1
EXHIBIT 5.6
MCN CORPORATION,
THE FIRST NATIONAL BANK
OF CHICAGO
AND
THE CHASE MANHATTAN BANK
PLEDGE AGREEMENT
Dated as of March 25, 1997
2
TABLE OF CONTENTS
Page
----
Section 1. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 2. Pledge; Control and Perfection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 2.1. The Pledge . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 2.2. Control and Perfection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 3. Distributions on Pledged Collateral . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 4. Substitution, Release, Repledge and Settlement of Preferred Securities . . . . . . . . . . . . . . . . . . . . 12
Section 4.1. Substitution of Preferred Securities and the Establishment of Growth PRIDES . . . . . . . . . . . . . . . . . . 12
Section 4.2. Pledge of Preferred Securities and Re-establishment of Income PRIDES . . . . . . . . . . . . . . . . . . . . . 12
Section 4.3. Termination Event . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 4.4. Cash Settlement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Section 4.5. Early Settlement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 4.6. Application of Proceeds Settlement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 5. Voting Rights -- Preferred Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 6. Rights and Remedies; Investment Company Event; Tax Event etc. . . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 6.1. Rights and Remedies of the Collateral Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 6.2. Tax Event, Investment Company Event, etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
i
3
Page
----
Section 7. Representation and Warranties; Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 7.1. Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 7.2. Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 8. The Collateral Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Section 8.1. Appointment, Powers and Immunities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Section 8.2. Instructions of the Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Section 8.3. Reliance by Collateral Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Section 8.4. Rights in Other Capacities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 8.5. Non-Reliance on Collateral Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 8.6. Compensation and Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 8.7. Failure to Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 8.8. Resignation of Collateral Agent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 8.9. Right to Appoint Agent or Advisor . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 8.10. Survival . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Section 8.11. Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Section 9. Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Section 9.1. Amendment Without Consent of Holders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Section 9.2. Amendment with Consent of Holders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Section 9.3. Execution of Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Section 9.4. Effect of Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Section 9.5. Reference to Amendments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Section 10. Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
ii
4
Page
----
Section 10.1. No Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Section 10.2. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Section 10.3. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Section 10.4. Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Section 10.5. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Section 10.6. Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Section 10.7. Expenses, etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Section 10.8. Security Interest Absolute . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
EXHIBIT A INSTRUCTION TO COLLATERAL AGENT
EXHIBIT B INSTRUCTION TO PURCHASE CONTRACT AGENT
iii
5
PLEDGE AGREEMENT
PLEDGE AGREEMENT, dated as of March 25, 1997 (this "Agreement"), among MCN
Corporation, a Michigan corporation, doing business as MCN Energy Group Inc.
(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"), 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) and The Chase Manhattan Bank in its capacity as a
"securities intermediary" as defined in Section 8-102(a)(14) of Revised Article
8 (as defined herein) (in such capacity, together with its successors in such
capacity, the "Securities Intermediary").
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 will be issued 2,300,000 FELINE PRIDES (the "Securities").
Each Security, at issuance, consists of a unit (the "Income PRIDES")
comprised of (a) one stock purchase contract (the "Purchase Contract") under
which (i) the Holder will purchase from the Company on May 16, 2000, for an
amount equal to the Stated Amount, a number of shares of Common Stock equal to
the Settlement Rate and (ii) the Company will pay the Holder Contract
Adjustment Payments, and (b) beneficial ownership of a 7-1/4% Trust Originated
Preferred Security (a "Preferred Security") issued by MCN Financing III (the
"Trust"), having a liquidation amount equal to $50 (the "Stated Amount") and
maturing on May 16, 2002, unless settled earlier.
Pursuant to the terms of the Purchase Contract Agreement and the Purchase
Contracts, the Holders, from time to time, of the Securities have irrevocably
autho-
6
rized 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 Preferred Securities and any
Treasury Securities (as defined below) 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 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 and the Purchase Contract
Agent, on its own behalf and as attorney-in-fact of the Holders from time to
time of the Securities, agree as follows:
Section 1. Definitions. For all purposes of this Agreement, except as
otherwise expressly provided or unless the context otherwise requires:
(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) Collateral Settlement, (vii)
Common Stock, (viii) Contract Adjustment Payments, (ix) Early Settlement,
(x) Early Settlement Amount, (xi) Early Settlement Date, (xii) Junior
Subordinated Debentures, (xiii) Opinion of Counsel, (xiv) Outstanding
Securities, (xv) Purchase Contract, (xvi) Purchase Contract Settlement
Date, (xvii) Purchase Price, (xviii) Repayment Price, (xix) Settlement
Rate, (xx) Termination Event, and (xxi) Underwriting Agreement;
(d) the following terms have the meanings assigned to them in the
Declaration: (i) Investment
2
7
Company Event, (ii) Liquidation Distribution, (iii) Institutional Trustee,
and (iv) Tax Event.
"Agreement" means this instrument as originally executed or as it may from
time to time be supplemented or amended by one or more agreements supplemental
hereto entered into pursuant to the applicable provisions hereof.
"Bankruptcy Code" means title 11 of the United States Code, or any other
law of the United States that from time to time provides a uniform system of
bankruptcy laws.
"Business Day" means any day other than a Saturday, a Sunday or any other
day on which banking institutions in The City of New York (in the State of New
York) are permitted or required by any applicable law to close.
"Cash" means any coin or currency of the United States as at the time
shall be legal tender for payment of public and private debts.
"Code" has the meaning set forth in Section 6.1 hereof.
"Collateral" has the meaning specified in Section 2.1 hereof.
"Collateral Account" means the trust account (number MB 9198919)
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 MCN Corporation, Collateral Account subject to the security
interest of The Chase Manhattan Bank, as Collateral Agent, for the benefit of
MCN Corporation, as pledgee" and any successor account.
"Collateral Agent" has the meaning specified in the first paragraph of
this instrument.
"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.
3
8
"Declaration" means the Amended and Restated Declaration of Trust of the
Trust, dated as of the date hereof, 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.
"Growth PRIDES" means a Purchase Contract with respect to which Treasury
Securities have been substituted for Preferred Securities as collateral to
secure the Holder's obligations under such Purchase Contract.
"Holder" when used with respect to a Security, or a Purchase Contract
constituting a part thereof, means The Depository Trust Company (or its
nominee) as the registered holder of an Income PRIDES or a Growth PRIDES, as
the case may be.
"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
on 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 a maturity of 365 days or less of any Person
that is fully and unconditionally guaranteed by a bank referred to in clause
(ii); (iv) repurchase agreements and reverse repurchase agreements relating to
marketable direct obligations issued or unconditionally guaranteed by the
United States Government or issued by any agency thereof and backed by the full
faith and credit of the United States Government; (v) 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
4
9
time of purchase at least equal to "A-1" by Standard & Poor's Ratings Services
or at least equal to "P-1" by Moody's Investors Service, Inc.; and (vi)
investments in money market funds registered under the Investment Company Act
of 1940, as amended, which have net assets of at least $200.0 million and at
least 85.0% of whose assets consist of securities and other obligations of the
types described in clauses (i) through (v) above.
"Person" means any individual, corporation, limited liability company,
partnership, joint venture, association, joint-stock company, trust,
unincorporated organization or government or any agency or political
subdivision thereof.
"Pledge" has the meaning specified in Section 2.1 hereof.
"Pledged Preferred Securities" has the meaning specified in Section 2.1
hereof.
"Pledged Treasury Securities" has the meaning specified in Section 2.1
hereof.
"Preferred Securities" has the meaning specified in the Recitals.
"Proceeds" means all interest, dividends, cash, instruments, securities,
financial assets (as defined in Section 8-102(a)(9) of Revised Article 8) and
other property from time to time received, receivable or otherwise distributed
in respect of or in exchange for any or all of the Collateral.
"Purchase Contract" has the meaning specified in the Recitals.
"Purchase Contract Agent" has the meaning specified in the first paragraph
of this instrument.
"Purchase Contract Agreement" has the meaning specified in the Recitals.
"Revised Article 8" means the 1994 Official Text of Revised Article 8 of
the Uniform Commercial Code, together with conforming and miscellaneous
amendments to Articles 1, 3, 4, 5, 9 and 10, 1994 Official Text, as adopted
5
10
by the American Law Institute and the National Conference of Commissioners on
Uniform State Laws and approved by the American Bar Association on February 14,
1995.
"Securities" has the meaning specified in the Recitals.
"Securities Intermediary" has the meaning specified in the preamble to
this Agreement.
"Security Entitlement" has the meaning set forth in Section 8.102(a)(7) of
Revised Article 8.
"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 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 (A) causing such securities
to be credited to a book-entry securities account of the
recipient or an Intermediary and (B) causing such
6
11
Intermediary, if any, (i) to send to the recipient
confirmation of the transfer of the relevant interest in such
Collateral to the recipient and (ii) to identify by
book-entry or otherwise such Collateral as subject to the
relevant interest in favor of the recipient or such other
method as may be effective under applicable law; and
(iii) in the case of Treasury Securities in book-entry form, by
causing a "securities intermediary" (as defined in Section
8-102(a)(14) of Revised Article 8) to (i) credit a
"securities entitlement" (as defined in Section 8-102(a)(17)
of Revised Article 8) with respect to such securities to a
securities account maintained by or on behalf of the
recipient; (ii) to issue a confirmation to the Collateral
Agent with respect to such credit and (iii) to make
appropriate notations in its books to reflect the security
interest of the Collateral Agent in such Treasury
Securities.
"Treasury Security" means a zero-coupon U.S. Treasury Security
maturing on May 15, 2000 (Cusip Number 912820 AW7) which are the principal
strips of the 8.875% U.S. Treasury Securities which mature on May 15, 2000.
"Trust" has the meaning specified in the Recitals.
"Value" with respect to any item of Collateral on any date means, as
to (i) a Preferred Security, the Stated Amount, (ii) Cash, the face amount
thereof and (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 Preferred
7
12
Securities constituting a part of the securities and all Proceeds thereof
(including any Proceeds from the repayment of the Preferred Securities by the
Trust) and any Treasury Securities delivered in exchange for such Preferred
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 (the
"Collateral"); (b) in payments made by Holders pursuant to Section 4.4; (c) in
the Collateral Account and all securities, financial assets and other property
credited thereto and all security entitlements related thereto; and (d) in any
Junior Subordinated Debentures delivered to the Collateral Agent upon the
occurrence of a Tax Event or an Investment Company Event or a liquidation of
the Trust as provided in Section 6.3. Prior to or concurrently with the
execution and delivery of this Agreement, the Purchase Contract Agent, on
behalf of the initial Holders of the Income PRIDES, shall cause the Preferred
Securities comprising a part of the Income PRIDES to be delivered to the
Collateral Agent for the benefit of the Company 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 send the Collateral Agent a confirmation of the deposit of such securities.
In the event a Holder of Income PRIDES so elects, such Holder 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
Preferred Securities to the Purchase Contract Agent on behalf of such Holder.
Treasury Securities 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 by the
notation by the Securities Intermediary on its books that a Security
Entitlement with respect to such Treasury Securities has been credited to the
Collateral Account. For purposes of perfecting the Pledge under applicable
law, including, to the extent applicable, the TRADES Regulations, the Uniform
Commercial Code as adopted and in effect in any applicable jurisdiction or
Revised Article 8 as made applicable by the TRADES Regulations, 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
Preferred
8
13
Securities or Treasury Securities subject to the Pledge, excluding any
Preferred Securities or Treasury Securities released from the Pledge as
provided in Section 4 hereof, are hereinafter referred to as "Pledged 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. Whenever directed by
the Collateral Agent acting on behalf of the Company, the Securities
Intermediary shall have the right to reregister the Preferred Securities or any
other securities held in physical form in its name.
Except as may be required in order to release Preferred Securities in
connection with a Holders election to convert its investment from an Income
Pride to a Growth Pride, or except as otherwise required to release securities
as specified herein, the Collateral Agent shall not relinquish physical
possession of any certificate evidencing a Preferred Security prior to the
termination of this Agreement. If it becomes necessary for the Collateral
Agent to relinquish physical possession of a certificate in order to release a
portion of the Preferred Securities evidenced thereby from the Pledge, the
Collateral Agent shall use its best efforts to obtain physical possession of a
replacement certificate evidencing any Preferred Securities remaining subject
to the Pledge hereunder registered to it or indorsed in blank within fifteen
days of the date it relinquished possession. The Collateral Agent shall
promptly notify the Company of its failure to obtain possession of any such
replacement certificate as required hereby.
Section 2.2. Control and Perfection. 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), to comply with and follow any
instructions and entitlement orders (as defined in Section 8-102(a)(8) of
Revised Article 8) 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
9
14
may, without limitation, direct the Securities Intermediary to transfer,
redeem, sell, liquidate, assign, deliver or otherwise dispose of the Preferred
Securities, the Treasury Securities and any security entitlements with respect
thereto and to pay and deliver any income, proceeds or other funds derived
therefrom to the Company. The Holders from time to time acting through the
Purchase Contract Agent hereby further authorize and direct the Collateral
Agent, as agent of the Company, to itself issue instructions and entitlement
orders, and to otherwise take action, with respect to the Collateral Account,
the Collateral credited thereto and any security entitlements with respect to
any thereof, 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. In addition, to further protect and perfect the Pledge,
the Securities Intermediary agrees that it will, until New York adopts Revised
Article 8, at all times mark its books with respect to the Collateral Account
to show that all securities credited thereto are subject to the Pledge in favor
of the Collateral Agent for the benefit of the Company. 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.
Section 3. Distributions on Pledged Collateral. So long as the
Purchase Contract Agent is the registered owner of the Pledged Preferred
Securities it shall receive all payments thereon. If the Pledged Preferred
Securities are reregistered such that the Collateral Agent becomes the
registered holder, all payments of the Stated Amount of, or cash distributions
on, any Pledged Preferred Securities and all payments of the principal of, or
cash distributions on, any Pledged Treasury Securities received by the
Collateral Agent and 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 Pledged Preferred Securities and (B) any payments of the Stated
Amount with respect to any Preferred Securities that have been
released from the Pledge pursuant to Section 4.3 hereof, to the
Purchase Contract Agent, for the benefit of the
10
15
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 Preferred Securities or the principal of any Pledged Treasury
Securities, to the Company on the relevant Payment Date in accordance
with the procedure set forth in Section 6.2(a) or 6.2(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 on account of
any Preferred Security that, at the time of such payment, is a Pledged
Preferred Security 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
11
16
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
Preferred Securities.
Section 4.1. Substitution of Preferred Securities and the
Establishment of Growth PRIDES. At any time on or prior to the second Business
Day immediately preceding the Purchase Contract Settlement Date, a Holder of
Income PRIDES shall have the right to substitute Treasury Securities for the
Pledged Preferred Securities securing such Holder's obligations under the
Purchase Contract(s) comprising a part of its Income PRIDES in integral
multiples of 20 Income PRIDES by (a) Transferring to the Collateral Agent
Treasury Securities having a Value equal to the Stated Amount of the Pledged
Preferred Securities to be released and (b) delivering the related Income
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 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 Preferred
Securities related to such Income PRIDES. The Purchase Contract Agent shall
instruct the Collateral Agent in the form provided in Exhibit A. 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 Preferred Securities and shall promptly Transfer such Preferred
Securities, free and clear of any lien, pledge or security interest created
hereby, to the Purchase Contract Agent.
Section 4.2. Pledge of Preferred Securities and Re-establishment of
Income PRIDES. At any time on or prior to the second Business Day immediately
preceding the Purchase Contract Settlement Date, a Holder of Growth PRIDES
shall have the right to establish or reestablish Income PRIDES consisting of
the Purchase Contracts and Preferred Securities in integral multiples of 20
Income PRIDES by
12
17
(a) Transferring to the Collateral Agent Preferred Securities having a Value
equal to the Stated Amount 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 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 Collateral Agent in the form
provided in Exhibit A. Upon receipt of the Preferred Securities 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 Preferred
Securities 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 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
Preferred Securities 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
13
18
shall be unable to obtain such opinion within ten days after the occurrence of
such Termination Event or (z) the Collateral Agent shall continue, after
delivery of such opinion, to refuse to effectuate the release and Transfer of
all Pledged Preferred Securities or of 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
Preferred Securities 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. Upon receipt by the Collateral Agent of
(a) notice from the Purchase Contract Agent prior to the Purchase Contract
Settlement Date, as provided in the Purchase Contract Agreement, that a Holder
elects to effect a Cash Settlement with respect to some or all of such Holder's
Purchase Contracts in accordance with the terms of the Purchase Contracts and
the Purchase Contract Agreement and (b) payment by such Holder prior to 9:00
a.m., New York City time, on the Business Day immediately preceding the
Purchase Contract Settlement Date, of the Purchase Price of such Purchase
Contracts by certified check payable to or upon the order of the Company, or
wire transfer in immediately available funds, then the Collateral Agent shall,
upon the written direction of the Purchase Contract Agent, promptly invest any
Cash received from a Holder in connection with a Cash Settlement in Permitted
Investments that will mature on the Purchase Contract Settlement Date. Upon
the receipt of any such funds, the Collateral Agent shall pay such funds to the
Company on the Purchase Contract Settlement Date and the Collateral Agent
shall, after payment of the Purchase Price to the Company on the Purchase
Contract Settlement Date, release from the Pledge and promptly Transfer to the
Purchase Contract Agent Pledged Preferred Securities or Pledged Treasury
Securities with a principal amount equal to the product of the Stated Amount
and the number of Purchase Contracts as to which such Holder has elected to
effect a Cash Settlement. The Collateral Agent shall distribute, when
received, any funds in re-
14
19
spect of the interest earned from any such investment to the Purchase Contract
Agent, for payment to the relevant Holders.
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 Preferred Securities 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 Preferred Securities 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 has not made an effective Cash Settlement or 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 Preferred Securities. The Collateral Agent shall, by 10:00 a.m., New
York City time, on the Business Day immediately preceding the Purchase Contract
Settlement Date, without any instruction from such Holder of Income PRIDES,
present the related Preferred Securities to the Institutional Trustee for
repayment at the Repayment Price. The Collateral Agent shall, at the written
direction of the Purchase Contract Agent, promptly invest
15
20
any Cash received in respect of the repayment of the Pledged Preferred
Securities in overnight Permitted Investments. On the Purchase Contract
Settlement Date, the Collateral Agent shall apply the proceeds of any such
funds to pay to the Company an amount equal to the product of the Stated Amount
and the number of Preferred Securities repaid by the Institutional Trustee at
the Purchase Price. The Collateral Agent shall distribute any funds received
in respect of the investment earnings from such investment when received to the
Purchase Contract Agent for payment to the relevant Holders.
(b) In the event a holder of Growth PRIDES has not made an Early Settlement of
the Purchase Contract(s) underlying its Growth 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. 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 in overnight Permitted Investments. Without receiving any
instruction from the Holder of Growth PRIDES, the Collateral Agent shall apply
the Proceeds of the related Pledged Treasury Securities 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 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 holder of the related Purchase Contracts.
Section 5. Voting Rights -- Preferred Securities. The Purchase
Contract Agent may exercise, or refrain from exercising, any and all voting and
other consensual rights pertaining to the Pledged Preferred Securities or 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
16
21
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 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 Preferred Securities, including notice
of any meeting at which holders of Preferred Securities are entitled to vote or
solicitation of consents, waivers or proxies of holders of 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 or a written request therefor from the
Purchase Contract Agent, execute and deliver to the Purchase Contract Agent
such proxies and other instruments in respect of such Pledged Preferred
Securities (in form and substance satisfactory to the Collateral Agent) as are
prepared by the Purchase Contract Agent with respect to the Pledged Preferred
Securities.
Section 6. Rights and Remedies; Investment Company Event; Tax Event
etc.
Section 6.1. Rights and Remedies of the Collateral Agent. (a) The
Collateral Agent shall have all of the rights and remedies with respect to the
Collateral of a secured party under the Uniform Commercial Code 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), Revised Article 8 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.
(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 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 is a part under the related Purchase Contracts, the
17
22
Collateral Agent shall have and may exercise, with reference to such Pledged
Treasury Securities and such obligations of such Holder, any and all of the
rights and remedies available to a secured party under the Code, Revised
Article 8 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 Preferred Securities, or (ii)
the principal of the Pledged Treasury Securities, 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. Tax Event, Investment Company Event, etc. Upon the
occurrence of a Tax Event or an Investment Company Event or a liquidation of
the Trust, a principal amount of the Junior Subordinated Debentures
constituting the assets of the Trust and underlying the Preferred Securities
equal to the aggregated Stated Amount of the Pledged Preferred Securities shall
be delivered to the Collateral Agent in exchange for the Pledged Preferred
Securities. In the event the Collateral Agent receives such Junior
Subordinated Debentures in respect of Pledged Preferred Securities upon the
occurrence of a Tax Event, Investment Company Event or liquidation of the
Trust, the Collateral Agent shall Transfer the Junior Subordinated Debentures
to the Collateral Account in the manner speci-
18
23
fied herein for Pledged 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 Junior
Subordinated Debentures as it had in respect of the Pledged Preferred
Securities as provided in Articles II, III, IV, V and VI hereof.
Section 7. Representation 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, calls,
liabilities to pay money or other restrictions 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 in-
19
24
volved in the Transfer of the Collateral, including
the Collateral Agent, gives the notices and takes
the action required of it hereunder and under
applicable law for perfection of that interest and
assuming the establishment and exercise of control
pursuant to Section 2.2 hereof); and
(d) the execution and performance by the Holder of its
obligations under this Agreement will not result in
the creation of any security interest, lien or other
encumbrance on the Collateral other than the
security interest and lien granted under 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.
20
25
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 incidental thereto. The
Collateral Agent: (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 the Collateral Agent, nor shall
the Collateral Agent be bound by the provisions of any agreement by any party
hereto beyond the specific terms hereof; (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) 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 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, any securities or other
property deposited hereunder. Subject to the foregoing, during the term of
this Agreement, the Collateral Agent shall take all reasonable action in
connection with the safekeeping and preservation of the Collateral hereunder.
No provision of this Agreement shall require the Collateral Agent to
expend or risk its own funds or
21
26
otherwise incur any financial liability in the performance of any of its duties
hereunder. In no event shall the Collateral Agent be liable for any amount in
excess of the Value of the Collateral. Notwithstanding the foregoing, the
Collateral Agent and Securities Intermediary 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, to direct the time, method and place of conducting any
proceeding for the realization of any right or remedy available to the
Collateral Agent, or of exercising any power conferred on the Collateral Agent,
or to direct the taking or refraining from taking of any action authorized by
this Agreement; provided, however, that (i) such direction shall not conflict
with the provisions of any law or of this Agreement and (ii) the Collateral
Agent shall be adequately indemnified as provided herein. Nothing 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 and the Collateral Agent shall be entitled 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
and the Securities Intermediary. As to any matters not expressly provided for
by this Agreement, the Collateral Agent and the Securities Intermediary shall
in all cases be fully protected in acting, or in refraining from acting,
hereunder in accordance with instructions given by the Company in accordance
with this Agreement.
22
27
Section 8.4. Rights in Other Capacities. The Collateral Agent and the
Securities Intermediary and their affiliates may (without having to account
therefor to the Company) accept deposits from, lend money to, make their
investments in and generally engage in any kind of banking, trust or other
business with the Purchase Contract Agent and any Holder of Securities (and any
of their respective subsidiaries or affiliates) as if it were not acting as the
Collateral Agent, and the Collateral Agent and its affiliates may accept fees
and other consideration from the Purchase Contract Agent and any Holder of
Securities without having to account for the same to the Company; provided that
each of the Securities Intermediary and the Collateral Agent covenants and
agrees with the Company that it shall not accept, receive or permit there to be
created in favor of itself and shall take no affirmative action to permit there
to be created in favor of any other person, any security interest, lien or
other encumbrance of any kind in or upon the Collateral.
Section 8.5. Non-Reliance on Collateral Agent. Neither the Securities
Intermediary nor the Collateral Agent shall be required to keep itself informed
as to the performance or observance by the Purchase Contract Agent or any
Holder of Securities of this Agreement, the Purchase Contract Agreement, the
Securities or any other document referred to or provided for herein or therein
or to inspect the properties or books of the Purchase Contract Agent or any
Holder of Securities. The Collateral Agent shall not have any duty or
responsibility to provide the Company or the Securities Intermediary with any
credit or other information concerning the affairs, financial condition or
business of the Purchase Contract Agent or any Holder of Securities (or any of
their respective affiliates) that may come into the possession of the
Collateral Agent or the Securities Intermediary or any of their respective
affiliates.
Section 8.6. Compensation and Indemnity. The Company agrees: (i) to
pay the Collateral Agent from time to time such compensation as shall be agreed
in writing between the Company and the Collateral Agent for all services
rendered by it hereunder and (ii) to indemnify the Collateral Agent and the
Securities Intermediary for, and to hold each of them harmless from and
against, any loss, liability or expense incurred without negligence, willful
misconduct or bad faith on its part, arising out of or in
23
28
connection with the acceptance or administration of its powers and duties under
this Agreement, including the 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 and/or any other Person with respect to any funds or
property deposited hereunder, the Collateral 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 the Collateral Agent shall not be or become liable in any
way to any of the parties hereto for its failure or refusal to comply with such
conflicting claims, demands or instructions. The Collateral Agent 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 (ii) the
Collateral Agent shall have received security or an indemnity satisfactory to
the Collateral Agent sufficient to save the Collateral Agent harmless from and
against any and all loss, liability or expense which the Collateral Agent may
incur by reason of its acting. The Collateral Agent may in addition elect to
commence an interpleader action or seek other judicial relief or orders as the
Collateral Agent may deem necessary. Notwithstanding anything contained herein
to the contrary, the Collateral Agent shall not 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 as provided below,
(a) the Collateral Agent may resign at any time by giving notice thereof to the
Company and the Purchase Contract Agent as attorney-in-fact for the Holders of
Securities, (b) the Collateral
24
29
Agent may be removed at any time by the Company and (c) if the Collateral Agent
fails to perform any of its material obligations hereunder in any material
respect for a period of not less than 20 days after receiving written notice of
such failure by the Purchase Contract Agent and such failure shall be
continuing, the Collateral Agent may be removed by the Purchase Contract Agent.
The Purchase Contract Agent shall promptly notify the Company of any removal of
the Collateral Agent pursuant to clause (c) of the immediately preceding
sentence. Upon any such resignation or removal, the Company shall have the
right to appoint a successor Collateral Agent. If no successor Collateral
Agent shall have been so appointed and shall have accepted such appointment
within 30 days after the retiring Collateral Agent's giving of notice of
resignation or such removal, then the retiring Collateral Agent may petition
any court of competent jurisdiction for the appointment of a successor
Collateral Agent. The Collateral Agent shall be a bank which has an office in
New York, New York with a combined capital and surplus of at least $50,000,000.
Upon the acceptance of any appointment as Collateral Agent hereunder by a
successor Collateral Agent, such successor Collateral Agent shall thereupon
succeed to and become vested with all the rights, powers, privileges and duties
of the retiring Collateral Agent, and the retiring Collateral Agent shall take
all appropriate action to transfer any money and property held by it hereunder
(including the Collateral) to such successor Collateral Agent. The retiring
Collateral Agent shall, upon such succession, be discharged from its duties and
obligations as Collateral Agent hereunder. After any retiring Collateral
Agent's resignation hereunder as Collateral Agent, the provisions of this
Section 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.
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.
25
30
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.
Section 8.11. Indemnity. Anything in this Agreement to the contrary
notwithstanding, in no event shall the Collateral 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 or the
Securities Intermediary, or any of them, incurred without any act or deed that
is found to be attributable to gross negligence on the part of the Collateral
Agent or the Securities Intermediary.
Section 9. Amendment.
Section 9.1. Amendment Without Consent of Holders. Without the
consent of any Holders, the Company, the Collateral Agent 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 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
26
31
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 66-2/3% 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
authorized by a Board Resolution, the Purchase Contract Agent and the
Collateral Agent may amend this Agreement for the purpose of modifying in any
manner the provisions of this Agreement or the rights of the Holders in respect
of the Securities; provided, however, that no such supplemental agreement
shall, without the consent of the Holder of each Outstanding Security 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 Trust Preferred Securities
or the rights of holders of Growth PRIDES to substitute Trust
Preferred Securities for the 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; or
(4) materially and adversely alter the rights of the holders
of Preferred Securities;
provided, that if any amendment or proposed referred to above would
adversely affect only the Income PRIDES or the Growth PRIDES, then only the
affected class of holder will be entitled to vote on such amendment or proposed
27
32
and such amendment or proposal shall not be effective except with the consent
of 66-2/3% of such class. 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 and the Purchase Contract Agent
shall be entitled to receive and (subject to Section 6.1 hereof, with respect
to the Collateral Agent, and Section 7.1 of the Purchase Contract Agreement,
with respect to the Purchase Contract Agent) shall be fully protected in
relying upon, an Opinion of Counsel stating that the execution of such
amendment is authorized or permitted by this Agreement and that all conditions
precedent, if any, to the execution and delivery of such amendment have been
satisfied.
Section 9.4. Effect of Amendments. Upon the execution of any
amendment under this Section, this Agreement shall be modified in accordance
therewith, and such amendment shall form a part of this Agreement for all
purposes; and every Holder of Certificates theretofore or thereafter
authenticated, executed on behalf of the Holders and delivered under the
Purchase Contract Agreement shall be bound thereby.
Section 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.
28
33
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 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 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
29
34
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 and the Purchase Contract Agent, and the
Holders from time to time of the Securities, by their acceptance of the same,
shall be deemed to have agreed to be bound by the provisions hereof and to have
ratified the agreements of, and the grant of the Pledge hereunder by, the
Purchase Contract Agent.
Section 10.5. Counterparts. This Agreement may be executed in any
number of counterparts, all of which taken together shall constitute one and
the same instrument, and any of the parties hereto may execute this Agreement
by signing any such counterpart.
Section 10.6. Severability. If 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 for: (a) all reasonable out-of-pocket costs and expenses of
the Collateral Agent (including, without limitation, the reasonable fees and
expenses of counsel to the Collateral 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
30
35
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.
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.
31
36
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the day and year first above written.
MCN CORPORATION
By: /s/ Sebastian Coppola
----------------------------
Name: Sebastian Coppola
Title: Senior Vice President
and Treasurer
Address for Notices:
MCN Energy Group Inc.
500 Griswold Street
Detroit, Michigan 48226
Attention: Treasurer
Telecopy: (313) 256-5871
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: /s/ R.D. Manella
-----------------------------
Name: R.D. Manella
Title: Vice President
Address for Notices:
The First National Bank of
Chicago
One First National Plaza
Suite 0126
Chicago, Illinois 60670-0126
Attention: Corporate Trust
Services Division
Telecopy: (312) 407-1708
32
37
The Chase Manhattan Bank
as Collateral Agent and as
Securities Intermediary
By: /s/ L. O'Brien
-----------------------------
Name: L. O'Brien
Title: Senior Trust Officer
Address for Notices:
The Chase Manhattan Bank
450 West 33rd Street
15th Floor
New York, New York 10001
Attention: Corporate Trust
Administration
Department
Telecopy: (212) 946-8159
33
38
EXHIBIT A
INSTRUCTION FROM PURCHASE CONTRACT AGENT TO COLLATERAL AGENT
The Chase Manhattan Bank
450 West 33rd Street
15th Floor
New York, New York 10001
Attention: Corporate Trust
Administration Department
Re: FELINE PRIDES of MCN Corporation, doing business as
MCN Energy Group Inc. (the "Company"), and MCN Financing III
We hereby notify you in accordance with Section 4.1 of the
Pledge Agreement, dated as of March 25, 1997, (the "Pledge Agreement") among
the Company, yourselves, as Collateral Agent, 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 Preferred Securities] in
exchange for an equal value of [Pledged Preferred Securities] [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] [Preferred Securities] to you, as Collateral Agent. We hereby
instruct you, upon receipt of such [Pledged Treasury Securities] [Pledged
Preferred Securities], to release the Preferred Securities] [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: THE FIRST NATIONAL BANK OF CHICAGO
----------------
By:
-----------------------------
Name:
Title:
Please print name and address of Registered Holder electing to substitute
[Treasury Securities] [Preferred Securities] for the [Pledged Preferred
Securities] [Pledged Treasury Securities]:
- ------------------------------- ------------------------------
Name Social Security or other
Taxpayer Identification Number,
if any
- -------------------------------
Address
- -------------------------------
- -------------------------------
A-1
39
EXHIBIT B
INSTRUCTION TO PURCHASE CONTRACT AGENT
The First National Bank of Chicago
One First National Plaza
Suite 6363
Chicago, IL 60670
Attention: Corporate Trust
Administration Department
Re: FELINE PRIDES of MCN Corporation, doing business as
MCN Energy Group Inc. (the "Company"), and MCN Financing III
The undersigned Holder hereby notifies you that it has
delivered to The Chase Manhattan Bank, as Collateral Agent, $_______ aggregate
principal amount of [Treasury Securities] [Preferred Securities] in exchange
for an equal value of [Pledged Preferred Securities] [Pledged Treasury
Securities] held by the Collateral Agent (the "Pledge Agreement"), in
accordance with Section 4.1 of the Pledge Agreement, dated March 25, 1997,
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 Preferred Securities] [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
Please print name and address of Registered Holder:
- ----------------------------- -----------------------------------
Name Social Security or other
Taxpayer Identification Number, if
any
- -----------------------------
Address
- -----------------------------
- -----------------------------
B-1