Draft dated: November 21, 1995
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CITIZENS UTILITIES COMPANY
TO
CHEMICAL BANK
(Trustee)
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FIRST SUPPLEMENTAL INDENTURE
Dated as of _______, 1995
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SUPPLEMENTAL TO THE INDENTURE
Dated as of _______, 1995
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TABLE OF CONTENTS PAGE
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ARTICLE 1
DEFINITIONS
Section 1.1 Definitions 3
ARTICLE 2
FORMS OF DEBENTURES
Section 2.1 Form of the Debentures 9
ARTICLE 3
TERMS OF THE DEBENTURES
Section 3.1 Terms of the Debentures 9
ARTICLE 4
SUBORDINATION OF DEBENTURES
Section 4.1 Debentures Subordinate to Senior Indebtedness 14
Section 4.2 Payment Over of Proceeds Upon Dissolution, etc. 14
Section 4.3 No Payment When Senior Indebtedness In Senior
Payment Default or Senior Indebtedness Accelerated 15
Section 4.4 Payment Permitted If No Default 17
Section 4.5 Subrogation To Rights Of Holders Of Senior Indebtedness 17
Section 4.6 Provisions Solely To Define Relative Rights 17
Section 4.7 Trustee To Effectuate Subordination 18
Section 4.8 No Waiver Of Subordination Provisions 18
Section 4.9 Notice To Trustee 18
Section 4.10 Reliance On Judicial Order Or Certificate Of Liquidating
Agent 19
Section 4.11 Trustee Not Fiduciary For Holders Of Senior Indebtedness 20
Section 4.12 Rights of Trustee As Holder Of Senior Indebtedness;
Preservation Of Trustee's Rights 20
Section 4.13 Article Applicable to Paying Agents 20
ARTICLE 5
CONVERSION OF DEBENTURES
Section 5.1 Conversion Privilege 21
Section 5.2 Manner of Exercise of Conversion Privilege 21
Section 5.3 Fractional Shares 22
(i)
Section 5.4 Conversion Price 22
Section 5.5 Adjustment of Conversion Price 22
Section 5.6 Reclassification, Consolidation, Merger or Sale of Assets 28
Section 5.7 Notice of Adjustments of Conversion Price 28
Section 5.8 Notices 29
Section 5.9 Taxes on Conversion 30
Section 5.10 Company to Provide Stock 30
Section 5.11 Disclaimer of Responsibility for Certain Matters 31
Section 5.12 Return of Funds Deposited for Redemption of Converted
Debentures 31
Section 5.13 Disposition of Converted Debentures 31
ARTICLE 6
REDEMPTION OF DEBENTURES
Section 6.1 Redemption 31
Section 6.2 Applicability of Article 32
Section 6.3 Election to Redeem; Notice to Trustee 32
Section 6.4 Notice of Redemption 33
Section 6.5 Deposit of Redemption Price 33
Section 6.6 Debentures Payable on Redemption Date 33
ARTICLE 7
AMENDMENTS TO INDENTURE FOR PURPOSES
OF FIRST SERIES OF DEBENTURES
Section 7.1 Amendment to Section 5.1 of Indenture
for Purposes of First Series of Debentures 34
Section 7.2 Amendment to Section 9.1 of Indenture
for Purposes of First Series of Debentures 36
Section 7.3 Amendment to Section 9.2 of Indenture
for Purposes of First Series of Debentures 36
ARTICLE 8
EXPENSES
Section 8.1 Payment and Expenses 37
ARTICLE 9
COVENANTS
Section 9.1 Covenants 38
(ii)
ARTICLE 10
Section 10.1 Benefits of Indenture 40
Section 10.2 Incorporation of Indenture 40
Section 10.3 Acceptance of Trust 40
Section 10.4 Conflict with Trust Indenture Act 41
Section 10.5 Governing Law 41
Section 10.6 Recitals 41
Section 10.7 Amendments 41
Section 10.8 Counterparts 41
(iii)
FIRST SUPPLEMENTAL INDENTURE, dated as of _______, 1995, between CITIZENS
UTILITIES COMPANY, a corporation duly organized and existing under the laws
of the State of Delaware (herein called "Citizens" or the "Company"), having
its principal administrative offices at High Ridge Park, Building No. 3,
Stamford, Connecticut 06905, and CHEMICAL BANK, a New York banking
corporation, as Trustee (herein called the "Trustee"), having its principal
corporate trust office at 450 West 33rd Street, New York, New York 10001. The
First Supplemental Indenture is one of several agreements executed in
connection with the issuance by the Company and certain of its affiliates of
up to $185,993,000 principal amount of Debentures, up to $180,413,000
liquidating value of Partnership Preferred Securities and up to $175,000,000
liquidating value of Convertible Preferred Securities (the "Offering"). Said
$185,993,000 principal amount of Debentures is subject to increase to not
more than $213,895,000 by a supplemental instrument hereto. For ease of
reference, certain of the operative agreements in connection with the
Offering make use of a Statement of Common Definitions. In this First
Supplemental Indenture, such Statement of Common Definitions ("Statement of
Common Definitions") is found at Exhibit B. For the purposes hereof,
capitalized terms are defined in Section 1.1 hereof, elsewhere in this First
Supplemental Indenture, in the Indenture, and in the Statement of Common
Definitions.
RECITALS
WHEREAS, the Company has entered into an Indenture dated as of __________,
1995 (the "Indenture"), with the Trustee to provide for the issuance from
time to time of the Company's debentures, notes or other evidences of
indebtedness (herein called the "Securities"), to be issued in one or more
series; and
WHEREAS, Section 9.1 of the Indenture provides, among other things, that
the Company and the Trustee may enter into indentures supplemental to the
Indenture for, among other things, the purpose of establishing the form and
terms of the Securities of any series as permitted in Sections 2.1 and 3.1
of the Indenture and adding to the covenants of the Company for the benefit
of the Holders of any series of Securities; and
WHEREAS, the Company or one of its wholly owned subsidiaries is the general
partner of Citizens Capital, and the Company formed Citizens Capital to issue
the Partnership Preferred Securities, with a liquidation preference of $50
per Partnership Preferred Security, and to issue the General Partnership
Security; and
WHEREAS, the Company has formed the Trust under the Trust Act pursuant to
the Declaration for the purpose of issuing the Convertible Preferred
Securities and the Convertible Common Securities (the Convertible Common
Securities and the Convertible Preferred Securities are together, the "Trust
Securities"), selling such Trust Securities and contributing the proceeds
thereof to Citizens Capital; and
1
WHEREAS, the Company wishes to sell to Citizens Capital, and Citizens
Capital wishes to purchase from the Company, Debentures in exchange for the
funds received by Citizens Capital from the Trust and capital contributed to
Citizens Capital by the General Partner; and
WHEREAS, the Declaration provides that the holders of Convertible Preferred
Securities may cause the Conversion Agent to exchange such Convertible
Preferred Securities for Partnership Preferred Securities, and, in turn, such
Partnership Preferred Securities for Debentures held by Citizens Capital, and
immediately convert such Debentures into Common Stock Series A; and
WHEREAS, the Company is irrevocably guaranteeing, on a subordinated basis,
payment of distributions, payment of the Redemption Price (as defined herein)
and payments on liquidation, to the extent provided in the Convertible
Preferred Securities Guarantee Agreement dated _______________, 1995 and the
Convertible Common Securities Guarantee Agreement dated ___________________,
1995, each between the Company and Chemical Bank, as guarantee trustee for
the benefit of the holders of the Trust Securities, which guarantee, together
with the back-up undertakings (as defined herein), will be full and
unconditional; and
WHEREAS, the Company, by corporate action duly taken, has authorized the
issuance of a first series of Securities designated as the ____% Convertible
Subordinated Debentures Due 2035 (hereinafter sometimes called the
"Debentures"), which series is limited in aggregate principal amount to
$185,993,000 (subject to increase by supplement hereto), such Debentures to
contain such provisions as have been determined by or at the direction of the
Board of Directors of the Company and as are set forth in this First
Supplemental Indenture; and
WHEREAS, all conditions have been complied with, all actions have been
taken and all things have been done which are necessary to make the
Debentures, when executed by the Company and authenticated by or on behalf
of the Trustee and when delivered as herein and in the Indenture provided,
the valid obligations of the Company, and to make this First Supplemental
Indenture a valid and binding supplemental indenture.
NOW, THEREFORE, THIS FIRST SUPPLEMENTAL INDENTURE WITNESSETH:
For and in consideration of the premises and the purchase of the Debentures
by the Holders thereof, it is mutually covenanted and agreed, for the equal
and proportionate benefit of all Holders of the Debentures, as follows:
2
ARTICLE 1
DEFINITIONS
Section 1.1 Definitions.
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For all purposes of this First Supplemental Indenture, except as
otherwise herein expressly provided or unless the context otherwise requires:
(1) capitalized terms used in this First Supplemental Indenture shall
have the meanings ascribed to them in the Indenture, this First
Supplemental Indenture or, to the extent not inconsistent with the
Indenture or this First Supplemental Indenture, the Statement of Common
Definitions;
(2) the words "herein", "hereof" and "hereto" and other words of
similar import used in this First Supplemental Indenture refer to this
First Supplemental Indenture as a whole and not to any particular
Article or Section or other subdivision of this First Supplemental
Indenture;
(3) the provisions of this First Supplemental Indenture shall be read
in conjunction with the provisions of the Indenture only with respect
to the Debentures and the provisions of the Indenture shall not be
modified by this First Supplemental Indenture with respect to any
series of the Securities outstanding or to be outstanding under the
Indenture, other than the Debentures; and
(4) terms defined in this First Supplemental Indenture shall apply
only to this First Supplemental Indenture and the Debentures hereunder,
and such definitions shall not apply to any supplemental indenture
other than this First Supplemental Indenture or to any Securities
outstanding or to be outstanding under the Indenture, other than the
Debentures.
"Additional Interest" has the meaning specified in Section 3.1(17).
"Average Market Price" is defined in the Statement of Common Definitions.
"back-up undertakings" is defined in the Statement of Common Definitions.
"Capital Lease Obligation" of any Person means the obligation to pay rent
or other payment amounts under a lease of (or other Indebtedness
arrangements conveying the right to use) real or personal property of such
Person which is required to be classified and accounted for as a capital
lease or a liability on the face of a balance sheet of such Person in
accordance with generally accepted accounting principles. The stated
maturity of such obligation shall be the date of the last payment of rent or
any other amount due under such lease prior to the first date upon which such
lease may be terminated by the lessee without payment of a penalty.
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"Cash Interest Payment Date" has the meaning specified in Section 3.1(4).
"Citizens Capital" is defined in the Statement of Common Definitions.
"Common Stock" and "Common Stock Series A" are defined in the Statement of
Common Definitions.
"Company Event" is defined in the Statement of Common Definitions.
"Compound Interest" is defined in the Statement of Common Definitions.
"Conversion Agent" is defined in the Statement of Common Definitions.
"Conversion Price" has the meaning specified in Section 5.4.
"Convertible Common Securities" is defined in the Statement of Common
Definitions.
"Convertible Preferred Securities" is defined in the Statement of Common
Definitions.
"Date of Conversion" has the meaning specified in Section 5.2.
"Debentures Payment" has the meaning specified in Section 4.2.
"Declaration" is defined in the Statement of Common Definitions.
"Delaware Trustee" is defined in the Statement of Common Definitions.
"Designated Senior Holder" means, with respect to any Senior Indebtedness,
the Person designated as such in accordance with the terms of the instrument
evidencing such Senior Indebtedness.
"Distribution Declaration Date" has the meaning specified in Section
3.1(4).
"Distribution Declaration Notice" has the meaning specified in Section
3.1(4).
"Election Period" is defined in the Statement of Common Definitions.
"Equivalent Value" is defined in the Statement of Common Definitions.
"Expiration Time" has the meaning specified in Section 5.5(e).
"General Partnership Security" is defined in the Statement of Common
Definitions.
4
"Guarantee" by any Person means any obligation, contingent or otherwise,
of such Person guaranteeing any Indebtedness of any other Person where such
other Person is the Primary Obligor under such Indebtedness, in any manner,
whether directly or indirectly, and including, without limitation, any
obligation of such Person (i) to purchase or pay (or advance or supply funds
for the purchase or payment of) such Indebtedness or to purchase (or to
advance or supply funds for the purchase of) any security for the payment of
such Indebtedness, (ii) to purchase property, securities or services for the
purpose of assuring the holder of such Indebtedness of the payment of such
Indebtedness or (iii) to maintain working capital, equity capital or other
financial statement condition or liquidity of the Primary Obligor so as to
enable the Primary Obligor to pay such Indebtedness (and "Guaranteed,"
"Guaranteeing" and "Guarantor" shall have meanings correlative to the
foregoing); provided, however, that the Guarantee by any Person shall
not include endorsements by such Person for collection or deposit, in either
case, in the ordinary course of business.
"Incur" means, with respect to any Indebtedness or other obligation of any
Person, to create, issue, incur (by conversion, exchange or otherwise),
assume, Guarantee or otherwise become liable in respect of such Indebtedness
or other obligation or the recording, as required pursuant to generally
accepted accounting principles or otherwise, of any such Indebtedness or
other obligation as a liability on the balance sheet of such Person (and
"Incurrence," "Incurred," "Incurrable" and "Incurring" shall have meanings
correlative to the foregoing); provided, however, that a change in generally
accepted accounting principles that results in an obligation of such Person
that exists at such time becoming Indebtedness shall not be deemed an
Incurrence of such Indebtedness.
"Indebtedness" means (without duplication), with respect to any Person,
whether recourse is to all or a portion of the assets of such Person, (i) all
Indebtedness described in clauses (i)-(vii) of the definition of Senior
Indebtedness (all references to Citizens in such definition being deemed to
refer to such Person) and (ii) the maximum fixed redemption or repurchase
price of Redeemable Interests of such Person at the time of determination.
"Junior Subordinated Payment" has the meaning specified in Section 4.2.
"Limited Partnership Agreement" is defined in the Statement of Common
Definitions.
"Ministerial Action Obligation" is defined in the Statement of Common
Definitions.
"NASDAQ" is defined in the Statement of Common Definitions.
"No Recognition Opinion" is defined in the Statement of Common Definitions.
"Notice of Conversion" means the notice to be given by a Holder of
Debentures to the Conversion Agent directing the Conversion Agent to convert
the Debentures into Common Stock Series A on behalf of such Holder.
5
"NYSE" is defined in the Statement of Common Definitions.
"Other Subordinated Indebtedness" has the meaning specified in Section 9.1.
"Partnership Event" is defined in the Statement of Common Definitions.
"Partnership Preferred Securities" is defined in the Statement of Common
Definitions.
"Partnership Securities" is defined in the Statement of Common Definitions.
"Paying Agent" is defined in the Statement of Common Definitions.
"Payment Blockage Period" has the meaning specified in Section 4.3.
"Person" is defined in the Statement of Common Definitions.
"Primary Obligor" shall refer to the Person who is primarily liable under
any Indebtedness.
"Proceeding" has the meaning specified in Section 4.2.
"Property Trustee" is defined in the Statement of Common Definitions.
"Purchased Shares" has the meaning specified in Section 5.5(e).
"Rating Agency Event" is defined in the Statement of Common Definitions.
"Redeemable Interest" of any Person means any equity security of or other
ownership interest in such Person that by its terms or otherwise is required
to be redeemed prior to the Stated Maturity of the principal of the
Debentures or is or may be redeemable at the option of the holder thereof at
any time prior to the Stated Maturity of the principal of the Debentures;
provided, however, that interests which are redeemable solely for any equity
security of or other ownership interest in such Person that by its terms or
otherwise is not required to be redeemed prior to the Stated Maturity of the
principal of the Debentures shall not constitute Redeemable Interests.
"Redemption Price" has the meaning specified in Section 6.1.
"Reference Date" has the meaning specified in Section 5.5(c).
"Regular Record Date" has the meaning specified in Section 3.1(4).
"Securities" has the meaning specified in the Recitals to this instrument.
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"Senior Indebtedness" means the principal of, premium, if any, interest on
and any other payment due pursuant to any of the following, whether Incurred
on or prior to the date hereof or hereafter Incurred:
(i) all obligations of Citizens for money borrowed;
(ii) all obligations of Citizens evidenced by notes, debentures, bonds
or other similar instruments, including obligations Incurred in
connection with the acquisition of property, assets or businesses;
(iii) all Capital Lease Obligations of Citizens;
(iv) all reimbursement obligations of Citizens with respect to letters
of credit, bankers' acceptances or similar facilities issued for the
account of Citizens;
(v) all obligations of Citizens issued or assumed as the deferred
purchase price of property or services (but excluding trade accounts
payable and accrued liabilities arising in the ordinary course of
business);
(vi) all payment obligations of Citizens under interest rate swap or
similar agreements or foreign currency hedge, exchange or similar
agreements at the time of determination, including any such obligations
Incurred by Citizens solely to act as a hedge against increases in
interest rates that may occur under the terms of other outstanding
variable or floating rate Indebtedness of Citizens;
(vii) all obligations under lease transactions pursuant to which
Citizens or any of its Subsidiaries are treated as the owner of the
subject property for federal income tax purposes;
(viii) all obligations of the type referred to in clauses (i) through
(vii) above of another Person and all dividends of another Person the
payment of which, in either case, Citizens has assumed or Guaranteed
or for which Citizens is responsible or liable, directly or indirectly,
jointly or severally, as obligor, Guarantor or otherwise; and
(ix) all amendments, modifications, renewals, extensions,
refinancings, replacements and refundings by Citizens of any such
Indebtedness referred to in clauses (i) through (viii) above (and of
any such amended, modified, renewed, extended, refinanced, refunded or
replaced Indebtedness);
provided, however, that the following shall not constitute Senior
Indebtedness: (A) any trade accounts payable or accrued liabilities arising
in the ordinary course of business, (B) any Indebtedness owed to a Person
when such Person is a Subsidiary of Citizens, or (C) any Indebtedness which
by the terms of the instrument creating or evidencing the same expressly
provides that it is not superior in right of payment to the Debentures. For
purposes of this
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Definition, "Indebtedness" includes any obligation to pay principal, premium
(if any), interest, penalties, reimbursement or indemnity amounts, fees and
expenses (including interest accruing on or after the filing of any petition
in bankruptcy or for reorganization relating to Citizens whether or not a
claim for post-petition interest is allowed in such proceeding). Such Senior
Indebtedness shall continue to be Senior Indebtedness and entitled to the
benefits of the subordination provisions irrespective of any amendment,
modification or waiver of any term of such Senior Indebtedness.
"Senior Nonmonetary Default" has the meaning specified in Section 4.3.
"Senior Payment Default" has the meaning specified in Section 4.3.
"Share Transfer and Valuation Date" has the meaning specified in Section
3.1(5) and in the Statement of Common Definitions.
"Special Event" is defined in the Statement of Common Definitions.
"Special Representative" is defined in the Statement of Common Definitions.
"Subsidiary" is defined in the Statement of Common Definitions.
"Trading Day" is defined in the Statement of Common Definitions.
"Trustee" shall mean Chemical Bank as trustee with respect to the
Debentures, until a successor Trustee shall have become such pursuant to the
terms of the Indenture.
"Trust" is defined in the Statement of Common Definitions.
"Trust Event" is defined in the Statement of Common Definitions.
"Trust Securities" has the meaning specified in the Recitals to this
instrument.
"Underwriting Agreement" is defined in the Statement of Common Definitions.
"Voting Stock" has the meaning specified in the Statement of Common
Definitions.
Except as otherwise expressly provided or unless the context otherwise
requires, "First Supplemental Indenture" means this instrument as originally
executed or, if amended or supplemented pursuant to the applicable provisions
of the Indenture, as amended or supplemented.
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ARTICLE 2
FORMS OF DEBENTURES
Section 2.1 Form of the Debentures.
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The Debentures shall be in substantially the form set forth in Exhibit A
to this First Supplemental Indenture, as such form may be completed pursuant
to Article 3 hereof, the terms of which Exhibit A are herein incorporated by
reference and made a part of this First Supplemental Indenture.
ARTICLE 3
TERMS OF THE DEBENTURES
Section 3.1 Terms of the Debentures.
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The terms of the Debentures shall be as follows:
(1) The Securities to be issued under the Indenture and this First
Supplemental Indenture shall be the Debentures and shall be designated as the
"____% Convertible Subordinated Debentures Due 2035".
(2) The Debentures shall constitute a single series of the Securities
under the Indenture, which series is limited in aggregate principal amount
to $185,993,000 subject to increase by supplemental instrument to an
aggregate of not more than $213,895,000.
(3) So long as all of the Debentures are registered in the name of CEDE
& Co., or any other nominee of The Depository Trust Company, and are intended
to be Book-Entry Securities, the provisions of Section 3.11 of the Indenture
shall apply to the Debentures. Thereafter, or in lieu thereof, the
Debentures may be subjected to the requirements of a successor or different
book-entry securities system that may be adopted by the Company in accordance
with the provisions of the Indenture and this First Supplemental Indenture.
(4) Interest on the Debentures will be paid in either shares of Common
Stock Series A or cash, as specified in paragraphs (4), (5) and (6) of this
Section. Interest which is paid in shares of Common Stock Series A shall be
paid on the Share Transfer and Valuation Date, as defined in paragraph (5)
below. Interest which is paid in cash shall be paid on the Cash Interest
Payment Date, as defined in this paragraph (4). Computation of the interest
payments shall be as follows: Interest on each of the Debentures shall be
payable at the rate per annum specified in the title of the Debenture from
_______, 1995, or from the most recent Cash Interest Payment Date to which
interest has been paid or duly provided for, quarterly in arrears, on (or,
if interest is paid in shares of Common Stock Series A, computed as of)
January 31, April 30, July 31 and October 31 in each year (each such date,
a "Cash Interest Payment Date"),
9
commencing on ____________, 199_, subject to the right of deferral of the
Company referred to in paragraph (7) of this Section. Interest shall be
calculated on the basis of a 360-day year consisting of 12 months of 30 days
each. For any period shorter than a full quarter, interest will be computed
on the basis of the actual number of days elapsed in such period. The
interest payable and punctually paid or duly provided for on or before
any Cash Interest Payment Date will be paid to the Person in whose name such
Debenture (or one or more Predecessor Securities) is registered at the close
of business on the regular record date ("Regular Record Date") next preceding
such interest payment. Upon or before the day on which the Trust, the
Partnership or the Company (or any direct or indirect beneficial owner of the
Debentures) is required to give notice of the record date for the next
scheduled distribution payable on the Convertible Preferred Securities, the
Partnership Preferred Securities or the Debentures to the NYSE, or NASDAQ,
or other applicable self-regulatory organization, or to the holders of the
Convertible Preferred Securities, the Partnership Preferred Securities or
the Debentures (the "Distribution Declaration Date," a date which will be
specified in advance by the Company in a written notice delivered to the
Trustee, and which date shall initially be the date specified in paragraph
(8) of this Section unless changed by the Company in accordance with the
provisions of this Section), the Company shall give written notice
("Distribution Declaration Notice") to the Trustee and the Holders of the
Debentures and the holders of the Convertible Preferred Securities and the
Partnership Preferred Securities, which notice shall specify (a) whether the
Company is exercising its option in whole or in part to make the next
interest payment in cash, (b) whether the Company is exercising its right to
elect to defer such next interest payment as permitted by paragraph (7) of
this Section (unless written notice of the Company's election to defer such
interest payment shall previously have been given to the Trustee and such
holders), (c) the Regular Record Date for such interest payment (unless such
Regular Record Date has theretofore been established by the Company and
notice thereof has previously been given to the Trustee and such holders),
(d) the Share Transfer and Valuation Date (as set forth in paragraph (5) of
this Section) and (e) if such Distribution Declaration Notice relates to the
January 31 Cash Interest Payment Date, the Election Period procedures.
The Regular Record Date shall be established by the Company in the
Distribution Declaration Notice as aforesaid or in a separate written notice
given to the Trustee and the Holders no later than the Distribution
Declaration Date immediately preceding the Cash Interest Payment Date in
question. Such notice (or a separate notice) may also establish a schedule
for subsequent Regular Record Dates which shall remain in effect until
changed by a later written notice to the Trustee and Holders. In the event
that any date on which interest is payable on the Debentures is not a
Business Day, then payment of the interest payable on such date will be made
on the next succeeding day which is a Business Day (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 the Cash Interest Payment Date. Any interest not so
punctually paid or duly provided for will forthwith cease to be payable to
the Holder on such Regular Record Date by virtue of having been such a
Holder and shall be paid by the Company as provided in Section 3.7 of the
Indenture. Any interest that has been properly
10
deferred pursuant to Section 3.1(7) hereof shall be payable only as
provided in Section 3.7 of the Indenture.
Upon the deferral of any interest payment as permitted by paragraph (7) of
this Section, interest on such deferred interest payment will be compounded
on each Cash Interest Payment Date and accrued until paid at the rate
specified in the title of the Debenture until the amount of such deferred
interest (including compounded interest thereon) is paid in full.
(5) So long as Citizens Capital shall be the Holder of all of the
Outstanding Debentures, and subject to provisions of paragraph (6) of this
Section, payment of interest shall be made by delivery (which may be by book-
entry) on a date (the "Share Transfer and Valuation Date"), which will be
specified by the Company in the immediately preceding Distribution
Declaration Notice, of shares of Common Stock Series A with an
Equivalent Value to the interest requirement set forth in paragraph (4) of
this Section. At any time subsequent to the Share Transfer and Valuation
Date, the Company shall have the right to purchase some or all of the shares
of Common Stock Series A delivered to the Holder as aforesaid at a price
equal to the Equivalent Value of such shares on the relevant Share Transfer
and Valuation Date. If subsequent to the delivery of shares of Common Stock
Series A to Citizens Capital on the Share Transfer and Valuation Date,
Citizens Capital sells shares of Common Stock Series A to make cash
distributions with respect to the Partnership Preferred Securities, and the
net proceeds from the sale of such shares of Common Stock Series A is less
than the proportionate share of the interest requirement set forth in
paragraph (4) of this Section that is allocable to the Partnership
Preferred Securities for which a cash distribution election has been made (the
amount by which net cash proceeds from the sale of such shares falls short of
such interest requirement being referred to as the "Cash Shortfall"), then
the Company, in its capacity as borrower with respect to the Outstanding
Debentures, shall be obligated to transfer an amount of cash to Citizens
Capital equal to the Cash Shortfall on or prior to the Cash Interest Payment
Date.
(6) So long as Citizens Capital shall be the Holder of all of the
Outstanding Debentures, the Company shall have the option to elect, at any
time prior to the Share Transfer and Valuation Date, to make payment of
interest on or before the Cash Interest Payment Date in cash, which shall be
payable either, at the option of the Company exercised on or before the Cash
Interest Payment Date, (i) by check mailed to the address of the Holder
appearing on the Security Register, (ii) by wire transfer in immediately
available funds at such place and to such account as may be designated by a
Holder upon application to the Security Registrar not later than the Regular
Record Date with respect to the first Cash Interest Payment Date for which
such transfer is requested, or (iii) as otherwise provided with respect to a
Book-Entry Security or pursuant to any applicable book-entry security system
or similar system. The Company shall also have the continuing right at any
time prior to the Share Transfer and Valuation Date to elect to pay all or
part of the next interest payment in cash as aforesaid (notwithstanding the
relevant Distribution Declaration Notice) by delivering a further written
notice of override to the Holders, the Trustee and the holders of the
Convertible Preferred Securities, and by complying with any
requirements of any stock exchange or market quotation system or the
Commission with respect to the public notification or notice of such
override. If the Company has made an election to
11
pay interest in cash, the payment of such cash to the Holders shall occur on
the Cash Interest Payment Date and need not be made on the Share Transfer and
Valuation Date. If the Company has not elected prior to the Share Transfer
and Valuation Date to pay interest in cash, the payment of such interest in
shares of Common Stock shall occur on the Share Transfer and Valuation Date.
If Citizens Capital ceases to be the Holder of all of the outstanding
Debentures, Citizens will be deemed to have elected to make each subsequent
payment of interest in cash.
The principal amount of the Debentures together with all accrued or
deferred but unpaid interest will be paid at maturity or redemption by check
against presentation of the Debentures by the Holders or their duly
authorized agent at the office or agency of the Trustee, in New York,
New York or such other address in New York, New York as the Trustee shall
designate by written notice to the Holders of the Debentures.
(7) The Company shall have the right, at any time and from time to time
during the term of the Debentures, to elect to defer the date on which one
or more of the quarterly interest payments would otherwise become due and
payable by giving of notice of deferral; provided that (a) no deferred
quarterly interest payment, including any extension of deferral, shall
remain unpaid for more than 20 consecutive quarters or be deferred beyond
the Stated Maturity of the Debentures, (b) no Event of Default has occurred
and is continuing, and (c), so long as any deferred interest has not been
paid, the Company shall not take any action prohibited in the first sentence
of Section 9.1 of this First Supplemental Indenture.
If the Company intends to exercise such right to elect to defer one or more
interest payments, it shall give written notification thereof to the Trustee
and the Holders no later than the Distribution Declaration Date occurring
immediately prior to the first Cash Interest Payment Date with respect to
which interest is being deferred. A deferred interest payment will become
due and payable by the Company only upon the Company's giving a deferred
distribution notice to the Holders of the Debentures and the Trustee in
accordance with the provisions of Section 3.7 of the Indenture applicable to
delayed interest payments, including deferred interest. The Company shall
also give notice of any deferred interest payment to the holders of the Trust
Securities and Partnership Preferred Securities. No interest payment
deferred in accordance with this paragraph shall be deemed due or payable
until the date specified for payment in Section 3.7 of the Indenture, or at
Stated Maturity, whichever occurs first.
(8) Prior to and pending the establishment by the Company of a different
schedule by written notice given by the Company to the Trustee, the Holders
and the holders of the Partnership Preferred Securities and the Convertible
Preferred Securities, the Regular Record Dates and related Distribution
Declaration Dates and Share Transfer and Valuation Dates shall occur on the
days set forth on Annex A.
Upon the completion of the giving of notice or taking of other action to
establish or change any Distribution Declaration Date, Regular Record Date
or Share Transfer and Valuation Date, the Company shall deliver (which
delivery may be contemporaneous with the
12
delivery of such notice) to the Trustee, and shall retain, a copy of a
revised Annex A duly reflecting any such date which has been established or
changed.
(9) If carried out in accordance with the provisions of paragraphs (4),
(5), (6), (7) and (8) of this Section, the Company may give notice or take
other action to establish or change any Distribution Declaration Date,
Regular Record Date, Special Record Date or Share Transfer and Valuation Date
(each of such days being referred to as a "Date" or collectively, "Dates" for
the purposes of this paragraph), or to establish or change any schedule for
one or more of the Dates, without any requirement of receiving the consent,
authorization, or any other action by any other Person, including the
Trustee, Citizens Capital, the Trust, any Holder or any beneficial owner of
the Debentures, or any holder of Partnership Securities or Trust Securities.
Such establishment or change shall not be deemed to be an act or change
requiring a supplemental indenture pursuant to Section 9.2 of the Indenture.
Any Annex A and revised Annex A given to the Trustee pursuant to this Section
shall be deemed to be included within the term "notice" as used in Section
6.3 of the Indenture. The Trustee shall be under no obligation with respect
to the establishment, or change, of Dates and may rely upon such notice or
notification to the full extent provided in such Section 6.3.
(10) Notwithstanding the foregoing, so long as Citizens Capital or the
Trust is the Holder of the Debenture, payment of the principal and interest
on the Debenture will be made at such place and to such account as may be
designated by such Holder.
(11) The Debentures shall be subordinated in right of payment to Senior
Indebtedness as provided in Article 4.
(12) The Debentures shall be convertible as provided in Article 5.
(13) The Debentures shall be redeemable as provided in Article 6.
(14) The Debentures shall be issued in registered form only and in
denominations of $50 or any amount in excess thereof which is an integral
multiple of $50.
(15) When principal and interest on the Debentures is payable in cash, it
shall be payable in the coin or currency of the United States of America,
which, at the time of payment, is legal tender for public and private debts.
(16) The Debentures shall not be subject to the defeasance provided for
in Sections 13.2 and 13.3 of the Indenture.
(17) If at any time while Citizens Capital or the Trust is the Holder of
the Outstanding Debentures or the Trust is the holder of the Outstanding
Partnership Preferred Securities of Citizens Capital, Citizens Capital or the
Trust becomes legally obligated to pay any Taxes, then, in such case, the
Company shall pay, but without duplication, such amounts, if any, as shall be
required to pay such Taxes of Citizens Capital or the Trust either (i) as
additional
13
interest ("Additional Interest") on the Debentures, (ii) directly
to such taxing authority or (iii) to the Trust or Citizens Capital, as the
case may be, so that such Taxes are paid on or before any date of redemption
or the Stated Maturity, whichever comes first. To the extent that such
payments give rise to additional Taxes of Citizens Capital or the Trust, the
Company shall also make payment for such additional Taxes of Citizens
Capital or the Trust. The Company shall pay Additional Interest or make such
other payments in an amount and at such time so that the net amounts
received as interest or distribution payments by Citizens Capital and the
Trust, and distriubtable to the holders of the Partnerhsip Preferred
Securities and the Convertible Preferred Securities, respectively, after all
such Taxes have been paid will not be less than the amount that would have
been received and distributed by such entities had no such Taxes been imposed.
(18) The Debentures initially will not be issued in the form of a
registered global debenture. If Debentures are thereafter to be issued in
the form of one or more registered global debentures, such global securities
shall be governed by the appropriate provisions of Section 3.3 and 3.11 of
the Indenture.
ARTICLE 4
SUBORDINATION OF DEBENTURES
Section 4.1 Debentures Subordinate to Senior Indebtedness.
---------------------------------------------
The Company covenants and agrees, and each Holder of a Debenture, by his
acceptance thereof, likewise covenants and agrees, that, to the extent and
in the manner hereinafter set forth in this Article (subject to Article Four
of the Indenture), the payment of the principal of (and premium, if any) and
interest on each and all of the Debentures is hereby expressly made
subordinate and subject in right of payment to the prior payment in full in
cash of all Senior Indebtedness.
Article Four shall constitute a continuing offer to all Persons who become
holders of, or continue to hold, Senior Indebtedness, and such provisions are
made for the benefit of the holders of Senior Indebtedness and such holders
are made obligees hereunder and any one or more of them may enforce such
provisions. Holders of Senior Indebtedness need not prove reliance on the
subordination provisions hereof.
Section 4.2 Payment Over of Proceeds Upon Dissolution, etc.
-----------------------------------------------
Upon any payment or distribution of assets of the Company to creditors upon
any liquidation, dissolution, winding-up, reorganization, assignment for the
benefit of creditors, marshalling of assets or liabilities or any bankruptcy,
insolvency or similar proceedings of the Company (each such event, if any,
herein sometimes referred to as a "Proceeding"):
(1) the holders of Senior Indebtedness shall be entitled to receive
payment in full in cash of all amounts due on or to become due on or
in respect of all Senior
14
Indebtedness, before the Holders of the Debentures are entitled to
receive any payment (including any payment to Holders of the Debentures
made in respect of any other Indebtedness of the Company subordinated to
the payment of the Debentures, such payment or distribution being
hereinafter referred to as a "Junior Subordinated Payment"), on account
of the principal of (and premium, if any) or interest on the Debentures
or on account of any purchase, redemption or other acquisition of
Debentures by the Company, any Subsidiary of the Company, the Trustee or
any Paying Agent (all such payments, distributions, purchases,
redemptions and acquisitions, whether or not in connection with a
Proceeding, herein referred to, individually and collectively, as a
"Debentures Payment"); and
(2) any payment or distribution of assets of the Company of any kind
or character, whether in cash, property or securities, by set-off or
otherwise, to which the Holders of the Debentures or the Trustee would
be entitled but for the provisions of this Article (including, without
limitation, any Junior Subordinated Payment) shall be paid by the
liquidating trustee or agent or other Person making such payment or
distribution, whether a trustee in bankruptcy, a receiver or
liquidating trustee or otherwise, directly to the holders of Senior
Indebtedness or their representative or representatives or to the
trustee or trustees under any indenture under which any instruments
evidencing any of such Senior Indebtedness may have been issued,
ratably according to the aggregate amounts remaining unpaid on account
of the Senior Indebtedness held or represented by each, to the extent
necessary to make payment in full in cash of all Senior Indebtedness
remaining unpaid, after giving effect to any concurrent payment to the
holders of such Senior Indebtedness.
In the event that, notwithstanding the foregoing provisions of this
Section, the Trustee or the Holder of any Debenture shall have received
in connection with any Proceeding any Debentures Payment before all
Senior Indebtedness is paid in full or payment thereof provided for in cash,
then and in such event such Debentures Payment shall be paid over or
delivered forthwith to the trustee in bankruptcy, receiver, liquidating
trustee, custodian, assignee, agent or other Person making payment or
distribution of assets of the Company for application to the payment of all
Senior Indebtedness remaining unpaid, to the extent necessary to pay all
Senior Indebtedness in full in cash after giving effect to any concurrent
payment to or for the holders of Senior Indebtedness.
For purposes of this Article only, the words "any payment or distribution
of any kind or character, whether in cash, property or securities" shall not
be deemed to include a payment or distribution of stock or securities of the
Company provided for by a plan of reorganization or readjustment authorized
by an order or decree of a court of competent jurisdiction in a
reorganization proceeding under any applicable bankruptcy law or of any other
corporation provided for by such plan of reorganization or readjustment which
stock or securities are subordinated in right of payment to all then
outstanding Senior Indebtedness to substantially the same extent, or to a
greater extent than, the Debentures are so subordinated as provided in this
Article. The consolidation of the Company with, or the merger of the Company
into, another
15
Person or the liquidation or dissolution of the Company
following the conveyance or transfer of all or substantially all of its
properties and assets as an entirety to another Person upon the terms and
conditions set forth in Article Eight of the Indenture shall not be deemed
a Proceeding for the purposes of this Section if the Person formed by such
consolidation or into which the Company is merged or the Person which
acquires by conveyance or transfer such properties and assets as an entirety,
as the case may be, shall, as a part of such consolidation, merger,
conveyance or transfer, comply with the conditions set forth in Article Eight
of the Indenture.
Section 4.3 No Payment When Senior Indebtedness In Senior
Payment Default or Senior Indebtedness Accelerated.
--------------------------------------------------
In the event that (a) any Senior Payment Default (as defined below) shall
have occurred and such Senior Indebtedness shall have become, by reason
thereof, due and payable prior to the Stated Maturity thereof, then no
Debentures Payment shall be made (except that, so long as Citizens Capital
shall be the Holder of all of the Outstanding Debentures, payment may be made
in shares of capital stock), unless and until such Senior Payment Default
shall have been cured or waived in writing or shall have ceased to exist or
all amounts then due and payable in respect of such Senior Indebtedness
(including amounts that have become and remain due by acceleration) shall
have been paid in full in cash. "Senior Payment Default" means any default
(which default has continued beyond any applicable grace and/or cure period
(if any), in the payment of principal of (or premium, if any) or interest on
any Senior Indebtedness when due, whether at the stated maturity of any such
payment or by declaration of acceleration, call for redemption, mandatory
payment or prepayment or otherwise.
In the event that any Senior Nonmonetary Default (as defined below) shall
have occurred and be continuing, then, upon the receipt by the Company and
the Trustee of written notice of such Senior Nonmonetary Default from the
Designated Senior Holder of such certain Senior Indebtedness, no Debentures
Payment (except that, so long as Citizens Capital shall be the Holder of all
of the Outstanding Debentures, payment may be made in shares of capital
stock) shall be made, during the period (the "Payment Blockage Period")
commencing on the date of such receipt of such written notice and ending
(subject to any blockage of payments that may then or thereafter be in effect
as the result of any Senior Payment Default) on the earlier of (i) the date
on which the Senior Indebtedness to which such Senior Nonmonetary Default
relates is discharged or such Senior Nonmonetary Default shall have been
cured or waived in writing or shall have ceased to exist and any acceleration
of Senior Indebtedness to which such Senior Nonmonetary Default relates shall
have been rescinded or annulled or (ii) the 179th day after the date of such
receipt of such written notice. No more than one Payment Blockage Period may
be commenced with respect to the Debentures during any period of 360
consecutive days and there shall be a period of at least 181 consecutive days
in each period of 360 consecutive days when no Payment Blockage Period is in
effect. Following the commencement of any Payment Blockage Period, the
holders of the Senior Indebtedness will be precluded from commencing a
subsequent Payment Blockage Period until the conditions set forth in the
preceding sentence are satisfied. For all purposes of this paragraph, no
Senior Nonmonetary Default that existed or was continuing on the date of
commencement of any Payment Blockage
16
Period with respect to the Senior Indebtedness initiating such Payment
Blockage Period shall be, or be made, the basis for the commencement of a
subsequent Payment Blockage Period by holders of Senior Indebtedness or
their representatives unless such Senior Nonmonetary Default shall have been
cured for a period of not less than 90 consecutive days. "Senior Nonmonetary
Default" means any default (other than a Senior Payment Default) or any
event which, after notice or lapse of time (or both), would become an event
of default, under the terms of any instrument or agreement pursuant to which
any Senior Indebtedness is outstanding, permitting (after notice or lapse of
time or both) one or more holders of such Senior Indebtedness (or a
trustee or agent on behalf of the holders thereof) to declare such Senior
Indebtedness due and payable prior to the date on which it would otherwise
become due and payable.
In the event that, notwithstanding the foregoing, the Company shall make
any Debentures Payment to the Trustee or any Holder prohibited by the
foregoing provisions of this Section, then and in such event such Debentures
Payment shall be paid over and delivered forthwith to the Designated Senior
Holders under the Senior Indebtedness or, if such Senior Indebtedness has
been repaid in full, to the Company.
The provisions of this Section shall not apply to any Debentures Payment
with respect to which Section 4.2 hereof would be applicable.
Section 4.4 Payment Permitted If No Default.
-------------------------------
Nothing contained in this Article or elsewhere in this First Supplemental
Indenture or in any of the Debentures shall prevent the Company, at any time
except during the pendency of any Proceeding referred to in Section 4.2 hereof
or under the conditions described in Section 4.3 hereof, from making
Debentures Payments.
Section 4.5 Subrogation To Rights Of Holders Of Senior Indebtedness.
-------------------------------------------------------
Subject to the payment in full in cash of all Senior Indebtedness, the
Holders of the Debentures shall be subrogated to the rights of the holders
of such Senior Indebtedness to receive payments and distributions of cash,
property and securities applicable to the Senior Indebtedness until the
principal of and interest on the Debentures shall be paid in full. For
purposes of such subrogation, no payments or distributions to the holders of
the Senior Indebtedness of any cash, property or securities to which the
Holders of the Debentures or the Trustee would be entitled except for the
provisions of this Article, and no payments pursuant to the provisions of
this Article to the holders of Senior Indebtedness by Holders of the
Debentures or the Trustee, shall, as among the Company, its creditors other
than holders of Senior Indebtedness and the Holders of the Debentures, be
deemed to be a payment or distribution by the Company to or on account of the
Senior Indebtedness.
17
Section 4.6 Provisions Solely To Define Relative Rights.
-------------------------------------------
The provisions of this Article are and are intended solely for the purpose
of defining the relative rights of the Holders on the one hand and the
holders of Senior Indebtedness on the other hand. Nothing contained in this
Article or elsewhere in this First Supplemental Indenture or in the
Debentures is intended to or shall (a) impair, as among the Company, its
creditors (other than holders of Senior Indebtedness) and the Holders of the
Debentures, the obligation of the Company, which is absolute and
unconditional (and which, subject to the rights under this Article of the
holders of Senior Indebtedness, is intended to rank equally with all other
general obligations of the Company), to pay to the Holders of the Debentures
the principal of and interest on the Debentures as and when the same shall
become due and payable in accordance with their terms; or (b) affect the
relative rights against the Company of the Holders of the Debentures and
creditors of the Company, other than the holders of Senior Indebtedness; or
(c) prevent the Trustee or the Holder of any Debenture from exercising all
remedies otherwise permitted by applicable law upon default under this First
Supplemental Indenture or the Indenture, subject to the rights, if any,
under this Article of the holders of Senior Indebtedness to receive cash,
property and securities otherwise payable or deliverable to the Trustee or
such Holder or, under the conditions specified in Section 4.3, to prevent
any payment prohibited by such Section or enforce their rights pursuant to
the penultimate paragraph in Section 4.3.
Section 4.7 Trustee To Effectuate Subordination.
-----------------------------------
Each Holder of a Debenture by his acceptance thereof authorizes and directs
the Trustee on his behalf to take such action as may be necessary or
appropriate to effectuate the subordination provided in this Article and
appoints the Trustee his attorney-in-fact for any and all such purposes,
including, in the event of any dissolution, winding-up, liquidation or
reorganization of the Company whether in bankruptcy, insolvency, receivership
proceedings, or otherwise, the timely filing of a claim for the unpaid
balance of the Indebtedness of the Company owing to such Holder in the form
required in such proceedings and the causing of such claim to be approved.
If the Trustee does not file a proper claim at least 30 days before the
expiration of the time to file such claim, then the holders of the Senior
Indebtedness and their agents, trustees or other representatives are
authorized to do so (but shall in no event be liable for any failure to do
so) for and on behalf of the Holders of the Debentures.
Section 4.8 No Waiver Of Subordination Provisions.
-------------------------------------
No right of any present or future holder of any Senior Indebtedness to
enforce subordination as herein provided shall at any time in any way be
prejudiced or impaired by any act or failure to act on the part of the
Company or by any act or failure to act, in good faith, by any such holder,
or by any noncompliance by the Company with the terms, provisions and
covenants of this First Supplemental Indenture or the Indenture, regardless
of any knowledge thereof any such holder may have or be otherwise charged
with.
18
Without in any way limiting the generality of the foregoing paragraph, the
holders of Senior Indebtedness may, at any time and from time to time,
without the consent of or notice to the Trustee or the Holders of the
Debentures, without incurring responsibility to the Holders of the Debentures
and without impairing or releasing the subordination provided in this Article
or the obligations hereunder of the Holders of the Debentures to the holders
of the Senior Indebtedness, do any one or more of the following: (i) change
the manner, place or terms of payment or extend the time of payment of, or
renew or alter, Senior Indebtedness, or otherwise amend or supplement in any
manner Senior Indebtedness or any instrument evidencing the same or any
agreement under which Senior Indebtedness is outstanding; (ii) permit the
Company to borrow, repay and then reborrow any or all of the Senior
Indebtedness; (iii) sell, exchange, release or otherwise deal with any
property pledged, mortgaged or otherwise securing Senior Indebtedness; (iv)
release any Person liable in any manner for the collection of Senior
Indebtedness; (v) exercise or refrain from exercising any rights against the
Company and any other Person; and (vi) apply any sums received by them to
Senior Indebtedness.
Section 4.9 Notice To Trustee.
-----------------
The Company shall give prompt written notice to the Trustee of any fact
known to the Company which would prohibit the making of any payment to or by
the Trustee in respect of the Debentures. Notwithstanding the provision of
this Article or any other provision of this First Supplemental Indenture or
the Indenture, the Trustee shall not be charged with knowledge of the
existence of any facts which would prohibit the making of any payment to or
by the Trustee in respect of the Debentures, unless and until a Responsible
Officer of the Trustee shall have received written notice thereof from the
Company, any holder of Senior Indebtedness, any Designated Senior Holder or
from any trustee, fiduciary or agent therefore; and, prior to the receipt of
any such written notice, the Trustee, subject to the provisions of Section
6.1 of the Indenture, shall be entitled in all respects to assume that no
such facts exist; provided, however, that if the Trustee shall not have
received the notice provided for in this Section at least three
Business Days prior to the date upon which by the terms hereof any money may
become payable for any purpose (including, without limitation, the payment
of the principal or interest on any Debenture), then, anything herein
contained to the contrary notwithstanding, but without limiting the rights
and remedies of the holders of Senior Indebtedness or any trustee, fiduciary
or agent therefor, the Trustee shall have full power and authority to receive
such money and to apply the same to the purpose for which such money was
received and shall not be affected by any notice to the contrary which may
be received by it within three Business Days prior to such date. Any notice
required or permitted to be given to the Trustee by a holder of Senior
Indebtedness or by any Designated Senior Holder shall be in writing and shall
be sufficient for every purpose hereunder if in writing and either (i) sent
via facsimile to the Trustee, the receipt of which shall be confirmed via
telephone, or (ii) mailed, first class postage prepaid, or sent by overnight
carrier, to the Trustee addressed to it at the address of its principal
office specified in the first paragraph of this instrument or at any other
address furnished in writing to such holder of Senior Indebtedness by the
Trustee.
19
Subject to the provisions of Section 6.1 of the Indenture, the Trustee
shall be entitled to rely on the delivery to it of a written notice by a
Person representing himself to be a holder of Senior Indebtedness or
Designated Senior Holder (or a trustee, fiduciary or agent therefor) to
establish that such notice has been given by a holder of Senior Indebtedness
or Designated Senior Holder (or a trustee, fiduciary or agent therefor). In
the event that the Trustee determines in good faith that further evidence is
required with respect to the right of any Person as a holder of Senior
Indebtedness or Designated Senior Holder to participate in any payment or
distribution pursuant to this Article, the Trustee may request such Person
to furnish evidence to the reasonable satisfaction of the Trustee as to the
amount of Senior Indebtedness held by such Person, the extent to which such
Person is entitled to participate in such payment or distribution and any
other facts pertinent to the rights of such Person under this Article, and
if such evidence is not furnished, the Trustee may defer any payment to such
Person pending judicial determination as to the right of such Person to
receive such payment.
Notwithstanding anything else contained herein, no notice, request or other
communication to or with the Trustee shall be deemed given unless received
by a Responsible Officer at the Trustee's principal corporate trust office.
Section 4.10 Reliance On Judicial Order Or Certificate Of Liquidating
Agent.
--------------------------------------------------------
Upon any payment or distribution of assets of the Company referred to in
this Article, the Trustee, subject to the provisions of Section 6.1 of the
Indenture, and the Holders of the Debentures shall be entitled to rely upon
any order or decree entered by any court of competent jurisdiction in which
such Proceeding is pending, or a certificate of the trustee in bankruptcy,
receiver, liquidating trustee, custodian, assignee for the benefit of
creditors, agent or other Person making such payment or distribution,
delivered to the Trustee or to the Holders of Debentures, for the purpose of
ascertaining the Persons entitled to participate in such payment or
distribution, the holders of the Senior Indebtedness and other Indebtedness
of the Company, the amount thereof or payable thereon, the amount or amounts
paid or distributed thereon and all other facts pertinent thereto or to this
Article, provided that the foregoing shall apply only if such court has been
apprised of the provisions of this Article.
Section 4.11 Trustee Not Fiduciary For Holders Of Senior Indebtedness.
--------------------------------------------------------
The Trustee shall not be deemed to owe any fiduciary duty to the holders
of Senior Indebtedness and shall not be liable to any such holders if it
shall in good faith mistakenly pay over or distribute to Holders of
Debentures or to the Company or to any other Person cash, property or
securities to which any holders of Senior Indebtedness shall be entitled by
virtue of this Article or otherwise.
20
Section 4.12 Rights of Trustee As Holder Of Senior Indebtedness;
Preservation Of Trustee's Rights.
--------------------------------------------------
The Trustee in its individual capacity shall be entitled to all the rights
set forth in this Article with respect to any Senior Indebtedness which may
at any time be held by it, to the same extent as any other holder of Senior
Indebtedness, and nothing in this First Supplemental Indenture shall deprive
the Trustee of any of its rights as a holder of Senior Indebtedness.
Nothing in this Article shall apply to claims of, or payments to, the
Trustee under or pursuant to Section 6.7 of the Indenture.
Section 4.13 Article Applicable to Paying Agents.
-----------------------------------
In case at any time any Paying Agent other than the Trustee shall have been
appointed by the Company and be then acting hereunder, the term "Trustee" as
used in this Article shall in such case (unless the context otherwise
requires) be construed as extending to and including such Paying Agent within
its meaning as fully for all intents and purposes as if such Paying Agent
were named in this Article in addition to or in place of the Trustee;
provided, however, that Section 4.11 hereof shall not apply to the Company
or any Affiliate of the Company if it or such Affiliate acts as Paying Agent.
ARTICLE 5
CONVERSION OF DEBENTURES
Section 5.1 Conversion Privilege.
--------------------
Subject to and upon compliance with the provisions of this Article, at the
option of the Holder thereof, any Debenture may, at any time or from time to
time on any Business Day to and including, but not after, the close of
business on the day which is five Business Days prior to _______ 2035, be
converted, in whole, or, if the Debenture is in a principal amount in excess
of $50, in part, in integral multiples of $50 principal amount, into fully
paid and nonassessable shares of Common Stock Series A, at the Conversion
Price in effect on the date of conversion. In case a Debenture or a portion
thereof is called for redemption, such conversion right in respect of such
Debenture or the portion so called, shall expire at the close of business on
the day which is five Business Days prior to the Redemption Date, unless the
Company defaults in making the payment due upon redemption.
21
Section 5.2 Manner of Exercise of Conversion Privilege.
------------------------------------------
In order to exercise the conversion privilege, the Holder of any Debenture
to be converted in whole or in part shall surrender such Debenture to the
Conversion Agent at the office or agency to be maintained by the Company
pursuant to Section 10.2 of the Indenture for the conversion of Debentures,
with the fully completed Notice of Conversion set forth in the Debenture duly
completed and, if so required by the Company, accompanied by instruments of
transfer, in form satisfactory to the Company and to the Trustee, duly
executed by the Holder or his duly authorized attorney in writing. Said
notice shall state the name or names (with addresses), if other than the
Holder, in which the certificate or certificates for shares of Common Stock
Series A which shall be issuable on such conversion shall be issued. As
promptly as practicable after the surrender of such Debenture with the signed
and completed notice as aforesaid, the Company shall, subject to the
provisions of Section 5.8, issue and deliver at such office or agency to such
Holder, or on his written order, a certificate or certificates for the number
of shares of Common Stock Series A issuable on the principal amount of the
Debenture then surrendered for conversion, and cash, as provided in Section
5.3, in respect of any fraction of a share of Common Stock Series A otherwise
issuable upon such conversion, and the Company shall execute, and the Trustee
shall authenticate and deliver to such Holder without service charge,
a new Debenture or Debentures, of any authorized denomination as requested
by such Holder, in an aggregate principal amount equal to and in exchange for
the unconverted portion of the Debenture so surrendered. Such conversion
shall be deemed to have been effected immediately prior to the close of
business on the date (herein called the "Date of Conversion") on which such
Debenture containing a duly completed and executed Notice of Conversion
shall have been surrendered as aforesaid, and the Person or Persons in whose
name or names any certificate or certificates for shares of Common Stock
Series A shall be issuable upon such conversion shall be deemed to have
become on the Date of Conversion the holder or holders of record of the
shares represented thereby; provided, however, 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 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 Debenture shall have
been so surrendered. The Holder at the close of business on any Regular
Record Date for the payment of interest will be entitled to receive the
interest payable on his or her Debenture on the corresponding Cash Interest
Payment Date notwithstanding the conversion of such Debenture into Common
Stock Series A following such Regular Record Date. Subject to Sections 5.5
and 5.6 hereof, no payment or adjustment shall be made upon conversion on
account of any interest accrued or deferred or otherwise unpaid on the
principal of any Debenture or portion thereof so converted or for any
dividends or distributions on any shares of Common Stock Series A. Holders
of Common Stock Series A issuable upon conversion prior to or on a record
date for any dividend or distribution on such shares shall be entitled to
receive the same dividend or distribution as other holders of record of
Common Stock Series A.
22
Section 5.3 Fractional Shares.
-----------------
No fractional shares of Common Stock Series A shall be issued upon
conversion of Debentures. If more than one Debenture shall be surrendered
for conversion at one time by the same Holder, the number of full shares
which shall be issuable upon conversion shall be computed on the basis of the
aggregate principal amount of the Debentures so surrendered. Instead of any
fractional interest in a share of Common Stock Series A which would otherwise
be issuable upon conversion of any Debenture or Debentures, the Company shall
pay a cash adjustment in respect of such fractional interest to the nearest
one-hundredth of a share in an amount equal to the Average Market Price of
such fractional interest on the Date of Conversion.
Section 5.4 Conversion Price.
----------------
The initial conversion price of the Debentures shall be $________ per share
of Common Stock Series A, subject to adjustment as provided in this Article
5 (the "Conversion Price").
Section 5.5 Adjustment of Conversion Price.
------------------------------
The Conversion Price for each series shall be adjusted from time to time
as follows:
(a) In case the Company shall, while any of the Debentures are
outstanding, (i) pay a dividend or make a distribution with respect to
its Common Stock Series A in shares of Common Stock Series A, (ii)
subdivide its outstanding shares of Common Stock Series A, (iii) combine
its outstanding shares of Common Stock Series A into a smaller number of
shares or (iv) issue by reclassification of its shares of Common Stock
Series A any shares of capital stock of the Company, the conversion
privilege and the Conversion Price for each series of Debentures in effect
immediately prior to such action shall be adjusted so that the Holder of
any Debenture thereafter surrendered for conversion shall be entitled to
receive the number of shares of capital stock of the Company which he
would have owned immediately following such action had such Debenture been
converted immediately prior thereto. An adjustment made pursuant to this
subsection (a) shall become effective immediately after the record date in
the case of a dividend or other distribution and shall become effective
immediately after the effective date in case of a subdivision, combination
or reclassification (or immediately after the record date if a record date
shall have been established for such event). If, as a result of an
adjustment made pursuant to this subsection (a), the Holder of any
Debenture thereafter surrendered for conversion shall become entitled
to receive shares of two or more classes or series of capital stock of
the Company, the Board of Directors (whose determination shall be
conclusive and shall be described in a Board Resolution filed with the
Trustee) shall determine the allocation of the adjusted Conversion
Price for each series of Debentures between or among shares of such
classes or series of capital stock.
23
(b) In case the Company shall, while any of the Debentures are
outstanding, issue rights or warrants to all holders of its Common
Stock Series A entitling them (for a period expiring within 45 days
after the record date mentioned below) to subscribe for or purchase
shares of Common Stock Series A at a price per share less than the
current market price per share of Common Stock Series A (as determined
pursuant to subsection (f) below) on the record date mentioned below,
the Conversion Price for the Debentures shall be adjusted so that the
same shall equal the price determined by multiplying the Conversion
Price in effect immediately prior to the date of issuance of such
rights or warrants by a fraction of which the numerator shall be the
number of shares of Common Stock Series A outstanding on the date of
issuance of such rights or warrants plus the number of shares which the
aggregate offering price of the total number of shares so offered for
subscription or purchase would purchase at such current market price,
and of which the denominator shall be the number of shares of Common
Stock Series A outstanding on the date of issuance of such rights or
warrants plus the number of additional shares of Common Stock Series
A offered for subscription or purchase. Such adjustment shall become
effective immediately after the record date for the determination of
stockholders entitled to receive such rights or warrants. To the
extent that shares of Common Stock Series A are not so delivered after
the expiration of such rights or warrants, the Conversion Price shall
be readjusted to the Conversion Price which would then be in effect if
such date fixed for the determination of stockholders entitled to
receive such rights or warrants had not been fixed. For the purposes
of this subsection, the number of shares of Common Stock Series A at any
time outstanding shall not include shares held in the treasury of the
Company. The Company shall not issue any rights or warrants in respect of
shares of Common Stock Series A held in the treasury of the Company. In
case any rights or warrants referred to in this subsection in respect of
which an adjustment shall have been made shall expire unexercised within
45 days after the same shall have been distributed or issued by the
Company, the Conversion Price shall be readjusted at the time of such
expiration to the Conversion Price that would have been in effect if no
adjustment had been made on account of the distribution or issuance of
such expired rights or warrants.
(c) Subject to the last sentence of this subsection, in case the
Company shall, by dividend or otherwise, distribute to all holders of
its Common Stock Series A evidences of its indebtedness, shares of any
class or series of capital stock (other than Common Stock Series A),
cash or assets (including securities, but excluding any rights or
warrants referred to in subsection (b), any dividend or distribution
paid exclusively in cash and any dividend or distribution referred
to in subsection (a) of this Section), the Conversion Price shall be
reduced so that the same shall equal the price determined by
multiplying the Conversion Price in effect immediately prior to the
effectiveness of the Conversion Price reduction contemplated by this
subsection (c) by a fraction of which the numerator shall be
24
the current market price per share (determined as provided in subsection
(f) below) of the Common Stock Series A on the date fixed for the
payment of such distribution (the "Reference Date") less the fair
market value (as determined in good faith by the Board of Directors,
whose determination shall be conclusive and described in a Board
Resolution), on the Reference Date, of the portion of the evidences of
indebtedness, shares of capital stock, cash and assets so distributed
applicable to one share of Common Stock Series A and the denominator
shall be such current market price per share of the Common Stock Series
A, such reduction to become effective immediately prior to the opening
of business on the day following the Reference Date. In the event that
such dividend or distribution is not so paid or made, the Conversion
Price shall again be adjusted to be the Conversion Price which would
then be in effect if such dividend or distribution had not occurred.
If the Board of Directors determines the fair market value of any
distribution for purposes of this subsection (c) by reference to the
actual or when issued trading market for any securities comprising such
distribution, it must in doing so consider the prices in such market
over the same period used in computing the current market price per
share of Common Stock Series A (determined as provided in subsection
(f)). For purposes of this subsection (c), any dividend or
distribution that includes shares of Common Stock Series A or rights
or warrants to subscribe for or purchase shares of Common Stock Series
A shall be deemed instead to be (1) a dividend or distribution of the
evidences of indebtedness, shares of capital stock, cash or assets
other than such shares of Common Stock Series A or such rights or
warrants (making any Conversion Price reduction required by this
subsection (c)) immediately followed by (2) a dividend or distribution of
such shares of Common Stock Series A or such rights or warrants (making
any further Conversion Price reduction required by subsections (a) or
(b)), except (A) the Reference Date of such dividend or distribution as
defined in this subdivision shall be substituted as (i) "the record date
in the case of a dividend or other distribution" and (ii) "the record date
for the determination of stockholders entitled to receive such rights or
warrants" within the meaning of subsections (a) and (b) and (B) any shares
of Common Stock Series A included in such dividend or distribution shall
not be deemed outstanding for purposes of computing any adjustment of the
Conversion Price in subparagraph (a).
(d) In case the Company shall pay or make a dividend or other
distribution on its Common Stock Series A exclusively in cash
(excluding all regular cash dividends if the annualized amount thereof
per share of Common Stock Series A does not exceed 15% of the current
market price per share (determined as provided in subsection (f)) of
the Common Stock Series A on the Trading Day next preceding the date
of declaration of such dividend, the Conversion Price shall be reduced so
that the same shall equal the price determined by multiplying the
Conversion Price in effect immediately prior to the effectiveness of the
Conversion Price reduction contemplated by this subsection by a fraction
of which the numerator shall be the current market price per share
25
(determined as provided in subsection (f)) of the Common Stock Series A on
the date fixed for the payment of such distribution less the amount of cash
so distributed and not excluded as provided applicable to one share of
Common Stock Series A and the denominator shall be such current market
price per share of the Common Stock Series A, such reduction to become
effective immediately prior to the opening of business on the day following
the date fixed for the payment of such distribution; provided, however,
that in the event the portion of the -------- -------
cash so distributed applicable to one share of Common Stock Series A
is equal to or greater than the current market price per share
(determined as provided in subsection (f)) of the Common Stock Series
A on the record date mentioned above, in lieu of the foregoing
adjustment, adequate provision shall be made so that each Holder of
Debentures shall have the right to receive upon conversion the amount
of cash such Holder would have received had such Holder converted such
Debentures immediately prior to the record date for the distribution
of the cash. In the event that such dividend or distribution is not
so paid or made, the Conversion Price shall again be adjusted to be the
Conversion Price which would then be in effect if such record date had
not been fixed.
(e) In case a tender or exchange offer (other than an odd-lot offer)
made by the Company or any Subsidiary of the Company for all or any
portion of the Company's Common Stock Series A shall expire and such
tender or exchange offer shall involve the payment by the Company or
such Subsidiary of consideration per share of Common Stock Series A
having a fair market value (as determined in good faith by the Board of
Directors, whose determination shall be conclusive and described in a
Board Resolution) at the last time (the "Expiration Time") tenders or
exchanges may be made pursuant to such tender or exchange offer (as it
shall have been amended) that exceeds 110% of the current market price per
share (determined as provided in subsection (f)) of the Common Stock
Series A on the Trading Day next succeeding the Expiration Time, the
Conversion Price shall be reduced so that the same shall equal the price
determined by multiplying the Conversion Price in effect immediately prior
to the effectiveness of the Conversion Price reduction contemplated by
this subsection by a fraction of which the numerator shall be the number
of shares of Common Stock Series A outstanding (including any tendered or
exchanged shares) at the Expiration Time multiplied by the current market
price per share (determined as provided in subsection (f)) of the Common
Stock Series A on the Trading Day next succeeding the Expiration Time and
the denominator shall be the sum of (x) the fair market value (determined
as aforesaid) of the aggregate consideration payable to holders based
on the acceptance (up to any maximum specified in the terms of the
tender or exchange offer) of all shares validly tendered or exchanged
and not withdrawn as of the Expiration Time (the shares deemed so
accepted, up to any such maximum, being referred to as the "Purchased
Shares") and (y) the product of the number of shares of Common Stock
Series A outstanding (less any Purchased Shares) at the Expiration Time
and the current market price per share
26
(determined as provided in subsection (f)) of the Common Stock Series A on
the Trading Day next succeeding the Expiration Time, such reduction to
become effective immediately prior to the opening of business on the day
following the Expiration Time.
(f) For the purpose of any computation under subsections (b), (c), (d)
or (e), the current market price per share of Common Stock Series A on
any date in question shall be deemed to be the average of the daily
Average Market Prices for the five consecutive Trading Days selected
by the Company commencing not more than 20 Trading Days before, and
ending not later than, the earlier of the day in question and, if
applicable, the day before the "ex" date with respect to the issuance
or distribution requiring such computation; provided, however, that if
-------- -------
another event occurs that would require an adjustment pursuant to
subsections (a) through (e), inclusive, the Board of Directors may make
such adjustments to the Average Market Prices during such five Trading
Day period as it deems appropriate to effectuate the intent of the
adjustments in this Section, in which case any such determination by
the Board of Directors shall be conclusive. For purposes of this
paragraph, the term "ex" date, (1) when used with respect to any
issuance or distribution, means the first date on which the Common
Stock Series A trades regular way on the NYSE or on such successor
securities exchange as the Common Stock Series A may be listed or in the
relevant market from which the Average Market Prices were obtained without
the right to receive such issuance or distribution, and (2) when used with
respect to any tender or exchange offer means the first date on which the
Common Stock Series A trades regular way on such securities exchange or in
such market after the Expiration Time of such offer.
(g) The Company may make such reductions in the Conversion Price, in
addition to those required by subsections (a) through (e) as it
considers to be advisable to avoid or diminish any income tax to
holders of Common Stock Series A or rights to purchase Common Stock
Series A resulting from any dividend or distribution of stock (or
rights to acquire stock) or from any event treated as such for income
tax purposes. The Company from time to time may reduce the Conversion
Price by any amount for any period of time if the period is at least
twenty (20) days, the reduction is irrevocable during the period, and
the Board of Directors of the Company shall have made a determination
that such reduction would be in the best interest of the Company, which
determination shall be conclusive. Whenever the Conversion Price is
reduced pursuant to the preceding sentence, the Company shall mail to
Holders of the Debentures a notice of the reduction at least fifteen
(15) days prior to the date the reduced Conversion Price takes effect,
and such notice shall state the reduced Conversion Price and the period
it will be in effect.
27
(h) No adjustment in the Conversion Price shall be required unless
such adjustment would require an increase or decrease of at least 1%
in the Conversion Price; provided; however; that any adjustments which
-------- -------
by reason of this subparagraph (i) are not required to be made shall
be carried forward and taken into account in determining whether any
subsequent adjustment shall be required.
(i) Notwithstanding the foregoing provisions, the issuance of any
shares of Common Stock Series A pursuant to any plan providing for the
reinvestment of dividends or interest payable on securities of the
Company and the investment of additional optional amounts in shares of
Common Stock Series A under any such plan, and the issuance of any
shares of Common Stock Series A or options or rights to purchase such
shares pursuant to any employee benefit plan or program of the Company
or pursuant to any option, warrant, right or exercisable, exchangeable
or convertible security outstanding on the date the Debentures are
first issued, shall not be deemed to constitute an issuance of Common
Stock Series A or exercisable, exchangeable or convertible securities
by the Company to which any of the adjustment provisions described
above applies. There shall also be no adjustment of the Conversion
Price in case of the issuance of any stock (or securities convertible
into or exchangeable for stock) of the Company except as specifically
described in this Article Five.
(j) If any action would require adjustment of the Conversion Price
pursuant to more than one of the provisions described above, only one
adjustment shall be made and such adjustment shall be the amount of
adjustment that has the highest absolute value to the Holder of the
Debentures.
Section 5.6 Reclassification, Consolidation, Merger or Sale of Assets.
---------------------------------------------------------
In the event that the Company shall be a party to any transaction
(including without limitation (a) any recapitalization or reclassification
of the Common Stock Series A (other than a change in par value, or from par
value to no par value, or from no par value to par value, or as a result of
a subdivision or combination of the Common Stock Series A), (b) any
consolidation of the Company with, or merger of the Company into, any other
Person, or any merger of another Person into the Company (other than a merger
which does not result in a reclassification, conversion, exchange or
cancellation of outstanding shares of Common Stock Series A of the Company),
(c) any sale or transfer of all or substantially all of the assets of the
Company or (d) any compulsory share exchange) pursuant to which the Common
Stock Series A is converted into the right to receive other securities, cash
or other property, then lawful provision shall be made as part of the terms
of such transaction whereby the Holder of each Debenture then outstanding
shall have the right thereafter to convert such Debenture only into the kind
and amount of securities, cash and other property receivable upon
consummation of such transaction by a holder of the number of
28
shares of Common Stock Series A of the Company into which such Debenture could
have been converted immediately prior to such transaction.
The Company or the Person formed by such consolidation or resulting from
such merger or which acquired such assets or which acquires the Company's
shares, as the case may be, shall make provision in its certificate or
articles of incorporation or other constituent document to establish such
right. Such certificate or articles of incorporation or other constituent
document shall provide for adjustments which, for events subsequent to the
effective date of such certificate or articles of incorporation or other
constituent document, shall be as nearly equivalent as may be practicable to
the adjustments provided for in this Article Five. The above provisions
shall similarly apply to successive transactions of the foregoing type.
Section 5.7 Notice of Adjustments of Conversion Price.
-----------------------------------------
Whenever the Conversion Price is adjusted as herein provided:
(a) the Company shall compute the adjusted Conversion Price and shall
prepare a certificate signed by the Treasurer or Controller of the
Company setting forth the adjusted Conversion Price and showing in
reasonable detail the facts upon which such adjustment is based, and
such certificate shall forthwith be filed with the Trustee and the
Conversion Agent; and
(b) a notice stating the Conversion Price has been adjusted and
setting forth the adjusted Conversion Price shall as soon as
practicable be mailed by the Company to all record holders of
Convertible Preferred Securities, Partnership Preferred Securities and
Debentures at their last addresses as they appear upon the transfer
books of the Company, the Trust or Citizens Capital, as the case may
be.
Section 5.8 Notices.
-------
In case, at any time while any of the Debentures are outstanding,
(a) the Company shall (i) declare a dividend (or any other
distribution) on its Common Stock Series A, excluding any cash
dividends that would not require adjustment pursuant to Section 5.5(d)
or dividends payable in shares of Common Stock Series A, or (ii)
authorize a tender or exchange offer that would require an adjustment
pursuant to Section 5.5(e); or
(b) the Company shall authorize the issuance to all holders of its
Common Stock Series A of rights or warrants to subscribe for or
purchase shares of its Common Stock Series A or of any other
subscription rights or warrants; or
29
(c) the Company shall authorize any reclassification of its Common
Stock Series A (other than a transaction or event referred to in
clauses (i), (ii), (iii) or (iv) of subsection (a) of Section 5.5) or
any consolidation or merger to which the Company is a party and for
which approval of any stockholders of the Company is required (except
for a merger of the Company into one of its subsidiaries solely for the
purpose of changing the corporate domicile of the Company to another
state of the United States and in connection with which there is no
substantive change in the rights or privileges of any securities of the
Company other than changes resulting from differences in the corporate
statutes of the then existing and the new state of domicile), or the
sale or transfer of all or substantially all of the assets of the
Company; or
(d) the voluntary or involuntary dissolution, liquidation or winding
up of the Company shall occur or be authorized;
then the Company shall cause to be filed at each office or agency maintained
by the Company for the purpose of conversion of the Debentures pursuant to
Section 10.2 of the Indenture, and shall cause to be mailed to the Holders
of Debentures and the holders of the Convertible Preferred Securities and the
Partnership Preferred Securities at their last addresses as they shall appear
on the Securities Register or the transfer books of the Trust or Citizens
Capital, as the case may be, at least 10 days before the date hereinafter
specified (or the earlier of the dates hereinafter specified, in the event
that more than one date is specified), a notice stating (i) the date on which
a record is to be taken for the purpose of such dividend, distribution,
rights or warrants, or, if a record is not to be taken, the date as of which
the holders of Common Stock Series A of record to be entitled to such
dividend, distribution, rights or warrants are to be determined or (ii) the
date on which any such reclassification, consolidation, merger, sale, share
exchange, transfer, dissolution, liquidation or winding up is expected that
holders of Common Stock Series A of record shall be entitled to exchange
their Common Stock Series A for securities or other property (including
cash), if any, deliverable upon such reclassification, consolidation, merger,
sale, share exchange, transfer, dissolution, liquidation or winding up. The
failure to give or receive the notice required by this Section 5.8 or any
defect therein shall not affect the legality or validity of any such dividend,
distribution, right or warrant or other action.
Section 5.9 Taxes on Conversion.
-------------------
The Company will pay any and all documentary, stamp or similar taxes
payable to the United States of America or any political subdivision or
taxing authority thereof or therein respect of the issue or delivery of
shares of Common Stock Series A on conversion of Debentures pursuant hereto;
provided, however, that the Company shall not be required to pay any tax
which may be payable in respect of any transfer involved in the issue
or delivery of shares of Common Stock Series A in a name other than that of
the Holder of the Debentures to be converted and no such issue or delivery
shall be made unless and until the Person requesting
30
such issue or delivery has paid to the Company the amount of any such tax or
has established, to the satisfaction of the Company, that such tax has been
paid.
Section 5.10 Company to Provide Stock.
------------------------
The Company covenants that there shall be reserved, from time to time, free
from preemptive rights, out of authorized but unissued shares of Common Stock
Series A, sufficient shares to provide for the conversion of the Debentures
from time to time as such Debentures are presented for conversion.
If any shares of Common Stock Series A to be reserved for the purpose of
conversion of Debentures hereunder require registration with or approval of,
or authorization by, any governmental authority under Federal or state law
before such shares may be validly issued or delivered upon conversion, then
the Company covenants that it will in good faith and as expeditiously as
possible endeavor to secure such registration, approval or authorization, as
the case may be.
Before any action which would cause an adjustment reducing the Conversion
Price for the Debentures below the then par value, if any, of the Common
Stock Series A, the Company covenants that there will be taken all corporate
action which may, in the opinion of its counsel, be necessary in order that
there may be validly and legally issued fully paid and non-assessable shares
of such Common Stock Series A at such adjusted Conversion Price.
The Company covenants that all shares of Common Stock Series A which may
be issued upon conversion of Debentures will upon issue be duly authorized,
validly issued, fully paid and non-assessable and free from all liens and
charges with respect to the issue or delivery thereof. Such shares of
Common Stock Series A will, upon issue, be listed on the NYSE or any other
national securities exchange, NASDAQ or other quotation system on which
shares of Common Stock Series A may then be listed or quoted.
Section 5.11 Disclaimer of Responsibility for Certain Matters.
------------------------------------------------
Neither the Trustee nor any Conversion Agent shall at any time be under
any duty or responsibility to any Holder of Debentures to determine whether
any facts exist which may require any adjustment of the Conversion Price for
any series of Debentures, or with respect to the nature or extent of any such
adjustment when made, or with respect to the method employed, or herein or
in any supplemental indenture provided to be employed, in making the same.
Neither the Trustee nor any Conversion Agent shall be accountable with
respect to the registration, validity or value (or the kind or amount) of any
shares of Common Stock Series A, or of any securities or property, which may
any time be issued or delivered upon the conversion of any Debenture; and
neither the Trustee nor any Conversion Agent makes any representation
with respect thereto. Neither the Trustee nor any Conversion Agent shall be
responsible for any failure of the Company to issue or deliver any shares of
Common Stock Series A or stock certificates or other securities, cash or
property upon the surrender of any Debenture for the
31
purpose of conversion, or, subject to Section 1.4 of the Indenture, to
comply with any of the covenants of the Company obtained in this Article 5.
Section 5.12 Return of Funds Deposited for Redemption of Converted
Debentures.
-----------------------------------------------------
Any funds which at any time shall have been deposited by the Company or on
its behalf with the Trustee or any other Paying Agent for the purpose of
paying the principal of, premium, if any, and interest, if any, on any of the
Debentures and which shall not be required for such purposes because of the
conversion of such Debentures, as provided in this Article 5, shall forthwith
after such conversion, upon Company Request, be repaid to the Company by the
Trustee or such other Paying Agent.
Section 5.13 Disposition of Converted Debentures.
-----------------------------------
All Debentures delivered to the Company or any Conversion Agent upon
conversion pursuant to this Article 5 shall be delivered to the Trustee for
cancellation.
ARTICLE 6
REDEMPTION OF DEBENTURES
Section 6.1 Redemption
----------
(a) Optional Redemption: At any time on or after ______________,
--------------------
199_, the Company, at its option, will have the right to prepay or
redeem the Debentures, in whole or in part (together with any accrued or
deferred but unpaid interest on the portion being prepaid), at 100% of the
principal amount being redeemed (together with any accrued or deferred but
unpaid interest to the Redemption Date) (such amount and form of payment
being the "Redemption Price").
(b) Redemption upon Company Event: Except as set forth in paragraph
------------------------------
(d) of this Section 6.1, upon the occurrence of a Company Event, the
Company shall have the right to redeem the Debentures, in whole or in part,
for cash, at the Redemption Price in accordance with Section 6.4.
(c) Redemption upon Trust Event or Partnership Event: Except as set
-------------------------------------------------
forth in paragraph (d) of this Section 6.1, upon the occurrence of a Trust
Event or a Partnership Event, if the Company cannot obtain a No Recognition
Opinion with regard to the distribution of either the Partnership Preferred
Securities or the Debentures, then the Company shall have the right to
redeem the Debentures, in whole or in part, for cash, at the Redemption
Price in accordance with Section 6.4.
(d) Ministerial Action. At the time of any such Special Event, the
-------------------
Company, Citizens Capital and the Trust each have a Ministerial Action
Obligation.
32
(e) Accrued or Deferred Interest. The Company may not redeem any
----------------------------
outstanding Debentures unless all accrued or deferred but unpaid interest
has been paid in full on all Debentures for all quarterly interest
payment periods terminating on or before the date of redemption.
Section 6.2 Applicability of Article.
------------------------
Redemption of Debentures at the election of the Company, as permitted by
Section 6.1, shall be made in accordance with such provision, this Article
and Article 11 of the Indenture, to the extent not inconsistent with this
Article 6.
Section 6.3 Election to Redeem; Notice to Trustee.
-------------------------------------
The election of the Company to redeem any Debentures pursuant to Section
6.1 shall be evidenced by a Board Resolution. In the case of any redemption
at the election of the Company, the Company shall, at least 40 days and no
more than 60 days prior to the Redemption Date fixed by the Company, notify
the Trustee of such Redemption Date and of the principal amount of Debentures
to be redeemed and any accrued or deferred and unpaid interest thereon and
provide a copy of the notice of redemption given to Holders of Debentures to
be redeemed pursuant to Section 6.4.
Section 6.4 Notice of Redemption.
--------------------
Notice of redemption shall be given by first-class mail, postage prepaid,
mailed not less than 30 nor more than 60 days prior to the Redemption Date,
to each Holder of Debentures to be Redeemed, at his address appearing in the
Security Register.
All notices of redemption shall state:
(1) the Redemption Date,
(2) the Redemption Price,
(3) that on the Redemption Date the Redemption Price will become due
and payable upon each such Debenture to be redeemed and that interest
thereon will cease to accrue on and after said date,
(4) the place or places where such Debentures are to be surrendered
for payment of the Redemption Price,
(5) the date that the conversion right shall expire, and
(6) the Conversion Price.
33
Notice of redemption of Debentures to be redeemed at the election of the
Company shall be given by the Company or, at the Company's request, by the
Trustee in the name and at the expense of the Company.
Section 6.5 Deposit of Redemption Price.
---------------------------
Prior to 12:00 p.m. on any Redemption Date, the Company shall deposit with
the Trustee or with a Paying Agent (or, if the Company is acting as its own
Paying Agent, segregate and hold in trust as provided in Section 10.3 of the
Indenture) an amount of money sufficient to pay the Redemption Price of,
and deferred interest on, all the Debentures.
Section 6.6 Debentures Payable on Redemption Date.
-------------------------------------
Notice of redemption having been given as aforesaid, the Debentures so to
be redeemed shall, on the Redemption Date, become due and payable at the
Redemption Price therein specified, and from and after such date (unless the
Company shall default in such payment) such Debentures shall cease to bear
interest. Upon surrender of any such Debenture for redemption in accordance
with said notice, such Debenture shall be paid by the Company at the
Redemption Price, provided, however, that installments of interest whose
Cash Interest Payment Date is prior to the Redemption Date shall be payable
to the Holders of such Debentures registered as such at the close of
business on the relevant Regular Record Dates subject to the provisions of
Section 3.7 of the Indenture and Article 3 of this First Supplemental
Indenture.
ARTICLE 7
AMENDMENTS TO INDENTURE FOR PURPOSES
OF FIRST SERIES OF DEBENTURES
Section 7.1 Amendment to Section 5.1 of Indenture
for Purposes of First Series of Debentures.
------------------------------------------
For all purposes of the Debentures and for no other purposes, Section 5.1
of the Indenture shall read (terms used but not defined in the Indenture
shall have the requisite meanings as used in this First Supplemental
Indenture):
"Section 5.1. Events of Default.
-----------------
"Event of Default", wherever used herein, means any one of the
following events (whatever the reason for such Event of Default and whether
it shall be occasioned by the provisions of Article Four of the First
Supplemental Indenture or shall be voluntary or involuntary or be effected
by operation of law or pursuant to any judgment, decree or
34
order of any court or any order, rule or regulation of any administrative or
governmental body):
(1) failure to pay any principal of the Debentures when due, and
such failure shall continue for 15 days; or
(2) failure to pay any interest on the Debentures, other than
Additional Interest, if any, when due and such failure continues for
a period of 60 days; provided, that a deferral of an interest payment
by the Company pursuant to the First Supplemental Indenture shall not
constitute a default in the payment of interest for this or any other
purpose and no interest payment which has been deferred shall be deemed
due or payable until the date specified as the date for payment of such
interest as provided in Section 3.7 of the Indenture; or
(3) failure by the Company to issue the Common Stock Series A (or
other securities) upon an election to convert the Debentures for Common
Stock Series A (or other securities), which failure shall continue for
five days; or
(4) failure by the Company to perform in any material respect any
other covenant herein (other than a covenant whose performance is
elsewhere in this Section specifically dealt with) for the benefit of
the holders of Debentures continued for a period of 90 days after
written notice, by registered or certified mail, (i) to the Company by
the Trustee or (ii) to the Company and the Trustee by the Holders of a
majority in aggregate principal amount of the Debentures or by the
holders of a majority in liquidation amount of Partnership Preferred
Securities or Convertible Preferred Securities; or
(5) the dissolution, winding-up, liquidation or termination of the
Partnership unless the same is a result of a Special Event or Rating
Agency Event; or
(6) the dissolution, winding-up, liquidation or termination of the
Trust unless the same is a result of a Special Event or Rating Agency
Event; or
(7) the entry by a court having jurisdiction in the premises of (A)
a decree or order for relief in respect of the Company, the Partnership
or the Trust in an involuntary case or proceeding under any applicable
Federal or State bankruptcy, insolvency, reorganization or other
similar law or (B) a decree or order adjudging the Company, the
Partnership or the Trust a bankrupt or insolvent, or approving as
properly filed a petition seeking reorganization, arrangement,
adjustment or composition of or in respect of the Company, the
Partnership or the Trust under any applicable federal or state law, or
appointing a custodian, receiver, liquidator, assignee, trustee,
sequestrator or other similar official of the Company, the Partnership
or the Trust or of any substantial part
35
of the property of any of them, or ordering the winding-up or
liquidation of its affairs, and the continuance or any such decree
or order for relief or any such other decree or order unstayed and in
effect for a period of 60 consecutive days; or
(8) the commencement by the Company, the Partnership or the Trust
of a voluntary case or proceeding under any applicable federal or state
bankruptcy, insolvency, reorganization or other similar law or of any
other case or proceeding to be adjudicated a bankrupt or insolvent, or
the consent by any of the Company, the Partnership or the Trust it to
the entry of a decree or order for relief in respect of itself in an
involuntary case or proceeding under any applicable federal or state
bankruptcy, insolvency, reorganization or other similar law or to the
commencement of any bankruptcy or insolvency case or proceeding against
either the Company, the Partnership or the Trust, or the filing by any
of them of a petition or answer or consent seeking reorganization or
relief under any applicable federal or state law, or the consent by any
of the Company, the Partnership or the Trust to the filing of such
petition or to the appointment of or taking possession by a custodian,
receiver, liquidator, assignee, trustee, sequestrator or other similar
official of the Company, the Partnership or the Trust or of any
substantial part of the property of any of them, or the making by any
of them of an assignment for the benefit of creditors, or the admission
by any of them in writing of its inability to pay its debts generally
as they become due, or the taking of corporate action by the Company,
the Partnership or the Trust in furtherance of any such action;
it being understood that (other than as described in paragraphs (1)
and (2) above to the extent the Trustee is the Paying Agent for the
Debentures) the Trustee shall not be deemed to have knowledge of an
Event of Default hereunder unless a Responsible Officer has received
written notice thereof."
Section 7.2 Amendment to Section 9.1 of Indenture
for Purposes of First Series of Debentures.
------------------------------------------
For all purposes of the Debentures and for no other purposes, subsection
(10) of Section 9.1 of the Indenture shall read (terms used but not defined
in the Indenture shall have the requisite meanings as used in this First
Supplemental Indenture):
"(10) to cure any ambiguity, to correct or supplement any
provision herein which may be inconsistent with any other provision
herein, or to make any other provisions with respect to matters or
questions arising under this Indenture or the First Supplemental
Indenture which shall not be inconsistent with the provisions of this
Indenture or the First Supplemental Indenture; provided that such
action pursuant to this clause (10) shall not adversely affect the
interests of the Holders in any material respect or, so long as any of
the Convertible Preferred Securities or Partnership Preferred
Securities shall remain
36
outstanding, the holders of the Convertible Preferred Securities or
Partnership Preferred Securities in any material respect."
Section 7.3 Amendment to Section 9.2 of Indenture
for Purposes of First Series of Debentures.
------------------------------------------
For all purposes of the Debentures and for no other purposes, there shall
be added a proviso following subsection (3) of Section 9.2 of the Indenture,
which shall read (terms used but not defined in the Indenture shall have the
requisite meanings as used in this First Supplemental Indenture):
"; provided, that, so long as any of the Convertible Preferred
Securities or Partnership Preferred Securities remains outstanding, no
such amendment shall be made that adversely affects the holders of the
Convertible Preferred Securities or Partnership Preferred Securities,
and no termination of this Indenture or the First Supplemental
Indenture shall occur, and no waiver of any Event of Default or
compliance with any covenant under this Indenture or the First
Supplemental Indenture shall be effective, without the prior consent
of the holders of at least 66-2/3% of the aggregate liquidation
preference of the outstanding Convertible Preferred Securities or
Partnership Preferred Securities unless and until the Debentures and
all accrued or deferred and unpaid interest thereon have been paid in
full."
ARTICLE 8
EXPENSES
Section 8.1 Payment and Expenses.
--------------------
In connection with the offering, sale and issuance of the Debentures to
Citizens Capital in connection with the issuance of the Partnership
Securities by Citizens Capital and the sale of the Trust Securities by the
Trust, the Company shall:
(a) pay for all costs and expenses relating to the offering, sale and
issuance of the Debentures, including commissions to the underwriters
payable pursuant to the Underwriting Agreement and compensation and
expenses of the Trustee under the Indenture in accordance with the
provisions of Section 6.7 of the Indenture;
(b) pay for all costs and expenses relating to the organization,
maintenance and dissolution of Citizens Capital and the Trust and the
retention of its regular trustees;
(c) pay for all costs and expenses of Citizens Capital and the Trust
(including but not limited to, costs and expenses relating to the
organization of Citizens Capital and the Trust, the issuance of the
Partnership Securities, the offering, sale and issuance of the Trust
Securities (including commissions to the underwriters in connection
therewith),
37
the fees and expenses of the Property Trustee and the Delaware
Trustee, the costs and expenses relating to the operation of Citizens
Capital and the Trust, including without limitation, costs and expenses of
accountants, attorneys, statistical or bookkeeping services, expenses for
printing and engraving and computing or accounting equipment, paying
agent(s), registrar(s), transfer agent(s), duplicating, travel and
telephone and other telecommunications expenses and costs and expenses
incurred in connection with the acquisition, financing, and disposition of
Citizens Capital and Trust assets);
(d) pay for all costs and expenses relating to the enforcement by the
Property Trustee under the Trust of the rights of the holders of the
Convertible Preferred Securities; and
(e) to the extent contemplated by Section 3.1(17), pay Taxes of
Citizens Capital and the Trust and all liabilities, costs and expenses with
respect to such Taxes of Citizens Capital and the Trust, either by payment
of Additional Interest, by payment directly to the taxing authority or
by otherwise making funds available to Citizens Capital or the Trust, as
contemplated by Section 3.1(17).
ARTICLE 9
COVENANTS
Section 9.1 Covenants.
---------
(1) The Company agrees (i) that the Company will not declare or pay
any dividend or distribution (other than in shares of its capital stock)
on any of the Company's capital stock, (ii) that neither the Company nor
any of its Subsidiaries will redeem, purchase, acquire for value or make
a liquidation payment to any holder of, or with respect to, any of the
Company's capital stock or any of the Company's indebtedness for borrowed
money which by its terms expressly ranks junior in subordination to the
Debentures ("Other Subordinated Indebtedness") (other than (x) as an
issuance of capital stock upon conversion of a convertible security or in
payment of interest, premium or principal or in payment in redemption,
purchase or other acquisition or liquidation of capital stock or Other
Subordinated Indebtedness, (y) as a result of reclassification of such
capital stock or the exchange or conversion of one class or series of
capital stock for another class or series of capital stock, or (z) in
connection with the right of the Company to purchase or reacquire shares
of Common Stock Series A referred to in Section 3.1(5) of this First
Supplemental Indenture or under the provisions of the Declaration or the
Limited Partnership Agreement), (iii) that the Company will not make any
payment of principal, premium or interest (unless payable in shares of
capital stock) on Other Subordinated Indebtedness, and (iv) that neither
the Company nor any of its Subsidiaries will make any guarantee of payments
which would be prohibited or limited by the foregoing (other than payments
under the Guarantees, payments of
38
dividends by a Subsidiary, or guarantees of dividends or payments payable
to the Company), if at such time (a) there shall have occurred any event
that, with the giving of notice or the lapse of time or both, would
constitute an Event of Default hereunder or under the Debentures, (b) the
Company shall be in default with respect to its payment or other
obligations under the Guarantees or (c) the Company shall have given notice
of its election to defer an interest payment as provided herein and any
deferred interest payment remains unpaid. The term "Other Subordinated
Indebtedness" shall not include any indebtedness which is outstanding
under an instrument dated prior to the date of this First Supplemental
Indenture which does not expressly permit the deferral of payment or
extension of the time for payment of interest, premium or principal, or any
installment thereof.
(2) The Company also covenants (i) to remain the General Partner of
Citizens Capital; provided that any permitted successor of the Company
under the Limited Partnership Agreement may succeed to the Company's duties
as General Partner, (ii) to cause at least 3% of the total value of
Citizens Capital and at least 3% of all interests in the capital, income,
gain, loss, deduction and credit of Citizens Capital to be held by the
Company, as a General Partner of Citizens Capital, (iii) not to voluntarily
dissolve, wind-up or liquidate Citizens Capital, (iv) to perform timely all
of its duties as General Partner (including the duty to declare and pay
distributions on the Partnership Preferred Securities), (v) to maintain
direct ownership of all partnership interests of Citizens Capital other
than the Partnership Preferred Securities and any special partnership
interest, except as may be permitted by the Limited Partnership Agreement,
(vi) to use its reasonable efforts to cause Citizens Capital to remain a
limited partnership and otherwise to continue to be treated as a
partnership for United States federal income tax purposes; (vii) to issue
Common Stock Series A upon an election by Holders to convert the
Debentures; and (viii) to own Convertible Common Securities equal to
at least 3% of the total undivided beneficial interests in the assets of
the Trust.
(3) The Company also covenants that so long as any Debentures are held
by Citizens Capital, the General Partner shall not (i) exercise its option
to select the form of payment of interest in violation of instructions of
the Special Representative, (ii) direct the time, method and place of
conducting any proceeding for any remedy available to the Special
Representative, or exercising any trust or power conferred on the Special
Representative with respect to the Debentures, (iii) waive any past default
which is waivable under this First Supplemental Indenture, (iv) exercise
any right to rescind or annul a declaration that the principal of all the
Debentures shall be due and payable, (v) consent to any amendment,
modification or termination of the Debentures or of this First Supplemental
Indenture or the Indenture without, in each case, obtaining the prior
approval of the Property Trustee after having received the prior consent
of the holders of at least 66-2/3% or more of the aggregate liquidation
preference of the Convertible Preferred Securities then outstanding,
provided, however, that where a consent under the Debentures would require
the consent of each Holder affected thereby, no such consent shall be given
by the General Partner without the prior approval of such Property Trustee
39
after having received the prior consent from each holder of the Convertible
Preferred Securities. The General Partner shall not revoke any
action previously approved by the Property Trustee with the prior consent
or approval of the holders of the Convertible Preferred Securities, without
the approval of the Property Trustee after having received the prior
consent or approval of the holders of Convertible Preferred Securities
representing 66-2/3% or more (or 100% where the consent of each holder
affected thereby is required) of the aggregate liquidation preference of
the Convertible Preferred Securities.
(4) If the Trust or Citizens Capital shall notify the Company and the
Trustee in writing that either the Trust or Citizens Capital is giving
notice of the redemption of all or a portion of the Trust Securities or the
Partnership Preferred Securities and General Partnership Security, which
notice shall state an amount of liquidating value to be redeemed of each
security and the date of such redemption, the Company will promptly give
notice of redemption of the Debentures with the same principal amount
(without duplication) as the aggregate liquidating value of the Partnership
Preferred Securities and the General Partnership Security being redeemed
or, if the Debentures are held by the Trust, in the same aggregate
principal amount as the liquidating value of the Trust Securities being
redeemed. The redemption date specified in such notice of redemption
of Debentures shall be the same redemption date as is specified by the
Trust or Citizens Capital.
(5) If Debentures are to be distributed to the holders of the
Convertible Preferred Securities upon a liquidation of the Trust, the
Company will use its best efforts to list the Debentures on the NYSE or on
such other exchange as the Convertible Preferred Securities are then
listed.
(6) The Company expressly acknowledges that, under the terms of the
Convertible Preferred Securities, the trustee for the holders of
outstanding Convertible Preferred Securities shall have the right to
appoint a Special Representative, which Special Representative shall be
authorized to exercise the right of the Trustee or the Holders of not less
than a majority in principal amount of the outstanding Debentures to
accelerate the principal amount of the Debentures and to enforce the
Holders' other rights hereunder or under the Debentures.
40
ARTICLE 10
MISCELLANEOUS
Section 10.1 Benefits of Indenture.
---------------------
The Company's obligations under the Indenture and this First Supplemental
Indenture and the Debentures will also be for the benefit of the holders from
time to time of the Partnership Preferred Securities, Convertible Preferred
Securities and Convertible Common Securities. Nothing in the Indenture or
this First Supplemental Indenture or in the Debentures, express or implied,
shall give any Person, other than the parties hereto and their successors
hereunder, the holders of Senior Indebtedness, the holders of Convertible
Preferred Securities and Convertible Common Securities, the holders of
Partnership Preferred Securities and the Holders of Debentures, any benefit
or any legal or equitable right, remedy or claim under the Indenture and this
First Supplemental Indenture.
Section 10.2 Incorporation of Indenture
--------------------------
From and after the date hereof, the Indenture, as supplemented by this
First Supplemental Indenture, shall be read, taken and construed as one and
the same instrument with respect to the Debentures.
Section 10.3 Acceptance of Trust.
-------------------
The Trustee accepts the trusts created by the Indenture, as hereby
supplemented by this First Supplemental Indenture, and agrees to perform the
same upon the terms and conditions in the Indenture, as so supplemented.
Section 10.4 Conflict with Trust Indenture Act.
---------------------------------
If any provision hereof limits, qualifies or conflicts with a provision of
the Trust Indenture Act that is required under such Act to be a part of and
govern this First Supplemental Indenture, such provision of the Act shall
control. If any provision of this First Supplemental Indenture modifies or
excludes any provision of the Trust Indenture Act that may be so modified or
excluded, such provision of the Act shall be deemed to apply to this First
Supplemental Indenture only as so modified and if not so excluded, as the
case may be.
Section 10.5 Governing Law.
-------------
This First Supplemental Indenture, and the Debentures, shall be governed
by and construed in accordance with the laws of the State of New York.
41
Section 10.6 Recitals.
--------
The recitals contained in the Indenture, this First Supplemental Indenture
and the Debentures, except the Trustee's certificate of authentication, shall
be taken as statements of the Company, and the Trustee assumes no
responsibility for their correctness. The Trustee makes no representations
as to the validity or sufficiency of the Indenture, as supplemented by this
First Supplemental Indenture.
Section 10.7 Amendments.
----------
Notwithstanding any other provisions hereof, all amendments to the
Indenture made hereby shall have effect only with respect to the Debentures,
and not with respect to the Securities of any other series created subsequent
to the date hereof.
Section 10.8 Counterparts.
------------
This First Supplemental Indenture may be executed in any number of
counterparts, each of which when so executed shall be deemed to be an
original, but all such counterparts shall together constitute but one and the
same instrument.
42
IN WITNESS WHEREOF, the parties hereto have caused this First Supplemental
Indenture to be duly executed, and their respective corporate seals to be
hereunto affixed and attested, all as of the date first above written.
CITIZENS UTILITIES COMPANY
By:______________________________
Title: Vice President and
Treasurer
Attest:
________________________________
Secretary
CHEMICAL BANK, as Trustee
By:______________________________
Title: Vice President
Attest:
_______________________________
Assistant Vice President
43
County of Fairfield )
) ss.:
State of Connecticut )
On the day of __________, 1995, before me personally came Robert
J. DeSantis, to me known, who, being by me duly sworn, did depose and say that
he is Vice President and Treasurer of CITIZENS UTILITIES COMPANY, one of
the corporations described in and which executed the foregoing instrument;
that he knows the seal of said corporations; that the seal affixed to said
instrument is such corporate seal; that it was so affixed by authority of the
Board of Directors of said corporation, and that he signed his name thereto
by like authority.
__________________________________
Notary Public, State of Connecticut
44
County of New York )
) ss.:
State of New York )
On this day of ___________ in the year of 1995 before me
personally came _____________________________________________, to me
personally known, who being by me duly sworn did depose and say that he
resides at _________________________________________________________, that
he is Vice President of CHEMICAL BANK, one of the corporations described in
and which executed the foregoing indenture; that he knows the seal of said
corporation; that the seal affixed to said instrument opposite the execution
thereof on behalf of said corporation is the corporate seal of said
corporation; that said instrument was signed and said corporate seal was so
affixed on behalf of said corporation by authority and order of its board of
directors; that he signed his name thereto by like authority; and he
acknowledged said instrument to be his free act and deed and the free act and
deed of said Chemical Bank.
IN WITNESS WHEREOF I have hereunder set my hand and affixed my official
seal, at New York in said State of New York, the day and year first above
written.
__________________________________
Notary Public, State of New York
45
ANNEX A
Initial Regular Record Dates,
Distribution Declaration Dates and Share Transfer and Valuation Dates
Distribution Regular Share Transfer Related Cash
Declaration Date Record Date and Valuation Date Interest Payment Date
- ---------------- ----------- ------------------ ---------------------
December 9 December 19 January 18 January 31
March 13 March 23 April 17 April 30
June 13 June 23 July 18 July 31
September 12 September 22 October 18 October 31
If the scheduled Distribution Declaration Date or Share Transfer and
Valuation Date falls on a day which is not a Business Day, the Distribution
Declaration Date or Share Transfer and Valuation Date, as the case may be,
shall be the next preceding day that is a Business Day.
46
EXHIBIT A
to
First Supplemental Indenture
(FORM OF DEBENTURE)
REGISTERED REGISTERED
R- ________ $___________
CITIZENS UTILITIES COMPANY
_____% CONVERTIBLE SUBORDINATED DEBENTURE DUE ____________, 2035
CITIZENS UTILITIES COMPANY, a Delaware corporation (hereinafter called the
"Company", which term includes any successor corporation under the Indenture
hereinafter referred to), for value received, hereby promises to pay to
-------------------------------------
or registered assigns, the principal sum of _________________________________
($_______________) DOLLARS on __________, 2035, and to pay interest (computed
on the basis of a 360-day year of twelve 30-day months) thereon from
__________, 1995 or from the most recent Cash Interest Payment Date to which
interest has been paid or duly provided for, quarterly (subject to deferral
as set forth herein) in arrears on (or, if interest is paid in shares of
Common Stock Series A, as provided in the Indenture, computed as of) January
31, April 30, July 31 and October 31 of each year (each such date, a "Cash
Interest Payment Date"), commencing on __________, 199_ at the rate per annum
specified in the title of this Debenture, until the principal hereof is paid
or made available for payment and on any overdue principal and (without
duplication and to the extent that payment of such interest is enforceable
under applicable law) on any overdue installment of interest at the same rate
per annum compounded quarterly. Unless deferred by the Company as provided
in the Indenture, the interest so payable, and punctually paid or duly
provided for, on or before any Cash Interest Payment Date will, as provided
in the Indenture, be paid to the Person in whose name this Debenture (or one
or more Predecessor Securities) is registered at the close of business on the
Regular Record Date, which is a date to be established by the Company by
written notice to the Trustee and the Holders prior to such Cash Interest
Payment Date. Any such interest not so punctually paid or duly provided for
(including any deferred interest referred to on the reverse hereof) shall
forthwith cease to be payable to the registered Holder on such Regular Record
Date and may
1
be paid to the Person in whose name this Debenture is registered
at the close of business on a Special Record Date for the payment of such
deferred interest to be fixed by the Company as provided in the Indenture.
Subject to the requirements of any book-entry security system applicable to
this Debenture, payment of principal and interest of this Debenture will be
made at maturity or redemption against presentation of the Debenture by the
Holder or the duly authorized agent of the Holder at the office or agency
of the Trustee maintained for that purpose in the Borough of Manhattan,
The City of New York, unless otherwise specified in notice of redemption.
Payment of principal (and interest, to the extent that interest is payable
in cash) will be made in such coin or currency of the United States of America
as at the time of payment is legal tender for payment of public and private
debts.
As more fully provided in the Indenture, so long as the Holder of the
Debentures is Citizens Utilities Capital L.P., the Company will have the
option to pay the interest becoming due on the quarterly Cash Interest
Payment Dates either by delivery of an Equivalent Value of shares of its
Common Stock Series A (as described in the Indenture) (which delivery shall
be made on the Share Transfer and Valuation Date), or in cash. Interest paid
in cash will be paid by check mailed to the address of the Holder as such
address shall appear on the Security Register or by wire transfer in
immediately available funds at such place and to such account as may be
designated by the Holder upon application to the Security Registrar as
provided in the Indenture.
The indebtedness evidenced by this Debenture is, to the extent provided in
the Indenture, subordinate and subject in right of payment to the prior
payment in full in cash of all Senior Indebtedness (as defined in the
Indenture), and this Debenture is issued subject to the provisions of the
Indenture with respect thereto. Each Holder of this Debenture, by accepting
the same, (a) agrees to and shall be bound by such provisions, (b) authorizes
and directs the Trustee on his or her behalf to take such action as may be
necessary or appropriate to acknowledge or effectuate the subordination so
provided and (c) appoints the Trustee his or her attorney-in-fact for any and
all such purposes. Each Holder hereof, by his or her acceptance hereof,
hereby waives all notice of the acceptance of the subordination provisions
contained herein and in the Indenture by each holder of Senior Indebtedness,
whether now outstanding or hereafter incurred, and waives reliance by each
such holder upon said provisions.
Additional provisions of the Indenture under which this Debenture is issued
and to the terms of which it is subject are summarized on the reverse hereof,
but the provisions set forth in the Indenture alone shall be definitive as
to the respective rights, duties, obligations and covenants of the Company,
the Trustee and the Holder of this Debenture.
Unless the certificate of authentication hereon has been executed by or on
behalf of the Trustee for the Debentures by manual signature, this Debenture
shall not be entitled to any benefit under the Indenture, or be valid or
obligatory for any purpose.
2
IN WITNESS WHEREOF, CITIZENS UTILITIES COMPANY has caused this Instrument
to be duly executed under its corporate seal.
Dated:
CERTIFICATE OF AUTHENTICATION CITIZENS UTILITIES COMPANY
THIS IS ONE OF THE SECURITIES OF
THE SERIES DESIGNATED THEREIN
REFERRED TO IN THE WITHIN-MENTIONED
INDENTURE. By: ____________________________
VICE PRESIDENT AND TREASURER
CHEMICAL BANK, TRUSTEE
Attest: __________________________
ASSISTANT SECRETARY
By: ____________________________
AUTHORIZED OFFICER
[FORM OF REVERSE OF DEBENTURE]
------------------------------
This Debenture is one of a duly authorized series of Securities of the
Company (herein sometimes referred to as the "Debentures"), specified in the
Indenture, all issued or to be issued in one or more series under and
pursuant to an Indenture dated as of __________, 1995, duly executed and
delivered between the Company and Chemical Bank, as Trustee (the "Trustee"),
as supplemented by the First Supplemental Indenture dated as of __________,
1995, between the Company and the Trustee (the Indenture as so supplemented,
the "Indenture"), to which Indenture and all indentures supplemental thereto
reference is hereby made for a description of the rights, limitations of
rights, obligations, duties and immunities thereunder of the Trustee, the
Company and the Holders of the Debentures. By the terms of the Indenture,
the Securities are issuable in series that may vary as to amount, date of
maturity, rate of interest and in other respects as provided in the
Indenture. This series of Debentures is limited in aggregate principal
amount as specified in said First Supplemental Indenture.
Deferred Interest. As provided in the Indenture, the Company shall have the
- -----------------
right, at any time and from time to time during the term of the Debentures,
upon notice delivered to the Holders and the Trustee no later than the date
the Company or any Holder or direct or indirect owner is required to give
notice of the record date for the next scheduled distribution payable on the
Convertible Preferred Securities, the Partnership Preferred Securities or the
Debentures to the NYSE, or NASDAQ, or other applicable self-regulatory
organization, or to the holders of the
3
Convertible Preferred Securities, the Partnership Preferred Securities or the
Debentures, to defer the date on which the quarterly interest payment
succeeding the date of such notice would otherwise become due and payable;
provided that (a) no deferred quarterly interest payment shall remain unpaid
for more than 20 consecutive quarters or be deferred beyond the Stated
Maturity of the Debentures, (b) no event of default under the Indenture has
occurred and is continuing and (c) so long as any deferred interest has not
been paid, the Company shall not take certain actions prohibited by the
Indenture. In the event of any deferral, any interest payment shall be
deemed not due or payable until the date specified for payment in a deferred
distribution notice given by the Company to the Trustee and to the Holder.
Upon the deferral of any interest payment, interest on such deferred interest
payment will be compounded and accrued on each Cash Interest Payment Date at
the rate specified in the title of this Debenture until the amount of such
deferred interest (including compounded interest thereon) is paid in full.
Conversion of Debentures. At the option of the Holder, this Debenture may,
- ------------------------
at any time or from time to time on any Business Day to and including, but
not after, the close of business on the day which is five Business Days prior
to _______ 2035, be converted, in whole, or, if the Debenture is in a
principal amount in excess of $50, in part in integral multiples of $50
principal amount, into fully paid and nonassessable shares of Common Stock
Series A of the Company, at the Conversion Price in effect at the Date of
Conversion. In case a Debenture or a portion thereof is called for
redemption, such conversion right in respect of such Debenture or the portion
so called, shall expire at the close of business on the day which is five
Business Days prior to the Redemption Date, unless the Company defaults in
making the payment due upon redemption. If this Debenture is to be converted
only in part, it shall be surrendered at any office or agency of the Company
designated for that purpose pursuant to the Indenture, and the Company shall
execute, and the Trustee shall authenticate and deliver to the Holder hereof
without service charge, a new Debenture or Debentures, of any authorized
denomination as requested by the Holder, in an aggregate principal amount
equal to and in exchange for the unconverted portion of this Debenture so
surrendered. In order to exercise the conversion privilege, the Holder shall
surrender this Debenture to the Conversion Agent at the office or agency to
be maintained by the Company pursuant to the Indenture for the conversion of
Debentures with the Notice of Conversion set forth below in this Debenture
duly completed and, if so required by the Company, accompanied by instruments
of transfer, in form satisfactory to the Company and to the Trustee, duly
executed by the Holder or his duly authorized attorney in writing. As
promptly as practicable after the surrender of this Debenture with the notice
duly completed as aforesaid, the Company shall then issue and deliver at such
office or agency to the Holder, or on his written order, a certificate or
certificates for the number of the shares of Common Stock Series A then
issuable in accordance with the provisions of the Indenture and cash in
respect of any fraction of a share of Common Stock Series A otherwise
issuable upon such conversion. Any such conversion shall be deemed to have
been effected at the time and on the date as specified in the Indenture. The
Holder of this Debenture at the close of business on any Regular Record Date
for the payment of interest will be entitled to receive the interest payable
hereon on the corresponding Cash Interest Payment Date notwithstanding the
conversion of such Debenture following such Regular Record Date. Subject to
provisions of Sections 5.5 and 5.6 of the First Supplemental Indenture, no
payment or
4
adjustment shall be made upon conversion on account of any interest accrued
or deferred or otherwise unpaid on the principal or any portion thereof of
this Debenture so converted or for any dividends or distributions on any
shares of Common Stock Series A. Holders of Common Stock Series A issuable
upon conversion prior to or on a record date for any dividend or distribution
on such shares shall be entitled to receive the same dividend or distribution
as other holders of record of Common Stock Series A. The initial Conversion
Price of the Debentures shall be $________per share of Common Stock Series A,
which Conversion Price is subject to adjustment as provided in the Indenture.
Optional Redemption. At any time on or after __________, 199_, the Company,
- -------------------
at its option, will have the right to redeem the Debentures, in whole or in
part, at 100% of the principal amount being redeemed (together with any
accrued or deferred but unpaid interest on the portion being so redeemed)
(the "Redemption Price") upon notice and in the manner provided in the
Indenture.
Special Event Redemption. Upon the occurrence of a Company Event, the
- ------------------------
Company shall have the right to redeem the Debentures, in whole or in part,
for cash, at the Redemption Price, and upon the occurrence of a Trust Event
or a Partnership Event, if the Company cannot obtain a No Recognition
Opinion with regard to certain matters, the Company may redeem the
Debentures, in whole or in part, for cash, at the Redemption Price,
in each case subject only to the obligation of the Company, on or before
_____________, 199_, to pursue any reasonable ministerial action in lieu of
redemption, that would eliminate the adverse effect of the Special Event.
The Company may not redeem any outstanding Debentures unless all accrued or
deferred but unpaid interest has been paid on all Debentures to be redeemed
for all quarterly interest payment periods terminating on or before the date
of redemption.
The Indenture permits, with certain exceptions as therein provided, the
amendment thereof and the modification of the rights and obligations of the
Company and the rights of the Holders of the Debentures under the Indenture
at any time by the Company and the Trustee with the consent of the Holders
of at least 66 2/3% in aggregate principal amount of the Debentures
outstanding. The Indenture also contains provisions permitting the Holders
of specified percentages in aggregate principal amount of the Debentures at
the time Outstanding, or voting at a meeting of Holders, on behalf of the
Holders of all the Debentures, to waive compliance by the Company with
certain provisions of the Indenture and certain past defaults under the
Indenture and their consequences. Any such consent or waiver by the Holder
of this Debenture shall be conclusive and binding upon such Holder and upon
all future Holders of this Debenture and of any Debenture issued upon the
registration of transfer hereof or in exchange hereof or in lieu hereof,
whether or not notation of such consent or waiver is made upon this
Debenture.
No reference herein to the Indenture and no provision of this Debenture or
of the Indenture shall alter or impair the obligation of the Company, which
is absolute and unconditional, to pay the principal of and interest on this
Debenture at the time, place and rate, and in the coin or currency, herein
prescribed, or to exchange this Debenture for Common Stock
5
Series A or other securities or property for which Debentures are from time to
time convertible as provided in the Indenture.
In the event of the merger or consolidation of the obligor on the Debentures
into, or of the transfer of its assets substantially as an entirety to, a
successor corporation, such successor corporation shall assume payment of the
Debentures and performance of every covenant of the Indenture on the part of
the predecessor corporation to be performed, and shall be substituted for the
predecessor corporation under the Indenture; and in the event of any such
transfer, such predecessor corporation shall be discharged from all
obligations and covenants under the Indenture and the Debentures and may be
dissolved and liquidated, all as more fully set forth in the Indenture.
If an Event of Default, as defined in the Indenture, with respect to the
Debentures shall occur and be continuing, the principal of all the Debentures
may be declared due and payable at the time, in the manner and with the
effect provided in the Indenture.
As provided in the Indenture and subject to certain limitations therein and
herein set forth, this Debenture is transferable on the Security Register of
the Company, upon surrender of this Debenture for registration of transfer
at the office or agency of the Company in any place where principal and
interest on the Debentures are payable, or at any other office or agency of
the Company maintained for that purpose, duly endorsed by, or accompanied by
a written instrument of transfer in form satisfactory to the Company and the
Security Registrar duly executed by, the Holder hereof or his attorney duly
authorized in writing, and thereupon one or more new Debentures, of
authorized denominations and for the same aggregate principal amount, will
be issued to the designated transferee or transferees.
The Debentures are issuable only in registered form without coupons in
denominations of $50 and any multiple of $50. As provided in the Indenture
and subject to certain limitations therein set forth, Debentures are
exchangeable for a like aggregate principal amount of Debentures of a like
tenor and of different authorized denominations, as requested by the Holder
surrendering the same. No service charge shall be made for any such
registration of transfer or exchange, but the Company may require payment of
a sum sufficient to cover any tax or other governmental charge payable in
connection with such registration of transfer or exchange, other then certain
exchanges not involving any transfer. Prior to due presentment of this
Debenture for registration of transfer, the Company, the Trustee and any
agent of the Company or the Trustee may treat the Person in whose name this
Debenture is registered as the owner hereof for the purpose of receiving
payment as herein provided and for all other purposes, whether or not this
Debenture shall be overdue, and neither the Company, the Trustee nor any such
agent shall be affected by notice to the contrary.
This Debenture shall for all purposes be governed by, and construed in
accordance with, the laws of the State of New York.
6
Certain terms used in this Debenture which are defined in the Indenture have
the meanings set forth therein.
ASSIGNMENT FORM
FOR VALUE RECEIVED, the undersigned hereby sells, assigns and transfers
unto
PLEASE INSERT SOCIAL SECURITY NUMBER OR
OTHER IDENTIFYING NUMBER OF ASSIGNEE
__________________________________
|_________________________________|_____________________________________
(Name and address of Assignee, including zip code, must be printed or
typewritten)
_________________________________________________________________________
__________________________________________________________________________
the within Debenture, and all rights thereunder, hereby irrevocably,
constituting and appointing
_________________________________________________________________Attorney
to transfer the said Debenture on the books of Citizens Utilities Company
with full power of substitution in the premises.
Dated:_______________ ________________________________________
NOTICE: The signature of this assignment must
correspond with the name as it appears upon the
face of the within Debenture in every particular,
without alteration or enlargement or any change
whatever.
7
FORM OF CONVERSION NOTICE
To Citizens Utility Company:
The undersigned Holder of this Debenture hereby irrevocably exercises the
option to convert this Debenture (or a portion thereof, which is $50.00 or
an integral multiple thereof, designated below), into shares of Common Stock
Series A of the Company or other securities or other property or cash in
accordance with the terms of the Indenture referred to in this Debenture, and
directs that the shares, other securities, other property or cash issuable
and deliverable upon the conversion, together with any check in payment for
fractional shares and any Debentures representing any unconverted principal
amount hereof, be issued and delivered to the undersigned unless a different
name has been indicated 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.
Dated:
------------------------------
Signature (for exchange only)
------------------------------
(Name)
------------------------------
(Address)
------------------------------
Please print name and address
(including zip code or similar
number)
Fill in for registration of shares Principal Amount of Debentures
or other securities and/or Debentures to be converted in an integral
if to be issued otherwise than to the multiple of $50.00, if less
Holder: than all:
- -------------------------------------
(Name) $ _____________________________
- -------------------------------------
(Address)
- -------------------------------------
Please print name and address
(including zip code or similar number)
8
Statement of Common Definitions
Exhibit B
"Additional Interest" is defined in Section 3.1(17) of the First
Supplemental Indenture.
"Average Market Price" for Common Stock on any day will be determined by
averaging the high and low sales prices of Common Stock for such day as
reported in The Wall Street Journal, under "New York Stock Exchange Composite
-----------------------
Transactions" or any successor market transaction report on the day in
question (the "Date"). If the Common Stock is not listed on the NYSE but is
quoted or admitted to trading on another national securities exchange, on the
National Market System of the National Association of Securities Dealers,
Inc., the Average Market Price shall be determined by reference to the
average of the high and low reported sales prices on such exchange if
available or, if not so available, the high and low sales prices reported by
such National Market System if available, or, if not so available, the high
and low bid and asked prices in the over-the-counter market on the day in
question as reported by the National Quotation Bureau Incorporated or a
similarly generally accepted reporting service if available, or if not so
available, in such manner, as otherwise determined in good faith by the Board
of Directors of the Company. If no trading occurs on the NYSE (or such other
market for which sales prices or quotations are regularly available) in the
Common Stock on the Date, the Average Market Price will be determined by
averaging the high and low sales prices per share of Common Stock on the
Trading Day immediately preceding the Date.
"Base Indenture" means the Indenture between Citizens and Chemical Bank, as
Indenture Trustee, dated as of ____________, 1995.
"Business Day" means any day other than a Saturday or a Sunday or a day on
which banking institutions in The City of New York are authorized or
obligated by law or executive order to close.
"Cash Interest Payment Date" is defined in Section 3.1(4) of the First
Supplemental Indenture.
"Change in 1940 Act Law" means the occurrence of a change in law or
regulation or a written change in interpretation or application of law or
regulation by any legislature body, court, governmental agency or regulatory
authority with respect to the 1940 Act.
"Change in Tax Law" means (a) any change (including any announced
prospective change) in, the laws (or any regulations thereunder) of the
United States or any political subdivision or taxing authority thereof or
therein, (b) any change in an interpretation or application of any such laws
or regulations by any legislative body, court, governmental agency
1
or regulatory authority (including the enactment of any legislation and the
publication of any judicial decision or regulatory determination), (c) any
interpretation or pronouncement that provides for a position with respect to
such laws or regulations that differs from the generally accepted position
or (d) any action taken by any governmental agency or regulatory authority,
which change is enacted, promulgated, issued or effective or which
interpretation or pronouncement is issued or announced or which action is
taken, in each case on or after the date of the Prospectus.
"Citizens" or the "Company" means Citizens Utilities Company, a Delaware
corporation.
"Citizens Capital" means Citizens Utilities Capital L.P., a special purpose
Delaware limited partnership of which the Company is the general partner,
also sometimes referred to as the "Partnership."
"Clearing Agency" means an organization registered as a "Cleaning Agency"
pursuant to Section 17A of the Exchange Act that is acting as depository for
the Convertible Preferred Securities or the Partnership Preferred Securities,
as the case may be, and in whose name (or nominee's name) shall be registered
a Global Certificate or one or more global L.P. Certificates, as the case may
be, and which shall undertake to effect book-entry transfers and pledges of
the Convertible Preferred Securities or the Partnership Preferred Securities,
as the case may be.
"Clearing Agency Participant" means a broker, dealer, bank, other financial
institution or other Person for whom from time to time a Clearing Agency
effects book-entry transfers and pledges of interest in securities deposited
with the Clearing Agency.
"Closing Date" means the Closing Date as defined in the Underwriting
Agreement.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time, or any corresponding federal tax statute enacted after the date
of the issuance of the Convertible Preferred Securities. A reference to a
specific section (Section) of the Code refers not only to such specific
section but also to any corresponding provision of any federal tax statute
enacted after the date of the issuance of the Convertible Preferred Securities,
as such specific section or corresponding provision is in effect on the date
of application of the provisions of the Declaration or the Limited Partnership
Agreement containing such reference.
"Common Stock" or "Common Stock Series A" means shares of the Common Stock
Series A of the Company, par value $.25 per share, and (i) for the purposes
of the making of distributions in shares of capital stock, any successor
capital stock of the Company, and (ii) for the purposes of Article 5 of the
First Supplemental Indenture, any successor security or property (including
cash) into which the Debentures issued under the First Supplemental Indenture
may be convertible in accordance with said Article 5.
"Company Event" means that the Company shall have obtained a Tax Event
Opinion to the effect that, as a result of a Change in Tax Law, there is more
than an insubstantial risk that
2
interest payable to the holders of the Convertible Debentures would not be
deductible by Citizens for United States federal income tax purposes.
"Compound Interest" means, upon any deferral of interest payments permitted
by the Indenture, the interest which will be compounded on each Cash Interest
Payment Date and accrued until paid at the rate per annum specified in the
designation of the Convertible Debentures on any interest so deferred until
the amount of such deferred interest (including Compound Interest thereon)
is paid in full.
"Conversion Agent" means the Person appointed under the Limited Partnership
Agreement, the Declaration and the Indenture to act on behalf of the holders
of Convertible Preferred Securities, the Partnership Preferred Securities or
the Convertible Debentures, as the case may be, in effecting the conversion
of Convertible Preferred Securities, the Partnership Preferred Securities or
the Convertible Debentures, as the case may be, as and in the manner set
forth in the Limited Partnership Agreement, the Declaration or the Indenture,
as the case may be. Initially, Chemical Bank shall act as Conversion Agent
with respect to the Convertible Preferred Securities and the Company shall
act as Conversion Agent with respect to the Partnership Preferred Securities
and the Convertible Debentures.
"Convertible Common Securities" means common undivided beneficial interests
in the assets of Citizens Utilities Trust.
"Convertible Debentures" means $___________ aggregate principal amount of
the __% Convertible Subordinated Debentures Due 2035, issued pursuant to the
Indenture.
"Convertible Preferred Securities" means the ___% Citizens Utilities
Convertible Preferred Securities, each with a liquidation value of $50,
representing preferred undivided beneficial interests in the assets of the
Trust.
"Date" shall have the meaning as specified in the definition of "Average
Market Price" contained in this Statement of Common Definitions.
"Declaration" means the declaration of trust dated __________, 1995, as
amended by the amended and restated declaration of trust dated __________,
1995, by Citizens, as sponsor, and the trustees named therein, establishing
the Trust under the Trust Act, as such declaration of trust may be further
amended or supplemented.
"Declaration Event of Default" means an Event of Default as defined in
the Limited Partnership Agreement.
"Delaware Trustee" means a trustee under the Declaration which will have
a principal place of business or reside in the State of Delaware. Initially,
Chemical Bank Delaware will act as Delaware Trustee.
3
"Distribution Declaration Date" is defined in Section 3.1(4) of the First
Supplemental Indenture.
"Distribution Declaration Notice" is defined in Section 3.1(4) of the First
Supplemental Indenture.
"Distribution Payment Date" means January 31, April 30, July 31 and October
31 of each year.
"Election Period" means the period of ten Business Days in each year
specified in the Distribution Declaration Notice relating to the January 31
Distribution Payment Date, as provided in paragraph (4) of Section 3.1 of the
First Supplemental Indenture.
"Equivalent Value" means the shares of Common Stock Series A
with a fair market value on the Share Transfer and Valuation Date
equivalent to the interest payment due on the next scheduled interest
payment date.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Expiration Time" is defined in Section 5.5(e) of the First Supplemental
Indenture.
"First Supplemental Indenture" means the First Supplemental Indenture dated
as of _____________, 1995 to the Indenture, as amended or supplemented.
"General Partner" means Citizens, as general partner of Citizens Capital,
or any successor general partner of Citizens Capital.
"General Partnership Security" means the general partnership interest of
Citizens in Citizens Capital.
"Guarantee Agreements" means the Convertible Common Securities Guarantee
Agreement and the Convertible Preferred Securities Guarantee Agreement, each
with respect to the Trust, and the Partnership Preferred Securities
Guarantee Agreement with respect to Citizens Capital, each dated
______________, 1995.
"Indenture" means the Base Indenture, as it may from time to time be
supplemented or amended by one or more indentures supplemental thereto,
including the First Supplemental Indenture.
"Indenture Event of Default" means an Event of Default as defined in Section
5.1 of the Indenture.
"Indenture Trustee" means Chemical Bank, as trustee under the Indenture,
or any successor trustee under the Indenture.
4
"Investment Company Act Opinion" means an opinion of a nationally
recognized independent counsel experienced in practice under the 1940 Act.
"Limited Partnership Agreement" means the amended and restated limited
partnership agreement of Citizens Capital dated as of ______________, 1995,
as amended or supplemented.
"Ministerial Action Obligation" shall have the meaning set forth in the
following sentence. If at the time of any Special Event, Citizens, Citizens
Capital or the Trust is actually aware of an opportunity to eliminate the
adverse effect of the Special Event on the Trust, Citizens or Citizens
Capital by taking some ministerial action (such as filing a form or making
an election or pursuing some other similar reasonable measure) where the
taking of such action does not involve a material cost, then neither
Citizens, Citizens Capital nor the Trust shall (i) liquidate Citizens Capital
or the Trust by reason of such Special Event or (ii) on or before __________,
199_, redeem any securities at any time such opportunity exists, without
first having pursued such ministerial action.
"NASDAQ" means The Nasdaq Stock Market, Inc.
"1940 Act" means the Investment Company Act of 1940, as amended.
"No Recognition Opinion" means the opinion of a nationally recognized
independent tax counsel experienced in such matters, which opinion may rely
on published revenue rulings, or any other available pronouncements,
determinations or available authority of the Internal Revenue Service, or any
judicial decisions, to the effect that the holders of the Convertible
Preferred Securities or Partnership Preferred Securities, as the case may be,
will not recognize any income, gain or loss for United States federal income
tax purposes as a result of the liquidation and distribution of Convertible
Debentures or Partnership Preferred Securities, as the case may be.
"NYSE" means the New York Stock Exchange.
"Officers' Certificate" means, with respect to any Person, a certificate
signed by two authorized officers of such Person. Any Officers' Certificate
delivered with respect to compliance with a condition or covenant provided
for in the applicable agreement shall include:
(a) a statement that each officer signing the Officers' Certificate has read
the covenant or condition and the definition relating thereto;
(b) a brief statement of the nature and scope of the examination or
investigation undertaken by each officer in rendering the Officers'
Certificate;
(c) a statement that each such officer has made such examination or
investigation as, in such officer's opinion, is necessary to enable
such officer to express an informed opinion as to whether or not such
covenant or condition has been complied with; and
5
(d) a statement as to whether, in the opinion of each such officer, such
condition or covenant has been complied with.
"Partnership Event" means a Partnership Tax Event or a Partnership
Investment Company Act Event.
"Partnership Event of Default" means an Event of Default as defined in the
Indenture.
"Partnership Investment Company Act Event" means that the General Partner
shall have received an Investment Company Act Opinion that as a result of the
occurrence of a Change in 1940 Act Law, there is more than an insubstantial
risk that the Partnership is or will be considered an Investment Company
which is required to be registered under the 1940 Act, which Change in 1940
Act Law becomes effective on or after the first date of issuance of the
Partnership Preferred Securities.
"Partnership Preferred Securities" means limited partnership interests in
Citizens Capital.
"Partnership Securities" means the Partnership Preferred Securities and the
General Partnership Security.
"Partnership Tax Event" means that the General Partner shall have obtained
a Tax Event Opinion to the effect that, as a result of a Change in Tax Law,
there is more than an insubstantial risk that (i) Citizens Capital is subject
to United States federal income tax with respect to interest accrued or
received on the Convertible Debentures or (ii) Citizens Capital is subject
to more than a de minimis amount of taxes, duties or other governmental
charges.
Paying Agent" means the Person appointed under and authorized pursuant to the
Limited Partnership Agreement, the Declaration and the Indenture to act on
behalf of the holders of Convertible Preferred Securities, the Partnership
Preferred Securities or the Convetible Debentures, as the case may be, in
effecting the payment of principal, disributions or interest, as the case may
be, redemption payments and liquidation payments, as and in the manner set
forth in the Limited Partnerhsip Agreement, the Declaration or the Indenture,
as the case may be. Initally, Chemical Bank shall act as Paying Agent with
respect to the Convertible Preferred Securities and the Company shall act as
Paying Agent with respect to the Convertible Preferred Securities and the
Company shall act as Paying Agent with respect to the Partnership Preferred
Securities and the Convertible Debentures.
"Person" means any individual, corporation, estate, partnership, joint
venture, association, joint-stock company, limited liability company, trust,
unincorporated association or government or any agency or political
subdivision thereof.
"Property Trustee" means the property trustee of the Trust under the
Declaration. Initially, Chemical Bank will act as Property Trustee.
6
"Prospectus" shall mean the prospectus dated _____________, 1995 of the
Trust, relating to the offering to the public of $175,000,000 aggregate
liquidation amount of Convertible Preferred Securities.
"Rating Agency Event" shall occur when, and if, (i) any nationally
recognized securities rating agency lowers its rating of the Company's
senior, unsecured long-term debt to a rating less than the
rating in effect on the date of the issuance of the Convertible
Preferred Securities and (ii) the Company has elected to transmit notice
thereof to the Trust.
"Regular Trustees" means the Regular Trustees of the Trust as defined in
the Declaration. Initially, Robert J. DeSantis and Edward O. Kipperman will
act as Regular Trustees.
"Share Transfer and Valuation Date" means the day on which shares of Common
Stock are transferred to the holders of Convertible Debentures pursuant to
Section 3.1(5) of the First Supplemental Indenture. Currently the Share
Transfer and Valuation Date will be at least nine Business Days before the
Distribution Payment Date, subject to change to reflect evolving market
practices and settlement procedures.
"Special Event" means a Partnership Event, a Trust Event or a Company
Event.
"Special Representative" means the Person appointed (i) to enforce
Partnership Preferred Security holders' rights under the Partnership
Guarantee, (ii) to enforce Citizens Capital's rights against the Company
under the Convertible Debentures or (iii) to exercise rights otherwise
exercisable by the General Partner to declare and pay distributions on the
Partnership Preferred Securities as provided in Section 6.2(h) of the Limited
Partnership Agreement.
"Subsidiary" of any Person means (i) a corporation more than 50% of the
outstanding Voting Stock of which is owned, directly or indirectly, by such
Person or by one or more other Subsidiaries of such Person or by such Person
and one or more Subsidiaries thereof or (ii) any other Person (other than a
corporation) in which such Person, or one or more other Subsidiaries of such
Person or such Person and one or more other Subsidiaries of such Person or
such Person and one or more other Subsidiaries thereof, directly or
indirectly, has at least a majority ownership and power to direct the
policies, management and affairs thereof.
"Taxes" means any taxes, duties, assessments or governmental charges of
whatever nature (other than withholding taxes) imposed by the United States
or any other domestic taxing authority upon either the Trust or Citizens
Capital.
"Tax Event Opinion" shall mean an opinion of a nationally recognized tax
counsel experienced in such matters.
"Trading Day" means any day on which the NYSE (or any other market used for
the determination of Average Market Price) is open for the trading of
securities.
7
"Treasury Regulations" means the income tax regulations, including temporary
and proposed regulations, promulgated under the Code by the United States
Treasury, as such regulations may be amended from time to time (including
corresponding provisions of succeeding regulations).
"Trust" means Citizens Utilities Trust, a statutory business trust created
under the Trust Act pursuant to the Declaration.
"Trust Act" means the Delaware Business Trust Act, Chapter 38 of Title 12
of the Delaware Code, 12 Del. Code Sec. 3801 et seq., as it may be
------------ ---- ----
amended from time to time.
"Trust Event" means a Trust Tax Event or a Trust Investment Company Act
Event.
"Trust Investment Company Act Event" means that Citizens shall have (i)
requested and received and (ii) delivered to the Regular Trustees, an
Investment Company Act Opinion to the effect that there has occurred a Change
in 1940 Act Law such that there is a more than an insubstantial risk that the
Trust is or will be considered an investment company which is required to be
registered under the 1940 Act.
"Trust Tax Event" means that Citizens shall have (i) requested and
received, and (ii) delivered to the Regular Trustees, a Tax Event Opinion to
the effect that there has occurred a Change in Tax Law such that there is
more than an insubstantial risk that (i) the Trust may be subject to United
States federal income tax with respect to distributions accrued or received
on the Partnership Preferred Securities or (ii) the Trust is subject to more
than a de minimis amount of taxes, duties or other governmental charges.
"Underwriting Agreement" means the agreement dated ____________, 1995,
among the Company, and the Trust and the underwriters named therein relating
to the issuance and sale by the Trust to such underwriters of the
Convertible Preferred Securities.
"Voting Stock" of any Person means capital stock of such Person which
ordinarily has voting power for the election of directors (or Persons
performing similar functions) of such Person, whether at all times or only
so long as no senior class of securities has such voting power by reason of
any contingency.
8