Exhibit 4.8
-----------
SOLUTIA INC.,
WACHOVIA BANK, N.A.,
as Collateral Agent, Custodial Agent
and Securities Intermediary
AND
JPMORGAN CHASE BANK
as Forward Purchase Contract Agent
PLEDGE AGREEMENT
Dated as of February , 2002
TABLE OF CONTENTS
Page
----
ARTICLE I
DEFINITIONS
SECTION 1.1 Definitions....................................................2
ARTICLE II
PLEDGE; CONTROL AND PERFECTION
SECTION 2.1 The Pledge.....................................................3
SECTION 2.2 Control and Perfection.........................................4
ARTICLE III
PAYMENTS ON PLEDGED COLLATERAL
SECTION 3.1 Payments.......................................................6
SECTION 3.2 Application of Payments........................................7
ARTICLE IV
SUBSTITUTION, RELEASE, REPLEDGE AND SETTLEMENT OF NOTES
SECTION 4.1 Collateral Substitution and the Creation of Stripped DECS......7
SECTION 4.2 Collateral Substitution and the Re-Creation of Upper DECS......8
SECTION 4.3 Termination Event..............................................8
SECTION 4.4 Early Settlement; Merger Early Settlement; Cash Settlement.....9
SECTION 4.5 Remarketing; Application of Proceeds; Settlement...............9
ARTICLE V
VOTING RIGHTS -- NOTES
SECTION 5.1 Exercise by Forward Purchase Contract Agent...................11
ARTICLE VI
RIGHTS AND REMEDIES; TAX EVENT REDEMPTION
SECTION 6.1 Rights and Remedies of the Collateral Agent...................11
SECTION 6.2 Substitutions.................................................12
SECTION 6.3 Tax Event Redemption..........................................12
ARTICLE VII
REPRESENTATIONS AND WARRANTIES; COVENANTS
SECTION 7.1 Representations and Warranties................................13
SECTION 7.2 Covenants.....................................................13
ARTICLE VIII
THE COLLATERAL AGENT
SECTION 8.1 Appointment, Powers and Immunities............................14
SECTION 8.2 Instructions of the Company...................................15
SECTION 8.3 Reliance......................................................15
SECTION 8.4 Rights in Other Capacities....................................15
SECTION 8.5 Non-Reliance on Collateral Agent..............................16
SECTION 8.6 Compensation and Indemnity....................................16
SECTION 8.7 Failure to Act................................................16
-i-
SECTION 8.8 Resignation...................................................17
SECTION 8.9 Right to Appoint Agent or Advisor.............................18
SECTION 8.10 Survival......................................................18
SECTION 8.11 Exculpation...................................................18
ARTICLE IX
AMENDMENT
SECTION 9.1 Amendment Without Consent of Holders..........................18
SECTION 9.2 Amendment with Consent of Holders.............................18
SECTION 9.3 Execution of Amendments.......................................19
SECTION 9.4 Effect of Amendments..........................................19
SECTION 9.5 Reference to Amendments.......................................19
ARTICLE X
MISCELLANEOUS
SECTION 10.1 No Waiver.....................................................20
SECTION 10.2 GOVERNING LAW.................................................20
SECTION 10.3 Notices.......................................................20
SECTION 10.4 Successors and Assigns........................................20
SECTION 10.5 Counterparts..................................................21
SECTION 10.6 Severability..................................................21
SECTION 10.7 Expenses, Etc.................................................21
SECTION 10.8 Security Interest Absolute....................................21
SECTION 10.9 Waiver of Jury Trial..........................................21
EXHIBIT A Instruction from Forward Purchase Contract Agent to
Collateral Agent
EXHIBIT B Instruction to Forward Purchase Contract Agent
EXHIBIT C Instruction to Custodial Agent Regarding Remarketing
EXHIBIT D Instruction to Custodial Agent Regarding Withdrawal from
Remarketing
-ii-
PLEDGE AGREEMENT
PLEDGE AGREEMENT, dated as of February , 2002 (this "Agreement"),
among Solutia Inc., a Delaware corporation (the "Company"), Wachovia Bank,
N.A., not individually but solely as collateral agent (in such capacity,
together with its successors in such capacity, the "Collateral Agent"), as
custodial agent (in such capacity, together with its successors in such
capacity, the "Custodial Agent") and as "securities intermediary" as defined
in Section 8-102(a)(14) of the Code (as defined herein) (in such capacity,
together with its successors in such capacity, the "Securities
Intermediary"), and JPMorgan Chase Bank, a New York banking corporation, not
individually but solely as forward purchase contract agent and as
attorney-in-fact of the Holders from time to time of the DECS (in such
capacity, together with its successors in such capacity, the "Forward
Purchase Contract Agent") under the Forward Purchase Contract Agreement (as
defined herein).
RECITALS
WHEREAS, the Company and the Forward Purchase Contract Agent are
parties to the Forward Purchase Contract Agreement, dated as of the date
hereof (as modified and supplemented and in effect from time to time, the
"Forward Purchase Contract Agreement"), pursuant to which there may be
issued DECS having a Stated Amount of $25 per DECS, all of which will
initially be Upper DECS.
WHEREAS, each Upper DECS will be comprised of (a) a Forward
Purchase Contract and (b) either beneficial ownership of (i) a Note, (ii)
following the successful remarketing of the Notes in accordance with the
Forward Purchase Contract Agreement and the Remarketing Agreement, the
appropriate Treasury Consideration or (iii) following a Tax Event Redemption
in accordance with the Forward Purchase Contract Agreement, any Applicable
Ownership Interest in the Treasury Portfolio.
WHEREAS, in accordance with the terms of the Forward Purchase
Contract Agreement, a Holder of Upper DECS may separate the Notes or the
appropriate Treasury Consideration or Applicable Ownership Interest in the
Treasury Portfolio, as the case may be, from the related Forward Purchase
Contracts by substituting for such Notes or appropriate Treasury
Consideration or Applicable Ownership Interest in the Treasury Portfolio, as
the case may be, Treasury Securities that will pay in the aggregate an
amount equal to the amount due on the Stock Purchase Date under such Forward
Purchase Contracts. Upon such separation, the Upper DECS will become
Stripped DECS. Each Stripped DECS will be comprised of (a) a Forward
Purchase Contract and (b) a 1/40 undivided beneficial interest in a Treasury
Security.
WHEREAS, pursuant to the terms of the Forward Purchase Contract
Agreement and the Forward Purchase Contracts, the Holders, from time to
time, of the DECS have irrevocably authorized the Forward Purchase Contract
Agent, as attorney-in-fact of such Holders, among other things, to execute
and deliver this Agreement on behalf of such Holders and to grant the pledge
provided hereby of the Notes, any Treasury Consideration, any Treasury
Securities and any Applicable Ownership Interest in the Treasury Portfolio
delivered in exchange therefor to secure each Holder's obligations under the
related Forward Purchase Contracts, as provided herein and subject to the
terms hereof.
NOW, THEREFORE, the Company, the Collateral Agent, the Securities
Intermediary, the Custodial Agent and the Forward Purchase Contract Agent,
on its own behalf and as attorney-in-fact of the Holders from time to time
of the DECS, 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 Forward Purchase Contract Agreement;
(b) the defined terms in this Agreement have the meanings
assigned to them in this Article and include the plural as well as the
singular; and
(c) the words "herein," "hereof" and "hereunder" and other words of
similar import refer to this Agreement as a whole and not to any particular
Article, Section or other subdivision.
"Agreement" means this instrument as originally executed or as it
may from time to time be supplemented or amended by one or more agreements
supplemental hereto entered into pursuant to the applicable provisions
hereof.
"Code" has the meaning specified in Section 6.1(a) hereof.
"Collateral" has the meaning specified in Section 2.1(a) hereof.
"Collateral Account" means the securities account (number )
maintained at Wachovia Bank, N.A. in the name "JPMorgan Chase Bank, a New
York banking corporation, as Forward Purchase Contract Agent on behalf of
the holders of certain securities of Solutia Inc., Collateral Account
subject to the security interest of Wachovia Bank, N.A., as Collateral
Agent, for the benefit of Solutia Inc., as pledgee" and any successor
account.
"Collateral Agent" has the meaning specified in the first paragraph
of this Agreement.
"Company" means the Person named as the "Company" in the first
paragraph of this Agreement until a successor shall have become such
pursuant to the applicable provisions of the Forward Purchase Contract
Agreement, and thereafter "Company" shall mean such successor.
"Custodial Agent" has the meaning specified in the first paragraph
of this Agreement.
"Forward Purchase Contract Agent" has the meaning specified in the
first paragraph of this Agreement.
"Forward Purchase Contract Agreement" has the meaning specified in
the Recitals.
"Intermediary" means any entity that in the ordinary course of its
business maintains securities accounts for others and is acting in that
capacity.
"Pledge" has the meaning specified in Section 2.1(c) hereof.
"Pledged Applicable Ownership Interest in the Treasury Portfolio"
has the meaning specified in Section 2.1(c) hereof.
"Pledged Notes" has the meaning specified in Section 2.1(c) hereof.
"Pledged Treasury Consideration" has the meaning specified in
Section 2.1(c) hereof.
-2-
"Pledged Treasury Securities" has the meaning specified in Section
2.1(c) hereof.
"Proceeds" means all interest, dividends, cash, instruments,
securities, financial assets (as defined in Section 8-102(a)(9) of the Code)
and other property from time to time received, receivable or otherwise
distributed upon the sale, exchange, collection or disposition of the
Collateral or any proceeds thereof.
"Securities Intermediary" has the meaning specified in the first
paragraph of this Agreement.
"Security Entitlement" has the meaning specified in Section
8-102(a)(17) of the Code.
"Separate Notes" means any Notes that are not Pledged Notes.
"Tax Event Redemption Date" means the date upon which a Tax Event
Redemption is to occur.
"TRADES Regulations" means the regulations of the United States
Department of the Treasury, published at 31 C.F.R. Part 357, as amended from
time to time. Unless otherwise defined herein, all terms defined in the
TRADES Regulations are used herein as therein defined.
"Transfer" means, with respect to the Collateral and in accordance
with the instructions of the Collateral Agent, the Forward Purchase Contract
Agent or the Holder, as applicable:
(i) in the case of Collateral consisting of securities which
cannot be delivered by book-entry or which the parties agree are to be
delivered in physical form, delivery in appropriate physical form
to the recipient accompanied by any duly executed instruments of
transfer, assignments in blank, transfer tax stamps and any other
documents necessary to constitute a legally valid transfer to the
recipient;
(ii) in the case of Collateral consisting of securities maintained
in book-entry form delivery by causing a "securities intermediary" (as
defined in Section 8-102(a)(14) of the Code) to (a) credit a "security
entitlement" (as defined in Section 8-102(a)(17) of the Code) with
respect to such securities to a "securities account" (as defined in
Section 8-501(a) of the Code) maintained by or on behalf of the
recipient and (b) to issue a confirmation to the recipient with
respect to such credit. In the case of Collateral to be delivered to
the Collateral Agent, the securities intermediary shall be the
Securities Intermediary and the securities account shall be the
Collateral Account. In addition, any Transfer of Treasury Securities
and Treasury Consideration hereunder shall be made in accordance
with the TRADES Regulations and other applicable law.
ARTICLE II
PLEDGE; CONTROL AND PERFECTION
SECTION 2.1 The Pledge.
----------
(a) The Holders from time to time acting through the Forward Purchase
Contract Agent, as their attorney-in-fact, and the Forward Purchase Contract
Agent, as such attorney-in-fact, hereby pledge and grant to the Collateral
Agent, for the benefit of the Company, as collateral security for the
performance when due by such Holders of their respective obligations under
the related Forward Purchase Contracts, a security interest in all of the
right, title and interest of the Forward Purchase Contract Agent and such
Holders in:
(i) (A) the Notes, Treasury Consideration, Treasury Securities
and any Applicable Ownership Interest in the Treasury Portfolio
constituting a part of the DECS, (B) any Treasury Securities delivered
in exchange for any Notes, Treasury Consideration or Applicable
Ownership Interest in the Treasury Portfolio, as applicable, in
accordance with Section 4.1 hereof, and (C) any Notes, Treasury
Consideration or Applicable Ownership Interest in the Treasury
Portfolio, as
-3-
applicable, delivered in exchange for any Treasury Securities in
accordance with Section 4.2 hereof, in each case that have been
Transferred to or otherwise received by the Collateral Agent and not
released by the Collateral Agent to such Holders under the provisions
of this Agreement;
(ii) the Collateral Account and all securities, financial
assets, security entitlements, cash and other property credited
thereto and all Security Entitlements related thereto; and
(iii) 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 Forward Purchase Contract Agent, on behalf of the initial
Holders of the DECS, shall cause the Notes comprising a part of the Upper
DECS to be Transferred to the Collateral Agent for the benefit of the
Company.
(c) The pledge provided in this Section 2.1 is herein referred to as
the "Pledge" and the Notes (or the Notes that are delivered pursuant to
Section 4.2 hereof), Treasury Consideration, Treasury Securities or Applicable
Ownership Interest in the Treasury Portfolio subject to the Pledge,
excluding any Notes, Treasury Consideration, Treasury Securities or
Applicable Ownership Interest in the Treasury Portfolio released from the
Pledge as provided in Sections 4.1 and 4.2 hereof, respectively, are herein
referred to as "Pledged Notes," "Pledged Treasury Consideration," "Pledged
Treasury Securities" or "Pledged Applicable Ownership Interest in the
Treasury Portfolio," respectively. Subject to the Pledge and 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
Uniform Commercial Code as adopted and in effect in any applicable
jurisdiction, the Collateral Agent shall be the agent of the Company as
provided herein. Whenever directed by the Collateral Agent acting on behalf
of the Company, the Securities Intermediary shall have the right to
reregister in its name the Notes or any other securities held in physical
form.
(d) Except as may be required in order to release Notes or Treasury
Consideration, as applicable, in connection with a Tax Event Redemption or
with a Holder's election to convert an Upper DECS to a Stripped DECS, or
except as otherwise required to release Notes as specified herein, neither
the Collateral Agent, the Custodial Agent nor the Securities Intermediary
shall relinquish physical possession of any certificate evidencing a Note
prior to the termination of this Agreement. If it becomes necessary for the
Securities Intermediary to relinquish physical possession of a certificate
in order to release a portion of the Notes evidenced thereby from the
Pledge, the Company or the Forward Purchase Contract Agent shall use its
best efforts to arrange for the Securities Intermediary to obtain physical
possession of a replacement certificate evidencing any Notes remaining
subject to the Pledge hereunder registered to the Securities Intermediary or
endorsed in blank within fifteen days of the date the Securities
Intermediary relinquished possession. The Securities Intermediary shall
promptly notify the Company and the Collateral Agent of the Securities
Intermediary's failure to obtain possession of any such replacement
certificate as required hereby.
SECTION 2.2 Control and Perfection.
----------------------
(a) In connection with the Pledge granted in Section 2.1, and subject
to the other provisions of this Agreement, the Holders from time to time
acting through the Forward 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 Forward Purchase Contract
Agent or any of the Holders), and the Securities Intermediary agrees, to
comply with and follow any instructions and entitlement orders (as defined
in Section 8-102(a)(8) of the Code) that the Collateral Agent may deliver
with respect to the Collateral Account, the Collateral credited thereto and
any Security Entitlements with respect thereto. In the event the Securities
Intermediary receives from the Holders or the Forward 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,
the Treasury Consideration, the Treasury Securities, any Applicable
-4-
Ownership Interest in the Treasury Portfolio and any Security Entitlements
with respect thereto or sell, liquidate or dispose of such assets through a
broker designated by the Company, and to pay and deliver any income,
proceeds or other funds derived therefrom to the Company. The Holders from
time to time acting through the Forward Purchase Contract Agent hereby
further authorize and direct the Collateral Agent itself, as agent of the
Company, to 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 Forward Purchase Contract Agent or any of the
Holders. The Collateral Agent shall be the agent of the Company and shall
act only in accordance with the terms hereof or as otherwise directed in
writing by the Company. Without limiting the generality of the foregoing,
the Collateral Agent shall issue entitlement orders to the Securities
Intermediary as directed in writing by the Company.
(b) The Securities Intermediary hereby confirms and agrees that:
(i) all securities or other property underlying any financial
assets credited to the Collateral Account shall be registered in the
name of the Securities Intermediary, or its nominee, indorsed to the
Securities Intermediary, or its nominee, or in blank and in no case
will any financial asset credited to the Collateral Account be
registered in the name of the Forward Purchase Contract Agent, the
Collateral Agent as such, the Company or any Holder, payable to the
order of, or specially indorsed to, the Forward Purchase Contract
Agent, the Collateral Agent as such, the Company or any Holder except
to the extent the foregoing have been specially indorsed to the
Securities Intermediary or in blank;
(ii) all property delivered to the Securities Intermediary
pursuant to this Agreement (including, without limitation, any Notes,
Treasury Consideration, Treasury Securities or Applicable Ownership
Interest in the Treasury Portfolio) will be promptly credited to the
Collateral Account;
(iii) the Collateral Account is an account to which financial
assets are or may be credited, and the Securities Intermediary shall,
subject to the terms of this Agreement, treat the Forward Purchase
Contract Agent as entitled to exercise the rights of any financial
asset credited to the Collateral Account;
(iv) the Securities Intermediary has not entered into, and until
the termination of this Agreement will not enter into, any agreement
with any other Person relating to the Collateral Account and/or any
financial assets credited thereto pursuant to which it has agreed
to comply with entitlement orders (as defined in Section
8-102(a)(8) of the Code) of such other Person;
(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 Forward 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;
(vi) 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; and
(vii) 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.
(c) The Forward Purchase Contract Agent hereby irrevocably constitutes
and appoints the Collateral Agent and the Company, with full power of
substitution, as the Forward Purchase Contract Agent's attorney-in-fact to
take on behalf of, and in the name, place and stead of, the Forward Purchase
Contract Agent and the Holders, any action necessary or desirable to perfect
and to keep perfected the
-5-
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 Forward Purchase Contract Agent is the registered
owner of the Pledged Notes, Pledged Treasury Consideration, Pledged
Applicable Ownership Interest in the Treasury Portfolio or Pledged Treasury
Securities, it shall receive all payments thereon. If the Pledged Notes are
reregistered, such that the Collateral Agent becomes the registered holder,
all payments of the principal of, or interest on, the Pledged Notes and all
payments of the principal of, or cash distributions on, any Pledged Treasury
Consideration, Pledged Treasury Securities or Pledged Applicable Ownership
Interest in the Treasury Portfolio that are received by the Collateral Agent
and that are properly payable hereunder, shall be paid by the Collateral
Agent by wire transfer in same day funds:
(i) in the case of (A) any interest payments with respect to the
Pledged Notes, the Pledged Treasury Consideration or the appropriate
Pledged Applicable Ownership Interest in the Treasury Portfolio (as
specified in clause (B) of the definition of Applicable Ownership
Interest), as the case may be, with respect to Upper DECS which include
Pledged Notes, Pledged Treasury Consideration or the appropriate
Pledged Applicable Ownership Interest in the Treasury Portfolio, as the
case may be, and (B) any payments of principal or, if applicable, the
appropriate Applicable Ownership Interest in the Treasury Portfolio (as
specified in clause (A) of the definition of Applicable Ownership
Interest) with respect to any Notes, Treasury Consideration or the
appropriate Applicable Ownership Interest in the Treasury Portfolio, as
the case may be, that have been released from the Pledge pursuant to
Section 4.3 hereof, to the Forward Purchase Contract Agent, for the
benefit of the relevant Holders of the Upper DECS, to the account
designated by the Forward Purchase Contract Agent for such purpose, no
later than 10:00 a.m., New York City time, on the Business Day such
payment is received by the Collateral Agent (provided that in the event
such payment is received by the Collateral Agent on a day that is not a
Business Day or after 9:00 a.m., New York City time, on a Business Day,
then such payment shall be made no later than 9:30 a.m., New York City
time, on the next succeeding Business Day);
(ii) in the case of any payments with respect to any Treasury
Securities that have been released from the Pledge pursuant to
Section 4.3 hereof, to the Holders of the Stripped DECS 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 10 a.m., New York City time, on a Business
Day, then such payment shall be made no later than 10:30 a.m., New
York City time, on the next succeeding Business Day); and
(iii) in the case of payments in respect of any Pledged Notes,
Pledged Treasury Consideration, Pledged Treasury Securities or the
appropriate Pledged Applicable Ownership Interest (as specified in
clause (A) of the definition of such term) in the Treasury
Portfolio, as the case may be, to be paid upon settlement of the
Holders' obligations to purchase Common Stock under the Forward
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 Forward Purchase Contracts.
-6-
SECTION 3.2 Application of Payments.
-----------------------
All payments received by the Forward Purchase Contract Agent as
provided herein shall be applied by the Forward Purchase Contract Agent
pursuant to the provisions of the Forward Purchase Contract Agreement. If,
notwithstanding the foregoing, the Forward Purchase Contract Agent shall
receive any payments of principal on account of any Note, Treasury
Consideration or the appropriate Applicable Ownership Interest (as specified
in clause (A) of the definition of such term) in the Treasury Portfolio, as
applicable, that, at the time of such payment, is a Pledged Note, Pledged
Treasury Consideration or Pledged Applicable Ownership Interest (as
specified in clause (A) of the definition of such term) in the Treasury
Portfolio, as the case may be, or a Holder of a Stripped DECS shall receive
any payments of principal on account of any Treasury Securities that, at the
time of such payment, are Pledged Treasury Securities, the Forward 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 Forward Purchase Contracts, and the Holders shall acquire no right,
title or interest in any such payments of principal so received.
ARTICLE IV
SUBSTITUTION, RELEASE, REPLEDGE AND SETTLEMENT OF NOTES
SECTION 4.1 Collateral Substitution and the Creation of Stripped DECS.
---------------------------------------------------------
At any time on or prior to the second Business Day immediately
preceding the Stock Purchase Date, a Holder of Upper DECS shall have the
right to substitute Treasury Securities for the Pledged Notes, Pledged
Treasury Consideration or Pledged Applicable Ownership Interest in the
Treasury Portfolio, as the case may be, securing such Holder's obligations
under the Forward Purchase Contracts comprising a part of such Upper DECS,
in integral multiples of Upper DECS, or after a remarketing of the Notes
pursuant to the Forward Purchase Contract Agreement, in integral multiples
of Upper DECS such that Treasury Securities to be deposited and the
applicable Treasury Consideration to be released are in integral multiples
of $1,000, by (a) Transferring to the Collateral Agent Treasury Securities
having an aggregate principal amount equal to the aggregate Stated Amount of
such Upper DECS and (b) delivering such Upper DECS to the Forward Purchase
Contract Agent, accompanied by a notice, substantially in the form of
Exhibit B hereto, to the Forward Purchase Contract Agent stating that such
Holder has Transferred Treasury Securities to the Collateral Agent pursuant
to clause (a) above (stating the principal amount and the CUSIP numbers of
the Treasury Securities Transferred by such Holder) and requesting that the
Forward Purchase Contract Agent instruct the Collateral Agent to release
from the Pledge the Pledged Notes, Pledged Treasury Consideration or Pledged
Applicable Ownership Interest in the Treasury Portfolio, as the case may be,
related to such Upper DECS, whereupon the Forward Purchase Contract Agent
shall promptly give such instruction in writing to the Collateral Agent in
the form provided in Exhibit A; provided that, such Holder may not
substitute such Treasury Securities for such Pledged Notes, Pledged Treasury
Consideration or Pledged Applicable Ownership Interest in the Treasury
Portfolio pursuant to this Section 4.1 during the period from four Business
Days prior to any Remarketing Period until the expiration of three Business
Days after the end of such Remarketing Period. Upon receipt of Treasury
Securities from a Holder of Upper DECS and the related written instruction
from the Forward Purchase Contract Agent, the Collateral Agent shall release
the Pledged Notes, Pledged Treasury Consideration or Pledged Applicable
Ownership Interest in the Treasury Portfolio, as the case may be, and shall
promptly Transfer such Pledged Notes, Pledged Treasury Consideration or
Pledged Applicable Ownership Interest in the Treasury Portfolio, as the case
may be, free and clear of any lien, pledge or security interest created
hereby, to the Forward 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.
-7-
SECTION 4.2 Collateral Substitution and the Re-Creation of Upper DECS.
---------------------------------------------------------
At any time on or prior to the second Business Day immediately
preceding the Stock Purchase Date, a Holder of Stripped DECS shall have the
right to reestablish Upper DECS (a) consisting of the Forward Purchase
Contracts and Notes in integral multiples of 40 Upper DECS, or (b) after a
remarketing of the Notes pursuant to the Forward Purchase Contract Agreement
or a Tax Event Redemption, consisting of the Forward Purchase Contracts and
the appropriate Treasury Consideration (identified and calculated by
reference to the Treasury Consideration then comprising Upper DECS) or the
appropriate portion of the Treasury Portfolio in integral multiples of
Stripped DECS such that the Treasury Consideration or Applicable Ownership
Interest in the Treasury Portfolio to be deposited and the Treasury
Securities to be released are in integral multiples of $1,000, by (x)
Transferring to the Collateral Agent Notes or the appropriate Treasury
Consideration or the Applicable Ownership Interest (as defined in clause (A)
of the definition of such term) in the Treasury Portfolio, as the case may
be, then comprising such number of Upper DECS as is equal to such Stripped
DECS and (y) delivering such Stripped DECS to the Forward Purchase Contract
Agent, accompanied by a notice, substantially in the form of Exhibit B
hereto, to the Forward Purchase Contract Agent stating that such Holder has
transferred Notes, Treasury Consideration or Applicable Ownership Interest
in the Treasury Portfolio to the Collateral Agent pursuant to clause (x)
above and requesting that the Forward Purchase Contract Agent instruct the
Collateral Agent to release from the Pledge the Pledged Treasury Securities
related to such Stripped DECS, whereupon the Forward Purchase Contract Agent
shall give such instruction to the Collateral Agent in the form provided in
Exhibit A; provided that such Holder of Stripped DECS shall not have the
right to reestablish Upper DECS pursuant to this Section 4.2 during the
period from four Business Days prior to any Remarketing Period until the
expiration of three Business Days after the end of such Remarketing Period.
Upon receipt of the Notes or the appropriate Treasury Consideration or
Applicable Ownership Interest in the Treasury Portfolio, as the case may be,
from such Holder and the instruction from the Forward Purchase Contract
Agent, the Collateral Agent shall release the Pledged Treasury Securities
and shall promptly Transfer such Pledged Treasury Securities, free and clear
of any lien, pledge or security interest created hereby, to the Forward
Purchase Contract Agent.
SECTION 4.3 Termination Event.
-----------------
(a) Upon receipt by the Collateral Agent of written notice from the
Company or the Forward Purchase Contract Agent that there has occurred a
Termination Event, the Collateral Agent shall release all Collateral from
the Pledge and shall promptly Transfer any Pledged Notes, Pledged Treasury
Consideration or Pledged Applicable Ownership Interest in the Treasury
Portfolio, as the case may be, and Pledged Treasury Securities to the
Forward Purchase Contract Agent for the benefit of the Holders of the Upper
DECS and the Stripped DECS, respectively, free and clear of any lien, pledge
or security interest or other interest created hereby.
(b) If such Termination Event shall result from the Company's becoming
a debtor under the Bankruptcy Code, and if the Collateral Agent shall for any
reason fail promptly to effectuate the release and Transfer of all Pledged
Notes, Pledged Treasury Consideration, Pledged Applicable Ownership Interest
in the Treasury Portfolio, or Pledged Treasury Securities, as the case may
be, as provided by this Section 4.3, the Forward 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 Forward Purchase Contract Agent shall
be unable to obtain such opinion within ten days after the occurrence
of such Termination Event or (z) the Collateral Agent shall continue,
after delivery of such opinion, to refuse to effectuate the release and
Transfer of all Pledged Notes, Pledged Treasury Consideration, Pledged
Applicable Ownership Interest in the
-8-
Treasury Portfolio or Pledged Treasury Securities, as the case may be,
as provided in this Section 4.3, then the Forward Purchase Contract
Agent shall within fifteen days after the occurrence of such
Termination Event commence an action or proceeding in the court with
jurisdiction of the Company's case under the Bankruptcy Code seeking
an order requiring the Collateral Agent to effectuate the release and
Transfer of all Pledged Notes, Pledged Treasury Consideration, Pledged
Applicable Ownership Interest in the Treasury Portfolio or Pledged
Treasury Securities, as the case may be, as provided by this Section
4.3 or
(ii) commence an action or proceeding like that described
in subsection (i)(z) hereof within ten days after the occurrence of
such Termination Event.
SECTION 4.4 Early Settlement; Merger Early Settlement; Cash Settlement.
----------------------------------------------------------
(a) Upon written notice to the Collateral Agent by the Forward Purchase
Contract Agent that one or more Holders of DECS have elected to effect Early
Settlement, Merger Early Settlement or Cash Settlement of their respective
obligations under the Forward Purchase Contracts forming a part of such DECS
in accordance with the terms of the Forward Purchase Contracts and the
Forward Purchase Contract Agreement (setting forth the number of such
Forward Purchase Contracts as to which such Holders have elected to effect
Early Settlement, Merger Early Settlement or Cash Settlement), and that the
Forward 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
Forward Purchase Contracts and the Forward Purchase Contract Agreement and
that all conditions to such Early Settlement, Merger Early Settlement or
Cash Settlement, as the case may be, have been satisfied, then the
Collateral Agent shall release from the Pledge (a) Pledged Notes, Pledged
Treasury Consideration or Pledged Applicable Ownership Interest in the
Treasury Portfolio, as the case may be, in the case of a Holder of Upper
DECS or (b) Pledged Treasury Securities, in the case of a Holder of Stripped
DECS, relating to such Forward Purchase Contracts as to which such Holders
have elected to effect Early Settlement, Merger Early Settlement or Cash
Settlement, and shall Transfer all such Pledged Notes, Pledged Treasury
Consideration, Pledged Applicable Ownership Interest in the Treasury
Portfolio or Pledged Treasury Securities, as the case may be, free and clear
of the Pledge created hereby, to the Forward Purchase Contract Agent for the
benefit of such Holders.
SECTION 4.5 Remarketing; Application of Proceeds; Settlement.
------------------------------------------------
(a) Pursuant to the Forward Purchase Contract Agreement, the Forward
Purchase Contract Agent shall notify, by 10:00 a.m., New York City time, on
the third Business Day preceding the Remarketing Date or any Subsequent
Remarketing Date, as the case may be, the Remarketing Agent and the
Collateral Agent of the aggregate principal amount of Notes comprising part
of Upper DECS to be remarketed. The Collateral Agent shall, by 10:00 a.m.,
New York City time, on the Business Day immediately preceding the first day
of any Remarketing Period or any Subsequent Remarketing Period, as the case
may be, without any instruction from Holders of Upper DECS, deliver the
Pledged Notes to be remarketed to the Remarketing Agent for remarketing.
After deducting as the remarketing fee an amount not exceeding 25 basis
points (0.25%) of the total proceeds of such remarketing of Pledged Notes,
the Remarketing Agent will deliver the Agent-purchased Treasury
Consideration purchased from the proceeds of the remarketing to the Forward
Purchase Contract Agent, which shall thereupon deliver such Agent-purchased
Treasury Consideration to the Collateral Agent. Upon receipt of the
Agent-purchased Treasury Consideration from the Forward 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 Upper DECS Holders'
obligations under the Forward Purchase Contracts and to fund the quarterly
interest payment due to Upper DECS 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 Forward
Purchase Contract Agent for payment to such Upper DECS Holders participating
in such remarketing. On the Stock Purchase Date, the Collateral Agent
-9-
shall, at the direction of the Company, (i) apply that portion of the payments
received in respect of the Pledged Treasury Consideration equal to the
aggregate Stated Amount of the related Upper DECS to satisfy in full the
obligations of such Upper DECS Holders to pay the Purchase Price under the
related Forward Purchase Contracts and (ii) apply the remaining portion to
pay the quarterly interest payment due to Upper DECS Holders on such Stock
Purchase Date, which quarterly interest payment shall be paid on the Pledged
Notes in an amount equal to the Coupon Rate for such quarterly interest
payment.
(b) Within three Business Days following the Last Failed Remarketing,
the Notes delivered to the Remarketing Agent pursuant to Section 4.5(a) hereof
shall be returned to the Collateral Agent, together with written notice from
the Remarketing Agent of the Last Failed Remarketing. The Collateral Agent,
for the benefit of the Company, shall thereupon hold such Notes to secure
the Upper DECS Holders' obligations under the Forward Purchase Contracts.
The Remarketing Agent shall make one or more attempts to remarket the Notes
in accordance with the procedures set forth in the Forward Purchase Contract
Agreement and the Remarketing Agreement, provided that the requirements of
Section 5.2(b)(ii) of the Forward Purchase Contract Agreement have been met.
If by 4:00 p.m., New York City time, on the Business Day immediately
preceding the Stock Purchase Date, the Remarketing Agent has failed to
remarket the Notes at 100.5% of the Remarketing Value (as described in the
Forward Purchase Contract Agreement), the Last Failed Remarketing shall be
deemed to have occurred. In this case, the Remarketing Agent shall advise
the Collateral Agent in writing that it cannot remarket the related Pledged
Notes of such Holders of Upper DECS. If any holder of Notes exercises its
right to put such holder's Notes to the Company pursuant to the terms of the
Indenture, the proceeds of the put shall be paid (a) to the Collateral Agent
on behalf of such holder to satisfy such holder's obligation under the
Forward Purchase Contract if such Notes are part of an Upper DECS and (b) to
the Holder of such Notes if the Notes are Separate Notes. The Collateral
Agent, for the benefit of the Company will, at the written direction of the
Company, retain or dispose of the Pledged Notes in accordance with
applicable law and satisfy in full, from any such disposition or retention,
such Holders' obligations to pay the Purchase Price for the Common Stock;
provided, that if upon a Failed Remarketing, the Collateral Agent exercises
such rights for the benefit of the Company with respect to such Notes, any
accrued and unpaid interest on such Notes will become payable by the Company
to the Forward Purchase Contract Agent for payment to the Holder of the
Upper DECS to which such Notes relate in accordance with the Forward
Purchase Contract Agreement.
(c) In the event a Holder of Stripped DECS has not made a Cash
Settlement, Early Settlement or Merger Early Settlement of the Forward Purchase
Contracts underlying its Stripped DECS, such Holder shall be deemed to have
elected to pay for the shares of Common Stock to be issued under such
Forward 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 Forward 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 under the Forward
Purchase Contracts being settled thereby, the Collateral Agent shall
distribute such excess, when received, to the Forward Purchase Contract
Agent for the benefit of such Holders of Stripped DECS.
(d) On or prior to the fourth Business Day preceding the first day of
any Remarketing Period, but no earlier than the Payment Date immediately
preceding , holders of Separate Notes may elect to have their Separate
Notes remarketed by delivering their Separate Notes, together with a notice
of such election, substantially in the form of Exhibit C hereto, to the
Custodial Agent. On the third Business Day prior to the first day of any
Remarketing Period, by 10:00 a.m., New York City time, the Custodial Agent
shall notify the Remarketing Agent of the number of such Separate Notes to
be remarketed. The Custodial Agent will hold such Separate Notes in an
account separate from the Collateral Account. A holder of Separate Notes
electing to have its Separate Notes remarketed will also have the right to
withdraw such election by written notice to the Custodial Agent,
substantially in the form of Exhibit D hereto, on or prior to the fifth
Business Day immediately preceding the first day of any Remarketing Period
and any Subsequent
-10-
Remarketing Period, upon which notice the Custodial Agent will return such
Separate Notes to such holder. On the third Business Day immediately
preceding the first day of any Remarketing Period and any Subsequent
Remarketing Period, the Custodial Agent at the written direction of the
Remarketing Agent will deliver to the Remarketing Agent for remarketing all
Separate Notes delivered to the Custodial Agent pursuant to this Section
4.5(d) and not withdrawn pursuant to the terms hereof prior to such date.
The portion of the proceeds from such remarketing equal to the amount
calculated in respect of such Separate Notes as set forth in Section
5.2(b)(i) of the Forward Purchase Contract Agreement will automatically be
remitted by the Remarketing Agent to the Custodial Agent for the benefit of
the holders of such Separate Notes. In addition, after deducting as the
remarketing fee an amount not exceeding 25 basis points (0.25%) of the total
proceeds of such remarketing of such Separate Notes, the Remarketing Agent
will remit to the Custodial Agent the remaining portion of the proceeds, if
any, for the benefit of such holders of such Separate Notes. If, despite
using its commercially reasonable best efforts, the Remarketing Agent
advises the Custodial Agent in writing that there has been a Failed
Remarketing, the Remarketing Agent will promptly return such Separate Notes
to the Custodial Agent for redelivery to such holders of such Separate
Notes.
ARTICLE V
VOTING RIGHTS -- NOTES
SECTION 5.1 Exercise by Forward Purchase Contract Agent.
-------------------------------------------
The Forward 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 Forward
Purchase Contract Agreement; provided, that the Forward 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 Forward 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
Forward Purchase Contract Agent such notice or communication, and as soon as
reasonably practicable after receipt of a written request therefor from the
Forward Purchase Contract Agent, execute and deliver to the Forward 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 Forward 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 Forward Purchase Contracts, the
Collateral Agent shall have all of the rights and remedies with respect to
the Collateral of a secured party under the Uniform Commercial Code (or any
successor thereto) as in effect in the State of New York from time to time
(the "Code") (whether or not the Code is in effect in the jurisdiction where
the rights and remedies are asserted) and the TRADES Regulations and such
additional rights and remedies to which a secured party is entitled under
the laws in effect in any jurisdiction where any rights and remedies
hereunder may be asserted. Wherever reference is made in this Agreement to
any section of the Code, such reference shall be deemed to include a
reference to any provision of the Code which is a successor to, or amendment
of, such section. Without limiting the generality of the foregoing, such
remedies may include, to the extent permitted by applicable law, (i)
retention of the Pledged Notes or other Collateral in full satisfaction of
the Holders' obligations under the
-11-
Forward Purchase Contracts or (ii) sale of the Pledged Notes or other
Collateral in one or more public or private sales, in each case at the
written direction of the Company.
(b) Without limiting any rights or powers otherwise granted by this
Agreement to the Collateral Agent, in the event the Collateral Agent is
unable to make payments to the Company on account of any Pledged Treasury
Consideration, Pledged Applicable Ownership Interest in the Treasury
Portfolio or Pledged Treasury Securities as provided in Article III hereof
in satisfaction of the obligations of the Holder of the DECS of which such
Pledged Treasury Consideration, Pledged Applicable Ownership Interest in the
Treasury Portfolio or Pledged Treasury Securities, as applicable, are a part
under the related Forward Purchase Contracts, the inability to make such
payments shall constitute an event of default under the Forward Purchase
Contracts and the Collateral Agent shall have and may exercise, with
reference to such Pledged Treasury Consideration, Pledged Applicable
Ownership Interest in the Treasury Portfolio or Pledged Treasury Securities,
as applicable, and such obligations of such Holder, any and all of the
rights and remedies available to a secured party under the Code and the
TRADES Regulations after default by a debtor, and as otherwise granted
herein or under any other law.
(c) Without limiting any rights or powers otherwise granted by this
Agreement to the Collateral Agent, the Collateral Agent is hereby
irrevocably authorized to receive and collect all payments of (i) the
principal amount of, or interest on, the Pledged Notes, or (ii) the
principal amount of, or interest (if any) on, the Pledged Treasury
Consideration, Pledged Applicable Ownership Interest 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 Forward Purchase Contract Agent, individually and as
attorney-in-fact for each Holder of DECS, 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 Forward 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 Forward Purchase Contract
Agent shall have no liability to any Holder for executing any documents or
taking any such acts requested by the Company or the Collateral Agent
(acting upon the written request of the Company) hereunder, except for
liability for its own negligent act, its own negligent failure to act, its
bad faith or its own willful misconduct.
SECTION 6.2 Substitutions.
-------------
Whenever a Holder has the right to substitute Treasury Securities,
Notes, Treasury Consideration or the appropriate Applicable Ownership
Interest 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 Pledged Notes, the aggregate Redemption Price payable on
the Tax Event Redemption Date with respect to such Pledged Notes shall be
delivered to the Collateral Agent by the Trustee at or prior to 12:00 p.m.,
New York City time, by wire transfer in immediately available funds at such
place and at such account as may be designated by the Collateral Agent in
exchange for the Pledged Notes. In the event the Collateral Agent receives
such Redemption Price, the Collateral Agent will, at the written direction
of the Company, apply an amount, out of such Redemption Price, equal to the
aggregate Redemption Amount with respect to the Pledged Notes to purchase
from the Quotation Agent the Treasury Portfolio and promptly remit the
remaining portion of such Redemption Price to the Forward Purchase Contract
Agent for payment to the Holders of Upper DECS. The Collateral Agent shall
Transfer the Treasury Portfolio to the Collateral Account to secure the
obligation of all Holders of Upper DECS to purchase Common Stock of the
Company under the Forward Purchase Contracts constituting a part of such
Upper DECS, in substitution
-12-
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 a 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 Forward Purchase
Contract Agent as their attorney-in-fact (it being understood that the
Forward Purchase Contract Agent shall not be liable for any representation
or warranty made by or on behalf of a Holder), hereby represent and warrant
to the Collateral Agent, which representations and warranties shall be
deemed repeated on each day a Holder Transfers Collateral that:
(a) such Holder has the power to grant a security interest in and
lien on the Collateral;
(b) such Holder is the sole beneficial owner of the Collateral and,
in the case of Collateral delivered in physical form, is the sole holder of
such Collateral and is the sole beneficial owner of, or has the right to
Transfer, the Collateral it Transfers to the Collateral Agent, free and
clear of any security interest, lien, encumbrance, call, liability to pay
money or other restriction other than the security interest and lien granted
under Section 2.1 hereof;
(c) upon the Transfer of the Collateral to the Collateral Account,
the Collateral Agent, for the benefit of the Company, will have a valid and
perfected first priority security interest therein (assuming that any
central clearing operation 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 Forward Purchase
Contract Agent as their attorney-in-fact (it being understood that the
Forward 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 Forward 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 Forward 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 sale or other disposition of
the DECS.
-13-
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 DECS or
the Forward Purchase Contract Agreement, or for the value, validity,
effectiveness, genuineness, enforceability or sufficiency of this
Agreement (other than as against the Collateral Agent, the Custodial
Agent or the Securities Intermediary, as the case may be), the DECS or
the Forward 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 hereunder or under any other document or instrument
referred to or provided for herein or in connection herewith or
therewith, except for its own gross negligence or willful
misconduct; and
(v) shall not be required to advise any party as to selling or
retaining, or taking or refraining from taking any action with
respect to, the DECS or other property deposited hereunder.
Subject to the foregoing, during the term of this Agreement, the
Collateral Agent shall take all reasonable action in connection with the
safekeeping and preservation of the Collateral hereunder.
(b) No provision of this Agreement shall require the Collateral Agent,
the Custodial Agent or the Securities Intermediary to expend or risk its own
funds or otherwise incur any financial liability in the performance of any
of its duties hereunder. In no event shall the Collateral Agent, the
Custodial Agent or the Securities Intermediary be liable for any amount in
excess of the value of the Collateral or for any special, indirect,
individual or 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 Forward Purchase Contract Agent and the 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.
-14-
(c) The Collateral Agent, Custodial Agent and Securities Intermediary
shall have no liability whatsoever for the action or inaction of any Clearing
Agency or any book-entry system thereof. In no event shall any Clearing
Agency or any book-entry system thereof be deemed an agent or subcustodian
of the Collateral Agent, Custodial Agent and Securities Intermediary. The
Collateral Agent, Custodial Agent and Securities Intermediary shall not be
responsible or liable for any failure or delay in the performance of its
obligations under this Agreement arising out of or caused, directly or
indirectly, by circumstances beyond its reasonable control, including,
without limitation, acts of God; earthquakes; fires; floods; war (whether
declared or undeclared); terrorism; civil or military disturbances;
sabotage; epidemics; riots; interruptions, loss or malfunctions of
utilities, computer (hardware or software) or communications service;
accidents; labor disputes; acts of civil or military authority; governmental
actions; or inability to obtain labor, material, equipment or
transportation.
SECTION 8.2 Instructions of the Company.
---------------------------
The Company shall have the right, by one or more instruments in
writing executed and delivered to the Collateral Agent, the Custodial Agent
or the Securities Intermediary, as the case may be, to direct the time,
method and place of conducting any proceeding for the realization of any
right or remedy available to the Collateral Agent, or of exercising any
power conferred on the Collateral Agent, the Custodial Agent or the
Securities Intermediary, as the case may be, or to direct the taking or
refraining from taking of any action authorized by this Agreement; provided,
however, that (i) such direction shall not conflict with the provisions of
any law or of this Agreement and (ii) the Collateral Agent, the Custodial
Agent and the Securities Intermediary shall each receive indemnity
reasonably satisfactory to it as provided herein. Nothing in this Section
8.2 shall impair the right of the Collateral Agent in its discretion to take
any action or omit to take any action which it deems proper and which is not
inconsistent with such direction.
SECTION 8.3 Reliance.
---------
Each of the Collateral Agent, the Custodial Agent and the
Securities Intermediary 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 investments in and
generally engage in any kind of banking, trust or other business with the
Forward Purchase Contract Agent, any Holder of DECS 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 Forward Purchase Contract
Agent, any Holder of DECS or any holder of Separate Notes without having to
account for the same to the Company; provided that each of the Collateral
Agent, the Custodial Agent and the Securities Intermediary 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.
-15-
SECTION 8.5 Non-Reliance on Collateral Agent.
--------------------------------
None of the Collateral Agent, the Custodial Agent and the
Securities Intermediary shall be required to keep itself informed as to the
performance or observance by the Forward Purchase Contract Agent or any
Holder of DECS of this Agreement, the Forward Purchase Contract Agreement,
the DECS or any other document referred to or provided for herein or therein
or to inspect the properties or books of the Forward Purchase Contract Agent
or any Holder of DECS. 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 Forward
Purchase Contract Agent, any Holder of DECS or any holder of Separate Notes
(or any of their respective subsidiaries or affiliates) that may come into
the possession of the Collateral Agent, the Custodial Agent or the
Securities Intermediary or any of their respective affiliates.
SECTION 8.6 Compensation and Indemnity.
--------------------------
The Company agrees:
(a) to pay each of the Collateral Agent, the Custodial Agent and the
Securities Intermediary from time to time such compensation as shall be
agreed in writing between the Company and the Collateral Agent, the
Custodial Agent or the Securities Intermediary, as the case may be, for all
services rendered by each of them hereunder, and
(b) to indemnify the Collateral Agent, the Custodial Agent, the
Securities Intermediary and their officers, directors and agents for, and to
hold each of them harmless from and against, any loss, liability or
reasonable out-of-pocket expense incurred without gross negligence or
willful misconduct 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, the Custodial Agent and the Securities
Intermediary shall be entitled, after prompt notice to the Company and the
Forward 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, the 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, the 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, the 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, the Custodial Agent or the Securities Intermediary, as the
case may be, sufficient to save the Collateral Agent, the 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, the 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, the Custodial Agent or the
-16-
Securities Intermediary may in addition elect to commence an interpleader
action or seek other judicial relief or orders as the Collateral Agent, the
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, the 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, the 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
Forward Purchase Contract Agent as attorney-in-fact for the Holders of DECS,
(b) the Collateral Agent, the Custodial Agent and the Securities
Intermediary may be removed at any time by the Company and (c) if the
Collateral Agent, the 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 Forward Purchase Contract Agent and such failure shall be
continuing, the Collateral Agent, the Custodial Agent or the Securities
Intermediary may be removed by the Forward Purchase Contract Agent. The
Forward Purchase Contract Agent shall promptly notify the Company of any
removal of the Collateral Agent, the Custodial Agent or the Securities
Intermediary pursuant to clause (c) of the immediately preceding sentence.
The Company shall promptly notify the Forward 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, the 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, the Custodial Agent's or Securities
Intermediary's giving of notice of resignation or such removal, then the
retiring Collateral Agent, the 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,
the Custodial Agent or Securities Intermediary, as the case may be. Each of
the Collateral Agent, the Custodial Agent and the Securities Intermediary
shall be a bank which has an office in New York, New York with a combined
capital and surplus of at least $500,000,000. 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
retiring 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.
-17-
SECTION 8.9 Right to Appoint Agent or Advisor.
---------------------------------
The Collateral Agent shall have the right to appoint or consult
with agents or advisors in connection with any of its duties hereunder, and
the Collateral Agent shall not be liable for any action taken or omitted by,
or in reliance upon the advice of, such agents or advisors selected in good
faith. The appointment of agents (other than legal counsel) pursuant to this
Section 8.9 shall be subject to prior consent of the Company, which consent
shall not be unreasonably withheld.
SECTION 8.10 Survival.
--------
The provisions of this Article VIII shall survive termination of
this Agreement and the resignation or removal of the Collateral Agent, the
Custodial Agent or the Securities Intermediary.
SECTION 8.11 Exculpation.
-----------
Anything in this Agreement to the contrary notwithstanding, in no
event shall any of the Collateral Agent, the Custodial Agent or the
Securities Intermediary or their officers, employees or agents be liable
under this Agreement to any third party for indirect, special, punitive or
consequential loss or damage of any kind whatsoever, including lost profits,
whether or not the likelihood of such loss or damage was known to the
Collateral Agent, the Custodial Agent or the Securities Intermediary, or any
of them, and regardless of the form of action.
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 Forward
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 Forward 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 does 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 Forward Purchase Contract Agent; or
(iv) to cure any ambiguity, to correct or supplement any
provisions herein which may be inconsistent with any other provisions
herein, or to make any other provisions with respect to such matters
or questions arising under this Agreement, provided such action shall
not adversely affect the interests of the Holders.
SECTION 9.2 Amendment with Consent of Holders.
---------------------------------
With the consent of the Holders of not less than a majority of the
Forward Purchase Contracts at the time outstanding, by Act of said Holders
delivered to the Company, the Forward Purchase Contract Agent or the
Collateral Agent, as the case may be, the Company, when duly authorized by a
Board
-18-
Resolution, the Forward 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 DECS; provided, however, that
no amendment agreement shall, without the consent of the Holder of each
Outstanding DECS adversely affected thereby,
(i) change the amount or type of Collateral underlying a DECS
(except for the rights of holders of Upper DECS to substitute the
Treasury Securities for the Pledged Notes, Pledged Treasury
Consideration or the appropriate Pledged Applicable Ownership Interest
in the Treasury Portfolio, as the case may be, or the rights of Holders
of Stripped DECS to substitute Notes or the appropriate Treasury
Consideration or the appropriate Applicable Ownership Interest in the
Treasury Portfolio, as applicable, for the Pledged Treasury
Securities), impair the right of the Holder of any DECS to receive
distributions on the underlying Collateral or otherwise adversely
affect the Holder's rights in or to such Collateral; or
(ii) otherwise effect any action that would require the consent
of the Holder of each Outstanding DECS affected thereby pursuant to the
Forward Purchase Contract Agreement if such action were effected by
an agreement supplemental thereto; or
(iii) reduce the percentage of Forward Purchase Contracts the
consent of whose Holders is required for any such amendment.
It shall not be necessary for any Act of Holders under this Section to
approve the particular form of any proposed amendment, but it shall be
sufficient if such Act shall approve the substance thereof.
SECTION 9.3 Execution of Amendments.
-----------------------
In executing any amendment permitted by this Section, the
Collateral Agent, the Custodial Agent, the Securities Intermediary and the
Forward Purchase Contract Agent shall receive and (subject to Section 8.1
hereof, with respect to the Collateral Agent, and Section 7.1 of the Forward
Purchase Contract Agreement, with respect to the Forward 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 under the Forward 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 Forward Purchase
Contract Agent, bear a notation in form approved by the Forward 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 Forward
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 Forward Purchase Contract Agent in
accordance with the Forward Purchase Contract Agreement in exchange for
outstanding Certificates.
-19-
ARTICLE X
MISCELLANEOUS
SECTION 10.1 No Waiver.
---------
No failure on the part of any party hereto or any of its agents to
exercise, and no course of dealing with respect to, and no delay in
exercising, any right, power or remedy hereunder shall operate as a waiver
thereof; nor shall any single or partial exercise by any party hereto or any
of its agents of any right, power or remedy hereunder preclude any other or
further exercise thereof or the exercise of any other right, power or
remedy. The remedies herein are cumulative and are not exclusive of any
remedies provided by law.
SECTION 10.2 GOVERNING LAW.
-------------
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO ITS PRINCIPLES OF
CONFLICTS OF LAWS. Without limiting the foregoing, the above choice of law
is expressly agreed to by the Securities Intermediary, the Collateral Agent,
the Custodial Agent and the Holders from time to time acting through the
Forward 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 DECS, acting through the Forward 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 DECS, acting through the Forward Purchase
Contract Agent as their attorney-in-fact, irrevocably waive, to the fullest
extent permitted by applicable law, any objection which they may now or
hereafter have to the laying of the venue of any such proceeding brought in
such a court and any claim that any such proceeding brought in such a court
has been brought in an inconvenient forum.
SECTION 10.3 Notices.
-------
Unless otherwise stated herein, all notices, requests, consents and
other communications provided for herein (including, without limitation, any
modifications of, or waivers or consents under, this Agreement) shall be
given or made in writing (including, without limitation, by telecopy)
delivered to the intended recipient at the "Address for Notices" specified
below its name on the signature pages hereof or, as to any party, at such
other address as shall be designated by such party in a notice to the other
parties. Except as otherwise provided in this Agreement, all such
communications shall be deemed to have been duly given when personally
delivered or, in the case of a mailed notice or notice transmitted by
telecopier, upon receipt, in each case given or addressed as aforesaid.
SECTION 10.4 Successors and Assigns.
----------------------
This Agreement shall be binding upon and inure to the benefit of
the respective successors and assigns of the Company, the Collateral Agent,
the Custodial Agent, the Securities Intermediary and the Forward Purchase
Contract Agent, and the Holders from time to time of the DECS, 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 Forward Purchase Contract Agent.
-20-
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 DECS to satisfy its obligations under
the Forward Purchase Contracts forming a part of the DECS and (ii) the
enforcement of this Section 10.7; and
(c) all transfer, stamp, documentary or other similar taxes,
assessments or charges levied by any governmental or revenue authority in
respect of this Agreement or any other document referred to herein and all
costs, expenses, taxes, assessments and other charges incurred in connection
with any filing, registration, recording or perfection of any security
interest contemplated hereby.
SECTION 10.8 Security Interest Absolute.
--------------------------
All rights of the Collateral Agent and security interests
hereunder, and all obligations of the Holders from time to time hereunder,
shall be absolute and unconditional irrespective of:
(a) any lack of validity or enforceability of any provision of
the Forward Purchase Contracts or the DECS 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 DECS under the related Forward Purchase Contracts, or any other
amendment or waiver of any term of, or any consent to any departure from any
requirement of, the Forward Purchase Contract Agreement or any Forward
Purchase Contract or any other agreement or instrument relating thereto; or
(c) any other circumstance which might otherwise constitute a
defense available to, or discharge of, a borrower, a guarantor or a pledgor.
SECTION 10.9 Waiver of Jury Trial.
--------------------
EACH PARTY ACKNOWLEDGES AND AGREES THAT ANY CONTROVERSY WHICH MAY
ARISE UNDER THIS AGREEMENT IS LIKELY TO INVOLVE COMPLICATED AND
-21-
DIFFICULT ISSUES, AND THEREFORE IT HEREBY IRREVOCABLY AND UNCONDITIONALLY
WAIVES ANY RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION
DIRECTLY OR INDIRECTLY ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY.
-22-
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be duly executed as of the day and year first above written.
SOLUTIA INC.
By:
----------------------------------
Name:
Title:
Address for Notices:
Solutia Inc.
000 Xxxxxxxxx Xxxxxx Xxxxx
X.X. Xxx 00000
Xx. Xxxxx, Xxxxxxxx 00000-0000
(if by courier, 000 Xxxxxxxxx Xxxxxx Xxxxx,
Xx. Xxxxx, Xxxxxxxx 00000)
Attention: Treasurer
Telecopy: 000-000-0000
with a copy to the General Counsel
JPMORGAN CHASE BANK, as Forward Purchase
Contract Agent and as attorney-in-fact of the
Holders from time to time of the DECS
By:
-----------------------------------
Name:
Title:
Address for Notices:
JPMorgan Chase Bank
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Institutional Trust Services
Telecopy: (000) 000-0000
WACHOVIA BANK, N.A., as Collateral Agent,
Custodial Agent and Securities Intermediary
By:
-----------------------------------
Name:
Title:
Address for Notices:
-23-
EXHIBIT A
INSTRUCTION FROM FORWARD PURCHASE CONTRACT
AGENT TO COLLATERAL AGENT
Wachovia Bank, N.A.,
[address,] as Collateral Agent
Re: DECS of Solutia Inc. (the "Company")
------------------------------------
We hereby notify you in accordance with Section [4.1] [4.2] of the
Pledge Agreement, dated as of February , 2002, (the "Pledge Agreement")
among the Company, you, as Collateral Agent, Custodial Agent and Securities
Intermediary and us, as Forward Purchase Contract Agent and as
attorney-in-fact for the holders of [Upper DECS] [Stripped DECS] from time
to time, that the holder of DECS listed below (the "Holder") has elected to
substitute [$_____ aggregate principal amount of Treasury Securities (CUSIP
No. _________)] [$_______ aggregate principal amount of Notes or $_____
aggregate principal amount of Treasury Consideration (CUSIP No. _____) or
the Applicable Ownership Interest in the Treasury Portfolio, as the case may
be,] in exchange for the related [Pledged Notes, Pledged Treasury
Consideration or the appropriate Pledged Applicable Ownership Interest in
the Treasury Portfolio, as the case may be,] [Pledged Treasury Securities]
held by you in accordance with the Pledge Agreement and has delivered to us
a notice stating that the Holder has Transferred [Treasury Securities]
[Notes, the Treasury Consideration or the appropriate Applicable Ownership
Interest in the Treasury Portfolio, as the case may be,] to you, as
Collateral Agent. We hereby instruct you, upon receipt of such [Pledged
Treasury Securities] [Pledged Notes, Pledged Treasury Consideration or the
appropriate Pledged Applicable Ownership Interest in the Treasury Portfolio,
as the case may be], and upon the payment by such Holder of any applicable
fees, to release the [Notes, the Treasury Consideration or the appropriate
Applicable Ownership Interest in the Treasury Portfolio, as the case may
be,] [Treasury Securities] related to such [Upper DECS] [Stripped DECS] to
us in accordance with the Holder's instructions. Capitalized terms used
herein but not defined shall have the meaning set forth in the Pledge
Agreement.
Date: _________________________
JPMorgan Chase Bank,
as Forward Purchase Contract Agent
By: ___________________________________
Name:
Title:
A-1
Please print name, Social Security or other Taxpayer Identification
Number, if any, and address of registered Holder electing to substitute
[Treasury Securities] [Notes, Treasury Consideration or the appropriate
Applicable Ownership Interest in the Treasury Portfolio] for the [Pledged
Notes, Pledged Treasury Consideration or the appropriate Pledged Applicable
Ownership Interest in the Treasury Portfolio] [Pledged Treasury Securities]:
Name:
Social Security or other Taxpayer
Identification Number, if any:
Address:
A-2
EXHIBIT B
INSTRUCTION TO FORWARD PURCHASE CONTRACT AGENT
JPMorgan Chase Bank,
As Forward Purchase Contract Agent
000 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attn: Institutional Trust Services
Telecopy: (000) 000-0000
Re: DECS of Solutia Inc. (the "Company")
------------------------------------
The undersigned Holder hereby notifies you that it has delivered to
Wachovia Bank, N.A., as Collateral Agent, Custodial Agent and Securities
Intermediary [$_______ aggregate principal amount of Treasury Securities
(CUSIP No. _________)] [$_______ aggregate principal amount of Notes or
$_____ principal amount of Treasury Consideration (CUSIP No. _____) or the
appropriate Applicable Ownership Interest in the Treasury Portfolio, as the
case may be,] in exchange for the related [Pledged Notes, Pledged Treasury
Consideration or the appropriate Pledged Applicable Ownership Interest in
the Treasury Portfolio, as the case may be,] [Pledged Treasury Securities]
held by the Collateral Agent, in accordance with Section [4.1] [4.2] of the
Pledge Agreement, dated February , 2002 (the "Pledge Agreement"), among
you, the Company and the Collateral Agent. The undersigned Holder has paid
the Collateral Agent all applicable fees relating to such exchange. The
undersigned Holder hereby instructs you to instruct the Collateral Agent to
release to you on behalf of the undersigned Holder the [Pledged Notes,
Pledged Treasury Consideration or the appropriate Pledged Applicable
Ownership Interest in the Treasury Portfolio, as the case may be,] [Pledged
Treasury Securities] related to such [Upper DECS] [Stripped DECS].
Capitalized terms used herein but not defined shall have the meaning set
forth in the Pledge Agreement.
Date: ___________________ Signature: _________________________________
Signature Guarantee: _______________________
Name:
Social Security or other Taxpayer
Identification Number, if any:
Address:
B-1
EXHIBIT C
INSTRUCTION TO CUSTODIAL AGENT REGARDING REMARKETING
Wachovia Bank, N.A.,
[address,] as Custodial Agent
Re: Notes of Solutia Inc. (the "Company")
-------------------------------------
The undersigned hereby notifies you in accordance with Section
4.5(d) of the Pledge Agreement, dated as of , 2002 (the "Pledge
Agreement"), among the Company, yourselves, as Collateral Agent, Securities
Intermediary and Custodial Agent, and JPMorgan Chase Bank, as Forward
Purchase Contract Agent and as attorney-in-fact for the Holders of Upper
DECS and Stripped DECS from time to time, that the undersigned elects to
deliver $________ aggregate principal amount of Notes for delivery to the
Remarketing Agent on the fourth Business Day immediately preceding the first
day of any Remarketing Period or any Subsequent Remarketing Period for
remarketing pursuant to Section 4.5(d) of the Pledge Agreement. The
undersigned will, upon request of the Remarketing Agent, execute and deliver
any additional documents deemed by the Remarketing Agent or by the Company
to be necessary or desirable to complete the sale, assignment and transfer
of the Notes tendered hereby.
The undersigned hereby instructs you, upon receipt of the proceeds
of such remarketing from the Remarketing Agent, net of amounts payable to
the Remarketing Agent in accordance with the Pledge Agreement, to deliver
such proceeds to the undersigned in accordance with the instructions
indicated herein under "A. Payment Instructions." The undersigned hereby
instructs you, in the event of a Failed Remarketing, upon receipt of the
Notes tendered herewith from the Remarketing Agent, to deliver the Notes to
the person(s) at the address indicated herein under "B. Delivery
Instructions."
With this notice, the undersigned hereby (i) represents and
warrants that the undersigned has full power and authority to tender, sell,
assign and transfer the Notes tendered hereby and that the undersigned is
the record owner of any Notes tendered herewith in physical form or a
participant in The Depository Trust Company ("DTC") and the beneficial owner
of any Notes tendered herewith by book-entry transfer to your account at DTC
and (ii) agrees to be bound by the terms and conditions of Section 4.5(d) of
the Pledge Agreement. Capitalized terms used herein but not defined shall
have the meaning set forth in the Pledge Agreement.
Date: ___________________ Signature: _________________________________
Signature Guarantee: _______________________
Name:
Social Security or other Taxpayer
Identification Number, if any:
Address:
C-1
A. PAYMENT INSTRUCTIONS
Proceeds of the remarketing should be paid by check in the name of
the person(s) set forth below and mailed to the address set forth below.
Name(s): ________________________________
(Please Print)
Address: ________________________________
(Zip Code) (Please Print)
(Taxpayer Identification or Social Security Number):
B. DELIVERY INSTRUCTIONS
In the event of a Failed Remarketing, Notes which are in physical
form should be mailed to the person(s) set forth below at the address set
forth below.
Name(s): ________________________________
(Please Print)
Address: ________________________________
(Zip Code) (Please Print)
(Taxpayer Identification or Social Security Number):
In the event of a Failed Remarketing, Notes which are in book-entry
form should be credited to the account at The Depository Trust Company set
forth below.
Name of Account Party: DTC Account Number:
C-2
EXHIBIT D
INSTRUCTION TO CUSTODIAL AGENT REGARDING
WITHDRAWAL FROM REMARKETING
Wachovia Bank, N.A.
[address], as Collateral Agent
Re: Notes of Solutia Inc. (the "Company")
-------------------------------------
The undersigned hereby notifies you in accordance with Section
4.5(d) of the Pledge Agreement, dated as of February , 2002 (the "Pledge
Agreement"), among the Company, yourselves, as Collateral Agent, Securities
Intermediary and Custodial Agent and JPMorgan Chase Bank, as Forward
Purchase Contract Agent and as attorney-in-fact for the Holders of Upper
DECS and Stripped DECS from time to time, that the undersigned elects to
withdraw the $_____ aggregate principal amount of Notes delivered to the
Custodial Agent on ___________, ____ for remarketing pursuant to Section
4.5(d) of the Pledge Agreement. The undersigned hereby instructs you to
return such Notes to the undersigned in accordance with the undersigned's
instructions. With this notice, the undersigned hereby agrees to be bound by
the terms and conditions of Section 4.5(d) of the Pledge Agreement.
Capitalized terms used herein but not defined shall have the meaning set
forth in the Pledge Agreement.
Name(s): ________________________________
(Please Print)
Address: ________________________________
(Zip Code) (Please Print)
(Taxpayer Identification or Social Security Number):
A. DELIVERY INSTRUCTIONS
In the event of a Failed Remarketing, Notes which are in physical
form should be mailed to the person(s) set forth below at the address set
forth below.
Name(s): ________________________________
(Please Print)
Address: ________________________________
(Zip Code) (Please Print)
(Taxpayer Identification or Social Security Number):
In the event of a Failed Remarketing, Notes which are in book-entry
form should be credited to the account at The Depository Trust Company set
forth below.
Name of Account Party: DTC Account Number:
D-1
