EXHIBIT 7
NORTHROP GRUMMAN CORPORATION
THE BANK OF NEW YORK
as Collateral Agent, Custodial Agent
and Securities Intermediary
AND
JPMORGAN CHASE BANK
as Purchase Contract Agent
PLEDGE AGREEMENT
Dated as of November __, 2001
TABLE OF CONTENTS
ARTICLE I DEFINITIONS......................................................2
SECTION 1.1 Definitions...............................................2
ARTICLE II PLEDGE; CONTROL AND PERFECTION..................................5
SECTION 2.1 The Pledge................................................5
SECTION 2.2 Control and Perfection....................................7
ARTICLE III PAYMENTS ON PLEDGED COLLATERAL.................................9
SECTION 3.1 Payments..................................................9
SECTION 3.2 Application of Payments..................................11
ARTICLE IV SUBSTITUTION, RELEASE, REPLEDGE AND SETTLEMENT OF
NOTES.....................................................................11
SECTION 4.1 Collateral Substitution and the Creation of
Stripped Units.........................................................11
SECTION 4.2 Collateral Substitution and the Re-Creation of
Normal Units...........................................................13
SECTION 4.3 Termination Event........................................14
SECTION 4.4 Early Settlement; Merger Early Settlement; Cash
Settlement.............................................................15
SECTION 4.5 Remarketing; Application of Proceeds;
Settlement.............................................................15
ARTICLE V VOTING RIGHTS-- NOTES...........................................19
SECTION 5.1 Exercise by Purchase Contract Agent......................19
ARTICLE VI RIGHTS AND REMEDIES; TAX EVENT REDEMPTION......................19
SECTION 6.1 Rights and Remedies of the Collateral Agent..............19
SECTION 6.2 Substitutions............................................21
SECTION 6.3 Tax Event Redemption.....................................21
ARTICLE VII REPRESENTATIONS AND WARRANTIES; COVENANTS.....................22
SECTION 7.1 Representations and Warranties...........................22
SECTION 7.2 Covenants................................................23
ARTICLE VIII THE COLLATERAL AGENT.........................................23
SECTION 8.1 Appointment, Powers and Immunities.......................23
SECTION 8.2 Instructions of the Company..............................25
SECTION 8.3 Reliance.................................................26
SECTION 8.4 Rights in Other Capacities...............................26
SECTION 8.5 Non-Reliance on Collateral Agent.........................27
SECTION 8.6 Compensation and Indemnity...............................27
SECTION 8.7 Failure to Act...........................................28
SECTION 8.8 Resignation..............................................29
SECTION 8.9 Right to Appoint Agent or Advisor........................30
SECTION 8.10 Survival................................................31
SECTION 8.11 Exculpation.............................................31
ARTICLE IX AMENDMENT......................................................31
SECTION 9.1 Amendment Without Consent of Holders.....................31
SECTION 9.2 Amendment with Consent of Holders........................32
SECTION 9.3 Execution of Amendments..................................33
SECTION 9.4 Effect of Amendments.....................................33
SECTION 9.5 Reference to Amendments..................................33
ARTICLE X MISCELLANEOUS...................................................34
SECTION 10.1 No Waiver...............................................34
SECTION 10.2 GOVERNING LAW...........................................34
SECTION 10.3 Notices.................................................35
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SECTION 10.4 Successors and Assigns..................................35
SECTION 10.5 Counterparts............................................35
SECTION 10.6 Severability............................................36
SECTION 10.7 Expenses, Etc...........................................36
SECTION 10.8 Security Interest Absolute..............................36
SECTION 10.9 Waiver of Jury Trial....................................37
EXHIBIT A Instruction from Purchase Contract Agent to
Collateral Agent
EXHIBIT B Instruction to Purchase Contract Agent
EXHIBIT C Instruction to Custodial Agent Regarding Remarketing
EXHIBIT D Instruction to Custodial Agent Regarding Withdrawal
from Remarketing
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PLEDGE AGREEMENT
PLEDGE AGREEMENT, dated as of November __, 2001 (this
"Agreement"), among Northrop Grumman Corporation, a Delaware
corporation (the "Company"), The Bank of New York, a New York
banking corporation, not individually but solely as collateral
agent (in such capacity, together with its successors in such
capacity, the "Collateral Agent"), as custodial agent (in such
capacity, together with its successors in such capacity, the
"Custodial Agent") and as "securities intermediary" as defined
in Section 8-102(a)(14) of the Code (as defined herein) (in
such capacity, together with its successors in such capacity,
the "Securities Intermediary"), and JPMorgan Chase Bank, a New
York banking corporation, not individually but solely as
purchase contract agent and as attorney-in-fact of the Holders
from time to time of the Units (in such capacity, together with
its successors in such capacity, the "Purchase Contract Agent")
under the Purchase Contract Agreement (as defined herein).
RECITALS
WHEREAS, the Company and the Purchase Contract Agent are
parties to the Purchase Contract Agreement, dated as of the
date hereof (as modified and supplemented and in effect from
time to time, the "Purchase Contract Agreement"), pursuant to
which there may be issued Units having a Stated Amount of $100
per Unit, all of which will initially be Normal Units.
WHEREAS, each Normal Unit will be comprised of (a) a
Purchase Contract and (b) either beneficial ownership of (i) a
Note, (ii) following the successful remarketing of the Notes in
accordance with the Purchase Contract Agreement and the
Remarketing Agreement, the appropriate Treasury Consideration
or (iii) following a Tax Event Redemption in accordance with
the Purchase Contract Agreement, any Applicable Ownership
Interest in the Treasury Portfolio.
WHEREAS, in accordance with the terms of the Purchase
Contract Agreement, a holder of Normal Units may separate the
Notes or the appropriate Treasury Consideration or Applicable
Ownership Interest in the Treasury Portfolio, as the case may
be, from the related Purchase Contracts by substituting for
such Notes or the appropriate Treasury Consideration or
Applicable Ownership Interest in the Treasury Portfolio, as the
case may be, Treasury Securities that will pay in the aggregate
an amount equal to the aggregate principal amount of such
Normal Units. Upon such separation, the Normal Units will
become Stripped Units. Each Stripped Unit will be comprised of
(a) a Purchase Contract and (b) a 1/10 undivided beneficial
interest in a Treasury Security.
WHEREAS, pursuant to the terms of the Purchase Contract
Agreement and the Purchase Contracts, the Holders, from time to
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time, of the Units 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
Notes, any Treasury Consideration, any Treasury Securities and
any Applicable Ownership Interest in the Treasury Portfolio
delivered in exchange therefor to secure each Holder's
obligations under the related Purchase Contract, as provided
herein and subject to the terms hereof.
NOW, THEREFORE, and for other good and valuable
consideration, the receipt and sufficiency of which is hereby
acknowledged, the Company, the Collateral Agent, the Securities
Intermediary, the Custodial Agent and the Purchase Contract
Agent, on its own behalf and as attorney-in-fact of the Holders
from time to time of the Units, agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1 Definitions.
For all purposes of this agreement, except as otherwise
expressly provided or unless the context otherwise requires:
(a) capitalized terms used but not defined herein are
used as defined in the Purchase Contract Agreement;
(b) the defined terms in this Agreement have the meanings
assigned to them in this Article and include the plural as well
as the singular; and
(c) the words "herein," "hereof" and "hereunder" and
other words of similar import refer to this Agreement as a
whole and not to any particular Article, Section or other
subdivision.
"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.
"Code" has the meaning specified in Section 6.1 hereof.
"Collateral" has the meaning specified in Section 2.1
hereof.
"Collateral Account" means the securities account (number
________) maintained at The Bank of New York in the name
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"JPMorgan Chase Bank, a New York banking corporation, as
Purchase Contract Agent on behalf of the holders of certain
securities of Northrop Grumman Corporation, Collateral Account
subject to the security interest of The Bank of New York, as
Collateral Agent, for the benefit of Northrop Grumman
Corporation, as pledgee" and any successor account.
"Collateral Agent" has the meaning specified in the first
paragraph of this Agreement.
"Company" means the Person named as the "Company" in the
first paragraph of this Agreement until a successor shall have
become such pursuant to the applicable provisions of the
Purchase Contract Agreement, and thereafter "Company" shall
mean such successor.
"Custodial Agent" has the meaning specified in the first
paragraph of this Agreement.
"Intermediary" means any entity that in the ordinary
course of its business maintains securities accounts for others
and is acting in that capacity.
"Pledge" has the meaning specified in Section 2.1 hereof.
"Pledged Applicable Ownership Interest in the Treasury
Portfolio" has the meaning specified in Section 2.1 hereof.
"Pledged Notes" has the meaning specified in Section 2.1
hereof.
"Pledged Treasury Consideration" has the meaning specified
in Section 2.1 hereof.
"Pledged Treasury Securities" has the meaning specified in
Section 2.1 hereof.
"Proceeds" means all interest, dividends, cash,
instruments, securities, financial assets (as defined in
Section 8-102(a)(9) of the Code) and other property from time
to time received, receivable or otherwise distributed upon the
sale, exchange, collection or disposition of the Collateral or
any proceeds thereof.
"Purchase Contract Agent" has the meaning specified in the
first paragraph of this Agreement.
"Purchase Contract Agreement" has the meaning specified in
the Recitals.
"Securities Intermediary" has the meaning specified in the
first paragraph of this Agreement.
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"Security Entitlement" has the meaning set forth in
Section 8-102(a) (17) of the Code.
"Separate Notes" means any Notes that are not Pledged
Notes.
"Tax Event Redemption Date" means the date upon which a
Tax Event Redemption is to occur.
"TRADES Regulations" means the regulations of the United
States Department of the Treasury, published at 31 C.F.R.
Part 357, as amended from time to time. Unless otherwise
defined herein, all terms defined in the TRADES Regulations are
used herein as therein defined.
"Transfer" means, with respect to the Collateral and in
accordance with the instructions of the Collateral Agent, the
Purchase Contract Agent or the Holder, as applicable:
(i) in the case of Collateral consisting of
securities which cannot be delivered by book-entry or
which the parties agree are to be delivered in physical
form, delivery in appropriate physical form to the
recipient accompanied by any duly executed instruments of
transfer, assignments in blank, transfer tax stamps and
any other documents necessary to constitute a legally
valid transfer to the recipient;
(ii)in the case of Collateral consisting of
securities maintained in book-entry form by causing a
"securities intermediary" (as defined in Section 8-
102(a)(14) of the Code) to (a) credit a "security
entitlement" (as defined in Section 8-102(a)(17) of the
Code) with respect to such securities to a "securities
account" (as defined in Section 8-501(a) of the Code)
maintained by or on behalf of the recipient and (b) to
issue a confirmation to the recipient with respect to such
credit. In the case of Collateral to be delivered to the
Collateral Agent, the securities intermediary shall be the
Securities Intermediary and the securities account shall
be the Collateral Account. In addition, any Transfer of
Treasury Securities and Treasury Consideration hereunder
shall be made in accordance with the TRADES Regulations
and other applicable law.
ARTICLE II
PLEDGE; CONTROL AND PERFECTION
SECTION 2.1 The Pledge.
(a) The Holders from time to time acting through the
Purchase Contract Agent, as their attorney-in-fact, and the
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Purchase Contract Agent, as such attorney-in-fact, hereby
pledge and grant to the Collateral Agent, for the benefit of
the Company, as collateral security for the performance when
due by such Holders of their respective obligations under the
related Purchase Contracts, a security interest in all of the
right, title and interest of the Purchase Contract Agent and
such Holders in:
(i) (A) the Notes, Treasury Consideration,
Treasury Securities and any Applicable Ownership Interest
in the Treasury Portfolio constituting a part of the
Units, (B) any Treasury Securities delivered in exchange
for any Notes, Treasury Consideration or any Applicable
Ownership Interest in the Treasury Portfolio, as
applicable, in accordance with Section 4.1 hereof, and
(C) any Notes, Treasury Consideration or any Applicable
Ownership Interest in the Treasury Portfolio, as
applicable, delivered in exchange for any Treasury
Securities in accordance with Section 4.2 hereof, in each
case that have been Transferred to or otherwise received
by the Collateral Agent and not released by the Collateral
Agent to such Holders under the provisions of this
Agreement;
(ii)the Collateral Account and all securities,
financial assets, security entitlements, cash and other
property credited thereto and all Security Entitlements
related thereto; and
(iiiall Proceeds of the foregoing (all of the
foregoing, collectively, the "Collateral").
(b) Prior to or concurrently with the execution and
delivery of this Agreement, the Purchase Contract Agent, on
behalf of the initial Holders of the Units, shall cause the
Notes comprising a part of the Normal Units to be Transferred
to the Collateral Agent for the benefit of the Company.
(c) The pledge provided in this Section 2.1 is herein
referred to as the "Pledge" and the Notes (or the Notes that
are delivered pursuant to Section 6.2 hereof), Treasury
Consideration, Treasury Securities or Applicable Ownership
Interest in the Treasury Portfolio subject to the Pledge,
excluding any Notes, Treasury Consideration, Treasury
Securities or Applicable Ownership Interest in the Treasury
Portfolio released from the Pledge as provided in Sections 4.1
and 4.2 hereof, respectively, are hereinafter referred to as
"Pledged Notes," "Pledged Treasury Consideration," "Pledged
Treasury Securities" or "Pledged Applicable Ownership Interest
in the Treasury Portfolio," respectively. Subject to the
Pledge and the provisions of Section 2.2 hereof, the Holders
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from time to time shall have full beneficial ownership of the
Collateral. 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. Whenever
directed by the Collateral Agent acting on behalf of the
Company, the Securities Intermediary shall have the right to
re-register in its name the Notes or any other securities held
in physical form.
(d) [Except as may be required in order to release Notes
or Treasury Consideration, as applicable, in connection with a
Tax Event Redemption or with a Holder's election to convert its
investment from a Normal Unit to a Stripped Unit, or except as
otherwise required to release Notes as specified herein,
neither the Collateral Agent, the Custodial Agent nor the
Securities Intermediary shall relinquish physical possession of
any certificate evidencing a Note 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 Notes evidenced thereby
from the Pledge, the Company or the Purchase Contract Agent
shall use its best efforts to obtain physical possession of a
replacement certificate evidencing any Notes remaining subject
to the Pledge hereunder registered to the Securities
Intermediary or endorsed in blank within fifteen days of the
date the Securities Intermediary relinquished possession. The
Securities Intermediary shall promptly notify the Company and
the Collateral Agent of the Securities Intermediary's failure
to obtain possession of any such replacement certificate as
required hereby.]
SECTION 2.2 Control and Perfection.
(a) In connection with the Pledge granted in Section 2.1,
and subject to the other provisions of this Agreement, the
Holders from time to time acting through the Purchase Contract
Agent, as their attorney-in-fact, hereby authorize and direct
the Securities Intermediary (without the necessity of obtaining
the further consent of the Purchase Contract Agent or any of
the Holders), and the Securities Intermediary agrees, to comply
with and follow any instructions and entitlement orders (as
defined in Section 8-102(a)(8) of the Code) that the Collateral
Agent may deliver with respect to the Collateral Account, the
Collateral credited thereto and any Security Entitlements with
respect to any thereof. In the event the Securities
Intermediary receives from the Holders or the Purchase Contract
Agent entitlement orders which conflict with entitlement orders
received from the Collateral Agent, the Securities Intermediary
shall follow the entitlement orders received from the
Collateral Agent. Such instructions and entitlement orders
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may, without limitation, direct the Securities Intermediary to
transfer, redeem, assign, or otherwise deliver the Notes, the
Treasury Consideration, the Treasury Securities, any Applicable
Ownership Interest in the Treasury Portfolio and any Security
Entitlements with respect thereto or sell, liquidate or dispose
of such assets through a broker designated by the Company, and
to pay and deliver any income, proceeds or other funds derived
therefrom to the Company. The Holders from time to time acting
through the Purchase Contract Agent hereby further authorize
and direct the Collateral Agent, as agent of the Company, to
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 only in accordance with the terms hereof or as
otherwise directed in writing by the Company. Without limiting
the generality of the foregoing, the Collateral Agent shall
issue entitlement orders to the Securities Intermediary as
directed in writing by the Company.
(b) The Securities Intermediary hereby confirms and
agrees that:
(i) all securities or other property underlying
any financial assets credited to the Collateral Account
shall be registered in the name of the Securities
Intermediary, or its nominee, indorsed to the Securities
Intermediary, or its nominee, or in blank or credited to
another Collateral Account maintained in the name of the
Securities Intermediary and in no case will any financial
asset credited to the Collateral Account be registered in
the name of the Purchase Contract Agent, the Collateral
Agent, the Company or any Holder, payable to the order of,
or specially indorsed to, the Purchase Contract Agent, the
Collateral Agent, the Company or any Holder except to the
extent the foregoing have been specially indorsed to the
Securities Intermediary or in blank;
(ii)all property delivered to the Securities
Intermediary pursuant to this Pledge Agreement (including,
without limitation, any Notes, Treasury Consideration,
Treasury Securities or any Applicable Ownership Interest
in the Treasury Portfolio) will be promptly credited to
the Collateral Account;
(iiithe Collateral Account is an account to
which financial assets are or may be credited, and the
Securities Intermediary shall, subject to the terms of
this Agreement, treat the Purchase Contract Agent as
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entitled to exercise the rights of any financial asset
credited to the Collateral Account;
(iv)the Securities Intermediary has not entered
into, and until the termination of this Agreement will not
enter into, any agreement with any other Person relating
to the Collateral Account and/or any financial assets
credited thereto pursuant to which it has agreed to comply
with entitlement orders (as defined in Section 8-102(a)(8)
of the Code) of such other Person; and
(v) the Securities Intermediary has not entered
into, and until the termination of this Agreement will not
enter into, any agreement with the Company, the Collateral
Agent or the Purchase Contract Agent purporting to limit
or condition the obligation of the Securities Intermediary
to comply with entitlement orders as set forth in this
Section 2.2 hereof.
(vi)The Securities Intermediary hereby agrees
that each item of property (whether investment property,
financial asset, security, instrument or cash) credited to
the Collateral Account shall be treated as a "financial
asset" within the meaning of Section 8-102(a)(9) of the
Code.
(viiIn the event of any conflict between this
Agreement (or any portion thereof) and any other agreement
now existing or hereafter entered into, the terms of this
Agreement shall prevail.
(c) The Purchase Contract Agent hereby irrevocably
constitutes and appoints the Collateral Agent and the Company,
with full power of substitution, as the Purchase Contract
Agent's attorney-in-fact to take on behalf of, and in the name,
place and stead of, the Purchase Contract Agent and the
Holders, any action necessary or desirable to perfect and to
keep perfected the security interest in the Collateral referred
to in Section 2.1. The grant of such power-of-attorney shall
not be deemed to require of the Collateral Agent any specific
duties or obligations not otherwise assumed by the Collateral
Agent hereunder. Notwithstanding the foregoing, in no event
shall the Collateral Agent or Securities Intermediary be
responsible for the preparation or filing of any financing or
continuation statements in the appropriate jurisdictions or
responsible for maintenance or perfection of any security
interest hereunder.
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ARTICLE III
PAYMENTS ON PLEDGED COLLATERAL
SECTION 3.1 Payments.
So long as the Purchase Contract Agent is the registered
owner of the Pledged Notes, Pledged Treasury Consideration,
Pledged Applicable Ownership Interest in the Treasury Portfolio
or Pledged Treasury Securities, it shall receive all payments
thereon. If the Pledged Notes are reregistered, such that the
Collateral Agent becomes the registered holder, all payments of
the principal of, or interest on, the Pledged Notes and all
payments of the principal of, or cash distributions on, any
Pledged Treasury Consideration, Pledged Treasury Securities or
any Pledged Applicable Ownership Interest in the Treasury
Portfolio, that are received by the Collateral Agent and that
are properly payable hereunder, shall be paid by the Collateral
Agent by wire transfer in same day funds:
(i) in the case of (A) quarterly cash
distributions on Normal Units which include Pledged Notes,
Pledged Treasury Consideration or any Pledged Applicable
Ownership Interest in the Treasury Portfolio, any interest
payments with respect to the Pledged Notes or the
appropriate Pledged Applicable Ownership Interest in the
Treasury Portfolio [(as specified in clause (B) of the
definition of Applicable Ownership Interest) of the
Treasury Portfolio, as the case may be, and (B) any
payments of principal 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 Notes, Treasury Consideration 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 the Normal Units, to the account designated by
the Purchase Contract Agent for such purpose, no later
than 10:00 a.m., New York City time, on the Business Day
such payment is received by the Collateral Agent (provided
that in the event such payment is received by the
Collateral Agent on a day that is not a Business Day or
after 9:00 a.m., New York City time, on a Business Day,
then such payment shall be made no later than 9:30 a.m.,
New York City time, on the next succeeding Business Day);
(ii)in the case of any payments with respect to
any Treasury Securities that have been released from the
Pledge pursuant to Section 4.3 hereof, to the Holders of
the Stripped Units to the accounts designated by them in
writing for such purpose no later than 2:00 p.m., New York
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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 10 a.m., New York City
time, on a Business Day, then such payment shall be made
no later than 10:30 a.m., New York City time, on the next
succeeding Business Day); and
(iiiin the case of payments in respect of any
Pledged Notes, Pledged Treasury Consideration, Pledged
Treasury Securities or the appropriate Pledged Applicable
Ownership Interest (as specified in clause (A) of the
definition of such term) of the Treasury Portfolio, as the
case may be, to be paid upon settlement of such Holder's
obligations to purchase Common Stock under the Purchase
Contract, to the Company on the Stock Purchase Date in
accordance with the procedure set forth in Section 4.5(a)
or 4.5(b) hereof, in full satisfaction of the respective
obligations of the Holders under the related Purchase
Contracts.
SECTION 3.2 Application of Payments.
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 principal on account of any Note,
Treasury Consideration or the appropriate Applicable Ownership
Interest (as specified in clause (A) of the definition of such
term) of the Treasury Portfolio, as applicable, that, at the
time of such payment, is a Pledged Note, Treasury Consideration
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 a Holder of a Stripped Unit
shall receive any payments of principal on account of any
Treasury Securities that, at the time of such payment, are
Pledged Treasury Securities, the Purchase Contract Agent or
such Holder shall hold the same as trustee of an express trust
for the benefit of the Company (and promptly deliver the same
over to the Company) for 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 principal so received.
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ARTICLE IV
SUBSTITUTION, RELEASE, REPLEDGE AND SETTLEMENT OF NOTES
SECTION 4.1 Collateral Substitution and the Creation of
Stripped Units.
At any time on or prior to the second Business Day
immediately preceding the Stock Purchase Date, a Holder of
Normal Units shall have the right to substitute Treasury
Securities for the Pledged Notes, Pledged Treasury
Consideration or Pledged Applicable Ownership Interest in the
Treasury Portfolio, as the case may be, securing such Holder's
obligations under the Purchase Contracts comprising a part of
such Normal Units, in integral multiples of 10 Normal Units, or
after a remarketing of the Notes pursuant to the Purchase
Contract Agreement, in integral multiples of Normal Units such
that Treasury Securities to be deposited and the applicable
Treasury Consideration to be released are in integral multiples
of $1,000, by (a) Transferring to the Collateral Agent Treasury
Securities having an aggregate principal amount equal to the
aggregate Stated Amount of such Normal Units and (b) delivering
such Normal Units to the Purchase Contract Agent, accompanied
by a notice, substantially in the form of Exhibit B hereto, to
the Purchase Contract Agent stating that such Holder has
Transferred Treasury Securities to the Collateral Agent
pursuant to clause (a) above (stating the principal amount and
the CUSIP numbers of the Treasury Securities Transferred by
such Holder) and requesting that the Purchase Contract Agent
instruct the Collateral Agent to release from the Pledge the
Pledged Notes, Pledged Treasury Consideration or Pledged
Applicable Ownership Interest in the Treasury Portfolio, as the
case may be, related to such Normal Units, whereupon the
Purchase Contract Agent shall promptly give such instruction in
writing to the Collateral Agent in the form provided in
Exhibit A; provided that, such Holder may not substitute such
Treasury Securities for such Pledged Notes, Pledged Treasury
Consideration or Pledged Applicable Ownership Interest in the
Treasury Portfolio pursuant to this Section 4.1 during the
period from four Business Days prior to any Remarketing Period
until the expiration of three Business Days after the end of
such Remarketing Period. Upon receipt of Treasury Securities
from a Holder of Normal Units and the related written
instruction from the Purchase Contract Agent, the Collateral
Agent shall release the Pledged Notes, Pledged Treasury
Consideration or the Pledged Applicable Ownership Interest in
the Treasury Portfolio, as the case may be, and shall promptly
Transfer such Pledged Notes, Pledged Treasury Consideration or
Pledged Applicable Ownership Interest in the Treasury
Portfolio, as the case may be, free and clear of any lien,
pledge or security interest created hereby, to the Purchase
Contract Agent. All items Transferred and/or substituted by
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any Holder pursuant to this Section 4.1, Section 4.2 or any
other Section of this Agreement shall be Transferred and/or
substituted free and clear of all liens, claims and
encumbrances.
SECTION 4.2 Collateral Substitution and the Re-Creation
of Normal Units.
At any time on or prior to the second Business Day
immediately preceding the Stock Purchase Date, a Holder of
Stripped Units shall have the right to reestablish Normal Units
(a) consisting of the Purchase Contracts and Notes in integral
multiples of 10 Normal Units, or (b) after a remarketing of the
Notes pursuant to the Purchase Contract Agreement or a Tax
Event Redemption, consisting of the Purchase Contracts and the
appropriate Treasury Consideration (identified and calculated
by reference to the Treasury Consideration then comprising
Normal Units) or the appropriate portion of the Treasury
Portfolio in integral multiples of Stripped Units such that the
Treasury Consideration or Applicable Ownership Interest in the
Treasury Portfolio to be deposited and the Treasury Securities
to be released are in integral multiples of $1,000, by (x)
Transferring to the Collateral Agent Notes or the appropriate
Treasury Consideration or the Applicable Ownership Interest (as
defined in clause (A) of the definition of such term) of the
Treasury Portfolio, as the case may be, then comprising such
number of Normal Units as is equal to such Stripped Units and
(y) delivering such Stripped Units to the Purchase Contract
Agent, accompanied by a notice, substantially in the form of
Exhibit B hereto, to the Purchase Contract Agent stating that
such Holder has transferred Notes, Treasury Consideration or
Applicable Ownership Interest in the Treasury Portfolio to the
Collateral Agent pursuant to clause (a) above and requesting
that the Purchase Contract Agent instruct the Collateral Agent
to release from the Pledge the Pledged Treasury Securities
related to such Stripped Units, whereupon the Purchase Contract
Agent shall give such instruction to the Collateral Agent in
the form provided in Exhibit A; provided that, such Holder of
Stripped Units shall not have the right to reestablish Normal
Units pursuant to this Section 4.2 during the period from four
Business Days prior to any Remarketing Period until the
expiration of three Business Days after the end of such
Remarketing Period. Upon receipt of the Notes or the
appropriate Treasury Consideration or Applicable Ownership
Interest in 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 Pledged Treasury
Securities and shall promptly Transfer such Pledged Treasury
Securities, free and clear of any lien, pledge or security
interest created hereby, to the Purchase Contract Agent.
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SECTION 4.3 Termination Event.
(a) Upon receipt by the Collateral Agent of written
notice from the Company or the Purchase Contract Agent that
there has occurred a Termination Event, the Collateral Agent
shall release all Collateral from the Pledge and shall promptly
Transfer any Pledged Notes, Pledged Treasury Consideration or
Pledged Applicable Ownership Interest in the Treasury
Portfolio, as the case may be, and Pledged Treasury Securities
to the Purchase Contract Agent for the benefit of the Holders
of the Normal Units and the Stripped Units, respectively, free
and clear of any lien, pledge or security interest or other
interest created hereby.
(b) If such Termination Event shall result from the
Company's becoming a debtor under the Bankruptcy Code, and if
the Collateral Agent shall for any reason fail promptly to
effectuate the release and Transfer of all Pledged Notes,
Pledged Treasury Consideration, Pledged Applicable Ownership
Interest in the Treasury Portfolio, or 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 at the
expense of the Company 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 Notes, Pledged Treasury
Consideration, Pledged Applicable Ownership Interest in
the Treasury Portfolio or Pledged Treasury Securities, as
the case may be, as provided in this Section 4.3, then the
Purchase Contract Agent shall within fifteen days after
the occurrence of such Termination Event commence an
action or proceeding in the court with jurisdiction of the
Company's case under the Bankruptcy Code seeking an order
requiring the Collateral Agent to effectuate the release
and transfer of all Pledged Notes, Pledged Treasury
Consideration, Pledged Applicable Ownership Interest in
the Treasury Portfolio or Pledged Treasury Securities, as
the case may be, as provided by this Section 4.3 or
(ii)commence an action or proceeding like that
described in subsection (i)(z) hereof within ten days
after the occurrence of such Termination Event.
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SECTION 4.4 Early Settlement; Merger Early Settlement;
Cash Settlement.
Upon written notice to the Collateral Agent by the
Purchase Contract Agent that one or more Holders of Units have
elected to effect Early Settlement, Merger Early Settlement or
Cash Settlement of their respective obligations under the
Purchase Contracts forming a part of such Units in accordance
with the terms of the Purchase Contracts and the Purchase
Contract Agreement (setting forth the number of such Purchase
Contracts as to which such Holders have elected to effect Early
Settlement, Merger Early Settlement or Cash Settlement), and
that the Purchase Contract Agent has received from such
Holders, and paid to the Company, as confirmed to the
Collateral Agent in writing by the Company, the related Early
Settlement Amounts, Merger Early Settlement Amounts or Cash
Settlement Amounts, as the case may be, pursuant to the terms
of the Purchase Contracts and the Purchase Contract Agreement
and that all conditions to such Early Settlement, Merger Early
Settlement or Cash Settlement, as the case may be, have been
satisfied, then the Collateral Agent shall release from the
Pledge (a) Pledged Notes, Pledged Treasury Consideration or
Pledged Applicable Ownership Interest in the Treasury
Portfolio, as the case may be, in the case of a Holder of
Normal Units or (b) Pledged Treasury Securities, in the case of
a Holder of Stripped Units, relating to such Purchase Contracts
as to which such Holders have elected to effect Early
Settlement, Merger Early Settlement or Cash Settlement, and
shall Transfer all such Pledged Notes, Pledged Treasury
Consideration, Pledged Applicable Ownership Interest in 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 such Holders.
SECTION 4.5 Remarketing; Application of Proceeds;
Settlement.
(a) Pursuant to the Purchase Contract Agreement, the
Purchase Contract Agent shall notify, by 10:00 a.m., New York
City time, on the third Business Day preceding the Remarketing
Date or any Subsequent Remarketing Date, as the case may be,
the Remarketing Agent and the Collateral Agent of the aggregate
principal amount of Notes comprising part of Normal Units to be
remarketed. The Collateral Agent shall, by 10:00 a.m., New
York City time, on the Business Day immediately preceding the
first day of any Remarketing Period or any Subsequent
Remarketing Period, as the case may be, without any instruction
from Holders of Normal Units, deliver the Pledged Notes to be
remarketed to the Remarketing Agent for remarketing. After
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deducting as the remarketing fee an amount not exceeding 25
basis points (.25%) of the total proceeds of such remarketing
of Pledged Notes, the Remarketing Agent will deliver the Agent-
purchased Treasury Consideration (as defined in the Purchase
Contract Agreement) purchased from the proceeds of the
remarketing to the Purchase Contract Agent, which shall
thereupon deliver such Agent-purchased Treasury Consideration
to the Collateral Agent. Upon receipt of the Agent-purchased
Treasury Consideration from the Purchase Contract Agent
following a successful remarketing, (i) the Collateral Agent,
for the benefit of the Company, shall thereupon hold in the
Collateral Account such Agent-Purchased Treasury Consideration
to secure such Normal Units Holders' obligations under the
Purchase Contracts and to fund the quarterly interest payment
due to Normal Units Holders on the Stock Purchase Date, and
(ii) the remaining portion, if any, of the proceeds of such
successful remarketing shall be distributed by the Remarketing
Agent to the Purchase Contract Agent for payment to such Normal
Units Holders participating in such remarketing. On the Stock
Purchase Date, the Collateral Agent shall apply that portion of
the payments received in respect of the Pledged Treasury
Consideration equal to the aggregate Stated Amount of the
related Normal Units (i) at the written direction of the
Company to satisfy in full the obligations of such Normal Units
Holders to pay the Purchase Price under the related Purchase
Contracts and (ii) to pay the quarterly interest payment due to
Normal Units Holders on such Stock Purchase Date, which such
quarterly interest payment shall be paid on the Pledged Notes
in an amount equal to the Coupon Rate for such quarterly
interest payment.
(b) Within three Business Days following the Last Failed
Remarketing, the Notes delivered to the Remarketing Agent
pursuant to Section 4.5(a) hereof shall be returned to the
Collateral Agent, together with written notice from the
Remarketing Agent of the Last Failed Remarketing. The
Collateral Agent, for the benefit of the Company, shall
thereupon hold such Notes to secure the Normal Units Holders'
obligations under the Purchase Contracts. The Remarketing
Agent shall make one or more attempts to remarket the Notes in
accordance with the procedures set forth in the Purchase
Contract Agreement and the Remarketing Agreement, provided that
the requirements of Section 5.4(b)(ii) of the Purchase Contract
Agreement have been met. If by 4:00 p.m., New York City time,
on the Business Day immediately preceding the Stock Purchase
Date, the Remarketing Agent has failed to remarket the Notes at
100.5% of the Remarketing Value (as described in the Purchase
Contract Agreement), the Last Failed Remarketing shall be
deemed to have occurred. In this case, the Remarketing Agent
shall advise the Collateral Agent in writing that it cannot
remarket the related Pledged Notes of such Holders of Normal
Units. If any Holder of Notes exercises it right to put such
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Holder's Notes to the Company pursuant to the terms of the
Indenture, the proceeds of the put shall be paid (a) to the
Collateral Agent on behalf of such Holder to satisfy such
Holder's obligation under the Purchase Contract if such Notes
are part of a Normal Unit and (b) to the Holder of such Notes
if the Notes are Separate Notes. The Collateral Agent, for the
benefit of the Company will, at the written direction of the
Company, retain or dispose of the Pledged Notes in accordance
with applicable law and satisfy in full, from any such
disposition or retention, such Holders' obligations to pay the
Purchase Price for the Common Stock; provided, that if upon a
Failed Remarketing, the Collateral Agent exercises such rights
for the benefit of the Company with respect to such Notes, any
accrued and unpaid interest on such Notes will become payable
by the Company to the Purchase Contract Agent for payment to
the Holder of the Normal Units to which such Notes relate in
accordance with the Purchase Contract Agreement.
(c) In the event a Holder of Stripped Units has not made
a Cash Settlement, Early Settlement or Merger Early Settlement
of the Purchase Contracts underlying its Stripped Units, such
Holder shall be deemed to have elected to pay for the shares of
Common Stock to be issued under such Purchase Contracts from
the payments received in respect of the related Pledged
Treasury Securities. Without receiving any instruction from
any such Holder, the Collateral Agent shall apply such payments
to the settlement of such Purchase Contracts on the Stock
Purchase Date. In the event the payments received in respect
of the related Pledged Treasury Securities are in excess of the
aggregate Purchase Price of the Purchase Contracts being
settled thereby, the Collateral Agent shall distribute such
excess, when received, to the Purchase Contract Agent for the
benefit of such Holders of Stripped Units.
(d) On or prior to the fourth Business Day preceding the
first day of any Remarketing Period, but no earlier than the
Payment Date immediately preceding _________, 2004, holders of
Separate Notes may elect to have their Separate Notes
remarketed by delivering their Separate Notes, together with a
notice of such election, substantially in the form of Exhibit C
hereto, to the Custodial Agent. On the third Business Day
prior to the first day of any Remarketing Period, by
10:00 a.m., New York City time, the Custodial Agent shall
notify the Remarketing Agent of the number of such Separate
Notes to be remarketed. The Custodial Agent will hold such
Separate Notes in an account separate from the Collateral
Account. A holder of Separate Notes electing to have its
Separate Notes remarketed will also have the right to withdraw
such election by written notice to the Custodial Agent,
substantially in the form of Exhibit D hereto, on or prior to
the [fifth] Business Day immediately preceding the first day of
any Remarketing Period and any Subsequent Remarketing Period,
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upon which notice the Custodial Agent will return such Separate
Notes to such holder. On the third Business Day immediately
preceding the first day of any Remarketing Period and any
Subsequent Remarketing Period, the Custodial Agent at the
written direction of the Remarketing Agent will deliver to the
Remarketing Agent for remarketing all Separate Notes delivered
to the Custodial Agent pursuant to this Section 4.5(d) and not
withdrawn pursuant to the terms hereof prior to such date. The
portion of the proceeds from such remarketing equal to the
amount calculated in respect of such Separate Notes as set
forth in Section 5.4(b) of the Purchase Contract Agreement will
automatically be remitted by the Remarketing Agent to the
Custodial Agent for the benefit of the holders of such Separate
Notes. In addition, after deducting as the remarketing fee an
amount not exceeding 25 basis points (.25%) of the total
proceeds of such remarketing of such Separate Notes, the
Remarketing Agent will remit to the Custodial Agent the
remaining portion of the proceeds, if any, for the benefit of
such holders of such Separate Notes. If, despite using its
reasonable best efforts, the Remarketing Agent advises the
Custodial Agent in writing that there has been a Failed
Remarketing, the Remarketing Agent will promptly return such
Separate Notes to the Custodial Agent for redelivery to such
holders of such Separate Notes.
ARTICLE V
VOTING RIGHTS-- NOTES
SECTION 5.1 Exercise by Purchase Contract Agent.
The Purchase Contract Agent may exercise, or refrain from
exercising, any and all voting and other consensual rights
pertaining to the Pledged Notes 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 Notes; 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 Notes, including notice of any meeting at which
holders of Notes are entitled to vote or solicitation of
consents, waivers or proxies of holders of Notes, 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
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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 Notes (in form
and substance satisfactory to the Collateral Agent) as are
prepared by the Purchase Contract Agent with respect to the
Pledged Notes.
ARTICLE VI
RIGHTS AND REMEDIES; TAX EVENT REDEMPTION
SECTION 6.1 Rights and Remedies of the Collateral
Agent.
(a) In addition to the rights and remedies available at
law or in equity, after an event of default under the Purchase
Contracts, the Collateral Agent shall have all of the rights
and remedies with respect to the Collateral of a secured party
under the Uniform Commercial Code (or any successor thereto) as
in effect in the State of New York from time to time (the
"Code") (whether or not the Code is in effect in the
jurisdiction where the rights and remedies are asserted) and
the TRADES Regulations and such additional rights and remedies
to which a secured party is entitled under the laws in effect
in any jurisdiction where any rights and remedies hereunder may
be asserted. Wherever reference is made in this Agreement to
any section of the Code, such reference shall be deemed to
include a reference to any provision of the Code which is a
successor to, or amendment of, such section. Without limiting
the generality of the foregoing, such remedies may include, to
the extent permitted by applicable law, (i) retention of the
Pledged Notes or other Collateral in full satisfaction of the
Holders' obligations under the Purchase Contracts or (ii) sale
of the Pledged Notes or other Collateral in one or more public
or private sales, in each case at the written direction of the
Company.
(b) Without limiting any rights or powers otherwise
granted by this Agreement to the Collateral Agent, in the event
the Collateral Agent is unable to make payments to the Company
on account of any Pledged Treasury Consideration, Pledged
Applicable Ownership Interest of the Treasury Portfolio or
Pledged Treasury Securities as provided in Article III hereof
in satisfaction of the obligations of the Holder of the Units
of which such Pledged Treasury Consideration or Pledged
Treasury Securities, as applicable, is a part under the related
Purchase Contracts, the inability to make such payments shall
constitute an event of default under the Purchase Contracts and
the Collateral Agent shall have and may exercise, with
reference to such Pledged Treasury Securities, Pledged
Applicable Ownership Interest of the Treasury Portfolio or
Pledged Treasury Consideration, as applicable, and such
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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 principal amount of, or
interest on, the Pledged Notes, or (ii) the principal amount
of, or interest (if any) on, the Pledged Treasury
Consideration, Pledged Applicable Ownership Interest of the
Treasury Portfolio or Pledged Treasury Securities, subject, in
each case, to the provisions of Article III, and as otherwise
granted herein.
(d) The Purchase Contract Agent, individually and as
attorney-in-fact for each Holder of Units, agrees that, from
time to time, upon the written request of the Company or the
Collateral Agent (acting upon the written request of the
Company), the Purchase Contract Agent or such Holder shall
execute and deliver such further documents and do such other
acts and things as the Company or the Collateral Agent (acting
upon the written request of the Company) may reasonably request
in order to maintain the Pledge, and the perfection and
priority thereof, and to confirm the rights of the Collateral
Agent hereunder. The Purchase Contract Agent shall have no
liability to any Holder for executing any documents or taking
any such acts requested by the Company or the Collateral Agent
(acting upon the written request of the Company) hereunder,
except for liability for its own negligent act, its own
negligent failure to act, its bad faith or its own willful
misconduct.
SECTION 6.2 Substitutions.
Whenever a Holder has the right to substitute Treasury
Securities, Notes, Treasury Consideration 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 6.3 Tax Event Redemption.
Upon the occurrence of a Tax Event Redemption prior to a
successful remarketing of the Pledged Notes, the aggregate
Redemption Price payable on the Tax Event Redemption Date with
respect to such Pledged Notes shall be delivered to the
Collateral Agent by the Trustee on or prior to 12:00 p.m., New
York City time, by wire transfer in immediately available funds
at such place and at such account as may be designated by the
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Collateral Agent in exchange for the Pledged Notes. In the
event the Collateral Agent receives such Redemption Price, the
Collateral Agent will, at the written direction of the Company,
apply an amount, out of such Redemption Price, equal to the
aggregate Redemption Amount with respect to the Pledged Notes
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
Normal Units. The Collateral Agent shall Transfer the Treasury
Portfolio to the Collateral Account to secure the obligation of
all Holders of Normal Units to purchase Common Stock of the
Company under the Purchase Contracts constituting a part of
such Normal Units, in substitution for the Pledged Notes.
Thereafter the Collateral Agent shall have such security
interests, rights and obligations with respect to the Treasury
Portfolio as it had in respect of the Pledged Notes as provided
in Articles II, III, IV, V and VI, and any reference herein to
the Notes shall be deemed to be reference to such Treasury
Portfolio, and any reference herein to interest on the Notes
shall be deemed to be a reference to distributions on such
Treasury Portfolio.
ARTICLE VII
REPRESENTATIONS AND WARRANTIES; COVENANTS
SECTION 7.1 Representations and Warranties.
The Holders from time to time, acting through the Purchase
Contract Agent as their attorney-in-fact (it being understood
that the Purchase Contract Agent shall not be liable for any
representation or warranty made by or on behalf of a Holder),
hereby represent and warrant to the Collateral Agent, which
representations and warranties shall be deemed repeated on each
day a Holder Transfers Collateral that:
(a) such Holder has the power to grant a security
interest in and lien on the Collateral;
(b) such Holder is the sole beneficial owner of the
Collateral and, in the case of Collateral delivered in physical
form, is the sole holder of such Collateral and is the sole
beneficial owner of, or has the right to Transfer, the
Collateral it Transfers to the Collateral Agent, free and clear
of any security interest, lien, encumbrance, call, liability to
pay money or other restriction other than the security interest
and lien granted under Section 2.1 hereof;
(c) upon the Transfer of the Collateral to the Collateral
Account, the Collateral Agent, for the benefit of the Company,
will have a valid and perfected first priority security
interest therein (assuming that any central clearing operation
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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 2.1 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
(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 Units.
ARTICLE VIII
THE COLLATERAL AGENT
SECTION 8.1 Appointment, Powers and Immunities.
(a) The Collateral Agent shall act as agent for the
Company hereunder with such powers as are specifically vested
in the Collateral Agent by the terms of this Agreement,
together with such other powers as are reasonably incidental
thereto. Each of the Collateral Agent, the Custodial Agent and
the Securities Intermediary:
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(i) shall have no duties or responsibilities
except those expressly set forth in this Agreement and no
implied covenants or obligations shall be inferred from
this Agreement against any of them, nor shall any of them
be bound by the provisions of any agreement by any party
hereto beyond the specific terms hereof;
(ii)shall not be responsible for any recitals
contained in this Agreement, or in any certificate or
other document referred to or provided for in, or received
by it under, this Agreement, the Units 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 Units or the Purchase Contract Agreement or
any other document referred to or provided for herein or
therein or for any failure by the Company or any other
Person (except the Collateral Agent, the Custodial Agent
or the Securities Intermediary, as the case may be) to
perform any of its obligations hereunder or thereunder or
for the perfection, priority or, except as expressly
required hereby, existence, validity, perfection or
maintenance of any security interest created hereunder;
(iiishall not be required to initiate or
conduct any litigation or collection proceedings hereunder
(except in the case of the Collateral Agent, pursuant to
written directions furnished under Section 8.2 hereof,
subject to Section 8.6 hereof);
(iv)shall not be responsible for any action
taken or omitted to be taken by it hereunder or under any
other document or instrument referred to or provided for
herein or in connection herewith or therewith, except for
its own gross negligence, bad faith or willful misconduct;
and
(v) shall not be required to advise any party
as to selling or retaining, or taking or refraining from
taking any action with respect to, the Units or other
property deposited hereunder.
Subject to the foregoing, during the term of this
Agreement, the Collateral Agent shall take all reasonable
action in connection with the safekeeping and preservation of
the Collateral hereunder.
(b) No provision of this Agreement shall require the
Collateral Agent, the Custodial Agent or the Securities
Intermediary to expend or risk its own funds or otherwise incur
any financial liability in the performance of any of its duties
hereunder. In no event shall the Collateral Agent, the
Custodial Agent or the Securities Intermediary be liable for
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any amount in excess of the value of the Collateral or for any
special, indirect, individual, consequential damages or lost
profits or loss of business, arising in connection with this
Agreement, without any act or deed that is found to be
attributable to gross negligence, bad faith or willful
misconduct on the part of the Collateral Agent, the Custodial
Agent or the Securities Intermediary, even if the Collateral
Agent, the Custodial Agent or the Securities Intermediary has
been advised of the likelihood of such loss or damage being
incurred, without any act or deed that is found to be
attributable to gross negligence, bad faith or willful
misconduct on the part of the Collateral Agent, the Custodial
Agent or the Securities Intermediary. Notwithstanding the
foregoing, the Collateral Agent, the Custodial Agent, the
Purchase Contract Agent and Securities Intermediary, each in
its individual capacity, hereby waive any right of setoff,
bankers lien, liens or perfection rights as securities
intermediary or any counterclaim with respect to any of the
Collateral.
(c) The Collateral Agent, Custodial Agent and Securities
Intermediary shall have no liability whatsoever for the action
or inaction of any Clearing Agency or any book-entry system
thereof. In no event shall any Clearing Agency or any book-
entry system thereof be deemed an agent or subcustodian of the
Collateral Agent, Custodial Agent and Securities Intermediary.
The Collateral Agent, Custodial Agent and Securities
Intermediary shall not be responsible or liable for any failure
or delay in the performance of its obligations under this
Agreement arising out of or caused, directly or indirectly, by
circumstances beyond its reasonable control, including, without
limitation, acts of God; earthquakes; fires; floods; war
(whether declared or undeclared); terrorism; civil or military
disturbances; sabotage; epidemics; riots; interruptions, loss
or malfunctions of utilities, computer (hardware or software)
or communications service; accidents; labor disputes; acts of
civil or military authority; governmental actions; or inability
to obtain labor, material, equipment or transportation.
SECTION 8.2 Instructions of the Company.
The Company shall have the right, by one or more
instruments in writing executed and delivered to the Collateral
Agent, the Custodial Agent or the Securities Intermediary, as
the case may be, to direct the time, method and place of
conducting any proceeding for the realization of any right or
remedy available to the Collateral Agent, or of exercising any
power conferred on the Collateral Agent, the Custodial Agent or
the Securities Intermediary, as the case may be, or to direct
the taking or refraining from 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
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Agreement and (ii) the Collateral Agent, the Custodial Agent
and the Securities Intermediary shall each receive indemnity
reasonably satisfactory to it as provided herein. Nothing in
this Section 8.2 shall impair the right of the Collateral Agent
in its discretion to take any action or omit to take any action
which it deems proper and which is not inconsistent with such
direction.
SECTION 8.3 Reliance.
Each of the Securities Intermediary, the Custodial Agent
and the Collateral Agent shall be entitled conclusively to rely
upon any certification, order, judgment, opinion, notice or
other communication (including, without limitation, any thereof
by telephone or facsimile) reasonably believed by it to be
genuine and correct and to have been signed or sent by or on
behalf of the proper Person or Persons (without being required
to determine the correctness of any fact stated therein), and
upon advice and statements of legal counsel and other experts
selected by the Collateral Agent, the Custodial Agent or the
Securities Intermediary, as the case may be. As to any matters
not expressly provided for by this Agreement, the Collateral
Agent, the Custodial Agent and the Securities Intermediary
shall in all cases be fully protected in acting, or in
refraining from acting, hereunder in accordance with
instructions given by the Company in accordance with this
Agreement.
SECTION 8.4 Rights in Other Capacities.
The Collateral Agent, the Custodial Agent and the
Securities Intermediary and their affiliates may (without
having to account therefor to the Company) accept deposits
from, lend money to, make their investments in and generally
engage in any kind of banking, trust or other business with the
Purchase Contract Agent, any Holder of Units and any holder of
Separate Notes (and any of their respective subsidiaries or
affiliates) as if it were not acting as the Collateral Agent,
the Custodial Agent or the Securities Intermediary, as the case
may be, and the Collateral Agent, the Custodial Agent and the
Securities Intermediary and their affiliates may accept fees
and other consideration from the Purchase Contract Agent, any
Holder of Units or any holder of Separate Notes without having
to account for the same to the Company; provided that each of
the Securities Intermediary, the Custodial Agent and the
Collateral Agent covenants and agrees with the Company that,
except as provided in this Agreement, it shall not accept,
receive or permit there to be created in favor of itself (and
waives any right of set-off or banker's lien with respect to)
and shall take no affirmative action to permit there to be
created in favor of any other Person, any security interest,
lien or other encumbrance of any kind in or upon the Collateral
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and the Collateral shall not be commingled with any other
assets of any such Person.
SECTION 8.5 Non-Reliance on Collateral Agent.
None of the Securities Intermediary, the Custodial Agent
or the Collateral Agent shall be required to keep itself
informed as to the performance or observance by the Purchase
Contract Agent or any Holder of Units of this Agreement, the
Purchase Contract Agreement, the Units 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 Units. The Collateral Agent, the Custodial Agent and
the Securities Intermediary shall not have any duty or
responsibility to provide the Company or the Remarketing Agent
with any credit or other information concerning the affairs,
financial condition or business of the Purchase Contract Agent,
any Holder of Units or any holder of Separate Notes (or any of
their respective subsidiaries or affiliates) that may come into
the possession of the Collateral Agent, the Custodial Agent or
the Securities Intermediary or any of their respective
affiliates.
SECTION 8.6 Compensation and Indemnity.
The Company agrees:
(a) to pay each of the Collateral Agent, the Custodial
Agent and the Securities Intermediary from time to time such
compensation as shall be agreed in writing between the Company
and the Collateral Agent, Custodial Agent or the Securities
Intermediary, as the case may be, for all services rendered by
each of them hereunder, and
(b) to indemnify the Collateral Agent, the Custodial
Agent, the Securities Intermediary and their officers,
directors and agents for, and to hold each of them harmless
from and against, any loss, liability or reasonable out-of-
pocket expense incurred without gross 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 out-of-pocket
costs and expenses (including fees and expenses of counsel) of
defending itself against any claim or liability in connection
with the exercise or performance of such powers and duties or
collecting such amounts. The Collateral Agent, the Custodial
Agent and the Securities Intermediary shall each promptly
notify the Company of any third party claim which may give rise
to the indemnity hereunder and give the Company the opportunity
to participate in the defense of such claim with counsel
reasonably satisfactory to the indemnified party, and no such
claim shall be settled without the written consent of the
-25-
Company, which consent shall not be unreasonably withheld. The
provisions of this Section 8.6 shall survive the resignation or
removal of the Collateral Agent, the Custodial Agent and the
Securities Intermediary or the termination of this Agreement.
SECTION 8.7 Failure to Act.
In the event of any ambiguity in the provisions of this
Agreement or any dispute between or conflicting claims by or
among the parties hereto or any other Person with respect to
any funds or property deposited hereunder, the Collateral
Agent, Custodial Agent and the Securities Intermediary shall be
entitled, after prompt notice to the Company and the Purchase
Contract Agent, at its sole option, to refuse to comply with
any and all claims, demands or instructions with respect to
such property or funds so long as such dispute or conflict
shall continue, and none of the Collateral Agent, Custodial
Agent or the Securities Intermediary shall be or become liable
in any way to any of the parties hereto for its failure or
refusal to comply with such conflicting claims, demands or
instructions. The Collateral Agent, Custodial Agent and the
Securities Intermediary shall be entitled to refuse to act
until either (i) such conflicting or adverse claims or demands
shall have been finally determined by a court of competent
jurisdiction or settled by agreement between the conflicting
parties as evidenced in a writing, reasonably satisfactory to
the Collateral Agent, Custodial Agent or the Securities
Intermediary, as the case may be, or (ii) the Collateral Agent,
the Custodial Agent or the Securities Intermediary, as the case
may be, shall have received security or an indemnity reasonably
satisfactory to the Collateral Agent, Custodial Agent or the
Securities Intermediary, as the case may be, sufficient to save
the Collateral Agent, Custodial Agent or the Securities
Intermediary, as the case may be, harmless from and against any
and all loss, liability or reasonable out-of-pocket expense
which the Collateral Agent, Custodial Agent or the Securities
Intermediary, as the case may be, may incur by reason of its
acting without bad faith, willful misconduct or gross
negligence. The Collateral Agent, Custodial Agent or the
Securities Intermediary may in addition elect to commence an
interpleader action or seek other judicial relief or orders as
the Collateral Agent, Custodial Agent or the Securities
Intermediary, as the case may be, may deem necessary.
Notwithstanding anything contained herein to the contrary, none
of the Collateral Agent, Custodial Agent or the Securities
Intermediary shall be required to take any action that is in
its opinion contrary to law or to the terms of this Agreement,
or which would in its opinion subject it or any of its
officers, employees or directors to liability.
-26-
SECTION 8.8 Resignation.
Subject to the appointment and acceptance of a successor
Collateral Agent, Custodial Agent or Securities Intermediary,
as provided below, (a) the Collateral Agent, Custodial Agent
and the Securities Intermediary may resign at any time by
giving notice thereof to the Company and the Purchase Contract
Agent as attorney-in-fact for the Holders of Units, (b) the
Collateral Agent, Custodial Agent and the Securities
Intermediary may be removed at any time by the Company and
(c) if the Collateral Agent, Custodial Agent or the Securities
Intermediary fails to perform any of its material obligations
hereunder in any material respect for a period of not less than
20 days after receiving written notice of such failure by the
Purchase Contract Agent and such failure shall be continuing,
the Collateral Agent, Custodial Agent or the Securities
Intermediary may be removed by the Purchase Contract Agent.
The Purchase Contract Agent shall promptly notify the Company
of any removal of the Collateral Agent, the Custodial Agent or
the Securities Intermediary pursuant to clause (c) of the
immediately preceding sentence. The Company shall promptly
notify the Purchase Contract Agent of any removal of the
Collateral Agent, the Custodial Agent or the Securities
Intermediary pursuant to clause (b) of the second preceding
sentence. Upon any such resignation or removal, the Company
shall have the right to appoint a successor Collateral Agent,
Custodial Agent or Securities Intermediary, as the case may be.
If no successor Collateral Agent, Custodial Agent or Securities
Intermediary, as the case may be, shall have been so appointed
and shall have accepted such appointment within 30 days after
the retiring Collateral Agent's, Custodial Agent's or
Securities Intermediary's giving of notice of resignation or
such removal, then the retiring Collateral Agent, Custodial
Agent or Securities Intermediary, as the case may be, may at
the Company's expense petition any court of competent
jurisdiction for the appointment of a successor Collateral
Agent, Custodial Agent or Securities Intermediary, as the case
may be. Each of the Collateral Agent, Custodial Agent and the
Securities Intermediary shall be a bank which has an office in
New York, New York with a combined capital and surplus of at
least $50,000,000. Upon the acceptance of any appointment as
Collateral Agent, Custodial Agent or Securities Intermediary,
as the case may be, hereunder by a successor Collateral Agent,
Custodial Agent or Securities Intermediary, as the case may be,
such successor shall thereupon succeed to and become vested
with all the rights, powers, privileges and duties of the
retiring Collateral Agent, Custodial Agent or Securities
Intermediary, as the case may be, and the retiring Collateral
Agent, Custodial Agent or Securities Intermediary, as the case
may be, shall take all appropriate action to transfer any money
and property held by it hereunder (including the Collateral) to
such successor after the payment of any outstanding fees,
-27-
expenses and indemnities due and owing to such remaining party.
The retiring Collateral Agent, Custodial Agent or Securities
Intermediary shall, upon such succession, be discharged from
its duties and obligations as Collateral Agent, Custodial Agent
or Securities Intermediary hereunder. After any retiring
Collateral Agent's, Custodial Agent's or Securities
Intermediary's resignation hereunder as Collateral Agent,
Custodial Agent or Securities Intermediary, the provisions of
this Section 8.8, and Section 8.6 hereof, shall continue in
effect for its benefit in respect of any actions taken or
omitted to be taken by it while it was acting as the Collateral
Agent, Custodial Agent or Securities Intermediary. Any
resignation or removal of the Collateral Agent hereunder shall
be deemed for all purposes of this Agreement as the
simultaneous resignation or removal of the Custodial Agent and
the Securities Intermediary hereunder.
SECTION 8.9 Right to Appoint Agent or Advisor.
The Collateral Agent shall have the right to appoint or
consult with agents or advisors in connection with any of its
duties hereunder, and the Collateral Agent shall not be liable
for any action taken or omitted by, or in reliance upon the
advice of, such agents or advisors selected in good faith. The
appointment of agents (other than legal counsel) pursuant to
this Section 8.9 shall be subject to prior consent of the
Company, which consent shall not be unreasonably withheld.
SECTION 8.10 Survival.
The provisions of this Article VIII shall survive
termination of this Agreement and the resignation or removal of
the Collateral Agent, the Custodial Agent or the Securities
Intermediary.
SECTION 8.11 Exculpation.
Anything in this Agreement to the contrary
notwithstanding, in no event shall any of the Collateral Agent,
the Custodial Agent or the Securities Intermediary or their
officers, employees or agents be liable under this Agreement to
any third party for indirect, special, punitive or
consequential loss or damage of any kind whatsoever, including
lost profits, whether or not the likelihood of such loss or
damage was known to the Collateral Agent, the Custodial Agent
or the Securities Intermediary, or any of them, incurred
without any act or deed that is found to be attributable to
gross negligence, bad faith or willful misconduct on the part
of the Collateral Agent, the Custodial Agent or the Securities
Intermediary,.
-28-
ARTICLE IX
AMENDMENT
SECTION 9.1 Amendment Without Consent of Holders.
Without the consent of any Holders or the holders of any
Separate Notes, the Company, when authorized by a Board
Resolution, the Collateral Agent, the Custodial Agent, the
Securities Intermediary and the Purchase Contract Agent, at any
time and from time to time, may amend this Agreement, in form
satisfactory to the Company, the Collateral Agent, the
Custodial Agent, the Securities Intermediary and the Purchase
Contract Agent, for any of the following purposes:
(i) to evidence the succession of another
Person to the Company, and the assumption by any such
successor of the covenants of the Company; or
(ii)to add to the covenants of the Company for
the benefit of the Holders, or to surrender any right or
power herein conferred upon the Company so long as such
covenants or such surrender do not adversely affect the
validity, perfection or priority of the security interests
granted or created hereunder; or
(iiito evidence and provide for the acceptance
of appointment hereunder by a successor Collateral Agent,
Custodial Agent, Securities Intermediary or Purchase
Contract Agent; or
(iv)to cure any ambiguity, to correct or
supplement any provisions herein which may be inconsistent
with any other such provisions herein, or to make any
other provisions with respect to such matters or questions
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 by a Board Resolution, the
Purchase Contract Agent, the Collateral Agent, the Custodial
Agent and the Securities Intermediary may amend this Agreement
for the purpose of modifying in any manner the provisions of
this Agreement or the rights of the Holders in respect of the
Units; provided, however, that no such supplemental agreement
shall, without the consent of the Holder of each Outstanding
Unit adversely affected thereby,
-29-
(i) change the amount or type of Collateral
underlying a Unit (except for the rights of holders of
Normal Units to substitute the Treasury Securities for the
Pledged Notes, Pledged Treasury Consideration or the
appropriate Pledged Applicable Ownership Interest of the
Treasury Portfolio, as the case may be, or the rights of
Holders of Stripped Units to substitute Notes or the
appropriate Treasury Consideration 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 Unit to receive
distributions on the underlying Collateral or otherwise
adversely affect the Holder's rights in or to such
Collateral; or
(ii)otherwise effect any action that would
require the consent of the Holder of each Outstanding Unit
affected thereby pursuant to the Purchase Contract
Agreement if such action were effected by an agreement
supplemental thereto; or
(iiireduce the percentage of Purchase Contracts
the consent of whose Holders is required for any such
amendment.
It shall not be necessary for any Act of Holders under
this Section to approve the particular form of any proposed
amendment, but it shall be sufficient if such Act shall approve
the substance thereof.
SECTION 9.3 Execution of Amendments.
In executing any amendment permitted by this Section, the
Collateral Agent, the Custodial Agent, the Securities
Intermediary and the Purchase Contract Agent shall receive and
(subject to Section 8.1 hereof, with respect to the Collateral
Agent, and Section 7.1 of the Purchase Contract Agreement, with
respect to the Purchase Contract Agent) shall be fully
protected in relying upon, an Opinion of Counsel stating that
the execution of such amendment is authorized or permitted by
this Agreement and that all conditions precedent, if any, to
the execution and delivery of such amendment have been
satisfied and, in the case of an amendment pursuant to
Section 9.1, that such amendment does not adversely affect the
validity, perfection or priority of the security interests
granted or created hereunder.
SECTION 9.4 Effect of Amendments.
Upon the execution of any amendment under this
Article IX, this Agreement shall be modified in accordance
therewith, and such amendment shall form a part of this
-30-
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.
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 Certificates
so modified as to conform, in the opinion of the Collateral
Agent, the Purchase Contract Agent and the Company, to any such
amendment may be prepared and executed by the Company and
authenticated, executed on behalf of the Holders and delivered
by the Purchase Contract Agent in accordance with the Purchase
Contract Agreement in exchange for outstanding Certificates.
ARTICLE X
MISCELLANEOUS
SECTION 10.1 No Waiver.
No failure on the part of any party hereto or any of its
agents to exercise, and no course of dealing with respect to,
and no delay in exercising, any right, power or remedy
hereunder shall operate as a waiver thereof; nor shall any
single or partial exercise by any party hereto or any of its
agents of any right, power or remedy hereunder preclude any
other or further exercise thereof or the exercise of any other
right, power or remedy. The remedies herein are cumulative and
are not exclusive of any remedies provided by law.
SECTION 10.2 GOVERNING LAW.
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT
REGARD TO ITS PRINCIPLES OF CONFLICTS OF LAWS. Without
limiting the foregoing, the above choice of law is expressly
agreed to by the Securities Intermediary, the Collateral Agent,
the Custodial Agent and the Holders from time to time acting
through the Purchase Contract Agent, as their attorney-in-fact,
in connection with the establishment and maintenance of the
Collateral Account, which law, for purposes of the Code, shall
be deemed to be the law governing all Security Entitlements
related thereto. In addition, such parties agree that, for
purposes of the Code, New York shall be the Securities
Intermediary's jurisdiction. The Company, the Collateral Agent
-31-
and the Holders from time to time of the Units, 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 Units, acting through the Purchase Contract Agent as
their attorney-in-fact, irrevocably waive, to the fullest
extent permitted by applicable law, any objection which they
may now or hereafter have to the laying of the venue of any
such proceeding brought in such a court and any claim that any
such proceeding brought in such a court has been brought in an
inconvenient forum.
SECTION 10.3 Notices.
Unless otherwise stated herein, all notices, requests,
consents and other communications provided for herein
(including, without limitation, any modifications of, or
waivers or consents under, this Agreement) shall be given or
made in writing (including, without limitation, by telecopy)
delivered to the intended recipient at the "Address for
Notices" specified below its name on the signature pages hereof
or, as to any party, at such other address as shall be
designated by such party in a notice to the other parties.
Except as otherwise provided in this Agreement, all such
communications shall be deemed to have been duly given when
personally delivered or, in the case of a mailed notice or
notice transmitted by telecopier, upon receipt, in each case
given or addressed as aforesaid.
SECTION 10.4 Successors and Assigns.
This Agreement shall be binding upon and inure to the
benefit of the respective successors and assigns of the
Company, the Collateral Agent, the Custodial Agent, the
Securities Intermediary and the Purchase Contract Agent, and
the Holders from time to time of the Units, 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.
-32-
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, the
Securities Intermediary and the Custodial Agent for:
(a) all reasonable out-of-pocket costs and all reasonable
expenses of the Collateral Agent, the Custodial Agent and the
Securities Intermediary (including, without limitation, the
reasonable fees and expenses of counsel to the Collateral
Agent, the Custodial Agent and the Securities Intermediary), in
connection with (i) the negotiation, preparation, execution and
delivery or performance of this Agreement and (ii) any
modification, supplement or waiver of any of the terms of this
Agreement;
(b) all reasonable costs and expenses of the Collateral
Agent (including, without limitation, reasonable fees and
expenses of counsel) in connection with (i) any enforcement or
proceedings resulting or incurred in connection with causing
any Holder of Units to satisfy its obligations under the
Purchase Contracts forming a part of the Units 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 Units or any other
agreement or instrument relating thereto;
-33-
(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 Units 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.
SECTION 10.9 Waiver of Jury Trial.
EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY
WHICH MAY ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE
COMPLICATED AND DIFFICULT ISSUES, AND THEREFORE IT HEREBY
IRREVOCABLY AND UNCONDITIONALLY WAIVES ANY RIGHT IT MAY HAVE TO
A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR
INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY.
-34-
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed as of the day and year first
above written.
NORTHROP GRUMMAN CORPORATION
By:
------------------------------
Name:
Title:
Address for Notices:
Northrop Grumman Corporation
0000 Xxxxxxx Xxxx Xxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Secretary
Telecopy: (000) 000-0000
JPMorgan Chase Bank, as Purchase
Contract Agent and as attorney-in-
fact of the Holders from time to
time of the Units
By:
------------------------------
Name:
Title:
Address for Notices:
JPMorgan Chase Bank
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx, 00000
Attention: Institutional Trust
Services
Telecopy: (000) 000-0000
-00-
Xxx Xxxx xx Xxx Xxxx, as Collateral
Agent, Custodial Agent and
Securities Intermediary
By:
------------------------------
Name:
Title:
Address for Notices:
000 Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
-36-
EXHIBIT A
INSTRUCTION FROM PURCHASE CONTRACT
AGENT TO COLLATERAL AGENT
The Bank of New York,
as Custodial Agent
000 Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Re: Equity Security Units of Northrop Grumman Corporation (the
"Company")
We hereby notify you in accordance with Section [4.1]
[4.2] of the Pledge Agreement, dated as of November __, 2001,
(the "Pledge Agreement") among the Company, you, as Collateral
Agent, Custodial Agent and Securities Intermediary and us, as
Purchase Contract Agent and as attorney-in-fact for the holders
of [Normal Units] [Stripped Units] from time to time, that the
holder of Units listed below (the "Holder") has elected to
substitute [$_____ aggregate principal amount of Treasury
Securities (CUSIP No. _________)] [$_______ aggregate principal
amount of Notes or $_____ aggregate principal amount of
Treasury Consideration (CUSIP No. _____) or the Applicable
Ownership Interest of the Treasury Portfolio, as the case may
be,] in exchange for the related [Pledged Notes, Pledged
Treasury Consideration or the appropriate Pledged Applicable
Ownership Interest of the Treasury Portfolio, as the case may
be,] [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]
[Notes, the Treasury Consideration or the appropriate
Applicable Ownership Interest of the Treasury Portfolio, as the
case may be,] to you, as Collateral Agent. We hereby instruct
you, upon receipt of such [Pledged Treasury Securities]
[Pledged Notes, Pledged Treasury Consideration or the
appropriate Pledged Applicable Ownership Interest of the
Treasury Portfolio, as the case may be,], and upon the payment
by such Holder of any applicable fees, to release the [Notes,
the Treasury Consideration or the appropriate Applicable
Ownership Interest of the Treasury Portfolio, as the case may
be,] [Treasury Securities] related to such [Normal Units]
[Stripped Units] 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.
A-1
Date: _____________________
JPMorgan Chase Bank,
as Purchase Contract Agent
By:
------------------------------
Name:
Title:
Please print name and address of Registered Holder electing to
substitute [Treasury Securities] [Notes, Treasury Consideration
or the appropriate Applicable Ownership Interest in the
Treasury Portfolio] for the [Pledged Notes, Pledged Treasury
Consideration or the appropriate Pledged Applicable Ownership
Interest in the Treasury Portfolio] [Pledged Treasury
Securities]:
Name:
Social Security or other Taxpayer
Identification Number, if any:
Address:
A-2
EXHIBIT B
INSTRUCTION TO PURCHASE CONTRACT AGENT
JPMorgan Chase Bank,
As Purchase Contract Agent
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Institutional Trust Services
Telecopy: (000) 000-0000
Re: Equity Security Units of Northrop Grumman Corporation (the
"Company")
The undersigned Holder hereby notifies you that it
has delivered to The Bank of New York, as Collateral Agent,
Custodial Agent and Securities Intermediary [$_______ aggregate
principal amount of Treasury Securities (CUSIP No. _________)]
[$_______ aggregate principal amount of Notes or $_____
principal amount of Treasury Consideration (CUSIP No. _____) or
the appropriate Applicable Ownership Interest in the Treasury
Portfolio, as the case may be] in exchange for the related
[Pledged Notes, Pledged Treasury Consideration or the
appropriate Pledged Applicable Ownership Interest in the
Treasury Portfolio, as the case may be] [Pledged Treasury
Securities] held by the Collateral Agent, in accordance with
Section [4.1] [4.2] of the Pledge Agreement, dated November __,
2001 (the "Pledge Agreement"), among you, the Company and the
Collateral Agent. The undersigned Holder has paid the
Collateral Agent all applicable fees relating to such exchange.
The undersigned Holder hereby instructs you to instruct the
Collateral Agent to release to you on behalf of the undersigned
Holder the [Pledged Notes, Pledged Treasury Consideration or
the appropriate Pledged Applicable Ownership Interest in the
Treasury Portfolio, as the case may be] [Pledged Treasury
Securities] related to such [Normal Units] [Stripped Units].
Capitalized terms used herein but not defined shall have the
meaning set forth in the Pledge Agreement.
Date: ___________________ Signature:_________________________________
Signature Guarantee: ------------------------
Please print name and address of Registered Holder:
Name:
Social Security or other Taxpayer Identification Number, if any:
Address:
B-1
EXHIBIT C
INSTRUCTION TO CUSTODIAL AGENT REGARDING REMARKETING
The Bank of New York,
as Collateral Agent
000 Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Re: Notes of Northrop Grumman Corporation (the
"Company")
The undersigned hereby notifies you in accordance
with Section 4.5(d) of the Pledge Agreement, dated as of
November __, 2001 (the "Pledge Agreement"), among the Company,
yourselves, as Collateral Agent, Securities Intermediary and
Custodial Agent, and JPMorgan Chase Bank, as Purchase Contract
Agent and as attorney-in-fact for the Holders of Normal Units
and Stripped Units from time to time, that the undersigned
elects to deliver $__________ aggregate principal amount of
Notes for delivery to the Remarketing Agent on the fourth
Business Day immediately preceding the first day of any
Remarketing Period or any Subsequent Remarketing Period for
remarketing pursuant to Section 4.5(d) of the Pledge Agreement.
The undersigned will, upon request of the Remarketing Agent,
execute and deliver any additional documents deemed by the
Remarketing Agent or by the Company to be necessary or
desirable to complete the sale, assignment and transfer of the
Notes tendered hereby.
The undersigned hereby instructs you, upon receipt of
the proceeds of such remarketing from the Remarketing Agent,
net of amounts payable to the Remarketing Agent in accordance
with the Pledge Agreement, to deliver such proceeds to the
undersigned in accordance with the instructions indicated
herein under "A. Payment Instructions." The undersigned hereby
instructs you, in the event of a Failed Remarketing, upon
receipt of the Notes tendered herewith from the Remarketing
Agent, to be delivered to the person(s) and the address(es)
indicated herein under "B. Delivery Instructions."
With this notice, the undersigned hereby (i)
represents and warrants that the undersigned has full power and
authority to tender, sell, assign and transfer the Notes
tendered hereby and that the undersigned is the record owner of
any Notes tendered herewith in physical form or a participant
in The Depositary Trust Company ("DTC") and the beneficial
owner of any Notes tendered herewith by book-entry transfer to
your account at DTC and (ii) agrees to be bound by the terms
C-1
and conditions of Section 4.5(d) of the Pledge Agreement.
Capitalized terms used herein but not defined shall have the
meaning set forth in the Pledge Agreement.
Date: _______________ Signature:__________________________
Signature Guarantee:
Name: Social Security or other Taxpayer Identification Number, if any:
Address:
A. PAYMENT INSTRUCTIONS
Proceeds of the remarketing should be paid by check in the name
of the person(s) set forth below and mailed to the address set
forth below.
Name(s): ________________________________
(Please Print)
Address: ________________________________
(Please Print)
(Zip Code)
(Tax Identification or Social Security Number):
B. DELIVERY INSTRUCTIONS
In the event of a Failed Remarketing, Notes which are in
physical form should be delivered to the person(s) set forth
below and mailed to the address set forth below.
Name(s): ________________________________
(Please Print)
C-2
Address: ________________________________
(Please Print)
(Zip Code)
(Tax Identification or Social Security Number):
In the event of a Failed Remarketing, Notes which are in book-
entry form should be credited to the account at The Depository
Trust Company set forth below.
Name of Account Party: DTC Account
Number:
C-3
EXHIBIT D
INSTRUCTION TO CUSTODIAL AGENT REGARDING
WITHDRAWAL FROM REMARKETING
The Bank of New York
as Collateral Agent
000 Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Re: Notes of Northrop Grumman Corporation (the
"Company")
The undersigned hereby notifies you in accordance
with Section 4.5(d) of the Pledge Agreement, dated as of
November __, 2001 (the "Pledge Agreement"), among the Company,
yourselves, as Collateral Agent, Securities Intermediary and
Custodial Agent and JPMorgan Chase Bank, as Purchase Contract
Agent and as attorney-in-fact for the Holders of Normal Units
and Stripped Units from time to time, that the undersigned
elects to withdraw the $_____ aggregate principal amount of
Notes delivered to the Custodial Agent on ___________, 2004 for
remarketing pursuant to Section 4.5(d) of the Pledge Agreement.
The undersigned hereby instructs you to return such Notes to
the undersigned in accordance with the undersigned's
instructions. With this notice, the Undersigned hereby agrees
to be bound by the terms and conditions of Section 4.5(d) of
the Pledge Agreement. Capitalized terms used herein but not
defined shall have the meaning set forth in the Pledge
Agreement.
Date: _______________ Signature:__________________________
Signature Guarantee:
Name: Social Security or other Taxpayer
Identification Number, if any:
Address:
D-1
A. DELIVERY INSTRUCTIONS
In the event of a Failed Remarketing, Notes which are in
physical form should be delivered to the person(s) set forth
below and mailed to the address set forth below.
Name(s): ________________________________
(Please Print)
Address: ________________________________
(Please Print)
(Zip Code)
(Tax Identification or Social Security Number):
In the event of a Failed Remarketing, Notes which are in book-
entry form should be credited to the account at The Depository
Trust Company set forth below.
Name of Account Party: DTC Account
Number:
D-2
