ANNEX I
TERMS OF
__% CITIZENS UTILITIES CONVERTIBLE
PREFERRED SECURITIES
__% CITIZENS UTILITIES CONVERTIBLE
COMMON SECURITIES
Pursuant to Section 7.1 of the Amended and
Restated Declaration of Trust, dated as of ,
1995 (as amended from time to time, the "Declaration"),
the designation, rights, privileges, restrictions,
preferences and other terms and provisions of the
Convertible Preferred Securities and the Convertible
Common Securities are set out below (each capitalized
term used but not defined herein has the meaning set
forth in the Declaration or, if not defined in such
Declaration, as defined in the Prospectus referred to
below):
1. DESIGNATION AND NUMBER.
(a) Convertible Preferred Securities.
______________ Convertible Preferred Securities of the
Trust with an aggregate liquidation amount with respect
to the assets of the Trust of __________________________
Dollars ($___________) plus up to an additional
Convertible Preferred Securities of the Trust
with an aggregate liquidation amount with respect to the
assets of the Trust of $ solely to cover
over-allotments as provided for in the Underwriting
Agreement (the "Additional Convertible Preferred
Securities"), and a liquidation amount with respect to
the assets of the Trust of $50 per Convertible Preferred
Security, are hereby designated for the purposes of
identification only as " % Citizens Utilities
Convertible Preferred Securities" (the "Convertible
Preferred Securities"). The Preferred Security
Certificates evidencing the Convertible Preferred
Securities shall be substantially in the form attached
hereto as Exhibit A-1, with such changes and additions
thereto or deletions therefrom as may be required by
ordinary usage, custom or practice or to conform to the
rules of any stock exchange on which the Convertible
Preferred Securities are listed.
(b) Convertible Common Securities.
______________ Convertible Common Securities of the Trust
with an aggregate liquidation amount with respect to the
assets of the Trust of ______________________________
Dollars ($___________) plus to an additional
Convertible Common Securities of the
Trust with an aggregate liquidation amount with respect
to the assets of the Trust of $ to meet
the capital requirements of the Trust in the event of an
issuance of Additional Convertible Preferred Securities,
and a liquidation amount with respect to the assets of
the Trust of $50 per Convertible Common Security, are
hereby designated for the purposes of identification only
as "__% Citizens Utilities Convertible Common Securities"
(the "Convertible Common Securities"). The Common
Security Certificates evidencing the Convertible Common
Securities shall be substantially in the form attached
hereto as Exhibit A-2, with such changes and additions
thereto or deletions therefrom as may be required by
ordinary usage, custom or practice.
2. DISTRIBUTIONS.
(a) Periodic Distributions payable on
each Security will be fixed at a rate per annum of ____%
(the "Rate") of the stated liquidation amount of $50 per
Security, such rate being the rate of distributions
payable on the Partnership Preferred Securities to be
held by the Property Trustee. Distributions in arrears
for more than one quarter will bear interest thereon at
the Rate (to the extent permitted by applicable law).
The form of payments of distributions (the
"Distributions") may be in either cash or an Equivalent
Value of shares of Common Stock, as provided in Section 8
of this Annex I. A Distribution can be paid only to the
extent that payments are made in respect of the
Partnership Preferred Securities held by the Property
Trustee. The amount of Distributions payable for any
period will be computed for any full quarterly
Distribution period on the basis of a 360-day year of
twelve 30-day months, and for any period shorter than a
full quarterly Distribution period for which
Distributions are computed, Distributions will be
computed on the basis of the actual number of days
elapsed in such period.
(b) Distributions on the Securities will
be cumulative, will accrue from , 1995 and will be
payable quarterly in arrears, on January 31, April 30,
July 31 and October 31 of each year, commencing on
, 1996, except as otherwise described below (each, a
"Distribution Payment Date"). In the event certain
events specified in the Limited Partnership Agreement
occur, Citizens Capital will defer distribution payments
on the Partnership Preferred Securities. Such a deferral
will occur if the Debenture Issuer elects to extend the
distribution payment period on the Convertible Debentures
for a period not exceeding 20 consecutive quarters (each,
an "Extension Period") and, as a consequence of such
extension, distributions on the Partnership Preferred
Securities and, therefore, the Distributions will also be
deferred. Despite such deferral, quarterly Distributions
will continue to accrue with interest thereon (to the
extent permitted by applicable law) at the Rate,
compounded quarterly, during any such Extension Period.
Prior to the termination of any such Extension Period,
Citizens Capital may, under the Limited Partnership
Agreement, be required to further extend such Extension
Period; provided that such Extension Period together with
all such previous and further extensions thereof may not
exceed 20 consecutive quarters nor extend the maturity
date of the Securities. Payments of accrued
Distributions which have been extended pursuant to this
Section 2 will be payable to Holders as they appear on
the books and records of the Trust on the first record
date after the end of the Extension Period. Upon the
termination of any Extension Period and the payment of
all amounts then due, Citizens Capital may, under the
Limited Partnership Agreement, be required to commence a
new Extension Period, subject to the above requirements.
(c) Distributions on the Securities will
be payable to the Holders thereof as they appear on the
books and records of the Trust on the Regular Record Date
(as defined in the Indenture) immediately preceding the
applicable Distribution Payment Date. So long as the
Securities remain in book-entry only form, subject to any
applicable laws and regulations and the provisions of the
Declaration, each such payment in respect of the
Convertible Preferred Securities will be made as
described under the heading "Description of the
Convertible Preferred Securities -- Book-Entry Only
Issuance -- The Depository Trust Company" in the
Prospectus dated ______, 1995 (the "Prospectus") of the
Trust included in the Registration Statement on Form S-3
of the Sponsor, Citizens Capital and the Trust (Reg. No.
33-________). The relevant record dates for the
Convertible Common Securities shall be the same record
dates as for the Convertible Preferred Securities.
Distributions payable on any Securities that are not
punctually paid on any Distribution Payment Date, as a
result of Citizens Capital having failed to make a
payment on the Partnership Preferred Securities, will
cease to be payable to the Person in whose name such
Securities are registered on the Regular Record Date, and
such late Distribution will instead be payable to the
Person in whose name such Securities are registered on
the special record date or other specified date
determined in accordance with the Declaration. If any
date on which Distributions are payable on the Securities
is not a Business Day, then payment of the Distribution
payable on such date will be made on the next succeeding
day that is a Business Day (and without any interest or
other payment in respect of any such delay) except that,
if such Business Day is in the next succeeding calendar
year, such payment shall be made on the immediately
preceding Business Day, in each case with the same force
and effect as if made on such date.
(d) In the event of an election by the
Holder to convert its Securities through the Conversion
Agent into shares of Common Stock, pursuant to the terms
of the Securities as set forth in this Annex I to the
Declaration, no payment, allowance or adjustment shall be
made with respect to accumulated, deferred and unpaid
Distributions on such Securities, or be required to be
made; provided that Holders of Securities at the close of
business on any record date for the payment of
Distributions will be entitled to receive the
Distributions payable on such Securities on the
corresponding payment date notwithstanding the conversion
of such Securities into Common Stock following such
record date.
(e) In the event that there is any money
or other property held by or for the Trust that is not
accounted for hereunder, such property shall be
distributed Pro Rata (as defined in Section 10 of this
Annex I) among the Holders of the Securities on [the next
Distribution Payment Date].
(f) In the event that Citizens Capital is
dissolved and the Convertible Debentures are issued to
the Trust, Distributions shall continue to be payable in
the manner provided for by this Section 2, except that
Distributions shall no longer be payable upon receipt of
distributions due under the Partnership Preferred
Securities as set forth in the Limited Partnership
Agreement but rather shall be payable upon receipt of
payments due under the Convertible Debentures as set
forth in the Indenture.
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 Securities on the date of the dissolution,
winding-up or termination, as the case may be, will be
entitled to receive out of the assets of the Trust
available for distribution to Holders of Securities after
satisfaction of liabilities to creditors, an amount equal
to the aggregate of the stated liquidation amount of $50
per Security, payable in cash, plus accrued and unpaid
Distributions thereon to the date of payment, payable in
cash or an Equivalent Value of Common Stock (such amount
being the "Liquidation Distribution"), unless, in
connection with such dissolution, winding-up or
termination, at the election of the Regular Trustees,
Partnership Preferred Securities (or, if the Partnership
has been terminated and the Property Trustee holds
Convertible Debentures, Convertible Debentures) in an
aggregate liquidation amount (or principal amount) equal
to the aggregate stated liquidation amount of such
Securities, with a distribution rate (or interest rate)
equal to the Rate of, and bearing accrued and unpaid
distributions (or interest) in an amount equal to the
accrued and unpaid Distributions on, such Securities,
shall be distributed on a Pro Rata basis to the Holders
of the Securities 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 Securities shall be
paid on a Pro Rata basis in accordance with Section 10 of
this Annex I.
If, upon any liquidation of the Trust, the
holders of Securities are paid in full the aggregate
Liquidation Distribution to which they are entitled, then
such holders will not be entitled to receive or share in
any other assets of the Trust thereafter available for
distribution to any other holders of beneficial interests
in the Trust.
4. REDEMPTION AND DISTRIBUTION.
(a) Mandatory Redemption. Upon the
repayment of the Convertible Debentures in whole or in
part, whether at maturity, upon acceleration of the
maturity of the Convertible Debentures or upon
redemption, the proceeds from such repayment or payment
shall be simultaneously applied to redeem, ultimately,
upon redemption of Partnership Preferred Securities, if
any, Securities having an aggregate liquidation amount
equal to the aggregate liquidation amount of the
Convertible Debentures so repaid or redeemed, at a
redemption price of $50 per Security, plus an amount
equal to accrued and unpaid Distributions thereon at the
date of the redemption, payable in cash (the "Redemption
Price"). Holders will be given not less than 30 nor more
than 60 days notice of such redemption. If the
Convertible Debentures are redeemed in part, then the
Securities shall be redeemed on a Pro Rata basis in
accordance with Section 10 of this Annex I.
(b) [reserved]
(c) Special Redemption. If, at any time,
a Trust Event shall occur and be continuing the Regular
Trustees shall (i) after receipt by the Company of a No
Recognition Opinion with respect to the Partnership
Preferred Securities and delivery of such No Recognition
Opinion to the Trust, dissolve the Trust and, after
satisfaction of creditors, cause the Partnership
Preferred Securities held by the Property Trustee, having
an aggregate stated liquidation amount equal to the
aggregate stated liquidation amount of, with a
distribution rate identical to the Rate of, and accrued
and unpaid distributions equal to accrued and unpaid
Distributions on and having the same record date for
payment as the Securities, to be distributed to the
Holders of the Securities, in liquidation of such
Holders' interests in the Trust, on a Pro Rata basis or
(ii) after receipt by the Company of No Recognition
Opinions with respect to the Partnership Preferred
Securities and the Convertible Debentures and delivery of
the appropriate No Recognition Opinion to each of the
Trust and Citizens Capital, and following the dissolution
of Citizens Capital in the manner set forth in the
Limited Partnership Agreement, dissolve the Trust, and,
after satisfaction of creditors, cause the Convertible
Debentures held by the General Partner, having aggregate
stated principal amount equal to the aggregate stated
liquidation amount of, with an interest payment rate
identical to the Rate of and accrued and unpaid interest
equal to accrued and unpaid Distributions on and having
the same record date for payment as the Securities, to be
distributed to the Holders of the Securities, in
liquidation of such Holders' interests in the Trust, on a
Pro Rata basis, or, in the event the Company cannot
receive a No Recognition Opinion with respect to the
Partnership Preferred Securities, the Regular Trustees
may dissolve the Trust and, after satisfaction of
creditors, at the direction of the Company, as Debenture
Issuer, and following the redemption, in whole or in
part, of the Convertible Debentures in the manner set
forth in the Indenture and the Partnership Preferred
Securities in the manner set forth in the Limited
Partnership Agreement, redeem, in whole or in part, the
Securities in the manner set forth in this Annex I to the
Declaration; provided, however, that, if at the time
there is available to the Trust the opportunity to
eliminate the Trust 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, the Trustees, Citizens
Capital, the Sponsor or the Holders of the Securities
("Ministerial Action"), the Regular Trustees will pursue
such Ministerial Action in lieu of dissolution.
If, at any time, a Partnership Event shall
occur and be continuing the General Partner may dissolve
Citizens Capital and, after satisfaction of creditors,
either (i) upon receipt by the Company of a No
Recognition Opinion with respect to the Convertible
Debentures and delivery of such No Recognition Opinion to
Citizens Capital, cause the Convertible Debentures held
by the General Partner, having an aggregate stated
principal amount equal to the aggregate stated
liquidation amount of, with a distribution rate identical
to the distribution rate of, and accrued and unpaid
distributions equal to accrued and unpaid distributions
on and having the same record date for payment as the
Partnership Preferred Securities, to be distributed to
the holders of the Partnership Preferred Securities, in
liquidation of such holders' interests in Citizens
Capital or (ii) in the event the Company cannot receive a
No Recognition Opinion, at the direction of the Company,
as Debenture Issuer, and following the redemption, in
whole or in part, of the Convertible Debentures in the
manner set forth in the Indenture and the Partnership
Preferred Securities in the manner set forth in the
Limited Partnership Agreement, redeem, in whole or in
part, the Securities in the manner set forth in this
Annex I to the Declaration, provided, however, that, if
at the time there is available to Citizens Capital the
opportunity to eliminate the Partnership Event by taking
a Ministerial Action, Citizens Capital will pursue such
Ministerial Action in lieu of dissolution. In the event
that the General Partner undertakes the actions specified
in item (i) of this paragraph, the Company, as Sponsor,
may dissolve the Trust and thereby cause the Convertible
Debentures to be distributed to the Holders of the
Securities.
If, at any time, a Company Event shall occur
and be continuing, the Company, as Debenture Issuer, may
cause the redemption, in whole but not in part, of the
Securities by redeeming, in whole but not in part, the
Convertible Debentures in the manner set forth in the
Indenture and thereby causing the redemption of the
Partnership Preferred Securities in the manner set forth
in the Limited Partnership Agreement, which redemption
shall in turn cause the redemption of the Securities in
the manner set forth in this Annex I to the Declaration,
provided, however, that, if at the time there is
available to the Debenture Issuer the opportunity to
eliminate the Company Event by taking a Ministerial
Action, the Debenture Issuer will pursue such Ministerial
Action in lieu of redemption.
If, at any time, a Rating Agency Event shall
occur and be continuing, the Company, as Sponsor of the
Trust, shall dissolve the Trust and (i) after
satisfaction of creditors, cause the Partnership
Preferred Securities having an aggregate liquidation
amount equal to the aggregate liquidation amount of the
Securities to be distributed to the holders of the
Securities in liquidation of the Trust or (ii) upon
dissolution of Citizens Capital as set forth in the
Limited Partnership Agreement, and after satisfaction of
creditors, cause the Convertible Debentures having an
aggregate principal amount equal to the aggregate
liquidation preference of the Securities to be
distributed to the holders of the Securities in
liquidation of the Trust and Citizens Capital.
After the date for any distribution of
Partnership Preferred Securities or Convertible
Debentures, as the case may be, upon dissolution and
liquidation of the Trust (i) the Securities will be
deemed to be no longer outstanding, (ii) if the
Convertible Preferred Securities then remain in book-
entry only form, the Depository Trust Company (the
"Depositary") or its nominee, as the record holder of the
Convertible Preferred Securities, will receive a
registered global certificate or certificates
representing the Partnership Preferred Securities or
Convertible Debentures, as the case may be, and (iii) any
certificates representing Securities not held by the
Depositary or its nominee will be deemed to represent, as
applicable, (a) Partnership Preferred Securities having
an aggregate liquidation amount equal to the aggregate
stated liquidation amount of, with a distribution rate
identical to the distribution rate of, and accrued and
unpaid distributions equal to accrued and unpaid interest
to accrued and unpaid Distributions on such Convertible
Preferred Securities, or (b) Convertible Debentures
having an aggregate principal amount equal to the
aggregate stated liquidation amount of, with an interest
rate identical to the distribution rate of, and accrued
and unpaid interest equal to accrued and unpaid
distributions on such Securities, as the case may be,
until such certificates are presented to the Company, as
General Partner or Debenture Issuer, as the case may be,
or its agent for registration of transfer or reissuance.
(d) General. The Trust may not redeem fewer
than all the outstanding Securities unless all accrued
and unpaid Distributions have been paid on all Securities
for all quarterly Distribution periods terminating on or
before the date of redemption. If fewer than all the
outstanding Securities are to be so redeemed, the
Convertible Common Securities and the Convertible
Preferred Securities will be redeemed Pro Rata and the
Convertible Preferred Securities to be redeemed will be
as described in Section 4(f)(ii) of this Annex I.
If the Partnership Preferred Securities or the
Convertible Debentures are distributed to Holders of the
Securities, Citizens Capital or the Debenture Issuer, as
the case may be, will use its best efforts to have the
Partnership Preferred Securities or the Convertible
Debentures, as the case may be, listed on the New York
Stock Exchange or on such other exchange as the
Convertible Preferred Securities were listed immediately
prior to the distribution of the Partnership Preferred
Securities or the Convertible Debentures.
(e) Redemption or Distribution Procedures. (i)
Notice of any redemption of Partnership Preferred
Securities and/or Convertible Debentures or notice of
distribution of Partnership Preferred Securities or
Convertible Debentures in exchange for the Securities (a
"Redemption/Distribution Notice") will be given by the
Trust by mail to each Holder of Securities to be redeemed
or exchanged not fewer than 30 nor more than 60 days
before the date fixed for redemption or exchange thereof
which, in the case of a redemption, will be the date
fixed for redemption of the Partnership Preferred
Securities and/or Convertible Debentures which in turn
will be the date fixed for redemption of the Convertible
Debentures. For purposes of the calculation of the date
of redemption or exchange and the dates on which notices
are given pursuant to this Section 4(e)(i) of Annex 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
Securities. Each Redemption/Distribution Notice shall be
addressed to the Holders of Securities at the address of
each such Holder appearing in the books and records of
the Trust. No defect in the Redemption/Distribution
Notice or in the mailing of either thereof with respect
to any Holder shall affect the validity of the redemption
or exchange proceedings with respect to any other Holder.
(ii) In the event that fewer than all the
outstanding Securities are to be redeemed, the Securities
to be redeemed shall be redeemed Pro Rata and, in the
event Convertible Preferred Securities are held in book-
entry only form by the Depositary or its nominee (or any
successor Clearing Agency or its nominee), the Depositary
will reduce Pro Rata the amount of the interest of each
Clearing Agency Participant in the Convertible Preferred
Securities to be redeemed; provided that if, as a result
of such Pro Rata redemption, Clearing Agency Participants
would hold fractional interests in the Convertible
Preferred Securities, the Depositary will adjust the
amount of the interest of each Clearing Agency
Participant to be redeemed to avoid such fractional
interests.
(iii) If Securities are to be redeemed and the
Trust gives a Redemption/Distribution Notice which notice
may only be issued if the Partnership Preferred
Securities and/or Convertible Debentures are redeemed as
set out in this Section 4 to Annex I (which notice will
be irrevocable) then (A) while the Convertible Preferred
Securities are in book-entry only form, with respect to
the Convertible Preferred Securities, by 12:00 noon, New
York City time, on the redemption date, provided that
Citizens Capital or the Debenture Issuer, as the case may
be, has paid the Property Trustee a sufficient amount of
cash in connection with the related redemption or
maturity of the Partnership Preferred Securities and/or
Convertible Debentures, the Property Trustee will deposit
irrevocably with the Paying Agent funds sufficient to pay
the applicable Redemption Price with respect to the
Convertible Preferred Securities and will give the Paying
Agent irrevocable instructions and authority to pay the
Redemption Price to the Depositary for payment to the
Holders of the Convertible Preferred Securities, and (B)
(i) in the case of Convertible Preferred Securities that
are issued in definitive form, then with respect to such
Convertible Preferred Securities, and (ii) with respect
to the Convertible Common Securities, provided that
Citizens Capital or the Debenture Issuer, as the case may
be, has paid the Property Trustee a sufficient amount of
cash in connection with the related redemption or
maturity of the Partnership Preferred Securities and/or
the Convertible Debentures, the Property Trustee will pay
the relevant Redemption Price to the Holders of such
Securities by check mailed to the address of the relevant
Holder appearing on the books and records of the Trust on
the redemption date. If a Redemption/Distribution Notice
shall have been given and funds deposited as required, if
applicable, then immediately prior to the close of
business on the date of such deposit, or on the
redemption date, as applicable, Distributions will cease
to accrue on the Securities so called for redemption and
all rights of Holders of such Securities so called for
redemption will cease, except the right of the Holders of
such Securities to receive the Redemption Price, but
without interest on such Redemption Price. Neither the
Regular Trustees nor the Trust shall be required to
register or cause to be registered the transfer of any
Securities which have been so called for redemption. If
any date fixed for redemption of Securities is not a
Business Day, then payment of the Redemption Price
payable on such date will be made on the next succeeding
day that is a Business Day (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 Securities is
improperly withheld or refused and not paid either by the
Property Trustee or by the Sponsor as guarantor pursuant
to the relevant Guarantee Agreement, Distributions on
such Securities will continue to accrue, from the
original redemption date to the actual date of payment,
in which case the actual payment date will be considered
the date fixed for redemption for purposes of calculating
the Redemption Price.
(iv) Redemption/Distribution Notices shall be
sent by the Regular Trustees on behalf of the Trust to
(A) in respect of the Convertible Preferred Securities,
the Depositary or its nominee (or any successor Clearing
Agency or its nominee) if the Global Certificates have
been issued or if Definitive Preferred Security
Certificates have been issued, to the Holder thereof, and
(B) in respect of the Convertible Common Securities to
the Holder thereof.
(v) If a Redemption/Distribution Notice shall
have been given with respect to the redemption of the
Securities, the conversion rights set forth in Section 5
of this Annex I shall terminate at the close of business
on the fifth Business Day prior to the redemption date.
(vi) Subject to the foregoing and applicable
law (including, without limitation, United States federal
securities laws), the Sponsor or any of its subsidiaries
may at any time and from time to time purchase
outstanding Convertible Preferred Securities by tender,
in the open market or by private agreement.
5. CONVERSION RIGHTS.
The Holders of Securities shall have the right,
at any time up to and including the fifth Business Day
prior to the maturity or redemption of the Securities, at
their option, to cause the Conversion Agent to convert
Securities, on behalf of the converting Holders, into
shares of Common Stock in the manner described herein on
and subject to the following terms and conditions:
(a) The Securities will be convertible at the
office of the Conversion Agent into fully paid and
nonassessable shares of Common Stock pursuant to the
Holder's direction in writing given pursuant to Section
5(b) of this Annex I. Upon receipt of any such written
directions, the Conversion Agent shall (i) exchange such
Securities for a portion of the Partnership Preferred
Securities or Convertible Debentures, as the case may be,
theretofore held by the Trust on the basis of one
Security per $50 liquidation amount of Partnership
Preferred Securities or $50 principal amount of
Convertible Debentures, as the case may be, (ii), as
holder of such Partnership Preferred Securities in the
event Citizens Capital has not been dissolved,
immediately cause Citizens Capital to exchange such
amount of Partnership Preferred Securities for a portion
of the Convertible Debentures theretofore held by
Citizens Capital on the basis of $50 liquidation amount
of Partnership Preferred Securities per $50 principal
amount of Convertible Debentures, and (iii) as holder of
such Convertible Debentures, immediately convert such
amount of Convertible Debentures into fully paid and
nonassessable shares of Common Stock at an initial rate
of _________ shares of Common Stock per $50 principal
amount of Convertible Debentures (which is equivalent to
a conversion price of $______ per share of Common Stock,
subject to certain adjustments set forth in the terms of
the Convertible Debentures (as so adjusted, "Conversion
Price")).
(b) In order to convert Securities into Common
Stock the Holder shall submit to the Conversion Agent at
the office referred to above an irrevocable request to
convert Securities on behalf of such Holder (the
"Conversion Request"), together, if the Securities are in
certificated form, with such certificates. The
Conversion Request shall (i) set forth the number of
Securities to be converted and the name or names, if
other than the Holder, in which the shares of Common
Stock should be issued and (ii) direct the Conversion
Agent (a) to exchange such Securities for a portion of
the Partnership Preferred Securities or Convertible
Debentures, as the case may be, held by the Trust (at the
rate of exchange specified in the preceding paragraph),
(b) to, in the event Partnership Preferred Securities are
held, immediately exchange such Partnership Preferred
Securities on behalf of such Holder, into Convertible
Debentures (at the conversion rate specified in the
preceding paragraph) and (c) to immediately convert such
Convertible Debentures on behalf of such Holder, into
Common Stock (at the conversion rate specified in the
preceding paragraph). The Conversion Agent shall notify
the Trust of the Holder's election to exchange Securities
for a portion of the Partnership Preferred Securities or
Convertible Debentures, as the case may be, held by the
Trust and the Trust shall, upon receipt of such notice,
deliver to the Conversion Agent the appropriate
liquidation amount of Partnership Preferred Securities or
the appropriate principal amount of Convertible
Debentures, as the case may be, for exchange in
accordance with this Section. In the event Partnership
Preferred Securities are held by the Trust, the
Conversion Agent shall thereupon notify Citizens Capital
of the Holder's election to exchange such Partnership
Preferred Securities for a portion of the Convertible
Debentures held by Citizens Capital and Citizens Capital
shall, upon receipt of such notice, deliver to the
Conversion Agent the appropriate principal amount of
Convertible Debentures for exchange in accordance with
this Section. The Conversion Agent shall thereupon
notify the Company of the Holder's election to convert
such Convertible Debentures into shares of Common Stock.
Holders of Securities at the close of business on a
Distribution record date will be entitled to receive the
Distribution payable on such securities on the
corresponding Distribution Payment Date notwithstanding
the conversion of such Securities following such record
date but prior to such Distribution Payment Date. Except
as provided above, neither the Trust nor the Sponsor will
make, or be required to make, any payment, allowance or
adjustment upon any conversion on account of any
accumulated and unpaid Distributions accrued on the
Securities (including any Additional Amounts accrued
thereon) surrendered for conversion, or on account of any
accumulated and unpaid dividends on the shares of Common
Stock issued upon such conversion. Securities shall be
deemed to have been converted immediately prior to the
close of business on the day on which a Notice of
Conversion relating to such Securities is received by the
Conversion Agent in accordance with the foregoing
provision (the "Conversion Date"). The Person or Persons
entitled to receive the Common Stock issuable upon
conversion of the Securities shall be treated for all
purposes as the record holder or holders of such Common
Stock at such time. As promptly as practicable on or
after the Conversion Date, the Company shall issue and
deliver at the office of the Conversion Agent a
certificate or certificates for the number of full shares
of Common Stock issuable upon such conversion, together
with the cash payment, if any, in lieu of any fraction of
any share to the Person or Persons entitled to receive
the same, unless otherwise directed by the Holder in the
Notice of Conversion and the Conversion Agent shall
distribute such certificate or certificates to such
Person or Persons.
(c) Each Holder of a Security by his
acceptance thereof appoints Chemical Bank "Conversion
Agent" for the purpose of effecting the conversion of
Securities in accordance with this Section. In effecting
the conversion and transactions described in this
Section, the Conversion Agent shall be acting as agent of
the Holders of Securities directing it to effect such
conversion transactions. The Conversion Agent is hereby
authorized (i) to exchange Securities from time to time
for Partnership Preferred Securities or Convertible
Debentures, as the case may be, held by the Trust in
connection with the conversion of such Securities in
accordance with this Section, (ii) to, in the event
Partnership Preferred Securities are held by the Trust,
exchange such Partnership Preferred Securities for
Convertible Debentures held by Citizens Capital in
connection with the conversion of such Securities in
accordance with this Section and (iii) to convert all or
a portion of the Convertible Debentures into Common Stock
and thereupon to deliver such shares of Common Stock in
accordance with the provisions of this Section and to
deliver to Citizens Capital a new Convertible Debenture
or Convertible Debentures for any resulting unconverted
principal amount and to the Trust a new Partnership
Preferred Security or Partnership Preferred Securities or
Convertible Debenture or Convertible Debentures, as the
case may be, for any resulting unconverted liquidation
amount.
(d) No fractional shares of Common Stock will
be issued as a result of conversion, but in lieu thereof,
such fractional interest will be in cash by the Company
to the Trust, which in turn will make such payment to the
Holder or Holders of Securities so converted.
(e) The Company shall at all times reserve and
have available out of its authorized and unissued Common
Stock, solely for issuance upon the conversion of the
Convertible Debentures, free from any preemptive or other
similar rights, such number of shares of Common Stock as
shall from time to time be issuable upon the conversion
of all the Convertible Debentures then outstanding.
Notwithstanding the foregoing, the Company shall be
entitled to deliver upon conversion of Convertible
Debentures, shares of Common Stock reacquired and held in
the treasury of the Company (in lieu of the issuance of
authorized and unissued shares of Common Stock), so long
as any such treasury shares are free and clear of all
liens, charges, security interests or encumbrances. Any
shares of Common Stock issued upon conversion of the
Convertible Debentures shall be duly authorized, validly
issued and fully paid and nonassessable. The Trust shall
deliver the shares of Common Stock received upon
conversion of the Convertible Debentures to the
converting Holder free and clear of all liens, charges,
security interests and encumbrances, except for United
States withholding taxes. Each of the Company, Citizens
Capital (if in existence) and the Trust shall prepare and
shall use its best efforts to obtain and keep in force
such governmental or regulatory permits or other
authorizations as may be required by law, and shall
comply with all applicable requirements as to
registration or qualification of the Common Stock (and
all requirements to list the Common Stock issuable upon
conversion of Convertible Debentures that are at the time
applicable), in order to enable the Company to lawfully
issue Common Stock to the Trust upon conversion of the
Convertible Debentures and the Trust to lawfully deliver
the Common Stock to each Holder upon conversion of the
Securities.
(f) The Company will pay any and all taxes
that may be payable in respect of the issue or delivery
of shares of Common Stock on conversion of Convertible
Debentures and the delivery of the shares of Common Stock
by the Trust upon conversion of the Securities. The
Company shall not, however, be required to pay any tax
which may be payable in respect of any transfer involved
in the issue and delivery of shares of Common Stock in a
name other than that in which the Securities so converted
were registered, and no such issue or delivery shall be
made unless and until the Person requesting such issue
has paid to the Trust the amount of any such tax, or has
established to the satisfaction of the Trust that such
tax has been paid.
(g) Nothing in the preceding Paragraph (f)
shall limit the requirement of the Trust to withhold
taxes pursuant to the terms of the Securities as set
forth in this Annex I to the Declaration or to the
Declaration itself or otherwise require the Property
Trustee or the Trust to pay any amounts on account of
such withholdings.
6. VOTING RIGHTS - CONVERTIBLE PREFERRED
SECURITIES.
(a) Except as provided under Sections 6(b) and
9 of this Annex I and as otherwise required by law and
the Declaration, the Holders of the Convertible Preferred
Securities will have no voting rights.
(b) Subject to the requirements of the
penultimate sentence of this paragraph, the Holders of a
Majority in liquidation amount of the Convertible
Preferred Securities voting separately as a class may
direct the time, method, and place of conducting any
proceeding for any remedy available to the Property
Trustee, or exercising any trust or power conferred upon
the Property Trustee under the Declaration, including (i)
for so long as the Property Trustee shall hold the
Partnership Preferred Securities, (A) causing the Special
Representative (as defined in the Partnership Agreement)
to direct the time, method and place of conducting any
proceeding for any remedy available to the Indenture
Trustee, or exercising any trust or power conferred on
Indenture Trustee with respect to the Convertible
Debentures, (B) causing the Special Representative to
waive any past default and its consequences that are
waivable under Section 5.13 of the Indenture, or (C)
causing the Special Representative to exercise any right
to rescind or annul a declaration that the principal
amount of all the Convertible Debentures shall be due and
payable; and (ii) if the Property Trustee holds
Convertible Debentures in the event that the Citizens
Capital is liquidated and such Convertible Debentures are
distributed in exchange for the Partnership Preferred
Securities, (A) directing the time, method and place of
exercising any trust or power conferred upon the
Indenture Trustee with respect to the Convertible
Debentures, (B) waiving any past default that is waivable
under Section 5.13 of the Indenture, or (C) exercising
any right to rescind or annul any declaration that the
principal amount of all the Convertible Debentures shall
be due and payable; provided, however, that where a
consent under the Limited Partnership or the Indenture,
as the case may be, would require the consent or act of
the Holders of greater than a majority in liquidation
amount of the Partnership Preferred Securities or the
Holders of greater than a majority in principal amount of
Convertible Debentures, as the case may be, affected
thereby (a "Super Majority"), the Property Trustee may
only give such consent or take such action at the
direction of the Holders of at least the proportion in
liquidation amount of the Partnership Preferred
Securities or in principal amount of the Convertible
Debentures, as the case may be, which the relevant Super
Majority represents of the aggregate liquidation amount
of the Partnership Preferred Securities or the aggregate
principal amount of the Convertible Debentures, as the
case may be, outstanding. The Property Trustee shall not
revoke any action previously authorized or approved by a
vote of the Holders of the Convertible Preferred
Securities. Other than with respect to directing the
time, method and place of conducting any remedy available
to the Property Trustee or the Special Representative as
set forth above, the Property Trustee shall not take any
action in accordance with the directions of the Holders
of the Convertible Preferred Securities under this
paragraph unless the Property Trustee has obtained an
opinion of tax counsel to the effect that for United
States federal income tax purposes the Trust will
continue to be classified as a grantor trust after
consummation of such action. If the Property Trustee
fails to enforce its rights under the Declaration, any
Holder of Convertible Preferred Securities may, after a
period of 30 days has elapsed from such Holder's written
request to the Property Trustee to enforce such rights,
institute a legal proceeding directly against any Person
to enforce the Property Trustee's rights under the
Declaration, without first instituting a legal proceeding
against the Property Trustee or any other Person.
Any approval or direction of Holders of
Convertible Preferred Securities may be given at a
separate meeting of Holders of Convertible Preferred
Securities convened for such purpose, at a meeting of all
of the Holders of Securities in the Trust or pursuant to
written consent. The Regular Trustees will cause a
notice of any meeting at which Holders of Convertible
Preferred Securities are entitled to vote, or of any
matter upon which action by written consent of such
Holders is to be taken, to be mailed to each Holder of
record of Convertible Preferred Securities. Each such
notice will include a statement setting forth (i) the
date of such meeting or the date by which such action is
to be taken, (ii) a description of any resolution
proposed for adoption at such meeting on which such
Holders are entitled to vote or of such matter upon which
written consent is sought and (iii) instructions for the
delivery of proxies or consents.
No vote or consent of the Holders of the
Convertible Preferred Securities will be required for the
Trust to redeem and cancel Convertible Preferred
Securities, or to distribute Partnership Preferred
Securities or Convertible Debentures, as the case may be,
in accordance with the Declaration and the terms of the
Securities.
Notwithstanding that Holders of Convertible
Preferred Securities are entitled to vote or consent
under any of the circumstances described above, any of
the Convertible Preferred Securities that are owned by
the Sponsor, or by any entity directly or indirectly
controlling or controlled by or under direct or indirect
common control with the Sponsor shall not be entitled to
vote or consent and shall, for purposes of such vote or
consent, be treated as if they were not outstanding;
provided, however, that holders of Convertible Preferred
Securities that have been validly pledged by the Company
or any such affiliate to a party otherwise eligible to
vote may vote or consent under any of the circumstances
described above.
7. VOTING RIGHTS - CONVERTIBLE COMMON
SECURITIES.
(a) Except as provided under Sections 7(b),
7(c) and 9 of this Annex I and as otherwise required by
law and the Declaration, the Holders of the Convertible
Common Securities will have no voting rights.
(b) The Holders of the Convertible Common
Securities are entitled, in accordance with Article V of
the Declaration, to vote to appoint, remove or replace
any Trustee or to increase or decrease the number of
Trustees.
(c) Subject to Section 2.6 of the Declaration
and only after all Events of Default with respect to the
Convertible Preferred Securities have been cured, waived
or otherwise eliminated and subject to the requirements
of the penultimate sentence of this paragraph, the
Holders of a Majority in liquidation amount of the
Convertible Common Securities voting separately as a
class may direct the time, method, and place of
conducting any proceeding for any remedy available to the
Property Trustee, or exercising any trust or power
conferred upon the Property Trustee under the
Declaration, including (i) for so long as the Property
Trustee shall hold the Partnership Preferred Securities,
(A) direct the time, method, place of conducting any
proceeding for any remedy available to the Indenture
Trustee, or exercising any trust or power conferred on
the Indenture Trustee with respect to the Convertible
Debentures, (B) causing the Special Representative to
waive any past default and its consequences that are
waivable under Section 5.13 of the Indenture, or (C)
causing the Special Representative to exercise any right
to rescind or annul a declaration that the principal
amount of all the Convertible Debentures shall be due and
payable; and (ii) if the Property Trustee holds
Convertible Debentures in the event that the Citizens
Capital is liquidated and such Convertible Debentures are
distributed in exchange for the Partnership Preferred
Securities (A) directing the time, method and place of
exercising any trust or power conferred upon the
Indenture Trustee with respect to the Convertible
Debentures, (B) waiving any past default that is waivable
under Section 5.13 of the Indenture, or (C) exercising
any right to rescind or annul any declaration that the
principal amount of all the Convertible Debentures shall
be due and payable; provided, however, that where a
consent or action under the Limited Partnership Agreement
or Indenture, as the case may be, would require the
consent or act of the Holders of greater than a majority
in liquidation amount of Partnership Preferred Securities
or the Holders of greater than a majority in principal
amount of the Convertible Debentures, as the case may be,
affected thereby (a "Super Majority"), the Property
Trustee may only give such consent or take such action at
the direction of the Holders of at least the proportion
in liquidation amount of the Convertible Common
Securities which the relevant Super Majority represents
of the aggregate liquidation amount of the Partnership
Preferred Securities or the aggregate principal amount of
the Convertible Debentures, as the case may be,
outstanding. Pursuant to this Section 7(c) to Annex I,
the Property Trustee shall not revoke any action
previously authorized or approved by a vote of the
Holders of the Convertible Preferred Securities. Other
than with respect to directing the time, method and place
of conducting any remedy available to the Property
Trustee or the Special Representative as set forth above,
the Property Trustee shall not take any action in
accordance with the directions of the Holders of the
Convertible Common Securities under this paragraph unless
the Property Trustee has obtained an opinion of tax
counsel to the effect that for United States federal
income tax purposes the Trust will continue to be
classified as a greater trust after consummation of such
action. If the Property Trustee fails to enforce its
rights under the Declaration, any Holder of Convertible
Common Securities may, after a period of 30 days has
elapsed from such Holder's written request to the
Property Trustee to enforce such rights, institute a
legal proceeding directly against any Person to enforce
the Property Trustee's rights under the Declaration,
without first instituting a legal proceeding against the
Property Trustee or any other Person.
Any approval or direction of Holders of
Convertible Common Securities may be given at a separate
meeting of Holders of Convertible Common Securities
convened for such purpose, at a meeting of all of the
Holders of Securities in the Trust or pursuant to written
consent. The Regular Trustees will cause a notice of any
meeting at which Holders of Convertible Common Securities
are entitled to vote, or of any matter upon which action
by written consent of such Holders is to be taken, to be
mailed to each Holder of record of Convertible Common
Securities. Each such notice will include a statement
setting forth (i) the date of such meeting or the date by
which such action is to be taken, (ii) a description of
any resolution proposed for adoption at such meeting on
which such Holders are entitled to vote or of such matter
upon which written consent is sought and (iii)
instructions for the delivery of proxies or consents.
No vote or consent of the Holders of the
Convertible Common Securities will be required for the
Trust to redeem and cancel Convertible Common Securities
or to distribute Partnership Preferred Securities or
Convertible Debentures, as the case may be, in accordance
with the Declaration and the terms of the Securities.
8. DISTRIBUTION ELECTION.
(a) Declaration by Company. For so long as
Citizens Capital shall hold the Convertible Debentures,
the Company shall have by the Distribution Declaration
Date applicable to each Distribution Payment Date
declared the form of payment in which it intends to pay
the interest on the Convertible Debentures. Such
Distribution Declaration Notice shall determine the form
of payment in which the Trust shall pay the
Distributions, subject to the terms and conditions of
this Section 8 of Annex I. If the Company shall have
declared to pay interest on the Convertible Debentures in
the form of cash, by the Distribution Declaration Date in
respect of a Distribution Payment Date, the Holders of
the Securities will receive Distributions only in the
form of cash, notwithstanding any election by a Holder of
the Securities to the contrary. If the Company shall
have by the Distribution Declaration Date declared to pay
interest on the Convertible Debentures in the form of
shares of Common Stock, the Holders of the Securities may
receive Distributions in the form of cash or shares of
Common Stock subject to the provision of this Section 8
of Annex I. If the Company fails to make a timely
declaration, the Company shall be deemed to have elected
to pay interest in the form of shares of Common Stock.
(b) Election by Holder. For so long as
Citizens Capital shall hold the Convertible Debentures,
Distributions on the Securities may be payable in cash or
shares of Common Stock as set forth in this Section 8 of
Annex I. Thereafter, Distributions shall be payable only
in the form of cash. Subject to Sections 8(a), 8(d) and
8(e) of this Annex I, each Holder may elect during the
annual Election Period to receive Distributions for the
next four Distribution Payment Dates in either (a) an
Equivalent Value of shares of Common Stock (a "Stock
Distribution Election") or (b) cash (a "Cash Distribution
Election"), in each case by submitting to the Election
Agent a notice of distribution election substantially in
the form of Exhibit B (a "Notice of Distribution
Election"). The Election Agent shall thereupon inform
all such parties (e.g., the Clearing Agency, any Clearing
Agency Participants, any nominee of the Clearing Agency)
as are necessary to ensure that the Paying Agent is
properly informed of such Holder's election with respect
to a pro rata share of the Partnership Preferred
Securities. The Notice of Distribution Election shall
specify the form of payment in which the Holder elects to
receive Distributions. If a Holder fails to submit a
Notice of Distribution Election during the Election
Period, the Holder shall be deemed to have elected to
receive Distributions in the form of cash. If a Holder
transfers any or all Securities in such Holder's
possession, the subsequent Holder(s) of such transferred
Securities shall be deemed to have made a Cash
Distribution Election for the remaining Distribution
Payment Dates prior to the next Election Period for which
such subsequent Holder(s) appear as the Holder(s) of
record.
(c) Common Stock Election by Company. If the
Company has (or be deemed to have) elected to pay
interest on the Convertible Debentures in the form of
shares of Common Stock, the Trust shall pay Distributions
on Securities in accordance with this Section 8(c) of
Annex I. No fractional shares of Common Stock will be
issued as a result of the Company's election to pay
interest on the Convertible Debentures in Common Stock,
but in lieu thereof, such fractional interest will be
paid in cash. No fractional shares of Common Stock will
be issued as a result of the Holder's election to receive
payments of Distribution in the form of Common Stock, but
in lieu thereof such fractional interests will be paid
for in cash to the Security Holders.
(i) To the extent Holders have elected to
receive payment of Distributions in shares of Common
Stock, subject to Section 8(d) of this Annex I, the
Paying Agent shall distribute an Equivalent Value of
shares of Common Stock equal to the amount of such
Distribution, together with the cash payment, if any, in
lieu of any fractional share of Common Stock to such
Security Holders at the address specified on the register
of the Trust.
(ii) To the extent Holders have elected to
receive payment of Distributions in cash the Paying Agent
shall pay Distributions in cash.
(d) Company Cash Option. Notwithstanding the
foregoing paragraphs of this Section 8 of Annex I, the
Debenture Issuer has the right (the "Company Cash
Option") on and after the Distribution Declaration Date
but before the Cash Interest Payment Date (as such term
is defined in the Indenture) to cause all Holders of
Securities to receive payment of Distributions in the
form of cash. The Debenture Issuer may exercise the
Company Cash Option, if the Debenture Issuer shall have
provided written notice to the Trust, the Partnership,
the Paying Agent and the holders of the Securities (a
"Cash Payment Notice").
(e) Call Option on Common Stock. On or after
the Share Transfer and Valuation Date, the Company may
cause some or all the holders of Securities to receive
Distributions in the form of cash by purchasing from
Citizens Capital shares of Common Stock distributed by
the Company as interest payment on the Convertible
Debentures, that have not yet been sold for cash or
distributed to the holders of the Partnership Preferred
Securities at a price equal to the Equivalent Value (the
"Company Call Option"). The Company may exercise the
Company Call Option, if the Company shall have provided a
Cash Payment Notice.
9. AMENDMENTS TO DECLARATION AND LIMITED
PARTNERSHIP AGREEMENT.
(a) In addition to any requirements under
Section 12.1 of the Declaration, if any proposed
amendment to the Declaration provides for, or the Regular
Trustees otherwise propose to effect, (i) any action that
would adversely affect the powers, preferences or special
rights of the Securities, whether by way of amendment to
the Declaration or otherwise, or (ii) the dissolution,
winding-up or termination of the Trust, other than as
described in Section 8.1 of the Declaration, then the
Holders of outstanding Securities as a class will be
entitled to vote on such amendment or proposal (but not
on any other amendment or proposal) and such amendment or
proposal shall not be effective except with the approval
of the Holders of at least 66-2/3% in liquidation amount
of the Securities, voting together as a single class;
provided, however, if any amendment or proposal referred
to in clause (i) above would adversely affect only the
Convertible Preferred Securities or the Convertible
Common Securities, then only the affected class will be
entitled to vote on such amendment or proposal and such
amendment or proposal shall not be effective except with
the approval of 66-2/3% in liquidation amount of such
class of Securities.
(b) In the event the consent of the
Property Trustee, as the holder of the Partnership
Preferred Securities or, in the event Citizens Capital is
dissolved and the Convertible Debentures are issued to
the holders of the Partnership Preferred Securities, the
Convertible Debentures, is required under the Limited
Partnership Agreement or the Indenture, as the case may
be, with respect to any amendment, modification or
termination of the Limited Partnership Agreement or the
Indenture, as the case may be, or the Partnership
Preferred Securities or the Convertible Debentures, as
the case may be, the Property Trustee shall request the
direction of the Holders of the Securities with respect
to such amendment, modification or termination and shall
vote with respect to such amendment, modification or
termination as directed by a Majority in liquidation
amount of the Securities voting together as a single
class; provided, however, that where a consent under the
Limited Partnership Agreement or the Indenture, as the
case may be, would require the consent of the holders of
greater than a majority in aggregate liquidation amount
of the Partnership Preferred Securities or the
Convertible Debentures, as the case may be (a "Super
Majority"), the Property Trustee may only give such
consent at the direction of the Holders of at least the
proportion in liquidation amount of the Securities which
the relevant Super Majority represents of the aggregate
liquidation amount of the Partnership Preferred
Securities or aggregate principal amount of the
Convertible Debentures, as the case may be, outstanding;
provided, further, that the Property Trustee shall not
take any action in accordance with the directions of the
Holders of the Securities under this Section 9(b) of
Annex I unless the Property Trustee has obtained an
opinion of tax counsel to the effect that for United
States federal income tax purposes the Trust will
continue to be classified as a grantor trust after
consummation of such action.
10. PRO RATA.
A reference in these terms of the Securities to
any payment, distribution or treatment as being "Pro
Rata" shall mean pro rata to each Holder of Securities
according to the aggregate liquidation amount of the
Securities held by the relevant Holder in relation to the
aggregate liquidation amount of all Securities
outstanding unless, in relation to a payment, [an Event
of Default under the Limited Partnership Agreement] has
occurred and is continuing, in which case any funds
available to make such payment shall be paid first to
each Holder of the Convertible Preferred Securities pro
rata according to the aggregate liquidation amount of
Convertible Preferred Securities held by the relevant
Holder relative to the aggregate liquidation amount of
all Convertible Preferred Securities outstanding, and
only after satisfaction of all amounts owed to the
Holders of the Convertible Preferred Securities, to each
Holder of Convertible Common Securities pro rata
according to the aggregate liquidation amount of
Convertible Common Securities held by the relevant Holder
relative to the aggregate liquidation amount of all
Convertible Common Securities outstanding.
11. RANKING.
The Convertible Preferred Securities rank pari
passu and payment thereon shall be made Pro Rata with the
Convertible Common Securities except that when an Event
of Default occurs and is continuing under the Limited
Partnership Agreement in respect of the Partnership
Preferred Securities held by the Property Trustee, the
rights of Holders of the Convertible Common Securities to
payment in respect of Distributions and payments upon
liquidation, redemption and otherwise are subordinated to
the rights to payment of the Holders of the Convertible
Preferred Securities.
12. LISTING.
The Regular Trustees shall use their best
efforts to cause the Convertible Preferred Securities to
be listed for quotation on the New York Stock Exchange.
13. ACCEPTANCE OF GUARANTEE AGREEMENTS,
LIMITED PARTNERSHIP AGREEMENT AND
INDENTURE.
Each Holder of Convertible Preferred Securities
and Convertible Common Securities, by the acceptance
thereof, agrees to the provisions of the Convertible
Preferred Securities Guarantee Agreement and the
Convertible Common Securities Guarantee Agreement,
respectively, including the subordination provisions
therein and to the provisions of the Limited Partnership
Agreement and the Indenture.
14. NO PREEMPTIVE RIGHTS.
The Holders of the Securities shall have no
preemptive rights to subscribe for any additional
Securities.
15. MISCELLANEOUS.
These terms constitute a part of the
Declaration.
The Sponsor will provide a copy of the
Declaration, the Convertible Preferred Securities
Guarantee Agreement, the Limited Partnership Agreement
and the Indenture to a Holder without charge on written
request to the Trust at its principal place of business.
EXHIBIT A-1
FORM OF PREFERRED SECURITY CERTIFICATE
[FORM OF FACE OF SECURITY]
[IF THE CONVERTIBLE PREFERRED SECURITY IS TO BE A
GLOBAL CERTIFICATE INSERT - This Convertible Preferred Security
is a Global Certificate within the meaning of the Declaration
hereinafter referred to and is registered in the name of The
Depository Trust Company (the "Depositary") or a nominee of the
Depositary. This Convertible Preferred Security is exchangeable
for Convertible Preferred Securities registered in the name of a
person other than the Depositary or its nominee only in the
limited circumstances described in the Declaration and no
transfer of this Convertible Preferred Security (other than a
transfer of this Convertible Preferred Security as a whole by the
Depositary to a nominee of the Depositary or by a nominee of the
Depositary to the Depositary or another nominee of the
Depositary) may be registered except in limited circumstances.
Unless this Convertible Preferred Security is presented
by an authorized representative of The Depository Trust Company
(55 Water Street, New York) to the Trust or its agent for
registration of transfer, exchange or payment, and any
Convertible Preferred Security issued is registered in the name
of Cede & Co. or such other name as requested by an authorized
representative of The Depository Trust Company and any payment
hereon is made to Cede & Co., ANY TRANSFER, PLEDGE OR OTHER USE
HEREOF FOR VALUE OR OTHERWISE BY A PERSON IS WRONGFUL since the
registered owner hereof, Cede & Co., has an interest herein.]
Certificate Number Number of Convertible Preferred Securities
CUSIP NO. [ ]
Certificate Evidencing Convertible Preferred Securities
of
Citizens Utilities Trust
____% Citizens Utilities Convertible
Preferred Securities
(liquidation amount $50 per Convertible Preferred Security)
Citizens Utilities Trust, a statutory business trust
formed under the laws of the State of Delaware (the "Trust"),
hereby certifies that (the "Holder") is the registered owner of
preferred securities of the Trust representing undivided
beneficial interests in the assets of the Trust designated the
_____% Citizens Utilities Convertible Preferred Securities
(liquidation amount $50 per Convertible Preferred Security) (the
"Convertible Preferred Securities"). The Convertible Preferred
Securities are transferable on the books and records of the
Trust, in person or by a duly authorized attorney, upon surrender
of this certificate duly endorsed and in proper form for
transfer. The designation, rights, privileges, restrictions,
preferences and other terms and provisions of the Convertible
Preferred Securities represented hereby are issued and shall in
all respects be subject to the provisions of the Amended and
Restated Declaration of Trust of the Trust dated as of _______,
1995, as the same may be amended from time to time (the
"Declaration"), including the designation of the terms of the
Convertible Preferred Securities as set forth in Annex I to the
Declaration. Capitalized terms used herein but not defined shall
have the meaning given them in the Declaration. The Holder is
entitled to the benefits of the Convertible Preferred Securities
Guarantee Agreement to the extent provided therein. The Sponsor
will provide a copy of the Declaration, the Convertible Preferred
Securities Guarantee Agreement, the Limited Partnership Agreement
and the Indenture to a Holder without charge upon written request
to the Trust at its principal place of business.
Upon receipt of this certificate, the Holder is bound
by the Declaration and is entitled to the benefits thereunder.
By acceptance, the Holder agrees to treat, for United
States federal income tax purposes, the Convertible Debentures as
indebtedness and the Convertible Preferred Securities as evidence
of indirect beneficial ownership in the Partnership Preferred
Securities.
IN WITNESS WHEREOF, the Trust has executed this
certificate this day of , 199 .
CITIZENS UTILITIES TRUST
By:
Name:
Title:
[FORM OF REVERSE OF SECURITY]
Distributions payable on each Convertible Preferred
Security will be fixed at a rate per annum of % (the "Rate")
of the stated liquidation preference of $50 per Convertible
Preferred Security, such rate being the rate of distribution
payable on the Partnership Preferred Securities to be held by the
Property Trustee. Distributions in arrears for more than one
quarter will bear interest thereon compounded quarterly at the
Rate (to the extent permitted by applicable law). The term
"Distributions" as used herein includes payment in the form of
cash or shares of common stock, par value $.25 per share, of
Citizens Utilities Company ("Common Stock"). A Distribution is
payable only to the extent that payments are made in respect of
the Partnership Preferred Securities or Convertible Debentures,
as the case may be, held by the Property Trustee and to the
extent the Property Trustee has funds available therefor. The
amount of Distributions payable for any period will be computed
for any full quarterly Distribution period on the basis of a 360-
day year of twelve 30-day months, and for any period shorter than
a full quarterly Distribution period for which Distributions are
computed, Distributions will be computed on the basis of the
actual number of days elapsed per 30-day month.
Except as otherwise described below, distributions on
the Convertible Preferred Securities will be cumulative, will
accrue from the date of original issuance and will be payable
quarterly in arrears, on , ,
and of each year, commencing on , 1996,
to Holders of record on the relevant Record Dates (as such term
is defined in the Declaration), which payment dates shall
correspond to the distribution payment dates on the Partnership
Preferred Securities or, in the event Citizens Capital is
dissolved and the Convertible Debentures are distributed to the
holders of the Convertible Preferred Securities, on the
Convertible Debentures. Citizens Capital may be directed by the
Debenture Issuer, acting pursuant to the Indenture, to defer
distribution payments by extending the distribution payment
period on the Partnership Preferred Securities for a period not
exceeding 20 consecutive quarters (each an "Extension Period")
and, as a consequence of such deferral, Distributions will also
be deferred. In the event Citizens Capital has been dissolved
and the Convertible Debentures are held by the Trust, the Trust
may be directed by the Debenture Issuer, acting pursuant to the
Indenture, to defer distribution payments by extending the
Distributions for a period not exceeding an Extension Period.
Despite such deferral, quarterly Distributions will continue to
accrue with interest thereon (to the extent permitted by
applicable law) at the Rate compounded quarterly during any such
Extension Period. Prior to the termination of any such Extension
Period, Citizens Capital or the Trust, as the case may be, may be
required to further extend such Extension Period; provided that
such Extension Period together with all such previous and further
extensions thereof may not exceed 20 consecutive quarters.
Payments of accrued Distributions will be payable to Holders as
they appear on the books and records of the Trust on the first
record date after the end of the Extension Period. Upon the
termination of any Extension Period and the payment of all
amounts then due, Citizens Capital or the Trust, as the case may
be, may commence a new Extension Period, subject to the above
requirements.
The Convertible Preferred Securities shall be
redeemable as provided in the Declaration.
The Convertible Preferred Securities shall be
convertible into shares of Series A of Common Stock ("Common
Stock"), through (i) the exchange of Convertible Preferred
Securities for a portion of the Partnership Preferred Securities
or Convertible Debentures, as the case may be, held by the
Property Trustee, (ii), in the event Partnership Preferred
Securities are held by the Trust, the immediate exchange of
Partnership Preferred Securities for a portion of the Convertible
Debentures held by Citizens Capital or the Trust, as the case may
be, and (iii) the immediate conversion of such Convertible
Debentures into shares of Common Stock, in the manner and
according to the terms set forth in the Declaration.
CONVERSION REQUEST
To: Chemical Bank,
as Property Trustee of
Citizens Utilities Trust
The undersigned owner of these Convertible Preferred
Securities hereby irrevocably exercises the option to convert
these Convertible Preferred Securities, or the portion below
designated, into Series A Common Stock of CITIZENS UTILITIES
COMPANY (the "Common Stock") in accordance with the terms of the
Amended and Restated Declaration of Trust (the "Declaration"),
dated as of _________ ___, 1995, by the Trustees named therein,
Citizens Utilities Company, as Sponsor, and by the Holders (as
defined therein). Pursuant to the aforementioned exercise of the
option to convert these Convertible Preferred Securities, the
undersigned hereby directs the Conversion Agent (as that term is
defined in the Declaration) to (i) exchange such Convertible
Preferred Securities for a portion of the Partnership Preferred
Securities (as that term is defined in the Declaration) or
Convertible Debentures (as that term is defined in the
Declaration), as the case may be, held by the Trust (at the rate
of exchange specified in the terms of the Convertible Preferred
Securities set forth as Annex I to the Declaration), (ii), in the
event Partnership Preferred Securities are held by the Trust,
immediately exchange such Partnership Preferred Securities for a
portion of the Convertible Debentures (as that term is defined in
the Declaration) held by Citizens Capital (at the rate of
exchange specified in the terms of the Convertible Preferred
Securities set forth as Annex I to the Declaration), and (iii)
immediately convert such Convertible Debentures on behalf of the
undersigned, into Common Stock (at the conversion rate specified
in the terms of the Convertible Preferred Securities set forth as
Annex I to the Declaration).
The undersigned does also hereby direct the Conversion
Agent that the shares issuable and deliverable upon conversion,
together with any check in payment for fractional shares, be
issued in the name of and delivered to the undersigned, unless a
different name has been indicated in the assignment below. If
shares are to be issued in the name of a person other than the
undersigned, the undersigned will pay all transfer taxes payable
with respect thereto. This Conversion Request and any action
taken hereunder shall be governed by the terms of the Declaration
and the terms of the Convertible Preferred Securities set forth in
Annex I thereto.
Date: ____________, ____
in whole __ in part
Number of Convertible Preferred
Securities to be converted:
___________________
If a name or names other than the
undersigned, please indicate in the
spaces below the name or names in
which the shares of Common Stock
are to be issued, along with the
address or addresses of such person
or persons
Signature (for conversion only)
Please Print or Typewrite Name and
Address, Including Zip Code, and
Social Security or Other
Identifying Number
_____________________
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned assigns and transfers this
Preferred Security Certificate to:
_________________________________________________________________
_________________________________________________________________
_________________________________________________________________
(Insert assignee's social security or tax identification number)
_________________________________________________________________
_________________________________________________________________
_________________________________________________________________
_________________________________________________________________
(Insert address and zip code of assignee)
and irrevocably appoints
_________________________________________________________________
_________________________________________________________________
_________________________________________________________________
agent to transfer this Preferred Security Certificate on the
books of the Trust. The agent may substitute another to act for
him or her.
Date: _______________________
Signature: __________________
(Sign exactly as your name appears on the other side of this
Preferred Security Certificate)
EXHIBIT A-2
FORM OF COMMON SECURITY CERTIFICATE
[FORM OF FACE OF SECURITY]
Certificate Number Number of Convertible Common Securities
Certificate Evidencing Convertible Common Securities
of
Citizens Utilities Trust
______% Citizens Utilities Convertible Common Securities
(liquidation amount $50 per Convertible Common Security)
Citizens Utilities Trust, a statutory business trust
formed under the laws of the State of Delaware (the "Trust"),
hereby certifies that (the "Holder") is the registered owner of
common securities of the Trust representing undivided beneficial
interests in the assets of the Trust designated the ______%
Citizens Utilities Convertible Common Securities (liquidation
amount $50 per Convertible Common Security) (the "Convertible
Common Securities"). The Convertible Common Securities are
transferable on the books and records of the Trust, in person or
by a duly authorized attorney, upon surrender of this certificate
duly endorsed and in proper form for transfer. The designation,
rights, privileges, restrictions, preferences and other terms and
provisions of the Convertible Common Securities represented
hereby are issued and shall in all respects be subject to the
provisions of the Amended and Restated Declaration of Trust of
the Trust dated as of _______, 1995, as the same may be amended
from time to time (the "Declaration"), including the designation
of the terms of the Convertible Common Securities as set forth in
Annex I to the Declaration. Capitalized terms used herein but
not defined shall have the meaning given them in the Declaration.
The Holder is entitled to the benefits of the Convertible Common
Securities Guarantee Agreement to the extent provided therein.
The Sponsor will provide a copy of the Declaration, the
Convertible Common Securities Guarantee Agreement, the Limited
Partnership Agreement and the Indenture to a Holder without
charge upon written request to the Sponsor at its principal place
of business.
Upon receipt of this certificate, the Sponsor is bound
by the Declaration and is entitled to the benefits thereunder.
By acceptance, the Holder agrees to treat for United
States federal income tax purposes the Convertible Debentures as
indebtedness and the Convertible Common Securities as evidence of
indirect beneficial ownership in the [Limited Partnership
Securities].
IN WITNESS WHEREOF, the Trust has executed this certificate
this day of , 199 .
CITIZENS UTILITIES TRUST
By:
Name:
Title:
[FORM OF REVERSE OF SECURITY]
Distributions payable on each Convertible Common
Security will be fixed at a rate per annum of % (the "Rate")
of the stated liquidation preference of $50 per Convertible
Common Security, such rate being the rate of distribution payable
on the Partnership Common Securities to be held by the Property
Trustee. Distributions in arrears for more than one quarter will
bear interest thereon compounded quarterly at the Rate (to the
extent permitted by applicable law). The term "Distributions" as
used herein includes payment in the form of cash or shares of
common stock, par value $.25 per share, of Citizens Utilities
Company ("Common Stock"). A Distribution is payable only to the
extent that payments are made in respect of the Partnership
Preferred Securities or the Convertible Debentures, as the case
may be, held by the Property Trustee and to the extent the
Property Trustee has funds available therefor. The amount of
Distributions payable for any period will be computed for any
full quarterly Distribution period on the basis of a 360-day year
of twelve 30-day months, and for any period shorter than a full
quarterly Distribution period for which Distributions are
computed, Distributions will be computed on the basis of the
actual number of days elapsed per 30-day month.
Except as otherwise described below, distributions on
the Convertible Common Securities will be cumulative, will accrue
from the date of original issuance and will be payable quarterly
in arrears, on , , and
of each year, commencing on , 1996, to Holders
of record on the relevant Record Dates (as such term is defined
in the Declaration), which payment dates shall correspond to the
distribution payment dates on the Partnership Preferred
Securities or, in the event Citizens Capital is dissolved and the
Convertible Debentures are distributed to the holders of the
Convertible Common Securities, on the Convertible Debentures.
Citizens Capital may be directed by the Debenture Issuer, acting
pursuant to the Indenture, to defer distribution payments by
extending the distribution payment period on the Partnership
Preferred Securities for a period not exceeding 20 consecutive
quarters (each an "Extension Period") and, as a consequence of
such deferral, Distributions will also be deferred. In the event
Citizens Capital has been dissolved and the Convertible
Debentures are held by the Trust, the Trust may be directed by
the Debenture Issuer, acting pursuant to the Indenture, to defer
distribution payments by extending the Distributions for a period
not exceeding an Extension Period. Despite such deferral,
quarterly Distributions will continue to accrue with interest
thereon (to the extent permitted by applicable law) at the Rate
compounded quarterly during any such Extension Period. Prior to
the termination of any such Extension Period, Citizens Capital or
the Trust, as the case may be, may be required to further extend
such Extension Period; provided that such Extension Period
together with all such previous and further extensions thereof
may not exceed 20 consecutive quarters. Payments of accrued
Distributions will be payable to Holders as they appear on the
books and records of the Trust on the first record date after the
end of the Extension Period. Upon the termination of any
Extension Period and the payment of all amounts then due,
Citizens Capital or the Trust, as the case may be, may commence a
new Extension Period, subject to the above requirements.
The Convertible Common Securities shall be redeemable
as provided in the Declaration.
The Convertible Common Securities shall be convertible
into shares of Series A of Common Stock ("Common Stock"), through
(i) the exchange of Convertible Common Securities for a portion
of the Partnership Preferred Securities or Convertible
Debentures, as the case may be, held by the Property Trustee,
(ii), in the event Partnership Preferred Securities are held by
the Trust, the immediate exchange of Partnership Preferred
Securities for a portion of the Convertible Debentures held by
Citizens Capital or the Trust, as the case may be, and (iii) the
immediate conversion of such Convertible Debentures into shares
of Common Stock, in the manner and according to the terms set
forth in the Declaration.
CONVERSION REQUEST
To: Chemical Bank,
as Property Trustee of
Citizens Utilities Trust
The undersigned owner of these Convertible Common
Securities hereby irrevocably exercises the option to convert
these Convertible Common Securities, or the portion below
designated, into Series A Common Stock of CITIZENS UTILITIES
COMPANY (the "Common Stock") in accordance with the terms of the
Amended and Restated Declaration of Trust (the "Declaration"),
dated as of _________ ___, 1995, by the Trustees named therein,
Citizens Utilities Company, as Sponsor, and by the Holders (as
defined therein). Pursuant to the aforementioned exercise of the
option to convert these Convertible Common Securities, the
undersigned hereby directs the Conversion Agent (as that term is
defined in the Declaration) to (i) exchange such Convertible
Common Securities for a portion of the Partnership Preferred
Securities (as that term is defined in the Declaration) or
Convertible Debentures (as that term is defined in the
Declaration) held by the Trust (at the rate of exchange specified
in the terms of the Convertible Common Securities set forth as
Annex I to the Declaration), (ii), in the event Partnership
Preferred Securities are held by the Trust, immediately exchange
such Partnership Preferred Securities for a portion of the
Convertible Debentures (as that term is defined in the
Declaration) held by Citizens Capital (at the rate of exchange
specified in the terms of the Convertible Common Securities set
forth as Annex I to the Declaration) and (iii) immediately
convert such Convertible Debentures on behalf of the undersigned,
into Common Stock (at the conversion rate specified in the terms
of the Convertible Common Securities set forth as Annex I to the
Declaration).
The undersigned does also hereby direct the Conversion
Agent that the shares issuable and deliverable upon conversion,
together with any check in payment for fractional shares, be
issued in the name of and delivered to the undersigned, unless a
different name has been indicated in the assignment below. If
shares are to be issued in the name of a person other than the
undersigned, the undersigned will pay all transfer taxes payable
with respect thereto. This Conversion Request and any action taken
hereunder shall be governed by the terms of the Declaration and the
terms of the Convertible Common Securities set forth in Annex I
thereto.
Date: ____________, ____
in whole __ in part
Number of Convertible Common
Securities to be converted:
___________________
If a name or names other than the
undersigned, please indicate in the
spaces below the name or names in
which the shares of Common Stock
are to be issued, along with the
address or addresses of such person
or persons
Signature (for conversion only)
Please Print or Typewrite Name and
Address, Including Zip Code, and
Social Security or Other
Identifying Number
_____________________
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned assigns and transfers this
Common Security Certificate to:
_________________________________________________________________
_________________________________________________________________
_________________________________________________________________
(Insert assignee's social security or tax identification number)
_________________________________________________________________
_________________________________________________________________
_________________________________________________________________
_________________________________________________________________
(Insert address and zip code of assignee)
and irrevocably appoints ________________________________________
_________________________________________________________________
_________________________________________________________________
agent to transfer this Common Security Certificate on the books
of the Trust. The agent may substitute another to act for him or
her.
Date: _______________________
Signature: __________________
(Sign exactly as your name appears on the other side of this
Common Security Certificate)
EXHIBIT B
FORM OF NOTICE OF DISTRIBUTION ELECTION
TO: _____________________,
as Election Agent
of Citizens Utility Company
The undersigned owner of ____% Citizens Utilities
Convertible Preferred Securities (liquidation amount $50 per
Convertible Preferred Security) (the "Convertible Preferred
Securities"), issued pursuant to the Amended and Restated
Declaration of Trust (the "Declaration"), dated as of __________
___, 1995, by the Trustees named therein, Citizens Utilities
Company, as Sponsor, and by the Holders (as defined therein),
hereby irrevocably elects to receive any and all Distributions
(as such term is defined in the Declaration) due and payable on
the next four Distribution Payment Dates, as set forth in the
terms of the Convertible Preferred Securities set forth in Annex
I to the Declaration, immediately following the Election Period
during which this Notice of Distribution Election is being
submitted.
I, ______________________, as Holder of [Number of
Convertible Preferred Securities held] Convertible Preferred
Securities, elect to receive any and all Distributions due and
payable on the next four Distribution Payment Dates in the
following form:
(A) ( ) Cash; or
(B) ( ) An Equivalent Value (as such term is defined in
the Declaration) of shares of common stock series
A, par value $.25 per share, of Citizens Utilities
Company ("Common Stock").
The undersigned does also hereby direct the addressee
that any and all Distributions in the form of Common Stock made
pursuant to this Notice of Distribution Election be delivered to
and issued in the name of the undersigned, unless a different
name has been indicated in the assignment below. If such shares
are to be issued in the name of a person other than the
undersigned, the undersigned will pay all transfer taxes payable
with respect thereto.
This Notice of Distribution Election and any action
taken hereunder shall be governed by the terms of the Declaration
and the terms of the Convertible Preferred Securities set forth
in Annex I thereto.
Date: ____________, ____
(Applicable only if box (B) has
been checked.) If a name or names
other than the undersigned, please
indicate in the spaces below the
name or names in which shares of
Common Stock are to be issued,
along with the address or addresses
of such person or persons
Signature
Please Print or Typewrite Name and
Address, Including Zip Code, and
Social Security or Other
Identifying Number