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 one hundred and seventy
five million Dollars ($175,000,000), 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 twenty-six million,
two hundred and fifty thousand dollars $26,250,000 solely
to cover over-allotments as provided for in the
Underwriting Agreement (the "Additional Convertible
Preferred Securities"), and a liquidation preference 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 five million, four hundred and
thirteen thousand Dollars ($5,413,000) plus up to an
additional Convertible Common Securities to the Trust
with an aggregate liquidation amount with respect to the
assets of the Trust of eight hundred and twelve thousand
Dollars ($812,000) 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), and
such compounded interest shall be paid as Compounded
Distributions (as defined hereinafter). 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"). If the Debenture Issuer
elects to defer the payment of interest on the
Convertible Debentures (each, a "Deferral"), as a
consequence of such Deferral, 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 Deferral, and shall be paid as compounded
distributions (the "Compounded Distributions") to the
Holders. Prior to the termination of any such Deferral,
Citizens Capital may, under the Limited Partnership
Agreement, be required to further extend such Deferral as
a result of further Deferrals of interest payments on the
Convertible Debentures, and such Deferral shall cause
Distributions on the Securities to be further deferred;
provided, that such Deferral together with all such
previous and further Deferrals may not exceed 20
consecutive quarters nor extend the maturity date of the
Securities. Payments of accrued Distributions, including
Compounded Distributions, which have been deferred
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 Deferral. Upon
the termination of any Deferral and the payment of all
amounts then due, the Debenture Issuer may, under the
Indenture, commence a new Deferral, subject to the above
requirements. Such new Deferral by the Debenture Issuer
shall cause Citizens Capital to defer distributions on
the Partnership Preferred Securities, which in turn shall
cause the Trust to defer Distributions.
(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.
33-63615-01, 33-63615-02, and 33-63615-03). 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 (as defined in the Indenture) in
accordance with Section 3.7 of the Base Indenture or
other specified date determined in accordance with
Section 3.7 of the Base Indenture. If any date on which
Distributions are payable on the Securities is not a
Business Day, then payment of the Distribution payable on
such date will be made on the next succeeding day that is
a Business Day (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, accrued, deferred or
otherwise 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 Distribution 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 and such Distributions on the
Convertible Preferred Securities shall, pursuant to
Section 8(b) hereof, be payable only in cash.
3. LIQUIDATION DISTRIBUTION UPON DISSOLUTION.
In the event of any voluntary or involuntary,
liquidation, dissolution, winding-up or termination of
the Trust, the Holders of the Securities on the date of
the liquidation 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 or deferred 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 liquidation, 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 or deferred and unpaid
distributions (or interest) in an amount equal to the
accrued or deferred 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 liquidation, dissolution, winding-
up or termination of the Trust, 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, dissolution, winding
up or termination 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
payment or 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 principal amount of the
Convertible Debentures so repaid or redeemed, at a
redemption price of $50 per Security, payable in cash,
plus an amount equal to accrued or deferred and unpaid
Distributions thereon at the date of the redemption,
payable in cash or Common Stock (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) upon 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 or deferred
and unpaid distributions equal to accrued or
deferred 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) if a Partnership Event shall also occur
and be continuing and upon 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 upon 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 an aggregate stated principal amount equal to
the aggregate stated liquidation amount of, with an
interest payment rate identical to the Rate of, and
accrued or deferred and unpaid interest equal to
accrued or deferred 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;
provided, that, in the event the Company cannot receive a
No Recognition Opinion with respect to the Partnership
Preferred Securities or the Convertible Debentures, the
Regular Trustees may dissolve the Trust and, after
satisfaction of creditors, at the direction of the
Company, as Debenture Issuer, and upon 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, further, however,
that, the Trust has a Ministerial Action Obligation.
If, at any time, a Partnership Event shall
occur and be continuing, the General Partner may dissolve
Citizens Capital in accordance with the Limited
Partnership Agreement, and 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; provided, however, that in the event
the Company cannot receive such No Recognition Opinion,
at the direction of the Company, as Debenture Issuer, and
upon 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,
further, that, Citizens Capital has a Ministerial Action
Obligation.
If, at any time, a Company Event shall occur
and be continuing, the Company, as Debenture Issuer, may
cause the redemption, in whole or in part, of the
Securities by redeeming, in whole or in part, the
Convertible Debentures in the manner set forth in the
Indenture, 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, the Debenture Issuer has a
Ministerial Action Obligation.
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) if, at the
option of the General Partner, Citizens Capital is
dissolved upon the occurrence of a Rating Agency Event as
set forth in the Limited Partnership Agreement, 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 are still 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
Common Security Certificate and any Preferred Security
Certificate 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 Rate of, and accrued or deferred and unpaid
distributions equal to the accrued or deferred and unpaid
Distributions on such 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 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 or
deferred and unpaid Distributions have been paid in full
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 redeemed as described in Section
4(e)(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, have undertaken, under the Limited
Partnership Agreement and the Indenture, use their
respective 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, as the case may be.
(e) Redemption Procedures. (i) Notice of any
redemption of Securities (a "Redemption/Distribution
Notice") will be given by the Trust by mail to each
Holder of Securities to be redeemed not fewer than 30 nor
more than 60 days before the date fixed for redemption
which will be the date fixed for redemption of the
Partnership Preferred Securities which in turn will be
the date fixed for redemption of the Convertible
Debentures. For purposes of the calculation of the date
of redemption 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 the Trust gives a
Redemption/Distribution Notice (which notice will be
irrevocable) in connection with a redemption, then (A)
while the Convertible Preferred Securities are in book-
entry only form, 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 and Common
Stock 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 cash and Common Stock
sufficient to pay the applicable Redemption Price with
respect to the 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)
in the case that the Convertible Preferred Securities are
issued in definitive form, provided that Citizens
Capital or the Debenture Issuer, as the case may be, has
paid the Property Trustee a sufficient amount of cash and
Common Stock in connection with the related redemption or
maturity of the Partnership Preferred Securities and/or
the Convertible Debentures, the Property Trustee will
deposit such cash and Common Stock with the Paying Agent,
who in turn 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. Upon satisfaction
of the foregoing conditions, then immediately prior to
the close of business on the date of such deposit or
payment, distributions will cease to accrue and all
rights of holders of such Convertible Preferred
Securities so called for redemption will cease, except
the right of the holders to receive the Redemption Price,
but without interest on such Redemption Price. In the
event that any date fixed for redemption of Convertible
Preferred Securities is not a Business day, then payment
of the Redemption Price payable on such date will be made
on the next succeeding Business Day (and without any
interest in respect of any such delay), except that, if
such Business Day falls in the next calendar year, such
payment will be made on the immediately preceding
Business Day. In the event that payment of the
Redemption Price is improperly withheld or refused and
not paid by either the Property Trustee or the Company,
distributions on the Convertible Preferred Securities
called for redemption will continue to accrue at the
Rate, compounded quarterly, to the extent that payment of
such interest is legally available, until the Redemption
Price is actually paid. 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.
(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,
if Global Certificates are outstanding, the Depositary or
its nominee (or any successor Clearing Agency or its
nominee) 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.
(f) Distribution. Notice of any distribution
of Partnership Preferred Securities or Convertible
Debentures upon liquidation of the Trust (a "Redemption/
Distribution Notice") will be given by the Trust by mail
to each Holder of Securities to be replaced.
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 timely submit to the Conversion
Agent at the office referred to above an irrevocable
request to convert Securities on behalf of such Holder
(the "Notice of Conversion"), 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 or deferred or unpaid Distributions accrued
on the Securities (including any Compounded Distributions
accrued thereon) surrendered for conversion, or on
account of any accumulated and unpaid dividends or
distributions 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; provided,
that, any such surrender, on any date when the stock
transfer books of the Company shall be closed, shall
constitute the Person or Persons in whose name or names
the certificate or certificates for such shares of Common
Stock are to be issued as the record holder or holders
thereof, for all purposes at the opening of business on
the next succeeding day on which such stock transfer
books are open, but such conversion shall nevertheless be
at the Conversion Price in effect at the close of
business on the date when such Securities shall have been
so surrendered. 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 paid 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 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.
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 aggregate 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
Base 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 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 conducting any proceeding for
any remedy available to the Indenture Trustee, or
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 Base 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 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 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. 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 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 aggregate 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) directing 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, or cause the Special Representative, if one
shall be elected, to do so, (B) causing the Special
Representative to waive any past default and its
consequences that are waivable under Section 5.13 of the
Base 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 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 conducting any proceeding for
any remedy available to the Indenture Trustee, or
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 Base 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 a Super
Majority of the Holders of the Partnership Preferred
Securities or the Convertible Debentures, as the case may
be, 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 Common 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
grantor 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 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 provisions 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. If Convertible Debentures are not held by
Citizens Capital, 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 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 Trust a notice of distribution election substantially
in the form of Exhibit B (a "Notice of Distribution
Election"). The Trust 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 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. During such next
Election Period a subsequent Holder can make his or her
Distribution Election by submitting a Notice of
Distribution Election to the Trust. If no Distribution
Election is made, the Holder is deemed to have made a
Cash Distribution Election. All elections will continue
in effect until another election is timely made in a
subsequent annual Election Period.
(c) Common Stock Election by Company. If the
Company has (or is 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 Distributions 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 a Holder has timely made a
Stock Distribution Election, subject to Section 8(d) and
(e) of this Annex I, on each Distribution Payment Date
the Paying Agent shall distribute an Equivalent Value of
shares of Common Stock, together with the cash payment,
if any, in lieu of any fractional share of Common Stock,
to such Holder at the address specified on the register
of the Trust.
(ii) To the extent a Holder has timely made a
Cash Distribution Election, or has been deemed to have
made a Cash Distribution Election, on each Distribution
Payment Date the Paying Agent shall pay to such Holder
his or her Distribution in cash.
(d) Company Cash Option. Notwithstanding the
other paragraphs of this Section 8 of Annex I, the
Debenture Issuer has the right (the "Company Cash
Option") on and after a Distribution Declaration Date on
which it has elected to pay interest on the Convertible
Debentures in shares of Common Stock, but before the
corresponding Share Transfer and Valuation Date 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; provided, that the
Debenture Issuer shall thereupon provide written notice
to the Trust, Citizens Capital, 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 who have made
Stock Distribution Elections to receive Distributions in
the form of cash by purchasing from Citizens Capital some
or all of the shares of Common Stock distributed by the
Company as interest payment on the Convertible
Debentures, that have not yet been sold or distributed 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 a Super
Majority of the Holders of Partnership Preferred
Securities or Convertible Debentures, as the case may be,
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 (of Partnership Preferred
Securities or Convertible Debentures), 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
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
Declaration, 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)("Compounded
Distributions"). The term "Distributions" as used herein
includes payment in the form of cash or shares of common stock,
Series A, 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 January 31, April 30, July 31, and
October 31 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 a "Deferral") 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 a Deferral. 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 Deferral. Prior to the termination of
any such Deferral, Citizens Capital or the Trust, as the case may
be, may be required to further extend such Deferral; provided
that such Deferral together with all such previous and further
extensions thereof may not exceed 20 consecutive quarters nor
extend the maturity date of the Convertible Preferred Securities.
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 Deferral. Upon the termination
of any Deferral and the payment of all amounts then due, Citizens
Capital or the Trust, as the case may be, may commence a new
Deferral, 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 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)("Compounded Distributions").
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 January 31, April 30, July 31, and October 31 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 a "Deferral") 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 a Deferral. 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 Deferral. Prior to the termination of
any such Deferral, Citizens Capital or the Trust, as the case may
be, may be required to further extend such Deferral; provided
that such Deferral together with all such previous and further
extensions thereof may not exceed 20 consecutive quarters nor
extend the maturity date of the Convertible Preferred Securities.
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 Deferral. Upon the termination
of any Deferral and the payment of all amounts then due, Citizens
Capital or the Trust, as the case may be, may commence a new
Deferral, 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 the Regular Trustees
of Citizens Utilities Trust
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 elects to receive any and all Distributions (as such term
is defined in the Declaration) due and payable on the
Distribution Payment Date immediately following the Election
Period during which this Notice of Distribution Election is being
submitted, and on each succeeding Distribution Payment Date until
such time as another Notice of Distribution Election is submitted
during an Election Period, as follows:
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 Distribution Payment Date and thereafter 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: ____________, ____
Signature
Please Print or Typewrite Name and
Address, Including Zip Code, and
Social Security or Other
Identifying Number
(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