-----------------------------
AMENDED AND RESTATED DECLARATION
OF TRUST
CALENERGY CAPITAL TRUST III
Dated as of August 12, 1997
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TABLE OF CONTENTS
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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.............................................. 11
SECTION 2.3 Reports by the Property Trustee............................................. 11
SECTION 2.4 Periodic Reports to Property Trustee........................................ 12
SECTION 2.5 Evidence of Compliance with
Conditions Precedent.................................................... 12
SECTION 2.6 Events of Default; Waiver................................................... 12
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..................................................................... 16
SECTION 3.4 Authority................................................................... 16
SECTION 3.5 Title to Property of the Trust.............................................. 17
SECTION 3.6 Powers and Duties of the Regular
Trustees................................................................ 17
SECTION 3.7 Prohibition of Actions by the Trust
and the Trustees........................................................ 21
SECTION 3.8 Powers and Duties of the Property
Trustee................................................................. 22
SECTION 3.9 Certain Duties and Responsibilities
of the Property Trustee................................................. 25
SECTION 3.10 Certain Rights of Property Trustee.......................................... 28
SECTION 3.11 Delaware Trustee............................................................ 30
SECTION 3.12 Not Responsible for Recitals or
Issuance of Securities.................................................. 31
SECTION 3.13 Duration of Trust........................................................... 31
SECTION 3.14 Mergers..................................................................... 31
ARTICLE IV
SPONSOR
SECTION 4.1 Sponsor's Purchase of Common
Securities.............................................................. 33
SECTION 4.2 Responsibilities of the Sponsor............................................. 34
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ARTICLE V
TRUSTEES
SECTION 5.1 Number of Trustees.......................................................... 35
SECTION 5.2 Delaware Trustee............................................................ 35
SECTION 5.3 Property Trustee; Eligibility............................................... 36
SECTION 5.4 Qualifications of Regular Trustees
and Delaware Trustee Generally.......................................... 37
SECTION 5.5 Initial Trustees............................................................ 37
SECTION 5.6 Appointment, Removal and Resignation
of Trustees............................................................. 38
SECTION 5.7 Vacancies among Trustees.................................................... 40
SECTION 5.8 Effect of Vacancies......................................................... 40
SECTION 5.9 Meetings.................................................................... 40
SECTION 5.10 Delegation of Power......................................................... 41
SECTION 5.11 Merger, Conversion, Consolidation or
Succession to Business.................................................. 41
ARTICLE VI
DISTRIBUTIONS
SECTION 6.1 Distributions............................................................... 42
ARTICLE VII
ISSUANCE OF SECURITIES
SECTION 7.1 General Provisions Regarding Securities..................................... 42
SECTION 7.2 Execution and Authentication................................................ 43
SECTION 7.3 Form and Dating............................................................. 44
SECTION 7.4 Registrar, Paying Agent and
Conversion Agent........................................................ 46
SECTION 7.5 Paying Agent to Hold Money in Trust..........................................47
SECTION 7.6 Replacement Securities...................................................... 47
SECTION 7.7 Outstanding Preferred Securities............................................ 48
SECTION 7.8 Preferred Securities........................................................ 48
SECTION 7.9 Temporary Securities........................................................ 48
SECTION 7.10 Cancellation................................................................ 49
ARTICLE VIII
DISSOLUTION AND TERMINATION OF TRUST
SECTION 8.1 Dissolution and Termination of Trust........................................ 49
ARTICLE IX
TRANSFER
SECTION 9.1 General..................................................................... 51
SECTION 9.2 Transfer Procedures and Restrictions........................................ 52
SECTION 9.3 Deemed Security Holders..................................................... 58
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SECTION 9.4 Book Entry Interests........................................................ 59
SECTION 9.5 Notices to Clearing Agency.................................................. 59
SECTION 9.6 Appointment of Successor Clearing
Agency.................................................................. 60
ARTICLE X
LIMITATION OF LIABILITY OF
HOLDERS OF SECURITIES, TRUSTEES OR OTHERS
SECTION 10.1 Liability................................................................... 60
SECTION 10.2 Exculpation................................................................. 61
SECTION 10.3 Fiduciary Duty.............................................................. 61
SECTION 10.4 Indemnification............................................................. 63
SECTION 10.5 Outside Businesses.......................................................... 66
ARTICLE XI
ACCOUNTING
SECTION 11.1 Fiscal Year................................................................. 67
SECTION 11.2 Certain Accounting Matters.................................................. 67
SECTION 11.3 Banking..................................................................... 68
SECTION 11.4 Withholding................................................................. 68
ARTICLE XII
AMENDMENTS AND MEETINGS
SECTION 12.1 Amendments.................................................................. 69
SECTION 12.2 Meetings of the Holders of Securities;
Action by Written Consent............................................... 71
ARTICLE XIII
REPRESENTATIONS OF PROPERTY TRUSTEE AND DELAWARE TRUSTEE
SECTION 13.1 Representations and Warranties of
Property Trustee........................................................ 73
SECTION 13.2 Representations and Warranties
of Delaware Trustee......................................................74
ARTICLE XIV
REGISTRATION RIGHTS
SECTION 14.1 Registration Rights......................................................... 75
ARTICLE XV
MISCELLANEOUS
SECTION 15.1 Notices..................................................................... 78
SECTION 15.2 Governing Law............................................................... 79
SECTION 15.3 Intention of the Parties.................................................... 80
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SECTION 15.4 Headings.................................................................... 80
SECTION 15.5 Successors and Assigns...................................................... 80
SECTION 15.6 Partial Enforceability...................................................... 80
SECTION 15.7 Counterparts................................................................ 80
AMENDED AND RESTATED
DECLARATION OF TRUST
OF
CALENERGY CAPITAL TRUST III
AUGUST 12, 1997
AMENDED AND RESTATED DECLARATION OF TRUST ("Declaration")
dated and effective as of August 12, 1997, 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 III (the "Trust"), a trust under the Business Trust Act (as
defined herein) pursuant to a Declaration of Trust dated as of August 4, 1997
(the "Original Declaration"), and a Certificate of Trust filed with the
Secretary of State of the State of Delaware on August 4, 1997, 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, supplemented 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.
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"Agent" means any Registrar, Paying Agent, Conversion Agent
or co-registrar.
"Applicable Procedures" means the rules and procedures of the
Depositary, Euroclear, and CEDEL applicable to transfer or exchange of
beneficial interests in book-entry securities.
"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
Preferred Security, 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 August 12, 1997.
"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 set forth in Section
7.1(a).
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"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.
"Conversion Agent" has the meaning set forth in Section 7.4.
"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.
"Depositary" means The Depository Trust Company, the initial
Clearing Agency or any Clearing Agency appointed as successor to The Depository
Trust Company pursuant to Section 9.4.
"Direct Action" has the meaning set forth in Section 3.8(e).
"Distribution" means a distribution payable to Holders of
Securities in accordance with Section 6.1.
"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.
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"Exchange Act" means the Securities Exchange Act of 1934, as
amended from time to time, or any successor legislation.
"Exchanged Global Preferred Security" has the meaning set
forth in Section 9.2(a).
"Fiduciary Indemnified Person" has the meaning set forth in
Section 10.4(b).
"Fiscal Year" has the meaning set forth in Section 11.1.
"Global Preferred Security" has the meaning set forth in
Section 7.3(a).
"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 August 12, 1997,
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).
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"Liquidated Damages" has the meaning set forth in Section
14.1.
"List of Holders" has the meaning set forth in Section 2.2(a).
"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 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.
"Offering Circular" means the confidential offering circular,
dated as of August 7, 1997, 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
6
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).
"Paying Agent" has the meaning set forth in Section 7.4.
"Payment Amount" has the meaning set forth in Section 6.1.
"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.
"PORTAL" has the meaning set forth in section 3.6(b)(iii).
"Preferred Securities" has the meaning set forth in Section
7.1(a).
"Preferred Securities Guarantee" means the guarantee
agreement, dated as of August 12, 1997, 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)(i).
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"Purchase Agreement" shall have the meaning set forth in
Section 7.3.
"QIB" means a "qualified institutional buyer," as defined in
Rule 144A.
"Quorum" means a majority of the Regular Trustees or, if
there are only two Regular Trustees, both of them.
"Registrable Securities" has the meaning set forth in Section
14.1.
"Registrar" has the meaning set forth in Section 7.4.
"Registration Rights Agreement" means the Registration Rights
Agreement, dated August 12, 1997, among the Sponsor, the Trust, and the Initial
Purchasers named in the Purchase Agreement.
"Regular Trustee" means any Trustee other than the Property
Trustee and the Delaware Trustee.
"Regulation S" has the meaning set forth in Section 7.3(b).
"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 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
8
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" means a Preferred Security
bearing the Restricted Securities Legend.
"Restricted Securities Legend" has the meaning set forth in
Section 9.2(b).
"Rule 3a-5" means Rule 3a-5 under the Investment Company Act.
"Rule 144A" means Rule 144A under the Securities 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.
"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 set forth in
Section 14.1.
"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.
"Successor Delaware Trustee" has the meaning set forth in
Section 5.6(c).
"Successor Entity" has the meaning set forth in Section
3.14(b)(i).
"Successor Property Trustee" has the meaning set forth in
Section 5.6(b).
"Successor Securities" has the meaning set forth in Section
3.14(b)(i)(B).
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"Super Majority" has the meaning set forth in Section
2.6(a)(ii).
"Tax Event" means that the Debenture Issuer shall have
obtained an opinion of nationally recognized independent tax counsel
(reasonably acceptable to the Regular Trustees) experienced in such matters 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 thereof or
therein or (b) any amendment to or change in an interpretation or application
of 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
August 7, 1997), which amendment or change is effective, is enacted or which
interpretation or pronouncement is announced on or after August 7, 1997
(collectively, a "Change In Tax Law"), 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) interest payable to
the Trust on the Debentures is not or will not be deductible for United States
federal income tax purposes or (iii) the Trust is or will be subject to more
than a de minimis amount of other taxes, duties, assessments or other
governmental charges of whatever nature imposed by the United States, or any
other taxing authority. 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.
"Treasury Regulations" means the income tax regulations,
including temporary and proposed regulations, promulgated under the Code by the
United States Treasury, as
10
such regulations may be amended from time to time (including corresponding
provisions of succeeding regulations).
"Trust" means CalEnergy Capital Trust III, a trust created
under the Business Trust Act.
"Trustee" or "Trustees" means each Person who has signed this
Declaration as a trustee, so long as such Person shall continue in office in
accordance with the terms hereof, and all other Persons who may from time to
time be duly appointed, qualified and serving as Trustees in accordance with
the provisions hereof, and references herein to a Trustee or the Trustees shall
refer to such Person or Persons solely in their capacity as trustees hereunder.
"Trust Indenture Act" means the Trust Indenture Act of 1939,
as amended from time to time, or any successor legislation.
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.
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(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 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, commencing May 15,
1998, 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.
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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, 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 Officer's 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
13
the Preferred Securities of an Event of Default with respect to the Preferred
Securities shall also be deemed to constitute a waiver by the Holders of the
Common Securities of any such Event of Default with respect to the Common
Securities for all purposes of this Declaration without any further act, vote,
or consent of the Holders of the Common Securities.
(b) The Holders of a Majority in liquidation amount of the
Common Securities may, by vote, on behalf of the Holders of all of the Common
Securities, waive any past Event of Default with 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
14
316(a)(1)(B) of the Trust Indenture Act are hereby expressly excluded from this
Declaration and the Securities, as permitted by the Trust Indenture Act.
Subject to the foregoing provisions of this Section 2.6(b), upon such waiver,
any such default shall cease to exist and any Event of Default with respect to
the Common Securities arising therefrom shall be deemed to have been cured for
every purpose of this Declaration, but no such waiver shall extend to any
subsequent or other default or Event of Default with respect to the Common
Securities or impair any right consequent thereon.
(c) A waiver of an Event of Default under the Indenture by
the Property Trustee at the direction of the Holders of the 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.
15
(b) The Property Trustee shall not be deemed to have
knowledge of any default except:
(i) a default under Sections 501(1) and 501(2) of
the Indenture; or
(ii) any default as to which the Property Trustee
shall have received written notice or of which a Responsible Officer
of the Property Trustee charged with the administration of the
Declaration shall have actual knowledge.
ARTICLE III
ORGANIZATION
SECTION 3.1 Name.
The Trust is named "CalEnergy Capital Trust III," 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.
16
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 otherwise provided in this
Declaration, legal title to all assets of the Trust shall be vested in the
Trust. The
17
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 and Common 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 outside the United States to
non-U.S. Persons in offshore transactions in reliance on Regulation S
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 determined 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;
18
(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 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
19
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;
(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
20
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.
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.
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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) on behalf of the Trust 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 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, in the case of each action
22
described in Clause (A), (B), (C) or (D), 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 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.
23
(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;
provided, however, that if an Event of Default has occurred and is continuing
and such event is attributable to the failure of the Sponsor to pay interest or
principal on the Debentures on the date such interest or principal is otherwise
payable (or in the case of redemption, on the redemption date), then a Holder
of Preferred Securities may directly institute a proceeding for enforcement of
payment to such Holder of the principal of or interest on the Securities having
a principal amount equal to the aggregate liquidation amount of the Preferred
Securities of such Holder (a "Direct Action") on or after the respective due
date specified in the Securities. In connection with such Direct Action, the
rights of the Holders of the Common Securities will be subrogated to the rights
of such Holder of Preferred Securities to the extent of any payment made by the
Sponsor to such Holder of Preferred Securities in such Direct Action. In
addition, if the Property Trustee fails to enforce its rights under the
Securities (other than rights arising from an Event of Default described in the
immediately preceding sentence)
24
after any Holder of Preferred Securities shall have made a written request to
the Property Trustee to enforce such rights, such Holder of Preferred
Securities may, to the fullest extent permitted by law, institute a Direct
Action to enforce the Property Trustee's rights as holder of the Debentures,
without first instituting any legal proceeding against the Property Trustee or
any other Person. Except as provided in the preceding sentences, the Holders of
Preferred Securities will not be able to exercise directly any other remedy
available to the holders of the Debentures.
(f) The Property Trustee shall not resign as a Trustee unless
either:
(i) the Trust has been completely liquidated
and the proceeds of the liquidation distributed to the
Holders 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.
(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. In no event, however, shall the Property Trustee, in
its capacity as holder of the Debentures, have the power to convert the
Debentures.
(h) The Property Trustee will act as Paying Agent and
Registrar both in London and 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
25
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.
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 or obligations shall be read into
this Declaration against the Property Trustee; and
26
(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 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
27
Account shall be to deal with such property in a similar manner as the
Property Trustee deals with similar property for its own account,
subject to the protections and limitations on liability afforded to
the Property Trustee under this Declaration and the Trust Indenture
Act;
(vi) the Property Trustee shall have no duty or
liability for or with respect to the value, genuineness, existence or
sufficiency of the Debentures or the payment of any taxes or
assessments levied thereon or in connection therewith;
(vii) the Property Trustee shall not be liable for
any interest on any money received by it except as it may otherwise
agree in writing with the Sponsor. Money held by the Property Trustee
need not be segregated from other funds held by it except in relation
to the Property Trustee Account maintained by the Property Trustee
pursuant to Section 3.8(c)(i) and except to the extent otherwise
required by law; and
(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 Officer's Certificate;
28
(iii) whenever in the administration of this
Declaration, the Property Trustee shall deem it desirable that a
matter be proved or established before taking, suffering or omitting
any action hereunder, the Property Trustee (unless other evidence is
herein specifically prescribed) may, in the absence of bad faith on
its part, request and rely upon an Officer's 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
29
Default, of its obligation to exercise the rights and powers vested in
it by this Declaration;
(vii) the Property Trustee shall not be bound to
make any investigation into the facts or matters stated in any
resolution, certificate, statement, instrument, opinion, report,
notice, request, direction, consent, order, 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)
30
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 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
31
validity or sufficiency of this Declaration or the Securities.
SECTION 3.13 Duration of Trust.
The Trust, unless terminated pursuant to the provisions of
Article VIII hereof, shall have existence until September 1, 2037.
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, assets 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;
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(iii) the Preferred Securities or any Successor
Securities are listed, or any Successor Securities 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
33
(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 and to do any and all such acts, other than actions
that
34
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 Securities, the
Sponsor may, by written instrument, increase or decrease the number of
Trustees; and
(b) after the issuance of any Securities, the number of
Trustees may be increased or decreased by vote of the Holders of a Majority in
liquidation amount of the Common Securities voting as a class at a meeting of
the Holders of the Common Securities;
provided, however, that the number of Trustees shall in no event be less than
two (2); provided further that (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 which has its principal
place of business in the State of
35
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 or to the requirements of
the supervising or examining authority referred to above, then for the
purposes of
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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
Delaware Trustee Generally.
Each Regular Trustee and the Delaware Trustee (unless the
Property Trustee also acts as Delaware Trustee) shall be either a natural
person who is at least 21 years of age or a legal entity that shall act through
one or more Authorized Officers.
SECTION 5.5 Initial Trustees.
The initial Regular Trustees shall be:
Steven A. McArthur
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c/o CalEnergy Company, Inc.
302 South 36th Street, Suite 400
Omaha, Nebraska 68131
Craig Hammett
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
(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
38
a successor Property Trustee possessing the qualifications to act as Property
Trustee under Section 5.3 (a "Successor Property Trustee") has been appointed
and has accepted such appointment by written instrument executed by such
Successor Property Trustee and delivered to the Regular Trustees and the
Sponsor.
(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.
(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.
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(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.
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
40
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.
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
41
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 Person 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 Person 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 Person 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 Person shall
be otherwise qualified and eligible under this Article, without the execution
or filing of any paper or any further act on the part of any of the parties
hereto.
ARTICLE VI
DISTRIBUTIONS
SECTION 6.1 Distributions.
Holders shall receive Distributions (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), 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.
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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.
(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
43
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 by executing the Property Trustee's certificate of
authentication contained in the Preferred 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.
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 Sponsor 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. Securities 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,
44
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.
The Preferred Securities are being offered and sold by the
Trust pursuant to a Purchase Agreement relating to the Preferred Securities,
dated August 7, 1997, among the Trust, the Sponsor and the Initial Purchasers
named therein (the "Purchase Agreement").
(a) Global Preferred Securities. Preferred Securities offered
and sold in their initial distribution to Qualified Institutional Buyers
("QIBs") in reliance on Rule 144A under the Securities Act ("Rule 144A") and in
reliance on Regulation S under the Securities Act ("Regulation S") as provided
in the Purchase Agreement, shall be issued in the form of one or more,
permanent global Securities in definitive, fully registered form without
distribution coupons and with the appropriate global legend and Restricted
Securities Legend set forth in Exhibit A-1 hereto (each, a "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 Global Preferred Security may from time
to time be increased or decreased by adjustments made on the records of the
Property Trustee and the Depositary or its nominee as hereinafter provided.
(b) Book-Entry Provisions. This Section 7.3(b) shall apply
only to 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.
45
The Trust shall execute and the Property Trustee shall, in
accordance with this Section 7.3, authenticate and make available for delivery
initially one or more Global Preferred Securities that (a) shall be registered
in the name of Cede & Co. or other nominee of the Depositary and (b) shall be
delivered by the Property Trustee to the Depositary or pursuant to the
Depositary's written instructions or held by the Property Trustee as custodian
for the Depositary.
Neither any members of, or participants in, the Depositary
("Participants") nor any other Persons on whose behalf Participants may act
(including account holders and participants therein) shall have any rights
under this Declaration with respect to any Global Preferred Security held on
their behalf by the Depositary or by the Property Trustee as the custodian of
the Depositary or under such 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 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
Depositary 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 Global Preferred Security.
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 or in the city of London, England, as the case may
be, (i) an office or agency where Preferred Securities may be presented for
registration of transfer or for 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
46
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 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
47
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, 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 Sponsor
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.
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
48
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 deliver to the Property Trustee Preferred
Securities in certificated form (other than in the case of Preferred Securities
in global form) and thereupon any or all temporary Preferred Securities (other
than any such Preferred Securities in global form) may be surrendered in
exchange therefor, at the office of the Registrar, and the Property Trustee
shall authenticate and deliver an equal aggregate liquidation amount of
definitive Preferred Securities in certificated form in exchange for temporary
Preferred Securities (other than any such Preferred Securities in global form).
Such exchange shall be made by the Trust at its own expense and without any
charge therefor. Until so exchanged, temporary Securities shall in all respects
be entitled to the same benefits and subject to the same limitations under this
Declaration as Securities in definitive certificated form authenticated (in the
case of Preferred Securities) and delivered hereunder.
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
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Preferred Securities that it has paid or that have been delivered to the
Property Trustee for cancellation or that any holder has converted.
ARTICLE VIII
DISSOLUTION AND TERMINATION OF TRUST
SECTION 8.1 Dissolution and Termination of Trust.
(a) The Trust shall dissolve:
(i) upon the bankruptcy of the Sponsor;
(ii) upon the filing of a certificate of dissolution
or its equivalent with respect to the Sponsor, upon the consent of at
least a Majority in liquidation amount of the Securities, voting
together as a single class, to file a certificate of cancellation with
respect to the Trust, 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) following the distribution of Debentures
having a principal amount equal to the liquidation amount of the
Securities to the Holders, provided that, the Property Trustee has
received written notice from the Holder of all of the Outstanding
Common Securities directing the Property Trustee to terminate the
Trust (which direction is optional, and except as otherwise expressly
provided below, within the discretion of such Holder) and provided,
further, that such direction and such distribution is conditioned on
the Sponsors' receipt of an opinion of counsel to the effect that such
distribution will not be a taxable event to the Holders of Preferred
Securities;
(iv) upon the entry of a decree of judicial
dissolution of the Sponsor or the Trust;
(v) when all of the Securities shall have been
called for redemption and the amounts necessary
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for redemption thereof shall have been paid to the
Holders in accordance with the terms of the Securities;
(vi) upon the occurrence and continuation of an
Investment Company Event pursuant to which the Sponsor causes the
Regular Trustees to dissolve the Trust in accordance with the terms of
the Securities;
(vii) upon the distribution of the common stock of
the Sponsor to Holders of all outstanding Securities upon conversion
of all such Securities;
(viii) the expiration of the term of the Trust on
September 1, 2037; or
(ix) 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), and upon the completion of the winding up
of the Trust, one of the Trustees (each of whom is hereby authorized to take
such action) shall file a certificate of cancellation with the Secretary of
State of the State of Delaware thereby terminating the Trust.
(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) When 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.
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(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.
(c) Subject to this Article IX, the Sponsor and any Related
Party may only transfer Common Securities to the Sponsor or a Related Party of
the Sponsor; 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.
(d) 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 in
accordance with Section 7.10. 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.
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(e) 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) Transfer After Effectiveness of Shelf Registration
Statement. After the effectiveness of a Shelf Registration Statement covering
the resale of Preferred Securities, Preferred Securities transferred pursuant
to such Shelf Registration Statement will no longer be required to bear the
Restricted Securities Legend, and beneficial interests in a Preferred Security
in global form without legends will be available to transferees of Preferred
Securities transferred pursuant to such Shelf Registration Statement, upon
directions to transfer such Holder's beneficial interest in the Global
Preferred Security. No such transfer or exchange of an interest in the Global
Preferred Security shall be effective unless the transferor delivers to the
Trust a certification (in the applicable form set forth on the reverse of the
Security) as to compliance by such Person with the provisions of this
Declaration applicable to such transfer or exchange. After the effectiveness of
the Shelf Registration Statement, the Trust shall issue and the Property
Trustee, upon instruction from the Trust, 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 beneficial interests in the Global Preferred Security
that are thereafter exchanged for interests in such Exchanged Global Preferred
Security.
(b) Transfer and Exchange of Global Preferred Securities. The
transfer and exchange of Global Preferred Securities or beneficial interests
therein shall be effected 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.
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(c) Restrictions on Transfer and Exchange of Global Preferred
Securities. Notwithstanding any other provisions of this Declaration (other
than the provisions set forth in subsection (e) 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.
(d) 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 or has ceased to be a Clearing Agency
registered under the Act 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.
(e) Legend.
(i) Until two (2) years after the later of the
original issuance date of any Restricted Preferred Security or the
last date that any Affiliate of the Trust was the owner of such
Restricted Preferred Security, any Security evidencing such Restricted
Preferred Security (and all securities issued in exchange therefor or
substitution thereof, other than Common Stock, if any, issued upon
conversion thereof which shall bear the legend set forth in the
Indenture)
54
shall bear a legend (the "Restricted Securities Legend") in
substantially the following form (unless such Restricted Preferred
Security has been transferred pursuant to a registration statement
that has been declared effective under the Securities Act (and which
continues to be effective at the time of such transfer) or unless
otherwise agreed by the Trust in writing, with notice thereof to the
Registrar):
THIS SECURITY (OR ITS PREDECESSOR), ANY CONVERTIBLE JUNIOR
SUBORDINATED DEBENTURE ISSUED IN EXCHANGE FOR THIS SECURITY, AND ANY
COMMON STOCK 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. NEITHER THIS SECURITY
NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE OFFERED, SOLD, OR
OTHERWISE TRANSFERRED WITHIN THE "UNITED STATES" OR TO, OR FOR THE
ACCOUNT OR BENEFIT OF, "U.S. PERSONS" (AS DEFINED IN REGULATION S
UNDER THE SECURITIES ACT) IN THE ABSENCE OF SUCH REGISTRATION OR AN
APPLICABLE EXEMPTION THEREFROM. EACH PURCHASER OF THIS SECURITY IS
HEREBY NOTIFIED THAT THE SELLER MAY BE RELYING ON THE EXEMPTION FROM
THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE
144A THEREUNDER ("RULE 144A"). THE HOLDER OF THIS SECURITY, BY ITS
ACCEPTANCE HEREOF, REPRESENTS, ACKNOWLEDGES, AND AGREES FOR THE
BENEFIT OF THE ISSUER HEREOF THAT: (I) IT HAS ACQUIRED A "RESTRICTED
SECURITY" WHICH HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT; (II)
IT WILL NOT OFFER, SELL OR OTHERWISE TRANSFER THIS SECURITY, PRIOR TO
THE EARLIER OF THE DATE WHICH IS TWO YEARS AFTER THE DATE OF ORIGINAL
ISSUANCE HEREOF AND THE LAST DATE ON WHICH CALENERGY COMPANY, INC.
(THE "COMPANY") OR ANY AFFILIATE OF THE COMPANY WAS THE OWNER OF SUCH
RESTRICTED SECURITIES (OR ANY PREDECESSOR) (THE "RESALE RESTRICTION
TERMINATION DATE") EXCEPT (A) TO THE COMPANY, (B) PURSUANT TO A
REGISTRATION STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER THE
SECURITIES ACT, (C) FOR SO LONG AS THIS SECURITY IS ELIGIBLE FOR
RESALE PURSUANT TO RULE 144A, TO A PERSON WHO THE SELLER REASONABLY
BELIEVES IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE
144A) IN A TRANSACTION MEETING THE
55
REQUIREMENTS OF RULE 144A, (D) OUTSIDE THE UNITED STATES IN A
TRANSACTION MEETING THE REQUIREMENTS OF RULE 904 UNDER THE SECURITIES
ACT, OR (E) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE
REGISTRATION REQUIREMENTS OF THE SECURITIES ACT AND, IN EACH CASE, IN
ACCORDANCE WITH THE APPLICABLE SECURITIES LAWS OF ANY STATE OF THE
UNITED STATES OR ANY APPLICABLE JURISDICTION; AND (III) IT WILL, AND
EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER FROM IT OF
THIS SECURITY OF THE RESALE RESTRICTIONS SET FORTH IN (II) ABOVE. ANY
OFFER, SALE OR OTHER DISPOSITION PURSUANT TO THE FOREGOING CLAUSES
(II)(D) AND (E) IS SUBJECT TO THE RIGHT OF THE ISSUER OF THIS SECURITY
AND THE TRUSTEES FOR SUCH ISSUER TO REQUIRE THE DELIVERY OF AN OPINION
OF COUNSEL, CERTIFICATIONS OR OTHER INFORMATION ACCEPTABLE TO THEM IN
FORM AND SUBSTANCE. THIS LEGEND WILL BE REMOVED UPON THE REQUEST OF A
HOLDER AFTER THE RESALE RESTRICTION TERMINATION DATE.
(ii) Any Security as to which such restrictions on
transfer shall have expired in accordance with their terms or as to
which the conditions for removal of the foregoing legend as set forth
therein have been satisfied may, upon surrender of such Security for
exchange to the Registrar in accordance with the provisions of this
Section 9.2, be exchanged for a new Security or Securities, of like
tenor and aggregate number of Preferred Securities, which shall not
bear the Restricted Securities Legend.
(f) 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 this 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)
56
with respect to such Global Preferred Security, by the Property Trustee or the
Securities Custodian, to reflect such reduction.
(g) 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 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
57
as the Preferred Securities surrendered upon such transfer or
exchange.
(h) 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, any 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 Security 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(d). Unless and until definitive, fully registered
Preferred Securities Certificates have been issued to the Preferred Security
Beneficial Owners pursuant to Section 9.2(d):
(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 the Depositary and/or the Participants and
59
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 Declaration, the
Securities Guarantees and the terms of the Securities, the Sponsor shall not
be:
(i) personally liable for the return of any portion
of the capital contributions (or any return thereon) of the Holders of
the Securities which shall be made solely from assets of the Trust; or
(ii) be required to pay to the Trust or to any
Holder of Securities any deficit upon dissolution of the Trust or
otherwise.
(b) The Holder of the Common Securities shall be liable as
principal obligor, jointly and severally with the Trust, for all of the debts
and obligations of the Trust (other than with respect to the Securities).
60
(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.
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
61
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:
(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
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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 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
63
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 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
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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 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.
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(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.
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,
66
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 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
67
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.
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 Trustees shall file
required forms with applicable jurisdictions and, unless an exemption from
withholding is properly established by a Holder, shall remit amounts withheld
with respect to the Holder to applicable jurisdictions. To the extent that the
Trust is required to withhold and pay over any amounts to any authority with
respect to distributions or allocations to any Holder, the amount withheld
shall be deemed to be a distribution in the amount of the withholding to the
Holder. In the event of
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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.
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
Regular Trustees);
(ii) if the amendment affects the rights, powers,
duties, obligations or immunities of the Property Trustee, the
Property Trustee; and
(iii) if the amendment affects the rights, powers,
duties, obligations or immunities of the Delaware Trustee, the
Delaware Trustee;
(b) no amendment shall be made, and any such purported
amendment shall be void and ineffective:
(i) unless, in the case of any proposed amendment,
the Property Trustee shall have first received an Officer's
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 Officer's Certificate from each of
the Trust and the Sponsor that such amendment is permitted
by, and conforms to, the terms of
69
this Declaration (including the terms of the Securities); and
(B) an opinion of counsel (who may be
counsel to the Sponsor or the Trust) that such amendment is
permitted by, and conforms to, the terms of this Declaration
(including the terms of the Securities); 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(d) 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
70
(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;
(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.
71
(b) Except to the extent otherwise provided in the terms of
the Securities, the following provisions shall apply to meetings of Holders of
Securities:
(i) notice of any such meeting shall be given to all
the Holders of Securities having a right to vote thereat at least 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 or over the counter market 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
72
and the Holders of the Securities were stockholders of a Delaware
corporation;
(iii) each meeting of the Holders of the Securities
shall be conducted by the Regular Trustees or by such other Person
that the Regular Trustees may designate; and
(iv) 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 at the Closing Date, 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
73
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, insolvency, and other
similar laws affecting creditors' rights generally and to general principles of
equity and the discretion of the court (regardless of whether the enforcement
of such remedies is considered in a proceeding in equity or at law).
(c) The execution, delivery and performance of the
Declaration by the Property Trustee does not conflict with or constitute a
breach of the certificate of incorporation or by-laws of the Property Trustee.
(d) At the Closing Date, the Property Trustee will be the
record holder of the Debentures and the Property Trustee has not knowingly
created any liens or encumbrances on such Debentures.
(e) 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 Closing Date, 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
74
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).
(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 Delaware or Federal banking authority is required for
the execution, delivery or performance by the Delaware Trustee, of this
Declaration.
(e) The Delaware Trustee is a natural person who is a
resident of the State of Delaware, or, if not a natural person, an entity which
has its principal place of business in the State of Delaware.
(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, the
Preferred Securities Guarantee and the shares of Common Stock of the Sponsor
issuable upon conversion of the Debentures (collectively, the "Registrable
Securities") are entitled to the benefits of a Registration Rights Agreement.
Pursuant to the Registration Rights Agreement, the Sponsor and the Trust have
agreed for the benefit of the Holders of the Registrable Securities that,
subject to the terms of the Registration Rights Agreement (including, without
limitation, those provisions permitting a Suspension (as defined therein)) (i)
they will, at the
75
Sponsor's cost, within 180 days following the date of original issuance (the
"Issue Date") of the Preferred Securities, prepare and file a Shelf
Registration Statement (as defined in the Registration Rights Agreement) with
the Commission relating to offers and resales of the Registrable Securities,
(ii) they will use their reasonable best efforts to cause such Shelf
Registration Statement to be declared effective under the Securities Act
(subject to certain exceptions under the Registration Rights Agreement) no
later than 270 days after the Issue Date and (iii) they will use their
reasonable best efforts to maintain such Shelf Registration Statement
continuously effective under the Securities Act until the second 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 Sponsor
and the Trust agree that from and after the date on which any Registration
Default (as defined below) occurs, additional interest ("Liquidated Damages")
will accrue on the Debentures and the Preferred Securities from and including
the day following the day such Registration Default shall occur (or be deemed
to occur as described below) to but excluding the day on which such
Registration Default has been cured (or be deemed to be cured as described
below). Liquidated Damages will be paid quarterly in arrears, with the first
quarterly payment due on the first interest or distribution payment date, as
applicable, following the date on which such Liquidated Damages begin to
accrue, and will accrue at a rate per annum equal to an additional one-quarter
of one percent (0.25%) of the principal amount or liquidation amount, as
applicable, to and including the 90th day following such Registration Default
and one-half of one percent (0.50%) thereof from and after the 91st day
following such Registration Default. Following the cure or deemed cure of a
Registration Default, Liquidated Damages will cease to accrue with respect to
such Registration Default.
"Registration Default" shall mean any of the
following events:
(i) on or prior to the 180th day following the Issue Date of
the Preferred Securities, a Shelf Registration Statement relating to
the offer and sale of the Registrable Securities has not been filed
with the Commission;
76
(ii) on or prior to the 270th day following the Issue Date of
the Preferred Securities, the Registrable Securities are not the
subject of a Shelf Registration Statement which has become effective;
(iii) the Registrable Securities are the subject of a Shelf
Registration Statement which was effective but which has ceased to be
effective for any reason (other than pursuant to clause (iv) of (v)
below) prior to the end of the Shelf Registration Period (as defined
in the Registration Rights Agreement);
(iv) the occurrence of a Suspension (as defined in the
Registration Rights Agreement); or
(v) 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 (iv) or (v) 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 Sponsor 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 Sponsor 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.
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), (ii) or (iii) above, the Shelf Registration Statement covering
such Registrable Securities shall become effective; or
(y) in the case of a Registration Default described in clause
(iv) or (v) above, upon the Sponsor 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
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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 Commission 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):
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):
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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 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
79
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.
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
80
circumstances other than those to which it is held invalid, shall not be
affected thereby.
SECTION 15.7 Counterparts.
This Declaration may contain more than one counterpart of the
signature page and this Declaration may be executed by the affixing of the
signature of each of the Trustees to one of such counterpart signature pages.
All of such counterpart signature pages shall be read as though one, and they
shall have the same force and effect as though all of the signers had signed a
single signature page.
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IN WITNESS WHEREOF, the undersigned has caused these presents
to be executed as of the day and year first above written.
Steven A. McArthur
as Trustee
/s/ Steven A. McArthur
------------------------------
Craig Hammett
as Trustee
/s/ Craig Hammet
------------------------------
Gregory Abel
as Trustee
/s/ Gregory Abel
------------------------------
THE BANK OF NEW YORK (DELAWARE),
as Delaware Trustee
By: /s/ Walter N. Gitlin
---------------------------------
Name: Walter N. Gitlin
Title: Authorized Signatory
THE BANK OF NEW YORK,
as Property Trustee
By: /s/ Mary La Gumina
---------------------------------
Name: Mary La Gumina
Title: Assistant Vice President
CALENERGY COMPANY, INC.
as Sponsor
By: /s/ Steven A. McArthur
---------------------------------
Name: Steven A. McArthur
Title: Senior Vice President and
General Counsel
ANNEX I
TERMS OF
6 1/2% CONVERTIBLE PREFERRED SECURITIES
6 1/2% CONVERTIBLE COMMON SECURITIES
Pursuant to Section 7.1 of the Amended and Restated
Declaration of Trust, dated as of August 12, 1997 (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." 4,500,000 Preferred Securities
of the Trust with an aggregate liquidation preference
with respect to the assets of the Trust of Two Hundred
and Twenty Five Million Dollars ($225,000,000), plus up
to an additional 900,000 Preferred Securities of the
Trust with an aggregate liquidation preference with
respect to the assets of the Trust of Forty Five Mil-
lion Dollars ($45,000,000) solely to cover over-allot-
ments, as provided for in the Purchase Agreement (the
"Additional Preferred Securities"), and a liquidation
preference with respect to the assets of the Trust of
$50 per preferred security, are hereby designated for
the purposes of identification only as "6 1/2% Convertible
Preferred Securities (liquidation preference $50 per
Convertible Preferred Security)" (the "Preferred Secu-
rities"). The certificates evidencing the Preferred
Securities shall be substantially in the form of Exhib-
it A-1 to the Declaration, with such changes and addi-
tions thereto or deletions therefrom as may be required
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." 139,176 Common Securities of the Trust
with an aggregate liquidation amount with respect to the
assets of the Trust of Six Million Nine Hundred Fifty Eight
Thousand and Eight Hundred Dollars ($6,958,800) plus up to an
additional 27,836 Common Securities of the Trust with an
aggregate liquidation
amount with respect to the assets of the Trust of One Million
Three Hundred Ninety One Thousand and Eight Hundred Dollars
($1,391,800) 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 1/2% Convertible
Common Securities (liquidation amount $50 per Convertible
Common Security)" (the "Common Securities" and, together with
the Preferred Securities, the "Securities"). The certificates
evidencing the Common Securities shall be substantially in
the form of Exhibit A-2 to the Declaration, with such changes
and additions thereto or deletions therefrom as may be
required by ordinary usage, custom or practice.
2. Distributions.
(a) Distributions payable on each Security will be fixed at
a rate per annum of 6 1/2% (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 first date of initial issuance of
any of the Securities and will be payable quarterly in
arrears, on the following dates, which dates correspond
to the interest payment dates on the Debentures: March
1, June 1, September 1, and December 1 of each year,
commencing on September 1, 1997, when, as and if avail-
able for payment by the Property Trustee, except as
otherwise described below. The Debenture Issuer has
the right under the Indenture to defer payments of in-
terest on the Debentures by extending the interest pay-
I-2
ment period from 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 then in effect, or any
earlier redemption date. 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, as then in
effect. 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
Convertible Preferred Securities -- Form, Denomination
and Registration" in the Offering Circular. The rele-
vant 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
I-3
accordance with the Indenture. If any date on which
Distributions are payable on the Securities is not a Business
Day, then payment of the Distribution payable on such date
will be made on the next succeeding day that is a Business
Day (and without any 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 or other property held
by or for the Trust that is not accounted for hereunder, such
property shall be distributed Pro Rata (as defined herein)
among the Holders of the Securities.
3. Liquidation Distribution Upon Dissolution.
In the event of any voluntary or involuntary dissolution of
the Trust (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
paying or making reasonable provision to pay all claims and obligations of the
Trust in accordance with Section 3808(e) of the Business Trust Act,
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, after paying or making reasonable provision to pay all
claims and obligations of the Trust in accordance with Section 3808(e) of
I-4
the Business Trust Act, be distributed on a Pro Rata basis to the Holders of
the Securities.
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 Tax
Event), the proceeds from such repayment or payment
shall be simultaneously applied to redeem Securities
having an aggregate liquidation amount equal to the
aggregate principal amount of the Debentures so repaid
or redeemed at a redemption price per Security equal to
the redemption price of the Debentures, together with
accrued and unpaid Distributions thereon through the
date of the redemption, payable in cash (the "Redemp-
tion 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 than 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.
If an Investment Company Event (as
hereinafter defined) shall occur and be continuing, the
Sponsor shall cause the Regular Trustees to dissolve the
Trust and, after paying or making reasonable provision to pay
all claims and obligations of the Trust in accordance with
Section 3808(e) of the Business Trust Act, cause 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
I-5
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 represented 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.
(c) The Holder of all of the outstanding Common Securities
has the right at any time to terminate the Trust and,
after satisfaction of liabilities to creditors of the
Trust as provided by applicable law, cause the Deben-
tures to be distributed to the Holders of the Preferred
Securities and Common Securities in liquidation of the
Trust. Such right is subject to the Sponsor having re-
ceived an opinion of counsel to the effect that such
distribution will not be a taxable event to Holders of
Preferred Securities.
(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
I-6
Securities (a "Redemption/Distribution Notice")
will be given by the Trust by mail to each Holder
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 than 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 exchange
and the dates on which notices are given pursuant
to this paragraph 4(f)(i), a
Redemption/Distribution Notice shall be deemed to
be given on the day such notice is first mailed by
first-class mail, postage pre-paid, to Holders of
Securities. Each Redemp- tion/Distribution Notice
shall be addressed to the Holders of Securities at
the address of each such Holder appearing in the
books and records of the Trust. No defect in the
Redemp- tion/Distribution Notice or in the mailing
of either thereof with respect to any Holder shall
affect the validity of the redemption or exchange
proceedings with respect to any other Holder.
(ii) In the event that fewer than all the outstanding
Securities are to be redeemed, the Securities to
be redeemed shall be redeemed Pro Rata from each
Holder of 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
I-7
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 Preferred Securities,
and (B) with respect to Preferred Securities
issued in certificated form and Common Securities,
provided that the Debenture Issuer has paid the
Property Trustee a sufficient amount of cash in
connection with the related redemption or maturity
of the Debentures, the Trust will irrevocably
deposit with the Paying Agent funds sufficient to
pay the amount payable on redemption to the
Holders of such Securities upon surrender of their
certificates. If a Redemption/Distribu- tion
Notice shall have been given and funds deposited
as required, then on the date of such deposit, all
rights of Holders of such Securities so called for
redemption will cease, except the right of the
Holders of such Securities to receive the
Redemption Price, but without interest on such
Redemption Price. Neither the Regular Trustees nor
the Trust shall be required to register or cause
to be registered the transfer of any Securities
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
Redemption Price in respect of any Securities is
improperly 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).
I-8
(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.
(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, beginning
60 days following the first date of original issuance of any of the
Preferred Securities through the close of business on September 1,
2027 (or, in the case of Securities called for redemption, prior to
the close of business on the Business Day prior to the redemption
date), at their option, to cause the Conversion Agent to convert
Securities, on behalf of the converting Holders, into shares of Common
Stock, par value $0.0675 per share (the "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 Debentures theretofore held by the Trust
on the basis of one
I-9
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 1.047 shares of
Common Stock of the Debenture Issuer per $50 principal amount
of Debentures (which is equivalent to a conversion price of
$47.75 per share of Common Stock of the Debenture Issuer,
subject to certain adjustments set forth in the terms of the
Debentures (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 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. Hold-
ers of Securities at the close of business on a Distri-
bution record date will be entitled to receive the
Distribution payable on such securities on the corre-
sponding 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 ac-
crued thereon) surrendered for conversion, or on ac-
count 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
I-10
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 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 uncon-
verted 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 paid in cash (based
on the last reported sale price of the Common Stock of the
Debenture Issuer on the date such
I-11
Securities 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
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 applica-
ble), in order to enable the Debenture Issuer to law-
fully 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 Securi-
ties.
(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
I-12
which may be payable in respect of any transfer involved 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 otherwise 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, (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 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
I-13
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 Holder will be treated as owning an
undivided beneficial interest in the Debentures.
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. In addition,
if the Property Trustee fails to enforce its rights under the
Debentures (other than rights arising from an Event of
Default described in the immediately preceding sentence)
after any Holder of Preferred Securities shall have made a
written request to the Property Trustee to enforce such
rights, such Holder of Preferred Securities may, to the
fullest extent permitted by law, thereafter institute a
Direct Action to enforce the Property Trustee's rights as
Holder of the Debentures, without first instituting any legal
proceeding against the Property Trustee or any other Person.
Except as provided in the preceding sentences, the Holders of
Preferred Securities will not be able to exercise directly
any other remedy available to the Holders of the Debentures.
In connection with any Direct Action, the Debenture Issuer
will be subrogated to the rights of such Holder of Preferred
Securities under the Declaration to the extent of any payment
made
I-14
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 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 Preferred Securities has
been cured, waived, or otherwise
I-15
eliminated and subject to the requirements of the second to
last sentence of this paragraph, the Holders of a Majority in
liquidation amount of the Common Securities, voting
separately as a class, may direct the time, method, and place
of conducting any proceeding for any remedy available to the
Property Trustee, or exercising any trust or power conferred
upon the Property Trustee under the Declaration, including
(i) directing the time, method, place of conducting any
proceeding for any remedy available to the 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 amendment,
modification, or termination of the Indenture or the
Debentures 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 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 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 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 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.
I-16
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 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 Securi-
ties or only the Common Securities, then only the
affected class will be entitled to vote on such amend-
ment 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-
I-17
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 termination as directed by a Majority in
liquidation amount of the Securities voting together as a
single class; provided, however, that where a consent under
the Indenture would require the consent of the holders of
greater than a majority in aggregate principal amount of the
Debentures (a "Super Majority"), the Property Trustee may
only give such consent at the written direction of the
Holders of at least the same proportion in aggregate stated
liquidation preference of the Securities; provided, further,
that the Property Trustee shall not take any action in
accordance with the directions of the Holders of the
Securities under this paragraph 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 liquida-
I-18
tion, 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.
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-19
EXHIBIT A-1
FORM OF PREFERRED SECURITY
[FORM OF FACE OF SECURITY]
THIS SECURITY (OR ITS PREDECESSOR), ANY CONVERTIBLE JUNIOR SUBORDINATED
DEBENTURE ISSUED IN EXCHANGE FOR THIS SECURITY, AND ANY COMMON STOCK 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.
NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE OFFERED,
SOLD, OR OTHERWISE TRANSFERRED WITHIN THE "UNITED STATES" OR TO, OR FOR THE
ACCOUNT OR BENEFIT OF, "U.S. PERSONS" (AS DEFINED IN REGULATION S UNDER THE
SECURITIES ACT) IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION
THEREFROM. EACH PURCHASER OF THIS SECURITY IS HEREBY NOTIFIED THAT THE SELLER
MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE
SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER ("RULE 144A"). THE HOLDER OF
THIS SECURITY, BY ITS ACCEPTANCE HEREOF, REPRESENTS, ACKNOWLEDGES, AND AGREES
FOR THE BENEFIT OF THE ISSUER HEREOF THAT: (I) IT HAS ACQUIRED A "RESTRICTED
SECURITY" WHICH HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT; (II) IT WILL
NOT OFFER, SELL OR OTHERWISE TRANSFER THIS SECURITY, PRIOR TO THE EARLIER OF
THE DATE WHICH IS TWO YEARS AFTER THE DATE OF ORIGINAL ISSUANCE HEREOF AND THE
LAST DATE ON WHICH CALENERGY COMPANY, INC. (THE "COMPANY") OR ANY AFFILIATE OF
THE COMPANY WAS THE OWNER OF SUCH RESTRICTED SECURITIES (OR ANY PREDECESSOR)
(THE "RESALE RESTRICTION TERMINATION DATE") EXCEPT (A) TO THE COMPANY, (B)
PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BEEN DECLARED EFFECTIVE UNDER
THE SECURITIES ACT, (C) FOR SO LONG AS THIS SECURITY IS ELIGIBLE FOR RESALE
PURSUANT TO RULE 144A, TO A PERSON WHO THE SELLER REASONABLY BELIEVES IS A
"QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN RULE 144A) IN A TRANSACTION
MEETING THE REQUIREMENTS OF RULE 144A, (D) OUTSIDE THE UNITED STATES IN A
TRANSACTION MEETING THE REQUIREMENTS OF RULE 904 UNDER THE SECURITIES ACT, OR
(E) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS
OF THE SECURITIES ACT AND, IN EACH CASE, IN ACCORDANCE WITH THE APPLICABLE
SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY APPLICABLE
JURISDICTION; AND (III) IT WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO,
NOTIFY ANY PURCHASER FROM IT OF THIS SECURITY OF THE RESALE RESTRICTIONS SET
FORTH IN (II) ABOVE. ANY OFFER, SALE OR OTHER DISPOSITION PURSUANT TO THE
FOREGOING CLAUSES (II)(D) AND (E) IS SUBJECT TO THE RIGHT OF THE ISSUER OF THIS
SECURITY AND THE TRUSTEES FOR SUCH ISSUER TO REQUIRE THE DELIVERY OF AN OPINION
OF COUNSEL, CERTIFICATIONS OR OTHER INFORMATION ACCEPTABLE TO THEM IN FORM AND
SUBSTANCE. THIS LEGEND WILL BE REMOVED UPON THE REQUEST OF A HOLDER AFTER THE
RESALE RESTRICTION TERMINATION DATE.
[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
A-1
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.]
Certificate Number: Number of Preferred Securities:
[Include if Preferred Security
is in global form -- :as increased
or decreased as set forth on Schedule A
attached hereto]
CUSIP No.:[__________ -- Global Preferred Security]
ISISN No.:[__________ -- Global Preferred Security]
Convertible Preferred Securities
of
CalEnergy Capital Trust III
6 1/2% Convertible Preferred Securities
(liquidation preference $50 per Convertible Preferred Security)
CalEnergy Capital Trust III, 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 1/2%
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 August 12, 1997, as the same may be amended
A-2
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.
By acceptance, the Holder agrees to treat, for United States
federal income tax purposes, the Debentures as indebtedness and the Preferred
Securities as evidence of indirect beneficial 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 ____________-.
CALENERGY CAPITAL Trust III
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
[FORM OF REVERSE OF SECURITY]
Distributions payable on each Preferred Security will be
fixed at a rate per annum of 6 1/2% (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 1,
June 1, Septem- ber 1 and December 1 of each year, commencing on September 1,
1997, 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
then in effect, or any earlier redemption date. 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 payment of
A-5
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 III
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 August 12, 1997,
by Steven A. McArthur, Craig Hammett 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 undivided 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.
Dated: ______________
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 Identifying
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
(continued)
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.
Dated: _______________________
Signature: __________________
(Sign exactly as your name appears on the other side of this Preferred
Security Certificate)
Signature Guarantee:** _______________________________________________________
- --------
*(...continued)
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.)
** (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
[Include the following if the Security bears a Restricted Securi-
ties Legend --
In connection with any transfer of any of the Preferred Securities evidenced by
this certificate, the undersigned confirms that such Preferred Securities are
being:
CHECK ONE BOX BELOW
(1) |_| exchanged for the undersigned's own account with-
out transfer; or
(2) |_| transferred pursuant to and in compliance with
Rule 144A under the Securities Act of 1933; or
(3) |_| transferred pursuant to and in compliance with
Regulation S under the Securities Act of 1933; or
(4) |_| transferred pursuant to another available
exemption from the registration requirements of the
Securities Act of 1933; or
(5) |_| transferred pursuant to an effective Shelf
Registration Statement (as defined in the
Declaration).
Unless one of the boxes is checked, the 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 Trustee may require, prior to registering any such
transfer of the Preferred Securities such legal opinions, certifications and
other information as the Company 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
Trustee may only permit transfers for which box (5) has been checked.
__________________________
Signature
Signature Guarantee: ***
- --------------------
*** Signature must be guaranteed by a commercial bank, trust company or
member firm of the New York Stock Exchange.
A-10
- -------------------------------- ----------------------------]
Signature must be guaranteed Signature
[TO BE COMPLETED BY PURCHASER IF (2) ABOVE IS CHECKED.
The undersigned represents and warrants that it is purchasing
this Preferred Security 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
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 Company as the undersigned has requested pursuant to Rule 144A or
has determined not to request such information and that it is aware that the
trans- feror 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-11
[TO BE ATTACHED TO GLOBAL SECURITIES]
SCHEDULE A
The original number of Preferred Securities represented by
this Global Preferred Security shall be __________. The
following increases or decreases in the number of Preferred
Securities represented by this Global
Preferred Security have
been made:
Date of Amount of Number of Securities Signature of
increase/ Amount of increase in decrease in number following such authorized
decrease number of Securities of Securities increase/decrease officer of Trustee
- -------- -------------------- ------------- ----------------- ------------------
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:
Convertible Common Securities
of
CalEnergy Capital Trust III
6 1/2% Convertible Common Securities
(liquidation amount $50 per Convertible Common Security)
CalEnergy Capital Trust III, 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 designat-
A2-1
ed the 6 1/2% 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 and shall in all respects be subject to the provisions of the
Amended and Restated Declaration of Trust of the Trust dated as of August 12,
1997, as the same may be amended from time to time (the "Declaration"),
including the designation of the terms of the Common Securities as set forth in
Annex I to the Declaration. Capitalized terms used 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 _____________________________.
CalEnergy Capital Trust III
By: _________________________________
Name:
Title:
[FORM OF REVERSE OF SECURITY]
Distributions payable on each Common Security will be fixed
at a rate per annum of 6 1/2% (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 1,
June 1, September 1 and December 1 of each year, commencing on September 1,
1997, 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
then in effect, or any earlier redemption date. 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 Distribu-
A2-4
tions will be payable to Holders as they appear on the books and records of the
Trust on the first record date after the end of the Extension Period. Upon the
termination of any Extension Period and the payment of all amounts then due,
the Debenture Issuer may commence a new Extension Period, subject to the above
requirements.
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
CalEnergy Capital Trust III
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 August 12, 1997,
by Steven A. McArthur, Craig Hammett 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.
Dated: ________________
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)
A2-7
Please Print or Typewrite Name and
Address, Including Zip Code, and
Social Security or Other Identifying
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
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
---------------------
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.)
A2-9
Exhibit B
Specimen of Debenture
THIS SECURITY HAS AND ANY COMMON STOCK (AND RELATED RIGHTS) ISSUED ON
CONVERSION HEREOF HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES
ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAW.
NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE OFFERED,
SOLD OR OTHERWISE TRANSFERRED WITHIN THE "UNITED STATES" OR TO, OR FOR THE
ACCOUNT OR BENEFIT OF, "U.S. PERSONS" (AS DEFINED IN REGULATION S UNDER THE
SECURITIES ACT) IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION
THEREFROM. EACH PURCHASER OF THIS SECURITY IS HEREBY NOTIFIED THAT THE SELLER
MAY BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE
SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER ("RULE 144A"). THE HOLDER OF
THIS SECURITY, BY ITS ACCEPTANCE HEREOF, REPRESENTS, ACKNOWLEDGES, AND AGREES
FOR THE BENEFIT OF CALENERGY COMPANY, INC. (THE "COMPANY") THAT: (I) IT HAS
ACQUIRED A "RESTRICTED SECURITY" THAT HAS NOT BEEN REGISTERED UNDER THE
SECURITIES ACT; (II) IT WILL NOT OFFER, SELL OR OTHERWISE TRANSFER SUCH
SECURITY, PRIOR TO THE DATE WHICH IS TWO YEARS AFTER THE LATER OF THE ORIGINAL
ISSUE DATE HEREOF AND THE LAST DATE ON WHICH THE COMPANY OR ANY AFFILIATE OF
THE COMPANY WAS THE OWNER OF THIS SECURITY (OR ANY PREDECESSOR OF THIS
SECURITY) (THE "RESALE RESTRICTION TERMINATION DATE") EXCEPT (A) TO THE
COMPANY, (B) PURSUANT TO A REGISTRATION STATEMENT THAT HAS BEEN DECLARED
EFFECTIVE UNDER THE SECURITIES ACT, (C) FOR SO LONG AS THE SECURITIES ARE
ELIGIBLE FOR RESALE PURSUANT TO 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 AND, IN EACH CASE, IN ACCORDANCE WITH THE APPLICABLE
SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY APPLICABLE
JURISDICTION; AND (III) IT WILL, AND EACH SUBSEQUENT HOLDER IS REQUIRED TO,
NOTIFY ANY PURCHASER FROM IT OF THIS SECURITY OF THE RESALE RESTRICTIONS SET
FORTH IN (II) ABOVE. ANY OFFER, SALE OR OTHER DISPOSITION PURSUANT TO THE
FOREGOING CLAUSE (D) OR (E) IS SUBJECT TO THE RIGHT OF THE ISSUER OF THIS
SECURITY AND THE TRUSTEES FOR SUCH ISSUER (i) TO REQUIRE THE DELIVERY OF AN
OPINION OF COUNSEL, CERTIFICATION OR OTHER INFORMATION SATISFACTORY TO EACH OF
THEM IN FORM AND SUBSTANCE, 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. THIS LEGEND
WILL BE REMOVED UPON THE RE-
QUEST OF A HOLDER AFTER THE RESALE RESTRICTION TERMINATION
DATE.
A-2
CALENERGY COMPANY, INC.
6 1/2% Convertible Junior Subordinated
Debenture Due 2027
No._________ $200,000,000
CUSIP No. 129466 AF5
CALENERGY COMPANY, INC., a corporation duly organized and
existing under the laws of the State of Delaware (herein called "the Company",
which term includes any successor corporation under the Indenture hereinafter
referred to), for value received, hereby promises to pay to THE BANK OF NEW
YORK, AS PROPERTY TRUSTEE OF CALENERGY CAPITAL TRUST III, or registered
assigns, the principal sum of TWO HUNDRED MILLION Dollars ($200,000,000) on
September 1, 2027, provided that the Company may shorten the maturity of the
principal of this Security to a date not earlier than August 10, 2012, as
described on the reverse hereof.
Interest Payment Dates: March 1, June 1, September 1 and
December 1, commencing Septem-
ber 1, 1997
Regular Record Dates: the close of business on the
15th day immediately preceding
each Interest Payment Date, com-
mencing August 17, 1997
Reference is hereby made to the further provisions of this
Security set forth on the reverse hereof, which further provisions shall for
all purposes have the same effect as if set forth at this place.
Unless the certificate of authentication hereon has been
executed by the Trustee referred to on the reverse hereof by manual signature,
this Security shall not be entitled to any benefit under the Indenture or be
valid or obligatory for any purpose.
3
IN WITNESS WHEREOF, the Company has caused this instrument to
be signed manually or by facsimile by its duly authorized officer.
Dated: _________________
CALENERGY COMPANY, INC.
By:______________________
Name:
Title:
TRUSTEE'S CERTIFICATE
OF AUTHENTICATION
This is one of the Securities referred to in the
within-mentioned Indenture.
Dated: _____________ THE BANK OF NEW YORK,
as Trustee
By: _____________________
Authorized Signatory
REVERSE OF SECURITY
CALENERGY COMPANY, INC.
6 1/2% Convertible Junior Subordinated
Debenture Due 20271
1. Interest. CalEnergy Company, Inc., a Delaware corporation
(the "Company"), is the issuer of this 6 1/2% Convertible Junior Subordinated
Debenture Due 2027 (the "Security") limited in aggregate principal amount to
$200,000,000, issued under the Indenture hereinafter referred to. The Company
promises to pay interest on the Securities in cash from August 12, 1997 or from
the most recent interest payment date to which interest has been paid or duly
provided for, quarterly (subject to deferral for up to 20 consecutive quarters
as described in Section 3 hereof) in arrears on March 1, June 1, September 1
and December 1 of each year (each such date, an "Interest Payment Date"),
commencing September 1, 1997, at the rate of 6 1/2% per annum (subject to
increase as provided in Section 13 hereto) plus Additional Interest, if any,
until the principal hereof shall have become due and payable.
The amount of interest payable for any period will be
computed on the basis of a 360-day year of twelve 30-day months. To the extent
lawful, the Company shall pay interest (including post-petition interest in any
proceeding under any Bankruptcy Law) on overdue installments of interest
(without regard to any applicable grace period) at the rate borne by the
Securities, compounded quarterly. Any interest paid on this Security shall be
increased to the extent necessary to pay Additional Interest as set forth in
this Security.
2. Additional Interest. The Company shall pay to CalEnergy
Capital Trust III (and its permitted successors or assigns under the
Declaration) (the "Trust") such additional amounts as may be necessary in order
that the amount of dividends or other distributions then due and payable by the
Trust on the Preferred Securities that at any time remain outstanding in
accordance with the terms thereof shall not be reduced as a result of any
additional taxes,
- --------
1 All terms used in this Security which are defined in the Indenture or
in the Declaration attached as Annex A thereto shall have the meanings
assigned to them in the Indenture or the Declaration, as the case may
be.
6
duties and other governmental charges of whatever nature (other than
withholding stamp or transfer taxes) imposed by the United States or any other
taxing authority.
3. Extension of Interest Payment Period. The
Company shall have the right, at any time during the term of
this Security, from time to time to defer payments of interest by extending
the interest payment period of such Security for up to 20 consecutive
quarters (an "Extended Interest Payment Period") during which Extended
Interest Payment Period no interest shall be due and payable; provided, that
no Extended Interest Payment Period may extend beyond the Maturity Date, as
then in effect, or any earlier Redemption Date. To the extent permitted by
applicable law, interest, the payment of which has been deferred because of
the extension of the interest payment period, will bear interest thereon
at 6 1/2% compounded quarterly for each quarter of the Extended Interest
Payment Period ("Compounded Interest"). At the end of the Extended Interest
Payment Period, the Company shall pay all interest then accrued and unpaid on
the Securities, including any Additional Payments that shall be payable to
the Holders of the Securities in whose names the Securities are registered
in the Security Registrar on the first Regular Record Date after the end of
the Extended Interest Payment Period. Before the expiration of any
Extended Interest Payment Period, the Company may elect to continue to defer
payments of interest for another consecutive Extended Interest Payment Period;
provided, that any such Extended Interest Payment Period, together with all
such previous and consecutive Extended Interest Payment Periods, shall not
exceed 20 consecutive quarters and shall not extend beyond the Maturity Date,
as then in effect. Upon the expiration of any Extended Interest Payment Period
and upon the payment of all Additional Payments, if any, then due, the Company
may commence a new Extended Interest Payment Period, subject to the foregoing
requirements. No interest shall be due and payable during an Extended
Interest Payment Period except at the end thereof.
If the Property Trustee is the sole holder of the Securities
at the time the Company selects an Extended Interest Payment Period, the
Company shall give notice to the Regular Trustees, the Property Trustee and
the Trustee of its selection of such Extended Interest Payment Period at least
one Business Day prior to the earlier of (i) the next succeeding Interest
Payment Date or (ii) if the Preferred Securities are listed on the New York
Stock Exchange or other stock exchange or quotation system, the date the Trust
is required to give notice to the New York Stock Exchange or other applicable
self-regulatory organization or to holders of the Preferred Securities on the
record date or the date
7
such distributions are payable, but in any event not less than ten Business
Days prior to such record date.
If the Property Trustee is not the sole holder of the
Securities at the time the Company selects an Extended Interest Payment Period,
the Company shall give the Holders of these Securities and the Trustee notice
of its selection of an Extended Interest Payment Period at least ten Business
Days prior to the earlier of (i) the next succeeding Interest Payment Date or
(ii) if the Preferred Securities are listed on the New York Stock Exchange or
other stock exchange or quotation system, the date the Company is required to
give notice to the New York Stock Exchange or other applicable self-regulatory
organization or to holders of the Securities on the record date or the date
such distributions are payable, but in any event not less than two Business
Days prior to such record date.
The quarter in respect of which any notice is given pursuant
to the second and third paragraphs of this Section 3 shall be counted as one of
the 20 quarters permitted in the maximum Extended Interest Payment Period
permitted under the first paragraph of this Section 3.
4. Method of Payment. The interest so payable, and punctually
paid or duly provided for, on any Interest Payment Date will, as provided in
the Indenture, be paid to the Person in whose name this Security (or one or
more Predecessor Securities) is registered at the close of business on the
regular record date for such interest installment, which shall be the close of
business on the 15th day immediately preceding each Interest Payment Date (the
"Regular Record Date"), commencing August 17, 1997. Any such interest not so
punctually paid or duly provided for shall forthwith cease to be payable to the
Holder on such Regular Record Date and may either be paid to the Person in
whose name this Security (or one or more Predecessor Securities) is registered
at the close of business on a Special Record Date for the payment of such
Defaulted Interest to be fixed by the Trustee, notice whereof shall be given to
Holders of Securities not less than 10 days prior to such Special Record Date,
or be paid at any time in any other lawful manner not inconsistent with the
requirements of any securities exchange on which the Securities may be listed,
and upon such notice as may be required by such exchange, all as more fully
provided in said Indenture.
Payment of the principal of and interest on this Security
will be made at the office or agency of the Company maintained for that purpose
in New York, New York, in such coin or currency of the United States of America
as at the time of payment is legal tender for payment of public and
8
private debts; provided, however, that, at the option of the Company, payment
of interest may be made by check mailed to the address of the Person entitled
thereto as such address shall appear in the Security Register.
5. Paying Agent and Security Registrar. The Trustee will act
as Paying Agent, Security Registrar and Conversion Agent. The Company may
change any Paying Agent, Security Registrar, co-registrar or Conversion Agent
without prior notice. The Company or any of its Affiliates may act in any such
capacity.
6. Indenture. The Company issued the Securities under an
indenture, dated as of August 12, 1997 (the "Indenture"), between the Company
and The Bank of New York, as Trustee (herein called the "Trustee", which term
includes any successor trustee under the Indenture), to which Indenture and all
indentures supplemental thereto reference is hereby made for a statement of the
respective rights, limitations of rights, duties and immunities thereunder of
the Trustee, the Company and the Holders of the Securities, and of the terms
upon which the Securities are, and are to be, authenticated and delivered. The
terms of the Securities include those stated in the Indenture and those made
part of the Indenture by the Trust Indenture Act of 1939 (15 U.S. Code ss.ss.
77aaa-77bbbb) ("TIA") as in effect on the date of the Indenture. The Securities
are subject to, and qualified by, all such terms, certain of which are
summarized hereon, and holders are referred to the Indenture and the TIA for a
statement of such terms. The Securities are unsecured general obligations of
the Company limited to $231,958,800 in aggregate principal amount (or up to
$278,350,600 if the over-allotment option is exercised) and subordinated in
right of payment to all existing and future Senior Indebtedness of the Company.
No reference herein to the Indenture and no provision of this Security or of
the Indenture shall alter or impair the obligation of the Company, which is
absolute and unconditional, to pay the principal of and interest on this
Security at the times, place and rate, and in the coin or currency, herein
prescribed or to convert this Security as provided in the Indenture.
7. Optional Redemption. The Securities are redeemable at the
Company's option at any time and from time to time after September 1, 2000,
upon not less than 20 or more than 60 days' notice, at a Redemption Price equal
to $51.00 per $50 principal amount of the Securities to be redeemed plus any
accrued and unpaid interest, including Additional Payments, if any, to the
Redemption Date, if redeemed before September 1, 2001, and at $50.50 per $50
principal amount of the Security, if redeemed during the 12-month period
beginning September 1, 2001 and thereafter at
9
$50 per $50 principal amount of the Securities plus, in each case, accrued and
unpaid interest, including Additional Payments, if any, to the Redemption Date.
On or after the Redemption Date, interest will cease to accrue on the
Securities, or portion thereof, called for redemption.
8. Conditional Right to Shorten Maturity; Optional Redemption
Upon Tax Event. If a Tax Event shall occur and be continuing and in the opinion
of counsel to the Company experienced in such matters, there would in all
cases, after effecting the termination of the Trust and the distribution of the
Securities to the holders of the Preferred Securities in exchange therefor, be
more than an insubstantial risk that an Adverse Tax Consequence would continue
to exist, then the Company shall have the right:
(a) to shorten the Stated Maturity of the Securities to the minimum
extent required, but in any event to a date not earlier than August 10, 2012
(the action referred to in this clause (a) being referred to herein as a
"Maturity Advancement"), such that, in the opinion of counsel to the Company
experienced in such matters, after advancing the Stated Maturity, interest paid
on the Securities will be deductible for federal income tax purposes; provided,
however, that there shall be delivered to the trustees of the Trust an opinion
of counsel (which counsel shall be satisfactory to the trustees of the Trust)
that such change in the Stated Maturity will not (i) cause the Trust to fail to
be classified as a grantor trust or (ii) result in a taxable event to the
holders of the Preferred Securities, or
(b) if in the opinion of counsel to the Company experienced in such
matters, there would in all cases, after effecting a Maturity Advancement, be
more than an insub-stantial risk that an Adverse Tax Consequence would continue
to exist, to redeem the Securities, prior to September 1, 2000, in whole but
not in part for cash, upon not less than 30 nor more than 60 days' notice and
within 90 days following the occurrence of the Tax Event, at 100% of the
principal amount thereof plus accrued and unpaid interest, including Additional
Payments, if any, and following such redemption, all the Preferred Securities
will be redeemed by the Trust at the liquidation preference of $50 per each
Preferred Security plus accrued and unpaid distributions.
In lieu of the foregoing, the Company also shall have the
option of causing the Securities to remain outstanding and pay Additional
Interest on the Securities.
9. Notice of Redemption. Notice of redemption will be mailed
at least 30 (or in the case of a redemption at the election of the Company, at
least 20) but not more
10
than 60 days before the Redemption Date to each Holder of the Securities to be
redeemed at his address of record. The Securities in denominations larger than
$50 may be redeemed in part but only in integral multiples of $50. In the event
of a redemption of less than all of the Securities, the Securities will be
chosen for redemption by the Trustee in accordance with the Indenture. On and
after the Redemption Date, interest ceases to accrue on the Securities or
portions of them called for redemption.
If this Security is redeemed subsequent to a Regular Record
Date with respect to any Interest Payment Date specified above and on or prior
to such Interest Payment Date, then any accrued interest will be paid to the
person in whose name this Security is registered at the close of business on
such record date.
10. Mandatory Redemption. The Securities will mature on
September 1, 2027, provided that the Company may shorten the maturity of the
principal of this Security to a date not earlier than August 10, 2012, as
described in paragraph 8 above, and may be redeemed, in whole or in part, at
any time after September 1, 2000 or at any time in certain circumstances upon
the occurrence of a Tax Event. Upon the repayment of the Securities, whether at
maturity or upon redemption, the proceeds from such repayment or payment shall
simultaneously be applied to redeem Trust Securities having an aggregate
liquidation amount of the Securities so repaid or redeemed at the applicable
redemption price together with accrued and unpaid distributions through the
date of redemption; provided, that holders of the Trust Securities shall be
given not less than 30 nor more than 60 days notice of such redemption. Upon
the repayment of the Securities at maturity or upon any acceleration, earlier
redemption or otherwise, the proceeds from such repayment will be applied to
redeem the Preferred Securities, in whole, upon not less than 30 nor more than
60 days' notice. There are no sinking fund payments with respect to the
Securities.
11. Subordination. The payment of the principal of, interest
on or any other amounts due on the Securities is subordinated in right of
payment to all existing and future Senior Indebtedness (as defined below) of
the Company, as described in the Indenture. Each holder, by accepting a
Security, agrees to such subordination and authorizes and directs the Trustee
on its behalf to take such action as may be necessary or appropriate to
effectuate the subordination so provided and appoints the Trustee as its
attorney-in-fact for such purpose.
11
Senior Indebtedness shall mean in respect of the Company (i)
the principal, premium, if any, and interest in respect of (A) indebtedness of
such obligor for money borrowed and (B) indebtedness evidenced by securities,
debentures, bonds or other similar instruments issued by such obligor, (ii) all
capital lease obligations of such obligor, (iii) all obligations of such
obligor issued or assumed as the deferred purchase price of property, all
conditional sale obligations of such obligor and all obligations of such
obligor under any title retention agreement (but excluding trade accounts
payable arising in the ordinary course of business), (iv) all obligations of
such obligor for the reimbursement of any letter of credit, banker's
acceptance, security purchase facility or similar credit transaction, (v) all
obligations of the type referred to in clauses (i) through (iv) above of other
Persons for the payment of which such obligor is responsible or liable as
obligor, guarantor or otherwise, and (vi) all obligations of the type referred
to in clauses (i) through (v) above of other persons secured by any lien on any
property or asset of such obligor (whether or not such obligation is assumed by
such obligor), except for (1) any such indebtedness issued after the date of
original issuance of the Securities that is by its terms subordinated to or
pari passu with the Securities and (2) any indebtedness (including all other
debt securities and guarantees in respect of those debt securities) initially
issued to any other trust, or a trustee of such trust, partnership, or other
entity affiliated with the Company that is, directly or indirectly, a financing
vehicle of the Company (a "Financing Entity") in connection with the issuance
by such Financing Entity of preferred securities or other securities which by
their terms rank pari passu with, or junior to, the Preferred Securities. The
Preferred Securities shall rank pari passu with the 6 1/4% Term Income
Deferrable Equity Securities of the Company and the 6-1/4% Trust Convertible
Preferred Securities of the Company. The Securities shall rank pari passu with
the 6 1/4% Convertible Junior Subordinated Interest Debentures Due 2016 of the
Company and the 6-1/4% Convertible Junior Subordinated Debentures Due 2012 of
the Company.
12. Conversion. The Holder of any Security has the right,
exercisable at any time beginning 60 days following August 12, 1997 and prior
to the close of business (New York time) on the date of the Security's
maturity, to convert the principal amount thereof (or any portion thereof that
is an integral multiple of $50) into shares of Common Stock at an initial
conversion rate of 1.047 shares of Common Stock for each Security (equivalent
to a conversion price of $47.75 per share of Common Stock of the Company),
subject to adjustment under certain circumstances, except that if a Security is
12
called for redemption, the conversion right will terminate at the close of
business on the Redemption Date.
To convert a Security, a Holder must (1) complete and sign a
conversion notice substantially in the form attached hereto, (2) surrender the
Security to a Conversion Agent, (3) furnish appropriate endorsements or
transfer documents if required by the Security Registrar or Conversion Agent
and (4) pay any transfer or similar tax, if required. Upon conversion, no
adjustment or payment will be made for interest or dividends, but if any Holder
surrenders a Security for conversion after the close of business on the Regular
Record Date for the payment of an installment of interest and prior to the
opening of business on the next Interest Payment Date, then, notwithstanding
such conversion, the interest payable on such Interest Payment Date will be
paid to the registered Holder of such Security on such Regular Record Date. In
such event, such Security, when surrendered for conversion, need not be
accompanied by payment of an amount equal to the interest payable on such
Interest Payment Date on the portion so converted. The number of shares
issuable upon conversion of a Security is determined by dividing the principal
amount of the Security converted by the conversion price in effect on the
Conversion Date. No fractional shares will be issued upon conversion but a cash
adjustment will be made for any fractional interest. The outstanding principal
amount of any Security shall be reduced by the portion of the principal amount
thereof converted into shares of Common Stock.
13. Registration Rights. The holders of the Preferred
Securities, the Securities, the Guarantee and the shares of Common Stock of
the Company issuable upon conversion of the Securities (collectively, the
"Registrable Securities") are entitled to the benefits of a Registration
Rights Agreement, dated as of August 12, 1997, among the Company and the
Initial Purchasers (the "Registration Rights Agreement"). Pursuant to the
Registration Rights Agreement, the Company has agreed for the benefit of the
holders of Registrable Securities 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, within
180 days following the date of issuance of the Registrable Securities (the
"Issue Date"), prepare and file a Shelf Registration Statement (as defined in
the Registration Rights Agreement) with the Commission relating to offers and
resales of the Registrable Securities, (ii) it will use its reasonable best
efforts to cause such Shelf Registration Statement to be declared effective
under the Securities Act (subject to certain exceptions under the Registration
Rights Agreement) no later than 270 days after the Issue Date and (iii) it
13
will use its reasonable best efforts to maintain such Shelf Registration
Statement continuously effective under the Securities Act until the second
anniversary of the effectiveness of the Shelf Registration Statement or such
earlier date as is provided in the Registration Rights Agreement (the
"Effectiveness Period").
The Company agrees that from and after the date on which any
Registration Default occurs, additional interest ("Liquidated Damages") will
accrue on the Securities, and accordingly, additional interest will accrue on
the Preferred Securities, in each case, from and including the day following
the day such Registration Default shall occur (or be deemed to occur as
described below) to but excluding the day on which such Registration Default
has been cured (or be deemed to be cured as described below). Liquidated
Damages will be paid quarterly in arrears, with the first quarterly payment due
on the first interest or distribution payment date, as applicable, following
the date on which such Liquidated Damages begin to accrue, and will accrue at a
rate per annum equal to an additional one-quarter of one percent (0.25%) of the
principal amount or liquidation amount, as applicable, to and including the
90th day following such Registration Default and one-half of one percent
(0.50%) thereof from and after the 91st day following such Registration
Default. Following the cure or deemed cure of a Registration Default,
Liquidated Damages will cease to accrue with respect to such Registration
Default.
"Registration Default" shall mean any of the
following events:
(i) on or prior to the 180th day following the Issue Date, a
Shelf Registration Statement relating to the offer and sale of the
Registrable Securities has
not been filed with the Commission;
(ii) on or prior to the 270th day following the Issue Date,
the Registrable Securities are not the subject of a Shelf Registration
Statement which has become effective;
(iii) the Registrable Securities are the subject of a Shelf
Registration Statement which was effective but which has ceased to be
effective for any reason (other than pursuant to clause (iv) or (v)
below) prior to the end of the Shelf Registration Period (as defined
in the Registration Rights Agreement);
(iv) the occurrence of a Suspension (as defined in the
Registration Rights Agreement); or
14
(v) 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 (iv) or (v) 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.
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), (ii) or (iii) above, the Shelf Registration Statement covering
such Registrable Securities shall become effective; or
(y) in the case of a Registration Default described in clause
(iv) or (v) 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 Commission or
publicly disseminated by press release or other release to a news
reporting service.
14. Registration, Transfer, Exchange and Denominations. As
provided in the Indenture and subject to certain limitations therein set forth,
the transfer of this Security is registrable in the Security Register, upon
surrender of this Security for registration of transfer at the office or agency
of the Company in New York, New York, duly endorsed by, or accompanied by a
written instrument of transfer in form satisfactory to the Company and the
Security Registrar duly executed by, the Holder hereof or his attorney duly
authorized in writing, and thereupon one or more new Securities, of authorized
denominations and for the
15
same aggregate principal amount, will be issued to the designated transferee
or transferees.
The Securities are issuable only in registered form without
coupons in denominations of $50 and integral multiples thereof. No service
charge shall be made for any such registration of transfer or exchange, but the
Company may require payment of a sum sufficient to cover any tax or other
governmental charge payable in connection therewith. Prior to due presentment
of this Security for registration of transfer, the Company, the Trustee and any
agent of the Company or the Trustee may treat the Person in whose name this
Security is registered as the owner hereof for all purposes, whether or not
this Security be overdue, and neither the Company, the Trustee nor any such
agent shall be affected by notice to the contrary. In the event of redemption
or conversion of this Security in part only, a new Security or Securities for
the unredeemed or unconverted portion hereof will be issued in the name of the
Holder hereof upon the cancellation hereof.
15. Persons Deemed Owners. Except as provided in Section 4
hereof, the registered Holder of a Security may be treated as its owner for
all purposes.
16. Unclaimed Money. If money for the payment of principal or
interest remains unclaimed for two years, the Trustee and the Paying Agent
shall pay the money back to the Company at its written request. After that,
holders of Securities entitled to the money must look to the Company for
payment unless an abandoned property law designates another Person and all
liability of the Trustee and such Paying Agent with respect to such money shall
cease.
17. Defaults and Remedies. The Securities shall have the
Events of Default as set forth in Section 501 of the Indenture. If an Event of
Default occurs and is continuing, the Trustee by notice to the Company or the
holders of at least 25% in aggregate principal amount of the then outstanding
Securities by notice to the Company and the Trustee may declare all the
Securities to be due and payable immediately.
The holders of a majority in principal amount of the
Securities then outstanding by written notice to the Trustee may rescind an
acceleration and its consequences if the rescission would not conflict with any
judgment or decree and if all existing Events of Default have been cured or
waived except nonpayment of principal or interest that has become due solely
because of the acceleration. Holders may not enforce the Indenture or the
Securities except as provided in the Indenture. Subject to certain limitations,
16
holders of a majority in principal amount of the then outstanding Securities
issued under the Indenture may direct the Trustee in its exercise of any trust
or power. The Company must furnish annually compliance certificates to the
Trustee. The above description of Events of Default and remedies is qualified
by reference to, and subject in its entirety by, the more complete description
thereof contained in the Indenture.
18. Amendments, Supplements and Waivers. The Indenture
permits, with certain exceptions as therein provided, the amendment thereof
and the modification of the rights and obligations of the Company and the
rights of the Holders of the Securities under the Indenture at any time by the
Company and the Trustee with the consent of the Holders of a majority in
aggregate principal amount of the Securities at the time Outstanding. The
Indenture also contains provisions permitting the Holders of specified
percentages in aggregate principal amount of the Securities at the time
Outstanding, on behalf of the Holders of all the Securities, to waive
compliance by the Company with certain provisions of the Indenture and certain
past defaults under the Indenture and their consequences. Any such consent or
waiver by the Holder of this Security shall be conclusive and binding upon
such Holder and upon all future Holders of this Security and of any Security
issued upon the registration of transfer hereof or in exchange herefor or in
lieu hereof, whether or not notation of such consent or waiver is made upon
this Security.
19. Trustee Dealings with the Company. The Trustee, in its
individual or any other capacity may become the owner or pledgee of the
Securities and may otherwise deal with the Company or an Affiliate with the
same rights it would have, as if it were not Trustee, subject to certain
limitations provided for in the Indenture and in the TIA.
Any Agent may do the same with like rights.
20. No Recourse Against Others. A director, officer, employee
or stockholder, as such, of the Company shall not have any liability for any
obligations of the Company under the Securities or the Indenture or for any
claim based on, in respect of or by reason of such obligations or their
creation. Each Holder of the Securities by accepting a Security waives and
releases all such liability. The waiver and release are part of the
consideration for the issue of the Securities.
21. Governing Law. THE INTERNAL LAWS OF THE STATE OF NEW YORK
SHALL GOVERN THE INDENTURE AND THE SECURITIES WITHOUT REGARD TO CONFLICT OF LAW
PROVISIONS THEREOF.
17
22. Authentication. The Securities shall not be valid until
authenticated by the manual signature of an authorized officer of the Trustee
or an authenticating agent.
23. Abbreviations. Customary abbreviations may be used in the
name of a Holder or an assignee, such as: TEN COM (= tenants in common), TEN
ENT (= tenants by the entireties), JT TEN (= joint tenants with right of
survivorship and not as tenants in common), CUST (= Custodian), and U/G/M/A (=
Uniform Gifts to Minors Act).
The Company will furnish to any Holder of the Securities upon
written request and without charge a copy of the Indenture. Request may be made
to:
CalEnergy Company, Inc.
302 South 36th Street, Suite 400
Omaha, Nebraska 68131
Attention of: General Counsel
18
ASSIGNMENT FORM
To assign this Security, fill in the form below:
(I) or (we) assign and transfer this Security to
- -------------------------------------------------------------------------------
(Insert assignee's social security or tax I.D. no.)
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
(Print or type assignee's name, address and zip code)
and irrevocably appoint _______________________________________________________
agent to transfer this Security on the books of the Company.
The agent may substitute another to act for him.
Your Signature:
------------------------------------------
(Sign exactly as your name appears on
the other side of this Security)
Date:
--------------------------
Signature Guarantee:*
---------------------------------------------
In connection with any transfer of any of the Securities evidenced by this
certificate, the undersigned confirms that such Securities are being:
- --------
* Signature must be guaranteed by a commercial bank, trust company or
member firm of the New York Stock Exchange.
19
CHECK ONE BOX BELOW
(1) [ ] exchanged for the undersigned's own account
without transfer; or
(2) [ ] transferred pursuant to and in compliance with
Rule 144A under the Securities Act of 1933; or
(3) [ ] transferred pursuant to and in compliance with
Regulation S under the Securities Act of 1933; or
(4) [ ] transferred pursuant to another available
exemption from the registration requirements of the
Securities Act of 1933; or
(5) [ ] transferred pursuant to an effective Shelf
Registration Statement (as defined in Section
1007 of the Indenture).
Unless one of the boxes is checked, the Trustee will refuse to register any of
the 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 Trustee may require, prior to registering any such transfer of
the Securities such legal opinions, certifications and other information as the
Company 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 Trustee may only permit
transfers for which box (5) has been checked.
-----------------------------
Signature
Signature Guarantee:*
- ---------------------------------- -------------------------------]
Signature must be guaranteed Signature
- --------
* Signature must be guaranteed by a commercial bank, trust company or
member firm of the New York Stock Exchange.
20
[TO BE COMPLETED BY PURCHASER IF (2) ABOVE IS CHECKED.
The undersigned represents and warrants that it is purchasing
this Security 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
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 Company 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]
21
ELECTION TO CONVERT
To: CalEnergy Company, Inc.
The undersigned owner of this Security hereby irrevocably
exercises the option to convert this Security, or the portion below designated,
into Common Stock of CALENERGY COMPANY, INC. in accordance with the terms of
the Indenture referred to in this Security, and directs 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.
Any holder, upon the exercise of its conversion rights in
accordance with the terms of the Indenture and the Security, agrees to be bound
by the terms of the Registration Agreement relating to the Common Stock
issuable upon conversion of the Securities.
Dated: ___________
in whole _____
Portions of Security to be
converted ($50 or integral
multiples thereof):
$
-----------------
----------------------------------------
Signature (for conversion only)
Please Print or Typewrite Name
and Address, Including Zip
Code, and Social Security or
Other Identifying Number
----------------------------------------
----------------------------------------
----------------------------------------
Signature Guarantee:*
-------------------
- --------
* Signature must be guaranteed by a commercial bank, trust company or
member firm of the New York Stock Exchange.
A-1
Exhibit C
Purchase Agreement
4,500,000
CALENERGY CAPITAL TRUST III
6 1/2% CONVERTIBLE PREFERRED SECURITIES
(LIQUIDATION AMOUNT $50 PER CONVERTIBLE PREFERRED SECURITY)
GUARANTEED TO A LIMITED EXTENT BY, AND
CONVERTIBLE INTO COMMON STOCK OF,
CALENERGY COMPANY, INC.
PURCHASE AGREEMENT
August 7, 1997
CREDIT SUISSE FIRST BOSTON CORPORATION
Eleven Madison Avenue
New York, N.Y. 10010
LEHMAN BROTHERS INC.
Three World Financial Center
New York, New York 10285
Dear Sirs:
CalEnergy Capital Trust III, a statutory business trust formed under
the laws of the State of Delaware (the "Trust"), proposes to issue and sell to
you (the "Initial Purchasers") an aggregate of 4,500,000 (the "Firm
Securities") of its 6 1/2% Convertible Preferred Securities (liquidation
preference $50 per convertible preferred security) (the "Preferred
Securities"). In addition, the Trust proposes to grant to the Initial
Purchasers an option to purchase up to an additional 900,000 Preferred
Securities on the terms and for the purposes set forth in Section 3 (the
"Optional Securities"). The Firm Securities and the Optional Securities which
the Initial Purchasers may elect to purchase pursuant to Section 3 hereof are
herein collectively called the "Offered Securities."
It is understood that the Initial Purchasers will resell the Offered
Securities only inside the United States to qualified institutional buyers in
reliance on Rule 144A ("Rule 144A") under the Securities Act of 1933, as
amended (the "Securities Act"), and outside the United States to certain
persons in reliance on Regulation S under the Securities Act ("Regulation S").
The Preferred Securities represent undivided beneficial ownership
interests in the assets of the Trust, guaranteed by CalEnergy Company, Inc.
(the "Guarantor") as to the payment of distributions, and as to payments on
liquidation or redemption, to the extent set forth in a guarantee agreement
(the "Guarantee") between the Guarantor and The Bank of New York, as trustee
(the "Guarantee Trustee"). The proceeds of the sale by the Trust of the
Offered Securities and its Common Securities (liquidation preference $50 per
Common Security) (the "Common Securities") are to be invested in 6 1/2%
Convertible Junior Subordinated Debentures Due 2027 (the "Junior Subordinated
Debentures") of the Guarantor, to be issued pursuant to an Indenture (the
"Indenture") between the Guarantor and The Bank of New York, as trustee (the
"Debenture Trustee"). The Preferred Securities are convertible into shares of
Common Stock, par value $0.0675 per share (the "Common Stock"), of the
Guarantor pursuant to the Indenture. Holders (including subsequent
transferees) of the Offered Securities will have the registration rights set
forth in the Registration Rights Agreement (the "Registration Rights
Agreement") to be entered into among the Trust, the Guarantor and the Initial
Purchasers. Pursuant to the Registration Rights Agreement, the Guarantor and
the Trust have agreed to file with the Securities and Exchange Commission (the
"Commission") a shelf registration statement (the "Shelf Registration
Statement") pursuant to Rule 415 under the Securities Act, to register sales
of the Preferred Securities, the Guarantee, the Junior Subordinated Debentures
and the shares of Common Stock issuable upon conversion thereof (together with
the related Rights (as defined in the Offering Document (as defined below))
(collectively, the "Securities") following the sale of the Offered Securities
contemplated hereby.
This is to confirm the agreement concerning the purchase of the Offered
Securities by the Initial Purchasers.
1. Representations and Warranties of the Trust and the Guarantor. Each
of the Trust and the Guarantor jointly and severally represents and warrants
to, and agrees with, the Initial Purchasers that:
(a) An offering circular relating to the Offered Securities to be
offered by the Initial Purchasers has been prepared by the Trust and the
Guarantor. Such offering circular, as amended or supplemented as of the date
of this Agreement, together with the documents incorporated by reference
therein are hereinafter collectively referred to as the "Offering Document."
On the date of this Agreement, the Offering Document does not include any
untrue statement of a material fact or omit to state any material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading. The preceding
sentence does not apply to statements in or omissions from the Offering
Document based upon written information furnished to the Guarantor by either
Initial Purchaser specifically for use therein, it being understood and agreed
that the only such information is that described as such in Section 8(e). The
documents incorporated by reference in the Offering Document (the "Exchange
Act Reports"), when they became effective or were last amended or filed with
the Commission, as the case may be, conformed in all material respects to the
requirements of the Securities Act or the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), as applicable, and the rules and regulations
(the "Rules and Regulations") of the Commission and none of such documents
contained an untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading in light of the circumstances under which
they were made, and any further documents so filed and incorporated by
reference in the Offering Document, when such documents become effective or
are filed with the Commission, as the case may be, shall conform in all
material respects to the requirements of the Securities Act and the Exchange
Act, as applicable, and the Rules and Regulations and shall not contain an
untrue statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein not
misleading in light of the circumstances under which they were made.
2
(b) The Trust has been duly created and is validly existing as a
statutory business trust in good standing under the Business Trust Act of the
State of Delaware (the "Delaware Business Trust Act") with the power and
authority to own its property and conduct its business as described in the
Offering Document, and has conducted and will conduct no business other than
the transactions contemplated by this Agreement and the Offering Document; the
Trust is a "grantor trust" for federal income tax purposes under existing law;
the Trust is not a party to or bound by any agreement or instrument other than
this Agreement, the Amended and Restated Declaration of Trust (the "Trust
Agreement") between the Guarantor and the trustees named therein (the
"Trustees") and the agreements and instruments contemplated by the Trust
Agreement and the Offering Document; the Trust has no liabilities or
obligations other than those arising out of the transactions contemplated by
this Agreement and the Trust Agreement and described in the Offering Document;
and the Trust is not a party to or subject to any action, suit or proceeding
of any nature.
(c) The Guarantor, each Subsidiary (as defined below) and each Joint
Venture (as defined below) have been duly organized and are validly existing
and, if applicable, in good standing under the laws of their respective
jurisdictions of organization as a corporation, limited liability company or
partnership, as the case may be, and have the power and authority to own,
lease and operate their property and conduct their businesses as described in
the Offering Document; the Guarantor, the Subsidiaries and the Joint Ventures
are duly qualified to do business and are in good standing as foreign
corporations or foreign partnerships, as the case may be, in each
jurisdiction, domestic or foreign, in which such registration or qualification
or good standing is required (whether by reason of the ownership or leasing of
property, the conduct of business or otherwise), except where the failure to
so register or qualify or be in good standing is not reasonably likely to have
a material adverse effect on the financial condition, business or results of
operations of the Guarantor, the Subsidiaries and Joint Ventures taken as a
whole. For purposes of this Agreement, (A) the term "Subsidiary" shall mean
the entities listed in Schedule B hereto and (B) the term "Joint Venture"
shall mean the entities listed in Schedule C hereto, it being understood that
such term means the general or limited partnership or other joint venture
entity and not the individual general or limited partners or other joint
venturers thereof. The Subsidiaries listed in Schedule B are all the material
direct and indirect "subsidiaries" of the Guarantor, as such term is defined
in Rule 405 of the Rules and Regulations, and are all of the "Significant
Subsidiaries" of the Guarantor, as such term is defined in Rule 1-02 of
Regulation S-X.
(d) All the outstanding shares of capital stock of the Guarantor have
been duly and validly authorized and issued and are fully-paid and
nonassessable; all the outstanding shares of capital stock of each Subsidiary
have been duly and validly authorized and issued and are fully-paid and
nonassessable; and except as otherwise set forth in Schedule B hereto or
disclosed in or contemplated by the Offering Document, all outstanding shares
of capital stock of each Subsidiary are owned beneficially by the Guarantor
free and clear of any material claims, liens, encumbrances and security
interests. All of the partnership interests in Joint Ventures beneficially
owned by the Guarantor (as reflected in Schedule C) have been duly and validly
authorized and issued and, except as otherwise set forth in Schedule C hereto
or disclosed in or contemplated by the Offering Document, are owned
beneficially by the Guarantor free and clear of any material claims, liens,
encumbrances and security interests.
(e) The Offered Securities have been duly and validly authorized by the
Trust, and, when issued and delivered against payment thereof as provided
herein, will be duly and validly issued and fully-paid and nonassessable
undivided beneficial interests in the assets of the Trust and will conform in
all material respects to the description thereof contained in the Offering
Document; the issuance of the Offered Securities is not subject to preemptive
or other similar rights which have not been waived; the Offered Secu-
3
rities will have the rights set forth in the Trust Agreement, and the Offered
Securities, when issued and delivered against payment therefor as provided
herein, will be, and the Trust Agreement, when duly executed and delivered by
all parties thereto, will be, valid and binding obligations of the Trust,
subject to bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and other laws of general applicability relating to creditors'
rights and to general equity principles; the Offered Securities will 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.
(f) The Common Securities have been duly and validly authorized by the
Trust and, upon delivery by the Trust to the Guarantor against payment
therefor as contemplated by the Offering Document, will be duly and validly
issued and fully-paid and nonassessable undivided beneficial interests in the
assets of the Trust and will conform in all material respects to the
description thereof contained in the Offering Document; the issuance of the
Common Securities is not subject to preemptive or other similar rights; and
all of the issued and outstanding Common Securities of the Trust are directly
owned by the Guarantor free and clear of any material claims, liens,
encumbrances and security interests.
(g) The Registration Rights Agreement has been duly authorized by the
Trust and the Guarantor and, when executed and delivered, will conform in all
material respects to the description thereof contained in the Offering
Document. The Registration Rights Agreement when validly executed and
delivered by the Trust and the Guarantor will constitute a valid and legally
binding obligation of the Trust and the Guarantor and will be enforceable in
accordance with its terms, subject to bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium and other laws of general applicability
relating to or affecting creditors' rights and to general equity principles
and except as the right to indemnity and contribution under the Registration
Rights Agreement may be limited by state or federal securities laws or the
public policy underlying such laws.
(h) The Guarantee, the Junior Subordinated Debentures, the Trust
Agreement and the Indenture (the Guarantee, the Junior Subordinated
Debentures, the Trust Agreement and the Indenture being collectively referred
to as the "Guarantor Agreements") have each been duly authorized and when
validly executed and delivered by the Guarantor and, in the case of the
Guarantee, by the Guarantee Trustee, in the case of the Trust Agreement, by
the Trustees and, in the case of the Indenture, by the Debenture Trustee, and,
in the case of the Junior Subordinated Debentures, when validly issued by the
Guarantor and validly authenticated and delivered by the Debenture Trustee and
paid for by the Trust, will constitute valid and legally binding obligations
of the Guarantor, enforceable in accordance with their respective terms,
subject to bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and other laws of general applicability relating to or affecting
creditors' rights and to general equity principles; the Junior Subordinated
Debentures are entitled to the benefits of the Indenture, subject to
bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and
other laws of general applicability relating to or affecting creditors' rights
and to general equity principles; and the Guarantor Agreements will conform in
all material respects to the descriptions thereof in the Offering Document.
(i) When the Offered Securities are delivered and paid for pursuant to
this Agreement on each Closing Date (as defined below), such Offered
Securities will be exchangeable for Junior Subordinated Debentures which will
be convertible into shares of Common Stock ("Underlying Shares") of the
Guarantor in accordance with the Trust Agreement and the Indenture; the
Underlying Shares initially issuable upon conversion of such Offered
Securities have been duly authorized and reserved for issuance upon such
conversion and, when issued upon such conversion, will be validly issued,
fully-paid and nonassessable; the outstanding shares of Common Stock of the
Guarantor conform in all material respects to
4
the description thereof contained in the Offering Document; and the
stockholders of the Guarantor have no preemptive rights with respect to the
Offered Securities, the Junior Subordinated Debentures or the Underlying
Shares which have not been waived.
(j) The use of the proceeds of the offering of the Offered Securities
as described in the Offering Document has been duly authorized by all
necessary action on the part of each of the Trust and the Guarantor.
(k) Other than pursuant to this Agreement, there are no contracts,
agreements or understandings between either the Trust or the Guarantor and any
person that would give rise to a valid claim against the Trust, the Guarantor
or either Initial Purchaser for a brokerage commission, finder's fee or other
like payment.
(l) The issue and sale of Offered Securities, the exchange of the
Junior Subordinated Debentures for Preferred Securities, the execution,
delivery and performance of this Agreement and the Registration Rights
Agreement, the compliance by the Trust and the Guarantor with all of the
provisions of this Agreement, the purchase of the Junior Subordinated
Debentures by the Trust and the consummation of the transactions contemplated
herein and therein will not conflict with or result in a breach of any of the
terms or provisions of, or constitute a default under, any indenture,
mortgage, deed of trust, loan agreement or other agreement or instrument to
which the Trust is a party or by which the Trust is bound or to which any of
the property or assets of the Trust is subject, nor will such action result in
any violation of the provisions of its certificate of trust, the Trust
Agreement or any statute or any order, rule or regulation of any court or
governmental agency or body having jurisdiction over the Trust or any of its
properties, except for such conflicts, breaches, defaults or violations that
would not have a material adverse effect on the financial condition, business
or results of operations of the Trust.
(m) The issuance by the Guarantor of the Guarantee, the compliance by
the Guarantor with all of the provisions of this Agreement, the issuance upon
exchange and conversion of the Underlying Shares, the execution, delivery and
performance by the Guarantor of the Registration Rights Agreement and the
Guarantor Agreements and the consummation of the transactions contemplated
herein and therein and the use of the proceeds of the offering of the Offered
Securities as described in the Offering Document will not (A) conflict with
the corporate charter or by-laws or partnership agreement of the Guarantor,
any Subsidiary or any Joint Venture, (B) conflict with, result in the creation
or imposition of any lien, charge or other encumbrance (other than as
contemplated by the Indenture) upon any asset of the Guarantor, any Subsidiary
or any Joint Venture pursuant to the terms of, or constitute a breach of, or
default under, any agreement, indenture or other instrument to which the
Guarantor, any Subsidiary or any Joint Venture is a party or by which the
Guarantor, any Subsidiary or any Joint Venture is bound or to which any of the
properties of the Guarantor, any Subsidiary or any Joint Venture is subject,
or (C) result in a violation of any statute, any rule, regulation, order,
judgment or decree of any court or governmental agency, body or authority
having jurisdiction over the Guarantor, any Subsidiary or any Joint Venture or
any of their properties where any such conflicts, encumbrances, breaches,
defaults or violations under clauses (B) or (C), individually or in the
aggregate, is reasonably likely to (i) have a material adverse effect on the
financial condition, business or results of operations of the Guarantor, the
Subsidiaries and Joint Ventures taken as a whole or (ii) impair the validity
or enforceability of this Agreement, the Registration Rights Agreement, the
Guarantor Agreements or the Securities.
(n) Assuming the accuracy of the representations and warranties of the
Initial Purchasers set forth in Section 2 of this Agreement, except (A) in
connection with the registration of the Securities pursuant
5
to the Registration Rights Agreement, (B) as to state or foreign securities
laws or by the regulations of the National Association of Securities Dealers,
Inc. (the "NASD") and (C) consents of third parties which have been obtained,
no consent, approval, authorization or order of, or filing or registration by
the Trust, the Guarantor, any Subsidiary or, to the best of the Trust's and
Guarantor's knowledge, any Joint Venture with, any court, governmental agency
or third party is required in connection with the issuance by the Guarantor of
the Guarantee, the compliance by the Guarantor with all of the provisions of
this Agreement, the issuance and sale of the Offered Securities by the Trust,
the exchange of the Junior Subordinated Debentures for the Preferred
Securities or the purchase of the Junior Subordinated Debentures by the Trust,
the issuance upon exchange and conversion of the Underlying Shares, the
execution, delivery and performance by the Guarantor and the Trust of the
Registration Rights Agreement and by the Guarantor of the Guarantor Agreements
and the consummation of the transactions herein and therein contemplated and
the use of the proceeds of the offering of the Offered Securities as described
in the Offering Document.
(o) The Trust has full power and authority to authorize, issue and sell
the Offered Securities as contemplated by this Agreement and to execute,
deliver and perform this Agreement and the Registration Rights Agreement.
(p) This Agreement has been duly authorized, executed and delivered by
the Trust and the Guarantor.
(q) Except as disclosed in the Offering Document, the Trustee (as
defined in the Offering Document) will on the Closing Date have good and valid
title to all the Junior Subordinated Debentures, free from liens, encumbrances
and defects that would materially affect the value thereof or materially
interfere with the use made or to be made thereof by the Trust.
(r) Except as disclosed in or contemplated by the Offering Document,
the Guarantor, each Subsidiary and each Joint Venture holds, as applicable,
good and valid title to, or valid and enforceable leasehold or contractual
interests in, all real properties and all other properties and assets owned or
leased by or held under contract by each of them that are material to the
business of the Guarantor and the Subsidiaries and Joint Ventures taken as a
whole, and free from liens, encumbrances and defects that would materially
interfere with the use made or to be made thereof by them.
(s) Except as disclosed in or contemplated by the Offering Document,
the Guarantor, the Subsidiaries and the Joint Ventures carry, or are covered
by, insurance in such amounts and covering such risks as is customary for
similarly situated companies in the Guarantor's, such Subsidiaries' and such
Joint Ventures' industries, respectively. Each of the foregoing insurance
policies is valid and in full force and effect, and no event has occurred and
is continuing that permits, or after notice or lapse of time or both would
permit, modifications or terminations of the foregoing that, individually or
in the aggregate, is reasonably likely to have a material adverse effect on
the financial condition, business or results of operations of the Guarantor,
the Subsidiaries and Joint Ventures taken as a whole.
(t) Except as disclosed in or contemplated by the Offering Document,
the Guarantor, each Subsidiary and each Joint Venture (i) has obtained each
license, permit, certificate, franchise or other governmental authorization
which is material to the ownership of their properties or to the conduct of
their businesses as described in or contemplated by the Offering Document and
(ii) is in compliance with all terms and conditions of such license, permit,
certificate, franchise or other governmental authorization, except (A) in
either case where the failure to do so is not reasonably likely to have,
individually or in
6
the aggregate, a material adverse effect on the financial condition, business
or results of operations of the Guarantor, the Subsidiaries and Joint Ventures
taken as a whole, (B) permits, consents and approvals that may be required for
future drilling or operating activities which are ordinarily deemed to be
ministerial in nature and which are anticipated to be obtained in the ordinary
course and (C) permits, consents and approvals for developmental or
construction activities which have not yet been obtained but which have been
or will be applied for in the course of development or construction and which
are anticipated to be obtained in the ordinary course.
(u) There is no legal or governmental action, suit or proceeding before
any court, governmental agency, body or authority, domestic or foreign, now
pending or, to the knowledge of the Guarantor, threatened against, or, to the
knowledge of the Guarantor, involving, the Guarantor, any Subsidiary or any
Joint Venture that, if determined adversely to the Guarantor, any Subsidiary
or any Joint Venture, would be reasonably likely to have, individually or in
the aggregate, a material adverse effect on the financial condition, business
or results of operations of the Guarantor, the Subsidiaries and Joint Ventures
taken as a whole, or on the ability of the Guarantor to perform its
obligations under this Agreement, the Registration Rights Agreement, the
Guarantor Agreements or the Securities.
(v) The Guarantor, the Subsidiaries and the Joint Ventures are
currently conducting their respective businesses as described in the Offering
Document.
(w) There are no contracts or other documents that would be required to
be described in or filed as exhibits to the Offering Document if it were a
registration statement under the Securities Act and that have not been
described in the Offering Document or filed as exhibits to documents
incorporated by reference in the Offering Document.
(x) There is no relationship, direct or indirect, that exists between
or among the Guarantor on the one hand, and the directors, officers,
stockholders, customers or suppliers of the Guarantor on the other hand, that
would be required to be described in the Offering Document if it were a
registration statement under the Securities Act and that has not been so
described in the Offering Document.
(y) There is no labor problem or disturbance with the persons employed
by the Guarantor, any Subsidiary or any Joint Venture that exists or, to the
knowledge of the Guarantor, that is threatened and that might reasonably be
expected to have a material adverse effect on the financial condition,
business or results of operations of the Guarantor, the Subsidiaries and Joint
Ventures taken as a whole.
(z) Neither the Guarantor nor any person who is a member of a group
which is under common control with the Guarantor and the Subsidiaries and
Joint Ventures, who together with the Guarantor, the Subsidiaries and the
Joint Ventures is treated as a single employer ("ERISA Affiliate") within the
meaning of Section 414(b), (c), (m) or (o) of the Internal Revenue Code of
1986, as amended from time to time (the "Code"), or Section 4001(b) of the
Employee Retirement Income Security Act of 1974, as amended from time to time
("ERISA"), has established, sponsored, maintained or had any obligation to
contribute to any employee benefit plans within the meaning of Section 3(3) of
ERISA which are subject to Title IV of ERISA or Section 412 of the Code.
Except where it could not reasonably be expected to result in a material
adverse effect on the financial condition, business or results of operations
of the Guarantor, the Subsidiaries and Joint Ventures taken as a whole, (i)
all employee benefit plans within the meaning of Section 3(3) of ERISA
established, sponsored or maintained for or on behalf of the employees,
officers or directors of the Guarantor, the Subsidiaries, Joint Ventures or
any ERISA Affiliate ("Employee Benefit Plans") are in compliance with all
applicable provisions of ERISA and the Code and the regulations and
7
published interpretations thereunder and each such Employee Benefit Plan that
is intended to be qualified under Code Section 401(a) has been determined by
the Internal Revenue Service to be so qualified and (ii) no material liability
or obligation has been incurred or is reasonably expected to be incurred by
the Guarantor, the Subsidiaries or Joint Ventures or any ERISA Affiliate with
respect to any Employee Benefit Plan.
(aa) None of the Trust, the Guarantor, any Subsidiary or any Joint
Venture (i) is in violation of its respective declaration of trust, charter,
by-laws, partnership or operating agreements, (ii) is in default, and no event
exists and is continuing that, with notice or lapse of time or both, would
constitute such a default, in the due performance and observance of any
material term contained in any lease, license, indenture, mortgage, deed of
trust, note, bank loan or other evidence of indebtedness or any other
agreement, understanding or instrument to which the Trust, the Guarantor, any
Subsidiary or any Joint Venture is a party or by which the Trust, the
Guarantor, any Subsidiary or any Joint Venture or any property of the Trust,
the Guarantor, any Subsidiary or any Joint Venture may be bound or affected,
which default, individually or in the aggregate, is reasonably likely to have
a material adverse effect on the financial condition, business or results of
operations of the Trust or the Guarantor, the Subsidiaries and Joint Ventures
taken as a whole, or (iii) is in violation of any law, ordinance, governmental
rule or regulation or court decree to which it may be subject, which
violation, individually or in the aggregate, is reasonably likely to have a
material adverse effect on the financial condition, business or results of
operations of the Trust or the Guarantor, the Subsidiaries and Joint Ventures
taken as a whole or would materially interfere with the execution, delivery
and performance of this Agreement, the Registration Rights Agreement and the
Guarantor Agreements, the consummation of the transactions contemplated herein
and therein, the issuance and sale of the Securities and the use of the
proceeds of the offering of the Offered Securities as described in the
Offering Document.
(ab) There has been no storage, disposal, generation, manufacture,
refinement, transportation, handling or treatment of toxic wastes, hazardous
wastes or hazardous substances, pollutants or contaminants by the Guarantor,
any Subsidiary or any Joint Venture (or, to the knowledge of the Guarantor,
any of their predecessors in interest) at, upon or from any of the property
now or previously owned or leased by the Guarantor, any Subsidiary or any
Joint Venture in violation of any applicable law, ordinance, rule, regulation,
order, judgment, decree or permit or which would require remedial action under
any applicable law, ordinance, rule, regulation, order, judgment, decree or
permit, except for any violation or remedial action which does not have, or
would not be reasonably likely to have, individually or in the aggregate with
all such violations and remedial actions, a material adverse effect on the
financial condition, business or results of operations of the Guarantor, the
Subsidiaries and Joint Ventures taken as a whole; there has been no material
spill, discharge, leak, emission, injection, escape, dumping or release of any
kind onto such property or into the environment surrounding such property of
any toxic wastes, solid wastes, hazardous wastes or hazardous substances,
pollutants or contaminants due to or caused by the Guarantor, any Subsidiary
or any Joint Venture or with respect to which the Guarantor, any Subsidiary or
any Joint Venture has knowledge, except for any such spill, discharge, leak,
emission, injection, escape, dumping or release which does not have, or would
not be reasonably likely to have, individually or in the aggregate with all
such spills, discharges, leaks, emissions, injections, escapes, dumpings and
releases, a material adverse effect on the financial condition, business or
results of operations of the Guarantor, the Subsidiaries and Joint Ventures
taken as a whole; and the terms "hazardous wastes", "toxic wastes" and
"hazardous substances" shall have the meanings specified in any applicable
local, state, federal and foreign laws or regulations with respect to
environmental protection.
8
(ac) None of the Trust, the Guarantor or any Subsidiary or any Joint
Venture is an open-end investment company, unit investment trust or
face-amount certificate company that is or is required to be registered under
Section 8 of the United States Investment Company Act of 1940, as amended (the
"1940 Act"), nor is it a closed-end investment company required to be
registered, but not registered, thereunder; and each of the Trust, the
Guarantor, each Subsidiary and each Joint Venture is not and, after giving
effect to the offering and sale of the Offered Securities and the application
of the proceeds thereof as described in the Offering Document, will not be an
"investment company", or, to the best knowledge of the Guarantor after due
inquiry, a company controlled by an "investment company" within the meaning of
the 1940 Act.
(ad) The Guarantor, each Subsidiary and each Joint Venture has filed
all federal, state and local income and franchise tax returns required to be
filed through the date hereof, or has filed extensions in accordance with
applicable law, and has paid all taxes required to be paid through the date
hereof thereon, except for such failures to file or pay that would not,
individually or in the aggregate, be reasonably likely to have a material
adverse effect on the financial condition, business or results of operations
of the Guarantor, the Subsidiaries and Joint Ventures taken as a whole, and no
tax deficiency has been determined adversely to the Guarantor, any Subsidiary
or any Joint Venture that has had (nor does the Guarantor have any knowledge
of any tax deficiency which, if determined adversely to the Guarantor, any
Subsidiary or any Joint Venture would be reasonably likely to have) a material
adverse effect on the financial condition, business or results of operations
of the Guarantor, the Subsidiaries and Joint Ventures taken as a whole.
(ae) The financial statements and the related notes and schedules
included or incorporated by reference in the Offering Document fairly present
the financial position, the results of operations and the cash flows of the
Guarantor and its consolidated subsidiaries at the respective dates and for
the respective periods to which they apply; and such financial statements and
the related notes and schedules have been prepared in conformity with United
States generally accepted accounting principles applied on a consistent basis
throughout the periods therein specified. The historical information under the
caption "Capitalization" in the Offering Document is accurately described as
of the date presented therein.
(af) Since the date of the latest financial statements included in the
Offering Document (i) there has been no material adverse change, nor any
development or event involving a prospective material adverse change, in the
financial condition, business or results of operations of the Guarantor, the
Subsidiaries and Joint Ventures taken as a whole, and (ii) except as disclosed
in or contemplated by the Offering Document, there have not been any
transactions entered into by the Guarantor, the Subsidiaries or any Joint
Venture, other than those in the ordinary course of business, which are
material to the Guarantor, the Subsidiaries and Joint Ventures taken as a
whole; and, except as disclosed in the Offering Document, there has been no
dividend or distribution of any kind declared, paid or made by the Guarantor
on any class of its capital stock.
(ag) The pro forma financial information incorporated by reference in
the Offering Document presents fairly the information shown therein, has been
prepared in accordance with the Commission's rules and guidelines with respect
to pro forma financial information, has been properly compiled on the pro
forma bases described therein, and, in the opinion of the Guarantor, the
assumptions used in the preparation thereof are reasonable and the adjustments
used therein are appropriate to give effect to the transactions or
circumstances referred to therein.
9
(ah) The Guarantor has complied with all applicable provisions of
Section 517.075, Florida Statutes (Chapter 92-198, Laws of Florida).
(ai) Deloitte & Touche LLP ("Deloitte & Touche") and Ernst & Young, who
have certified certain financial statements of the Guarantor or of businesses
acquired by the Guarantor, as applicable, and whose respective reports appear
in the Offering Document and/or are incorporated by reference therein, are and
were independent public accountants as required by the Securities Act and the
Rules and Regulations during the periods covered by the financial statements
on which they reported which are contained or incorporated in the Offering
Document.
(aj) (i) Each of the operational electric generation facilities
("Plants") owned in whole or in part, directly or indirectly by (A) the
Guarantor, (B) the Subsidiaries or (C) the Joint Ventures which is located in
the United States is a "qualifying cogeneration facility" or a "qualifying
small power production facility" (either or both of which are hereinafter
referred to as a "QF"), as such terms are defined under the Federal Power Act,
as amended ("FPA"), and the regulations thereunder, and has continuously been
in compliance with the requirements for being a QF since it commenced sales of
electricity; (ii) with respect to each Plant under development and located in
the United States, either (x) to the extent that the Guarantor, the
Subsidiaries or the Joint Ventures plan to act as the owner and/or operator of
any one of the Plants under development by the Guarantor, the Subsidiaries or
the Joint Ventures and located in the United States (as currently configured
or as currently anticipated to be configured), that owner and/or operator
satisfies or is currently expected to satisfy current regulatory requirements
for being an "exempt wholesale generator" ("EWG"), as such term is defined
under the FPA, the Public Utility Holding Company Act of 1935, as amended
("PUHCA") and the regulations thereunder or (y) each of the Plants under
development by the Guarantor, the Subsidiaries or the Joint Ventures and
located in the United States (as currently configured or as currently
anticipated to be configured) will be a QF and will be in continuous
compliance with the requirements for being a QF; (iii) the owner or operator
of each of the Plants under development by the Guarantor, the Subsidiaries or
Joint Ventures and located outside the United States (as currently configured
or as currently anticipated to be configured) satisfies or is currently
expected to satisfy current regulatory requirements for being either (A) an
EWG or (B) a "foreign utility company," as such term is defined under PUHCA
and the regulations thereunder; (iv) none of the entities identified in clause
(A) or (B) of subparagraph (i) above owns or operates or will own or operate
any electric distribution facilities or any electric transmission facilities
in or outside of the United States other than electric transmission facilities
that have been or will be approved by the Federal Energy Regulatory Commission
as being part of a QF, or the owner and/or operator of which will have
qualified as EWG's or as "foreign utility companies" as such terms are defined
under the FPA, PUHCA and the regulations thereunder; and (v) none of the
entities identified in clause (A), (B) or (C) of subparagraph (i) above is, or
is subject to regulation as, a "public utility holding company" or a
"subsidiary company" of a "public utility holding company," as those terms are
defined under PUHCA, or is subject to regulation under the FPA, other than as
contemplated by 18 C.F.R Section 292.601(c), or, except as described in or
contemplated by the Offering Document, subject to regulation by any state law
or foreign governmental law with respect to rates or the financial or
organizational regulation of electric utilities.
(ak) No securities of the same class (within the meaning of Rule
144A(d)(3) under the Securities Act) as the Offered Securities are listed on
any national securities exchange registered under Section 6 of the Exchange
Act or quoted in a U.S. automated inter-dealer quotation system.
(al) Neither the Trust nor the Guarantor nor any of their respective
affiliates nor (assuming the accuracy of the representations of the Initial
Purchasers set forth herein) any person acting on their behalf
10
has made offers or sales of securities under circumstances that would require
the registration of any of the Securities under the Securities Act.
(am) The Offered Securities meet the eligibility requirements of Rule
144A(d)(3) under the Securities Act.
(an) Assuming the accuracy of the representations of the Initial
Purchasers set forth herein, the offer and sale of the Offered Securities in
the manner contemplated by this Agreement will be exempt from the registration
requirements of the Securities Act by reason of Section 4(2) thereof and Rule
144A thereunder; and it is not necessary to qualify an indenture in respect of
any of the Securities under the United States Trust Indenture Act of 1939, as
amended (the "Trust Indenture Act"), except as contemplated by the
Registration Rights Agreement.
(ao) Neither the Guarantor nor the Trust nor any of their respective
affiliates nor (assuming the accuracy of the representations of the Initial
Purchasers set forth herein) any person acting on behalf of any of the
foregoing (i) has, within the six-month period prior to the date hereof,
offered or sold in the United States or to any U.S. person (as such terms are
defined in Regulation S) the Offered Securities or any security of the same
class or series as the Offered Securities or (ii) has offered or will offer or
sell the Offered Securities by means of any form of general solicitation or
general advertising within the meaning of Rule 502(c) under the Securities
Act. The Guarantor and the Trust have not entered and will not enter into any
contractual arrangement with respect to the distribution of the Offered
Securities except for this Agreement and the Registration Rights Agreement.
(ap) The cash tender offer (the "Tender Offer") by CE Electric (NY),
Inc. (the "Offeror") to acquire that number of shares of common stock, par
value $6.662/3 per share ("NYSE&G shares") of New York State Electric & Gas
Corporation ("NYSE&G") which, together with the NYSE&G shares beneficially
owned by the Company, would represent 9.9% of the total number of NYSE&G
shares outstanding, and the consummation of the transactions contemplated
thereby, did not and will not (A) conflict with the corporate charter of the
Guarantor or the Offeror, (B) constitute a breach of, or default under, any
agreement, indenture or other instrument to which the Guarantor, any
Subsidiary or any Joint Venture is a party or by which the Guarantor, any
Subsidiary or any Joint Venture is bound or to which any of the properties of
the Guarantor, any Subsidiary or any Joint Venture is subject, or (C) result
in a violation of any statute, rule, regulation, order, judgment or decree of
any court or governmental agency, body or authority, including the rules and
regulations of the New York Stock Exchange, having jurisdiction over the
Offeror or the Tender Offer; except in the case of clauses (B) and (C) such
breaches, defaults or violations which, individually or in the aggregate, did
not have a material adverse effect on the financial condition, business or
results of operations of the Guarantor, the Subsidiaries and Joint Ventures
taken as a whole.
(aq) Except as disclosed in or contemplated by the Offering Memorandum,
there are no statutes, rules, regulations, orders, judgments or decrees of any
courts or governmental agencies having jurisdiction over the Guarantor, the
Offeror or NYSE&G, that prohibit the acquisition by the Offeror of the
outstanding common stock of NYSE&G not already owned by it.
11
2. Representations, Warranties and Agreements of the Initial
Purchasers. Each of the Initial Purchasers represents, warrants and agrees as
follows:
(a) Each Initial Purchaser severally represents and warrants that it
is a "qualified institutional buyer" within the meaning of Rule 144A and that
it will offer the Offered Securities for resale only upon the terms and
conditions set forth in this Agreement and in the Offering Document.
(b) The Initial Purchasers severally acknowledge that they are
purchasing the Offered Securities pursuant to a private sale exemption from
registration under the Securities Act, and that the Offered Securities have
not been registered under the Securities Act and may not be offered or sold
within the United States or to, or for the account or benefit of, U.S. persons
except pursuant to an exemption from the registration requirements of the
Securities Act. Each Initial Purchaser severally represents, warrants and
agrees that it has offered the Offered Securities, and will offer and sell the
Offered Securities, only (i) inside the United States to persons whom the
Initial Purchaser reasonably believes to be "qualified institutional buyers"
in accordance with Rule 144A or (ii) outside the United States in accordance
with Regulation S. Each Initial Purchaser severally represents, warrants and
agrees that neither it nor its affiliates nor any person acting on its or
their behalf, has engaged or will engage in any directed selling efforts in
the United States within the meaning of Regulation S with respect to the
Offered Securities, and such Initial Purchaser, its affiliates and all persons
acting on its or their behalf have complied and will comply with the offering
restrictions requirements of Regulation S, to deliver either with the
confirmation of such resale or otherwise prior to settlement of such resale a
notice substantially to the following effect:
"The 6 1/2% Convertible Preferred Securities of CalEnergy Capital
Trust III covered hereby and the shares of Common Stock, par value
$0.0675 per share, of CalEnergy Company, Inc. issuable upon
conversion hereof have not been registered under the U.S. Securities
Act of 1933, as amended (the "Securities Act"), and may not be
offered and sold within the United States or to, or for the account
or benefit of, U.S. persons (i) as part of the distribution thereof
at any time or (ii) otherwise until 40 days after the later of the
date of the commencement of the offering and the latest closing date,
except in either case in accordance with Regulation S under the
Securities Act. Terms used above have the meaning given them by
Regulation S."
(c) Each Initial Purchaser severally agrees that it and each of its
affiliates have not entered and will not enter into any contractual
arrangement with respect to the distribution of the Offered Securities except
for any such arrangements with the other Initial Purchasers or affiliates of
the other Initial Purchasers or with the prior written consent of the Trust
and the Guarantor.
(d) The Initial Purchasers severally represent, warrant and agree that
(i) they have not offered or sold and prior to the date six months after the
date of issue of the Offered Securities will not offer or sell, in the United
Kingdom by means of any document, any Offered Securities offered hereby, other
than to persons whose ordinary activities involve them in acquiring, holding,
managing or disposing of investments (as principal or agent) for the purposes
of their businesses or otherwise in circumstances that have not resulted and
will not result in an offer to the public in the United Kingdom within the
meaning of the Public Offers of Securities Regulations 1995, (ii) they have
complied and will comply with all applicable provisions of the Financial
Services Act 1986 and the Public Offers of Securities Regulations 1995 with
respect to anything done by them in relation to the Offered Securities in,
from or otherwise involving the United Kingdom, and (iii) they have only
issued or passed on and will only issue or pass
12
on to any person in the United Kingdom any document received by them in
connection with the issue of the Offered Securities if that person is of a
kind described in Article 11(3) of the Financial Services Act 1986 (Investment
Advertisements) (Exemptions) Order 1996 or is a person to whom the document
may otherwise lawfully be issued or passed on.
(e) The Initial Purchasers severally represent, warrant and agree that
they have not and will not solicit offers for, or offer to sell the Offered
Securities purchased from the Trust hereunder by means of any form of general
solicitation or general advertising (as these terms are used in Regulation D
under the Securities Act), including, but not limited to (i) any
advertisement, article, notice or other communication published in any
newspaper, magazine or similar media or broadcast over television or radio, or
(ii) any seminar or meeting whose attendees have been invited by any general
solicitation or general advertising. The Initial Purchasers severally agree,
with respect to resales made in reliance on Rule 144A, other than through the
National Association of Securities Dealers, Inc. Private Offerings, Resale and
Trading through Automated Linkages ("PORTAL") market, of any of the Offered
Securities purchased from the Trust hereunder, to deliver either with the
confirmation of such resale or otherwise prior to settlement of such resale a
notice to the effect that the resale of such Offered Securities has been made
in reliance upon the exemption from the registration requirements of the
Securities Act provided by Rule 144A.
(f) Each Initial Purchaser further agrees that it will not offer, sell
or deliver any of the Offered Securities in any jurisdiction except under
circumstances that will result in compliance with the applicable laws thereof,
and that, except as otherwise provided in this Agreement, it will take at its
own expense whatever action is required to permit its purchase and resale of
the Offered Securities. Each Initial Purchaser understands that no action has
been taken to permit a public offering in any jurisdiction where action would
be required for such purpose. Each Initial Purchaser agrees that it is not
authorized (i) to make any offering, sale, resale or delivery of Offered
Securities or to circulate or disseminate any material relating to the
acquisition or disposal of Offered Securities except as contemplated in this
Agreement and the Offering Document or (ii) to make any representation or use
any information in connection with the issuance, subscription and sale of the
Offered Securities other than as contained in the Offering Document.
3. Purchase of the Offered Securities. On the basis of the
representations and warranties contained in, and subject to the terms and
conditions of, this Agreement, the Trust agrees to sell to the Initial
Purchasers, and each of the Initial Purchasers, severally and not jointly,
agrees to purchase the number of Firm Securities set opposite that Initial
Purchaser's name in Schedule A hereto.
In addition, the Trust grants to the Initial Purchasers an option to
purchase up to an additional 900,000 Preferred Securities. Such option is
granted solely for the purpose of covering over-allotments in the sale of Firm
Securities and is exercisable as provided in Section 4 hereof. Optional
Securities shall be purchased severally for the account of the Initial
Purchasers in proportion to the number of Firm Securities set opposite the
name of such Initial Purchaser in Schedule A hereto. The respective purchase
obligations of each Initial Purchaser with respect to the Optional Securities
shall be adjusted so that no Initial Purchaser shall be obligated to purchase
Optional Securities other than in lots of 100 Optional Securities. The price
of the Offered Securities shall be $50 per Preferred Security, plus accrued
and unpaid distributions from the First Closing Date (as defined below).
13
The Trust shall not be obligated to deliver any of the Offered
Securities to be delivered on the First Closing Date or the Optional Closing
Date (as defined below), as the case may be, except upon payment for all the
Offered Securities to be purchased on such Closing Date as provided herein.
4. Delivery of and Payment for the Offered Securities. Delivery of and
payment for the Firm Securities shall be made at the office of Skadden, Arps,
Slate, Meagher & Flom LLP, 919 Third Avenue, New York, NY, at 10:00 a.m., New
York City time, on August 12, 1997 or at such other date (not later than seven
full business days thereafter), time or place as shall be determined by
agreement between the Initial Purchasers and the Trust. This date and time are
hereinafter referred to as the "First Closing Date."
On the First Closing Date, the Trust shall deliver or cause to be
delivered certificates representing the Firm Securities to the Initial
Purchasers for the account of each Initial Purchaser against payment to or
upon the order of the Trust of the purchase price by certified or official
bank check or checks payable in immediately available funds or wire transfer
to an account in New York previously designated to the Initial Purchasers by
the Trust. The Firm Securities to be offered and sold by the Initial
Purchasers shall be (i) in the form of one or more permanent global securities
in definitive form (the "Firm Global Securities"), (ii) registered in the name
of Cede & Co., as nominee for The Depository Trust Company ("DTC") and (iii)
delivered to The Bank of New York as custodian for DTC. Interests in any Firm
Global Securities will be held only in book-entry form through DTC, except in
the limited circumstances described in the Offering Document. For the purpose
of expediting the checking and packaging of the certificates for the Firm
Securities, the Trust shall make the certificates representing the Firm
Securities available for inspection by the Initial Purchasers in New York, New
York, not later than 2:00 p.m., New York City time, on the business day prior
to the First Closing Date. Time shall be of the essence, and delivery at the
time and place specified pursuant to this Agreement is a further condition of
the obligation of each Initial Purchaser hereunder.
At any time on or before the thirtieth day after the date of this
Agreement, the option granted in Section 3 may be exercised by written notice
being given to the Trust by the Initial Purchasers. Such notice shall set
forth the aggregate number of Optional Securities as to which the option is
being exercised and the date and time, as determined by the Initial
Purchasers, when the Optional Securities are to be delivered; provided,
however, that this date and time shall not be earlier than the First Closing
Date nor earlier than the third business day after the date on which the
option shall have been exercised nor later than the seventh business day after
the date on which the option shall have been exercised. The date and time the
Optional Securities are delivered are hereinafter referred to as the "Optional
Closing Date" and the First Closing Date and the Optional Closing Date are
each hereinafter referred to as a "Closing Date".
Delivery of and payment for the Optional Securities shall be made at
the place specified in the first sentence of the first paragraph of this
Section 4 (or at such other place as shall be determined by agreement between
the Initial Purchasers and the Trust) at 10:00 a.m., New York City time, on
the Optional Closing Date. On the Optional Closing Date, the Trust shall
deliver or cause to be delivered certificates representing the Optional
Securities to the Initial Purchasers for the account of each Initial Purchaser
against payment to or upon the order of the Trust of the purchase price by
certified or official bank check or checks payable in immediately available
funds or wire transfer to an account in New York previously designated to the
Initial Purchasers by the Trust. The Optional Securities to be offered and
sold by the Initial Purchasers shall be (i) in the form of one or more
permanent global securities in definitive form (the "Optional Global
Securities"), (ii) registered in the name of Cede & Co., as nominee for DTC
and (iii) delivered to The Bank of New York as custodian for DTC. Interests in
any Optional
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Global Securities will be held only in book-entry form through DTC, except in
the limited circumstances described in the Offering Document. For the purpose
of expediting the checking and packaging of the certificates for the Optional
Securities, the Trust shall make the certificates representing the Optional
Securities available for inspection by the Initial Purchasers in New York, New
York, not later than 2:00 p.m., New York City time, on the business day prior
to the Optional Closing Date. Time shall be of the essence, and delivery at
the time and place specified pursuant to this Agreement is a further condition
of the obligation of each Initial Purchaser hereunder.
Any Offered Securities sold to qualified institutional buyers in
reliance on Rule 144A shall bear the appropriate legend relating thereto, as
set forth under "Transfer Restrictions" in the Offering Document.
As compensation for the Initial Purchasers' commitments, the Guarantor
will pay to the Initial Purchasers for their proportionate accounts on each
Closing Date $1.25 per each Preferred Security purchased by such Initial
Purchaser on the respective Closing Date.
5. Further Agreements of the Trust and the Guarantor. Each of the Trust
and the Guarantor agrees that:
(a) The Trust and the Guarantor will advise the Initial Purchasers
promptly of any proposal to amend or supplement the Offering Document prior to
the resale of the Offered Securities by the Initial Purchasers and will not
effect such amendment or supplementation without the consent of the Initial
Purchasers; and will also advise the Initial Purchasers promptly of any
amendment or supplementation of the Offering Document. If, at any time prior
to the completion of the resale of the Offered Securities by the Initial
Purchasers, any event occurs as a result of which the Offering Document as
then amended or supplemented would include an untrue statement of a material
fact or omit to state any material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading, the Trust and the Guarantor promptly will notify the
Initial Purchasers of such event and promptly will prepare, at their own
expense, an amendment or supplement which will correct such statement or
omission. Neither the consent of the Initial Purchasers to, nor the delivery
by the Initial Purchasers to offerees or investors of, any such amendment or
supplement shall constitute a waiver of any of the conditions set forth in
Section 7.
(b) The Trust and the Guarantor will furnish to the Initial Purchasers
copies of the Offering Document and all amendments and supplements to such
documents, in each case as soon as available and in such quantities as the
Initial Purchasers reasonably requests. At any time when the Guarantor is not
subject to Section 13 or 15(d) of the Exchange Act, the Guarantor will
promptly furnish or cause to be furnished to the Initial Purchasers and, upon
request of holders and prospective purchasers of the Offered Securities, to
such holders and purchasers, a reasonable number of copies of the information
required to be delivered to holders and prospective purchasers of the Offered
Securities pursuant to Rule 144A(d)(4) under the Securities Act (or any
successor provision thereto) in order to permit compliance with Rule 144A in
connection with resales by such holders of the Offered Securities. The
Guarantor will pay the expenses of printing and distributing to the Initial
Purchasers all such documents.
(c) The Trust and the Guarantor will arrange, in cooperation with the
Initial Purchasers and their counsel, for the qualification of the Offered
Securities for sale and the determination of their eligibility for investment
under the laws of such jurisdictions as the Initial Purchasers designate and
will continue such qualifications in effect so long as required for the resale
of the Offered Securities by the Initial Purchasers; provided, however, that
the Trust and the Guarantor will not be required to qualify as a
15
foreign corporation, to file a general consent to service of process in any
such jurisdiction or to take any other action that would subject the Trust or
the Guarantor to service of process in any suits other than those arising out
of the offering of the Securities or to taxation in respect of doing business
in any jurisdiction in which it is not otherwise subject.
(d) During the period of three years hereafter, the Guarantor will
furnish to the Initial Purchasers as soon as practicable after the end of each
fiscal year, a copy of its annual report to stockholders for such year, and
the Guarantor will furnish to the Initial Purchasers as soon as available, a
copy of each report and any definitive proxy statement of the Guarantor filed
with the Commission under the Exchange Act or mailed to stockholders.
(e) During the period of two years after the later of the First Closing
Date and the last Optional Closing Date, the Guarantor will, upon request,
furnish to the Initial Purchasers, and upon request, any holder of Offered
Securities a copy of the restrictions on transfer set forth under "Transfer
Restrictions" in the Offering Document applicable to the Offered Securities.
(f) During the period of two years after the later of the First Closing
Date and the last Optional Closing Date, the Guarantor will not, and will not
permit any of its affiliates (as defined in Rule 144 under the Securities Act)
to, resell any of the Offered Securities that have been reacquired by any of
them, except for Offered Securities purchased by the Guarantor or any of its
affiliates and resold in a transaction registered under the Securities Act;
provided, however, that this covenant shall no longer be applicable once all
of the Offered Securities have been exchanged for Exchange Preferred
Securities (as defined in the Offering Document).
(g) During the period of two years after the later of the First Closing
Date and the last Optional Closing Date, the Guarantor and the Trust will not
be or become an open-end investment company, unit investment trust or
face-amount certificate company that is or is required to be registered under
Section 8 of the 1940 Act and is not, and will not be or become, a closed-end
investment company required to be registered, but not registered, under the
1940 Act.
(h) In connection with the offering, until the earlier of (i) 180 days
following the last Closing Date or (ii) the date the Initial Purchasers shall
have notified the Trust and the Guarantor of the completion of the resale of
the Offered Securities, neither the Guarantor nor the Trust nor any of their
affiliates has or will, either alone or with one or more other persons, bid
for or purchase for any account in which it or any of its affiliates has a
beneficial interest, any Offered Securities or attempt to induce any person to
purchase any Offered Securities; and neither it nor any of its affiliates will
make bids or purchases for the purpose of creating actual or apparent active
trading in, or of raising the price of, the Offered Securities.
(i) For a period of 90 days after the date hereof, the Trust and the
Guarantor will not offer, sell, contract to sell, pledge or otherwise dispose
of, directly or indirectly, or file with the Commission a registration
statement under the Securities Act (other than the Shelf Registration
Statement or registration statements currently on file with the Commission)
relating to, (a) any trust certificates or other securities of the Trust
(other than the Trust Securities (as defined in the Offering Document)), (b)
any preferred stock or any other securities of the Guarantor which are
substantially similar to the Preferred Securities, (c) any shares of Common
Stock of the Guarantor or any other capital stock of the Guarantor, or (d) any
other securities which are convertible into, or exercisable or exchangeable
for, trust certificates or other securities of the Trust, or preferred stock
or such substantially similar securities of the Guarantor, or
16
Common Stock of the Guarantor or other capital stock of the Guarantor, without
the prior written consent of the Initial Purchasers, except the offer, sale,
contract to sell, or other disposition of (i) the Offered Securities, (ii)
Common Stock of the Guarantor issued or delivered upon conversion of the
Offered Securities or the Junior Subordinated Debentures, (iii) securities
issued or delivered upon conversion, exchange or exercise of any other
securities of the Guarantor or any other statutory trust (including CalEnergy
Capital Trust and CalEnergy Capital Trust II) affiliated or associated with
the Guarantor outstanding on the date of the Offering Document, (iv) capital
stock of the Guarantor issued pursuant to benefit or incentive plans
maintained for its officers, directors or employees (including its employee
stock purchase or stock option plans), or (v) securities issued in connection
with mergers, acquisitions or similar transactions. The Guarantor will not at
any time offer, sell, contract to sell, pledge or otherwise dispose of,
directly or indirectly, any securities under circumstances where such offer,
sale, pledge, contract or disposition would cause the exemption afforded by
Section 4(2) of the Securities Act to cease to be applicable to the offer and
sale of the Offered Securities.
(j) The Trust and the Guarantor will apply the proceeds of the offering
and sale of the Offered Securities in the manner contemplated in the Offering
Document under the caption "Use of Proceeds".
6. Expenses. The Guarantor agrees to pay all expenses incidental to the
performance of its obligations under this Agreement, the Registration Rights
Agreement and the Guarantor Agreements, including (i) the fees and expenses of
the Trustees and their professional advisers; (ii) all expenses in connection
with the execution, issue, authentication, packaging and initial delivery of
the Offered Securities, the preparation and printing of this Agreement, the
Registration Rights Agreement, the Offered Securities and the Guarantor
Agreements, the Offering Document and amendments and supplements thereto, and
any other document relating to the issuance, offer, sale and delivery of the
Offered Securities; (iii) qualifying the Offered Securities for trading in the
PORTAL market and any expenses incidental thereto; and (iv) the cost of any
advertising approved by the Guarantor in connection with the issue of the
Offered Securities. The Guarantor also agrees to pay or reimburse the Initial
Purchasers (to the extent incurred by them) for any expenses (including
reasonable fees and disbursements of counsel up to $7,500) incurred in
connection with qualification of the Offered Securities for sale under the
laws of such jurisdictions as the Initial Purchasers designate and the
printing of memoranda relating thereto, for any fees charged by investment
rating agencies for the rating of the Securities, for all travel expenses of
the Guarantor's officers and employees and any other expenses of the Guarantor
in connection with attending or hosting meetings with prospective purchasers
of the Offered Securities from the Initial Purchasers and for expenses
incurred in distributing the Offering Document (including any amendments and
supplements thereto) to the Initial Purchasers. Except as otherwise provided
in this Section 6 or in Section 10 of this Agreement, the Initial Purchasers
will pay all of their costs and expenses, including fees and expenses of their
counsel, transfer taxes on the resale of the Offered Securities and any
advertising and travel expenses incurred by them.
7. Conditions of the Obligations of the Initial Purchasers. The
respective obligations of the Initial Purchasers hereunder are subject to the
accuracy, when made and on each Closing Date, of the representations and
warranties of the Trust and the Guarantor contained herein, to the performance
by the Trust and the Guarantor of their respective obligations hereunder, and
to the following additional terms and conditions:
(a) All corporate proceedings and other legal matters incident to the
authorization, form and validity of this Agreement, the Offered Securities,
the Offering Document, the Registration Rights Agreement and the Guarantor
Documents, and all other legal matters relating to such agreements and the
17
transactions contemplated thereby shall be satisfactory in all material
respects to counsel for the Initial Purchasers, and the Trust and the
Guarantor shall have furnished to such counsel such documents as they request
for the purpose of enabling them to pass upon such matters.
(b) The Initial Purchasers shall have received a letter, dated the date
of this Agreement, of Deloitte & Touche (and the independent accountants of
any subsidiary of the Guarantor or of any business acquired by the Guarantor
for which financial statements and financial data are included or incorporated
by reference in the Offering Document) in agreed form.
(c) Since the date of the latest audited financial statements included
or incorporated by reference in the Offering Document (i) except as disclosed
in the Offering Document, there shall have been no material adverse change, or
a development which is reasonably likely to lead to a material adverse change,
in the financial condition, business or results of operations of the
Guarantor, the Subsidiaries and Joint Ventures taken as a whole and (ii)
except as disclosed in the Offering Document, there shall not have been any
transactions entered into by the Guarantor, any Subsidiary or any Joint
Venture, other than those in the ordinary course of business, which are
material and adverse to the Guarantor, the Subsidiaries and Joint Ventures
taken as a whole, and which, in the judgment of the Initial Purchasers, make
it impracticable or inadvisable to proceed with the offering or the delivery
of the Offered Securities on the terms and in the manner contemplated in the
Offering Document.
(d) Subsequent to the execution and delivery of this Agreement, there
shall not have occurred (i) any change, or any development or event involving
a prospective change, in or affecting particularly the business or properties
of the Trust or the Guarantor, the Subsidiaries and Joint Ventures taken as a
whole, which is material and adverse, and which, in the judgment of the
Initial Purchasers, makes it impractical or inadvisable to proceed with
completion of the offering or the sale of and payment for the Offered
Securities; (ii) any downgrading in the rating of any debt securities or
preferred stock of the Guarantor by any "nationally recognized statistical
rating organization" (as defined for purposes of Rule 436(g) under the
Securities Act) or any public announcement that any such organization has
under surveillance or review its rating of any debt securities or preferred
stock of the Guarantor (other than an announcement with positive implications
of a possible upgrading, and no implication of a possible downgrading, of such
rating); (iii) any suspension or limitation of trading in securities generally
on the New York Stock Exchange, or any setting of minimum prices for trading
on such exchange, or any suspension of trading of any securities of the
Guarantor on any exchange or in the over-the-counter market; (iv) any banking
moratorium declared by U.S. Federal or New York authorities; or (v) any
outbreak or escalation of major hostilities in which the United States is
involved, any declaration of war by the United States Congress or any other
substantial national or international calamity or emergency if, in the
judgment of the Initial Purchasers, the effect of any such outbreak,
escalation, declaration, calamity or emergency makes it impractical or
inadvisable to proceed with completion of the offering or sale of and payment
for the Offered Securities.
(e) The Initial Purchasers shall have received opinions, dated such
Closing Date, of:
(i) Steven A. McArthur, General Counsel to the Guarantor;
(ii) Willkie Farr & Gallagher, special counsel to the Trust and the
Guarantor;
(iii) Morris Nichols Arsht & Tunnel, special Delaware counsel to the
Trust and the Guarantor;
18
(iv) Emmet, Marvin & Martin, LLP, special counsel to The Bank of New
York; and
(v) Richards, Layton & Finger, special counsel to The Bank of New
York (Delaware)
to the effect set forth in Annexes A, B, C, D and E hereto, and satisfactory
in all respects to the Initial Purchasers and its counsel.
(f) The Initial Purchasers shall have received from Skadden, Arps,
Slate, Meagher & Flom LLP, counsel for the Initial Purchasers, such opinion or
opinions, dated such Closing Date, with respect to the incorporation of the
Guarantor and the formation of the Trust, the validity of the Offered
Securities, the Offering Document, the exemption from registration for the
offer and sale of the Offered Securities by the Guarantor to the Initial
Purchasers and the resales by the Initial Purchasers as contemplated hereby
and other related matters as the Initial Purchasers may require, and the Trust
and the Guarantor shall have furnished to such counsel such documents as they
request for the purpose of enabling them to pass upon such matters.
(g) The Initial Purchasers shall have received a certificate, dated
such Closing Date, of the President or any Vice President and a principal
financial or accounting officer of the Guarantor in which such officers, to
the best of their knowledge after reasonable investigation, shall state that
(i) the representations and warranties of the Trust and the Guarantor in this
Agreement are true and correct in all material respects, (ii) the Trust and
the Guarantor have complied with all agreements and satisfied all conditions
on their part to be performed or satisfied hereunder at or prior to such
Closing Date and (iii) subsequent to the dates of the most recent financial
statements in the Offering Document there has been no material adverse change,
nor any development or event involving a prospective material adverse change,
in the financial condition, business or results of operations of the
Guarantor, the Subsidiaries and Joint Ventures taken as a whole except as set
forth in or contemplated by the Offering Document or as described in such
certificate.
(h) The Initial Purchasers shall have received a letter, dated such
Closing Date, of Deloitte & Touche and such other independent accountants for
subsidiaries and acquired businesses which meet the requirements of subsection
(b) of this Section 7, except that the specified date referred to in such
subsection will be a date not more than three days prior to such Closing Date
for the purposes of this subsection.
(i) The Guarantor Agreements and the Registration Rights Agreement
shall have been duly executed and delivered by the Guarantor and the Trust and
be in form, scope and substance reasonably satisfactory to the Initial
Purchasers.
(j) The Trust and the Guarantor shall have furnished the Initial
Purchasers with such conformed copies of such opinions, certificates, letters
and documents as the Initial Purchasers reasonably requested.
(k) The Offered Securities shall have been approved by the Nasdaq Stock
Market, Inc. as being eligible for trading in the PORTAL market.
(l) The Guarantor and Kiewit Energy Company, Inc. ("Kiewit") shall have
entered into an agreement, in form and substance satisfactory to the Initial
Purchasers, whereby Kiewit shall have waived any and all preemptive rights to
which it would otherwise be entitled as a result of the execution, delivery
and performance by the Trust and/or the Guarantor of this Agreement, the
Registration Rights Agreement
19
and the Guarantor Agreements, the consummation of the transactions herein and
therein contemplated and the use of the proceeds of the offering as described
in the Offering Document, the issuance and sale of the Offered Securities or
the Common Securities by the Trust, the exchange of the Junior Subordinated
Debentures for the Offered Securities, the purchase of the Junior Subordinated
Debentures by the Trust or the issuance by the Guarantor of the Guarantee, the
purchase by the Guarantor of the Common Securities or the issuance of the
Underlying Shares upon conversion of the Offered Securities and the Junior
Subordinated Debentures.
The Initial Purchasers may in their sole discretion waive compliance with any
conditions to the obligations of the Initial Purchasers hereunder, whether in
respect of an Optional Closing Date or otherwise. Documents described as being
"in the agreed form" are documents which are in the forms which have been
approved by Skadden, Arps, Slate, Meagher & Flom LLP, as counsel to the
Initial Purchasers, and copies of which are held by the Guarantor and the
Initial Purchasers, with such changes as the Initial Purchasers may approve.
8. Indemnification and Contribution.
(a) The Trust and the Guarantor will indemnify and hold harmless each Initial
Purchaser against any losses, claims, damages or liabilities, to which that
Initial Purchaser may become subject, under the Securities Act or the Exchange
Act or otherwise, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon any untrue
statement or alleged untrue statement of any material fact contained in the
Offering Circular, or any amendment or supplement thereto, or the Exchange Act
Reports incorporated therein, or arise out of or are based upon the omission
or alleged omission to state therein a material fact necessary in order to
make the statements therein, in the light of the circumstances under which
they were made, not misleading and will reimburse each Initial Purchaser for
any legal or other expenses reasonably incurred by that Initial Purchaser in
connection with investigating or defending any such loss, claim, damage,
liability or action as such expenses are incurred; provided, however, that the
Trust and the Guarantor will not be liable in any such case to the extent that
any such loss, claim, damage, liability or action arises out of or is based
upon an untrue statement or alleged untrue statement in or omission or alleged
omission from any of such documents in reliance upon and in conformity with
written information furnished to the Trust or the Guarantor by either Initial
Purchaser specifically for use therein, it being understood and agreed that
the only such information consists of the information described as such in
subsection (b) below; and provided, further, that, with respect to any untrue
statement contained in or omission from the offering circular, this indemnity
agreement shall not inure to the benefit of any Initial Purchaser on account
of any loss, claim, damage, liability or action arising from the sale of any
Offered Securities to any person in the initial resale by that Initial
Purchaser if that Initial Purchaser failed to send or give a copy of the
offering circular, as the same may be amended or supplemented, to that person
within the time required by the Securities Act, and the untrue statement or
alleged untrue statement of a material fact or omission or alleged omission to
state a material fact in such offering circular was corrected in the Offering
Circular, as amended and supplemented, and the Offering Circular, as amended
and supplemented, was made available to that Initial Purchaser prior to the
sale of the Offered Securities. For purposes of the last proviso to the
immediately preceding sentence, the term "Offering Circular" shall not be
deemed to include the documents incorporated by reference therein, and no
Initial Purchaser shall be obligated to send or give any supplement or
amendment to any document incorporated by reference in any offering circular
to any person other than a person to whom such Initial Purchaser had delivered
such incorporated document or documents in response to a written request
therefor.
20
(b) Each Initial Purchaser will indemnify and hold harmless the Trust
and the Guarantor against any losses, claims, damages or liabilities to which
the Trust or the Guarantor may become subject, under the Securities Act or the
Exchange Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon any
untrue statement or alleged untrue statement of any material fact contained in
the Offering Circular, or any amendment or supplement thereto, or arise out of
or are based upon the omission or the alleged omission to state therein a
material fact necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading, in each case to
the extent, but only to the extent, that such untrue statement or alleged
untrue statement or omission or alleged omission was made in reliance upon and
in conformity with written information furnished to the Trust and the
Guarantor by such Initial Purchaser specifically for use therein, and will
reimburse any legal or other expenses reasonably incurred by the Trust or the
Guarantor in connection with investigating or defending any such loss, claim,
damage, liability or action as such expenses are incurred, it being understood
and agreed that the only such information furnished by such Initial Purchaser
consists of the following information in the Offering Circular furnished on
behalf of each Initial Purchaser: the last paragraph at the bottom of the
cover page concerning the terms of the offering by the Purchaser, the legend
concerning over-allotments and stabilizing on page 6 of the Offering Circular,
and the sixth paragraph and the third sentence of the seventh paragraph under
the caption "Plan of Distribution."
(c) Promptly after receipt by an indemnified party under this Section
of notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against the indemnifying party under
subsection (a) or (b) above, notify the indemnifying party of the commencement
thereof; but the omission so to notify the indemnifying party will not relieve
it from any liability which it may have to any indemnified party otherwise
than under subsection (a) or (b) above, except to the extent it has been
materially prejudiced by such failure; and provided, further, that such
omission will not relieve it from any liability which it may otherwise have to
an indemnified party. In case any such action is brought against any
indemnified party and it notifies the indemnifying party of the commencement
thereof, the indemnifying party will be entitled to participate therein and,
to the extent that it may wish, jointly with any other indemnifying party
similarly notified, to assume the defense thereof, with counsel reasonably
satisfactory to such indemnified party and after notice from the indemnifying
party to such indemnified party of its election so to assume the defense
thereof, the indemnifying party will not be liable to such indemnified party
under this Section for any legal or other expenses subsequently incurred by
such indemnified party in connection with the defense thereof other than
reasonable costs of investigation; provided, however, that the indemnified
party shall have the right to employ counsel to represent the indemnified
party and their respective controlling persons who may be subject to liability
arising out of any claim in respect of which indemnity may be sought by the
indemnified party against the indemnifying party under this Section 8 if the
employment of such counsel shall have been authorized in writing by the
indemnifying party in connection with the defense of such action or, if in the
written opinion of counsel to either the indemnifying party or the indemnified
party, representation of both parties by the same counsel would be
inappropriate due to actual or likely conflicts of interest between them, and
in that event the fees and expenses of one firm of separate counsel (in
addition to the fees and expenses of local counsel) shall be paid by the
indemnifying party. No indemnifying party shall, without the prior written
consent of the indemnified party, which consent shall not be unreasonably
withheld, effect any settlement of any pending or threatened action in respect
of which any indemnified party is or could have been a party and indemnity
could have been sought hereunder by such indemnified party unless such
settlement includes an unconditional release of such indemnified party from
all liability on any claims that are the subject matter of such action. The
indemnifying party shall not be liable for any settlement of any proceeding
effected without its written consent.
21
(d) If the indemnification provided for in this Section is unavailable
or insufficient to hold harmless an indemnified party under subsection (a) or
(b) above, then each indemnifying party shall contribute to the amount paid or
payable by such indemnified party as a result of the losses, claims, damages
or liabilities referred to in subsection (a) or (b) above (i) in such
proportion as is appropriate to reflect the relative benefits received by the
Trust and the Guarantor on the one hand and the Initial Purchasers on the
other from the offering of the Offered Securities or (ii) if the allocation
provided by clause (i) above is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative benefits
referred to in clause (i) above but also the relative fault of the Trust and
the Guarantor on the one hand and the Initial Purchasers on the other in
connection with the statements or omissions which resulted in such losses,
claims, damages or liabilities as well as any other relevant equitable
considerations. The relative benefits received by the Trust and the Guarantor
on the one hand and the Initial Purchasers on the other shall be deemed to be
in the same proportion as the total net proceeds from the offering (before
deducting expenses) received by the Trust bear to the total discounts and
commissions received by the Initial Purchasers from the Guarantor under this
Agreement. The relative fault shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or
the omission or alleged omission to state a material fact relates to
information supplied by the Trust, the Guarantor or the Initial Purchasers and
the parties' relative intent, knowledge, access to information and opportunity
to correct or prevent such untrue statement or omission. The amount paid by an
indemnified party as a result of the losses, claims, damages or liabilities
referred to in the first sentence of this subsection (d) shall be deemed to
include any legal or other expenses reasonably incurred by such indemnified
party in connection with investigating or defending any action or claim which
is the subject of this subsection (d). Notwithstanding the provisions of this
subsection (d), no Initial Purchaser shall be required to contribute any
amount in excess of the amount by which the Offered Securities purchased by it
were resold exceeds the amount of any damages which such Initial Purchaser has
otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation.
The Initial Purchasers' obligations in this Section 8(d) are several in
proportion to their respective purchase obligations and not joint.
(e) The obligations of the Trust and the Guarantor under this Section
shall be in addition to any liability which the Trust or the Guarantor may
otherwise have and shall extend, upon the same terms and conditions, to each
director, officer, employee and agent of the Initial Purchasers and to each
person, if any, who controls either Initial Purchaser within the meaning of
the Securities Act; and the obligations of each Initial Purchaser under this
Section shall be in addition to any liability which such Initial Purchaser may
otherwise have and shall extend, upon the same terms and conditions, to each
director, officer, employee or agent of the Trust or the Guarantor and to each
person, if any, who controls the Trust or the Guarantor within the meaning of
the Securities Act.
9. Default of Initial Purchasers. If either Initial Purchaser defaults
in its obligations to purchase Offered Securities hereunder on either the
First Closing Date or any Optional Closing Date and arrangements satisfactory
to the Trust and the Guarantor for the purchase of such Offered Securities by
other persons are not made within 36 hours after such default, this Agreement
will terminate without liability on the part of any non-defaulting Initial
Purchaser or the Trust or the Guarantor, except as provided in Sections 6, 10
and 13 (provided that if such default occurs with respect to Optional
Securities after the First Closing Date, this Agreement shall not terminate as
to the Firm Securities or any Optional
22
Securities purchased prior to such termination). As used in this Agreement,
the term "Initial Purchaser" includes any person substituted for an Initial
Purchaser under this Section 9. Nothing herein will relieve a defaulting
Initial Purchaser from liability for its default.
10. Reimbursement of Initial Purchasers' Expenses. If this Agreement is
terminated pursuant to Section 9 or if for any reason the purchase of the
Offered Securities by the Initial Purchasers is not consummated, the Trust and
the Guarantor shall remain responsible for the expenses to be paid or
reimbursed by them pursuant to Section 6. If the purchase of the Offered
Securities by the Initial Purchasers is not consummated for any reason other
than solely because of the termination of this Agreement pursuant to Section 9
or the occurrence of any event specified in clause (iii), (iv) or (v) of
Section 7(d), the Trust and the Guarantor will reimburse the Initial
Purchasers for all out-of-pocket expenses (including fees and disbursements of
counsel) reasonably incurred by them in connection with the offering of the
Offered Securities; provided that the Trust and the Guarantor shall not be
obligated under this Section 10 to reimburse the Initial Purchasers for any
expenses (including any reasonable fees and disbursements of counsel) in
excess of $150,000.
11. Notices, etc. All statements, requests, notices and agreements
hereunder shall be in writing, and:
(a) if to the Initial Purchasers, shall be delivered or sent by mail,
telex or facsimile transmission to (i) Credit Suisse First Boston Corporation,
Eleven Madison Avenue, New York, New York 10010, Attention: Investment Banking
Department - Transaction Advisory Group (fax 212-325-8278); and (ii) Lehman
Brothers Inc., Three World Financial Center, New York, New York 10010,
Attention Syndicate Department (Fax 212-526-6588), with a copy, in the case of
any notice pursuant to Section 8(d), to the Director of Litigation, Office of
the General Counsel, Lehman Brothers Inc., 3 World Financial Center, New York,
New York 10285;
(b) if to the Trust or the Guarantor, shall be delivered or sent by
mail, telex or facsimile transmis- sion to the Guarantor at 302 South 36th
Street, Suite 400, Omaha, Nebraska 68131, Attention: General Counsel (Fax:
402-231-1658);
provided, however, that any notice to an Initial Purchaser pursuant to Section
8(c) shall be delivered or sent by mail, telex or facsimile transmission to
such Initial Purchaser at its address set forth in its acceptance telex to the
Initial Purchasers, which address shall be supplied to any other party hereto
by the Initial Purchasers upon request. Any such statements, requests, notices
or agreements shall take effect at the time of receipt thereof. The Trust and
the Guarantor shall be entitled to act and rely upon any request, consent,
notice or agreement given or made on behalf of the Initial Purchaser by either
Initial Purchaser.
12. Successors. This Agreement will inure to the benefit of and be
binding upon the parties hereto and their respective successors and the
officers and directors and controlling persons referred to in Section 8, and
no other person will have any right or obligation hereunder.
13. Survival. The respective indemnities, representations, warranties
and agreements of the Trust, the Guarantor and the Initial Purchasers
contained in this Agreement or made by or on behalf of them, respectively,
pursuant to this Agreement, shall survive the delivery of and payment for the
Offered Securities and shall remain in full force and effect, regardless of
any investigation made by or on behalf of any of them or any person
controlling any of them. If this Agreement is terminated pursuant to
23
Section 9 or if for any reason the purchase of the Offered Securities by the
Initial Purchasers is not consummated, the respective obligations of the
Trust, the Guarantor and the Initial Purchasers pursuant to Section 8 shall
remain in effect.
14. Definition of the Term "Business Day". For purposes of this
Agreement, "business day" means any day on which the New York Stock Exchange,
Inc. is open for trading.
15. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO THE
PRINCIPLES OF CONFLICTS OF LAWS. Each of the Trust and
the Guarantor hereby submits to the non-exclusive jurisdiction of the Federal
and state courts in the Borough of Manhattan in The City of New York in any
suit or proceeding arising out of or relating to this Agreement or the
transactions contemplated hereby.
16. Counterparts. This Agreement may be executed in one or more
counterparts and, if executed in more than one counterpart, the executed
counterparts shall each be deemed to be an original but all such counterparts
shall together constitute one and the same instrument.
17. Headings. The headings herein are inserted for convenience of
reference only and are not intended to be part of, or to affect the meaning or
interpretation of, this Agreement.
24
If the foregoing correctly sets forth the agreement among the Trust,
the Guarantor and the Initial Purchasers, please indicate your acceptance in
the space provided for that purpose below.
Very truly yours,
CALENERGY CAPITAL TRUST III
By Craig Hammett, solely in his ca-
pacity as trustee and not in his individ-
ual capacity,
/s/ Craig Hammett
-----------------------------------
Craig Hammett
By Steven A. McArthur, solely in his
capacity as trustee and not in his indi-
vidual capacity,
/s/ Steven A. McArthur
-----------------------------------
Steven A. McArthur
CALENERGY COMPANY, INC.
By /s/ Steven A. McArthur
---------------------------------
Name: Steven A. McArthur
Title: Senior Vice President
Accepted:.
CREDIT SUISSE FIRST BOSTON CORPORATION
By /s/ Jonathan Bram
-----------------------------------
Name: Jonathan Bram
Title: Director
LEHMAN BROTHERS INC.
By /s/ Joseph G. Sauvage
-----------------------------------
Name: Joseph G. Sauvage
Title: Managing Director
0191584.03-01S4a
SCHEDULE A
----------
Number of
Purchaser Firm Securities
- --------- ---------------
Credit Suisse First Boston Corporation........................2,250,000
Lehman Brothers Inc...........................................2,250,000
Total................................................4,500,000
SCHEDULE B
----------
Subsidiaries
------------
Coso Funding Corp.+
Incorporated in Delaware
Coso Hotsprings Intermountain Power, Inc. (CHIP)+
Incorporated in Delaware
China Lake Operating Co. (CLOC)+
Incorporated in Delaware
Coso Technology Corporation (CTC)+
Incorporated in Delaware
China Lake Geothermal Management Company (CLGMC)+
Incorporated in Delaware
China Lake Plant Services, Inc. +
Incorporated in California
Coso Hotsprings Overland Power, Inc.+
Incorporated in Delaware
CE Geothermal, Inc.
Incorporated in Delaware
Western States Geothermal Company
Incorporated in Delaware
Intermountain Geothermal Company
Incorporated in Delaware
CalEnergy Development Corporation
Incorporated in Delaware
California Energy Yuma Corporation
Incorporated in Utah
- --------------------------
+ Indicates stock or partnership interests that are and at the Closing Date
will continue to be pledged, subject to a purchase agreement or regulatory
restrictions or otherwise encumbered and subject to foreclosure or other
exercise of remedies.
California Energy General Corporation
Incorporated in Delaware
Rose Valley Properties, Inc.
Incorporated in Delaware
CE Holt Company, Inc.
Incorporated in Delaware
CBE Engineering Co.
Incorporated in California
CE Exploration Company
Incorporated in Delaware
CE Newberry, Inc.
Incorporated in Delaware
CE International Investments Inc.
Incorporated in Delaware
CE Philippines Ltd.
Incorporated in Bermuda
CE Mahanagdong Ltd.
Incorporated in Bermuda
Ormoc Cebu Ltd.
Incorporated in Bermuda
CE Cebu Geothermal Power Company, Inc.+
Incorporated in the Philippines
CE Indonesia Ltd.+
Incorporated in Bermuda
CE Casecnan Ltd.
Incorporated in Bermuda
CE Singapore Ltd.
Incorporated in Bermuda
- --------------------------
+ Indicates stock or partnership interests that are and at the Closing Date
will continue to be pledged, subject to a purchase agreement or regulatory
restrictions or otherwise encumbered and subject to foreclosure or other
exercise of remedies.
CalEnergy International Ltd.
Incorporated in Bermuda
CE Bali, Ltd.
Incorporated in Bermuda
CE Casecnan Water and Energy Company, Inc.+
Incorporated in the Philippines
Capital Stock: Owned 35% by CE Casecnan Ltd.,
35% by Kiewit Energy International (Bermuda) Ltd.,
15% by La Prairie Group Contractors (International) Ltd and
15% by San Lorenzo Ruiz Builders & Developers Group, Inc.
Magma Power Company+
Incorporated in Nevada
CalEnergy Operating Company+
Incorporated in Delaware
Salton Sea Power Company+
Incorporated in Nevada
Vulcan Power Company+
Incorporated in Nevada
Imperial Magma+
Incorporated in Nevada
Magma Land Company I+
Incorporated in Nevada
Desert Valley Company+
Incorporated in California
Fish Lake Power Company+
Incorporated in Delaware
Magma Netherlands B.V.+
Formed in the Netherlands
Tongonan Power Investment, Inc.+
Incorporated in the Philippines
- --------------------------
+ Indicates stock or partnership interests that are and at the Closing Date
will continue to be pledged, subject to a purchase agreement or regulatory
restrictions or otherwise encumbered and subject to foreclosure or other
exercise of remedies.
Salton Sea Funding Corporation (SSFC)+
Incorporated in Delaware
Salton Sea Royalty Company+
Incorporated in Delaware
CE Asia Ltd.+
Incorporated In Bermuda
American Pacific Finance Company
Incorporated in Delaware
The Ben Holt International Co., Inc.
Incorporated in Delaware
CalEnergy International Services, Inc.
Incorporated in Delaware
CalEnergy Imperial Valley Company, Inc.
Incorporated in Delaware
California Energy Retail Company, Inc.
Incorporated in Delaware
CE Humboldt, Inc.
Incorporated in Delaware
CE Ijen Ltd.
Incorporated in Bermuda
Magma Generating Company I
Incorporated in Nevada
Magma Generating Company II
Incorporated in Nevada
Peak Power Corporation
Incorporated in California
- --------------------------
+ Indicates stock or partnership interests that are and at the Closing Date
will continue to be pledged, subject to a purchase agreement or regulatory
restrictions or otherwise encumbered and subject to foreclosure or other
exercise of remedies.
CE Luzon Geothermal Power Company, Inc.+
Incorporated in the Philippines
Capital Stock: Owned 50% by CE Mahanagdong Ltd.; 50% by Kiewit
Energy International (Bermuda) Ltd.; an industrial company has
the right to acquire 10% of the equity - 5% from CE Mahanagdong Ltd.
and 5% from Kiewit Energy International (Bermuda) Ltd.
Himpurna California Energy Ltd.+
Incorporated in Bermuda
Capital Stock: Owned 47% by CE Indonesia Ltd.; 47% by Kiewit Energy
International (Bermuda) Ltd., and 6% by P.T. Himpurna Enersindo
Abadi; ("Himpurna"). Himpurna has assigned the right to certain
preferred dividends representing a 4% interest in Himpurna California
Energy Ltd., under the Joint Operating Contract, Pertamina has
certain rights to acquire up to a 25% interest in the Joint Operating
Contract, but not under the Energy Sales Contract
Patuha Power, Ltd.+
Incorporated in Bermuda
Capital Stock: Owned 50% by CE Singapore Ltd., and 50% by Kiewit
Energy International (Bermuda) Ltd.; under the Joint Operating
Contract, Pertamina has certain rights to acquire up to a 25%
interest in the Joint Operating Contract, but not under the Energy
Sales Agreement
Bali Energy Ltd.+
Incorporated in Bermuda
Capital Stock: Owned 50% by CE Bali Ltd. and
50% by Kiewit Energy International (Bermuda) Ltd.
P.T. Pandanwangi Sekartji has the right to acquire
up to 40% of the equity in Bali Energy Ltd.
Norming Investments BV+
Incorporated in the Netherlands
Capital Stock: Owned 50% by CE Asia Ltd. and
50% by Kiewit Energy International (Bermuda) Ltd.
- --------------------------
+ Indicates stock or partnership interests that are and at the Closing Date
will continue to be pledged, subject to a purchase agreement or regulatory
restrictions or otherwise encumbered and subject to foreclosure or other
exercise of remedies.
BN Geothermal Inc.+
Incorporated in Delaware
Canejo Energy Company+
Incorporated in California
Niguel Energy Company+
Incorporated in California
San Felipe Energy Company+
Incorporated in California
CE/FS Holding Company, Inc.
Incorporated in Delaware
Falcon Seaboard Power Corporation
Incorporated in Texas
Falcon Seaboard Resources, Inc.
Incorporated in Texas
Falcon Seaboard Energy Corporation
Incorporated in Texas
Falcon Seaboard Gas Company
Incorporated in Texas
Falcon Seaboard Oil Company
Incorporated in Texas
Falcon Seaboard Pipeline Corporation
Incorporated in Texas
Big Spring Pipeline Company
Incorporated in Texas
Falcon Power Operating Company
Incorporated in Texas
Power Resources, Inc.+
Incorporated in Texas
- --------------------------
+ Indicates stock or partnership interests that are and at the Closing Date
will continue to be pledged, subject to a purchase agreement or regulatory
restrictions or otherwise encumbered and subject to foreclosure or other
exercise of remedies.
North Country Gas Pipeline Corporation+
Incorporated in New York
Owned by Saranac Power Partners, L.P.
Saranac Energy Company, Inc. (SECI)+
Incorporated in Delaware
SECI Holdings, Inc.+
Incorporated in Delaware
Northern Consolidated Power, Inc. (NCPI)+
Incorporated in Delaware
NorCon Holdings, Inc.
Incorporated in Delaware
CE Electric, Inc.
Incorporated in Delaware
CE Power, Inc.
Incorporated in Delaware
CE Electric UK plc
Incorporated in England
Capital Stock: Owned 70% indirectly by CalEnergy Company, Inc. and
30% indirectly by Peter Kiewit Sons', Inc.
American Pacific Finance Company II
Incorporated in Delaware
Capital Stock: Owned 50% by CalEnergy Company, Inc. and
50% by Kiewit Energy Company
PT Kiewit Holt Indonesia
Incorporated in Indonesia
Owned by Kiewit/Holt Indonesia
Slupo I B.V.+
Incorporated in Netherlands
Owned 50% by CE Asia Ltd. and 50% by Kiewit
Energy International (Bermuda) Limited
- --------------------------
+ Indicates stock or partnership interests that are and at the Closing Date
will continue to be pledged, subject to a purchase agreement or regulatory
restrictions or otherwise encumbered and subject to foreclosure or other
exercise of remedies.
Gilbert/CBE Indonesia L.L.C.
Organized in Nebraska
Owned 60% Gilbert Industrial Corporation and 40% CBE Engineering Co.
Northern Electric plc+
Incorporated in England and Wales
Northern Electric Generation (NPL) Ltd.
Incorporated in England and Wales
Northern Electric Supply Ltd.+
Incorporated in England and Wales
Northern Electric Share Scheme Trustee Ltd.+
Incorporated in England and Wales
Northern Transport Finance Ltd.+
Incorporated in England and Wales
Northern Electric Retail Ltd.+
Incorporated in England and Wales
Northern Electric Properties Ltd.+
Incorporated in England and Wales
Northern Electric Distribution Ltd..
Incorporated in England and Wales
Gas UK Ltd.+
Incorporated in England and Wales
Combined Power Systems (Northern) Ltd.+
Incorporated in England and Wales
Northern Electric (Overseas Holdings) Ltd.+
Incorporated in England and Wales
Northern Electric Generation (CPS) Ltd.+
Incorporated in England and Wales
Kings Road Developments Ltd.+
Incorporated in England and Wales
- --------------------------
+ Indicates stock or partnership interests that are and at the Closing Date
will continue to be pledged, subject to a purchase agreement or regulatory
restrictions or otherwise encumbered and subject to foreclosure or other
exercise of remedies.
Ryhope Road Developments Ltd.+
Incorporated in England and Wales
Stamfordham Road Developments Ltd.+
Incorporated in England and Wales
Northern Electric Generation (TPL) Ltd.+
Incorporated in England and Wales
Northern Electric Generation Ltd.+
Incorporated in England and Wales
Northern Electric Insurance Services Ltd.+
Incorporated in England and Wales
Northern Metering Services Ltd.+
Incorporated in Isle of Man
Sovereign Exploration Ltd.+
Incorporated in England and Wales
Northern Electric Generation (Peaking) Ltd.+
Incorporated in England and Wales
Northern Electric Training Ltd.+
Incorporated in England and Wales
Northern Electric Transport Ltd.+
Incorporated in England and Wales
Northern information Systems Ltd.+
Incorporated in England and Wales
Northern Utility Services Ltd.+
Incorporated in England and Wales
Viking Power Ltd.+
Incorporated in England and Wales
Northern electric Finance plc.+
Incorporated in England and Wales
- --------------------------
+ Indicates stock or partnership interests that are and at the Closing Date
will continue to be pledged, subject to a purchase agreement or regulatory
restrictions or otherwise encumbered and subject to foreclosure or other
exercise of remedies.
Northgas Ltd.+
Incorporated in England and Wales
Northern Tracing & Collection Services Ltd.+
Incorporated in England and Wales
Northern Electric Telecom Ltd.+
Incorporated in England and Wales
CE Electric UK Holdings
Incorporated in England
Capital Stock: Owned 70% indirectly by CalEnergy Company, Inc. and
30% indirectly by Peter Kiewit Sons', Inc.
- --------------------------
+ Indicates stock or partnership interests that are and at the Closing Date
will continue to be pledged, subject to a purchase agreement or regulatory
restrictions or otherwise encumbered and subject to foreclosure or other
exercise of remedies.
SCHEDULE C
----------
Joint Ventures
--------------
Coso Energy Developers (CED)+
Formed in California
General Partnership: 48% CHIP; 52% Caithness Coso
Holdings, L.P.
Coso Finance Partners+
Formed in California
General Partnership: 46.3% owned by CLOC; 53.7%
owned by ESCA I, L.P.
Coso Power Developers (CPD)+
Formed in California
General Partnership: 50% owned by CTC; 50% by
Caithness Navy II
Coso Transmission Line Partners+
Formed in California
General Partnership: Owned 50% by CED; 50% by CPD
Vulcan/BN Geothermal Power Company+
Formed in Nevada
Partnership Interests: Vulcan Power Company 50%
General Partner; BN Geothermal, Inc. 50% General
Partner
Del Ranch, L.P.+
Formed in California
Partnership Interests: Magma Power Company 10%
Limited Partner; CalEnergy Operating Company 40% General Partner;
Conejo Energy Company 10% Limited Partner and 40% General Partner
Elmore, L.P.+
Formed in California
Partnership Interests: Magma Power Company 10%
Limited Partner; CalEnergy Operating Company 40% General Partner;
Niguel Energy Company 10% Limited Partner
and 40% General Partner
- --------------------------
+ Indicates stock or partnership interests that are and at the Closing Date
will continue to be pledged, subject to a purchase agreement, or otherwise
encumbered and subject to foreclosure or other exercise of remedies.
Leathers, L.P.+
Formed in California
Partnership Interests: Magma Power Company 10%
Limited Partner; CalEnergy Operating Company 40% General Partner;
San Felipe Energy Company 10% Limited Partner and 40% General Partner
Salton Sea Brine Processing L.P.+
Limited Partnership Formed in California
Salton Sea Power Generation L.P.+
Limited Partnership Formed in California
Visayas Geothermal Power Company+
Partnership Formed in the Philippines
Yuma Cogeneration Associates (YCA)+
Formed in Utah
Alto Peak Power Company
Formed in the Philippines
China Lake Joint Venture
Formed in California
Owed 50% by CalEnergy Company and
50% by Caithness Geothermal 1980 Ltd.
Coso Finance Partners II
Formed in California
Owned 50% by China Lake Geothermal Management Co., an affiliate of
Calenergy Company, Inc. and 50% by ESCA II, L.P.
Coso Land Company
Formed in California
Owned 50% by CalEnergy Company and 50% by Caithness Geothermal 1980
Ltd.
Gilbert/CBE L.P.
Limited partnership formed in Nebraska
Partnership Interests: 20% CBE Engineering Co. and 80% Gilbert
Industrial Corporation
- --------------------------
+ Indicates stock or partnership interests that are and at the Closing Date
will continue to be pledged, subject to a purchase agreement, or otherwise
encumbered and subject to foreclosure or other exercise of remedies.
Kiewit/Holt Philippines, L.P.
Limited partnership formed in Nebraska
Partnership Interests: 20% CE Holt Company and 80% Kiewit Industrial Co.
Saranac Power Partners, L.P.+
Limited partnership formed in Delaware
Partnership Interests: 80% Saranac Energy Company, Inc. and 20%
affiliates of Tomen Power Corporation
NorCon Power Partners, L.P.+
Limited partnership formed in Delaware
Partnership Interests: 80% Northern Consolidated Power, Inc. and 20%
affiliates of Tomen Power Corporation
- --------------------------
+ Indicates stock or partnership interests that are and at the Closing Date
will continue to be pledged, subject to a purchase agreement, or otherwise
encumbered and subject to foreclosure or other exercise of remedies.
ANNEX A
General Counsel Opinion
-----------------------
1. Each of the Guarantor, the Subsidiaries and Joint Ventures has
been duly organized and is validly existing and, if applicable, in good
standing under the laws of its respective jurisdiction of organization and
each of the Guarantor, the Subsidiaries and Joint Ventures has the power and
authority to own, lease and operate its respective properties and to conduct
its businesses as described in the Offering Document;
2. Each of the Guarantor, the Subsidiaries and Joint Ventures is duly
qualified to do business and (to the extent applicable) is in good standing as
a foreign corporation, a foreign partnership or foreign limited liability
company, as the case may be, in each jurisdiction, domestic or foreign, in
which such registration, qualification or good standing is required (whether
by reason of the ownership or leasing of property, the conduct of its business
or otherwise), except where the failure to so register or qualify or be in
good standing is not reasonably likely to have a material adverse effect on
the financial condition, business or results of operations of the Guarantor,
the Subsidiaries and Joint Ventures taken as a whole;
3. The Guarantor has the authorized and outstanding capitalization as
set forth under the caption "Capitalization" in the Offering Document; to the
best of my knowledge, all the outstanding shares of capital stock of each
Subsidiary owned by the Guarantor have been duly and validly authorized and
issued and are fully-paid and nonassessable; and to the best of my knowledge,
except as otherwise set forth in Schedule B attached to the Purchase Agreement
or disclosed in or contemplated by the Offering Document, all outstanding
shares of capital stock of each Subsidiary are owned beneficially by the
Guarantor free and clear of any material claims, liens, encumbrances and
security interests; and to the best of my knowledge, all of the partnership
interests in Joint Ventures beneficially owned by the Guarantor (as reflected
in Schedule C to the Purchase Agreement) have been duly and validly authorized
and issued and, except as otherwise set forth in Schedule C attached to the
Purchase Agreement or disclosed in or contemplated by the Offering Document,
are owned beneficially by the Guarantor free and clear of any material claims,
liens, encumbrances and security interests;
4. The Guarantor Agreements have each been duly authorized, executed
and delivered by the Guarantor; the Guarantee, the Trust Agreement, the
Indenture and the Junior Subordinated Debentures, when validly authenticated
and delivered by the Debenture Trustee in accordance with the Indenture and
paid for by the Trust, will constitute valid and legally binding obligations
of the Guarantor, enforceable in accordance with their respective terms,
except to the extent that enforcement thereof may be limited by (a)
bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium or
other similar laws now or hereafter in effect relating to creditors' rights
generally and (b) general principles of equity (regardless of whether
enforceability is considered in a proceeding at law or in equity); and the
Junior Subordinated Debentures will be entitled to the benefits of the
Indenture, subject to (a) bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium or other similar laws now or hereafter in effect
relating to creditors' rights generally and (b) general principles of equity
(regardless of whether enforceability is considered in a proceeding at law or
in equity);
5. The Purchase Agreement has been duly authorized, executed and
delivered by each of the Guarantor and the Trust;
6. The Registration Rights Agreement has been duly authorized,
executed and delivered by each of the Guarantor and the Trust and constitutes
a valid and binding obligation of the Guarantor and the Trust, enforceable
against the Guarantor and the Trust in accordance with its terms, except to
the extent that enforcement thereof may be limited by (a) bankruptcy,
insolvency, fraudulent transfer, reorganization, moratorium or other similar
laws now or hereafter in effect relating to creditors' rights generally and
(b) general principles of equity (regardless of whether enforceability is
considered in a proceeding at law or in equity);
7. The Underlying Shares initially issuable upon conversion of the
Offered Securities and the Junior Subordinated Debentures have been duly
authorized and reserved for issuance upon conversion and, if and when issued
upon conversion of the Offered Securities and the Junior Subordinated
Debentures in accordance with the terms of the Purchase Agreement, Indenture
and Trust Agreement, such Underlying Shares will be validly issued, fully-paid
and nonassessable and conform in all material respects to the description
thereof contained in the Offering Document; and the holders of outstanding
securities of the Guarantor are not entitled to any preemptive rights with
respect to the Underlying Shares issuable upon such conversion which have not
been waived;
8. Except as disclosed in or contemplated by the Offering Document,
the Guarantor, each Subsidiary and each Joint Venture holds, as applicable,
good and valid title to, or valid and enforceable leasehold or contractual or
other legal interests in, all real properties and all other properties and
assets owned or leased by or held under contract by each of them that are
material to the business of the Guarantor, the Subsidiaries and the Joint
Ventures taken as a whole, and free from liens, encumbrances and defects that
would materially interfere with the use made or to be made thereof by them;
9. To the best of my knowledge, the Guarantor, each Subsidiary and
each Joint Venture (i) has obtained each license, permit, certificate,
franchise or other governmental authorization which is material to the
ownership of their properties or to the conduct of their businesses as
described in the Offering Document and (ii) is in compliance with all terms
and conditions of such license, permit, certificate, franchise or other
governmental authorization, except (A) in either case where the failure to do
so is not reasonably likely to have, individually or in the aggregate, a
material adverse effect on the financial condition, business or results of
operations of the Guarantor, the Subsidiaries and Joint Ventures taken as a
whole, (B) permits, consents and approvals that may be required for future
drilling or operating activities which are ordinarily deemed to be ministerial
in nature and which are anticipated to be obtained in the ordinary course and
(C) permits, consents and approvals for developmental or construction
activities which have not yet been obtained but which have been or will be
applied for in the course of development or construction and which are
anticipated to be obtained in the ordinary course;
10. To the best of my knowledge, there is no legal or governmental
action, suit or proceeding before any court, governmental agency, body or
authority, domestic or foreign, now pending, threatened against, or involving,
the Guarantor, any Subsidiary or any Joint Venture (A) of a character that
would be required to be disclosed in the Offering Document if it were a
registration statement under the Securities Act which is not adequately
disclosed in the Offering Document or (B) that, if determined adversely to the
Guarantor, any Subsidiary or any Joint Venture, would be reasonably likely to
have, individually or in the aggregate, a material adverse effect on the
financial condition, business or results of operations of the Guarantor, the
Subsidiaries and Joint Ventures taken as a whole, or on the ability of
the Guarantor to perform its obligations under the Purchase Agreement, the
Registration Rights Agreement, the Guarantor Agreements or the Securities;
11. The Guarantor has all requisite corporate power and authority to
issue the Guarantee, comply with all of the provisions of the Purchase
Agreement, issue the Underlying Shares upon conversion of the Junior
Subordinated Debentures, sell to the Trust the Junior Subordinated Debentures,
purchase the Common Securities, execute, deliver and perform each of the
Purchase Agreement, the Guarantor Agreements and the Registration Rights
Agreement, consummate the transactions therein contemplated and use the
proceeds of the offering as described in the Offering Document;
12. There are no contracts or other documents that would be required
to be described in the Offering Document if it were a registration statement
under the Securities Act which have not been described or incorporated by
reference therein (including exhibits to any such documents so incorporated by
reference);
13. Except as otherwise disclosed in or contemplated by the offering
Document, there are no outstanding securities convertible into or exchangeable
for, and no outstanding options, warrants or other rights to purchase, any
shares of the capital stock of the Guarantor, nor any agreements or
commitments to issue any of the same;
14. To the best of my knowledge, except pursuant to the Purchase
Agreement or otherwise disclosed in the Offering Document, there are no
contracts, agreements or understandings between the Guarantor and any person
that would give rise to a valid claim against the Guarantor or the Initial
Purchasers for a brokerage commission, finder's fee or other like payment;
15. The issuance by the Guarantor of the Guarantee, the compliance by
the Guarantor and the Trust with all of the provisions of the Purchase
Agreement and the Registration Rights Agreement, the issuance and sale of the
Offered Securities and the Common Securities in accordance with the terms of
the Purchase Agreement, the Indenture and the Trust Agreement, the issuance of
the Underlying Shares upon conversion of the Junior Subordinated Debentures,
the sale to the Trust of the Junior Subordinated Debentures in accordance with
the terms of the Indenture and the Trust Agreement, the purchase by the
Guarantor of the Common Securities, the execution, delivery and performance by
the Guarantor and the Trust of each of the Purchase Agreement and the
Registration Rights Agreement and by the Guarantor of the Guarantor
Agreements, the consummation of the transactions therein contemplated and the
use of the proceeds of the offering as described in the Offering Document do
not and will not (A) conflict with the corporate charter or by-laws or
partnership agreements of the Guarantor, any Subsidiary or any Joint Venture
or the Trust Agreement or the Certificate of Trust of the Trust, (B) to the
best of my knowledge, conflict with, result in the creation or imposition of
any lien, charge or other encumbrance upon any asset of the Trust or the
Guarantor, any Subsidiary or Joint Venture pursuant to the terms of, or
constitute a breach of, or default under, any agreement, indenture or other
instrument to which the Trust or the Guarantor, any Subsidiary or any Joint
Venture is a party or by which the Trust or the Guarantor, any Subsidiary or
any Joint Venture is bound or to which any of the properties of the Trust or
the Guarantor, any Subsidiary or any Joint Venture is subject, or (C) to the
best of my knowledge, result in a violation of any statute, rule, regulation,
order, judgment or decree of any court or governmental agency, body or
authority having jurisdiction over the Trust or the Guarantor, any Subsidiary
or any Joint Venture or any of their properties where any such conflict,
encumbrance, breach, default or violation under clauses (B) or (C),
individually or in the aggregate, is reasonably likely to have
a material adverse effect on the financial condition, business or results of
operations of the Trust or the Guarantor, the Subsidiaries and Joint Ventures
taken as a whole;
16. Assuming the accuracy of the representations and warranties of
the Initial Purchasers set forth in Section 2 of the Purchase Agreement, to
the best of my knowledge, except (A) in connection with the registration of
the Securities pursuant to the Registration Rights Agreement, and (B) in
connection with or compliance with the Trust Indenture Act and applicable
state or foreign securities laws or the regulations of the National
Association of Securities Dealers, Inc., no consent, authorization or order
of, or filing or registration by the Trust or the Guarantor, any Subsidiary or
any Joint Venture with, any court, governmental agency or third party is
required in connection with the issuance and sale of the Offered Securities,
the issuance by the Guarantor of the Guarantee, the compliance by the Trust
and the Guarantor with all of the provisions of the Purchase Agreement and the
Registration Rights Agreement, the issuance of the Underlying Shares upon
conversion of the Junior Subordinated Debentures, the sale to the Trust of the
Junior Subordinated Debentures, the purchase by the Guarantor of the Common
Securities, the execution, delivery and performance by the Trust and the
Guarantor of each of the Purchase Agreement and the Registration Rights
Agreement and by the Guarantor of the Guarantor Agreements, the consummation
of the transactions therein contemplated and the use of the proceeds of the
offering as described in the Offering Document, the failure to obtain which,
individually or in the aggregate, is reasonably likely to have a material
adverse effect on the financial condition, business or results of operations
of the Trust or the Guarantor, the Subsidiaries and Joint Ventures taken as a
whole or on the Securities or the ability of the Trust or the Guarantor to
perform its obligations under the Purchase Agreement, the Guarantor Agreements
or the Registration Rights Agreement;
17. Neither the Trust nor the Guarantor is required to be registered
under the Investment Company Act of 1940, as amended;
18. The documents incorporated by reference in the Offering Document
and any further amendments or supplements to any such incorporated document
made by the Guarantor prior to the date hereof (other than the financial
statements, related schedules and other financial and statistical information
contained therein or omitted therefrom as to which I express no opinion), when
they became effective or were filed with the Commission, as the case may be,
appear on their face to have been appropriately responsive in all material
respects to the applicable requirements of the Securities Act or the Exchange
Act, as the case may be, and the Rules and Regulations of the Commission
thereunder;
I have not independently verified, and I am not passing upon and do
not assume any responsibility for, the accuracy, completeness or fairness of
the statements contained in the Offering Document. I have, however,
participated in conferences with certain representatives of the Guarantor and
the Trust, independent accountants for the Guarantor and the Trust, the
Initial Purchasers and their counsel, at which conferences the contents of the
Offering Document and related matters were discussed. Based upon and subject
to the foregoing, no facts have come to my attention which cause me to believe
(i) that the Offering Document, as amended and supplemented as of the date of
the Purchase Agreement and as of the date hereof (except for the financial
statements, related schedules and other financial and statistical information
contained therein or omitted therefrom as to all of which I do not express any
belief), contained or contains any untrue statement of a material fact or
omitted or omits to state a material fact required to be stated therein or
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading; and (ii) any
document incorporated by reference in the Offering Document or any further
amendment or supplement to such incorporated document made by the Guarantor
prior to the date hereof when they became effective or were filed with
the Commission, as the case may be, contained an untrue statement of a
material fact or omitted to state a material fact necessary in order to make
the statements therein, in light of the circumstances under which they were
made, not misleading.
ANNEX B
-------
Willkie Farr Opinion
--------------------
1. Assuming full compliance with the terms of the Trust Agreement and
the Indenture, the Trust will be classified for United States federal income
tax purposes as a grantor trust and not as an association taxable as a
corporation. Accordingly, for United States federal income tax purposes, each
holder of the Preferred Securities will generally be considered the owner of
an undivided interest in the Junior Subordinated Debentures, and each holder
will be required to include in its gross income any original issue discount
accrued with respect to its allocable share of those Junior Subordinated
Debentures;
2. Although the discussion set forth in the Offering Document under
the heading "United States Taxation" does not purport to discuss all possible
United States federal income tax consequences of the purchase, ownership and
disposition of the Preferred Securities, in our opinion such discussion
constitutes, in all material respects, a fair and accurate summary of the
United States federal income tax consequences of the purchase, ownership and
disposition of the Preferred Securities under current law;
3. The Guarantor has been duly organized and is validly existing and
in good standing as a corporation under the laws of the State of Delaware and
the Guarantor has the corporate power and authority to own, lease and operate
its properties and to conduct its businesses as described in the Offering
Document;
4. The Trust is a duly created and validly existing business trust in
good standing under the laws of the State of Delaware; all filings required
under the laws of the State of Delaware with respect to the creation and valid
existence of the Trust as a Delaware statutory business trust have been made;
and the Trust has all requisite business trust power and authority to own
property and conduct its business as described in the Offering Document;
5. The Offered Securities have been duly authorized by the Trust for
issuance and, when issued in accordance with the Trust Agreement and delivered
and paid for in accordance with the Purchase Agreement, will be validly issued
and (subject to the terms of the Trust Agreement) fully-paid and nonassessable
undivided beneficial interests in the assets of the Trust; under the Trust
Agreement, the issuance of the Offered Securities is not subject to preemptive
or other similar rights; the Offered Securities, when issued in accordance
with the Trust Agreement and delivered against and paid for in accordance with
the Purchase Agreement, will have the rights set forth in the Trust Agreement,
subject to (A) bankruptcy, insolvency, reorganization, fraudulent conveyance,
moratorium or other laws of general application relating to or affecting the
enforcement of creditors' rights and remedies, as from time to time in effect,
(B) application of equitable principles (regardless of whether such
enforceability is considered in a proceeding in equity or at law), and (C)
considerations of public policy or the effect of applicable law relating to
fiduciary duties; the Trust Agreement is a valid and binding obligation of the
Guarantor, except to the extent that enforcement thereof may be limited by (A)
bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and
other similar laws now or hereafter in effect relating to creditors' rights
generally, (B) general principles of equity (regardless of whether
enforceability is considered in a proceeding at law or in equity and (C)
considerations of public policy or the effect of applicable law relating to
fiduciary duties; and under the Delaware Business Trust Act and the terms of
the Trust Agreement, the holders of the Offered Securities, in such capacity,
will (subject to the terms of the Trust Agreement) 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; provided, however, we express no opinion with respect to
the liability of any holder of Offered Securities who is, was or may become a
named Trustee of the Trust. We note that Holders of the Offered Securities
will be subject to the withholding provisions of Section 11.4 of the Trust
Agreement and may be required to make payment or provide indemnity or security
as set forth therein;
6. The Common Securities have been duly authorized by the Trust for
issuance and, when issued, delivered and paid for in accordance with the Trust
Agreement and upon delivery by the Trust to the Guarantor against payment
therefor as described in the Offering Document, will be validly issued and
(subject to the terms of the Trust Agreement) fully-paid and nonassessable
undivided beneficial interests in the assets of the Trust; we note that
Holders of the Common Securities will be subject to the withholding provisions
of Section 11.4 of the Trust Agreement and may be required to make payment or
provide indemnity or security as set forth therein; under the Trust Agreement,
the issuance of the Common Securities is not subject to preemptive or other
similar rights; and all of the issued and outstanding Common Securities of the
Trust are owned of record by the Guarantor;
7. The Registration Rights Agreement has been duly authorized,
executed and delivered by each of the Trust and the Guarantor and constitutes
a valid and binding obligation of each of the Trust and the Guarantor,
enforceable against the Trust and the Guarantor in accordance with its terms,
except to the extent that enforcement thereof may be limited by (A)
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium or
other similar laws now or hereafter in effect relating to creditors' rights
generally, (B) general principles of equity (regardless of whether
enforceability is considered in a proceeding at law or in equity) and (C)
considerations of policy or the effect of applicable law relating to fiduciary
duties, and except to the extent that the right to indemnity and contribution
contained in the Registration Rights Agreement may be limited by state or
federal securities laws or the public policy underlying such laws;
8. The Guarantor Agreements have each been duly authorized, executed
and delivered by the Guarantor. The Guarantee, the Trust Agreement, the
Indenture and the Junior Subordinated Debentures, when validly authenticated
and delivered by the Debenture Trustee in accordance with the Indenture and
paid for by the Trust, will constitute valid and binding obligations of the
Guarantor, enforceable against the Guarantor in accordance with their
respective terms, except to the extent that enforcement thereof may be limited
by (A) bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium or other similar laws now or hereafter in effect relating to
creditors' rights generally, (B) general principles of equity (regardless of
whether enforceability is considered in a proceeding at law or in equity) and
(C) considerations of policy or the effect of applicable law relating to
fiduciary duties; and, subject to the terms of the Indenture, the Junior
Subordinated Debentures will be entitled to the benefits of the Indenture;
9. The Underlying Shares initially issuable upon conversion of the
Offered Securities and the Junior Subordinated Debentures have been duly
authorized and reserved for issuance upon conversion and, if and when issued
upon conversion of the Offered Securities and the Junior Subordinated
Debentures in accordance with the terms of the Purchase Agreement, the
Indenture and the Trust Agreement, will be validly issued, fully-paid and
nonassessable and conform in all material respects to the description thereof
contained in the Offering Document; and, under the Guarantor's Certificate of
Incorporation, the
holders of outstanding securities of the Guarantor are not entitled to any
preemptive rights with respect to the Underlying Shares issuable upon such
conversion;
10. The Purchase Agreement has been duly authorized, executed and
delivered by each of the Trust and the Guarantor;
11. The Offered Securities, the Common Securities, the Junior
Subordinated Debentures and each of the Guarantor Agreements conform in all
material respects to the descriptions thereof contained in the Offering
Document;
12. The Trust has the requisite business trust power and authority to
authorize, issue and sell the Offered Securities and the Common Securities as
contemplated by the Purchase Agreement and the Trust Agreement and to execute,
deliver and perform the Purchase Agreement and the Registration Rights
Agreement;
13. The issuance and sale of the Offered Securities and the Common
Securities in accordance with the terms of the Purchase Agreement and the
Trust Agreement, the use of the proceeds of the offering to purchase the
Junior Subordinated Debentures as described in the Offering Document, the
execution, delivery and performance by the Trust and the Guarantor of the
Purchase Agreement and the Registration Rights Agreement, the execution,
delivery and performance by the Guarantor of the Guarantor Agreements, the
compliance by the Trust and the Guarantor with the provisions of the Purchase
Agreement and the Registration Rights Agreement, the purchase of the Junior
Subordinated Debentures by the Trust, the issuance by the Guarantor of the
Guarantee, the purchase by the Guarantor of the Common Securities and the
issuance of the Underlying Shares upon conversion of the Offered Securities
and the Junior Subordinated Debentures will not (A) to our knowledge,
constitute a violation of or a default under any indenture, mortgage, deed of
trust, loan agreement or other agreement set forth on Exhibit I hereto, (B)
violate the provisions of the Trust Agreement or the Certificate of Trust of
the Trust or violate the corporate charter or by-laws of the Guarantor or (C)
result in a violation of any Applicable Laws; for purposes of the opinion set
forth in this paragraph, the term "Applicable Laws" means those laws, rules
and regulations of the State of New York, the State of Delaware and the United
States of America that, in our experience, are normally applicable to
transactions of the type contemplated by the Purchase Agreement, as in effect
on the date hereof (other than United States, state and foreign securities or
blue sky laws and the rules and regulations of the National Association of
Securities Dealers, Inc.);
14. No consent, authorization, order of, or filing or registration by
the Guarantor or the Trust with, any United States governmental authority or
body having jurisdiction over the Guarantor or the Trust is necessary or
required for the execution, delivery and performance by the Trust or the
Guarantor of the Purchase Agreement or the Registration Rights Agreement or
the execution, delivery and performance by the Guarantor of the Guarantor
Agreements or the issuance and sale of the Offered Securities or the Common
Securities by the Trust, the exchange of the Junior Subordinated Debentures
for Offered Securities, the purchase of the Junior Subordinated Debentures by
the Trust or the issuance by the Guarantor of the Guarantee, the purchase by
the Guarantor of the Common Securities or the issuance of the Underlying
Shares upon conversion of the Offered Securities and the Junior Subordinated
Debentures, except (A) in connection with the registration of the Securities
pursuant to the Registration Rights Agreement and (B) as may be required under
applicable state or foreign securities laws or blue sky laws;
15. To the best of our knowledge after due inquiry, there are no
actions, suits or proceedings pending or judgments outstanding against the
Guarantor or the Trust in any court or agency or instrumentality in the United
States of America which relate to or place or may place in question the
validity or enforceability of the Purchase Agreement or the issuance and sale
of the Offered Securities and the Common Securities by the Trust, the exchange
of the Junior Subordinated Debentures for Offered Securities or the purchase
of the Junior Subordinated Debentures by the Trust;
16. As of the date hereof, no securities of the same class (within
the meaning of Rule 144A(d) (3) under the Securities Act) as the Offered
Securities are listed on any national securities exchange registered under
Section 6 of the Exchange Act or quoted in a U.S. automated inter-dealer
quotation system;
17. Neither the Trust nor the Guarantor is required to be registered
under the Investment Company Act of 1940, as amended; and
18. Assuming (A) the accuracy of the representations and warranties
of the Trust and the Guarantor set forth in Section 1 of the Purchase
Agreement and of the Initial Purchasers set forth in Section 2 of the Purchase
Agreement, (B) the due performance by the Trust and the Guarantor of the
covenants and agreements set forth in Section 5 of the Purchase Agreement and
the due performance by the Initial Purchasers of the covenants and agreements
set forth in Section 2 of the Purchase Agreement, (C) compliance by the
Initial Purchasers with the offering and transfer procedures and restrictions
described in the Offering Document, (D) the accuracy of the representations
and warranties made in accordance with the Offering Document by purchasers to
whom the Initial Purchasers initially resell the Offered Securities and (E) in
the case of resales by the Initial Purchasers pursuant to Rule 144A under the
Securities Act, that purchasers to whom the Initial Purchasers initially
resell Offered Securities receive a copy of the Offering Document or other
notice that such resales are made pursuant to Rule 144A prior to such sale,
(i) the offer, sale and delivery of the Offered Securities to the Initial
Purchasers in the manner contemplated by the Purchase Agreement and the
Offering Document and the initial resale of the Offered Securities by the
Initial Purchasers in the manner contemplated in the Offering Document and the
Purchase Agreement, (ii) the exchange of the Junior Subordinated Debentures
for the Offered Securities or the distribution of Junior Subordinated
Debentures to holders of Offered Securities in the circumstances contemplated
by the Trust Agreement, (iii) the issuance of shares of Common Stock upon
conversion of the Offered Securities or Junior Subordinated Debentures and
(iv) the purchase of the Junior Subordinated Debentures by the Trust do not
require registration under the Securities Act (it being understood that we
express no opinion as to any subsequent resale of any Offered Securities,
Junior Subordinated Debentures or Common Stock), and none of the Trust
Agreement, the Indenture or the Guarantee is required to be qualified under
the Trust Indenture Act of 1939, as amended (the "TIA"), although each is in
such form that it may be qualified under the TIA in compliance with the
provisions set forth in the Registration Rights Agreement without material
modification.
19. The cash tender offer (the "Tender Offer") by CE Electric (NY),
Inc. (the "Offeror") to acquire that number of shares of common stock, par
value $6.662/3 per share ("NYSE&G shares") of New York State Electric & Gas
Corporation ("NYSE&G") which, together with the NYSE&G shares beneficially
owned by the Company, would represent 9.9% of the total number of NYSE&G
shares outstanding, and the consummation of the transactions contemplated
thereby, did not and will not (A) conflict with the corporate charter of the
Guarantor or the Offeror or (B) to our knowledge, constitute a violation of or
a default under any indenture, mortgage, deed of trust, loan agreement or
other agreement set forth on Exhibit I hereto.
We have participated in conferences with representatives of the
Guarantor and the Trust, independent accountants for the Guarantor and the
Trust, the Initial Purchasers and their counsel at which conferences the
contents of the Offering Document, each amendment thereof and supplement
thereto and related matters were discussed, although we have not independently
checked or verified and are not passing upon and assuming no responsibility
for the factual accuracy, completeness or fairness of the statements contained
in the Offering Document, any amendment thereof or supplement thereto. Based
on the foregoing, no facts have come to our attention which cause us to
believe that (i) the Offering Document, as amended and supplemented as of the
date of the Purchase Agreement and as of the date hereof (except for the
financial statements, related schedules and other financial and statistical
information contained therein or omitted therefrom as to all of which we do
not express any belief), contained or contains any untrue statement of a
material fact or omitted or omits to state a material fact required to be
stated therein or necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading; and
(ii) any document incorporated by reference in the Offering Document or any
further amendment or supplement to such incorporated document made by the
Guarantor prior to the date hereof when they became effective or were filed
with the Commission, as the case may be, contained an untrue statement of a
material fact or omitted to state a material fact necessary in order to make
the statements therein, in light of the circumstances under which they were
made, not misleading.
EXHIBIT I
---------
1. Stock Purchase Agreement dated as of February 18, 1991 (re: common
stock) between CalEnergy Company, Inc. and Kiewit Energy Company.
2. Amendment #1 to February 18, 1991 Stock Purchase Agreement dated as
of June 19, 1991 between CalEnergy Company, Inc. and Kiewit Energy
Company.
3. Amendment #2 to February 18, 1991 Stock Purchase Agreement dated as
of January 8, 1992 between CalEnergy Company, Inc. and Kiewit Energy
Company.
4. Amendment #3 to February 18, 1991 Stock Purchase Agreement dated as
of April 2, 1993 between CalEnergy Company, Inc. and Kiewit Energy
Company.
5. Shareholder's Agreement dated as of February 18, 1991 between
CalEnergy Company, Inc. and Kiewit Energy Company.
6. Amendment #1 to February 18, 1991 Shareholder's Agreement dated as of
June 19, 1991 between CalEnergy Company, Inc. and Kiewit Energy
Company.
7. Amendment #2 to February 18, 1991 Shareholder's Agreement dated as of
November 20, 1991 between CalEnergy Company, Inc. and Kiewit Energy
Company.
8. Amendment #3 to February 18, 1991 Shareholder's Agreement dated as of
April 2, 1992 between CalEnergy Company, Inc. and Kiewit Energy
Company.
9. Amendment #4 to February 18, 1991 Shareholder's Agreement dated as of
July 20, 1993 between CalEnergy Company, Inc. and Kiewit Energy
Company.
10. Stock Option Agreement dated as of February 18, 1991 (re: $9.00 and
$12.00 options) between CalEnergy Company, Inc. and Kiewit Energy
Company.
11. Amendments #1 to February 18, 1991 Stock Option Agreement dated as of
June 19, 1991 between CalEnergy Company, Inc. and Kiewit Energy
Company.
12. Amendment #2 to February 18, 1991 Stock Option Agreement dated as of
May 12, 1994 between CalEnergy Company, Inc. and Kiewit Energy
Company.
13. Stock Option Agreement dated as of June 19, 1991 (re: $11 5/8
options) between CalEnergy Company, Inc. and Kiewit Energy Company.
14. Registration Rights Agreement dated as of February 18, 1991 (re:
common stock $9.00 and $12.00 options) between CalEnergy Company,
Inc. and Kiewit Energy Company.
15. Amendment #1 to February 18, 1991 Registration Rights Agreement dated
as of June 19, 1991 between CalEnergy Company, Inc. and Kiewit Energy
Company.
16. Registration Rights Agreement dated as of June 19, 1991 (re: $11 5/8
options) between CalEnergy Company, Inc. and Kiewit Energy Company.
17. Amendment #1 to June 19, 1991 Registration Rights Agreement dated as
of November 20, 1991 between CalEnergy Company, Inc. and Kiewit
Energy Company.
18. Securities Purchase Agreement dated as of November 20, 1991 (re:
Series C Preferred Stock and 9.5% Exchange Debenture) between
CalEnergy Company, Inc. and Kiewit Energy Company.
19. Joint Venture Agreement dated as of December 14, 1993 between
CalEnergy Company, Inc. and Kiewit Construction Group and Kiewit
Diversified Group.
20. Indenture, dated as of March 24, 1994, relating to $529,640,000
10-1/4% Senior Discount Notes due 2004 between CalEnergy Company,
Inc. and IBJ Schroder Bank and Trust Company, as Trustee.
21. Indenture, dated as of July 21, 1995, relating to $200,000,000 9-7/8%
Limited Recourse Senior Secured Notes Due 2004 between CalEnergy
Company, Inc. and The Bank of New York, as Trustee.
22. Indenture, dated as of April 10, 1996, relating to 6-1/4% Convertible
Junior Subordinated Deferrable Interest Debentures Due 2016 between
CalEnergy Company, Inc. and The Bank of New York, as Trustee.
23. Indenture, dated as of September 20, 1996, relating to $225,000,000
9-1/2% Senior Notes due September 15, 2006 CalEnergy Company, Inc.
and IBJ Schroder Bank and Trust Company, as Trustee.
24. Indenture, dated as of February 26, 1997, relating to 6-1/4%
Convertible Junior Subordinated Debentures Due 2012 between CalEnergy
Company, Inc. and The Bank of New York, as Trustee.
25. Master Trust Deed, dated October 22, 1990, relating
to(pound)55,00,000 12.661% Bonds due 1999 of Northern Electric plc.
26. Master Trust Deed, dated October 16, 1995, relating to
(pound)100,00,000 8.625% Guaranteed Bonds due 2005 and
(pound)100,00,000 8.875% Guaranteed Bonds due 2020 of Northern
Electric Finance plc.
27. 10-1/4% Senior Discount Notes due 2004 of CalEnergy Company, Inc.
28. 9-7/8% Limited Recourse Senior Secured Notes Due 2004 of CalEnergy
Company, Inc.
29. 6-1/4% Convertible Junior Subordinated Deferrable Interest Debentures
Due 2016 of CalEnergy Company, Inc.
30. 9-1/2% Senior Notes due September 15, 2006 of CalEnergy Company, Inc.
31. 6-1/4% Convertible Junior Subordinated Debentures Due 2012 of
CalEnergy Company, Inc.
32. Credit Agreement, dated as of October 28, 1996, by and among,
CalEnergy Company, Inc. and the banks and other financial
institutions parties thereto and Credit Suisse, New York branch.
33. Purchase Agreement, dated August 7, 1997, among CalEnergy Capital
Trust III, CalEnergy Company, Inc., Credit Suisse First Boston
Corporation and Lehman Brothers Inc.
34. Registration Rights Agreement, dated August 12, 1997, among CalEnergy
Capital Trust III, CalEnergy Company, Inc. and the Purchasers named
therein.
35. Common Securities Purchase Agreement, dated August 12, 1997, between
CalEnergy Capital Trust III and CalEnergy Company, Inc.
36. Debenture Purchase Agreement, dated August 12, 1997, between
CalEnergy Capital Trust III and CalEnergy Company, Inc.
37. Letter of Representations, dated August 12, 1997, among CalEnergy
Capital Trust III, The Bank of New York and The Depositary Trust
Company.
ANNEX C
-------
Morris Nichols Opinion
1. The Trust is a duly created and validly existing business trust in
good standing under the laws of the State of Delaware. All filings required
under the laws of the State of Delaware with respect to the creation and valid
existence of the Trust as a Delaware statutory business trust have been made.
The Trust has all requisite business trust power and authority to own its
property and conduct its business as described in the Offering Document;
2. The Offered Securities have been duly authorized by the Trust for
issuance and, when issued in accordance with the Trust Agreement and delivered
and paid for in accordance with the Purchase Agreement, will be validly issued
and (subject to the terms of the Trust Agreement) fully-paid and nonassessable
undivided beneficial interests in the assets of the Trust. Under the Trust
Agreement, the issuance of the Offered Securities is not subject to preemptive
or other similar rights. The Offered Securities, when issued in accordance
with the Trust Agreement and delivered against and paid for in accordance with
the Purchase Agreement, will have the rights set forth in the Trust Agreement,
subject to (A) bankruptcy, insolvency, reorganization, fraudulent conveyance,
moratorium or other laws of general application relating to or affecting the
enforcement of creditors' rights and remedies, as from time to time in effect,
(B) application of equitable principles (regardless of whether such
enforceability is considered in a proceeding in equity or at law), and (C)
considerations of public policy or the effect of applicable law relating to
fiduciary duties. The Trust Agreement is a legal, valid and binding obligation
of the Guarantor, enforceable against the Guarantor in accordance with its
terms, except as such enforceability may be limited by (A) bankruptcy,
insolvency, reorganization, fraudulent conveyance, moratorium or other laws of
general application relating to or affecting the enforcement of creditors'
rights and remedies, as from time to time in effect, (B) application of
equitable principles (regardless of whether such enforceability is considered
in a proceeding in equity or at law), and (C) considerations of public policy
or the effect of applicable law relating to fiduciary duties. Under the
Delaware Business Trust Act and the terms of the Trust Agreement, the holders
of the Offered Securities, in such capacity, will (subject to the terms of the
Trust Agreement) 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; provided, however, we
express no opinion with respect to the liability of any holder of Offered
Securities who is, was or may become a named Trustee of the Trust. We note
that Holders of the Offered Securities will be subject to the withholding
provisions of Section 11.4 of the Trust Agreement and may be required to make
payment or provide indemnity or security as set forth therein;
3. The Common Securities have been duly authorized by the Trust for
issuance and, when issued, delivered and paid for in accordance with the Trust
Agreement and upon delivery by the Trust to the Guarantor against payment
therefor as described in the Offering Document, will be validly issued and
(subject to the terms of the Trust Agreement) fully-paid and nonassessable
undivided beneficial interests in the assets of the Trust. We note that
Holders of the Common Securities will be subject to the withholding provisions
of Section 11.4 of the Trust Agreement and may be required to make payment or
provide indemnity or security as set forth therein. Under the Trust Agreement,
the issuance of the Common Securities is not subject to preemptive or other
similar rights. All of the issued and outstanding Common Securities of the
Trust are owned of record by the Guarantor;
4. The Registration Rights Agreement and the Purchase Agreement each
has been duly authorized by the Trust;
5. The Trust has the requisite business trust power and authority to
authorize, issue and sell the Offered Securities and the Common Securities as
contemplated by the Purchase Agreement and the Trust Agreement and to execute,
deliver and perform the Purchase Agreement and the Registration Rights
Agreement;
6. No governmental approval of any Delaware governmental authority
(other than under or pursuant to any Delaware "blue sky" laws as to which we
express no opinion) is required for the issuance and sale of the Offered
Securities, the issuance by the Guarantor of the Guarantee, the compliance by
the Trust and the Guarantor with all of the provisions of the Purchase
Agreement and the Registration Rights Agreement, the issuance of the
Underlying Shares upon conversion of the Junior Subordinated Debentures, the
sale to the Trust of the Junior Subordinated Debentures, the purchase by the
Guarantor of the Common Securities, the execution, delivery and performance by
the Trust and the Guarantor of each of the Purchase Agreement and the
Registration Rights Agreement and by the Guarantor of the Guarantor
Agreements, the consummation of the transactions therein contemplated and the
use of the proceeds of the offering by the Trust to purchase the Junior
Subordinated Debentures as described in the Offering Document;
7. The issuance and sale of the Offered Securities and the Common
Securities in accordance with the terms of the Purchase Agreement and the
Trust Agreement, the use of the proceeds of the offering to purchase the
Junior Subordinated Debentures as described in the Offering Document, the
execution, delivery and performance by the Trust of the Purchase Agreement and
the Registration Rights Agreement, the compliance by the Trust with the
provisions of the Purchase Agreement and the Registration Rights Agreement,
the purchase of the Junior Subordinated Debentures by the Trust, the purchase
by the Guarantor of the Common Securities and the issuance of the Underlying
Shares upon conversion of the Offered Securities and the Junior Subordinated
Debentures will not (a) to our knowledge, constitute a violation of or a
default under any indenture, mortgage, deed of trust, loan agreement or other
agreement set forth on Exhibit I hereto (which the Trust has certified to us
are the only agreements, instruments or documents of any kind to which the
Trust is a party or by which the Trust is bound or to which any of the
property or assets of the Trust are subject), (b) violate the provisions of
the Trust Agreement or the Certificate of Trust of the Trust or (c) result in
a violation of any Applicable Laws; for purposes of the opinion set forth in
this paragraph, the term "Applicable Laws" means those laws, rules and
regulations of the State of Delaware, including the Business Trust Act, that,
in our experience, are normally applicable to transactions of the type
contemplated by the Purchase Agreement, as in effect on the date hereof; and
8. To our knowledge, there is no action, suit or proceeding pending
or judgments outstanding against the Trust in any court or agency or
instrumentality in the United States of America that relates to or places or
may place in question the validity or enforceability of the Purchase
Agreement, the Registration Rights Agreement or the issuance and sale of the
Offered Securities and the Common Securities by the Trust, the exchange of the
Junior Subordinated Debentures for Offered Securities or the purchase of the
Junior Subordinated Debentures by the Trust.
EXHIBIT I
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1. Purchase Agreement, dated August 7, 1997, among CalEnergy Capital
Trust III, CalEnergy Company, Inc., Credit Suisse First Boston
Corporation and Lehman Brothers Inc.
2. Registration Rights Agreement, dated August 12, 1997, among CalEnergy
Capital Trust III, CalEnergy Company, Inc. and the Purchasers named
therein.
3. Common Securities Purchase Agreement, dated August 12, 1997, between
CalEnergy Capital Trust III and CalEnergy Company, Inc.
4. Debenture Purchase Agreement, dated August 12, 1997, between
CalEnergy Capital Trust III and CalEnergy Company, Inc.
5. Letter of Representations, dated August 12, 1997, among CalEnergy
Capital Trust III, The Bank of New York and The Depositary Trust
Company.
ANNEX D
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Emmet, Marvin Opinion
1. The Bank of New York is duly incorporated and is validly existing
and in good standing as a banking corporation under the laws of the State of
New York.
2. The execution, delivery and performance by the Property Trustee of
the Declaration, the execution, delivery and performance by the Guarantee
Trustee of the Guarantee and the execution, delivery and performance by the
Debenture Trustee of the Indenture have been duly authorized by all necessary
corporate action on the part of the Property Trustee, the Guarantee Trustee
and the Debenture Trustee, respectively. The Declaration, the Guarantee and
the Indenture have been duly executed and delivered by the Property Trustee,
the Guarantee Trustee and the Debenture Trustee, respectively, and constitute
the legal, valid and binding obligations of the Property Trustee, the
Guarantee Trustee and the Debenture Trustee, respectively, enforceable against
the Property Trustee, the Guarantee Trustee and the Debenture Trustee,
respectively, in accordance with their terms, except as enforcement thereof
may be limited by applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws relating to the enforcement of creditors' rights
generally, and by general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law).
3. The execution, delivery and performance of the Declaration, the
Guarantee and the Indenture by the Property Trustee, the Guarantee Trustee and
the Debenture Trustee, respectively, does not conflict with or constitute a
breach of the Organization Certificate or By-laws of the Property Trustee, the
Guarantee Trustee and the Debenture Trustee, respectively or the terms of any
indenture or other agreement or instrument known to such counsel and to which
the Property Trustee, the Guarantee Trustee or the Debenture Trustee,
respectively, is a party or is bound or any judgment, order or decree known to
such counsel to be applicable to the Property Trustee, the Guarantee Trustee
or the Debenture Trustee, respectively, of any court, regulatory body,
governmental body or arbitrator having jurisdiction over the Property Trustee,
the Guarantee Trustee or the Debenture Trustee, respectively.
4. No consent, approval or authorization of, or registration with or
notice to any federal or New York State banking authority is required for the
execution, delivery or performance by the Property Trustee, the Guarantee
Trustee or the Debenture Trustee of the Declaration, the Guarantee and the
Indenture, respectively.
ANNEX E
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Richards, Layton Opinion
The Bank of New York (Delaware) has been duly incorporated
and is validly existing in good standing as a banking corporation under the
laws of the State of Delaware and has the corporate power to act as Trustee of
a Delaware business trust under the laws of the State of Delaware, 12 Del.C.
ss. 3801, et. seq.