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Exhibit 4.16
XXXXXXX AND BROAD HOME CORPORATION,
THE BANK OF NEW YORK,
as Collateral Agent, Custodial Agent
and Securities Intermediary
AND
THE FIRST NATIONAL BANK OF CHICAGO,
as Purchase Contract Agent
FORM OF PLEDGE AGREEMENT
Dated as of _________, 1998
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TABLE OF CONTENTS
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Page
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RECITALS............................................................1
Section 1. Definitions.............................................3
Section 2. Pledge; Control and Perfection..........................8
Section 2.1. The Pledge......................................8
Section 2.2. Control and Perfection.........................10
Section 3. Distributions on Pledged Collateral....................12
Section 4. Substitution, Release, Repledge and Settlement of
Capital Securities.............................14
Section 4.1. Substitution for Capital Securities
and the Creation of Growth PRIDES..........14
Section 4.2. Substitution of Treasury Securities
and the Creation of Income PRIDES..........15
Section 4.3. Termination Event..............................16
Section 4.4. Cash Settlement................................17
Section 4.5. Early Settlement...............................19
Section 4.6. Application of Proceeds Settlement.............20
Section 5. Voting Rights -- Capital
Securities.......................................23
Section 6. Rights and Remedies; Distribution of the
Debentures; Tax Event Redemption.......................24
Section 6.1. Rights and Remedies of the Collateral
Agent......................................24
Section 6.2. Distribution of the Debentures; Tax
Event Redemption...........................25
Section 6.3. Substitutions..................................27
Section 7. Representations and Warranties;
Covenants........................................27
Section 7.1. Representations and Warranties.................27
Section 7.2. Covenants......................................28
Section 8. The Collateral Agent...................................29
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Section 8.1. Appointment, Powers and
Immunities.................................29
Section 8.2. Instructions of the Company....................30
Section 8.3. Reliance by Collateral Agent...................31
Section 8.4. Rights in Other Capacities.....................31
Section 8.5. Non-Reliance on Collateral Agent...............32
Section 8.6. Compensation and Indemnity.....................32
Section 8.7. Failure to Act.................................33
Section 8.8. Resignation of Collateral Agent................33
Section 8.9. Right to Appoint Agent or Advisor..............35
Section 8.10. Survival......................................35
Section 8.11. Exculpation...................................35
Section 9. Amendment..............................................35
Section 9.1. Amendment Without Consent
of Holders.................................35
Section 9.2. Amendment with Consent of Holders..............36
Section 9.3. Execution of Amendments........................37
Section 9.4. Effect of Amendments...........................37
Section 9.5. Reference to Amendments........................37
Section 10. Miscellaneous.........................................38
Section 10.1. No Waiver.....................................38
Section 10.2. Governing Law.................................38
Section 10.3. Notices.......................................39
Section 10.4. Successors and Assigns........................39
Section 10.5. Counterparts..................................39
Section 10.6. Severability..................................39
Section 10.7. Expenses, etc.................................40
Section 10.8. Security Interest Absolute....................40
EXHIBIT A INSTRUCTION TO COLLATERAL AGENT
EXHIBIT B INSTRUCTION TO PURCHASE CONTRACT AGENT
EXHIBIT C INSTRUCTION TO CUSTODIAL AGENT REGARDING REMARKETING
EXHIBIT D INSTRUCTION TO CUSTODIAL AGENT REGARDING WITHDRAWAL FROM REMARKETING
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FORM OF PLEDGE AGREEMENT
FORM OF PLEDGE AGREEMENT, dated as of __________, 1998 (this "Agreement"),
among Xxxxxxx and Broad Home Corporation, a Delaware corporation (the
"Company"), The Bank of New York, a New York banking corporation, not
individually but solely as collateral agent (in such capacity, together with its
successors in such capacity, the "Collateral Agent"), as custodial agent (in
such capacity, together with its successors in such capacity, the "Custodial
Agent") and as "securities intermediary" as defined in Section 8-102(a)(14) of
the Code (as defined herein) (in such capacity, together with its successors in
such capacity, the "Securities Intermediary"), and The First National Bank of
Chicago, not individually but solely as purchase contract agent and as
attorney-in-fact of the Holders (as defined in the Purchase Contract Agreement)
from time to time of the Securities (as hereinafter defined) (in such capacity,
together with its successors in such capacity, the "Purchase Contract Agent")
under the Purchase Contract Agreement (as herein after defined).
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 Agree ment"), pursuant
to which there may be issued up to 17,250,000 FELINE PRIDES of the Company,
having a stated amount of $10 (the "Stated Amount") per FELINE PRIDES.
The FELINE PRIDES will initially consist of (A) units (referred to as
"Income PRIDES") with a face amount, per Income PRIDES, equal to the Stated
Amount and (B) units (referred to as "Growth PRIDES" and, together with the
Income PRIDES, the "Securities") with a face amount, per Growth PRIDES, equal to
the Stated Amount. Each Income PRIDES will initially be comprised of (a) a stock
purchase contract (the "Purchase Contract") under which the holder will
purchase from the Company on 16, 2001 (the "Purchase Contract Settle ment
Date"), for an amount of cash equal to the Stated Amount, a number of newly
issued shares of common stock, $1 par value per share (the "Common Stock"), of
the Company equal to the Settlement Rate (as defined below)
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and (b) either beneficial ownership of a Capital Security (as defined below) or
upon the occurrence of a Tax Event Redemption the Applicable Ownership Interest
of the Treasury Portfolio. Each Growth PRIDES will initially be comprised of (a)
a Purchase Contract under which (i) the holder will purchase from the Company on
the Purchase Contract Settlement Date, for an amount in cash equal to the Stated
Amount, a number of newly issued shares of Common Stock of the Company, equal to
the Settlement Rate, and (ii) the Company will pay the Holder Contract
Adjustment Payments, if any, at the rate of ___% of the Stated Amount per annum,
and (b) a 1/100 undivided beneficial interest in a zero-coupon U.S. Treasury
Security (CUSIP No. _______) having a principal amount equal to $1,000 and
maturing on _________ 15, 2001 (the "Treasury Securities").
Pursuant to the terms of the Declaration (as defined below), KBHC
Financing I, a statutory business trust formed under the laws of the State of
Delaware (the "Trust") will issue _________ ___% Capital Securities (the
"Capital Securities") having a stated liquidation value equal to the Stated
Amount.
Pursuant to the terms of the Purchase Contract Agreement and the Purchase
Contracts, the Holders, from time to time, 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 hereby of the Capital Securities, any
Applicable Ownership Interest in the Treasury Portfolio and any Treasury
Securities delivered in exchange there for to secure each Holder's obligations
under the related Purchase Contract, as provided herein and subject to the terms
hereof. Upon such pledge, the Capital Securities will be beneficially owned by
the Holders but will be owned of record by the Purchase Contract Agent subject
to the Pledge hereunder.
Accordingly, the Company, the Collateral Agent, the Securities
Intermediary, the Custodial Agent 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:
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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 or other subdivision;
(c) the following terms have the meanings assigned to them in the
Purchase Contract Agreement: (i) Act, (ii) Agent, (iii) Board Resolution,
(iv) Cash Settlement, (v) Certificate, (vi) Contract Adjustment Payments,
(vii) Debentures, (viii) Early Settlement, (ix) Early Settlement Amount,
(x) Early Settlement Date, (xi) Failed Remarketing, (xii) Holder, (xiii)
Opinion of Counsel, (xiv) Outstanding Securities, (xv) Remarketing Agent,
(xvi) Remarketing Agreement, (xvii) Settlement Rate, and (xviii)
Termination Event; and
(d) the following terms have the meanings as signed to them in the
Declaration: (i) Applicable Ownership Interest (ii) Applicable Principal
Amount, (iii) Institutional Trustee, (iv) Investment Company Event, (v)
Primary Treasury Dealer, (vi) Quotation Agent, (vii) Redemption Amount,
(viii) Redemption Price, (ix) Tax Event, (x) Tax Event Redemption, (xi)
Tax Event Redemption Date, (xii) Treasury Portfolio, (xiii) Treasury
Portfolio Purchase Price.
"Agreement" means this instrument as originally executed or as it may from
time to time be supplemented or amended by one or more agreements supplemental
hereto entered into pursuant to the applicable provisions hereof.
"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.
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"Business Day" means any day other than a Saturday, a Sunday or any other
day on which banking institutions in The City of New York (in the State of New
York) are permitted or required by any applicable law to close.
"Capital Securities" has the meaning specified in the Recitals.
"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" has the meaning specified in Section 6.1 hereof.
"Collateral" has the meaning specified in Section 2.1 hereof.
"Collateral Account" means the securities account (number ) maintained at
The Bank of New York in the name "The First National Bank of Chicago, as
Purchase Contract Agent on behalf of the holders of certain securities of KBHC
Financing I, Collateral Account subject to the security interest of The Bank of
New York, as Collateral Agent, for the benefit of Xxxxxxx and Broad Home
Corporation, as pledgee" and any successor account.
"Collateral Agent" has the meaning specified in the first paragraph of
this instrument.
"Common Stock" has the meaning specified in the Recitals.
"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.
"Custodial Agent" has the meaning specified in the Recitals.
"Debenture Trustee" means The First National Bank of Chicago, as trustee
under the Indenture until a successor is appointed thereunder, and thereafter
means such successor trustee.
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"Declaration" means the Amended and Restated Declaration of Trust, dated
as of ___________, 1998, among the Company as sponsor, the trustees named
therein and the holders from time to time of undivided beneficial interests in
the assets of the Trust.
"Intermediary" means any entity that in the ordinary course of its
business maintains securities accounts for others and is acting in that
capacity.
"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 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 US $200.0 million at the time of
deposit; (iii) investments with an original maturity of 365 days or less of any
Person that is fully and unconditionally guaranteed by a bank referred to in
clause (ii); (iv) 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 (v) 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 individual, corporation, limited liability company,
partnership, joint venture, association, joint-stock company, trust,
unincorporated organization or government or any agency or political subdivision
thereof.
"Pledge" has the meaning specified in Section 2.1 hereof.
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"Pledged Capital Securities" has the meaning specified in Section 2.1
hereof.
"Pledged Treasury Securities" has the meaning specified in Section 2.1
hereof.
"Proceeds" means all interest, dividends, cash, instruments, securities,
financial assets (as defined in ss. 8-102(a)(9) of the Code) and other property
from time to time received, receivable or otherwise distributed upon the sale,
exchange, collection or disposition of the Collateral or any proceeds thereof.
"Purchase Contract" has the meaning specified in the Recitals.
"Purchase Contract Agent" has the meaning specified in the first paragraph
of this Agreement.
"Purchase Contract Agreement" has the meaning specified in the Recitals.
"Purchase Contract Settlement Date" has the meaning specified in the
Recitals.
"Remarketing Underwriting Agreement" means the Remarketing Underwriting
Agreement attached as Exhibit A to the Remarketing Agreement.
"Securities" has the meaning specified in the Recitals.
"Securities Intermediary" has the meaning specified in the first paragraph
of this Agreement.
"Security Entitlement" has the meaning set forth in Section 8-102(a)(17)
of the Code.
"Separate Capital Securities" means any Capital Securities that are not
Pledged Capital Securities.
"Stated Amount" has the meaning specified in the Recitals.
"TRADES" means the Treasury/Reserve Automated Debt Entry System maintained
by the Federal Reserve Bank of New York pursuant to the TRADES Regulations.
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"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, with respect to the Collateral and in accordance with
the instructions of the Collateral Agent, the Purchase Contract Agent or the
Holder, as applicable:
(i) in the case of Collateral consisting of securities which cannot be
delivered by book-entry or which the parties agree are to be
delivered in physical form, delivery in appropriate physical form to
the recipient accompanied by any duly executed instruments of
transfer, assignments in blank, transfer tax stamps and any other
documents necessary to constitute a legally valid transfer to the
recipient;
(ii) in the case of Collateral consisting of securities maintained in
book-entry form by causing a "securities intermediary" (as defined
in Section 8-102(a)(14) of the Code) to (i) credit a "security
entitlement" (as defined in Section 8-102(a)(17) of the Code) with
respect to such securities to a "securities account" (as defined in
Section 8-501(a) of the Code) maintained by or on behalf of the
recipient and (ii) to issue a confirmation to the recipient with
respect to such credit. In the case of Collateral to be delivered to
the Collateral Agent, the Securities Intermediary shall be the
Securities Intermediary and the securities account shall be the
Collateral Account.
"Treasury Security" has the meaning specified in the Recitals.
"Trust" has the meaning specified in the Recitals.
"Value" with respect to any item of Collateral on any date means, as to
(i) a Capital Security, the Stated Amount, (ii) Cash, the face amount thereof
and (iii)
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Treasury Securities, the aggregate principal amount thereof at maturity.
Section 2. Pledge; Control and Perfection.
Section 2.1. The Pledge. The Holders from time to time acting through the
Purchase Contract Agent, as their attorney-in-fact, and the Purchase Contract
Agent, as such attorney-in-fact, hereby pledge and grant to the Collateral
Agent, for the benefit of the Company, as collateral security for the
performance when due by such Holders of their respective obligations under the
related Purchase Contracts, a security interest in all of the right, title and
interest of the Purchase Contract Agent and such Holders (a) in the Capital
Securities and Treasury Securities constituting a part of the Securities and
any Treasury Securities delivered in exchange for any Capital Securities, and
any Capital Securities delivered in exchange for any Treasury Securities, in
accordance with Section 4 hereof, in each case that have been Transferred to or
received by the Collateral Agent and not released by the Collateral Agent to
such Holders under the provisions of this Agreement; (b) in payments made by
Holders pursuant to Section 4.4; (c) in the Collateral Account and all
securities, financial assets, Cash and other property credited thereto and all
Security Entitlements related thereto; (d) in any Debentures delivered to the
Collateral Agent upon the occurrence of an Investment Company Event or a
liquidation of the Trust as provided in Section 6.2; (e) in the Treasury
Portfolio purchased on behalf of the Holders of Income PRIDES by the Collateral
Agent upon the occurrence of a Tax Event Redemption as provided in Section 6.2
and (f) all Proceeds of the foregoing (all of the foregoing, collectively, the
"Collateral"). Prior to or concurrently with the execution and delivery of this
Agreement, the Purchase Contract Agent, on behalf of the initial Holders of the
Securities, shall cause the Capital Securities comprising a part of the Income
PRIDES, and the Treasury Securities comprising a part of the Growth PRIDES, to
be Transferred to the Collateral Agent for the benefit of the Company. Such
Capital Securities shall be Transferred by physically delivering such
Securities to the Securities Intermediary indorsed in blank and causing the
Securities Intermediary to credit the Collateral Account with such Securities
and sending the Collateral Agent a confirmation of the deposit of such
Securities. In the
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event a Holder of Income PRIDES so elects, such Holder may Transfer Treasury
Securities to the Collateral Agent for the benefit of the Company in exchange
for the re lease by the Collateral Agent on behalf of the Company of Capital
Securities or the appropriate Applicable Owner ship Interest of the Treasury
Portfolio, as the case may be, with an aggregate stated liquidation amount equal
to the aggregate principal amount of the Treasury Securities so Transferred, in
the case of Capital Securities, or with an appropriate Applicable Ownership
Interest (as specified in clause (A) of the definition of such term) of the
Treasury Portfolio equal to the aggregate principal amount of the Treasury
Securities so transferred, in the event that a Tax Event Redemption has
occurred, to the Purchase Contract Agent on behalf of such Holder. Treasury
Securities and the Treasury Portfolio, as applicable, shall be Transferred to
the Collateral Account maintained by the Collateral Agent at the Securities
Intermediary by book-entry transfer to the Collateral Account in accordance with
the TRADES Regulations and other applicable law and by the notation by the
Securities Intermediary on its books that a Security Entitle ment with respect
to such Treasury Securities or Treasury Portfolio, has been credited to the
Collateral Account. For purposes of perfecting the Pledge under applicable law,
including, to the extent applicable, the TRADES Regulations or the Uniform
Commercial Code as adopted and in effect in any applicable jurisdiction, the
Collateral Agent shall be the agent of the Company as provided herein. The
pledge provided in this Section 2.1 is herein referred to as the "Pledge" and
the Capital Securities (or the Debentures that are delivered pursuant to
Section 6.2 hereof) or Treasury Securities subject to the Pledge, excluding any
Capital Securities (or the Debentures that are delivered pursuant to Section
6.2 hereof) or Treasury Securities released from the Pledge as provided in
Section 4 hereof, are hereinafter referred to as "Pledged Capital Securities" or
the "Pledged Treasury Securities," respectively. Subject to the Pledge and the
provisions of Section 2.2 hereof, the Holders from time to time shall have full
beneficial ownership of the Collateral. Whenever directed by the Collateral
Agent acting on behalf of the Company, the Securities Intermediary shall have
the right to reregister the Capital Securities or any other Securities held in
physical form in its name.
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Except as may be required in order to release Capital Securities in
connection with a Holder's election to convert its investment from an Income
PRIDES to a Growth PRIDES, or except as otherwise required to release Securities
as specified herein, neither the Collateral Agent nor the Securities
Intermediary shall relinquish physical possession of any certificate evidencing
a Capital Security prior to the termination of this Agreement. If it becomes
necessary for the Securities Intermediary to relinquish physical possession of a
certificate in order to release a portion of the Capital Securities evidenced
thereby from the Pledge, the Securities Intermediary shall use its best efforts
to obtain physical possession of a replacement certificate evidencing any
Capital Securities remaining subject to the Pledge hereunder registered to it or
endorsed in blank within fifteen days of the date it relinquished possession.
The Securities Intermediary shall promptly notify the Company and the Collateral
Agent of the Securities Intermediary's failure to obtain possession of any such
replacement certificate as required hereby.
Section 2.2. Control and Perfection. (a) In connection with the Pledge
granted in Section 2.1, and subject to the other provisions of this Agreement,
the Holders from time to time acting through the Purchase Contract Agent, as
their attorney-in-fact, hereby authorize and direct the Securities Intermediary
(without the necessity of obtaining the further consent of the Purchase
Contract Agent or any of the Holders), and the Securities Intermediary agrees,
to comply with and follow any instructions and entitlement orders (as defined in
Section 8-102(a)(8) of the Code) that the Collateral Agent on behalf of the
Company may give in writing with respect to the Collateral Account, the
Collateral credited thereto and any security entitlements with respect to any
thereof. Such instructions and entitlement orders may, without limitation,
direct the Securities Intermediary to transfer, redeem, sell, liquidate,
assign, deliver or otherwise dispose of the Capital Securities, the Treasury
Securities, the Treasury Portfolio, and any Security Entitlements with respect
thereto and to pay and deliver any income, proceeds or other funds derived
therefrom to the Company. The Holders from time to time acting through the
Purchase Contract Agent hereby further authorize and direct the Collateral
Agent, as Agent of the Company, to itself issue instructions and entitlement
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orders, and to otherwise take action, with respect to the Collateral Account,
the Collateral credited thereto and any security entitlements with respect
thereto, pursuant to the terms and provisions hereof, all without the necessity
of obtaining the further consent of the Purchase Contract Agent or any of the
Holders. The Collateral Agent shall be the Agent of the Company and shall act
as directed in writing by the Company. Without limiting the generality of the
foregoing, the Collateral Agent shall issue entitlement orders to the Securities
Intermediary when and as directed by the Company.
(b) The Securities Intermediary hereby confirms and agrees that: (i) all
securities or other property under lying 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 Collateral 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, the Collateral Agent, the
Company or any Holder, payable to the order of, or specially indorsed to, the
Purchase Contract Agent, the Collateral Agent, the Company or any Holder except
to the extent the fore going have been specially indorsed to the Securities
Intermediary or in blank; (ii) all property delivered to the Securities
Intermediary pursuant to this Pledge Agreement (including, without limitation,
any Capital Securities, the Treasury Portfolio or Treasury Securities) will be
promptly credited to the Collateral Account; (iii) the Collateral Account is an
account to which financial assets are or may be credited, and the Securities
Intermediary shall, subject to the terms of this Agreement, treat the Purchase
Contract Agent as entitled to exercise the rights of any financial asset
credited to the Collateral Account; (iv) the Securities Intermediary has not
entered into, and until the termination of the this Agreement will not enter
into, any agreement with any other person relating to the Collateral Account
and/or any financial assets credited thereto pursuant to which it has agreed to
comply with entitle ment orders (as defined in Section 8-102(a)(8) of the Code)
of such other person; and (v) the Securities Intermediary has not entered into,
and until the termination of this Agreement will not enter into, any agreement
with the Company, the Collateral Agent or the Purchase Con-
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tract Agent purporting to limit or condition the obligation of the Securities
Intermediary to comply with entitlement orders as set forth in this Section 2.2
hereof.
(c) The Securities Intermediary hereby agrees that 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"
within the meaning of Section 8-102(a)(9) of the Code.
(d) In the event of any conflict between this Agreement (or any portion
thereof) and any other agreement now existing or hereafter entered into, the
terms of this Agreement shall prevail.
(e) The Purchase Contract Agent hereby irrevocably constitutes and
appoints the Collateral Agent and the Company, with full power of substitution,
as the Purchase Contract Agent's attorney-in-fact to take on behalf of, and in
the name, place and stead of the Purchase Contract Agent and the Holders, any
action necessary or desirable to perfect and to keep perfected the security
interest in the Collateral referred to in Section 2.1. The grant of such
power-of-attorney shall not be deemed to require of the Collateral Agent any
specific duties or obligations not otherwise assumed by the Collateral Agent
hereunder.
Section 3. Distributions on Pledged Collateral. So long as the Purchase
Contract Agent is the registered owner of the Pledged Capital Securities, it
shall receive all payments thereon. If the Pledged Capital Securities are
reregistered, such that the Collateral Agent becomes the registered holder, all
payments of the Stated Amount or, if applicable, the appropriate Applicable
Ownership Interest (as specified in clause (A) of the definition of such term)
of the Treasury Portfolio, or cash distributions on, the Pledged Capital
Securities or on the appropriate Applicable Ownership Interest (as specified in
clause (B) of the definition of such term) of the Treasury Portfolio, as the
case may be, and all payments of the principal of, or cash distributions on, any
Pledged Treasury Securities received by the Collateral Agent that are properly
payable hereunder shall be paid by the Collateral Agent by wire transfer in same
day funds:
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(i) In the case of (A) cash distributions with respect to the
Pledged Capital Securities or the appropriate Applicable Ownership
Interest (as specified in clause (B) of the definition of such term) of
the Treasury Portfolio, as the case may be, and (B) any payments of the
Stated Amount or, if applicable, the appropriate Applicable Ownership
Interest (as specified in clause (A) of the definition of such term) of
the Treasury Portfolio with respect to any Capital Securities or the
appropriate Applicable Ownership Interest of the Treasury Portfolio, as
the case may be, that have been released from the Pledge pursuant to
Section 4.3 hereof, to the Purchase Contract Agent, for the benefit of the
relevant Holders of Securities, to the account designated by the Purchase
Contract Agent for such purpose, no later than 2:00 p.m., New York City
time, on the Business Day such payment is received by the Collateral Agent
(provided that in the event such payment is received by the Collateral
Agent on a day that is not a Business Day or after 12:30 p.m., New York
City time, on a Business Day, then such payment shall be made no later
than 10:30 a.m., New York City time, on the next succeeding Business Day);
(ii) In the case of any principal payments with respect to any
Treasury Securities that have been released from the Pledge pursuant to
Section 4.3 hereof, to the Holders of the Growth PRIDES to the accounts
designated by them in writing for such purpose no later than 2:00 p.m.,
New York City time, on the Business Day such payment is received by the
Collateral Agent (provided that in the event such payment is received by
the Collateral Agent on a day that is not a Business Day or after 12:30
p.m., New York City time, on a Business Day, then such payment shall be
made no later than 10:30 a.m., New York City time, on the next succeeding
Business Day); and
(iii) In the case of payments of the Stated Amount of any Pledged
Capital Securities or the appropriate Applicable Ownership Interest (as
specified in clause (A) of the definition of such term) of the Treasury
Portfolio, as the case may be, or the principal of any Pledged Treasury
Securities, to the Company on the Purchase Contract Settlement Date
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in accordance with the procedure set forth in Section 4.6(a) or 4.6(b)
hereof, in full satisfaction of the respective obligations of the Holders
under the related Purchase Contracts.
All payments received by the Purchase Contract Agent as provided herein shall be
applied by the Purchase Contract Agent pursuant to the provisions of the
Purchase Contract Agreement. If, notwithstanding the foregoing, the Purchase
Contract Agent shall receive any payments of the Stated Amount or, if
applicable, the appropriate Applicable Ownership Interest (as specified in
clause (A) of the definition of such term) on account of any Capital Security or
the appropriate Applicable Ownership Interest of the Treasury Portfolio, as
applicable, that, at the time of such payment, is a Pledged Capital Security or
the appropriate Applicable Ownership Interest of the Treasury Portfolio, as the
case may be, or a Holder of a Growth PRIDES shall receive any payments of
principal on account of any Treasury Securities that, at the time of such
payment, are Pledged Treasury Securities, the Purchase Contract Agent or such
Holder shall hold the same as trustee of an express trust for the benefit of the
Company (and promptly deliver the same over to the Company) for application to
the obligations of the Holders under the related Purchase Contracts, and the
Holders shall acquire no right, title or interest in any such payments of Stated
Amount or principal so received.
Section 4. Substitution, Release, Repledge and Settlement of Capital
Securities.
Section 4.1. Substitution for Capital Securities and the Creation of
Growth PRIDES. At any time on or prior to the fifth Business Day immediately
preceding the Purchase Contract Settlement Date (unless a Tax Event Redemption
has occurred), a Holder of Income PRIDES shall have the right to substitute
Treasury Securities for the Pledged Capital Securities securing such Holder's
obligations under the Purchase Contract(s) comprising a part of its Income
PRIDES in integral multiples of 100 Income PRIDES by (a) Transferring to the
Collateral Agent Treasury Securities having a Value equal to the aggregate
Stated Amount of the Pledged Capital Securities to be released and (b)(i)
delivering to the Purchase Contract Agent cash in an amount equal to the excess
of the Contract Adjustment Payments, if any, that would have ac-
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crued since the last date that Contract Adjustment Payments were made through
the date of substitution on the Growth PRIDES being created by the Holder, which
amount the Purchase Contract Agent shall promptly remit to the Company, and (ii)
delivering the related Income PRIDES to the Purchase Contract Agent, accompanied
by a notice, substantially in the form of Exhibit B hereto, to the Purchase
Contract Agent stating that such Holder has Transferred Treasury Securities to
the Collateral Agent pursuant to clause (a) above (stating the Value of the
Treasury Securities Transferred by such Holder) and requesting that the Purchase
Contract Agent instruct the Collateral Agent to release from the Pledge the
Pledged Capital Securities related to such Income PRIDES. The Purchase Contract
Agent shall instruct the Collateral Agent in the form provided in Exhibit A;
provided, however, that if a Tax Event Redemption has occurred and the Treasury
Portfolio has become a component of the Income PRIDES, Holders of Income PRIDES
may make such substitution only in integral multiples of 4,000,000 Income PRIDES
at any time on or prior to the second Business Day immediately preceding the
Purchase Contract Settlement Date. Upon receipt of Treasury Securities from a
Holder of Income PRIDES and the related instruction from the Purchase Contract
Agent, the Collateral Agent shall release the Pledged Capital Securities or the
appropriate Applicable Ownership Interest of the Treasury Portfolio, as the case
may be, and shall promptly Transfer such Pledged Capital Securities or the
appropriate Applicable Ownership Interest of the Treasury Portfolio, as the case
may be, free and clear of any lien, pledge or security interest created hereby,
to the Purchase Contract Agent. All items Transferred and/or substituted by any
Holder pursuant to this Section 4.1, Section 4.2 or any other Section of this
Agreement shall be Transferred and/or substituted free and clear of all liens,
claims and encumbrances.
Section 4.2. Substitution of Treasury Securities and the Creation of
Income PRIDES. At any time on or prior to the fifth Business Day immediately
preceding the Purchase Contract Settlement Date (unless a Tax Event Redemption
has occurred), a Holder of Growth PRIDES shall have the right to establish or
reestablish Income PRIDES consisting of the Purchase Contracts and Capital
Securities in integral multiples of 100 Income PRIDES by (a) Transferring to the
Collateral Agent Capital Securities
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having a Value equal to the Value of the Pledged Treasury Securities to be
released and (b) delivering the related Growth PRIDES to the Purchase Contract
Agent, accompanied by a notice, substantially in the form of Exhibit B hereto,
to the Purchase Contract Agent stating that such Holder has transferred Capital
Securities to the Collateral Agent pursuant to clause (a) above and requesting
that the Purchase Contract Agent instruct the Collateral Agent to release from
the Pledge the Pledged Treasury Securities related to such Growth PRIDES. The
Purchase Contract Agent shall instruct the Collateral Agent in the form provided
in Exhibit A; provided, however, that if a Tax Event Redemption has occurred and
the Treasury Portfolio has become a component of the Income PRIDES, Holders of
Growth PRIDES may make such substitution only in integral multiples of 4,000,000
Growth PRIDES, at any time on or prior to the Business Day immediately preceding
the Purchase Contract Settlement Date. Upon receipt of the Capital Securities or
the appropriate Applicable Ownership Interest of the Treasury Portfolio, as the
case may be, from such Holder and the instruction from the Purchase Contract
Agent, the Collateral Agent shall release the Treasury Securities and shall
promptly Transfer such Treasury Securities, free and clear of any lien, pledge
or security interest created hereby, to the Purchase Contract Agent.
Section 4.3. Termination Event. Upon receipt by the Collateral Agent of
written notice from the Company or the Purchase Contract Agent that there has
occurred a Termination Event, the Collateral Agent shall release all Collateral
from the Pledge and shall promptly Transfer any Pledged Capital Securities (or
the Applicable Ownership Interest of the Treasury Portfolio if a Tax Event
Redemption has occurred) and Pledged Treasury Securities to the Purchase
Contract Agent for the benefit of the Holders of the Income PRIDES and the
Growth PRIDES, respectively, free and clear of any lien, pledge or security
interest or other interest created hereby.
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
Capital Securities, the Treasury Portfolio or of the Pledged Treasury
Securities, as the case may be, as provided by this Section 4.3, the Purchase
Contract Agent
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shall (i) use its best efforts to obtain an opinion of a nationally recognized
law firm 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 4.3, and shall deliver such opinion to
the Collateral Agent within ten days after the occurrence of such Termination
Event, and if (y) the Purchase Contract Agent shall be unable to obtain such
opinion within ten days after the occurrence of such Termination Event or (z)
the Collateral Agent shall continue, after delivery of such opinion, to refuse
to effectuate the release and Transfer of all Pledged Capital Securities, the
Treasury Portfolio or the Pledged Treasury Securities, as the case may be, as
provided in this Section 4.3, then the Purchase Contract Agent shall within
fifteen days after the occurrence of such Termination Event commence an action
or proceeding in the court with 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 Capital Securities, the Treasury
Portfolio or of the Pledged Treasury Securities, as the case may be, as provided
by this Section 4.3 or (ii) commence an action or proceeding like that described
in subsection (i)(z) hereof within ten days after the occurrence of such
Termination Event.
Section 4.4. Cash Settlement. (a) Upon receipt by the Collateral Agent of
(i) a notice from the Purchase Contract Agent promptly after the receipt by the
Purchase Contract Agent of such notice that a Holder of an Income PRIDES or
Growth PRIDES 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 (ii) payment of the amount required
to settle such contract by such Holder on or prior to 11:00 a.m., New York City
time, on the Business Day immediately preceding the Purchase Contract Settlement
Date in lawful money of the United States by certified or cashiers' check or
wire transfer in immediately available funds payable to or upon the order of the
Company, then the Collateral Agent shall, promptly invest any Cash received from
a Holder in connection with a Cash Settlement in Permitted Investments. Upon
receipt of the proceeds upon the maturity of the Permitted Investments on the
Purchase Contract Settlement
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Date, the Collateral Agent shall pay the portion of such proceeds and deliver
any certified or cashiers' checks received and any funds so wired, in an
aggregate amount equal to the Purchase Price, to the Company on the Purchase
Contract Settlement Date, and shall distribute any funds in respect of the
interest earned from the Permitted Investments to the Purchase Contract Agent
for payment to the relevant Holders.
(b) If a Holder of an Income PRIDES fails to notify the Agent of its
intention to make a Cash Settlement in accordance with Section 5.4(a)(i) of the
Purchase Contract Agreement, such failure shall constitute an event of default
under the Purchase Contract Agreement and hereunder, and the Holder shall be
deemed to have consented to the disposition of the pledged Capital Securities
pursuant to the remarketing as described in Section 5.4(b) of the Purchase
Contract Agreement, which is incorporated herein by reference. If a Holder of an
Income PRIDES does notify the Agent as provided in Section 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 Section 5.4(a)(ii) of the Purchase
Contract Agreement, the Capital Securities of such a Holder will not be
remarketed but instead the Collateral Agent, for the benefit of the Company,
will exercise its rights as a secured party with respect to such Capital
Securities at the direction of the Company to retain or dispose of the
Collateral in accordance with applicable law. In addition, in the event of a
Failed Remarketing as described in Section 5.4(b) of the Purchase Contract
Agreement, such Failed Remarketing shall constitute an event of default
hereunder by such Holder and the Collateral Agent, for the benefit of the
Company, will also exercise its rights as a secured party with respect to such
Capital Securities at the direction of the Company to retain or dispose of the
Collateral in accordance with applicable law.
(c) If a Holder of a Growth PRIDES fails to notify the Purchase Contract
Agent of such Holder's intention to make a Cash Settlement in accordance with
Section 5.4(d)(i) of the Purchase Contract Agreement, or if a Holder of a Growth
PRIDES does notify the Agent as provided in paragraph 5.4 (d)(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
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paragraph 5.4(d)(ii) of the Purchase Contract Agreement, such failure shall
constitute an event of default hereunder by such Holder and upon the maturity of
any Pledged Treasury Securities or the Treasury Portfolio, if any, held by the
Collateral Agent on the Business Day immediately preceding the Purchase Contract
Settlement Date, the principal amount of the Pledged Treasury Securities or the
Treasury Portfolio received by the Collateral Agent shall, upon written
direction of the Company, be invested promptly in Permitted Investments. On the
Purchase Contract Settlement Date, an amount equal to the Purchase Price will be
remitted to the Company as payment thereof. In the event the sum of the proceeds
from the related Pledged Treasury Securities or the Treasury Portfolio, as the
case may be, and the investment earnings earned from such investments is in
excess of the aggregate Purchase Price of the Purchase Contracts being settled
thereby, the Collateral Agent will distribute such excess to the Purchase
Contract Agent for the benefit of the Holder of the related Growth PRIDES or
Income PRIDES when received.
Section 4.5. 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, (a) Pledged Capital Securities or the appropriate
Applicable Ownership Interest of the Treasury Portfolio in the case of a Holder
of Income PRIDES or (b) Pledged Treasury Securities in the case of a Holder of
Growth PRIDES, as the case may be, with a principal amount equal to the product
of (i) the Stated Amount times (ii) the number of such Purchase Contracts as to
which such Holders have elected to effect Early Settlement and shall Transfer
all such Pledged Capital Securities or the appropriate Appli-
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23
cable Ownership Interest of the Treasury Portfolio or Pledged Treasury
Securities, as the case may be, free and clear of the Pledge created hereby, to
the Purchase Contract Agent for the benefit of the Holders.
Section 4.6. Application of Proceeds Settlement. (a) In the event a Holder
of Income PRIDES (if a Tax Event Redemption has not occurred) has not elected to
make an effective Cash Settlement by notifying the Purchase Contract Agent in
the manner provided for in paragraph 5.4(a)(i) in the Purchase Contract
Agreement or has not made an Early Settlement of the Purchase Contract(s)
underlying its Income PRIDES, 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 Capital Securities. The Collateral Agent
shall, by 10:00 a.m., New York City time, on the fourth Business Day immediately
preceding the Purchase Contract Settlement Date, without any instruction from
such Holder of Income PRIDES, present the related Pledged Capital Securities to
the Remarketing Agent for remarketing. Upon receiving such Pledged Capital
Securities, the Remarketing Agent, pursuant to the terms of the Remarketing
Agreement and the Remarketing Underwriting Agreement, will use its reasonable
efforts to remarket such Pledged Capital Securities on such date at a price not
less than approximately 100.75% of the aggregate Value of such Pledged Capital
Securities, plus accrued and unpaid distributions (including deferred
distributions), if any, thereon. After deducting as the Remarketing Fee an
amount not exceeding 50 basis points (.50%) of the aggregate Value of the
Pledged Capital Securities from any amount of such Proceeds in excess of the
aggregate Value, plus such accrued and unpaid distributions (including deferred
distributions) of the remarketed Pledged Capital Securities, the Remarketing
Agent will remit the entire amount of the Proceeds of such remarketing to the
Collateral Agent. On the Purchase Contract Settlement Date, the Collateral Agent
shall apply that portion of the Proceeds from such remarketing equal to the
aggregate Value, plus such accrued and unpaid distributions (including deferred
distributions) of such Pledged Capital Securities, to satisfy in full the
obligations of such Holders of Income PRIDES to pay the Purchase Price to
purchase the Common Stock under the related Purchase Contracts. The remaining
portion of such Proceeds, if any, shall be distrib-
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24
uted by the Collateral Agent to the Purchase Contract Agent for payment to the
Holders. If the Remarketing Agent advises the Collateral Agent in writing that
it cannot remarket the related Pledged Capital Securities of such Holders of
Income PRIDES at a price not less than 100% of the aggregate Value of such
Pledged Capital Securities plus any accrued and unpaid distributions (including
deferred distributions), thus resulting in a Failed Remarketing and an event of
default under the Purchase Contract Agreement and hereunder, the Collateral
Agent, for the benefit of the Company will, at the written direction of the
Company, retain or dispose of the Pledged Capital Securities in accordance with
applicable law and satisfy in full, from any such disposition or retention, such
Holder's obligation to pay the Purchase Price for the Common Stock.
(b) In the event a Holder of Growth PRIDES or Income PRIDES (if a Tax
Event Redemption has occurred) has not made an Early Settlement of the Purchase
Contract(s) underlying its Growth PRIDES or Income PRIDES, 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 or the Treasury Portfolio, as the case may be. On the Business Day
immediately prior to the Purchase Contract Settlement Date, the Collateral Agent
shall, at the written direction of the Purchase Contract Agent, invest the Cash
proceeds of the maturing Pledged Treasury Securities or the Treasury Portfolio,
as the case may be, in overnight Permitted Investments. Without receiving any
instruction from any such Holder of Growth PRIDES or Income PRIDES, the
Collateral Agent shall apply the Proceeds of the related Pledged Treasury
Securities or Treasury Portfolio 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 or Treasury Portfolio and the investment earnings from the investment
in overnight Permitted Investments is in excess of the aggregate Purchase Price
of the Purchase Contracts being settled thereby, the Collateral Agent shall
distribute such excess, when received, to the Purchase Contract Agent for the
benefit of the Holders.
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(c) Pursuant to the Remarketing Agreement and subject to the terms of the
Remarketing Underwriting Agreement, on or prior to the fifth Business Day
immediately preceding the Purchase Contract Settlement Date, but no earlier than
the Payment Date immediately preceding the Purchase Contract Settlement Date,
holders of Separate Capital Securities may elect to have their Separate Capital
Securities remarketed by delivering their Separate Capital Securities, together
with a notice of such election, substantially in the form of Exhibit C hereto,
to the Custodial Agent. The Custodial Agent will hold such Separate Capital
Securities in an account separate from the Collateral Account. A holder of
Separate Capital Securities electing to have its Separate Capital Securities
remarketed will also have the right to withdraw such election by written notice
to the Custodial Agent, substantially in the form of Exhibit D hereto, on or
prior to the fifth Business Day immediately preceding the Purchase Contract
Settlement Date, upon which notice the Custodial Agent will return such Separate
Capital Securities to such holder. On the fourth Business Day immediately
preceding the Purchase Contract Settlement Date, the Custodial Agent will
deliver to the Remarketing Agent for remarketing all separate Capital Securities
delivered to the Custodial Agent pursuant to this Section 4.6(c) and not
withdrawn pursuant to the terms hereof prior to such date. The portion of the
proceeds from such remarketing equal to the aggregate Value of such Separate
Capital Securities will automatically be remitted by the Remarketing Agent to
the Custodial Agent for the benefit of the holders of such Separate Capital
Securities. In addition, after deducting as the Remarketing Fee an amount not
exceeding 50 basis points (.50%) of the Value of the remarketed Separate Capital
Securities, from any amount of such proceeds in excess of the aggregate Value of
the remarketed Separate Capital Securities plus any accrued and unpaid
distributions (including deferred distributions, if any), the Remarketing Agent
will remit to the Custodial Agent the remaining portion of the proceeds, if any,
for the benefit of such holders. If, despite using its reasonable efforts, the
Remarketing Agent advises the Custodial Agent in writing that it cannot remarket
the related Separate Capital Securities of such holders at a price not less than
100% of the aggregate Value of such Separate Capital Securities plus accrued and
unpaid distributions (including deferred distributions) and thus result-
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26
ing in a Failed Remarketing, the Remarketing Agent will promptly return such
Capital Securities to the Custodial Agent for redelivery to such holders. In the
event of a dissolution of the Trust and the distribution of the Debentures as
described in the Declaration, all references to "Separate Capital Securities" in
this Section 4.6(c) shall be deemed to be references to Debentures which are not
pledged hereunder or required to be part of the Collateral.
Section 5. Voting Rights -- Capital Securities. The Purchase Contract
Agent may exercise, or refrain from exercising, any and all voting and other
consensual rights pertaining to the Pledged Capital Securities 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 Company, such
action would impair or otherwise have a material adverse effect on the value of
all or any of the Pledged Capital Securities; 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,
or its reasons for refraining from exercising, any such right. Upon receipt of
any notices and other communications in respect of any Pledged Capital
Securities, including notice of any meeting at which holders of Capital
Securities are entitled to vote or solicitation of consents, waivers or proxies
of holders of Capital Securities, 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 Capital Securities (in form and substance satisfactory to the Collateral
Agent) as are prepared by the Purchase Contract Agent with respect to the
Pledged Capital Securities.
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Section 6. Rights and Remedies; Distribution of the Debentures; Tax Event
Redemption
Section 6.1. Rights and Remedies of the Collateral Agent. (a) In addition
to the rights and remedies specified in Section 4.4 hereof or otherwise
available at law or in equity, after an event of default hereunder, the
Collateral Agent shall have all of the rights and remedies with respect to the
Collateral of a secured party under the Uniform Commercial Code (or any
successor thereto) as in effect in the State of New York from time to time (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. Wherever reference is made in this Agreement to any section of the
Code, such reference shall be deemed to include a reference to any provision of
the Code which is a successor to, or amendment of, such section. Without
limiting the generality of the foregoing, such remedies may include, to the
extent permitted by applicable law, (i) retention of the Pledged Capital
Securities or other Collateral in full satisfaction of the Holders obligations
under the Purchase Contracts or (ii) sale of the Pledged Capital Securities or
other Collateral 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 the appropriate Applicable
Ownership Interest (as specified in clause (A) of the definition of such term)
of the Treasury Portfolio or 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, or the appropriate Applicable Ownership Interest (as specified in
clause (A) of the definition of such term) of the Treasury Portfolio, as
applicable, 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, or
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such appropriate Applicable Ownership Interest (as specified in clause (A) of
the definition of such term) of the Treasury Portfolio, as applicable, 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) the Stated Amount of or,
cash distributions on, the Pledged Capital Securities, (ii) the principal amount
of the Pledged Treasury Securities, or (iii) the appropriate Applicable
Ownership Interest (as specified in clause (A) of the definition of such term)
of the Treasury Portfolio, subject, in each case, to the provisions of Section
3, and as otherwise granted herein.
(d) The Purchase Contract Agent, individually and as attorney-in-fact for
each Holder of Securities, in the event such Holder becomes the Holder of a
Growth PRIDES, 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 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 act, its
own negligent failure to act or its own willful misconduct.
Section 6.2. Distribution of the Debentures; Tax Event Redemption. Upon
the occurrence of an Investment Company Event or a liquidation of the Trust, a
principal amount of the Debentures constituting the assets of the Trust and
underlying the Capital Securities equal to the aggregate stated liquidation
amount of the Pledged Capital Securities shall be delivered to the Collateral
Agent in exchange for the Pledged Capital Securities. In the event the
Collateral Agent receives such Debentures in respect of Pledged Capital
Securities upon the occurrence of an Investment Company Event or liquidation of
the
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29
Trust, the Collateral Agent shall Transfer the Debentures to the Collateral
Account in the manner specified herein (including, without limitation, physical
delivery thereof as set forth in Section 2.1) for Pledged Capital Securities to
secure the obligations of the Holders of Income PRIDES to purchase the Company's
Common Stock under the related Purchase Contracts. Thereafter, the Collateral
Agent shall have such security interests, rights and obligations with respect to
the Debentures as it had in respect of the Pledged Capital Securities as
provided in Sections 2, 3, 4, 5 and 6 hereof, and any reference herein to the
Pledged Capital Securities shall be deemed to be referring to such Debentures.
Upon the occurrence of a Tax Event Redemption prior to the Purchase
Contract Settlement Date, the Redemption Price payable on the Tax Event
Redemption Date with respect to the Applicable Principal Amount of Debentures
shall be delivered to the Collateral Agent by the Institutional Trustee or upon
a dissolution of the Trust and the distribution of the related Debentures by the
Debenture Trustee on or prior to 12:30 p.m., New York City time, by check or
wire transfer in immediately available funds at such place and at such account
as may be designated by the Collateral Agent in exchange for the Pledged Capital
Securities or Debentures, as the case may be. In the event the Collateral Agent
receives such Redemption Price, the Collateral Agent will, at the written
direction of the Company, apply an amount equal to the Redemption Amount of such
Redemption Price to purchase from the Quotation Agent the Treasury Portfolio and
promptly remit the remaining portion of such Redemption Price to the Purchase
Contract Agent for payment to the Holders of Income PRIDES. The Collateral Agent
shall Transfer the Treasury Portfolio to the Collateral Account in the manner
specified herein for Pledged Capital Securities to secure the obligation of all
Holders of Income PRIDES to purchase Common Stock of the Company under the
Purchase Contracts constituting a part of such Income PRIDES, in substitution
for the Pledged Capital Securities. Thereafter the Collateral Agent shall have
such security interests, rights and obligations with respect to the Treasury
Portfolio as it had in respect of the Pledged Capital Securities or Debentures,
as the case may be, as provided in Sections 2, 3, 4, 5 and 6, and any reference
herein to the Pledged Capital Securities or the Xxxxx-
00
00
tures shall be deemed to be reference to such Treasury Portfolio.
Section 6.3. Substitutions. Whenever a Holder has the right to substitute
Treasury Securities, Capital Securities or the appropriate Applicable Ownership
Interest of the Treasury Portfolio, as the case may be, for Collateral held by
the Collateral Agent, such substitution shall not constitute a novation of the
security interest created hereby.
Section 7. Representations and Warranties; Covenants.
Section 7.1. Representations and Warranties. 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
representation or warranty made by or on behalf of a Holder), hereby represent
and warrant to the Collateral Agent, 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 Collateral Agent, 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;
(c) upon the Transfer of the Collateral 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 opera-
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31
tion or any Intermediary or other entity not within the
control of the Holder involved in the Transfer of the
Collateral, including the Collateral Agent, 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
2.2 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 7.2. Covenants. 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
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32
(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 8. The Collateral Agent. It is hereby agreed as follows:
Section 8.1. 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. Each of
the Collateral Agent, the Custodial Agent and the Securities Intermediary: (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 any of them, nor shall any of them 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, the Custodial
Agent or the Securities Intermediary, as the case may be) 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 in the case of the Collateral Agent,
pursuant to directions furnished under Section 8.2 hereof, subject to Section
8.6 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
29
33
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, the 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.
No provision of this Agreement shall require the Collateral Agent, the
Custodial Agent or the Securities Intermediary 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, the Custodial Agent or
the Securities Intermediary be liable for any amount in excess of the Value of
the Collateral. Notwithstanding the foregoing, the Collateral Agent, the
Custodial Agent, the Purchase Contract Agent and Securities Intermediary, each
in its individual capacity, hereby waive any right of setoff, bankers lien,
liens or perfection rights as securities intermediary or any counterclaim with
respect to any of the Collateral.
Section 8.2. Instructions of the Company. The Company shall have the
right, by one or more instruments in writing executed and delivered to the
Collateral Agent, the Custodial Agent or the Securities Intermediary, as the
case may be, 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, the Custodial Agent
or the Securities Intermediary, as the case may be, 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, the Custodial Agent and
the Securities Intermediary shall be adequately indemnified as provided herein.
Nothing in this Section 8.2 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.
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34
Section 8.3. Reliance by Collateral Agent. Each of the Securities
Intermediary, the Custodial Agent and the Collateral Agent shall be entitled
conclusively to rely upon any certification, order, judgment, opinion, notice or
other communication (including, without limitation, any thereof by telephone,
telecopy, telex 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, the Custodial Agent or the Securities
Intermediary, as the case may be. As to any matters not expressly provided for
by this Agreement, the Collateral Agent, the Custodial 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 8.4. Rights in Other Capacities. The Collateral Agent, the
Custodial 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 Holder of
Securities and any holder of separate Capital Securities (and any of their
respective subsidiaries or affiliates) as if it were not acting as the
Collateral Agent, the Custodial Agent or the Securities Intermediary, as the
case may be, and the Collateral Agent, the Custodial Agent and the Securities
Intermediary and their affiliates may accept fees and other consideration from
the Purchase Contract Agent, any Holder of Securities or any holder of separate
Capital Securities without having to account for the same to the Company;
provided that each of the Securities Intermediary, the Custodial Agent 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 and the Collateral shall not be commingled with any other assets of
any such Person.
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35
Section 8.5. Non-Reliance on Collateral Agent. None of the Securities
Intermediary, the Custodial Agent or 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. The Collateral Agent, the Custodial
Agent and the Securities Intermediary shall not have any duty or responsibility
to provide the Company or the Remarketing Agent with any credit or other
information concerning the affairs, financial condition or business of the
Purchase Contract Agent, any Holder of Securities or any holder of separate
Capital Securities (or any of their respective subsidiaries or affiliates) that
may come into the possession of the Collateral Agent, the Custodial Agent or the
Securities Intermediary or any of their respective affiliates.
Section 8.6. Compensation and Indemnity. The Company agrees: (i) to pay
each of the Collateral Agent and the Custodial Agent from time to time such
compensation as shall be agreed in writing between the Company and the
Collateral Agent or the Custodial Agent, as the case may be, for all services
rendered by each of them hereunder and (ii) to indemnify the Collateral Agent,
the Custodial Agent and the Securities Intermediary 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 Collateral Agent, the
Custodial Agent and the Securities Intermediary shall each promptly notify the
Company of any third party claim which may give rise to the indemnity hereunder
and give the Company the opportunity to participate in the defense of such claim
with counsel reasonably satisfactory to the indemnified party, and no such claim
shall be settled without the written consent of the Company, which consent shall
not be unreasonably withheld.
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Section 8.7. 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 Custodial Agent 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 neither the Collateral Agent nor the Custodial
Agent shall 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 Custodial Agent 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 Custodial Agent, as the case may be,
or (ii) the Collateral Agent or the Custodial Agent, as the case may be, shall
have received security or an indemnity reasonably satisfactory to the Collateral
Agent or the Custodial Agent, as the case may be, sufficient to save the
Collateral Agent or the Custodial Agent, as the case may be, harmless from and
against any and all loss, liability or reasonable out-of-pocket expense which
the Collateral Agent or the Custodial Agent, as the case may be, may incur by
reason of its acting without bad faith, willful misconduct or gross negligence.
The Collateral Agent or the Custodial Agent may in addition elect to commence an
interpleader action or seek other judicial relief or orders as the Collateral
Agent or the Custodial Agent, as the case may be, may deem necessary.
Notwithstanding anything contained herein to the contrary, neither the
Collateral Agent nor the Custodial Agent 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 8.8. Resignation of Collateral Agent. Subject to the appointment
and acceptance of a successor Collateral Agent or Custodial Agent as provided
below, (a) the Collateral Agent and the Custodial Agent may resign at any time
by giving notice thereof to the Com-
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37
pany and the Purchase Contract Agent as attorney-in-fact for the Holders of
Securities, (b) the Collateral Agent and the Custodial Agent may be removed at
any time by the Company and (c) if the Collateral Agent or the Custodial 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 or the Custodial 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 (c) of the
immediately preceding sentence. Upon any such resignation or removal, the
Company shall have the right to appoint a successor Collateral Agent or
Custodial Agent, as the case may be. If no successor Collateral Agent or
Custodial Agent, as the case may be, shall have been so appointed and shall have
accepted such appointment within 30 days after the retiring Collateral Agent's
or Custodial Agent's giving of notice of resignation or such removal, then the
retiring Collateral Agent or Custodial Agent, as the case may be, may petition
any court of competent jurisdiction for the appointment of a successor
Collateral Agent or Custodial Agent, as the case may be. Each of the Collateral
Agent and the Custodial Agent shall be a bank which has an office in New York,
New York with a combined capital and surplus of at least $75,000,000. Upon the
acceptance of any appointment as Collateral Agent or Custodial Agent, as the
case may be, hereunder by a successor Collateral Agent or Custodial Agent, as
the case may be, such successor shall thereupon succeed to and become vested
with all the rights, powers, privileges and duties of the retiring Collateral
Agent or Custodial Agent, as the case may be, and the retiring Collateral Agent
or Custodial Agent, as the case may be, shall take all appropriate action to
transfer any money and property held by it hereunder (including the Collateral)
to such successor. The retiring Collateral Agent or Custodial Agent shall, upon
such succession, be discharged from its duties and obligations as Collateral
Agent or Custodial Agent hereunder. After any retiring Collateral Agent's or
Custodial Agent's resignation hereunder as Collateral Agent or Custodial Agent,
the provisions of this Section 8 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 or Custodial Agent. Any resignation or
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38
removal of the Collateral Agent hereunder shall be deemed for all purposes of
this Agreement as the simultaneous resignation or removal of the Custodial Agent
and the Securities Intermediary.
Section 8.9. 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 8.9
shall be subject to prior consent of the Company, which consent shall not be
unreasonably withheld.
Section 8.10. Survival. The provisions of this Section 8 shall survive
termination of this Agreement and the resignation or removal of the Collateral
Agent or the Custodial Agent.
Section 8.11. Exculpation. Anything in this Agreement to the contrary
notwithstanding, in no event shall any of the Collateral Agent, the Custodial
Agent or the Securities Intermediary or their officers, 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, the Custodial 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 part of the Collateral Agent, the
Custodial Agent or the Securities Intermediary.
Section 9. Amendment.
Section 9.1. Amendment Without Consent of Holders. Without the consent of
any Holders or the holders of any Separate Capital Securities, the Company, the
Collateral Agent, the Custodial 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
Custodial Agent, the Securities Intermediary and the Purchase Contract Agent,
for any of the following purposes:
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39
(1) to evidence the succession of another Person to the Company, and
the assumption by any such successor of the covenants of the Company; or
(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 security interests
granted or created hereunder; or
(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, 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 9.2. 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 or the Collateral Agent, as the case may be, the Company, when
duly authorized, the Purchase Contract Agent, the Collateral Agent, the
Custodial Agent and the Securities Intermediary 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 consent of the Holder 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 Income PRIDES to substitute the
Treasury Securities for the Pledged Capital Securities or the appropriate
Applicable Ownership Interest of the Treasury Portfolio, as the case may
be, or the rights of Holders of Growth PRIDES to substitute
36
40
Capital Securities or the appropriate Applicable Ownership Interest of the
Treasury Portfolio, as applicable, 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.
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 9.3. Execution of Amendments. In executing any amendment permitted
by this Section, the Collateral Agent, the Custodial Agent, the Securities
Intermediary and the Purchase Contract Agent shall be entitled to receive and
(subject to Section 6.1 hereof, with respect to the Collateral Agent, and
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 9.4. Effect of Amendments. Upon the execution of any amendment
under this Section 9, 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 9.5. Reference to Amendments. Security Certificates authenticated,
executed on behalf of the
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41
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 10. Miscellaneous.
Section 10.1. No Waiver. No failure on the part of any party hereto 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 any party hereto 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 10.2. 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 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 and the Holders from time to time of the
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42
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 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.
Section 10.3. 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 10.4. 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 Custodial 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 10.5. 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 10.6. 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 par-
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43
ties 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 10.7. Expenses, etc. The Company agrees to reimburse the
Collateral Agent and the Custodial Agent for: (a) all reasonable out-of-pocket
costs and expenses of the Collateral Agent and the Custodial Agent (including,
without limitation, the reasonable fees and expenses of counsel to the
Collateral Agent and the Custodial Agent), 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
(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 10.7; 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 10.8. 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 Securities under the related Purchase Contracts,
or any other amendment or waiver of any
40
44
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.
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45
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
XXXXXXX AND BROAD HOME
CORPORATION
By:
--------------------------------------------
Name:
Title:
Address for Notices:
XXXXXXX AND BROAD HOME
CORPORATION
00000 Xxxxxxxx Xxxx.
Xxx Xxxxxxx, XX 00000
Attention: Chief Financial Officer
Telecopy: (000)000-0000
THE FIRST NATIONAL BANK OF CHICAGO,
as Purchase Contract Agent and as
attorney-in-fact of the Holders from
time to time of the Securities
By:
--------------------------------------------
Name:
Title:
Address for Notices:
The First National Bank of Chicago
Xxx Xxxxx Xxxxxxxx Xxxxx,
Xxxxx 0000
Xxxxxxx, XX 00000-0000
Attention: Corporate Trust Services Division
Telecopy: (000) 000-0000
00
Xxx Xxxx xx Xxx Xxxx,
as Collateral Agent, Custodial Agent and as
Securities Intermediary
By:
--------------------------------------------
Name:
Title:
Address for Notices:
The Bank of New York
000 Xxxxxxx Xxxxxx
Xxxxx 00 Xxxx
Xxx Xxxx, XX 00000
Attention:
Telecopy: (000) 000-0000
47
EXHIBIT A
INSTRUCTION FROM PURCHASE CONTRACT AGENT TO COLLATERAL AGENT
The Bank of New York
000 Xxxxxxx Xxxxxx
Xxxxx 00 Xxxx
Xxx Xxxx, XX 00000
Attention:
Re: FELINE PRIDES of Xxxxxxx and Broad Home Corporation (the
"Company"), and KBHC Financing I
We hereby notify you in accordance with Section [4.1] [4.2] of the
Pledge Agreement, dated as of ______, 1998, (the "Pledge Agreement") among the
Company, yourselves, as Collateral Agent, Custodial Agent and Securities
Intermediary and ourselves, as Purchase Contract Agent and as attorney-in-fact
for the holders of [Income PRIDES] [Growth PRIDES] from time to time, that the
holder of Securities listed below (the "Holder") has elected to substitute
[$_____ aggregate principal amount of Treasury Securities] [$_______Stated
Amount of Capital Securities or the appropriate Applicable Ownership Interest of
the Treasury Portfolio] in exchange for an equal Value of [Pledged Capital
Securities or the appropriate Applicable Ownership Interest of the Treasury
Portfolio] [Pledged Treasury Securities] held by you in accordance with the
Pledge Agreement and has delivered to us a notice stating that the Holder has
Transferred [Treasury Securities] [Capital Securities or the appropriate
Applicable Ownership Interest of the Treasury Portfolio] to you, as Collateral
Agent. We hereby instruct you, upon receipt of such [Pledged Treasury
Securities] [Pledged Capital Securities or the appropriate Applicable Ownership
Interest of the Treasury Portfolio], to release the [Capital Securities or the
appropriate Applicable Ownership Interest of the Treasury Portfolio] [Treasury
Securities] related to such [Income PRIDES] [Growth PRIDES] to us in accordance
with the Holder's instructions. Capitalized terms used herein but not defined
shall have the meaning set forth in the Pledge Agreement.
Date:
--------------------- ----------------------------------------
By:
-------------------------------------
48
Name:
Title:
Signature Guarantee:
-----------------
Please print name and address of Registered Holder electing to substitute
[Treasury Securities] [Capital Securities or the appropriate Applicable
Ownership Interest of the Treasury Portfolio] for the [Pledged Capital
Securities or the Treasury Portfolio] [Pledged Treasury Securities]:
--------------------------- ------------------------------------
Name Social Security or other Taxpayer
Identification Number, if any
---------------------------
Address
---------------------------
---------------------------
49
EXHIBIT B
INSTRUCTION TO PURCHASE CONTRACT AGENT
The First National Bank of Chicago
Xxx Xxxxx Xxxxxxxx Xxxxx, Xxxxx 0000
Xxxxxxx, XX 00000-0000
Attention: Corporate Trust, Services Division
Re: FELINE PRIDES of Xxxxxxx and Broad Home Corporation (the
"Company"), and KBHC Financing I
The undersigned Holder hereby notifies you that it has delivered to
The Bank of New York, as Collateral Agent, [$_______ aggregate principal amount
of Treasury Securities] [$ aggregate Stated Amount of Capital Securities or the
appropriate Applicable Ownership Interest of the Treasury Portfolio] in exchange
for an equal Value of [Pledged Capital Securities or the appropriate Applicable
Ownership Interest of the Treasury Portfolio] [Pledged Treasury Securities] held
by the Collateral Agent, in accordance with Section 4.1 of the Pledge Agreement,
dated ______, 1998 (the "Pledge Agreement"), between you, the Company and the
Collateral Agent. The undersigned Holder hereby instructs you to instruct the
Collateral Agent to release to you on behalf of the undersigned Holder the
[Pledged Capital Securities or the appropriate Applicable Ownership Interest of
the Treasury Portfolio] [Pledged Treasury Securities] related to such [Income
PRIDES] [Growth PRIDES]. Capitalized terms used herein but not defined shall
have the meaning set forth in the Pledge Agreement.
Dated:
------------------- --------------------------------
Signature
Signature Guarantee:
-----------------------
50
Please print name and address of Registered Holder:
------------------------- -------------------------
Name Social Security or other
Taxpayer Identification
Number, if any
-------------------------
Address
-------------------------
-------------------------
-------------------------
51
EXHIBIT C
INSTRUCTION TO CUSTODIAL AGENT REGARDING REMARKETING
The Bank of New York
000 Xxxxxxx Xxxxxx
Xxxxx 00 Xxxx
Xxx Xxxx, XX 00000
Attention:
Re: Capital Securities of Xxxxxxx and Broad Home Corporation (the
"Company"), and KBHC Financing I
The undersigned hereby notifies you in accordance with Section 4.6(c) of
the Pledge Agreement, dated as of __________, 1998 (the "Pledge Agreement"),
among the Company, yourselves, as Collateral Agent, Securities Intermediary and
Custodial Agent, and The First National Bank of Chicago, as Purchase Contract
Agent and as attorney-in-fact for the Holders of Income PRIDES and Growth PRIDES
from time to time, that the undersigned elects to deliver $ stated liquidation
amount of Capital Securities for delivery to the Remarketing Agent on the fourth
Business Day immediately preceding the Purchase Contract Settlement Date for
remarketing pursuant to Section 4.6(c) of the Pledge Agreement. The undersigned
will, upon request of the Remarketing Agent, execute and deliver any additional
documents deemed by the Remarketing Agent or by the Company to be necessary or
desirable to complete the sale, assignment and transfer of the Capital
Securities tendered hereby.
The undersigned hereby instructs you, upon receipt of the Proceeds
of such remarketing from the Remarketing Agent to deliver such Proceeds to the
undersigned in accordance with the instructions indicated herein under "A.
Payment Instructions". The undersigned hereby instructs you, in the event of
Failed Remarketing, upon receipt of the Capital Securities tendered herewith
from the Remarketing Agent, to be delivered to the person(s) and the address(es)
indicated herein under "B. Delivery Instructions."
With this notice, the undersigned hereby (i) represents and warrants
that the undersigned has full power and authority to tender, sell, assign and
transfer the Capital Securities tendered hereby and that the undersigned is the
record owner of any Capital Securities tendered herewith in physical form or a
participant in The Depositary Trust Company ("DTC") and the beneficial owner of
any Capi-
52
tal Securities tendered herewith by book-entry transfer to your account at DTC
and (ii) agrees to be bound by the terms and conditions of Section 4.6(c) of the
Pledge Agreement. Capitalized terms used herein but not defined shall have the
meaning set forth in the Pledge Agreement.
Date:
---------------
--------------------------------------
By:
-----------------------------------
Name:
Title:
Signature Guarantee:
------------------
Please print name and address:
--------------------------------- ---------------------------------
Name Social Security or other Taxpayer
Identification Number, if any
---------------------------------
Address
---------------------------------
---------------------------------
---------------------------------
--------------------------------------------------------------------------------
A. PAYMENT INSTRUCTIONS
Proceeds of the remarketing should be paid by check in the name of the person(s)
set forth below and mailed to the address set forth below.
Name(s)
--------------------------------------
(Please Print)
Address
--------------------------------------
(Please Print)
----------------------------------------------
----------------------------------------------
(Zip Code)
----------------------------------------------
(Tax Identification or Social Security Number)
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
B. DELIVERY INSTRUCTIONS
In the event of a Failed Remarketing, Capital Securities which are in physical
form should be delivered to the person(s) set forth below and mailed to the
address set forth below.
Name(s)
--------------------------------------
(Please Print)
Address
--------------------------------------
(Please Print)
----------------------------------------------
----------------------------------------------
(Zip Code)
----------------------------------------------
(Tax Identification or Social Security Number)
In the event of a Failed Remarketing, Capital Securities which are in book-entry
form should be credited to the account at The Depositary Trust Company set forth
below.
------------------
DTC Account Number
Name of Account Party: ______________
--------------------------------------------------------------------------------
53
EXHIBIT D
INSTRUCTION TO CUSTODIAL AGENT REGARDING
WITHDRAWAL FROM REMARKETING
The Bank of New York
000 Xxxxxxx Xxxxxx
Xxxxx 00 Xxxx
Xxx Xxxx, XX 00000
Attention:
Re: Capital Securities of Xxxxxxx and Broad Home Corporation (the
"Company"), and KBHC Financing I
The undersigned hereby notifies you in accordance with Section 4.6(c) of
the Pledge Agreement, dated as of ___________, 1998 (the "Pledge Agreement")
among the Company, yourselves, as Collateral Agent, Securities Intermediary and
Custodial Agent and The First National Bank of Chicago, as Purchase Contract
Agent and as attorney-in-fact for the Holders of Income PRIDES and Growth PRIDES
from time to time, that the undersigned elects to withdraw the $_____ aggregate
stated liquidation amount of Capital Securities delivered to the Custodial Agent
on ___________, 2001 for remarketing pursuant to Section 4.6(c) of the Pledge
Agreement. The undersigned hereby instructs you to return such Capital
Securities to the undersigned in accordance with the undersigned's instructions.
With this notice, the Undersigned hereby agrees to be bound by the terms and
conditions of Section 4.6(c) of the Pledge Agreement. Capitalized terms used
herein but not defined shall have the meaning set forth in the Pledge Agreement.
Date:
-------------------------- ---------------------------------------
By:
------------------------------------
Name:
----------------------------------
Title:
---------------------------------
Signature Guarantee:
-------------------
54
Please print name and address:
---------------------------------- ---------------------------------
Name Social Security or other Taxpayer
Identification Number, if any
----------------------------------
Address
----------------------------------
----------------------------------
----------------------------------
--------------------------------------------------------------------------------
A. DELIVERY INSTRUCTIONS
In the event of a Failed Remarketing, Capital Securities which are in physical
form should be delivered to the person(s) set forth below and mailed to the
address set forth below.
Name(s)
--------------------------------------
(Please Print)
Address
--------------------------------------
(Please Print)
----------------------------------------------
----------------------------------------------
(Zip Code)
----------------------------------------------
(Tax Identification or Social Security Number)
In the event of a Failed Remarketing, Capital Securities which are in book-entry
form should be credited to the account at The Depositary Trust Company set forth
below.
------------------
DTC Account Number
Name of Account Party: ______________
--------------------------------------------------------------------------------
