AMENDED AND RESTATED DECLARATION
OF TRUST
CALENERGY CAPITAL TRUST
Dated as of April 4, 1996
TABLE OF CONTENTS
Page
ARTICLE I
INTERPRETATION AND DEFINITIONS
SECTION 1.1 Definitions...................................................................... 2
ARTICLE II
TRUST INDENTURE ACT
SECTION 2.1 Trust Indenture Act; Application................................................. 10
SECTION 2.2 Lists of Holders of Securities................................................... 10
SECTION 2.3 Reports by the Property Trustee.................................................. 11
SECTION 2.4 Periodic Reports to Property Trustee............................................. 11
SECTION 2.5 Evidence of Compliance with Conditions Precedent................................. 11
SECTION 2.6 Events of Default; Waiver........................................................ 11
SECTION 2.7 Event of Default; Notice......................................................... 14
ARTICLE III
ORGANIZATION
SECTION 3.1 Name............................................................................. 15
SECTION 3.2 Office........................................................................... 15
SECTION 3.3 Purpose.......................................................................... 15
SECTION 3.4 Authority........................................................................ 15
SECTION 3.5 Title to Property of the Trust................................................... 16
SECTION 3.6 Powers and Duties of the Regular Trustees........................................ 16
SECTION 3.7 Prohibition of Actions by the Trust and the Trustees............................. 20
SECTION 3.8 Powers and Duties of the Property Trustee........................................ 21
SECTION 3.9 Certain Duties and Responsibilities of the Property Trustee...................... 24
SECTION 3.10 Certain Rights of Property Trustee............................................... 26
SECTION 3.11 Delaware Trustee................................................................. 29
SECTION 3.12 Not Responsible for Recitals or Issuance of Securities........................... 29
SECTION 3.13 Duration of Trust................................................................ 30
SECTION 3.14 Mergers.......................................................................... 30
ARTICLE IV
SPONSOR
SECTION 4.1 Sponsor's Purchase of Common Securities.......................................... 32
SECTION 4.2 Responsibilities of the Sponsor.................................................. 32
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Page
ARTICLE V
TRUSTEES
SECTION 5.1 Number of Trustees............................................................... 33
SECTION 5.2 Delaware Trustee................................................................. 34
SECTION 5.3 Property Trustee; Eligibility.................................................... 34
SECTION 5.4 Qualifications of Regular Trustees and Delaware Trustee Generally................ 35
SECTION 5.5 Initial Trustees................................................................. 36
SECTION 5.6 Appointment, Removal and Resignation of Trustees................................. 36
SECTION 5.7 Vacancies among Trustees......................................................... 38
SECTION 5.8 Effect of Vacancies.............................................................. 38
SECTION 5.9 Meetings......................................................................... 39
SECTION 5.10 Delegation of Power.............................................................. 39
SECTION 5.11 Merger, Conversion, Consolidation or Succession to Business...................... 40
ARTICLE VI
DISTRIBUTIONS
SECTION 6.1 Distributions.................................................................... 40
ARTICLE VII
ISSUANCE OF SECURITIES
SECTION 7.1 General Provisions Regarding Securities.......................................... 41
SECTION 7.2 Execution and Authentication..................................................... 41
SECTION 7.3 Form and Dating.................................................................. 42
SECTION 7.4 Registrar, Paying Agent and Conversion Agent..................................... 45
Section 7.5 Paying Agent to Hold Money in Trust.............................................. 46
SECTION 7.6 Replacement Securities........................................................... 46
SECTION 7.7 Outstanding Preferred Securities................................................. 46
SECTION 7.8 Preferred Securities............................................................. 47
SECTION 7.9 Temporary Securities............................................................. 47
SECTION 7.10 Cancellation..................................................................... 48
ARTICLE VIII
TERMINATION OF TRUST
SECTION 8.1 Termination of Trust............................................................. 49
ARTICLE IX
TRANSFER
SECTION 9.1 General.......................................................................... 50
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Page
SECTION 9.2 Transfer Procedures and Restrictions............................................. 51
SECTION 9.3 Deemed Security Holders.......................................................... 61
SECTION 9.4 Book Entry Interests............................................................. 61
SECTION 9.5 Notices to Clearing Agency....................................................... 62
SECTION 9.6 Appointment of Successor Clearing Agency......................................... 62
ARTICLE X
LIMITATION OF LIABILITY OF
HOLDERS OF SECURITIES, TRUSTEES OR OTHERS
SECTION 10.1 Liability....................................................................... 63
SECTION 10.2 Exculpation..................................................................... 63
SECTION 10.3 Fiduciary Duty.................................................................. 64
SECTION 10.4 Indemnification................................................................. 65
SECTION 10.5 Outside Businesses.............................................................. 69
ARTICLE XI
ACCOUNTING
SECTION 11.1 Fiscal Year..................................................................... 69
SECTION 11.2 Certain Accounting Matters...................................................... 69
SECTION 11.3 Banking......................................................................... 70
SECTION 11.4 Withholding..................................................................... 71
ARTICLE XII
AMENDMENTS AND MEETINGS
SECTION 12.1 Amendments...................................................................... 71
SECTION 12.2 Meetings of the Holders of Securities; Action by Written Consent................ 73
ARTICLE XIII
REPRESENTATIONS OF PROPERTY TRUSTEE AND DELAWARE TRUSTEE
SECTION 13.1 Representations and Warranties of Property Trustee.............................. 76
ARTICLE XIV
REGISTRATION RIGHTS
SECTION 14.1 Registration Rights............................................................. 78
ARTICLE XV
MISCELLANEOUS
SECTION 15.1 Notices......................................................................... 80
SECTION 15.2 Governing Law................................................................... 81
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Page
SECTION 15.3 Intention of the Parties........................................................ 82
SECTION 15.4 Headings........................................................................ 82
SECTION 15.5 Successors and Assigns.......................................................... 82
SECTION 15.6 Partial Enforceability.......................................................... 82
SECTION 15.7 Counterparts.................................................................... 83
iv
CROSS-REFERENCE TABLE*
Section of
Trust Indenture Act
Section of
of 1939, as amended
Declaration
310(a)........................................................ 5.3(a)
310(c)........................................................ Inapplicable
311(c)........................................................ Inapplicable
312(a)........................................................ 2.2(a)
312(b)........................................................ 2.2(b)
313........................................................... 2.3
314(a)........................................................ 2.4
314(b)........................................................ Inapplicable
314(c)........................................................ 2.5
314(d)........................................................ Inapplicable
314(f)........................................................ Inapplicable
315(a)........................................................ 3.9(b)
315(c)........................................................ 3.9(a)
315(d)........................................................ 3.9(a)
316(a)........................................................ Annex I
316(c)........................................................ 3.6(e)
- ---------------
* This Cross-Reference Table does not constitute part of the
Declaration and shall not affect the interpretation of any of its
terms or provisions.
v
AMENDED AND RESTATED
DECLARATION OF TRUST
OF
CALENERGY CAPITAL TRUST
April 4, 1996
AMENDED AND RESTATED DECLARATION OF TRUST ("Declaration")
dated and effective as of April 4, 1996, by the undersigned trustees (together
with all other Persons from time to time duly appointed and serving as
trustees in accordance with the provisions of this Declaration, the
"Trustees"), CalEnergy Company, Inc., a Delaware corporation, as trust sponsor
(the "Sponsor"), and by the holders, from time to time, of undivided
beneficial interests in the Trust issued pursuant to this Declaration;
WHEREAS, the Trustees and the Sponsor established CalEnergy
Capital Trust (the "Trust"), a trust under the Business Trust Act (as defined
herein) pursuant to a Declaration of Trust dated as of April 3, 1996, (the
"Original Declaration") and a Certificate of Trust filed with the Secretary of
State of the State of Delaware on April 3, 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 (as defined herein) of the Debenture Issuer (as defined
herein);
WHEREAS, as of the date hereof, no interests in
the Trust have been issued;
WHEREAS, all of the Trustees and the Sponsor, by this
Declaration, amend and restate each and every term and provision of the
Original Declaration; and
NOW, THEREFORE, it being the intention of the parties hereto
to continue the Trust as a business trust under the Business Trust Act and
that this Declaration constitute the governing instrument of such business
trust, the Trustees declare that all assets contributed to the Trust will be
held in trust for the benefit of the holders, from time to time, of the
securities representing undivided beneficial interests in the assets of the
Trust issued hereunder, subject to the provisions of this Declaration.
ARTICLE I
INTERPRETATION AND DEFINITIONS
SECTION 1.1 Definitions.
Unless the context otherwise requires:
(a) Capitalized terms used in this Declaration
but not defined in the preamble above have the respective
meanings assigned to them in this Section 1.1;
(b) a term defined anywhere in this Declaration
has the same meaning throughout;
(c) all references to "the Declaration" or "this
Declaration" are to this Declaration as modified, supple-
mented or amended from time to time;
(d) all references in this Declaration to
Articles and Sections and Annexes and Exhibits are to
Articles and Sections and Annexes and Exhibits to this
Declaration unless otherwise specified;
(e) 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; and
(f) a reference to the singular includes the
plural and vice versa.
"Additional Interest" means if the Trust is required to pay
any taxes, duties, assessments or governmental charges of whatever nature
(other than withholding taxes) imposed by the United States or any other
taxing authority, such amounts as shall be required so that the net amounts
received and retained by the Trust after paying such taxes, duties,
assessments and governmental charges will not be less than the amounts the
Trust would have received had no such taxes, duties, assessments or
governmental charges been imposed.
"Affiliate" has the same meaning as given to that term in
Rule 405 of the Securities Act or any successor rule thereunder.
2
"Agent" means any Registrar, Paying Agent,
Conversion Agent or co-registrar.
"Authorized Officer" of a Person means any Person that is
authorized to bind such Person provided, however that the Authorized Officer
signing an Officer's Certificate given pursuant to section 314(a)(4) of the
Trust Indenture Act shall be the principal executive, financial or accounting
officer of such Person.
"Book Entry Interest" means a beneficial interest in a
Global Certificate, ownership and transfers of which shall be maintained and
made through book entries by a Depositary as described in Section 9.4.
"Business Day" means any day other than a day on which
banking institutions in the City of New York or in Wilmington, Delaware are
authorized or required by law to close.
"Business Trust Act" means Chapter 38 of Title 12 of the
Delaware Code, 12 Del. Code ss.3801 et seq., as it may be amended from time to
time, or any successor legislation.
"Certificate" means a certificate in global or definitive
form representing a Common Security or a Preferred Security.
"Clearing Agency" means an organization registered as a
"Clearing Agency" pursuant to Section 17A of the Exchange Act.
"Closing Date" means April 10, 1996.
"Code" means the Internal Revenue Code of 1986 as amended
from time to time, or any successor legislation.
"Commission" means the Securities and Exchange
Commission.
"Common Securities" has the meaning specified in
Section 7.1(a).
"Common Securities Guarantee" means the guarantee agreement
dated as of April 10, 1996, of the Sponsor in respect of the Common
Securities.
3
"Company Indemnified Person" means (a) any Regular Trustee;
(b) any Affiliate of any Regular Trustee; (c) any officers, directors,
shareholders, members, partners, employees, representatives or agents of any
Regular Trustee; or (d) any officer, employee or agent of the Trust or its
Affiliates.
"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 the Sponsor in its
capacity as issuer of the Debentures.
"Debenture Trustee" means The Bank of New York, a New York
banking corporation, as trustee under the Indenture until a successor is
appointed thereunder, and thereafter means such successor trustee.
"Debentures" means the series of Debentures to be issued by
the Debenture Issuer under the Indenture to be held by the Property Trustee, a
specimen certificate for such series of Debentures being Exhibit B.
"Delaware Trustee" has the meaning set forth in
Section 5.2.
"Definitive Preferred Securities" means the Restricted
Definitive Preferred Security and any other Preferred Securities in definitive
form issued by the Trust.
"Distribution" means a distribution payable to Holders of
Securities in accordance with Section 6.1.
"Depositary" 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, as
amended from time to time, or any successor legislation.
4
"Exchanged Preferred Securities" means any Preferred
Security issued in connection with a sale pursuant to an effective Shelf
Registration Statement and not bearing any Restricted Securities Legend.
"Fiduciary Indemnified Person" has the meaning set
forth in Section 10.4(b).
"Holder" means a Person in whose name a Certificate
representing a Security is registered, such Person being a beneficial owner
within the meaning of the Business Trust Act.
"Indemnified Person" means a Company Indemnified
Person or a Fiduciary Indemnified Person.
"Indenture" means the Indenture dated as of April 1, 1996,
between the Debenture Issuer and the Debenture Trustee, and any indenture
supplemental thereto pursuant to which the Debentures are to be issued.
"Initial Purchasers" has the meaning set forth in
the Purchase Agreement.
"Investment Company" means an investment company
as defined in the Investment Company Act.
"Investment Company Act" means the Investment Company Act of
1940, as amended from time to time, or any successor legislation.
"Investment Company Event" has the meaning set forth in the
terms of the Securities as set forth in Annex I hereto.
"Legal Action" has the meaning set forth in
Section 3.6(g).
"Majority in liquidation amount of the Securities" means,
except as provided in the terms of the Preferred Securities or by the Trust
Indenture Act, Holder(s) of outstanding Securities voting together as a single
class or, as the context may require, Holders of outstanding Preferred
Securities or Holders of outstanding Common Securities voting separately as a
class, who are the record owners of
5
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 the terms
of the Securities as set forth in Annex I hereto.
"Offering Circular" means the confidential offering
circular, dated as of April 4, 1996, relating to the issuance by the Trust of
Preferred Securities.
"Officer's Certificate" means, with respect to any Person, a
certificate signed by an Authorized Officer of such Person. Any Officer's
Certificate delivered with respect to compliance with a condition or covenant
provided for in this Declaration shall include:
(a) a statement that the 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 upon which the
statements or opinions contained in such Certificate are
based;
(c) a statement that, in such officer's opinion, such officer
has made or caused to be made such examination or
investigation as 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 such officer,
such condition or covenant has been complied with.
"Participants" has the meaning set forth in
Section 7.3(b).
6
"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.
"Preferred Securities" has the meaning specified
in Section 7.1(a).
"Preferred Securities Guarantee" means the guarantee
agreement dated as of April 10, 1996, of the Sponsor in respect of the
Preferred Securities.
"Preferred Security Beneficial Owner" means, with respect to
a Book Entry Interest, a Person who is the beneficial owner of such Book Entry
Interest, as reflected on the books of the Depositary, or on the books of a
Person maintaining an account with such Depositary (directly as a Participant
or as an indirect participant, in each case in accordance with the rules of
such Depositary).
"Property Trustee" means the Trustee meeting the eligibility
requirements set forth in Section 5.3.
"Property Trustee Account" has the meaning set
forth in Section 3.8(c).
"Purchase Agreement" shall have the meaning set
forth in Section 7.3(a).
"Quorum" means a majority of the Regular Trustees or, if
there are only two Regular Trustees, both of them.
"Registrar" has the meaning specified in Section 7.4.
"Registration Rights Agreement" means the Registration
Rights Agreement, dated April 10, 1996, among the Sponsor, the Trust, and the
Initial Purchasers named in
the Purchase Agreement.
7
"Regular Trustee" means any Trustee other than the Property
Trustee and the Delaware Trustee.
"Related Party" means, with respect to the
Sponsor, any direct or indirect wholly owned subsidiary of
the Sponsor or any other Person that owns, directly or indirectly, 100% of the
outstanding voting securities of the Sponsor.
"Responsible Officer" means, with respect to the Property
Trustee, any vice-president, any assistant vice-president, the treasurer, any
assistant treasurer, any trust officer or assistant trust officer or any other
officer in the Corporate Trust Department 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 Preferred Security" has the
meaning set forth in Section 7.3(c).
"Restricted Period" means the one-year period following the
last issue date for the Preferred Securities (including Preferred Securities
issued to cover overallotments and Common Securities issued in connection with
related capital contributions). The Sponsor shall inform the Trustee as to the
termination of the restricted period and the Trustee may rely conclusively
thereon.
"Restricted Preferred Securities" shall include
the Restricted Definitive Preferred Securities and the Rule
144A Global Preferred Securities (as defined in Article IX
herein).
"Rule 3a-5" means Rule 3a-5 under the Investment
Company Act.
"Securities" means the Common Securities and the
Preferred Securities.
"Securities Act" means the Securities Act of 1933, as
amended from time to time or any successor legislation.
8
"Securities Custodian" means the custodian with respect to
the Rule 144A Global Preferred Security and any other Preferred Security in
global form.
"Shelf Registration Statement" has the meaning
specified in Section 14.1.
"Special Event" has the meaning set forth in
Annex I hereto.
"Sponsor" means CalEnergy Company, Inc., a Delaware
corporation, or any successor entity in a merger, consolidation or
amalgamation, in its capacity as sponsor of the Trust.
"Super Majority" has the meaning set forth in
Section 2.6(a)(ii).
"Tax Event" has the meaning set forth in Annex I
hereto.
"10% in liquidation amount of the Securities" means, except
as provided in the terms of the Preferred Securities or by the Trust Indenture
Act, Holders of outstanding Securities voting together as a single class or,
as the context may require, Holders of outstanding Preferred Securities or
Holders of outstanding Common Securities, voting separately as a class, who
are the record owners of 10% or more 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.
"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
9
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,
as amended from time to time, or any successor legislation.
"Unrestricted Definitive Preferred Security" has
the meaning set forth in Section 9.2(c).
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, which
are incorporated by reference in and made part of this Declaration and shall,
to the extent applicable, be governed by such provisions.
(b) The Property Trustee shall be the only Trustee which is
a Trustee for the purposes of the Trust Indenture Act.
(c) If and to the extent that any provision of this
Declaration limits, qualifies or conflicts with the duties imposed by ss.ss.
310 to 317, inclusive, of the Trust Indenture Act, such imposed duties shall
control.
(d) The application of the Trust Indenture Act to this
Declaration shall not affect the nature of the Securities as equity securities
representing undivided beneficial interests in the assets of the Trust.
SECTION 2.2 Lists of Holders of Securities.
(a) Each of the Sponsor and the Regular Trustees on behalf
of the Trust shall provide the Property Trustee (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 of
the Securities ("List of Holders") as of such record date, provided that
neither the Sponsor nor the
10
Regular 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
Regular Trustees on behalf of the Trust, and (ii) at any other time, within 30
days of receipt by the Trust of a written request from the Property Trustee
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 information 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 ss.ss. 311(a), 311(b) and 312(b) of the Trust Indenture Act.
SECTION 2.3 Reports by the Property Trustee.
Within 60 days after May 15 of each year, the Property
Trustee shall provide to the Holders of the Preferred Securities such reports
as are required by ss. 313 of the Trust Indenture Act, if any, in the form and
in the manner provided by ss. 313 of the Trust Indenture Act. The Property
Trustee shall also comply with the requirements of ss. 313(d) of the Trust
Indenture Act.
SECTION 2.4 Periodic Reports to Property Trustee.
Each of the Sponsor and the Regular Trustees on behalf of
the Trust shall provide to the Property Trustee such documents, reports and
information as required by ss. 314 of the Trust Indenture Act (if any) and the
compliance certificate required by ss. 314 of the Trust Indenture Act in the
form, in the manner and at the times required by ss. 314 of the Trust
Indenture Act.
SECTION 2.5 Evidence of Compliance with Conditions
Precedent.
Each of the Sponsor and the Regular Trustees on behalf of
the Trust shall provide to the Property Trustee such evidence of compliance
with any conditions precedent,
11
if any, provided for in this Declaration that relate to any of the matters set
forth in ss. 314(c) of the Trust Indenture Act. Any certificate or opinion
required to be given by an officer pursuant to ss. 314(c)(1) 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 Preferred Securities may, by vote, on behalf of
the Holders of all of the Preferred Securities, waive any past Event of
Default in respect of the Preferred Securities and its consequences, provided
that, if the underlying Event of Default under the Indenture:
(i) is not waivable under the Indenture, the
Event of Default under the Declaration shall also not
be waivable; or
(ii) requires the consent or vote of greater than a
majority in principal amount of the holders of 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 liquidation amount of the
Preferred 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 ss. 316(a)(1)(B) of the Trust Indenture Act and such ss. 316(a)(1)(B)
of the Trust Indenture Act is hereby expressly excluded from this Declaration
and the Securities, as permitted by the Trust Indenture Act. Upon such waiver,
any such default shall cease to exist, and any Event of Default with respect
to the Preferred Securities arising therefrom shall be deemed to have been
cured, for every purpose of this Declaration, but no such waiver shall extend
to any subsequent or other default or an Event of Default with respect to the
Preferred Securities or impair any right consequent thereon. Any waiver by the
Holders of the Preferred Securities of an Event of Default with respect to the
Preferred Securities shall also be deemed to constitute a waiver by the
Holders of the Common Securities of any such Event of Default with respect to
the Common Securities for all purposes of this Declaration without any
12
further act, vote, or consent of the Holders of the Common Securities.
(b) The Holders of a Majority in liquidation amount of the
Common Securities may, by vote, on behalf of the Holders of all of the Common
Securities, waive any past Event of Default with 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 liquidation amount of the
Common Securities that the relevant Super Majority represents of the
aggregate principal amount of the Debentures outstanding;
provided further, that each Holder of Common Securities will be deemed to have
waived any such Event of Default and all Events of Default with respect to the
Common Securities and its consequences until all Events of Default with
respect to the Preferred Securities have been cured, waived or otherwise
eliminated, and until such Events of Default have been so cured, waived or
otherwise eliminated, the Property Trustee will be deemed to be acting solely
on behalf of the Holders of the Preferred Securities and only the Holders of
the Preferred Securities will have the right to direct the Property Trustee in
accordance with the terms of the Securities. The foregoing provisions of this
Section 2.6(b) shall be in lieu of ss.ss. 316(a)(1)(A) and 316(a)(1)(B) of the
Trust Indenture Act and such ss.ss. 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
13
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 Preferred 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 ss. 316(a)(1)(B) of the Trust Indenture Act and such ss. 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 of the Securities, notices of all defaults with
respect to the Securities actually known to a Responsible Officer 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 or in the payment of any sinking fund installment established for
the Debentures, the Property Trustee shall be protected in withholding such
notice if and so long as the board of directors, the executive committee, or a
trust committee of directors and/or Responsible Officers of the Property
Trustee in good faith determines that the withholding of such notice is in the
interests of the Holders of the Securities.
(b) The Property Trustee shall not be deemed to
have knowledge of any default except:
(i) a default under Sections 501(1) and
501(2) of the Indenture; or
14
(ii) any default as to which the Property Trustee
shall have received written notice or of which a Responsible Officer
of the Property Trustee charged with the administration of the
Declaration shall have actual knowledge.
ARTICLE III
ORGANIZATION
SECTION 3.1 Name.
The Trust is named "CalEnergy Capital Trust," as such name
may be modified from time to time by the Regular Trustees following written
notice to the Holders of Securities. The Trust's activities may be conducted
under the name of the Trust or any other name deemed advisable by the Regular
Trustees.
SECTION 3.2 Office.
The address of the principal office of the Trust is c/o
CalEnergy Company, Inc., 302 South 36th Street, Suite 400, Omaha, Nebraska
68131, Attention: Chief Financial Officer, with a copy to: General Counsel. On
10 Business Days written notice to the Holders of Securities, the Regular
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 and use the proceeds from such sale to acquire the
Debentures, and (b) except as otherwise limited herein, to engage in only
those other activities necessary or incidental thereto. The Trust shall not
borrow money, issue debt or reinvest proceeds derived from investments, pledge
any of its assets, or otherwise undertake (or permit to be undertaken) any
activity that would cause the Trust not to be classified for United States
federal income tax purposes as a grantor trust.
15
SECTION 3.4 Authority.
(a) Subject to the limitations provided in this Declaration
and to the specific duties of the Property Trustee, the Regular Trustees shall
have exclusive and complete authority to carry out the purposes of the Trust.
An action taken by the Regular Trustees in accordance with their powers shall
constitute the act of and serve to bind the Trust and an action taken by the
Property Trustee on behalf of the Trust in accordance with its powers shall
constitute the act of and serve to bind the Trust. In dealing with the
Trustees acting on behalf of the Trust, no person shall be required to inquire
into the authority of the Trustees to bind the Trust. Persons dealing with the
Trust are entitled to rely conclusively on the power and authority of the
Trustees as set forth in this Declaration.
(b) Except as expressly set forth in this Declaration and
except if a meeting of the Regular Trustees is called with respect to any
matter over which the Regular Trustees have power to act, any power of the
Regular Trustees may be exercised by, or with the consent of, any one such
Regular Trustee.
(c) Unless otherwise determined by the Regular Trustees, and
except as otherwise required by the Business Trust Act or applicable law, any
Regular Trustee is authorized to execute on behalf of the Trust any documents
which the Regular Trustees have the power and authority to cause the Trust to
execute pursuant to Section 3.6, provided, that the registration statement
referred to in Section 3.6, including any amendments thereto, shall be signed
by a majority of the Regular Trustees; and
(d) a Regular Trustee may, by power of attorney consistent
with applicable law, delegate to any other natural person over the age of 21
his or her power for the purposes of signing any documents which the Regular
Trustees have power and authority to cause the Trust to execute pursuant to
Section 3.6.
SECTION 3.5 Title to Property of the Trust.
Except as provided in Section 3.8 with respect to the
Debentures and the Property Trustee Account or as
16
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 Regular Trustees.
The Regular Trustees shall have the exclusive power, duty
and authority to cause the Trust to engage in the following activities:
(a) to issue and sell the Preferred Securities
and the Common Securities in accordance with this Declaration; provided,
however, that the Trust may issue no
more than one series of Preferred Securities and no more than one series of
Common Securities, and, provided further, that there shall be no interests in
the Trust other than the Securities, and the issuance of Securities shall be
limited to simultaneous issuance of both Preferred Securities and Common
Securities on the Closing Date and any other date Preferred Securities are
sold pursuant to the over-allotment option granted in the Purchase Agreement;
(b) in connection with the issue and sale of the
Preferred Securities, at the direction of the Sponsor, to:
(i) prepare and execute, if necessary, an offering
circular (the "Offering Circular") in preliminary and final form
prepared by the Sponsor, in relation to the offering and sale of
Preferred Securities to qualified institutional buyers in reliance on
Rule 144A under the Securities Act and to a limited number of
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,
a registration statement filed on Form S-3 prepared by the Sponsor,
including any amendments thereto in relation to the Preferred
Securities;
(ii) execute and file any documents prepared by the
Sponsor, or take any acts as deter-
17
mined by the Sponsor to be necessary in order to qualify or register
all or part of the Preferred Securities in any State or foreign
jurisdiction in which the Sponsor has determined to qualify or
register such Preferred Securities for sale;
(iii) execute and file an application, prepared by
the Sponsor, to the Private Offerings, Resale and Trading through
Automated Linkages ("PORTAL") Market and, at such time as determined
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 Preferred Securities;
(iv) to execute and deliver letters,
documents, or instruments with the Depositary relating
to the Preferred Securities;
(v) execute and file with the Commission, at such
time as determined by the Sponsor, a registration statement on Form
8-A, including any amendments thereto, prepared by the Sponsor
relating to the registration of the Preferred Securities under
Section 12(b) of the Exchange Act; and
(vi) execute and enter into the Purchase Agreement,
Registration Rights Agreement and other related agreements providing
for the sale of the Preferred Securities;
(c) to acquire the Debentures with the proceeds of the sale
of the Preferred Securities and the Common Securities; provided, however, that
the Regular Trustees shall cause legal title to the Debentures to be held of
record in the name of the Property Trustee for the benefit of the Holders of
the Preferred Securities and the Holders of Common Securities;
(d) to give the Sponsor and the Property Trustee prompt
written notice of the occurrence of a Special Event; provided that the Regular
Trustees shall consult with the Sponsor and the Property Trustee before taking
or refraining from taking any Ministerial Action in relation to a Special
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
18
purposes of ss.316(c) of the Trust Indenture Act, Distributions, voting
rights, redemptions and exchanges, and to issue relevant notices to the
Holders of Preferred 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 Regular 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;
(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
ss. 314(a)(4) of the Trust Indenture Act to the Property
Trustee, which certificate may be executed by any Regular
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 transfer agent for the Securities;
(m) to give prompt written notice to the Holders of the
Securities 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;
19
(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
Preferred 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 Regular Trustees determine in
their discretion to be necessary or desirable in carrying out the activities
of the Trust as set out in this Section 3.6, including, but not limited to:
(i) causing the Trust not to be deemed to be
an Investment Company required to be registered under
the Investment Company Act;
(ii) causing the Trust to be classified for
United States federal income tax purposes as a grantor
trust; and
(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;
provided that such action does not materially adversely
affect the interests of Holders; and
(q) to take all action necessary to cause all applicable tax
returns and tax information reports that are required to be filed with respect
to the Trust to be duly prepared and filed by the Regular Trustees, on behalf
of the Trust.
The Regular 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 Regular Trustees shall
not take any action that is inconsistent with the purposes and functions of
the Trust set forth in Section 3.3.
20
Subject to this Section 3.6, the Regular Trustees shall have
none of the powers or the authority of the Property Trustee set forth in
Section 3.8.
Any expenses incurred by the Regular 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. In particular, the Trust shall not and the
Trustees (including the Property Trustee) shall cause the Trust not to:
(i) invest any proceeds received by the Trust from
holding the Debentures, but shall distribute all such proceeds to
Holders of Securities pursuant to the terms of this Declaration and
of the Securities;
(ii) acquire any assets other than 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
(vii) other than as provided in this Declaration or
Annex I hereto, (A) direct the time, method and place of 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
21
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 counsel to the effect that such
modification will not cause more than an insubstantial risk that for
United States federal income tax purposes the Trust will not be
classified as a grantor trust.
SECTION 3.8 Powers and Duties of the Property Trustee.
(a) The legal title to the Debentures shall be owned by and
held of record in the name of the Property Trustee in trust for the benefit of
the Holders of the Securities. 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 5.6.
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 Regular Trustees or to the Delaware
Trustee (if the Property Trustee does not also act as Delaware Trustee).
(c) The Property Trustee shall:
(i) establish and maintain a segregated
non-interest bearing trust account (the "Property Trustee Account")
in the name of and under the exclusive control of the Property
Trustee on behalf of the Holders of the Securities 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 Preferred 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
22
equal to the rating assigned to the Preferred Securities by a
"nationally recognized statistical rating organization", as that
term is defined for purposes of Rule 436(g)(2) under the Securities
Act.
(ii) engage in such ministerial activities as so
directed and as shall be necessary or appropriate to effect the
redemption of the Preferred Securities and the Common Securities to
the extent the Debentures are redeemed or mature; and
(iii) upon written notice of distribution issued by
the Regular Trustees in accordance with the terms of the Securities,
engage in such ministerial activities as so directed as shall be
necessary or appropriate to effect the distribution of the Debentures
to Holders of Securities upon the occurrence of certain special
events (as may be defined in the terms of the Securities) arising
from a change in law or a change in legal interpretation or other
specified circumstances pursuant to the terms of the Securities.
(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) 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.
(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 of Securities 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 5.6.
23
(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 of the Securities, enforce
its rights as holder of the Debentures subject to the rights of the Holders
pursuant to the terms of such Securities.
(h) The Property Trustee will act as Paying Agent and
Registrar in New York 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 ss. 317(b) of the Trust Indenture Act. Any
Paying Agent may be removed by the Property Trustee at any time and a
successor Paying Agent or additional Paying Agents may be appointed at any
time by the Property Trustee.
(i) Subject to this Section 3.8, the Property Trustee shall
have none of the duties, liabilities, powers or the authority of the Regular
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.
24
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 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 individual 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 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 no
implied covenants orobligations shall be read into
this Declaration against the Property Trustee; and
(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;
but in the
25
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 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;
26
(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
(viii) the Property Trustee shall not be
responsible for monitoring the compliance by the Regular 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 Regular 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 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 Regular Trustees contemplated by this Declaration
shall 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
27
faith on its part, request and rely upon an Officers' Certificate
which, upon receipt of such request, shall be promptly delivered by
the Sponsor or the Regular Trustees;
(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
of its choice or other experts 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. 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 adequate
security and indemnity, reasonably satisfactory to the Property
Trustee, against the costs, expenses (including 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 direction, 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
28
stated in any resolution, certificate, statement, instrument,
opinion, report, notice, request, direction, consent, order,
security, 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 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 of the Securities which instructions
may only be given by the Holders of the same proportion in
liquidation amount of the Securities as would be entitled to direct
the Property Trustee under the terms of the Securities in respect of
such remedy, right or action, (ii) may refrain from
enforcing such remedy or right or taking such other action until such
instructions are received, and (iii) shall be protected in acting in
accordance with such instructions;
(xi) except as otherwise expressly provided by this
Declaration, the Property Trustee shall not be
29
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 and reasonably believed by it to be authorized or within the
discretion or rights or powers conferred upon it by this Declaration.
(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 Regular 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 ss. 3807 of the Business Trust Act.
SECTION 3.12 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.
30
SECTION 3.13 Duration of Trust.
The Trust, unless terminated pursuant to the provisions of
Article VIII hereof, shall exist until April 2, 2021.
SECTION 3.14 Mergers.
(a) The Trust may not consolidate, amalgamate, merge with or
into, or be replaced by, or convey, transfer or lease its properties and
assets substantially as an entirety to any corporation or other entity or
body, except as described in Section 3.14(b) and (c).
(b) The Trust may, with the consent of the Regular Trustees
or, if there are more than two, a majority of the Regular Trustees and without
the consent of the Holders of the Securities, the Delaware Trustee or the
Property Trustee, consolidate, amalgamate, merge with or into, or be replaced
by a trust organized as such under the laws of any State of the United States;
provided, that:
(i) if the Trust is not the survivor, such
successor entity (the "Successor Entity") either:
(A) expressly assumes all of the
obligations of the Trust under the
Securities; or
(B) substitutes for the Preferred
Securities other securities having substantially
the same terms as the Preferred Securities (the
"Successor Securities") so long as the Successor
Securities rank the same as the Preferred
Securities with respect to Distributions and
payments upon liquidation, redemption and
otherwise;
(ii) the Debenture Issuer expressly acknowledges 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 Preferred Securities or any Successor
Securities are listed, or any Successor Securities
31
will be listed upon notification of issuance, on any national
securities exchange or with any other organization on which the
Preferred Securities are then listed or quoted;
(iv) such merger, consolidation, amalgamation or
replacement does not cause the Preferred Securities (including any
Successor Securities) to be downgraded by any nationally recognized
statistical rating organization;
(v) such merger, consolidation, amalgamation or
replacement does not adversely affect the rights, preferences and
privileges of the Holders of the Preferred Securities (including any
Successor Securities) in any material respect;
(vi) such Successor Entity has a purpose
substantially identical to that of the Trust;
(vii) the Sponsor guarantees the obligations of
such Successor Entity under the Successor Securities at least to the
extent provided by the Preferred Securities Guarantee; and
(viii) prior to such merger, consolidation,
amalgamation or replacement, the Sponsor has received an opinion of a
nationally recognized independent counsel to the Trust reasonably
acceptable to the Property Trustee experienced in such matters to the
effect that:
(A) such merger, consolidation,
amalgamation or replacement will not adversely affect the
rights, preferences and privileges of the Holders of the
Securities (including any Successor Securities) in any
material respect (other than with respect to any dilution of
the Holders' interest in the new entity);
(B) following such merger, consolidation,
amalgamation or replacement, neither the Trust nor the
Successor Entity will be required to register as an
Investment Company; and
32
(C) following such merger, consolidation,
amalgamation or replacement, the Trust (or the Successor
Entity) will be treated as a grantor trust for United States
federal income tax purposes.
(c) Notwithstanding Section 3.14(b), the Trust shall not,
except with the consent of Holders of 100% in liquidation amount of the Common
Securities, consolidate, amalgamate, merge with or into, or be replaced by any
other entity or permit any other entity to consolidate, amalgamate, merge with
or into, or replace it if such consolidation, amalgamation, merger or
replacement would cause the Trust or Successor Entity to be classified as
other than a grantor trust for United States federal income tax purposes.
ARTICLE IV
SPONSOR
SECTION 4.1 Sponsor's Purchase of Common Securities.
On the Closing Date and on any other date Preferred
Securities are sold pursuant to the over-allotment option granted in the
Purchase Agreement, the Sponsor will purchase all of the Common Securities
issued by the Trust, in an amount at least equal to 3% of the capital of the
Trust, at the same time as the Preferred Securities are sold.
SECTION 4.2 Responsibilities of the Sponsor.
In connection with the issue and sale of the Preferred
Securities, the Sponsor shall have the exclusive right and responsibility to
engage in the following activities, as applicable:
(a) to prepare the Offering Circular and to
prepare for filing by the Trust with the Commission the
Shelf Registration Statement, including any amendments
thereto;
(b) to determine the States and foreign jurisdictions in
which to take appropriate action to qualify or register for sale all or part
of the Preferred Securities
33
and to do any and all such acts, other than actions that 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 and foreign jurisdictions;
(c) to prepare for filing by the Trust an application to
PORTAL and to the New York Stock Exchange or any other national stock exchange
or the Nasdaq National Market for listing or quotation of the Preferred
Securities;
(d) to prepare for filing by the Trust with the Commission a
registration statement on Form 8-A relating to the registration of the
Preferred Securities under Section 12(b) of the Exchange Act, including any
amendments thereto; and
(e) to negotiate the terms of the Purchase Agreement,
Registration Rights Agreement and other related agreements providing for the
sale of the Preferred Securities.
ARTICLE V
TRUSTEES
SECTION 5.1 Number of Trustees.
The number of Trustees shall be five (5), and:
(a) at any time before the issuance of any Se-
curities, 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 (1) one Trustee, the Delaware Trustee, in the
case of a natural person, shall be a person who is a resident of the State of
Delaware or that, if not a natural person, is an entity
34
which has its principal place of business in the State of Delaware; (2) there
shall be at least one Regular Trustee who is an employee or officer of, or is
affiliated with the Sponsor; and (3) one Trustee shall be the Property Trustee
for so long as this Declaration is required to qualify as an indenture under
the Trust Indenture Act, and such Trustee may also serve as Delaware Trustee
if it meets the applicable requirements.
SECTION 5.2 Delaware Trustee.
If required by the Business Trust Act, one Trustee (the
"Delaware Trustee") shall be:
(a) a natural person who is 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 which
shall act as Property Trustee which shall:
(i) not be an Affiliate of the Sponsor;
(ii) be a corporation organized and doing business
under the laws of the United States of America or any State or
Territory thereof or of the District of Columbia, or a corporation or
Person permitted by the Commission to act as an institutional trustee
under the Trust Indenture Act, authorized under such laws to exercise
corporate trust powers, having a combined capital and surplus of at
least 50 million U.S. dollars ($50,000,000), and subject to
supervision or examination by Federal, State, Territorial or District
of Columbia authority. If such corporation publishes reports of
condition at least annually, pursuant to law
35
or to the requirements of the supervising or examining authority
referred to above, then for the purposes of this Section 5.3(a)(ii),
the combined capital and surplus of such corporation shall be deemed
to be its combined capital and surplus as set forth in its most
recent report of condition so published; and
(iii) if the Trust is excluded from the definition
of an Investment Company solely by means of Rule 3a-5 and to the
extent Rule 3a-5 requires a trustee having certain qualifications to
hold title to the "eligible assets" of the trust, the Property
Trustee shall possess those qualifications.
(b) If at any time the Property Trustee shall cease to be
eligible to so act under Section 5.3(a), the Property Trustee shall
immediately resign in the manner and with the effect set forth in Section
5.6(c).
(c) If the Property Trustee has or shall acquire any
"conflicting interest" within the meaning of ss. 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 ss. 310(b) of the Trust Indenture Act) shall
in all respects comply with the provisions of ss. 310(b) of the Trust
Indenture Act.
(d) The Preferred 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 set
forth in Section 5.5 hereof.
SECTION 5.4 Qualifications of Regular Trustees and Dela-
ware Trustee Generally.
Each Regular Trustee and the Delaware Trustee (unless the
Property Trustee also acts as Delaware Trustee) shall be either a natural
person who is at least 21 years of age or a legal entity that shall act
through one or more Authorized Officers.
36
SECTION 5.5 Initial Trustees.
The initial Regular Trustees shall be:
Steven A. McArthur
c/o CalEnergy Company, Inc.
302 South 36th Street, Suite 400
Omaha, Nebraska 68131
John G. Sylvia
c/o CalEnergy Company, Inc.
302 South 36th Street, Suite 400
Omaha, Nebraska 68131
Gregory Abel
c/o CalEnergy Company, Inc.
302 South 36th Street, Suite 400
Omaha, Nebraska 68131
The initial Delaware Trustee shall be:
The Bank of New York (Delaware)
23 White Clay Center
Route 273
Newark, Delaware 19711
The initial Property Trustee shall be:
The Bank of New York
101 Barclay Street
Corporate Trust Trustee Administration
Floor 21 West
New York, New York 10286
SECTION 5.6 Appointment, Removal and Resignation of
---------------------------------------
Trustees.
(a) Subject to Section 5.6(b), Trustees may be
appointed or removed without cause at any time:
(i) until the issuance of any Securities, by
written instrument executed by the Sponsor; and
37
(ii) 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.
(b) The Trustee that acts as Property Trustee shall not be
removed in accordance with Section 5.6(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 Regular
Trustees and the Sponsor; and
(c) The Trustee that acts as Delaware Trustee shall not be
removed in accordance with Section 5.6(a) until a successor Trustee possessing
the qualifications to act as Delaware Trustee under Sections 5.2 and 5.4 (a
"Successor Delaware Trustee") has been appointed and has accepted such
appointment by written instrument executed by such Successor Delaware Trustee
and delivered to the Regular Trustees and the Sponsor.
(d) 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
instrument executed by such Successor Property
Trustee and delivered to the Trust, the Sponsor and
the resigning Property Trustee; or
(B) until the assets of the Trust have
been completely liquidated and the proceeds
thereof distributed to the holders of the
Securities; and
38
(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 instrument executed by such Successor
Delaware Trustee and delivered to the Trust, the Sponsor and the
resigning Delaware Trustee.
(e) The Holders of the Common Securities shall use their
best efforts to promptly appoint a Successor Property Trustee or Successor
Delaware Trustee, as the case may be, if the Property Trustee or the Delaware
Trustee delivers an instrument of resignation in accordance with this Section
5.6.
(f) If no Successor Property Trustee or Successor Delaware
Trustee shall have been appointed and accepted appointment as provided in this
Section 5.6 within 60 days after delivery to the Sponsor and the Trust 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.
(g) 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 5.7 Vacancies among Trustees.
If a Trustee ceases to hold office for any reason and the
number of Trustees is not reduced pursuant to Section 5.1, or if the number of
Trustees is increased pursuant to Section 5.1, a vacancy shall occur. A
resolution certifying the existence of such vacancy by the Regular Trustees
or, if there are more than two, a majority of the Regular Trustees shall be
conclusive evidence of the existence of such vacancy. The vacancy shall be
filled with a Trustee appointed in accordance with Section 5.6.
39
SECTION 5.8 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 annul the Trust. Whenever a vacancy in the
number of Regular Trustees shall occur, until such vacancy is filled by the
appointment of a Regular Trustee in accordance with Section 5.6, the Regular
Trustees in office, regardless of their number, shall have all the powers
granted to the Regular Trustees and shall discharge all the duties imposed
upon the Regular Trustees by this Declaration.
SECTION 5.9 Meetings.
If there is more than one Regular Trustee, meetings of the
Regular Trustees shall be held from time to time upon the call of any Regular
Trustee. Regular meetings of the Regular Trustees may be held at a time and
place fixed by resolution of the Regular Trustees. Notice of any meetings of
the Regular Trustees shall be hand delivered or otherwise delivered in writing
(including by facsimile or overnight courier) not less than 24 hours before
such meeting. Notices shall contain a brief statement of the time, place and
anticipated purposes of the meeting. The presence (whether in person or by
telephone) of a Regular Trustee at a meeting shall constitute a waiver of
notice of such meeting except where a Regular Trustee attends a meeting for
the express purpose of objecting to the transaction of any activity on the
ground that the meeting has not been lawfully called or convened. Unless
provided otherwise in this Declaration, any action of the Regular Trustees may
be taken at a meeting by vote of a majority of the Regular Trustees present
(whether in person or by telephone) and eligible to vote with respect to such
matter, provided that a Quorum is present, or without a meeting by the
unanimous written consent of the Regular Trustees. In the event there is only
one Regular Trustee, any and all action of such Regular Trustee shall be
evidenced by a written consent of such Regular Trustee.
40
SECTION 5.10 Delegation of Power.
(a) Any Regular Trustee may, by power of attorney consistent
with applicable law, delegate to any other natural person over the age of 21
his or her power for the purpose of executing any documents contemplated in
Section 3.6, including any registration statement or amendment thereto filed
with the Commission, or making any other governmental filing; and
(b) the Regular Trustees shall have power to
delegate from time to time to such of their number or to
officers of the Trust the doing of such things and the execution of such
instruments either in the name of the Trust or the names of the Regular
Trustees or otherwise as the Regular Trustees may deem expedient, to the
extent such delegation is not prohibited by applicable law or contrary to the
provisions of the Trust, as set forth herein.
SECTION 5.11 Merger, Conversion, Consolidation or
Succession to Business.
Any corporation into which the Property Trustee or the
Delaware Trustee, as the case may be, may be merged or converted or with which
either may be consolidated, or any corporation resulting from any merger,
conversion or consolidation to which the Property Trustee or the Delaware
Trustee, as the case may be, shall be 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.
41
ARTICLE VI
DISTRIBUTIONS
SECTION 6.1 Distributions.
Holders shall receive Distributions (as defined herein) in
accordance with the applicable terms of the relevant Holder's Securities.
Distributions shall be made on the Preferred Securities and the Common
Securities in accordance with the preferences set forth in their respective
terms. If and to the extent that the 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 Regular Trustees shall on behalf of the Trust issue
one class of convertible preferred securities, representing undivided
beneficial interests in the assets of the Trust (the "Preferred Securities"),
having such terms (the "Terms") as are set forth in Annex I and one class of
convertible common securities, representing undivided beneficial interests in
the assets of the Trust (the "Common Securities"), having such terms as are
set forth in Annex I. The Trust shall issue no securities or other interests
in the assets of the Trust other than the Preferred Securities and the Common
Securities. The Trust shall issue no Securities in bearer form.
(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.
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(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 nonassessable.
(d) Every Person, by virtue of having become a Holder or a
Preferred Security Beneficial Owner in accordance with the terms of this
Declaration, shall be deemed to have expressly assented and agreed to the
terms of, and shall be bound by, this Declaration.
SECTION 7.2 Execution and Authentication.
(a) The Securities shall be signed on behalf of the Trust by
a Regular Trustee. In case any Regular Trustee of the Trust who shall have
signed any of the Securities shall cease to be such Regular Trustee before the
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 Regular 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 Regular Trustees of the Trust, although at the
date of the execution and delivery of
the Declaration any such person was not such a Regular
Trustee.
(b) One Regular Trustee shall sign the Preferred 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 Preferred Security shall not be valid until authenticated
by the manual signature of an authorized signatory of the Property Trustee.
The signature shall be conclusive evidence that the Preferred Security has
been authenticated under this Declaration.
Upon a written order of the Trust signed by one Regular
Trustee, the Property Trustee shall authenticate the Preferred Securities for
original issue in paragraph 5 of the Securities. The aggregate number of
Preferred 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.
43
The Property Trustee may appoint an authenticating agent
acceptable to the Trust to authenticate Preferred Securities. An
authenticating agent may authenticate Preferred Securities whenever the
Property Trustee may do so. Each reference in this Declaration to
authentication by the Property Trustee includes authentication by such agent.
An authenticating agent has the same rights as the Property Trustee to deal
with the Company or an Affiliate.
SECTION 7.3 Form and Dating.
The Preferred 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 may be printed, lithographed or engraved or may be
produced in any other manner as is reasonably acceptable to the Regular
Trustees, as evidenced by their execution thereof. The Securities may have
letters, 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 Preferred 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.
(a) Global Securities. The Preferred Securities are being
offered and sold by the Trust pursuant to a Purchase Agreement relating to the
Preferred Securities, dated April 4, 1996, among the Trust, the Sponsor and
the Initial Purchasers named therein (the "Purchase Agreement").
Securities offered and sold to Qualified Institutional
Buyers ("QIBs") in reliance on Rule 144A under the Securities Act ("Rule
144A") as provided in the Purchase
44
Agreement, shall be issued in the form of one or more, permanent global
Securities in definitive, fully registered form without distribution coupons
with the appropriate global legends and Restricted Securities Legend set forth
in Exhibit A-1 hereto (each, a "Rule 144A Global Preferred Security"), which
shall be deposited on behalf of the purchasers of the Preferred Securities
represented thereby with the Property Trustee, at its New York office, as
custodian for the Depositary, and registered in the name of the Depositary or
a nominee of the Depositary, duly executed by the Trust and authenticated by
the Property Trustee as hereinafter provided. The number of Preferred
Securities represented by the Rule 144A Global Preferred Security may from
time to time be increased or decreased by adjustments made on the records of
the Property Trustee and the Deposi- tary or its nominee as hereinafter
provided.
(b) Book-Entry Provisions. This Section 7.3(b) shall apply
only to the Rule 144A Global Preferred Securities and such other Preferred
Securities in global form as may be authorized by the Trust to be deposited
with or on behalf of the Depositary.
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 Rule 144A Global Preferred Securities that (a) shall be registered
in the name of Cede & Co. or other nominee of such Depositary and (b) shall be
delivered by the Trustee to such Depositary or pursuant to such Depositary's
written instructions or held by the Trustee as custodian for the Depositary.
Members of, or participants in, the Depositary
("Participants") shall have no rights under this Declaration with respect to
any Rule 144A Global Preferred Security held on their behalf by the Depositary
or by the Property Trustee as the custodian of the Depositary or under such
Rule 144A Global Preferred Security, and the Depositary 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 Rule 144A Global Preferred 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 Depositary or impair, as between the
Depos-
45
itary and its Participants, the operation of customary practices of such
Depositary governing the exercise of the rights of a holder of a beneficial
interest in any Rule 144A Global Preferred Security.
(c) Certificated Securities. Except as provided in Section
7.9, owners of beneficial interests in the Rule 144A Global Preferred Security
will not be entitled to receive physical delivery of certificated Preferred
Securities. Purchasers of Securities who are institutional "accredited
investors" (as defined in Rule 501(a)(1), (2), (3) or (7) under the Securities
Act) will receive Preferred 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 Preferred Securities"); provided, however, that upon transfer of
such Restricted Definitive Preferred Securities to a QIB, such Restricted
Definitive Preferred Securities will, unless the Rule 144A Global Preferred
Security has previously been exchanged, be exchanged for an interest in a Rule
144A Global Security pursuant to the provisions at Section 9.2. Restricted
Definitive Preferred 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.
SECTION 7.4 Registrar, Paying Agent and Conversion Agent.
The Trust shall maintain in the Borough of Manhattan, City
of New York, State of New York, (i) an office or agency where Preferred
Securities may be presented for registration of transfer or from exchange
("Registrar"), (ii) an office or agency where Preferred Securities may be
presented for payment ("Paying Agent") and an office or agency where
Securities may be presented for conversion ("Conversion Agent"). The Registrar
shall keep a register of the Preferred Securities and of their transfer and
exchange. The Trust may appoint the Registrar, the Paying Agent and the
Conversion Agent and may appoint one or more co-registrars, one or more
additional paying agents and one or more additional conversion agents in such
other locations as it shall determine. The term "Paying Agent" includes any
additional paying agent and the term "Conversion Agent" includes any
additional conversion agent. The Trust may change any Paying Agent, Registrar,
co-registrar or Conversion Agent without prior notice to any Holder. The
46
Paying Agent shall be permitted to resign as Paying Agent upon 30 days'
written notice to the Regular 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 Conversion Agent, the Property Trustee shall act as such. The Trust
or any of its Affiliates may act as Paying Agent, Registrar, or Conversion
Agent. The Trust shall act as Paying Agent, Registrar, co-registrar, and
Conversion Agent for the Common Securities.
The Trust initially appoints the Property Trustee
as Registrar, Paying Agent, and Conversion Agent for the
Preferred 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 principal or distribution on the Securities,
and will notify the Property Trustee if there are insufficient funds. 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.
SECTION 7.6 Replacement Securities.
If the holder of a Security claims that the Security 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 Preferred 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. If required by the Property Trustee
or the Trust,
47
an indemnity bond must be sufficient in the judgment of both to
protect the Trustees, the Property Trustee, the Sponsor or any authenticating
agent from any loss which any of them may suffer if a Security is replaced.
The Company may charge for its expenses in replacing a Security.
In case any such mutilated, destroyed, lost or stolen
Security has become or is about to become due and payable, or is about to be
purchased by the Sponsor pursuant to Article III hereof, the Sponsor in its
discretion may, instead of issuing a new Security, pay or purchase such
Security, as the case may be.
Every replacement Security is an additional obligation of
the Trust.
SECTION 7.7 Outstanding Preferred Securities.
The Preferred Securities outstanding at any time are all the
Preferred 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 Preferred 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 Preferred Security is held by a bona fide purchaser.
If Preferred Securities are considered paid in accordance
with the terms of this Declaration, they cease to be outstanding and interest
on them ceases to accrue.
A Preferred Security does not cease to be outstanding
because one of the Trust, the Sponsor or an Affiliate of the Sponsor holds the
Security.
48
SECTION 7.8 Preferred Securities in Treasury.
In determining whether the Holders of the required amount of
Securities have concurred in any direction, waiver or consent, Preferred
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 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 Preferred 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 Preferred
Securities, the Property Trustee shall authenticate definitive Securities in
exchange for temporary Securities.
(b) A Global Preferred Security deposited with the
Depositary or with the Property Trustee as custodian for the Depositary
pursuant to Section 7.3 shall be transferred to the beneficial owners thereof
in the form of certificated Preferred Securities only if such transfer
complies with Section 9.2 and (i) the Depositary notifies the Company that it
is unwilling or unable to continue as Depositary for such Global Preferred
Security or if at any time such Depositary ceases to be a "clearing agency"
registered under the Exchange Act and a successor depositary is not appointed
by the Sponsor within 90 days of such notice, or (ii) an Event of Default has
occurred and is continuing.
(c) Any Global Preferred Security that is transferable to
the beneficial owners thereof in the form of certificated Preferred Securities
pursuant to this Section 7.9 shall be surrendered by the Depositary to the
Property Trustee located in the Borough of Manhattan, The City of New York, to
be so transferred, in whole or from time to time in part, without charge, and
the Property Trustee shall
49
authenticate and make available for delivery, upon such transfer of each
portion of such Global Preferred Security, an equal aggregate liquidation
amount of Securities of authorized denominations in the form of certificated
Securities. Any portion of a Global Preferred Security transferred pursuant to
this Section shall be registered in such names as the Depositary shall direct.
Any Preferred Security in the form of certificated Preferred Securities
delivered in exchange for an interest in the Restricted Global Preferred
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
registered holder of a Global Preferred Security may grant proxies and
otherwise authorize any person, including Participants and persons that may
hold interests through Participants, to take any action which a holder is
entitled to take under this Declaration or the Securities.
(e) In the event of the occurrence of either of the events
specified in Section 7.9(b), the Trust will promptly make available to the
Property Trustee a reasonable supply of certificated Securities in definite,
fully registered form without interest coupons.
SECTION 7.10 Cancellation.
The Trust at any time may deliver Preferred Securities to
the Property Trustee for cancellation. The Registrar, Paying Agent and
Conversion Agent shall forward to the Property Trustee any Preferred
Securities surrendered to them for registration of transfer, redemption,
conversion, exchange or payment. The Property Trustee shall promptly cancel
all Preferred Securities, surrendered for registration of transfer,
redemption, conversion, exchange, payment, replacement or cancellation and
shall dispose of cancelled Preferred Securities as the Trust directs. The Trust
may not issue new Preferred Securities to replace Preferred Securities that it
has paid or that have been delivered to the Property Trustee for cancellation
or that any holder has converted.
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ARTICLE VIII
TERMINATION OF TRUST
SECTION 8.1 Termination of Trust.
(a) The Trust shall terminate:
(i) upon the bankruptcy of the Sponsor;
(ii) upon the filing of a certificate of
dissolution or its equivalent with respect to the Sponsor, the filing
of a certificate of cancellation with respect to the Trust after
having obtained the consent of at least a Majority in liquidation
amount of the Securities, voting together as a single class, to file
such certificate of cancellation, or the revocation of the charter of
the Sponsor and the expiration of 90 days after the date of
revocation without a reinstatement thereof, except, in each case, to
the extent permitted by Article Eight of the Indenture;
(iii) upon the entry of a decree of judicial
dissolution of the Sponsor or the Trust;
(iv) when all of the Securities shall have been
called for redemption and the amounts necessary for redemption
thereof shall have been paid to the Holders in accordance with the
terms of the Securities;
(v) upon the occurrence and continuation of a Tax
Event pursuant to which the Trust shall have been dissolved in
accordance with the terms of the Securities and all of the Debentures
endorsed thereon shall have been distributed to the Holders of
Securities in exchange for all of the Securities;
(vi) the expiration of the term of the Trust
on April 2, 2021; or
(vii) before the issuance of any Securities,
with the consent of all the Regular Trustees and the
Sponsor.
(b) As soon as is practicable after the occurrence of an
event referred to in Section 8.1(a), the
51
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 AND EXCHANGE
SECTION 9.1 General.
(a) Where Preferred Securities are presented to the
Registrar or a co-registrar with a request to register a transfer or to
exchange them for an equal number of Preferred Securities represented by
different certificates, the Registrar shall register the transfer or make the
exchange if its requirements for such transactions are met. To permit
registrations of transfers and exchanges, the Trust shall issue and the
Property Trustee shall authenticate Preferred Securities at the Registrar's
request.
(b) 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.
Subject to this Article IX, the Sponsor and any Related
Party may only transfer Common Securities to the Sponsor or a Related Party of
the Sponsor; provided that, any such transfer is subject to the condition
precedent that the transferor obtain the written opinion of nationally
recognized independent counsel experienced in such matters that such transfer
would not cause more than an insubstantial risk that:
(i) the Trust would not be classified for
United States federal income tax purposes as a grantor
trust; and
(ii) the Trust would be an Investment Company
or the transferee would become an Investment Company.
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(c) The Regular Trustees shall provide for the registration
of Securities and of transfers of Securities, which will be effected without
charge but only upon payment (with such indemnity as the Regular Trustees may
require) in respect of any tax or other governmental charges that may be
imposed in relation to it. Upon surrender for registration of transfer of any
Securities, the Regular Trustees shall cause one or more new Securities to be
issued in the name of the designated transferee or transferees. Every Security
surrendered for registration of transfer shall be accompanied by a written
instrument of transfer in form satisfactory to the Regular Trustees duly
executed by the Holder or such Holder's attorney duly authorized in writing.
Each Security surrendered for registration of transfer shall be canceled by
the Regular Trustees. A transferee of a Security shall be entitled to the
rights and subject to the obligations of a Holder hereunder upon the receipt
by such transferee of a Security. By acceptance of a Security, each transferee
shall be deemed to have agreed to be bound by this Declaration.
(d) The Trust shall not be required (i) to issue, register
the transfer of, or exchange, Preferred Securities during a period beginning
at the opening of business 15 days before the day of any selection of
Preferred Securities for redemption set forth in the terms of the Securities
as set forth in Annex I hereto and ending at the close of business on the day
of selection, or (ii) to register the transfer or exchange of any Preferred
Security so selected for redemption in whole or in part, except the unredeemed
portion of any Preferred Security being redeemed in part.
SECTION 9.2 Transfer Procedures and Restrictions.
(a) General. Except in connection with a Shelf Registration
Statement contemplated by and in accordance with the terms of the Registration
Rights Agreement, if Preferred Securities are issued upon the transfer,
exchange or replacement of Preferred 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 Preferred Securities, the
Preferred 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
53
Property Trustee such satisfactory evidence, which may include an opinion of
counsel licensed to practice law in the State of New York, as may be
reasonably required by the Company, that neither the legend nor the
restrictions on transfer set forth therein are required to ensure that
transfers thereof comply with the provisions of Rule 144A, Rule 144 or
Regulation S under the Securities Act or, with respect to Restricted
Securities, that such Securities are not "restricted" within the meaning of
Rule 144 under the Securities Act. Upon provision of such satisfactory
evidence, the Property Trustee, at the written direction of the Trust, shall
authenticate and deliver Preferred Securities that do not bear the legend.
(b) Transfers After Effectiveness of Shelf Registration
Statement. After the effectiveness of a Shelf Registration Statement for any
Preferred Securities, all requirements pertaining to legends on such Preferred
Security will cease to apply, and beneficial interests in a Preferred Security
in global form without legends will be available to transferees of such
Preferred Securities, upon exchange of the transferring holder's Restricted
Definitive Preferred Security or directions to transfer such Holder's
beneficial interest in the Rule 144A Global Preferred Security, as the case
may be. No such transfer or exchange of a Restricted Definitive Preferred
Security or of an interest in the Rule 144A Global Preferred Security shall be
effective unless the transferor delivers to the Trust a certificate in the
form of Exhibit D hereto as to compliance by such person with the provisions
of the Registration Rights Agreement applicable thereto. After the
effectiveness of the Shelf Registration Statement, the Trust shall issue and
the Property Trustee upon the receipt of a Company Order shall authenticate a
Preferred Security in global form without the Restricted Securities Legend
(the "Exchanged Global Preferred Security") to deposit with the Depositary to
evidence transfers of (i) beneficial interests from the Rule 144A Global
Preferred Security and (ii) Restricted Definitive Preferred Securities.
(c) Transfer and Exchange of Definitive Preferred
Securities. When Definitive Preferred Securities are
presented to the Registrar or co-Registrar
(x) to register the transfer of such Definitive
Preferred Securities; or
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(y) to exchange such Definitive Preferred
Securities for an equal number of Definitive Preferred
Securities of another number,
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 Preferred 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 Preferred Securities
that are Restricted Definitive Preferred Securities, are being
transferred or exchanged pursuant to an effective registration
statement under the Securities Act or, prior to the effectiveness of
the Shelf Registration Statement, pursuant to clause (A) or (B)
below, and are accompanied by the following additional information
and documents, as applicable:
(A) if such Restricted Preferred 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 (in the form set forth on
the reverse of the Preferred Security); or
(B) if such Restricted Preferred Securities are being
transferred pursuant to an exemption from registration in
accordance with Rule 144 or Regulation S under the
Securities Act: (i) a certification to that effect (in the
form set forth on the reverse of the Preferred Security)
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.
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Definitive Preferred Securities that are transferred to QIBs
in accordance with Rule 144A under the Securities Act must take delivery of
their interests as the Preferred Securities in the form of a beneficial
interest in the Rule 144A Global Preferred Security in accordance with Section
9.2(d).
(d) Restrictions on Transfer of a Definitive Preferred
Security for a Beneficial Interest in a Global Preferred Security. A
Definitive Preferred Security may not be exchanged for a beneficial interest
in a Global Preferred Security except upon satisfaction of the requirements
set forth below. Upon receipt by the Property Trustee of a Definitive
Preferred Security, duly endorsed or accompanied by appropriate instruments of
transfer, in form satisfactory to the Property Trustee, together with:
(i) if such Definitive Preferred Security is a
Restricted Preferred Security, certification, in the form set forth
on the reverse of the Preferred Security, that such Definitive
Preferred Security is being transferred to a QIB in accordance with
Rule 144A under the Securities Act; and
(ii) whether or not such Definitive Preferred
Security is a Restricted Preferred Security, written instructions
directing the Property Trustee to make, or to direct the Depositary
to make, an adjustment on its books and records with respect to such
Global Preferred Security to reflect an increase in the number of the
Preferred Securities represented by the Global Preferred Security,
then the Property Trustee shall cancel such Definitive Preferred Security and
cause, or direct the Depositary to cause, the aggregate number of Preferred
Securities represented by the Global Preferred Security to be increased
accordingly. If no Global Preferred Securities are then outstanding, the Trust
shall issue and the Property Trustee shall authenticate, upon written order of
any Regular Trustee, an appropriate number of Preferred Securities in global
form.
(e) Transfer and Exchange of Global Preferred Securities.
The transfer and exchange of Global Preferred Securities or beneficial
interests therein shall be effected
56
through the Depositary, in accordance with this Declaration (including
applicable restrictions on transfer set forth herein, if any) and the
procedures of the Depositary therefor.
(f) Transfer of a Beneficial Interest in a Global
Preferred Security for a Definitive Preferred Security.
(i) Any person having a beneficial interest in a
Global Preferred Security that is being transferred or exchanged
pursuant to clause (A) or (B) below and not pursuant to an effective
Shelf Registration Statement may upon request, and if accompanied by
the information specified below, exchange such beneficial interest
for a Definitive Preferred Security representing the same number of
Preferred Securities. Upon receipt by the Property Trustee from the
Depositary or its nominee on behalf of any Person having a beneficial
interest in a Global Preferred Security of written instructions or
such other form of instructions as is customary for the Depositary or
the person designated by the Depositary as having such a beneficial
interest in a Restricted Preferred Security and the following
additional information and documents (all of which may submitted by
facsimile):
(A) if such beneficial interest is being
transferred to the person designated by the
Depositary as being the owner of a beneficial
interest in a Global Preferred Security, a
certification from such Person to that effect (in
the form set forth on the reverse of the Preferred
Security); or
(B) if such beneficial interest is being
transferred pursuant to an exemption from
registration in accordance with Rule 144 or
Regulation S under the Securities Act: (i) a
certification to that effect from the transferee or
transferor (in the form set forth on the reverse of
the Preferred Security) and (ii) if the Property
Trustee or Registrar so requests, evidence
reasonably satisfactory to them as to the compliance
57
with the restrictions set forth in the legend
set forth in Section 9.2(i),
then the Property Trustee or the Securities Custodian, at the
direction of the Property Trustee, will cause, in accordance with the
standing instructions and procedures existing between the Depositary
and the Securities Custodian, the aggregate principal amount of the
Global Preferred Security to be reduced on its books and records and,
following such reduction, the Trust will execute and the Property
Trustee will authenticate and deliver to the transferee a Definitive
Preferred Security.
(ii) Definitive Preferred Securities issued in
exchange for a beneficial interest in a Global Preferred Security
pursuant to this Section 9.2(f) shall be registered in such names and
in such authorized denominations as the Depositary, pursuant to
instructions from its Participants or indirect participants or
otherwise, shall instruct the Property Trustee. The Property Trustee
shall deliver such Preferred Securities to the persons in whose names
such Preferred Securities are so registered in accordance with the
instructions of the Depositary.
Beneficial interests in the Rule 144A Global
Security may not be exchanged for a Definitive Preferred Security
except as provided in Section 9.2(h).
(g) Restrictions on Transfer and Exchange of Global
Preferred Securities. Notwithstanding any other provisions of this Declaration
(other than the provisions set forth in subsection (i) of this Section 9.2), a
Global Preferred Security may not be transferred as a whole except by the
Depositary to a nominee of the Depositary or another nominee of the Depositary
or by the Depositary or any such nominee to a successor Depositary or a
nominee of such successor Depositary.
Definitive Preferred Securities that are transferred to QIBs
in accordance with Rule 144A under the Securities Act prior to the
effectiveness of the Shelf Registration Statement must take delivery of their
interests as the Preferred Securities in the form of a beneficial
58
interest in the Rule 144A Global Preferred Security in accordance with Section
9.2(d).
(h) Authentication of Definitive Preferred
Securities. If at any time:
(i) the Depositary notifies the Trust that the
Depositary is unwilling or unable to continue as Depositary for the
Global Preferred Securities and a successor Depositary for the Global
Preferred Securities is not appointed by the Trust at the direction
of the Sponsor within 90 days after delivery of such notice; or
(ii) the Trust, in its sole discretion, notifies
the Property Trustee in writing that it elects to cause the issuance
of Definitive Preferred 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 Regular Trustee requesting the
authentication and delivery of Definitive Preferred Securities to the Persons
designated by the Trust, will authenticate and deliver Definitive Preferred
Securities, in an aggregate principal amount equal to the principal amount of
Global Preferred Securities, in exchange for such Global Preferred Securities.
(i) Legend.
(i) Except as permitted by the following paragraph
(ii), each Preferred Security certificate evidencing the Global
Preferred Securities and the Definitive Preferred Securities (and all
Preferred Securities issued in exchange therefor or substitution
thereof) shall bear a legend (the "Restricted Securities Legend") in
substantially the following form:
THIS SECURITY, ANY CONVERTIBLE JUNIOR
SUBORDINATED DEBENTURE ISSUED IN EXCHANGE FOR THIS SECURITY
AND ANY COMMON STOCK (AND RELATED RIGHTS) ISSUED ON
CONVERSION THEREOF HAVE NOT BEEN REGISTERED UNDER THE UNITED
STATES SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES
ACT"), OR ANY STATE SECURITIES LAW AND MAY NOT BE OFFERED,
SOLD,
59
PLEDGED OR OTHERWISE TRANSFERRED EXCEPT (A) TO THE
COMPANY, (B) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE SECURITIES ACT, (C) FOR SO LONG AS THE SECURITIES
ARE 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 OFFERS AND SALES TO NON-U.S. PERSONS
THAT OCCUR OUTSIDE THE UNITED STATES WITHIN THE MEANING OF
REGULATION S UNDER THE SECURITIES ACT, OR (E) PURSUANT TO
ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO THE COMPANY'S
AND THE TRANSFER AGENT'S RIGHT PRIOR TO ANY SUCH OFFER, SALE
OR TRANSFER (i) PURSUANT TO CLAUSES (D) OR (E) TO REQUIRE
THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION AND/OR
OTHER INFORMATION SATISFACTORY TO EACH OF THEM, AND (ii) IN
EACH OF THE FOREGOING CASES, TO REQUIRE THAT A CERTIFICATE
OF TRANSFER IN THE FORM APPEARING ON THIS SECURITY IS
COMPLETED AND DELIVERED BY THE TRANSFEROR TO THE TRANSFER
AGENT.
(ii) Upon any sale or transfer of a Restricted
Preferred Security (including any Restricted Preferred Security
represented by a Global Preferred Security) pursuant to an effective
registration statement under the Securities Act or pursuant to Rule
144 under the Securities Act after the Shelf Registration Statement
ceases to be effective:
(A) in the case of any Restricted
Preferred Security that is a Definitive Preferred Security,
the Registrar shall permit the Holder thereof to exchange
such Restricted Preferred Security for a Definitive
Preferred Security that does not bear the Restricted
Securities Legend and rescind any restriction on the
transfer of such Restricted Preferred Security; and
(B) in the case of any Restricted
Preferred Security that is represented by a Global Preferred
Security, the Registrar shall permit the
60
Holder thereof to exchange such Restricted Preferred Security
(in connection with the sale of a Preferred Security pursuant
to the Registration Rights Agreement) for another Global
Preferred Security that does not bear the Restricted Securities
Legend.
(j) Cancellation or Adjustment of Global Preferred Security.
At such time as all beneficial interests in a Global Preferred Security have
either been exchanged for Definitive Preferred Securities to the extent
permitted by the Declaration or redeemed, repurchased or canceled in
accordance with the terms of this Declaration, such Global Preferred Security
shall be returned to the Depositary for cancellation or retained and canceled
by the Property Trustee. At any time prior to such cancellation, if any
beneficial interest in a Global Preferred Security is exchanged for Definitive
Preferred Securities, Preferred Securities represented by such Global
Preferred Security shall be reduced and an adjustment shall be made on the
books and records of the Property Trustee (if it is then the Securities
Custodian for such Global Preferred Security) with respect to such Global
Preferred Security, by the Property Trustee or the Securities Custodian, to
reflect such reduction.
(k) Obligations with Respect to Transfers and
Exchanges of Preferred Securities.
(i) To permit registrations of transfers and
exchanges, the Trust shall execute and the Property Trustee shall
authenticate Definitive Preferred Securities and Global Preferred
Securities at the
Registrar's or co-Registrar's request.
(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) any
Definitive Preferred Security selected for redemption in whole or in
part pursuant to Article III, except the unredeemed portion of any
Definitive
61
Preferred Security being redeemed in part, or (b) any Preferred
Security for a period beginning 15 Business Days before the mailing
of a notice of an offer to repurchase or redeem Preferred Securities
or 15 Business Days before a quarterly distribution date.
(iv) Prior to the due presentation for
registrations of transfer of any Preferred 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 Preferred Security is
registered as the absolute owner of such Preferred Security for the
purpose of receiving Distributions on such Preferred 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 Preferred 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 Preferred Securities surrendered upon
such transfer or exchange.
62
(l) No Obligation of the Property Trustee.
(i) The Property Trustee shall have no
responsibility or obligation to any beneficial owner of a Global
Preferred Security, a Participant in the Depositary or other Person
with respect to the accuracy of the records of the Depositary or its
nominee or of any Participant thereof, with respect to any ownership
interest in the Preferred Securities or with respect to the delivery
to any Participant, beneficial owner or other Person (other than the
Depositary) of any notice (including any notice of redemption) or the
payment of any amount, under or with respect to such Preferred
Securities. All notices and communications to be given to the Holders
and all payments to be made to Holders under the Preferred Securities
shall be given or made only to or upon the order of the registered
Holders (which shall be the Depositary or its nominee in the case of
a Global Preferred Security). The rights of beneficial owners in any
Global Preferred Security shall be exercised only through the
Depositary subject to the applicable rules and procedures of the
Depositary. The Property Trustee may conclusively rely and shall be
fully protected in relying upon information furnished by the
Depositary 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 Preferred Security (including any transfers
between or among Depositary Participants or beneficial owners in any
Global Preferred 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.
SECTION 9.3 Deemed Security Holders.
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The Trustees may treat the Person in whose name any
Certificate shall be registered on the books and records of the Trust as the
sole holder of such Certificate and of the Securities represented by such
Certificate for purposes of receiving Distributions and for all other purposes
whatsoever and, accordingly, shall not be bound to recognize any equitable or
other claim to or interest in such Certificate or in the Securities
represented by such Certificate on the part of any Person, whether or not the
Trust shall have actual or other notice thereof.
SECTION 9.4 Book Entry Interests.
Global Preferred Securities shall initially be registered on
the books and records of the Trust in the name of Cede & Co., the nominee of
the Depositary, and no Preferred Security Beneficial Owner will receive a
definitive Preferred Security Certificate representing such Preferred Security
Beneficial Owner's interests in such Global Preferred Securities, except as
provided in Section 9.2. Unless and until definitive, fully registered
Preferred Securities Certificates have been issued to the Preferred Security
Beneficial Owners pursuant to Section 9.2:
(a) the provisions of this Section 9.4 shall be
in full force and effect;
(b) the Trust and the Trustees shall be entitled to deal
with the Depositary for all purposes of this Declaration (including the
payment of Distributions on the relevant Global Preferred Securities and
receiving approvals, votes or consents hereunder) as the Holder of the
Preferred Securities and the sole holder of the Global Preferred Securities
and shall have no obligation to the Preferred 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 Preferred Security Beneficial Owners
shall be exercised only through the Depositary and shall be limited to those
established by law and agreements between such Preferred Security Beneficial
Owners and
64
the Depositary and/or the Participants and receive and transmit
payments of Distributions on the Global Certificates to such Participants. The
Depositary will make book entry transfers among the Participants.
SECTION 9.5 Notices to Clearing Agency.
Whenever a notice or other communication to the Preferred
Security Holders is required under this Declaration, the Regular Trustees
shall, in the case of any Global Preferred Security, give all such notices and
communications specified herein to be given to the Preferred Security Holders
to the Depositary, and shall have no notice obligations to the Preferred
Security Beneficial Owners.
SECTION 9.6 Appointment of Successor Clearing Agency.
If the Depository elects to discontinue its services as
securities depositary with respect to the Preferred Securities, the Regular
Trustees may, in their sole discretion, appoint a successor Clearing Agency
with respect to such Preferred 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 Decla-
ration, 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; and
(ii) be required to pay to the Trust or to
any Holder of Securities any deficit upon dissolution
of the Trust or otherwise.
(b) The Holder of the Common Securities shall be liable as
principal obligor, jointly and severally with the
65
Trust, for all of the debts and obligations of the Trust (other than with
respect to the Securities).
(c) Pursuant to ss. 3803(a) of the Business Trust Act, the
Holders of the Preferred 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, in the case of the Property Trustee, 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.
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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 an Indemnified Person and any Covered
Person; 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,
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:
67
(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 by reason of the fact that
he 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 in connection with
such action, suit or proceeding if he acted in good faith and in a
manner he 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 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 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 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
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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 is or was a Company
Indemnified Person against expenses (including attorneys' fees and
expenses) actually and reasonably incurred by him in connection with
the defense or settlement of such action or suit if he acted in good
faith and in a manner he 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) 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 has met the applicable
standard of conduct set forth in paragraphs (i) and (ii). Such
determination shall be made (1) by the Regular Trustees by a majority
vote of a quorum consisting of such Regular 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
Regular Trustees so directs, by independent legal counsel in a
written opinion, or (3) by the Common Security Holder of the Trust.
(iv) 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. Notwithstanding the foregoing, no
advance shall be made by the Debenture Issuer if a determination is
reasonably
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and promptly made (i) by the Regular Trustees by a majority vote of
a quorum of disinterested Regular Trustees, (ii) if such a quorum is
not obtainable, or, even if obtainable, if a quorum of disinterested
Regular 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 Regular 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
interests of the Trust, or, with respect to any criminal proceeding,
that such Company Indemnified Person believed or had reasonable
cause to believe his conduct was unlawful.
(v) 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 Preferred Security Holders of
the Trust or otherwise, both as to action in his 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 require the consent of the Regular
Trustees and not affect any rights or obligations then existing.
(vi) 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 and
incurred by him in any such capacity, or arising out of his status
as such, whether or not the Debenture Issuer would have the power to
indemnify him against such liability under the provisions of this
Section 10.4(a).
(vii) For purposes of this Section 10.4(a), references to
"the Trust" shall include, in addition to the
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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 would have with respect
to such constituent entity if its separate existence had continued.
(viii) 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 or expense including 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 or 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.
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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 of
Securities shall have no rights by virtue of this Declaration in and to such
independent ventures or the income or profits derived therefrom, and the
pursuit of any such venture, even if competitive with the business of the
Trust, shall not be deemed wrongful or improper. No Covered Person, the
Sponsor, the Delaware Trustee, or the Property Trustee shall be obligated to
present any particular investment or other opportunity to the Trust even if
such opportunity is of a character that, if presented to the Trust, could be
taken by the Trust, and any Covered Person, the Sponsor, the Delaware Trustee
and the Property Trustee shall have the right to take for its own account
(individually or as a partner or fiduciary) or to recommend to others any such
particular investment or other opportunity. Any Covered Person, the Delaware
Trustee and the Property Trustee may engage or be interested in any financial
or other transaction with the Sponsor or any Affiliate of the Sponsor, or may
act as depositary for, trustee or agent for, or act on any committee or body
of holders of, securities or other obligations of the Sponsor or its
Affiliates.
ARTICLE XI
ACCOUNTING
SECTION 11.1 Fiscal Year.
The fiscal year ("Fiscal Year") of the Trust shall be the
calendar year, or such other year as is required by the Code.
SECTION 11.2 Certain Accounting Matters.
(a) At all times during the existence of the Trust, the
Regular Trustees shall keep, or cause to be kept, books of account, records
and supporting documents, which shall reflect in reasonable detail, each
material transaction of the Trust. The books of account shall be
72
maintained in accordance with generally accepted accounting principles
consistently applied.
(b) The Regular Trustees shall cause to be prepared and
delivered to each of the Holders of Securities, within 90 days after the end
of each Fiscal Year of the Trust, annual financial 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, which shall be examined by and
reported upon as of the end of each Fiscal Year by a firm of independent
certified public accountants selected by the Regular Trustees.
(c) The Regular Trustees shall cause to be duly prepared and
delivered to each of the Holders of Securities, any annual United States
federal income tax information statement, required by the Code, containing
such information with regard to the Securities held by each Holder as is
required by the Code and the Treasury Regulations. Notwithstanding any right
under the Code to deliver any such statement at a later date, the Regular
Trustees shall endeavor to deliver all such statements within 30 days after
the end of each Fiscal Year of the Trust.
(d) The Regular 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 Regular Trustees on behalf of the Trust with any state or local
taxing authority.
SECTION 11.3 Banking.
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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 Regular Trustees;
provided, however, that the Property Trustee shall designate the signatories
for the Property Trustee Account.
SECTION 11.4 Withholding.
The Trust and the Regular 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 Regular Trustee 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 overwithholding, 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.
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ARTICLE XII
AMENDMENTS AND MEETINGS
SECTION 12.1 Amendments.
(a) Except as otherwise provided in this Declaration or by
any applicable terms of the Securities, this Declaration may only be amended
by a written instrument approved and executed by:
(i) the Regular Trustees (or, if there are
more than two Regular Trustees a majority of the Regul-
ar 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 pur-
ported 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 each of the Trust and 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 each of
the Trust and 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
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amendment is permitted by, and conforms to, the terms of this
Declaration (including the terms of the Securities); 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 which is required 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 and;
(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; and
(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;
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(ii) correct or supplement any provision in
this Declaration that may be defective or inconsistent
with any other provision of this Declaration;
(iii) add to the covenants, restrictions or
obligations of the Sponsor; and
(iv) conform to any change in Rule 3a-5 or written
change in interpretation or application of Rule 3a-5 by any
legislative body, court, government agency or regulatory authority
which amendment does not have a material adverse effect on the
rights, preferences or privileges of the Holders.
SECTION 12.2 Meetings of the Holders of Securities; Action
by Written Consent.
(a) Meetings of the Holders of any class of
Securities may be called at any time by the Regular Trustees
(or as provided in the terms of the Securities) to consider
and act on any matter on which Holders of such class of Securities are
entitled to act under the terms of this Declaration, the terms of the
Securities or the rules of any stock exchange on which the Preferred
Securities are listed or admitted for trading. The Regular Trustees shall call
a meeting of the Holders of such class if directed to do so by the Holders of
at least a Majority in liquidation amount of such class of Securities. Such
direction shall be given by delivering to the Regular Trustees one or more
calls in a writing stating that the signing Holders of Securities wish to call
a meeting and indicating the general or specific purpose for which the meeting
is to be called. Any Holders of Securities calling a meeting shall specify in
writing the Certificates held by the Holders of Securities exercising the
right to call a meeting and only those Securities represented by the
Certificates so 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
77
to vote thereat at least 7 days and not more than 60 days before the
date of such meeting. Whenever a vote, consent or approval of the
Holders of Securities is permitted or required under this
Declaration or the rules of any stock exchange on which the
Preferred Securities are listed or admitted for trading, such vote,
consent or approval may be given at a meeting of the Holders of
Securities. Any action that may be taken at a meeting of the Holders
of Securities may be taken without a meeting if a consent in writing
setting forth the action so taken is signed by the Holders of
Securities owning not less than the minimum amount of Securities in
liquidation amount that would be necessary to authorize or take such
action at a meeting at which all Holders of Securities having a
right to vote thereon were present and voting, but in no event less
than a Majority in liquidation amount of the outstanding Securities.
Prompt notice of the taking of action without a meeting shall be
given to the Holders of Securities entitled to vote who have not
consented in writing. The Regular Trustees may specify that any
written ballot submitted to the Security Holders for the purpose of
taking any action without a meeting shall be returned to the Trust
within the time specified by the Regular Trustees;
(ii) each Holder of a Security may authorize
any Person to act for it by proxy on all matters in
which a Holder of Securities is entitled to participate, including
waiving notice of any meeting, or voting or participating at a
meeting. No proxy shall be valid after the expiration of 11 months
from the date thereof unless otherwise provided in the proxy. Every
proxy shall be revocable at the pleasure of the Holder of Securities
executing it. Except as otherwise provided herein, all matters
relating to the giving, voting or validity of proxies shall be
governed by the General Corporation Law of the State of Delaware
relating to proxies, and judicial interpretations thereunder, as if
the Trust were a Delaware corporation and the Holders of the
Securities were stockholders of a Delaware corporation;
(iii) each meeting of the Holders of the Securities
shall be conducted by the Regular Trustees or
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by such other Person that the Regular Trustees may designate; and
(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 Preferred
Securities are then listed or trading provide otherwise, the Regular
Trustees, in their sole discretion, shall establish all other
provisions relating to meetings of Holders of Securities, including
notice of the time, place or purpose of any meeting at which any
matter is to be voted on by any Holders of Securities, waiver of any
such notice, action by consent without a meeting, the establishment
of a record date, quorum 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 banking corporation with trust
powers, duly organized, validly existing and in good standing under the laws
of the State of New York, with trust power 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 the Declaration has been duly authorized by all necessary corporate
action on the part of the Property Trustee. The 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, insol-
79
vency, and other similar laws affecting creditors' rights generally and to
general principles of equity and the discretion of the court (regardless of
whether the enforcement of such remedies is considered in a proceeding in
equity or at law).
(c) The execution, delivery and performance of the
Declaration by the Property Trustee does not conflict with or constitute a
breach of the certificate of incorporation or by-laws of the Property Trustee.
(d) No consent, approval or authorization of, or
registration with or notice to, any New York State or Federal banking
authority is required for the execution, delivery or performance by the
Property Trustee, of the Declaration.
SECTION 13.2 Representations and Warranties of 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 at the time of Closing, 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 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 the Declaration has been duly authorized by all necessary corporate
action on the part of the Delaware Trustee. The 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).
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(c) The execution, delivery and performance of the
Declaration by the Delaware Trustee does not conflict with or constitute a
breach of the certificate of incorporation or By-laws of the Delaware Trustee.
(d) 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.
(e) The Delaware Trustee is an entity which has
its principal place of business in the State of Delaware.
(f) The Delaware Trustee has been authorized to
perform its obligations under the Certificate of Trust and
the Declaration.
ARTICLE XIV
REGISTRATION RIGHTS
SECTION 14.1 Registration Rights.
The Holders of the Preferred Securities, the Debentures and
the Preferred Securities Guarantee are entitled to the benefits of a
Registration Rights Agreement. Pursuant to the Registration Rights Agreement
the Sponsor has agreed for the benefit of the Holders of the Preferred
Securities, the Debentures and the Preferred Securities Guarantee that,
subject to the terms of the Registration Rights Agreement (including, without
limitation, those provisions permitting a Suspension (as defined therein)) (i)
it will, at its cost, as promptly as reasonably practicable, prepare and file
a Shelf Registration Statement (as defined in the Registration Rights
Agreement) with the Commission with respect to resales of the Preferred
Securities, together with the Securities, the Guarantee and the related Common
Stock issuable upon conversion thereof, (ii) it will use its reasonable best
efforts to cause such Shelf Registration Statement to be declared effective by
the Commission on or prior to October 7, 1996 and (iii) it will use its
reasonable best efforts to keep such Shelf Registration Statement continuously
effective under the Securities Act of 1933, as amended, until the third
anniversary of the date of the effectiveness of the Shelf Registration
Statement or such earlier date as is provided in the Registration Rights
Agreement. The Company and the Trust agree that from and
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after the date on which any Registration Default (as defined below) occurs,
the per annum interest rate on the Securities will increase by 50 basis points
(.50%). Such increase will remain in effect from and including the date on
which any such Registration Default shall occur (or be deemed to occur as
described below) to but excluding the date on which all Registration Defaults
have been cured (or have been deemed to be cured as described below), on which
date the interest rate on the Securities will revert to the interest rate
originally borne by the Securities.
"Registration Default" shall mean any of the
following events:
(i) on or prior to October 7, 1996, the Regis- trable
Securities (as defined in the Registration Rights Agreement) are not
the subject of a Shelf Registration Statement which has become
effective;
(ii) the Registrable Securities are the subject of a Shelf
Registration Statement which was effective but which has ceased to be
effective for any reason prior to the end of the Shelf Registration
Period (as defined in the Registration Rights Agreement);
(iii) the occurrence of a Suspension (as defined
in the Registration Rights Agreement); or
(iv) the occurrence of an event contemplated by
paragraph 3(c)(2)(iii) of the Registration Rights
Agreement (an "Amendment Event");
provided, however, that if the Registration Default consists of the occurrence
of any event contemplated by clause (iii) or (iv) above, then such
Registration Default shall not be deemed to have occurred until the expiration
of 30 Business Days after the date of the occurrence of such Suspension or
Amendment Event, provided that (a) the Trust and the Company thereafter
reasonably promptly comply with the requirements of paragraph 3(i) of the
Registration Rights Agreement, if applicable, and (b) in the case of such
Amendment Event resulting from an action taken by the Company or the Trust,
such action was taken in good faith; and provided, further, that a
Registration Default shall not constitute a default or Event of Default
hereunder.
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A Registration Default shall be deemed to have been cured
and cease to exist on the date subsequent to the occurrence of such
Registration Default on which:
(x) in the case of a Registration Default described in
clause (i) or (ii) above, the Shelf Registration Statement covering
such Registrable Securities shall become effective; or
(y) in the case of a Registration Default described in
clause (iii) or (iv) above, upon the Company and the Trust taking
action to notify the Holders (for purposes of this clause (y), as
that term is defined in the Registration Rights Agreement) of the
Registrable Securities that such Suspension or Amendment Event has
ended. For purposes of this clause (y), taking action to notify
Holders shall be deemed sufficient when notice is first deposited in
first class mail or delivered to a courier service or filed with the
SEC or publicly disseminated by press release or other release
to a news reporting service.
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 registered or certified mail, as follows:
(a) if given to the Trust, in care of the Regular Trustees
at the Trust's mailing address set forth below (or such other address as the
Trust may give notice of to the Holders of the Securities):
c/o CalEnergy Company, Inc.
302 South 36th Street, Suite 400
Omaha, Nebraska 68131
Attention: General Counsel
(b) if given to the Property Trustee, at the mailing address
set forth below (or such other address as the Property Trustee may give notice
of to the Holders of the Securities):
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The Bank of New York
Corporate Trust Trustee Administration
101 Barclay Street
Floor 21 West
New York, New York 10286
Attention: Corporate Trust Department
(c) if given to the Delaware Trustee, at the mailing address
set forth below (or such other address as the Delaware Trustee may give notice
of to the Holders of the Securities):
The Bank of New York (Delaware)
23 White Clay Center
Route 273
Newark, Delaware 19711
Attention: Corporate Trust Department
(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):
CalEnergy Company, Inc.
302 South 36th Street, Suite 400
Omaha, Nebraska 68131
Attention: General Counsel
(e) if given to any other Holder, at the address
set forth on the books and records of the Trust or the
Registrar, as applicable.
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.
SECTION 15.2 Governing Law.
This Declaration and the rights of the parties hereunder
shall be governed by and interpreted in accordance
84
with the laws of the State of Delaware and all rights and remedies shall be
governed by such laws without regard to the principles of conflict of laws of
the State of Delaware or any other jurisdiction that would call for the
application of the law of any jurisdiction other than the State of Delaware;
provided, however, that there shall not be applicable to the Trust, the
Trustees or this Declaration any provision of the laws (statutory or common)
of the State of Delaware pertaining to trusts that relate to or regulate, in a
manner inconsistent with the terms hereof (i) the filing with any court or
governmental body or agency of trustee accounts or schedules of trustee fees
and charges, (ii) affirmative requirements to post bonds for trustees,
officers, agents or employees of a trust, (iii) the necessity for obtaining
court or other governmental approval concerning the acquisition, holding or
disposition of real or personal property, (iv) fees or other sums payable to
trustees, officers, agents or employees of a trust, (v) the allocation of
receipts and expenditures to income or principal, (vi) restrictions or
limitations on the permissible nature, amount or concentration of trust
investments or requirements relating to the titling, storage or other manner
of holding or investing trust assets, or (vii) the establishment of fiduciary
or other standards of responsibility or limitations on the acts or powers of
trustees that are inconsistent with the limitations or liabilities or
authorities and powers of the Trustees as set forth or referenced in this
Declaration. Section 3540 of Title 12 of the Delaware Code shall not apply to
the Trust.
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.
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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.
86
IN WITNESS WHEREOF, the undersigned has caused these
presents to be executed as of the day and year first above written.
Steven A. McArthur
as Trustee
/s/ Steven A. McArthur
-----------------------------------
John G. Sylvia
as Trustee
/s/ John G. Sylvia
-----------------------------------
Gregory Abel
as Trustee
/s/ Gregory Abel
-----------------------------------
THE BANK OF NEW YORK (DELAWARE),
as Delaware Trustee
By: /s/ Donald J. Wrobel
--------------------------------
Name: Donald J. Wrobel
Title: Excutive Vice President
THE BANK OF NEW YORK,
as Property Trustee
By: /s/ Byron Merino
-------------------------------
Name: Byron Merino
Title: Assistant Treasurer
CALENERGY COMPANY, INC.
as Sponsor
By: /s/ Steven A. McArthur
-------------------------------
Name: Steven A. McArthur
Title: Senior Vice President
87
ANNEX I
TERMS OF
6 1/4% CONVERTIBLE PREFERRED SECURITIES
6 1/4% CONVERTIBLE COMMON SECURITIES
Pursuant to Section 7.1 of the Amended and Restated
Declaration of Trust, dated as of April 4, 1996 (as amended from time to time,
the "Declaration"), the designation, rights, privileges, restrictions,
preferences and other terms and provisions of the Preferred Securities and the
Common Securities are set out below (each capitalized term used but not
defined herein has the meaning set forth in the Declaration or, if not defined
in such Declaration, as defined in the Offering Circular referred to below):
1. Designation and Number.
(a) "Preferred Securities." 2,000,000 Preferred Securities
of the Trust with an aggregate liquidation preference
with respect to the assets of the Trust of One Hundred
Million Dollars ($100,000,000), plus up to an addition-
al 240,000 Preferred Securities of the Trust with an
aggregate liquidation preference with respect to the
assets of the Trust of Twelve Million Dollars
($12,000,000) solely to cover over-allotments, as pro-
vided for in the Purchase Agreement (the "Additional
Preferred Securities"), and a liquidation preference
with respect to the assets of the Trust of $50 per pre-
ferred security, are hereby designated for the purposes
of identification only as "6 1/4% Convertible Preferred
Securities (liquidation preference $50 per Convertible
Preferred Security)" (the "Preferred Securities"). The
Preferred Security Certificates evidencing the Pre-
ferred 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 re-
quired by ordinary usage, custom or practice or to
conform to the rules of any stock exchange or other
organization on which the Preferred Securities are
listed.
(b) "Common Securities." 61,856 Common Securities of the Trust
with an aggregate liquidation amount with respect to the
assets of the Trust of Three Million Ninety-Two Thousand
Eight Hundred Dollars ($3,092,800) plus up to an additional
7,423 Common Securities of the
Trust with an aggregate liquidation amount with respect to
the assets of the Trust of Three Hundred Seventy-One
Thousand One Hundred Fifty Dollars ($371,150) to meet the
capital requirements of the Trust in the event of an
issuance of Additional Preferred Securities, and a
liquidation amount with respect to the assets of the Trust
of $50 per Common Security, are hereby designated for the
purposes of identification only as "6 1/4% Convertible
Common Securities (liquidation amount $50 per Convertible
Common Security)" (the "Common Securities"). The Common
Security 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 6 1/4% (the "Coupon Rate") of the
stated liquidation amount of $50 per Security, such
rate being the rate of interest payable on the Debentu-
res to be held by the Property Trustee. Distributions
in arrears for more than one quarter will bear interest
thereon compounded quarterly at the Coupon Rate (to the
extent permitted by applicable law). The term "Distri-
butions" as used herein includes any such interest
including any Additional Payments payable unless other-
wise stated. A Distribution is payable only to the
extent that payments are made in respect of the Deben-
tures held by the Property Trustee and to the extent
the Property Trustee has funds available therefor. The
amount of Distributions payable for any period will be
computed for any full quarterly Distribution period on
the basis of a 360-day year of twelve 30-day months,
and for any period shorter than a full quarterly Dis-
tribution period for which Distributions are computed,
Distributions will be computed on the basis of the
actual number of days elapsed.
(b) Distributions on the Securities will be cumulative,
will accrue from the date of initial issuance and will
be payable quarterly in arrears, on the following
dates, which dates correspond to the interest payment
dates on the Debentures: March 15, June 15, Septem-
ber 15, and December 15 of each year, commencing on
June 15, 1996, when, as and if available for payment by
the Property Trustee, except as otherwise described
below. The Debenture Issuer has the right under the
Indenture to defer payments of interest on the Deben-
tures by extending the interest payment period from
I-2
time to time on the Debentures for successive periods
not exceeding 20 consecutive quarters (each an "Extension
Period"), during which Extension Period no interest shall be
due and payable on the Debentures; provided, that no
Extension Period shall last beyond the date of maturity of
the Debentures. As a consequence of such extension,
Distributions will also be deferred. Despite such deferral,
quarterly Distributions will continue to accrue with
interest thereon (to the extent permitted by applicable law)
at the Coupon Rate compounded quarterly during the Extension
Period. Prior to the expiration of any Extension Period, the
Debenture Issuer may elect to continue to defer payments of
interest for another Extension Period, provided, that such
Extension Period, together with all previous and further
consecutive Extension Periods, may not exceed 20 consecutive
quarters and provided further that such Extension Period may
not extend beyond the maturity 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
expiration 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 relevant record dates. The rele-
vant record dates shall be 15 days prior to the rele-
vant payment dates, except as otherwise described in
this Annex I to the Declaration. Subject to any appli-
cable laws and regulations and the provisions of the
Declaration, each such payment in respect of the Pre-
ferred Securities being held in book-entry form through
The Depository Trust Company (the "Depositary") will be
made as described under the heading "Description of the
TIDES -- Book-Entry Only Issuance -- The Depository
Trust Company" in the Offering Circular. The relevant
record dates for the Common Securities shall be the
same record dates as for the Preferred Securities.
Distributions payable on any Securities that are not
punctually paid on any Distribution payment date, as a
result of the Debenture Issuer having failed to make a
payment under the Debentures, will cease to be payable
to the Person in whose name such Securities are regis-
tered on the relevant record date, and such defaulted
Distribution will instead be payable to the Person in
whose name such Securities are registered on the spe-
cial record date or other specified date determined in
accordance with the Indenture. If
I-3
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
distribution or other payment in respect of any such
delay) except that, if such Business Day is in the next
succeeding calendar year, such payment shall be made on
the immediately preceding Business Day, in each case with
the same force and effect as if made on such date.
(d) In the event of an election by the Holder to convert
its Securities through the Conversion Agent into Common
Stock of the Debenture Issuer pursuant to the terms of
the Securities as forth in this Annex I to the Declara-
tion, no payment, allowance or adjustment shall be made
with respect to accumulated and unpaid Distributions on
such Securities, or be required to be made; provided
that Holders of Securities at the close of business on
any record date for the payment of Distributions will
be entitled to receive the Distributions payable on
such Securities on the corresponding payment date
notwithstanding the conversion of such Securities into
Common Stock of the Debenture Issuer following such
record date.
(e) In the event that there is any money (including money
received pursuant to Section 1309(b) of the Indenture) or
other property held by or for the Trust that is not
accounted for hereunder, such property shall be distributed
Pro Rata (as defined herein) among the Holders of the
Securities.
3. Liquidation Distribution Upon Dissolution.
In the event of any voluntary or involuntary dissolution,
winding-up or termination of the Trust (each a "Liquidation") the then Holders
of the Securities on the date of the Liquidation, as the case may be, will be
entitled to receive out of the assets of the Trust available for distribution
to Holders of Securities after satisfaction of liabilities of creditors,
distributions in an amount equal to the aggregate of the stated liquidation
amount of $50 per Security plus accrued and unpaid Distributions thereon to
the date of payment (such amount being the "Liquidation Distribution"),
unless, in connection with such Liquidation, Debentures in an aggregate
principal amount equal to the aggregate stated liquidation amount of such
Securities, with an interest rate equal to the Coupon Rate of, and bearing
accrued and unpaid interest in an amount equal to the accrued and unpaid
Distributions on, such Securities, shall be distributed on a Pro Rata basis to
the Holders of the Securities.
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If, upon any such Liquidation, the Liquidation Distribution
can be paid only in part because the Trust has insufficient assets available
to pay in full the aggregate Liquidation Distribution, then the amounts
payable directly by the Trust on the Securities shall be paid on a Pro Rata
basis in accordance with paragraph 9 below.
4. Redemption and Distribution.
(a) Upon the repayment of the Debentures in whole or in
part, whether at maturity or upon redemption (either at
the option of the Debenture Issuer or pursuant to a
Special Event), the proceeds from such repayment or
payment shall be simultaneously applied to redeem Secu-
rities having an aggregate liquidation amount equal to
the aggregate principal amount of the Debentures so
repaid or redeemed at a redemption price per Security
equal to the redemption price of the Debentures, to-
gether with accrued and unpaid Distributions thereon
through the date of the redemption, payable in cash
(the "Redemption Price"). Holders will be given not
less than 30 (or in the case of a redemption at the
option of the Debenture Issuer, not less 20) nor more
than 60 days' notice of such redemption.
(b) If fewer than all the outstanding Securities are to be so
redeemed, the Common Securities and the Preferred Securities
will be redeemed Pro Rata and the Preferred Securities to be
redeemed will be as described in paragraph 4(f)(ii) below.
(c) If, at any time, a Tax Event shall occur and be con-
tinuing the Sponsor shall cause the Regular Trustees to
liquidate the Trust and, after satisfaction of credi-
tors of the Trust, cause Debentures to be distributed
to the Holders of the Securities in liquidation of the
Trust within 90 days following the occurrence of such
Tax Event (the "90 Day Period"); provided, however,
that such liquidation and distribution shall be condi-
tioned on (i) the Regular Trustees' receipt of an opin-
ion of a nationally recognized independent tax counsel
experienced in such matters (a "No Recognition Opin-
ion"), which opinion may rely on published revenue rul-
ings of the Internal Revenue Service, to the effect
that the Holders of the Securities will not recognize
any income, gain or loss for United States federal
income tax purposes as a result of such liquidation and
distribution of Debentures, and (ii) the Sponsor being
unable to avoid such Tax Event within such 90-day
period by taking some ministerial action or pursuing
I-5
some other reasonable measure that, in the sole judg-
ment of the Sponsor, will have no adverse effect on the
Trust, the Sponsor or the Holders of the Securities and
will involve no material cost ("Ministerial Action").
If (i) the Debenture Issuer has received
an opinion (a "Redemption Tax Opinion") of a nationally
recognized independent tax counsel (reasonably acceptable to
the Regular Trustees) experienced in such matters that, as a
result of a Tax Event, there is more than an insubstantial
risk that the Debenture Issuer would be precluded from
deducting the interest on the Debentures for United States
federal income tax purposes, even after the Debentures were
distributed to the Holders of Securities upon liquidation of
the Trust as described in this paragraph 4(c), or (ii) the
Regular Trustees shall have been informed by such tax
counsel that it cannot deliver a No Recognition Opinion, the
Debenture Issuer shall have the right, upon not less than 30
nor more than 60 days' notice, and within 90 days following
the occurrence of such Tax Event, to redeem the Debentures
in whole (but not in part) for cash, at par plus accrued and
unpaid interest and, following such redemption, all the
Securities will be redeemed by the Trust at the liquidation
preference of $50 per Security plus accrued and unpaid
distributions; provided, however, that, if at the time there
is available to the Debenture Issuer or the Trust the
opportunity to eliminate, within such 90 day period, the Tax
Event by taking some Ministerial Action, the Trust or the
Debenture Issuer will pursue such Ministerial Action in lieu
of redemption.
"Tax Event" means that the Sponsor shall
have received an opinion of a nationally recognized
independent tax counsel (reasonably acceptable to the
Regular Trustees) experienced in such matters (a
"Dissolution Tax Opinion") to the effect that as a result of
(a) any amendment to, or change (including any announced
prospective change) in, the laws (or any regulations
thereunder) of the United States or any political
subdivision or taxing authority therefor or therein, or (b)
any amendment to, or change in, an interpretation or
application of any such laws or regulations by any
legislative body, court, governmental agency or regulatory
authority (including the enactment of any legislation and
the publication of any judicial decision or regulatory
determination on or after the date of the Offering
Circular), which amendment or change is effective or which
interpretation or pronouncement is announced on or after the
date of the Offering Circu-
I-6
lar, there is more than an insubstantial risk that (i) the
Trust is or will be subject to United States federal
income tax with respect to interest received on the
Debentures, (ii) the Trust is, or will be within 90 days
of the date thereof, subject to more than a de minimis
amount of taxes, duties, assessments or other
governmental charges of whatever nature imposed by the
United States, or any other taxing authority, or (iii)
interest payable by the Debenture Issuer to the Trust on the
Debentures is not or will not be deductible by the Debenture
Issuer for United States federal income tax purposes.
Notwithstanding anything in the previous sentence to the
contrary, a Tax Event shall not include any Change in Tax
Law that requires the Debenture Issuer for United States
federal income tax purposes to defer taking a deduction for
any original issue discount ("OID") that accrues with
respect to the Debentures until the interest payment related
to such OID is paid by the Debenture Issuer in money;
provided, that such Change in Tax Law does not create more
than an insubstantial risk that the Debenture Issuer will be
prevented from taking a deduction for OID accruing with
respect to the Debentures at a date that is no later than
the date the interest payment related to such OID is
actually paid by the Debenture Issuer in money.
If an Investment Company Event (as
hereinafter defined) shall occur and be continuing, the
Sponsor shall cause the Regular Trustees to liquidate the
Trust and cause the Debentures to be distributed to the
Holders of the Securities in liquidation of the Trust within
90 days following the occurrence of such Investment Company
Event.
"Investment Company Event" means the
occurrence of a change in law or regulation or a written
change in interpretation or application of law or regulation
by any legislative body, court, governmental agency or
regulatory authority (a "Change in 1940 Act Law"), to the
effect that the Trust is or will be considered an Investment
Company which is required to be registered under the
Investment Company Act, which Change in 1940 Act Law becomes
effective on or after the date of the Offering Circular.
After the date fixed for any distribution
of Debentures: (i) the Securities will no longer be deemed
to be outstanding, (ii) the Depositary or its nominee (or
any successor Clearing Agency or its nominee), as record
Holder of Preferred Securities repre-
I-7
sented by global certificates, will receive a registered
global certificate or certificates representing the
Debentures to be delivered upon such distribution and
(iii) any certificates representing Securities, except for
certificates representing Preferred Securities held by the
Depositary or its nominee (or any successor Clearing
Agency or its nominee), will be deemed to represent
Debentures having an aggregate principal amount equal to
the aggregate stated liquidation amount of such
Securities, with accrued and unpaid interest equal to
accrued and unpaid Distributions on such Securities until
such certificates are presented to the Debenture Issuer or
its agent for transfer or reissuance.
(d) The Trust may not redeem fewer than all the outstanding
Securities unless all accrued and unpaid Distributions have
been paid on all Securities for all quarterly Distribution
periods terminating on or before the date of redemption.
(e) If the Debentures are distributed to the Holders of the
Securities, pursuant to the terms of the Indenture, the
Debenture Issuer will use its best efforts to have the
Debentures listed on any exchange on which the Preferred
Securities were listed immediately prior to the distribution
of the Debentures.
(f) "Redemption or Distribution Procedures."
(i) Notice of any redemption of, or notice of dis-
tribution of Debentures in exchange for the
Securities (a "Redemption/Distribution Notice")
will be given by the Trust by mail to each Hold-
er of Securities to be redeemed or exchanged not
less than 30 (or in the case of a redemption at
the option of the Debenture Issuer, not less 20)
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 ex-
change and the dates on which notices are given
pursuant to this paragraph 4(f)(i), a Redemp-
tion/Distribution Notice shall be deemed to be
given on the day such notice is first mailed by
first-class mail, postage prepaid, to Holders of
Securities. Each Redemption/Distribution Notice
shall be addressed to the Holders of Securities
at the address of each such Holder appearing in
I-8
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 redemp-
tion 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 Preferred Securities, it being under-
stood that, in respect of Preferred Securities
registered in the name of and held of record by
the Depositary or its nominee (or any successor
Clearing Agency or its nominee), the distribu-
tion of the proceeds of such redemption will be
made to each Clearing Agency Participant (or
Person on whose behalf such nominee holds such
securities) in accordance with the procedures
applied by such agency or nominee.
(iii) If Securities are to be redeemed and the Trust
gives a Redemption/Distribution Notice, which
notice may only be issued if the Debentures are
redeemed as set out in this paragraph 4 (which
notice will be irrevocable), then (A) with re-
spect to Preferred Securities held 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 suffi-
cient amount of cash in connection with the
related redemption or maturity of the Deben-
tures, the Trust will deposit irrevocably with
the Depositary or its nominee (or successor
Clearing Agency or its nominee) funds sufficient
to pay the applicable Redemption Price with
respect to such Preferred Securities and will
give the Depositary irrevocable instructions and
authority to pay the applicable Redemption Price
to the Holders of such Preferred Securities
represented by the Global Certificates, and (B)
with respect to Preferred Securities issued in
certificated form and Common Securities, provid-
ed that the Debenture Issuer has paid the Prop-
erty Trustee a sufficient amount of cash in
connection with the related redemption or matu-
rity of the Debentures, the Trust will irrevoca-
bly deposit with the Paying Agent funds suffi-
cient to pay the amount payable on redemption to
the Holders of such Securities upon surrender of
I-9
their certificates. If a Redemption/Distribution Notice
shall have been given and funds deposited as
required, then on the date of such deposit, all
rights of Holders of such Securi- ties so called for
redemption will cease, except the right of the
Holders of such Securities to receive the redemption
price, but without inter- est on such redemption
price. Neither the Regu- lar Trustees nor the Trust
shall be required to register or cause to be
registered the transfer of any Securities that have
been so called for redemption. If any date fixed for
redemption of Securities is not a Business Day, then
payment of the amount payable on such date will be
made on the next succeeding day that is a Business
Day (without any interest or other payment in respect
of any such delay) except that, if such Business Day
falls in the next calendar year, such payment will be
made on the immediately preceding Business Day, in
each case with the same force and effect as if made
on such date fixed for redemption. If payment of the
redemp- tion price in respect of any Securities is
im- properly withheld or refused and not paid either
by the Trust or by the Sponsor as guarantor pursuant
to the relevant Securities Guarantee, Distributions
on such Securities will continue to accrue at the
then applicable rate, from the original redemption
date to the date of payment, in which case the actual
payment date will be considered the date fixed for
redemption for purposes of calculating the amount
payable upon redemption (other than for purposes of
calculating any premium).
(iv) In the event of any redemption in part, the
Trust shall not be required to (i) issue, regis-
ter the transfer of or exchange of any Preferred
Security during a period beginning at the open-
ing of business 15 days before any selection for
redemption of Preferred Securities and ending at
the close of business on the earliest date in
which the relevant notice of redemption is
deemed to have been given to all holders of Pre-
ferred Securities to be so redeemed and (ii)
register the transfer of or exchange of any Pre-
ferred Securities so selected for redemption, in
whole or in part, except for the unredeemed
portion of any Preferred Securities being re-
deemed in part.
I-10
(v) Redemption/Distribution Notices shall be sent by
the Regular Trustees on behalf of the Trust to
(A) in the case of Preferred Securities held in
book-entry form, the Depositary and, in the case
of Securities held in certificated form, the
Holders of such certificates and (B) in respect
of the Common Securities, the Holder thereof.
(vi) Subject to the foregoing and applicable law
(including, without limitation, United States
federal securities laws), the Sponsor or any of
its subsidiaries may at any time and from time to
time purchase outstanding Preferred Securities
by tender, in the open market or by private
agreement.
5. Conversion Rights.
The Holders of Securities shall have the right at any time, at their
option, to cause the Conversion Agent to convert Securities, on
behalf of the converting Holders, into shares of Common Stock of the
Debenture Issuer in the manner described herein on and subject to the
following terms and conditions:
(a) The Securities will be convertible at the office of the
Conversion Agent into fully paid and nonassessable
shares of Common Stock of the Debenture Issuer pursuant
to the Holder's direction to the Conversion Agent to
exchange such Securities for a portion of the Deben-
tures theretofore held by the Trust on the basis of one
Security per $50 principal amount of Debentures, and
immediately convert such amount of Debentures into
fully paid and nonassessable shares of Common Stock of
the Debenture Issuer at an initial conversion rate of
1.6728 shares of Common Stock of the Debenture Issuer
per $50 principal amount of Debentures (which is equiv-
alent to a conversion price of $29.89 per share of
Common Stock of the Debenture Issuer, subject to cer-
tain adjustments set forth in the terms of the Deben-
tures (as so adjusted, "Conversion Price")).
(b) In order to convert Securities into Common Stock of the
Debenture Issuer the Holder shall submit to the Conver-
sion Agent at the office referred to above an irrevo-
cable request to convert Securities on behalf of such
Holder (the "Conversion Request"), together, if the
Securities are in certificated form, with such certifi-
cates. The Conversion Request shall (i) set forth the
number of Securities to be converted and the
I-11
name or names, if other than the Holder, in which the
shares of Common Stock of the Debenture Issuer should be
issued and (ii) direct the Conversion Agent (a) to
exchange such Securities for a portion of the Debentures
held by the Trust (at the rate of exchange specified in
the preceding paragraph) and (b) to immediately convert
such Debentures on behalf of such Holder, into Common -
Stock of the Debenture Issuer (at the conversion rate
specified in the preceding paragraph). The Conversion
Agent shall notify the Trust of the Holder's election to
exchange Securities for a portion of the Debentures held
by the Trust and the Trust shall, upon receipt of such
notice, deliver to the Conversion Agent the appro- priate
principal amount of Debentures for exchange in accordance
with this Section. The Conversion Agent shall thereupon
notify the Debenture Issuer of the Holder's election to
convert such Debentures into shares of Common Stock of the
Debenture Issuer. Holders of Securities at the close of
business on a Distribution record date will be entitled to
receive the Distribution payable on such securities on the
corresponding Distribution payment date notwithstanding
the conversion of such Securities following such record
date but prior to such distribution payment date. Except
as provided above, neither the Trust nor the Sponsor will
make, or be required to make, any payment, allowance or
adjustment upon any conversion on account of any
accumulated and unpaid Distributions accrued on the
Securities (including any Additional Payments accrued
thereon) surrendered for conversion, or on account of any
accumulated and unpaid dividends on the shares of Common
Stock of the Debenture Issuer issued upon such conversion.
The Debenture Issuer shall make no payment or allowance
for distributions on the shares of Common Stock of the
Debenture Issuer issued upon such conversion, except to
the extent that such shares of Common Stock of the
Debenture Issuer are held of record on the record date for
any such distributions and except as provided in Section
1309 of the Indenture. Securities shall be deemed to have
been converted immediately prior to the close of business
on the day on which a Notice of Conversion relating to
such Securities is received the Trust in accordance with
the foregoing provision (the "Conversion Date"). The
Person or Persons entitled to receive the Common Stock of
the Debenture Issuer issuable upon conversion of the
Debentures shall be treated for all purposes as the record
holder or holders of such Common Stock of the Debenture
Issuer at such time. As promptly as practicable on or
after the Conversion Date, the Debenture Issuer shall
issue and deliver at the office of
I-12
the Conversion Agent a certificate or certificates for the
number of full shares of Common Stock of the Debenture
Issuer issuable upon such conversion, together with the
cash payment, if any, in lieu of any fraction of any share
to the Person or Persons entitled to receive the same,
unless otherwise directed by the Holder in the notice of
conversion and the Conversion Agent shall distribute such
certificate or certificates to such Person or Persons.
(c) Each Holder of a Security by his acceptance thereof appoints
The Bank of New York "Conversion Agent" for the purpose of
effecting the conversion of Securities in accordance with
this Section. In effecting the conversion and transactions
described in this Section, the Conversion Agent shall be
acting as agent of the Holders of Securities directing it to
effect such conversion transactions. The Conversion Agent is
hereby authorized (i) to exchange Securities from time to
time for Debentures held by the Trust in connection with the
conversion of such Securities in accordance with this Section
and (ii) to convert all or a portion of the Debentures into
Common Stock of the Debenture Issuer and thereupon to deliver
such shares of Common Stock of the Debenture Issuer in
accordance with the provisions of this Section and to deliver
to the Trust a new Debenture or Debentures for any resulting
unconverted principal amount.
(d) No fractional shares of Common Stock of the Debenture
Issuer will be issued as a result of conversion, but in
lieu thereof, such fractional interest will be in cash
(based on the last reported sale price of the Common
Stock of the Debenture Issuer on the date such Securi-
ties are surrendered for conversion) by the Debenture
Issuer to the Trust, which in turn will make such
payment to the Holder or Holders of Securities so
converted.
(e) The Debenture Issuer shall at all times reserve and
keep available out of its authorized and unissued
Common Stock of the Debenture Issuer, solely for issu-
ance upon the conversion of the Debentures, free from
any preemptive or other similar rights, such number of
shares of Common Stock of the Debenture Issuer as shall
from time to time be issuable upon the conversion of
all the Debentures then outstanding. Notwithstanding
the foregoing, the Debenture Issuer shall be entitled
to deliver upon conversion of Debentures, shares of
Common Stock of the Debenture Issuer reacquired and
held in the treasury of the Debenture Issuer (in lieu
I-13
of the issuance of authorized and unissued shares of
Common Stock of the Debenture Issuer), so long as any
such treasury shares are free and clear of all liens,
charges, security interests or encumbrances. Any
shares of Common Stock of the Debenture Issuer issued
upon conversion of the Debentures shall be duly autho-
rized, validly issued and fully paid and nonassessable.
The Trust shall deliver the shares of Common Stock of
the Debenture Issuer received upon conversion of the
Debentures to the converting Holder free and clear of
all liens, charges, security interests and encumbranc-
es, except for transfer, stamp or withholding taxes.
Each of the Debenture Issuer and the Trust shall pre-
pare and shall use its best efforts to obtain and keep
in force such governmental or regulatory permits or
other authorizations as may be required by law, and
shall comply with all applicable requirements as to
registration or qualification of the Common Stock of the
Debenture Issuer (and all requirements to list the Common
Stock of the Debenture Issuer issuable upon conversion of
Debentures that are at the time applicable), in order to
enable the Debenture Issuer to lawfully issue Common Stock
of the Debenture Issuer to the Trust upon conversion of the
Debentures and the Trust to lawfully deliver the Common
Stock of the Debenture Issuer to each Holder upon conversion
of the Securities.
(f) The Debenture Issuer will pay any and all taxes that
may be payable in respect of the issue or delivery of
shares of Common Stock of the Debenture Issuer on
conversion of Debentures and the delivery of the shares
of Common Stock of the Debenture Issuer by the Trust
upon conversion of the Securities. The Debenture
Issuer shall not, however, be required to pay any tax
which may be payable in respect of any transfer in-
volved in the issue and delivery of shares of Common
Stock of the Debenture Issuer in a name other than that
in which the Securities so converted were registered,
and no such issue or delivery shall be made unless and
until the person requesting such issue has paid to the
Trust or Debenture Issuer, as the case may be, the
amount of any such tax, or has established to the
satisfaction of the Trust or Debenture Issuer, as the
case may be, that such tax has been paid.
(g) Nothing in the preceding Paragraph (f) shall limit the
requirement of the Trust or Debenture Issuer, as the case
may be, to withhold taxes pursuant to the terms of the
Securities or set forth in this Annex I to the Declaration
or to the Declaration itself or other-
I-14
wise require the Property Trustee or the Trust to pay any
amounts on account of such withholdings.
6. Voting Rights - Preferred Securities.
(a) Except as provided under paragraphs 6(b) and 7, in the
Business Trust Act and as otherwise required by law and the
Declaration, the Holders of the Preferred Securities will
have no voting rights.
Subject to the requirements set forth in this paragraph,
following an Event of Default, the Holders of a majority
in liquidation amount of the Preferred Securities, voting
separately as a class may direct the time, method, and
place of conducting any proceeding for any remedy
available to the Property Trustee, or direct the exercise
of any trust or power conferred upon the Property Trustee
under the Declaration, including the right to direct the
Property Trustee, as holder of the Debentures, to (i)
exercise the remedies available under the Indenture with
respect to the Debentures, (ii) waive any past default and
its consequences that is waivable under the Indenture, or
(iii) exercise any right to rescind or annul a declaration
that the principal of all the Debentures shall be due and
payable, or (iv) consent to any amendment, modification,
or termination of the Indenture or the Debentures where
such consent shall be required; provided, however, that
where a consent under the Indenture would require the
consent or act of the Holders of greater than a majority
of the Holders in principal amount of Debentures affected
thereby (a "Super Majority"), the Property Trustee may
only give such consent or take such action at the written
direction of the Holders of at least the proportion in
liquidation amount of the Preferred Securities which the
relevant Super Majority represents of the aggregate
principal amount of the Debentures outstanding. The
Property Trustee shall be under no obligation to revoke
any action previously authorized or approved by a vote of
the Holders of the Preferred Securities. Other than with
respect to directing the time, method and place of
conducting any remedy available to the Property Trustee or
the Debenture Trustee as set forth above, the Property
Trustee shall be under no obligation to take any action in
accordance with the directions of the Holders of the
Preferred Securities under this paragraph unless the
Property Trustee has obtained an opinion of independent
tax counsel to the effect that for the purposes of United
States federal income tax the Trust will not be classified
as other than a grantor trust on account of such action
and each
I-15
Holder will be treated as owning an undivided beneficial
interest in the Debentures. If the Property Trustee fails
to enforce its rights under the Debentures after the
Holders of the requisite percentage in liquidation amount
of Preferred Securities has made a written request, a
Holder of Preferred Securities may institute a legal
proceeding directly against the Debenture Issuer or any
other Person to enforce the Property Trustee's rights
under the Debentures without first instituting any legal
proceeding against the Property Trustee or any other
Person. Notwithstanding the foregoing, if a Declaration
Event of Default has occurred and is continuing and such
event is attributable to the failure of the Debenture
Issuer to pay interest or principal on the Debentures on
the date such interest or principal is otherwise payable
(other than pursuant to a valid extension of the interest
payment period by the Debenture Issuer pursuant to Section
312 of the Indenture) (or in the case of redemption on the
redemption date), then a holder of Preferred Securities
may directly institute a proceeding for enforcement of
payment to such holder (a "Direct Action") of the
principal of or interest on the Debentures having a
principal amount equal to the aggregate liquidation amount
of the Preferred Securities of such holder on or after the
respective due date specified in the Debentures. Except as
provided in the preceding sentence, the holders of
Preferred Securities will not be able to exercise directly
any other remedy available to the holders of the
Debentures. In connection with such Direct Action, the
Debenture Issuer will be subro- gated to the rights of
such holder of Preferred Securities under the Declaration
to the extent of any payment made by the Debenture Issuer
to such holder of Preferred Securities in such Direct
Action.
Any required approval or direction of Holders of Preferred
Securities may be given at a separate meeting of Holders
of Preferred Securities convened for such purpose, at a
meeting of all of the Holders of Securities in the Trust
or pursuant to written consent. The Regular Trustees will
cause a notice of any meeting at which Holders of
Preferred Securities are entitled to vote, 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 Preferred Securities. Each such notice will
include a statement setting forth the following
information (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
I-16
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 Preferred
Securities will be required for the Trust to redeem and
cancel Preferred Securities or to distribute the Debentures
in accordance with the Declaration and the terms of the
Securities.
Notwithstanding that Holders of Preferred Securities are
entitled to vote or consent under any of the circumstances
described above, any of the Preferred Securities that are
owned by the Sponsor or any Affiliate of the Sponsor shall
not be entitled to vote or consent and shall, for purposes
of such vote or consent, be treated as if such Preferred
Securities were not outstanding.
7. Voting Rights - Common Securities.
(a) Except as provided under paragraphs 7(b), (c) and 8, in the
Business Trust Act and as otherwise required by law and the
Declaration, the Holders of the Common Securities will have
no voting rights.
(b) The Holders of the Common Securities are entitled, in
accordance with Article V of the Declaration, to vote to
appoint, remove or replace any Trustee or to increase or
decrease the number of Trustees.
(c) Subject to Section 2.6 of the Declaration and only
after the Event of Default with respect to the Pre-
ferred Securities has been cured, waived, or otherwise
eliminated and subject to the requirements of the
second to last sentence of this paragraph, the Holders
of a Majority in liquidation amount of the Common
Securities, voting separately as a class, may direct
the time, method, and place of conducting any proceed-
ing for any remedy available to the Property Trustee,
or exercising any trust or power conferred upon the
Property Trustee under the Declaration, including (i)
directing the time, method, place of conducting any
proceeding for any remedy available to the Debenture
Trustee, or exercising any trust or power conferred on
the Debenture Trustee with respect to the Debentures,
(ii) waive any past default and its consequences that
is waivable under Section 606 of the Indenture, (iii)
exercise any right to rescind or annul a declaration
that the principal of all the Debentures shall be due
and payable, or (iv) consent to any amend-
I-17
ment, modification, or termination of the Indenture or the
Deben- tures where such consent shall be required;
provided that, where a consent or action under the
Indenture would require the consent or act of the Holders
of greater than a majority in principal amount of Deben-
tures affected thereby (a "Super Majority"), the Prop-
erty Trustee may only give such consent or take such
action at the written direction of the Holders of at least
the proportion in liquidation amount of the Common
Securities which the relevant Super Majority represents of
the aggregate principal amount of the Debentures
outstanding. Pursuant to this paragraph 7(c), the Property
Trustee shall not revoke any action previously authorized
or approved by a vote of the Holders of the Preferred
Securities. Other than with respect to directing the time,
method and place of con- ducting any remedy available to
the Property Trustee or the Debenture Trustee as set forth
above, the Property Trustee shall be under no obligation
to take any action in accordance with the directions of
the Holders of the Common Securities under this paragraph
unless the Property Trustee has obtained an opinion of
independent tax counsel to the effect that for the
purposes of United States federal income tax the Trust
will not be classified as other than a grantor trust on
account of such action and each Holder will be treated as
owning an undivided beneficial interest in the Debentures.
If the Property Trustee fails to enforce its rights under
the Debentures after a Holder of Common Securities has
made a written request, such Holder of Common Securities
may institute a legal proceeding directly against the
Debenture Issuer or any other Person to enforce the
Property Trustee's rights under the Debentures, without
first instituting any legal proceeding against the
Property Trustee or any other Person.
Any approval or direction of Holders of Common Securities
may be given at a separate meeting of Holders of Common
Securities convened for such purpose, at a meeting of all
of the Holders of Securities in the Trust or pursuant to
written consent. The Regular Trustees will cause a notice
of any meeting at which Holders of Common Securities are
entitled to vote, 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
I-18
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.
8. Amendments to Declaration and Indenture.
(a) In addition to any requirements under Section 12.1 of the
Declaration, if any proposed amendment to the Declaration
provides for, or the Regular Trustees otherwise propose to
effect, (i) any action that would adversely affect the
powers, preferences or special rights of the Securities,
whether by way of amendment to the Declaration or
otherwise, or (ii) the dissolu- tion, winding-up or
termination of the Trust, other than as described in
Section 8.1 of the Declaration, then the Holders of
Securities as a class, will be entitled to vote on such
amendment or proposal (but not on any other amendment or
proposal) and such amendment or proposal shall not be
effective except with the approval of the Holders of at
least a Majority in liquidation amount of the Securities
affected thereby, voting together as a single class;
provided, however, if any amendment or proposal referred
to in clause (i) above would adversely affect only the
Preferred Securities or only the Common Securities, then
only the affected class will be entitled to vote on such
amendment or proposal and such amendment or proposal shall
not be effective except with the approval of a Majority in
liquidation amount of such class of Securities.
(b) In the event the consent of the Property Trustee as the
holder of the Debentures is required under the Inden- ture
with respect to any amendment, modification or termination
on the Indenture or the Debentures, the Property Trustee
shall request the written direction of the Holders of the
Securities with respect to such amendment, modification or
termination and shall vote with respect to such amendment,
modification or termi- nation as directed by a Majority in
liquidation amount of the Securities voting together as a
single class; provided, however, that where a consent
under the Indenture would require the consent of the
holders of greater than a majority in aggregate principal
amount of the Debentures (a "Super Majority"), the
Property Trustee may only give such consent at the written
direction of the Holders of at least the same propor-
I-19
tion in aggregate stated liquidation preference of the
Securities; provided, further, that the Property Trust- ee
shall not take any action in accordance with the
directions of the Holders of the Securities under this
paragraph 8(b) unless the Property Trustee has obtained an
opinion of tax counsel to the effect that for the purposes
of United States federal income tax the Trust will not be
classified as other than a grantor trust on account of
such action.
9. Pro Rata.
A reference in these terms of the Securities to any payment,
distribution or treatment as being "Pro Rata" shall mean pro rata to each
Holder of Securities according to the aggregate liquidation amount of the
Securities held by the relevant Holder in relation to the aggregate
liquidation amount of all Securities outstanding unless, in relation to a
payment, an Event of Default under the Declaration has occurred and is
continuing, in which case any funds available to make such payment shall be
paid first to each Holder of the Preferred Securities pro rata according to
the aggregate liquidation amount of Preferred Securities held by
the relevant Holder relative to the aggregate liquidation amount of all
Preferred Securities outstanding, and only after satisfaction of all amounts
owed to the Holders of the Preferred Securities, to each Holder of Common
Securities pro rata according to the aggregate liquidation amount of Common
Securities held by the relevant Holder relative to the aggregate liquidation
amount of all Common Securities outstanding.
10. Ranking.
The Preferred Securities rank pari passu and payment thereon
shall be made Pro Rata with the Common Securities except that, where an Event
of Default occurs and is continuing under the Indenture in respect of the
Debentures held by the Property Trustee, the rights of Holders of the Common
Securities to payment in respect of Distributions and payments upon
liquidation, redemption and otherwise are subordinated to the rights to
payment of the Holders of the Preferred Securities.
11. Acceptance of Securities Guarantee and Indenture.
Each Holder of Preferred Securities and Common Securities,
by the acceptance thereof, agrees to the provisions of the Preferred
Securities Guarantee and the Common Securities Guarantee, respectively,
including the subordination provisions therein and to the provisions of the
Indenture.
12. No Preemptive Rights.
I-20
The Holders of the Securities shall have no preemptive
rights to subscribe for any additional securities.
13. Miscellaneous.
These terms constitute a part of the Declaration.
The Sponsor will provide a copy of the Declaration, the
Preferred Securities Guarantee or the Common Securities Guarantee (as may be
appropriate), and the Indenture to a Holder without charge on written request
to the Sponsor at its principal place of business.
I-21
EXHIBIT A-1
FORM OF PREFERRED SECURITY
[FORM OF FACE OF SECURITY]
THIS SECURITY, ANY CONVERTIBLE JUNIOR SUBORDINATED DEBENTURE
ISSUED IN EXCHANGE FOR THIS SECURITY AND ANY COMMON STOCK (AND RELATED RIGHTS)
ISSUED ON CONVERSION THEREOF HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE
SECURITIES LAWS AND MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED
EXCEPT (A) TO THE COMPANY, (B) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
UNDER THE SECURITIES ACT, (C) FOR SO LONG AS THE SECURITIES ARE 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 OFFERS AND SALES TO
NON-U.S. PERSONS THAT OCCUR OUTSIDE THE UNITED STATES WITHIN THE MEANING OF
REGULATION S UNDER THE SECURITIES ACT, OR (E) PURSUANT TO ANOTHER AVAILABLE
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO
THE COMPANY'S AND THE TRANSFER AGENT'S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR
TRANSFER (i) PURSUANT TO CLAUSES (D) OR (E) TO REQUIRE THE DELIVERY OF AN
OPINION OF COUNSEL, CERTIFICATION AND/OR OTHER INFORMATION SATISFACTORY TO
EACH OF THEM, AND (ii) IN EACH OF THE FOREGOING CASES, TO REQUIRE THAT A
CERTIFICATE OF TRANSFER IN THE FORM APPEARING ON THIS SECURITY IS COMPLETED
AND DELIVERED BY THE TRANSFEROR TO THE TRANSFER AGENT.
[Include if Preferred Security is in global form and the
Depository Trust Company is the U. S. Depositary -- UNLESS THIS CERTIFICATE IS
PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A
NEW YORK CORPORATION ("DTC"), NEW YORK, NEW YORK, TO THE COMPANY OR ITS AGENT
FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED
IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS IS REQUESTED BY
AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO CEDE & CO., OR
TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC)
ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY
PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN
INTEREST HEREIN.]
[Include if Preferred Security is in global form --
TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN WHOLE, BUT
NOT IN PART, TO NOMINEES OF DTC OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR'S
NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO
TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN THE
DECLARATION REFERRED TO BELOW.]
A-1
Certificate Number Number of Preferred Securities
[CUSIP NO. [ ]]
Preferred Securities
of
CalEnergy Capital Trust
6 1/4% Convertible Preferred Securities
(liquidation preference $50 per Convertible Preferred Security)
CalEnergy Capital Trust, a statutory business trust formed
under the laws of the State of Delaware (the "Trust"), hereby certifies that
___________________________________________ (the "Holder") is the registered
owner of preferred securities of the Trust representing undivided beneficial
interests in the assets of the Trust designated the 6 1/4% Convertible
Preferred Securities (liquidation preference $50 per Convertible Preferred
Security) (the "Preferred Securities"). The Preferred Securities are
transferable on the books and records of the Trust, in person or by a duly
authorized attorney, upon surrender of this certificate duly endorsed and in
proper form for transfer. The designation, rights, privileges, restrictions,
preferences and other terms and provisions of the Preferred Securities
represented hereby are issued and shall in all respects be subject to the
provisions of the Amended and Restated Declaration of Trust of the Trust dated
as of April 4, 1996, as the same may be amended from time to time (the
"Declaration"), including the designation of the terms of the Preferred
Securities as set forth in Annex I to the Declaration. Capitalized terms used
herein but not defined shall have the meaning given them in the Declaration.
The Holder is entitled to the benefits of the Preferred Securities Guarantee
to the extent provided therein. The Sponsor will provide a copy of the
Declaration, the Preferred Securities Guarantee and the Indenture to a Holder
without charge upon written request to the Trust at its principal place of
business.
Reference is hereby made to select provisions of the
Preferred Securities set forth on the reverse hereof, which select provisions
shall for all purposes have the same effect as if set forth at this place.
Upon receipt of this certificate, the Holder is bound by the
Declaration and is entitled to the benefits thereunder.
A-2
By acceptance, the Holder agrees to treat, for United States
federal income tax purposes, the Debentures as indebted-
ness and the Preferred Securities as evidence of indirect benefi-
cial ownership in the Debentures.
Unless the Property Trustee's Certificate of Authentication
hereon has been properly executed, these Preferred Securities shall not be
entitled to any benefit under the Declaration or be valid or obligatory for
any purpose.
A-3
IN WITNESS WHEREOF, the Trust has executed this certificate
this day of____________________ , 199__.
CALENERGY CAPITAL TRUST
By: ____________________
Name:
Title:
PROPERTY TRUSTEE'S CERTIFICATE OF AUTHENTICATION
This is one of the Preferred Securities referred to in the
within-mentioned Declaration.
Dated:__________________ ,____
THE BANK OF NEW YORK,
as Property Trustee
By: _______________________
Authorized Signatory
A-4
[FORM OF REVERSE OF SECURITY]
Distributions payable on each Preferred Security will be
fixed at a rate per annum of 6 1/4% (the "Coupon Rate") of the stated
liquidation preference of $50 per Preferred 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 quarter will bear interest thereon
compounded quarterly 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 payable 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. The amount of Distributions payable for any period will be
computed for any full quarterly Distribution period on the basis of a 360-day
year of twelve 30-day months, and for any period shorter than a full quarterly
Distribution period for which Distributions are computed, Distributions will
be computed on the basis of the actual number of days elapsed per 30-day
month.
Except as otherwise described below, distributions on the
Preferred Securities will be cumulative, will accrue from the date of original
issuance or from the most recent distribution date to which interest has been
paid or duly provided for and will be payable quarterly in arrears, on March
15, June 15, Sep- tember 15 and December 15 of each year, commencing on June
15, 1996, to Holders of record fifteen (15) days prior to such payment dates,
which payment dates shall correspond to the interest payment dates on the
Debentures. The Debenture Issuer has the right under the Indenture to defer
payments of interest on the Debentures by extending the interest payment
period from time to time on the Debentures for successive periods not
exceeding 20 consecutive quarters (each an "Extension Period") during which
Extension Periods no interest shall be due and payable on the Debentures;
provided, that no Extension Period shall extend beyond the date of maturity of
the Debentures. As a consequence of such extension, Distributions will also be
deferred. Despite such extension, quarterly Distributions will continue to
accrue with interest thereon (to the extent permitted by applicable law) at
the Coupon Rate compounded quarterly during the Extension Periods. Prior to
the termination of any Extension Period, the Debenture Issuer may elect to
continue to defer payments of interest for another consecutive Extension
Period; provided, that any such continued Extension Period, together with all
such previous and consecutive Extension Periods, may not exceed 20 consecutive
quarters. 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
A-5
payment of all amounts then due, the Debenture Issuer may commence a new
Extension Period, subject to the above requirements.
The Preferred Securities shall be redeemable as provided in
the Declaration.
The Preferred Securities shall be convertible into shares of
Common Stock of CalEnergy Company, Inc., through (i) the exchange of Preferred
Securities for a portion of the Debentures and (ii) the immediate conversion
of such Debentures into Common Stock of CalEnergy Company, Inc., in the manner
and according to the terms set forth in the Declaration.
A-6
CONVERSION REQUEST
To: THE BANK OF NEW YORK,
as Property Trustee of
CalEnergy Capital Trust
The undersigned owner of these Preferred Securities hereby
irrevocably exercises the option to convert these Preferred Securities, or the
portion below designated, into Common Stock of CALENERGY COMPANY, INC. (the
"CalEnergy Common Stock") in accordance with the terms of the Amended and
Restated Declaration of Trust (the "Declaration"), dated as of April 4, 1996,
by Steven A. McArthur, John G. Sylvia and Gregory Abel as Regular Trustees,
The Bank of New York (Delaware), as Delaware Trustee, The Bank of New York, as
Property Trustee, CalEnergy Company, Inc., as Sponsor, and by the Holders,
from time to time, of individual beneficial interests in the Trust to be
issued pursuant to the Declaration. Pursuant to the aforementioned exercise of
the option to convert these Preferred Securities, the undersigned hereby
directs the Conversion Agent (as that term is defined in the Declaration) to
(i) exchange such Preferred Securities for a portion of the Debentures (as
that term is defined in the Declaration) held by the Trust (at the rate of
exchange specified in the terms of the Preferred Securities set forth as Annex
I to the Declaration) and (ii) immediately convert such Debentures on behalf
of the undersigned, into CalEnergy Common Stock (at the conversion rate
specified in the terms of the Preferred Securities set forth as Annex I to the
Declaration).
The undersigned does also hereby direct the Conversion Agent
that the shares issuable and deliverable upon conversion, together with any
check in payment for fractional shares, be issued in the name of and delivered
to the undersigned, unless a different name has been indicated in the
assignment below. If shares are to be issued in the name of a person other
than the undersigned, the undersigned will pay all transfer taxes payable with
respect thereto.
A-7
Any holder, upon the exercise of its conversion rights in
accordance with the terms of the Declaration and the Preferred Securities,
agrees to be bound by the terms of the Registration Rights Agreement relating
to the CalEnergy Common Stock issuable upon conversion of the Preferred
Securities.
Date: ____________, ____
in whole __ in part __
Number of Preferred Securities to
be converted: ___________________
If a name or names other
than the undersigned,
please indicate in the
spaces below the name or
names in which the shares
of CalEnergy Common Stock
are to be issued, along
with the address or
addresses of such person
or persons
---------------------------------
---------------------------------
---------------------------------
---------------------------------
---------------------------------
---------------------------------
---------------------------------
Signature (for conversion only)
Please Print or Typewrite Name and
Address, Including Zip Code, and
Social Security or Other Identify-
ing Number
---------------------------------
---------------------------------
---------------------------------
- ---------------
* (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
A-8
---------------------
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned assigns and transfers this Preferred
Security Certificate to:
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
(Insert assignee's social security or tax identification number)
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
(Insert address and zip code of assignee)
and irrevocably appoints
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
agent to transfer this Preferred Security Certificate on the
books of the Trust. The agent may substitute another to act for
him or her.
Date: _______________________
Signature: __________________
(Sign exactly as your name appears on the other side of this Preferred
Security Certificate)
Signature Guarantee:** ------------------------------------------------------
---------------------
(..continued)
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.)
** (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.)
A-9
CERTIFICATE TO BE DELIVERED UPON EXCHANGE OR REGISTRATION OF
RESTRICTED PREFERRED SECURITIES
This certificate relates to _____________ Preferred Securities held in (check
applicable space) ____ book-entry or ____ definitive form by the undersigned.
(A) The undersigned (check one box below):
|_| has requested the Property Trustee by written order to deliver in
exchange for its beneficial interest in the Rule 144A Global
Preferred Security held by the Depositary a Preferred Security or
Preferred Securities in definitive, registered form in such number
equal to its beneficial interest in such Rule 144A Global Preferred
Security (or the number thereof indicated above); or
|_| has requested the Property Trustee by written order to exchange its
Preferred Security in definitive registered form for an interest in
the Rule 144A Global Preferred Security held by the Depositary in
such number equal to number of Preferred Securities in definitive
registered form so held; or
|_| has requested the Property Trustee by written order to exchange or
register the transfer of a Preferred Security or Preferred
Securities.
(B) The undersigned confirms that such Securities are being (check one
box below):
(1) |_| acquired for the undersigned's own account, with-
out transfer (in satisfaction of Section
9.2(d)(ii)(A)); 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 pursuant to another available exemp-
tion from the registration requirements of the
Securities Act of 1933; or
A-10
(5) |_| transferred pursuant to an effective Shelf Regis-
tration Statement (as defined in Section 14.1 of
the Declaration).
Unless one of the boxes in (B) above is checked, the Property Trustee will
refuse to register any of the Preferred Securities evidenced by this
certificate in the name of any person other than the registered Holder
thereof; provided, however, that if box (3) or (4) is checked, the Property
Trustee 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 after the date
that a Shelf Registration Statement becomes effective and so long as such
Shelf Registration Statement continues to be effective, the Property Trustee
may only permit transfers for which box (5) has been checked.
---------------
Signature
- ------------------------
Signature Guarantee:***
- -------------------------- ---------------
Signature must be guaranteed Signature
TO BE COMPLETED BY PURCHASER IF (2) ABOVE IS CHECKED.
The undersigned represents and warrants that it is
purchasing these Preferred Securities for its own account or an account with
respect to which it exercises sole investment discretion and that it and any
such account is a "qualified institutional buyer" within the meaning of Rule
144A under the
- --------
*** (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.)
A-11
Securities Act of 1933, and is aware that the sale to it is being made in
reliance on Rule 144A and acknowledges that it has received such information
regarding the Trust as the undersigned has requested pursuant to Rule 144A or
has determined not to request such information and that it is aware that the
transferor is relying upon the undersigned's foregoing representations in
order to claim the exemption from registration provided by Rule 144A.
Dated: -------------------- ----------------------------------
NOTICE: To be executed by
an executive officer
A-12
EXHIBIT A-2
FORM OF COMMON SECURITY
[FORM OF FACE OF SECURITY]
[THIS COMMON SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES
ACT OF 1933, AS AMENDED, AND MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE
TRANSFERRED EXCEPT PURSUANT TO AN EXEMPTION FROM REGISTRATION OR AN EFFECTIVE
REGISTRATION STATEMENT.]
[OTHER THAN AS PROVIDED IN THE DECLARATION (AS DEFINED HEREIN), THIS
SECURITY MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT TO
A RELATED PARTY (AS DEFINED IN THE DECLARATION) OF CALENERGY COMPANY, INC.]
Certificate Number Number of Common Securities
Common Securities
of
CalEnergy Capital Trust
6 1/4% Convertible Common Securities
(liquidation amount $50 per Convertible Common Security)
CalEnergy Capital Trust, a statutory business trust formed
under the laws of the State of Delaware (the "Trust"), hereby certifies that
- -------------------------------------------------------------------------------
(the "Holder") is the registered owner of common securities of the Trust
representing undivided beneficial interests in the assets of the Trust
designated the 6 1/4% Convertible Common Securities (liquidation amount $50
per Convertible 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
A2-1
and shall in all respects be subject to the provisions of the
Amended and Restated Declaration of Trust of the Trust dated as of April 4,
1996, 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 herein but not defined
shall have the meaning given them in the Declaration. The Holder is entitled
to the benefits of the Common Securities Guarantee to the extent provided
therein. The Sponsor will provide a copy of the Declaration, the Common
Securities Guarantee and the Indenture to a Holder without charge upon written
request to the Sponsor at its principal place of business.
Reference is hereby made to select provisions of the Common
Securities set forth on the reverse hereof, which select provisions shall for
all purposes have the same effect as if set forth at this place.
Upon receipt of this certificate, the Sponsor is bound by
the Declaration and is entitled to the benefits thereunder.
By acceptance, the Holder agrees to treat for United States
federal income tax purposes the Debentures as indebtedness and the Common
Securities as evidence of indirect beneficial ownership in the Debentures.
A2-2
IN WITNESS WHEREOF, the Trust has executed this certificate
this day of , 199 .
CalEnergy Capital Trust
By:
-------------------------
Name:
Title:
A2-3
[FORM OF REVERSE OF SECURITY]
Distributions payable on each Common Security will be fixed
at a rate per annum of 6 1/4% (the "Coupon Rate") of the stated liquidation
amount of $50 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 quarter will bear interest thereon compounded
quarterly 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 payable 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. The amount of Distributions payable for any period will be computed
for any full quarterly Distribution period on the basis of a 360-day year of
twelve 30-day months, and for any period shorter than a full quarterly
Distribution period for which Distributions are computed, Distributions will
be computed on the basis of the actual number of days elapsed per 30-day
month.
Except as otherwise described below, distributions on the
Common Securities will be cumulative, will accrue from the date of original
issuance or from the most recent distribution date to which interest has been
paid or duly provided for and will be payable quarterly in arrears, on March
15, June 15, Sep- tember 15 and December 15 of each year, commencing on June
15, 1996, to Holders of record fifteen (15) days prior to such payment dates,
which payment dates shall correspond to the interest payment dates on the
Debentures. The Debenture Issuer has the right under the Indenture to defer
payments of interest on the Debentures by extending the interest payment
period from time to time on the Debentures for successive periods not
exceeding 20 consecutive quarters (each an "Extension Period") during which
Extension Periods no interest shall be due and payable on the Debentures;
provided, that no Extension Period shall last beyond the date of maturity of
the Debentures. As a consequence of such extension, Distributions will also be
deferred. Despite such extension, quarterly Distributions will continue to
accrue with interest thereon (to the extent permitted by applicable law) at
the Coupon Rate compounded quarterly during the Extension Periods. Prior to
the termination of any Extension Period, the Debenture Issuer may elect to
continue to defer payments of interest for another consecutive Extension
Period; provided, that any such continued Extension Period, together with all
such previous and consecutive Extension Periods, may not exceed 20 consecutive
quarters. Payments of accrued Distributions will be payable to Holders as they
appear on the books and records of the Trust on
A2-4
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.
The Common Securities shall be redeemable as provided in the
Declaration.
The Common Securities shall be convertible into shares of
Common Stock of CalEnergy Company, Inc., through (i) the exchange of Common
Securities for a portion of the Debentures and (ii) the immediate conversion
of such Debentures into Common Stock of CalEnergy Company, Inc., in the manner
and according to the terms set forth in the Declaration.
A2-5
CONVERSION REQUEST
To: THE BANK OF NEW YORK
as Property Trustee of
CalEnergy Capital Trust
The undersigned owner of these Common Securities hereby
irrevocably exercises the option to convert these Common Securities, or the
portion below designated, into Common Stock of CALENERGY COMPANY, INC. (the
"CalEnergy Common Stock") in accordance with the terms of the Amended and
Restated Declaration of Trust (the "Declaration"), dated as of April 4, 1996,
by Steven A. McArthur, John G. Sylvia and Gregory Abel, as Regular Trustees,
The Bank of New York (Delaware), as Delaware Trustee, The Bank of New York, as
Property Trustee, CalEnergy Company, Inc., as Sponsor, and by the Holders,
from time to time, of individual beneficial interests in the Trust to be
issued pursuant to the Declaration. Pursuant to the aforementioned exercise of
the option to convert these Common Securities, the undersigned hereby directs
the Conversion Agent (as that term is defined in the Declaration) to (i)
exchange such Common Securities for a portion of the Debentures (as that term
is defined in the Declaration) held by the Trust (at the rate of exchange
specified in the terms of the Common Securities set forth as Annex I to the
Declaration) and (ii) immediately convert such Debentures on behalf of the
undersigned, into CalEnergy Common Stock (at the conversion rate specified in
the terms of the Common Securities set forth as Annex I to the Declaration).
The undersigned does also hereby direct the Conversion Agent
that the shares issuable and deliverable upon conversion, together with any
check in payment for fractional shares, be issued in the name of and delivered
to the undersigned, unless a different name has been indicated in the
assignment below. If shares are to be issued in the name of a person other
than the undersigned, the undersigned will pay all transfer taxes payable with
respect thereto.
A2-6
Any holder, upon the exercise of its conversion rights in
accordance with the terms of the Declaration and the Common Securities, agrees
to be bound by the terms of the Registration Rights Agreement relating to the
CalEnergy Common Stock issuable upon conversion of the Common Securities.
Date: ____________, ____
in whole __ in part __
Number of Common Securities to be
converted: _____________________
If a name or names other
than the undersigned,
please indicate in the
spaces below the name or
names in which the shares
of CalEnergy Common Stock
are to be issued, along
with the address or
addresses of such person
or persons
--------------------------------
--------------------------------
--------------------------------
--------------------------------
--------------------------------
--------------------------------
--------------------------------
Signature (for conversion only)
Please Print or Typewrite Name and
Address, Including Zip Code, and
Social Security or Other Identify-
ing Number
--------------------------------
--------------------------------
--------------------------------
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
A2-7
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.)
---------------------
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.)
A2-8
EXHIBIT B
SPECIMEN OF DEBENTURE
(Omitted)
B-1
EXHIBIT C
PURCHASE AGREEMENT
(Omitted)
C-1
EXHIBIT D
FORM OF TRANSFEROR CERTIFICATE FOR TRANSFER DURING THE
EFFECTIVENESS OF A SHELF REGISTRATION STATEMENT
The Bank of New York
101 Barclay Street
Corporate Trust Trustee Administration
21 West
New York, New York 10286
Re: CalEnergy Capital Trust
6 1/4% Convertible Preferred Securities
Reference is hereby made to the Amended and Restated
Declaration of Trust (the "Declaration"), dated as of April 4, 1996, by Steven
A. McArthur, John G. Sylvia and Gregory Abel, as Regular Trustees, The Bank of
New York (Delaware), as Delaware Trustee, The Bank of New York, as Property
Trustee, CalEnergy Company, Inc., as Sponsor, and by the Holders, from time to
time, of individual beneficial interests in the Trust to be issued pursuant to
the Declaration. Capitalized terms used but not defined herein shall have the
meanings given them in the Declaration.
This letter relates to Preferred Securities which are held
in the form of [the Rule 144A Global Preferred Security with the Depositary
(CUSIP No. )][a Restricted Definitive Preferred Security (CUSIP No. )] in the
name of [name of transferor] (the "Transferor") to effect the transfer of the
Preferred Securities in exchange for an equivalent beneficial interest in the
Exchanged Global Preferred Security.
In connection with such request, and in respect of such
Preferred Securities, the Transferor does hereby certify that (i) such
Preferred Securities are being transferred in accordance with and pursuant to
an effective registration statement under the Securities Act of 1933, as
amended (the "Act"), and in accordance with any applicable securities laws of
any state of the United States and (ii) the Transferor has complied with its
obligations to provide information to the Issuer, as required by the
Registration Rights Agreement, and with its obligations, if any, under the Act
with regard to the delivery of a prospectus.
[Name of Transferor]
By:
--------------------------
Name:
Title:
Dated:
----------------------
cc: CalEnergy Capital Trust
D-1