EXHIBIT 4(AB)
================================================================================
FPL GROUP, INC.,
,
----------------------
as Collateral Agent, Custodial Agent
and Securities Intermediary,
AND
THE BANK OF NEW YORK
as Purchase Contract Agent
PLEDGE AGREEMENT
DATED AS OF __________, 200_
================================================================================
TABLE OF CONTENTS
Page
----
RECITALS .................................................................1
ARTICLE I. DEFINITIONS......................................................2
ARTICLE II. PLEDGE; CONTROL AND PERFECTION...................................5
SECTION 2.1 The Pledge..................................................5
SECTION 2.2 Control and Perfection......................................7
ARTICLE III. DISTRIBUTIONS ON PLEDGED COLLATERAL..............................8
ARTICLE IV. SUBSTITUTION, RELEASE, REPLEDGE AND SETTLEMENT OF DEBENTURES....10
SECTION 4.1 Substitution for Debentures and the Creation of Treasury
Units....................................................10
SECTION 4.2 Substitution of Treasury Securities and the Creation of
Corporate Units.............................................11
SECTION 4.3 Termination Event...........................................12
SECTION 4.4 Cash Settlement.............................................13
SECTION 4.5 Early Settlement............................................14
SECTION 4.6 Application of Proceeds Settlement..........................14
ARTICLE V. VOTING RIGHTS-- DEBENTURES......................................16
ARTICLE VI. RIGHTS AND REMEDIES; DISTRIBUTION OF THE DEBENTURES;
TAX EVENT REDEMPTION; REMARKETING...........................17
SECTION 6.1 Rights and Remedies of the Collateral Agent.................17
SECTION 6.2 Tax Event Redemption; Remarketing...........................18
SECTION 6.3 Initial Remarketing.........................................19
SECTION 6.4 Substitutions...............................................19
ARTICLE VII. REPRESENTATIONS AND WARRANTIES; COVENANTS.......................20
SECTION 7.1 Representations and Warranties..............................20
SECTION 7.2 Covenants...................................................21
ARTICLE VIII. THE COLLATERAL AGENT............................................21
SECTION 8.1 Appointment, Powers and Immunities..........................21
SECTION 8.2 Instructions of the Company.................................22
SECTION 8.3 Reliance....................................................22
SECTION 8.4 Rights in Other Capacities..................................23
SECTION 8.5 Non-Reliance................................................23
SECTION 8.6 Compensation and Indemnity..................................23
SECTION 8.7 Failure to Act..............................................24
SECTION 8.8 Resignation of Collateral Agent.............................24
SECTION 8.9 Right to Appoint Agent or Advisor...........................25
SECTION 8.10 Survival....................................................25
SECTION 8.11 Exculpation.................................................25
ARTICLE IX. AMENDMENT.......................................................26
SECTION 9.1 Amendment Without Consent of Holders........................26
SECTION 9.2 Amendment with Consent of Holders...........................26
SECTION 9.3 Execution of Amendments.....................................27
SECTION 9.4 Effect of Amendments........................................27
SECTION 9.5 Reference to Amendments.....................................28
ARTICLE X. MISCELLANEOUS...................................................28
SECTION 10.1 No Waiver...................................................28
SECTION 10.2 Governing Law...............................................28
SECTION 10.3 Notices.....................................................29
SECTION 10.4 Successors and Assigns......................................29
SECTION 10.5 Counterparts................................................29
SECTION 10.6 Severability................................................29
SECTION 10.7 Expenses, etc...............................................29
SECTION 10.8 Security Interest Absolute..................................30
EXHIBIT A Instruction From Purchase Contract Agent To
Collateral Agent........................................A-1
EXHIBIT B Instruction To Purchase Contract Agent.....................B-1
EXHIBIT C Instruction To Custodial Agent Regarding Remarketing.......C-1
EXHIBIT D Instruction To Custodial Agent Regarding Withdrawal From
Remarketing.............................................D-1
ii
PLEDGE AGREEMENT, dated as of __________, 200_ (this "Agreement"), by and
among FPL Group, Inc., a Florida corporation (the "Company"), as pledgee,
__________, 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 a "securities intermediary" as defined
in Section 8-102(a)(14) of the Code (as defined herein) (in such capacity,
together with its successors in such capacity, the "Securities Intermediary"),
and The Bank of New York, a New York banking corporation, not individually but
solely as purchase contract agent and as attorney-in-fact of the Holders (as
defined in the Purchase Contract Agreement (as hereinafter defined)) from time
to time of the New Securities (as hereinafter defined) (in such capacity,
together with its successors in such capacity, the "Purchase Contract Agent")
under the Purchase Contract Agreement (terms not otherwise defined herein are
used herein with the meaning ascribed to them in the Purchase Contract
Agreement).
RECITALS
The Company and the Purchase Contract Agent are parties to the Purchase
Contract Agreement, dated as of the date hereof (as modified and supplemented
and in effect from time to time, the "Purchase Contract Agreement"), pursuant to
which there may be issued up to __________ new securities (the "New Securities")
of the Company, having a stated amount of $[50] (the "Stated Amount") per New
Security.
The New Securities will initially consist of __________ units (referred to
as "Equity Units") with a stated amount, per Equity Unit, equal to $[50]. The
Equity Units will initially consist of __________ Corporate Units and __________
Treasury Units. Each Corporate Unit will initially be comprised of (a) a stock
purchase contract (as modified and supplemented and in effect from time to time,
a "Purchase Contract") under which (i) the Holder will purchase from the Company
not later than __________, 200_ ("Purchase Contract Settlement Date"), for $[50]
in cash, a number of newly issued shares of common stock, $.01 par value per
share, of the Company ("Common Stock") equal to the applicable Settlement Rate
and (ii) the Company will pay certain Contract Adjustment Payments to the
Holders as provided in the Purchase Contract Agreement, and (b) either (A) prior
to the Purchase Contract Settlement Date so long as no Tax Event Redemption has
occurred, (i) beneficial ownership of a Series __ Debenture due __________, 200_
issued by FPL Group Capital Inc ("FPL Group Capital") (a "Debenture"), having a
principal amount of $[50] or (ii) following a successful remarketing of the
Debentures on the Initial Remarketing Date, the appropriate Applicable Ownership
Interest in the Treasury Portfolio, or (B) upon the occurrence of a Tax Event
Redemption prior to the Purchase Contract Settlement Date, the appropriate
Applicable Ownership Interest in the Treasury Portfolio.
Each Treasury Unit will initially be comprised of (a) a Purchase Contract
under which (i) the Holder will purchase from the Company not later than the
Purchase Contract Settlement Date, for $[50] in cash, a number of newly issued
shares of Common Stock equal to the applicable Settlement Rate and (ii) the
Company will pay certain Contract Adjustment Payments to the Holders as provided
in the Purchase Contract Agreement, and (b) (i) prior to the Purchase Contract
Settlement Date, a [1/20], or [5]%, undivided beneficial ownership interest in a
zero-coupon U.S. Treasury security having a principal amount at maturity equal
to $1,000 and maturing on __________, 200_ (CUSIP No. __________) ("Treasury
Security").
[Pursuant to the terms of the Purchase Contract Agreement, the Company may
issue up to __________ additional Corporate Units and, if the Company issues
such additional Corporate Units, the related Debentures will be pledged
hereunder.]
Pursuant to the terms of the Purchase Contract Agreement and the Purchase
Contracts, the Holders, from time to time, of the New Securities have
irrevocably authorized the Purchase Contract Agent, as attorney-in-fact of such
Holders, among other things, to execute and deliver this Agreement on behalf of
and in the name of such Holders and to grant the pledge provided hereby of the
Debentures, any Applicable Ownership Interest in the Treasury Portfolio and any
Treasury Securities to secure each Holder's obligations under the related
Purchase Contract, as provided herein and subject to the terms hereof. Upon such
pledge, the Debentures will be beneficially owned by the Holders but will be
owned of record by the Purchase Contract Agent subject to the Pledge hereunder,
and the Treasury Securities (and the appropriate Applicable Ownership Interest
in the Treasury Portfolio) will be beneficially owned by the Holders but will be
held in book-entry form by the Securities Intermediary subject to the pledge
hereunder.
Accordingly, the Company, the Collateral Agent, the Securities
Intermediary, the Custodial Agent and the Purchase Contract Agent, on its own
behalf and as attorney-in-fact of the Holders from time to time of the New
Securities, agree as follows:
ARTICLE I
DEFINITIONS
For all purposes of this Agreement, except as otherwise expressly provided
or unless the context otherwise requires:
(a) the terms defined in this Article have the meanings assigned to
them in this Article and include the plural as well as the singular; and
(b) 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.
"BANKRUPTCY CODE" means title 11 of the United States Code, or any other
law of the United States that from time to time provides a uniform system of
bankruptcy laws.
"BUSINESS DAY" means any day other than a Saturday, a Sunday or any other
day on which banking institutions in The City of New York (in the State of New
York) are permitted or required by any applicable law to close.
"CASH" means any coin or currency of the United States as at the time shall
be legal tender for payment of public and private debts.
2
"CODE" has the meaning specified in Section 6.1 hereof.
"COLLATERAL" has the meaning specified in Section 2.1 hereof.
"COLLATERAL ACCOUNT" means the securities account (number __________)
maintained at __________ in the name "The Bank of New York, as Purchase Contract
Agent on behalf of the Holders of New Securities subject to the security
interest of __________ as Collateral Agent, for the benefit of FPL Group, Inc.,
as pledgee" and any successor account.
"COLLATERAL AGENT" has the meaning specified in the first paragraph of this
Agreement.
"COMMON STOCK" has the meaning specified in the Recitals.
"COMPANY" means the Person named as the "Company" in the first paragraph of
this Agreement until a successor shall have become such, and thereafter
"Company" shall mean such successor.
"CUSTODIAL AGENT" has the meaning specified in the first paragraph of this
Agreement.
"DEBENTURES" has the meaning specified in the Recitals.
"EQUITY UNITS" has the meanings specified in the Recitals.
"FPL GROUP CAPITAL" has the meaning specified in the Recitals.
"INDENTURE" means the Indenture (For Unsecured Debt Securities), dated as
of June 1, 1999, between FPL Group Capital and the Indenture Trustee pursuant to
which the Debentures are to be issued, as originally executed and delivered and
as it may from time to time be supplemented or amended by one or more indentures
supplemental thereto entered into pursuant to the applicable provisions thereof
and shall include the terms of a particular series of securities established as
contemplated by Section 301 thereof.
"INDENTURE TRUSTEE" means The Bank of New York, as trustee under the
Indenture until a successor is appointed thereunder, and thereafter means such
successor trustee.
"INTERMEDIARY" means any entity that in the ordinary course of its business
maintains securities accounts for others and is acting in that capacity.
"NEW SECURITIES" has the meaning specified in the Recitals.
"PERMITTED INVESTMENTS" means any one of the following which shall mature
not later than the next succeeding Business Day (i) any evidence of indebtedness
with an original maturity of 365 days or less issued, or directly and fully
guaranteed or insured, by the United States of America or any agency or
instrumentality thereof (provided that the full faith and credit of the United
States of America is pledged in support thereof or such indebtedness constitutes
a general obligation of it); (ii) deposits, certificates of deposit or
acceptances with an original maturity of 365 days or less of any institution
which is a member of the Federal Reserve System having combined capital and
surplus and undivided profits of not less than U.S. $200 million at the time of
deposit; (iii) investments with an original maturity of 365 days or less of any
3
Person that is fully and unconditionally guaranteed by a bank referred to in
clause (ii); (iv) investments in commercial paper, other than commercial paper
issued by the Company or its affiliates, of any corporation incorporated under
the laws of the United States or any State thereof, which commercial paper has a
rating at the time of purchase at least equal to "A-1" by Standard & Poor's
Ratings Service, a Division of XxXxxx-Xxxx Companies, Inc. ("S&P"), or at least
equal to "P-1" by Xxxxx'x Investors Service, Inc. ("Moody's"); and (v)
investments in money market funds registered under the Investment Company Act of
1940, as amended, rated in the highest applicable rating category by S&P or
Moody's.
"PERSON" means any individual, corporation, limited liability company,
partnership, joint venture, association, joint-stock company, trust,
unincorporated organization or government or any agency or political subdivision
thereof.
"PLEDGE" has the meaning specified in Section 2.1 hereof.
"PLEDGED APPLICABLE OWNERSHIP INTEREST IN THE TREASURY PORTFOLIO" has the
meaning specified in Section 2.1 hereof.
"PLEDGED DEBENTURES" has the meaning specified in Section 2.1 hereof.
"PLEDGED SECURITIES" has the meaning specified in Section 2.1 hereof.
"PLEDGED TREASURY SECURITIES" has the meaning specified in Section 2.1
hereof.
"PROCEEDS" means all interest, dividends, cash, instruments, securities,
financial assets (as defined in Section 8-102(a)(9) of the Code) and other
property from time to time received, receivable or otherwise distributed upon
the sale, exchange, collection or disposition of the Collateral or any proceeds
thereof.
"PURCHASE CONTRACT" has the meaning specified in the Recitals.
"PURCHASE CONTRACT AGENT" has the meaning specified in the first paragraph
of this Agreement.
"PURCHASE CONTRACT AGREEMENT" has the meaning specified in the Recitals.
"REMAINING STATED AMOUNT" means $[50].
"SECURITIES INTERMEDIARY" has the meaning specified in the first paragraph
of this Agreement.
"SECURITY ENTITLEMENT" has the meaning set forth in Section 8-102(a)(17) of
the Code.
"SEPARATE DEBENTURES" means any Debentures that are not Pledged Debentures.
"STATED AMOUNT" has the meaning specified in the Recitals.
"TRADES" means the Treasury/Reserve Automated Debt Entry System maintained
by the Federal Reserve Bank of New York pursuant to the TRADES Regulations.
4
"TRADES REGULATIONS" means the regulations of the United States Department
of the Treasury, published at 31 C.F.R. Part 357, as amended from time to time.
Unless otherwise defined herein, all terms defined in the TRADES Regulations are
used herein as therein defined.
"TRANSFER" means, with respect to the Collateral and in accordance with the
instructions of the Collateral Agent, the Purchase Contract Agent or the Holder,
as applicable:
(i) except as otherwise provided in Section 2.1 hereof, in
the case of Collateral consisting of securities which
cannot be delivered by book-entry or which the parties
agree are to be delivered in physical form, delivery in
appropriate physical form to the recipient accompanied
by any duly executed instruments of transfer,
assignments in blank, transfer tax stamps and any other
documents necessary to constitute a legally valid
transfer to the recipient; and
(ii) in the case of Collateral consisting of securities
maintained in book-entry form by causing a "securities
intermediary" (as defined in Section 8-102(a)(14) of
the Code) to (i) credit a Security Entitlement with
respect to such securities to a "securities account"
(as defined in Section 8-501(a) of the Code) maintained
by or on behalf of the recipient and (ii) to issue a
confirmation to the recipient with respect to such
credit. 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.
"TREASURY SECURITY" has the meaning specified in the Recitals.
"VALUE" with respect to any item of Collateral on any date means, as to
(i) Debentures, the aggregate principal amount thereof, (ii) Cash, the face
amount thereof and (iii) Treasury Securities, the aggregate principal amount
thereof at maturity, provided however, that in the case of the remarketing of
the Debentures on the third Business Day immediately preceding __________, 200_,
Value means the applicable Treasury Portfolio Purchase Price.
ARTICLE II
PLEDGE; CONTROL AND PERFECTION
SECTION 2.1 PLEDGE
The Holders from time to time acting through the Purchase Contract Agent,
as their attorney-in-fact, and the Purchase Contract Agent, as such
attorney-in-fact, hereby pledge and grant to the Collateral Agent, for the
5
benefit of the Company, as collateral security for the performance when due by
such Holders of their respective obligations under the related Purchase
Contracts, a security interest in all of the right, title and interest of such
Holders and the Purchase Contract Agent (a) in the Debentures and Treasury
Securities constituting a part of the New Securities and any Treasury Securities
delivered in exchange for any Debentures, and any Debentures delivered in
exchange for any Treasury Securities, in accordance with Article IV hereof, in
each case that have been Transferred to or received by the Collateral Agent and
not released by the Collateral Agent to such Holders or the Purchase Contract
Agent under the provisions of this Agreement; (b) in payments made by Holders
pursuant to Section 4.4 hereof; (c) in the Collateral Account and all
securities, financial assets, Cash and other property credited thereto and all
Security Entitlements related thereto; (d) in the Applicable Ownership Interest
in the Treasury Portfolio purchased on behalf of the Holders of Corporate Units
by the Collateral Agent upon the occurrence of a successful remarketing of the
Debentures or a Tax Event Redemption as provided in Section 6.2 hereof and
(e) all Proceeds of the foregoing (all of the foregoing, collectively, the
"Collateral"). Prior to or concurrently with the execution and delivery of this
Agreement, the Purchase Contract Agent, on behalf of the initial Holders of the
New Securities, shall cause the Debentures comprising a part of the Corporate
Units, and the Treasury Securities comprising a part of the Treasury Units, to
be Transferred to the Collateral Agent for the benefit of the Company. Such
Debentures shall be Transferred by physically delivering such Debentures to the
Collateral Agent endorsed in blank. Treasury Securities and the Treasury
Portfolio, as applicable, shall be Transferred to the Collateral Account
maintained by the Collateral Agent at the Securities Intermediary by book-entry
transfer to the Collateral Account in accordance with the TRADES Regulations and
other applicable law and by the notation by the Securities Intermediary on its
books that a Security Entitlement with respect to such Treasury Securities or
Treasury Portfolio, has been credited to the Collateral Account. For purposes of
perfecting the Pledge under applicable law, including, to the extent applicable,
the TRADES Regulations or the Uniform Commercial Code as adopted and in effect
in any applicable jurisdiction, the Collateral Agent shall be the agent of the
Company as provided herein. The pledge provided in this Section 2.1 is herein
referred to as the "Pledge" and the Debentures, Treasury Securities or Treasury
Portfolio subject to the Pledge, excluding any Debentures or Treasury Securities
or interest in the Treasury Portfolio released from the Pledge as provided in
Article IV hereof, are hereinafter referred to as "Pledged Debentures," the
"Pledged Treasury Securities," or "Pledged Applicable Ownership Interest in the
Treasury Portfolio," respectively, and collectively, the "Pledged Securities."
Subject to the Pledge and the provisions of Section 2.2 hereof, the Holders from
time to time shall have full beneficial ownership of the Collateral. The
Collateral Agent shall have the right to have the Debentures or any other New
Securities held in physical form reregistered in its name or in the name of its
agent or the Securities Intermediary and credited to the Collateral Account.
Except as may be required in order to release Debentures (or if (i) a Tax
Event Redemption or (ii) a successful remarketing of the Debentures has
occurred, the Applicable Ownership Interest in the Treasury Portfolio) or
Treasury Securities in connection with a Holder's election to convert its
investment from Corporate Units to Treasury Units, or from Treasury Units to
Corporate Units, as the case may be, or except as otherwise required to release
Pledged Securities as specified herein, neither the Collateral Agent nor the
Securities Intermediary shall relinquish physical possession of any certificate
evidencing Debentures (or if (i) a Tax Event Redemption or (ii) a successful
remarketing of the Debentures has occurred, the Applicable Ownership Interest in
6
the Treasury Portfolio) or Treasury Securities prior to the termination of this
Agreement. If it becomes necessary for the Collateral Agent to relinquish
physical possession of a certificate in order to release a portion of the
Debentures evidenced thereby from the Pledge, the Collateral Agent shall use its
best efforts to obtain physical possession of a replacement certificate
evidencing any Debentures remaining subject to the Pledge hereunder registered
to it or endorsed in blank within ten days of the date it relinquished
possession. The Collateral Agent shall promptly notify the Company of its
failure to obtain possession of any such replacement certificate as required
hereby.
SECTION 2.2 CONTROL AND PERFECTION
(a) In connection with the Pledge granted in Section 2.1, and subject
to the other provisions of this Agreement, the Holders from time to time acting
through the Purchase Contract Agent, as their attorney-in-fact, hereby authorize
and direct the Securities Intermediary (without the necessity of obtaining the
further consent of the Purchase Contract Agent or any of the Holders), and the
Securities Intermediary agrees, to comply with and follow any instructions and
entitlement orders (as defined in Section 8-102(a)(8) of the Code) that the
Collateral Agent on behalf of the Company may give in writing with respect to
the Collateral Account, the Collateral credited thereto and any Security
Entitlements with respect to any thereof. Such instructions and entitlement
orders may, without limitation, direct the Securities Intermediary to transfer,
redeem, sell, liquidate, assign, deliver or otherwise dispose of the Debentures,
the Treasury Securities, any Treasury Portfolio and any Security Entitlements
with respect thereto and to pay and deliver any income, proceeds or other funds
derived therefrom to the Company. The Purchase Contract Agent and the Holders
from time to time, acting through the Purchase Contract Agent, each hereby
further authorize and direct the Collateral Agent, as agent of the Company, to
itself issue instructions and entitlement orders, and to otherwise take action,
with respect to the Collateral Account, the Collateral credited thereto and any
Security Entitlements with respect thereto, pursuant to the terms and provisions
hereof, all without the necessity of obtaining the further consent of the
Purchase Contract Agent or any of the Holders. The Collateral Agent shall be the
agent of the Company and shall act as directed in writing by the Company.
Without limiting the generality of the foregoing, the Collateral Agent shall
issue entitlement orders to the Securities Intermediary when and as required by
the terms hereof or as directed 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, indorsed to the Securities Intermediary or in blank or credited to
another collateral account maintained in the name of the Securities Intermediary
and in no case will any financial asset credited to the Collateral Account be
registered in the name of the Purchase Contract Agent, the Company or any
Holder, payable to the order of, or specially indorsed to, the Purchase Contract
Agent, the Collateral Agent, the Company or any Holder except to the extent the
foregoing have been specially indorsed to the Securities Intermediary or in
blank; (ii) all property delivered to the Securities Intermediary pursuant to
this Pledge Agreement (including, without limitation, any Debentures, any
Treasury Portfolio or any Treasury Securities) 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 Purchase Contract Agent as the
7
"entitlement holder" (as defined in the Code) with respect to the Collateral
Account; (iv) the Securities Intermediary has not entered into, and until the
termination of this Agreement will not enter into, any agreement with any other
Person relating to the Collateral Account and/or any financial assets credited
thereto pursuant to which it has agreed to comply with entitlement orders (as
defined in Section 8-102(a)(8) of the Code) of such other Person; and (v) the
Securities Intermediary has not entered into, and until the termination of this
Agreement will not enter into, any agreement with the Company, the Collateral
Agent, the Purchase Contract Agent or the Holders of the New Securities
purporting to limit or condition the obligation of the Securities Intermediary
to comply with entitlement orders as set forth in this Section 2.2 hereof.
(c) The Securities Intermediary hereby agrees that each item of
property (whether investment property, financial asset, security, instrument or
cash) credited to the Collateral Account shall be treated as a "financial asset"
within the meaning of Section 8-102(a)(9) of the Code.
(d) In the event of any conflict between this Agreement (or any
portion hereof) and any other agreement now existing or hereafter entered into,
the terms of this Agreement shall prevail.
(e) The Purchase Contract Agent hereby irrevocably constitutes and
appoints the Collateral Agent and the Company, and each of them severally, with
full power of substitution, as the Purchase Contract Agent's attorney-in-fact to
take on behalf of, and in the name, place and stead of the Purchase Contract
Agent and the Holders, any action necessary or desirable to perfect and to keep
perfected the security interest in the Collateral referred to in Section 2.1.
The grant of such power-of-attorney shall not be deemed to require of the
Collateral Agent any specific duties or obligations not otherwise assumed by the
Collateral Agent hereunder.
ARTICLE III
DISTRIBUTIONS ON PLEDGED COLLATERAL
So long as the Purchase Contract Agent is the registered owner of the
Pledged Debentures, it shall receive all payments thereon. If the Pledged
Debentures are reregistered, such that the Collateral Agent becomes the
registered holder, all payments of principal or interest on such Pledged
Debentures, together with any payments of principal or interest or cash
distributions in respect of any other Pledged Securities received by the
Collateral Agent that are properly payable hereunder shall be paid by the
Collateral Agent by wire transfer in same day funds:
(i) In the case of (A) payment of interest with respect to the
Pledged Debentures or cash distributions on the appropriate Pledged Applicable
Ownership Interest in the Treasury Portfolio (as specified in clauses (1) or (2)
of the definition of the term "Applicable Ownership Interest" in the Purchase
Contract Agreement), as the case may be, and (B) any payments of principal with
respect to any Debentures or the appropriate Applicable Ownership Interest (as
specified in clauses (1) or (2) of the definition of such term) in the Treasury
Portfolio, as the case may be, that have been released from the Pledge pursuant
8
to Section 4.3 hereof, to the Purchase Contract Agent, for the benefit of the
relevant Holders of Corporate Units, to the account designated by the Purchase
Contract Agent for such purpose, no later than 2:00 p.m., New York City time, on
the Business Day such payment is received by the Collateral Agent (provided that
in the event such payment is received by the Collateral Agent on a day that is
not a Business Day or after 12:30 p.m., New York City time, on a Business Day,
then such payment shall be made no later than 10:30 a.m., New York City time, on
the next succeeding Business Day);
(ii) In the case of any principal payments with respect to any
Treasury Securities that have been released from the Pledge pursuant to
Section 4.3 hereof, to the Holders of the Treasury Units to the accounts
designated by them to the Collateral Agent in writing for such purpose no later
than 2:00 p.m., New York City time, on the Business Day such payment is received
by the Collateral Agent (provided that in the event such payment is received by
the Collateral Agent on a day that is not a Business Day or after 12:30 p.m.,
New York City time, on a Business Day, then such payment shall be made no later
than 10:30 a.m., New York City time, on the next succeeding Business Day); and
(iii) In the case of payments of the principal of any Pledged
Debentures or on the appropriate Pledged Applicable Ownership Interest (as
specified in clauses (1) or (2) of the definition of the term "Applicable
Ownership Interest") in the Treasury Portfolio, as the case may be, or the
principal of any Pledged Treasury Securities, to the Company on the Purchase
Contract Settlement Date in accordance with the procedure set forth in
Section 4.6(a) or 4.6(b) hereof, in full satisfaction of the respective
obligations of the Holders under the related Purchase Contracts.
All payments received by the Purchase Contract Agent as provided herein
shall be applied by the Purchase Contract Agent pursuant to the provisions of
the Purchase Contract Agreement. If, notwithstanding the foregoing, the Purchase
Contract Agent or a Holder of Corporate Units shall receive any payments of
principal on account of any Debenture or, if applicable, the appropriate
Applicable Ownership Interest (as specified in clauses (1) or (2) of the
definition of such term) in the Treasury Portfolio that, at the time of such
payment, is a Pledged Debenture or the Pledged Applicable Ownership Interest in
the Treasury Portfolio, as the case may be, or the Purchase Contract Agent or a
Holder of Treasury Units shall receive any payments of principal on account of
any Treasury Securities that, at the time of such payment, are Pledged Treasury
Securities, the Purchase Contract Agent or such Holder, as the case may be,
shall transfer the Proceeds of such payment of principal on such Pledged
Debenture, Pledged Applicable Ownership Interest in the Treasury Portfolio, or
Pledged Treasury Securities, as the case may be, to the Collateral Agent and the
Collateral Agent shall hold such Proceeds for the benefit of the Company as
Collateral for the performance when due by such Holder of its obligations under
the related Purchase Contracts.
9
ARTICLE IV
SUBSTITUTION, RELEASE, REPLEDGE AND SETTLEMENT OF DEBENTURES
SECTION 4.1 SUBSTITUTION FOR DEBENTURES AND THE CREATION OF TREASURY UNITS
A Holder of a Corporate Unit may create or recreate a Treasury Unit and
separate the Debentures or the appropriate Applicable Ownership Interest in the
Treasury Portfolio, as applicable, from the related Purchase Contract in respect
of such Corporate Unit by substituting Treasury Securities for all, but not less
than all, of the Debentures or Applicable Ownership Interest in the Treasury
Portfolio that form a part of such Corporate Unit in accordance with this
Section 4.1 and 3.13 of the Purchase Contract Agreement; provided, however, that
if the Treasury Portfolio has not replaced the Debentures as a component of
Corporate Units as a result of a successful remarketing or a Tax Event
Redemption, such Collateral Substitutions may only be made on or prior to the
fifth Business Day immediately preceding the Purchase Contract Settlement Date;
if the Treasury Portfolio has replaced the Debentures as a component of
Corporate Units as a result of a successful remarketing of the Debentures or a
Tax Event Redemption, such Collateral Substitutions may only be made on or prior
to the second Business Day immediately preceding the Purchase Contract
Settlement Date. Holders may make Collateral Substitutions and establish
Treasury Units (i) only in integral multiples of [20] Corporate Units if only
Debentures are being substituted by Treasury Securities, or (ii) only in
integral multiples of [1,600,000] Corporate Units if the appropriate Applicable
Ownership Interests in the Treasury Portfolio are being substituted for Treasury
Securities. For example, to create [20] Treasury Units (if a Tax Event
Redemption has not occurred and Debentures remain components of Corporate
Units), or [1,600,000] Treasury Units (if a Tax Event Redemption has occurred or
the Treasury Portfolio has replaced Debentures as components of Corporate Units
as a result of a successful remarketing of the Debentures), the Corporate Unit
Holder shall
(a) if the Treasury Portfolio has not replaced the Debentures as a
component of Corporate Units as a result of a successful remarketing or a Tax
Event Redemption, prior to the fifth Business Day preceding the Purchase
Contract Settlement Date, deposit with the Collateral Agent a Treasury Security
having a principal amount at maturity of $1,000; or
(b) if the Treasury Portfolio has replaced the Debentures as a
component of Corporate Units as a result of a successful remarketing of the
Debentures or a Tax Event Redemption, prior to the second Business Day
immediately preceding the Purchase Contract Settlement Date, deposit with the
Collateral Agent Treasury Securities having an aggregate principal amount at
maturity of $[80,000,000]; and
(c) in each case, transfer and surrender the related [20] Corporate
Units, or, in the event the Treasury Portfolio is a component of Corporate
Units, [1,600,000] Corporate Units, to the Purchase Contract Agent accompanied
by a notice to the Purchase Contract Agent, substantially in the form of Exhibit
B hereto, stating that the Holder has transferred the relevant amount of
Treasury Securities to the Collateral Agent and requesting that the Purchase
Contract Agent instruct the Collateral Agent to release the Debentures or the
appropriate Applicable Ownership Interest in the Treasury Portfolio, as the case
may be, underlying such Corporate Units, whereupon the Purchase Contract Agent
shall promptly give such instruction to the Collateral Agent, substantially in
the form of Exhibit A hereto.
10
Upon receipt of the Treasury Securities described in clause (a) or (b)
above and the instructions described in clause (c) above from the Purchase
Contract Agent, the Collateral Agent shall release the Pledged Debentures or the
appropriate Pledged Applicable Ownership Interest in the Treasury Portfolio, as
the case may be, and shall promptly Transfer such Pledged Debentures or the
appropriate Pledged Applicable Ownership Interest in the Treasury Portfolio, as
the case may be, free and clear of the lien, pledge or security interest created
hereby, to the Purchase Contract Agent.
SECTION 4.2 SUBSTITUTION OF TREASURY SECURITIES AND THE CREATION OF CORPORATE
UNITS
A Holder of a Treasury Unit may create or recreate Corporate Units by
depositing with the Collateral Agent Debentures or the appropriate Applicable
Ownership Interest in the Treasury Portfolio, as the case may be, having an
aggregate principal amount equal to the aggregate principal amount at maturity
of, and in substitution for all, but not less than all, of the Treasury
Securities comprising part of the Treasury Unit in accordance with this
Section 4.2 and 3.14 of the Purchase Contract Agreement; provided, however, that
if the Treasury Portfolio has not replaced the Debentures as a component of
Corporate Units as a result of a successful remarketing or a Tax Event
Redemption, such Collateral Substitutions may only be made on or prior to the
fifth Business Day immediately preceding the Purchase Contract Settlement Date;
and if the Treasury Portfolio has replaced the Debentures as a component of
Corporate Units as a result of a successful remarketing of the Debentures or a
Tax Event Redemption, such Collateral Substitutions may only be made on or prior
to the second Business Day immediately preceding the Purchase Contract
Settlement Date. Holders of Treasury Units may make such Collateral
Substitutions and establish Corporate Units (i) only in integral multiples of
[20] Treasury Units if Treasury Securities are being replaced by Debentures, or
(ii) only in integral multiples of [1,600,000] Treasury Units if any Treasury
Security is being replaced by the Applicable Ownership Interest in the Treasury
Portfolio. To create [20] Corporate Units (if a Tax Event Redemption has not
occurred and the Debentures remain components of Corporate Units), or
[1,600,000] Corporate Units (if a Tax Event Redemption has occurred or the
Treasury Portfolio has replaced the Debentures as a result of a successful
remarketing of the Debentures), the Treasury Unit Holder shall
(a) if the Treasury Portfolio has not replaced the Debentures as a
component of Corporate Units as a result of a successful remarketing or a Tax
Event Redemption, prior to the fifth Business Day preceding the Purchase
Contract Settlement Date, deposit with the Collateral Agent $1,000 in aggregate
principal amount of Debentures; or
(b) if the Treasury Portfolio has replaced the Debentures as a
component of Corporate Units as a result of a successful remarketing of the
Debentures or a Tax Event Redemption, prior to the second Business Day
immediately preceding the Purchase Contract Settlement Date, deposit with the
Collateral Agent the Applicable Ownership Interest in the Treasury Portfolio
having an aggregate principal amount at maturity of $[80,000,000]; and
(c) in each case, transfer and surrender the related [20] Treasury
Units, or in the event the Treasury Portfolio is a component of Corporate Units,
[1,600,000] Treasury Units, to the Purchase Contract Agent accompanied by a
notice to the Purchase Contract Agent, substantially in the form of Exhibit B
hereto, stating that the Holder has transferred the relevant amount of
11
Debentures or the appropriate Applicable Ownership Interest in the Treasury
Portfolio, as the case may be, to the Collateral Agent and requesting that the
Purchase Contract Agent instruct the Collateral Agent to release the Pledged
Treasury Securities underlying such Treasury Units, whereupon the Purchase
Contract Agent shall promptly give such instruction to the Collateral Agent,
substantially in the form of Exhibit A hereto.
Upon receipt of the Debentures or the appropriate Applicable Ownership
Interest in the Treasury Portfolio, as the case may be, described in clause (a)
or (b) above and the instructions described in clause (c) above, from the
Purchase Contract Agent, the Collateral Agent shall release the related Pledged
Treasury Securities and shall promptly Transfer such Pledged Treasury
Securities, free and clear of the lien, pledge or security interest created
hereby, to the Purchase Contract Agent.
SECTION 4.3 TERMINATION EVENT
Upon receipt by the Collateral Agent of written notice from the Company or
the Purchase Contract Agent that there has occurred a Termination Event, the
Collateral Agent shall release all Collateral from the Pledge and shall promptly
Transfer any Pledged Debentures (or, if (i) a Tax Event Redemption or (ii) a
successful remarketing of the Debentures, as the case may be, has occurred, the
Pledged Applicable Ownership Interest in the Treasury Portfolio) and Pledged
Treasury Securities to the Purchase Contract Agent for the benefit of the
Holders of the Corporate Units and the Treasury Units, respectively, free and
clear of any lien, pledge or security interest or other interest created hereby.
If such Termination Event shall result from the Company's becoming a debtor
under the Bankruptcy Code, and if the Collateral Agent shall for any reason fail
promptly to effectuate the release and Transfer of all Pledged Debentures, the
appropriate Pledged Applicable Ownership Interest in the Treasury Portfolio or
the Pledged Treasury Securities, as the case may be, as provided by this
Section 4.3, any Holder may, and the Purchase Contract Agent shall, upon receipt
from the Holders of security or indemnity satisfactory to it against the costs,
expenses and liabilities which might be incurred by the Purchase Contract Agent
in compliance with this paragraph, (i) use its reasonable best efforts to obtain
an opinion of a nationally recognized law firm reasonably acceptable to the
Collateral Agent to the effect that, as a result of the Company 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) any such Holder or the Purchase
Contract Agent shall be unable to obtain such opinion within ten days after the
occurrence of such Termination Event or (z) the Collateral Agent shall continue,
after delivery of such opinion, to refuse to effectuate the release and Transfer
of all Pledged Debentures, the appropriate Pledged Applicable Ownership Interest
in the Treasury Portfolio or the Pledged Treasury Securities, as the case may
be, as provided in this Section 4.3, then any Holder may, and the Purchase
Contract Agent, shall within 15 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
Debentures, the appropriate Pledged Applicable Ownership Interest in the
Treasury Portfolio or of the Pledged Treasury Securities, as the case may be, as
provided by this Section 4.3 or (ii) commence an action or proceeding in the
12
court with jurisdiction of the Company's case under the Bankruptcy Code like
that described in subsection (i)(z) hereof within ten days after the occurrence
of such Termination Event.
SECTION 4.4 CASH SETTLEMENT
(a) Upon receipt by the Collateral Agent of (i) a notice from the
Purchase Contract Agent that a Holder of a Corporate Unit or Treasury Unit has
elected, in accordance with the procedures specified in Section 5.4(a)(i) or
(d)(i) of the Purchase Contract Agreement, respectively, to settle its Purchase
Contract with Cash and (ii) payment by such Holder of the amount required to
settle the Purchase Contract prior to 11:00 a.m., New York City time, on the
Business Day immediately preceding the Purchase Contract Settlement Date in
lawful money of the United States by certified or cashiers' check or wire
transfer in immediately available funds payable to or upon the order of the
Company, then the Collateral Agent shall, upon written direction of the Company,
promptly invest any Cash received from a Holder in connection with a Cash
Settlement in Permitted Investments. Upon receipt of the proceeds upon the
maturity of the Permitted Investments on the Purchase Contract Settlement Date,
the Collateral Agent shall pay the portion of such proceeds and deliver any
certified or cashiers' checks received, in an aggregate amount equal to the
Purchase Price, to the Company on the Purchase Contract Settlement Date, and
shall distribute any funds in respect of the interest earned from the Permitted
Investments to the Purchase Contract Agent for payment to the relevant Holder.
(b) If a Holder of Corporate Units fails to notify the Purchase
Contract Agent of its intention to make a Cash Settlement in accordance with
Section 5.4(a)(i) of the Purchase Contract Agreement, such failure shall
constitute a default under the Purchase Contract Agreement and hereunder, and
the Holder shall be deemed to have consented to the disposition of the Pledged
Debentures pursuant to the remarketing as described in Section 5.4(b) of the
Purchase Contract Agreement, which is incorporated herein by reference and
Section 4.6 hereof, and the Collateral Agent, for the benefit of the Company,
will exercise its rights as a secured party with respect to applicable Pledged
Debentures at the direction of the Company to cause the remarketing of such
Pledged Debentures. If a Holder of Corporate Units does notify the Purchase
Contract Agent as provided in Section 5.4(a)(i) of the Purchase Contract
Agreement of its intention to make a Cash Settlement, but fails to make such
payment as required by Section 5.4(a)(ii) of the Purchase Contract Agreement,
such failure shall constitute a default under the related Purchase Contracts and
hereunder, and the Pledged Debentures of such a Holder will not be remarketed
but instead the Collateral Agent, for the benefit of the Company, will exercise
its rights as a secured party with respect to such Debentures at the direction
of the Company to retain or dispose of the Collateral in accordance with
applicable law. In addition, in the event of a Failed Remarketing as described
in Section 5.4(b) of the Purchase Contract Agreement, such Failed Remarketing
shall constitute a default hereunder by such Holder, and the Collateral Agent,
for the benefit of the Company, will also exercise its rights as a secured party
with respect to such Debentures at the direction of the Company to retain or
dispose of the Collateral in accordance with applicable law.
(c) If a Holder of Treasury Units or Corporate Units (if the Treasury
Portfolio has replaced the Debentures) fails to notify the Purchase Contract
Agent of such Holder's intention to make a Cash Settlement in accordance with
Section 5.4(d)(i) of the Purchase Contract Agreement, or if a Holder of Treasury
Units or Corporate Units (if the Treasury Portfolio has replaced the Debentures)
notifies the Purchase Contract Agent as provided in Section 5.4(d)(i) of the
13
Purchase Contract Agreement of its intention to make a Cash Settlement, but
fails to make such payment as required by Section 5.4(d)(ii) of the Purchase
Contract Agreement, such failure shall constitute a default under the related
Purchase Contracts and hereunder by such Holder and upon the maturity of the
related Pledged Treasury Securities or the Pledged Applicable Ownership Interest
in the Treasury Portfolio, if any, held by the Collateral Agent on the Business
Day immediately preceding the Purchase Contract Settlement Date, the principal
amount of such Pledged Treasury Securities or the portion of the Pledged
Applicable Ownership Interest in the Treasury Portfolio corresponding to such
Purchase Contracts received by the Collateral Agent shall, upon written
direction of the Company, be invested promptly in Permitted Investments. On the
Purchase Contract Settlement Date, an aggregate amount equal to the Purchase
Price will be remitted to the Company as payment thereof. In the event the sum
of the proceeds from the Pledged Treasury Securities or the Pledged Applicable
Ownership Interest in the Treasury Portfolio, as the case may be, and the
investment earnings earned from such investments is in excess of the aggregate
Purchase Price of the Purchase Contracts being settled thereby, the Collateral
Agent will distribute such excess to the Purchase Contract Agent for the benefit
of the Holder of the related Treasury Units or Corporate Units when received.
SECTION 4.5 EARLY SETTLEMENT
Upon written notice to the Collateral Agent by the Purchase Contract Agent
that a Holder of a New Security has elected to effect Early Settlement of its
entire obligation under the Purchase Contract forming a part of such New
Security in accordance with the terms of the Purchase Contract and the Purchase
Contract Agreement, and that the Purchase Contract Agent has received from such
Holder, and paid to the Company as confirmed in writing by the Company, the
related Early Settlement Amount pursuant to the terms of the Purchase Contract
and the Purchase Contract Agreement and that all conditions to such Early
Settlement have been satisfied, then the Collateral Agent shall release from the
Pledge, (a) the Pledged Debentures or the appropriate Pledged Applicable
Ownership Interest in the Treasury Portfolio in the case of a Holder of
Corporate Units or (b) Pledged Treasury Securities in the case of a Holder of
Treasury Units, in each case that had been components of such New Security, and
shall transfer such Pledged Debentures or the appropriate Pledged Applicable
Ownership Interest in the Treasury Portfolio or Pledged Treasury Securities, as
the case may be, free and clear of the Pledge created hereby, to the Purchase
Contract Agent for the benefit of such Holder.
SECTION 4.6 APPLICATION OF PROCEEDS SETTLEMENT
(a) In the event a Holder of Corporate Units, unless the Treasury
Portfolio has replaced the Debentures, has not elected to make an effective Cash
Settlement by notifying the Purchase Contract Agent in the manner provided for
in Section 5.4(a)(i) of the Purchase Contract Agreement or has not made an Early
Settlement of the Purchase Contracts underlying its Corporate Units, such Holder
shall be deemed to have elected to pay for the shares of Common Stock to be
issued under such Purchase Contracts from the Proceeds of the related Pledged
Debentures. The Collateral Agent shall by 10:00 a.m., New York City time, on the
fourth Business Day immediately preceding the Purchase Contract Settlement Date,
without any instruction from such Holder of Corporate Units, present the related
Pledged Debentures to the Remarketing Agent for remarketing. Upon receiving such
Pledged Debentures, the Remarketing Agent, pursuant to the terms of the
Remarketing Agreement, will use its reasonable efforts to remarket such Pledged
Debentures on such date at a price of approximately ____% (but not less than
14
___%) of the aggregate Value of such Pledged Debentures, plus accrued and unpaid
interest, if any, thereon. After deducting as the Remarketing Fee an amount not
exceeding __ basis points (.__%) of the aggregate Value of the Pledged
Debentures from any amount of such Proceeds in excess of the aggregate Value of
such Debentures, plus such accrued and unpaid interest of the remarketed Pledged
Debentures, the Remarketing Agent will remit the entire amount of the Proceeds
of a successful remarketing to the Collateral Agent. On the Purchase Contract
Settlement Date, the Collateral Agent shall apply that portion of the Proceeds
from such remarketing equal to the aggregate Value of the Pledged Debentures, to
satisfy in full the obligations of such Holders of Corporate Units to pay the
Purchase Price to purchase the Common Stock under the related Purchase
Contracts. The remaining portion of such Proceeds, if any, shall be distributed
by the Collateral Agent to the Purchase Contract Agent for payment to the
Holders. If the Remarketing Agent advises the Collateral Agent in writing that
it cannot remarket the related Pledged Debentures of such Holders of Corporate
Units at a price not less than ___% of the aggregate Value of such Pledged
Debentures plus any accrued and unpaid interest, thus resulting in a Failed
Remarketing, the Collateral Agent will, for the benefit of the Company, at the
written direction of the Company, retain or dispose of the Pledged Debentures in
accordance with applicable law and satisfy in full, from any such disposition or
retention, such Holder's obligation to pay the Purchase Price for the Common
Stock under the related Purchase Contracts.
(b) In the event a Holder of Treasury Units or, if the Treasury
Portfolio has replaced the Debentures, Corporate Units, has not made an Early
Settlement of the Purchase Contracts underlying its Treasury Units or Corporate
Units, as the case may be, such Holder shall be deemed to have elected to pay
for the shares of Common Stock to be issued under such Purchase Contracts from
the Proceeds of the related Pledged Treasury Securities or the related Pledged
Applicable Ownership Interest in the Treasury Portfolio, as the case may be. On
the Business Day immediately prior to the Purchase Contract Settlement Date, the
Collateral Agent shall, at the written direction of the Purchase Contract Agent,
invest the Cash proceeds of the maturing Pledged Treasury Securities or the
Pledged Applicable Ownership Interest in the Treasury Portfolio, as the case may
be, in overnight Permitted Investments. Without receiving any instruction from
any such Holder of Treasury Units or Corporate Units, the Collateral Agent shall
apply the Proceeds of the related Pledged Treasury Securities or Pledged
Applicable Ownership Interest in the Treasury Portfolio to the settlement of the
related Purchase Contracts on the Purchase Contract Settlement Date. In the
event the sum of the Proceeds from the related Pledged Treasury Securities or
related Pledged Applicable Ownership Interest in the Treasury Portfolio and the
investment earnings from the investment in overnight Permitted Investments is in
excess of the aggregate Purchase Price of the Purchase Contracts being settled
thereby on the Purchase Contract Settlement Date, the Collateral Agent shall
distribute such excess, when received, to the Purchase Contract Agent for the
benefit of the Holders.
The Company shall not be obligated to issue any shares of Common Stock in
respect of the Purchase Contract(s) or deliver any certificate therefor to the
Holder unless it shall have received payment in full of the Purchase Price for
the shares of Common Stock to be purchased thereunder.
(c) Pursuant to the Remarketing Agreement, on or prior to the fifth
Business Day immediately preceding the Reset Date, but no earlier than the
15
Payment Date immediately preceding the Reset Date, holders of Separate
Debentures may elect to have their Separate Debentures remarketed by delivering
the Separate Debentures, together with a notice of such election, substantially
in the form of Exhibit C hereto, to the Custodial Agent. The Custodial Agent
will hold the Separate Debentures in an account separate from the Collateral
Account. A holder of Separate Debentures electing to have its Separate
Debentures 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 Reset
Date, upon which notice the Custodial Agent will return the Separate Debentures
to such holder. On the fourth Business Day immediately preceding the Reset Date,
the Custodial Agent will deliver to the Remarketing Agent for remarketing all
Separate Debentures delivered to the Custodial Agent pursuant to this
Section 4.6(c) and not withdrawn pursuant to the terms hereof prior to such
date. The portion of the proceeds from such remarketing equal to the aggregate
Value of the Separate Debentures will automatically be remitted by the
Remarketing Agent to the Custodial Agent for the benefit of the holders of the
Separate Debentures. In addition, after deducting as the Remarketing Fee an
amount not exceeding __ basis points (.__%) of the Value of the remarketed
Separate Debentures, from any amount of such proceeds in excess of the aggregate
Value of the remarketed Separate Debentures plus any accrued and unpaid interest
thereon, the Remarketing Agent will remit to the Custodial Agent the remaining
portion of the proceeds, if any, for the benefit of such holders. If, despite
using its reasonable efforts, the Remarketing Agent advises the Custodial Agent
in writing that it cannot remarket the related Separate Debentures of such
holders, together with the remarketed Pledged Debentures, at a price not less
than ___% of the aggregate Value of the Separate Debentures and the Pledged
Debentures plus accrued and unpaid interest or, if a condition to the
remarketing shall not have been fulfilled, thus in either case resulting in a
Failed Remarketing, the Remarketing Agent will promptly return the Separate
Debentures to the Custodial Agent for redelivery to such holders.
ARTICLE V
VOTING RIGHTS -- DEBENTURES
The Purchase Contract Agent may exercise, or refrain from exercising, any
and all voting and other consensual rights pertaining to the Pledged Debentures
or any part thereof for any purpose not inconsistent with the terms of this
Agreement and in accordance with the terms of the Purchase Contract Agreement;
provided, that the Purchase Contract Agent shall not exercise or, as the case
may be, shall not refrain from exercising such right if, in the judgment of the
Company evidenced in writing and delivered to the Purchase Contract Agent, such
action would impair or otherwise have a material adverse effect on the value of
all or any of the Pledged Debentures; and provided, further, that the Purchase
Contract Agent shall give the Company and the Collateral Agent at least five
days' prior written notice of the manner in which it intends to exercise, or its
reasons for refraining from exercising, any such right. Upon receipt of any
notices and other communications in respect of any Pledged Debentures, including
notice of any meeting at which holders of Debentures are entitled to vote or
solicitation of consents, waivers or proxies of holders of Debentures, the
Collateral Agent shall use reasonable efforts to send promptly to the Purchase
Contract Agent such notice or communication, and as soon as reasonably
practicable after receipt of a written request therefor from the Purchase
Contract Agent, execute and deliver to the Purchase Contract Agent such proxies
16
and other instruments in respect of such Pledged Debentures (in form and
substance satisfactory to the Collateral Agent) as are prepared by the Purchase
Contract Agent with respect to the Pledged Debentures.
ARTICLE VI
RIGHTS AND REMEDIES; DISTRIBUTION OF THE DEBENTURES;
TAX EVENT REDEMPTION; REMARKETING
SECTION 6.1 RIGHTS AND REMEDIES OF THE COLLATERAL AGENT
(a) In addition to the rights and remedies specified in Section 4.4
hereof or otherwise available at law or in equity, after an event of default
hereunder, the Collateral Agent shall have all of the rights and remedies with
respect to the Collateral of a secured party under the Uniform Commercial Code
(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 Debentures or
other Collateral in full satisfaction of the Holders' obligations under the
Purchase Contracts or (ii) sale of the Pledged Debentures or other Collateral in
one or more public or private sales and application of the proceeds in full
satisfaction of the Holders' obligations under the Purchase Contracts.
(b) Without limiting any rights or powers otherwise granted by this
Agreement to the Collateral Agent, in the event the Collateral Agent is unable
to make payments to the Company on account of the appropriate Pledged Applicable
Ownership Interest (as specified in clauses (1) or (2) of the definition of the
term "Applicable Ownership Interest") of the Treasury Portfolio or on account of
principal payments of any Pledged Treasury Securities as provided in Article III
hereof in satisfaction of the obligations of the Holder of the New Securities of
which such Pledged Treasury Securities, or the appropriate Pledged Applicable
Ownership Interest (as specified in clauses (1) or (2) of the definition of the
term "Applicable Ownership Interest") of the Treasury Portfolio, as applicable,
is a part under the related Purchase Contracts, the inability to make such
payments shall constitute a default hereunder and the Collateral Agent shall
have and may exercise, with reference to such Pledged Treasury Securities, or
such appropriate Pledged Applicable Ownership Interest (as specified in clauses
(1) or (2) of the definition of the term "Applicable Ownership Interest") of the
Treasury Portfolio, as applicable, and such obligations of such Holder, any and
all of the rights and remedies available to a secured party under the Code and
the TRADES Regulations after default by a debtor, and as otherwise granted
herein or under any other law.
(c) Without limiting any rights or powers otherwise granted by this
Agreement to the Collateral Agent, the Collateral Agent is hereby irrevocably
authorized to receive and collect all payments of (i) principal of, or interest
on, the Pledged Debentures, (ii) the principal amount of the Pledged Treasury
Securities, or (iii) the appropriate Pledged Applicable Ownership Interest in
17
the Treasury Portfolio, subject, in each case, to the provisions of Article III,
and as otherwise provided herein.
(d) The Purchase Contract Agent individually and as attorney-in-fact
for each Holder of New Securities, in the event such Holder becomes the Holder
of Corporate Units or Treasury Units, agrees that, from time to time, upon the
written request of the Collateral Agent, the Purchase Contract Agent or such
Holder it shall execute and deliver such further documents and do such other
acts and things as the Collateral Agent may reasonably request in order to
maintain the Pledge, and the perfection and priority thereof, and to confirm the
rights of the Collateral Agent hereunder. The Purchase Contract Agent shall have
no liability to any Holder for executing any documents or taking any such acts
requested by the Collateral Agent hereunder, except for liability for its own
negligent act, its own negligent failure to act or its own willful misconduct.
SECTION 6.2 TAX EVENT REDEMPTION; REMARKETING
(a) Upon the occurrence of a Tax Event Redemption prior to the
Purchase Contract Settlement Date, the Collateral Agent will, upon the written
instruction of the Company and the Purchase Contract Agent, deliver the Pledged
Debentures to the Indenture Trustee for payment of the Redemption Price. The
Collateral Agent shall, or in the event the Pledged Debentures are registered in
the name of the Purchase Contract Agent, the Purchase Contract Agent shall,
direct the Indenture Trustee to pay the Redemption Price therefor payable on the
Tax Event Redemption Date, as the case may be, on or prior to 12:30 p.m., New
York City time, by check or wire transfer in immediately available funds at such
place and to such account as may be designated by the Collateral Agent. In the
event the Collateral Agent receives such Redemption Price, subject to the
provisions of Section 4.3, the Collateral Agent will, at the written direction
of the Company, apply an amount equal to the Redemption Amount of such
Redemption Price to purchase from the Quotation Agent, the Treasury Portfolio
and promptly remit the remaining portion of such Redemption Price to the
Purchase Contract Agent for payment to the Holders of Corporate Units. The
Collateral Agent shall Transfer the Treasury Portfolio to the Collateral Account
to secure the obligation of all Holders of Corporate Units to purchase Common
Stock of the Company under the Purchase Contracts constituting a part of such
Corporate Units, in substitution for the Pledged Debentures. 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
Debentures, as provided in Articles II, III, IV, V and VI, and any reference
herein to the Pledged Debentures shall be deemed to be a reference to the
Treasury Portfolio.
(b) Upon the successful remarketing of the Debentures on the third
Business Day immediately preceding __________, 200_, the proceeds of such
remarketing (after deducting any Remarketing Fee) shall be delivered to the
Collateral Agent in exchange for the Pledged Debentures. Pursuant to the terms
of this Agreement, the Collateral Agent will apply an amount equal to the
Treasury Portfolio Purchase Price to purchase on behalf of the Holders of
Corporate Units the Treasury Portfolio and promptly remit the remaining portion
of such proceeds to the Purchase Contract Agent for payment to the Holders of
such Corporate Units. The Treasury Portfolio will be substituted for the
outstanding Pledged Debentures, and will be held by the Collateral Agent in
accordance with the terms of this Agreement to secure the obligation of each
Holder of a Corporate Unit to purchase the Common Stock of the Company on the
18
Purchase Contract Settlement Date under the Purchase Contract constituting a
part of such Corporate Unit. Following the successful remarketing of the
Debentures on the third Business Day immediately preceding __________, 200_, the
Holders of Corporate Units and the Collateral Agent shall have such security
interests, rights and obligations with respect to the Treasury Portfolio as the
Holder of Corporate Units and the Collateral Agent had in respect of the Pledged
Debentures subject to the Pledge thereof as provided in Articles II, III, IV, V
and VI of this Agreement, and any reference herein to the Pledged Debentures
shall be deemed to be reference to the Treasury Portfolio.
SECTION 6.3 INITIAL REMARKETING
The Collateral Agent shall, by 10:00 a.m., New York City time, on the
fourth Business Day immediately preceding __________, 200_, without any
instruction from any Holder of Corporate Units, present the related Pledged
Debentures to the Remarketing Agent for remarketing. Upon receiving such Pledged
Debentures, the Remarketing Agent, pursuant to the terms of the Remarketing
Agreement and the Supplemental Remarketing Agreement, will use its reasonable
efforts to remarket such Pledged Debentures on such date at a price of
approximately ____% (but not less than ___%) of the Treasury Portfolio Purchase
Price, plus accrued and unpaid interest, if any, thereon. After deducting as the
Remarketing Fee an amount not exceeding __ basis points (.__%) of the Treasury
Portfolio Purchase Price from any amount of such Proceeds in excess of the
Treasury Portfolio Purchase Price, the Remarketing Agent will remit the entire
amount of the Proceeds of such remarketing to the Collateral Agent on or prior
to 12:00 p.m., New York City time on __________, 200_. In the event the
Collateral Agent receives such Proceeds, the Collateral Agent will, at the
written direction of the Company, apply an amount equal to the Treasury
Portfolio Purchase Price to purchase from the Quotation Agent the Treasury
Portfolio and remit the remaining portion of such Proceeds, if any, to the
Purchase Contract Agent for payment to the Holders of Corporate Units. The
Collateral Agent shall Transfer the Treasury Portfolio to the Collateral Account
to secure the obligation of all Holders of Corporate Units to purchase Common
Stock of the Company under the Purchase Contracts constituting a part of such
Corporate Units, in substitution for the Pledged Debentures. 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 Debentures
as provided in Articles II, III, IV, V and VI, and any reference herein to the
Pledged Debentures shall be deemed to be a reference to such Treasury Portfolio,
and any reference herein to interest on the Pledged Debentures shall be deemed
to be a reference to distributions on such Treasury Portfolio.
SECTION 6.4 SUBSTITUTIONS
Whenever a Holder has the right to substitute Treasury Securities,
Debentures 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.
19
ARTICLE VII
REPRESENTATIONS AND WARRANTIES; COVENANTS
SECTION 7.1 REPRESENTATIONS AND WARRANTIES
The Holders from time to time, acting through the Purchase Contract Agent
as their attorney-in-fact (it being understood that the Purchase Contract Agent
shall not be liable for any representation or warranty made by or on behalf of a
Holder), hereby represent and warrant to the Collateral Agent, which
representations and warranties shall be deemed repeated on each day a Holder
Transfers Collateral that:
(a) such Holder has the power to grant a security interest
in and lien on the Collateral;
(b) such Holder is the sole beneficial owner of the Collateral
and, in the case of Collateral delivered in physical form,
is the sole holder of such Collateral and is the sole
beneficial owner of, or has the right to Transfer, the
Collateral it Transfers to the Collateral Agent, free and
clear of any security interest, lien, encumbrance, call,
liability to pay money or other restriction other than the
security interest and lien granted under Article II hereof;
(c) upon the Transfer of the Collateral to the Collateral
Account or physical delivery of the Debentures to the
Collateral Agent, 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 Article II hereof or violate any provision of
any existing law or regulation applicable to it or of any
mortgage, charge, pledge, indenture, contract or undertaking
20
to which it is a party or which is binding on it or any of
its assets.
SECTION 7.2 COVENANTS
The Holders from time to time, acting through the Purchase Contract Agent
as their attorney-in-fact (it being understood that the Purchase Contract Agent
shall not be liable for any covenant made by or on behalf of a Holder), hereby
covenant to the Collateral Agent that for so long as the Collateral remains
subject to the Pledge:
(a) neither the Purchase Contract Agent nor such Holders will
create or purport to create or allow to subsist any
mortgage, charge, lien, pledge or any other security
interest whatsoever over the Collateral or any part of it
other than pursuant to this Agreement; and
(b) neither the Purchase Contract Agent nor such Holders will
sell or otherwise dispose (or attempt to dispose) of the
Collateral or any part of it except for the beneficial
interest therein, subject to the pledge hereunder,
transferred in connection with the Transfer of the New
Securities.
ARTICLE VIII
THE COLLATERAL AGENT
It is hereby agreed as follows:
SECTION 8.1 APPOINTMENT, POWERS AND IMMUNITIES
The Collateral Agent shall act as agent for the Company hereunder with such
powers as are specifically vested in the Collateral Agent by the terms of this
Agreement, together with such other powers as are reasonably incidental thereto.
Each of the Collateral Agent, the Custodial Agent and the Securities
Intermediary: (a) shall have no duties or responsibilities except those
expressly set forth or incorporated 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 or incorporated terms hereof; (b) shall not be
responsible for any recitals contained in this Agreement, or in any certificate
or other document referred to or provided for in, or received by it under, this
Agreement, the New Securities or the Purchase Contract Agreement (except as
specifically incorporated by reference herein), 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), the New Securities or the Purchase Contract Agreement
or any other document referred to or provided for herein (except as specifically
incorporated by reference herein) or therein or for any failure by the Company
or any other Person (except the Collateral Agent, the Custodial Agent or the
21
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, maintenance of any security interest created hereunder;
(c) shall not be required to initiate or conduct any litigation or collection
proceedings hereunder (except in the case of the Collateral Agent, pursuant to
directions furnished under Section 8.2 hereof, subject to Section 8.6 hereof);
(d) shall not be responsible for any action taken or omitted to be taken by it
hereunder or under any other document or instrument referred to or provided for
herein or in connection herewith or therewith, except for its own negligence or
willful misconduct; and (e) shall not be required to advise any party as to
selling or retaining, or taking or refraining from taking any action with
respect to, the New Securities or other property deposited hereunder in
accordance with the terms hereof. Subject to the foregoing, during the term of
this Agreement, the Collateral Agent shall take all reasonable action in
connection with the safekeeping and preservation of the Collateral hereunder.
No provision of this Agreement shall require the Collateral Agent, 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. Notwithstanding the foregoing, the Collateral Agent, the
Custodial Agent and Securities Intermediary, each in its individual capacity,
hereby waive any right of setoff, bankers lien, liens or perfection rights as
Securities Intermediary or any counterclaim with respect to any of the
Collateral.
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 be
adequately indemnified as provided herein. Nothing in this Section 8.2 shall
impair the right of the Collateral Agent in its discretion to take any action or
omit to take any action which it deems proper and which is not inconsistent with
such direction. The Company shall promptly confirm in writing any oral
instructions furnished to the Collateral Agent by the Company.
SECTION 8.3 RELIANCE
Each of the Securities Intermediary, the Custodial Agent and the Collateral
Agent shall be entitled conclusively to rely upon any certification, order,
judgment, opinion, notice or other communication (including, without limitation,
any thereof by telephone, telecopy, telex or facsimile) believed by it to be
genuine and correct and to have been signed or sent by or on behalf of the
proper Person or Persons (without being required to determine the correctness of
any fact stated therein), and upon advice and statements of legal counsel and
other experts selected by the Collateral Agent, 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
22
in refraining from acting, hereunder in accordance with instructions given by
the Company in accordance with this Agreement.
SECTION 8.4 RIGHTS IN OTHER CAPACITIES
The Collateral Agent, the Custodial Agent and the Securities Intermediary
and their affiliates may (without having to account therefor to the Company)
accept deposits from, lend money to, make their investments in and generally
engage in any kind of banking, trust or other business with the Purchase
Contract Agent and any Holder of New Securities (and any of their respective
subsidiaries or affiliates) as if it were not acting as the Collateral Agent,
the Custodial Agent or the Securities Intermediary, as the case may be, and the
Collateral Agent, the Custodial Agent and the Securities Intermediary and their
affiliates may accept fees and other consideration from the Purchase Contract
Agent and any Holder of New Securities without having to account for the same to
the Company; provided that each of the Securities Intermediary, the Custodial
Agent and the Collateral Agent covenants and agrees with the Company that it
shall not accept, receive or permit there to be created in favor of itself and
shall take no affirmative action to permit there to be created in favor of any
other Person, any security interest, lien or other encumbrance of any kind in or
upon the Collateral.
SECTION 8.5 NON-RELIANCE
None of the Securities Intermediary, the Custodial Agent or the Collateral
Agent shall be required to keep itself informed as to the performance or
observance by the Purchase Contract Agent or any Holder of New Securities of
this Agreement, the Purchase Contract Agreement, the New Securities or any other
document referred to or provided for herein or therein or to inspect the
properties or books of the Purchase Contract Agent or any Holder of New
Securities. The Collateral Agent, the Custodial Agent and the Securities
Intermediary shall not have any duty or responsibility to provide the Company
with any credit or other information concerning the affairs, financial condition
or business of the Purchase Contract Agent or any Holder of New Securities (or
any of their respective 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: (i) to pay each of the Collateral Agent and the
Custodial Agent from time to time such compensation as shall be agreed in
writing between the Company and the Collateral Agent or the Custodial Agent, as
the case may be, for all services rendered by each of them hereunder and (ii) to
indemnify the Collateral Agent, the Custodial Agent and the Securities
Intermediary for, and to hold each of them harmless from and against, any loss,
liability or reasonable out-of-pocket expense incurred without negligence,
willful misconduct or bad faith on its part, arising out of or in connection
with the acceptance or administration of its powers and duties under this
Agreement, including the reasonable out-of-pocket costs and expenses (including
reasonable fees and expenses of counsel) of defending itself against any claim
or liability in connection with the exercise or performance of such powers and
duties. 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 indemnity hereunder and give the Company the opportunity
to participate in the defense of such claim with counsel reasonably satisfactory
23
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.
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 and the Custodial Agent shall be entitled, after prompt notice
to the Company and the Purchase Contract Agent, at its sole option, to refuse to
comply with any and all claims, demands or instructions with respect to such
property or funds so long as such dispute or conflict shall continue, and
neither the Collateral Agent nor the Custodial Agent 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 and
the Custodial Agent shall be entitled to refuse to act until either (i) such
conflicting or adverse claims or demands shall have been finally determined by a
court of competent jurisdiction or settled by agreement between the conflicting
parties as evidenced in a writing, satisfactory to the Collateral Agent or the
Custodial Agent, as the case may be, or (ii) the Collateral Agent or the
Custodial Agent, as the case may be, shall have received security or an
indemnity satisfactory to the Collateral Agent or the Custodial Agent, as the
case may be, sufficient to save the Collateral Agent or the Custodial Agent, as
the case may be, harmless from and against any and all loss, liability or
reasonable out-of-pocket expense which the Collateral Agent or the Custodial
Agent, as the case may be, may without negligence, willful misconduct, or bad
faith on its part incur by reason of its acting. The Collateral Agent or the
Custodial Agent may in addition elect to commence an interpleader action or seek
other judicial relief or orders as the Collateral Agent or the Custodial Agent,
as the case may be, may deem necessary. Notwithstanding anything contained
herein to the contrary, neither the Collateral Agent nor the Custodial Agent
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 OF COLLATERAL AGENT
Subject to the appointment and acceptance of a successor Collateral Agent
or Custodial Agent as provided below, (a) the Collateral Agent and the Custodial
Agent may resign at any time by giving notice thereof to the Company and the
Purchase Contract Agent as attorney-in-fact for the Holders of New Securities,
(b) the Collateral Agent and the Custodial Agent may be removed at any time by
the Company and (c) if the Collateral Agent or the Custodial Agent fails to
perform any of its material obligations hereunder in any material respect for a
period of not less than 20 days after receiving written notice of such failure
by the Purchase Contract Agent and such failure shall be continuing, the
Collateral Agent or the Custodial Agent may be removed by the Purchase Contract
Agent. The Purchase Contract Agent shall promptly notify the Company of any
removal of the Collateral Agent pursuant to clause (c) of the immediately
preceding sentence. Upon any such resignation or removal, the Company shall have
the right to appoint a successor Collateral Agent or Custodial Agent, as the
case may be. If no successor Collateral Agent or Custodial Agent, 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 or Custodial Agent's giving
of notice of resignation or such removal, then the retiring Collateral Agent or
Custodial Agent, as the case may be, may petition any court of competent
24
jurisdiction for the appointment of a successor Collateral Agent or Custodial
Agent, as the case may be. Each of the Collateral Agent and the Custodial Agent
shall be a bank which has an office in New York, New York with a combined
capital and surplus of at least $75,000,000. Upon the acceptance of any
appointment as Collateral Agent or Custodial Agent, as the case may be,
hereunder by a successor Collateral Agent or Custodial Agent, 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 or
Custodial Agent, as the case may be, and the retiring Collateral Agent or
Custodial Agent, 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. The retiring Collateral Agent or Custodial Agent shall, upon
such succession, be discharged from its duties and obligations as Collateral
Agent or Custodial Agent hereunder. After any retiring Collateral Agent's or
Custodial Agent's resignation hereunder as Collateral Agent or Custodial Agent,
the provisions of this Article VIII 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 or Custodial Agent. 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.
SECTION 8.9 RIGHT TO APPOINT AGENT OR ADVISOR
The Collateral Agent shall have the right to appoint agents or advisors in
connection with any of its duties hereunder, and the Collateral Agent shall not
be liable for any action taken or omitted by, or in reliance upon the advice of,
such agents or advisors selected in good faith. The appointment of agents
pursuant to this Section 8.9 shall be subject to prior consent of the Company,
which consent shall not be unreasonably withheld.
SECTION 8.10 SURVIVAL
The provisions of this Article VIII shall survive termination of this
Agreement and the resignation or removal of the Collateral Agent or the
Custodial Agent.
SECTION 8.11 EXCULPATION
Anything in this Agreement to the contrary notwithstanding, in no event
shall any of the Collateral Agent, the Custodial Agent or the Securities
Intermediary or their officers, employees or agents be liable under this
Agreement to any third party for indirect, special, punitive, or consequential
loss or damage of any kind whatsoever, including lost profits, whether or not
the likelihood of such loss or damage was known to the Collateral Agent, the
Custodial Agent or the Securities Intermediary, or any of them, incurred without
any act or deed that is found to be attributable to negligence or willful
misconduct on the part of the Collateral Agent, the Custodial Agent or the
Securities Intermediary.
25
ARTICLE IX
AMENDMENT
SECTION 9.1 AMENDMENT WITHOUT CONSENT OF HOLDERS
Without the consent of any Holders or the holders of any Separate
Debentures, the Company, the Collateral Agent, the Custodial Agent, the
Securities Intermediary and the Purchase Contract Agent, at any time and from
time to time, may amend this Agreement, in form satisfactory to the Company, the
Collateral Agent, the Custodial Agent, the Securities Intermediary and the
Purchase Contract Agent, for any of the following purposes:
(a) to evidence the succession of another Person to the
Company, and the assumption by any such successor of
the covenants of the Company; or
(b) to add to the covenants of the Company for the benefit
of the Holders, or to surrender any right or power
herein conferred upon the Company so long as such
covenants or such surrender do not adversely affect the
validity, perfection or priority of the security
interests granted or created hereunder; or
(c) to evidence and provide for the acceptance of
appointment hereunder by a successor Collateral Agent,
Custodial Agent, Securities Intermediary or Purchase
Contract Agent; or
(d) to cure any ambiguity, to correct or supplement any
provisions herein which may be inconsistent with any
other such provisions herein, or to make any other
provisions with respect to such matters or questions
arising under this Agreement, provided such action
shall not adversely affect the interests of the
Holders.
SECTION 9.2 AMENDMENT WITH CONSENT OF HOLDERS
With the consent of the Holders of not less than a majority of the Purchase
Contracts at the time outstanding, by Act of said Holders delivered to the
Company, the Purchase Contract Agent or the Collateral Agent, as the case may
be, the Company, the Purchase Contract Agent, the Collateral Agent, the
Custodial Agent and the Securities Intermediary may amend this Agreement for the
purpose of modifying in any manner the provisions of this Agreement or the
rights of the Holders in respect of the New Securities; provided, however, that
no such supplemental agreement shall, without the consent of the Holder of each
Outstanding New Security adversely affected thereby,
26
(a) change the amount or type of Collateral underlying a
New Security (except for the rights of holders of
Corporate Units to substitute the Treasury Securities
for the Pledged Debentures or the appropriate Pledged
Applicable Ownership Interest in the Treasury
Portfolio, as the case may be, or the rights of Holders
of Treasury Units to substitute Debentures 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 New Security to receive distributions on the
underlying Collateral or otherwise adversely affect the
Holder's rights in or to such Collateral; or
(b) otherwise effect any action that would require the
consent of the Holder of each Outstanding New Security
affected thereby pursuant to the Purchase Contract
Agreement if such action were effected by an agreement
supplemental thereto; or
(c) reduce the percentage of Purchase Contracts the consent
of whose Holders is required for any such amendment.
It shall not be necessary for any Act of Holders under this Section to approve
the particular form of any proposed amendment, but it shall be sufficient if
such Act shall approve the substance thereof.
SECTION 9.3 EXECUTION OF AMENDMENTS
In executing any amendment permitted by this Section, the Collateral Agent,
the Custodial Agent, the Securities Intermediary and the Purchase Contract Agent
shall be entitled to receive and (subject to Section 6.1 hereof, with respect to
the Collateral Agent, and Section 7.1 of the Purchase Contract Agreement, with
respect to the Purchase Contract Agent) shall be fully protected in relying
upon, an Opinion of Counsel stating that the execution of such amendment is
authorized or permitted by this Agreement and that all conditions precedent, if
any, to the execution and delivery of such amendment have been satisfied.
SECTION 9.4 EFFECT OF AMENDMENTS
Upon the execution of any amendment under this 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 New Securities
theretofore or thereafter authenticated, executed on behalf of the Holders and
delivered under the Purchase Contract Agreement shall be bound thereby.
27
SECTION 9.5 REFERENCE TO AMENDMENTS
Security Certificates authenticated, executed on behalf of the Holders and
delivered after the execution of any amendment pursuant to this Article IX may,
and shall if required by the Collateral Agent or the Purchase Contract Agent,
bear a notation in form approved by the Purchase Contract Agent and the
Collateral Agent as to any matter provided for in such amendment. If the Company
shall so determine, new Security Certificates so modified as to conform, in the
opinion of the Collateral Agent, the Purchase Contract Agent and the Company, to
any such amendment may be prepared and executed by the Company and
authenticated, executed on behalf of the Holders and delivered by the Purchase
Contract Agent in accordance with the Purchase Contract Agreement in exchange
for Outstanding New Security Certificates.
ARTICLE X
MISCELLANEOUS
SECTION 10.1 NO WAIVER
No failure on the part of the Collateral Agent or any of its agents to
exercise, and no course of dealing with respect to, and no delay in exercising,
any right, power or remedy hereunder shall operate as a waiver thereof; nor
shall any single or partial exercise by the Collateral Agent or any of its
agents of any right, power or remedy hereunder preclude any other or further
exercise thereof or the exercise of any other right, power or remedy. The
remedies herein are cumulative and are not exclusive of any remedies provided by
law.
SECTION 10.2 GOVERNING LAW
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES
THEREUNDER, EXCEPT TO THE EXTENT THAT THE LAWS OF ANY OTHER JURISDICTION SHALL
BE MANDATORILY APPLICABLE. Without limiting the foregoing, the above choice of
law is expressly agreed to by the Company, the Securities Intermediary, the
Custodial Agent, the Collateral Agent and the Holders from time to time acting
through the Purchase Contract Agent, as their attorney-in-fact, in connection
with the establishment and maintenance of the Collateral Account. The Company,
the Collateral Agent and the Holders from time to time of the New Securities,
acting through the Purchase Contract Agent as their attorney-in-fact, hereby
submit to the nonexclusive jurisdiction of the United States District Court for
the Southern District of New York and of any New York state court sitting in New
York City for the purposes of all legal proceedings arising out of or relating
to this Agreement or the transactions contemplated hereby. The Company, the
Collateral Agent and the Holders from time to time of the New Securities, acting
through the Purchase Contract Agent as their attorney-in-fact, irrevocably
waive, to the fullest extent permitted by applicable law, any objection which
they may now or hereafter have to the laying of the venue of any such proceeding
brought in such a court and any claim that any such proceeding brought in such a
court has been brought in an inconvenient forum.
28
SECTION 10.3 NOTICES
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
in the case of Holders, may be made and deemed given as provided in Sections 1.5
and 1.6 of the Purchase Contract Agreement) or, as to any party, at such other
address as shall be designated by such party in a notice to the other parties.
Except as otherwise provided in this Agreement, all such communications shall be
deemed to have been duly given when transmitted by telecopier or personally
delivered or, in the case of a mailed notice, upon receipt, in each case given
or addressed as aforesaid (except as aforesaid).
SECTION 10.4 SUCCESSORS AND ASSIGNS
This Agreement shall be binding upon and inure to the benefit of the
respective successors and assigns of the Company, the Collateral Agent, the
Custodial Agent, the Securities Intermediary and the Purchase Contract Agent,
and the Holders from time to time of the New Securities, by their acceptance of
the same, shall be deemed to have agreed to be bound by the provisions hereof
and to have ratified the agreements of, and the grant of the Pledge hereunder
by, the Purchase Contract Agent.
SECTION 10.5 COUNTERPARTS
This Agreement may be executed in any number of counterparts, all of which
taken together shall constitute one and the same instrument, and any of the
parties hereto may execute this Agreement by signing any such counterpart.
SECTION 10.6 SEVERABILITY
If any provision hereof is invalid and unenforceable in any jurisdiction,
then, to the fullest extent permitted by law, (i) the other provisions hereof
shall remain in full force and effect in such jurisdiction and shall be
liberally construed in order to carry out the intentions of the parties hereto
as nearly as may be possible and (ii) the invalidity or unenforceability of any
provision hereof in any jurisdiction shall not affect the validity or
enforceability of such provision in any other jurisdiction.
SECTION 10.7 EXPENSES, ETC.
The Company agrees to reimburse the Collateral Agent and the Custodial
Agent for: (a) all reasonable out-of-pocket costs and expenses of the Collateral
Agent and the Custodial Agent (including, without limitation, the reasonable
fees and expenses of the necessary services of a Securities Intermediary and of
counsel to the Collateral Agent and the Custodial Agent), 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 New Securities to satisfy its obligations
29
under the Purchase Contracts forming a part of the New Securities and (ii) the
enforcement of this Section 10.7; and (c) all transfer, stamp, documentary or
other similar taxes, assessments or charges levied by any governmental or
revenue authority in respect of this Agreement or any other document referred to
herein and all costs, expenses, taxes, assessments and other charges incurred in
connection with any filing, registration, recording or perfection of any
security interest contemplated hereby.
SECTION 10.8 SECURITY INTEREST ABSOLUTE
All rights of the Collateral Agent and security interests hereunder, and
all obligations of the Holders from time to time hereunder, shall be absolute
and unconditional irrespective of:
(a) any lack of validity or enforceability of any provision of the
Purchase Contracts or the New Securities or any other agreement or
instrument relating thereto;
(b) any change in the time, manner or place of payment of, or any
other term of, or any increase in the amount of, all or any of the
obligations of Holders of New Securities under the related Purchase
Contracts, or any other amendment or waiver of any term of, or any consent
to any departure from any requirement of, the Purchase Contract Agreement
or any Purchase Contract or any other agreement or instrument relating
thereto; or
(c) any other circumstance which might otherwise constitute a defense
available to, or discharge of, a borrower, a guarantor or a pledgor.
30
IN WITNESS WHEREOF, the parties hereto have caused this Pledge Agreement to
be duly executed as of the day and year first above written.
FPL GROUP, INC.
By:
----------------------------------
Name:
Title:
Address for Notices:
FPL Group, Inc.
000 Xxxxxxxx Xxxxxxxxx
Xxxx Xxxxx, Xxxxxxx 00000
Attention: Treasurer
Telecopy:
THE BANK OF NEW YORK, as
Purchase Contract Agent and
as attorney-in-fact of the
Holders from time to time
of the New Securities
By:
----------------------------------
Name:
Title:
Address for Notices:
The Bank of New York
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Corporate Trust Department
Telecopy:
------------------------------
as Collateral Agent, Custodial
Agent and as Securities Intermediary
By:
----------------------------------
Name:
Title:
Address for Notices:
------------------------------
------------------------------
------------------------------
Attention:
--------------------
Telecopy:
--------------------
EXHIBIT A
INSTRUCTION FROM PURCHASE CONTRACT AGENT TO COLLATERAL AGENT
, as Collateral Agent
------------------
------------------
------------------
------------------
Attention:
----------------
Re: Securities of FPL Group, Inc. (the "Company")
We hereby notify you in accordance with Section [4.1] [4.2] of the Pledge
Agreement, dated as of __________, 200_ (the "Pledge Agreement"), among the
Company, yourselves, as Collateral Agent, Custodial Agent and Securities
Intermediary and ourselves, as Purchase Contract Agent and as attorney-in-fact
for the Holders of [Corporate Units] [Treasury Units] from time to time, that
the Holder of securities listed below (the "Holder") has elected to substitute
$____ [principal amount at maturity of Treasury Securities] [principal amount of
Debentures] [the appropriate Applicable Ownership Interest in the Treasury
Portfolio] in exchange for an equal Value of [Pledged Debentures] [the
appropriate Pledged Applicable Ownership Interest in the Treasury Portfolio]
[Pledged Treasury Securities] held by you in accordance with the Pledge
Agreement and has delivered to us a notice stating that the Holder has
Transferred [Debentures] [the appropriate Applicable Ownership Interest in the
Treasury Portfolio] [Treasury Securities] to you, as Collateral Agent. We hereby
instruct you, upon receipt of such [Treasury Securities] [Debentures]
[appropriate Applicable Ownership Interest in the Treasury Portfolio] so
Transferred, to release the [Pledged Debentures] [appropriate Pledged Applicable
Ownership Interest in the Treasury Portfolio] [Pledged Treasury Securities]
related to such [Corporate Units] [Treasury Units] to us in accordance with the
Holder's instructions. Capitalized terms used herein but not defined shall have
the meaning set forth or incorporated by reference in the Pledge Agreement.
Date:
---------------------------- ---------------------------------------
By:
------------------------------------
Name:
Title:
Signature Guarantee:
--------------
A-1
Please print name and address of registered Holder electing to substitute
[Treasury Securities] [Debentures or the appropriate Applicable Ownership
Interest in the Treasury Portfolio] for [Pledged Debentures or appropriate
Pledged Applicable Ownership Interest in the Treasury Portfolio] [Pledged
Treasury Securities]:
-------------------------------- ------------------------------
Name Social Security or other Taxpayer
Identification Number, if any
Address
--------------------------------
--------------------------------
--------------------------------
A-2
EXHIBIT B
INSTRUCTION TO PURCHASE CONTRACT AGENT
The Bank of New York
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Re: Securities of FPL Group, Inc. (the "Company")
The undersigned Holder hereby notifies you that it has delivered to
__________, as Collateral Agent, $____ [principal amount at maturity of Treasury
Securities] [principal amount of Debentures] [of the appropriate Applicable
Ownership Interest in the Treasury Portfolio] in exchange for an equal Value of
[Pledged Debentures 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 as of __________, 200_ (the "Pledge Agreement"), among you, the
Company and the Collateral Agent. The undersigned Holder hereby instructs you to
instruct the Collateral Agent to release to you on behalf of the undersigned
Holder the [Pledged Debentures or the appropriate Pledged Applicable Ownership
Interest in the Treasury Portfolio] [Pledged Treasury Securities] related to
such [Corporate Units] [Treasury Units]. Capitalized terms used herein but not
defined shall have the meaning set forth or incorporated by reference in the
Pledge Agreement.
Dated:
----------------------------- ---------------------------------------
Signature
Signature Guarantee:
-------------------
B-1
Please print name and address of Registered Holder:
----------------------------------- --------------------------------
Name Social Security or other Taxpayer
Identification Number, if any
Address
-----------------------------------
-----------------------------------
-----------------------------------
B-2
EXHIBIT C
INSTRUCTION TO CUSTODIAL AGENT REGARDING REMARKETING
__________, as Custodial Agent
----------------------
----------------------
Attention: _______________
Re: Securities of FPL Group Capital Inc (the "Company")
The undersigned hereby notifies you in accordance with Section 4.6(c) of
the Pledge Agreement, dated as of __________, 200_ (the "Pledge Agreement"),
among the Company, yourselves, as Collateral Agent, Securities Intermediary and
Custodial Agent, and The Bank of New York, as Purchase Contract Agent and as
attorney-in-fact for the Holders of Corporate Units and Treasury Units from time
to time, that the undersigned elects to deliver $________ principal amount of
Debentures for delivery to the Remarketing Agent on the Business Day immediately
preceding the [Initial Remarketing Date] [Secondary Remarketing Date] for
remarketing pursuant to Section 4.6(c) 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 Debentures
tendered hereby.
The undersigned hereby instructs you, upon receipt of the Proceeds of such
remarketing from the Remarketing Agent 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
Failed Remarketing, upon receipt of the Debentures tendered herewith from the
Remarketing Agent, to deliver such Debentures to the person(s) and the
address(es) indicated herein under "B. Delivery Instructions."
With this notice, the undersigned hereby (i) represents and warrants that
the undersigned has full power and authority to tender, sell, assign and
transfer the Debentures tendered hereby and that the undersigned is the record
owner of any Debentures tendered herewith in physical form or a participant in
The Depository Trust Company ("DTC") and the beneficial owner of any Debentures
tendered herewith by book-entry transfer to your account at DTC and (ii) agrees
to be bound by the terms and conditions of Section 4.6(c) of the Pledge
Agreement. Capitalized terms used herein but not defined shall have the meaning
set forth or incorporated by reference in the Pledge Agreement.
Date:
------------------------------ ---------------------------------------
By:
------------------------------------
Name:
Title:
Signature Guarantee:
--------------
C-1
Please print name and address:
---------------------------------- ---------------------------------------
Name Social Security or other Taxpayer
Identification Number, if any
Address
---------------------------------
---------------------------------
---------------------------------
A. PAYMENT INSTRUCTIONS B. DELIVERY INSTRUCTIONS
Proceeds of the remarketing should In the event of a Failed Remarketing,
be paid by check in the name of the Debentures which are in physical form
person(s) set forth below and should be delivered to the person(s)
mailed to the address set forth set forth below and mailed to the
below. address set forth below.
Name(s) Name(s)
--------------------------------- ---------------------------------------
(Please Print) (Please Print)
Address Address
--------------------------------- ---------------------------------------
----------------------------------- ---------------------------------------
(Please Print) (Please Print)
----------------------------------- ---------------------------------------
(Zip Code) (Zip Code)
---------------------------------- ---------------------------------------
(Tax Identification or Social (Tax Identification or Social
Security Number) Security Number)
In the event of a Failed Remarketing,
Debentures which are in book-entry
form should be credited to the account
at The Depositary Trust Company set
forth below.
----------------------
DTC Account Number
Name of Account
Party:
-------------------------------
C-2
EXHIBIT D
INSTRUCTION TO CUSTODIAL AGENT REGARDING
WITHDRAWAL FROM REMARKETING
__________, as Custodial Agent
--------------------
--------------------
Attention: Institutional Trust Services
Re: Securities of FPL Group Capital Inc (the "Company")
The undersigned hereby notifies you in accordance with Section 4.6(c) of
the Pledge Agreement, dated as of __________, 200_ (the "Pledge Agreement"),
among the Company, yourselves, as Collateral Agent, Securities Intermediary and
Custodial Agent and The Bank of New York, as Purchase Contract Agent and as
attorney-in-fact for the Holders of Corporate Units and Treasury Units from time
to time, that the undersigned elects to withdraw the $_____ principal amount of
Debentures delivered to the Custodial Agent on ____________ for remarketing
pursuant to Section 4.6(c) of the Pledge Agreement. The undersigned hereby
instructs you to return such Debentures 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 4.6(c) of the Pledge
Agreement. Capitalized terms used herein but not defined shall have the meaning
set forth or incorporated in the Pledge Agreement.
Date:
------------------------------ ---------------------------------------
By:
------------------------------------
Name:
Title:
Signature Guarantee:
----------------
D-1
Please print name and address:
------------------------------- ---------------------------------------
Name Social Security or other Taxpayer
Identification Number, if any
Address
-----------------------------
-----------------------------
-----------------------------
D-2
