CENDANT CORPORATION,
THE CHASE MANHATTAN BANK,
as Collateral Agent
AND
THE FIRST NATIONAL BANK OF CHICAGO,
as Purchase Contract Agent
FORM OF PLEDGE AGREEMENT
Dated as of , 1998
TABLE OF CONTENTS
Page
Section 1. Definitions....................................................2
Section 2. Pledge; Control and Perfection.................................7
Section 2.1. The Pledge.....................................................7
Section 2.2. Control and Perfection.........................................9
Section 3. Distributions on Pledged Collateral...........................10
Section 4. Substitution, Release, Repledge and
Settlement of Preferred Securities............................12
Section 4.1. Substitution of Preferred Securities and
the Establishment of Growth PRIDES............................12
Section 4.2. Pledge of Preferred Securities and Re-
establishment of Income PRIDES................................13
Section 4.3. Termination Event.............................................14
Section 4.4. Cash Settlement...............................................15
Section 4.5. Early Settlement..............................................17
Section 4.6. Application of Proceeds Settlement. .........................17
Section 5. Voting Rights -- Preferred Securities.........................19
Section 6. Rights and Remedies; Distribution of the
Debentures; Tax Event Redemption..............................20
Section 6.1. Rights and Remedies of the Collateral
Agent.........................................................20
Section 6.2. Distribution of the Debentures; Tax Event
Redemption....................................................22
Section 6.3. Substitutions. ...............................................23
Section 7. Representations and Warranties;
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Page
Covenants.....................................................23
Section 7.1. Representations and Warranties................................23
Section 7.2. Covenants.....................................................24
Section 8. The Collateral Agent..........................................25
Section 8.1. Appointment, Powers and Immunities............................25
Section 8.2. Instructions of the Company...................................26
Section 8.3. Reliance by Collateral Agent..................................26
Section 8.4. Rights in Other Capacities....................................27
Section 8.5. Non-Reliance on Collateral Agent..............................27
Section 8.6. Compensation and Indemnity....................................28
Section 8.7. Failure to Act................................................28
Section 8.8. Resignation of Collateral Agent...............................29
Section 8.9. Right to Appoint Agent or Advisor.............................30
Section 8.10. Survival......................................................30
Section 8.11. Exculpation...................................................30
Section 9. Amendment.....................................................30
Section 9.1. Amendment Without Consent of Holders..........................30
Section 9.2. Amendment with Consent of Holders.............................31
Section 9.3. Execution of Amendments.......................................32
Section 9.4. Effect of Amendments..........................................32
Section 9.5. Reference to Amendments.......................................32
Section 10. Miscellaneous.................................................33
Section 10.1. No Waiver.....................................................33
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Page
Section 10.2. Governing Law................................................33
Section 10.3. Notices......................................................33
Section 10.4. Successors and Assigns.......................................34
Section 10.5. Counterparts.................................................34
Section 10.6. Severability.................................................34
Section 10.7. Expenses, etc................................................34
Section 10.8. Security Interest Absolute...................................35
EXHIBIT A INSTRUCTION TO COLLATERAL AGENT
EXHIBIT B INSTRUCTION TO PURCHASE CONTRACT AGENT
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PLEDGE AGREEMENT
FORM OF PLEDGE AGREEMENT, dated as of , 1998 (this
"Agreement"), among Cendant Corporation, a Delaware corporation (the
"Company"), The Chase Manhattan 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") and in its capacity as
a "securities intermediary" as defined in Section 8-102(a)(14) of the Code (as
defined herein) (in such capacity, together with its successors in such
capacity, the "Securities Intermediary"), and The First National Bank of
Chicago, not individually but solely as purchase contract agent and as
attorney-in-fact of the Holders (as defined in the Purchase Contract Agreement)
from time to time of the Securities (as hereinafter defined) (in such capacity,
together with its successors in such capacity, the "Purchase Contract Agent")
under the Purchase Contract Agreement (as hereinafter defined).
RECITALS
The Company and the Purchase Contract Agent are parties to the
Purchase Contract Agreement, dated as of the date hereof (as modified and
supplemented and in effect from time to time, the "Purchase Contract
Agreement"), pursuant to which there may be issued up to FELINE PRIDES and %
Trust Originated Preferred Securities (the "Preferred Securities" and, together
with the FELINE PRIDES, the "Securities").
The FELINE PRIDES will initially consist of (A) ,000,000 units
(referred to as "Income PRIDES") with a Stated Amount, per Income PRIDES, of
$50 (the "Stated Amount") and (B) at least 2,000,000 units (referred to as
"Growth PRIDES") with a face amount, per Growth PRIDES, equal to the Stated
Amount. Each Income PRIDES will initially consist of a unit comprised of (a) a
stock purchase contract (a "Purchase Contract") under which (i) the holder will
purchase from the Company on , 2001 (the "Purchase Contract Settlement
Date"), for an amount of cash equal to the Stated Amount, a number of newly
issued shares of common stock, $0.01 par value per share (the "Common Stock"),
of the Company equal to the Settlement Rate and (ii) the Company will pay the
holder Contract Adjustment Payments at the rate of % of the
Stated Amount per annum and (b) either beneficial ownership of a Trust
Preferred Security or upon the occurrence of a Tax Event Redemption the
Applicable Ownership Interest of the Treasury Portfolio. Each Growth PRIDES
will initially consist of a unit comprised of (a) a Purchase Contract under
which (i) the holder will purchase from the Company on the Purchase Contract
Settlement Date, for an amount in cash equal to the Stated Amount, a number of
newly issued shares of Common Stock of the Company, equal to the Settlement
Rate, and (ii) the Company will pay the holder Contract Adjustment Payments, at
the rate of % of the Stated Amount per annum, and (b) a 1/20 undivided
beneficial interest in a % zero-coupon U.S. Treasury Security (CUSIP No. )
having a principal amount equal to $1,000 and maturing on , 2001
(the "Treasury Securities").
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 Preferred
Securities 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 Preferred
Securities will be beneficially owned by the Holders but will be owned of
record by the Purchase Contract Agent subject to the Pledge hereunder.
Accordingly, the Company, the Collateral Agent, the Securities
Intermediary and the Purchase Contract Agent, on its own behalf and as
attorney-in-fact of the Holders from time to time of the Securities, agree as
follows:
Section 1. Definitions. For all purposes of this Agreement, except as
otherwise expressly provided or unless the context otherwise requires:
(a) the terms defined in this Article have the meanings assigned
to them in this Article and include the plural as well as the
singular;
(b) the words "herein," "hereof" and "hereunder" and other words
of similar import refer to this
2
Agreement as a whole and not to any particular Article, Section or
other subdivision;
(c) the following terms have the meanings assigned to them in the
Purchase Contract Agreement: (i) Act, (ii) Agent, (iii) Board
Resolution, (iv) Cash Settlement, (v) Certificate, (vi) Common Stock,
(vii) Contract Adjustment Payments, (viii) Debentures, (ix) Early
Settlement, (x) Early Settlement Amount, (xi) Early Settlement Date,
(xii) Failed Remarketing, (xiii) Holder, (xiv) Opinion of Counsel,
(xv) Outstanding Securities, (xvi) Purchase Agreement, (xvii) Purchase
Contract, (xviii) Purchase Contract Settlement Date, (xix) Purchase
Price, (xx) Remarketing Agent, (xxi) Remarketing Agreement, (xxii)
Remarketing Underwriting Agreement, (xxiii) Settlement Rate, and
(xxiv) Termination Event; and
(d) the following terms have the meanings assigned to them in the
Declaration: (i) Applicable Ownership Interest (ii) Applicable
Principal Amount, (iii) Institutional Trustee, (iv) Investment Company
Event,(v) Primary Treasury Dealer, (vi) Quotation Agent, (vii)
Redemption Amount, (viii) Redemption Price, (ix) Tax Event, (x) Tax
Event Redemption, (xi) Tax Event Redemption Date, (xii) Treasury
Portfolio, (xiii) Treasury Portfolio Purchase Price.
"Agreement" means this instrument as originally executed or as it may
from time to time be supplemented or amended by one or more agreements
supplemental hereto entered into pursuant to the applicable provisions hereof.
"Bankruptcy Code" means title 11 of the United States Code, or any
other law of the United States that from time to time provides a uniform system
of bankruptcy laws.
"Business Day" means any day other than a Saturday, a Sunday or any
other day on which banking institutions in The City of New York (in the State
of New York) are permitted or required by any applicable law to close.
3
"Cash" means any coin or currency of the United States as at the time
shall be legal tender for payment of public and private debts.
"Code" has the meaning specified in Section 6.1 hereof.
"Collateral" has the meaning specified in Section 2.1 hereof.
"Collateral Account" means the trust account (number ) maintained
at The Chase Manhattan Bank in the name "The First National Bank of Chicago",
as Purchase Contract Agent on behalf of the holders of certain securities of
Cendant Capital I, Collateral Account subject to the security interest of The
Chase Manhattan Bank, as Collateral Agent, for the benefit of Cendant
Corporation, as pledgee and any successor account.
"Collateral Agent" has the meaning specified in the first paragraph of
this instrument.
"Company" means the Person named as the "Company" in the first
paragraph of this instrument until a successor shall have become such, and
thereafter "Company" shall mean such successor.
"Debenture Trustee" means The Bank of Nova Scotia Trust Company of New
York, as trustee under the Indenture until a successor is appointed thereunder,
and thereafter means such successor trustee.
"Declaration" means the Amended and Restated Declaration of Trust,
dated as of , 1998, among the Company as sponsor, the trustees named therein
and the holders from time to time of undivided beneficial interests in the
assets of the Trust.
"Intermediary" means any entity that in the ordinary course of its
business maintains securities accounts for others and is acting in that
capacity.
"Permitted Investments" means any one of the following which shall
mature not later than the next succeeding Business Day (i) any evidence of
indebtedness with an original maturity of 365 days or less issued, or directly
and fully guaranteed or insured, by the United
4
States of America or any agency or instrumentality thereof (provided that the
full faith and credit of the United States of America is pledged in support
thereof or such indebtedness constitutes a general obligation of it); (ii)
deposits, certificates of deposit or acceptances with an original maturity of
365 days or less of any institution which is a member of the Federal Reserve
System having combined capital and surplus and undivided profits of not less
than US$ 200.0 million at the time of deposit; (iii) investments with an
original maturity of 365 days or less of any Person that is fully and
unconditionally guaranteed by a bank referred to in clause (ii); (iv)
repurchase agreements and reverse repurchase agreements relating to marketable
direct obligations issued or unconditionally guaranteed by the United States
Government or issued by any agency thereof and backed by the full faith and
credit of the United States Government; (v) investments in commercial paper,
other than commercial paper issued by the Company or its affiliates, of any
corporation incorporated under the laws of the United States or any State
thereof, which commercial paper has a rating at the time of purchase at least
equal to "A-1" by Standard & Poor's Ratings Services or at least equal to "P-1"
by Xxxxx'x Investors Service, Inc.; and (vi) investments in money market funds
registered under the Investment Company Act of 1940, as amended, rated in the
highest applicable rating category by S&P or Moody's.
"Person" means any 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 Preferred Securities" has the meaning specified in Section
2.1 hereof.
"Pledged Treasury Securities" has the meaning specified in Section 2.1
hereof.
"Preferred Securities" has the meaning specified in the Recitals.
5
"Proceeds" means all interest, dividends, cash, instruments,
securities, financial assets (as defined in ss. 8-102(a)(9) of the Code) and
other property from time to time received, receivable or otherwise distributed
upon the sale, exchange, collection or disposition of the Collateral or any
proceeds thereof.
"Purchase Contract" has the meaning specified in the Recitals.
"Purchase Contract Agent" has the meaning specified in the first
paragraph of this Agreement.
"Purchase Contract Agreement" has the meaning specified in the
Recitals.
"Securities" has the meaning specified in the Recitals.
"Securities Intermediary" has the meaning specified in the first
paragraph of this Agreement.
"Security Entitlement" has the meaning set forth in Section
8-102(a)(17) of the Code.
"Stated Amount" has the meaning specified in the Recitals.
"TRADES" means the Treasury/Reserve Automated Debt Entry System
maintained by the Federal Reserve Bank of New York pursuant to the TRADES
Regulations.
"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 appro-
6
priate physical form to the recipient accompanied by any duly
executed instruments of transfer, assignments in blank, transfer
tax stamps and any other documents necessary to constitute a
legally valid transfer to the recipient;
(ii) in the case of Collateral consisting of securities maintained in
book-entry form by causing a "securities intermediary" (as
defined in Section 8-102(a)(14) of the Code) to (i) credit a
"securities entitlement" (as defined in Section 8-102(a)(17) of
the Code) with respect to such securities to a "securities
account" (as defined in Section 8-501(a) of the Code) maintained
by or on behalf of the recipient and (ii) to issue a confirmation
to the recipient with respect to such credit.
"Treasury Security" means a zero-coupon U.S. Treasury Security (Cusip
Number 91280 AZ0) which are the principal strips of the 7 3/4% U.S. Treasury
Securities which mature on February 15, 2001.
"Trust" has the meaning specified in the Recitals.
"Value" with respect to any item of Collateral on any date means, as
to (i) a Preferred Security, the Stated Amount, (ii) Cash, the face amount
thereof and (iii) Treasury Securities, the aggregate principal amount thereof
at maturity.
Section 2. Pledge; Control and Perfection.
Section 2.1. The Pledge. The Holders from time to time acting through
the Purchase Contract Agent, as their attorney-in-fact, 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 (i) all of the
right, title and interest of such Holders (a) in the Preferred Securities
constituting a part of the Securities and all Proceeds thereof and any Treasury
Securities delivered in exchange for such Preferred Securities in accordance
with Section 4 hereof, in each case that have been Transferred
7
to or received by the Collateral Agent and not released by the Collateral Agent
to such Holders under the provisions of this Agreement (the "Collateral"); (b)
in payments made by Holders pursuant to Section 4.4; (c) in the Collateral
Account and all securities, financial assets and other property credited
thereto and all Security Entitlements related thereto; (d) in any Debentures
delivered to the Collateral Agent upon the occurrence of an Investment Company
Event or a liquidation of the Trust as provided in Section 6.2; (e) in the
Treasury Portfolio purchased on behalf of the Holders of Income PRIDES by the
Collateral Agent upon the occurrence of a Tax Event Redemption as provided in
Section 6.2 and (f) all proceeds of the foregoing. Prior to or concurrently
with the execution and delivery of this Agreement, the Purchase Contract Agent,
on behalf of the initial Holders of the Income PRIDES, shall cause the
Preferred Securities comprising a part of the Income PRIDES to be delivered to
the Collateral Agent for the benefit of the Company by physically delivering
such securities to the Collateral Agent endorsed in blank and the Collateral
Agent delivering such securities to the Securities Intermediary and causing the
Securities Intermediary to credit the Collateral Account with such securities
and send the Collateral Agent a confirmation of the deposit of such securities.
In the event a Holder of Income PRIDES so elects, such Holder may Transfer
Treasury Securities to the Collateral Agent for the benefit of the Company in
exchange for the release by the Collateral Agent on behalf of the Company of
Preferred Securities or the appropriate Applicable Ownership Interest of the
Treasury Portfolio, as the case may be, with an aggregate stated liquidation
amount equal to the aggregate principal amount of the Treasury Securities so
Transferred, in the case of Preferred Securities, or with an appropriate
Applicable Ownership Interest (as specified in clause (A) of the definition of
such term) of the Treasury Portfolio equal to the aggregate principal amount of
the Treasury Securities so transferred, in the event that a Tax Event
Redemption has occurred, to the Purchase Contract Agent on behalf of such
Holder. Treasury Securities and the Treasury Portfolio, as applicable, shall be
Transferred to the Collateral Account maintained by the Collateral Agent at the
Securities Intermediary by book-entry transfer to the Collateral Account in
accordance with the TRADES Regulations and other applicable law and by the
notation by the Securities Intermediary on its books that
8
a Security Entitlement with respect to such Treasury Securities or Treasury
Portfolio, has been credited to the Collateral Account. For purposes of
perfecting the Pledge under applicable law, including, to the extent
applicable, the TRADES Regulations or the Uniform Commercial Code as adopted
and in effect in any applicable jurisdiction, the Collateral Agent shall be the
agent of the Company as provided herein. The pledge provided in this Section
2.1 is herein referred to as the "Pledge" and the Preferred Securities (or the
Debentures that are delivered pursuant to Section 6.2 hereof) or Treasury
Securities subject to the Pledge, excluding any Preferred Securities (or the
Debentures that are delivered pursuant to Section 6.2 hereof) or Treasury
Securities released from the Pledge as provided in Section 4 hereof, are
hereinafter referred to as "Pledged Preferred Securities" or the "Pledged
Treasury Securities," respectively. Subject to the Pledge and the provisions of
Section 2.2 hereof, the Holders from time to time shall have full beneficial
ownership of the Collateral. Whenever directed by the Collateral Agent acting
on behalf of the Company, the Securities Intermediary shall have the right to
reregister the Preferred Securities or any other securities held in physical
form in its name.
Except as may be required in order to release Preferred Securities in
connection with a Holder's election to convert its investment from an Income
PRIDES to a Growth PRIDES, or except as otherwise required to release
securities as specified herein, neither the Collateral Agent nor the Securities
Intermediary shall relinquish physical possession of any certificate evidencing
a Preferred 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 Preferred Securities
evidenced thereby from the Pledge, the Securities Intermediary shall use its
best efforts to obtain physical possession of a replacement certificate
evidencing any Preferred 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.
9
Section 2.2. Control and Perfection. 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 ss. 8-102(a)(8) of the Code) that the Collateral Agent on behalf of the
Company may give in writing with respect to the Collateral Account, the
Collateral credited thereto and any security entitlements with respect to any
thereof. Such instructions and entitlement orders may, without limitation,
direct the Securities Intermediary to transfer, redeem, sell, liquidate,
assign, deliver or otherwise dispose of the Preferred Securities, the Treasury
Securities, the Treasury Portfolio, and any Security Entitlements with respect
thereto and to pay and deliver any income, proceeds or other funds derived
therefrom to the Company. The Holders from time to time acting through the
Purchase Contract Agent hereby further authorize and direct the Collateral
Agent, as agent of the Company, to itself issue instructions and entitlement
orders, and to otherwise take action, with respect to the Collateral Account,
the Collateral credited thereto and any security entitlements with respect
thereto, pursuant to the terms and provisions hereof, all without the necessity
of obtaining the further consent of the Purchase Contract Agent or any of the
Holders. The Collateral Agent shall be the Agent of the Company and shall act
as directed in writing by the Company. Without limiting the generality of the
foregoing, the Collateral Agent shall issue entitlement orders to the
Securities Intermediary when and as directed by the Company.
Section 3. Distributions on Pledged Collateral. So long as the
Purchase Contract Agent is the registered owner of the Pledged Preferred
Securities, it shall receive all payments thereon. If the Pledged Preferred
Securities are reregistered, such that the Collateral Agent becomes the
registered holder, all payments of the Stated Amount of or, if applicable, the
appropriate Applicable Ownership Interest (as specified in clause (A) of the
definition of such term) of the Treasury Portfolio, or cash distributions on,
the Pledged Preferred
10
Securities or on the appropriate Applicable Ownership Interest (as specified in
clause (B) of the definition of such term) of the Treasury Portfolio, as the
case may be, and all payments of the principal of, or cash distributions on,
any Pledged Treasury Securities received by the Collateral Agent that are
properly payable hereunder shall be paid by the Collateral Agent by wire
transfer in same day funds:
(i) In the case of (A) cash distributions with respect to the
Pledged Preferred Securities or the appropriate Applicable Ownership
Interest (as specified in clause (B) of the definition of such term)
of the Treasury Portfolio, as the case may be, and (B) any payments of
the Stated Amount or, if applicable, the appropriate Applicable
Ownership Interest (as specified in clause (A) of the definition of
such term) of the Treasury Portfolio with respect to any Preferred
Securities or the appropriate Applicable Ownership Interest of the
Treasury Portfolio, as the case may be, that have been released from
the Pledge pursuant to Section 4.3 hereof, to the Purchase Contract
Agent, for the benefit of the relevant Holders of Securities, to the
account designated by the Purchase Contract Agent for such purpose, no
later than 2:00 p.m., New York City time, on the Business Day such
payment is received by the Collateral Agent (provided that in the
event such payment is received by the Collateral Agent on a day that
is not a Business Day or after 12:30 p.m., New York City time, on a
Business Day, then such payment shall be made no later than 10:30
a.m., New York City time, on the next succeeding Business Day);
(ii) In the case of any principal payments with respect to any
Treasury Securities that have been released from the Pledge pursuant
to Section 4.3 hereof, to the Holders of the Growth PRIDES to the
accounts designated by them in writing for such purpose no later than
2:00 p.m., New York City time, on the Business Day such payment is
received by the Collateral Agent (provided that in the event such
payment is received by the Collateral Agent on a day that is not a
Business Day or after 12:30 p.m., New York City time, on a Business
Day, then such payment
11
shall be made no later than 10:30 a.m., New York City time, on
the next succeeding Business Day); and
(iii) In the case of payments of the Stated Amount of any
Pledged Preferred Securities or the appropriate Applicable Ownership
Interest (as specified in clause (A) of the definition of such term)
of the Treasury Portfolio, as the case may be, or the principal of any
Pledged Treasury Securities, to the Company on the Purchase Contract
Settlement Date in accordance with the procedure set forth in Section
4.6(a) or 4.6(b) hereof, in full satisfaction of the respective
obligations of the Holders under the related Purchase Contracts.
All payments received by the Purchase Contract Agent as provided herein shall
be applied by the Purchase Contract Agent pursuant to the provisions of the
Purchase Contract Agreement. If, notwithstanding the foregoing, the Purchase
Contract Agent shall receive any payments of the Stated Amount or, if
applicable, the appropriate Applicable Ownership Interest (as specified in
clause (A) of the definition of such term) on account of any Preferred Security
or the appropriate Applicable Ownership Interest of the Treasury Portfolio, as
applicable that, at the time of such payment, is a Pledged Preferred Security
or the appropriate Applicable Ownership Interest of the Treasury Portfolio, as
the case may be, or a Holder of a Growth PRIDES shall receive any payments of
principal on account of any Treasury Securities that, at the time of such
payment, are Pledged Treasury Securities, the Purchase Contract Agent or such
Holder shall hold the same as trustee of an express trust for the benefit of
the Company (and promptly deliver the same over to the Company) for application
to the obligations of the Holders under the related Purchase Contracts, and the
Holders shall acquire no right, title or interest in any such payments of
Stated Amount or principal so received.
Section 4. Substitution, Release, Repledge and Settlement of Preferred
Securities.
Section 4.1. Substitution of Preferred Securities and the Creation of
Growth PRIDES or Income PRIDES.
At any time on or prior to the fifth Business Day immediately
preceding the Purchase Contract Settlement
12
Date (unless a Tax Event Redemption has occurred), a Holder of Income PRIDES
shall have the right to substitute Treasury Securities for the Pledged
Preferred Securities securing such Holder's obligations under the Purchase
Contract(s) comprising a part of its Income PRIDES in integral multiples of 20
Income PRIDES by (a) Transferring to the Collateral Agent Treasury Securities
having a Value equal to the Stated Amount of the Pledged Preferred Securities
to be released and (b)(i) in the event that Contract Adjustment Payments are at
a higher rate for Growth PRIDES than for Income PRIDES, delivering cash in an
amount equal to the excess of the Contract Adjustment Payments that would have
accrued since the last Payment Date through the date of substitution on the
Growth PRIDES being created by the holder, over the Contract Adjustment
Payments that have accrued over the same time period on the related Income
PRIDES, which amount the Purchase Contract Agent shall promptly remit to the
Company, and (ii) delivering the related Income PRIDES to the Purchase Contract
Agent, accompanied by a notice, substantially in the form of Exhibit B hereto,
to the Purchase Contract Agent stating that such Holder has Transferred
Treasury Securities to the Collateral Agent pursuant to clause (a) above
(stating the Value of the Treasury Securities Transferred by such Holder) and
requesting that the Purchase Contract Agent instruct the Collateral Agent to
release from the Pledge the Pledged Preferred Securities related to such Income
PRIDES. The Purchase Contract Agent shall instruct the Collateral Agent in the
form provided in Exhibit A; provided, however, that if a Tax Event Redemption
has occurred and the Treasury Portfolio has become a component of the Income
PRIDES, Holders of Income PRIDES may make such substitution only in integral
multiples of 32,000 Income PRIDES at any time on or prior to the second
Business Day immediately preceding the Purchase Contract Settlement Date. Upon
receipt of Treasury Securities from a Holder of Income PRIDES and the related
instruction from the Purchase Contract Agent, the Collateral Agent shall
release the Pledged Preferred Securities or the appropriate Applicable
Ownership Interest of the Treasury Portfolio, as the case may be, and shall
promptly Transfer such Pledged Preferred Securities or the appropriate
Applicable Ownership Interest of the Treasury Portfolio, as the case may be,
free and clear of any lien, pledge or security interest created hereby, to the
Purchase Contract Agent.
13
(B) At any time on or prior to the fifth Business Day immediately
preceding the Purchase Contract Settlement Date (unless a Tax Event Redemption
has occurred), a Holder of Growth PRIDES shall have the right to establish or
reestablish Income PRIDES consisting of the Purchase Contracts and Preferred
Securities in integral multiples of 20 Income PRIDES by (a) Transferring to the
Collateral Agent Preferred Securities having a Stated Amount equal to the
Stated Amount of the Pledged Treasury Securities to be released and (b)(i) in
the event that Contract Adjustment Payments are at a higher rate for Income
PRIDES than for Growth PRIDES, holders of Growth PRIDES wishing to recreate
Income PRIDES will also be required to deliver cash in an amount equal to the
excess of the Contract Adjustment Payments that would have accrued since the
last payment date through the date of substitution on the Income PRIDES being
recreated by such holders, over the Contract Adjustment Payments that have
accrued over the same time period on the related Growth PRIDES and (ii)
delivering the related Growth PRIDES to the Purchase Contract Agent,
accompanied by a notice, substantially in the form of Exhibit B hereto, to the
Purchase Contract Agent stating that such Holder has transferred Preferred
Securities to the Collateral Agent pursuant to clause (a) above and requesting
that the Purchase Contract Agent instruct the Collateral Agent to release from
the Pledge the Pledged Treasury Securities related to such Growth PRIDES. The
Purchase Contract Agent shall instruct the Collateral Agent in the form
provided in Exhibit A; provided, however, that if a Tax Event Redemption has
occurred and the Treasury Portfolio has become a component of the Income
PRIDES, Holders of Growth PRIDES may make such substitution only in integral
multiples of 32,000 Growth PRIDES, at any time on or prior to the Business Day
immediately preceding the Purchase Contract Settlement Date. Upon receipt of
the Preferred Securities or the appropriate Applicable Ownership Interest of
the Treasury Portfolio, as the case may be, from such Holder and the
instruction from the Purchase Contract Agent, the Collateral Agent shall
release the Treasury Securities and shall promptly Transfer such Treasury
Securities, free and clear of any lien, pledge or security interest created
hereby, to the Purchase Contract Agent.
Section 4.2. Pledge of Preferred Securities and Reestablishment of
Income PRIDES or Growth PRIDES.
14
At any time on or prior to the fifth Business Day immediately
preceding the Purchase Contract Settlement Date (unless a Tax Event Redemption
has occurred), a Holder of Income PRIDES shall have the right to substitute
Treasury Securities for the Pledged Preferred Securities securing such Holder's
obligations under the Purchase Contract(s) comprising a part of its Income
PRIDES in integral multiples of 20 Income PRIDES by (a) Transferring to the
Collateral Agent Treasury Securities having a Value equal to the Stated Amount
of the Pledged Preferred Securities to be released and (b)(i) in the event that
Contract Adjustment Payments are at a higher rate for Growth PRIDES than for
Income PRIDES, delivering cash in an amount equal to the excess of the Contract
Adjustment Payments that would have accrued since the last Payment Date through
the date of substitution on the Growth PRIDES being created by the holder, over
the Contract Adjustment Payments that have accrued over the same time period on
the related Income PRIDES, which amount the Purchase Contract Agent shall
promptly remit to the Company, and (ii) delivering the related Income PRIDES to
the Purchase Contract Agent, accompanied by a notice, substantially in the form
of Exhibit B hereto, to the Purchase Contract Agent stating that such Holder
has Transferred Treasury Securities to the Collateral Agent pursuant to clause
(a) above (stating the Value of the Treasury Securities Transferred by such
Holder) and requesting that the Purchase Contract Agent instruct the Collateral
Agent to release from the Pledge the Pledged Preferred Securities related to
such Income PRIDES. The Purchase Contract Agent shall instruct the Collateral
Agent in the form provided in Exhibit A; provided, however, that if a Tax Event
Redemption has occurred and the Treasury Portfolio has become a component of
the Income PRIDES, Holders of Income PRIDES may make such substitution only in
integral multiples of 32,000 Income PRIDES at any time on or prior to the
second Business Day immediately preceding the Purchase Contract Settlement
Date. Upon receipt of Treasury Securities from a Holder of Income PRIDES and
the related instruction from the Purchase Contract Agent, the Collateral Agent
shall release the Pledged Preferred Securities or the appropriate Applicable
Ownership Interest of the Treasury Portfolio, as the case may be, and shall
promptly Transfer such Pledged Preferred Securities or the appropriate
Applicable Ownership Interest of the Treasury Portfolio, as the case may be,
free and clear of any lien, pledge or
15
security interest created hereby, to the Purchase Contract Agent.
(B) At any time on or prior to the fifth Business Day immediately
preceding the Purchase Contract Settlement Date (unless a Tax Event Redemption
has occurred), a Holder of Growth PRIDES shall have the right to establish or
reestablish Income PRIDES consisting of the Purchase Contracts and Preferred
Securities in integral multiples of 20 Income PRIDES by (a) Transferring to the
Collateral Agent Preferred Securities having a Stated Amount equal to the
Stated Amount of the Pledged Treasury Securities to be released and (b) (i) in
the event that Contract Adjustment Payments are at a higher rate for Income
PRIDES than for Growth PRIDES, holders of Growth PRIDES wishing to recreate
Income PRIDES will also be required to deliver cash in an amount equal to the
excess of the Contract Adjustment Payments that would have accrued since the
last payment date through the date of substitution on the Income PRIDES being
recreated by such holders, over the Contract Adjustment Payments that have
accrued over the same time period on the related Growth PRIDES and (ii)
delivering the related Growth PRIDES to the Purchase Contract Agent,
accompanied by a notice, substantially in the form of Exhibit B hereto, to the
Purchase Contract Agent stating that such Holder has transferred Preferred
Securities to the Collateral Agent pursuant to clause (a) above and requesting
that the Purchase Contract Agent instruct the Collateral Agent to release from
the Pledge the Pledged Treasury Securities related to such Growth PRIDES. The
Purchase Contract Agent shall instruct the Collateral Agent in the form
provided in Exhibit A; provided, however, that if a Tax Event Redemption has
occurred and the Treasury Portfolio has become a component of the Income
PRIDES, Holders of Growth PRIDES may make such substitution only in integral
multiples of 32,000 Growth PRIDES, at any time on or prior to the Business Day
immediately preceding the Purchase Contract Settlement Date. Upon receipt of
the Preferred Securities or the appropriate Applicable Ownership Interest of
the Treasury Portfolio, as the case may be, from such Holder and the
instruction from the Purchase Contract Agent, the Collateral Agent shall
release the Treasury Securities and shall promptly Transfer such Treasury
Securities, free and clear of any lien, pledge or security interest created
hereby, to the Purchase Contract Agent.
16
Section 4.3. Termination Event. Upon receipt by the Collateral Agent
of written notice from the Company or the Purchase Contract Agent that there
has occurred a Termination Event, the Collateral Agent shall release all
Collateral from the Pledge and shall promptly Transfer any Pledged Preferred
Securities (or the Applicable Ownership Interest of the Treasury Portfolio if a
Tax Event Redemption has occurred) and Pledged Treasury Securities to the
Purchase Contract Agent for the benefit of the Holders of the Income PRIDES and
the Growth PRIDES, respectively, free and clear of any lien, pledge or security
interest or other interest created hereby.
If such Termination Event shall result from the Company's becoming a
debtor under the Bankruptcy Code, and if the Collateral Agent shall for any
reason fail promptly to effectuate the release and Transfer of all Pledged
Preferred Securities, the Treasury Portfolio or of the Pledged Treasury
Securities, as the case may be, as provided by this Section 4.3, the Purchase
Contract Agent shall (i) use its best efforts to obtain an opinion of a
nationally recognized law firm reasonably acceptable to the Collateral Agent to
the effect that, as a result of the Company's being the debtor in such a
bankruptcy case, the Collateral Agent will not be prohibited from releasing or
Transferring the Collateral as provided in this Section 4.3, and shall deliver
such opinion to the Collateral Agent within ten days after the occurrence of
such Termination Event, and if (y) the Purchase Contract Agent shall be unable
to obtain such opinion within ten days after the occurrence of such Termination
Event or (z) the Collateral Agent shall continue, after delivery of such
opinion, to refuse to effectuate the release and Transfer of all Pledged
Preferred Securities, of the Treasury Portfolio or of the Pledged Treasury
Securities, as the case may be, as provided in this Section 4.3, then the
Purchase Contract Agent shall within fifteen days after the occurrence of such
Termination Event commence an action or proceeding in the court with
jurisdiction of the Company's case under the Bankruptcy Code seeking an order
requiring the Collateral Agent to effectuate the release and transfer of all
Pledged Preferred Securities, of the Treasury Portfolio or of the Pledged
Treasury Securities, as the case may be, as provided by this Section 4.3 or
(ii) commence an action or proceeding like that described in subsection (i)(z)
hereof within ten days after the occurrence of such Termination Event.
17
Section 4.4. Cash Settlement. (a) Upon receipt by the Collateral Agent
of (i) a notice from the Purchase Contract Agent promptly after the receipt by
the Purchase Contract Agent of such notice that a Holder of an Income PRIDES or
Growth PRIDES has elected, in accordance with the procedures specified in
Section 5.4(a)(i) or (d)(i) of the Purchase Contract Agreement, respectively,
to settle its Purchase Contract with cash and (ii) payment by such Holder on or
prior to 11:00 a.m., New York City time, on the Business Day immediately
preceding the Purchase Contract Settlement Date in lawful money of the United
States by certified or cashiers' check or wire transfer in immediately
available funds payable to or upon the order of the Company, then the
Collateral Agent shall, upon the written direction of the Purchase Contract
Agent, promptly invest any Cash received from a Holder in connection with a
Cash Settlement in Permitted Investments. Upon receipt of the proceeds upon the
maturity of the Permitted Investments on the Purchase Contract Settlement Date,
the Collateral Agent shall pay the portion of such proceeds and deliver any
certified or cashiers' checks received, in an aggregate amount equal to the
Purchase Price, to the Company on the Purchase Contract Settlement Date, and
shall distribute any funds in respect of the interest earned from the Permitted
Investments to the Purchase Contract Agent for payment to the relevant Holders.
(b) If a Holder of an Income PRIDES fails to notify the Agent of its
intention to make a Cash Settlement in accordance with paragraph 5.4(a)(i) of
the Purchase Contract Agreement, such failure shall constitute an event of
default under the Purchase Contract Agreement and hereunder, and the Holder
shall be deemed to have consented to the disposition of the pledged Preferred
Securities pursuant to the remarketing as described in paragraph 5.4(b) of the
Purchase Contract Agreement, which is incorporated herein by reference. If a
Holder of an Income PRIDES does notify the Agent as provided in paragraph
5.4(a)(i) of the Purchase Contract Agreement of its intention to pay the
Purchase Price in cash, but fails to make such payment as required by paragraph
5.4(a)(ii) of the Purchase Contract Agreement, the Preferred Securities of such
a Holder will not be remarketed but instead the Collateral Agent, for the
benefit of the Company, will exercise its rights as a secured party with
respect to such Preferred Securities at the direction of
18
the Company to retain or dispose of the Collateral in accordance with
applicable law. In addition, in the event of a Failed Remarketing as described
in paragraph 5.4(b) of the Purchase Contract Agreement, such Failed Remarketing
shall constitute an event of default hereunder by such Holder and the
Collateral Agent, for the benefit of the Company, will also exercise its rights
as a secured party with respect to such Preferred Securities at the direction
of the Company to retain or dispose of the Collateral in accordance with
applicable law.
(c) If a Holder of a Growth PRIDES fails to notify the Purchase
Contract Agent of such Holder's intention to make a Cash Settlement in
accordance with paragraph 5.4(d)(i) of the Purchase Contract Agreement, or if a
Holder of an Income PRIDES does notify the Agent as provided in paragraph
(d)(i) of the Purchase Contract Agreement of its intention to pay the Purchase
Price in cash, but fails to make such payment as required by paragraph
5.4(d)(ii) of the Purchase Contract Agreement, such failure shall constitute an
event of default hereunder by such Holder and upon the maturity of any Pledged
Treasury Securities or the Treasury Portfolio, if any, held by the Collateral
Agent on the Business Day immediately preceding the Purchase Contract
Settlement Date, the principal amount of the Pledged Treasury Securities or the
Treasury Portfolio received by the Collateral Agent shall, upon written
direction of the Purchase Contract Agent, be invested promptly in Permitted
Investments. On the Purchase Contract Settlement Date, an amount equal to the
Purchase Price will be remitted to the Company as payment thereof. In the event
the sum of the proceeds from the related Pledged Treasury Securities or the
Treasury Portfolio, as the case may be, and the investment earnings earned from
such investments is in excess of the aggregate Purchase Price of the Purchase
Contracts being settled thereby, the Collateral Agent will distribute such
excess to the Purchase Contract Agent for the benefit of the Holder of the
related Growth PRIDES or Income PRIDES when received.
Section 4.5. Early Settlement. Upon written notice to the Collateral
Agent by the Purchase Contract Agent that one or more Holders of Securities
have elected to effect Early Settlement of their respective obligations under
the Purchase Contracts forming a part of such Securities in accordance with the
terms of the Purchase
19
Contracts and the Purchase Contract Agreement (setting forth the number of such
Purchase Contracts as to which such Holders have elected to effect Early
Settlement), and that the Purchase Contract Agent has received from such
Holders, and paid to the Company as confirmed in writing by the Company, the
related Early Settlement Amounts pursuant to the terms of the Purchase
Contracts and the Purchase Contract Agreement and that all conditions to such
Early Settlement have been satisfied, then the Collateral Agent shall release
from the Pledge, (a) Pledged Preferred Securities or the appropriate Applicable
Ownership Interest of the Treasury Portfolio in the case of a Holder of Income
PRIDES or (b) Pledged Treasury Securities in the case of a Holder of Growth
PRIDES, as the case may be, with a principal amount equal to the product of (i)
the Stated Amount times (ii) the number of such Purchase Contracts as to which
such Holders have elected to effect Early Settlement and shall Transfer all
such Pledged Preferred Securities or the appropriate Applicable Ownership
Interest of the Treasury Portfolio or Pledged Treasury Securities, as the case
may be, free and clear of the Pledge created hereby, to the Purchase Contract
Agent for the benefit of the Holders.
Section 4.6. Application of Proceeds Settlement. (a) In the event a
Holder of Income PRIDES (if a Tax Event Redemption has not occurred) has not
elected to make an effective Cash Settlement by notifying the Purchase Contract
Agent in the manner provided for in paragraph 5.4(a)(i) in the Purchase
Contract Agreement or has not made an Early Settlement of the Purchase
Contract(s) underlying its Income PRIDES, such Holder shall be deemed to have
elected to pay for the shares of Common Stock to be issued under such Purchase
Contract(s) from the Proceeds of the related Pledged Preferred Securities. The
Collateral Agent shall, by 10:00 a.m., New York City time, on the fourth
Business Day immediately preceding the Purchase Contract Settlement Date,
without any instruction from such Holder of Income PRIDES, present the related
Pledged Preferred Securities to the Remarketing Agent for remarketing. Upon
receiving such Pledged
20
Preferred Securities, the Remarketing Agent, pursuant to the terms of the
Remarketing Agreement and the Remarketing Underwriting Agreement, will use its
reasonable efforts to remarket such Pledged Preferred Securities on such date
at a price not less than approximately 100.5% of the aggregate Stated Amount of
such Pledged Preferred Securities, plus accrued and unpaid distributions
(including deferred distributions), if any, thereon. After deducting as the
Remarketing Fee an amount not exceeding 25 basis points (.25%) of the aggregate
Stated Amount of the Pledged Preferred Securities from any amount of such
Proceeds in excess of the aggregate Stated Amount, plus such accrued and unpaid
distributions (including deferred distributions) of the remarketed Pledged
Preferred Securities, the Remarketing Agent will remit the entire amount of the
Proceeds of such remarketing to the Collateral Agent. On the Purchase Contract
Settlement Date, the Collateral Agent shall apply that portion of the Proceeds
from such remarketing equal to the aggregate Stated Amount, plus such accrued
and unpaid distributions (including deferred distributions) of such Pledged
Preferred Securities, to satisfy in full the obligations of such Holders of
Income PRIDES to pay the Purchase Price to purchase the Common Stock under the
related Purchase Contracts. The remaining portion of such Proceeds, if any,
shall be distributed by the Collateral Agent to the Purchase Contract Agent for
payment to the Holders. If the Remarketing Agent advises the Collateral Agent
in writing that it cannot remarket the related Pledged Preferred Securities of
such Holders of Income PRIDES at a price not less than 100% of the aggregate
Stated Amount of such Pledged Preferred Securities plus any accrued and unpaid
distributions (including deferred distributions), thus resulting in a Failed
Remarketing and an event of default under the Purchase Contract Agreement and
hereunder, the Collateral Agent, for the benefit of the Company will, at the
written direction of the Company, retain or dispose of the Pledged Preferred
Securities in accordance with applicable law and satisfy in full, from any such
disposition or retention, such Holder's obligation to pay the Purchase Price
for the Common Stock.
(b) In the event a Holder of Growth PRIDES or Income PRIDES (if a Tax
Event Redemption has occurred) has not made an Early Settlement of the Purchase
Contract(s) underlying its Growth PRIDES or Income PRIDES, such Holder shall be
deemed to have elected to pay for the shares of Common Stock to be issued under
such Purchase Contract(s) from the Proceeds of the related Pledged Treasury
Securities or the Treasury Portfolio, as the case may be. On the Business Day
immediately prior to the Purchase Contract Settlement Date, the Collateral
21
Agent shall, at the written direction of the Purchase Contract Agent, invest
the Cash proceeds of the maturing Pledged Treasury Securities or the Treasury
Portfolio, as the case may be, in overnight Permitted Investments. Without
receiving any instruction from any such Holder of Growth PRIDES or Income
PRIDES, the Collateral Agent shall apply the Proceeds of the related Pledged
Treasury Securities or Treasury Portfolio to the settlement of such Purchase
Contracts on the Purchase Contract Settlement Date.
In the event the sum of the Proceeds from the related Pledged Treasury
Securities or Treasury Portfolio and the investment earnings from the
investment in overnight Permitted Investments is in excess of the aggregate
Purchase Price of the Purchase Contracts being settled thereby, the Collateral
Agent shall distribute such excess, when received, to the Purchase Contract
Agent for the benefit of the Holders.
(c) Pursuant to the Remarketing Agreement and subject to the terms of
the Remarketing Underwriting Agreement, on or prior to the Business Day
immediately preceding the Purchase Contract Settlement Date, but no earlier
than the Business Day immediately preceding the Purchase Contract Settlement
Date, holders of separate Preferred Securities which are not components of
Income PRIDES may elect to have their Preferred Securities remarketed by
delivering their Preferred Securities along with a notice of such election to
the Collateral Agent. The Collateral Agent will hold such Preferred Securities
in an account separate from the collateral account in which the Pledged
Securities will be held. Holders of Preferred Securities electing to have their
Preferred Securities remarketed will also have the right to withdraw such
election by written notice to the Collateral Agent on or prior to the Business
Day immediately preceding the Purchase Contract Settlement Date, upon which
notice the Collateral Agent will return such Preferred Securities to such
holders. On the fourth Business Day immediately preceding the Purchase Contract
Settlement Date, the Collateral Agent will deliver the Preferred Securities to
the Remarketing Agent for remarketing. The Remarketing Agent will use its
reasonable efforts to remarket such Preferred Securities on such date at a
price of approximately 100.5% of the aggregate stated liquidation amount of
such Preferred
22
Securities, plus accrued and unpaid distributions (including deferred
distributions), if any, thereon. The portion of the proceeds from such
remarketing equal to the aggregate stated liquidation amount of such Preferred
Securities will automatically be remitted by the Remarketing Agent to the
Collateral Agent for the benefit of such Preferred Securities holders. In
addition, after deducting as the Remarketing Fee an amount not exceeding 25
basis points (.25%) of the aggregate stated liquidation amount of the
remarketed securities, from any amount of such proceeds in excess of the
aggregate stated liquidation amount of the remarketed Trust Preferred
Securities plus any accrued and unpaid distributions (including deferred
distributions, if any), the Remarketing Agent will remit to the Collateral
Agent the remaining portion of the proceeds, if any, for the benefit of such
holder. If, despite using its reasonable efforts, the Remarketing Agent advises
the Collateral Agent in writing that it cannot remarket the related Preferred
Securities of such holders at a price not less than 100% of the aggregate
stated liquidation amount of such Preferred Securities plus accrued and unpaid
distributions (including deferred distributions) and thus resulting in a Failed
Remarketing, the Remarketing Agent will promptly return such Trust Preferred
Securities to the Collateral Agent to release to such holders.
Section 5. Voting Rights -- Preferred Securities. The Purchase
Contract Agent may exercise, or refrain from exercising, any and all voting and
other consensual rights pertaining to the Pledged Preferred 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 Preferred Securities; and provided,
further, that the Purchase Contract Agent shall give the Company and the
Collateral Agent at least five days' prior written notice of the manner in
which it intends to exercise, or its reasons for refraining from exercising,
any such right. Upon receipt of any notices and other communications in respect
of any Pledged Preferred Securities, including notice of any meeting at which
holders of Preferred Securities are entitled to
23
vote or solicitation of consents, waivers or proxies of holders of Preferred
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 Preferred
Securities (in form and substance satisfactory to the Collateral Agent) as are
prepared by the Purchase Contract Agent with respect to the Pledged Preferred
Securities.
Section 6. Rights and Remedies; Distribution of the Debentures; Tax
Event Redemption
Section 6.1. Rights and Remedies of the Collateral Agent. (a) In
addition to the rights and remedies specified in Section 4.4 hereof or
otherwise available at law or in equity, after an event of default hereunder,
the Collateral Agent shall have all of the rights and remedies with respect to
the Collateral of a secured party under the Uniform Commercial Code as in
effect in the State of New York (the "Code") (whether or not the Code is in
effect in the jurisdiction where the rights and remedies are asserted) and the
TRADES Regulations and such additional rights and remedies to which a secured
party is entitled under the laws in effect in any jurisdiction where any rights
and remedies hereunder may be asserted. Without limiting the generality of the
foregoing, such remedies may include, to the extent permitted by applicable
law, (i) retention of the Pledged Preferred Securities or other Collateral in
full satisfaction of the Holders obligations under the Purchase Contracts or
(ii) sale of the Pledged Preferred Securities or other Collateral in one or
more public or private sales.
(b) Without limiting any rights or powers otherwise granted by this
Agreement to the Collateral Agent, in the event the Collateral Agent is unable
to make payments to the Company on account of the appropriate Applicable
Ownership Interest (as specified in clause (A) of the definition of such term)
of the Treasury Portfolio or on account of principal payments of any Pledged
Treasury Securities as provided in Section 3 hereof in satisfaction of the
obligations of the Holder of the Securities of which such Pledged Treasury
Securities, or the appro-
24
priate Applicable Ownership Interest (as specified in clause (A) of
the definition of such term) of the Treasury Portfolio, as applicable, is a
part under the related Purchase Contracts, the inability to make such payments
shall constitute an event of default hereunder and the Collateral Agent shall
have and may exercise, with reference to such Pledged Treasury Securities, or
such appropriate Applicable Ownership Interest (as specified in clause (A) of
the definition of such term) of the Treasury Portfolio, as applicable, and such
obligations of such Holder, any and all of the rights and remedies available to
a secured party under the Code and the TRADES Regulations after default by a
debtor, and as otherwise granted herein or under any other law.
(c) Without limiting any rights or powers otherwise granted by this
Agreement to the Collateral Agent, the Collateral Agent is hereby irrevocably
authorized to receive and collect all payments of (i) the Stated Amount of or,
cash distributions on, the Pledged Preferred Securities, (ii) the principal
amount of the Pledged Treasury Securities, or (iii) the appropriate Applicable
Ownership Interest (as specified in clause (A) of the definition of such term)
of the Treasury Portfolio, subject, in each case, to the provisions of Section
3, and as otherwise granted herein.
(d) The Purchase Contract Agent and each Holder of Securities, in the
event such Holder becomes the Holder of a Growth PRIDES, agrees that, from time
to time, upon the written request of the Collateral Agent, the Purchase
Contract Agent or such Holder shall execute and deliver such further documents
and do such other acts and things as the Collateral Agent may reasonably
request in order to maintain the Pledge, and the perfection and priority
thereof, and to confirm the rights of the Collateral Agent hereunder. The
Purchase Contract Agent shall have no liability to any Holder for executing any
documents or taking any such acts requested by the Collateral Agent hereunder,
except for liability for its own negligent act, its own negligent failure to
act or its own willful misconduct.
Section 6.2. Distribution of the Debentures; Tax Event Redemption.
Upon the occurrence of an Investment Company Event or a liquidation of the
Trust, a principal amount of the Debentures constituting the assets of the
25
Trust and underlying the Preferred Securities equal to the aggregate Stated
Amount of the Pledged Preferred Securities shall be delivered to the Collateral
Agent in exchange for the Pledged Preferred Securities. In the event the
Collateral Agent receives such Debentures in respect of Pledged Preferred
Securities upon the occurrence of an Investment Company Event or liquidation of
the Trust, the Collateral Agent shall Transfer the Debentures to the Collateral
Account in the manner specified herein for Pledged Preferred Securities to
secure the obligations of the Holders of Income PRIDES to purchase the
Company's Common Stock under the related Purchase Contracts. Thereafter, the
Collateral Agent shall have such security interests, rights and obligations
with respect to the Debentures as it had in respect of the Pledged Preferred
Securities as provided in Articles II, III, IV, V and VI hereof, and any
reference herein to the Pledged Preferred Securities shall be deemed to be
referring to such Debentures.
Upon the occurrence of a Tax Event Redemption prior to the Purchase
Contract Settlement Date, the Redemption Price payable on the Tax Event
Redemption Date with respect to the Applicable Principal Amount of Debentures
shall be delivered to the Collateral Agent by the Institutional Trustee or upon
a dissolution of the Trust and the distribution of the related Debentures by
the Debenture Trustee on or prior to 12:30 p.m., New York City time, by check
or wire transfer in immediately available funds at such place and at such
account as may be designated by the Collateral Agent in exchange for the
Pledged Preferred Securities or Debentures, as the case may be. In the event
the Collateral Agent receives such Redemption Price, the Collateral Agent will,
at the written direction of the Company, apply an amount equal to the
Redemption Amount of such Redemption Price to purchase from the Quotation
Agent, the Treasury Portfolio and promptly remit the remaining portion of such
Redemption Price to the Purchase Contract Agent for payment to the Holders of
Income PRIDES. The Collateral Agent shall Transfer the Treasury Portfolio to
the Collateral Account in the manner specified herein for Pledged Preferred
Securities to secure the obligation of all Holders of Income PRIDES to purchase
Common Stock of the Company under the Purchase Contracts constituting a part of
such Income PRIDES, in substitution for the Pledged Preferred Securities.
Thereafter the Collateral Agent shall have
26
such security interests, rights and obligations with respect to the Treasury
Portfolio as it had in respect of the Pledged Preferred Securities or
Debentures, as the case may be, as provided in Articles II, III, IV, V, and VI,
and any reference herein to the Pledged Preferred Securities or the Debentures
shall be deemed to be reference to such Treasury Portfolio.
Section 6.3. Substitutions. Whenever a Holder has the right to
substitute Treasury Securities, Preferred Securities or the appropriate
Applicable Ownership Interest of the Treasury Portfolio, as the case may be,
for Collateral held by the Collateral Agent, such substitution shall not
constitute a novation of the security interest created hereby.
Section 7. Representations and Warranties; Covenants.
Section 7.1. Representations and Warranties. The Holders from time to
time, acting through the Purchase Contract Agent as their attorney-in-fact (it
being understood that the Purchase Contract Agent shall not be liable for any
representation or warranty made by or on behalf of a Holder), hereby represent
and warrant to the Collateral Agent, which representations and warranties shall
be deemed repeated on each day a Holder Transfers Collateral that:
(a) such Holder has the power to grant a security interest in
and lien on the Collateral;
(b) such Holder is the sole beneficial owner of the Collateral
and, in the case of Collateral delivered in physical form,
is the sole holder of such Collateral and is the sole
beneficial owner of, or has the right to Transfer, the
Collateral it Transfers to the Collateral Agent, free and
clear of any security interest, lien, encumbrance, call,
liability to pay money or other restriction other than the
security interest and lien granted under Section 2 hereof;
27
(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 hereof); and
(d) the execution and performance by the Holder of its
obligations under this Agreement will not result in the
creation of any security interest, lien or other encumbrance
on the Collateral other than the security interest and lien
granted under Section 2 hereof or violate any provision of
any existing law or regulation applicable to it or of any
mortgage, charge, pledge, indenture, contract or undertaking
to which it is a party or which is binding on it or any of
its assets.
Section 7.2. Covenants. The Holders from time to time, acting through
the Purchase Contract Agent as their attorney-in-fact (it being understood that
the Purchase Contract Agent shall not be liable for any covenant made by or on
behalf of a Holder), hereby covenant to the Collateral Agent that for so long
as the Collateral remains subject to the Pledge:
(a) neither the Purchase Contract Agent nor such Holders will
create or purport to create or allow to subsist any
mortgage, charge, lien, pledge or any other security
interest whatsoever over the Collateral or any part of it
other than pursuant to this Agreement; and
28
(b) neither the Purchase Contract Agent nor such Holders will
sell or otherwise dispose (or attempt to dispose) of the
Collateral or any part of it except for the beneficial
interest therein, subject to the pledge hereunder,
transferred in connection with the Transfer of the
Securities.
Section 8. The Collateral Agent. It is hereby agreed as follows:
Section 8.1. Appointment, Powers and Immunities. The Collateral Agent
shall act as agent for the Company hereunder with such powers as are
specifically vested in the Collateral Agent by the terms of this Agreement,
together with such other powers as are reasonably incidental thereto. The
Collateral Agent: (a) shall have no duties or responsibilities except those
expressly set forth in this Agreement and no implied covenants or obligations
shall be inferred from this Agreement against the Collateral Agent, nor shall
the Collateral Agent be bound by the provisions of any agreement by any party
hereto beyond the specific terms hereof; (b) shall not be responsible for any
recitals contained in this Agreement, or in any certificate or other document
referred to or provided for in, or received by it under, this Agreement, the
Securities or the Purchase Contract Agreement, or for the value, validity,
effectiveness, genuineness, enforceability or sufficiency of this Agreement
(other than as against the Collateral Agent), the Securities or the Purchase
Contract Agreement or any other document referred to or provided for herein or
therein or for any failure by the Company or any other Person (except the
Collateral Agent) to perform any of its obligations hereunder or thereunder or
for the perfection, priority or, except as expressly required hereby,
maintenance of any security interest created hereunder; (c) shall not be
required to initiate or conduct any litigation or collection proceedings
hereunder (except pursuant to directions furnished under Section 8.2 hereof,
subject to Section 8.6 hereof); (d) shall not be responsible for any action
taken or omitted to be taken by it hereunder or under any other document or
instrument referred to or provided for herein or in connection herewith or
therewith, except for its own negligence or willful misconduct; and (e) shall
not be required to advise any party as to selling or retain-
29
ing, or taking or refraining from taking any action with respect to, any
securities or other property deposited hereunder. Subject to the foregoing,
during the term of this Agreement, the Collateral Agent shall take all
reasonable action in connection with the safekeeping and preservation of the
Collateral hereunder.
No provision of this Agreement shall require the Collateral Agent to
expend or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder. In no event shall the Collateral
Agent be liable for any amount in excess of the Value of the Collateral.
Notwithstanding the foregoing, the Collateral Agent and Securities Intermediary
in its individual capacity hereby waive any right of setoff, bankers lien,
liens or perfection rights as securities intermediary or any counterclaim with
respect to any of the Collateral.
Section 8.2. Instructions of the Company. The Company shall have the
right, by one or more instruments in writing executed and delivered to the
Collateral Agent, to direct the time, method and place of conducting any
proceeding for the realization of any right or remedy available to the
Collateral Agent, or of exercising any power conferred on the Collateral Agent,
or to direct the taking or refraining from taking of any action authorized by
this Agreement; provided, however, that (i) such direction shall not conflict
with the provisions of any law or of this Agreement and (ii) the Collateral
Agent shall be adequately indemnified as provided herein. Nothing in this
Section 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 by Collateral Agent. Each of the Securities
Intermediary and the Collateral Agent shall be entitled to rely upon any
certification, order, judgment, opinion, notice or other communication
(including, without limitation, any thereof by telephone, telecopy, telex or
facsimile) believed by it to be genuine and correct and to have been signed or
sent by or on behalf of the proper Person or Persons (without being required to
determine the correctness of any fact stated therein), and upon advice and
statements of legal counsel and other experts selected by the Collateral Agent
and
30
the Securities Intermediary. As to any matters not expressly provided for by
this Agreement, the Collateral Agent and the Securities Intermediary shall in
all cases be fully protected in acting, or in refraining from acting, hereunder
in accordance with instructions given by the Company in accordance with this
Agreement.
Section 8.4. Rights in Other Capacities. The Collateral Agent and the
Securities Intermediary and their affiliates may (without having to account
therefor to the Company) accept deposits from, lend money to, make their
investments in and generally engage in any kind of banking, trust or other
business with the Purchase Contract Agent and any Holder of Securities (and any
of their respective subsidiaries or affiliates) as if it were not acting as the
Collateral Agent, and the Collateral Agent and its affiliates may accept fees
and other consideration from the Purchase Contract Agent and any Holder of
Securities without having to account for the same to the Company; provided that
each of the Securities Intermediary and the Collateral Agent covenants and
agrees with the Company that it shall not accept, receive or permit there to be
created in favor of itself and shall take no affirmative action to permit there
to be created in favor of any other Person, any security interest, lien or
other encumbrance of any kind in or upon the Collateral.
Section 8.5. Non-Reliance on Collateral Agent. Neither the Securities
Intermediary nor the Collateral Agent shall be required to keep itself informed
as to the performance or observance by the Purchase Contract Agent or any
Holder of Securities of this Agreement, the Purchase Contract Agreement, the
Securities or any other document referred to or provided for herein or therein
or to inspect the properties or books of the Purchase Contract Agent or any
Holder of Securities. The Collateral Agent shall not have any duty or
responsibility to provide the Company with any credit or other information
concerning the affairs, financial condition or business of the Purchase
Contract Agent or any Holder of Securities (or any of their respective
affiliates) that may come into the possession of the Collateral Agent or the
Securities Intermediary or any of their respective affiliates.
Section 8.6. Compensation and Indemnity. The Company agrees: (i) to
pay the Collateral Agent from time
31
to time such compensation as shall be agreed in writing between the Company and
the Collateral Agent for all services rendered by it hereunder and (ii) to
indemnify the Collateral 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.
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 shall be entitled, after
prompt notice to the Company and the Purchase Contract Agent, at its sole
option, to refuse to comply with any and all claims, demands or instructions
with respect to such property or funds so long as such dispute or conflict
shall continue, and the Collateral Agent shall not be or become liable in any
way to any of the parties hereto for its failure or refusal to comply with such
conflicting claims, demands or instructions. The Collateral Agent shall be
entitled to refuse to act until either (i) such conflicting or adverse claims
or demands shall have been finally determined by a court of competent
jurisdiction or settled by agreement between the conflicting parties as
evidenced in a writing, satisfactory to the Collateral Agent or (ii) the
Collateral Agent shall have received security or an indemnity satisfactory to
the Collateral Agent sufficient to save the Collateral Agent harmless
from and against any and all loss, liability or reasonable out-of-pocket
expense which the Collateral Agent may incur by reason of its acting. The
Collateral Agent may in addition elect to commence an interpleader action or
seek other judicial relief or orders as the Collateral Agent may deem
necessary. Notwithstanding anything contained herein to the contrary, the
Collateral Agent shall not 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
32
opinion subject it or any of its officers, employees or directors to liability.
Section 8.8. Resignation of Collateral Agent. Subject to the
appointment and acceptance of a successor Collateral Agent as provided below,
(a) the Collateral Agent may resign at any time by giving notice thereof to the
Company and the Purchase Contract Agent as attorney-in-fact for the Holders of
Securities, (b) the Collateral Agent may be removed at any time by the Company
and (c) if the Collateral Agent fails to perform any of its material
obligations hereunder in any material respect for a period of not less than 20
days after receiving written notice of such failure by the Purchase Contract
Agent and such failure shall be continuing, the Collateral Agent may be removed
by the Purchase Contract Agent. The Purchase Contract Agent shall promptly
notify the Company of any removal of the Collateral Agent pursuant to clause
(c) of the immediately preceding sentence. Upon any such resignation or
removal, the Company shall have the right to appoint a successor Collateral
Agent. If no successor Collateral Agent shall have been so appointed and shall
have accepted such appointment within 30 days after the retiring Collateral
Agent's giving of notice of resignation or such removal, then the retiring
Collateral Agent may petition any court of competent jurisdiction for the
appointment of a successor Collateral Agent. The Collateral Agent shall be a
bank which has an office in New York, New York with a combined capital and
surplus of at least $750,000,000. Upon the acceptance of any appointment as
Collateral Agent hereunder by a successor Collateral Agent, such successor
Collateral Agent shall thereupon succeed to and become vested with all the
rights, powers, privileges and duties of the retiring Collateral Agent, and the
retiring Collateral Agent shall take all appropriate action to transfer any
money and property held by it hereunder (including the Collateral) to such
successor Collateral Agent. The retiring Collateral Agent shall, upon such
succession, be discharged from its duties and obligations as Collateral Agent
hereunder. After any retiring Collateral Agent's resignation hereunder as
Collateral Agent, the provisions of this Section 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.
33
Section 8.9. Right to Appoint Agent or Advisor. The Collateral Agent
shall have the right to appoint agents or advisors in connection with any of
its duties hereunder, and the Collateral Agent shall not be liable for any
action taken or omitted by, or in reliance upon the advice of, such agents or
advisors selected in good faith. The appointment of agents pursuant to this
Section 8.9 shall be subject to prior consent of the Company, which consent
shall not be unreasonably withheld.
Section 8.10. Survival. The provisions of this Section 8 shall survive
termination of this Agreement and the resignation or removal of the Collateral
Agent.
Section 8.11. Exculpation. Anything in this Agreement to the contrary
notwithstanding, in no event shall the Collateral Agent or the Securities
Intermediary or their officers, employees or agents be liable under this
Agreement to any third party for indirect, special, punitive, or consequential
loss or damage of any kind whatsoever, including lost profits, whether or not
the likelihood of such loss or damage was known to the Collateral Agent or the
Securities Intermediary, or any of them, incurred without any act or deed that
is found to be attributable to gross negligence or willful misconduct on the
part of the Collateral Agent or the Securities Intermediary.
Section 9. Amendment.
Section 9.1. Amendment Without Consent of Holders. Without the consent
of any Holders, the Company, the Collateral Agent 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 and the Purchase Contract
Agent, for any of the following purposes:
(1) to evidence the succession of another Person to the Company,
and the assumption by any such successor of the covenants of the
Company; or
(2) to add to the covenants of the Company for the benefit of the
Holders, or to surrender any right or power herein conferred upon the
Company so long as such covenants or such surrender do not adversely
affect the validity, perfection or priori-
34
ty of the security interests granted or created hereunder; or
(3) to evidence and provide for the acceptance of appointment
hereunder by a successor Collateral Agent, Securities Intermediary or
Purchase Contract Agent; or
(4) to cure any ambiguity, to correct or supplement any
provisions herein which may be inconsistent with any other such
provisions herein, or to make any other provisions with respect to
such matters or questions arising under this Agreement, provided such
action shall not adversely affect the interests of the Holders.
Section 9.2. Amendment with Consent of Holders. With the consent of
the Holders of not less than a majority of the Purchase Contracts at the time
outstanding, by Act of said Holders delivered to the Company, the Purchase
Contract Agent or the Collateral Agent, as the case may be, the Company, when
duly authorized, the Purchase Contract Agent and the Collateral Agent may amend
this Agreement for the purpose of modifying in any manner the provisions of
this Agreement or the rights of the Holders in respect of the Securities;
provided, however, that no such supplemental agreement shall, without the
consent of the Holder of each Outstanding Security adversely affected thereby,
(1) change the amount or type of Collateral underlying a Security
(except for the rights of holders of Income PRIDES to substitute the
Treasury Securities for the Pledged Preferred Securities or the
appropriate Applicable Ownership Interest of the Treasury Portfolio,
as the case may be, or the rights of Holders of Growth PRIDES to
substitute Preferred Securities or the appropriate Applicable
Ownership Interest of the Treasury Portfolio, as applicable, for the
Pledged Treasury Securities), impair the right of the Holder of any
Security to receive distributions on the underlying Collateral or
otherwise adversely affect the Holder's rights in or to such
Collateral; or
(2) otherwise effect any action that would require the consent of
the Holder of each Outstand-
35
ing Security affected thereby pursuant to the Purchase Contract
Agreement if such action were effected by an agreement supplemental
thereto; or
(3) reduce the percentage of Purchase Contracts the consent of
whose Holders is required for any such amendment.
It shall not be necessary for any Act of Holders under this Section to approve
the particular form of any proposed amendment, but it shall be sufficient if
such Act shall approve the substance thereof.
Section 9.3. Execution of Amendments. In executing any amendment
permitted by this Section, the Collateral Agent and the Purchase Contract Agent
shall be entitled to receive and (subject to Section 6.1 hereof, with respect
to the Collateral Agent, and Section 7.1 of the Purchase Contract Agreement,
with respect to the Purchase Contract Agent) shall be fully protected in
relying upon, an Opinion of Counsel stating that the execution of such
amendment is authorized or permitted by this Agreement and that all conditions
precedent, if any, to the execution and delivery of such amendment have been
satisfied.
Section 9.4. Effect of Amendments. Upon the execution of any amendment
under this Section, 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
36
delivered by the Purchase Contract Agent in accordance with the Purchase
Contract Agreement in exchange for Outstanding Security Certificates.
Section 10. Miscellaneous.
Section 10.1. No Waiver. No failure on the part of the Collateral
Agent or any of its agents to exercise, and no course of dealing with respect
to, and no delay in exercising, any right, power or remedy hereunder shall
operate as a waiver thereof; nor shall any single or partial exercise by the
Collateral Agent or any of its agents of any right, power or remedy hereunder
preclude any other or further exercise thereof or the exercise of any other
right, power or remedy. The remedies herein are cumulative and are not
exclusive of any remedies provided by law.
Section 10.2. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. Without
limiting the foregoing, the above choice of law is expressly agreed to by the
Securities Intermediary, the Collateral Agent and the Holders from time to time
acting through the Purchase Contract Agent, as their attorney-in-fact, in
connection with the establishment and maintenance of the Collateral Account.
The Company, the Collateral Agent and the Holders from time to time of the
Securities, acting through the Purchase Contract Agent as their
attorney-in-fact, hereby submit to the nonexclusive jurisdiction of the United
States District Court for the Southern District of New York and of any New York
state court sitting in New York City for the purposes of all legal proceedings
arising out of or relating to this Agreement or the transactions contemplated
hereby. The Company, the Collateral Agent and the Holders from time to time of
the Securities, acting through the Purchase Contract Agent as their
attorney-in-fact, irrevocably waive, to the fullest extent permitted by
applicable law, any objection which they may now or hereafter have to the
laying of the venue of any such proceeding brought in such a court and any
claim that any such proceeding brought in such a court has been brought in an
inconvenient forum.
Section 10.3. Notices. All notices, requests, consents and other
communications provided for herein (including, without limitation, any
modifications of, or
37
waivers or consents under, this Agreement) shall be given or made in writing
(including, without limitation, by telecopy) delivered to the intended
recipient at the "Address for Notices" specified below its name on the
signature pages hereof or, as to any party, at such other address as shall be
designated by such party in a notice to the other parties. Except as otherwise
provided in this Agreement, all such communications shall be deemed to have
been duly given when transmitted by telecopier or personally delivered or, in
the case of a mailed notice, upon receipt, in each case given or addressed as
aforesaid.
Section 10.4. Successors and Assigns. This Agreement shall be binding
upon and inure to the benefit of the respective successors and assigns of the
Company, the Collateral Agent and the Purchase Contract Agent, and the Holders
from time to time of the Securities, by their acceptance of the same, shall be
deemed to have agreed to be bound by the provisions hereof and to have ratified
the agreements of, and the grant of the Pledge hereunder by, the Purchase
Contract Agent.
Section 10.5. Counterparts. This Agreement may be executed in any
number of counterparts, all of which taken together shall constitute one and
the same instrument, and any of the parties hereto may execute this Agreement
by signing any such counterpart.
Section 10.6. Severability. If any provision hereof is invalid and
unenforceable in any jurisdiction, then, to the fullest extent permitted by
law, (i) the other provisions hereof shall remain in full force and effect in
such jurisdiction and shall be liberally construed in order to carry out the
intentions of the 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 for: (a) all reasonable out-of-pocket costs and expenses of
the Collateral Agent (including, without limitation, the reasonable fees and
expenses of counsel to the Collateral Agent), in connection with (i) the
negotiation, preparation, execution and delivery or performance of this
Agreement and (ii) any
38
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
(c) any other circumstance which might otherwise constitute a
defense available to, or discharge of, a borrower, a guarantor or a
pledgor.
39
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the day and year first above written.
CENDANT CORPORATION
By:
---------------------------------
Name:
Title:
Address for Notices:
CENDANT CORPORATION
0 Xxxxxx Xxx
Xxxxxxxxxx, Xxx Xxxxxx 00000
Attention: Chief Financial Officer
Telecopy: (000) 000-0000
THE FIRST NATIONAL BANK OF CHICAGO,
as Purchase Contract Agent and as
attorney-in-fact of the Holders
from time to time of the Securities
By:
---------------------------------
Name:
Title:
Address for Notices:
The First National Bank of Chicago
Xxx Xxxxx Xxxxxxxx Xxxxx
Xxxxx 0000
Xxxxxxx, XX 00000-0000
Attention: Corporate Trust
Administration
Telecopy: (000) 000-0000
THE CHASE MANHATTAN BANK,
as Collateral Agent and as
Securities Intermediary
By:
---------------------------------
Name:
Title:
Address for Notices:
The Chase Manhattan Bank
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, XX 00000-0000
Attention: Corporate Trust
Administration Department
Telecopy: (000) 000-0000
EXHIBIT A
INSTRUCTION FROM PURCHASE CONTRACT AGENT TO COLLATERAL AGENT
The Chase Manhattan Bank
000 Xxxx 00xx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000-0000
Attention: Corporate Trust Administration Department
Re: FELINE PRIDES of Cendant Corporation (the
"Company"), and Cendant Capital I
We hereby notify you in accordance with Section 4.1 of the Pledge
Agreement, dated as of __, 1998, (the "Pledge Agreement") among the Company,
yourselves, as Collateral Agent, and ourselves, as Purchase Contract Agent and
as attorney-in-fact for the holders of [Income PRIDES] [Growth PRIDES] from
time to time, that the holder of securities listed below (the "Holder") has
elected to substitute [$_____ aggregate principal amount of Treasury
Securities] [$_______Stated Amount of Preferred Securities or the appropriate
Applicable Ownership Interest of the Treasury Portfolio] in exchange for an
equal Value of [Pledged Preferred Securities or the appropriate Applicable
Ownership Interest of the Treasury Portfolio] [Pledged Treasury Securities]
held by you in accordance with the Pledge Agreement and has delivered to us a
notice stating that the Holder has Transferred [Treasury Securities] [Preferred
Securities or the appropriate Applicable Ownership Interest of the Treasury
Portfolio] to you, as Collateral Agent. We hereby instruct you, upon receipt of
such [Pledged Treasury Securities] [Pledged Preferred Securities or the
appropriate Applicable Ownership Interest of the Treasury Portfolio], to
release the [Preferred Securities or the appropriate Applicable Ownership
Interest of the Treasury Portfolio] [Treasury Securities] related to such
[Income PRIDES] [Growth PRIDES] to us in accordance with the Holder's
instructions. Capitalized terms used herein but not defined shall have the
meaning set forth in the Pledge Agreement.
Date:_____________ ___________________________
By:______________________
Name:
Title:
Signature Guarantee:_____________
Please print name and address of Registered Holder electing to substitute
[Treasury Securities] [Preferred Securities or the appropriate Applicable
Ownership Interest of the Treasury Portfolio] for the [Pledged Preferred
Securities or the Treasury Portfolio] [Pledged Treasury Securities]:
--------------------------- ------------------------------
Name Social Security or other
Taxpayer Identification Number,
if any
---------------------------
Address
---------------------------
---------------------------
EXHIBIT B
INSTRUCTION TO PURCHASE CONTRACT AGENT
The First National Bank of Chicago
Xxx Xxxxx Xxxxxxxx Xxxxx
Xxxxx 0000
Xxxxxxx, XX 00000-0000
Attention: Corporate Trust Services Division
Re: FELINE PRIDES of Cendant Corporation (the
"Company"), and Cendant Capital I
The undersigned Holder hereby notifies you that it has delivered to
The Chase Manhattan Bank, as Collateral Agent, [$_______ aggregate principal
amount of Treasury Securities] [$ aggregate Stated Amount of Preferred
Securities or the appropriate Applicable Ownership Interest of the Treasury
Portfolio of the appropriate Applicable Ownership Interest of the Treasury
Portfolio] in exchange for an equal Value of [Pledged Preferred Securities or
the appropriate Applicable Ownership Interest of the Treasury Portfolio]
[Pledged Treasury Securities] held by the Collateral Agent (the "Pledge
Agreement"), in accordance with Section 4.1 of the Pledge Agreement, dated ,
1998, between you, the Company and the Collateral Agent. The undersigned Holder
hereby instructs you to instruct the Collateral Agent to release to you on
behalf of the undersigned Holder the [Pledged Preferred Securities or the
appropriate Applicable Ownership Interest of the Treasury Portfolio] [Pledged
Treasury Securities] related to such [Income PRIDES] [Growth PRIDES].
Capitalized terms used herein but not defined shall have the meaning set forth
in the Pledge Agreement.
Dated:_____________ _________________________
Signature
Signature Guarantee:_______________
Please print name and address of Registered Holder:
------------------------- -----------------------------
Name Social Security or other
Taxpayer Identification
------------------------- Number, if any
Address
-------------------------
-------------------------
-------------------------
