Exhibit 4.5
PLEDGE AGREEMENT
Dated as of November 19, 2001
among
DUKE ENERGY CORPORATION
BANK ONE TRUST COMPANY, N.A.,
as Collateral Agent, Custodial Agent
and Securities Intermediary
and
JPMORGAN CHASE BANK,
as Purchase Contract Agent
Table of Contents
Page
ARTICLE I DEFINITIONS ..................................................................................... 2
SECTION 1.1. Definitions of Terms ............................................................... 2
ARTICLE II PLEDGE; CONTROL AND PERFECTION ................................................................. 5
SECTION 2.1. The Pledge ......................................................................... 5
SECTION 2.2. Control and Perfection ............................................................. 7
ARTICLE III DISTRIBUTIONS ON PLEDGED COLLATERAL ........................................................... 9
ARTICLE IV SUBSTITUTION, RELEASE, REPLEDGE AND SETTLEMENT OF SENIOR NOTES ................................. 10
SECTION 4.1. Substitution for Senior Notes and the Creation of Treasury Units ................... 10
SECTION 4.2. Substitution of Treasury Securities and the Recreation of Corporate Units .......... 11
SECTION 4.3. Termination Event .................................................................. 11
SECTION 4.4. Cash Settlement .................................................................... 12
SECTION 4.5. Early Settlement ................................................................... 13
SECTION 4.6. Application of Proceeds, Settlement ................................................ 13
ARTICLE V VOTING RIGHTS - SENIOR NOTES .................................................................... 15
SECTION 5.1. Voting Rights - Senior Notes ....................................................... 15
ARTICLE VI RIGHTS AND REMEDIES; TAX EVENT REDEMPTION ...................................................... 16
SECTION 6.1. Rights and Remedies of the Collateral Agent ........................................ 16
SECTION 6.2. Tax Event Redemption ............................................................... 17
SECTION 6.3. Initial Remarketing ................................................................ 17
SECTION 6.4. Substitutions ...................................................................... 18
ARTICLE VII REPRESENTATIONS AND WARRANTIES; COVENANTS ..................................................... 18
SECTION 7.1. Representations and Warranties ..................................................... 18
SECTION 7.2. Covenants .......................................................................... 19
ARTICLE VIII THE COLLATERAL AGENT ......................................................................... 19
SECTION 8.1. Appointment, Powers and Immunities ................................................. 19
SECTION 8.2. Instructions of the Company ........................................................ 20
SECTION 8.3. Reliance ........................................................................... 20
SECTION 8.4. Rights in other Capacities ......................................................... 20
SECTION 8.5. Non-Reliance ....................................................................... 21
SECTION 8.6. Compensation and Indemnity ......................................................... 21
SECTION 8.7. Failure to Act ..................................................................... 21
SECTION 8.8. Resignation and Removal ............................................................ 22
SECTION 8.9. Right to Appoint Agent or Advisor .................................................. 23
SECTION 8.10. Survival ........................................................................... 23
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SECTION 8.11. Exculpation ......................................... 23
ARTICLE IX AMENDMENT ....................................................... 23
SECTION 9.1. Amendment Without Consent of Holders ................ 23
SECTION 9.2. Amendment with Consent of Holders ................... 24
SECTION 9.3. Execution of Amendments ............................. 25
SECTION 9.4. Effect of Amendments ................................ 25
SECTION 9.5. Reference to Amendments ............................. 25
ARTICLE X MISCELLANEOUS .................................................... 25
SECTION 10.1. No Waiver ........................................... 25
SECTION 10.2. Governing Law ....................................... 25
SECTION 10.3. Notices ............................................. 26
SECTION 10.4. Successors and Assigns .............................. 26
SECTION 10.5. Counterparts ........................................ 26
SECTION 10.6. Severability ........................................ 26
SECTION 10.7. Expenses, etc. ...................................... 27
SECTION 10.8. Security Interest Absolute .......................... 27
EXHIBIT A INSTRUCTION FROM PURCHASE CONTRACT AGENT TO
COLLATERAL AGENT ............................................. 30
EXHIBIT B INSTRUCTION TO PURCHASE CONTRACT AGENT ....................... 32
EXHIBIT C INSTRUCTION TO CUSTODIAL AGENT REGARDING
REMARKETING .................................................. 33
EXHIBIT D INSTRUCTION TO CUSTODIAL AGENT REGARDING
WITHDRAWAL FROM REMARKETING .................................. 36
ii
PLEDGE AGREEMENT, dated as of November 19, 2001 (this
"Agreement"), among Duke Energy Corporation, a North Carolina corporation (the
"Company"), Bank One Trust Company, N.A., a national banking association, not
individually but solely as collateral agent (in such capacity, together with its
successors in such capacity, the "Collateral Agent"), as custodial agent for the
Company (in such capacity, together with its successors in such capacity, the
"Custodial Agent") and as "securities intermediary" as defined in Section
8-102(a)(14) of the Code (as defined herein) for the Purchase Contract Agent on
behalf of the Holders (in such capacity, together with its successors in such
capacity, the "Securities Intermediary"), and JPMorgan Chase Bank, not
individually but solely as purchase contract agent and as attorney-in-fact of
the Holders (as defined in the Purchase Contract Agreement) from time to time of
the Securities (as hereinafter defined) (in such capacity, together with its
successors in such capacity, the "Purchase Contract Agent") under the Purchase
Contract Agreement (as hereinafter defined).
RECITALS
WHEREAS, the Company and the Purchase Contract Agent are
parties to the Purchase Contract Agreement, dated as of the date hereof (as
modified and supplemented and in effect from time to time, the "Purchase
Contract Agreement"), pursuant to which there may be issued 30,000,000 Equity
Units, Series B of the Company (or 34,500,000 Equity Units, Series B if the
Underwriters' overallotment option is exercised in full), having a stated amount
of $25 (the "Stated Amount") per Equity Unit (the "Equity Units"); and
WHEREAS, the Equity Units will initially consist of 30,000,000
(or 34,500,000 if the underwriters' overallotment option is exercised in full)
Corporate Units, Series B (referred to as "Corporate Units") with a stated
amount, per Corporate Unit, equal to the Stated Amount. Each Corporate Unit will
initially consist of (a) a stock purchase contract (the "Purchase Contract")
under which the holder will purchase from the Company not later than November
16, 2004 (the "Purchase Contract Settlement Date"), for an amount of cash equal
to the Stated Amount, a number of newly issued shares of common stock, no par
value (the "Common Stock"), of the Company equal to the Settlement Rate (as
defined below) and (b) beneficial ownership of a Senior Note (as defined below);
and
WHEREAS, if Holders of Corporate Units substitute collateral
as contemplated by Section 4. 1, each Treasury Unit, Series B created thereby
(referred to as "Treasury Units" and, together with the Corporate Units, the
"Securities") will initially consist of (a) a Purchase Contract under which the
Holder will purchase from the Company on the Purchase Contract Settlement Date,
for an amount in cash equal to the Stated Amount, a number of newly issued
shares of Common Stock of the Company, equal to the Settlement Rate, and (b) a
1/40, or 2.5%, undivided beneficial interest in a zero-coupon U.S. Treasury
Security (CUSIP No. 912803AB9) having a principal amount at maturity equal to
$1,000 and maturing on November 15, 2004 (the "Treasury Securities"); and
WHEREAS, pursuant to the terms of the Indenture (as defined
below) Duke Capital Corporation, a Delaware corporation and wholly owned
subsidiary of the Company ("Duke Capital") will issue $750,000,000 aggregate
principal amount of 4.32% Senior Notes due 2006 (or $862,500,000 if the
Underwriters' overallotment option is exercised) (the "Senior Notes"), each
having a principal amount per Senior Note equal to $25; and
WHEREAS, pursuant to the terms of the Purchase Contract Agreement
and the Purchase Contracts, the Holders, from time to time, of the Securities
have irrevocably authorized the Purchase Contract Agent, as attorney-in-fact of
such Holders, among other things, to execute and deliver this Agreement on
behalf of such Holders and to grant the pledge provided hereby of the Senior
Notes, any Applicable Ownership Interest in the Treasury Portfolio and the
Treasury Securities to secure each Holder's obligations under the related
Purchase Contract, as provided herein and subject to the terms hereof; and
WHEREAS, upon such pledge, the Pledged Senior Notes or the
Applicable Ownership Interests in the Treasury Portfolio, as the case may be,
and the Pledged Treasury Securities will be beneficially owned by the Holders
but will be owned of record by the Purchase Contract Agent subject to the Pledge
hereunder.
NOW THEREFORE, in consideration of the foregoing premises, the
Company, the Collateral Agent, the Securities Intermediary, the Custodial Agent
and the Purchase Contract Agent, on its own behalf and as attorney-in-fact of
the Holders from time to time of the Securities, agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1. Definitions of Terms. For all purposes of this
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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) initially capitalized terms used but not otherwise defined
herein have the meanings assigned to such terms in the Purchase Contract
Agreement; and
(d) the following terms have the meanings assigned to them in
this Section 1.1(d); and
"Agreement" means this instrument as originally executed or as it
may from time to time be supplemented or amended by one or more agreements
supplemental hereto entered into pursuant to the applicable provisions hereof
"Bankruptcy Code" means title 11 of the United States Code, or
any other law of the United States that from time to time provides a uniform
system of bankruptcy laws.
"Business Day" means any day other than a Saturday, a Sunday or
any other day on which banking institutions in The City of New York (in the
State of New York) are permitted or required by any applicable law to close.
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"Cash" means any coin or currency of the United States as at
the time shall be legal tender for payment of public and private debts.
"Code" has the meaning specified in Section 6.1 hereof.
"Collateral" has the meaning specified in Section 2.1 hereof.
"Collateral Account" means the securities account (number ...)
maintained with the Collateral Agent in the name "JPMorgan Chase Bank, as
Purchase Contract Agent on behalf of the holders of certain securities of Duke
Energy Corporation, Collateral Account subject to the security interest of Bank
One Trust Company, N.A., as Collateral Agent, for the benefit of Duke Energy
Corporation, as pledgee" and any successor account.
"Collateral Agent" has the meaning specified in the first
paragraph of this instrument.
"Common Stock" has the meaning specified in the Recitals.
"Company" means the Person named as the "Company" in the first
paragraph of this instrument until a successor shall have become such, and
thereafter "Company" shall mean such successor.
"Custodial Agent" has the meaning specified in the first
paragraph of this instrument.
"Duke Capital" has the meaning specified in the Recitals.
"Intermediary" means any entity that in the ordinary course of
its business maintains securities accounts for others and is acting in that
capacity.
"Permitted Investments" means any one of the following which
shall mature not later than the next succeeding Business Day (i) any evidence of
indebtedness with an original maturity of 365 days or less issued, or directly
and fully guaranteed or insured, by the United States of America or any agency
or instrumentality thereof (provided that the full faith and credit of the
United States of America is pledged in support thereof or such indebtedness
constitutes a general obligation of it); (ii) deposits, certificates of deposit
or acceptances with an original maturity of 365 days or less of any institution
which is a member of the Federal Reserve System having combined capital and
surplus and undivided profits of not less than US $200 million at the time of
deposit; (iii) investments with an original maturity of 365 days or less of any
Person that is fully and unconditionally guaranteed by a bank referred to in
clause (ii); (iv) investments in commercial paper, other than commercial paper
issued by the Company or any of its Affiliates, of any corporation incorporated
under the laws of the United States or any State thereof, which commercial paper
has a rating at the time of purchase at least equal to "A-1" by Standard &
Poor's Ratings Services ("S&P") or at least equal to VP "P-I" 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, which may include such
money market funds offered, managed, administered or serviced by the Collateral
Agent or any of its Affiliates.
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"Person" and "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 Senior Notes" has the meaning specified in Section 2.1
hereof
"Pledged Treasury Securities" has the meaning specified in
Section 2.1 hereof
"Primary Treasury Dealer" means a primary U.S. government
securities dealer in The City of New York.
"Proceeds" means all interest, dividends, cash, instruments,
securities, financial assets (as defined in ss. 8-102(a)(9) of the Code) and
other property from time to time received, receivable or otherwise distributed
upon the sale, exchange, maturity, collection or disposition of the Collateral
or any proceeds thereof.
"Purchase Contract" has the meaning specified in the Recitals.
"Purchase Contract Agent" has the meaning specified in the first
paragraph of this Agreement.
"Purchase Contract Agreement" has the meaning specified in the
Recitals.
"Purchase Contract Settlement Date" has the meaning specified in
the Recitals.
"Securities" has the meaning specified in the Recitals.
"Securities Intermediary" has the meaning specified in the first
paragraph of this Agreement.
"Security Entitlement" has the meaning set forth in Section
8-102(a)(I 7) of the Code.
"Senior Notes" has the meaning specified in the Recitals.
"Senior Note Trustee" means JPMorgan Chase Bank (formerly known
as The Chase Manhattan Bank), a New York banking corporation, as trustee under
the Indenture until a successor is appointed thereunder, and thereafter means
such successor trustee.
"Separate Senior Notes" means any Senior Notes that are not
Pledged Senior Notes.
"Stated Amount" has the meaning specified in the Recitals.
"Supplemental Remarketing Agreement" means the Supplemental
Remarketing Agreement, as defined in the Remarketing Agreement.
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"Tax Event Redemption Date" means the date upon which a Tax Event
Redemption is to occur.
"TRADES" means the Treasury/Reserve Automated Debt Entry System
maintained by the Federal Reserve Bank of New York pursuant to the TRADES
Regulations.
"TRADES Regulations" means the regulations of the United States
Department of the Treasury, published at 31 C.F.R. Part 357, as amended from
time to time. Unless otherwise defined herein, all terms defined in the TRADES
Regulations are used herein as therein defined.
"Transfer" means, except as otherwise expressly provided herein,
with respect to the Collateral and in accordance with the instructions of the
Collateral Agent, the Purchase Contract Agent or the Holder, as applicable:
(i) in the case of Collateral consisting of securities
which cannot be delivered by book-entry or which the parties
agree are to be delivered in physical form, delivery in
appropriate physical form to the recipient accompanied by any
duly executed instruments of transfer, assignments in blank,
transfer tax stamps and any other documents necessary to
constitute a legally valid transfer to the recipient;
(ii) in the case of Collateral consisting of securities
maintained in book-entry form by causing a "securities
intermediary" (as defined in Section 8-102(a)(14) of the Code) to
(i) credit a "security entitlement" (as defined in Section
8-102(a)(17) of the Code) with respect to such securities to a
"securities account" (as defined in Section 8-501 (a) of the
Code) maintained by or on behalf of the recipient and (ii) to
issue a confirmation to the recipient with respect to such
credit. In the case of Collateral to be delivered to the
Collateral Agent, the Securities Intermediary shall be the
securities intermediary and the securities account shall be the
Collateral Account.
"Treasury Securities" has the meaning specified in the Recitals.
"Value" with respect to any item of Collateral on any date means,
as to (i) a Senior Note, the principal amount thereof, (ii) Cash, the face
amount thereof and (iii) Treasury Securities, the aggregate principal amount
thereof at maturity.
ARTICLE II
PLEDGE; CONTROL AND PERFECTION
SECTION 2.1. The Pledge. (a) The Holders from time to time as
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beneficial owners of the Collateral (as defined below) acting through the
Purchase Contract Agent, as their attorney-in-fact, and the Purchase Contract
Agent, as nominal owner of the Collateral, each hereby pledge and grant to the
Collateral Agent, for the benefit of the Company, as collateral security for the
performance when due by such Holders of their respective obligations under the
related Purchase Contracts, a security interest in all of the right, title and
interest of the Purchase Contract Agent and such Holders (a) in the Senior Notes
constituting a part of the Corporate Units and any Treasury Securities delivered
in exchange for any Senior Notes (or, if applicable,
5
the Applicable Ownership Interest in the Treasury Portfolio), any Senior Notes
(or, if applicable, the Applicable Ownership Interest in the Treasury Portfolio)
delivered in exchange for any Treasury Securities, in accordance with Article IV
hereof, in each case that have been Transferred to or received by the Collateral
Agent and not released by the Collateral Agent to such Holders under the
provisions of this Agreement; (b) in payments made by Holders pursuant to
Section 4.4; (c) in the Collateral Account and all securities, financial assets,
Cash and other property credited thereto and all Security Entitlements related
thereto; (d) in the Treasury Portfolio purchased on behalf of the Holders of
Corporate Units by the Collateral Agent upon the occurrence of a Successful
Initial Remarketing, Successful Second Remarketing or Successful Third
Remarketing or a Tax Event Redemption as provided in Article VI, or otherwise,
and (e) all Proceeds of the foregoing (all of the foregoing, collectively, the
"Collateral").
Prior to or concurrently with the execution and delivery of this
Agreement, the Purchase Contract Agent, on behalf of the initial Holders of the
Securities, shall cause the Senior Notes comprising a part of the Corporate
Units to be Transferred to the Collateral Agent for the benefit of the Company.
Such Senior Notes shall be Transferred by physically delivering such Senior
Notes to the Securities Intermediary indorsed in blank (or accompanied by a
stock or bond power indorsed in blank) and causing the Securities Intermediary
to credit the Collateral Account with such Senior Notes such that security
entitlements with respect to such Senior Notes are credited to the Collateral
Account. In the event a Holder of Corporate Units so elects, such Holder may
Transfer Treasury Securities to the Collateral Agent for the benefit of the
Company as provided in Section 4.1 hereof in exchange for the release by the
Collateral Agent on behalf of the Company of Senior Notes or the appropriate
Applicable Ownership Interest of the Treasury Portfolio, as the case may be,
with an aggregate principal amount equal to the aggregate principal amount of
the Treasury Securities so Transferred, in the case of Senior Notes, or with an
appropriate Applicable Ownership Interest (as specified in clause (A) of the
definition of such term) of the Treasury Portfolio equal to the aggregate
principal amount of the Treasury Securities so Transferred, in the event that a
Successful Initial Remarketing, Successful Second Remarketing or Successful
Third Remarketing or a Tax Event Redemption has occurred, to the Purchase
Contract Agent on behalf of such Holder. In the event that a Holder of Treasury
Units so elects, such Holder may Transfer Senior Notes or the appropriate
Applicable Ownership Interest of the Treasury Portfolio to the Collateral Agent
for the benefit of the Company as provided in Section 4.2 hereof in exchange for
the release by the Collateral Agent on behalf of the Company of Treasury
Securities with an aggregate principal amount at maturity equal to the aggregate
principal amount of the Senior Notes or the appropriate Applicable Ownership
Interest (as specified in clause (A) of the definition of such term) of the
Treasury Portfolio so transferred to the Purchase Contract Agent on behalf of
such Holder. Treasury Securities and the appropriate Applicable Ownership
Interest of the Treasury Portfolio, as applicable, shall be Transferred to the
Collateral Account maintained by the Collateral Agent at the Securities
Intermediary by book-entry transfer to the Collateral Account in accordance with
the TRADES Regulations and other applicable law and by the notation by the
Securities Intermediary on its books that a Security Entitlement with respect to
such Treasury Securities or appropriate Applicable Ownership Interest of the
Treasury Portfolio, has been credited to the Collateral Account.
(b) For purposes of perfecting the Pledge under applicable law,
including, to the extent applicable, the TRADES Regulations or the Uniform
Commercial Code as adopted and in effect in any applicable jurisdiction, the
Collateral Agent shall be the agent of the
6
Company as provided herein. The pledge provided in this Section 2.1 is herein
referred to as the "Pledge" and the Senior Notes or Treasury Securities subject
to the Pledge, excluding any Senior Notes that are delivered pursuant to Section
6.2 hereof or Senior Notes or Treasury Securities released from the Pledge as
provided in Article IV hereof, are hereinafter referred to as "Pledged Senior
Notes" or the "Pledged Treasury Securities," respectively. Subject to the Pledge
and the provisions of Section 2.2 hereof, the Holders from time to time shall
have full beneficial ownership of the Collateral. Whenever directed by the
Collateral Agent acting on behalf of the Company, the Securities Intermediary
shall have the right to reregister the Senior Notes or any other securities held
in physical form in its name.
Except as may be required in order to release Senior Notes in
connection with a Holder's election to convert its investment from a Corporate
Unit to a Treasury Unit, or except as otherwise required to release Senior Notes
as specified herein, neither the Collateral Agent nor the Securities
Intermediary shall relinquish physical possession of any certificate evidencing
a Senior Note prior to the termination of this Agreement, except Senior Notes
may be held in any clearing corporation in an account including only assets of
customers of the Collateral Agent or Securities Intermediary. If it becomes
necessary for the Securities Intermediary to relinquish physical possession of a
certificate in order to release a portion of the Senior Notes evidenced thereby
from the Pledge, the Securities Intermediary shall use its best efforts to
obtain physical possession of a replacement certificate evidencing any Senior
Notes remaining subject to the Pledge hereunder registered to it or indorsed in
blank (or accompanied by a stock or bond power indorsed in blank) within fifteen
days of the date it relinquished possession. The Securities Intermediary shall
promptly notify the Company and the Collateral Agent of the Securities
Intermediary's failure to obtain possession of any such replacement certificate
as required hereby.
SECTION 2.2. Control and Perfection. (a) In connection with the
----------------------
Pledge granted in Section 2.1, and subject to the other provisions of this
Agreement, the Holders from time to time acting through the Purchase Contract
Agent, as their attorney-in-fact, and the Purchase Contract Agent each hereby
authorize and direct the Securities Intermediary (without the necessity of
obtaining the further consent of the Purchase Contract Agent or any of the
Holders), and the Securities Intermediary agrees, to comply with and follow any
instructions and entitlement orders (as defined in Section 8-102(a)(8) of the
Code) that the Collateral Agent on behalf of the Company may give in writing
with respect to the Collateral Account, the Collateral credited thereto and any
Security Entitlements with respect to any thereof. Such instructions and
entitlement orders may, without limitation, direct the Securities Intermediary
to transfer, redeem, sell, liquidate, assign, deliver or otherwise dispose of
the Senior Notes, the Treasury Securities, the Treasury Portfolio, and any
Security Entitlements with respect thereto and to pay and deliver any income,
proceeds or other funds derived therefrom to the Company. The Holders from time
to time acting through the Purchase Contract Agent hereby further authorize and
direct the Collateral Agent, as agent of the Company, to itself issue
instructions and entitlement orders, and to otherwise take action, with respect
to the Collateral Account, the Collateral credited thereto and any security
entitlements with respect thereto, pursuant to the terms and provisions hereof,
all without the necessity of obtaining the further consent of the Purchase
Contract Agent or any of the Holders. The Collateral Agent shall be the agent of
the Company and shall act as directed in writing by the Company. Without
limiting the generality of the foregoing, the Collateral Agent
7
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 Senior Notes, the Treasury Portfolio or Treasury Securities) will be
promptly credited to the Collateral Account; (iii) the Collateral Account is an
account to which financial assets are or may be credited, and the Securities
Intermediary shall, subject to the terms of this Agreement, treat the Purchase
Contract Agent as entitled to exercise the rights of any financial asset
credited to the Collateral Account; (iv) the Securities Intermediary has not
entered into, and until the termination of this Agreement will not enter into,
any agreement with any other person relating to the Collateral Account and/or
any financial assets credited thereto pursuant to which it has agreed to comply
with entitlement orders (as defined in Section 8-102(a)(8) of the Code) of such
other person; and (v) the Securities Intermediary has not entered into, and
until the termination of this Agreement will not enter into, any agreement with
the Company, the Collateral Agent or the Purchase Contract Agent purporting to
limit or condition the obligation of the Securities Intermediary to comply with
entitlement orders as set forth in this Section 2.2 hereof.
(c) The Securities Intermediary hereby agrees that each item of property
(whether investment property, financial asset, security, instrument or cash)
credited to the Collateral Account shall be treated as a "financial asset"
within the meaning of Section 8-102(a)(9) of the Code.
(d) In the event of any conflict between this Agreement (or any portion
thereof) and any other agreement now existing or hereafter entered into, the
terms of this Agreement shall prevail.
(e) The Purchase Contract Agent hereby irrevocably constitutes and appoints
the Collateral Agent and the Company, with full power of substitution, as the
Purchase Contract Agent's attorneys-in-fact to take on behalf of, and in the
name, place and stead of, the Purchase Contract Agent and the Holders, any
action necessary or desirable to perfect and to keep perfected the security
interest in the Collateral referred to in Section 2.1. The grant of such
power-of-attorney shall not be deemed to require of the Collateral Agent any
specific duties or obligations not otherwise assumed by the Collateral Agent
hereunder.
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ARTICLE III
DISTRIBUTIONS ON PLEDGED COLLATERAL
So long as the Purchase Contract Agent is the registered owner of the
Pledged Senior Notes, it shall receive all payments thereon. If the Pledged
Senior Notes are reregistered, such that the Collateral Agent becomes the
registered holder, all payments of principal on the Pledged Senior Notes or, if
applicable, the appropriate Applicable Ownership Interest (as specified in
clause (A) of the definition of such term) of the Treasury Portfolio, or
interest payments on the Pledged Senior Notes or on the appropriate Applicable
Ownership Interest (as specified in clause (B) of the definition of such term)
of the Treasury Portfolio, as the case may be, and all payments of the principal
of, or cash distributions on, any Pledged Treasury Securities received by the
Collateral Agent that are properly payable hereunder shall be paid by the
Collateral Agent by wire transfer in same day funds:
(i) in the case of (A) interest payments with respect to the Pledged
Senior Notes or the appropriate Applicable Ownership Interest (as specified
in clause (B) of the definition of such term) of the Treasury Portfolio, as
the case may be, and (B) any payments of principal or, if applicable, the
appropriate Applicable Ownership Interest (as specified in clause (A) of
the definition of such term) of the Treasury Portfolio with respect to any
Senior Notes or the appropriate Applicable Ownership Interest of the
Treasury Portfolio, as the case may be, that have been released from the
Pledge pursuant to Section 4.1 or 4.3 hereof, to the relevant Holders of
Securities, to the accounts designated by them in writing for such purpose,
no later than 2:00 p.m., New York City time, on the Business Day such
payment is received by the Collateral Agent (provided that in the event
such payment is received by the Collateral Agent on a day that is not a
Business Day or after 12:30 p.m., New York City time, on a Business Day,
then such payment shall be made no later than 10:30 a.m., New York City
time, on the next succeeding Business Day);
(ii) in the case of any principal payments with respect to any
Treasury Securities that have been released from the Pledge pursuant to
Section 4.2 or 4.3 hereof, to the Holders of the Treasury Units, to the
accounts designated by them in writing for such purpose, no later than 2:00
p.m., New York City time, on the Business Day such payment is received by
the Collateral Agent (provided that in the event such payment is received
by the Collateral Agent on a day that is not a Business Day or after 12:30
p.m., New York City time, on a Business Day, then such payment shall be
made no later than 10:30 a.m., New York City time, on the next succeeding
Business Day); and
(iii) in the case of payments of the Proceeds of any Pledged Senior
Notes or the appropriate Applicable Ownership Interest (as specified in
clause (A) of the definition of such term) of the Treasury Portfolio, as
the case may be, or the Proceeds of any Pledged Treasury Securities, to the
Company on the Purchase Contract Settlement Date to the extent of the
Purchase Price in accordance with the procedure set forth in Section 4.6(a)
or 4.6(b) hereof, in full satisfaction of the respective obligations of the
Holders under the related Purchase Contracts and, to
9
the extent such Proceeds exceed the Purchase Price, to the Purchase
Contract Agent for the benefit of the Holders.
All payments received by the Purchase Contract Agent as provided herein shall be
applied by the Purchase Contract Agent pursuant to the provisions of the
Purchase Contract Agreement. If, notwithstanding the foregoing, the Purchase
Contract Agent shall receive any payments of the principal amount of the Senior
Note or, if applicable, the appropriate Applicable Ownership Interest (as
specified in clause (A) of the definition of such term) on account of any
Pledged Senior Note or the appropriate Applicable Ownership Interest of the
Treasury Portfolio, as applicable, that, at the time of such payment, is subject
to the Pledge, or a Holder of a Treasury Unit shall receive any payments of
principal on account of any Treasury Securities that, at the time of such
payment, are Pledged Treasury Securities, the Purchase Contract Agent or such
Holder shall hold the same as trustee of an express trust for the benefit of the
Company (and promptly deliver the same over to the Company) for application to
the obligations of the Holders under the related Purchase Contracts, and the
Holders shall acquire no right, title or interest in any such payments of
principal so received.
ARTICLE IV
SUBSTITUTION, RELEASE, REPLEDGE AND
SETTLEMENT OF SENIOR NOTES
SECTION 4.1. Substitution for Senior Notes and the Creation of Treasury
----------------------------------------------------------
Units. At any time on or prior to the fifth Business Day immediately preceding
- -----
the Purchase Contract Settlement Date (or on or prior to the second Business Day
immediately preceding the Purchase Contract Settlement Date, if a Tax Event
Redemption or a Successful Initial Remarketing, Successful Second Remarketing or
Successful Third Remarketing has occurred), a Holder of Corporate Units shall
have the right to substitute Treasury Securities for the Pledged Senior Notes
(or, if a Tax Event Redemption or a Successful Initial Remarketing, Successful
Second Remarketing or Successful Third Remarketing has occurred, for the
appropriate Applicable Ownership Interest in the Treasury Portfolio) securing
such Holder's obligations under the Purchase Contract(s) comprising a part of
its Corporate Units in integral multiples of 40 Corporate Units by (a)
Transferring to the Collateral Agent Treasury Securities having a Value equal to
the aggregate principal amount of the Pledged Senior Notes (or appropriate
Applicable Ownership Interest (as defined in clause (A) of the definition of
such term) in the Treasury Portfolio as the case may be), to be released and
transferring the related Corporate Units to the Purchase Contract Agent,
accompanied by a notice, substantially in the form of Exhibit B hereto, to the
Purchase Contract Agent stating that such Holder has Transferred the relevant
Treasury Securities to the Collateral Agent pursuant to clause (a) above
(stating the Value of the Treasury Securities Transferred by such Holder) and
requesting that the Purchase Contract Agent instruct the Collateral Agent to
release from the Pledge the Pledged Senior Notes or the appropriate Applicable
Ownership Interest of the Treasury Portfolio, as the case may be, related to
such Corporate Units. The Purchase Contract Agent shall instruct the Collateral
Agent in the form provided in Exhibit A; provided, however, that if a Tax Event
Redemption or a Successful Initial Remarketing, Successful Second Remarketing or
Successful Third Remarketing has occurred and the Treasury Portfolio has become
a component of the Corporate Units, Holders of Corporate Units may make such
substitution only in integral multiples of 100,000 Corporate Units at any time
on or prior to the second Business Day immediately preceding the Purchase
10
Contract Settlement Date. Upon receipt of Treasury Securities from a Holder of
Corporate Units and the related instruction from the Purchase Contract Agent,
the Collateral Agent shall release the Pledged Senior Notes or the appropriate
Applicable Ownership Interest of the Treasury Portfolio, as the case may be, and
shall promptly Transfer to the securities account specified by the Purchase
Contract Agent such Pledged Senior Notes or the appropriate Applicable Ownership
Interest of the Treasury Portfolio, as the case may be, free and clear of any
lien, pledge or security interest created hereby. All items Transferred and/or
substituted by any Holder pursuant to this Section 4.1, Section 4.2 or any other
Section of this Agreement shall be Transferred and/or substituted free and clear
of all liens, claims and encumbrances.
SECTION 4.2. Substitution of Treasury Securities and the Recreation of
---------------------------------------------------------
Corporate Units. At any time on or prior to the fifth Business Day immediately
- ---------------
preceding the Purchase Contract Settlement Date (or on or prior to the second
Business Day immediately preceding the Purchase Contract Settlement Date if a
Tax Event Redemption or a Successful Initial Remarketing, Successful Second
Remarketing or Successful Third Remarketing has occurred), a Holder of Treasury
Units shall have the right to recreate Corporate Units in integral multiples of
40 Corporate Units by (a) Transferring to the Collateral Agent Senior Notes
having a Value equal to the Value of the Pledged Treasury Securities to be
released (or the appropriate Applicable Ownership Interest of the Treasury
Portfolio with the Applicable Ownership Interest (as defined in clause (A) of
the definition of such term) having Value equal to the Value of the Pledged
Treasury Securities to be released) and (b) delivering the related Treasury
Units to the Purchase Contract Agent, accompanied by a notice, substantially in
the form of Exhibit B hereto, to the Purchase Contract Agent stating that such
Holder has transferred the relevant amount of Senior Notes (or the appropriate
Applicable Ownership Interest of the Treasury Portfolio, as the case may be) to
the Collateral Agent pursuant to clause (a) above and requesting that the
Purchase Contract Agent instruct the Collateral Agent to release from the Pledge
the Pledged Treasury Securities underlying such Treasury Units. The Purchase
Contract Agent shall instruct the Collateral Agent in the form provided in
Exhibit A; provided, however, that if a Tax Event Redemption or a Successful
Initial Remarketing, Successful Second Remarketing or Successful Third
Remarketing has occurred and the Treasury Portfolio has become a component of
the Corporate Units, Holders of Treasury Units may make such substitution only
in integral multiples of 100,000 Treasury Units, at any time on or prior to the
second Business Day immediately preceding the Purchase Contract Settlement Date.
Upon receipt of the Senior Notes or the appropriate Applicable Ownership
Interest of the Treasury Portfolio, as the case may be, from such Holder and the
instruction from the Purchase Contract Agent, the Collateral Agent shall release
the Treasury Securities having a corresponding aggregate principal amount from
the Pledge and shall promptly Transfer such Treasury Securities, free and clear
of any lien, pledge or security interest created hereby, to the Purchase
Contract Agent.
SECTION 4.3. Termination Event. Upon receipt by the Collateral Agent of
-----------------
written notice from the Company or the Purchase Contract Agent that there has
occurred a Termination Event, the Collateral Agent shall release all Collateral
from the Pledge and shall promptly Transfer any Pledged Senior Notes (or the
Applicable Ownership Interest of the Treasury Portfolio if a Tax Event
Redemption or a Successful Initial Remarketing, Successful Second Remarketing or
Successful Third Remarketing has occurred) and Pledged Treasury Securities to
the Purchase Contract Agent for the benefit of the Holders of the Corporate
Units
11
and the Treasury Units, respectively, free and clear of any lien, pledge or
security interest or other interest created hereby.
If such Termination Event shall result from the Company's becoming a debtor
under the Bankruptcy Code, and if the Collateral Agent shall for any reason fail
promptly to effectuate the release and Transfer of all Pledged Senior Notes, the
Treasury Portfolio or of the Pledged Treasury Securities, as the case may be, as
provided by this Section 4.3, the Purchase Contract Agent shall (i) use
reasonable efforts to obtain an opinion of a nationally recognized law firm
reasonably acceptable to the Collateral Agent to the effect that, as a result of
the Company's being the debtor in such a bankruptcy case, the Collateral Agent
will not be prohibited from releasing or Transferring the Collateral as provided
in this Section 4.3, and shall deliver such opinion to the Collateral Agent
within ten days after the occurrence of such Termination Event, and if (y) the
Purchase Contract Agent shall be unable to obtain such opinion within ten days
after the occurrence of such Termination Event or (z) the Collateral Agent shall
continue, after delivery of such opinion, to refuse to effectuate the release
and Transfer of all Pledged Senior Notes, the Treasury Portfolio or the Pledged
Treasury Securities, as the case may be, as provided in this Section 4.3, then
the Purchase Contract Agent shall within fifteen days after the occurrence of
such Termination Event commence an action or proceeding in the court with
jurisdiction of the Company's case under the Bankruptcy Code seeking an order
requiring the Collateral Agent to effectuate the release and transfer of all
Pledged Senior Notes, the Treasury Portfolio or of the Pledged Treasury
Securities, as the case may be, as provided by this Section 4.3 or (ii) commence
an action or proceeding like that described in subsection (i)(z) hereof within
ten days after the occurrence of such Termination Event.
SECTION 4.4. Cash Settlement. (a) Upon receipt by the Collateral Agent of
---------------
(i) a notice from the Purchase Contract Agent promptly after the receipt by the
Purchase Contract Agent of such notice that a Holder of a Corporate Unit has
elected, in accordance with the procedures specified in Section 5.4(a)(i) of the
Purchase Contract Agreement to settle its Purchase Contract with Cash and (ii)
payment of the amount required to settle such Purchase Contract by such Holder
on or prior to 11:00 a.m., New York City time, on the fourth Business Day
immediately preceding the Purchase Contract Settlement Date in lawful money of
the United States by certified or cashiers' check or wire transfer in
immediately available funds payable to or upon the order of the Company, then
the Collateral Agent shall, at the written direction of the Company, promptly
invest any Cash received from a Holder in connection with a Cash Settlement in
Permitted Investments. Upon receipt of the proceeds upon the maturity of the
Permitted Investments on the Purchase Contract Settlement Date, the Collateral
Agent shall pay the portion of such proceeds and deliver any certified or
cashiers' checks received and any funds so wired, in an aggregate amount equal
to the Purchase Price, to the Company on the Purchase Contract Settlement Date,
and shall distribute any funds in respect of the interest earned from the
Permitted Investments to the Purchase Contract Agent for payment to the relevant
Holders.
(b) If a Holder of a Corporate Unit (unless a Tax Event Redemption or a
Successful Initial Remarketing, Successful Second Remarketing or Successful
Third Remarketing has occurred) fails to notify the Purchase Contract Agent of
its intention to make a Cash Settlement in accordance with Section 5.4(a)(i) of
the Purchase Contract Agreement, such failure shall constitute an event of
default under the Purchase Contract Agreement and hereunder, and the Holder
shall be deemed to have consented to the disposition of the Pledged
12
Senior Notes pursuant to the remarketing as described in Section 5.4(b) of
the Purchase Contract Agreement, which is incorporated herein by reference. If a
Holder of a Corporate Unit does notify the Purchase Contract Agent as provided
in Section 5.4(a)(i) of the Purchase Contract Agreement of its intention to pay
the Purchase Price in cash, but fails to make such payment on the fourth
Business Day immediately preceding the Purchase Contract Settlement Date, as
required by Section 5.4(a)(ii) of the Purchase Contract Agreement, the Pledged
Senior Notes of such a Holder shall be remarketed in accordance with Section
5.4(b) of the Purchase Contract Agreement. In addition, in the event of a Failed
Final Remarketing as described in Section 5.4(b) of the Purchase Contract
Agreement, such Failed Final Remarketing shall constitute an additional event of
default hereunder by such Holder, and the Collateral Agent, for the benefit of
the Company, will also exercise its rights as a secured party with respect to
such Pledged Senior Notes at the direction of the Company to retain or dispose
of the Collateral in accordance with applicable law.
SECTION 4.5. Early Settlement. Upon written notice to the Collateral Agent
----------------
by the Purchase Contract Agent that one or more Holders of Securities have
elected to effect Early Settlement of their respective obligations under the
Purchase Contracts forming a part of such Securities in accordance with the
terms of the Purchase Contracts and the Purchase Contract Agreement (setting
forth the number of such Purchase Contracts as to which such Holders have
elected to effect Early Settlement), and that the Purchase Contract Agent has
received from such Holders, and paid to the Company as confirmed in writing by
the Company, the related Early Settlement Amounts pursuant to the terms of the
Purchase Contracts and the Purchase Contract Agreement and that all conditions
to such Early Settlement have been satisfied, then the Collateral Agent shall
release from the Pledge, (a) Pledged Senior Notes or the appropriate Applicable
Ownership Interest of the Treasury Portfolio in the case of a Holder of
Corporate Units or (b) Pledged Treasury Securities in the case of a Holder of
Treasury Units, as the case may be, in each case with an aggregate principal
amount, as the case may be, equal to the product of (i) the Stated Amount times
(ii) the number of such Purchase Contracts as to which such Holders have elected
to effect Early Settlement and shall Transfer all such Pledged Senior Notes, the
appropriate Applicable Ownership Interest of the Treasury Portfolio or the
Pledged Treasury Securities, as the case maybe, free and clear of the Pledge
created hereby, to the Purchase Contract Agent for the benefit of such Holders.
SECTION 4.6. Application of Proceeds, Settlement. (a) In the event a Holder
-----------------------------------
of Corporate Units (unless a Tax Event Redemption or a Successful Initial
Remarketing, Successful Second Remarketing or Successful Third Remarketing has
occurred) has not elected to make an effective Cash Settlement by notifying the
Purchase Contract Agent (with a copy to the Collateral Agent) in the manner
provided for in paragraph 5.4(a)(i) in the Purchase Contract Agreement (or has
elected to make a Cash Settlement but has not paid the Purchase Price in the
manner required by Section 5.4(a)(ii) of the Purchase Contract Agreement) and
has not made an Early Settlement of the Purchase Contracts underlying its
Corporate Units, such Holder shall be deemed to have irrevocably elected to pay
for the shares of Common Stock to be issued under such Purchase Contracts from
the Proceeds of the related Pledged Senior Notes. The Collateral Agent shall, by
11:00 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 Corporate Units, present the related Pledged Senior Notes to the Remarketing
Agent for remarketing. Upon receiving such Pledged Senior Notes, the Remarketing
Agent, pursuant to the
13
terms of the Remarketing Agreement and the Supplemental Remarketing Agreement,
will use its reasonable efforts to remarket such Pledged Senior Notes on the
Final Remarketing Date at a price of approximately 100.5% (but not less than
100%) of the aggregate Value of such Pledged Senior Notes. After deducting as
the Remarketing Fee an amount not exceeding 25 basis points (.25%) of the
aggregate Value of the remarketed Pledged Senior Notes from any amount of such
Proceeds in excess of the aggregate Value of the remarketed Pledged Senior
Notes, the Remarketing Agent will remit the entire amount of the Proceeds of
such remarketing to the Collateral Agent. On the Purchase Contract Settlement
Date, the Collateral Agent shall apply that portion of the Proceeds from such
remarketing equal to the aggregate Value of such remarketed Pledged Senior Notes
to satisfy in full the obligations of such Holders of Corporate Units to pay the
Purchase Price to purchase the Common Stock under the related Purchase
Contracts. The remaining portion of such Proceeds, if any, shall be remitted by
the Collateral Agent to the Purchase Contract Agent for payment to the Holders.
If the Remarketing Agent advises the Collateral Agent in writing that it cannot
remarket the related Pledged Senior Notes of such Holders of Corporate Units at
a price not less than 100% of the aggregate Value of such Pledged Senior Notes
or if the remarketing shall not have occurred because a condition precedent to
the remarketing shall not have been fulfilled, thus resulting in a Failed Final
Remarketing and an event of default under the Purchase Contract Agreement and
hereunder, the Collateral Agent, for the benefit of the Company will, at the
written direction of the Company, retain or dispose of the Pledged Senior Notes
in accordance with applicable law and any such disposition or retention shall be
deemed to be satisfaction in full of any such Holder's obligation to pay the
Purchase Price for the Common Stock.
(b) In the event a Holder of Treasury Units or Corporate Units (if a Tax
Event Redemption or a Successful Initial Remarketing, Successful Second
Remarketing or Successful Third Remarketing has occurred) has not made an Early
Settlement of the Purchase Contracts underlying its Treasury Units or Corporate
Units, such Holder shall be deemed to have elected to pay for the shares of
Common Stock to be issued under such Purchase Contracts from the Proceeds of the
related Pledged Treasury Securities or the appropriate Applicable Ownership
Interest (as defined in clause (A) of the definition of such term) of the
Treasury Portfolio, as the case may be. On the Business Day immediately prior to
the Purchase Contract Settlement Date, the Collateral Agent shall, invest the
Cash proceeds of the maturing Pledged Treasury Securities or the maturing
appropriate Applicable Ownership Interest (as defined in clause (A) of the
definition of such term) of the Treasury Portfolio, as the case may be, in
overnight Permitted Investments of the type specified in clause (v) of the
definition of "Permitted Investments," unless it received other instructions
from the Company prior to 10 a.m. New York City time. The Collateral Agent shall
apply the Proceeds of the related Pledged Treasury Securities or appropriate
Applicable Ownership Interest (as defined in clause (A) of the definition of
such term) of the Treasury Portfolio to the settlement of such Purchase
Contracts on the Purchase Contract Settlement Date, whether or not the
Collateral Agent receives an instruction from any Holder of Treasury Units or
Corporate Units, to so apply such Proceeds.
In the event the sum of the Proceeds from the related Pledged Treasury
Securities or appropriate Applicable Ownership Interest (as defined in clause
(A) of the definition of such term) of the Treasury Portfolio, as the case may
be, and the investment earnings from the investment in overnight Permitted
Investments is in excess of the aggregate Purchase Price of the
14
Purchase Contracts being settled thereby, the Collateral Agent shall remit such
excess, when received, to the Purchase Contract Agent for the benefit of the
Holders.
(c) Pursuant to the Remarketing Agreement and subject to the terms of the
Supplemental Remarketing Agreement, on or prior to the second Business Day
immediately preceding the Initial Remarketing Date, Second Remarketing Date,
Third Remarketing Date or Final Remarketing Date, as applicable, but no earlier
than the Payment Date immediately preceding such date, holders of Separate
Senior Notes may elect to have their Separate Senior Notes remarketed by
delivering their Separate Senior Notes, together with a notice of such election,
substantially in the form of Exhibit C hereto, to the Custodial Agent. The
Custodial Agent shall hold such Separate Senior Notes in an account separate
from the Collateral Account. A holder of Separate Senior Notes electing to have
its Separate Senior Notes remarketed will also have the right to withdraw such
election by written notice to the Custodial Agent, substantially in the form of
Exhibit D hereto, on or prior to the second Business Day immediately preceding
the Initial Remarketing Date, Second Remarketing Date, Third Remarketing Date or
Final Remarketing Date, as the case may be, upon which notice the Custodial
Agent shall return such Separate Senior Notes to such holder. On the Business
Day immediately preceding the Initial Remarketing Date, Second Remarketing Date,
Third Remarketing Date or Final Remarketing Date, as the case may be, the
Custodial Agent shall notify the Remarketing Agent, the Company and Duke Capital
of the aggregate principal amount of the separate Senior Notes to be remarketed
and will deliver to the Remarketing Agent for remarketing all Separate Senior
Notes delivered to the Custodial Agent pursuant to this Section 4.6(c) and not
withdrawn pursuant to the terms hereof prior to such date. After deducting the
Remarketing Fee to the extent permitted under the terms of the Remarketing
Agreement, the Remarketing Agent will remit to the Custodial Agent the remaining
portion of the proceeds for the benefit of such holders. In the event of a
Failed Initial Remarketing, Failed Second Remarketing, Failed Third Remarketing
or Failed Final Remarketing, as the case may be, the Remarketing Agent will
promptly return such Separate Senior Notes to the Custodial Agent for redelivery
to such holders.
The Purchase Contract Agent, on behalf of itself and the Holders
acknowledges and irrevocably agrees that any remarketing of the Senior Notes on
the Initial Remarketing Date, Second Remarketing Date, Third Remarketing Date or
Final Remarketing Date shall not constitute a foreclosure of the Pledge of or
other exercise of default remedies with respect to the Senior Notes within the
meaning of the Code, but rather shall constitute a voluntary sale of the Senior
Notes by and on behalf of the Holders and the Purchase Contract Agent.
ARTICLE V
VOTING RIGHTS - SENIOR NOTES
SECTION 5.1. Voting Rights - Senior Notes. The Purchase Contract Agent may
----------------------------
exercise, or refrain from exercising, any and all voting and other consensual
rights pertaining to the Pledged Senior Notes or any part thereof for any
purpose not inconsistent with the terms of this Agreement and in accordance with
the terms of the Purchase Contract Agreement; provided, that the Purchase
Contract Agent shall not exercise or, as the case may be, shall not refrain from
exercising such right if, in the judgment of the Company, such action would
impair or otherwise have a material adverse effect on the value of all or any of
the Pledged Senior Notes; and
15
provided, further, that the Purchase Contract Agent shall give the Company and
the Collateral Agent at least five days' prior written notice of the manner in
which it intends to exercise, or its reasons for refraining from exercising, any
such right. Upon receipt of any notices and other communications in respect of
any Pledged Senior Notes, including notice of any meeting at which holders of
Senior Notes are entitled to vote or solicitation of consents, waivers or
proxies of holders of Senior Notes, the Collateral Agent shall use reasonable
efforts to send promptly to the Purchase Contract Agent such notice or
communication, and as soon as reasonably practicable after receipt of a written
request therefor from the Purchase Contract Agent, execute and deliver to the
Purchase Contract Agent such proxies and other instruments in respect of such
Pledged Senior Notes (in form and substance satisfactory to the Collateral
Agent) as are prepared by the Purchase Contract Agent with respect to the
Pledged Senior Notes.
ARTICLE VI
RIGHTS AND REMEDIES; TAX EVENT REDEMPTION
SECTION 6.1. Rights and Remedies of the Collateral Agent. (a) In addition
-------------------------------------------
to the rights and remedies specified in Section 4.4 hereof or otherwise
available at law or in equity, after an event of default hereunder, the
Collateral Agent shall have all of the rights and remedies with respect to the
Collateral of a secured party under the Uniform Commercial Code (or any
successor thereto) as in effect in the State of New York from time to time (the
"Code") (whether or not, to the extent permitted by law, the Code is in effect
in the jurisdiction where the rights and remedies are asserted) and the TRADES
Regulations and such additional rights and remedies to which a secured party is
entitled under the laws in effect in any jurisdiction where any rights and
remedies hereunder may be asserted. Wherever reference is made in this Agreement
to any section of the Code, such reference shall be deemed to include a
reference to any provision of the Code that is a successor to, or amendment of,
such section. Without limiting the generality of the foregoing, such remedies
may include, to the extent permitted by applicable law, (i) cancellation or
retention of the Pledged Senior Notes or other Collateral in full satisfaction
of the Holders' obligations under their respective Purchase Contracts or (ii)
sale of the Pledged Senior Notes or other Collateral in one or more public or
private sales.
(b) Without limiting any rights or powers otherwise granted by this
Agreement to the Collateral Agent, in the event the Collateral Agent is unable
to make payments to the Company on account of the appropriate Applicable
Ownership Interest (as specified in clause (A) of the definition of such term)
of the Treasury Portfolio or on account of principal payments of any Pledged
Treasury Securities as provided in Article 3 hereof in satisfaction of the
obligations of the Holder of the Securities of which such Pledged Treasury
Securities, or the appropriate Applicable Ownership Interest (as specified in
clause (A) of the definition of such term) of the Treasury Portfolio, as
applicable, is a part under the related Purchase Contracts, the inability to
make such payments shall constitute an event of default hereunder and the
Collateral Agent shall have and may exercise, with reference to such Pledged
Treasury Securities, or such appropriate Applicable Ownership Interest (as
specified in clause (A) of the definition of such term) of the Treasury
Portfolio, as applicable, and such obligations of such Holder, any and all of
the rights and remedies available to a secured party under the Code and the
TRADES Regulations after default by a debtor, and as otherwise granted herein or
under any other law.
16
(c) Without limiting any rights or powers otherwise granted by this
Agreement to the Collateral Agent, the Collateral Agent is hereby irrevocably
authorized to receive and collect all payments of (i) principal and interest on
the Pledged Senior Notes, (ii) the principal amount of the Pledged Treasury
Securities, or (iii) the appropriate Applicable Ownership Interest of the
Treasury Portfolio, subject, in each case, to the provisions of Article 3, and
as otherwise granted herein.
(d) The Purchase Contract Agent, individually and as attorney-in-fact for
each Holder of Securities, agrees that, from time to time, upon the written
request of the Collateral Agent, the Purchase Contract Agent or such Holder
shall execute and deliver such further documents and do such other acts and
things as the Collateral Agent may reasonably request in order to maintain the
Pledge, and the perfection and priority thereof, and to confirm the rights of
the Collateral Agent hereunder. The Purchase Contract Agent shall have no
liability to any Holder for executing any documents or taking any such acts
requested by the Collateral Agent hereunder, except for liability for its own
negligent act, its own negligent failure to act or its own willful misconduct.
SECTION 6.2. Tax Event Redemption. Upon the occurrence of a Tax Event
--------------------
Redemption prior to a Successful Initial Remarketing, Successful Second
Remarketing or Successful Third Remarketing or prior to the Purchase Contract
Settlement Date, the aggregate Redemption Price payable on the Tax Event
Redemption Date with respect to the Pledged Senior Notes shall be delivered to
the Collateral Agent by the Senior Note Trustee on or prior to 12:00 p.m., New
York City time, by check or wire transfer in immediately available funds at such
place and at such account as may be designated by the Collateral Agent in
exchange for the Pledged Senior Notes. In the event the Collateral Agent
receives such Redemption Price, the Collateral Agent will, at the written
direction of the Company, apply an amount, out of such Redemption Price, equal
to the aggregate Redemption Amount with respect to the Pledged Senior Notes to
purchase from the Quotation Agent the Treasury Portfolio and promptly remit the
remaining portion of such Redemption Price to the Purchase Contract Agent for
payment to the Holders of Corporate Units. The Collateral Agent shall Transfer
the Treasury Portfolio to the Collateral Account to secure the obligation of all
Holders of Corporate Units to purchase Common Stock of the Company under the
Purchase Contracts constituting a part of such Corporate Units, in substitution
for the Pledged Senior Notes. Thereafter the Collateral Agent shall have such
security interests, rights and obligations with respect to the Treasury
Portfolio as it had in respect of the Pledged Senior Notes as provided in
Articles 2, 3, 4, 5 and 6, and any reference herein to the Senior Notes shall be
deemed to be reference to such Treasury Portfolio, and any reference herein to
interest on the Senior Notes shall be deemed to be a reference to distributions
on such Treasury Portfolio.
SECTION 6.3. Initial, Second and Third Remarketing. The Collateral Agent
-------------------------------------
shall, by 11:00 a.m., New York City time, on the fourth Business Day immediately
preceding August 16, 2004, September 16, 2004 or October 16, 2004, as
applicable, without any instruction from any Holder of Corporate Units, present
the related Pledged Senior Notes to the Remarketing Agent for remarketing. Upon
receiving such Pledged Senior Notes, the Remarketing Agent, pursuant to the
terms of the Remarketing Agreement and the Supplemental Remarketing Agreement,
will use its reasonable efforts to remarket such Pledged Senior Notes on the
Initial Remarketing Date, Second Remarketing Date or Third Remarketing Date, as
applicable, at a price of approximately 100.5% (but not less than 100%) of the
Treasury Portfolio Purchase Price. After deducting as the Remarketing Fee an
amount not exceeding 25 basis points (.25%) of the Treasury Portfolio Purchase
Price from any amount of such Proceeds in excess of the Treasury Portfolio
Purchase Price, the Remarketing Agent will remit the entire amount of the
Proceeds of such remarketing to the Collateral Agent on or prior to 12:00 p.m.,
New York City time, by check or wire transfer in immediately available funds at
such place and at such account as may be designated by the Collateral Agent in
exchange for the Pledged Senior Notes. In the event the Collateral Agent
receives such Proceeds, the Collateral Agent will, at the written direction of
the Company, apply an amount equal to the Treasury Portfolio Purchase Price to
purchase from the Quotation Agent the Treasury Portfolio and promptly remit the
remaining portion of such Proceeds to the Purchase Contract Agent for payment to
the Holders of Corporate Units. The Collateral Agent shall Transfer the Treasury
Portfolio to the Collateral Account to secure the obligation of all Holders of
Corporate Units to purchase Common Stock of the Company under the Purchase
Contracts constituting a part of such Corporate Units, in substitution for the
Pledged Senior Notes. Thereafter the Collateral Agent shall have such security
interests, rights and obligations with respect to the Treasury Portfolio as it
had in respect of the Pledged Senior Notes as provided in Articles 2, 3, 4, 5
and 6, and any reference herein to the Senior Notes shall be deemed to be
reference to such Treasury Portfolio, and any reference herein to interest on
the Senior Notes shall be deemed to be a reference to distributions on such
Treasury Portfolio.
SECTION 6.4. Substitutions. Whenever a Holder has the right to substitute
-------------
Treasury Securities, Senior Notes or the appropriate Applicable Ownership
Interest of the Treasury Portfolio, as the case may be, for Collateral held by
the Collateral Agent, such substitution shall not constitute a novation of the
security interest created hereby.
ARTICLE VII
REPRESENTATIONS AND WARRANTIES; COVENANTS
SECTION 7.1. Representations and Warranties. The Holders from time to time,
------------------------------
acting through the Purchase Contract Agent as their attorney-in-fact (it being
understood that the Purchase Contract Agent shall not be liable for any
representation or warranty made by or on behalf of a Holder), hereby represent
and warrant to the Collateral Agent, which representations and warranties shall
be deemed repeated on each day a Holder Transfers Collateral that:
(a) such Holder has the power to grant a security interest in and lien on
the Collateral;
(b) such Holder is the sole beneficial owner of the Collateral and, in the
case of Collateral delivered in physical form, is the sole holder of such
Collateral and is the sole beneficial owner of, or has the right to Transfer,
the Collateral it Transfers to the Collateral Agent, free and clear of any
security interest, lien, encumbrance, call, liability to pay money or other
restriction other than the security interest and lien granted under Article 2
hereof;
(c) upon the Transfer of the Collateral to the Collateral Account, the
Collateral Agent, for the benefit of the Company, will have a valid and
perfected first priority security interest therein; and
18
(d) the execution and performance by the Holder of its obligations under
this Agreement will not result in the creation of any security interest, lien or
other encumbrance on the Collateral other than the security interest and lien
granted under Article 2 hereof or violate any provision of any existing law or
regulation applicable to it or of any mortgage, charge, pledge, indenture,
contract or undertaking to which it is a party or which is binding on it or any
of its assets.
SECTION 7.2. Covenants. The Holders from time to time, acting through the
---------
Purchase Contract Agent as their attorney-in-fact (it being understood that the
Purchase Contract Agent shall not be liable for any covenant made by or on
behalf of a Holder), hereby covenant to the Collateral Agent that for so long as
the Collateral remains subject to the Pledge:
(a) neither the Purchase Contract Agent nor such Holders will create or
purport to create or allow to subsist any mortgage, charge, lien, pledge or any
other security interest whatsoever over the Collateral or any part of it other
than pursuant to this Agreement; and
(b) neither the Purchase Contract Agent nor such Holders will sell or
otherwise dispose (or attempt to dispose) of the Collateral or any part of it
except for the beneficial interest therein, subject to the pledge hereunder,
transferred in connection with the Transfer of the Securities.
ARTICLE VIII
THE COLLATERAL AGENT
It is hereby agreed as follows:
SECTION 8.1. Appointment, Powers and Immunities. The Collateral Agent shall
----------------------------------
act as agent for the Company hereunder with such powers as are specifically
vested in the Collateral Agent by the terms of this Agreement, together with
such other powers as are reasonably incidental thereto. Each of the Collateral
Agent, the Custodial Agent and the Securities Intermediary: (a) shall have no
duties or responsibilities except those expressly set forth in this Agreement
and no implied covenants or obligations shall be inferred from this Agreement
against any of them, nor shall any of them be bound by the provisions of any
agreement beyond the specific terms hereof, (b) shall not be responsible for any
recitals contained in this Agreement, or in any certificate or other document
referred to or provided for in, or received by it under, this Agreement, the
Securities or the Purchase Contract Agreement, or for the value, validity,
effectiveness, genuineness, enforceability or sufficiency of this Agreement
(other than as against the Collateral Agent), the Securities or the Purchase
Contract Agreement or any other document referred to or provided for herein or
therein or for any failure by the Company or any other Person (except the
Collateral Agent, the Custodial Agent or the Securities Intermediary, as the
case may be) to perform any of its obligations hereunder or thereunder or for
the perfection, priority or, except as expressly required hereby, maintenance of
any security interest created hereunder; (c) shall not be required to initiate
or conduct any litigation or collection proceedings hereunder (except in the
case of the Collateral Agent, pursuant to directions furnished under Section 8.2
hereof, subject to Section 8.6 hereof); (d) shall not be responsible for any
action taken or omitted to be taken by it hereunder or under any other
19
document or instrument referred to or provided for herein or in connection
herewith or therewith, except for its own negligence, bad faith or willful
misconduct; (e) shall not be required to advise any party as to selling or
retaining, or taking or refraining from taking any action with respect to, the
Securities or other property deposited hereunder; and (f) shall not be
responsible for the acts or omissions of any clearing corporation with whom
collateral is deposited. Subject to the foregoing, during the term of this
Agreement, the Collateral Agent shall take all reasonable action in connection
with the safekeeping and preservation of the Collateral hereunder.
No provision of this Agreement shall require the Collateral Agent, the
Custodial Agent or the Securities Intermediary to expend or risk its own funds
or otherwise incur any financial liability in the performance of any of its
duties hereunder. In no event shall the Collateral Agent, the Custodial Agent or
the Securities Intermediary be liable for any amount in excess of the Value of
the Collateral. Notwithstanding the foregoing, the Collateral Agent, the
Custodial Agent, the Purchase Contract Agent and Securities Intermediary, each
in its individual capacity, hereby waive any right of setoff, bankers lien,
liens or perfection rights as securities intermediary or any counterclaim with
respect to any of the Collateral.
SECTION 8.2. Instructions of the Company. The Company shall have the right,
---------------------------
by one or more instruments in writing executed and delivered to the Collateral
Agent, the Custodial Agent or the Securities Intermediary, as the case may be,
to direct the time, method and place of conducting any proceeding for the
realization of any right or remedy available to the Collateral Agent, or of
exercising any power conferred on the Collateral Agent, the Custodial Agent or
the Securities Intermediary, as the case may be, or to direct the taking or
refraining from taking of any action authorized by this Agreement; provided,
however, that (i) such direction shall not conflict with the provisions of any
law or of this Agreement and (ii) the Collateral Agent, the Custodial Agent and
the Securities Intermediary shall be adequately indemnified as provided herein.
Nothing in this Section 8.2 shall impair the right of the Collateral Agent in
its discretion to take any action or omit to take any action which it deems
proper and which is not inconsistent with such direction.
SECTION 8.3. Reliance. Each of the Securities Intermediary, the Custodial
--------
Agent and the Collateral Agent shall be entitled conclusively to rely upon any
certification, order, judgment, opinion, notice or other communication
(including, without limitation, any thereof by telephone, telecopy, telex,
facsimile, e-mail or similar electronic means) believed by it to be genuine and
correct and to have been signed or sent by or on behalf of the proper Person or
Persons (without being required to determine the correctness of any fact stated
therein), and upon the advice of legal counsel and other experts selected by the
Collateral Agent, the Custodial Agent or the Securities Intermediary, as the
case may be. As to any matters not expressly provided for by this Agreement, the
Collateral Agent, the Custodial Agent and the Securities Intermediary shall in
all cases be fully protected in acting, or in refraining from acting, hereunder
in accordance with instructions given by the Company in accordance with this
Agreement.
SECTION 8.4. Rights in other Capacities. The Collateral Agent, the
--------------------------
Custodial Agent and the Securities Intermediary and their affiliates may
(without having to account therefor to the Company) accept deposits from, lend
money to, make their investments in and generally engage in any kind of banking,
trust or other business with the Purchase Contract Agent, any Holder of
Securities and any holder of separate Senior Notes (and any of their
20
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, any Holder of Securities or any holder of separate
Senior Notes without having to account for the same to the Company; provided
that each of the Securities Intermediary, the Custodial Agent and the Collateral
Agent covenants and agrees with the Company that it shall not accept, receive or
permit there to be created in favor of itself and shall take no affirmative
action to permit there to be created in favor of any other Person, any security
interest, lien or other encumbrance of any kind in or upon the Collateral and
the Collateral shall be segregated or the books and records of the Collateral
Agent and not commingled with any other assets of any such Person.
SECTION 8.5. Non-Reliance. None of the Securities Intermediary, the
------------
Custodial Agent or the Collateral Agent shall be required to keep itself
informed as to the performance or observance by the Purchase Contract Agent or
any Holder of Securities of this Agreement, the Purchase Contract Agreement, the
Securities or any other document referred to or provided for herein or therein
or to inspect the properties or books of the Purchase Contract Agent or any
Holder of Securities. The Collateral Agent, the Custodial Agent and the
Securities Intermediary shall not have any duty or responsibility to provide the
Company or the Remarketing Agent with any credit or other information concerning
the affairs, financial condition or business of the Purchase Contract Agent, any
Holder of Securities or any holder of separate Senior Notes (or any of their
respective subsidiaries or affiliates) that may come into the possession of the
Collateral Agent, the Custodial Agent or the Securities Intermediary or any of
their respective affiliates.
SECTION 8.6. Compensation and Indemnity. The Company agrees: (i) to pay
--------------------------
each of the Collateral Agent and the Custodial Agent from time to time such
compensation as shall be agreed in writing between the Company and the
Collateral Agent or the Custodial Agent, as the case may be, for all services
rendered by each of them hereunder and (ii) to indemnify the Collateral Agent,
the Custodial Agent and the Securities Intermediary for, and to hold each of
them harmless from and against, any loss, liability or reasonable expense
incurred without negligence, willful misconduct or bad faith on its part,
arising out of or in connection with the acceptance or administration of its
powers and duties under this Agreement, including the reasonable costs and
expenses (including reasonable fees and expenses of counsel) of defending itself
against any claim or liability in connection with the exercise or performance of
such powers and duties. The Collateral Agent, the Custodial Agent and the
Securities Intermediary shall each promptly notify the Company of any third
party claim which may give rise to the indemnity hereunder and give the Company
the opportunity to participate in the defense of such claim or if the Company so
elects to assume the defense of such claim with counsel reasonably satisfactory
to the indemnified party, and no such claim shall be settled without the written
consent of the Company, which consent shall not be unreasonably withheld.
SECTION 8.7. Failure to Act. In the event of any ambiguity in the
--------------
provisions of this Agreement or any dispute between or conflicting claims by or
among the parties hereto or any other Person with respect to any funds or
property deposited hereunder, the Collateral Agent and the Custodial Agent shall
be entitled, after prompt notice to the Company and the Purchase Contract Agent,
at its sole option, to refuse to comply with any and all claims, demands or
21
instructions with respect to such property or funds so long as such dispute or
conflict shall continue, and neither the Collateral Agent nor the Custodial
Agent shall be or become liable in any way to any of the parties hereto for its
failure or refusal to comply with such conflicting claims, demands or
instructions. The Collateral Agent and the Custodial Agent shall be entitled to
refuse to act until either (i) such conflicting or adverse claims or demands
shall have been finally determined by a court of competent jurisdiction or
settled by agreement between the conflicting parties as evidenced in a writing,
satisfactory to the Collateral Agent or the Custodial Agent, as the case may be,
or (ii) the Collateral Agent or the Custodial Agent, as the case may be, shall
have received security or an indemnity reasonably satisfactory to the Collateral
Agent or the Custodial Agent, as the case maybe, sufficient to save the
Collateral Agent or the Custodial Agent, as the case may be, harmless from and
against any and all loss, liability or reasonable expense which the Collateral
Agent or the Custodial Agent, as the case may be, may incur by reason of its
acting without bad faith, willful misconduct or negligence. The Collateral Agent
or the Custodial Agent may in addition elect to commence an interpleader action
or seek other judicial relief or orders as the Collateral Agent 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 and Removal. Subject to the appointment and
-----------------------
acceptance of a successor Collateral Agent, Custodial Agent or Securities
Intermediary as provided below, (a) the Collateral Agent, the Custodial Agent
and the Securities Intermediary may resign at any time by giving 45 days' prior
notice thereof to the Company and the Purchase Contract Agent as
attorney-in-fact for the Holders of Securities, (b) the Collateral Agent, the
Custodial Agent and the Securities Intermediary may be removed at any time by
the Company and (c) if the Collateral Agent, the Custodial Agent or Securities
Intermediary fails to perform any of its material obligations hereunder in any
material respect for a period of not less than 20 days after receiving written
notice of such failure by the Purchase Contract Agent and such failure shall be
continuing, the Collateral Agent, the Custodial Agent or the Securities
Intermediary may be removed by the Purchase Contract Agent. Any resignation or
removal of the Collateral Agent, the Custodial Agent or the Securities
Intermediary shall become effective only upon acceptance of appointment by its
successor. The Purchase Contract Agent shall promptly notify the Company of any
removal of the Collateral Agent, the Custodial Agent or the Securities
Intermediary pursuant to clause (c) above. Upon any such resignation or removal,
the Company shall have the right and shall exercise commercially reasonable
efforts to appoint a successor Collateral Agent, Custodial Agent or Securities
Intermediary, as the case may be. If no successor Collateral Agent, Custodial
Agent or Securities Intermediary, as the case may be, shall have been so
appointed and shall have accepted such appointment within 45 days after the
retiring Collateral Agent's, Custodial Agent's or Securities Intermediary's
giving of notice of resignation or such removal, then the retiring Collateral
Agent, Custodial Agent or Securities Intermediary, as the case may be, may
petition any court of competent jurisdiction for the appointment of a successor
Collateral Agent, Custodial Agent or Securities Intermediary, as the case may
be. Each of the Collateral Agent, the Custodial Agent and the Securities
Intermediary shall be a bank which has an office in New York, New York with a
combined capital and surplus of at least $75,000,000. Upon the acceptance of any
appointment as Collateral Agent, Custodial Agent or Securities Intermediary, as
the case may be, hereunder by a successor Collateral Agent,
22
Custodial Agent or Securities Intermediary, as the case may be, such successor
shall thereupon succeed to and become vested with all the rights, powers,
privileges and duties of the retiring Collateral Agent, Custodial Agent or
Securities Intermediary, as the case may be, and the retiring Collateral Agent,
Custodial Agent or Securities Intermediary, as the case maybe, shall take all
appropriate action to transfer any money and property held by it hereunder
(including the Collateral) to such successor. The retiring Collateral Agent,
Custodial Agent or Securities Intermediary shall, upon such succession, be
discharged from its duties and obligations as Collateral Agent, Custodial Agent
or Securities Intermediary hereunder. After any retiring Collateral Agent's,
Custodial Agent's or Securities Intermediary's resignation hereunder as
Collateral Agent, Custodial Agent or Securities Intermediary, the provisions of
this Article 8 shall continue in effect for its benefit in respect of any
actions taken or omitted to be taken by it while it was acting as the Collateral
Agent, Custodial Agent or Securities Intermediary. Any resignation or removal of
the Collateral Agent hereunder shall be deemed for all purposes of this
Agreement as the simultaneous resignation or removal of the Custodial Agent and
the Securities Intermediary. The Company shall give the Purchase Contract Agent
prompt notice of the appointment of any successor to the Collateral Agent, the
Custodial Agent or the Securities Intermediary.
SECTION 8.9. Right to Appoint Agent or Advisor. The Collateral Agent shall
---------------------------------
have the right to appoint agents or advisors in connection with any of its
duties hereunder, and the Collateral Agent shall not be liable for any action
taken or omitted by, or in reliance upon the advice of, such agents or advisors
selected in good faith. The appointment of agents pursuant to this Section 8.9
shall be subject to prior consent of the Company, which consent shall not be
unreasonably withheld.
SECTION 8.10. Survival. The provisions of this Article 8 shall survive
--------
termination of this Agreement and the resignation or removal of the Collateral
Agent or the Custodial Agent.
SECTION 8.11. Exculpation. Anything in this Agreement to the contrary
-----------
notwithstanding, in no event shall any of the Collateral Agent, the Custodial
Agent or the Securities Intermediary or their officers, employees or agents be
liable under this Agreement to any third party for indirect, special, punitive,
or consequential loss or damage of any kind whatsoever, including lost profits,
whether or not the likelihood of such loss or damage was known to the Collateral
Agent, the Custodial Agent or the Securities Intermediary, or any of them,
incurred without any act or deed that is found to be attributable to negligence
or willful misconduct on the part of the Collateral Agent, the Custodial Agent
or the Securities Intermediary.
ARTICLE IX
AMENDMENT
SECTION 9.1. Amendment Without Consent of Holders. Without the consent of
------------------------------------
any Holders or the holders of any Separate Senior Notes, the Company when
authorized by or pursuant to a Board Resolution, the Collateral Agent, the
Custodial Agent, the Securities Intermediary and the Purchase Contract Agent, at
any time and from time to time, may amend
23
this Agreement, in form satisfactory to the Company, the Collateral Agent, the
Custodial Agent, the Securities Intermediary and the Purchase Contract Agent,
for any of the following purposes:
(a) to evidence the succession of another Person to the Company, and the
assumption by any such successor of the covenants of the Company; or
(b) to add to the covenants of the Company for the benefit of the Holders,
or to surrender any right or power herein conferred upon the Company; or
(c) to evidence and provide for the acceptance of appointment hereunder by
a successor Collateral Agent, Custodial Agent, Securities Intermediary or
Purchase Contract Agent; or
(d) to cure any ambiguity, to correct or supplement any provisions herein
which may be inconsistent with any other such provisions herein, or to make any
other provisions with respect to such matters or questions arising under this
Agreement, provided such action shall not adversely affect the interests of the
Holders in any material respect.
SECTION 9.2. Amendment with Consent of Holders. With the consent of the
---------------------------------
Holders of not less than a majority of the Purchase Contracts at the time
outstanding, by Act of said Holders delivered to the Company, the Purchase
Contract Agent or the Collateral Agent, as the case may be, the Company, when
authorized by or pursuant to a Board Resolution, the Purchase Contract Agent,
the Collateral Agent, the Custodial Agent and the Securities Intermediary may
amend this Agreement for the purpose of modifying in any manner the provisions
of this Agreement or the rights of the Holders in respect of the Securities;
provided, however, that no such supplemental agreement shall, without the
consent of the Holder of each Outstanding Security affected thereby,
(a) change the amount or type of Collateral underlying a Security, impair
the right of the Holder of any Security to receive distributions on the
underlying Collateral or otherwise adversely affect the Holder's rights in or to
such Collateral; or
(b) otherwise effect any action that would require the consent of the
Holder of each Outstanding Security affected thereby pursuant to the Purchase
Contract Agreement if such action were effected by an agreement supplemental
thereto;
(c) reduce the amount payable or distributable to Holders upon the
remarketing of Senior Notes; or
(d) reduce the percentage of Purchase Contracts the consent of whose
Holders is required for any such amendment.
If any amendment referred to above would adversely affect only the Corporate
Units or the Treasury Units, then only the affected class of Holders shall be
entitled to vote on the amendment and the amendment shall not be effective
except with the consent of the Holders of not less than a majority or each of
the affected Holders, as applicable, of the relevant class. It shall not be
necessary for any Act of Holders under this Article 9 to approve the particular
form
24
of any proposed amendment, but it shall be sufficient if such Act shall approve
the substance thereof.
SECTION 9.3. Execution of Amendments. In executing any amendment permitted
-----------------------
by this Section, the Collateral Agent, the Custodial Agent, the Securities
Intermediary and the Purchase Contract Agent shall be provided and (subject to
Section 8.1 hereof, with respect to the Collateral Agent, and Section 7.1 of the
Purchase Contract Agreement, with respect to the Purchase Contract Agent) shall
be fully protected in relying upon, an Opinion of Counsel stating that the
execution of such amendment is authorized or permitted by this Agreement and
that all conditions precedent, if any, to the execution and delivery of such
amendment have been satisfied. All amendments must be in writing, signed by all
parties to this Agreement.
SECTION 9.4. Effect of Amendments. Upon the execution of any amendment
--------------------
under this Article 9, this Agreement shall be modified in accordance therewith,
and such amendment shall form a part of this Agreement for all purposes; and
every Holder of Certificates theretofore or thereafter authenticated, executed
on behalf of the Holders and delivered under the Purchase Contract Agreement
shall be bound thereby.
SECTION 9.5. Reference to Amendments. Security Certificates authenticated,
-----------------------
executed on behalf of the Holders and delivered after the execution of any
amendment pursuant to this Article 9 may, and shall if required by the
Collateral Agent or the Purchase Contract Agent, bear a notation in form
approved by the Purchase Contract Agent and the Collateral Agent as to any
matter provided for in such amendment. If the Company shall so determine, new
Security Certificates so modified as to conform, in the opinion of the
Collateral Agent, the Purchase Contract Agent and the Company, to any such
amendment may be prepared and executed by the Company and authenticated,
executed on behalf of the Holders and delivered by the Purchase Contract Agent
in accordance with the Purchase Contract Agreement and without charge or expense
to Holders in exchange for Outstanding Security Certificates.
ARTICLE X
MISCELLANEOUS
SECTION 10.1. No Waiver. To the extent permitted by law, no failure on the
---------
part of any party hereto or any of its agents to exercise, and no course of
dealing with respect to, and no delay in exercising, any right, power or remedy
hereunder shall operate as a waiver thereof, nor shall any single or partial
exercise by any party hereto or any of its agents of any right, power or remedy
hereunder preclude any other or further exercise thereof or the exercise of any
other right, power or remedy. To the extent permitted by law, the remedies
herein are cumulative and are not exclusive of any remedies provided by law.
SECTION 10.2. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND
-------------
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. Without limiting
the foregoing, the above choice of law is expressly agreed to by the Securities
Intermediary, the Collateral Agent and the Holders from time to time acting
through the Purchase Contract Agent, as their attorney-in-fact, in connection
with the establishment and maintenance of the Collateral Account. The Company,
the Collateral Agent,
25
the Custodial Agent, the Securities Intermediary and the Holders from time to
time of the Securities, acting through the Purchase Contract Agent as their
attorney-in-fact, hereby submit to the nonexclusive jurisdiction of the United
States District Court for the Southern District of New York for the purposes of
all legal proceedings arising out of or relating to this Agreement or the
transactions contemplated hereby. Notwithstanding any provisions of any account
agreement or any other agreement to the contrary, the collateral account and all
other agreements relating thereto (including any related account agreement)
shall be governed by and construed in accordance with the laws of the State of
New York, without giving effect to conflict of laws provisions that would
require the application of any other law (other than Section 5-1401 of the
General Obligations Law of the State of New York). This is intended to be "an
agreement" within the meaning of Section 8-110(e) of the Code, and the State of
New York shall be the Securities Intermediary's jurisdiction for the purposes of
the Code. The Company, the Collateral Agent, the Custodial Agent, the Securities
Intermediary and the Holders from time to time of the Securities, acting through
the Purchase Contract Agent as their attorney-in-fact, irrevocably waive, to the
fullest extent permitted by applicable law, any objection which they may now or
hereafter have to the laying of the venue of any such proceeding brought in such
a court and any claim that any such proceeding brought in such a court has been
brought in an inconvenient forum, as well as to trial by jury.
SECTION 10.3. Notices. All notices, requests, consents and other
-------
communications provided for herein (including, without limitation, any
modifications of, or waivers or consents under, this Agreement) shall be given
or made in writing (including, without limitation, by telecopy) delivered to the
intended recipient at the "Address for Notices" specified below its name on the
signature pages hereof or, as to any party, at such other address as shall be
designated by such party in a notice to the other parties. Except as otherwise
provided in this Agreement, all such communications shall be deemed to have been
duly given when transmitted by telecopier or personally delivered or, in the
case of a mailed notice, upon receipt, in each case given or addressed as
aforesaid.
SECTION 10.4. Successors and Assigns. This Agreement shall be binding upon
----------------------
and inure to the benefit of the respective successors and assigns of the
Company, the Collateral Agent, the Custodial Agent, the Securities Intermediary
and the Purchase Contract Agent, and the Holders from time to time of the
Securities, by their acceptance of the same, shall be deemed to have agreed to
be bound by the provisions hereof and to have ratified the agreements of, and
the grant of the Pledge hereunder by, the Purchase Contract Agent.
SECTION 10.5. Counterparts. This Agreement may be executed in any number of
------------
counterparts, all of which taken together shall constitute one and the same
instrument, and any of the parties hereto may execute this Agreement by signing
any such counterpart.
SECTION 10.6. Severability. If any provision hereof is invalid and
------------
unenforceable in any jurisdiction, then, to the fullest extent permitted by law,
(i) the other provisions hereof shall remaining full force and effect in such
jurisdiction and shall be construed in order to carry out the intentions of the
parties hereto as nearly as may be possible and (ii) the invalidity or,
unenforceability of any provision hereof in any jurisdiction shall not affect
the validity or enforceability of such provision in any other jurisdiction.
26
SECTION 10.7. Expenses, etc. The Company agrees to reimburse the Collateral
-------------
Agent and the Custodial Agent for: (a) all reasonable costs and expenses of the
Collateral Agent and the Custodial Agent (including, without limitation, the
reasonable fees and expenses of counsel to the Collateral Agent and the
Custodial Agent), in connection with (i) the negotiation, preparation, execution
and delivery or performance of this Agreement and (ii) any modification,
supplement or waiver of any of the terms of this Agreement; (b) all reasonable
costs and expenses of the Collateral Agent (including, without limitation,
reasonable fees and expenses of counsel) in connection with (i) any enforcement
or proceedings resulting or incurred in connection with causing any Holder of
Securities to satisfy its obligations under the Purchase Contracts forming a
part of the Securities and (ii) the enforcement of this Section 10.7; and (c)
all transfer, stamp, documentary or other similar taxes, assessments or charges
levied by any governmental or revenue authority in respect of this Agreement or
any other document referred to herein and all costs, expenses, taxes,
assessments and other 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.
27
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the day and year first above written.
DUKE ENERGY CORPORATION
By: ________________________________
Name:
Title:
Address for Notices:
Duke Energy Corporation
526 South Church Street
Charlotte, North Carolina 28202
Attention: Chief Financial Officer
Telecopy:
JPMORGAN CHASE BANK, as
Purchase Contract Agent and
as attorney-in-fact of the Holders
from time to time of the Securities
By: ________________________________
Name:
Title:
Address for Notices:
JPMorgan Chase Bank
450 West 33rd Street,
New York, NY 10001
Attention: Institutional Trust
Services
Telecopy: (212) 946-8159
28
BANK ONE TRUST COMPANY, N.A.,
as Collateral Agent, Custodial Agent and
as Securities Intermediary
By: ________________________________
Name:
Title:
Address for Notices:
Bank One Trust Company, N.A.
One North State Street, 9/th/
Floor Chicago, Illinois 60602
Attention: Corporate Trust Services Division
Telecopy: (312) 407-1708
29
EXHIBIT A
INSTRUCTION FROM PURCHASE CONTRACT AGENT
TO COLLATERAL AGENT
Bank One Trust Company, N.A.
One North State Street, 9/th/ Floor
Chicago, Illinois 60602
Attention: Corporate Trust Services Division
Re: Duke Energy Corporation (the "Company")
We hereby notify you in accordance with Section [4.1] [4.2] of the
Pledge Agreement, dated as of November 19, 2001, (the "Pledge Agreement") among
the Company, yourselves, as Collateral Agent, Custodial Agent and Securities
Intermediary and ourselves, as Purchase Contract Agent and as attorney-in-fact
for the holders of [Corporate Units, Series B] [Treasury Units, Series B] from
time to time, that the holder of the Securities listed below (the "Holder") has
elected to substitute $_______ [aggregate principal amount of Treasury
Securities] [aggregate principal amount of Senior Notes or the appropriate
Applicable Ownership Interest of the Treasury Portfolio, as the case may be,] in
exchange for an equal Value of [Pledged Senior Notes or the appropriate
Applicable Ownership Interest of the Treasury Portfolio, as the case may be,]
[Pledged Treasury Securities] held by you in accordance with the Pledge
Agreement and has delivered to us a notice stating that the Holder has
Transferred [Treasury Securities] [Senior Notes or the appropriate Applicable
Ownership Interest of the Treasury Portfolio, as the case may be,] to you, as
Collateral Agent. We hereby instruct you, upon receipt of such [Pledged Treasury
Securities] [Pledged Senior Notes or the appropriate Applicable Ownership
Interest of the Treasury Portfolio, as the case may be,], and upon the payment
by such Holder of any applicable fees, to release the [Senior Notes or the
appropriate Applicable Ownership Interest of the Treasury Portfolio, as the case
may be,] [Treasury Securities] related to such [Corporate Units, Series B]
[Treasury Units, Series B] 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 Chase Manhattan Bank,
By: __________________________________
Name:
Title:
Signature Guarantee: _________________
30
Please print name and address of Registered Holder electing to substitute
[Treasury Securities] [Senior Notes or the appropriate Applicable Ownership
Interest of the Treasury Portfolio, as the case may be,] for the [Pledged Senior
Notes or the appropriate Applicable Ownership Interest of the Treasury
Portfolio, as the case may be,] [Pledged Treasury Securities]:
________________________________ ______________________________________
Name Social Security or other Taxpayer
Identification Number, if any
________________________________
Address
________________________________
________________________________
31
EXHIBIT B
INSTRUCTION TO PURCHASE CONTRACT AGENT
The Chase Manhattan Bank
450 West 33d Street,
New York, NY 10001
Attention: Institutional Trust Services
Re: Equity Units, Series B of Duke Energy Corporation (the "Company")
The undersigned Holder hereby notifies you that it has delivered to
Bank One Trust Company, N.A., as Collateral Agent, [$_______ aggregate principal
amount of Treasury Securities] [$_______ aggregate principal amount of Senior
Notes or the appropriate Applicable Ownership Interest of the Treasury
Portfolio, the case may be,] in exchange for an equal Value of [Pledged Senior
Notes or the appropriate Applicable Ownership Interest of the Treasury
Portfolio, as the case may be,] [Pledged Treasury Securities] held by the
Collateral Agent, in accordance with Section [4.1][4.2] of the Pledge Agreement,
dated November 19, 2001 (the "Pledge Agreement"), between you, the Company and
the Collateral Agent. The undersigned Holder has paid the Collateral Agent all
applicable fees relating to such exchange. The undersigned Holder hereby
instructs you to instruct the Collateral Agent to release to you on behalf of
the undersigned Holder the [Pledged Senior Notes or the appropriate Applicable
Ownership Interest of the Treasury Portfolio] [Pledged Treasury Securities]
related to such [Corporate Units, Series B] [Treasury Units, Series B].
Capitalized terms used herein but not defined shall have the meaning set forth
in the Pledge Agreement.
Dated:________________________ _____________________________________
Signature
Signature Guarantee:_________________
Please print name and address of Registered Holder:
______________________________ _____________________________________
Name Social Security or other Taxpayer
Identification Number, if any
______________________________
Address
______________________________
______________________________
______________________________
32
EXHIBIT C
INSTRUCTION TO CUSTODIAL AGENT REGARDING REMARKETING
Bank One Trust Company, N.A.
One North State Street, 9/th/ Floor
Chicago, Illinois 60602
Attention: Corporate Trust Services Division
Re: Senior Notes of Duke Capital Corporation (the "Company")
The undersigned hereby notifies you in accordance with Section 4.6(c)
of the Pledge Agreement, dated as of November 19, 2001 (the "Pledge Agreement"),
among Duke Energy Corporation, yourselves, as Collateral Agent, Securities
Intermediary and Custodial Agent, and JPMorgan Chase Bank, as Purchase Contract
Agent and as attorney-in-fact for the Holders of Corporate Units, Series B and
Treasury Units, Series B from time to time, that the undersigned elects to
deliver $_____ aggregate principal amount of Senior Notes for delivery to the
Remarketing Agent on the Business Day immediately preceding the [Initial
Remarketing Date] [Second Remarketing Date] [Third Remarketing Date] [Final
Remarketing 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 Senior Notes tendered hereby.
The undersigned hereby instructs you, upon receipt of the Proceeds of
such remarketing from the Remarketing Agent to deliver such Proceeds to the
undersigned in accordance with the instructions indicated herein under "A.
Payment Instructions". The undersigned hereby instructs you, in the event of a
Failed [Initial] [Second] [Third] [Final] Remarketing, upon receipt of the
Senior Notes tendered herewith from the Remarketing Agent, to deliver the Senior
Notes 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 Senior Notes tendered hereby and that the undersigned is the record
owner of any Senior Notes tendered herewith in physical form or a participant in
The Depositary Trust Company ("DTC") and the beneficial owner of any Senior
Notes tendered herewith by book-entry transfer to your account at DTC and (ii)
agrees to be bound 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:
33
Signature Guarantee: _____________________
Please print name and address:
________________________________ ________________________________________
Name Social Security or other Taxpayer
Identification Number, if any
________________________________
Address
________________________________
________________________________
________________________________
34
- ---------------------------------------------- ---------------------------------------------------
A. PAYMENT INSTRUCTIONS B. DELIVERY INSTRUCTIONS
============================================== ===================================================
Proceeds of the remarketing should be paid In the event of a failed remarketing, Senior
by check in the name of the person(s) set Notes which are in physical form should be
forth below and mailed to the address delivered to the person(s) set forth below
set forth below. and mailed to the address set forth below.
Name(s) Name(s)
_____________________________________ _____________________________________
(Please Print) (Please Print)
Address Address
____________________________________ _____________________________________
(Please Print) (Please Print)
____________________________________ _____________________________________
____________________________________ _____________________________________
(Zip Code) (Zip Code)
_______________________________ __________________________________
(Tax Identification or Social Security Number) (Tax Identification or Social Security Number)
- ----------------------------------------------
In the event of a failed remarketing, Senior
Notes which are in book-entry form should be
credited to the account at The Depositary Trust
Company set forth below.
____________________
DTC Account Number
Name of Account Party:___________________
---------------------------------------------------
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EXHIBIT D
INSTRUCTION TO CUSTODIAL AGENT REGARDING
WITHDRAWAL FROM REMARKETING
Bank One Trust Company, N.A.
One North State Street, 9/th/ Floor
Chicago, Illinois 60602
Attention: Corporate Trust Services Division
Re: Senior Notes of Duke Capital Corporation
The undersigned hereby notifies you in accordance with Section 4.6(c)
of the Pledge Agreement, dated as of November 19, 2001 (the "Pledge Agreement")
among the Duke Energy Corporation, yourselves, as Collateral Agent, Securities
Intermediary and Custodial Agent and JPMorgan Chase Bank, as Purchase Contract
Agent and as attorney-in-fact for the Holders of Corporate Units, Series B and
Treasury Units, Series B from time to time, that the undersigned elects to
withdraw the $_________ aggregate principal amount of Senior Notes delivered to
the Custodial Agent on _________, ____ for remarketing pursuant to Section
4.6(c) of the Pledge Agreement. The undersigned hereby instructs you to return
such Senior Notes to the undersigned in accordance with the undersigned's
instructions. With this notice, the Undersigned hereby agrees to be bound by the
terms and conditions of Section 4.6(c) of the Pledge Agreement. Capitalized
terms used herein but not defined shall have the meaning set forth in the Pledge
Agreement.
Date: _________________ ________________________________________
By: ____________________________________
Name:
Title:
Signature Guarantee: ___________________
36
Please print name and address:
__________________________________ __________________________________
Name Social Security or other Taxpayer
Identification Number, if any
__________________________________
Address
__________________________________
__________________________________
__________________________________
37