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EXHIBIT 4.12
PHILADELPHIA CONSOLIDATED HOLDING CORP.,
THE CHASE MANHATTAN BANK,
as Collateral Agent, Custodial Agent
and Securities Intermediary
AND
THE FIRST NATIONAL BANK OF CHICAGO,
as Purchase Contract Agent
FORM OF PLEDGE AGREEMENT
Dated as of April __, 1998
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TABLE OF CONTENTS
Page
RECITALS ......................................................................1
Section 1. Definitions..................................................3
Section 2. Pledge; Control and Perfection...............................8
Section 2.1. The Pledge...................................................8
Section 2.2. Control and Perfection......................................10
Section 3. Distributions on Pledged Collateral.........................12
Section 4. Substitution, Release, Repledge and
Settlement of Trust Preferred Securities................14
Section 4.1. Substitution for Capital
Securities and the Creation
of Growth PRIDES...................................14
Section 4.2. Substitution of Treasury
Securities and the Creation
of Income PRIDES...................................15
Section 4.3. Termination Event...........................................16
Section 4.4. Cash Settlement.............................................17
Section 4.5. Early Settlement............................................19
Section 4.6. Application of Proceeds
Settlement.........................................19
Section 5. Voting Rights -- Trust Preferred Securities.................22
Section 6. Rights and Remedies; Distribution
of the Debentures; Tax Event
Redemption..............................................23
Section 6.1. Rights and Remedies of the
Collateral Agent...................................23
Section 6.2. Distribution of the Debentures;
Tax Event Redemption...............................25
Section 6.3. Substitutions...............................................26
Section 7. Representations and Warranties;
Covenants...............................................26
Section 7.1. Representations and Warranties..............................26
Section 7.2. Covenants...................................................27
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Page
Section 8. The Collateral Agent........................................28
Section 8.1. Appointment, Powers and
Immunities.........................................28
Section 8.2. Instructions of the Company.................................29
Section 8.3. Reliance by Collateral Agent................................30
Section 8.4. Rights in Other Capacities..................................30
Section 8.5. Non-Reliance on Collateral Agent............................31
Section 8.6. Compensation and Indemnity..................................31
Section 8.7. Failure to Act..............................................31
Section 8.8. Resignation of Collateral
Agent..............................................32
Section 8.9. Right to Appoint Agent or
Advisor............................................34
Section 8.10. Survival....................................................34
Section 8.11. Exculpation.................................................34
Section 9. Amendment...................................................34
Section 9.1. Amendment Without Consent
of Holders.........................................34
Section 9.2. Amendment with Consent of
Holders............................................35
Section 9.3. Execution of Amendments.....................................36
Section 9.4. Effect of Amendments........................................36
Section 9.5. Reference to Amendments.....................................36
Section 10. Miscellaneous...............................................37
Section 10.1. No Waiver...................................................37
Section 10.2. Governing Law...............................................37
Section 10.3. Notices.....................................................38
Section 10.4. Successors and Assigns......................................38
Section 10.5. Counterparts................................................38
Section 10.6. Severability................................................38
Section 10.7. Expenses, etc...............................................39
Section 10.8. Security Interest Absolute..................................39
EXHIBIT A INSTRUCTION TO COLLATERAL AGENT
EXHIBIT B INSTRUCTION TO PURCHASE CONTRACT AGENT
EXHIBIT C INSTRUCTION TO CUSTODIAL AGENT REGARDING
REMARKETING
EXHIBIT D INSTRUCTION TO CUSTODIAL AGENT REGARDING
WITHDRAWAL FROM REMARKETING
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PLEDGE AGREEMENT
FORM OF PLEDGE AGREEMENT, dated as of April __, 1998 (this
"Agreement"), among Philadelphia Consolidated Holding Corp., a Pennsylvania
corporation (the "Company"), The Chase Manhattan Bank, a New York banking
corporation, not individually but solely as collateral agent (in such capacity,
together with its successors in such capacity, the "Collateral Agent") as
custodial agent (in such capacity, together with its successors in such
capacity, the "Custodial Agent") and in its capacity as a "securities
intermediary" as defined in Section 8-102(a)(14) of the Code (as defined herein)
(in such capacity, together with its successors in such capacity, the
"Securities Intermediary"), and The First National Bank of Chicago, not
individually but solely as purchase contract agent and as attorney-in-fact of
the Holders (as defined in the Purchase Contract Agreement) from time to time of
the Securities (as hereinafter defined) (in such capacity, together with its
successors in such capacity, the "Purchase Contract Agent") under the Purchase
Contract Agreement (as hereinafter defined).
RECITALS
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 10,350,000 FELINE PRIDES of the Company,
having a stated amount of $10 (the "Stated Amount") per FELINE PRIDES.
The FELINE PRIDES will initially consist of (A) 8,000,000,000 units
(referred to as "Income PRIDES") with a face amount, per Income PRIDES, equal to
the Stated Amount and (B) 1,000,000 units (referred to as "Growth PRIDES" and,
together with the Income PRIDES, the "Securities") with a face amount, per
Growth PRIDES, equal to the Stated Amount. Each Income PRIDES will initially be
comprised of (a) a stock purchase contract (a "Purchase Contract") under which
(i) the holder will purchase from the Company on ___ 16, 2001 (the "Purchase
Contract Settlement Date"), for an amount of cash equal to the Stated Amount, a
number of newly issued shares of common stock, no par value per share (the
"Common Stock"), of the Company equal to the Settlement Rate (as defined
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below) and (ii) the Company will pay the Holder Contract Adjustment Payments (as
defined below) at the rate of __% of the Stated Amount per annum and (b) either
beneficial ownership of a Trust Preferred Security (as defined below) or upon
the occurrence of a Tax Event Redemption the Applicable Ownership Interest of
the Treasury Portfolio. Each Growth PRIDES will initially be comprised of (a) a
Purchase Contract under which (i) the holder will purchase from the Company on
the Purchase Contract Settlement Date, for an amount in cash equal to the
Stated Amount, a number of newly issued shares of Common Stock of the Company,
equal to the Settlement Rate, and (ii) the Company will pay the Holder Contract
Adjustment Payments, at the rate of __% of the Stated Amount per annum, and (b)
a 1/100 undivided beneficial interest in a zero-coupon U.S. Treasury Security
(CUSIP No. ) having a principal amount equal to $1,000 and maturing on ____15,
2001 (the "Treasury Securities").
Pursuant to the terms of the Declaration (as defined below), PC
Financing I, a statutory business trust formed under the laws of the State of
Delaware (the "Trust") will issue _____ __% Trust Originated Preferred
Securities (the "Trust Preferred Securities") having a stated liquidation value
equal to the Stated Amount.
Pursuant to the terms of the Purchase Contract Agreement and the
Purchase Contracts, the Holders, from time to time, of the Securities have
irrevocably authorized the Purchase Contract Agent, as attorney-in-fact of such
Holders, among other things, to execute and deliver this Agreement on behalf of
such Holders and to grant the pledge provided hereby of the Trust Preferred
Securities, any Applicable Ownership Interest in the Treasury Portfolio and any
Treasury Securities delivered in exchange therefor to secure each Holder's
obligations under the related Purchase Contract, as provided herein and subject
to the terms hereof. Upon such pledge, the Trust Preferred Securities will be
beneficially owned by the Holders but will be owned of record by the Purchase
Contract Agent subject to the Pledge hereunder.
Accordingly, the Company, the Collateral Agent, the Securities
Intermediary, the Custodial Agent and the Purchase Contract Agent, on its own
behalf and as attorney-in-fact of the Holders from time to time of the
Securities, agree as follows:
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Section 1. Definitions. For all purposes of this
Agreement, except as otherwise expressly provided or
unless the context otherwise requires:
(a) the terms defined in this Article have the meanings
assigned to them in this Article and include the plural as well as the
singular;
(b) the words "herein," "hereof" and "hereunder" and other
words of similar import refer to this Agreement as a whole and not to
any particular Article, Section or other subdivision;
(c) the following terms have the meanings assigned to them in
the Purchase Contract Agreement: (i) Act, (ii) Agent, (iii) Board
Resolution, (iv) Cash Settlement, (v) Certificate, (vi) Contract
Adjustment Payments, (vii) Debentures, (viii) Early Settlement, (ix)
Early Settlement Amount, (x) Early Settlement Date, (xi) Failed
Remarketing, (xii) Holder, (xiii) Opinion of Counsel, (xiv) Outstanding
Securities, (xv) Purchase Agreement, (xvi) Purchase Contract, (xvii)
Purchase Contract Settlement Date, (xviii) Remarketing Agent, (xix)
Remarketing Agreement, (xx) Remarketing Underwriting Agreement, (xxi)
Settlement Rate, and (xxii) Termination Event; and
(d) the following terms have the meanings assigned to them in
the Declaration: (i) Applicable Ownership Interest (ii) Applicable
Principal Amount, (iii) Institutional Trustee, (iv) Investment Company
Event,(v) Primary Treasury Dealer, (vi) Quotation Agent, (vii)
Redemption Amount, (viii) Redemption Price, (ix) Tax Event, (x) Tax
Event Redemption, (xi) Tax Event Redemption Date, (xii) Treasury
Portfolio, (xiii) Treasury Portfolio Purchase Price.
"Agreement" means this instrument as originally executed or as it may
from time to time be supplemented or amended by one or more agreements
supplemental hereto entered into pursuant to the applicable provisions hereof.
"Bankruptcy Code" means title 11 of the United States Code, or any
other law of the United States that
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from time to time provides a uniform system of bankruptcy laws.
"Business Day" means any day other than a Saturday, a Sunday or any
other day on which banking institutions in The City of New York (in the State of
New York) are permitted or required by any applicable law to close.
"Trust Preferred Securities" has the meaning specified in the Recitals.
"Cash" means any coin or currency of the United States as at the time
shall be legal tender for payment of public and private debts.
"Code" has the meaning specified in Section 6.1 hereof.
"Collateral" has the meaning specified in Section 2.1 hereof.
"Collateral Account" means the securities account (number _____)
maintained at The Chase Manhattan Bank in the name "The First National Bank of
Chicago, as Purchase Contract Agent on behalf of the holders of certain
securities of PCHC Financing I, Collateral Account subject to the security
interest of The Chase Manhattan Bank, as Collateral Agent, for the benefit of
Philadelphia Consolidated Holding Corp., as pledgee" and any successor account.
"Collateral Agent" has the meaning specified in the first paragraph of
this instrument.
"Common Stock" has the meaning specified in the Recitals.
"Company" means the Person named as the "Company" in the first
paragraph of this instrument until a successor shall have become such, and
thereafter "Company" shall mean such successor.
"Custodial Agent" has the meaning specified in the Recitals.
"Debenture Trustee" means The First National Bank of Chicago, as
trustee under the Indenture until a successor
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is appointed thereunder, and thereafter means such successor trustee.
"Declaration" means the Amended and Restated Declaration of Trust,
dated as of April __, 1998, among the Company as sponsor, the trustees named
therein and the holders from time to time of undivided beneficial interests in
the assets of the Trust.
"Intermediary" means any entity that in the ordinary course of its
business maintains securities accounts for others and is acting in that
capacity.
"Permitted Investments" means any one of the following which shall
mature not later than the next succeeding Business Day (i) any evidence of
indebtedness with an original maturity of 365 days or less issued, or directly
and fully guaranteed or insured, by the United States of America or any agency
or instrumentality thereof (provided that the full faith and credit of the
United States of America is pledged in support thereof or such indebtedness
constitutes a general obligation of it); (ii) deposits, certificates of deposit
or acceptances with an original maturity of 365 days or less of any institution
which is a member of the Federal Reserve System having combined capital and
surplus and undivided profits of not less than US $200.0 million at the time of
deposit; (iii) investments with an original maturity of 365 days or less of any
Person that is fully and unconditionally guaranteed by a bank referred to in
clause (ii); (iv) investments in commercial paper, other than commercial paper
issued by the Company or its affiliates, of any corporation incorporated under
the laws of the United States or any State thereof, which commercial paper has a
rating at the time of purchase at least equal to "A-1" by Standard & Poor's
Ratings Services ("S&P") or at least equal to "P-1" by Moody's Investors
Service, Inc. ("Moody's"); and (v) investments in money market funds registered
under the Investment Company Act of 1940, as amended, rated in the highest
applicable rating category by S&P or Moody's.
"Person" means any individual, corporation, limited liability company,
partnership, joint venture, association, joint-stock company, trust,
unincorporated organization or government or any agency or political
subdivision thereof.
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"Pledge" has the meaning specified in Section 2.1 hereof.
"Pledged Trust Preferred Securities" has the meaning specified in
Section 2.1 hereof.
"Pledged Treasury Securities" has the meaning specified in Section 2.1
hereof.
"Proceeds" means all interest, dividends, cash, instruments,
securities, financial assets (as defined in Section 8-102(a)(9) of the Code) and
other property from time to time received, receivable or otherwise distributed
upon the sale, exchange, collection or disposition of the Collateral or any
proceeds thereof.
"Purchase Contract" has the meaning specified in the Recitals.
"Purchase Contract Agent" has the meaning specified in the first
paragraph of this Agreement.
"Purchase Contract Agreement" has the meaning specified in the
Recitals.
"Securities" has the meaning specified in the Recitals.
"Securities Intermediary" has the meaning specified in the first
paragraph of this Agreement.
"Security Entitlement" has the meaning set forth in Section
8-102(a)(17) of the Code.
"Separate Trust Preferred Securities" means any Trust Preferred
Securities that are not Pledged Trust Preferred Securities.
"Stated Amount" has the meaning specified in the Recitals.
"TRADES" means the Treasury/Reserve Automated Debt Entry System
maintained by the Federal Reserve Bank of New York pursuant to the TRADES
Regulations.
"TRADES Regulations" means the regulations of the United States
Department of the Treasury, published at 31
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C.F.R. Part 357, as amended from time to time. Unless otherwise defined herein,
all terms defined in the TRADES Regulations are used herein as therein defined.
"Transfer" means, with respect to the Collateral and in accordance with
the instructions of the Collateral Agent, the Purchase Contract Agent or the
Holder, as applicable:
(i) in the case of Collateral consisting of
securities which cannot be delivered by
book-entry or which the parties agree are
to be delivered in physical form, delivery
in appropriate physical form to the
recipient accompanied by any duly executed
instruments of transfer, assignments in
blank, transfer tax stamps and any other
documents necessary to constitute a legally
valid transfer to the recipient;
(ii) in the case of Collateral consisting of
securities maintained in book-entry form by
causing a "securities intermediary" (as defined
in Section 8-102(a)(14) of the Code) to
(i) credit a "security entitlement" (as
defined in Section 8-102(a)(17) of the Code)
with respect to such securities to a
"securities account" (as defined in Section
8-501(a) of the Code) maintained by or on
behalf of the recipient and (ii) to issue a
confirmation to the recipient with respect to
such credit. In the case of Collateral to be
delivered to the Collateral Agent, the
Securities Intermediary shall be the Securities
Intermediary and the securities account shall
be the Collateral Account.
"Treasury Security" means a zero-coupon U.S. Treasury Security (Cusip
Number ________) which are the principal strips of the U.S. Treasury Securities
which mature on _____ 15, 2001.
"Trust" has the meaning specified in the Recitals.
"Value" with respect to any item of Collateral on any date means, as to
(i) a Trust Preferred Security, the Stated Amount, (ii) Cash, the face amount
thereof and
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(iii) Treasury Securities, the aggregate principal amount thereof at maturity.
Section 2. Pledge; Control and Perfection.
Section 2.1. The Pledge. The Holders from time to time acting through
the Purchase Contract Agent, as their attorney-in-fact, hereby pledge and grant
to the Collateral Agent, for the benefit of the Company, as collateral security
for the performance when due by such Holders of their respective obligations
under the related Purchase Contracts, a security interest in (i) all of the
right, title and interest of such Holders (a) in the Trust Preferred Securities
and Treasury Securities constituting a part of the Securities and any Treasury
Securities delivered in exchange for any Trust Preferred Securities, and any
Trust Preferred Securities delivered in exchange for any Treasury Securities, in
accordance with Section 4 hereof, in each case that have been Transferred to or
received by the Collateral Agent and not released by the Collateral Agent to
such Holders under the provisions of this Agreement; (b) in payments made by
Holders pursuant to Section 4.4; (c) in the Collateral Account and all
securities, financial assets, Cash and other property credited thereto and all
Security Entitlements related thereto; (d) in any Debentures delivered to the
Collateral Agent upon the occurrence of an Investment Company Event or a
liquidation of the Trust as provided in Section 6.2; (e) in the Treasury
Portfolio purchased on behalf of the Holders of Income PRIDES by the Collateral
Agent upon the occurrence of a Tax Event Redemption as provided in Section 6.2
and (f) all Proceeds of the foregoing (all of the foregoing, collectively, the
"Collateral"). Prior to or concurrently with the execution and delivery of this
Agreement, the Purchase Contract Agent, on behalf of the initial Holders of the
Securities, shall cause the Trust Preferred Securities comprising a part of
the Income PRIDES, and the Treasury Securities comprising a part of the Growth
PRIDES, to be Transferred to the Collateral Agent for the benefit of the
Company. Such Trust Preferred Securities shall be Transferred by physically
delivering such Securities to the Securities Intermediary endorsed in blank and
causing the Securities Intermediary to credit the Collateral Account with such
Securities and sending the Collateral Agent a confirmation of the deposit of
such Securities. In the event a Holder of Income PRIDES so elects, such Holder
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may Transfer Treasury Securities to the Collateral Agent for the benefit of the
Company in exchange for the release by the Collateral Agent on behalf of the
Company of Trust Preferred Securities or the appropriate Applicable Ownership
Interest of the Treasury Portfolio, as the case may be, with an aggregate stated
liquidation amount equal to the aggregate principal amount of the Treasury
Securities so Transferred, in the case of Trust Preferred Securities, or with
an appropriate Applicable Ownership Interest (as specified in clause (A) of the
definition of such term) of the Treasury Portfolio equal to the aggregate
principal amount of the Treasury Securities so transferred, in the event that a
Tax Event Redemption has occurred, to the Purchase Contract Agent on behalf of
such Holder. Treasury Securities and the Treasury Port folio, as applicable,
shall be Transferred to the Collateral Account maintained by the Collateral
Agent at the Securities Intermediary by book-entry transfer to the Collateral
Account in accordance with the TRADES Regulations and other applicable law and
by the notation by the Securities Intermediary on its books that a Security
Entitlement with respect to such Treasury Securities or Treasury Portfolio, has
been credited to the Collateral Account. For purposes of perfecting the Pledge
under applicable law, including, to the extent applicable, the TRADES
Regulations or the Uniform Commercial Code as adopted and in effect in any
applicable jurisdiction, the Collateral Agent shall be the agent of the Company
as provided herein. The pledge provided in this Section 2.1 is herein referred
to as the "Pledge" and the Trust Preferred Securities (or the Debentures that
are delivered pursuant to Section 6.2 hereof) or Treasury Securities subject
to the Pledge, excluding any Trust Preferred Securities (or the Debentures that
are delivered pursuant to Section 6.2 hereof) or Treasury Securities released
from the Pledge as provided in Section 4 hereof, are hereinafter referred to as
"Pledged Trust Preferred Securities" or the "Pledged Treasury Securities,"
respectively. Subject to the Pledge and the provisions of Section 2.2 hereof,
the Holders from time to time shall have full beneficial ownership of the
Collateral. When ever directed by the Collateral Agent acting on behalf of the
Company, the Securities Intermediary shall have the right to reregister the
Trust Preferred Securities or any other Securities held in physical form in its
name.
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Except as may be required in order to release Trust Preferred
Securities in connection with a Holder's election to convert its investment
from an Income PRIDES to a Growth PRIDES, or except as otherwise required to
release Securities as specified herein, neither the Collateral Agent nor the
Securities Intermediary shall relinquish physical possession of any certificate
evidencing a Trust Preferred Security prior to the termination of this
Agreement. If it becomes necessary for the Securities Intermediary to relinquish
physical possession of a certificate in order to release a portion of the Trust
Preferred Securities evidenced thereby from the Pledge, the Securities
Intermediary shall use its best efforts to obtain physical possession of a
replacement certificate evidencing any Trust Preferred Securities remaining
subject to the Pledge hereunder registered to it or endorsed in blank within
fifteen days of the date it relinquished possession. The Securities Intermediary
shall promptly notify the Company and the Collateral Agent of the Securities
Intermediary's failure to obtain possession of any such replacement certificate
as required hereby.
Section 2.2. Control and Perfection. (a) In connection with the Pledge
granted in Section 2.1, and subject to the other provisions of this Agreement,
the Holders from time to time acting through the Purchase Contract Agent, as
their attorney-in-fact, hereby authorize and direct the Securities Intermediary
(without the necessity of obtaining the further consent of the Purchase
Contract Agent or any of the Holders), and the Securities Intermediary agrees,
to comply with and follow any instructions and entitlement orders (as defined in
Section 8-102(a)(8) of the Code) that the Collateral Agent on behalf of the
Company may give in writing with respect to the Collateral Account, the
Collateral credited thereto and any security entitlements with respect to any
thereof. Such instructions and entitlement orders may, without limitation,
direct the Securities Intermediary to transfer, redeem, sell, liquidate,
assign, deliver or otherwise dispose of the Trust Preferred Securities, the
Treasury Securities, the Treasury Portfolio, and any Security Entitlements with
respect thereto and to pay and deliver any income, proceeds or other funds
derived therefrom to the Company. The Holders from time to time acting through
the Purchase Contract Agent hereby further authorize and direct the Collateral
Agent, as Agent of
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the Company, to itself issue instructions and entitlement orders, and to
otherwise take action, with respect to the Collateral Account, the Collateral
credited thereto and any security entitlements with respect thereto, pursuant to
the terms and provisions hereof, all without the necessity of obtaining the
further consent of the Purchase Contract Agent or any of the Holders. The
Collateral Agent shall be the Agent of the Company and shall act as directed in
writing by the Company. Without limiting the generality of the foregoing, the
Collateral Agent shall issue entitlement orders to the Securities Intermediary
when and as directed by the Company.
(b) The Securities Intermediary hereby confirms and agrees that: (i)
all securities or other property underlying any financial assets credited to
the Collateral Account shall be registered in the name of the Securities
Intermediary, indorsed to the Securities Intermediary or in blank or credited to
another Collateral Account maintained in the name of the Securities
Intermediary and in no case will any financial asset credited to the Collateral
Account be registered in the name of the Purchase Contract Agent, the Collateral
Agent, the Company or any Holder, payable to the order of, or specially indorsed
to, the Purchase Contract Agent, the Collateral Agent, the Company or any Holder
except to the extent the foregoing have been specially indorsed to the
Securities Intermediary or in blank; (ii) all property delivered to the
Securities Intermediary pursuant to this Pledge Agreement (including, without
limitation, any Trust Preferred Securities, the Treasury Portfolio or Treasury
Securities) will be promptly credited to the Collateral Account; (iii) the
Collateral Account is an account to which financial assets are or may be
credited, and the Securities Intermediary shall, subject to the terms of this
Agreement, treat the Purchase Contract Agent as entitled to exercise the rights
of any financial asset credited to the Collateral Account; (iv) the Securities
Intermediary has not entered into, and until the termination of the this
Agreement will not enter into, any agreement with any other person relating to
the Collateral Account and/or any financial assets credited thereto pursuant to
which it has agreed to comply with entitlement orders (as defined in Section
8-102(a)(8) of the Code) of such other person; and (v) the Securities
Intermediary has not entered into, and until the termination of this Agreement
will not enter into, any agreement with
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the debtor or the secured party purporting to limit or condition the obligation
of the Securities Intermediary to comply with entitlement orders as set forth in
this Section 2.2 hereof.
(c) The Securities Intermediary hereby agrees that each item of
property (whether investment property, financial asset, security, instrument or
cash) credited to the Collateral Account shall be treated as a "financial
asset" within the meaning of Section 8-102(a)(9) of the Code.
(d) In the event of any conflict between this Agreement (or any portion
thereof) and any other agreement now existing or hereafter entered into, the
terms of this Agreement shall prevail.
Section 3. Distributions on Pledged Collateral. So long as the Purchase
Contract Agent is the registered owner of the Pledged Trust Preferred
Securities, it shall receive all payments thereon. If the Pledged Trust
Preferred Securities are reregistered, such that the Collateral Agent becomes
the registered holder, all payments of the Stated Amount or, if applicable, the
appropriate Applicable Ownership Interest (as specified in clause (A) of the
definition of such term) of the Treasury Portfolio, or cash distributions on,
the Pledged Trust Preferred Securities or on the appropriate Applicable
Ownership Interest (as specified in clause (B) of the definition of such term)
of the Treasury Portfolio, as the case may be, and all payments of the principal
of, or cash distributions on, any Pledged Treasury Securities received by the
Collateral Agent that are properly payable hereunder shall be paid by the
Collateral Agent by wire transfer in same day funds:
(i) In the case of (A) cash distributions with respect to the
Pledged Trust Preferred Securities or the appropriate Applicable
Ownership Interest (as specified in clause (B) of the definition of
such term) of the Treasury Portfolio, as the case may be, and (B) any
payments of the Stated Amount or, if applicable, the appropriate
Applicable Ownership Interest (as specified in clause (A) of the
definition of such term) of the Treasury Portfolio with respect to any
Trust Preferred Securities or the appropriate Applicable Ownership
Interest of the
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Treasury Portfolio, as the case may be, that have been released from
the Pledge pursuant to Section 4.3 hereof, to the Purchase Contract
Agent, for the benefit of the relevant Holders of Securities, to the
account designated by the Purchase Contract Agent for such purpose, no
later than 2:00 p.m., New York City time, on the Business Day such
payment is received by the Collateral Agent (provided that in the event
such payment is received by the Collateral Agent on a day that is not a
Business Day or after 12:30 p.m., New York City time, on a Business
Day, then such payment shall be made no later than 10:30 a.m., New York
City time, on the next succeeding Business Day);
(ii) In the case of any principal payments with respect to any
Treasury Securities that have been released from the Pledge pursuant to
Section 4.3 hereof, to the Holders of the Growth PRIDES to the accounts
designated by them in writing for such purpose no later than 2:00 p.m.,
New York City time, on the Business Day such payment is received by the
Collateral Agent (provided that in the event such payment is received
by the Collateral Agent on a day that is not a Business Day or after
12:30 p.m., New York City time, on a Business Day, then such payment
shall be made no later than 10:30 a.m., New York City time, on the next
succeeding Business Day); and
(iii) In the case of payments of the Stated Amount of any
Pledged Trust Preferred Securities or the appropriate Applicable
Ownership Interest (as specified in clause (A) of the definition of
such term) of the Treasury Portfolio, as the case may be, or the
principal of any Pledged Treasury Securities, to the Company on the
Purchase Contract Settlement Date in accordance with the procedure set
forth in Section 4.6(a) or 4.6(b) hereof, in full satisfaction of the
respective obligations of the Holders under the related Purchase
Contracts.
All payments received by the Purchase Contract Agent as provided herein shall be
applied by the Purchase Contract Agent pursuant to the provisions of the
Purchase Contract Agreement. If, notwithstanding the foregoing, the Purchase
Contract Agent shall receive any payments of the Stated Amount or, if
applicable, the appropriate Applica-
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ble Ownership Interest (as specified in clause (A) of the definition of such
term) on account of any Trust Preferred Security or the appropriate Applicable
Ownership Interest of the Treasury Portfolio, as applicable that, at the time of
such payment, is a Pledged Trust Preferred Security or the appropriate
Applicable Ownership Interest of the Treasury Portfolio, as the case may be, or
a Holder of a Growth PRIDES shall receive any payments of principal on account
of any Treasury Securities that, at the time of such payment, are Pledged
Treasury Securities, the Purchase Contract Agent or such Holder shall hold the
same as trustee of an express trust for the benefit of the Company (and promptly
deliver the same over to the Company) for application to the obligations of the
Holders under the related Purchase Contracts, and the Holders shall acquire no
right, title or interest in any such payments of Stated Amount or principal so
received.
Section 4. Substitution, Release, Repledge and Settlement of Trust
Preferred Securities.
Section 4.1. Substitution for Trust Preferred Securities and the
Creation of Growth PRIDES. At any time on or prior to the fifth Business Day
immediately preceding the Purchase Contract Settlement Date (unless a Tax Event
Redemption has occurred), a Holder of Income PRIDES shall have the right to
substitute Treasury Securities for the Pledged Trust Preferred Securities
securing such Holder's obligations under the Purchase Con tract(s) comprising a
part of its Income PRIDES in integral multiples of 100 Income PRIDES by (a)
Transferring to the Collateral Agent Treasury Securities having a Value equal to
the Stated Amount of the Pledged Trust Preferred Securities to be released and
(b)(i) in the event that Contract Adjustment Payments are at a higher rate for
Growth PRIDES than for Income PRIDES, delivering to the Purchase Contract Agent
Cash in an amount equal to the excess of the Contract Adjustment Payments that
would have accrued since the last Payment Date through the date of substitution
on the Growth PRIDES being created by the Holder, over the Contract Adjustment
Payments that have accrued over the same time period on the related Income
PRIDES, which amount the Purchase Contract Agent shall promptly remit to the
Company, and (ii) delivering the related Income PRIDES to the Purchase Contract
Agent, accompanied by a notice, substantially in the form of
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Exhibit B hereto, to the Purchase Contract Agent stating that such Holder has
Transferred Treasury Securities to the Collateral Agent pursuant to clause (a)
above (stating the Value of the Treasury Securities Transferred by such Holder)
and requesting that the Purchase Contract Agent instruct the Collateral Agent to
release from the Pledge the Pledged Trust Preferred Securities related to such
Income PRIDES. The Purchase Contract Agent shall instruct the Collateral Agent
in the form provided in Exhibit A; provided, however, that if a Tax Event
Redemption has occurred and the Treasury Portfolio has become a component of the
Income PRIDES, Holders of Income PRIDES may make such substitution only in
integral multiples of 4,000,000 Income PRIDES at any time on or prior to the
second Business Day immediately preceding the Purchase Contract Settlement Date.
Upon receipt of Treasury Securities from a Holder of Income PRIDES and the
related instruction from the Purchase Contract Agent, the Collateral Agent
shall release the Pledged Trust Preferred Securities or the appropriate
Applicable Ownership Interest of the Treasury Portfolio, as the case may be,
and shall promptly Transfer such Pledged Trust Preferred Securities or the
appropriate Applicable Ownership Interest of the Treasury Portfolio, as the
case may be, free and clear of any lien, pledge or security interest created
hereby, to the Purchase Contract Agent.
Section 4.2. Substitution of Treasury Securities and the Creation of
Income PRIDES. At any time on or prior to the fifth Business Day immediately
preceding the Purchase Contract Settlement Date (unless a Tax Event Redemption
has occurred), a Holder of Growth PRIDES shall have the right to establish or
reestablish Income PRIDES consisting of the Purchase Contracts and Trust
Preferred Securities in integral multiples of 100 Income PRIDES by (a)
Transferring to the Collateral Agent Trust Preferred Securities having a Value
equal to the Value of the Pledged Treasury Securities to be released and (b)
delivering the related Growth PRIDES to the Purchase Contract Agent,
accompanied by a notice, substantially in the form of Exhibit B hereto, to the
Purchase Contract Agent stating that such Holder has transferred Trust Preferred
Securities to the Collateral Agent pursuant to clause (a) above and requesting
that the Purchase Contract Agent instruct the Collateral Agent to release from
the Pledge the Pledged Treasury Securities related to such Growth PRIDES. The
Purchase Contract Agent shall instruct the
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Collateral Agent in the form provided in Exhibit A; provided, however, that if a
Tax Event Redemption has occurred and the Treasury Portfolio has become a
component of the Income PRIDES, Holders of Growth PRIDES may make such
substitution only in integral multiples of 4,000,000 Growth PRIDES, at any time
on or prior to the Business Day immediately preceding the Purchase Contract
Settlement Date. Upon receipt of the Trust Preferred Securities or the
appropriate Applicable Ownership Interest of the Treasury Portfolio, as the
case may be, from such Holder and the instruction from the Purchase Contract
Agent, the Collateral Agent shall release the Treasury Securities and shall
promptly Transfer such Treasury Securities, free and clear of any lien, pledge
or security interest created hereby, to the Purchase Contract Agent.
Section 4.3. Termination Event. Upon receipt by the Collateral Agent of
written notice from the Company or the Purchase Contract Agent that there has
occurred a Termination Event, the Collateral Agent shall release all Collateral
from the Pledge and shall promptly Transfer any Pledged Trust Preferred
Securities (or the Applicable Ownership Interest of the Treasury Portfolio if a
Tax Event Redemption has occurred) and Pledged Treasury Securities to the
Purchase Contract Agent for the benefit of the Holders of the Income PRIDES and
the Growth PRIDES, respectively, free and clear of any lien, pledge or security
interest or other interest created hereby.
If such Termination Event shall result from the Company's becoming a
debtor under the Bankruptcy Code, and if the Collateral Agent shall for any
reason fail promptly to effectuate the release and Transfer of all Pledged Trust
Preferred Securities, the Treasury Portfolio or of the Pledged Treasury
Securities, as the case may be, as provided by this Section 4.3, the Purchase
Contract Agent shall (i) use 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 4.3, and shall deliver
such opinion to the Collateral Agent within ten days after the occurrence of
such Termination Event, and if (y) the Purchase Contract Agent shall be unable
to obtain such
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opinion within ten days after the occurrence of such Termination Event or (z)
the Collateral Agent shall continue, after delivery of such opinion, to refuse
to effectuate the release and Transfer of all Pledged Trust Preferred
Securities, the Treasury Portfolio or the Pledged Treasury Securities, as the
case may be, as provided in this Section 4.3, then the Purchase Contract Agent
shall within fifteen days after the occurrence of such Termination Event
commence an action or proceeding in the court with jurisdiction of the Company's
case under the Bankruptcy Code seeking an order requiring the Collateral Agent
to effectuate the release and transfer of all Pledged Trust Preferred
Securities, the Treasury Portfolio or of the Pledged Treasury Securities, as the
case may be, as provided by this Section 4.3 or (ii) commence an action or
proceeding like that described in subsection (i)(z) hereof within ten days after
the occurrence of such Termination Event.
Section 4.4. Cash Settlement. (a) Upon receipt by the Collateral Agent
of (i) a notice from the Purchase Contract Agent promptly after the receipt by
the Purchase Contract Agent of such notice that a Holder of an Income PRIDES or
Growth PRIDES has elected, in accordance with the procedures specified in
Section 5.4(a)(i) or (d)(i) of the Purchase Contract Agreement, respectively, to
settle its Purchase Contract with Cash and (ii) payment by such Holder on or
prior to 11:00 a.m., New York City time, on the Business Day immediately
preceding the Purchase Contract Settlement Date in lawful money of the United
States by certified or cashiers' check or wire transfer in immediately available
funds payable to or upon the order of the Company, then the Collateral Agent
shall, promptly invest any Cash received from a Holder in connection with a Cash
Settlement in Permitted Investments. Upon receipt of the proceeds upon the
maturity of the Permitted Investments on the Purchase Contract Settlement Date,
the Collateral Agent shall pay the portion of such proceeds and deliver any
certified or cashiers' checks received, in an aggregate amount equal to the
Purchase Price, to the Company on the Purchase Contract Settlement Date, and
shall distribute any funds in respect of the interest earned from the Permitted
Investments to the Purchase Contract Agent for payment to the relevant Holders.
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(b) If a Holder of an Income PRIDES fails to notify the Agent of its
intention to make a Cash Settlement in accordance with Section 5.4(a)(i) of the
Purchase Con tract Agreement, such failure shall constitute an event of default
under the Purchase Contract Agreement and hereunder, and the Holder shall be
deemed to have consented to the disposition of the pledged Trust Preferred
Securities pursuant to the remarketing as described in Section 5.4(b) of the
Purchase Contract Agreement, which is incorporated herein by reference. If a
Holder of an Income PRIDES does notify the Agent as provided in Section
5.4(a)(i) of the Purchase Contract Agreement of its intention to pay the
Purchase Price in cash, but fails to make such payment as required by Section
5.4(a)(ii) of the Purchase Contract Agreement, the Trust Preferred Securities of
such a Holder will not be remarketed but instead the Collateral Agent, for the
benefit of the Company, will exercise its rights as a secured party with respect
to such Trust Preferred Securities at the direction of the Company to retain or
dispose of the Collateral in accordance with applicable law. In addition, in
the event of a Failed Remarketing as described in Section 5.4(b) of the Purchase
Contract Agreement, such Failed Remarketing shall constitute an event of default
hereunder by such Holder and the Collateral Agent, for the benefit of the
Company, will also exercise its rights as a secured party with respect to such
Trust Preferred Securities at the direction of the Company to retain or dispose
of the Collateral in accordance with applicable law.
(c) If a Holder of a Growth PRIDES fails to notify the Purchase
Contract Agent of such Holder's intention to make a Cash Settlement in
accordance with Section 5.4(d)(i) of the Purchase Contract Agreement, or if a
Holder of a Growth PRIDES does notify the 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 failure shall constitute an
event of default hereunder by such Holder and upon the maturity of any Pledged
Treasury Securities or the Treasury Portfolio, if any, held by the Collateral
Agent on the Business Day immediately preceding the Purchase Contract
Settlement Date, the principal amount of the Pledged Treasury Securities or the
Treasury Portfolio received by the Collateral
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Agent shall, upon written direction of the Company, be invested promptly in
Permitted Investments. On the Purchase Contract Settlement Date, an amount equal
to the Purchase Price will be remitted to the Company as payment thereof. In the
event the sum of the proceeds from the related Pledged Treasury Securities or
the Treasury Portfolio, as the case may be, and the investment earnings earned
from such investments is in excess of the aggregate Purchase Price of the
Purchase Contracts being settled thereby, the Collateral Agent will distribute
such excess to the Purchase Contract Agent for the benefit of the Holder of the
related Growth PRIDES or Income PRIDES when received.
Section 4.5. Early Settlement. Upon written notice to the Collateral
Agent by the Purchase Contract Agent that one or more Holders of Securities have
elected to effect Early Settlement of their respective obligations under the
Purchase Contracts forming a part of such Securities in accordance with the
terms of the Purchase Contracts and the Purchase Contract Agreement (setting
forth the number of such Purchase Contracts as to which such Holders have
elected to effect Early Settlement), and that the Purchase Contract Agent has
received from such Holders, and paid to the Company as confirmed in writing by
the Company, the related Early Settlement Amounts pursuant to the terms of the
Purchase Contracts and the Purchase Contract Agreement and that all conditions
to such Early Settlement have been satisfied, then the Collateral Agent shall
release from the Pledge, (a) Pledged Trust Preferred Securities or the
appropriate Applicable Ownership Interest of the Treasury Portfolio in the case
of a Holder of Income PRIDES or (b) Pledged Treasury Securities in the case of a
Holder of Growth PRIDES, as the case may be, with a principal amount equal to
the product of (i) the Stated Amount times (ii) the number of such Purchase
Contracts as to which such Holders have elected to effect Early Settlement and
shall Transfer all such Pledged Trust Preferred Securities or the appropriate
Applicable Ownership Interest of the Treasury Portfolio or Pledged Treasury
Securities, as the case may be, free and clear of the Pledge created hereby, to
the Purchase Contract Agent for the benefit of the Holders.
Section 4.6. Application of Proceeds Settlement.
(a) In the event a Holder of Income PRIDES (if a Tax
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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 paragraph 5.4(a)(i) in the Purchase Contract Agreement or has not made an
Early Settlement of the Purchase Contract(s) underlying its Income PRIDES, such
Holder shall be deemed to have elected to pay for the shares of Common Stock to
be issued under such Purchase Contract(s) from the Proceeds of the related
Pledged Trust Preferred Securities. The Collateral Agent shall, by 10:00 a.m.,
New York City time, on the fourth Business Day immediately preceding the
Purchase Contract Settlement Date, without any instruction from such Holder of
Income PRIDES, present the related Pledged Trust Preferred Securities to the
Remarketing Agent for remarketing. Upon receiving such Pledged Trust Preferred
Securities, the Remarketing Agent, pursuant to the terms of the Remarketing
Agreement and the Remarketing Underwriting Agreement, will use its reasonable
efforts to remarket such Pledged Trust Preferred Securities on such date at a
price not less than approximately 100.5% of the aggregate Value of such Pledged
Trust Preferred Securities, plus accrued and unpaid distributions (including
deferred distributions), if any, thereon. After deducting as the Remarketing Fee
an amount not exceeding 25 basis points (.25%) of the aggregate Value of the
Pledged Trust Preferred Securities from any amount of such Proceeds in excess of
the aggregate Value, plus such accrued and unpaid distributions (including
deferred distributions) of the remarketed Pledged Trust Preferred Securities,
the Remarketing Agent will remit the entire amount of the Proceeds of such
remarketing to the Collateral Agent. On the Purchase Contract Settlement Date,
the Collateral Agent shall apply that portion of the Proceeds from such
remarketing equal to the aggregate Value, plus such accrued and unpaid
distributions (including deferred distributions) of such Pledged Trust Preferred
Securities, to satisfy in full the obligations of such Holders of Income PRIDES
to pay the Purchase Price to purchase the Common Stock under the related
Purchase Contracts. The remaining portion of such Proceeds, if any, shall be
distributed by the Collateral Agent to the Purchase Contract Agent for payment
to the Holders. If the Remarketing Agent advises the Collateral Agent in writing
that it cannot remarket the related Pledged Trust Preferred Securities of such
Holders of Income PRIDES at a price not less than 100% of the aggregate Value
of such Pledged Trust Preferred Securi-
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ties plus any accrued and unpaid distributions (including deferred
distributions), thus resulting in a Failed Remarketing and an event of default
under the Purchase Contract Agreement and hereunder, the Collateral Agent, for
the benefit of the Company will, at the written direction of the Company, retain
or dispose of the Pledged Trust Preferred Securities in accordance with
applicable law and satisfy in full, from any such disposition or retention,
such Holder's obligation to pay the Purchase Price for the Common Stock.
(b) In the event a Holder of Growth PRIDES or Income PRIDES (if a Tax
Event Redemption has occurred) has not made an Early Settlement of the Purchase
Contract(s) underlying its Growth PRIDES or Income PRIDES, such Holder shall be
deemed to have elected to pay for the shares of Common Stock to be issued under
such Purchase Contract(s) from the Proceeds of the related Pledged Treasury
Securities or the Treasury Portfolio, as the case may be. On the Business Day
immediately prior to the Purchase Contract Settlement Date, the Collateral Agent
shall, at the written direction of the Purchase Contract Agent, invest the Cash
proceeds of the maturing Pledged Treasury Securities or the Treasury Portfolio,
as the case may be, in overnight Permitted Investments. Without receiving any
instruction from any such Holder of Growth PRIDES or Income PRIDES, the
Collateral Agent shall apply the Proceeds of the related Pledged Treasury
Securities or Treasury Portfolio 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 Treasury Portfolio and the investment earnings from the investment
in overnight Permitted Investments is in excess of the aggregate Purchase Price
of the Purchase Contracts being settled thereby, the Collateral Agent shall
distribute such excess, when received, to the Purchase Contract Agent for the
benefit of the Holders.
(c) Pursuant to the Remarketing Agreement and subject to the terms of
the Remarketing Underwriting Agreement, on or prior to the fifth Business Day
immediately preceding the Purchase Contract Settlement Date, but no earlier than
the Payment Date immediately preceding the Purchase Contract Settlement Date,
holders of Separate
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Trust Preferred Securities may elect to have their Separate Trust Preferred
Securities remarketed by delivering their Separate Trust Preferred Securities,
together with a notice of such election, substantially in the form of Exhibit C
hereto, to the Custodial Agent. The Custodial Agent will hold such Separate
Trust Preferred Securities in an account separate from the Collateral Account. A
holder of Separate Trust Preferred Securities electing to have its Separate
Trust Preferred Securities remarketed will also have the right to withdraw such
election by written notice to the Custodial Agent, substantially in the form of
Exhibit D hereto, on or prior to the fifth Business Day immediately preceding
the Purchase Contract Settlement Date, upon which notice the Custodial Agent
will return such Separate Trust Preferred Securities to such holder. On the
fourth Business Day immediately preceding the Purchase Contract Settlement Date,
the Custodial Agent will deliver to the Remarketing Agent for remarketing all
separate Trust Preferred Securities delivered to the Custodial Agent pursuant to
this Section 4.6(c) and not withdrawn pursuant to the terms hereof prior to such
date. The portion of the proceeds from such remarketing equal to the aggregate
Value of such Separate Trust Preferred Securities will automatically be remitted
by the Remarketing Agent to the Custodial Agent for the benefit of the holders
of such Separate Trust Preferred Securities. In addition, after deducting as the
Remarketing Fee an amount not exceeding 25 basis points (.25%) of the Value of
the remarketed Separate Trust Preferred Securities, from any amount of such
proceeds in excess of the aggregate Value of the remarketed Separate Trust
Preferred Securities plus any accrued and unpaid distributions (including
deferred distributions, if any), the Remarketing Agent will remit to the
Custodial Agent the remaining portion of the proceeds, if any, for the benefit
of such holders. If, despite using its reasonable efforts, the Remarketing Agent
advises the Custodial Agent in writing that it cannot remarket the related
Separate Trust Preferred Securities of such holders at a price not less than
100% of the aggregate Value of such Separate Trust Preferred Securities plus
accrued and unpaid distributions (including deferred distributions) and thus
resulting in a Failed Remarketing, the Remarketing Agent will promptly return
such Trust Preferred Securities to the Custodial Agent for redelivery to such
holders. In the event of a dissolution of the Trust and the distribution of the
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Debentures as described in the Declaration, all references to "Separate Trust
Preferred Securities" in this Section 4.6(c) shall be deemed to be references to
Debentures.
Section 5. Voting Rights -- Trust Preferred Securities. The Purchase
Contract Agent may exercise, or refrain from exercising, any and all voting and
other consensual rights pertaining to the Pledged Trust Preferred Securities or
any part thereof for any purpose not inconsistent with the terms of this
Agreement and in accordance with the terms of the Purchase Contract Agreement;
provided, that the Purchase Contract Agent shall not exercise or, as the case
may be, shall not refrain from exercising such right if, in the judgment of the
Company, such action would impair or otherwise have a material adverse effect on
the value of all or any of the Pledged Trust Preferred Securities; and provided,
further, that the Purchase Contract Agent shall give the Company and the
Collateral Agent at least five days' prior written notice of the manner in which
it intends to exercise, or its reasons for refraining from exercising, any such
right. Upon receipt of any notices and other communications in respect of any
Pledged Trust Preferred Securities, including notice of any meeting at which
holders of Trust Preferred Securities are entitled to vote or solicitation of
consents, waivers or proxies of holders of Trust Preferred Securities, 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 Trust Preferred Securities (in
form and substance satisfactory to the Collateral Agent) as are prepared by the
Purchase Contract Agent with respect to the Pledged Trust Preferred Securities.
Section 6. Rights and Remedies; Distribution of the Debentures; Tax
Event Redemption
Section 6.1. Rights and Remedies of the Collateral Agent. (a) In
addition to the rights and remedies specified in Section 4.4 hereof or otherwise
available at law or in equity, after an event of default hereunder, the
Collateral Agent shall have all of the rights and
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27
remedies with respect to the Collateral of a secured party under the Uniform
Commercial Code as in effect in the State of New York (the "Code") (whether or
not the Code is in effect in the jurisdiction where the rights and remedies are
asserted) and the TRADES Regulations and such additional rights and remedies to
which a secured party is entitled under the laws in effect in any jurisdiction
where any rights and remedies hereunder may be asserted. Without limiting the
generality of the foregoing, such remedies may include, to the extent permitted
by applicable law, (i) retention of the Pledged Trust Preferred Securities or
other Collateral in full satisfaction of the Holders obligations under the
Purchase Contracts or (ii) sale of the Pledged Trust Preferred Securities or
other Collateral in one or more public or private sales.
(b) Without limiting any rights or powers otherwise granted by this Agreement to
the Collateral Agent, in the event the Collateral Agent is unable to make
payments to the Company on account of the appropriate Applicable Ownership
Interest (as specified in clause (A) of the definition of such term) of the
Treasury Portfolio or on account of principal payments of any Pledged Treasury
Securities as provided in Section 3 hereof in satisfaction of the obligations of
the Holder of the Securities of which such Pledged Treasury Securities, or the
appropriate Applicable Ownership Interest (as specified in clause (A) of the
definition of such term) of the Treasury Portfolio, as applicable, is a part
under the related Purchase Contracts, the inability to make such payments shall
constitute an event of default hereunder and the Collateral Agent shall have and
may exercise, with reference to such Pledged Treasury Securities, or such
appropriate Applicable Ownership Interest (as specified in clause (A) of the
definition of such term) of the Treasury Portfolio, as applicable, and such
obligations of such Holder, any and all of the rights and remedies available to
a secured party under the Code and the TRADES Regulations after default by a
debtor, and as otherwise granted herein or under any other law.
(c) Without limiting any rights or powers otherwise granted by this
Agreement to the Collateral Agent, the Collateral Agent is hereby irrevocably
authorized to receive and collect all payments of (i) the Stated Amount of or,
cash distributions on, the Pledged Trust Preferred
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Securities, (ii) the principal amount of the Pledged Treasury Securities, or
(iii) the appropriate 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, and as otherwise granted herein.
(d) The Purchase Contract Agent and each Holder of Securities, in the
event such Holder becomes the Holder of a Growth PRIDES, agrees that, from time
to time, upon the written request of the Collateral Agent, the Purchase Contract
Agent or such Holder shall execute and deliver such further documents and do
such other acts and things as the Collateral Agent may reasonably request in
order to maintain the Pledge, and the perfection and priority thereof, and to
confirm the rights of the Collateral Agent hereunder. The Purchase Contract
Agent shall have no liability to any Holder for executing any documents or
taking any such acts requested by the Collateral Agent hereunder, except for
liability for its own negligent act, its own negligent failure to act or its own
willful misconduct.
Section 6.2. Distribution of the Debentures; Tax Event Redemption. Upon
the occurrence of an Investment Company Event or a liquidation of the Trust, a
principal amount of the Debentures constituting the assets of the Trust and
underlying the Trust Preferred Securities equal to the aggregate stated
liquidation amount of the Pledged Trust Preferred Securities shall be delivered
to the Collateral Agent in exchange for the Pledged Trust Preferred Securities.
In the event the Collateral Agent receives such Debentures in respect of Pledged
Trust Preferred Securities upon the occurrence of an Investment Company Event or
liquidation of the Trust, the Collateral Agent shall Transfer the Debentures to
the Collateral Account in the manner specified herein for Pledged Trust
Preferred Securities to secure the obligations of the Holders of Income PRIDES
to purchase the Company's Common Stock under the related Purchase Contracts.
Thereafter, the Collateral Agent shall have such security interests, rights and
obligations with respect to the Debentures as it had in respect of the Pledged
Trust Preferred Securities as provided in Sections 2, 3, 4, 5 and 6 hereof, and
any reference herein to the Pledged Trust Preferred Securities shall be deemed
to be referring to such Debentures.
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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 of Debentures
shall be delivered to the Collateral Agent by the Institutional Trustee or upon
a dissolution of the Trust and the distribution of the related Debentures by the
Debenture Trustee on or prior to 12:30 p.m., New York City time, by check or
wire transfer in immediately available funds at such place and at such account
as may be designated by the Collateral Agent in exchange for the Pledged Trust
Preferred Securities or Debentures, as the case may be. In the event the
Collateral Agent receives such Redemption Price, the Collateral Agent will, at
the written direction of the Company, apply an amount equal to the Redemption
Amount of such Redemption Price to purchase from the Quotation Agent, the
Treasury Portfolio and promptly remit the remaining portion of such Redemption
Price to the Purchase Contract Agent for payment to the Holders of Income
PRIDES. The Collateral Agent shall Transfer the Treasury Portfolio to the
Collateral Account in the manner specified herein for Pledged Trust Preferred
Securities to secure the obligation of all Holders of Income PRIDES to purchase
Common Stock of the Company under the Purchase Contracts constituting a part of
such Income PRIDES, in substitution for the Pledged Trust Preferred Securities.
Thereafter the Collateral Agent shall have such security interests, rights and
obligations with respect to the Treasury Portfolio as it had in respect of the
Pledged Trust Preferred Securities or Debentures, as the case may be, as
provided in Sections 2, 3, 4, 5 and 6, and any reference herein to the Pledged
Trust Preferred Securities or the Debentures shall be deemed to be reference to
such Treasury Portfolio.
Section 6.3. Substitutions. Whenever a Holder has the right to
substitute Treasury Securities, Trust Preferred Securities or the appropriate
Applicable Ownership Interest of the Treasury Portfolio, as the case may be, for
Collateral held by the Collateral Agent, such substitution shall not constitute
a novation of the security interest created hereby.
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Section 7. Representations and Warranties; Covenants.
Section 7.1. Representations and Warranties. The Holders from time to
time, acting through the Purchase Contract Agent as their attorney-in-fact (it
being understood that the Purchase Contract Agent shall not be liable for any
representation or warranty made by or on behalf of a Holder), hereby represent
and warrant to the Collateral Agent, which representations and warranties shall
be deemed repeated on each day a Holder Transfers Collateral that:
(a) such Holder has the power to grant a
security interest in and lien on the
Collateral;
(b) such Holder is the sole beneficial owner
of the Collateral and, in the case of
Collateral delivered in physical form, is
the sole holder of such Collateral and is
the sole beneficial owner of, or has the
right to Transfer, the Collateral it
Transfers to the Collateral Agent, free
and clear of any security interest, lien,
encumbrance, call, liability to pay money
or other restriction other than the
security interest and lien granted under
Section 2 hereof;
(c) upon the Transfer of the Collateral to
the Collateral Account, the Collateral
Agent, for the benefit of the Company,
will have a valid and perfected first
priority security interest therein
(assuming that any central clearing
operation or any Intermediary or other entity
not within the control of the Holder
involved in the Transfer of the Collateral,
including the Collateral Agent, gives the
notices and takes the action required of
it hereunder and under applicable law for
perfection of that interest and assuming
the establishment and exercise of control
pursuant to Section 2.2 hereof); and
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(d) the execution and performance by the
Holder of its obligations under this
Agreement will not result in the creation
of any security interest, lien or other
encumbrance on the Collateral other than
the security interest and lien granted
under Section 2 hereof or violate any
provision of any existing law or regulation
applicable to it or of any mortgage,
charge, pledge, indenture, contract or
undertaking to which it is a party or
which is binding on it or any of its
assets.
Section 7.2. Covenants. The Holders from time to time, acting through
the Purchase Contract Agent as their attorney-in-fact (it being understood that
the Purchase Contract Agent shall not be liable for any covenant made by or on
behalf of a Holder), hereby covenant to the Collateral Agent that for so long as
the Collateral remains subject to the Pledge:
(a) neither the Purchase Contract Agent nor such Holders
will create or purport to create or allow to subsist
any mortgage, charge, lien, pledge or any other
security interest whatsoever over the Collateral or
any part of it other than pursuant to this
Agreement; and
(b) neither the Purchase Contract Agent nor
such Holders will sell or otherwise
dispose (or attempt to dispose) of the
Collateral or any part of it except for the
beneficial interest therein, subject to
the pledge hereunder, transferred in
connection with the Transfer of the Securities.
Section 8. The Collateral Agent. It is hereby agreed as follows:
Section 8.1. Appointment, Powers and Immunities. The Collateral Agent
shall act as Agent for the Company hereunder with such powers as are
specifically vested in the Collateral Agent by the terms of this Agreement,
together with such other powers as are reasonably inci-
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32
dental thereto. Each of the Collateral Agent, the Custodial Agent and the
Securities Intermediary: (a) shall have no duties or responsibilities except
those expressly set forth in this Agreement and no implied covenants or
obligations shall be inferred from this Agreement against any of them, nor shall
any of them be bound by the provisions of any agreement by any party hereto
beyond the specific terms hereof; (b) shall not be responsible for any recitals
contained in this Agreement, or in any certificate or other document referred to
or provided for in, or received by it under, this Agreement, the Securities or
the Purchase Contract Agreement, or for the value, validity, effectiveness,
genuineness, enforceability or sufficiency of this Agreement (other than as
against the Collateral Agent), the Securities or the Purchase Contract Agreement
or any other document referred to or provided for herein or therein or for any
failure by the Company or any other Person (except the Collateral Agent, the
Custodial Agent or the Securities Intermediary, as the case may be) to perform
any of its obligations hereunder or thereunder or for the perfection, priority
or, except as expressly required hereby, maintenance of any security interest
created hereunder; (c) shall not be required to initiate or conduct any
litigation or collection proceedings hereunder (except in the case of the
Collateral Agent, pursuant to directions furnished under Section 8.2 hereof,
subject to Section 8.6 hereof); (d) shall not be responsible for any action
taken or omitted to be taken by it hereunder or under any other document or
instrument referred to or provided for herein or in connection herewith or
therewith, except for its own negligence or willful misconduct; and (e) shall
not be required to advise any party as to selling or retaining, or taking or
refraining from taking any action with respect to, the 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, the
Custodial Agent or the Securities Intermediary to expend or risk its own funds
or otherwise incur any financial liability in the performance of any of its
duties hereunder. In no event shall the Collateral Agent, the Custodial Agent
or the Securities Intermediary be liable for any amount in excess of the Value
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of the Collateral. Notwithstanding the foregoing, the Collateral Agent, the
Custodial Agent and Securities Intermediary, each in its individual capacity,
hereby waive any right of setoff, bankers lien, liens or perfection rights as
securities intermediary or any counterclaim with respect to any of the
Collateral.
Section 8.2. Instructions of the Company. The Company shall have the
right, by one or more instruments in writing executed and delivered to the
Collateral Agent, the Custodial Agent or the Securities Intermediary, as the
case may be, to direct the time, method and place of conducting any proceeding
for the realization of any right or remedy available to the Collateral Agent, or
of exercising any power conferred on the Collateral Agent, the Custodial Agent
or the Securities Intermediary, as the case may be, or to direct the taking or
refraining from taking of any action authorized by this Agreement; provided,
however, that (i) such direction shall not conflict with the provisions of any
law or of this Agreement and (ii) the Collateral Agent, the Custodial Agent and
the Securities Intermediary shall be adequately indemnified as provided herein.
Nothing in this Section 8.2 shall impair the right of the Collateral Agent in
its discretion to take any action or omit to take any action which it deems
proper and which is not inconsistent with such direction.
Section 8.3. Reliance by Collateral Agent. Each of the Securities
Intermediary, the Custodial Agent and the Collateral Agent shall be entitled
conclusively to rely upon any certification, order, judgment, opinion, notice or
other communication (including, without limitation, any thereof by telephone,
telecopy, telex or facsimile) believed by it to be genuine and correct and to
have been signed or sent by or on behalf of the proper Person or Persons
(without being required to determine the correctness of any fact stated
therein), and upon advice and statements of legal counsel and other experts
selected by the Collateral Agent, the Custodial Agent or the Securities
Intermediary, as the case may be. As to any matters not expressly provided for
by this Agreement, the Collateral Agent, the Custodial Agent and the Securities
Intermediary shall in all cases be fully protected in acting, or in refraining
from acting, hereunder in accordance with instructions given by the Company in
accordance with this Agreement.
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34
Section 8.4. Rights in Other Capacities. The Collateral Agent, the
Custodial Agent and the Securities Intermediary and their affiliates may
(without having to account therefor to the Company) accept deposits from, lend
money to, make their investments in and generally engage in any kind of banking,
trust or other business with the Purchase Contract Agent and any Holder of
Securities (and any of their respective subsidiaries or affiliates) as if it
were not acting as the Collateral Agent, the Custodial Agent or the Securities
Intermediary, as the case may be, and the Collateral Agent, the Custodial Agent
and the Securities Intermediary and their affiliates may accept fees and other
consideration from the Purchase Contract Agent and any Holder of Securities
without having to account for the same to the Company; provided that each of the
Securities Intermediary, the Custodial Agent and the Collateral Agent covenants
and agrees with the Company that it shall not accept, receive or permit there to
be created in favor of itself and shall take no affirmative action to permit
there to be created in favor of any other Person, any security interest, lien or
other encumbrance of any kind in or upon the Collateral.
Section 8.5. Non-Reliance on Collateral Agent. None of the Securities
Intermediary, the Custodial Agent or the Collateral Agent shall be required to
keep itself informed as to the performance or observance by the Purchase
Contract Agent or any Holder of Securities of this Agreement, the Purchase
Contract Agreement, the Securities or any other document referred to or provided
for herein or therein or to inspect the properties or books of the Purchase
Contract Agent or any Holder of Securities. The Collateral Agent, the Custodial
Agent and the Securities Intermediary shall not have any duty or responsibility
to provide the Company 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, the Custodial Agent or the Securities
Intermediary or any of their respective affiliates.
Section 8.6. Compensation and Indemnity. The Company agrees: (i) to pay
each of the Collateral Agent and the Custodial Agent from time to time such
compensation as shall be agreed in writing between the Company
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and the Collateral Agent or the Custodial Agent, as the case may be, for all
services rendered by each of them hereunder and (ii) to indemnify the Collateral
Agent, the Custodial Agent and the Securities Intermediary for, and to hold each
of them harmless from and against, any loss, liability or reasonable
out-of-pocket expense incurred without negligence, willful misconduct or bad
faith on its part, arising out of or in connection with the acceptance or
administration of its powers and duties under this Agreement, including the
reasonable out-of-pocket costs and expenses (including reasonable fees and
expenses of counsel) of defending itself against any claim or liability in
connection with the exercise or performance of such powers and duties.
Section 8.7. Failure to Act. In the event of any ambiguity in the
provisions of this Agreement or any dispute between or conflicting claims by or
among the parties hereto or any other Person with respect to any funds or
property deposited hereunder, the Collateral Agent and the Custodial Agent shall
be entitled, after prompt notice to the Company and the Purchase Contract Agent,
at its sole option, to refuse to comply with any and all claims, demands or
instructions with respect to such property or funds so long as such dispute or
conflict shall continue, and neither the Collateral Agent nor the Custodial
Agent shall be or become liable in any way to any of the parties hereto for its
failure or refusal to comply with such conflicting claims, demands or
instructions. The Collateral Agent and the Custodial Agent shall be entitled to
refuse to act until either (i) such conflicting or adverse claims or demands
shall have been finally determined by a court of competent jurisdiction or
settled by agreement between the conflicting parties as evidenced in a writing,
satisfactory to the Collateral Agent or the Custodial Agent, as the case may be,
or (ii) the Collateral Agent or the Custodial Agent, as the case may be, shall
have received security or an indemnity satisfactory to the Collateral Agent or
the Custodial Agent, as the case may be, sufficient to save the Collateral Agent
or the Custodial Agent, as the case may be, harmless from and against any and
all loss, liability or reasonable out-of-pocket expense which the Collateral
Agent or the Custodial Agent, as the case may be, may incur by reason of its
acting. The Collateral Agent or the Custodial Agent may in addition elect to
commence an interpleader action or seek other judicial
32
36
relief or orders as the Collateral Agent or the Custodial Agent, as the case may
be, may deem necessary. Notwithstanding anything contained herein to the
contrary, neither the Collateral Agent nor the Custodial Agent shall be required
to take any action that is in its opinion contrary to law or to the terms of
this Agreement, or which would in its opinion subject it or any of its
officers, employees or directors to liability.
Section 8.8. Resignation of Collateral Agent. Subject to the appointment and
acceptance of a successor Collateral Agent or Custodial Agent as provided below,
(a) the Collateral Agent and the Custodial Agent may resign at any time by
giving notice thereof to the Company and the Purchase Contract Agent as
attorney-in-fact for the Holders of Securities, (b) the Collateral Agent and the
Custodial Agent may be removed at any time by the Company and (c) if the
Collateral Agent or the Custodial Agent fails to perform any of its material
obligations hereunder in any material respect for a period of not less than 20
days after receiving written notice of such failure by the Purchase Contract
Agent and such failure shall be continuing, the Collateral Agent or the
Custodial Agent may be removed by the Purchase Contract Agent. The Purchase
Contract Agent shall promptly notify the Company of any removal of the
Collateral Agent pursuant to clause (c) of the immediately preceding sentence.
Upon any such resignation or removal, the Company shall have the right to
appoint a successor Collateral Agent or Custodial Agent, as the case may be. If
no successor Collateral Agent or Custodial Agent, as the case may be, shall have
been so appointed and shall have accepted such appointment within 30 days after
the retiring Collateral Agent's or Custodial Agent's giving of notice of
resignation or such removal, then the retiring Collateral Agent or Custodial
Agent, as the case may be, may petition any court of competent jurisdiction for
the appointment of a successor Collateral Agent or Custodial Agent, as the case
may be. Each of the Collateral Agent and the Custodial Agent shall be a bank
which has an office in New York, New York with a combined capital and surplus of
at least $75,000,000. Upon the acceptance of any appointment as Collateral Agent
or Custodial Agent, as the case may be, hereunder by a successor Collateral
Agent or Custodial Agent, as the case may be, such successor shall thereupon
succeed to and become vested with all the rights, powers, privileges and duties
of the retiring
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37
Collateral Agent or Custodial Agent, as the case may be, and the retiring
Collateral Agent or Custodial Agent, as the case may be, shall take all
appropriate action to transfer any money and property held by it hereunder
(including the Collateral) to such successor. The retiring Collateral Agent or
Custodial Agent shall, upon such succession, be discharged from its duties and
obligations as Collateral Agent or Custodial Agent hereunder. After any retiring
Collateral Agent's or Custodial Agent's resignation hereunder as Collateral
Agent or Custodial Agent, the provisions of this Section 8 shall continue in
effect for its benefit in respect of any actions taken or omitted to be taken by
it while it was acting as the Collateral Agent or Custodial Agent. Any
resignation or removal of the Collateral Agent hereunder shall be deemed for all
purposes of this Agreement as the simultaneous resignation or removal of the
Custodial Agent and the Securities Intermediary.
Section 8.9. Right to Appoint Agent or Advisor. The Collateral Agent
shall have the right to appoint agents or advisors in connection with any of its
duties hereunder, and the Collateral Agent shall not be liable for any action
taken or omitted by, or in reliance upon the advice of, such agents or advisors
selected in good faith. The appointment of agents pursuant to this Section 8.9
shall be subject to prior consent of the Company, which consent shall not be
unreasonably withheld.
Section 8.10. Survival. The provisions of this Section 8 shall survive
termination of this Agreement and the resignation or removal of the Collateral
Agent or the Custodial Agent.
Section 8.11. Exculpation. Anything in this Agreement to the contrary
notwithstanding, in no event shall any of the Collateral Agent, the Custodial
Agent or the Securities Intermediary or their officers, employees or agents be
liable under this Agreement to any third party for indirect, special, punitive,
or consequential loss or damage of any kind whatsoever, including lost profits,
whether or not the likelihood of such loss or damage was known to the Collateral
Agent, the Custodial Agent or the Securities Intermediary, or any of them,
incurred without any act or deed that is found to be attributable to gross
negligence or willful misconduct on the part of the
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Collateral Agent, the Custodial Agent or the Securities Intermediary.
Section 9. Amendment.
Section 9.1. Amendment Without Consent of Holders. Without the consent
of any Holders or the holders of any Separate Trust Preferred Securities, the
Company, the Collateral Agent, the Custodial Agent, the Securities Intermediary
and the Purchase Contract Agent, at any time and from time to time, may amend
this Agreement, in form satisfactory to the Company, the Collateral Agent, the
Custodial Agent, the Securities Intermediary and the Purchase Contract Agent,
for any of the following purposes:
(1) to evidence the succession of another Person to the
Company, and the assumption by any such successor of the covenants of
the Company; or
(2) to add to the covenants of the Company for the benefit of
the Holders, or to surrender any right or power herein conferred upon
the Company so long as such covenants or such surrender do not
adversely affect the validity, perfection or priority of the security
interests granted or created hereunder; or
(3) to evidence and provide for the acceptance of appointment
hereunder by a successor Collateral Agent, Securities Intermediary or
Purchase Contract Agent; or
(4) to cure any ambiguity, to correct or supplement any
provisions herein which may be inconsistent with any other such
provisions herein, or to make any other provisions with respect to such
matters or questions arising under this Agreement, provided such action
shall not adversely affect the interests of the Holders.
Section 9.2. Amendment with Consent of Holders. With the consent of the
Holders of not less than a majority of the Purchase Contracts at the time
outstanding, by Act of said Holders delivered to the Company, the Purchase
Contract Agent or the Collateral Agent, as the case may be, the Company, when
duly authorized, the Purchase
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39
Contract Agent, the Collateral Agent, the Custodial Agent and the Securities
Intermediary may amend this Agreement for the purpose of modifying in any manner
the provisions of this Agreement or the rights of the Holders in respect of the
Securities; provided, however, that no such supplemental agreement shall,
without the consent of the Holder of each Outstanding Security adversely
affected thereby,
(1) change the amount or type of Collateral underlying a
Security (except for the rights of holders of Income PRIDES to
substitute the Treasury Securities for the Pledged Trust Preferred
Securities or the appropriate Applicable Ownership Interest of the
Treasury Portfolio, as the case may be, or the rights of Holders of
Growth PRIDES to substitute Trust Preferred Securities or the
appropriate Applicable Ownership Interest of the Treasury Portfolio,
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
(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.
It shall not be necessary for any Act of Holders under this Section to approve
the particular form of any proposed amendment, but it shall be sufficient if
such Act shall approve the substance thereof.
Section 9.3. Execution of Amendments. In executing any amendment
permitted by this Section, the Collateral Agent, the Custodial Agent, the
Securities Intermediary and the Purchase Contract Agent shall be entitled to
receive and (subject to Section 6.1 hereof, with respect to the Collateral
Agent, and Section 7.1 of the Purchase Contract Agreement, with respect to the
Purchase Contract Agent) shall be fully protected in relying upon, an
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40
Opinion of Counsel stating that the execution of such amendment is authorized or
permitted by this Agreement and that all conditions precedent, if any, to the
execution and delivery of such amendment have been satisfied.
Section 9.4. Effect of Amendments. Upon the execution of any amendment
under this Section 9, this Agreement shall be modified in accordance therewith,
and such amendment shall form a part of this Agreement for all purposes; and
every Holder of Certificates theretofore or thereafter authenticated, executed
on behalf of the Holders and delivered under the Purchase Contract Agreement
shall be bound thereby.
Section 9.5. Reference to Amendments. Security Certificates
authenticated, executed on behalf of the Holders and delivered after the
execution of any amendment pursuant to this 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.
Section 10. Miscellaneous.
Section 10.1. No Waiver. No failure on the part of the Collateral Agent
or any of its agents to exercise, and no course of dealing with respect to, and
no delay in exercising, any right, power or remedy hereunder shall operate as a
waiver thereof; nor shall any single or partial exercise by the Collateral Agent
or any of its agents of any right, power or remedy hereunder preclude any other
or further exercise thereof or the exercise of any other right, power or remedy.
The remedies herein are cumulative and are not exclusive of any remedies
provided by law.
Section 10.2. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS
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OF THE STATE OF NEW YORK. Without limiting the foregoing, the above choice of
law is expressly agreed to by the Securities Intermediary, the Collateral Agent
and the Holders from time to time acting through the Purchase Contract Agent, as
their attorney-in-fact, in connection with the establishment and maintenance of
the Collateral Account. The Company, the Collateral Agent 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 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 10.3. Notices. All notices, requests, consents and other
communications provided for herein (including, without limitation, any
modifications of, or waivers or consents under, this Agreement) shall be given
or made in writing (including, without limitation, by telecopy) delivered to the
intended recipient at the "Address for Notices" specified below its name on the
signature pages hereof or, as to any party, at such other address as shall be
designated by such party in a notice to the other parties. Except as otherwise
provided in this Agreement, all such communications shall be deemed to have been
duly given when transmitted by telecopier or personally delivered or, in the
case of a mailed notice, upon receipt, in each case given or addressed as
aforesaid.
Section 10.4. Successors and Assigns. This Agreement shall be binding
upon and inure to the benefit of the respective successors and assigns of the
Company, the Collateral Agent, the Custodial Agent, the Securities Intermediary
and the Purchase Contract Agent, and the Holders from time to time of the
Securities, by their acceptance of the same, shall be deemed to have agreed to
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42
be bound by the provisions hereof and to have ratified the agreements of, and
the grant of the Pledge hereunder by, the Purchase Contract Agent.
Section 10.5. Counterparts. This Agreement may be executed in any
number of counterparts, all of which taken together shall constitute one and the
same instrument, and any of the parties hereto may execute this Agreement by
signing any such counterpart.
Section 10.6. Severability. If any provision hereof is invalid and
unenforceable in any jurisdiction, then, to the fullest extent permitted by law,
(i) the other provisions hereof shall remain in full force and effect in such
jurisdiction and shall be liberally construed in order to carry out the
intentions of the parties hereto as nearly as may be possible and (ii) the
invalidity or unenforceability of any provision hereof in any jurisdiction shall
not affect the validity or enforceability of such provision in any other
jurisdiction.
Section 10.7. Expenses, etc. The Company agrees to reimburse the
Collateral Agent and the Custodial Agent for: (a) all reasonable out-of-pocket
costs and expenses of the Collateral Agent and the Custodial Agent (including,
without limitation, the reasonable fees and expenses of counsel to the
Collateral Agent and the Custodial Agent), in connection with (i) the
negotiation, preparation, execution and delivery or performance of this
Agreement and (ii) any modification, supplement or waiver of any of the terms of
this Agreement; (b) all reasonable costs and expenses of the Collateral Agent
(including, without limitation, reasonable fees and expenses of counsel) in
connection with (i) any enforcement or proceedings resulting or incurred in
connection with causing any Holder of Securities to satisfy its obligations
under the Purchase Contracts forming a part of the Securities and (ii) the
enforcement of this Section 10.7; and (c) all transfer, stamp, documentary or
other similar taxes, assessments or charges levied by any governmental or
revenue authority in respect of this Agreement or any other document referred to
herein and all costs, expenses, taxes, assessments and other charges incurred
in connection with any filing, registration, recording or perfection of any
security interest contemplated hereby.
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Section 10.8. Security Interest Absolute. All rights of the Collateral
Agent and security interests hereunder, and all obligations of the Holders from
time to time hereunder, shall be absolute and unconditional irrespective of:
(a) any lack of validity or enforceability of any provision of
the Purchase Contracts or the Securities or any other agreement or
instrument relating thereto;
(b) any change in the time, manner or place of payment of, or
any other term of, or any increase in the amount of, all or any of the
obligations of Holders of Securities under the related Purchase
Contracts, or any other amendment or waiver of any term of, or any
consent to any departure from any requirement of, the Purchase Contract
Agreement or any Purchase Contract or any other agreement or instrument
relating thereto; or
(c) any other circumstance which might otherwise constitute a
defense available to, or discharge of, a borrower, a guarantor or a
pledgor.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
PHILADELPHIA CONSOLIDATED
HOLDING CORP.
By:
-------------------------------------
Name:
Title:
Address for Notices:
PHILADELPHIA CONSOLIDATED
HOLDING CORP.
One Bala Plaza, Suite 100
Bala Cynwyd, PA 19004
Attention: Chief Financial Officer
Telecopy: (610) 617-7600
THE FIRST NATIONAL BANK OF CHICAGO,
as Purchase Contract Agent and as
attorney-in-fact of the Holders from
time to time of the Securities
By:
-------------------------------------
Name:
Title:
Address for Notices:
The First National Bank of Chicago
One First National Plaza,
Suite 0126
Chicago, IL 60670-0126
Attention: Corporate Trust
Services Division
Telecopy: ( )
45
THE CHASE MANHATTAN BANK,
as Collateral Agent, Custodial
Agent and as Securities Intermediary
By:
-------------------------------------
Name:
Title:
Address for Notices:
The Chase Manhattan Bank
450 West 33rd Street
15th Floor
New York, NY 10001-2697
Attention: Corporate Trust
Administration Department
Telecopy: (212) 946-8160
46
EXHIBIT A
INSTRUCTION FROM PURCHASE CONTRACT AGENT TO COLLATERAL AGENT
The Chase Manhattan Bank
450 West 33rd Street, 15th Floor
New York, NY 10010-2697
Attention: Corporate Trust Administration Department
Re: FELINE PRIDES of Philadelphia Consolidated
Holding Corp. (the "Company"), and PCHC
Financing I
We hereby notify you in accordance with Section [4.1] [4.2] of
the Pledge Agreement, dated as of April __, 1998, (the "Pledge Agreement") among
the Company, yourselves, as Collateral Agent, Custodial Agent and Securities
Intermediary and ourselves, as Purchase Contract Agent and as attorney-in-fact
for the holders of [Income PRIDES] [Growth PRIDES] from time to time, that the
holder of Securities listed below (the "Holder") has elected to substitute
[$_____ aggregate principal amount of Treasury Securities] [$_______Stated
Amount of Trust Preferred Securities or the appropriate Applicable Ownership
Interest of the Treasury Portfolio] in exchange for an equal Value of [Pledged
Trust Preferred Securities or the appropriate Applicable Ownership Interest of
the Treasury Portfolio] [Pledged Treasury Securities] held by you in accordance
with the Pledge Agreement and has delivered to us a notice stating that the
Holder has Transferred [Treasury Securities] [Trust Preferred Securities or the
appropriate Applicable Ownership Interest of the Treasury Portfolio] to you, as
Collateral Agent. We hereby instruct you, upon receipt of such [Pledged
Treasury Securities] [Pledged Trust Preferred Securities or the appropriate
Applicable Ownership Interest of the Treasury Portfolio], to release the [Trust
Preferred Securities or the appropriate Applicable Ownership Interest of the
Treasury Portfolio] [Treasury Securities] related to such [Income PRIDES]
[Growth PRIDES] to us in accordance with the Holder's instructions. Capitalized
terms used herein but not defined shall have the meaning set forth in the Pledge
Agreement.
Date:
---------------------- --------------------------------
By:
-----------------------------
Name:
47
Title:
Signature Guarantee:
------------
Please print name and address of Registered Holder electing to substitute
[Treasury Securities] [Trust Preferred Securities or the appropriate Applicable
Ownership Interest of the Treasury Portfolio] for the [Pledged Trust Preferred
Securities or the Treasury Portfolio] [Pledged Treasury Securities]:
- --------------------------- ------------------------------
Name Social Security or other Taxpayer
Identification Number, if any
- ---------------------------
Address
- ---------------------------
- ---------------------------
48
EXHIBIT B
INSTRUCTION TO PURCHASE CONTRACT AGENT
The First National Bank of Chicago
One First National Plaza, Suite 0126
Chicago, IL 60670-0126
Attention: Corporate Trust, Services Division
Re: FELINE PRIDES of Philadelphia Consolidated
Holding Corp. (the "Company"), and PCHC
Financing I
The undersigned Holder hereby notifies you that it has
delivered to The Chase Manhattan Bank, as Collateral Agent, [$_______ aggregate
principal amount of Treasury Securities] [$ aggregate Stated Amount of Trust
Preferred Securities or the appropriate Applicable Ownership Interest of the
Treasury Portfolio] in exchange for an equal Value of [Pledged Trust Preferred
Securities or the appropriate Applicable Ownership Interest of the Treasury
Portfolio] [Pledged Treasury Securities] held by the Collateral Agent, in
accordance with Section 4.1 of the Pledge Agreement, dated April __, 1998 (the
"Pledge Agreement"), between you, the Company and the Collateral Agent. The
undersigned Holder hereby instructs you to instruct the Collateral Agent to
release to you on behalf of the undersigned Holder the [Pledged Trust Preferred
Securities or the appropriate Applicable Ownership Interest of the Treasury
Portfolio] [Pledged Treasury Securities] related to such [Income PRIDES] [Growth
PRIDES]. Capitalized terms used herein but not defined shall have the meaning
set forth in the Pledge Agreement.
Dated:
---------------------- --------------------------------
Signature
Signature Guarantee:
------------------------
49
Please print name and address of Registered Holder:
- ------------------------- -------------------------
Name Social Security or other
Taxpayer Identification
- ------------------------- Number, if any
Address
- -------------------------
- -------------------------
- -------------------------
50
EXHIBIT C
INSTRUCTION TO CUSTODIAL AGENT REGARDING REMARKETING
The Chase Manhattan Bank
450 West 33rd Street, 15th Floor
New York, NY 10001-2697
Attention: Corporate Trust Administration Department
Re: Trust Preferred Securities of Philadelphia
Consolidated Holding Corp. (the "Company"),
and PCHC Financing I
The undersigned hereby notifies you in accordance with Section
4.6(c) of the Pledge Agreement, dated as of April __, 1998 (the "Pledge
Agreement"), among the Company, yourselves, as Collateral Agent, Securities
Intermediary and Custodial Agent, and The First National Bank of Chicago, as
Purchase Contract Agent and as attorney-in-fact for the Holders of Income PRIDES
and Growth PRIDES from time to time, that the undersigned elects to deliver $
stated liquidation amount of Trust Preferred Securities for delivery to the
Remarketing Agent on the fourth Business Day immediately preceding the Purchase
Contract Settlement Date for remarketing pursuant to Section 4.6(c) of the
Pledge Agreement. The undersigned will, upon request of the Remarketing Agent,
execute and deliver any additional documents deemed by the Remarketing Agent or
by the Company to be necessary or desirable to complete the sale, assignment and
transfer of the Trust Preferred Securities tendered hereby.
The undersigned hereby instructs you, upon receipt of the
Proceeds of such remarketing from the Remarketing Agent to deliver such Proceeds
to the undersigned in accordance with the instructions indicated herein under
"A. Payment Instructions". The undersigned hereby instructs you, in the event
of Failed Remarketing, upon receipt of the Trust Preferred Securities tendered
herewith from the Remarketing Agent, to be delivered to the person(s) and the
address(es) indicated herein under "B. Delivery Instructions."
With this notice, the undersigned hereby (i) represents and
warrants that the undersigned has full power and authority to tender, sell,
assign and transfer the Trust Preferred Securities tendered hereby and that the
undersigned is the record owner of any Trust Preferred Securities tendered
herewith in physical form or a participant in The Depositary Trust Company
("DTC") and the beneficial owner of any Trust Preferred Securities tendered
herewith by book-entry transfer
51
to your account at DTC and (ii) agrees to be bound by the terms and conditions
of Section 4.6(c) of the Pledge Agreement. Capitalized terms used herein but
not defined shall have the meaning set forth in the Pledge Agreement.
Date:
---------------------- ---------------------------------
By:
------------------------------
Name:
Title:
Signature Guarantee:
-------------
Please print name and address:
- ------------------------- -------------------------------
Name Social Security or other
Taxpayer Identification Number,
if any
- -------------------------
Address
- -------------------------
B. DELIVERY INSTRUCTIONS
- -------------------------
In the event of a Failed Remarketing, Trust
- ------------------------- Preferred Securities which are in physical
form should be delivered to the person(s)
set forth below and mailed to the address
set forth below.
Name(s)
------------------------------------
A. PAYMENT INSTRUCTIONS (Please Print)
Address
------------------------------------
Proceeds of the remarketing should (Please Print)
be paid by check in the name of
the person(s) set forth below and -------------------------------------------
mailed to the address set forth
below. -------------------------------------------
(Zip Code)
Name(s)
--------------------------- -------------------------------------------
(Please Print) (Tax Identification or Social
Security Number)
Address
--------------------------- In the event of a Failed Remarketing, Trust
(Please Print) Preferred Securities which are in
book-entry form should be credited to the
- ---------------------------------- account at The Depositary Trust Company set
forth below.
- ----------------------------------
------------------
- ---------------------------------- DTC Account Number
(Zip Code)
Name of Account Party:
- ---------------------------------- --------------
(Tax Identification or Social
Security Number)
52
EXHIBIT D
INSTRUCTION TO CUSTODIAL AGENT REGARDING
WITHDRAWAL FROM REMARKETING
The Chase Manhattan Bank
450 West 33rd Street, 15th Floor
New York, NY 10001-2697
Attention: Corporate Trust Administration Department
Re: Trust Preferred Securities of Philadelphia
Consolidated Holding Corp. (the "Company"),
and PCHC Financing I
The undersigned hereby notifies you in accordance with Section
4.6(c) of the Pledge Agreement, dated as of April __, 1998 (the "Pledge
Agreement") among the Company, yourselves, as Collateral Agent, Securities
Intermediary and Custodial Agent and The First National Bank of Chicago, as
Purchase Contract Agent and as attorney-in-fact for the Holders of Income
PRIDES and Growth PRIDES from time to time, that the undersigned elects to
withdraw the $_____ aggregate stated liquidation amount of Trust Preferred
Securities delivered to the Custodial Agent on ___ 16, 2001 for remarketing
pursuant to Section 4.6(c) of the Pledge Agreement. The undersigned hereby
instructs you to return such Trust Preferred Securities to the undersigned in
accordance with the undersigned's instructions. With this notice, the
Undersigned hereby agrees to be bound by the terms and conditions of Section
4.6(c) of the Pledge Agreement. Capitalized terms used herein but not defined
shall have the meaning set forth in the Pledge Agreement.
Date:
---------------------- ---------------------------------
By:
------------------------------
Name:
Title:
Signature Guarantee:
-------------
53
Please print name and address:
- --------------------------- -------------------------------
Name Social Security or other
Taxpayer Identification Number,
if any
- ---------------------------
Address
- ---------------------------
- ---------------------------
- ---------------------------
A. DELIVERY INSTRUCTIONS
In the event of a Failed Remarketing, Trust
Preferred Securities which are in physical form
should be delivered to the person(s) set forth
below and mailed to the address set forth below.
Name(s)
-----------------------------------------
(Please Print)
Address
-----------------------------------------
(Please Print)
- ------------------------------------------------
- ------------------------------------------------
(Zip Code)
- ------------------------------------------------
(Tax Identification or Social Security Number)
In the event of a Failed Remarketing, Trust Pre-
ferred Securities which are in book-entry form
should be credited to the account at The Deposi-
tary Trust Company set forth below.
-------------------
DTC Account Number
Name of Account Party:
--------------