- - --------------------------------------------------------------------------------
- - --------------------------------------------------------------------------------
NIAGARA MOHAWK POWER CORPORATION
SENIOR NOTES
____________________
INDENTURE
Dated as of June 30, 1998
____________________
____________________
IBJ SCHRODER BANK & TRUST COMPANY
____________________
Trustee
ARTICLE 1
DEFINITIONS AND INCORPORATION BY REFERENCE. . . . . . . . . . . . . - 1 -
Section 1.01. Definitions. . . . . . . . . . . . . . . . . . . . . - 1 -
Section 1.02. Other Definitions. . . . . . . . . . . . . . . . . . - 17 -
Section 1.03. Incorporation by Reference of Trust Indenture Act. . - 18 -
ARTICLE 2
THE SENIOR NOTES. . . . . . . . . . . . . . . . . . . . . . . . . . - 19 -
Section 2.01. Series And Terms of Senior Notes . . . . . . . . . . - 19 -
Section 2.02. Terms of Initial Series Senior Notes . . . . . . . . - 21 -
Section 2.03. Form and Dating. . . . . . . . . . . . . . . . . . . - 24 -
Section 2.04. Execution and Authentication . . . . . . . . . . . . - 24 -
Section 2.05. Registrar and Paying Agent . . . . . . . . . . . . . - 25 -
Section 2.06. Paying Agent and to Hold Money in Trust. . . . . . . - 25 -
Section 2.07. Holder Lists . . . . . . . . . . . . . . . . . . . . - 26 -
Section 2.08. Transfer and Exchange. . . . . . . . . . . . . . . . - 26 -
Section 2.09. Replacement Senior Notes . . . . . . . . . . . . . . - 27 -
Section 2.10. Outstanding Senior Notes . . . . . . . . . . . . . . - 27 -
Section 2.11. Treasury Senior Notes. . . . . . . . . . . . . . . . - 27 -
Section 2.13. Cancellation . . . . . . . . . . . . . . . . . . . . - 28 -
Section 2.14. Record Date. . . . . . . . . . . . . . . . . . . . . - 28 -
Section 2.15. Cusip Number . . . . . . . . . . . . . . . . . . . . - 28 -
ARTICLE 3.
REDEMPTION AND REPURCHASE . . . . . . . . . . . . . . . . . . . . . - 29 -
Section 3.01. Certain Senior Notes Redeemable; Notices to Trustee. - 29 -
Section 3.02. Selection of Senior Notes to Be Redeemed . . . . . . - 29 -
Section 3.03. Notice of Redemption . . . . . . . . . . . . . . . . - 30 -
Section 3.04. Effect of Notice of Redemption.. . . . . . . . . . . - 31 -
Section 3.05. Deposit of Redemption Price. . . . . . . . . . . . . - 31 -
Section 3.06. Senior Notes Redeemed in Part. . . . . . . . . . . . - 31 -
Section 3.07. Optional and special Redemption of Initial Series
Senior Notes . . . . . . . . . . . . . . . . . . . . - 32 -
Section 3.08. Mandatory Redemption . . . . . . . . . . . . . . . . - 33 -
Section 3.09. Offer to Purchase by Application of Excess Proceeds. - 33 -
ARTICLE 4
COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 35 -
Section 4.01. Payment of Senior Notes. . . . . . . . . . . . . . . - 35 -
Section 4.02. Maintenance of Office or Agency. . . . . . . . . . . - 35 -
-i-
Section 4.03. Reports. . . . . . . . . . . . . . . . . . . . . . . - 36 -
Section 4.04. Compliance Certificate . . . . . . . . . . . . . . . - 36 -
Section 4.05. Taxes. . . . . . . . . . . . . . . . . . . . . . . . - 37 -
Section 4.06. Stay, Extension and Usury Laws.. . . . . . . . . . . - 37 -
Section 4.07. Restricted Payments. . . . . . . . . . . . . . . . . - 38 -
Section 4.08. Dividend and Other Payment Restrictions Affecting
Subsidiaries.. . . . . . . . . . . . . . . . . . . . - 39 -
Section 4.09. Incurrence of Indebtedness . . . . . . . . . . . . . - 40 -
Section 4.10. Proceeds of Certain Asset Sales. . . . . . . . . . . - 41 -
Section 4.11. Transaction with Affiliates. . . . . . . . . . . . . - 42 -
Section 4.12. Liens. . . . . . . . . . . . . . . . . . . . . . . . - 43 -
Section 4.13. Corporate Existence. . . . . . . . . . . . . . . . . - 43 -
Section 4.14. Offer to repurchase upon change of control
triggering event . . . . . . . . . . . . . . . . . . - 43 -
Section 4.15. Payments for Consents. . . . . . . . . . . . . . . . - 45 -
ARTICLE 5
SUCCESSORS. . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 45 -
Section 5.01. Merger, Consolidation, or Sale of Assets . . . . . . - 45 -
Section 5.02. Successor Corporation Substituted. . . . . . . . . . - 46 -
ARTICLE 6
DEFAULTS AND REMEDIES . . . . . . . . . . . . . . . . . . . . . . . - 46 -
Section 6.01. Events of Default. . . . . . . . . . . . . . . . . . - 46 -
Section 6.02. Acceleration . . . . . . . . . . . . . . . . . . . . - 48 -
Section 6.03. Other Remedies . . . . . . . . . . . . . . . . . . . - 49 -
Section 6.04. Waiver of past Defaults. . . . . . . . . . . . . . . - 49 -
Section 6.05. Control by Majority. . . . . . . . . . . . . . . . . - 49 -
Section 6.06. Limitation on Suits. . . . . . . . . . . . . . . . . - 49 -
Section 6.07. Rights of Holders of Senior Notes to Receive
Payment. . . . . . . . . . . . . . . . . . . . . . . - 50 -
Section 6.08. Collection Suit by Trustee . . . . . . . . . . . . . - 50 -
Section 6.09. Trustee May File Proofs of Claim . . . . . . . . . . - 50 -
Section 6.10. Priorities . . . . . . . . . . . . . . . . . . . . . - 51 -
Section 6.11. Undertaking for Costs. . . . . . . . . . . . . . . . - 51 -
ARTICLE 7
TRUSTEE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . - 52 -
Section 7.01. Duties of Trustee. . . . . . . . . . . . . . . . . . - 52 -
Section 7.02. Rights of Trustee. . . . . . . . . . . . . . . . . . - 53 -
Section 7.03. Individual Rights of Trustee . . . . . . . . . . . . - 54 -
Section 7.04. Trustee's Disclaimer . . . . . . . . . . . . . . . . - 54 -
Section 7.05. Notice of Defaults . . . . . . . . . . . . . . . . . - 54 -
Section 7.06. Reports by Trustee to Holders of the Senior Notes. . - 55 -
-ii-
Section 7.07. Compensation and Indemnity . . . . . . . . . . . . . - 55 -
Section 7.08. Replacement of Trustee . . . . . . . . . . . . . . . - 56 -
Section 7.09. Successor Trustee by Merger, Etc.. . . . . . . . . . - 57 -
Section 7.10. Eligibility, Disqualification. . . . . . . . . . . . - 57 -
Section 7.11. Preferential Collection of Claims Against Company. . - 57 -
ARTICLE 8
LEGAL DEFEASANCE AND COVENANT DEFEASANCE. . . . . . . . . . . . . . - 58 -
Section 8.01. Option to Effect Legal Defeasance or Covenant
Defeasance . . . . . . . . . . . . . . . . . . . . . - 58 -
Section 8.02. Legal Defeasance and discharge . . . . . . . . . . . - 58 -
Section 8.03. Covenant Defeasance. . . . . . . . . . . . . . . . . - 58 -
Section 8.04. Conditions to Legal or Covenant Defeasance . . . . . - 59 -
Section 8.05. Deposited Money and Government Senior Notes to Be
Held in Trust; Other Miscellaneous Provisions. . . . - 60 -
Section 8.06. Repayment of Company . . . . . . . . . . . . . . . . - 61 -
Section 8.07. Reinstatement. . . . . . . . . . . . . . . . . . . . - 61 -
ARTICLE 9
AMENDMENT, SUPPLEMENT AND WAIVER. . . . . . . . . . . . . . . . . . - 62 -
Section 9.01. Without Consent of Holders of Senior Notes . . . . . - 62 -
Section 9.02. With Consent of Holders of Senior Notes. . . . . . . - 63 -
Section 9.03. Compliance with Trust Indenture Act. . . . . . . . . - 65 -
Section 9.04. Revocation and Effect of Consents. . . . . . . . . . - 65 -
Section 9.05. Notation on or Exchange of Senior Notes. . . . . . . - 66 -
Section 9.06. Trustee to Sign Amendments, Etc. . . . . . . . . . . - 66 -
Section 9.07. Effect Of Supplemental Indentures. . . . . . . . . . - 66 -
ARTICLE 10
MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . - 66 -
Section 10.01. Trust Indenture Act Controls . . . . . . . . . . . . - 66 -
Section 10.02. Notices. . . . . . . . . . . . . . . . . . . . . . . - 67 -
Section 10.03. Communication by Holders of Senior Notes with
Other Holders of Senior Notes. . . . . . . . . . . . - 68 -
Section 10.04. Certificate And Opinion as to Conditions Precedent . - 68 -
Section 10.05. Statements Required in Certificate or Opinion. . . . - 68 -
Section 10.06. Rules by Trustee and Agents. . . . . . . . . . . . . - 69 -
Section 10.07. No Personal Liability of Directors, Officers,
Employees and Stockholders . . . . . . . . . . . . . - 69 -
Section 10.08. Governing Law. . . . . . . . . . . . . . . . . . . . - 69 -
Section 10.09. No Adverse Interpretation of Other Agreements. . . . - 69 -
-iii-
Section 10.10. Successors . . . . . . . . . . . . . . . . . . . . . - 69 -
Section 10.11. Severability . . . . . . . . . . . . . . . . . . . . - 69 -
Section 10.12. Counterpart Originals. . . . . . . . . . . . . . . . - 70 -
Section 10.13. Table of Contents, Headings, Etc.. . . . . . . . . . - 70 -
-iv-
INDENTURE dated as of June 30, 1998, between Niagara Mohawk Power
Corporation, a New York corporation (the "Company") and IBJ Schroder Bank &
Trust Company, as trustee (the "Trustee").
The Company and the Trustee agree as follows for the benefit of each
other and for the equal and ratable benefit of the Holders of the Senior Notes
issued hereunder.
ARTICLE 1
DEFINITIONS AND INCORPORATION
BY REFERENCE
SECTION 1.01. DEFINITIONS.
"ACCRETED VALUE" means, for each $1,000 face amount of Senior
Discount Notes as of any date of determination prior to July 1, 2003, the sum
of (a) the initial offering price of each Senior Discount Note and (b) that
portion of the excess of the principal amount of each Senior Discount Note over
such initial offering price which shall have been accreted thereon through such
date, such amount to be so accreted on a daily basis and compounded
semi-annually on each January 1 and July 1 at the rate of ___% per annum from
the date of issuance of the Senior Discount Notes through the date of
determination.
"ACQUIRED DEBT" means, with respect to any specified Person, (i)
Indebtedness of any other Person existing at the time such other Person is
merged with or into or became a Restricted Subsidiary of such specified
Person including, without limitation, Indebtedness incurred in connection
with, or in contemplation of, such other Person merging with or into or
becoming a Restricted Subsidiary of such specified Person and (ii)
Indebtedness secured by a Lien encumbering any asset acquired by such
specified Person.
"AFFILIATE" of any specified Person means any other Person directly
or indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For purposes of this definition, "control"
(including, with correlative meanings, the terms "controlling," "controlled by"
and "under common control with"), as used with respect to any Person, shall
mean the possession, directly or indirectly, of the power to direct or cause
the direction of the management or policies of such Person, whether through the
ownership of voting securities, by agreement or otherwise; PROVIDED that
beneficial ownership of 10% or more of the voting securities of a Person shall
be deemed to be control.
"AGENT" means any Registrar, Paying Agent or co-registrar.
"BANKRUPTCY LAW" means Title 11, U.S. Code or any similar federal or
state law for the relief of debtors.
"BOARD OF DIRECTORS" means the Board of Directors, if any, of the
Company or any authorized committee thereof.
"BOARD RESOLUTION" means a resolution authorized by the Board of
Directors.
"BUSINESS DAY" means any day other than a Legal Holiday.
"CAPITAL LEASE OBLIGATION" means, at the time any determination
thereof is to be made, the amount of the liability in respect of a capital
lease that would at such time be required to be capitalized on a balance sheet
of such Person in accordance with GAAP.
"CAPITAL STOCK" means (i) in the case of a corporation, shares of
corporate stock, (ii) in the case of an association or business entity, any and
all shares, interests, participations, rights or other equivalents (however
designated) of corporate stock, (iii) in the case of a partnership, partnership
interests (whether general or limited) and (iv) any other interest or
participation that confers on a Person the right to receive a share of the
profits and losses of, or distributions of assets of, the issuing Person.
"CASH EQUIVALENTS" means (i) Government Securities having maturities
of not more than eighteen months from the date of acquisition; (ii)
certificates of deposit and Eurodollar time deposits with maturities of
eighteen months or less from the date of acquisition, bankers' acceptances with
maturities not exceeding eighteen months and overnight bank deposits, in each
case with any lender party to the Credit Facility or with any U.S. commercial
bank having capital and surplus in excess of $500.0 million; (iii) repurchase
obligations with a term of not more than seven days for underlying securities
of the types described in clauses (i) and (ii) above entered into with any
financial institution meeting the qualifications specified in clause (ii)
above; (iv) commercial paper having either the highest or second highest rating
obtainable from Moody's or S&P and in each case maturing within six months
after the date of acquisition; (v) other corporate debt or asset backed or
mortgage backed securities with an Investment Grade rating from Moody's or S&P
and which mature within eighteen months; and (vi) money market mutual funds.
"CHANGE OF CONTROL" means the occurrence of any of the following:
(i) the sale, lease, transfer, conveyance or other disposition (other than by
way of merger or consolidation), in one or a series of related transactions,
of all or substantially all of the assets of the Company and its Restricted
Subsidiaries taken as a whole; (ii) the adoption of a plan relating to the
liquidation or dissolution of the Company; (iii) the consummation of any
transaction (including, without limitation any merger or consolidation) the
result of which is that any "person" or "group" (as such terms are defined in
Sections 13(d)(3) and 14(d)(2) of the Exchange Act) becomes
-2-
the "beneficial owner" (as such term is defined in Rule 13d-3 and Rule 13d-5
under the Exchange Act), directly or indirectly, of more than 50% of the
total voting power in the aggregate of all classes of Capital Stock of the
Company then outstanding normally entitled to vote in the election of
directors; or (iv) the first day on which a majority of the members of the
Board of Directors of the Company or any Successor Entity are not Continuing
Directors; PROVIDED, HOWEVER, that the consummation of a transaction in which
the outstanding shares of Common Stock are exchanged for common stock of a
Person that thereafter will be the sole shareholder of the Company as part of
a holding company reorganization shall not be deemed a "Change of Control."
For purposes of this definition, any transfer of an equity interest of an
entity that was formed for the purpose of acquiring voting stock of the
Company will be deemed to be a transfer of such portion of such voting stock
as corresponds to the portion of the equity of such entity that has been so
transferred.
"CHANGE OF CONTROL TRIGGERING EVENT" means the occurrence of a Change
of Control and a Rating Decline.
"COMMON STOCK" means the Company's common stock, $1.00 par value.
"COMPANY ORDER" means a written order, signed in the name of the
Company by an authorized Officer and delivered to the Trustee, for the
authentication and delivery of Senior Notes of the relevant series pursuant to
this Indenture or any Supplemental Indenture pursuant to the procedures
described herein or therein.
"CONSOLIDATED NET WORTH" means, with respect to any Person as of any
date, the sum of (i) the consolidated equity of the common stockholders (or
equity holders) of such Person and its consolidated Restricted Subsidiaries as
of such date, PLUS (ii) the respective amounts reported on such Person's
balance sheet as of such date with respect to any series of Preferred Stock
that by its terms is not entitled to the payment of dividends unless such
dividends may be declared and paid only out of net earnings in respect of the
year of such declaration and payment, but only to the extent of any cash
received by such Person upon issuance of such Preferred Stock, LESS (x) all
write-ups (other than write-ups resulting from foreign currency translations
and write-ups of tangible assets of a going concern business made within 12
months after the acquisition of such business) subsequent to the Initial
Issuance Date in the book value of any asset owned by such Person or a
Restricted Subsidiary of such Person, (y) all investments as of such date in
Unrestricted Subsidiaries and (z) all unamortized debt discount and expense and
unamortized deferred charges as of such date, all of the foregoing determined
in accordance with GAAP.
"CONTINUING DIRECTORS" means, as of any date of determination, any
member of the Board of Directors of the Company who (i) was a member of such
Board of Directors on the Initial Issuance Date or (ii) was nominated for
election or elected to such Board of Directors with the approval of a majority
of the Continuing Directors who were members of such Board at the time of such
nomination or election.
-3-
"CORPORATE TRUST OFFICE OF THE TRUSTEE" shall be at the address of
the Trustee specified in Section 10.02 or such other address as the Trustee may
give notice to the Company.
"CREDIT FACILITY" means the Company's $804.4 million credit facility
dated as of March 20, 1996 with a group of banks and Citibank as agent, as such
agreement is amended, modified, restated, extended, renewed, replaced or
refinanced from time to time.
"DEFAULT" means any event that is or with the passage of time or the
giving of notice or both would be an Event of Default.
"DISQUALIFIED STOCK" means any Capital Stock that, by its terms (or
by the terms of any security into which it is convertible or for which it is
exchangeable), or upon the happening of any event, matures or is mandatorily
redeemable, pursuant to a sinking fund obligation or otherwise, or redeemable
at the option of the holder thereof, in whole or in part, on or prior to the
date that is one year after the final maturity of the outstanding series of
Senior Notes with the longest maturity.
"DOLLAR " or "$" means a dollar or other equivalent unit in such coin
or currency of the United States as at the time shall be legal tender for the
payment of public and private debts in the United States.
"EQUITY INTERESTS" means Capital Stock and all warrants, options or
other rights to acquire Capital Stock (but excluding any debt security that is
convertible into, or exchangeable for, Capital Stock).
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended.
"FAIR VALUE" when applied to any property means its fair value to the
Company, which may be determined without physical inspection by use of
accounting and engineering records and other data maintained by, or available
to, the Company; PROVIDED that the Company delivers a Board Resolution
specifying the Fair Value of the assets being sold and, in the event of a
transaction in excess of $50.0 million, the Company also delivers an opinion of
a nationally recognized expert in the valuation of the assets being sold as to
the Fair Value of the assets being sold and that the transaction is fair to the
Company.
"FIRST MORTGAGE BONDS" means the securities and other Indebtedness
issued from time to time pursuant to the Company's Mortgage Trust Indenture
dated as of October 1, 1937 and the supplemental indentures thereto.
"FIXED CHARGE COVERAGE RATIO" of the Company and its Restricted
Subsidiaries means for any period, the ratio of (i) the sum (determined from
the consolidated income statement of the Company and its Restricted
Subsidiaries) of (A) operating income or operating loss of the Company
-4-
and its Restricted Subsidiaries, taken as a whole, for such period PLUS (B)
depreciation and amortization (including amortization of goodwill and other
intangibles and of the MRA Regulatory Asset and other non-cash regulatory
deferrals and amortizations) and other non-recurring, non-cash charges of the
Company and its Restricted Subsidiaries for such period to the extent that such
deprecation and amortization and other non-recurring, non-cash charges were
deducted in computing operating income or operating loss, in each case on a
consolidated basis and determined in accordance with GAAP, PLUS (C) provision
for taxes based on income or profits of the Company and its Restricted
Subsidiaries for such period to the extent deducted in determining operating
income, to (ii) the sum of (A) the consolidated interest expense of the Company
and its Restricted Subsidiaries for such period, whether paid or accrued
(including, without limitation, amortization of original issue discount,
non-cash interest payments, the interest component of all payments associated
with Capital Lease Obligations, imputed interest with respect to any sale and
leaseback transactions, commissions, discounts and other fees and charges
incurred in respect of letter of credit or bankers' acceptance financings
(unless such commissions, discounts and other fees and charges have been
deducted in calculating operating income), net payments (if any) pursuant to
Hedging Obligations and any interest paid by the Company or a Restricted
Subsidiary pursuant to a TIPES Transaction; PLUS (B) the consolidated interest
expense of the Company and its Restricted Subsidiaries that was capitalized
during such period; PLUS (C) any interest expense on Indebtedness of another
Person that is Guaranteed by the Company or one of its Restricted Subsidiaries
or secured by a Lien on assets of the Company or one of its Restricted
Subsidiaries (whether or not such Guarantee or Lien is called upon); PLUS (D)
the quotient obtained by dividing all cash dividend or other payments or
distributions on or in respect of any series of Preferred Stock (other than
Preferred Stock issued in a TIPES Transaction) of the Company or any of its
Restricted Subsidiaries by 1 minus the maximum statutory income tax rate then
applicable to the Company (expressed as a decimal), in each case, on a
consolidated basis and in accordance with GAAP. In the event that the Company
or any of its Restricted Subsidiaries incurs, assumes, Guarantees or redeems
any Indebtedness (other than revolving credit borrowings) or issues Preferred
Stock subsequent to the commencement of the period for which the Fixed Charge
Coverage Ratio is being calculated but prior to the date on which the event for
which the calculation of the Fixed Charge Coverage Ratio is made, then the
Fixed Charge Coverage Ratio shall be calculated giving PRO FORMA effect to such
incurrence, assumption, Guarantee or redemption of Indebtedness, or such
issuance or redemption of Preferred Stock, as if the same had occurred at the
beginning of the applicable reference period.
"FOSSIL AND HYDRO GENERATING ASSETS" means the Generating Assets
other than the Nuclear Generating Assets.
"GAAP" means generally accepted accounting principles in use at the
Initial Issuance Date or, at the option of the Company, other generally
accepted accounting principles which are in use at the time of their
determination; in determining generally accepted accounting principles, the
Company may, but shall not be required to, conform to any accounting order,
rule or regulation of any
-5-
regulatory authority having jurisdiction over the electric generating,
transmission or distribution operations of the Company.
"GENERATING ASSETS" means the Company's nuclear, fossil and
hydroelectric generation plants other than the Oswego Plant, and any related
asset necessary for the operation of any such plant and any associated license
or permit.
"GOVERNMENT SECURITIES" means securities which are (i) direct
obligations of the United States of America for the payment of which its full
faith and credit is pledged or (ii) obligations of a Person controlled or
supervised by and acting as an agency or instrumentality of the United States
of America the timely payment of which is unconditionally guaranteed by the
full faith and credit of the United States of America which, in either case,
are not callable or redeemable at the option of the issuer thereof or otherwise
subject to prepayment, and shall also include a depository receipt issued by a
New York Clearing House bank or trust company as custodian with respect to any
such Government Securities or a specific payment or interest on or principal of
any such Government Securities held by such custodian for the account of the
holder of a depository receipt, PROVIDED that (except as required by law) such
custodian is not authorized to make any deduction from the amount payable to
the holder of such depository receipt or from any amount held by the custodian
in respect of the Government Securities or the specific payment of interest on
or principal of the Government Securities evidenced by such depository receipt.
"GRADATION" means a gradation within a Rating Category or a change
to another Rating Category, which shall include "+" and "-", in the case of
S&P's current Rating Categories (e.g., a decline from BB+ to BB would
constitute a decrease of one gradation); "1", "2" and "3", in the case of
Moody's current Rating Categories (e.g. a decline from B1 to B2 would
constitute a decrease of one gradation); or the equivalent in respect of
successor Rating Categories used by Rating Agencies other than S&P or Moody's.
"GUARANTEE" means a guarantee (other than by endorsement of
negotiable instruments for collection in the ordinary course of business),
direct or indirect, in any manner (including, without limitation, letters of
credit, reimbursement agreements and support, "keep well" or similar agreements
in respect thereof), of all or any part of any Indebtedness.
"HEDGING OBLIGATIONS" means, with respect to any Person, the
obligations of such Person under any interest rate, currency or commodity swap
agreement, interest rate, currency or commodity future agreement, interest rate
cap or collar agreement, interest rate, currency or commodity hedge agreement,
and any put, call or other agreement designed to protect such Person against
fluctuations in interest rates, currency exchange rates or commodity prices.
"HOLDER" means a person in whose name a Senior Note is registered.
-6-
"INDEBTEDNESS" means, with respect to any Person, any indebtedness
of such Person, whether or not contingent, in respect of borrowed money or
evidenced by bonds, notes, debentures or similar instruments or letters of
credit (or reimbursement agreements in respect thereof) or banker's
acceptances or representing Capital Lease Obligations of such Person or the
balance deferred and unpaid of the purchase price of any property or
representing any Hedging Obligations of such Person, except any such balance
that constitutes an accrued expense or trade payable, if and to the extent
any of the foregoing indebtedness (other than letters of credit and Hedging
Obligations) would appear as a liability upon a balance sheet of such Person
prepared in accordance with GAAP (provided, that any debt instrument issued
by the Company or a Restricted Subsidiary in a TIPES Transaction shall be
deemed Indebtedness of the Company regardless of its characterization on any
such balance sheet), as well as all Indebtedness of others secured by a Lien
on any asset of such Person (whether or not such indebtedness is assumed by
such Person) and, to the extent not otherwise included, any Guarantees by
such Person of any indebtedness of any other Person.
"INDENTURE" means this Indenture, as amended or supplemented from
time to time.
"INITIAL ISSUANCE DATE" means the date of closing of the public
offering of the Initial Series Senior Notes as set forth in a Company Order.
"INITIAL SERIES SENIOR NOTES" means the Senior Discount Notes and
the Series A through G Senior Notes issued on the Initial Issuance Date.
"INVESTMENT" means, with respect to any Person, any investment by
such Person in other Persons (including Affiliates) in the forms of direct or
indirect loans (including Guarantees of Indebtedness or other obligations),
advances (excluding commission, travel and similar advances to employees made
in the ordinary course of business) or capital contributions, purchases or
other acquisitions for consideration of Indebtedness, Equity Interests or
other securities and all other items that are or would be classified as
investments on a balance sheet prepared in accordance with GAAP; PROVIDED,
HOWEVER, that an acquisition of assets, Equity Interests or other securities
by the Company for consideration consisting of assets or Capital Stock (other
than Disqualified Stock) shall not be deemed to be an Investment.
"INVESTMENT GRADE" means BBB- or above, in the case of S&P (or its
equivalent under any successor rating categories of S&P), or the equivalent
in respect of the Rating Categories of any other Rating Agency.
"INVESTMENT GRADE DATE" means the date of delivery by the Company
to the Trustee of an Officers' Certificate to the effect that the Senior
Notes of the series having the longest maturity then outstanding have been
rated Investment Grade by (i) S&P and Moody's or (ii) S&P or Moody's and at
least one other Rating Agency identified in such certificate.
- 7 -
"IPP BUYOUT" means the termination, restatement or amendment of
certain power purchase agreements in exchange for cash and securities (or the
proceeds of the sale by the Company of securities) pursuant to the terms of
the Master Restructuring Agreement.
"LEGAL HOLIDAY" means a Saturday, a Sunday or a day on which
banking institutions in the City of New York or at a place of payment are
authorized by law, regulation or executive order to remain closed. If a
payment date is a Legal Holiday at a place of payment, payment may be made at
that place on the next succeeding day that is not a Legal Holiday, and no
interest shall accrue for the intervening period.
"LIEN" means, with respect to any asset, any mortgage, lien,
pledge, encumbrance, charge, or adverse claim affecting title or resulting in
a charge against real or personal property, or a security interest of any
kind in respect of such asset, whether or not filed, recorded or otherwise
perfected under applicable law (including any conditional sale or other title
retention agreement, any lease in the nature thereof, any option, other
agreement to sell or give a security interest in and any filing of or
agreement to give any financing statement under the Uniform Commercial Code
(or equivalent statutes) of any jurisdiction).
"MAKE WHOLE PREMIUM" with respect to any Senior Note shall mean
with respect to any prepayment of such Senior Note in circumstances requiring
the payment of a Make Whole Premium, an amount equal to (i) in the case of
the Series A through G Notes the excess of (a) the aggregate present value as
of the date of such prepayment of the expected future cash flows of such
Senior Note (for the avoidance of doubt, such amounts shall include all
principal and interest payable with respect to such Senior Note) (exclusive
of interest accrued to the date of prepayment) that, but for such prepayment,
would have been payable if such prepayment had not been made, all
determinated by discounting such amounts at a rate which is equal to the
Treasury Rate plus .50% over (b) the aggregate principal amount of the Senior
Note then to be prepaid and (ii) in the case of the Senior Discount Notes (if
such prepayment occurs prior to July 1, 2003), the excess of (a) the present
value of the sum of all remaining interest (excluding accrued and unpaid
interest, if any), premium and principal payments that would become due on
the Senior Discount Notes if they were to remain outstanding and be redeemed
on July 1, 2003, computed using a discount rate equal to the Treasury Rate
plus .50% over (b) the Accreted Value of the Senior Discount Note then to be
prepaid. For purposes of any determination of the Make Whole Premium:
"TREASURY RATE" shall mean at any time with respect to the Senior
Notes being prepaid (a) the yield reported on page C4 of the Bloomberg
Financial Markets Service (or, if not available, any other nationally
recognized trading screen reporting on-line intra day trading in
United States government securities) at 11:00 A.M. (New York, New York
time) for those actively traded United States government securities
having a maturity (rounded to the nearest month) corresponding to the
remaining Weighted Average Life to Maturity of the Senior Notes being
prepaid or (b) in the event that no nationally
- 8 -
recognized trading screen reporting on-line intraday trading in
United States government securities is available, Treasury Rate
shall mean the weekly average of the yield to maturity on the
United States Treasury obligations with a constant maturity (as
compiled by and published in the most recently published issue of
the United States Federal Reserve Statistical Release designated
H.15(519) or its successor publication) most nearly equal to (by
rounding to the nearest month) the Weighted Average Life to
Maturity of the Senior Notes then being prepaid. If no maturity
exactly corresponding to such Weighted Average Life to maturity of
such Senior Notes shall appear therein, the weekly average yield
for the two most closely corresponding published maturities shall
be calculated pursuant to the foregoing sentence and the Treasury
Rate shall be interpolated or extrapolated, as the case may be,
from such yields on a straight-line basis (rounding, in the case of
relevant periods, to the nearest month).
"MASTER RESTRUCTURING AGREEMENT" means the Master Restructuring
Agreement dated July 9, 1997 among the Company and the independent power
producer parties thereto, as amended from time to time.
"MEDIUM-TERM NOTES" means the unsecured variable rate notes issued
pursuant to an indenture between the Company and IBJ Schroder Bank & Trust
Company, as trustee.
"MOODY'S" means Moody's Investors Service, Inc., or any successor
to its securities ratings business.
"MRA REGULATORY ASSET" means the item designated as such on the
Company's balance sheet, which represents amounts that the Company is
permitted to collect from customers, pursuant to the regulations of the PSC,
in respect of the IPP Buyout and the other transactions contemplated by the
Master Restructuring Agreement.
"NET PROCEEDS" means the aggregate cash proceeds received by a
Person in respect of any sale of assets, net of amounts paid to minority
interests, co-owners or lienholders, the direct costs relating to such sale
(including, without limitation, legal, accounting and investment banking
fees, and sales commissions), taxes paid or payable which are attributable to
such sale (after taking into account any available tax credits or deductions
and any tax sharing arrangements relating to such assets) and any cash
reserve for adjustment in respect of the sale price of such asset or assets
established in accordance with GAAP.
"NON-RECOURSE DEBT" means Indebtedness (i) as to which neither the
Company nor any of its Restricted Subsidiaries (a) provide credit support of
any kind (including any undertaking, agreement or instrument that would
constitute Indebtedness), (b) is directly or indirectly liable (as a
guarantor or otherwise), or (c) constitutes the lender; and (ii) no default
with respect to which (including any rights that the Holders thereof may have
to take enforcement action against an
- 9 -
Unrestricted Subsidiary) would permit (upon notice, lapse of time or both)
any Holder of any other Indebtedness of the Company or any of its Restricted
Subsidiaries to declare a default on such other Indebtedness or cause the
payment thereof to be accelerated or payable prior to its stated maturity;
and (iii) as to which the lenders have been notified in writing that they
will not have any recourse to the stock or assets of the Company or any of
its Restricted Subsidiaries.
"NUCLEAR GENERATING ASSETS" means the Company's interest in Units 1
and 2 of the Nine Mile Point Nuclear Generating Plant, and any related asset
necessary for the operation of such plants and any associated license or
permit.
"OBLIGATIONS" means any principal, interest, penalties, fees,
indemnifications, reimbursements, damages and other liabilities payable under
the documentation governing any Indebtedness.
"OFFICERS" means the Chief Executive Officer, the President, the
Executive Vice President, the Treasurer, any Assistant Treasurer, Controller,
Secretary or any Vice President of the Company.
"OFFICERS' CERTIFICATE" means a certificate signed on behalf of the
Company by two Officers of the Company, one of whom must be the principal
executive officer, the principal financial officer, the treasurer or the
principal accounting officer of the Company, that meets the requirements of
Section 10.05 hereof.
"OPERATING CASH FLOW" means, with respect to any Person for any
period, the net cash provided by operating activities of such Person and its
Restricted Subsidiaries for such period, on a consolidated basis, determined
in accordance with GAAP.
"OPINION OF COUNSEL" means an opinion from legal counsel who is
reasonably acceptable to the Trustee, that meets the requirements of Section
1005 hereof. The counsel may be an employee of or counsel to the Company.
"OSWEGO PLANT" means the interest of the Company in the fossil fuel
electric generation plant located near Lake Ontario in Oswego, New York.
"OTHER INDEBTEDNESS" shall mean Senior Indebtedness incurred after
the Initial Issuance Date, except (a) Permitted Refinancing Indebtedness with
respect to First Mortgage Bonds in an amount equal to the aggregate amount of
First Mortgage Bonds issued and outstanding at the closing on the Initial
Issuance Date; (b) Permitted Refinancing Indebtedness with respect to the
Credit Facility; and (c) Indebtedness under the Securitization Transaction
and the Receivables Financing and any Permitted Refinancing Indebtedness with
respect thereto.
- 10 -
"PERMITTED ASSET SWAP" means any swap of utility property or assets
(or assets related or ancillary thereto) of the Company for other property or
assets that will be used in or in connection with the Company's utility
business.
"PERMITTED HEDGING AGREEMENT" of any Person shall mean any Hedging
Obligation entered into in the ordinary course of business or pursuant to the
Master Restructuring Agreement and not for speculation or trading purposes
that is designed to protect such Person against fluctuations in interest
rates or currency exchange rates or commodity prices with respect to
Indebtedness incurred or proposed to be incurred or assets used in the
business in the ordinary course and which in the case of agreements relating
to interest rates shall have a notional amount no greater than the payments
due with respect to the Indebtedness being hedged thereby.
"PERMITTED INVESTMENT" means (a) an Investment in the Company or in
a Restricted Subsidiary of the Company (including Investments by the Company
in the First Mortgage Bonds or Senior Notes to the extent otherwise permitted
by this Indenture); (b) an Investment in Cash Equivalents; (c) an Investment
by the Company or any Restricted Subsidiary in a Person, if as a result of
such Investment (i) such Person becomes a direct or indirect Restricted
Subsidiary of the Company or (ii) such Person is merged, consolidated or
amalgamated with or into, or transfers or conveys substantially all of its
assets to, or is liquidated into, the Company or a Restricted Subsidiary of
the Company; (d) an Investment in any Person owning or operating electric
generation, transmission or distribution facilities or gas distribution or
transportation or related systems in which the Company owns joint or
undivided interests; (e) an Investment in a Person formed as a special
purpose entity in conjunction with a Receivables Financing or Securitization
Transaction; (f) an Investment received in connection with the bankruptcy or
reorganization of customers and suppliers and in settlement of delinquent
obligations of, and other disputes with, customers and suppliers arising in
the ordinary course of business; and (g) any payment pursuant to those
existing Investments of the Company, including the nuclear decommissioning
trust fund and the employee benefits plan trusts, described in Schedule 1
attached hereto.
"PERMITTED REFINANCING INDEBTEDNESS" means any Indebtedness of the
Company or any of its Restricted Subsidiaries issued in exchange for, or the
net proceeds of which are used to renew, extend, refinance, replace
(including the replacement at any time following their stated maturity of
First Mortgage Bonds or Senior Notes that are repaid at maturity, or the
replacement at any time following its stated maturity of the Credit Facility
or the Receivables Financing), defease or refund, in whole or in part, other
Indebtedness of the Company or any of its Restricted Subsidiaries; PROVIDED,
HOWEVER, that (i) the principal amount of such Permitted Refinancing
Indebtedness does not exceed the principal amount of the Indebtedness so
renewed, extended, refinanced, replaced, defeased or refunded (plus the
amount of accrued interest and premiums (including premium paid on open
market purchases), if any, thereon and the reasonable expenses incurred in
connection therewith); (ii) Permitted Refinancing Indebtedness that is
incurred prior to the maturity of the Indebtedness that it is renewing,
extending, refinancing, replacing, defeasing or refunding must be on terms at
least as favorable to the holders of
- 11 -
Notes as those contained in the documentation governing the Indebtedness
being renewed, extended, refinanced, replaced, defeased or refunded and: (a)
if such Indebtedness has a final maturity date earlier than the final
maturity date of the series of Notes with the latest final maturity date,
then such Permitted Refinancing Indebtedness must have a final maturity date
the same as or later than the final maturity date of, and a Weighted Average
Life to Maturity equal to or greater than the Weighted Average Life to
Maturity of, the Indebtedness being renewed, extended, refinanced, replaced,
defeased or refunded, and (b) if such Indebtedness has a final maturity date
later than the final maturity date of the series of Notes with the latest
final maturity date, then such Permitted Refinancing Indebtedness must have a
final maturity date the same as or later than the final maturity date of, and
a Weighted Average Life to Maturity equal to or greater than the maturity of,
the series of Notes with the latest final maturity date; (iii) if the
Indebtedness being renewed, extended, refinanced, replaced, defeased or
refunded is subordinated in right of payment to the Senior Notes, such
Permitted Refinancing Indebtedness has a final maturity date later than the
final maturity date of, and is subordinated in right of payment to, the
Senior Notes on terms at least as favorable to the holders of Senior Notes as
those contained in the documentation governing the Indebtedness being
refinanced, replaced, defeased or refunded; and (iv) such Indebtedness is
incurred either by the Company or by the Restricted Subsidiary (or, in the
case of the Receivables Financing, the special purpose entity) that is the
obligor on the Indebtedness being renewed, extended, refinanced, replaced,
defeased or refunded.
"PERSON" means any individual, corporation, partnership, limited
liability company, joint venture, association, joint-stock company, trust,
unincorporated organization or government or agency or political subdivision
thereof.
"POLLUTION CONTROL OBLIGATIONS" means the Indebtedness or other
obligations (however designated) of the Company in respect of tax-exempt
revenue bonds issued by the New York State Energy Research and Development
Authority.
"POWERCHOICE AGREEMENT" means the PowerChoice Settlement Agreement
between the Company and the PSC, as approved by the PSC in an Order dated
March 20, 1998, as such agreement may be modified or amended from time to
time.
"PREFERRED STOCK" means any Capital Stock of the Company which by
its terms has preference to Common Stock in right of dividends or other
distributions upon liquidation or dissolution.
"PSC" means the New York State Public Service Commission, or any
successor agency or other governmental entity performing the same function.
"RATING AGENCY" means any of S&P, Moody's, Duff & Phelps Credit
Rating Company and Fitch Investors Service, Inc. and their successors.
- 12 -
"RATING CATEGORIES" means (i) with respect to S&P, any of the
following categories (any of which may include a "+" or "-"): AAA, AA, A,
BBB, BB, B, CCC, CC, C and D (or equivalent successor categories); (ii) with
respect to Moody's, any of the following categories (any of which may include
a "1", "2" or "3"): Aaa, Aa, A, Baa, Ba, B, Caa, Ca, C and D (or equivalent
successor categories); and (iii) the equivalent of any such categories of S&P
or Moody's used by another Rating Agency, if applicable.
"RATING DECLINE" means, at any time within 90 days (which period
shall be extended so long as the rating of the Senior Notes is under publicly
announced consideration for a possible downgrade by any Rating Agency) after
the date of public notice of a Change of Control, or the intention of the
Company or any Person to effect a Change of Control, (i) the Rating of the
Senior Notes is decreased at least one Gradation by any Rating Agency or (ii)
a withdrawal of the rating of the Senior Notes by any Rating Agency.
"RECEIVABLES FINANCING" means the Obligation of the Company
pursuant to the [describe agreement], as such agreement is amended or
modified from time to time.
"RELATED ASSET" means real or tangible personal property integral
to the generation, transmission or distribution of electricity or the
transportation or distribution of natural gas, and ancillary or related
activities, including other energy-related businesses.
"REPURCHASE OFFER" means a Change of Control Offer.
"RESPONSIBLE OFFICER," when used with respect to the Trustee, means
any officer within the Corporate Trust Administration of the Trustee (or any
successor group of the Trustee) or any other officer of the 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 his knowledge of and familiarity with the particular subject.
"RESTRICTED INVESTMENT" means an Investment other than a Permitted
Investment.
"RESTRICTED SUBSIDIARY" of a Person means any Subsidiary of such
Person that is not an Unrestricted Subsidiary.
"S&P" means Standard & Poors' Rating Services, a division of The
McGraw-Hill Companies, Inc., and its successors.
"SALE OF ASSETS" means (i) the sale, lease, conveyance or other
disposition of any assets (including, without limitation by way of a sale and
leaseback) by the Company or any Restricted Subsidiary other than sales of
inventory or other current assets in the ordinary course of business consistent
with past practice (provided that the sale, lease conveyance or other
disposition of all or
- 13 -
substantially all of the assets of the Company and its Subsidiaries taken as
a whole will be governed by Sections 4.14 and/or Section 5.01 and not Section
4.10 hereof); (ii) the issue or sale by the Company or any of its Restricted
Subsidiaries of Equity Interests of any of their Restricted Subsidiaries, in
the case of either clause (i) or (ii), whether in a single transaction or a
series of related transactions (a) that have a Fair Value in excess of $25.0
million or (b) for Net Proceeds in excess of $25.0 million; (iii) the sale or
other disposition (but not any spin-off or other distribution to the
Company's shareholders) of the Generating Assets or the Oswego Plant; or (iv)
a Securitization Transaction. Notwithstanding the foregoing: (i) a transfer
of assets by the Company to a Wholly-Owned Restricted Subsidiary or by a
Wholly-Owned Restricted Subsidiary to the Company or to another Wholly-Owned
Restricted Subsidiary; (ii) an issuance of Equity Interests by a Wholly-Owned
Restricted Subsidiary to the Company or to another Wholly-Owned Restricted
Subsidiary; (iii) a Restricted Payment that is permitted by Section 4.07;
(iv) sales of property or equipment that have become worn out, obsolete or
damaged or otherwise unsuitable for use in connection with the business of
the Company or any of its Restricted Subsidiaries; (v) transactions involving
the license, lease or sublease of any real or personal property in the
ordinary course of business; (vi) the making of any Permitted Investment;
(vii) the transfer, sale or assignment of assets to a single purpose entity
in connection with the Receivables Financing; and (viii) a Permitted Asset
Swap, will not be deemed to be a Sale of Assets.
"SEC" means the Securities and Exchange Commission.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SECURITIZATION TRANSACTION" means a transaction in which the
Company, pursuant to authorization of the PSC, or other appropriate
governmental authorizations, transfers rights or other property to a Person
formed as a special purpose entity in conjunction with a financing based on
the Company's right to collect a non-by passable wires or similar fee.
"SENIOR INDEBTEDNESS" means any senior Indebtedness of the Company,
including the First Mortgage Bonds, the Credit Facility, the Senior Notes and
the Medium-Term Notes.
"SENIOR DISCOUNT NOTES" means the Company's ____% Senior Discount
Notes due 2010, which were issued pursuant to this Indenture on the Initial
Issuance Date.
"SENIOR NOTES" means the Company's Initial Series Senior Notes
(which include the Senior Discount Notes) and any other series of Senior
Notes issued under this Indenture or any Supplemental Indenture.
"SERIES A SENIOR NOTES" means the Company's ___% Series A Senior
Notes due 1999, which were issued pursuant to this Indenture on the Initial
Issuance Date.
- 14 -
"SERIES B SENIOR NOTES" means the Company's ___% Series B Senior
Notes due 2000, which were issued pursuant to this Indenture on the Initial
Issuance Date.
"SERIES C SENIOR NOTES" means the Company's ___% Series C Senior
Notes due 2001, which were issued pursuant to this Indenture on the Initial
Issuance Date.
"SERIES D SENIOR NOTES" means the Company's ___% Series D Senior
Notes due 2002, which were issued pursuant to this Indenture on the Initial
Issuance Date.
"SERIES E SENIOR NOTES" means the Company's ___% Series E Senior
Notes due 2003, which were issued pursuant to this Indenture on the Initial
Issuance Date.
"SERIES F SENIOR NOTES" means the Company's ___% Series F Senior
Notes due 2005, which were issued pursuant to this Indenture on the Initial
Issuance Date.
"SERIES G SENIOR NOTES" means the Company's ___% Series G Senior
Notes due 2008, which were issued pursuant to this Indenture on the Initial
Issuance Date.
"SIGNIFICANT SUBSIDIARY" means any Subsidiary that would be a
"significant subsidiary" as defined in Article 1, Rule 1-02 of Regulation
S-X, promulgated pursuant to the Securities Act, as such Regulation is in
effect on the date hereof.
"SUBORDINATED INDEBTEDNESS" means Indebtedness of the Company
(whether outstanding on the date hereof or hereafter created, incurred,
assumed or Guaranteed by the Company or its Restricted Subsidiaries) which is
subordinate to the Senior Notes in right of payment or rights upon
liquidation of the Company, whether pursuant to the terms of the instrument
creating or evidencing such Indebtedness or otherwise.
"SUBSIDIARY" means, with respect to any Person, (i) any
corporation, association or other business entity of which more than 50% of
the total voting power of shares of Capital Stock entitled (without regard to
the occurrence of any contingency) to vote in the election of directors,
managers or trustees thereof is at the time owned or controlled, directly or
indirectly, by such Person or one or more of the other Subsidiaries of that
Person (or a combination thereof) and (ii) any partnership (a) the sole
general partner or the managing general partner of which is such Person or a
Subsidiary of such Person or (b) the only general partners of which are such
Person or of one or more Subsidiaries of such Person (or any combination
thereof).
"SUPPLEMENTAL INDENTURE" means any indenture hereafter duly
authorized and approved by the Board of Directors and entered into between
the Company and the Trustee in accordance with this Indenture.
- 15 -
"TIPES TRANSACTION" means a financing transaction or transactions
in which the Company establishes a trust or other pass-through entity whose
common equity interests are owned by the Company or a Subsidiary and whose
assets consist of debt securities of the Company or any Restricted Subsidiary
for the purpose of issuing issue preferred interests in such trust or other
entity to investors.
"TIA" means the Trust Indenture Act of 1939 (15 U.S.C. Sections
77aaa-77bbbb) as in effect on the date on which this Indenture is qualified
under the TIA, except as provided in Section 9.03 hereof.
"TRUSTEE" means the party named as such above until a successor
replaces it in accordance with the applicable provisions of this Indenture
and thereafter means the successor serving hereunder.
"UNRESTRICTED SUBSIDIARY" means (i) Opinac North America, Inc.,
Opinac Energy Corporation, Plum Street Enterprises, Inc., Canadian Niagara
Power Company, Limited and any other Subsidiary that is designated by the
Board of Directors as an Unrestricted Subsidiary pursuant to a Board
Resolution; but only to the extent that any such Subsidiary: (a) has no
Indebtedness other than Non-Recourse Debt; (b) is not party to any agreement,
contract, arrangement or understanding with the Company or any Restricted
Subsidiary unless the terms of any such agreement, contract, arrangement or
understanding are no less favorable to the Company or such Restricted
Subsidiary than those that might be obtained at the time from Persons who are
not Affiliates of the Company; (c) is a Person with respect to which neither
the Company nor any of its Restricted Subsidiaries has any direct or indirect
obligation (x) to subscribe for additional Equity Interests or (y) to
maintain or preserve such Person's financial condition or to cause such
Person to achieve any specified levels of operating results; and (d) has not
Guaranteed or otherwise directly or indirectly provided credit support for
any Indebtedness of the Company or any of its Restricted Subsidiaries. Any
such designation by the Board of Directors will be evidenced to the Trustee
by filing with the Trustee a certified copy of the Board Resolution giving
effect to such designation and an Officers' Certificate certifying that such
designation complied with the foregoing conditions and was permitted by
Section 4.07 of this Indenture. If, at any time, any Unrestricted Subsidiary
would fail to meet the foregoing requirements as an Unrestricted Subsidiary,
it shall thereafter cease to be an Unrestricted Subsidiary and any
Indebtedness of such Subsidiary shall be deemed to be incurred by a
Restricted Subsidiary of the Company as of such date (and, if such
Indebtedness is not permitted to be incurred as of such date by Section 4.07,
the Company shall be in default of such provision). The Board of Directors
may at any time designate any Unrestricted Subsidiary to be a Restricted
Subsidiary; PROVIDED that such designation shall be deemed to be an
incurrence of Indebtedness by a Restricted Subsidiary of the Company of any
outstanding Indebtedness of such Unrestricted Subsidiary and such designation
shall only be permitted if (i) such Indebtedness is permitted by Section 4.07
and (ii) no Default or Event of Default would be in existence following such
designation.
- 16 -
"WEIGHTED AVERAGE LIFE TO MATURITY" means, with respect to any
Indebtedness at any date, the number of years obtained by dividing (i) the
sum of the products obtained by multiplying (a) the amount of each then
remaining installment, sinking fund, serial maturity or other required
payments of principal, including payment at final maturity, in respect
thereof, by (b) the number of years (calculated to the nearest one-twelfth)
that will elapse between such date and the making of such payment, by (ii)
the then outstanding principal amount of such Indebtedness.
"WHOLLY-OWNED RESTRICTED SUBSIDIARY" of any Person means a
Restricted Subsidiary of such Person all of the outstanding Capital Stock or
ownership interests of which (other than directors' qualifying shares) shall
at the time be owned by such Person or by one or more Wholly-Owned Restricted
Subsidiaries of such Person.
SECTION 1.02. OTHER DEFINITIONS.
Term Defined in Section
"Affiliate Transaction" ................... 4.11
"Asset Sale Offer" ........................ 4.10
"Beneficial Owners" ....................... 2.02
"Case" .................................... 6.01
"Change of Control Offer" ................. 4.14
"Change of Control Payment" ............... 4.14
"Change of Control Payment Date" .......... 4.14
"Covenant Defeasance" ..................... 8.03
"Custodian" ............................... 6.01
"Event of Default" ........................ 6.01
"Incur" ................................... 4.09
"Legal Defeasance" ........................ 8.02
"Offer Amount" ............................ 3.09
"Offer Period" ............................ 3.09
"Participant" ............................. 2.02
"Paying Agent" ............................ 2.05
"Payment Default" ......................... 6.01
"Purchase Date" ........................... 3.09
"Registrar" ............................... 2.05
"Restricted Payments" ..................... 4.07
"Securities Depositary" ................... 2.02
"Successor Entity" ........................ 5.01
- 17 -
SECTION 1.03. INCORPORATION BY REFERENCE OF TRUST INDENTURE ACT.
Whenever this Indenture refers to a provision of the TIA, the provision
is incorporated by reference in and made a part of this Indenture.
The following TIA terms used in this Indenture have the following
meanings:
"INDENTURE SECURITIES" means the Senior Notes;
"INDENTURE SECURITY HOLDER" means a Holder of a Senior Note;
"INDENTURE TO BE QUALIFIED" means this Indenture;
"INDENTURE TRUSTEE or "INSTITUTIONAL TRUSTEE" means the Trustee;
"OBLIGOR" on the Senior Notes means the Company, or any successor
obligor upon the Senior Notes.
All other terms used in this Indenture that are defined by the TIA,
defined by TIA reference to another statute or defined by SEC rule under the
TIA have the meanings so assigned to them.
SECTION 1.04. RULES OF CONSTRUCTION.
Unless the context otherwise requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the meaning assigned
to it in accordance with generally accepted accounting principles in the
United States;
(3) references to "generally accepted accounting principles" shall
mean generally accepted accounting principles in effect in the United
States as of the time when and for the period as to which such accounting
principles are to be applied;
(4) "or" is not exclusive;
(5) words in the singular include the plural, and in the plural
include the singular;
(6) provisions apply to successive events and transactions; and
- 18 -
(7) the words "he," "his," and "him" refer to both the masculine and
feminine gender.
ARTICLE 2
THE SENIOR NOTES
SECTION 2.01. SERIES AND TERMS OF SENIOR NOTES.
At the option of the Company, Senior Notes may be issued under this
Indenture in one or more series and in an unlimited amount. All Senior Notes
issued under this Indenture and any sums which may be secured by this
Indenture shall be secured equally, to the same extent and with the same
priority, as the amount initially advanced on the security of this Indenture.
Except for the Initial Series Senior Notes, which are created
hereby, each series of Senior Notes shall be created and established in a
Supplemental Indenture which shall designate the title of such series of
Senior Notes, any maximum aggregate principal amount of Senior Notes of such
series which may be authenticated and delivered upon the original issuance or
issuances of such Senior Notes, and the currency or currencies, including
composite currencies, in which payment of the principal of and interest, if
any, on such Senior Notes shall be payable if other than in Dollars.
The Supplemental Indenture which creates and establishes a series of
Senior Notes, or a Company Order pursuant to such Supplemental Indenture, shall
specify the form of Senior Notes of such series (and, if applicable, any
coupons) and any and all of the terms of such Senior Notes or the method of
determining such terms, which terms may include, but are not limited to:
(i) the principal amount of such Senior Notes to be authenticated
and delivered upon their original issuance at any particular time;
(ii) the date on which such Senior Notes are to be issued, and the
date from which interest, if any, will accrue on such Senior Notes;
(iii) the rate of interest, if any, which shall be borne by such
Senior Notes and, if such interest rate is not a fixed rate, the formula
for determining such interest rate from time to time;
(iv) the interest payment dates, if any, with respect to such
Senior Notes;
(v) the record dates for the payment of interest on any interest
payment dates with respect to such Senior Notes;
- 19 -
(vi) the date or dates on which principal of such Senior Notes is
payable;
(vii) the place or places where (A) the principal of and interest,
if any, on such Senior Notes shall be payable upon presentation thereof,
(B) such Senior Notes may be surrendered for registration of transfer,
(C) such Senior Notes may be surrendered for exchange, and (D) notices
and demands to or upon the Company in respect of such Senior Notes and
this Indenture may be served, if different than as provided in Section
10.02;
(viii) the means, which may include mail, for the payment of
principal of and interest, if any, on such Senior Notes;
(ix) if such Senior Notes may be established in book entry or
certificate form;
(x) the period or periods within which, the price or prices at
which and the terms and conditions upon which such Senior Notes may be
redeemed, in whole or in part, at the option of the Company;
(xi) the obligation, if any, of the Company to redeem or repurchase
such Senior Notes pursuant to any sinking, improvement, maintenance,
replacement or analogous fund or at the option of a holder thereof and
the period or periods within which, the price or prices at which and the
terms and conditions upon which such Senior Notes shall be redeemed or
repurchased, in whole or in part, pursuant to such obligation;
(xii) if the principal of or interest, if any, on such Senior Notes,
are to be payable, at the election of the Company or a Holder of such
Senior Notes, in a coin or currency other than that in which such Senior
Notes are stated to be payable, the period or periods within which, and
the terms and conditions upon which, such election may be made;
(xiii) if the principal of or interest, if any, on such Senior Notes
are to be payable, or are to be payable at the election of the Company
or a Holder of such Senior Notes, in securities or other property, the
type and amount of such securities or other property, or the method by
which such amount shall be determined, and the period or periods within
which, and the terms and conditions upon which, any election may be made;
(xiv) if the amount of payments of principal of or interest, if any,
on such Senior Notes may be determined with reference to an index or
other fact or event ascertainable outside of this Indenture, the manner
in which such amounts shall be determined;
(xv) if other than the principal amount of such Senior Notes, the
portion of such principal amount of such Senior Notes which shall be
payable upon a declaration that the principal of such Senior Notes is
due and payable immediately pursuant to Section 6.02;
- 20 -
(xvi) the terms, if any, pursuant to which such Senior Notes may be
converted into or exchanged for shares of Capital Stock or other
securities of the Company or of any other Person;
(xvii) the obligations or instruments, if any, which shall be
considered to be eligible obligations in respect of such Senior Notes if
they are denominated in a composite currency or in a currency other than
Dollars;
(xviii) if a service charge will be made for the registration of
transfer or exchange of such Senior Notes the amount or terms thereof;
and
(xix) any variation in the definition of Business Day with respect
to such Senior Notes.
The Senior Notes and coupons of any one or more series may be
expressed in one or more foreign languages, if also expressed in the English
language, and the English text shall govern the construction thereof and both
or all texts shall constitute only a single obligation. The English text of
Senior Notes and the authentication certificate of the Trustee shall be in
the forms set forth in the Supplemental Indenture creating and establishing
such series of Senior Notes or in a Company Order pursuant to such
Supplemental Indenture.
With respect to Senior Notes of a series subject to a periodic
offering, the Supplemental Indenture which creates and establishes such
series or a Company Order pursuant to such Supplemental Indenture may provide
general terms or parameters for Senior Notes of such series and provide
either that the specific terms of particular Senior Notes of such series
shall be specified in a Company Order or that such terms shall be determined
by the Company or its agents in accordance with specified procedures,
acceptable to the Trustee, by which such terms are to be established (which
procedures may provide for authentication and delivery pursuant to oral or
electronic instructions from the Company or any agent or agents thereof,
which oral instructions are to be promptly confirmed electronically or in
writing).
SECTION 2.02. TERMS OF INITIAL SERIES SENIOR NOTES.
There are hereby created and established eight series of Senior
Notes to be issued pursuant to this Indenture, having the respective series
designations, maturity dates and maximum aggregate principal amounts (subject
to Section 2.07 of the Indenture) as follows:
- 21 -
Maximum Principal Amount
Series Designation Maturity Date or Principal Amount at Maturity
- - ------------------ ----------------- -------------------------------
__% Series A Senior Notes July 1, 1999 $300,000,000
__% Series B Senior Notes October 1, 2000 $450,000,000
__% Series C Senior Notes July 1, 2001 $400,000,000
__% Series D Senior Notes October 1, 2002 $400,000,000
__% Series E Senior Notes July 1, 2003 $400,000,000
__% Series F Senior Notes October 1, 2005 $400,000,000
__% Series G Senior Notes October 1, 2008 $600,000,000
__% Senior Discount Notes July 1, 2010 $500,000,000
The Initial Series Senior Notes shall have the following terms:
(1) The Series A through G Senior Notes shall bear interest at the
rate per annum set forth in their respective titles, from the date of their
initial issuance. Interest will be computed on the basis of a 360-day year
comprised of twelve 30-day months. Interest on the Series A through G Senior
Notes will accrue from the most recent date to which interest has been paid
or, if no interest has been paid, from the date of their initial issuance.
The interest payment dates for the Series A, C and E Senior Notes shall be
January 1 and July 1 in each year, commencing January 1, 1999. The interest
payment dates for the Series B, D, F and G Senior Notes shall be April 1 and
October 1 in each year, commencing October 1, 1998. The regular record dates
for the interest payable on any interest payment date for the Series A, C and
E Senior Notes shall be the December 15 and June 15 next preceding such
January 1 or July 1, as the case may be. The regular record dates for the
interest payable on any interest payment date for the Series B, D, F and G
Senior Notes shall be the March 15 and September 15 next preceding such April
1 or October 1, as the case may be.
(2) The Senior Discount Notes will be issued at a discount from
their principal amount at maturity. Until July 1, 2003, no interest will
accrue on the Senior Discount Notes, but the Accreted Value will increase
(representing amortization of original issue discount) between the date of
initial issuance and July 1, 2003, on a semi-annual bond equivalent basis
using a 360-day year comprised of twelve 30-day months, such that the
Accreted Value shall be equal to the full principal amount at maturity of the
Senior Discount Notes on July 1, 2003. Thereafter, interest on the Senior
Discount Notes will accrue at the rate of ___% per annum and will be payable
in cash semi-annually in arrears on January 1 and July 1, commencing on
January 1, 2004, to holders of record on the immediately preceding June 15
and December 15. Interest on the Senior Discount Notes will accrue from the
most recent to which interest has been paid or, if no interest has been paid,
from July 1, 2003. Interest will be computed on the basis of a 360-day year
comprised of twelve 30-day months.
- 22 -
(3) The Initial Series Senior Notes are subject to redemption and
repurchase by the Company in accordance with the terms of Article 3 hereof.
(4) The Initial Series Senior Notes are entitled to the
protections of the covenants contained in Articles 4 and 5 hereof and are
subject to the provisions pertaining to Events of Default contained in
Article 6 hereof.
(5) The Initial Series Senior Notes shall be issuable in fully
registered form, without coupons, in denominations of $1,000 and integral
multiples of $1,000 in excess thereof. The Initial Series Senior Notes shall
be numbered RA-1, RB-1, RC-1, RD-1, RE-1, RF-1, RG-1, RDN-1 consecutively
upwards, with the second capital letter (or the second and third capital
letters in the case of the Senior Discount Notes) of such number
corresponding to the applicable series of Senior Notes.
(6) The Initial Series Senior Notes shall be dated as described in
Section 2.03 of the Indenture, except that Initial Series Senior Notes first
issued shall be dated as of the Initial Issuance Date.
(7) Payment of principal of and interest on the Initial Series
Senior Notes will be made in Dollars. Payment of principal of the Initial
Series Senior Notes will be made upon surrender thereof at the office or
agency of the Company maintained for that purpose in the City and State of
New York, and principal and interest may be paid by check mailed to the
address of the Holder as such address shall appear in the records of the
Registrar as of the applicable record date or upon written request made prior
to the applicable record date by a Holder of Initial Series Senior Notes in
an aggregate principal amount in excess of $5,000,000, payments in respect of
such Senior Notes shall be made by wire transfer; PROVIDED, FURTHER, that in
the case of redemption or repurchase the Company may designate such other
offices or agencies at which Initial Series Senior Notes subject to such
redemption or repurchase may be surrendered for payment.
(8) The Trustee and the Company may from time to time enter into,
and discontinue, an agreement with a clearing agency (the "SECURITIES
DEPOSITORY") registered under Section 17A of the Exchange Act, which is the
registered owner of all of the Senior Notes of a series, to establish
procedures with respect to the Senior Notes of such series not inconsistent
with the provisions of the Indenture; PROVIDED, HOWEVER, that any such
agreement may provide:
(i) that the Senior Notes of such series may be represented by one or
more global certificates;
(ii) that such Securities Depository is not required to present a
Senior Note of such series to the Trustee in order to receive a partial
payment of principal;
-23-
(iii) that a legend referring to such agreement shall appear on
each Senior Note of such series so long as the Senior Notes of such series
are subject to such agreement; and
(iv) that provisions for notice to such Securities Depository which
are different from notice provisions in the Indenture, may be set forth
therein.
Neither the Company nor the Trustee will have any responsibility or
obligation to any Securities Depository, to any direct or indirect
participant (a "PARTICIPANT") in the book entry system of any Securities
Depository, or to the purchasers (the "BENEFICIAL OWNERS") of an interest in
the Senior Notes of such series from a Participant with respect to (A) the
accuracy of any records maintained by the Securities Depository or by any
Participant; (B) the payment by the Securities Depository or by any
Participant of any amount due to any Beneficial Owner in respect of the
principal amount or redemption price of, or interest on, any Senior Notes of
such series; (C) the delivery of any notice by the Securities Depository or
any Participant; (D) the selection of the Beneficial Owners to receive
payment in the event of any partial redemption of the Senior Notes of such
series; or (E) any other action taken by the Securities Depository or any
Participant.
SECTION 2.03. FORM AND DATING.
The Senior Notes and the Trustee's certificate of authentication
shall be substantially in the form of Exhibit A through Exhibit H hereto
(which shall be a part of this Indenture) in respect of the Initial Series
Senior Notes, or as specifically provided in the Supplemental Indenture that
creates any other series of Senior Notes or in a Company Order pursuant to
such Supplemental Indenture. The Senior Notes may have notations, legends or
endorsements approved as to form by the Company and required by law, stock
exchange rules and agreements to which the Company is subject or usage. Each
Senior Note shall be dated the date of its authentication, unless otherwise
specifically provided herein or in the Supplemental Indenture that creates a
series of Senior Notes or in a Company Order pursuant to such Supplemental
Indenture. The Senior Notes shall be issuable only in denominations of
$1,000 and integral multiples thereof.
The terms and provisions contained in the Senior Notes shall
constitute, and are hereby expressly made, a part of this Indenture and the
Company and the Trustee, by their execution and delivery of this Indenture
and of any Supplemental Indenture creating any series of Senior Notes,
expressly agree to such terms and provisions and to be bound thereby.
SECTION 2.04. EXECUTION AND AUTHENTICATION.
Two Officers of the Company shall sign the Senior Notes for the
Company by manual or facsimile signature. If an Officer of the Company whose
signature is on a Senior Note no longer holds that office at the time a
Senior Note is authenticated, the Senior Note shall nevertheless be valid.
-24-
A Senior Note shall not be valid until authenticated by the manual
signature of the Trustee. The signature shall be conclusive evidence that
the Senior Note has been authenticated under this Indenture.
The Trustee shall, upon a written order of the Company signed by
two Officers of the Company, authenticate Senior Notes for original issue up
to the aggregate principal amount stated in paragraph 3 of the Initial Series
Senior Notes, or as specifically provided in the Supplemental Indenture that
creates any other series of Senior Notes or in a Company Order pursuant to
such Supplemental Indenture. The aggregate principal amount of Senior Notes
outstanding at any time may not exceed such amount except as provided in
Section 2.09 hereof.
The Trustee may appoint an authenticating agent acceptable to the
Company to authenticate Senior Notes. An authenticating agent may
authenticate Senior Notes whenever the Trustee may do so. Each reference in
this Indenture to authentication by the Trustee includes authentication by
such agent. An authenticating agent has the same rights as an Agent to deal
with the Company.
SECTION 2.05. REGISTRAR AND PAYING AGENT.
The Company shall maintain an office or agency where Senior Notes
may be presented for registration of transfer or for exchange ("REGISTRAR")
and an office or agency where Senior Notes may be presented for payment
("PAYING AGENT"). The Registrar shall keep a register of the Senior Notes
and of their transfer and exchange. The Company may appoint one or more
co-registrars and one or more additional paying agents. The term "Registrar"
includes any co-registrar and the term "Paying Agent" includes any additional
paying agent. The Company may change any Paying Agent or Registrar without
prior notice to any Holder. The Company shall notify the Trustee in writing
of the name and address of any Agent not a party to this Indenture. If the
Company fail to appoint or maintain another entity as Registrar or Paying
Agent, the Trustee shall act as such. The Company may act as Paying Agent or
Registrar.
The Company initially appoints the Trustee to act as the Registrar
and Paying Agent and agent for service of notices and demands in connection
with the Senior Notes.
SECTION 2.06. PAYING AGENT AND TO HOLD MONEY IN TRUST.
The Company shall require each Paying Agent other than the Trustee
or the Company itself to agree in writing that the Paying Agent will hold in
trust for the benefit of Holders or the Trustee all money held by the Paying
Agent for the payment of principal of, or premium, if any, on the Senior
Notes, and will notify the Trustee in writing of any default by the Company
in making any such payment. While any such default continues, the Trustee
may require a Paying Agent to pay all money held by it to the Trustee. The
Company at any time may require a Paying Agent to pay all money held
-25-
by it to the Trustee. Upon payment over to the Trustee, the Paying Agent (if
other than the Company) shall have no further liability for the money
delivered to the Trustee. If the Company 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. Upon any bankruptcy or reorganization
proceedings relating to the Company, the Trustee shall serve as Paying Agent
for the Senior Notes.
SECTION 2.07. HOLDER LISTS.
The Trustee shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses
of all Holders and shall otherwise comply with TIA Section 312(a). If the
Trustee is not the Registrar, the Company shall furnish to the Trustee at
least seven Business Days before each interest payment date and at such other
times as the Trustee may request in writing, a list in such form and as of
such date as the Trustee may reasonably require of the names and addresses of
the Holders of Senior Notes, including the aggregate principal amount of
Senior Notes held by each thereof.
SECTION 2.08. TRANSFER AND EXCHANGE.
When Senior Notes are presented to the Registrar with a request to
register the transfer or to exchange them for an equal principal amount of
Senior Notes of other denominations, the Registrar shall register the
transfer or make the exchange if its requirements for such transactions are
met; PROVIDED, HOWEVER, that any Senior Note presented or surrendered for
registration of transfer or exchange shall be duly endorsed or accompanied by
a written instruction of transfer in form satisfactory to the Registrar and
the Trustee duly executed by the Holder thereof or by his attorney duly
authorized in writing. To permit registrations of transfer and exchanges,
the Company shall issue and the Trustee shall authenticate Senior Notes at
the Registrar's request, subject to such rules as the Trustee may reasonably
require.
Neither the Company nor the Registrar shall be required (i) to
issue, register the transfer of or exchange Senior Notes during a period
beginning at the opening of business on a Business Day 15 days before the day
of any selection of Senior Notes for redemption under Section 3.02 and ending
at the close of business on the day of selection, (ii) to register the
transfer of or exchange any Senior Note so selected for redemption in whole
or in part, being redeemed in part or (iii) to register the transfer or
exchange of a Senior Note between the record date and the next succeeding
interest payment date.
No service charge shall be made to any Holder of a Senior Note for
any registration of transfer or exchange (except as otherwise expressly
permitted herein), but the Company may require payment of a sum sufficient to
cover any transfer tax or similar governmental charge payable in connection
therewith (other than such transfer tax or similar governmental charge
payable upon exchanges pursuant to Sections 2.12, 3.06, or 9.05 hereof, which
shall be paid by the Company).
-26-
Prior to due presentment to the Trustee for registration of the
transfer of any Senior Note, the Trustee, any Agent or the Company may deem
and treat the Person in whose name any Senior Note is registered as the
absolute owner of such Senior Note for the purpose of receiving payment of
principal of, or premium, if any, on such Senior Note and for all other
purposes whatsoever, whether or not such Senior Note is overdue, and neither
the Trustee, any Agent or the Company shall be affected by notice to the
contrary.
SECTION 2.09. REPLACEMENT SENIOR NOTES.
If any mutilated Senior Note is surrendered to the Trustee or the
Company and the Trustee receives evidence to its satisfaction of the
destruction, loss or theft of any Senior Note, the Company shall issue and
the Trustee, upon the written order of the Company signed by two Officers of
the Company, shall authenticate a replacement Senior Note if the Trustee's
requirements for replacements of Senior Notes are met. If required by the
Trustee or the Company, an indemnity bond must be supplied by the Holder that
is sufficient in the judgment of the Trustee and the Company to protect the
Company, the Trustee, any Agent and any authenticating agent from any loss
that any of them may suffer if a Senior Note is replaced. The Company may
charge for its expenses in replacing a Senior Note.
Every replacement Senior Note shall constitute a valid obligation
of the Company and shall evidence the same debt as the Senior Note for which
it is a replacement.
SECTION 2.10. OUTSTANDING SENIOR NOTES.
The Senior Notes outstanding at any time are all the Senior Notes
authenticated by the Trustee except for those canceled by it, those delivered
to it for cancellation and those described in this Section as not
outstanding. Except as set forth in Section 2.11 hereof, a Senior Note does
not cease to be outstanding because the Company or an Affiliate of the
Company holds the Senior Note.
If a Senior Note is replaced pursuant to Section 2.09 hereof, it
ceases to be outstanding unless the Trustee receives proof satisfactory to it
that the replaced Senior Note is held by a bona fide purchaser.
If the principal amount of any Senior Note is considered paid under
Section 4.01 hereof, it ceases to be outstanding and interest on it ceases to
accrue.
SECTION 2.11. TREASURY SENIOR NOTES.
In determining whether the Holders of the required principal amount
of Senior Notes have concurred in any direction, waiver or consent, Senior
Notes owned by the Company, any Subsidiary of the Company or any Affiliate of
the Company shall be considered as though not
-27-
outstanding, except that for the purposes of determining whether the Trustee
shall be protected in relying on any such direction, waiver or consent, only
Senior Notes that a Trustee knows are so owned shall be so considered.
Notwithstanding the foregoing, Senior Notes that are to be acquired by the
Company, any Subsidiary of the Company or any Affiliate of the Company
pursuant to an exchange offer, tender offer or other agreement shall not be
deemed to be owned by the Company, a Subsidiary of the Company or an
Affiliate of the Company until legal title to such Senior Notes passes to the
Company, such Subsidiary or such Affiliate, as the case may be.
SECTION 2.12. TEMPORARY SENIOR NOTES.
Until definitive Senior Notes are ready for delivery, the Company
may prepare and the Trustee shall authenticate temporary Senior Notes upon a
written order of the Company signed by two Officers. Temporary Senior Notes
shall be substantially in the form of definitive Senior Notes but may have
variations that the Company considers appropriate for temporary Senior Notes
and as shall be reasonably acceptable to the Trustee. Without unreasonable
delay, the Company shall prepare and the Trustee, upon a written order of the
Company signed by two Officers of the Company, shall authenticate definitive
Senior Notes in exchange for temporary Senior Notes. Holders of temporary
Senior Notes shall be entitled to all of the benefits of this Indenture.
SECTION 2.13. CANCELLATION.
The Company at any time may deliver Senior Notes to the Trustee for
cancellation. The Registrar and Paying Agent shall forward to the Trustee
any Senior Notes surrendered to them for registration of transfer, exchange
or payment. The Trustee and no one else shall cancel all Senior Notes
surrendered for registration of transfer, exchange, payment, replacement or
cancellation and shall destroy canceled Senior Notes (subject to the record
retention requirement of the Exchange Act). Certification of the destruction
of all canceled Senior Notes shall be delivered to the Company. The Company
may not issue new Senior Notes to replace Senior Notes that they have paid or
that have been delivered to the Trustee for cancellation.
SECTION 2.14. RECORD DATE.
The record date for purposes of determining the identity of Holders
of the Senior Notes entitled to vote or consent to any action by vote or
consent authorized or permitted under this Indenture shall be determined as
provided for in TIA Section 316(c).
SECTION 2.15. CUSIP NUMBER.
The Company in issuing the Senior Notes may use a "CUSIP" number
and, if it does so, the Trustee shall use the CUSIP number in notices of
redemption or exchange as a convenience to Holders; PROVIDED that any such
notice may state that no representation is made as to the correctness
-28-
or accuracy of the CUSIP number printed in the notice or on the Senior Notes
and that reliance may be placed only on the other identification numbers
printed on the Senior Notes. The Company will promptly notify the Trustee of
any change in the CUSIP number.
ARTICLE 3.
REDEMPTION AND REPURCHASE
Section 3.01. CERTAIN SENIOR NOTES REDEEMABLE; NOTICES TO TRUSTEE.
Any Outstanding Senior Notes which are, by their terms, redeemable
before maturity, at the option of the Company or pursuant to the requirements
of this Indenture (or any Supplemental Indenture which created a series of
Senior Notes), may be redeemed at such times, in such amounts and at such
prices as may be specified therein and in accordance with this Article 3.
If the Company elects to redeem any Initial Series Senior Notes
pursuant to the optional redemption provisions of Section 3.07 hereof, it
shall furnish to the Trustee, at least 45 days (unless shorter notice shall
be satisfactory to the Trustee) but not more than 60 days before a redemption
date, an Officers' Certificate setting forth (i) the clause of this Indenture
pursuant to which the redemption shall occur, (ii) the redemption date, (iii)
the principal amount of Senior Notes to be redeemed and (iv) the redemption
price. The notice periods for redemption of other series of Senior Notes, if
different from the foregoing, shall be set forth in the Supplemental
Indenture which creates and establishes such series or a Company Order
pursuant to such Supplemental Indenture.
SECTION 3.02. SELECTION OF SENIOR NOTES TO BE REDEEMED.
If less than all of the Outstanding Senior Notes are to be redeemed
at any time, the Trustee shall select the Senior Notes to be redeemed among
the Holders of the Senior Notes in compliance with the requirements of the
principal national securities exchange, if any, on which the Senior Notes are
listed or, if the Senior Notes are not so listed, on a PRO RATA basis, by lot
or in accordance with any other method the Trustee considers fair and
appropriate. In the event of partial redemption by lot, the particular
Senior Notes to be redeemed shall be selected, unless otherwise provided
herein, not less than 30 nor more than 60 days prior to the redemption date
by the Trustee from the outstanding Senior Notes not previously called for
redemption.
The Trustee shall promptly notify the Company in writing of the
Senior Notes selected for redemption and, in the case of any Senior Note
selected for partial redemption, the principal amount thereof to be redeemed.
Senior Notes and portions of Senior Notes selected shall be in amounts of
$1,000 or whole multiples of $1,000; except that if all of the Senior Notes
of a Holder are to be redeemed, the entire outstanding amount of Senior Notes
held by such Holder, even if not a multiple of $1,000, shall be redeemed.
Except as provided in the preceding sentence, provisions of this
-29-
Indenture that apply to Senior Notes called for redemption also apply to
portions of Senior Notes called for redemption.
In the event the Issuers are required to make an offer to redeem
Senior Notes pursuant to Sections 3.09 and 4.10 hereof and the amount of the
Net Proceeds from the Sale of Assets is not evenly divisible by $1,000, the
Trustee shall promptly refund to the Company at the address set forth in
Section 10.02 hereof of any remaining Net Proceeds.
SECTION 3.03. NOTICE OF REDEMPTION.
Subject to the provisions of Section 3.09 hereof, at least 30 days
but not more than 60 days before a redemption date, the Company shall mail or
cause to be mailed, by first class mail, a notice of redemption to each
Holder whose Senior Notes are to be redeemed at its registered address.
The notice shall identify the Senior Notes to be redeemed and shall
state:
i. the redemption date;
ii. the redemption price;
iii. if any Senior Note is being redeemed in part, the portion of the
principal amount of such Senior Note to be redeemed and that, after the
redemption date, upon surrender of such Senior Note, a new Senior Note or
Senior Notes in principal amount equal to the unredeemed portion shall be
issued upon cancellation of the original Senior Note;
iv. the name and address of the Paying Agent;
v. that Senior Notes called for redemption must be surrendered to
the Paying Agent to collect the redemption price;
vi. that, unless the Company defaults in making such redemption
payment, interest on Senior Notes called for redemption ceases to accrue on
and after the redemption date;
vii. the paragraph of the Senior Notes and/or Section of this
Indenture and/or of the Supplemental Indenture which created the series of
Senior Notes pursuant to which the Senior Notes called for redemption are
being redeemed; and
viii. that no representation is made as to the correctness or
accuracy of the CUSIP number, if any, listed in such notice or printed on
the Senior Notes.
-30-
At the Company's request, the Trustee shall give the notice of
redemption in the Company's name and at the Company's expense; PROVIDED,
HOWEVER, that the Company shall have delivered to the Trustee, at least 45
days prior to the redemption date, an Officers' Certificate requesting that
the Trustee give such notice and setting forth the information to be stated
in such notice as provided in the preceding paragraph.
SECTION 3.04. EFFECT OF NOTICE OF REDEMPTION.
Once notice of redemption is mailed in accordance with Section 3.03
hereof, Senior Notes called for redemption become irrevocably due and payable
on the redemption date at the redemption price. A notice of redemption may
not be conditional.
SECTION 3.05. DEPOSIT OF REDEMPTION PRICE.
One Business Day prior to the redemption date, the Company shall
deposit with the Trustee or with the Paying Agent money sufficient to pay the
redemption price of and accrued interest on all Senior Notes to be redeemed
on that date. The Trustee or the Paying Agent shall promptly return to the
Company any money deposited with the Trustee or the Paying Agent by the
Company in excess of the amounts necessary to pay the redemption price of,
and accrued interest on, all Senior Notes to be redeemed.
If the Company complies with the provisions of the preceding
paragraph, on and after the redemption date, interest shall cease to accrue
on the Senior Notes or the portions of Senior Notes called for redemption,
whether or not such Senior Notes are presented for payment. If a Senior Note
is redeemed on or after an interest record date but on or prior to the
related interest payment date, then any accrued and unpaid interest shall be
paid to the Person in whose name such Senior Note was registered at the close
of business on such record date. If any Senior Note called for redemption
shall not be so paid upon surrender for redemption because of the failure of
the Company to comply with the preceding paragraph, interest shall be paid on
the unpaid principal, from the redemption date until such principal is paid,
and to the extent lawful on any interest not paid on such unpaid principal,
in each case at the rate provided in the Senior Notes and in Section 4.01
hereof.
SECTION 3.06. SENIOR NOTES REDEEMED IN PART.
Upon surrender of a Senior Note that is redeemed in part, the
Company shall issue and, upon the Company's written request, the Trustee
shall authenticate for the Holder at the expense of the Company a new Senior
Note equal in principal amount to the unredeemed portion of the Senior Note
surrendered.
-31-
SECTION 3.07. OPTIONAL AND SPECIAL REDEMPTION OF INITIAL SERIES SENIOR NOTES.
(a) Except as provided in subparagraphs (b), (c) and (d) below,
the Initial Series Senior Notes may not be redeemed at the option of the
Company prior to maturity.
(b) The Series A through G Senior Notes are redeemable by the
Company at any time, in whole or in part, upon not less than 30 nor more than
60 days' notice, in cash at a redemption price equal to 100% of the principal
amount thereof plus accrued and unpaid interest through the redemption date
plus the Make-Whole Premium.
(c) The Company shall have the option to redeem the Senior
Discount Notes prior to July 1, 2003 at any time, in whole or in part, upon
not less than 30 nor more than 60 days' notice, in cash at a redemption price
equal to 100% of the Accreted Value thereof plus the Make-Whole Premium. On
and after July 1, 2003, the Company shall have the option to redeem the
Senior Discount Notes, in whole or in part, upon not less than 30 nor more
than 60 days' notice, in cash at the redemption prices (expressed as
percentages of the principal amount) set forth below plus accrued and unpaid
interest thereon, if any, to the applicable redemption date, if redeemed
during the twelve-month period beginning on July 1 of the years indicated
below:
YEAR PERCENTAGE
---- ----------
2003 %
2004 %
2005 %
2006 and thereafter 100.0%
(d) Notwithstanding the provisions of subparagraph (b) above, the
Company may, at its option, by delivering a notice of redemption at any time
during the period from April 1, 1999 through December 31, 2000, use all or a
portion of the Net Proceeds from any sale or sales of Fossil and Hydro
Generating Assets to redeem up to $500,000,000 aggregate principal amount of
the Senior Notes in Series B through F at a cash redemption price equal to
100% of the principal amount thereof plus accrued and unpaid interest
thereon, if any, through the date of redemption. The Company shall effect a
redemption of Senior Notes pursuant to this provision such that, following
such redemption, the percentage of Senior Notes in each of Series B through F
that remain outstanding (calculated for each series by dividing the aggregate
principal amount of Senior Notes outstanding by the aggregate principal
amount of Senior Notes originally issued) is as near to identical as
reasonably practicable. Any such redemption must occur within 120 days
following the receipt by the Company of the Net Proceeds that are being used
to effect the redemption.
-32-
(e) Any redemption pursuant to this Section 3.07 shall be made
pursuant to the provisions of Sections 3.01 through 3.06 hereof.
SECTION 3.08. MANDATORY REDEMPTION.
Except as set forth under Sections 4.10 and 4.15 hereof, the
Company shall not be required to make mandatory repurchase, redemption or
sinking fund payments with respect to the Initial Series Senior Notes.
SECTION 3.09. OFFER TO PURCHASE BY APPLICATION OF EXCESS PROCEEDS.
In the event that, pursuant to Section 4.10 hereof, the Company
shall be required to commence an Asset Sale Offer, it shall follow the
procedures specified below.
The Asset Sale Offer shall remain open for a period of 20 Business
Days following its commencement and no longer, except to the extent that a
longer period is required by applicable law (the "OFFER PERIOD"). No later
than five Business Days after the termination of the Offer Period (the
"PURCHASE DATE"), the Company shall purchase the principal amount (or
principal amount at maturity, as the case may be) of Senior Notes required to
be purchased pursuant to Section 4.10 hereof (the "OFFER AMOUNT") or, if less
than the Offer Amount has been tendered, all Senior Notes tendered in
response to the Asset Sale Offer. Payment for any Senior Notes so purchased
shall be made in the same manner as interest payments are made.
The Company shall comply with any tender offer rules under the
Exchange Act which may then be applicable, including Rule 14e-1, in
connection with any offer required to be made by the Company to repurchase
the Senior Notes as a result of an Asset Sale Offer. To the extent that the
provisions of any securities laws or regulations conflict with provisions of
this Section 3.09, the Company shall comply with the applicable securities
laws or regulations and shall not be deemed to have breached its obligations
hereunder by virtue thereof.
If the Purchase Date is on or after an interest record date and on
or before the related interest payment date, any accrued and unpaid interest
shall be paid to the Person in whose name a Senior Note is registered at the
close of business on such record date, and no additional interest shall be
payable to Holders who tender Senior Notes pursuant to the Asset Sale Offer.
Upon the commencement of an Asset Sale Offer, the Company shall
send, by first class mail, a notice to the Trustee and each of the Holders,
with a copy to the Trustee. The notice shall contain all instructions and
materials necessary to enable such Holders to tender Senior Notes pursuant to
the Asset Sale Offer. The Asset Sale Offer shall be made to all Holders.
The notice, which shall govern the terms of the Asset Sale Offer, shall state:
-33-
(a) that the Asset Sale Offer is being made pursuant to this Section
3.09 and Section 4.10 hereof and the length of time the Asset Sale Offer
shall remain open;
(b) the Offer Amount, the purchase price and the Purchase Date;
(c) that any Senior Note not tendered or accepted for payment shall
continue to accrue interest;
(d) that, unless the Company defaults in making such payment, any
Senior Note accepted for payment pursuant to the Asset Sale Offer shall
cease to accrue interest after the Purchase Date;
(e) that Holders electing to have a Senior Note purchased pursuant to
an Asset Sale Offer may elect only to have all of such Senior Note
purchased and may not elect to have only a portion of such Senior Note
purchased;
(f) that Holders electing to have a Senior Note purchased pursuant to
any Asset Sale Offer shall be required to surrender the Senior Note, with
the form entitled "Option of Holder to Elect Purchase" on the reverse of
the Senior Note completed, or transfer by book-entry transfer, to the
Company, a depositary (if appointed by the Company) or a Paying Agent at
the address specified in the notice at least three days before the Purchase
Date;
(g) that Holders shall be entitled to withdraw their election if the
Company, the depositary or the Paying Agent, as the case may be, receive,
not later than the expiration of the Offer Period, a telegram, telex,
facsimile transmission or letter setting forth the name of the Holder, the
principal amount of the Senior Note the Holder delivered for purchase and a
statement that such Holder is withdrawing his election to have such Senior
Note purchased;
(h) that, if the aggregate principal amount (or principal amount at
maturity, as the case may be) of Senior Notes surrendered by Holders
exceeds the Offer Amount, the Company shall select the Senior Notes to be
purchased on a PRO RATA basis (with such adjustments as may be deemed
appropriate by the Company so that only Senior Notes in denominations of
US$1,000, or integral multiples thereof, shall be purchased); and
(i) that Holders whose Senior Notes were purchased only in part shall
be issued new Senior Notes equal in principal amount to the unpurchased
portion of the Senior Notes surrendered (or transferred by book-entry
transfer).
On or before the Purchase Date, the Company shall, to the extent
lawful, accept for payment, on a PRO RATA basis to the extent necessary, the
Offer Amount of Senior Notes or portions
-34-
thereof tendered pursuant to the Asset Sale Offer, or if less than the Offer
Amount has been tendered, all Senior Notes tendered, and shall deliver to the
Trustee an Officers' Certificate stating that such Senior Notes or portions
thereof were accepted for payment by the Company in accordance with the terms
of this Section 3.09. The Company, the depositary or the Paying Agent, as the
case may be, shall promptly (but in any case not later than five days after
the Purchase Date) mail or deliver to each tendering Holder an amount equal
to the purchase price of the Senior Notes tendered by such Holder and
accepted by the Company for purchase, and the Company shall promptly issue a
new Senior Note, and the Trustee, upon written request from the Company shall
authenticate and mail or deliver such new Senior Note to such Holder, in a
principal amount equal to any unpurchased portion of the Senior Note
surrendered. Any Senior Note not so accepted shall be promptly mailed or
delivered by the Company to the Holder thereof. The Company shall publicly
announce the results of the Asset Sale Offer on the Purchase Date.
Other than as specifically provided in this Section 3.09, any
purchase pursuant to this Section 3.09 shall be made pursuant to the
provisions of Sections 3.01 through 3.06 hereof. No repurchase of Senior
Notes under this Section 3.09 shall be deemed to be a redemption of Senior
Notes.
ARTICLE 4
COVENANTS
SECTION 4.01. PAYMENT OF SENIOR NOTES.
The Company shall pay or cause to be paid the principal of and
premium, if any, and interest on the Senior Notes on the dates and in the
manner provided in the Senior Notes. Principal, and premium, if any, shall
be considered paid on the date due if the Paying Agent, if other than the
Company, holds as of 10:00 a.m. Eastern Time on the due date money deposited
by the Company in immediately available funds and designated for and
sufficient to pay all principal, and premium, if any, then due. Such Paying
Agent shall return to the Company, no later than five Business Days following
the date of payment, any money (including accrued interest) that exceeds such
amount of principal of, premium, if any, and interest required to be paid on
the Senior Notes.
The Company shall pay interest (including post-petition interest in
any proceeding under any Bankruptcy Law) on overdue principal and premium, if
any, at the rate equal to 1% per annum in excess of the then applicable
interest rate on the Senior Notes to the extent lawful.
SECTION 4.02. MAINTENANCE OF OFFICE OR AGENCY.
The Company shall maintain in the Borough of Manhattan, the City of
New York, an office or agency (which may be an office of the Trustee or an
affiliate of the Trustee, Registrar or co-registrar) where Senior Notes may
be surrendered for registration of transfer or for exchange and
-35-
where notices and demands to or upon the Company in respect of the Senior
Notes and this Indenture may be served. The Company shall give prompt
written notice to the Trustee of the location, and any change in the
location, of such office or agency. If at any time the Company shall fail to
maintain any such required office or agency or shall fail to furnish the
Trustee with the address thereof, such presentations, surrenders, notices and
demands may be made or served at the Corporate Trust Office of the Trustee.
The Company may also from time to time designate one or more other
offices or agencies where the Senior Notes may be presented or surrendered
for any or all such purposes and may from time to time rescind such
designations; PROVIDED, HOWEVER, that no such designation or rescission shall
in any manner relieve the Company of its obligations to maintain an office or
agency in the Borough of Manhattan, the City of New York for such purposes.
The Company shall give prompt written notice to the Trustee of any such
designation or rescission and of any change in the location of any such other
office or agency.
The Company hereby designates the Corporate Trust Office of the
Trustee as one such office or agency of the Company in accordance with
Section 2.05.
SECTION 4.03. REPORTS.
The Company shall file with the Trustee, within 15 days of filing
them with the SEC, copies of the current, quarterly and annual reports and of
the information, documents and other reports (or copies of such portions of
any of the foregoing as the SEC may by rules and regulations prescribe) that
the Company is required to file with the SEC pursuant to Section 13 or 15(d)
of the Exchange Act. If the Company is not subject to the requirements of
Section 13 or 15(d) of the Exchange Act, the Company shall nevertheless file
with the SEC and the Trustee, on the date upon which it would have been
required to file with the SEC, financial statements, including any notes
thereto (and with respect to annual reports, an auditor's report by a firm of
established national reputation, upon which the Trustee may conclusively
rely), and a "Management's Discussion and Analysis of Financial Condition and
Results of Operations," both comparable to that which the Company would have
been required to include in such annual reports, information, documents or
other reports on Forms 8-K, 10-Q and 10-K if the Company were subject to the
requirements of Section 13 or 15(d) of the Exchange Act; PROVIDED, HOWEVER,
that the Company shall not be required to register under the Exchange Act by
virtue of this provision, if it were not otherwise required to do so.
SECTION 4.04. COMPLIANCE CERTIFICATE.
(a) The Company shall deliver to the Trustee, within 90 days after
the end of each fiscal year, an Officers' Certificate stating that a review
of the activities of the Company and its Restricted Subsidiaries during the
preceding fiscal year has been made under the supervision of the signing
Officers with a view to determining whether the Company and its Restricted
Subsidiaries have
-36-
kept, observed, performed and fulfilled their obligations under this
Indenture and further stating, as to each such Officer signing such
certificate, that to the best of his or her knowledge the Company has kept,
observed, performed and fulfilled each and every covenant contained in this
Indenture and is not in default in the performance or observance of any of
the terms, provisions and conditions of this Indenture (or, if a Default or
Event of Default shall have occurred, describing all such Defaults or Events
of Default of which he or she may have knowledge and what action the Company
is taking or proposes to take with respect thereto) and that to the best of
his or her knowledge no event has occurred and remains in existence by reason
of which payments on account of the principal of the Senior Notes is
prohibited or if such event has occurred, a description of the event and what
action the Company is taking or proposes to take with respect thereto.
(b) So long as not contrary to the then current recommendations of
the American Institute of Chartered Accountants, the year-end financial
statements delivered pursuant to Section 4.03(a) above shall be accompanied
by a written statement of the Company's independent public accountants (who
shall be a firm of established national reputation) that in making the
examination necessary for certification of such financial statements, nothing
has come to their attention that would lead them to believe that the Company
have violated any of the financial provisions of Sections 4.01, 4.07, 4.09
and 4.12 or, if any such violation has occurred, specifying the nature and
period of existence thereof, it being understood that such accountants shall
not be liable directly or indirectly to any Person for any failure to obtain
knowledge of any such violation.
(c) The Company shall, so long as any of the Senior Notes are
outstanding, deliver to the Trustee, forthwith upon any Officer becoming
aware of any Default or Event of Default, an Officers' Certificate specifying
such Default or Event of Default and what action the Company is taking or
proposes to take with respect thereto.
SECTION 4.05. TAXES.
The Company shall pay, and shall cause each of its Restricted
Subsidiaries to pay, prior to delinquency, all material taxes, assessments,
and governmental levies except such as are contested in good faith and by
appropriate proceedings or where the failure to effect such payment is not
adverse in any material respect to the Holders of the Senior Notes.
SECTION 4.06. STAY, EXTENSION AND USURY LAWS.
The Company covenants (to the extent that it may lawfully do so)
that it shall not at any time insist upon, plead, or in any manner whatsoever
claim or take the benefit or advantage of, any stay, extension or usury law
wherever enacted, now or at any time hereafter in force, that may affect the
covenants or the performance of this Indenture; and the Company (to the
extent that it may lawfully do so) hereby expressly waives all benefit or
advantage of any such law, and covenants that it shall not, by resort to any
such law, hinder, delay or impede the execution of any power herein granted
to the
-37-
Trustee, but shall suffer and permit the execution of every such power as
though no such law has been enacted.
SECTION 4.07. RESTRICTED PAYMENTS.
Prior to the Investment Grade Date, the Company shall not, and
shall not permit any of its Restricted Subsidiaries to, directly or
indirectly, (i) declare or pay any dividend or make any cash dividend or
other distribution on account of the Company's or any of its Restricted
Subsidiaries' Equity Interests, including, without limitation, any payment in
connection with any merger or consolidation involving the Company (other than
dividends or distributions payable in Equity Interests (other than
Disqualified Stock) of the Company or any portion of a dividend or
distribution by a Restricted Subsidiary of the Company that is payable to the
Company or to any Wholly-Owned Restricted Subsidiary of the Company); (ii)
purchase, redeem or otherwise acquire or retire for value from any Person
other than the Company or a Wholly-Owned Restricted Subsidiary any Equity
Interests of the Company, any of its Subsidiaries or any direct or indirect
parent of the Company (other than the conversion or exchange of Equity
Interests of the Company for other Equity Interests of the Company); or (iii)
make any principal payment on, or purchase, redeem, defease or otherwise
acquire or retire for value any Subordinated Indebtedness, except at final
maturity; or (iv) make any Restricted Investment (all such payments and other
actions set forth in clauses (i) through (iv) above being collectively
referred to as "RESTRICTED PAYMENTS"), unless, at the time of and after
giving effect to such Restricted Payments:
(a) no Default or Event of Default shall have occurred and be
continuing or would occur as a consequence thereof; and
(b) except in the case of any Restricted Investment, the Company
would, at the time of such Restricted Payment, and after giving PRO FORMA
effect thereto as if such Restricted Payment had been made at the beginning
of the applicable four-quarter period, have a Fixed Charge Coverage Ratio of
not less than 1.75 to 1 (calculated pursuant to Section 4.09 below); and
(c) such Restricted Payment, together with the aggregate of all
other Restricted Payments made by the Company and its Restricted Subsidiaries
after the Initial Issuance Date (excluding Restricted Payments permitted by
clauses (iii), (iv), (v), (vi) or (vii) of the next succeeding paragraph), is
less than the sum of (i) $50,000,000, PLUS (ii) 25% of an amount equal to the
Operating Cash Flow of the Company for the period (taken as one accounting
period) from the day after the Initial Issuance Date through the end of the
Company's most recently ended fiscal quarter for which financial statements
are available at the time of such Restricted Payment (or, if such Operating
Cash Flow for such period is a deficit, less 100% of such deficit), PLUS
(iii) 100% of the aggregate net cash proceeds received by the Company from
the issuance or sale (other than pursuant to or in connection with the IPP
Buyout) after the Initial Issuance Date of Equity Interests of the Company or
of debt securities of the Company that have been converted into Equity
Interests of the Company, PLUS (iv)
-38-
100% of the aggregate cash proceeds received by the Company from any payment
in respect of any previously made Restricted Investment (but only to the
extent that such amount is not reflected in Consolidated Net Income).
The foregoing provisions shall not prohibit (i) the payment of
dividends, whether paid in kind or in cash, or the satisfaction of mandatory
redemption obligations, in respect of any Preferred Stock outstanding on the
Initial Issuance Date in accordance with the terms thereof; (ii) the payment
of any dividend within 60 days after the date of declaration thereof, if at
said date of declaration such payment would have complied with the provisions
of this Section 4.07, (iii) the redemption, repurchase, retirement or other
acquisition of any Equity Interests of the Company in exchange for, or out of
the proceeds of, the substantially concurrent sale (other than to a
Restricted Subsidiary of the Company) of, other Equity Interests of the
Company; (iv) defeasance, redemption or repurchase of Subordinated
Indebtedness with the net cash proceeds of the substantially concurrent sale
(other than to a Restricted Subsidiary of the Company) of Equity Interests of
the Company or from an incurrence of Permitted Refinancing Indebtedness that
consists of Subordinated Indebtedness, PROVIDED that the amount of any net
cash proceeds that are utilized for any redemption, repurchase, retirement or
other acquisition described in clauses (iii) and (iv) shall be excluded from
clause (c)(iii) of the first paragraph of this Section 4.07; (v) the
repurchase, redemption, or other acquisition or retirement for value of any
Equity Interests of the Company or any Restricted Subsidiary of the Company
held by any member of the Company's (or any of its Restricted Subsidiaries')
management or for the purpose of providing Equity Interests for issuance
under dividend reinvestment or employee benefits plans of the Company; (vi)
any spin-off or other distribution to shareholders of the Generating Assets
or the Oswego Plant or any portion thereof or any direct or indirect interest
therein; and (vii) any dividend or other distribution of the Capital Stock of
any Unrestricted Subsidiary, PROVIDED that in the case of each of clauses (i)
and (ii) above, no Default or Event of Default shall have occurred and be
continuing immediately after such transaction.
Not later than the date of making any Restricted Payment that
relies on clause (c) of the first paragraph of this covenant to be permitted,
and so long as the limitations contained in such clause apply, the Company
shall deliver to the Trustee an Officer's Certificate stating that such
Restricted Payment is permitted and setting forth the basis upon which the
calculations required by such covenant were computed, which calculations may
be based upon the Company's latest available financial statements.
SECTION 4.08. DIVIDEND AND OTHER PAYMENT RESTRICTIONS AFFECTING SUBSIDIARIES.
The Company shall not, and shall not permit any of its Restricted
Subsidiaries to, directly or indirectly, create or otherwise cause or suffer
to exist or become effective any encumbrance or restriction on the ability of
any such Restricted Subsidiary to (a) (i) pay dividends or make any other
distributions to the Company or any of its Restricted Subsidiaries (A) on its
Capital Stock or (B) with respect to any other interest or participation in,
or measured by, its profits or (ii) pay any Indebtedness
-39-
owed to the Company or any of its Restricted Subsidiaries, (b) make loans or
advances to the Company or any of its Restricted Subsidiaries or (c) transfer
any of its properties or assets to the Company or any of its Restricted
Subsidiaries, except for such encumbrances or restrictions existing under or
by reason of (i) the First Mortgage Bonds, the Credit Facility, the
Receivables Financing, the Pollution Control Obligations, the Securitization
Transaction, the Indenture and the Senior Notes; (ii) applicable law or
regulation; (iii) any instrument governing Indebtedness or Capital Stock of a
Person acquired by the Company or any of its Restricted Subsidiaries as in
effect at the time of such acquisition (except to the extent such
Indebtedness was incurred in connection with or in contemplation of such
acquisition), which encumbrance or restriction is not applicable to any
Person, or the properties or assets of any Person, other than the Person, or
the property or assets of the Person, so acquired; (iv) by reason of
customary non-assignment provisions in leases entered into in the ordinary
course of business and consistent with past practice; (v) purchase money
obligations for property acquired in the ordinary course of business that
impose restrictions of the nature described in clause (c) above in the
property so acquired; (vi) any contract for the sale of 100% of the Capital
Stock of a Restricted Subsidiary; or (vii) Permitted Refinancing
Indebtedness, PROVIDED that the restrictions contained in the agreements
governing such Permitted Refinancing Indebtedness are no more restrictive
than those contained in the agreements governing the Indebtedness being
refinanced.
SECTION 4.09. INCURRENCE OF INDEBTEDNESS.
Prior to the Investment Grade Date, the Company shall not, and
shall not permit any of its Restricted Subsidiaries to, directly or
indirectly create, incur, issue, assume, guaranty or otherwise become
directly or indirectly liable, contingently or otherwise, with respect to
(collectively, "INCUR"), any Indebtedness (including Acquired Debt) or issue
any Disqualified Stock; PROVIDED, HOWEVER, that the Company and any of its
Restricted Subsidiaries may incur Indebtedness (including Acquired Debt) and
issue Disqualified Stock if the Fixed Charge Coverage Ratio for the Company's
most recently ended four full fiscal quarters for which financial statements
are available immediately preceding the date on which such Indebtedness is
incurred or Disqualified Stock is issued would have been at least 3.25 to 1,
determined on a PRO FORMA basis (including a PRO FORMA application of the net
proceeds therefrom), as if such Indebtedness had been incurred or such
Disqualified Stock had been issued at the beginning of such four-quarter
period.
The foregoing provisions will not apply to (i) Permitted
Refinancing Indebtedness; (ii) the incurrence by the Company of any amount of
Subordinated Indebtedness if the Fixed Charge Coverage Ratio for the
Company's most recently ended four full fiscal quarters for which financial
statements are available immediately preceding the date on which such
Subordinated Indebtedness is incurred would have been at least 1.75 to 1
(determined as in the immediately preceding paragraph); (iii) Permitted
Hedging Agreements; (iv) borrowings under the Credit Facility in an amount
not to exceed $804.4 million; and (v) intercompany Indebtedness between and
among the Company and any of its Restricted Subsidiaries (except in a TIPES
Transaction); PROVIDED, HOWEVER, that (A) any subsequent issuance or transfer
of Equity Interests that results in any such Indebtedness being held by
40
a Person other than a Restricted Subsidiary and (B) any sale or other
transfer of any such Indebtedness to a Person that is not either the Company
or a Restricted Subsidiary shall be deemed, in each case, to constitute an
incurrence of such Indebtedness by the Company or such Restricted Subsidiary,
as the case may be.
SECTION 4.10. PROCEEDS OF CERTAIN ASSET SALES.
The Company shall not, and shall not permit any of its
Restricted Subsidiaries to, engage in a (A) Permitted Asset Swap unless the
Company or Restricted Subsidiary receives property or assets with a Fair
Value at least equal to the Fair Value of the property or assets swapped or
(B) Sale of Assets unless (i) the Company (or the applicable Restricted
Subsidiary, as the case may be) receives consideration at the time of such
Sale of Assets at least equal to the Fair Value (evidenced by a resolution of
the Board of Directors set forth in an Officers' Certificate delivered to the
Trustee) of the assets of Equity Interests issued or sold or otherwise
disposed of and (ii) except in connection with a sale of Fossil
and Generating Assets or the Oswego Plant, at least 75% of the consideration
received therefor by the Company or such Restricted Subsidiary is in the form
of cash or Cash Equivalents; PROVIDED that if in the case of the sale of any
Fossil and Generating Asset pursuant to the PowerChoice Agreement, the Board
of Directors determines in good faith that the Company will receive the
highest price by accepting a bid with consideration consisting of less than
75% cash or Cash Equivalents, and the PSC approves the Company's acceptance
of such bid, then the Company may accept such bid, and PROVIDED FURTHER, that
in the case of any Sale of Assets (except a Securitization Transaction) that
is consummated after the Investment Grade Date, the requirement of clause
(ii) shall not apply. For purposes of determining the Company's compliance
with the requirements of the immediately preceding sentence, the amount of
(x) any liabilities (as shown on the Company's or such Restricted
Subsidiary's most recent balance sheet), of the Company or any Restricted
Subsidiary (other than contingent liabilities and liabilities that are by
their terms subordinated to the Senior Notes) that are assumed by the
transferee of any such assets pursuant to a customary novation agreement or
that otherwise releases the Company or such Restricted Subsidiary from
further liability and (y) any notes or other obligations received by the
Company or any such Restricted Subsidiary from such transferee that are
immediately converted by the Company or such Restricted Subsidiary into cash
shall be deemed to be cash for purposes of this provision (to the extent of
the cash received).
Within 180 days after the receipt of any Net Proceeds from a
Securitization Transaction or a Sale of Assets consisting of Generating
Assets, or within 360 days after the receipt of any Net Proceeds from any
other Sale of Assets that is consummated prior to the Investment Grade Date,
the Company shall (a) in the case of a Securitization Transaction, apply the
cash portion of such Net Proceeds in accordance with the relevant statutory
or regulatory requirements that govern such transaction or, if there are no
such requirements, to reduce Senior Indebtedness, (b) in the case of a sale
or other disposition of Generating Assets or the Oswego Plant, use not less
than 85% (or 100% if the accepted bid requires less than 75% of the purchase
price to be paid in cash or Cash Equivalents) of the cash portion of such Net
Proceeds to reduce Senior Indebtedness, and (c) in the case of any
41
other Sale of Assets that is consummated prior to the Investment Grade Date,
use 100% of such Net Proceeds for one or more of the following: (i) to
reduce Senior Indebtedness, (ii) to reinvest, or enter into an agreement with
respect to the reinvestment of, such Net Proceeds in Related Assets, or (iii)
make an offer to all Holders of Senior Notes (an "ASSET SALE OFFER") to
purchase the maximum principal amount of Senior Notes that may be purchased
out of such Net Proceeds, at an offer price in cash in an amount equal to
100% of the principal amount thereof (in the case of the Series A through G
Notes) or 100% of the principal amount at maturity of the Senior Discount
Notes (if such purchase occurs on or after July 1, 2003) or 100% of the
Accreted Value of the Senior Discount Notes (if such repurchase occurs prior
to July 1, 2003) plus accrued and unpaid interest thereon, if any, to the
date of purchase, in accordance with the procedures set forth in this
Indenture. To the extent that the aggregate amount of Senior Notes tendered
pursuant to an Asset Sale Offer is less than the amount of such Net Proceeds,
the Company may use any remaining Net Proceeds for general corporate
purposes. If the aggregate principal amount of Senior Notes surrendered by
Holders thereof exceeds the amount of such Net Proceeds, the Trustee shall
select the Senior Notes to be purchased on a pro rata basis. Upon completion
of such offer to purchase, the amount of Net Proceeds shall be reset at zero.
Pending the final application of any such Net Proceeds, the Company may
otherwise invest such Net Proceeds in any manner that is not prohibited by
this Indenture.
SECTION 4.11. TRANSACTION WITH AFFILIATES.
The Company shall not, and shall not permit any of its
Subsidiaries to, make any payment to, or sell, lease, transfer or otherwise
dispose of any of their properties or assets to, or purchase any property or
assets from, or enter into or make or amend any contract, agreement,
understanding, loan, advance or guarantee with, or for the benefit of, any
Affiliate (each of the foregoing, an "AFFILIATE TRANSACTION"), unless (i)
such Affiliate Transaction is on terms that are no less favorable to the
Company or the relevant Subsidiary than those that would have been obtained
in a comparable transaction by the Company or Subsidiary with an unrelated
Person; and (ii) the Company delivers to the Trustee (a) with respect to any
Affiliate Transaction or series of related Affiliate Transactions involving
aggregate consideration in excess of $10.0 million, a resolution of the Board
of Directors set forth in an Officers' Certificate certifying that such
Affiliate Transaction complies with clause (i) above and that such Affiliate
Transaction has been approved by a majority of the disinterested members of
the Board of Directors and (b) with respect to any Affiliate Transaction or
series of related Affiliate Transactions involving aggregate consideration in
excess of $50.0 million, an opinion as to the fairness to the Company or such
Subsidiary of such Affiliate Transaction from a financial point of view
issued by a nationally recognized expert in evaluating such transactions;
PROVIDED that (v) any employment agreement entered into by the Company or its
Subsidiaries in the ordinary course of business; (w) commercial transactions
in the ordinary course of the utility business between or among the Company
and/or its Restricted Subsidiaries; (x) Restricted Payments that are
permitted by Section 4.07; (y) agreements or transactions entered into in
connection with a Securitization Transaction or the Receivables Financing and
(z) following any holding company reorganization, transactions between
42
the Company and its Restricted Subsidiaries and the Company's parent that are
on terms permitted by the PSC, in each case, shall not be deemed Affiliate
Transactions.
SECTION 4.12. LIENS.
The Company will not, and will not permit any of its
Restricted Subsidiaries to, directly or indirectly, secure with a Lien on the
property or assets of the Company or such Restricted Subsidiary, Other
Indebtedness or Subordinated Indebtedness without making, or causing such
Restricted Subsidiary to make, effective provision for securing the Senior
Notes (i) in the case of a Lien securing Other Indebtedness, on an equal and
ratable basis with the Lien securing such Other Indebtedness and (ii) in the
case of a Lien securing Subordinated Indebtedness, on a basis such that the
Lien securing the Senior Notes is senior in priority to the Lien securing
such Subordinated Indebtedness, in each case until such time as such Other
Indebtedness or Subordinated Indebtedness is no longer secured by a Lien.
SECTION 4.13. CORPORATE EXISTENCE.
Subject to Article 5 hereof, the Company shall do or cause to
be done all things necessary to preserve and keep in full force and effect
(i) its corporate existence, and the corporate, partnership or other
existence of each of its Restricted Subsidiaries, in accordance with the
respective organizational documents (as the same may be amended from time to
time) of the Company or any such Restricted Subsidiary and (ii) the rights
(charter and statutory), licenses and franchises of the Company and its
Restricted Subsidiaries; PROVIDED, HOWEVER, that the Company shall not be
required to preserve any such right, license or franchise, or the corporate,
partnership or other existence of any of its Restricted Subsidiaries, if the
Board of Directors shall determine that the preservation thereof is no longer
desirable in the conduct of the business of the Company and its Restricted
Subsidiaries, taken as a whole, and that the loss thereof is not adverse in
any material respect to the Holders of the Senior Notes.
SECTION 4.14. OFFER TO REPURCHASE UPON CHANGE OF CONTROL TRIGGERING EVENT.
(a) Upon the occurrence of a Change of Control Triggering
Event, each Holder of Senior Notes will have the right to require the Company
to repurchase all or any part (equal to $1,000 or an integral multiple
thereof) of such Holder's Senior Notes pursuant to the offer described below
(the "CHANGE OF CONTROL OFFER") at an offer price in cash equal to (a) 101%
of the aggregate principal amount thereof in the case of the Series A through
G Senior Notes, (b) 101% of the principal amount at maturity of the Senior
Discount Notes (if such repurchase occurs on or after July 1, 2003) or (c)
101% of the Accreted Value of the Senior Discount Notes (if such repurchase
occurs prior to July 1, 2003), plus accrued and unpaid interest thereon, if
any, to the date of purchase (the "CHANGE OF CONTROL PAYMENT"). Within
thirty days following any Change of Control Triggering Event, the Company
shall mail a notice to each Holder describing the transaction or transactions
that constitute
43
the Change of Control Triggering Event and offering to repurchase Senior
Notes pursuant to the procedures described in this Section and described in
such notice. The notice will state: (1) that the Change of Control Offer is
being made pursuant to this Section 4.14 and that all Senior Notes tendered
will be accepted for payment; (2) the purchase price and the purchase date,
which shall be at least 30 but not more than 60 days from the date such
notice is mailed (the "CHANGE OF CONTROL PAYMENT DATE"); (3) that any Senior
Note not tendered will continue to accrue interest; (4) that, unless the
Company defaults in the payment of the Change of Control Payment, all Senior
Notes accepted for payment pursuant to the Change of Control Offer shall
cease to accrue interest after the Change of Control Payment Date; (5) that
Holders electing to have any Senior Notes purchased pursuant to a Change of
Control Offer will be required to surrender the Senior Notes, with the form
entitled "Option of Holder to Elect Purchase" on the reverse of the Senior
Notes completed, to the Paying Agent at the address specified in the notice
prior to the close of business on the third Business Day preceding the Change
of Control Payment Date; (6) that Holders will be entitled to withdraw their
election if the Paying Agent receives, not later than the close of business
on the second Business Day preceding the Change of Control Payment Date, a
telegram, telex, facsimile transmission or letter setting forth the name of
the Holder, the principal amount of Senior Notes delivered for purchase, and
a statement that such Holder is withdrawing his election to have the Senior
Notes purchased; and (7) that Holders whose Senior Notes are being purchased
only in part will be issued new Senior Notes equal in principal amount (or
principal amount at maturity, as the case may be) to the unpurchased portion
of the Senior Notes surrendered, which unpurchased portion must be equal to
$1,000 in principal amount or an integral multiple thereof. The Company
shall comply with the requirements of Rule 14e-1 under the Exchange Act and
any other securities laws and regulations thereunder to the extent such laws
and regulations are applicable in connection with the repurchase of the
Senior Notes as a result of a Change of Control.
(b) On the Change of Control Payment Date, the Company shall,
to the extent lawful, (1) accept for payment all Senior Notes or portions
thereof properly tendered pursuant to the Change of Control Offer, (2)
deposit with the Paying Agent an amount equal to the Change of Control
Payment in respect of all Senior Notes or portions thereof so tendered and
(3) deliver or cause to be delivered to the Trustee the Senior Notes so
accepted together with an Officers' Certificate stating the aggregate
principal amount (or principal amount at maturity, as the case may be) of
Senior Notes or portions thereof being purchased by the Company. The Paying
Agent shall promptly mail to each Holder of Senior Notes so tendered the
Change of Control Payment for such Senior Notes, and the Trustee will
promptly authenticate and mail (or cause to be transferred by book entry) to
each Holder a new Senior Note equal in principal amount (or principal amount
at maturity, as the case may be) to any unpurchased portion of the Senior
Notes surrendered, if any; PROVIDED that each such new Senior Note will be in
a principal amount of $1,000 or an integral multiple thereof. The Company
shall publicly announce the results of the Change of Control Offer on or as
soon as practicable after the Change of Control Payment Date.
44
(c) The Company shall not be required to make a Change of
Control Offer upon a Change of Control Triggering Event if a third party
makes the Change of Control Offer in the manner, at the times and otherwise
in compliance with the requirements set forth in Sections 4.14(a) and 4.14(b)
hereof and purchases all Senior Notes validly tendered and not withdrawn
under such Change of Control Offer.
SECTION 4.15. PAYMENTS FOR CONSENTS.
Neither the Company nor any of its Subsidiaries may, directly
or indirectly, pay or cause to be paid any consideration, whether by way of
interest, fee or otherwise, to any Holder of any Senior Note of any series
for or as an inducement to any consent, waiver or amendment of any of the
terms or provisions of this Indenture or such Senior Notes unless such
consideration is offered to be paid or agreed to be paid to all Holders of
the Senior Notes of that series that consent, waive or agree to amend in the
time frame set forth in the solicitation documents relating to such consent,
waiver or agreement.
ARTICLE 5
SUCCESSORS
SECTION 5.01. MERGER, CONSOLIDATION, OR SALE OF ASSETS.
So long as the Senior Notes are outstanding, the Company may
not, directly or indirectly, consolidate or merge with or into (whether or
not the Company is the surviving corporation), or sell, assign, transfer,
lease, convey or otherwise dispose of all or substantially all its assets in
one or more related transactions, to another Person unless (i) the
corporation formed by such consolidation or surviving in such merger or the
Person that acquires by sale, assignment, transfer, conveyance or other
disposition, or that leases, such assets (in each such case, the "SUCCESSOR
ENTITY"), is a corporation organized and existing under the laws of the
United States, any State thereof or the District of Columbia and expressly
assumes the Company's obligations under the Indenture and the Notes; (ii)
immediately before and after such transaction no Default or Event of Default
exists; and (iii) the Successor Entity (or the Company, in the case of a
consolidation or merger in which the Company is the surviving entity) (A) has
Consolidated Net Worth immediately after the transaction (but prior to any
revaluation or recalculation of Consolidated Net Worth as of the date of the
transaction relating to a carry-over basis (if any) of the assets acquired in
the transaction (as determined in accordance with GAAP)) equal to or greater
than the Consolidated Net Worth of the Company immediately prior to the
transaction and (B) will, at the time of such transaction and after giving
PRO FORMA effect thereto as if such transaction had occurred at the beginning
of the applicable four-quarter period, have a Fixed Charge Coverage Ratio of
not less than 1.75 to 1 (calculated pursuant to Section 4.09 above); PROVIDED
that the limitations set forth in this clause (iii) shall not apply following
the Investment Grade Date or to any merger or consolidation of the Company
with or into a Restricted Subsidiary and PROVIDED FURTHER, that the
limitations set forth above shall not apply to the sale or disposition by the
45
Company of the Generating Assets or the Oswego Plant (it being understood and
agreed that the acquiror or transferee of such assets shall not qualify as a
Successor Entity on the basis of having acquired all or substantially all of
the Company's assets for purposes of this Article 5).
SECTION 5.02. SUCCESSOR CORPORATION SUBSTITUTED.
Upon any consolidation, amalgamation or merger, or any sale,
assignment, transfer, lease, conveyance or other disposition of all or
substantially all of the assets of the Company in accordance with Section
5.01 hereof, the successor corporation formed by such consolidation or
amalgamation or into or with which the Company is merged or to which such
sale, assignment, transfer, lease, conveyance or other disposition is made
shall succeed to, and be substituted for (so that from and after the date of
such consolidation, amalgamation, merger, sale, lease, conveyance or other
disposition, the provisions of this Indenture referring to the "COMPANY"
shall refer instead to the successor corporation), and may exercise every
right and power of the Company under this Indenture with the same effect as
if such successor Person had been named as the Company herein; PROVIDED,
HOWEVER, that the predecessor Company shall not be relieved from the
obligation to pay the principal of, and premium, if any, on the Senior Notes
except in the case of a transaction that meets the requirements of Section
5.01 hereof.
ARTICLE 6
DEFAULTS AND REMEDIES
SECTION 6.01. EVENTS OF DEFAULT.
Each of the following constitutes an "EVENT OF DEFAULT":
(i) default by the Company for 60 days in the payment when due
of interest on the Senior Notes;
(ii) default by the Company in the payment when due of the
principal of, or premium, if any, on the Senior Notes;
(iii) failure by the Company to comply with Sections 4.07,
4.09 or 5.01 hereof;
(iv) failure by the Company for 60 days after written notice to
the Company by the Trustee, or written notice to the Company and the
Trustee by the Holders of 25% or more in an aggregate principal
amount (or principal amount at maturity, as the case may be) of the
Senior Notes, to comply with any of its agreements in the Indenture
or the Senior Notes;
46
(v) default by the Company under any mortgage, indenture or
instrument under which there may be issued or by which there may
be secured or evidenced any Indebtedness of the Company or any of
its Restricted Subsidiaries (or the payment of which is guaranteed
by the Company or any of its Restricted Subsidiaries), whether
such Indebtedness or Guarantee now exists, or is created after the
date hereof, which default (a) is caused by a failure to pay the
principal of such Indebtedness at the stated maturity of such
Indebtedness after the expiration of the grace period provided in
such Indebtedness (a "PAYMENT DEFAULT") or (b) results in the
acceleration of such Indebtedness prior to its stated maturity
and, in each case, the principal amount of any such Indebtedness,
together with the principal amount of any other such Indebtedness
under which there has been a Payment Default or the maturity of
which has been so accelerated, aggregates $50.0 million or more;
(vi) failure by the Company or any of its Restricted
Subsidiaries to pay a final judgment or final judgments not
otherwise covered by insurance for the payment of money entered by
a court or courts of competent jurisdiction against the Company or
any of its Subsidiaries and such judgment or judgments are not
paid, discharged or stayed for a period of 60 days, PROVIDED that
the aggregate of all such undischarged judgments exceeds $50.0
million;
(vii) the Company or any of its Significant Subsidiaries
pursuant to or within the meaning of any Bankruptcy Law:
(a) commences a voluntary Case,
(b) consents to the entry of an order for relief
against it in an involuntary Case,
(c) consents to the appointment of a Custodian of it
or for all or substantially all of its property,
(d) makes a general assignment for the benefit of its
creditors, or
(e) generally is not paying its debts as they become
due; or
(viii) a court of competent jurisdiction enters an order or
decree under any Bankruptcy Law that:
(a) is for relief against the Company or any of its
Significant Subsidiaries in an involuntary Case;
47
(b) appoints a Custodian of the Company or any of its
Significant Subsidiaries or for all or substantially all of the
property of the Company or any of its Significant Subsidiaries;
or
(c) orders the liquidation of the Company or any of its
Significant Subsidiary; and, in each case, the order or decree
remains unstayed and in effect for 60 consecutive days.
The term "CUSTODIAN" means any receiver, trustee, assignee,
liquidator or similar official under any Bankruptcy Law. The term "CASE"
means an application, petition, action, case or other proceeding (including
the filing of a notice of intention to file a proposal) before any court,
tribunal or other governmental authority under any applicable Bankruptcy Law
(foreign or domestic).
In the case of any Event of Default pursuant to the provisions of
this Section 6.01 occurring by reason of any willful action (or inaction)
taken (or not taken) by or on behalf of the Company with the intention of
avoiding payment of the premium that the Company would have had to pay if the
Company then had elected to redeem the Senior Notes pursuant to Sections 3.07
or 4.14 hereof, an equivalent premium shall also become and be immediately
due and payable to the extent permitted by law upon the acceleration of the
Senior Notes, anything in this Indenture or in the Senior Notes to the
contrary notwithstanding.
SECTION 6.02. ACCELERATION.
If any Event of Default (other than an Event of Default specified in
clause (vii) or (viii) of Section 6.01 hereof with respect to the Company or any
Significant Subsidiary) occurs and is continuing, the Trustee or the Holders of
at least 25% in principal amount (or principal amount at maturity, as the case
may be) of the then outstanding Senior Notes of any series affected by an Event
of Default may declare all the Senior Notes of such Series to be due and payable
immediately. Upon any such declaration, the Senior Notes shall become due and
payable immediately. Notwithstanding the foregoing, if an Event of Default
specified in clause (vii) or (viii) of Section 6.01 hereof occurs with respect
to the Company or any of its Significant Subsidiaries, all outstanding Senior
Notes shall be due and payable immediately without further action or notice.
The Holders of a majority in aggregate principal amount (or principal amount at
maturity, as the case may be) of the then outstanding Senior Notes of any series
affected by an Event of Default by written notice to the Trustee may on behalf
of all of the Holders of such series rescind an acceleration and its
consequences if the rescission would not conflict with any judgment or decree
and if all existing Events of Default (except nonpayment of principal, interest
or premium that has become due solely because of the acceleration) have been
cured or waived. Except as provided in Section 6.01 hereof, in the event of any
such acceleration of Senior Notes, the Company will become obligated to pay the
aggregate principal amount and accrued interest (or Accreted Value on the Senior
Discount Notes if prior to July 1, 2003) of the Senior Notes immediately.
48
SECTION 6.03. OTHER REMEDIES.
If an Event of Default occurs and is continuing, the Trustee may
pursue any available remedy to collect the payment of principal, and premium,
if any, on the Senior Notes or to enforce the performance of any provision of
the Senior Notes or this Indenture.
The Trustee may maintain a proceeding even if it does not
possess any of the Senior Notes or does not produce any of them in the
proceeding. A delay or omission by the Trustee or any Holder of a Senior
Note in exercising any right or remedy accruing upon an Event of Default
shall not impair the right or remedy or constitute a waiver of or
acquiescence in the Event of Default. All remedies are cumulative to the
extent permitted by law.
SECTION 6.04. WAIVER OF PAST DEFAULTS.
Holders of not less than a majority in aggregate principal
amount (or principal amount at maturity, as the case may be) of the then
outstanding Senior Notes that would be materially adversely affected by such
waiver by notice to the Trustee may on behalf of the Holders of all of the
Senior Notes waive an existing Default or Event of Default and its
consequences hereunder, except a continuing Default or Event of Default in
the payment of interest on, or the principal of, or premium of, if any, the
Senior Notes. Upon any such waiver, such Default shall cease to exist, and
any Event of Default arising therefrom shall be deemed to have been cured for
every purpose of this Indenture; but no such waiver shall extend to any
subsequent or other Default or impair any right consequent thereon.
SECTION 6.05. CONTROL BY MAJORITY.
Holders of a majority in principal amount (or principal amount at
maturity, as the case may be) of the then outstanding Senior Notes of any series
affected by an Event of Default may direct the time, method and place of
conducting any proceeding for exercising any remedy available to the Trustee or
exercising any trust or power conferred on it. However, the Trustee may refuse
to follow any direction that conflicts with law or this Indenture that the
Trustee determines may be unduly prejudicial to tile rights of other Holders of
Senior Notes or that may involve the Trustee in personal liability.
SECTION 6.06. LIMITATION ON SUITS.
A Holder of a Senior Note may pursue a remedy with respect to
this Indenture or the Senior Notes only if:
(a) the Holder of a Senior Note gives to the Trustee written
notice of a continuing Event of Default;
49
(b) the Holders of at least 25% in principal amount (or
principal amount at maturity, as the case may be) of the then outstanding
Senior Notes make a written request to the Trustee to pursue the remedy;
(c) such Holder of a Senior Note or Holders of Senior Notes
offer and, if requested, provide to the Trustee indemnity satisfactory to
the Trustee against any loss, liability or expense;
(d) the Trustee does not comply with the request within 60 days
after receipt of the request and the offer and, if requested, the
provision of indemnity; and
(e) during such 60-day period the Holders of a majority in
principal amount (or principal amount at maturity, as the case may be)
of the then outstanding Senior Notes do not give the Trustee a direction
inconsistent with the request.
A Holder of a Senior Note may not use this Indenture to prejudice the rights
of another Holder of a Senior Note or to obtain a preference or priority over
another Holder of a Senior Note.
SECTION 6.07. RIGHTS OF HOLDERS OF SENIOR NOTES TO RECEIVE PAYMENT.
Notwithstanding any other provision of this Indenture, the
right of any Holder of a Senior Note to receive payment of principal and
premium, if any, on the Senior Note, on or after the respective due dates
expressed in the Senior Note (including in connection with an offer to
purchase), or to bring suit for the enforcement of any such payment on or
after such respective dates, shall not be impaired or affected without the
consent of such Holder.
SECTION 6.08. COLLECTION SUIT BY TRUSTEE.
If an Event of Default specified in Section 6.01(i) or (ii)
hereof occurs and is continuing, the Trustee is authorized to recover
judgment in its own name and as trustee of an express trust against the
Company for the whole amount of principal of, and premium, if any, remaining
unpaid on the Senior Notes and interest on overdue principal and, to the
extent lawful, such further amount as shall be sufficient to cover the costs
and expenses of collection, including the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel.
SECTION 6.09. TRUSTEE MAY FILE PROOFS OF CLAIM.
The Trustee is authorized to file such proofs of claim and
other papers or documents as may be necessary or advisable in order to have
the claims of the Trustee (including any claim for the reasonable
compensation, expenses, disbursements and advances of the Trustee, its agents
and counsel) and the Holders of the Senior Notes allowed in any judicial
proceedings relative to the Company (or
50
any other obligor upon the Senior Notes), its creditors or its property and
shall be entitled and empowered to collect, receive and distribute any money
or other property payable or deliverable on any such claims and any custodian
in any such judicial proceeding is hereby authorized by each Holder to make
such payments to the Trustee, and in the event that the Trustee shall consent
to the making of such payments directly to the Holders, to pay to the Trustee
any amount due to it for the reasonable compensation, expenses, disbursements
and advances of the Trustee, its agents and counsel, and any other amounts
due the Trustee under Section 7.07 hereof. To the extent that the payment of
any such compensation, expenses, disbursements and advances of the Trustee,
its agents and counsel, and any other amounts due the Trustee under Section
7.07 hereof out of the estate in any such proceeding, shall be denied for any
reason, payment of the same shall be secured by a Lien on, and shall be paid
out of, any and all distributions, dividends, money, securities and other
properties that the Holders may be entitled to receive in such proceeding
whether in liquidation or under any plan of reorganization or arrangement or
otherwise. Nothing herein contained shall be deemed to authorize the Trustee
to authorize or consent to or accept or adopt on behalf of any Holder any
plan of reorganization, arrangement, adjustment or composition affecting the
Senior Notes or the rights of any Holder, or to authorize the Trustee to vote
in respect of the claim of any Holder in any such proceeding.
SECTION 6.10. PRIORITIES.
If the Trustee collects any money pursuant to this Article, it
shall pay out the money in the following order:
FIRST: to the Trustee, its agents and attorneys for amounts
due under Section 7.07 hereof, including payment of all compensation, expense
and liabilities incurred, and all advances made, by the Trustee and the costs
and expenses of collection, including the costs of its agents and counsel;
SECOND: to Holders of Senior Notes for amounts due and unpaid
on the Senior Notes for principal, and premium, if any, ratably, without
preference or priority of any kind, according to the amounts due and payable
on the Senior Notes for principal, and premium, if any, respectively; and
THIRD: to the Company or to such party as a court of competent
jurisdiction shall direct.
The Trustee may fix a record date and payment date for any
payment to Holders of Senior Notes pursuant to this Section 6.10.
SECTION 6.11. UNDERTAKING FOR COSTS.
In any suit for the enforcement of any right or remedy under
this Indenture or in any suit against the Trustee for any action taken or
omitted by it as a Trustee, a court in its discretion may require the filing
by any party, litigant in the suit of an undertaking to pay the costs of the
suit, and the court in its discretion may assess reasonable costs, including
reasonable attorneys' fees, against any
51
party litigant in the suit, having due regard to the merits and good faith of
the claims or defenses made by the party litigant. This Section does not
apply to a suit by the Trustee, a suit by a Holder of a Senior Note pursuant
to Section 6.07 hereof, or a suit by Holders of more than 10% in principal
amount of the then outstanding Senior Notes.
ARTICLE 7
TRUSTEE
SECTION 7.01. DUTIES OF TRUSTEE.
(a) If an Event of Default has occurred and is continuing,
the Trustee shall exercise such of the rights and powers vested in it by this
Indenture, and use the same degree of care and skill in its exercise, as a
prudent man would exercise or use under the circumstances in the conduct of
his own affairs.
(b) Except during the occurrence and continuance of an Event of
Default:
(i) the Trustee need perform only those duties that are
specifically set forth in this Indenture and any Supplemental
Indenture; and
(ii) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the correctness
of the opinions expressed therein, upon certificates or opinions
furnished to the Trustee and conforming to the requirements of this
Indenture. However, the Trustee shall examine the certificates and
opinions to determine whether or not they conform to the requirements
of this Indenture.
(c) The Trustee may not be relieved from liabilities for its
own negligent action, its own negligent failure to act, or its own
willful misconduct, except that:
(i) this paragraph does not limit the effect of paragraph (b)
of this Section 7.01;
(ii) the Trustee shall not be liable for any error of judgment
made in good faith by a Responsible Officer, unless it is proved
that the Trustee was negligent in ascertaining the pertinent facts;
and
(iii) the Trustee shall not be liable with respect to any
action it takes or omits to take in good faith in accordance with a
direction received by it pursuant to Section 6.05 hereof.
52
(d) Whether or not therein expressly so provided, every
provision of this Indenture that in any way relates to the Trustee
is subject to paragraphs (a), (b), and (c) of this Section 7.01 and
the requirements of the TIA.
(e) No provision of this Indenture shall require the Trustee
to expend or risk its own funds or incur any liability. The Trustee
may refuse to perform any duty or exercise any right or power unless
it receives indemnity satisfactory to it against any loss, liability
or expense.
(f) The Trustee shall not be liable for interest on any money
received by it except as the Trustee may agree in writing with the
Company. Money held in trust by the Trustee need not be segregated
from other funds except to the extent required by law.
SECTION 7.02. RIGHTS OF TRUSTEE.
(a) The Trustee may conclusively rely upon any document (and
any facts or matters stated in any document) believed by it to be
genuine and to have been signed or presented by the proper Person.
The Trustee need not investigate any fact or matter stated in the
document.
(b) Before the Trustee acts or refrains from acting, it may
require an Officers' Certificate or an Opinion of Counsel or both.
The Trustee shall not be liable for any action it takes or omits to
take in good faith in reliance on such Officers' Certificate or
Opinion of Counsel. The Trustee may consult with counsel and the
written advice of such counsel or any Opinion of Counsel shall be
full and complete authorization and protection from liability in
respect of any action taken, suffered or omitted by it hereunder in
good faith and in reliance thereon.
(c) The Trustee may act through its agents and shall not be
responsible for the misconduct or negligence of any agent appointed
with due care.
(d) The Trustee shall not be liable for any action it takes
or omits to take in good faith that it believes to be authorized or
within the rights or powers conferred upon it by this Indenture.
(e) Unless otherwise specifically provided in this Indenture,
any demand, request, direction or notice from the Company shall be
sufficient if signed by an Officer of the Company.
(f) The Trustee shall be under no obligation to exercise any
of the rights or powers vested in it by this Indenture at the
request or direction of the Holders unless such Holders shall have
offered to the Trustee security or indemnity reasonably satisfactory
to the Trustee against the costs, expenses and liabilities that
might be incurred by it in compliance with such request or direction.
(g) The Trustee shall not be required to expend or risk its
own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder, or in the exercise of
any
53
of its rights or powers, if it shall have reasonable grounds for
believing that repayment of such funds or adequate indemnity against
such risk or liability is not assured to it.
(h) The Trustee shall have no duty to inquire as to the
performance of the Company's covenants in Article 4 hereof. In
addition, the Trustee shall not be deemed to have knowledge of any
Default or Event of Default except (i) any Event of Default
occurring pursuant to Sections 6.01(i) or 6.01(ii) hereof; or (ii)
any Default or Event of Default of which the Trustee shall have
received written notification or obtained actual knowledge.
SECTION 7.03. INDIVIDUAL RIGHTS OF TRUSTEE.
The Trustee in its individual or any other capacity may become
the owner or pledgee of Senior Notes and may otherwise deal with the Company
or any Affiliate of the Company with the same rights it would have if it were
not Trustee. However, in the event that the Trustee acquires any conflicting
interest it must eliminate such conflict within 90 days, apply to the SEC for
permission to continue as trustee or resign. Any Agent may do the same with
like rights and duties. The Trustee is also subject to Sections 7.10 and
7.11 hereof.
SECTION 7.04. TRUSTEE'S DISCLAIMER.
The Trustee makes no representation as to the validity or
adequacy of this Indenture or the Senior Notes, it shall not be accountable
for the Company's use of the proceeds from the Senior Notes or any money paid
to the Company or upon the Company's direction under any provision of this
Indenture, it shall not be responsible for the use or application of any
money received by any Paying Agent other than the Trustee, and it shall not
be responsible for any statement or recital in this Indenture or any
statement in the Senior Notes or any other document in connection with the
sale of the Senior Notes or pursuant to this Indenture other than its
certificate of authentication.
SECTION 7.05. NOTICE OF DEFAULTS.
If a Default or Event of Default occurs and is continuing and
if it is known to the Trustee, the Trustee shall mail to Holders of Senior
Notes a notice of the Default or Event of Default within 90 days after it
occurs, unless such Default or Event of Default shall have been cured.
Except in the case of a Default or Event of Default in payment of principal
of, or premium, if any, or interest on any Senior Note, the Trustee may
withhold the notice if and so long as a committee of its Responsible Officers
in good faith determines that withholding the notice is in the interests of
the Holders of the Senior Notes.
54
SECTION 7.06. REPORTS BY TRUSTEE TO HOLDERS OF THE SENIOR NOTES.
Within 60 days after each May 15 beginning with the May 15
following the date hereof, and for so long as Senior Notes remain
outstanding, the Trustee shall mail to the Holders of the Senior Notes a
brief report dated as of such reporting date that complies with TIA Section
313(a) (but if the event described in Section 313(a) of the TIA has occurred
within twelve months preceding the reporting date, no report need be
transmitted). The Trustee also shall comply with TIA Section 313(b)(2). The
Trustee shall also transmit by mail all reports as required by TIA Section
313(c).
Commencing at the time this Indenture is qualified under the
TIA, a copy of each report at the time of its mailing to the Holders of
Senior Notes shall be mailed to the Company and filed with the SEC and each
stock exchange on which the Senior Notes are listed in accordance with TIA
Section 313(d). The Company shall promptly notify the Trustee when the
Senior Notes are listed on any stock exchange.
SECTION 7.07. COMPENSATION AND INDEMNITY.
The Company shall pay to the Trustee from time to time
reasonable compensation for its acceptance of this Indenture and services
hereunder. The Trustee's compensation shall not be limited by any law on
compensation of a trustee of an express trust. The Company shall reimburse
the Trustee upon request for all reasonable disbursements, advances and
expenses incurred by it or made by it in addition to the compensation for its
services, including reasonable compensation and the expenses and
disbursements of its agents and counsel. Such expenses shall include the
reasonable compensation, disbursements and expenses of the Trustee's agents
and counsel, whether incurred in disputes between the parties or disputes
with third parties or otherwise.
The Company shall indemnify the Trustee against any loss,
liability or expense incurred by it arising out of or in connection with the
acceptance or administration of its duties under this Indenture, except as
set forth in the next paragraphs, including the costs and expenses of
enforcing this Indenture against the Company (including this Section 7.07)
and defending itself against any claim (whether asserted by the Company, any
Holder or any other Person). The Trustee shall notify the Company promptly of
any claim for which it may seek indemnity. Failure by the Trustee to so
notify the Company shall not relieve the Company or any Person of any
liability or obligations hereunder. The Company shall defend the claim and
the Trustee shall cooperate in the defense. The Trustee may have separate
counsel and the Company shall pay the reasonable fees and expenses of such
counsel.
The Company need not reimburse any expense or indemnify
against any loss or liability attributed solely to the Trustee's negligence
or bad faith.
55
To secure the Company's payment obligations in this Section
7.07, the Trustee shall have a Lien prior to the Senior Notes on all money or
property held or collected by the Trustee, except that held in trust to pay
principal and interest on particular Senior Notes. Such Lien shall survive
the satisfaction and discharge of this Indenture.
When the Trustee incurs expenses or renders services after an
Event of Default specified in Section 6.01(vii) or (viii) hereof occurs, the
expenses and the compensation for the services (including the fees and
expenses of its agents and counsel) are intended to constitute expenses of
administration under any Bankruptcy Law.
SECTION 7.08. REPLACEMENT OF TRUSTEE.
A resignation or removal of the Trustee and appointment of a
successor Trustee shall become effective only upon the successor Trustee's
acceptance of appointment as provided in this Section 7.08.
The Trustee may resign and be discharged from the trust hereby
created by so notifying the Company. The Holders of a majority in principal
amount of the then outstanding Senior Notes may remove the Trustee by so
notifying the Trustee and the Company in writing. The Company may remove the
Trustee if:
(a) the Trustee fails to comply with Section 7.10 hereof;
(b) the Trustee is adjudged a bankrupt or an insolvent or an order
for relief is entered with respect to the Trustee under any Bankruptcy
Law;
(c) a Custodian or public officer takes charge of the Trustee or its
property; or
(d) the Trustee becomes incapable of acting.
If the Trustee resigns or is removed or if a vacancy exists in the
office of Trustee for any reason, the Company shall promptly appoint a
successor Trustee. Within one year after the successor Trustee takes office,
the Holders of a majority in principal amount of the then outstanding Senior
Notes may appoint a successor Trustee to replace the successor Trustee
appointed by the Company.
If a successor Trustee does not take office within 60 days after
the retiring Trustee resigns or is removed, the retiring Trustee, the
Company, or the Holders of at least 10% in principal amount (or principal
amount at maturity, as the case may be) of the then outstanding Senior Notes
may petition any court of competent jurisdiction for the appointment of a
successor Trustee.
56
If the Trustee, after written request by any Holder of a
Senior Note who has been a Holder of a Senior Note for at least six months,
fails to comply with Section 7. 10, such Holder of a Senior Note may petition
any court of competent jurisdiction for the removal of the Trustee and the
appointment of a successor Trustee.
A successor Trustee shall deliver a written acceptance of its
appointment to the retiring Trustee and to the Company. Thereupon, the
resignation or removal of the retiring Trustee shall become effective, and
the successor Trustee shall have all the rights, powers and duties of the
Trustee under this Indenture. The successor Trustee shall mail a notice of
its succession to Holders of the Senior Notes. The retiring Trustee shall
promptly transfer all property held by it as Trustee to the successor
Trustee, subject to the Lien provided for in Section 7.07 hereof.
Notwithstanding replacement of the Trustee pursuant to this Section 7.08, the
Company's obligations under Section 7.07 hereof shall continue for the
benefit of the retiring Trustee.
SECTION 7.09. SUCCESSOR TRUSTEE BY MERGER, ETC.
If the Trustee consolidates, merges or converts into, or
transfers all or substantially all of its corporate trust business to,
another corporation, the successor corporation without any further act shall
be the successor Trustee.
SECTION 7.10. ELIGIBILITY, DISQUALIFICATION.
The final paragraph of this Section shall not be operative as
a part of this Indenture until this Indenture is qualified under the TIA and
until such qualification this Indenture shall be construed as if said
paragraph were not contained herein.
There shall at all times be a Trustee hereunder that is a
corporation organized and doing business under the laws of the United States
of America or of any state thereof that is authorized under such laws to
exercise corporate trustee power, that is subject to supervision or
examination by federal or state authorities and that has a combined capital
and surplus of at least $50 million as set forth in its most recent published
annual report of condition.
This Indenture shall always have a Trustee who satisfies the
requirements of TIA Section 310(a)(1), (2) and (5). The Trustee is subject
to TIA Section 310(b).
SECTION 7.11. PREFERENTIAL COLLECTION OF CLAIMS AGAINST COMPANY.
The Trustee is subject to TIA Section 311(a), excluding any
creditor relationship listed in TIA Section 311 (b). A Trustee that has
resigned or been removed shall be subject to TIA Section 311(a) to the extent
indicated therein.
57
ARTICLE 8
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
SECTION 8.01. OPTION TO EFFECT LEGAL DEFEASANCE OR COVENANT DEFEASANCE.
The Company may, at the option of its Board of Directors
evidenced by a resolution set forth in an Officers' Certificate, at any time,
elect to have either Section 8.02 or 8.03 hereof be applied to all
outstanding Senior Notes of any series upon compliance with the conditions
set forth below in this Article Eight.
SECTION 8.02. LEGAL DEFEASANCE AND DISCHARGE.
Upon the Company's exercise under Section 8.01 hereof of the
option applicable to this Section 8.02, the Company shall, subject to the
satisfaction of the conditions set forth in Section 8.04 hereof, be deemed to
have been discharged from its obligations with respect to all outstanding
Senior Notes of any series on the date the conditions set forth below are
satisfied (hereinafter, "LEGAL DEFEASANCE"). For this purpose, Legal
Defeasance means that the Company shall be deemed to have paid and discharged
the entire Indebtedness represented by the outstanding Senior Notes of such
series, which shall thereafter be deemed to be " outstanding" only for the
purposes of Section 8.05 hereof and the other Sections of this Indenture
referred to in (a) and (b) below, and to have satisfied all its other
obligations under such Senior Notes and this Indenture (and the Trustee, on
demand of and at the expense of the Company, shall execute proper instruments
acknowledging the same), except for the following provisions which shall
survive until otherwise terminated or discharged hereunder: (a) the rights of
Holders of outstanding Senior Notes of such series to receive solely from the
trust fund described in Section 8.04 hereof, and as more fully set forth in
such Section, payments in respect of the principal of, and premium, if any,
and interest on such Senior Notes when such payments are due from the funds
held by the Trustee in the trust, (b) the Company's obligations with respect
to such Senior Notes of such series under Sections 2.06, 2.08, 2.09, 2.12 and
4.02 hereof, (c) the rights, powers, trusts, duties and immunities of the
Trustee under this Indenture and the Company's obligations in connection
therewith and (d) the obligations of the Company under this Article Eight.
Subject to compliance with this Article Eight, the Company may exercise its
option under this Section 8.02 notwithstanding the prior exercise of its
option under Section 8.03 hereof.
SECTION 8.03. COVENANT DEFEASANCE.
Upon the Company's exercise under Section 8.01 hereof of the
option applicable to this Section 8.03, the Company shall, subject to the
satisfaction of the conditions set forth in Section 8.04 hereof, be released
from its obligations under the covenants contained in Sections 4.07, 4.08,
4.09, 4.10, 4.11, 4.12, 4.14 and Article 5 hereof with respect to the
outstanding Senior Notes of any series on and after the date the conditions
set forth below are satisfied (hereinafter, "COVENANT DEFEASANCE"), and such
Senior Notes shall thereafter be deemed not "outstanding" for the purposes of
any direction,
58
waiver, consent or declaration or act of Holders (and the
consequences of any thereof) in connection with such covenants, but shall
continue to be deemed "outstanding" for all other purposes hereunder (it
being understood that such Senior Notes shall not be deemed outstanding for
accounting purposes). For this purpose, Covenant Defeasance means that, with
respect to the outstanding Senior Notes of such series, the Company may omit
to comply with and shall have no liability in respect of any term, condition
or limitation set forth in any such covenant, whether directly or indirectly,
by reason of any reference elsewhere herein to any such covenant or by reason
of any reference in any such covenant to any other provision herein or in any
other document and such omission to comply shall not constitute a Default or
an Event of Default under Section 6.01 hereof, but, except as specified
above, the remainder of this Indenture and such Senior Notes of such series
shall be unaffected thereby. In addition, upon the Company's exercise under
Section 8.01 hereof of the option applicable to this Section 8.03 hereof,
subject to the satisfaction of the conditions set forth in Section 8.04
hereof, Sections 6.01(iii) through 6.01(vii) hereof shall not constitute
Events of Default.
SECTION 8.04. CONDITIONS TO LEGAL OR COVENANT DEFEASANCE.
The following shall be the conditions to the application of
either Section 8.02 or 8.03 hereof to the outstanding Senior Notes:
In order to exercise either Legal Defeasance or Covenant
Defeasance:
(a) the Company must irrevocably deposit with the Trustee, in
trust, for the benefit of the Holders of the Senior Notes, cash in Dollars,
Government Securities or a combination thereof, in such amounts as will be
sufficient, in the opinion of a firm of independent public accountants,
nationally recognized in the United States, to pay the principal of,
premium, if any, and interest on the outstanding Senior Notes on the stated
date for payment thereof or on the applicable redemption date of such
Senior Notes, and the Company must specify whether the Senior Notes are
being defeased to maturity or to a particular redemption date;
(b) in the case of an election under Section 8.02 hereof,
the Company shall have delivered to the Trustee an Opinion of Counsel
reasonably acceptable to the Trustee confirming that (A) the Company has
received from, or there has been published by, the Internal Revenue
Service a ruling or (B) since the date hereof, there has been a change in
the applicable federal income tax law, in either case to the effect that,
and based thereon such Opinion of Counsel shall confirm that, the Holders
of the outstanding Senior Notes will not recognize income, gain or loss
for federal income tax purposes as a result of such Legal Defeasance and
will be subject to federal income tax on the same amounts, in the same
manner and at the same times as would have been the case if such Legal
Defeasance had not occurred;
(c) in the case of an election under Section 8.03 hereof, the
Company shall have delivered to the Trustee an Opinion of Counsel
reasonably acceptable to the Trustee confirming
59
S&A DRAFT -JUNE 10, 1998
that the Holders of the outstanding Senior Notes will not recognize
income, gain or loss for federal income tax purposes as a result of
such Covenant Defeasance and will be subject to federal income tax
on the same amounts, in the same manner and at the same times as
would have been the case if such Covenant Defeasance had not
occurred;
(d) the Company shall covenant that no Default or Event of Default
shall have occurred and be continuing on the date of such deposit (other
than a Default or Event of Default resulting from the incurrence of
Indebtedness all or a portion of the proceeds of which will be used to
defease the Senior Notes pursuant to this Article Eight concurrently with
such incurrence) or insofar as Sections 6.01(vii) and (viii) hereof are
concerned, at any time in the period ending on the 91st day after the date
of deposit;
(e) the Company shall covenant that such Legal Defeasance or Covenant
Defeasance shall not result in a breach or violation of, or constitute a
default under, any material agreement or instrument (other than this
Indenture) to which the Company or any of its Subsidiaries are parties or
by which the Company or any of its Subsidiaries are bound;
(f) the Company shall have delivered to the Trustee an Officers'
Certificate stating that the deposit was not made by the Company with the
intent of preferring the Holders of Senior Notes over any other creditors
of the Company or with the intent of defeating, hindering, delaying or
defrauding any other creditors of the Company; and
(g) the Company shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent provided for, in the case of the Officers' Certificate, clauses
(a) through (f), and, in the case of the Opinion of Counsel, clauses (a)
(with respect to the validity and perfection of security interest), (b),
(c) and (e), have been complied with.
SECTION 8.05. DEPOSITED MONEY AND GOVERNMENT SENIOR NOTES TO BE HELD IN TRUST;
OTHER MISCELLANEOUS PROVISIONS.
Subject to Section 8.06 hereof, all money and non-callable Government
Securities (including the proceeds thereof) deposited with the Trustee (or other
qualifying trustee, collectively for purposes of this Section 8.05, the
"TRUSTEE") pursuant to Section 8.04 hereof in respect of the outstanding Senior
Notes shall be held in trust and applied by the Trustee, in accordance with the
provisions of such Senior Notes and this Indenture, to the payment, either
directly or through any Paying Agent (including the Company acting as Paying
Agent) as the Trustee may determine, to the
- 60 -
S&A DRAFT -JUNE 10, 1998
Holders of such Senior Notes of all sums due and to become due thereon in
respect of principal, premium, if any, and interest, but such money need
not be segregated from other funds except to the extent required by law.
The Company shall pay and indemnify the Trustee against any tax,
fee or other charge imposed on or assessed against the cash or Government
Securities deposited pursuant to Section 8.04 hereof or the principal and
interest received in respect thereof other than any such tax, fee or other
charge which by law is for the account of the Holders of the outstanding
Senior Notes.
Anything in this Article Eight to the contrary notwithstanding, the
Trustee shall deliver or pay to the Company from time to time upon the
request of the Company any money or non-callable Government Securities held
by it as provided in Section 8.04 hereof which, in the opinion of a
nationally recognized firm of independent public accountants expressed in a
written certification thereof delivered to the Trustee (which may be the
opinion delivered under Section 8.04(a) hereof), are in excess of the amount
thereof that would then be required to be deposited to effect an equivalent
Legal Defeasance or Covenant Defeasance.
SECTION 8.06. REPAYMENT OF COMPANY.
Any money deposited with the Trustee or any Paying Agent, or then
held by the Company, in trust for the payment of the principal of, or
premium, if any, or interest on any Senior Note and remaining unclaimed for
two years after such principal, and premium, if any, or interest has become
due and payable shall be paid to the Company on its request or (if then held
by the Company) shall be discharged from such trust; and the Holder of such
Senior Note shall thereafter, as a secured creditor, look only to the Company
for payment thereof, and all liability of the Trustee or such Paying Agent
with respect to such trust money, and all liability of the Company as trustee
thereof, shall thereupon cease; PROVIDED, HOWEVER, that the Trustee or such
Paying Agent, before being required to make any such repayment, may at the
expense of the Company cause to be published once, in the New York Times and
The Wall Street Journal (national edition), notice that such money remains
unclaimed and that, after a date specified therein, which shall not be less
than 30 days from the date of such notification or publication, any unclaimed
balance of such money then remaining will be repaid to the Company.
SECTION 8.07. REINSTATEMENT.
If the Trustee or Paying Agent is unable to apply any Dollars or
Government Securities in accordance with Section 8.02 or 8.03 hereof, as the
case may be, by reason of any order or judgment of any court or governmental
authority enjoining, restraining or otherwise prohibiting such application,
then the Company's obligations under this Indenture and the Senior Notes
shall be revived and reinstated as though no deposit had occurred pursuant to
Section 8.02 or 8.03 hereof until such time as the Trustee or Paying Agent is
permitted to apply all such money in accordance with Section 8.02
- 61 -
or 8.03 hereof, as the case may be; PROVIDED, HOWEVER, that, if the Company
make any payment of principal of, premium, if any, or interest on any Senior
Note following the reinstatement of its obligations, the Company shall be
subrogated to the rights of the Holders of such Senior Notes to receive such
payment from the money held by the Trustee or Paying Agent.
ARTICLE 9
AMENDMENT, SUPPLEMENT AND WAIVER
SECTION 9.01. WITHOUT CONSENT OF HOLDERS OF SENIOR NOTES.
Notwithstanding Section 9.02 of this Indenture, the Company and the
Trustee may amend or supplement this Indenture or the Senior Notes, and enter
into Supplemental Indentures hereto which shall thereafter form a part
hereof, without the consent of any Holder of a Senior Note, for any one or
more of the following purposes:
(a) to cure any ambiguity, defect or inconsistency herein;
(b) to secure the Senior Notes on an equal and ratable or senior
basis with Other Indebtedness or Subordinated Indebtedness, respectively, as
required by Section 4.12 hereof;
(c) to establish and create one or more series of Senior Notes (in
addition to the Initial Series Senior Notes) and to specify certain terms of
such series of Senior Notes, which terms may include, but are not limited to,
those set forth in Section 2.01, all in a manner not inconsistent with the
provisions of this Indenture;
(d) to provide that the Company shall not issue any additional
Senior Notes or to add conditions, limitations and restrictions on the
Company with respect to any series of Senior Notes under this Indenture;
(e) to add additional covenants and agreements of the Company to
this Indenture, or to add to the Events of Default specified in Section 6.01
additional Events of Default, or to surrender any right or power herein
reserved to or conferred upon the Company pursuant to this Indenture.
(f) to provide for alternative methods or forms for evidencing and
recording the ownership of Senior Notes;
- 62 -
S&A DRAFT -JUNE 10, 1998
(g) to provide for the assumption of the Company's obligations to
the Holders of the Senior Notes in the case of a merger, amalgamation,
consolidation or sale of all or substantially all of the assets pursuant to
Article Five hereof;
(h) to make any change that would provide any additional rights or
benefits to the Holders of the Senior Notes or that does not adversely affect
the legal rights hereunder of any Holder of the Senior Notes;
(i) to comply with requirements of the SEC in order to effect or
maintain the qualification of this Indenture under the TIA.
Upon the request of the Company accompanied by a resolution of its
Board of Directors authorizing the execution of any such amended or
Supplemental Indenture, and upon receipt by the Trustee of the documents
described in Section 7.02 hereof, the Trustee shall join with the Company in
the execution of any amended or Supplemental Indenture authorized or
permitted by the terms of this Indenture and to make any further appropriate
agreements and stipulations that may be therein contained, but the Trustee
shall not be obligated to enter into such amended or supplemental Indenture
that affects its own rights, duties or immunities under this Indenture or
otherwise.
SECTION 9.02. WITH CONSENT OF HOLDERS OF SENIOR NOTES.
Except as provided below in this Section 9.02, the Company and the
Trustee may amend or supplement this Indenture, and the Senior Notes, and
enter into Supplemental Indentures hereto which shall thereafter form a part
hereof, with the consent of the Holders of at least a majority in principal
amount (or principal amount at maturity, as the case may be) of the Senior
Notes then outstanding (including, without limitation, consents obtained in
connection with a purchase of, or tender offer or exchange offer for, Senior
Notes), and, subject to Sections 6.04 and 6.07 hereof, any existing Default
or Event of Default (other than a Default or Event of Default in the payment
of the principal of, or interest on, the Senior Notes, except a payment
default resulting from an acceleration that has been rescinded) or compliance
with any provision of this Indenture or the Senior Notes may be waived with
the consent of the Holders of a majority in principal amount (or principal
amount at maturity, as the case may be) of the then outstanding Senior Notes
(including consents obtained in connection with a tender offer or exchange
offer for the Senior Notes); PROVIDED, HOWEVER, that if there shall be Senior
Notes of more than one series outstanding and if the proposed action to be
taken will materially adversely affect the rights of holders of Senior Notes
of one or more of such series, then the consent (including consents obtained
in connection with a tender offer or exchange offer for Senior Notes) only of
holders of a majority in aggregate principal amount (or principal amount at
maturity, as the case may be) of outstanding Senior Notes of all series so
affected, considered as one class, shall be required.
- 63 -
Upon the request of the Company accompanied by a resolution of its
Board of Directors authorizing the execution of any such amended or
Supplemental Indenture, and upon the filing with the Trustee of evidence
satisfactory to the Trustee of the consent of the Holders of Senior Notes as
aforesaid, and upon receipt by the Trustee of the documents described in
Section 7.02 hereof, the Trustee shall join with the Company in the execution
of such amended or Supplemental Indenture unless such amended or Supplemental
Indenture affects the Trustee's own rights, duties or immunities under this
Indenture or otherwise, in which case the Trustee may in its discretion, but
shall not be obligated to, enter into such amended or Supplemental Indenture.
It shall not be necessary for the consent of the Holders of Senior
Notes under this Section 9.02 to approve the particular form of any proposed
amendment or waiver, but it shall be sufficient if such consent approves the
substance thereof.
After an amendment, supplement or waiver under this Section becomes
effective, the Company shall mail to the Holders of Senior Notes affected
thereby a notice briefly describing the amendment, supplement or waiver. Any
failure of the Company to mail such notice, or any defect therein, shall not,
however, in any way impair or affect the validity of any such amended or
Supplemental Indenture or waiver. Subject to Sections 6.04 and 6.07 hereof,
the Holders of a majority in aggregate principal amount of the Senior Notes
then outstanding may waive compliance in a particular instance by the Company
with any provision of this Indenture, the Senior Notes or any Supplemental
Indenture. Subject to Section 9.01(a)(i), however, without the consent of
each Holder affected, an amendment, waiver or Supplemental Indenture may not
(with respect to any Senior Notes held by a non-consenting Holder):
(a) reduce the principal amount (or principal amount at maturity,
as the case may be) of Senior Notes whose Holders must consent to an
amendment, supplement or waiver;
(b) reduce the principal of or change the fixed maturity of any
Senior Note or alter or waive any of the provisions with respect to the
redemption of the Senior Notes except as provided above with respect to
Sections 3.09, 4.10 and 4.14 hereof;
(c) reduce the rate of or change the time for payment of interest on
any Senior Note;
(d) after the obligation has arisen for the Company to make an offer
to purchase following the occurrence of a Change of Control or Sale of
Assets, alter the obligation to purchase the Senior Notes in accordance
with such offer to purchase or waive any default in the performance
thereof;
- 64-
(e) waive a Default or Event of Default in the payment of principal
of, or interest on, the Senior Notes (except a rescission of acceleration
of the Senior Notes by the Holders of at least a majority in aggregate
principal amount (or principal amount at maturity, as the case may be) of
the then outstanding Senior Notes and a waiver of the payment default that
resulted from such acceleration);
(f) make any Senior Note payable in money other than that stated in
the Senior Notes;
(g) make any change in the provisions of this Indenture regarding
waivers of past Defaults or the rights of Holders of Senior Notes to
receive payments of principal of, or interest on, the Senior Notes;
(h) waive a redemption payment with respect to any Senior Note (other
than a payment required by Sections 4.10 or 4.14 hereof); or
(i) make any change in the foregoing amendment and waiver provisions.
SECTION 9.03. COMPLIANCE WITH TRUST INDENTURE ACT.
Every amendment or supplement to this Indenture or the Senior Notes
shall be set forth in an amended or Supplemental Indenture that complies with
the TIA in effect as of the date of amendment or supplement.
SECTION 9.04. REVOCATION AND EFFECT OF CONSENTS.
Until an amendment, supplement or waiver becomes effective, a consent
to it by a Holder of a Senior Note is a continuing consent by the Holder of a
Senior Note and every subsequent Holder of a Senior Note or portion of a Senior
Note that evidences the same debt as the consenting Holder's Senior Note, even
if notation of the consent is not made on any Senior Note. However, any such
Holder of a Senior Note or subsequent Holder of a Senior Note may revoke the
consent as to its Senior Note if the Trustee receives written notice of
revocation before the date the waiver, Supplemental Indenture or amendment
becomes effective. An amendment, Supplemental Indenture or waiver becomes
effective in accordance with its terms and thereafter binds every Holder.
The Company may fix a record date for determining which Holders of
Senior Notes must consent to such Supplemental Indenture, amendment or waiver.
If the Company fixes a record date, the record date shall be fixed at (i) the
later of 30 days prior to the first solicitation of such consent or the date of
the most recent list of Holders of Senior Notes furnished to the Trustee prior
to such solicitation pursuant to Section 2.07, or (ii) such other date as the
Company shall designate.
- 65 -
SECTION 9.05. NOTATION ON OR EXCHANGE OF SENIOR NOTES.
The Trustee may place an appropriate notation about an amendment,
Supplemental Indenture or waiver on any Senior Note thereafter authenticated.
The Company in exchange for all Senior Notes may issue and the Trustee shall
authenticate new Senior Notes that reflect the amendment, Supplemental
Indenture or waiver.
Failure to make the appropriate notation or issue a new Senior Note
shall not affect the validity and effect of such amendment, Supplemental
Indenture or waiver.
SECTION 9.06. TRUSTEE TO SIGN AMENDMENTS, ETC.
The Trustee shall sign any amended or Supplemental Indenture
authorized pursuant to this Article Nine if the amendment or supplement does
not adversely affect the rights, duties, liabilities or immunities of the
Trustee. The Company may not sign an amendment or Supplemental Indenture
until its Board of Directors approves it. In executing any amended or
supplemental indenture, the Trustee shall be entitled to receive, and shall
be fully protected in relying upon, an Officer's Certificate and an Opinion
of Counsel stating that the execution of such amended or Supplemental
Indenture is authorized or permitted by this Indenture and that all
conditions precedent have been complied with.
SECTION 9.07. EFFECT OF SUPPLEMENTAL INDENTURES.
Upon the execution of any Supplemental Indenture under this Article
9 by the Trustee and the Company, this Indenture shall be and shall be deemed
to be modified and amended in accordance therewith and such Supplemental
Indenture shall be and shall be deemed to be a part of the terms and
conditions of this Indenture for all purposes; and every Holder of Senior
Notes theretofore or thereafter authenticated and delivered hereunder shall
be bound thereby, except to the extent that the terms of such Supplemental
Indenture relate solely to one or more particular series of Senior Notes
identified therein. In the event of any inconsistency between the Indenture
and the terms of any Supplemental Indenture, the terms of such Supplemental
Indenture shall control.
ARTICLE 10
MISCELLANEOUS
SECTION 10.01. TRUST INDENTURE ACT CONTROLS.
If any provision of this Indenture limits, qualifies or conflicts
with the duties or rights imposed by TIA Section 318(c), the imposed duties
or rights shall control.
- 66 -
SECTION 10.02. NOTICES.
Any notice or communication by the Company or the Trustee to the
other is duly given if in writing and delivered in Person or mailed by first
class mail (registered or certified, return receipt requested), telex,
telecopier or overnight air courier guaranteeing next day delivery, to the
others' address:
If to the Company:
Niagara Mohawk Power Corporation
300 Erie Boulevard West
Syracuse, New York 13202
Attention: Chief Financial Officer
If to the Trustee:
IBJ Schroder Bank & Trust Company
One State Street
New York, New York 10004
Attention: Corporate Trust
The Company or the Trustee, by notice to the others may designate
additional or different addresses for subsequent notices or communications.
All notices and communications (other than those sent to Holders)
shall be deemed to have been duly given: at the time delivered by hand, if
personally delivered; five Business Days after being deposited in the mail,
postage prepaid, if mailed; when answered back, if telexed; when receipt
acknowledged, if telecopied; and the next Business Day after timely delivery
to the courier, if sent by overnight air courier guaranteeing next day
delivery.
Any notice or communication to a Holder shall be mailed by first
class mail, certified or registered, return receipt requested, or by
overnight air courier guaranteeing next day delivery to its address shown on
the register kept by the Registrar. Any notice or communication shall also
be so mailed to any Person described in TIA Section 313(c), to the extent
required by the TIA. Failure to mail a notice or communication to a Holder or
any defect in it shall not affect its sufficiency with respect to other
Holders.
If a notice or communication is mailed in the manner provided above
within the time prescribed, it is duly given, whether or not the addressee
receives it.
- 67 -
If the Company mails a notice or communication to Holders, they
shall mail a copy to the Trustee and each Agent at the same time.
SECTION 10.03. COMMUNICATION BY HOLDERS OF SENIOR NOTES WITH OTHER HOLDERS OF
SENIOR NOTES.
Holders may communicate pursuant to TIA Section 312(b) with other
Holders with respect to their rights under this Indenture or the Senior
Notes. The Company, the Trustee, the Registrar and anyone else shall have the
protection of TIA Section 312(c).
SECTION 10.04. CERTIFICATE AND OPINION AS TO CONDITIONS PRECEDENT.
Upon any request or application by the Company to the Trustee to
take any action under this Indenture, the Company shall furnish to the
Trustee:
(a) an Officers' Certificate in form and substance reasonably
satisfactory to the Trustee (which shall include the statements set forth
in Section 10.05 hereof) stating that, in the opinion of the signers, all
conditions precedent and covenants, if any, provided for in this Indenture
relating to the proposed action have been satisfied; and
(b) an Opinion of Counsel in form and substance reasonably
satisfactory to the Trustee (which shall include the statements set forth
in Section 10.05 hereof) stating that, in the opinion of such counsel, all
such conditions precedent and covenants have been satisfied.
SECTION 10.05. STATEMENTS REQUIRED IN CERTIFICATE OR OPINION.
Each certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture (other than a
certificate provided pursuant to TIA Section 314(a)(4)) shall comply with the
provisions of TIA Section 314(e) and shall include:
(a) a statement that the Person making such certificate or opinion
has read such covenant or condition;
(b) a brief statement as to the nature and scope of the examination
or investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(c) a statement that, in the opinion of such Person, he or she has
made such examination or investigation as is necessary to enable him to
express an informed opinion as to whether or not such covenant or condition
has been satisfied; and
- 68 -
(d) a statement as to whether or not, in the opinion of such Person,
such condition or covenant has been satisfied, PROVIDED, HOWEVER, that with
respect to matters of fact, an Opinion of Counsel may rely upon an
Officer's Certificate or a certificate of a public official.
SECTION 10.06. RULES BY TRUSTEE AND AGENTS.
The Trustee may make reasonable rules for action by or at a meeting
of Holders. The Registrar or Paying Agent may make reasonable rules and set
reasonable requirements for its functions.
SECTION 10.07. NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES AND
STOCKHOLDERS.
No past, present or future director, officer, employee,
incorporator or stockholder of the Company, as such, shall have any liability
for any obligations of the Company under the Senior Notes or this Indenture
or for any claim based on, in respect of, or by reason of, such obligations
or their creation. Each Holder by accepting a Senior Note waives and
releases all such liability. The waiver and release are part of the
consideration for issuance of the Senior Notes.
SECTION 10.08. GOVERNING LAW.
THE INTERNAL LAW OF THE STATE OF NEW YORK SHALL GOVERN AND BE USED
TO CONSTRUE THIS INDENTURE AND THE SENIOR NOTES.
SECTION 10.09. NO ADVERSE INTERPRETATION OF OTHER AGREEMENTS.
This Indenture may not be used to interpret any other indenture,
loan or debt agreement of the Company or its Subsidiaries or of any other
Person. Any such indenture, loan or debt agreement may not be used to
interpret this Indenture.
SECTION 10.10. SUCCESSORS.
All agreements of the Company in this Indenture and the Senior
Notes shall bind its successors. All agreements of the Trustee in this
Indenture shall bind its successors.
SECTION 10.11. SEVERABILITY.
In case any provision in this Indenture or in the Senior Notes
shall be invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions shall not in any way be affected
or impaired thereby.
- 69 -
SECTION 10.12. COUNTERPART ORIGINALS.
The parties may sign any number of copies of this Indenture. Each
signed copy shall be an original, but all of them together represent the same
agreement.
SECTION 10.13. TABLE OF CONTENTS, HEADINGS, ETC.
The Table of Contents, Cross-Reference Table and Headings of the
Articles and Sections of this Indenture have been inserted for convenience of
reference only, are not to be considered a part of this Indenture and shall
in no way modify or restrict any of the terms or provisions hereof.
- 70 -
SIGNATURES
NIAGARA MOHAWK POWER CORPORATION
By:____________________________
Name:
Title:
Attest:
______________________________
IBJ SCHRODER BANK & TRUST COMPANY
Trustee
By:_____________________________
Name:
Title:
Attest:
_______________________________