EXHIBIT 4.10
PRUDENTIAL FINANCIAL, INC.
AND
JPMORGAN CHASE BANK
as Purchase Contract Agent,
Collateral Agent, Custodial Agent
and Securities Intermediary
PLEDGE AGREEMENT
Dated as of _____, 2001
TABLE OF CONTENTS
ARTICLE I
Definitions
SECTION 1.1 Definitions.................................................. 2
ARTICLE II
Pledge; Control and Perfection
SECTION 2.1 The Pledge................................................... 6
SECTION 2.2 Control and Perfection....................................... 7
ARTICLE III
Distributions on Pledged Collateral
SECTION 3.1 Distributions................................................ 9
SECTION 3.2 Application of Distributions................................. 10
ARTICLE IV
Substitution, Release, Repledge and Settlement of Capital Securities
SECTION 4.1 Collateral Substitution and the Creation of Stripped Units... 11
SECTION 4.2 Collateral Substitution and the Re-Creation of Normal Units.. 12
SECTION 4.3 Termination Event............................................ 12
SECTION 4.4 Early Settlement; Merger Early Settlement.................... 13
SECTION 4.5 Remarketing; Application of Proceeds; Settlement............. 14
ARTICLE V
Voting Rights -- Capital Securities
SECTION 5.1 Exercise by Purchase Contract Agent.......................... 16
ARTICLE VI
Rights and Remedies; Distribution of the Debentures
SECTION 6.1 Rights and Remedies of the Collateral Agent.................. 17
SECTION 6.2 Distribution of the Debentures............................... 18
SECTION 6.3 Substitutions................................................ 18
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ARTICLE VII
Representations and Warranties; Covenants
SECTION 7.1 Representations and Warranties............................... 19
SECTION 7.2 Covenants.................................................... 19
ARTICLE VIII
The Collateral Agent
SECTION 8.1 Appointment, Powers and Immunities........................... 20
SECTION 8.2 Instructions of the Company.................................. 21
SECTION 8.3 Reliance..................................................... 22
SECTION 8.4 Rights in Other Capacities................................... 22
SECTION 8.5 Non-Reliance on Collateral Agent............................. 23
SECTION 8.6 Compensation and Indemnity................................... 23
SECTION 8.7 Failure to Act............................................... 24
SECTION 8.8 Resignation.................................................. 24
SECTION 8.9 Right to Appoint Agent or Advisor............................ 25
SECTION 8.10 Survival..................................................... 26
SECTION 8.11 Exculpation.................................................. 26
ARTICLE IX
Amendment
SECTION 9.1 Amendment Without Consent of Holders......................... 26
SECTION 9.2 Amendment With Consent of Holders............................ 27
SECTION 9.3 Execution of Amendments...................................... 27
SECTION 9.4 Effect of Amendments......................................... 28
SECTION 9.5 Reference to Amendments...................................... 28
ARTICLE X
Miscellaneous
SECTION 10.1 No Waiver.................................................... 28
SECTION 10.2 GOVERNING LAW................................................ 28
SECTION 10.3 Notices...................................................... 29
SECTION 10.4 Successors and Assigns....................................... 29
SECTION 10.5 Counterparts................................................. 29
SECTION 10.6 Severability................................................. 29
SECTION 10.7 Expenses, Etc................................................ 30
SECTION 10.8 Security Interest Absolute................................... 30
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SECTION 10.9 Waiver of Jury Trial......................................... 31
EXHIBIT A Instruction from Purchase Contract Agent to Collateral Agent
EXHIBIT B Instruction to Purchase Contract Agent
EXHIBIT C Instruction to Custodial Agent
EXHIBIT D Instruction to Custodial Agent
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PLEDGE AGREEMENT
PLEDGE AGREEMENT, dated as of ___, 2001 (this "Agreement"), among
Prudential Financial, Inc., a New Jersey corporation (the "Company"), JPMorgan
Chase Bank, 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 JPMorgan Chase Bank, a New York
banking corporation, 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 hereinafter defined).
RECITALS
WHEREAS, the Company and the Purchase Contract Agent are parties to the
Purchase Contract Agreement, dated as of the date hereof (as modified and
supplemented and in effect from time to time, the "Purchase Contract
Agreement"), pursuant to which there may be issued up to ___ Units of the
Company (___ if the Underwriters' over-allotment option pursuant to the
Underwriting Agreement (as defined in the Declaration) is exercised in full),
having a Stated Amount of $50 per Unit, all of which will initially be Normal
Units.
WHEREAS, each Normal Unit will be comprised of (a) a stock purchase
contract (the "Purchase Contract") under which the holder will be required to
purchase from the Company and the Company will be required to sell to such
holder not later than ___, 2004 (the "Stock Purchase Date"), for $50.00, a
number of shares of Common Stock, $0.01 par value per share (the "Common
Stock"), of the Company equal to the Settlement Rate (as defined below), and (b)
either beneficial ownership of (x) a Capital Security (as defined below) or (y)
following the remarketing of the Capital Securities in accordance with the
Purchase Contract Agreement and the Remarketing Agreement (as defined below),
the appropriate Treasury Consideration (as defined in the Purchase Contract
Agreement).
WHEREAS, in accordance with the terms of the Purchase Contract Agreement, a
holder of Normal Units may separate the Capital Securities or the appropriate
Treasury Consideration, as applicable, from the related Purchase Contracts by
substituting for such Capital Securities or the appropriate Treasury
Consideration, as the case may be, Treasury Securities (as defined in the
Purchase Contract Agreement) that will pay in the aggregate an amount equal to
the aggregate Stated Amount (as defined below) of such Normal Units. Upon such
separation, the Normal Units will become Stripped Units. Each Stripped Unit will
be comprised of (a) a Purchase Contract under which the holder
will purchase from the Company not later than the Stock Purchase Date, for
$50.00, a number of shares of Common Stock of the Company equal to the
Settlement Rate, and (b) a 1/20 undivided beneficial interest in a zero-coupon
U.S. Treasury Security (CUSIP No. ___) maturing on ___, 2004 [Insert Stock
Purchase Date] that will pay $1,000 on such maturity date (the "Treasury
Securities").
WHEREAS, pursuant to the terms of the Declaration (as defined below),
Prudential Financial Capital Trust I, a statutory business trust formed under
the laws of the State of Delaware (the "Trust"), will issue ___ (___ if the
Underwriters' over-allotment option pursuant to the Underwriting Agreement is
exercised in full) ___% capital securities, (the "Capital Securities") and ____
___% common securities (the "Common Securities"), in each case having a stated
liquidation value equal to the Stated Amount.
WHEREAS, 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 Treasury Consideration and any Treasury Securities delivered in exchange
therefor 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, any Treasury Consideration and the Treasury Securities
will be beneficially owned by the Holders but will be owned of record by the
Purchase Contract Agent subject to the Pledge hereunder.
NOW, THEREFORE, and for other good and valuable consideration, the receipt
and sufficiency of which is hereby acknowledged, 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:
ARTICLE I
DEFINITIONS
SECTION 1.1 Definitions.
For all purposes of this agreement, except as otherwise expressly provided
or unless the context otherwise requires:
(a) the defined terms in this Agreement 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; and
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(c) the following terms have the meanings assigned to them in the Purchase
Contract Agreement: (i) Act, (ii) Board Resolution; (iii) Certificate, (iv)
Debentures, (v) Early Settlement, (vi) Early Settlement Amount, (vii) Failed
Remarketing, (viii) First Supplemental Indenture, (ix) Holder, (x) Indenture,
(xi) Initial Remarketing Date, (xii) Initial Remarketing Period, (xiii) Last
Failed Remarketing, (xiv) Merger Early Settlement, (xv) Merger Early
Settlement Amount, (xvi) Normal Unit, (xvii) Opinion of Counsel, (xviii) Opt-
out Treasury Consideration, (xix) Outstanding Securities, (xx) Remarketing
Agent, (xxi) Remarketing Agreement, (xxii) Settlement Rate, (xxiii) Stated
Amount, (xxiv) Stripped Unit, (xxv) Subsequent Remarketing Date, (xxvi)
Subsequent Remarketing Period, (xxvii) Treasury Consideration (including
Agent-purchased Treasury Consideration), (xxviii) Termination Event, and
(xxix) Unit;
"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.
"Business Day" means any day that is not a Saturday, Sunday or day on which
banking institutions and trust companies in The City of New York or at a place
of payment are authorized or required by law, regulation or executive order to
close.
"Capital Securities" has the meaning specified in the Recitals.
"Class B Stock" means the Class B Stock, par value $0.01 per share, of the
Company.
"Code" has the meaning specified in Section 6.1 hereof.
"Collateral" has the meaning specified in Section 2.1 hereof.
"Collateral Account" means the trust account (number ___ ) maintained at
JPMorgan Chase Bank in the name of "JPMorgan Chase Bank, as Purchase Contract
Agent on behalf of the holders of certain securities of Prudential Financial,
Inc., Collateral Account subject to the security interest of JPMorgan Chase
Bank, as Collateral Agent, for the benefit of Prudential Financial, Inc., as
pledgee" and any successor account.
"Collateral Agent" has the meaning specified in the first paragraph of this
Agreement.
"Common Securities" has the meaning specified in the Recitals.
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"Common Stock" has the meaning specified in the Recitals but does not
include the Class B Stock of the Company unless expressly otherwise stated.
"Company" means the Person named as the "Company" in the first paragraph of
this Agreement until a successor shall have become such pursuant to the
applicable provisions of the Purchase Contract Agreement, and thereafter
"Company" shall mean such successor.
"Custodial Agent" has the meaning specified in the first paragraph of this
Agreement.
"Debenture Trustee" means JPMorgan Chase Bank, as trustee under the
Indenture (as defined in the Purchase Contract Agreement) and First Supplemental
Indenture (as defined in the Purchase Contract Agreement) until a successor is
appointed thereunder, and thereafter means such successor trustee.
"Declaration" means the Amended and Restated Declaration of Trust, dated as
of ___, 2001 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.
"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.
"Pledged Capital Securities" has the meaning specified in Section 2.1
hereof.
"Pledged Treasury Consideration" 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 Section 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.
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"Securities" means the Normal Units and Stripped Units collectively.
"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.
"Stock Purchase Date" 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.
"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 (a) 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 (b) 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.
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ARTICLE II
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 (i) the Capital Securities, Treasury Consideration and Treasury
Securities constituting a part of the Securities, (ii) any Treasury Securities
delivered in exchange for any Capital Securities or Treasury Consideration, as
applicable, in accordance with Section 4.1 hereof, and (iii) any Capital
Securities or Treasury Consideration, as applicable, delivered in exchange for
any Treasury Securities in accordance with Section 4.2 hereof, in each case that
have been Transferred to or otherwise received by the Collateral Agent and not
released by the Collateral Agent to such Holders under the provisions of this
Agreement;
(b) in the Collateral Account and all securities, financial assets,
security entitlements, cash and other property credited thereto and all Security
Entitlements related thereto;
(c) in any Debentures delivered to the Collateral Agent upon the
occurrence of a liquidation of the Trust as provided in Section 6.2; and
(d) all Proceeds of the foregoing (all of the foregoing, collectively, the
"Collateral").
(e) 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 Normal
Units 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. Treasury Securities and Treasury Consideration, 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 Entitlement
with respect to such Treasury Securities or Treasury Consideration, has been
credited to the Collateral Account. For purposes of perfecting the pledge under
applicable law, including, to the extent
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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.
(f) 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), Treasury Consideration or Treasury Securities
subject to the Pledge, excluding any Capital Securities (or the Debentures that
are delivered pursuant to Section 6.2 hereof), Treasury Consideration or
Treasury Securities released from the Pledge as provided in Sections 4.1 and 4.2
hereof, respectively, are hereinafter referred to as "Pledged Capital
Securities," "Pledged Treasury Consideration" 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 hereunder in physical form in
its name.
(g) Except as may be required in order to release Capital Securities or
Treasury Consideration, as applicable, in connection with a Holder's election to
convert its investment from a Normal Unit to a Stripped Unit, or except as
otherwise required to release Capital Securities as specified herein, neither
the Collateral Agent, the Custodial 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 may deliver upon the written direction of the Company with
respect to the Collateral Account, the Collateral credited thereto and any
Security Entitlements with respect to any thereof. In the event the Securities
Intermediary receives from the Holders or the Purchase Contract Agent
entitlement orders which conflict with entitlement orders received from the
Collateral
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Agent, the Securities Intermediary shall follow the entitlement orders received
from the Collateral Agent. Such instructions and entitlement orders may, without
limitation, direct the Securities Intermediary to transfer, redeem, assign, or
otherwise deliver the Capital Securities, the Treasury Consideration, the
Treasury Securities, and any Security Entitlements with respect thereto or sell,
liquidate or dispose of such assets through a broker designated by the Company,
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, upon written direction of the Company, itself issue instructions
and entitlement 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 in
writing by the Company.
(b) The Securities Intermediary hereby confirms and agrees that:
(i) all securities or other property underlying any financial assets
credited to the Collateral Account shall be registered in the name of
the Securities Intermediary, or its nominee, indorsed to the
Securities Intermediary, or its nominee, 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 foregoing 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 Consideration 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 this Agreement will not enter into, any agreement with
any other person relating to the Collateral Account and/or any
financial assets credited
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thereto pursuant to which it has agreed to comply with entitlement
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 Contract 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.
Notwithstanding the foregoing, in no event shall the Collateral Agent or
Securities Intermediary be responsible for the preparation or filing of any
financing or continuation statements in the appropriate jurisdictions or
responsible for maintenance or perfection of any security interest hereunder.
ARTICLE III
DISTRIBUTIONS ON PLEDGED COLLATERAL
SECTION 3.1 Distributions.
So long as the Purchase Contract Agent is the registered owner of the
Pledged Capital Securities or Pledged Treasury Consideration, 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 of or cash distributions on the Pledged Capital Securities and all
payments of the principal of, or cash distributions on, any Pledged Treasury
Consideration or Pledged Treasury Securities, that are received by the
Collateral Agent and 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) quarterly cash distributions on Normal Units which
include Pledged Capital Securities or Pledged Treasury Consideration
and (B) any payments with respect to any Capital Securities or
Treasury Consideration, 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 the Normal
Units, to the account designated by the Purchase Contract Agent for
such purpose, no later than 10:00 a.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 9:00
a.m., New York City time, on a Business Day, then such payment shall
be made no later than 9:30 a.m., New York City time, on the next
succeeding Business Day);
(ii) In the case of any 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 Stripped Units 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 or payment
instructions 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 10 a.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 in respect of any Pledged Capital Securities,
Pledged Treasury Consideration or Pledged Treasury Securities, to be
paid upon settlement of such Holder's obligations to purchase Common
Stock under the Purchase Contract, to the Company on the Stock
Purchase Date in accordance with the procedure set forth in Section
4.5(a) or 4.5(c) hereof, in full satisfaction of the respective
obligations of the Holders under the related Purchase Contracts.
SECTION 3.2 Application of Distributions.
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 on
account of any Capital Security or principal of any Treasury Consideration, as
applicable, that, at the time of such payment, is a Pledged Capital Security or
Pledged Treasury Consideration, as the case may be, or a Holder of a Stripped
Unit 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
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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.
ARTICLE IV
SUBSTITUTION, RELEASE, REPLEDGE AND SETTLEMENT OF CAPITAL SECURITIES
SECTION 4.1 Collateral Substitution and the Creation of Stripped Units.
At any time on or prior to the second Business Day preceding the Stock
Purchase Date, (except during the periods commencing on the second Business Day
prior to the Initial Remarketing Period or any Subsequent Remarketing Period, as
the case may be, and ending, if there is a Failed Remarketing, on the second
Business Day following the Initial Remarketing Period or any Subsequent
Remarketing Period, as the case may be. If the remarketing is successful, the
Holder may not substitute Treasury Securities until the Business Day following
the Initial Remarketing Date or any Subsequent Remarketing Date, as the case may
be. A Holder of Normal Units shall have the right to substitute Treasury
Securities for the Pledged Capital Securities or Pledged Treasury Consideration,
as the case may be, securing such Holder's obligations under the Purchase
Contracts comprising a part of such Normal Units, in integral multiples of 20
Normal Units, or after a successful remarketing of the Capital Securities
pursuant to the Purchase Contract Agreement, in integral multiples of Normal
Units such that Treasury Securities to be deposited and the applicable Treasury
Consideration to be released are in integral multiples of $1,000, by (a)
Transferring to the Collateral Agent Treasury Securities having an aggregate
principal amount equal to the aggregate Stated Amount of such Normal Units and
(b) delivering such Normal Units to the Purchase Contract Agent, accompanied by
a notice, substantially in the form of Exhibit B hereto, to the Purchase
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Contract Agent stating that such Holder has Transferred Treasury Securities to
the Collateral Agent pursuant to clause (a) above (stating the principal amount,
and the CUSIP numbers 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 or Pledged Treasury
Consideration, as the case may be, related to such Normal Units, whereupon the
Purchase Contract Agent shall promptly give such instruction to the Collateral
Agent in the form provided in Exhibit A. Upon receipt of Treasury Securities
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from a Holder of Normal Units and the related instruction from the Purchase
Contract Agent, the Collateral Agent shall release the Pledged Capital
Securities or Pledged Treasury Consideration, as the case may be, and shall
promptly Transfer such Pledged Capital Securities or Pledged Treasury
Consideration, 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.
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SECTION 4.2 Collateral Substitution and the Re-Creation of Normal Units.
At any time on or prior to the second Business Day immediately preceding
the Stock Purchase Date (except during the periods commencing on the second
Business Day prior to the Initial Remarketing Period or any Subsequent
Remarketing Period, as the case may be, and ending, if there is a Failed
Remarketing, on the second Business Day following the Initial Remarketing Period
or any Subsequent Remarketing Period, as the case may be. If the remarketing is
successful, the Holder may not reestablish Normal Units until the Business Day
following the Initial Remarketing Date or any Subsequent Remarketing Date, as
the case may be), a Holder of Stripped Units shall have the right to reestablish
Normal Units (a) consisting of the Purchase Contracts and Capital Securities in
integral multiples of 20 Normal Units, or (b) after a remarketing of the Capital
Securities pursuant to the Purchase Contract Agreement, consisting of the
Purchase Contracts and the appropriate Treasury Consideration (identified and
calculated by reference to the Treasury Consideration then comprising Normal
Units) in integral multiples of Stripped Units such that the Treasury
Consideration to be deposited and the Treasury Securities to be released are in
integral multiples of $1,000, by (x) Transferring to the Collateral Agent
Capital Securities or the appropriate Treasury Consideration, as the case may
be, then comprising such number of Normal Units as is equal to such Stripped
Units and (y) delivering such Stripped Units 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 or Treasury Consideration 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 Stripped Units, whereupon the Purchase Contract Agent shall give
such instruction to the Collateral Agent in the form provided in Exhibit A.
---------
Upon receipt of the Capital Securities or the appropriate Treasury
Consideration, as the case may be, from such Holder and the instruction from the
Purchase Contract Agent, the Collateral Agent shall release the Pledged 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.
(a) 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 Pledged Treasury
Consideration, as the case may be, and Pledged Treasury Securities to the
Purchase Contract Agent for the benefit of the Holders of the Normal Units and,
subject to Section 3.1(ii), of the Stripped Units, respectively, free and clear
of any lien, pledge or security interest or other interest created hereby.
(b) If such Termination Event shall result from the Company's becoming a
debtor under the Bankruptcy Code, and if the Collateral Agent shall for any
reason fail
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promptly to effectuate the release and Transfer of all Pledged Capital
Securities, Pledged Treasury Consideration or of the Pledged Treasury
Securities, as the case may be, as provided by this Section 4.3, the Purchase
Contract Agent shall
(i) attempt 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, Pledged
Treasury Consideration or 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, Pledged Treasury Consideration or
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 Early Settlement; Merger 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
or Merger 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 or Merger 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 or Merger Early Settlement
Amounts, as the case may be, pursuant to the terms of the Purchase Contracts and
the Purchase Contract Agreement and that all conditions to such Early Settlement
or Merger Early Settlement, as the case may be, have been satisfied, then the
Collateral Agent shall release from the Pledge, (a) Pledged Capital Securities
or Pledged Treasury Consideration, as the case may be, in the case of a Holder
of Normal Units or (b) Pledged Treasury Securities, in the case of a Holder of
Stripped Units, relating to such Purchase Contracts as to which such Holders
have elected to effect Early Settlement or Merger Early Settlement, and shall
Transfer all such Pledged Capital
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Securities, Pledged Treasury Consideration 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 4.5 Remarketing; Application of Proceeds; Settlement.
(a) Pursuant to the Purchase Contract Agreement, the Purchase Contract
Agent shall notify, by 4:00 p.m., New York City time, on the eighth Business Day
preceding the Initial Remarketing Date or any Subsequent Remarketing Date, as
the case may be, the Remarketing Agent and the Collateral Agent of the aggregate
number of Capital Securities comprising part of Normal Units to be remarketed.
If the Remarketing Agent successfully remarkets the Capital Securities, the
Reset Agent shall, by approximately 4:30 P.M., New York City time, on the day of
the successful Remarketing within the Initial Remarketing Period or the
applicable Subsequent Remarketing Period, as the case may be, so promptly notify
by telephone (promptly confirmed in writing) the Collateral Agent. Upon receipt
of such notice, the Collateral Agent shall, by 10:00 a.m., New York City time,
on the second Business Day preceding the Initial Remarketing Date or any
Subsequent Remarketing Date, as the case may be, without any instruction from
Holders of Normal Units, (i) deliver the Pledged Capital Securities to be
remarketed to the Remarketing Agent for settlement of the remarketing, (ii)
deliver the remaining Pledged Capital Securities to the Purchase Contract Agent
for distribution to the Holders that have elected not to participate in the
remarketing and (iii) dispose of the Opt-out Treasury Consideration in
accordance with the provisions of Section 5.4(b)(v) of the Purchase Contract
Agreement. The Remarketing Agent will deliver the Agent-purchased Treasury
Consideration (as defined in the Purchase Contract Agreement) purchased from the
proceeds of the remarketing to the Purchase Contract Agent, which shall
thereupon deliver such Agent-purchased Treasury Consideration to the Collateral
Agent. Upon receipt of the Agent-purchased Treasury Consideration from the
Purchase Contract Agent following a successful remarketing, the Collateral
Agent, for the benefit of the Company, shall thereupon apply such Treasury
Consideration to secure such Holders' obligations under the Purchase Contracts.
On the Stock Purchase Date, the Collateral Agent shall apply that portion of the
payments received in respect of the Pledged Treasury Consideration equal to the
aggregate Stated Amount of the related Normal Units to satisfy in full the
obligations of such Holders of Normal Units to pay the Purchase Price under the
related Purchase Contracts. The remaining portion of such Proceeds, if any,
shall be distributed by the Collateral Agent to the Purchase Contract Agent for
payment to such Holders.
(b) (i) If the Remarketing Agent fails to remarket the Capital Securities
during the Initial Remarketing Period, settling on the Initial Remarketing Date,
the Remarketing Agent shall make further attempts to remarket the Capital
Securities in accordance with the procedures set forth in the Purchase Contract
Agreement and the Remarketing Agreement between the Initial Remarketing Date and
the Stock Purchase Date, provided that the requirements of Section 5.4(b)(ii) of
the Purchase Contract Agreement have been met. If there is a Failed Remarketing,
the Remarketing Agent
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shall, on the date of such Failed Remarketing, so promptly notify by telephone
(promptly confirmed in writing) the Collateral Agent.
(ii) If by 4:00 p.m., New York City time, on the Business Day
immediately preceding the Stock Purchase Date, the Remarketing Agent has
failed to remarket the Capital Securities at 100.5% of the Remarketing
Value (as described in the Purchase Contract Agreement), the Last Failed
Remarketing shall be deemed to have occurred and the Remarketing Agent
shall promptly notify by telephone (promptly confirmed in writing) the
Collateral Agent and the Purchase Contract Agent thereof. 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 Holders' obligations to pay the Purchase Price for the
Common Stock; provided that, if upon the Last Failed Remarketing the
Collateral Agent exercises such rights for the benefit of the Company with
respect to such Capital Securities, any accumulated and unpaid
distributions on such Capital Securities will become payable by the Company
to the Purchase Contract Agent for payment to the Holder of the Normal
Units to which such Capital Securities relates in accordance with the
Purchase Contract Agreement.
(c) In the event a Holder of Stripped Units has not made an Early
Settlement or Merger Early Settlement of the Purchase Contracts underlying its
Stripped Units, such Holder shall be deemed to have elected to pay for the
shares of Common Stock to be issued under such Purchase Contracts from the
payments received in respect of the related Pledged Treasury Securities. Without
receiving any instruction from any such Holder of Stripped Units, the Collateral
Agent shall apply such payments to the settlement of such Purchase Contracts on
the Stock Purchase Date. In the event the payments received in respect of the
related Pledged Treasury Securities are 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.
(d) On or prior to the ninth Business Day preceding the Initial
Remarketing Date, but no earlier than the Payment Date immediately preceding the
Initial Remarketing 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. On the eighth Business Day
---------
prior to the Initial Remarketing Date or any Subsequent Remarketing Date, as the
case may be, by 4:00 p.m., New York City time, the Custodial Agent shall notify
the Remarketing Agent of the number of such Separate Capital Securities to be
remarketed. 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, to be received at or prior
---------
to
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10:00 a.m., New York City time, on the eighth Business Day preceding the Initial
Remarketing Date and any Subsequent Remarketing Date, as the case may be, upon
which notice the Custodial Agent will return such Separate Capital Securities to
such holder. If the Remarketing Agent successfully remarkets the Separate
Capital Securities, the Remarketing Agent shall, by approximately 4:30 P.M., New
York City time, on the day of the successful Remarketing within the Initial
Remarketing Period or the applicable Subsequent Remarketing Period, as the case
may be, so promptly notify by telephone (promptly confirmed in writing) the
Custodial Agent. Upon receipt of such notice, the Custodial Agent shall, by
10:00 a.m., New York City time, on the second Business Day preceding the Initial
Remarketing Date or any Subsequent Remarketing Date, as the case may be, deliver
to the Remarketing Agent all Separate Capital Securities delivered to the
Custodial Agent pursuant to this Section 4.5 (d) and not withdrawn pursuant to
the terms hereof prior to such date. The portion of the proceeds from such
remarketing equal to the amount calculated in respect of such Separate Capital
Securities as set forth in Section 5.4(b) of the Purchase Contract Agreement
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 25 basis points
(.25%) of the total proceeds of such remarketing, the Remarketing Agent will
remit to the Custodial Agent the remaining portion of the proceeds, if any, for
the benefit of such holders. If there is a Failed Remarketing, the Remarketing
Agent shall on the date of such Failed Remarketing, so promptly notify by
telephone (promptly confirmed in writing) the Custodial Agent. In the case of
the Last Failed Remarketing, the Remarketing Agent shall promptly so notify by
telephone (promptly confirmed in writing) the Custodial Agent, upon which notice
the Custodial Agent shall return the Separate Capital Securities to their
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 4.5(d) shall be deemed to be references to
Debentures which are not pledged hereunder or required to be part of the
Collateral.
ARTICLE V
VOTING RIGHTS -- CAPITAL SECURITIES
SECTION 5.1 Exercise by Purchase Contract Agent.
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
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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.
ARTICLE VI
RIGHTS AND REMEDIES; DISTRIBUTION OF THE DEBENTURES
SECTION 6.1 Rights and Remedies of the Collateral Agent.
(a) In addition to the rights and remedies available at law or in equity,
after an event of default hereunder (as defined in Section 6.1(b)), 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 at the written direction
of the Company.
(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 any Pledged Treasury Consideration
or Pledged Treasury Securities as provided in Article III hereof in satisfaction
of the obligations of the Holder of the Securities of which such Pledged
Treasury Consideration or Pledged Treasury Securities, 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 such Pledged
Treasury Consideration, as applicable, and such obligations of such Holder, any
and all of the rights and remedies available to a secured party under the
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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, or (ii) the principal
amount of the Pledged Treasury Consideration or Pledged Treasury Securities,
subject, in each case, to the provisions of Article III, and as otherwise
granted herein.
(d) The Purchase Contract Agent, individually and as attorney-in-fact for
each Holder of Securities, agrees that, from time to time, upon the written
request of the Company or the Collateral Agent (acting upon the written request
of the Company), the Purchase Contract Agent or such Holder shall execute and
deliver such further documents and do such other acts and things as the Company
or the Collateral Agent (acting upon the written request of the Company) may
reasonably request in order to maintain the Pledge, and the perfection and
priority thereof, and to confirm the rights of the Collateral Agent hereunder.
The Purchase Contract Agent shall have no liability to any Holder for executing
any documents or taking any such acts requested by the Company or the Collateral
Agent (acting upon the written request of the Company) hereunder, except for
liability for its own negligent act, its own negligent failure to act, its bad
faith or its own willful misconduct.
SECTION 6.2 Distribution of the Debentures.
Upon the occurrence of a voluntary or involuntary dissolution 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 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 a voluntary or involuntary dissolution of the Trust, the
Collateral Agent shall Transfer such 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 Normal Units 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 such
Debentures as it had in respect of the Pledged Capital Securities as provided in
Articles II, III, IV, V and VI hereof, and any reference herein to the Capital
Securities or Pledged Capital Securities shall be deemed to be referring to such
Debentures.
SECTION 6.3 Substitutions.
Whenever a Holder has the right to substitute Treasury Securities, Capital
Securities or Treasury Consideration, as the case may be, for Collateral held by
the
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Collateral Agent, such substitution shall not constitute a novation of the
security interest created hereby.
ARTICLE VII
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 2.1;
(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 operation 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); 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 2.1 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:
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(a) neither the Purchase Contract Agent nor such Holders will create or
purport to create or allow to subsist any mortgage, charge, lien, pledge or any
other security interest whatsoever over the Collateral or any part of it other
than pursuant to this Agreement; and
(b) neither the Purchase Contract Agent nor such Holders will sell or
otherwise dispose (or attempt to dispose) of the Collateral or any part of it
except for the beneficial interest therein, subject to the pledge hereunder,
transferred in connection with the Transfer of the Securities.
ARTICLE VIII
THE COLLATERAL AGENT
SECTION 8.1 Appointment, Powers and Immunities.
(a) 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:
(i) 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;
(ii) 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,
existence, validity, perfection or maintenance of any security
interest created hereunder;
(iii) 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, subject to Section 8.6);
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(iv) shall not be responsible for any action taken or omitted to be taken
by it hereunder or under any other document or instrument referred to
or provided for herein or in connection herewith or therewith, except
for its own negligence, bad faith or willful misconduct; and
(v) 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.
(b) 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 or for any special, indirect, individual, consequential damages
or lost profits or loss of business, arising in connection with this Agreement.
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.
(c) The Collateral Agent, Custodial Agent and Securities Intermediary
shall have no liability whatsoever for the action or inaction of the Book-Entry
System or any Clearing Corporation. In no event shall the Book-Entry System or
any Clearing Corporation be deemed an agent or subcustodian of the Collateral
Agent, Custodial Agent and Securities Intermediary. The Collateral Agent,
Custodial Agent and Securities Intermediary shall not be responsible or liable
for any failure or delay in the performance of its obligations under this
Agreement arising out of or caused, directly or indirectly, by circumstances
beyond its reasonable control, including, without limitation, acts of God;
earthquakes; fires; floods; wars; civil or military disturbances; sabotage;
epidemics; riots; interruptions, loss or malfunctions of utilities, computer
(hardware or software) or communications service; accidents; labor disputes;
acts of civil or military authority; acts of terrorism; governmental actions; or
inability to obtain labor, material, equipment or transportation.
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
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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 or involve the Collateral Agent, the Custodial Agent or the Securities
Intermediary in personal liability for which indemnification pursuant to this
Section 8.6(b) would not be sufficient and (ii) the Collateral Agent, the
Custodial Agent and the Securities Intermediary shall each receive indemnity
reasonably satisfactory to it 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.
SECTION 8.3 Reliance.
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 or facsimile) reasonably 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
waives any right of set-off or banker's lien with respect to) 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. The parties to this Agreement hereby agree that the same
Person may
-22-
act as Collateral Agent hereunder and as Purchase Contract Agent under the
Purchase Contract Agreement.
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:
(a) to pay each of the Collateral Agent, the Custodial Agent and the
Securities Intermediary from time to time such compensation as shall be agreed
in writing between the Company and the Collateral Agent, Custodial Agent or the
Securities Intermediary, as the case may be, for all services rendered by each
of them hereunder, and
(b) 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 or collecting such amounts. 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. Failure by the Collateral Agent, the Custodial
Agent or the Securities Intermediary to promptly so notify the Company shall not
relieve the Company of its obligations under this Section except to the extent
the Company shall have been materially prejudiced as a result of such failure.
-23-
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, Custodial Agent and the Securities Intermediary shall be
entitled, after prompt notice to the Company and the Purchase Contract Agent, at
its sole option, to refuse to comply with any and all claims, demands or
instructions with respect to such property or funds so long as such dispute or
conflict shall continue, and neither the Collateral Agent, Custodial Agent nor
the Securities Intermediary 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, Custodial Agent and the
Securities Intermediary shall be entitled to refuse to act until either (i) such
conflicting or adverse claims or demands shall have been finally determined by a
court of competent jurisdiction or settled by agreement between the conflicting
parties as evidenced in a writing, reasonably satisfactory to the Collateral
Agent, Custodial Agent or the Securities Intermediary, as the case may be, or
(ii) the Collateral Agent, the Custodial Agent or the Securities Intermediary,
as the case may be, shall have received security or an indemnity reasonably
satisfactory to the Collateral Agent, Custodial Agent or the Securities
Intermediary, as the case may be, sufficient to save the Collateral Agent,
Custodial Agent or the Securities Intermediary, as the case may be, harmless
from and against any and all loss, liability or reasonable out-of-pocket expense
which the Collateral Agent, Custodial Agent or the Securities Intermediary, as
the case may be, may incur by reason of its acting without bad faith, willful
misconduct or gross negligence. The Collateral Agent, Custodial Agent or the
Securities Intermediary may in addition elect to commence an interpleader action
or seek other judicial relief or orders as the Collateral Agent, Custodial Agent
or the Securities Intermediary, as the case may be, may deem necessary.
Notwithstanding anything contained herein to the contrary, neither the
Collateral Agent, Custodial Agent nor the Securities Intermediary shall be
required to take any action that is in its opinion contrary to law or to the
terms of this Agreement, or which would in its opinion subject it or any of its
officers, employees or directors to liability.
SECTION 8.8 Resignation.
Subject to the appointment and acceptance of a successor Collateral Agent,
Custodial Agent or Securities Intermediary, as provided below, (a) the
Collateral Agent, Custodial Agent and the Securities Intermediary may resign at
any time by giving notice thereof to the Company and the Purchase Contract Agent
as attorney-in-fact for the Holders of Securities, (b) the Collateral Agent,
Custodial Agent and the Securities Intermediary may be removed at any time by
the Company and (c) if the Collateral Agent, Custodial Agent or the Securities
Intermediary fails to perform any of its material obligations hereunder in any
material respect for a period of not less than 20 days after receiving written
notice of such failure by the Purchase Contract Agent and such failure shall be
continuing, the Collateral Agent, Custodial Agent or the Securities Intermediary
may be removed by the Purchase Contract Agent. The Purchase Contract Agent
shall
-24-
promptly notify the Company of any removal of the Collateral Agent, the
Custodial Agent or the Securities Intermediary pursuant to clause (c) of the
immediately preceding sentence. The Company shall promptly notify the Purchase
Contract Agent of any removal of the Collateral Agent, the Custodial Agent or
the Securities Intermediary pursuant to clause (b) of the second preceding
sentence. Upon any such resignation or removal, the Company shall have the
right to appoint a successor Collateral Agent, Custodial Agent or Securities
Intermediary, as the case may be. If no successor Collateral Agent, Custodial
Agent or Securities Intermediary, as the case may be, shall have been so
appointed and shall have accepted such appointment within 60 days after the
retiring Collateral Agent's, Custodial Agent's or Securities Intermediary's
giving of notice of resignation or such removal, then the retiring Collateral
Agent, Custodial Agent or Securities Intermediary, as the case may be, may
petition any court of competent jurisdiction for the appointment of a successor
Collateral Agent, Custodial Agent or Securities Intermediary, as the case may
be. Each of the Collateral Agent, Custodial Agent and the Securities
Intermediary shall be a bank which has an office in New York, New York with a
combined capital and surplus of at least $50,000,000. Upon the acceptance of
any appointment as Collateral Agent, Custodial Agent or Securities Intermediary,
as the case may be, hereunder by a successor Collateral Agent, Custodial Agent
or Securities Intermediary, 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, Custodial Agent or Securities Intermediary, as
the case may be, and the retiring Collateral Agent, Custodial Agent or
Securities Intermediary, as the case may be, shall, upon payment of its charges,
take all appropriate action to transfer any money and property held by it
hereunder (including the Collateral) to such successor. The retiring Collateral
Agent, Custodial Agent or Securities Intermediary shall, upon such succession,
be discharged from its duties and obligations as Collateral Agent, Custodial
Agent or Securities Intermediary hereunder. After any retiring Collateral
Agent's, Custodial Agent's or Securities Intermediary's resignation hereunder as
Collateral Agent, Custodial Agent or Securities Intermediary, the provisions of
this Section 8.8 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, Custodial Agent or Securities Intermediary. Any resignation or 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 hereunder.
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
(other than legal counsel) pursuant to this Section 8.9 shall be subject to
prior consent of the Company, which consent shall not be unreasonably withheld.
-25-
SECTION 8.10 Survival.
The provisions of this Article VIII shall survive termination of this
Agreement and the resignation or removal of the Collateral Agent, the Custodial
Agent or the Securities Intermediary.
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, incurred without
any act or deed that is found to be attributable to negligence, bad faith or
willful misconduct on the part of the Collateral Agent, the Custodial Agent or
the Securities Intermediary.
ARTICLE IX
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:
(i) to evidence the succession of another Person to the Company, and the
assumption by any such successor of the covenants of the Company; or
(ii) 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
(iii) to evidence and provide for the acceptance of appointment hereunder
by a successor Collateral Agent, Securities Intermediary or Purchase
Contract Agent; or
(iv) 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
-26-
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, 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,
(i) change the amount or type of Collateral underlying a Security
(except for the rights of holders of Normal Units to substitute the
Treasury Securities for the Pledged Capital Securities or the
Pledged Treasury Consideration, as the case may be, or the rights of
Holders of Stripped Units to substitute Capital Securities or the
appropriate Treasury Consideration, 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
(ii) 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
(iii) 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 receive and (subject to Section 8.1 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 and, in the case of an
amendment pursuant to Section 9.1, that such amendment
-27-
does not adversely affect the validity, perfection or priority of the security
interests granted or created hereunder.
SECTION 9.4 Effect of Amendments.
Upon the execution of any amendment under this Article IX, 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 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.
ARTICLE X
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 REGARD TO ITS PRINCIPLES OF CONFLICTS OF
LAWS. Without limiting the foregoing, the above choice of law is expressly
agreed to by the Securities Intermediary, the Collateral Agent, the Custodial
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, which law, for purposes of the
-28-
Code, shall be deemed to be the law governing all security entitlements related
thereto. In addition, such parties agree that, for purposes of the Code, New
York shall be the Securities Intermediary's jurisdiction. 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, 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.
Unless otherwise stated herein, 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 personally delivered or, in the case of a mailed notice or
notice transmitted by telecopier, 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
-29-
force and effect in such jurisdiction and shall be liberally construed in order
to carry out the intentions of the parties hereto as nearly as may be possible
and (ii) the invalidity or unenforceability of any provision hereof in any
jurisdiction shall not affect the validity or enforceability of such provision
in any other jurisdiction.
SECTION 10.7 Expenses, Etc.
The Company agrees to reimburse the Collateral Agent, the Securities
Intermediary and the Custodial Agent for:
(a) all reasonable out-of-pocket costs and all reasonable expenses of the
Collateral Agent, the Custodial Agent and the Securities Intermediary
(including, without limitation, the reasonable fees and expenses of counsel to
the Collateral Agent, the Custodial Agent and the Securities Intermediary ), in
connection with (i) the negotiation, preparation, execution and delivery or
performance of this Agreement and (ii) any modification, supplement or waiver of
any of the terms of this Agreement;
(b) all reasonable costs and expenses of the Collateral Agent (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 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
-30-
(c) any other circumstance which might otherwise constitute a defense
available to, or discharge of, a borrower, a guarantor or a pledgor.
SECTION 10.9 Waiver of Jury Trial.
EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY ARISE
UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND DIFFICULT ISSUES, AND
THEREFORE IT HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT IT MAY HAVE
TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING
OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
-31-
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
PRUDENTIAL FINANCIAL, INC.
By:______________________________________________
Name:
Title:
Address for Notices:
Prudential Financial, Inc.
000 Xxxxx Xxxxxx
Xxxxxx, Xxx Xxxxxx 00000
Attention: Treasurer's Office
Telecopy: (000) 000-0000
JPMORGAN CHASE BANK,
as Purchase Contract Agent, Collateral Agent,
CustodialAgent and Securities Intermediary,
and as attorney-in-fact of the Holders from time
to time of the Securities
By:______________________________________________
Name:
Title:
Address for Notices:
JPMorgan Chase Bank
000 Xxxx 00xx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Institutional Trust Services
Telecopy: (000) 000-0000
-32-
EXHIBIT A
INSTRUCTION FROM PURCHASE CONTRACT AGENT TO
COLLATERAL AGENT
JPMorgan Chase Bank
000 Xxxx 00xx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Institutional Trust Services
Re: Equity Security Units of Prudential Financial, Inc. (the "Company"),
and Prudential Financial Capital Trust I
--------------------------------------------------------------------
We hereby notify you in accordance with Section [4.1] [4.2] of the Pledge
Agreement, dated as of ___, 2001 (the "Pledge Agreement"), among the Company,
you, as Collateral Agent, Custodial Agent and Securities Intermediary, and us,
as Purchase Contract Agent and as attorney-in-fact for the holders of [Normal
Units] [Stripped Units] from time to time, that the holder of securities listed
below (the "Holder") has elected to substitute [$ _______ aggregate principal
amount of Treasury Securities (CUSIP No. _____)] [$_______ stated liquidation
amount of Capital Securities or $________ principal amount of Treasury
Consideration, as the case may be,] in exchange for the related [Pledged Capital
Securities or Pledged Treasury Consideration (CUSIP No. ____),] [Pledged
Treasury Securities] held by you in accordance with the Pledge Agreement and has
delivered to us a notice stating that the Holder has transferred [Treasury
Securities] [Capital Securities or the appropriate Treasury Consideration, as
the case may be,] to you, as Collateral Agent. We hereby instruct you, upon
receipt of such [Pledged Treasury Securities] [Pledged Capital Securities or
Pledged Treasury Consideration, as the case may be], and upon the payment by
such Holder of any applicable fees, to release the [Capital Securities or
Treasury Consideration, as the case may be,] [Treasury Securities] related to
such [Normal Units] [Stripped Units] to us in accordance with the Holder's
instructions.
Date:_______________
JPMORGAN CHASE BANK
By:_______________________________________
Name:
Title:
A-1
Please print name and address of Registered Holder electing to substitute
[Treasury Securities] [Capital Securities or Treasury Consideration] for the
[Pledged Capital Securities or the Pledged Treasury Consideration] [Pledged
Treasury Securities]:
Name: Social Security or other Taxpayer
Identification Number, if any:
Address:
A-2
EXHIBIT B
INSTRUCTION TO PURCHASE CONTRACT AGENT
JPMorgan Chase Bank
000 Xxxx 00xx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Institutional Trust Services
Re: Equity Security Units of Prudential Financial, Inc. (the "Company")
and Prudential Financial Capital Trust I
-------------------------------------------------------------------
The undersigned Holder hereby notifies you that it has delivered to ___, as
Collateral Agent, Custodial Agent and Securities Intermediary [$_________
aggregate principal amount of Treasury Securities] [$_________ stated
liquidation amount of Capital Securities or the appropriate Treasury
Consideration, as the case may be,] in exchange for the related [Pledged Capital
Securities or Pledged Treasury Consideration as the case may be,] [Pledged
Treasury Securities] held by the Collateral Agent, in accordance with Section
[4.1] [4.2] of the Pledge Agreement, dated ___________, 2001, among you, the
Company and the Collateral Agent. The undersigned Holder has paid the Collateral
Agent all applicable fees relating to such exchange. 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 Pledged
Treasury Consideration, as the case may be,] [Pledged Treasury Securities]
related to such [Normal Units] [Stripped Units].
Date: __________________
By:________________________________
Signature Guarantee:_______________
Please print name and address of
Registered Holder:
Name Social Security or other Taxpayer
Identification Number, if any
Address
B-1
EXHIBIT C
INSTRUCTION TO CUSTODIAL AGENT
(Remarketing of Separate Capital Securities)
JPMorgan Chase Bank
000 Xxxx 00xx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Institutional Trust Services
Re: Capital Securities of Prudential Financial, Inc. (the "Company")
and Prudential Financial Capital Trust I
----------------------------------------------------------------
The undersigned hereby notifies you in accordance with Section 4.5(d) of
the Pledge Agreement, dated as of ___, 2001 (the "Pledge Agreement"), among the
Company, yourselves, as Collateral Agent, Securities Intermediary and Custodial
Agent, and JPMorgan Chase Bank, as Purchase Contract Agent and as attorney-in-
fact for the Holders of Normal Units and Stripped Units 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 Initial Remarketing Period or any Subsequent
Remarketing Period for remarketing pursuant to Section 4.5(d) 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, net of amounts payable to the
Remarketing Agent in accordance with the Pledge Agreement, 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 deliver said Capital Securities 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 Depository Trust Company ("DTC") and the beneficial owner of
any Capital Securities tendered herewith by book-entry transfer to your account
at DTC and (ii) agrees to be bound by the terms
C-1
and conditions of Section 4.5(d) of the Pledge Agreement. Capitalized terms used
herein but not defined shall have the meaning set forth in the Pledge Agreement.
Date: _______________
Signature:__________________________
Signature Guarantee:
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):
C-2
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 Depository Trust Company set forth
below.
Name of Account Party: DTC Account Number:
C-3
EXHIBIT D
INSTRUCTION TO CUSTODIAL AGENT
(Withdrawal of Separate Capital Securities from Remarketing)
JPMorgan Chase Bank
000 Xxxx 00xx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Institutional Trust Services
Re: Capital Securities of Prudential Financial, Inc. (the "Company")
and Prudential Financial Capital Trust I
----------------------------------------------------------------
The undersigned hereby notifies you in accordance with Section 4.5(d) of
the Pledge Agreement, dated as of ___, 2001 (the "Pledge Agreement"), among the
Company, yourselves, as Collateral Agent, Securities Intermediary and Custodial
Agent and JPMorgan Chase Bank, as Purchase Contract Agent and as attorney-in-
fact for the Holders of Normal Units and Stripped Units from time to time, that
the undersigned elects to withdraw the $_____ aggregate stated liquidation
amount of Capital Securities delivered to the Custodial Agent on ___________,
2004 for remarketing pursuant to Section 4.5(d) 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 4.5(d) of the Pledge Agreement. Capitalized terms used herein but not
defined shall have the meaning set forth in the Pledge Agreement.
Date: __________________
Signature:__________________________
Signature Guarantee:
Name: Social Security or other Taxpayer
Identification Number, if any:
Address:
D-1
A. DELIVERY INSTRUCTIONS
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):
Capital Securities which are in book-entry form should be credited to the
account at The Depository Trust Company set forth below.
Name of Account Party: DTC Account Number:
D-2
