EXHIBIT 4(c)
================================================================================
TXU CORP.
AND
THE BANK OF NEW YORK,
as Purchase Contract Agent
and Trustee
PURCHASE CONTRACT AGREEMENT
Dated as of June 1, 2002
================================================================================
TIE SHEET
Section of Section of
Trust Indenture Act Purchase Contract
of 1939, as amended Agreement
------------------- ---------
310(a).................................................... 7.8
310(b).................................................... 7.9(d) and (g), 11.8
310(c).................................................... Inapplicable
311(a).................................................... 11.2(b)
311(b).................................................... 11.2(b)
311(c).................................................... Inapplicable
312(a).................................................... 11.2(a)
312(b).................................................... 11.2(b)
313....................................................... 11.3
314(a).................................................... 11.4
314(b).................................................... Inapplicable
314(c).................................................... 11.5
314(d).................................................... Inapplicable
314(e).................................................... 1.2
314(f).................................................... 11.1
315(a).................................................... 7.1(a)
315(b).................................................... 7.2
315(c).................................................... 7.1(e)
315(d)(1)................................................. 7.1(b)
315(d)(2)................................................. 7.1(b)
315(d)(3)................................................. 11.9
316(a)(1)(A).............................................. 11.9
316(a)(1)(B).............................................. 11.6
316(b).................................................... 6.1
316(c).................................................... 11.2
317(a).................................................... Inapplicable
317(b).................................................... Inapplicable
318(a).................................................... 11.1(b)
----------
* This Cross-Reference Table does not constitute part of the Purchase
Contract Agreement and shall not affect the interpretation of any of its
terms or provisions.
i
TABLE OF CONTENTS
Page No.
--------
RECITALS.....................................................................................................1
ARTICLE I Definitions and Other Provisions of General Application............................................1
SECTION 1.1 Definitions...................................................................................1
SECTION 1.2 Compliance Certificates and Opinions..........................................................12
SECTION 1.3 Form of Documents Delivered to Agent..........................................................12
SECTION 1.4 Acts of Holders; Record Dates.................................................................13
SECTION 1.5 Notices.......................................................................................14
SECTION 1.6 Notice to Holders; Waiver.....................................................................15
SECTION 1.7 Effect of Headings and Table of Contents......................................................15
SECTION 1.8 Successors and Assigns........................................................................15
SECTION 1.9 Separability Clause...........................................................................15
SECTION 1.10 Benefits of Agreement........................................................................15
SECTION 1.11 Governing Law................................................................................15
SECTION 1.12 Legal Holidays...............................................................................15
SECTION 1.13 Counterparts.................................................................................16
SECTION 1.14 Inspection of Agreement......................................................................16
ARTICLE II Certificate Forms.................................................................................16
SECTION 2.1 Forms of Certificates Generally...............................................................16
SECTION 2.2 Form of Agent's Certificate of Authentication.................................................17
ARTICLE III The Securities...................................................................................17
SECTION 3.1 Title and Terms; Denominations................................................................17
SECTION 3.2 Rights and Obligations Evidenced by the Certificates..........................................17
SECTION 3.3 Execution, Authentication, Delivery and Dating................................................18
SECTION 3.4 Temporary Certificates........................................................................19
SECTION 3.5 Registration; Registration of Transfer and Exchange...........................................19
SECTION 3.6 Book-Entry Interests..........................................................................20
SECTION 3.7 Notices to Holders............................................................................21
SECTION 3.8 Appointment of Successor Clearing Agency......................................................21
SECTION 3.9 Definitive Certificates.......................................................................21
SECTION 3.10 Mutilated, Destroyed, Lost and Stolen Certificates...........................................21
SECTION 3.11 Persons Deemed Owners........................................................................22
SECTION 3.12 Cancellation.................................................................................22
SECTION 3.13 Establishment or Reestablishment of Treasury Units...........................................23
SECTION 3.14 Establishment or Reestablishment of Corporate Units..........................................24
SECTION 3.15 Transfer of Collateral upon Occurrence of Termination Event..................................26
SECTION 3.16 No Consent to Assumption.....................................................................27
ARTICLE IV The Debt Securities...............................................................................27
SECTION 4.1 Payment of Interest; Rights to Interest Preserved; Interest Rate Reset; Notice................27
SECTION 4.2 Notice and Voting.............................................................................28
SECTION 4.3 Substitution of a Treasury Portfolio for Debt Securities......................................29
SECTION 4.4 Consent to Treatment for Tax Purposes.........................................................29
ii
ARTICLE V The Purchase Contracts.............................................................................30
SECTION 5.1 Purchase of Shares of Common Stock............................................................30
SECTION 5.2 Contract Adjustment Payments..................................................................31
SECTION 5.3 Deferral of Payment Dates For Contract Adjustment Payments....................................32
SECTION 5.4 Payment of Purchase Price.....................................................................33
SECTION 5.5 Issuance of Shares of Common Stock............................................................36
SECTION 5.6 Adjustment of Settlement Rate.................................................................36
SECTION 5.7 Notice of Adjustments and Certain Other Events................................................40
SECTION 5.8 Termination Event; Notice.....................................................................41
SECTION 5.9 Early Settlement..............................................................................41
SECTION 5.10 No Fractional Shares.........................................................................42
SECTION 5.11 Charges and Taxes............................................................................43
ARTICLE VI Remedies..........................................................................................43
SECTION 6.1 Unconditional Right of Holders to Receive Contract Adjustment Payments and to
Purchase Common Stock........................................................................43
SECTION 6.2 Restoration of Rights and Remedies............................................................43
SECTION 6.3 Rights and Remedies Cumulative................................................................43
SECTION 6.4 Delay or Omission Not Waiver..................................................................44
SECTION 6.5 Undertaking for Costs.........................................................................44
SECTION 6.6 Waiver of Stay or Extension Laws..............................................................44
ARTICLE VII The Agent........................................................................................44
SECTION 7.1 Certain Duties and Responsibilities...........................................................44
SECTION 7.2 Notice of Default.............................................................................45
SECTION 7.3 Certain Rights of Agent.......................................................................46
SECTION 7.4 Not Responsible for Recitals or Issuance of Securities........................................46
SECTION 7.5 May Hold Securities...........................................................................47
SECTION 7.6 Money Held in Custody.........................................................................47
SECTION 7.7 Compensation and Reimbursement................................................................47
SECTION 7.8 Corporate Agent Required; Eligibility.........................................................47
SECTION 7.9 Resignation and Removal; Appointment of Successor.............................................48
SECTION 7.10 Acceptance of Appointment by Successor.......................................................49
SECTION 7.11 Merger, Conversion, Consolidation or Succession to Business..................................49
SECTION 7.12 Preservation of Information; Communications to Holders.......................................49
SECTION 7.13 No Obligations of Agent......................................................................50
SECTION 7.14 Tax Compliance...............................................................................50
ARTICLE VIII Supplemental Agreements.........................................................................50
SECTION 8.1 Supplemental Agreements Without Consent of Holders............................................50
SECTION 8.2 Supplemental Agreements with Consent of Holders...............................................51
SECTION 8.3 Execution of Supplemental Agreements..........................................................52
SECTION 8.4 Effect of Supplemental Agreements.............................................................52
SECTION 8.5 Reference to Supplemental Agreements..........................................................52
ARTICLE IX Consolidation, Merger, Sale or Conveyance.........................................................52
SECTION 9.1 Covenant Not to Merge, Consolidate, Sell or Convey Property Except Under Certain Conditions...52
SECTION 9.2 Rights and Duties of Successor Entity.........................................................53
SECTION 9.3 Opinion of Counsel Given to Agent.............................................................53
iii
ARTICLE X Covenants..........................................................................................53
SECTION 10.1 Performance Under Purchase Contracts.........................................................53
SECTION 10.2 Maintenance of Office or Agency..............................................................53
SECTION 10.3 Company to Reserve Common Stock..............................................................54
SECTION 10.4 Covenants as to Common Stock.................................................................54
ARTICLE XI Trust Indenture Act...............................................................................54
SECTION 11.1 Trust Indenture Act; Application.............................................................54
SECTION 11.2 Lists of Holders of Securities...............................................................54
SECTION 11.3 Reports by the Agent.........................................................................55
SECTION 11.4 Periodic Reports to Agent....................................................................55
SECTION 11.5 Evidence of Compliance with Conditions Precedent.............................................55
SECTION 11.6 Defaults; Waiver.............................................................................55
SECTION 11.7 Agent's Knowledge of Defaults................................................................55
SECTION 11.8 Conflicting Interests........................................................................56
SECTION 11.9 Direction of Agent...........................................................................56
EXHIBIT A
EXHIBIT B
EXHIBIT C
iv
PURCHASE CONTRACT AGREEMENT, dated as of June 1, 2002, between TXU
Corp., a Texas corporation (the "Company"), and The Bank of New York, acting as
purchase contract agent, attorney-in-fact and trustee for the Holders of
Securities from time to time (in any one or more of such capacities, the
"Agent").
RECITALS
The Company has duly authorized the execution and delivery of this
Agreement and the Certificates evidencing the Securities.
All things necessary to make the Purchase Contracts, when the
Certificates are executed by the Company and authenticated, executed on behalf
of the Holders and delivered by the Agent, as provided in this Agreement, the
valid obligations of the Company and the Holders, and to constitute these
presents a valid agreement of the Company, in accordance with its terms, have
been done.
WITNESSETH:
For and in consideration of the premises and the purchase of the
Securities by the Holders thereof, it is mutually agreed as follows:
ARTICLE I
DEFINITIONS AND OTHER PROVISIONS
OF GENERAL APPLICATION
SECTION 1.1 DEFINITIONS.
For all purposes of this Agreement, except as otherwise expressly
provided or unless the context otherwise requires:
(a) the terms defined in this Article have the meanings assigned to
them in this Article and include the plural as well as the
singular; and nouns and pronouns of the masculine gender include
the feminine and neuter genders;
(b) all accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with generally accepted
accounting principles in the United States;
(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; and
(d) the following terms have the meanings given to them in this
Section 1.1(d):
"Act" when used with respect to any Holder, has the meaning specified
in Section 1.4.
"Affiliate" has the same meaning as given to that term in Rule 405 of
the Securities Act of 1933, as amended, or any successor rule thereunder.
"Agent" means the Person named as the "Agent" in the first paragraph
of this instrument until a successor Agent shall have become such pursuant to
the applicable provisions of this Agreement, and thereafter "Agent" shall mean
such Person.
1
"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.
"Applicable Benchmark Treasury" on a particular determination date
shall mean direct obligations of the United States (which may be obligations
traded on a when-issued basis only) having a maturity comparable to the
remaining term to maturity of the Debt Securities, which may be two years or
between two and one half and two and one quarter years, as applicable, as agreed
upon by the Company and the Reset Agent. The yield for the Applicable Benchmark
Treasury will be the bid side yield displayed at 10:00 A.M., New York City time,
on the third Business Day immediately preceding the applicable Reset Date in the
Telerate system (or if the Telerate system is (a) no longer available on the
third Business Day immediately preceding such Reset Date or (b) in the opinion
of the Reset Agent (after consultation with the Company) no longer an
appropriate system from which to obtain such yield, such other nationally
recognized quotation system as, in the opinion of the Reset Agent (after
consultation with the Company), is appropriate). If such yield is not so
displayed, the yield for the Applicable Benchmark Treasury shall be, as
calculated by the Reset Agent, the yield to maturity for the Applicable
Benchmark Treasury, expressed as a bond equivalent on the basis of a year of 365
or 366 days, as applicable, and applied on a daily basis, and computed by taking
the arithmetic mean of the secondary market bid rates, as of 10:30 A.M., New
York City time, on the third Business Day immediately preceding the applicable
Reset Date of three leading United States government securities dealers selected
by the Reset Agent (after consultation with the Company) (which may include the
Reset Agent or an affiliate thereof).
"Applicable Market Value" has the meaning specified in Section 5.1.
"Applicable Ownership Interest" means, with respect to the U.S.
Treasury Securities in a Treasury Portfolio contained in a Corporate Unit, (1)
for a Remarketing Treasury Portfolio, (i) a 1/20, or 5%, undivided beneficial
ownership interest in a $1,000 face amount of a principal or interest strip in a
U.S. Treasury Security included in the Treasury Portfolio that matures on or
prior to May 15, 2006, (ii) for the originally scheduled quarterly interest
payment date on the Senior Notes that would have occurred on May 16, 2006 if no
remarketing had occurred, a 0.0725% undivided beneficial ownership interest in a
$1,000 face amount of a principal or interest strip in a U.S. Treasury Security
maturing on or prior to May 16, 2006, and (iii) if the Initial Reset Date occurs
prior to February 16, 2006, for the originally scheduled quarterly interest
payment date on the Senior Notes that would have occurred on February 16, 2006
if no remarketing had occurred, an undivided beneficial ownership interest to be
determined by the reset agent, in a $1,000 face amount of a principal or
interest strip in a U.S. Treasury Security maturing on or prior to February 16,
2006, or (2) for a Tax Event Treasury Portfolio, (i) a 1/20, or 5%, undivided
beneficial ownership interest in a $1,000 face amount of a principal or interest
strip in a U.S. Treasury Security included in the Treasury Portfolio that
matures on or prior to May 15, 2006, and (ii) for each scheduled interest
payment date on the Senior Notes that occurs after the Tax Event Redemption Date
and on or prior to May 16, 2006, a 0.0725% undivided beneficial ownership
interest in a $1,000 face amount of a principal or interest strip in a U.S.
Treasury Security maturing on or prior to that interest payment date.
"Applicable Principal Amount" means (i) on any date prior to the Reset
Date, the aggregate principal amount of Debt Securities that are components of
Corporate Units on such date or (ii) on or after the Reset Date, the aggregate
principal amount of the Debt Securities outstanding on such date.
"Authorized Officer" means the Chairman of the Board, the President,
any Vice President, the Treasurer, any Assistant Treasurer, or any other officer
or agent of the Company duly authorized by the Board of Directors to act in
respect of matters relating to this Agreement.
2
"Authorized Newspaper" means a newspaper in the English language of
general circulation in the City of New York and generally published each
Business Day. As of the date of this Agreement, the Company anticipates that for
purposes of each Reset Announcement Date, the Authorized Newspaper will be the
Wall Street Journal.
"Bankruptcy Code" means title 11 of the United States Code, or any
other law of the United States that from time to time provides a uniform system
of bankruptcy laws.
"Beneficial Owner" means, with respect to a Book-Entry Interest, a
Person who is the beneficial owner of such Book-Entry Interest as reflected on
the books of the Clearing Agency or on the books of a Person maintaining an
account with such Clearing Agency (directly as a Clearing Agency Participant or
as an indirect participant, in each case in accordance with the rules of such
Clearing Agency).
"Board of Directors" means the board of directors of the Company or a
duly authorized committee of that board.
"Board Resolution" means one or more resolutions of the Board of
Directors, a copy of which has been certified by the Secretary or an Assistant
Secretary of the Company to have been duly adopted by the Board of Directors and
to be in full force and effect on the date of such certification and delivered
to the Agent.
"Book-Entry Interest" means a beneficial interest in a Global
Certificate, ownership and transfers of which shall be maintained and made
through book entries by a Clearing Agency as described in Section 3.6.
"Business Day" means any day other than a Saturday, Sunday or any
other day on which banking institutions in Xxx Xxxx Xxxx (xx xxx Xxxxx xx Xxx
Xxxx) are permitted or required by any applicable law to close.
"Cash Settlement" has the meaning set forth in Section 5.4(a)(i).
"Certificate" means a Corporate Unit Certificate or a Treasury Unit
Certificate.
"Clearing Agency" means an organization registered as a "Clearing
Agency" pursuant to Section 17A of the Exchange Act that is acting as a
depositary for the Securities and in whose name, or in the name of a nominee of
that organization, shall be registered as a Global Certificate and which shall
undertake to effect book entry transfers and pledges of the Securities.
"Clearing Agency Participant" means a broker, dealer, bank, other
financial institution or other Person for whom from time to time the Clearing
Agency effects book entry transfers and pledges of securities deposited with the
Clearing Agency.
"Closing Price" has the meaning specified in Section 5.1.
"Collateral" has the meaning specified in Section 2.1 of the Pledge
Agreement.
"Collateral Agent" means JPMorgan Chase Bank, as Collateral Agent
under the Pledge Agreement until a successor Collateral Agent shall have become
such pursuant to the applicable provisions of the Pledge Agreement, and
thereafter "Collateral Agent" shall mean the Person who is then the Collateral
Agent thereunder.
3
"Collateral Substitution" means the substitution of the pledged
components of one type of Security for pledged components of the other type of
Security in connection with establishment or reestablishment of Treasury Units
or Corporate Units, as described in Sections 3.13 and 3.14 hereof.
"Common Stock" means the Common Stock, without par value, of the
Company, including, where applicable, the preference stock purchase rights
appurtenant thereto.
"Company" means the Person named as the "Company" in the first
paragraph of this instrument until a successor shall have become such pursuantto
the applicable provision of this Agreement, and thereafter "Company" shall mean
such successor.
"Company Certificate" means a certificate signed by an Authorized
Officer and delivered to the Agent.
"Contract Adjustment Payments" means the amounts payable by the
Company in respect of each Purchase Contract issued in connection with the
Corporate Units and the Treasury Units, which amounts shall be equal to 2.325%
per annum of the Stated Amount; computed on the basis of a 360-day year of
twelve 30-day months, plus any Deferred Contract Adjustment Payments accrued
pursuant to Section 5.2.
"Corporate Trust Office" means the corporate trust office of the Agent
at which, at any particular time, its corporate trust business shall be
principally administered, which office at the date hereof is located at 000
Xxxxxxx Xxxxxx, Xxxxx 00X, Xxx Xxxx, Xxx Xxxx 00000.
"Corporate Unit" means a Security, initially issued in substantially
the form set forth as Exhibit A hereto in the Stated Amount of $50, which
represents (i) beneficial ownership by the Holder of either (a) (1) one Debt
Security in a principal amount of $50, or (2) following a successful remarketing
of the Debt Securities on the Initial Remarketing Date, on and after the Initial
Reset Date an Applicable Ownership Interest in the Remarketing Treasury
Portfolio, subject to the Pledge of such Debt Security or Applicable Ownership
Interest in the Remarketing Treasury Portfolio by the Holder pursuant to the
Pledge Agreement or (b) upon the occurrence of a Tax Event Redemption prior to
the Purchase Contract Settlement Date, an Applicable Ownership Interest in a Tax
Event Treasury Portfolio, subject to the Pledge of such Applicable Ownership
Interest in the Tax Event Treasury Portfolio by the Holder pursuant to the
Pledge Agreement, and (ii) the rights and obligations of the Holder under one
Purchase Contract.
"Corporate Unit Certificate" means a certificate evidencing the rights
and obligations of a Holder in respect of the number of Corporate Units
specified on such certificate.
"Corporate Unit Register" and "Corporate Unit Registrar" have
the respective meanings specified in Section 3.5.
"Coupon Rate" with respect to a Debt Security means the percentage
rate per annum at which such Debt Security will bear interest.
"Current Market Price" has the meaning specified in Section 5.6(a)(8).
"Debt Securities" means the series of debt securities of the Company
to be designated "Series M Senior Notes due May 16, 2008" issued under the
Indenture.
"Default" means a default by the Company in any of its obligations
under this Agreement.
4
"Deferred Contract Adjustment Payments" has the meaning specified in
Section 5.3.
"Depositary" means, initially, DTC until another Clearing Agency
becomes its successor.
"DTC" means The Depository Trust Company, the initial Clearing Agency.
"Early Settlement" has the meaning specified in Section 5.9(a).
"Early Settlement Amount" has the meaning specified in Section 5.9(a).
"Early Settlement Date" has the meaning specified in Section 5.9(a).
"Early Settlement Rate" has the meaning specified in Section 5.9(b).
"Exchange Act" means the Securities Exchange Act of 1934 and any
statute successor thereto, in each case as amended from time to time, and the
rules and regulations promulgated thereunder.
"Expiration Date" has the meaning specified in Section 1.4.
"Expiration Time" has the meaning specified in Section 5.6(a)(6).
"Failed Remarketing" means a remarketing that does not occur because a
condition precedent to such remarketing is not fulfilled, or if in spite of
using their reasonable efforts, the Remarketing Agents cannot remarket the Debt
Securities of Holders of Corporate Units at a price not less than 100% of the
Remarketing Treasury Portfolio Purchase Price, in the case of the remarketing of
Debt Securities on the Initial Remarketing Date, or 100% of the aggregate
principal amount of such Debt Securities, in the case of the remarketing of Debt
Securities on the Secondary Remarketing Date, in each case, plus accrued and
unpaid interest.
"Global Certificate" means a Certificate that evidences all or part of
the Securities and is registered in the name of a Depositary or a nominee
thereof.
"Holder," when used with respect to a Security, means the Person in
whose name the Security evidenced by a Corporate Unit Certificate and/or a
Treasury Unit Certificate is registered on the Corporate Unit Register and/or
the Treasury Unit Register, as the case may be.
"Indenture" means the Indenture (For Unsecured Debt Securities Series
M) dated as of June 1, 2002 between the Company and the Indenture Trustee
pursuant to which the Debt Securities are to be issued, as originally executed
and delivered and as it may from time to time be supplemented or amended by one
or more indentures supplemental thereto entered into pursuant to the applicable
provisions thereof and shall include the terms of a particular series of
securities established as contemplated by Section 301 thereof.
"Indenture Trustee" means The Bank of New York, as trustee under the
Indenture, or any successor thereto.
"Initial Remarketing Date" means the third Business Day immediately
preceding the Initial Reset Date.
"Initial Reset Date" means any Business Day, as selected by the
Company in its sole discretion, from November 16, 2005 to February 16, 2006.
5
"Issuer Order" or "Issuer Request" means a written order or request
signed in the name of the Company by an Authorized Officer and delivered to the
Agent.
"NYSE" has the meaning specified in Section 5.1.
"Officer's Certificate" means a certificate signed by an authorized
signatory of the Company establishing the terms of the debt securities of any
series pursuant to the Indenture.
"Opinion of Counsel" means an opinion in writing signed by legal
counsel, who may be an employee of or counsel to the Company or an Affiliate and
who shall be reasonably acceptable to the Agent.
"Outstanding," with respect to any Corporate Units or Treasury Units
means, as of the date of determination, all Corporate Units or Treasury Units
evidenced by Certificates theretofore authenticated, executed and delivered
under this Agreement, except:
(i) If a Termination Event has occurred, (A) Treasury Units for
which Treasury Securities have been deposited with the Agent in trust for the
Holders of such Treasury Units and (B) Corporate Units for which Debt Securities
or the appropriate Applicable Ownership Interest in a Treasury Portfolio (or as
contemplated in Section 3.15 hereto with respect to a Holder's interest in the
Treasury Portfolio, cash) has been theretofore deposited with the Agent in trust
for the Holders of such Corporate Units;
(ii) Corporate Units and Treasury Units evidenced by Certificates
theretofore cancelled by the Agent or delivered to the Agent for cancellation or
deemed cancelled pursuant to the provisions of this Agreement; and
(iii) Corporate Units and Treasury Units evidenced by Certificates
in exchange for or in lieu of which other Certificates have been authenticated,
executed on behalf of the Holder and delivered pursuant to this Agreement, other
than any such Certificate in respect of which there shall have been presented to
the Agent proof satisfactory to it that such Certificate is held by a bona fide
purchaser in whose hands the Corporate Units or Treasury Units evidenced by such
Certificate are valid obligations of the Company;
provided, however, that in determining whether the Holders of the
requisite number of the Corporate Units or Treasury Units have given any
request, demand, authorization, direction, notice, consent or waiver hereunder,
Corporate Units or Treasury Units owned by the Company or any Affiliate of the
Company shall be disregarded and deemed not to be outstanding, except that, in
determining whether the Agent shall be protected in relying upon any such
request, demand, authorization, direction, notice, consent or waiver, only
Corporate Units or Treasury Units which a Responsible Officer of the Agent
actually knows to be so owned shall be so disregarded. Corporate Units or
Treasury Units so owned which have been pledged in good faith may be regarded as
Outstanding Securities if the pledgee establishes to the satisfaction of the
Agent the pledgee's right so to act with respect to such Corporate Units or
Treasury Units and that the pledgee is not the Company or any Affiliate of the
Company.
"Payment Date" means each of (i) February 16, May 16, August 16 and
November 16, commencing August 16, 2002, and (ii) the Initial Reset Date if the
remarketing of the Senior Notes on the third business day immediately preceding
the Initial Reset Date is successful and the Initial Reset Date is not November
16, 2005 or February 16, 2006.
6
"Permitted Investments" has the meaning set forth in Article I of the
Pledge Agreement.
"Person" means a legal person, including any individual, corporation,
estate, partnership, joint venture, association, joint-stock company, limited
liability company, trust, unincorporated association or government or any agency
or political subdivision thereof or any other entity of whatever nature.
"Pledge" means the pledge under the Pledge Agreement of the Debt
Securities, the Treasury Securities or the appropriate Applicable Ownership
Interest in a Treasury Portfolio, in each case constituting a part of the
Securities.
"Pledge Agreement" means the Pledge Agreement, dated as of the date
hereof, by and among the Company, the Agent, as purchase contract agent and as
attorney-in-fact for the Holders from time to time of Securities, and the
Collateral Agent, as the collateral agent, the custodial agent and the
securities intermediary.
"Pledged Applicable Ownership Interest in a Treasury Portfolio" has
the meaning specified in Section 2.1 of the Pledge Agreement.
"Pledged Debt Securities" has the meaning specified in Section 2.1 of
the Pledge Agreement.
"Pledged Treasury Securities" has the meaning specified in Section 2.1
of the Pledge Agreement.
"Predecessor Certificate" means a Predecessor Corporate Unit
Certificate or a Predecessor Treasury Unit Certificate.
"Predecessor Corporate Unit Certificate" of any particular Corporate
Unit Certificate means every previous Corporate Unit Certificate evidencing all
or a portion of the rights and obligations of the Company and the Holder under
the Corporate Units evidenced thereby; and, for the purposes of this definition,
any Corporate Unit Certificate authenticated and delivered under Section 3.10 in
exchange for or in lieu of a mutilated, destroyed, lost or stolen Corporate Unit
Certificate shall be deemed to evidence the same rights and obligations of the
Company and the Holder as the mutilated, destroyed, lost or stolen Corporate
Unit Certificate.
"Predecessor Treasury Unit Certificate" of any particular Treasury
Unit Certificate means every previous Treasury Unit Certificate evidencing all
or a portion of the rights and obligations of the Company and the Holder under
the Treasury Units evidenced thereby; and, for the purposes of this definition,
any Treasury Unit Certificate authenticated and delivered under Section 3.10 in
exchange for or in lieu of a mutilated, destroyed, lost or stolen Treasury Unit
Certificate shall be deemed to evidence the same rights and obligations of the
Company and the Holder as the mutilated, destroyed, lost or stolen Treasury Unit
Certificate.
"Primary Treasury Dealer" means a primary U.S. government securities
dealer in New York City.
"Proceeds" has the meaning set forth in Article I of the Pledge
Agreement.
7
"Purchase Contract," when used with respect to any Security, means the
contract forming a part of such Security and obligating the Company (A) to sell
to the Holder of such Security and the Holder of such Security to purchase not
later than the Purchase Contract Settlement Date, for $50 in cash, a number of
newly issued shares of Common Stock equal to the applicable Settlement Rate, and
(B) to pay the Holder Contract Adjustment Payments on the terms and subject to
the conditions set forth in Article Five hereof.
"Purchase Contract Settlement Date" means May 16, 2006.
"Purchase Contract Settlement Fund" has the meaning specified in
Section 5.5.
"Purchase Price" has the meaning specified in Section 5.1.
"Purchased Shares" has the meaning specified in Section 5.6(a)(6).
"Quotation Agent" means (i) Xxxxxxx Xxxxx Government Securities, Inc.
or its successor, provided, however, that, if the foregoing shall cease to be a
Primary Treasury Dealer, the Company shall substitute therefor another Primary
Treasury Dealer, and (ii) any other Primary Treasury Dealer selected by the
Company.
"Record Date" for the payment of interest, distribution and Contract
Adjustment Payments payable on any Payment Date means, as to any Global
Certificate, the Business Day next preceding such Payment Date, and as to any
other Certificate, a day selected by the Company which shall be at least one
Business Day but not more than 60 Business Days prior to such Payment Date (and
which shall correspond to the related record date for the Debt Securities).
"Redemption Amount" means for each Debt Security, the product of (i)
the principal amount of such Debt Security and (ii) a fraction whose numerator
is the applicable Treasury Portfolio Purchase Price and whose denominator is the
Applicable Principal Amount.
"Redemption Price" means an amount per Debt Security equal to the
Redemption Amount plus accrued and unpaid interest, if any, to the date of
redemption.
"Register" means the Corporate Unit Register and the Treasury Unit
Register.
"Registrar" means the Corporate Unit Registrar and the Treasury Unit
Registrar.
"Remarketing Agents" has the meaning specified in Section 5.4.
"Remarketing Agreement" means a Remarketing Agreement contemplated by
Section 5.4 by and between the Company, the Remarketing Agents and the Purchase
Contract Agent, including any supplements thereto.
"Remarketing Fee" means an amount not exceeding 25 basis points (.25%)
of (i) the applicable Treasury Portfolio Purchase Price, in the case of any
successful remarketing of Debt Securities on the Initial Remarketing Date, or
(ii) the aggregate principal amount of the remarketed Debt Securities, in the
case of any successful remarketing of Debt Securities on the Secondary
Remarketing Date.
"Remarketing Treasury Portfolio" means (a) interest or principal
strips of U.S. Treasury Securities that mature on or prior to May 15, 2006 in an
aggregate amount equal to the principal amount of the Debt Securities included
in Corporate Units; (b) with respect to the originally scheduled
8
quarterly interest payment date on the Debt Securities that would have occurred
on May 16, 2006, interest or principal strips of U.S. Treasury Securities that
mature on or prior to May 16, 2006 in an aggregate amount equal to the aggregate
interest payment that would be due on May 16, 2006 on the principal amount of
the Debt Securities that would have been included in Corporate Units assuming no
remarketing and assuming that the interest rate on the Debt Securities was not
reset; and (c) if the Initial Reset Date occurs prior to February 16, 2006, with
respect to the originally scheduled quarterly interest payment date on the Debt
Securities that would have occurred on February 16, 2006, interest or principal
strips of U.S. Treasury Securities that mature on or prior to February 16, 2006
in an aggregate amount equal to the aggregate interest payment that would be due
on February 16, 2006 on the principal amount of the Debt Securities that would
have been included in the Corporate Units assuming no remarketing and assuming
no reset of the interest rate on the Debt Securities and assuming that interest
on the Debt Securities accrued from the Initial Reset Date to, but excluding,
February 16, 2006.
"Remarketing Treasury Portfolio Purchase Price" means the lowest
aggregate price quoted by a Primary Treasury Dealer to the Quotation Agent on
the third Business Day immediately preceding the Initial Reset Date for the
purchase of the Remarketing Treasury Portfolio for settlement on the Initial
Reset Date.
"Reorganization Event" has the meaning specified in Section 5.6(b).
"Reset Agent" means Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx
Incorporated, or such other Reset Agent as the Company shall select from time to
time.
"Reset Announcement Date" means the seventh Business Day immediately
preceding the Reset Date, the date on which the Reset Spread, and the Applicable
Benchmark Treasury will be announced by the Company.
"Reset Date" means the Initial Reset Date, or if the remarketing of
the Debt Securities on the Initial Remarketing Date results in a Failed
Remarketing, May 16, 2006.
"Reset Rate" means the Coupon Rate to be in effect for the Debt
Securities on and after the Reset Date and determined as provided in Section
4.1.
"Reset Spread" means an amount determined by the Reset Agent which,
when added to the Applicable Benchmark Treasury in effect on the third Business
Day immediately preceding the Reset Date, will produce the rate the Debt
Securities should bear in order to have an approximate market value on the third
Business Day immediately preceding the Reset Date of 100.5% of (a) the
Remarketing Treasury Portfolio Purchase Price, if the Reset Date is the Initial
Reset Date or (b) their aggregate principal amount if the Reset Date is May 16,
2006; provided that (i) the Company may limit the Reset Rate to be no higher
than the rate on the Applicable Benchmark Treasury on such Business Day plus 200
basis points (2.0%); (ii) such market value may be less than 100.5% if the
Company exercises such right to limit the Reset Rate; and (iii) the Reset Rate
shall in no event exceed the maximum permitted by applicable law.
"Responsible Officer," when used with respect to the Agent, means any
Vice President, Assistant Vice President, Trust Officers or other officer of the
Agent assigned by the Agent to the Corporate Trust Administration Division of
the Agent (or any successor division or department of the Agent).
"Secondary Remarketing Date" means the third Business Day immediately
preceding May 16, 2006.
9
"Security" means a Corporate Unit or a Treasury Unit.
"Senior Indebtedness" means indebtedness of any kind of the Company
(including the Debt Securities) unless the instrument under which such
indebtedness is incurred expressly provides that it is in parity or subordinate
in right of payment to the Contract Adjustment Payments.
"Settlement Rate" has the meaning specified in Section 5.1.
"Stated Amount" means $50, which is equal to the stated amount of a
Corporate Unit and the face amount of a Treasury Unit.
"Tax Event" means the receipt by the Company of an opinion of a
nationally recognized independent tax counsel experienced in such matters to the
effect that, as a result of (a) any amendment to, change in, or announced
proposed change in, the laws (or any regulations thereunder) of the United
States or any political subdivision or taxing authority thereof or therein
affecting taxation, (b) any amendment to or change in an interpretation or
application of any such laws or regulations by any legislative body, court,
governmental agency or regulatory authority or (c) any interpretation or
pronouncement by any such legislative body, court, governmental agency or
regulatory authority that provides for a position with respect to any such laws
or regulations that differs from the generally accepted position on May 31,
2002, which amendment, change or proposed change is effective or which
interpretation or pronouncement is announced on or after May 31, 2002, there is
more than an insubstantial risk that interest payable by the Company on the Debt
Securities would not be deductible, in whole or in part, by the Company for
United States federal income tax purposes.
"Tax Event Redemption" means, if a Tax Event shall occur and be
continuing, the redemption of Debt Securities, in whole but not in part, at the
option of the Company on not less than 30 days nor more than 60 days notice.
"Tax Event Redemption Date" means the date on which a Tax Event
Redemption is to occur.
"Tax Event Treasury Portfolio" means (a) if the Tax Event Redemption
occurs prior to the Initial Reset Date, or if the Senior Notes are not
successfully remarketed on the third business day immediately preceding the
Initial Reset Date, prior to May 16, 2006 (i) interest or principal strips of
U.S. Treasury Securities that mature on or prior to May 15, 2006 in an aggregate
amount equal to the principal amount of Senior Notes included in the Corporate
Units, and (ii) with respect to each scheduled interest payment date on the
Senior Notes that occurs after the Tax Event Redemption and on or before May 16,
2006, interest or principal strips of U.S. Treasury Securities which mature on
or prior to that interest payment date in an aggregate amount equal to the
aggregate interest payment that would be due on the aggregate principal amount
of the Senior Notes on that date if the interest rate of the Senior Notes was
not reset on any applicable Reset Date; or (b) if the Tax Event Redemption
occurs on or after the Initial Reset Date, or if the Senior Notes are not
successfully remarketed on the third business day immediately preceding the
Initial Reset Date, on or after May 16, 2006 (i) interest or principal strips of
U.S. Treasury Securities that mature on or prior to May 15, 2008 in an aggregate
amount equal to the principal amount of Senior Notes outstanding, and (ii) with
respect to each scheduled interest payment date on the Senior Notes that occurs
after the Tax Event Redemption and on or before May 16, 2008, interest or
principal strips of U.S. Treasury Securities which mature on or prior to that
interest payment date in an aggregate amount equal to the aggregate interest
payment that would be due on the aggregate principal amount of the Senior Notes
outstanding on that date.
10
"Tax Event Treasury Portfolio Purchase Price" means the lowest
aggregate price quoted by the Primary Treasury Dealer to the Quotation Agent on
the third Business Day immediately preceding the Tax Event Redemption Date for
the purchase of the Tax Event Treasury Portfolio for settlement on the Tax Event
Redemption Date.
"Termination Date" means the date, if any, on which a Termination
Event occurs.
"Termination Event" means the occurrence of any of the following
events: (i) at any time on or prior to the Purchase Contract Settlement Date, a
judgment, decree or court order shall have been entered granting relief under
the Bankruptcy Code, adjudicating the Company to be insolvent, or approving as
properly filed a petition seeking reorganization or liquidation of the Company
or any other similar applicable Federal or State law, and, unless such judgment,
decree or order shall have been entered within 60 days prior to the Purchase
Contract Settlement Date, such decree or order shall have continued undischarged
and unstayed for a period of 60 days; or (ii) at any time on or prior to the
Purchase Contract Settlement Date, a judgment, decree or court order for the
appointment of a receiver or liquidator or trustee or assignee in bankruptcy or
insolvency of the Company or of its property, or for the winding up or
liquidation of its affairs, shall have been entered, and, unless such judgment,
decree or order shall have been entered within 60 days prior to the Purchase
Contract Settlement Date, such judgment, decree or order shall have continued
undischarged and unstayed for a period of 60 days; or (iii) at any time on or
prior to the Purchase Contract Settlement Date the Company shall file a petition
for relief under the Bankruptcy Code, or shall consent to the filing of a
bankruptcy proceeding against it, or shall file a petition or answer or consent
seeking reorganization or liquidation under the Bankruptcy Code or any other
similar applicable Federal or State law, or shall consent to the filing of any
such petition, or shall consent to the appointment of a receiver or liquidator
or trustee or assignee in bankruptcy or insolvency of it or of its property, or
shall make an assignment for the benefit of creditors, or shall admit in writing
its inability to pay its debts generally as they become due.
"Threshold Appreciation Price" has the meaning specified in Section
5.1.
"TIA" means, as of any time, the Trust Indenture Act of 1939, as
amended, or any successor statute, as in effect at such time.
"Trading Day" has the meaning specified in Section 5.1.
"Treasury Portfolio" means, as applicable, the Remarketing Treasury
Portfolio or a Tax Event Treasury Portfolio.
"Treasury Portfolio Purchase Price" means, as applicable, the
Remarketing Treasury Portfolio Purchase Price or the Tax Event Treasury
Portfolio Purchase Price.
"Treasury Security" means a zero-coupon U.S. Treasury security having
a principal amount at maturity equal to $1,000 and maturing on May 15, 2006
(CUSIP No. 000000XX0).
"Treasury Units" means a Security, initially issued in substantially
the form set forth as Exhibit B hereto in a Stated Amount of $50, which
represents (i) a 1/20 undivided beneficial ownership in a Treasury Security
having a principal amount at maturity equal to $1,000, and (ii) the rights and
obligations of the Company and the Holder under one Purchase Contract.
"Treasury Unit Certificate" means a certificate evidencing the rights
and obligations of a Holder in respect of the number of Treasury Units specified
on such certificate.
11
"Treasury Unit Register" and "Treasury Unit Registrar" have the
respective meanings specified in Section 3.5.
"Underwriting Agreement" means the Underwriting Agreement dated May
31, 2002 relating to the Corporate Units between the Company and Xxxxxxx Lynch,
Pierce, Xxxxxx & Xxxxx Incorporated, as representative of the underwriters named
therein.
"Vice President" means any vice president, whether or not designated
by a number or a word or words added before or after the title "vice president."
SECTION 1.2 COMPLIANCE CERTIFICATES AND OPINIONS.
Except as otherwise expressly provided by this Agreement, upon any
application or request by the Company to the Agent to take any action under any
provision of this Agreement, the Company shall furnish to the Agent a Company
Certificate stating that in the opinion of the Authorized Officer signing such
Company Certificate all conditions precedent, if any, provided for in this
Agreement relating to the proposed action have been complied with and an Opinion
of Counsel stating that, in the opinion of such counsel, all such conditions
precedent, if any, have been complied with, except that in the case of any such
application or request as to which the furnishing of such documents is
specifically required by any provision of this Agreement relating to such
particular application or request, no additional certificate or opinion need be
furnished.
Every certificate or opinion with respect to compliance with a
condition or covenant provided for in this Agreement shall include:
(1) a statement that each individual signing such certificate or
opinion has read such covenant or condition and the definitions herein
relating thereto;
(2) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions
contained in such certificate or opinion are based;
(3) a statement that, in the opinion of each such individual, he
or she has made such examination or investigation as is necessary to enable
such individual to express an informed opinion as to whether or not such
covenant or condition has been complied with; and
(4) a statement as to whether, in the opinion of each such
individual, such condition or covenant has been complied with.
SECTION 1.3 FORM OF DOCUMENTS DELIVERED TO AGENT.
In any case where several matters are required to be certified by, or
covered by an opinion of, any specified Person, it is not necessary that all
such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and one
or more other such Persons as to other matters, and any such Person may certify
or give an opinion as to such matters in one or several documents.
Any certificate or opinion of an officer of the Company may be based,
insofar as it relates to legal matters, upon a certificate or opinion of, or
representations by, counsel, unless such officer knows, or in the exercise of
reasonable care should know, that the certificate or opinion or representations
with respect to the matters upon which his certificate or opinion is based are
erroneous. Any such
12
certificate or Opinion of Counsel may be based, insofar as
it relates to factual matters, upon a certificate or opinion of, or
representations by, an officer or officers of the Company stating that the
information with respect to such factual matters is in the possession of the
Company unless such counsel knows, or in the exercise of reasonable care should
know, that the certificate or opinion or representations with respect to such
matters are erroneous.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Agreement, they may, but need not, be consolidated and
form one instrument.
SECTION 1.4 ACTS OF HOLDERS; RECORD DATES.
(a) Any request, demand, authorization, direction, notice,
consent, waiver or other action provided by this Agreement to be given or
taken by Holders may be embodied in and evidenced by one or more
instruments of substantially similar tenor signed by such Holders in person
or by agent duly appointed in writing; and, except as herein otherwise
expressly provided, such action shall become effective when such instrument
or instruments are delivered to the Agent and, where it is hereby expressly
required, to the Company. Such instrument or instruments (and the action
embodied therein and evidenced thereby) are herein sometimes referred to as
the "Act" of the Holders signing such instrument or instruments. Proof of
execution of any such instrument or of a writing appointing any such agent
shall be sufficient for any purpose of this Agreement and (subject to
Section 7.1) conclusive in favor of the Agent and the Company, if made in
the manner provided in this Section.
(b) The fact and date of the execution by any Person of any such
instrument or writing may be proved in any manner which the Agent deems
sufficient.
(c) The ownership of Securities shall be proved by the Corporate
Unit Register or the Treasury Unit Register, as the case may be.
(d) Any request, demand, authorization, direction, notice,
consent, waiver or other Act of the Holder of any Certificate shall bind
every future Holder of the same Certificate and the Holder of every
Certificate issued upon the registration of transfer thereof or in exchange
therefor or in lieu thereof in respect of anything done, omitted or
suffered to be done by the Agent or the Company in reliance thereon,
whether or not notation of such action is made upon such Certificate.
(e) The Company may set any day as a record date for the purpose
of determining the Holders of Outstanding Securities entitled to give, make
or take any request, demand, authorization, direction, notice, consent,
waiver or other action provided or permitted by this Agreement to be given,
made or taken by Holders of Securities. If any record date is set pursuant
to this paragraph, the Holders of the Outstanding Corporate Units and the
Outstanding Treasury Units, as the case may be, on such record date, and no
other Holders, shall be entitled to take the relevant action with respect
to the Corporate Units or the Treasury Units, as the case may be, whether
or not such Holders remain Holders after such record date; provided that no
such action shall be effective hereunder unless taken on or prior to the
applicable Expiration Date by Holders of the requisite number of
Outstanding Securities on such record date. Nothing in this paragraph shall
be construed to prevent the Company from setting a new record date for any
action for which a record date has previously been set pursuant to this
paragraph (whereupon the record date previously set shall automatically and
with no action by any Person be cancelled and of no effect), and nothing in
this paragraph shall be construed to render ineffective any action taken by
13
Holders of the requisite number of Outstanding Securities on the date such
action is taken. Promptly after any record date is set pursuant to this
paragraph, the Company, at its own expense, shall cause notice of such
record date, the proposed action by Holders and the applicable Expiration
Date to be given to the Agent in writing and to each Holder of Securities
in the manner set forth in Section 1.6.
With respect to any record date set pursuant to this Section,
the Company may designate any date as the "Expiration Date" and from time to
time may change the Expiration Date to any earlier or later day; provided that
no such change shall be effective unless notice of the proposed new Expiration
Date is given to the Agent in writing, and to each Holder of Securities in the
manner set forth in Section 1.6, on or prior to the existing Expiration Date. If
an Expiration Date is not designated with respect to any record date set
pursuant to this Section, the Company shall be deemed to have initially
designated the 180th day after such record date as the Expiration Date with
respect thereto, subject to its right to change the Expiration Date as provided
in this paragraph. Notwithstanding the foregoing, no Expiration Date shall be
later than the 180th day after the applicable record date.
SECTION 1.5 NOTICES.
Any request, demand, authorization, direction, notice,
consent, waiver or Act of Holders or other document provided or permitted by
this Agreement to be made upon, given or furnished to, or filed with,
(1) the Agent by any Holder or by the Company shall be sufficient
for every purpose hereunder (unless otherwise herein expressly provided) if
made, given, furnished or filed in writing and personally delivered or
mailed, first-class postage prepaid, to the Agent at The Bank of New York,
000 Xxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Vice President,
Corporate Trust Administration, or at any other address previously
furnished in writing by the Agent to the Holders and the Company;
(2) the Company by the Agent or by any Holder shall be sufficient
for every purpose hereunder (unless otherwise herein expressly provided) if
made, given, furnished or filed in writing and personally delivered or
mailed, first-class postage prepaid, to the Company at TXU Corp., Energy
Plaza, 0000 Xxxxx Xxxxxx, Xxxxxx, Xxxxx 00000, Attention: Secretary, or at
any other address previously furnished in writing to the Agent by the
Company;
(3) the Collateral Agent by the Agent, the Company or any Holder
shall be sufficient for every purpose hereunder (unless otherwise herein
expressly provided) if made, given, furnished or filed in writing and
personally delivered or mailed, first-class postage prepaid, addressed to
the Collateral Agent at JPMorgan Chase Bank at 000 Xxxx 00xx Xxxxxx, Xxx
Xxxx, Xxx Xxxx 00000, Attention: Global Trust Services, or at any other
address previously furnished in writing by the Collateral Agent to the
Agent, the Company and the Holders; or
(4) the Indenture Trustee by the Company shall be sufficient for
every purpose hereunder (unless otherwise herein expressly provided) if
made, given, furnished or filed in writing and personally delivered or
mailed, first-class postage prepaid, addressed to the Indenture Trustee at
The Bank of New York, 000 Xxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000,
Attention: Vice President, Corporate Trust Administration, or at any other
address previously furnished in writing by the Indenture Trustee to the
Company.
14
SECTION 1.6 NOTICE TO HOLDERS; WAIVER.
Where this Agreement provides for notice to Holders of any event, such
notice shall be sufficiently given (unless otherwise herein expressly provided)
if in writing and mailed, first-class postage prepaid, to each Holder affected
by such event, at its address as it appears in the applicable Register, not
later than the latest date, and not earlier than the earliest date, prescribed
for the giving of such notice. In any case where notice to Holders is given by
mail, neither the failure to mail such notice, nor any defect in any notice so
mailed to any particular Holder shall affect the sufficiency of such notice with
respect to other Holders. Where this Agreement provides for notice in any
manner, such notice may be waived in writing by the Person entitled to receive
such notice, either before or after the event, and such waiver shall be the
equivalent of such notice. Waivers of notice by Holders shall be filed with the
Agent, but such filing shall not be a condition precedent to the validity of any
action taken in reliance upon such waiver.
In case by reason of the suspension of regular mail service or by
reason of any other cause it shall be impracticable to give such notice by mail,
then such notification as shall be made with the approval of the Agent shall
constitute a sufficient notification for every purpose hereunder.
SECTION 1.7 EFFECT OF HEADINGS AND TABLE OF CONTENTS.
The Article and Section headings herein and the Table of Contents are
for convenience only and shall not affect the construction hereof.
SECTION 1.8 SUCCESSORS AND ASSIGNS.
All covenants and agreements in this Agreement by the Company shall
bind its successors and assigns, whether so expressed or not.
SECTION 1.9 SEPARABILITY CLAUSE.
In case any provision in this Agreement or in the Securities shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions hereof and thereof shall not in any way be affected or
impaired thereby.
SECTION 1.10 BENEFITS OF AGREEMENT.
Nothing in this Agreement or in the Securities, express or implied,
shall give to any Person, other than the parties hereto and their successors
hereunder and, to the extent provided hereby, the Holders, any benefits or any
legal or equitable right, remedy or claim under this Agreement. The Holders from
time to time shall be beneficiaries of this Agreement and shall be bound by all
of the terms and conditions hereof and of the Securities evidenced by their
Certificates by their acceptance of delivery of such Certificates.
SECTION 1.11 GOVERNING LAW.
THIS AGREEMENT AND THE SECURITIES SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
SECTION 1.12 LEGAL HOLIDAYS.
In any case where any Payment Date shall not be a Business Day, then
(notwithstanding any other provision of this Agreement or the Corporate Unit
Certificates or the Treasury Unit Certificates)
15
payment of the Contract Adjustment Payments, if any, shall not be made on such
date, but such payments shall be made on the next succeeding Business Day with
the same force and effect as if made on such Payment Date, and no interest shall
accrue or be payable by the Company or any Holder for the period from and after
any such Payment Date, except that, if such next succeeding Business Day is in
the next succeeding calendar year, such payment shall be made on the immediately
preceding Business Day with the same force and effect as if made on such Payment
Date.
In any case where the Purchase Contract Settlement Date shall not be a
Business Day, then (notwithstanding any other provision of this Agreement, the
Corporate Unit Certificates or the Treasury Unit Certificates), the Purchase
Contracts shall not be performed on such date, but the Purchase Contracts shall
be performed on the immediately following Business Day with the same force and
effect as if performed on the Purchase Contract Settlement Date.
SECTION 1.13 COUNTERPARTS.
This Agreement may be executed in any number of counterparts by the
parties hereto on separate counterparts, each of which, when so executed and
delivered, shall be deemed an original, but all such counterparts shall together
constitute one and the same instrument.
SECTION 1.14 INSPECTION OF AGREEMENT.
A copy of this Agreement shall be available at all reasonable times
during normal business hours at the Corporate Trust Office for inspection by any
Holder.
ARTICLE II
CERTIFICATE FORMS
SECTION 2.1 FORMS OF CERTIFICATES GENERALLY.
The Corporate Unit Certificates (including the form of Purchase
Contract forming part of the Corporate Units evidenced thereby) shall be in
substantially the form set forth in Exhibit A hereto, with such letters, numbers
or other marks of identification or designation and such legends or endorsements
printed, lithographed or engraved thereon as may be required by the rules of any
securities exchange on which the Corporate Units are listed or any depositary
therefor, or as may, consistently herewith, be determined by the officers of the
Company executing such Corporate Unit Certificates, as evidenced by their
execution of the Corporate Unit Certificates.
The definitive Corporate Unit Certificates shall be printed,
lithographed or engraved on steel engraved borders or may be produced in any
other manner, all as determined by the officers of the Company executing the
Corporate Units evidenced by such Corporate Unit Certificates, consistent with
the provisions of this Agreement, as evidenced by their execution thereof.
The Treasury Unit Certificates (including the form of Purchase
Contracts forming part of the Treasury Units evidenced thereby) shall be in
substantially the form set forth in Exhibit B hereto, with such letters, numbers
or other marks of identification or designation and such legends or endorsements
printed, lithographed or engraved thereon as may be required by the rules of any
securities exchange on which the Treasury Units may be listed or any depositary
therefor, or as may, consistently herewith, be determined by the officers of the
Company executing such Treasury Unit Certificates, as evidenced by their
execution of the Treasury Unit Certificates.
16
The definitive Treasury Unit Certificates shall be printed,
lithographed or engraved on steel engraved borders or may be produced in any
other manner, all as determined by the officers of the Company executing the
Treasury Units evidenced by such Treasury Unit Certificates, consistent with the
provisions of this Agreement, as evidenced by their execution thereof.
Every Global Certificate authenticated, executed on behalf of the
Holders and delivered hereunder shall bear a legend in substantially the
following form:
THIS CERTIFICATE IS A GLOBAL CERTIFICATE WITHIN THE MEANING OF THE
PURCHASE CONTRACT AGREEMENT (AS HEREINAFTER DEFINED) AND IS REGISTERED IN THE
NAME OF THE CLEARING AGENCY OR A NOMINEE THEREOF. THIS CERTIFICATE MAY NOT BE
EXCHANGED IN WHOLE OR IN PART FOR A CERTIFICATE REGISTERED, AND NO TRANSFER OF
THIS CERTIFICATE IN WHOLE OR IN PART MAY BE REGISTERED, IN THE NAME OF ANY
PERSON OTHER THAN SUCH CLEARING AGENCY OR A NOMINEE THEREOF, EXCEPT IN THE
LIMITED CIRCUMSTANCES DESCRIBED IN THE PURCHASE CONTRACT AGREEMENT.
SECTION 2.2 FORM OF AGENT'S CERTIFICATE OF AUTHENTICATION.
The form of the Agent's certificate of authentication of the Corporate
Units shall be in substantially the form set forth on the form of the Corporate
Unit Certificates set forth as Exhibit A hereto.
The form of the Agent's certificate of authentication of the Treasury
Units shall be in substantially the form set forth on the form of the Treasury
Unit Certificates set forth as Exhibit B hereto.
ARTICLE III
THE SECURITIES
SECTION 3.1 TITLE AND TERMS; DENOMINATIONS.
The aggregate number of Corporate Units and Treasury Units evidenced
by Certificates authenticated, executed on behalf of the Holders and delivered
hereunder is limited to 8,800,000 units (or 10,120,000 if the overallotment
option provided for in the Underwriting Agreement is exercised in full) except
for Certificates authenticated, executed and delivered upon registration of
transfer of, in exchange for, or in lieu of, other Certificates pursuant to
Section 3.4, 3.5, 3.10, 3.12, 3.13, 5.9 or 8.5.
The Certificates shall be issuable only in registered form and only in
denominations of a single Corporate Unit or Treasury Unit and any integral
multiple thereof.
SECTION 3.2 RIGHTS AND OBLIGATIONS EVIDENCED BY THE CERTIFICATES.
Each Corporate Unit Certificate shall evidence the number of Corporate
Units specified therein, with each such Corporate Unit representing the
ownership by the Holder thereof of a beneficial interest in a Debt Security or
the Applicable Ownership Interest in the appropriate Treasury Portfolio, as the
case may be, subject to the Pledge of such Debt Security or Applicable Ownership
Interest in the appropriate
17
Treasury Portfolio, as the case may be, by such Holder pursuant to the Pledge
Agreement, and the rights and obligations of the Holder thereof and the Company
under one Purchase Contract. The Agent as attorney-in-fact for, and on behalf
of, the Holder of each Corporate Unit shall pledge, pursuant to the Pledge
Agreement, each Debt Security or the Applicable Ownership Interest in the
appropriate Treasury Portfolio, as the case may be, forming a part of such
Corporate Unit, to the Collateral Agent and grant to the Collateral Agent a
security interest in the right, title, and interest of such Holder in such Debt
Security or Applicable Ownership Interest in the appropriate Treasury Portfolio,
as the case may be, for the benefit of the Company, to secure the obligation of
the Holder under one Purchase Contract to purchase the Common Stock of the
Company.
Each Treasury Unit Certificate shall evidence the number of Treasury
Units specified therein, with each such Treasury Unit representing the ownership
by the Holder thereof of a 1/20, or 5%, undivided beneficial interest in a
Treasury Security, subject to the Pledge of such Treasury Security by such
Holder pursuant to the Pledge Agreement, and the rights and obligations of the
Holder thereof and the Company under one Purchase Contract. The Agent as
attorney-in-fact for, and on behalf of, the Holder of each Treasury Unit shall
pledge, pursuant to the Pledge Agreement, each Treasury Security forming a part
of such Treasury Unit, to the Collateral Agent and grant to the Collateral Agent
a security interest in the right, title, and interest of such Holder in such
Treasury Security for the benefit of the Company, to secure the obligation of
the Holder under one Purchase Contract to purchase the Common Stock of the
Company.
SECTION 3.3 EXECUTION, AUTHENTICATION, DELIVERY AND DATING.
Subject to the provisions of Sections 3.13 and 3.14 hereof, upon the
execution and delivery of this Agreement, and at any time and from time to time
thereafter, the Company may deliver Certificates executed by the Company to the
Agent for authentication, execution on behalf of the Holders and delivery,
together with its Issuer Order for authentication of such Certificates, and the
Agent in accordance with such Issuer Order shall authenticate, execute on behalf
of the Holders and deliver such Certificates.
The Certificates shall be executed on behalf of the Company by its
Chairman of the Board, its President, one of its Vice Presidents, its Treasurer,
one of its Assistant Treasurers, its Secretary or one of its Assistant
Secretaries. The signature of any of these officers on the Certificates may be
manual or facsimile.
Certificates bearing the manual or facsimile signatures of individuals
who were at any time the proper officers of the Company shall bind the Company,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the authentication and delivery of such Certificates or did not
hold such offices at the date of such Certificates.
No Purchase Contract evidenced by a Certificate shall be valid until
such Certificate has been executed on behalf of the Holder by the manual
signature of an authorized signatory of the Agent, as such Holder's
attorney-in-fact. Such signature by an authorized signatory of the Agent shall
be conclusive evidence that the Holder of such Certificate has entered into the
Purchase Contracts evidenced by such Certificate.
Each Certificate shall be dated the date of its authentication.
No Certificate shall be entitled to any benefit under this Agreement
or be valid or obligatory for any purpose unless there appears on such
Certificate a certificate of authentication substantially in the form provided
for herein executed by an authorized signatory of the Agent by manual signature,
and such certificate upon any Certificate shall be conclusive evidence, and the
only evidence, that such Certificate has been duly authenticated and delivered
hereunder.
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SECTION 3.4 TEMPORARY CERTIFICATES.
Pending the preparation of definitive Certificates, the Company shall
execute and deliver to the Agent, and the Agent shall authenticate, execute on
behalf of the Holders, and deliver, in lieu of such definitive Certificates,
temporary Certificates which are in substantially the forms set forth in Exhibit
A and Exhibit B hereto, with such letters, numbers or other marks of
identification or designation and such legends or endorsements printed,
lithographed or engraved thereon as may be required by the rules of any
securities exchange on which the Corporate Units or Treasury Units are listed,
or as may, consistently herewith, be determined by the officers of the Company
executing such Certificates, as evidenced by their execution of the
Certificates.
If temporary Certificates are issued, the Company will cause
definitive Certificates to be prepared without unreasonable delay. After the
preparation of definitive Certificates, the temporary Certificates shall be
exchangeable for definitive Certificates upon surrender of the temporary
Certificates at the Corporate Trust Office, at the expense of the Company and
without charge to the Holder. Upon surrender for cancellation of any one or more
temporary Certificates, the Company shall execute and deliver to the Agent, and
the Agent shall authenticate, execute on behalf of the Holder, and deliver in
exchange therefor, one or more definitive Certificates of like tenor and
denominations and evidencing a like number of Corporate Units or Treasury Units,
as the case may be, as the temporary Certificate or Certificates so surrendered.
Until so exchanged, the temporary Certificates shall in all respects evidence
the same benefits and the same obligations with respect to the Corporate Units
or Treasury Units, as the case may be, evidenced thereby as definitive
Certificates.
SECTION 3.5 REGISTRATION; REGISTRATION OF TRANSFER AND EXCHANGE.
The Agent shall keep at the Corporate Trust Office a register (the
"Corporate Unit Register") in which, subject to such reasonable regulations as
it may prescribe, the Agent shall provide for the registration of Corporate Unit
Certificates and of transfers of Corporate Unit Certificates (the Agent, in such
capacity, the "Corporate Unit Registrar") and a register (the "Treasury Unit
Register") in which, subject to such reasonable regulations as it may prescribe,
the Agent shall provide for the registration of the Treasury Unit Certificates
and of transfers of Treasury Unit Certificates (the Agent, in such capacity, the
"Treasury Unit Registrar").
Upon surrender for registration of transfer of any Certificate at the
Corporate Trust Office, the Company shall execute and deliver to the Agent, and
the Agent shall authenticate, execute on behalf of the designated transferee or
transferees, and deliver, in the name of the designated transferee or
transferees, one or more new Certificates of any authorized denominations, like
tenor, and evidencing a like number of Corporate Units or Treasury Units as the
case may be.
At the option of the Holder, Certificates may be exchanged for other
Certificates, of any authorized denominations and evidencing a like number of
Corporate Units or Treasury Units, as the case may be, upon surrender of the
Certificates to be exchanged at the Corporate Trust Office. Whenever any
Certificates are so surrendered for exchange, the Company shall execute and
deliver to the Agent, and the Agent shall authenticate, execute on behalf of the
Holder, and deliver the Certificates which the Holder making the exchange is
entitled to receive.
All Certificates issued upon any registration of transfer or exchange
of a Certificate shall evidence the ownership of the same number of Corporate
Units or Treasury Units, as the case may be, and be entitled to the same
benefits and subject to the same obligations, under this Agreement as the
Corporate Units or Treasury Units, as the case may be, evidenced by the
Certificate surrendered upon such registration of transfer or exchange.
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Every Certificate presented or surrendered for registration of
transfer or for exchange shall (if so required by the Company or the Agent) be
duly endorsed, or be accompanied by a written instrument of transfer in form
satisfactory to the Company and the Agent, duly executed by the Holder thereof
or its attorney duly authorized in writing.
No service charge shall be made for any registration of transfer or
exchange of a Certificate, but the Company and the Agent may require payment
from the Holder of a sum sufficient to cover any tax or other governmental
charge that may be imposed in connection with any registration of transfer or
exchange of Certificates, other than any exchanges pursuant to Sections 3.6 and
8.5 not involving any transfer.
Notwithstanding the foregoing, the Company will not be obligated to
execute and deliver to the Agent, and the Agent will not be obligated to
authenticate, execute on behalf of the Holder and deliver any Certificate
presented or surrendered for registration of transfer or for exchange on or
after the Business Day immediately preceding the Purchase Contract Settlement
Date or on or after the Termination Date. In lieu of delivery of a new
Certificate, upon satisfaction of the applicable conditions specified above in
this Section and receipt of appropriate registration or transfer instructions
from such Holder, the Agent shall (i) if the Purchase Contract Settlement Date
has occurred, deliver the shares of Common Stock issuable in respect of the
Purchase Contracts forming a part of the Securities evidenced by such
Certificate, (ii) in the case of Corporate Units, if a Termination Event shall
have occurred prior to the Purchase Contract Settlement Date, transfer the
aggregate principal amount of the Debt Securities or the aggregate Stated Amount
of the appropriate Treasury Portfolio, as applicable, evidenced thereby, or
(iii) in the case of Treasury Units, if a Termination Event shall have occurred
prior to the Purchase Contract Settlement Date, transfer the Treasury Securities
evidenced thereby, in each case subject to the applicable conditions and in
accordance with the applicable provisions of Article V hereof.
SECTION 3.6 BOOK-ENTRY INTERESTS.
The Certificates, on original issuance, will be issued in the form of
one or more fully registered Global Certificates, to be delivered to the
Depositary or a nominee or custodian thereof by, or on behalf of, the Company.
Such Global Certificates shall initially be registered on the books and records
of the Company in the name of Cede & Co., the nominee of the Depositary, and no
Beneficial Owner will receive a definitive Certificate representing such
Beneficial Owner's interest in such Global Certificate, except as provided in
Section 3.9. The Agent shall enter into an agreement with the Depositary if so
requested by the Company. Unless and until definitive, fully registered
Certificates have been issued to Beneficial Owners pursuant to Section 3.9:
(a) the provisions of this Section 3.6 shall be in full force and
effect;
(b) the Company shall be entitled to deal with the Clearing Agency
for all purposes of this Agreement (including the payment of Contract
Adjustment Payments, if any, and receiving approvals, votes or consents
hereunder) as the Holder of the Securities and the sole holder of the
Global Certificate(s) and shall have no obligation to the Beneficial
Owners;
(c) to the extent that the provisions of this Section 3.6 conflict
with any other provisions of this Agreement, the provisions of this Section
3.6 shall control; and
(d) the rights of the Beneficial Owners shall be exercised only
through the Clearing Agency and shall be limited to those established by law and
agreements between such Beneficial Owners and the Clearing Agency and/or the
Clearing Agency Participants. The Clearing Agency will make book
20
entry transfers among Clearing Agency Participants and receive and transmit
payments of Contract Adjustment Payments to such Clearing Agency Participants.
SECTION 3.7 NOTICES TO HOLDERS.
Whenever a notice or other communication to the Holders is required to
be given under this Agreement, the Company or the Company's agent shall give
such notices and communications to the Holders and, with respect to any
Certificates registered in the name of a Clearing Agency or the nominee of a
Clearing Agency, the Company or the Company's agent shall, except as set forth
herein, have no obligations to the Beneficial Owners.
SECTION 3.8 APPOINTMENT OF SUCCESSOR CLEARING AGENCY.
If any Clearing Agency elects to discontinue its services as
securities depositary with respect to the Securities, the Company may, in its
sole discretion, appoint a successor Clearing Agency with respect to the
Securities.
SECTION 3.9 DEFINITIVE CERTIFICATES.
If (i) a Clearing Agency elects to discontinue its services as
securities depositary with respect to the Securities and a successor Clearing
Agency is not appointed within 90 days after such discontinuance pursuant to
Section 3.8, or (ii) the Company elects to terminate the book-entry system
through the Clearing Agency with respect to the Securities, then upon surrender
of the Global Certificates representing the Book-Entry Interests with respect to
the Securities by the Clearing Agency, accompanied by registration instructions,
the Company shall cause definitive Certificates to be delivered to Beneficial
Owners in accordance with the instructions of the Clearing Agency. The Company
shall not be liable for any delay in delivery of such instructions and may
conclusively rely on and shall be protected in relying on, such instructions.
SECTION 3.10 MUTILATED, DESTROYED, LOST AND STOLEN CERTIFICATES.
If any mutilated Certificate is surrendered to the Agent, the Company
shall execute and deliver to the Agent, and the Agent shall authenticate,
execute on behalf of the Holder, and deliver in exchange therefor, a new
Certificate at the cost of the Holder, evidencing the same number of Corporate
Units or Treasury Units, as the case may be, and bearing a Certificate number
not contemporaneously outstanding.
If there shall be delivered to the Company and the Agent (i) evidence
to their satisfaction of the destruction, loss or theft of any Certificate, and
(ii) such security or indemnity at the cost of the Holder as may be required by
them to hold each of them and any agent of either of them harmless, then, in the
absence of notice to the Company or the Agent that such Certificate has been
acquired by a bona fide purchaser, the Company shall execute and deliver to the
Agent, and the Agent shall authenticate, execute on behalf of the Holder, and
deliver to the Holder, in lieu of any such destroyed, lost or stolen
Certificate, a new Certificate, evidencing the same number of Corporate Units or
Treasury Units, as the case may be, and bearing a Certificate number not
contemporaneously outstanding.
Notwithstanding the foregoing, the Company will not be obligated to
execute and deliver to the Agent, and the Agent will not be obligated to
authenticate, execute on behalf of the Holder and deliver any Certificate on or
after the Business Day immediately preceding the Purchase Contract Settlement
Date or on or after the Termination Date. In addition, in lieu of delivery of a
new Certificate, upon satisfaction of the applicable conditions specified above
in this Section and receipt of appropriate
21
registration or transfer instructions from such Holder, the Agent may (i) if the
Purchase Contract Settlement Date has occurred, deliver the shares of Common
Stock issuable in respect of the Purchase Contracts forming a part of the
Securities evidenced by such Certificate, or (ii) if a Termination Event shall
have occurred, transfer the Debt Securities, the Applicable Ownership Interest
in the appropriate Treasury Portfolio or the Treasury Securities, as the case
may be, forming a part of the Securities represented by such Certificate to such
Holder, in each case subject to the applicable conditions and in accordance with
the applicable provisions of Article Five hereof.
Upon the issuance of any new Certificate under this Section, the
Company and the Agent may require payment from the Holder of a sum sufficient to
cover any tax or other governmental charge that may be imposed in relation
thereto and any other expenses (including the fees and expenses of the Agent)
connected therewith.
Every new Certificate issued pursuant to this Section in lieu of any
destroyed, lost or stolen Certificate shall constitute an original additional
contractual obligation of the Company and of the Holder in respect of the
Security evidenced thereby, whether or not the destroyed, lost or stolen
Certificate (and the Securities evidenced thereby) shall be at any time
enforceable by anyone, and shall be entitled to all the benefits and be subject
to all the obligations of this Agreement equally and proportionately with any
and all other Certificates delivered hereunder.
The provisions of this Section are exclusive and shall preclude (to
the extent lawful) all other rights and remedies with respect to the replacement
or payment of mutilated, destroyed, lost or stolen Certificates.
SECTION 3.11 PERSONS DEEMED OWNERS.
Prior to due presentment of a Certificate for registration of
transfer, the Company and the Agent, and any agent of the Company or the Agent,
may treat the Person in whose name such Certificate is registered on the
Corporate Units Register or the Treasury Units Register, as applicable, as the
owner of the Corporate Units or Treasury Units evidenced thereby, for the
purpose of receiving interest on the Debt Securities or distributions on the
maturing quarterly interest strips of the appropriate Treasury Portfolio, as
applicable, receiving payments of Contract Adjustment Payments, performance of
the Purchase Contracts and for all other purposes whatsoever, whether or not any
interest on the Debt Securities or the Contract Adjustment Payments payable in
respect of the Purchase Contracts constituting a part of the Corporate Units or
Treasury Units evidenced thereby shall be overdue and notwithstanding any notice
to the contrary, and neither the Company nor the Agent, nor any agent of the
Company or the Agent, shall be affected by notice to the contrary.
Notwithstanding the foregoing, with respect to any Global Certificate,
nothing herein shall prevent the Company, the Agent or any agent of the Company
or the Agent, from treating the Clearing Agency as the sole Holder of such
Global Certificate or from giving effect to any written certification, proxy or
other authorization furnished by any Clearing Agency (or its nominee), as a
Holder, with respect to such Global Certificate or impair, as between such
Clearing Agency and owners of beneficial interests in such Global Certificate,
the operation of customary practices governing the exercise of rights of such
Clearing Agency (or its nominee) as Holder of such Global Certificate.
SECTION 3.12 CANCELLATION.
All Certificates surrendered for delivery of shares of Common Stock on
or after the Purchase Contract Settlement Date, upon the transfer of Debt
Securities, the Applicable Ownership Interest in the appropriate Treasury
Portfolio or Treasury Securities, as the case may be, after the
22
occurrence of a Termination Event or pursuant to an Early Settlement, or upon
the registration of a transfer or exchange of a Security, or a Collateral
Substitution or the re-establishment of a Corporate Unit shall, if surrendered
to any Person other than the Agent, be delivered to the Agent and, if not
already cancelled, shall be promptly cancelled by it. The Company may at any
time deliver to the Agent for cancellation any Certificates previously
authenticated, executed and delivered hereunder which the Company may have
acquired in any manner whatsoever, and all Certificates so delivered shall, upon
Issuer Order, be promptly cancelled by the Agent. No Certificates shall be
authenticated, executed on behalf of the Holder and delivered in lieu of or in
exchange for any Certificates cancelled as provided in this Section, except as
expressly permitted by this Agreement. All cancelled Certificates held by the
Agent shall upon written request be returned to the Company.
If the Company or any Affiliate of the Company shall acquire any
Certificate, such acquisition shall not operate as a cancellation of such
Certificate unless and until such Certificate is delivered to the Agent
cancelled or for cancellation.
SECTION 3.13 ESTABLISHMENT OR REESTABLISHMENT OF TREASURY UNITS.
A Holder of a Corporate Unit may, at any time on or prior to the fifth
Business Day immediately preceding the Purchase Contract Settlement Date, create
or recreate a Treasury Unit and separate the Debt Security or the Applicable
Ownership Interest in the appropriate Treasury Portfolio, as applicable, from
the related Purchase Contract in respect of such Corporate Unit by substituting
a Treasury Security for the Debt Security, or the Applicable Ownership Interest
in the appropriate Treasury Portfolio, that form a part of such Corporate Unit
in accordance with this Section 3.13; provided, however, that if a successful
remarketing of the Debt Securities has occurred on the Initial Remarketing Date
or a Tax Event Redemption has occurred, Holders of such Corporate Units may make
such Collateral Substitutions at any time on or prior to the second Business Day
immediately preceding the Purchase Contract Settlement Date. Holders may make
Collateral Substitutions and establish Treasury Units (i) only in integral
multiples of 20 Corporate Units if only Debt Securities are being substituted by
Treasury Securities, or (ii) only in integral multiples of 40,000 Corporate
Units if the Applicable Ownership Interests in the appropriate Treasury
Portfolio are being substituted by Treasury Securities. To create 20 Treasury
Units (if a Tax Event Redemption has not occurred and the Debt Securities remain
a component of the Corporate Units), or 40,000 Treasury Units (if a Tax Event
Redemption has occurred or the Remarketing Treasury Portfolio has replaced the
Debt Securities as a component of the Corporate Units as a result of a
successful remarketing of such Debt Securities), the Corporate Unit Holder shall
(a) if a Treasury Portfolio has not replaced any Debt Securities
as a component of Corporate Units as a result of a successful remarketing
of the Debt Securities or a Tax Event Redemption, deposit with the
Collateral Agent a Treasury Security having a principal amount at maturity
of $1,000; or
(b) if a Treasury Portfolio has replaced the Debt Securities as a
component of Corporate Units as a result of a successful remarketing of the
Debt Securities or a Tax Event Redemption, on or prior to the second
Business Day immediately preceding the Purchase Contract Settlement Date,
deposit with the Collateral Agent Treasury Securities having an aggregate
principal amount at maturity of $2,000,000; and
(c) in each case, transfer and surrender the related 20 Corporate
Units, or, in the event a Treasury Portfolio is a component of Corporate
Units, 40,000 Corporate Units, to the Agent accompanied by a notice to the
Agent, substantially in the form of Exhibit B to the Pledge Agreement,
stating that the Holder has transferred the relevant types and amounts of
Treasury Securities to the Collateral Agent and requesting that the Agent
instruct the Collateral Agent to
23
release the applicable Debt Securities or the Applicable Ownership Interest
in the appropriate Treasury Portfolio, as the case may be, underlying such
Corporate Unit, whereupon the Agent shall promptly give such instruction to
the Collateral Agent, substantially in the form of Exhibit A to the Pledge
Agreement.
Upon receipt of the Treasury Securities described in clause (a) or (b)
above and the instructions described in clause (c) above, in accordance with the
terms of the Pledge Agreement, the Collateral Agent will release from the
Pledge, to the Agent, on behalf of the Holder, Debt Securities or the Applicable
Ownership Interest in the appropriate Treasury Portfolio, as the case may be,
that had been components of such Corporate Unit, free and clear of the Company's
security interest therein, and upon receipt thereof the Agent shall promptly:
(i) cancel the related Corporate Units surrendered and transferred;
(ii) transfer the Debt Securities or the Applicable Ownership Interest
in the appropriate Treasury Portfolio, as the case may be, that had been
components of such Corporate Unit to the Holder; and
(iii) authenticate, execute on behalf of such Holder and deliver a
Treasury Unit Certificate executed by the Company in accordance with Section 3.3
evidencing the same number of Purchase Contracts as were evidenced by the
cancelled Corporate Units.
Holders who elect to separate the Debt Securities or the Applicable
Ownership Interest in the appropriate Treasury Portfolio, as the case may be,
from the related Purchase Contracts and to substitute Treasury Securities for
such Debt Securities or the Applicable Ownership Interest in the appropriate
Treasury Portfolio, as the case may be, shall be responsible for any fees or
expenses payable to the Collateral Agent for its services as Collateral Agent in
respect of the substitution, and the Company shall not be responsible for any
such fees or expenses.
In the event a Holder making a Collateral Substitution pursuant to
this Section 3.13 fails to effect a book-entry transfer of the Corporate Units
or fails to deliver a Corporate Unit Certificate to the Agent after depositing
the appropriate Treasury Securities with the Collateral Agent, the Debt
Securities or the Applicable Ownership Interest in the appropriate Treasury
Portfolio, as the case may be, constituting a part of such Corporate Unit, and
any interest on such Debt Securities or distributions with respect to the
Applicable Ownership Interest in the appropriate Treasury Portfolio, as the case
may be, shall be held in the name of the Agent or its nominee in trust for the
benefit of such Holder, until such Corporate Unit is so transferred or the
Corporate Unit Certificate is so delivered, as the case may be, or, until such
Holder provides evidence satisfactory to the Company and the Agent that such
Corporate Unit Certificate has been destroyed, lost or stolen, together with any
indemnity that may be required by the Agent and the Company.
Except as described in this Section 3.13, for so long as the Purchase
Contract underlying a Corporate Unit remains in effect, such Corporate Unit
shall not be separable into its constituent parts, and the rights and
obligations of the Holder in respect of the Debt Securities or the Applicable
Ownership Interest in the appropriate Treasury Portfolio, as the case may be,
and Purchase Contract comprising such Corporate Unit may be acquired, and may be
transferred and exchanged, only as an entire Corporate Unit.
SECTION 3.14 ESTABLISHMENT OR REESTABLISHMENT OF CORPORATE UNITS.
A Holder of a Treasury Unit may, at any time on or prior to the fifth
Business Day immediately preceding the Purchase Contract Settlement Date, create
or recreate a Corporate Unit by
24
depositing with the Collateral Agent a Debt Security or the Applicable Ownership
Interest in the appropriate Treasury Portfolio, as the case may be, having an
aggregate principal amount equal to the aggregate principal amount at maturity
of, and in substitution for all, but not less than all, of the Treasury
Securities comprising part of the Treasury Unit in accordance with this Section
3.14; provided, however, that if a Treasury Portfolio has replaced the Debt
Securities as a component of Corporate Units as a result of a successful
remarketing of the Debt Securities or a Tax Event Redemption, such Collateral
Substitutions may be made at any time on or prior to the second Business Day
immediately preceding the Purchase Contract Settlement Date. Holders of Treasury
Units may make such Collateral Substitutions and establish Corporate Units (i)
only in integral multiples of 20 Treasury Units if Treasury Securities are being
replaced by only Debt Securities, or (ii) only in integral multiples of 40,000
Treasury Units if any Treasury Security is being replaced by the Applicable
Ownership Interest in the appropriate Treasury Portfolio. To create 20 Corporate
Units (if a Tax Event Redemption has not occurred and the Debt Securities remain
components of Corporate Units), or 40,000 Corporate Units (if a Tax Event
Redemption has occurred or the Remarketing Treasury Portfolio has replaced the
Debt Securities as a result of a successful remarketing of such Debt
Securities), the Treasury Unit Holder shall
(a) if a Treasury Portfolio has not replaced the Debt Securities
as a component of Corporate Units as a result of a successful remarketing of the
Debt Securities on the Initial Remarketing Date or a Tax Event Redemption, on or
prior to the fifth Business Day immediately preceding the Purchase Contract
Settlement Date, deposit with the Collateral Agent $1,000 in aggregate principal
amount of Debt Securities; or
(b) if a Treasury Portfolio has replaced the Debt Securities as a
component of Corporate Units as a result of a successful remarketing of the Debt
Securities or a Tax Event Redemption, on or prior to the second Business Day
immediately preceding the Purchase Contract Settlement Date, deposit with the
Collateral Agent the Applicable Ownership Interest in the Treasury Portfolio for
each 40,000 Corporate Units being created by the Holder, and having an aggregate
principal amount of $2,000,000; and
(c) in each case, transfer and surrender the related 20 Treasury
Units, or in the event the Treasury Portfolio is a component of Corporate Units,
40,000 Corporate Units, to the Agent accompanied by a notice to the Agent,
substantially in the form of Exhibit B to the Pledge Agreement, stating that the
Holder has transferred the relevant amount of Debt Securities or the Applicable
Ownership Interest in the appropriate Treasury Portfolio, as the case may be, to
the Collateral Agent and requesting that the Agent instruct the Collateral Agent
to release the Treasury Securities underlying such Treasury Units, whereupon the
Agent shall promptly give such instruction to the Collateral Agent,
substantially in the form of Exhibit A to the Pledge Agreement.
Upon receipt of the Debt Securities or the Applicable Ownership
Interest in the appropriate Treasury Portfolio, as the case may be, described in
clause (a) or (b) above and the instructions described in clause (c) above, in
accordance with the terms of the Pledge Agreement, the Collateral Agent will
effect the release of the Treasury Securities having a corresponding aggregate
principal amount from the Pledge to the Agent free and clear of the Company's
security interest therein, and upon receipt thereof the Agent shall promptly:
(i) cancel the related Treasury Units surrendered and transferred;
(ii) transfer the Treasury Securities that had been components of such
Treasury Units to the Holder; and
25
(iii) authenticate, execute on behalf of such Holder and deliver a
Corporate Unit Certificate executed by the Company in accordance with Section
3.3 evidencing the same number of Purchase Contracts as were evidenced by the
cancelled Treasury Units.
Holders who elect to separate Treasury Securities from the related
Purchase Contract and to substitute Debt Securities or the Applicable Ownership
Interest in the appropriate Treasury Portfolio, as the case may be, for such
Treasury Securities shall be responsible for any fees or expenses payable to the
Collateral Agent for its services as Collateral Agent in respect of the
substitution, and the Company shall not be responsible for any such fees or
expenses.
In the event a Holder making a Collateral Substitution pursuant to
this Section 3.14 fails to effect a book-entry transfer of the Treasury Units or
fails to deliver a Treasury Unit Certificate to the Agent after depositing the
Debt Securities or Applicable Ownership Interest in the appropriate Treasury
Portfolio with the Collateral Agent, the Treasury Securities constituting a part
of such Treasury Unit Certificate, and any interest on such Treasury Securities,
shall be held in the name of the Agent or its nominee in trust for the benefit
of such Holder, until such Treasury Unit is so transferred or the Treasury Unit
is so delivered, or until such Holder provides evidence satisfactory to the
Company and the Agent that such Treasury Unit has been destroyed, lost or
stolen, together with any indemnity that may be required by the Agent and the
Company.
Except as provided in this Section 3.14, for so long as the Purchase
Contract underlying a Treasury Unit remains in effect, such Treasury Unit shall
not be separable into its constituent parts and the rights and obligations of
the Holder of such Treasury Unit in respect of the Treasury Security and
Purchase Contract comprising such Treasury Unit may be acquired, and may be
transferred and exchanged only as an entire Treasury Unit.
SECTION 3.15 TRANSFER OF COLLATERAL UPON OCCURRENCE OF TERMINATION EVENT.
Upon the occurrence of a Termination Event and the transfer to the
Agent of the Debt Securities, the Applicable Ownership Interest in the
appropriate Treasury Portfolio or the Treasury Securities, as the case may be,
underlying the Corporate Units and the Treasury Units pursuant to the terms of
the Pledge Agreement, the Agent shall request transfer instructions with respect
to such Debt Securities or the Applicable Ownership Interest in the appropriate
Treasury Portfolio or Treasury Securities, as the case may be, from each Holder
by written request mailed to such Holder at its address as it appears in the
Corporate Unit Register or the Treasury Unit Register, as the case may be. Upon
book-entry transfer of a Corporate Unit Certificate or Treasury Unit Certificate
or delivery of a Corporate Unit Certificate or Treasury Unit Certificate to the
Agent with such transfer instructions, the Agent shall transfer the Debt
Securities, the Applicable Ownership Interest in the appropriate Treasury
Portfolio or Treasury Securities, as the case may be, underlying such Corporate
Units or Treasury Units, as the case may be, to such Holder by book-entry
transfer, or other appropriate procedures, in accordance with such instructions.
In the event a Holder of Corporate Units or Treasury Units fails to effect such
transfer or delivery, the Debt Securities, the Applicable Ownership Interest in
the appropriate Treasury Portfolio or Treasury Securities, as the case may be,
underlying such Corporate Units or Treasury Units, as the case may be, and any
interest thereon, shall be held in the name of the Agent or its nominee in trust
for the benefit of such Holder, until such Corporate Units or Treasury Units are
transferred or the Corporate Unit Certificate or Treasury Unit Certificate is
surrendered or such Holder provides satisfactory evidence that such Corporate
Unit Certificate or Treasury Unit Certificate has been destroyed, lost or
stolen, together with any indemnity that may be required by the Agent and the
Company. In the case of a Treasury Portfolio or any Treasury Securities, the
Agent may dispose of the subject securities for cash and pay the applicable
portion of such cash to the Holders in lieu of such Holders' Applicable
Ownership Interest in
26
such Treasury Portfolio, or any Treasury Securities, where such Holder would
otherwise have been entitled to receive less than $1,000 of any such security.
SECTION 3.16 NO CONSENT TO ASSUMPTION.
Each Holder of a Security, by acceptance thereof, will be deemed
expressly to have withheld any consent to the assumption under Section 365 of
the Bankruptcy Code or otherwise, of the Purchase Contract by the Company, its
trustee in bankruptcy, receiver, liquidator or a person or entity performing
similar functions, in the event that the Company becomes a debtor under the
Bankruptcy Code or subject to other similar State or Federal law providing for
reorganization or liquidation.
ARTICLE IV
THE DEBT SECURITIES
SECTION 4.1 PAYMENT OF INTEREST; RIGHTS TO INTEREST PRESERVED; INTEREST RATE
RESET; NOTICE.
A payment of interest on the Debt Securities or distribution with
respect to the Applicable Ownership Interest in the appropriate Treasury
Portfolio, as the case may be, which is paid on any Payment Date shall, subject
to receipt thereof by the Agent from the Collateral Agent as provided by the
terms of the Pledge Agreement, be paid to the Person in whose name the Corporate
Unit Certificate (or one or more Predecessor Corporate Unit Certificates) of
which such Debt Securities or the Applicable Ownership Interest in the
appropriate Treasury Portfolio, as the case may be, are a part is registered at
the close of business on the Record Date for such Payment Date.
Each Corporate Unit Certificate evidencing Debt Securities delivered
under this Agreement upon registration of transfer of or in exchange for or in
lieu of any other Corporate Unit Certificate shall carry the rights to payment
of interest accrued and unpaid, and to accrue interest, which are carried by the
Debt Securities underlying such other Corporate Unit Certificate.
In the case of any Corporate Unit with respect to which Cash
Settlement of the underlying Purchase Contract is effected on the Business Day
immediately preceding the Purchase Contract Settlement Date pursuant to prior
notice, or with respect to which Early Settlement of the underlying Purchase
Contract is effected on an Early Settlement Date, or with respect to which a
Collateral Substitution is effected, in each case on a date that is after any
Record Date and on or prior to the next succeeding Payment Date, interest on the
Debt Securities or distributions with respect to the Applicable Ownership
Interest in the appropriate Treasury Portfolio, as the case may be, underlying
such Corporate Unit otherwise payable on such Payment Date shall be payable on
such Payment Date notwithstanding such Cash Settlement or Early Settlement or
Collateral Substitution, and such interest or distributions shall, subject to
receipt thereof by the Agent, be payable to the Person in whose name the
Corporate Unit Certificate (or one or more Predecessor Corporate Unit
Certificates) was registered at the close of business on the Record Date. Except
as otherwise expressly provided in the immediately preceding sentence, in the
case of any Corporate Unit with respect to which Cash Settlement or Early
Settlement of the underlying Purchase Contract is effected on the Business Day
immediately preceding the applicable Purchase Contract Settlement Date or an
Early Settlement Date, as the case may be, or with respect to which a Collateral
Substitution has been effected, payment of interest on the related Debt
Securities or distributions with respect to the Applicable Ownership Interest in
the appropriate Treasury Portfolio, as the case may be, that would otherwise be
payable after the Purchase Contract Settlement Date or Early Settlement Date
shall not be payable hereunder to the Holder of such Corporate Unit; provided,
however, that to the extent that such Holder continues to hold the separated
Debt Security that
27
formerly comprised a part of such Holder's Corporate Unit, such Holder shall be
entitled to receive the payment of interest on such separated Debt Security.
The Reset Rate on the Debt Securities to be in effect on and after the
Reset Date will be determined on the third Business Day immediately preceding
the Reset Date (such Reset Rate to be effective from and after the Reset Date).
If the Initial Remarketing results in a Failed Remarketing, the Coupon Rate on
the Debt Securities will not be reset to the Reset Rate but will continue at the
initial Coupon Rate. If the Secondary Remarketing results in a Failed
Remarketing, the Reset Rate will be the rate determined by the Reset Agent as
the rate the Debt Securities should bear in order for each Senior Note to have
an approximate market value of 100.5% of the principal amount of the Debt
Securities. The Company may limit the reset rate to 200 basis points over the
yield on the Applicable Benchmark Treasury. In addition, the Reset Rate will in
no event exceed the maximum rate permitted by applicable law. On each Reset
Announcement Date, the Reset Spread and the Applicable Benchmark Treasury to be
used to determine the Reset Rate will be announced by the Company. In addition,
on any Reset Announcement Date relating to an Initial Reset Date occurring prior
to February 16, 2006, the percentage undivided beneficial ownership interest
determined by the Reset Agent for purposes of clause (1)(iii) of the definition
of "Applicable Ownership Interest" will be announced by the Company. On the
Business Day immediately following the Reset Announcement Date, the Company will
cause a notice of the Reset Spread, Applicable Benchmark Treasury and, if
applicable, percentage undivided beneficial ownership interest in the to be
published in an Authorized Newspaper.
Not later than 7 calendar days nor more than 15 calendar days prior to
each Reset Announcement Date and the Purchase Contract Settlement Date, if the
Purchase Contract Settlement Date is not also a Reset Date, the Company will
request that the Depositary (or any successor Clearing Agency or its nominee)
notify by first-class mail, postage prepaid, the Beneficial Owners or Clearing
Agency Participants holding Corporate Units or Treasury Units, of each Reset
Announcement Date and any procedures to be followed by such Holders of
Securities, who intend to settle their obligation under the Purchase Contract
with separate cash on the Purchase Contract Settlement Date.
SECTION 4.2 NOTICE AND VOTING.
Under and subject to the terms of the Pledge Agreement, the Agent will
be entitled to exercise the voting and any other consensual rights pertaining to
the Pledged Debt Securities but only to the extent instructed by the Holders as
described below. Upon receipt of notice of any meeting at which holders of Debt
Securities are entitled to vote or upon any solicitation of consents, waivers or
proxies of holders of Debt Securities, the Agent shall, as soon as practicable
thereafter, mail to the Holders of Corporate Units a notice (a) containing such
information as is contained in the notice or solicitation, (b) stating that each
Corporate Unit Holder on the record date set by the Agent therefor (which, to
the extent possible, shall be the same date as the record date for determining
the holders of Debt Securities entitled to vote) shall be entitled to instruct
the Agent as to the exercise of the voting rights pertaining to the Debt
Securities constituting a part of such Holder's Corporate Units and (c) stating
the manner in which such instructions may be given. Upon the written request of
the Holders of Corporate Units on such record date, the Agent shall endeavor
insofar as practicable to vote or cause to be voted, in accordance with the
instructions set forth in such requests, the maximum number of Debt Securities
as to which any particular voting instructions are received. In the absence of
specific instructions from the Holder of a Corporate Unit, the Agent shall
abstain from voting the Debt Security constituting a part of such Holder's
Corporate Unit. The Company hereby agrees, if applicable, to solicit Holders of
Corporate Units to timely instruct the Agent in order to enable the Agent to
vote such Debt Securities.
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SECTION 4.3 SUBSTITUTION OF A TREASURY PORTFOLIO FOR DEBT SECURITIES.
(a) Upon the occurrence of a Tax Event Redemption prior to the
Purchase Contract Settlement Date, the Redemption Price payable on the Tax Event
Redemption Date with respect to the Applicable Principal Amount of Debt
Securities shall be delivered to the Collateral Agent in exchange for the
Pledged Debt Securities. Pursuant to the terms of the Pledge Agreement, the
Collateral Agent will apply an amount equal to the Redemption Amount of such
Redemption Price to purchase on behalf of the Holders of Corporate Units the Tax
Event Treasury Portfolio and promptly remit the remaining portion of such
Redemption Price to the Agent for payment to the Holders of such Corporate
Units. The Tax Event Treasury Portfolio will be substituted for the outstanding
Pledged Debt Securities, and will be held by the Collateral Agent in accordance
with the terms of the Pledge Agreement to secure the obligation of each Holder
of a Corporate Unit to purchase the Common Stock of the Company on the Purchase
Contract Settlement Date under the Purchase Contract constituting a part of such
Corporate Unit. Following the occurrence of a Tax Event Redemption prior to the
Purchase Contract Settlement Date, the Holders of Corporate Units and the
Collateral Agent shall have such security interests, rights and obligations with
respect to the Tax Event Treasury Portfolio as the Holder of Corporate Units and
the Collateral Agent had in respect of the Debt Securities subject to the Pledge
thereof as provided in Articles II, III, IV, V and VI of the Pledge Agreement,
and any reference herein to the Debt Securities shall be deemed to be reference
to such Tax Event Treasury Portfolio. The Company may cause to be made in any
Corporate Unit Certificates thereafter to be issued such change in phraseology
and form (but not in substance) as may be appropriate to reflect the
substitution of the Tax Event Treasury Portfolio for Debt Securities as
collateral.
(b) Upon the successful remarketing of the Pledged Debt Securities
on the Initial Remarketing Date, the proceeds of such remarketing (after
deducting any Remarketing Fee) shall be delivered to the Collateral Agent in
exchange for the Pledged Debt Securities. Pursuant to the terms of the Pledge
Agreement, the Collateral Agent will apply an amount equal to the Remarketing
Treasury Portfolio Purchase Price to purchase on behalf of the Holders of
Corporate Units the Remarketing Treasury Portfolio and promptly remit the
remaining portion of such proceeds to the Agent for payment to the Holders of
such Corporate Units. The Remarketing Treasury Portfolio will be substituted for
the outstanding Pledged Debt Securities, and will be held by the Collateral
Agent in accordance with the terms of the Pledge Agreement to secure the
obligation of each Holder of a Corporate Unit to purchase the Common Stock of
the Company on the Purchase Contract Settlement Date under the Purchase Contract
constituting a part of such Corporate Unit. Following the successful remarketing
of the Pledged Debt Securities on the Initial Remarketing Date, the Holders of
Corporate Units and the Collateral Agent shall have such security interests,
rights and obligations with respect to the Remarketing Treasury Portfolio as the
Holder of Corporate Units and the Collateral Agent had in respect of the Debt
Securities subject to the Pledge thereof as provided in Articles II, III, IV, V
and VI of the Pledge Agreement, and any reference herein to the Debt Securities
shall be deemed to be reference to such Remarketing Treasury Portfolio. The
Company may cause to be made in any Corporate Unit Certificates thereafter to be
issued such change in phraseology and form (but not in substance) as may be
appropriate to reflect the substitution of the Remarketing Treasury Portfolio
for Debt Securities as collateral.
SECTION 4.4 CONSENT TO TREATMENT FOR TAX PURPOSES.
Each Holder of a Corporate Unit or a Treasury Unit, by its acceptance
thereof, covenants and agrees to treat itself as the owner, for United States
federal, state and local income and franchise tax purposes, of (i) the related
Debt Securities or the appropriate Applicable Ownership Interest in the Treasury
Portfolio, in the case of the Corporate Units, or (ii) the Treasury Securities,
in the case of the Treasury Units. Each Holder of a Corporate Unit, by its
acceptance thereof, further covenants and agrees to treat the Debt Securities as
indebtedness of the Company for United States federal, state and local income
and franchise tax purposes.
29
ARTICLE V
THE PURCHASE CONTRACTS
SECTION 5.1 PURCHASE OF SHARES OF COMMON STOCK.
Each Purchase Contract shall, unless a Termination Event or an Early
Settlement in accordance with Section 5.9 hereof has occurred, obligate the
Holder of the related Security to purchase, and the Company to sell, on the
Purchase Contract Settlement Date, for $50 in cash (the "Purchase Price"), a
number of newly issued shares of Common Stock equal to the applicable Settlement
Rate. The "Settlement Rate" is equal to (a) if the Applicable Market Value (as
defined below) is equal to or greater than $62.9145 (the "Threshold Appreciation
Price"), 0.7947 shares of Common Stock per Purchase Contract, (b) if the
Applicable Market Value is less than the Threshold Appreciation Price, but is
greater than $51.15, the number of shares of Common Stock equal to $50 divided
by the Applicable Market Value and (c) if the Applicable Market Value is less
than or equal to $51.15, 0.9775 shares of Common Stock per Purchase Contract, in
each case subject to adjustment as provided in Section 5.6 (and in each case
rounded upward or downward to the nearest 1/10,000th of a share). As provided in
Section 5.10, no fractional shares of Common Stock will be issued upon
settlement of Purchase Contracts.
The "Applicable Market Value" means the average of the Closing Price
per share of Common Stock on each of the 20 consecutive Trading Days ending on
the third Trading Day immediately preceding the Purchase Contract Settlement
Date. The "Closing Price" of the Common Stock on any date of determination means
the closing sale price (or, if no closing price is reported, the last reported
sale price) of the Common Stock on the New York Stock Exchange (the "NYSE") on
such date or, if the Common Stock is not listed for trading on the NYSE on any
such date, as reported in the composite transactions for the principal United
States national or regional securities exchange on which the Common Stock is so
listed. If the Common Stock is not so listed on a United States national or
regional securities exchange, the Closing Price means the last sale price of the
Common Stock as reported by the NASDAQ Stock Market, or if the Common Stock is
not so reported, the last quoted bid price for the Common Stock in the
over-the-counter market as reported by the National Quotation Bureau or similar
organization. If such bid price is not available, the Closing Price means market
value of the Common Stock on such date as determined by a nationally recognized
independent investment banking firm retained by the Company for this purpose. A
"Trading Day" means a day on which the Common Stock (A) is not suspended from
trading on any national or regional securities exchange or association or
over-the-counter market at the close of business and (B) has traded at least
once on the national or regional securities exchange or association or
over-the-counter market that is the primary market for the trading of the Common
Stock.
Each Holder of a Corporate Unit or a Treasury Unit, by its acceptance
thereof, irrevocably authorizes the Agent to enter into and perform the related
Purchase Contract on its behalf as its attorney-in-fact (including the execution
of Certificates on behalf of such Holder), agrees to be bound by the terms and
provisions thereof, covenants and agrees to perform its obligations under such
Purchase Contracts, and consents to the provisions hereof, irrevocably
authorizes the Agent to enter into and perform the Pledge Agreement on its
behalf as its attorney-in-fact, and consents to and agrees to be bound by the
Pledge of the Debt Securities, the Treasury Portfolios or the Treasury
Securities, as the case may be, pursuant to the Pledge Agreement. Each Holder of
a Corporate Unit or a Treasury Unit, by its acceptance thereof, further
covenants and agrees, that, to the extent and in the manner provided in Section
5.4 and the Pledge Agreement, but subject to the terms thereof, payments in
respect of the principal of and interest on Debt Securities or the Proceeds of
the Treasury Securities or the Applicable Ownership Interest in any Treasury
Portfolio on the Purchase Contract Settlement Date shall be paid by
30
the Collateral Agent to the Company in satisfaction of such Holder's obligations
under such Purchase Contract and such Holder shall acquire no right, title or
interest in such payments.
Upon registration of transfer of a Certificate, the transferee shall
be bound (without the necessity of any other action on the part of such
transferee, except as may be required by the Agent pursuant hereto), under the
terms of this Agreement, the Purchase Contracts underlying such Certificate and
the Pledge Agreement; and the transferor shall be released from the obligations
under this Agreement, the Purchase Contracts underlying the Certificates so
transferred and the Pledge Agreement. The Company covenants and agrees, and each
Holder of a Certificate, by its acceptance thereof, likewise covenants and
agrees, to be bound by the provisions of this paragraph.
SECTION 5.2 CONTRACT ADJUSTMENT PAYMENTS.
Subject to Section 5.3 herein, the Company shall pay, on each Payment
Date, except the Initial Reset Date, if the Initial Reset Date is not also a
regular quarterly Payment Date, the Contract Adjustment Payments payable in
respect of each Purchase Contract to the Person in whose name a Certificate (or
one or more Predecessor Certificates) is registered on the Register at the close
of business on the Record Date next preceding such Payment Date. The Contract
Adjustment Payments will be payable at the Corporate Trust Office or, at the
option of the Company, by check mailed to the address of the Person entitled
thereto at such Person's address as it appears on the Corporate Unit Register or
Treasury Unit Register or by wire transfer to an account appropriately
designated in writing by the Person entitled to payment.
Upon the occurrence of a Termination Event, the Company's obligation
to pay Contract Adjustment Payments (including any accrued or Deferred Contract
Adjustment Payments) shall cease.
Each Certificate delivered under this Agreement upon registration of
transfer of or in exchange for or in lieu of any other Certificate (including as
a result of a Collateral Substitution or the re-establishment of a Corporate
Unit) shall carry the rights to Contract Adjustment Payments accrued and unpaid,
and to accrue Contract Adjustment Payments, which were carried by the Purchase
Contracts which were represented by such other Certificates.
Subject to Section 5.9, in the case of any Security with respect to
which Early Settlement of the underlying Purchase Contract is effected on an
Early Settlement Date that is after any Record Date and on or prior to the next
succeeding Payment Date, Contract Adjustment Payments, if any, otherwise payable
on such Payment Date shall be payable on such Payment Date notwithstanding such
Early Settlement, and such Contract Adjustment Payments shall, subject to
receipt thereof by the Agent, be payable to the Person in whose name the
Certificate evidencing such Security (or one or more Predecessor Certificates)
was registered at the close of business on such Record Date. Except as otherwise
expressly provided in the immediately preceding sentence, in the case of any
Security with respect to which Early Settlement of the underlying Purchase
Contract is effected on an Early Settlement Date, Contract Adjustment Payments
that would otherwise be payable after the Early Settlement Date with respect to
such Purchase Contract shall not be payable.
The Company's obligations with respect to Contract Adjustment Payments
(including any accrued or Deferred Contract Adjustment Payments), will be
subordinated and junior in right of payment to the Company's obligations under
any Senior Indebtedness.
31
SECTION 5.3 DEFERRAL OF PAYMENT DATES FOR CONTRACT ADJUSTMENT PAYMENTS.
The Company shall have the right, at any time prior to the Purchase
Contract Settlement Date, to defer the payment of any or all of the Contract
Adjustment Payments otherwise payable on any Payment Date, but only if the
Company shall give the Holders and the Agent written notice of its election to
defer such payment (specifying the amount to be deferred) at least ten Business
Days prior to the earlier of (i) the next succeeding Payment Date or (ii) the
date the Company is required to give notice of the Record Date or Payment Date
with respect to payment of such Contract Adjustment Payments to the NYSE or
other applicable self-regulatory organization or to Holders of the Securities,
but in any event not less than one Business Day prior to such Record Date. In
connection with any Contract Adjustment Payments so deferred, additional
Contract Adjustment Payments on the amounts so deferred will accrue at the rate
of 8.125% per annum (computed on the basis of a 360 day year of twelve 30 day
months), compounding on each succeeding Payment Date, until paid in full (such
deferred installments of Contract Adjustment Payments, if any, together with the
accrued additional Contract Adjustment Payments accrued thereon, being referred
to herein as the "Deferred Contract Adjustment Payments"). Deferred Contract
Adjustment Payments, if any, shall be due on the next succeeding Payment Date
except to the extent that payment is deferred pursuant to this Section 5.3. No
Contract Adjustment Payments may be deferred to a date that is after the
Purchase Contract Settlement Date. If the Purchase Contracts are terminated upon
the occurrence of a Termination Event, the Holder's right to receive Contract
Adjustment Payments and Deferred Contract Adjustment Payments will terminate.
In the event that the Company elects to defer the payment of Contract
Adjustment Payments on the Purchase Contracts until the Purchase Contract
Settlement Date, each Holder will receive on the Purchase Contract Settlement
Date, in lieu of a cash payment, a number of shares of Common Stock (in addition
to a number of shares of Common Stock equal to the Settlement Rate) equal to (x)
the aggregate amount of Deferred Contract Adjustment Payments payable to such
Holder divided by (y) the Applicable Market Value.
No fractional shares of Common Stock will be issued by the Company
with respect to the payment of Deferred Contract Adjustment Payments on the
Purchase Contract Settlement Date. In lieu of fractional shares otherwise
issuable with respect to such payment of Deferred Contract Adjustment Payments,
the Holder will be entitled to receive an amount in cash as provided in Section
5.10.
In the event the Company exercises its option to defer the payment of
Contract Adjustment Payments, then, until the Deferred Contract Adjustment
Payments have been paid, the Company shall not declare or pay dividends on, make
distributions with respect to, or redeem, purchase or acquire, or make a
liquidation payment with respect to, any of its capital stock or make guarantee
payments with respect to the foregoing (other than (i) redemptions, purchases or
acquisitions of capital stock of the Company in connection with the satisfaction
by the Company in connection with any employment contract, benefit plan or other
similar arrangement with or for the benefit of employees, officers, directors or
agents or a stock purchase or dividend reinvestment plan, or the satisfaction by
the Company of its obligations pursuant to any contract or security outstanding
on the date of such event requiring the Company to redeem, purchase or acquire
its capital stock, (ii) as a result of a reclassification of the Company's
capital stock or the exchange or conversion of all or a portion of one class or
series of the Company's capital stock for another class or series of the
Company's capital stock, (iii) the purchase of fractional interests in shares of
the Company's capital stock pursuant to the conversion or exchange provisions of
the Company's capital stock or the security being converted or exchanged, (iv)
dividends or distributions in capital stock of the Company (or rights to acquire
capital stock), or repurchases, redemptions or acquisitions of capital stock in
connection with the issuance or exchange of capital stock (or securities
convertible into or exchangeable for shares of the Company's capital stock) or
(v)
32
redemptions, exchanges or repurchases of any rights outstanding under a
shareholder rights plan or payment thereunder of a dividend or distribution of
or with respect to rights in the future.
SECTION 5.4 PAYMENT OF PURCHASE PRICE.
(a) (i) Unless a Treasury Portfolio has replaced the Debt Securities
as a component of the Corporate Units or a Holder settles the underlying
Purchase Contract through the early delivery of cash to the Agent in the manner
described in Section 5.9, each Holder of a Corporate Unit must notify the Agent
of its intention to pay in cash ("Cash Settlement") the Purchase Price for the
shares of Common Stock to be purchased pursuant to the Purchase Contract on a
Purchase Contract Settlement Date by presenting and surrendering to the Agent
the Corporate Unit Certificate with a notice in substantially the form of
Exhibit C hereto completed and executed. Such presentation, surrender and notice
shall be made on or prior to 5:00 p.m., New York City time, on the fifth
Business Day immediately preceding the Purchase Contract Settlement Date. The
Agent shall promptly notify the Collateral Agent of the receipt of such a notice
from a Holder intending to make a Cash Settlement.
(ii) A Holder of a Corporate Unit who has so notified the Agent of
its intention to make a Cash Settlement is required to pay the Purchase Price to
the Collateral Agent prior to 11:00 a.m., New York City time, on the Business
Day immediately preceding the Purchase Contract Settlement Date in lawful money
of the United States by certified or cashiers' check or wire transfer, in each
case in immediately available funds payable to or upon the order of the Company.
Any cash received by the Collateral Agent will be invested promptly by the
Collateral Agent in Permitted Investments and paid to the Company on the
Purchase Contract Settlement Date in settlement of the Purchase Contract in
accordance with the terms of this Agreement and the Pledge Agreement. Any funds
received by the Collateral Agent in respect of the investment earnings from the
investment in such Permitted Investments, will be distributed to the Agent when
received for payment to the Holder.
(iii) If a Holder of a Corporate Unit fails to notify the Agent of
its intention to make a Cash Settlement in accordance with paragraph (a)(i)
above, such failure shall constitute a default under the Purchase Contract and
the Holder shall be deemed to have consented to the disposition of the Pledged
Debt Securities pursuant to the remarketing as described in paragraph (b) below.
If a Holder of a Corporate Unit does notify the Agent as provided in paragraph
(a)(i) above of its intention to pay the Purchase Price in cash, but fails to
make such payment as required by paragraph (a)(ii) above, such failure shall
also constitute a default; however, the Debt Securities of such a Holder will
not be remarketed but instead the Collateral Agent, for the benefit of the
Company, will exercise its rights as a secured party with respect to such Debt
Securities, including those rights specified in paragraph (c) below.
(b) In order to dispose of the Debt Securities of Corporate
Unit Holders who have not notified the Agent of their intention to effect a Cash
Settlement with respect to the Purchase Contract Settlement Date as provided in
paragraph (a)(i) above, the Company shall engage one or more nationally
recognized investment banking firms (the "Remarketing Agents") pursuant to a
Remarketing Agreement to sell such Debt Securities. In order to facilitate the
remarketing, the Agent shall notify the Remarketing Agents, by 10:00 a.m., New
York City time, on the fourth Business Day immediately preceding the Purchase
Contract Settlement Date, of the aggregate number of Debt Securities to be
remarketed. Concurrently, the Collateral Agent, pursuant to the terms of the
Pledge Agreement, will present for remarketing such Debt Securities to the
Remarketing Agents. Upon receipt of such notice from the Agent and such Debt
Securities from the Collateral Agent, the Remarketing Agents will, on the third
Business Day immediately preceding the Purchase Contract Settlement Date, use
their reasonable efforts to remarket such Debt Securities on such date at a
price of approximately 100.5% (but not less than 100%) of the aggregate
principal amount of such Debt Securities, plus accrued and unpaid interest
(including deferred interest), if any, thereon. After deducting any Remarketing
Fee, the Remarketing Agents will
33
remit the remaining portion of the proceeds from such remarketing to the
Collateral Agent. Such portion of the proceeds, equal to the aggregate principal
amount of such Debt Securities, will automatically be applied by the Collateral
Agent, in accordance with the Pledge Agreement to satisfy in full such Corporate
Unit Holders' obligations to pay the Purchase Price for the Common Stock under
the related Purchase Contracts on the Purchase Contract Settlement Date. Any
proceeds in excess of those required to pay the Purchase Price and the
Remarketing Fee will be remitted to the Agent for payment to the Holders of the
related Corporate Units. Corporate Unit Holders whose Debt Securities are so
remarketed will not otherwise be responsible for the payment of any Remarketing
Fee in connection therewith. If such a remarketing results in a Failed
Remarketing in accordance with the terms of the Pledge Agreement, the Collateral
Agent, for the benefit of the Company, will exercise its rights as a secured
party with respect to such Debt Securities, including those actions specified in
paragraph (c) below; provided, that if upon a Failed Remarketing the Collateral
Agent exercises such rights for the benefit of the Company with respect to such
Debt Securities, any accrued and unpaid interest on such Debt Securities will
become payable by the Company to the Agent for payment to the Holder of the
Corporate Units to which such Debt Securities relate. Such payment will be made
by the Company on or prior to 11 a.m., New York City time, on the Purchase
Contract Settlement Date in lawful money of the United States by certified or
cashiers' check or wire transfer, in each case, in immediately available funds
payable to or upon the order of the Agent. The Company will cause a notice of
such Failed Remarketing to be published on the Business Day immediately
preceding the Purchase Contract Settlement Date in an Authorized Newspaper.
(c) With respect to any Debt Securities beneficially owned
by Holders who have elected Cash Settlement but failed to deliver cash as
required in (a)(ii) above, or with respect to Debt Securities which are subject
to a Failed Remarketing, the Collateral Agent for the benefit of the Company
reserves all of its rights as a secured party with respect thereto and, subject
to applicable law and paragraph (h) below, may, among other things, (i) retain
such Debt Securities in full satisfaction of the Holders' obligations under the
Purchase Contracts or (ii) sell such Debt Securities in one or more public or
private sales and apply the proceeds of such sale in full satisfaction of the
Holders' obligations under the Purchase Contracts.
(d) (i) Unless a Holder of a Treasury Unit or Corporate Unit (if a
Treasury Portfolio has replaced the Debt Securities as a component of the
Corporate Units) settles the underlying Purchase Contract through the early
delivery of cash to the Purchase Contract Agent in the manner described in
Section 5.9, each Holder of a Treasury Unit or Corporate Unit (if a Treasury
Portfolio has replaced the Debt Securities as a component of the Corporate
Units) must notify the Agent of its intention to pay in cash the Purchase Price
for the shares of Common Stock to be purchased pursuant to the Purchase Contract
on the Purchase Contract Settlement Date by presenting and surrendering to the
Agent the Treasury Unit Certificate or Corporate Unit Certificate, as the case
may be, with a notice in substantially the form of Exhibit C hereto completed
and executed. Such presentation, surrender and notice must be made on or prior
to 5:00 p.m., New York City time, on the second Business Day immediately
preceding the Purchase Contract Settlement Date. The Agent shall promptly notify
the Collateral Agent of the receipt of such notice from a Holder intending to
make a Cash Settlement.
(ii) A Holder of a Treasury Unit or Corporate Unit (if a Treasury
Portfolio has replaced the Debt Securities as a component of the Corporate
Units), who has so notified the Agent of its intention to make a Cash Settlement
in accordance with paragraph (d)(i) above is required to pay the Purchase Price
to the Collateral Agent prior to 11:00 a.m., New York City time, on the Business
Day immediately preceding the Purchase Contract Settlement Date in lawful money
of the United States by certified or cashiers' check or wire transfer, in each
case, in immediately available funds payable to or upon the order of the
Company. Any cash received by the Collateral Agent will be invested promptly by
the Collateral Agent in Permitted Investments and paid to the Company on the
Purchase Contract
34
Settlement Date in settlement of the Purchase Contract in accordance with the
terms of this Agreement and the Pledge Agreement. Any funds received by the
Collateral Agent in respect of the investment earnings from the investment in
such Permitted Investments will be distributed to the Agent when received for
payment to the Holder.
(iii) If a Holder of a Treasury Unit or Corporate Unit (if a
Treasury Portfolio has replaced the Debt Securities as a component of the
Corporate Units), fails to notify the Agent of its intention to make a Cash
Settlement in accordance with paragraph (d)(i) above, or if such Holder does
notify the Agent as provided in paragraph (d)(i) above of its intention to pay
the Purchase Price in cash, but fails to make such payment as required by
paragraph (d)(ii) above, then such failure shall constitute a default under the
Purchase Contract and upon the maturity of the Pledged Treasury Securities or
the Applicable Ownership Interest in the appropriate Treasury Portfolio, as the
case may be, held by the Collateral Agent on the Business Day immediately prior
to the Purchase Contract Settlement Date, the principal amount of the Treasury
Securities or the Applicable Ownership Interest in the appropriate Treasury
Portfolio, as the case may be, received by the Collateral Agent will be invested
promptly in overnight Permitted Investments. On the Purchase Contract Settlement
Date an amount equal to the Purchase Price will be remitted to the Company as
payment thereof without receiving any instructions from the Holder. In the event
the sum of the proceeds from the related Pledged Treasury Securities or the
Applicable Ownership Interest in the appropriate Treasury Portfolio, as the case
may be, and the investment earnings earned from such investments is in excess of
the aggregate Purchase Price of the Purchase Contracts being settled thereby,
the Collateral Agent will distribute such excess to the Agent for the benefit of
the Holder of the related Treasury Units or Corporate Units when received.
(e) Any distribution to Holders of excess funds and interest
described above, shall be payable at the Corporate Trust Office maintained for
that purpose or, at the option of the Holder, by check mailed to the address of
the Person entitled thereto at such address as it appears on the Register.
(f) The Company shall not be obligated to issue any shares of
Common Stock in respect of a Purchase Contract or deliver any certificate
therefor to the Holder unless it shall have received payment in full of the
Purchase Price for the shares of Common Stock to be purchased thereunder in the
manner herein set forth.
(g) Upon Cash Settlement with respect to a Purchase Contract,
(i) the Collateral Agent will in accordance with the terms of the Pledge
Agreement cause the Pledged Debt Security or the Pledged Applicable Ownership
Interest in the appropriate Treasury Portfolio, as the case may be, or the
Pledged Treasury Security underlying the relevant Security to be released from
the Pledge by the Collateral Agent free and clear of any security interest of
the Company and transferred to the Agent for delivery to the Holder thereof or
its designee as soon as practicable and (ii) subject to the receipt thereof from
the Collateral Agent, the Agent shall, by book-entry transfer, or other
appropriate procedures, in accordance with instructions provided by the Holder
thereof, transfer such Debt Security or the Applicable Ownership Interest in the
appropriate Treasury Portfolio, as the case may be, or such Treasury Security
(or, if no such instructions are given to the Agent by the Holder, the Agent
shall hold such Debt Security or the Applicable Ownership Interest in the
appropriate Treasury Portfolio, as the case may be, or such Treasury Security,
and any distribution thereon, in the name of the Agent or its nominee in trust
for the benefit of such Holder).
(h) The obligations of the Holders to pay the Purchase Price
on the Purchase Contract Settlement Date are non-recourse obligations and are
payable solely out of any Cash Settlement or the proceeds of any Collateral
pledged to secure the obligations of the Holders with respect to such Purchase
Price, and in no event will Holders be liable for any deficiency between the
proceeds of Collateral disposition and the Purchase Price.
35
SECTION 5.5 ISSUANCE OF SHARES OF COMMON STOCK.
Unless a Termination Event shall have occurred, and except with
respect to Purchase Contracts with respect to which there has been an Early
Settlement, on the Purchase Contract Settlement Date, upon the Company's receipt
of payment in full of the Purchase Price for the shares of Common Stock
purchased by the Holders pursuant to the foregoing provisions of this Article
and subject to Section 5.6(b), the Company shall issue and deposit with the
Agent, for the benefit of the Holders of the Outstanding Securities, one or more
certificates representing the newly issued shares of Common Stock registered in
the name of the Agent (or its nominee) as custodian for the Holders (such
certificates for shares of Common Stock, together with any dividends or
distributions for which both a record date and payment date for such dividend or
distribution has occurred after the Purchase Contract Settlement Date, being
hereinafter referred to as the "Purchase Contract Settlement Fund") to which the
Holders are entitled hereunder. Subject to the foregoing, upon surrender of a
Certificate to the Agent on or after the Purchase Contract Settlement Date,
together with settlement instructions thereon duly completed and executed, the
Holder of such Certificate shall be entitled to receive in exchange therefor a
certificate representing that number of whole shares of Common Stock which such
Holder is entitled to receive pursuant to the provisions of this Article V
(after taking into account all Securities then held by such Holder) together
with cash in lieu of fractional shares as provided in Section 5.10 and any
dividends or distributions with respect to such shares constituting part of the
Purchase Contract Settlement Fund, but without any interest thereon, and any
Certificate so surrendered shall forthwith be cancelled. Such shares shall be
registered in the name of the Holder or the Holder's designee as specified in
the settlement instructions provided by the Holder to the Agent. If any shares
of Common Stock issued in respect of a Purchase Contract are to be registered to
a Person other than the Person in whose name the Certificate evidencing such
Purchase Contract is registered, no such registration shall be made unless the
Person requesting such registration has paid any transfer and other taxes
required by reason of such registration in a name other than that of the
registered Holder of the Certificate evidencing such Purchase Contract or has
established to the satisfaction of the Company that such tax either has been
paid or is not payable.
SECTION 5.6 ADJUSTMENT OF SETTLEMENT RATE.
(a) Adjustments for Dividends, Distributions, Stock Splits, Etc.
(1) In case the Company shall pay or make a dividend or other
distribution on the Common Stock in Common Stock, the Settlement Rate, as in
effect at the opening of business on the day following the date fixed for the
determination of stockholders entitled to receive such dividend or other
distribution shall be increased by dividing such Settlement Rate by a fraction
of which the numerator shall be the number of shares of Common Stock outstanding
at the close of business on the date fixed for such determination and the
denominator shall be the sum of such number of shares and the total number of
shares constituting such dividend or other distribution, such increase to become
effective immediately after the opening of business on the day following the
date fixed for such determination. For the purposes of this paragraph (1), the
number of shares of Common Stock at any time outstanding shall not include
shares held in the treasury of the Company but shall include any shares issuable
in respect of any scrip certificates issued in lieu of fractions of shares of
Common Stock. The Company will not pay any dividend or make any distribution on
shares of Common Stock held in the treasury of the Company.
(2) In case the Company shall issue rights, options or warrants to
all holders of its Common Stock that are not available on an equivalent basis to
Holders of the Securities upon settlement of the Purchase Contracts underlying
such Securities entitling such holders of the Common Stock, for a period
expiring within 45 days after the record date for the determination of
stockholders entitled to receive such rights, options or warrants, to subscribe
for or purchase shares of Common Stock at a price per share less than the
Current Market Price per share of the Common Stock on the date fixed for the
36
determination of stockholders entitled to receive such rights, options or
warrants (other than pursuant to any dividend reinvestment plan or share
purchase plan, including such a plan that provides for purchases of Common Stock
by non-shareholders), the Settlement Rate, in effect at the opening of business
on the day following the date fixed for such determination shall be increased by
dividing such Settlement Rate, by a fraction of which the numerator shall be the
number of shares of Common Stock outstanding at the close of business on the
date fixed for such determination plus the number of shares of Common Stock
which the aggregate of the offering price of the total number of shares of
Common Stock so offered for subscription or purchase would purchase at such
Current Market Price and the denominator shall be the number of shares of Common
Stock outstanding at the close of business on the date fixed for such
determination plus the number of shares of Common Stock so offered for
subscription or purchase, such increase to become effective immediately after
the opening of business on the day following the date fixed for such
determination. For the purposes of this paragraph (2), the number of shares of
Common Stock at any time outstanding shall not include shares held in the
treasury of the Company but shall include any shares issuable in respect of any
scrip certificates issued in lieu of fractions of shares of Common Stock. The
Company shall not issue any such rights, options or warrants in respect of
shares of Common Stock held in the treasury of the Company.
(3) In case outstanding shares of Common Stock shall be subdivided
or split into a greater number of shares of Common Stock, the Settlement Rate,
in effect at the opening of business on the day following the day upon which
such subdivision or split becomes effective shall be proportionately increased,
and, conversely, in case outstanding shares of Common Stock shall each be
combined into a smaller number of shares of Common Stock, the Settlement Rate,
in effect at the opening of business on the day following the day upon which
such combination becomes effective shall be proportionately reduced, such
increase or reduction, as the case may be, to become effective immediately after
the opening of business on the day following the day upon which such
subdivision, split or combination becomes effective.
(4) In case the Company shall, by dividend or otherwise,
distribute to all holders of its Common Stock evidences of its indebtedness or
assets (including securities, but excluding any rights or warrants referred to
in paragraph (2) of this Section, any dividend or distribution paid exclusively
in cash and any dividend or distribution referred to in paragraph (1) of this
Section), the Settlement Rate, in effect at the opening of business on the day
following the day on which such dividend or distribution was effected, shall be
adjusted so that the same shall equal the rate determined by dividing the
Settlement Rate in effect immediately prior to the close of business on the date
fixed for the determination of stockholders entitled to receive such
distribution by a fraction of which the numerator shall be the Current Market
Price per share of the Common Stock on the date fixed for such determination
less the then fair market value (as determined by the Board of Directors, whose
determination shall be conclusive and described in a Board Resolution) of the
portion of the assets or evidences of indebtedness so distributed applicable to
one share of Common Stock and the denominator shall be such Current Market Price
per share of the Common Stock, such adjustment to become effective immediately
prior to the opening of business on the day following the date fixed for the
determination of stockholders entitled to receive such distribution. In any case
in which this paragraph (4) is applicable, paragraph (2) of this Section shall
not be applicable.
(5) In case the Company shall, (I) by dividend or otherwise,
distribute to all holders of its Common Stock cash (excluding any cash that is
distributed in a Reorganization Event to which Section 5.6(b) applies or as part
of a distribution referred to in paragraph (4) of this Section) in an aggregate
amount that, combined together with (II) the aggregate amount of any other
distributions to all holders of its Common Stock made exclusively in cash within
the 12 months preceding the date of payment of such distribution and in respect
of which no adjustment pursuant to this paragraph (5) or paragraph (6) of this
Section has been made and (III) the aggregate of any cash plus the fair market
value (as determined by the Board of Directors, whose determination shall be
conclusive and described in a
37
Board Resolution) of consideration payable in respect of any tender or exchange
offer (other than consideration payable in respect of any odd-lot tender offer)
by the Company or any of its subsidiaries for all or any portion of the Common
Stock concluded within the 12 months preceding the date of payment of the
distribution described in clause (I) above and in respect of which no adjustment
pursuant to this paragraph (5) or paragraph (6) of this Section has been made,
exceeds 15% of the product of the Current Market Price per share of the Common
Stock on the date for the determination of holders of shares of Common Stock
entitled to receive such distribution times the number of shares of Common Stock
outstanding on such date, then, and in each such case, immediately after the
close of business on such date for determination, the Settlement Rate, shall be
increased so that the same shall equal the rate determined by dividing the
Settlement Rate in effect immediately prior to the close of business on the date
fixed for determination of the stockholders entitled to receive such
distribution by a fraction (i) the numerator of which shall be equal to the
Current Market Price per share of the Common Stock on the date fixed for such
determination less an amount equal to the quotient of (x) the combined amount
distributed or payable in the transactions described in clauses (I), (II) and
(III) above and (y) the number of shares of Common Stock outstanding on such
date for determination and (ii) the denominator of which shall be equal to the
Current Market Price per share of the Common Stock on such date for
determination.
(6) In case (I) a tender or exchange offer made by the Company or
any subsidiary of the Company for all or any portion of the Common Stock shall
expire and such tender or exchange offer (as amended upon the expiration
thereof) shall require the payment to stockholders (based on the acceptance (up
to any maximum specified in the terms of the tender or exchange offer) of
Purchased Shares (as defined below)) of an aggregate consideration having a fair
market value (as determined by the Board of Directors, whose determination shall
be conclusive and described in a Board Resolution) that combined together with
(II) the aggregate of the cash plus the fair market value (as determined by the
Board of Directors, whose determination shall be conclusive and described in a
Board Resolution), as of the expiration of such tender or exchange offer, of
consideration payable in respect of any other tender or exchange offer (other
than consideration payable in respect of any odd-lot tender offer), by the
Company or any subsidiary of the Company for all or any portion of the Common
Stock expiring within the 12 months preceding the expiration of such tender or
exchange offer and in respect of which no adjustment pursuant to paragraph (5)
of this Section or this paragraph (6) has been made and (III) the aggregate
amount of any distributions to all holders of the Company's Common Stock made
exclusively in cash (other than regular quarterly cash dividends) within the 12
months preceding the expiration of such tender or exchange offer and in respect
of which no adjustment pursuant to paragraph (5) of this Section or this
paragraph (6) has been made, exceeds 15% of the product of the Current Market
Price per share of the Common Stock as of the last time (the "Expiration Time")
tenders could have been made pursuant to such tender or exchange offer (as it
may be amended) times the number of shares of Common Stock outstanding
(including any tendered shares) on the Expiration Time, then, and in each such
case, immediately prior to the opening of business on the day after the date of
the Expiration Time, the Settlement Rate, shall be adjusted so that the same
shall equal the rate determined by dividing the Settlement Rate immediately
prior to the close of business on the date of the Expiration Time by a fraction
(i) the numerator of which shall be equal to (A) the product of (I) the Current
Market Price per share of the Common Stock on the date of the Expiration Time
and (II) the number of shares of Common Stock outstanding (including any
tendered shares) on the Expiration Time less (B) the amount of cash plus the
fair market value (determined as aforesaid) of the aggregate consideration
payable to stockholders based on the transactions described in clauses (I), (II)
and (III) above (assuming in the case of clause (I) the acceptance, up to any
maximum specified in the terms of the tender or exchange offer, of Purchased
Shares), and (ii) the denominator of which shall be equal to the product of (A)
the Current Market Price per share of the Common Stock as of the Expiration Time
and (B) the number of shares of Common Stock outstanding (including any tendered
shares) as of the Expiration Time less the number of all shares validly tendered
and not withdrawn as of the Expiration Time (the shares deemed so accepted, up
to any such maximum, being referred to as the "Purchased Shares").
38
(7) The reclassification of Common Stock into securities including
securities other than Common Stock (other than any reclassification upon a
Reorganization Event to which Section 5.6(b) applies) shall be deemed to involve
(a) a distribution of such securities other than Common Stock to all holders of
Common Stock (and the effective date of such reclassification shall be deemed to
be "the date fixed for the determination of stockholders entitled to receive
such distribution" and the "date fixed for such determination" within the
meaning of paragraph (4) of this Section), and (b) a subdivision, split or
combination, as the case may be, of the number of shares of Common Stock
outstanding immediately prior to such reclassification into the number of shares
of Common Stock outstanding immediately thereafter (and the effective date of
such reclassification shall be deemed to be "the day upon which such subdivision
or split becomes effective" or "the day upon which such combination becomes
effective", as the case may be, and "the day upon which such subdivision, split
or combination becomes effective" within the meaning of paragraph (3) of this
Section).
(8) The "Current Market Price" per share of Common Stock on any
day means the average of the daily Closing Prices for the five consecutive
Trading Days selected by the Company commencing not more than 30 Trading Days
before, and ending not later than, the earlier of the day in question and the
day before the "ex date" with respect to the issuance or distribution requiring
such computation. For purposes of this paragraph, the term "ex date," when used
with respect to any issuance or distribution, shall mean the first date on which
the Common Stock trades regular way the applicable exchange or in the applicable
market without the right to receive such issuance or distribution.
(9) All adjustments to the Settlement Rate, shall be calculated to
the nearest 1/10,000th of a share of Common Stock (or if there is not a nearest
1/10,000th of a share to the next lower 1/10,000th of a share). No adjustment in
the Settlement Rate shall be required unless such adjustment would require an
increase or decrease of at least one percent therein; provided, however, that
any adjustments which by reason of this subparagraph are not required to be made
shall be carried forward and taken into account in any subsequent adjustment. If
an adjustment is made to the Settlement Rate pursuant to paragraph (1), (2),
(3), (4), (5), (6), (7) or (10) of this Section 5.6(a), an adjustment shall also
be made to the Applicable Market Value solely to determine which of clauses (a),
(b) or (c) of the definition of Settlement Rate in Section 5.1 will apply on the
Purchase Contract Settlement Date. Such adjustment shall be made by multiplying
the Applicable Market Value by a fraction of which the numerator shall be the
Settlement Rate immediately after such adjustment pursuant to paragraph (1),
(2), (3), (4), (5), (6), (7) or (10) of this Section 5.6(a) and the denominator
shall be the Settlement Rate immediately before such adjustment; provided,
however, that if such adjustment to the Settlement Rate is required to be made
pursuant to the occurrence of any of the events contemplated by paragraph (1),
(2), (3), (4), (5), (7) or (10) of this Section 5.6(a) during the period taken
into consideration for determining the Applicable Market Value, appropriate and
customary adjustments shall be made to the Settlement Rate.
(10) The Company may make such increases in the Settlement Rate, in
addition to those required by this Section, as it considers to be advisable in
order to avoid or diminish the effect of any income tax to any holders of shares
of Common Stock resulting from any dividend or distribution of stock or issuance
of rights or warrants to purchase or subscribe for stock or from any event
treated as such for income tax purposes or for any other reasons.
(b) Adjustment for Consolidation, Merger or Other Reorganization
Event. In the event of (i) any consolidation or merger of the Company with or
into another Person (other than a merger or consolidation in which the Company
is the continuing corporation and in which the Common Stock outstanding
immediately prior to the merger or consolidation is not exchanged for cash,
securities or other property of the Company or another corporation), (ii) any
sale, transfer, lease or conveyance to another Person of the property of the
Company as an entirety or substantially as an entirety, (iii) any statutory
39
exchange of securities of the Company with another Person (other than in
connection with a merger or acquisition) or (iv) any liquidation, dissolution or
winding up of the Company other than as a result of or after the occurrence of a
Termination Event (any such event, a "Reorganization Event"), the Settlement
Rate will be adjusted to provide that each Holder of Securities will receive on
the Purchase Contract Settlement Date with respect to each Purchase Contract
forming a part thereof, the kind and amount of securities, cash and other
property receivable upon such Reorganization Event (without any interest
thereon, and without any right to dividends or distribution thereon which have a
record date that is prior to the Purchase Contract Settlement Date) by a Holder
of the number of shares of Common Stock issuable on account of each Purchase
Contract if the Purchase Contract Settlement Date had occurred immediately prior
to such Reorganization Event assuming such Holder of Common Stock is not a
Person with which the Company consolidated or into which the Company merged or
which merged into the Company or with which such statutory exchange of
securities was effected or to which such sale, transfer, lease or conveyance was
made, as the case may be (any such Person, a "Constituent Person"), or an
Affiliate of a Constituent Person to the extent such Reorganization Event
provides for different treatment of Common Stock held by Affiliates of the
Company and non-affiliates and such Holder failed to exercise its rights of
election, if any, as to the kind or amount of securities, cash and other
property receivable upon such Reorganization Event (provided that if the kind or
amount of securities, cash and other property receivable upon such
Reorganization Event is not the same for each share of Common Stock held
immediately prior to such Reorganization Event by other than a Constituent
Person or an Affiliate thereof and in respect of which such rights of election
shall not have been exercised ("non-electing share"), then for the purpose of
this Section the kind and amount of securities, cash and other property
receivable upon such Reorganization Event by each non-electing share shall be
deemed to be the kind and amount so receivable per share by a plurality of the
non-electing shares). In the event of such a Reorganization Event, the Person
formed by such consolidation, merger or exchange or the Person which acquires
the assets of the Company or, in the event of a liquidation or dissolution of
the Company, the Company or a liquidating trust created in connection therewith,
shall execute and deliver to the Agent an agreement supplemental hereto
providing that the Holders of each Outstanding Security shall have the rights
provided by this Section 5.6. Such supplemental agreement shall provide for
adjustments which, for events subsequent to the effective date of such
supplemental agreement, shall be as nearly equivalent as may be practicable to
the adjustments provided for in this Section. The above provisions of this
Section shall similarly apply to successive Reorganization Events.
SECTION 5.7 NOTICE OF ADJUSTMENTS AND CERTAIN OTHER EVENTS.
(a) Whenever the Settlement Rate is adjusted as herein provided,
the Company shall:
(i) forthwith compute the Settlement Rate in accordance with
Section 5.6 and prepare and transmit to the Agent a Company Certificate setting
forth the Settlement Rate, the method of calculation thereof in reasonable
detail, and the facts requiring such adjustment and upon which such adjustment
is based; and
(ii) within 10 Business Days following the occurrence of an event
that requires an adjustment to the Settlement Rate pursuant to Section 5.6 (or
if the Company is not aware of such occurrence, as soon as practicable after
becoming so aware), provide a written notice to the Holders of the Securities of
the occurrence of such event and a statement in reasonable detail setting forth
the method by which the adjustment to the Settlement Rate was determined and
setting forth the adjusted Settlement Rate.
(b) The Agent shall not at any time be under any duty or
responsibility to any Holder of Securities to determine whether any facts exist
which may require any adjustment of the Settlement Rate, or with respect to the
nature or extent or calculation of any such adjustment when made, or with
40
respect to the method employed in making the same. The Agent shall not be
accountable with respect to the validity or value (or the kind or amount) of any
shares of Common Stock, or of any securities or property, which may at the time
be issued or delivered with respect to any Purchase Contract, and the Agent
makes no representation with respect thereto. The Agent shall not be responsible
for any failure of the Company to issue, transfer or deliver any shares of
Common Stock pursuant to a Purchase Contract or to comply with any of the
duties, responsibilities or covenants of the Company contained in this Article.
SECTION 5.8 TERMINATION EVENT; NOTICE.
The Purchase Contracts and all obligations and rights of the Company
and the Holders thereunder, including, without limitation, the rights of the
Holders to receive and the obligation of the Company to pay any Contract
Adjustment Payments or any Deferred Contract Adjustment Payments, and the rights
and obligations of the Holders to purchase Common Stock, will immediately and
automatically terminate, without the necessity of any notice or action by any
Holder, the Agent or the Company, if, on or prior to the Purchase Contract
Settlement Date, a Termination Event shall have occurred. Upon the occurrence of
a Termination Event, the Company shall promptly but in no event later than two
Business Days thereafter give written notice thereof to the Agent, the
Collateral Agent and to the Holders, at their addresses as they appear in the
applicable Register. Upon and after the occurrence of a Termination Event, the
Securities shall thereafter represent the right to receive the Debt Securities
or the Applicable Ownership Interest in the appropriate Treasury Portfolio, as
the case may be, forming a part of such Securities in the case of Corporate
Units, or Treasury Securities in the case of Treasury Units, in accordance with
the provisions of Section 4.3 of the Pledge Agreement.
SECTION 5.9 EARLY SETTLEMENT.
(a) A holder of Corporate Units may settle the related Purchase
Contracts in their entirety at any time on or prior to the fifth Business Day
immediately preceding the Purchase Contract Settlement Date in the manner
described herein, but only in integral multiples of 20 Corporate Units;
provided, however, if a Treasury Portfolio has become a component of the
Corporate Units, Holders of Corporate Units may settle early only in integral
multiples of 40,000 Corporate Units. A holder of Treasury Units may settle the
related Purchase Contracts in their entirety at any time on or prior to the
second Business Day immediately preceding the Purchase Contract Settlement Date
in the manner described herein (in either case, "Early Settlement") but only in
integral multiples of 20 Treasury Units. The right to Early Settlement is
subject to there being in effect, if so required under Federal securities laws,
a registration statement covering the shares of Common Stock to be delivered in
respect of the Purchase Contracts being settled. Upon Early Settlement, (i) the
holder's rights to receive Deferred Contract Adjustment Payments, if any, on the
Purchase Contracts being settled will be forfeited, (ii) the holder's right to
receive additional Contract Adjustment Payments in respect of such Purchase
Contracts will terminate and (iii) no adjustment will be made to or for the
holder on account of Deferred Contract Adjustment Payments, or any amount
accrued in respect of Contract Adjustment Payments. In order to exercise the
right to effect any Early Settlement with respect to any Purchase Contracts, the
Holder of the Certificate evidencing Securities shall deliver such Certificate
to the Agent at the Corporate Trust Office duly endorsed for transfer to the
Company or in blank with the form of Election to Settle Early therein duly
completed and executed and accompanied by payment payable to the Company in
immediately available funds in an amount (the "Early Settlement Amount") equal
to the sum of (i) $50 times the number of Purchase Contracts being settled (ii)
if such delivery is made with respect to any Purchase Contracts during the
period from the close of business on any Record Date next preceding any Payment
Date to the opening of business on such Payment Date, an amount equal to the
Contract Adjustment Payments payable on such Payment Date with respect to such
Purchase Contracts; provided that no payment is required if the Company has
elected to defer the Contract Adjustment Payments which would otherwise be
payable on the Payment Date. Except as provided in the immediately preceding
sentence
41
and subject to the second to last paragraph of Section 5.2, no payment or
adjustment shall be made upon Early Settlement of any Purchase Contract on
account of any Contract Adjustment Payments accrued on such Purchase Contract or
on account of any dividends on the Common Stock issued upon such Early
Settlement. In order for any of the foregoing requirements to be considered
satisfied or effective with respect to a Purchase Contract underlying any
Security on or by a particular Business Day, such requirement must be met at or
prior to 5:00 p.m., New York City time, on such Business Day; the first Business
Day on which all of the foregoing requirements have been satisfied by 5:00 p.m.,
New York City time shall be the "Early Settlement Date" with respect to such
Security.
(b) Upon Early Settlement of Purchase Contracts by a Holder of the
related Securities, the Company shall issue, and the Holder shall be entitled to
receive 0.7947 newly issued shares of Common Stock per Corporate Unit or
Treasury Unit (the "Early Settlement Rate") (regardless of the market price of
the Common Stock on the date of Early Settlement); provided, however, that upon
the Early Settlement of the Purchase Contracts, the Holder of such related
Securities will forfeit the right to receive any Deferred Contract Adjustment
Payments. The Early Settlement Rate shall be adjusted in the same manner and at
the same time as the Settlement Rate is adjusted, in accordance with Section
5.6. As promptly as practicable after Early Settlement of Purchase Contracts in
accordance with the provisions of this Section 5.9, the Company shall issue and
shall deliver to the Agent at the Corporate Trust Office a certificate or
certificates for the full number of shares of Common Stock issuable upon such
Early Settlement together with payment in lieu of any fraction of a share, as
provided in Section 5.10.
(c) No later than the third Business Day after the applicable
Early Settlement Date the Company shall cause (i) the shares of Common Stock
issuable upon Early Settlement of Purchase Contracts to be issued and delivered,
and (ii) the related Debt Securities or the Applicable Ownership Interest in the
appropriate Treasury Portfolio, in the case of Corporate Units, or the related
Treasury Securities, in the case of Treasury Units, to be released from the
Pledge by the Collateral Agent and transferred, in each case to the Agent for
delivery to the Holder thereof or its designee.
(d) Upon Early Settlement of any Purchase Contracts, and subject
to receipt of shares of Common Stock from the Company and the Debt Securities,
the Applicable Ownership Interest in the appropriate Treasury Portfolio or
Treasury Securities, as the case may be, from the Collateral Agent, as
applicable, the Agent shall, in accordance with the instructions provided by the
Holder thereof on the applicable form of Election to Settle Early in the
Certificate evidencing the related Securities, (i) transfer to the Holder the
Debt Securities, Treasury Portfolio or Treasury Securities, as the case may be,
forming a part of such Securities, and (ii) deliver to the Holder a certificate
or certificates for the full number of shares of Common Stock issuable upon such
Early Settlement together with payment in lieu of any fraction of a share, as
provided in Section 5.10.
(e) In the event that Early Settlement is effected with respect to
Purchase Contracts underlying less than all the Securities evidenced by a
Certificate, upon such Early Settlement the Company shall execute and the Agent
shall authenticate, countersign and deliver to the Holder thereof, at the
expense of the Company, a Certificate evidencing the Securities as to which
Early Settlement was not effected.
SECTION 5.10 NO FRACTIONAL SHARES.
No fractional shares or scrip representing fractional shares of Common
Stock shall be issued or delivered upon settlement on the Purchase Contract
Settlement Date or upon Early Settlement of any Purchase Contracts. If
Certificates evidencing more than one Purchase Contract shall be surrendered for
settlement at one time by the same Holder, the number of full shares of Common
Stock which shall be delivered upon settlement shall be computed on the basis of
the aggregate number of Purchase Contracts
42
evidenced by the Certificates so surrendered. Instead of any fractional share of
Common Stock which would otherwise be deliverable upon settlement of any
Purchase Contracts on the Purchase Contract Settlement Date or upon Early
Settlement, the Company, through the Agent, shall make a cash payment in respect
of such fractional interest in an amount equal to the fractional share times (i)
the Threshold Appreciation Price, in the case of an Early Settlement or (ii) the
Applicable Market Value, in all other circumstances. The Company shall provide
the Agent from time to time with sufficient funds to permit the Agent to make
all cash payments required by this Section 5.10 in a timely manner.
SECTION 5.11 CHARGES AND TAXES.
The Company will pay all stock transfer and similar taxes attributable
to the initial issuance and delivery of the shares of Common Stock pursuant to
the Purchase Contracts and in payment of any Deferred Contract Adjustment
Payments; provided, however, that the Company shall not be required to pay any
such tax or taxes which may be payable in respect of any exchange of or
substitution for a Certificate evidencing a Security or any issuance of a share
of Common Stock in a name other than that of the registered Holder of a
Certificate surrendered in respect of the Securities evidenced thereby, other
than in the name of the Agent, as custodian for such Holder, and the Company
shall not be required to issue or deliver such share certificates or
Certificates unless or until the Person or Persons requesting the transfer or
issuance thereof shall have paid to the Company the amount of such tax or shall
have established to the satisfaction of the Company that such tax has been paid
or that no such tax is due.
ARTICLE VI
REMEDIES
SECTION 6.1 UNCONDITIONAL RIGHT OF HOLDERS TO RECEIVE CONTRACT ADJUSTMENT
PAYMENTS AND TO PURCHASE COMMON STOCK.
The Holder of any Corporate Unit or Treasury Unit shall have the
right, which is absolute and unconditional (subject to the right of the Company
to defer payment thereof pursuant to Section 5.3, the prepayment of Contract
Adjustment Payments pursuant to Section 5.9(a) and the forfeiture of any
Deferred Contract Adjustment Payments upon Early Settlement pursuant to Section
5.9(b) or upon the occurrence of a Termination Event), to receive payment of
each installment of the Contract Adjustment Payments with respect to the
Purchase Contract constituting a part of such Security on the respective Payment
Date for such Security and to purchase Common Stock pursuant to such Purchase
Contract and, in each such case, to institute suit for the enforcement of any
such payment and right to purchase Common Stock, and such rights shall not be
impaired without the consent of such Holder.
SECTION 6.2 RESTORATION OF RIGHTS AND REMEDIES.
If any Holder has instituted any proceeding to enforce any right or
remedy under this Agreement and such proceeding has been discontinued or
abandoned for any reason, or has been determined adversely to such Holder, then
and in every such case, subject to any determination in such proceeding, the
Company and such Holder shall be restored severally and respectively to their
former positions hereunder and thereafter all rights and remedies of such Holder
shall continue as though no such proceeding had been instituted.
SECTION 6.3 RIGHTS AND REMEDIES CUMULATIVE.
Except as otherwise provided with respect to the replacement or
payment of mutilated, destroyed, lost or stolen Certificates in the last
paragraph of Section 3.10, no right or remedy herein
43
conferred upon or reserved to the Holders is intended to be exclusive of any
other right or remedy, and every right and remedy shall, to the extent permitted
by law, be cumulative and in addition to every other right and remedy given
hereunder or now or hereafter existing at law or in equity or otherwise. The
assertion or employment of any right or remedy hereunder, or otherwise, shall
not prevent the concurrent assertion or employment of any other appropriate
right or remedy.
SECTION 6.4 DELAY OR OMISSION NOT WAIVER.
No delay or omission of any Holder to exercise any right or remedy
upon a default shall impair any such right or remedy or constitute a waiver of
any such right. Every right and remedy given by this Article or by law to the
Holders may be exercised from time to time, and as often as may be deemed
expedient, by such Holders.
SECTION 6.5 UNDERTAKING FOR COSTS.
All parties to this Agreement agree, and each Holder of Corporate
Units or Treasury Units, by its acceptance of such Corporate Units or Treasury
Units shall be deemed to have agreed, that any court may in its discretion
require, in any suit for the enforcement of any right or remedy under this
Agreement, or in any suit against the Agent for any action taken, suffered or
omitted by it as Agent, the filing by any party litigant in such suit of an
undertaking to pay the costs of such suit, and that such court may in its
discretion assess reasonable costs, including reasonable attorneys' fees,
against any party litigant in such suit, having due regard to the merits and
good faith of the claims or defenses made by such party litigant; provided that
the provisions of this Section shall not apply to any suit instituted by the
Company, to any suit instituted by the Agent, to any suit instituted by any
Holder, or group of Holders, holding in the aggregate more than 10% of the
Outstanding Securities, or to any suit instituted by any Holder for the
enforcement of payment of interest on any Debt Securities or Contract Adjustment
Payments on any Purchase Contract on or after the respective Payment Date
therefor in respect of any Security held by such Holder, or for enforcement of
the right to purchase shares of Common Stock under the Purchase Contracts
constituting part of any Security held by such Holder.
SECTION 6.6 WAIVER OF STAY OR EXTENSION LAWS.
The Company covenants (to the extent that it may lawfully do so) that
it will not at any time insist upon, or plead, or in any manner whatsoever claim
or take the benefit or advantage of, any stay or extension law wherever enacted,
now or at any time hereafter in force, which may affect the covenants or the
performance of this Agreement; and the Company (to the extent that it may
lawfully do so) hereby expressly waives all benefit or advantage of any such law
and covenants that it will not hinder, delay or impede the execution of any
power herein granted to the Agent or the Holders, but will suffer and permit the
execution of every such power as though no such law had been enacted.
ARTICLE VII
THE AGENT
SECTION 7.1 CERTAIN DUTIES AND RESPONSIBILITIES.
(a) Prior to a Default and after the curing or waiving of all such
Defaults that may have occurred,
44
(1) the Agent undertakes to perform, with respect to the
Securities, such duties and only such duties as are specifically set forth in
this Agreement and no implied covenants or obligations shall be read into this
Agreement against the Agent; and
(2) the Agent may, with respect to the Securities, conclusively
rely, as to the truth of the statements and the correctness of the opinions
expressed therein, in the absence of bad faith on the part of the Agent, upon
certificates or opinions furnished to the Agent and conforming to the
requirements of this Agreement; but in the case of any certificates or opinions
which by any provision hereof are specifically required to be furnished to the
Agent, the Agent shall be under a duty to examine the same to determine whether
or not they conform to the requirements of this Agreement.
(b) No provision of this Agreement shall be construed to relieve
the Agent from liability for its own negligent action, its own negligent failure
to act, or its own willful misconduct, except that
(1) this Subsection shall not be construed to limit the effect of
Subsection (a) of this Section;
(2) the Agent shall not be liable for any error of judgment made
in good faith by a Responsible Officer, unless it shall be proved that the Agent
was negligent in ascertaining the pertinent facts; and
(3) no provision of this Agreement shall require the Agent to
expend or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder, or in the exercise of any of its
rights or powers.
(c) Whether or not therein expressly so provided, every provision
of this Agreement relating to the conduct or affecting the liability of or
affording protection to the Agent shall be subject to the provisions of this
Section.
(d) The Agent is authorized to execute, deliver and perform the
Pledge Agreement in its capacity as Agent and to grant the Pledge. The Agent
shall be entitled to all of the rights, privileges, immunities and indemnities
contained in this Agreement with respect to any duties of the Agent under, or
actions taken by the Agent pursuant to, such Pledge Agreement.
(e) In case a Default has occurred (that has not been cured or
waived), and is actually known by a Responsible Officer of the Agent, the Agent
shall exercise such of the rights and powers vested in it by this Agreement, and
use the same degree of care and skill in its exercise thereof, as a prudent
person would exercise or use under the circumstances in the conduct of his or
her own affairs.
(f) At the request of the Company, the Agent is authorized to
execute and deliver one or more Remarketing Agreements to, among other things,
effectuate Section 5.4.
SECTION 7.2 NOTICE OF DEFAULT.
Within 90 days after the occurrence of any Default hereunder of which
a Responsible Officer of the Agent has actual knowledge, the Agent shall
transmit by mail to the Company and the Holders of Securities, as their names
and addresses appear in the Register, notice of such Default hereunder, unless
such Default shall have been cured or waived; provided that, except for a
Default in any payment obligation hereunder, the Agent shall be protected in
withholding such notice if and so long as a
45
Responsible Officer of the Agent in good faith determines that the withholding
of such notice is in the interests of the Holders of the Securities.
SECTION 7.3 CERTAIN RIGHTS OF AGENT.
Subject to the provisions of Section 7.1:
(a) the Agent may conclusively rely and shall be protected in
acting or refraining from acting upon any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order, bond,
debenture, note, other evidence of indebtedness or other paper or document
believed by it to be genuine and to have been signed or presented by the proper
party or parties;
(b) any request or direction of the Company mentioned herein shall
be sufficiently evidenced by a Company Certificate, Issuer Order or Issuer
Request, and any resolution of the Board of Directors of the Company may be
sufficiently evidenced by a Board Resolution;
(c) whenever in the administration of this Agreement the Agent
shall deem it desirable that a matter be proved or established prior to taking,
suffering or omitting any action hereunder, the Agent (unless other evidence be
herein specifically prescribed) may, in the absence of bad faith on its part,
rely upon a Company Certificate;
(d) the Agent may consult with counsel of its selection and the
advice of such counsel or any Opinion of Counsel shall be full and complete
authorization and protection in respect of any action taken, suffered or omitted
by it hereunder in good faith and in reliance thereon;
(e) the Agent shall not be bound to make any investigation into
the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order, bond,
debenture, note, other evidence of indebtedness or other paper or document, but
the Agent, in its discretion, may make reasonable further inquiry or
investigation into such facts or matters related to the execution, delivery and
performance of the Purchase Contracts as it may see fit, and, if the Agent shall
determine to make such further inquiry or investigation, it shall be given a
reasonable opportunity to examine the books, records and premises of the
Company, personally or by agent or attorney;
(f) the Agent may execute any of the powers hereunder or perform
any duties hereunder either directly or by or through agents or attorneys or an
Affiliate and the Agent shall not be responsible for any misconduct or
negligence on the part of any agent or attorney or an Affiliate appointed with
due care by it hereunder; and
(g) the rights, privileges, protections, immunities and benefits
given to the Agent, including, without limitation, its right to be indemnified,
are extended to, and shall be enforceable by, the Agent in each of its
capacities hereunder.
SECTION 7.4 NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OF SECURITIES.
The recitals contained herein and in the Certificates shall be taken
as the statements of the Company, and the Agent assumes no responsibility for
their accuracy. The Agent makes no representations as to the validity or
sufficiency of either this Agreement or of the Securities, or of the Pledge
Agreement or the Pledge. The Agent shall not be accountable for the use or
application by the Company of the proceeds in respect of the Purchase Contracts.
46
SECTION 7.5 MAY HOLD SECURITIES.
Any Registrar or any other agent of the Company, or the Agent and its
Affiliates, in their individual or any other capacity, may become the owner or
pledgee of Securities and may otherwise deal with the Company, the Collateral
Agent or any other Person with the same rights it would have if it were not
Registrar or such other agent, or the Agent.
SECTION 7.6 MONEY HELD IN CUSTODY.
Money held by the Agent in custody hereunder need not be segregated
from the other funds except to the extent required by law or provided herein.
The Agent shall be under no obligation to invest or pay interest on any money
received by it hereunder except as otherwise agreed in writing with the Company.
SECTION 7.7 COMPENSATION AND REIMBURSEMENT.
The Company agrees:
(a) to pay to the Agent from time to time such compensation for
all services rendered by it hereunder as the parties shall agree from time to
time in writing (which compensation shall not be limited by any provisions of
law in regards to the compensation of a trustee of an express trust);
(b) except as otherwise expressly provided herein, to reimburse
the Agent upon its request for all reasonable expenses, disbursements and
advances incurred or made by the Agent in accordance with any provision of this
Agreement (including the reasonable compensation and the expenses and
disbursements of its agents and counsel), except any such expense, disbursement
or advance as may be attributable to its negligence or bad faith; and
(c) to indemnify the Agent and any predecessor Agent for, and to
hold it harmless against, any loss, liability or expense incurred without
negligence or bad faith on its part, arising out of or in connection with the
acceptance or administration or the performance of its duties hereunder,
including the costs and expenses of defending itself against any claim or
liability in connection with the exercise or performance of any of its powers or
duties hereunder.
"Agent" for purposes of this Section 7.7 shall include any predecessor
Agent; provided, however, that the negligence or bad faith of any Agent
hereunder shall not affect the rights of any other Agent hereunder.
When the Agent incurs expenses or renders services in an action or
proceeding commenced pursuant to Section 4.3 of the Pledge Agreement upon the
occurrence of a Termination Event, the expenses (including the reasonable
charges and expenses of its counsel) and the compensation for the services are
intended to constitute expenses of administration under any applicable Federal
or State bankruptcy, insolvency or other similar law.
The provisions of this Section 7.7 shall survive the termination of
this Agreement and the Pledge Agreement.
SECTION 7.8 CORPORATE AGENT REQUIRED; ELIGIBILITY.
There shall at all times be an Agent hereunder which shall be (i) not
an Affiliate of the Company and (ii) a corporation organized and doing business
under the laws of the United States of
47
America, any State thereof or the District of Columbia, authorized under such
laws to exercise corporate trust powers, having (or being a member of a bank
holding company having) a combined capital and surplus of at least $50,000,000
and subject to supervision or examination by Federal or State authority. If such
corporation publishes reports of condition at least annually, pursuant to law or
to the requirements of said supervising or examining authority, then for the
purposes of this Section, the combined capital and surplus of such corporation
shall be deemed to be its combined capital and surplus as set forth in its most
recent report of condition so published. If at any time the Agent shall cease to
be eligible in accordance with the provisions of this Section, it shall resign
immediately in the manner and with the effect hereinafter specified in this
Article.
SECTION 7.9 RESIGNATION AND REMOVAL; APPOINTMENT OF SUCCESSOR.
(a) No resignation or removal of the Agent and no appointment of a
successor Agent pursuant to this Article shall become effective until the
acceptance of appointment by the successor Agent in accordance with the
applicable requirements of Section 7.10.
(b) The Agent may resign at any time by giving written notice
thereof to the Company 60 days prior to the effective date of such resignation.
If the instrument of acceptance by a successor Agent required by Section 7.10
shall not have been delivered to the Agent within 30 days after the giving of
such notice of resignation, the resigning Agent may petition any court of
competent jurisdiction for the appointment of a successor Agent.
(c) The Agent may be removed at any time by Act of the Holders of
a majority in number of the Outstanding Securities delivered to the Agent and
the Company.
(d) If at any time
(1) the Agent fails to comply with Section 310(b) of the TIA,
after written request therefor by the Company or by any Holder who has
been a bona fide Holder of a Security for at least six months, or
(2) the Agent shall cease to be eligible under Section 7.8
and shall fail to resign after written request therefor by the Company
or by any such Holder, or
(3) the Agent shall become incapable of acting or shall be
adjudged a bankrupt or insolvent or a receiver of the Agent or of its
property shall be appointed or any public officer shall take charge or
control of the Agent or of its property or affairs for the purpose of
rehabilitation, conservation or liquidation, then, in any such case,
(i) the Company by a Board Resolution may remove the Agent, or (ii)
any Holder who has been a bona fide Holder of a Security for at least
six months may, on behalf of himself and all others similarly
situated, petition any court of competent jurisdiction for the removal
of the Agent and the appointment of a successor Agent.
(e) If the Agent shall resign, be removed or become incapable of
acting, or if a vacancy shall occur in the office of Agent for any cause, the
Company, by a Board Resolution, shall promptly appoint a successor Agent and
shall comply with the applicable requirements of Section 7.10. If no successor
Agent shall have been so appointed by the Company and accepted appointment in
the manner required by Section 7.10, the Agent or any Holder who has been a bona
fide Holder of a Security for at least six months may, on behalf of himself and
all others similarly situated, petition any court of competent jurisdiction for
the appointment of a successor Agent.
48
(f) The Company shall give, or shall cause such successor Agent to
give, notice of each resignation and each removal of the Agent and each
appointment of a successor Agent by mailing written notice of such event by
first-class mail, postage prepaid, to all Holders as their names and addresses
appear in the applicable Register. Each notice shall include the name of the
successor Agent and the address of its Corporate Trust Office.
(g) If the Agent has or shall acquire any "conflicting interest"
within the meaning of Section 310(b) of the TIA, the Agent and the Company shall
in all respects comply with the provisions of Section 310(b) of the TIA.
SECTION 7.10 ACCEPTANCE OF APPOINTMENT BY SUCCESSOR.
(a) In case of the appointment hereunder of a successor Agent,
every such successor Agent so appointed shall execute, acknowledge and deliver
to the Company and to the retiring Agent an instrument accepting such
appointment, and thereupon the resignation or removal of the retiring Agent
shall become effective and such successor Agent, without any further act, deed
or conveyance, shall become vested with all the rights, powers, agencies and
duties of the retiring Agent; but, on the request of the Company or the
successor Agent, such retiring Agent shall, upon payment of its charges, execute
and deliver an instrument transferring to such successor Agent all the rights,
powers and trusts of the retiring Agent and shall duly assign, transfer and
deliver to such successor Agent all property and money held by such retiring
Agent hereunder.
(b) Upon request of any such successor Agent, the Company shall
execute any and all instruments for more fully and certainly vesting in and
confirming to such successor Agent all such rights, powers and agencies referred
to in paragraph (a) of this Section.
(c) No successor Agent shall accept its appointment unless at the
time of such acceptance such successor Agent shall be qualified and eligible
under this Article.
SECTION 7.11 MERGER, CONVERSION, CONSOLIDATION OR SUCCESSION TO BUSINESS.
Any Person into which the Agent may be merged or converted or with
which it may be consolidated, or any Person resulting from any merger,
conversion or consolidation to which the Agent shall be a party, or any Person
succeeding to all or substantially all the corporate trust business of the
Agent, shall be the successor of the Agent hereunder, provided such Person shall
be otherwise qualified and eligible under this Article, without the execution or
filing of any paper or any further act on the part of any of the parties hereto.
In case any Certificates shall have been authenticated and executed on behalf of
the Holders, but not delivered, by the Agent then in office, any successor by
merger, conversion or consolidation to such Agent may adopt such authentication
and execution and deliver the Certificates so authenticated and executed with
the same effect as if such successor Agent had itself authenticated and executed
such Securities.
SECTION 7.12 PRESERVATION OF INFORMATION; COMMUNICATIONS TO HOLDERS.
(a) The Agent shall preserve, in as current a form as is
reasonably practicable, the names and addresses of Holders received by the Agent
in its capacity as Registrar.
(b) If three or more Holders (herein referred to as "applicants")
apply in writing to the Agent, and furnish to the Agent reasonable proof that
each such applicant has owned a Security for a period of at least six months
preceding the date of such application, and such application states that the
applicants desire to communicate with other Holders with respect to their rights
under this Agreement or
49
under the Securities and is accompanied by a copy of the form of proxy or other
communication which such applicants propose to transmit, then the Agent shall
mail to all the Holders copies of the form of proxy or other communication which
is specified in such request, with reasonable promptness after a tender to the
Agent of the materials to be mailed and of payment, or provision for the
payment, of the reasonable expenses of such mailing.
SECTION 7.13 NO OBLIGATIONS OF AGENT.
Except to the extent otherwise provided in this Agreement, the Agent
assumes no obligations and shall not be subject to any liability under this
Agreement, the Pledge Agreement or any Purchase Contract in respect of the
obligations of the Holder of any Security thereunder. The Company agrees, and
each Holder of a Certificate, by his acceptance thereof, shall be deemed to have
agreed, that the Agent's execution of the Certificates on behalf of the Holders
shall be solely as agent and attorney-in-fact for the Holders, and that the
Agent shall have no obligation to perform such Purchase Contracts on behalf of
the Holders, except to the extent expressly provided in Article V hereof.
SECTION 7.14 TAX COMPLIANCE.
(a) The Agent, on its own behalf and on behalf of the Company,
will comply with all applicable certification, information reporting and
withholding (including "backup" withholding) requirements imposed by applicable
tax laws, regulations or administrative practice with respect to (i) any
payments made with respect to the Securities or (ii) the issuance, delivery,
holding, transfer, redemption or exercise of rights under the Securities. Such
compliance shall include, without limitation, the preparation and timely filing
of required returns and the timely payment of all amounts required to be
withheld to the appropriate taxing authority or its designated agent.
(b) The Agent shall comply with any written direction received
from the Company with respect to the application of such requirements to
particular payments or Holders or in other particular circumstances, and may for
purposes of this Agreement conclusively rely on any such direction in accordance
with the provisions of Section 7.1(a)(2) hereof.
(c) The Agent shall maintain all appropriate records documenting
compliance with such requirements, and shall make such records available, on
written request, to the Company or its authorized representative within a
reasonable period of time after receipt of such request.
ARTICLE VIII
SUPPLEMENTAL AGREEMENTS
SECTION 8.1 SUPPLEMENTAL AGREEMENTS WITHOUT CONSENT OF HOLDERS.
Without the consent of any Holders, the Company and the Agent, at any
time and from time to time, may enter into one or more agreements supplemental
hereto, in form satisfactory to the Company and the Agent, for any of the
following purposes:
(a) to evidence the succession of another Person to the Company,
and the assumption by any such successor of the covenants of the Company herein
and in the Certificates; or
(b) 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;
or
50
(c) to evidence and provide for the acceptance of appointment
hereunder by a successor Agent; or
(d) to make provision with respect to the rights of Holders
pursuant to the requirements of Section 5.6(b); or
(e) to cure any ambiguity, to correct or supplement any provisions
herein which may be inconsistent with any other 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 8.2 SUPPLEMENTAL AGREEMENTS WITH CONSENT OF HOLDERS.
With the consent of the Holders of not less than a majority of the
outstanding Purchase Contracts voting together as one class, by Act of said
Holders delivered to the Company and the Agent, the Company, when authorized by
a Board Resolution, and the Agent may enter into an agreement or agreements
supplemental hereto for the purpose of modifying in any manner the terms of the
Purchase Contracts, or the provisions of this Agreement or the rights of the
Holders in respect of the Securities; provided, however, that, except as
contemplated herein, no such supplemental agreement shall, without the consent
of the Holder of each Outstanding Security affected thereby,
(a) change any Payment Date;
(b) change the amount or the type of Collateral required to be
Pledged to secure a Holder's Obligations under the Purchase Contract, impair the
right of the Holder of any Purchase Contract to receive distributions on the
related Collateral (except for the rights of Holders of Corporate Units to
substitute the Treasury Securities for the Pledged Debt Securities or the
Applicable Ownership Interest in a Treasury Portfolio or the rights of holders
of Treasury Units to substitute Debt Securities or the Applicable Ownership
Interest in a Treasury Portfolio for the Pledged Treasury Securities) or
otherwise adversely affect the Holder's rights in or to such Collateral or
adversely alter the rights in or to such Collateral;
(c) reduce any Contract Adjustment Payments or any Deferred
Contract Adjustment Payment, or change any place where, or the coin or currency
in which, any Contract Adjustment Payment is payable;
(d) impair the right to institute suit for the enforcement of any
Purchase Contract;
(e) reduce the number of shares of Common Stock to be purchased
pursuant to any Purchase Contract, increase the price to purchase shares of
Common Stock upon settlement of any Purchase Contract, change the Purchase
Contract Settlement Date or the right to Early Settlement or otherwise adversely
affect the Holder's rights under any Purchase Contract; or
(f) reduce the percentage of the outstanding Purchase Contracts
the consent of whose Holders is required for any such supplemental agreement;
provided, that if any amendment or proposal referred to above would
adversely affect only the Corporate Units or the Treasury Units, then only the
Holders of the affected class of Security as of the record date for the Holders
entitled to vote thereon will be entitled to vote on or consent to such
amendment or proposal, and such amendment or proposal shall not be effective
except with the consent of
51
Holders of not less than a majority of such class; provided further, however,
that no such agreement, whether with or without the consent of the Holders,
shall affect Section 3.16 hereof.
It shall not be necessary for any Act of the Holders under this
Section to approve the particular form of any proposed supplemental agreement,
but it shall be sufficient if such Act shall approve the substance thereof.
SECTION 8.3 EXECUTION OF SUPPLEMENTAL AGREEMENTS.
In executing, or accepting the additional agencies created by, any
supplemental agreement permitted by this Article or the modifications thereby of
the agencies created by this Agreement, the Agent shall be entitled to receive
and (subject to Section 7.1) shall be fully protected in relying upon, an
Opinion of Counsel stating that the execution of such supplemental agreement is
authorized or permitted by this Agreement. The Agent may, but shall not be
obligated to, enter into any such supplemental agreement which affects the
Agent's own rights, duties or immunities under this Agreement or otherwise.
SECTION 8.4 EFFECT OF SUPPLEMENTAL AGREEMENTS.
Upon the execution of any supplemental agreement under this Article,
this Agreement shall be modified in accordance therewith, and such supplemental
agreement shall form a part of this Agreement for all purposes; and every Holder
of Certificates theretofore or thereafter authenticated, executed on behalf of
the Holders and delivered hereunder shall be bound thereby.
SECTION 8.5 REFERENCE TO SUPPLEMENTAL AGREEMENTS.
Certificates authenticated, executed on behalf of the Holders and
delivered after the execution of any supplemental agreement pursuant to this
Article may, and shall if required by the Agent, bear a notation in form
approved by the Agent as to any matter provided for in such supplemental
agreement. If the Company shall so determine, new Certificates so modified as to
conform, in the opinion of the Agent and the Company, to any such supplemental
agreement may be prepared and executed by the Company and authenticated,
executed on behalf of the Holders and delivered by the Agent in exchange for
Outstanding Certificates.
ARTICLE IX
CONSOLIDATION, MERGER, SALE OR CONVEYANCE
SECTION 9.1 COVENANT NOT TO MERGE, CONSOLIDATE, SELL OR CONVEY PROPERTY EXCEPT
UNDER CERTAIN CONDITIONS.
The Company covenants that it will not merge or consolidate with or
into any other Person or sell, assign, transfer, lease or convey all or
substantially all of its properties and assets to any Person or group of
affiliated Persons in one transaction or a series of related transactions,
unless (i) either the Company shall be the continuing entity, or the successor
(if other than the Company) shall be a Person, other than an individual,
organized and existing under the laws of the United States of America or a State
thereof or the District of Columbia and such entity shall expressly assume all
the obligations of the Company under the Purchase Contracts, the Debt
Securities, this Agreement and the Pledge Agreement by one or more supplemental
agreements in form reasonably satisfactory to the Agent and the Collateral
Agent, executed and delivered to the Agent and the Collateral Agent by such
Person, and (ii) the Company or such successor entity, as the case may be, shall
not, immediately after such merger or
52
consolidation, or such sale, assignment, transfer, lease or conveyance, be in
default in its payment obligations or in any material default in the performance
of any of its other obligations hereunder, or under any of the Securities or the
Pledge Agreement.
SECTION 9.2 RIGHTS AND DUTIES OF SUCCESSOR ENTITY.
In case of any such consolidation, merger, sale, assignment, transfer,
lease or conveyance and upon any such assumption by a successor entity in
accordance with Section 9.1, such successor entity shall succeed to and be
substituted for the Company with the same effect as if it had been named herein
as the Company. Such successor entity thereupon may cause to be signed, and may
issue either in its own name or in the name of TXU Corp. any or all of the
Certificates evidencing Securities issuable hereunder which theretofore shall
not have been signed by the Company and delivered to the Agent; and, upon the
order of such successor corporation, instead of the Company, and subject to all
the terms, conditions and limitations in this Agreement prescribed, the Agent
shall authenticate and execute on behalf of the Holders and deliver any
Certificates which previously shall have been signed and delivered by the
officers of the Company to the Agent for authentication and execution, and any
Certificate evidencing Securities which such successor entity thereafter shall
cause to be signed and delivered to the Agent for that purpose. All the
Certificates so issued shall in all respects have the same legal rank and
benefit under this Agreement as the Certificates theretofore or thereafter
issued in accordance with the terms of this Agreement as though all of such
Certificates had been issued at the date of the execution hereof.
In case of any such consolidation, merger, sale, assignment, transfer,
lease or conveyance such change in phraseology and form (but not in substance)
may be made in the Certificates evidencing Securities thereafter to be issued as
may be appropriate.
SECTION 9.3 OPINION OF COUNSEL GIVEN TO AGENT.
The Agent, subject to Sections 7.1 and 7.3, shall receive an Opinion
of Counsel as conclusive evidence that any such consolidation, merger, sale,
assignment, transfer, lease or conveyance, and any such assumption, complies
with the provisions of this Article and that all conditions precedent to the
consummation of any such consolidation, merger, sale, assignment, transfer,
lease or conveyance have been met.
ARTICLE X
COVENANTS
SECTION 10.1 PERFORMANCE UNDER PURCHASE CONTRACTS.
The Company covenants and agrees for the benefit of the Holders from
time to time of the Securities that it will duly and punctually perform its
obligations under the Purchase Contracts in accordance with the terms of the
Purchase Contracts and this Agreement.
SECTION 10.2 MAINTENANCE OF OFFICE OR AGENCY.
The Company will maintain in the Borough of Manhattan, The City of New
York an office or agency where Certificates may be presented or surrendered for
acquisition of shares of Common Stock upon settlement of the Purchase Contracts
on the Purchase Contract Settlement Date or Early Settlement and for transfer of
Collateral upon occurrence of a Termination Event, where Certificates may be
surrendered for registration of transfer or exchange, for a Collateral
Substitution or establishment of a Corporate Unit and where notices and demands
to or upon the Company in respect of the Securities and
53
this Agreement may be served. The Company will give prompt written notice to the
Agent of the location, and any change in the location, of such office or agency.
If at any time the Company shall fail to maintain any such required office or
agency or shall fail to furnish the Agent with the address thereof, such
presentations, surrenders, notices and demands may be made or served at the
Corporate Trust Office, and the Company hereby appoints the Agent as its agent
to receive all such presentations, surrenders, notices and demands.
The Company may also from time to time designate one or more other
offices or agencies where Certificates may be presented or surrendered for any
or all such purposes and may from time to time rescind such designations;
provided, however, that no such designation or rescission shall in any manner
relieve the Company of its obligation to maintain an office or agency in the
Borough of Manhattan, The City of New York for such purposes. The Company will
give prompt written notice to the Agent of any such designation or rescission
and of any change in the location of any such other office or agency. The
Company hereby designates as the place of payment for the Securities the
Corporate Trust Office and appoints the Agent at its Corporate Trust Office as
paying agent in such city.
SECTION 10.3 COMPANY TO RESERVE COMMON STOCK.
The Company shall at all times prior to the Purchase Contract
Settlement Date reserve and keep available, free from preemptive rights, out of
its authorized but unissued Common Stock the full number of shares of Common
Stock issuable against tender of payment in respect of all Purchase Contracts
constituting a part of the Securities evidenced by Outstanding Certificates.
SECTION 10.4 COVENANTS AS TO COMMON STOCK.
The Company covenants that all shares of Common Stock which may be
issued against tender of payment in respect of any Purchase Contract
constituting a part of the Outstanding Securities will, upon issuance, be duly
authorized, validly issued, fully paid and nonassessable.
ARTICLE XI
TRUST INDENTURE ACT
SECTION 11.1 TRUST INDENTURE ACT; APPLICATION.
(a) This Agreement is subject to the provisions of the TIA that
are required or deemed to be part of this Agreement and shall, to the extent
applicable, be governed by such provisions; and
(b) if and to the extent that any provision of this Agreement
limits, qualifies or conflicts with the duties imposed by Section 310 to 317,
inclusive, of the TIA, such imposed duties shall control.
SECTION 11.2 LISTS OF HOLDERS OF SECURITIES.
(a) The Company shall furnish or cause to be furnished to the
Agent (a) semi-annually, not later than June 1 and December 1 in each year,
commencing December 1, 2002, a list, in such form as the Agent may reasonably
require, of the names and addresses of the Holders ("List of Holders") as of a
date not more than 15 days prior to the delivery thereof, and (b) at such other
times as the Agent may request in writing, within 30 days after the receipt by
the Company of any such request, a List of Holders as of a date not more than 15
days prior to the time such list is furnished; provided that,
54
the Company shall not be obligated to provide such List of Holders at any time
the List of Holders does not differ from the most recent List of Holders given
to the Agent by the Company. The Agent may destroy any List of Holders
previously given to it on receipt of a new List of Holders.
(b) The Agent shall comply with its obligations under Section
311(a) of the TIA, subject to the provisions of Section 311(b) and Section
312(b) of the TIA.
SECTION 11.3 REPORTS BY THE AGENT.
Not later than November 1 of each year, commencing November 1, 2002,
the Agent shall provide to the Holders such reports, if any, as are required by
Section 313(a) of the TIA in the form and in the manner provided by Section
313(a) of the TIA. Such reports shall be as of the preceding September 15. The
Agent shall also comply with the requirements of Sections 313(b), (c) and (d) of
the TIA.
SECTION 11.4 PERIODIC REPORTS TO AGENT.
The Company shall provide to the Agent such documents, reports and
information as required by Section 314(a) (if any) and the compliance
certificate required by Section 314(a) of the TIA in the form, in the manner and
at the times required by Section 314(a) of the TIA.
SECTION 11.5 EVIDENCE OF COMPLIANCE WITH CONDITIONS PRECEDENT.
The Company shall provide to the Agent such evidence of compliance
with any conditions precedent provided for in this Agreement as and to the
extent required by Section 314(c) of the TIA. Any certificate or opinion
required to be given by an officer pursuant to Section 314(c)(1) of the TIA may
be given in the form of a Company's Certificate. Any opinion required to be
given pursuant to Section 314(c)(2) of the TIA may be given in the form of an
Opinion of Counsel.
SECTION 11.6 DEFAULTS; WAIVER.
The Holders of a majority of the Outstanding Purchase Contracts voting
together as one class may, by vote or consent, on behalf of all of the Holders,
waive any past Default and its consequences, except a Default
(a) in the payment on any Security, or
(b) in respect of a provision hereof which under Section 8.2
cannot be modified or amended without the consent of the Holder of each
Outstanding Security affected.
Upon such waiver, any such Default shall cease to exist, and any
Default arising therefrom shall be deemed to have been cured, for every purpose
of this Agreement, but no such waiver shall extend to any subsequent or other
Default or impair any right consequent thereon.
SECTION 11.7 AGENT'S KNOWLEDGE OF DEFAULTS.
The Agent shall not be deemed to have knowledge of any Default unless
a Responsible Officer shall have obtained written notice of such Default.
55
SECTION 11.8 CONFLICTING INTERESTS.
The Indenture, the Indenture (For Unsecured Debt Securities Series A),
dated as of October 1, 1997, of the Company to The Bank of New York, as trustee,
the Indenture (For Unsecured Debt Securities Series B), dated as of October 1,
1997, of the Company to The Bank of New York, as trustee, the Indenture (For
Unsecured Debt Securities Series C), dated as of January 1, 1998, of the Company
to The Bank of New York, as trustee, the Purchase Contract Agreement dated as of
July 1, 1998 of the Company to The Bank of New York, as agent, attorney-in-fact
and trustee, the Indenture (For Unsecured Debt Securities Series D and Series
E), dated as of July 1, 1998, of the Company to The Bank of New York, as
trustee, the Indenture (For Unsecured Debt Securities Series F), dated as of
October 1, 1998 of the Company to The Bank of New York, as trustee, the
Indenture (For Unsecured Debt Securities Series G), dated as of October 1, 1998,
of the Company to The Bank of New York, as trustee, the Indenture (For Unsecured
Debt Securities Series H), dated as of June 1, 1999, of the Company to The Bank
of New York, as trustee, the Indenture (For Unsecured Debt Securities Series I),
dated as of September 1, 1999, of the Company to The Bank of New York, as
trustee, or the Indenture (For Unsecured Debt Securities Series J), dated as of
July 1, 2001, of the Company to The Bank of New York, as trustee, the Indenture
(For Unsecured Debt Securities Series K and Series L), dated as of October 1,
2001, of the Company to The Bank of New York, as trustee, shall be deemed to be
specifically described in this Agreement for the purposes of clause (i) of the
first proviso contained in Section 310(b) of the TIA.
SECTION 11.9 DIRECTION OF AGENT.
Sections 316(a)(1)(A) of the TIA is hereby expressly excluded from
this Agreement, as permitted by the TIA.
56
IN WITNESS WHEREOF, the parties hereto have caused this Purchase
Contract Agreement to be duly executed as of the day and year first above
written.
TXU CORP.
By: /s/ Xxxx X. Xxxxxx
--------------------------------
Name: Xxxx X. Xxxxxx
Title: Treasurer
THE BANK OF NEW YORK,
as Purchase Contract Agent and Trustee
By: /s/ Xxxx X. Xxxxx
--------------------------------
Name: Xxxx X. Xxxxx
Title: Vice President
57
EXHIBIT A
FORM OF CORPORATE UNIT CERTIFICATE
THIS CERTIFICATE IS A GLOBAL CERTIFICATE WITHIN THE MEANING OF
THE PURCHASE CONTRACT AGREEMENT (AS HEREINAFTER DEFINED) AND IS REGISTERED IN
THE NAME OF THE CLEARING AGENCY OR A NOMINEE THEREOF. THIS CERTIFICATE MAY NOT
BE EXCHANGED IN WHOLE OR IN PART FOR A CERTIFICATE REGISTERED, AND NO TRANSFER
OF THIS CERTIFICATE IN WHOLE OR IN PART MAY BE REGISTERED, IN THE NAME OF ANY
PERSON OTHER THAN SUCH CLEARING AGENCY OR A NOMINEE THEREOF, EXCEPT IN THE
LIMITED CIRCUMSTANCES DESCRIBED IN THE PURCHASE CONTRACT AGREEMENT.
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (55 XXXXX XXXXXX, XXX XXXX, XXX
XXXX) TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR
PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO., OR
SUCH OTHER NAME AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY
TRUST COMPANY, AND ANY PAYMENT HEREON IS MADE TO CEDE & CO., ANY TRANSFER,
PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY A PERSON IS WRONGFUL SINCE
THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
No. _____ Cusip No.___________
Number of Corporate Units _______
TXU CORP.
8.125% Corporate Units
($50 Stated Amount)
This Corporate Unit Certificate certifies that ___________ is the
registered Holder of the number of Corporate Units set forth above. Each
Corporate Unit represents (a) a stock purchase contract of TXU Corp., a Texas
corporation (the "Company") (as modified and supplemented and in effect from
time to time, a "Purchase Contract") and (b) beneficial ownership of either (A)
(i) beneficial ownership of a Series M Senior Note due May 16, 2008 of the
Company ("Debt Security"), having a principal amount of $50 or (ii) following a
successful remarketing of the Debt Securities on the Initial Remarketing Date,
an Applicable Ownership Interest in the appropriate Treasury Portfolio, subject
to the pledge of such Debt Security or Applicable Ownership Interest in the
appropriate Treasury Portfolio by the Holder pursuant to the Pledge Agreement or
(B) upon the occurrence of a Tax Event Redemption prior to the Purchase Contract
Settlement Date, an Applicable Ownership Interest in the appropriate Treasury
Portfolio, subject to the Pledge of such Applicable Ownership Interest in the
appropriate Treasury Portfolio by the Holder pursuant to the Pledge Agreement.
All capitalized terms used herein without definition herein shall have the
meaning set forth in the Purchase Contract Agreement referred to below.
Pursuant to the Pledge Agreement, the Debt Securities or the
appropriate Applicable Ownership Interest in the Treasury Portfolio, as the case
may be, constituting part of each Corporate Unit evidenced hereby have been
pledged to the Collateral Agent, for the benefit of the Company, to secure the
obligations of the Holder under the Purchase Contract comprising a portion of
such Corporate Unit.
The Pledge Agreement provides that all payments of the principal
amount of Pledged Debt Securities or the Stated Amount of the Pledged Applicable
Ownership Interest (as specified in clause (1)
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of the definition of such term) in the appropriate Treasury Portfolio, as the
case may be, or payments of interest on any Pledged Debt Securities or the
Pledged Applicable Ownership Interest in the appropriate Treasury Portfolio, as
the case may be, constituting part of the Corporate Units received by the
Collateral Agent shall be paid by the Collateral Agent by wire transfer in same
day funds (i) in the case of (A) payments of interest with respect to Pledged
Debt Securities or cash distributions on the Pledged Applicable Ownership
Interest (as specified in clauses (1)(ii), (1)(iii) or (2)(ii) of the definition
of such term) in the appropriate Treasury Portfolio, as the case may be, and (B)
any payments of the principal amount of Pledged Debt Securities or the Stated
Amount of the Pledged Applicable Ownership Interest (as specified in clauses
(1)(i) or (2)(i) of the definition of such term) in the appropriate Treasury
Portfolio, as the case may be, with respect to any Debt Securities or the
Applicable Ownership Interest in the appropriate Treasury Portfolio, as the case
may be, that have been released from the Pledge pursuant to the Pledge
Agreement, to the Agent to the account designated by the Agent, no later than
2:00 p.m., New York City time, on the Business Day such payment is received by
the Collateral Agent (provided that in the event such payment is received by the
Collateral Agent on a day that is not a Business Day or after 12:30 p.m., New
York City time, on a Business Day, then such payment shall be made no later than
10:30 a.m., New York City time, on the next succeeding Business Day) and (ii) in
the case of payments of the principal amount of Debt Securities or the
Applicable Ownership Interest (as specified in clauses (1)(i) or (2)(i) of the
definition of such term) in the appropriate Treasury Portfolio, as the case may
be, to the Company on the Purchase Contract Settlement Date (as defined herein)
in accordance with the terms of the Pledge Agreement, in full satisfaction of
the respective obligations of the Holders of the Corporate Units of which such
Pledged Debt Securities or the Pledged Applicable Ownership Interest in the
appropriate Treasury Portfolio, as the case may be, are a part under the
Purchase Contracts forming a part of such Corporate Units. Payment of interest
on any Pledged Debt Securities or cash distribution on the Pledged Applicable
Ownership Interest (as specified in clauses (1)(ii), 1(iii) or (2)(ii) of the
definition of such term) in the appropriate Treasury Portfolio, as the case may
be, forming part of a Corporate Unit evidenced hereby which are payable
quarterly in arrears on February 16, May 16, August 16 and May 16 of each year,
commencing August 16, 2002, and on the Initial Reset Date if the remarketing of
the Pledged Debt Securities on the third Business Day immediately preceding the
Initial Reset Date is successful and the Initial Reset Date is not November 16,
2005 or February 16, 2006 (each a "Payment Date"), shall, subject to receipt
thereof by the Agent from the Collateral Agent, be paid to the Person in whose
name this Corporate Unit Certificate (or a Predecessor Corporate Unit
Certificate) is registered at the close of business on the Record Date for such
Payment Date.
Each Purchase Contract evidenced hereby obligates the Holder of this
Corporate Unit Certificate to purchase, and the Company to sell, not later than
May 16, 2006 (the "Purchase Contract Settlement Date"), at a price of $50 in
cash (the "Purchase Price"), a number of newly-issued shares of Common Stock,
without par value including, where applicable, the preference stock purchase
rights appurtenant thereto ("Common Stock"), of the Company equal to the
applicable Settlement Rate (as defined below), unless on or prior to the
Purchase Contract Settlement Date there shall have occurred a Termination Event
or an Early Settlement with respect to the Corporate Units of which such
Purchase Contract is a part, all as provided in the Purchase Contract Agreement
and more fully described on the herein.
The Settlement Rate is equal to (a) if the Applicable Market Value (as
defined below) is equal to or greater than $62.9145 (the "Threshold Appreciation
Price"), 0.7947 shares of Common Stock per Purchase Contract, (b) if the
Applicable Market Value is less than the Threshold Application Price but is
greater than $51.15, the number of shares of Common Stock per Purchase Contract
equal to $50 divided by the Applicable Market Value, and (c) if the Applicable
Market Value is less than or equal to $51.15, 0.9775 shares of Common Stock per
Purchase Contract, in each case subject to adjustment as provided in the
Purchase Contract Agreement. No fractional shares of Common Stock will be issued
upon settlement of Purchase Contracts, as provided in the Purchase Contract
Agreement.
The Company shall pay, on each Payment Date other than the Initial
Reset Date, if the Initial Reset Date is not also a regular quarterly Payment
Date in respect of each Purchase Contract forming part of a Corporate Unit
evidenced hereby, an amount (the "Contract Adjustment Payments") equal to 2.325%
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per annum of the Stated Amount; computed on the basis of a 360-day year of
twelve 30-day months, subject to deferral at the option of the Company as
provided in the Purchase Contract Agreement and more fully described herein.
Such Contract Adjustment Payments shall be payable to the Person in whose name
this Corporate Unit Certificate (or a Predecessor Corporate Unit Certificate or
a Predecessor Treasury Unit Certificate) is registered on the Register at the
close of business on the Record Date for such Payment Date.
Contract Adjustment Payments will be payable at the Corporate Trust
Office or, at the option of the Company, by check mailed to the address of the
Person entitled thereto at such Person's address as it appears on the Corporate
Unit Register or by wire transfer to an account appropriately designated in
writing by the Person entitled to payment.
Unless the context otherwise requires, each provision of this Security
shall be part of the Purchase Contracts evidenced hereby. This Security and each
Purchase Contract evidenced hereby is governed by a Purchase Contract Agreement,
dated as of June 1, 2002 (as may be supplemented from time to time, the
"Purchase Contract Agreement"), between the Company and The Bank of New York, as
purchase contract agent and trustee (including any successor thereunder, herein
called the "Agent"), to which Purchase Contract Agreement and supplemental
agreements thereto reference is hereby made for a description of the respective
rights, limitations of rights, obligations, duties and immunities thereunder of
the Agent, the Company, and the Holders and of the terms upon which the
Corporate Unit Certificates are, and are to be, executed and delivered.
Each Purchase Contract evidenced hereby, which is settled either
through Early Settlement or Cash Settlement, shall obligate the Holder of the
related Corporate Units to purchase at the applicable Purchase Price, and the
Company to sell, a number of newly issued shares of Common Stock equal to the
Early Settlement Rate or the applicable Settlement Rate, as applicable.
The "Applicable Market Value" means the average of the Closing Price
per share of Common Stock on each of the 20 consecutive Trading Days ending on
the third Trading Day immediately preceding the Purchase Contract Settlement
Date. The "Closing Price" of the Common Stock on any date of determination means
the closing sale price (or, if no closing price is reported, the last reported
sale price) of the Common Stock on the New York Stock Exchange (the "NYSE") on
such date or, if the Common Stock is not listed for trading on the NYSE on any
such date, as reported in the composite transactions for the principal United
States national or regional securities exchange on which the Common Stock is so
listed. If the Common Stock is not so listed on a United States national or
regional securities exchange, the Closing Price means the last sale price of the
Common Stock as reported by the NASDAQ Stock Market, or if the Common Stock is
not so reported, the last quoted bid price for the Common Stock in the
over-the-counter market as reported by the National Quotation Bureau or similar
organization. If such bid price is not available, the Closing Price means market
value of the Common Stock on such date as determined by a nationally recognized
independent investment banking firm retained by the Company for this purpose. A
"Trading Day" means a day on which the Common Stock (A) is not suspended from
trading on any national or regional securities exchange or association or
over-the-counter market at the close of business and (B) has traded at least
once on the national or regional securities exchange or association or
over-the-counter market that is the primary market for the trading of the Common
Stock.
In accordance with the terms of the Purchase Contract Agreement, the
Holder of the Corporate Units evidenced hereby shall pay, on the Purchase
Contract Settlement Date, the applicable Purchase Price for the shares of Common
Stock purchased pursuant to each Purchase Contract evidenced hereby by effecting
a Cash Settlement or, an Early Settlement. A Holder of Corporate Units who does
not make such payment in accordance with the Purchase Contract Agreement or who
does not notify the Agent of such Holder's intention, on or prior to 5:00 p.m.,
New York City time, on the fifth Business Day immediately preceding the Purchase
Contract Settlement Date, to make an effective Cash Settlement or an Early
Settlement, shall have defaulted in its obligations under the related Purchase
Contract and the
A-3
Collateral Agent shall exercise its rights as a secured creditor for the benefit
of the Company under the Purchase Contract Agreement and the Pledge Agreement
and shall apply the Proceeds of the sale of the related applicable Pledged Debt
Securities held by the Collateral Agent to satisfy the Holder's obligations
under such Purchase Contract to purchase Common Stock at the Purchase Price.
The Company shall not be obligated to issue any shares of Common Stock
in respect of the Purchase Contract on the Purchase Contract Settlement Date or
deliver any certificates therefor to the Holder unless it shall have received
payment in full of the aggregate Purchase Price for the shares of Common Stock
to be purchased thereunder in the manner herein set forth.
Under and subject to the terms of the Pledge Agreement and the
Purchase Contract Agreement, the Agent will be entitled to exercise the voting
and any other consensual rights pertaining to the Pledged Debt Securities, but
only to the extent instructed by the Holders as described in the paragraph
below. Upon receipt of notice of any meeting at which holders of Debt Securities
are entitled to vote or upon the solicitation of consents, waivers or proxies of
holders of Debt Securities, the Agent shall, as soon as practicable thereafter,
mail to the Holders of Corporate Units a notice (a) containing such information
as is contained in the notice or solicitation, (b) stating that each Corporate
Unit Holder on the record date set by the Agent therefor shall be entitled to
instruct the Agent as to the exercise of the voting rights pertaining to the
Debt Securities constituting a part of such Holder's Corporate Unit and (c)
stating the manner in which such instructions may be given. Upon the written
request of the Corporate Unit Holders on such record date, the Agent shall
endeavor insofar as practicable to vote or cause to be voted, in accordance with
the instructions set forth in such requests, the maximum number of Debt
Securities as to which any particular voting instructions are received. In the
absence of specific instructions from the Holder of a Corporate Units, the Agent
shall abstain from voting any Debt Securities evidenced by such Corporate Units.
Upon the occurrence of a Tax Event Redemption prior to the Purchase
Contract Settlement Date, the Redemption Price payable on the Tax Event
Redemption Date with respect to the Applicable Principal Amount of Debt
Securities shall be delivered to the Collateral Agent in exchange for the
Pledged Debt Securities. Pursuant to the terms of the Pledge Agreement, the
Collateral Agent will apply an amount equal to the Redemption Amount of such
Redemption Price to purchase on behalf of the Holders of Corporate Units the Tax
Event Treasury Portfolio and promptly remit the remaining portion of such
Redemption Price, if any, to the Agent for payment to the Holders of such
Corporate Units. The Tax Event Treasury Portfolio will be substituted for the
Pledged Debt Securities, and will be held by the Collateral Agent in accordance
with the terms of the Pledge Agreement to secure the obligation of each Holder
of a Corporate Unit to purchase the Common Stock of the Company on the Purchase
Contract Settlement Date under the Purchase Contract constituting a part of such
Corporate Unit. Following the occurrence of a Tax Event Redemption prior to the
Purchase Contract Settlement Date, the Holders of Corporate Units and the
Collateral Agent shall have such security interests, rights and obligations with
respect to the Tax Event Treasury Portfolio as the Holder of Corporate Units and
the Collateral Agent had in respect of the Debt Securities subject to the Pledge
thereof as provided in Articles II, III, IV, V and VI of the Pledge Agreement,
and any reference herein to the Pledged Debt Securities shall be deemed to be
reference to such Tax Event Treasury Portfolio. The Company may cause to be made
in any Corporate Unit Certificates thereafter to be issued such change in
phraseology and form (but not in substance) as may be appropriate to reflect the
substitution of the Tax Event Treasury Portfolio for Debt Securities as
collateral.
Upon the successful remarketing of the Pledged Debt Securities on the
Initial Remarketing Date, the proceeds of such remarketing (after deducting any
Remarketing Fee) shall be delivered to the Collateral Agent in exchange for the
Pledged Debt Securities. Pursuant to the terms of the Pledge Agreement, the
Collateral Agent will apply an amount equal to the Remarketing Treasury
Portfolio Purchase Price to purchase on behalf of the Holders of Corporate Units
the Remarketing Treasury Portfolio and promptly remit the remaining portion of
such proceeds to the Agent for payment to the Holders of such Corporate Units.
The Remarketing Treasury Portfolio will be substituted for the
A-4
outstanding Pledged Debt Securities, and will be held by the Collateral Agent in
accordance with the terms of the Pledge Agreement to secure the obligation of
each Holder of a Corporate Unit to purchase the Common Stock of the Company on
the Purchase Contract Settlement Date under the Purchase Contract constituting a
part of such Corporate Unit. Following the successful remarketing of the Pledged
Debt Securities on the Initial Remarketing Date, the Holders of Corporate Units
and the Collateral Agent shall have such security interests, rights and
obligations with respect to the Remarketing Treasury Portfolio as the Holder of
Corporate Units and the Collateral Agent had in respect of the Debt Securities
subject to the Pledge thereof as provided in Articles II, III, IV, V and VI of
the Pledge Agreement, and any reference herein to the Debt Securities shall be
deemed to be reference to such Remarketing Treasury Portfolio. The Company may
cause to be made in any Corporate Unit Certificates thereafter to be issued such
change in phraseology and form (but not in substance) as may be appropriate to
reflect the substitution of the Remarketing Treasury Portfolio for Debt
Securities as collateral.
The Corporate Units are issuable only in registered form and only in
denominations of a single Corporate Unit and any integral multiple thereof. The
transfer of any Corporate Unit Certificate will be registered and Corporate Unit
Certificates may be exchanged as provided in the Purchase Contract Agreement.
The Corporate Unit Registrar may require a Holder, among other things, to
furnish appropriate endorsements and transfer documents permitted by the
Purchase Contract Agreement. No service charge shall be required for any such
registration of transfer or exchange, but the Company and the Agent may require
payment of a sum sufficient to cover any tax or other governmental charge
payable in connection therewith.
A Holder of a Corporate Unit may, at any time on or prior to the
fifth Business Day immediately preceding the Purchase Contract Settlement Date,
create or recreate a Treasury Unit and separate the Debt Security or the
Applicable Ownership Interest in the appropriate Treasury Portfolio, as
applicable, from the related Purchase Contract in respect of such Corporate Unit
by substituting the appropriate Treasury Security for the Debt Security, or the
Applicable Ownership Interest in the appropriate Treasury Portfolio, that form a
part of such Corporate Unit in accordance with the Purchase Contract Agreement;
provided, however, that if a successful remarketing of the Debt Securities has
occurred on the Initial Remarketing Date or a Tax Event Redemption has occurred,
Holders of such Corporate Units may make such Collateral Substitutions at any
time on or prior to the second Business Day immediately preceding the Purchase
Contract Settlement Date. Holders may make Collateral Substitutions and
establish Treasury Units (i) only in integral multiples of 20 Corporate Units if
only Debt Securities are being substituted by Treasury Securities, or (ii) only
in integral multiples of 40,000 Corporate Units if the Applicable Ownership
Interests in the appropriate Treasury Portfolio are being substituted by
Treasury Securities. To create 20 Treasury Units (if a Tax Event Redemption has
not occurred and the Debt Securities remain a component of the Corporate Units),
or 40,000 Treasury Units (if a Tax Event Redemption has occurred or the
Remarketing Treasury Portfolio has replaced the Debt Securities as a component
of the Corporate Units as a result of a successful remarketing of such Debt
Securities), the Corporate Unit Holder shall
(a) if a Treasury Portfolio has not replaced any Debt
Securities as a component of Corporate Units as a result of a
successful remarketing of the Debt Securities on the Initial
Remarketing Date or a Tax Event Redemption, deposit with the
Collateral Agent a Treasury Security having a principal amount at
maturity of $1,000; or
(b) if a Treasury Portfolio has replaced the Debt Securities
as a component of Corporate Units as a result of a successful
remarketing of the Debt Securities on the Initial Remarketing Date or
a Tax Event Redemption, on or prior to the second Business Day
immediately preceding the Purchase Contract Settlement Date, deposit
with the Collateral Agent Treasury Securities having an aggregate
principal amount at maturity of $2,000,000; and
(c) in each case, transfer and surrender the related 20
Corporate Units, or, in the event a Treasury Portfolio is a component
of Corporate Units, 40,000 Corporate Units, to the
A-5
Agent accompanied by a notice to the Agent, substantially in the form
of Exhibit B to the Pledge Agreement, stating that the Holder has
transferred the relevant types and amounts of Treasury Securities to
the Collateral Agent and requesting that the Agent instruct the
Collateral Agent to release the applicable Debt Securities or the
Applicable Ownership Interest in the appropriate Treasury Portfolio,
as the case may be, underlying such Corporate Unit, whereupon the
Agent shall promptly give such instruction to the Collateral Agent,
substantially in the form of Exhibit A to the Pledge Agreement.
Upon receipt of the Treasury Securities described in clause (a)
or (b) above and the instructions described in clause (c) above, in accordance
with the terms of the Pledge Agreement, the Collateral Agent will release from
the Pledge, to the Agent, on behalf of the Holder, Debt Securities or the
Applicable Ownership Interest in the appropriate Treasury Portfolio, as the case
may be, that had been components of such Corporate Unit, free and clear of the
Company's security interest therein, and upon receipt thereof the Agent shall
promptly:
(i) cancel the related Corporate Units surrendered and
transferred;
(ii) transfer the Debt Securities or the Applicable Ownership
Interest in the appropriate Treasury Portfolio, as the case may be, that had
been components of such Corporate Unit to the Holder; and
(iii) authenticate, execute on behalf of such Holder and
deliver a Treasury Unit Certificate executed by the Company in accordance with
the Purchase Contract Agreement evidencing the same number of Purchase Contracts
as were evidenced by the cancelled Corporate Units.
Holders who elect to separate the Debt Securities or the Applicable
Ownership Interest in the appropriate Treasury Portfolio, as the case may be,
from the related Purchase Contracts and to substitute Treasury Securities for
such Debt Securities or the Applicable Ownership Interest in the appropriate
Treasury Portfolio, as the case may be, shall be responsible for any fees or
expenses payable to the Collateral Agent for its services as Collateral Agent in
respect of the substitution, and the Company shall not be responsible for any
such fees or expenses.
A Holder of a Treasury Unit may create or recreate a Corporate Unit by
depositing with the Collateral Agent a Debt Security or the Applicable Ownership
Interest in the appropriate Treasury Portfolio, as the case may be, having an
aggregate principal amount equal to the aggregate principal amount at maturity
of, and in substitution for all, but not less than all, of the Treasury
Securities comprising part of the Treasury Unit in exchange for the release of
such Pledged Treasury Securities in accordance with the terms of the Purchase
Contract Agreement and the Pledge Agreement.
Subject to the next succeeding paragraph, the Company shall pay, on
each Payment Date, except the Initial Reset Date, if the Initial Reset Date is
not also a quarterly Payment Date the Contract Adjustment Payments payable in
respect of each Purchase Contract to the Person in whose name the Corporate Unit
Certificate evidencing such Purchase Contract is registered on the Register at
the close of business on the Record Date next preceding such Payment Date. The
Contract Adjustment Payments will be payable at the Corporate Trust Office or,
at the option of the Company, by check mailed to the address of the Person
entitled thereto at such address as it appears on the Corporate Unit Register or
by wire transfer to an account appropriately designated in writing by such
person.
The Company shall have the right, at any time prior to the Purchase
Contract Settlement Date, to defer the payment of any or all of the Contract
Adjustment Payments otherwise payable on any Payment Date, but only if the
Company shall give the Holders and the Agent written notice of its election to
defer such payment (specifying the amount to be deferred) as provided in the
Purchase Contract Agreement. Any Contract Adjustment Payments so deferred shall
bear additional Contract Adjustment Payments thereon at the rate of 8.125% per
annum (computed on the basis of a 360-day year of twelve 30-day
A-6
months), compounding on each succeeding Payment Date, until paid in full (such
deferred installments of Contract Adjustment Payments, if any, together with the
additional Contract Adjustment Payments accrued thereon, are referred to herein
as the "Deferred Contract Adjustment Payments"). Deferred Contract Adjustment
Payments, if any, shall be due on the next succeeding Payment Date except to the
extent that payment is deferred pursuant to the Purchase Contract Agreement. No
Contract Adjustment Payments may be deferred to a date that is after the
Purchase Contract Settlement Date.
In the event that the Company elects to defer the payment of Contract
Adjustment Payments on the Purchase Contracts until the Purchase Contract
Settlement Date, the Holder of this Corporate Unit Certificate will receive on
the Purchase Contract Settlement Date, in lieu of a cash payment, a number of
shares of Common Stock (in addition to the number of shares equal to the
Settlement Rate) equal to (x) the aggregate amount of Deferred Contract
Adjustment Payments payable to the Holder of this Corporate Unit Certificate
divided by (y) the Applicable Market Value.
In the event the Company exercises its option to defer the payment of
Contract Adjustment Payments, then, until the Deferred Contract Adjustment
Payments have been paid, the Company shall not declare or pay dividends on, make
distributions with respect to, or redeem, purchase or acquire, or make a
liquidation payment with respect to, any of its capital stock or make guarantee
payments with respect to the foregoing (other than (i) purchases, redemptions or
acquisitions of shares of capital stock of the Company in connection with any
employment contract, benefit plan or other similar arrangement with or for the
benefit of employees, officers, directors or agents or a stock purchase or
dividend reinvestment plan, or the satisfaction by the Company of its
obligations pursuant to any contract or security outstanding on the date of such
event or agent benefit plans or the satisfaction by the Company of its
obligations pursuant to any contract or security outstanding on the date of such
event requiring the Company to purchase, redeem or acquire its capital stock,
(ii) as a result of a reclassification of the Company's capital stock or the
exchange or conversion of one class or series of the Company's capital stock for
another class or series of the Company's capital stock, (iii) the purchase of
fractional interests in shares of the Company's capital stock pursuant to the
conversion or exchange provisions of the Company's capital stock or the security
being converted or exchanged, (iv) dividends or distributions in capital stock
of the Company (or rights to acquire capital stock) or repurchases, redemptions
or acquisitions of capital stock in connection with the issuance or exchange of
the Company's capital stock (or securities convertible into or exchangeable for
shares of capital stock) or (v) redemptions, exchanges or repurchases of any
rights outstanding under a shareholder rights plan or the declaration or payment
thereunder of a dividend or distribution of or with respect to rights in the
future.
The Purchase Contracts and all obligations and rights of the Company
and the Holders thereunder, including, without limitation, the rights of the
Holders to receive and the obligation of the Company to pay any Contract
Adjustment Payments or any Deferred Contract Adjustment Payments, and the rights
and obligations of the Holders to purchase Common Stock, shall immediately and
automatically terminate, without the necessity of any notice or action by any
Holder, the Agent or the Company, if, on or prior to the Purchase Contract
Settlement Date, a Termination Event shall have occurred. Upon the occurrence of
a Termination Event, the Company shall promptly but in no event later than two
Business Days thereafter give written notice to the Agent, the Collateral Agent
and to the Holders, at their addresses as they appear in the Corporate Unit
Register. Upon and after the occurrence of a Termination Event, the Collateral
Agent shall release the Debt Securities or the Applicable Ownership Interest in
the appropriate Treasury Portfolio, as the case may be, forming a part of the
Corporate Units evidenced hereby from the Pledge in accordance with the
provisions of the Pledge Agreement.
Subject to and upon compliance with the provisions of the Purchase
Contract Agreement, a Holder of Corporate Units may settle the related Purchase
Contracts in their entirety at any time on or prior to the fifth Business Day
immediately preceding the Purchase Contract Settlement Date, but only in
integral multiples of 20 Corporate Units; provided, however, that if a Treasury
Portfolio has become a component of the Corporate Units, Holders of Corporate
Units may settle early only in integral multiples of 40,000 Corporate Units at
any time on or prior to the second Business Day immediately preceding the
A-7
Purchase Contract Settlement Date. In order to exercise the right to effect any
such early settlement ("Early Settlement") with respect to any Purchase
Contracts evidenced by this Corporate Unit Certificate, the Holder of this
Corporate Unit Certificate shall deliver this Corporate Unit Certificate to the
Agent at the Corporate Trust Office duly endorsed for transfer to the Company or
in blank with the form of Election to Settle Early set forth below duly
completed and executed and accompanied by payment payable to the Company in
immediately available funds in an amount (the "Early Settlement Amount") equal
to the sum of (i) $50 times the number of Purchase Contracts being settled, plus
(ii) if such delivery is made with respect to any Purchase Contracts during the
period from the close of business on any Record Date next preceding any Payment
Date to the opening of business on such Payment Date, an amount equal to the
Contract Adjustment Payments payable, if any, on such Payment Date with respect
to such Purchase Contracts. Upon Early Settlement of Purchase Contracts by a
Holder of the related Securities, the Pledged Debt Securities or the Pledged
Applicable Ownership Interest in the a Treasury Portfolio underlying such
Securities shall be released from the Pledge as provided in the Pledge Agreement
and the Holder shall be entitled to receive a number of shares of Common Stock
on account of each Purchase Contract forming part of a Corporate Unit as to
which Early Settlement is effected equal to the Early Settlement Rate which
shall be equal to 0.7947 newly issued shares of Common Stock per Purchase
Contract (the "Early Settlement Rate"); provided however, that upon the Early
Settlement of the Purchase Contracts, (i) the Holder thereof will forfeit the
right to receive any Deferred Contract Adjustment Payments, if any, on such
Purchase Contracts, (ii) the Holder's right to receive additional Contract
Adjustment Payments in respect of such Purchase Contracts will terminate, and
(iii) no adjustment will be made to or for the Holder on account of Deferred
Contract Adjustment Payments, or any amount accrued in respect of Contract
Adjustment Payments. The Early Settlement Rate shall be adjusted in the same
manner and at the same time as the Settlement Rate is adjusted as provided in
the Purchase Contract Agreement.
Upon registration of transfer of this Corporate Unit Certificate, the
transferee shall be bound (without the necessity of any other action on the part
of such transferee, except as may be required by the Agent pursuant to the
Purchase Contract Agreement), under the terms of the Purchase Contract Agreement
and the Purchase Contracts evidenced hereby and the transferor shall be released
from the obligations under the Purchase Contracts evidenced by this Corporate
Unit Certificate. The Company covenants and agrees, and the Holder, by its
acceptance hereof, likewise covenants and agrees, to be bound by the provisions
of this paragraph.
The Holder of this Corporate Unit Certificate, by its acceptance
hereof, irrevocably authorizes the Agent to enter into and perform the related
Purchase Contracts forming part of the Corporate Units evidenced hereby on its
behalf as its attorney-in-fact, expressly withholds any consent to the
assumption of the Purchase Contracts by the Company, its trustee in bankruptcy,
receiver, liquidator or a person or entity performing similar functions, in the
event that the Company becomes the subject of a case under the Bankruptcy Code
or subject to other similar Federal or State law providing for reorganization or
liquidation, agrees to be bound by the terms and provisions thereof, covenants
and agrees to perform its obligations under such Purchase Contracts, consents to
the provisions of the Purchase Contract Agreement, authorizes the Agent to enter
into and perform the Pledge Agreement on its behalf as its attorney-in-fact, and
consents to and agrees to be bound by the Pledge of the Pledged Debt Securities
or the Pledged Applicable Ownership Interest in a Treasury Portfolio, as the
case may be, underlying this Corporate Unit Certificate pursuant to the Pledge
Agreement. The Holder, by its acceptance hereof, further covenants and agrees,
that, to the extent and in the manner provided in the Purchase Contract
Agreement and the Pledge Agreement, but subject to the terms thereof, payments
in respect of the principal of the Pledged Debt Securities, or the portion of
the Applicable Ownership Interest (as specified in clauses (1)(i) or 2(i) of the
definition of such term) in the appropriate Treasury Portfolio, on the Purchase
Contract Settlement Date shall be paid by the Collateral Agent to the Company in
satisfaction of such Holder's obligations under such Purchase Contract and such
Holder shall acquire no right, title or interest in such payments.
A-8
The Holder of this Corporate Unit Certificate, by its acceptance
hereof, covenants and agrees to treat itself as the owner, for United States
federal, state and local income and franchise tax purposes, of the Debt
Securities or the Applicable Ownership Interest in the appropriate Treasury
Portfolio forming part of the Corporate Units evidenced hereby. The Holder of
this Corporate Unit Certificate, by its acceptance hereof, further covenants and
agrees to treat the Debt Securities forming part of the Corporate Units
evidenced hereby as indebtedness of the Company for United States federal, state
and local income and franchise tax purposes.
Subject to certain exceptions, the provisions of the Purchase Contract
Agreement may be amended with the consent of the Holders of a majority of the
Purchase Contracts. In addition, certain amendments to the Purchase Contract
Agreement may be made without any consent of the Holders as provided in the
Purchase Contract Agreement.
THE PURCHASE CONTRACTS SHALL FOR ALL PURPOSES BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
The Company and the Agent and any agent of the Company or the Agent
may treat the Person in whose name this Corporate Unit Certificate is registered
on the Corporate Unit Register as the owner of the Corporate Units evidenced
hereby for the purpose of receiving payments of interest payable quarterly and
on the Initial Reset Date, if the remarketing of the Debt Securities on the
third Business Day immediately preceding the Initial Reset Date is successful
and the Initial Reset Date is not November 16, 2005 or February 16, 2006, on the
Debt Securities receiving payments of Contract Adjustment Payments and any
Deferred Contract Adjustment Payments, performance of the Purchase Contracts and
for all other purposes whatsoever, whether or not any payments in respect
thereof be overdue and notwithstanding any notice to the contrary, and neither
the Company, the Agent nor any such agent shall be affected by notice to the
contrary.
The Purchase Contracts shall not, prior to the settlement thereof in
accordance with the Purchase Contract Agreement, entitle the Holder to any of
the rights of a holder of shares of Common Stock.
A copy of the Purchase Contract Agreement is available for inspection
at the offices of the Agent during regular business hours of the Agent.
Unless the certificate of authentication hereon has been executed by
the Agent by manual signature, this Corporate Unit Certificate shall not be
entitled to any benefit under the Pledge Agreement or the Purchase Contract
Agreement or be valid or obligatory for any purpose.
A-9
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed.
TXU Corp.
By:
-------------------------------
Name:
Title:
HOLDER SPECIFIED ABOVE (as to
obligations of such Holder under the
Purchase Contracts evidenced hereby)
By: The Bank of New York,
not individually but solely as
Attorney-in-Fact of such Holder
By:
-------------------------------
Name:
Title:
Dated:
AGENT'S CERTIFICATE OF AUTHENTICATION
This is one of the Corporate Unit Certificates referred to in the
within mentioned Purchase Contract Agreement.
THE BANK OF NEW YORK,
as Purchase Contract Agent and Trustee
By:
-------------------------------
Authorized Signatory
A-10
ABBREVIATIONS
The following abbreviations, when used in the inscription on the face
of this instrument, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM - as tenants in common
UNIF GIFT MIN ACT - ------------Custodian------------
(cust) (minor)
Under Uniform Gifts to Minors Act
---------------------------------
(State)
TEN ENT - as tenants by the entireties
JT TEN - as joint tenants with right of survivorship
and not as tenants in common
Additional abbreviations may also be used though not in the above list.
-----------------------------------
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto
(Please insert Social Security or Taxpayer I.D. or other Identifying Number of
Assignee)
(Please Print or Type Name and Address Including Postal Zip Code of Assignee)
the within Corporate Unit Certificate and all rights thereunder, hereby
irrevocably constituting and appointing
attorney to transfer said Corporate Unit Certificate on the books of TXU Corp.
with full power of substitution in the premises.
Dated:
-----------------------------------------------------------------------
Signature
NOTICE: The signature to this
assignment must correspond with the
name as it appears upon the face of
the within Corporate Unit
Certificates in every particular,
without alteration or enlargement or
any change whatsoever.
Signature Guarantee:
-----------------------
Signatures must be guaranteed by an "eligible guarantor institution" meeting the
requirements of the Registrar, which requirements include membership or
participation in the Security Transfer Agent Medallion Program ("STAMP") or such
other "signature guarantee program" as may be determined by the Registrar in
addition to, or in substitution for, STAMP, all in accordance with the
Securities Exchange Act of 1934, as amended.
A-11
SETTLEMENT INSTRUCTIONS
The undersigned Holder directs that a certificate for shares of Common
Stock deliverable upon settlement on or after the Purchase Contract Settlement
Date of the Purchase Contracts underlying the number of Corporate Units
evidenced by this Corporate Unit Certificate be registered in the name of, and
delivered, together with a check in payment for any fractional share, to the
undersigned at the address indicated below unless a different name and address
have been indicated below. If shares are to be registered in the name of a
Person other than the undersigned, the undersigned will pay any transfer tax
payable incident thereto.
Dated:
-------------------------- ----------------------------------
Signature
Signature Guarantee:
--------------------
(if assigned to another person)
Signatures must be guaranteed by an "eligible guarantor institution"
meeting the requirements of the Registrar, which requirements include membership
or participation in the Security Transfer Agent Medallion Program ("STAMP") or
such other "signature guarantee program" as may be determined by the Registrar
in addition to, or in substitution for, STAMP, all in accordance with the
Securities Exchange Act of 1934, as amended.
If shares are to be registered in the name REGISTERED HOLDER
of and delivered to a Person other than the
Holder, please (i) print such Person's name
and address and (ii) provide a guarantee of
your signature:
Please print name and address of
Registered Holder:
____________________________________ ____________________________________
Name Name
____________________________________ ____________________________________
Address Address
____________________________________ ____________________________________
____________________________________ ____________________________________
____________________________________ ____________________________________
Social Security or other
Taxpayer Identification
Number, if any _______________________________
A-12
ELECTION TO SETTLE EARLY
The undersigned Holder of this Corporate Unit Certificate hereby irrevocably
exercises the option to effect Early Settlement in accordance with the terms of
the Purchase Contract Agreement with respect to the Purchase Contracts
underlying the number of Corporate Units evidenced by this Corporate Unit
Certificate specified below. The undersigned Holder directs that a certificate
for shares of Common Stock deliverable upon such Early Settlement be registered
in the name of, and delivered, together with a check in payment for any
fractional share and any Corporate Unit Certificate representing any Corporate
Units evidenced hereby as to which Early Settlement of the related Purchase
Contracts is not effected, to the undersigned at the address indicated below
unless a different name and address have been indicated below. Pledged Debt
Securities or the Applicable Ownership Interest in the appropriate Treasury
Portfolio, as the case may be, deliverable upon such Early Settlement will be
transferred in accordance with the transfer instructions set forth below. If
shares are to be registered in the name of a Person other than the undersigned,
the undersigned will pay any transfer tax payable incident thereto.
Dated:
----------------------------- ---------------------------------
Signature
Signature Guarantee:
-------------------------------
Signatures must be guaranteed by an "eligible guarantor institution" meeting the
requirements of the Registrar, which requirements include membership or
participation in the Security Transfer Agent Medallion Program ("STAMP") or such
other "signature guarantee program" as may be determined by the Registrar in
addition to, or in substitution for, STAMP, all in accordance with the
Securities Exchange Act of 1934, as amended.
Number of Securities evidenced hereby as to which Early Settlement of the
related Purchase Contracts is being elected:
If shares of Common Stock or Corporate Unit
Certificates are to be registered in the
name of and delivered to, and Pledged Debt
Securities, or the Treasury Portfolio, REGISTERED HOLDER
as the case may be, are to be transferred
to, a Person other than the Holder, please
print such Person's name and address:
Please print name and address of
Registered Holder:
_______________________________________________________________________________
Name Name
_______________________________________________________________________________
Address Address
_______________________________________________________________________________
_______________________________________________________________________________
_______________________________________________________________________________
Social Security or other Taxpayer Identification
Number, if any _________________________________
A-13
Transfer Instructions for Pledged Debt Securities, or the Treasury Portfolio, as
the case may be, Transferable Upon Early Settlement or a Termination Event:
A-14
[TO BE ATTACHED TO GLOBAL CERTIFICATES]
SCHEDULE OF INCREASES OR DECREASES IN GLOBAL CERTIFICATE
The following increases or decreases in this Global Certificate
have been made:
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Date Amount of decrease Amount of increase Principal Amount of Signature of
in Principal Amount in Principal Amount this Global authorized
of the Global of the Global Certificate officer of
Certificate Certificate following such Trustee or Securities
decrease or increase Custodian
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A-15
EXHIBIT B
FORM OF TREASURY UNIT CERTIFICATE
THIS CERTIFICATE IS A GLOBAL CERTIFICATE WITHIN THE MEANING OF THE
PURCHASE CONTRACT AGREEMENT (AS HEREINAFTER DEFINED) AND IS REGISTERED IN THE
NAME OF THE CLEARING AGENCY OR A NOMINEE THEREOF. THIS CERTIFICATE MAY NOT BE
EXCHANGED IN WHOLE OR IN PART FOR A CERTIFICATE REGISTERED, AND NO TRANSFER OF
THIS CERTIFICATE IN WHOLE OR IN PART MAY BE REGISTERED, IN THE NAME OF ANY
PERSON OTHER THAN SUCH CLEARING AGENCY OR A NOMINEE THEREOF, EXCEPT IN THE
LIMITED CIRCUMSTANCES DESCRIBED IN THE PURCHASE CONTRACT AGREEMENT.
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE
OF THE DEPOSITORY TRUST COMPANY (55 XXXXX XXXXXX, XXX XXXX, XXX XXXX) TO THE
COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT AND ANY
CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO., OR SUCH OTHER NAME
AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY,
AND ANY PAYMENT HEREON IS MADE TO CEDE & CO., ANY TRANSFER, PLEDGE OR OTHER USE
HEREOF FOR VALUE OR OTHERWISE BY A PERSON IS WRONGFUL SINCE THE REGISTERED OWNER
HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.
No. ____________________ Cusip No. _____________
Number of Treasury Units ___________________
TXU CORP.
Treasury Units
($50 Stated Amount)
This Treasury Unit Certificate certifies that ___________ is the
registered Holder of the number of Treasury Units set forth above. Each Treasury
Unit represents (a) a stock purchase contract of TXU Corp., a Texas corporation
(the "Company") (as modified and supplemented and in effect from time to time, a
"Purchase Contract") and (b) a 1/20, or 5% undivided beneficial ownership
interest in a Treasury Security. All capitalized terms used herein without
definition herein have the meaning set forth in the Purchase Contract Agreement
referred to below.
Pursuant to the Pledge Agreement, the Treasury Securities constituting
part of each Treasury Unit evidenced hereby have been pledged to the Collateral
Agent, for the benefit of the Company, to secure the obligations of the Holder
under the Purchase Contract comprising a portion of such Treasury Unit.
The Pledge Agreement provides that all payments of the principal of
any Treasury Securities received by the Collateral Agent shall be paid by the
Collateral Agent by wire transfer in same day funds (i) in the case of any
principal payments with respect to any Treasury Securities that have been
released from the Pledge pursuant to the Pledge Agreement, to the Holders of the
applicable Treasury Units to the accounts designated by them in writing for such
purpose no later than 2:00 p.m. New York City time, on the Business Day such
payment is received by the Collateral Agent (provided that in the event such
B-1
payment is received by the Collateral Agent on a day that is not a Business Day
or after 12:30 p.m., New York City time, on a Business Day, then such payment
shall be made no later than 10:30 a.m., New York City time, on the next
succeeding Business Day), and (ii) in the case of the principal of any Pledged
Treasury Securities, to the Company on the Purchase Contract Settlement Date (as
defined herein) in accordance with the terms of the Pledge Agreement, in full
satisfaction of the respective obligations of the Holders of the Treasury Units
of which such Pledged Treasury Securities are a part under the Purchaser
Contracts forming a part of such Treasury Units.
Each Purchase Contract evidenced hereby obligates the Holder of this
Treasury Unit Certificate to purchase, and the Company, to sell not later than
May 16, 2006 (the "Purchase Contract Settlement Date"), at a price of $50 in
cash (the "Purchase Price"), a number of newly issued shares of Common Stock,
without par value, of the Company including, where applicable, the preference
stock purchase rights appurtenant thereto ("Common Stock"), equal to the
applicable Settlement Rate (as defined below), unless on or prior to the
Purchase Contract Settlement Date there shall have occurred a Termination Event
or an Early Settlement with respect to the Treasury Units of which such Purchase
Contract is a part, all as provided in the Purchase Contract Agreement and more
fully described below.
The "Settlement Rate" is equal to (a) if the Applicable Market Value
(as defined below) determined with respect to such Purchase Contract Settlement
Date is equal to or greater than $62.9145 (the "Threshold Appreciation Price"),
0.7947 shares of Common Stock per Purchase Contract, (b) if such Applicable
Market Value is less than the Threshold Appreciation Price but is greater than
$51.15, the number of shares of Common Stock per Purchase Contract equal to $50
divided by the Applicable Market Value and (c) if the Applicable Market Value is
less than or equal to $51.15, 0.9775 shares of Common Stock per Purchase
Contract, in each case subject to adjustment as provided in the Purchase
Contract Agreement. No fractional shares of Common Stock will be issued upon
settlement of Purchase Contracts, as provided in the Purchase Contract
Agreement.
The Company shall pay on each Payment Date other than the Initial
Reset Date is not also a regular quarterly Payment Date in respect of each
Purchase Contract forming part of a Treasury Unit evidenced hereby an amount
(the "Contract Adjustment Payments") equal to 2.325% per annum of the Stated
Amount computed on the basis of a 360 day year of twelve 30 day months, subject
to deferral at the option of the Company as provided in the Purchase Contract
Agreement and more fully described below. Such Contract Adjustment Payments
shall be payable to the Person in whose name this Treasury Unit Certificate (or
a Predecessor Treasury Unit Certificate or a Predecessor Corporate Unit
Certificate) is registered on the Register at the close of business on the
Record Date for such Payment Date.
Contract Adjustment Payments will be payable at the Corporate Trust
Office or, at the option of the Company, by check mailed to the address of the
Person entitled thereto as such address appears on the Treasury Unit Register or
by wire transfer to an account appropriately designated in writing by the Person
entitled to payment.
Unless the context otherwise requires, each provision of this Security
shall be part of the Purchase Contracts evidenced hereby. This Security and each
Purchase Contract evidenced hereby is governed by a Purchase Contract Agreement,
dated as of June 1, 2002 (as may be supplemented from time to time, the
"Purchase Contract Agreement") between the Company and The Bank of New York, as
purchase contract agent and trustee (including any successor thereunder, herein
called the "Agent"), to which Purchase Contract Agreement and supplemental
agreements thereto reference is hereby made for a description of the respective
rights, limitations of rights, obligations, duties and immunities thereunder of
the Agent, the Company and the Holders and of the terms upon which the Treasury
Unit Certificates are, and are to be, executed and delivered.
B-2
Each Purchase Contract evidenced hereby, which is settled either
through Early Settlement or Cash Settlement, shall obligate the Holder of the
related Treasury Unit to purchase at the applicable Purchase Price, and the
Company to sell, a number of newly issued shares of Common Stock equal to the
applicable Early Settlement Rate or the Settlement Rate, as applicable.
The "Applicable Market Value" means the average of the Closing Price
per share of Common Stock on each of the 20 consecutive Trading Days ending on
the third Trading Day immediately preceding the Purchase Contract Settlement
Date. The "Closing Price" of the Common Stock on any date of determination means
the closing sale price (or, if no closing price is reported, the last reported
sale price) of the Common Stock on the New York Stock Exchange (the "NYSE") on
such date or, if the Common Stock is not listed for trading on the NYSE on any
such date, as reported in the composite transactions for the principal United
States national or regional securities exchange on which the Common Stock is so
listed. If the Common Stock is not so listed on a United States national or
regional securities exchange, the Closing Price means the last sale price of the
Common Stock as reported by the NASDAQ Stock Market, or if the Common Stock is
not so reported, the last quoted bid price for the Common Stock in the
over-the-counter market as reported by the National Quotation Bureau or similar
organization. If such bid price is not available, the Closing Price means market
value of the Common Stock on such date as determined by a nationally recognized
independent investment banking firm retained by the Company for this purpose. A
"Trading Day" means a day on which the Common Stock (A) is not suspended from
trading on any national or regional securities exchange or association or
over-the-counter market at the close of business and (B) has traded at least
once on the national or regional securities exchange or association or
over-the-counter market that is the primary market for the trading of the Common
Stock.
In accordance with the terms of the Purchase Contract Agreement, the
Holder of the Treasury Units evidenced hereby shall pay, on the Purchase
Contract Settlement Date, the Purchase Price for the shares of Common Stock
purchased pursuant to each Purchase Contract evidenced hereby by effecting a
Cash Settlement or an Early Settlement of each such Purchase Contract or by
applying a principal amount of the Pledged Treasury Securities underlying such
Holder's Treasury Units equal to the Stated Amount of such Purchase Contract to
the purchase of Common Stock. A Holder of Treasury Units who does not make such
payment in accordance with the Purchase Contract Agreement or who does not
notify the Agent of such Holder's intention, on or prior to 5:00 p.m., New York
City time, on the fifth Business Day immediately preceding the Purchase Contract
Settlement Date, to make an effective Cash Settlement or an Early Settlement,
shall have defaulted in its obligations under the related Purchase Contract, and
the Collateral Agent shall exercise its rights as a secured creditor for the
benefit of the Company under the Purchase Contract Agreement and the Pledge
Agreement and shall apply the principal amount at maturity of the related
Pledged Treasury Securities held by the Collateral Agent to the Purchase Price
of the Common Stock on such Purchase Contract Settlement Date.
The Company shall not be obligated to issue any shares of Common Stock
in respect of a Purchase Contract or deliver any certificates therefor to the
Holder unless it shall have received payment in full of the Purchase Price for
the shares of Common Stock to be purchased thereunder in the manner set forth in
the Purchase Contract Agreement.
The Treasury Unit Certificates are issuable only in registered form
and only in denominations of a single Treasury Unit and any integral multiple
thereof. The transfer of any Treasury Unit Certificate will be registered and
Treasury Unit Certificates may be exchanged as provided in the Purchase Contract
Agreement. The Treasury Unit Registrar may require a Holder, among other things,
to furnish appropriate endorsements and transfer documents permitted by the
Purchase Contract Agreement. No service charge shall be required for any such
registration of transfer or exchange, but the Company and
B-3
the Agent may require payment of a sum sufficient to cover any tax or other
governmental charge payable in connection therewith.
A Holder of a Treasury Unit may, at any time on or prior to the fifth
Business Day immediately preceding the Purchase Contract Settlement Date, create
or recreate a Corporate Unit by depositing with the Collateral Agent a Debt
Security or the Applicable Ownership Interest in the applicable Treasury
Portfolio, as the case may be, having an aggregate principal amount equal to the
aggregate principal amount at maturity of, and in substitution for all, but not
less than all, of the Treasury Securities comprising part of the Treasury Unit
in accordance with the Purchase Contract Agreement; provided, however, that if
the Treasury Portfolio has replaced the Debt Securities as a component of
Corporate Units as a result of a successful remarketing of the Debt Securities
on the Initial Remarketing Date or a Tax Event Redemption, such Collateral
Substitutions may be made at any time on or prior to the second Business Day
immediately preceding the Purchase Contract Settlement Date. Holders of Treasury
Units may make such Collateral Substitutions and establish Corporate Units (i)
only in integral multiples of 20 Treasury Units if Treasury Securities are being
replaced by only Debt Securities, or (ii) only in integral multiples of 40,000
Treasury Units if any Treasury Security is being replaced by the Applicable
Ownership Interest in the appropriate Treasury Portfolio. To create 20 Corporate
Units (if a Tax Event Redemption has not occurred and the Debt Securities remain
components of Corporate Units), or 40,000 Corporate Units (if a Tax Event
Redemption has occurred or the Remarketing Treasury Portfolio has replaced the
Debt Securities as a result of a successful remarketing of such Debt
Securities), the Treasury Unit Holder shall
(a) if a Treasury Portfolio has not replaced the Debt
Securities as a component of Corporate Units as a result of a successful
remarketing of the Debt Securities on the Initial Remarketing Date or a Tax
Event Redemption, on or prior to the fifth Business Day immediately preceding
the Purchase Contract Settlement Date, deposit with the Collateral Agent $1,000
in aggregate principal amount of Debt Securities; or
(b) if a Treasury Portfolio has replaced the Debt Securities
as a component of Corporate Units as a result of a successful remarketing of the
Debt Securities on the Initial Remarketing Date or a Tax Event Redemption, on or
prior to the second Business Day immediately preceding the Purchase Contract
Settlement Date, deposit with the Collateral Agent the Applicable Ownership
Interest in the Treasury Portfolio for each 40,000 Corporate Units being created
by the Holder, and having an aggregate principal amount of $2,000,000; and
(c) in each case, transfer and surrender the related 20
Treasury Units, or in the event the Treasury Portfolio is a component of
Corporate Units, 40,000 Corporate Units, to the Agent accompanied by a notice to
the Agent, substantially in the form of Exhibit B to the Pledge Agreement,
stating that the Holder has transferred the relevant amount of Debt Securities
or the appropriate Applicable Ownership Interest in the Treasury Portfolio, as
the case may be, to the Collateral Agent and requesting that the Agent instruct
the Collateral Agent to release the Treasury Securities underlying such Treasury
Units, whereupon the Agent shall promptly give such instruction to the
Collateral Agent, substantially in the form of Exhibit A to the Pledge
Agreement.
Upon receipt of the Debt Securities or the Applicable Ownership
Interest in the appropriate Treasury Portfolio, as the case may be, described in
clause (a) or (b) above and the instructions described in clause (c) above, in
accordance with the terms of the Pledge Agreement, the Collateral Agent will
effect the release of the Treasury Securities having a corresponding aggregate
principal amount from the Pledge to the Agent free and clear of the Company's
security interest therein, and upon receipt thereof the Agent shall promptly:
B-4
(i) cancel the related Treasury Units surrendered and
transferred;
(ii) transfer the Treasury Securities that had been components
of such Treasury Units to the Holder; and
(iii) authenticate, execute on behalf of such Holder and
deliver a Corporate Unit Certificate executed by the Company in accordance with
the Purchase Contract Agreement evidencing the same number of Purchase Contracts
as were evidenced by the cancelled Treasury Units.
Holders who elect to separate Pledged Treasury Securities from the
related Purchase Contracts and to substitute Debt Securities or the Applicable
Ownership Interest in the Treasury Portfolio, as the case may be, for such
Pledged Treasury Securities shall be responsible for any fees or expenses
payable to the Collateral Agent for its services as Collateral Agent in respect
of the substitution, and the Company shall not be responsible for any such fees
or expenses.
A Holder of a Corporate Unit may create or recreate a Treasury Unit
and separate the Debt Security or the Applicable Ownership Interest in the
appropriate Treasury Portfolio, as applicable, from the related Purchase
Contract in respect of such Corporate Unit by substituting a Treasury Security
for the Debt Security, or the Applicable Ownership Interest in the appropriate
Treasury Portfolio, that form a part of such Corporate Unit in accordance with
the Purchase Contract Agreement.
Subject to the next succeeding paragraph, the Company shall pay, on
each Payment Date, except Initial Reset Date, if the Initial Reset Date is not
also a quarterly Payment Date, the Contract Adjustment Payments payable in
respect of each Purchase Contract to the Person in whose name the Treasury Unit
Certificate evidencing such Purchase Contract is registered on the Register at
the close of business on the Record Date next preceding such Payment Date. The
Contract Adjustment Payments will be payable at the Corporate Trust Office or,
at the option of the Company, by check mailed to the address of the Person
entitled thereto at such address as it appears on the Treasury Unit Register or
by wire transfer to an account appropriately designated in writing by such
person.
The Company shall have the right, at any time prior to the Purchase
Contract Settlement Date, to defer the payment of any or all of the Contract
Adjustment Payments otherwise payable on any Payment Date, but only if the
Company shall give the Holders and the Agent written notice of its election to
defer such payment (specifying the amount to be deferred) as provided in the
Purchase Contract Agreement. Any Contract Adjustment Payments so deferred shall
bear additional Contract Adjustment Payments thereon at the rate of 8.125% per
annum (computed on the basis of a 360-day year of twelve 30-day months),
compounding on each succeeding Payment Date, until paid in full (such deferred
installments of Contract Adjustment Payments, if any, together with the
additional Contract Adjustment Payments accrued thereon, are referred to herein
as the "Deferred Contract Adjustment Payments"). Deferred Contract Adjustment
Payments, if any, shall be due on the next succeeding Payment Date except to the
extent that payment is deferred pursuant to the Purchase Contract Agreement. No
Contract Adjustment Payments may be deferred to a date that is after the
Purchase Contract Settlement Date.
In the event that the Company elects to defer the payment of Contract
Adjustment Payments on the Purchase Contracts until the Purchase Contract
Settlement Date, the Holder of this Treasury Unit Certificate will receive on
the Purchase Contract Settlement Date, in lieu of a cash payment, a number of
shares of Common Stock (in addition to the number of shares equal to the
Settlement Rate) equal to (x) the aggregate amount of Deferred Contract
Adjustment Payments payable to the Holder of this Treasury Unit Certificate
divided by (y) the Applicable Market Value.
B-5
In the event the Company exercises its option to defer the payment of
Contract Adjustment Payments, then, until the Deferred Contract Adjustment
Payments have been paid, the Company shall not declare or pay dividends on, make
distributions with respect to, or redeem, purchase or acquire, or make a
liquidation payment with respect to, any of its capital stock or make guarantee
payments with respect to the foregoing (other than (i) purchases, redemptions or
acquisitions of shares of capital stock of the Company in connection with any
employment contract, benefit plan or other similar arrangement with or for the
benefit of employees, officers, directors or agents or a stock purchase or
dividend reinvestment plan, or the satisfaction by the Company of its
obligations pursuant to any contract or security outstanding on the date of such
event or agent benefit plans or the satisfaction by the Company of its
obligations pursuant to any contract or security outstanding on the date of such
event requiring the Company to purchase, redeem or acquire its capital stock,
(ii) as a result of a reclassification of the Company's capital stock or the
exchange or conversion of one class or series of the Company's capital stock for
another class or series of the Company's capital stock, (iii) the purchase of
fractional interests in shares of the Company's capital stock pursuant to the
conversion or exchange provisions of the Company's capital stock or the security
being converted or exchanged, (iv) dividends or distributions in capital stock
of the Company (or rights to acquire capital stock) or repurchases, redemptions
or acquisitions of capital stock in connection with the issuance or exchange of
the Company's capital stock (or securities convertible into or exchangeable for
shares of capital stock) or (v) redemptions, exchanges or repurchases of any
rights outstanding under a shareholder rights plan or the declaration or payment
thereunder of a dividend or distribution of or with respect to rights in the
future.
The Purchase Contracts and all obligations and rights of the Company
and the Holders thereunder, including, without limitation, the rights of the
Holders to receive and the obligation of the Company to pay any Contract
Adjustment Payments or any Deferred Contract Adjustment Payments, and the rights
and obligations of the Holders to purchase Common Stock shall immediately and
automatically terminate, without the necessity of any notice or action by any
Holder, the Agent or the Company, if, on or prior to the Purchase Contract
Settlement Date, a Termination Event shall have occurred. Upon the occurrence of
a Termination Event, the Company shall promptly but in no event later than two
Business Days thereafter give written notice to the Agent, the Collateral Agent
and to the Holders, at their addresses as they appear in the Treasury Unit
Register. Upon and after the occurrence of a Termination Event, the Collateral
Agent shall release the Treasury Securities from the Pledge in accordance with
the provisions of the Pledge Agreement.
Subject to and upon compliance with the provisions of the Purchase
Contract Agreement, a Holder of Treasury Units may settle the related Purchase
Contracts in their entirety on or prior to the second Business Day immediately
preceding the Purchase Contract Settlement Date, but only in integral multiples
of 20 Treasury Units. In order to exercise the right to effect any such early
settlement ("Early Settlement") with respect to any Purchase Contracts evidenced
by this Treasury Unit Certificate, the Holder of this Treasury Unit Certificate
shall deliver this Treasury Unit Certificate to the Agent at the Corporate Trust
Office duly endorsed for transfer to the Company or in blank with the form of
Election to Settle Early set forth below duly completed and executed and
accompanied by payment payable to the Company in immediately available funds
payable to the order of the Company in an amount (the "Early Settlement Amount")
equal to the sum of (i) $50 times the number of Purchase Contracts being
settled, (ii) if such delivery is made with respect to any Purchase Contracts
during the period from the close of business on any Record Date next preceding
any Payment Date to the opening of business on such Payment Date, an amount
equal to the Contract Adjustment Payments payable, if any, on such Payment Date
with respect to such Purchase Contracts. Upon Early Settlement of Purchase
Contracts by a Holder of the related Securities, the Pledged Treasury Securities
underlying such Securities shall be released from the Pledge as provided in the
Pledge Agreement and the Holder shall be entitled to receive a number of shares
of Common Stock on account of each Purchase Contract forming part of a Treasury
Unit as to which Early Settlement is effected equal to the Early Settlement Rate
which shall be equal to 0.7947
B-6
newly issued shares of Common Stock per Purchase Contract (the "Early Settlement
Rate"); provided however, that upon the Early Settlement of the Purchase
Contracts, (i) the Holder thereof will forfeit the right to receive any Deferred
Contract Adjustment Payments, if any, on such Purchase Contracts, (ii) the
Holder's right to receive additional Contract Adjustment Payments in respect of
such Purchase Contracts will terminate, and (iii) no adjustment will be made to
or for the Holder on account of Deferred Contract Adjustment Payments, or any
amount accrued in respect of Contract Adjustment Payments. The Early Settlement
Rate shall be adjusted in the same manner and at the same time as the Settlement
Rate is adjusted, as provided in the Purchase Contract Agreement.
Upon registration of transfer of this Treasury Unit Certificate, the
transferee shall be bound (without the necessity of any other action on the part
of such transferee, except as may be required by the Agent pursuant to the
Purchase Contract Agreement), under the terms of the Purchase Contract Agreement
and the Purchase Contracts evidenced hereby and the transferor shall be released
from the obligations under the Purchase Contracts evidenced by this Treasury
Unit Certificate. The Company covenants and agrees, and the Holder, by its
acceptance hereof, likewise covenants and agrees, to be bound by the provisions
of this paragraph.
The Holder of this Treasury Unit Certificate, by its acceptance
hereof, irrevocably authorizes the Agent to enter into and perform the related
Purchase Contracts forming part of the Treasury Units evidenced hereby on its
behalf as its attorney-in-fact, expressly withholds any consent to the
assumption (i.e., affirmance) of the Purchase Contracts by the Company or its
trustee in bankruptcy, receiver, liquidator or a person or entity performing
similar functions, in the event that the Company becomes the subject of a case
under the Bankruptcy Code or subject to other similar Federal or State law
providing for reorganization or liquidation, agrees to be bound by the terms and
provisions thereof, covenants and agrees to perform its obligations under such
Purchase Contracts, consents to the provisions of the Purchase Contract
Agreement, authorizes the Agent to enter into and perform the Pledge Agreement
on its behalf as its attorney-in-fact, and consents to the Pledge of the
Treasury Securities underlying this Treasury Unit Certificate pursuant to the
Pledge Agreement. The Holder, by its acceptance hereof, further covenants and
agrees, that, to the extent and in the manner provided in the Purchase Contract
Agreement and the Pledge Agreement, but subject to the terms thereof, payments
in respect to the Stated Amount of the Pledged Treasury Securities on the
Purchase Contract Settlement Date shall be paid by the Collateral Agent to the
Company in satisfaction of such Holder's obligations under such Purchase
Contract and such Holder shall acquire no right, title or interest in such
payments.
The Holder of this Treasury Unit Certificate, by its acceptance
hereof, covenants and agrees to treat itself as the owner, for United States
federal, state and local income and franchise tax purposes, of the Treasury
Securities forming part of the Treasury Units evidenced hereby.
Subject to certain exceptions, the provisions of the Purchase Contract
Agreement may be amended with the consent of the Holders of a majority of the
Purchase Contracts. In addition, certain amendments to the Purchase Contract
Agreement may be made without any consent of the Holders as provided in the
Purchase Contract Agreement.
THE PURCHASE CONTRACTS SHALL FOR ALL PURPOSES BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
The Company and the Agent and any agent of the Company or the Agent
may treat the Person in whose name this Treasury Unit Certificate is registered
on the Treasury Unit Register as the owner of the Treasury Units evidenced
hereby for the purpose of receiving payments of interest on the Treasury
Securities, receiving payments of Contract Adjustment Payments and any Deferred
Contract Adjustment Payments, performance of the Purchase Contracts and for all
other purposes whatsoever, whether or not
B-7
any payments in respect thereof be overdue and notwithstanding any notice to the
contrary, and neither the Company, the Agent nor any such agent shall be
affected by notice to the contrary.
The Purchase Contracts shall not, prior to the settlement thereof, in
accordance with the Purchase Agreement, entitle the Holder to any of the rights
of a holder of shares of Common Stock.
A copy of the Purchase Contract Agreement is available for inspection
at the offices of the Agent during regular business hours of the Agent.
Unless the certificate of authentication hereon has been executed by
the Agent by manual signature, this Treasury Unit Certificate shall not be
entitled to any benefit under the Pledge Agreement or the Purchase Contract
Agreement or be valid or obligatory for any purpose.
B-8
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed.
TXU Corp.
By:
-------------------------------
Name:
Title:
HOLDER SPECIFIED ABOVE (as to
obligations of such Holder under the
Purchase Contracts evidenced hereby)
By: The Bank of New York,
not individually but solely as
Attorney-in-Fact of such Holder
By:
-------------------------------
Name:
Title:
Dated:
AGENT'S CERTIFICATE OF AUTHENTICATION
This is one of the Corporate Unit Certificates referred to in the
within mentioned Purchase Contract Agreement.
THE BANK OF NEW YORK,
as Purchase Contract Agent and Trustee
By:
-------------------------------
Authorized Signatory
B-9
ABBREVIATIONS
The following abbreviations, when used in the inscription on the face
of this instrument, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM - as tenants in common
UNIF GIFT MIN ACT - ------------------Custodian--------------
(cust) (minor)
Under Uniform Gifts to Minors Act
---------------------------------
(State)
TEN ENT - as tenants by the entireties
JT TEN - as joint tenants with right of
survivorship and not as
tenants in common
Additional abbreviations may also be used though not in the above list.
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto
(Please insert Social Security or Taxpayer I.D. or other Identifying
Number of Assignee)
(Please Print or Type Name and Address Including Postal Zip Code of
Assignee)
the within Treasury Unit Certificate and all rights thereunder, hereby
irrevocably constituting and appointing
attorney to transfer said Treasury Unit Certificate on the books of TXU Corp.
with full power of substitution in the premises.
Dated:
------------------------------------------------------------------------
Signature
NOTICE: The signature to this
assignment must correspond with the
name as it appears upon the face of
the within Treasury Unit
Certificates in every particular,
without alteration or enlargement or
any change whatsoever.
Signature Guarantee:
-----------------------
Signatures must be guaranteed by an "eligible guarantor institution" meeting the
requirements of the Registrar, which requirements include membership or
participation in the Security Transfer Agent Medallion Program ("STAMP") or such
other "signature guarantee program" as may be determined by the Registrar in
addition to, or in substitution for, STAMP, all in accordance with the
Securities Exchange Act of 1934, as amended.
B-10
SETTLEMENT INSTRUCTIONS
The undersigned Holder directs that a certificate for shares of Common
Stock deliverable upon settlement on or after the Purchase Contract Settlement
Date of the Purchase Contracts underlying the number of Treasury Units evidenced
by this Treasury Unit Certificate be registered in the name of, and delivered,
together with a check in payment for any fractional share, to the undersigned at
the address indicated below unless a different name and address have been
indicated below. If shares are to be registered in the name of a Person other
than the undersigned, the undersigned will pay any transfer tax payable incident
thereto.
Dated:
------------------------------------------------------------------------
Signature
Signature Guarantee:
Signatures must be guaranteed by an "eligible guarantor institution"
meeting the requirements of the Registrar, which requirements include membership
or participation in the Security Transfer Agent Medallion Program ("STAMP") or
such other "signature guarantee program" as may be determined by the Registrar
in addition to, or in substitution for, STAMP, all in accordance with the
Securities Exchange Act of 1934, as amended.
If shares are to be registered in the name of REGISTERED HOLDER
and delivered to a Person other than the
Holder, please print such Person's name and
address: Please print name and address
of Registered Holder:
Name Name
Address Address
Social Security or other Taxpayer Identification
Number, if any
________________________________________________
B-11
ELECTION TO SETTLE EARLY
The undersigned Holder of this Treasury Unit Certificate hereby
irrevocably exercises the option to effect Early Settlement in accordance with
the terms of the Purchase Contract Agreement with respect to the Purchase
Contracts underlying the number of Treasury Units evidenced by this Treasury
Unit Certificate specified below. The undersigned Holder directs that a
certificate for shares of Common Stock deliverable upon such Early Settlement be
registered in the name of, and delivered, together with a check in payment for
any fractional share and any Treasury Unit Certificate representing any Treasury
Units evidenced hereby as to which Early Settlement of the related Purchase
Contracts is not effected, to the undersigned at the address indicated below
unless a different name and address have been indicated below. Pledged Treasury
Securities deliverable upon such Early Settlement will be transferred in
accordance with the transfer instructions set forth below. If shares are to be
registered in the name of a Person other than the undersigned, the undersigned
will pay any transfer tax payable incident thereto.
Dated:
-------------------------------------------------------------------------
Signature
Signature Guarantee:
---------------------------
Signatures must be guaranteed by an "eligible guarantor institution" meeting the
requirements of the Registrar, which requirements include membership or
participation in the Security Transfer Agent Medallion Program ("STAMP") or such
other "signature guarantee program" as may be determined by the Registrar in
addition to, or in substitution for, STAMP, all in accordance with the
Securities Exchange Act of 1934, as amended.
B-12
Number of Securities evidenced hereby as to which Early Settlement of
the related Purchase Contracts is being elected:
If shares of Common Stock or Treasury Unit REGISTERED HOLDER
Certificates are to be registered in the name of
and delivered to, and Pledged Treasury
Securities are to be transferred to, a Person
other than the Holder, please print such
Person's name and address: Please print name and address
of Registered Holder:
Name Name
Address Address
Social Security or other Taxpayer
Identification Number, if any
________________________________________________
Transfer Instructions for Pledged Treasury Securities Transferable Upon Early
Settlement or a Termination Event:
B-13
[TO BE ATTACHED TO GLOBAL CERTIFICATES]
SCHEDULE OF INCREASES OR DECREASES IN GLOBAL CERTIFICATE
The following increases or decreases in this Global Certificate
have been made:
--------------------------------------------------------------------------------------------------------------------
Date Amount of decrease Amount of increase Principal Amount of Signature of
in Principal Amount in Principal Amount this Global authorized
of the Global of the Global Certificate officer of
Certificate Certificate following such Trustee or Securities
decrease or increase Custodian
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B-14
EXHIBIT C
NOTICE TO SETTLE BY SEPARATE CASH
Attention:
Re: Securities of TXU Corp. (the "Company")
The undersigned Holder hereby irrevocably notifies you in
accordance with Section 5.4 of the Purchase Contract Agreement, dated as of June
1, 2002 among the Company, yourselves, as Purchase Contract Agent and as
Attorney-in-Fact for the Holders of the Purchase Contracts, that such Holder has
elected to pay to the Collateral Agent, on or prior to 11:00 a.m. New York City
time, on the Business Day immediately preceding the Purchase Contract Settlement
Date, (in lawful money of the United States by [certified or cashiers check or]
wire transfer, in immediately available funds), $_________ as the Purchase Price
for the shares of Common Stock issuable to such Holder by the Company under the
related Purchase Contract on the Purchase Contract Settlement Date. The
undersigned Holder hereby instructs you to notify promptly the Collateral Agent
of the undersigned Holders election to make such cash settlement with respect to
the Purchase Contracts related to such Holder's [Corporate Units] [Treasury
Units].
Dated:
-----------------------------------------------------------------------
Signature
Signature Guarantee:
----------------------
Signatures must be guaranteed by an "eligible guarantor institution" meeting the
requirements of the Registrar, which requirements include membership or
participation in the Security Transfer Agent Medallion Program ("STAMP") or such
other "signature guarantee program" as may be determined by the Registrar in
addition to, or in substitution for, STAMP, all in accordance with the
Securities Exchange Act of 1934, as amended.
Please print name and address of Registered Holder:
________________________________________________________________________________
Name Social Security or other Taxpayer
Identification Number, if any
Address
______________________________
______________________________
C-1
