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COMMON SECURITIES GUARANTEE AGREEMENT
CALENERGY COMPANY, INC.
Dated as of __________, 1997
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COMMON SECURITIES GUARANTEE AGREEMENT
This COMMON SECURITIES GUARANTEE AGREEMENT (the "Common Securities
Guarantee"), dated as of __________, 1997, is executed and delivered by
CalEnergy Company, Inc., a Delaware corporation (the "Guarantor"), for the
benefit of the Holders (as defined herein) from time to time of the Common
Securities (as defined in the Declaration) of CalEnergy Capital Trust ___, a
Delaware business trust (the "Issuer").
WHEREAS, pursuant to an Amended and Restated Declaration of Trust (the
"Declaration"), dated as of __________, 1997, among the Trustees of the Issuer
named therein, the Guarantor, as sponsor, and the holders from time to time of
undivided beneficial interests in the assets of the Issuer, the Issuer is
issuing on the date hereof _______ Common Securities, having an aggregate
stated liquidation amount of $_________ (plus up to an additional ______ Common
Securities, having an aggregate liquidation amount of $_________, to meet the
capital requirements of the Trust in the event of an issuance of Additional
Preferred Securities (as such term is defined in the Declaration)), designated
the _____% Convertible Common Securities;
WHEREAS, as incentive for the Holders to purchase the Common
Securities, the Guarantor desires irrevocably and unconditionally to agree, to
the extent set forth in this Common Securities Guarantee, to pay to the Holders
of the Common Securities the Guarantee Payments (as defined herein) and to make
certain other payments on the terms and conditions set forth herein; and
WHEREAS, the Guarantor is also executing and delivering a guarantee
agreement in substantially identical terms to this Common Securities Guarantee
for the benefit of the holders of the _____% Convertible Preferred Securities
(the "Preferred Securities") (the "Preferred Securities Guarantee") except that
if an Event of Default (as defined in the Indenture), has occurred and is
continuing, the rights of holders of the Common Securities to receive Guarantee
Payments under this Common Securities Guarantee are subordinated to the rights
of
Holders of Preferred Securities to receive Guarantee Payments under the
Preferred Securities Guarantee.
NOW, THEREFORE, in consideration of the purchase by each Holder of
Common Securities, which purchase the Guarantor hereby agrees shall benefit the
Guarantor, the Guarantor executes and delivers this Common Securities Guarantee
for the benefit of the Holders.
ARTICLE I
SECTION 1.1. In this Common Securities Guarantee, unless the context
otherwise requires, the terms set forth below shall have the following
meanings.
(a) Capitalized terms used in this Common Securities Guarantee but not
defined in the preamble above have the respective meanings assigned to them
in this Section 1.1;
(b) Terms defined in the Declaration as at the date of execution of
this Common Securities Guarantee have the same meaning when used in this
Common Securities Guarantee unless otherwise defined in this Common
Securities Guarantee.
(c) A term defined anywhere in this Common Securities Guarantee has
the same meaning throughout;
(d) All references to "the Common Securities Guarantee" or "this
Common Securities Guarantee" are to this Common Securities Guarantee as
modified, supplemented or amended from time to time;
(e) All references in this Common Securities Guarantee to Articles and
Sections are to Articles and Sections of this Common Securities Guarantee
unless otherwise specified; and
(f) A reference to the singular includes the plural and vice versa.
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"Guarantee Payments" shall mean the following payments or
distributions, without duplication, with respect to the Common Securities, to
the extent not paid or made by the Issuer: (i) any accrued and unpaid
Distributions which are required to be paid on such Common Securities to the
extent the Issuer shall have funds available therefore, (ii) the amount payable
upon redemption to the extent the Issuer has funds available therefor, with
respect to any Common Securities called for redemption by the Issuer, and (iii)
upon a voluntary or involuntary dissolution, winding-up or termination of the
Issuer (other than in connection with the distribution of Debentures to the
Holders in exchange for Common Securities as provided in the Declaration), the
lesser of (a) the aggregate of the liquidation amount and all accrued and
unpaid Distributions on the Common Securities to the date of payment, to the
extent the Issuer has funds available therefor, and (b) the amount of assets of
the Issuer remaining available for distribution to Holders in liquidation of
the Issuer (in either case, the "Liquidation Distribution").
"Holder" shall mean any holder, as registered on the books and records
of the Issuer, of any Common Securities.
ARTICLE II
SECTION 2.1. The Guarantor irrevocably and unconditionally agrees to
pay in full to the Holders the Guarantee Payments (without duplication of
amounts theretofore paid by the Issuer), as and when due, regardless of any
defense, right of set-off or counterclaim which the Issuer may have or assert.
The Guarantor's obligation to make a Guarantee Payment may be satisfied by
direct payment of the required amounts by the Guarantor to the Holders or by
causing the Issuer to pay such amounts to the Holders.
SECTION 2.2. If an Event of Default (as defined in the Indenture), has
occurred and is continuing, the rights of Holders of the Common Securities to
receive Guarantee Payments under this Common Securities Guarantee are
subordinated to the rights of Holders of Preferred Securities to receive
Guarantee Payments under the Preferred Securities Guarantee.
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SECTION 2.3. The Guarantor hereby waives notice of acceptance of this
Common Securities Guarantee and of any liability to which it applies or may
apply, presentment, demand for payment, any right to require a proceeding first
against the Issuer or any other Person before proceeding against the Guarantor,
protest, notice of nonpayment, notice of dishonor, notice of redemption and all
other notices and demands.
SECTION 2.4. The obligations, covenants, agreements and duties of the
Guarantor under this Common Securities Guarantee shall in no way be affected or
impaired by reason of the happening from time to time of any of the following:
(a) the release or waiver, by operation of law or otherwise, of the
performance or observance by the Issuer of any express or implied
agreement, covenant, term or condition relating to the Common Securities to
be performed or observed by the Issuer;
(b) the extension of time for the payment by the Issuer of all or any
portion of the Distributions, amount payable upon redemption, Liquidation
Distribution or any other sums payable under the terms of the Common
Securities or the extension of time for the performance of any other
obligation under, arising out of, or in connection with, the Common
Securities (other than an extension of time for payment of Distributions,
amount payable upon redemption, Liquidation Distribution or other sum
payable that results from the extension of any interest payment period on
the Debentures or any extension of the maturity date of the Debentures
permitted by the Indenture);
(c) any failure, omission, delay or lack of diligence on the part of
the Holders to enforce, assert or exercise any right, privilege, power or
remedy conferred on the Holders pursuant to the terms of the Common
Securities, or any action on the part of the Issuer granting indulgence or
extension of any kind;
(d) the voluntary or involuntary liquidation, dissolution, sale of any
collateral, receivership,
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insolvency, bankruptcy, assignment for the benefit of creditors,
reorganization, arrangement, composition or readjustment of debt of, or
other similar proceedings affecting, the Issuer or any of the assets of the
Issuer;
(e) any invalidity of, or defect or deficiency in, the Common
Securities;
(f) the settlement or compromise of any obligation guaranteed hereby
or hereby incurred; or
(g) any other circumstance whatsoever that might otherwise constitute
a legal or equitable discharge or defense of a guarantor, it being the
intent of this Section 2.3 that the obligations of the Guarantor hereunder
shall be absolute and unconditional under any and all circumstances.
There shall be no obligation of the Holders or any other Persons to give notice
to, or obtain consent of, the Guarantor with respect to the happening of any of
the foregoing.
SECTION 2.5. The Guarantor expressly acknowledges that any Holder of
Common Securities may institute a legal proceeding directly against the
Guarantor to enforce its rights under this Common Securities Guarantee, without
first instituting a legal proceeding against the Issuer or any other Person.
SECTION 2.6. This Common Securities Guarantee creates a guarantee of
payment and not of collection.
SECTION 2.7. The Guarantor shall be subrogated to all (if any)
rights of the Holders of Common Securities against the Issuer in respect of any
amounts paid to such Holders by the Guarantor under this Common Securities
Guarantee; provided, however, that the Guarantor shall not (except to the
extent required by mandatory provisions of law) be entitled to enforce or
exercise any rights which it may acquire by way of subrogation or any
indemnity, reimbursement or other agreement, in all cases as a result of
payment under this Common Securities Guarantee, if, at the time of any such
payment, any amounts are due and unpaid under this Common Securities Guarantee.
If any amount shall be paid to the Guarantor
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in violation of the preceding sentence, the Guarantor agrees to hold such
amount in trust for the Holders and to pay over such amount to the Holders.
SECTION 2.8. The Guarantor acknowledges that its obligations hereunder
are independent of the obligations of the Issuer with respect to the Common
Securities and that the Guarantor shall be liable as principal and as debtor
hereunder to make Guarantee Payments pursuant to the terms of this Common
Securities Guarantee notwithstanding the occurrence of any event referred to in
subsections (a) through (g), inclusive, of Section 2.4 hereof.
SECTION 2.9. The Guarantor acknowledges its obligation to issue and
deliver common stock upon the conversion of the Common Securities.
ARTICLE III
SECTION 3.1. So long as any Common Securities remain outstanding, if
(i) the Guarantor shall be in default with respect to its Guarantee Payments or
other obligations hereunder, (ii) there shall have occurred and be continuing
any event that, with the giving of notice or the lapse of time or both, would
constitute an Event of Default under the Indenture or (iii) the Guarantor shall
have given notice of its selection of an Extended Interest Payment Period as
provided in the Indenture and such period, or any extension thereof, shall be
continuing, then the Guarantor shall not (a) declare or pay any dividend on,
make any distributions with respect to, or redeem, purchase or acquire, or make
a liquidation payment with respect to, any of its capital stock (other than (1)
purchases or acquisitions of shares of common stock in connection with the
satisfaction by the Guarantor of its obligations under any employee benefit
plans, (2) as a result of a reclassification of capital stock of the Guarantor
or the exchange or conversion of one class or series of the Guarantor's capital
stock for another class or series of capital stock of the Guarantor, (3) the
purchase of fractional interests in shares of the Guarantor's capital stock
pursuant to the conversion or exchange provisions of such capital stock of the
Guarantor or the security being converted or exchanged
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or (4) stock dividends paid by the Guarantor which consist of stock of the same
class as that on which the dividend is being paid), (b) make any payment of
interest, principal or premium, if any, on or repay, repurchase or redeem any
debt securities issued by the Guarantor after the date hereof that ranks pari
passu with or junior to the Debentures and (c) make any guarantee payments with
respect to the foregoing (other than pursuant to the Preferred Securities
Guarantee).
SECTION 3.2. This Common Securities Guarantee will constitute an
unsecured obligation of the Guarantor and will rank (i) subordinate and junior
in right of payment to all other liabilities of the Guarantor, except any
liabilities that may be made pari passu expressly by their terms, (ii) pari
passu with the most senior preferred or preference stock now or hereafter
issued by the Guarantor and with any guarantee now or hereafter entered into by
the Guarantor in respect of any preferred or preference stock or preferred
security of any Affiliate of the Guarantor, and (iii) senior to the Guarantor's
common stock.
ARTICLE IV
SECTION 4.1. This Common Securities Guarantee shall terminate upon (i)
full payment of the amount payable upon redemption of the Common Securities,
(ii) the distribution of the Guarantor's common stock to the Holders in respect
of the conversion of the Preferred Securities into the Guarantor's common stock
or the distribution of the Debentures to the Holders of all of the Common
Securities or (iii) full payment of the amounts payable in accordance with the
Declaration upon liquidation of the Issuer. Notwithstanding the foregoing, this
Common Securities Guarantee will continue to be effective or will be
reinstated, as the case may be, if at any time any Holder of Common Securities
must restore payment of any sums paid under the Common Securities or under this
Common Securities Guarantee.
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ARTICLE V
SECTION 5.1. All guarantees and agreements contained in this Common
Securities Guarantee shall bind the successors, assigns, receivers, trustees
and representatives of the Guarantor and shall inure to the benefit of the
Holders of the Common Securities then outstanding. Except in connection with
any merger or consolidation of the Guarantor with or into another entity or any
sale, transfer or lease of all or substantially all of the Guarantor's assets
to another entity as permitted under Article Eight of the Indenture, the
Guarantor may not assign its rights or delegate its obligations under the
Common Securities Guarantee without the prior approval of the Holders of at
least a Majority of the aggregate stated liquidation amount of the Common
Securities then outstanding.
SECTION 5.2. Except with respect to any changes which do not adversely
affect the rights of Holders (in which case no consent of Holders will be
required), this Common Securities Guarantee may only be amended with the prior
approval of the Holders of at least a Majority in liquidation amount of all the
outstanding Common Securities. The provisions of Section 12.2 of the
Declaration with respect to meetings of Holders of the Securities apply to the
giving of such approval.
SECTION 5.3. All notices provided for in this Common Securities
Guarantee shall be in writing, duly signed by the party giving such notice, and
shall be delivered, telecopied or mailed by registered or certified mail, as
follows:
(a) if given to the Issuer, in care of the Regular Trustees at the
Issuer's mailing address set forth below (or such other address
as the Issuer may give notice of to the Holders of the Common
Securities):
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Xxxxxx X. XxXxxxxx
Xxxxx Xxxxxxx
Xxxxxxx Xxxx
CalEnergy Capital Trust
c/o CalEnergy Company, Inc.
000 Xxxxx 00xx Xxxxxx, Xxxxx 000
Xxxxx, Xxxxxxxx 00000
(b) if given to the Guarantor, at the Guarantor's mailing address
set forth below (or such other address as the Guarantor may give
notice of to the Holders of the Common Securities):
CalEnergy Company, Inc.
000 Xxxxx 00xx Xxxxxx, Xxxxx 000
Xxxxx, Xxxxxxxx 00000
Attention: Chief Financial Officer
with a copy to: General Counsel
(c) if given to any Holder of Common Securities, at the address set
forth on the books and records of the Issuer.
All such notices shall be deemed to have been given when received in
person, telecopied with receipt confirmed, or mailed by first class mail,
postage pre-paid, except that if a notice or other document is refused delivery
or cannot be delivered because of a changed address of which no notice was
given, such notice or other document shall be deemed to have been delivered on
the date of such refusal or inability to deliver.
SECTION 5.4. This Common Securities Guarantee is solely for the
benefit of the Holders and is not separately transferable from the Common
Securities.
SECTION 5.5. THIS COMMON SECURITIES GUARANTEE SHALL BE GOVERNED BY AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK,
WITHOUT REGARD TO PRINCIPLES OF CONFLICT OF LAWS.
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THIS COMMON SECURITIES GUARANTEE is executed as of the day and year
first above written.
CALENERGY COMPANY,
INC., as Guarantor
By:
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Name: Xxxxxx X. XxXxxxxx
Title: Senior Vice President
and General Counsel
