings Corp.
1301 Avenue of the Americas
New York, New York 10019
(212) 258-5600
The Information Agent for the Offer is:
--------------------------------------
MacKenzie Partners, Inc.
156 Fifth Avenue
New York, New York 10010
(212) 929-5500 (collect)
or
1-800-322-2885 (Toll Free)
The Dealer Managers for the Offer are:
-------------------------------------
Merrill Lynch & Co.
World Financial Center
North Tower - Seventh Floor
New York, New York 10281
(212) 236-4565 (collect)
Lehman Brothers Morgan Stanley & Co. Incorporated
3 World Financial Center 1221 Avenue of the Americas
New York, New York 10285 New York, New York 10020
(800) 438-3242 (Toll-Free) (800) 422-6464 ext. 6620
(Toll-Free)
PaineWebber Incorporated Smith Barney Inc.
1285 Avenue of the Americas 388 Greenwich Street
New York, New York 10019 New York, New York 10013
(800) 324-0210 (Toll-Free) (212) 723-7599 (collect)
_____________, 1995
11
EXHIBIT 99.2
NOTICE OF GUARANTEED DELIVERY
This form, or a form substantially equivalent to this form, must be
used to accept the Offer (as defined below) if (i) certificates for shares of
Series B Depositary Shares, each representing 1/1000 of a share of Series B
Cumulative Preferred Stock (the "Depositary Shares") of RJR Nabisco Holdings
Corp. ("Holdings") cannot be delivered to the Exchange Agent by the Expiration
Date (as defined in the Prospectus of Holdings and RJR Nabisco Holdings Capital
Trust I dated ________, 1995 (the "Prospectus")), (ii) the procedure for book-
entry transfer of Depositary Shares (as set out in the Prospectus) cannot be
completed by the Expiration Date or (iii) the Letter of Transmittal (or a
facsimile thereof) and all other required documents cannot be delivered to the
Exchange Agent prior to the Expiration Date. This form, properly completed and
duly executed, may be delivered by hand or facsimile transmission or mail to the
Exchange Agent. See the Prospectus.
To: First Chicago Trust Company of New York, Exchange Agent
By Hand or Overnight Courier:
----------------------------
Attention: Tenders and Exchanges
Suite 4680-RNH
14 Wall Street
8th Floor
New York, New York 10005
By Mail:
-------
(registered or certified mail recommended)
Attention: Tenders and Exchanges
Suite 4660-RNH
P.O. Box 2559
Jersey City, New Jersey 07303-2559
By Facsimile Transmission:
-------------------------
(For Eligible Institutions Only)
(201) 222-4720 or 4721
Confirm Receipt of Notice of Guaranteed Delivery
------------------------------------------------
by Telephone:
------------
(201) 222-4707
Delivery of this Notice of Guaranteed Delivery to an address other than as set
forth above or transmission of instructions via facsimile transmission to a
number other than as set forth above will not constitute a valid delivery.
<PAGE>
Ladies and Gentlemen:
The undersigned hereby tenders to RJR Nabisco Holdings Capital Trust I
(the "Trust"), upon the terms and conditions set forth in the Prospectus and the
related Letter of Transmittal (which constitute the "Offer"), receipt of which
is hereby acknowledged, the number of Depositary Shares set forth below,
pursuant to the guaranteed delivery procedure set forth in the Prospectus.
SIGN HERE
Number of Depositary Shares
tendered:.....................
Certificate Nos. (if available)
.............................
.................................
.................................
.............................
If Depositary Shares will be tendered by (Signature(s))
book-entry transfer:
Name of Tendering .............................
Institution:.................... (Name(s)) (Please Print)
................................. .............................
(Address)
Account No.
................................
.............................
(Zip Code)
.............................
(Area Code and Telephone No.)
2
<PAGE>
GUARANTEE
(Not to be used for signature guarantee)
The undersigned, a firm that is a member of a registered national
securities exchange or the National Association of Securities Dealers, Inc., or
a commercial bank or trust company having an office branch or agency in the
United States, guarantees (a) that the above named person(s) "own(s)" the
Depositary Shares tendered hereby within the meaning of Rule 14e-4 under the
Securities Exchange Act of 1934, as amended, (b) that such tender of Depositary
Shares complies with Rule 14e-4 and (c) to deliver to the Exchange Agent either
the Depositary Shares tendered hereby, in proper form for transfer, or
confirmation of the book-entry transfer of the Depositary Shares tendered hereby
into the account of the Exchange Agent at the Depository Trust Company, Midwest
Securities Trust Company or Philadelphia Depository Trust Company, in each case
together with a properly completed and duly executed Letter(s) of Transmittal
(or facsimile(s) thereof), with any required signature guarantees (or an Agent's
message (as defined in the Prospectus)) and any other required documents within
five New York Stock Exchange trade days after the date of execution of this
Notice.
...................................
(Name of Firm)
...................................
(Authorized Signature)
...................................
(Name)
...................................
(Address)
...................................
(Zip Code)
Dated:................................... ...................................
(Area Code and Telephone No.)
DO NOT SEND STOCK CERTIFICATES WITH THIS FORM. YOUR STOCK CERTIFICATES
MUST BE SENT WITH THE LETTER OF TRANSMITTAL.
3
EXHIBIT 99.3
RJR NABISCO HOLDINGS CAPITAL TRUST I
OFFER TO EXCHANGE ITS
____% TRUST ORIGINATED PREFERRED SECURITIES(sm) ("TOPrS(sm)")
(liquidation amount $25 per
Preferred Security and
guaranteed to the extent set forth in the
Prospectus by
RJR Nabisco Holdings Corp.)
FOR UP TO 49,000,000 OUTSTANDING SERIES B DEPOSITARY SHARES
(CUSIP 74960K 70 8), EACH REPRESENTING 1/1000 OF A SHARE OF
SERIES B CUMULATIVE PREFERRED STOCK
OF
RJR NABISCO HOLDINGS CORP.
___________, 1995
To Brokers, Dealers, Commercial
Banks, Trust Companies and
Other Nominees
We have been appointed by RJR Nabisco Holdings Corp., a Delaware corporation
("Holdings"), and RJR Nabisco Holdings Capital Trust I, a Delaware statutory
business trust (the "Trust"), to act as Dealer Managers in connection with the
offer by the Trust to exchange, upon the terms and subject to the conditions set
forth in the Prospectus referred to below and the related Letter of Transmittal
(which together constitute the "Offer"), its ____% Trust Originated Preferred
Securities ("TOPrS(sm)") (the "Preferred Securities") for up to 49,000,000
Series B Depositary Shares, each representing 1/1000 of a share of Series B
Cumulative Preferred Stock (the "Depositary Shares") of Holdings that are
validly tendered and accepted for exchange pursuant to the Offer. In connection
with the Offer, Holdings will deposit in the Trust as trust assets its ____%
Junior Subordinated Debentures due 2044 as set forth in the Prospectus referred
to below.
Pursuant to the Offer, exchanges will be made on the basis of one Preferred
Security for each Depositary Share validly tendered and accepted for exchange in
the Offer. Depositary Shares not accepted for exchange because of proration
will be returned.
- - - ----------------
(sm) "Trust Originated Preferred Securities" and "TOPrS" are service marks of
Merrill Lynch & Co.
<PAGE>
The Trust will accept for exchange all Depositary Shares validly tendered and
not withdrawn, upon the terms and subject to the conditions of the Offer,
including the provisions thereof relating to proration described in the
Prospectus dated ________, 1995 (the "Prospectus").
For your information and for forwarding to your clients for whom you hold
Depositary Shares registered in your name or in the name of your nominee, we are
enclosing the following documents:
1. Prospectus dated __________, 1995;
2. Letter of Transmittal for your use and for the information of your
clients, together with Guidelines for Certification of Taxpayer
Identification Number on Substitute Form W-9 providing information
relating to backup federal income tax withholding;
3. Notice of Guaranteed Delivery to be used to accept the Offer if the
Depositary Shares and all other required documents cannot be delivered
to the Exchange Agent by the Expiration Date (as defined in the
Prospectus), or the book-entry transfer of the Depositary Shares cannot
be completed by the Expiration Date;
4. A form of letter that may be sent to your clients for whose accounts you
hold Depositary Shares registered in your name or in the name of your
nominee, with space provided for obtaining such clients' instructions
and designation of Soliciting Dealer with regard to the Offer; and
5. Return envelope addressed to First Chicago Trust Company of New York,
the Exchange Agent.
WE URGE YOU TO CONTACT YOUR CLIENTS AS PROMPTLY AS POSSIBLE.
THE OFFER, THE PRORATION PERIOD AND WITHDRAWAL RIGHTS EXPIRE AT 12:00
MIDNIGHT, NEW YORK CITY TIME, ON ________ , 1995, UNLESS THE OFFER IS EXTENDED.
NEITHER THE BOARD OF DIRECTORS OF HOLDINGS NOR HOLDINGS NOR THE TRUSTEES NOR
THE TRUST MAKES ANY RECOMMENDATION TO HOLDERS OF DEPOSITARY SHARES AS TO WHETHER
TO TENDER OR REFRAIN FROM TENDERING IN THE OFFER. HOLDERS OF DEPOSITARY SHARES
ARE URGED TO CONSULT THEIR FINANCIAL AND TAX ADVISORS IN MAKING THEIR DECISIONS
ON WHAT ACTION TO TAKE IN LIGHT OF THEIR OWN PARTICULAR CIRCUMSTANCES.
Holding will pay a solicitation fee of $0.50 per Depositary Share for any
Depositary Shares tendered by physically delivering depositary shares which are
accepted for exchange and exchanged pursuant to the Offer and covered by a
Letter of Transmittal which designates, as having solicited and obtained the
tender, the name of (i) any broker or dealer in securities, including each
Dealer Manager in its capacity as a broker or dealer, which is a member of any
national securities exchange or of the National Association of Securities
Dealers, Inc. (the
2
<PAGE>
"NASD"), (ii) any foreign broker or dealer not eligible for membership in the
NASD which agrees to conform to the NASD's Rules of Fair Practice in soliciting
tenders outside the United States to the same extent as though it were an NASD
member, or (iii) any bank or trust company (each of which is referred to herein
as a "Soliciting Dealer"). No solicitation fee shall be payable to a Soliciting
Dealer with respect to the tender of Depositary Shares by a holder unless the
Letter of Transmittal accompanying such tender designates such Soliciting Dealer
as such in the box captioned "Solicited Tenders".
If tendered Depositary Shares are being delivered by book-entry transfer made
to an account maintained by the Exchange Agent with the Depository Trust
Company, Midwest Securities Trust Company or Philadelphia Depository Trust
Company, the Soliciting Dealer must return a Notice of Solicited Tenders to the
Exchange Agent within five New York Stock Exchange trading days after the
expiration Date in order to receive a solicitation fee. No solicitation fee
shall be payable to a Soliciting Dealer in respect of Depositary Shares (i)
beneficially owned by such Soliciting Dealer or (ii) registered in the name of
such Soliciting Dealer unless such Depositary Shares are held by such Soliciting
Dealer as nominee and such depositary Shares are being tendered for the benefit
of one or more beneficial owners identified on the Letter of Transmittal or the
Notice of Solicited Tenders. No solicitation fee shall be payable to the
Soliciting Dealer with respect to the tender of Depositary Shares by the holder
of record, for the benefit of the beneficial owner, unless the beneficial owner
has designated such Soliciting Dealer.
No solicitation fee shall be payable to a Soliciting Dealer if such
Soliciting Dealer is required for any reason to transfer any portion of such fee
to a tendering holder (other than itself). No broker, dealer, bank, trust
company or fiduciary shall be deemed to be the agent of Holdings, the Exchange
Agent, the Information Agent or the Dealer Managers for purposes of the Offer.
Holdings will upon request, reimburse brokers, dealers, commercial banks and
trust companies for reasonable and necessary costs and expenses incurred by them
in forwarding materials to their customers. Holdings will pay all stock
transfer taxes applicable to the acceptance of Depositary Shares pursuant to the
Offer, subject to Instruction 6 of the Letter of Transmittal.
Soliciting Dealers should take care to ensure proper record-keeping to
document their entitlement to any solicitation fee.
Any inquiries you may have with respect to the Offer should be addressed to,
and additional copies of the enclosed materials may be obtained from, the
Information Agent or the undersigned at the addresses and telephone numbers set
forth in the back cover of the Prospectus.
Very truly yours,
MERRILL LYNCH & CO.
LEHMAN BROTHERS
MORGAN STANLEY & CO. INCORPORATED
PAINEWEBBER INCORPORATED
SMITH BARNEY INC.
3
<PAGE>
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU
THE AGENT OF HOLDINGS, THE TRUST, THE TRUSTEES OF THE TRUST, THE DEALER
MANAGERS, THE INFORMATION AGENT OR THE EXCHANGE AGENT, OR AUTHORIZE YOU OR ANY
OTHER PERSON TO USE ANY DOCUMENT OR MAKE ANY STATEMENT ON BEHALF OF ANY OF THEM
IN CONNECTION WITH THE OFFER OTHER THAN THE DOCUMENTS ENCLOSED HEREWITH AND THE
STATEMENTS CONTAINED THEREIN.
NOTICE OF SOLICITED TENDERS
List below the number of Depositary Shares whose tender you have solicited.
All Depositary Shares beneficially owned by a beneficial owner, whether in one
account or several, and in however many capacities, must be aggregated for
purposes of completing the tables below. Any questions as to what constitutes
beneficial ownership should be directed to the Exchange Agent. If the space
below is inadequate, list the Depositary Shares in a separate signed schedule
and affix the list to this Notice of Solicited Tenders. Please do not complete
the sections of the table headed "TO BE COMPLETED ONLY BY EXCHANGE AGENT".
ALL NOTICES OF SOLICITED TENDERS SHOULD BE RETURNED TO THE EXCHANGE AGENT AT
THE ADDRESS SET FORTH ON THE BACK COVER OF THE PROSPECTUS. ALL QUESTIONS
CONCERNING THE NOTICES OF SOLICITED TENDERS SHOULD BE DIRECTED TO THE
INFORMATION AGENT AT THE TELEPHONE NUMBER SET FORTH ON THE BACK COVER OF THE
PROSPECTUS.
SOLICITED TENDERS OF DEPOSITARY SHARES NOT BENEFICIALLY
OWNED BY SOLICITING DEALER
TO BE TO BE TO BE TO BE
COMPLETED COMPLETED COMPLETED COMPLETED
BY THE BY THE ONLY BY ONLY BY
SOLICITING SOLICITING EXCHANGE EXCHANGE
DEALER DEALER AGENT AGENT
NUMBER OF FEE
NUMBER OF SHARES VOI TICKET SHARES $0.50
BENEFICIAL OWNERS TENDERED NUMBER* ACCEPTED PER SHARE
Beneficial Owner No. 1
------------- ------------ ------------ ----------
Beneficial Owner No. 2
------------- ------------ ------------ ----------
Beneficial Owner No. 3
------------- ------------ ------------ ----------
Beneficial Owner No. 4
------------- ------------ ------------ ----------
Beneficial Owner No. 5
------------- ------------ ------------ ----------
Total . . . . . . .
------------- ------------ ------------ ----------
- - - ----------
* Complete if Depositary Shares delivered by book-entry transfer.
4
<PAGE>
All questions as to the validity, form and eligibility (including time of
receipt) of Notices of Solicited Tenders will be determined by the Exchange
Agent, in its sole discretion, which determination will be final and binding.
Neither the Exchange Agent nor any other person will be under any duty to give
notification of any defects or irregularities in any Notice of Solicited Tenders
or incur any liability for failure to give such notification.
The undersigned hereby confirms that: (i) it has complied with the
applicable requirements of the Securities Exchange Act of 1934, and the
applicable rules and regulations thereunder, in connection with such
solicitation; (ii) it is entitled to such compensation for such solicitation
under the terms and conditions of the Prospectus; (iii) in soliciting tenders of
Depositary Shares, it has used no soliciting materials other than those
furnished by Holdings or the Trust; and (iv) if it is a foreign broker or dealer
not eligible for membership in the NASD, it has agreed to conform to the NASD's
Rules of Fair Practice in making solicitations outside the United States to the
same extent as though it were an NASD member.
- - - ------------------------- -----------------------------
Printed Firm Name Address
- - - ------------------------- -----------------------------
Authorized Signature City, State, Zip Code
------------------------------
Area Code and Telephone Number
5
EXHIBIT 99.4
RJR NABISCO HOLDINGS CAPITAL TRUST I
OFFER TO EXCHANGE ITS
____% TRUST ORIGINATED PREFERRED SECURITIES(sm) ("TOPrS(sm)")
(liquidation amount $25 per
Preferred Security and
guaranteed to the extent set forth in the
Prospectus by
RJR Nabisco Holdings Corp.)
FOR UP TO 49,000,000 OUTSTANDING SERIES B DEPOSITARY SHARES,
EACH REPRESENTING 1/1000 OF A SHARE OF
SERIES B CUMULATIVE PREFERRED STOCK
OF
RJR NABISCO HOLDINGS CORP.
________, 1995
To Our Clients:
Enclosed for your consideration are the Prospectus dated ________, 1995 (the
"Prospectus") and the related Letter of Transmittal (which together constitute
the "Offer") in connection with the Offer by RJR Nabisco Holdings Capital Trust
I, a Delaware statutory business trust (the "Trust") to exchange its ____% Trust
Originated Preferred Securities ("TOPrS(sm)") (the "Preferred Securities") for
up to 49,000,000 outstanding Series B Depositary Shares, each representing
1/1000 of a Share of Series B Cumulative Preferred Stock (the "Depositary
Shares") of RJR Nabisco Holdings Corp., a Delaware corporation ("Holdings"),
that are validly tendered and accepted for exchange pursuant to the Offer. In
connection with the Offer, Holdings will deposit in the Trust as trust assets
its ____% Junior Subordinated Debentures due 2044 as set forth in the
Prospectus.
Pursuant to the Offer, exchanges will be made on the basis of one (1)
Preferred Security for each Depositary Share validly tendered and accepted for
exchange in the Offer. Depositary Shares not accepted for exchange because of
proration will be returned.
- - - ---------------
(sm) "Trust Originated Preferred Securities" and "TOPrS" are service marks of
Merrily Lynch & Co.
<PAGE>
The Trust will accept for exchange up to 49,000,000 Depositary Shares validly
tendered and not withdrawn, upon the terms and subject to the conditions of the
Offer, including the provisions thereof relating to proration described in the
Prospectus. We are the holder of record of Depositary Shares held for your
account. A tender of such Depositary Shares can be made only by us as the
holder of record and pursuant to your instructions. The Letter of Transmittal
is furnished to you for your information only and cannot be used by you to
tender Depositary Shares held by us for your account.
We request instructions as to whether you wish us to tender any or all of the
Depositary Shares held by us for your account, upon the terms and subject to the
conditions set forth in the Prospectus and the Letter of Transmittal. We also
request that you designate, in the box captioned "Soliciting Tenders", any
Soliciting Dealer who solicited your tender of Depositary Shares.
Your attention is invited to the following:
1. The Offer, the proration period and withdrawal rights expire at 12:00
Midnight, New York City time, on ______, 1995, unless the Offer is extended.
2. Consummation of the Offer is conditioned on, among other things, (i)
receipt of at least 15,000,000 validly tendered Depositary Shares (which
condition may be waived by the Trust) and (ii) tenders by a sufficient number of
holders of Depositary Shares such that there be at least 400 record or
beneficial holders of Preferred Securities to be issued in exchange for such
Depositary Shares (which condition may not be waived).
3. The Trust expressly reserves the right, in its sole discretion, subject
to applicable law, to (i) terminate the Offer, and not accept for exchange any
Depositary Shares and promptly return all Depositary Shares upon the failure of
any of the conditions specified above and in "The Offer--Conditions to the
Offer" in the Prospectus, (ii) waive any condition to the Offer and accept all
Depositary Shares previously tendered pursuant to the Offer, (iii) extend the
Expiration Date of the Offer and retain all Depositary Shares tendered pursuant
to such Offer until the Expiration Date, subject, however, to all withdrawal
rights of holders, see "The Offer -- Withdrawal of Tenders" in the Prospectus,
(iv) amend the terms of the Offer or (v) modify the form of the consideration to
be paid pursuant to the Offer. Any amendment applicable to the Offer will apply
to all Depositary Shares tendered pursuant to the Offer. The minimum period
during which the Offer must remain open following material changes in the terms
of the Offer or the information concerning the Offer, other than a change in the
percentage of securities sought or the price, depends upon the facts and
circumstances, including the relative materiality of such terms or information.
See "The Offer -- Expiration Date; Extensions; Amendments; Termination" in the
Prospectus.
4. Any stock transfer taxes applicable to the exchange of Depositary Shares
pursuant to the Offer will be paid by Holdings, except as otherwise provided in
Instruction 6 of the Letter of Transmittal.
If you wish to have us tender any or all of your Depositary Shares, please so
instruct us by completing, executing, detaching and returning to us the
instruction form on the detachable part hereof. An envelope to return your
instructions to us is enclosed. If you authorize tender of your Depositary
Shares, all such Depositary Shares will be tendered unless otherwise specified
on the
2
<PAGE>
detachable part hereof. Your instructions should be forwarded to us in ample
time to permit us to submit a tender on your behalf by the Expiration Date.
As described in the Prospectus, if fewer than all Depositary Shares validly
tendered prior to the Expiration Date are to be accepted by the Trust, the Trust
will accept Depositary Shares from each tendering holder on a pro rata basis,
subject to adjustment to avoid the acceptance for exchange of fractional shares.
THE OFFER IS NOT BEING MADE TO, NOR WILL TENDERS BE ACCEPTED FROM OR ON
BEHALF OF, HOLDERS OF DEPOSITARY SHARES IN ANY JURISDICTION IN WHICH THE MAKING
OF THE OFFER OR ACCEPTANCE THEREOF WOULD NOT BE IN COMPLIANCE WITH THE LAWS OF
SUCH JURISDICTION. IN THOSE JURISDICTIONS THE LAWS OF WHICH REQUIRE THAT THE
OFFER BE MADE BY A LICENSED BROKER OR DEALER, THE OFFER SHALL BE DEEMED TO BE
MADE ON BEHALF OF THE TRUST BY MERRILL LYNCH & CO., LEHMAN BROTHERS, MORGAN
STANLEY & CO. INCORPORATED, PAINEWEBBER INCORPORATED AND SMITH BARNEY INC. OR
ONE OR MORE REGISTERED BROKERS OR DEALERS LICENSED UNDER THE LAWS OF SUCH
JURISDICTION.
Instructions with Respect to the Offer
The undersigned acknowledge(s) receipt of your letter and the enclosed
Prospectus dated ________, 1995 and the related Letter of Transmittal in
connection with the Offer by the Trust to exchange its Preferred Securities for
up to 49,000,000 Depositary Shares of Holdings that are validly tendered and
accepted for exchange. Pursuant to the Offer, exchanges will be made on the
basis of one Preferred Security for each Depositary Share validly tendered and
accepted for exchange in the Offer. Depositary Shares not accepted for exchange
because of proration will be returned.
This will instruct you to tender the number of Depositary Shares indicated
below held by you for the account of the undersigned, upon the terms and subject
to the conditions set forth in the Prospectus and the related Letter of
Transmittal.
[ ] By checking this box, all Depositary Shares held by you for our account,
including fractional shares, will be tendered in the Offer. If fewer than
all Depositary Shares are to be tendered, we have checked the box and
indicated below the aggregate number of Depositary Shares to be tendered by
you.
________________shares*
____________________
* Unless otherwise indicated, it will be assumed that all Depositary Shares
held by us for your account are to be tendered.
3
<PAGE>
Please designate in the box below any Soliciting Dealer who solicited your
tender.
SOLICITED TENDERS
The undersigned represents that the Soliciting Dealer who solicited
and obtained this tender is:
Name of Firm:
-----------------------------------
(Please Print)
Name of Individual Broker
or Financial Consultant:
------------------------
Identification Number (if known):
---------------
Address:
----------------------------------------
--------------------------------------------------
(Include Zip Code)
SIGN HERE
................................. .................................
................................. .................................
Signature(s) Please print name(s) and
address(es) here
Dated............................
4
EXHIBIT 99.5
, 1995
--------- --
The First National Bank of Chicago
One First National Plaza
Suite 0124
Chicago, Illinois 60670-0124
Re: RJR Nabisco Holdings Corp. ("Holdings")
and RJR Nabisco Holdings Capital Trust I
(the "Trust" and, together with Holdings,
the "Offerors")
------------------------------------------
Ladies and Gentlemen:
Pursuant to "The Offer" section of the Prospectus dated
, 1995 (the "Prospectus"), we appoint you as
--------- --
Exchange Agent subject to the terms hereof. Capitalized terms
used herein without definition shall have the meanings ascribed
thereto in the Prospectus.
The Offerors have delivered to you or will deliver to
you (i) a copy of the Letter of Transmittal, in the form attached
hereto as Exhibit A, (ii) copies of all other documents or
materials to be forwarded to the Holders and (iii) a copy of the
resolutions adopted by the Board of Directors of Holdings or a
duly constituted committee thereof authorizing the Offer and your
appointment as Exchange Agent. Holdings has delivered or will
deliver to you (i) a list showing the names and addresses of the
Holders as of the close of business on , 1995, and
--------- --
the number of Depositary Shares, each representing 1/1000 of a
share of Series B Preferred, held by each such Holder as of such
date and (ii) a list of certificates (giving the certificate
number) stating which Depositary Shares have been or are, as of
such date, lost, stolen, destroyed or replaced or restricted as
to transfer (noting the text of the restrictive legends
applicable thereto) or with respect to which a stop transfer
order has been noted.
1. Appointment of the Exchange Agent. This will
---------------------------------
confirm the Offerors' appointment of The First National Bank of
Chicago as the Exchange Agent provided for in the Prospectus and,
in that capacity, authorization to act solely as agent for the
Offerors hereunder for the purpose of receiving from the Holders
the Depositary Shares tendered in exchange for Preferred
Securities of the Trust upon satisfaction of the conditions set
forth herein and in the Prospectus. You will not owe fiduciary
duties to any other person by reason of this appointment.
<PAGE>
2
2. Duties and Obligations of the Exchange Agent. As
--------------------------------------------
Exchange Agent, you are hereby instructed to perform the specific
exchange agency duties set forth in "The Offer" section of the
Prospectus and in the related Letter of Transmittal and to
perform such duties as are specifically set forth herein, and no
implied covenants or obligations should be read into your
appointment as Exchange Agent against you. Without limiting and
in furtherance of the foregoing, you shall not be liable or
responsible for any of the provisions of the Prospectus except
for those expressly referred to herein above. Further, as
Exchange Agent you:
(i) will, at the request of Holdings, advise the Co-
Dealer Managers on a daily basis with respect to the
Depositary Shares tendered as follows: (a) the number of
Depositary Shares validly tendered represented by
certificates physically held by you (or for which you have
received confirmation of receipt of book-entry transfer into
your account at a Book-Entry Transfer Facility (as defined
in the Prospectus) pursuant to the procedures set forth in
"The Offer" section of the Prospectus) on such day; (b) the
number of Depositary Shares represented by Notices of
Guaranteed Delivery on such day; (c) the number of
Depositary Shares properly withdrawn on such day; and (d)
the cumulative number of Depositary Shares in categories (a)
through (c) above;
(ii) will, on the day following such oral
communication, furnish to the Co-Dealer Managers a written
report confirming the above information and furnish to the
Co-Dealer Managers such reasonable information on the
tendering holders of Depositary Shares as may be requested
from time to time;
(iii) will be regarded as making no representations or
warranties and having no responsibilities regarding the
validity or adequacy of the Offerors' power to make this
appointment or the Offer;
(iv) will not be responsible in any manner whatsoever
for the correctness of the statements made in the
Prospectus; the Letter of Transmittal or in any document
furnished to you by the Offerors;
(v) shall not be liable for any action taken,
suffered, or omitted or for any error of judgment made by
you in the performance of your duties hereunder, in the
absence of willful misconduct or gross negligence on your
part, nor shall you be liable for any error of judgment made
in good faith unless you shall have been grossly negligent
in ascertaining the pertinent facts;
(vi) may rely and shall be protected in acting or
refraining from acting upon any communication authorized
<PAGE>
3
hereby and upon any oral or written instruction, notice,
request, direction, consent, report, certificate, form of
bond certificate or other instrument, paper or document in
good faith believed by you to be genuine;
(vii) may consult with counsel of your choice, and the
advice of such counsel shall be full and complete
authorization and protection in respect of any action taken,
suffered or omitted by you hereunder in good faith and in
reliance thereon; and
(viii) may perform your duties and exercise your rights
hereunder directly or by or through agents or attorneys and
shall not be responsible for any misconduct or negligence on
the part of any agent or attorney appointed by you with due
care hereunder.
3. Maintenance of Records. You will keep and maintain
----------------------
complete and accurate records and ledgers showing all Depositary
Shares exchanged by you and payments made by you. Letters of
Transmittal, Notices of Guaranteed Delivery and telegrams,
telexes, facsimile transmissions and other materials submitted to
you shall be preserved by you until delivered to, or otherwise
disposed of in accordance with the instructions of, the Offerors.
4. Indemnification, compensation and Expenses. (a)
------------------------------------------
In consideration of your acceptance of the foregoing appointment
by the Offerors, Holdings hereby agrees:
(i) to indemnify you for, and to hold you harmless
against, any loss, liability or expense incurred without
gross negligence or willful misconduct on your part, arising
out of or in connection with the acceptance or
administration of the agency created under the foregoing
appointment, including the costs and expenses (including the
reasonable fees and expenses of your counsel) of defending
yourself against any claim or liability in connection with
the exercise or performance of any of your duties thereunder
and of enforcing this indemnification provision; and
(ii) to pay to you a fee for all services rendered by
you under the foregoing appointment according to the fee
schedule attached hereto as Exhibit A; and
(iii) to reimburse you upon your request for all
reasonable expenses, disbursements and advances incurred or
made by you in accordance with any of your agency duties
(including the reasonable compensation and the reasonable
expenses and disbursements of your agents and counsel),
except any such expenses, disbursement or advance as may be
attributable to your gross negligence or willful misconduct.
<PAGE>
4
(b) You shall not be required to advance, expend or
risk your own funds or otherwise incur or become exposed to
financial liability in the performance of your duties hereunder.
5. IRS Filings. You shall arrange to comply with all
-----------
requirements under the tax laws of the United States, including
those relating to missing Taxpayer Identification Numbers, and
shall file any appropriate reports with the IRS (e.g., 1099,
----
1099B, etc.).
6. Counterparts. This Agreement may be executed in
------------
two or more counterparts, each of which shall be deemed an
original, but all of which shall constitute one and the same
instrument.
7. Governing Law. This agreement shall be construed
-------------
and enforced in accordance with the laws of the state of New
York.
Please confirm your acceptance of your appointment as
Exchange Agent and the arrangements herein provided by signing
and returning to us the enclosed duplicates of this letter.
RJR NABISCO HOLDINGS CORP.
By:___________________________
Name:
Title:
RJR NABISCO HOLDINGS
CAPITAL TRUST I
By: RJR Nabisco Holdings Corp.,
as Sponsor
By:___________________________
Name:
Title:
THE FIRST NATIONAL BANK
OF CHICAGO
By:______________________
Name:
Title:
<PAGE>
EXHIBIT A
FIRST CHICAGO
FEE SCHEDULE
EXCHANGE AGENT SERVICES
DEPOSITARY SHARES EACH REPRESENTING 1/000
OF A SHARE OF SERIES B PREFERRED STOCK/EXCHANGE OFFER
RJR NABISCO HOLDINGS CORP.
RJR NABISCO HOLDINGS CAPITAL TRUST I
-------------------------------------------------
I. Exchange Agency
---------------
A fee for the receipt of tendered Depositary Shares, each
representing 1/1000 of a share of Series B Preferred, will
be charged at $ per Letter of Transmittal. The total
-----
charge will be subject to a minimum of $ and maximum
--------
of $ .
----------
This fee covers examination and execution of all required
documentation, receipt of tendered shares and transmittal
letters, reporting as required to Holdings and other parties
and communication with DTC.
II. Miscellaneous
-------------
Fees for services not specifically covered in this schedule
will be assessed in amounts commensurate with the services
rendered. The fees in this schedule are subject to
reasonable adjustments as changes in laws, procedures, or
costs of doing business demand. The costs of supplies and
other out-of-pocket expenses that can be directly allocated
will be added to our regular charges.
EXHIBIT 99.6
[Information Agent Letterhead]
__________ __, 1995
RJR Nabisco Holdings Corp.
1301 Avenue of the Americas
New York, New York 10019-6013
LETTER OF AGREEMENT
-------------------
This Letter of Agreement (the "Agreement") sets forth the terms
and conditions under which _________________ (the "Information
Agent") has been retained by RJR Nabisco Holdings Corp.
("Holdings") as Information Agent for its contemplated exchange
offer (the "Offer"). The term of the Agreement shall be the term
of the Offer, including any extensions thereof.
1. During the term of the Agreement, the Information
Agent will: provide advice and consultation with
respect to the planning and execution of the
Offer; assist in the preparation and placement of
newspaper ads; assist in the distribution of Offer
documents to brokers, banks, nominees,
institutional investors, and other shareholders
and investment community accounts; answer collect
telephone inquiries from shareholders and their
representatives; and, if requested, call
individuals who are registered holders or
non-objecting beneficial owners ("NOBOs").
2. Holdings will pay the Information Agent a fee of
$______, of which half is payable in advance per
the enclosed invoice and the balance at the
expiration of the Offer, plus an additional fee to
be mutually agreed upon if the Offer is extended
more than fifteen days beyond the initial
expiration date. Holdings will pay the
Information Agent an additional sum computed on
the basis of $____ per incoming call received in
excess of 1,000, and if the Information Agent is
requested to call registered holders or NOBOS,
Holdings will also pay the Information Agent a sum
computed on the basis of $____ per such call,
<PAGE>
RJR Nabisco Holdings Corp.
__________ __, 1995
Page 2
which fee will include all telephone charges. In
addition, Holdings will reimburse the Information
Agent for reasonable costs and expenses incurred
by the Information Agent in fulfilling the
Agreement, including but not limited to: postage
and freight charges incurred by the Information
Agent in the delivery of Offer documents; printing
costs; charges for the production of shareholder
lists (paper, computer cards, etc.), mailing
labels, or other forms of information requested by
Holdings or its agents and other expenses or
disbursements authorized by Holdings or its
agents.
3. The Information Agent will review for accuracy the
bills rendered by brokers and banks forwarding
Offer material to beneficial owners, before
forwarding such bills to Holdings for payment.
4. The Information Agent hereby agrees not to make
any representations not included in the offer
documents.
5. Holdings agrees to indemnify and hold the
Information Agent harmless against any loss,
damage, expense (including, without limitation,
reasonable legal and other related fees and
expenses), liability or claim arising out of the
Information Agent's fulfillment of the Agreement
(except for any loss, damage, expense,, liability
or claim arising out of the Information Agent's
own gross negligence or misconduct). At its
election, Holdings may assume the defense of any
such action. The Information Agent hereby agrees
to advise Holdings of any such liability or claim
promptly after receipt of any notice thereof. The
indemnification contained in this paragraph will
survive the term of the Agreement.
6. The Information Agent agrees to preserve the
confidentiality of all non-public information
provided by Holdings or its agents for our use in
providing services under this Agreement, or
information developed by the Information Agent
based upon such non-public information.
<PAGE>
RJR Nabisco Holdings Corp.
__________ __, 1995
Page 3
By executing the Agreement below the undersigned agrees to be
bound by its terms.
ACCEPTED: Sincerely,
RJR NABISCO HOLDINGS CORP. _____________________________
By: By:
-------------------------- ---------------------------
Title: Title:
----------------------- ------------------------
Date:
------------------------
EXHIBIT 99.7
This is neither an offer to exchange or to sell nor a solicitation of an offer
to exchange or buy any of these securities. The Offer is made only by the
Prospectus and the related Letter of Transmittal and the Offer is not being made
to, nor will tenders be accepted from or on behalf of, holders of these
securities in any jurisdiction in which the making or acceptance thereof would
not be in compliance with the securities or blue sky laws of such jurisdiction.
In any jurisdiction where the securities or blue sky laws require the Offer to
be made by a licensed broker or dealer, the Offer is being made on behalf of the
Trust by Merrill Lynch & Co., Lehman Brothers, Morgan Stanley & Co.
Incorporated, PaineWebber Incorporated, Smith Barney Inc. or one or more other
brokers or dealers which are licensed under the laws of such jurisdiction.
Notice of Offer to Holders of
RJR NABISCO HOLDINGS CORP.
Series B Depositary Shares, each representing 1/1000 of a share of
Series B Cumulative Preferred Stock
RJR Nabisco Holdings Capital Trust I, a Delaware statutory business trust
(the "Trust") is offering, upon the terms and subject to the conditions set
forth in its Prospectus dated ________, 1995 (the "Prospectus") and the
accompanying Letter of Transmittal (the "Letter of Transmittal" which, together
with the Prospectus, constitute the "Offer"), to exchange its ____% Trust
Originated Preferred Securities(sm) ("TOPrS(sm)") (the "Preferred Securities")
for up to 49,000,000 of the outstanding Series B Depositary Shares ("Depositary
Shares") each representing 1/1000 of a share of Series B Cumulative Preferred
Stock (the "Series B Preferred") of RJR Nabisco Holdings Corp., a Delaware
corporation ("Holdings"). Exchanges will be made on the basis of one Preferred
Security for each Depositary Share validly tendered and accepted for exchange in
the Offer. Depositary Shares not accepted for exchange because of proration
will be returned. In connection with the Offer, Holdings will deposit in the
Trust as trust assets its ____% Junior Subordinated Debentures due 2044 as set
forth in the Prospectus.
THE OFFER, THE PRORATION PERIOD
AND WITHDRAWAL RIGHTS WILL EXPIRE
AT 12:00 MIDNIGHT, NEW YORK CITY TIME, ON ________, 1995,
UNLESS THE OFFER IS EXTENDED.
NEITHER THE BOARD OF DIRECTORS OF HOLDINGS NOR HOLDINGS NOR THE TRUSTEES NOR
THE TRUST MAKES ANY RECOMMENDATION TO HOLDERS OF DEPOSITARY SHARES AS TO WHETHER
TO TENDER OR REFRAIN FROM TENDERING IN THE OFFER. EACH HOLDER OF DEPOSITARY
SHARES MUST MAKE ITS OWN DECISION ON WHAT ACTION TO TAKE IN LIGHT OF ITS OWN
PARTICULAR CIRCUMSTANCES.
Upon the terms and conditions of the Offer, including the provisions relating
to proration described in the Prospectus, the Trust will accept for exchange up
to 49,000,000 Depositary Shares, validly tendered and not withdrawn prior to
12:00 midnight, New York City time, on ________, 1995, or if the Offer is
extended by the Trust, in its sole discretion, the latest date and time to which
the Offer has been extended (the "Expiration Date"). Tenders of Depositary
Shares pursuant to the Offer may be withdrawn at any time prior to the
Expiration Date and, unless accepted for exchange by the Trust, may be withdrawn
at any time after 40 business days after ________, 1995. Depositary Shares not
accepted because of proration will be returned to the tendering holders at
Holdings' expense as promptly as practicable following the Expiration Date.
Consummation of the Offer is conditioned on, among other things, (i) receipt
of at least 15,000,000 validly tendered Depositary Shares (which condition may
be waived by the Trust) and (ii) tenders by a sufficient number of holders of
Depositary Shares such that there be at least 400 record or beneficial owners of
Preferred Securities to be issued in exchange for such Depositary Shares (which
condition may not be waived).
The Trust expressly reserves the right, in its sole discretion, subject to
applicable law, to (i) terminate the Offer, and not accept for exchange any
Depositary Shares and promptly return all Depositary Shares upon the failure
_______________
(sm) "Trust Originated Preferred Securities" and "TOPrS" are service marks of
Merrill Lynch & Co.
<PAGE>
of any of the conditions specified above or in "The Offer--Conditions to the
Offer" in the Prospectus, (ii) waive any condition to the Offer and accept all
Depositary Shares previously tendered pursuant to the Offer, (iii) extend the
Expiration Date of the Offer and retain all Depositary Shares tendered pursuant
to such Offer until the expiration date, subject, however, to all withdrawal
rights of holders, see "The Offer--Withdrawal of Tenders", (iv) amend the terms
of the Offer or (v) modify the form of the consideration to be paid pursuant to
the Offer. Any amendment applicable to the Offer will apply to all Depositary
Shares tendered pursuant to the Offer. The minimum period during which Offer
must remain open following material changes in the terms of the Offer or the
information concerning the Offer, other than a change in the percentage of
securities sought or the price, depends upon the facts and circumstances,
including the relative materiality of such terms or information. See "The
Offer--Expiration Date; Extensions; Amendments; Termination" in the Prospectus.
The purpose of the Offer is to refinance the Depositary Shares with the
Preferred Securities and to achieve certain tax efficiencies.
The Prospectus and Letter of Transmittal contain important information which
should be read before any action is taken by holders of Depositary Shares.
Tenders may be made only by a properly completed and executed Letter of
Transmittal and in conformance with the terms thereof and of the Prospectus.
Holdings will pay to Soliciting Dealers (as defined in the Prospectus)
designated by the record or beneficial owner, as appropriate, of Depositary
Shares a solicitation fee of $0.50 per Depositary Share validly tendered and
accepted for exchange pursuant to the Offer, subject to certain conditions.
Soliciting Dealers are not entitled to a solicitation fee for Depositary Shares
beneficially owned by such Soliciting Dealer.
The information required to be disclosed by paragraph (d)(1) of Rule 13e-4 of
the General Rules and Regulations under the Securities Exchange Act of 1934, as
amended, is contained in the Prospectus and is incorporated herein by reference.
The Prospectus and the related Letter of Transmittal are first being sent to
holders of Depositary Shares on ________, 1995 and are being furnished to
brokers, dealers, banks and similar persons whose names, or names of whose
nominees, appear on the lists of holders of the Depositary Shares or, if
applicable, who are listed as participants in a clearing agency's security
position listing for subsequent transmittal to beneficial owners of Depositary
Shares.
Any questions or requests for assistance may be directed to the Information
Agent and the Dealer Managers at the addresses and telephone numbers set forth
below. Requests for copies of the Prospectus or of the Letter of Transmittal or
the Notice of Guaranteed Delivery may be directed to MacKenzie Partners, Inc.,
the Information Agent, at (800) 322-2885, and copies will be forwarded promptly
at Holdings' expense. Shareholders may also contact their broker, dealer,
commercial bank or trust company for assistance concerning the Offer.
The Information Agent for the Offer is:
MACKENZIE PARTNERS, INC.
156 Fifth Avenue
New York, New York 10010
Banks and Brokers Call Collect: (212) 929-5500
or
All Others Call Toll Free: (800) 322-2885
The Exchange Agent for the Offer is:
First Chicago Trust Company of New York
2
<PAGE>
By Hand or Overnight Courier:
Attention: Tenders and Exchanges
Suite 4780-RNH
14 Wall Street
8th Floor
New York, New York 10005
By Mail:
(registered or certified mail recommended)
Attention: Tenders and Exchanges
Suite 4660-RNH
P.O. Box 2559
Jersey City, New Jersey 07303-2559
By Facsimile Transmission:
(For Eligible Institutions Only)
(201) 222-4720 or 4721
Confirm Receipt of Notice of Guaranteed Delivery
by Telephone:
(201) 222-4707
The Dealer Managers for the Offer are:
Merrill Lynch & Co.
World Financial Center
North Tower - Seventh Floor
New York, New York 10281
(212) 236-4565 (collect)
Lehman Brothers Morgan Stanley & Co. Incorporated
3 World Financial Center 1221 Avenue of the Americas
New York, New York 10285 New York, New York 10020
(800) 438-3242 (Toll-Free) (800) 422-6464 ext. 6620 (Toll-Free)
PaineWebber Incorporated Smith Barney Inc.
1285 Avenue of the Americas 388 Greenwich Street
New York, New York 10019 New York, New York 10013
(800) 324-0210 (Toll-Free) (212) 723-7599 (collect)
________, 1995
3
[RJR NABISCO HOLDINGS CORP. LETTERHEAD]
, 1995
------------
To Holders of Series B Depositary Shares:
RJR Nabisco Holdings Capital Trust I, a newly organized special purpose
Delaware statutory business trust (the "Trust"), all of whose common beneficial
interests are owned by RJR Nabisco Holdings Corp. ("RJR Nabisco Holdings"), is
proposing an exchange offer for up to 49,000,000 of outstanding Series B
Depositary Shares each representing 1/1000 of a share of Series B Cumulative
Preferred Stock ("Depositary Shares") of RJR Nabisco Holdings. The Trust is
offering (the "Offer") to exchange its % Trust Originated Preferred
---
Securities (the "Preferred Securities") for Depositary Shares on the basis of
one Preferred Security for each Depositary Share validly tendered and not
withdrawn pursuant to the Offer. Depositary Shares not accepted for exchange
because of proration or otherwise will be returned. In connection with the
Offer, RJR Nabisco Holdings will deposit in the Trust as trust assets its %
---
Junior Subordinated Debentures due 2044.
The Offer is explained in detail in the enclosed Prospectus and Letter of
Transmittal. If you want to tender your shares and to participate in the Offer,
the instructions for tendering are also set forth in detail in the enclosed
materials. I encourage you to read these materials carefully before making any
decision with respect to the Offer. Neither the board of directors of Holdings
nor Holdings nor the Trustees nor the Trust makes any recommendation to holders
of Depositary Shares as to whether to tender or refrain from tendering in the
Offer. Holders of Depositary Shares are urged to consult their financial and tax
advisors in making their decisions on what action to take in light of their own
particular circumstances.
Very truly yours,
Charles M. Harper
Chairman and Chief
Executive Officer
cc: First Chicago Trust Company of New York
Depositary for Series B Cumulative Preferred Stock
