Exhibit (k)(4)
FORM OF
COLLATERAL AGREEMENT
THIS COLLATERAL AGREEMENT (the "Agreement"), dated as of
December [ ], 2001, among [ ], a corporation organized under the laws of the
State of Delaware, (the "Pledgor"), The Bank of New York, a New York banking
corporation, as collateral agent (the "Collateral Agent") hereunder for the
benefit of Equity Securities Trust II, a statutory business trust organized
under the Business Trust Act of the State of Delaware (such trust and the
trustees thereof acting in their capacity as such being referred to herein as
the "Trust"), and the Trust;
W I T N E S S E T H:
WHEREAS, pursuant to the Forward Contract Agreement (the
"Forward Contract"), dated as of the date hereof, between Pledgor and the Trust,
the Pledgor has agreed to deliver and the Trust has agreed to acquire Rainbow
Media Group Class A common stock, or the cash value thereof, $.01 par value, of
Cablevision Systems Corporation, a Delaware corporation (the "Company"), subject
to the terms and conditions of the Forward Contract; and
NOW, THEREFORE, to secure the performance by the Pledgor of
its obligations under the Forward Contract and to secure the observance and
performance of the covenants and agreements contained herein and in the Forward
Contract, the parties hereto agree as follows:
1. The Security Interests.
In order to secure the observance and performance of the
covenants, agreements and obligations contained herein and in the Forward
Contract:
(a) Security Interests. The Pledgor hereby grants and pledges
unto the Collateral Agent, as agent of and for the benefit of the Trust, a
security interest in and to, and a lien upon and right of set-off against, all
of Pledgor's right, title and interest in and to (i) the Pledged Items described
in paragraphs (b), (c) and (d); (ii) all additions to and substitutions for such
Pledged Items; (iii) (subject to the remittance of certain payments upon
satisfaction of the conditions specified in Section 7(a) hereof) all income,
proceeds and collections received or to be received, or derived or to be
derived, now or any time hereafter from or in connection with the Pledged Items
(whether such proceeds arise before or after the commencement of any proceeding
under any applicable bankruptcy, insolvency or other similar law, by or against
the Pledgor with respect to the Pledgor); and (iv) all powers and rights now
owned or hereafter acquired under or with respect to the Pledged Items (such
Pledged Items, additions, substitutions, income, proceeds, collections, powers
and rights being herein collectively called the "Collateral"). The Collateral
Agent shall have all of the rights, remedies and recourses with respect to the
Collateral afforded a secured party by the New York Uniform Commercial Code, in
addition to, and not in limitation of, the other rights, remedies and recourses
afforded to the Collateral Agent by this Agreement.
(b) Firm Payment Date. At the Firm Payment Date, the Pledgor
shall deliver to the Collateral Agent in pledge hereunder one or more
certificates in registered form representing in the aggregate [ ] shares of
Common Stock, indorsed in blank or in the name
of the Collateral Agent for the benefit of the Trust (together with all
signature guarantees and other documents necessary to permit the Collateral
Agent to effect the re-registration of such Common Stock without further action
by the Pledgor) or, if such Common Stock is not issuable in certificated form
but is held in book entry form by The Depository Trust Company, the Pledgor
shall transfer such number of shares of Common Stock to an account of the
Collateral Agent or to an account (other than an account of the Pledgor)
designated by the Collateral Agent with The Depository Trust Company.
(c) Option Closing Date. Effective upon and subject to the
receipt by the Pledgor of the Additional Purchase Price, at the Option Closing
Date, the Pledgor shall deliver to the Collateral Agent in pledge hereunder one
or more certificates in registered form representing in the aggregate a number
of shares of Common Stock equal to the Additional Share Base Amount, indorsed in
blank or in the name of the Collateral Agent for the benefit of the Trust
(together with all signature guarantees and other documents necessary to permit
the Collateral Agent to effect the re-registration of such Common Stock without
further action by the Pledgor) or, if such Common Stock is not issuable in
certificated form but is held in book entry form by The Depository Trust
Company, the Pledgor shall transfer such number of shares of Common Stock to an
account of the Collateral Agent or to an account (other than an account of the
Pledgor) designated by the Collateral Agent with The Depository Trust Company.
(d) Extension of Exchange Date. [Prior to, or simultaneously
with Pledgor's election to extend the Exchange Date pursuant to Section 1.3(f)
of the Forward Contract] [If AT&T Broadband CSC Holdings, Inc. ("Holdings")
elects to extend the Exchange Date under the Forward Contract, dated as of the
date hereof by and between the Trust and Holdings (the "Holdings Forward
Contract")], the Pledgor shall deliver to the Collateral Agent in pledge
hereunder Additional Government Securities meeting the requirements of Section
1.3(f) of the[Holdings] Forward Contract.
(e) Reregistration. Immediately following the Firm Payment
Date and any Option Closing Date, the Collateral Agent shall cause all
certificates for Common Stock delivered pursuant to Section 1(b) or 1(c) above
to be re-registered on the books of the transfer agent for the Common Stock into
the name of the Collateral Agent or its nominee, and shall thereafter maintain
them in such form until the termination of this Collateral Agreement; provided,
however, that at any time following the Firm Payment Date and any Option Closing
Date, to the extent that the Depositary Trust Company will accept such Common
Stock, the Collateral Agent may cause any such certificates for the Common Stock
to be deposited with The Depositary Trust Company and thereafter hold such
certificates in book entry form in an account (other than an account of the
Pledgor) designated by the Collateral Agent.
2. Definitions.
Capitalized terms used and not otherwise defined herein shall
have the meanings ascribed to them in the Forward Contract. Capitalized terms
used herein shall have the meanings as follows:
"Additional Government Securities" means collateral that must
be pledged to the Collateral Agent in connection with [the Pledgor's]
[Holdings] election to extend the Exchange
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Date [under the Holdings Forward Contract] and, consisting of U.S. Government
Securities which through the scheduled payment of principal and interest in
accordance with their terms will provide, not later than one Business Day before
the extended Exchange Date, money in an amount not less than the Extension
Amount.
"Authorized Representative" of the Pledgor means any trustee,
officer or other representative as to whom Pledgor shall have delivered notice
to the Collateral Agent that such trustee or other representative is authorized
to act hereunder on behalf of Pledgor.
"Business Day" means any day except a Saturday, Sunday or
other day on which banking institutions in New York City are authorized or
obligated by law or regulation to close or a day on which the New York Stock
Exchange, Inc. is closed.
"Cash Delivery Obligations" means, at any time (A) if no
Adjustment Event shall have occurred prior to such time, zero, and (B) from and
after the occurrence of any Adjustment Event, (i) the Firm Share Base Amount
plus the Additional Share Base Amount (if any) multiplied by (ii) the
Transaction Value of any property other than Reported Securities received by the
Pledgor in such Adjustment Event, multiplied successively by each number by
which the Exchange Rate shall have been multiplied on or prior to the Adjustment
Event pursuant to the adjustments provided for under Section 6.1 of the Forward
Contract; provided, however, that upon the occurrence of an Adjustment Event in
connection with which holders of Common Stock receive consideration other than
Reported Securities with a Transaction Value of 25% or more of the Aggregate
Transaction Value for such Adjustment Event, then the Cash Delivery Obligations
shall be zero.
"Cash Equivalents" means (i) United States dollars, (ii)
securities issued or directly and fully guaranteed or insured by the United
States government or any agency or instrumentality thereof (provided that the
full faith and credit of the United States is pledged in support thereof) having
maturities of not more than six months from the date of acquisition, (iii)
certificates of deposit with maturities of six months or less from the date of
the acquisition, bankers' acceptances with maturities not exceeding six months
and overnight bank deposits, in each case with any domestic commercial bank
having capital and surplus in excess of $500 million and a Xxxxxxxx Bank Watch
Rating of "B" or better, (iv) repurchase obligations with a term of not more
than seven days for underlying securities of the types described in clause (ii)
above entered into with any financial institution meeting the qualifications
specified in clause (iii) above, (v) commercial paper having the highest rating
obtainable from Xxxxx'x Investors Service, Inc. or Standard & Poor's Ratings
Group and in each case maturing within six months after the date of acquisition
and (vi) money market funds at least 95% of the assets of which constitute Cash
equivalents of the kinds described in clauses (i)-(v) of this definition.
"Collateral" has the meaning specified in Section 1(a).
"Collateral Agent" means the financial institution identified
as such in the preliminary paragraph hereof, or any successor appointed in
accordance with Section 9.
"Collateral Agreement" means this Collateral Agreement and any
exhibits hereto.
"Collateral Event of Default" has the meaning specified in
Section 6(e).
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"Collateral Requirement" means, as of any date and with
respect to: (i) any Common Stock, 100%; (ii) any Reported Securities, 100%;
(iii) any U.S. Government Securities or Cash Equivalents pledged in respect of
Cash Delivery Obligations, 105%; (iv) any other U.S. Government Securities or
Cash Equivalents (other than Additional Government Securities), 150%, provided
that upon and after any failure to cure an Insufficiency Determination by 4:00
p.m. New York City time on the Business Day following telephonic notice of such
Insufficiency Determination as described in Section 6(e), which insufficiency
shall be continuing on such Business Day, the Collateral Requirement relating to
any U.S. Government Securities or Cash Equivalents (other than (i) Additional
Government Securities and (ii) U.S. Government Securities or Cash Equivalents
pledged in respect of Cash Delivery Obligations) shall be 200%; and (v) any
Additional Government Securities, 100%. The portion of any pledged U.S.
Government Securities or Cash Equivalents that shall be deemed at any time to be
in respect of Cash Delivery Obligations shall be as provided in Section 6(e).
"Common Stock" means the Rainbow Media Group Class A common
stock of Cablevision Systems Corporation, par value $.01 per share.
"Delivery Date" has the meaning specified in Section 8(a).
"Eligible Collateral" means (i) Common Stock, (ii) U.S.
Government Securities, (iii) Cash Equivalents, (iv) from and after [Pledgor's]
[Holdings'] election to extend the Exchange Date pursuant to Section 1.3(f) of
the [Holdings] Forward Contract, Additional Government Securities, and (v) from
and after any Adjustment Event, Reported Securities, provided, in each case,
that (A) the Pledgor has good and marketable title thereto, free of all Liens
(other than the Liens created by this Collateral Agreement) and Transfer
Restrictions except as contemplated by Section 3(e) and (B) the Collateral Agent
has a valid, first priority perfected security interest therein and first lien
thereon, and provided further that to the extent the number of shares of Common
Stock or Reported Securities pledged hereunder exceeds at any time the Maximum
Deliverable Number thereof, such excess shares shall not be Eligible Collateral.
"Event of Default" means the occurrence of: (i) an event
described in clause (a) or (b) of Article VII of the Forward Contract, (ii) a
Collateral Event of Default, (iii) a failure by Pledgor to have caused the
Collateral to meet the requirements described in Section 5(d), (iv) if an
Adjustment Event shall have occurred prior to the Exchange Date, failure by
Pledgor to cause to be delivered to the Trust on the Exchange Date the
consideration then required to be delivered pursuant to Section 6.2 of the
Forward Contract or (v) if [Pledgor] [Holdings] shall have exercised [its] [the]
Cash Delivery Option, a failure by the Pledgor to deliver cash on the Exchange
Date in the amount required under Section 1.3(d) of the [Holdings] Forward
Contract.
"Ineligible Collateral" means Collateral that does not
constitute "Eligible Collateral".
"Insufficiency Determination" has the meaning specified in
Section 6(e).
"Lien" means any lien, mortgage, security interest, pledge,
charge or encumbrance of any kind.
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"Market Value" means, as of any date: (a) with respect to any
Common Stock (except as otherwise provided in Section 6(e)(2)), the Closing
Price of the Common Stock on such date; (b) with respect to any U.S. Government
Security, (x)(i) the average unit bid price for such security on the Trading Day
prior to such date as published in the New York edition of The Wall Street
Journal or The New York Times or, if not so published, (ii) the lower bid price
quoted (which quotation shall be evidenced in writing) on such date (or if such
date is not a Trading Day, on the preceding Trading Day) by either of two
nationally recognized dealers making a market in such security which are members
of the National Association of Securities Dealers, Inc. multiplied by (y) the
number of such units comprised in the outstanding principal amount of such U.S.
Government Security; (c) with respect to any unit of Reported Securities, the
Closing Price thereof on such date; provided that the "Market Value" of any
Ineligible Collateral shall be zero; and (d) with respect to any Cash
Equivalent, the face value of such instrument.
"Maximum Deliverable Number" means, on any date, with respect
to the Common Stock, the product of the Firm Share Base Amount plus the
Additional Share Base Amount (if any), multiplied successively by each number by
Which the Exchange Rate shall have been multiplied on or prior to such date
pursuant to the adjustments provided for under Article VI of the Forward
Contract. The Maximum Deliverable Number of Reported Securities means, on any
date, (i) the Firm Share Base Amount plus the Additional Share Base Amount (if
any) multiplied by (ii) the number of Reported Securities received by the
Pledgor in the Adjustment Event for each share of Common Stock, multiplied
successively by each number by which the Exchange Rate shall have been
multiplied on or prior to such date and after the date of such Adjustment Event
pursuant to the adjustments provided for under Article VI of the Forward
Contract.
"Person" means an individual, a corporation, a partnership, an
association, a limited liability company, a trust or any other entity or
organization, including a government or political subdivision or an agency or
instrumentality thereof.
"Pledge Value" means, as of any date and with respect to any
particular type of Collateral, an amount equal to the aggregate Market Value of
such Collateral divided by the Collateral Requirement for such Collateral.
"Pledge Value Requirement" means, as of any date, (a) the
aggregate Market Value on such date of the Maximum Deliverable Number of shares
of Common Stock or, from and after an Adjustment Event, Reported Securities, on
such date plus (b) from and after an Adjustment Event, the Cash Delivery
Obligations plus (c) from and after [the Pledgor's] [Holdings'] extension of the
Exchange Date pursuant to Section 1.3(f) of the [Holdings] Forward Contract, the
aggregate Market Value on such date of the Additional Government Securities.
"Pledged Items" means, as of any date, any and all securities
and instruments delivered by the Pledgor to be held by the Collateral Agent
under this Collateral Agreement as Collateral, whether Eligible Collateral or
Ineligible Collateral.
"Prior Collateral" has the meaning specified in Section
6(b)(1).
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"Responsible Officer" means, when used with respect to the
Collateral Agent, any vice president, assistant vice president, assistant
treasurer or assistant secretary located in the division or department of the
Collateral Agent responsible for performing the obligations of the Collateral
Agent under this Collateral Agreement, or in any other division or department of
the Collateral Agent performing operations substantially equivalent to those
performed by such division or department pursuant hereto, or any other officer
of the Collateral Agent or any successor Collateral Agent customarily performing
functions similar to those performed by any of the aforesaid officers, and also
means, with respect to any matter relating to this Collateral Agreement or the
Collateral, any other officer to whom such matter is referred because of his
knowledge of and familiarity with the particular subject.
"Transfer Restriction" means, with respect to any item of
Collateral, any condition to or restriction on the ability of the holder thereof
to sell, assign or otherwise transfer such item of Collateral to the Trust or to
enforce the provisions thereof or of any document related thereto whether set
forth in such item of Collateral itself or in any document related thereto,
including, without limitation, (i) any requirement that any sale, assignment or
other transfer or enforcement of such item of Collateral be consented to or
approved by any Person, including, without limitation, the issuer thereof or any
other obligor thereon, (ii) any limitations on the type or status, financial or
otherwise, of any purchaser, pledgee, assignee or transferee of such item of
Collateral, (iii) any requirement of the delivery of any certificate, consent,
agreement, opinion of counsel, notice or any other document of any Person to the
issuer of, any other obligor on or any registrar or transfer agent for, such
item of Collateral, prior to the sale, pledge, assignment or other transfer or
enforcement of such item of Collateral and (iv) any registration or
qualification requirement for such item of Collateral pursuant to any federal or
state securities law; provided that the required delivery of any assignment from
the seller, pledgor, assignor or transferor of such item of Collateral, together
with any evidence of the corporate or other authority of such Person, shall not
constitute a "Transfer Restriction."
"Trustee" or "Trustees" means any trustee or trustees of the
Trust identified on the signature pages hereto, or any successor as such trustee
or trustees.
"UCC" means the Uniform Commercial Code as in effect in the
State of New York.
"U.S. Government Securities" means direct obligations of the
United States of America that mature on a date that is one year or less from the
date such obligations are pledged hereunder, but in any event prior to the
Exchange Date (or the extended Exchange Date in the case of Additional
Government Securities pledged in connection with an extension of the Exchange
Date pursuant to Section 1.3(f) of the [Holdings] Forward Contract).
3. Representations and Warranties of the Pledgor.
The Pledgor hereby represents and warrants to the Collateral
Agent and the Trust that:
(a) Power. The Pledgor has full power and authority
to execute and deliver this Collateral Agreement and to perform and
observe the provisions hereof;
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(b) Non-Contravention. The execution, delivery and
performance by the Pledgor of this Collateral Agreement do not and will
not violate, contravene or constitute a default under any provision of
applicable law or regulation or of any material agreement, judgment,
injunction, order, decree or other instrument binding upon the Pledgor.
The Pledgor is not in default under any material agreement by which the
Collateral may be bound and no litigation, arbitration or
administrative proceedings are current or pending, which default,
litigation, arbitration or administrative proceedings are material to
the Collateral in the context of this Collateral Agreement.
(c) Binding Effect. This Collateral Agreement
constitutes a valid and binding agreement of the Pledgor enforceable
against the Pledgor in accordance with its terms except as such
enforceability may be limited by applicable bankruptcy, insolvency and
similar laws affecting creditors' rights generally and by general
equitable principles.
(d) Solvency. The Pledgor is presently solvent and
able to pay, and paying its debts as they become due, and anticipates
that it will continue to be able to pay its debts as they become due
for the foreseeable future.
(e) No Transfer Restrictions. Except for(i) any
legend with respect to restrictions pursuant to applicable federal and
state securities laws on transfer of the Common Stock pledged by the
Pledgor hereunder which appears on the certificates representing such
Common Stock (and which (A) will not be applicable to the delivery of
any such Common Stock to the Trust pursuant to the Forward Contract and
this Agreement or to the delivery of any such Common Stock by the Trust
to the holders of Equity Trust Securities pursuant to the Equity Trust
Securities and (B) will be removed at the request of the Collateral
Agent to the transfer agent for the Common Stock prior to any such
delivery to the holders of Equity Trust Securities) and (ii) any
restrictions on the Common Stock pursuant to the Stockholders
Agreement, dated as of March 4, 1998, as amended by the Letter
Agreements dated August 8, 2001, September 10, 2001 and October 5, 2001
(which such Agreement, as amended, shall not have any effect on the
Common Stock pledged hereunder for so long as the Common Stock remains
pledged pursuant to the terms of this Agreement and when such Common
Stock is delivered by the Collateral Agent to the Trust on the Exchange
Date or in connection with the occurrence of an Event of Default), no
Transfer Restrictions exist with respect to or otherwise apply to the
assignment of, or transfer by the Pledgor of possession of, any items
of Collateral to the Collateral Agent hereunder, or the subsequent sale
or transfer of such items of Collateral by the Collateral Agent
pursuant to the terms hereof.
(f) Title to Collateral; Perfected Security Interest.
The Pledgor has good and marketable title to the Pledged Items, free of
all Liens (other than the Lien created by this Collateral Agreement)
and Transfer Restrictions (except for any restrictions as contemplated
in Section 3(e) hereof). Upon delivery of the Pledged Items described
in paragraph (b), (c) and (d) of Section 1 to the Collateral Agent
hereunder, the Collateral Agent will obtain a valid, first priority
perfected security interest in, and a first lien upon, such Pledged
Items subject to no other Lien. None of the Collateral is or shall be
pledged by the Pledgor as collateral for any other purpose.
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4. Representations and Warranties of the Collateral
Agent.
The Collateral Agent represents and warrants to the Pledgor
and the Trust that:
(a) Corporate Existence and Power. The Collateral
Agent is a banking corporation, duly incorporated, validly existing and
in good standing under the laws of the jurisdiction of its
incorporation, and has all corporate powers and all material
governmental licenses, authorizations, consents and approvals required
to enter into, and perform its obligations under, this Collateral
Agreement.
(b) Authorization and Non-Contravention. The
execution, delivery and performance by the Collateral Agent of this
Collateral Agreement have been duly authorized by all necessary
corporate action on the part of the Collateral Agent (no action by the
shareholders of the Collateral Agent being required) and do not and
will not violate, contravene or constitute a default under any
provision of applicable law or regulation or of the charter or by-laws
of the Collateral Agent or of any material agreement, judgment,
injunction, order, decree or other instrument binding upon the
Collateral Agent.
(c) Binding Effect. This Collateral Agreement
constitutes a valid and binding agreement of the Collateral Agent
enforceable against the Collateral Agent in accordance with its terms.
5. Certain Covenants of the Pledgor.
The Pledgor agrees that, so long as any of its obligations
under the Forward Contract remain outstanding:
(a) Title to Collateral. The Pledgor shall at all
times hereafter have good and marketable title to the Collateral
pledged hereunder, free of all Liens (other than the Liens created by
this Collateral Agreement) and Transfer Restrictions (except for those
permitted by Section 3(e) hereof), and, subject to the terms of this
Collateral Agreement, will at all times hereafter have good, right and
lawful authority to assign, transfer and pledge such Collateral and all
such additions thereto and substitutions therefor under this Collateral
Agreement.
(b) Pledge Value Requirement. The Pledgor shall cause
the aggregate Pledge Value of the Collateral to be equal to or greater
than the Pledge Value Requirement at all times, and shall pledge
additional Collateral in the manner described in Section 6(d) as
necessary to cause such requirement to be met.
(c) Pledge upon Adjustment Event. Upon the occurrence
of an Adjustment Event, the Pledgor shall immediately cause to be
delivered to the Collateral Agent, in the manner provided in Section
6(d): (i) U.S. Government Securities or Cash Equivalents (other than
cash) having an aggregate Market Value at least equal to 105% of the
Cash Delivery Obligations, if any, or at Pledgor's election, U.S.
dollars in an amount equal to at least 100% of the Cash Delivery
Obligations, if any; and (ii) Reported Securities in an amount at least
equal to the Maximum Deliverable Number thereof (if
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any), or, at Pledgor's election, U.S. Government Securities or Cash
Equivalents having an aggregate Market Value at least equal to 150% of
such Maximum Deliverable Number of Reported Securities; in each case to
be held as substitute or additional Collateral hereunder.
(d) Composition of Pledged Items. Notwithstanding
Pledgor's right to substitute Collateral pursuant to Section 6(b), the
Pledgor shall cause the Collateral to include, on the Exchange Date,
unless Pledgor shall have exercised its Cash Delivery Option, a number
of shares of Common Stock (and/or, if an Adjustment Event shall have
occurred, Reported Securities) at least equal to the number of shares
of Common Stock (and/or, if an Adjustment Event shall have occurred,
Reported Securities) required to be delivered under the Forward
Contract on the Exchange Date. If [the Pledgor] [Holdings] shall have
extended the Exchange Date pursuant to Section 1.3(f) of the [Holdings]
Forward Contract, the Pledgor shall cause Collateral for Pledgor's
obligations to deliver the Extension Amount to consist entirely of
Additional Government Securities.
(e) Further Assurances. The Pledgor shall, at its
expense and in such manner and form as the Trust or the Collateral
Agent may reasonably require, give, execute, deliver, file and record
any financing statement, notice, instrument, document, agreement or
other papers that may be necessary in order to create, preserve,
perfect, substantiate or validate any security interest granted
pursuant hereto or to enable the Collateral Agent to exercise and
enforce its rights and the rights of the Trust hereunder with respect
to such security interest. To the extent permitted by applicable law,
the Pledgor hereby authorizes the Collateral Agent to execute and file,
in the name of the Pledgor or otherwise, Uniform Commercial Code
financing or continuation statements (which may be carbon,
photographic, photostatic or other reproductions of this Agreement or
of a financing statement relating to this Agreement) which the
Collateral Agent may reasonably deem necessary or appropriate to
further perfect, or maintain the perfection of the security interests
granted hereby.
(f) The Pledgor shall not consolidate with or merge
with or into, or transfer all or substantially of its assets to, any
other Person unless:
(i) either (x) the Pledgor shall be the resulting or
surviving entity or (y) such other Person is an entity
organized and existing under the laws of the United States, a
State thereof or the District of Columbia, such other Person
expressly assumes by supplemental agreement executed and
delivered to the Trust, in form satisfactory to counsel to the
Trust, all the obligations of the Pledgor under the
Underwriting Agreement, Collateral Agreement, the
Reimbursement Agreement, and this Agreement (in which case all
such obligations of the Pledgor shall terminate); and
(ii) the Pledgor shall deliver to the Trust prior to
the proposed transaction an Officer's Certificate and an
Opinion of Counsel, each of which shall state that such
consolidation, merger or transfer and such supplemental
agreement comply with this Section 5(f) and that all
conditions precedent herein provided for relating to such
transaction have been complied with.
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Upon any consolidation or merger, or any transfer of
all or substantially all of the assets of the Pledgor in accordance
with this Section 5(f), the successor entity formed by such
consolidation or into which the Pledgor is merged or to which such
transfer is made shall succeed to, and be substituted for, and may
exercise every right and power of the Pledgor under this Agreement with
the same effect as if such successor entity had been named as the
Pledgor herein, and the predecessor entity, shall be relieved of any
further obligation under this Agreement.
6. Administration of the Collateral and Valuation of the
Securities.
(a) Valuation of Collateral. The Collateral Agent shall
determine on each Business Day whether the Pledge Value is at least equal to the
Pledge Value Requirement and whether an Insufficiency Determination or
Collateral Event of Default shall have occurred and, from and after any
substitution of U.S. Government Securities or Cash Equivalents for pledged
Common Stock or Reported Securities pursuant to paragraph (b) of this Section 6,
shall determine the Pledge Value on each Business Day and shall provide written
notice of the Pledge Value to the Pledgor.
(b) Substitution of Collateral. The Pledgor may substitute
Collateral in accordance with the following provisions:
(1) Unless an Event of Default or a failure by the
Pledgor to meet any of its obligations under Section 5(b) or (c) hereof
has occurred and is continuing, the Pledgor shall have the right at any
time and from time to time to deposit Eligible Collateral with the
Collateral Agent in substitution for Pledged Items previously deposited
hereunder ("Prior Collateral") and to obtain the release from the Lien
hereof of such Prior Collateral.
(2) If the Pledgor wishes to deposit Eligible
Collateral with the Collateral Agent in substitution for Prior
Collateral, the Pledgor shall (i) give written notice to the Collateral
Agent identifying the Prior Collateral to be released from the Lien
hereof, and (ii) deliver to the Collateral Agent concurrently with such
Eligible Collateral a certificate of the Pledgor substantially in the
form of Exhibit A hereto and dated the date of such delivery, (A)
identifying the items of Eligible Collateral being substituted for the
Prior Collateral and the Prior Collateral that is to be transferred to
the Pledgor and (B) certifying that the representations and warranties
contained in such Exhibit A hereto are true and correct on and as of
the date thereof. The Pledgor hereby covenants and agrees to take all
actions required under Section 6(d) and any other actions necessary to
create for the benefit of the Collateral Agent a valid, first priority
perfected security interest in, and a first lien upon, such Eligible
Collateral deposited with the Collateral Agent in substitution for
Prior Collateral.
(3) No such substitution shall be made unless and
until the Collateral Agent shall have determined that the aggregate
Pledge Value of all of the Collateral at the time of such proposed
substitution, after giving effect to the proposed substitution, shall
at least equal the Pledge Value Requirement.
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(c) Additional Collateral. The Pledgor may pledge additional
Collateral (excluding Additional Government Securities) hereunder at any time
and may pledge Additional Government Securities hereunder at any time prior to
or simultaneously with [Pledgor's] [Holdings'] election to extend the Exchange
Date pursuant to Section 1.3(f) of the [Holdings] Forward Contract. Concurrently
with the delivery of any additional Eligible Collateral, the Pledgor shall
deliver in the case of Eligible Collateral consisting of Additional Government
Securities, a certificate of the Pledgor substantially in the form of Exhibit B
hereto, or in the case of all other Eligible Collateral, a certificate of the
Pledgor substantially in the form of Exhibit C hereto and dated the date of such
delivery, in each case (A) identifying the additional items of Eligible
Collateral being pledged and (B) certifying that with respect to such items of
additional Eligible Collateral the representations and warranties contained in
such Exhibit B or Exhibit C, as the case may be, hereto are true and correct on
and as of the date thereof. The Pledgor hereby covenants and agrees to take all
actions required under Section 6(d) and any other actions necessary to create
for the benefit of the Collateral Agent a valid, first priority perfected
security interest in, and a first lien upon, such additional Eligible
Collateral.
(d) Delivery of Collateral. The Pledgor shall deliver all
Collateral to the Collateral Agent in accordance with the following provisions:
(1) Pledged Common Stock. In the case of Collateral
consisting of Common Stock, by delivery of certificates evidencing such
Common Stock, indorsed in blank (together with all signature guarantees
and any other documents necessary to permit the Collateral Agent to
effect the re-registration thereof without further action by the
Pledgor) or registered in the name of the Collateral Agent or its
nominee or, if such Common Stock is held in book entry form by The
Depository Trust Company, by transfer to an account of the Collateral
Agent or to an account (other than an account of the Pledgor)
designated by the Collateral Agent with The Depository Trust Company;
(2) Pledged Government Securities. In the case of
Collateral consisting of U.S. Government Securities or Additional
Government Securities, by transfer thereof through the Book Entry
System of the Federal Reserve System to the account of the Collateral
Agent or to an account (other than an account of the Pledgor)
designated by the Collateral Agent; and
(3) Pledged Cash Equivalents. In the case of
Collateral consisting of Cash Equivalents under (i) of the definition
of Cash Equivalents, by wire transfer in immediately available funds to
the account of the Collateral Agent or to an account (other than an
account of the Pledgor) designated by the Collateral Agent and over
which the Collateral Agent has sole dominion and control; in the case
of Collateral consisting of Cash Equivalents under (ii) of the
definition of Cash Equivalents, by transfer thereof through the Book
Entry System of the Federal Reserve System to the account of the
Collateral Agent or to an account (other than an account of the
Pledgor) designated by the Collateral Agent or, if such Cash
Equivalents are held in book entry form by The Depository Trust
Company, by transfer to an account of the Collateral Agent or to an
account (other than an account of the Pledgor) designated by the
Collateral Agent with The Depository Trust Company; in the case of
Collateral consisting of Cash Equivalents under (iv) of the definition
of Cash Equivalents, by transfer of the underlying securities to
11
a security account maintained by the Collateral Agent with a securities
intermediary in its name, pursuant to a contract between the Collateral
Agent and a third party; and in each other case of Collateral
consisting of Cash Equivalents under the definition of Cash
Equivalents, by physically delivering certificates evidencing the Cash
Equivalents indorsed in blank (together with all documents necessary to
permit the Collateral Agent to effect the re-registration thereof
without further action by the Pledgor) or registered in the name of the
Collateral Agent issued to or otherwise payable to the Collateral Agent
or its nominee or, if such Cash Equivalents are held in book entry form
by a securities intermediary, by transfer to an account of the
Collateral Agent or to an Account (other than an account of the
Pledgor) designated by the Collateral Agent with such securities
intermediary, or by crediting the Cash Equivalents to a securities
account maintained by the Collateral Agent or to an account designated
by the Collateral Agent with a securities intermediary in its name.
(4) Pledged Reported Securities. In the case of
Collateral consisting of Reported Securities, by delivery of
certificates evidencing such Reported Securities, indorsed in blank
(together with all signature guarantees and other documents necessary
to permit the Collateral Agent to effect the re-registration thereof
without further action by the Pledgor) or registered in the name of the
Collateral Agent or its nominee or, if such Reported Securities are not
issuable in certificated form but are held in book entry form by The
Depository Trust Company, by transfer to an account of the Collateral
Agent or to an account (other than an account of the Pledgor)
designated by the Collateral Agent with The Depository Trust Company.
Upon delivery of any Pledged Item under this Collateral
Agreement, the Collateral Agent shall examine such Pledged Item and any
certificates delivered pursuant to Sections 6(b), 6(c), 6(d)(3) or otherwise
pursuant to the terms hereof in connection therewith to determine that they
comply as to form with the requirements for Eligible Collateral. Immediately
following the delivery to the Collateral Agent of any Collateral in the form of
certificates indorsed in blank, the Collateral Agent shall cause all such
certificates to be re-registered on the books of the applicable transfer agent
into the name of the Collateral Agent or its nominee, and shall thereafter
maintain all such Collateral in such form until the termination of this
Agreement; provided, however, that at any time following such delivery to the
Collateral Agent, the Collateral Agent may cause any such certificates to be
deposited with The Depository Trust Company and thereafter hold such
certificates in book entry form in an account (other than an account of Pledgor)
designated by the Collateral Agent. The Pledgor hereby designates the Collateral
Agent as the person in whose name any Collateral held in book entry form in the
Federal Reserve System shall be registered.
(e) Insufficiency Determination.
(1) If on any Business Day the Collateral Agent
determines that the aggregate Pledge Value of the Collateral is less
than the Pledge Value Requirement (any such determination, an
"Insufficiency Determination"), the Collateral Agent shall, by
telephone call to an Authorized Representative of the Pledgor followed
by a written confirmation of such call, promptly notify the Pledgor of
such determination and of the amount of the insufficiency.
12
(2) If, by 4:00 p.m., New York City time on the
Business Day following the day on which telephonic notice shall have
been given pursuant to the preceding paragraph (e)(1), the Pledgor
shall have failed to deliver, in the manner set forth in paragraphs (c)
and (d) of this Section 6, sufficient additional Eligible Collateral so
that, after giving effect to such delivery (and taking into account
that Common Stock and Reported Securities in excess of the Maximum
Deliverable Number thereof shall not constitute Eligible Collateral),
the aggregate Pledge Value of the Collateral, as of such Business Day,
is at least equal to the Pledge Value Requirement, then (x) the
Collateral Requirement with respect to any U.S. Government Securities
or Cash Equivalents pledged hereunder (other than in respect of Cash
Delivery Obligations) shall be increased from 150% to 200%, and (y)
unless a Collateral Event of Default shall have occurred and be
continuing, the Collateral Agent shall:
(i) commence sales, in the manner
described in paragraph (3) below, of such portion of the
Collateral consisting of U.S. Government Securities or Cash
Equivalents as may be required to be sold in order to generate
proceeds sufficient to purchase Common Stock and/or, after an
Adjustment Event, Reported Securities, as described in the
following clause (ii); and
(ii) commence purchases, in the
manner described in paragraph (3) below, of Common Stock
and/or, after an Adjustment Event, Reported Securities, in an
amount sufficient to cause the aggregate Pledge Value of the
Collateral to be at least equal to the Pledge Value
Requirement.
Notwithstanding the foregoing, the Collateral Agent
shall discontinue sales and purchases pursuant to the preceding clauses
(i) and (ii), respectively, if at any time a Collateral Event of
Default shall have occurred and be continuing. The Collateral Agent
shall determine the Market Value and the Pledge Value of the Collateral
after each purchase of Common Stock or Reported Securities pursuant to
the preceding clause (ii) in order to determine whether the Pledge
Value Requirement is met and whether a Collateral Event of Default has
occurred. Solely for purposes of such calculation, the Market Value of
the Common Stock or Reported Securities shall be the most recent sales
price as reported in the composite transactions for the principal
securities exchange on which the Common Stock or Reported Securities,
as the case may be, are then listed or, if such securities are not so
listed, the last quoted ask price for such securities in the
over-the-counter market as reported by The NASDAQ National Market or,
if not so reported, by the National Quotation Bureau or a similar
organization.
A "Collateral Event of Default" shall mean, at any
time, the occurrence of any of the following: (A) failure of the
aggregate Market Value of the Collateral to equal or exceed the Pledge
Value Requirement; (B) failure of the Market Value of any U.S.
Government Securities and Cash Equivalents pledged at such time (not
including any (i) Additional Government Securities or (ii) U.S.
Government Securities and Cash Equivalents pledged in respect of Cash
Delivery Obligations at such time) to have an aggregate Market Value of
at least 105% of the Market Value of a number of shares of Common Stock
(or, from and after any Adjustment Event, Reported Securities) equal to
13
(x) the Maximum Deliverable Number thereof minus (y) the number thereof
pledged as Collateral hereunder at such time; or (C) from and after any
Adjustment Event, failure of the U.S. Government Securities and Cash
Equivalents (other than cash) pledged in respect of Cash Delivery
Obligations to have an aggregate Market Value at least equal to 105% of
the Cash Delivery Obligations at such time or, in the case of cash
pledged in respect of Cash Delivery Obligations, failure of such cash
to be at least equal to the Cash Delivery Obligations at such time, if,
in the case of a failure described in this clause (C), such failure
shall continue to be in effect at 4:00 p.m., New York City time, on the
Business Day following the day on which telephonic notice in respect
thereof shall have been given pursuant to paragraph (e)(1) above. For
purposes of this Agreement, the portion of any pledged U.S. Government
Securities and Cash Equivalents that shall be deemed to be in respect
of Cash Delivery Obligations at any time shall be a portion having a
Market Value equal to 105% of the Cash Delivery Obligations at such
time (or, if less, the aggregate Market Value of all U.S. Government
Securities and Cash Equivalents pledged at such time). To the extent
that any pledged U.S. Government Securities and Cash Equivalents have a
Market Value exceeding 105%, the U.S. Government Securities shall be
applied to satisfy the 105% requirement in the first instance.
(3) Collateral sold and Common Stock or shares of
Reported Securities purchased by the Collateral Agent pursuant to the
preceding paragraphs (e)(2)(i) and (ii) may be sold and purchased on
any securities exchange or in any over-the-counter market or in any
private purchase transaction, and at such price or prices, in each case
as the Collateral Agent may deem satisfactory. The Pledgor covenants
and agrees that it will execute and deliver such documents and take
such other action as the Collateral Agent deems necessary or advisable
in order that any such sales and purchases may be made in compliance
with law.
(f) Release of Excess Collateral. If on any Business Day the
Collateral Agent determines that the aggregate Pledge Value of the Pledgor's
Eligible Collateral exceeds the Pledge Value Requirement and no Event of Default
or failure by the Pledgor to meet any of its obligations under Sections 5 or 6
hereof has occurred and is continuing, the Pledgor may obtain the release from
the Lien hereof of any Collateral having an aggregate Pledge Value on such
Business Day less than or equal to such excess, upon delivery to the Collateral
Agent of a written notice from an Authorized Representative of the Pledgor
indicating the items of Collateral to be released. Such Collateral shall be
released only after the Collateral Agent shall have determined that the
aggregate Pledge Value of all of the Collateral remaining after such release as
determined on such Business Day is at least equal to the Pledge Value
Requirement.
(g) Delivery of Forward Contract Consideration. On the
Exchange Date, unless Pledgor shall have exercised its Cash Delivery Option, the
Collateral Agent shall deliver to the Trust Common Stock (or, if an Adjustment
Event shall have occurred, Reported Securities) then held by it hereunder
representing the number of shares of Common Stock (or, if an Adjustment Event
shall have occurred, Reported Securities) then required to be delivered under
the Forward Contract. Upon such delivery, the Trust shall hold such Common Stock
or Reported Securities, as the case may be, absolutely and free from any claim
or right whatsoever.
14
(h) Investment of Cash Collateral. The Collateral Agent shall
invest any cash received by it pursuant to Section 6.2 of the Forward Contract
in direct obligations of the United States of America maturing on or before the
Exchange Date.
7. Income and Voting Rights on Collateral.
(a) Unless an Event of Default or failure by the Pledgor to
meet any of Pledgor's obligations under Section 5(b) or (c) hereof has occurred
and is continuing, the Pledgor shall be entitled to receive for Pledgor's own
account all dividends, interest and, if any, principal and premium relating to
all of the Collateral, unless the payment thereof to the Pledgor would reduce
the aggregate Pledge Value of the Collateral below the Pledge Value Requirement.
The Collateral Agent agrees to remit to the Pledgor on the Business Day received
or the first Business Day thereafter all such payments received by it. If an
Event of Default or failure by the Pledgor to meet any of its obligations under
Section 5(b) or (c) hereof has occurred and is continuing, all such payments
made or accrued after and during the continuance of such Event of Default or
failure shall be retained by the Collateral Agent, and any such payments which
are received by the Pledgor shall be received in trust for the benefit of the
Trust, shall be segregated from other funds of the Pledgor and shall forthwith
be paid over to the Collateral Agent. Any such payments so retained by, or paid
over to, the Collateral Agent shall be held by the Collateral Agent as
Collateral hereunder. If any such Event of Default or failure is no longer
continuing, then the Collateral Agent shall remit any such payments that are so
retained by, or paid to it, on the first Business Day after the Collateral Agent
shall have received notice from the Trust that such Event of Default or failure
is no longer continuing, unless the payment thereof to the Pledgor would reduce
the aggregate Pledge Value of the Collateral below the Pledge Value Requirement.
(b) Unless an Event of Default has occurred and is continuing,
the Pledgor shall have the right, from time to time, to vote and to give all
approvals, consents, ratifications and waivers with respect to the Collateral
(including all shares of Common Stock), and the Collateral Agent shall promptly
deliver to the Pledgor such proxies, powers of attorney, consents, ratifications
and waivers in respect of any of the Collateral which is registered in the name
of the Collateral Agent or its nominee and shall further deliver such documents
and instruments as shall be specified in a written request by the Pledgor.
If an Event of Default shall have occurred and be continuing,
the Collateral Agent shall have the right to the extent permitted by law, and
the Pledgor shall take all such action as may be necessary or appropriate to
give effect to such right, to vote and to give all approvals, consents,
ratifications and waivers, and take any other action with respect to any or all
of the Collateral with the same force and effect as if the Collateral Agent were
the absolute and sole owner thereof.
8. Remedies upon Events of Default.
(a) If any Event of Default shall have occurred and be
continuing, the Collateral Agent may exercise on behalf of the Trust all the
rights of a secured party under the UCC (whether or not in effect in the
jurisdiction where such rights are exercised) and, in addition, without being
required to give any notice, except as herein provided or as may be
15
required by mandatory provisions of law, shall: (i) deliver all Collateral
consisting of Common Stock or Reported Securities (but not, in either case, in
excess of the number of shares thereof deliverable under the Forward Contract at
such time) to the Trust on the date of the notice delivered to the Collateral
Agent pursuant to the last paragraph of Article VII of the Forward Contract
relating to such Event of Default (or, in the case of an Event of Default
described in clause (iii), (iv) or (v) of the definition thereof in this
Agreement, on the Exchange Date) (in either case, the "Delivery Date"),
whereupon the Trust shall hold such Common Stock or Reported Securities
absolutely free from any claim or right of whatsoever kind, including any equity
or right of redemption of the Pledgor which may be waived, and the Pledgor, to
the extent permitted by law, hereby specifically waives all rights of
redemption, stay or appraisal which Pledgor has or may have under any law now
existing or hereafter adopted; and (ii) if such delivery shall be insufficient
to satisfy in full all of the obligations of Pledgor under the Forward Contract,
sell all of the remaining Collateral, or such lesser portion thereof as may be
necessary to generate proceeds sufficient to satisfy in full all of the
obligations of Pledgor under the Forward Contract, at public or private sale or
at any broker's board or on any securities exchange, for cash, upon credit or
for future delivery, and at such price or prices as the Collateral Agent may
deem satisfactory. The Pledgor covenants and agrees to execute and deliver such
documents and take such other action as the Collateral Agent deems necessary or
advisable in order that any such sale may be made in compliance with law. Upon
any such sale the Collateral Agent shall have the right to deliver, assign and
transfer to the purchaser thereof the Collateral so sold. Each purchaser at any
such sale shall hold the Collateral so sold absolutely and free from any claim
or right of whatsoever kind, including any equity or right of redemption of the
Pledgor which may be waived, and the Pledgor, to the extent permitted by law,
hereby specifically waives all rights of redemption, stay or appraisal which
Pledgor has or may have under any law now existing or hereafter adopted. The
notice (if any) of such sale required by Article 9 of the UCC shall (1) in case
of a public sale, state the time and place fixed for such sale, (2) in case of
sale at a broker's board or on a securities exchange, state the board or
exchange at which such sale is to be made and the day on which the Collateral,
or the portion thereof so being sold, will first be offered for sale at such
board or exchange, and (3) in the case of a private sale, state the day after
which such sale may be consummated. Any such public sale shall be held at such
time or times within ordinary business hours and at such place or places as the
Collateral Agent may fix in the notice of such sale. At any such sale the
Collateral may be sold in one lot as an entirety or in separate parcels, as the
Collateral Agent may determine. The Collateral Agent shall not be obligated to
make any such sale pursuant to any such notice. The Collateral Agent may,
without notice or publication, adjourn any public or private sale or cause the
same to be adjourned from time to time by announcement at the time and place
fixed for the sale, and such sale may be made at any time or place to which the
same may be so adjourned. In case of any sale of all or any part of the
Collateral on credit or for future delivery, the Collateral so sold may be
retained by the Collateral Agent until the selling price is paid by the
purchaser thereof, but the Collateral Agent shall not incur any liability in
case of the failure of such purchaser to take up and pay for the Collateral so
sold and, in case of any such failure, such Collateral may again be sold upon
like notice. The Collateral Agent, instead of exercising the power of sale
herein conferred upon it, may proceed by a suit or suits at law or in equity to
foreclose the security interests and sell the Collateral, or any portion
thereof, under a judgment or decree of a court or courts of competent
jurisdiction.
16
(b) Power of Attorney. The Collateral Agent is hereby
irrevocably appointed the true and lawful attorney of the Pledgor with full
power and authority, in the name and stead of the Pledgor, to do all of the
following: (i) upon any delivery or sale of all or any part of any Collateral
made either under the power of delivery or sale given hereunder or under
judgment or decree in any judicial proceedings for foreclosure or otherwise for
the enforcement of this Collateral Agreement, to make all necessary deeds, bills
of sale and instruments of assignment, transfer or conveyance of the property
thus delivered or sold; (ii) if an Event of Default shall have occurred and be
continuing, upon the occurrence of an Adjustment Event while any shares of
Common Stock are Pledged Items, to take any necessary actions with respect to
such shares of Common Stock to cause the Pledged Items to conform to the
requirements of this Agreement following the occurrence of the Adjustment Event,
including, without limitation, the tender of shares of Common Stock and the sale
of property (other than Reported Securities) received in respect of Common
Stock. The grant of the foregoing power of attorney shall not be deemed to be a
grant of a power of attorney to vote or grant proxies with respect to any shares
of Common Stock, except as provided in Section 7(b). For such purposes the
Collateral Agent may execute all necessary documents and instruments. This power
of attorney shall be deemed coupled with an interest, and the Pledgor hereby
ratifies and confirms all that its attorneys acting under such power, or such
attorneys' successors or agents, shall lawfully do so by virtue of this
Collateral Agreement. If so requested by the Collateral Agent, by the Trustees
or by any purchaser of the Collateral or a portion thereof, the Pledgor shall
further ratify and confirm any such delivery or sale by executing and delivering
to the Collateral Agent, to the Trustees or to such purchaser or purchasers at
the expense of the Pledgor all proper deeds, bills of sale, instruments of
assignment, conveyance of transfer and releases as may be designated in any such
request. The Pledgor's obligations and authorizations hereunder shall not be
terminated by operation of law or the occurrence of any event whatsoever,
including the death or disability of the Pledgor, or the occurrence of any other
event.
(c) Application of Collateral and Proceeds. In the case of an
Event of Default, the Collateral Agent may proceed to realize upon the security
interest in the Collateral against any one or more of the types of Collateral,
at any one time, as the Collateral Agent shall determine in its sole discretion
subject to the foregoing provisions of this Section 8. The proceeds of any sale
of, or other realization upon, or other receipt from, any of the Collateral
remaining after delivery to the Trust pursuant to Section 8(a) shall be applied
by the Collateral Agent in the following order of priorities:
(1) first, to the payment to the Trust of an amount equal to: (A)
the aggregate Market Value of a number of shares of Common
Stock equal to (1) the number of shares of Common Stock
required to be delivered under the Forward Contract on the
Delivery Date minus (2) the number of shares of Common Stock
delivered by the Collateral Agent to the Trust on the Delivery
Date as described above; or (B) from and after an Adjustment
Event, the sum of (1) the Cash Delivery Obligations on the
Delivery Date plus (2) the aggregate Market Value on the
Delivery Date of a number of Reported Securities (and, if
applicable, shares of Common Stock) equal to (x) the number
thereof required to be delivered on the Delivery Date under
Section 6.2 of the Forward Contract minus (y) the number
thereof delivered by the Collateral Agent to the Trust on the
Delivery Date as described above; and/or (C) if [the Pledgor]
[Holdings] shall have exercised [its] [the] Cash
17
Delivery Option, the amount of cash required to be delivered
under Section 1.3(d) of the [Holdings] Forward Contract minus
the amount of cash so delivered; and (D) if [the Pledgor]
[Holdings] shall have extended the Exchange Date pursuant to
Section 1.3(f) of the [Holdings] Forward Contract, the amount
of cash required to be delivered under said Section 1.3(f)
(or, if [the Pledgor] [Holdings] shall have accelerated the
Exchange Date pursuant to Section 1.3(g) thereof, the amount
of cash deliverable pursuant to said Section 1.3(g));
(2) second, to the payment to the Collateral Agent of the expenses
of such sale or other realization, including reasonable
compensation to the Collateral Agent and its agents and
counsel, and all expenses, liabilities and advances incurred
or made by the Collateral Agent in connection therewith,
including brokerage fees in connection with the sale by the
Collateral Agent of any Pledged Item; and
(3) finally, if all of the obligations of the Pledgor hereunder
and under the Forward Contract have been fully discharged or
sufficient funds have been set aside by the Collateral Agent
at the request of the Pledgor for the discharge thereof, any
remaining proceeds shall be released to the Pledgor.
9. The Collateral Agent.
The Collateral Agent accepts its duties and responsibilities
hereunder as agent for the Trust, on and subject to the following terms and
conditions:
(a) Performance of Duties; Force Majeure. The Collateral Agent
undertakes to perform such duties and only such duties as are expressly set
forth herein and, beyond the exercise of reasonable care in the performance of
such duties, no implied covenants or obligations shall be read into this
Collateral Agreement against the Collateral Agent. No provision hereof shall be
construed to relieve the Collateral Agent from liability for its own grossly
negligent action, grossly negligent failure to act or its own willful
misconduct, subject to the following:
(1) The Collateral Agent may consult with counsel,
and the advice or opinion of such counsel shall be full and complete
authorization and protection in respect of an action taken or suffered
hereunder in good faith and in accordance with such advice or opinion
of counsel.
(2) The Collateral Agent shall not be liable with
respect to any action taken, suffered or omitted by it in good faith
(i) reasonably believed by it to be authorized or within the discretion
or rights or powers conferred on it by this Collateral Agreement or
(ii) in accordance with any direction or request of the Trustees.
(3) The Collateral Agent shall not be liable for any
error of judgment made in good faith by any of its officers, unless the
Collateral Agent was grossly negligent in ascertaining the pertinent
facts.
(4) The Collateral Agent shall not be liable for any
claims, losses, liabilities, damages or expenses (including attorneys'
fees and expenses) due to forces
18
beyond the reasonable control of the Collateral Agent, including
without limitation strikes, work stoppages, acts of war or terrorism,
insurrection, revolution, nuclear or natural catastrophes or acts of
God, and interruptions, loss or malfunctions of utilities,
communications or computer (software and hardware) services; provided
that this provision shall not protect the Collateral Agent against any
liability to which it would otherwise be subject by reason of willful
misfeasance, bad faith or gross negligence in the performance of its
duties or by reason of its reckless disregard of its obligations and
duties hereunder.
(5) In the absence of bad faith on its part, the
Collateral Agent may conclusively rely, as to the truth of the
statements and the correctness of the opinions expressed therein, upon
any note, notice, resolution, consent, certificate, affidavit, letter,
telegram, teletype message, statement, order or other document believed
by it to be genuine and correct and to have been signed or sent by the
proper Person or Persons.
(6) No provision of this Collateral Agreement shall
require the Collateral Agent to expend or risk its own funds or
otherwise incur any financial liability in the performance of any of
its duties hereunder, or in the exercise of any of its rights or
powers, if it shall have reasonable grounds for believing that
repayment of such funds or adequate indemnity against such risk or
liability is not reasonably assured to it.
(7) The Collateral Agent may perform any duties
hereunder either directly or by or through agents or attorneys, and the
Collateral Agent shall not be responsible for any misconduct or
negligence on the part of any agent or attorney appointed with due care
by it hereunder. In furtherance thereof, any subsidiary owned or
controlled by the Collateral Agent, or its successors, as agent for the
Collateral Agent, may perform any or all of the duties of the
Collateral Agent relating to the valuation of securities and other
instruments constituting Collateral hereunder.
(8) In no event shall the Collateral Agent be
personally liable for any taxes or other governmental charges imposed
upon or in respect of (i) the collateral or (ii) the income or other
distributions thereon.
(9) Unless and until the Collateral Agent shall have
received notice from the Pledgor, or unless and until a Responsible
Officer of the Collateral Agent shall have actual knowledge to the
contrary, the Collateral Agent shall be entitled to deem and treat all
Collateral delivered to it hereunder as Eligible Collateral hereunder,
provided that the Collateral Agent has carried out the duties specified
in Section 6 with respect to such Collateral at the time of delivery
thereof.
The Collateral Agent shall not be responsible for the
correctness of the recitals and statements herein which are made by the Pledgor
or for any statement or certificate delivered by the Pledgor pursuant hereto.
Except as specifically provided herein, the Collateral Agent shall not be
responsible for the validity, sufficiency, collectibility or marketability of
any Collateral given to or held by it hereunder or for the validity or
sufficiency of the Forward Contract or the Lien on the Collateral purported to
be created hereby.
19
(b) Knowledge. The Collateral Agent shall not be deemed to
have knowledge of any Event of Default (except a Collateral Event of Default),
unless and until a Responsible Officer of the Collateral Agent shall have actual
knowledge thereof or shall have received written notice thereof.
(c) Merger. Any corporation or association into which the
Collateral Agent may be converted or merged, or with which it may be
consolidated, or to which it may sell or transfer its agency business and assets
as a whole or substantially as a whole, or any corporation or association
resulting from any such conversion, sale, merger, consolidation or transfer to
which it is a party, shall, subject to the prior written consent of the Trust,
be and become a successor Collateral Agent hereunder and vested with all of the
title to the Collateral and all of the powers, discretions, immunities,
privileges and other matters as was its predecessor without, except as provided
above, the execution or filing of any instrument or any further act, deed or
conveyance on the part of any of the parties hereto, anything herein to the
contrary notwithstanding.
(d) Resignation. The Collateral Agent and any successor
Collateral Agent may at any time resign by giving 30 days' written notice by
registered or certified mail to the Pledgor and notice to the Trust in
accordance with the provisions of Section 10(d) hereof. Such resignation shall
take effect upon the appointment of a successor Collateral Agent by the Trust.
(e) Removal. The Collateral Agent may be removed at any time
by an instrument or concurrent instruments in writing delivered to the
Collateral Agent and to the Pledgor and signed by the Trust.
(f) Appointment of Successor. (1) If the Collateral Agent
hereunder shall resign or be removed, or be dissolved or shall be in the course
of dissolution or liquidation or otherwise become incapable of action hereunder,
or if it shall be taken under the control of any public officer or officers or
of a receiver appointed by a court, a successor may be appointed by the Trust by
an instrument or concurrent instruments in writing signed by the Trust or by its
attorneys in fact fully authorized, a copy of such instrument or concurrent
instruments shall be sent by registered mail to the Pledgor.
(2) Every such temporary or permanent successor Collateral
Agent appointed pursuant to the provisions hereof shall be a trust company or
bank in good standing, having a reported capital and surplus of not less than
$100,000,000 and capable of holding the Collateral in the State of New York, if
there be such an institution willing, qualified and able to accept the duties of
the Collateral Agent hereunder upon customary terms.
(g) Acceptance by Successor. Every temporary or permanent
successor Collateral Agent appointed hereunder shall execute, acknowledge and
deliver to its predecessor and also to the Pledgor an instrument in writing
accepting such appointment hereunder, whereupon such successor, without any
further act, deed or conveyance, shall become fully vested with all the estates,
properties, rights, powers, duties and obligations of its predecessors. Such
predecessor shall, nevertheless, on the written request of its successor or the
Pledgor, execute and deliver an instrument transferring to such successor all
the estates, properties, rights and powers of such predecessor hereunder. Every
predecessor Collateral Agent shall deliver all
20
Collateral held by it as the Collateral Agent hereunder to its successor. Should
any instrument in writing from the Pledgor be reasonably required by a successor
Collateral Agent for more fully and certainly vesting in such successor the
estates, properties, rights, powers, duties and obligations hereby vested or
intended to be vested in the predecessor, any and all such instruments in
writing shall, at the request of the temporary or permanent successor Collateral
Agent, be forthwith executed, acknowledged and delivered by the Pledgor.
10. Miscellaneous.
(a) Benefit of Agreement; Successors and Assigns. Whenever any
of the parties hereto is referred to, such reference shall be deemed to include
the successors and assigns of such party. All the covenants and agreements
herein contained by or on behalf of the Pledgor and the Collateral Agent shall
bind, and inure to the benefit of, their respective successors and assigns
whether so expressed or not, and shall be enforceable by and inure to the
benefit of the Trust and its successors and assigns.
(b) Separability. To the extent permitted by law, the
unenforceability or invalidity of any provision or provisions of this Collateral
Agreement shall not render any other provision or provisions herein contained
unenforceable or invalid.
(c) Amendments and Waivers. Any term, covenant, agreement or
condition of this Collateral Agreement may be amended or compliance therewith
may be waived (either generally or in a particular instance and either
retrospectively or prospectively) but only by a writing signed by the Collateral
Agent, the Pledgor and the Trust.
(d) Notices.
(1) Any notice provided for herein, unless otherwise
specified, shall be in writing (including transmittals by telex or
telecopier) and shall be given to a party at the address set forth
opposite such party's name on the signature pages hereto or at such
other address as may be designated by notice duly given in accordance
with this Section 10(d) to each other party hereto.
(2) Each such notice given pursuant to paragraph (1)
shall be effective (i) if sent by certified mail (return receipt
requested), 72 hours after being deposited in the United States mail,
postage prepaid; (ii) if given by telex or telecopier, when such telex
or telecopied notice is transmitted; or (iii) if given by any other
means, when delivered at the address specified in this Section 10(d).
(e) Governing Law. This Collateral Agreement shall in all
respects be construed in accordance with and governed by the laws of the State
of New York; provided that as to Pledged Items located in any jurisdiction other
than the State of New York, the Collateral Agent on behalf of the Trust shall
have all of the rights to which a secured party is entitled under the laws of
such other jurisdiction.
(f) Counterparts. This Collateral Agreement may be executed,
acknowledged and delivered in any number of counterparts and such counterparts
taken together shall constitute one and the same instrument.
21
(g) Application of Bankruptcy Code. The parties hereto
acknowledge and agree that the Collateral Agent is a "financial institution"
within the meaning of Section 101(22) of the Bankruptcy Code and is acting as
agent and custodian for the Trust in connection with the Forward Contract and
that the Trust is a "customer" of the Collateral Agent within the meaning of
said Section 101(22).
(h) WAIVER OF JURY TRIAL. TO THE EXTENT PERMITTED BY
APPLICABLE LAW, THE PARTIES HERETO HEREBY WAIVE AND COVENANT THAT THEY WILL NOT
ASSERT (WHETHER AS PLAINTIFF, DEFENDANT OR OTHERWISE) ANY RIGHT TO TRIAL BY JURY
IN ANY FORUM IN RESPECT OF ANY ISSUE, CLAIM, DEMAND, ACTION OR CAUSE OF ACTION
ARISING OUT OF OR BASED UPON THIS AGREEMENT OR THE SUBJECT MATTER HEREOF, IN
EACH CASE WHETHER NOW EXISTING OR HEREAFTER ARISING OR WHETHER IN CONTRACT OR
TORT OR OTHERWISE. EACH PARTY HERETO ACKNOWLEDGES THAT IT OR HE HAS BEEN
INFORMED BY THE OTHER PARTY HERETO THAT THE PROVISIONS OF THIS SECTION
CONSTITUTE A MATERIAL INDUCEMENT UPON WHICH SUCH OTHER PARTY HERETO HAS RELIED,
IS RELYING AND WILL RELY IN ENTERING INTO THIS AGREEMENT AND ANY DOCUMENT
RELATED THERETO. EACH PARTY HERETO MAY FILE AN ORIGINAL COUNTERPART OF THIS
SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE OTHER PARTY
HERETO TO THE WAIVER OF ITS RIGHTS TO TRIAL BY JURY.
11. Termination of Collateral Agreement.
This Collateral Agreement and the rights hereby granted by the
Pledgor in the Collateral shall cease, terminate and be void upon fulfillment of
all of the obligations of the Pledgor under the Forward Contract, and the
Pledgor shall have no further liability hereunder upon such termination. Any
Collateral remaining at the time of such termination shall be fully released and
discharged from the Lien hereof and delivered to the Pledgor by the Collateral
Agent, all at the expense of the Pledgor.
12. No Personal Liability of Trustees.
By executing this Collateral Agreement none of the Trustees
assumes any personal liability hereunder.
22
Exhibit A
to
Collateral Agreement
CERTIFICATE FOR SUBSTITUTED COLLATERAL
The undersigned, _____________ (the "Pledgor"), hereby certifies, pursuant to
Section 6(b) of the Collateral Agreement dated as of December [ ], 2001 among
the Pledgor, The Bank of New York, as Collateral Agent, and Equity Securities
Trust II (the "Collateral Agreement"; terms defined in the Collateral Agreement
being used herein as defined therein), that:
1. The Pledgor is delivering the following securities to the
Collateral Agent to be held by the Collateral Agent as substituted Collateral
(the "Substituted Collateral"):
2. The Pledgor requests that the Collateral Agent transfer to
the Pledgor the following Prior Collateral, pursuant to Section 6(b) of the
Collateral Agreement:
3. The Pledgor hereby represents and warrants to the
Collateral Agent and the Trust that:
(a) Consents to Transfer. No
Transfer Restrictions exist with respect to or otherwise apply
to the assignment of, or transfer by the Pledgor of possession
of, any items of Substituted Collateral to the Collateral
Agent under the Collateral Agreement, or the subsequent sale
or transfer of such items of Substituted Collateral by the
Collateral Agent pursuant to the terms of the Collateral
Agreement.
(b) Title to Collateral; Perfected
Security Interest. The Pledgor has good and marketable title
to the Substituted Collateral, free of all Liens (other than
the Lien created by the Collateral Agreement) and Transfer
Restrictions. Upon delivery of the Collateral to the
Collateral Agent, the Collateral Agent will obtain a valid,
first priority perfected security interest in, and a first
lien upon, such Substituted Collateral subject to no other
Lien. None of such Substituted Collateral is or shall be
pledged by the Pledgor as collateral for any other purpose.
This Certificate may be relied upon by the Trust as fully and
to the same extent as if this Certificate had been specifically addressed to the
Trust.
A-1
IN WITNESS WHEREOF, the undersigned has executed this
Certificate this _____ day of ______, [ ].
________________________________
Name:
Title:
A-2
Exhibit B
to
Collateral Agreement
CERTIFICATE FOR ADDITIONAL GOVERNMENT SECURITIES
The undersigned, __________________ (the "Pledgor"), hereby
certifies, pursuant to Section 6(c) of the Collateral Agreement, dated as of
December [ ], 2001, among the Pledgor, The Bank of New York, as Collateral
Agent, and Equity Securities Trust II (the "Collateral Agreement"; terms defined
in the Collateral Agreement being used herein as defined therein), that:
1. The Pledgor is delivering the following securities to the
Collateral Agent to be held by the Collateral Agent as Collateral deliverable in
connection with [Pledgor's option] [Holdings election] to extend the Exchange
Date in accordance with Section 1.3(f) of the [Holdings] Forward Contract (the
"Additional Government Securities"):
2. The Pledgor hereby represents and warrants to the
Collateral Agent that:
(a) Consents to Transfer. No Transfer Restrictions
exist with respect to or otherwise apply to the assignment of, or
transfer by the Pledgor of possession of, any items of Additional
Government Securities to the Collateral Agent under the Collateral
Agreement, or the subsequent sale or transfer of such items of
Additional Government Securities by the Collateral Agent pursuant to
the terms of the Collateral Agreement.
(b) Title to Collateral; Perfected Security Interest.
The Pledgor has good and marketable title to the Additional Government
Securities, free of all Liens (other than the Lien created by the
Collateral Agreement) and Transfer Restrictions. Upon delivery of the
Collateral to the Collateral Agent, the Collateral Agent will obtain a
valid, first priority perfected security interest in, and a first lien
upon, such Additional Government Securities subject to no other Lien.
None of such Additional Government Securities is or shall be pledged by
the Pledgor as collateral for any other purpose.
This Certificate may be relied upon by the Trust as fully and
to the same extent as if this Certificate had been specifically addressed to the
Trust.
B-1
IN WITNESS WHEREOF, the undersigned has executed this
Certificate this _____ day of _____ [ ].
________________________________
Name:
Title:
Exhibit C
to
Collateral Agreement
CERTIFICATE FOR ADDITIONAL COLLATERAL
The undersigned, __________________ (the "Pledgor"), hereby
certifies, pursuant to Section 6(c) of the Collateral Agreement, dated as of
December [ ], 2001, among the Pledgor, The Bank of New York, as Collateral
Agent, and Equity Securities Trust II (the "Collateral Agreement"; terms defined
in the Collateral Agreement being used herein as defined therein), that:
1. The Pledgor is delivering the following securities to the
Collateral Agent to be held by the Collateral Agent as additional Collateral
(the "Additional Collateral"):
2. The Pledgor hereby represents and warrants to the
Collateral Agent that:
(a) Consents to Transfer. No Transfer Restrictions
exist with respect to or otherwise apply to the assignment of, or
transfer by the Pledgor of possession of, any items of Additional
Collateral to the Collateral Agent under the Collateral Agreement, or
the subsequent sale or transfer of such items of Additional Collateral
by the Collateral Agent pursuant to the terms of the Collateral
Agreement.
(b) Title to Collateral; Perfected Security Interest.
The Pledgor has good and marketable title to the Additional Collateral,
free of all Liens (other than the Lien created by the Collateral
Agreement) and Transfer Restrictions. Upon delivery of the Collateral
to the Collateral Agent, the Collateral Agent will obtain a valid,
first priority perfected security interest in, and a first lien upon,
such additional Collateral subject to no other Lien. None of such
Additional Collateral is or shall be pledged by the Pledgor as
collateral for any other purpose.
This Certificate may be relied upon by the Trust as fully and
to the same extent as if this Certificate had been specifically addressed to the
Trust.
C-1
IN WITNESS WHEREOF, the undersigned has executed this
Certificate this _____ day of _____ [ ].
________________________________
Name:
Title:
C-1
