EXECUTION COPY
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PARTNERSHIP PREFERRED SECURITIES GUARANTEE AGREEMENT
CITIZENS UTILITIES COMPANY
Dated as of January 15, 1996
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PARTNERSHIP PREFERRED SECURITIES GUARANTEE AGREEMENT
EXECUTION COPY
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PARTNERSHIP PREFERRED SECURITIES GUARANTEE AGREEMENT
CITIZENS UTILITIES COMPANY
Dated as of January 15, 1996
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PARTNERSHIP PREFERRED SECURITIES GUARANTEE AGREEMENT
This PARTNERSHIP PREFERRED SECURITIES GUARANTEE AGREEMENT
("Guarantee Agreement"), dated as of January 15, 1996, is executed and delivered
by Citizens Utilities Company, a Delaware corporation (the "Guarantor"), and
Chemical Bank, a New York banking corporation, as trustee (the "Guarantee
Trustee"), for the benefit of the Holders (as defined herein) from time to time
of the Partnership Preferred Securities (as defined herein) of Citizens
Utilities Capital L.P., a Delaware limited partnership ("Citizens Capital").
WHEREAS, pursuant to the Limited Partnership Agreement (as defined
herein), Citizens Capital is issuing on the date hereof up to 3,608,260
Partnership Preferred Securities (plus up to an additional 541,240 Partnership
Preferred Securities, solely to cover over-allotments, if any), designated the
5% Partnership Preferred Securities (the "Partnership Preferred Securities");
and
WHEREAS, as incentive for the Holders to purchase the Partnership
Preferred Securities, the Guarantor desires irrevocably and unconditionally to
agree, to the extent set forth in this Guarantee Agreement, to pay to the
Holders of the Partnership Preferred Securities the Guarantee Payments (as
defined herein) and to make certain other payments on the terms and conditions
set forth herein;
NOW, THEREFORE, in consideration of the purchase by each Holder of
Partnership Preferred Securities, which purchase the Guarantor hereby agrees
shall benefit the Guarantor, the Guarantor executes and delivers this Guarantee
Agreement for the benefit of the Holders.
ARTICLE I
DEFINITIONS AND INTERPRETATION
SECTION 1.1 Definitions and Interpretation. In this Guaran
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tee Agreement, unless the context otherwise requires:
(a) Capitalized terms used in this Guarantee Agreement have the
respective meanings assigned to them in this Sec tion 1.1, or, to the extent not
inconsistent with this Guarantee Agreement, in the Statement of Common Defini
tions annexed hereto as Annex A;
(b) unless otherwise defined herein, all capitalized items used
herein shall have the meanings ascribed to them in the Limited Partnership
Agreement;
(c) a term defined anywhere in this Guarantee Agreement has the
same meaning throughout;
(d) all references to "the Guarantee Agreement" or "this
Guarantee Agreement" are to this Guarantee Agreement as modified, supplemented
or amended from time to time;
(e) all references in this Guarantee Agreement to Articles and
Sections are to Articles and Sections of this Guarantee Agreement unless
otherwise specified;
(f) a term defined in the Trust Indenture Act has the same
meaning when used in this Guarantee Agreement unless otherwise defined in this
Guarantee Agreement or unless the context otherwise requires; and
(g) a reference to the singular includes the plural and vice
versa.
"Affiliate" has the same meaning as given to that term in
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Rule 405 of the Securities Act of 1933, or any successor rule thereunder.
"Business Day" is defined in the Statement of Common Defini
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tions.
"Citizens Capital" shall have the meaning set forth in the
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Preamble to this Guarantee Agreement.
" Common Stock Series A" is defined in the Statement of
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Common Definitions.
"Conversion Agent" is defined in the Statement of Common
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Definitions.
"Convertible Debentures" is defined in the Statement of
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Common Definitions.
"Covered Person" means any Holder or beneficial owner of
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Partnership Preferred Securities.
"Declaration" is defined in the Statement of Common Defini
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tions.
"Designated Senior Holder" is defined in the Indenture.
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"Distributions" shall have the meaning as set forth in the
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Limited Partnership Agreement.
"Event of Default" means a default by the Guarantor on any of
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its payment or other obligations under this Guarantee Agreement.
"First Supplemental Indenture" is defined in the Statement of
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Common Definitions.
"Guarantee Payments" means the following payments or distri
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butions, without duplication, with respect to the Partnership Preferred
Securities, to the extent not paid or made by Citizens Capital: (i) any accrued
or deferred and unpaid Distributions that are required to be paid on such
Partnership Preferred Securities to the extent Citizens Capital shall have cash
and/or Common Stock legally available therefor, (ii) the redemption price,
including all accrued or deferred and unpaid Distributions to the date of
redemption (the "Redemption Price"), to the extent Citizens Capital has cash
and/or Common Stock legally available therefor, with respect to any Partnership
Preferred Securities called for redemption by Citizens Capital, and (iii) upon a
voluntary or involuntary dissolution, winding-up or termination of Citizens
Capital other than in connection with the distribution of Convertible Debentures
to the Holders in exchange for Partnership Preferred Securities as provided in
the Limited Partnership Agreement or the redemption of all the Partnership
Preferred Securities, the lesser of (a) the aggregate of the liquidation amount,
payable in cash, and all accrued or deferred and unpaid Distributions, payable
in either cash or Common Stock, on the Partnership Preferred Securities to the
date of payment (a "Liquidation Distribution"), to the extent Citizens Capital
shall have cash and/or Common Stock legally available therefor, and (b) the
amount of assets of Citizens Capital available for distribution to Holders in
liquidation of Citizens Capital.
"Guarantee Subordinated Payment" has the meaning specified in
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Section 7.2.
"Guarantee Trustee" means Chemical Bank until a Successor
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Guarantee Trustee has been appointed and has accepted such appointment pursuant
to the terms of this Guarantee Agreement and thereafter means each such
Successor Guarantee Trustee.
"Guarantor" shall have the meaning set forth in the Preamble
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to this Guarantee Agreement.
"Holder" shall mean any holder, as registered on the books
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and records of Citizens Capital, of any Partnership Preferred Securities;
provided, however, that, in determining whether the holders of the requi
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site percentage of Partnership Preferred Securities have given any request,
notice, consent or waiver hereunder, "Holder" shall not include the Guarantor or
any Affiliate of the Guarantor.
"Indebtedness" is defined in the Indenture.
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"Indemnified Person" means the Guarantee Trustee, any Affili
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ate of the Guarantee Trustee, or any officers, directors, shareholders, members,
partners, employees, representatives or agents of the Guarantee Trustee.
"Indenture" is defined in the Statement of Common Defini
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tions.
"Junior Subordinated Payment" has the meaning specified in
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Section 7.2.
"Limited Partnership Agreement" is defined in the Statement
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of Common Definitions.
"Liquidation Distribution" shall have the meaning set forth
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in this Section 1.1.
"List of Holders" shall have the meaning set forth in Section
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2.2.
"Majority in aggregate liquidation amount of the Partnership
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Preferred Securities" means, except as provided by the Trust Indenture
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Act, a vote by Holder(s) of Partnership Preferred Securities, voting separately
as a class, of more than 50% of the liquidation amount of all Partnership
Preferred Securities.
"Officers' Certificate" is defined in the Statement of Common
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Definitions.
"Opinion of Counsel" is defined in the Indenture.
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"Other Subordinated Indebtedness" is defined in the Inden
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ture.
"Paying Agent" is defined in the Statement of Common Defini
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tions.
"Payment Blockage Period" has the meaning specified in
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Section 7.3.
"Person" is defined in the Statement of Common Definitions.
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"Partnership Preferred Securities" shall have the meaning set
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forth in the Recitals to this Guarantee Agreement.
"Proceeding" shall have the meaning set forth in Section 7.2.
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"Redemption Price" shall have the meaning set forth in this
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Section 1.1.
"Responsible Officer" means, with respect to the Guarantee
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Trustee, any vice-president, any assistant vice-president, the secretary or any
officer of the Guarantee Trustee with direct responsibility for the
administration of this Guarantee Agreement and also means, with respect to a
particular corporate trust matter, any other officer to whom such matter is
referred because of that officer's knowledge of and familiarity with the
particular subject.
"Senior Indebtedness" and all capitalized terms used therein
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is defined in the Statement of Common Definitions.
"Senior Nonmonetary Default" has the meaning specified in
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Section 7.3.
"Senior Payment Default" has the meaning specified in Section
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7.3.
"Subsidiary" is defined in the Statement of Common Defini
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tions.
"Successor Guarantee Trustee" means a successor Guarantee
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Trustee possessing the qualifications to act as Guarantee Trustee under Section
4.1.
"Trust Indenture Act" means the Trust Indenture Act of 1939, as
amended from time to time.
ARTICLE II
TRUST INDENTURE ACT
SECTION 2.1 Trust Indenture Act; Application. This Guaran
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tee Agreement is subject to the provisions of the Trust Indenture Act that are
required to be part of this Guarantee Agreement and shall, to the extent
applicable, be governed by such provisions; and
(b) if and to the extent that any provision of this Guarantee
Agreement limits, qualifies or conflicts with the duties imposed by Section 310
to 317, inclusive, of the Trust Indenture Act, such imposed duties shall
control.
SECTION 2.2 Lists of Holders of Securities. The Guarantor
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shall provide the Guarantee Trustee with a list, in such form as the Guarantee
Trustee may reasonably require, of the names and addresses of the Holders of the
Partnership Preferred Securities ("List of Holders") as of such date, (i) within
one Business Day after January 1 and June 30 of each year and (ii) at any other
time within 30 days of receipt by the Guarantor of a written request for a List
of Holders as of a date no more than 14 days before such List of Holders is
given to the Guarantee Trustee; provided that the Guarantor shall not be
obligated to provide such --------
List of Holders at any time the List of Holders does not differ from the most
recent List of Holders given to the Guarantee Trustee by the Guarantor. The
Guarantee Trustee may destroy any List of Holders previously given to it on
receipt of a new List of Holders.
(b) The Guarantee Trustee shall comply with its obligations under
Section 311(a), 311(b) and Section 312(b) of the Trust Indenture Act.
(c) Every Holder, by receiving and holding the same, agrees with
the Guarantor and the Guarantee Trustee that neither the Guarantor nor the
Guarantee Trustee nor any agent of either of them shall be held accountable by
reason of any disclosure of information as to names and addresses of Holders
made pursuant to the Trust Indenture Act.
SECTION 2.3 Reports by the Guarantee Trustee. Within 60 days
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after May 15 of each year, the Guarantee Trustee shall provide to the Holders of
the Partnership Preferred Securities such reports as are required by Section 313
of the Trust Indenture Act, if any, in the form and in the manner provided by
Section 313 of the Trust Indenture Act. The Guarantee Trustee shall also comply
with the requirements of Section 313(d) of the Trust Indenture Act.
SECTION 2.4 Periodic Reports to Guarantee Trustee. The Guar
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antor shall provide to the Guarantee Trustee such documents, reports and
information as required by Section 314 (if any) and the compliance certificate
required by Section 314 of the Trust Indenture Act in the form, in the manner
and at the times required by Section 314 of the Trust Indenture Act.
SECTION 2.5 Evidence of Compliance with Conditions Precedent.
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The Guarantor shall provide to the Guarantee Trustee such evidence of compliance
with any conditions precedent, if any, provided for in this Guarantee Agreement
that relate to any of the matters set forth in Section 314(c) of the Trust
Indenture Act. Any certificate or opinion required to be given by an officer
pursuant to Section 314(c)(1) may be given in the form of an Officers'
Certificate.
SECTION 2.6 Events of Default; Waiver. The Holders of a
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Majority in aggregate liquidation amount of Partnership Preferred Securities
may, by vote, on behalf of the Holders of all of the Partnership Preferred
Securities, waive any past Event of Default and its consequences. Upon such
waiver, any such Event of Default shall cease to exist, and any Event of Default
arising therefrom shall be deemed to have been cured, for every purpose of this
Guarantee Agreement, but no such waiver shall extend to any subsequent or other
default or Event of Default or impair any right consequent thereon.
SECTION 2.7 Event of Default; Notice. The Guarantee
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Trustee shall, within 90 days after the occurrence of an Event of Default,
transmit by mail, first class postage prepaid, to the Holders of the Partnership
Preferred Securities, notices of all Events of Default known to the Guarantee
Trustee, unless such defaults have been cured before the giving of such notice;
provided that the Guarantee Trustee shall be
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protected in withholding such notice if and so long as the board of directors,
the executive committee, or a trust committee of directors and/or Responsible
Officers of the Guarantee Trustee in good faith determines that the withholding
of such notice is in the interests of the Holders of the Partnership Preferred
Securities.
(b) The Guarantee Trustee shall not be deemed to have knowledge of
any Event of Default unless the Guarantee Trustee shall have received written
notice of such Event of Default.
SECTION 2.8 Conflicting Interests. The Limited Partnership
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Agreement shall be deemed to be specifically described in this Guarantee
Agreement for the purposes of clause (i) of the first proviso contained in
Section 310(b) of the Trust Indenture Act.
ARTICLE III
POWERS, DUTIES AND RIGHTS OF
GUARANTEE TRUSTEE
SECTION 3.1 Powers and Duties of the Guarantee Trustee.
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This Guarantee Agreement shall be held by the Guarantee Trustee for the benefit
of the Holders of the Partnership Preferred Securities, and the Guarantee
Trustee shall not transfer this Guarantee Agreement to any Person except a
Holder of Partnership Preferred Securities exercising his or her rights pursuant
to Section 5.4(b) or to a Successor Guarantee Trustee on acceptance by such
Successor Guarantee Trustee of its appointment to act as Successor Guarantee
Trustee. The right, title and interest of the Guarantee Trustee shall
automatically vest in any Successor Guarantee Trustee, and such vesting and
cessation of title shall be effective whether or not conveyancing documents have
been executed and delivered pursuant to the appointment of such Successor
Guarantee Trustee.
(b) If an Event of Default has occurred and is continuing, the
Guarantee Trustee shall enforce this Guarantee Agreement for the benefit of the
Holders of the Partnership Preferred Securities.
(c) The Guarantee Trustee, before the occurrence of any Event of
Default and after the curing of all Events of Default that may have occurred,
shall undertake to perform only such duties as are specifically set forth in
this Guarantee Agreement, and no implied covenants shall be read into this
Guarantee Agreement against the Guarantee Trustee. In case an Event of Default
has occurred (that has not been cured or waived pursuant to Section 2.6), the
Guarantee Trustee shall exercise such of the rights and powers vested in it by
this Guarantee Agreement, and use the same degree of care and skill in its
exercise thereof, as a prudent person would exercise or use under the
circumstances in the conduct of his or her own affairs.
(d) No provision of this Guarantee Agreement shall be construed to
relieve the Guarantee Trustee from liability for its own negligent action, its
own negligent failure to act, or its own willful misconduct, except that:
(i) prior to the occurrence of any Event of Default and after
the curing or waiving of all such Events of Default that may have occurred:
(A) the duties and obligations of the Guarantee
Trustee shall be determined solely by the express provisions of this Guarantee
Agreement, and the Guarantee Trustee shall not be liable except for the
performance of such duties and obligations as are specifically set forth in this
Guarantee Agreement, and no implied covenants or obligations shall be read into
this Guarantee Agreement against the Guarantee Trustee; and
(B) in the absence of bad faith on the part of the
Guarantee Trustee, the Guarantee Trustee may conclusively rely, as to the truth
of the statements and the correctness of the opinions expressed therein, upon
any certificates or opinions furnished to the Guarantee Trustee and conforming
to the requirements of this Guarantee Agreement; but in the case of any such
certificates or opinions that by any provision hereof are specifically required
to be furnished to the Guar antee Trustee, the Guarantee Trustee shall be under
a duty to examine the same to determine whether or not they conform to the
requirements of this Guarantee Agreement;
(ii) the Guarantee Trustee shall not be liable for any error
of judgment made in good faith by a Responsible Officer of the Guarantee
Trustee, unless it shall be proved that the Guarantee Trustee was negligent in
ascertaining the per tinent facts upon which such judgment was made;
(iii) the Guarantee Trustee shall not be liable with respect
to any action taken or omitted to be taken by it in good faith in accordance
with the direction of the Holders of not less than a Majority in aggregate
liquidation amount of the Partnership Preferred Securities relating to the time,
method and place of conducting any proceeding for any remedy available to the
Guarantee Trustee or exercising any trust or power conferred upon the Guaran tee
Trustee under this Guarantee Agreement; and
(iv) no provision of this Guarantee Agreement shall require
the Guarantee Trustee to expend or risk its own funds or otherwise incur
personal financial liability in the performance of any of its duties or in the
exercise of any of its rights or powers, if the Guarantee Trustee shall have
reasonable grounds for believing that the repayment of such funds or liability
is not reasonably assured to it under the terms of this Guarantee Agree ment or
adequate indemnity against such risk or liability is not reasonably assured to
it.
(e) If:
(1) default occurs in the payment of the principal of any
Partnership Preferred Security when and as the same shall be due and payable and
such failure shall continue for 15 days; or
(2) default occurs in the payment of any distribution on
any Partnership Preferred Security when such distribution becomes due and
payable and such failure continues for a period of 60 days;
the Guarantee Trustee shall be authorized to recover judgment, in its own name
and as trustee of an express trust, against the Guarantor for the whole amount
of principal and distributions owing and unpaid.
(f) In case of the pendency of any receivership, insolvency,
liquidation, bankruptcy, reorganization, arrangement, adjustment, composition or
other judicial proceeding relative to the Guarantor or any other obligor upon
the Partnership Preferred Securities or the property of the Guarantor or of such
other obligor or their creditors, the Guarantee Trustee shall be authorized to
file and prove a claim for the whole amount of principal and distributions owing
and unpaid in respect of the Partnership Preferred Securities and to file such
other papers or documents as may be necessary or advisable in order to have the
claims of the Guarantee Trustee (including any claim for the reasonable
compensation, expenses, disbursements and advances of the Guarantee Trustee, its
agents and counsel) and of the Holders allowed in such judicial proceeding.
SECTION 3.2 Certain Rights of Guarantee Trustee. (a) Subject
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to the provisions of Section 3.1:
(i) The Guarantee Trustee may rely and shall be fully
protected in acting or refraining from acting upon any resolution, certificate,
statement, instrument, opinion, report, notice, re quest, direction, consent,
order, bond, debenture, note, other evidence of indebtedness or other paper or
document believed by it to be genuine and to have been signed, sent or presented
by the proper party or parties.
(ii) Any direction or act of the Guarantor contem plated by
this Guarantee Agreement shall be sufficiently evidenced by a written direction
or an Officers' Certificate.
(iii) Whenever, in the administration of this Guarantee
Agreement, the Guarantee Trustee shall deem it desirable that a matter be proved
or established before taking, suffering or omit ting any action hereunder, the
Guarantee Trustee (unless other evidence is herein specifically prescribed) may,
in the absence of bad faith on its part, request and rely upon an Officers'
Certifi cate which, upon receipt of such request, shall be promptly deliv ered
by the Guarantor.
(iv) The Guarantee Trustee shall have no duty to see to any
recording, filing or registration of any instrument (or any rerecording,
refiling or reregistration thereof).
(v) The Guarantee Trustee may consult with counsel, and the
written advice or opinion of such counsel with respect to legal matters shall be
full and complete authorization and protec tion in respect of any action taken,
suffered or omitted by it hereunder in good faith and in accordance with such
advice or opin ion. Such counsel may be counsel to the Guarantor or any of its
Affiliates and may include any of its employees. The Guarantee Trustee shall
have the right at any time to seek instructions concerning the administration of
this Guarantee Agreement from any court of competent jurisdiction.
(vi) The Guarantee Trustee shall be under no obligation to exercise
any of the rights or powers vested in it by this Guarantee Agreement at the
request or direction of any Holder, unless such Holder shall have provided to
the Guarantee Trustee such adequate security and indemnity as would satisfy a
reasonable person in the position of the Guarantee Trustee, against the costs,
expenses (including attorneys' fees and expenses) and liabilities that might be
incurred by it in complying with such request or direction, including such
reasonable advances as may be requested by the Guarantee Trustee; provided that,
nothing contained in this Section -------
3.2(a)(vi) shall be taken to relieve the Guarantee Trustee, upon the
occurrence of an Event of Default, of its obligation to exer cise the rights and
powers vested in it by this Guarantee Agree ment.
(vii) The Guarantee Trustee shall not be bound to make any
investigation into the facts or matters stated in any resolu tion, certificate,
statement, instrument, opinion, report, notice, request, direction, consent,
order, bond, debenture, note, other evidence of indebtedness or other paper or
document, but the Guarantee Trustee, in its discretion, may make such further
inquiry or investigation into such facts or matters as it may see fit.
(viii)The Guarantee Trustee may execute any of the trusts or
powers hereunder or perform any duties hereunder either directly or by or
through agents or attorneys, and the Guarantee Trustee shall not be responsible
for any misconduct or negligence on the part of any agent or attorney appointed
with due care by it hereunder.
(ix) Any action taken by the Guarantee Trustee or its agents
hereunder shall bind the Holders of the Partnership Pre ferred Securities, and
the signature of the Guarantee Trustee or its agents alone shall be sufficient
and effective to perform any such action. No third party shall be required to
inquire as to the authority of the Guarantee Trustee to so act or as to its com
pliance with any of the terms and provisions of this Guarantee Agreement, both
of which shall be conclusively evidenced by the Guarantee Trustee's or its
agent's taking such action.
(x) Whenever in the administration of this Guarantee
Agreement the Guarantee Trustee shall deem it desirable to receive instructions
with respect to enforcing any remedy or right or taking any other action
hereunder, the Guarantee Trustee (i) may request instructions from the Holders
of a Majority in aggregate liquidation amount of the Partnership Preferred
Securities, (ii) may refrain from enforcing such remedy or right or taking such
other action until such instructions are received and (iii) shall be protected
in acting in accordance with such instructions.
(b) No provision of this Guarantee Agreement shall be deemed to
impose any duty or obligation on the Guarantee Trustee to perform any act or
acts or exercise any right, power, duty or obligation conferred or imposed on it
in any jurisdiction in which it shall be illegal, or in which the Guarantee
Trustee shall be unqualified or incompetent in accordance with applicable law,
to perform any such act or acts or to exercise any such right, power, duty or
obligation. No permissive power or authority available to the Guarantee Trustee
shall be construed to be a duty.
SECTION 3.3 Not Responsible for Recitals or Issuance of Guar
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antee. The recitals contained in this Guarantee shall be taken as the
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statements of the Guarantor, and the Guarantee Trustee does not assume any
responsibility for their correctness. The Guarantee Trustee makes no
representation as to the validity or sufficiency of this Guarantee Agreement.
ARTICLE IV
GUARANTEE TRUSTEE
SECTION 4.1 Guarantee Trustee; Eligibility. There shall at
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all times be a Guarantee Trustee which shall:
(i) not be an Affiliate of the Guarantor; and
(ii) be a corporation organized and doing business under the
laws of the United States of America or any State or Territory thereof or of the
District of Columbia, or a corporation or Person meeting the requirements of an
institutional trustee under the Trust Indenture Act, authorized under such laws
to exercise corporate trust powers, having a combined capital and surplus of at
least fifty million U.S. dollars ($50,000,000), and subject to supervision or
examination by Federal, State, Territorial or District of Columbia authority. If
such corporation publishes reports of condition at least annually, pursuant to
law or to the requirements of the supervising or examining authority referred to
above, then, for the purposes of this Section 4.1(a)(ii), the combined capital
and surplus of such corporation shall be deemed to be its combined capital and
surplus as set forth in its most recent report of condition so published.
(b) If at any time the Guarantee Trustee shall cease to be eligible
to so act under Section 4.1(a), the Guarantee Trustee shall immediately resign
in the manner and with the effect set out in Section 4.2(c).
(c) If the Guarantee Trustee has or shall acquire any "conflicting
interest" within the meaning of Section 310(b) of the Trust Indenture Act, the
Guarantee Trustee and Guarantor shall in all respects comply with the provisions
of Section 310(b) of the Trust Indenture Act.
SECTION 4.2 Appointment, Removal and Resignation of Guarantee
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Trustees. Subject to Section 4.2(b), the Guarantee
Trustee may be ap
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pointed or removed without cause at any time by the Guarantor.
(b) The Guarantee Trustee shall not be removed in accordance with
Section 4.2 until a Successor Guarantee Trustee has been appointed and has
accepted such appointment by written instrument executed by such Successor
Guarantee Trustee and delivered to the Guarantor.
(c) The Guarantee Trustee appointed to office shall hold office
until a Successor Guarantee Trustee shall have been appointed or until its
removal or resignation. The Guarantee Trustee may resign from office (without
need for prior or subsequent accounting) by an instrument in writing executed by
the Guarantee Trustee and delivered to the Guarantor, which resignation shall
not take effect until a Successor Guarantee Trustee has been appointed and has
accepted such appointment by instrument in writing executed by such Successor
Guarantee Trustee and delivered to the Guarantor and the resigning Guarantee
Trustee.
(d) If no Successor Guarantee Trustee shall have been appointed and
accepted appointment as provided in this Section 4.2 within 60 days after
delivery to the Guarantor of an instrument of resignation, the resigning
Guarantee Trustee may petition any court of competent jurisdiction for
appointment of a Successor Guarantee Trustee. Such court may thereupon, after
prescribing such notice, if any, as it may deem proper, appoint a Successor
Guarantee Trustee.
ARTICLE V
GUARANTEE
SECTION 5.1 Guarantee. The Guarantor irrevocably and uncon
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ditionally agrees to pay in full to the Holders the Guarantee Payments (without
duplication of amounts theretofore paid by Citizens Capital), as and when due,
regardless of any defense, right of set-off or counterclaim that Citizens
Capital may have or assert. The Guarantor's obligation to make a Guarantee
Payment may be satisfied by direct payment of the required amounts by the
Guarantor to the Holders or by causing Citizens Capital to pay such amounts to
the Holders.
SECTION 5.2 Waiver of Notice and Demand. The Guarantor
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hereby waives notice of acceptance of this Guarantee Agreement and of any
liability to which it applies or may apply, presentment, demand for payment, any
right to require a proceeding first against Citizens Capital or any other Person
before proceeding against the Guarantor, protest, notice of nonpayment, notice
of dishonor, notice of redemption and all other notices and demands.
SECTION 5.3 Obligations Not Affected. The obligations, cove
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nants, agreements and duties of the Guarantor under this Guarantee Agreement
shall in no way be affected or impaired by reason of the happening from time to
time of any of the following:
(a) the release or waiver, by operation of law or otherwise, of the
performance or observance by Citizens Capital of any express or implied
agreement, covenant, term or condition relating to the Partnership Preferred
Securities to be performed or observed by Citizens Capital;
(b) the extension of time for the payment by Citizens Capital of
all or any portion of the Distributions, Redemption Price, Liquidation
Distribution or any other sums payable under the terms of the Partnership
Preferred Securities or the extension of time for the performance of any other
obligation under, arising out of, or in connection with, the Partnership
Preferred Securities (other than an extension of time for payment of
Distributions, Redemption Price, Liquidation Distribution or other sum payable
that results from the deferral of any interest payment on the Convertible
Debentures permitted by the Indenture);
(c) any failure, omission, delay or lack of diligence on the part
of the Holders to enforce, assert or exercise any right, privilege, power or
remedy conferred on the Holders pursuant to the terms of the Partnership
Preferred Securities, or any action on the part of Citizens Capital granting
indulgence or extension of any kind;
(d) the voluntary or involuntary liquidation, dissolution, sale of
any collateral, receivership, insolvency, bankruptcy, assignment for the benefit
of creditors, reorganization, arrangement, composition or readjustment of debt
of, or other similar proceedings affecting, Citizens Capital or any of the
assets of Citizens Capital;
(e) any invalidity of, or defect or deficiency in the
Partnership Preferred Seceurities;
(f) the settlement or compromise of any obligation guaranteed
hereby or hereby incurred; or
(g) any other circumstance whatsoever that might otherwise
constitute a legal or equitable discharge or defense of a guarantor, it being
the intent of this Section 5.3 that the obligations of the Guarantor hereunder
shall be absolute and unconditional under any and all circumstances.
There shall be no obligation of the Holders to give notice to, or
obtain consent of, the Guarantor with respect to the happening of any of the
foregoing.
SECTION 5.4 Rights of Holders. (b) The Holders of a Majori
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ty in aggregate liquidation amount of the Partnership Preferred Securities have
the right (i) to direct the time, method and place of conducting of any
proceeding for any remedy available to the Guarantee Trustee in respect of this
Guarantee Agreement or to direct the exercise of any trust or power conferred
upon the Guarantee Trustee under this Guarantee Agreement and (ii) on behalf of
the Holders of all Partnership Preferred Securities to consent to the waiver of
any past default and its consequences.
(b) If the Guarantee Trustee fails to enforce this Guarantee
Agreement, any Holder of Partnership Preferred Securities may institute a legal
proceeding directly against the Guarantor to enforce the Guarantee Trustee's
rights under this Guarantee Agreement, without first instituting a legal
proceeding against Citizens Capital, the Guarantee Trustee or any other Person.
SECTION 5.5 Guarantee of Payment. This Guarantee Agreement
--------------------
creates a guarantee of payment and not of collection.
SECTION 5.6 Subrogation. The Guarantor shall be subrogated
-----------
to all (if any) rights of the Holders of Partnership Preferred Securities
against Citizens Capital in respect of any amounts paid to such Holders by the
Guarantor under this Guarantee Agreement; provided, however, that the
--------
Guarantor shall not (except to the extent required by mandatory provisions of
law) be entitled to enforce or exercise any right that it may acquire by way of
subrogation or any indemnity, reimbursement or other agreement, in all cases as
a result of payment under this Guarantee Agreement, if, at the time of any such
payment, any amounts are due and unpaid under this Guarantee Agreement. If any
amount shall be paid to the Guarantor in violation of the preceding sentence,
the Guarantor agrees to hold such amount in trust for the Holders and to pay
over such amount to the Holders.
SECTION 5.7 Independent Obligations. The Guarantor acknowl
------------------------
edges that its obligations hereunder are independent of the obligations of
Citizens Capital with respect to the Partnership Preferred Securities, and that
the Guarantor shall be liable as principal and as debtor hereunder to make
Guarantee Payments pursuant to the terms of this Guarantee Agreement
notwithstanding the occurrence of any event referred to in subsections (a)
through (g), inclusive, of Section 5.3 hereof.
ARTICLE VI
COVENANTS
SECTION 6.1 Limitation of Transactions. So long as any
--------------------------
Partnership Preferred Securities remain outstanding, if (i) there shall have
occurred an Event of Default hereunder or an event of default under the Limited
Partnership Agreement or (ii) if the Guarantor exercises its right to defer
interest payments on the Convertible Debentures, then the Guarantor will comply
with Section 9.1 (1) (i), (ii), (iii) and (iv) of the First Supplemental
Indenture (and references therein to "the Company" shall be deemed to refer to
the Guarantor).
ARTICLE VII
SUBORDINATION
SECTION 7.1 Subordination. This Guarantee Agreement will
-------------
constitute an unsecured obligation of the Guarantor and will rank subordinate
and subject in right of payment to the prior payment in full in cash of Senior
Indebtedness of the Guarantor.
Article VII 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 7.2 Payment Over of Proceeds Upon Dissolution, etc.
-----------------------------------------------
Upon any payment or distribution of assets of the Guarantor 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 Guarantor (each such event, if any,
herein sometimes referred to as a "Proceeding"):
(i) 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 are entitled to receive any
payment (including any payment to Holders made in respect of any other
Indebtedness of the Guarantor subordinated to the payment of the Guarantee, such
payment or distribution being hereinafter referred to as a "Junior Subordinated
Payment"), on account of the Guarantee or on account of any purchase, redemption
or other acquisition of the Guarantee by the Guarantor, any Subsidiary of the
Guarantor, the Guarantee 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 "Guarantee Subordinated Payment"); and
(ii) any payment or distribution of assets of the Guarantor of any
kind or character, whether in cash, property or securities, by set-off or
otherwise, to which the Holders or the Guarantee 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 Guarantee Trustee or a Holder shall have received in connection
with any Proceeding any Guarantee Subordinated Payment before all Senior
Indebtedness is paid in full or payment thereof provided for in cash, then and
in such event such Guarantee Subordinated 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 Guarantor 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 Guarantor 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 Guarantee is so subordinated as provided in this Article. The
consolidation of the Guarantor with, or the merger of the Guarantor into,
another Person or the liquidation or dissolution of the Guarantor 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
Guarantor 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 7.3 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 Guarantee Subordinated Payment shall be
made (except that, so long as Citizens Capital shall be the holder of all of the
Outstanding Convertible 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 Guarantor
and the Guarantee Trustee of written notice of such Senior Nonmonetary Default
from the Designated Senior Holder of such certain Senior Indebtedness, no
Guarantee Subordinated Payment (except that, so long as Citizens Capital shall
be the holder of all of the Outstanding Convertible 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 Guarantee 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 Guarantor
shall make any Guarantee Subordinated Payment to the Guarantee Trustee or any
Holder prohibited by the foregoing provisions of this Section, then and in such
event such Guarantee Subordinated Payment shall be paid over and delivered
forthwith to the Designated Senior Holders under the Senior Indebtedness or, if
such Senior Indebtedness has been repaid in full, to the Guarantor.
The provisions of this Section shall not apply to any Guarantee
Subordinated Payment with respect to which Section 7.2 hereof would be
applicable.
SECTION 7.4 Payment Permitted If No Default. Nothing con
-------------------------------
tained in this Article or elsewhere in this Guarantee Agreement shall prevent
the Guarantor, at any time except during the pendency of any Proceeding referred
to in Section 7.2 hereof or under the conditions described in Section 7.3
hereof, from making Guarantee Subordinated Payments.
SECTION 7.5 Subrogation To Rights Of Holders Of Senior
-------------------------------------------
Indebtedness. Subject to the payment in full in cash of all Senior
- ------------
Indebtedness, the Holders 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 Guarantee 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 or the
Guarantee 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 or the Guarantee Trustee, shall, as among the
Guarantor, its creditors other than holders of Senior Indebtedness and the
Holders, be deemed to be a payment or distribution by the Guarantor to or on
account of the Senior Indebtedness.
SECTION 7.6 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 Guarantee Agreement is intended to or shall (a) impair, as
among the Guarantor, its creditors (other than holders of Senior Indebtedness)
and the Holders, the obligation of the Guarantor, 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 Guarantor), to pay to the Holders the Guarantee
Subordinated Payments as and when the same shall become due and payable in
accordance with their terms; or (b) affect the relative rights against the
Guarantor of the Holders and creditors of the Guarantor, other than the holders
of Senior Indebtedness; or (c) prevent the Guarantee Trustee or a Holder from
exercising all remedies otherwise permitted by applicable law upon default under
this Guarantee Agreement, 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 Guarantee Trustee or such Holder or,
under the conditions specified in Section 7.3, to prevent any payment prohibited
by such Section or enforce their rights pursuant to the penultimate paragraph in
Section 7.3.
SECTION 7.7 Guarantee Trustee To Effectuate Subordination.
----------------------------------------------
Each Holder of the Guarantee by his acceptance thereof authorizes and directs
the Guarantee 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 Guarantee 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 Guarantor whether in bankruptcy, insolvency, receivership
proceedings, or otherwise, the timely filing of a claim for the unpaid balance
of the Indebtedness of the Guarantor owing to such Holder in the form required
in such proceedings and the causing of such claim to be approved. If the
Guarantee 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.
SECTION 7.8 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 Guarantor or by any act
or failure to act, in good faith, by any such holder, or by any noncompliance by
the Guarantor with the terms, provisions and covenants of this Guarantee
Agreement, 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 Guarantee Trustee or the Holders,
without incurring responsibility to the Holders and without impairing or
releasing the subordination provided in this Article or the obligations
hereunder of the Holders 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 Guarantor 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 Guarantor and any other Person; and (vi) apply any sums received by them to
Senior Indebtedness.
SECTION 7.9 Notice To Guarantee Trustee. The Guarantor shall
- ----------------------------
give prompt written notice to the Guarantee Trustee of any fact known to the
Guarantor which would prohibit the making of any payment to or by the Guarantee
Trustee in respect of the Guarantee. Notwithstanding the provision of this
Article or any other provision of this Guarantee Agreement, the Guarantee
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 Guarantee Trustee in
respect of the Guarantee, unless and until a Responsible Officer of the
Guarantee Trustee shall have received written notice thereof from the Guarantor,
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 Guarantee Trustee, subject to the provisions of Section 3.1,
shall be entitled in all respects to assume that no such facts exist; provided,
however, that
--------
if the Guarantee 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 any amounts due under the Guarantee), 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 Guarantee 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 Guarantee 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 Guarantee Trustee, the receipt of which shall be
confirmed via telephone, or (ii) mailed, first class postage prepaid, or sent by
overnight carrier, to the Guarantee Trustee addressed to it at the address of
its principal office specified herein or at any other address furnished in
writing to such holder of Senior Indebtedness by the Guarantee Trustee.
Subject to the provisions of Section 3.1, the Guarantee 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 Guarantee
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 Guarantee Trustee may request such Person to furnish evidence to
the reasonable satisfaction of the Guarantee 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 Guarantee 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 Guarantee Trustee shall be deemed given
unless received by a Responsible Officer at the Guarantee Trustee's principal
corporate trust office.
SECTION 7.10 Reliance On Judicial Order Or Certificate Of
---------------------------------------------
Liquidating Agent. Upon any payment or distribution of assets of the
- -----------------
Guarantor referred to in this Article, the Guarantee Trustee, subject to the
provisions of Section 3.1, and the Holders 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 Guarantee
Trustee or to the Holders, 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 Guarantor, 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 7.11 Guarantee Trustee Not Fiduciary For Holders Of
----------------------------------------------
Senior Indebtedness. The Guarantee 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 or to the Guarantor 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 7.12 Rights of Guarantee Trustee As Holder Of Senior
------------------------------------------------
Indebtedness;Preservation Of Guarantee Trustee's Rights. The Guarantee
- -------------------------------------------------------
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 Guarantee Agreement shall deprive the Guarantee 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 Guarantee Trustee under or pursuant to this Guarantee Agreement or Section
6.7 of the Indenture.
SECTION 7.13 Article Applicable to Paying Agents. In case at
- -----------------------------------
any time any Paying Agent other than the Guarantee Trustee shall have been
appointed by the Guarantor and be then acting hereunder, the term "Guarantee
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 Guarantee Trustee;
provided, however, that Section 7.11
-------- -------
hereof shall not apply to the Guarantor or any Affiliate of the Guarantor if it
or such Affiliate acts as Paying Agent.
ARTICLE VIII
TERMINATION
SECTION 8.1 Termination. This Guarantee Agreement shall
-----------
terminate upon (i) full payment of the Redemption Price of all Partnership
Preferred Securities, (ii) the distribution of the Convertible Debentures to the
Holders in exchange for all of such Holders' Partnership Preferred Securities,
(iii) full payment of the amounts payable in accordance with the Limited
Partnership Agreement upon liquidation of Citizens Capital or (iv) distribution
of Common Stock to Holders in respect of the conversion of all of such Holders'
Partnership Preferred Securities into Common Stock. Notwithstanding the
foregoing, this Guarantee Agreement will continue to be effective or will be
reinstated, as the case may be, if at any time any Holder of Partnership
Preferred Securities must restore payment of any sums paid under the Partnership
Preferred Securities or under this Guarantee Agreement.
ARTICLE IX
INDEMNIFICATION
SECTION 9.1 Exculpation. No Indemnified Person shall be
-----------
liable, responsible or accountable in damages or otherwise to the Guarantor or
any Covered Person for any loss, damage or claim incurred by reason of any act
or omission performed or omitted by such Indemnified Person in good faith in
accordance with this Guarantee Agreement and in a manner that such Indemnified
Person reasonably believed to be within the scope of the authority conferred on
such Indemnified Person by this Guarantee Agreement or by law, except that an
Indemnified Person shall be liable for any such loss, damage or claim incurred
by reason of such Indemnified Person's negligence or willful misconduct with
respect to such acts or omissions.
(b) An Indemnified Person shall be fully protected in relying in good
faith upon the records of the Guarantor and upon such information, opinions,
reports or statements presented to the Guarantor by any Person as to matters the
Indemnified Person reasonably believes are within such other Person's
professional or expert competence, including information, opinions, reports or
statements as to the value and amount of the assets, liabilities, profits,
losses or any other facts pertinent to the existence and amount of assets from
which Distributions to Holders of Partnership Preferred Securities might
properly be paid.
SECTION 9.2 Indemnification. (c) To the fullest extent
----------------
permitted by applicable law, the Guarantor shall indemnify and hold harmless
each Indemnified Person from and against any loss, damage or claim incurred by
such Indemnified Person arising out of the acceptance by the Guarantee Trustee
of its duties and obligations hereunder by reason of any act or omission
performed or omitted by such Indemnified Person in good faith in accordance with
this Guarantee Agreement and in a manner such Indemnified Person reasonably
believed to be within the scope of authority conferred on such Indemnified
Person in accordance with this Guarantee Agreement, except that no Indemnified
Person shall be entitled to be indemnified in respect of any loss, damage or
claim incurred by such Indemnified Person by reason of its negligence or willful
misconduct with respect to such acts or omissions.
(b) To the fullest extent permitted by applicable law, expenses
(including legal fees) incurred by an Indemnified Person in defending any claim,
demand, action, suit or proceeding shall, from time to time, be advanced by the
Guarantor prior to the final disposition of such claim, demand, action, suit or
proceeding upon receipt by the Guarantor of an undertaking by or on behalf of
the Indemnified Person to repay such amount if it shall be determined that the
Indemnified Person is not entitled to be indemnified as authorized in Section
9.2(a).
ARTICLE X
CONVERSION OF PARTNERSHIP PREFERRED SECURITIES
SECTION 10.1 Issuance of Common Stock Series A. The Guaran
---------------------------------
tor hereby agrees that, upon the request of the Conversion Agent, on behalf of
one or more Holders of Partnership Preferred Securities, to convert Convertible
Debentures into Common Stock Series A pursuant to the request of such Holders to
effect such conversion in accordance with the terms of the Limited Partnership
Agreement, the Guarantor shall deliver to the Conversion Agent certificates
representing the full number of shares of Common Stock Series A issuable upon
conversion of such Convertible Debentures in accordance with the terms of the
Indenture and such Convertible Debentures. The Guarantor has reserved and will
keep available for issuance, solely for the purpose of affecting the conversion
of the Convertible Debentures, the full number of shares of Common Stock Series
A deliverable by the Conversion Agent to the Holders upon the conversion of all
outstanding Partnership Preferred Securities not theretofore converted by the
Holders.
SECTION 10.2 Validity of Common Stock Series A. All shares
---------------------------------
of Common Stock Series A delivered by the Guarantor upon such conversion will be
duly and validly issued and fully paid and nonassessable.
SECTION 10.3 Termination of Obligation to Issue Common Stock
-----------------------------------------------
Series A. The Guarantor's obligations under this Article IX to issue
- --------
Common Stock Series A shall terminate upon the termination of the right of
holders of Partnership Preferred Securities to request the Conversion Agent to
effect such conversion as set forth in the Limited Partnership Agreement and,
with respect to a particular holder, upon such conversion.
ARTICLE XI
MISCELLANEOUS
SECTION 11.1 Successors and Assigns. All guarantees and
----------------------
agreements contained in this Guarantee Agreement shall bind the successors,
assigns, receivers, trustees and representatives of the Guarantor and shall
inure to the benefit of the Holders of the Partnership Preferred Securities then
outstanding.
SECTION 11.2 Amendments. Except with respect to any changes
----------
that do not adversely affect the rights of Holders (in which case no consent of
Holders will be required), this Guarantee Agreement may only be amended with the
prior approval of the Holders of at least 66-2/3% in aggregate liquidation
amount (including the stated amount that would be paid on redemption,
liquidation or otherwise, plus accrued and unpaid Distributions to the date upon
which the voting percentages are determined) of all the outstanding Partnership
Preferred Securities. The provisions of Section 12.3 of the Limited Partnership
Agreement with respect to meetings of Partners apply to the giving of such
approval. In executing any amendment to this Guarantee Agreement, the Guarantee
Trustee shall be entitled to receive, and shall be fully protected in relying
upon, an Opinion of Counsel stating that the execution of such amendment is
authorized or permitted by this Guarantee Agreement.
SECTION 11.3 Notices. All notices provided for in this
-------
Guarantee Agreement shall be in writing, duly signed by the party giving such
notice, and shall be delivered, telecopied or mailed by registered or certified
mail, as follows:
(a) If given to the Guarantee Trustee, at the Guarantee Trustee's
mailing address set forth below (or such other address as the Guarantee Trustee
may give notice of to the Holders of the Partnership Preferred Securities):
Chemical Bank
450 West 33rd Street, 15th Floor
New York, New York 10001
Attention: Corporate Trustee Administration Department
Fax No.: (212) 946-7799
(b) If given to the Guarantor, at the Guarantor's mailing address
set forth below (or such other address as the Guarantor may give notice of to
the Holders of the Partnership Preferred Securities):
Citizens Utilities Company
High Ridge Park, Bldg. No. 3
Stamford, Connecticut 06905
Attention: Robert J. DeSantis, Vice President
and Treasurer
Fax No.: (203) 329-4625
copy to:
Boulanger, Hicks & Churchill
135 East 57th Street
New York, New York 10022
Attention: Jonathan H. Churchill
Fax No.: (212) 753-6971
(c) If given to any Holder of Partnership Preferred Securities, at
the address of such Holder set forth on the books and records of Citizens
Capital.
All such notices shall be deemed to have been given when (i)
received in person, (ii) telecopied with receipt confirmed, or (iii) the third
Business Day after having been mailed by first class mail, postage prepaid,
except that if a notice or other document is refused delivery or cannot be
delivered because of a changed address of which no notice was given, such notice
or other document shall be deemed to have been delivered on the date of such
refusal or inability to deliver.
SECTION 11.4 Benefit. This Guarantee Agreement is solely for
- -------
the benefit of the Guarantee Trustee and the Holders of the Partnership
Preferred Securities and, subject to Section 3.1(a), is not separately
transferable from the Partnership Preferred Securities.
SECTION 11.5 Governing Law. This Guarantee Agreement shall
-------------
be governed by and construed and interpreted in accordance with the laws of the
State of New York.
SECTION 11.6 Counterparts. This Guarantee Agreement 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.
THIS GUARANTEE AGREEMENT is executed as of the day and year
first above written.
CITIZENS UTILITIES COMPANY
By:_______________________
Robert J. DeSantis
Vice President and Treasurer
CHEMICAL BANK, as Guarantee Trustee
By:________________________
Name:
Title:
CITIZENS UTILITIES COMPANY
Reconciliation and tie between Trust Indenture Act of 1939 and Guarantee,
dated as of January 15, 1996.
Trust Indenture
Act Section Guarantee Section
----------- -----------------
subsection 310(a)(1) 4.1(a)
(a)(2) 4.1(a)
(a)(3) Not Applicable
(a)(4) Not Applicable
(a)(5) 4.1(a)
(b) 4.1(c), 4.2(d)
subsection 311(a) 2.2(b)
(b) 2.2(b)
subsection 312(a) 2.2(a)
(b) 2.2(b)
(c) 2.2(c)
subsection 313(a) 2.3
(b) 2.3
(c) 2.3
(d) 2.3
subsection 314(a) 2.4
(b) Not Applicable
(c)(1) 2.4, 2.5
(c)(2) 2.4, 2.5
(c)(3) Not Applicable
(d) Not Applicable
(e) 1.1
subsecton 315(a) 3.1(c), 3.1(d)(i)
(b) 2.7
(c) 3.1(c)
(d) 3.1(d)
(d)(1) 3.1(d)(i)
(d)(2) 3.1(d)(ii)
(d)(3) 3.1(d)(iii)
(e) None
subsection 316(a) 5.4
(a)(1) (A)5.4
(a)(1)(B) 5.4
(a)(2) None
(b) 5.1, 5.3
(c) None
subsection 317(a)(1) 3.1(e)
(a)(2) 3.1(f)
(b) Not applicable
subsection 318(a) . .2.1
NOTE: This reconciliation and tie shall not, for any
purpose, be deemed to be a part of the Guarantee.
TABLE OF CONTENTS
------------------
ARTIICLE I
DEFINITIONS AND INTERPRETATION
SECTION 1.1 Definitions and Interpretation 1
ARTICLE II
TRUST INDENTURE ACT
SECTION 2.1 Trust Indenture Act; Application 5
SECTION 2.2 Lists of Holders of Securities 5
SECTION 2.3 Reports by the Guarantee Trustee 5
SECTION 2.4 Periodic Reports to Guarantee Trustee 6
SECTION 2.5 Evidence of Compliance with Conditions Precedent 6
SECTION 2.6 Events of Default; Waiver 6
SECTION 2.7 Event of Default; Notice 6
SECTION 2.8 Conflicting Interests 6
ARTICLE III
POWERS, DUTIES AND RIGHTS OF
GUARANTEE TRUSTEE
SECTION 3.1 Powers and Duties of the Guarantee Trustee 7
SECTION 3.2 Certain Rights of Guarantee Trustee 9
SECTION 3.3 Not Responsible for Recitals or Issuance of Guarantee 11
ARTICLE IV
GUARANTEE TRUSTEE
SECTION 4.1 Guarantee Trustee; Eligibility 11
SECTION 4.2 Appointment, Removal and Resignation of Guarantee
Trustees 12
ARTICLE V
GUARANTEE
SECTION 5.1 Guarantee 12
SECTION 5.2 Waiver of Notice and Demand 13
SECTION 5.3 Obligations Not Affected 13
SECTION 5.4 Rights of Holders 14
SECTION 5.5 Guarantee of Payment 14
SECTION 5.6 Subrogation 14
SECTION 5.7 Independent Obligations 14
ARTICLE VI
COVENANTS
SECTION 6.1 Limitation of Transactions 14
ARTICLE VII
SUBORDINATION
SECTION 7.1 Subordination 15
SECTION 7.2 Payment Over of Proceeds Upon Dissolution, etc. 15
SECTION 7.3 No Payment When Senior Indebtedness In Senior Payment
Default or Senior Indebtedness Accelerated 16
SECTION 7.4 Payment Permitted If No Default 18
SECTION 7.5 Subrogation To Rights Of Holders Of Senior Indebtedness 18
SECTION 7.6 Provisions Solely To Define Relative Rights 18
SECTION 7.7 Guarantee Trustee To Effectuate Subordination 18
SECTION 7.8 No Waiver Of Subordination Provisions 19
SECTION 7.9 Notice To Guarantee Trustee 19
SECTION 7.10 Reliance On Judicial Order Or Certificate
Of Liquidating Agent 20
SECTION 7.11 Guarantee Trustee Not Fiduciary For Holders
Of Senior Indebtedness 21
SECTION 7.12 Rights of Guarantee Trustee As Holder Of Senior
Indebtedness; Preservation Of Guarantee Trustee's Rights 21
SECTION 7.13 Article Applicable to Paying Agents 21
ARTICLE VIII
TERMINATION
SECTION 8.1 Termination 21
ARTICLE IX
INDEMNIFICATION
SECTION 9.1 Exculpation 22
SECTION 9.2 Indemnification 22
ARTICLE X
CONVERSION OF PARTNERSHIP PREFERRED SECURITIES
SECTION 10.1 Issuance of Common Stock Series A 23
SECTION 10.2 Validity of Common Stock Series A 23
SECTION 10.3 Termination of Obligation to Issue Common Stock Series A 23
ARTICLE XI
MISCELLANEOUS
SECTION 11.1 Successors and Assigns 23
SECTION 11.2 Amendments 23
SECTION 11.3 Notices 24
SECTION 11.4 Benefit 25
SECTION 11.5 Governing Law 25
SECTION 11.6 Counterparts. 25