Exhibit 4(a)
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RJR NABISCO HOLDINGS CORP.
AND
THE BANK OF NEW YORK
as Trustee
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SECOND SUPPLEMENTAL INDENTURE
Dated as of September 16, 1998
TO
INDENTURE
Dated as of September 21, 1995
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9 1/2% Junior Subordinated Debentures Due 2047
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SECOND SUPPLEMENTAL INDENTURE, dated as of the 16th day of
September, 1998 (the "Second Supplemental Indenture"), between RJR NABISCO
HOLDINGS CORP., a corporation duly organized and existing under the laws of
the State of Delaware (hereinafter sometimes referred to as "Holdings"), and
The Bank of New York, a New York banking corporation, as trustee (hereinafter
sometimes referred to as the "Trustee") under the Indenture dated as of
September 21, 1995 between Holdings and the Trustee, as supplemented by the
First Supplemental Indenture dated as of September 21, 1995 between Holdings
and the Trustee (said Indenture as so supplemented being hereinafter referred
to as the "Indenture"). All terms used and not defined herein are used as
defined in the Indenture.
WHEREAS, Holdings has executed and delivered the Indenture to
the Trustee to provide for the future issuance of its notes, debentures and
other evidences of indebtedness (the "Securities"), said Securities to be
issued from time to time in series as might be determined by Holdings under
the Indenture, in an unlimited aggregate principal amount which may be
authenticated and delivered thereunder as in the Indenture provided; and
WHEREAS, pursuant to the terms of the Indenture, Holdings
desires to provide for the establishment of a series of its junior
subordinated debentures ("Debentures") to be known as its 9 1/2% Junior
Subordinated Debentures Due 2047 (said series being hereinafter referred to as
the "Junior Subordinated Debentures"), the form and substance of such Junior
Subordinated Debentures and the terms, provisions and conditions thereof to be
as provided in the Indenture and this Second Supplemental Indenture; and
WHEREAS, Holdings has caused to be formed RJR Nabisco Holdings
Capital Trust II (the "Trust") as a statutory business trust under the Business
Trust Act of the State of Delaware (12 Del. Code Section 3801 et seq.)
pursuant to a declaration of trust dated August 5, 1998 (the "Original
Declaration") and the filing of a certificate of trust with the Secretary of
State of the State of Delaware on August 6, 1998; and
WHEREAS, the Original Declaration has been amended and restated
in its entirety pursuant to an Amended and Restated Declaration of Trust dated
as of September 16, 1998 (such Amended and Restated Declaration of Trust, as
amended from time to time, the "Declaration of Trust") with The Bank of New
York, as Institutional Trustee; and
WHEREAS, the Trust desires to issue its 9 1/2% Trust
Originated Preferred Securities (the "Preferred Securities") and sell such
Preferred Securities to initial purchasers; and
WHEREAS, pursuant to the Preferred Securities Guarantee (the
"Preferred Securities Guarantees"), Holdings has irrevocably and
unconditionally guaranteed, to the extent set forth therein, to pay in full,
to the holders of the Preferred Securities, the Guarantee Payments (as defined
therein), to the extent not paid by the Trust; and
WHEREAS, in connection with such issuance of Preferred
Securities and the related purchase by the Company of Common Securities (as
defined in the Declaration of Trust) of the Trust, the Trust will purchase
as trust assets Junior Subordinated Debentures; and
WHEREAS, pursuant to the Declaration of Trust, the legal title
to the Junior Subordinated Debentures shall be owned and held of record in the
name of The Bank of New York or its successor under the Declaration of Trust,
as Institutional Trustee (the "Institutional Trustee"); and
WHEREAS, each of the following shall constitute a "Dissolution
Event": (i) the Regular Trustees (as defined in the Declaration of Trust) of
the Trust dissolve the Trust and cause Junior Subordinated Debentures to be
distributed to the holders of the Preferred Securities and Common Securities
upon the occurrence of a Special Event (as defined in the Declaration of Trust)
or upon exercise by Holdings of its right to cause the trustees of the Trust to
do so, and (ii) in connection with a Liquidation Distribution (as defined in
the Declaration of Trust) the Regular Trustees cause Junior Subordinated
Debentures to be distributed to holders of Preferred Securities and Common
Securities; and
WHEREAS, Holdings desires and has requested the Trustee to join
with it in the execution and delivery of this Second Supplemental Indenture,
and all requirements necessary to make this Second Supplemental Indenture a
valid instrument, in accordance with its terms, and to make the Junior
Subordinated Debentures, when executed by Holdings and authenticated and
delivered by the Trustee, the valid obligations of Holdings, have been
performed and fulfilled, and the execution and delivery hereof have been in all
respects duly authorized;
NOW THEREFORE, in consideration of the purchase and acceptance
of the Junior Subordinated Debentures by the holders thereof, and for the
purpose of setting forth, as provided in the Indenture, the form and substance
of the Junior Subordinated Debentures and the terms, provisions and conditions
thereof, Holdings covenants and agrees with the Trustee as follows:
ARTICLE 1
General Terms and Conditions of the Junior Subordinated Debentures
Section 1.1. There shall be and is hereby authorized a
series of Debentures designated the "9 1/2% Junior Subordinated Debentures Due
2047", initially limited in aggregate principal amount to $335,051,550 which
is equal to the sum of (i) $325,000,000 plus (ii) $10,051,550 which is a dollar
amount equal to the principal amount of Junior Subordinated Debentures
purchased by the Trust with the proceeds received by the Trust from the
purchase by Holdings of the Common Securities of the Trust, which amount shall
be as set forth in any written order of Holdings for the authentication and
delivery of Junior Subordinated Debentures. Upon exercise of the
overallotment option set forth in the Underwriting Agreement (as defined in
the Declaration of Trust), additional Junior Subordinated Debentures in the
aggregate principal amount of up to $50,257,750 may be executed by Holdings
and delivered to the Trustee for authentication, and the Trustee shall
thereupon authenticate and deliver said Junior Subordinated Debentures to or
upon the written order of Holdings, which order shall be accompanied by
evidence satisfactory to the Trustee that the overallotment option has been
exercised. The Junior Subordinated Debentures shall mature and the principal
shall be due and payable together with all accrued and unpaid interest thereon,
including Compounded Interest (as hereinafter defined) on September 30, 2047.
Section 1.2. (a) The Junior Subordinated Debentures shall be
issued in fully registered certificated form without interest coupons.
Principal and interest on the Junior Subordinated Debentures issued in
certificated form will be payable, the transfer of such Junior Subordinated
Debentures will be registrable and such Junior Subordinated Debentures will be
exchangeable for Junior Subordinated Debentures bearing identical terms and
provisions at the office or agency of Holdings in the Borough of Manhattan,
The City and State of New York; provided, however, that payment of interest
may be made at the option of Holdings by check mailed to the registered holder
at such address as shall appear in the Debenture register and that the payment
of principal with respect to the Junior Subordinated Debentures will only be
made upon surrender of the Junior Subordinated Debentures to the Trustee.
(b) In connection with a Dissolution Event:
(i) Junior Subordinated Debentures in certificated form may
be presented to the Trustee by the Institutional Trustee in exchange for a
Global Debenture or Debentures representing the Junior Subordinated Debentures
in an aggregate principal amount equal to all outstanding Junior Subordinated
Debentures, to be registered in the name of the Depositary, or its nominee,
and delivered by the Trustee to the Depositary for crediting to the accounts
of its participants pursuant to the instructions of the Regular Trustees (as
defined in the Declaration of Trust). Upon any such presentation, Holdings
shall execute one or more Global Debentures representing the Junior
Subordinated Debentures in such aggregate principal amount and deliver the
same to the Trustee for authentication and delivery in accordance with the
Indenture and this Second Supplemental Indenture. Payments on the Junior
Subordinated Debentures issued as Global Debentures will be made to the
Depositary; and
(ii) if any Preferred Securities are held in non book-entry
certificated form, Junior Subordinated Debentures in certificated form may be
presented to the Trustee by the Institutional Trustee and any Preferred
Security Certificate (as defined in the Declaration of Trust) which represents
Preferred Securities other than Preferred Securities held by the Clearing
Agency (as defined in the Declaration of Trust) or its nominee ("Non
Book-Entry Preferred Securities") will be deemed to represent beneficial
interests in Junior Subordinated Debentures presented to the Trustee by the
Institutional Trustee having an aggregate principal amount equal to the
aggregate liquidation amount of the Non Book-Entry Preferred Securities until
such Preferred Security Certificate is presented to the Debenture Registrar
for transfer or reissuance at which time such Preferred Security Certificate
will be cancelled and a Junior Subordinated Debenture, registered in the name
of the holder of the Preferred Security Certificate or the transferee of the
holder of such Preferred Security Certificate, as the case may be, with an
aggregate principal amount equal to the aggregate liquidation amount of the
Preferred Security Certificate canceled will be executed by Holdings and
delivered to the Trustee for authentication and delivery in accordance with
the Indenture and this Second Supplemental Indenture. On issue of such Junior
Subordinated Debentures, Junior Subordinated Debentures with an equivalent
aggregate amount that were presented by the Institutional Trustee to the
Trustee will be deemed to have been canceled.
Section 1.3. Each Junior Subordinated Debenture will bear
interest at the rate of 9 1/2% per annum from September 16, 1998 until the
principal thereof becomes due and payable, and on any overdue principal and
(to the extent that payment of such interest is enforceable under applicable
law) on any overdue installment of interest at the same rate per annum,
compounded quarterly, payable (subject to the provisions of Article Three)
quarterly in arrears on the 30th day of March, June, September and December of
each year (each, an "Interest Payment Date", commencing on December 30, 1998),
to the person in whose name such Junior Subordinated Debenture or any
predecessor Junior Subordinated Debenture is registered, at the close of
business on the regular record date for such interest installment, which,
except as set forth below, shall be the close of business on the Business Day
immediately preceding that Interest Payment Date. Notwithstanding the
foregoing sentence, if the Preferred Securities are no longer in book-entry
only form or if pursuant to the provisions of Section 2.4(4) of the Indenture,
the Junior Subordinated Debentures are not represented by a Global Debenture,
the regular record dates for such interest installment shall be the close of
business on the last day of the quarter next preceding that Interest Payment
Date. Any such interest installment not punctually paid or duly provided for
shall forthwith cease to be payable to the registered holders on such regular
record date, and may be paid to the person in whose name the Junior
Subordinated Debenture (or one or more Predecessor Debentures) is registered
at the close of business on a special record date to be fixed by the Trustee
for the payment of such defaulted interest, notice whereof shall be given to
the registered holders of the Junior Subordinated Debentures not less than 10
days prior to such special record date, or may be paid at any time in any other
lawful manner not inconsistent with the requirements of any securities
exchange on which the Junior Subordinated Debentures may be listed, and upon
such notice as may be required by such exchange, all as more fully provided in
the Indenture.
The amount of interest payable for any period will be computed
on the basis of a 360-day year of twelve 30-day months and for any partial
month in any period shorter than a full quarterly period for which interest is
computed, the amount of interest payable will be computed on the basis of the
actual number of days elapsed in such a 30-day month. In the event that any
date on which interest is payable on the Junior Subordinated Debentures is not
a Business Day, then payment of interest payable on such date will be made on
the next succeeding day which is a Business Day (and without any interest or
other payment in respect of any such delay), except that, if such Business Day
is in the next succeeding calendar year, such payment shall be made on the
immediately preceding Business Day (and the regular record date for such
interest installment shall be the Business Day immediately preceding such
Business Day), in each case with the same force and effect as if made on such
date.
ARTICLE 2
Optional Redemption of the Junior Subordinated Debentures
Section 2.1. Except as provided in Section 2.02, Junior
Subordinated Debentures may not be redeemed by Holdings prior to September 30,
2003. Subject to the terms of Article Three of the Indenture, Holdings shall
have the right to redeem the Junior Subordinated Debentures, in whole or in
part, from time to time, on or after September 30, 2003, at a redemption price
equal to 100% of the principal amount to be redeemed plus any accrued and
unpaid interest thereon, including Compounded Interest, if any, to the date
of such redemption (the "Optional Redemption Price"). Any redemption pursuant
to this paragraph will be made upon not less than 30 nor more than 60 days'
notice, at the Optional Redemption Price.
Section 2.2. In the case of a Tax Event (as defined below)
which occurs prior to the dissolution of the Trust (or, in the case of a Tax
Event described in clause (iii) of the definition of Tax Event, after such
dissolution), Holdings shall have the right at any time, upon not less than 30
nor more than 60 days' notice, to redeem the Junior Subordinated Debentures in
whole or in part for cash at the Optional Redemption Price within 90 days
following the occurrence of such Tax Event; provided, however, that, if at the
time there is available to Holdings or the Regular Trustees on behalf of the
Trust the opportunity to eliminate, within such 90 day period, the Tax Event
by taking some ministerial action ("Ministerial Action"), such as filing a
form or making an election, or pursuing some other similar reasonable measure,
which has no adverse effect on the Trust, Holdings or the holders of the
Preferred Securities, Holdings or the Regular Trustees on behalf of the Trust
will pursue such measure in lieu of redemption and the 90-day period shall be
extended by the amount of time spent on such Ministerial Action; and, provided
further that Holdings shall have no right to redeem the Junior Subordinated
Debentures while Holdings or the Regular Trustees on behalf of the Trust are
pursuing any such Ministerial Action.
"Tax Event" means that Holdings and the Regular Trustees shall
have obtained an opinion of nationally recognized independent tax counsel
experienced in such matters (a "Dissolution Tax Opinion") to the effect that
on or after September 16, 1998, as a result of (a) any amendment to, or change
(including any announced prospective change) in, the laws (or any regulations
thereunder) of the United States or any political subdivision or taxing
authority thereof or therein, (b) any 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
(including the enactment of any legislation and the publication of any
judicial decision or regulatory determination), (c) any interpretation or
pronouncement that provides for a position with respect to such laws or
regulations that differs from the theretofore generally accepted position or
(d) any action taken by any governmental agency or regulatory authority, which
amendment or change is enacted, promulgated, issued or effective or which
interpretation or pronouncement is issued or announced or which action is
taken, in each case on or after September 16, 1998, there is more than an
insubstantial risk that (i) the Trust is, or will be within 90 days of the
date thereof, subject to United States federal income tax with respect to
income accrued or received on the Junior Subordinated Debentures, (ii) the
Trust is, or will be within 90 days of the date thereof, subject to more than
a de minimis amount of taxes, duties or other governmental charges or (iii)
interest payable by Holdings on the Junior Subordinated Debentures is not, or
within 90 days of the date thereof will not be, deductible by Holdings for
United States federal income tax purposes.
Section 2.3. If the Junior Subordinated Debentures are only
partially redeemed pursuant to this Article Two, the Junior Subordinated
Debentures will be redeemed pro rata or by lot or by any other method utilized
by the Trustee. Notwithstanding the foregoing, if a partial redemption of the
Junior Subordinated Debentures would result in the delisting of the Preferred
Securities by any national securities exchange or other organization on which
the Preferred Securities are then listed, Holdings shall not be permitted to
effect such partial redemption and will only redeem the Junior Subordinated
Debentures in whole.
ARTICLE 3
Extension of Interest Payment Period
Section 3.1. So long as Holdings is not in default in the
payment of interest on the Junior Subordinated Debentures, Holdings shall have
the right, at any time during the term of the Junior Subordinated Debentures,
from time to time to extend the interest payment period of such Junior
Subordinated Debentures for up to 20 consecutive quarterly interest periods
(the "Extended Interest Payment Period"), at the end of which period Holdings
shall pay all interest accrued and unpaid thereon (together with interest
thereon at the rate of 9 1/2% per annum, compounded quarterly to the extent
permitted by applicable law ("Compounded Interest")). During such Extended
Interest Payment Period Holdings shall not declare or pay any dividend on, or
redeem, purchase, acquire or make a distribution or liquidation payment with
respect to, any of its common stock or preferred stock, or make any guarantee
payments with respect thereto; provided that Holdings may pay accrued
dividends (and cash in lieu of fractional shares) upon the conversion, other
than at the option of Holdings, of any of its preferred stock, including its
ESOP Preferred Stock, in accordance with the terms of such stock. Prior to
the termination of any such Extended Interest Payment Period, Holdings may pay
all or any portion of the interest accrued on the Junior Subordinated
Debentures on any Interest Payment Date to holders of record on the regular
record date for such Interest Payment Date or from time to time further extend
such Period; provided that such Period together with all such previous and
further extensions thereof shall not exceed 20 consecutive quarterly interest
periods or extend beyond the stated maturity of the Junior Subordinated
Debentures. Upon the termination of any Extended Interest Payment Period and
upon the payment of all accrued and unpaid interest then due, together with
Compounded Interest, Holdings may select a new Extended Interest Payment
Period, subject to the foregoing requirements. No interest shall be due and
payable during an Extended Interest Payment Period, except at the end thereof.
At the end of the Extended Interest Payment Period Holdings shall pay all
interest accrued and unpaid on the Junior Subordinated Debentures including
any Compounded Interest which shall be payable to the holders of the Junior
Subordinated Debentures in whose names the Junior Subordinated Debentures are
registered in the Debenture register on the record date for the first interest
payment date occurring on or after the end of the Extended Interest Payment
Period.
Section 3.2. (a) So long as the Trust is the legal owner and
holder of record of the Junior Subordinated Debentures, at the time Holdings
selects an Extended Interest Payment Period, Holdings shall give both the
Institutional Trustee and the Trustee written notice of its selection of such
Extended Interest Payment Period one Business Day prior to the earlier of (i)
the next succeeding date on which distributions on the Preferred Securities
are payable or (ii) the next succeeding date on which the Trust is required to
give notice of the record date or the date such distributions are payable to
the New York Stock Exchange or other applicable self-regulatory organization
or to holders of the Preferred Securities, but in any event not less than one
Business Day prior to such record date. Holdings shall cause the Trust to
give notice of Holdings's selection of such Extended Interest Payment Period
to the holders of the Preferred Securities.
(b) If as a result of a Dissolution Event, Junior Subordinated
Debentures have been distributed to holders of Preferred Securities and Common
Securities, at the time Holdings selects an Extended Interest Payment Period,
Holdings shall give the holders of the Junior Subordinated Debentures and the
Trustee written notice of its selection of such Extended Interest Payment
Period 10 Business Days prior to the earlier of (i) the next succeeding
Interest Payment Date or (ii) the date Holdings is required to give notice of
the record or payment date of such interest payment to the New York Stock
Exchange (if the Junior Subordinated Debentures are listed thereon) or other
applicable self-regulatory organization or to holders of the Junior
Subordinated Debentures.
Section 3.3. The quarter in which any notice is given
pursuant to Section 3.02 shall be counted as one of the 20 quarters permitted
in the maximum Extended Interest Payment Period permitted under this Article
Three.
ARTICLE 4
Covenants Applicable to Junior Subordinated Debentures
Section 4.1. So long as any Preferred Securities remain
outstanding, Holdings will not declare or pay any dividend on, or redeem,
purchase, acquire or make a distribution or liquidation payment with respect
to, any of its common stock or preferred stock, or make any guarantee payments
with respect thereto, if at such time (i) Holdings shall be in default with
respect to its Guarantee Payments (as defined in the Guarantee Agreement) or
other payment obligations under the Guarantee Agreement, (ii) there shall have
occurred any Event of Default under the Indenture with respect to the Junior
Subordinated Debentures or (iii) Holdings shall have given notice of its
selection of an Extended Interest Payment Period and such Period, or any
extension thereof, is continuing; provided that Holdings will be permitted to
make payments under the Preferred Securities Guarantee and to pay accrued
dividends (and cash in lieu of fractional shares) upon the conversion, other
than at the option of Holdings, of any of its preferred stock, including its
ESOP Preferred Stock, in accordance with the terms of such stock.
Section 4.2. In connection with the distribution of the
Junior Subordinated Debentures to the holders of the Preferred Securities upon
a Dissolution Event, and if the Preferred Securities of the Trust are listed
on the New York Stock Exchange or other securities exchange, Holdings will use
its best efforts to list such Junior Subordinated Debentures on the New York
Stock Exchange or on such other exchange as the Preferred Securities are then
listed and traded.
Section 4.3. Holdings covenants and agrees for the benefit
of the holders of the Preferred Securities to comply fully with all of its
obligations and agreements under the Declaration of Trust, including, without
limitation, its obligations under Article 4 thereof.
Section 4.4. Prior to the distribution of Junior Subordinated
Debentures to the holders of Preferred Securities upon a Dissolution Event,
Holdings covenants and agrees for the benefit of the holders of the Preferred
Securities (i) not to cause or permit the Common Securities to be transferred
except as permitted by the Declaration of Trust and (ii) not to take any action
which would cause the Trust to cease to be treated as a grantor trust for
United States federal income tax purposes, except in connection with a
distribution of the Junior Subordinated Debentures as provided in the
Declaration of Trust.
ARTICLE 5
Form of Junior Subordinated Debentures
Section 5.1. The Junior Subordinated Debentures and the
Trustee's Certificate of Authentication to be endorsed thereon are to be
substantially in the following forms:
(FORM OF FACE OF DEBENTURE)
[IF THE NOTE IS TO BE A GLOBAL DEBENTURE HELD BY A DEPOSITARY,
INSERT: This Debenture is a Global Debenture within the meaning of the
Indenture hereinafter referred to and is registered in the name of a
Depositary or a nominee of a Depositary. This Debenture is exchangeable for
Debentures registered in the name of a person other than the Depositary or its
nominee only in the limited circumstances described in the Indenture, and no
transfer of this Debenture (other than a transfer of this Debenture as a whole
by the Depositary to a nominee of the Depositary or by a nominee of the
Depositary to the Depositary or another nominee of the Depositary) may be
registered except in limited circumstances.
Unless this Debenture is presented by an authorized
representative to The Depository Trust Company (55 Water Street, New York, New
York) to the issuer or its agent for registration of transfer, exchange or
payment, and any Debenture 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.]
No. $
CUSIP NO. _________
RJR NABISCO HOLDINGS CORP.
9 1/2% JUNIOR SUBORDINATED DEBENTURE,
DUE 2047
RJR Nabisco Holdings Corp., a corporation duly organized and
existing under the laws of the State of Delaware (herein referred to as
"Holdings", which term includes any successor corporation under the Indenture
hereinafter referred to), for value received, hereby promises to pay to
, or registered assigns, the principal sum of _________ Dollars
on September 30, 2047, and to pay interest on said principal sum from
September 16, 1998 or from the most recent interest payment date (each such
date, an "Interest Payment Date") to which interest has been paid or duly
provided for, quarterly (subject to deferral as set forth herein) in arrears
on the 30th day of March, June, September and December of each year commencing
December 30, 1998 at the rate of 9 1/2% per annum plus Compounded Interest, if
any, until the principal hereof shall have become due and payable, and on any
overdue principal and premium, if any, and (without duplication and to the
extent that payment of such interest is enforceable under applicable law) on
any overdue installment of interest at the same rate per annum. The amount
of interest payable on any Interest Payment Date shall be computed on the
basis of a 360-day year of twelve 30-day months and for any period shorter
than a full quarterly interest period for which interest is computed, the
amount of interest payable will be computed on the basis of the actual number
of days elapsed in such a 30-day month. In the event that any date on which
interest is payable on this Debenture is not a Business Day, then payment of
interest payable on such date will be made on the next succeeding day which is
a Business Day (and without any interest or other payment in respect of any
such delay), except that, if such Business Day is in the next succeeding
calendar year, such payment shall be made on the immediately preceding
Business Day, in each case with the same force and effect as if made on such
date. The interest installment so payable, and punctually paid or duly
provided for, on any Interest Payment Date will, as provided in the Indenture,
be paid to the person in whose name this Debenture is registered at the close
of business on the regular record date for such interest installment, which
shall be the close of business on the Business Day immediately preceding such
Interest Payment Date. Any such interest installment not punctually paid or
duly provided for shall forthwith cease to be payable to the registered holders
on such regular record date, and may be paid to the person in whose name this
Debenture is registered at the close of business on a special record date to be
fixed by the Trustee for the payment of such defaulted interest, notice whereof
shall be given to the registered holders of this series of Debentures not less
than 10 days prior to such special record date, or may be paid at any time in
any other lawful manner not inconsistent with the requirements of any
securities exchange on which the Debentures may be listed, and upon such
notice as may be required by such exchange, all as more fully provided in the
Indenture. The principal of and the interest on this Debenture shall be
payable at the office or agency of Holdings maintained for that purpose in the
Borough of Manhattan, The City and State of New York, in any coin or currency
of the United States of America which at the time of payment is legal tender
for payment of public and private debts; provided, however, that payment of
interest may be made at the option of Holdings by check mailed to the
registered holder at such address as shall appear in the Debenture register and
that the payment of principal will only be made upon the surrender of this
Debenture to the Trustee. Notwithstanding the foregoing, so long as the owner
and record holder of this Debenture is the Trust (as defined in the Indenture
referred to on the reverse hereof), the payment of the principal of and
interest (including Compounded Interest, if any) on this Debenture will be
made at such place and to such account of the Trust as may be designated by
the Institutional Trustee.
The indebtedness evidenced by this Debenture is, to the extent
provided in the Indenture, subordinate and subject in right of payment to the
prior payment in full of all Senior Indebtedness, and this Debenture is issued
subject to the provisions of the Indenture with respect thereto. Each Holder
of this Debenture, by accepting the same (a) agrees to and shall be bound by
such provisions, (b) authorizes and directs the Trustee on his behalf to take
such action as may be necessary or appropriate to acknowledge or effectuate the
subordination so provided and (c) appoints the Trustee his attorney-in-fact for
any and all such purposes. Each Holder hereof, by his acceptance hereof,
hereby waives all notice of the acceptance of the subordination provisions
contained herein and in the Indenture by each holder of Senior Indebtedness,
whether now outstanding or hereafter incurred, and waives reliance by each
such Holder upon said provisions.
This Debenture shall not be entitled to any benefit under the
Indenture hereinafter referred to, be valid or become obligatory for any
purpose until the Certificate of Authentication hereon shall have been signed
by or on behalf of the Trustee.
Unless the Certificate of Authentication hereon has been
executed by the Trustee referred to on the reverse side hereof, this Debenture
shall not be entitled to any benefit under the Indenture or be valid or
obligatory for any purpose.
The provisions of this Debenture are continued on the reverse
side hereof and such continued provisions shall for all purposes have the same
effect as though fully set forth at this place.
IN WITNESS WHEREOF, Holdings has caused this Instrument to be
executed.
Dated ___________ __, ____
RJR NABISCO HOLDINGS CORP.
By___________________________
Name:
Title:
Attest:
By______________________
Name:
Title:
(FORM OF CERTIFICATE OF AUTHENTICATION)
CERTIFICATE OF AUTHENTICATION
This is one of the Debentures of the series of Debentures
described in the within-mentioned Indenture.
Dated:
The Bank of New York,
as Trustee
____________________________
or as Authentication Agent
____________________________
Authorized Signatory
By____________________________
Authorized Signatory
(FORM OF REVERSE OF DEBENTURE)
This Debenture is one of a duly authorized series of debentures
of Holdings (herein sometimes referred to as the "Debentures"), all issued or
to be issued in one or more series under and pursuant to an Indenture dated as
of September 21, 1995 duly executed and delivered between Holdings and The
Bank of New York, a New York banking corporation, as Trustee (herein referred
to as the "Trustee"), as supplemented by the First Supplemental Indenture
dated as of September 21, 1995 between Holdings and the Trustee, and as
further supplemented by the Second Supplemental Indenture dated as of
September 16, 1998 between Holdings and the Trustee (said Indenture as so
supplemented being hereinafter referred to as the "Indenture"), to which
Indenture and all indentures supplemental thereto reference is hereby made for
a description of the rights, limitations of rights, obligations, duties and
immunities thereunder of the Trustee, Holdings and the holders of the
Debentures, and, to the extent specifically set forth in the Indenture, the
holders of Senior Indebtedness and Preferred Securities. By the terms of the
Indenture, the Debentures are issuable in series which may vary as to amount,
date of maturity, rate of interest and in other respects as in the Indenture
provided. This series of Debentures is designated the 9 1/2% Junior
Subordinated Debentures Due 2047 and is limited in aggregate principal amount
as specified in said Second Supplemental Indenture.
Except as provided in the next paragraph, the Debentures may
not be redeemed by Holdings prior to September 30, 2003. Holdings shall have
the right to redeem this Debenture at the option of Holdings, without premium
or penalty, in whole or in part at any time on or after September 30, 2003 (an
"Optional Redemption"), at a redemption price equal to 100% of the principal
amount plus any accrued but unpaid interest, including any Compounded
Interest, if any, to the date of such redemption (the "Optional Redemption
Price"). Any redemption pursuant to this paragraph will be made upon not less
than 30 nor more than 60 days' notice, at the Optional Redemption Price.
In the case of a Tax Event (as defined below) which occurs
prior to the dissolution of the Trust (or, in the case of a Tax Event
described in clause (iii) of the definition of Tax Event, after such
dissolution), Holdings shall have the right at any time, upon not less than 30
nor more than 60 days' notice, to redeem the Junior Subordinated Debentures in
whole or in part for cash at the Optional Redemption Price within 90 days
following the occurrence of such Tax Event; provided, however, that, if at the
time there is available to Holdings or the Regular Trustees on behalf of the
Trust the opportunity to eliminate, within such 90-day period, the Tax Event
by taking some ministerial action ("Ministerial Action"), such as filing a
form or making an election, or pursuing some other similar reasonable measure,
which has no adverse effect on the Trust, Holdings or the holders of the
Preferred Securities, Holdings or the Regular Trustees on behalf of the Trust
will pursue such measure in lieu of redemption and the 90-day period shall be
extended by the amount of time spent on such Ministerial Action; and, provided
further that Holdings shall have no right to redeem the Junior Subordinated
Debentures while Holdings or the Regular Trustees on behalf of the Trust are
pursuing any such Ministerial Action.
"Tax Event" means that Holdings and the Regular Trustees shall
have obtained an opinion of nationally recognized independent tax counsel
experienced in such matters (a "Dissolution Tax Opinion") to the effect that
on or after September 16, 1998, as a result of (a) any amendment to, or change
(including any announced prospective change) in, the laws (or any regulations
thereunder) of the United States or any political subdivision or taxing
authority thereof or therein, (b) any 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
(including the enactment of any legislation and the publication of any
judicial decision or regulatory determination), (c) any interpretation or
pronouncement that provides for a position with respect to such laws or
regulations that differs from the theretofore generally accepted position or
(d) any action taken by any governmental agency or regulatory authority, which
amendment or change is enacted, promulgated, issued or effective or which
interpretation or pronouncement is issued or announced or which action is
taken, in each case on or after September 16, 1998, there is more than an
insubstantial risk that (i) the Trust is, or will be within 90 days of the
date thereof, subject to United States federal income tax with respect to
income accrued or received on the Junior Subordinated Debentures, (ii) the
Trust is, or will be within 90 days of the date thereof, subject to more than
a de minimis amount of taxes, duties or other governmental charges or (iii)
interest payable by Holdings on the Junior Subordinated Debentures is not, or
within 90 days of the date thereof will not be, deductible by Holdings for
United States federal income tax purposes.
If the Debentures are only partially redeemed by Holdings
pursuant to an Optional Redemption or as a result of a Tax Event as described
above, the Debentures will be redeemed pro rata or by lot or in some other
equitable manner determined by the Trustee. Notwithstanding the foregoing, if
a partial redemption of the Junior Subordinated Debentures would result in the
delisting of the Preferred Securities by any national securities exchange or
other organization on which the Preferred Securities are then listed, Holdings
shall not be permitted to effect such partial redemption and will only redeem
the Junior Subordinated Debentures in whole.
In the event of redemption of this Debenture in part only, a new
Debenture or Debentures of this series for the unredeemed portion hereof will
be issued in the name of the Holder hereof upon the cancellation hereof.
In case an Event of Default, as defined in the Indenture, shall
have occurred and be continuing, the principal of all of the Debentures may be
declared, and upon such declaration shall become, due and payable, in the
manner, with the effect and subject to the conditions provided in the
Indenture.
The Indenture contains provisions for defeasance at any time of
the entire indebtedness of this Debenture upon compliance by Holdings with
certain conditions set forth therein.
The Indenture contains provisions permitting Holdings and the
Trustee, with the consent of the Holders of not less than a majority in
aggregate principal amount of the Debentures of all series affected at the time
outstanding, as defined in the Indenture (and, in the case of any series of
Debentures held as trust assets of a RJR Nabisco Holdings Capital Trust and
with respect to which a Security Exchange has not theretofore occurred, such
consent of holders of the Preferred Securities and the Common Securities of
such RJR Nabisco Holdings Capital Trust as may be required under the
Declaration of Trust of such RJR Nabisco Holdings Capital Trust), to execute
supplemental indentures for the purpose of adding any provisions to or
changing in any manner or eliminating any of the provisions of the Indenture
or of any supplemental indenture or of modifying in any manner the rights of
the Holders of the Debentures; provided, however, that no such supplemental
indenture shall (i) extend the final maturity of any Debentures of any series,
or reduce the principal amount thereof, or reduce the rate or extend the time
of payment of interest thereon (except that a valid extension of an interest
payment period by the Issuer shall not constitute an extension of interest for
this purpose), or reduce any amount payable upon the redemption thereof or
reduce the amount of the principal of an original issue discount Debenture that
would be due and payable upon an acceleration of the maturity thereof pursuant
to the Indenture or the amount thereof provable in bankruptcy pursuant to the
Indenture, or alter the provisions of the Indenture concerning liability of
officers of the Issuer and the parties to the Indenture or impair or affect
the right of any Debenture holder to institute suit for the payment thereof in
each case without the consent of the holder of each Debenture so affected
(and, in the case of any series of Securities held as trust assets of an RJR
Nabisco Holdings Capital Trust and with respect to which a Security Exchange
has not theretofore occurred, such consent of holders of the Preferred
Securities and the Common Securities of such RJR Nabisco Holdings Capital
Trust as may be required under the Declaration of Trust of such RJR Nabisco
Holdings Capital Trust) or (ii) reduce the aforesaid percentage of Debentures,
the holders of which are required to consent to any such supplemental
indenture, without the consent of the holders of each Debenture (and, in the
case of any series of Debentures held as trust assets of a RJR Nabisco
Holdings Capital Trust and with respect to which a Security Exchange has not
theretofore occurred, such consent of the holders of the Preferred Securities
and the Common Securities of such RJR Nabisco Holdings Capital Trust as may be
required under the Declaration of Trust of such RJR Nabisco Holdings Capital
Trust) affected thereby. The Indenture also contains provisions permitting
the Holders of a majority in aggregate principal amount of the Debentures of
all series at the time outstanding affected thereby (subject, in the case of
any series of Debentures held as trust assets of a RJR Nabisco Holdings
Capital Trust and with respect to which a Securities Exchange has not
theretofore occurred, to such consent of holders of Preferred Securities and
Common Securities of such RJR Nabisco Holdings Capital Trust as may be
required under the Declaration of Trust of such RJR Nabisco Holdings Capital
Trust), on behalf of the Holders of the Debentures of such series, to waive
any past default in the performance of any of the covenants contained in the
Indenture, or established pursuant to the Indenture with respect to such
series, and its consequences, except a default in the payment of the principal
of or premium, if any, or interest on any of the Debentures of such series.
Any such consent or waiver by the registered Holder of this Debenture (unless
revoked as provided in the Indenture) shall be conclusive and binding upon
such Holder and upon all future Holders and owners of this Debenture and of
any Debenture issued in exchange herefor or in place hereof (whether by
registration of transfer or otherwise), irrespective of whether or not any
notation of such consent or waiver is made upon this Debenture.
No reference herein to the Indenture and no provision of this
Debenture or of the Indenture shall alter or impair the obligation of
Holdings, which is absolute and unconditional, to pay the principal of and
premium, if any, and interest on this Debenture at the time and place at the
rate and in the money herein prescribed.
So long as Holdings is not in default in the payment of
interest on the Debentures, Holdings shall have the right, at any time during
the term of the Debentures, from time to time to extend the interest payment
period of such Debentures for up to 20 consecutive quarterly interest periods
(the "Extended Interest Payment Period"), at the end of which period Holdings
shall pay all interest then accrued and unpaid (together with interest thereon
at the rate of 9 1/2% per annum compounded quarterly to the extent permitted
by applicable law ("Compounded Interest")). During such Extended Interest
Payment Period Holdings shall not declare or pay any dividend on, or redeem,
purchase, acquire or make a distribution or liquidation payment with respect
to, any of its common stock or preferred stock, or make any guarantee payments
with respect thereto, provided that Holdings may pay accrued dividends (and
cash in lieu of fractional shares) upon the conversion, other than at the
option of Holdings, of any of its preferred stock, including its ESOP
Preferred Stock, in accordance with the terms of such stock. Prior to the
termination of any such Extended Interest Payment Period, Holdings may pay all
or any portion of the interest accrued on the Debentures on any Interest
Payment Date to holders of record on the regular record date for such Interest
Payment Date or from time to time further extend such Extended Interest
Payment Period, provided that such Period together with all such further
extensions thereof shall not exceed 20 consecutive quarterly interest periods
or extend beyond the stated maturity of the Junior Subordinated Debentures. At
the termination of any such Extended Interest Payment Period and upon the
payment of all accrued and unpaid interest then due, together with Compounded
Interest, Holdings may select a new Extended Interest Payment Period, subject
to the foregoing requirements. No interest on this Debenture shall be due and
payable during an Extended Interest Payment Period, except at the end thereof.
At the end of the Extended Interest Payment Period Holdings shall pay all
interest accrued and unpaid on the Junior Subordinated Debentures including
any Compounded Interest which shall be payable to the holders of the Junior
Subordinated Debentures in whose names the Junior Subordinated Debentures are
registered in the Debenture register on the record date for the first interest
payment date occurring on or after the end of the Extended Interest Payment
Period.
As provided in the Indenture and subject to certain limitations
therein set forth, this Debenture is transferable by the registered holder
hereof on the Debenture register of Holdings, upon surrender of this Debenture
for registration of transfer at the office or agency of Holdings in the
Borough of Manhattan, The City and State of New York accompanied by a written
instrument or instruments of transfer in form satisfactory to Holdings or the
Trustee duly executed by the registered holder hereof or his attorney duly
authorized in writing, and thereupon one or more new Debentures of authorized
denominations and for the same aggregate principal amount and series will be
issued to the designated transferee or transferees. No service charge will be
made for any such transfer, but Holdings may require payment of a sum
sufficient to cover any tax or other governmental charge payable in relation
thereto.
Prior to due presentment for registration of transfer of this
Debenture, Holdings, the Trustee, any paying agent and any Debenture Registrar
may deem and treat the registered holder hereof as the absolute owner hereof
(whether or not this Debenture shall be overdue and notwithstanding any notice
of ownership or writing hereon made by anyone other than the Debenture
Registrar) for the purpose of receiving payment of or on account of the
principal hereof and premium, if any, and interest due hereon and for all other
purposes, and neither Holdings nor the Trustee nor any paying agent nor any
Debenture Registrar shall be affected by any notice to the contrary.
No recourse shall be had for the payment of the principal of or
the interest on this Debenture, or for any claim based hereon, or otherwise in
respect hereof, or based on or in respect of the Indenture, against any
incorporator, stockholder, officer or director, past, present or future, as
such, of Holdings or of any predecessor or successor corporation, whether by
virtue of any constitution, statute or rule of law, or by the enforcement of
any assessment or penalty or otherwise, all such liability being, by the
acceptance hereof and as part of the consideration for the issuance hereof,
expressly waived and released.
The Debentures of this series are issuable only in registered
form without coupons in denominations of $25 and any integral multiple
thereof. As provided in the Indenture and subject to certain limitations
therein set forth, Debentures of this Series are exchangeable for a like
aggregate principal amount of Debentures of this series of a different
authorized denomination, as requested by the Holder surrendering the same.
All terms used in this Debenture which are defined in the
Indenture shall have the meanings assigned to them in the Indenture.
ARTICLE 6
Issue of Junior Subordinated Debentures
Section 6.1. Junior Subordinated Debentures in the aggregate
principal amount equal to the sum of $325,000,000 plus a dollar amount equal
to the principal amount of Junior Subordinated Debentures purchased by the
Trust with the proceeds received by the Trust from the purchase by Holdings
of the Common Securities of the Trust, may, upon execution of this Second
Supplemental Indenture, be executed by Holdings and delivered to the Trustee
for authentication, and the Trustee shall thereupon authenticate and deliver
said Debentures to or upon the written order of Holdings, signed by its
Chairman, any Vice Chairman, its President, or any Vice President and its
Treasurer or an Assistant Treasurer, without any further action by Holdings.
Up to $50,257,750 aggregate principal amount of Junior Subordinated Debentures
may be executed by Holdings and delivered to the Trustee for authentication
and the Trustee shall thereupon authenticate and deliver such Debentures to or
upon the written order of Holdings, signed by any of the aforementioned
officers, without any further action by Holdings upon exercise of the
overallotment option set forth in the Underwriting Agreement, other than
delivery of evidence of exercise.
ARTICLE 7
Miscellaneous
Section 7.1. Except as otherwise expressly provided in this
Second Supplemental Indenture or in the form of Junior Subordinated Debenture
or otherwise clearly required by the context hereof or thereof, all terms used
herein or in said form of Junior Subordinated Debenture that are defined in the
Indenture shall have the several meanings respectively assigned to them
thereby.
Section 7.2. The Indenture, as supplemented by this Second
Supplemental Indenture, is in all respects ratified and confirmed, and this
Second Supplemental Indenture shall be deemed part of the Indenture in the
manner and to the extent herein and therein provided.
Section 7.3. The recitals herein contained are made by
Holdings and not by the Trustee, and the Trustee assumes no responsibility for
the correctness thereof. The Trustee makes no representation as to the
validity or sufficiency of this Second Supplemental Indenture.
Section 7.4. This Second Supplemental Indenture may be
executed in any number of counterparts each of which shall be an original; but
such counterparts shall together constitute but one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this Second
Supplemental Indenture to be duly executed, and their respective corporate
seals to be hereunto affixed and attested, on the date or dates indicated in
the acknowledgments and as of the day and year first above written.
RJR NABISCO HOLDINGS CORP.
By_______________________________
Name:
Title:
Attest:
_______________________
Name:
Title:
THE BANK OF NEW YORK, as Trustee
By_______________________________
Name:
Title:
STATE OF NEW YORK )
) ss.:
COUNTY OF NEW YORK ) September 16, 1998
On the 16th day of September, in the year one thousand nine
hundred ninety-eight, before me personally came ________________ to me known,
who, being by me duly sworn, did depose and say that he resides at
____________________ ___________________________________; that he is
____________ ______________________ of RJR NABISCO HOLDINGS CORP., one of the
corporations described in and which executed the above instrument; that he
knows the corporate seal of said corporation; that the seal affixed to the
said instrument is such corporation seal; that it was so affixed by authority
of the Board of Directors of said corporation, and that he signed his name
thereto by like authority.
_____________________________
NOTARY PUBLIC
My Commission Expires