WASHINGTON MUTUAL, INC.
and
[], as Collateral Agent
and
[], as Securities Intermediary
and
[], as Purchase Contract Agent
PLEDGE AGREEMENT
Dated as of ____________
Exhibits
EXHIBIT A Instruction from Purchase Contract Agent to Collateral Agent
(Establishment of Treasury PIES)
EXHIBIT B Instruction from Collateral Agent to Securities Intermediary
(Establishment of Treasury PIES)
EXHIBIT C Instruction from Purchase Contract Agent to Collateral Agent
(Reestablishment of Corporate PIES)
EXHIBIT D Instruction from Collateral Agent to Securities Intermediary
(Reestablishment of Corporate PIES)
EXHIBIT E Notice of Cash Settlement from the Securities Intermediary to
the Purchase Contract Agent.
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PLEDGE AGREEMENT
PLEDGE AGREEMENT dated as of __________ among WASHINGTON MUTUAL, INC., a
Washington corporation (the "Company"), [________], not individually but
solely as collateral agent (in such capacity, together with its successors in
such capacity, the "Collateral Agent"), [______], not individually but solely
in its capacity as a securities intermediary with respect to the Collateral
Account (in such capacity, together with its successors in such capacity, the
"Securities Intermediary"), and [_______], not individually but solely as
purchase contract agent and as attorney-in-fact of the Holders from time to
time of the Securities (in such capacity, together with its successors in
such capacity, the "Purchase Contract Agent") under the Purchase Contract
Agreement (as defined herein).
RECITALS
The Company and the Purchase Contract Agent are parties to the Purchase
Contract Agreement, dated as of the date hereof (as modified and supplemented
and in effect from time to time, the "Purchase Contract Agreement"), pursuant
to which there may be issued up to 2,000,000 PIES (the "Securities").
Each Corporate PIES, at issuance, consists of a unit comprised of (a)
one stock purchase contract (each, a "Purchase Contract") under which (i) the
Holder will purchase from the Company on August 16, 2002, for an amount equal
to $50 (the "Stated Amount"), a number of shares of Common Stock equal to the
Settlement Rate and (ii) the Company will pay the Holder Contract Adjustment
Payments, if any, and (b) a share of Series H Preferred Stock of the Company
(each a "Share of Preferred Stock"), having a liquidation preference equal to
the Stated Amount.
Pursuant to the terms of the Purchase Contract Agreement and the
Purchase Contracts, the Holders of the Securities have irrevocably authorized
the Purchase Contract Agent, as attorney-in-fact of such Holders, among other
things, to execute and deliver this Agreement on behalf of such Holders and
to grant the pledge provided herein of the Collateral Account to secure the
Obligations.
Accordingly, the Company, the Collateral Agent, the Securities
Intermediary and the Purchase Contract Agent, on its own behalf and as
attorney-in-fact of the Holders from time to time of the Securities, agree as
follows:
Section 1. Definitions. For all purposes of this Agreement, except as otherwise
expressly provided or unless the context otherwise requires:
(a) the terms defined in this Article have the meanings assigned to them
in this Article and include the plural as well as the singular;
(b) the words "herein," "hereof" and "hereunder" and other words of
similar import refer to this Agreement as a whole and not to any particular
Article, Section, Exhibit or other subdivision;
(c) the following terms which are defined in the Code shall have the
meanings set forth therein: "certificated security," "control," "financial
asset," "entitlement order," "securities account" and "security entitlement";
(d) the following terms have the meanings assigned to them in the
Purchase Contract Agreement: (1) Act, (2) Agent, (3) Board Resolution, (4)
Cash Settlement, (5) Certificate, (6) Common Stock, (7) Contract Adjustment
Payments, (8) Corporate PIES, (9) Early Settlement, (10) Early Settlement
Amount, (11) Early Settlement Date, (12) Holder, (13) Opinion of Counsel,
(14) Outstanding Securities, (15) PIES,
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(16) Purchase Contract, (17) Purchase Contract Settlement Date, (18) Purchase
Price, (19) Remarketing Agent, (20) Remarketing Agreement, (21) Settlement
Rate, (22) Shares, (23) Termination Event, (24) Treasury PIES and (25)
Underwriting Agreement; and
(e) the following terms have the meanings given to them in this section
1(e):
"Agreement" means this Pledge Agreement, as the same may be
amended, modified or supplemented from time to time.
"Bankruptcy Code" means title 11 of the United States Code, or any
other law of the United States that from time to time provides a uniform
system of bankruptcy laws.
"Business Day" means any day other than (i) a Saturday or Sunday or
a day on which banking institutions in Chicago, Illinois or The City of New
York are authorized or required by law or executive order to remain closed
for business.
"Cash" means any coin or currency of the United States as at the
time shall be legal tender for payment of public and private debts.
"Code" means the Uniform Commercial Code as in effect in the State
of New York from time to time.
"Collateral Account" means the collective reference to (1)
Securities Account No. [______] entitled "___________" maintained by the
Securities Intermediary for the Purchase Contract Agent on behalf of and as
attorney-in-fact for the Holders, (2) all investment property and other
financial assets from time to time credited to the Collateral Account,
including, without limitation, (A) Shares of Preferred Stock and security
entitlements relating thereto which are a component of the Corporate PIES
from time to time, (B) any Treasury Securities and security entitlements
relating thereto delivered from time to time upon establishment of Treasury
PIES in accordance with Section 5.2 hereof and (C) payments made by Holders
pursuant to Section 5.5 hereof (collectively, the "Collateral"), (3) all
Proceeds of any of the foregoing (whether such Proceeds arise before or after
the commencement of any proceeding under any applicable bankruptcy,
insolvency or other similar law, by or against the pledgor or with respect to
the pledgor) and (4) all powers and rights now owned or hereafter acquired
under or with respect to the Collateral Account.
"Company" means the Person named as the "Company" in the first
paragraph of this instrument until a successor shall have become such, and
thereafter "Company" shall mean such successor.
"Failed Remarketing" has the meaning specified in Section 5.4(b) of
the Purchase Contract Agreement.
"Obligations" means, with respect to each Holder, the collective
reference to all obligations and liabilities of such Holder under such
Holder's Purchase Contract and this Agreement or any other document made,
delivered or given in connection herewith or therewith, in each case whether
on account of principal, interest (including, without limitation, interest
accruing before and after the filing of any petition in bankruptcy, or the
commencement of any insolvency, reorganization or like proceeding, relating
to such Holder, whether or not a claim for post-filing or post-petition
interest is allowed in such proceeding), fees, indemnities, costs, expenses
or otherwise (including, without limitation, all fees and disbursements of
counsel to the Company or the Collateral Agent or the Securities Intermediary
that are required to be paid by the Holder pursuant to the terms of any of
the foregoing agreements).
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"Permitted Investments" means any one of the following which shall
mature not later than the next succeeding Business Day: (i) any evidence of
indebtedness with an original maturity of 365 days or less issued, or
directly and fully guaranteed or insured, by the United States of America or
any agency or instrumentality thereof (provided that the full faith and
credit of the United States of America is pledged in support of the timely
payment thereof or such indebtedness constitutes a general obligation of it);
(ii) deposits, certificates of deposit or acceptances with an original
maturity of 365 days or less of any institution which is a member of the
Federal Reserve System having combined capital and surplus and undivided
profits of not less than $50 million at the time of deposit; (iii)
investments with an original maturity of 365 days or less of any Person that
are fully and unconditionally guaranteed by a bank referred to in clause
(ii); (iv) repurchase agreements and reverse repurchase agreements relating
to marketable direct obligations issued or unconditionally guaranteed by the
United States Government or issued by any agency thereof and backed as to
timely payment by the full faith and credit of the United States Government;
(v) investments in commercial paper, other than commercial paper issued by
the Company or its affiliates, of any corporation incorporated under the laws
of the United States or any State thereof, which commercial paper has a
rating at the time of purchase at least equal to "A-1" by Standard & Poor's
Ratings Services ("S&P") or at least equal to "P-1" by Xxxxx'x Investors
Service, Inc. ("Moody's"); and (vi) investments in money market funds
registered under the Investment Company Act of 1940, as amended, rated in the
highest applicable rating category by S&P or Moody's.
"Person" means any legal person, including any individual,
corporation, estate, partnership, joint venture, association, joint-stock
company, limited liability company, trust, unincorporated organization or
government or any agency or political subdivision thereof.
"Pledge" means the lien and security interest created by this
Agreement.
"Pledged Preferred Stock" means the Shares of Preferred Stock and
security entitlements with respect thereto from time to time credited to the
Collateral Account and not then released from the Pledge.
"Pledged Treasury Securities" means Treasury Securities and
security entitlements with respect thereto from time to time credited to the
Collateral Account and not then released from the Pledge.
"Proceeds" has the meaning ascribed thereto in the Code and
includes, without limitation, all interest, dividends, cash, instruments,
securities, financial assets (as defined in Section 8-102(a)(9) of the Code)
and other property received, receivable or otherwise distributed upon the
sale, exchange, collection or disposition of any financial assets from time
to time held in the Collateral Account.
"Purchase Contract Agent" has the meaning specified in the
paragraph preceding the recitals of this Agreement.
"TRADES" means the Treasury/Reserve Automated Debt Entry System
maintained by the Federal Reserve Bank of New York pursuant to the TRADES
Regulations.
"TRADES Regulations" means the regulations of the United States
Department of the Treasury, published at 31 C.F.R. Part 357, as amended from
time to time. Unless otherwise defined herein, all terms defined in the
TRADES Regulations are used herein as therein defined.
"Transfer" means:
(a) in the case of certificated securities in registered
form, delivery as provided in
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Section 8-301(a) of the Code, indorsed to the transferee or in blank by an
effective indorsement;
(b) in the case of Treasury Securities, registration of the
transferee as the owner of such Treasury Securities on TRADES; and
(c) in the case of security entitlements, including, without
limitation, security entitlements with respect to Treasury Securities, a
securities intermediary indicating by book entry that such security
entitlement has been credited to the transferee's securities account.
"Treasury Security" means a zero-coupon U.S. Treasury Security
(Cusip Number 00000XX0) which are the principal strips of the 6-3/8% U.S.
Treasury Securities which mature on August 15, 2002.
"Value" with respect to any item of Collateral on any date means,
as to (i) Cash, the face amount thereof, (ii) Treasury Securities, the
aggregate principal amount thereof at maturity and (iii) Shares of Preferred
Stock, the liquidation preference thereof.
Section 2. Pledge.
Section 2.1 Pledge. Each Holder, acting through the Purchase Contract
Agent as such Holder's attorney-in-fact, hereby pledges and grants to the
Collateral Agent, as agent of and for the benefit of the Company, a
continuing first priority security interest in and to, and a lien upon and
right of set off against, all of such Holder's right, title and interest in
and to the Collateral Account to secure the prompt and complete payment and
performance when due (whether at stated maturity, by acceleration or
otherwise) of the Obligations. The Collateral Agent shall have all of the
rights, remedies and recourses with respect to the Collateral afforded a
secured party by the Code, in addition to, and not in limitation of, the
other rights, remedies and recourses afforded to the Collateral Agent by this
Agreement.
Section 2.2 Control; Financing Statement.
(a) The Collateral Agent shall have control of the Collateral
Account pursuant to the provisions of Section 4 of this Agreement.
(b) On the date of initial issuance of the Securities, the Purchase
Contract Agent shall deliver to the Collateral Agent a financing statement
prepared by the Company for filing in the Office of the Secretary of State of
the State of New York, signed by the Purchase Contract Agent, as
attorney-in-fact for the Holders, as debtors, and describing the Collateral.
Section 2.3 Termination. This Agreement and the Pledge created hereby
shall terminate, with respect to a Holder, upon the satisfaction of such
Holder's Obligations. Upon termination, the Securities Intermediary shall
Transfer the Collateral to the Purchase Contract Agent for distribution to
the Holders in accordance with their respective interests, free and clear of
any lien, pledge or security interest created hereby.
Section 3. Distributions on Pledged Collateral.
Section 3.1 Income Distributions. All income distributions, including
dividends, received by the Securities Intermediary on account of the Shares
or Permitted Investments from time to time held in the Collateral Account
shall be distributed to the Purchase Contract Agent for the benefit of the
applicable Holders as provided in the Purchase Contracts.
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Section 3.2 Principal Payments Following Termination Event. All payments
received by the Securities Intermediary following a Termination Event of (1)
the principal amount of Pledged Preferred Stock or securities entitlements
thereto or (2) the principal amount of the Pledged Treasury Securities or
securities entitlements thereto shall be distributed to the Purchase Contract
Agent for the benefit of the Holders for distribution to such Holders in
accordance with their respective interests.
Section 3.3 Principal Payments Prior To or On Purchase Contract
Settlement Date.
(a) Subject to the provisions of Section 7.2, and except as
provided in clause 3.3(b) below, if no Termination Event shall have occurred,
all payments received by the Securities Intermediary of (1) the liquidation
preference with respect to the Pledged Preferred Stock or security
entitlements thereto or (2) the principal amount of Pledged Treasury
Securities or security entitlements thereto shall be held and invested in
Permitted Investments until the Purchase Contract Settlement Date and on the
Purchase Contract Settlement Date distributed to the Company as provided in
Section 5.7 hereof. Any balance remaining in the Collateral Account shall be
distributed to the Purchase Contract Agent for the benefit of the applicable
Holders for distribution to such Holders in accordance with their respective
interests.
(b) All payments received by the Securities Intermediary of (1) the
liquidation preference of Shares of Preferred Stock or security entitlements
thereto or (2) the principal amount of Treasury Securities or security
entitlements thereto that in each case have been released from the Pledge
shall be distributed to the Purchase Contract Agent for the benefit of the
Holders to be distributed to such Holders in accordance with their respective
interests.
Section 3.4 Payments to Purchase Contract Agent. Payments to the
Purchase Contract Agent hereunder shall be made for receipt to the account
designated by the Purchase Contract Agent for such purpose not later than
12:00 p.m., New York City time, on the Business Day such payment is received
by the Securities Intermediary; provided, however, that if such payment is
received on a day that is not a Business Day or after 11.30 a.m., New York
City time, on a Business Day, then such payment shall be made no later than
12:00 p.m., New York City time, on the next succeeding Business Day. The
Purchase Contract Agent will not be obligated to make any distributions to
the Holders hereunder until the Purchase Contract Agent has received full
payment of the applicable funds for such distribution.
Section 3.5 Assets Not Properly Released. If the Purchase Contract Agent
or any Holder shall receive any payments of the liquidation amount or
principal payments on account of financial assets credited to the Collateral
Account and not released therefrom in accordance with this Agreement, the
Purchase Contract Agent or such Holder shall hold the same as trustee of an
express trust for the benefit of the Company and, upon receipt of an
Officers' Certificate (as defined in the Purchase Contract Agreement) of the
Company so directing, promptly deliver the same to the Securities
Intermediary for credit to the Collateral Account or to the Company for
application to the obligations of the Holders under the related Purchase
Contracts, and the Purchase Contract Agent and Holders shall acquire no
right, title or interest in any such payments of liquidation or principal
amounts so received.
Section 4. Control.
Section 4.1 Establishment of Collateral Account. The Securities
Intermediary hereby confirms that (a) the Securities Intermediary has
established the Collateral Account, (b) the Collateral Account is a
securities account, (c) subject to the terms of this Agreement, the
Securities Intermediary shall treat the Purchase Contract Agent as entitled
to exercise the rights that comprise any financial asset credited to the
Collateral Account, (d) all property delivered to the Securities Intermediary
pursuant to this Agreement or
7
the Purchase Contract Agreement will be credited promptly to the Collateral
Account and (e) all securities or other property underlying any financial
assets credited to the Collateral Account shall be registered in the name of
the Securities Intermediary, indorsed to the Securities Intermediary, or in
blank or credited to another securities account maintained in the name of the
Securities Intermediary, and in no case will any financial asset credited to
the Collateral Account be registered in the name of the Purchase Contract
Agent or any Holder, payable to the order of the Purchase Contract Agent or
any Holder or specially indorsed to the Purchase Contract Agent or any Holder.
Section 4.2 Treatment as Financial Assets. Each item of property
(whether investment property, financial asset, security, instrument or cash)
credited to the Collateral Account shall be treated as a financial asset.
Section 4.3 Sole Control by Collateral Agent. Except as provided in
Section 6, at all times prior to the termination of the Pledge, the
Collateral Agent shall have sole control of the Collateral Account, and the
Securities Intermediary shall take instructions and directions with respect
to the Collateral Account solely from the Collateral Agent. If at any time
the Securities Intermediary shall receive an entitlement order issued by the
Collateral Agent and relating to the Collateral Account, the Securities
Intermediary shall comply with such entitlement order without further consent
by the Purchase Contract Agent or any Holder or any other Person. Until
termination of the Pledge, the Securities Intermediary will not comply with
any entitlement orders issued by the Purchase Contract Agent or any Holder.
Section 4.4 Securities Intermediary's Location. The Collateral Account
and the rights and obligations of the Securities Intermediary, the Collateral
Agent, the Purchase Contract Agent and the Holders with respect thereto shall
be governed by the laws of the State of New York. Regardless of any provision
in any other agreement, for purposes of the Code, New York shall be deemed to
be the Securities Intermediary's location, and the Collateral Account (as
well as the securities entitlements related thereto) shall be governed by the
laws of the State of New York.
Section 4.5 No Other Claims. Except for the claims and interest of the
Collateral Agent and of the Purchase Contract Agent and the Holders in the
Collateral Account, the Securities Intermediary does not know of any claim
to, or interest in, the Collateral Account or in any financial asset credited
thereto. If any person asserts any lien, encumbrance or adverse claim
(including any writ, garnishment, judgment, warrant of attachment, execution
or similar process) against the Collateral Account or in any financial asset
carried therein, the Securities Intermediary will promptly notify the
Collateral Agent and the Purchase Contract Agent.
Section 4.6 Investment and Release. All proceeds of financial assets
from time to time deposited in the Collateral Account shall be invested and
reinvested as provided in this Agreement. At all times prior to termination
of the Pledge, no property shall be released from the Collateral Account
except in accordance with this Agreement or upon written instructions of the
Collateral Agent.
Section 4.7 Statements and Confirmations. The Securities Intermediary
will promptly send copies of all statements, confirmations and other
correspondence concerning the Collateral Account and any financial assets
credited thereto simultaneously to each of the Purchase Contract Agent and
the Collateral Agent at their addresses for notices under this Agreement.
Section 4.8 Tax Allocations. All items of income, gain, expense and loss
recognized in the Collateral Account shall be reported by the Company to the
Internal Revenue Service and all state and local taxing authorities under the
names and taxpayer identification numbers of the Holders that are the
beneficial owners thereof.
8
Section 4.9 No Other Agreements. The Securities Intermediary has not
entered into and prior to the termination of the Pledge will not enter into
any agreement with any other Person relating to the Collateral Account or any
financial assets credited thereto, including, without limitation, any
agreement to comply with entitlement orders of any Person other than the
Collateral Agent.
Section 4.10 Powers Coupled With An Interest. The rights and powers
granted in this Section 4 to the Collateral Agent have been granted in order
to perfect its security interests in the Collateral Account, are powers
coupled with an interest and will be affected neither by the bankruptcy of
the Purchase Contract Agent or any Holder nor by the lapse of time. The
obligations of the Securities Intermediary under this Section 4 shall
continue in effect until the termination of the Pledge.
Section 5. Initial Deposit; Establishment of Treasury PIES and
Reestablishment of Corporate PIES.
Section 5.1 Initial Deposit of Shares of Preferred Stock. Prior to or
concurrently with the execution and delivery of this Agreement, the Purchase
Contract Agent, on behalf of the initial Holders of the Corporate PIES, shall
Transfer to the Securities Intermediary, for credit to the Collateral
Account, the Shares of Preferred Stock or security entitlements relating to
such Shares of Preferred Stock, and the Securities Intermediary shall
indicate by book entry that a securities entitlement to such Shares of
Preferred Stock has been credited to the Collateral Account.
Section 5.2 Establishment of Treasury PIES.
(a) At any time on or prior to the seventh Business Day immediately
preceding the Purchase Contract Settlement Date, a Holder of Corporate PIES
shall have the right to establish or reestablish Treasury PIES by
substitution of Treasury Securities or security entitlements thereto for the
Pledged Preferred Stock comprising a part of such Holder's Corporate PIES in
integral multiples of 20 Corporate PIES by:
(1) Transferring to the Securities Intermediary for credit to
the Collateral Account Treasury Securities or security entitlements thereto
having a Value equal to the liquidation preference of the Pledged Preferred
Stock to be released, accompanied by a notice, substantially in the form of
Exhibit C to the Purchase Contract Agreement, whereupon the Purchase Contract
Agent shall deliver to the Collateral Agent a notice, substantially in the
form of Exhibit A hereto, (A) stating that such Holder has Transferred
Treasury Securities or security entitlements thereto to the Securities
Intermediary for credit to the Collateral Account, (B) stating the Value of
the Treasury Securities or security entitlements thereto Transferred by such
Holder and (C) requesting that the Collateral Agent release from the Pledge
the Pledged Preferred Stock that are a component of such Corporate PIES; and
(2) delivering the related Corporate PIES to the Purchase
Contract Agent.
Upon receipt of such notice and confirmation that Treasury Securities or
security entitlements thereto have been credited to the Collateral Account as
described in such notice, the Collateral Agent shall instruct the Securities
Intermediary by a notice, substantially in the form of Exhibit B hereto, to
release such Pledged Preferred Stock from the Pledge by Transfer to the
Purchase Contract Agent for distribution to such Holder, free and clear of
any lien, pledge or security interest created hereby.
(b) Upon credit to the Collateral Account of Treasury Securities or
security entitlements thereto delivered by a Holder of Corporate PIES and
receipt of the related instruction from the Collateral Agent, the Securities
Intermediary shall release the Pledged Preferred Stock and shall promptly
transfer the same to the Purchase Contract Agent for distribution to such
Holder, free and clear of any lien, pledge or security interest created
hereby.
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Section 5.3 Reestablishment of Corporate PIES.
(a) At any time on or prior to the seventh Business Day immediately
preceding the Purchase Contract Settlement Date, a Holder of Treasury PIES
shall have the right to reestablish Corporate PIES by substitution of Shares
of Preferred Stock or security entitlements thereto for Pledged Treasury
Securities in integral multiples of 20 Treasury PIES by:
(1) Transferring to the Securities Intermediary for credit to
the Collateral Account Shares of Preferred Stock or security entitlements
thereto having a liquidation preference equal to the Value of the Pledged
Treasury Securities to be released, accompanied by a notice, substantially in
the form of Exhibit C to the Purchase Contract Agreement, whereupon the
Purchase Contract Agent shall deliver to the Collateral Agent a notice,
substantially in the form of Exhibit C hereto, stating that such Holder has
Transferred Shares of Preferred Stock or security entitlements thereto to the
Securities Intermediary for credit to the Collateral Account and requesting
that the Collateral Agent release from the Pledge the Pledged Treasury
Securities related to such Treasury PIES; and
(2) delivering the related Treasury PIES to the Purchase
Contract Agent.
Upon receipt of such notice and confirmation that Shares of Preferred Stock
or security entitlements thereto have been credited to the Collateral Account
as described in such notice, the Collateral Agent shall instruct the
Securities Intermediary by a notice in the form provided in Exhibit D to
release such Pledged Treasury Securities from the Pledge by Transfer to the
Purchase Contract Agent for distribution to such Holder.
(b) Upon credit to the Collateral Account of Shares of Preferred
Stock or security entitlements thereto and receipt of the related instruction
from the Collateral Agent, the Securities Intermediary shall release the
applicable Pledged Treasury Securities and shall promptly Transfer the same
to the Purchase Contract Agent for distribution to such Holder, free and
clear of any lien, pledge or security interest created hereby.
Section 5.4 Termination Event.
(a) Upon receipt by the Collateral Agent of written notice from the
Company or the Purchase Contract Agent that a Termination Event has occurred,
the Collateral Agent shall release all Collateral from the Pledge and shall
promptly Transfer:
(1) any Pledged Preferred Stock; and
(2) any Pledged Treasury Securities
to the Purchase Contract Agent for the benefit of the Holders, for
distribution to such Holders in accordance with their respective interests,
free and clear of any lien, pledge or security interest or other interest
created hereby.
(b) If such Termination Event shall result from the Company's
becoming a debtor under the Bankruptcy Code, and if the Collateral Agent
shall for any reason fail promptly to effectuate the release and Transfer of
all Pledged Preferred Stock or the Pledged Treasury Securities, as the case
may be, as provided by this Section 5.4, the Purchase Contract Agent shall:
(1) use its best efforts to obtain an opinion of a nationally
recognized law firm
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reasonably acceptable to the Collateral Agent to the effect that, as a result
of the Company's being the debtor in such a bankruptcy case, the Collateral
Agent will not be prohibited from releasing or Transferring the Collateral as
provided in this Section 5.4, and shall deliver such opinion to the
Collateral Agent within ten days after the occurrence of such Termination
Event, and if (A) the Purchase Contract Agent shall be unable to obtain such
opinion within ten days after the occurrence of such Termination Event or (B)
the Collateral Agent shall continue, after delivery of such opinion, to
refuse to effectuate the release and Transfer of all Pledged Preferred Stock,
all the Pledged Treasury Securities or the Proceeds of any of the foregoing,
as the case may be, as provided in this Section 5.4, then the Purchase
Contract Agent shall within fifteen days after the occurrence of such
Termination Event commence an action or proceeding in the court having
jurisdiction of the Company's case under the Bankruptcy Code seeking an order
requiring the Collateral Agent to effectuate the release and transfer of all
Pledged Preferred Stock or all the Pledged Treasury Securities, as the case
may be, as provided by this Section 5.4; or
(2) commence an action or proceeding like that described in
clause 5.4(b)(1)(B) hereof within ten days after the occurrence of such
Termination Event.
Section 5.5 Cash Settlement.
(a) Upon receipt by the Collateral Agent of (1) a notice from the
Purchase Contract Agent promptly after the receipt by the Purchase Contract
Agent of a notice that a Holder of a Corporate PIES or Treasury PIES has
elected, in accordance with the procedures specified in Section 5.4(a)(i) or
(d)(i) of the Purchase Contract Agreement, respectively, to settle its
Purchase Contract with cash and (2) payment by such Holder by deposit in the
Collateral Account on or prior to 11:00 a.m., New York City time, on the
fifth Business Day immediately preceding the Purchase Contract Settlement
Date, in the case of Corporate PIES, and the Business Day immediately
preceding the Purchase Contract Settlement Date, in the case of the Treasury
PIES, of the Purchase Price in lawful money of the United States by certified
or cashier's check or wire transfer of immediately available funds payable to
or upon the order of the Securities Intermediary, then the Collateral Agent
shall (i) instruct the Securities Intermediary promptly to invest any such
Cash in Permitted Investments and (ii) release from the Pledge (1) Pledged
Preferred Stock in the case of a Holder of Corporate PIES, or (2) Pledged
Treasury Securities in the case of a Holder of Treasury PIES with a
liquidation or principal amount equal to the product of (x) the Stated Amount
times (y) the number of such Purchase Contracts as to which such Holders have
elected to effect a cash settlement pursuant to this Section 5.5(a) and shall
instruct the Securities Intermediary to Transfer all such Pledged Preferred
Stock or Pledged Treasury Securities, as the case may be, to the Purchase
Contract Agent for the benefit of such Holders, in each case free and clear
of the Pledge created hereby, for distribution to such Holders in accordance
with their respective interests. Upon receipt of the proceeds upon the
maturity of the Permitted Investments on the Purchase Contract Settlement
Date, the Collateral Agent shall (A instruct the Securities Intermediary to
pay the portion of such proceeds and deliver any certified or cashier's
checks received, in an aggregate amount equal to the Purchase Price, to the
Company on the Purchase Contract Settlement Date, and (B) instruct the
Securities Intermediary to release any amounts in respect of the interest
earned from such Permitted Investments to the Purchase Contract Agent for
distribution to the relevant Holders in accordance with their respective
interests.
(b) If a Holder of a Corporate PIES notifies the Purchase Contract
Agent as provided in paragraph 5.4(a)(i) of the Purchase Contract Agreement
of its intention to pay the Purchase Price in cash, but fails to make such
payment as required by paragraph 5.4(a)(ii) of the Purchase Contract
Agreement, such Holder shall be deemed to have consented to the disposition
of the Pledged Preferred Stock of such Holder in accordance with paragraph
5.4(a)(iii) of the Purchase Contract Agreement.
(c) If a Holder of a Treasury PIES notifies the Purchase Contract
Agent as provided in paragraph 5.4(d)(i) of the Purchase Contract Agreement
of its intention to pay the Purchase Price in cash,
11
but fails to make such payment as required by paragraph 5.4(d)(ii) of the
Purchase Contract Agreement, such Holder shall be deemed to have elected to
pay the Purchase Price in accordance with paragraph 5.4(d)(iii) of the
Purchase Contract Agreement.
(d) Prior to 3:00 p.m., New York City time, on the fourth Business
Day immediately preceding the Purchase Contract Settlement Date, the
Securities Intermediary shall deliver to the Purchase Contract Agent a
notice, substantially in the form of Exhibit E hereto, stating (i) the amount
of cash that it has received with respect to the Cash Settlement of Corporate
PIES and (ii) the amount of cash that it has received with respect to the
Cash Settlement of Treasury PIES.
Section 5.6 Early Settlement. Upon written notice to the Collateral
Agent by the Purchase Contract Agent that one or more Holders of Securities
have elected to effect Early Settlement of their respective obligations under
the Purchase Contracts forming a part of such Securities in accordance with
the terms of the Purchase Contracts and the Purchase Contract Agreement
(setting forth the number of such Purchase Contracts as to which such Holders
have elected to effect Early Settlement), and that the Purchase Contract
Agent has received from such Holders, and paid to the Company as confirmed in
writing by the Company, the related Early Settlement Amounts pursuant to the
terms of the Purchase Contracts and the Purchase Contract Agreement and that
all conditions to such Early Settlement have been satisfied, then the
Collateral Agent shall release from the Pledge, upon three Business Days'
written notice to the Collateral Agent, (a) Pledged Preferred Stock, in the
case of a Holder of Corporate PIES, or (b0 Pledged Treasury Securities, in
the case of a Holder of Treasury PIES, with a Value equal to the product of
(i) the Stated Amount times (ii) the number of Purchase Contracts as to which
such Holders have elected to effect Early Settlement and shall instruct the
Securities Intermediary to Transfer all such Pledged Preferred Stock or
Pledged Treasury Securities, as the case may be, to the Purchase Contract
Agent for the benefit of such Holders, in each case free and clear of the
Pledge created hereby, for distribution to such Holders in accordance with
their respective interests.
Section 5.7 Application of Proceeds Settlement.
(a) If a Holder of Corporate PIES has not elected to make an
effective Cash Settlement by notifying the Purchase Contract Agent in the
manner provided for in Section 5.4(a)(i) in the Purchase Contract Agreement,
or has given such notice but failed to deliver the required cash prior to
11:00 a.m., New York City time, on the fifth Business Day immediately
preceding the Purchase Contract Settlement Date, such Holder shall be deemed
to have elected to pay for the shares of Common Stock to be issued under such
Purchase Contract(s) from the Proceeds of the related Pledged Preferred
Stock. In such event, the Collateral Agent shall instruct the Securities
Intermediary to Transfer the related Pledged Preferred Stock to the
Remarketing Agent for remarketing. Upon receiving such Pledged Preferred
Stock, the Remarketing Agent, pursuant to the terms of the Remarketing
Agreement, will use its reasonable efforts to remarket such Pledged Preferred
Stock on such date at a price of 100.50% of the aggregate liquidation
preference of such Pledged Preferred Stock. The Remarketing Agent will
deposit in the Collateral Account the portion of the Proceeds of such
remarketing equal to 100% the aggregate liquidation preference of the
remarketed Pledged Preferred Stock and, pursuant to the Remarketing
Agreement, shall retain the portion of the Proceeds equal to 0.50% of the
aggregate liquidation preference of the remarketed Pledged Preferred Stock.
On the Purchase Contract Settlement Date, upon three Business Days' written
notice to the Collateral Agent the Collateral Agent shall instruct the
Securities Intermediary to apply a portion of the Proceeds from such
remarketing equal to the aggregate liquidation preference of such Pledged
Preferred Stock to satisfy in full the obligations of such Holders of
Corporate PIES to pay the Purchase Price to purchase the Common Stock under
the related Purchase Contracts. The balance of the Proceeds from such
remarketing on deposit in the Collateral Account shall be transferred to the
Purchase Contract Agent for distribution to the Holders in accordance with
their respective interests. If the Remarketing Agent advises the Collateral
Agent in writing that there has been a Failed Remarketing,
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thus resulting in an event of default under the Purchase Contract Agreement
and hereunder, the Collateral Agent, for the benefit of the Company shall, at
the written direction of the Company, dispose of the Pledged Preferred Stock
in accordance with applicable law and satisfy in full, from such disposition,
such Holders' obligations to pay the Purchase Price for the Common Stock.
(b) If a Holder of Treasury PIES has not elected to make an
effective cash settlement by notifying the Purchase Contract Agent in the
manner provided for in Section 5.4(d)(i) of the Purchase Contract Agreement,
or has given such notice but failed to make such payment in the manner
required by Section 5.4(d)(ii) of the Purchase Contract Agreement, such
Holder shall be deemed to have elected to pay for the shares of Common Stock
to be issued under such Purchase Contract(s) from the Proceeds of the related
Pledged Treasury Securities. Upon maturity of the Pledged Treasury
Securities, the Securities Intermediary, at the written direction of the
Collateral Agent, shall invest the Cash Proceeds of the maturing Pledged
Treasury Securities in Permitted Investments. Without receiving any
instruction from any such Holder of Treasury PIES, the Collateral Agent shall
apply the Proceeds of the related Pledged Treasury Securities to the
settlement of such Purchase Contracts on the Purchase Contract Settlement
Date. In the event the sum of the Proceeds from the related Pledged Treasury
Securities and the investment earnings from the investment in Permitted
Investments is in excess of the aggregate Purchase Price of the Purchase
Contracts being settled thereby, the Collateral Agent shall instruct the
Securities Intermediary to distribute such excess, when received, to the
Purchase Contract Agent for the benefit of such Holders for distribution to
such Holders in accordance with their respective interests.
Section 6. Voting Rights-Pledged Preferred Stock. The Purchase Contract Agent
will only exercise any voting rights upon written direction and indemnity of
holders, or may refrain from exercising, any and all voting and other
consensual rights pertaining to the Pledged Preferred Stock or any part
thereof for any purpose not inconsistent with the terms of this Agreement and
in accordance with the terms of the Purchase Contract Agreement; provided,
that the Purchase Contract Agent shall not exercise or, as the case may be,
shall not refrain from exercising such right if, in the judgment of the
Purchase Contract Agent, such action would impair or otherwise have a
material adverse effect on the value of all or any of the Pledged Preferred
Stock; and provided, further, that the Purchase Contract Agent shall give the
Company and the Collateral Agent at least five days' prior written notice of
the manner in which it intends to exercise any such right. Upon receipt of
any notices and other communications in respect of any Pledged Preferred
Stock, including notice of any meeting at which holders of the Shares of
Preferred Stock are entitled to vote or solicitation of consents, waivers or
proxies of holders of the Shares of Preferred Stock, the Collateral Agent
shall use reasonable efforts to send promptly to the Purchase Contract Agent
such notice or communication, and as soon as reasonably practicable after
receipt of a written request therefor from the Purchase Contract Agent,
execute and deliver to the Purchase Contract Agent such proxies and other
instruments in respect of such Pledged Preferred Stock (in form and substance
satisfactory to the Collateral Agent) as are prepared by the Purchase
Contract Agent with respect to the Pledged Preferred Stock.
Section 7. Rights and Remedies.
Section 7.1 Rights and Remedies of the Collateral Agent.
(a) In addition to the rights and remedies specified in Section 5.5
hereof or otherwise available at law or in equity, after an event of default
(as specified in Section 7.1(b) below) hereunder the Collateral Agent shall
have all of the rights and remedies with respect to the Collateral of a
secured party under the Code (whether or not the Code is in effect in the
jurisdiction where the rights and remedies are asserted) and the TRADES
Regulations and such additional rights and remedies to which a secured party
is entitled under the laws in effect in any jurisdiction where any rights and
remedies hereunder may be asserted. Without limiting the generality of the
foregoing, such remedies may include, to the extent
13
permitted by applicable law, (i) retention of the Pledged Preferred Stock in
full satisfaction of the Holders' obligations under the Purchase Contracts or
(ii) sale of the Pledged Preferred Stock in one or more public or private
sales.
(b) Without limiting any rights or powers otherwise granted by this
Agreement to the Collateral Agent, in the event the Collateral Agent is
unable to make payments to the Company on account of principal payments of
any Pledged Treasury Securities as provided in Section 3 hereof, in
satisfaction of the Obligations of the Holder of the Securities of which such
Pledged Treasury Securities is a part under the related Purchase Contracts,
the inability to make such payments shall constitute an event of default
hereunder and the Collateral Agent shall have and may exercise, with
reference to such Pledged Treasury Securities and such Obligations of such
Holder, any and all of the rights and remedies available to a secured party
under the Code and the TRADES Regulations after default by a debtor, and as
otherwise granted herein or under any other law.
(c) Without limiting any rights or powers otherwise granted by this
Agreement to the Collateral Agent, the Collateral Agent is hereby irrevocably
authorized to receive and collect all payments of (i) dividends on the
Pledged Preferred Stock and (ii) the principal amount of the Pledged Treasury
Securities, subject, in each case, to the provisions of Section 3 hereof, and
as otherwise granted herein.
(d) The Purchase Contract Agent and each Holder of Securities, in
the event such Holder becomes the Holder of a Treasury PIES, agrees that,
from time to time, upon the written request of the Collateral Agent, the
Purchase Contract Agent or such Holder shall execute and deliver such further
documents and do such other acts and things as the Collateral Agent, upon
notice by the Company, may reasonably request in order to maintain the
Pledge, and the perfection and priority thereof, and to confirm the rights of
the Collateral Agent hereunder. The Purchase Contract Agent shall have no
liability to any Holder for executing any documents or taking any such acts
requested by the Collateral Agent hereunder, except for liability for its own
negligent acts, its own negligent failure to act or its own willful
misconduct.
Section 7.2 Substitutions. Whenever a Holder has the right to substitute
Treasury Securities, Shares of Preferred Stock or security entitlements to
either of them for financial assets held in the Collateral Account, such
substitution shall not constitute a novation of the security interest created
hereby.
Section 8. Representations and Warranties; Covenants.
Section 8.1 Representations and Warranties. Each Holder from time to
time, acting through the Purchase Contract Agent as attorney-in-fact (it
being understood that the Purchase Contract Agent shall not be liable for any
representation or warranty made by or on behalf of a Holder), hereby
represents and warrants to the Collateral Agent (with respect to his interest
in the Collateral), which representations and warranties shall be deemed
repeated on each day a Holder Transfers Collateral that:
(a) such Holder has the power to grant a security interest in and
lien on the Collateral;
(b) such Holder is the sole beneficial owner of the Collateral and,
in the case of Collateral delivered in physical form, is the sole holder of
such Collateral and is the sole beneficial owner of, or has the right to
Transfer, the Collateral it Transfers to the Securities Intermediary for
credit to the Collateral Account, free and clear of any security interest,
lien, encumbrance, call, liability to pay money or other restriction other
than the security interest and lien granted under Section 2 hereof;
14
(c) upon the Transfer of the Collateral to the Securities
Intermediary for credit to the Collateral Account, the Collateral Agent, for
the benefit of the Company, will have a valid and perfected first priority
security interest therein (assuming that any central clearing operation or
any securities intermediary or other entity not within the control of the
Holder involved in the Transfer of the Collateral, including the Collateral
Agent and the Securities Intermediary, gives the notices and takes the action
required of it hereunder and under applicable law for perfection of that
interest and assuming the establishment and exercise of control pursuant to
Section 4 hereof); and
(d) the execution and performance by the Holder of its obligations
under this Agreement will not result in the creation of any security
interest, lien or other encumbrance on the Collateral other than the security
interest and lien granted under Section 2 hereof or violate any provision of
any existing law or regulation applicable to it or of any mortgage, charge,
pledge, indenture, contract or undertaking to which it is a party or which is
binding on it or any of its assets.
Section 8.2 Covenants. The Purchase Contract Agent and the Holders from
time to time, acting through the Purchase Contract Agent as their
attorney-in-fact (it being understood that the Purchase Contract Agent shall
not be liable for any covenant made by or on behalf of a Holder), hereby
covenant to the Collateral Agent that for so long as the Collateral remains
subject to the Pledge:
(a) neither the Purchase Contract Agent nor such Holders will
create or purport to create or allow to subsist any mortgage, charge, lien,
pledge or any other security interest whatsoever over the Collateral or any
part of it other than pursuant to this Agreement; and
(b) neither the Purchase Contract Agent nor such Holders will sell
or otherwise dispose (or attempt to dispose) of the Collateral or any part of
it except for the beneficial interest therein, subject to the Pledge
hereunder, transferred in connection with the Transfer of the Securities.
Section 9. The Collateral Agent and the Securities Intermediary. It is hereby
agreed as follows:
Section 9.1 Appointment, Powers and Immunities. The Collateral Agent
shall act as agent for the Company hereunder with such powers as are
specifically vested in the Collateral Agent by the terms of this Agreement,
together with such other powers as are reasonably incidental thereto. The
Collateral Agent: (a) shall have no duties or responsibilities except those
expressly set forth in this Agreement and no implied covenants or obligations
shall be inferred from this Agreement against the Collateral Agent, nor shall
the Collateral Agent be bound by the provisions of any agreement by any party
hereto beyond the specific terms hereof; (b) shall not be responsible for any
recitals contained in this Agreement, or in any certificate or other document
referred to or provided for in, or received by it under, this Agreement, the
Securities or the Purchase Contract Agreement, or for the value, validity,
effectiveness, genuineness, enforceability or sufficiency of this Agreement
(other than as against the Collateral Agent), the Securities or the Purchase
Contract Agreement or any other document referred to or provided for herein
or therein or for any failure by the Company or any other Person (except the
Collateral Agent) to perform any of its obligations hereunder or thereunder
or for the perfection, priority or, except as expressly required hereby,
maintenance of any security interest created hereunder; (c) shall not be
required to initiate or conduct any litigation or collection proceedings
hereunder (except pursuant to directions furnished under Section 9.2 hereof,
subject to Section 9.6 hereof); (d) shall not be responsible for any action
taken or omitted to be taken by it hereunder or under any other document or
instrument referred to or provided for herein or in connection herewith or
therewith, except for its own negligence or willful misconduct; and (e) shall
not be required to advise any party as to selling or retaining, or taking or
refraining from taking any action with respect to, any securities or other
property deposited hereunder. Subject to the foregoing, during the term of
this Agreement, the Collateral Agent shall take all reasonable action in
connection with the safekeeping and preservation of the Collateral hereunder.
15
No provision of this Agreement shall require the Collateral Agent to
expend or risk its own funds or otherwise incur any financial liability in
the performance of any of its duties hereunder. In no event shall the
Collateral Agent be liable for any amount in excess of the Value of the
Collateral. Notwithstanding the foregoing, each of the Collateral Agent and
the Securities Intermediary in its individual capacity hereby waives any
right of setoff, bankers lien, liens or perfection rights as securities
intermediary or any counterclaim with respect to any of the Collateral.
Section 9.2 Instructions of the Company. The Company shall have the
right, by one or more instruments in writing executed and delivered to the
Collateral Agent, to direct the time, method and place of conducting any
proceeding for the realization of any right or remedy available to the
Collateral Agent, or of exercising any power conferred on the Collateral
Agent, or to direct the taking or refraining from taking of any action
authorized by this Agreement; provided, however, that (i) such direction
shall not conflict with the provisions of any law or of this Agreement and
(ii) the Collateral Agent shall be adequately indemnified as provided herein.
Nothing in this Section 9.2 shall impair the right of the Collateral Agent in
its discretion to take any action or omit to take any action which it deems
proper and which is not inconsistent with such direction.
Section 9.3 Reliance by Collateral Agent and Securities Intermediary.
Each of the Securities Intermediary and the Collateral Agent shall be
entitled to rely upon any certification, order, judgment, opinion, notice or
other communication (including, without limitation, any thereof by telephone
or facsimile) believed by it to be genuine and correct and to have been
signed or sent by or on behalf of the proper Person or Persons (without being
required to determine the correctness of any fact stated therein) and upon
advice and statements of legal counsel and other experts selected by the
Collateral Agent and the Securities Intermediary. As to any matters not
expressly provided for by this Agreement, the Collateral Agent and the
Securities Intermediary shall in all cases be fully protected in acting, or
in refraining from acting, hereunder in accordance with instructions given by
the Company in accordance with this Agreement.
Section 9.4 Rights in Other Capacities. The Collateral Agent and the
Securities Intermediary and their affiliates may (without having to account
therefor to the Company) accept deposits from, lend money to, make their
investments in and generally engage in any kind of banking, trust or other
business with the Purchase Contract Agent, any other Person interested herein
and any Holder of Securities (and any of their respective subsidiaries or
affiliates) as if it were not acting as the Collateral Agent, and the
Collateral Agent, the Securities Intermediary and their affiliates may accept
fees and other consideration from the Purchase Contract Agent and any Holder
of Securities without having to account for the same to the Company; provided
that each of the Securities Intermediary and the Collateral Agent covenants
and agrees with the Company that it shall not accept, receive or permit there
to be created in favor of itself and shall take no affirmative action to
permit there to be created in favor of any other Person, any security
interest, lien or other encumbrance of any kind in or upon the Collateral
other than the lien created by the Pledge.
Section 9.5 Non-Reliance on Collateral Agent and Securities
Intermediary. Neither the Securities Intermediary nor the Collateral Agent
shall be required to keep itself informed as to the performance or observance
by the Purchase Contract Agent or any Holder of Securities of this Agreement,
the Purchase Contract Agreement, the Securities or any other document
referred to or provided for herein or therein or to inspect the properties or
books of the Purchase Contract Agent or any Holder of Securities. Neither the
Collateral Agent nor the Securities Intermediary shall have any duty or
responsibility to provide the Company with any credit or other information
concerning the affairs, financial condition or business of the Purchase
Contract Agent or any Holder of Securities (or any of their respective
affiliates) that may come into the possession of the Collateral Agent or the
Securities Intermediary or any of their respective
16
affiliates.
Section 9.6 Compensation and Indemnity. The Company agrees: (i) to pay
the Collateral Agent and the Securities Intermediary from time to time such
compensation as shall be agreed in writing between the Company and the
Collateral Agent or the Securities Intermediary, as the case may be, for all
services rendered by them hereunder and (ii) to indemnify the Collateral
Agent, the Securities Intermediary and the Purchase Contract Agent for, and
to hold each of them harmless from and against, any loss, liability or
reasonable out-of-pocket expense incurred without negligence, willful
misconduct or bad faith on its part, arising out of or in connection with the
acceptance or administration of its powers and duties under this Agreement,
including the reasonable out-of-pocket costs and expenses (including
reasonable fees and expenses of counsel) of defending itself against any
claim or liability in connection with the exercise or performance of such
powers and duties. The provisions of this Section shall survive the
termination of this Agreement.
Section 9.7 Failure to Act. In the event of any ambiguity in the
provisions of this Agreement or any dispute between or conflicting claims by
or among the parties hereto or any other Person with respect to any funds or
property deposited hereunder, the Collateral Agent and the Securities
Intermediary shall be entitled, after prompt notice to the Company and the
Purchase Contract Agent, at its sole option, to refuse to comply with any and
all claims, demands or instructions with respect to such property or funds so
long as such dispute or conflict shall continue, and the Collateral Agent and
the Securities Intermediary shall not be or become liable in any way to any
of the parties hereto for its failure or refusal to comply with such
conflicting claims, demands or instructions. The Collateral Agent and the
Securities Intermediary shall be entitled to refuse to act until either (i)
such conflicting or adverse claims or demands shall have been finally
determined by a court of competent jurisdiction or settled by agreement
between the conflicting parties as evidenced in a writing satisfactory to the
Collateral Agent or the Securities Intermediary or (ii) the Collateral Agent
or the Securities Intermediary shall have received security or an indemnity
satisfactory to it sufficient to save it harmless from and against any and
all loss, liability or reasonable out-of-pocket expense which it may incur by
reason of its acting. The Collateral Agent and the Securities Intermediary
may in addition elect to commence an interpleader action or seek other
judicial relief or orders as the Collateral Agent or the Securities
Intermediary may deem necessary. Notwithstanding anything contained herein to
the contrary, neither the Collateral Agent nor the Securities Intermediary
shall be required to take any action that is in its opinion contrary to law
or to the terms of this Agreement, or which would in its opinion subject it
or any of its officers, employees or directors to liability.
Section 9.8 Resignation of Collateral Agent and Securities Intermediary.
(a) Subject to the appointment and acceptance of a successor
Collateral Agent as provided below, (i) the Collateral Agent may resign at
any time by giving notice thereof to the Company and the Purchase Contract
Agent as attorney-in-fact for the Holders of Securities, (ii) the Collateral
Agent may be removed at any time by the Company and (iii) if the Collateral
Agent fails to perform any of its material obligations hereunder in any
material respect for a period of not less than 20 days after receiving
written notice of such failure by the Purchase Contract Agent and such
failure shall be continuing, the Collateral Agent may be removed by the
Purchase Contract Agent. The Purchase Contract Agent shall promptly notify
the Company of any removal of the Collateral Agent pursuant to clause (iii)
of the immediately preceding sentence. Upon any such resignation or removal,
the Company shall have the right to appoint a successor Collateral Agent. If
no successor Collateral Agent shall have been so appointed and shall have
accepted such appointment within 30 days after the retiring Collateral
Agent's giving of notice of resignation or such removal, then the retiring
Collateral Agent may petition any court of competent jurisdiction for the
appointment of a successor Collateral Agent. The Collateral Agent shall be a
bank which has an office in New York, New York with a combined capital and
surplus of at least $50,000,000
17
and shall not be the Purchase Contract Agent or any of its affiliates. Upon
the acceptance of any appointment as Collateral Agent hereunder by a
successor Collateral Agent, such successor Collateral Agent shall thereupon
succeed to and become vested with all the rights, powers, privileges and
duties of the retiring Collateral Agent, and the retiring Collateral Agent
shall take all appropriate action to transfer any money and property held by
it hereunder (including the Collateral) to such successor Collateral Agent.
The retiring Collateral Agent shall, upon such succession, be discharged from
its duties and obligations as Collateral Agent hereunder. After any retiring
Collateral Agent's resignation hereunder as Collateral Agent, the provisions
of this Section 9 shall continue in effect for its benefit in respect of any
actions taken or omitted to be taken by it while it was acting as the
Collateral Agent.
(b) Subject to the appointment and acceptance of a successor
Securities Intermediary as provided below, (i) the Securities Intermediary
may resign at any time by giving notice thereof to the Company and the
Purchase Contract Agent as attorney-in-fact for the Holders of Securities,
(ii) the Securities Intermediary may be removed at any time by the Company
and (iii) if the Securities Intermediary fails to perform any of its material
obligations hereunder in any material respect for a period of not less than
20 days after receiving written notice of such failure by the Purchase
Contract Agent and such failure shall be continuing, the Securities
Intermediary may be removed by the Purchase Contract Agent. The Purchase
Contract Agent shall promptly notify the Company of any removal of the
Securities Intermediary pursuant to clause (iii) of the immediately preceding
sentence. Upon any such resignation or removal, the Company shall have the
right to appoint a successor Securities Intermediary. If no successor
Securities Intermediary shall have been so appointed and shall have accepted
such appointment within 30 days after the retiring Securities Intermediary's
giving of notice of resignation or such removal, then the retiring Securities
Intermediary may petition any court of competent jurisdiction for the
appointment of a successor Securities Intermediary. The Securities
Intermediary shall be a bank which has an office in New York, New York with a
combined capital and surplus of at least $50,000,000 and shall not be the
Purchase Contract Agent or any of its affiliates. Upon the acceptance of any
appointment as Securities Intermediary hereunder by a successor Securities
Intermediary, such successor Securities Intermediary shall thereupon succeed
to and become vested with all the rights, powers, privileges and duties of
the retiring Securities Intermediary, and the retiring Securities
Intermediary shall take all appropriate action to transfer any money and
property held by it hereunder (including the Collateral) to such successor
Securities Intermediary. The retiring Securities Intermediary shall, upon
such succession, be discharged from its duties and obligations as Securities
Intermediary hereunder. After any retiring Securities Intermediary's
resignation hereunder as Securities Intermediary, the provisions of this
Section 9 shall continue in effect for its benefit in respect of any actions
taken or omitted to be taken by it while it was acting as the Securities
Intermediary.
Section 9.9 Right to Appoint Agent or Advisor. The Collateral Agent
shall have the right to appoint agents or advisors in connection with any of
its duties hereunder, and the Collateral Agent shall not be liable for any
action taken or omitted by, or in reliance upon the advice of, such agents or
advisors selected in good faith. The appointment of agents pursuant to this
Section 9.9 shall be subject to prior consent of the Company, which consent
shall not be unreasonably withheld.
Section 9.10 Survival. The provisions of this Section 9 shall survive
termination of this Agreement and the resignation or removal of the
Collateral Agent or the Securities Intermediary.
Section 9.11 Exculpation. Anything in this Agreement to the contrary
notwithstanding, in no event shall the Collateral Agent or the Securities
Intermediary or their officers, directors, employees or agents be liable
under this Agreement to any third party for indirect, special, punitive, or
consequential loss or damage of any kind whatsoever, including lost profits,
whether or not the likelihood of such loss or damage was known to the
Collateral Agent or the Securities Intermediary, or any of them, incurred
without any act or deed that is found to be attributable to gross negligence
or willful misconduct on the
18
part of the Collateral Agent or the Securities Intermediary.
Section 10. Amendment.
Section 10.1 Amendment Without Consent of Holders. Without the consent
of any Holders, the Company, the Collateral Agent, the Securities
Intermediary and the Purchase Contract Agent, at any time and from time to
time, may amend this Agreement, in form satisfactory to the Company, the
Collateral Agent, the Securities Intermediary and the Purchase Contract
Agent, for any of the following purposes:
(1) to evidence the succession of another Person to the Company,
and the assumption by any such successor of the covenants of the Company;
(2) to add to the covenants of the Company for the benefit of the
Holders, or to surrender any right or power herein conferred upon the
Company, so long as such covenants or such surrender do not adversely affect
the validity, perfection or priority of the Pledge created hereunder;
(3) to evidence and provide for the acceptance of appointment
hereunder by a successor Collateral Agent, Securities Intermediary or
Purchase Contract Agent; or
(4) to cure any ambiguity (or formal defect), to correct or
supplement any provisions herein which may be inconsistent with any other
such provisions herein, or to make any other provisions with respect to such
matters or questions arising under this Agreement, provided such action shall
not adversely affect the interests of the Holders.
Section 10.2 Amendment with Consent of Holders. With the consent of the
Holders of not less than a majority of the Purchase Contracts at the time
outstanding, by Act of said Holders delivered to the Company, the Purchase
Contract Agent, the Securities Intermediary or the Collateral Agent, as the
case may be, the Company, when duly authorized, the Purchase Contract Agent,
the Securities Intermediary and the Collateral Agent may amend this Agreement
for the purpose of modifying in any manner the provisions of this Agreement
or the rights of the Holders in respect of the Securities; provided, however,
that no such supplemental agreement shall, without the unanimous consent of
the Holders of each Outstanding Security adversely affected thereby,
(1) change the amount or type of Collateral underlying a Security
(except for the rights of holders of Corporate PIES to substitute the
Treasury Securities for the Pledged Preferred Stock or the rights of Holders
of Treasury PIES to substitute Shares of Preferred Stock for the Pledged
Treasury Securities), impair the right of the Holder of any Security to
receive distributions on the underlying Collateral or otherwise adversely
affect the Holder's rights in or to such Collateral; or
(2) otherwise effect any action that would require the consent of
the Holder of each Outstanding Security affected thereby pursuant to the
Purchase Contract Agreement if such action were effected by an agreement
supplemental thereto; or
(3) reduce the percentage of Purchase Contracts the consent of
whose Holders is required for any such amendment; provided that if any
amendment or proposal referred to above would adversely affect only the
Corporate PIES or only the Treasury PIES, then only the affected class of
Holder as of the record date for the Holders entitled to vote thereon will be
entitled to vote on such amendment or proposal, and such amendment or
proposal shall not be effective except with the consent of Holders of not
less than a majority of such class; provided that the unanimous consent of
the Holders of each outstanding Purchase Contract of such class affected
thereby shall be required to approve any amendment or proposal specified in
clauses (1) - (3) above.
19
It shall not be necessary for any Act of Holders under this Section to
approve the particular form of any proposed amendment, but it shall be
sufficient if such Act shall approve the substance thereof.
Section 10.3 Execution of Amendments. In executing any amendment
permitted by this Section, the Collateral Agent, the Securities Intermediary
and the Purchase Contract Agent shall be entitled to receive and (subject to
Section 7.1 of the Purchase Contract Agreement with respect to the Purchase
Contract Agent) shall be fully protected in relying upon, an Opinion of
Counsel stating that the execution of such amendment is authorized or
permitted by this Agreement and that all conditions precedent, if any, to the
execution and delivery of such amendment have been satisfied.
Section 10.4 Effect of Amendments. Upon the execution of any amendment
under this Section, this Agreement shall be modified in accordance therewith,
and such amendment shall form a part of this Agreement for all purposes; and
every Holder of Certificates theretofore or thereafter authenticated,
executed on behalf of the Holders and delivered under the Purchase Contract
Agreement shall be bound thereby.
Section 10.5 Reference to Amendments. Certificates authenticated,
executed on behalf of the Holders and delivered after the execution of any
amendment pursuant to this Section may, and shall if required by the
Collateral Agent or the Purchase Contract Agent, bear a notation in form
approved by the Purchase Contract Agent and the Collateral Agent as to any
matter provided for in such amendment. If the Company shall so determine, new
Security Certificates so modified as to conform, in the opinion of the
Collateral Agent, the Purchase Contract Agent and the Company, to any such
amendment may be prepared and executed by the Company and authenticated,
executed on behalf of the Holders and delivered by the Purchase Contract
Agent in accordance with the Purchase Contract Agreement in exchange for
Outstanding Security Certificates.
Section 11. Miscellaneous.
Section 11.1 No Waiver. No failure on the part of the Collateral Agent
or any of its agents to exercise, and no course of dealing with respect to,
and no delay in exercising, any right, power or remedy hereunder shall
operate as a waiver thereof; nor shall any single or partial exercise by the
Collateral Agent or any of its agents of any right, power or remedy hereunder
preclude any other or further exercise thereof or the exercise of any other
right, power or remedy. The remedies herein are cumulative and are not
exclusive of any remedies provided by law.
Section 11.2 Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. Without
limiting the foregoing, the above choice of law is expressly agreed to by the
Company, the Securities Intermediary, the Collateral Agent and the Holders
from time to time acting through the Purchase Contract Agent, as their
attorney-in-fact, in connection with the establishment and maintenance of the
Collateral Account. The Company, the Collateral Agent, the Securities
Intermediary and the Holders from time to time of the Securities, acting
through the Purchase Contract Agent as their attorney-in-fact, hereby submit
to the nonexclusive jurisdiction of the United States District Court for the
Southern District of New York and of any New York state court sitting in New
York City for the purposes of all legal proceedings arising out of or
relating to this Agreement or the transactions contemplated hereby. The
Company, the Collateral Agent, the Securities Intermediary and the Holders
from time to time of the Securities, acting through the Purchase Contract
Agent as their attorney-in-fact, irrevocably waive, to the fullest extent
permitted by applicable law, any objection which they may now or hereafter
have to the laying of the venue of any such proceeding brought in such a
court and any claim that any such proceeding brought in such a court has been
brought in an inconvenient forum.
20
Section 11.3 Notices. All notices, requests, consents and other
communications provided for herein (including, without limitation, any
modifications of, or waivers or consents under, this Agreement) shall be
given or made in writing (including, without limitation, by telecopy)
delivered to the intended recipient at the "Address for Notices" specified
below its name on the signature pages hereof or, as to any party, at such
other address as shall be designated by such party in a notice to the other
parties. Except as otherwise provided in this Agreement, all such
communications shall be deemed to have been duly given when transmitted by
telecopier or personally delivered or, in the case of a mailed notice, upon
receipt, in each case given or addressed as aforesaid.
Section 11.4 Successors and Assigns. This Agreement shall be binding
upon and inure to the benefit of the respective successors and assigns of the
Company, the Collateral Agent, the Securities Intermediary and the Purchase
Contract Agent, and the Holders from time to time of the Securities, by their
acceptance of the same, shall be deemed to have agreed to be bound by the
provisions hereof and to have ratified the agreements of, and the grant of
the Pledge hereunder by, the Purchase Contract Agent.
Section 11.5 Counterparts. This Agreement may be executed in any number
of counterparts, all of which taken together shall constitute one and the
same instrument, and any of the parties hereto may execute this Agreement by
signing any such counterpart.
Section 11.6 Severability. If any provision hereof is invalid and
unenforceable in any jurisdiction, then, to the fullest extent permitted by
law, (i) the other provisions hereof shall remain in full force and effect in
such jurisdiction and shall be liberally construed in order to carry out the
intentions of the parties hereto as nearly as may be possible and (ii) the
invalidity or unenforceability of any provision hereof in any jurisdiction
shall not affect the validity or enforceability of such provision in any
other jurisdiction.
Section 11.7 Expenses, etc. The Company agrees to reimburse the
Collateral Agent and the Securities Intermediary for: (a) all reasonable
out-of-pocket costs and expenses of the Collateral Agent and the Securities
Intermediary (including, without limitation, the reasonable fees and expenses
of counsel to the Collateral Agent and the Securities Intermediary), in
connection with (i) the negotiation, preparation, execution and delivery or
performance of this Agreement and (ii) any modification, supplement or waiver
of any of the terms of this Agreement; (b) all reasonable costs and expenses
of the Collateral Agent and the Securities Intermediary (including, without
limitation, reasonable fees and expenses of counsel) in connection with (i)
any enforcement or proceedings resulting or incurred in connection with
causing any Holder of Securities to satisfy its obligations under the
Purchase Contracts forming a part of the Securities and (ii) the enforcement
of this Section 11.7; and (c) all transfer, stamp, documentary or other
similar taxes, assessments or charges levied by any governmental or revenue
authority in respect of this Agreement or any other document referred to
herein and all costs, expenses, taxes, assessments and other charges incurred
in connection with any filing, registration, recording or perfection of any
security interest contemplated hereby.
Section 11.8 Security Interest Absolute. All rights of the Collateral
Agent and security interests hereunder, and all obligations of the Holders
from time to time hereunder, shall be absolute and unconditional irrespective
of:
(a) any lack of validity or enforceability of any provision of the
Purchase Contracts or the Securities or any other agreement or instrument
relating thereto;
(b) any change in the time, manner or place of payment of, or any
other term of, or any increase in the amount of, all or any of the
obligations of Holders of the Securities under the related
21
Purchase Contracts, or any other amendment or waiver of any term of, or any
consent to any departure from any requirement of, the Purchase Contract
Agreement or any Purchase Contract or any other agreement or instrument
relating thereto; or
(c) any other circumstance which might otherwise constitute a
defense available to, or discharge of, a borrower, a guarantor or a pledgor.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
WASHINGTON MUTUAL, Inc., [],
Washington corporation as Purchase Contract Agent and as an
attorney-in-fact of the Holders from
time to time of the Securities
By: By:
Name: Name:
Title: Title:
Address for Notices: Address for Notices:
0000 Xxxxx Xxxxxx
Xxxxxxx, XX 00000
Attention: Attention:
Telecopy: Telecopy:
[], [],
as Collateral Agent as Securities Intermediary
By: By:
Name: Name:
Title: Title:
Address for Notices: Address for Notices:
Attention: Attention:
Telecopy: Telecopy:
22
EXHIBIT A
INSTRUCTION
FROM PURCHASE CONTRACT AGENT
TO COLLATERAL AGENT
(Establishment of Treasury PIES)
[Collateral Agent]
Attention:
Telecopy:
Re: ________ PIES of Washington Mutual, Inc. (the "Company")
Please refer to the Pledge Agreement dated as of __________ (the "Pledge
Agreement"), among the Company, you, as Collateral Agent and as Securities
Intermediary, and the undersigned, as Purchase Contract Agent and as
attorney-in-fact for the holders of PIES from time to time. Capitalized terms
used herein but not defined shall have the meaning set forth in the Pledge
Agreement.
We hereby notify you in accordance with Section 5.2 of the Pledge
Agreement that the holder of securities named below (the "Holder") has
elected to substitute $__________ Value of Treasury Securities or security
entitlements thereto in exchange for an equal Value of Pledged Preferred
Stock and has delivered to the undersigned a notice stating that the Holder
has Transferred such Treasury Securities or security entitlements thereto to
the Securities Intermediary, for credit to the Collateral Account.
We hereby request that you instruct the Securities Intermediary, upon
confirmation that such Treasury Securities or security entitlements thereto
have been credited to the Collateral Account, to release to the undersigned
an equal Value of Pledged Preferred Stock in accordance with Section 5.2 of
the Pledge Agreement.
[Collateral Agent]
Date: _______________ By:______________________________
Name:
Title:
23
Please print name and address of Holder electing to substitute Treasury
Securities or security entitlements thereto for the Pledged Preferred Stock:
---------------------------------- ---------------------------------
Name Social Security or other Taxpayer
Identification Number, if any
Address:
----------------------------------
----------------------------------
----------------------------------
24
EXHIBIT B
INSTRUCTION
FROM COLLATERAL AGENT
TO SECURITIES INTERMEDIARY
(Establishment of Treasury PIES)
[Securities Intermediary]
Attention:
Telecopy:
Re: ________ PIES of Washington Mutual, Inc. (the "Company")
Securities Account No. [______] entitled "_______" (the "Collateral
Account")
Please refer to the Pledge Agreement, dated as of ___________ (the
"Pledge Agreement"), among the Company, [______________], as Purchase
Contract Agent and as attorney-in-fact for the holders of PIES from time to
time, and the undersigned, as Collateral Agent and Securities Intermediary.
Capitalized terms used herein but not defined shall have the meanings set
forth in the Pledge Agreement.
When you have confirmed that $__________ Value of Treasury Securities or
security entitlements thereto has been credited to the Collateral Account by
or for the benefit of _________, as Holder of PIES (the "Holder"), you are
hereby instructed to release from the Collateral Account an equal Value of
Shares of Preferred Stock or security entitlements thereto by Transfer to the
Purchase Contract Agent.
[Collateral Agent]
Dated:_______________ By:________________________________
Name:
Title:
25
Please print name and address of Holder:
---------------------------------- ---------------------------------
Name Social Security or other Taxpayer
Identification Number, if any
Address:
----------------------------------
----------------------------------
----------------------------------
26
EXHIBIT C
INSTRUCTION
FROM PURCHASE CONTRACT AGENT
TO COLLATERAL AGENT
(Reestablishment of Corporate PIES)
[Collateral Agent]
Attention:
Telecopy:
Re: ________ PIES of Washington Mutual, Inc. (the "Company")
Please refer to the Pledge Agreement, dated as of ____________ (the
"Pledge Agreement"), among the Company, you, as Collateral Agent and as
Securities Intermediary, and the undersigned, as Purchase Contract Agent and
as attorney-in-fact for the holders of PIES from time to time. Capitalized
terms used herein but not defined shall have the meanings set forth in the
Pledge Agreement.
We hereby notify you in accordance with Section 5.3(a) of the Pledge
Agreement that the holder of securities listed below (the "Holder") has
elected to substitute $__________ Value of Shares of Preferred Stock or
security entitlements thereto in exchange for $__________ Value of Pledged
Treasury Securities and has delivered to the undersigned a notice stating
that the Holder has Transferred such Shares of Preferred Stock or security
entitlements thereto to the Securities Intermediary, for credit to the
Collateral Account.
We hereby request that you instruct the Securities Intermediary, upon
confirmation that such Shares of Preferred Stock or security entitlements
thereto have been credited to the Collateral Account, to release to the
undersigned $__________ Value of Treasury Securities or security entitlements
thereto related to _____ Treasury PIES of such Holder in accordance with
Section 5.3(a) of the Pledge Agreement.
[Purchase Contract Agent]
Dated:_______________ By:________________________________
Name:
Title:
27
Please print name and address of Holder electing to substitute Pledged Preferred
Stock or security entitlements thereto for Pledged Treasury Securities:
---------------------------------- ---------------------------------
Name Social Security or other Taxpayer
Identification Number, if any
Address:
----------------------------------
----------------------------------
----------------------------------
28
EXHIBIT D
INSTRUCTION
FROM COLLATERAL AGENT
TO SECURITIES INTERMEDIARY
(Reestablishment of Corporate PIES)
[Securities Intermediary]
Attention:
Telecopy:
Re: ________ PIES of Washington Mutual, Inc. (the "Company")
Securities Account No. _____ entitled "[]" (the "Collateral Account")
Please refer to the Pledge Agreement, dated as of __________ (the
"Pledge Agreement"), among the Company, you, as Securities Intermediary,
[_______], as Purchase Contract Agent and as attorney-in-fact for the holders
of PIES from time to time, and the undersigned, as Collateral Agent.
Capitalized terms used herein but not defined shall have the meanings set
forth in the Pledge Agreement.
When you have confirmed that $_________ Value of Shares of Preferred
Stock or security entitlements thereto has been credited to the Collateral
Account by or for the benefit of _________, as Holder of PIES (the "Holder"),
you are hereby instructed to release from the Collateral Account $__________
Value of Treasury Securities or security entitlements thereto by Transfer to
the Purchase Contract Agent.
[Collateral Agent]
Date: _______________ By:______________________________
Name:
Title:
29
Please print name and address of Holder:
---------------------------------- ---------------------------------
Name Social Security or other Taxpayer
Identification Number, if any
Address:
----------------------------------
----------------------------------
----------------------------------
30
EXHIBIT E
NOTICE OF CASH SETTLEMENT FROM SECURITIES INTERMEDIARY
TO PURCHASE CONTRACT AGENT
(Cash Settlement Amounts)
[Purchase Contract Agent]
Telecopier
Attention:
Re: ________ PIES of Washington Mutual, Inc. (the "Company")
Please refer to the Pledge Agreement, dated as of _______ (the "Pledge
Agreement"), by and among you, the Company, and the undersigned, as
Securities Intermediary and Collateral Agent. Unless otherwise defined
herein, terms defined in the Pledge Agreement are used herein as defined
therein
In accordance with Section 5.5(d) of the Pledge Agreement, we hereby
notify you that as of 11:00 a.m., [(on the fifth Business Day immediately
preceding the Purchase Contract Settlement Date)], we have received (i)
$_____ in immediately available funds paid in an aggregate amount equal to
the Purchase Price to the Company on the Purchase Contract Settlement Date
with respect to __________ Corporate PIES and (ii) $_________ in immediately
available funds paid in an aggregate amount equal to the Purchase Price to
the Company on the Purchase Contract Settlement Date with respect to ______
Treasury PIES.
[Securities Intermediary]
Date: _______________ By:______________________________
Name:
Title:
31
