Exhibit 4.5
PLEDGE AGREEMENT
Dated as of March __, 2001
among
DUKE ENERGY CORPORATION
BANK ONE TRUST COMPANY, N.A.,
as Collateral Agent, Custodial Agent
and Securities Intermediary
and
THE CHASE MANHATTAN BANK,
as Purchase Contract Agent
TABLE OF CONTENTS
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Page
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ARTICLE I DEFINITIONS...................................................................... 2
SECTION 1.1 Definition of Terms.................................................... 3
ARTICLE II PLEDGE; CONTROL AND PERFECTION................................................... 7
SECTION 2.1 The Pledge............................................................. 7
SECTION 2.2 Control and Perfection................................................. 9
ARTICLE III DISTRIBUTIONS ON PLEDGED COLLATERAL.............................................. 11
ARTICLE IV SUBSTITUTION, RELEASE, REPLEDGE AND
SETTLEMENT OF SENIOR NOTES....................................................... 13
SECTION 4.1 Substitution for Senior Notes and the Creation of Treasury
Units......................................................................... 13
SECTION 4.2 Substitution of Treasury Securities and the Recreation of
Corporate Units............................................................... 14
SECTION 4.3 Termination Event...................................................... 14
SECTION 4.4 Cash Settlement........................................................ 15
SECTION 4.5 Early Settlement....................................................... 16
SECTION 4.6 Application of Proceeds; Settlement.................................... 17
ARTICLE V VOTING RIGHTS - SENIOR NOTES..................................................... 19
SECTION 5.1 Voting Rights - Senior Notes. ......................................... 19
ARTICLE VI RIGHTS AND REMEDIES; TAX EVENT REDEMPTION........................................ 20
SECTION 6.1 Rights and Remedies of the Collateral Agent............................ 20
SECTION 6.2 Tax Event Redemption................................................... 21
SECTION 6.3 Initial Remarketing.................................................... 22
SECTION 6.4 Substitutions.......................................................... 23
ARTICLE VII REPRESENTATIONS AND WARRANTIES; COVENANTS........................................ 23
SECTION 7.1 Representations and Warranties......................................... 23
SECTION 7.2 Covenants.............................................................. 24
ARTICLE VIII THE COLLATERAL AGENT............................................................. 24
SECTION 8.1 Appointment, Powers and Immunities..................................... 24
SECTION 8.2 Instructions of the Company............................................ 25
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SECTION 8. 3 Reliance.....................................................................26
SECTION 8. 4 Rights in other Capacities...................................................26
SECTION 8. 5 Non-Reliance.................................................................27
SECTION 8. 6 Compensation and Indemnity...................................................27
SECTION 8. 7 Failure to Act...............................................................27
SECTION 8. 8 Resignation and Removal......................................................28
SECTION 8. 9 Right to Appoint Agent or Advisor............................................29
SECTION 8.10 Survival.....................................................................30
SECTION 8.11 Exculpation..................................................................30
ARTICLE IX AMENDMENT..............................................................................30
SECTION 9. 1 Amendment Without Consent of Holders.........................................30
SECTION 9. 2 Amendment with Consent of Holders............................................31
SECTION 9. 3 Execution of Amendments......................................................32
SECTION 9. 4 Effect of Amendments.........................................................32
SECTION 9. 5 Reference to Amendments......................................................32
ARTICLE X MISCELLANEOUS..........................................................................32
SECTION 10.1 No Waiver....................................................................32
SECTION 10.2 Governing Law................................................................33
SECTION 10.3 Notices......................................................................33
SECTION 10.4 Successors and Assigns.......................................................34
SECTION 10.5 Counterparts.................................................................34
SECTION 10.6 Severability.................................................................34
SECTION 10.7 Expenses, etc................................................................34
SECTION 10.8 Security Interest Absolute...................................................35
EXHIBIT A INSTRUCTION FROM PURCHASE CONTRACT AGENT
TO COLLATERAL AGENT....................................................................38
EXHIBIT B INSTRUCTION TO PURCHASE CONTRACT AGENT.................................................40
EXHIBIT C INSTRUCTION TO CUSTODIAL AGENT REGARDING
REMARKETING............................................................................42
EXHIBIT D INSTRUCTION TO CUSTODIAL AGENT REGARDING
WITHDRAWAL FROM REMARKETING............................................................45
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PLEDGE AGREEMENT, dated as of March __, 2001 (this "Agreement"), among Duke
Energy Corporation, a North Carolina corporation (the "Company"), Bank One Trust
Company, N.A., a national banking association, not individually but solely as
collateral agent (in such capacity, together with its successors in such
capacity, the "Collateral Agent"), as custodial agent for the Company (in such
capacity, together with its successors in such capacity, the "Custodial Agent")
and as "securities intermediary" as defined in Section 8-102(a)(14) of the Code
(as defined herein) for the Purchase Contract Agent on behalf of the Holders (in
such capacity, together with its successors in such capacity, the "Securities
Intermediary"), and The Chase Manhattan Bank, not individually but solely as
purchase contract agent and as attorney-in-fact of the Holders (as defined in
the Purchase Contract Agreement) from time to time of the Securities (as
hereinafter defined) (in such capacity, together with its successors in such
capacity, the "Purchase Contract Agent") under the Purchase Contract Agreement
(as hereinafter defined).
RECITALS
WHEREAS, the Company and the Purchase Contract Agent are parties to the
Purchase Contract Agreement, dated as of the date hereof (as modified and supple
mented and in effect from time to time, the "Purchase Contract Agreement"),
pursuant to which there may be issued 20,000,000 Equity Units of the Company (or
23,000,000 Equity Units if the Underwriters' overallotment option is exercised
in full), having a stated amount of $25 (the "Stated Amount") per Equity Unit;
and
WHEREAS, the Equity Units will initially consist of 20,000,000 (or
23,000,000 if the underwriters' overallotment option is exercised in full with
respect to the Corporate Units) units (referred to as "Corporate Units") with a
stated amount, per Corporate Unit, equal to the Stated Amount. Each Corporate
Unit will initially consist of (a) a stock purchase contract (the "Purchase
Contract") under which the holder will purchase from the Company not later than
___________, 2004 (the "Purchase Contract Settlement Date"), for an amount of
cash equal to the Stated Amount, a number of newly issued shares of common
stock, no par value (the "Common Stock"), of the Company equal to the Settlement
Rate (as defined below) and (b) beneficial ownership of a Senior Note (as
defined below); and
WHEREAS, if Holders of Corporate Units substitute collateral as
contemplated by Section 4.1, each unit created thereby (referred to as "Treasury
Units" and, together with the Corporate Units, the "Securities") will initially
consist of (a) a Purchase Contract under which the Holder will purchase from the
Company on the Purchase Contract Settlement Date, for an amount in cash equal to
the Stated Amount, a number
of newly issued shares of Common Stock of the Company, equal to the Settlement
Rate, and (b) a 1/40, or 2.5%, undivided beneficial interest in a zero-coupon
U.S. Treasury Security (CUSIP No. _________) having a principal amount at
maturity equal to $1,000 and maturing on ___________, 2004 (the "Treasury
Securities"); and
WHEREAS, pursuant to the terms of the Indenture (as defined below) Duke
Capital Corporation, a Delaware corporation and wholly owned subsidiary of the
Company ("Duke Capital") will issue $500,000,000 aggregate principal amount of
___% Senior Notes due 2006 (or $575,000,000 if the Underwriters' overallotment
option is exercised) (the "Senior Notes"), each having a principal amount per
Senior Note equal to $25; and
WHEREAS, pursuant to the terms of the Purchase Contract Agreement and the
Purchase Contracts, the Holders, from time to time, of the 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
such Holders and to grant the pledge provided hereby of the Senior Notes, any
Applicable Ownership Interest in the Treasury Portfolio and the Treasury
Securities to secure each Holder's obligations under the related Purchase
Contract, as provided herein and subject to the terms hereof; and
WHEREAS, upon such pledge, the Pledged Senior Notes or the Applicable
Ownership Interests in the Treasury Portfolio, as the case may be, and the
Pledged Treasury Securities will be beneficially owned by the Holders but will
be owned of record by the Purchase Contract Agent subject to the Pledge
hereunder.
NOW THEREFORE, in consideration of the foregoing premises, 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 Securities, agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1 Definitions of Terms. For all purposes of this Agreement,
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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;
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(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;
(c) initially capitalized terms used but not otherwise defined herein
have the meanings assigned to such terms in the Purchase Contract Agreement; and
(d) the following terms have the meanings assigned to them in this
Section 1.1(d); and
"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.
"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 with the Collateral Agent in the name "The Chase Manhattan Bank, as
Purchase Contract Agent on behalf of the holders of certain securities of Duke
Energy Corporation, Collateral Account subject to the security interest of Bank
One Trust Company, N.A., as Collateral Agent, for the benefit of Duke Energy
Corporation, as pledgee" and any successor account.
"Collateral Agent" has the meaning specified in the first paragraph of this
instrument.
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"Common Stock" has the meaning specified in the Recitals.
"Company" means the Person named as the "Company" in the first paragraph of
this instrument 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
instrument.
"Duke Capital" has the meaning specified in the Recitals.
"Intermediary" means any entity that in the ordinary course of its business
maintains securities accounts for others and is acting in that capacity.
"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 US $200 million at the time of
deposit; (iii) investments with an original maturity of 365 days or less of any
Person that is fully and unconditionally guaranteed by a bank referred to in
clause (ii); (iv) investments in commercial paper, other than commercial paper
issued by the Company or any of its Affiliates, of any corporation incorporated
under the laws of the United States or any State thereof, which commercial paper
has a rating at the time of purchase at least equal to "A-1" by Standard &
Poor's Ratings Services ("S&P") or at least equal to "P-1" by Xxxxx'x Investors
Service, Inc. ("Moody's"); and (v) investments in money market funds registered
under the Investment Company Act of 1940, as amended, rated in the highest
applicable rating category by S&P or Moody's, which may include such money
market funds offered, managed, administered or serviced by the Collateral Agent
or any of its Affiliates.
"Person" and "person" means any individual, corporation, limited liability
company, partnership, joint venture, association, joint-stock company, trust,
unincorpo rated organization or government or any agency or political
subdivision thereof.
"Pledge" has the meaning specified in Section 2.1 hereof.
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"Pledged Senior Notes" has the meaning specified in Section 2.1 hereof.
"Pledged Treasury Securities" has the meaning specified in Section 2.1
hereof.
"Primary Treasury Dealer" means a primary U.S. government securities dealer
in The City of New York.
"Proceeds" means all interest, dividends, cash, instruments, securities,
financial assets (as defined in ss. 8-102(a)(9) of the Code) and other property
from time to time received, receivable or otherwise distributed upon the sale,
exchange, maturity, 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.
"Purchase Contract Settlement Date" has the meaning specified in the
Recitals.
"Securities" has the meaning specified in the Recitals.
"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.
"Senior Notes" has the meaning specified in the Recitals.
"Senior Note Trustee" means The Chase Manhattan Bank, a New York banking
corporation, as trustee under the Indenture until a successor is appointed
thereunder, and thereafter means such successor trustee.
"Separate Senior Notes" means any Senior Notes that are not Pledged Senior
Notes.
"Stated Amount" has the meaning specified in the Recitals.
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"Supplemental Remarketing Agreement" means the Supplemental Remarketing
Agreement, as defined in the Remarketing Agreement.
"Tax Event Redemption Date" means the date upon which a Tax Event
Redemption is to occur.
"TRADES" means the Treasury/Reserve Automated Debt Entry System maintained
by the Federal Reserve Bank of New York pursuant to the TRADES Regulations.
"TRADES Regulations" means the regulations of the United States Department
of the Treasury, published at 31 C.F.R. Part 357, as amended from time to time.
Unless otherwise defined herein, all terms defined in the TRADES Regulations are
used herein as therein defined.
"Transfer" means, except as otherwise expressly provided herein, with
respect to the Collateral and in accordance with the instructions of the
Collateral Agent, the Purchase Contract Agent or the Holder, as applicable:
(i) in the case of Collateral consisting of securities which cannot
be delivered by book-entry or which the parties agree are to be delivered in
physical form, delivery in appropriate physical form to the recipient
accompanied by any duly executed instruments of transfer, assignments in blank,
transfer tax stamps and any other documents necessary to constitute a legally
valid transfer to the recipient;
(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" (as defined in
Section 8-102(a)(17) of the Code) with respect to such securities to a
"securities account" (as defined in Section 8-501(a) of the Code) maintained by
or on behalf of the recipient and (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 Securities" has the meaning specified in the Recitals.
"Value" with respect to any item of Collateral on any date means, as to (i)
a Senior Note, the principal amount thereof, (ii) Cash, the face amount thereof
and (iii) Treasury Securities, the aggregate principal amount thereof at
maturity.
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ARTICLE II
PLEDGE; CONTROL AND PERFECTION
SECTION 2.1 The Pledge. (a) The Holders from time to time as
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beneficial owners of the Collateral (as defined below) acting through the
Purchase Contract Agent, as their attorney-in-fact, and the Purchase Contract
Agent, as nominal owner of the Collateral, each hereby pledge and grant to the
Collateral Agent, for the benefit of the Company, as collateral security for the
performance when due by such Holders of their respective obligations under the
related Purchase Contracts, a security interest in all of the right, title and
interest of the Purchase Contract Agent and such Holders (a) in the Senior Notes
constituting a part of the Corporate Units and any Treasury Securities delivered
in exchange for any Senior Notes (or, if applicable, the Applicable Ownership
Interest in the Treasury Portfolio), any Senior Notes (or, if applicable, the
Applicable Ownership Interest in the Treasury Portfolio) 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 under the provisions of this
Agreement; (b) in payments made by Holders pursuant to Section 4.4; (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
Treasury Portfolio purchased on behalf of the Holders of Corporate Units by the
Collateral Agent upon the occurrence of a Successful Initial Remarketing or a
Tax Event Redemption as provided in Article VI, or otherwise, 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
Securities, shall cause the Senior Notes comprising a part of the Corporate
Units to be Transferred to the Collateral Agent for the benefit of the Company.
Such Senior Notes shall be Transferred by physically delivering such Senior
Notes to the Securities Intermediary indorsed in blank (or accompanied by a
stock or bond power indorsed in blank) and causing the Securities Intermediary
to credit the Collateral Account with such Senior Notes such that security
entitlements with respect to such Senior Notes are credited to the Collateral
Account. In the event a Holder of Corporate Units so elects, such Holder may
Transfer Treasury Securities to the Collateral Agent for the benefit of the
Company as provided in Section 4.1 hereof in exchange for the release by the
Collateral Agent on behalf of the Company of Senior Notes or the appropriate
Applicable Ownership Interest of the Treasury Portfolio, as the case may be,
with an aggregate principal amount equal to the aggregate principal amount of
the Treasury Securities so Transferred, in the case of Senior Notes, or with an
appropriate Applicable Ownership Interest (as specified in clause (A) of the
definition of such term) of the Treasury Portfolio equal to the aggregate
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principal amount of the Treasury Securities so Transferred, in the event that a
Successful Initial Remarketing or a Tax Event Redemption has occurred, to the
Purchase Contract Agent on behalf of such Holder. In the event that a Holder of
Treasury Units so elects, such Holder may Transfer Senior Notes or the
appropriate Applicable Ownership Interest of the Treasury Portfolio to the
Collateral Agent for the benefit of the Company as provided in Section 4.2
hereof in exchange for the release by the Collateral Agent on behalf of the
Company of Treasury Securities with an aggregate principal amount at maturity
equal to the aggregate principal amount of the Senior Notes or the appropriate
Applicable Ownership Interest (as specified in clause (A) of the definition of
such term) of the Treasury Portfolio so transferred to the Purchase Contract
Agent on behalf of such Holder. Treasury Securities and the appropriate
Applicable Ownership Interest of 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 appropriate Applicable Ownership
Interest of the Treasury Portfolio, has been credited to the Collateral Account.
(b) 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 Senior Notes or Treasury Securities subject to the "Pledge", excluding any
Senior Notes that are delivered pursuant to Section 6.2 hereof or Senior Notes
or Treasury Securities released from the Pledge as provided in Article IV
hereof, are hereinafter referred to as "Pledged Senior Notes" or the "Pledged
Treasury Securities," respectively. Subject to the Pledge and the provisions of
Section 2.2 hereof, the Holders from time to time shall have full beneficial
ownership of the Collateral. Whenever directed by the Collateral Agent acting on
behalf of the Company, the Securities Intermediary shall have the right to
reregister the Senior Notes or any other securities held in physical form in its
name.
Except as may be required in order to release Senior Notes in connection
with a Holder's election to convert its investment from a Corporate Unit to a
Treasury Unit, or except as otherwise required to release Senior Notes as
specified herein, neither the Collateral Agent nor the Securities Intermediary
shall relinquish physical possession of any certificate evidencing a Senior Note
prior to the termination of this Agreement, except Senior Notes may be held in
any clearing corporation in an account including only assets of customers of the
Collateral Agent or Securities Intermediary. If it
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becomes necessary for the Securities Intermediary to relinquish physical
possession of a certificate in order to release a portion of the Senior Notes
evidenced thereby from the Pledge, the Securities Intermediary shall use its
best efforts to obtain physical possession of a replacement certificate
evidencing any Senior Notes remaining subject to the Pledge hereunder registered
to it or indorsed in blank (or accompanied by a stock or bond power indorsed in
blank) within fifteen days of the date it relinquished possession. The
Securities Intermediary shall promptly notify the Company and the Collateral
Agent of the Securities Intermediary's failure to obtain possession of any such
replacement certificate as required hereby.
SECTION 2.2 Control and Perfection. (a) In connection with the Pledge
----------------------
granted in Section 2.1, and subject to the other provisions of this Agreement,
the Holders from time to time acting through the Purchase Contract Agent, as
their attorney- in-fact, and the Purchase Contract Agent each 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 Senior
Notes, the Treasury Securities, the 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 Holders from time to time
acting through the Purchase Contract Agent hereby further authorize and direct
the Collateral Agent, as agent of the Company, to itself issue instructions and
entitlement orders, and to otherwise take action, with respect to the Collateral
Account, the Collateral credited thereto and any security entitlements with
respect thereto, pursuant to the terms and provisions hereof, all without the
necessity of obtaining the further consent of the Purchase Contract Agent or any
of the Holders. The Collateral Agent shall be the agent of the Company and shall
act 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 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
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credited to the Collateral Account be registered in the name of the Purchase
Contract Agent, the Collateral 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 Senior Notes, the Treasury Portfolio or
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 entitled to exercise the rights
of any financial asset credited to the Collateral Account; (iv) the Securities
Intermediary has not entered into, and until the termination of this Agreement
will not enter into, any agreement with any other person relating to the
Collateral Account and/or any financial assets credited thereto pursuant to
which it has agreed to comply with entitlement orders (as defined in Section 8-
102(a)(8) of the Code) of such other person; 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 or the Purchase
Contract Agent purporting to limit or condition the obligation of the Securities
Intermediary to comply with entitlement orders as set forth in this Section 2.2
hereof.
(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 thereof) and any other agreement now existing or hereafter entered into,
the terms of this Agreement shall prevail.
(e) The Purchase Contract Agent hereby irrevocably constitutes and
appoints the Collateral Agent and the Company, with full power of substitution,
as the Purchase Contract Agent's attorneys-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
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DISTRIBUTIONS ON PLEDGED COLLATERAL
So long as the Purchase Contract Agent is the registered owner of the
Pledged Senior Notes, it shall receive all payments thereon. If the Pledged
Senior Notes are reregistered, such that the Collateral Agent becomes the
registered holder, all payments of principal on the Pledged Senior Notes or, if
applicable, the appropriate Applicable Ownership Interest (as specified in
clause (A) of the definition of such term) of the Treasury Portfolio, or
interest payments on the Pledged Senior Notes or on the appropriate Applicable
Ownership Interest (as specified in clause (B) of the definition of such term)
of the Treasury Portfolio, as the case may be, and all payments of the principal
of, or cash distributions on, any Pledged Treasury 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) interest payments with respect to the
Pledged Senior Notes or the appropriate Applicable Ownership Interest (as
specified in clause (B) of the definition of such term) of the Treasury
Portfolio, as the case may be, and (B) any payments of principal or, if
applicable, the appropriate Applicable Ownership Interest (as specified in
clause (A) of the definition of such term) of the Treasury Portfolio with
respect to any Senior Notes or the appropriate Applicable Ownership Interest of
the Treasury Portfolio, as the case may be, that have been released from the
Pledge pursuant to Section 4.1 or 4.3 hereof, to the relevant Holders of
Securities, to the accounts designated by them in writing for such purpose, no
later than 2:00 p.m., New York City time, on the Business Day such payment is
received by the Collateral Agent (provided that in the event such payment is
received by the Collateral Agent on a day that is not a Business Day or after
12:30 p.m., New York City time, on a Business Day, then such payment shall be
made no later than 10:30 a.m., New York City time, on the next succeeding
Business Day);
(ii) in the case of any principal payments with respect to any
Treasury Securities that have been released from the Pledge pursuant to Section
4.2 or 4.3 hereof, to the Holders of the Treasury Units, to the accounts
designated by them in writing for such purpose, no later than 2:00 p.m., New
York City time, on the Business Day such payment is received by the Collateral
Agent (provided that in the event such 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
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(iii) in the case of payments of the Proceeds of any Pledged
Senior Notes or the appropriate Applicable Ownership Interest (as specified in
clause (A) of the definition of such term) of the Treasury Portfolio, as the
case may be, or the Proceeds of any Pledged Treasury Securities, to the Company
on the Purchase Contract Settlement Date to the extent of the Purchase Price 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 and, to the extent such Proceeds exceed the Purchase Price,
to the Purchase Contract Agent for the benefit of the Holders.
All payments received by the Purchase Contract Agent as provided herein shall be
applied by the Purchase Contract Agent pursuant to the provisions of the
Purchase Contract Agreement. If, notwithstanding the foregoing, the Purchase
Contract Agent shall receive any payments of the principal amount of the Senior
Note or, if applicable, the appropriate Applicable Ownership Interest (as
specified in clause (A) of the definition of such term) on account of any
Pledged Senior Note or the appropriate Applicable Ownership Interest of the
Treasury Portfolio, as applicable, that, at the time of such payment, is subject
to the Pledge, or a Holder of a Treasury Unit shall receive any payments of
principal on account of any Treasury Securities that, at the time of such
payment, are Pledged Treasury Securities, the Purchase Contract Agent or such
Holder shall hold the same as trustee of an express trust for the benefit of the
Company (and promptly deliver the same over to the Company) for application to
the obligations of the Holders under the related Purchase Contracts, and the
Holders shall acquire no right, title or interest in any such payments of
principal so received.
ARTICLE IV
SUBSTITUTION, RELEASE, REPLEDGE AND
SETTLEMENT OF SENIOR NOTES
SECTION 4.1 Substitution for Senior Notes and the Creation of
-------------------------------------------------
Treasury Units. At any time on or prior to the fifth Business Day immediately
--------------
preceding the Purchase Contract Settlement Date (or on or prior to the second
Business Day immediately preceding the Purchase Contract Settlement Date, if a
Tax Event Redemption or a Successful Initial Remarketing has occurred), a Holder
of Corporate Units shall have the right to substitute Treasury Securities for
the Pledged Senior Notes (or, if a Tax Event Redemption or a Successful Initial
Remarketing has occurred, for the appropriate Applicable Ownership Interest in
the Treasury Portfolio) securing such Holder's obligations under the Purchase
Contract(s) comprising a part of its Corporate Units in integral multiples of 40
Corporate Units by (a) Transferring to the Collateral Agent Treasury Securities
having a Value equal to the aggregate principal amount of the
12
Pledged Senior Notes (or appropriate Applicable Ownership Interest (as defined
in clause (A) of the definition of such term) in the Treasury Portfolio as the
case may be), to be released and transferring the related Corporate Units to the
Purchase Contract Agent, accompanied by a notice, substantially in the form of
Exhibit B hereto, to the Purchase Contract Agent stating that such Holder has
Transferred the relevant Treasury Securities to the Collateral Agent pursuant to
clause (a) above (stating the Value of the Treasury Securities Transferred by
such Holder) and requesting that the Purchase Contract Agent instruct the
Collateral Agent to release from the Pledge the Pledged Senior Notes or the
appropriate Applicable Ownership Interest of the Treasury Portfolio, as the case
may be, related to such Corporate Units. The Purchase Contract Agent shall
instruct the Collateral Agent in the form provided in Exhibit A; provided,
however, that if a Tax Event Redemption or a Successful Initial Remarketing has
occurred and the Treasury Portfolio has become a component of the Corporate
Units, Holders of Corporate Units may make such substitution only in integral
multiples of ________ Corporate Units at any time on or prior to the second
Business Day immediately preceding the Purchase Contract Settlement Date. Upon
receipt of Treasury Securities from a Holder of Corporate Units and the related
instruction from the Purchase Contract Agent, the Collateral Agent shall release
the Pledged Senior Notes or the appropriate Applicable Ownership Interest of the
Treasury Portfolio, as the case may be, and shall promptly Transfer to the
securities account specified by the Purchase Contract Agent such Pledged Senior
Notes or the appropriate Applicable Ownership Interest of the Treasury
Portfolio, as the case may be, free and clear of any lien, pledge or security
interest created hereby. All items Transferred and/or substituted by any Holder
pursuant to this Section 4.1, Section 4.2 or any other Section of this Agreement
shall be Transferred and/or substituted free and clear of all liens, claims and
encumbrances.
SECTION 4.2 Substitution of Treasury Securities and the
-------------------------------------------
Recreation of Corporate Units. At any time on or prior to the fifth Business Day
-----------------------------
immediately preceding the Purchase Contract Settlement Date (or on or prior to
the second Business Day immediately preceding the Purchase Contract Settlement
Date, if a Tax Event Redemption or a Successful Initial Remarketing has
occurred), a Holder of Treasury Units shall have the right to recreate Corporate
Units in integral multiples of 40 Corporate Units by (a) Transferring to the
Collateral Agent Senior Notes having a Value equal to the Value of the Pledged
Treasury Securities to be released (or the appropriate Applicable Ownership
Interest of the Treasury Portfolio with the Applicable Ownership Interest (as
defined in clause (A) of the definition of such term) having Value equal to the
Value of the Pledged Treasury Securities to be released) and (b) delivering the
related Treasury Units to the Purchase Contract Agent, accompanied by a notice,
substantially in the form of Exhibit B hereto, to the Purchase Contract Agent
stating that such Holder has transferred the relevant amount of Senior Notes (or
the appropriate
13
Applicable Ownership Interest of the Treasury Portfolio, as the case may be) to
the Collateral Agent pursuant to clause (a) above and requesting that the
Purchase Contract Agent instruct the Collateral Agent to release from the Pledge
the Pledged Treasury Securities underlying such Treasury Units. The Purchase
Contract Agent shall instruct the Collateral Agent in the form provided in
Exhibit A; provided, however, that if a Tax Event Redemption or a Successful
Initial Remarketing has occurred and the Treasury Portfolio has become a
component of the Corporate Units, Holders of Treasury Units may make such
substitution only in integral multiples of ________ Treasury Units, at any time
on or prior to the second Business Day immediately preceding the Purchase
Contract Settlement Date. Upon receipt of the Senior Notes or the appropriate
Applicable Ownership Interest of the Treasury Portfolio, as the case may be,
from such Holder and the instruction from the Purchase Contract Agent, the
Collateral Agent shall release the Treasury Securities having a corresponding
aggregate principal amount from the Pledge and shall promptly Transfer such
Treasury Securities, free and clear of any 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 Senior Notes
(or the Applicable Ownership Interest of the Treasury Portfolio if a Tax Event
Redemption or a Successful Initial Remarketing has occurred) 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
Senior Notes, the Treasury Portfolio or of the Pledged Treasury Securities, as
the case may be, as provided by this Section 4.3, the Purchase Contract Agent
shall (i) use reasonable 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's being the debtor in such a bankruptcy case, the
Collateral Agent will not be prohibited from releasing or Transferring the
Collateral as provided in this Section 4.3, and shall deliver such opinion to
the Collateral Agent within ten days after the occurrence of such Termination
Event, and if (y) the Purchase Contract Agent shall be unable to obtain such
opinion within ten days after the occurrence of such Termination Event or (z)
the Collateral Agent shall continue, after delivery of such opinion, to refuse
to effectuate the release and Transfer of all Pledged Senior Notes, the Treasury
Portfolio or the Pledged Treasury Securities,
14
as the case may be, as provided in this Section 4.3, then the Purchase Contract
Agent shall within fifteen days after the occurrence of such Termination Event
commence an action or proceeding in the court with jurisdiction of the Company's
case under the Bankruptcy Code seeking an order requiring the Collateral Agent
to effectuate the release and transfer of all Pledged Senior Notes, 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 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 promptly after the
receipt by the Purchase Contract Agent of such notice that a Holder of a
Corporate Unit has elected, in accordance with the procedures specified in
Section 5.4(a)(i) of the Purchase Contract Agreement to settle its Purchase
Contract with Cash and (ii) payment of the amount required to settle such
Purchase Contract by such Holder on or prior to 11:00 a.m., New York City time,
on the Business Day immediately preceding the Purchase Contract Settlement Date
in lawful money of the United States by certified or cashiers' check or wire
transfer in immediately available funds payable to or upon the order of the
Company, then the Collateral Agent shall, at the written direction of the
Company, promptly invest any Cash received from a Holder in connection with a
Cash Settlement in Permitted Investments. 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 and any funds so wired, 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 Holders.
(b) If a Holder of a Corporate Unit (unless a Tax Event
Redemption or a Successful Initial Remarketing has occurred) 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 an event of default under the Purchase Contract Agreement and
hereunder, and the Holder shall be deemed to have consented to the disposition
of the Pledged Senior Notes pursuant to the remarketing as described in Section
5.4(b) of the Purchase Contract Agreement, which is incorporated herein by
reference. If a Holder of a Corporate Unit does notify the Purchase Contract
Agent as provided in Section 5.4(a)(i) of the Purchase Contract Agreement of its
intention to pay the Purchase Price in cash, but fails to make such payment as
required by Section 5.4(a)(ii) of the Purchase Contract Agreement, the Pledged
Senior Notes of such a Holder will not be remarketed but instead the Collateral
15
Agent, for the benefit of the Company, will exercise its rights as a secured
party with respect to such Senior Notes at the direction of the Company to
retain or dispose of the Collateral in accordance with applicable law and the
proceeds of such disposition shall be paid to the Company on the Purchase
Contract Settlement Date in settlement of the relevant Purchase Contract. In
addition, in the event of a Failed Secondary Remarketing as described in Section
5.4(b) of the Purchase Contract Agreement, such Failed Secondary Remarketing
shall constitute an additional event of 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 Pledged Senior Notes at the direction of
the Company to retain or dispose of the Collateral in accordance with applicable
law.
SECTION 4.5 Early Settlement. Upon written notice to the
----------------
Collateral Agent by the Purchase Contract Agent that one or more Holders of
Securities have elected to effect Early Settlement of their respective
obligations under the Purchase Contracts forming a part of such Securities in
accordance with the terms of the Purchase Contracts and the Purchase Contract
Agreement (setting forth the number of such Purchase Contracts as to which such
Holders have elected to effect Early Settlement), and that the Purchase Contract
Agent has received from such Holders, and paid to the Company as confirmed in
writing by the Company, the related Early Settlement Amounts pursuant to the
terms of the Purchase Contracts 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) Pledged Senior Notes or the appropriate
Applicable Ownership Interest of 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, as the case may be, in each case with an aggregate principal
amount, as the case may be, equal to the product of (i) the Stated Amount times
(ii) the number of such Purchase Contracts as to which such Holders have elected
to effect Early Settlement and shall Transfer all such Pledged Senior Notes, the
appropriate Applicable Ownership Interest of the Treasury Portfolio or the
Pledged Treasury Securities, as the case may be, free and clear of the Pledge
created hereby, to the Purchase Contract Agent for the benefit of such Holders.
SECTION 4.6 Application of Proceeds; Settlement. (a) In the
-----------------------------------
event a Holder of Corporate Units (unless a Tax Event Redemption or a Successful
Initial Remarketing has occurred) has not elected to make an effective Cash
Settlement by notifying the Purchase Contract Agent (with a copy to the
Collateral Agent) in the manner provided for in paragraph 5.4(a)(i) in the
Purchase Contract Agreement and has not made an Early Settlement of the Purchase
Contracts underlying its Corporate Units, such Holder shall be deemed to have
irrevocably elected to pay for the shares of Common Stock to be issued under
such Purchase Contracts from the Proceeds of the
16
related Pledged Senior Notes. The Collateral Agent shall, by 10:00 a.m., New
York City time, on the third Business Day immediately preceding the Purchase
Contract Settlement Date, without any instruction from such Holder of Corporate
Units, present the related Pledged Senior Notes to the Remarketing Agent for
remarketing. Upon receiving such Pledged Senior Notes, 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
Senior Notes on such date at a price of approximately 100.5% (but not less than
100%) of the aggregate Value of such Pledged Senior Notes. After deducting as
the Remarketing Fee an amount not exceeding 25 basis points (.25%) of the
aggregate Value of the remarketed Pledged Senior Notes from any amount of such
Proceeds in excess of the aggregate Value of the remarketed Pledged Senior
Notes, the Remarketing Agent will remit the entire amount of the Proceeds of
such 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 such remarketed Pledged Senior Notes
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 remitted 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 Senior Notes of such Holders of Corporate Units at
a price not less than 100% of the aggregate Value of such Pledged Senior Notes
or if the remarketing shall not have occurred because a condition precedent to
the remarketing shall not have been fulfilled, thus resulting in a Failed
Secondary Remarketing and an event of default under the Purchase Contract
Agreement and hereunder, the Collateral Agent, for the benefit of the Company
will, at the written direction of the Company, retain or dispose of the Pledged
Senior Notes in accordance with applicable law and from any such disposition or
retention, such Holder's obligation to pay the Purchase Price for the Common
Stock, which shall be deemed to be satisfaction in full of any such obligation.
(b) In the event a Holder of Treasury Units or Corporate Units
(if a Tax Event Redemption or a Successful Initial Remarketing has occurred) has
not made an Early Settlement of the Purchase Contracts underlying its Treasury
Units or 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 Treasury Securities or the appropriate
Applicable Ownership Interest (as defined in clause (A) of the definition of
such term) of the Treasury Portfolio, as the case may be. On the Business Day
immediately prior to the Purchase Contract Settlement Date, the Collateral Agent
shall, invest the Cash proceeds of the maturing Pledged Treasury Securities or
the maturing appropriate Applicable Ownership Interest (as
17
defined in clause (A) of the definition of such term) of the Treasury Portfolio,
as the case may be, in overnight Permitted Investments of the type specified in
clause (v) of the definition of "Permitted Investments," unless it receives
other instructions prior to 10:00 a.m., New York City time. The Collateral Agent
shall apply the Proceeds of the related Pledged Treasury Securities or
appropriate Applicable Ownership Interest (as defined in clause (A) of the
definition of such term) of the Treasury Portfolio to the settlement of such
Purchase Contracts on the Purchase Contract Settlement Date, whether or not the
Collateral Agent receives an instruction from any Holder of Treasury Units or
Corporate Units, to so apply such proceeds or such interest.
In the event the sum of the Proceeds from the related Pledged Treasury
Securities or appropriate Applicable Ownership Interest (as defined in clause
(A) of the definition of such term) of the Treasury Portfolio, as the case may
be, and the investment earnings from the investment in overnight Permitted
Investments is in excess of the aggregate Purchase Price of the Purchase
Contracts being settled thereby, the Collateral Agent shall remit such excess,
when received, to the Purchase Contract Agent for the benefit of the Holders.
(c) Pursuant to the Remarketing Agreement and subject to the
terms of the Supplemental Remarketing Agreement, on or prior to the second
Business Day immediately preceding the Initial Remarketing Date or the Secondary
Remarketing Date, as applicable, but no earlier than the Payment Date
immediately preceding such date, holders of Separate Senior Notes may elect to
have their Separate Senior Notes remarketed by delivering their Separate Senior
Notes, together with a notice of such election, substantially in the form of
Exhibit C hereto, to the Custodial Agent. The Custodial Agent shall hold such
Separate Senior Notes in an account separate from the Collateral Account. A
holder of Separate Senior Notes electing to have its Separate Senior Notes
remarketed will also have the right to withdraw such election by written notice
to the Custodial Agent, substantially in the form of Exhibit D hereto, on or
prior to the second Business Day immediately preceding the Initial Remarketing
Date or the Secondary Remarketing Date, as applicable, upon which notice the
Custodial Agent shall return such Separate Senior Notes to such holder. On the
Business Day immediately preceding the Initial Remarketing Date or the Secondary
Remarketing Date, as applicable, the Custodial Agent shall notify the
Remarketing Agent, the Company and Duke Capital of the aggregate principal
amount of the separate Senior Notes to be remarketed and will deliver to the
Remarketing Agent for remarketing all Separate Senior Notes delivered to the
Custodial Agent pursuant to this Section 4.6(c) and not withdrawn pursuant to
the terms hereof prior to such date. After deducting the Remarketing Fee to the
extent permitted under the terms of the Remarketing Agreement, the Remarketing
Agent will remit to the Custodial Agent the remaining portion of the proceeds
for the benefit of such holders. In the event of a Failed Initial Remarketing or
18
a Failed Secondary Remarketing, as applicable, the Remarketing Agent will
promptly return such Separate Senior Notes to the Custodial Agent for redelivery
to such holders.
The Purchase Contract Agent, on behalf of itself and the Holders
acknowledges and irrevocably agrees that any remarketing of the Senior Notes on
the Initial Remarketing Date or the Secondary Remarketing Date shall not
constitute a foreclosure of the Pledge of or other exercise of default remedies
with respect to the Senior Notes withing the meaning of the Code, but rather
shall constitute a voluntary sale of the Senior Notes by and on behalf of the
Holders and the Purchase Contract Agent.
ARTICLE V
VOTING RIGHTS - SENIOR NOTES
SECTION 5.1 Voting Rights - Senior Notes. The Purchase Contract
----------------------------
Agent may exercise, or refrain from exercising, any and all voting and other
consensual rights pertaining to the Pledged Senior Notes or any part thereof for
any purpose not inconsistent with the terms of this Agreement and in accordance
with the terms of the Purchase Contract Agreement; provided, that the Purchase
Contract Agent shall not exercise or, as the case may be, shall not refrain from
exercising such right if, in the judgment of the Company, such action would
impair or otherwise have a material adverse effect on the value of all or any of
the Pledged Senior Notes; and provided, further, that the Purchase Contract
Agent shall give the Company and the Collateral Agent at least five days' prior
written notice of the manner in which it intends to exercise, or its reasons for
refraining from exercising, any such right. Upon receipt of any notices and
other communications in respect of any Pledged Senior Notes, including notice of
any meeting at which holders of Senior Notes are entitled to vote or
solicitation of consents, waivers or proxies of holders of Senior Notes, the
Collateral Agent shall use reasonable efforts to send promptly to the Purchase
Contract Agent such notice or communication, and as soon as reasonably
practicable after receipt of a written request therefor from the Purchase
Contract Agent, execute and deliver to the Purchase Contract Agent such proxies
and other instruments in respect of such Pledged Senior Notes (in form and
substance satisfactory to the Collateral Agent) as are prepared by the Purchase
Contract Agent with respect to the Pledged Senior Notes.
ARTICLE VI
RIGHTS AND REMEDIES; TAX EVENT REDEMPTION
19
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, to the extent permitted by law, 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) cancellation or
retention of the Pledged Senior Notes or other Collateral in full satisfaction
of the Holders' obligations under their respective Purchase Contracts or (ii)
sale of the Pledged Senior Notes or other Collateral in one or more public or
private sales.
(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 Applicable
Ownership Interest (as specified in clause (A) of the definition of such term)
of the Treasury Portfolio or on account of principal payments of any Pledged
Treasury Securities as provided in Article 3 hereof in satisfaction of the
obligations of the Holder of the Securities of which such Pledged Treasury
Securities, or the appropriate Applicable Ownership Interest (as specified in
clause (A) of the definition of such term) of the Treasury Portfolio, as
applicable, is a part under the related Purchase Contracts, the inability to
make such payments shall constitute an event of default hereunder and the
Collateral Agent shall have and may exercise, with reference to such Pledged
Treasury Securities, or such appropriate Applicable Ownership Interest (as
specified in clause (A) of the definition of such term) 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 and
interest on the Pledged Senior Notes, (ii) the principal amount of the Pledged
Treasury Securities, or (iii) the
20
appropriate Applicable Ownership Interest of the Treasury Portfolio, subject, in
each case, to the provisions of Article 3, and as otherwise granted herein.
(d) The Purchase Contract Agent, individually and as
attorney-in-fact for each Holder of Securities, agrees that, from time to time,
upon the written request of the Collateral Agent, the Purchase Contract Agent or
such Holder 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. Upon the occurrence of a Tax
--------------------
Event Redemption prior to the Purchase Contract Settlement Date, the aggregate
Redemption Price payable on the Tax Event Redemption Date with respect to the
Pledged Senior Notes shall be delivered to the Collateral Agent by the Senior
Note Trustee on or prior to 12:00 p.m., New York City time, by check or wire
transfer in immediately available funds at such place and at such account as may
be designated by the Collateral Agent in exchange for the Pledged Senior Notes.
In the event the Collateral Agent receives such Redemption Price, the Collateral
Agent will, at the written direction of the Company, apply an amount, out of
such Redemption Price, equal to the aggregate Redemption Amount with respect to
the Pledged Senior Notes 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 Senior Notes. Thereafter the
Collateral Agent shall have such security interests, rights and obligations with
respect to the Treasury Portfolio as it had in respect of the Pledged Senior
Notes as provided in Articles 2, 3, 4, 5 and 6, and any reference herein to the
Senior Notes shall be deemed to be reference to such Treasury Portfolio, and any
reference herein to interest on the Senior Notes shall be deemed to be a
reference to distributions on such 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 ____________, 2004, without any instruction from any Holder of
Corporate Units, present the related Pledged Senior Notes to the Remarketing
Agent for remarketing.
21
Upon receiving such Pledged Senior Notes, 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 Senior Notes on such
date at a price of approximately 100.5% (but not less than 100%) of the Treasury
Portfolio Purchase Price. After deducting as the Remarketing Fee an amount not
exceeding 25 basis points (.25%) 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, by check or wire transfer in immediately available funds at such place and
at such account as may be designated by the Collateral Agent in exchange for the
Pledged Senior Notes. 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 promptly remit the remaining portion
of such Proceeds 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
Senior Notes. Thereafter the Collateral Agent shall have such security
interests, rights and obligations with respect to the Treasury Portfolio as it
had in respect of the Pledged Senior Notes as provided in Articles 2, 3, 4, 5
and 6, and any reference herein to the Senior Notes shall be deemed to be
reference to such Treasury Portfolio, and any reference herein to interest on
the Senior Notes 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, Senior Notes or the appropriate Applicable
Ownership Interest of 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.
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
22
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 2 hereof;
(c) upon the Transfer of the Collateral to the Collateral
Account, the Collateral Agent, for the benefit of the Company, will have a valid
and perfected first priority security interest therein; 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 2 hereof or violate any provision of any
existing law or regulation applicable to it or of any mortgage, charge, pledge,
indenture, contract or undertaking to which it is a party or which is binding on
it or any of its assets.
SECTION 7.2 Covenants. The Holders from time to time, acting
---------
through the Purchase Contract Agent as their attorney-in-fact (it being
understood that the Purchase Contract Agent shall not be liable for any covenant
made by or on behalf of a Holder), hereby covenant to the Collateral Agent that
for so long as the Collateral remains subject to the Pledge:
(a) neither the Purchase Contract Agent nor such Holders
will create or purport to create or allow to subsist any mortgage, charge, lien,
pledge or any other security interest whatsoever over the Collateral or any part
of it other than pursuant to this Agreement; and
(b) neither the Purchase Contract Agent nor such Holders
will sell or otherwise dispose (or attempt to dispose) of the Collateral or any
part of it except for the beneficial interest therein, subject to the pledge
hereunder, transferred in connection with the Transfer of the Securities.
23
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 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 beyond the specific 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 Securities or the Purchase Contract Agreement, or for the value,
validity, effectiveness, genuineness, enforceability or sufficiency of this
Agreement (other than as against the Collateral Agent), the Securities or the
Purchase Contract Agreement or any other document referred to or provided for
herein or therein or for any failure by the Company or any other Person (except
the Collateral Agent, the Custodial Agent or the Securities Intermediary, as the
case may be) to perform any of its obligations hereunder or thereunder or for
the perfection, priority or, except as expressly required hereby, 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, bad faith or willful misconduct; (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 Securities or other
property deposited hereunder; and (f) shall not be responsible for the acts or
omissions of any clearing corporation with whom collateral is deposited. 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
24
amount in excess of the Value of the Collateral. Notwithstanding the foregoing,
the Collateral Agent, the Custodial Agent, the Purchase Contract Agent and
Securities Intermediary, each in its individual capacity, hereby waive any right
of setoff, 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.
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,
facsimile, e-mail or similar electronic means) 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 the advice of legal counsel and other experts selected by the
Collateral Agent, the Custodial Agent or the Securities Intermediary, as the
case may be. As to any matters not expressly provided for by this Agreement, the
Collateral Agent, the Custodial Agent and the Securities Intermediary shall in
all cases be fully protected in acting, or in refraining from acting, hereunder
in accordance with instructions given by the Company in accordance with this
Agreement.
SECTION 8.4 Rights in other Capacities. The Collateral Agent,
--------------------------
the Custodial Agent and the Securities Intermediary and their affiliates may
(without having to account therefor to the Company) accept deposits from, lend
money to, make their investments in and generally engage in any kind of banking,
trust or other business with the Purchase Contract Agent, any Holder of
Securities and any holder of separate Senior Notes (and any of their respective
subsidiaries or affiliates) as if it were not acting as the
25
Collateral Agent, the Custodial Agent or the Securities Intermediary, as the
case may be, and the Collateral Agent, the Custodial Agent and the Securities
Intermediary and their affiliates may accept fees and other consideration from
the Purchase Contract Agent, any Holder of Securities or any holder of separate
Senior Notes without having to account for the same to the Company; provided
that each of the Securities Intermediary, the Custodial Agent and the
Collateral Agent covenants and agrees with the Company that 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 and the Collateral shall be segregated or the books and records of
the Collateral Agent and not commingled with any other assets of any such
Person.
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 Securities of this Agreement, the Purchase Contract Agreement, the
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 Securities. The Collateral Agent, the Custodial Agent and the
Securities Intermediary shall not have any duty or responsibility to provide the
Company or the Remarketing Agent with any credit or other information concerning
the affairs, financial condition or business of the Purchase Contract Agent, any
Holder of Securities or any holder of separate Senior Notes (or any of their
respective subsidiaries or affiliates) that may come into the possession of the
Collateral Agent, the Custodial Agent or the Securities Intermediary or any of
their respective affiliates.
SECTION 8.6 Compensation and Indemnity. The Company agrees:
--------------------------
(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 expense
incurred without negligence, willful misconduct or bad faith on its part,
arising out of or in connection with the acceptance or administra tion of its
powers and duties under this Agreement, including the reasonable 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 the indemnity hereunder and give the Company
the opportunity to participate in the defense
26
of such claim or if the Company so elects to assume the defense of such claim
with counsel reasonably satisfactory to the indemnified party, and no such claim
shall be settled without the written consent of the Company, which consent shall
not be unreasonably withheld.
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 reasonably 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 expense which the
Collateral Agent or the Custodial Agent, as the case may be, may incur by reason
of its acting without bad faith, willful misconduct or negligence. 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 of the Custodial Agent, as the case may be, may deen 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 terns of this Agreement, or
which would in its opninion subject it or any of its officers, employees or
directors to liability.
SECTION 8.8 Resignation and Removal. Subject to the
-----------------------
appointment and acceptance of a successor Collateral Agent, Custodial Agent or
Securities Intermediary as provided below, (a) the Collateral Agent, the
Custodial Agent and the Securities Intermediary may resign at any time by giving
45 days prior notice thereof to the Company and the Purchase Contract Agent as
attorney-in-fact for the Holders of Securities, (b) the Collateral Agent, the
Custodial Agent and the Securities Intermediary may be removed at any time by
the Company and (c) if the Collateral Agent, the Custodial Agent or Securities
Intermediary fails to perform any of its material
27
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, the Custodial
Agent or the Securities Intermediary may be removed by the Purchase Contract
Agent. Any resignation or removal of the Collateral Agent, the Custodial Agent
or the Securities Intermediary shall become effective only upon acceptance of
appointment by its successor. The Purchase Contract Agent shall promptly notify
the Company of any removal of the Collateral Agent, the Custodial Agent or the
Securities Intermediary pursuant to clause (c) of the immediately preceding
sentence. Upon any such resignation or removal, the Company shall have the right
and shall exercise its best efforts to appoint a successor Collateral Agent,
Custodial Agent or Securities Intermediary, as the case may be. If no successor
Collateral Agent, Custodial Agent or Securities Intermediary, as the case may
be, shall have been so appointed and shall have accepted such appointment within
30 days after the retiring Collateral Agent's, Custodial Agent's or Securities
Intermediary's giving of notice of resignation or such removal, then the
retiring Collateral Agent, Custodial Agent or Securities Intermediary, as the
case may be, may petition any court of competent jurisdiction for the
appointment of a successor Collateral Agent, Custodial Agent or Securities
Intermediary, as the case may be. Each of the Collateral Agent, the Custodial
Agent and the Securities Intermediary shall be a bank which has an office in New
York, New York with a combined capital and surplus of at least $75,000,000. Upon
the acceptance of any appointment as Collateral Agent, Custodial Agent or
Securities Intermediary, as the case may be, hereunder by a successor Collateral
Agent, Custodial Agent or Securities Intermediary, as the case may be, such
successor shall thereupon succeed to and become vested with all the rights,
powers, privileges and duties of the retiring Collateral Agent, Custodial Agent
or Securities Intermediary, as the case may be, and the retiring Collateral
Agent, Custodial Agent or Securities Intermediary, as the case may be, shall
take all appropriate action to transfer any money and property held by it
hereunder (including the Collateral) to such successor. The retiring Collateral
Agent, Custodial Agent or Securities Intermediary shall, upon such succession,
be discharged from its duties and obligations as Collateral Agent, Custodial
Agent or Securities Intermediary hereunder. After any retiring Collateral
Agent's, Custodial Agent's or Securities Intermediary's resignation hereunder as
Collateral Agent, Custodial Agent or Securities Intermediary, the provisions of
this Article 8 shall continue in effect for its benefit in respect of any
actions taken or omitted to be taken by it while it was acting as the Collateral
Agent, Custodial Agent or Securities Intermediary. Any resignation or removal of
the Collateral Agent hereunder shall be deemed for all purposes of this
Agreement as the simultaneous resignation or removal of the Custodial Agent and
the Securities Intermediary. The Company shall give the Purchase Contract Agent
prompt notice of the appointment of any successor to the Collateral Agent, the
Custodial Agent or the Securities Intermediary.
28
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 8 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 gross
negligence or willful misconduct on the part of the Collateral Agent, the
Custodial Agent or the Securities Intermediary.
ARTICLE IX
AMENDMENT
SECTION 9.1 Amendment Without Consent of Holders. Without the
------------------------------------
consent of any Holders or the holders of any Separate Senior Notes, the Company
when authorized by or pursuant to a Board Resolution (as defined in the Purchase
Contract Agreement), 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; or
29
(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 in any material respect.
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, when
authorized by or pursuant to a Board Resolution (as defined in the Purchase
Contract Agreement), the Purchase Contract Agent or the Collateral Agent, as the
case may be, the Company, when duly authorized, 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 Securities; provided,
however, that no such supplemental agreement shall, without the consent of the
Holder of each Outstanding Security affected thereby,
(a) change the amount or type of Collateral underlying a
Security, impair the right of the Holder of any 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 Security affected thereby pursuant to the
Purchase Contract Agreement if such action were effected by an agreement
supplemental thereto;
(c) reduce the amount payable or distributable to Holders upon
the remarketing of Senior Notes; or
(d) reduce the percentage of Purchase Contracts the consent of
whose Holders is required for any such amendment.
If any amendment referred to above would adversely affect only the Corporate
Units or the Treasury Units, then only the affected class of Holders shall be
entitled to vote on the amendment and the amendment shall not be effective
except with the consent of the Holders of not less than a majority or all of the
affected Holders, as applicable, of the
30
relevant class. It shall not be necessary for any Act of Holders under this
Article 9 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 provided
and (subject to Section 8.1 hereof, with respect to the Collateral Agent, and
Section 7.1 of the Purchase Contract Agreement, with respect to the Purchase
Contract Agent) shall be fully protected in relying upon, an Opinion of Counsel
stating that the execution of such amendment is authorized or permitted by this
Agreement and that all conditions precedent, if any, to the execution and
delivery of such amendment have been satisfied. All amendments must be in
writing, signed by all parties to this Agreement.
SECTION 9.4 Effect of Amendments. Upon the execution of any
--------------------
amendment under this Article 9, this Agreement shall be modified in accordance
therewith, and such amendment shall form a part of this Agreement for all
purposes; and every Holder of Certificates theretofore or thereafter
authenticated, executed on behalf of the Holders and delivered under the
Purchase Contract Agreement shall be bound thereby.
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 9 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 and without charge or expense
to Holders in exchange for Outstanding Security Certificates.
ARTICLE X
MISCELLANEOUS
SECTION 10.1 No Waiver. To the extent permitted by law, no
---------
failure on the part of any party hereto or any of its agents to exercise, and no
course of dealing with respect to, and no delay in exercising, any right, power
or remedy hereunder shall
31
operate as a waiver thereof; nor shall any single or partial exercise by any
party hereto or any of its agents of any right, power or remedy hereunder
preclude any other or further exercise thereof or the exercise of any other
right, power or remedy. To the extent permitted by law, 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
limiting the foregoing, the above choice of law is expressly agreed to by the
Securities Intermediary, 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, the Custodial Agent, the Securities Intermediary
and the Holders from time to time of the 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 for the purposes of all legal proceedings arising out of or relating to
this Agreement or the transactions contemplated hereby. Notwithstanding any
provisions of any account agreement or any other agreement to the contrary, the
collateral account and all other agreements relating thereto (including any
related account agreement) shall be governed by and construed in accordance with
the laws of the State of New York, without giving effect to conflict of laws
provisions that would require the application of any other law (other than
Section 5-1401 of the General Obligations Law of the State of New York). This is
intended to be "an agreement" withing the meaning of Section 8-110(e) of the
Code, and the State of New York shall be the Securities Intermediary's
jurisdiction for the purposes of the Code. The Company, the Collateral Agent,
the Custodial Agent, the Securities Intermediary and the Holders from time to
time of the 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, as well as to trial by jury.
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, 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
32
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.
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
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 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 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 costs and
expenses of the Collateral Agent and the Custodial Agent (including, without
limitation, the reasonable fees and expenses 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 Securities to satisfy its obligations under the Purchase Contracts
forming a part of the 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
33
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 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 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.
34
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
DUKE ENERGY CORPORATION
By:_________________________________
Name:
Title:
Address for Notices:
Duke Energy Corporation
000 Xxxxx Xxxxxx Xxxxxx
Xxxxxxxxx, Xxxxx Xxxxxxxx 00000
Attention: Chief Financial Officer
Telecopy:
THE CHASE MANHATTAN BANK, as
Purchase Contract Agent and as
attorney- in-fact of the Holders
from time to time of the Securities
By:________________________________
Name:
Title:
Address for Notices:
The Chase Manhattan Bank
000 Xxxx 00/xx/ Xxxxxx,
Xxx Xxxx, XX 00000
Attention: Institutional Trust Services
Telecopy: (000) 000-0000
35
BANK ONE TRUST COMPANY, N.A.
as Collateral Agent, Custodial Agent and as
Securities Intermediary
By:________________________________
Name:
Title:
Address for Notices:
Bank One Trust Company, N.A.
Xxx Xxxxx Xxxxx Xxxxxx, 0/xx/ Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Corporate Trust Services Division
Telecopy: (000) 000-0000
36
EXHIBIT A
INSTRUCTION FROM PURCHASE CONTRACT AGENT
TO COLLATERAL AGENT
Bank One Trust Company, N.A.
Xxx Xxxxx Xxxxx Xxxxxx, 0/xx/ Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Corporate Trust Services Division
Re: Duke Energy Corporation (the "Company")
We hereby notify you in accordance with Section [4.1] [4.2] of the
Pledge Agreement, dated as of March ___, 2001, (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 the Securities listed below (the "Holder") has elected to
substitute $_____ [aggregate principal amount of Treasury Securities] [aggregate
principal amount of Senior Notes or the appropriate Applicable Ownership
Interest of the Treasury Portfolio, as the case may be,] in exchange for an
equal Value of [Pledged Senior Notes or the appropriate Applicable Ownership
Interest of the Treasury Portfolio, as the case may be,] [Pledged Treasury
Securities] held by you in accordance with the Pledge Agreement and has
delivered to us a notice stating that the Holder has Transferred [Treasury
Securities] [Senior Notes or the appropriate Applicable Ownership Interest of
the Treasury Portfolio, as the case may be,] to you, as Collateral Agent. We
hereby instruct you, upon receipt of such [Pledged Treasury Securities] [Pledged
Senior Notes or the appropriate Applicable Ownership Interest of the Treasury
Portfolio, as the case may be,], and upon the payment by such Holder of any
applicable fees, to release the [Senior Notes or the appropriate Applicable
Ownership Interest of the Treasury Portfolio, as the case may be,] [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 in the Pledge Agreement.
38
Date:_____________ The Chase Manhattan Bank,
By:_________________
Name:
Title:
Signature Guarantee: _______________
Please print name and address of Registered Holder electing to substitute
[Treasury Securities] [Senior Notes or the appropriate Applicable Ownership
Interest of the Treasury Portfolio, as the case may be,] for the [Pledged Senior
Notes or the appro priate Applicable Ownership Interest of the Treasury
Portfolio, as the case may be,] [Pledged Treasury Securities]:
______________________________ __________________________________
Name Social Security or other Taxpayer
Identification Number, if any
______________________________
Address
______________________________
______________________________
______________________________
38
EXHIBIT B
INSTRUCTION TO PURCHASE CONTRACT AGENT
The Chase Manhattan Bank
000 Xxxx 00/xx/ Xxxxxx,
Xxx Xxxx, XX 00000
Attention: Institutional Trust Services
Re: Equity Units of Duke Energy Corporation (the "Company")
The undersigned Holder hereby notifies you that it has
delivered to Bank One Trust Company, N.A., as Collateral Agent, [$_______
aggregate principal amount of Treasury Securities] [$_____aggregate principal
amount of Senior Notes or the appropriate Applicable Ownership Interest of the
Treasury Portfolio, the case may be,] in exchange for an equal Value of [Pledged
Senior Notes or the appropriate Applicable Ownership Interest of 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 March __, 2001 (the "Pledge Agreement"), between you, the Company and the
Collateral Agent. The undersigned Holder has paid the Collateral Agent all
applicable fees relating to such exchange. The undersigned Holder hereby
instructs you to instruct the Collateral Agent to release to you on behalf of
the undersigned Holder the [Pledged Senior Notes or the appropriate Applicable
Ownership Interest of 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 in the Pledge Agreement.
Dated:_____________ ______________________________________
Signature
Signature Guarantee: _________________
39
Please print name and address of Registered Holder:
___________________________ _________________________
Name Social Security or other
Taxpayer Identification
___________________________ Number, if any
Address
___________________________
___________________________
___________________________
40
EXHIBIT C
INSTRUCTION TO CUSTODIAL AGENT REGARDING REMARKETING
Bank One Trust Company, N.A.
Xxx Xxxxx Xxxxx Xxxxxx, 0xx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Corporate Trust Services Division
Re: Senior Notes of Duke Capital Corporation (the "Company")
The undersigned hereby notifies you in accordance with Section
4.6(c) of the Pledge Agreement, dated as of March ___, 2001 (the "Pledge Agree
ment"), among Duke Energy Corporation, yourselves, as Collateral Agent,
Securities Intermediary and Custodial Agent, and The Chase Manhattan Bank, 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 $ aggregate principal amount of Senior Notes 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 Agree ment. 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 Senior Notes 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
a Failed [Initial] [Secondary] Remarketing, upon receipt of the Senior Notes
tendered herewith from the Remarketing Agent, to deliver the Senior Notes to the
person(s) and the ad dress(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 Senior Notes tendered hereby and that the undersigned is
the record owner of any Senior Notes tendered herewith in physical form or a
participant in The Depositary Trust Company ("DTC") and the beneficial owner of
any Senior Notes tendered herewith by book-entry transfer to your account at DTC
and (ii) agrees to be bound
41
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
in the Pledge Agreement.
Date:_____________
_____________________________________
By:
_________________________________
Name:
Title:
Signature Guarantee: ________________
Please print name and address:
____________________________ _______________________
Name Social Security or other
Taxpayer Identification
____________________________ Number, if any
Address
____________________________
____________________________
____________________________
42
-------------------------------------------------- ---------------------------------------------------
A. PAYMENT INSTRUCTIONS B. DELIVERY INSTRUCTIONS
================================================== ===================================================
Proceeds of the remarketing should be paid by In the event of a failed remarketing, Senior Notes
check in the name of the person(s) set forth which are in physical form should be delivered to
below and mailed to the address set forth below the person(s) set forth below and mailed to the
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 Security Number) (Tax Identification or Social Security Number)
==================================================
In the event of a failed remarketing, Senior Notes
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: _______________
===================================================
43
EXHIBIT D
INSTRUCTION TO CUSTODIAL AGENT REGARDING
WITHDRAWAL FROM REMARKETING
Bank One Trust Company, N.A.
Xxx Xxxxx Xxxxx Xxxxxx, 0xx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Attention: Corporate Trust Services Division
Re: Senior Notes of Duke Capital Corporation
The undersigned hereby notifies you in accordance with Section
4.6(c) of the Pledge Agreement, dated as of March __, 2001 (the "Pledge
Agreement") among the Duke Energy Corporation, yourselves, as Collateral Agent,
Securities Intermediary and Custodial Agent and The Chase Manhattan Bank, 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 $_____ aggregate principal amount of Senior Notes delivered to the
Custodial Agent on March __, 2001 for remarketing pursuant to Section 4.6(c) of
the Pledge Agreement. The undersigned hereby instructs you to return such Senior
Notes to the undersigned in accordance with the undersigned's instructions. With
this notice, the Undersigned hereby agrees to be bound by the terms and
conditions of Section 4.6(c) of the Pledge Agreement. Capitalized terms used
herein but not defined shall have the meaning set forth in the Pledge Agreement.
Date:_____________
_____________________________________
By:
_________________________________
Name:
Title:
Signature Guarantee: ________________
44
Please print name and address:
____________________________ _______________________
Name Social Security or other
Taxpayer Identification
____________________________ Number, if any
Address
____________________________
____________________________
____________________________
45
