EXHIBIT 4.14
VALERO ENERGY CORPORATION
and
________________________________________, as Collateral Agent
and
_________________________________, as Securities Intermediary
and
_________________________________, as Purchase Contract Agent
PLEDGE AGREEMENT
Dated as of ___________, 2000
TABLE OF CONTENTS
Section 1. Definitions ..................................................................... 1
Section 2. Pledge .......................................................................... 5
Section 2.1 Pledge ................................................................. 5
Section 2.2 Control; Financing Statement ........................................... 5
Section 2.3 Termination ............................................................ 5
Section 3. Distributions on Pledged Collateral ............................................. 6
Section 3.1 Income Distributions ................................................... 6
Section 3.2 Principal Payments Following Termination Event ......................... 6
Section 3.3 Principal Payments Prior To or On Purchase Contract Settlement Date .... 6
Section 3.4 Payments to Purchase Contract Agent .................................... 7
Section 3.5 Assets Not Properly Released ........................................... 7
Section 4. Control ......................................................................... 7
Section 4.1 Establishment of Collateral Account .................................... 7
Section 4.2 Treatment as Financial Assets .......................................... 8
Section 4.3 Sole Control by Collateral Agent ....................................... 8
Section 4.4 Securities Intermediary's Location ..................................... 8
Section 4.5 No Other Claims ........................................................ 8
Section 4.6 Investment and Release ................................................. 8
Section 4.7 Statements and Confirmations ........................................... 9
Section 4.8 Tax Allocations ........................................................ 9
Section 4.9 No Other Agreements .................................................... 9
Section 4.10 Powers Coupled With An Interest ....................................... 9
Section 5. Initial Deposit; Establishment of Treasury PEPS Units and
Reestablishment of PEPS Units ................................................... 9
Section 5.1 Initial Deposit of Trust Preferred Securities .......................... 9
Section 5.2 Establishment of Treasury PEPS Units ................................... 9
Section 5.3 Reestablishment of PEPS Units .......................................... 11
Section 5.4 Termination Event ...................................................... 12
Section 5.5 Cash Settlement ........................................................ 14
Section 5.6 Early Settlement ....................................................... 15
Section 5.7 Application of Proceeds Settlement ..................................... 16
Section 5.8 Tax Event Redemption ................................................... 17
Section 6. Voting Rights - Trust Preferred Securities and Pledged Senior Deferrable Notes... 17
Section 7. Rights and Remedies ............................................................. 18
Section 7.1 Rights and Remedies of the Collateral Agent ............................ 18
Section 7.2 Substitution of Senior Deferrable Notes................................. 19
Section 7.3 Tax Event Redemption ................................................... 19
Section 7.4 Substitutions .......................................................... 20
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Section 8. Representations and Warranties; Covenants ....................................... 20
Section 8.1 Representations and Warranties ......................................... 20
Section 8.2 Covenants .............................................................. 21
Section 9. The Collateral Agent and the Securities Intermediary ............................ 21
Section 9.1 Appointment, Powers and Immunities ..................................... 21
Section 9.2 Instructions of the Company ............................................ 22
Section 9.3 Reliance by Collateral Agent and Securities Intermediary ............... 22
Section 9.4 Rights in Other Capacities ............................................. 23
Section 9.5 Non-Reliance on Collateral Agent and Securities Intermediary ........... 23
Section 9.6 Compensation and Indemnity ............................................. 23
Section 9.7 Failure to Act ......................................................... 24
Section 9.8 Resignation of Collateral Agent and Securities Intermediary ............ 25
Section 9.9 Right to Appoint Agent or Advisor ...................................... 26
Section 9.10 Survival .............................................................. 26
Section 9.11 Exculpation ........................................................... 26
Section 10. Amendment ...................................................................... 27
Section 10.1 Amendment Without Consent of Holders .................................. 27
Section 10.2 Amendment With Consent of Holders ..................................... 27
Section 10.3 Execution of Amendments ............................................... 28
Section 10.4 Effect of Amendments .................................................. 28
Section 10.5 Reference to Amendments ............................................... 28
Section 11. Miscellaneous .................................................................. 29
Section 11.1 No Waiver ............................................................. 29
Section 11.2 Governing Law ......................................................... 29
Section 11.3 Notices ............................................................... 29
Section 11.4 Successors and Assigns ................................................ 29
Section 11.5 Counterparts .......................................................... 30
Section 11.6 Severability .......................................................... 30
Section 11.7 Expenses, etc ......................................................... 30
Section 11.8 Security Interest Absolute ............................................ 31
Section 11.9 Notice of Tax Event, Tax Event Redemption and Termination Event ....... 31
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EXHIBIT A INSTRUCTION FROM PURCHASE CONTRACT AGENT TO COLLATERAL
AGENT (Establishment of Treasury PEPS Units)........................................ A-1
EXHIBIT B INSTRUCTION FROM COLLATERAL AGENT TO SECURITIES
INTERMEDIARY (Establishment of Treasury PEPS Units)................................. B-1
EXHIBIT C INSTRUCTION FROM PURCHASE CONTRACT AGENT TO COLLATERAL
AGENT (Reestablishment of PEPS Units)............................................... C-1
EXHIBIT D INSTRUCTION FROM COLLATERAL AGENT TO SECURITIES
INTERMEDIARY (Reestablishment of PEPS Units)........................................ D-1
EXHIBIT E NOTICE OF CASH SETTLEMENT FROM SECURITIES INTERMEDIARY TO
PURCHASE CONTRACT AGENT (Cash Settlement Amounts)................................... E-3
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PLEDGE AGREEMENT
PLEDGE AGREEMENT, dated as of ___________, 2000, among Valero Energy
Corporation, a Delaware corporation (the "COMPANY"), _______________, a national
banking association, as collateral agent (in such capacity, together with its
successors in such capacity, the "COLLATERAL AGENT"), ______________________, a
national banking association, as securities intermediary with respect to the
Collateral Account (in such capacity, together with its successors in such
capacity, the "SECURITIES INTERMEDIARY"), and ________________________, as
purchase contract agent and as attorney-in-fact of the Holders from time to time
of the Securities under the Purchase Contract Agreement (in such capacity,
together with its successors in such capacity, the "PURCHASE CONTRACT AGENT").
RECITALS
The Company and the Purchase Contract Agent are parties to the Purchase
Contract Agreement dated as of the date hereof (as modified and supplemented and
in effect from time to time, the "PURCHASE CONTRACT AGREEMENT"), pursuant to
which there may be issued up to ___________ Premium Equity Participating
Security Units--PEPSSM Units (the "SECURITIES") (including ____________
Securities relating to the over-allotment option granted to the underwriters
pursuant to the Underwriting Agreement).
Each PEPS Unit, at issuance, consists of a unit comprised of (a) a
stock purchase contract (the "PURCHASE CONTRACT") under which (i) the Holder
will purchase from the Company on the Purchase Contract Settlement Date, for an
amount equal to [25] (the "STATED AMOUNT"), a number of shares of Valero Energy
Corporation, Inc. common stock, par value $0.01 ("COMMON STOCK"), equal to the
Settlement Rate, and (ii) the Company will pay the Holder Purchase Contract
Payments and (b) beneficial ownership of a Trust Preferred Security (a
"PREFERRED SECURITY") issued by VEC Trust [ ] (the "TRUST"), having a
liquidation amount equal to the Stated Amount and maturing on __________, 200__.
Pursuant to the terms of the Purchase Contract Agreement and the
Purchase Contracts, the Holders 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 herein of the Collateral Account to secure the
Obligations.
Accordingly, the Company, the Collateral Agent, the Securities
Intermediary 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:
SECTION 1. DEFINITIONS.
For all purposes of this Agreement, except as otherwise expressly
provided or unless the context otherwise requires:
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(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;
(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, Exhibit or other subdivision;
(c) the following terms which are defined in the UCC shall have the
meanings set forth therein: "CERTIFICATED SECURITY," "CONTROL," "FINANCIAL
ASSET," "ENTITLEMENT ORDER," "SECURITIES ACCOUNT" and "SECURITY ENTITLEMENT;"
(d) the following terms have the meanings assigned to them in the
Purchase Contract Agreement: "ACT," "BANKRUPTCY CODE," "BOARD RESOLUTION,"
"BUSINESS DAY," "CASH SETTLEMENT," "CERTIFICATE," "EARLY SETTLEMENT," "EARLY
SETTLEMENT AMOUNT," "EARLY SETTLEMENT DATE," "HOLDER," "OFFICERS' CERTIFICATE,"
"OPINION OF COUNSEL," "OUTSTANDING SECURITIES," "PEPS UNIT," "PURCHASE
CONTRACT," "PURCHASE CONTRACT PAYMENTS," "PURCHASE CONTRACT SETTLEMENT DATE,"
"PURCHASE PRICE," "REMARKETING AGENT," "REMARKETING AGREEMENT," "SENIOR
DEFERRABLE NOTES," "SETTLEMENT RATE," "TERMINATION EVENT," "TREASURY PEPS UNIT,"
and "UNDERWRITING AGREEMENT;"
(e) the following terms have the meanings assigned to them in the
Amended and Restated Declaration of Trust of VEC Trust [ ], of even date
herewith (the "DECLARATION"): "APPLICABLE OWNERSHIP INTEREST," "APPLICABLE
PRINCIPAL AMOUNT," "FAILED REMARKETING," "INDENTURE," "INDENTURE TRUSTEE,"
"PRIMARY TREASURY DEALER," "PROPERTY TRUSTEE," "QUOTATION AGENT," "REDEMPTION
AMOUNT," "REDEMPTION PRICE," "TAX EVENT," "TAX EVENT REDEMPTION," "TAX EVENT
REDEMPTION DATE," and "TREASURY PORTFOLIO;" and
(f) the following terms have the meanings given to them in this Section
1(f):
"AGREEMENT" means this Pledge Agreement, as the same may be
amended, modified or supplemented from time to time.
"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.
"COLLATERAL ACCOUNT" means the collective reference to:
(1) Securities Account No. _________ entitled "_____________,
AS COLLATERAL AGENT, SECURITIES ACCOUNT (VALERO ENERGY CORPORATION)"
maintained by the Securities Intermediary for the Purchase Contract
Agent on behalf of and as attorney-in-fact for the Holders;
(2) all investment property and other financial assets from
time to time credited to the Collateral Account, including, without
limitation, (A) the Preferred Securities and security entitlements
relating thereto which are a component of the PEPS Units from time to
time, (B) the Applicable Ownership Interests (as specified in Clause
(A) of the definition of such term) of the Holders with respect to the
Treasury Portfolio which are a
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component of the PEPS Units from time to time; (C) the Senior
Deferrable Notes and security entitlements relating thereto which are a
component of the PEPS Units from time to time, (D) any Treasury
Securities and security entitlements relating thereto delivered from
time to time upon establishment of Treasury PEPS Units in accordance
with Section 5.2 hereof and (E) payments made by Holders pursuant to
Section 5.5 hereof;
(3) all Proceeds of any of the foregoing (whether such
Proceeds arise before or after the commencement of any proceeding under
any applicable bankruptcy, insolvency or other similar law, by or
against the pledgor or with respect to the pledgor); and
(4) all powers and rights now owned or hereafter acquired
under or with respect to the Collateral Account
((2), (3) and (4), being collectively referred to as the "COLLATERAL").
"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.
"OBLIGATIONS" means, with respect to each Holder, the collective
reference to all obligations and liabilities of such Holder under such Holder's
Purchase Contract, the Purchase Contract Agreement, and this Agreement or any
other document made, delivered or given in connection herewith or therewith, in
each case whether on account of principal, interest (including, without
limitation, interest accruing before and after the filing of any petition in
bankruptcy, or the commencement of any insolvency, reorganization or like
proceeding, relating to such Holder, whether or not a claim for post-filing or
post-petition interest is allowed in such proceeding), fees, indemnities, costs,
expenses or otherwise (including, without limitation, all fees and disbursements
of counsel to the Company or the Collateral Agent or the Securities Intermediary
that are required to be paid by the Holder pursuant to the terms of any of the
foregoing agreements).
"PERMITTED INVESTMENTS" means any one of the following which shall
mature not later than the next succeeding Business Day:
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 of the timely
payment thereof or such indebtedness constitutes a general obligation of it);
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 $200.0 million at the time of deposit; 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 (2); repurchase agreements and
reverse repurchase agreements relating to marketable direct obligations issued
or unconditionally guaranteed by the United States Government or issued by any
agency thereof and backed as to timely payment by the full faith and credit of
the United States Government; investments in commercial paper, other than
commercial paper issued by the Company or its affiliates, of any corporation
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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 investments in money market funds
(including, but not limited to, money market funds managed by the Collateral
Agent or an affiliate of the Collateral Agent) registered under the Investment
Company Act of 1940, as amended, rated in the highest applicable rating category
by S&P or Moody's.
"PERSON" means any legal person, including any individual, corporation,
estate, partnership, joint venture, association, joint-stock company, limited
liability company, trust, unincorporated organization or government or any
agency or political subdivision thereof.
"PLEDGE" means the lien and security interest created by this
Agreement.
"PLEDGED PREFERRED SECURITIES" means the Preferred Securities and
security entitlements with respect thereto from time to time credited to the
Collateral Account and not then released from the Pledge.
"PLEDGED SENIOR DEFERRABLE NOTES" means Senior Deferrable Notes and
security entitlements with respect thereto from time to time credited to the
Collateral Account and not then released from the Pledge.
"PLEDGED TREASURY SECURITIES" means Treasury Securities and security
entitlements with respect thereto from time to time credited to the Collateral
Account and not then released from the Pledge.
"PROCEEDS" has the meaning ascribed thereto in the UCC and includes,
without limitation, all interest, dividends, cash, instruments, securities,
financial assets (as defined in Section 8-102(a)(9) of the UCC) and other
property received, receivable or otherwise distributed upon the sale, exchange,
collection or disposition of any financial assets from time to time held in the
Collateral Account.
"PURCHASE CONTRACT AGENT" has the meaning specified in the paragraph
preceding the recitals of this Agreement.
"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, an amended from
time to time. Unless otherwise defined herein, all terms defined in the TRADES
Regulations are used herein as therein defined.
"TRANSFER" means in the case of certificated securities in registered
form, delivery as provided in Section 8-301(a) of the UCC, endorsed to the
transferee or in blank by an effective endorsement; in the case of Treasury
Securities, registration of the transferee as the owner of such Treasury
Securities on TRADES; and in the case of security entitlements, including,
without limitation, security entitlements with respect to Treasury Securities, a
securities
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intermediary indicating by book entry that such security entitlement has been
credited to the transferee's securities account.
"TREASURY SECURITIES" means zero-coupon U.S. treasury securities (Cusip
No. ______ FR6) which mature on ____________, 200__.
"UCC" means the Uniform Commercial Code as in effect in the State of
New York from time to time.
"VALUE" means, with respect to any item of Collateral on any date, as
to (1) Cash, the face amount thereof and (2) Treasury Securities, the aggregate
principal amount thereof at maturity and (3) the Preferred Securities, the
liquidation amount thereto.
SECTION 2. PLEDGE.
SECTION 2.1 PLEDGE.
Each Holder, acting through the Purchase Contract Agent as such
Holder's attorney-in-fact, hereby pledges and grants to the Collateral Agent,
as agent of and for the benefit of the Company, a continuing first priority
security interest in and to, and a lien upon and right of set off against, all
of such Holder's right, title and interest in and to the Collateral Account to
secure the prompt and complete payment and performance when due (whether at
stated maturity, by acceleration or otherwise) of the Obligations. The
Collateral Agent shall have all of the rights, remedies and recourses with
respect to the Collateral afforded a secured party by the UCC, in addition to,
and not in limitation of, the other rights, remedies and recourses afforded to
the Collateral Agent by this Agreement.
SECTION 2.2 CONTROL; FINANCING STATEMENT.
(a) The Collateral Agent shall have control of the Collateral Account
pursuant to the provisions of Section 4 of this Agreement.
(b) Subsequent to the date of initial issuance of the Securities, the
Purchase Contract Agent shall deliver to the Collateral Agent a financing
statement prepared by the Company for filing in the Office of the Secretary of
State of the State of New York and any other jurisdictions which the Company
deems necessary, signed by the Purchase Contract Agent, as attorney-in-fact for
the Holders, as Debtors, and describing the Collateral.
SECTION 2.3 TERMINATION.
As to each Holder, this Agreement and the Pledge created hereby shall
terminate upon the satisfaction of such Holder's Obligations. Upon such
termination, the Securities Intermediary shall Transfer such Holder's portion of
the Collateral to the Purchase Contract Agent for distribution to such Holder in
accordance with his interest, free and clear of any lien, pledge or security
interest created hereby.
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SECTION 3. DISTRIBUTIONS ON PLEDGED COLLATERAL.
SECTION 3.1 INCOME DISTRIBUTIONS.
All income distributions received by the Securities Intermediary on
account of the Preferred Securities, the Applicable Ownership Interest (as
specified in clause (A) of the definition of such term) of the Treasury
Portfolio, the Senior Deferrable Notes or Permitted Investments from time to
time held in the Collateral Account shall be distributed to the Purchase
Contract Agent for the benefit of the applicable Holders as provided in the
Purchase Contracts or Purchase Contract Agreement.
SECTION 3.2 PRINCIPAL PAYMENTS FOLLOWING TERMINATION EVENT.
All payments received by the Securities Intermediary following a
Termination Event of (1) the liquidation amount of Pledged Preferred Securities
or securities entitlements thereto, or (2) the Applicable Ownership Interests
(as specified in Clause (A) of the definition thereof) of the Treasury
Portfolio, (3) the aggregate principal amount of the Pledged Senior Deferrable
Notes or securities entitlements thereto, or (4) the principal amount of the
Pledged Treasury Securities, shall be distributed to the Purchase Contract Agent
for the benefit of the applicable Holders for distribution to such Holders in
accordance with their respective interests.
SECTION 3.3 PRINCIPAL PAYMENTS PRIOR TO OR ON PURCHASE CONTRACT
SETTLEMENT DATE.
(a) Subject to the provisions of Section 7.2, and except as provided in
clause 3.3(b) below, if no Termination Event shall have occurred, all payments
received by the Securities Intermediary of (1) the liquidation amount with
respect to the Pledged Preferred Securities or security entitlements thereto,
(2) Applicable Ownership Interests (as specified in Clause (A) of the definition
thereof) of the Treasury Portfolio, (3) the aggregate principal amount with
respect to the Pledged Senior Deferrable Notes or security entitlements thereto
or (4) the principal amount of Pledged Treasury Securities, shall be held and
invested in Permitted Investments until the Purchase Contract Settlement Date
and on the Purchase Contract Settlement Date distributed to the Company as
provided in Section 5.7 hereof. Any balance remaining in the Collateral Account
shall be distributed to the Purchase Contract Agent for the benefit of the
applicable Holders for distribution to such Holders in accordance with their
respective interests. Upon the request of the Securities Intermediary, the
Company shall instruct the Securities Intermediary as to the type of Permitted
Investments in which any payments made under this Section shall be invested,
provided, however, that if the Company fails to deliver such instructions in a
timely manner, the Securities Intermediary shall invest such payments in the
Permitted Investments described in clause 5 of the definition of Permitted
Investments.
(b) All payments received by the Securities Intermediary of (1) the
liquidation amount of Preferred Securities or security entitlements thereto, (2)
Applicable Ownership interests (as specified in Clause (A) of the definition
thereof) of the Treasury Portfolio, (3) the aggregate principal amount with
respect to the Senior Deferrable Notes or security entitlements thereto or (4)
the principal amount of Treasury Securities or security entitlements thereto,
that, in each case,
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have been released from the Pledge shall be distributed to the Purchase Contract
Agent for the benefit of the applicable Holders for distribution to such Holders
in accordance with their respective interests.
SECTION 3.4 PAYMENTS TO PURCHASE CONTRACT AGENT.
The Securities Intermediary shall use all commercially reasonable
efforts to deliver payments to the Purchase Contract Agent hereunder to the
account designated by the Purchase Contract Agent for such purpose not later
than 12:00 p.m. (New York City time) on the Business Day such payment is
received by the Securities Intermediary; provided, however, that if such payment
is received on a day that is not a Business Day or after 12:00 p.m. (New York
City time) on a Business Day, then the Securities Intermediary shall use all
commercially reasonable efforts to deliver such payment no later than 10:30 a.m.
(New York City time) on the next succeeding Business Day.
SECTION 3.5 ASSETS NOT PROPERLY RELEASED.
If the Purchase Contract Agent or any Holder shall receive any
principal payments on account of financial assets credited to the Collateral
Account and not released therefrom in accordance with this Agreement, the
Purchase Contract Agent or such Holder shall hold the same as trustee of an
express trust for the benefit of the Company and, upon receipt of an Officers'
Certificate of the Company so directing, promptly deliver the same to the
Securities Intermediary for credit to the Collateral Account or to the Company
for application to the Obligations of the Holders, and the Purchase Contract
Agent and Holders shall acquire no right, title or interest in any such payments
of principal amounts so received.
SECTION 4. CONTROL
SECTION 4.1 ESTABLISHMENT OF COLLATERAL ACCOUNT.
The Securities Intermediary hereby confirms that:
(1) the Securities Intermediary has established the Collateral
Account;
(2) the Collateral Account is a securities account;
(3) subject to the terms of this Agreement, the Securities
Intermediary shall treat the Purchase Contract Agent as entitled to
exercise the rights that comprise any financial asset credited to the
Collateral Account;
(4) all property delivered to the Securities Intermediary
pursuant to this Agreement or the Purchase Contract Agreement will be
credited promptly to the Collateral Account;
(5) 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 securities
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account maintained in the name of the Securities Intermediary, and in
no case will any financial asset credited to the Collateral Account be
registered in the name of the Purchase Contract Agent or any Holder,
payable to the order of the Purchase Contract Agent or any Holder or
specially indorsed to the Purchase Contract Agent or any Holder.
SECTION 4.2 TREATMENT AS FINANCIAL ASSETS.
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.
SECTION 4.3 SOLE CONTROL BY COLLATERAL AGENT.
Except as provided in Section 6, at all times prior to the termination
of the Pledge, the Collateral Agent shall have sole control of the Collateral
Account, and the Securities Intermediary shall take instructions and directions
with respect to the Collateral Account solely from the Collateral Agent. If at
any time the Securities Intermediary shall receive an entitlement order issued
by the Collateral Agent and relating to the Collateral Account, the Securities
Intermediary shall comply with such entitlement order without further consent by
the Purchase Contract Agent or any Holder or any other Person. Until termination
of the Pledge, the Securities Intermediary will not comply with any entitlement
orders issued by the Purchase Contract Agent or any Holder.
SECTION 4.4 SECURITIES INTERMEDIARY'S LOCATION.
The Collateral Account, and the rights and obligations of the
Securities Intermediary, the Collateral Agent, the Purchase Contract Agent and
the Holders with respect thereto, shall be governed by the laws of the State of
New York. Regardless of any provision in any other agreement, for purposes of
the UCC, New York shall be deemed to be the Securities Intermediary's location.
SECTION 4.5 NO OTHER CLAIMS.
Except for the claims and interest of the Collateral Agent and of the
Purchase Contract Agent and the Holders in the Collateral Account, the
Securities Intermediary (without making any investigation) does not know of any
claim to, or interest in, the Collateral Account or in any financial asset
credited thereto. If any person asserts any lien, encumbrance or adverse claim
(including any writ, garnishment, judgment, warrant of attachment, execution or
similar process) against the Collateral Account or in any financial asset
carried therein, the Securities Intermediary will promptly notify the Collateral
Agent and the Purchase Contract Agent.
SECTION 4.6 INVESTMENT AND RELEASE.
All proceeds of financial assets from time to time deposited in the
Collateral Account shall be invested and reinvested as provided in this
Agreement. At all times prior to termination of the Pledge, no property shall be
released from the Collateral Account except in accordance with this Agreement or
upon written instructions of the Collateral Agent.
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SECTION 4.7 STATEMENTS AND CONFIRMATIONS.
The Securities Intermediary will promptly send copies of all
statements, confirmations and other correspondence concerning the Collateral
Account and any financial assets credited thereto simultaneously to each of the
Purchase Contract Agent and the Collateral Agent at their addresses for notices
under this Agreement.
SECTION 4.8 TAX ALLOCATIONS.
The Purchase Contract Agent shall report all items of income, gain,
expense and loss recognized in the Collateral Account to the Internal Revenue
Service and all state and local taxing authorities under the names and taxpayer
identification numbers of the Holders which are the beneficial owners thereof.
SECTION 4.9 NO OTHER AGREEMENTS.
The Securities Intermediary has not entered into, and prior to the
termination of the Pledge will not enter into, any agreement with any other
Person relating to the Collateral Account or any financial assets credited
thereto, including, without limitation, any agreement to comply with entitlement
orders of any Person other than the Collateral Agent.
SECTION 4.10 POWERS COUPLED WITH AN INTEREST.
The rights and powers granted in this Section 4 to the Collateral Agent
have been granted in order to perfect its security interests in the Collateral
Account, are powers coupled with an interest and will be affected neither by the
bankruptcy of the Purchase Contract Agent or any Holder nor by the lapse of
time. The obligations of the Securities Intermediary under this Section 4 shall
continue in effect until the termination of the Pledge.
SECTION 5. INITIAL DEPOSIT; ESTABLISHMENT OF TREASURY PEPS UNITS AND
REESTABLISHMENT OF PEPS UNITS
SECTION 5.1 INITIAL DEPOSIT OF TRUST PREFERRED SECURITIES.
Prior to or concurrently with the execution and delivery of this
Agreement, the Purchase Contract Agent, on behalf of the initial Holders of the
PEPS Units, shall Transfer to the Securities Intermediary, for credit to the
Collateral Account, the Preferred Securities or security entitlements relating
thereto, and the Securities Intermediary shall indicate by book-entry that a
securities entitlement to such Preferred Securities has been credited to the
Collateral Account.
SECTION 5.2 ESTABLISHMENT OF TREASURY PEPS UNITS.
(a) So long as no Tax Event Redemption shall have occurred, and the
Trust shall not have been dissolved and liquidated, at any time prior to or on
the seventh Business Day immediately preceding __________________, 200__, a
Holder of PEPS Units shall have the right to establish or reestablish Treasury
PEPS Units by substitution of Treasury Securities or
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security entitlements with respect thereto for the Pledged Preferred Securities
comprising a part of such Holder's PEPS Units in integral multiples of [40] PEPS
Units by:
(1) Transferring to the Securities Intermediary for credit to
the Collateral Account Treasury Securities or security entitlements
with respect thereto having a Value equal to the aggregate liquidation
amount of the Pledged Preferred Securities to be released, accompanied
by a notice, substantially in the form of Exhibit C to the Purchase
Contract Agreement, whereupon the Purchase Contract Agent shall deliver
to the Collateral Agent a notice, substantially in the form of Exhibit
A hereto, (A) stating that such Holder has Transferred Treasury
Securities or security entitlements with respect thereto to the
Securities Intermediary for credit to the Collateral Account, (B)
stating the Value of the Treasury Securities or security entitlements
with respect thereto Transferred by such Holder and (C) requesting that
the Collateral Agent release from the Pledge the Pledged Preferred
Securities that are a component of such PEPS Units; and
(2) delivering the related PEPS Units to the Purchase Contract
Agent.
Upon receipt of such notice and confirmation that Treasury Securities
or security entitlements with respect thereto have been credited to the
Collateral Account as described in such notice, the Collateral Agent shall
instruct the Securities Intermediary by a notice, substantially in the form of
Exhibit B hereto, to release such Pledged Preferred Securities from the Pledge
by Transfer to the Purchase Contract Agent for distribution to such Holder, free
and clear of any lien, pledge or security interest created hereby.
(b) If a Tax Event Redemption has occurred and the Treasury Portfolio
has become a component of the PEPS Units, a Holder of PEPS Units shall not have
the right to establish or reestablish Treasury PEPS Units.
(c) If no Tax Event Redemption shall have occurred, but the Trust shall
have been dissolved and liquidated, and the Senior Deferrable Notes have become
a component of the PEPS Units, at any time on or prior to the seventh Business
Day immediately preceding ______________, 200__, a Holder of PEPS Units shall
have the right to substitute Treasury Securities or security entitlements with
respect thereto for the Pledged Senior Deferrable Notes comprising a part of
such Holder's PEPS Units in integral multiples of [40] PEPS Units by:
(1) Transferring to the Securities Intermediary for credit to
the Collateral Account Treasury Securities or security entitlements
with respect thereto having a Value equal to the aggregate principal
amount at maturity of Pledged Senior Deferrable Notes to be released,
accompanied by a notice, substantially in the form of Exhibit C to the
Purchase Contract Agreement, whereupon the Purchase Contract Agent
shall deliver to the Collateral Agent a notice, substantially in the
form of Exhibit A hereto, (A) stating that such Holder has Transferred
Treasury Securities or security entitlements with respect thereto to
the Securities Intermediary for credit to the Collateral Account, (B)
stating the Value of the Treasury Securities or securities entitlements
with respect thereto Transferred by such Holder and (C) requesting that
the Collateral Agent release from the Pledge the Pledged Senior
Deferrable Notes that are a component of such PEPS Units; and
10
(2) delivering the related PEPS Units to the Purchase Contract
Agent.
Upon receipt of such notice and confirmation that Treasury Securities
or security entitlements with respect thereto have been credited to the
Collateral Account as described in such notice, the Collateral Agent shall
instruct the Securities Intermediary by a notice, substantially in the form of
Exhibit B hereto, to release such Pledged Senior Deferrable Notes from the
Pledge by Transfer to the Purchase Contract Agent for distribution to such
Holder free and clear of any lien, pledge or security interest created hereby.
(d) Upon credit to the Collateral Account of Treasury Securities or
security entitlements with respect thereto delivered by a Holder of PEPS Units
and receipt of the related instruction from the Collateral Agent, the Securities
Intermediary shall release the Pledged Preferred Securities or the Pledged
Senior Deferrable Notes, as the case may be, and shall promptly transfer the
same to the Purchase Contract Agent for distribution to such Holder, free and
clear of any lien, pledge or security interest created hereby.
SECTION 5.3 REESTABLISHMENT OF PEPS UNITS.
(a) So long as no Tax Event Redemption shall have occurred, and the
Trust shall not have been dissolved and liquidated, at any time on or prior to
the seventh Business Day immediately preceding _________________, 200__, a
Holder of Treasury PEPS Units shall have the right to reestablish PEPS Units by
substitution of Preferred Securities or security entitlements with respect
thereto for Pledged Treasury Securities in integral multiples of [40] Treasury
PEPS Units by:
(1) Transferring to the Securities Intermediary for credit to
the Collateral Account Preferred Securities or security entitlements
with respect thereto having a liquidation amount equal to the Value of
the Pledged Treasury Securities to be released, accompanied by a
notice, substantially in the form of Exhibit C to the Purchase Contract
Agreement, whereupon the Purchase Contract Agent shall deliver to the
Collateral Agent a notice, substantially in the form of Exhibit C
hereto, stating that such Holder has Transferred Trust Preferred
Securities or security entitlements with respect thereto to the
Securities Intermediary for credit to the Collateral Account and
requesting that the Collateral Agent release from the Pledge the
Pledged Treasury Securities related to such Treasury PEPS Units; and
(2) Delivering the related Treasury PEPS Units to the Purchase
Contract Agent.
Upon receipt of such notice and confirmation that Preferred Securities
or security entitlements thereto have been credited to the Collateral Account as
described in such notice, the Collateral Agent shall instruct the Securities
Intermediary by a notice in the form provided in Exhibit D to release such
Pledged Treasury Securities from the Pledge by Transfer to the Purchase Contract
Agent for distribution to such Holder, free and clear of any lien, pledge or
security interest created hereby.
11
(b) If a Tax Event Redemption has occurred and the Treasury Portfolio
has become a component of the PEPS Units, a holder of a Treasury PEPS Unit shall
not have the right to reestablish a PEPS Unit.
(c) If no Tax Event Redemption shall have occurred, but the Trust shall
have been dissolved and liquidated, and the Senior Deferrable Notes have become
a component of the PEPS Units, at any time on or prior to the seventh Business
Day immediately preceding _______________, 200__, a Holder of Treasury PEPS
Units shall have the right to reestablish PEPS Units by substitution of Senior
Deferrable Notes or security entitlements with respect thereto for Pledged
Treasury Securities in integral multiples of [40] Treasury PEPS Units by:
(1) Transferring to the Securities Intermediary for credit to
the Collateral Account Senior Deferrable Notes or security entitlements
with respect thereto having a principal amount equal to the Value of
the Pledged Treasury Securities to be released, accompanied by a
notice, substantially in the form of Exhibit C to the Purchase Contract
Agreement, whereupon the Purchase Contract Agent shall deliver to the
Collateral Agent a notice, substantially in the form of Exhibit C
hereto, stating that such Holder has Transferred the Senior Deferrable
Notes or security entitlements with respect thereto to the Securities
Intermediary for credit to the Collateral Account and requesting that
the Collateral Agent release from the Pledge the Pledged Treasury
Securities related to such Treasury PEPS Units; and
(2) delivering the related Treasury PEPS Units to the Purchase
Contract Agent.
Upon receipt of such notice and confirmation that Senior Deferrable
Notes or security entitlements with respect thereto have been credited to the
Collateral Account as described in such notice, the Collateral Agent shall
instruct the Securities Intermediary by a notice in the form provided in Exhibit
D to release such Pledged Treasury Securities from Pledge by Transfer to the
Purchase Contract Agent for distribution to such Holder, free and clear of any
lien, pledge or security interest created hereby.
(d) Upon credit to the Collateral Account of Preferred Securities or
security entitlements with respect thereto or Senior Deferrable Notes or
security entitlements with respect thereto, as the case may be, delivered by a
Holder of Treasury PEPS Units and receipt of the related instruction from the
Collateral Agent, the Securities Intermediary shall release the Pledged Treasury
Securities and shall promptly transfer the same to the Purchase Contract Agent
for distribution to such Holder, free and clear of any lien, pledge or security
interest created hereby.
SECTION 5.4 TERMINATION EVENT.
(a) Upon receipt by the Collateral Agent of written notice from the
Company or the Purchase Contract Agent that a Termination Event has occurred,
the Collateral Agent shall release all Collateral from the Pledge and shall
promptly Transfer:
(1) any Pledged Preferred Securities or security entitlements
with respect thereto or the Applicable Ownership Interest (as specified
in clause (A) of the definition of such
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term) of the Treasury Portfolio (if a Tax Event Redemption has occurred
and the Treasury Portfolio has become a component of the PEPS Units) or
the Pledged Senior Deferrable Notes (if the Trust has been dissolved
and liquidated, and the Senior Deferrable Notes or security
entitlements with respect thereto have become a component of the PEPS
Units);
(2) any Pledged Treasury Securities, and
(3) payments by Holders (or the Permitted Investments of such
payments) pursuant to Section 5.5 hereof,
to the Purchase Contract Agent for the benefit of the Holders for distribution
to such Holders in accordance with their respective interests, free and clear of
any lien, pledge or security interest or other interest created hereby;
provided, however, if any Holder shall be entitled to receive less than $1,000
with respect to his interest in the Applicable Ownership Interest (as specified
in clause (A) of the definition of such term) of the Treasury Portfolio, the
Purchase Contract Agent shall have the right to dispose of such interest for
cash and deliver to such Holder cash in lieu of delivering the Applicable
Ownership Interest (as specified in clause (A) of the definition of such term)
of the Treasury Portfolio.
(b) If such Termination Event shall result from the Company's becoming
a debtor under the Bankruptcy Code, and if the Collateral Agent shall for any
reason fail promptly to effectuate the release and Transfer of all Pledged
Preferred Securities, the Applicable Ownership Interest (as specified in clause
(A) of the definition of such term) of the Treasury Portfolio, the Pledged
Senior Deferrable Notes, the Pledged Treasury Securities or payments by Holders
(or the Permitted Investments of such payments) pursuant to Section 5.5 hereof,
as the case may be, as provided by this Section 5.4, the Purchase Contract Agent
shall:
(1) use its best efforts to obtain an opinion of a nationally
recognized law firm reasonably acceptable to the Collateral Agent to
the effect that, as a result of the Company'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
5.4, and shall deliver such opinion to the Collateral Agent within ten
days after the occurrence of such Termination Event, and if (A) the
Purchase Contract Agent shall be unable to obtain such opinion within
ten days after the occurrence of such Termination Event or (B) the
Collateral Agent shall continue, after delivery of such opinion, to
refuse to effectuate the release and Transfer of all Preferred
Securities, Applicable Ownership Interest (as specified in clause (A)
of the definition of such term) of the Treasury Portfolio, all the
Pledged Senior Deferrable Notes, the Pledged Treasury Securities, the
payments by Holders or the Permitted Investments of such payments
pursuant to Section 5.5 hereof or the Proceeds of any of the foregoing,
as the case may be, as provided in this Section 5.4, then the Purchase
Contract Agent shall within fifteen days after the occurrence of such
Termination Event commence an action or proceeding in the court having
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 Preferred Securities, Applicable Ownership
Interest (as specified in clause (A) of the definition of such term) of
the Treasury Portfolio, all the Pledged Senior Deferrable Notes, the
Pledged Treasury
13
Securities, or the payments by Holders or the Permitted Investments of
such payments pursuant to Section 5.5 hereof, or as the case may be, as
provided by this Section 5.4; or
(2) commence an action or proceeding like that described in
clause 5.4(b)(1)(B) hereof within ten days after the occurrence of such
Termination Event.
SECTION 5.5 CASH SETTLEMENT.
(a) Upon receipt by the Collateral Agent of (1) a notice from the
Purchase Contract Agent promptly after the receipt by the Purchase Contract
Agent of a notice from a Holder of PEPS Units that such Holder has elected, in
accordance with the procedures specified in Section 5.4(a)(i) or (d)(i) of the
Purchase Contract Agreement, respectively, to effect a Cash Settlement and (2)
payment by such Holder by deposit in the Collateral Account prior to or on 11:00
a.m. (New York City time) on the fifth Business Day immediately preceding
_____________, 200___, in the case of a PEPS Unit, unless a Tax Event Redemption
has occurred, or on the Business Day prior to _________, 200__, in the case of
Treasury PEPS or a PEPS Unit, if a Tax Event Redemption has occurred, of the
Purchase Price in lawful money of the United States by certified or cashier's
check or wire transfer of immediately available funds payable to or upon the
order of the Securities Intermediary, then the Collateral Agent shall:
(1) instruct the Securities Intermediary promptly to invest
any such Cash in Permitted Investments;
(2) release from the Pledge the PEPS Unit holder's or the
Treasury PEPS Unit holder's related Pledged Preferred Securities,
Applicable Ownership Interest (as specified in clause (A) of the
definition of such term) of the Treasury Portfolio, the Pledged Senior
Deferrable Notes or Pledged Treasury Securities, as applicable, as to
which such Holder has elected to effect a Cash Settlement pursuant to
this Section 5.5(a); and
(3) instruct the Securities Intermediary to Transfer all such
Pledged Preferred Securities, Applicable Ownership Interest (as
specified in clause (A) of the definition of such term) of the Treasury
Portfolio, Pledged Senior Deferrable Notes or the Pledged Treasury
Securities, as the case may be, to the Purchase Contract Agent for the
benefit of such Holder, in each case free and clear of the Pledge
created hereby, for distribution to such Holder.
Upon the request of the Securities Intermediary, the Company shall
instruct the Securities Intermediary as to the type of Permitted Investments in
which any such Cash shall be invested; provided, however, that if the Company
fails to deliver such instructions in a timely manner, the Securities
Intermediary shall invest such Cash in the Permitted Investments described in
Clause 5 of the definition of Permitted Investments.
Upon receipt of the proceeds upon the maturity of the Permitted
Investments on the Purchase Contract Settlement Date, the Collateral Agent shall
(A) instruct the Securities Intermediary to pay the portion of such proceeds and
deliver any certified or cashier's checks
14
received, in an aggregate amount equal to the Purchase Price, to the Company on
the Purchase Contract Settlement Date, and (B) instruct the Securities
Intermediary to release any amounts in excess of the Purchase Price earned from
such Permitted Investments to the Purchase Contract Agent for distribution to
the such Holder.
(a) If a Holder of PEPS Units (if a Tax Event Redemption shall not have
occurred) notifies the Purchase Contract Agent as provided in paragraph
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 paragraph
5.4(a)(ii) of the Purchase Contract Agreement, such Holder shall be deemed to
have consented to the disposition of such Holder's Pledged Preferred Securities
or Pledged Senior Deferrable Notes in accordance with paragraph 5.4(a)(iii) of
the Purchase Contract Agreement.
(b) If a Holder of a Treasury PEPS Unit or a Holder of PEPS Unit (if a
Tax Event Redemption shall have occurred) notifies the Purchase Contract Agent
as provided in paragraph 5.4(d)(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 paragraph 5.4(d)(ii) of the Purchase Contract Agreement, such Holder
shall be deemed to have elected to pay the Purchase Price in accordance with
paragraph 5.4(d)(iii) of the Purchase Contract Agreement.
(c) As soon as practicable after 11:00 a.m. (New York City time) on the
fifth Business Day immediately preceding the Purchase Contract Settlement Date,
the Securities Intermediary shall deliver to the Purchase Contract Agent a
notice, substantially in the form of Exhibit E hereto, stating (i) the amount of
cash that it has received with respect to the Cash Settlement of PEPS Units and
(ii) the amount of cash that it has received with respect to the Cash Settlement
of Treasury PEPS Units.
SECTION 5.6 EARLY SETTLEMENT.
Upon receipt by the Collateral Agent of a notice from the Purchase
Contract Agent that a Holder of Securities has elected to effect Early
Settlement of its obligations under the Purchase Contracts forming a part of
such Securities in accordance with the terms of the Purchase Contracts and
Section 5.9 of the Purchase Contract Agreement (which notice shall set forth the
number of such Purchase Contracts as to which such Holder has elected to effect
Early Settlement), and that the Purchase Contract Agent has received from such
Holder, and paid to the Company as confirmed in writing by the Company, the
related Early Settlement 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, (1) Pledged Preferred Securities or the appropriate Applicable Ownership
Interest (as specified in clause (A) of the definitions at such term) of the
Treasury Portfolio or Pledged Senior Deferrable Notes in the case of a Holder of
PEPS Units or (2) Pledged Treasury Securities, in the case of a Holder of
Treasury PEPS Units, with a Value equal to the product of (x) the Stated Amount
times (y) the number of Purchase Contracts as to which such Holder has elected
to effect Early Settlement, and shall instruct the Securities Intermediary to
Transfer all such Pledged Preferred Securities or the appropriate Applicable
Ownership Interest (as specified in clause (A) of the definitions at such term)
of the Treasury Portfolio or Pledged Senior
15
Deferrable Notes or Pledged Treasury Securities, as the case may be, to the
Purchase Contract Agent for the benefit of such Holder, in each case free and
clear of the Pledge created hereby, for distribution to such Holder. A Treasury
PEPS Unit holder may settle early only in integral multiples of [40] Purchase
Contracts.
SECTION 5.7 APPLICATION OF PROCEEDS SETTLEMENT.
(a) If a Holder of PEPS Units (if a Tax Event Redemption has not
occurred) has not elected to make an effective Cash Settlement by notifying the
Purchase Contract Agent in the manner provided for in Section 5.4(a)(i) in the
Purchase Contract Agreement, or has given such notice but failed to deliver the
required cash prior to 11:00 A.M. (New York City time) on the fifth Business Day
immediately preceding ____________, 200__, 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 remarketing of the related Pledged Preferred
Securities or Pledged Senior Deferrable Notes. In such event, the Collateral
Agent shall instruct the Securities Intermediary to Transfer the related Pledged
Preferred Securities or Pledged Senior Deferrable Notes to the Remarketing Agent
for remarketing. Upon receiving such Pledged Preferred Securities or Pledged
Senior Deferrable Notes, the Remarketing Agent, pursuant to the terms of the
Remarketing Agreement, will use reasonable efforts to remarket such Pledged
Preferred Securities or Pledged Senior Deferrable Notes. The Remarketing Agent
will deposit the Proceeds of such remarketing (less $_______ per each Preferred
Security remarketed, which shall be retained by the Remarketing Agent as a fee
for its services in the Remarketing) in the Collateral Account, and the
Securities Intermediary, at the written direction of the Collateral Agent, shall
invest the Proceeds of the remarketing in Permitted Investments. On the Purchase
Contract Settlement Date, the Collateral Agent shall instruct the Securities
Intermediary to apply a portion of the Proceeds from such remarketing equal to
the aggregate liquidation amount of the Preferred Securities or aggregate
principal amount of such Pledged Senior Deferrable Note to satisfy in full such
Holder's obligations to pay the Purchase Price to purchase the shares of Common
Stock under the related Purchase Contracts. The balance of the Proceeds from the
remarketing, if any, shall be transferred to the Purchase Contract Agent for the
benefit of such Holder for distribution to such Holder.
If the Remarketing Agent advises the Collateral Agent in writing that
there has been a Failed Remarketing, thus resulting in an event of default under
the Purchase Contract Agreement and hereunder, the Collateral Agent, for the
benefit of the Company shall, at the written direction of the Company, dispose
of the Pledged Preferred Securities or Pledged Senior Deferrable Notes in
accordance with applicable law and satisfy in full, from such disposition, such
Holder's obligations to pay the Purchase Price for the shares of Common Stock.
(b) If a Holder of a Treasury PEPS Unit or a Holder of PEPS Unit (if a
Tax Event Redemption has occurred) has not elected to make an effective Cash
Settlement by notifying the Purchase Contract Agent in the manner provided for
in Section 5.4(d)(i) of the Purchase Contract Agreement, or has given such
notice but failed to make such payment in the manner required by Section
5.4(d)(ii) of the Purchase Contract Agreement, 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 such Applicable Ownership Interest
16
(as specified in clause (A) of the definition of such term) of the Treasury
Portfolio, as the case may be. Promptly, after 11:00 a.m. (New York City time)
on the Business Day immediately prior to the Purchase Contract Settlement Date,
the Securities Intermediary, at the written direction of the Collateral Agent,
shall invest the Cash Proceeds of the maturing Pledged Treasury Securities or
such Applicable Ownership Interest (as specified in clause (A) of the definition
of such term) of the Treasury portfolios, as the case may be, in Permitted
Investments. Upon the request of the Securities Intermediary, the Company shall
instruct the Securities Intermediary as to the type of Permitted Investments in
which any such Cash Proceeds shall be invested; provided, however, that if the
Company fails to deliver such instructions in a timely manner, the Securities
Intermediary shall invest such Cash Proceeds in the Permitted Investments
described in clause 5 of the definition of Permitted Investments. Without
receiving any instruction from any such Holder, the Collateral Agent shall apply
the Proceeds of the related Pledged Treasury Securities or such Applicable
Ownership Interest (as specified in clause (A) of the definition of such term)
of the Treasury Portfolio, as the case may be, to the settlement of such
Purchase Contracts on the Purchase Contract Settlement Date. In the event the
sum of the Proceeds from the related Pledged Treasury Securities or such
Applicable Ownership Interest (as specified 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 Permitted Investments exceeds the aggregate
Purchase Price of the Purchase Contracts being settled thereby, the Collateral
Agent shall instruct the Securities Intermediary to distribute such excess, when
received, to the Purchase Contract Agent for the benefit of such Holder for
distribution to such Holder.
SECTION 5.8 TAX EVENT REDEMPTION.
If the Tax Event Redemption shall occur prior to the Purchase Contract
Settlement Date, the Securities Intermediary shall apply the Redemption Amount
to purchase the Treasury Portfolio and the Securities Intermediary shall credit
the Applicable Ownership Interest (as specified in clause (A) of the definition
of such term) of the Treasury Portfolio to the Collateral Account and shall
transfer the Applicable Ownership Interest (as specified in clause (B) of the
definition of such term) of the Treasury Portfolio to the Purchase Contract
Agent for distribution to the Holders of the PEPS Units. Upon credit to the
Collateral Account of the Applicable Ownership Interest (as specified in clause
(A) of the definition of such term) of the Treasury Portfolio having a Value
equal to the liquidation amount of the Pledged Preferred Securities or the
aggregate principal amount of the Pledged Senior Deferrable Notes, the
Securities Intermediary shall release the Pledged Preferred Securities or the
Pledged Senior Deferrable Notes, as applicable, from the Collateral Account and
shall promptly transfer the Pledged Preferred Securities to the Trust and the
Pledged Senior Deferrable Notes to the Company, as applicable.
SECTION 6. VOTING RIGHTS - TRUST PREFERRED SECURITIES AND PLEDGED
SENIOR DEFERRABLE NOTES
The Purchase Contract Agent may exercise, or refrain from exercising,
any and all voting and other consensual rights pertaining to the Pledged
Preferred Securities or the Pledged Senior Deferrable 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
17
the Purchase Contract Agent shall not exercise or shall not refrain from
exercising such right, as the case may be, if, in the judgment of the Purchase
Contract Agent, such action would impair or otherwise have a material adverse
effect on the value of all or any of the Pledged Preferred Securities or the
Pledged Senior Deferrable Notes; and provided, further, that the Purchase
Contract Agent shall give the Company and the Collateral Agent at least five
Business 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
Preferred Securities or the Pledged Senior Deferrable Notes, including notice of
any meeting at which holders of the Preferred Securities or the Pledged Senior
Deferrable Notes are entitled to vote or solicitation of consents, waivers or
proxies of holders of the Preferred Securities or Senior Deferrable 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 Preferred Securities or the
Pledged Senior Deferrable Notes (in form and substance satisfactory to the
Collateral Agent) as are prepared by the Purchase Contract Agent with respect to
the Pledged Preferred Securities or the Pledged Senior Deferrable Notes.
SECTION 7. RIGHTS AND REMEDIES.
SECTION 7.1. RIGHTS AND REMEDIES OF THE COLLATERAL AGENT.
(a) In addition to the rights and remedies specified in Section 5.7
hereof or otherwise available at law or in equity, after an event of default (as
specified in Section 7.1(b) below) hereunder, the Collateral Agent shall have
all of the rights and remedies with respect to the Collateral of a secured party
under the UCC (whether or not the UCC 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. Without limiting the generality of the foregoing, such remedies may
include, to the extent permitted by applicable law, (1) retention of the Pledged
Preferred Securities, Pledged Senior Deferrable Notes, Pledged Treasury
Securities or the appropriate Applicable Ownership Interest (as specified in
clause (A) of the definition of such term) in full satisfaction of the Holders'
obligations under the Purchase Contracts and the Purchase Contract Agreement or
(2) sale of the Pledged Preferred Securities, Pledged Senior Deferrable Notes,
Pledged Treasury Securities or the appropriate Applicable Ownership Interest (as
specified in clause (A) of the definition of such term) 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 Section 3 hereof, in satisfaction of the
Obligations of the Holder of the PEPS Units (if a Tax Event Redemption has
occurred) of which such appropriate Applicable Ownership Interest (as specified
in clause (A) of the definition of such term) of the Treasury Portfolio or the
Holder of the Treasury PEPS Units of which such Pledged
18
Treasury Securities, 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 the appropriate Applicable
Ownership Interest (as specified in clause (A) of the definition of such term)
of the Treasury Portfolio, as applicable, any and all of the rights and remedies
available to a secured party under the UCC and the TRADES Regulations after
default by a debtor, and as otherwise granted herein or under any other law.
(c) Without limiting any rights or powers otherwise granted by this
Agreement to the Collateral Agent, the Collateral Agent is hereby irrevocably
authorized to receive and collect all payments of (i) the liquidation amount of
the Pledged Preferred Securities, (ii) the principal amount of the Pledged
Senior Deferrable Notes, (iii) the principal amount of the Pledged Treasury
Securities and (iv) the principal amount of the Applicable Ownership Interest
(as specified in clause (A) of the definition of such term) of the Treasury
Portfolio, subject, in each case, to the provisions of Section 3 hereof, and as
otherwise granted herein.
(d) The Purchase Contract Agent and each Holder of Securities agrees
that, from time to time, upon the written request of the Collateral Agent or the
Purchase Contract Agent, 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 acts, its own negligent
failure to act or its own willful misconduct.
SECTION 7.2 SUBSTITUTION OF SENIOR DEFERRABLE NOTES.
If the Trust shall have been dissolved and liquidated prior to the
Purchase Contract Settlement Date, the Securities Intermediary shall transfer to
the Collateral Agent Senior Deferrable Notes having a Value equal to the
liquidation amount of the Pledged Preferred Securities for credit to the
Collateral Account. Upon credit to the Collateral Account of such Senior
Deferrable Notes, the Collateral Agent shall release the Pledged Preferred
Securities from the Collateral Account and shall promptly transfer the same to
the Trust.
SECTION 7.3 TAX EVENT REDEMPTION.
Upon the occurrence of a Tax Event Redemption prior to the Purchase
Contract Settlement Date, the Redemption Price payable on the Tax Event
Redemption Date with respect to the Applicable Principal Amount shall be
credited to the Collateral Account by the Property Trustee or, upon a
dissolution of the Trust and the distribution of the related Senior Deferrable
Notes, by the Indenture Trustee, on or prior to 12:30 p.m., New York City time,
by federal funds check or wire transfer of immediately available funds. The
Collateral Agent is hereby authorized to present the Pledged Preferred
Securities or the Pledged Senior Deferrable Notes for payment as may be required
by their respective terms. Upon receipt of such funds, the Pledged Preferred
Securities or Pledged Senior Deferrable Notes, as the case may be, shall be
released from the Collateral Account. In the event such funds are credited to
the Collateral Account, the Collateral
19
Agent, at the written direction of the Company, shall instruct the Securities
Intermediary to (a) apply an amount equal to the Redemption Amount of such
Redemption Price to purchase the Treasury Portfolio from the Quotation Agent for
credit to the Collateral Account and (b) promptly remit the remaining portion of
such Redemption Price, if any, to the Purchase Contract Agent for payment to the
Holders of PEPS Units.
SECTION 7.4 SUBSTITUTIONS.
Whenever a Holder has the right to substitute Treasury Securities,
Trust Preferred Securities, Senior Deferrable Notes or security entitlements for
any of them or the appropriate Applicable Ownership Interest of the Treasury
Portfolio, as the case may be, for financial assets held in the Collateral
Account, such substitution shall not constitute a novation of the security
interest created hereby.
SECTION 8. REPRESENTATIONS AND WARRANTIES; COVENANTS.
SECTION 8.1 REPRESENTATIONS AND WARRANTIES.
Each Holder from time to time, acting through the Purchase Contract
Agent as 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 represents and warrants to the Collateral Agent (with respect to
such Holder's interest in the Collateral), which representations and warranties
shall be deemed repeated on each day a Holder Transfers Collateral that:
(1) such Holder has the power to grant a security interest in
and lien on the Collateral;
(2) 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 Securities
Intermediary for credit to the Collateral Account, free and clear of
any security interest, lien, encumbrance, call, liability to pay money
or other restriction other than the security interest and lien granted
under Section 2 hereof;
(3) upon the Transfer of the Collateral to the Securities
Intermediary for credit to the Collateral Account, the Collateral
Agent, for the benefit of the Company, will have a valid and perfected
first priority security interest therein (assuming that any central
clearing operation or any securities intermediary or other entity not
within the control of the Holder involved in the Transfer of the
Collateral, including the Collateral Agent and the Securities
Intermediary, gives the notices and takes the action required of it
hereunder and under applicable law for perfection of that interest and
assuming the establishment and exercise of control pursuant to Section
4 hereof); and
(4) 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
20
encumbrance on the Collateral other than the security interest and lien
granted under Section 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 8.2 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:
(1) 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
(2) 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.
SECTION 9. THE COLLATERAL AGENT AND THE SECURITIES INTERMEDIARY.
It is hereby agreed as follows:
SECTION 9.1 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. The Collateral Agent shall:
(1) 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 the Collateral Agent, nor
shall the Collateral Agent be bound by the provisions of any agreement
by any party hereto beyond the specific terms hereof;
(2) 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) 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;
21
(3) not be required to initiate or conduct any litigation or
collection proceedings hereunder (except pursuant to directions
furnished under Section 9.2 hereof, subject to Section 9.6 hereof);
(4) not be responsible for any action taken or omitted to be
taken by it hereunder or under any other document or instrument
referred to or provided for herein or in connection herewith or
therewith, except for its own negligence or willful misconduct; and
(4) not be required to advise any party as to selling or
retaining, or taking or refraining from taking any action with respect
to, any securities or other property deposited hereunder.
Subject to the foregoing, during the term of this Agreement, the Collateral
Agent shall take all reasonable action in connection with the safekeeping and
preservation of the Collateral hereunder.
No provision of this Agreement shall require the Collateral Agent to
expend or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder. In no event shall the Collateral
Agent be liable for any amount in excess of the Value of the Collateral.
Notwithstanding the foregoing, each of the Collateral Agent and the Securities
Intermediary in its individual capacity hereby waives any right of setoff,
bankers' lien, liens or perfection rights as securities intermediary or any
counterclaim with respect to any of the Collateral.
SECTION 9.2 INSTRUCTIONS OF THE COMPANY.
The Company shall have the right, by one or more written instruments
executed and delivered to the Collateral Agent, 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, 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 shall be adequately indemnified as provided herein. Nothing
contained in this Section 9.2 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 9.3 RELIANCE BY COLLATERAL AGENT AND SECURITIES INTERMEDIARY.
Each of the Securities Intermediary and the Collateral Agent shall be
entitled to rely upon any certification, order, judgment, opinion, notice or
other written communication (including, without limitation, any thereof by
telecopy, telex or facsimile) believed by it to be genuine and correct and to
have been signed or sent by or on behalf of the proper Person or Persons
(without being required to determine the correctness of any fact stated therein)
and consult with and rely upon advice and statements of legal counsel and other
experts selected by the Collateral Agent and the Securities Intermediary. As to
any matters not expressly provided for by this Agreement,
22
the Collateral 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 9.4 RIGHTS IN OTHER CAPACITIES.
The Collateral 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 other Person interested herein and any Holder of Securities (and any of
their respective subsidiaries or affiliates) as if it were not acting as the
Collateral Agent or the Securities Intermediary, as the case may be, and the
Collateral Agent, the Securities Intermediary and their affiliates may accept
fees and other consideration from the Purchase Contract Agent and any Holder of
Securities without having to account for the same to the Company; provided that
each of the Securities Intermediary 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 other than the lien created by
the Pledge.
SECTION 9.5 NON-RELIANCE ON COLLATERAL AGENT AND SECURITIES
INTERMEDIARY.
Neither the Securities Intermediary nor 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. Neither the Collateral
Agent nor the Securities Intermediary shall have any duty or responsibility to
provide the Company with any credit or other information concerning the affairs,
financial condition or business of the Purchase Contract Agent or any Holder of
Securities (or any of their respective affiliates) that may come into the
possession of the Collateral Agent or the Securities Intermediary or any of
their respective affiliates.
SECTION 9.6 COMPENSATION AND INDEMNITY.
The Company agrees to:
(1) pay the Collateral Agent and the Securities Intermediary
from time to time such compensation as shall be agreed in writing
between the Company and the Collateral Agent or the Securities
Intermediary, as the case may be, for all services rendered by them
hereunder;
(2) indemnify and hold harmless the Collateral Agent, the
Securities Intermediary and each of their respective directors,
officers, agents and employees (collectively, the "INDEMNITEES"),
harmless from and against any and all claims, liabilities, losses,
damages, fines, penalties and expenses (including reasonable fees and
expenses of
23
counsel) (collectively, "LOSSES" and individually, a "LOSS") that may
be imposed on, incurred by, or asserted against, the Indemnitees or any
of them for following any instructions or other directions upon which
either the Collateral Agent or the Securities Intermediary is entitled
to rely pursuant to the terms of this Agreement; and
(3) in addition to and not in limitation of paragraph (2)
immediately above, indemnify and hold the Indemnitees and each of them
harmless from and against any and all Losses that may be imposed on,
incurred by or asserted against, the Indemnitees or any of them in
connection with or arising out of the Collateral Agent's or the
Securities Intermediary's acceptance or performance of its powers and
duties under this Agreement, provided the Collateral Agent or the
Securities Intermediary has not acted with negligence or engaged in
willful misconduct or bad faith with respect to the specific Loss
against which indemnification is sought.
SECTION 9.7 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, then at
its sole option, each of the Collateral Agent and the Securities Intermediary
shall be entitled, after prompt notice to the Company and the Purchase Contract
Agent, 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 the Collateral Agent and the Securities Intermediary shall not 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 Securities Intermediary shall be entitled to refuse to
act until either:
(1) 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 Securities Intermediary; or
(2) the Collateral Agent or the Securities Intermediary shall
have received security or an indemnity satisfactory to it sufficient to
save it harmless from and against any and all loss, liability or
reasonable out-of-pocket expense which it may incur by reason of its
acting.
The Collateral Agent and the Securities Intermediary may in addition elect to
commence an interpleader action or seek other judicial relief or orders as the
Collateral Agent or the Securities Intermediary may deem necessary.
Notwithstanding anything contained herein to the contrary, neither the
Collateral Agent nor the Securities Intermediary shall be required to take any
action that is in its opinion contrary to law or to the terms of this Agreement,
or which would in its opinion subject it or any of its officers, employees or
directors to liability.
24
SECTION 9.8 RESIGNATION OF COLLATERAL AGENT AND SECURITIES
INTERMEDIARY.
(a) Subject to the appointment and acceptance of a successor Collateral
Agent as provided below:
(1) the Collateral Agent may resign at any time by giving
notice thereof to the Company and the Purchase Contract Agent as
attorney-in-fact for the Holders of Securities;
(2) the Collateral Agent may be removed at any time by the
Company; and
(3) if the Collateral Agent fails to perform any of its
material obligations hereunder in any material respect for a period of
not less than 20 days after receiving written notice of such failure by
the Purchase Contract Agent and such failure shall be continuing, the
Collateral Agent may be removed by the Purchase Contract Agent.
The Purchase Contract Agent shall promptly notify the Company of any removal of
the Collateral Agent pursuant to clause (3) of the immediately preceding
sentence. Upon any such resignation or removal, the Company shall have the right
to appoint a successor Collateral Agent. If no successor Collateral Agent shall
have been so appointed and shall have accepted such appointment within 30 days
after the retiring Collateral Agent's giving of notice of resignation or the
Company or the Purchase Contract Agent giving notice of such removal, then the
retiring Collateral Agent may petition any court of competent jurisdiction for
the appointment of a successor Collateral Agent. The Collateral Agent shall be a
bank or a national banking association which has an office (or an agency office)
in New York City with a combined capital and surplus of at least $50,000,000 and
shall not be the Purchase Contract Agent or any of its affiliates. Upon the
acceptance of any appointment as Collateral Agent hereunder by a successor
Collateral Agent, such successor Collateral Agent shall thereupon succeed to and
become vested with all the rights, powers, privileges and duties of the retiring
Collateral Agent, and the retiring Collateral Agent shall take all appropriate
action to transfer any money and property held by it hereunder (including the
Collateral) to such successor Collateral Agent. The retiring Collateral Agent
shall, upon such succession, be discharged from its duties and obligations as
Collateral Agent hereunder. After any retiring Collateral Agent's resignation
hereunder as Collateral Agent, the provisions of this Section 9 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.
(b) Subject to the appointment and acceptance of a successor Securities
Intermediary as provided below:
(1) the Securities Intermediary may resign at any time by
giving notice thereof to the Company and the Purchase Contract Agent as
attorney-in-fact for the Holders of Securities;
(2) the Securities Intermediary may be removed at any time by
the Company; and
(3) if the Securities Intermediary fails to perform any of its
material obligations hereunder in any material respect for a period of
not less than 20 days after receiving
25
written notice of such failure by the Purchase Contract Agent and such
failure shall be continuing, the Securities Intermediary may be removed
by the Purchase Contract Agent.
The Purchase Contract Agent shall promptly notify the Company of any removal of
the Securities Intermediary pursuant to clause (3) of the immediately preceding
sentence. Upon any such resignation or removal, the Company shall have the right
to appoint a successor Securities Intermediary. If no successor Securities
Intermediary shall have been so appointed and shall have accepted such
appointment within 30 days after the retiring Securities Intermediary's giving
of notice of resignation or the Company or the Purchase Contract Agent giving
notice of such removal, then the retiring Securities Intermediary may petition
any court of competent jurisdiction for the appointment of a successor
Securities Intermediary. The Securities Intermediary shall be a bank or a
national banking association which has an office (or an agency office) in New
York City with a combined capital and surplus of at least $50,000,000 and shall
not be the Purchase Contract Agent or any of its affiliates. Upon the acceptance
of any appointment as Securities Intermediary hereunder by a successor
Securities Intermediary, such successor Securities Intermediary shall thereupon
succeed to and become vested with all the rights, powers, privileges and duties
of the retiring Securities Intermediary, and the retiring Securities
Intermediary shall take all appropriate action to transfer any money and
property held by it hereunder (including the Collateral) to such successor
Securities Intermediary. The retiring Securities Intermediary shall, upon such
succession, be discharged from its duties and obligations as Securities
Intermediary hereunder. After any retiring Securities Intermediary's resignation
hereunder as Securities Intermediary, the provisions of this Section 9 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 Securities Intermediary.
SECTION 9.9 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 9.9 shall be subject to prior consent of the Company,
which consent shall not be unreasonably withheld.
SECTION 9.10 SURVIVAL.
The provisions of this Section 9 shall survive termination of this
Agreement and the resignation or removal of the Collateral Agent or the
Securities Intermediary.
SECTION 9.11 EXCULPATION.
Anything contained in this Agreement to the contrary notwithstanding,
in no event shall the Collateral Agent or the Securities Intermediary or their
officers, directors, 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, but not limited to, lost profits, whether or not
the likelihood of such loss or damage was known to the Collateral Agent or the
Securities Intermediary, or any of them.
26
SECTION 10 AMENDMENT.
SECTION 10.1 AMENDMENT WITHOUT CONSENT OF HOLDERS.
Without the consent of any Holders, the Company, the Collateral 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 Securities Intermediary and the Purchase
Contract Agent, to:
(1) evidence the succession of another Person to the Company,
and the assumption by any such successor of the covenants of the
Company;
(2) evidence and provide for the acceptance of appointment
hereunder by a successor Collateral Agent, Securities Intermediary or
Purchase Contract Agent;
(3) add to the covenants of the Company for the benefit of the
Holders, or surrender any right or power herein conferred upon the
Company, provided such covenants or such surrender do not adversely
affect the validity, perfection or priority of the Pledge created
hereunder; or
(4) cure any ambiguity (or formal defect), correct or
supplement any provisions herein which may be inconsistent with any
other such provisions herein, or make any other provisions with respect
to such matters or questions arising under this Agreement, provided
such action shall not adversely affect the interests of the Holders.
SECTION 10.2 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 such Holders delivered to
the Company, the Purchase Contract Agent, the Securities Intermediary or the
Collateral Agent, as the case may be, the Company, when duly authorized, the
Purchase Contract Agent, the Securities Intermediary and the Collateral Agent
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 unanimous consent of the Holders of each Outstanding Security
adversely affected thereby:
(1) Change the amount or type of Collateral underlying a
Security (except for the rights of holders of PEPS Units to substitute
the Treasury Securities for the Pledged Preferred Securities or the
Pledged Senior Deferrable Notes, as the case may be, or the rights of
Holders of Treasury PEPS Units to substitute Preferred Securities or
Senior Deferrable Notes, as applicable, for the Pledged Treasury
Securities), 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
27
(2) 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; or
(3) reduce the percentage of Purchase Contracts the consent of
whose Holders is required for any such amendment; provided that if any
amendment or proposal referred to above would adversely affect only the
PEPS Units or only the Treasury PEPS Units, then only the affected
class of Holders as of the record date for the Holders entitled to vote
thereon will be entitled to vote on such amendment or proposal, and
such amendment or proposal shall not be effective except with the
consent of Holders of not less than a majority of such class; provided,
further, that the unanimous consent of the Holders of each outstanding
Purchase Contract of such class affected thereby shall be required to
approve any amendment or proposal specified in clauses (1) through (3)
above.
It shall not be necessary for any Act of Holders under this Section to
approve the particular form of any proposed amendment, but it shall be
sufficient if such Act shall approve the substance thereof.
SECTION 10.3 EXECUTION OF AMENDMENTS.
In executing any amendment permitted by this Section, the Collateral
Agent, the Securities Intermediary and the Purchase Contract Agent shall be
entitled to receive and (subject to Section 7.1 of the Purchase Contract
Agreement with respect to the Purchase Contract Agent) shall be fully protected
in relying upon, an Opinion of Counsel stating that the execution of such
amendment is authorized or permitted by this Agreement and that all conditions
precedent, if any, to the execution and delivery of such amendment have been
satisfied.
SECTION 10.4 EFFECT OF AMENDMENTS.
Upon the execution of any amendment under this Section, 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 10.5 REFERENCE TO AMENDMENTS.
Certificates authenticated, executed on behalf of the Holders and
delivered after the execution of any amendment pursuant to this Section may, and
shall if required by the Collateral Agent or the Purchase Contract Agent, bear a
notation in form approved by the Purchase Contract Agent and the Collateral
Agent as to any matter provided for in such amendment. If the Company shall so
determine, new Security Certificates so modified as to conform, in the opinion
of the Collateral Agent, the Purchase Contract Agent and the Company, to any
such amendment may be prepared and executed by the Company and authenticated,
executed on behalf of the Holders and delivered by the Purchase Contract Agent
in accordance with the Purchase Contract Agreement in exchange for Outstanding
Security Certificates.
28
SECTION 11. MISCELLANEOUS.
SECTION 11.1 NO WAIVER.
No failure on the part of the Collateral Agent, the Securities
Intermediary or any of their respective agents to exercise, and no course of
dealing with respect to, and no delay in exercising, any right, power or remedy
hereunder shall operate as a waiver thereof; nor shall any single or partial
exercise by the Collateral Agent, the Securities Intermediary or any of their
respective agents of any right, power or remedy hereunder preclude any other or
further exercise thereof or the exercise of any other right, power or remedy.
The remedies herein are cumulative and are not exclusive of any remedies
provided by law.
SECTION 11.2 GOVERNING LAW.
THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH,
THE LAWS OF THE STATE OF NEW YORK. The Company, the Collateral 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 and of any New York state court sitting in New
York City for the purposes of all legal proceedings arising out of or relating
to this Agreement or the transactions contemplated hereby. The Company, the
Collateral Agent, 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.
SECTION 11.3 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 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 11.4 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
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
29
ratified the agreements of, and the grant of the Pledge hereunder by, the
Purchase Contract Agent.
SECTION 11.5 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 11.6 SEVERABILITY.
If any provision hereof is invalid and unenforceable in any
jurisdiction, then, to the fullest extent permitted by law, (i) the other
provisions hereof shall remain in full force and effect in such jurisdiction and
shall be liberally construed in order to carry out the intentions of the parties
hereto as nearly as may be possible and (ii) the invalidity or unenforceability
of any provision hereof in any jurisdiction shall not affect the validity or
enforceability of such provision in any other jurisdiction.
SECTION 11.7 EXPENSES, ETC.
The Company agrees to reimburse the Collateral Agent and the Securities
Intermediary for:
(1) all reasonable out-of-pocket costs and expenses of the
Collateral Agent and the Securities Intermediary (including, without
limitation, the reasonable fees and expenses of counsel to the
Collateral Agent and the Securities Intermediary), in connection with
(i) the negotiation, preparation, execution and delivery or performance
of this Agreement and (ii) any modification, supplement or waiver of
any of the terms of this Agreement;
(2) all reasonable costs and expenses of the Collateral Agent
and the Securities Intermediary (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 11.7;
(3) and all transfer, stamp, documentary or other similar
taxes, assessments or charges levied by any governmental or revenue
authority in respect of this Agreement or any other document referred
to herein and all costs, expenses, taxes, assessments and other charges
incurred in connection with any filing, registration, recording or
perfection of any security interest contemplated hereby; and
(4) all fees and expenses of any agent or advisor appointed by
the Collateral Agent and consented to by the Company under Sections 9.3
and 9.9 of this Agreement.
30
SECTION 11.8 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:
(1) any lack of validity or enforceability of any provision of
the Purchase Contracts or the Securities or any other agreement or
instrument relating thereto;
(2) 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 the 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
(3) any other circumstance which might otherwise constitute a
defense available to, or discharge of, a borrower, a guarantor or a
xxxxxxx.
SECTION 11.9 NOTICE OF TAX EVENT, TAX EVENT REDEMPTION AND TERMINATION
EVENT.
Upon the occurrence of a Tax Event, a Tax Event Redemption or a
Termination Event, the Company or the Purchase Contract Agent shall deliver
written notice to the Collateral Agent and the Securities Intermediary. Upon the
written request of the Collateral Agent or the Securities Intermediary, the
Company shall inform such party whether or not a Tax Event, a Tax Event
Redemption or a Termination Event has occurred.
[SIGNATURES ON THE FOLLOWING PAGE]
31
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
------------------------- --------------------------------------------
VALERO ENERGY CORPORATION --------------------------------------------
as Purchase Contract Agent and as attorney-in-
fact of the Holders from time to time of the
Securities
By: By:
----------------------------------- -----------------------------------
Name: Name:
Title: Title:
Address for Notices: Address for Notices:
[ ] [ ]
[ ] [ ]
Attention: [ ] Attention: [ ]
Telecopy: Telecopy: [ ]
-------------------------------------------- -----------------------------------------------
[ ] [ ]
-------------------------, ---------------------------,
as Collateral Agent as Securities Intermediary
By: By:
----------------------------------------- -------------------------------------------
Name: Name:
Title: Title:
Address for Notices: Address for Notices:
[ ] [ ]
[ ] [ ]
Attention: [ ] Attention: [ ]
Telecopy: [ ] Telecopy: [ ]
32
EXHIBIT A
INSTRUCTION
FROM PURCHASE CONTRACT AGENT
TO COLLATERAL AGENT
(Establishment of Treasury PEPS Units)
[Name ]
[Address ]
[Address ]
Attention:
Telecopy:
Re: PEPS Units of Valero Energy Corporation. (the "COMPANY") and
VEC Trust [ ]
Please refer to the Pledge Agreement, dated as of ____________, 2000
(the "PLEDGE AGREEMENT"), among the Company, you, as Collateral Agent,
_______________, as Securities Intermediary, and the undersigned, as Purchase
Contract Agent and as attorney-in-fact for the holders of PEPS Units from time
to time. Capitalized terms used herein but not defined shall have the meaning
set forth in the Pledge Agreement.
We hereby notify you in accordance with Section 5.2 of the Pledge
Agreement that the holder of securities named below (the "HOLDER") has elected
to substitute $__________ Value of Treasury Securities or security entitlements
thereto in exchange for [an equal Value of [Pledged Preferred Securities]
[Pledged Senior Deferrable Notes] relating to _________ PEPS Units] and has
delivered to the undersigned a notice stating that the Holder has Transferred
such Treasury Securities or security entitlements thereto to the Securities
Intermediary, for credit to the Collateral Account.
We hereby request that you instruct the Securities Intermediary, upon
confirmation that such Treasury Securities or security entitlements thereto have
been credited to the Collateral Account, to release to the undersigned [an equal
Value of [Pledged Preferred Securities] [Pledged Senior Deferrable Notes]] in
accordance with Section 5.2 of the Pledge Agreement.
-----------------------------------
Date:
----------------
By:
--------------------------------
Name:
Title:
A-1
Please print name and address of Holder electing to substitute Treasury
Securities or security entitlements thereto for the [Pledged Preferred
Securities] [Pledged Senior Deferrable Notes]:
------------------------------------ -------------------------------
Name Social Security or other
Taxpayer Identification Number,
if any
------------------------------------
Address
------------------------------------
------------------------------------
A-2
EXHIBIT B
INSTRUCTION
FROM COLLATERAL AGENT
TO SECURITIES INTERMEDIARY
(Establishment of Treasury PEPS Units)
[Name ]
[Address]
Attention:
Telecopy:
Re: PEPS Units of Valero Energy Corporation (the "COMPANY") and
VEC Trust [ ] Securities Account No. ______ entitled
"_______________________," as Collateral Agent, Securities
Account ("VEC TRUST [ ]") (the "COLLATERAL ACCOUNT")
Please refer to the Pledge Agreement, dated as of ________________,
2000 (the "PLEDGE AGREEMENT"), among the Company, you, as Securities
Intermediary, ________________, as Purchase Contract Agent and as
attorney-in-fact for the holders of PEPS Units from time to time, and the
undersigned, as Collateral Agent. Capitalized terms used herein but not defined
shall have the meanings set forth in the Pledge Agreement.
When you have confirmed that $__________ Value of Treasury Securities
or security entitlements thereto has been credited to the Collateral Account by
or for the benefit of _________, as Holder of PEPS Units (the "HOLDER"), you are
hereby instructed to release from the Collateral Account [an equal Value of
[Preferred Securities or security entitlements thereto] [Senior Deferrable Notes
or security entitlements thereto]] relating to _____ PEPS Units of the Holder]
by Transfer to the Purchase Contract Agent.
-----------------------------------
Dated:
--------------
By:
-------------------------------
Name:
Title:
B-1
Please print name and address of Holder:
---------------------------------------- --------------------------------
Name Social Security or other
Taxpayer Identification Number,
if any
----------------------------------------
Address
----------------------------------------
----------------------------------------
B-2
EXHIBIT C
INSTRUCTION
FROM PURCHASE CONTRACT AGENT
TO COLLATERAL AGENT
(Reestablishment of PEPS Units )
[Name]
[Address]
[Address]
Attention:
Telecopy:
Re: _________________ PEPS Units of Valero Energy Corporation (the
"COMPANY") and VEC Trust [ ]
Please refer to the Pledge Agreement dated as of ____________, 2000
(the "PLEDGE AGREEMENT"), among the Company, you, as Collateral Agent,
_________________, as Securities Intermediary, and the undersigned, as Purchase
Contract Agent and as attorney-in-fact for the holders of PEPS Units from time
to time. Capitalized terms used herein but not defined shall have the meaning
set forth in the Pledge Agreement.
We hereby notify you in accordance with Section 5.3(a) of the Pledge
Agreement that the holder of securities listed below (the "HOLDER") has elected
to substitute [$ Value of [Preferred Securities or security entitlements
thereto] [Senior Deferrable Notes or security entitlements thereto]] in exchange
for $__________ Value of Pledged Treasury Securities and has delivered to the
undersigned a notice stating that the holder has Transferred such [Preferred
Securities or security entitlements thereto] [Senior Deferrable Notes or
security entitlements thereto] to the Securities Intermediary, for credit to the
Collateral Account.
We hereby request that you instruct the Securities Intermediary, upon
confirmation that such [Preferred Securities or security entitlements thereto]
[Senior Deferrable Notes or security entitlements thereto] have been credited to
the Collateral Account, to release to the undersigned $__________ Value of
Treasury Securities or security entitlements thereto related to _____ PEPS Units
of such Holder in accordance with Section 5.3(a) of the Pledge Agreement.
-----------------------------------
Date: By:
------------------------------------ --------------------------------
Name:
Title:
C-1
Please print name and address of Holder electing to substitute [Preferred
Securities or security entitlements thereto] [Pledged Senior Deferrable Notes or
security entitlements thereto] for Pledged Treasury Securities:
---------------------------------------- --------------------------------
Name Social Security or other
Taxpayer Identification Number,
if any
----------------------------------------
Address
----------------------------------------
----------------------------------------
C-2
EXHIBIT D
INSTRUCTION
FROM COLLATERAL AGENT
TO SECURITIES INTERMEDIARY
(Reestablishment of PEPS Units)
[Name]
[Address]
[Address]
Attention:
Telecopy:
Re: ___________________ PEPS Units of Valero Energy Corporation
(the "COMPANY") and VEC Trust [ ]
Securities Account No. ________ entitled "________________, AS
COLLATERAL AGENT, SECURITIES ACCOUNT
VEC TRUST [ ])" (the "COLLATERAL ACCOUNT")
Please refer to the Pledge Agreement dated as of _____________, 2000
(the "PLEDGE AGREEMENT"), among the Company, you, as Securities Intermediary,
________________, as Purchase Contract Agent and as attorney-in-fact for the
holders of PEPS Units from time to time, and the undersigned, as Collateral
Agent. Capitalized terms used herein but no defined shall have the meaning set
forth in the Pledge Agreement.
When you have confirmed that $ __________ Value of [Preferred
Securities or security entitlements thereto] [Senior Deferrable Notes or
security entitlements thereto] has been credited to the Collateral Account by or
for the benefit of ________________, as Holder of PEPS Units (the "HOLDER"), you
are hereby instructed to release from the Collateral Account $ ________________
Value of Treasury Securities or security entitlements thereto by Transfer to the
Purchase Contract Agent.
----------------------------------
Dated: By:
----------------------------------- -------------------------------
Name:
Title:
---------------------------------------- --------------------------------
Name Social Security or other
Taxpayer Identification Number,
if any
----------------------------------------
Address
----------------------------------------
----------------------------------------
D-1
EXHIBIT E
NOTICE OF CASH SETTLEMENT FROM SECURITIES INTERMEDIARY
TO PURCHASE CONTRACT AGENT
(Cash Settlement Amounts)
[Name]
[Address]
[Address]
Attention:
Telecopy:
Re: ______________________ PEPS Units of Valero Energy Corporation
(the "COMPANY") and VEC Trust [ ]
Please refer to the Pledge Agreement dated as of ______________, 2000
(the "PLEDGE AGREEMENT"), by and among you, the Company, ___________________,
as Collateral Agent and the undersigned, as Securities Intermediary. Unless
otherwise defined herein, terms defined in the Pledge Agreement are used herein
as defined therein.
In accordance with Section 5.5(d) of the Pledge Agreement, we hereby
notify you that as of 11:00 a.m., (on the fifth Business Day immediately
preceding ________________, 2000), we have received (i) $ _______________ in
immediately available funds paid in an aggregate Amount equal to the Purchase
Price to the Company on the Purchase Contract Settlement Date with respect to
________________ PEPS Units and (ii) $ ___________ in immediately available
funds paid in an aggregate amount equal to the Purchase Price to the Company on
the Purchase Contract Settlement Date with respect to ______ Treasury PEPS
Units.
----------------------------------
Dated: By:
----------------------------------- -------------------------------
Name:
Title:
