Exhibit 4.12
__________________________________________
AMENDED AND RESTATED DECLARATION
OF TRUST
SEMPRA ENERGY CAPITAL TRUST [ ]
Dated as of [ ], [199]/[200_]
__________________________________________
TABLE OF CONTENTS
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ARTICLE I. INTERPRETATION AND DEFINITIONS...................................1
Section 1.1. Definitions..................................................1
ARTICLE II. TRUST INDENTURE ACT..............................................6
Section 2.1. Trust Indenture Act; Application.............................6
Section 2.2. Lists of Holders of Securities...............................6
Section 2.3. Reports by the Property Trustee..............................7
Section 2.4. Periodic Reports to the Property Trustee.....................7
Section 2.5. Evidence of Compliance with Conditions Precedent.............7
Section 2.6. Events of Default; Waiver....................................7
Section 2.7. Event of Default; Notice.....................................9
ARTICLE III. ORGANIZATION.....................................................9
Section 3.1. Name.........................................................9
Section 3.2. Office.......................................................9
Section 3.3. Purpose......................................................9
Section 3.4. Authority...................................................10
Section 3.5. Title to Property of the Trust..............................10
Section 3.6. Powers and Duties of the Regular Trustees...................10
Section 3.7. Prohibition of Actions by the Trust and the Trustees........13
Section 3.8. Powers and Duties of the Property Trustee...................14
Section 3.9. Certain Duties and Responsibilities of the Property Trustee.16
Section 3.10. Certain Rights of the Property Trustee......................17
Section 3.11. Delaware Trustee............................................19
Section 3.12. Execution of Documents......................................19
Section 3.13. Not Responsible for Recitals or Issuance of Securities......19
Section 3.14. Duration of Trust...........................................19
Section 3.15. Mergers.....................................................19
ARTICLE IV. SPONSOR.........................................................21
Section 4.1. Sponsor's Purchase of Common Securities.....................21
Section 4.2. Responsibilities of the Sponsor.............................21
Section 4.3. Right to Proceed............................................22
ARTICLE V. TRUSTEES........................................................22
Section 5.1. Number of Trustees..........................................22
Section 5.2. Delaware Trustee............................................22
Section 5.3. Property Trustee; Eligibility...............................22
Section 5.4. Qualifications of Regular Trustees and Delaware Trustee
Generally...................................................23
Section 5.5. Regular Trustees............................................23
Section 5.6. Appointment, Removal and Resignation of Trustees............24
Section 5.7. Vacancies Among Trustees....................................25
Section 5.8. Effect of Vacancies.........................................25
Section 5.9. Meetings....................................................25
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Section 5.10. Delegation of Power.............................................................26
Section 5.11. Merger, Conversion, Consolidation or Succession to Business.....................26
ARTICLE VI. DISTRIBUTIONS.......................................................................26
Section 6.1. Distributions...................................................................26
ARTICLE VII. ISSUANCE OF SECURITIES..............................................................27
Section 7.1. General Provisions Regarding Securities.........................................27
ARTICLE VIII. DISSOLUTION AND TERMINATION OF TRUST................................................28
Section 8.1. Dissolution and Termination of Trust............................................28
ARTICLE IX. TRANSFER OF INTERESTS...............................................................29
Section 9.1. Transfer of Securities..........................................................29
Section 9.2. Transfer of Certificates........................................................29
Section 9.3. Deemed Security Holders.........................................................30
Section 9.4. Book Entry Interests............................................................30
Section 9.5. Notices to Clearing Agency......................................................31
Section 9.6. Appointment of Successor Clearing Agency........................................31
Section 9.7. Definitive Preferred Security Certificates Under Certain Circumstances..........32
Section 9.8. Mutilated, Destroyed, Lost or Stolen Certificates...............................32
ARTICLE X. LIMITATION OF LIABILITY OF HOLDERS OF SECURITIES, TRUSTEES OR OTHERS................33
Section 10.1. Liability.......................................................................33
Section 10.2. Exculpation.....................................................................33
Section 10.3. Fiduciary Duty..................................................................34
Section 10.4. Indemnification.................................................................35
Section 10.5. Outside Businesses..............................................................35
ARTICLE XI. ACCOUNTING..........................................................................35
Section 11.1. Fiscal Year.....................................................................35
Section 11.2. Certain Accounting Matters......................................................36
Section 11.3. Banking.........................................................................36
Section 11.4. Withholding.....................................................................36
ARTICLE XII. AMENDMENTS AND MEETINGS.............................................................37
Section 12.1. Amendments......................................................................37
Section 12.2. Meetings of the Holders of Securities; Action by Written Consent................38
ARTICLE XIII. REPRESENTATIONS OF THE PROPERTY TRUSTEE AND THE DELAWARE TRUSTEE....................39
Section 13.1. Representations and Warranties of the Property Trustee..........................39
Section 13.2. Representations and Warranties of the Delaware Trustee..........................40
ARTICLE XIV. MISCELLANEOUS.......................................................................40
Section 14.1. Notices.........................................................................40
Section 14.2. Governing Law...................................................................41
Section 14.3. Intention of the Parties........................................................42
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Section 14.4. Headings...............................................................42
Section 14.5. Successors and Assigns.................................................42
Section 14.6. Partial Enforceability.................................................42
Section 14.7. Counterparts...........................................................42
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AMENDED AND RESTATED
DECLARATION OF TRUST
OF
SEMPRA ENERGY CAPITAL TRUST[ ]
[ ], [1999]/[200_]
AMENDED AND RESTATED DECLARATION OF TRUST ("Declaration") dated and
effective as of [ ], [1999]/[200_] by the undersigned trustees (together with
all other Persons from time to time duly appointed and serving as trustees in
accordance with the provisions of this Declaration, the "Trustees"), Sempra
Energy, a California corporation, as trust sponsor (the "Sponsor"), and by the
holders, from time to time, of the securities representing undivided beneficial
interests in the assets of the Sempra Energy Capital Trust[ ] (the "Trust") to
be issued pursuant to this Declaration;
WHEREAS, certain of the Trustees and the Sponsor established a trust (the
"Trust") under the Business Trust Act (as defined herein) pursuant to a
Declaration of Trust, dated as of April 22, 1999 (the "Original Declaration")
and a Certificate of Trust filed with the Secretary of State of Delaware on
April 22, 1999, for the sole purpose of issuing and selling certain securities
representing undivided beneficial interests in the assets of the Trust and
investing the proceeds thereof in certain Subordinated Debt Securities (as
defined herein) of the Subordinated Debt Securities Issuer (as defined herein);
WHEREAS, as of the date hereof, no interests in the Trust have been issued;
WHEREAS, all of the Trustees and the Sponsor, by this Declaration, amend
and restate each and every term and provision of the Original Declaration; and
NOW, THEREFORE, it being the intention of the parties hereto to continue
the Trust as a business trust under the Business Trust Act and that this
Declaration constitute the governing instrument of such business trust, the
Trustees declare that all assets contributed to the Trust will be held in trust
for the benefit of the holders, from time to time, of the securities
representing undivided beneficial interests in the assets of the Trust issued
hereunder, subject to the provisions of this Declaration.
ARTICLE I.
INTERPRETATION AND DEFINITIONS
Section 1.1. Definitions. Unless the context otherwise requires:
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(a) Capitalized terms used in this Declaration but not defined in
the preamble above have the respective meanings assigned to them in this Section
1.1;
(b) a term defined anywhere in this Declaration has the same
meaning throughout;
(c) all references to "the Declaration" or "this Declaration" are
to this Amended and Restated Declaration of Trust as modified, supplemented or
amended from time to time;
(d) all references in this Declaration to Articles and Sections
and Exhibits are to Articles and Sections of and Exhibits to this Declaration
unless otherwise specified;
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(e) a term defined in the Trust Indenture Act has the same
meaning when used in this Declaration unless otherwise defined in this
Declaration; and
(f) a reference to the singular includes the plural and vice
versa.
"Affiliate" has the same meaning as given to that term in Rule 405 of the
Securities Act as in effect on the date of this Declaration.
"Authorized Officer" of a Person means any Person that is authorized to
bind such Person.
"Book Entry Interest" means a beneficial interest in a Global Certificate,
ownership and transfers of which shall be maintained and made through book
entries by a Clearing Agency as described in Section 9.4.
"Business Day" means any day other than a day on which banking institutions
in New York, New York and California are authorized or required by law to close.
"Business Trust Act" means Chapter 38 of Title 12 of the Delaware Code, 12
Del. C. (S)(S)3801 et seq., as it may be amended from time to time, or any
successor legislation.
"Certificate" means a Common Security Certificate or a Preferred Security
Certificate.
"Clearing Agency" means an organization registered as a "Clearing Agency"
pursuant to Section 17A of the Exchange Act that is acting as depositary for the
Preferred Securities and in whose name or in the name of a nominee of that
organization, shall be registered a Global Certificate and which shall undertake
to effect book entry transfers and pledges of the Preferred Securities.
"Clearing Agency Participant" means a broker, dealer, bank, other financial
institution or other Person for whom from time to time the Clearing Agency
effects book entry transfers and pledges of securities deposited with the
Clearing Agency.
"Closing Date" means [ ], [1999]/[200_].
"Code" means the Internal Revenue Code of 1986, as amended, or any
successor legislation.
"Commission" means the Securities and Exchange Commission.
"Common Security" has the meaning specified in Section 7.1.
"Common Securities Guarantee" means the guarantee agreement to be dated as
of [ ], [1999]/[200_] of the Sponsor in respect of the Common Securities.
"Common Security Certificate" means a definitive certificate in fully
registered form representing a Common Security substantially in the form of
Annex II to Exhibit A.
"Covered Person" means: (a) any officer, director, shareholder, partner,
member, representative, employee or agent of: (i) the Trust; or (ii) the
Trust's Affiliates; and (b) any Holder of Securities.
"Definitive Preferred Security Certificates" has the meaning set forth in
Section 9.4.
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"Delaware Trustee" has the meaning set forth in Section 5.2.
"Direct Action" has the meaning set forth in Section 3.8(e).
"Distribution" means a distribution payable to Holders of Securities in
accordance with Section 6.1.
"DTC" means The Depository Trust Company, the initial Clearing Agency.
"Event of Default" in respect of the Securities means an Event of Default
(as defined in the Indenture) has occurred and is continuing in respect of the
Subordinated Debt Securities.
"Exchange Act" means the Securities Exchange Act of 1934, as amended from
time to time or any successor legislation.
"Global Certificate" has the meaning set forth in Section 9.4.
"Holder" means a Person in whose name a Certificate representing a Security
is registered, such Person being a beneficial owner within the meaning of the
Business Trust Act.
"Indemnified Person" means
(i) any Trustee;
(ii) any Affiliate of any Trustee;
(iii) any officers, directors, shareholders, members,
partners, employees, representatives or agents of any Trustee; or
(iv) any employee or agent of the Trust or its Affiliates.
"Indenture" means the Indenture dated as of [ ], [1999]/[200_] among the
Subordinated Debt Securities Issuer and The Bank of New York, as trustee, as
supplemented by an Officers' Certificate (as defined in the Indenture) dated as
of [ ], [1999]/[200_] pursuant to Section 301 of the Indenture.
"Investment Company" means an investment company as defined in the
Investment Company Act.
"Investment Company Act" means the Investment Company Act of 1940, as
amended from time to time or any successor legislation.
"Legal Action" has the meaning set forth in Section 3.6(h).
"Majority in liquidation amount of the Securities" means, except as
provided in the terms of the Preferred Securities and by the Trust Indenture
Act, Holder(s) of Securities voting together as a single class or, as the
context may require, Holder(s) of Preferred Securities or Common Securities
voting separately as a class, who vote Securities of a relevant class and the
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 the Securities
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voted by such Holders represents more than 50% of the above stated aggregate
liquidation amount of all Securities of such class.
"Officers' Certificate" means, with respect to any Person, a certificate
signed by the Chairman of the Board, the Vice Chairman of the Board, the Chief
Executive Officer, the President or a Vice President, and by the Treasurer, an
Assistant Treasurer, the Controller, an Assistant Controller, the Secretary or
an Assistant Secretary of such Person. Any Officers' Certificate delivered with
respect to compliance with a condition or covenant provided for in this
Declaration shall include:
(a) a statement that each officer signing the 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 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.
"Paying Agent" has the meaning specified in Section 3.8(h).
"Person" means a legal person, including 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, or any other entity of whatever nature.
"Preferred Securities Guarantee" means the guarantee agreement to be dated
as of [ ], [1999]/[200_] of the Sponsor in respect of the Preferred Securities.
"Preferred Security" has the meaning specified in Section 7.1.
"Preferred Security Beneficial Owner" means, with respect to a Book Entry
Interest, a Person who is the beneficial owner of such Book Entry Interest, as
reflected on the books of the Clearing Agency, or on the books of a Person
maintaining an account with such Clearing Agency (directly as a Clearing Agency
Participant or as an indirect participant, in each case in accordance with the
rules of such Clearing Agency).
"Preferred Security Certificate" means a certificate representing a
Preferred Security substantially in the form of Annex I to Exhibit A.
"Property Trustee" means the Trustee meeting the eligibility requirements
set forth in Section 5.3.
"Property Trustee Account" has the meaning set forth in Section 3.8(c).
"Purchase Agreement" means the Purchase Agreement or Underwriting Agreement
for the offering and sale of Preferred Securities, substantially in the form of
Exhibit C.
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"Quorum" means a majority of the Regular Trustees or if there are only two
Regular Trustees, both of them.
"Regular Trustee" means any Trustee other than the Property Trustee and the
Delaware Trustee.
"Related Party" means, with respect to the Sponsor, any direct or indirect
wholly owned subsidiary of the Sponsor or any other Person that owns, directly
or indirectly, 100% of the outstanding voting securities of the Sponsor.
"Responsible Officer" means, with respect to the Property Trustee, any
Vice-President, any Assistant Vice-President, any Assistant Secretary, any
Assistant Treasurer, any Trust Officer or Assistant Trust Officer or any other
officer of the Property Trustee customarily performing functions similar to
those performed by any of the above designated officers 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.
"Securities" means the Common Securities and the Preferred Securities.
"Securities Act" means the Securities Act of 1933, as amended, or any
successor legislation.
"Special Event" has the meaning set forth in the terms of the Securities.
"Sponsor" means Sempra Energy, a California corporation or any permitted
successor thereof under the Indenture, in its capacity as sponsor of the Trust.
"Subordinated Debt Securities" means the series of Subordinated Debt
Securities to be issued by the Subordinated Debt Securities Issuer under the
Indenture to be held by the Property Trustee pursuant to Section 3.6(c), a
specimen certificate for such series of Subordinated Debt Securities attached
hereto as Exhibit B.
"Subordinated Debt Securities Issuer" means Sempra Energy, a California
corporation.
"Subordinated Debt Securities Trustee" means The Bank of New York, as
trustee under the Indenture until a successor is appointed thereunder and
thereafter means such successor trustee.
"Successor Property Trustee" means a successor Trustee possessing the
qualifications to act as Property Trustee under Section 5.3(a).
"25% in liquidation amount of the Securities" means, except as provided in
the terms of the Preferred Securities and by the Trust Indenture Act, Holder(s)
of Securities voting together as a single class or, as the context may require,
Holder(s) of Preferred Securities or Common Securities, voting separately as a
class, who vote Securities of a relevant class and the 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 the Securities voted by such Holders
represents 25% of the above stated aggregate liquidation amount of all
Securities of such class.
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"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 Indenture Act" means the Trust Indenture Act of 1939, as amended
from time to time, or any successor legislation.
"Trustee" or "Trustees" means each Person who has signed this Declaration
as a trustee, so long as such Person shall continue in office in accordance with
the terms hereof, and all other Persons who may from time to time be duly
appointed, qualified and serving as Trustees in accordance with the provisions
hereof, and references herein to a Trustee or the Trustees shall refer to such
Person or Persons solely in their capacity as trustees hereunder.
ARTICLE II.
TRUST INDENTURE ACT
Section 2.1. Trust Indenture Act; Application.
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(a) This Declaration is subject to the provisions of the Trust
Indenture Act that are required to be part of this Declaration and shall, to the
extent applicable, be governed by such provisions;
(b) the Property Trustee shall be the only Trustee which is a
trustee for the purposes of the Trust Indenture Act;
(c) if and to the extent that any provision of this Declaration
limits, qualifies or conflicts with the duties imposed by (S)(S) 310 to 317,
inclusive, of the Trust Indenture Act, such imposed duties shall control; and
(d) the application of the Trust Indenture Act to this
Declaration shall not affect the nature of the Securities as equity securities
representing undivided beneficial interests in the assets of the Trust.
Section 2.2. Lists of Holders of Securities.
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(a) Each of the Sponsor and the Regular Trustees, on behalf of
the Trust, shall provide the Property Trustee (i) semiannually, not later than
June 30 and December 31 in each year, a list, in such form as the Property
Trustee may reasonably require, containing all the information in the possession
or control of the Sponsor, or any of its Paying Agents other than the Property
Trustee, as to the names and addresses of the Holders of Securities ("List of
Holders") as of the preceding June 15 or December 15, as the case may be, and
(ii) at such other times as the Property Trustee may request in writing, within
30 days after the receipt by the Trust of any such request, a list of similar
form and content as of a date not more than 15 days prior to the time such list
is furnished. The Property Trustee shall preserve, in as current a form as is
reasonably practicable, all information contained in Lists of Holders given to
it or which it receives in its capacity as Paying Agent (if acting in such
capacity) provided that the Property Trustee may destroy any List of Holders
previously given to it on receipt of a new List of Holders; and
(b) the Property Trustee shall comply with its obligations under
(S)(S) 311(a), 311(b) and 312(b) of the Trust Indenture Act.
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Section 2.3. Reports by the Property Trustee. Within 60 days after May 15
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of each year, commencing May [ ], the Property Trustee shall provide to the
Holders of the Securities such reports as are required by (S) 313 of the Trust
Indenture Act, if any, in the form and in the manner provided by (S) 313 of the
Trust Indenture Act. The Property Trustee shall also comply with the
requirements of (S) 313(d) of the Trust Indenture Act.
Section 2.4. Periodic Reports to the Property Trustee. Each of the
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Sponsor and the Regular Trustees, on behalf of the Trust, shall provide to the
Property Trustee such documents, reports and information as required by (S) 314
(if any) and the compliance certificate required by (S) 314 of the Trust
Indenture Act in the form, in the manner and at the times required by (S) 314 of
the Trust Indenture Act.
Section 2.5. Evidence of Compliance with Conditions Precedent. Each of
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the Sponsor and the Regular Trustees, on behalf of the Trust, shall provide to
the Property Trustee such evidence of compliance with any conditions precedent,
if any, provided for in this Declaration which relate to any of the matters set
forth in (S) 314(c) of the Trust Indenture Act. Any certificate or opinion
required to be given by an officer pursuant to (S) 314(c)(1) may be given in the
form of an Officers' Certificate.
Section 2.6. Events of Default; Waiver.
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(a) The Holders of a Majority in liquidation amount of Preferred
Securities may, by vote, on behalf of the Holders of all of the Preferred
Securities, waive any past Event of Default in respect of the Preferred
Securities and its consequences, provided that, if the underlying Event of
Default under the Indenture:
(i) is not waivable under the Indenture, the Event of
Default under this Declaration shall also not be waivable; or
(ii) requires the consent or vote of greater than a
majority in principal amount of the holders of Subordinated Debt
Securities affected thereby (a "Super Majority") to be waived under
the Indenture, the Event of Default under this Declaration may only be
waived by the vote of the Holders of at least the proportion in
liquidation amount of the Preferred Securities which the relevant
Super Majority represents of the aggregate principal amount of the
Subordinated Debt Securities outstanding.
The foregoing provisions of this Section 2.6(a) shall be in lieu of Section
316(a)(1)(B) of the Trust Indenture Act and such Section 316(a)(1)(B) of the
Trust Indenture Act is hereby expressly excluded from this Declaration and the
Securities, as permitted by the Trust Indenture Act. Upon such waiver, any such
default shall cease to exist, and any Event of Default with respect to the
Preferred Securities arising therefrom shall be deemed to have been cured, for
every purpose of this Declaration, but no such waiver shall extend to any
subsequent or other default or Event of Default with respect to the Preferred
Securities or impair any right consequent thereon. Any waiver by the Holders of
the Preferred Securities of an Event of Default with respect to the Preferred
Securities shall also be deemed to constitute a waiver by the Holders of the
Common Securities of any such Event of Default with respect to the Common
Securities for all purposes of this Declaration without any further act, vote or
consent of the Holders of the Common Securities.
(b) The Holders of a Majority in liquidation amount of the Common
Securities may, by vote, on behalf of the Holders of all of the Common
Securities, waive any past Event of Default with
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respect to the Common Securities and its consequences, provided that, if the
underlying Event of Default under the Indenture:
(i) is not waivable under the Indenture, except where the
Holders of the Common Securities are deemed to have waived such Event
of Default under this Declaration as provided below in the proviso to
this Section 2.6(b), the Event of Default under this Declaration shall
also be not waivable; or
(ii) requires the consent or vote of a Super Majority to
be waived, except where the Holders of the Common Securities are
deemed to have waived such Event of Default under this Declaration as
provided below in the proviso to this Section 2.6(b), the Event of
Default under this Declaration may only be waived by the vote of the
Holders of at least the proportion in liquidation amount of the Common
Securities which the relevant Super Majority represents of the
aggregate principal amount of the Subordinated Debt Securities
outstanding,
provided further, each Holder of Common Securities will be deemed to have waived
any such Event of Default and all Events of Default with respect to the Common
Securities and its consequences until all Events of Default with respect to the
Preferred Securities have been cured, waived or otherwise eliminated and until
such Events of Default have been so cured, waived or otherwise eliminated, the
Property Trustee will be deemed to be acting solely on behalf of the Holders of
the Preferred Securities and only the Holders of the Preferred Securities will
have the right to direct the Property Trustee in accordance with the terms of
the Securities; and provided, further, that any waiver by the Holders of the
Preferred Securities of an Event of Default with respect to the Preferred
Securities shall also be deemed to constitute a waiver by the Holders of the
Common Securities of any such Event of Default with respect to the Common
Securities for all purposes of this Declaration without any further act, vote or
consent of the Holder of the Common Securities. The foregoing provisions of
this Section 2.6(b) shall be in lieu of Section 316(a)(1)(A) and Section
316(a)(1)(B) of the Trust Indenture Act and such Section 316(a)(1)(A) and
Section 316(a)(1)(B) of the Trust Indenture Act are hereby expressly excluded
from this Declaration and the Securities, as permitted by the Trust Indenture
Act. Subject to the foregoing provisions of this Section 2.6(b), upon such
waiver, any such default shall cease to exist and any Event of Default with
respect to the Common Securities arising therefrom shall be deemed to have been
cured for every purpose of this Declaration, but no such waiver shall extend to
any subsequent or other default or Event of Default with respect to the Common
Securities or impair any right consequent thereon.
(c) A waiver of any Event of Default under the Indenture by the
Property Trustee at the direction of the Holders of the Preferred Securities
constitutes a waiver of the corresponding Event of Default with respect to the
Preferred Securities under this Declaration. Any waiver of an Event of Default
under the Indenture by the Property Trustee at the direction of the Holders of
the Preferred Securities shall also be deemed to constitute a waiver by the
Holders of the Common Securities of the corresponding Event of Default under
this Declaration with respect to the Common Securities for all purposes of this
Declaration without further act, vote or consent of the Holders of the Common
Securities. The foregoing provisions of this Section 2.6(c) shall be in lieu of
Section 316(a)(1)(B) of the Trust Indenture Act and such Section 316(a)(1)(B) of
the Trust Indenture Act is hereby expressly excluded from this Declaration and
the Securities, as permitted by the Trust Indenture Act.
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Section 2.7. Event of Default; Notice.
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(a) The Property Trustee shall, within 90 days after the
occurrence of an Event of Default with respect to the Securities known to the
Property Trustee, transmit by mail, first class postage prepaid, to the Holders
of the Securities, notices of all such defaults unless such defaults have been
cured before the giving of such notice (the term "defaults" for the purposes of
this Section 2.7(a) being hereby defined to be an Event of Default as defined in
the Indenture, not including any periods of grace provided for therein and
irrespective of the giving of any notice provided therein); provided, that,
except for a default in the payment of principal of (or premium, if any) or
interest on any of the Subordinated Debt Securities or in the payment of any
sinking fund installment established for the Subordinated Debt Securities, the
Property Trustee shall be 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 Property Trustee in good faith
determine that the withholding of such notice is in the interests of the Holders
of the Securities.
(b) The Property Trustee shall not be deemed to have knowledge of
any default except:
(i) a default under Sections 501(1) and 501(2) of the
Indenture; or
(ii) any default as to which the Property Trustee shall
have received written notice or of which a Responsible Officer of the
Property Trustee charged with the administration of the Declaration
shall have actual knowledge.
ARTICLE III.
ORGANIZATION
Section 3.1. Name. The Trust is named "Sempra Energy Capital Trust [ ]",
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as such name may be modified from time to time by the Regular Trustees following
written notice to the Holders of Securities. The Trust's activities may be
conducted under the name of the Trust or any other name deemed advisable by the
Regular Trustees.
Section 3.2. Office. The address of the principal office of the Trust is
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c/o Sempra Energy, 101 Ash Street, San Diego, California, 92101. On ten (10)
Business Days written notice to the Property Trustee and Holders of Securities,
the Regular Trustees may designate another principal office.
Section 3.3. Purpose. The exclusive purposes and functions of the Trust
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are (a) to issue and sell Securities and use the proceeds from such sale to
acquire an equivalent amount of the Subordinated Debt Securities, (b) distribute
the cash payments it receives on the Subordinated Debt Securities it owns to the
holders of Securities, and (c) except as otherwise limited herein, to engage in
only those other activities necessary or incidental thereto. The Trust shall not
borrow money, issue debt or reinvest proceeds derived from investments, pledge
any of its assets, or otherwise undertake (or permit to be undertaken) any
activity that would cause the Trust not to be classified for United States
federal income tax purposes as a grantor trust. It is the intention of all of
the parties hereto that the Trust created hereunder constitutes a "grantor
trust" for United States federal income tax purposes under the Code, and all
parties hereto, and the Holders of the Preferred Securities by the purchase of
the Preferred Securities, agree to treat the Trust with such characterization.
The provisions of this Agreement shall be interpreted consistently with such
characterization. Unless otherwise required by law, by the acceptance of this
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Trust, neither the Trustees, the Sponsor nor the Holders of the Preferred
Securities or Common Securities will take any position which is contrary to the
classification of the Trust as a grantor trust for United States federal income
tax purposes.
Section 3.4. Authority.
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(a) Subject to the limitations provided in this Declaration and
to the specific duties of the Property Trustee, the Regular Trustees shall have
exclusive and complete authority to carry out the purposes of the Trust. An
action taken by the Regular Trustees in accordance with their powers shall
constitute the act of and serve to bind the Trust and an action taken by the
Property Trustee on behalf of the Trust in accordance with its powers shall
constitute the act of and serve to bind the Trust. In dealing with the Trustees
acting on behalf of the Trust, no Person shall be required to inquire into the
authority of the Trustees to bind the Trust. Persons dealing with the Trust are
entitled to rely conclusively on the power and authority of the Trustees as set
forth in this Declaration.
(b) Except as expressly set forth in this Declaration and except
if a meeting of the Regular Trustees is called with respect to any matter over
which the Regular Trustees have power to act, any power of the Regular Trustees
may be exercised by, or with the consent of, any one such Regular Trustee.
(c) Except as otherwise required by the Business Trust Act or
applicable law, any Regular Trustee is authorized to execute on behalf of the
Trust any documents which the Regular Trustees have the power and authority to
cause the Trust to execute pursuant to Section 3.6.
(d) A Regular Trustee may, by power of attorney consistent with
applicable law, delegate to any other natural person over the age of 21 his or
her power for the purposes of executing any documents which the Regular Trustees
have power and authority to cause the Trust to execute pursuant to Section 3.6.
Section 3.5. Title to Property of the Trust. Except as provided in
------------------------------
Section 3.8 with respect to the Subordinated Debt Securities and the Property
Trustee Account or as otherwise provided in this Declaration, legal title to all
assets of the Trust shall be vested in the Trust. A Holder shall not have legal
title to any part of the assets of the Trust, but shall have an undivided
beneficial interest in the assets of the Trust.
Section 3.6. Powers and Duties of the Regular Trustees. The Regular
-----------------------------------------
Trustees shall have the exclusive power, duty and authority to cause the Trust
to engage in the following activities:
(a) to execute, issue and sell the Preferred Securities and the
Common Securities in accordance with this Declaration; provided, however, that
the Trust may issue no more than one series of Preferred Securities and no more
than one series of Common Securities, and, provided further, there shall be no
interests in the Trust other than the Securities, and the issuance of Securities
shall be limited to a simultaneous issuance of both Preferred Securities and
Common Securities on the Closing Date [and any other date Preferred Securities
and Common Securities are sold pursuant to the overallotment option granted in
the Purchase Agreement];
(b) in connection with the issue and sale of the Preferred
Securities, at the direction of the Sponsor, to:
10
(i) execute and file with the Commission, at such time as
determined by the Sponsor, a registration statement on Form S-3
prepared by the Sponsor in relation to the Preferred Securities,
including any pre- and post-effective amendments thereto and any
related registration statement to be filed pursuant to Rule 462(b) of
the Securities Act prepared by the Sponsor;
(ii) execute and file any documents prepared by the Sponsor, or
take any acts as determined by the Sponsor as necessary in order to
qualify or register all or part of the Preferred Securities in any
State in which the Sponsor has determined to qualify or register such
Preferred Securities for sale;
(iii) execute and file an application prepared by the Sponsor,
at such time as determined by the Sponsor, to the New York Stock
Exchange or any other national stock exchange or the NASDAQ National
Market for listing upon notice of issuance of any Preferred
Securities;
(iv) execute and file with the Commission, at such time as
determined by the Sponsor, a registration statement on Form 8-A
prepared by the Sponsor relating to the registration of the Preferred
Securities under Section 12(b) of the Exchange Act, including any
amendments thereto prepared by the Sponsor;
(v) execute and enter into, and perform its obligations under,
the Purchase Agreement and other related agreements providing for the
sale of the Preferred Securities;
(vi) execute and deliver letters, documents, or instruments with
DTC relating to the Preferred Securities;
(vii) execute and file any documents prepared by the Sponsor, or
take any acts as determined by the Sponsor to be necessary in order to
qualify or register all or part of the Preferred Securities in any
State in which the Sponsor has determined to qualify or register such
Preferred Securities for sale or resale, as the case may be; and
(viii) take all actions and perform such duties as may be
required of the Regular Trustees to open checking, deposit or similar
banking accounts as may be necessary in connection with the issuance
and sale of the Securities.
(c) in connection with the issue and sale of Common Securities, to
execute and enter into, and perform its obligations under, the Common Securities
Subscription Agreement dated as of [ ], 1999 between the Trust and the Sponsor
(the "Common Securities Subscription Agreement");
(d) to execute and enter into, and perform its obligations under, the
Subordinated Debt Securities Subscription Agreement dated as of [ ],
[1999]/[200_] between the Trust and the Sponsor (the "Subordinated Debt
Securities Subscription Agreement") to acquire the Subordinated Debt Securities
with the proceeds of the sale of the Preferred Securities and the Common
Securities; provided, however, that the Regular Trustees shall cause legal title
to the Subordinated Debt Securities to be owned by and held of record in the
name of the Property Trustee for the benefit of the Holders of the Preferred
Securities and the Common Securities;
11
(e) to give the Sponsor and the Property Trustee prompt written
notice of the occurrence of a Special Event;
(f) to establish a record date with respect to all actions to be
taken hereunder that require a record date be established, including for the
purposes of (S)316(c) of the Trust Indenture Act and with respect to
Distributions, voting rights, redemptions and exchanges, and to issue relevant
notices to the Holders of Preferred Securities and Common Securities as to such
actions and applicable record dates;
(g) to take all actions and perform such duties as may be
required of the Regular Trustees pursuant to the terms of the Securities and
this Declaration;
(h) to bring or defend, pay, collect, compromise, arbitrate,
resort to legal action, or otherwise adjust claims or demands of or against the
Trust ("Legal Action"), unless pursuant to Section 3.8, the Property Trustee has
the power to bring such Legal Action;
(i) to employ or otherwise engage employees and agents (who may
be designated as officers with titles) and managers, contractors, advisors, and
consultants and pay reasonable compensation for such services;
(j) to cause the Trust to comply with the Trust's obligations
under the Trust Indenture Act;
(k) to give the certificate to the Property Trustee required by
(S) 314(a)(4) of the Trust Indenture Act which certificate may be executed by
any Regular Trustee;
(l) to incur expenses which are necessary or incidental to
carrying out any of the purposes of the Trust;
(m) to act as, or appoint another Person to act as, registrar and
transfer agent for the Securities;
(n) to give prompt written notice to the Holders of the
Securities of any notice received from the Subordinated Debt Securities Issuer
of its election to defer payments of interest on the Subordinated Debt
Securities by extending the interest payment period under the Indenture;
(o) to take all action which may be necessary or appropriate for
the preservation and the continuation of the Trust's valid existence, rights,
franchises and privileges as a statutory business trust under the laws of the
State of Delaware and of each other jurisdiction in which such existence is
necessary to protect the limited liability of the Holders of the Securities or
to enable the Trust to effect the purposes for which the Trust was created;
(p) to take any action, not inconsistent with this Declaration or
with applicable law, which the Regular Trustees determine in their discretion to
be necessary or desirable in carrying out the activities of the Trust as set out
in this Section 3.6 including, but not limited to:
(i) causing the Trust not to be deemed to be an
Investment Company required to be registered under the Investment
Company Act;
12
(ii) causing the Trust to be classified for United States
federal income tax purposes as a grantor trust; and
(iii) cooperating with the Subordinated Debt Securities
Issuer to ensure that the Subordinated Debt Securities will be treated
as indebtedness of the Subordinated Debt Securities Issuer for United
States federal income tax purposes, provided that such action relating
to this clause (iii) does not adversely affect the interests of
Holders; and
(q) to take all action necessary to cause all applicable tax
returns and tax information reports that are required to be filed with respect
to the Trust to be duly prepared and filed by the Regular Trustees, on behalf of
the Trust;
(r) to take all actions and perform such duties as may be
required of the Regular Trustees pursuant to Section 11.2 herein;
(s) to the extent provided in this Declaration, to cause the
winding up of the affairs of and liquidation of the Trust and the preparation,
execution and filing of the Certificate of Cancellation with the Secretary of
State of the State of Delaware; and
(t) to execute all documents or instruments, perform all duties
and powers, and do all things for and on behalf of the Trust in all matters
necessary or incidental to the foregoing.
The Regular Trustees shall exercise the powers set forth in this Section
3.6 in a manner which is consistent with the purposes, functions and
characterization for United States federal income tax purposes of the Trust set
out in Section 3.3 and the Regular Trustees shall not take any action which is
inconsistent with or contrary to the purposes, functions and characterization
for United States federal income tax purposes of the Trust set forth in Section
3.3.
Subject to this Section 3.6, the Regular Trustees shall have none of the
powers or the authority of the Property Trustee set forth in Section 3.8.
The Trust initially appoints the Property Trustee as transfer agent and
registrar for the Preferred Securities.
Section 3.7. Prohibition of Actions by the Trust and the Trustees.
----------------------------------------------------
(a) Notwithstanding any provision herein to the contrary, the
Trust shall not, and the Trustees (including the Property Trustee) shall cause
the Trust not to, engage in any activity other than as required or authorized by
this Declaration. In particular, the Trust shall not and the Trustees (including
the Property Trustee) shall cause the Trust not to:
(i) invest any proceeds received by the Trust from
holding the Subordinated Debt Securities, but shall distribute all
such proceeds to Holders of Securities pursuant to the terms of this
Declaration and of the Securities;
(ii) acquire any assets other than the Subordinated Debt
Securities and any cash proceeds received with respect thereto;
(iii) possess Trust property for other than a Trust
purpose;
13
(iv) make any loans or incur any indebtedness other than
loans represented by the Subordinated Debt Securities;
(v) possess any power or otherwise act in such a way as
to vary the assets of the Trust or the terms of the Securities in any
way whatsoever;
(vi) issue any securities or other evidences of beneficial
ownership of, or beneficial interest in, the Trust other than the
Securities; or
(vii) other than as expressly provided in this Declaration
and Exhibit A hereto, (A) direct the time, method and place of
exercising any trust or power conferred upon the Subordinated Debt
Securities Trustee with respect to the Subordinated Debt Securities,
(B) waive any past default that is waivable under Section 513 of the
Indenture, (C) exercise any right to rescind or annul any declaration
that the principal of all the Subordinated Debt Securities shall be
due and payable or (D) consent to any amendment, modification or
termination of the Indenture or the Subordinated Debt Securities,
where such consent shall be required, unless the Trust shall have
received an opinion of counsel to the effect that such modification
will not cause more than an insubstantial risk that for United States
federal income tax purposes the Trust will not be classified as a
grantor trust.
Section 3.8. Powers and Duties of the Property Trustee.
-----------------------------------------
(a) The legal title to the Subordinated Debt Securities shall be
owned by and held of record in the name of the Property Trustee for the benefit
of the Trust and the Holders of the Securities. The right, title and interest
of the Property Trustee to the Subordinated Debt Securities shall vest
automatically in each Person who may hereafter be appointed as Property Trustee
as set forth in Section 5.6. Such vesting and cessation of title shall be
effective whether or not conveyancing documents have been executed and
delivered.
(b) The Property Trustee shall not transfer its right, title and
interest in the Subordinated Debt Securities to the Regular Trustees or to the
Delaware Trustee (if the Property Trustee does not also act as Delaware
Trustee).
(c) The Property Trustee shall:
(i) establish and maintain a segregated non-interest
bearing bank account (the "Property Trustee Account") in the name of
and under the exclusive control of the Property Trustee on behalf of
the Trust and the Holders of the Securities and, upon the receipt of
payments of funds made in respect of the Subordinated Debt Securities
held by the Property Trustee, deposit such funds into the Property
Trustee Account and make payments to the Holders of the Preferred
Securities and the Common Securities from the Property Trustee Account
in accordance with Section 6.1. Funds in the Property Trustee Account
shall be held uninvested until disbursed in accordance with this
Declaration. The Property Trustee Account shall be an account which is
maintained with a banking institution the rating on whose long term
unsecured indebtedness is at least equal to the rating assigned to the
Preferred Securities by a "nationally recognized statistical rating
organization," as that term is defined for purposes of Rule 436(g)(2)
under the Securities Act;
14
(ii) engage in such ministerial activities as shall be
necessary or appropriate to effect the redemption of the Preferred
Securities and the Common Securities to the extent the Subordinated
Debt Securities are redeemed or mature; and
(iii) upon notice of distribution issued by the Regular
Trustees in accordance with the terms of the Preferred Securities and
the Common Securities, engage in such ministerial activities as shall
be necessary or appropriate to effect the distribution of the
Subordinated Debt Securities to Holders of Securities upon the
Sponsor's election to dissolve the Trust in accordance with Section
8.1(a)(v).
(d) The Property Trustee shall take all actions and perform such
duties as may be specifically required of the Property Trustee pursuant to the
terms of the Securities and this Declaration.
(e) The Property Trustee shall have the power to take any Legal
Action which arises out of or in connection with an Event of Default or the
Property Trustee's duties and obligations under this Declaration, the Business
Trust Act or the Trust Indenture Act. If the Property Trustee fails to enforce
its rights under the Subordinated Debt Securities after a Holder of Preferred
Securities has made a written request, such Holder may, to the fullest extent
permitted by law, institute a legal proceeding against the Subordinated Debt
Securities Issuer, to enforce the Property Trustee's rights under the
Subordinated Debt Securities, without first instituting any legal proceeding
against the Property Trustee or any other Person. Notwithstanding the
foregoing, if an Event of Default has occurred and is continuing and such event
is attributable to the failure of the Subordinated Debt Securities Issuer to pay
interest, premium, if any, or principal on the Subordinated Debt Securities on
the date such interest, premium, if any, or principal is otherwise payable (or
in the case of redemption, on the redemption date), then a Holder of Preferred
Securities may directly institute a proceeding for enforcement of payment to
such Holder of the principal of, premium, if any, or interest on, the
Subordinated Debt Securities having a principal amount equal to the aggregate
liquidation amount of the Preferred Securities of such Holder (a "Direct
Action"). Notwithstanding any payments made to such Holder of Preferred
Securities by the Subordinated Debt Securities Issuer in connection with a
Direct Action, the Subordinated Debt Securities Issuer shall remain obligated to
pay the principal of, premium, if any, or interest on the Subordinated Debt
Securities held by the Trust or the Property Trustee of the Trust, and the
Subordinated Debt Securities Issuer shall be subrogated to the rights of the
Holder of such Preferred Securities with respect to payments on the Preferred
Securities. Except as provided in the preceding sentences and in the Preferred
Securities Guarantee, the Holders of Preferred Securities will not be able to
exercise directly any other remedy available to the holders of the Subordinated
Debt Securities.
(f) No resignation of the Property Trustee shall be effective
unless either:
(i) the Trust has been completely liquidated and the
proceeds of the liquidation distributed to the Holders of Securities
pursuant to the terms of the Securities; or
(ii) a Successor Property Trustee has been appointed and
accepted that appointment in accordance with Section 5.6.
(g) The Property Trustee shall have the legal power to exercise
all of the rights, powers and privileges of a holder of Subordinated Debt
Securities under the Indenture and, if an Event of Default occurs and is
continuing, the Property Trustee shall, for the benefit of Holders of the
Securities,
15
enforce its rights as holder of the Subordinated Debt Securities subject to the
rights of the Holders pursuant to the terms of such Securities and this
Declaration.
(h) The Property Trustee may authorize one or more Persons (each,
a "Paying Agent") to pay Distributions, redemption payments or liquidation
payments on behalf of the Trust with respect to the Preferred Securities and any
such Paying Agent shall comply with (S) 317(b) of the Trust Indenture Act. Any
Paying Agent may be removed by the Property Trustee at any time and a successor
Paying Agent or additional Paying Agents may be appointed at any time by the
Property Trustee.
(i) Subject to this Section 3.8, the Property Trustee shall have
none of the powers or the authority of the Regular Trustees set forth in Section
3.6.
(j) The Property Trustee must exercise the powers set forth in
this Section 3.8 in a manner which is consistent with the purposes, functions
and characterization for United States federal income tax purposes of the Trust
set forth in Section 3.3 and the Property Trustee shall not take any action
which is inconsistent with or contrary to the purposes, functions and
characterization for United States federal income tax purposes of the Trust set
out in Section 3.3.
Section 3.9. Certain Duties and Responsibilities of the Property Trustee.
-----------------------------------------------------------
(a) The Property Trustee, before the occurrence of any Event of
Default and after the curing or waiver of all Events of Default that may have
occurred:
(i) shall undertake to perform only such duties as are
specifically set forth in this Declaration and in the terms of the
Securities, and no implied covenants, duties or obligations shall be
read into this Declaration against the Property Trustee; and
(ii) in the absence of bad faith on the part of the
Property Trustee, the Property 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
Property Trustee and conforming to the requirements of this
Declaration; but in the case of any such certificates or opinions that
by any provision hereof are specifically required to be furnished to
the Property Trustee, the Property Trustee shall be under a duty to
examine the same to determine whether or not they conform to the
requirements of this Declaration.
In case an Event of Default has occurred (that has not been cured or waived
pursuant to Section 2.6), the Property Trustee shall exercise such of the rights
and powers vested in it by this Declaration, and use the same degree of care and
skill in their exercise or use, as a prudent person would exercise or use under
the circumstances in the conduct of his or her own affairs;
(b) no provision of this Declaration shall be construed to
relieve the Property Trustee from liability for its own negligent action, its
own negligent failure to act, or its own willful misconduct, except that:
(i) this Subsection shall not be construed to limit
Subsection (a) of this Section;
16
(ii) the Property Trustee shall not be liable for any
error of judgment made in good faith by a Responsible Officer of the
Property Trustee, unless it shall be proved that the Property Trustee
was negligent in ascertaining the pertinent facts;
(iii) the Property 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 liquidation amount of the Securities at the time
outstanding relating to the time, method and place of conducting any
proceeding for any remedy available to the Property Trustee, or
exercising any trust or power conferred upon the Property Trustee
under this Declaration including, without limitation, with respect to
the Securities; and
(iv) no provision of this Declaration shall require the
Property Trustee to expend or risk its own funds or otherwise incur
financial liability in the performance of any of its duties hereunder
or in the exercise of any of its rights or powers, if it shall have
reasonable ground for believing that the repayment of such funds or
adequate indemnity against such risk or liability is not reasonably
assured to it.
(c) Whether or not therein expressly so provided, every provision
of this Declaration relating to the conduct or affecting the liability of or
affording protection to the Property Trustee shall be subject to the provisions
of this Section.
Section 3.10 Certain Rights of the Property Trustee. Subject to the
--------------------------------------
provisions of Section 3.9:
(a) the Property Trustee may conclusively rely and shall be fully
protected in acting or refraining from acting upon any resolution, certificate,
statement, instrument, opinion, report, notice, request, direction, consent,
order, bond, debenture, note or other paper or document believed by it to be
genuine and to have been signed or presented by the proper party or parties;
(b) any act of the Sponsor or the Regular Trustees contemplated
by this Declaration shall be sufficiently evidenced by an Officers' Certificate;
(c) whenever in the administration of this Declaration, the
Property Trustee shall deem it desirable that a matter be proved or established
before taking, suffering or omitting any action hereunder, the Property Trustee
(unless other evidence is herein specifically prescribed) may, in the absence of
bad faith on its part, request and rely upon an Officers' Certificate which,
upon receipt of such request, shall be promptly delivered by the Sponsor or the
Regular Trustees;
(d) the Property Trustee shall have no duty to see to any
recording, filing or registration of any instrument (or any recording, refiling
or registration thereof);
(e) the Property Trustee may consult with counsel of its
selection and the written advice or opinion of such counsel with respect to
legal matters shall be full and complete authorization and protection in respect
of any action taken, suffered or omitted by it hereunder in good faith and in
reliance thereon. Such counsel may be counsel to the Sponsor or any of its
Affiliates, and may include any of its employees;
(f) the Property Trustee shall be under no obligation to exercise
any of the rights or powers vested in it by this Declaration at the request or
direction of any Holder, unless such Holder shall
17
have offered to the Property Trustee security or indemnity satisfactory to it
against the costs, expenses and liabilities that might be incurred by it in
complying with such request or direction;
(g) the Property Trustee shall not be bound to make any
investigation into the facts or matters stated in any resolution, certificate,
statement, instrument, opinion, report, notice, request, direction, consent,
order, bond, debenture, note or other paper or document, but the Property
Trustee, in its discretion, may make such further inquiry or investigation into
such facts or matters as it may see fit and, if the Property Trustee shall
determine to make such further inquiry or investigation, it shall be entitled to
examine the books, records and premises of the Trust, personally or by agent or
attorney at the expense of the Sponsor and shall incur no liability or
additional liability of any kind by reason of such inquiry or investigation;
(h) any action taken by the Property Trustee or its agents
hereunder shall bind the Trust and the Holders of the Securities and the
signature of the Property Trustee or its agents alone shall be sufficient and
effective to perform any such action; and no third party shall be required to
inquire as to the authority of the Property Trustee to so act, or as to its
compliance with any of the terms and provisions of this Declaration, both of
which shall be conclusively evidenced by the Property Trustee's or its agent's
taking such action;
(i) whenever in the administration of this Declaration the
Property Trustee shall deem it desirable to receive instructions with respect to
enforcing any remedy or right or taking any other action hereunder, the Property
Trustee (i) may request instructions from the Holders of the Securities which
instructions may only be given by the Holders of the same proportion in
liquidation amount of the Securities as would be entitled to direct the Property
Trustee under the terms of the Securities in respect of such remedy, right or
action, (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;
(j) the Property 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 Property 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;
(k) the Property Trustee shall not be liable for any action taken
or omitted by it in good faith and believed by it to be authorized or within the
discretion or rights or powers conferred upon it by this Declaration; and
(l) the rights, privileges, protections, immunities and benefits
given to the Property Trustee, including, without limitation, its right to be
indemnified, are extended to, and shall be enforceable by, the Property Trustee
in each of its capacities hereunder, and to each agent, custodian and other
person employed to act hereunder.
18
Section 3.11. Delaware Trustee. Notwithstanding any other provision of
----------------
this Declaration other than Section 5.1, the Delaware Trustee shall not be
entitled to exercise any powers, nor shall the Delaware Trustee have any of the
duties and responsibilities of the Trustees described in this Declaration,
except as mandated by the Business Trust Act. Except as set forth in Section
5.1, the Delaware Trustee shall be a Trustee for the sole and limited purpose of
fulfilling the requirements of (S) 3807(a) of the Business Trust Act.
Section 3.12. Execution of Documents. Except as otherwise required by the
----------------------
Business Trust Act, each of the Regular Trustees are authorized to execute on
behalf of the Trust any documents which the Regular Trustees have the power and
authority to execute pursuant to Section 3.6.
Section 3.13. Not Responsible for Recitals or Issuance of Securities. The
------------------------------------------------------
recitals contained in this Declaration and the Securities shall be taken as the
statements of the Sponsor, and the Trustees do not assume any responsibility for
their correctness. The Trustees make no representations as to the value or
condition of the property of the Trust or any part thereof. The Trustees make no
representations as to the validity or sufficiency of this Declaration or the
Securities.
Section 3.14. Duration of Trust. The Trust, unless dissolved pursuant to
-----------------
the provisions of Article VIII hereof, shall have existence for [ ] years from
the Closing Date.
Section 3.15. Mergers.
-------
(a) The Trust may not consolidate, amalgamate, merge with or
into, convert into or be replaced by, or convey, transfer or lease its
properties and assets substantially as an entirety to any Person, except as
described in Section 3.15(b) and (c) of this Declaration or as described in
Section 3 of Exhibit A;
(b) the Trust may, with the consent of a majority of the Regular
Trustees and without the consent of the Holders of the Securities, the Delaware
Trustee or the Property Trustee, consolidate, amalgamate, merge with or into,
convert into or be replaced by a trust organized as such under the laws of any
State; provided, that if the Trust is not the surviving entity:
(i) such successor entity (the "Successor Entity")
either:
(A) expressly assumes all of the obligations of
the Trust under the Securities; or
(B) substitutes for the Preferred Securities other
securities having substantially the same terms as the Preferred
Securities (the "Successor Securities") so long as the Successor
Securities rank the same as the Preferred Securities rank with
respect to Distributions and payments upon liquidation,
redemption and maturity and substitutes for the Common Securities
other securities having substantially the same terms as the
Common Securities (the "Successor Common Securities"), so long as
the Successor Common Securities rank the same as the Common
Securities rank with respect to Distributions and payments upon
liquidation, redemption, repayment and otherwise;
(ii) the Subordinated Debt Securities Issuer expressly
acknowledges a trustee of the Successor Entity which possesses the
same powers and duties as the Property Trustee as the Holder of the
Subordinated Debt Securities;
19
(iii) such merger, consolidation, amalgamation, conversion
or replacement does not cause the Preferred Securities (including any
Successor Securities) to be downgraded by any nationally recognized
statistical rating organization;
(iv) such merger, consolidation, amalgamation, conversion
or replacement does not adversely affect the rights, preferences and
privileges of the Holders of the Securities (including any Successor
Securities and any Successor Common Securities) in any material
respect (other than with respect to any dilution of the Holders'
interest in the new entity);
(v) such Successor Entity has a purpose substantially
identical to that of the Trust;
(vi) prior to such merger, consolidation, amalgamation,
conversion or replacement, the Sponsor has received an opinion of
counsel to the Trust experienced in such matters to the effect that:
(A) such merger, consolidation, amalgamation,
conversion or replacement does not adversely affect the rights,
preferences and privileges of the Holders of the Securities
(including any Successor Securities and Successor common
securities) in any material respect (other than with respect to
any dilution of the Holders' interest in the new entity);
(B) following such merger, consolidation,
amalgamation, conversion or replacement, neither the Trust nor
the Successor Entity will be required to register as an
Investment Company; and
(C) following such merger, consolidation,
amalgamation, conversion or replacement, the Successor Entity
will continue to be classified as a grantor trust for United
States federal income tax purposes; and
(vii) the Sponsor guarantees the obligations of such
Successor Entity under the Successor Securities and Successor Common
Securities at least to the extent provided by the Preferred Securities
Guarantee and the Common Securities Guarantee, respectively; and
(c) notwithstanding Section 3.15(b), the Trust shall not (except
with the written consent of Holders of 100% of the outstanding Preferred
Securities) consolidate, amalgamate, merge with or into, convert into or be
replaced by any other entity or permit any other entity to consolidate,
amalgamate, merge with or into, or replace it if such consolidation,
amalgamation, merger, conversion or replacement would cause the Trust or
Successor Entity to be classified as other than a grantor trust for United
States federal income tax purposes. Prior to such merger, consolidation,
amalgamation, conversion or replacement, the Sponsor shall have received an
opinion of tax counsel to the Trust, experienced in such matters to the effect
that following such merger, consolidation, amalgamation, conversion or
replacement, the Trust will continue to be classified as grantor trust for
United States federal income tax purposes.
20
ARTICLE IV.
SPONSOR
Section 4.1. Sponsor's Purchase of Common Securities. On the Closing Date
---------------------------------------
[and any other date Preferred Securities and Common Securities are sold pursuant
to the overallotment option granted in the Purchase Agreement] the Sponsor will
purchase all the Common Securities issued by the Trust, at the same time as the
Preferred Securities are sold, in an amount at least equal to 3% of the capital
of the Trust.
Section 4.2. Responsibilities of the Sponsor. In connection with the
-------------------------------
issue and sale of the Preferred Securities, the Sponsor shall have the exclusive
right and responsibility to engage in the following activities:
(a) to prepare for filing by the Trust with the Commission, at
such time as determined by the Sponsor, a registration statement on Form S-3 in
relation to the Preferred Securities, including any amendments thereto;
(b) if necessary or desirable, to determine the States in which
to take appropriate action to qualify or register for sale all or part of the
Preferred Securities and to take any and all such acts, other than actions which
must be taken by the Trust, and advise the Trust of actions it must take, and
prepare for execution and filing any documents to be executed and filed by the
Trust, as the Sponsor deems necessary or advisable in order to comply with the
applicable laws of any such States;
(c) if necessary or desirable, to prepare for filing by the Trust
an application, at such time as determined by the Sponsor, to the New York Stock
Exchange or any other national stock exchange or the NASDAQ National Market for
listing or quotation upon notice of issuance, of any Preferred Securities;
(d) if necessary or desirable, to prepare for filing by the Trust
with the Commission, at such time as determined by the Sponsor, a registration
statement on Form 8-A relating to the registration of the Preferred Securities
under Section 12(b) of the Exchange Act, including any amendments thereto;
(e) if necessary or desirable, to negotiate the terms of the
Purchase Agreement providing for the sale of the Preferred Securities;
(f) execute and enter into the Purchase Agreement, the
Subordinated Debt Securities Subscription Agreement and the Common Securities
Subscription Agreement to be entered into with the Company; and
(g) prepare for execution and filing by the Trust of documents,
or instruments to be delivered to DTC relating to the Preferred Securities.
21
Section 4.3. Right to Proceed. The Sponsor acknowledges the rights of
----------------
Holders to institute a Direct Action as set forth in Section 3.8(e) hereto.
ARTICLE V.
TRUSTEES
Section 5.1. Number of Trustees.
------------------
(a) The number of Trustees shall initially be five (5).
(b) At any time before the issuance of any Securities, the
Sponsor may, by written instrument, increase or decrease the number of Trustees.
(c) After the issuance of any Securities, the number of Trustees
may be increased or decreased by vote of the Holders of a Majority in
liquidation amount of the Common Securities voting as a class at a meeting of
the Holders of the Common Securities; provided, however, that the number of
Trustees shall in no event be less than three (3); provided further that (1) if
required by the Business Trust Act, one Trustee (the "Delaware Trustee") shall
be: (a) a natural person who is a resident of the State of Delaware; or (b) if
not a natural person, an entity which has its principal place of business in the
State of Delaware and otherwise meets the requirements of applicable law
(provided that if the Property Trustee has its principal place of business in
the State of Delaware and otherwise meets the requirements of applicable law,
then the Property Trustee shall also be the Delaware Trustee and Section 3.11
shall have no application); (2) there shall be at least two Trustees who are
employees or officers of, or are affiliated with the Sponsor; and (3) one
Trustee shall be the Property Trustee for so long as this Declaration is
required to qualify as an indenture under the Trust Indenture Act, and such
Trustee may also serve as Delaware Trustee if it meets the applicable
requirements.
Section 5.2. Delaware Trustee.
----------------
The initial Delaware Trustee under this Declaration shall be:
The Bank of New York (Delaware)
White Clay Center, Route 273
Newark, Delaware 19711
Attn: Corporate Trust Administration
Section 5.3. Property Trustee; Eligibility. The initial Property Trustee
-----------------------------
shall be:
The Bank of New York
101 Barclay Street, 21W
New York, New York 10286
Attn: Corporate Trust Administration
(a) There shall at all times be one Trustee which shall act as
Property Trustee which shall:
22
(i) not be an Affiliate of the Sponsor; and
(ii) be a corporation organized and doing business under
the laws of the United States of America or any State thereof or of
the District of Columbia, or a corporation or Person permitted by the
Commission to act as 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 50 million
U.S. dollars ($50,000,000), and subject to supervision or examination
by Federal, State 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
5.3(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 Property Trustee shall cease to be
eligible to so act under Section 5.3(a), the Property Trustee shall immediately
resign in the manner and with the effect set forth in Section 5.6(c).
(c) If the Property Trustee has or shall acquire any "conflicting
interest" within the meaning of (S) 310(b) of the Trust Indenture Act, the
Property Trustee and the Holder of the Common Securities (as if it were the
obligor referred to in (S) 310(b) of the Trust Indenture Act) shall in all
respects comply with the provisions of (S) 310(b) of the Trust Indenture Act.
(d) The Preferred Securities Guarantee, the Common Securities
Guarantee and the Indenture shall be deemed to be specifically described in this
Declaration and the Indenture for purposes of clause (i) of the first proviso
contained in (S) 310(b) of the Trust Indenture Act.
Section 5.4. Qualifications of Regular Trustees and Delaware Trustee
-------------------------------------------------------
Generally.
- ---------
Each Regular Trustee and the Delaware Trustee (unless the Property Trustee
also acts as Delaware Trustee) shall be either a natural person who is at least
21 years of age or a legal entity which shall act through one or more Authorized
Officers.
Section 5.5. Regular Trustees. The initial Regular Trustees under this
----------------
Declaration shall be:
Neal E. Schmale
Frank H. Ault
Charles A. McMonagle
c/o Sempra Energy
101 Ash Street
San Diego, CA 92101
(a) Except as expressly set forth in this Declaration and except
if a meeting of the Regular Trustees is called with respect to any matter over
which the Regular Trustees have power to act, any power of the Regular Trustees
may be exercised by, or with the consent of, any one such Regular Trustee.
(b) Unless otherwise determined by the Regular Trustees, and
except as otherwise required by the Business Trust Act or applicable law, any
Regular Trustee is authorized to execute on
23
behalf of the Trust any documents which the Regular Trustees have the power and
authority to cause the Trust to execute pursuant to Section 3.6.
Section 5.6 Appointment, Removal and Resignation of Trustees.
------------------------------------------------
(a) Subject to Section 5.6(b), Trustees may be appointed or
removed without cause at any time:
(i) until the issuance of any Securities, by written
instrument executed by the Sponsor;
(ii) unless an Event of Default shall have occurred and be
continuing after the issuance of any Securities by vote of the Holders
of a Majority in liquidation amount of the Common Securities voting as
a class at a meeting of the Holders of the Common Securities; and
(iii) if an Event of Default shall have occurred and be
continuing after the issuance of any Securities, with respect to the
Property Trustee or the Delaware Trustee, by vote of Holders of a
Majority in liquidation amount of the Preferred Securities voting as a
class at a meeting of Holders of the Preferred Securities.
(b)
(i) The Trustee that acts as Property Trustee shall not
be removed in accordance with Section 5.6(a) until a Successor
Property Trustee possessing the qualifications to act as Property
Trustee under Section 5.3 (a "Successor Property Trustee") has been
appointed and has accepted such appointment by written instrument
executed by such Successor Property Trustee and delivered to the
Regular Trustees and the Sponsor.
(ii) So long as a Delaware Trustee is required pursuant to
Section 5.1, the Trustee that acts as Delaware Trustee shall not be
removed in accordance with Section 5.6(a) until a successor Trustee
possessing the qualifications to act as Delaware Trustee under
Sections 5.2 and 5.4 (a "Successor Delaware Trustee") has been
appointed and has accepted such appointment by written instrument
executed by such Successor Delaware Trustee and delivered to the
Regular Trustees and the Sponsor.
(c) A Trustee appointed to office shall hold office until his
successor shall have been appointed or until such Trustee's death, bankruptcy,
dissolution, termination, removal or resignation. Any Trustee may resign from
office (without need for prior or subsequent accounting) by an instrument in
writing signed by the Trustee and delivered to the Sponsor and the Trust, which
resignation shall take effect upon such delivery or upon such later date as is
specified therein; provided, however, that:
(i) no such resignation of the Trustee that acts as the
Property Trustee shall be effective (A) until a Successor Property
Trustee has been appointed and has accepted such appointment by
instrument executed by such Successor Property Trustee and delivered
to the Trust, the Sponsor and the resigning Property Trustee; or (B)
until the assets of the Trust have been completely liquidated and the
proceeds thereof distributed to the holders of the Securities; and
24
(ii) so long as a Delaware Trustee is required pursuant to
Section 5.1, no such resignation of the Trustee that acts as the
Delaware Trustee shall be effective until a Successor Delaware Trustee
has been appointed and has accepted such appointment by instrument
executed by such Successor Delaware Trustee and delivered to the
Trust, the Sponsor and the resigning Delaware Trustee.
(d) The Holders of the Common Securities shall use their best
efforts to promptly appoint a Successor Delaware Trustee (so long as a Delaware
Trustee is required pursuant to Section 5.1) or Successor Property Trustee, as
the case may be, if the Property Trustee or the Delaware Trustee delivers an
instrument of resignation in accordance with this Section 5.6.
(e) If no Successor Property Trustee or Successor Delaware
Trustee shall have been appointed and accepted appointment as provided in this
Section 5.6 within 60 days after delivery of an instrument of resignation or
removal, the Property Trustee or Delaware Trustee resigning or being removed may
petition, at the expense of the Sponsor, any court of competent jurisdiction for
appointment of a Successor Property Trustee or Successor Delaware Trustee. Such
court may thereupon after such notice, if any, as it may deem proper and
prescribe, appoint a Successor Property Trustee or Successor Delaware Trustee,
as the case may be.
Section 5.7. Vacancies Among Trustees. If a Trustee ceases to hold office
------------------------
for any reason and the number of Trustees is not reduced pursuant to Section
5.1, or if the number of Trustees is increased pursuant to Section 5.1, a
vacancy shall occur. A resolution certifying the existence of such vacancy by a
majority of the Regular Trustees shall be conclusive evidence of the existence
of such vacancy. The vacancy shall be filled with a Trustee appointed in
accordance with Section 5.6.
Section 5.8. Effect of Vacancies. The death, resignation, retirement,
-------------------
removal, bankruptcy, dissolution, liquidation, incompetence or incapacity to
perform the duties of a Trustee, or any one of them, shall not operate to
dissolve, terminate or annul the Trust. Whenever a vacancy in the number of
Regular Trustees shall occur, until such vacancy is filled by the appointment of
a Regular Trustee in accordance with Section 5.6, the Regular Trustees in
office, regardless of their number, shall have all the powers granted to the
Regular Trustees and shall discharge all the duties imposed upon the Regular
Trustees by this Declaration.
Section 5.9. Meetings. Meetings of the Regular Trustees shall be held
--------
from time to time upon the call of any Regular Trustee. Regular meetings of the
Regular Trustees may be held at a time and place fixed by resolution of the
Regular Trustees. Notice of any in-person meetings of the Regular Trustees shall
be hand delivered or otherwise delivered in writing (including by facsimile,
with a hard copy by overnight courier) not less than 48 hours before such
meeting. Notice of any telephonic meetings of the Regular Trustees or any
committee thereof shall be hand delivered or otherwise delivered in writing
(including by facsimile, with a hard copy by overnight courier) not less than 24
hours before a meeting. Notices shall contain a brief statement of the time,
place and anticipated purposes of the meeting. The presence (whether in person
or by telephone) of a Regular Trustee at a meeting shall constitute a waiver of
notice of such meeting except where a Regular Trustee attends a meeting for the
express purpose of objecting to the transaction of any activity on the ground
that the meeting has not been lawfully called or convened. Unless provided
otherwise in this Declaration, any action of the Regular Trustees may be taken
at a meeting by vote of a majority of the Regular Trustees present (whether in
person or by telephone) and eligible to vote with respect to such matter,
provided that a Quorum is present, or without a meeting by the unanimous written
consent of the Regular Trustees.
25
Section 5.10. Delegation of Power.
-------------------
(a) Any Regular Trustee may, by power of attorney consistent with
applicable law, delegate to any other natural person over the age of 21 his or
her power for the purpose of executing any documents contemplated in Section 3.6
including any registration statement or amendment thereto filed with the
Commission or making any other governmental filing.
(b) The Regular Trustees shall have power to delegate from time
to time to such of their number or to officers of the Trust the doing of such
things and the execution of such instruments either in the name of the Trust or
the names of the Regular Trustees or otherwise as the Regular Trustees may deem
expedient, to the extent such delegation is not prohibited by applicable law or
contrary to the provisions of the Trust, as set forth herein.
Section 5.11. Merger, Conversion, Consolidation or Succession to Business.
-----------------------------------------------------------
Any corporation into which the Property Trustee or the Delaware Trustee, as the
case may be, may be merged or converted or with which either may be
consolidated, or any corporation resulting from any merger, conversion or
consolidation to which the Property Trustee or the Delaware Trustee, as the case
may be, shall be bound by this Declaration, or any corporation succeeding to all
or substantially all the corporate trust business of the Property Trustee or the
Delaware Trustee, as the case may be, shall be the successor of the Property
Trustee or the Delaware Trustee, as the case may be, hereunder, provided such
corporation shall be otherwise qualified and eligible under this Article,
without the execution or filing of any paper or any further act on the part of
any of the parties hereto.
ARTICLE VI.
DISTRIBUTIONS
Section 6.1. Distributions. Holders shall receive Distributions in
accordance with the applicable terms of the relevant Holder's Securities.
Distributions shall be made on the Preferred Securities and the Common
Securities in accordance with the preferences set forth in their respective
terms. If and to the extent that the Subordinated Debt Securities Issuer makes a
payment of interest (including Additional Interest (as defined in the
Indenture)), premium, if any, and principal on the Subordinated Debt Securities
held by the Property Trustee (the amount of any such payment being a "Payment
Amount"), the Property Trustee shall and is directed, to the extent funds are
available for that purpose, to make a distribution (a "Distribution") of the
Payment Amount to Holders. In the event the Sponsor shall defer any payment of
principal, premium, if any, or interest on the Subordinated Debt Securities, the
Trust shall, in like manner, defer payments of Distributions on the Securities,
and Additional Distributions shall accrue on such Securities for so long as the
payment of principal, premium, if any, or interest on the Subordinated Debt
Securities is deferred.
ARTICLE VII.
ISSUANCE OF SECURITIES
Section 7.1. General Provisions Regarding Securities.
---------------------------------------
(a) The Regular Trustees shall, on behalf of the Trust, issue one
class of preferred securities representing undivided beneficial interests in the
assets of the Trust having such terms as are set forth in Exhibit A and
incorporated herein by reference (the "Preferred Securities"), and one class of
26
common securities representing undivided beneficial interests in the assets of
the Trust having such terms as are set forth in Exhibit A and incorporated
herein by reference (the "Common Securities"). The Trust shall have no
securities or other interests in the assets of the Trust other than the
Preferred Securities and the Common Securities;
(b) the Certificates shall be signed on behalf of the Trust by the
Regular Trustees (or if there are more than two Regular Trustees by any two of
the Regular Trustees). Such signatures may be the manual or facsimile
signatures of the present or any future Regular Trustee. Typographical and
other minor errors or defects in any such reproduction of any such signature
shall not affect the validity of any Certificate. In case any Regular Trustee
of the Trust who shall have signed any of the Certificates shall cease to be
such Regular Trustee before the Certificate so signed shall be delivered by the
Trust, such Certificate nevertheless may be delivered as though the person who
signed such Certificate had not ceased to be such Regular Trustee; and any
Certificate may be signed on behalf of the Trust by such persons who shall at
the actual date of execution of such Security, be the Regular Trustees of the
Trust, although at the date of the execution and delivery of the Declaration any
such person was not such a Regular Trustee. Certificates shall be printed,
lithographed or engraved or may be produced in any other manner as is reasonably
acceptable to the Regular Trustees, as evidenced by their execution thereof, and
may have such letters, numbers or other marks of identification or designation
and such legends or endorsements as the Regular Trustees may deem appropriate,
or as may be required to comply with any law or with any rule or regulation of
any stock exchange on which Securities may be listed, or to conform to usage. A
Preferred Security shall not be valid until authenticated by the manual
signature of an authorized signatory of the Property Trustee. The signature
shall be conclusive evidence that the Preferred Security has been authenticated
under this Declaration. Upon a written order of the Trust signed by one Regular
Trustee, the Property Trustee shall authenticate the Preferred Securities for
original issue. The Property Trustee may appoint an authenticating agent
acceptable to the Trust to authenticate Preferred Securities. An authenticating
agent may authenticate Preferred Securities whenever the Property Trustee may do
so. Each reference in this Declaration to authentication by the Property
Trustee includes authentication by such agent. An authenticating agent has the
same rights as the Property Trustee to deal with the Trust or an Affiliate;
(c) the consideration received by the Trust for the issuance of the
Securities shall constitute a contribution to the capital of the Trust and shall
not constitute a loan to the Trust;
(d) upon issuance of the Securities as provided in this Declaration,
the Securities so issued shall be deemed to be validly issued, fully paid and
nonassessable; and
(e) every Person, by virtue of having become a Holder or a Preferred
Security Beneficial Owner in accordance with the terms of this Declaration,
shall be deemed to have expressly assented and agreed to the terms of, and shall
be bound by this Declaration.
ARTICLE VIII.
DISSOLUTION AND TERMINATION OF TRUST
Section 8.1. Dissolution and Termination of Trust.
------------------------------------
(a) The Trust shall dissolve and its affairs shall be wound up, upon
the earliest to occur of the following:
27
(i) upon the bankruptcy of the Sponsor or the Holder of the
Common Securities;
(ii) upon the filing of a certificate of dissolution or its
equivalent with respect to the Sponsor, upon the consent (other than
in connection with a dissolution of the Trust pursuant to clause (v)
of this Section 8.1(a)) of the Holders of at least a Majority in
liquidation amount of the Securities, voting together as a single
class, and the consent of the Sponsor, to dissolve the Trust, or the
revocation of the articles of incorporation of the Sponsor or the
Holder of the Common Securities and the expiration of 90 days after
the date of revocation without a reinstatement thereof;
(iii) upon the entry of a decree of judicial dissolution of the
Sponsor or the Trust or the Holder of the Common Securities;
(iv) when all of the Securities shall have been called for
redemption and the amounts necessary for redemption thereof shall have
been paid to the Holders in accordance with the terms of the
Securities;
(v) upon the written direction to the Property Trustee from the
Sponsor at any time to dissolve the Trust and, after satisfaction of
liabilities to creditors of the Trust as provided by applicable law,
the distribution of Subordinated Debt Securities to Holders in
exchange for the Securities, subject to the Regular Trustees' receipt
of an opinion of counsel experienced in such matters to the effect
that the Holders of the Preferred Securities will not recognize any
income, gain or loss for United States federal income tax purposes as
a result of the dissolution of the Trust and such distribution to
Holders; or
(vi) before the issuance of any Securities, with the consent of
all of the Regular Trustees and the Sponsor.
(b) As soon as is practicable after the occurrence of an event
referred to in Section 8.1(a) or dissolution pursuant to Section 3.14 and upon
the completion of the winding up of the Trust, one of the Regular Trustees (each
Regular Trustee being hereby authorized to take such action) shall file a
certificate of cancellation with the Secretary of State of the State of Delaware
terminating the Trust.
(c) The provisions of Section 3.9 and Article X shall survive the
termination of the Trust.
ARTICLE IX.
TRANSFER OF INTERESTS
Section 9.1. Transfer of Securities.
----------------------
(a) Securities may only be transferred, in whole or in part, in
accordance with the terms and conditions set forth in this Declaration and in
the terms of the Securities. Any transfer or purported transfer of any Security
not made in accordance with this Declaration shall be null and void;
(b) subject to this Article IX, Preferred Securities shall be freely
transferable; and
(c) subject to this Article IX, the Sponsor and any Related Party may
only transfer Common Securities to the Sponsor or a Related Party of the
Sponsor, or as contemplated by Article VIII of the Indenture; provided that, any
such transfer shall not violate the Securities Act and is subject to the
28
condition precedent that the transferor obtain the written opinion of counsel
experienced in such matters that such transfer would not cause more than an
insubstantial risk that:
(i) the Trust would not be classified for United States federal
income tax purposes as a grantor trust; and
(ii) the Trust would be an Investment Company required to
register under the Investment Company Act or the transferee would
become an Investment Company required to register under the Investment
Company Act.
(d) Each Common Security that bears or is required to bear the legend
set forth in this Section 9.1(d) shall be subject to the restrictions on
transfer provided in the legend set forth in this Section 9.1(d), unless such
restrictions on transfer shall be waived by the written consent of the Regular
Trustees, and the Holder of each such Common Security, by such security holder's
acceptance thereof, agrees to be bound by such restrictions on transfer. As
used in this Section 9.1(d) and in Section 9.1(c), the term "transfer"
encompasses any sale, pledge, transfer or other disposition of any such Common
Security.
Any certificate evidencing a Common Security shall bear a legend in
substantially the following form, unless otherwise agreed by the Regular
Trustees (with written notice thereof to the Property Trustee):
THE SECURITY EVIDENCED HEREBY HAS NOT BEEN REGISTERED UNDER THE U.S.
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND,
ACCORDINGLY, MAY NOT BE OFFERED OR SOLD UNLESS SUCH OFFER AND SALE ARE
REGISTERED UNDER OR ARE EXEMPT FROM REGISTRATION UNDER THE SECURITIES ACT.
THE TRANSFER OF THE SECURITY EVIDENCED HEREBY IS ALSO SUBJECT TO THE
RESTRICTIONS SET FORTH IN THE DECLARATION REFERRED TO BELOW.
Section 9.2. Transfer of Certificates.
------------------------
(a) The Regular Trustees shall provide for the registration of
Certificates and of transfers of Certificates, which will be effected without
charge but only upon payment (with such indemnity as the Regular Trustees may
require) in respect of any tax or other government charges which may be imposed
in relation to it. Upon surrender for registration of transfer of any
Certificate, the Regular Trustees shall cause one or more new Certificates to be
issued in the name of the designated transferee or transferees. Every
Certificate surrendered for registration of transfer shall be accompanied by a
written instrument of transfer in form satisfactory to the Regular Trustees duly
executed by the Holder or such Holder's attorney duly authorized in writing.
Each Certificate surrendered for registration of transfer shall be canceled by
the Regular Trustees. A transferee of a Certificate shall be entitled to the
rights and subject to the obligations of a Holder hereunder upon the receipt by
such transferee of a Certificate. By acceptance of a Certificate, each
transferee shall be deemed to have agreed to be bound by this Declaration and
the documents incorporated by reference herein.
(b) Notwithstanding any other provisions of this Declaration, a
Global Certificate may not be transferred as a whole, except by the Clearing
Agency to a nominee of the Clearing Agency or by the Clearing Agency or any such
nominee to a successor Clearing Agency or a nominee of such successor Clearing
Agency.
29
Section 9.3. Deemed Security Holders. The Trustees may treat the Person
-----------------------
in whose name any Certificate shall be registered on the books and records of
the Trust as the sole holder of such Certificate and of the Securities
represented by such Certificate for purposes of receiving Distributions and for
all other purposes whatsoever and, accordingly, shall not be bound to recognize
any equitable or other claim to or interest in such Certificate or in the
Securities represented by such Certificate on the part of any Person, whether or
not the Trustees shall have actual or other notice thereof.
Section 9.4. Book Entry Interests.
--------------------
(a) So long as Preferred Securities are eligible for book entry
settlement with the Clearing Agency or unless otherwise required by law, all
Preferred Securities that are so eligible may be represented by one or more,
fully registered, global Preferred Security Certificates (each a "Global
Certificate"), to be delivered to DTC, the initial Clearing Agency, by, or on
behalf of, the Trust. Such Global Certificates shall initially be registered on
the books and records of the Trust in the name of Cede & Co., the nominee of
DTC, and no Preferred Security Beneficial Owner will receive a definitive
Preferred Security Certificate representing such Preferred Security Beneficial
Owner's interests in such Global Certificates, except as provided in Section
9.7. The transfer and exchange of beneficial interests in any such Security in
global form shall be effected through the Clearing Agency in accordance with
this Declaration and the procedures of the Clearing Agency therefor.
(b) Except as provided below, Beneficial Owners of a Preferred
Security in global form shall not be entitled to have certificates registered in
their names, will not receive or be entitled to receive physical delivery of
certificates in definitive form and will not be considered Holder of such
Preferred Security in global form.
(c) Any Global Certificate may be endorsed with or have incorporated
in the text thereof such legends or recitals or changes not inconsistent with
the provisions of this Declaration as may be required by the Clearing Agency, by
any national securities exchange or by the National Association of Securities
Dealers, Inc. as may be required to comply with any applicable law or any
regulation thereunder or with the rules and regulations of any securities
exchange or interdealer quotation system upon which the Preferred Securities may
be listed or traded or to conform with any usage with respect thereto, or to
indicate any special limitations or restrictions to which any particular
Preferred Securities are subject.
(d) Unless and until definitive, fully registered Preferred Security
Certificates (the "Definitive Preferred Security Certificates") have been issued
to the Preferred Security Beneficial Owners pursuant to Section 9.7:
(i) the provisions of this Section 9.4 shall be in full force
and effect with respect to such Preferred Securities;
(ii) the Trust and the Trustees shall be entitled to deal with
the Clearing Agency for all purposes of this Declaration (including
the payment of Distributions on the Global Certificates and receiving
approvals, votes or consents hereunder) as the Holder of the Preferred
Securities and the sole holder of the Global Certificates and shall
have no obligation to the Preferred Security Beneficial Owners;
(iii) to the extent that the provisions of this Section 9.4
conflict with any other provisions of this Declaration, the provisions
of this Section 9.4 shall control; and
30
(iv) the rights of the Beneficial Owners of Preferred Securities
in global form shall be exercised only through the Clearing Agency and
shall be limited to those established by law and agreements between
such Preferred Security Beneficial Owners and the Clearing Agency
and/or the Clearing Agency Participants. The Clearing Agency will
make book entry transfers among the Clearing Agency Participants and
receive and transmit payments of Distributions on the Global
Certificates to such Clearing Agency Participants. DTC will make book
entry transfers among the Clearing Agency Participants, provided, that
solely for the purposes of determining whether the Holders of the
requisite amount of Preferred Securities have voted on any matter
provided for in this Declaration, so long as Definitive Preferred
Security Certificates have not been issued, the Trustees may
conclusively rely on, and shall be protected in relying on, any
written instrument (including a proxy) delivered to the Trustees by
the Clearing Agency setting forth the Preferred Securities Beneficial
Owners' votes or assigning the right to vote on any matter to any
other Persons either in whole or in part.
Notwithstanding any other provisions of this Declaration (other than the
provisions set forth in this Section 9.4(c)), a Preferred Security in global
form may not be transferred as a whole except by the Clearing Agency to a
nominee of the Clearing Agency or by a nominee of the Clearing Agency to the
Clearing Agency or another nominee to a successor Clearing Agency or a nominee
of such successor Clearing Agency.
Section 9.5. Notices to Clearing Agency. Whenever a notice or other
--------------------------
communication to the Preferred Security Holders is required under this
Declaration, unless and until Definitive Preferred Security Certificates shall
have been issued to the Preferred Security Beneficial Owners pursuant to Section
9.7, the Trustees shall give all such notices and communications, specified
herein to be given to the Preferred Security Holders, to the Clearing Agency,
and shall have no notice obligations to the Preferred Security Beneficial
Owners.
Section 9.6. Appointment of Successor Clearing Agency. If any Clearing
----------------------------------------
Agency notifies the Trust that it is unwilling or unable to continue its
services as securities depositary with respect to the Preferred Securities if
such Clearing Agency ceases to perform such services, or if at any time such
Clearing Agency ceases to be a clearing agency registered as such under the
Exchange Act when such Clearing Agency is required to be so registered to act as
such depositary, then the Regular Trustees may, in their sole discretion,
appoint a successor Clearing Agency with respect to such Preferred Securities.
Section 9.7. Definitive Preferred Security Certificates Under Certain
--------------------------------------------------------
Circumstances. If:
- -------------
(a) a Clearing Agency notifies the Trust that it is unwilling or
unable to continue its services as securities depositary with respect to the
Preferred Securities, if such Clearing Agency ceases to perform such services,
or if at any time such Clearing Agency ceases to be a clearing agency registered
as such under the Exchange Act when such Clearing Agency is required to be so
registered to act as such depositary, and a successor Clearing Agency is not
appointed within 90 days after such discontinuance pursuant to Section 9.6; or
(b) the Regular Trustees (with the consent of the Sponsor) in their
sole discretion determine that the Preferred Securities in global form shall be
exchanged for certificated Preferred Securities;
31
then:
(i) Definitive Preferred Security Certificates shall be
prepared by the Regular Trustees on behalf of the Trust with respect
to such Preferred Securities; and
(ii) upon surrender of the Global Certificates by the Clearing
Agency, accompanied by registration instructions, the Regular Trustees
shall cause Definitive Preferred Security Certificates to be delivered
to Preferred Security Beneficial Owners of such Preferred Securities
in accordance with the instructions of the Clearing Agency. Neither
the Trustees nor the Trust shall be liable for any delay in delivery
of such instructions and each of them may conclusively rely on and
shall be protected in relying on, said instructions of the Clearing
Agency. The Definitive Preferred Security Certificates shall be
printed, lithographed or engraved or may be produced in any other
manner as is reasonably acceptable to the Regular Trustees, as
evidenced by their execution thereof, and may have such letters,
numbers or other marks of identification or designation and such
legends or endorsements as the Regular Trustees may deem appropriate,
or as may be required to comply with any law or with any rule or
regulation made pursuant thereto or with any rule or regulation of any
stock exchange on which Preferred Securities may be listed, or to
conform to usage.
At such time as all interests in a Preferred Security in global form have
been redeemed, exchanged, repurchased or canceled, such Preferred Security in
global form shall be, upon receipt thereof, canceled by the Trust in accordance
with standing procedures and instructions of the Clearing Agency.
Section 9.8. Mutilated, Destroyed, Lost or Stolen Certificates If:
-------------------------------------------------
(a) any mutilated Certificates should be surrendered to the Regular
Trustees, or if the Regular Trustees shall receive evidence to their
satisfaction of the destruction, loss or theft of any Certificate; and
(b) there shall be delivered to the Property Trustee or the Regular
Trustees such security or indemnity as may be required by them to keep each of
them harmless,
then:
in the absence of notice that such Certificate shall have been acquired by a
bona fide purchaser, the Property Trustee or any Regular Trustee on behalf of
the Trust shall execute and deliver, in exchange for or in lieu of any such
mutilated, destroyed, lost or stolen Certificate, a new Certificate of like
denomination. In connection with the issuance of any new Certificate under this
Section 9.8, the Property Trustee or the Regular Trustees may require the
payment of a sum sufficient to cover any tax or other governmental charge that
may be imposed in connection therewith. Any duplicate Certificate issued
pursuant to this Section shall constitute conclusive evidence of an ownership
interest in the relevant Securities, as if originally issued, whether or not the
lost, stolen or destroyed Certificate shall be found at any time.
ARTICLE X.
32
LIMITATION OF LIABILITY OF HOLDERS
OF SECURITIES, TRUSTEES OR OTHERS
Section 10.1. Liability.
---------
(a) Except as expressly set forth in this Declaration, the Preferred
Securities Guarantee, the Common Securities Guarantee and the terms of the
Securities, the Sponsor shall not be:
(i) personally liable for the return of any portion of the
capital contributions (or any return thereon) of the Holders of the
Securities, which shall be made solely from assets of the Trust; or
(ii) required to pay to the Trust or to any Holder of Securities
any deficit upon dissolution of the Trust or otherwise.
(b) Pursuant to (S) 3803(a) of the Business Trust Act, the Holders of
the Securities, in their capacity as such, shall be entitled to the same
limitation of personal liability extended to stockholders of private
corporations for profit organized under the General Corporation Law of the State
of Delaware.
Section 10.2. Exculpation.
-----------
(a) No Indemnified Person shall be liable, responsible or accountable
in damages or otherwise to the Trust 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 on behalf of the Trust and in a manner such
Indemnified Person reasonably believed to be within the scope of the authority
conferred on such Indemnified Person by this Declaration 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, in the case of
the Property Trustee, except as otherwise set forth in Section 3.9) 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 Trust and upon such information, opinions, reports
or statements presented to the Trust by any Person as to matters the Indemnified
Person reasonably believes are within such other Person's professional or expert
competence and who has been selected with reasonable care by or on behalf of the
Trust, 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 Securities might properly be paid.
Section 10.3. Fiduciary Duty.
--------------
(a) To the extent that, at law or in equity, an Indemnified Person
has duties (including fiduciary duties) and liabilities relating thereto to the
Trust or to any other Covered Person, an Indemnified Person acting under this
Declaration shall not be liable to the Trust or to any other Covered Person for
its good faith reliance on the provisions of this Declaration. The provisions
of this Declaration, to the extent that they restrict the duties and liabilities
of an Indemnified Person otherwise existing at law or in equity (other than
duties imposed on the Property Trustee under the Trust Indenture Act), are
agreed by the parties hereto to replace such other duties and liabilities of
such Indemnified Person;
33
(b) Unless otherwise expressly provided herein:
(i) whenever a conflict of interest exists or arises between an
Indemnified Person and any Covered Persons; or
(ii) whenever this Declaration or any other agreement
contemplated herein or therein provide that an Indemnified Person
shall act in a manner that is, or provides terms that are, fair and
reasonable to the Trust or any Holder of Securities,
the Indemnified Person shall resolve such conflict of interest, take such action
or provide such terms, considering in each case the relative interest of each
party (including its own interest) to such conflict, agreement, transaction or
situation and the benefits and burdens relating to such interests, any customary
or accepted industry practices, and any applicable generally accepted accounting
practices or principles. In the absence of bad faith by the Indemnified Person,
the resolution, action or term so made, taken or provided by the Indemnified
Person shall not constitute a breach of this Declaration or any other agreement
contemplated herein or of any duty or obligation of the Indemnified Person at
law or in equity or otherwise.
(c) Whenever in this Declaration an Indemnified Person is permitted
or required to make a decision:
(i) in its "discretion" or under a grant of similar authority,
the Indemnified Person shall be entitled to consider such interests
and factors as it desires, including its own interests, and shall have
no duty or obligation to give any consideration to any interest of or
factors affecting the Trust or any other Person; or
(ii) in its "good faith" or under another express standard, the
Indemnified Person shall act under such express standard and shall not
be subject to any other or different standard imposed by this
Declaration or by applicable law.
Section 10.4. Indemnification.
---------------
(a) To the fullest extent permitted by law, the Sponsor shall
fully indemnify each Indemnified Person for, and hold each Indemnified Person
harmless against, any and all loss, liability, expense, damage or claim incurred
by such Indemnified Person by reason of any act or omission performed or omitted
by such Indemnified Person without negligence or bad faith on behalf of the
Trust and in a manner such Indemnified Person reasonably believed to be within
the scope of authority conferred on such Indemnified Person by this Declaration;
(b) reasonable expenses (including reasonable legal fees and
expenses) incurred by an Indemnified Person in defending any claim, demand,
action, suit or proceeding shall, from time to time, be advanced by the Sponsor
prior to the final disposition of such claim, demand, action, suit or proceeding
upon receipt by the Sponsor 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 10.4(a); and
(c) the provisions of this Section 10.4 shall survive the termination
of this Declaration or resignation or removal of any Trustee.
34
Section 10.5. Outside Businesses. Any Covered Person, the Sponsor, the
------------------
Delaware Trustee and the Property Trustee (subject to Section 5.3(c)) may engage
in or possess an interest in other business ventures of any nature or
description, independently or with others, similar or dissimilar to the business
of the Trust, and the Trust and the Holders of Securities shall have no rights
by virtue of this Declaration in and to such independent ventures or the income
or profits derived therefrom, and the pursuit of any such venture, even if
competitive with the business of the Trust, shall not be deemed wrongful or
improper. No Covered Person, the Sponsor, the Delaware Trustee, or the Property
Trustee shall be obligated to present any particular investment or other
opportunity to the Trust even if such opportunity is of a character that, if
presented to the Trust, could be taken by the Trust, and any Covered Person, the
Sponsor, the Delaware Trustee and the Property Trustee shall have the right to
take for its own account (individually or as a partner or fiduciary) or to
recommend to others any such particular investment or other opportunity. Any
Covered Person, the Delaware Trustee and the Property Trustee may engage or be
interested in any financial or other transaction with the Sponsor or any
Affiliate of the Sponsor, or may act as depositary for, trustee or agent for, or
act on any committee or body of holders of, securities or other obligations of
the Sponsor or its Affiliates.
ARTICLE XI.
ACCOUNTING
Section 11.1 Fiscal Year. The fiscal year ("Fiscal Year") of the Trust
-----------
shall be the calendar year, or such other year as is required by the Code.
Section 11.2. Certain Accounting Matters.
--------------------------
(a) At all times during the existence of the Trust, the Trust shall
keep, or cause to be kept, full books of account, records and supporting
documents, which shall reflect in reasonable detail, each transaction of the
Trust. The books of account shall be maintained on the accrual method of
accounting, in accordance with generally accepted accounting principles,
consistently applied. The Trust shall use the accrual method of accounting for
United States federal income tax purposes. The books of account and the records
of the Trust shall be examined by and reported upon, as of the end of each
Fiscal Year, by a firm of independent certified public accountants selected by
the Regular Trustees of the Trust.
(b) The Trust shall cause to be duly prepared and delivered to each
of the Holders of Securities, any annual United States federal income tax
information statement, required by the Code, containing such information with
regard to the Securities held by each Holder as is required by the Code and the
Treasury Regulations. Notwithstanding any right under the Code to deliver any
such statement at a later date, the Trust shall endeavor to deliver all such
statements within 30 days after the end of each Fiscal Year of the Trust.
(c) The Trust shall cause to be duly prepared and filed with the
appropriate taxing authority, an annual United States federal income tax return,
on a Form 1041 or such other form required by United States federal income tax
law, and any other annual income tax returns required to be filed by the Trust
on behalf of the Trust with any state or local taxing authority.
Section 11.3. Banking. The Trust shall maintain one or more bank accounts
-------
in the name and for the sole benefit of the Trust; provided, however, that all
payments of funds in respect of the Subordinated Debt Securities held by the
Property Trustee shall be made directly to the Property Trustee Account
35
and no other funds of the Trust shall be deposited in the Property Trustee
Account. The sole signatories for such accounts shall be designated by the
Regular Trustees; provided, however, that the Property Trustee shall designate
the signatories for the Property Trustee Account.
Section 11.4 Withholding. The Trust shall comply with all withholding
-----------
requirements under United States federal, state and local law. The Trust shall
request, and the Holders shall provide to the Trust, such forms or certificates
as are necessary to establish an exemption from withholding with respect to each
Holder, and any representations and forms as shall reasonably be requested by
the Trust to assist it in determining the extent of, and in fulfilling, its
withholding obligations. The Trust shall file required forms with applicable
jurisdictions and, unless an exemption from withholding is properly established
by a Holder, shall remit amounts withheld with respect to the Holder to
applicable jurisdictions. To the extent that the Trust is required to withhold
and pay over any amounts to any authority with respect to distributions or
allocations to any Holder, the amount withheld shall be deemed to be a
distribution in the amount of the withholding to the Holder. In the event of any
claimed over-withholding, Holders shall be limited to an action against the
applicable jurisdiction. If the amount required to be withheld was not withheld
from actual Distributions made, the Trust may reduce subsequent Distributions by
the amount of such withholding.
ARTICLE XII.
AMENDMENTS AND MEETINGS
Section 12.1 Amendments.
----------
(a) Except as otherwise provided in this Declaration or by any
applicable terms of the Securities, this Declaration may be amended by, and only
by, a written instrument approved and executed by the Regular Trustees (or, if
there are more than two (2) Regular Trustees, a majority of the Regular
Trustees); provided, however, that:
(i) no amendment shall be made, and any such purported
amendment shall be void and ineffective, to the extent the result
thereof would be to:
(A) cause the Trust to fail to be classified for the
purposes of United States federal income taxation as a grantor
trust;
(B) affect the powers or the rights of the Property Trustee
or the Delaware Trustee without the written consent of the
Property Trustee or the Delaware Trustee, as the case may be; or
(C) cause the Trust to be deemed to be an Investment Company
which is required to be registered under the Investment Company
Act;
(ii) at such time after the Trust has issued any Securities
which remain outstanding, any amendment which would adversely affect
the rights, privileges or preferences of any Holder of Securities may
be effected only with such additional requirements as may be set forth
in the terms of such Securities;
(iii) Section 9.1 (c) and this Section 12.1 shall not be amended
without the consent of all of the Holders of the Securities;
36
(iv) Article IV shall not be amended without the consent of the
Holders of a Majority in liquidation amount of the Common Securities;
and
(v) the rights of the Holders of the Common Securities under
Article V to increase or decrease the number of, and appoint and
remove Trustees shall not be amended without the consent of the
Holders of a Majority in liquidation amount of the Common Securities.
(b) Notwithstanding Section 12.1(a)(ii), this Declaration may be
amended from time to time by the Holders of a Majority in liquidation amount of
the Common Securities and the Property Trustee, without the consent of the
Holders of the Preferred Securities, to:
(i) cure any ambiguity;
(ii) correct or supplement any provision in this Declaration
that may be defective or inconsistent with any other provision or to
make any other provisions with respect to matters or questions arising
under this Declaration, which shall not be inconsistent with the other
provisions of this Declaration;
(iii) add to the covenants, restrictions or obligations of the
Sponsor;
(iv) to ensure the Trust's classification as a grantor trust for
United States federal income tax purposes; and
(v) to modify, eliminate or add to any provisions of this
Declaration to such extent as shall be necessary to ensure that the
Trust will not be required to register as an investment company under
the Investment Company Act.
(c) Subject to Section 12.1(a), this Declaration may be amended by
the Holders of a Majority in liquidation amount of the Common Securities and the
Property Trustee if:
(i) the Holders of a Majority in liquidation amount of the
Preferred Securities consent to such amendment; and
(ii) the Regular Trustees have received an opinion of counsel
experienced in such matters to the effect that such amendment or the
exercise of any power granted to the Regular Trustees in accordance
with such amendment will not affect the Trust's status as a grantor
trust for United States federal income tax purposes or the Trust's
exemption from status as an "investment company" under the Investment
Company Act.
(d) Any amendments of this Declaration pursuant to Section 12.1(b)
shall become effective when notice thereof is given to Holders of Securities.
Any other amendments of this Declaration shall become immediately effective,
however, within ten (10) days of such effective date notice must be given to
Holders of Securities, which notice may be given by press release or other
similar widely disseminated means.
Section 12.2. Meetings of the Holders of Securities; Action by Written
--------------------------------------------------------
Consent.
- -------
(a) Meetings of the Holders of any class of Securities may be called
at any time by the Regular Trustees (or as provided in the terms of the
Securities) to consider and act on any matter on which Holders of such class of
Securities are entitled to act under the terms of this Declaration, the terms of
the Securities or the rules of any stock exchange on which the Preferred
Securities are listed or admitted for trading. The Regular Trustees shall call
a meeting of the Holders of such class of Holders,
37
if directed to do so by the Holders of at least 25% in liquidation amount of the
Securities of such class. Such direction shall be given by delivering to the
Regular Trustees one or more calls in a writing stating that the signing Holders
of Securities wish to call a meeting and indicating the general or specific
purpose for which the meeting is to be called. Any Holders of Securities calling
a meeting shall specify in writing the Security Certificates held by the Holders
of Securities exercising the right to call a meeting and only those Securities
specified shall be counted for purposes of determining whether the required
percentage set forth in the second sentence of this paragraph has been met.
(b) Except to the extent otherwise provided in the terms of the
Securities, the following provisions shall apply to meetings of Holders of
Securities:
(i) notice of any such meeting shall be given to all the
Holders of Securities having a right to vote thereat at least seven
(7) days and not more than 60 days before the date of such meeting.
Whenever a vote, consent or approval of the Holders of Securities is
permitted or required under this Declaration, the terms of the
Securities or the rules of any stock exchange on which the Preferred
Securities are listed or admitted for trading, such vote, consent or
approval may be given at a meeting of the Holders of Securities. Any
action that may be taken at a meeting of the Holders of Securities may
be taken without a meeting and without prior notice if a consent in
writing setting forth the action so taken is signed by the Holders of
Securities owning not less than the minimum amount of Securities in
liquidation amount that would be necessary to authorize or take such
action at a meeting at which all Holders of Securities having a right
to vote thereon were present and voting. Prompt notice of the taking
of action without a meeting shall be given to the Holders of
Securities entitled to vote who have not consented in writing. The
Regular Trustees may specify that any written ballot submitted to the
Security Holder for the purpose of taking any action without a meeting
shall be returned to the Trust within the time specified by the
Regular Trustees;
(ii) each Holder of a Security may authorize any Person to act
for it by proxy on all matters in which a Holder of Securities is
entitled to participate, including waiving notice of any meeting, or
voting or participating at a meeting. No proxy shall be valid after
the expiration of 11 months from the date thereof unless otherwise
provided in the proxy. Every proxy shall be revocable at the pleasure
of the Holder of Securities executing it. Except as otherwise
provided herein, all matters relating to the giving, voting or
validity of proxies shall be governed by the General Corporation Law
of the State of Delaware relating to proxies, and judicial
interpretations thereunder, as if the Trust were a Delaware
corporation and the Holders of the Securities were stockholders of a
Delaware corporation;
(iii) each meeting of the Holders of the Securities shall be
conducted by the Regular Trustees or by such other Person that the
Regular Trustees may designate; and
(iv) except to the extent that the Business Trust Act, the Trust
Indenture Act, this Declaration, the terms of the Securities or the
listing rules of any stock exchange on which the Preferred Securities
are then listed or trading otherwise provides, the Regular Trustees,
in their sole discretion, shall establish all other provisions
relating to meetings of Holders of Securities, including notice of the
time, place or purpose of any meeting at which any matter is to be
voted on by any Holders of Securities, waiver of any such notice,
action by consent without a meeting, the establishment of a record
date, quorum
38
requirements, voting in person or by proxy or any other matter with
respect to the exercise of any such right to vote.
ARTICLE XIII.
REPRESENTATIONS OF THE PROPERTY TRUSTEE AND
THE DELAWARE TRUSTEE
Section 13.1. Representations and Warranties of the Property Trustee. The
------------------------------------------------------
Trustee which acts as initial Property Trustee represents and warrants to the
Trust and to the Sponsor at the date of this Declaration, and each Successor
Property Trustee represents and warrants to the Trust and the Sponsor at the
time of the Successor Property Trustee's acceptance of its appointment as
Property Trustee that:
(a) the Property Trustee is a New York banking corporation with power
and authority to execute and deliver, and to carry out and perform its
obligations under the terms of, the Declaration;
(b) the Declaration has been duly executed and delivered by the
Property Trustee, and it constitutes a legal, valid and binding obligation of
the Property Trustee, enforceable against it in accordance with its terms,
subject to applicable bankruptcy, reorganization, moratorium, insolvency, and
other similar laws affecting creditors' rights generally and to general
principles of equity and the discretion of the court (regardless of whether the
enforcement of such remedies is considered in a proceeding in equity or at law);
(c) the execution, delivery and performance of the Declaration by the
Property Trustee does not conflict with or constitute a breach of the Articles
of Organization or Bylaws of the Property Trustee; and
(d) no consent, approval or authorization of, or registration with or
notice to, any New York State or Federal banking authority is required for the
execution, delivery or performance by the Property Trustee, of the Declaration.
Section 13.2. Representations and Warranties of the Delaware Trustee. The
------------------------------------------------------
Trustee which acts as initial Delaware Trustee represents and warrants to the
Trust and to the Sponsor at the date of this Declaration, and each Successor
Delaware Trustee represents and warrants to the Trust and the Sponsor at the
time of the Successor Delaware Trustee's acceptance of its appointment as
Delaware Trustee that:
(a) The Delaware Trustee is a Delaware banking corporation, duly
organized, validly existing and in good standing;
(b) the Delaware Trustee satisfies the requirements set forth in
Section 5.1(c) and has the power and authority to execute and deliver, and to
carry out and perform its obligations under the terms of, this Declaration and,
if it is not a natural person, is duly organized, validly existing and in good
standing under the laws of its jurisdiction of incorporation or organization;
(c) this Declaration under Delaware law constitutes a legal, valid
and binding obligation of the Delaware Trustee, enforceable against it in
accordance with its terms, subject to applicable bankruptcy, reorganization,
moratorium, insolvency and other similar laws affecting creditors' rights
generally and to general principles of equity and the discretion of the court
(regardless of whether the enforcement of such remedies is considered in a
proceeding in equity or at law);
39
(d) no consent, approval or authorization of, or registration with or
notice to, any Delaware State or Federal banking authority is required for the
execution, delivery or performance by the Delaware Trustee of this Declaration;
and
(e) the execution, delivery and performance of this Declaration by
the Delaware Trustee do not conflict with, or constitute a violation or breach
of, the charter or bylaws of the Delaware Trustee.
ARTICLE XIV.
MISCELLANEOUS
Section 14.1. Notices. All notices provided for in this Declaration shall
-------
be in writing, duly signed by the party giving such notice, and shall be
delivered, telecopied or mailed by first class mail, postage prepaid, as
follows:
(a) if given to the Trust, in care of the Regular Trustees at the
Trust's mailing address set forth below (or such other address as the Trust may
give notice of to the Holders of the Securities):
Sempra Energy Capital Trust[ ]
c/o Sempra Energy
101 Ash Street
San Diego, California 92101
Attention: General Counsel
(b) if given to the Delaware Trustee, at the mailing address set
forth below (or such other address as the Delaware Trustee may give notice of to
the Holders of the Securities):
The Bank of New York (Delaware)
White Clay Center, Route 273
Newark, Delaware 19711
Attn: Corporate Trust Administration
(c) if given to the Property Trustee, at the mailing address set
forth below (or such other address as the Property Trustee may give notice of to
the Holders of the Securities):
The Bank of New York
101 Barclay Street, 21W
New York, New York 10286
Attention: Corporate Trust Administration
(d) if given to the Holder of the Common Securities, at the mailing
address of the Sponsor set forth below (or such other address as the Holder of
the Common Securities may give notice to the Trust):
Sempra Energy
101 Ash Street
San Diego, California 92101
Attention: Vice President, Treasurer
40
(e) if given to any other Holder, at the address set forth on the
books and records of the Trust.
(f) All such notices shall be deemed to have been given when received
in person, telecopied with receipt confirmed, or mailed 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 14.2. Governing Law. This Declaration and the rights of the
-------------
parties hereunder shall be governed by and interpreted in accordance with the
laws of the State of Delaware and all rights and remedies shall be governed by
such laws without regard to principles of conflict of laws.
Section 14.3. Intention of the Parties. It is the intention of the
------------------------
parties hereto that the Trust be classified for United States federal income tax
purposes as a grantor trust. The provisions of this Declaration shall be
interpreted to further this intention of the parties.
Section 14.4. Headings. Headings contained in this Declaration are
--------
inserted for convenience of reference only and do not affect the interpretation
of this Declaration or any provision hereof.
Section 14.5. Successors and Assigns. Whenever in this Declaration any of
----------------------
the parties hereto is named or referred to, the successors and assigns of such
party shall be deemed to be included, and all covenants and agreements in this
Declaration by the Sponsor and the Trustees shall bind and inure to the benefit
of their respective successors and assigns, whether so expressed.
Section 14.6 Partial Enforceability. If any provision of this
----------------------
Declaration, or the application of such provision to any Person or circumstance,
shall be held invalid, the remainder of this Declaration, or the application of
such provision to persons or circumstances other than those to which it is held
invalid, shall not be affected thereby.
Section 14.7 Counterparts. This Declaration may contain more than one
------------
counterpart of the signature page and this Declaration may be executed by the
affixing of the signature of each of the Trustees to one of such counterpart
signature pages. All of such counterpart signature pages shall be read as though
one, and they shall have the same force and effect as though all of the signers
had signed a single signature page.
41
IN WITNESS WHEREOF, the undersigned has caused these presents to be
executed as of the day and year first above written.
Neal E. Schmale
as Regular Trustee
________________________________________
Frank H. Ault,
as Regular Trustee
________________________________________
Charles A. McMonagle,
as Regular Trustee
________________________________________
The Bank of New York (Delaware),
as Delaware Trustee
By: ___________________________________
Name: _________________________________
Title: ________________________________
The Bank of New York,
as Property Trustee
By: ___________________________________
Name: _________________________________
Title: ________________________________
Sempra Energy,
as Sponsor
By: ___________________________________
Name: _________________________________
Title: ________________________________
42
EXHIBIT A
TERMS OF
[ ]% PREFERRED SECURITIES
[ ]% COMMON SECURITIES
Pursuant to Section 7.1 of the Amended and Restated Declaration of Trust,
dated as of [ ], [1999]/[200_] (as amended from time to time, the
"Declaration"), the designation, rights, privileges, restrictions, preferences
and other terms and provisions of the Preferred Securities and the Common
Securities are set out below (each capitalized term used but not defined herein
has the meaning set forth in the Declaration or, if not defined in such
Declaration, as defined in the Prospectus referred to below):
1. Designation and Number.
----------------------
a. Preferred Securities. [ ] Preferred Securities [(including [ ]
--------------------
Preferred Securities of the Trust sold pursuant to an overallotment option
provided for in the Purchase Agreement)] of the Trust with an aggregate
liquidation amount with respect to the assets of the Trust of [ ] Dollars ($[ ])
[(plus up to an additional [ ] Preferred Securities with an aggregate
liquidation amount with the respect to the assets of the Trust of [ ] Dollars
($[ ]) solely to cover overallotments, as provided for in the Purchase Agreement
(the "Additional Preferred Securities")),] and a liquidation amount with respect
to the assets of the Trust of $[ ] per Preferred Security, are hereby designated
for the purposes of identification only as "[ ]% Preferred Securities" (the
"Preferred Securities"). The Preferred Security Certificates evidencing the
Preferred Securities shall be substantially in the form attached hereto as Annex
I, with such changes and additions thereto or deletions therefrom as may be
required by ordinary usage, custom or practice or to conform to the rules of any
stock exchange on which the Preferred Securities are listed.
b. Common Securities. [ ] Common Securities [(including [ ] Common
-----------------
Securities of the Trust sold pursuant to an overallotment option)] of the Trust
with an aggregate liquidation amount with respect to the assets of the Trust of
[ ] Dollars ($[ ]) [(plus up to an additional [ ] Common Securities of the Trust
with an aggregate liquidation amount with respect to the assets of the Trust of
[ ] Dollars ($[ ])] to meet capital requirements of the Trust in the event of an
issuance of Additional Preferred Securities), and a liquidation amount with
respect to the assets of the Trust of $[ ] per Common Security, are hereby
designated for the purposes of identification only as "[ ]% Common Securities"
(the "Common Securities"). The Common Security Certificates evidencing the
Common Securities shall be substantially in the form attached hereto as Annex
II, with such changes and additions thereto or deletions therefrom as may be
required by ordinary usage, custom or practice.
2. Distributions.
-------------
a. Periodic Distributions payable on each Security will be fixed at
a rate per annum of [ ]% (the "Coupon Rate") of the stated liquidation amount of
$[ ] per Security, such rate being the rate of interest payable on the
Subordinated Debt Securities to be held by the Property Trustee. Distributions
in arrears for more than one quarterly period will bear interest thereon at the
Coupon Rate (to the extent permitted by applicable law). The term
"Distributions" as used in these terms includes such periodic cash distributions
and any such interest payable unless otherwise stated. A Distribution is payable
only to the extent that payments are made in respect of the Subordinated Debt
Securities held by the Property Trustee. The amount of Distributions payable for
any period will be computed for any full quarterly Distribution period on the
basis of a 360-day year of twelve 30-day months, and for any period shorter
A-1
than a full quarterly Distribution period for which Distributions are computed,
Distributions will be computed on the basis of the actual number of days elapsed
in such a 30-day month.
b. Distributions on the Securities will be cumulative, will accrue
from [ ], [1999]/[200_] and will be payable quarterly in arrears, on [ ], [ ], [
] and [ ] of each year, commencing on [ ], [1999]/[200_], except as otherwise
described below. The Debenture Issuer has the right under the Indenture to
defer payments of interest by extending the interest payment period from time to
time on the Subordinated Debt Securities for a period not exceeding 20
consecutive quarterly periods (each, an "Extension Period") but not beyond the
maturity date of the Subordinated Debt Securities and, as a consequence of such
extension, Distributions will also be deferred. Despite such deferral,
quarterly Distributions will continue to accrue with interest thereon (to the
extent permitted by applicable law) at the Coupon Rate during any such Extension
Period. Prior to the termination of any such Extension Period, the Subordinated
Debt Securities Issuer may further extend such Extension Period; provided that
such Extension Period together with all such previous and further extensions
thereof may not exceed 20 consecutive quarterly periods. Payments of accrued
Distributions will be payable to Holders as they appear on the books and records
of the Trust on the first record date after the end of the Extension Period.
Upon the termination of any Extension Period and the payment of all amounts then
due, the Subordinated Debt Securities Issuer may commence a new Extension
Period, subject to the above requirements.
c. Distributions on the Securities will be payable to the Holders
thereof as they appear on the books and records of the Trust on the relevant
record dates. While the Preferred Securities remain in book entry only form,
the relevant record dates shall be one Business Day prior to the relevant
payment dates which payment dates correspond to the interest payment dates on
the Subordinated Debt Securities. Subject to any applicable laws and
regulations and the provisions of the Declaration, each such payment in respect
of the Preferred Securities will be made as described under the heading
["Certain Terms of the Preferred Securities -- Book Entry-Only Issuance -- The
Depository Trust Company"] in the Prospectus Supplement dated [ ], [1999]/[200_]
(the "Prospectus Supplement") to the Prospectus dated [ ], [1999]/[200_] (as so
supplemented the "Prospectus") of the Trust included in the Registration
Statement on Form S-3 of the Sponsor, the Trust and certain other business
trusts. The relevant record dates for the Common Securities shall be the same
record dates as for the Preferred Securities. If the Preferred Securities shall
not continue to remain in book entry only form, the relevant record dates for
the Preferred Securities, shall conform to the rules of any securities exchange
on which the securities are listed and, if none, shall be selected by the
Regular Trustees, which dates shall be at least one Business Day but less than
60 Business Days before the relevant payment dates, which payment dates
correspond to the interest payment dates on the Subordinated Debt Securities.
Distributions payable on any Securities that are not punctually paid on any
Distribution payment date, as a result of the Subordinated Debt Securities
Issuer having failed to make a payment under the Subordinated Debt Securities,
will cease to be payable to the Person in whose name such Securities are
registered on the relevant record date, and such defaulted Distribution will
instead be payable to the Person in whose name such Securities are registered on
the special record date or other specified date determined in accordance with
the Indenture. If any date on which Distributions are payable on the Securities
is not a Business Day, then payment of the Distribution payable on such date
will be made on the next succeeding day that is a Business Day (and without any
interest or other payment in respect of any such delay) except that, if such
Business Day is in the next succeeding calendar year, such payment shall be made
on the immediately preceding Business Day, in each case with the same force and
effect as if made on such date.
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d. In the event that there is any money or other property held by or
for the Trust that is not accounted for hereunder, such property shall be
distributed Pro Rata (as defined herein) among the Holders of the Securities.
3. Liquidation Distribution Upon Dissolution.
-----------------------------------------
In the event of any voluntary or involuntary dissolution of the Trust, the
Holders of the Securities on the date of the dissolution will be entitled to
receive out of the assets of the Trust available for distribution to Holders of
Securities, after paying or making reasonable provision to pay all claims and
obligations of the Trust in accordance with Section 3808(e) of the Business
Trust Act, an amount equal to the aggregate of the stated liquidation amount of
$[ ] per Security plus accrued and unpaid Distributions thereon to the date of
payment (such amount being the "Liquidation Distribution"), unless, in
connection with such dissolution, Subordinated Debt Securities in an aggregate
principal amount equal to the aggregate stated liquidation amount of such
Securities, with an interest rate equal to the Coupon Rate of, and bearing
accrued and unpaid interest in an amount equal to the accrued and unpaid
Distributions on, such Securities, shall be distributed on a Pro Rata basis to
the Holders of the Securities in exchange for such Securities, after paying or
making reasonable provision to pay all claims and obligations of the Trust in
accordance with Section 3808(e) of the Business Trust Act.
If, upon any such dissolution, the Liquidation Distribution can be paid
only in part because the Trust has insufficient assets available to pay in full
the aggregate Liquidation Distribution, then the amounts payable directly by the
Trust on the Securities shall be paid on a Pro Rata basis.
4. Redemption and Distribution.
---------------------------
a. Upon the repayment of the Subordinated Debt Securities in whole or
in part, whether at maturity or upon redemption, the proceeds from such
repayment or payment shall be simultaneously applied to redeem Securities having
an aggregate liquidation amount equal to the aggregate principal amount of the
Subordinated Debt Securities so repaid or redeemed, at the redemption price for
the Subordinated Debt Securities, payable in cash (the "Redemption Price").
Holders will be given not less than 30 nor more than 60 days notice of such
redemption.
b. If fewer than all the outstanding Securities are to be so
redeemed, the Common Securities and the Preferred Securities will be redeemed
Pro Rata and the Preferred Securities to be redeemed will be as described in
Paragraph 4(h)(ii) below.
c. The Subordinated Debt Securities are redeemable, in whole or in
part, at the option of the Subordinated Debt Securities Issuer, on or after [ ],
[1999]/[200_], at a redemption price equal to [100%] of the principal amount per
Subordinated Debt Securities, plus, in each case, accrued and unpaid interest
thereon at the date of the redemption for the Debentures.
d. If, at any time, a Tax Event or an Investment Company Event (each
as defined below, and each a "Special Event") shall occur and be continuing, the
Subordinated Debt Securities Issuer shall have the right, upon not less than 30
nor more than 60 days notice, to redeem the Subordinated Debt Securities in
whole or in part, for cash within 90 days following the occurrence of such
Special Event, at a redemption price equal to [100%] of the principal amount to
be redeemed plus any accrued and unpaid interest thereon to the date of such
redemption and, following such redemption, Securities with an aggregate
liquidation amount equal to the aggregate principal amount of the Subordinated
Debt Securities so redeemed shall be redeemed by the Trust at the Redemption
Price on a
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Pro Rata basis in accordance with paragraph 8 hereof. The Common Securities will
be redeemed Pro Rata with the Preferred Securities, except that if an Event of
Default has occurred and is continuing, the Preferred Securities will have
priority over the Common Securities with respect to payment of the Redemption
Price.
e. The following terms used herein shall be defined as
follows:
(i) "Investment Company Event" means that the Trust shall have
received an opinion of counsel experienced in practice under the
Investment Company Act that, as a result of the occurrence of a change
in law or regulation or a change in interpretation or application of
law or regulation by any legislative body, court, governmental agency
or regulatory authority (a "Change in 1940 Act Law"), there is more
than an insubstantial risk that the Trust is or will be considered an
Investment Company which is required to be registered under the
Investment Company Act, which Change in 1940 Act Law becomes effective
on or after the date of the Prospectus Supplement.
(ii) "Tax Event" means that the Trust shall have received an
opinion of counsel experienced in such matters to the effect that on
or after the date of the Prospectus Supplement, as a result of (a) any
amendment to, or change (including any announced proposed change) in,
the laws (or any regulations thereunder) of the United States or any
political subdivision or taxing authority therefore or therein, or (b)
any amendment to, or change in, an interpretation or application of
any such laws or regulations by any legislative body, court,
governmental agency or regulatory authority, which amendment or change
is enacted, promulgated, issued, proposed or announced or which
interpretation or pronouncement is issued, proposed or announced or
which action is taken, in each case on or after the date of the
Prospectus Supplement, there is more than an insubstantial risk that
(i) the Trust is or will be within 90 days of the date of such
opinion, subject to United States federal income tax with respect to
interest accrued or received on the Subordinated Debt Securities, (ii)
the Trust is, or will be within 90 days of the date of such opinion,
subject to more than a de minimis amount of taxes, duties or other
governmental charges, or (iii) interest payable by the Subordinated
Debt Securities Issuer to the Trust on the Subordinated Debt
Securities is not, or within 90 days of the date of such opinion will
not be, deductible, in whole or in part, by the Debt Securities Issuer
for United States federal income tax purposes.
f. The Trust may not redeem fewer than all the outstanding Securities
unless all accrued and unpaid Distributions have been paid on all Securities for
all quarterly Distribution periods terminating on or before the date of
redemption.
g. In the event that the Sponsor makes the election referred to in
Section 8.1(a)(v) of the Declaration, the Regular Trustees shall dissolve the
Trust and, after paying or making reasonable provision to pay all claims and
obligations of the Trust in accordance with Section 3808(e) of the Business
Trust Act, cause Subordinated Debt Securities, held by the Property Trustee,
having an aggregate stated liquidation amount of, with an interest rate
identical to the Coupon Rate of, and accrued and unpaid interest equal to
accrued and unpaid Distributions on and having the same record date for payment,
as the Securities, to be distributed to the Holders of the Securities in
liquidation of such Holders' interests in the Trust on a Pro Rata basis in
accordance with paragraph 8 hereof. On and from the date fixed by the Regular
Trustees for any distribution of Subordinated Debt Securities and dissolution of
the Trust: (i) the Securities will no longer be deemed to be outstanding, (ii)
The
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Depository Trust Company (the "Depository") or its nominee (or any successor
Clearing Agency or its nominee), as the record Holder of the Preferred
Securities, will receive a registered global certificate or certificates
representing the Subordinated Debt Securities to be delivered upon such
distribution and (iii) any certificates representing Securities, except for
certificates representing Preferred Securities held by the Depository or
its nominee (or any successor Clearing Agency or its nominee), will be deemed to
represent beneficial interests in the Subordinated Debt Securities having an
aggregate principal amount equal to the aggregate stated liquidation amount of,
with an interest rate identical to the Coupon Rate of, and accrued and unpaid
interest equal to accrued and unpaid Distributions on such Securities until such
certificates are presented to the Subordinated Debt Securities Issuer or its
agent for transfer or reissue. If the Subordinated Debt Securities are
distributed to Holders of the Securities, pursuant to the terms of the
Indenture, the Subordinated Debt Securities Issuer will use its best efforts to
have the Subordinated Debt Securities listed on the New York Stock Exchange or
on such other exchange as the Preferred Securities were listed immediately prior
to the distribution of the Subordinated Debt Securities.
h. Redemption or Distribution Procedures.
-------------------------------------
(i) Notice of any redemption of, or notice of distribution of
Subordinated Debt Securities in exchange for the Securities (a
"Redemption/Distribution Notice") will be given by the Trust by mail
to each Holder of Securities to be redeemed or exchanged not fewer
than 30 nor more than 60 days before the date fixed for redemption or
exchange thereof which, in the case of a redemption, will be the date
fixed for redemption of the Subordinated Debt Securities. For
purposes of the calculation of the date of redemption or exchange and
the dates on which notices are given pursuant to this paragraph
4(h)(i), a Redemption/Distribution Notice shall be deemed to be given
on the day such notice is first mailed, by first-class mail, postage
prepaid, to Holders of Securities. Each Redemption/Distribution
Notice shall be addressed to the Holders of Securities at the address
of each such Holder appearing in the books and records of the Trust.
No defect in the Redemption/Distribution Notice or in the mailing of
either thereof with respect to any Holder shall affect the validity of
the redemption or exchange proceedings with respect to any other
Holder.
(ii) In the event that fewer than all the outstanding Securities
are to be redeemed, the Securities to be redeemed will be redeemed Pro
Rata from each Holder of Securities, it being understood that, in
respect of Preferred Securities registered in the name of and held of
record by DTC (or any successor Clearing Agency) or any other nominee,
the distribution of the proceeds of such redemption will be made to
each Clearing Agency Participant (or person on whose behalf such
nominee holds such securities) in accordance with the procedures
applied by such agency or nominee.
(iii) If Securities are to be redeemed and the Trust gives a
Redemption/Distribution Notice which notice may only be issued if the
Subordinated Debt Securities are redeemed as set out in this paragraph
4 (which notice will be irrevocable) then (A) while the Preferred
Securities are in book entry only form, with respect to the Preferred
Securities, by 12:00 noon, New York City time, on the redemption date,
provided that the Subordinated Debt Securities Issuer has paid the
Property Trustee a sufficient amount of cash in connection with the
related redemption or maturity of the Subordinated Debt Securities,
the Property Trustee will deposit irrevocably with the Depository (or
successor Clearing Agency) funds sufficient to pay the Redemption
Price with respect to the Preferred Securities and will give the
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Depository irrevocable instructions and authority to pay the
Redemption Price to the Holders of the Preferred Securities, and (B)
if the Preferred Securities are issued in definitive form, with
respect to the Preferred Securities, and with respect to the Common
Securities, provided that the Subordinated Debt Securities Issuer has
paid the Property Trustee a sufficient amount of cash in connection
with the related redemption or maturity of the Subordinated Debt
Securities, the Property Trustee will pay the Redemption Price to the
Holders of such Securities by check mailed to the address of the
relevant Holder appearing on the books and records of the Trust on the
redemption date. If a Redemption/Distribution Notice shall have been
given and funds deposited as required, if applicable, then immediately
prior to the close of business on the date of such deposit, or on the
redemption date, as applicable, Distributions will cease to accrue on
the Securities so called for redemption and all rights of Holders of
such Securities so called for redemption will cease, except the right
of the Holders of such Securities to receive the Redemption Price, but
without interest on such Redemption Price. Neither the Regular
Trustees nor the Trust shall be required to register or cause to be
registered the transfer of any Securities which have been so called
for redemption. If any date fixed for redemption of Securities is not
a Business Day, then payment of the Redemption Price payable on such
date will be made on the next succeeding day that is a Business Day
(and without any interest or other payment in respect of any such
delay) except that, if such Business Day falls in the next calendar
year, such payment will be made on the immediately preceding Business
Day, in each case with the same force and effect as if made on such
date fixed for redemption. If payment of the Redemption Price in
respect of Securities is improperly withheld or refused and not paid
either by the Property Trustee or by the Sponsor as guarantor pursuant
to the relevant Securities Guarantee, Distributions on such Securities
will continue to accrue, from the original redemption date to the
actual date of payment, in which case the actual payment date will be
considered the date fixed for redemption for purposes of calculating
the Redemption Price.
(iv) Redemption/Distribution Notices shall be sent by the Regular
Trustees on behalf of the Trust to (A) in respect of the Preferred
Securities, the Depository or its nominee (or any successor Clearing
Agency or its nominee) if the Global Certificates have been issued or
if Definitive Preferred Security Certificates have been issued, to the
Holder thereof, and (B) in respect of the Common Securities, to the
Holder thereof.
5. Voting Rights Applicable to Preferred Securities.
------------------------------------------------
a. Except as provided under paragraphs 5(b) and 7 and as otherwise
required by law and the Declaration, the Holders of the Preferred Securities
will have no voting rights.
b. Subject to the requirements of the third to last sentence of this
paragraph, the Holders of a Majority in liquidation amount of the Preferred
Securities, voting separately as a class, may direct the time, method, and place
of conducting any proceeding for any remedy available to the Property
A-6
Trustee, or exercising any trust or power conferred upon the Property Trustee
under the Declaration, including (i) directing the time, method, and place of
conducting any proceeding for any remedy available to the Subordinated Debt
Securities Trustee, or exercising any trust or power conferred on the
Subordinated Debt Securities Trustee with respect to the Subordinated Debt
Securities, (ii) waiving any past default and its consequences that is waivable
under Section 5.13 of the Indenture, (iii) exercising any right to rescind or
annul a declaration that the principal of all the Subordinated Debt Securities
shall be due and payable or (iv) consenting to any amendment, modification or
termination of the Indenture or the Subordinated Debt Securities where such
consent shall be required, provided, however, that where a consent under the
Indenture would require the consent or act of the Holders of greater than a
majority in principal amount of Subordinated Debt Securities affected thereby (a
"Super Majority"), the Property Trustee may only give such consent or take such
action at the direction of the Holders of at least the proportion in liquidation
amount of the Preferred Securities which the relevant Super Majority represents
of the aggregate principal amount of the Subordinated Debt Securities
outstanding. The Property Trustee shall not revoke any action previously
authorized or approved by a vote of the Holders of the Preferred Securities.
Other than with respect to directing the time, method and place of conducting
any remedy available to the Property Trustee or the Subordinated Debt Securities
Trustee as set forth above, the Property Trustee shall not take any action in
accordance with the directions of the Holders of the Preferred Securities under
this paragraph unless the Property Trustee has obtained an opinion of tax
counsel to the effect that for the purposes of United States federal income tax
the Trust will not be classified as other than a grantor trust on account of
such action. If the Property Trustee fails to enforce its rights under the
Declaration, any Holder of Preferred Securities may, to the fullest extent
permitted by law, institute a legal proceeding directly against any Person to
enforce the Property Trustee's rights under the Declaration, without first
instituting a legal proceeding against the Property Trustee or any other Person.
Notwithstanding the foregoing, if an Event of Default has occurred and is
continuing with respect to the Preferred Securities and such event is
attributable to the failure of the Subordinated Debt Securities Issuer to pay
interest, premium, if any, or principal on the Subordinated Debt Securities on
the date such interest, premium, if any, or principal is otherwise payable (or
in the case of redemption, on the redemption date), then a holder of Preferred
Securities may institute a Direct Action for enforcement of payment to such
holder of the principal of, premium, if any, or interest on, Subordinated Debt
Securities having a principal amount equal to the aggregate liquidation amount
of the Preferred Securities of such holder on or after the respective due date
specified in the Subordinated Debt Securities. Notwithstanding any payments made
to such Holder of Preferred Securities by the Subordinated Debt Securities
Issuer in connection with a Direct Action, the Subordinated Debt Securities
Issuer shall remain obligated to pay the principal of, premium, if any, and
interest on the Subordinated Debt Securities held by the Trust or the Property
Trustee, and the Subordinated Debt Securities Issuer shall be subrogated to the
rights of the Holder of such Preferred Securities with respect to payments on
the Preferred Securities to the extent of any payment made by the Subordinated
Debt Securities Issuer to such Holder in any Direct Action. Except as provided
in the preceding sentences, the Holders of Preferred Securities will not be able
to exercise directly any other remedy available to the holders of the
Subordinated Debt Securities.
c. Any approval or direction of Holders of Preferred Securities may
be given at a separate meeting of Holders of Preferred Securities convened for
such purpose, at a meeting of all of the Holders of Securities in the Trust or
pursuant to written consent. The Regular Trustees will cause a notice of any
meeting at which Holders of Preferred Securities are entitled to vote to be
mailed to each Holder of record of Preferred Securities. Each such notice will
include a statement setting forth (i) the date of such meeting, (ii) a
description of any resolution proposed for adoption at such meeting on which
such Holders are entitled to vote and (iii) instructions for the delivery of
proxies.
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d. No vote or consent of the Holders of the Preferred Securities will
be required for the Trust to redeem and cancel Preferred Securities or to
distribute the Subordinated Debt Securities in accordance with the Declaration
and the terms of the Securities.
e. Notwithstanding that Holders of Preferred Securities are entitled
to vote or consent under any of the circumstances described above, any of the
Preferred Securities that are owned by the Sponsor or any Affiliate of the
Sponsor shall not be entitled to vote or consent and shall, for purposes of such
vote or consent, be treated as if they were not outstanding.
6. Voting Rights With Respect to Common Securities.
-----------------------------------------------
a. Except as provided under paragraphs 6(b), 6(c) and 7 and as
otherwise required by law and the Declaration, the Holders of the Common
Securities will have no voting rights.
b. The Holders of the Common Securities are entitled, in accordance
with Article V of the Declaration, to vote to appoint, remove or replace any
Trustee or to increase or decrease the number of Trustees.
c. Subject to Section 2.6 of the Declaration and only after all
Events of Default with respect to the Preferred Securities have been cured,
waived or otherwise eliminated and subject to the requirements of the second to
last sentence of this paragraph, the Holders of a Majority in liquidation amount
of the Common Securities, voting separately as a class, may direct the time,
method, and place of conducting any proceeding for any remedy available to the
Property Trustee, or exercising any trust or power conferred upon the Property
Trustee under the Declaration, including (i) directing the time, method, place
of conducting any proceeding for any remedy available to the Subordinated Debt
Securities Trustee, or exercising any trust or power conferred on the
Subordinated Debt Securities Trustee with respect to the Subordinated Debt
Securities, (ii) waiving any past default and its consequences that is waivable
under Section 513 of the Indenture, or (iii) exercising any right to rescind or
annul a declaration that the principal of all the Subordinated Debt Securities
shall be due and payable, provided, however, that where a consent or action
under the Indenture would require the consent or act of the Holders of greater
than a majority in principal amount of Debentures affected thereby (a "Super
Majority"), the Property Trustee may only give such consent or take such action
at the direction of the Holders of at least the proportion in liquidation amount
of the Common Securities which the relevant Super Majority represents of the
aggregate principal amount of the Subordinated Debt Securities outstanding.
Pursuant to this paragraph 6(c), the Property Trustee shall not revoke any
action previously authorized or approved by a vote of the Holders of the Common
Securities. Other than with respect to directing the time, method and place of
conducting any remedy available to the Property Trustee or the Subordinated Debt
Securities Trustee as set forth above, the Property Trustee shall not take any
action in accordance with the directions of the Holders of the Common Securities
under this paragraph unless the Property Trustee has obtained an opinion of tax
counsel to the effect that for the purposes of United States federal income tax
the Trust will not be classified as other than a grantor trust on account of
such action. If the Property Trustee fails to enforce its rights under the
Declaration, any Holder of Common Securities may, to the fullest extent
permitted by law, institute a legal proceeding directly against any Person to
enforce the Property Trustee's rights under the Declaration, without first
instituting a legal proceeding against the Property Trustee or any other Person.
Notwithstanding the foregoing, if an Event of Default has occurred and is
continuing with respect to the Common Securities and such event is attributable
to the failure of the Subordinated Debt Securities Issuer to pay interest or
principal on the Subordinated Debt Securities on the date such interest or
principal is otherwise payable (or in the case of redemption, on the redemption
date), then a holder of Common Securities may institute a proceeding for
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enforcement of payment to such holder of the principal of, or interest on,
Subordinated Debt Securities having a principal amount equal to the aggregate
liquidation amount of the Common Securities of such holder on or after the
respective due date specified in the Subordinated Debt Securities.
d. Any approval or direction of Holders of Common Securities may be
given at a separate meeting of Holders of Common Securities convened for such
purpose, at a meeting of all of the Holders of Securities in the Trust or
pursuant to written Consent. The Regular Trustees will cause a notice of any
meeting at which Holders of Common Securities are entitled to vote, to be mailed
to each Holder of record of Common Securities. Each such notice will include a
statement setting forth (i) the date of such meeting, (ii) a description of any
resolution proposed for adoption at such meeting on which such Holders are
entitled to vote and (iii) instructions for the delivery of proxies.
e. No vote or consent of the Holders of the Common Securities will be
required for the Trust to redeem and cancel Common Securities or to distribute
the Subordinated Debt Securities in accordance with the Declaration and the
terms of the Securities.
7. Amendments to Declaration and Indenture.
---------------------------------------
a. In addition to any requirements under Section 12.1 of the
Declaration, if any proposed amendment to the Declaration provides for, or the
Regular Trustees otherwise propose to effect, (i) any action that would
adversely affect the powers, preferences or special rights of the Securities,
whether by way of amendment to the Declaration or otherwise, or (ii) the
dissolution, winding-up or termination of the Trust, other than as described in
Section 8.1 or Section 3.14 of the Declaration, then the Holders of outstanding
Securities as a class, will be entitled to vote on such amendment or proposal
(but not on any other amendment or proposal) and such amendment or proposal
shall not be effective except with the approval of the Holders of at least a
Majority in liquidation amount of the Securities, voting together as a single
class; provided, however, that if any amendment or proposal referred to in
clause (i) above would adversely affect only the Preferred Securities or the
Common Securities, then only the affected class will be entitled to vote on such
amendment or proposal and such amendment or proposal shall not be effective
except with the approval of a Majority in liquidation amount of such class of
Securities.
b. In the event the consent of the Property Trustee as the holder of
the Subordinated Debt Securities is required under the Indenture with respect to
any amendment, modification or termination of the Indenture or the Subordinated
Debt Securities, the Property Trustee shall request the direction of the Holders
of the Securities with respect to such amendment, modification or termination
and shall vote with respect to such amendment, modification or termination as
directed by a Majority in liquidation amount of the Securities voting together
as a single class; provided, however, that where a consent under the Indenture
would require the consent of the Holders of greater than a majority in aggregate
principal amount of the Debentures (a "Super Majority"), the Property Trustee
may only give such consent at the direction of the Holders of at least the
proportion in liquidation amount of the Securities which the relevant Super
Majority represents of the aggregate principal amount of the Debentures
outstanding; provided, further, that the Property Trustee shall not take any
action in accordance with the directions of the Holders of the Securities under
this paragraph 7(b) unless the Property Trustee has been furnished an opinion of
tax counsel to the effect that for the purposes of United States federal income
tax the Trust will not be classified as other than a grantor trust on account of
such action.
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8. Pro Rata.
--------
A reference in these terms of the Securities to any payment, distribution
or treatment as being "Pro Rata" shall mean pro rata to each Holder of
Securities according to the aggregate liquidation amount of the Securities held
by the relevant Holder in relation to the aggregate liquidation amount of all
Securities outstanding unless, in relation to a payment, an Event of Default
under the Indenture has occurred and is continuing, in which case any funds
available to make such payment shall be paid first to each Holder of the
Preferred Securities pro rata according to the aggregate liquidation amount of
Preferred Securities held by the relevant Holder relative to the aggregate
liquidation amount of all Preferred Securities outstanding, and only after
satisfaction of all amounts owed to the Holders of the Preferred Securities, to
each Holder of Common Securities pro rata according to the aggregate liquidation
amount of Common Securities held by the relevant Holder relative to the
aggregate liquidation amount of all Common Securities outstanding.
9. Ranking.
-------
The Preferred Securities rank pari passu and payment thereon shall be made
Pro Rata with the Common Securities except that, where an Event of Default
occurs and is continuing under the Indenture in respect of the Subordinated Debt
Securities held by the Property Trustee, the rights of Holders of the Common
Securities to payment in respect of Distributions and payments upon liquidation,
redemption and otherwise are subordinated to the rights to payment of the
Holders of the Preferred Securities.
10. Acceptance of Securities Guarantee and Indenture.
------------------------------------------------
Each Holder of Preferred Securities and Common Securities, by the
acceptance thereof, agrees to the provisions of the Preferred Securities
Guarantee and the Common Securities Guarantee, respectively, including the
subordination provisions therein and to the provisions of the Indenture.
11. No Preemptive Rights.
--------------------
The Holders of the Securities shall have no preemptive or similar rights to
subscribe for any additional Securities.
12. Miscellaneous.
-------------
These terms constitute a part of the Declaration.
The Sponsor will provide a copy of the Declaration, the Preferred
Securities Guarantee and the Indenture to a Holder without charge on written
request to the Trust at its principal place of business.
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Annex I
[IF THE PREFERRED SECURITY IS TO BE A GLOBAL CERTIFICATE INSERT This
Preferred Security is a Global Certificate within the meaning of the Declaration
hereinafter referred to and is registered in the name of The Depository Trust
Company (the "Depository") or a nominee of the Depository. This Preferred
Security is exchangeable for Preferred Securities registered in the name of a
person other than the Depository or its nominee only in the limited
circumstances described in the Declaration and no transfer of this Preferred
Security (other than a transfer of this Preferred Security as a whole by the
Depository to a nominee of the Depository or by a nominee of the Depository to
the Depository or another nominee of the Depository) may be registered except in
limited circumstances.
Unless this Preferred Security is presented by an authorized representative
of The Depository Trust Company (55 Water Street, New York) to the Trust or its
agent for registration of transfer, exchange or payment, and any Preferred
Security issued is registered in the name of Cede & Co. or such other name as
requested by an authorized representative of The Depository Trust Company and
any payment hereon is made to Cede & Co., ANY TRANSFER, PLEDGE OR OTHER USE
HEREOF FOR VALUE OR OTHERWISE BY A PERSON IS WRONGFUL since the registered owner
hereof, Cede & Co., has an interest herein.]
Certificate Number _______ Number of Preferred Securities _______
CUSIP NO.__________
A-11
Certificate Evidencing Preferred Securities
of
SEMPRA ENERGY CAPITAL TRUST [ ]
[ ]% Preferred Securities
(liquidation amount $[ ] per Preferred Security)
SEMPRA ENERGY CAPITAL TRUST [ ], a business trust created under the laws of
the State of Delaware (the "Trust"), hereby certifies that [ ] (the
"Holder") is the registered owner of preferred securities of the Trust
representing undivided beneficial interests in the assets of the Trust
designated the [ ]% Preferred Securities (liquidation amount $[ ] per Preferred
Security) (the "Preferred Securities"). The Preferred Securities are
transferable on the books and records of the Trust, in person or by a duly
authorized attorney, upon surrender of this certificate duly endorsed and in
proper form for transfer. The designation, rights, privileges, restrictions,
preferences and other terms and provisions of the Preferred Securities
represented hereby are issued and shall in all respects be subject to the
provisions of the Amended and Restated Declaration of Trust of the Trust dated
as of [ ], [1999]/[200_], as the same may be amended from time to time (the
"Declaration") including the designation of the terms of the Preferred
Securities as set forth in Exhibit A to the Declaration. Capitalized terms used
herein but not defined shall have the respective meanings given them in the
Declaration. The Holder is entitled to the benefits of the Preferred Securities
Guarantee to the extent provided therein. The Sponsor will provide a copy of
the Declaration, the Preferred Securities Guarantee and the Indenture to a
Holder without charge upon written request to the Trust at its principal place
of business.
Upon receipt of this certificate, the Holder is bound by the Declaration
and is entitled to the benefits thereunder.
By acceptance, the Holder agrees to treat, for United States federal income
tax purposes, the Subordinated Debt Securities as indebtedness and the Preferred
Securities as evidence of indirect beneficial ownership in the Subordinated Debt
Securities.
A-12
IN WITNESS WHEREOF, the Trust has executed this certificate this ______ day
of ____________, 1999.
SEMPRA ENERGY CAPITAL TRUST [ ]
By ______________________, as Regular Trustee
By ______________________, as Regular Trustee
CERTIFICATE OF AUTHENTICATION
This is one of the Securities issued under the
Amended and Restated Declaration of Trust
described herein.
Dated: __________________________________
THE BANK OF NEW YORK, as Property Trustee
By: __________________________________
Name:
Title:
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned assigns and transfers this Preferred
Security Certificate to: ____________________________________________________
(Insert assignee's social security or tax
_____________________________________________________________________________
identification number)
_____________________________________________________________________________
(Insert address and zip code of assignee)
and irrevocably appoints
________________________________________________________________________________
agent to transfer this Preferred Security Certificate on the books of the Trust.
The agent may substitute another to act for him or her.
Date: ___________________ Signature: _____________________________________________________
(Sign exactly as your name appears on the other side
of this Preferred Security Certificate)
Signature Guarantor: ___________________________________________
A-13
Annex II
TRANSFER OF THIS CERTIFICATE
IS SUBJECT TO THE CONDITIONS
SET FORTH IN THE DECLARATION
REFERRED TO BELOW
THE SECURITY EVIDENCED HEREBY HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES
ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE
OFFERED OR SOLD UNLESS SUCH OFFER AND SALE ARE REGISTERED UNDER OR ARE EXEMPT
FROM REGISTRATION UNDER THE SECURITIES ACT. THE TRANSFER OF THE SECURITY
EVIDENCED HEREBY IS ALSO SUBJECT TO THE RESTRICTIONS SET FORTH IN THE
DECLARATION REFERRED TO BELOW.
Certificate Number _______ Number of Common Securities _______
Certificate Evidencing Common Securities
of
SEMPRA ENERGY CAPITAL TRUST [ ]
Common Securities (liquidation amount $[ ] per Common Security)
SEMPRA ENERGY CAPITAL TRUST [ ], a business trust created under the laws of
the State of Delaware (the "Trust"), hereby certifies that Sempra Energy (the
"Holder") is the registered owner of common securities of the Trust representing
undivided beneficial interests in the assets of the Trust designated the [ ]%
Common Securities (liquidation amount $[ ] per Common Security) (the "Common
Securities"). Subject to the terms of the Declaration (as defined below), the
Common Securities are transferable on the books and records of the Trust, in
person or by a duly authorized attorney, upon surrender of this certificate duly
endorsed and in proper form for transfer. The designation, rights, privileges,
restrictions, preferences and other terms and provisions of the Common
Securities represented hereby are issued and shall in all respects be subject to
the provisions of the Amended and Restated Declaration of Trust of the Trust
dated as of [ ], [1999]/[200_], as the same may be amended from time to time
(the "Declaration") including the designation of the terms of the Common
Securities as set forth in Exhibit A to the Declaration. Capitalized terms used
herein but not defined shall have the respective meanings given them in the
Declaration. The Holder is entitled to the benefits of the Common Securities
Guarantee to the extent provided therein. The Sponsor will provide a copy of
the Declaration, the Common Securities Guarantee and the Indenture to a Holder
without charge upon written request to the Trust at its principal place of
business.
Upon receipt of this certificate, the Holder is bound by the Declaration
and is entitled to the benefits thereunder.
By acceptance, the Holder agrees to treat, for United States federal income
tax purposes, the Subordinated Debt Securities as indebtedness and the Common
Securities as evidence of indirect beneficial ownership in the Subordinated Debt
Securities.
A-14
IN WITNESS WHEREOF, the Trust has executed this certificate this day of
[ ], [1999]/[200_].
SEMPRA ENERGY CAPITAL TRUST [ ]
By: _________________________, as Regular Trustee
By: _________________________, as Regular Trustee
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned assigns and transfers this Common
Security Certificate to: _____________________________________________________
(Insert assignee's social security or tax
______________________________________________________________________________
identification number)
______________________________________________________________________________
(Insert address and zip code of assignee)
and irrevocably appoints
______________________________________________________________________________
agent to transfer this Common Security Certificate on the books of the Trust.
The agent may substitute another to act for him or her.
Date: ___________________ Signature: ______________________________________________________
(Sign exactly as your name appears on the other side
of this Common Security Certificate)
Signature Guarantor: ____________________________________________
A-15