Exhibit 4.2
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RJR NABISCO HOLDINGS CORP.
AND
THE BANK OF NEW YORK
as Trustee
-------------------
FIRST SUPPLEMENTAL INDENTURE
Dated as of ________, 1995
TO
INDENTURE
Dated as of ________, 1995
-------------------
____% Junior Subordinated Debentures
Due 2044
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FIRST SUPPLEMENTAL INDENTURE, dated as of the ____ day of ______,
1995 (the "First 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 the "Company"), and The
Bank of New York, a national banking association, as trustee (hereinafter
sometimes referred to as the "Trustee") under the Indenture dated as of
________, 1995 between the Company and the Trustee (the "Indenture"; all
terms used and not defined herein are used as defined in the Indenture),
WHEREAS, the Company 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 the Company 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, the Company
desires to provide for the establishment of a series of its junior
subordinated debentures ("Debentures") to be known as its ____% Junior
Subordinated Debentures Due 2044 (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 First Supplemental
Indenture; and
WHEREAS, the Company has caused to be formed RJR Nabisco Holdings
Capital Trust I (the "Trust") as a statutory business trust under the
Business Trust Act of the State of Delaware (12 Del. Code Sec. 3801 et seq.)
--- ---- -- ---
pursuant to a declaration of trust dated June 20, 1995 (the "Original
Declaration") and the filing of a certificate of trust with the Secretary of
State of the State of Delaware on June 20, 1995; and
WHEREAS, the Original Declaration is to be amended and restated in
its entirety pursuant to an Amended and Restated Declaration of Trust dated
as of ______, 1995 (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 has offered (the "Offer") to issue its ____%
Trust Originated Preferred Securities (the "Preferred Securities") to holders
of Series B Depositary Shares ("Depositary Shares") each representing 1/1000
of a
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share of the Series B Cumulative Preferred Stock ("Series B Preferred") of
the Company in exchange for such Depositary Shares; and
WHEREAS, in connection with such Offer and the purchase by the
Company of the Common Securities (as defined in the Declaration of Trust) of
the Trust, the Company will deposit, and the Trust will purchase,
respectively, 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 Trust in trust for the benefit of holders of the Preferred
Securities and the Common Securities; and
WHEREAS, upon the occurrence of a Special Event (as defined in the
Declaration of Trust) the Regular Trustees (as defined in the Declaration of
Trust) of the Trust shall, unless the Junior Subordinated Debentures are
redeemed as described herein, dissolve the Trust and cause to be distributed
to the holders of the Preferred Securities and Common Securities, on a Pro
Rata basis (determined as provided in the terms of the Preferred Securities
and Common Securities attached as Exhibits B and C to the Declaration of
Trust), Junior Subordinated Debentures and in connection with a Liquidation
Distribution (as defined in the Declaration of Trust) the Regular Trustees
may cause to be distributed to holders of Preferred Securities and Common
Securities, on such a Pro Rata basis, Junior Subordinated Debentures (each a
"Dissolution Event"); and
WHEREAS, the Company desires and has requested the Trustee to join
with it in the execution and delivery of this First Supplemental Indenture,
and all requirements necessary to make this First Supplemental Indenture a
valid instrument, in accordance with its terms, and to make the Junior
Subordinated Debentures, when executed by the Company and authenticated and
delivered by the Trustee, the valid obligations of the Company, 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, the Company covenants and agrees with the Trustee as
follows:
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ARTICLE ONE
General Terms and Conditions of
the Junior Subordinated Debentures
SECTION 1.01. There shall be and is hereby authorized a series of
Debentures designated the "___% Junior Subordinated Debentures Due 2044",
limited in aggregate principal amount to the sum of (i) $__________ plus (ii)
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 the Company of the Common Securities of the Trust, which
amount shall be as set forth in any written order of the Company for the
authentication and delivery of Junior Subordinated Debentures. 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 December 31, 2044, and shall
be issued in the form of registered Junior Subordinated Debentures without
coupons.
SECTION 1.02. The Junior Subordinated Debentures shall be issued
in certificated form. 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
the Company 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 the
Company 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.
SECTION 1.03. Each Junior Subordinated Debenture will bear
interest at the rate of ___% per annum from ______, 1995 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 March 31, June 30, September 30 and December 31 of each year
(each, an "Interest Payment Date", commencing on September 30, 1995), to the
person in whose name such Junior Subordinated Debenture or any predecessor
Junior
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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 next preceding that
Interest Payment Date. In addition, each Junior Subordinated Debenture will
bear interest at the rate of 9 1/4% per annum from June 1, 1995 through
______, 1995 ("Pre-issuance Interest"), payable on September 30, 1995, to the
person in whose name such Junior Subordinated Debenture is registered at the
close of business on the regular record date for such Interest Payment Date.
With the exception of the interest payment described in the immediately
preceding sentence, 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 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 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 next preceding such Interest
Payment Date), in each case with the same force and effect as if made on such
date.
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ARTICLE TWO
Optional Redemption
of the Junior Subordinated Debentures
SECTION 2.01. Except as provided in Section 2.02, Junior
Subordinated Debentures may not be redeemed by the Company prior to August
19, 1998. Subject to the terms of Article Three of the Indenture, the
Company shall have the right to redeem the Junior Subordinated Debentures, in
whole or in part, from time to time, on or after August 19, 1998, 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 2.02. If, at any time, a Tax Event (as defined below)
shall occur or be continuing and (i) the Regular Trustees and the Company
shall have received an opinion (a "Redemption Tax Opinion") of a nationally
recognized independent tax counsel experienced in such matters that, as a
result of a Tax Event, there is more than an insubstantial risk that the
Company would be precluded from deducting the interest on the Junior
Subordinated Debentures for United States federal income tax purposes even if
the Junior Subordinated Debentures were distributed to the holders of
Preferred Securities and Common Securities in liquidation of such holder's
interest in the Trust as set forth in the Declaration of Trust or (ii) the
Regular Trustees shall have been informed by such tax counsel that a No
Recognition Opinion (as defined below) cannot be delivered to the Trust, the
Company 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 the Company 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, the Company or the holders of the
Preferred Securities, the Company or the Regular Trustees on behalf of the
Trust will pursue such measure in lieu of redemption and provided further
that the Company shall have no right to redeem the Junior
6
Subordinated Debentures while the Regular Trustees on behalf of the Trust are
pursuing any such Ministerial Action.
"Tax Event" means that the Company 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 ______, 1995, 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 announced or
which interpretation or pronouncement is issued or announced or which action
is taken, in each case on or after ______, 1995, 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 the Company to the Trust on the Junior Subordinated
Debentures is not, or within 90 days of the date thereof will not be,
deductible by the Company for United States federal income tax purposes.
"No Recognition Opinion" means an opinion of a nationally
recognized independent tax counsel experienced in such matters, which opinion
may rely on any then applicable published revenue ruling of the Internal
Revenue Service, to the effect that the holders of the Preferred Securities
will not recognize any gain or loss for United States federal income tax
purposes as a result of a dissolution of the Trust and distribution of the
Junior Subordinated Debentures as provided in the Declaration of Trust.
SECTION 2.03. 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
7
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, the
Company shall not be permitted to effect such partial redemption and will
only redeem the Junior Subordinated Debentures in whole.
ARTICLE THREE
Extension of Interest Payment Period
SECTION 3.01. So long as the Company is not in default in the
payment of interest on the Junior Subordinated Debentures, the Company 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 (other than with respect to Pre-issuance
Interest) for up to 20 consecutive quarterly interest periods (the "Extended
Interest Payment Period"), at the end of which period the Company shall pay
all interest accrued and unpaid thereon (together with interest thereon at
the rate of ___% per annum to the extent permitted by applicable law,
compounded quarterly ("Compounded Interest")). During such Extended Interest
Payment Period the Company 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 the Company may pay accrued
dividends (and cash in lieu of fractional shares) upon mandatory conversion
of any of its preferred stock, including its Series C Conversion Preferred
Stock and ESOP Convertible Preferred Stock, in accordance with the terms of
such stock. Prior to the termination of any such Extended Interest Payment
Period, the Company 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 further extensions thereof shall not exceed 20 consecutive quarterly
interest periods. 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, the Company 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 the
Company shall pay all interest accrued
8
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 3.02. (a) So long as the Trust is the legal owner and
holder of record of the Junior Subordinated Debentures, at the time the
Company selects an Extended Interest Payment Period, the Company 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 date 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. The Company shall cause the Trust to
give notice of the Company'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 the Company selects an Extended Interest
Payment Period, the Company 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 the Company is required to
give notice of the record or payment date of such interest payment to the New
York Stock Exchange or other applicable self-regulatory organization or to
holders of the Junior Subordinated Debentures.
SECTION 3.03. 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 FOUR
Covenants Applicable to Junior Subordinated Debentures
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SECTION 4.01. So long as any Preferred Securities remain
outstanding, the Company 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) the Company 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) the Company shall have
given notice of its selection of an Extended Interest Payment Period and such
Period, or any extension thereof, is continuing; provided that the Company
will be permitted to pay accrued dividends (and cash in lieu of fractional
shares) upon the conversion of any of its preferred stock, including its
Series C Conversion Preferred Stock and ESOP Convertible Preferred Stock, in
accordance with the terms of such stock.
SECTION 4.02. In connection with the distribution of the Junior
Subordinated Debentures to the holders of the Preferred Securities upon a
Dissolution Event, the Company 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 4.03. The Company 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 IV thereof.
SECTION 4.04. Prior to the distribution of Junior Subordinated
Debentures to the holders of Preferred Securities upon a Dissolution Event,
the Company 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 FIVE
Form of Junior Subordinated Debentures
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SECTION 5.01. 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)
No. $
CUSIP NO. _________
RJR NABISCO HOLDINGS CORP.
___% JUNIOR SUBORDINATED DEBENTURE,
SERIES A, DUE 2044
RJR Nabisco Holdings Corp., a corporation duly organized and
existing under the laws of the State of Delaware (herein referred to as the
"Company", which term includes any successor corporation under the Indenture
hereinafter referred to), for value received, hereby promises to payto
------
, or registered assigns, the principal sum of _________ Dollars
-------------
on December 31, 2044, and to pay interest on said principal sum from ______,
1995 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 March
31, June 30, September 30 and December 31 of each year commencing September
30, 1995 at the rate of ___% 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. In addition,
the Company promises to pay to such holder or registered assigns interest at
the rate of 9 1/4% per annum from June 1, 1995 through ______, 1995 ("Pre-
issuance Interest"), payable on September 30, 1995. 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
11
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 (or one or more Predecessor Debentures,
as defined in said Indenture) 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 next preceding such Interest Payment Date.
With the exception of the Pre-Issuance Interest, 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 (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 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 premium, if any) and the interest on this
Debenture shall be payable at the office or agency of the Company 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 the Company 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 premium, if any) 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 Obligations, and this Debenture is issued
subject to the provisions of the Indenture with respect thereto.
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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 Obligations, 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, the Company has caused this Instrument to be
executed.
Dated
------------------
RJR NABISCO HOLDINGS CORP.
By
---------------------------
Attest:
By
--------------------
Secretary
(FORM OF CERTIFICATE OF AUTHENTICATION)
CERTIFICATE OF AUTHENTICATION
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This is one of the Debentures of the series of Debentures described
in the within-mentioned Indenture.
________________________________,
as Trustee
-------------------------
or as Authentication Agent
By
------------------------ -------------------------
Authorized Signatory Authorized Signatory
(FORM OF REVERSE OF DEBENTURE)
This Debenture is one of a duly authorized series of debentures of
the Company (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 ________, 1995 duly executed and delivered between the Company and The
Bank of New York, a national banking association, as Trustee (herein referred
to as the "Trustee"), as supplemented by the First Supplemental Indenture
dated as of ________, 1995 between the Company 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, the
Company 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 ___% Junior Subordinated Debentures due 2044 and is limited in
aggregate principal amount as specified in said First Supplemental Indenture.
Except as provided in the next paragraph, the Debentures may not be
redeemed by the Company prior to August 19, 1998. The Company shall have the
right to redeem this Debenture at the option of the Company, without premium
or penalty, in whole or in part at any time on or after August 19, 1998 (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
14
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.
If, at any time, a Tax Event (as defined below) shall occur or be
continuing after receipt of a Dissolution Tax Opinion (as defined below) and
(i) the Regular Trustees and the Company shall have received an opinion (a
"Redemption Tax Opinion") of a nationally recognized independent tax counsel
experienced in such matters that, as a result of a Tax Event, there is more
than an insubstantial risk that the Company would be precluded from deducting
the interest on the Junior Subordinated Debentures for United States federal
income tax purposes even if the Junior Subordinated Debentures were
distributed to the holders of Preferred Securities and Common Securities in
liquidation of such holder's interest in the Trust as set forth in the
Declaration of Trust or (ii) the Regular Trustees shall have been informed by
such tax counsel that a No Recognition Opinion (as defined below) cannot be
delivered to the Trust, the Company 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 the Company 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, the Company or the holders of the Preferred Securities, the
Company or the Regular Trustees on behalf of the Trust will pursue such
measure in lieu of redemption and provided further that the Company shall
have no right to redeem the Junior Subordinated Debentures while the Regular
Trustees on behalf of the Trust are pursuing any such Ministerial Action.
"Tax Event" means that the Company 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 ______, 1995, 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
15
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 announced or which interpretation or
pronouncement is issued or announced or which action is taken, in each case
on or after ______, 1995, 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 the
Company to the Trust on the Junior Subordinated Debentures is not, or within
90 days of the date thereof will not be, deductible by the Company for United
States federal income tax purposes.
"No Recognition Opinion" means an opinion of a nationally
recognized independent tax counsel experienced in such matters, which opinion
may rely on any then applicable published revenue ruling of the Internal
Revenue Service, to the effect that the holders of the Preferred Securities
will not recognize any gain or loss for United States federal income tax
purposes as a result of a dissolution of the Trust and distribution of the
Junior Subordinated Debentures as provided in the Declaration of Trust.
If the Debentures are only partially redeemed by the Company
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, the
Company 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
16
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 the Company with
certain conditions set forth therein.
The Indenture contains provisions permitting the Company 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 fixed 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, or reduce any premium payable upon
the redemption thereof, without the consent of the holder of each Debenture
so affected 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) then outstanding and 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
17
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.
Subject to Section 13.13 of the Indenture, no reference herein to
the Indenture (other than such Section) and no provision of this Debenture or
of the Indenture shall alter or impair the obligation of the Company, which
is absolute and unconditional, to pay the principal of and 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 the Company is not in default in the payment of interest
on the Debentures, the Company 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 (other than with respect to Pre-issuance Interest)
for up to 20 consecutive quarterly interest periods (the "Extended Interest
Payment Period"), at the end of which period the Company shall pay all
interest then accrued and unpaid (together with interest thereon at the rate
of ___% per annum compounded quarterly to the extent permitted by applicable
law ("Compounded Interest")). During such Extended Interest Payment Period
the Company 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 the Company may pay accrued dividends (and
cash in lieu of fractional shares) upon mandatory conversion of any of its
preferred stock, including its Series C Conversion Preferred Stock and ESOP
Convertible Preferred Stock, in accordance with the terms of such Stock.
Prior to the termination of any such Extended Interest Payment Period, the
Company 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
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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. 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, the Company
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 the Company 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 the Company, upon surrender of this
Debenture for registration of transfer at the office or agency of the Company
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 the
Company 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 the Company 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, the Company, 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 the Company nor the Trustee
nor any paying agent nor any Debenture Registrar shall be affected by any
notice to the contrary.
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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 the Company 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 thereto.
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 SIX
Original Issue of Junior Subordinated Debentures
SECTION 6.01. Junior Subordinated Debentures in the aggregate
principal amount equal to the sum of $__________ 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 the
Company of the Common Securities of the Trust, may, upon execution of this
First Supplemental Indenture, be executed by the Company and delivered to the
Trustee for authentication, and the trustee shall thereupon authenticate and
deliver said Debentures to or upon the written order of the Company, signed
by its Chairman, its President, or any Vice President and its Treasurer or an
Assistant Treasurer, without any further action by the Company.
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ARTICLE SEVEN
Miscellaneous Provisions
SECTION 7.01. Except as otherwise expressly provided in this First
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 7.02. The Indenture, as supplemented by this First
Supplemental Indenture, is in all respects ratified and confirmed, and this
First Supplemental Indenture shall be deemed part of the Indenture in the
manner and to the extent herein and therein provided.
SECTION 7.03. The recitals herein contained are made by the
Company 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 First Supplemental Indenture.
SECTION 7.04. This First 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.
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IN WITNESS WHEREOF, the parties hereto have caused this First
Supplemental Indenture to be duly executed, and their respective corporate
seals to be hereunto affixed and attested, 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:
Attest:
--------------------------
Assistant Secretary
22
STATE OF NEW YORK )
) ss.:
COUNTY OF New York ) _______, 1995
On the ______ day of ____, in the year one
thousand nine hundred ninety-five, 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
STATE OF NEW YORK )
) ss.:
COUNTY OF New York ) _______, 1995
On the ______ day of ____, in the year one
thousand nine hundred ninety-five, before me personally came
____________ to me known, who, being by me duly sworn, did
depose and say that he resides at ________________________
________________, that he is a __________________of The Bank
of New York, 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 said
instrument is such corporate seal; that it was so affixed by
authority of the Board of Directors of said corporation and
that he signed his name thereto by like authority.
------------------------
NOTARY PUBLIC
My Commission Expires
23