Exhibit (4)-7
ComEd Financing II
Form S-4 File No. 333-
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AMENDED AND RESTATED DECLARATION
OF TRUST
ComEd Financing II
Dated as of January 24, 1997
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TABLE OF CONTENTS
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ARTICLE I DEFINITIONS AND INTERPRETATION
SECTION 1.1 Definitions ................................................................................. 1
SECTION 1.2 Interpretation .............................................................................. 8
ARTICLE II TRUST INDENTURE ACT
SECTION 2.1 Trust Indenture Act; Application ............................................................ 8
SECTION 2.2 Lists of Holders of Securities .............................................................. 9
SECTION 2.3 Reports by the Property Trustee ............................................................. 9
SECTION 2.4 Periodic Reports to Property Trustee ........................................................ 9
SECTION 2.5 Evidence of Compliance with Conditions Precedent ............................................ 9
SECTION 2.6 Events of Default; Waiver ................................................................... 10
SECTION 2.7 Event of Default; Notice ................................................................... 11
ARTICLE III ORGANIZATION
SECTION 3.1 Name ....................................................................................... 12
SECTION 3.2 Office ..................................................................................... 12
SECTION 3.3 Purpose ................................................................................... 12
SECTION 3.4 Authority .................................................................................. 12
SECTION 3.5 Title to Property of the Trust ............................................................. 13
SECTION 3.6 Powers and Duties of the Administrative Trustees ........................................... 13
SECTION 3.7 Prohibition of Actions by the Trust and the Trustees ....................................... 16
SECTION 3.8 Powers and Duties of the Property Trustee .................................................. 17
SECTION 3.9 Certain Duties and Responsibilities of the Property Trustee ................................ 19
SECTION 3.10 Certain Rights of Property Trustee ......................................................... 20
SECTION 3.11 Delaware Trustee ........................................................................... 22
SECTION 3.12 Execution of Documents ..................................................................... 22
SECTION 3.13 Not Responsible for Recitals or Issuance of Securities ..................................... 23
SECTION 3.14 Duration of Trust .......................................................................... 23
SECTION 3.15 Mergers .................................................................................... 23
ARTICLE IV SPONSOR
SECTION 4.1 Sponsor's Purchase of Common Securities .................................................... 24
SECTION 4.2 Responsibilities of the Sponsor ............................................................ 25
SECTION 4.3 Right to Proceed ........................................................................... 25
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ARTICLE V TRUSTEES
SECTION 5.1 Number of Trustees: Appointment of Co-Trustee ............................................................... 25
SECTION 5.2 Delaware Trustee ............................................................................................ 26
SECTION 5.3 Property Trustee; Eligibility ............................................................................... 26
SECTION 5.4 Certain Qualifications of Administrative Trustees and Delaware Trustee Generally ............................ 27
SECTION 5.5 Administrative Trustees ..................................................................................... 27
SECTION 5.6 Delaware Trustee ............................................................................................ 28
SECTION 5.7 Appointment, Removal and Resignation of Trustees ............................................................ 28
SECTION 5.8 Vacancies Among Trustees .................................................................................... 30
SECTION 5.9 Effect of Vacancies ......................................................................................... 30
SECTION 5.10 Meetings ................................................................................................ 30
SECTION 5.11 Delegation of Power ..................................................................................... 30
SECTION 5.12 Merger, Conversion, Consolidation or Succession to Business ............................................. 31
ARTICLE VI DISTRIBUTIONS
SECTION 6.1 Distributions ............................................................................................... 31
ARTICLE VII ISSUANCE OF SECURITIES
SECTION 7.1 General Provisions Regarding Securities ..................................................................... 31
SECTION 7.2 Execution and Authentication ................................................................................ 32
SECTION 7.3 Form and Dating ............................................................................................. 33
SECTION 7.4 Registrar, Paying Agent and Exchange Agent .................................................................. 34
SECTION 7.5 Paying Agent to Hold Money in Trust ......................................................................... 35
SECTION 7.6 Replacement Securities ...................................................................................... 35
SECTION 7.7 Outstanding Capital Securities .............................................................................. 35
SECTION 7.8 Capital Securities in Treasury .............................................................................. 35
SECTION 7.9 Temporary Securities ........................................................................................ 36
SECTION 7.10 Cancellation ............................................................................................ 36
ARTICLE VIII TERMINATION OF TRUST
SECTION 8.1 Termination of Trust ........................................................................................ 37
ARTICLE IX TRANSFER OF INTERESTS
SECTION 9.1 Transfer of Securities ...................................................................................... 38
SECTION 9.2 Transfer Procedures and Restrictions ........................................................................ 39
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SECTION 9.3 Deemed Security Holders ...................................................................................... 46
SECTION 9.4 Book Entry Interests ......................................................................................... 46
SECTION 9.5 Notices to Clearing Agency ................................................................................... 47
SECTION 9.6 Appointment of Successor Clearing Agency ..................................................................... 47
ARTICLE X LIMITATION OF LIABILITY OF
HOLDERS OF SECURITIES, TRUSTEES OR OTHERS
SECTION 10.1 Liability ................................................................................................. 47
SECTION 10.2 Exculpation ............................................................................................... 48
SECTION 10.3 Fiduciary Duty ............................................................................................ 48
SECTION 10.4 Indemnification ........................................................................................... 49
SECTION 10.5 Outside Businesses ........................................................................................ 52
ARTICLE XI ACCOUNTING
SECTION 11.1 Fiscal Year ............................................................................................... 52
SECTION 11.2 Certain Accounting Matters ................................................................................ 52
SECTION 11.3 Banking ................................................................................................... 53
SECTION 11.4 Withholding ............................................................................................... 53
ARTICLE XII AMENDMENTS AND MEETINGS
SECTION 12.1 Amendments ................................................................................................ 53
SECTION 12.2 Meetings of the Holders; Action by Written Consent ........................................................ 55
ARTICLE XIII REPRESENTATIONS OF PROPERTY TRUSTEE
AND DELAWARE TRUSTEE
SECTION 13.1 Representations and Warranties of Property Trustee ........................................................ 56
ARTICLE XIV REGISTRATION RIGHTS
SECTION 14.1 Registration Rights Agreement ............................................................................. 58
ARTICLE XV MISCELLANEOUS
SECTION 15.1 Notices ................................................................................................... 58
SECTION 15.2 Governing Law ............................................................................................. 59
SECTION 15.3 Intention of the Parties .................................................................................. 59
SECTION 15.4 Headings .................................................................................................. 59
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SECTION 15.5 Successors and Assigns ..................................................................................... 59
SECTION 15.6 Partial Enforceability ..................................................................................... 59
SECTION 15.7 Counterparts ............................................................................................... 60
ANNEX I TERMS OF SECURITIES ...................................................................................... I-1
EXHIBIT A-1 FORM OF CAPITAL SECURITY CERTIFICATE ..................................................................... A1-1
EXHIBIT A-2 FORM OF COMMON SECURITY CERTIFICATE ...................................................................... A2-1
EXHIBIT B SPECIMEN OF DEBENTURE .................................................................................... B-1
EXHIBIT C PURCHASE AGREEMENT ....................................................................................... C-1
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AMENDED AND RESTATED DECLARATION OF TRUST
OF
ComEd Financing II
January 24, 1997
THIS AMENDED AND RESTATED DECLARATION OF TRUST ("Declaration") dated
and effective as of January 24, 1997, by the Trustees (as defined herein), the
Sponsor (as defined herein) and by the holders, from time to time, of undivided
beneficial interests in the Trust to be issued pursuant to this Declaration;
W I T N E S S E T H:
WHEREAS, the Trustees and the Sponsor established ComEd Financing II
(the "Trust"), a trust formed under the Business Trust Act (as defined herein)
pursuant to a Declaration of Trust dated as of November 19, 1996 (the "Original
Declaration"), and a Certificate of Trust filed with the Secretary of State of
the State of Delaware on November 20, 1996, for the sole purpose of issuing and
selling certain securities representing undivided beneficial interests in the
assets of the Trust and investing the proceeds thereof in certain Debentures of
the Debenture Issuer (each as hereinafter defined); and
WHEREAS, as of the date hereof, no interests in the Trust have been
issued; and
WHEREAS, all of the Trustees and the Sponsor, by this Declaration,
amend and restate each and every term and provision of the Original Declaration;
NOW, THEREFORE, it being the intention of the parties hereto to
continue the Trust as a business trust under the Business Trust Act and that
this Declaration constitute the governing instrument of such business trust, the
Trustees declare that all assets contributed to the Trust will be held in trust
for the benefit of the holders, from time to time, of the securities
representing undivided beneficial interests in the assets of the Trust issued
hereunder, subject to the provisions of this Declaration.
ARTICLE I
DEFINITIONS AND INTERPRETATION
SECTION 1.1 Definitions. Capitalized terms used in this Declaration
but not defined in the preamble above have the respective meanings assigned to
them in this Section 1.1. A term defined anywhere in this Declaration has the
same meaning throughout. A term defined in the Trust Indenture Act has the same
meaning when used in this Declaration unless otherwise defined in this
Declaration or unless the context otherwise requires. Unless the context
otherwise requires:
"Administrative Trustee" has the meaning set forth in Section 5.1.
"Affiliate" has the same meaning as given to that term in Rule 405 under
the Securities Act or any successor rule thereunder.
"Agent" means any Paying Agent, Registrar or Exchange Agent.
"Authorized Officer" of a Person means any other Person that is authorized
to legally bind such former Person.
"Book Entry Interest" means a beneficial interest in a Global Certificate
registered in the name of a Clearing Agency or its nominee, ownership and
transfers of which shall be maintained and made through book entries by a
Clearing Agency as described in Section 9.4.
"Business Day" means any day other than a Saturday or a Sunday or a day on
which banking institutions in Wilmington, Delaware or New York, New York are
authorized or required by law or executive order to close.
"Business Trust Act" means Chapter 38 of Title 12 of the Delaware Code, 12
Del. Code Section 3801 et seq.
"Capital Security Beneficial Owner" means, with respect to a Book Entry
Interest, a Person who is the beneficial owner of such Book Entry Interest, as
reflected on the books of the Clearing Agency, or on the books of a Person
maintaining an account with such Clearing Agency (directly as a Clearing Agency
Participant or as an indirect participant, in each case in accordance with the
rules of such Clearing Agency).
"Capital Securities" means, collectively, the Series A Capital Securities
and the Series B Capital Securities.
"Capital Securities Guarantee" means, collectively, the Series A Capital
Securities Guarantee and the Series B Capital Securities Guarantee.
"Clearing Agency" means an organization registered as a "Clearing Agency"
pursuant to Section 17A of the Exchange Act that is acting as depositary for the
Capital Securities and in whose name, or in the name of a nominee of that
organization, shall be registered a Global Certificate and which shall undertake
to effect book entry transfers and pledges of the Capital Securities.
"Clearing Agency Participant" means a broker, dealer, bank, other financial
institution or other Person for whom, from time to time, the Clearing Agency
effects book entry transfers and pledges of securities deposited with the
Clearing Agency.
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"Closing Time" means the "Closing Time" under the Purchase Agreement.
"Code" means the Internal Revenue Code of 1986.
"Commission" means the United States Securities and Exchange Commission as
from time to time constituted, or if any time after the execution of this
Declaration such Commission is not existing and performing the duties now
assigned to it under applicable Federal securities laws, then the body
performing such duties at such time.
"Common Securities" has the meaning specified in Section 7.1(a).
"Common Securities Guarantee" means the guarantee agreement dated as of
January 24, 1997 of the Sponsor in respect of the Common Securities.
"Company Indemnified Person" means (a) any Administrative Trustee; (b) any
Affiliate of any Administrative Trustee; (c) any officers, directors,
shareholders, members, partners, employees, representatives or agents of any
Administrative Trustee; or (d) any officer, employee or agent of the Trust or
its Affiliates.
"Corporate Trust Office" means the office of the Property Trustee at which
the corporate trust business of the Property Trustee shall, at any particular
time, be principally administered, which office at the date of execution of this
Agreement is located at Wilmington, Delaware.
"Covered Person" means: (a) any officer, director, shareholder, partner,
member, representative, employee or agent of (i) the Trust or (ii) the Trust's
Affiliates; and (b) any Holder of Securities.
"Debenture Issuer" means Commonwealth Edison Company, an Illinois
corporation, or any successor entity resulting from any consolidation,
amalgamation, merger or other business combination, in its capacity as issuer of
the Debentures under the Indenture.
"Debenture Trustee" means Wilmington Trust Company, not in its individual
capacity but solely as trustee under the Indenture until a successor is
appointed thereunder, and thereafter means such successor trustee.
"Debentures" means, collectively, the Series A Debentures and the Series B
Debentures.
"Default" means an event, act or condition that with notice or lapse of
time, or both, would constitute an Event of Default.
"Definitive Capital Securities" shall have the meaning set forth in Section
7.3(c).
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"Delaware Trustee" has the meaning set forth in Section 5.2.
"Direct Action" shall have the meaning set forth in Section 3.8(e).
"Distribution" means a distribution payable to Holders in accordance with
Section 6.1.
"DTC" means The Depository Trust Company, the initial Clearing Agency.
"Event of Default" in respect of the Securities means an Event of Default
(as defined in the Indenture) has occurred and is continuing in respect of the
Debentures.
"Exchange Act" means the Securities Exchange Act of 1934.
"Exchange Agent" has the meaning set forth in Section 7.4.
"Exchange Offer" means the offer that may be made pursuant to the
Registration Rights Agreement (i) by the Trust to exchange Series B Capital
Securities for Series A Capital Securities and (ii) by the Debenture Issuer to
exchange Series B Debentures for Series A Debentures and the Series B Capital
Securities Guarantee for the Series A Capital Securities Guarantee.
"Fiduciary Indemnified Person" has the meaning set forth in Section
10.4(b).
"Global Capital Security" has the meaning set forth in Section 7.3(a).
"Holder" means a Person in whose name a Security is registered, such Person
being a beneficial owner within the meaning of the Business Trust Act.
"Indemnified Person" means a Company Indemnified Person or a Fiduciary
Indemnified Person.
"Indenture" means the Indenture dated as of September 1, 1995, among the
Debenture Issuer and the Debenture Trustee, as amended from time to time.
"Investment Company" means an investment company as defined in the
Investment Company Act.
"Investment Company Act" means the Investment Company Act of 1940.
"Legal Action" has the meaning set forth in Section 3.6(g).
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"Majority in liquidation amount" means, with respect to the Trust
Securities, except as provided in the terms of the Capital Securities or by the
Trust Indenture Act, Holder(s) of outstanding Trust Securities voting together
as a single class or, as the context may require, Holders of outstanding Capital
Securities or Holders of outstanding Common Securities voting separately as a
class, who are the record owners of more than 50% of the aggregate liquidation
amount (including the stated amount that would be paid on redemption,
liquidation or otherwise, plus accrued and unpaid Distributions to the date upon
which the voting percentages are determined) of all outstanding Securities of
the relevant class.
"Ministerial Action" has the meaning set forth in Annex I hereto.
"Offering Memorandum" has the meaning set forth in Section 3.6(b).
"Officers' Certificate" means, with respect to any Person, a certificate
signed by any two of the Chairman, a Vice Chairman, the Chief Executive Officer,
the President, a Vice President, the Comptroller, the Treasurer, the Secretary,
an Assistant Treasurer or an Assistant Secretary of such Person. Any Officers'
Certificate delivered with respect to compliance with a condition or covenant
provided for in this Declaration shall include:
(a) a statement that each officer signing the Certificate has read the
covenant or condition and the definitions relating thereto;
(b) a brief statement of the nature and scope of the examination or
investigation undertaken by each officer in rendering the Certificate;
(c) a statement that each such officer has made such examination or
investigation as, in such officer's opinion, is necessary to enable such
officer to express an informed opinion as to whether or not such covenant
or condition has been complied with; and
(d) a statement as to whether, in the opinion of each such officer,
such condition or covenant has been complied with.
"Opinion of Counsel" shall mean a written opinion of counsel, who may be an
employee of the Sponsor, and who shall be reasonably acceptable to the Property
Trustee.
"Paying Agent" has the meaning specified in Section 7.4.
"Person" means a legal person, including any individual, corporation,
estate, partnership, joint venture, association, joint stock company, limited
liability company, trust, unincorporated association, or government or any
agency or political subdivision thereof, or any other entity of whatever nature.
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"Property Trustee" has the meaning set forth in Section 5.3(a).
"Property Trustee Account" has the meaning set forth in Section
3.8(c).
"Purchase Agreement" means the Purchase Agreement for the initial offering
and sale of Capital Securities in the form of Exhibit C.
"QIBs" shall mean qualified institutional buyers as defined in Rule 144A.
"Quorum" means a majority of the Administrative Trustees or, if there are
only two Administrative Trustees, both of them.
"Registrar" has the meaning set forth in Section 7.4.
"Registration Rights Agreement" means the Registration Rights Agreement
dated as of January 24, 1997, by and among the Trust, the Debenture Issuer and
the Initial Purchasers named therein, as amended from time to time.
"Registration Statement" has the meaning set forth in the Registration
Rights Agreement.
"Related Party" means, with respect to the Sponsor, any direct or indirect
wholly owned subsidiary of the Sponsor or any other Person that owns, directly
or indirectly, 100% of the outstanding voting securities of the Sponsor.
"Responsible Officer" means, with respect to the Property Trustee, the
chairman of the board of directors, the president, any vice-president, any
assistant vice-president, the secretary, any assistant secretary, the treasurer,
any assistant treasurer, any trust officer or assistant trust officer or other
officer of the Property Trustee customarily performing functions similar to
those performed by any of the above designated officers and also means, with
respect to a particular corporate trust matter, any other officer to whom such
matter is referred because of that officer's knowledge of and familiarity with
the particular subject.
"Restricted Definitive Capital Securities" has the meaning set forth in
Section 7.3(c).
"Restricted Capital Security" means a Capital Security required by Section
9.2 to contain a Restricted Securities Legend.
"Restricted Securities Legend" has the meaning set forth in Section 9.2.
"Rule 3a-5" means Rule 3a-5 under the Investment Company Act, or any
successor rule or regulation.
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"Rule 144" means Rule 144 under the Securities Act, as such rule may be
amended from time to time, or any similar rule or regulation hereafter adopted
by the Commission.
"Rule 144A" means Rule 144A under the Securities Act, as such rule may be
amended from time to time, or any similar rule or regulation hereafter adopted
by the Commission.
"Securities" or "Trust Securities" means the Common Securities and the
Capital Securities.
"Securities Act" means the Securities Act of 1933.
"Securities Guarantees" means the Common Securities Guarantee and the
Capital Securities Guarantee.
"Series A Capital Securities" has the meaning specified in Section 7.1(a).
"Series B Capital Securities" has the meaning specified in Section 7.1(a).
"Series A Capital Securities Guarantee" means the guarantee agreement dated
as of January 24, 1997, by the Sponsor in respect of the Series A Capital
Securities.
"Series B Capital Securities Guarantee" means the guarantee agreement to be
entered in connection with the Exchange Offer by the Sponsor in respect of the
Series B Capital Securities.
"Series A Debentures" means the Series A 8.50% Subordinated Deferrable
Interest Notes due January 15, 2027 of the Debenture Issuer issued pursuant to
the Indenture.
"Series B Debentures" means the Series B 8.50% Subordinated Deferrable
Interest Notes due January 15, 2027 of the Debenture Issuer issued pursuant to
the Indenture.
"Sponsor" means Commonwealth Edison Company, an Illinois corporation, or
any successor entity resulting from any merger, consolidation, amalgamation or
other business combination, in its capacity as sponsor of the Trust.
"Super Majority" has the meaning set forth in Section 2.6(a)(ii).
"10% in liquidation amount" means, with respect to the Trust Securities,
except as provided in the terms of the Capital Securities or by the Trust
Indenture Act, Holder(s) of outstanding Trust Securities voting together as a
single class or, as the context may require, Holders of outstanding Capital
Securities or Holders of outstanding Common Securities voting separately as a
class, who are the record owners of 10% or more of the aggregate
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liquidation amount (including the stated amount that would be paid on
redemption, liquidation or otherwise, plus accrued and unpaid
Distributions to the date upon which the voting percentages are determined)
of all outstanding Securities of the relevant class.
"Treasury Regulations" means the income tax regulations, including
temporary and proposed regulations, promulgated under the Code by the
United States Treasury, as such regulations may be amended from time to
time (including corresponding provisions of succeeding regulations).
"Trustee" or "Trustees" means each Person who has signed this
Declaration as a trustee, so long as such Person shall continue in office
in accordance with the terms hereof, and all other Persons who may from
time to time be duly appointed, qualified and serving as Trustees in
accordance with the provisions hereof, and references herein to a Trustee
or the Trustees shall refer to such Person or Persons solely in their
capacity as trustees hereunder.
"Trust Indenture Act" means the Trust Indenture Act of 1939.
"Unrestricted Global Capital Security" has the meaning set forth in
Section 9.2(b).
SECTION 1.2 Interpretation. Each definition in this Declaration
includes the singular and the plural, and references to the neuter gender
include the masculine and feminine where appropriate. Terms which relate to
accounting matters shall be interpreted in accordance with generally accepted
accounting principles in effect from time to time. References to any statute
mean such statute as amended from time to time and include any successor
legislation. The word "or" is not exclusive, and the words "herein," "hereof"
and "hereunder" refer to this Declaration as a whole. The headings to the
Articles and Sections are for convenience of reference and shall not affect the
meaning or interpretation of this Declaration. References to Articles,
Sections, Annexes and Schedules mean the Articles, Sections, Annexes and
Schedules of this Declaration. The Annexes, if any, and Schedules are hereby
incorporated by reference into and shall be deemed a part of this Declaration.
ARTICLE II
TRUST INDENTURE ACT
SECTION 2.1 Trust Indenture Act; Application. (a) This
Declaration is subject to the provisions of the Trust Indenture Act that are
required to be part of this Declaration and shall, to the extent applicable, be
governed by such provisions.
(a) The Property Trustee shall be the only Trustee which is a Trustee
for the purposes of the Trust Indenture Act.
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(b) If and to the extent that any provision of this Declaration
limits, qualifies or conflicts with the duties imposed by sections 310 to 317,
inclusive, of the Trust Indenture Act, such imposed duties shall control.
(c) The application of the Trust Indenture Act to this Declaration
shall not affect the nature of the Securities as equity securities representing
undivided beneficial interests in the assets of the Trust.
SECTION 2.2 Lists of Holders of Securities. (a) Each of the
Sponsor and the Administrative Trustees on behalf of the Trust shall provide the
Property Trustee, unless the Property Trustee is Registrar for the Securities
(i) within 14 days after each record date for payment of Distributions, a list,
in such form as the Property Trustee may reasonably require, of the names and
addresses of the Holders ("List of Holders") as of such record date, provided
that neither the Sponsor nor the Administrative Trustees on behalf of the Trust
shall be obligated to provide such List of Holders at any time the List of
Holders does not differ from the most recent List of Holders given to the
Property Trustee by the Sponsor and the Administrative Trustees on behalf of the
Trust, and (ii) at any other time, within 30 days of receipt by the Trust of a
written request for a List of Holders as of a date no more than 14 days before
such List of Holders is given to the Property Trustee. The Property Trustee
shall preserve, in as current a form as is reasonably practicable, all infor
mation contained in Lists of Holders given to it or which it receives in the
capacity as Paying Agent (if acting in such capacity), provided that the
Property Trustee may destroy any List of Holders previously given to it on
receipt of a new List of Holders.
(b) The Property Trustee shall comply with its obligations under
sections 311(a), 311(b) and 312(b) of the Trust Indenture Act.
SECTION 2.3 Reports by the Property Trustee. Within 60 days after
December 15 of each year, commencing December 15, 1997, the Property Trustee
shall provide to the Holders of the Capital Securities such reports as are
required by section 313 of the Trust Indenture Act, if any, in the form and in
the manner provided by section 313 of the Trust Indenture Act. The Property
Trustee shall also comply with the requirements of section 313(d) of the Trust
Indenture Act.
SECTION 2.4 Periodic Reports to Property Trustee. Each of the
Sponsor and the Administrative Trustees on behalf of the Trust shall provide to
the Property Trustee such documents, reports and information as are required by
section 314 (if any) and the compliance certificate required by section 314 of
the Trust Indenture Act in the form, in the manner and at the times required by
section 314(a)(4) of the Trust Indenture Act, such compliance certificate to be
delivered annually on or before 120 days after the end of each fiscal year of
the Sponsor.
SECTION 2.5 Evidence of Compliance with Conditions Precedent.
Each of the Sponsor and the Administrative Trustees on behalf of the Trust shall
provide to the Property Trustee such evidence of compliance with any conditions
precedent provided for in this Declaration that relate to any of the matters set
forth in section 314(c) of the Trust Indenture Act. Any certificate or
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opinion required to be given by an officer pursuant to section 314(c)(1) of the
Trust Indenture Act may be given in the form of an Officers' Certificate.
SECTION 2.6 Events of Default; Waiver. (a) The Holders of a
Majority in liquidation amount of Capital Securities may, by vote, on behalf of
the Holders of all of the Capital Securities, waive any past Event of Default in
respect of the Capital Securities and its consequences, provided that, if the
underlying Event of Default under the Indenture:
(i) is not waivable under the Indenture, the Event of Default under
the Declaration shall also not be waivable; or
(ii) requires the consent or vote of greater than a majority in
aggregate principal amount of the holders of the Debentures (a "Super
Majority") to be waived under the Indenture, the Event of Default under the
Declaration may only be waived by the vote of the Holders of at least the
proportion in aggregate liquidation amount of the Capital Securities that
the relevant Super Majority represents of the aggregate principal amount of
the Debentures outstanding.
The foregoing provisions of this Section 2.6(a) shall be in lieu of section
316(a)(1)(B) of the Trust Indenture Act and such section 316(a)(1)(B) of the
Trust Indenture Act is hereby expressly excluded from this Declaration and the
Securities, as permitted by the Trust Indenture Act. Upon such waiver, any such
default shall cease to exist, and any Event of Default with respect to the
Capital Securities arising therefrom shall be deemed to have been cured, for
every purpose of this Declaration, but no such waiver shall extend to any
subsequent or other default or an Event of Default with respect to the Capital
Securities or impair any right consequent thereon. Any waiver by the Holders of
the Capital Securities of an Event of Default with respect to the Capital
Securities shall also be deemed to constitute a waiver by the Holders of the
Common Securities of any such Event of Default with respect to the Common
Securities for all purposes of this Declaration without any further act, vote or
consent of the Holders of the Common Securities.
The Holders of a Majority in liquidation amount of the Capital
Securities shall have the right to direct the time, method and place of
conducting any proceeding for any remedy available to the Property Trustee or to
direct the exercise of any trust or power conferred upon the Property Trustee,
including the right to direct the Property Trustee to exercise the remedies
available to it as holder of the Debentures; provided, however, that (subject to
the provisions of Section 3.9) the Property Trustee shall have the right to
decline to follow any such direction if the Property Trustee shall determine
that the action so directed would be unjustly prejudicial to the Holders not
taking part in such direction or if the Property Trustee, being advised by
counsel, determines that the action or proceeding so directed may not lawfully
be taken or if the Property Trustee, in good faith, by its board of directors or
trustees, executive committee, or a trust committee of directors or trustees
and/or Responsible Officers, shall determine that the action or proceedings so
directed would involve the Property Trustee in personal liability.
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(b) The Holders of a Majority in liquidation amount of the Common
Securities may, by vote, on behalf of the Holders of all of the Common
Securities, waive any past Event of Default with respect to the Common
Securities and its consequences, provided that, if the underlying Event of
Default under the Indenture:
(i) is not waivable under the Indenture, except where the Holders of
the Common Securities are deemed to have waived such Event of Default under
the Declaration as provided below in this Section 2.6(b), the Event of
Default under the Declaration shall also not be waivable; or
(ii) requires the consent or vote of a Super Majority to be waived,
except where the Holders of the Common Securities are deemed to have waived
such Event of Default under the Declaration as provided below in this
Section 2.6(b), the Event of Default under the Declaration may only be
waived by the vote of the Holders of at least the proportion in aggregate
liquidation amount of the Common Securities that the relevant Super
Majority represents of the aggregate principal amount of the Debentures
outstanding;
provided further, each Holder of Common Securities will be deemed to have waived
any such Event of Default and all Events of Default with respect to the Common
Securities and its consequences if all Events of Default with respect to the
Capital Securities have been cured, waived or otherwise eliminated, and until
such Events of Default have been so cured, waived or otherwise eliminated, the
Property Trustee will be deemed to be acting solely on behalf of the Holders of
the Capital Securities and only the Holders of the Capital Securities will have
the right to direct the Property Trustee in accordance with the terms of the
Securities. The foregoing provisions of this Section 2.6(b) shall be in lieu of
sections 316(a)(1)(A) and 316(a)(1)(B) of the Trust Indenture Act and such
sections 316(a)(1)(A) and 316(a)(1)(B) of the Trust Indenture Act are hereby
expressly excluded from this Declaration and the Securities, as permitted by the
Trust Indenture Act. Subject to the foregoing provisions of this Section
2.6(b), upon such waiver, any such default shall cease to exist and any Event of
Default with respect to the Common Securities arising therefrom shall be deemed
to have been cured for every purpose of this Declaration, but no such waiver
shall extend to any subsequent or other default or Event of Default with respect
to the Common Securities or impair any right consequent thereon.
(c) A waiver of an Event of Default under the Indenture by the
Property Trustee, at the direction of the Holders of the Capital Securities,
constitutes a waiver of the corresponding Event of Default under this
Declaration. The foregoing provisions of this Section 2.6(c) shall be in lieu
of section 316(a)(1)(B) of the Trust Indenture Act and such section 316(a)(1)(B)
of the Trust Indenture Act is hereby expressly excluded from this Declaration
and the Securities, as permitted by the Trust Indenture Act.
SECTION 2.7 Event of Default; Notice. (a) The Property Trustee
shall, within 90 days after the occurrence of an Event of Default, transmit by
mail, first class postage prepaid, to the Holders notices of all defaults with
respect to the Securities actually known to a Responsible Officer
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of the Property Trustee, unless such defaults have been cured before the giving
of such notice (the term "defaults," for the purposes of this Section 2.7(a),
being hereby defined to be an Event of Default as defined in the Indenture, not
including any periods of grace provided for therein and irrespective of the
giving of any notice provided therein); provided that, except for a default in
the payment of principal of (or premium, if any) or interest on any of the
Debentures, the Property Trustee shall be protected in withholding such notice
if and so long as a Responsible Officer of the Property Trustee in good faith
determines that the withholding of such notice is in the interests of the
Holders.
(b) The Property Trustee shall not be deemed to have knowledge of any
default except:
(i) a default under Sections 6.01(a)(1) and 6.02(a)(2) of the
Indenture; or
(ii) any default as to which the Property Trustee shall have received
written notice or of which a Responsible Officer of the Property Trustee
charged with the administration of the Declaration shall have actual
knowledge.
(c) Within five Business Days after the occurrence of any Event of
Default actually known to the Property Trustee, the Property Trustee shall
transmit notice of such Event of Default to the holders of the Capital
Securities, the Administrative Trustees and the Sponsor, unless such Event of
Default shall have been cured or waived. The Sponsor and the Administrative
Trustees shall file annually with the Property Trustee a certification as to
whether or not they are in compliance with all the conditions and covenants
applicable to them under this Declaration.
ARTICLE III
ORGANIZATION
SECTION 3.1 Name. The Trust is named "ComEd Financing II" as such
name may be modified from time to time by the Administrative Trustees following
written notice to the Holders of Securities. The Trust's activities may be
conducted under the name of the Trust or any other name deemed advisable by the
Administrative Trustees.
SECTION 3.2 Office. The address of the principal office of the
Trust is c/o Commonwealth Edison Company, 10 South Dearborn Street, 37th floor,
Chicago, Illinois 60603. On ten Business Days written notice to the Holders of
Securities, the Administrative Trustees may designate another principal office.
SECTION 3.3 Purpose. The exclusive purposes and functions of the
Trust are (a) to issue and sell Securities, (b) use the proceeds from the sale
of the Securities to acquire the Debentures, and (c) except as otherwise
limited herein, to engage in only those other activities necessary, advisable or
incidental thereto. The Trust shall not borrow money, issue debt or reinvest
proceeds
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derived from investments, mortgage or pledge any of its assets, or otherwise
undertake (or permit to be undertaken) any activity that would cause the Trust
not to be classified for United States federal income tax purposes as a grantor
trust.
SECTION 3.4 Authority. Subject to the limitations provided in this
Declaration and to the specific duties of the Property Trustee, the
Administrative Trustees shall have exclusive and complete authority to carry out
the purposes of the Trust. An action taken by the Administrative Trustees in
accordance with their powers shall constitute the act of and serve to bind the
Trust, and an action taken by the Property Trustee on behalf of the Trust in
accordance with its powers shall constitute the act of and serve to bind the
Trust. In dealing with the Trustees acting on behalf of the Trust, no person
shall be required to inquire into the authority of the Trustees to bind the
Trust. Persons dealing with the Trust are entitled to rely conclusively on the
power and authority of the Trustees as set forth in this Declaration.
SECTION 3.5 Title to Property of the Trust. Except as provided in
Section 3.8 with respect to the Debentures and the Property Trustee Account or
as otherwise provided in this Declaration, legal title to all assets of the
Trust shall be vested in the Trust. The Holders shall not have legal title to
any part of the assets of the Trust, but shall have an undivided beneficial
interest in the assets of the Trust.
SECTION 3.6 Powers and Duties of the Administrative Trustees. The
Administrative Trustees shall have the exclusive power, duty and authority to
cause the Trust to engage in the following activities:
(a) to issue and sell the Securities in accordance with this
Declaration; provided, however, that except, in the case of (i) and (ii),
as contemplated in Section 7.1(a), (i) the Trust may issue no more than one
series of Capital Securities and no more than one series of Common
Securities, (ii) there shall be no interests in the Trust other than the
Securities, and (iii) the issuance of Securities shall be limited to a
simultaneous issuance of both Capital Securities and Common Securities at
the Closing Time,
(b) in connection with the issue and sale of the Capital Securities
and the consummation of the Exchange Offer, at the direction of the
Sponsor, to:
(i) prepare and execute, if necessary, an offering memorandum
(the "Offering Memorandum") in preliminary and final form prepared by
the Sponsor, in relation to the offering and sale of Series A Capital
Securities to qualified institutional buyers in reliance on Rule 144A
under the Securities Act and to institutional "accredited investors"
(as defined in Rule 501(a)(1), (2), (3) or (7) under the Securities
Act), and to execute and file with the Commission, at such time as
determined by the Sponsor, any Registration Statement, including any
amendments thereto, as contemplated by the Registration Rights
Agreement;
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(ii) execute and file any documents prepared by the Sponsor, or
take any acts as determined by the Sponsor to be necessary, in order
to qualify or register all or part of the Capital Securities in any
state in which the Sponsor has determined to qualify or register such
Capital Securities for sale;
(iii) at the direction of the Sponsor, execute and file an
application, prepared by the Sponsor, to the New York Stock Exchange
or any other national stock exchange or the Nasdaq Stock Market's
National Market for listing or quotation of the Capital Securities;
(iv) to execute and deliver letters, documents, or instruments
with DTC and other Clearing Agencies relating to the Capital
Securities;
(v) if required, execute and file with the Commission a
registration statement on Form 8-A, including any amendments thereto,
prepared by the Sponsor, relating to the registration of the Capital
Securities under Section 12(b) of the Exchange Act; and
(vi) execute and enter into the Purchase Agreement and the
Registration Rights Agreement providing for the sale of the Capital
Securities;
(c) to acquire the Series A Debentures with the proceeds of the sale
of the Series A Capital Securities and the Common Securities and to
exchange the Series A Debentures for a like principal amount of Series B
Debentures, pursuant to the Exchange Offer; provided, however, that the
Administrative Trustees shall cause legal title to the Debentures to be
held of record in the name of the Property Trustee for the benefit of the
Holders;
(d) to give the Sponsor and the Property Trustee prompt written
notice of the occurrence of a Tax Event;
(e) to establish a record date with respect to all actions to be
taken hereunder that require a record date be established, including and
with respect to, for the purposes of section 316(c) of the Trust Indenture
Act, Distributions, voting rights, redemptions and exchanges, and to issue
relevant notices to the Holders of Capital Securities and Holders of Common
Securities as to such actions and applicable record dates;
(f) to take all actions and perform such duties as may be required of
the Administrative Trustees pursuant to the terms of the Securities;
(g) to bring or defend, pay, collect, compromise, arbitrate, resort
to legal action or otherwise adjust claims or demands of or against the
Trust ("Legal Action"), unless pursuant to Section 3.8(e), the Property
Trustee has the exclusive power to bring such Legal Action;
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(h) to employ or otherwise engage employees and agents (who may be
designated as officers with titles) and managers, contractors, advisors and
consultants and pay reasonable compensation for such services;
(i) to cause the Trust to comply with the Trust's obligations under
the Trust Indenture Act;
(j) to give the certificate required by section 314(a)(4) of the
Trust Indenture Act to the Property Trustee, which certificate may be
executed by any Administrative Trustee;
(k) to incur expenses that are necessary or incidental to carry out
any of the purposes of the Trust;
(l) to act as, or appoint another Person to act as, Registrar and
Exchange Agent for the Securities or to appoint a Paying Agent for the
Securities as provided in Section 7.4 except for such time as such power to
appoint a Paying Agent is vested in the Property Trustee;
(m) to give prompt written notice to the Property Trustee and to
Holders of any notice received from the Debenture Issuer of its election to
defer payments of interest on the Debentures by extending the interest
payment period under the Indenture;
(n) to execute all documents or instruments, perform all duties and
powers, and do all things for and on behalf of the Trust in all matters
necessary or incidental to the foregoing;
(o) to take all action that may be necessary or appropriate for the
preservation and the continuation of the Trust's valid existence, rights,
franchises and privileges as a statutory business trust under the laws of
the State of Delaware and of each other jurisdiction in which such
existence is necessary to protect the limited liability of the Holders of
the Capital Securities or to enable the Trust to effect the purposes for
which the Trust was created;
(p) to take any action, not inconsistent with this Declaration or
with applicable law, that the Administrative Trustees determine in their
discretion to be necessary or desirable in carrying out the activities of
the Trust as set out in this Section 3.6, including, but not limited to:
(i) causing the Trust not to be deemed to be an Investment
Company required to be registered under the Investment Company Act;
(ii) causing the Trust to be classified for United States
federal income tax purposes as a grantor trust; and
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(iii) cooperating with the Debenture Issuer to ensure that the
Debentures will be treated as indebtedness of the Debenture Issuer for
United States federal income tax purposes;
(q) to take all action necessary to consummate the Exchange Offer or
otherwise cause the Capital Securities to be registered pursuant to an
effective Registration Statement in accordance with the provisions of the
Registration Rights Agreement; and
(r) to take all action necessary to cause all applicable tax returns
and tax information reports that are required to be filed with respect to
the Trust to be duly prepared and filed by the Administrative Trustees, on
behalf of the Trust.
The Administrative Trustees must exercise the powers set forth in this
Section 3.6 in a manner that is consistent with the purposes and functions of
the Trust set out in Section 3.3, and the Administrative Trustees shall not take
any action that is inconsistent with the purposes and functions of the Trust set
forth in Section 3.3.
Subject to this Section 3.6, the Administrative Trustees shall have
none of the powers or the authority of the Property Trustee set forth in Section
3.8.
Any expenses incurred by the Administrative Trustees pursuant to this
Section 3.6 shall be reimbursed by the Debenture Issuer.
SECTION 3.7 Prohibition of Actions by the Trust and the Trustees.
(a) The Trust shall not, and the Trustees (including the Property Trustee)
shall not, engage in any activity other than as required or authorized by this
Declaration. The Trust shall not:
(i) invest any proceeds received by the Trust from holding the
Debentures, but shall distribute all such proceeds to Holders pursuant
to the terms of this Declaration and of the Securities;
(ii) acquire any assets other than as expressly provided
herein;
(iii) possess Trust property for other than a Trust purpose;
(iv) make any loans or incur any indebtedness other than loans
represented by the Debentures;
(v) possess any power or otherwise act in such a way as to
vary the Trust assets or the terms of the Securities in any way
whatsoever;
(vi) issue any securities or other evidences of beneficial
ownership of, or beneficial interest in, the Trust other than the
Securities; or
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(vii) other than as provided in this Declaration or Annex I, (A)
direct the time, method and place of conducting any proceeding with respect
to any remedy available to the Debenture Trustee, or exercising any trust
or power conferred upon the Debenture Trustee with respect to the
Debentures, (B) waive any past default that is waivable under the
Indenture, (C) exercise any right to rescind or annul any declaration that
the principal of all the Debentures shall be due and payable, or (D)
consent to any amendment, modification or termination of the Indenture or
the Debentures where such consent shall be required unless the Trust shall
have received an opinion of a nationally recognized independent tax counsel
experienced in such matters to the effect that such modification will not
cause more than an insubstantial risk that for United States federal income
tax purposes the Trust will not be classified as a grantor trust.
SECTION 3.8 Powers and Duties of the Property Trustee. (a) The legal
title to the Debentures shall be owned by and held of record in the name of the
Property Trustee in trust for the benefit of the Holders. The right, title and
interest of the Property Trustee to the Debentures shall vest automatically in
each Person who may hereafter be appointed as Property Trustee in accordance
with Section 5.7. Such vesting and cessation of title shall be effective whether
or not conveyancing documents with regard to the Debentures have been executed
and delivered.
(b) The Property Trustee shall not transfer its right, title and
interest in the Debentures to the Administrative Trustees or to the
Delaware Trustee (if the Property Trustee does not also act as Delaware
Trustee).
(c) The Property Trustee shall:
(i) establish and maintain a segregated non-interest bearing
trust account (the "Property Trustee Account") in the name of and
under the exclusive control of the Property Trustee on behalf of the
Holders and, upon the receipt of payments of funds made in respect of
the Debentures held by the Property Trustee, deposit such funds into
the Property Trustee Account and make payments to the Holders of the
Capital Securities and Holders of the Common Securities from the
Property Trustee Account in accordance with Section 6.1. Funds in the
Property Trustee Account shall be held uninvested until disbursed in
accordance with this Declaration. The Property Trustee Account shall
be an account that is maintained with a banking institution the rating
on whose long-term unsecured indebtedness is at least equal to the
rating assigned to the Capital Securities by a "nationally recognized
statistical rating organization", as that term is defined for purposes
of Rule 436(g)(2) under the Securities Act;
(ii) engage in such ministerial activities as shall be
necessary or appropriate to effect the redemption of the Capital
Securities and the Common Securities to the extent the Debentures are
redeemed or mature; and
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(iii) upon written notice of distribution issued by the
Administrative Trustees in accordance with the terms of the
Securities, engage in such ministerial activities as shall be
necessary or appropriate to effect the distribution of the Debentures
to Holders of Securities upon the occurrence of certain events.
(d) The Property Trustee shall take all actions and perform such
duties as may be specifically required of the Property Trustee pursuant to
the terms of the Securities.
(e) Subject to Section 3.9(a), the Property Trustee shall take any
Legal Action which arises out of or in connection with an Event of Default
of which a Responsible Officer of the Property Trustee has actual knowledge
or the Property Trustee's duties and obligations under this Declaration or
the Trust Indenture Act and if such Property Trustee shall have failed to
take such Legal Action, the Holders of the Capital Securities may take such
Legal Action, to the same extent as if such Holders of Capital Securities
held an aggregate principal amount of Debentures equal to the aggregate
liquidation amount of such Capital Securities, without first proceeding
against the Property Trustee or the Trust; provided however, that if an
Event of Default has occurred and is continuing and such event is
attributable to the failure of the Debenture Issuer to pay the principal of
or premium, if any, or interest on the Debentures on the date such
principal, premium, if any, or interest is otherwise payable (or, in the
case of redemption, on the redemption date), then a Holder of Capital
Securities may directly institute a proceeding for enforcement of payment
to such Holder of the principal of or premium, if any, or interest on the
Debentures having a principal amount equal to the aggregate liquidation
amount of the Capital Securities of such Holder (a "Direct Action") on or
after the respective due date specified in the Debentures. In connection
with such Direct Action, the rights of the Holders of the Common Securities
will be subrogated to the rights of such Holder of Capital Securities to
the extent of any payment made by the Debenture Issuer to such Holder of
Capital Securities in such Direct Action. Except as provided in the
preceding sentences, the Holders of Capital Securities will not be able to
exercise directly any other remedy available to the holders of the
Debentures.
(f) The Property Trustee shall not resign as a Trustee unless either:
(i) the Trust has been completely liquidated and the proceeds of
the liquidation distributed to the Holders pursuant to the terms of
the Securities; or
(ii) a successor Property Trustee has been appointed and has
accepted that appointment in accordance with Section 5.7 (a "Successor
Property Trustee").
(g) The Property Trustee shall have the legal power to exercise all
of the rights, powers and privileges of a holder of Debentures under the
Indenture and, if an Event of Default actually known to a Responsible
Officer of the Property Trustee occurs and is continuing, the Property
Trustee shall, for the benefit of Holders, enforce its rights as holder of
the Debentures subject to the rights of the Holders pursuant to the terms
of such Securities.
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(h) The Property Trustee shall be authorized to undertake any actions
set forth in section 317(a) of the Trust Indenture Act.
(i) For such time as the Property Trustee is the Paying Agent, the
Property Trustee may authorize one or more Persons to act as additional
Paying Agents and to pay Distributions, redemption payments or liquidation
payments on behalf of the Trust with respect to all securities and any such
Paying Agent shall comply with section 317(b) of the Trust Indenture Act.
Any such additional Paying Agent may be removed by the Property Trustee at
any time the Property Trustee remains as Paying Agent and a successor
Paying Agent or additional Paying Agents may be (but are not required to
be) appointed at any time by the Property Trustee while the Property
Trustee is so acting as Paying Agent.
(j) Subject to this Section 3.8, the Property Trustee shall have none
of the duties, liabilities, powers or authority of the Administrative
Trustees set forth in Section 3.6.
The Property Trustee must exercise the powers set forth in this
Section 3.8 in a manner that is consistent with the purposes and functions of
the Trust set out in Section 3.3, and the Property Trustee shall not take any
action that is inconsistent with the purposes and functions of the Trust set out
in Section 3.3.
SECTION 3.9 Certain Duties and Responsibilities of the Property
Trustee. (a) The Property Trustee, before the occurrence of any Event of
Default and after the curing of all Events of Default that may have occurred,
shall undertake to perform only such duties as are specifically set forth in
this Declaration and in the Securities and no implied covenants shall be read
into this Declaration against the Property Trustee. In case an Event of Default
has occurred (that has not been cured or waived pursuant to Section 2.6) of
which a Responsible Officer of the Property Trustee has actual knowledge, the
Property Trustee shall exercise such of the rights and powers vested in it by
this Declaration, and use the same degree of care and skill in their exercise,
as a prudent person would exercise or use under the circumstances in the conduct
of his or her own affairs.
(b) No provision of this Declaration shall be construed to relieve
the Property Trustee from liability for its own negligent action, its own
negligent failure to act, or its own willful misconduct, except that:
(i) prior to the occurrence of an Event of Default and after the
curing or waiving of all such Events of Default that may have
occurred:
(A) the duties and obligations of the Property Trustee shall
be determined solely by the express provisions of this
Declaration and in the Securities and the Property Trustee shall
not be liable except for the performance of such duties and
obligations as are specifically set forth in this Declaration and
in the Securities, and no implied covenants or obligations shall
be read into this Declaration or the Securities against the
Property Trustee; and
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(B) in the absence of bad faith on the part of the
Property Trustee, the Property Trustee may conclusively rely, as
to the truth of the statements and the correctness of the
opinions expressed therein, upon any certificates or opinions
furnished to the Property Trustee and conforming to the
requirements of this Declaration; provided, however, that in the
case of any such certificates or opinions that by any provision
hereof are specifically required to be furnished to the Property
Trustee, the Property Trustee shall be under a duty to examine
the same to determine whether or not they conform to the
requirements of this Declaration;
(ii) the Property Trustee shall not be liable for any error of
judgment made in good faith by a Responsible Officer of the Property
Trustee, unless it shall be proved that the Property Trustee was
negligent in ascertaining the pertinent facts;
(iii) the Property Trustee shall not be liable with respect to
any action taken or omitted to be taken by it in good faith in
accordance with the direction of the Holders of not less than a
Majority in liquidation amount of the Capital Securities relating to
the time, method and place of conducting any proceeding for any remedy
available to the Property Trustee, or exercising any trust or power
conferred upon the Property Trustee under this Declaration;
(iv) no provision of this Declaration shall require the
Property Trustee to expend or risk its own funds or otherwise incur
personal financial liability in the performance of any of its duties
or in the exercise of any of its rights or powers, if it shall have
reasonable grounds for believing that the repayment of such funds or
liability is not reasonably assured to it under the terms of this
Declaration or indemnity reasonably satisfactory to the Property
Trustee against such risk or liability is not reasonably assured to
it;
(v) the Property Trustee's sole duty with respect to the
custody, safe keeping and physical preservation of the Debentures and
the Property Trustee Account shall be to deal with such property in a
similar manner as the Property Trustee deals with similar property for
its own account, subject to the protections and limitations on
liability afforded to the Property Trustee under this Declaration and
the Trust Indenture Act;
(vi) the Property Trustee shall have no duty or liability for
or with respect to the value, genuineness, existence or sufficiency of
the Debentures or the payment of any taxes or assessments levied
thereon or in connection therewith;
(vii) the Property Trustee shall not be liable for any interest
on any money received by it except as it may otherwise agree in
writing with the Sponsor. Money held by the Property Trustee need not
be segregated from other funds held by it except in relation to the
Property Trustee Account maintained by the Property Trustee pursuant
to Section 3.8(c)(i) and except to the extent otherwise required by
law; and
20
(viii) the Property Trustee shall not be responsible for
monitoring the compliance by the Administrative Trustees or the
Sponsor with their respective duties under this Declaration, nor
shall the Property Trustee be liable for any default or misconduct of
the Administrative Trustees or the Sponsor.
SECTION 3.10 Certain Rights of Property Trustee. (a) Subject to
the provisions of Section 3.9:
(i) the Property Trustee may conclusively rely and shall be
fully protected in acting or refraining from acting upon any
resolution, certificate, statement, instrument, opinion, report,
notice, request, direction, consent, order, bond, debenture, note,
other evidence of indebtedness or other paper or document believed by
it to be genuine and to have been signed, sent or presented by the
proper party or parties;
(ii) any direction or act of the Sponsor or the Administrative
Trustees contemplated by this Declaration may be sufficiently
evidenced by an Officers' Certificate;
(iii) whenever in the administration of this Declaration, the
Property Trustee shall deem it desirable that a matter be proved or
established before taking, suffering or omitting any action hereunder,
the Property Trustee (unless other evidence is herein specifically
prescribed) may, in the absence of bad faith on its part, request and
conclusively rely upon an Officers' Certificate which, upon receipt of
such request, shall be promptly delivered by the Sponsor or the
Administrative Trustees;
(iv) the Property Trustee shall have no duty to see to any
recording, filing or registration of any instrument (including any
financing or continuation statement or any filing under tax or
securities laws) or any rerecording, refiling or registration thereof;
(v) the Property Trustee may consult with counsel or other
experts of its selection and the advice or opinion of such counsel and
experts with respect to legal matters or advice within the scope of
such experts' area of expertise shall be full and complete
authorization and protection in respect of any action taken, suffered
or omitted by it hereunder in good faith and in accordance with such
advice or opinion; such counsel may be counsel to the Sponsor or any
of its Affiliates, and may include any of its employees; and the
Property Trustee shall have the right at any time to seek instructions
concerning the administration of this Declaration from any court of
competent jurisdiction;
(vi) the Property Trustee shall be under no obligation to
exercise any of the rights or powers vested in it by this Declaration
at the request or direction of any Holder, unless such Holder shall
have provided to the Property Trustee security and indemnity,
reasonably satisfactory to the Property Trustee, against the costs,
expenses (including reasonable attorneys' fees and expenses and the
expenses of the Property Trustee's agents, nominees or custodians) and
liabilities that might be incurred by it in complying with such
request or di-
21
rection, including such reasonable advances as may be requested by the
Property Trustee provided, that, nothing contained in this Section
3.10(a)(vi) shall be taken to relieve the Property Trustee, upon the
occurrence of an Event of Default, of its obligation to exercise the
rights and powers vested in it by this Declaration;
(vii) the Property Trustee shall not be bound to make any
investigation into the facts or matters stated in any resolution,
certificate, statement, instrument, opinion, report, notice, request,
direction, consent, order, bond, debenture, note, other evidence of
indebtedness or other paper or document, but the Property Trustee, in
its discretion, may make such further inquiry or investigation into
such facts or matters as it may see fit;
(viii) the Property Trustee may execute any of the trusts or
powers hereunder or perform any duties hereunder either directly or by
or through agents, custodians, nominees or attorneys and the Property
Trustee shall not be responsible for any misconduct or negligence on
the part of any agent or attorney appointed with due care by it
hereunder;
(ix) any action taken by the Property Trustee or its agents
hereunder shall bind the Trust and the Holders of the Securities, and
the signature of the Property Trustee or its agents alone shall be
sufficient and effective to perform any such action and no third party
shall be required to inquire as to the authority of the Property
Trustee to so act or as to its compliance with any of the terms and
provisions of this Declaration, both of which shall be conclusively
evidenced by the Property Trustee's or its agent's taking such action;
(x) whenever in the administration of this Declaration the
Property Trustee shall deem it desirable to receive instructions with
respect to enforcing any remedy or right or taking any other action
hereunder, the Property Trustee (i) may request instructions from the
Holders which instructions may only be given by the Holders of the
same proportion in liquidation amount of the Securities as would be
entitled to direct the Property Trustee under the terms of the
Securities in respect of such remedy, right or action, (ii) may
refrain from enforcing such remedy or right or taking such other
action until such instructions are received, and (iii) shall be
protected in conclusively relying on or acting in or accordance with
such instructions;
(xi) except as otherwise expressly provided by this
Declaration, the Property Trustee shall not be under any obligation to
take any action that is discretionary under the provisions of this
Declaration; and
(xii) the Property Trustee shall not be liable for any action
taken, suffered, or omitted to be taken by it in good faith, without
negligence, and reasonably believed by it to be authorized or within
the discretion or rights or powers conferred upon it by this
Declaration.
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(b) No provision of this Declaration shall be deemed to impose any
duty or obligation on the Property Trustee to perform any act or acts or
exercise any right, power, duty or obligation conferred or imposed on it,
in any jurisdiction in which it shall be illegal, or in which the Property
Trustee shall be unqualified or incompetent in accordance with applicable
law, to perform any such act or acts, or to exercise any such right, power,
duty or obligation. No permissive power or authority available to the
Property Trustee shall be construed to be a duty.
SECTION 3.11 Delaware Trustee. Notwithstanding any other provision of
this Declaration other than Section 5.2, the Delaware Trustee shall not be
entitled to exercise any powers, nor shall the Delaware Trustee have any of the
duties and responsibilities of the Administrative Trustees or the Property
Trustee described in this Declaration. Except as set forth in Section 5.2, the
Delaware Trustee shall be a Trustee for the sole and limited purpose of
fulfilling the requirements of section 3807 of the Business Trust Act.
SECTION 3.12 Execution of Documents. Unless otherwise determined by
the Administrative Trustees, and except as otherwise required by the Business
Trust Act or applicable law, each Administrative Trustee is authorized to
execute on behalf of the Trust any documents that the Administrative Trustees
have the power and authority to execute pursuant to Section 3.6; provided that,
the Registration Statement referred to in Section 3.6(b)(i), including any
amendments thereto, shall be signed by a majority of the Administrative
Trustees.
SECTION 3.13 Not Responsible for Recitals or Issuance of Securities.
The recitals contained in this Declaration and the Securities shall be taken as
the statements of the Sponsor, and the Trustees do not assume any responsibility
for their correctness. The Trustees make no representations as to the value or
condition of the property of the Trust or any part thereof. The Trustees make no
representations as to the validity or sufficiency of this Declaration or the
Securities.
SECTION 3.14 Duration of Trust. The Trust, unless terminated pursuant
to the provisions of Article VIII hereof, shall have existence up to December
31, 2030.
SECTION 3.15 Mergers. (a) The Trust may not merge with or into,
consolidate, amalgamate, or be replaced by, or convey, transfer or lease its
properties and assets substantially as an entirety to any Person, except as
described in Section 3.15(b) and (c).
(b) The Trust may, at the request of the Sponsor, with the consent of
the Administrative Trustees or, if there are more than two, a majority of
the Administrative Trustees and without the consent of the Holders, the
Delaware Trustee or the Property Trustee, merge with or into, consolidate,
amalgamate, or be replaced by, or convey, transfer or lease its properties
and assets as an entirety or substantially as an entirety to, a trust
organized as such under the laws of any State; provided that:
(i) such successor entity (the "Successor Entity") either:
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(A) expressly assumes all of the obligations of the Trust
under the Securities; or
(B) substitutes for the Securities other securities having
substantially the same terms as the Securities (the "Successor
Securities") so long as the Successor Securities rank the same as
the Securities rank with respect to Distributions and payments
upon liquidation, redemption and otherwise;
(ii) the Sponsor expressly appoints a trustee of the Successor
Entity that possesses the same powers and duties as the Property
Trustee as the Holder of the Debentures;
(iii) the Successor Securities are listed, or any Successor
Securities will be listed upon notification of issuance, on any
national securities exchange or with another organization on which
the Capital Securities are then listed or quoted;
(iv) such merger, consolidation, amalgamation, replacement,
conveyance, transfer or lease does not cause the Capital Securities
(including any Successor Securities) to be downgraded by any
nationally recognized statistical rating organization;
(v) such merger, consolidation, amalgamation, replacement,
conveyance, transfer or lease does not adversely affect the rights,
preferences and privileges of the Holders (including any Successor
Securities) in any material respect (other than with respect to any
dilution of such Holders' interests in the new entity);
(vi) such Successor Entity has a purpose substantially
identical to that of the Trust;
(vii) prior to such merger, consolidation, amalgamation,
replacement, conveyance, transfer or lease, the Sponsor has received
an opinion of an independent counsel to the Trust experienced in such
matters to the effect that:
(A) such merger, consolidation, amalgamation,
replacement, conveyance, transfer or lease does not adversely
affect the rights, preferences and privileges of the Holders
(including the holders of any Successor Securities) in any
material respect (other than with respect to any dilution of the
Holders' interest in the new entity); and
(B) following such merger, consolidation, amalgamation,
replacement, conveyance, transfer or lease, neither the Trust nor
the Successor Entity will be required to register as an
Investment Company; and
(viii) the Sponsor or any permitted successor or assignee owns
all of the common securities of such Successor Entity and guarantees
the obligations of such Successor Entity
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under the Successor Securities at least to the extent provided by the
Capital Securities Guarantee and the Common Securities Guarantee.
(c) Notwithstanding Section 3.15(b), the Trust shall not, except with
the consent of Holders of 100% in liquidation amount of the Securities,
consolidate, amalgamate, merge with or into, or be replaced by, or convey,
transfer or lease its properties and assets as an entirety or substantially
as an entirety to, any other entity or permit any other entity to
consolidate, amalgamate, merge with or into, or replace it if such
consolidation, amalgamation, merger, replacement, conveyance, transfer or
lease would cause the Trust or the Successor Entity not to be classified as
a grantor trust for United States federal income tax purposes.
ARTICLE IV
SPONSOR
SECTION 4.1 Sponsor's Purchase of Common Securities. At the Closing
Time, the Sponsor will purchase all of the Common Securities then issued by the
Trust, in an amount at least equal to 3% of the capital of the Trust, at the
same time as the Series A Capital Securities are issued and sold.
SECTION 4.2 Responsibilities of the Sponsor. In connection with the
issue and sale of the Capital Securities, the Sponsor shall have the exclusive
right and responsibility to engage in the following activities:
(a) to prepare the Offering Memorandum and to prepare for filing by
the Trust with the Commission any Registration Statement, including any
amendments thereto as contemplated by the Registration Rights Agreement;
(b) to determine the states in which to take appropriate action to
qualify or register for sale all or part of the Capital Securities and to
do any and all such acts, other than actions which must be taken by the
Trust, and advise the Trust of actions it must take, and prepare for
execution and filing any documents to be executed and filed by the Trust,
as the Sponsor deems necessary or advisable in order to comply with the
applicable laws of any such States;
(c) if deemed necessary or advisable by the Sponsor, to prepare for
filing by the Trust an application to the New York Stock Exchange or any
other national stock exchange or the Nasdaq Stock Market's National Market
for listing or quotation of the Capital Securities;
(d) if required, to prepare for filing by the Trust with the
Commission a registration statement on Form 8-A relating to the
registration of the Capital Securities under Section 12(b) of the Exchange
Act, including any amendments thereto; and
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(e) to negotiate the terms of the Purchase Agreement and the
Registration Rights Agreement providing for the sale of the Capital
Securities.
SECTION 4.3 Right to Proceed. The Sponsor acknowledges the rights of
the Holders of Capital Securities, in the event that a failure of the Trust to
pay Distributions on the Capital Securities is attributable to the failure of
the Debenture Issuer to pay interest or principal on the Debentures, to
institute a proceeding directly against the Debenture Issuer for enforcement of
its payment obligations on the Debentures.
ARTICLE V
TRUSTEES
SECTION 5.1 Number of Trustees: Appointment of Co-Trustee. The number
of Trustees initially shall be three (3), and:
(a) at any time before the issuance of any Securities, the Sponsor
may, by written instrument, increase or decrease the number of Trustees;
and
(b) after the issuance of any Securities, the number of Trustees may
be increased or decreased by vote of the Holders of a majority in
liquidation amount of the Common Securities voting as a class at a meeting
of the Holders of the Common Securities;
provided, however, that, the number of Trustees shall in no event be less than
two (2); provided further that (i) one Trustee, in the case of a natural person,
shall be a person who is a resident of the State of Delaware or, if not a
natural person, shall be an entity which has its principal place of business in
the State of Delaware (the "Delaware Trustee"); (ii) there shall be at least one
Trustee who is an employee or officer of, or is affiliated with the Sponsor (an
"Administrative Trustee"); and (iii) one Trustee shall be the Property Trustee
for so long as this Declaration is required to qualify as an indenture under the
Trust Indenture Act, and such Trustee may also serve as Delaware Trustee if it
meets the applicable requirements. Notwithstanding the above, unless an Event of
Default shall have occurred and be continuing, at any time or times, for the
purpose of meeting the legal requirements of the Trust Indenture Act or of any
jurisdiction in which any part of the Trust's property may at the time be
located, the Holders of a Majority in liquidation amount of the Common
Securities acting as a class at a meeting of the Holders of the Common
Securities, and the Administrative Trustees shall have power to appoint one or
more persons either to act as a co-trustee, jointly with the Property Trustee,
of all or any part of the Trust's property, or to act as separate trustee of any
such property, in either case with such powers as may be provided in the
instrument of appointment, and to vest in such person or persons in such
capacity any property, title, right or power deemed necessary or desirable,
subject to the provisions of this Declaration. In case an Event of Default has
occurred and is continuing, the Property Trustee alone shall have power to make
any such appointment of a co-trustee.
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SECTION 5.2 Delaware Trustee. If required by the Business Trust
Act, one Trustee (the "Delaware Trustee") shall be:
(a) a natural person who is a resident of the State of Delaware; or
(b) if not a natural person, an entity which has its principal place
of business in the State of Delaware, and otherwise meets the requirements
of applicable law,
provided that, if the Property Trustee has its principal place of business in
the State of Delaware and otherwise meets the requirements of applicable law,
then the Property Trustee shall also be the Delaware Trustee and Section 3.11
shall have no application.
SECTION 5.3 Property Trustee; Eligibility. (a) There shall at all
times be one Trustee (the "Property Trustee") which shall act as Property
Trustee which shall:
(i) not be an Affiliate of the Sponsor; and
(ii) be a corporation organized and doing business under the laws of
the United States of America or any state or territory thereof or of the
District of Columbia, or a cor poration or Person permitted by the
Commission to act as an institutional trustee under the Trust Indenture
Act, authorized under such laws to exercise corporate trust powers, having
a combined capital and surplus of at least fifty million U.S. dollars
($50,000,000), and subject to supervision or examination by federal, state,
territorial or District of Columbia authority. If such corporation
publishes reports of condition at least annually, pursuant to law or to the
requirements of the supervising or examining authority referred to above,
then for the purposes of this Section 5.3(a)(ii), the combined capital and
surplus of such corpora tion shall be deemed to be its combined capital and
surplus as set forth in its most recent re port of condition so published.
(b) If at any time the Property Trustee shall cease to be eligible to
so act under Section 5.3(a), the Property Trustee shall immediately resign in
the manner and with the effect set forth in Section 5.7(c).
(c) If the Property Trustee has or shall acquire any "conflicting
interest" within the meaning of section 310(b) of the Trust Indenture Act, the
Property Trustee and the Holder of the Common Securities (as if it were the
obligor referred to in section 310(b) of the Trust Indenture Act) shall in all
respects comply with the provisions of section 310(b) of the Trust Indenture
Act.
(d) The Capital Securities Guarantee shall be deemed to be
specifically described in this Declaration for purposes of clause (i) of the
first provision contained in section 310(b) of the Trust Indenture Act.
(e) The initial Property Trustee shall be:
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Wilmington Trust Company
Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890
SECTION 5.4 Certain Qualifications of Administrative Trustees and
Delaware Trustee Generally. Each Administrative Trustee and the Delaware
Trustee (unless the Property Trustee also acts as Delaware Trustee) shall be
either a natural person who is at least 21 years of age or a legal entity that
shall act through one or more Authorized Officers.
SECTION 5.5 Administrative Trustees. The initial Administrative
Trustees shall be:
John C. Bukovski
10 South Dearborn Street -- 37th Floor
Chicago, Illinois 60603
Dennis F. O'Brien
10 South Dearborn Street -- 37th Floor
Chicago, Illinois 60603
(a) Except as expressly set forth in this Declaration and except if a
meeting of the Administrative Trustees is called with respect to any matter over
which the Administrative Trustees have power to act, any power of the
Administrative Trustees may be exercised by, or with the consent of, any one
such Administrative Trustee.
(b) Unless otherwise determined by the Administrative Trustees, and
except as otherwise required by the Business Trust Act or applicable law, any
Administrative Trustee is authorized to execute on behalf of the Trust any
documents which the Administrative Trustees have the power and authority to
cause the Trust to execute pursuant to Section 3.6, provided, that, the
Registration Statement referred to in Section 3.6, including any amendments
thereto, shall be signed by a majority of the Administrative Trustees.
(c) An Administrative Trustee may, by power of attorney consistent
with applicable law, delegate to any other natural person over the age of 21 his
or her power for the purposes of signing any documents which the Administrative
Trustees have power and authority to cause the Trust to execute pursuant to
Section 3.6.
SECTION 5.6 Delaware Trustee. The initial Delaware Trustee shall
be:
Wilmington Trust Company
Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890
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SECTION 5.7 Appointment, Removal and Resignation of Trustees. (a)
Subject to Section 5.7(b) of this Declaration and to Section 6(b) of Annex I
hereto, Trustees may be appointed or removed without cause at any time:
(i) until the issuance of any Securities, by written instrument
executed by the Sponsor;
(ii) unless an Event of Default shall have occurred and be continuing
after the issuance of any Securities, by vote of the Holders of a Majority
in liquidation amount of the Common Securities voting as a class at a
meeting of the Holders of the Common Securities; and
(iii) if an Event of Default shall have occurred and be continuing
after the issuance of the Securities, with respect to the Property Trustee
or the Delaware Trustee, by vote of the Holders of a Majority in
liquidation amount of the Capital Securities voting as a class at a meeting
of the Holders of the Capital Securities.
(b) (i) The Trustee that acts as Property Trustee shall not be
removed in accordance with Section 5.7(a) until a Successor Property Trustee has
been appointed and has accepted such appointment by written instrument executed
by such Successor Property Trustee and delivered to the Trust, the Sponsor and
the resigning Property Trustee; and
(ii) the Trustee that acts as Delaware Trustee shall not be removed in
accordance with Section 5.7(a) until a successor Trustee possessing the
qualifications to act as Delaware Trustee under Sections 5.2 and 5.4 (a
"Successor Delaware Trustee") has been appointed and has accepted such
appointment by written instrument executed by such Successor Delaware
Trustee and delivered to the Trust, the Sponsor and the resigning Delaware
Trustee.
(c) A Trustee appointed to office shall hold office until his
successor shall have been appointed or until his death, removal or resignation.
Any Trustee may resign from office (without need for prior or subsequent
accounting) by an instrument in writing signed by the Trustee and delivered to
the Sponsor and the Trust, which resignation shall take effect upon such
delivery or upon such later date as is specified therein; provided, however,
that:
(i) No such resignation of the Trustee that acts as the Property
Trustee shall be effective:
(A) until a Successor Property Trustee has been appointed and has
accepted such appointment by written instrument executed by such
Successor Property Trustee and delivered to the Trust, the Sponsor and
the resigning Property Trustee; or
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(B) until the assets of the Trust have been completely liquidated
and the proceeds thereof distributed to the holders of the Securities; and
(ii) no such resignation of the Trustee that acts as the Delaware
Trustee shall be effective until a Successor Delaware Trustee has been
appointed and has accepted such appointment by written instrument executed
by such Successor Delaware Trustee and delivered to the Trust, the Sponsor
and the resigning Delaware Trustee.
(d) The Holders of the Common Securities shall use their best efforts
to promptly appoint a Successor Delaware Trustee or Successor Property Trustee,
as the case may be, if the Property Trustee or the Delaware Trustee delivers an
instrument of resignation in accordance with this Section 5.7.
(e) If no Successor Property Trustee or Successor Delaware Trustee
shall have been appointed and accepted appointment as provided in this Section
5.7 within 60 days after delivery of an instrument of resignation or removal,
the Property Trustee or Delaware Trustee resigning or being removed, as
applicable, may petition any court of competent jurisdiction for appointment of
a Successor Property Trustee or Successor Delaware Trustee. Such court may
thereupon, after prescribing such notice, if any, as it may deem proper and
prescribe, appoint a Successor Property Trustee or Successor Delaware Trustee,
as the case may be.
(f) No Property Trustee or Delaware Trustee shall be liable for the
acts or omissions to act of any Successor Property Trustee or Successor Delaware
Trustee, as the case may be.
SECTION 5.8 Vacancies Among Trustees. If a Trustee ceases to hold
office for any reason and the number of Trustees is not reduced pursuant to
Section 5.1, or if the number of Trustees is increased pursuant to Section
5.1, a vacancy shall occur. A resolution certifying the existence of such
vacancy by the Administrative Trustees or, if there are more than two, a
majority of the Administrative Trustees, shall be conclusive evidence of the
existence of such vacancy. The vacancy shall be filled with a Trustee appointed
in accordance with Section 5.7.
SECTION 5.9 Effect of Vacancies. The death, resignation,
retirement, removal, bankruptcy, dissolution, liquidation, incompetence or
incapacity to perform the duties of a Trustee shall not operate to dissolve,
terminate or annul the Trust. Whenever a vacancy in the number of
Administrative Trustees shall occur, until such vacancy is filled by the
appointment of an Administrative Trustee in accordance with Section 5.7, the
Administrative Trustees in office, regardless of their number, shall have all
the powers granted to the Administrative Trustees and shall discharge all the
duties imposed upon the Administrative Trustees by this Declaration.
SECTION 5.10 Meetings. If there is more than one Administrative
Trustee, meetings of the Administrative Trustees shall be held from time to time
upon the call of any Administrative Trustee. Regular meetings of the
Administrative Trustees may be held at a time and
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place fixed by resolution of the Administrative Trustees. Notice of any in-
person meetings of the Administrative Trustees shall be hand delivered or
otherwise delivered in writing (including by facsimile, with a hard copy by
overnight courier) not less than 24 hours before such meeting. Notice of any
telephonic meetings of the Administrative Trustees or any committee thereof
shall be hand delivered or otherwise delivered in writing (including by
facsimile, with a hard copy by overnight courier) not less than 24 hours before
a meeting. Notices shall contain a brief statement of the time, place and
anticipated purposes of the meeting. The presence (whether in person or by
telephone) of an Administrative Trustee at a meeting shall constitute a waiver
of notice of such meeting except where an Administrative Trustee attends a
meeting for the express purpose of objecting to the transaction of any activity
on the ground that the meeting has not been lawfully called or convened. Unless
provided otherwise in this Declaration, any action of the Administrative
Trustees may be taken at a meeting by vote of a majority of the Administrative
Trustees present (whether in person or by telephone) and eligible to vote with
respect to such matter, provided that a Quorum is present, or without a meeting
by the unanimous written consent of the Administrative Trustees. In the event
there is only one Administrative Trustee, any and all action of such
Administrative Trustee shall be evidenced by a written consent of such
Administrative Trustee.
SECTION 5.11 Delegation of Power. (a) Any Administrative Trustee
may, by power of attorney consistent with applicable law, delegate to any other
natural person over the age of 21 his or her power for the purpose of executing
any documents contemplated in Section 3.6, including any Registration Statement
or amendment thereto filed with the Commission, or making any other governmental
filing.
(b) The Administrative Trustees shall have power to delegate from time
to time to such of their number or to officers of the Trust the doing of such
things and the execution of such instruments either in the name of the Trust or
the names of the Administrative Trustees or otherwise as the Administrative
Trustees may deem expedient, to the extent such delegation is not prohibited by
applicable law or contrary to the provisions of the Trust, as set forth herein.
SECTION 5.12 Merger, Conversion, Consolidation or Succession to
Business. Any corporation into which the Property Trustee or the Delaware
Trustee or any Administrative Trustee that is not a natural person, as the case
may be, may be merged or converted or with which it may be consolidated, or any
corporation resulting from any merger, conversion or consolidation to which the
Property Trustee or the Delaware Trustee, as the case may be, shall be a party,
or any corporation succeeding to all or substantially all the corporate trust
business of the Property Trustee or the Delaware Trustee, as the case may be,
shall be the successor of the Property Trustee or the Delaware Trustee, as the
case may be, hereunder, provided such corporation shall be otherwise qualified
and eligible under this Article, without the execution or filing of any paper or
any further act on the part of any of the parties hereto.
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ARTICLE VI
DISTRIBUTIONS
SECTION 6.1 Distributions. Holders shall receive Distributions in
accordance with the applicable terms of the relevant Holder's Securities. If
and to the extent that the Debenture Issuer makes a payment of interest
(including Compounded Interest (as defined in the Indenture) and Additional
Interest (as defined in the Indenture)), premium and/or principal on the
Debentures held by the Property Trustee (the amount of any such payment being a
"Payment Amount"), the Property Trustee shall and is directed, to the extent
funds are available for that purpose, to make a distribution (a "Distribution")
of the Payment Amount to Holders.
ARTICLE VII
ISSUANCE OF SECURITIES
SECTION 7.1 General Provisions Regarding Securities. (a) The
Administrative Trustees shall on behalf of the Trust issue one class of capital
securities representing undivided beneficial interests in the assets of the
Trust having such terms as are set forth in Annex I (the "Series A Capital
Securities") and one class of common securities representing undivided
beneficial interests in the assets of the Trust having such terms as are set
forth in Annex I (the "Common Securities"). The Administrative Trustees shall
on behalf of the Trust issue one class of capital securities representing
undivided beneficial interests in the Trust having such terms as are set forth
in Annex I (the "Series B Capital Securities") in exchange for Series A Capital
Securities accepted for exchange in the Exchange Offer, which Series B Capital
Securities shall not bear the legends required by Section 9.2(i) unless the
Holder of such Series A Capital Securities is either (A) a broker-dealer who
purchased such Series A Capital Securities directly from the Trust for resale
pursuant to Rule 144A or any other available exemption under the Securities Act,
(B) a Person participating in the distribution of the Series A Capital
Securities or (C) a Person who is an affiliate (as defined in Rule 144A) of the
Trust. The Trust shall issue no securities or other interests in the assets of
the Trust other than the Securities.
(b) The consideration received by the Trust for the issuance of the
Securities shall constitute a contribution to the capital of the Trust and shall
not constitute a loan to the Trust.
(c) Upon issuance of the Securities as provided in this Declaration,
the Securities so issued shall be deemed to be validly issued, fully paid and
non-assessable undivided beneficial interests in the assets of the Trust.
(d) Every Person, by virtue of having become a Holder or a Capital
Security Beneficial Owner in accordance with the terms of this Declaration,
shall be deemed to have expressly assented and agreed to the terms of, and
shall be bound by, this Declaration.
SECTION 7.2 Execution and Authentication. (a) The Securities
shall be signed on behalf of the Trust by an Administrative Trustee. In case
any Administrative Trustee of the Trust who shall have signed any of the
Securities shall cease to be such Administrative Trustee before the
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Securities so signed shall be delivered by the Trust, such Securities
nevertheless may be delivered as though the person who signed such Securities
had not ceased to be such Administrative Trustee; and any Securities may be
signed on behalf of the Trust by such persons who, at the actual date of
execution of such Security, shall be the Administrative Trustees of the Trust,
although at the date of the execution and delivery of the Declaration any such
person was not such an Administrative Trustee.
(b) One Administrative Trustee shall sign the Capital Securities for
the Trust by manual or facsimile signature. Unless otherwise determined by the
Trust, such signature shall, in the case of Common Securities, be a manual
signature.
A Capital Security shall not be valid until authenticated by the
manual signature of an authorized signatory of the Property Trustee. The
signature shall be conclusive evidence that the Capital Security has been
authenticated under this Declaration.
Upon a written order of the Trust signed by one Administrative
Trustee, the Property Trustee shall authenticate the Capital Securities for
original issue. The aggregate number of Capital Securities outstanding at any
time shall not exceed the number set forth in the terms in Annex I hereto except
as provided in Section 7.6.
The Property Trustee may appoint an authenticating agent acceptable to
the Trust to authenticate Capital Securities. An authenticating agent may
authenticate Capital Securities whenever the Property Trustee may do so. Each
reference in this Declaration to authentication by the Property Trustee includes
authentication by such agent. An authenticating agent has the same rights as
the Property Trustee to deal with the Sponsor or an Affiliate.
SECTION 7.3 Form and Dating. The Capital Securities and the
Property Trustee's certificate of authentication shall be substantially in the
form of Exhibit A-1 and the Common Securities shall be substantially in the form
of Exhibit A-2, each of which is hereby incorporated in and expressly made a
part of this Declaration. Certificates representing the Securities may be
printed, lithographed or engraved or may be produced in any other manner as is
reasonably acceptable to the Administrative Trustees, as evidenced by their
execution thereof. The Securities may have letters, CUSIP or other numbers,
notations or other marks of identification or designation and such legends or
endorsements required by law, stock exchange rule, agreements to which the Trust
is subject, if any, or usage (provided that any such notation, legend or
endorsement is in a form acceptable to the Trust). The Trust at the direction
of the Sponsor shall furnish any such legend not contained in Exhibit A-1 to the
Property Trustee in writing. Each Capital Security shall be dated the date of
its authentication. The terms and provisions of the Securities set forth in
Annex I and the forms of Securities set forth in Exhibits A-1 and A-2 are part
of the terms of this Declaration and to the extent applicable, the Property
Trustee and the Sponsor, by their execution and delivery of this Declaration,
expressly agree to such terms and provisions and to be bound thereby.
33
(a) Global Securities. Securities offered and sold to QIBs in
reliance on Rule 144A, as provided in the Purchase Agreement, shall be issued in
the form of one or more permanent global Securities in definitive, fully
registered form without distribution coupons with the global legend and
Restricted Securities Legend set forth in Exhibit A-1 hereto (a "Global Capital
Security"), which shall be deposited on behalf of the purchasers of the Capital
Securities represented thereby with the Property Trustee, at its Wilmington,
Delaware office, as custodian for the Clearing Agency, and registered in the
name of the Clearing Agency or a nominee of the Clearing Agency, duly executed
by the Trust and authenticated by the Property Trustee as hereinafter provided.
The number of Capital Securities represented by the Global Capital Security may
from time to time be increased or decreased by adjustments made on the records
of the Property Trustee and the Clearing Agency or its nominee as hereinafter
provided.
(b) Book-Entry Provisions. This Section 7.3(b) shall apply only to
the Global Capital Security and such other Capital Securities in global form as
may be authorized by the Trust to be deposited with or on behalf of the Clearing
Agency.
The Trust shall execute and the Property Trustee shall, in accordance
with this Section 7.3, authenticate and make available for delivery initially
one or more Global Capital Securities that (i) shall be registered in the name
of Cede & Co. or other nominee of such Clearing Agency and (ii) shall be
delivered by the Trustee to such Clearing Agency or pursuant to such Clearing
Agency's written instructions or held by the Property Trustee as custodian for
the Clearing Agency.
Members of, or participants in, the Clearing Agency ("Participants")
shall have no rights under this Declaration with respect to any Global Capital
Security held on their behalf by the Clearing Agency or by the Property Trustee
as the custodian of the Clearing Agency or under such Global Capital Security,
and the Clearing Agency may be treated by the Trust, the Property Trustee and
any agent of the Trust or the Property Trustee as the absolute owner of such
Global Capital Security for all purposes whatsoever. Notwithstanding the
foregoing, nothing herein shall prevent the Trust, the Property Trustee or any
agent of the Trust or the Property Trustee from giving effect to any written
certification, proxy or other authorization furnished by the Clearing Agency or
impair, as between the Clearing Agency and its Participants, the operation of
customary practices of such Clearing Agency governing the exercise of the rights
of a holder of a beneficial interest in any Global Capital Security.
(c) Definitive Capital Securities. Except as provided in Section 7.9,
owners of beneficial interests in a Global Capital Security will not be entitled
to receive physical delivery of certificated Capital Securities ("Definitive
Capital Securities"). Purchasers of Securities who are "accredited investors"
(as defined in Rule 501(a)(1), (2), (3) or (7) under the Securities Act) will
receive Capital Securities in the form of individual certificates in definitive,
fully registered form without distribution coupons and with the Restricted
Securities Legend set forth in Exhibit A-1 hereto ("Restricted Definitive
Capital Securities"); provided, however, that upon transfer of such Restricted
Definitive Capital Securities to a QIB, such Restricted Definitive Capital
Securities will,
34
unless the Global Capital Security has previously been exchanged, be exchanged
for an interest in a Global Capital Security pursuant to the provisions of
Section 9.2. Restricted Definitive Capital Securities will bear the Restricted
Securities Legend set forth on Exhibit A-1 unless removed in accordance with
this Section 7.3 or Section 9.2.
(d) Authorized Denominations. The Capital Securities are issuable
only in denominations of $1,000 and any integral multiple thereof.
SECTION 7.4 Registrar, Paying Agent and Exchange Agent. The Trust
shall maintain in the Borough of Manhattan, The City of New York, (i) an office
or agency where Capital Securities may be presented for registration of transfer
("Registrar"), (ii) an office or agency where Capital Securities may be
presented for payment ("Paying Agent") and (iii) an office or agency where
Securities may be presented for exchange ("Exchange Agent"). The Registrar
shall keep a register of the Capital Securities and of their transfer. The
Trust may appoint the Registrar, the Paying Agent and the Exchange Agent and may
appoint one or more co-registrars, one or more additional paying agents and
one or more additional exchange agents in such other locations as it shall
determine. The term "Registrar" includes any additional registrar, "Paying
Agent" includes any additional paying agent and the term "Exchange Agent"
includes any additional exchange agent. The Trust may change any Paying Agent,
Registrar, co-registrar or Exchange Agent without prior notice to any Holder.
The Paying Agent shall be permitted to resign as Paying Agent upon 30 days'
written notice to the Administrative Trustees. The Trust shall notify the
Property Trustee of the name and address of any Agent not a party to this
Declaration. If the Trust fails to appoint or maintain another entity as
Registrar, Paying Agent or Exchange Agent, the Property Trustee shall act as
such. The Trust or any of its Affiliates may act as Paying Agent, Registrar or
Exchange Agent. The Trust shall act as Paying Agent, Registrar, co-registrar
and Exchange Agent for the Common Securities.
The Trust initially appoints the Property Trustee as Registrar, Paying
Agent, and Exchange Agent for the Capital Securities.
SECTION 7.5 Paying Agent to Hold Money in Trust. The Trust shall
require each Paying Agent other than the Property Trustee to agree in writing
that the Paying Agent will hold in trust for the benefit of Holders or the
Property Trustee all money held by the Paying Agent for the payment of
liquidation amounts or Distributions on the Securities, and will notify the
Property Trustee if there are insufficient funds for such purpose. While any
such insufficiency continues, the Property Trustee may require a Paying Agent to
pay all money held by it to the Property Trustee. The Trust at any time may
require a Paying Agent to pay all money held by it to the Property Trustee and
to account for any money disbursed by it. Upon payment over to the Property
Trustee, the Paying Agent (if other than the Trust or an Affiliate of the Trust)
shall have no further liability for the money. If the Trust or the Sponsor or
an Affiliate of the Trust or the Sponsor acts as Paying Agent, it shall
segregate and hold in a separate trust fund for the benefit of the Holders all
money held by it as Paying Agent.
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SECTION 7.6 Replacement Securities. If a Holder claims that a
Security owned by it has been lost, destroyed or wrongfully taken or if such
Security is mutilated and is surrendered to the Trust or, in the case of the
Capital Securities, to the Property Trustee, the Trust shall issue and the
Property Trustee shall authenticate a replacement Security if the Property
Trustee's and the Trust's requirements, as the case may be, are met. An
indemnity bond must be provided by the Holder which, in the judgment of the
Property Trustee, is sufficient to protect the Trustees, the Sponsor or any
authenticating agent from any loss which any of them may suffer if a Security is
replaced. The Trust may charge such Holder for its expenses in replacing a
Security.
Every replacement Security is an additional beneficial interest in the
Trust.
SECTION 7.7 Outstanding Capital Securities. The Capital Securities
outstanding at any time are all the Capital Securities authenticated by the
Property Trustee except for those cancelled by it, those delivered to it for
cancellation, and those described in this Section as not outstanding.
If a Capital Security is replaced, paid or purchased pursuant to
Section 7.6 hereof, it ceases to be outstanding unless the Property Trustee
receives proof satisfactory to it that the replaced, paid or purchased Capital
Security is held by a bona fide purchaser.
If Capital Securities are considered paid in accordance with the terms
of this Declaration, they cease to be outstanding and Distributions on them
shall cease to accumulate.
A Capital Security does not cease to be outstanding because one of the
Trust, the Sponsor or an Affiliate of the Sponsor holds the Security.
SECTION 7.8 Capital Securities in Treasury. In determining whether
the Holders of the required amount of Securities have concurred in any
direction, waiver or consent, Capital Securities owned by the Trust, the Sponsor
or an Affiliate of the Sponsor, as the case may be, shall be disregarded and
deemed not to be outstanding, except that for the purposes of determining
whether the Property Trustee shall be fully protected in relying on any such
direction, waiver or consent, only Securities which the Property Trustee
actually knows are so owned shall be so disregarded.
SECTION 7.9 Temporary Securities. (a) Until Definitive Securities
are ready for delivery, the Trust may prepare and, in the case of the Capital
Securities, the Property Trustee shall authenticate temporary Securities.
Temporary Securities shall be substantially in the form of Definitive Securities
but may have variations that the Trust considers appropriate for temporary
Securities. Without unreasonable delay, the Trust shall prepare and, in the
case of the Capital Securities, the Property Trustee shall authenticate
Definitive Securities in exchange for temporary Securities.
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(b) A Global Capital Security deposited with the Clearing Agency or
with the Property Trustee as custodian for the Clearing Agency pursuant to
Section 7.3 shall be transferred to the beneficial owners thereof in the form of
certificated Capital Securities only if such transfer complies with Section 9.2
and (i) the Clearing Agency notifies the Company that it is unwilling or unable
to continue as Clearing Agency for such Global Capital Security or if at any
time such Clearing Agency ceases to be a "clearing agency" registered under the
Exchange Act and a clearing agency is not appointed by the Sponsor or the
Administrative Trustees within 90 days of such notice, (ii) a Default or an
Event of Default has occurred and is continuing or (iii) the Trust at its sole
discretion elects to cause the issuance of certificated Capital Securities.
(c) Any Global Capital Security that is transferable to the beneficial
owners thereof in the form of certificated Capital Securities pursuant to this
Section 7.9 shall be surrendered by the Clearing Agency to the Property Trustee
to be so transferred, in whole or from time to time in part, without charge, and
the Property Trustee shall authenticate and make available for delivery, upon
such transfer of each portion of such Global Capital Security, an equal
aggregate liquidation amount of Securities of authorized denominations in the
form of certificated Capital Securities. Any portion of a Global Capital
Security transferred pursuant to this Section shall be registered in such names
as the Clearing Agency shall direct. Any Capital Security in the form of
certificated Capital Securities delivered in exchange for an interest in the
Restricted Global Capital Security shall, except as otherwise provided by
Sections 7.3 and 9.1, bear the Restricted Securities Legend set forth in Exhibit
A-1 hereto.
(d) Subject to the provisions of Section 7.9(c), the Holder of a
Global Capital Security may grant proxies and otherwise authorize any person,
including Participants and persons that may hold interests through Participants,
to take any action which such Holder is entitled to take under this Declaration
or the Securities.
(e) In the event of the occurrence of any of the events specified in
Section 7.9(b), the Trust will promptly make available to the Property Trustee a
reasonable supply of certificated Capital Securities in fully registered form
without distribution coupons.
SECTION 7.10 Cancellation. The Trust at any time may deliver
Capital Securities to the Property Trustee for cancellation. The Registrar,
Paying Agent and Exchange Agent shall forward to the Property Trustee any
Capital Securities surrendered to them for registration of transfer, redemption,
exchange or payment. The Property Trustee shall promptly cancel all Capital
Securities, surrendered for registration of transfer, redemption, exchange,
payment, replacement or cancellation and shall dispose of cancelled Capital
Securities as the Trust directs, provided that the Property Trustee shall not be
obligated to destroy Capital Securities. The Trust may not issue new Capital
Securities to replace Capital Securities that it has paid or that have been
delivered to the Property Trustee for cancellation or that any holder has
exchanged.
SECTION 7.11 CUSIP Numbers. The Trust in issuing the Capital
Securities may use "CUSIP" numbers (if then generally in use), and, if so, the
Property Trustee shall use
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"CUSIP" numbers in notices of redemption as a convenience to Holders of Capital
Securities; provided that any such notice may state that no representation is
made as to the correctness of such numbers either as printed on the Capital
Securities or as contained in any notice of a redemption and that reliance may
be placed only on the other identification numbers printed on the Capital
Securities, and any such redemption shall not be affected by any defect in or
omission of such numbers. The Sponsor will promptly notify the Property Trustee
of any change in the CUSIP numbers.
ARTICLE VIII
TERMINATION OF TRUST
SECTION 8.1 Termination of Trust. (a) The Trust shall automatically
terminate:
(i) upon the bankruptcy of the Sponsor;
(ii) upon the filing of a certificate of dissolution or liquidation or its
equivalent with respect to the Sponsor; or the revocation of the Sponsor's
charter and the expiration of 90 days after the date of revocation without a
reinstatement thereof;
(iii) following the distribution of a Like Amount of the Debentures to the
Holders, provided that, the Property Trustee has received written notice from
the Sponsor directing the Property Trustee to terminate the Trust (which
direction is optional, and except as otherwise expressly provided below, within
the discretion of the Sponsor) and provided, further, that such direction and
such distribution is conditioned on (i) the receipt by the Sponsor or the Trust,
as the case requires, of any required regulatory approval, and (ii) the
Administrative Trustees' receipt of an opinion of an independent tax counsel
experienced in such matters (a "No Recognition Opinion"), which opinion may rely
on published rulings of the Internal Revenue Service, to the effect that the
Holders will not recognize any gain or loss for United States federal income tax
purposes as a result of the dissolution of the Trust and the distribution of
Debentures;
(iv) upon the entry of a decree of judicial dissolution of the Trust by a
court of competent jurisdiction;
(v) when all of the Securities shall have been called for redemption and
the amounts necessary for redemption thereof shall have been paid to the Holders
in accordance with the terms of the Securities;
(vi) upon the repayment of the Debentures or at such time as no Debentures
are outstanding; or
(vii) the expiration of the term of the Trust provided in Section 3.14.
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(b) As soon as is practicable after the occurrence of an event
referred to in Section 8.1(a), the Administrative Trustees shall file a
certificate of cancellation with the Secretary of State of the State of
Delaware.
(c) The provisions of Section 3.9 and Article X shall survive the
termination of the Trust.
ARTICLE IX
TRANSFER OF INTERESTS
SECTION 9.1 Transfer of Securities. (a) Securities may only be
transferred, in whole or in part, in accordance with the terms and conditions
set forth in this Declaration and in the terms of the Securities. Any transfer
or purported transfer of any Security not made in accordance with this
Declaration shall be null and void.
(b) Subject to this Article IX, Capital Securities may only be
transferred, in whole or in part, in accordance with the terms and conditions
set forth in this Declaration. Any transfer or purported transfer of any
security not made in accordance with this Declaration shall be null and void.
(c) The Sponsor may not transfer the Common Securities.
(d) The Administrative Trustees shall provide for the registration of
Capital Securities and of the transfer of Securities, which will be effected
without charge but only upon payment (with such indemnity as the Administrative
Trustees may require) in respect of any tax or other governmental charges that
may be imposed in relation to it. Upon surrender for registration of transfer
of any Capital Securities, the Administrative Trustees shall cause one or more
new Securities to be issued in the name of the designated transferee or
transferees. Every Capital Security surrendered for registration of transfer
shall be accompanied by a written instrument of transfer in form satisfactory to
the Administrative Trustees and the Registrar duly executed by the Holder or
such Holder's attorney duly authorized in writing. Each Capital Security
surrendered for registration of transfer shall be canceled by the Property
Trustee. A transferee of a Capital Security shall be entitled to the rights and
subject to the obligations of a Holder hereunder upon the receipt by such
transferee of a Capital Security. By acceptance of a Security, each transferee
shall be deemed to have agreed to be bound by this Declaration.
SECTION 9.2 Transfer Procedures and Restrictions (a) General.
Except as otherwise provided in Section 9.2(b), if Capital Securities are issued
upon the transfer, exchange or replacement of Capital Securities bearing the
Restricted Securities Legend set forth in Exhibit A-1 hereto, or if a request is
made to remove such Restricted Securities Legend on Capital Securities, the
Capital Securities so issued shall bear the Restricted Securities Legend, or the
Restricted Securities Legend shall not be removed, as the case may be, unless
there is delivered to the Trust and the
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Property Trustee such satisfactory evidence, which shall include an Opinion of
Counsel as may be reasonably required by the Sponsor and the Property Trustee,
that neither the legend nor the restrictions on transfer set forth therein are
required to ensure that transfers thereof are made pursuant to an exception from
the registration requirements of the Securities Act or, with respect to
Restricted Securities, that such Securities are not "restricted" within the
meaning of Rule 144. Upon provision of such satisfactory evidence, the Property
Trustee, at the written direction of the Trust, shall authenticate and deliver
Capital Securities that do not bear the legend.
(b) Transfers After Effectiveness of a Registration Statement. After
the effectiveness of a Registration Statement with respect to any Capital
Securities, all requirements pertaining to legends on such Capital Securities
will cease to apply, and beneficial interests in a Capital Security in global
form without legends will be available to transferees of such Capital
Securities, upon exchange of the transferring holder's Restricted Definitive
Capital Security or directions to transfer such Holder's beneficial interest
in the Global Capital Security. No such transfer or exchange of a Restricted
Definitive Capital Security or of an interest in the Global Capital Security
shall be effective unless the transferor delivers to the Trust a certificate in
a form substantially similar to that attached hereto as the "Form of Assignment"
in Exhibit A-1. Except as otherwise provided in Section 9.2(m), after the
effectiveness of a Registration Statement, the Trust shall issue and the
Property Trustee, upon a written order of the Trust signed by one Administrative
Trustee, shall authenticate a Capital Security in global form without the
Restricted Securities Legend (the "Unrestricted Global Capital Security") to
deposit with the Clearing Agency to evidence transfers of beneficial interests
from the (i) Global Capital Security and (ii) Restricted Definitive Capital
Securities.
(c) Transfer and Exchange of Definitive Capital Securities. When
Definitive Capital Securities are presented to the Registrar
(x) to register the transfer of such Definitive Capital Securities, or
(y) to exchange such Definitive Capital Securities for an equal number
of Definitive Capital Securities,
the Registrar or co-registrar shall register the transfer or make the exchange
as requested if its reasonable requirements for such transaction are met;
provided, however, that the Definitive Capital Securities surrendered for
transfer or exchange:
(i) shall be duly endorsed or accompanied by a written instrument of
transfer in form reasonably satisfactory to the Trust and the Registrar or
co-registrar, duly executed by the Holder thereof or his attorney duly
authorized in writing; and
(ii) in the case of Definitive Capital Securities that are Restricted
Definitive Capital Securities:
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(A) if such Restricted Capital Securities are being delivered to
the Registrar by a Holder for registration in the name of such Holder,
without transfer, a certification from such Holder to that effect; or
(B) if such Restricted Capital Securities are being transferred:
(i) a certification from the transferor in a form substantially similar to
that attached hereto as the "Form of Assignment" in Exhibit A-1, and (ii)
if the Trust or Registrar so requests, evidence reasonably satisfactory to
them as to the compliance with the restrictions set forth in the Restricted
Securities Legend.
(d) Restrictions on Transfer of a Definitive Capital Security for a
Beneficial Interest in a Global Capital Security. A Definitive Capital Security
may not be exchanged for a beneficial interest in a Global Capital Security
except upon satisfaction of the requirements set forth below. Upon receipt by
the Property Trustee of a Definitive Capital Security, duly endorsed or
accompanied by appropriate instruments of transfer, in form satisfactory to the
Property Trustee and the Administrative Trustees, together with:
(i) if such Definitive Capital Security is a Restricted Capital
Security, certification (in a form substantially similar to that attached
hereto as the "Form of Assignment" in Exhibit A-1); and
(ii) whether or not such Definitive Capital Security is a Restricted
Capital Security, written instructions directing the Property Trustee to
make, or to direct the Clearing Agency to make, an adjustment on its books
and records with respect to the appropriate Global Capital Security to
reflect an increase in the number of the Capital Securities represented by
such Global Capital Security,
then the Property Trustee shall cancel such Definitive Capital Security and
cause, or direct the Clearing Agency to cause, the aggregate number of Capital
Securities represented by the appropriate Global Capital Security to be
increased accordingly. If no Global Capital Securities are then outstanding,
the Trust shall issue and the Property Trustee shall authenticate, upon written
order of any Administrative Trustee, an appropriate number of Capital Securities
in global form.
(e) Transfer and Exchange of Global Capital Securities. Subject to
Section 9.2(f), the transfer and exchange of Global Capital Securities or
beneficial interests therein shall be effected through the Clearing Agency, in
accordance with this Declaration (including applicable restrictions on transfer
set forth herein, if any) and the procedures of the Clearing Agency therefor.
(f) Transfer of a Beneficial Interest in a Global Capital Security for
a Definitive Capital Security.
(i) Any Person having a beneficial interest in a Global Capital
Security may upon request, but only upon 20 days prior notice to the
Property Trustee, and if accompanied by
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the information specified below, exchange such beneficial interest for a
Definitive Capital Security representing the same number of Capital
Securities. Upon receipt by the Property Trustee from the Clearing Agency
or its nominee on behalf of any Person having a beneficial interest in a
Global Capital Security of written instructions or such other form of
instructions as is customary for the Clearing Agency or the Person
designated by the Clearing Agency as having such a beneficial interest in a
Restricted Capital Security and a certification from the transferor (in a
form substantially similar to that attached hereto as the "Form of
Assignment" in Exhibit A-1), which may be submitted by facsimile, then the
Property Trustee will cause the aggregate number of Capital Securities
represented by Global Capital Securities to be reduced on its books and
records and, following such reduction, the Trust will execute and the
Property Trustee will authenticate and make available for delivery to the
transferee a Definitive Capital Security.
(ii) Definitive Capital Securities issued in exchange for a beneficial
interest in a Global Capital Security pursuant to this Section 9.2(f) shall
be registered in such names and in such authorized denominations as the
Clearing Agency, pursuant to instructions from its Participants or indirect
participants or otherwise, shall instruct the Property Trustee in writing.
The Property Trustee shall deliver such Capital Securities to the persons
in whose names such Capital Securities are so registered in accordance with
such instructions of the Clearing Agency.
(g) Restrictions on Transfer and Exchange of Global Capital
Securities. Notwithstanding any other provisions of this Declaration (other than
the provisions set forth in subsection (h) of this Section 9.2), a Global
Capital Security may not be transferred as a whole except by the Clearing Agency
to a nominee of the Clearing Agency or another nominee of the Clearing Agency or
by the Clearing Agency or any such nominee to a successor Clearing Agency or a
nominee of such successor Clearing Agency.
(h) Authentication of Definitive Capital Securities. If at any time:
(i) there occurs a Default or an Event of Default which is continuing,
or
(ii) the Trust, in its sole discretion, notifies the Property Trustee
in writing that it elects to cause the issuance of Definitive Capital
Securities under this Declaration,
then the Trust will execute, and the Property Trustee, upon receipt of a written
order of the Trust signed by one Administrative Trustee requesting the
authentication and delivery of Definitive Capital Securities to the Persons
designated by the Trust, will authenticate and make available for delivery
Definitive Capital Securities, equal in number to the number of Capital
Securities represented by the Global Capital Securities, in exchange for such
Global Capital Securities.
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(i) Legend.
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(i) Except as permitted by the following paragraph (ii), each Capital
Security certificate evidencing the Global Capital Securities and the
Definitive Capital Securities (and all Capital Securities issued in exchange
therefor or substitution thereof) shall bear a legend (the "Restricted
Securities Legend") in substantially the following form:
THE CAPITAL SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") OR ANY STATE
SECURITIES LAWS OR ANY OTHER APPLICABLE SECURITIES LAW. NEITHER THIS
CAPITAL SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED,
SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF
IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT
FROM, OR NOT SUBJECT TO, REGISTRATION.
THE HOLDER OF THIS CAPITAL SECURITY BY ITS ACCEPTANCE HEREOF AGREES TO
OFFER, SELL OR OTHERWISE TRANSFER THIS CAPITAL SECURITY, PRIOR TO THE DATE
(THE "RESALE RESTRICTION TERMINATION DATE") WHICH IS THREE YEARS AFTER THE
LATER OF THE ORIGINAL ISSUANCE DATE HEREOF AND THE LAST DATE ON WHICH THE
COMPANY OR ANY "AFFILIATE" OF THE COMPANY WAS THE OWNER OF THIS CAPITAL
SECURITY (OR ANY PREDECESSOR OF THIS CAPITAL SECURITY) ONLY (A) TO THE
COMPANY, (B) PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BEEN DECLARED
EFFECTIVE UNDER THE SECURITIES ACT, (C) SO LONG AS THIS CAPITAL SECURITY IS
ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE SECURITIES ACT ("RULE
144A"), TO A PERSON IT REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL
BUYER" (AS DEFINED IN RULE 144A) THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR
THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT
THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (D) PURSUANT TO THE
EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT
(IF AVAILABLE), (E) PURSUANT TO OFFERS AND SALES TO NON-U.S. PERSONS THAT
OCCUR OUTSIDE THE UNITED
43
STATES WITHIN THE MEANING OF REGULATION S UNDER THE SECURITIES ACT, (F) TO
AN INSTITUTIONAL "ACCREDITED INVESTOR" WITHIN THE MEANING OF SUBPARAGRAPH
(A)(1), (2), (3) OR (7) OF RULE 501 UNDER THE SECURITIES ACT THAT IS
ACQUIRING THIS CAPITAL SECURITY FOR ITS OWN ACCOUNT, OR FOR THE ACCOUNT OF
SUCH AN INSTITUTIONAL ACCREDITED INVESTOR, FOR INVESTMENT PURPOSES AND NOT
WITH A VIEW TO, OR FOR OFFER OR SALE IN CONNECTION WITH, ANY DISTRIBUTION
IN VIOLATION OF THE SECURITIES ACT, OR (G) PURSUANT TO ANY OTHER AVAILABLE
EXEMPTION FROM THE REGISTRATION REQUIREMENTS UNDER THE SECURITIES ACT,
SUBJECT TO THE RIGHT OF THE TRUST AND THE COMPANY PRIOR TO ANY SUCH OFFER,
SALE OR TRANSFER (i) PURSUANT TO CLAUSE (D), (E), (F) OR (G) TO REQUIRE THE
DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATIONS AND/OR OTHER INFORMATION
REASONABLY SATISFACTORY TO EACH OF THEM, AND (ii) PURSUANT TO CLAUSE (F) TO
REQUIRE THAT THE TRANSFEROR DELIVER TO THE TRUST A LETTER FROM THE
TRANSFEREE SUBSTANTIALLY IN THE FORM OF ANNEX A TO THE OFFERING MEMORANDUM
DATED JANUARY 17, 1997. SUCH HOLDER FURTHER AGREES THAT IT WILL DELIVER
TO EACH PERSON TO WHOM THIS CAPITAL SECURITY IS TRANSFERRED A NOTICE
SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND.
(ii) Upon any sale or transfer of a Restricted Capital Security (including
any Restricted Capital Security represented by a Global Capital Security)
pursuant to an effective registration statement under the Securities Act or
pursuant to Rule 144 under the Securities Act after such registration statement
ceases to be effective:
(A) in the case of any Restricted Capital Security that is a
Definitive Capital Security, the Registrar shall permit the Holder thereof
to exchange such Restricted Capital Security for a Definitive Capital
Security that does not bear the Restricted Securities Legend and rescind
any restriction on the transfer of such Restricted Capital Security; and
(B) in the case of any Restricted Capital Security that is represented
by a Global Capital Security, the Registrar shall permit the Holder of such
Global Capital Security to exchange such Global Capital Security for
another Global Capital Security that does not bear the Restricted
Securities Legend.
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(j) Cancellation or Adjustment of Global Capital Security. At such
time as all beneficial interests in a Global Capital Security have either been
exchanged for Definitive Capital Securities to the extent permitted by this
Declaration or redeemed, repurchased or canceled in accordance with the terms of
this Declaration, such Global Capital Security shall be returned to the Property
Trustee for cancellation or retained and canceled by the Property Trustee. At
any time prior to such cancellation, if any beneficial interest in a Global
Capital Security is exchanged for Definitive Capital Securities, Capital
Securities represented by such Global Capital Security shall be reduced and an
adjustment shall be made on the books and records of the Property Trustee (if it
is then the custodian for such Global Capital Security) with respect to such
Global Capital Security, by the Property Trustee or the Securities Custodian, to
reflect such reduction.
(k) Obligations with Respect to Transfers and Exchanges of Capital
Securities.
(i) To permit registrations of transfers and exchanges, the Trust
shall execute and the Property Trustee shall authenticate Definitive
Capital Securities and Global Capital Securities at the Registrar's or co-
Registrar's request in accordance with the terms of this Declaration.
(ii) Registrations of transfers or exchanges will be effected without
charge, but only upon payment (with such indemnity as the Trust or the
Sponsor may require) in respect of any tax or other governmental charge
that may be imposed in relation to it.
(iii) The Registrar or co-Registrar shall not be required to register
the transfer of or exchange of (a) Capital Securities during a period
beginning at the opening of business 15 days before the day of mailing of a
notice of redemption or any notice of selection of Capital Securities for
redemption and ending at the close of business on the day of such mailing;
or (b) any Capital Security so selected for redemption in whole or in part,
except the unredeemed portion of any Capital Security being redeemed in
part.
(iv) Prior to the due presentation for registration of transfer of any
Capital Security, the Trust, the Property Trustee, the Paying Agent, the
Registrar or any co-Registrar may deem and treat the person in whose name a
Capital Security is registered as the absolute owner of such Capital
Security for the purpose of receiving Distributions on such Capital
Security and for all other purposes whatsoever, and none of the Trust, the
Property Trustee, the Paying Agent, the Registrar or any co-Registrar shall
be affected by notice to the contrary.
(v) All Capital Securities issued upon any transfer or exchange
pursuant to the terms of this Declaration shall evidence the same security
and shall be entitled to the same benefits under this Declaration as the
Capital Securities surrendered upon such transfer or exchange.
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(l) No Obligation of the Property Trustee.
(i) The Property Trustee shall have no responsibility or obligation to
any beneficial owner of a Global Capital Security, a Participant in the
Clearing Agency or other Person with respect to the accuracy of the records
of the Clearing Agency or its nominee or of any Participant thereof, with
respect to any ownership interest in the Capital Securities or with respect
to the delivery to any Participant, beneficial owner or other Person (other
than the Clearing Agency) of any notice (including any notice of
redemption) or the payment of any amount, under or with respect to such
Capital Securities. All notices and communications to be given to the
Holders and all payments to be made to Holders under the Capital Securities
shall be given or made only to or upon the order of the registered Holders
(which shall be the Clearing Agency or its nominee, in the case of a Global
Capital Security). The rights of beneficial owners in any Global Capital
Security shall be exercised only through the Clearing Agency subject to the
applicable rules and procedures of the Clearing Agency. The Property
Trustee may conclusively rely and shall be fully protected in relying upon
information furnished by the Clearing Agency or any agent thereof with
respect to its Participants and any beneficial owners.
(ii) The Property Trustee and Registrar shall have no obligation or
duty to monitor, determine or inquire as to compliance with any
restrictions on transfer imposed under this Declaration or under applicable
law with respect to any transfer of any interest in any Capital Security
(including any transfers between or among Clearing Agency Participants or
beneficial owners in any Global Capital Security) other than to require
delivery of such certificates and other documentation or evidence as are
expressly required by, and to do so if and when expressly required by, the
terms of this Declaration, and to examine the same to determine substantial
compliance as to form with the express requirements hereof.
(m) Exchange of Series A Capital Securities for Series B Capital
Securities. The Series A Capital Securities may be exchanged for Series B
Securities pursuant to the terms of the Exchange Offer. The Trustee shall make
the exchange as follows:
The Sponsor shall present the Property Trustee with an Officers'
Certificate certifying the following:
(A) upon issuance of the Series B Capital Securities, the transactions
contemplated by the Exchange Offer have been consummated; and
(B) the number of Series A Capital Securities properly tendered in the
Exchange Offer that are represented by a Global Capital Security
and the number of Series A Capital Securities properly tendered in
the Exchange Offer that are represented by Definitive Capital
Securities, the name of each Holder of such Definitive Capital
Securities, the liquidation amount of Capital Securities properly
tendered in the Ex-
46
change Offer by each such Holder and the name and address to which
Definitive Capital Securities for Series B Capital Securities shall be
registered and sent for each such Holder.
The Property Trustee, upon receipt of (i) such Officers' Certificate,
(ii) an Opinion of Counsel (x) to the effect that the Series B Capital
Securities have been registered under Section 5 of the Securities Act and
the Indenture has been qualified under the Trust Indenture Act and (y) with
respect to the matters set forth in Section 3(p) of the Registration Rights
Agreement and (iii) a Company Order, shall authenticate (A) a Global
Capital Security for Series B Capital Securities in an aggregate
liquidation amount equal to the aggregate liquidation amount of Series A
Capital Securities represented by a Global Capital Security indicated in
such Officers' Certificate as having been properly tendered and (B)
Definitive Capital Securities representing Series B Capital Securities
registered in the names, and in the liquidation amounts, indicated in such
Officers' Certificate.
If, upon consummation of the Exchange Offer, less than all the
outstanding Series A Capital Securities shall have been properly tendered
and not withdrawn, the Property Trustee shall make an endorsement on the
Global Capital Security for Series A Capital Securities indicating the
reduction in the number and aggregate liquidation amount represented
thereby as a result of the Exchange Offer.
The Trust shall deliver such Definitive Capital Securities for Series
B Capital Securities to the Holders thereof as indicated in such Officers'
Certificate.
(n) Minimum Transfers. Series A Capital Securities may only be
transferred in minimum blocks of $100,000 aggregate liquidation amount until
such Series A Capital Securities are registered pursuant to an effective
registration statement filed under the Securities Act.
SECTION 9.3 Deemed Security Holders. The Trustees may treat the
Person in whose name any Security shall be registered on the books and records
of the Trust as the sole owner of such Security for purposes of receiving
Distributions and for all other purposes whatsoever and, accordingly, shall
not be bound to recognize any equitable or other claim to or interest in such
Security on the part of any Person, whether or not the Trust shall have actual
or other notice thereof.
SECTION 9.4 Book Entry Interests. Global Capital Securities shall
initially be registered on the books and records of the Trust in the name of
Cede & Co., the nominee of the Clearing Agency, and no Capital Security
Beneficial Owner will receive a definitive Capital Security Certificate
representing such Capital Security Beneficial Owner's interests in such Global
Capital Securities, except as provided in Section 9.2 and Section 7.9. Unless
and until definitive, fully registered Capital Securities certificates have
been issued to the Capital Security Beneficial Owners pursuant to Section 9.2 or
Section 7.9:
(a) the provisions of this Section 9.4 shall be in full force and
effect;
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(b) the Trust and the Trustees shall be entitled to deal with the
Clearing Agency for all purposes of this Declaration (including the payment
of Distributions on the Global Capital Securities and receiving approvals,
votes or consents hereunder) as the Holder of the Capital Securities and
the sole holder of the Global Certificates and shall have no obligation to
the Capital Security Beneficial Owners;
(c) to the extent that the provisions of this Section 9.4 conflict
with any other provisions of this Declaration, the provisions of this
Section 9.4 shall control; and
(d) the rights of the Capital Security Beneficial Owners shall be
exercised only through the Clearing Agency and shall be limited to those
established by law and agreements between such Capital Security Beneficial
Owners and the Clearing Agency and/or the Clearing Agency Participants; and
the Clearing Agency shall make book entry transfers among the Clearing
Agency Participants and receive and transmit payments of Distributions on
the Global Certificates to such Clearing Agency Participants.
SECTION 9.5 Notices to Clearing Agency. Whenever a notice or other
communication to the Capital Security Holders is required under this
Declaration, the Trustees shall give all such notices and communications
specified herein to be given to the Holders of Global Capital Securities to the
Clearing Agency, and shall have no notice obligations to the Capital Security
Beneficial Owners.
SECTION 9.6 Appointment of Successor Clearing Agency. If any
Clearing Agency elects to discontinue its services as securities depositary with
respect to the Capital Securities, the Administrative Trustees may, in their
sole discretion, appoint a successor Clearing Agency with respect to such
Capital Securities.
ARTICLE X
LIMITATION OF LIABILITY OF
HOLDERS OF SECURITIES, TRUSTEES OR OTHERS
SECTION 10.1 Liability. (a) Except as expressly set forth in this
Declaration, the Securities Guarantees and the terms of the Securities, the
Sponsor shall not be:
(i) personally liable for the return of any portion of the capital
contributions (or any return thereon) of the Holders of the Securities
which shall be made solely from assets of the Trust; or
(ii) be required to pay to the Trust or to any Holder of Securities
any deficit upon dissolution of the Trust or otherwise.
48
(b) The Sponsor shall be liable for all of the debts and obligations
of the Trust (other than with respect to the Securities) to the extent not
satisfied out of the Trust's assets.
(c) Pursuant to section 3803(a) of the Business Trust Act, the Holders
of the Capital Securities shall be entitled to the same limitation of personal
liability extended to stockholders of private corporations for profit organized
under the General Corporation Law of the State of Delaware.
SECTION 10.2 Exculpation. (a) No Indemnified Person shall be
liable, responsible or accountable in damages or otherwise to the Trust or any
Covered Person for any loss, damage or claim incurred by reason of any act or
omission performed or omitted by such Indemnified Person in good faith on
behalf of the Trust and in a manner such Indemnified Person reasonably believed
to be within the scope of the authority conferred on such Indemnified Person by
this Declaration or by law, except that an Indemnified Person shall be liable
for any such loss, damage or claim incurred by reason of such Indemnified
Person's gross negligence or willful misconduct with respect to such acts or
omissions.
(b) An Indemnified Person shall be fully protected in relying in good
faith upon the records of the Trust and upon such information, opinions, reports
or statements presented to the Trust by any Person as to matters the Indemnified
Person reasonably believes are within such other Person's professional or expert
competence and who has been selected with reasonable care by or on behalf of the
Trust, including information, opinions, reports or statements as to the value
and amount of the assets, liabilities, profits, losses, or any other facts
pertinent to the existence and amount of assets from which Distributions to
Holders of Securities might properly be paid.
SECTION 10.3 Fiduciary Duty. (a) To the extent that, at law or in
equity, an Indemnified Person has duties (including fiduciary duties) and
liabilities relating thereto to the Trust or to any other Covered Person, an
Indemnified Person acting under this Declaration shall not be liable to the
Trust or to any other Covered Person for its good faith reliance on the
provisions of this Declaration. The provisions of this Declaration, to the
extent that they restrict the duties and liabilities of an Indemnified Person
otherwise existing at law or in equity (other than the duties imposed on the
Property Trustee under the Trust Indenture Act), are agreed by the parties
hereto to replace such other duties and liabilities of such Indemnified Person.
(b) Unless otherwise expressly provided herein:
(i) whenever a conflict of interest exists or arises between any
Covered Persons; or
(ii) whenever this Declaration or any other agreement contemplated
herein or therein provides that an Indemnified Person shall act in a manner
that is, or provides terms that are, fair and reasonable to the Trust or
any Holder of Securities,
49
the Indemnified Person shall resolve such conflict of interest, take such action
or provide such terms, considering in each case the relative interest of each
party (including its own interest) to such conflict, agreement, transaction or
situation and the benefits and burdens relating to such interests, any customary
or accepted industry practices, and any applicable generally accepted accounting
practices or principles. In the absence of bad faith by the Indemnified Person,
the resolution, action or term so made, taken or provided by the Indemnified
Person shall not constitute a breach of this Declaration or any other agreement
contemplated herein or of any duty or obligation of the Indemnified Person at
law or in equity or otherwise.
(c) Whenever in this Declaration an Indemnified Person is permitted or
required to make a decision:
(i) in its "discretion" or under a grant of similar authority, the
Indemnified Person shall be entitled to consider such interests and factors
as it desires, including its own interests, and shall have no duty or
obligation to give any consideration to any interest of or factors
affecting the Trust or any other Person; or
(ii) in its "good faith" or under another express standard, the
Indemnified Person shall act under such express standard and shall not be
subject to any other or different standard imposed by this Declaration or
by applicable law.
SECTION 10.4 Indemnification. (a) (i) The Debenture Issuer shall
indemnify, to the full extent permitted by law, any Company Indemnified Person
who was or is a party or is threatened to be made a party to any threatened,
pending or completed action, suit or proceeding, whether civil, criminal,
administrative or investigative (other than an action by or in the right of the
Trust) by reason of the fact that he or she is or was a Company Indemnified
Person against expenses (including attorneys' fees and expenses), judgments,
fines and amounts paid in settlement actually and reasonably incurred by him or
her in connection with such action, suit or proceeding if he or she acted in
good faith and in a manner he or she reasonably believed to be in or not opposed
to the best interests of the Trust, and, with respect to any criminal action or
proceeding, had no reasonable cause to believe his or her conduct was unlawful.
The termination of any action, suit or proceeding by judgment, order,
settlement, conviction, or upon a plea of nolo contendere or its equivalent,
shall not, of itself, create a presumption that the Company Indemnified Person
did not act in good faith and in a manner which he or she reasonably believed to
be in or not opposed to the best interests of the Trust, and, with respect to
any criminal action or proceeding, had reasonable cause to believe that his or
her conduct was unlawful.
(ii) The Debenture Issuer shall indemnify, to the full extent
permitted by law, any Company Indemnified Person who was or is a party or
is threatened to be made a party to any threatened, pending or completed
action or suit by or in the right of the Trust to procure a judgment in its
favor by reason of the fact that he or she is or was a Company Indemnified
Person against expenses (including attorneys' fees and expenses) actually
and reasonably incurred by him or her in connection with the defense or
settlement of such action or suit if he
50
or she acted in good faith and in a manner he or she reasonably believed to
be in or not opposed to the best interests of the Trust and except that no
such indemnification shall be made in respect of any claim, issue or matter
as to which such Company Indemnified Person shall have been adjudged to be
liable to the Trust unless and only to the extent that the Court of
Chancery of Delaware or the court in which such action or suit was brought
shall determine upon application that, despite the adjudication of
liability but in view of all the circumstances of the case, such person is
fairly and reasonably entitled to indemnity for such expenses which such
Court of Chancery or such other court shall deem proper.
(iii) To the extent that a Company Indemnified Person shall be
successful on the merits or otherwise (including dismissal of an action
without prejudice or the settlement of an action without admission of
liability) in defense of any action, suit or proceeding referred to in
paragraphs (i) and (ii) of this Section 10.4(a), or in defense of any
claim, issue or matter therein, he or she shall be indemnified, to the full
extent permitted by law, against expenses (including attorneys' fees)
actually and reasonably incurred by him or her in connection therewith.
(iv) Any indemnification under paragraphs (i) and (ii) of this
Section 10.4(a) (unless ordered by a court) shall be made by the Debenture
Issuer only as authorized in the specific case upon a determination that
indemnification of the Company Indemnified Person is proper in the
circumstances because he or she has met the applicable standard of conduct
set forth in paragraphs (i) and (ii). Such determination shall be made (1)
by the Administrative Trustees by a majority vote of a quorum consisting of
such Administrative Trustees who were not parties to such action, suit or
proceeding, (2) if such a quorum is not obtainable, or, even if obtainable,
if a quorum of disinterested Administrative Trustees so directs, by
independent legal counsel in a written opinion, or (3) by the Common
Security Holder of the Trust.
(v) Expenses (including attorneys' fees and expenses) incurred by a
Company Indemnified Person in defending a civil, criminal, administrative
or investigative action, suit or proceeding referred to in paragraphs (i)
and (ii) of this Section 10.4(a) shall be paid by the Debenture Issuer in
advance of the final disposition of such action, suit or proceeding upon
receipt of an undertaking by or on behalf of such Company Indemnified
Person to repay such amount if it shall ultimately be determined that he or
she is not entitled to be indemnified by the Debenture Issuer as authorized
in this Section 10.4(a). Notwithstanding the foregoing, no advance shall be
made by the Debenture Issuer if a determination is reasonably and promptly
made (i) by the Administrative Trustees by a majority vote of a quorum of
disinterested Administrative Trustees, (ii) if such a quorum is not
obtainable, or, even if obtainable, if a quorum of disinterested
Administrative Trustees so directs, by independent legal counsel in a
written opinion or (iii) the Common Security Holder of the Trust, that,
based upon the facts known to the Administrative Trustees, counsel or the
Common Security Holder at the time such determination is made, such Company
Indemnified Person acted in bad faith or in a manner that such person did
not believe to be in or not opposed to the best
51
interests of the Trust, or, with respect to any criminal proceeding, that
such Company Indemnified Person believed or had reasonable cause to
believe his or her conduct was unlawful. In no event shall any advance be
made in instances where the Administrative Trustees, independent legal
counsel or the Common Security Holder reasonably determine that such person
deliberately breached his or her duty to the Trust or its Common or Capital
Security Holders.
(vi) The indemnification and advancement of expenses provided by, or
granted pursuant to, the other paragraphs of this Section 10.4(a) shall not
be deemed exclusive of any other rights to which those seeking
indemnification and advancement of expenses may be entitled under any
agreement, vote of stockholders or disinterested directors of the Debenture
Issuer or Capital Security Holders of the Trust or otherwise, both as to
action in his or her official capacity and as to action in another capacity
while holding such office. All rights to indemnification under this Section
10.4(a) shall be deemed to be provided by a contract between the Debenture
Issuer and each Company Indemnified Person who serves in such capacity at
any time while this Section 10.4(a) is in effect. Any repeal or
modification of this Section 10.4(a) shall not affect any rights or
obligations then existing.
(vii) The Debenture Issuer or the Trust may purchase and maintain
insurance on behalf of any person who is or was a Company Indemnified
Person against any liability asserted against him or her and incurred by
him or her in any such capacity, or arising out of his or her status as
such, whether or not the Debenture Issuer would have the power to indemnify
him or her against such liability under the provisions of this Section
10.4(a).
(viii) For purposes of this Section 10.4(a), references to "the Trust"
shall include, in addition to the resulting or surviving entity, any
constituent entity (including any constituent of a constituent) absorbed in
a consolidation or merger, so that any person who is or was a director,
trustee, officer or employee of such constituent entity, or is or was
serving at the request of such constituent entity as a director, trustee,
officer, employee or agent of another entity, shall stand in the same
position under the provisions of this Section 10.4(a) with respect to the
resulting or surviving entity as he or her would have with respect to such
constituent entity if its separate existence had continued.
(ix) The indemnification and advancement of expenses provided by, or
granted pursuant to, this Section 10.4(a) shall, unless otherwise provided
when authorized or ratified, continue as to a person who has ceased to be a
Company Indemnified Person and shall inure to the benefit of the heirs,
executors and administrators of such a person.
(b) The Debenture Issuer agrees to indemnify the (i) Property Trustee,
(ii) the Delaware Trustee, (iii) any Affiliate of the Property Trustee and the
Delaware Trustee, and (iv) any officers, directors, shareholders, members,
partners, employees, representatives, custodians, nominees or agents of the
Property Trustee and the Delaware Trustee (each of the Persons in (i) through
(iv) being referred to as a "Fiduciary Indemnified Person") for, and to hold
each Fiduciary Indemnified Person harmless against, any and all loss, liability,
damage, claim or expense including
52
taxes (other than taxes based on the income of such Fiduciary Indemnified
Person) incurred without negligence or bad faith on its part, arising out of or
in connection with the acceptance or administration of the trust or trusts
hereunder, including the costs and expenses (including reasonable legal fees and
expenses) of defending itself against or investigating any claim or liability in
connection with the exercise or performance of any of its powers or duties
hereunder. The obligation to indemnify as set forth in this Section 10.4(b)
shall survive the satisfaction and discharge of this Declaration.
SECTION 10.5 Outside Businesses. Any Covered Person, the Sponsor,
the Delaware Trustee and the Property Trustee may engage in or possess an
interest in other business ventures of any nature or description, independently
or with others, similar or dissimilar to the business of the Trust, and the
Trust and the Holders shall have no rights by virtue of this Declaration in and
to such independent ventures or the income or profits derived therefrom, and the
pursuit of any such venture, even if competitive with the business of the Trust,
shall not be deemed wrongful or improper. No Covered Person, the Sponsor, the
Delaware Trustee or the Property Trustee shall be obligated to present any
particular investment or other opportunity to the Trust even if such opportunity
is of a character that, if presented to the Trust, could be taken by the Trust,
and any Covered Person, the Sponsor, the Delaware Trustee and the Property
Trustee shall have the right to take for its own account (individually or as a
partner or fiduciary) or to recommend to others any such particular investment
or other opportunity. Any Covered Person, the Delaware Trustee and the Property
Trustee may engage or be interested in any financial or other transaction with
the Sponsor or any Affiliate of the Sponsor, or may act as depositary for,
trustee or agent for, or act on any committee or body of holders of, securities
or other obligations of the Sponsor or its Affiliates.
ARTICLE XI
ACCOUNTING
SECTION 11.1 Fiscal Year. The fiscal year ("Fiscal Year") of the
Trust shall be the calendar year, or such other year as is required by the Code.
SECTION 11.2 Certain Accounting Matters. (a) At all times during
the existence of the Trust, the Administrative Trustees shall keep, or cause to
be kept, full books of account, records and supporting documents, which shall
reflect in reasonable detail, each transaction of the Trust. The books of
account shall be maintained on the accrual method of accounting, in accordance
with generally accepted accounting principles, consistently applied. The Trust
shall use the accrual method of accounting for United States federal income tax
purposes. The books of account and the records of the Trust shall be examined
by and reported upon as of the end of each Fiscal Year of the Trust by a firm of
independent certified public accountants selected by the Administrative
Trustees.
(b) The Administrative Trustees shall cause to be prepared and
delivered to each of the Holders, within 90 days after the end of each Fiscal
Year of the Trust, annual financial
53
statements of the Trust, including a balance sheet of the Trust as of the end of
such Fiscal Year, and the related statements of income or loss.
(c) The Administrative Trustees shall cause to be duly prepared and
delivered to each of the Holders, any annual United States federal income tax
information statement, required by the Code, containing such information with
regard to the Securities held by each Holder as is required by the Code and
the Treasury Regulations. Notwithstanding any right under the Code to deliver
any such statement at a later date, the Administrative Trustees shall endeavor
to deliver all such information statements within 30 days after the end of each
Fiscal Year of the Trust.
(d) The Administrative Trustees shall cause to be duly prepared and
filed with the appropriate taxing authority, an annual United States federal
income tax return, on a Form 1041 or such other form required by United States
federal income tax law, and any other annual income tax returns required to be
filed by the Administrative Trustees on behalf of the Trust with any state or
local taxing authority.
SECTION 11.3 Banking. The Trust shall maintain one or more bank
accounts in the name and for the sole benefit of the Trust; provided, however,
that all payments of funds in respect of the Debentures held by the Property
Trustee shall be made directly to the Property Trustee Account and no other
funds of the Trust shall be deposited in the Property Trustee Account. The sole
signatories for such accounts shall be designated by the Administrative
Trustees; provided, however, that the Property Trustee shall designate the
signatories for the Property Trustee Account.
SECTION 11.4 Withholding. The Trust and the Administrative Trustees
shall comply with all withholding requirements under United States federal,
state and local law. The Trust shall request, and the Holders shall provide to
the Trust, such forms or certificates as are necessary to establish an exemption
from withholding with respect to each Holder, and any representations and forms
as shall reasonably be requested by the Trust to assist it in determining the
extent of, and in fulfilling, its withholding obligations. The Administrative
Trustees shall file required forms with applicable jurisdictions and, unless an
exemption from withholding is properly established by a Holder, shall remit
amounts withheld with respect to the Holder to applicable jurisdictions. To
the extent that the Trust is required to withhold and pay over any amounts to
any authority with respect to Distributions or allocations to any Holder, the
amount withheld shall be deemed to be a Distribution in the amount of the
withholding to the Holder. In the event of any claimed over withholding,
Holders shall be limited to an action against the applicable jurisdiction. If
the amount required to be withheld was not withheld from actual Distributions
made, the Trust may reduce subsequent Distributions by the amount of such
withholding.
ARTICLE XII
AMENDMENTS AND MEETINGS
SECTION 12.1 Amendments. (a) Except as otherwise provided in this
Decla-
54
ration or by any applicable terms of the Securities, this Declaration may
only be amended by a written instrument approved and executed by:
(i) the Administrative Trustees (or, if there are more than two
Administrative Trustees, a majority of the Administrative Trustees);
(ii) if the amendment affects the rights, powers, duties, obligations
or immunities of the Property Trustee, the Property Trustee; and
(iii) if the amendment affects the rights, powers, duties, obligations
or immunities of the Delaware Trustee, the Delaware Trustee.
(b) No amendment shall be made, and any such purported amendment shall
be void and ineffective:
(i) unless, in the case of any proposed amendment, the Property
Trustee shall have first received an Officers' Certificate from the Sponsor
that such amendment is permitted by, and conforms to, the terms of this
Declaration (including the terms of the Securities);
(ii) unless, in the case of any proposed amendment which affects the
rights, powers, duties, obligations or immunities of the Property Trustee,
the Property Trustee shall have first received:
(A) an Officers' Certificate from the Sponsor that such amendment
is permitted by, and conforms to, the terms of this Declaration
(including the terms of the Securities); and
(B) an opinion of counsel (who may be counsel to the Sponsor or
the Trust) that such amendment is permitted by, and conforms to, the
terms of this Declaration (including the terms of the Securities),
provided, however, that the Property Trustee shall not be required to sign
any such amendment; and
(iii) to the extent the result of such amendment would be to:
(A) cause the Trust to fail to continue to be classified for
purposes of United States federal income taxation as a grantor trust;
(B) reduce or otherwise adversely affect the powers of the
Property Trustee in contravention of the Trust Indenture Act; or
(C) cause the Trust to be deemed to be an Investment Company
required
55
to be registered under the Investment Company Act;
(c) At such time after the Trust has issued any Securities that remain
outstanding, any amendment that would adversely affect the rights, privileges or
preferences of any Holder of Securities may be effected only with such
additional requirements as may be set forth in the terms of such Securities.
(d) Section 9.1(c) and this Section 12.1 shall not be amended without
the consent of all of the Holders of the Securities.
(e) Article IV shall not be amended without the consent of the Holders
of a Majority in liquidation amount of the Common Securities.
(f) The rights of the holders of the Common Securities under Article V
to increase or decrease the number of, and appoint and remove, Trustees shall
not be amended without the consent of the Holders of a Majority in liquidation
amount of the Common Securities.
(g) Notwithstanding Section 12.1(c), this Declaration may be amended
without the consent of the Holders of the Securities to:
(i) cure any ambiguity, correct or supplement any provision in this
Declaration that may be inconsistent with any other provision of this
Declaration or to make any other provisions with respect to matters or
questions arising under this Declaration which shall not be inconsistent
with the other provisions of this Declaration; and
(ii) to modify, eliminate or add to any provisions of this Declaration
to such extent as shall be necessary to ensure that the Trust will be
classified for United States federal income tax purposes as a grantor trust
at all times that any Securities are outstanding or to ensure that the
Trust will not be required to register as an Investment Company under the
Investment Company Act.
provided, however, that in the case of clause (i), such action shall not
adversely affect in any material respect the interests of the Holders, and any
amendments of this Declaration shall become effective when notice thereof is
given to the Holders.
SECTION 12.2 Meetings of the Holders; Action by Written Consent.
(a) Meetings of the Holders of any class of Securities may be called at any time
by the Administrative Trustees (or as provided in the terms of the Securities)
to consider and act on any matter on which Holders of such class of Securities
are entitled to act under the terms of this Declaration, the terms of the
Securities or the rules of any stock exchange on which the Capital Securities
are listed or admitted for trading. The Administrative Trustees shall call a
meeting of the Holders of such class if directed to do so by the Holders of at
least 10% in liquidation amount of such class of Securities. Such direction
shall be given by delivering to the Administrative Trustees one or more notices
in a
56
writing stating that the signing Holders of Securities wish to call a meeting
and indicating the general or specific purpose for which the meeting is to be
called. Any Holders calling a meeting shall specify in writing the Security
Certificates held by the Holders exercising the right to call a meeting and only
those Securities specified shall be counted for purposes of determining whether
the required percentage set forth in the second sentence of this paragraph has
been met.
(b) Except to the extent otherwise provided in the terms of the
Securities, the following provisions shall apply to meetings of Holders of
Securities:
(i) Notice of any such meeting shall be given to all the Holders of
Securities having a right to vote thereat at least seven days and not more
than 60 days before the date of such meeting. Whenever a vote, consent or
approval of the Holders is permitted or required under this Declaration or
the rules of any stock exchange on which the Capital Securities are listed
or admitted for trading, such vote, consent or approval may be given at a
meeting of the Holders. Any action that may be taken at a meeting of the
Holders of Securities may be taken without a meeting if a consent in
writing setting forth the action so taken is signed by the Holders of
Securities owning not less than the minimum amount of Securities in
liquidation amount that would be necessary to authorize or take such action
at a meeting at which all Holders having a right to vote thereon were
present and voting. Prompt notice of the taking of action without a meeting
shall be given to the Holders entitled to vote who have not consented in
writing. The Administrative Trustees may specify that any written ballot
submitted to the Security Holder for the purpose of taking any action with
out a meeting shall be returned to the Trust within the time specified by
the Administrative Trustees.
(ii) Each Holder may authorize any Person to act for it by proxy on
all matters in which a Holder is entitled to participate, including waiving
notice of any meeting, or voting or participating at a meeting. No proxy
shall be valid after the expiration of 11 months from the date thereof
unless otherwise provided in the proxy. Every proxy shall be revocable at
the pleasure of the Holder of Securities executing it. Except as otherwise
provided herein, all matters relating to the giving, voting or validity of
proxies shall be governed by the General Corporation Law of the State of
Delaware relating to proxies, and judicial interpretations thereunder, as
if the Trust were a Delaware corporation and the Holders were stock holders
of a Delaware corporation.
(iii) Each meeting of the Holders shall be conducted by the
Administrative Trustees or by such other Person that the Administrative
Trustees may designate.
(iv) Unless the Business Trust Act, this Declaration, the terms of the
Securities, the Trust Indenture Act or the listing rules of any stock
exchange on which the Capital Securities are then listed or trading,
otherwise provides, the Administrative Trustees, in their sole discretion,
shall establish all other provisions relating to meetings of Holders,
including notice of the time, place or purpose of any meeting at which any
matter is to be voted on by
57
any Holders of Securities, waiver of any such notice, action by consent without
a meeting, the establishment of a record date, quorum requirements, voting in
person or by proxy or any other matter with respect to the exercise of any such
right to vote.
ARTICLE XIII
REPRESENTATIONS OF PROPERTY TRUSTEE
AND DELAWARE TRUSTEE
SECTION 13.1 Representations and Warranties of Property Trustee. The
Trustee that acts as initial Property Trustee represents and warrants to the
Trust and to the Sponsor at the date of this Declaration, and each Successor
Property Trustee represents and warrants to the Trust and the Sponsor at the
time of the Successor Property Trustee's acceptance of its appointment as
Property Trustee that:
(a) The Property Trustee is a corporation with trust powers and
authority to execute and deliver, and to carry out and perform its
obligations under the terms of, this Declaration.
(b) The execution, delivery and performance by the Property Trustee of
this Declaration has been duly authorized by all necessary corporate action
on the part of the Property Trustee. This Declaration has been duly
executed and delivered by the Property Trustee and constitutes a legal,
valid and binding obligation of the Property Trustee, enforceable against
it in accordance with its terms, subject to applicable bankruptcy,
reorganization, moratorium, insolvency, and other similar laws affecting
creditors' rights generally and to general principles of equity and the
discretion of the court (regardless of whether the enforcement of such
remedies is considered in a proceeding in equity or at law).
(c) The execution, delivery and performance of this Declaration by the
Property Trustee does not conflict with or constitute a breach of the
charter or by-laws of the Property Trustee.
(d) No consent, approval or authorization of, or registration with or
notice to, any state or federal banking authority is required for the
execution, delivery or performance by the Property Trustee of this
Declaration.
SECTION 13.2 Representations and Warranties of Delaware Trustee.
The Trustee that acts as initial Delaware Trustee represents and warrants to the
Trust and to the Sponsor at the date of this Declaration, and each Successor
Delaware Trustee represents and warrants to the Trust and the Sponsor at the
time of the Successor Delaware Trustee's acceptance of its appointment as
Delaware Trustee that:
(a) The Delaware Trustee is duly organized, validly existing and in
good standing under the laws of the State of Delaware, with trust power and
authority to execute and
58
deliver, and to carry out and perform its obligations under the terms of,
this Declaration.
(b) The execution, delivery and performance by the Delaware Trustee of
this Declaration has been duly authorized by all necessary corporate action
on the part of the Delaware Trustee. This Declaration has been duly
executed and delivered by the Delaware Trustee and constitutes a legal,
valid and binding obligation of the Delaware Trustee, enforceable against
it in accordance with its terms, subject to applicable bankruptcy,
reorganization, moratorium, insolvency, and other similar laws affecting
creditors' rights generally and to general principles of equity and the
discretion of the court (regardless of whether the enforcement of such
remedies is considered in a proceeding in equity or at law).
(c) No consent, approval or authorization of, or registration with or
notice to, any federal banking authority is required for the execution,
delivery or performance by the Delaware Trustee of this Declaration.
(d) The Delaware Trustee is a natural person who is a resident of the
State of Delaware or, if not a natural person, an entity which has its
principal place of business in the State of Delaware.
ARTICLE XIV
REGISTRATION RIGHTS
SECTION 14.1 Registration Rights Agreement. The Holders of the
Capital Securities, the Debentures and the Capital Securities Guarantee
(collectively, the "Registrable Securities") are entitled to the benefits of a
Registration Rights Agreement.
ARTICLE XV
MISCELLANEOUS
SECTION 15.1 Notices. All notices provided for in this Declaration
shall be in writing, duly signed by the party giving such notice, and shall be
delivered, telecopied or mailed by first class mail, as follows:
(a) if given to the Trust, in care of the Administrative Trustees at
the Trust's mailing address set forth below (or such other address as the
Trust may give notice of to the Holders):
59
ComEd Financing II
c/o Commonwealth Edison Company
10 South Dearborn Street - 37th Floor
Chicago, Illinois 60603
Attention: Dennis F. O'Brien, Administrative Trustee
(b) if given to the Delaware Trustee, at the mailing address set forth
below (or such other address as Delaware Trustee may give notice of to the
Holders):
Wilmington Trust Company
Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890
Attention: Corporate Trust Administration
(c) if given to the Property Trustee, at the Property Trustee's mailing
address set forth below (or such other address as the Property Trustee may give
notice of to the Holders):
Wilmington Trust Company
Rodney Square North
1100 North Market Street
Wilmington, Delaware 19890
Attention: Corporate Trust Administration
(d) if given to the Holder of the Common Securities, at the mailing address
of the Sponsor set forth below (or such other address as the Holder of the
Common Securities may give notice to the Trust):
Commonwealth Edison Company
10 South Dearborn Street - 37th Floor
Chicago, Illinois 60690-0767
Attention: Treasurer
(e) if given to any other Holder, at the address set forth on the books and
records of the Trust.
All such notices shall be deemed to have been given when received in
person, telecopied with receipt confirmed, or mailed by first class mail,
postage prepaid except that if a notice or other document is refused delivery or
cannot be delivered because of a changed address of which no notice was given,
such notice or other document shall be deemed to have been delivered on the date
of such refusal or inability to deliver.
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SECTION 15.2 Governing Law. This Declaration and the rights of the
parties hereunder shall be governed by and interpreted in accordance with the
laws of the State of Delaware and all rights and remedies shall be governed by
such laws without regard to principles of conflict of laws.
SECTION 15.3 Intention of the Parties. It is the intention of the
parties hereto that the Trust be classified for United States federal income tax
purposes as a grantor trust. The provisions of this Declaration shall be
interpreted to further this intention of the parties.
SECTION 15.4 Headings. Headings contained in this Declaration are
inserted for convenience of reference only and do not affect the interpretation
of this Declaration or any provision hereof.
SECTION 15.5 Successors and Assigns. Whenever in this Declaration
any of the parties hereto is named or referred to, the successors and assigns of
such party shall be deemed to be included, and all covenants and agreements in
this Declaration by the Sponsor and the Trustees shall bind and inure to the
benefit of their respective successors and assigns, whether so expressed.
SECTION 15.6 Partial Enforceability. If any provision of this
Declaration, or the application of such provision to any Person or circumstance,
shall be held invalid, the remainder of this Declaration, or the application of
such provision to persons or circumstances other than those to which it is held
invalid, shall not be affected thereby.
SECTION 15.7 Counterparts. This Declaration may contain more than one
counterpart of the signature page and this Declaration may be executed by the
affixing of the signature of each of the Trustees to one of such counterpart
signature pages. All of such counterpart signature pages shall be read as though
one, and they shall have the same force and effect as though all of the signers
had signed a single signature page.
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IN WITNESS WHEREOF, the undersigned has caused these presents to be
executed as of the day and year first above written.
/s/ John C. Bukovski
-------------------------------------------
John C. Bukovski, as Administrative Trustee
/s/ Dennis F. O'Brein
--------------------------------------------
Dennis F. O'Brien, as Administrative Trustee
WILMINGTON TRUST COMPANY,
Not in its individual capacity but solely as
Delaware Trustee and Property Trust
By: /s/ Lario M. Marini
----------------------------------------
Name: Lario M. Marini
Title: Vice President
COMMONWEALTH EDISON COMPANY,
as Sponsor
By: /s/ Dennis F. O'Brein
---------------------------------------
Dennis F. O'Brien
Treasurer
ANNEX I
TERMS OF
8.50% SERIES A/SERIES B CAPITAL SECURITIES
8.50% COMMON SECURITIES
Pursuant to Section 7.1 of the Amended and Restated Declaration of Trust,
dated as of January 24, 1997 (as amended from time to time, the "Declaration"),
the designation, rights, privileges, restrictions, preferences and other terms
and provisions of the Securities are set out below (each capitalized term used
but not defined herein has the meaning set forth in the Declaration or, if not
defined in such Declaration, as defined in the Offering Memorandum referred to
below in Section 2(c) of this Annex I):
1. Designation and Number.
----------------------
(a) Capital Securities. 150,000 Series A Capital Securities of the
Trust and 150,000 Series B Capital Securities of the Trust, each series with an
aggregate liquidation amount with respect to the assets of the Trust of one
hundred fifty million dollars ($150,000,000), and each with a liquidation amount
with respect to the assets of the Trust of $1,000 per security, are hereby
designated for the purposes of identification only as "8.50% Series A Capital
Securities" and "8.50% Series B Capital Securities", respectively (collectively,
the "Capital Securities"). The certificates evidencing the Capital Securities
shall be substantially in the form of Exhibit A-1 to the Declaration, with such
changes and additions thereto or deletions therefrom as may be required by
ordinary usage, custom or practice or to conform to the rules of any stock
exchange on which the Capital Securities are listed.
(b) Common Securities. 4,640 Common Securities of the Trust with an
aggregate liquidation amount with respect to the assets of the Trust of four
million six hundred forty thousand dollars ($4,640,000) and a liquidation amount
with respect to the assets of the Trust of $1,000 per security, are hereby
designated for the purposes of identification only as "8.50% Common Securities"
(the "Common Securities"). The certificates evidencing the Common Securities
shall be substantially in the form of Exhibit A-2 to the Declaration, with such
changes and additions thereto or deletions therefrom as may be required by
ordinary usage, custom or practice.
2. Distributions.
-------------
(a) Distributions payable on each Security will be fixed at a rate
per annum of 8.50% (the "Coupon Rate") of the liquidation amount of $1,000 per
Security (the "Liquidation Amount"), such rate being the rate of interest
payable on the Debentures to be held by the Property Trustee. Distributions in
arrears for more than one semi-annual period will bear additional distributions
thereon compounded semi-annually at the Coupon Rate (to the extent permitted by
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applicable law). The term "Distributions", as used herein, includes
distributions of any such interest unless otherwise stated. A Distribution is
payable only to the extent that payments are made in respect of the Debentures
held by the Property Trustee and to the extent the Property Trustee has funds on
hand legally available therefor.
(b) Distributions on the Securities will be cumulative, will
accumulate from the most recent date to which Distributions have been paid or,
if no Distributions have been paid, from January 24, 1997, and will be payable
semi-annually in arrears on January 15, and July 15 of each year, commencing on
July 15, 1997 (each, a "Distribution Date"), except as otherwise described
below. Distributions will be computed on the basis of a 360-day year consisting
of twelve 30-day months and for any period less than a full calendar month on
the basis of the actual number of days elapsed in such month. As long as no
Event of Default has occurred and is continuing under the Indenture, the
Debenture Issuer has the right under the Indenture to defer payments of interest
by extending the interest payment period at any time and from time to time on
the Debentures for a period not exceeding 10 consecutive semi-annual periods,
including the first such semi-annual period during such period (each an
"Extension Period"), during which Extension Period no interest shall be due and
payable on the Debentures, provided that no Extension Period shall end in a day
other than an Interest Payment Date for the Debentures or shall extend beyond
the Maturity Date of the Debentures. As a consequence of such deferral,
Distributions will also be deferred. Despite such deferral, Distributions will
continue to accumulate with additional Distributions thereon (to the extent
permitted by applicable law but not at a rate greater than the rate at which
interest is then accruing on the Debentures) at the Coupon Rate compounded semi-
annually during any such Extension Period. Prior to the termination of any such
Extension Period, the Debenture Issuer may further defer payments of interest by
further extending such Extension Period; provided that such Extension Period,
together with all such previous and further extensions within such Extension
Period, may not exceed 10 consecutive semi-annual periods, including the first
semi-annual period during such Extension Period, or extend beyond the Maturity
Date of the Debentures. Upon the termination of any Extension Period and the
payment of all amounts then due, the Debenture Issuer may commence a new
Extension Period, subject to the above requirements.
(c) Distributions on the Securities will be payable to the Holders
thereof as they appear on the books and records of the Trust on the first day of
the month in which the relevant Distribution Date occurs, which Distribution
Dates correspond to the interest payment dates on the Debentures. Subject to any
applicable laws and regulations and the provisions of the Declaration, each such
payment in respect of the Capital Securities will be made as described under the
heading "Description of Capital Securities -- Form, Denomination, Book-Entry
Procedures and Transfer" in the Offering Memorandum dated January 17, 1997, of
the Debenture Issuer and the Trust relating to the Securities and the
Debentures. Payments in respect of Capital Securities held in certificated form
will be made by check mailed to the Holder entitled thereto. The relevant record
dates for the Common Securities shall be the same as the record dates for the
Capital Securities. Distributions payable on any Securities that are not
punctually paid on any Distribution Date, as a result of the Debenture Issuer
having failed to make a payment under the Debentures, will cease to be payable
to the Holder on the relevant record date, and such defaulted Distribution will
instead be payable to
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the Person in whose name such Securities are registered on the special record
date or other specified date determined in accordance with the Indenture. If any
date on which Distributions are payable on the Securities is not a Business Day,
then payment of the Distribution payable on such date will be made on the next
succeeding day that is a Business Day (and without any interest or other payment
in respect of any such delay), with the same force and effect as if made on such
date.
(d) In the event that there is any money or other property held by or
for the Trust that is not accounted for hereunder, such property shall be
distributed Pro Rata (as defined herein) among the Holders of the Securities.
3. Liquidation Distribution Upon Dissolution.
-----------------------------------------
In the event of any termination of the Trust or the Sponsor otherwise gives
notice of its election to liquidate the Trust pursuant to Section 8.1(a)(iii) of
the Declaration, the Trust shall be liquidated by the Administrative Trustees as
expeditiously as the Administrative Trustees determine to be possible by
distributing, after satisfaction of liabilities to creditors of the Trust as
provided by applicable law, to the Holders a Like Amount (as defined below) of
the Debentures, unless such distribution is determined by the Property Trustee
not to be practicable, in which event such Holders will be entitled to receive
out of the assets of the Trust legally available for distribution to Holders,
after satisfaction of liabilities to creditors of the Trust as provided by
applicable law, an amount equal to the aggregate of the liquidation amount of
$1,000 per Security plus accumulated and unpaid Distributions thereon to the
date of payment (such amount being the "Liquidation Distribution").
"Like Amount" means (i) with respect to a redemption of the Securities,
Securities having a Liquidation Amount equal to the principal amount of
Debentures to be paid in accordance with their terms and (ii) with respect to a
distribution of Debentures upon the liquidation of the Trust, Debentures having
a principal amount equal to the Liquidation Amount of the Securities of the
Holder to whom such Debentures are distributed.
If, upon any such liquidation, the Liquidation Distribution can be paid
only in part because the Trust has insufficient assets on hand legally available
to pay in full the aggregate Liquidation Distribution, then the amounts payable
directly by the Trust on the Securities shall be paid on a Pro Rata basis.
4. Redemption and Distribution.
---------------------------
(a) Upon the repayment of the Debentures in whole or in part, at
maturity or upon early redemption (either at the option of the Debenture Issuer
or pursuant to a Tax Event, as described below), the proceeds from such
repayment shall be simultaneously applied by the Property Trustee (subject to
the Property Trustee having received notice no later than 45 days prior to such
repayment) to redeem a Like Amount of the Securities at a redemption price equal
to (i) in the case of the repayment of the Debentures at maturity, the Maturity
Redemption Price (as defined below), (ii) in the case of the optional redemption
of the Debentures upon the occurrence and continuation
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of a Tax Event, the Tax Event Redemption Price (as defined below) and (iii) in
the case of the optional redemption of the Debentures other than as a result of
the occurrence and continuance of a Tax Event, the Optional Redemption Price (as
defined below). The Maturity Redemption Price, the Tax Event Redemption Price
and the Optional Redemption Price are referred to collectively as the
"Redemption Price". Holders will be given not less than 30 nor more than 60 days
notice of such redemption.
(b) (i) The "Maturity Redemption Price", with respect to a
redemption of Securities, shall mean an amount equal to the principal of
and accrued and unpaid interest on the Debentures as of the maturity date
thereof.
(ii) In the case of an optional redemption, if fewer than all the
outstanding Securities are to be so redeemed, the Capital Securities will
be redeemed Pro Rata and the Capital Securities to be redeemed will be
determined as described in Section 4(f)(ii) below. Upon the entry of an
order for the dissolution of the Trust by a court of competent
jurisdiction, the Debentures thereafter will be subject to optional
repayment, in whole, but not in part, on or after January 15, 2007 (the
"Initial Optional Redemption Date").
The Debenture Issuer shall have the right (subject to the conditions
in the Indenture) to elect to redeem the Debentures in whole or in part at
any time on or after the Initial Optional Redemption Date, upon not less
than 30 days and not more than 60 days notice, at the Optional Redemption
Price and, simultaneous with such redemption, to cause a Like Amount of the
Securities to be redeemed by the Trust at the Optional Redemption Price on
a Pro Rata basis. "Optional Redemption Price" shall mean a price equal to
the percentage of the liquidation amount of Securities to be redeemed plus
accumulated and unpaid Distributions thereon, if any, to the date of such
redemption if redeemed during the 12-month period beginning January 15 of
the years indicated below:
Year Percentage
---- ----------
2007 104.250
2008 103.825
2009 103.400
2010 102.975
2011 102.550
2012 102.125
2013 101.700
2014 101.275
2015 100.850
2016 100.425
2017 and thereafter 100.000
(c) If at any time a Tax Event (as defined below) occurs, the Debenture
Issuer
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shall have the right (subject to the conditions set forth in the Indenture) at
any time prior to the Initial Optional Redemption Date, upon not less than 30
nor more than 60 days notice, to redeem the Debentures in whole, but not in
part, within the 90 days following the occurrence of such Tax Event (the "90 Day
Period"), and, simultaneous with such redemption, to cause a Like Amount of the
Securities to be redeemed by the Trust at the Tax Event Redemption Price on a
Pro Rata basis.
"Tax Event" shall occur upon receipt by the Company and the Trust of
an opinion of a nationally recognized tax counsel (a "Tax Event Opinion")
experienced in such matters to the effect that, as a result of 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, or as a result of any official
administrative pronouncement or judicial decision interpreting or applying such
laws or regulations, which amendment or change is effective or such
pronouncement or decision is announced on or after January 24, 1997, there is
more than an insubstantial risk that (i) the Trust is, or will be within 90 days
of the date of such opinion, subject to United States federal income tax with
respect to income received or accrued on the Debentures, (ii) interest payable
by the Debenture Issuer on the Debentures is not, or within 90 days of the date
of such opinion, will not be, deductible by the Debenture Issuer, in whole or in
part, for United States federal income tax purposes, or (iii) the Trust is, or
will be within 90 days of the date of such opinion, subject to more than a de
minimis amount of other taxes, duties or other governmental charges.
"Tax Event Redemption Price" shall mean, with respect to a redemption
of Securities, a price equal to the greater of (i) 100% of the principal of a
Like Amount of Debentures to be redeemed or (ii) the sum, as determined by a
Quotation Agent (as defined in the Indenture), of the present values of the
principal amount and premium payable with respect to an optional redemption of a
Like Amount of the Debentures on the Initial Optional Redemption Date, together
with scheduled payments of interest on the Debentures from the redemption date
to and including the Initial Optional Redemption Date, discounted to the
redemption date on a semi-annual basis (assuming a 360-day year consisting of
twelve 30-day months) at the Adjusted Treasury Rate (as defined in the
Indenture), plus, in each case, accumulated and unpaid Distributions thereon, if
any, to the date of such redemption.
(d) On and from the date fixed by the Administrative Trustees for any
distribution of Debentures and liquidation of the Trust: (i) the Securities will
no longer be deemed to be outstanding, (ii) the Clearing Agency or its nominee
(or any successor Clearing Agency or its nominee), as the Holder of the Capital
Securities, will receive a registered global certificate or certificates
representing the Debentures to be delivered upon such distribution and any
certificates representing Securities not held by the Clearing Agency or its
nominee (or any successor Clearing Agency or its nominee) will be deemed to
represent beneficial interests in a Like Amount of Debentures until such
certificates are presented to the Debenture Issuer or its agent for transfer or
reissue.
(e) The Trust may not redeem fewer than all the outstanding
Securities unless all
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accumulated and unpaid Distributions have been paid on all Securities for all
semi-annual Distribution periods terminating on or before the date of
redemption.
(f) The procedure with respect to redemptions or distributions of
Debentures shall be as follows:
(i) Notice of any redemption of, or notice of distribution of
Debentures in exchange for, the Securities (a "Redemption/Distribution
Notice") will be given by the Trust by mail to each Holder to be redeemed
or exchanged not fewer than 30 nor more than 60 days before the date fixed
for redemption or exchange thereof which, in the case of a redemption, will
be the date fixed for redemption of the Debentures. For purposes of the
calculation of the date of redemption or exchange and the dates on which
notices are given pursuant to this Section 4(f)(i), a
Redemption/Distribution Notice shall be deemed to be given on the day such
notice is first mailed by first-class mail, postage prepaid, to Holders.
Each Redemption/Distribution Notice shall be addressed to the Holders of
Securities at the address of each such Holder appearing in the books and
records of the Trust. No defect in the Redemption/Distribution Notice or in
the mailing of either thereof with respect to any Holder shall affect the
validity of the redemption or exchange proceedings with respect to any
other Holder.
(ii) In the event that fewer than all the outstanding Securities are
to be redeemed, the Securities to be redeemed shall be redeemed Pro Rata
from each Holder of Capital Securities, it being understood that, in
respect of Capital Securities registered in the name of and held of record
by the Clearing Agency or its nominee (or any successor Clearing Agency or
its nominee) or any nominee, the distribution of the proceeds of such
redemption will be made to the Clearing Agency and disbursed by such
Clearing Agency in accordance with the procedures applied by such agency or
nominee.
(iii) If Securities are to be redeemed and the Trust gives a
Redemption/Distribution Notice (which notice will be irrevocable), then (A)
with respect to Capital Securities issued in book-entry form, by 12:00
noon, New York City time, on the redemption date, provided that the
Debenture Issuer has paid the Property Trustee a sufficient amount of cash
in connection with the related redemption or maturity of the Debentures by
10:00 a.m., New York City time, on the maturity date or the date of
redemption, as the case requires, the Property Trustee will deposit
irrevocably with the Clearing Agency or its nominee (or successor Clearing
Agency or its nominee) funds sufficient to pay the applicable Redemption
Price with respect to such Capital Securities and will give the Clearing
Agency irrevocable instructions and authority to pay the Redemption Price
to the relevant Clearing Agency Participants, and (B) with respect to
Capital Securities issued in certificated form and Common Securities,
provided that the Debenture Issuer has paid the Property Trustee a
sufficient amount of cash in connection with the related redemption or
maturity of the Debentures, the Property Trustee will pay the relevant
Redemption Price to the Holders by check mailed to the address of the
relevant Holder
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appearing on the books and records of the Trust on the redemption date. If
a Redemption/Distribution Notice shall have been given and funds deposited
as required, if applicable, then immediately prior to the close of business
on the date of such deposit, or on the redemption date, as applicable,
Distributions will cease to accumulate on the Securities so called for
redemption and all rights of Holders so called for redemption will cease,
except the right of the Holders of such Securities to receive the
Redemption Price, but without interest on such Redemption Price, and such
Securities shall cease to be outstanding.
(iv) Payment of accumulated and unpaid Distributions on the Redemption
Date of the Securities will be subject to the rights of Holders of
Securities on the close of business on a regular record date in respect of
a Distribution Date occurring on or prior to such Redemption Date.
Neither the Administrative Trustees nor the Trust shall be required to
register or cause to be registered the transfer of (i) any Securities beginning
on the opening of business 15 days before the day of mailing of a notice of
redemption or any notice of selection of Securities for redemption or (ii) any
Securities selected for redemption except the unredeemed portion of any Security
being redeemed. If any date fixed for redemption of Securities is not a Business
Day, then payment of the Redemption Price payable on such date will be made on
the next succeeding day that is a Business Day (and without any interest or
other payment in respect of any such delay), with the same force and effect as
if made on such date fixed for redemption. If payment of the Redemption Price in
respect of any Securities is improperly withheld or refused and not paid either
by the Property Trustee or by the Sponsor as guarantor pursuant to the relevant
Securities Guarantee, Distributions on such Securities will continue to
accumulate from the original redemption date to the actual date of payment, in
which case the actual payment date will be considered the date fixed for
redemption for purposes of calculating the Redemption Price.
(v) Redemption/Distribution Notices shall be sent by the Property
Trustee on behalf of the Trust to (A) in respect of the Capital Securities,
the Clearing Agency or its nominee (or any successor Clearing Agency or its
nominee) if the Global Certificates have been issued or, if Definitive
Capital Security Certificates have been issued, to the Holder thereof, and
(B) in respect of the Common Securities, to the Holder thereof.
(vi) Subject to the foregoing and applicable law (including, without
limitation, United States federal securities laws), provided the acquiror
is not the Holder of the Common Securities or the obligor under the
Indenture, the Sponsor or any of its subsidiaries may at any time and from
time to time purchase outstanding Capital Securities by tender, in the open
market or by private agreement.
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5. Voting Rights - Capital Securities.
----------------------------------
(a) Except as provided under Sections 5(b) and 7 and as otherwise
required by law and the Declaration, the Holders of the Capital Securities will
have no voting rights.
(b) So long as any Debentures are held by the Property Trustee, the
Trustees shall not (i) direct the time, method and place of conducting any
proceeding for any remedy available to the Debenture Trustee, or executing any
trust or power conferred on such Debenture Trustee with respect to the
Debentures, (ii) waive any past default that is waivable under Section 6.06 of
the Indenture, (iii) exercise any right to rescind or annul a declaration of
acceleration of the maturity of the principal of the Debentures or (iv) consent
to any amendment, modification or termination of the Indenture or the
Debentures, where such consent shall be required, without, in each case,
obtaining the prior approval of the Holders of a majority in liquidation amount
of all outstanding Capital Securities; provided, however, that where a consent
under the Indenture would require the consent of each holder of Debentures
affected thereby, no such consent shall be given by the Property Trustee without
the prior approval of each Holder of the Capital Securities. The Trustees shall
not revoke any action previously authorized or approved by a vote of the Holders
of the Capital Securities except by subsequent vote of such Holders. The
Property Trustee shall notify each Holder of Capital Securities of any notice of
default with respect to the Debentures. In addition to obtaining the foregoing
approvals of such Holders of the Capital Securities, prior to taking any of the
foregoing actions, the Trustees shall obtain an opinion of counsel experienced
in such matters to the effect that the Trust will not be classified as an
association taxable as a corporation for United States federal income tax
purposes on account of such action.
If an Event of Default under the Declaration has occurred and is
continuing and such event is attributable to the failure of the Debenture Issuer
to pay principal of or premium, if any, or interest on the Debentures on the due
date (or in the case of redemption, on the redemption date), then a Holder of
Capital Securities may directly institute a proceeding for enforcement of
payment to such Holder of the principal of or premium, if any, or interest on a
Like Amount of Debentures (a "Direct Action") on or after the respective due
date specified in the Debentures. In connection with such Direct Action, the
rights of the Common Securities Holder will be subrogated to the rights of such
Holder of Capital Securities to the extent of any payment made by the Debenture
Issuer to such Holder of Capital Securities in such Direct Action. Except as
provided in the second preceding sentence, the Holders of Capital Securities
will not be able to exercise directly any other remedy available to the holders
of the Debentures.
Any approval or direction of Holders of Capital Securities may be
given at a separate meeting of Holders of Capital Securities convened for such
purpose, at a meeting of all of the Holders of Securities in the Trust or
pursuant to written consent. The Property Trustees will cause a notice of any
meeting at which Holders of Capital Securities are entitled to vote, or of any
matter upon which action by written consent of such Holders is to be taken, to
be mailed to each Holder of record of Capital Securities. Each such notice will
include a statement setting forth (i) the date of such meeting or the date by
which such action is to be taken, (ii) a description of any resolution
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proposed for adoption at such meeting on which such Holders are entitled to vote
or of such matter upon which written consent is sought and (iii) instructions
for the delivery of proxies or consents.
No vote or consent of the Holders of the Capital Securities will be
required for the Trust to redeem and cancel Capital Securities or to distribute
the Debentures in accordance with the Declaration and the terms of the
Securities.
Notwithstanding that Holders of Capital Securities are entitled to
vote or consent under any of the circumstances described above, any of the
Capital Securities that are owned by the Sponsor or any Affiliate of the Sponsor
shall not be entitled to vote or consent and shall, for purposes of such vote or
consent, be treated as if they were not outstanding.
6. Voting Rights - Common Securities.
---------------------------------
(a) Except as provided under Sections 6(b), 6(c), and 7 or as
otherwise required by law and the Declaration, the Holders of the Common
Securities will have no voting rights.
(b) Unless an Event of Default shall have occurred and be continuing,
any Trustee may be removed at any time by the holder of the Common Securities.
If an Event of Default has occurred and is continuing, the Property Trustee and
the Delaware Trustee may be removed at such time by the holders of a majority in
liquidation amount of the outstanding Capital Securities. In no event will the
holders of the Capital Securities have the right to vote to appoint, remove or
replace the Administrative Trustees, which voting rights are vested exclusively
in the Sponsor as the holder of the Common Securities. No resignation or removal
of a Trustee and no appointment of a successor trustee shall be effective until
the acceptance of appointment by the successor trustee in accordance with the
provisions of the Declaration.
(c) So long as any Debentures are held by the Property Trustee, the
Trustees shall not (i) direct the time, method and place of conducting any
proceeding for any remedy available to the Debenture Trustee, or executing any
trust or power conferred on such Debenture Trustee with respect to the
Debentures, (ii) waive any past default that is waivable under Section 6.06 of
the Indenture, (iii) exercise any right to rescind or annul a declaration of
acceleration of the maturity of the principal of the Debentures or (iv) consent
to any amendment, modification or termination of the Indenture or the
Debentures, where such consent shall be required, without, in each case,
obtaining the prior approval of the Holders of a majority in liquidation amount
of all outstanding Common Securities; provided, however, that where a consent
under the Indenture would require the consent of each holder of Debentures
affected thereby, no such consent shall be given by the Property Trustee without
the prior approval of each Holder of the Common Securities. The Trustees shall
not revoke any action previously authorized or approved by a vote of the Holders
of the Common Securities except by subsequent vote of such Holders. The Property
Trustee shall notify each Holder of Common Securities of any notice of default
with respect to the Debentures. In addition to obtaining the foregoing approvals
of such Holders of the Common Securities, prior to taking any of the foregoing
actions, the Trustees shall obtain an opinion of counsel experienced in such
matters
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to the effect that the Trust will not be classified as an association taxable as
a corporation for United States federal income tax purposes on account of such
action.
If an Event of Default has occurred and is continuing and such event
is attributable to the failure of the Debenture Issuer to pay principal of or
premium, if any, or interest on the Debentures on the due date (or in the case
of redemption, on the redemption date), then a Holder of Common Securities may
institute a Direct Action for enforcement of payment to such Holder of the
principal of or premium, if any, or interest on a Like Amount of Debentures on
or after the respective due date specified in the Debentures. In connection with
any Direct Action, the rights of the Common Securities Holder will be
subordinated to the rights of such Holder of Capital Securities to the extent of
any payment made by the Debenture Issuer to such Holder of Common Securities in
such Direct Action. Except as provided in the second preceding sentence, the
Holders of Common Securities will not be able to exercise directly any other
remedy available to the holders of the Debentures.
Any approval or direction of Holders of Common Securities may be given
at a separate meeting of Holders of Common Securities convened for such purpose,
at a meeting of all of the Holders of Securities in the Trust or pursuant to
written consent. The Administrative Trustees will cause a notice of any meeting
at which Holders of Common Securities are entitled to vote, or of any matter
upon which action by written consent of such Holders is to be taken, to be
mailed to each Holder of record of Common Securities. Each such notice will
include a statement setting forth (i) the date of such meeting or the date by
which such action is to be taken, (ii) a description of any resolution proposed
for adoption at such meeting on which such Holders are entitled to vote or of
such matter upon which written consent is sought and (iii) instructions for the
delivery of proxies or consents.
No vote or consent of the Holders of the Common Securities will be
required for the Trust to redeem and cancel Common Securities or to distribute
the Debentures in accordance with the Declaration and the terms of the
Securities.
7. Amendments to Declaration and Indenture.
---------------------------------------
In addition to the requirements set out in Section 12.1 of the
Declaration, the Declaration may be amended from time to time by the Sponsor,
the Property Trustee and the Administrative Trustees, without the consent of the
Holders of the Securities (i) to cure any ambiguity, correct or supplement any
provisions in the Declaration that may be inconsistent with any other
provisions, or to make any other provisions with respect to matters or questions
arising under the Declaration which shall not be inconsistent with the other
provisions of the Declaration, or (ii) to modify, eliminate or add to any
provisions of the Declaration to such extent as shall be necessary to ensure
that the Trust will be classified for United States federal income tax purposes
as a grantor trust at all times that any Securities are outstanding or to ensure
that the Trust will not be required to register as an "Investment Company" under
the Investment Company Act; provided, however, that in the case of clause (i),
such action shall not adversely affect in any material respect the interests
I-10
of any Holder of Securities, and any amendments of the Declaration shall become
effective when notice thereof is given to the holders of the Securities. The
Declaration may be amended by the Trustees and the Sponsor with (i) the consent
of Holders representing a majority in liquidation amount of all outstanding
Securities, and (ii) receipt by the Trustees of an Opinion of Counsel to the
effect that such amendment or the exercise of any power granted to the Trustees
in accordance with such amendment will not affect the Trust's status as a
grantor trust for United States federal income tax purposes or the Trust's
exemption from status as an Investment Company under the Investment Company Act,
provided that, without the consent of each Holder of Trust Securities, the
Declaration may not be amended to (i) change the amount or timing of any
Distribution on the Trust Securities or otherwise adversely affect the amount of
any Distribution required to be made in respect of the Trust Securities as of a
specified date or (ii) restrict the right of a holder of Trust Securities to
institute suit for the enforcement of any such payment on or after such date.
8. Pro Rata.
--------
A reference in these terms of the Securities to any payment,
distribution or treatment as being "Pro Rata" shall mean pro rata to each Holder
according to the aggregate liquidation amount of the Securities held by the
relevant Holder in relation to the aggregate liquidation amount of all
Securities outstanding unless, in relation to a payment, an Event of Default has
occurred and is continuing, in which case any funds available to make such
payment shall be paid first to each Holder of the Capital Securities pro rata
according to the aggregate liquidation amount of Capital Securities held by the
relevant Holder relative to the aggregate liquidation amount of all Capital
Securities outstanding, and only after satisfaction of all amounts owed to the
Holders of the Capital Securities, to each Holder of Common Securities pro rata
according to the aggregate liquidation amount of Common Securities held by the
relevant Holder relative to the aggregate liquidation amount of all Common
Securities outstanding.
9. Ranking.
-------
The Capital Securities rank pari passu with the Common Securities and
payment thereon shall be made Pro Rata with the Common Securities, except that,
if an Event of Default occurs and is continuing, no payments in respect of
Distributions on, or payments upon liquidation, redemption or otherwise with
respect to, the Common Securities shall be made until the Holders of the Capital
Securities shall be paid in full the Distributions, Redemption Price,
Liquidation Distribution and other payments to which they are entitled at such
time.
10. Acceptance of Securities Guarantee and Indenture.
------------------------------------------------
Each Holder of Capital Securities and Common Securities, by the
acceptance thereof, agrees to the provisions of the Capital Securities Guarantee
and the Common Securities Guarantee, respectively, including the subordination
provisions therein and to the provisions of the Indenture.
I-11
11. No Preemptive Rights.
--------------------
The Holders of the Securities shall have no preemptive rights to
subscribe for any additional securities.
12. Miscellaneous.
-------------
These terms constitute a part of the Declaration.
The Sponsor will provide a copy of the Declaration, the Capital
Securities Guarantee or the Common Securities Guarantee (as may be appropriate),
and the Indenture (including any supplemental indenture) to a Holder without
charge on written request to the Sponsor at its principal place of business.
I-12
EXHIBIT A-1
FORM OF CAPITAL SECURITY CERTIFICATE
[FORM OF FACE OF SECURITY]
[IF THIS GLOBAL SECURITY IS A GLOBAL CAPITAL SECURITY, INSERT: THIS
CAPITAL SECURITY IS A GLOBAL CAPITAL SECURITY WITHIN THE MEANING OF THE
DECLARATION HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF THE
DEPOSITORY TRUST COMPANY (THE "CLEARING AGENCY") OR A NOMINEE OF THE CLEARING
AGENCY. THIS CAPITAL SECURITY IS EXCHANGEABLE FOR CAPITAL SECURITIES REGISTERED
IN THE NAME OF A PERSON OTHER THAN THE CLEARING AGENCY OR ITS NOMINEE ONLY IN
THE LIMITED CIRCUMSTANCES DESCRIBED IN THE DECLARATION AND NO TRANSFER OF THIS
CAPITAL SECURITY (OTHER THAN A TRANSFER OF THIS CAPITAL SECURITY AS A WHOLE BY
THE CLEARING AGENCY TO A NOMINEE OF THE CLEARING AGENCY OR BY A NOMINEE OF THE
CLEARING AGENCY TO THE CLEARING AGENCY OR ANOTHER NOMINEE OF THE CLEARING
AGENCY) MAY BE REGISTERED EXCEPT IN LIMITED CIRCUMSTANCES.]
UNLESS THIS CAPITAL SECURITY IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (55 WATER STREET, NEW YORK, NEW
YORK) TO THE TRUST OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR
PAYMENT, AND ANY CAPITAL SECURITY ISSUED IS REGISTERED IN THE NAME OF CEDE & CO.
OR SUCH OTHER NAME AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY AND ANY PAYMENT HEREON IS MADE TO CEDE & CO., ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY A PERSON IS
WRONGFUL SINCE THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.]
[IF THIS SECURITY IS A RESTRICTED CAPITAL SECURITY, INSERT: THE
CAPITAL SECURITIES REPRESENTED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") OR ANY STATE
SECURITIES LAWS OR ANY OTHER APPLICABLE SECURITIES LAW. NEITHER THIS CAPITAL
SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD,
ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE
ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT
SUBJECT TO, REGISTRATION.
THE HOLDER OF THIS CAPITAL SECURITY BY ITS ACCEPTANCE HEREOF AGREES TO
OFFER, SELL OR OTHERWISE TRANSFER THIS CAPITAL SECURITY, PRIOR TO THE DATE (THE
"RESALE RESTRICTION TERMINATION DATE") WHICH IS THREE YEARS AFTER THE LATER OF
THE ORIGINAL ISSUANCE DATE HEREOF AND THE LAST DATE ON WHICH THE COMPANY OR ANY
"AFFILIATE" OF THE COMPANY WAS
A1-1
THE OWNER OF THIS CAPITAL SECURITY (OR ANY PREDECESSOR OF THIS CAPITAL SECURITY)
ONLY (A) TO THE COMPANY, (B) PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BEEN
DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C) SO LONG AS THIS CAPITAL
SECURITY IS ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE SECURITIES ACT
("RULE 144A"), TO A PERSON IT REASONABLY BELIEVES IS A "QUALIFIED INSTITUTIONAL
BUYER" (AS DEFINED IN RULE 144A) THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE
ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE
TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (D) PURSUANT TO THE EXEMPTION
FROM REGISTRATION PROVIDED BY RULE 144 UNDER THE SECURITIES ACT (IF AVAILABLE),
(E) PURSUANT TO OFFERS AND SALES TO NON-U.S. PERSONS THAT OCCUR OUTSIDE THE
UNITED STATES WITHIN THE MEANING OF REGULATION S UNDER THE SECURITIES ACT, (F)
TO AN INSTITUTIONAL "ACCREDITED INVESTOR" WITHIN THE MEANING OF SUBPARAGRAPH
(A)(1), (2), (3) OR (7) OF RULE 501 UNDER THE SECURITIES ACT THAT IS ACQUIRING
THIS CAPITAL SECURITY FOR ITS OWN ACCOUNT, OR FOR THE ACCOUNT OF SUCH AN
INSTITUTIONAL ACCREDITED INVESTOR, FOR INVESTMENT PURPOSES AND NOT WITH A VIEW
TO, OR FOR OFFER OR SALE IN CONNECTION WITH, ANY DISTRIBUTION IN VIOLATION OF
THE SECURITIES ACT, OR (G) PURSUANT TO ANY OTHER AVAILABLE EXEMPTION FROM THE
REGISTRATION REQUIREMENTS UNDER THE SECURITIES ACT, SUBJECT TO THE RIGHT OF THE
TRUST AND THE COMPANY PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER (i) PURSUANT TO
CLAUSE (D), (E), (F) OR (G) TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL,
CERTIFICATIONS AND/OR OTHER INFORMATION REASONABLY SATISFACTORY TO EACH OF THEM,
AND (ii) PURSUANT TO CLAUSE (F) TO REQUIRE THAT THE TRANSFEROR DELIVER TO THE
TRUST A LETTER FROM THE TRANSFEREE SUBSTANTIALLY IN THE FORM OF ANNEX A TO THE
OFFERING MEMORANDUM DATED JANUARY 17, 1997. SUCH HOLDER FURTHER AGREES THAT IT
WILL DELIVER TO EACH PERSON TO WHOM THIS CAPITAL SECURITY IS TRANSFERRED A
NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND.
A1-2
Certificate Number Aggregate Liquidation
Amount of Capital Securities
CUSIP NO.
----------
Certificate Evidencing Capital Securities
of
ComEd Financing II
8.50% Series __ Capital Securities
(liquidation amount $1,000 per Capital Security)
ComEd Financing II, a statutory business trust created under the laws
of the State of Delaware (the "Trust"), hereby certifies that ______________
(the "Holder") is the registered owner of [$_________ in aggregate liquidation
amount of Capital Securities of the Trust]* [the aggregate liquidation amount of
Capital Securities of the Trust specified in Schedule A hereto.]** representing
undivided beneficial interests in the assets of the Trust designated the 8.50%
Series __ Capital Securities (liquidation amount $1,000 per Capital Security)
(the "Capital Securities"). The Capital Securities are transferable on the books
and records of the Trust, in person or by a duly authorized attorney, upon
surrender of this certificate duly endorsed and in proper form for transfer. The
designation, rights, privileges, restrictions, preferences and other terms and
provisions of the Capital Securities represented hereby are issued and shall in
all respects be subject to the provisions of the Amended and Restated
Declaration of Trust of the Trust dated as of January 24, 1997, as the same may
be amended from time to time (the "Declaration"), including the designation of
the terms of the Capital Securities as set forth in Annex I to the Declaration.
Capitalized terms used but not defined herein shall have the meaning given them
in the Declaration. The Sponsor will provide a copy of the Declaration, the
Capital Securities Guarantee and the Indenture to a Holder without charge upon
written request to the Trust at its principal place of business.
Upon receipt of this certificate, the Holder is bound by the
Declaration and is entitled to the benefits thereunder and to the benefits of
the Capital Securities Guarantee to the extent provided therein.
- ---------------
* Insert in Definitive Capital Securities only.
** Insert in Global Capital Securities only.
A1-3
By acceptance, the Holder agrees to treat, for United States federal
income tax purposes, the Debentures as indebtedness and the Capital Securities
as evidence of indirect beneficial ownership in the Debentures.
IN WITNESS WHEREOF, the Trust has executed this certificate this ____
day of __________, ____.
COMED FINANCING II
By:
-------------------------------
Name:
Administrative Trustee
PROPERTY TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Capital Securities referred to in the within-
mentioned Declaration.
Dated: _____________,____
WILMINGTON TRUST COMPANY,
Not in Its Individual Capacity But Solely as
Property Trustee
By:
-------------------------------------
Authorized Signatory
A1-4
[FORM OF REVERSE OF SECURITY]
Distributions payable on each Capital Security will be fixed at a rate
per annum of 8.50% (the "Coupon Rate") of the liquidation amount of $1,000 per
Capital Security, such rate being the rate of interest payable on the Debentures
to be held by the Property Trustee. Distributions in arrears for more than one
semi-annual period will bear interest thereon compounded semi-annually at the
Coupon Rate (to the extent permitted by applicable law). The term
"Distributions", as used herein, includes such cash distributions and any such
interest unless otherwise stated. A Distribution is payable only to the extent
that payments are made in respect of the Debentures held by the Property Trustee
and to the extent the Property Trustee has funds on hand legally available
therefor.
Distributions on the Capital Securities will be cumulative, will
accumulate from the most recent date to which Distributions have been paid or,
if any Distributions have been paid, from January 24, 1997 and will be payable
semi-annually in arrears, on January 15 and July 15 of each year, commencing on
July 15, 1997, except as otherwise described below. Distributions will be
computed on the basis of a 360-day year consisting of twelve 30-day months and,
for any period less than a full calendar month, the number of days elapsed in
such month. As long as no Event of Default has occurred and is continuing under
the Indenture, the Debenture Issuer has the right under the Indenture to defer
payments of interest by extending the interest payment period at any time and
from time to time on the Debentures for a period not exceeding 10 consecutive
calendar semi-annual periods, including the first such semi-annual period during
such extension period (each an "Extension Period"), provided that no Extension
Period shall extend beyond the Maturity Date of the Debentures. As a
consequence of such deferral, Distributions will also be deferred. Despite such
deferral, semi-annual Distributions will continue to accumulate with interest
thereon (to the extent permitted by applicable law, but not at a rate exceeding
the rate of interest then accruing on the Debentures) at the Coupon Rate
compounded semi-annually during any such Extension Period. Prior to the
termination of any such Extension Period, the Debenture Issuer may further defer
payments of interest by further extending such Extension Period; provided that
such Extension Period, together with all such previous and further extensions
within such Extension Period, may not exceed 10 consecutive semi-annual periods,
including the first semi-annual period during such Extension Period, or extend
beyond the Maturity Date of the Debentures. Payments of accumulated
Distributions will be payable to Holders as they appear on the books and records
of the Trust on the first record date after the end of the Extension Period.
Upon the termination of any Extension Period and the payment of all amounts then
due, the Debenture Issuer may commence a new Extension Period, subject to the
above requirements.
Subject to certain conditions set forth in the Declaration and the
Indenture, the Property Trustee may, at the direction of the Sponsor, at any
time liquidate the Trust and cause the Debentures to be distributed to the
holders of the Securities in liquidation of the Trust or, simultaneous with any
redemption of the Debentures, cause a Like Amount of the Securities to be
redeemed by the Trust.
The Capital Securities shall be redeemable as provided in the
Declaration.
A1-5
_____________________
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned assigns and transfers this Capital Security
Certificate to:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Insert assignee's social security or tax identification number)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Insert address and zip code of assignee)
and irrevocably appoints
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
agent to transfer this Capital Security Certificate on the books of the Trust.
The agent may substitute another to act for him or her.
Date:
--------------------------------------------
Signature:
---------------------------------------
(Sign exactly as your name appears on the other side of this Capital Security
Certificate)
Signature Guarantee*:
----------------------------
_____________________
* Signature must be guaranteed by an "eligible guarantor institution" that is
a bank, stockbroker, savings and loan association or credit union meeting
the requirements of the Registrar, which requirements include membership or
participation in the Securities Transfer Agents Medallion Program ("STAMP")
or such other "signature guarantee program" as may be determined by the
Registrar in addition to, or in substitution for, STAMP, all in accordance
with the Securities Exchange Act of 1934, as amended.
A1-6
[Include the following if the Capital Security bears a Restricted Capital
Securities Legend --
In connection with any transfer of any of the Capital Securities evidenced by
this certificate, the undersigned confirms that such Capital Securities are
being:
CHECK ONE BOX BELOW
(1) [_] exchanged for the undersigned's own account without transfer; or
(2) [_] transferred pursuant to and in compliance with Rule 144A under
the Securities Act of 1933; or
(3) [_] transferred pursuant to and in compliance with Regulation S
under the Securities Act of 1933; or
(4) [_] transferred to an institutional "accredited investor" within the
meaning of subparagraph (a)(1), (2), (3) or (7) of Rule 501
under the Securities Act of 1933 that is acquiring the Capital
Securities for its own account, or for the account of such an
institutional "accredited investor," for investment purposes and
not with a view to, or for offer or sale in connection with, any
distribution in violation of the Securities Act of 1933; or
(5) [_] transferred pursuant to another available exemption from the
registration requirements of the Securities Act of 1933; or
(6) [_] transferred pursuant to an effective registration statement.
Unless one of the boxes is checked, the Exchange Agent will refuse to register
any of the Capital Securities evidenced by this certificate in the name of any
person other than the registered Holder thereof; provided, however, that if box
(3), (4) or (5) is checked, the Registrar may require, prior to registering any
such transfer of the Capital Securities such legal opinions, certifications and
other information as the Trust has reasonably requested to confirm that such
transfer is being made pursuant to an exemption from, or in a transaction not
subject to, the registration requirements of the Securities Act of 1933, such as
the exemption provided by Rule 144 under such Act; provided, further, that (i)
if box 2 is checked, the transferee must also certify that it is a qualified
institutional buyer as defined in Rule 144A or (ii) if box (4) is checked, the
transferee must also provide to the Registrar a Transferee Letter of
Representation in the form attached to the Offering Memorandum of the Trust
dated January 17 , 1997; provided, further, that after the date that a
Registration Statement has been filed and so long as such Registration Statement
continues to be effective, the Registrar may only permit transfers for which box
(5) has been checked.
---------------------------------------
Signature
A1-7
SCHEDULE A*
The initial aggregate liquidation amount of Capital Securities
evidenced by the Certificate to which this Schedule is attached is $__________
(equivalent to ________ Capital Securities). The notations on the following
table evidence decreases and increases in the number of Capital Securities
evidenced by such Certificate.
Liquidation Amount
of Capital Securities
Decrease in Increase in Remaining After
Liquidation Amount Liquidation Amount Such Decrease or Notation by
of Capital Securities of Capital Securities Increase Registration
- --------------------- --------------------- --------------------- ------------
- -----------------
* Append to Global Capital Securities only.
A-1
EXHIBIT A-2
FORM OF COMMON SECURITY CERTIFICATE
THIS COMMON SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT") OR ANY STATE SECURITIES LAWS OR ANY
OTHER APPLICABLE SECURITIES LAW. NEITHER THIS COMMON SECURITY NOR ANY INTEREST
OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED,
ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR
UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, REGISTRATION.
THE HOLDER OF THIS CAPITAL SECURITY BY ITS ACCEPTANCE HEREOF AGREES TO
OFFER, SELL OR OTHERWISE TRANSFER THIS CAPITAL SECURITY, PRIOR TO THE DATE (THE
"RESALE RESTRICTION TERMINATION DATE") WHICH IS THREE YEARS AFTER THE LATER OF
THE ORIGINAL ISSUANCE DATE HEREOF AND THE LAST DATE ON WHICH THE COMPANY OR ANY
"AFFILIATE" OF THE COMPANY WAS THE OWNER OF THIS CAPITAL SECURITY (OR ANY
PREDECESSOR OF THIS CAPITAL SECURITY) ONLY (A) TO THE COMPANY, (B) PURSUANT TO A
REGISTRATION STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES
ACT, (C) SO LONG AS THIS CAPITAL SECURITY IS ELIGIBLE FOR RESALE PURSUANT TO
RULE 144A UNDER THE SECURITIES ACT ("RULE 144A"), TO A PERSON IT REASONABLY
BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A) THAT
PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL
BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON
RULE 144A, (D) PURSUANT TO THE EXEMPTION FROM REGISTRATION PROVIDED BY RULE 144
UNDER THE SECURITIES ACT (IF AVAILABLE), (E) PURSUANT TO OFFERS AND SALES TO
NON-U.S. PERSONS THAT OCCUR OUTSIDE THE UNITED STATES WITHIN THE MEANING OF
REGULATION S UNDER THE SECURITIES ACT, (F) TO AN INSTITUTIONAL "ACCREDITED
INVESTOR" WITHIN THE MEANING OF SUBPARAGRAPH (A)(1), (2), (3) OR (7) OF RULE 501
UNDER THE SECURITIES ACT THAT IS ACQUIRING THIS CAPITAL SECURITY FOR ITS OWN
ACCOUNT, OR FOR THE ACCOUNT OF SUCH AN INSTITUTIONAL ACCREDITED INVESTOR, FOR
INVESTMENT PURPOSES AND NOT WITH A VIEW TO, OR FOR OFFER OR SALE IN CONNECTION
WITH, ANY DISTRIBUTION IN VIOLATION OF THE SECURITIES ACT, OR (G) PURSUANT TO
ANY OTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS UNDER THE
SECURITIES ACT, SUBJECT TO THE RIGHT OF THE TRUST AND THE COMPANY PRIOR TO ANY
SUCH OFFER, SALE OR TRANSFER (i) PURSUANT TO CLAUSE (D), (E), (F) OR (G) TO
REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATIONS AND/OR OTHER
INFORMATION REASONABLY SATISFACTORY TO EACH OF THEM, AND (ii) PURSUANT TO CLAUSE
(F) TO REQUIRE THAT THE TRANSFEROR DELIVER TO THE TRUST A LETTER FROM THE
TRANSFEREE SUBSTANTIALLY IN THE FORM OF ANNEX A TO THE OFFERING
A2-1
MEMORANDUM DATED JANUARY 17, 1997. SUCH HOLDER FURTHER AGREES THAT IT WILL
DELIVER TO EACH PERSON TO WHOM THIS CAPITAL SECURITY IS TRANSFERRED A NOTICE
SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND.
A2-2
Certificate Number Number of Common Securities
Certificate Evidencing Common Securities
of
ComEd Financing II
8.50% Common Securities
(Liquidation Amount $1,000 per Common Security)
ComEd Financing II, a statutory business trust formed under the laws of the
State of Delaware (the "Trust"), hereby certifies that Commonwealth Edison
Company, an Illinois corporation (the "Holder"), is the registered owner of
__________ common securities of the Trust representing undivided beneficial
interests in the assets of the Trust designated the 8.50% Common Securities
(Liquidation Amount $1,000 per Common Security) (the "Common Securities"). The
Common Securities are transferable on the books and records of the Trust, in
person or by a duly authorized attorney, upon surrender of this certificate duly
endorsed and in proper form for transfer. The designation, rights, privileges,
restrictions, preferences and other terms and provisions of the Common
Securities represented hereby are issued and shall in all respects be subject to
the provisions of the Amended and Restated Declaration of Trust of the Trust
dated as of January 24, 1997, as the same may be amended from time to time (the
"Declaration"), including the designation of the terms of the Common Securities
as set forth in Annex I to the Declaration. Capitalized terms used but not
defined herein shall have the meaning given them in the Declaration. The Sponsor
will provide a copy of the Declaration, the Common Securities Guarantee and the
Indenture (including any supplemental indenture) to a Holder without charge upon
written request to the Sponsor at its principal place of business.
Upon receipt of this certificate, the Sponsor is bound by the Declaration
and is entitled to the benefits thereunder and to the benefits of the Common
Securities Guarantee to the extent provided therein.
By acceptance, the Holder agrees to treat, for United States federal income
tax purposes, the Debentures as indebtedness and the Common Securities as
evidence of indirect beneficial ownership in the Debentures.
A2-3
IN WITNESS WHEREOF, the Trust has executed this certificate this ___ day
of _________, ____.
COMED FINANCING II
By:________________________________
Name:
Administrative Trustee
A2-4
[FORM OF REVERSE OF SECURITY]
Distributions payable on each Common Security will be fixed at a rate per
annum of 8.50% (the "Coupon Rate") of the liquidation amount of $1,000 per
Common Security, such rate being the rate of interest payable on the Debentures
to be held by the Property Trustee. Distributions in arrears for more than one
semi-annual period will bear interest thereon compounded semi-annually at the
Coupon Rate (to the extent permitted by applicable law). The term
"Distributions", as used herein, includes such cash distributions and any such
interest unless otherwise stated. A Distribution is payable only to the extent
that payments are made in respect of the Debentures held by the Property Trustee
and to the extent the Property Trustee has funds available therefor.
Distributions on the Common Securities will be cumulative, will accrue from
the most recent date to which Distributions have been paid or, if no
Distributions have been paid, from January 24, 1997 and will be payable semi-
annually in arrears, on January 15 and July 15 of each year, commencing on July
15, 1997, except as otherwise described below. Distributions will be computed on
the basis of a 360-day year consisting of twelve 30-day months and, for any
period less than a full calendar month, the number of days elapsed in such
month. As long as no Event of Default has occurred and is continuing under the
Indenture, the Debenture Issuer has the right under the Indenture to defer
payments of interest by extending the interest payment period at any time and
from time to time on the Debentures for a period not exceeding 10 consecutive
calendar semi-annual periods, including the first such semi-annual period during
such extension period (each an "Extension Period"), provided that no Extension
Period shall extend beyond the Maturity Date of the Debentures. As a consequence
of such deferral, Distributions will also be deferred. Despite such deferral,
Distributions will continue to accumulate with interest thereon (to the extent
permitted by applicable law, but not at a rate exceeding the rate of interest
then accruing on the Debentures) at the Coupon Rate compounded semi-annually
during any such Extension Period. Prior to the termination of any such Extension
Period, the Debenture Issuer may further defer payments of interest by further
extending such Extension Period; provided that such Extension Period, together
with all such previous and further extensions within such Extension Period, may
not exceed 10 consecutive semi-annual periods, including the first semi-annual
period during such Extension Period, or extend beyond the Maturity Date of the
Debentures. Payments of accrued Distributions will be payable to Holders as they
appear on the books and records of the Trust on the first record date after the
end of the Extension Period. Upon the termination of any Extension Period and
the payment of all amounts then due, the Debenture Issuer may commence a new
Extension Period, subject to the above requirements.
Subject to certain conditions set forth in the Declaration and the
Indenture, the Property Trustee may, at the direction of the Sponsor, at any
time liquidate the Trust and cause the Debentures to be distributed to the
holders to the Securities in liquidation of the Trust or, simultaneous with any
redemption of the Debentures, cause a Like Amount of the Securities to be
redeemed by the Trust.
The Common Securities shall be redeemable as provided in the Declaration.
A2-5
---------------------
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned assigns and transfers this Common Security
Certificate to:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Insert assignee's social security or tax identification number)
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Insert address and zip code of assignee)
and irrevocably appoints
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
agent to transfer this Common Security Certificate on the books of the Trust.
The agent may substitute another to act for him or her.
Date:
----------------------------------------------------------------------
Signature:
-----------------------------------------------------------------
(Sign exactly as your name appears on the other side of this Common Security
Certificate)
Signature Guarantee*:
-------------------------------------------------------
- --------------------
* Signature must be guaranteed by an "eligible guarantor institution" that is
a bank, stockbroker, savings and loan association or credit union meeting
the requirements of the Registrar, which requirements include membership or
participation in the Securities Transfer Agents Medallion Program ("STAMP")
or such other "signature guarantee program" as may be determined by the
Registrar in addition to, or in substitution for, STAMP, all in accordance
with the Securities Exchange Act of 1934, as amended.
A2-6
[Include the following if the Common Security bears a Restricted Common
Securities Legend --
In connection with any transfer of any of the Common Securities evidenced by
this certificate, the undersigned confirms that such Common Securities are
being:
CHECK ONE BOX BELOW
(1) [_] exchanged for the undersigned's own account without transfer; or
(2) [_] transferred pursuant to and in compliance with Rule 144A under
the Securities Act of 1933; or
(3) [_] transferred pursuant to and in compliance with Regulation S
under the Securities Act of 1933; or
(4) [_] to an institutional "accredited investor" within the meaning of
subparagraph (a)(1), (2), (3) or (7) of Rule 501 under the
Securities Act that is acquiring the Preferred Security for its
own account, or for the account of such an institutional
"accredited investor," for investment purposes and not with a
view to, or for offer or sale in connection with, any
distribution in violation of the Securities Act; or
(5) [_] transferred pursuant to another available exemption from the
registration requirements of the Securities Act of 1933; or
(6) [_] transferred pursuant to an effective Registration Statement.
Unless one of the boxes is checked, the Exchange Agent will refuse to register
any of the Common Securities evidenced by this certificate in the name of any
person other than the registered Holder thereof; provided, however, that if box
(3), (4) or (5) is checked, the Exchange Agent may require, prior to registering
any such transfer of the Preferred Securities such legal opinions,
certifications and other information as the Trust has reasonably requested to
confirm that such transfer is being made pursuant to an exemption from, or in a
transaction not subject to, the registration requirements of the Securities Act
of 1933, such as the exemption provided by Rule 144 under such Act; provided,
further, that (i) if box 2 is checked, the transferee must also certify that it
is a qualified institutional buyer as defined in Rule 144A or (ii) if box 4 is
checked, the transferee must also provide a Transferee Representation Letter in
the form attached to the Offering Memorandum of the Trust, dated January 17,
1997, after the date that a Registration Statement has been filed and so long as
such Registration Statement continues to be effective, the Exchange Agent may
only permit transfers for which box (5) has been checked.
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Signature
A2-7