DRAFT: October 13, 1995
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CONVERTIBLE PREFERRED SECURITIES GUARANTEE AGREEMENT
CITIZENS UTILITIES COMPANY
Dated as of __________, 1995
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CONVERTIBLE PREFERRED SECURITIES GUARANTEE AGREEMENT
This CONVERTIBLE PREFERRED SECURITIES GUARANTEE AGREE-
MENT ("Guarantee Agreement"), dated as of _________, 1995, is executed and
delivered by Citizens Utilities Company, a Delaware corporation (the
"Guarantor"), and Chemical Bank, a New York banking corporation, as trustee
(the "Guarantee Trustee"), for the benefit of the Holders (as defined herein)
from time to time of the Convertible Preferred Securities (as defined herein)
of Citizens Utilities Trust, a Delaware statutory business trust (the
"Trust").
WHEREAS, pursuant to the Declaration (as defined herein), the Trust
is issuing on the date hereof up to $175,000,000 aggregate stated liquidation
amount of Convertible Preferred Securities (plus up to an additional
$26,250,000 aggregate stated liquidation amount of Convertible Preferred
Securities, solely to cover over-allotments, if any), designated the _____%
Citizens Utilities Convertible Preferred Securities (the "Convertible
Preferred Securities");
WHEREAS, as incentive for the Holders to purchase the Convertible
Preferred Securities, the Guarantor desires irrevocably and unconditionally
to agree, to the extent set forth in this Guarantee Agreement, to pay to the
Holders of the Convertible Preferred 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 (the "Convertible Common Securities Guarantee Agreement") in
substantially identical terms to this Guarantee Agreement for the benefit of
the holders of the Convertible Common Securities (as defined herein) except
that if an event of default under the Indenture (as defined herein), has
occurred and is continuing, the rights of holders of the Convertible Common
Securities to receive guarantee payments under the Convertible Common
Securities Guarantee Agreement are subordinated to the rights of Holders of
Convertible Preferred Securities to receive Guarantee Payments under this
Guarantee Agreement.
NOW, THEREFORE, in consideration of the purchase by each Holder of
Convertible Preferred Securities, which purchase the Guarantor hereby agrees
shall benefit the Guarantor, the Guarantor executes and delivers this
Guarantee Agreement for the benefit of the Holders.
ARTICLE I
DEFINITIONS AND INTERPRETATION
SECTION 1.1 Definitions and Interpretation. In this Guarantee
Agreement, unless the context otherwise requires:
(a) Capitalized terms used in this Guarantee Agreement have the
respective meanings assigned to them in this Section 1.1, or, to the extent
not inconsistent with this Guarantee Agreement, in the Statement of Common
Definitions, Annex A hereto;
(b) unless otherwise defined herein, all capitalized items used
herein shall have the meanings ascribed to them in the Declaration;
(c) a term defined anywhere in this Guarantee Agreement has the
same meaning throughout;
(d) all references to "the Guarantee Agreement" or "this Guarantee
Agreement" are to this Guarantee Agreement as modified, supplemented or
amended from time to time;
(e) all references in this Guarantee Agreement to Articles and
Sections are to Articles and Sections of this Guarantee Agreement unless
otherwise specified;
(f) a term defined in the Trust Indenture Act has the same meaning
when used in this Guarantee Agreement unless otherwise defined in this
Guarantee Agreement or unless the context otherwise requires; and
(g) a reference to the singular includes the plural and vice
versa.
"Affiliate" has the same meaning as given to that term in Rule 405
of the Securities Act of 1933, or any successor rule thereunder.
"Business Day" is defined in the Statement of Common Definitions.
"Citizens Capital" is defined in the Statement of Common
Definitions.
"Common Stock Series A" is defined in the Statement of Common
Definitions.
"Conversion Agent" is defined in the Statement of Common
Definitions.
"Convertible Common Securities" is defined in the Statement of
Common Definitions.
"Convertible Common Securities Guarantee Agreement" shall have the
meaning set forth in the Recitals to this Guarantee Agreement.
"Convertible Debentures" is defined in the Statement of Common
Definitions.
"Convertible Preferred Securities" shall have the meaning set forth
in the Recitals to this Guarantee Agreement.
"Covered Person" means any Holder or beneficial owner of
Convertible Preferred Securities.
"Declaration" is defined in the Statement of Common Definitions.
"Designated Senior Holder" is defined in the Indenture.
"Distributions" shall have the meaning as set forth in the
Declaration.
"Event of Default" means a default by the Guarantor on any of its
payment or other obligations under this Guarantee Agreement.
"First Supplemental Indenture" is defined in the Statement of
Common Definitions.
"Guarantee Payments" means the following payments or distributions,
without duplication, with respect to the Convertible Preferred Securities,
to the extent not paid or made by the Trust: (i) any accrued or deferred and
unpaid Distributions that are required to be paid on such Convertible
Preferred Securities to the extent the Trust shall have cash and/or Common
Stock available therefor, (ii) the redemption price, including all accrued
or deferred and unpaid Distributions to the date of redemption (the
"Redemption Price"), to the extent the Trust has cash and/or Common Stock
available therefor, with respect to any Convertible Preferred Securities
called for redemption by the Trust, and (iii) upon a voluntary or involuntary
dissolution, winding-up or termination of the Trust other than in connection
with the distribution of Partnership Preferred Securities or Convertible
Debentures to the Holders in exchange for Convertible Preferred Securities
as provided in the Declaration or the redemption of all the Convertible
Preferred Securities, the lesser of (a) the aggregate of the liquidation
amount, payable in cash, and all accrued or deferred and unpaid
Distributions, payable in either cash or Common Stock, on the Convertible
Preferred Securities to the date of payment (a "Liquidation Distribution"),
to the extent the Trust shall have cash and/or Common Stock available
therefor, and (b) the amount of assets of the Trust available for
distribution to Holders in liquidation of the Trust. If an event of default
under the Indenture has occurred and is continuing, the rights of holders of
the Convertible Common Securities to receive guarantee payments under the
Convertible Common Securities Guarantee Agreement are subordinated to the
rights of Holders of Convertible Preferred Securities to receive Guarantee
Payments under this Guarantee Agreement.
"Guarantee Subordinated Payment" has the meaning specified in
Section 7.2.
"Guarantee Trustee" means Chemical Bank until a Successor Guarantee
Trustee has been appointed and has accepted such appointment pursuant to the
terms of this Guarantee Agreement, and thereafter means each such Successor
Guarantee Trustee.
"Guarantor" shall have the meaning set forth in the Preamble to
this Guarantee Agreement.
"Holder" shall mean any holder, as registered on the books and
records of the Trust, of any Convertible Preferred Securities; provided,
however, that, in determining whether the holders of the requisite percentage
of Convertible Preferred Securities have given many request, notice, consent
or waiver hereunder, "Holder" shall not include the Guarantor or any
Affiliate of the Guarantor.
"Indebtedness" is defined in the Indenture.
"Indemnified Person" means the Guarantee Trustee, any Affiliate of
the Guarantee Trustee, or any officers, directors, shareholders, members,
partners, employees, representatives or agents of the Guarantee Trustee.
"Indenture" is defined in the Statement of Common Definitions.
"Junior Subordinated Payment" has the meaning specified in Section
7.2.
"Limited Partnership Agreement" is defined in the Statement of
Common Definitions.
"Liquidation Distribution" shall have the meaning set forth in this
Section 1.1.
"List of Holders" shall have the meaning set forth in Section 2.2.
"Majority in aggregate liquidation amount of the Convertible
Preferred Securities" means, except as provided by the Trust Indenture Act,
a vote by Holder(s) of Convertible Preferred Securities, voting separately
as a class, of more than 50% of the liquidation amount of all Convertible
Preferred Securities.
"Officers' Certificate" means, with respect to any Person, a
certificate signed by two Authorized Officers of such Person. Any Officers'
Certificate delivered with respect to compliance with a condition or covenant
provided for in this Guarantee Agreement shall include:
(a) a statement that each officer signing the Officers'
Certificate has read the covenant or condition and the definition relating
thereto;
(b) a brief statement of the nature and scope of the examination
or investigation undertaken by each officer in rendering the Officers'
Certificate;
(c) a statement that each such officer has made such examination
or investigation as, in such officer's opinion, is necessary to enable such
officer to express an informed opinion as to whether or not such covenant or
condition has been complied with; and
(d) a statement as to whether, in the opinion of each such
officer, such condition or covenant has been complied with.
"Other Subordinated Indebtedness" is defined in the Indenture.
"Paying Agent" means any Person authorized by the Guarantor to pay
the amounts due under the Guarantee on behalf of the Guarantor.
"Payment Blockage Period" has the meaning specified in Section 7.3.
"Person" is defined in the Statement of Common Definitions.
"Preferred Partnership Securities" is defined in the Statement of
Common Definitions.
"Proceeding" shall have the meaning set forth in Section 7.2.
"Redemption Price" shall have the meaning set forth in this Section
1.1.
"Responsible Officer" means, with respect to the Guarantee Trustee,
any vice-president, any assistant vice-president, the secretary, any
assistant secretary, the treasurer, any assistant treasurer, any trust
officer or assistant trust officer or any other officer of the Corporate
Trust Department of the Guarantee Trustee customarily performing functions
similar to those performed by any of the above designated officers and also
means, with respect to a particular corporate trust matter, any other officer
to whom such matter is referred because of that officer's knowledge of and
familiarity with the particular subject.
"Senior Indebtedness" and all capitalized terms used therein is
defined in the Indenture.
"Senior Nonmonetary Default" has the meaning specified in Section
7.3.
"Senior Payment Default" has the meaning specified in Section 7.3.
"Subsidiary" is defined in the Statement of Common Definitions.
"Successor Guarantee Trustee" means a successor Guarantee Trustee
possessing the qualifications to act as Guarantee Trustee under Section 4.1.
"Trust" shall have the meaning set forth in the Preamble to this
Guarantee Agreement.
"Trust Indenture Act" means the Trust Indenture Act of 1939.
ARTICLE II
TRUST INDENTURE ACT
SECTION 2.1 Trust Indenture Act; Application. (a) This Guarantee
Agreement is subject to the provisions of the Trust Indenture Act that are
required to be part of this Guarantee Agreement and shall, to the extent
applicable, be governed by such provisions; and
(b) if and to the extent that any provision of this Guarantee
Agreement limits, qualifies or conflicts with the duties imposed by Section
310 to 317, inclusive, of the Trust Indenture Act, such imposed duties shall
control.
SECTION 2.2 Lists of Holders of Securities. (a) The Guarantor
shall provide the Guarantee Trustee with a list, in such form as the
Guarantee Trustee may reasonably require, of the names and addresses of the
Holders of the Convertible Preferred Securities ("List of Holders") as of
such date, (i) within 1 day after January 1 and June 30 of each year and (ii)
at any other time within 30 days of receipt by the Guarantor of a written
request for a List of Holders as of a date no more than 14 days before such
List of Holders is given to the Guarantee Trustee; provided that the
Guarantor shall not be obligated to provide such List of Holders at any time
the List of Holders does not differ from the most recent List of Holders
given to the Guarantee Trustee by the Guarantor. The Guarantee Trustee may
destroy any List of Holders previously given to it on receipt of a new List
of Holders.
(b) The Guarantee Trustee shall comply with its obligations under
Section 311(a), 311(b) and Section 312(b) of the Trust Indenture Act.
(c) Every Holder, by receiving and holding the same, agrees with
the Guarantor and the Guarantee Trustee that neither the Guarantor nor the
Guarantee Trustee nor any agent of either of them shall be held accountable
by reason of any disclosure of information as to names and addresses of
Holders made pursuant to the Trust Indenture Act.
SECTION 2.3 Reports by the Guarantee Trustee. Within 60 days
after May 15 of each year, the Guarantee Trustee shall provide to the Holders
of the Convertible Preferred Securities such reports as are required by
Section 313 of the Trust Indenture Act, if any, in the form and in the manner
provided by Section 313 of the Trust Indenture Act. The Guarantee Trustee
shall also comply with the requirements of Section 313(d) of the Trust
Indenture Act.
SECTION 2.4 Periodic Reports to Guarantee Trustee. The Guarantor
shall provide to the Guarantee Trustee such documents, reports and
information as required by Section 314 (if any) and the compliance
certificate required by Section 314 of the Trust Indenture Act in the form,
in the manner and at the times required by Section 314 of the Trust Indenture
Act.
SECTION 2.5 Evidence of Compliance with Conditions Precedent. The
Guarantor shall provide to the Guarantee Trustee such evidence of compliance
with any conditions precedent, if any, provided for in this Guarantee
Agreement that relate to any of the matters set forth in Section 314(c) of
the Trust Indenture Act. Any certificate or opinion required to be given by
an officer pursuant to Section 314(c)(1) may be given in the form of an
Officers' Certificate.
SECTION 2.6 Events of Default; Waiver. The Holders of a Majority
in aggregate liquidation amount of Convertible Preferred Securities may, by
vote, on behalf of the Holders of all of the Convertible Preferred
Securities, waive any past Event of Default and its consequences. Upon such
waiver, any such Event of Default shall cease to exist, and any Event of
Default arising therefrom shall be deemed to have been cured, for every
purpose of this Guarantee Agreement, but no such waiver shall extend to any
subsequent or other default or Event of Default or impair any right
consequent thereon.
SECTION 2.7 Event of Default; Notice. (a) The Guarantee Trustee
shall, within 90 days after the occurrence of an Event of Default, transmit
by mail, first class postage prepaid, to the Holders of the Convertible
Preferred Securities, notices of all Events of Default known to the Guarantee
Trustee, unless such defaults have been cured before the giving of such
notice; provided that the Guarantee Trustee shall be protected in withholding
such notice if and so long as the board of directors, the executive
committee, or a trust committee of directors and/or Responsible Officers of
the Guarantee Trustee in good faith determines that the withholding of such
notice is in the interests of the Holders of the Convertible Preferred
Securities.
(b) The Guarantee Trustee shall not be deemed to have knowledge
of any Event of Default unless the Guarantee Trustee shall have received
written notice, or a Responsible Officer charged with the administration of
the Declaration shall have obtained written notice, of such Event of Default.
SECTION 2.8 Conflicting Interests. The Declaration shall be
deemed to be specifically described in this Guarantee Agreement for the
purposes of clause (i) of the first proviso contained in Section 310(b) of
the Trust Indenture Act.
ARTICLE III
POWERS, DUTIES AND RIGHTS OF
GUARANTEE TRUSTEE
SECTION 3.1 Powers and Duties of the Guarantee Trustee. (a) This
Guarantee Agreement shall be held by the Guarantee Trustee for the benefit
of the Holders of the Convertible Preferred Securities, and the Guarantee
Trustee shall not transfer this Guarantee Agreement to any Person except a
Holder of Convertible Preferred Securities exercising his or her rights
pursuant to Section 5.4(b) or to a Successor Guarantee Trustee on acceptance
by such Successor Guarantee Trustee of its appointment to act as Successor
Guarantee Trustee. The right, title and interest of the Guarantee Trustee
shall automatically vest in any Successor Guarantee Trustee, and such vesting
and cessation of title shall be effective whether or not conveyancing
documents have been executed and delivered pursuant to the appointment of
such Successor Guarantee Trustee.
(b) If an Event of Default has occurred and is continuing, the
Guarantee Trustee shall enforce this Guarantee Agreement for the benefit of
the Holders of the Convertible Preferred Securities.
(c) The Guarantee Trustee, before the occurrence of any Event of
Default and after the curing of all Events of Default that may have occurred,
shall undertake to perform only such duties as are specifically set forth in
this Guarantee Agreement, and no implied covenants shall be read into this
Guarantee Agreement against the Guarantee Trustee. In case an Event of
Default has occurred (that has not been cured or waived pursuant to Section
2.6), the Guarantee Trustee shall exercise such of the rights and powers
vested in it by this Guarantee Agreement, and use the same degree of care and
skill in its exercise there- of, as a prudent person would exercise or use
under the circumstances in the conduct of his or her own affairs.
(d) No provision of this Guarantee Agreement shall be construed
to relieve the Guarantee Trustee from liability for its own negligent action,
its own negligent failure to act, or its own willful misconduct, except that:
(i) prior to the occurrence of any Event of Default and after
the curing or waiving of all such Events of Default that may have
occurred:
(A) the duties and obligations of the Guarantee Trustee
shall be determined solely by the express provisions of this
Guarantee Agreement, and the Guarantee Trustee shall not be liable
except for the performance of such duties and obligations as are
specifically set forth in this Guarantee Agreement, and no implied
covenants or obligations shall be read into this Guarantee
agreement against the Guarantee Trustee; and
(B) in the absence of bad faith on the part of the
Guarantee Trustee, the Guarantee Trustee may conclusively rely, as
to the truth of the statements and the correctness of the opinions
expressed therein, upon any certificates or opinions furnished to
the Guarantee Trustee and conforming to the requirements of this
Guarantee Agreement; but in the case of any such certificates or
opinions that by any provision hereof are specifically required to
be furnished to the Guarantee Trustee, the Guarantee Trustee shall
be under a duty to examine the same to determine whether or not
they conform to the requirements of this Guarantee Agreement;
(ii) the Guarantee Trustee shall not be liable for any error
of judgment made in good faith by a Responsible Officer of the Guarantee
Trustee, unless it shall be proved that the Guarantee Trustee was negligent
in ascertaining the pertinent facts upon which such judgment was made;
(iii) the Guarantee Trustee shall not be liable with respect
to any action taken or omitted to be taken by it in good faith in accordance
with the direction of the Holders of not less than a Majority in aggregate
liquidation amount of the Convertible Preferred Securities relating to the
time, method and place of conducting any proceeding for any remedy available
to the Guarantee Trustee or exercising any trust or power conferred upon the
Guarantee Trustee under this Guarantee Agreement; and
(iv) no provision of this Guarantee Agreement shall require
the Guarantee Trustee to expend or risk its own funds or otherwise incur
personal financial liability in the performance of any of its duties or in
the exercise of any of its rights or powers, if the Guarantee Trustee shall
have reasonable grounds for believing that the repayment of such funds or
liability is not reasonably assured to it under the terms of this Guarantee
Agreement or adequate indemnity against such risk or liability is not
reasonably assured to it.
(e) If:
(1) default occurs in the payment of the principal of any
Convertible Preferred Security when and as the same shall be due and payable
and such failure shall continue for 15 days; or
(2) default occurs in the payment of any distribution on any
Convertible Preferred Security when such distribution becomes due and payable
and such failure continues for a period of 60 days; the Guarantee Trustee
shall be authorized to recover judgment, in its own name and as trustee of
an express trust, against the Guarantor for the whole amount of principal and
distributions owing and unpaid.
(f) In case of the pendency of any receivership, insolvency,
liquidation, bankruptcy, reorganization, arrangement, adjustment, composition
or other judicial proceeding relative to the Guarantor or any other obligor
upon the Convertible Preferred Securities or the property of the Guarantor
or of such other obligor or their creditors, the Guarantee Trustee shall be
authorized to file and prove a claim for the whole amount of principal and
distributions owing and unpaid in respect of the Convertible Preferred
Securities and to file such other papers or documents as may be necessary or
advisable in order to have the claims of the Guarantee Trustee (including any
claim for the reasonable compensation, expenses, disbursements and advances
of the Guarantee Trustee, its agents and counsel) and of the Holders allowed
in such judicial proceeding.
SECTION 3.2 Certain Rights of Guarantee Trustee. (a) Subject to
the provisions of Section 3.1:
(i) The Guarantee Trustee may rely and shall be fully
protected in acting or refraining from acting upon any resolution,
certificate, statement, instrument, opinion, report, notice, request,
direction, consent, order, bond, debenture, note, other evidence of
indebtedness or other paper or document believed by it to be genuine and to
have been signed, sent or presented by the proper party or parties.
(ii) Any direction or act of the Guarantor contemplated by
this Guarantee Agreement shall be sufficiently evidenced by a written
direction or an Officers' Certificate.
(iii) Whenever, in the administration of this Guarantee
Agreement, the Guarantee Trustee shall deem it desirable that a matter be
proved or established before taking, suffering or omitting any action
hereunder, the Guarantee Trustee (unless other evidence is herein
specifically prescribed) may, in the absence of bad faith on its part,
request and rely upon an Officers' Certificate which, upon receipt of such
request, shall be promptly delivered by the Guarantor.
(iv) The Guarantee Trustee shall have no duty to see to any
recording, filing or registration of any instrument (or any rerecording,
refiling or reregistration thereof).
(v) The Guarantee Trustee may consult with counsel, and the
written advice or opinion of such counsel with respect to legal matters
shall be full and complete authorization and protection in respect of any
action taken, suffered or omitted by it hereunder in good faith and in
accordance with such advice or opinion. Such counsel may be counsel to the
Guarantor or any of its Affiliates and may include any of its employees. The
Guarantee Trustee shall have the right at any time to seek instructions
concerning the administration of this Guarantee Agreement from any court of
competent jurisdiction.
(vi) The Guarantee Trustee shall be under no obligation to
exercise any of the rights or powers vested in it by this Guarantee Agreement
at the request or direction of any Holder, unless such Holder shall have
provided to the Guarantee Trustee such adequate security and indemnity as
would satisfy a reasonable person in the position of the Guarantee Trustee,
against the costs, expenses (including attorneys' fees and expenses) and
liabilities that might be incurred by it in complying with such request or
direction, including such reasonable advances as may be requested by the
Guarantee Trustee; provided that, nothing contained in this Section
3.2(a)(vi) shall be taken to relieve the Guarantee Trustee, upon the
occurrence of an Event of Default, of its obligation to exercise the rights
and powers vested in it by this Guarantee Agreement.
(vii) The Guarantee Trustee shall not be bound to make any
investigation into the facts or matters stated in any resolution,
certificate, statement, instrument, opinion, report, notice, request,
direction, consent, order, bond, debenture, note, other evidence of
indebtedness or other paper or document, but the Guarantee Trustee, in its
discretion, may make such further inquiry or investigation into such facts
or matters as it may see fit.
(viii) The Guarantee Trustee may execute any of the trusts or
powers hereunder or perform any duties hereunder either directly or by
or through agents or attorneys, and the Guarantee Trustee shall not be
responsible for any misconduct or negligence on the part of any agent or
attorney appointed with due care by it hereunder.
(ix) Any action taken by the Guarantee Trustee or its agents
hereunder shall bind the Holders of the Convertible Preferred
Securities, and the signature of the Guarantee Trustee or its agents alone
shall be sufficient and effective to perform any such action. No third party
shall be required to inquire as to the authority of the Guarantee Trustee to
so act or as to its compliance with any of the terms and provisions of this
Guarantee Agreement, both of which shall be conclusively evidenced by the
Guarantee Trustee's or its agent's taking such action.
(x) Whenever in the administration of this Guarantee Agree-
ment the Guarantee Trustee shall deem it desirable to receive
instructions with respect to enforcing any remedy or right or taking any
other action hereunder, the Guarantee Trustee (i) may request instructions
from the Holders of a Majority in aggregate liquidation amount of the
Convertible Preferred Securities, (ii) may refrain from enforcing such remedy
or right or taking such other action until such instructions are received and
(iii) shall be protected in acting in accordance with such instructions.
(b) No provision of this Guarantee Agreement shall be deemed to
impose any duty or obligation on the Guarantee Trustee to perform any act or
acts or exercise any right, power, duty or obligation conferred or imposed
on it in any jurisdiction in which it shall be illegal, or in which the
Guarantee Trustee shall be unqualified or incompetent in accordance with
applicable law, to perform any such act or acts or to exercise any such
right, power, duty or obligation. No permissive power or authority available
to the Guarantee Trustee shall be construed to be a duty.
SECTION 3.3 Not Responsible for Recitals or Issuance of Guarantee.
The recitals contained in this Guarantee shall be taken as the statements of
the Guarantor, and the Guarantee Trustee does not assume any responsibility
for their correctness. The Guarantee Trustee makes no representation as to
the validity or sufficiency of this Guarantee Agreement.
ARTICLE IV
GUARANTEE TRUSTEE
SECTION 4.1 Guarantee Trustee; Eligibility. (a) There shall at
all times be a Guarantee Trustee which shall:
(i) not be an Affiliate of the Guarantor; and
(ii) be a corporation organized and doing business under the
laws of the United States of America or any State or Territory thereof
or of the District of Columbia, or a corporation or Person permitted by the
Securities and Exchange Commission to act as an institutional trustee under
the Trust Indenture Act, authorized under such laws to exercise corporate
trust powers, having a combined capital and surplus of at least fifty million
U.S. dollars ($50,000,000), and subject to supervision or examination by
Federal, State, Territorial or District of Columbia authority. If such
corporation publishes reports of condition at least annually, pursuant to law
or to the requirements of the supervising or examining authority referred to
above, then, for the purposes of this Section 4.1(a)(ii), the combined
capital and surplus of such corporation shall be deemed to be its combined
capital and surplus as set forth in its most recent report of condition so
published.
(b) If at any time the Guarantee Trustee shall cease to be
eligible to so act under Section 4.1(a), the Guarantee Trustee shall
immediately resign in the manner and with the effect set out in Section
4.2(c).
(c) If the Guarantee Trustee has or shall acquire any
"conflicting interest" within the meaning of Section 310(b) of the Trust
Indenture Act, the Guarantee Trustee and Guarantor shall in all respects
comply with the provisions of Section 310(b) of the Trust Indenture Act.
SECTION 4.2 Appointment, Removal and Resignation of Guarantee
Trustees. Subject to Section 4.2(b), the Guarantee Trustee may be appointed
or removed without cause at any time by the Guarantor.
(b) The Guarantee Trustee shall not be removed in accordance with
Section 4.2(b) until a Successor Guarantee Trustee has been appointed and has
accepted such appointment by written instrument executed by such Successor
Guarantee Trustee and delivered to the Guarantor.
(c) The Guarantee Trustee appointed to office shall hold office
until a Successor Guarantee Trustee shall have been appointed or until its
removal or resignation. The Guarantee Trustee may resign from office
(without need for prior or subsequent account- ing) by an instrument in
writing executed by the Guarantee Trustee and delivered to the Guarantor,
which resignation shall not take effect until a Successor Guarantee Trustee
has been appointed and has accepted such appointment by instrument in writing
executed by such Successor Guarantee Trustee and delivered to the Guarantor
and the resigning Guarantee Trustee.
(d) If no Successor Guarantee Trustee shall have been appointed
and accepted appointment as provided in this Section 4.2 within 60 days after
delivery to the Guarantor of an instrument of resignation, the resigning
Guarantee Trustee may petition any court of competent jurisdiction for
appointment of a Successor Guarantee Trustee. Such court may thereupon,
after prescribing such notice, if any, as it may deem proper, appoint a
Successor Guarantee Trustee.
ARTICLE V
GUARANTEE
SECTION 5.1 Guarantee. The Guarantor irrevocably and
unconditionally agrees to pay in full to the Holders the Guarantee Payments
(without duplication of amounts theretofore paid by the Trust), as and when
due, regardless of any defense, right of set-off or counterclaim that the
Trust 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 Trust to pay such amounts to the
Holders.
SECTION 5.2 Waiver of Notice and Demand. The Guarantor hereby
waives notice of acceptance of this Guarantee Agreement and of any liability
to which it applies or may apply, presentment, demand for payment, any right
to require a proceeding first against the Trust 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 5.3 Obligations Not Affected. The obligations, covenants,
agreements and duties of the Guarantor under this Guarantee Agreement 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 Trust of any express or implied
agreement, covenant, term or condition relating to the Convertible Preferred
Securities to be performed or observed by the Trust;
(b) the extension of time for the payment by the Trust of all or
any portion of the Distributions, Redemption Price, Liquidation Distribution
or any other sums payable under the terms of the Convertible Preferred
Securities or the extension of time for the performance of any other
obligation under, arising out of, or in connection with, the Convertible
Preferred Securities (other than an extension of time for payment of
Distributions, Redemption Price, Liquidation Distribution or other sum
payable that results from the deferral of any interest payment on the
Convertible 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 Convertible
Preferred Securities, or any action on the part of the Trust granting
indulgence or extension of any kind;
(d) the voluntary or involuntary liquidation, dissolution, sale
of any collateral, receivership, insolvency, bankruptcy, assignment for the
benefit of creditors, reorganization, arrangement, composition or
readjustment of debt of, or other similar proceedings affecting, the Trust
or any of the assets of the Trust;
(e) any invalidity of, or defect or deficiency in the Convertible
Preferred 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 5.3 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 to give notice to, or
obtain consent of, the Guarantor with respect to the happening of any of the
foregoing.
SECTION 5.4 Rights of Holders. (a) The Holders of a Majority in
ag- gregate liquidation amount of the Convertible Preferred Securities have
the right (i) to direct the time, method and place of conducting of any
proceeding for any remedy available to the Guarantee Trustee in respect of
this Guarantee Agreement or to direct the exercise of any trust or power
conferred upon the Guarantee Trustee under this Guarantee Agreement and (ii)
on behalf of the Holders of all Convertible Preferred Securities to consent
to the waiver of any past default and its consequences.
(b) If the Guarantee Trustee fails to enforce this Guarantee
Agreement, any Holder of Convertible Preferred Securities may, after a period
of 30 days has elapsed from such Holder's written request to the Guarantee
Trustee to enforce this Guarantee Agreement, institute a legal proceeding
directly against the Guarantor to enforce the Guarantee Trustee's rights
under this Guarantee Agreement, without first instituting a legal proceeding
against the Trust, the Guarantee Trustee or any other Person.
SECTION 5.5 Guarantee of Payment. This Guarantee Agreement
creates a guarantee of payment and not of collection.
SECTION 5.6 Subrogation. The Guarantor shall be subrogated to all
(if any) rights of the Holders of Convertible Preferred Securities against
the Trust in respect of any amounts paid to such Holders by the Guarantor
under this Guarantee Agreement; provided, however, that the Guarantor shall
not (except to the extent required by mandatory provisions of law) be
entitled to enforce or exercise any right that it may acquire by way of
subrogation or any indemnity, reimbursement or other agreement, in all cases
as a result of payment under this Guarantee Agreement, if, at the time of any
such payment, any amounts are due and unpaid under this Guarantee Agreement.
If any amount shall be paid to the Guarantor 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 5.7 Independent Obligations. The Guarantor acknowledges
that its obligations hereunder are independent of the obligations of the
Trust with respect to the Convertible Preferred Securities, and that the
Guarantor shall be liable as principal and as debtor hereunder to make
Guarantee Payments pursuant to the terms of this Guarantee Agree- ment
notwithstanding the occurrence of any event referred to in subsections (a)
through (g), inclusive, of Section 5.3 hereof.
ARTICLE VI
COVENANTS
SECTION 6.1 Limitation of Transactions. So long as any
Convertible Preferred Securities remain outstanding, if (i) there shall have
occurred an Event of Default hereunder or an event of default under the
Declaration or (ii) if the Guarantor exercises its right to defer interest
payments on the Convertible Debentures, then (a) the Guarantor will not
declare or pay any dividend or distribution (other than in shares of its
capital stock) on any of the Guarantor's capital stock, (b) neither the
Guarantor nor any of its Subsidiaries will redeem, purchase, acquire for
value or make a liquidation payment to any holder of, or with respect to, any
of its capital stock or Other Subordinated Indebtedness (other than (x) as
an issuance of capital stock upon conversion of a convertible security or in
payment of interest, premium or principal or in payment in redemption,
purchase or other acquisition or liquidation of capital stock or Other
Subordinated Indebtedness, (y) as a result of reclassification of such
capital stock or the exchange or conversion of one class or series of capital
stock for another class or series of capital stock, or (z) in connection with
the right of Guarantor to purchase or reacquire shares of Common Stock Series
A under the provisions of the First Supplemental Indenture, the Declaration
or the Limited Partnership Agreement), (c) the Guarantor will not make any
payment of principal, premium or interest (unless payable in shares of
capital stock) on Other Subordinated Indebtedness, and (d) neither Guarantor
nor any of its Subsidiaries will make any guarantee of payments which would
be prohibited or limited by the foregoing (other than payments under this
Guarantee Agreement, payments of dividends by a Subsidiary, or guarantees of
dividends or payments payable to Guarantor).
ARTICLE VII
SUBORDINATION
SECTION 7.1 Subordination. This Guarantee Agreement will
constitute an unsecured obligation of the Guarantor and will rank subordinate
and subject in right of payment to the prior payment in full in cash of
Senior Indebtedness of the Guarantor.
Article VII shall constitute a continuing offer to all Persons who
become holders of, or continue to hold, Senior Indebtedness, and such
provisions are made for the benefit of the holders of Senior Indebtedness and
such holders are made obligees hereunder and any one or more of them may
enforce such provisions. Holders of Senior Indebtedness need not prove
reliance on the subordination provisions hereof.
SECTION 7.2 Payment Over of Proceeds Upon Dissolution, etc. Upon
any payment or distribution of assets of the Guarantor to creditors upon any
liquidation, dissolu- tion, winding-up, reorganization, assignment for the
benefit of creditors, marshalling of assets or liabilities or any bankruptcy,
insolvency or similar proceedings of the Guarantor (each such event, if any,
herein sometimes referred to as a "Proceeding"):
(i) the holders of Senior Indebtedness shall be entitled to
receive payment in full in cash of all amounts due on or to become due on or
in respect of all Senior Indebtedness, before the Holders are entitled to
receive any payment (including any payment to Holders made in respect of any
other Indebtedness of the Guarantor subordinated to the payment of the
Guarantee, such payment or distribution being hereinafter referred to as a
"Junior Subordinated Payment"), on account of the Guarantee or on account of
any purchase, redemption or other acquisition of the Guarantee by the
Guarantor, any Subsidiary of the Guarantor, the Guarantee Trustee or any
Paying Agent (all such payments, distributions, purchases, redemptions and
acquisitions, whether or not in connection with a Proceeding, herein referred
to, individually and collectively, as a "Guarantee Subordinated Payment");
and
(ii) any payment or distribution of assets of the Guarantor
of any kind or character, whether in cash, property or securities, by set-off
or otherwise, to which the Holders or the Guarantee Trustee would be entitled
but for the provisions of this Article (including, without limitation, any
Junior Subordinated Payment) shall be paid by the liquidating trustee or
agent or other Person making such payment or distribution, whether a trustee
in bankruptcy, a receiver or liquidating trustee or otherwise, directly to
the holders of Senior Indebtedness or their representative or representatives
or to the trustee or trustees under any indenture under which any instruments
evidencing any of such Senior Indebtedness may have been issued, ratably
according to the aggregate amounts remaining unpaid on account of the Senior
Indebtedness held or represented by each, to the extent necessary to make
payment in full in cash of all Senior Indebtedness remaining unpaid, after
giving effect to any concurrent payment to the holders of such Senior
Indebtedness.
In the event that, notwithstanding the foregoing provisions of this
Section, the Guarantee Trustee or a Holder shall have received in connection
with any Proceeding any Guarantee Subordinated Payment before all Senior
Indebtedness is paid in full or payment thereof provided for in cash, then
and in such event such Guarantee Subordinated Payment shall be paid over or
delivered forthwith to the trustee in bankruptcy, receiver, liquidating
trustee, custodian, assignee, agent or other Person making payment or
distribution of assets of the Guarantor for application to the payment of all
Senior Indebtedness remaining unpaid, to the extent necessary to pay all
Senior Indebtedness in full in cash after giving effect to any concurrent
payment to or for the holders of Senior Indebtedness.
For purposes of this Article only, the words "any payment or
distribution of any kind or character, whether in cash, property or
securities" shall not be deemed to include a payment or distribution of stock
or securities of the Guarantor provided for by a plan of reorganization or
readjustment authorized by an order or decree of a court of competent
jurisdiction in a reorganization proceeding under any applicable bankruptcy
law or of any other corporation provided for by such plan of reorganization
or readjustment which stock or securities are subordinated in right of
payment to all then outstanding Senior Indebtedness to substantially the same
extent, or to a greater extent than, the Guarantee is so subordinated as
provided in this Article. The consolidation of the Guarantor with, or the
merger of the Guarantor into, another Person or the liquidation or
dissolution of the Guarantor following the conveyance or transfer of all or
substantially all of its properties and assets as an entirety to another
Person upon the terms and conditions set forth in Article Eight of the
Indenture shall not be deemed a Proceeding for the purposes of this Section
if the Person formed by such consolidation or into which the Guarantor is
merged or the Person which acquires by conveyance or transfer such properties
and assets as an entirety, as the case may be, shall, as a part of such
consolidation, merger, conveyance or transfer, comply with the conditions set
forth in Article Eight of the Indenture.
SECTION 7.3 No Payment When Senior Indebtedness In Senior Payment
Default or Senior Indebtedness Accelerated. In the event that (a) any Senior
Payment Default (as defined below) shall have occurred and such Senior
Indebtedness shall have become, by reason thereof, due and payable prior to
the stated maturity thereof, then no Guarantee Subordinated Payment shall be
made (except that, so long as Citizens Capital shall be the holder of all of
the Outstanding Convertible Debentures, payment may be made in shares of
capital stock), unless and until such Senior Payment Default shall have been
cured or waived in writing or shall have ceased to exist or all amounts then
due and payable in respect of such Senior Indebtedness (including amounts
that have become and remain due by acceleration) shall have been paid in full
in cash. "Senior Payment Default" means any default (which default has
continued beyond any applicable grace and/or cure period (if any), in the
payment of principal of (or premium, if any) or interest on any Senior
Indebtedness when due, whether at the stated maturity of any such payment or
by declaration of acceleration, call for redemption, mandatory payment or
prepayment or otherwise.
In the event that any Senior Nonmonetary Default (as defined below)
shall have occurred and be continuing, then, upon the receipt by the
Guarantor and the Guarantee Trustee of written notice of such Senior
Nonmonetary Default from the Designated Senior Holder of such certain Senior
Indebtedness, no Guarantee Subordinated Payment (except that, so long as
Citizens Capital shall be the holder of all of the Outstanding Convertible
Deben- tures, payment may be made in shares of capital stock) shall be made,
during the period (the "Payment Blockage Period") commencing on the date of
such receipt of such written notice and ending (subject to any blockage of
payments that may then or thereafter be in effect as the result of any Senior
Payment Default) on the earlier of (i) the date on which the Senior
Indebtedness to which such Senior Nonmonetary Default relates is discharged
or such Senior Nonmonetary Default shall have been cured or waived in writing
or shall have ceased to exist and any acceleration of Senior Indebtedness to
which such Senior Nonmonetary Default relates shall have been rescinded or
annulled or (ii) the 179th day after the date of such receipt of such written
notice. No more than one Payment Blockage Period may be com- menced with
respect to the Guarantee during any period of 360 consecutive days and there
shall be a period of at least 181 consecutive days in each period of 360
consecutive days when no Payment Blockage Period is in effect. Following the
commencement of any Payment Blockage Period, the holders of the Senior
Indebtedness will be precluded from commencing a subsequent Payment Blockage
Period until the conditions set forth in the preceding sentence are
satisfied. For all purposes of this paragraph, no Senior Nonmonetary Default
that existed or was continuing on the date of commencement of any Payment
Blockage Period with respect to the Senior Indebtedness initiating such
Payment Blockage Period shall be, or be made, the basis for the commencement
of a subsequent Payment Blockage Period by holders of Senior Indebtedness or
their representatives unless such Senior Nonmonetary Default shall have been
cured for a period of not less than 90 consecutive days. "Senior Nonmonetary
Default" means any default (other than a Senior Payment Default) or any event
which, after notice or lapse of time (or both), would become an event of
default, under the terms of any instrument or agreement pursuant to which any
Senior Indebtedness is outstanding, permitting (after notice or lapse of time
or both) one or more holders of such Senior Indebtedness (or a trustee or
agent on behalf of the holders thereof) to declare such Senior Indebtedness
due and payable prior to the date on which it would otherwise become due and
payable.
In the event that, notwithstanding the foregoing, the Guarantor shall
make any Guarantee Subordinated Payment to the Guarantee Trustee or any
Holder prohibited by the foregoing provisions of this Section, then and in
such event such Guarantee Subordinated Payment shall be paid over and
delivered forthwith to the Designated Senior Holders under the Senior
Indebtedness or, if such Senior Indebtedness has been repaid in full, to the
Guarantor.
The provisions of this Section shall not apply to any Guarantee
Subordinated Payment with respect to which Section 7.2 hereof would be
applicable.
SECTION 7.4 Payment Permitted If No Default. Nothing contained
in this Article or elsewhere in this Guarantee Agreement shall prevent the
Guarantor, at any time except during the pendency of any Proceeding referred
to in Section 7.2 hereof or under the conditions described in Section 7.3
hereof, from making Guarantee Subordinated Payments.
SECTION 7.5 Subrogation To Rights Of Holders Of Senior
Indebtedness. Subject to the payment in full in cash of all Senior
Indebtedness, the Holders shall be subrogated to the rights of the holders
of such Senior Indebtedness to receive payments and distributions of cash,
property and securities applicable to the Senior Indebtedness until the
principal of and interest on the Guarantee shall be paid in full. For
purposes of such subrogation, no payments or distributions to the holders of
the Senior Indebtedness of any cash, property or securities to which the
Holders or the Guarantee Trustee would be entitled except for the provisions
of this Article, and no payments pursuant to the provisions of this Article
to the holders of Senior Indebtedness by Holders or the Guarantee Trustee,
shall, as among the Guarantor, its creditors other than holders of Senior
Indebtedness and the Holders, be deemed to be a payment or distribution by
the Guarantor to or on account of the Senior Indebtedness.
SECTION 7.6 Provisions Solely To Define Relative Rights. The
provisions of this Article are and are intended solely for the purpose of
defining the relative rights of the Holders on the one hand and the holders
of Senior Indebtedness on the other hand. Nothing contained in this Article
or elsewhere in this Guarantee Agreement is intended to or shall (a) impair,
as among the Guarantor, its creditors (other than holders of Senior
Indebtedness) and the Holders, the obligation of the Guarantor, which is
absolute and unconditional (and which, subject to the rights under this
Article of the holders of Senior Indebtedness, is intended to rank equally
with all other general obligations of the Guarantor), to pay to the Holders
the Guarantee Subordinated Payments as and when the same shall become due and
payable in accordance with their terms; or (b) affect the relative rights
against the Guarantor of the Holders and creditors of the Guarantor, other
than the holders of Senior Indebtedness; or (c) prevent the Guarantee Trustee
or a Holder from exercising all remedies otherwise permitted by applicable
law upon default under this Guarantee Agreement, subject to the rights, if
any, under this Article of the holders of Senior Indebtedness to receive
cash, property and securities otherwise payable or deliverable to the
Guarantee Trustee or such Holder or, under the conditions specified in
Section 7.3, to prevent any payment prohibited by such Section or enforce
their rights pursuant to the penultimate paragraph in Section 7.3.
SECTION 7.7 Guarantee Trustee To Effectuate Subordination. Each
Holder of the Guarantee by his acceptance thereof authorizes and directs the
Guarantee Trustee on his behalf to take such action as may be necessary or
appropriate to effectuate the subordination provided in this Article and
appoints the Guarantee Trustee his attorney-in-fact for any and all such
purposes, including, in the event of any dissolution, winding-up, liquidation
or reorganization of the Guarantor whether in bankruptcy, insolvency,
receivership proceedings, or otherwise, the timely filing of a claim for the
unpaid balance of the Indebtedness of the Guarantor owing to such Holder in
the form required in such proceedings and the causing of such claim to be
approved. If the Guarantee Trustee does not file a proper claim at least 30
days before the expiration of the time to file such claim, then the holders
of the Senior Indebtedness and their agents, trustees or other
representatives are authorized to do so (but shall in no event be liable for
any failure to do so) for and on behalf of the Holders.
SECTION 7.8 No Waiver Of Subordination Provisions. No right of
any present or future holder of any Senior Indebtedness to enforce
subordination as herein provided shall at any time in any way be prejudiced
or impaired by any act or failure to act on the part of the Guarantor or by
any act or failure to act, in good faith, by any such holder, or by any
noncompliance by the Guarantor with the terms, provisions and covenants of
this Guarantee Agreement, regardless of any knowledge thereof any such holder
may have or be otherwise charged with.
Without in any way limiting the generality of the foregoing
paragraph, the holders of Senior Indebtedness may, at any time and from time
to time, without the consent of or notice to the Guarantee Trustee or the
Holders, without incurring responsibility to the Holders and without
impairing or releasing the subordination provided in this Article or the
obligations hereunder of the Holders to the holders of the Senior
Indebtedness, do any one or more of the following: (i) change the manner,
place or terms of payment or extend the time of payment of, or renew or
alter, Senior Indebtedness, or otherwise amend or supplement in any manner
Senior Indebtedness or any instrument evidencing the same or any agreement
under which Senior Indebtedness is outstanding; (ii) permit the Guarantor to
borrow, repay and then reborrow any or all of the Senior Indebtedness; (iii)
sell, exchange, release or otherwise deal with any property pledged,
mortgaged or otherwise securing Senior Indebtedness; (iv) release any Person
liable in any manner for the collection of Senior Indebtedness; (v) exercise
or refrain from exercising any rights against the Guarantor and any other
Person; and (vi) apply any sums received by them to Senior Indebtedness.
SECTION 7.9 Notice To Guarantee Trustee. The Guarantor shall give
prompt written notice to the Guarantee Trustee of any fact known to the
Guarantor which would prohibit the making of any payment to or by the
Guarantee Trustee in respect of the Guarantee. Notwithstanding the provision
of this Article or any other provision of this Guarantee Agreement, the
Guarantee Trustee shall not be charged with knowledge of the existence of any
facts which would prohibit the making of any payment to or by the Guaran- tee
Trustee in respect of the Guarantee, unless and until a Responsible Officer
of the Guarantee Trustee shall have received written notice thereof from the
Guarantor, any holder of Senior Indebtedness, any Designated Senior Holder
or from any trustee, fiduciary or agent therefore; and, prior to the receipt
of any such written notice, the Guarantee Trustee, subject to the provisions
of Section 3.1, shall be entitled in all respects to assume that no such
facts exist; provided, however, that if the Guarantee Trustee shall not have
received the notice provided for in this Section at least three Business Days
prior to the date upon which by the terms hereof any money may become payable
for any purpose (including, without limitation, the payment of any amounts
due under the Guarantee), then, anything herein contained to the contrary
notwithstanding, but without limiting the rights and remedies of the holders
of Senior Indebtedness or any trustee, fiduciary or agent therefor, the
Guarantee Trustee shall have full power and authority to receive such money
and to apply the same to the purpose for which such money was received and
shall not be affected by any notice to the contrary which may be received by
it within three Business Days prior to such date. Any notice required or
permitted to be given to the Guarantee Trustee by a holder of Senior
Indebtedness or by any Designated Senior Holder shall be in writing and shall
be sufficient for every purpose hereunder if in writing and either (i) sent
via facsimile to the Guarantee Trustee, the receipt of which shall be
confirmed via telephone, or (ii) mailed, first class postage prepaid, or sent
by overnight carrier, to the Guarantee Trustee addressed to it at the address
of its principal office specified herein or at any other address furnished
in writing to such holder of Senior Indebtedness by the Guarantee Trustee.
Subject to the provisions of Section 3.1, the Guarantee Trustee
shall be entitled to rely on the delivery to it of a written notice by a
Person representing himself to be a holder of Senior Indebtedness or
Designated Senior Holder (or a trustee, fiduciary or agent therefor) to
establish that such notice has been given by a holder of Senior Indebtedness
or Designated Senior Holder (or a trustee, fiduciary or agent therefor). In
the event that the Guarantee Trustee determines in good faith that further
evidence is required with respect to the right of any Person as a holder of
Senior Indebtedness or Designated Senior Holder to participate in any payment
or distribution pursuant to this Article, the Guarantee Trustee may request
such Person to furnish evidence to the reasonable satisfaction of the
Guarantee Trustee as to the amount of Senior Indebtedness held by such
Person, the extent to which such Person is entitled to participate in such
payment or distribution and any other facts pertinent to the rights of such
Person under this Article, and if such evidence is not fur- nished, the
Guarantee Trustee may defer any payment to such Person pending judicial
determination as to the right of such Person to receive such payment.
Notwithstanding anything else contained herein, no notice, request
or other communication to or with the Guarantee Trustee shall be deemed given
unless received by a Responsible Officer at the Guarantee Trustee's principal
corporate trust office.
SECTION 7.10 Reliance On Judicial Order Or Certificate Of
Liquidating Agent. Upon any payment or distribution of assets of the
Guarantor referred to in this Article, the Guarantee Trustee, subject to the
provisions of Section 3.1, and the Holders shall be entitled to rely upon any
order or decree entered by any court of competent jurisdiction in which such
Proceeding is pending, or a certificate of the trustee in bankruptcy,
receiver, liquidating trustee, custodian, assignee for the benefit of
creditors, agent or other Person making such payment or distribution,
delivered to the Guarantee Trustee or to the Holders, for the purpose of
ascertaining the Persons entitled to participate in such payment or
distribution, the holders of the Senior Indebtedness and other Indebtedness
of the Guarantor, the amount thereof or payable thereon, the amount or
amounts paid or distributed thereon and all other facts pertinent thereto or
to this Article, provided that the foregoing shall apply only if such court
has been apprised of the provisions of this Article.
SECTION 7.11 Guarantee Trustee Not Fiduciary For Holders Of Senior
Indebtedness. The Guarantee Trustee shall not be deemed to owe any fiduciary
duty to the holders of Senior Indebtedness and shall not be liable to any
such holders if it shall in good faith mistakenly pay over or distribute to
Holders or to the Guarantor or to any other Person cash, property or
securities to which any holders of Senior Indebtedness shall be entitled by
virtue of this Article or otherwise.
SECTION 7.12 Rights of Guarantee Trustee As Holder Of Senior
Indebtedness; Preservation Of Guarantee Trustee's Rights. The Guarantee
Trustee in its individual capacity shall be entitled to all the rights set
forth in this Article with respect to any Senior Indebtedness which may at
any time be held by it, to the same extent as any other holder of Senior
Indebtedness, and nothing in this Guarantee Agreement shall deprive the
Guarantee Trustee of any of its rights as a holder of Senior Indebtedness.
Nothing in this Article shall apply to claims of, or payments to,
the Guarantee Trustee under or pursuant to this Guarantee Agreement or
Section 6.7 of the Indenture.
SECTION 7.13 Article Applicable to Paying Agents. In case at any
time any Paying Agent other than the Guarantee Trustee shall have been
appointed by the Guarantor and be then acting hereunder, the term "Guarantee
Trustee" as used in this Article shall in such case (unless the context
otherwise requires) be construed as extending to and including such Paying
Agent within its meaning as fully for all intents and purposes as if such
Paying Agent were named in this Article in addition to or in place of the
Guarantee Trustee; provided, however, that Section 7.11 hereof shall not
apply to the Guarantor or any Affiliate of the Guarantor if it or such
Affiliate acts as Paying Agent.
ARTICLE VIII
TERMINATION
SECTION 8.1 Termination. This Guarantee Agreement shall terminate
upon (i) full payment of the Redemption Price of all Convertible Preferred
Securities, (ii) the distribution of the Partnership Preferred Securities or
the Convertible Debentures to the Holders in exchange for all of such
Holders' Convertible Preferred Securities, (iii) full payment of the amounts
payable in accordance with the Declaration upon liquidation of the Trust or
(iv) distribution of Common Stock to Holders in respect of the conversion of
all of such Holders' Convertible Preferred Securities into Common Stock.
Notwithstanding the foregoing, this Guarantee Agreement will continue to be
effective or will be reinstated, as the case may be, if at any time any
Holder of Convertible Preferred Securities must restore payment of any sums
paid under the Convertible Preferred Securities or under this Guarantee
Agreement.
ARTICLE IX
INDEMNIFICATION
SECTION 9.1 Exculpation. (a) No Indemnified Person shall be
liable, responsible or accountable in damages or otherwise to the Guarantor
or any Covered Person for any loss, damage or claim incurred by reason of any
act or omission performed or omitted by such Indemnified Person in good faith
in accordance with this Guarantee Agreement and in a manner that such
Indemnified Person reasonably believed to be within the scope of the
authority conferred on such Indemnified Person by this Guarantee Agreement
or by law, except that an Indemnified Person shall be liable for any such
loss, damage or claim incurred by reason of such Indemnified Person's
negligence or willful misconduct with respect to such acts or omissions.
(b) An Indemnified Person shall be fully protected in relying in good
faith upon the records of the Guarantor and upon such information, opinions,
reports or statements presented to the Guarantor by any Person as to matters
the Indemnified Person reasonably believes are within such other Person's
professional or expert competence and who has been selected with reasonable
care by or on behalf of the Guarantor, including information, opinions,
reports or statements as to the value and amount of the assets, liabilities,
profits, losses or any other facts pertinent to the existence and amount of
assets from which Distribu- tions to Holders of Convertible Preferred
Securities might properly be paid.
SECTION 9.2 Indemnification. (a) To the fullest extent permitted
by applicable law, the Guarantor shall indemnify and hold harmless each
Indemnified Person from and against any loss, damage or claim incurred by
such Indemnified Person by reason of any act or omission performed or omitted
by such Indemnified Person in good faith in accordance with this Guarantee
Agreement and in a manner such Indemnified Person reasonably believed to be
within the scope of authority conferred on such Indemnified Person in
accordance with this Guarantee Agreement, except that no Indemnified Person
shall be entitled to be indemnified in respect of any loss, damage or claim
incurred by such Indemnified Person by reason of negligence or willful
misconduct with respect to such acts or omissions. (b) To the fullest extent
permitted by applicable law, expenses (including legal fees) incurred by an
Indemnified Person in defending any claim, demand, action, suit or proceeding
shall, from time to time, be advanced by the Guarantor prior to the final
disposition of such claim, demand, action, suit or proceeding upon receipt
by the Guarantor of an undertaking by or on behalf of the Indemnified Person
to repay such amount if it shall be determined that the Indemnified Person
is not entitled to be indemnified as authorized in Section 9.2(a).
ARTICLE X
CONVERSION OF CONVERTIBLE PREFERRED SECURITIES
SECTION 10.1 Issuance of Common Stock Series A. The Guarantor
hereby agrees that, upon the request of the Conversion Agent, on behalf of
one or more holders of Convertible Preferred Securities to convert
Convertible Debentures into Common Stock Series A pursuant to the request of
such holders to effect such conversion in accordance with the terms of the
Declaration, the Guarantor shall deliver to the Conversion Agent certificates
representing the full number of shares of Common Stock Series A issuance upon
conversion of such Convertible Debentures in accordance with the terms of the
Indenture and such Convertible Debentures. The Guarantor has reserved and
will keep available for issuance, solely for the purpose of affecting the
conversion of the Convertible Debentures, the full number of shares of Common
Stock Series A deliverable by the Conversion Agent to the holders upon the
conversion of all outstanding Convertible Preferred Securities not
thereto fore converted by the holders.
SECTION 10.2 Validity of Common Stock Series A. All shares of
Common Stock Series A delivered by the Guarantor upon such conversion will
be duly and validly issued and fully paid and nonassessable.
SECTION 10.3 Termination of Obligation to Issue Common Stock Series
A.
The Guarantor's obligations under this Article X to issue Common Stock Series
A shall terminate upon the termination of the right of holders of Convertible
Preferred Securities to request the Conversion Agent to effect such
conversion as set forth in the Declaration and, with respect to a particular
holder, upon such conversion.
ARTICLE XI
MISCELLANEOUS
SECTION 11.1 Successors and Assigns. All guarantees and agreements
contained in this Guarantee Agreement shall bind the successors, assigns,
receivers, trustees and representatives of the Guarantor and shall inure to
the benefit of the Holders of the Convertible Preferred Securities then
outstanding.
SECTION 11.2 Amendments. Except with respect to any changes that
do not adversely affect the rights of Holders (in which case no consent of
Holders will be required), this Guarantee Agreement may only be amended with
the prior approval of the Holders of at least 66-2/3% in aggregate
liquidation amount (including the stated amount that would be paid on
redemption, liquidation or otherwise, plus accrued and unpaid Distributions
to the date upon which the voting percentages are determined) of all the
outstanding Convertible P- referred 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 11.3 Notices. All notices provided for in this Guarantee
Agreement 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 Guarantee Trustee, at the Guarantee Trustee's
mailing address set forth below (or such other address as the Guarantee
Trustee may give notice of to the Holders of the Convertible Preferred
Securities):
Chemical Bank
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: _________________
Fax No.: (212) __________
(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 Convertible Preferred Securities):
Citizens Utilities Company
Xxxx Xxxxx Xxxx, Xxxx. Xx. 0
Xxxxxxxx, Xxxxxxxxxxx 00000
Attention: _________________
Fax No.: (203) __________
copy to:
Xxxxxxxxx, Xxxxx & Xxxxxxxxx
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxxx X. Xxxxxxxxx
Fax No.: (000) 000-0000
(c) If given to any Holder of Convertible Preferred Securities,
at the address set forth on the books and records of the Trust.
All such notices shall be deemed to have been given when received
in person, telecopied with receipt confirmed, or mailed by first class mail,
postage prepaid except that if a notice or other document is refused delivery
or cannot be delivered because of a changed address of which no notice was
given, such notice or other document shall be deemed to have been delivered
on the date of such refusal or inability to deliver.
SECTION 11.4 Benefit. This Guarantee Agreement is solely for the
benefit of the Holders of the Convertible Preferred Securities and, subject
to Section 3.1(a), is not separately transferable from the Convertible
Preferred Securities.
SECTION 11.5 Governing Law. This Guarantee Agreement shall be
governed by and construed and interpreted in accordance with the laws of the
State of New York.
THIS GUARANTEE AGREEMENT is executed as of the day and
year first above written.
CITIZENS UTILITIES COMPANY
By:
Name:
Title:
CHEMICAL BANK, as Guarantee Trustee
By:
Name:
Title:
CITIZENS UTILITIES COMPANY
Reconciliation and tie between Trust Indenture Act of 1939 and
Guarantee, dated as of __________, 1995.
Trust Indenture
Act Section Guarantee Section
310(a)(1). . . . . . . . . . . . . . . . . . . . . .4.1(a)
(a)(2). . . . . . . . . . . . . . . . . . . . . .4.1(a)
(a)(3). . . . . . . . . . . . . . . . . .Not Applicable
(a)(4). . . . . . . . . . . . . . . . . .Not Applicable
(a)(5). . . . . . . . . . . . . . . . . . . . . .4.1(a)
(b) . . . . . . . . . . . . . . . . . . .4.1(c), 4.2(d)
311(a) . . . . . . . . . . . . . . . . . . . . . .2.2(b)
(b) . . . . . . . . . . . . . . . . . . . . . .2.2(b)
312(a) . . . . . . . . . . . . . . . . . . . . . . .2.2(a)
(b) . . . . . . . . . . . . . . . . . . . . . . .2.2(b)
(c) . . . . . . . . . . . . . . . . . . . . . . .2.2(c)
313(a) . . . . . . . . . . . . . . . . . . . . . . . . 2.3
(b) . . . . . . . . . . . . . . . . . . . . . . . . 2.3
(c) . . . . . . . . . . . . . . . . . . . . . . . . 2.3
(d) . . . . . . . . . . . . . . . . . . . . . . . . 2.3
314(a) . . . . . . . . . . . . . . . . . . . . . . . . 2.4
(b) . . . . . . . . . . . . . . . . . . .Not Applicable
(c)(1). . . . . . . . . . . . . . . . . . . . .2.4, 2.5
(c)(2). . . . . . . . . . . . . . . . . . . . .2.4, 2.5
(c)(3). . . . . . . . . . . . . . . . . Not Applicable
(d) . . . . . . . . . . . . . . . . . Not Applicable
(e) . . . . . . . . . . . . . . . . . . . . . . . 1.1
315(a) . . . . . . . . . . . . . . . . 3.1(c), 3.1(d)(i)
(b) . . . . . . . . . . . . . . . . . . . . . . . 2.7
(c) . . . . . . . . . . . . . . . . . . . . . .3.1(c)
(d) . . . . . . . . . . . . . . . . . . . . . .3.1(d)
(d)(1). . . . . . . . . . . . . . . . . . . . 3.1(d)(i)
(d)(2). . . . . . . . . . . . . . . . . . . .3.1(d)(ii)
(d)(3). . . . . . . . . . . . . . . . . . . 3.1(d)(iii)
(e) . . . . . . . . . . . . . . . . . . . . . .None
316(a) . . . . . . . . . . . . . . . . . . . . . . . 5.4
(a)(1)(A) . . . . . . . . . . . . . . . . . . . . . 5.4
(a)(1)(B) . . . . . . . . . . . . . . . . . . . . . 5.4
(a)(2). . . . . . . . . . . . . . . . . . . . . . .None
(b) . . . . . . . . . . . . . . . . . . . . . .5.1, 5.3
(c) . . . . . . . . . . . . . . . . . . . . . . . .None
317(a)(1). . . . . . . . . . . . . . . . . . . . . .3.1(e)
(a)(2). . . . . . . . . . . . . . . . . . . . . .3.1(f)
(b) . . . . . . . . . . . . . . . . . . .Not applicable
318(a) . . . . . . . . . . . . . . . . . . . . . . . . 2.1
NOTE: This reconciliation and tie shall not, for any
purpose, be deemed to be a part of the Guarantee.
ARTICLE I
DEFINITIONS AND INTERPRETATION
SECTION 1.1 Definitions and Interpretation . . . . . . . . . 1
ARTICLE II
TRUST INDENTURE ACT
SECTION 2.1 Trust Indenture Act; Application . . . . . . . . 6
SECTION 2.2 Lists of Holders of Securities . . . . . . . . . 6
SECTION 2.3 Reports by the Guarantee Trustee . . . . . . . . 6
SECTION 2.4 Periodic Reports to Guarantee Trustee. . . . . . 7
SECTION 2.5 Evidence of Compliance with Conditions Precedent 7
SECTION 2.6 Events of Default; Waiver. . . . . . . . . . . . 7
SECTION 2.7 Event of Default; Notice . . . . . . . . . . . . 7
SECTION 2.8 Conflicting Interests. . . . . . . . . . . . . . 7
ARTICLE III
POWERS, DUTIES AND RIGHTS OF
GUARANTEE TRUSTEE
SECTION 3.1 Powers and Duties of the Guarantee Trustee . . . 8
SECTION 3.2 Certain Rights of Guarantee Trustee. . . . . . 10
SECTION 3.3 Not Responsible for Recitals or
Issuance of Guarantee 12
ARTICLE IV
GUARANTEE TRUSTEE
SECTION 4.1 Guarantee Trustee; Eligibility . . . . . . . . 12
SECTION 4.2 Appointment, Removal and Resignation of
Guarantee Trustees . . . . . . . . . . . . . 13
ARTICLE V
GUARANTEE
SECTION 5.1 Guarantee. . . . . . . . . . . . . . . . . . . 13
SECTION 5.2 Waiver of Notice and Demand. . . . . . . . . . 14
SECTION 5.3 Obligations Not Affected . . . . . . . . . . . 14
SECTION 5.4 Rights of Holders. . . . . . . . . . . . . . . 15
SECTION 5.5 Guarantee of Payment . . . . . . . . . . . . . 15
SECTION 5.6 Subrogation. . . . . . . . . . . . . . . . . . 15
SECTION 5.7 Independent Obligations. . . . . . . . . . . . 15
ARTICLE VI
COVENANTS
SECTION 6.1 Limitation of Transactions . . . . . . . . . . 16
ARTICLE VII
SUBORDINATION
SECTION 7.1 Subordination. . . . . . . . . . . . . . . . . 16
SECTION 7.2 Payment Over of Proceeds Upon Dissolution, etc. 16
SECTION 7.3 No Payment When Senior Indebtedness In Senior
Payment Default or Senior Indebtedness
Accelerated . . . . . . . . . . . . . . . . 18
SECTION 7.4 Payment Permitted If No Default. . . . . . . . 19
SECTION 7.5 Subrogation To Rights Of Holders Of
Senior Indebtedness. . . . . . . . . . . . . 19
SECTION 7.6 Provisions Solely To Define Relative Rights. . 19
SECTION 7.7 Guarantee Trustee To Effectuate Subordination. 20
SECTION 7.8 No Waiver Of Subordination Provisions. . . . . 20
SECTION 7.9 Notice To Guarantee Trustee. . . . . . . . . . 21
SECTION 7.10 Reliance On Judicial Order Or Certificate Of
Liquidating Agent. . . . . . . . . . . . . . 22
SECTION 7.11 Guarantee Trustee Not Fiduciary For Holders Of
Senior Indebtedness . . . . . . . . . . . . . 22
SECTION 7.12 Rights of Guarantee Trustee As Holder Of Senior
Indebtedness; Preservation Of Guarantee
Trustee's Rights . . . . . . . . . . . . . . 22
SECTION 7.13 Article Applicable to Paying Agents. . . . . . 22
ARTICLE VIII
TERMINATION
SECTION 8.1 Termination. . . . . . . . . . . . . . . . . . 23
ARTICLE IX
INDEMNIFICATION
SECTION 9.1 Exculpation. . . . . . . . . . . . . . . . . . 23
SECTION 9.2 Indemnification. . . . . . . . . . . . . . . . 24
ARTICLE X
CONVERSION OF CONVERTIBLE PREFERRED SECURITIES
SECTION 10.1 Issuance of Common Stock Series A. . . . . . . 24
SECTION 10.2 Validity of Common Stock Series A. . . . . . . 24
SECTION 10.3 Termination of Obligation to Issue Common Stock
Series A . . . . . . . . . . . . . . . . . . 24
ARTICLE XI
MISCELLANEOUS
SECTION 11.1 Successors and Assigns . . . . . . . . . . . . 25
SECTION 11.2 Amendments . . . . . . . . . . . . . . . . . . 25
SECTION 11.3 Notices. . . . . . . . . . . . . . . . . . . . 25
SECTION 11.4 Benefit. . . . . . . . . . . . . . . . . . . . 26
SECTION 11.5 Governing Law. . . . . . . . . . . . . . . . . 26
