Exhibit 4.2
STB DRAFT
February 9, 1999
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NIPSCO INDUSTRIES, INC.
and
THE FIRST NATIONAL BANK OF CHICAGO, as Collateral Agent
and
THE FIRST NATIONAL BANK OF CHICAGO, as Securities Intermediary
and
THE CHASE MANHATTAN BANK, as Purchase Contract
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PLEDGE AGREEMENT
Dated as of February __, 1999
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TABLE OF CONTENTS
Section 1. Definitions........................................................1
Section 2. Pledge.............................................................5
2.1 Pledge.............................................................5
2.2 Control; Financing Statement.......................................5
Section 3. Distributions on Pledged Collateral ...............................6
3.1 Income Distributions...............................................6
3.2 Principal Payments Following Termination Event.....................6
3.3 Principal Payments Prior To or On Purchase Contract
Settlement Date....................................................6
3.4 Payments to Purchase Contract Agent................................6
3.5 Assets Not Properly Released.......................................7
Section 4. Control............................................................7
4.1 Establishment of Collateral Account................................7
4.2 Treatment as Financial Assets......................................7
4.3 Sole Control by Collateral Agent...................................7
4.4 Securities Intermediary's Location.................................7
4.5 No Other Claims....................................................8
4.6 Investment and Release.............................................8
4.7 Statements and Confirmations.......................................8
4.8 Tax Allocations....................................................8
4.9 No Other Agreements................................................8
4.10 Powers Coupled With An Interest....................................8
Section 5. Initial Deposit; Establishment of Treasury PIES
and Reestablishment of Corporate PIES..............................8
5.1 Initial Deposit of Trust Preferred Securities......................8
5.2 Establishment of Treasury PIES.....................................9
5.3 Reestablishment of Corporate PIES.................................11
5.4 Termination Event.................................................13
5.5 Cash Settlement...................................................14
5.6 Early Settlement..................................................14
5.7 Application of Proceeds Settlement................................15
5.8 Tax Event Redemption..............................................16
5.9 Liquidation of the Trust..........................................16
Section 6. Voting Rights -- Trust Preferred Securities
and Pledged Debentures............................................16
Section 7. Rights and Remedies; Distribution of the Debentures;
Tax Event Redemption..............................................17
7.1 Rights and Remedies of the Collateral Agent.......................17
7.2 Substitution of Debentures........................................18
7.3 Tax Event Redemption..............................................18
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7.4 Substitutions.....................................................18
Section 8. Representations and Warranties; Covenants.........................18
8.1 Representations and Warranties....................................18
8.2 Covenants.........................................................19
Section 9. The Collateral Agent and the Securities Intermediary..............20
9.1 Appointment, Powers and Immunities................................20
9.2 Instructions of the Company.......................................20
9.3 Reliance by Collateral Agent and Securities Intermediary..........21
9.4 Rights in Other Capacities........................................21
9.5 Non-Reliance on Collateral Agent and Securities Intermediary......21
9.6 Compensation and Indemnity........................................21
9.7 Failure to Act....................................................22
9.8 Resignation of Collateral Agent...................................22
9.9 Right to Appoint Agent or Advisor.................................23
9.10 Survival..........................................................23
9.11 Exculpation.......................................................23
Section 10. Amendment.........................................................23
10.1 Amendment Without Consent of Holders..............................23
10.2 Amendment with Consent of Holders.................................24
10.3 Execution of Amendments...........................................24
10.4 Effect of Amendments..............................................24
10.5 Reference to Amendments...........................................25
Section 11. Miscellaneous.....................................................25
11.1 No Waiver.........................................................25
11.2 Governing Law.....................................................25
11.3 Notices...........................................................25
11.4 Successors and Assigns............................................26
11.5 Counterparts......................................................26
11.6 Severability......................................................26
11.7 Expenses, etc.....................................................26
11.8 Security Interest Absolute........................................26
EXHIBIT A Instruction from Purchase Contract Agent to Collateral Agent
(Establishment of Treasury PIES)
EXHIBIT B Instruction from Collateral Agent to Securities Intermediary
(Establishment of Treasury PIES)
EXHIBIT C Instruction from Purchase Contract Agent to Collateral Agent
(Reestablishment of Corporate PIES)
EXHIBIT D Instruction from Collateral Agent to Securities Intermediary
(Reestablishment of Corporate PIES)
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EXHIBIT E Notice of Cash Settlement from the Securities Intermediary to the
Purchase Contract Agent.
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PLEDGE AGREEMENT
PLEDGE AGREEMENT dated as of February __, 1999 (this "Agreement") among
NIPSCO INDUSTRIES, INC., an Indiana corporation (the "Company"), THE FIRST
NATIONAL BANK OF CHICAGO, a national banking association, not individually but
solely as collateral agent (in such capacity, together with its successors in
such capacity, the "Collateral Agent"), THE FIRST NATIONAL BANK OF CHICAGO, a
national banking association, not individually but solely in its capacity as a
securities intermediary with respect to the Collateral Account (in such
capacity, together with its successors in such capacity, the "Securities
Intermediary"), and THE CHASE MANHATTAN BANK, a New York banking corporation,
not individually but solely as purchase contract agent and as attorney-in-fact
of the Holders from time to time of the Securities (in such capacity, together
with its successors in such capacity, the "Purchase Contract Agent") under the
Purchase Contract Agreement.
RECITALS
The Company and the Purchase Contract Agent are parties to the Purchase
Contract Agreement dated as of the date hereof (as modified and supplemented and
in effect from time to time, the "Purchase Contract Agreement"), pursuant to
which there may be issued up to 6,900,000 PIES (the "Securities").
Each Corporate PIES, at issuance, consists of a unit comprised of (a) one
stock purchase contract (the "Purchase Contract") under which (i) the Holder
will purchase from the Company on ___________, 2003, for an amount equal to $50
(the "Stated Amount"), a number of shares of Common Stock equal to the
Settlement Rate, and (ii) the Company will pay the Holder Contract Adjustment
Payments, if any, and (b) beneficial ownership of a Trust Preferred Security (a
"Trust Preferred Security") issued by NIPSCO Capital Trust I (the "Trust"),
having a liquidation amount equal to the Stated Amount and maturing on ________,
2005.
Pursuant to the terms of the Purchase Contract Agreement and the Purchase
Contracts, the Holders of the Securities have irrevocably authorized the
Purchase Contract Agent, as attorney-in-fact of such Holders, among other
things, to execute and deliver this Agreement on behalf of such Holders and to
grant the pledge provided herein of the Collateral Account to secure the
Obligations.
Accordingly, the Company, the Collateral Agent, the Securities
Intermediary and the Purchase Contract Agent, on its own behalf and as
attorney-in-fact of the Holders from time to time of the Securities, agree as
follows:
Section 1. Definitions. For all purposes of this Agreement, except as
otherwise expressly provided or unless the context otherwise requires:
(a) the terms defined in this Article have the meanings assigned to them
in this Article and include the plural as well as the singular;
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(b) the words "herein," "hereof" and "hereunder" and other words of
similar import refer to this Agreement as a whole and not to any particular
Article, Section, Exhibit or other subdivision;
(c) the following terms which are defined in the Code shall have the
meanings set forth therein: "certificated security," "control," "financial
asset," "entitlement order," "securities account" and "security entitlement";
(d) the following terms have the meanings assigned to them in the Purchase
Contract Agreement: (1) Act, (2) Agent, (3) Board Resolution, (4) Cash
Settlement, (5) Certificate, (6) Common Stock, (7) Contract Adjustment Payments,
(8) Corporate PIES, (9) Debentures, (10) Early Settlement, (11) Early Settlement
Amount, (12) Early Settlement Date, (13) Finance Subsidiary, (14) Holders, (15)
Opinion of Counsel, (16) Outstanding Securities, (17) PIES, (18) Purchase
Contract, (19) Purchase Contract Settlement Date, (20) Purchase Price, (21)
Remarketing Agent, (22) Remarketing Agreement, (23) Settlement Rate, (24)
Termination Event, (25) Treasury PIES and (26) Underwriting Agreement;
(e) the following terms have the meanings assigned to them in the
Declaration: (1) Applicable Ownership Interest (2) Applicable Principal Amount,
(3) Failed Remarketing, (4) Indenture, (5) Primary Treasury Dealer, (6) Property
Trustee, (7) Quotation Agent, (8) Redemption Amount, (9) Redemption Price, (10)
Tax Event, (11) Tax Event Redemption, (12) Tax Event Redemption Date, (13)
Treasury Portfolio and (14) Treasury Portfolio Purchase Price; and
(f) the following terms have the meanings given to them in this section
1(f):
"Agreement" means this Agreement, as the same may be amended, modified or
supplemented from time to time.
"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 (i) a Saturday or Sunday or a day
on which banking institutions in The City of New York are authorized or required
by law or executive order to remain closed or (ii) a day on which the principal
office of either the Debenture Trustee or the Property Trustee under the
Declaration is closed for business.
"Capital Markets" means NIPSCO Capital Markets, Inc., an Indiana
corporation, until a successor shall have become such, and thereafter "Capital
Markets" shall mean such successor.
"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" means the Uniform Commercial Code as in effect in the State of New
York from time to time.
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"Collateral Account" means the collective reference to (1) Securities
Account No. _________ entitled "First National Bank of Chicago, as Collateral
Agent, Securities Account (NIPSCO Capital Trust I)" maintained by the Securities
Intermediary for the Purchase Contract Agent on behalf of and as
attorney-in-fact for the Holders, (2) all investment property and other
financial assets from time to time credited to the Collateral Account,
including, without limitation, (A) the Trust Preferred Securities and security
entitlements relating thereto which are a component of the Corporate PIES from
time to time, (B) the Applicable Ownership Interests (as specified in clause (A)
of the definition of such term) of the Holders with respect to the Treasury
Portfolio which are a component of the Corporate PIES from time to time, (C) the
Debentures and security entitlements relating thereto which are a component of
Corporate PIES from time to time, (D) any Treasury Securities and security
entitlements relating thereto delivered from time to time upon establishment of
Treasury PIES in accordance with Section 5.2 hereof and (E) payments made by
Holders pursuant to Section 5.5 hereof (collectively, the "Collateral"), (3) all
Proceeds of any of the foregoing (whether such Proceeds arise before or after
the commencement of any proceeding under any applicable bankruptcy, insolvency
or other similar law, by or against the pledgor or with respect to the pledgor)
and (4) all powers and rights now owned or hereafter acquired under or with
respect to the Collateral Account.
"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.
"Debenture Trustee" means The Chase Manhattan Bank, as trustee under the
Indenture until a successor is appointed thereunder, and thereafter means such
successor trustee.
"Declaration" means the Amended and Restated Declaration of Trust of the
Trust, dated as of February __, 1999, among the Capital Markets as sponsor, the
trustees named therein and the holders from time to time of undivided beneficial
interests in the assets of the Trust.
"Obligations" means, with respect to each Holder, the collective reference
to all obligations and liabilities of such Holder under such Holder's Purchase
Contract and this Agreement or any other document made, delivered or given in
connection herewith or therewith, in each case whether on account of principal,
interest (including, without limitation, interest accruing before and after the
filing of any petition in bankruptcy, or the commencement of any insolvency,
reorganization or like proceeding, relating to such Holder, whether or not a
claim for post-filing or post-petition interest is allowed in such proceeding),
fees, indemnities, costs, expenses or otherwise (including, without limitation,
all fees and disbursements of counsel to the Company or the Collateral Agent or
the Securities Intermediary that are required to be paid by the Holder pursuant
to the terms of any of the foregoing agreements).
"Permitted Investments" means any one of the following which shall mature
not later than the next succeeding Business Day: (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
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America is pledged in support of the timely payment 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 $200.0 million at the time of
deposit; (iii) investments with an original maturity of 365 days or less of any
Person that is fully and unconditionally guaranteed by a bank referred to in
clause (ii); (iv) repurchase agreements and reverse repurchase agreements
relating to marketable direct obligations issued or unconditionally guaranteed
by the United States Government or issued by any agency thereof and backed as to
timely payment by the full faith and credit of the United States Government; (v)
investments in commercial paper, other than commercial paper issued by the
Company or its affiliates, of any corporation incorporated under the laws of the
United States or any State thereof, which commercial paper has a rating at the
time of purchase at least equal to "A-1" by Standard & Poor's Ratings Services
("S&P") or at least equal to "P-1" by Moody's Investors Service, Inc.
("Moody's"); and (vi) investments in money market funds registered under the
Investment Company Act of 1940, as amended, rated in the highest applicable
rating category by S&P or Moody's.
"Person" means any legal person, including any individual, corporation,
estate, partnership, joint venture, association, joint-stock company, limited
liability company, trust, unincorporated organization or government or any
agency or political subdivision thereof.
"Pledge" means the lien and security interest created by this Agreement.
"Pledged Debentures" means Debentures and security entitlements with
respect thereto from time to time credited to the Collateral Account and not
then released from the Pledge.
"Pledged Preferred Securities" means the Trust Preferred Securities and
security entitlements with respect thereto from time to time credited to the
Collateral Account and not then released from the Pledge.
"Pledged Treasury Securities" means Treasury Securities and security
entitlements with respect thereto from time to time credited to the Collateral
Account and not then released from the Pledge.
"Proceeds" has the meaning ascribed thereto in the Code and includes,
without limitation, all interest, dividends, cash, instruments, securities,
financial assets (as defined in ss. 8-102(a)(9) of the Code) and other property
received, receivable or otherwise distributed upon the sale, exchange,
collection or disposition of any financial assets from time to time held in the
Collateral Account.
"Purchase Contract Agent" has the meaning specified in the paragraph
preceding the recitals of this Agreement.
"TRADES" means the Treasury/Reserve Automated Debt Entry System maintained
by the Federal Reserve Bank of New York pursuant to the TRADES Regulations.
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"TRADES Regulations" means the regulations of the United States Department
of the Treasury, published at 31 C.F.R. Part 357, an amended from time to time.
Unless otherwise defined herein, all terms defined in the TRADES Regulations are
used herein as therein defined.
"Transfer" means:
(a) in the case of certificated securities in registered form, delivery as
provided in ss. 8-301(a) of the Code, indorsed to the transferee or in blank by
an effective indorsement;
(b) in the case of Treasury Securities, registration of the transferee as
the owner of such Treasury Securities on TRADES; and
(c) in the case of security entitlements, including, without limitation,
security entitlements with respect to Treasury Securities, a securities
intermediary indicating by book entry that such security entitlement has been
credited to the transferee's securities account.
"Treasury Security" means a zero-coupon U.S. Treasury Security (Cusip
Number ________) which are the principal strips of the __% U.S. Treasury
Securities which mature on ________, 2003.
"Value" with respect to any item of Collateral on any date means, as to
(i) a Trust Preferred Security, the liquidation amount, (ii) Cash, the face
amount thereof and (iii) Treasury Securities, Debentures or the Applicable
Ownership Interest (as specified in clause (A) of the definition of such term)
of the Treasury Portfolio, in each case the aggregate principal amount thereof
at maturity.
Section 2. Pledge
Section 2.1 Pledge. Each Holder, acting through the Purchase Contract
Agent as such Holder's attorney-in-fact, hereby pledges and grants to the
Collateral Agent, as agent of and for the benefit of the Company, a continuing
first priority security interest in and to, and a lien upon and right of set off
against, all of such Holder's right, title and interest in and to the Collateral
Account to secure the prompt and complete payment and performance when due
(whether at stated maturity, by acceleration or otherwise) of the Obligations.
The Collateral Agent shall have all of the rights, remedies and recourses with
respect to the Collateral afforded a secured party by the Code, in addition to,
and not in limitation of, the other rights, remedies and recourses afforded to
the Collateral Agent by this Agreement.
Section 2.2 Control; Financing Statement.
(a) The Collateral Agent shall have control of the Collateral Account
pursuant to the provisions of Section 4 of this Agreement.
(b) On the date of initial issuance of the Securities, the Purchase
Contract Agent shall deliver to the Collateral Agent a financing statement
prepared by the Company for filing in the Office of the
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Secretary of State of the State of New York, signed by the Purchase Contract
Agent, as attorney-in-fact for the Holders, as Debtors, and describing the
Collateral.
Section 3. Distributions on Pledged Collateral
Section 3.1 Income Distributions. All income distributions received by the
Securities Intermediary on account of the Trust Preferred Securities or the
Applicable Ownership Interest (as specified in clause (A) of the definition of
such term) of the Treasury Portfolio or the Debentures or Permitted Investments
from time to time held in the Collateral Account shall be distributed to the
Purchase Contract Agent for the benefit of the applicable Holders as provided in
the Purchase Contracts.
Section 3.2 Principal Payments Following Termination Event. All payments
received by the Securities Intermediary following a Termination Event of (1) the
liquidation amount of Pledged Preferred Securities or securities entitlements
thereto, (2) the Applicable Ownership Interests (as specified in clause (A) of
the definition thereof) of the Treasury Portfolio, (3) the aggregate principal
amount of Pledged Debentures or securities entitlements thereto, or (4) the
principal amount of the Pledged Treasury Securities or securities entitlements
thereto shall be distributed to the Purchase Contract Agent for the benefit of
the Holders for distribution to such Holders in accordance with their respective
interests.
Section 3.3 Principal Payments Prior To or On Purchase Contract Settlement
Date. (a) Subject to the provisions of Section 7.3, and except as provided in
clause 3.3(b) below, if no Termination Event shall have occurred, all payments
received by the Securities Intermediary of (1) the liquidation amount with
respect to Pledged Preferred Securities or security entitlements thereto, (2)
Applicable Ownership Interests (as specified in clause (A) of the definition
thereof) of the Treasury Portfolio, (3) the aggregate principal amount with
respect to the Pledged Debentures or security entitlements thereto or (4) the
principal amount of Pledged Treasury Securities or security entitlements thereto
shall be held and invested in Permitted Investments until the Purchase Contract
Settlement Date and on the Purchase Contract Settlement Date distributed to the
Company as provided in Section 5.7 hereof. Any balance remaining in the
Collateral Account shall be distributed to the Purchase Contract Agent for the
benefit of the applicable Holders for distribution to such Holders in accordance
with their respective interests.
(b) All payments received by the Securities Intermediary of (1) the
liquidation amount with respect to Trust Preferred Securities or security
entitlements thereto, (2) Applicable Ownership Interests (as specified in clause
(A) of the definition thereof) of the Treasury Portfolio, (3) the aggregate
principal amount of Debentures or security entitlements thereto or (4) the
principal amount of Treasury Securities or security entitlements thereto that in
each case have been released from the Pledge shall be distributed to the
Purchase Contract Agent for the benefit of the Holders to be distributed to such
Holders in accordance with their respective interests.
Section 3.4 Payments to Purchase Contract Agent. Payments to the Purchase
Contract Agent hereunder shall be made to the account designated by the Purchase
Contract Agent for such purpose
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not later than 12:00 p.m., New York City time, on the Business Day such payment
is received by the Securities Intermediary; provided, however, that if such
payment is received on a day that is not a Business Day or after 12:30 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.
Section 3.5 Assets Not Properly Released. If the Purchase Contract Agent
or any Holder shall receive any payments of the liquidation amount or principal
payments on account of financial assets credited to the Collateral Account and
not released therefrom in accordance with this Agreement, the Purchase Contract
Agent or such Holder shall hold the same as trustee of an express trust for the
benefit of the Company and upon receipt of an Officers' Certificate (as defined
in the Purchase Contract Agreement) of the Company so directing, promptly
deliver the same to the Securities Intermediary for credit to the Collateral
Account or to the Company for application to the obligations of the Holders
under the related Purchase Contracts, and the Purchase Contract Agent and
Holders shall acquire no right, title or interest in any such payments of
liquidation or principal amounts so received.
Section 4. Control
Section 4.1 Establishment of Collateral Account. The Securities
Intermediary hereby confirms that (a) the Securities Intermediary has
established the Collateral Account, (b) the Collateral Account is a securities
account, (c) subject to the terms of this Agreement, the Securities Intermediary
shall treat the Purchase Contract Agent as entitled to exercise the rights that
comprise any financial asset credited to the Collateral Account, (d) all
property delivered to the Securities Intermediary pursuant to this Pledge or the
Purchase Contract Agreement or the Indenture will be credited promptly to the
Collateral Account and (e) all securities or other property underlying any
financial assets credited to the Collateral Account shall be registered in the
name of the Securities Intermediary, indorsed to the Securities Intermediary or
in blank or credited to another securities account maintained in the name of the
Securities Intermediary and in no case will any financial asset credited to the
Collateral Account be registered in the name of the Purchase Contract Agent or
any Holder, payable to the order of the Purchase Contract Agent or any Holder or
specially indorsed to the Purchase Contract Agent or any Holder.
Section 4.2 Treatment as Financial Assets. Each item of property (whether
investment property, financial asset, security, instrument or cash) credited to
the Collateral Account shall be treated as a financial asset.
Section 4.3 Sole Control by Collateral Agent. Except as provided in
Section 6, at all times prior to the termination of the Pledge, the Collateral
Agent shall have sole control of the Collateral Account, and the Securities
Intermediary shall take instructions and directions with respect to the
Collateral Account solely from the Collateral Agent. If at any time the
Securities Intermediary shall receive an entitlement order issued by the
Collateral Agent and relating to the Collateral Account, the Securities
Intermediary shall comply with such entitlement order without further consent by
the Purchase Contract Agent or any Holder or any other Person. Until termination
of the Pledge, the
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Securities Intermediary will not comply with any entitlement orders issued by
the Purchase Contract Agent or any Holder.
Section 4.4 Securities Intermediary's Location. The Collateral Account and
the rights and obligations of the Securities Intermediary, the Collateral Agent,
the Purchase Contract Agent and the Holders with respect thereto shall be
governed by the laws of the State of New York. Regardless of any provision in
any other agreement, for purposes of the Code, New York shall be deemed to be
the Securities Intermediary's location and the Collateral Account (as well as
the securities entitlements related thereto) shall be governed by the laws of
the State of New York.
Section 4.5 No Other Claims. Except for the claims and interest of the
Collateral Agent and of the Purchase Contract Agent and the Holders in the
Collateral Account, the Securities Intermediary does not know of any claim to,
or interest in, the Collateral Account or in any financial asset credited
thereto. If any person asserts any lien, encumbrance or adverse claim (including
any writ, garnishment, judgment, warrant of attachment, execution or similar
process) against the Collateral Account or in any financial asset carried
therein, the Securities Intermediary will promptly notify the Collateral Agent
and the Purchase Contract Agent.
Section 4.6 Investment and Release. All proceeds of financial assets from
time to time deposited in the Collateral Account shall be invested and
reinvested as provided in this Agreement. At all times prior to termination of
the Pledge, no property shall be released from the Collateral Account except in
accordance with this Agreement or upon written instructions of the Collateral
Agent.
Section 4.7 Statements and Confirmations. The Securities Intermediary will
promptly send copies of all statements, confirmations and other correspondence
concerning the Collateral Account and any financial assets credited thereto
simultaneously to each of the Purchase Contract Agent and the Collateral Agent
at their addresses for notices under this Agreement.
Section 4.8 Tax Allocations. All items of income, gain, expense and loss
recognized in the Collateral Account shall be reported to the Internal Revenue
Service and all state and local taxing authorities under the names and taxpayer
identification numbers of the holders which are the beneficial owners thereof.
Section 4.9 No Other Agreements. The Securities Intermediary has not
entered into and prior to the termination of the Pledge will not enter into any
agreement with any other Person relating to the Collateral Account or any
financial assets credited thereto, including, without limitation, any agreement
to comply with entitlement orders of any Person other than the Collateral Agent.
Section 4.10 Powers Coupled With An Interest. The rights and powers
granted in this Section 4 to the Collateral Agent have been granted in order to
perfect its security interests in the Collateral Account, are powers coupled
with an interest and will be affected neither by the bankruptcy of the Purchase
Contract Agent or any Holder nor by the lapse of time. The obligations
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of the Securities Intermediary under this Section 4 shall continue in effect
until the termination of the Pledge.
Section 5. Initial Deposit; Establishment of Treasury PIES and
Reestablishment of Corporate PIES.
Section 5.1 Initial Deposit of Trust Preferred Securities. Prior to or
concurrently with the execution and delivery of this Agreement, the Purchase
Contract Agent, on behalf of the initial Holders of the Corporate PIES, shall
Transfer to the Securities Intermediary, for credit to the Collateral Account,
the Trust Preferred Securities or security entitlements relating to such Trust
Preferred Securities, and the Securities Intermediary shall indicate by book
entry that a securities entitlement to such Trust Preferred Securities has been
credited to the Collateral Account.
Section 5.2 Establishment of Treasury PIES. (a) So long as no Tax Event
Redemption shall have occurred, and the Trust shall not have been liquidated, at
any time on or prior to the seventh Business Day immediately preceding the
Purchase Contract Settlement Date, a Holder of Corporate PIES shall have the
right to establish or reestablish Treasury PIES by substitution of Treasury
Securities or security entitlements thereto for the Pledged Preferred Securities
comprising a part of such Holder's Corporate PIES in integral multiples of 20
Corporate PIES by:
(1) Transferring to the Securities Intermediary for credit to the
Collateral Account Treasury Securities or security entitlements thereto
having a Value equal to the liquidation amount of the Pledged Preferred
Securities to be released, accompanied by a notice, substantially in the
form of Exhibit C to the Purchase Contract Agreement, whereupon the
Purchase Contract Agent shall deliver to the Collateral Agent a notice,
substantially in the form of Exhibit A hereto, (A) stating that such
Holder has Transferred Treasury Securities or security entitlements
thereto to the Securities Intermediary for credit to the Collateral
Account, (B) stating the Value of the Treasury Securities or security
entitlements thereto Transferred by such Holder and (C) requesting that
the Collateral Agent release from the Pledge the Pledged Preferred
Securities that are a component of such Corporate PIES; and
(2) delivering the related Corporate PIES to the Purchase Contract
Agent.
Upon receipt of such notice and confirmation that Treasury Securities or
security entitlements thereto have been credited to the Collateral Account as
described in such notice, the Collateral Agent shall instruct the Securities
Intermediary by a notice, substantially in the form of Exhibit B hereto, to
release such Pledged Preferred Securities from the Pledge by Transfer to the
Purchase Contract Agent for distribution to such Holder.
(b) If a Tax Event Redemption has occurred and the Treasury Portfolio has
become a component of the Corporate PIES, at any time on or prior to the second
Business Day immediately preceding the Purchase Contract Settlement Date, a
Holder of Corporate PIES shall have the right to establish or reestablish
Treasury PIES by substitution of Treasury Securities or security entitlements
thereto for the Applicable Ownership Interest (as specified in clause (A) of the
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definition of such term) of the Treasury Portfolio that are a component of such
Holder's Corporate PIES in integral multiples of 160,000 Corporate PIES by:
(1) Transferring to the Securities Intermediary for credit to the
Collateral Account Treasury Securities or security entitlements thereto
having a Value equal to such Applicable Ownership Interest (as specified
in clause (A) of the definition of such term) of the Treasury Portfolio to
be released, accompanied by a notice, substantially in the form of Exhibit
C to the Purchase Contract Agreement, whereupon the Purchase Contract
Agent shall deliver to the Collateral Agent a notice, substantially in the
form of Exhibit A hereto, (A) stating that such Holder has Transferred
Treasury Securities or security entitlements thereto to the Securities
Intermediary for credit to the Collateral Account, (B) stating the Value
of the Treasury Securities Transferred by such Holder and (C) requesting
that the Collateral Agent release from the Pledge the Applicable Ownership
Interest (as specified in clause (A) of the definition of such term) of
the Treasury Portfolio that is a component of such Corporate PIES; and
(2) delivering the related Corporate PIES to the Purchase Contract
Agent.
Upon receipt of such notice and confirmation that Treasury Securities or
security entitlements thereto have been credited to the Collateral Account as
described in such notice, the Collateral Agent shall instruct the Securities
Intermediary by a notice, substantially in the form of Exhibit B hereto, to
release such Applicable Ownership Interest (as specified in clause (A) of the
definition of such term) of the Treasury Portfolio from the Pledge by Transfer
to the Purchase Contract Agent for distribution to such Holder.
(c) If no Tax Event Redemption shall have occurred, but the Trust shall
have been liquidated, and the Debentures have become a component of the
Corporate PIES, at any time on or prior to the seventh Business Day immediately
preceding the Purchase Contract Settlement Date, a Holder of Corporate PIES
shall have the right to substitute Treasury Securities or security entitlements
thereto for the Pledged Debentures comprising a part of such Holder's Corporate
PIES in integral multiples of 20 Corporate PIES by:
(1) Transferring to the Securities Intermediary for credit to the
Collateral Account Treasury Securities or security entitlements thereto
having a Value at maturity equal to the aggregate principal amount at
maturity of Pledged Debentures to be released, accompanied by a notice,
substantially in the form of Exhibit C to the Purchase Contract Agreement,
whereupon the Purchase Contract Agent shall deliver to the Collateral
Agent a notice, substantially in the form of Exhibit A hereto, (A) stating
that such Holder has Transferred Treasury Securities or security
entitlements thereto to the Securities Intermediary for credit to the
Collateral Account, (B) stating the Value of the Treasury Securities
Transferred by such Holder and (C) requesting that the Collateral Agent
release from the Pledge the Pledged Debentures that are a component of
such Corporate PIES; and
(2) delivering the related Corporate PIES to the Purchase Contract
Agent.
11
Upon receipt of such notice and confirmation that Treasury Securities or
security entitlements thereto have been credited to the Collateral Account as
described in such notice, the Collateral Agent shall instruct the Securities
Intermediary by a notice, substantially in the form of Exhibit B hereto, to
release such Pledged Debentures from the Pledge by Transfer to the Purchase
Contract Agent for distribution to such Holder.
(d) Upon credit to the Collateral Account of Treasury Securities or
security entitlements thereto delivered by a Holder of Corporate PIES and
receipt of the related instruction from the Collateral Agent, the Securities
Intermediary shall release the Pledged Preferred Securities or the Applicable
Ownership Interest (as specified in clause (A) of the definition of such term)
of the Treasury Portfolio or the Pledged Debentures, as the case may be, and
shall promptly transfer the same to the Purchase Contract Agent for distribution
to such Holder, free and clear of any lien, pledge or security interest created
hereby.
Section 5.3 Reestablishment of Corporate PIES. (a) So long as no Tax Event
Redemption shall have occurred, and the Trust shall not have been liquidated, at
any time on or prior to the seventh Business Day immediately preceding the
Purchase Contract Settlement Date, a Holder of Treasury PIES shall have the
right to reestablish Corporate PIES by substitution of Trust Preferred
Securities or security entitlements thereto for Pledged Treasury Securities in
integral multiples of 20 Treasury PIES by:
(1) Transferring to the Securities Intermediary for credit to the
Collateral Account Trust Preferred Securities or security entitlements
thereto having a liquidation amount equal to the Value of the Pledged
Treasury Securities to be released, accompanied by a notice, substantially
in the form of Exhibit C to the Purchase Contract Agreement, whereupon the
Purchase Contract Agent shall deliver to the Collateral Agent a notice,
substantially in the form of Exhibit C hereto, stating that such Holder
has Transferred Trust Preferred Securities or security entitlements
thereto to the Securities Intermediary for credit to the Collateral
Account and requesting that the Collateral Agent release from the Pledge
the Pledged Treasury Securities related to such Treasury PIES; and
(2) delivering the related Treasury PIES to the Purchase Contract
Agent.
Upon receipt of such notice and confirmation that Trust Preferred Securities or
security entitlements thereto have been credited to the Collateral Account as
described in such notice, the Collateral Agent shall instruct the Securities
Intermediary by a notice in the form provided in Exhibit D to release such
Pledged Treasury Securities from the Pledge by Transfer to the Purchase Contract
Agent for distribution to such Holder.
(b) If a Tax Event Redemption has occurred and the Treasury Portfolio has
become a component of the Corporate PIES, at any time on or prior to the second
Business Day immediately preceding the Purchase Contract Settlement Date, a
Holder of Treasury PIES shall have the right to reestablish Corporate PIES by
substitution of an Applicable Ownership Interest (as specified in
12
clause (A) of the definition of such term) of the Treasury Portfolio for Pledged
Treasury Securities in integral multiples of 160,000 Treasury PIES by:
(1) Transferring to the Securities Intermediary for credit to the
Collateral Account an Applicable Ownership Interest (as specified in
clause (A) of the definition of such term) of the Treasury Portfolio equal
to the Value of the Pledged Treasury Securities to be released,
accompanied by a notice, substantially in the form provided in Exhibit C
to the Purchase Contract Agreement, whereupon the Purchase Contract Agent
shall deliver to the Collateral Agent a notice, substantially in the form
of Exhibit C hereto, stating that such Holder has Transferred an
Applicable Ownership Interest (as specified in clause (A) of the
definition of such term) of the Treasury Portfolio to the Securities
Intermediary for credit to the Collateral Account and requesting that the
Collateral Agent release from the Pledge the Pledged Treasury Securities
related to such Treasury PIES; and
(2) delivering the related Treasury PIES to the Purchase Contract
Agent.
Upon receipt of such notice and confirmation that an Applicable Ownership
Interest (as specified in clause (A) of the definition of such term) of the
Treasury Portfolio equal to the Value of the Pledged Treasury Securities to be
released has been credited to the Collateral Account as described in such
notice, the Collateral Agent shall instruct the Securities Intermediary by a
notice in the form provided in Exhibit D to release such Pledged Treasury
Securities from the Pledge by Transfer to the Purchase Contract Agent for
distribution to such Holder.
(c) If no Tax Event Redemption shall have occurred, but the Trust shall
have been liquidated, and the Debentures have become a component of the
Corporate PIES, at any time on or prior to the seventh Business Day immediately
preceding the Purchase Contract Settlement Date, a Holder of Treasury PIES shall
have the right to reestablish Corporate PIES by substitution of Debentures or
security entitlements thereto for Pledged Treasury Securities in integral
multiples of 20 Treasury PIES by:
(1) Transferring to the Securities Intermediary for credit to the
Collateral Account Debentures or security entitlements thereto having a
principal amount equal to the Value of the Pledged Treasury Securities to
be released, accompanied by a notice, substantially in the form of Exhibit
C to the Purchase Contract Agreement, whereupon the Purchase Contract
Agent shall deliver to the Collateral Agent a notice, substantially in the
form of Exhibit C hereto, stating that such Holder has Transferred
Debentures or security entitlements thereto to the Securities Intermediary
for credit to the Collateral Account and requesting that the Collateral
Agent release from the Pledge the Pledged Treasury Securities related to
such Treasury PIES; and
(2) delivering the related Treasury PIES to the Purchase Contract
Agent.
Upon receipt of such notice and confirmation that Debentures or security
entitlements thereto have been credited to the Collateral Account as described
in such notice, the Collateral Agent shall
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instruct the Security Intermediary by a notice in the form provided in Exhibit D
to release such Pledged Treasury Securities from the Pledge by Transfer to the
Purchase Contract Agent for distribution to such Holder.
(d) Upon credit to the Collateral Account of Trust Preferred Securities or
security entitlements thereto, or an appropriate Applicable Ownership Interest
(as specified in clause (A) of the definition of such term) of the Treasury
Portfolio or the Debentures or security entitlements thereto, as the case may
be, and receipt of the related instruction from the Collateral Agent, the
Securities Intermediary shall release the applicable Pledged Treasury Securities
and shall promptly Transfer the same to the Purchase Contract Agent for
distribution to such Holder, free and clear of any lien, pledge or security
interest created hereby.
Section 5.4 Termination Event. (a) Upon receipt by the Collateral Agent of
written notice from the Company or the Purchase Contract Agent that a
Termination Event has occurred, the Collateral Agent shall release all
Collateral from the Pledge and shall promptly Transfer:
(1) any Pledged Preferred Securities or the Applicable Ownership
Interest (as specified in clause (A) of the definition of such term) of
the Treasury Portfolio (if a Tax Event Redemption has occurred and the
Treasury Portfolio has become a component of the Corporate PIES) or the
Pledged Debentures (if the Trust has been liquidated, and the Debentures
or security entitlements thereto have become a component of the Corporate
PIES); or
(2) any Pledged Treasury Securities
to the Purchase Contract Agent for the benefit of the Holders, for distribution
to such Holders in accordance with their respective interests, free and clear of
any lien, pledge or security interest or other interest created hereby.
(b) If such Termination Event shall result from the Company's becoming a
debtor under the Bankruptcy Code, and if the Collateral Agent shall for any
reason fail promptly to effectuate the release and Transfer of all Pledged
Preferred Securities, the Applicable Ownership Interest (as specified in clause
(A) of the definition of such term) of the Treasury Portfolio, the Pledged
Debentures or the Pledged Treasury Securities, as the case may be, as provided
by this Section 5.4, the Purchase Contract Agent shall:
(1) use its best efforts to obtain an opinion of a nationally
recognized law firm reasonably acceptable to the Collateral Agent to the
effect that, as a result of the Company's being the debtor in such a
bankruptcy case, the Collateral Agent will not be prohibited from
releasing or Transferring the Collateral as provided in this Section 5.4,
and shall deliver such opinion to the Collateral Agent within ten days
after the occurrence of such Termination Event, and if (A) the Purchase
Contract Agent shall be unable to obtain such opinion within ten days
after the occurrence of such Termination Event or (B) the Collateral Agent
shall continue, after delivery of such opinion, to refuse to effectuate
the release and Transfer of
14
all Pledged Preferred Securities, Applicable Ownership Interest (as
specified in clause (A) of the definition of such term) of the Treasury
Portfolio, all the Pledged Debentures or the Pledged Treasury Securities,
as the case may be, as provided in this Section 5.4, then the Purchase
Contract Agent shall within fifteen days after the occurrence of such
Termination Event commence an action or proceeding in the court having
jurisdiction of the Company's case under the Bankruptcy Code seeking an
order requiring the Collateral Agent to effectuate the release and
transfer of all Pledged Preferred Securities, the Applicable Ownership
Interest (as specified in clause (A) of the definition of such term) of
the Treasury Portfolio, all the Pledged Debentures or the Pledged Treasury
Securities, as the case may be, as provided by this Section 5.4; or
(2) commence an action or proceeding like that described in clause
5.4(b)(1)(B) hereof within ten days after the occurrence of such
Termination Event.
Section 5.5 Cash Settlement. (a) Upon receipt by the Collateral Agent of
(1) a notice from the Purchase Contract Agent promptly after the receipt by the
Purchase Contract Agent of a notice that a Holder of a Corporate PIES or
Treasury PIES has elected, in accordance with the procedures specified in
Section 5.4(a)(i) or (d)(i) of the Purchase Contract Agreement, respectively, to
settle its Purchase Contract with cash and (2) payment by such Holder by deposit
in the Collateral Account on or prior to 11:00 a.m., New York City time, on the
fifth Business Day immediately preceding the Purchase Contract Settlement Date
of lawful money of the United States by certified or cashier's check or wire
transfer of immediately available funds payable to or upon the order of the
Securities Intermediary, then the Collateral Agent shall (i) instruct the
Securities Intermediary promptly to invest any such Cash in Permitted
Investments and (ii) release from the Pledge, (1) Pledged Preferred Securities
or the appropriate Applicable Ownership Interest (as specified in clause (A) of
the definition of such term) of the Treasury Portfolio or Pledged Debentures in
the case of a Holder of Corporate PIES or (2) Pledged Treasury Securities in the
case of a Holder of Treasury PIES, as the case may be, with a liquidation or
principal amount equal to the product of (x) the Stated Amount times (y) the
number of such Purchase Contracts as to which such Holders have elected to
effect a cash settlement pursuant to this Section 5.5(a) and shall instruct the
Securities Intermediary to Transfer all such Pledged Preferred Securities or the
appropriate Applicable Ownership Interest (as specified in clause (A) of the
definition of such term) of the Treasury Portfolio or Pledged Debentures or
Pledged Treasury Securities, as the case may be, to the Purchase Contract Agent
for the benefit of such Holders, in each case free and clear of the Pledge
created hereby, for distribution to such Holders in accordance with their
respective interests. Upon receipt of the proceeds upon the maturity of the
Permitted Investments on the Purchase Contract Settlement Date, the Collateral
Agent shall (A) instruct the Securities Intermediary to pay the portion of such
proceeds and deliver any certified or cashier's checks received, in an aggregate
amount equal to the Purchase Price, to the Company on the Purchase Contract
Settlement Date, and (B) instruct the Securities Intermediary to release any
amounts in respect of the interest earned from such Permitted Investments to the
Purchase Contract Agent for distribution to the relevant Holders in accordance
with their respective interests.
15
(b) If a Holder of a Corporate PIES notifies the Purchase Contract Agent
as provided in paragraph 5.4(a)(i) of the Purchase Contract Agreement of its
intention to pay the Purchase Price in cash, but fails to make such payment as
required by paragraph 5.4(a)(ii) of the Purchase Contract Agreement, such Holder
shall be deemed to have consented to the disposition of the Pledged Preferred
Securities or Pledged Debentures of such Holder in accordance with paragraph
5.4(a)(iii) of the Purchase Contract Agreement.
(c) If a Holder of a Treasury PIES or Corporate PIES (if a Tax Event
Redemption has occurred) notifies the Purchase Contract Agent as provided in
paragraph 5.4(d)(i) of the Purchase Contract Agreement of its intention to pay
the Purchase Price in cash, but fails to make such payment as required by
paragraph 5.4(d)(ii) of the Purchase Contract Agreement, such Holder shall be
deemed to have elected to pay the Purchase Price in accordance with paragraph
5.4(d)(iii) of the Purchase Contract Agreement..
(d) Prior to 3:00 p.m., New York City time, on the fourth Business Day
immediately preceding the Purchase Contract Settlement Date, the Securities
Intermediary shall deliver to the Purchase Contract Agent a notice,
substantially in the form of Exhibit E hereto, stating (i) the amount of cash
that it has received with respect to the Cash Settlement of Corporate PIES and
(ii) the amount of cash that it has received with respect to the Cash Settlement
of Treasury PIES.
Section 5.6 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, (a0 Pledged Preferred Securities or the appropriate
Applicable Ownership Interest (as specified in clause (A) of the definition of
such term) of the Treasury Portfolio or Pledged Debentures in the case of a
Holder of Corporate PIES or (b) Pledged Treasury Securities in the case of a
Holder of Treasury PIES, as the case may be, with a liquidation or principal
amount equal to the product of (i) the Stated Amount times (ii) the number of
such Purchase Contracts as to which such Holders have elected to effect Early
Settlement and shall instruct the Securities Intermediary to Transfer all such
Pledged Preferred Securities or the appropriate Applicable Ownership Interest
(as specified in clause (A) of the definition of such term) of the Treasury
Portfolio or Pledged Debentures or Pledged Treasury Securities, as the case may
be, to the Purchase Contract Agent for the benefit of such Holders, in each case
free and clear of the Pledge created hereby, for distribution to such Holders in
accordance with their respective interests.
Section 5.7 Application of Proceeds Settlement. (a) If a Holder of
Corporate PIES (if a Tax Event Redemption has not occurred and the Trust
Preferred Securities or Debentures or security entitlements to either of them
are a component of the Corporate PIES) has not elected to make an
16
effective Cash Settlement by notifying the Purchase Contract Agent in the manner
provided for in Section 5.4(a)(i) in the Purchase Contract Agreement, or has
given such notice but failed to deliver the required cash prior to 11:00 A.M.,
New York City time, on the fifth Business Day immediately preceding the Purchase
Contract Settlement Date, such Holder shall be deemed to have elected to pay for
the shares of Common Stock to be issued under such Purchase Contract(s) from the
Proceeds of the related Pledged Preferred Securities or Pledged Debentures. In
such event, the Collateral Agent shall instruct the Securities Intermediary to
Transfer the related Pledged Preferred Securities or Pledged Debentures to the
Remarketing Agent for remarketing. Upon receiving such Pledged Preferred
Securities or Pledged Debentures, the Remarketing Agent, pursuant to the terms
of the Remarketing Agreement, will use its reasonable efforts to remarket such
Pledged Preferred Securities or Pledged Debentures on such date at a price of
100% of the aggregate liquidation amount of such Pledged Preferred Securities or
aggregate principal amount of such Pledged Debentures, as the case may be. The
Remarketing Agent will deposit the entire amount of the Proceeds of such
remarketing in the Collateral Account. On the Purchase Contract Settlement Date,
the Collateral Agent shall instruct the Securities Intermediary to apply the
Proceeds from such remarketing equal to the aggregate liquidation amount of such
Pledged Preferred Securities or aggregate principal amount of such Pledged
Debentures, as the case may be, to satisfy in full the obligations of such
Holders of Corporate PIES to pay the Purchase Price to purchase the Common Stock
under the related Purchase Contracts. If the Remarketing Agent advises the
Collateral Agent in writing that it cannot remarket the related Pledged
Preferred Securities or Pledged Debentures, as the case may be, of such Holders
of Corporate PIES at a price equal to 100% of the aggregate liquidation amount
of such Pledged Preferred Securities or aggregate principal amount of such
Pledged Debentures, thus resulting in a Failed Remarketing and an event of
default under the Purchase Contract Agreement and hereunder, the Collateral
Agent, for the benefit of the Company shall, at the written direction of the
Company, dispose of the Pledged Preferred Securities or Pledged Debentures, as
the case may be, in accordance with applicable law and satisfy in full, from
such disposition, such Holders' obligation to pay the Purchase Price for the
Common Stock.
(b) If a Holder of Treasury PIES or Corporate PIES (if a Tax Event
Redemption has occurred) has not elected to make an effective cash settlement by
notifying the Purchase Contract Agent in the manner provided for in Section
5.4(d)(i) of the Purchase Contract Agreement, or has given such notice but
failed to make such payment in the manner required by Section 5.4(d)(ii) of the
Purchase Contract Agreement, such Holder shall be deemed to have elected to pay
for the shares of Common Stock to be issued under such Purchase Contract(s) from
the Proceeds of the related Pledged Treasury Securities or such Applicable
Ownership Interest (as specified in clause (A) of the definition of such term)
of the Treasury Portfolio, as the case may be. On the Business Day immediately
prior to the Purchase Contract Settlement Date, the Securities Intermediary, at
the written direction of the Collateral Agent, shall invest the Cash Proceeds of
the maturing Pledged Treasury Securities or such Applicable Ownership Interest
(as specified in clause (A) of the definition of such term) of the Treasury
Portfolio, as the case may be, in Permitted Investments. Without receiving any
instruction from any such Holder of Treasury PIES or Corporate PIES, the
Collateral Agent shall apply the Proceeds of the related Pledged Treasury
Securities or such Applicable Ownership Interest (as specified in clause (A) of
the definition of such term) of the Treasury Portfolio to the settlement of such
Purchase Contracts on the Purchase Contract Settlement
17
Date. In the event the sum of the Proceeds from the related Pledged Treasury
Securities or such Applicable Ownership Interest (as specified in clause (A) of
the definition of such term) of the Treasury Portfolio and the investment
earnings from the investment in Permitted Investments is in excess of the
aggregate Purchase Price of the Purchase Contracts being settled thereby, the
Collateral Agent shall instruct the Securities Intermediary to distribute such
excess, when received, to the Purchase Contract Agent for the benefit of such
Holders for distribution to such Holders in accordance with their respective
interests.
Section 5.8 Tax Event Redemption. If the Tax Event Redemption shall occur
prior to the Purchase Contract Settlement Date, the Securities Intermediary
shall apply the Redemption Amount to purchase the Treasury Portfolio and the
Securities Intermediary shall credit the Applicable Ownership Interest (as
specified in clause (A) of the definition of such term) of the Treasury
Portfolio to the Collateral Account and shall transfer the Applicable Ownership
Interest (as specified in clause (B) of the definition of such term) of the
Treasury Portfolio to the Purchase Contract Agent for distribution to the
Holders of the Corporate PIES. Upon credit to the Collateral Account of the
Applicable Ownership Interest (as specified in clause (A) of the definition of
such term) of the Treasury Portfolio having a Value equal to the liquidation
amount of the Pledged Preferred Securities or the aggregate principal amount of
the Pledged Debentures, the Securities Intermediary shall release the Pledged
Preferred Securities or the Pledged Debentures, as applicable, from the
Collateral Account and shall promptly transfer the Pledged Preferred Securities
to the Trust and the Pledged Debentures to the Finance Subsidiary, as
applicable.
Section 6. Voting Rights -- Trust Preferred Securities and Pledged
Debentures. The Purchase Contract Agent may exercise, or refrain from
exercising, any and all voting and other consensual rights pertaining to the
Pledged Preferred Securities or the Pledged Debentures 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 Purchase Contract Agent, such
action would impair or otherwise have a material adverse effect on the value of
all or any of the Pledged Preferred Securities or the Pledged Debentures; and
provided, further, that the Purchase Contract Agent shall give the Company and
the Collateral Agent at least five days' prior written notice of the manner in
which it intends to exercise, or its reasons for refraining from exercising, any
such right. Upon receipt of any notices and other communications in respect of
any Pledged Preferred Securities or any Pledged Debentures, including notice of
any meeting at which holders of Trust Preferred Securities or Debentures are
entitled to vote or solicitation of consents, waivers or proxies of holders of
Trust Preferred Securities or Debentures, the Collateral Agent shall use
reasonable efforts to send promptly to the Purchase Contract Agent such notice
or communication, and as soon as reasonably practicable after receipt of a
written request therefor from the Purchase Contract Agent, execute and deliver
to the Purchase Contract Agent such proxies and other instruments in respect of
such Pledged Preferred Securities or Pledged Debentures (in form and substance
satisfactory to the Collateral Agent) as are prepared by the Purchase Contract
Agent with respect to the Pledged Preferred Securities or Pledged Debentures.
Section 7. Rights and Remedies; Distribution of the Debentures; Tax Event
Redemption
18
Section 7.1 Rights and Remedies of the Collateral Agent. (a) In addition
to the rights and remedies specified in Section 5.5 hereof or otherwise
available at law or in equity, after an event of default (as specified in
Section 7.1(b) below) hereunder the Collateral Agent shall have all of the
rights and remedies with respect to the Collateral of a secured party under the
Code (whether or not the Code is in effect in the jurisdiction where the rights
and remedies are asserted) and the TRADES Regulations and such additional rights
and remedies to which a secured party is entitled under the laws in effect in
any jurisdiction where any rights and remedies hereunder may be asserted.
Without limiting the generality of the foregoing, such remedies may include, to
the extent permitted by applicable law, (i) retention of the Pledged Preferred
Securities or Pledged Debentures in full satisfaction of the Holders'
obligations under the Purchase Contracts or (ii) sale of the Pledged Preferred
Securities or Pledged Debentures in one or more public or private sales.
(b) Without limiting any rights or powers otherwise granted by this
Agreement to the Collateral Agent, in the event the Collateral Agent is unable
to make payments to the Company on account of the appropriate Applicable
Ownership Interest (as specified in clause (A) of the definition of such term)
of the Treasury Portfolio or on account of principal payments of any Pledged
Treasury Securities as provided in Section 3 hereof, in satisfaction of the
Obligations of the Holder of the Securities of which such Pledged Treasury
Securities or the appropriate Applicable Ownership Interest (as specified in
clause (A) of the definition of such term) of the Treasury Portfolio, as
applicable, is a part under the related Purchase Contracts, the inability to
make such payments shall constitute an event of default hereunder and the
Collateral Agent shall have and may exercise, with reference to such Pledged
Treasury Securities or such appropriate Applicable Ownership Interest (as
specified in clause (A) of the definition of such term) of the Treasury
Portfolio, as applicable, and such obligations of such Holder, any and all of
the rights and remedies available to a secured party under the Code and the
TRADES Regulations after default by a debtor, and as otherwise granted herein or
under any other law.
(c) Without limiting any rights or powers otherwise granted by this
Agreement to the Collateral Agent, the Collateral Agent is hereby irrevocably
authorized to receive and collect all payments of (i) the liquidation amount of
or, cash distributions on, the Pledged Preferred Securities, (ii) the principal
amount of the Pledged Treasury Securities, (iii) the appropriate Applicable
Ownership Interest (as specified in clause (A) of the definition of such term)
of the Treasury Portfolio and (iv) the principal amount of the Pledged
Debentures, subject, in each case, to the provisions of Section 3 hereof, and as
otherwise granted herein.
(d) The Purchase Contract Agent and each Holder of Securities, in the
event such Holder becomes the Holder of a Treasury PIES, 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.
19
Section 7.2 Substitution of Debentures. If the Trust shall have been
liquidated prior to the Purchase Contract Settlement Date, the Collateral Agent
shall transfer to the Securities Intermediary Debentures having a Value equal to
the liquidation amount of the Pledged Preferred Securities for credit to the
Collateral Account. Upon credit to the Collateral Account of such Debentures,
the Securities Intermediary shall release the Pledged Preferred Securities from
the Collateral Account and shall promptly transfer the same to the Trust.
Section 7.3 Tax Event Redemption. Upon the occurrence of a Tax Event
Redemption prior to the Purchase Contract Settlement Date, the Redemption Price
payable on the Tax Event Redemption Date with respect to the Applicable
Principal Amount shall be credited to the Collateral Account by the Property
Trustee or, upon a dissolution of the Trust and the distribution of the related
Debentures, by the Debenture Trustee on or prior to 12:30 p.m., New York City
time, by federal funds check or wire transfer of immediately available funds.
The Collateral Agent is hereby authorized to present the Pledged Preferred
Securities or the Pledged Debentures for payment as may be required by their
respective terms. Upon receipt of such funds, the Pledged Preferred Securities
or Pledged Debentures, as the case may be, shall be released from the Collateral
Account. In the event such funds are credited to the Collateral Account, the
Collateral Agent, at the written direction of the Company, shall instruct the
Securities Intermediary to (a) apply an amount equal to the Redemption Amount of
such Redemption Price to purchase the Treasury Portfolio from the Quotation
Agent for credit to the Collateral Account and (b) promptly remit the remaining
portion of such Redemption Price to the Purchase Contract Agent for payment to
the Holders of Corporate PIES.
Section 7.4 Substitutions. Whenever a Holder has the right to substitute
Treasury Securities, Trust Preferred Securities, Debentures or security
entitlements to any of them or the appropriate Applicable Ownership Interest of
the Treasury Portfolio, as the case may be, for financial assets held in the
Collateral Account, such substitution shall not constitute a novation of the
security interest created hereby.
Section 8. Representations and Warranties; Covenants.
Section 8.1 Representations and Warranties. 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 Securities Intermediary for credit to the
Collateral Account, free and clear of any security interest,
lien, encumbrance, call, liability to pay
20
money or other restriction other than the security interest
and lien granted under Section 2 hereof;
(c) upon the Transfer of the Collateral to the Securities
Intermediary for credit to the Collateral Account, the
Collateral Agent, for the benefit of the Company, will have a
valid and perfected first priority security interest therein
(assuming that any central clearing operation or any
securities intermediary or other entity not within the control
of the Holder involved in the Transfer of the Collateral,
including the Collateral Agent and the Securities
Intermediary, gives the notices and takes the action required
of it hereunder and under applicable law for perfection of
that interest and assuming the establishment and exercise of
control pursuant to Section 4 hereof); and
(d) the execution and performance by the Holder of its obligations
under this Agreement will not result in the creation of any
security interest, lien or other encumbrance on the Collateral
other than the security interest and lien granted under
Section 2 hereof or violate any provision of any existing law
or regulation applicable to it or of any mortgage, charge,
pledge, indenture, contract or undertaking to which it is a
party or which is binding on it or any of its assets.
Section 8.2 Covenants. The Holders from time to time, acting through the
Purchase Contract Agent as their attorney-in-fact (it being understood that the
Purchase Contract Agent shall not be liable for any covenant made by or on
behalf of a Holder), hereby covenant to the Collateral Agent that for so long as
the Collateral remains subject to the Pledge:
(a) neither the Purchase Contract Agent nor such Holders will
create or purport to create or allow to subsist any mortgage,
charge, lien, pledge or any other security interest whatsoever
over the Collateral or any part of it other than pursuant to
this Agreement; and
(b) neither the Purchase Contract Agent nor such Holders will sell
or otherwise dispose (or attempt to dispose) of the Collateral
or any part of it except for the beneficial interest therein,
subject to the Pledge hereunder, transferred in connection
with the Transfer of the Securities.
Section 9. The Collateral Agent and the Securities Intermediary. It is
hereby agreed as follows:
Section 9.1 Appointment, Powers and Immunities. The Collateral Agent shall
act as agent for the Company hereunder with such powers as are specifically
vested in the Collateral Agent by the terms of this Agreement, together with
such other powers as are reasonably incidental thereto. The Collateral Agent:
(a) shall have no duties or responsibilities except those expressly set forth in
21
this Agreement and no implied covenants or obligations shall be inferred from
this Agreement against the Collateral Agent, nor shall the Collateral Agent be
bound by the provisions of any agreement by any party hereto beyond the specific
terms hereof; (b) shall not be responsible for any recitals contained in this
Agreement, or in any certificate or other document referred to or provided for
in, or received by it under, this Agreement, the Securities or the Purchase
Contract Agreement, or for the value, validity, effectiveness, genuineness,
enforceability or sufficiency of this Agreement (other than as against the
Collateral Agent), the Securities or the Purchase Contract Agreement or any
other document referred to or provided for herein or therein or for any failure
by the Company or any other Person (except the Collateral Agent) to perform any
of its obligations hereunder or thereunder or for the perfection, priority or,
except as expressly required hereby, maintenance of any security interest
created hereunder; (c) shall not be required to initiate or conduct any
litigation or collection proceedings hereunder (except pursuant to directions
furnished under Section 9.2 hereof, subject to Section 9.6 hereof); (d) shall
not be responsible for any action taken or omitted to be taken by it hereunder
or under any other document or instrument referred to or provided for herein or
in connection herewith or therewith, except for its own negligence or willful
misconduct; and (e) shall not be required to advise any party as to selling or
retaining, or taking or refraining from taking any action with respect to, any
securities or other property deposited hereunder. Subject to the foregoing,
during the term of this Agreement, the Collateral Agent shall take all
reasonable action in connection with the safekeeping and preservation of the
Collateral hereunder.
No provision of this Agreement shall require the Collateral Agent to
expend or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder. In no event shall the Collateral
Agent be liable for any amount in excess of the Value of the Collateral.
Notwithstanding the foregoing, each of the Collateral Agent and the Securities
Intermediary in its individual capacity hereby waives any right of setoff,
bankers lien, liens or perfection rights as securities intermediary or any
counterclaim with respect to any of the Collateral.
Section 9.2 Instructions of the Company. The Company shall have the right,
by one or more instruments in writing executed and delivered to the Collateral
Agent, to direct the time, method and place of conducting any proceeding for the
realization of any right or remedy available to the Collateral Agent, or of
exercising any power conferred on the Collateral Agent, or to direct the taking
or refraining from taking of any action authorized by this Agreement; provided,
however, that (i) such direction shall not conflict with the provisions of any
law or of this Agreement and (ii) the Collateral Agent shall be adequately
indemnified as provided herein. Nothing in this Section 9.2 shall impair the
right of the Collateral Agent in its discretion to take any action or omit to
take any action which it deems proper and which is not inconsistent with such
direction.
Section 9.3 Reliance by Collateral Agent and Securities Intermediary. Each
of the Securities Intermediary and the Collateral Agent shall be entitled to
rely upon any certification, order, judgment, opinion, notice or other
communication (including, without limitation, any thereof by telephone,
telecopy, telex or facsimile) believed by it to be genuine and correct and to
have been signed or sent by or on behalf of the proper Person or Persons
(without being required to determine the correctness of any fact stated
therein), and upon advice and statements of legal counsel and other experts
selected by the Collateral Agent and the Securities Intermediary. As to any
matters not ex-
22
pressly provided for by this Agreement, the Collateral Agent and the Securities
Intermediary shall in all cases be fully protected in acting, or in refraining
from acting, hereunder in accordance with instructions given by the Company in
accordance with this Agreement.
Section 9.4 Rights in Other Capacities. The Collateral Agent and the
Securities Intermediary and their affiliates may (without having to account
therefor to the Company) accept deposits from, lend money to, make their
investments in and generally engage in any kind of banking, trust or other
business with the Purchase Contract Agent, any other Person interested herein
and any Holder of Securities (and any of their respective subsidiaries or
affiliates) as if it were not acting as the Collateral Agent, and the Collateral
Agent, the Securities Intermediary and their affiliates may accept fees and
other consideration from the Purchase Contract Agent and any Holder of
Securities without having to account for the same to the Company; provided that
each of the Securities Intermediary and the Collateral Agent covenants and
agrees with the Company that it shall not accept, receive or permit there to be
created in favor of itself and shall take no affirmative action to permit there
to be created in favor of any other Person, any security interest, lien or other
encumbrance of any kind in or upon the Collateral other than the lien created by
the Pledge.
Section 9.5 Non-Reliance on Collateral Agent and Securities Intermediary.
Neither the Securities Intermediary nor the Collateral Agent shall be required
to keep itself informed as to the performance or observance by the Purchase
Contract Agent or any Holder of Securities of this Agreement, the Purchase
Contract Agreement, the Securities or any other document referred to or provided
for herein or therein or to inspect the properties or books of the Purchase
Contract Agent or any Holder of Securities. Neither the Collateral Agent nor the
Securities Intermediary shall have any duty or responsibility to provide the
Company with any credit or other information concerning the affairs, financial
condition or business of the Purchase Contract Agent or any Holder of Securities
(or any of their respective affiliates) that may come into the possession of the
Collateral Agent or the Securities Intermediary or any of their respective
affiliates.
Section 9.6 Compensation and Indemnity. The Company agrees: (i) to pay the
Collateral Agent and the Securities Intermediary from time to time such
compensation as shall be agreed in writing between the Company and the
Collateral Agent or the Securities Intermediary, as the case may be, for all
services rendered by them hereunder and (ii) to indemnify the Collateral Agent
and the Securities Intermediary for, and to hold each of them harmless from and
against, any loss, liability or reasonable out-of-pocket expense incurred
without negligence, willful misconduct or bad faith on its part, arising out of
or in connection with the acceptance or administration of its powers and duties
under this Agreement, including the reasonable out-of-pocket costs and expenses
(including reasonable fees and expenses of counsel) of defending itself against
any claim or liability in connection with the exercise or performance of such
powers and duties.
Section 9.7 Failure to Act. In the event of any ambiguity in the
provisions of this Agreement or any dispute between or conflicting claims by or
among the parties hereto or any other Person with respect to any funds or
property deposited hereunder, the Collateral Agent and the Securities
Intermediary shall be entitled, after prompt notice to the Company and the
Purchase Contract Agent, at its sole option, to refuse to comply with any and
all claims, demands or instructions with respect
23
to such property or funds so long as such dispute or conflict shall continue,
and the Collateral Agent and the Securities Intermediary shall not be or become
liable in any way to any of the parties hereto for its failure or refusal to
comply with such conflicting claims, demands or instructions. The Collateral
Agent and the Securities Intermediary shall be entitled to refuse to act until
either (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 Securities Intermediary or (ii) the Collateral Agent or the
Securities Intermediary shall have received security or an indemnity
satisfactory to it sufficient to save it harmless from and against any and all
loss, liability or reasonable out-of-pocket expense which it may incur by reason
of its acting. The Collateral Agent and the Securities Intermediary may in
addition elect to commence an interpleader action or seek other judicial relief
or orders as the Collateral Agent or the Securities Intermediary may deem
necessary. Notwithstanding anything contained herein to the contrary, neither
the Collateral Agent nor the Securities Intermediary shall be required to take
any action that is in its opinion contrary to law or to the terms of this
Agreement, or which would in its opinion subject it or any of its officers,
employees or directors to liability.
Section 9.8 Resignation of Collateral Agent and Securities Intermediary.
(a) Subject to the appointment and acceptance of a successor Collateral Agent as
provided below, (i) the Collateral Agent may resign at any time by giving notice
thereof to the Company and the Purchase Contract Agent as attorney-in-fact for
the Holders of Securities, (ii) the Collateral Agent may be removed at any time
by the Company and (iii) if the Collateral Agent fails to perform any of its
material obligations hereunder in any material respect for a period of not less
than 20 days after receiving written notice of such failure by the Purchase
Contract Agent and such failure shall be continuing, the Collateral Agent may be
removed by the Purchase Contract Agent. The Purchase Contract Agent shall
promptly notify the Company of any removal of the Collateral Agent pursuant to
clause (iii) of the immediately preceding sentence. Upon any such resignation or
removal, the Company shall have the right to appoint a successor Collateral
Agent. If no successor Collateral Agent shall have been so appointed and shall
have accepted such appointment within 30 days after the retiring Collateral
Agent's giving of notice of resignation or such removal, then the retiring
Collateral Agent may petition any court of competent jurisdiction for the
appointment of a successor Collateral Agent. The Collateral Agent shall be a
bank which has an office in New York, New York with a combined capital and
surplus of at least $50,000,000 and shall not be the Purchase Contract Agent or
any of its affiliates. Upon the acceptance of any appointment as Collateral
Agent hereunder by a successor Collateral Agent, such successor Collateral Agent
shall thereupon succeed to and become vested with all the rights, powers,
privileges and duties of the retiring Collateral Agent, and the retiring
Collateral Agent shall take all appropriate action to transfer any money and
property held by it hereunder (including the Collateral) to such successor
Collateral Agent. The retiring Collateral Agent shall, upon such succession, be
discharged from its duties and obligations as Collateral Agent hereunder. After
any retiring Collateral Agent's resignation hereunder as Collateral Agent, the
provisions of this Section 9 shall continue in effect for its benefit in respect
of any actions taken or omitted to be taken by it while it was acting as the
Collateral Agent.
(b) Subject to the appointment and acceptance of a successor Securities
Intermediary as provided below, (i) the Securities Intermediary may resign at
any time by giving notice thereof to
24
the Company and the Purchase Contract Agent as attorney-in-fact for the Holders
of Securities, (ii) the Securities Intermediary may be removed at any time by
the Company and (iii) if the Securities Intermediary fails to perform any of its
material obligations hereunder in any material respect for a period of not less
than 20 days after receiving written notice of such failure by the Purchase
Contract Agent and such failure shall be continuing, the Securities Intermediary
may be removed by the Purchase Contract Agent. The Purchase Contract Agent shall
promptly notify the Company of any removal of the Securities Intermediary
pursuant to clause (iii) of the immediately preceding sentence. Upon any such
resignation or removal, the Company shall have the right to appoint a successor
Securities Intermediary. If no successor Securities Intermediary shall have been
so appointed and shall have accepted such appointment within 30 days after the
retiring Securities Intermediary's giving of notice of resignation or such
removal, then the retiring Securities Intermediary may petition any court of
competent jurisdiction for the appointment of a successor Securities
Intermediary. The Securities Intermediary shall be a bank which has an office in
New York, New York with a combined capital and surplus of at least $50,000,000
and shall not be the Purchase Contract Agent or any of its affiliates. Upon the
acceptance of any appointment as Securities Intermediary hereunder by a
successor Securities Intermediary, such successor Securities Intermediary shall
thereupon succeed to and become vested with all the rights, powers, privileges
and duties of the retiring Securities Intermediary, and the retiring Securities
Intermediary shall take all appropriate action to transfer any money and
property held by it hereunder (including the Collateral) to such successor
Securities Intermediary. The retiring Securities Intermediary shall, upon such
succession, be discharged from its duties and obligations as Securities
Intermediary hereunder. After any retiring Securities Intermediary's resignation
hereunder as Securities Intermediary, the provisions of this Section 9 shall
continue in effect for its benefit in respect of any actions taken or omitted to
be taken by it while it was acting as the Securities Intermediary.
Section 9.9 Right to Appoint Agent or Advisor. The Collateral Agent shall
have the right to appoint agents or advisors in connection with any of its
duties hereunder, and the Collateral Agent shall not be liable for any action
taken or omitted by, or in reliance upon the advice of, such agents or advisors
selected in good faith. The appointment of agents pursuant to this Section 9.9
shall be subject to prior consent of the Company, which consent shall not be
unreasonably withheld.
Section 9.10 Survival. The provisions of this Section 9 shall survive
termination of this Agreement and the resignation or removal of the Collateral
Agent or the Securities Intermediary.
Section 9.11 Exculpation. Anything in this Agreement to the contrary
notwithstanding, in no event shall the Collateral Agent or the Securities
Intermediary or their officers, directors, employees or agents be liable under
this Agreement to any third party for indirect, special, punitive, or
consequential loss or damage of any kind whatsoever, including lost profits,
whether or not the likelihood of such loss or damage was known to the Collateral
Agent or the Securities Intermediary, or any of them, incurred without any act
or deed that is found to be attributable to gross negligence or willful
misconduct on the part of the Collateral Agent or the Securities Intermediary.
Section 10. Amendment
25
Section 10.1 Amendment Without Consent of Holders. Without the consent of
any Holders, the Company, the Collateral Agent, the Securities Intermediary and
the Purchase Contract Agent, at any time and from time to time, may amend this
Agreement, in form satisfactory to the Company, the Collateral Agent, the
Securities Intermediary and the Purchase Contract Agent, for any of the
following purposes:
(1) to evidence the succession of another Person to the Company, and
the assumption by any such successor of the covenants of the Company;
(2) to add to the covenants of the Company for the benefit of the
Holders, or to surrender any right or power herein conferred upon the
Company so long as such covenants or such surrender do not adversely
affect the validity, perfection or priority of the Pledge created
hereunder;
(3) to evidence and provide for the acceptance of appointment
hereunder by a successor Collateral Agent, Securities Intermediary or
Purchase Contract Agent; or
(4) to cure any ambiguity (or formal defect), to correct or
supplement any provisions herein which may be inconsistent with any other
such provisions herein, or to make any other provisions with respect to
such matters or questions arising under this Agreement, provided such
action shall not adversely affect the interests of the Holders.
Section 10.2 Amendment with Consent of Holders. With the consent of the
Holders of not less than a majority of the Purchase Contracts at the time
outstanding, by Act of said Holders delivered to the Company, the Purchase
Contract Agent, the Securities Intermediary or the Collateral Agent, as the case
may be, the Company, when duly authorized, the Purchase Contract Agent, the
Securities Intermediary and the Collateral Agent may amend this Agreement for
the purpose of modifying in any manner the provisions of this Agreement or the
rights of the Holders in respect of the Securities; provided, however, that no
such supplemental agreement shall, without the unanimous consent of the Holders
of each Outstanding Security adversely affected thereby,
(1) change the amount or type of Collateral underlying a Security
(except for the rights of holders of Corporate PIES to substitute the
Treasury Securities for the Pledged Preferred Securities, the Pledged
Debentures 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 rights of Holders of Treasury PIES to
substitute Trust Preferred Securities, Debentures or the appropriate
Applicable Ownership Interest (as specified in clause (A) of the
definition of such term) of the Treasury Portfolio, as applicable, for the
Pledged Treasury Securities), impair the right of the Holder of any
Security to receive distributions on the underlying Collateral or
otherwise adversely affect the Holder's rights in or to such Collateral;
or
26
(2) otherwise effect any action that would require the consent of
the Holder of each Outstanding Security affected thereby pursuant to the
Purchase Contract Agreement if such action were effected by an agreement
supplemental thereto; or
(3) reduce the percentage of Purchase Contracts the consent of whose
Holders is required for any such amendment;
provided that if any amendment or proposal referred to above would adversely
affect only the Corporate PIES or the Treasury PIES, then only the affected
class of Holder as of the record date for the Holders entitled to vote thereon
will be entitled to vote on such amendment or proposal, and such amendment or
proposal shall not be effective except with the consent of Holders of not less
than a majority of such class; provided that the unanimous consent of the
Holders of each outstanding Purchase Contract of such class affected thereby
shall be required to approve any amendment or proposal specified in clauses
(1) - (3) above.
It shall not be necessary for any Act of Holders under this Section to approve
the particular form of any proposed amendment, but it shall be sufficient if
such Act shall approve the substance thereof.
Section 10.3 Execution of Amendments. In executing any amendment permitted
by this Section, the Collateral Agent, the Securities Intermediary and the
Purchase Contract Agent shall be entitled to receive and (subject to Section 7.1
of the Purchase Contract Agreement with respect to the Purchase Contract Agent)
shall be fully protected in relying upon, an Opinion of Counsel stating that the
execution of such amendment is authorized or permitted by this Agreement and
that all conditions precedent, if any, to the execution and delivery of such
amendment have been satisfied.
Section 10.4 Effect of Amendments. Upon the execution of any amendment
under this Section, this Agreement shall be modified in accordance therewith,
and such amendment shall form a part of this Agreement for all purposes; and
every Holder of Certificates theretofore or thereafter authenticated, executed
on behalf of the Holders and delivered under the Purchase Contract Agreement
shall be bound thereby.
Section 10.5 Reference to Amendments. Certificates authenticated, executed
on behalf of the Holders and delivered after the execution of any amendment
pursuant to this Section may, and shall if required by the Collateral Agent or
the Purchase Contract Agent, bear a notation in form approved by the Purchase
Contract Agent and the Collateral Agent as to any matter provided for in such
amendment. If the Company shall so determine, new Security Certificates so
modified as to conform, in the opinion of the Collateral Agent, the Purchase
Contract Agent and the Company, to any such amendment may be prepared and
executed by the Company and authenticated, executed on behalf of the Holders and
delivered by the Purchase Contract Agent in accordance with the Purchase
Contract Agreement in exchange for Outstanding Security Certificates.
27
Section 11. Miscellaneous
Section 11.1 No Waiver. No failure on the part of the Collateral Agent or
any of its agents to exercise, and no course of dealing with respect to, and no
delay in exercising, any right, power or remedy hereunder shall operate as a
waiver thereof; nor shall any single or partial exercise by the Collateral Agent
or any of its agents of any right, power or remedy hereunder preclude any other
or further exercise thereof or the exercise of any other right, power or remedy.
The remedies herein are cumulative and are not exclusive of any remedies
provided by law.
Section 11.2 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 Company,
the Securities Intermediary, the Collateral Agent and the Holders from time to
time acting through the Purchase Contract Agent, as their attorney-in-fact, in
connection with the establishment and maintenance of the Collateral Account. The
Company, the Collateral Agent, the Securities Intermediary and the Holders from
time to time of the Securities, acting through the Purchase Contract Agent as
their attorney-in-fact, hereby submit to the nonexclusive jurisdiction of the
United States District Court for the Southern District of New York and of any
New York state court sitting in New York City for the purposes of all legal
proceedings arising out of or relating to this Agreement or the transactions
contemplated hereby. The Company, the Collateral Agent, the Securities
Intermediary and the Holders from time to time of the Securities, acting through
the Purchase Contract Agent as their attorney-in-fact, irrevocably waive, to the
fullest extent permitted by applicable law, any objection which they may now or
hereafter have to the laying of the venue of any such proceeding brought in such
a court and any claim that any such proceeding brought in such a court has been
brought in an inconvenient forum.
Section 11.3 Notices. All notices, requests, consents and other
communications provided for herein (including, without limitation, any
modifications of, or waivers or consents under, this Agreement) shall be given
or made in writing (including, without limitation, by telecopy) delivered to the
intended recipient at the "Address for Notices" specified below its name on the
signature pages hereof or, as to any party, at such other address as shall be
designated by such party in a notice to the other parties. Except as otherwise
provided in this Agreement, all such communications shall be deemed to have been
duly given when transmitted by telecopier or personally delivered or, in the
case of a mailed notice, upon receipt, in each case given or addressed as
aforesaid.
Section 11.4 Successors and Assigns. This Agreement shall be binding upon
and inure to the benefit of the respective successors and assigns of the
Company, the Collateral Agent, the Securities Intermediary and the Purchase
Contract Agent, and the Holders from time to time of the Securities, by their
acceptance of the same, shall be deemed to have agreed to be bound by the
provisions hereof and to have ratified the agreements of, and the grant of the
Pledge hereunder by, the Purchase Contract Agent.
28
Section 11.5 Counterparts. This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one and the same
instrument, and any of the parties hereto may execute this Agreement by signing
any such counterpart.
Section 11.6 Severability. If any provision hereof is invalid and
unenforceable in any jurisdiction, then, to the fullest extent permitted by law,
(i) the other provisions hereof shall remain in full force and effect in such
jurisdiction and shall be liberally construed in order to carry out the
intentions of the parties hereto as nearly as may be possible and (ii) the
invalidity or unenforceability of any provision hereof in any jurisdiction shall
not affect the validity or enforceability of such provision in any other
jurisdiction.
Section 11.7 Expenses, etc. The Company agrees to reimburse the Collateral
Agent and the Securities Intermediary for: (a) all reasonable out-of-pocket
costs and expenses of the Collateral Agent (including, without limitation, the
reasonable fees and expenses of counsel to the Collateral Agent and the
Securities Intermediary), in connection with (i) the negotiation, preparation,
execution and delivery or performance of this Agreement and (ii) any
modification, supplement or waiver of any of the terms of this Agreement; (b)
all reasonable costs and expenses of the Collateral Agent and the Securities
Intermediary (including, without limitation, reasonable fees and expenses of
counsel) in connection with (i) any enforcement or proceedings resulting or
incurred in connection with causing any Holder of Securities to satisfy its
obligations under the Purchase Contracts forming a part of the Securities and
(ii) the enforcement of this Section 11.7; 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 11.8 Security Interest Absolute. All rights of the Collateral
Agent and security interests hereunder, and all obligations of the Holders from
time to time hereunder, shall be absolute and unconditional irrespective of:
(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.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
NIPSCO INDUSTRIES, INC. THE CHASE MANHATTAN BANK, as Purchase
Contract Agent and as attorney-in-fact
of the Holders from time to time of the
Securities
By:
---------------------------------- By:
Name: -------------------------------------
Title: Name:
Title:
Address for Notices:
Address for Notices:
801 East 86th Avenue
Merrillville, Indiana 46410-6272 450 West 33rd Street
New York, New York 10001
Attention: Stephen P. Adik
Telecopy: 219-647-6060 Attention: Corporate Trust Group
Telecopy: 212-946-8159
THE FIRST NATIONAL BANK OF THE FIRST NATIONAL BANK OF
CHICAGO, as Collateral Agent CHICAGO, as Securities Intermediary
By: By:
---------------------------------- -------------------------------------
Name: Name:
Title: Title:
Address for Notices: Address for Notices:
One First National Plaza One First National Plaza
Suite 0126 Suite 0126
Chicago, Illinois 60670-0126 Chicago, Illinois 60670-0126
Attention: Global Corporate Services Attention: Global Corporate Services
Telecopy: 312-407-1708 Telecopy: 312-407-1708
EXHIBIT A
INSTRUCTION
FROM PURCHASE CONTRACT AGENT
TO COLLATERAL AGENT
(Establishment of Treasury PIES)
The First National Bank of Chicago
1 North State Street, 9th Floor
Chicago, Illinois 60602
Attention: Corporate Trust Administration Department
Telecopy: 312-407-1708
Re: ________ PIES of NIPSCO Industries, Inc.
(the "Company") and NIPSCO Capital Trust I
Please refer to the Pledge Agreement dated as of February __, 1999 (the
"Pledge Agreement"), among the Company, you, as Collateral Agent, The First
National Bank of Chicago, as Securities Intermediary, and the undersigned, as
Purchase Contract Agent and as attorney-in-fact for the holders of PIES from
time to time. Capitalized terms used herein but not defined shall have the
meaning set forth in the Pledge Agreement.
We hereby notify you in accordance with Section 5.2 of the Pledge
Agreement that the holder of securities named below (the "Holder") has elected
to substitute $__________ Value of Treasury Securities or security entitlements
thereto in exchange for [an equal Value of [Pledged Preferred Securities]
[Pledged Debentures]] [the appropriate Applicable Ownership Interest (as
specified in clause (A) of the definition of such term) of the Treasury
Portfolio relating to _____ Corporate PIES] and has delivered to the undersigned
a notice stating that the Holder has Transferred such Treasury Securities or
security entitlements thereto to the Securities Intermediary, for credit to the
Collateral Account.
We hereby request that you instruct the Securities Intermediary, upon
confirmation that such Treasury Securities or security entitlements thereto have
been credited to the Collateral Account, to release to the undersigned [an equal
Value of [Pledged Preferred Securities] [Pledged Debentures]] [an appropriate
Applicable Ownership Interest (as specified in clause (A) of the definition of
such term) of the Treasury Portfolio relating to __________ Corporate PIES] in
accordance with Section 5.2 of the Pledge Agreement.
THE CHASE MANHATTAN BANK
Date: By:
-------------------- -------------------------------------
Name:
Title:
2
Please print name and address of Holder electing to substitute Treasury
Securities or security entitlements thereto for the [Pledged Preferred
Securities] [Pledged Debentures] [appropriate Applicable Ownership Interest (as
specified in clause (A) of the definition of such term) of the Treasury
Portfolio]:
- ----------------------------------- ----------------------------------------
Name Social Security or other
Taxpayer Identification Number,
if any
- -----------------------------------
Address
- -----------------------------------
- -----------------------------------
EXHIBIT B
INSTRUCTION
FROM COLLATERAL AGENT
TO SECURITIES INTERMEDIARY
(Establishment of Treasury PIES)
The First National Bank of Chicago
1 North State Street, 9th Floor
Chicago, Illinois 60602
Attention: Corporate Trust Administration Department
Telecopy: 312-407-1708
Re: ________ PIES of NIPSCO Industries, Inc.
(the "Company") and NIPSCO Capital Trust I
Securities Account No. _________ entitled "The First National
Bank of Chicago, as Collateral Agent, Securities Account
(NIPSCO Capital Trust I)" (the "Collateral Account")
Please refer to the Pledge Agreement dated as of February __, 1999 (the
"Pledge Agreement"), among the Company, you, as Securities Intermediary, The
Chase Manhattan Bank, as Purchase Contract Agent and as attorney-in-fact for the
holders of PIES from time to time, and the undersigned, as Collateral Agent.
Capitalized terms used herein but not defined shall have the meaning set forth
in the Pledge Agreement.
When you have confirmed that $__________ Value of Treasury Securities or
security entitlements thereto has been credited to the Collateral Account by or
for the benefit of _________, as Holder of PIES (the "Holder"), you are hereby
instructed to release from the Collateral Account [an equal Value of [Trust
Preferred Securities or security entitlements thereto] [Debentures or security
entitlements thereto]] [the appropriate Applicable Ownership Interest (as
specified in clause (A) of the definition of such term) of the Treasury
Portfolio relating to ______ Corporate PIES of the Holder] by Transfer to the
Purchase Contract Agent.
THE FIRST NATIONAL BANK OF CHICAGO
Dated: By:
-------------------- -------------------------------------
Name:
Title:
2
Please print name and address of Holder:
- ----------------------------------- ----------------------------------------
Name Social Security or other
Taxpayer Identification Number,
if any
- -----------------------------------
Address
- -----------------------------------
- -----------------------------------
EXHIBIT C
INSTRUCTION
FROM PURCHASE CONTRACT AGENT
TO COLLATERAL AGENT
(Reestablishment of Corporate PIES)
The First National Bank of Chicago
1 North State Street, 9th Floor
Chicago, Illinois 60602
Attention: Corporate Trust Administration Department
Telecopy: 312-407-1708
Re: ________ PIES of NIPSCO Industries, Inc.
(the "Company") and NIPSCO Capital Trust I
Please refer to the Pledge Agreement dated as of February __, 1999 (the
"Pledge Agreement"), among the Company, you, as Collateral Agent, The First
National Bank of Chicago, as Securities Intermediary, and the undersigned, as
Purchase Contract Agent and as attorney-in-fact for the holders of PIES from
time to time. Capitalized terms used herein but not defined shall have the
meaning set forth in the Pledge Agreement.
We hereby notify you in accordance with Section 5.3(a) of the Pledge
Agreement that the holder of securities listed below (the "Holder") has elected
to substitute [$__________ Value of Trust Preferred Securities or security
entitlements thereto] [Debentures or security entitlements thereto]] [an
appropriate Applicable Ownership Interest (as specified in clause (A) of the
definition of such term) of the Treasury Portfolio relating to _____ Corporate
PIES] in exchange for $__________ Value of Pledged Treasury Securities and has
delivered to the undersigned a notice stating that the Holder has Transferred
such [Trust Preferred Securities or security entitlements thereto] [Debentures
or security entitlements thereto] [Applicable Ownership Interest (as specified
in clause (A) of the definition of such term) of the Treasury Portfolio] to the
Securities Intermediary, for credit to the Collateral Account.
We hereby request that you instruct the Securities Intermediary, upon
confirmation that such [Trust Preferred Securities or security entitlements
thereto] [Debentures or security entitlements thereto] [Applicable Ownership
Interest (as specified in clause (A) of the definition of such term) of the
Treasury Portfolio] have been credited to the Collateral Account, to release to
the undersigned $__________ Value of Treasury Securities or security
entitlements thereto related to _____ Treasury PIES of such Holder in accordance
with Section 5.3(a) of the Pledge Agreement.
THE CHASE MANHATTAN BANK
Date: By:
-------------------- -------------------------------------
Name:
Title:
2
Please print name and address of Holder electing to substitute [Trust Preferred
Securities or security entitlements thereto] [Pledged Debentures or security
entitlements thereto] [an appropriate Applicable Ownership Interest (as
specified in clause (A) of the definition of such term) of the Treasury
Portfolio] for Pledged Treasury Securities:
- ----------------------------------- ----------------------------------------
Name Social Security or other
Taxpayer Identification Number,
if any
- -----------------------------------
Address
- -----------------------------------
- -----------------------------------
EXHIBIT D
INSTRUCTION
FROM COLLATERAL AGENT
TO SECURITIES INTERMEDIARY
(Reestablishment of Corporate PIES)
The First National Bank of Chicago
1 North State Street, 9th Floor
Chicago, Illinois 60602
Attention: Corporate Trust Administration Department
Telecopy: 312-407-1708
Re: ________ PIES of NIPSCO Industries, Inc.
(the "Company") and NIPSCO Capital Trust I
Securities Account No. _________ entitled "The First National
Bank of Chicago, as Collateral Agent, Securities Account
(NIPSCO Capital Trust I)" (the "Collateral Account")
Please refer to the Pledge Agreement dated as of February __, 1999 (the
"Pledge Agreement"), among the Company, you, as Securities Intermediary, THE
CHASE MANHATTAN BANK, as Purchase Contract Agent and as attorney-in-fact for the
holders of PIES from time to time, and the undersigned, as Collateral Agent.
Capitalized terms used herein but not defined shall have the meaning set forth
in the Pledge Agreement.
When you have confirmed that $_________ Value of [Trust Preferred
Securities or security entitlements thereto] [Debentures or security
entitlements thereto] [an appropriate Applicable Ownership Interest (as
specified in clause (A) of the definition of such term) of the Treasury
Portfolio relating to _____ Corporate PIES] has been credited to the Collateral
Account by or for the benefit of _________, as Holder of PIES (the "Holder"),
you are hereby instructed to release from the Collateral Account $__________
Value of Treasury Securities or security entitlements thereto by Transfer to the
Purchase Contract Agent.
THE FIRST NATIONAL BANK OF CHICAGO
Dated: By:
-------------------- -------------------------------------
Name:
Title:
2
Please print name and address of Holder:
- ----------------------------------- ----------------------------------------
Name Social Security or other
Taxpayer Identification Number,
if any
- -----------------------------------
Address
- -----------------------------------
- -----------------------------------
EXHIBIT E
NOTICE OF CASH SETTLEMENT FROM SECURITIES INTERMEDIARY
TO PURCHASE CONTRACT AGENT
(Cash Settlement Amounts)
The Chase Manhattan Bank
450 West 33rd Street
New York, New York 10001
Telecopier No.: 212-946-8159
Attention: Corporate Trust Group
Re: _________ PIES of NIPSCO Industries, Inc.
(the "Company") and NIPSCO Capital Trust I
Please refer to the Pledge Agreement, dated as of February __, 1999 (the
"Pledge Agreement"), by and among you, the Company, The First National Bank of
Chicago, as Collateral Agent and the undersigned, as Securities Intermediary.
Unless otherwise defined herein, terms defined in the Pledge Agreement are used
herein as defined therein
In accordance with Section 5.5(d) of the Pledge Agreement, we hereby
notify you that as of 11:00 a.m., [(on the fifth Business Day immediately
preceding the Purchase Contract Settlement Date)], we have received (i) $_____
in immediately available funds paid in an aggregate amount equal to the Purchase
Price to the Company on the Purchase Contract Settlement Date with respect to
__________ Corporate PIES and (ii) $_________ in immediately available funds
paid in an aggregate amount equal to the Purchase Price to the Company on the
Purchase Contract Settlement Date with respect to ______ Treasury PIES.
THE FIRST NATIONAL BANK OF CHICAGO
Date: By:
-------------------- -------------------------------------
Name:
Title: