Exhibit 4.6
TOYS "R" US, INC.
JPMORGAN CHASE BANK
as Collateral Agent, Custodial Agent
and Securities Intermediary
AND
THE BANK OF NEW YORK
as Purchase Contract Agent
PLEDGE AGREEMENT
Dated as of May 28, 2002
TABLE OF CONTENTS
Page
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ARTICLE I DEFINITIONS.........................................................................................2
SECTION 1.1 Definitions.................................................................................2
ARTICLE II PLEDGE; CONTROL AND PERFECTION.....................................................................6
SECTION 2.1 The Pledge..................................................................................6
SECTION 2.2 Control and Perfection......................................................................8
ARTICLE III PAYMENTS ON PLEDGED COLLATERAL...................................................................10
SECTION 3.1 Payments...................................................................................10
SECTION 3.2 Application of Payments....................................................................11
ARTICLE IV SUBSTITUTION, RELEASE, REPLEDGE AND SETTLEMENT OF NOTES...........................................12
SECTION 4.1 Collateral Substitution and the Creation of Stripped Units.................................12
SECTION 4.2 Collateral Substitution and the Re-Establish of Normal Units...............................13
SECTION 4.3 Termination Event..........................................................................15
SECTION 4.4 Early Settlement; Merger Early Settlement; Cash Settlement.................................16
SECTION 4.5 Remarketing; Application of Proceeds; Settlement...........................................17
ARTICLE V VOTING RIGHTS--NOTES...............................................................................21
SECTION 5.1 Exercise by Purchase Contract Agent........................................................21
ARTICLE VI RIGHTS AND REMEDIES; TAX EVENT REDEMPTION.........................................................21
SECTION 6.1 Rights and Remedies of the Collateral Agent................................................21
SECTION 6.2 Substitutions..............................................................................23
SECTION 6.3 Tax Event Redemption.......................................................................23
ARTICLE VII REPRESENTATIONS AND WARRANTIES; COVENANTS........................................................23
SECTION 7.1 Representations and Warranties.............................................................23
SECTION 7.2 Covenants..................................................................................24
ARTICLE VIII THE COLLATERAL AGENT............................................................................25
SECTION 8.1 Appointment, Powers and Immunities.........................................................25
SECTION 8.2 Instructions of the Company................................................................26
SECTION 8.3 Reliance...................................................................................27
SECTION 8.4 Rights in Other Capacities.................................................................27
SECTION 8.5 Non-Reliance on Collateral Agent...........................................................27
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SECTION 8.6 Compensation and Indemnity.................................................................28
SECTION 8.7 Failure to Act.............................................................................28
SECTION 8.8 Resignation................................................................................29
SECTION 8.9 Right to Appoint Agent or Advisor..........................................................30
SECTION 8.10 Survival..................................................................................31
SECTION 8.11 Exculpation...............................................................................31
ARTICLE IX AMENDMENT.........................................................................................31
SECTION 9.1 Amendment Without Consent of Holders.......................................................31
SECTION 9.2 Amendment with Consent of Holders..........................................................32
SECTION 9.3 Execution of Amendments....................................................................33
SECTION 9.4 Effect of Amendments.......................................................................33
SECTION 9.5 Reference to Amendments....................................................................33
ARTICLE X MISCELLANEOUS......................................................................................33
SECTION 10.1 No Waiver.................................................................................33
SECTION 10.2 GOVERNING LAW.............................................................................34
SECTION 10.3 Notices...................................................................................34
SECTION 10.4 Successors and Assigns....................................................................35
SECTION 10.5 Counterparts..............................................................................35
SECTION 10.6 Severability..............................................................................35
SECTION 10.7 Expenses, Etc.............................................................................35
SECTION 10.8 Security Interest Absolute................................................................36
SECTION 10.9 Incorporation by Reference................................................................36
EXHIBIT A Instruction from Purchase Contract Agent to Collateral Agent
EXHIBIT B Instruction from Holder to Purchase Contract Agent
EXHIBIT C Instruction from Holder to Collateral Agent Regarding Withdrawal from Remarketing
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PLEDGE AGREEMENT
PLEDGE AGREEMENT, dated as of May 28, 2002, among Toys "R" Us, Inc., a
Delaware corporation (the "Company"), JPMorgan Chase Bank, a New York banking
corporation, not individually but solely as collateral agent (in such capacity,
together with its successors in such capacity, the "Collateral Agent"), as
custodial agent (in such capacity, together with its successors in such
capacity, the "Custodial Agent") and as "securities intermediary" as defined in
Section 8-102(a)(14) of the Code (as defined herein) (in such capacity, together
with its successors in such capacity, the "Securities Intermediary"), and The
Bank of New York, a New York banking corporation, not individually but solely as
purchase contract agent and as attorney-in-fact of the Holders from time to time
of the Units (in such capacity, together with its successors in such capacity,
the "Purchase Contract Agent") under the Purchase Contract Agreement (as defined
herein).
RECITALS
WHEREAS, the Company and the Purchase Contract Agent are parties to the
Purchase Contract Agreement, dated as of the date hereof (as modified, amended
or supplemented pursuant to the terms thereof and in effect from time to time,
the "Purchase Contract Agreement"), pursuant to which there may be issued
7,000,000 Units of the Company (or 8,050,000 Units if the Underwriters' over
allotment option is exercised in full) having a stated amount of $50.00 per Unit
(the "Stated Amount"), all of which will initially be Normal Units.
WHEREAS, each Normal Unit will be comprised of (a) a purchase contract
pursuant to which a Holder will purchase from the Company, and the Company will
sell to such Holder, not later than August 16, 2005 (the "Purchase Contract
Date") pursuant to the Purchase Contract Agreement for an amount of cash equal
to the Stated Amount, a number of shares of Company common stock, $0.10 par
value per share (the "Common Stock") equal to the Settlement Rate (as defined
below) and (b) either beneficial ownership of a Note (as defined below) or,
following a successful remarketing or a Tax Event Redemption, the Applicable
Ownership Interest in the Treasury Portfolio;
WHEREAS, if the Holders of Normal Units substitute Collateral as
contemplated by Section 4.1 hereof, each Unit created thereby (referred to as a
"Stripped Unit" and, together with a Normal Unit, the "Units") initially will
consist of (a) a purchase contract pursuant to which a Holder will purchase from
the Company, and the Company will sell to such Holder, not later than the
Purchase Contract Date pursuant to the Purchase Contract Agreement for an amount
of cash equal to the Stated Amount, a number of shares of Common Stock equal to
the Settlement Rate (as defined below) and (b) a 1/20, or 5.0%, undivided
beneficial ownership interest in a zero-coupon U.S. Treasury security (CUSIP No.
000000XX0) having a principal amount at maturity equal to $1,000 and maturing on
August 15, 2005 (the "Treasury Securities");
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WHEREAS, pursuant to the terms of the Indenture (as defined below), the
Company will issue $350,000,000 aggregate principal amount of the Company's
Senior Notes due 2007 (or $402,500,000 if the Underwriters' overallotment option
is exercised in full) (the "Notes"), each having a principal amount equal to
$50.00;
WHEREAS, pursuant to the terms of the Purchase Contract Agreement and the
Purchase Contracts, the Holders, from time to time, of the Units have
irrevocably authorized the Purchase Contract Agent, as attorney-in-fact of such
Holders, among other things, to execute and deliver this Agreement on behalf of
such Holders and to grant the pledge provided hereby of the Notes, any
Applicable Ownership Interest in the Treasury Portfolio and any Treasury
Securities to secure each Holder's obligations under the related Purchase
Contract, as provided herein and subject to the terms hereof; and
WHEREAS, upon such pledge, the Pledged Notes, or the Pledged Applicable
Ownership Interest in the Treasury Portfolio, as the case may be, and the
Pledged Treasury Securities will be beneficially owned by the Holders but will
be owned of record by the Purchase Contract Agent or the Securities Intermediary
subject to the Pledge hereunder.
NOW, THEREFORE, and for other good and valuable consideration, the receipt
and sufficiency of which is hereby acknowledged, the Company, the Collateral
Agent, the Securities Intermediary, the Custodial Agent and the Purchase
Contract Agent, on its own behalf and as attorney-in-fact of the Holders from
time to time of the Units, agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1 Definitions.
For all purposes of this agreement, except as otherwise expressly provided
or unless the context otherwise requires:
(a) capitalized terms used but not defined herein are used as
defined in the Purchase Contract Agreement;
(b) the defined terms in this Agreement have the meanings assigned
to them in this Article and include the plural as well as the singular;
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(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 which are defined in the Code shall have the
meanings set forth therein: "certificated security," "control," "financial
asset," "entitlement order," "securities account," "security entitlement,"
and "securities intermediary".
"Agreement" means this instrument as originally executed or as it may from
time to time be supplemented or amended by one or more agreements supplemental
hereto entered into pursuant to the applicable provisions hereof.
"Bankruptcy Code" means Title 11 of the United States Code, or any other
law of the United States that from time to time provides a uniform system of
bankruptcy laws.
"Business Day" means any day other than a Saturday, Sunday or any other
day on which banking institutions and trust companies in The State of New York
or at a place of payment are authorized or required by law, regulation or
executive order to be closed.
"Cash" means any coin or currency of the United States as at the time
shall be legal tender for payment of public and private debts.
"Code" has the meaning specified in Section 6.1 hereof.
"Collateral" has the meaning specified in Section 2.1 hereof.
"Collateral Account" means the securities account (number 161764.1)
maintained at JPMorgan Chase Bank in the name of "The Bank of New York, a New
York banking corporation, as Purchase Contract Agent on behalf of the holders of
certain securities of Toys "R" Us, Inc., Collateral Account subject to the
security interest of JPMorgan Chase Bank, as Collateral Agent, for the benefit
of Toys "R" Us, Inc., as pledgee" and any successor account.
"Collateral Agent" has the meaning specified in the first paragraph of
this Agreement.
"Collateral Substitution" has the meanings specified in Section 4.1
hereof.
"Common Stock" has the meaning specified in the Recitals.
"Company" means the Person named as the "Company" in the first paragraph
of this Agreement until a successor shall have become such pursuant to the
applicable provisions of the Purchase Contract Agreement, and thereafter
"Company" shall mean such successor.
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"Custodial Agent" has the meaning specified in the first paragraph of this
Agreement.
"Indenture" means the Base Indenture and First Supplemental Indenture both
dated as of May 28, 2002 between Toys "R" Us, Inc., and The Bank of New York, as
Trustee, as modified, amended or supplemented pursuant to the terms thereof, in
each case, relating to the Notes.
"Intermediary" means any entity that in the ordinary course of its
business maintains securities accounts for others and is acting in that
capacity.
"Notes" has the meaning specified in the Recitals.
"Permitted Investments" means any one of the following which shall mature
not later than three Business Days prior to the Stock Purchase Date (i) any
evidence of indebtedness with an original maturity of 365 days or less issued,
or directly and fully guaranteed or insured, by the United States of America or
any agency or instrumentality thereof (provided that the full faith and credit
of the United States of America is pledged in support thereof or such
indebtedness constitutes a general obligation of it); (ii) deposits,
certificates or deposit or acceptances with an original maturity of 365 days or
less of any institution which is a member of the Federal Reserve System having
combined capital and surplus and undivided profits of not less than US $200.0
million at the time of deposit; (iii) investments with an original maturity of
365 days or less of any Person that is fully and unconditionally guaranteed by a
bank referred to in clause (ii); (iv) investments in commercial paper, other
than commercial paper issued by the Company or its affiliates, of any
corporation incorporated under the laws of the United States or any State
thereof, which commercial paper has a rating at the time of purchase at least
equal to "A-1" by Standard & Poor's Ratings Services ("S&P") or at least equal
to "P-1" by Xxxxx'x Investors Service, Inc. ("Moody's"); and (v) investments in
money market funds registered under the Investment Company Act of 1940, as
amended, rated in the highest applicable rating category by S&P or Moody's.
"Pledge" has the meaning specified in Section 2.1 hereof.
"Pledged Applicable Ownership Interest in the Treasury Portfolio" has the
meaning specified in Section 2.1 hereof.
"Pledged Notes" has the meaning specified in Section 2.1 hereof.
"Pledged Treasury Securities" has the meaning specified in Section 2.1
hereof.
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"Proceeds" means all interest, dividends, cash, instruments, securities,
financial assets (as defined in Section 8-102(a)(9) of the Code) and other
property from time to time received, receivable or otherwise distributed upon
the sale, exchange, collection or disposition of the Collateral or any proceeds
thereof.
"Purchase Contract Agent" has the meaning specified in the first paragraph
of this Agreement.
"Purchase Contract Agreement" has the meaning specified in the Recitals.
"Purchase Contract Date" has the meaning specified in the Recitals.
"Remarketing Settlement Date" means, after a successful remarketing, the
date on which the settlement of such remarketing occurs.
"Securities Intermediary" has the meaning specified in the first paragraph
of this Agreement.
"Separate Notes" means any outstanding Notes that are not Pledged Notes.
"Stated Amount" has the meaning specified in the Recitals.
"Stripped Unit" has the meaning specified in the Recitals.
"Tax Event Redemption Date" means the date upon which a Tax Event
Redemption is to occur.
"TRADES" means the Treasury/Reserve Automated Debt Entry System maintained
by the Federal Reserve Bank of New York pursuant to the TRADES Regulations.
"TRADES Regulations" means the regulations of the United States Department
of the Treasury, published at 31 C.F.R. Part 357, as amended from time to time.
Unless otherwise defined herein, all terms defined in the TRADES Regulations are
used herein as therein defined.
"Transfer" means, except as otherwise expressly provided herein, with
respect to the Collateral and in accordance with the instructions of the
Collateral Agent, the Purchase Contract Agent or the Holder, as applicable:
(i) in the case of Collateral consisting of securities which cannot
be delivered by book-entry or which the parties agree are to be delivered
in physical form, delivery in appropriate physical form to the recipient
accompanied by any duly executed instruments of transfer, assignments in
blank, transfer tax stamps and any other documents necessary to constitute
a legally valid transfer to the recipient; and
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(ii) in the case of Collateral consisting of securities maintained
in book-entry form by causing a securities intermediary to (a) credit a
security entitlement with respect to such securities to a securities
account maintained by or on behalf of the recipient and (b) to issue a
confirmation to the recipient with respect to such credit. In the case of
Collateral to be delivered to the Collateral Agent, the Securities
Intermediary shall be the securities intermediary and the securities
account shall be the Collateral Account. In addition, any Transfer of
Treasury Securities hereunder shall be made in accordance with the TRADES
Regulations and other applicable law.
"Treasury Securities" has the meaning specified in the Recitals.
"Units" has the meaning specified in the Recitals.
"Value" with respect to any item of Collateral on any date means, as to
(i) a Note, the principal amount thereof, (ii) Cash, the face amount thereof,
(iii) the Treasury Portfolio, the aggregate principal amount thereof at
maturity, and (iv) Treasury Securities, the aggregate principal amount thereof
at maturity.
ARTICLE II
PLEDGE; CONTROL AND PERFECTION
SECTION 2.1 The Pledge.
(a) The Holders from time to time as beneficial owners of the Collateral
(as defined below) acting through the Purchase Contract Agent, as their
attorney-in-fact, and the Purchase Contract Agent, hereby pledge and grant to
the Collateral Agent, for the benefit of the Company to secure the prompt and
complete payment and performance when due (whether at stated settlement, early
settlement, by acceleration or otherwise) of the obligations of the Holders
under the Purchase Contracts, as collateral security for the performance when
due by such Holders of their respective obligations under the related Purchase
Contracts, a continuing first priority security interest in and lien upon and
right of set off against such Holder's right, title and interest in:
(i) (A) the Notes, any Applicable Ownership Interest in the Treasury
Portfolio and Treasury Securities constituting a part of the Units, (B)
any Treasury Securities delivered in exchange for any Notes or any
Applicable Ownership Interest in the Treasury Portfolio, as applicable, in
accordance with Section 4.1 hereof, and (C) any Notes or any Applicable
Ownership Interest in the Treasury Portfolio, as applicable, delivered in
exchange for any Treasury Securities in accordance with Section 4.2
hereof, in each case, that have been Transferred to or otherwise received
by the Collateral Agent and not released by the Collateral Agent to such
Holders under the provisions of this Agreement;
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(ii) payments made by Holders pursuant to Section 4.4 hereof;
(iii) the Collateral Account and all securities, financial assets,
security entitlements, cash and other property credited thereto and all
security entitlements related thereto; and
(iv) all Proceeds of the foregoing (all of the foregoing,
collectively, the "Collateral").
(b) Prior to or concurrently with the execution and delivery of this
Agreement, the Purchase Contract Agent, on behalf of the initial Holders of the
Units, shall cause the Notes comprising a part of the Normal Units to be
Transferred to the Collateral Agent for the benefit of the Company. The
Collateral Agent shall have all of the rights, remedies and recourses with
respect to the Collateral afforded a secured party by the Code, in addition to,
and not in limitation of, the other rights, remedies and recourses afforded to
the Collateral Agent by this Agreement.
(c) Subsequent to the date of initial issuance of the Units, the Purchase
Contract Agent shall file or cause to be filed a financing statement prepared by
the Company in the State of New York, Office of the Secretary of State and any
other jurisdictions which the Company deems necessary. The Purchase Contract
Agent, as attorney-in-fact for the Holders as debtors, shall sign a financing
statement describing the Collateral.
(d) The pledge provided in this Section 2.1 is herein referred to as the
"Pledge" and the Notes (or the Notes that are delivered pursuant to Section 6.2
hereof), any Applicable Ownership Interest in the Treasury Portfolio or Treasury
Securities subject to the Pledge, excluding any Notes, any Applicable Ownership
Interest in the Treasury Portfolio or any Treasury Securities released from the
Pledge as provided in Sections 4.1 and 4.2 hereof, respectively, are hereinafter
referred to as "Pledged Notes," "Pledged Applicable Ownership Interest in the
Treasury Portfolio" or "Pledged Treasury Securities" respectively. Subject to
the Pledge and the provisions of Section 2.2 hereof, the Holders from time to
time shall have full beneficial ownership of the Collateral. For purposes of
perfecting the Pledge under applicable law, including, to the extent applicable,
the TRADES Regulations or the Code as adopted and in effect in any applicable
jurisdiction, the Collateral Agent shall be the agent of the Company as provided
herein. Whenever directed by the Collateral Agent acting on behalf of the
Company, the Securities Intermediary shall have the right to re-register in its
name the Notes or any other securities held in physical form.
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(e) Except as may be required in order to release Pledged Notes or Pledged
Applicable Ownership Interest in the Treasury Portfolio, as applicable, in
connection with a Tax Event Redemption or with a Holder's election to convert
its investment from a Normal Unit to a Stripped Unit, or except as otherwise
required to release Pledged Notes as specified herein, neither the Collateral
Agent, the Custodial Agent nor the Securities Intermediary shall relinquish
physical possession of any certificate evidencing a Note prior to the
termination of this Agreement, provided, however, that if the Notes are issued
in whole or in part in the form of global Notes, such Notes may be held in any
clearing corporation in an account including only assets of customers of the
Collateral Agent or Securities Intermediary. If it becomes necessary for the
Securities Intermediary to relinquish physical possession of a certificate in
order to release a portion of the Pledged Notes evidenced thereby from the
Pledge, the Company or the Purchase Contract Agent shall use its best efforts to
obtain physical possession of a replacement certificate evidencing any Notes
remaining subject to the Pledge hereunder registered to the Securities
Intermediary or endorsed in blank (or accompanied by a bond power endorsed in
blank) within fifteen calendar days of the date the Securities Intermediary
relinquished possession. The Securities Intermediary shall promptly notify the
Company and the Collateral Agent of the Securities Intermediary's failure to
obtain possession of any such replacement certificate as required hereby.
(f) Notwithstanding anything contained herein to the contrary, for
avoidance of doubt, the Cash payments at the rate of 6.25% per year of the
Principal Amount of the Notes that are a part of Normal Units to Holders of
Normal Units shall not be subject to the Pledge and therefore are not part of
the Collateral.
SECTION 2.2 Control and Perfection.
(a) In connection with the Pledge granted in Section 2.1, and subject to
the other provisions of this Agreement, the Holders from time to time acting
through the Purchase Contract Agent, as their attorney-in-fact, hereby authorize
and direct the Securities Intermediary (without the necessity of obtaining the
further consent of the Purchase Contract Agent or any of the Holders), and the
Securities Intermediary agrees, to comply with and follow any instructions and
entitlement orders that the Collateral Agent may deliver with respect to the
Collateral Account, the Collateral credited thereto and any security
entitlements with respect to any thereof. In the event the Securities
Intermediary receives from the Holders or the Purchase Contract Agent
entitlement orders which conflict with entitlement orders received from the
Collateral Agent, the Securities Intermediary shall follow the entitlement
orders received from the Collateral Agent. Such instructions and entitlement
orders may, without limitation, direct the Securities Intermediary to transfer,
redeem, assign, or otherwise deliver the Notes, any Applicable Ownership
Interest in the Treasury Portfolio, the Treasury Securities, and any security
entitlements with respect thereto or sell, liquidate or
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dispose of such assets through a broker designated by the Company, and to pay
and deliver any income, proceeds or other funds derived therefrom to the
Company. The Holders from time to time acting through the Purchase Contract
Agent hereby further authorize and direct the Collateral Agent, as agent of the
Company, to itself issue instructions and entitlement orders, and to otherwise
take action, with respect to the Collateral Account, the Collateral credited
thereto and any security entitlements with respect thereto, pursuant to the
terms and provisions hereof, all without the necessity of obtaining the further
consent of the Purchase Contract Agent or any of the Holders. The Collateral
Agent shall be the agent of the Company and shall act only in accordance with
the terms hereof or as otherwise directed in writing by the Company. Without
limiting the generality of the foregoing, the Collateral Agent shall issue
entitlement orders to the Securities Intermediary when and as directed in
writing by the Company.
(b) The Collateral Agent hereby confirms and agrees that:
(i) all securities or other property underlying any financial assets
credited to the Collateral Account shall be registered in the name of the
Collateral Agent, or its nominee, indorsed to the Collateral Agent, or its
nominee, or in blank or credited to another Collateral Account maintained
in the name of the Collateral Agent and in no case will any financial
asset credited to the Collateral Account be registered in the name of the
Purchase Contract Agent, the Company or any Holder, payable to the order
of, or specially indorsed to, the Purchase Contract Agent, the Company or
any Holder except to the extent the foregoing have been specially indorsed
to the Collateral Agent or in blank;
(ii) all property delivered to the Collateral Agent pursuant to this
Pledge Agreement (including, without limitation, any Notes, any Applicable
Ownership Interest in the Treasury Portfolio or Treasury Securities) will
be promptly credited on the books of the Securities Intermediary to the
Collateral Account;
(iii) the Collateral Account is an account to which financial assets
are or may be credited, and the Securities Intermediary shall, subject to
the terms of this Agreement, treat the Collateral Agent as entitled to
exercise the rights of any financial asset credited to the Collateral
Account;
(iv) the Securities Intermediary has not entered into, and until the
termination of this Agreement will not enter into, any agreement with any
other Person relating to the Collateral Account and/or any financial
assets credited thereto pursuant to which it has agreed to comply with
entitlement orders of such other Person;
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(v) the Securities Intermediary has not entered into, and until the
termination of this Agreement will not enter into, any agreement with the
Company, the Collateral Agent or the Purchase Contract Agent purporting to
limit or condition the obligation of the Securities Intermediary to comply
with entitlement orders as set forth in this Section 2.2 hereof; and
(c) The Securities Intermediary agrees that each item of property (whether
investment property, financial asset, security, instrument or cash) credited to
the Collateral Account shall be treated as a "financial asset" within the
meaning of Section 8-102(a)(9) of the Code.
(d) In the event of any conflict between this Agreement (or any portion
thereof) and any other agreement now existing or hereafter entered into, the
terms of this Agreement shall prevail.
(e) The Purchase Contract Agent hereby irrevocably constitutes and
appoints the Collateral Agent and the Company, with full power of substitution,
as the Purchase Contract Agent's attorney-in-fact to take on behalf of, and in
the name, place and stead of, the Purchase Contract Agent and the Holders, any
action necessary or desirable to perfect and to keep perfected the security
interest in the Collateral referred to in Section 2.1. The grant of such
power-of-attorney shall not be deemed to require of the Collateral Agent any
specific duties or obligations not otherwise assumed by the Collateral Agent
hereunder. Notwithstanding the foregoing, in no event shall the Collateral Agent
or Securities Intermediary be responsible for the preparation or filing of any
financing or continuation statements in the appropriate jurisdictions or
responsible for maintenance or perfection of any security interest hereunder.
ARTICLE III
PAYMENTS ON PLEDGED COLLATERAL
SECTION 3.1 Payments.
So long as the Purchase Contract Agent is the registered owner of the
Pledged Notes, Pledged Applicable Ownership Interest in the Treasury Portfolio
or Pledged Treasury Securities, it shall receive all payments thereon. If the
Pledged Notes are reregistered, such that the Collateral Agent becomes the
registered holder, all payments of principal of, or interest on, the Pledged
Notes and all payments of the principal of, or cash distributions on, any
Pledged Treasury Securities or any Pledged Applicable Ownership Interest in the
Treasury Portfolio, that are received by the Collateral Agent and that are
properly payable hereunder, shall be paid by the Collateral Agent by wire
transfer in same day funds:
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(i) in the case of (1) any interest payments with respect to the
Pledged Notes or Pledged Applicable Ownership Interest (as specified in
clause (B) of the definition of Applicable Ownership Interest) in the
Treasury Portfolio, as the case may be, and (2) any payments of principal
with respect to any Notes or Applicable Ownership Interest (as specified
in clause (A) of the definition of such term) in the Treasury Portfolio,
as the case may be, that have been released from the Pledge pursuant to
Section 4.3 hereof, to the Purchase Contract Agent, for the benefit of the
relevant Holders of the Normal Units, to the account designated by the
Purchase Contract Agent for such purpose, no later than 2:00 p.m. (New
York City time) on the Business Day such payment is received by the
Collateral Agent (provided that in the event such payment is received by
the Collateral Agent on a day that is not a Business Day or after 12:30
p.m. (New York City time) on a Business Day, then such payment shall be
made no later than 10:30 a.m. (New York City time) on the next succeeding
Business Day);
(ii) in the case of any payments with respect to any Treasury
Securities that have been released from the Pledge pursuant to Section 4.3
hereof, to the Purchase Contract Agent, for the benefit of the Holders of
the Stripped Units to the accounts designated by them in writing for such
purpose, no later than 2:00 p.m. (New York City time) on the Business Day
such payment is received by the Collateral Agent (provided that in the
event such payment is received by the Collateral Agent on a day that is
not a Business Day or after 12:30 p.m. (New York City time) on a Business
Day, then such payment shall be made no later than 10:30 a.m. (New York
City time) on the next succeeding Business Day); and
(iii) in the case of payments in respect of any Pledged Notes, the
Pledged Applicable Ownership Interest (as specified in clause (A) of the
definition of such term) in the Treasury Portfolio or Pledged Treasury
Securities, as the case may be, to be paid upon settlement of such
Holder's obligations to purchase Common Stock under the Purchase Contract,
to the Company on the Stock Purchase Date in accordance with the procedure
set forth in Section 4.5(a) or 4.5(b) hereof, in full satisfaction of the
respective obligations of the Holders under the related Purchase Contracts
and to the extent such payments exceed the Purchase Price to the Purchase
Contract Agent for the benefit of the Holders.
SECTION 3.2 Application of Payments.
All payments received by the Purchase Contract Agent as provided herein
shall be applied by the Purchase Contract Agent pursuant to the provisions of
the Purchase Contract Agreement. If, notwithstanding the foregoing, the Purchase
Contract Agent shall receive any payments of the principal amount of any Note or
the Applicable Ownership Interest (as specified in clause (A) of the term as
defined in the Purchase Contract Agreement) in the Treasury Portfolio, as
applicable, that, at the time of such payment, is a Pledged Note, or Pledged
Applicable Ownership Interest in the Treasury Portfolio, as the case may be, or
a Holder of a Stripped Unit shall receive any payments of principal on account
of any Treasury Securities that, at the time of such payment, are Pledged
Treasury Securities, the Purchase Contract Agent or such Holder shall hold the
same as trustee of an express trust for the benefit of the Company (and promptly
deliver the same over to the Company) for application to the obligations of the
Holders under the related Purchase Contracts, and the Holders shall acquire no
right, title or interest in any such payments of principal so received.
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ARTICLE IV
SUBSTITUTION, RELEASE, REPLEDGE AND SETTLEMENT OF NOTES
SECTION 4.1 Collateral Substitution and the Creation of Stripped Units.
(a) Except as otherwise provided in this Section 4.1, a Holder of Normal
Units shall have the right to substitute Treasury Securities for the Pledged
Notes or Pledged Applicable Ownership Interest in the Treasury Portfolio, as the
case may be, securing such Holder's obligations under the Purchase Contracts
comprising a part of such Normal Units (a "Collateral Substitution"), in
integral multiples of 20 Normal Units, or after a remarketing of the Notes
pursuant to the Purchase Contract Agreement or a Tax Event Redemption, in
integral multiples of Normal Units such that Treasury Securities to be deposited
and the Applicable Ownership Interest in the Treasury Portfolio to be released
are in integral multiples of $1,000, by (x) a Transfer to the Collateral Agent
of Treasury Securities having an aggregate principal amount equal to the
aggregate Stated Amount of such Normal Units and (y) delivery of such Normal
Units to the Purchase Contract Agent, accompanied by a notice, substantially in
the form of Exhibit B hereto, to the Purchase Contract Agent stating that such
Holder has Transferred Treasury Securities to the Collateral Agent pursuant to
this Section 4.1 (stating the principal amount and the CUSIP numbers of the
Treasury Securities Transferred by such Holder) and requesting that the Purchase
Contract Agent instruct the Collateral Agent to release from the Pledge the
Pledged Notes or Pledged Applicable Ownership Interest in the Treasury
Portfolio, as the case may be, related to such Normal Units, whereupon the
Purchase Contract Agent shall promptly give such instruction in writing to the
Collateral Agent substantially in the form provided in Exhibit A.
Notwithstanding the foregoing, a Holder may not substitute Treasury Securities
for Pledged Notes or Pledged Applicable Ownership Interest in the Treasury
Portfolio pursuant to this Section 4.1 after 10:00 a.m. (New York City time) (i)
on the fourth Business Day immediately preceding the Initial Remarketing Date
until the Business Day immediately following such Initial Remarketing Date; (ii)
on the fourth Business Day immediately preceding the first day of a Subsequent
Remarketing Period
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ending on June 16, 2005 or July 14, 2005 until the Business Day immediately
following such Remarketing Period; and (iii) on the tenth Business Day
immediately preceding the Stock Purchase Date. Upon receipt of Treasury
Securities from a Holder of Normal Units and the related written instruction
from the Purchase Contract Agent, in accordance with the terms of this
Agreement, the Collateral Agent shall release the Pledged Notes or the Pledged
Applicable Ownership Interest in the Treasury Portfolio, as the case may be, and
shall promptly Transfer such Pledged Notes, or Pledged Applicable Ownership
Interest in the Treasury Portfolio, as the case may be, free and clear of any
lien, pledge or security interest created under this Agreement, to the Purchase
Contract Agent. All items Transferred and/or substituted by any Holder pursuant
to this Section 4.1, Section 4.2 or any other Section of this Agreement shall be
Transferred and/or substituted free and clear of all liens, claims and
encumbrances.
(b) Holders of Normal Units who create Stripped Units 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.
(c) In the event a Holder making a Collateral Substitution pursuant to
this Section 4.1 fails to effect a book-entry transfer of the Normal Units or
fails to deliver a Normal Units Certificate to the Purchase Contract Agent after
depositing Treasury Securities with the Collateral Agent, the Pledged Notes or
Pledged Applicable Ownership Interest in the Treasury Portfolio, as the case may
be, constituting a part of such Normal Units, and any distributions on such
Pledged Notes or Pledged Applicable Ownership Interest in the 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 Normal Units are so
transferred or the Normal Units Certificate is so delivered, as the case may be,
or, with respect to a Normal Units Certificate, such Holder provides evidence
satisfactory to the Company and the Agent that such Normal Units Certificate has
been destroyed, lost or stolen, together with any indemnity that may be required
by the Agent and the Company.
SECTION 4.2 Collateral Substitution and the Re-Establish of Normal Units.
(a) Except as otherwise provided in this Section 4.2, at any time on or
prior to 10:00 a.m. (New York City time) on the tenth Business Day immediately
preceding the Stock Purchase Date, a Holder of Stripped Units shall have the
right to reestablish Normal Units (a) consisting of the Purchase Contracts and
Notes in integral multiples of 20 Normal Units, or (b) after a successful
remarketing of the Notes pursuant to the Purchase Contract Agreement or a Tax
Event Redemption, consisting of the Purchase Contracts and the Applicable
Ownership Interest in the Treasury Portfolio in integral multiples of Stripped
Units such that the Applicable Ownership Interest in the Treasury Portfolio to
be deposited, and the Treasury Securities to be released are in integral
multiples of $1,000, by (x) a Transfer to the Collateral Agent Notes or the
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Applicable Ownership Interest (as defined in clause (A) of the definition of
such term) in the Treasury Portfolio, as the case may be, then comprising such
number of Normal Units as is equal to such Stripped Units and (y) by delivery of
such Stripped Units, accompanied by a notice, substantially in the form of
Exhibit B hereto, to the Purchase Contract Agent stating that such Holder has
transferred Notes or Applicable Ownership Interests in the Treasury Portfolio to
the Collateral Agent pursuant to this Section 4.2 and requesting that the
Purchase Contract Agent instruct the Collateral Agent to release from the Pledge
the Pledged Treasury Securities related to such Stripped Units, whereupon the
Purchase Contract Agent shall instruct the Collateral Agent substantially in the
form provided in Exhibit A; provided, however, that such Holder of Stripped
Units shall not have the right to reestablish Normal Units pursuant to this
Section 4.2 after 10:00 a.m. (New York City time) (i) on the fourth Business Day
immediately preceding the Initial Remarketing Date until the Business Day
immediately following such Initial Remarketing Date; (ii) on the fourth Business
Day immediately preceding the first day of a Subsequent Remarketing Period
ending on June 16, 2005 or July 14, 2005 until the Business Day immediately
following such Remarketing Period; and (iii) on the tenth Business Day
immediately preceding the Stock Purchase Date. Upon receipt of the Notes or
Applicable Ownership Interest in the Treasury Portfolio, as the case may be,
from such Holder and the instruction from the Purchase Contract Agent, the
Collateral Agent, in accordance with the terms of this Agreement, shall release
the Pledged Treasury Securities and shall promptly Transfer such Pledged
Treasury Securities, free and clear of any lien, pledge or security interest
created under this Agreement to the Purchase Contract Agent.
(b) Holders of Stripped Units who reestablish Normal Units 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.
(c) In the event a Holder who reestablishes Normal Units pursuant to this
Section 4.2 fails to effect a book-entry transfer of the Stripped Units or fails
to deliver a Stripped Units Certificate to the Purchase Contract Agent after
depositing Pledged Notes or Pledged Applicable Ownership Interest in the
Treasury Portfolio, as the case may be, with the Collateral Agent, the Treasury
Securities constituting a part of such Stripped Units, and any distributions 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 Stripped Units are so
transferred or the Stripped Units Certificate is so delivered, as the case may
be, or, with respect to a Stripped Units Certificate, such Holder provides
evidence satisfactory to the Company and the Agent that such Stripped Units
Certificate has been destroyed, lost or stolen, together with any indemnity that
may be required by the Agent and the Company.
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SECTION 4.3 Termination Event.
(a) The Purchase Contracts and all obligations and rights of the Company
and the Holders thereunder, including the rights and obligations of 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 Stock Purchase Date, a Termination Event shall have
occurred. Upon and after the occurrence of a Termination Event, the Normal Units
shall thereafter represent the right to receive the Pledged Notes or the
Applicable Ownership Interest in the Treasury Portfolio, as the case may be,
forming a part of such Normal Units, and the Stripped Units shall thereafter
represent the right to receive the Pledged Treasury Securities forming a part of
such Stripped Units, in each case in accordance with the provisions of this
Section 4.3. 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 Purchase Contract Agent, the Collateral Agent and to the Holders,
at their addresses as they appear in the Register. Upon receipt by the
Collateral Agent of written notice from the Company that a Termination Event has
occurred, the Collateral Agent shall release all Collateral from the Pledge and
shall promptly Transfer any (x) Pledged Notes and (y) Pledged Applicable
Ownership Interest in the Treasury Portfolio, as applicable, or (z) Pledged
Treasury Securities, as the case may be, to the Purchase Contract Agent for the
benefit of the Holders of the Normal Units and the Stripped Units, respectively,
free and clear of any lien, pledge or security interest or other interest
created hereby.
(b) If such Termination Event shall result from the Company's becoming a
debtor under the Bankruptcy Code, and if the Collateral Agent shall for any
reason fail to promptly effectuate the release and Transfer of all Pledged
Notes, Pledged Applicable Ownership Interest in the Treasury Portfolio, or
Pledged Treasury Securities, as the case may be, as provided by this Section
4.3, the Purchase Contract Agent shall:
(i) use its best efforts to obtain at the expense of the Company an
opinion of a nationally recognized law firm reasonably acceptable to the
Collateral Agent to the effect that, as a result of the Company's being
the debtor in such a bankruptcy case, the Collateral Agent will not be
prohibited from releasing or transferring the Collateral as provided in
this Section 4.3, and shall deliver such opinion to the Collateral Agent
within ten days after the occurrence of such Termination Event, and if (y)
the Purchase Contract Agent shall be unable to obtain such opinion within
ten days after the occurrence of such Termination Event or (z) the
Collateral Agent shall continue, after delivery of such opinion, to refuse
to effectuate the release and transfer of all Pledged Notes, Pledged
Applicable Ownership Interest in the Treasury Portfolio or Pledged
Treasury Securities, as the case may be, as provided in this Section 4.3,
then the Purchase Contract Agent shall within fifteen days after the
occurrence of such Termination Event commence an action or proceeding in
the court with jurisdiction of the Company's case under the Bankruptcy
Code seeking an order requiring the Collateral Agent to effectuate the
release and transfer of all Pledged Notes, Pledged Applicable Ownership
Interest in the Treasury Portfolio or Pledged Treasury Securities, as the
case may be, as provided by this Section 4.3, or
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(ii) commence an action or proceeding like that described in
subsection (i)(z) hereof within ten days after the occurrence of such
Termination Event.
SECTION 4.4 Early Settlement; Merger Early Settlement; Cash Settlement.
(a) Unless a Holder has effected a Merger Early Settlement or a
Termination Event shall have occurred, such Holder may, at its option, effect an
Early Settlement at any time of Purchase Contracts underlying Units having an
aggregate Stated Amount equal to $1,000 or an integral multiple thereof,
provided that Holders may not effect an Early Settlement after 10:00 a.m. (New
York City time) (i) on the fourth Business Day immediately preceding the Initial
Remarketing Date until the next Business Day immediately following the Initial
Remarketing Date; (ii) on the fourth Business Day immediately preceding the
first day of a Subsequent Remarketing Period ending June 16, 2005 or July 14,
2005 until the Business Day immediately following such Remarketing Period or;
(iii) on or after the tenth Business Day immediately preceding the Stock
Purchase Date.
(b) Upon written notice to the Collateral Agent by the Purchase Contract
Agent that one or more Holders of Units have elected to effect Early Settlement,
Merger Early Settlement or Cash Settlement of their respective obligations under
the Purchase Contracts forming a part of such Units in accordance with the terms
of the Purchase Contracts and the Purchase Contract Agreement (setting forth the
number of such Purchase Contracts as to which such Holders have elected to
effect Early Settlement, Merger Early Settlement or Cash Settlement), and that
the Purchase Contract Agent has received from such Holders, and paid to the
Company, as confirmed to the Collateral Agent in writing by the Company, the
related Early Settlement Amounts, Merger Early Settlement Amounts or Cash
Settlement Amounts, as the case may be, pursuant to the terms of the Purchase
Contracts and the Purchase Contract Agreement and that all conditions to such
Early Settlement, Merger Early Settlement or Cash Settlement, as the case may
be, have been satisfied, then the Collateral Agent shall release from the Pledge
(a) Pledged Notes or Pledged Applicable Ownership Interest in the Treasury
Portfolio, as the case may be, in the case of a Holder of Normal Units or (b)
Pledged Treasury Securities, in the case of a Holder of Stripped Units, relating
to such Purchase Contracts as to which such Holders have elected to effect Early
Settlement, Merger Early Settlement or Cash Settlement, and shall transfer all
such Pledged Notes, Pledged Applicable Ownership Interest in the Treasury
Portfolio or Pledged Treasury Securities, as the case may be, free and clear of
the Pledge created hereby, to the Purchase Contract Agent for the benefit of
such Holders.
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(c) If a Holder of a Unit notifies the Purchase Contract Agent, as
provided in Section 5.4(a)(i) of the Purchase Contract Agreement, of its
intention to effect Cash Settlement, but fails to pay the Purchase Price in cash
as required by Section 5.4(a)(i) of the Purchase Contract Agreement, such Holder
will be deemed to have such Notes remarketed pursuant to the Purchase Contract
Agreement and Indenture as if it had not notified the Purchase Contract Agent as
stated above. In addition, in the event the Notes are not remarketed on or prior
to the third Business Day prior to the Stock Purchase Date, such Last Failed
Remarketing as described in Section 5.4(b)(ii) of the Purchase Contract
Agreement shall constitute an event of default hereunder by such Holder and the
Collateral Agent, at the direction and for the benefit of the Company, will
exercise its rights as a secured party with respect to such Pledged Notes and at
the direction of the Company retain or dispose of the Collateral in accordance
with applicable law.
(d) Upon receipt by the Collateral Agent of payment of the Cash required
to settle such Purchase Contract by such Holder on or prior to 10:00 a.m. (New
York City time) on the tenth Business Day immediately preceding the Stock
Purchase Date by wire transfer in immediately available funds payable to or upon
the order of the Company, the Collateral Agent shall, at the written direction
of the Company, promptly invest any cash received from a Holder in connection
with a Cash Settlement in Permitted Investments; provided, however, that if the
Company fails to deliver such instructions by 10:00 a.m. (New York City time) on
the date of any such investment, the Collateral Agent shall invest such Cash in
the Permitted Investments described in clause (i) of the definition of Permitted
Investments. Upon receipt of the proceeds upon the maturity of the Permitted
Investments on the Stock Purchase Date, the Collateral Agent shall pay the
portion of such proceeds and deliver the funds so wired, in an aggregate amount
equal to the Purchase Price, to the Company on the Purchase Contract Date, and
shall distribute any funds in respect of the interest earned from the Permitted
Investments to the Purchase Contract Agent for payment to the Holders whose
Purchase Contracts were settled prior to the Stock Purchase Date, as
contemplated by this Section, on a pro rata basis.
SECTION 4.5 Remarketing; Application of Proceeds; Settlement.
(a) Pursuant to the Purchase Contract Agreement, the Purchase Contract
Agent shall notify the Remarketing Agent and the Collateral Agent, by 10:00 a.m.
(New York City time) on the third Business Day immediately preceding (i) the
Initial Remarketing Date or (ii) the first day of a Subsequent Remarketing
Period, as the case may be, of the aggregate principal amount of Notes
comprising part of Normal Units
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to be remarketed. In the case of a successful remarketing prior to the third
Business Day immediately preceding the Stock Purchase Date, after deducting as
the remarketing fee an amount not exceeding 25 basis points (.25%) of the total
proceeds of such remarketing of such Pledged Notes, the Remarketing Agent will
deliver the Agent-purchased Treasury Consideration (as defined in the Purchase
Contract Agreement) purchased from the proceeds of the remarketing, to the
Purchase Contract Agent, which shall thereupon Transfer such Agent-purchased
Treasury Consideration to the Collateral Agent. Upon receipt of the
Agent-purchased Treasury Consideration from the Purchase Contract Agent
following a successful remarketing, (i) the Collateral Agent, for the benefit of
the Company, shall thereupon hold in the Collateral Account such Agent-purchased
Treasury Consideration to secure such Normal Units Holders' obligations under
the Purchase Contracts and to fund the quarterly interest payment due to Normal
Units Holders on the Stock Purchase Date, and (ii) the remaining portion, if
any, of the proceeds of such successful remarketing shall be distributed by the
Remarketing Agent to the Purchase Contract Agent for payment on a pro rata basis
to such Normal Units Holders participating in such remarketing. On the Stock
Purchase Date, the Collateral Agent shall, at the direction of the Company, (i)
apply that portion of the payments received in respect of the Pledged Applicable
Ownership Interests to the Treasury Portfolio equal to the aggregate Stated
Amount of the related Normal Units to satisfy in full the obligations of such
Normal Units Holders to pay the Purchase Price under the related Purchase
Contracts and (ii) distribute to the Purchase Contract Agent the remaining
portion to pay the quarterly interest payment due to Normal Units Holders on the
Stock Purchase Date, which such quarterly interest payment shall be paid in an
amount equal to the Coupon Rate for such quarterly interest payment.
(b) If a Holder of Normal Units, pursuant to the Purchase Contract
Agreement, elects not to participate in the remarketing and retains the Notes
underlying such Units and delivers the appropriate Opt-out Treasury
Consideration to the Purchase Contract Agent, the Purchase Contract Agent, upon
receipt thereof, shall deliver such Opt-out Treasury Consideration to the
Collateral Agent. The Collateral Agent will hold Opt-out Treasury Consideration
in a separate account from the Collateral Account. On the Remarketing Settlement
Date, the Collateral Agent, for the benefit of the Company shall thereupon
transfer to the Collateral Account such Opt-out Treasury Consideration to secure
such Normal Units Holder's obligations under the Purchase Contract constituting
a part of the Holder's Normal Units, in substitution for the Pledged Notes and
to fund the quarterly interest payment due to Normal Units Holders on the Stock
Purchase Date and deliver the applicable Notes to their Holders. On the first
Business Day immediately following a Terminated Remarketing Period, the
Collateral Agent will transfer the Opt-out Treasury Consideration to the
Purchase Contract Agent and the Purchase Contract Agent will transfer promptly
such Opt-out Treasury Consideration to the appropriate Holders. A Holder that
does not so deliver the Opt-out Treasury Consideration pursuant to this clause
(b) shall be deemed to have elected to participate in the remarketing.
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(c) In the event the sum of the Proceeds from the related Pledged Treasury
Securities or Applicable Ownership Interest (as defined in clause (A) of the
definition of such term) in the Treasury Portfolio, as the case may be, and the
investment earnings from the investment in overnight Permitted Investments is in
excess of the aggregate Purchase Price of the Purchase Contracts being settled
thereby, the Collateral Agent shall remit such excess, when received, to the
Purchase Contract Agent for the benefit of the Holders on a pro rata basis.
(d) The Remarketing Agent shall attempt to remarket the Notes in
accordance with the procedures set forth in the Purchase Contract Agreement and
the Remarketing Agreement. Promptly following a Terminated Remarketing Period or
the Last Failed Remarketing, the Remarketing Agent shall deliver to the
Collateral Agent, Purchase Contract Agent, the Trustee, the Company and the
Depositary a written notice of such terminated or failed remarketing. If by 4:00
p.m. (New York City time) on the third Business Day immediately preceding the
Stock Purchase Date, the Remarketing Agent has failed to remarket the Notes for
not less than 100.25% of the Remarketing Value or the Remarketing Agent has
determined that the remarketing may not be commenced or consummated pursuant to
applicable law, then the Last Failed Remarketing shall be deemed to have
occurred. In this case, the Remarketing Agent shall advise the Collateral Agent
and the Company in writing that it cannot remarket the related Pledged Notes of
such Holders of Normal Units. The Collateral Agent, for the benefit of the
Company, may exercise its rights as a secured party with respect to such Notes
and at the direction of the Company, retain or dispose of the Pledged Notes in
accordance with applicable law and satisfy in full, from any such disposition or
retention, such Holder's obligations to pay the Purchase Price for the Common
Stock; provided, that if upon the Last Failed Remarketing, the Collateral Agent
delivers the Notes to the Company in full satisfaction of the Holder's
obligation under the Purchase Contract, any accumulated and unpaid interest on
such Notes will become payable by the Company to the Purchase Contract Agent for
payment to the Holder of the Normal Units to which such Notes relate in
accordance with the Purchase Contract Agreement.
(e) In the event a Holder of Stripped Units has not made a Cash
Settlement, Early Settlement or Merger Early Settlement of the Purchase
Contracts underlying its Stripped Units, such Holder shall be deemed to have
elected to pay for the shares of Common Stock to be issued under such Purchase
Contracts from the payments received in respect of the related Pledged Treasury
Securities. Without receiving any instruction from any such Holder, the
Collateral Agent shall apply such payments to the settlement of such Purchase
Contracts on the Stock Purchase Date. In the event the payments received in
respect of the related Pledged Treasury Securities are in excess of the
aggregate Purchase Price of the Purchase Contracts being settled thereby, the
Collateral Agent shall distribute such excess, when received, to the Purchase
Contract Agent for the benefit of such Holders of Stripped Units on a pro rata
basis.
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(f) Beginning on the Payment Date immediately preceding August 16, 2005,
holders of Separate Notes may elect, pursuant to the Indenture, at any time to
have their Separate Notes remarketed during any Remarketing Period by delivering
their Separate Notes, together with a notice of such election, substantially in
the form of Exhibit B to the Indenture to the Collateral Agent, provided that
such Holder may not make such election later than 10:00 a.m. (New York City
time) on: (i) the fourth Business Day immediately preceding the Initial
Remarketing Date until the Business Day immediately following the Initial
Remarketing Date, (ii) the fourth Business Day immediately preceding the first
day of a Subsequent Remarketing Period ending June 16, 2005 or July 14, 2005
until the Business Day immediately following such Remarketing Period or (iii)
the tenth Business Day immediately preceding the Stock Purchase Date. No later
than 10:00 a.m. (New York City time) on the third Business Day immediately
preceding the Initial Remarketing Date or the first day of a Subsequent
Remarketing Period, as the case may be, the Collateral Agent shall notify the
Remarketing Agent of the aggregate number of Separate Notes to be remarketed.
The Collateral Agent will hold such Separate Notes in an account separate from
the Collateral Account. A holder of Separate Notes electing to have its Separate
Notes remarketed will also have the right to withdraw such election by written
notice to the Collateral Agent, substantially in the form of Exhibit C hereto,
provided that such Holder may not withdraw such election after 10:00 a.m. (New
York City time) on (i) the fourth Business Day immediately preceding the Initial
Remarketing Date until the Business Day immediately following the Initial
Remarketing Date, (ii) the fourth Business Day immediately preceding the first
day of the Subsequent Remarketing Period ending June 16, 2005 or July 14, 2005
until the Business Day immediately following such Remarketing Period or (iii)
the tenth Business Day immediately preceding the Stock Purchase Date, upon which
notice the Collateral Agent will return such Separate Notes to such Holder. The
portion of the proceeds from such remarketing equal to the amount calculated in
respect of such Separate Notes as set forth in Section 5.4(b) of the Purchase
Contract Agreement will automatically be remitted by the Remarketing Agent to
the Collateral Agent for the benefit of the holders of such Separate Notes. In
addition, after deducting as the remarketing fee an amount not exceeding 25
basis points (.25%) of the total proceeds of such remarketing of such Separate
Notes, the Remarketing Agent will remit to the Collateral Agent the remaining
portion of the proceeds, if any, for the benefit of such holders of such
Separate Notes. If, despite using its reasonable best efforts, the Remarketing
Agent advises the Collateral Agent in writing that there has been a Terminated
Remarketing Period or Last Failed Remarketing, as the case may be, the
Remarketing Agent will promptly return such Separate Notes to the Collateral
Agent for redelivery to such holders of such Separate Notes.
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ARTICLE V
VOTING RIGHTS -- NOTES
SECTION 5.1 Exercise by Purchase Contract Agent.
The Purchase Contract Agent may exercise, or refrain from exercising, any
and all voting and other consensual rights pertaining to the Pledged Notes or
any part thereof for any purpose not inconsistent with the terms of this
Agreement and in accordance with the terms of the Purchase Contract Agreement;
provided that the Purchase Contract Agent shall not exercise or, as the case may
be, shall not refrain from exercising such right if, in the judgment of the
Company, such action would impair or otherwise have a material adverse effect on
the value of all or any of the Pledged Notes; and provided further that the
Purchase Contract Agent shall give the Company and the Collateral Agent at least
five days prior written notice of the manner in which it intends to exercise, or
its reasons for refraining from exercising, any such right. Upon receipt of any
notices and other communications in respect of any Pledged Notes, including
notice of any meeting at which holders of Notes are entitled to vote or
solicitation of consents, waivers or proxies of holders of Notes, the Collateral
Agent shall use reasonable efforts to send promptly to the Purchase Contract
Agent such notice or communication, and as soon as reasonably practicable after
receipt of a written request therefor from the Purchase Contract Agent, execute
and deliver to the Purchase Contract Agent such proxies and other instruments in
respect of such Pledged Notes (in form and substance satisfactory to the
Collateral Agent) as are prepared by the Purchase Contract Agent with respect to
the Pledged Notes.
ARTICLE VI
RIGHTS AND REMEDIES; TAX EVENT REDEMPTION
SECTION 6.1 Rights and Remedies of the Collateral Agent.
(a) In addition to the rights and remedies available at law or in equity,
after an event of default under the Purchase Contracts, the Collateral Agent
shall have all of the rights and remedies with respect to the Collateral of a
secured party under the Uniform Commercial Code (the "Code") (or any successor
thereto) as in effect in the State of New York from time to time (whether or not
in effect in the jurisdiction where the rights and remedies are asserted) and
the TRADES Regulations and such additional rights and remedies to which a
secured party is entitled under the laws in effect in any jurisdiction where any
rights and remedies hereunder may be asserted. Wherever reference is made in
this Agreement to any section of the Code, such reference shall be deemed to
include a reference to any provision of the Code which is a successor to, or
amendment of, such section. Without limiting the generality of the foregoing,
such remedies may include, to the extent permitted by applicable law, (i)
retention of the Pledged Notes or other Collateral in full satisfaction of the
Holders' obligations under the Purchase Contracts or (ii) sale of the Pledged
Notes or other Collateral in one or more public or private sales, in each case
at the written direction of the Company.
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(b) Without limiting any rights or powers otherwise granted by this
Agreement to the Collateral Agent, in the event the Collateral Agent is unable
to make payments to the Company on account of any Pledged Applicable Ownership
Interest in the Treasury Portfolio or Pledged Treasury Securities as provided in
Article III hereof in satisfaction of the obligations of the Holder of the Units
of which such Pledged Applicable Ownership Interest in the Treasury Portfolio or
Pledged Treasury Securities, as the case may be, is a part under the related
Purchase Contracts, the inability to make such payments shall constitute an
event of default under the Purchase Contracts and the Collateral Agent shall
have and may exercise, with reference to such Pledged Applicable Ownership
Interest in the Treasury Portfolio or Pledged Treasury Securities, as the case
may be, and such obligations of such Holder, any and all of the rights and
remedies available to a secured party under the Code and the TRADES Regulations
after default by a debtor, and as otherwise granted herein or under any other
law.
(c) Without limiting any rights or powers otherwise granted by this
Agreement to the Collateral Agent, the Collateral Agent is hereby irrevocably
authorized to receive and collect all payments of (i) the principal amount of,
or interest on, the Pledged Notes, or (ii) the principal amount of, or interest
(if any) on, the Pledged Applicable Ownership Interest in the Treasury Portfolio
or Pledged Treasury Securities, subject, in each case, to the provisions of
Article III, and as otherwise granted herein.
(d) The Purchase Contract Agent, individually and as attorney-in-fact for
each Holder of Units, agrees that, from time to time, upon the written request
of the Company or the Collateral Agent (acting upon the written request of the
Company), the Purchase Contract Agent or such Holder shall execute and deliver
such further documents and do such other acts and things as the Company or the
Collateral Agent (acting upon the written request of the Company) may reasonably
request in order to maintain the Pledge, and the perfection and priority
thereof, and to confirm the rights of the Collateral Agent hereunder. The
Purchase Contract Agent shall have no liability to any Holder for executing any
documents or taking any such acts requested by the Company or the Collateral
Agent (acting upon the written request of the Company) hereunder, except for
liability for its own negligent act, its own negligent failure to act, its bad
faith or its own willful misconduct.
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SECTION 6.2 Substitutions.
Whenever a Holder has the right to substitute Treasury Securities, Notes,
or the Applicable Ownership Interest in the Treasury Portfolio, as the case may
be, for Collateral held by the Collateral Agent, such substitution shall not
constitute a novation of the security interest created hereby.
SECTION 6.3 Tax Event Redemption.
Upon the occurrence of a Tax Event Redemption prior to a successful
remarketing of the Notes, the aggregate Redemption Price payable on the Tax
Event Redemption Date with respect to all Notes shall be delivered to the
Collateral Agent by the Trustee on or prior to 12:00 p.m. (New York City time)
on such Tax Event Redemption Date, by wire transfer in immediately available
funds at such place and at such account as may be designated by the Collateral
Agent. Upon receipt of such Redemption Price, the Collateral Agent will at the
written direction of the Company, (a) apply an amount out of such Redemption
Price equal to the aggregate Redemption Amount with respect to the Pledged Notes
to purchase from the Quotation Agent the Treasury Portfolio, (b) promptly remit
the remaining portion of such Redemption Price in an amount equal to any accrued
and unpaid interest on the Notes to the Purchase Contract Agent for payment to
the Holders of Normal Units on a pro rata basis and, (c) distribute to Holders
of Separate Notes the Redemption Price applicable to such Separate Notes. The
Collateral Agent shall transfer the Treasury Portfolio to the Collateral Account
to secure the obligation of all Holders of Normal Units to purchase Common Stock
of the Company under the Purchase Contracts constituting a part of such Normal
Units, in substitution for the Pledged Notes. Thereafter the Collateral Agent
shall have such security interests, rights and obligations with respect to the
Treasury Portfolio as it had in respect of the Pledged Notes as provided in
Articles II, III, IV, V and VI, and any reference herein to the Notes shall be
deemed to be reference to such Treasury Portfolio, and any reference herein to
interest on the Notes shall be deemed to be a reference to distributions on such
Treasury Portfolio.
ARTICLE VII
REPRESENTATIONS AND WARRANTIES; COVENANTS
SECTION 7.1 Representations and Warranties.
The Holders from time to time, acting through the Purchase Contract Agent
as their attorney-in-fact (it being understood that the Purchase Contract Agent
shall not be liable for any representation or warranty made by or on behalf of a
Holder), hereby represent and warrant to the Collateral Agent, which
representations and warranties shall be deemed repeated on each day a Holder
transfers Collateral that:
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(a) such Holder has the power to grant a security interest in and
lien on the Collateral;
(b) such Holder is the sole beneficial owner of the Collateral and,
in the case of Collateral delivered in physical form, is the sole holder
of such Collateral and is the sole beneficial owner of, or has the right
to transfer, the Collateral it transfers to the Collateral Agent, free and
clear of any security interest, lien, encumbrance, call, liability to pay
money or other restriction other than the security interest and lien
granted under Section 2.1 hereof;
(c) upon the transfer of the Collateral to the Collateral Account,
the Collateral Agent, for the benefit of the Company, will have a valid
and perfected first priority security interest therein (assuming that any
central clearing operation or any Intermediary or other entity not within
the control of the Holder involved in the transfer of the Collateral,
including the Collateral Agent, gives the notices and takes the action
required of it hereunder and under applicable law for perfection of that
interest and assuming the establishment and exercise of control pursuant
to Section 2.2 hereof); and
(d) the execution and performance by the Holder of its obligations
under this Agreement will not result in the creation of any security
interest, lien or other encumbrance on the Collateral other than the
security interest and lien granted under Section 2.1 hereof or violate any
provision of any existing law or regulation applicable to it or of any
mortgage, charge, pledge, indenture, contract or undertaking to which it
is a party or which is binding on it or any of its assets.
SECTION 7.2 Covenants.
The Holders from time to time, acting through the Purchase Contract Agent
as their attorney-in-fact (it being understood that the Purchase Contract Agent
shall not be liable for any covenant made by or on behalf of a Holder), hereby
covenant to the Collateral Agent that for so long as the Collateral remains
subject to the Pledge:
(a) neither the Purchase Contract Agent nor such Holders will create
or purport to create or allow to subsist any mortgage, charge, lien,
pledge or any other security interest whatsoever over the Collateral or
any part of it other than pursuant to this Agreement; and
(b) neither the Purchase Contract Agent nor such Holders will sell
or otherwise dispose (or attempt to dispose) of the Collateral or any part
of it except for the beneficial interest therein, subject to the pledge
hereunder, transferred in connection with the transfer of the Units.
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ARTICLE VIII
THE COLLATERAL AGENT
SECTION 8.1 Appointment, Powers and Immunities.
(a) The Collateral Agent shall act as agent for the Company hereunder with
such powers as are specifically vested in the Collateral Agent by the terms of
this Agreement, together with such other powers as are reasonably incidental
thereto. Each of the Collateral Agent, the Custodial Agent and the Securities
Intermediary:
(i) shall have no duties or responsibilities except those expressly
set forth in this Agreement and no implied covenants or obligations shall
be inferred from this Agreement against any of them, nor shall any of them
be bound by the provisions of any agreement by any party hereto beyond the
specific terms hereof;
(ii) shall not be responsible for any recitals contained in this
Agreement, or in any certificate or other document referred to or provided
for in, or received by it under, this Agreement, the Units or the Purchase
Contract Agreement, or for the value, validity, effectiveness,
genuineness, enforceability or sufficiency of this Agreement (other than
as against the Collateral Agent), the Units or the Purchase Contract
Agreement or any other document referred to or provided for herein or
therein or for any failure by the Company or any other Person (except the
Collateral Agent, the Custodial Agent or the Securities Intermediary, as
the case may be) to perform any of its obligations hereunder or thereunder
or for the perfection, priority or, except as expressly required hereby,
existence, validity, perfection or maintenance of any security interest
created hereunder;
(iii) shall not be required to initiate or conduct any litigation or
collection proceedings hereunder (except in the case of the Collateral
Agent, pursuant to written directions furnished under Section 8.2 hereof,
subject to Section 8.6 hereof);
(iv) shall not be responsible for any action taken or omitted to be
taken by it in good faith hereunder or under any other document or
instrument referred to or provided for herein or in connection herewith or
therewith; and
(v) shall not be required to advise any party as to selling or
retaining, or taking or refraining from taking any action with respect to,
the Units or other property deposited hereunder.
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Subject to the foregoing, during the term of this Agreement, the
Collateral Agent shall take all reasonable action in connection with the
safekeeping and preservation of the Collateral hereunder.
(b) No provision of this Agreement shall require the Collateral Agent, the
Custodial Agent or the Securities Intermediary to expend or risk its own funds
or otherwise incur any financial liability in the performance of any of its
duties hereunder or in the exercise of any of its rights or powers, if it shall
have reasonable grounds for believing that payment of such funds or adequate
indemnity against such risk or liability is reasonably assured to it. In no
event shall the Collateral Agent, the Custodial Agent or the Securities
Intermediary be liable for any amount in excess of the value of the Collateral
or for any special, indirect, individual, consequential damages or lost profits
or loss of business, arising in connection with this Agreement even if the
Collateral Agent, the Custodial Agent or the Securities Intermediary has been
advised of the likelihood of such loss or damage being incurred and regardless
of the form of action. Notwithstanding the foregoing, the Collateral Agent, the
Custodial Agent, the Purchase Contract Agent and Securities Intermediary, each
in its individual capacity, hereby waive any right of setoff, banker's lien,
liens or perfection rights as securities intermediary or any counterclaim with
respect to any of the Collateral.
(c) The Collateral Agent, Custodial Agent and Securities Intermediary
shall have no liability whatsoever for the action or inaction of any Clearing
Agency or any book-entry system thereof. In no event shall any Clearing Agency
or any book-entry system thereof be deemed an agent or subcustodian of the
Collateral Agent, Custodial Agent and Securities Intermediary.
(d) Nothing in this Section 8.1 shall impair the right of the Collateral
Agent in its discretion to take any action or omit to take any action which it
deems proper and which is not inconsistent with such direction.
SECTION 8.2 Instructions of the Company.
The Company shall have the right, by one or more instruments in writing
executed and delivered to the Collateral Agent, the Custodial Agent or the
Securities Intermediary, as the case may be, to direct the time, method and
place of conducting any proceeding for the realization of any right or remedy
available to the Collateral Agent, or of exercising any power conferred on the
Collateral Agent, the Custodial Agent or the Securities Intermediary, as the
case may be, or to direct the taking or refraining from taking of any action
authorized by this Agreement; provided, however, that (i) such direction shall
not conflict with the provisions of any law or of this Agreement and (ii) the
Collateral Agent, the Custodial Agent and the Securities Intermediary shall each
receive indemnity reasonably satisfactory to it as provided herein. Nothing in
this Section 8.2 shall impair the right of the Collateral Agent in its
discretion to take any action or omit to take any action which it deems proper
and which is not inconsistent with such direction.
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SECTION 8.3 Reliance.
Each of the Securities Intermediary, the Custodial Agent and the
Collateral Agent, in the absence of bad faith, shall be entitled conclusively to
rely upon any certification, order, judgment, opinion, notice or other
communication (including, without limitation, any thereof by telephone or
facsimile) reasonably believed by it to be genuine and correct and to have been
signed or sent by or on behalf of the proper Person or Persons (without being
required to determine the correctness of any fact stated therein), and upon
advice and statements of legal counsel and other experts selected by the
Collateral Agent, the Custodial Agent or the Securities Intermediary, as the
case may be. As to any matters not expressly provided for by this Agreement, the
Collateral Agent, the Custodial Agent and the Securities Intermediary shall in
all cases be fully protected in acting, or in refraining from acting, hereunder
in accordance with instructions given by the Company in accordance with this
Agreement.
SECTION 8.4 Rights in Other Capacities.
The Collateral Agent, the Custodial Agent and the Securities Intermediary
and their affiliates may (without having to account therefor to the Company)
accept deposits from, lend money to, make their investments in and generally
engage in any kind of banking, trust or other business with the Purchase
Contract Agent, any Holder of Units and any holder of Separate Notes (and any of
their respective subsidiaries or affiliates) as if it were not acting as the
Collateral Agent, the Custodial Agent or the Securities Intermediary, as the
case may be, and the Collateral Agent, the Custodial Agent and the Securities
Intermediary and their affiliates may accept fees and other consideration from
the Purchase Contract Agent, any Holder of Units or any holder of Separate Notes
without having to account for the same to the Company; provided that each of the
Securities Intermediary, the Custodial Agent and the Collateral Agent covenants
and agrees with the Company that, except as provided in this Agreement, it shall
not accept, receive or permit there to be created in favor of itself (and waives
any right of set-off or banker's lien with respect to) and shall take no
affirmative action to permit there to be created in favor of any other Person,
any security interest, lien or other encumbrance of any kind in or upon the
Collateral and the Collateral shall not be commingled with any other assets of
any such Person.
SECTION 8.5 Non-Reliance on Collateral Agent.
None of the Securities Intermediary, the Custodial Agent or the Collateral
Agent shall be required to keep itself informed as to the performance or
observance by the Purchase Contract Agent or any Holder of Units of this
Agreement, the Purchase Contract Agreement, the Units or any other document
referred to or provided for herein or therein or to inspect the properties or
books of the Purchase Contract Agent or any Holder of Units. The Collateral
Agent, the Custodial Agent and the Securities Intermediary shall not have any
duty or responsibility to provide the Company or the Remarketing Agent with any
credit or other information concerning the affairs, financial condition or
business of the Purchase Contract Agent, any Holder of Units or any holder of
Separate Notes (or any of their respective subsidiaries or affiliates) that may
come into the possession of the Collateral Agent, the Custodial Agent or the
Securities Intermediary or any of their respective affiliates.
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SECTION 8.6 Compensation and Indemnity.
The Company agrees:
(a) to pay each of the Collateral Agent, the Custodial Agent and the
Securities Intermediary from time to time such compensation as shall be
agreed in writing between the Company and the Collateral Agent, Custodial
Agent or the Securities Intermediary, as the case may be, for all services
rendered by each of them hereunder, and
(b) to indemnify the Collateral Agent, the Custodial Agent, the
Securities Intermediary and their officers, directors and agents for, and
to hold each of them harmless from and against, any loss, liability or
reasonable out-of-pocket expense incurred without negligence on its part,
arising out of or in connection with the acceptance or administration of
its powers and duties under this Agreement, including the reasonable
out-of-pocket costs and expenses (including reasonable fees and expenses
of counsel) of defending itself against any claim or liability in
connection with the exercise or performance of such powers and duties or
collecting such amounts. The Collateral Agent, the Custodial Agent and the
Securities Intermediary shall each promptly notify the Company of any
third party claim which may give rise to the indemnity hereunder and give
the Company the opportunity to participate in the defense of such claim
with counsel reasonably satisfactory to the indemnified party, and no such
claim shall be settled without the written consent of the Company, which
consent shall not be unreasonably withheld. The provisions of this Section
8.6 shall survive the resignation or removal of the Collateral Agent, the
Custodial Agent and the Securities Intermediary or the termination of this
Agreement.
SECTION 8.7 Failure to Act.
In the event of any ambiguity in the provisions of this Agreement or any
dispute between or conflicting claims by or among the parties hereto or any
other Person with respect to any funds or property deposited hereunder, the
Collateral Agent, Custodial Agent and the Securities Intermediary shall be
entitled, after prompt notice to the
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Company and the Purchase Contract Agent, at its sole option, to refuse to comply
with any and all claims, demands or instructions with respect to such property
or funds so long as such dispute or conflict shall continue, and none of the
Collateral Agent, Custodial Agent or the Securities Intermediary shall be or
become liable in any way to any of the parties hereto for its failure or refusal
to comply with such conflicting claims, demands or instructions. The Collateral
Agent, Custodial Agent and the Securities Intermediary shall be entitled to
refuse to act until either (i) such conflicting or adverse claims or demands
shall have been finally determined by a court of competent jurisdiction or
settled by agreement between the conflicting parties as evidenced in a writing,
reasonably satisfactory to the Collateral Agent, Custodial Agent or the
Securities Intermediary, as the case may be, or (ii) the Collateral Agent, the
Custodial Agent or the Securities Intermediary, as the case may be, shall have
received security or an indemnity reasonably satisfactory to the Collateral
Agent, Custodial Agent or the Securities Intermediary, as the case may be,
sufficient to save the Collateral Agent, Custodial Agent or the Securities
Intermediary, as the case may be, harmless from and against any and all loss,
liability or reasonable out-of-pocket expense which the Collateral Agent,
Custodial Agent or the Securities Intermediary, as the case may be, may incur by
reason of its acting without willful misconduct or gross negligence. The
Collateral Agent, Custodial Agent or the Securities Intermediary may in addition
elect to commence an interpleader action or seek other judicial relief or orders
as the Collateral Agent, Custodial Agent or the Securities Intermediary, as the
case may be, may deem necessary. Notwithstanding anything contained herein to
the contrary, none of the Collateral Agent, Custodial Agent or the Securities
Intermediary shall be required to take any action that is in its opinion
contrary to law or to the terms of this Agreement, or which would in its opinion
subject it or any of its officers, employees or directors to liability.
SECTION 8.8 Resignation.
Subject to the appointment and acceptance of a successor Collateral Agent,
Custodial Agent or Securities Intermediary, as provided below, (a) the
Collateral Agent, Custodial Agent and the Securities Intermediary may resign at
any time by giving notice thereof to the Company and the Purchase Contract Agent
as attorney-in-fact for the Holders of Units, (b) the Collateral Agent,
Custodial Agent and the Securities Intermediary may be removed at any time by
the Company and (c) if the Collateral Agent, Custodial Agent or the Securities
Intermediary fails to perform any of its material obligations hereunder in any
material respect for a period of not less than 20 days after receiving written
notice of such failure by the Purchase Contract Agent and such failure shall be
continuing, the Collateral Agent, Custodial Agent or the Securities Intermediary
may be removed by the Purchase Contract Agent. The Purchase Contract Agent shall
promptly notify the Company of any removal of the Collateral Agent, the
Custodial Agent or the Securities Intermediary pursuant to clause (c) of the
immediately preceding sentence. The Company shall promptly notify
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the Purchase Contract Agent of any removal of the Collateral Agent, the
Custodial Agent or the Securities Intermediary pursuant to clause (b) of the
second preceding sentence. Upon any such resignation or removal, the Company
shall have the right to appoint a successor Collateral Agent, Custodial Agent or
Securities Intermediary, as the case may be. If no successor Collateral Agent,
Custodial Agent or Securities Intermediary, as the case may be, shall have been
so appointed and shall have accepted such appointment within 30 days after the
retiring Collateral Agent's, Custodial Agent's or Securities Intermediary's
giving of notice of resignation or such removal, then the retiring Collateral
Agent, Custodial Agent or Securities Intermediary, as the case may be, may at
the Company's expense petition any court of competent jurisdiction for the
appointment of a successor Collateral Agent, Custodial Agent or Securities
Intermediary, as the case may be. Each of the Collateral Agent, Custodial Agent
and the Securities Intermediary shall be a bank that has an office in New York,
New York with a combined capital and surplus of at least $50,000,000. Upon the
acceptance of any appointment as Collateral Agent, Custodial Agent or Securities
Intermediary, as the case may be, hereunder by a successor Collateral Agent,
Custodial Agent or Securities Intermediary, as the case may be, such successor
shall thereupon succeed to and become vested with all the rights, powers,
privileges and duties of the retiring Collateral Agent, Custodial Agent or
Securities Intermediary, as the case may be, and the retiring Collateral Agent,
Custodial Agent or Securities Intermediary, as the case may be, shall take all
appropriate action to transfer any money and property held by it hereunder
(including the Collateral) to such successor after the payment of any
outstanding fees, expenses and indemnities due and owing to such remaining
party. The retiring Collateral Agent, Custodial Agent or Securities Intermediary
shall, upon such succession, be discharged from its duties and obligations as
Collateral Agent, Custodial Agent or Securities Intermediary hereunder. After
any retiring Collateral Agent's, Custodial Agent's or Securities Intermediary's
resignation hereunder as Collateral Agent, Custodial Agent or Securities
Intermediary, the provisions of this Section 8.8, and Section 8.6 hereof, shall
continue in effect for its benefit in respect of any actions taken or omitted to
be taken by it while it was acting as the Collateral Agent, Custodial Agent or
Securities Intermediary. Any resignation or removal of the Collateral Agent
hereunder shall be deemed for all purposes of this Agreement as the simultaneous
resignation or removal of the Custodial Agent and the Securities Intermediary
hereunder. Neither the Company, nor the Purchase Contract Agent shall remove the
Custodial Agent or the Securities Intermediary without simultaneously removing
the Collateral Agent.
SECTION 8.9 Right to Appoint Agent or Advisor.
The Collateral Agent shall have the right to appoint or consult with
agents or advisors in connection with any of its duties hereunder, and the
Collateral Agent shall not be liable for any action taken or omitted by, or in
reliance upon the advice of, such agents or advisors selected in good faith. The
appointment of agents (other than legal counsel) pursuant to this Section 8.9
shall be subject to prior consent of the Company, which consent shall not be
unreasonably withheld.
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SECTION 8.10 Survival.
The provisions of this Article VIII shall survive termination of this
Agreement and the resignation or removal of the Collateral Agent, the Custodial
Agent or the Securities Intermediary.
SECTION 8.11 Exculpation.
Anything in this Agreement to the contrary notwithstanding, in no event
shall any of the Collateral Agent, the Custodial Agent or the Securities
Intermediary or their officers, employees or agents be liable under this
Agreement to any third party for indirect, special, punitive or consequential
loss or damage of any kind whatsoever, including lost profits, whether or not
the likelihood of such loss or damage was known to the Collateral Agent, the
Custodial Agent or the Securities Intermediary, or any of them, incurred without
any act or deed that is found to be attributable to negligence or bad faith on
the part of such party.
ARTICLE IX
AMENDMENT
SECTION 9.1 Amendment Without Consent of Holders.
Without the consent of any Holders or the holders of any Separate Notes,
the Company, when authorized by a Board Resolution, the Collateral Agent, the
Custodial Agent, the Securities Intermediary and the Purchase Contract Agent, at
any time and from time to time, may amend this Agreement, in form satisfactory
to the Company, the Collateral Agent, the Custodial Agent, the Securities
Intermediary and the Purchase Contract Agent, for any of the following purposes:
(i) to evidence the succession of another Person to the Company, and
the assumption by any such successor of the covenants of the Company; or
(ii) to add to the covenants of the Company for the benefit of the
Holders, or to surrender any right or power herein conferred upon the
Company so long as such covenants or such surrender do not adversely
affect the validity, perfection or priority of the security interests
granted or created hereunder; or
(iii) to evidence and provide for the acceptance of appointment
hereunder by a successor Collateral Agent, Custodial Agent, Securities
Intermediary or Purchase Contract Agent; or
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(iv) to cure any ambiguity, to correct or supplement any provisions
herein which may be inconsistent with any other such provisions herein, or
to make any other provisions with respect to such matters or questions
arising under this Agreement, provided such action shall not adversely
affect the interests of the Holders.
SECTION 9.2 Amendment with Consent of Holders.
With the consent of the Holders of not less than a majority of the
Purchase Contracts at the time outstanding, by Act of said Holders delivered to
the Company, the Purchase Contract Agent or the Collateral Agent, as the case
may be, the Company, when duly authorized by a Board Resolution, the Purchase
Contract Agent, the Collateral Agent, the Custodial Agent and the Securities
Intermediary may amend this Agreement for the purpose of modifying in any manner
the provisions of this Agreement or the rights of the Holders in respect of the
Units; provided, however, that no such supplemental agreement shall, without the
consent of the Holder of each Outstanding Unit adversely affected thereby,
(i) change the amount or type of Collateral underlying a Unit
(except for the rights of holders of Normal Units to substitute the
Treasury Securities for the Pledged Notes, or the Applicable Ownership
Interest in the Treasury Portfolio, as the case may be, or the rights of
Holders of Stripped Units to substitute Notes or the Applicable Ownership
Interest in the Treasury Portfolio, as applicable, for the Pledged
Treasury Securities), impair the right of the Holder of any Unit to
receive distributions on the underlying Collateral or otherwise materially
adversely affect the Holder's rights in or to such Collateral; or
(ii) otherwise effect any action that would require the consent of
the Holder of each Outstanding Unit affected thereby pursuant to the
Purchase Contract Agreement if such action were effected by an agreement
supplemental thereto; or
(iii) reduce the percentage of Purchase Contracts the consent of
whose Holders is required for any such amendment.
If any amendment referred to above would adversely affect only the Normal
Units or the Stripped Units, then only the affected class of Holders shall be
entitled to vote on the amendment and the amendment shall not be effective
except with the consent of the Holders of not less than a majority of the
affected class. It shall not be necessary for any Act of Holders under this
Article IX to approve the particular form of any proposed amendment, but it
shall be sufficient if such Act shall approve the substance thereof.
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SECTION 9.3 Execution of Amendments.
In executing any amendment permitted by this Section, the Collateral
Agent, the Custodial Agent, the Securities Intermediary and the Purchase
Contract Agent shall receive and (subject to Section 8.1 hereof, with respect to
the Collateral Agent, and Section 7.1 of the Purchase Contract Agreement, with
respect to the Purchase Contract Agent) shall be fully protected in relying
upon, an Opinion of Counsel stating that the execution of such amendment is
authorized or permitted by this Agreement and that all conditions precedent, if
any, to the execution and delivery of such amendment have been satisfied and, in
the case of an amendment pursuant to Section 9.1, that such amendment does not
adversely affect the validity, perfection or priority of the security interests
granted or created hereunder.
SECTION 9.4 Effect of Amendments.
Upon the execution of any amendment under this Article IX, this Agreement
shall be modified in accordance therewith, and such amendment shall form a part
of this Agreement for all purposes; and every Holder of Certificates theretofore
or thereafter authenticated, executed on behalf of the Holders and delivered by
he Purchase Contract Agent under the Purchase Contract Agreement shall be bound
thereby.
SECTION 9.5 Reference to Amendments.
Certificates authenticated, executed on behalf of the Holders and
delivered after the execution of any amendment pursuant to this Section may, and
shall if required by the Collateral Agent or the Purchase Contract Agent, bear a
notation in form approved by the Purchase Contract Agent and the Collateral
Agent as to any matter provided for in such amendment. If the Company shall so
determine, new Certificates so modified as to conform, in the opinion of the
Collateral Agent, the Purchase Contract Agent and the Company, to any such
amendment may be prepared and executed by the Company and authenticated,
executed on behalf of the Holders and delivered by the Purchase Contract Agent
in accordance with the Purchase Contract Agreement in exchange for outstanding
Certificates.
ARTICLE X
MISCELLANEOUS
SECTION 10.1 No Waiver.
No failure on the part of any party hereto or any of its agents to
exercise, and no course of dealing with respect to, and no delay in exercising,
any right, power or remedy hereunder shall operate as a waiver thereof; nor
shall any single or partial exercise by any party hereto or any of its agents of
any right, power or remedy hereunder preclude any other or further exercise
thereof or the exercise of any other right, power or remedy. The remedies herein
are cumulative and are not exclusive of any remedies provided by law.
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SECTION 10.2 GOVERNING LAW.
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NEW YORK. Without limiting the foregoing, the above choice
of law is expressly agreed to by the Securities Intermediary, the Collateral
Agent, the Custodial Agent and the Holders from time to time acting through the
Purchase Contract Agent, as their attorney-in-fact, in connection with the
establishment and maintenance of the Collateral Account, which law, for purposes
of the Code, shall be deemed to be the law governing all security entitlements
related thereto. In addition, such parties agree that, for purposes of the Code,
New York shall be the Securities Intermediary's jurisdiction. The Company, the
Collateral Agent and the Holders from time to time of the Units, acting through
the Purchase Contract Agent as their attorney-in-fact, hereby submit to the
nonexclusive jurisdiction of the United States District Court for the Southern
District of New York and of any New York state court sitting in New York City
for the purposes of all legal proceedings arising out of or relating to this
Agreement or the transactions contemplated hereby. The Company, the Collateral
Agent and the Holders from time to time of the Units, acting through the
Purchase Contract Agent as their attorney-in-fact, irrevocably waive, to the
fullest extent permitted by applicable law, any objection which they may now or
hereafter have to the laying of the venue of any such proceeding brought in such
a court and any claim that any such proceeding brought in such a court has been
brought in an inconvenient forum.
SECTION 10.3 Notices.
Unless otherwise stated herein, all notices, requests, consents and other
communications provided for herein (including, without limitation, any
modifications of, or waivers or consents under, this Agreement) shall be given
or made in writing (including, without limitation, by telecopy) delivered to the
intended recipient at the "Address for Notices" specified below its name on the
signature pages hereof or, as to any party, at such other address as shall be
designated by such party in a notice to the other parties. Except as otherwise
provided in this Agreement, all such communications shall be deemed to have been
duly given when personally delivered or, in the case of a mailed notice or
notice transmitted by telecopier, upon receipt, in each case given or addressed
as aforesaid.
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SECTION 10.4 Successors and Assigns.
This Agreement shall be binding upon and inure to the benefit of the
respective successors and assigns of the Company, the Collateral Agent, the
Custodial Agent, the Securities Intermediary and the Purchase Contract Agent,
and the Holders from time to time of the Units, by their acceptance of the same,
shall be deemed to have agreed to be bound by the provisions hereof and to have
ratified the agreements of, and the grant of the Pledge hereunder by, the
Purchase Contract Agent.
SECTION 10.5 Counterparts.
This Agreement may be executed in any number of counterparts, all of which
taken together shall constitute one and the same instrument, and any of the
parties hereto may execute this Agreement by signing any such counterpart.
SECTION 10.6 Severability.
If any provision hereof is invalid and unenforceable in any jurisdiction,
then, to the fullest extent permitted by law, (i) the other provisions hereof
shall remain in full force and effect in such jurisdiction and shall be
liberally construed in order to carry out the intentions of the parties hereto
as nearly as may be possible and (ii) the invalidity or unenforceability of any
provision hereof in any jurisdiction shall not affect the validity or
enforceability of such provision in any other jurisdiction.
SECTION 10.7 Expenses, Etc.
The Company agrees to reimburse the Collateral Agent, the Securities
Intermediary and the Custodial Agent for:
(a) all reasonable out-of-pocket costs and all reasonable expenses
of the Collateral Agent, the Custodial Agent and the Securities
Intermediary (including, without limitation, the reasonable fees and
expenses of counsel to the Collateral Agent, the Custodial Agent and the
Securities Intermediary), in connection with (i) the negotiation,
preparation, execution and delivery or performance of this Agreement and
(ii) any modification, supplement or waiver of any of the terms of this
Agreement;
(b) all reasonable costs and expenses of the Collateral Agent
(including, without limitation, reasonable fees and expenses of counsel)
in connection with (i) any enforcement or proceedings resulting or
incurred in connection with causing any Holder of Units to satisfy its
obligations under the Purchase Contracts forming a part of the Units and
(ii) the enforcement of this Section 10.7; and
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(c) all transfer, stamp, documentary or other similar taxes,
assessments or charges levied by any governmental or revenue authority in
respect of this Agreement or any other document referred to herein and all
costs, expenses, taxes, assessments and other charges incurred in
connection with any filing, registration, recording or perfection of any
security interest contemplated hereby.
SECTION 10.8 Security Interest Absolute.
All rights of the Collateral Agent and security interests hereunder, and
all obligations of the Holders from time to time hereunder, shall be absolute
and unconditional irrespective of:
(a) any lack of validity or enforceability of any provision of the
Purchase Contracts or the Units or any other agreement or instrument
relating thereto;
(b) any change in the time, manner or place of payment of, or any
other term of, or any increase in the amount of, all or any of the
obligations of Holders of Units under the related Purchase Contracts, or
any other amendment or waiver of any term of, or any consent to any
departure from any requirement of, the Purchase Contract Agreement or any
Purchase Contract or any other agreement or instrument relating thereto;
or
(c) any other circumstance which might otherwise constitute a
defense available to, or discharge of, a borrower, a guarantor or a
pledgor.
SECTION 10.9 Incorporation by Reference.
Each of the Company, the Collateral Agent, the Custodial Agent and the
Securities Intermediary agrees that the Purchase Contract Agent is, in acting
hereunder with respect to the Company, entitled to all rights, privileges,
benefits, protections, immunities and indemnities provided to it under the
Purchase Contract Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
TOYS "R" US, INC.
By: /s/ Xxxxx Xxxxxxxxx
------------------------------------------
Name: Xxxxx Xxxxxxxxx
Title: Executive Vice President - Chief
Executive Officer
Address for Notices:
36
Toys "R" Us, Inc.
000 Xxxx Xxxx
Xxxxxxx, Xxx Xxxxxx 00000
Attention: Treasurer
Telecopy: 000-000-0000
THE BANK OF NEW YORK, as
Purchase Contract Agent and as
attorney-in-fact of the Holders
from time to time of the Units
By: /s/ Xxxxx X. Xxxxxxxx
-----------------------------------------
Name: Xxxxx X. Xxxxxxxx
Title: Assistant Vice-President
Address for Notices:
The Bank of New York
000 Xxxxxxx Xxxxxx, Xxxxx 00 Xxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Corporate Trust Administration
Telecopy: 000-000-0000
37
JPMORGAN CHASE BANK, as Collateral
Agent, Custodial Agent and Securities
Intermediary
By: /s/ X. X'Xxxxx
-----------------------------------------
Name: X. X'Xxxxx
Title: Vice-President
Address for Notices:
JPMorgan Chase Bank
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Institutional Trust Services
Telecopy: (000) 000-0000/8158
38
EXHIBIT A
INSTRUCTION FROM PURCHASE CONTRACT
AGENT TO COLLATERAL AGENT
JPMorgan Chase Bank,
as Collateral Agent
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Institutional Trust Services
Re: Equity Security Units of Toys "R" Us, Inc. (the "Company")
We hereby notify you in accordance with Section [4.1] [4.2] of the Pledge
Agreement, dated as of May 28, 2002 (the "Pledge Agreement"), among the Company,
you, as Collateral Agent, Custodial Agent and Securities Intermediary and us, as
Purchase Contract Agent and as attorney-in-fact for the holders of [Normal
Units] [Stripped Units] from time to time, that the holder of Units listed below
(the "Holder") has elected to substitute [$_____ aggregate principal amount of
Treasury Securities (CUSIP No. 000000XX0)] [$_______ aggregate principal amount
of Notes] [the Applicable Ownership Interest in the Treasury Portfolio], in
exchange for the related [Pledged Notes], [the Pledged Applicable Ownership
Interest in the Treasury Portfolio] [Pledged Treasury Securities] held by you in
accordance with the Pledge Agreement and has delivered to us a notice stating
that the Holder has transferred such [Treasury Securities] [Notes] [the
Applicable Ownership Interest in the Treasury Portfolio] to you, as Collateral
Agent. We hereby instruct you, upon receipt of such [Pledged Treasury
Securities] [Pledged Notes] [the Pledged Applicable Ownership Interest in the
Treasury Portfolio], and upon the payment by such Holder of any applicable fees,
to release the [Notes] [the Applicable Ownership Interest in the Treasury
Portfolio] [Treasury Securities] related to such [Normal Units] [Stripped Units]
to us in accordance with the Holder's instructions. Capitalized terms used
herein but not defined shall have the meaning set forth in the Pledge Agreement.
A-1
Date: _____________________
THE BANK OF NEW YORK,
as Purchase Contract Agent
By:
------------------------------
Name:
Title:
Please print name and address of the Holder electing to substitute [Treasury
Securities (CUSIP No. 000000XX0)] [$______ aggregate principal amount of Notes
or the Applicable Ownership Interest in the Treasury Portfolio, as the case may
be] for the [Pledged Notes or the Pledged Applicable Ownership Interest in the
Treasury Portfolio] [Pledged Treasury Securities]:
Name: ________________________
________________________
Social Security or other Taxpayer
Identification Number, if any: ____
Address: _____________________
_____________________
_____________________
A-2
EXHIBIT B
INSTRUCTION FROM HOLDER TO PURCHASE CONTRACT AGENT
The Bank of New York,
as Purchase Contract Agent
000 Xxxxxxx Xxxxxx, Xxxxx 00 Xxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Corporate Trust Administration
Re: Equity Security Units of Toys "R" Us, Inc. (the "Company")
The undersigned Holder hereby notifies you that it has delivered to
JPMorgan Chase Bank, as Collateral Agent [$_______ aggregate principal amount of
Treasury Securities (CUSIP No. 000000XX0)] [$_______ aggregate principal amount
of [Notes] [the Applicable Ownership Interest in the Treasury Portfolio], in
exchange for the related [Pledged Notes] [the Pledged Applicable Ownership
Interest in the Treasury Portfolio], [Pledged Treasury Securities] held by the
Collateral Agent, in accordance with Section [4.1] [4.2] of the Pledge
Agreement, dated May 28, 2002 (the "Pledge Agreement"), among you, the Company
and the JPMorgan Chase Bank, as Collateral Agent, Custodial Agent and Securities
Intermediary, and The Bank of New York, as Purchase Contract Agent. The
undersigned Holder has paid the Collateral Agent all applicable fees relating to
such exchange. The undersigned Holder hereby instructs you to instruct the
Collateral Agent to release to you on behalf of the undersigned Holder the
[Pledged Notes] [the Pledged Applicable Ownership Interest in the Treasury
Portfolio], [Pledged Treasury Securities] related to such [Normal Units]
[Stripped Units]. Capitalized terms used herein but not defined shall have the
meaning set forth in the Pledge Agreement.
Date: ___________________ Signature:___________________________________
Signature Guarantee: ________________________
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-1
Please print name and address of Registered Holder:
Name: ________________________
________________________
Social Security or other Taxpayer Identification Number, if any: ________
Address: _____________________
_____________________
_____________________
B-2
EXHIBIT C
INSTRUCTION FROM HOLDER TO COLLATERAL AGENT REGARDING
WITHDRAWAL FROM REMARKETING
JPMorgan Chase Bank,
as Collateral Agent
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Institutional Trust Services
Re: Senior Notes due 2007 of Toys "R" Us, Inc. (the "Company")
The undersigned hereby notifies you in accordance with Section 4.5(f) of
the Pledge Agreement, dated as of May 28, 2002 (the "Pledge Agreement"), among
the Company, you, as Collateral Agent, Securities Intermediary and Custodial
Agent and The Bank of New York, as Purchase Contract Agent and as
attorney-in-fact for the Holders of Normal Units and Stripped Units from time to
time, that the undersigned elects to withdraw the $_____ aggregate principal
amount of Notes delivered to the Collateral Agent on ___________, 2005 for
remarketing pursuant to Section 8.1(m) of the First Supplemental Indenture. The
undersigned hereby instructs you to return such Notes to the undersigned in
accordance with the undersigned's instructions. With this notice, the
Undersigned hereby agrees to be bound by the terms and conditions of Section
4.5(f) of the Pledge Agreement. Capitalized terms used herein but not defined
shall have the meaning set forth in the Pledge Agreement.
Date: _______________ Signature:__________________________
Signature Guarantee:
Name: ________________________
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.
C-1
Social Security or other Taxpayer Identification Number, if any: _________
Address: _____________________
_____________________
_____________________
A. DELIVERY INSTRUCTIONS
In the event of a Terminated Remarketing Period, Notes that are in physical form
should be delivered to the person(s) set forth below and mailed to the address
set forth below.
Name(s): ________________________________
(Please Print)
Address: ________________________________
(Please Print)
(Zip Code)
(Tax Identification or Social Security Number):
In the event of a Terminated Remarketing Period, Notes that are in book-entry
form should be credited to the account at The Depository Trust Company set forth
below.
Name of Account Party: DTC Account Number:
C-2