FIRST SUPPLEMENTAL INDENTURE, dated as of January 15, 1996, 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 $211,756,050 principal
amount of Debentures, up to 4,149,500 Partnership Preferred Securities and up to
4,025,000 Convertible Preferred Securities (the "Offering"). 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 January 15, 1996
(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
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 January 15, 1996 and the Convertible Common
Securities Guarantee Agreement dated January 15, 1996, 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 5% Convertible
Subordinated Debentures Due 2036 (hereinafter sometimes called the
"Debentures"), which series is limited in aggregate principal amount to
$211,756,050, 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:
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.
"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 Tax 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.
"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
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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
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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.
"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.
"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
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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).
"Record Date" has the meaning specified in Section 3.1(4) and shall also
mean any Special Record Date, as defined in the Indenture.
"Securities" has the meaning specified in the Recitals to this instrument.
"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 United States 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
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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
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" is defined 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.
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
"5% Convertible Subordinated Debentures Due 2036".
(2) The Debentures shall constitute a single series of the Securities
under the Indenture, which series is limited in aggregate principal amount to
$211,756,050.
(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 January 22, 1996, 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"), commencing on
April 30, 1996, 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 in cash on any Cash Interest Payment Date or in shares of Common
Stock Series A on any Share Transfer and Valuation 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 ("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 Record Date for such interest payment (unless
such 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 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
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 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 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 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 only part
of such interest payment is in cash and the number of shares of Common Stock
Series A transferred is less than the number of shares of Common Stock Series A
to be transferred for the account of Holders who have elected to receive shares
of Common Stock Series A, the shares transferred to the account of each such
Holder shall be reduced pro rata so that the number of shares received by each
such Holder will be reduced by the same proportion, to the extent possible. If
the Company has made an election to 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
and shares of Common Stock, if any, 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 the giving of notice of deferral; provided that (a) no
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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 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, Record Date or
Share Transfer and Valuation Date, the Company shall deliver (which delivery may
be contemporaneous with the 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, 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. Upon maturity or the redemption of all
Outstanding Debentures, the Cash Interest Payment Date shall then become the
maturity date or the Redemption Date, as the case may be, and the Company may
establish or change any Date to reflect any such resulting change in the Cash
Interest Payment Date; provided that the Record Date shall be at least 15 days
before the Cash Interest Payment Date. 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 Debentures, payment of the principal and interest on
the Debentures 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 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 distributable to
the holders of the Partnership 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 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 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 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.
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.
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.
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.
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.
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 January 15, 2036, 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.
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 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 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 issued 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.
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 $15.375 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.
(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 the current market price per
share (determined as provided in subsection (f) below) of the Common Stock
Series A on the record date fixed for the determina-tion of stockholders
entitled to receive 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), as of
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 "ex" date related to 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 Conver-sion Price reduction required by subsections (a) or
(b), except that 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 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 (determined as provided in subsection (f)) of the Common Stock
Series A on the date fixed for the determination of stockholders entitled to
receive 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 "ex" date related to the Reference Date 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 (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 an "ex" date is applicable to a record date, the day
before the "ex" date with respect to the record date relating 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.
(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 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
(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 transfer 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 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 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 February 1,
1999, the Company, at its option, will have the right to prepay or redeem the
Debentures, in whole or in part, at 100% of the principal amount being redeemed
in cash (together with any accrued or deferred but unpaid interest to the
Redemption Date in cash or Common Stock) (such amount and form of payment being
the "Redemption Price").
(b) Accrued or Deferred Interest. The Company may not redeem
any outstanding Debentures unless on or before the Redemption Date 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; Other Notices.
--------------------------------------------
(a) 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, 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. In the event that
any date fixed for redemption is not a Business Day, then payment of the
Redemption Price payable on such date will be made on the next succeeding day
that is a Business Day, except that, if such Business Day is in the next
succeeding calendar year, such payment will be made on the immediately preceding
Business Day.
(b) Notice of Redemption. If the Company, after a Distribution
- --------------------
Declaration Date, proposes to deliver a notice of redemption to the
Trustee of a proposed Redemption Date for Debentures, the proposed Redemption
Date established in such notice shall be no earlier than the Cash Interest
Payment Date or the Special Cash Interest Payment Date related to such
Distribution Declaration Date.
(c) Distribution Declaration Date Notice. If the Company has
------------------------------------
delivered or is proposing to deliver a notice of redemption to the Trustee
and the Company proposes to deliver a Distribution Declaration Notice to the
Trustee, the schedule of Dates established by the Company as contemplated in
Section 3.1(a) herein and set forth in the Distribution Declaration Notice shall
provide for adequate time for the activities required for the payment of
interest in Common Stock or cash, and the related Cash Interest Payment Date or
Special Cash Interest Payment Date shall be no later than the Redemption Date.
If the Company proposes to establish a Special Cash Interest Payment Date after
having delivered, or proposing to deliver, a notice of redemption to the Trustee
establishing a Redemption Date, the Special Cash Interest Payment Date so
established shall be no later than such Redemption Date. The Company may only
change the Cash Interest Payment Date so as to coincide with a Redemption Date
which is earlier than a regular scheduled Redemption Date, in which case the
Company must also establish a Record Date for such changed Cash Interest Payment
Date as provided in Section 3.1(a).
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.
Notice of redemption of Debentures to be redeemed 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 10:00 a.m., New York City time, on any Redemption Date (or,
with respect to the shares of Common Stock, the Share Transfer and Valuation
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 and Common Stock,
if any, sufficient to pay the Redemption Price of all the Debentures to be
redeemed.
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 any installment of interest for the period prior to or
-------
ending
on a Cash Interest Payment Date or Special Cash Interest Payment Date
which is prior to, or the same date as, the Redemption Date shall be payable to
the Holders of such Debentures registered as such at the close of business on
the relevant 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 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 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 nowledge of an Event of Default hereunder
unless a Responsible Officer has received written notice thereof."
Section 7.2 Amendment to Section 5.13 of Indenture for Purposes of
First Series of Debentures.
-------------------------------------------
For all purposes of the Debentures and for no other purposes, Section 5.13
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 5.13. Waiver of Past Defaults.
------------------------
The Holders of not less than a majority in principal amount of the
outstanding Debentures may on behalf of the Holders of all the Debentures waive
any past default hereunder with respect to such Debentures and its consequences,
except a default
(1) in the payment of the principal of (or
premium, if any) or interest on the Debentures, or
(2) in respect of a covenant or provision hereof which under
Article Nine cannot be modified or amended without the consent of the Holder of
each outstanding Debenture affected;
provided, however, that if the Debentures are held by Citizens Capital
--------- -------- or the Trust, such waiver shall not be effective until,
in the case that the Debentures are
held by Citizens Capital, the holders of a majority in liquidation preference of
the Partnership Preferred Securities, or, in the case that the Debentures are
held by the Trust, the holders of a majority in liquidation preference of the
Convertible Preferred Securities, as the case may be, shall have consented to
such waiver; provided, further, that if the consent of the Holder of each
- --------- --------
Debenture is required and the Debentures are held by Citizens Capital or
the Trust, such waiver shall not be effective until, in the case that the
Debentures are held by Citizens Capital, each holder of the Partnership
Preferred Securities, or, in the case that the Debentures are held by the Trust,
each holder of the Trust Securities, as the case may be, shall have consented to
such waiver.
Upon any such waiver, such default shall cease to exist, and
any Event of Default arising therefrom shall be deemed to have been cured, for
every purpose of this Indenture; but no such waiver shall extend to any
subsequent or other default or Event of Default or impair any right consequent
thereon."
Section 7.3 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 outstanding, the holders of the Convertible Preferred Securities or
Partnership Preferred Securities in any material respect."
Section 7.4 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), 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 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 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.
(7) At the time of any Special Event, the Company
has a Ministerial Action Obligation.
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.
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.
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
County of Fairfield )
) ss.:
State of Connecticut )
On the day of January, 1996, 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
County of New York )
) ss.:
State of New York )
On this day of January in the year of 1996 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
ANNEX A
Initial Record Dates,
Distribution Declaration Dates and Share Transfer and
Valuation Dates
Distribution Record Date Share Transfer Related Cash
Declaration Date and Valuation Date Interest Payment Date
- ---------------- ----------- ------------------ ---------------------
December 6 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 falls on a day which is not a
Business Day, the Distribution Declaration Date shall be the next preceeding day
that is a Business Day. If the scheduled Share Transfer and Valuation Date or
Cash Interest Payment Date falls on a day which is not a Business Day, the Share
Transfer and Valuation Date or Cash Interest Payment Date, as the case may be,
shall be the next succeding day that is a Business Day except that, if such
Business Day is in the next succeeding calendar year, the Share Transfer and
Valuation Date or Cash Interest Payment Date, as the case may be, shall be the
immediately preceding Business Day.
EXHIBIT A
to
First Supplemental Indenture
(FORM OF DEBENTURE)
REGISTERED REGISTERED
R ________ $___________
CITIZENS UTILITIES COMPANY
5% CONVERTIBLE SUBORDINATED DEBENTURE DUE 2036
CITIZENS UTILITIES COMPANY, a Delaware corporation (hereinafter called the
Company , which term includes any successor corporation under the Indenture
hereinafter referred to), for value received, hereby promises to pay to
----------------------------
or registered assigns, the principal sum of _________________________________
($_______________) DOLLARS on January 15, 2036, and to pay interest (computed on
the basis of a 360-day year of twelve 30-day months) thereon from January 22,
1996 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 April 30, 1996, 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, in cash on any Cash Interest Payment
Date or in shares of Common Stock Series A on any Share Transferand Valuation
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 Record Date next preceding such interest payment, 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 Record Date and may 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.
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:__________________________
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 ), issued or to be issued under
and pursuant to an Indenture dated as of January 15, 1996, duly executed and
delivered between the Company and Chemical Bank, as Trustee (the Trustee ), as
supplemented by the First Supplemental Indenture dated as of January 15, 1996,
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. 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 Distribution
Declaration Date (as defined in the Indenture), to defer the date on which one
or more of the quarterly interest payments would otherwise become due and
payable; 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 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 an deferal, 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 Holer. Upon the deferral of any interest
payment, interest on such deferred interest payment will be compoinded 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 cluding, but not after,
the close of business on the day which is five Business Days prior to January
15, 2036, be converted, in whole, or, if the Debenture is in a principal amount
in excess of $50, in part, in integrral 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, is 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, is 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
practiacable after the surender of this Debenture with the notice duly completed
as aforesaid, the Company shall then issue and delive 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 inrespect 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 Record Date for the payment of interest will be intitled to
receive the interest payable hereon on the corresponding Cash Interest Payment
Date notwithstanding the conversion of such Debenture into Common Stock Series A
following such Record Date. Subject to provisions of Sections 5.5 and 5.6 of the
First Supplemental Indenture, no payment or adjustment shall be made upon
conversion on account of any interest accrued or deferred or otherwise upoaid on
the principal or any portion thereof of this Debenture so converted or for any
dividends or distributions on any shares of Common Stocks Series A. The initial
Conversion Price of the Debentures, as of the dae of issuance, is $15.375 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 February 1, 1999, the Company as
its option, will have the right to prepay or 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. The
company may not redeem any outstanding Debentures unless on or before the
Redemption Date all accrued or deferred but unpaid interest has been paid on all
Debentures 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 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 Holders 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 an 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 (subject to deferral) 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 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 discharge 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
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.
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.
FORM OF CONVERSION NOTICE
To Citizens Utilities 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 share Principal Amount of Debentures to be s or
other securities and/or converted in an integral multiple of Debentures if to be
issued other- $50.00, if less than all: wise than to the Holder:
- ----------------------------------
(Name) $_____________________________________
- ----------------------------------
(Address)
- ----------------------------------
Please print name and address
(including zip code or similar number)
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.
"back-up undertakings" means the obligations of Citizens under the
Guarantee Agreements, taken together with Citizens' obligations under the
Convertible Debentures, the Indenture, the Declaration and the Limited
Partnership Agreement, including its obligation to pay costs, expenses and
certain indemnities of the Trust.
"Base Indenture" means the Indenture between Citizens and Chemical Bank,
as Indenture Trustee, dated as of January 15, 1996.
"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 or prospective change which is
announced or publicly stated in the laws (or any regulations thereunder) of the
United States or any political subdivision or taxing authority thereof or
therein, (b) any change or prospective change in an interpretation or
application of any such laws or regulations by any legislative body, court,
governmental agency or regulatory authority (including the enactment of any
legislation and the publication of any judicial decision or regulatory
determination), (c) any interpretation or pronouncement that provides for a
position with respect to such laws or regulations that differs from the
generally accepted position or (d) any action by any governmental agency or body
or regulatory authority, which, assuming such change is enacted, promulgated,
issued or effective or such interpretation or pronouncement is issued or
announced or becomes effective or such action is taken, in each case on or after
the date of the Prospectus, would have the result specified.
"Citizens" or the "Company" means Citizens Utilities Company,
a Delaware corporation, or its successor.
"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 "Clearing
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 beneficial interests in 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 Tax 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 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 or 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 $211,756,050 aggregate principal amount
of the 5% Convertible Subordinated Debentures Due 2036, issued pursuant to the
Indenture.
"Convertible Preferred Securities" means the 5% 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.
"Debenture Issuer" means Citizens in its capacity as issuer of the
Convertible Debentures.
"Declaration" means the declaration of trust dated October 13, 1995, as
amended by the amended and restated declaration of trust dated January 15, 1996,
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 a Partnership Event of Default.
"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.
"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, or if any such date is not a Business Day, the next
succeeding Business Day except that, if such Business Day is in the next
succeeding calendar year, the Distribution Payment Date shall be the immediately
preceding Business Day.
"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 January 15, 1996 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
January 15, 1996, and each as amended or supplemented from time to time.
"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 Base Indenture, as supplemented by the First Supplemental
Indenture.
"Indenture Trustee" means Chemical Bank, as trustee under the
Indenture, or any successor trustee under the Indenture.
"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 January 15, 1996, 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 liquidate Citizens Capital or the Trust by reason of such
Special Event, 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.
"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
(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 Indenture Event of Default.
"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 the 5% Partnership Preferred
Securities, issued by Citizens Capital pursuant to the Limited Partnership
Agreement, representing 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 or 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 payment of principal, distributions or interest, as the case may
be, redemption payments and liquidation payments, 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 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.
"Prospectus" shall mean the prospectus dated January 16, 1996 of the
Trust, relating to the offering to the public of 3,500,000 Convertible Preferred
Securities, plus up to 525,000 additional Convertible Preferred Securities to
cover overallotments.
"Rate" means 5% per annum.
"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. Initially, the Share
Transfer and Valuation Date will be at least nine Business Days before the
Distribution Payment Date and Cash Interest 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
Tax 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.
"Sponsor" means Citizens in its capacity as trust sponsor of the Trust
pursuant to the Declaration.
"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.
"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 ss.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 January 16, 1996,
among the Company, Citizens Capital 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.
EXECUTION COPY
CITIZENS UTILITIES COMPANY
TO
CHEMICAL BANK
(Trustee)
FIRST SUPPLEMENTAL INDENTURE
Dated as of January 15, 1996
Supplemental to the Indenture
Dated as of January 15, 1996
TABLE OF CONTENTS
Page
TABLE OF CONTENTS
Page
cuc\ps\cucps.630
cuc\ps\cucps.630
ARTICLE 1
DEFINITIONS
Section 1.1 Definitions 2
ARTICLE 2
FORMS OF DEBENTURES
Section 2.1 Form of the Debentures 8
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 16
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 19
Section 4.10 Reliance On Judicial Order Or Certificate Of
Liquidating Agent 20
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 21
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
Section 5.4 Conversion Price 22
Section 5.5 Adjustment of Conversion Price 23
Section 5.6 Reclassification, Consolidation, Merger or Sale of
Assets 28
Section 5.7 Notice of Adjustments of Conversion Price 29
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 32
Section 6.2 Applicability of Article 32
Section 6.3 Election to Redeem; Notice to Trustee; Other
Notices 32
Section 6.4 Notice of Redemption 33
Section 6.5 Deposit of Redemption Price 33
Section 6.6 Debentures Payable on Redemption Date 34
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 5.13 of Indenture
for Purposes of First Series of Debentures 36
Section 7.3 Amendment to Section 9.1 of Indenture
for Purposes of First Series of Debentures 37
Section 7.4 Amendment to Section 9.2 of Indenture
for Purposes of First Series of Debentures 37
ARTICLE 8
EXPENSES
Section 8.1 Payment and Expenses 38
ARTICLE 9
COVENANTS
Section 9.1 Covenants 39
ARTICLE 10
MISCELLANEOUS
Section 10.1 Benefits of Indenture 41
Section 10.2 Incorporation of Indenture 41
Section 10.3 Acceptance of Trust 42
Section 10.4 Conflict with Trust Indenture Act 42
Section 10.5 Governing Law 42
Section 10.6 Recitals 42
Section 10.7 Amendments 42
Section 10.8 Counterparts 42