SEMPRA ENERGY
and
U.S. BANK TRUST NATIONAL ASSOCIATION,
as Purchase Contract Agent
PURCHASE CONTRACT AGREEMENT
Dated as of April 30, 2002
TABLE OF CONTENTS
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ARTICLE I
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATIONS
Section 1.01. Definitions............................................................ 1
Section 1.02. Compliance Certificates and Opinions................................... 13
Section 1.03. Form of Documents Delivered to Purchase Contract Agent................. 14
Section 1.04. Acts of Holders; Record Dates.......................................... 14
Section 1.05. Notices................................................................ 15
Section 1.06. Notice to Holders; Waiver.............................................. 16
Section 1.07. Effect of Headings and Table of Contents............................... 17
Section 1.08. Successors and Assigns................................................. 17
Section 1.09. Separability Clause.................................................... 17
Section 1.10. Benefits of Agreement.................................................. 17
Section 1.11. Governing Law.......................................................... 17
Section 1.12. Legal Holidays......................................................... 17
Section 1.13. Counterparts........................................................... 18
Section 1.14. Inspection of Agreement................................................ 18
Section 1.15. Appointment of Financial Institution as Agent for the Company.......... 18
Section 1.16. No Waiver.............................................................. 18
ARTICLE II
CERTIFICATE FORMS
Section 2.01. Forms of Certificates Generally........................................ 18
Section 2.02. Form of Purchase Contract Agent's Certificate of Authentication........ 19
ARTICLE III
THE SECURITIES
Section 3.01. Amount; Form and Denominations......................................... 20
Section 3.02. Rights and Obligations Evidenced by the Certificates................... 20
Section 3.03. Execution, Authentication, Delivery and Dating......................... 21
Section 3.04. Temporary Certificates................................................. 21
Section 3.05. Registration; Registration of Transfer and Exchange.................... 22
Section 3.06. Book-Entry Interests................................................... 23
Section 3.07. Notices to Holders..................................................... 24
Section 3.08. Appointment of Successor Depositary.................................... 24
Section 3.09. Definitive Certificates................................................ 24
Section 3.10. Mutilated, Destroyed, Lost and Stolen Certificates..................... 24
Section 3.11. Persons Deemed Owners.................................................. 26
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Section 3.12. Cancellation........................................................... 26
Section 3.13. Creation of Growth Equity Units by Substitution of Treasury Securities. 27
Section 3.14. Reestablishment of Income Equity Units................................. 28
Section 3.15. Transfer of Collateral upon Occurrence of Termination Event............ 30
Section 3.16. No Consent to Assumption............................................... 31
ARTICLE IV
THE NOTES AND APPLICABLE OWNERSHIP INTEREST OF THE TREASURY
PORTFOLIO
Section 4.01. Interest Payments; Rights to Interest Payments Preserved............... 31
Section 4.02. Notice and Voting...................................................... 32
Section 4.03. Tax Event Redemption................................................... 32
ARTICLE V
THE PURCHASE CONTRACTS
Section 5.01. Purchase of Shares of Common Stock. ................................... 33
Section 5.02. Initial and Secondary Remarketing; Payment of Purchase Price........... 35
Section 5.03. Issuance of Shares of Common Stock..................................... 42
Section 5.04. Adjustment of Settlement Rate.......................................... 43
Section 5.05. Notice of Adjustments and Certain Other Events......................... 50
Section 5.06. Termination Event; Notice.............................................. 51
Section 5.07. Early Settlement....................................................... 52
Section 5.08. Intentionally Omitted.................................................. 54
Section 5.09. No Fractional Shares................................................... 54
Section 5.10. Charges and Taxes...................................................... 54
Section 5.11. Purchase Contract Payments............................................. 54
Section 5.12. Deferral of Purchase Contract Payments................................. 59
ARTICLE VI
REMEDIES
Section 6.01. Unconditional Right of Holders to Receive Purchase Contract Payments
and to Purchase Shares of Common Stock................................. 60
Section 6.02. Restoration of Rights and Remedies..................................... 61
Section 6.03. Rights and Remedies Cumulative......................................... 61
Section 6.04. Delay or Omission Not Waiver........................................... 61
Section 6.05. Undertaking for Costs.................................................. 61
Section 6.06. Waiver of Stay or Extension Laws....................................... 62
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ARTICLE VII
THE PURCHASE CONTRACT AGENT
Section 7.01. Certain Duties and Responsibilities.................................... 62
Section 7.02. Notice of Default...................................................... 63
Section 7.03. Certain Rights of Purchase Contract Agent.............................. 63
Section 7.04. Not Responsible for Recitals or Issuance of Securities................. 65
Section 7.05. May Hold Securities.................................................... 65
Section 7.06. Money Held in Custody.................................................. 65
Section 7.07. Compensation and Reimbursement......................................... 65
Section 7.08. Corporate Purchase Contract Agent Required; Eligibility................ 66
Section 7.09. Resignation and Removal; Appointment of Successor...................... 66
Section 7.10. Acceptance of Appointment by Successor................................. 67
Section 7.11. Merger, Conversion, Consolidation or Succession to Business............ 68
Section 7.12. Preservation of Information; Communications to Holders................. 68
Section 7.13. No Obligations of Purchase Contract Agent.............................. 69
Section 7.14. Tax Compliance......................................................... 69
ARTICLE VIII
SUPPLEMENTAL AGREEMENTS
Section 8.01. Supplemental Agreements Without Consent of Holders..................... 69
Section 8.02. Supplemental Agreements with Consent of Holders........................ 70
Section 8.03. Execution of Supplemental Agreements................................... 71
Section 8.04. Effect of Supplemental Agreements...................................... 71
Section 8.05. Reference to Supplemental Agreements................................... 71
ARTICLE IX
CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE
Section 9.01. Covenant Not to Consolidate, Merge, Convey, Transfer or Lease Property
Except under Certain Conditions........................................ 72
Section 9.02. Rights and Duties of Successor Corporation............................. 72
Section 9.03. Officers' Certificate and Opinion of Counsel Given to Purchase
Contract Agent......................................................... 73
ARTICLE X
COVENANTS
Section 10.01. Performance under Purchase Contracts.................................. 73
Section 10.02. Maintenance of Office or Agency....................................... 73
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Section 10.03. Company to Reserve Common Stock....................................... 74
Section 10.04. Covenants as to Common Stock.......................................... 74
Section 10.05. Statements of Officers of the Company as to Default................... 74
Section 10.06. ERISA................................................................. 74
Section 10.07. Tax Treatment......................................................... 75
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PURCHASE CONTRACT AGREEMENT, dated as of April 30, 2002, between SEMPRA
ENERGY, a California corporation (the "COMPANY"), and U.S. BANK TRUST NATIONAL
ASSOCIATION, a national banking association, acting as purchase contract agent
for the Holders of Securities (as defined herein) from time to time (the
"PURCHASE CONTRACT AGENT").
RECITALS
WHEREAS, the Company has duly authorized the execution and delivery of this
Agreement and the Certificates evidencing the Securities; and
WHEREAS, all things necessary to make the Purchase Contracts, when the
Certificates are executed by the Company and authenticated, executed on behalf
of the Holders and delivered by the Purchase Contract Agent, as provided in this
Agreement, the valid obligations of the Company have been done;
NOW, THEREFORE, for and in consideration of the premises and the purchase
of the Securities by the Holders thereof, it is mutually agreed as follows:
ARTICLE I
DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION
Section 1.01. 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, and
nouns and pronouns of the masculine gender include the feminine and neuter
genders;
(b) all accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with generally accepted accounting
principles in the United States;
(c) 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; and
(d) the following terms have the meanings given to them in this
Section 1.01(d):
"ACT" has the meaning, with respect to any Holder, set forth in Section
1.04.
"ADJUSTED EXCHANGE PROPERTY" has the meaning set forth in Section
5.04(b)(1).
"AFFILIATE" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control" when used with respect to any specified Person means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"AGREEMENT" means this instrument as originally executed or as it may from
time to time be supplemented or amended by one or more agreements supplemental
hereto entered into pursuant to the applicable provisions hereof.
"APPLICABLE EXCHANGE PROPERTY MARKET VALUE" has the meaning set forth in
Section 5.04(b)(1).
"APPLICABLE MARKET VALUE" has the meaning set forth in Section 5.01.
"APPLICABLE OWNERSHIP INTEREST" shall mean, with respect to an Income
Equity Unit that includes the Treasury Portfolio, (A) a 2.5% undivided
beneficial ownership interest in a $1,000 face amount of a principal or interest
strip in a U.S. treasury security included in such Treasury Portfolio that
matures on or prior to May 16, 2005, and (B) for the scheduled interest payment
date on the Notes that occurs on May 17, 2005, in the case of a Successful
Initial Remarketing or a Successful Secondary Remarketing, or in the case of a
Tax Event Redemption, for each scheduled interest payment on the Notes that
occurs after the Tax Event Redemption Date and on or before the Purchase
Contract Settlement Date, a .0350%, undivided beneficial ownership interest in a
$1,000 face amount of a principal or interest strip in a U.S. treasury security
included in such Treasury Portfolio that matures prior to such date.
"APPLICABLE PRINCIPAL AMOUNT" means the aggregate principal amount of the
Notes that are components of Income Equity Units on the Initial Remarketing Date
or, in the event of a Failed Initial Remarketing, on the Secondary Remarketing
Date.
"APPLICANTS" has the meaning set forth in Section 7.12(b).
"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.
"BASE EXCHANGE PROPERTY" has the meaning set forth in Section 5.04(b)(1).
"BENEFICIAL OWNER" means, with respect to a Book-Entry Interest, a Person
who is the beneficial owner of such Book-Entry Interest as reflected on the
books of the Depositary or on the books of a Person maintaining an account with
such Depositary (directly as a Depositary Participant or as an indirect
participant, in each case in accordance with the rules of such Depositary).
"BOARD OF DIRECTORS" means the board of directors of the Company or a duly
authorized committee of that board.
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"BOARD RESOLUTION" means one or more resolutions of the Board of Directors,
a copy of which has been certified by the Secretary or an Assistant Secretary of
the Company, to have been duly adopted by the Board of Directors and to be in
full force and effect on the date of such certification and delivered to the
Purchase Contract Agent.
"BOOK-ENTRY INTEREST" means a beneficial interest in a Global Certificate,
registered in the name of a Depositary or a nominee thereof, ownership and
transfers of which shall be maintained and made through book entries by such
Depositary as described in Section 3.06.
"BUSINESS DAY" or "BUSINESS DAY" means any day other than a Saturday or
Sunday or a day on which banking institutions and trust companies in New York
City, New York are permitted or required by any applicable law to close;
provided that for purposes of the second paragraph of Section 1.12 only, the
term "Business Day" shall also be deemed to exclude any day on which trading on
the New York Stock Exchange, Inc. is closed or suspended.
"CASH MERGER" has the meaning set forth in Section 5.04(b)(2).
"CASH SETTLEMENT" has the meaning set forth in Section 5.02(b)(i).
"CERTIFICATE" means an Income Equity Units Certificate or a Growth Equity
Units Certificate.
"CLEARING AGENCY" means an organization registered as a "Clearing Agency"
pursuant to Section 17A of the Exchange Act that is acting as a depositary for
the Securities and in whose name, or in the name of a nominee of that
organization, shall be registered a Global Certificate and which shall undertake
to effect book-entry transfers and pledges of the Securities.
"CLOSING PRICE" has the meaning set forth in Section 5.01.
"CODE" means the Internal Revenue Code of 1986, as amended.
"COLLATERAL" has the meaning set forth in Section 1.01(e) of the Pledge
Agreement.
"COLLATERAL ACCOUNT" has the meaning set forth in Section 1.01(e) of the
Pledge Agreement.
"COLLATERAL AGENT" means U.S. Bank Trust National Association, as
Collateral Agent under the Pledge Agreement until a successor Collateral Agent
shall have become such pursuant to the applicable provisions of the Pledge
Agreement, and thereafter "Collateral Agent" shall mean the Person who is then
the Collateral Agent thereunder.
"COLLATERAL SUBSTITUTION" has the meaning set forth in Section 3.13.
"COMMON STOCK" means the common stock, without par value, of the Company.
"COMPANY" means the Person named as the "COMPANY" in the first paragraph of
this instrument until a successor shall have become such pursuant to the
applicable provision of this Agreement, and thereafter "Company" shall mean such
successor.
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"CONSTITUENT PERSON" has the meaning set forth in Section 5.04(b).
"CORPORATE TRUST OFFICE" means the office of the Purchase Contract Agent at
which, at any particular time, its corporate trust business shall be principally
administered, which office at the date hereof is located at U. S. Bank Trust
National Association, 100 Wall Street, Suite 1600, New York, New York 10005,
Attention: Corporate Trust Services.
"COUPON RATE" means the percentage rate per annum at which each Note will
bear interest initially.
"CURRENT MARKET PRICE" has the meaning set forth in Section 5.04(a)(8).
"DEPOSITARY" means a clearing agency registered under the Exchange Act that
is designated to act as Depositary for the Securities as contemplated by
Sections 3.06, 3.07, 3.08 and 3.09.
"DEPOSITARY PARTICIPANT" means a broker, dealer, bank, other financial
institution or other Person for whom from time to time the Depositary effects
book entry transfers and pledges of securities deposited with the Depositary.
"DTC" means The Depository Trust Company.
"EARLY SETTLEMENT" means an early settlement of a Purchase Contract
pursuant to Section 5.04(b)(2) or 5.07(a).
"EARLY SETTLEMENT AMOUNT" has the meaning set forth in Section 5.07(a).
"EARLY SETTLEMENT DATE" means the date on which an Early Settlement occurs.
"EARLY SETTLEMENT RATE" has the meaning set forth in Section 5.07(c).
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"EXCHANGE ACT" means the Securities Exchange Act of 1934 and any statute
successor thereto, in each case as amended from time to time, and the rules and
regulations promulgated thereunder.
"EXPIRATION DATE" has the meaning set forth in Section 1.04(e).
"EXPIRATION TIME" has the meaning set forth in Section 5.04(a)(6).
"FAILED FINAL REMARKETING" has the meaning set forth in Section 5.02(c).
"FAILED INITIAL REMARKETING" has the meaning set forth in Section 5.02(a).
"FAILED SECONDARY REMARKETING" means, in connection with a Secondary
Remarketing, that the Remarketing Agent, in spite of using its reasonable
efforts, cannot remarket the Notes in the Secondary Remarketing (other than to
the Company) at a price not less than 100% of the sum
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of the Treasury Portfolio Purchase Price plus the Separate Notes Purchase Price
or a condition precedent set forth in the Remarketing Agreement is not
fulfilled.
"FINAL REMARKETING" has the meaning set forth in Section 5.02(c).
"FINAL REMARKETING DATE" means the third Business Day immediately preceding
the Purchase Contract Settlement Date.
"FIRST SUPPLEMENTAL INDENTURE" means the First Supplemental Indenture to
the Indenture, entered into between the Company and the Indenture Trustee on the
date hereof.
"GLOBAL CERTIFICATE" means a Certificate that evidences all or part of the
Securities and is registered in the name of a Clearing Agency or a nominee
thereof.
"GROWTH EQUITY UNIT" means, following the substitution of Treasury
Securities for Notes as collateral to secure a Holder's obligations under the
Purchase Contract, the collective rights and obligations of a Holder of a Growth
Equity Units Certificate in respect of such Treasury Securities, subject to the
Pledge thereof, and the related Purchase Contract.
"GROWTH EQUITY UNITS CERTIFICATE" means a certificate evidencing the rights
and obligations of a Holder in respect of the number of Growth Equity Units
specified on such certificate.
"HOLDER" means, with respect to a Security, the Person in whose name the
Security evidenced by a Certificate is registered in the Security Register;
provided, however, that in determining whether the Holders of the requisite
number of Securities have voted on any matter, then for the purpose of such
determination only (and not for any other purpose hereunder), if the Security
remains in the form of one or more Global Certificates and if the Depositary
that is the registered holder of such Global Certificate has sent an omnibus
proxy assigning voting rights to the Depositary Participants to whose accounts
the Securities are credited on the record date, the term "HOLDER" shall mean
such Depositary Participant acting at the direction of the Beneficial Owners.
"INCOME EQUITY UNIT" means the collective rights and obligations of a
Holder of an Income Equity Units Certificate in respect of the Notes or an
appropriate Applicable Ownership Interest of the Treasury Portfolio, as the case
may be, subject in each case to the Pledge thereof, and the related Purchase
Contract; provided that the appropriate Applicable Ownership Interest (as
specified in clause (B) of the definition of such term) of the Treasury
Portfolio shall not be subject to the Pledge.
"INCOME EQUITY UNITS CERTIFICATE" means a certificate evidencing the rights
and obligations of a Holder in respect of the number of Income Equity Units
specified on such certificate.
"INDENTURE" means the Indenture, dated as of February 23, 2000, between the
Company and the Indenture Trustee (including any provisions of the TIA that are
deemed incorporated therein), as amended and supplemented as of the date hereof,
pursuant to which the Notes will be issued.
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"INDENTURE TRUSTEE" means U. S. Bank Trust National Association, as trustee
under the Indenture, or any successor thereto.
"INITIAL REMARKETING" has the meaning set forth in Section 5.02(a).
"INITIAL REMARKETING DATE" means the third Business Day immediately
preceding February 17, 2005.
"ISSUER ORDER" or "ISSUER REQUEST" means a written order or request signed
in the name of the Company by its Chairman of the Board, its President or one of
its Vice Presidents, and by its Treasurer, an Assistant Treasurer, its Secretary
or an Assistant Secretary, and delivered to the Purchase Contract Agent.
"NON-ELECTING SHARE" has the meaning set forth in Section 5.04(b).
"NOTES" means the series of Notes designated the senior notes due May 17,
2007 to be issued by the Company under the Indenture as of the date hereof.
"NYSE" has the meaning set forth in Section 5.01.
"OFFICERS' CERTIFICATE" means a certificate signed by the Chairman of the
Board of the Company, its President, one of its Vice Presidents, its Treasurer,
an Assistant Treasurer, the Secretary or an Assistant Secretary of the Company,
and delivered to the Purchase Contract Agent. Any Officers' Certificate
delivered with respect to compliance with a condition or covenant provided for
in this Agreement (other than the Officers' Certificate provided for in Section
10.05) shall include:
(i) a statement that each officer signing the Officers' Certificate
has read the covenant or condition and the definitions relating thereto;
(ii) a brief statement of the nature and scope of the examination or
investigation undertaken by each officer in rendering the Officers'
Certificate;
(iii) a statement that, in the opinion of each such officer, each such
officer has made such examination or investigation as is necessary to
enable such officer to express an informed opinion as to whether or not
such covenant or condition has been complied with; and
(iv) a statement as to whether, in the opinion of each such officer,
such condition or covenant has been complied with.
"OPINION OF COUNSEL" means a written opinion of counsel, who may be counsel
to the Company (and who may be an employee of the Company), and who shall be
reasonably acceptable to the Purchase Contract Agent. An opinion of counsel may
rely on certificates as to matters of fact.
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"OUTSTANDING SECURITIES" means, with respect to any Security and as of the
date of determination, all Securities evidenced by Certificates theretofore
authenticated, executed and delivered under this Agreement, except:
(i) If a Termination Event has occurred, (i) Growth Equity Units and
(ii) Income Equity Units for which the underlying Notes or Applicable
Ownership Interests in the Treasury Portfolio have been theretofore
deposited with the Purchase Contract Agent in trust for the Holders of such
Income Equity Units;
(ii) Securities evidenced by Certificates theretofore cancelled by the
Purchase Contract Agent or delivered to the Purchase Contract Agent for
cancellation or deemed cancelled pursuant to the provisions of this
Agreement; and
(iii) Securities evidenced by Certificates in exchange for or in lieu
of which other Certificates have been authenticated, executed on behalf of
the Holder and delivered pursuant to this Agreement, other than any such
Certificate in respect of which there shall have been presented to the
Purchase Contract Agent proof satisfactory to it that such Certificate is
held by a protected purchaser in whose hands the Securities evidenced by
such Certificate are valid obligations of the Company;
provided, however, that in determining whether the Holders of the requisite
number of the Securities have given any request, demand, authorization,
direction, notice, consent or waiver hereunder, Securities owned by the Company
or any Affiliate of the Company shall be disregarded and deemed not to be
Outstanding Securities, except that, in determining whether the Purchase
Contract Agent shall be protected in relying upon any such request, demand,
authorization, direction, notice, consent or waiver, only Securities that a
Responsible Officer of the Purchase Contract Agent actually knows to be so owned
shall be so disregarded. Securities so owned that have been pledged in good
faith may be regarded as Outstanding Securities if the pledgee establishes to
the satisfaction of the Purchase Contract Agent the pledgee's right so to act
with respect to such Securities and that the pledgee is not the Company or any
Affiliate of the Company.
"PAYMENT DATE" means each February 17, May 17, August 17 and November 17,
commencing August 17, 2002.
"PERMITTED INVESTMENTS" has the meaning set forth in the Pledge Agreement.
"PERSON" means a 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 or any other entity of whatever nature.
"PLAN" means an employee benefit plan that is subject to ERISA, a plan or
individual retirement account that is subject to Section 4975 of the Code or any
entity whose assets are considered assets of any such plan.
"PLEDGE" means the pledge under the Pledge Agreement of the Notes, the
Treasury Securities or the appropriate Applicable Ownership Interest (as
specified in clause (A) of the
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definition of such term) of the Treasury Portfolio, in each case constituting a
part of the Securities.
"PLEDGE AGREEMENT" means the Pledge Agreement, dated as of April 30, 2002,
among the Company, the Collateral Agent, the Securities Intermediary and the
Purchase Contract Agent, on its own behalf in its capacity as Purchase Contract
Agent and as attorney-in-fact for the Holders from time to time of the
Securities.
"PLEDGED NOTES" has the meaning set forth in Section 1.01(e) of the Pledge
Agreement.
"PREDECESSOR CERTIFICATE" means a Predecessor Income Equity Units
Certificate or a Predecessor Growth Equity Units Certificate.
"PREDECESSOR INCOME EQUITY UNITS CERTIFICATE" of any particular Income
Equity Units Certificate means every previous Income Equity Units Certificate
evidencing all or a portion of the rights and obligations of the Company and the
Holder under the Income Equity Units evidenced thereby; and, for the purposes of
this definition, any Income Equity Units Certificate authenticated and delivered
under Section 3.10 in exchange for or in lieu of a mutilated, destroyed, lost or
stolen Income Equity Units Certificate shall be deemed to evidence the same
rights and obligations of the Company and the Holder as the mutilated,
destroyed, lost or stolen Income Equity Units Certificate.
"PREDECESSOR GROWTH EQUITY UNITS CERTIFICATE" of any particular Growth
Equity Units Certificate means every previous Growth Equity Units Certificate
evidencing all or a portion of the rights and obligations of the Company and the
Holder under the Growth Equity Units evidenced thereby; and, for the purposes of
this definition, any Growth Equity Units Certificate authenticated and delivered
under Section 3.10 in exchange for or in lieu of a mutilated, destroyed, lost or
stolen Growth Equity Units Certificate shall be deemed to evidence the same
rights and obligations of the Company and the Holder as the mutilated,
destroyed, lost or stolen Growth Equity Units Certificate.
"PRIMARY TREASURY DEALER" shall mean a primary U.S. government securities
dealer in New York City.
"PROCEEDS" has the meaning set forth in Section 1.01(e) of the Pledge
Agreement.
"PRO RATA" shall mean pro rata to each Holder according to the aggregate
Stated Amount of the Securities held by such Holder in relation to the aggregate
Stated Amount of all Securities outstanding.
"PROSPECTUS" means the prospectus relating to the delivery of shares of any
securities in connection with an Early Settlement, in the form in which first
filed, or transmitted for filing, with the Commission after the effective date
of the Registration Statement pursuant to Rule 424(b) under the Securities Act,
including the documents incorporated by reference therein as of the date of such
Prospectus.
"PURCHASE AGREEMENT" means the Purchase Agreement, dated April 24, 2002,
among the Company and the Underwriters identified therein.
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"PURCHASE CONTRACT" means, with respect to any Security, the contract
forming a part of such Security and obligating the Company to (i) sell, and the
Holder of such Security to purchase, shares of Common Stock and (ii) pay the
Holder thereof Purchase Contract Payments, in each case on the terms and subject
to the conditions set forth in Article Five hereof.
"PURCHASE CONTRACT AGENT" means the Person named as the "Purchase Contract
Agent" in the first paragraph of this Agreement until a successor Purchase
Contract Agent shall have become such pursuant to the applicable provisions of
this Agreement, and thereafter "Purchase Contract Agent" shall mean such Person
or any subsequent successor who is appointed pursuant to this Agreement.
"PURCHASE CONTRACT PAYMENTS" means the payments payable by the Company on
the Payment Dates in respect of each Purchase Contract, at a rate per year of
2.90% of the Stated Amount per Purchase Contract.
"PURCHASE CONTRACT SETTLEMENT DATE" means May 17, 2005.
"PURCHASE CONTRACT SETTLEMENT FUND" has the meaning set forth in Section
5.03.
"PURCHASE PRICE" has the meaning set forth in Section 5.01.
"PURCHASED SHARES" has the meaning set forth in Section 5.04(a)(6).
"QUOTATION AGENT" means (i) Merrill Lynch, Pierce, Fenner & Smith
Incorporated or Salomon Smith Barney Inc. or any of their respective affiliates
or successors or (ii) any other Primary Treasury Dealer selected by the Company.
"RECORD DATE" for any distribution and Purchase Contract Payment payable on
any Payment Date means, as to any Global Certificate, the first day of each
month in which the relevant Payment Date falls, and as to any other Certificate,
the date selected by the Company, which shall be more than one Business Day but
less than sixty Business Days prior to such Payment Date.
"REDEMPTION AMOUNT" shall mean, for each Note, the product of the principal
amount of such Note and a fraction, the numerator of which shall be the Treasury
Portfolio Purchase Price and the denominator of which shall be the principal
amount of such Note.
"REFERENCE DEALER" means a dealer engaged in trading of convertible
securities.
"REFERENCE PRICE" has the meaning set forth in Section 5.01.
"REGISTRATION STATEMENT" means a registration statement under the
Securities Act prepared by the Company covering, inter alia, the delivery by the
Company of any securities in connection with an Early Settlement, including all
exhibits thereto and the documents incorporated by reference in the prospectus
contained in such registration statement, and any post-effective amendments
thereto.
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"REMARKETING" means the remarketing of the Notes by the Remarketing Agent
pursuant to the Remarketing Agreement.
"REMARKETING AGENT" has the meaning set forth in Section 5.02(a).
"REMARKETING AGREEMENT" means the Remarketing Agreement substantially in
the form attached hereto as Annex I to be entered into by the Company, the
Remarketing Agent and the Purchase Contract Agent as of a date that is no later
than the third Business Day prior to the Initial Remarketing Date.
"REMARKETING FEE" has the meaning set forth in Section 5.02(a).
"REMARKETING PER NOTE PRICE" means the Treasury Portfolio Purchase Price
divided by the number of Notes held as components of Income Equity Units and
remarketed in the Initial Remarketing or, in the event of a Failed Initial
Remarketing, in the Secondary Remarketing.
"REORGANIZATION EVENT" has the meaning set forth in Section 5.04(b).
"RESET RATE" means the interest rate per year determined by the Remarketing
Agent as necessary for a successful completion of the Remarketing.
"RESPONSIBLE OFFICER" means, with respect to the Purchase Contract Agent,
any officer of the Purchase Contract Agent assigned by the Purchase Contract
Agent to administer this Purchase Contract Agreement.
"SECONDARY REMARKETING" has the meaning set forth in Section 5.02(a).
"SECONDARY REMARKETING DATE" has the meaning set forth in Section 5.02(a).
"SECURITIES ACT" means the Securities Act of 1933 and any statute successor
thereto, in each case as amended from time to time, and the rules and
regulations promulgated thereunder.
"SECURITIES INTERMEDIARY" means U.S. Bank Trust National Association, as
Securities Intermediary under the Pledge Agreement until a successor Securities
Intermediary shall have become such pursuant to the applicable provisions of the
Pledge Agreement, and thereafter "SECURITIES INTERMEDIARY" shall mean such
successor or any subsequent successor who is appointed pursuant to the Pledge
Agreement.
"SECURITY" means an Income Equity Unit or a Growth Equity Unit, as the case
may be.
"SECURITY REGISTER" and "SECURITIES REGISTRAR" have the respective meanings
set forth in Section 3.05.
----
"SENIOR INDEBTEDNESS" means indebtedness of any kind of the Company unless
the instrument under which such indebtedness is incurred expressly provides that
it is on a parity in right of payment with or subordinate in right of payment to
the Purchase Contract Payments.
"SEPARATE NOTES" means Notes that are no longer a component of Income
Equity Units.
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"SEPARATE NOTES PURCHASE PRICE" means the amount in cash equal to the
product of the Remarketing Per Note Price multiplied by the number of Separate
Notes remarketed in the Initial Remarketing or, in the event of a Failed Initial
Remarketing, in the Secondary Remarketing.
"SETTLEMENT RATE" has the meaning set forth in Section 5.01.
"STATED AMOUNT" means $25.
"SUCCESSFUL FINAL REMARKETING" has the meaning set forth in Section
5.02(c).
"SUCCESSFUL INITIAL REMARKETING" has the meaning set forth in Section
5.02(a).
"SUCCESSFUL SECONDARY REMARKETING" means, in connection with a Secondary
Remarketing, that the Remarketing Agent has been able to remarket the Notes at a
price equal to or greater than 100% of the Treasury Portfolio Purchase Price
plus the Separate Notes Purchase Price.
"TAX EVENT" shall mean the receipt by the Company of an opinion of
independent counsel, rendered by a law firm having a recognized national tax
practice, to the effect that, as a result of any amendment to, or change,
including any announced prospective change in, the laws or any regulations of
the United States or any political subdivision or taxing authority thereof or
therein affecting taxation, any amendment to or change in an interpretation or
application of these laws or regulations by any legislative body, court,
governmental agency or regulatory authority or any interpretation or
pronouncement that provides for a position with respect to any such laws or
regulations that differs from the generally accepted position on April 24, 2002,
which amendment, change or proposed change is effective or which interpretation
or pronouncement is announced on or after April 24, 2002, there is more than an
insubstantial increase in the risk that interest or original issue discount on
the Notes would not be deductible by the Company, in whole or in part, for
United States federal income tax purposes.
"TAX EVENT REDEMPTION" shall mean that a Tax Event has occurred and is
continuing and the Notes have been called for redemption pursuant to the
Indenture.
"TAX EVENT REDEMPTION DATE" means the date upon which a Tax Event
Redemption is to occur.
"TAX EVENT REDEMPTION PRINCIPAL AMOUNT" means either (i) if the Tax Event
Redemption Date occurs (1) prior to February 17, 2005, (2) in the event of a
Failed Initial Remarketing, prior to April 17, 2005, or (3) in the event of a
Failed Secondary Remarketing, prior to the Purchase Contract Settlement Date,
the aggregate principal amount of the Notes that are components of Income Equity
Units on the Tax Event Redemption Date or (ii) if the Tax Event Redemption Date
occurs (1) on or after February 17, 2005, (2) in the event of a Failed Initial
Remarketing, on or after April 17, 2005 but prior to the Purchase Contract
Settlement Date or, (3) in the event of a Failed Secondary Remarketing, on or
after the Purchase Contract Settlement Date, the aggregate principal amount of
the Notes outstanding on such Tax Event Redemption Date.
"TERMINATION DATE" means the date, if any, on which a Termination Event
occurs.
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"TERMINATION EVENT" means the occurrence of any of the following
events:
(i) any time on or prior to the Purchase Contract Settlement Date,
a judgment, decree or court order shall have been entered granting relief
under the Bankruptcy Code, adjudicating the Company to be insolvent, or
approving as properly filed a petition seeking reorganization or
liquidation of the Company or any other similar applicable Federal or State
law, and, unless such judgment, decree or order shall have been entered
within 60 days prior to the Purchase Contract Settlement Date, such decree
or order shall have continued undischarged and unstayed for a period of 60
days;
(ii) any time on or prior to the Purchase Contract Settlement Date,
a judgment, decree or court order for the appointment of a receiver or
liquidator or trustee or assignee in bankruptcy or insolvency of the
Company or of its property, or for the termination or liquidation of its
affairs, shall have been entered, and, unless such judgment, decree or
order shall have been entered within 60 days prior to the Purchase Contract
Settlement Date, such judgment, decree or order shall have continued
undischarged and unstayed for a period of 60 days; or
(iii) at any time on or prior to the Purchase Contract Settlement
Date, the Company shall file a petition for relief under the Bankruptcy
Code, or shall consent to the filing of a bankruptcy proceeding against it,
or shall file a petition or answer or consent seeking reorganization or
liquidation under the Bankruptcy Code or any other similar applicable
Federal or State law, or shall consent to the filing of any such petition,
or shall consent to the appointment of a receiver or liquidator or trustee
or assignee in bankruptcy or insolvency of it or of its property, or shall
make an assignment for the benefit of creditors, or shall admit in writing
its inability to pay its debts generally as they become due.
"THRESHOLD APPRECIATION PRICE" has the meaning set forth in Section 5.01.
"TIA" means the Trust Indenture Act of 1939, as amended from time to time,
or any successor legislation.
"TRADING DAY" has the meaning set forth in Section 5.01.
"TREASURY PORTFOLIO" means (1) in connection with the Initial Remarketing
or the Secondary Remarketing, a portfolio of zero-coupon U.S. treasury
securities consisting of (a) principal or interest strips of U.S. Treasury
Securities that mature prior to the Purchase Contract Settlement Date, in an
aggregate amount equal to the Applicable Principal Amount and (b) with respect
to the scheduled interest payment date on the Notes that occurs on the Purchase
Contract Settlement Date, principal or interest strips of U.S. treasury
securities that mature prior to such date in an aggregate amount equal to the
aggregate interest payment that would be due on the Applicable Principal Amount
on such date if the applicable Coupon Rate on the Notes were not reset to the
Reset Rate as described in Section 5.02 and (2) in connection with a Tax Event
Redemption, (a) if the Tax Event Redemption Date occurs (x) prior to February
17, 2005, (y) in the event of a Failed Initial Remarketing, prior to April 17,
2005, or (z) in the event of a Failed Secondary Remarketing, prior to the
Purchase Contract Settlement Date, a portfolio of zero-
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coupon U.S. treasury securities consisting of (i) principal or interest strips
of U.S. treasury securities that mature on or prior to May 16, 2005 in an
aggregate amount equal to the applicable Tax Event Redemption Principal Amount
and (ii) with respect to each scheduled interest payment date on the Notes that
occurs after the Tax Event Redemption Date and on or before the Purchase
Contract Settlement Date, principal or interest strips of U.S. treasury
securities that mature on or prior to such date in an aggregate amount equal to
the aggregate interest payment that would be due on the applicable Tax Event
Redemption Principal Amount of the Notes on such date, and (b) if the Tax Event
Redemption Date occurs (x) on or after February 17, 2005, (y) in the event of a
Failed Initial Remarketing, on or after April 17, 2005 but prior to the Purchase
Contract Settlement Date, or (z) in the event of a Failed Secondary Remarketing,
on or after the Purchase Contract Settlement Date, a portfolio of zero-coupon
U.S. treasury securities consisting of (i) principal or interest strips of U.S.
Treasury Securities which mature on or prior to May 16, 2007 in an aggregate
amount equal to the applicable Tax Event Redemption Principal Amount and (ii)
with respect to each scheduled interest payment date on the Notes that occurs
after the Tax Event Redemption Date, principal or interest strips of such U.S.
treasury securities that mature prior to such date in an aggregate amount equal
to the aggregate interest payment that would be due on the applicable Tax Event
Redemption Principal Amount of the Notes on such date if the interest rate of
the Notes was not reset on the Initial Remarketing Date, the Secondary
Remarketing Date or the Final Remarketing Date.
"TREASURY PORTFOLIO PURCHASE PRICE" means the lowest aggregate price quoted
by the Primary Treasury Dealer to the Quotation Agent (a) in the case of a Tax
Event Redemption, on the third Business Day immediately preceding the Tax Event
Redemption Date for the purchase of the applicable Treasury Portfolio for
settlement on the Tax Event Redemption Date, (b) in the case of the Initial
Remarketing, on the Initial Remarketing Date for the purchase of the applicable
Treasury Portfolio for settlement on February 17, 2005, and (c) in the case of
the Secondary Remarketing, on the Secondary Remarketing Date for the purchase of
the applicable Treasury Portfolio for settlement on April 17, 2005.
"TREASURY SECURITIES" means zero-coupon U.S. Treasury Securities (CUSIP No.
912803AD5) that mature on May 16, 2005.
"VICE PRESIDENT" means any vice president, whether or not designated by a
number or a word or words added before or after the title "vice president."
Section 1.02. Compliance Certificates and Opinions.
Except as otherwise expressly provided by this Agreement, upon any
application or request by the Company to the Purchase Contract Agent to take any
action in accordance with any provision of this Agreement, the Company shall
furnish to the Purchase Contract Agent an Officers' Certificate stating that all
conditions precedent, if any, provided for in this Agreement relating to the
proposed action have been complied with and, if requested by the Purchase
Contract Agent, an Opinion of Counsel stating that, in the opinion of such
counsel, all such conditions precedent, if any, have been complied with, except
that in the case of any such application or request as to which the furnishing
of such documents is specifically required by any provision of this Agreement
relating to such particular application or request, no additional certificate or
opinion need be furnished.
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Section 1.03. Form of Documents Delivered to Purchase Contract Agent.
In any case where several matters are required to be certified by, or
covered by an opinion of, any specified Person, it is not necessary that all
such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and one
or more other such Persons as to other matters, and any such Person may certify
or give an opinion as to such matters in one or several documents. Any
certificate or opinion of an officer of the Company may be based, insofar as it
relates to legal matters, upon a certificate or opinion of, or representations
by, counsel, unless such officer knows, or in the exercise of reasonable care
should know, that the certificate or opinion or representations with respect to
the matters upon which his certificate or opinion is based are erroneous. Any
such certificate or Opinion of Counsel may be based, insofar as it relates to
factual matters, upon a certificate or opinion of, or representations by, an
officer or officers of the Company stating that the information with respect to
such factual matters is in the possession of the Company unless such counsel
knows, or in the exercise of reasonable care should know, that the certificate
or opinion or representations with respect to such matters are erroneous.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Agreement, they may, but need not, be consolidated and
form one instrument.
Section 1.04. Acts of Holders; Record Dates.
(a) Any request, demand, authorization, direction, notice, consent, waiver
or other action provided by this Agreement to be given or taken by Holders may
be embodied in and evidenced by one or more instruments of substantially similar
tenor signed by such Holders in person or by an agent duly appointed in writing
and, except as herein otherwise expressly provided, such action shall become
effective when such instrument or instruments are delivered to the Purchase
Contract Agent and, where it is hereby expressly required, to the Company. Such
instrument or instruments (and the action embodied therein and evidenced
thereby) are herein sometimes referred to as the "Act" of the Holders signing
such instrument or instruments. Proof of execution of any such instrument or of
a writing appointing any such agent shall be sufficient for any purpose of this
Agreement and (subject to Section 7.01) conclusive in favor of the Purchase
Contract Agent and the Company, if made in the manner provided in this Section.
(b) The fact and date of the execution by any Person of any such
instrument or writing may be proved in any manner which the Purchase Contract
Agent deems sufficient.
(c) The ownership of Securities shall be proved by the Security Register.
(d) Any request, demand, authorization, direction, notice, consent, waiver
or other Act of the Holder of any Security shall bind every future Holder of the
same Security and the Holder of every Certificate evidencing such Security
issued upon the registration of transfer thereof or in exchange therefor or in
lieu thereof in respect of anything done, omitted or suffered to be done by the
Purchase Contract Agent or the Company in reliance thereon, whether or not
notation of such action is made upon such Certificate.
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(e) The Company may set any date as a record date for the purpose of
determining the Holders of Outstanding Securities entitled to give, make or take
any request, demand, authorization, direction, notice, consent, waiver or other
action provided or permitted by this Agreement to be given, made or taken by
Holders of Securities. If any record date is set pursuant to this paragraph,
the Holders of the Outstanding Income Equity Units and the Outstanding Growth
Equity Units, as the case may be, on such record date, and no other Holders,
shall be entitled to take the relevant action with respect to the Income Equity
Units or the Growth Equity Units, as the case may be, whether or not such
Holders remain Holders after such record date; provided that no such action
shall be effective hereunder unless taken prior to or on the applicable
Expiration Date by Holders of the requisite number of Outstanding Securities on
such record date. Nothing contained in this paragraph shall be construed to
prevent the Company from setting a new record date for any action for which a
record date has previously been set pursuant to this paragraph (whereupon the
record date previously set shall automatically and with no action by any Person
be cancelled and be of no effect), and nothing contained in this paragraph shall
be construed to render ineffective any action taken by Holders of the requisite
number of Outstanding Securities on the date such action is taken. Promptly
after any record date is set pursuant to this paragraph, the Company, at its own
expense, shall cause notice of such record date, the proposed action by Holders
and the applicable Expiration Date to be given to the Purchase Contract Agent in
writing and to each Holder of Securities in the manner set forth in Section
1.06.
With respect to any record date set pursuant to this Section, the Company
may designate any date as the "EXPIRATION DATE" and from time to time may change
the Expiration Date to any earlier or later day; provided that no such change
shall be effective unless notice of the proposed new Expiration Date is given to
the Purchase Contract Agent in writing, and to each Holder of Securities in the
manner set forth in Section 1.06, prior to or on the existing Expiration Date.
If an Expiration Date is not designated with respect to any record date set
pursuant to this Section, the Company shall be deemed to have initially
designated the 180th day after such record date as the Expiration Date with
respect thereto, subject to its right to change the Expiration Date as provided
in this paragraph. Notwithstanding the foregoing, no Expiration Date shall be
later than the 180th day after the applicable record date.
Section 1.05. Notices.
Any notice or communication is duly given if in writing and delivered in
Person or mailed by first-class mail (registered or certified, return receipt
requested), telecopier (with receipt confirmed) or overnight air courier
guaranteeing next day delivery, to the others' address; provided that notice
shall be deemed given to the Purchase Contract Agent only upon receipt thereof:
If to the Purchase Contract Agent:
U. S. Bank Trust National Association
100 Wall Street
Suite 1600
New York, New York 10005
Telecopier No.: (212) 809-5459
Attention: Corporate Trust Services
15
If to the Company:
Sempra Energy
101 Ash Street
San Diego, California 92101
Telecopier No.: (619) 696-2999
Attention: Treasurer
and a copy to:
Latham & Watkins
633 West Fifth Street
Suite 4000
Los Angeles, California 90071
Telecopier No.: (213) 891-8763
Attention: Scott Hodgkins, Esq.
If to the Collateral Agent:
U.S. Bank Trust National Association
100 Wall Street
Suite 1600
New York, New York 10005
Telecopier No.: (212) 809-5459
Attention: Corporate Trust Services
If to the Indenture Trustee:
U.S. Bank Trust National Association
100 Wall Street
Suite 1600
New York, New York 10005
Telecopier No.: (212) 809-5459
Attention: Corporate Trust Services
The Purchase Contract Agent shall send to the Indenture Trustee at the
telecopier number set forth above a copy of any notices in the form of Exhibits
C, D, E or F it sends or receives.
Section 1.06. Notice to Holders; Waiver.
Where this Agreement provides for notice to Holders of any event, such
notice shall be sufficiently given (unless otherwise herein expressly provided)
if in writing and mailed, first-class postage prepaid, to each Holder affected
by such event, at its address as it appears in the Security Register, not later
than the latest date, and not earlier than the earliest date, prescribed for the
giving of such notice. In any case where notice to Holders is given by mail,
neither the failure to mail such notice, nor any defect in any notice so mailed
to any particular Holder shall affect the sufficiency of such notice with
respect to other Holders. Where this Agreement provides for notice in any
manner, such notice may be waived in writing by the Person entitled to receive
such notice, either before or after the event, and such waiver shall be the
equivalent of such notice. Waivers of notice by Holders shall be filed with the
Purchase Contract Agent, but
16
such filing shall not be a condition precedent to the validity of any action
taken in reliance upon such waiver.
In case by reason of the suspension of regular mail service or by reason of
any other cause it shall be impracticable to give such notice by mail, then such
notification as shall be made with the approval of the Purchase Contract Agent
shall constitute a sufficient notification for every purpose hereunder.
Section 1.07. Effect of Headings and Table of Contents.
The Article and Section headings herein and the Table of Contents are for
convenience only and shall not affect the construction hereof.
Section 1.08. Successors and Assigns.
All covenants and agreements in this Agreement by the Company and the
Purchase Contract Agent shall bind their respective successors and assigns,
whether so expressed or not.
Section 1.09. Separability Clause.
In case any provision in this Agreement or in the Securities shall be
invalid, illegal or unenforceable, the validity, legality and enforceability of
the remaining provisions hereof and thereof shall not in any way be affected or
impaired thereby.
Section 1.10. Benefits of Agreement.
Nothing contained in this Agreement or in the Securities, express or
implied, shall give to any Person, other than the parties hereto and their
successors hereunder and, to the extent provided hereby, the Holders, any
benefits or any legal or equitable right, remedy or claim under this Agreement.
The Holders from time to time shall be beneficiaries of this Agreement and shall
be bound by all of the terms and conditions hereof and of the Securities
evidenced by their Certificates by their acceptance of delivery of such
Certificates.
Section 1.11. Governing Law.
This Agreement and the Securities shall be governed by, and construed in
accordance with, the laws of the State of New York without regard to any
conflicts of law provision that would require the application of the law of any
other jurisdiction.
Section 1.12. Legal Holidays.
In any case where any Payment Date shall not be a Business Day
(notwithstanding any other provision of this Agreement or the Securities),
Purchase Contract Payments or other distributions shall not be paid on such
date, but Purchase Contract Payments or such other distributions shall be paid
on the next succeeding Business Day with the same force and effect as if made on
such Payment Date, provided that no interest shall accrue or be payable by the
Company or to any Holder for the period from and after any such Payment Date.
17
In any case where any Purchase Contract Settlement Date or Early Settlement
Date shall not be a Business Day (notwithstanding any other provision of this
Agreement or the Securities) Purchase Contracts shall not be performed and Early
Settlement shall not be effected on such date, but Purchase Contracts shall be
performed or Early Settlement effected, as applicable, on the next succeeding
Business Day with the same force and effect as if made on such Purchase Contract
Settlement Date or Early Settlement Date, as applicable.
Section 1.13. Counterparts.
This Agreement may be executed in any number of counterparts by the parties
hereto on separate counterparts, each of which, when so executed and delivered,
shall be deemed an original, but all such counterparts shall together constitute
one and the same instrument.
Section 1.14. Inspection of Agreement.
A copy of this Agreement shall be available at all reasonable times during
normal business hours at the Corporate Trust Office for inspection by any Holder
or Beneficial Owner.
Section 1.15. Appointment of Financial Institution as Agent for the
Company.
The Company may appoint a financial institution (which may be the
Collateral Agent) to act as its agent in performing its obligations and in
accepting and enforcing performance of the obligations of the Purchase Contract
Agent and the Holders, under this Agreement and the Purchase Contracts, by
giving notice of such appointment in the manner provided in Section 1.05 hereof.
Any such appointment shall not relieve the Company in any way from its
obligations hereunder.
Section 1.16. No Waiver. No failure on the part of the Company, the
Purchase Contract Agent, the Collateral Agent, the Securities Intermediary or
any of their respective agents to exercise, and no course of dealing with
respect to, and no delay in exercising, any right, power or remedy hereunder
shall operate as a waiver thereof; nor shall any single or partial exercise by
the Company, the Collateral Agent, the Securities Intermediary or any of their
respective agents of any right, power or remedy hereunder preclude any other or
further exercise thereof or the exercise of any other right, power or remedy.
The remedies herein are cumulative and are not exclusive of any remedies
provided by law.
ARTICLE II
CERTIFICATE FORMS
Section 2.01. Forms of Certificates Generally.
The Certificates (including the form of Purchase Contract forming part of
each Security evidenced thereby) shall be in substantially the form set forth in
Exhibit A hereto (in the case of Certificates evidencing Income Equity Units) or
Exhibit B hereto (in the case of Certificates evidencing Growth Equity Units),
with such letters, numbers or other marks of identification or designation and
such legends or endorsements printed, lithographed or engraved thereon as may be
required by the rules of any securities exchange on which the Securities are
listed or any
18
depositary therefor, or as may, consistently herewith, be determined by the
officers of the Company executing such Certificates, as evidenced by their
execution of the Certificates.
The definitive Certificates shall be printed, lithographed or engraved on
steel engraved borders or may be produced in any other manner, all as determined
by the officers of the Company executing the Securities evidenced by such
Certificates, consistent with the provisions of this Agreement, as evidenced by
their execution thereof.
Every Global Certificate authenticated, executed on behalf of the Holders
and delivered hereunder shall bear a legend in substantially the following form:
"THIS CERTIFICATE IS A GLOBAL CERTIFICATE WITHIN THE MEANING OF THE
PURCHASE CONTRACT AGREEMENT HEREINAFTER REFERRED TO AND IS REGISTERED IN
THE NAME OF CEDE & CO., AS NOMINEE OF THE DEPOSITORY TRUST COMPANY, A NEW
YORK CORPORATION (THE "DEPOSITARY"), THE DEPOSITARY OR ANOTHER NOMINEE OF
THE DEPOSITARY. THIS CERTIFICATE IS EXCHANGEABLE FOR CERTIFICATES
REGISTERED IN THE NAME OF A PERSON OTHER THAN THE DEPOSITARY OR ITS NOMINEE
ONLY IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE PURCHASE CONTRACT
AGREEMENT AND NO TRANSFER OF THIS CERTIFICATE (OTHER THAN A TRANSFER OF
THIS CERTIFICATE AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE
DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER
NOMINEE OF THE DEPOSITARY) MAY BE REGISTERED EXCEPT IN LIMITED
CIRCUMSTANCES.
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITARY FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY
CERTIFICATE ISSUED IS REQUESTED IN THE NAME OF CEDE & CO. OR SUCH OTHER
NAME AS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITARY (AND
ANY PAYMENT HEREON IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITARY), ANY TRANSFER,
PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS
WRONGFUL SINCE THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN."
Section 2.02. Form of Purchase Contract Agent's Certificate of
Authentication.
The form of the Purchase Contract Agent's certificate of authentication of
the Securities shall be in substantially the form set forth on the form of the
applicable Certificates.
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ARTICLE III
THE SECURITIES
Section 3.01. Amount; Form and Denominations.
The aggregate number of Securities evidenced by Certificates authenticated,
executed on behalf of the Holders and delivered hereunder is limited to
22,000,0000 (24,000,000 if the over-allotment option granted in the Purchase
Agreement is exercised in full), except for Certificates authenticated, executed
and delivered upon registration of transfer of, in exchange for, or in lieu of,
other Certificates pursuant to Sections 3.04, 3.05, 3.10, 3.13, 3.14, 5.07 or
8.05.
The Certificates shall be issuable only in registered form and only in
denominations of a single Income Equity Unit or Growth Equity Unit and any
integral multiple thereof.
Section 3.02. Rights and Obligations Evidenced by the Certificates.
Each Income Equity Units Certificate shall evidence the number of Income
Equity Units specified therein, with each such Income Equity Unit representing
(1) the ownership by the Holder thereof of a beneficial interest in a Note or
the Applicable Ownership Interest of the Treasury Portfolio, as the case may be,
subject to the Pledge of such Note or the Applicable Ownership Interest (as
specified in clause (A) of the definition of such term) of the Treasury
Portfolio, as the case may be, by such Holder pursuant to the Pledge Agreement,
and (2) the rights and obligations of the Holder thereof and the Company under
one Purchase Contract. The Purchase Contract Agent, as attorney-in-fact for,
and on behalf of, the Holder of each Income Equity Unit shall pledge, pursuant
to the Pledge Agreement, the Note or the Applicable Ownership Interest (as
specified in clause (A) of the definition of such term) of the Treasury
Portfolio, as the case may be, forming a part of such Income Equity Unit, to the
Collateral Agent and grant to the Collateral Agent a security interest in the
right, title and interest of such Holder in such Note or the Applicable
Ownership Interest (as specified in clause (A) of the definition of such term)
of the Treasury Portfolio, as the case may be, for the benefit of the Company,
to secure the obligation of the Holder under each Purchase Contract to purchase
shares of Common Stock.
Upon the formation of Growth Equity Units pursuant to Section 3.13, each
Growth Equity Units Certificate shall evidence the number of Growth Equity Units
specified therein, with each such Growth Equity Unit representing (1) the
ownership by the Holder thereof of a 1/40 undivided beneficial interest in a
Treasury Security with a principal amount equal to $1,000, subject to the Pledge
of such Treasury Security by such Holder pursuant to the Pledge Agreement, and
(2) the rights and obligations of the Holder thereof and the Company under one
Purchase Contract.
Prior to the purchase of shares of Common Stock under each Purchase
Contract, such Purchase Contracts shall not entitle the Holder of a Security to
any of the rights of a holder of shares of Common Stock, including, without
limitation, the right to vote or receive any dividends or other payments or to
consent or to receive notice as a shareholder in respect of the meetings of
20
shareholders or for the election of directors of the Company or for any other
matter, or any other rights whatsoever as a shareholder of the Company.
Section 3.03. Execution, Authentication, Delivery and Dating.
Subject to the provisions of Sections 3.13 and 3.14 hereof, upon the
execution and delivery of this Agreement, and at any time and from time to time
thereafter, the Company may deliver Certificates executed by the Company to the
Purchase Contract Agent for authentication, execution on behalf of the Holders
and delivery, together with its Issuer Order for authentication of such
Certificates, and the Purchase Contract Agent in accordance with such Issuer
Order shall authenticate, execute on behalf of the Holders and deliver such
Certificates.
The Certificates shall be executed on behalf of the Company by its Chairman
of the Board, its President, its Treasurer or one of its Vice Presidents. The
signature of any of these officers on the Certificates may be manual or
facsimile.
Certificates bearing the manual or facsimile signatures of individuals who
were at any time the proper officers of the Company shall bind the Company,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the authentication and delivery of such Certificates or did not
hold such offices at the date of such Certificates.
No Purchase Contract evidenced by a Certificate shall be valid until such
Certificate has been executed on behalf of the Holder by the manual signature of
an authorized officer of the Purchase Contract Agent, as such Holder's attorney-
in-fact. Such signature by an authorized officer of the Purchase Contract Agent
shall be conclusive evidence that the Holder of such Certificate has entered
into the Purchase Contracts evidenced by such Certificate.
Each Certificate shall be dated the date of its authentication.
No Certificate shall be entitled to any benefit under this Agreement or be
valid or obligatory for any purpose unless there appears on such Certificate a
certificate of authentication substantially in the form provided for herein
executed by an authorized officer of the Purchase Contract Agent by manual
signature, and such certificate upon any Certificate shall be conclusive
evidence, and the only evidence, that such Certificate has been duly
authenticated and delivered hereunder.
Section 3.04. Temporary Certificates.
Pending the preparation of definitive Certificates (in the event that
definitive Certificates are not prepared at the time of the initial issuance of
the Securities), the Company shall execute and deliver to the Purchase Contract
Agent, and the Purchase Contract Agent shall authenticate, execute on behalf of
the Holders, and deliver, in lieu of such definitive Certificates, temporary
Certificates which are in substantially the form set forth in Exhibit A or
Exhibit B hereto, as the case may be, with such letters, numbers or other marks
of identification or designation and such legends or endorsements printed,
lithographed or engraved thereon as may be required by the rules of any
securities exchange on which the Income Equity Units or Growth Equity Units, as
the case may be, are listed, or as may, consistently herewith, be determined by
the officers of the Company executing such Certificates, as evidenced by their
execution of the Certificates.
21
If temporary Certificates are issued, the Company will cause definitive
Certificates to be prepared without unreasonable delay. After the preparation
of definitive Certificates, the temporary Certificates shall be exchangeable for
definitive Certificates upon surrender of the temporary Certificates at the
Corporate Trust Office, at the expense of the Company and without charge to the
Holder. Upon surrender for cancellation of any one or more temporary
Certificates, the Company shall execute and deliver to the Purchase Contract
Agent, and the Purchase Contract Agent shall authenticate, execute on behalf of
the Holder, and deliver in exchange therefor, one or more definitive
Certificates of like tenor and denominations and evidencing a like number of
Securities as the temporary Certificate or Certificates so surrendered. Until
so exchanged, the temporary Certificates shall in all respects evidence the same
benefits and the same obligations with respect to the Securities, evidenced
thereby as definitive Certificates.
Section 3.05. Registration; Registration of Transfer and Exchange.
The Purchase Contract Agent shall keep at the Corporate Trust Office a
register (the "Security Register") in which, subject to such reasonable
regulations as it may prescribe, the Purchase Contract Agent shall provide for
the registration of Certificates and of transfers of Certificates (the Purchase
Contract Agent, in such capacity, the "Security Registrar"). The Security
Registrar shall record separately the registration and transfer of the
Certificates evidencing Income Equity Units and Growth Equity Units.
Upon surrender for registration of transfer of any Certificate at the
Corporate Trust Office, the Company shall execute and deliver to the Purchase
Contract Agent, and the Purchase Contract Agent shall authenticate, execute on
behalf of the designated transferee or transferees, and deliver, in the name of
the designated transferee or transferees, one or more new Certificates of any
authorized denominations, like tenor, and evidencing a like number of Income
Equity Units or Growth Equity Units, as the case may be.
At the option of the Holder, Certificates may be exchanged for other
Certificates, of any authorized denominations and evidencing a like number of
Income Equity Units or Growth Equity Units, as the case may be, upon surrender
of the Certificates to be exchanged at the Corporate Trust Office. Whenever any
Certificates are so surrendered for exchange, the Company shall execute and
deliver to the Purchase Contract Agent, and the Purchase Contract Agent shall
authenticate, execute on behalf of the Holder, and deliver the Certificates
which the Holder making the exchange is entitled to receive.
All Certificates issued upon any registration of transfer or exchange of a
Certificate shall evidence the ownership of the same number of Income Equity
Units or Growth Equity Units, as the case may be, and be entitled to the same
benefits and subject to the same obligations, under this Agreement as the Income
Equity Units or Growth Equity Units, as the case may be, evidenced by the
Certificate surrendered upon such registration of transfer or exchange.
Every Certificate presented or surrendered for registration of transfer or
exchange shall (if so required by the Purchase Contract Agent) be duly endorsed,
or be accompanied by a written instrument of transfer in form satisfactory to
the Company and the Purchase Contract Agent duly executed, by the Holder thereof
or its attorney duly authorized in writing.
22
No service charge shall be made for any registration of transfer or
exchange of a Certificate, but the Company and the Purchase Contract Agent may
require payment from the Holder of a sum sufficient to cover any tax or other
governmental charge that may be imposed in connection with any registration of
transfer or exchange of Certificates, other than any exchanges pursuant to
Sections 3.06 and 8.05 not involving any transfer.
Notwithstanding the foregoing, the Company shall not be obligated to
execute and deliver to the Purchase Contract Agent, and the Purchase Contract
Agent shall not be obligated to authenticate, execute on behalf of the Holder
and deliver any Certificate in exchange for any other Certificate presented or
surrendered for registration of transfer or for exchange on or after the
Business Day immediately preceding the earliest of any Early Settlement Date for
such Certificate, the Purchase Contract Settlement Date or the Termination Date.
In lieu of delivery of a new Certificate, upon satisfaction of the applicable
conditions specified above in this Section and receipt of appropriate
registration or transfer instructions from such Holder, the Purchase Contract
Agent shall:
(i) if the Purchase Contract Settlement Date or an Early Settlement
Date with respect to such other Certificate has occurred, deliver the
shares of Common Stock issuable in respect of the Purchase Contracts
forming a part of the Securities evidenced by such other Certificate; or
(ii) if a Cash Settlement or an Early Settlement Date with respect to
such other Certificate shall have occurred, or if a Termination Event shall
have occurred prior to the Purchase Contract Settlement Date, transfer the
Notes, the Treasury Securities, or the appropriate Applicable Ownership
Interest of the Treasury Portfolio, as the case may be, evidenced thereby,
in each case subject to the applicable conditions and in accordance with
the applicable provisions of Section 3.15 and Article Five hereof.
Section 3.06. Book-Entry Interests.
The Certificates, on original issuance, will be issued in the form of one
or more fully registered Global Certificates, to be delivered to the Depositary
or its custodian by, or on behalf of, the Company. The Company hereby
designates DTC as the initial Depositary. Such Global Certificates shall
initially be registered on the books and records of the Company in the name of
Cede & Co., the nominee of the Depositary, and no Beneficial Owner will receive
a definitive Certificate representing such Beneficial Owner's interest in such
Global Certificate, except as provided in Section 3.09. The Purchase Contract
Agent shall enter into an agreement with the Depositary if so requested by the
Company. Unless and until definitive, fully registered Certificates have been
issued to Beneficial Owners pursuant to Section 3.09:
(i) the provisions of this Section 3.06 shall be in full force and
effect;
(ii) the Company shall be entitled to deal with the Depositary for all
purposes of this Agreement (including, without limitation, making Purchase
Contract Payments and receiving approvals, votes or consents hereunder) as
the Holder of the Securities and the sole holder of the Global Certificates
and shall have no obligation to the Beneficial Owners;
23
(iii) to the extent that the provisions of this Section 3.06 conflict
with any other provisions of this Agreement, the provisions of this Section
3.06 shall control; and
(iv) the rights of the Beneficial Owners shall be exercised only
through the Depositary and shall be limited to those established by law and
agreements between such Beneficial Owners and the Depositary or the
Depositary Participants.
Section 3.07. Notices to Holders.
Whenever a notice or other communication to the Holders is required to be
given under this Agreement, the Company or the Company's agent shall give such
notices and communications to the Holders and, with respect to any Securities
registered in the name of the Depositary or the nominee of the Depositary, the
Company or the Company's agent shall, except as set forth herein, have no
obligations to the Beneficial Owners.
Section 3.08. Appointment of Successor Depositary.
If the Depositary elects to discontinue its services as securities
depositary with respect to the Securities, the Company may, in its sole
discretion, appoint a successor Depositary with respect to the Securities.
Section 3.09. Definitive Certificates.
If:
(i) the Depositary elects to discontinue its services as securities
depositary with respect to the Securities and a successor Depositary is not
appointed pursuant to Section 3.08 within 90 days after such
discontinuance; or
(ii) the Company elects, after consultation with the Purchase Contract
Agent, to terminate the book-entry system for the Securities,
then (x) definitive Certificates shall be prepared by the Company with respect
to such Securities and delivered to the Purchase Contract Agent and (y) upon
surrender of the Global Certificates representing the Securities by the
Depositary, accompanied by registration instructions, the Company shall cause
definitive Certificates to be delivered to Beneficial Owners in accordance with
the instructions of the Depositary. The Company and the Purchase Contract Agent
shall not be liable for any delay in delivery of such instructions and may
conclusively rely on and shall be protected in relying on, such instructions.
Each definitive Certificate so delivered shall evidence Securities of the same
kind and tenor as the Global Certificate so surrendered in respect thereof.
Section 3.10. Mutilated, Destroyed, Lost and Stolen Certificates.
If any mutilated Certificate is surrendered to the Purchase Contract Agent,
the Company shall execute and deliver to the Purchase Contract Agent, and the
Purchase Contract Agent shall authenticate, execute on behalf of the Holder, and
deliver in exchange therefor, a new Certificate, evidencing the same number of
Income Equity Units or Growth Equity Units, as the case may be, and bearing a
Certificate number not contemporaneously outstanding.
24
If there shall be delivered to the Company and the Purchase Contract Agent
(i) evidence to their satisfaction of the destruction, loss or theft of any
Certificate, and (ii) such security or indemnity as may be required by them to
hold each of them and any agent of any of them harmless, then, in the absence of
notice to the Company or the Purchase Contract Agent that such Certificate has
been acquired by a protected purchaser, the Company shall execute and deliver to
the Purchase Contract Agent, and the Purchase Contract Agent shall authenticate,
execute on behalf of the Holder, and deliver to the Holder, in lieu of any such
destroyed, lost or stolen Certificate, a new Certificate, evidencing the same
number of Income Equity Units or Growth Equity Units, as the case may be, and
bearing a Certificate number not contemporaneously outstanding.
Notwithstanding the foregoing, the Company shall not be obligated to
execute and deliver to the Purchase Contract Agent, and the Purchase Contract
Agent shall not be obligated to authenticate, execute on behalf of the Holder,
and deliver to the Holder, a Certificate on or after the Business Day
immediately preceding the earliest of any Early Settlement Date for such lost or
mutilated Certificate, the Purchase Contract Settlement Date or the Termination
Date. In lieu of delivery of a new Certificate, upon satisfaction of the
applicable conditions specified above in this Section and receipt of appropriate
registration or transfer instructions from such Holder, the Purchase Contract
Agent shall:
(i) if the Purchase Contract Settlement Date or an Early Settlement
Date with respect to such lost, stolen, destroyed or mutilated Certificate
has occurred, deliver the shares of Common Stock issuable in respect of the
Purchase Contracts forming a part of the Securities evidenced by such
Certificate; or
(ii) if a Cash Settlement with respect to such lost or mutilated
Certificate shall have occurred or if a Termination Event shall have
occurred prior to the Purchase Contract Settlement Date, transfer the
Notes, the Treasury Securities or the appropriate Applicable Ownership
Interest (as specified in clause (A) of the definition of such term) of the
Treasury Portfolio, as the case may be, evidenced thereby, in each case
subject to the applicable conditions and in accordance with the applicable
provisions of Section 3.15 and Article Five hereof.
Upon the issuance of any new Certificate under this Section, the Company
and the Purchase Contract Agent may require the payment by the Holder of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
relation thereto and any other fees and expenses (including, without limitation,
the fees and expenses of the Purchase Contract Agent) connected therewith.
Every new Certificate issued pursuant to this Section in lieu of any
destroyed, lost or stolen Certificate shall constitute an original additional
contractual obligation of the Company and of the Holder in respect of the
Security evidenced thereby, whether or not the destroyed, lost or stolen
Certificate (and the Securities evidenced thereby) shall be at any time
enforceable by anyone, and shall be entitled to all the benefits and be subject
to all the obligations of this Agreement equally and proportionately with any
and all other Certificates delivered hereunder.
25
The provisions of this Section are exclusive and shall preclude, to the
extent lawful, all other rights and remedies with respect to the replacement or
payment of mutilated, destroyed, lost or stolen Certificates.
Section 3.11. Persons Deemed Owners.
Prior to due presentment of a Certificate for registration of transfer, the
Company and the Purchase Contract Agent, and any agent of the Company or the
Purchase Contract Agent, may treat the Person in whose name such Certificate is
registered as the owner of the Security evidenced thereby, for the purpose of
(subject to any applicable record date) receiving distributions on the Treasury
Securities, the Notes, or on the maturing quarterly interest strips of the
Treasury Portfolio, as applicable, receiving Purchase Contract Payments,
performance of the Purchase Contracts and for all other purposes whatsoever,
whether or not any distributions on the Treasury Securities, the Notes, or
Treasury Portfolio, as applicable, or Purchase Contract Payments payable on the
Purchase Contracts, each constituting a part of the Security evidenced thereby
shall be overdue and notwithstanding any notice to the contrary, and neither the
Company nor the Purchase Contract Agent, nor any agent of the Company or the
Purchase Contract Agent, shall be affected by notice to the contrary.
Notwithstanding the foregoing, with respect to any Global Certificate,
nothing contained herein shall prevent the Company, the Purchase Contract Agent
or any agent of the Company or the Purchase Contract Agent, from giving effect
to any written certification, proxy or other authorization furnished by the
Depositary (or its nominee), as a Holder, with respect to such Global
Certificate or impair, as between such Depositary and the related Beneficial
Owner, the operation of customary practices governing the exercise of rights of
the Depositary (or its nominee) as Holder of such Global Certificate. None of
the Company, the Purchase Contract Agent nor any agent of the Company or the
Purchase Contract Agent will have any responsibility or liability for any aspect
of the records relating to or payments made on account of beneficial ownership
interests of a Global Certificate or maintaining, supervising or reviewing any
records relating to such beneficial ownership interests.
Section 3.12. Cancellation.
All Certificates surrendered for delivery of shares of Common Stock on or
after the Purchase Contract Settlement Date or upon the transfer of Notes, or
for delivery of the appropriate Applicable Ownership Interest (as specified in
clause (A) of the definition of that term) of the Treasury Portfolio or Treasury
Securities, as the case may be, after the occurrence of a Termination Event or
pursuant to an Early Settlement, or upon the registration of transfer or
exchange of a Security, or a Collateral Substitution or the reestablishment of
Income Equity Units shall, if surrendered to any Person other than the Purchase
Contract Agent, be delivered to the Purchase Contract Agent and, if not already
cancelled, shall be promptly cancelled by it. The Company may at any time
deliver to the Purchase Contract Agent for cancellation any Certificates
previously authenticated, executed and delivered hereunder which the Company may
have acquired in any manner whatsoever, and all Certificates so delivered shall,
upon an Issuer Order, be promptly cancelled by the Purchase Contract Agent. No
Certificates shall be authenticated, executed on behalf of the Holder and
delivered in lieu of or in exchange for any Certificates cancelled as provided
in this Section, except as expressly permitted by this
26
Agreement. All cancelled Certificates held by the Purchase Contract Agent shall
be disposed of in accordance with its customary practices.
If the Company or any Affiliate of the Company shall acquire any
Certificate, such acquisition shall not operate as a cancellation of such
Certificate unless and until such Certificate is delivered to the Purchase
Contract Agent cancelled or for cancellation.
Section 3.13. Creation of Growth Equity Units by Substitution of Treasury
Securities.
Subject to the conditions set forth in this Agreement, a Holder may
separate the Notes or Applicable Ownership Interests of the Treasury Portfolio,
as applicable, from the related Purchase Contracts in respect of such Holder's
Income Equity Units by substituting for such Notes or Applicable Ownership
Interests of the Treasury Portfolio, as applicable, Treasury Securities in an
aggregate principal amount equal to the aggregate principal amount of such Notes
or the principal amount of such Applicable Ownership Interests (as specified in
clause (A) of the definition of such term) of the Treasury Portfolio, as
applicable (a "COLLATERAL SUBSTITUTION"), at any time from and after the date of
this Agreement and, subject to the third succeeding paragraph, prior to or on
the fifth Business Day immediately preceding the Purchase Contract Settlement
Date. To effect such substitution, the Holder must:
(1) deposit with the Securities Intermediary Treasury Securities
having an aggregate principal amount at maturity equal to the
aggregate principal amount of the Notes or the Applicable
Ownership Interests (as specified in clause (A) of the
definition of such term) of the Treasury Portfolio comprising
part of such Income Equity Units, as the case may be; and
(2) transfer the related Income Equity Units to the Purchase
Contract Agent accompanied by a notice to the Purchase Contract
Agent, substantially in the form of Exhibit C hereto, (i)
stating that the Holder has transferred the relevant amount of
Treasury Securities to the Securities Intermediary and (ii)
requesting that the Purchase Contract Agent instruct the
Collateral Agent to release the Notes or the Applicable
Ownership Interests of the Treasury Portfolio, as the case may
be, underlying such Income Equity Units, whereupon the Purchase
Contract Agent shall promptly provide an instruction to such
effect to the Collateral Agent, substantially in the form of
Exhibit A to the Pledge Agreement.
Upon receipt of the Treasury Securities described in clause (1) above and
the instruction described in clause (2) above, in accordance with the terms of
the Pledge Agreement, the Collateral Agent will cause the Securities
Intermediary to effect the release of such Notes or Applicable Ownership
Interests of the Treasury Portfolio, as the case may be, from the Pledge, free
and clear of the Company's security interest therein, and the transfer of such
Notes or Applicable Ownership Interests of the Treasury Portfolio, as the case
may be, to the Purchase Contract Agent on behalf of the Holder. Upon receipt
thereof, the Purchase Contract Agent shall promptly:
(i) cancel the related Income Equity Units;
27
(ii) transfer the Notes or Applicable Ownership Interests of the
Treasury Portfolio, as the case may be, to the Holder; and
(iii) authenticate, execute on behalf of such Holder and deliver a
Growth Equity Units Certificate executed by the Company in accordance with
Section 3.03 evidencing the same number of Purchase Contracts as were
evidenced by the cancelled Income Equity Units.
Holders who elect to separate the Notes or Applicable Ownership Interests
of the Treasury Portfolio, as the case may be, from the related Purchase
Contracts and to substitute Treasury Securities for such Notes or Applicable
Ownership Interests of the Treasury Portfolio, as the case may be, shall be
responsible for any fees or expenses (including, without limitation, fees and
expenses payable to the Collateral Agent for its services as Collateral Agent)
in respect of the substitution, and the Company shall not be responsible for any
such fees or expenses.
Holders may make Collateral Substitutions only in integral multiples of 40
Income Equity Units; provided that if the Treasury Portfolio has replaced the
Notes as a component of the Income Equity Units as a result of a Successful
Initial Remarketing, Successful Secondary Remarketing or a Tax Event Redemption,
Holders may make Collateral Substitutions at any time on or prior to the second
Business Day immediately preceding the Purchase Contract Settlement Date, but
only in integral multiples of 20,000 Income Equity Units.
In the event a Holder making a Collateral Substitution pursuant to this
Section 3.13 fails to effect a book-entry transfer of the Income Equity Units or
fails to deliver Income Equity Units Certificates to the Purchase Contract Agent
after depositing Treasury Securities with the Collateral Agent, any
distributions on the Notes or Applicable Ownership Interests of the Treasury
Portfolio, as the case may be, constituting a part of such Income Equity Units
shall be held in the name of the Purchase Contract Agent or its nominee in trust
for the benefit of such Holder, until such Income Equity Units are so
transferred or the Income Equity Units Certificate is so delivered, as the case
may be, or such Holder provides evidence satisfactory to the Company and the
Purchase Contract Agent that such Income Equity Units Certificate has been
destroyed, lost or stolen, together with any indemnity that may be required by
the Purchase Contract Agent and the Company.
Except as described in this Section 3.13 or in connection with a Cash
Settlement, for so long as the Purchase Contract underlying an Income Equity
Unit remains in effect, such Income Equity Unit shall not be separable into its
constituent parts, and the rights and obligations of the Holder in respect of
the Notes or Applicable Ownership Interests of the Treasury Portfolio, as the
case may be, and the Purchase Contract comprising such Income Equity Unit may be
acquired, and may be transferred and exchanged, only as an Income Equity Unit.
Section 3.14. Reestablishment of Income Equity Units.
Subject to the conditions set forth in this Agreement, a Holder of Growth
Equity Units may reestablish Income Equity Units at any time prior to or on,
subject to the third succeeding paragraph, the fifth Business Day immediately
preceding the Purchase Contract Settlement Date, by:
28
(1) depositing with the Securities Intermediary Notes or Applicable
Ownership Interests of the Treasury Portfolio, as the case may
be, (i) in the case of Notes, having an aggregate principal
amount equal to the aggregate principal amount at maturity of
the Treasury Securities comprising part of the Growth Equity
Units and (ii) in the case of Applicable Ownership Interests,
such that the portion of such Applicable Ownership Interests
described in clause (A) of the definition of such term
represents an undivided beneficial ownership interest in
principal or interest strips of U.S. treasury securities having
an aggregate face amount equal to the aggregate principal amount
at maturity of the Treasury Securities comprising part of the
Growth Equity Units; and
(2) transferring the related Growth Equity Units to the Purchase
Contract Agent accompanied by a notice to the Purchase Contract
Agent, substantially in the form of Exhibit C hereto, (i)
stating that the Holder has transferred the relevant amount of
Notes or Applicable Ownership Interests of the Treasury
Portfolio, as the case may be, to the Securities Intermediary
and (ii) requesting that the Purchase Contract Agent instruct
the Collateral Agent to release the Treasury Securities
underlying such Growth Equity Units, whereupon the Purchase
Contract Agent shall promptly provide an instruction to such
effect to the Collateral Agent, substantially in the form of
Exhibit C to the Pledge Agreement.
Upon receipt of the Notes or Applicable Ownership Interests of the Treasury
Portfolio, as the case may be, described in clause (1) above and the instruction
described in clause (2) above, in accordance with the terms of the Pledge
Agreement, the Collateral Agent will cause the Securities Intermediary to effect
the release of the Treasury Securities having a corresponding aggregate
principal amount at maturity from the Pledge, free and clear of the Company's
security interest therein, and the transfer thereof to the Purchase Contract
Agent on behalf of the Holder. Upon receipt thereof, the Purchase Contract
Agent shall promptly:
(i) cancel the related Growth Equity Units;
(ii) transfer the Treasury Securities to the Holder; and
(iii) authenticate, execute on behalf of such Holder and deliver an
Income Equity Units Certificate executed by the Company in accordance with
Section 3.03 evidencing the same number of Purchase Contracts as were
evidenced by the cancelled Growth Equity Units.
Holders who elect to reestablish Income Equity Units shall be responsible
for any fees or expenses (including, without limitation, fees and expenses
payable to the Collateral Agent for its services as Collateral Agent) in respect
of the reestablishment, and the Company shall not be responsible for any such
fees or expenses.
Holders of Growth Equity Units may only reestablish Income Equity Units in
integral multiples of 40 Growth Equity Units; provided that if the Treasury
Portfolio has replaced the
29
Notes as a component of the Income Equity Units as a result of a Successful
Initial Remarketing, Successful Secondary Remarketing or a Tax Event Redemption,
Holders may convert their Growth Equity Units into Income Equity Units by
substituting Applicable Ownership Interests of the Treasury Portfolio for
Treasury Securities at any time on or prior to the second Business Day
immediately preceding the Purchase Contract Settlement Date, but only in
multiples of 20,000 Growth Equity Units.
Except as provided in this Section 3.14 or in connection with a Cash
Settlement, for so long as the Purchase Contract underlying a Growth Equity Unit
remains in effect, such Growth Equity Unit shall not be separable into its
constituent parts and the rights and obligations of the Holder of such Growth
Equity Unit in respect of the 1/40 of a Treasury Security and the Purchase
Contract comprising such Growth Equity Unit may be acquired, and may be
transferred and exchanged, only as a Growth Equity Unit.
Section 3.15. Transfer of Collateral upon Occurrence of Termination Event.
Upon the occurrence of a Termination Event and the transfer to the Purchase
Contract Agent of the Notes, the appropriate Applicable Ownership Interest of
the Treasury Portfolio or the Treasury Securities, as the case may be,
underlying the Income Equity Units and the Growth Equity Units, as the case may
be, pursuant to the terms of the Pledge Agreement, the Purchase Contract Agent
shall request transfer instructions with respect to such Notes, the appropriate
Applicable Ownership Interest of the Treasury Portfolio or Treasury Securities,
as the case may be, from each Holder by written request, substantially in the
form of Exhibit D hereto, mailed to such Holder at its address as it appears in
the Security Register.
Upon book-entry transfer of the Income Equity Units or the Growth Equity
Units or delivery of an Income Equity Units Certificate or Growth Equity Units
Certificate to the Purchase Contract Agent with such transfer instructions, the
Purchase Contract Agent shall transfer the Notes, the appropriate Applicable
Ownership Interest of the Treasury Portfolio or Treasury Securities, as the case
may be, underlying such Income Equity Units or Growth Equity Units, as the case
may be, to such Holder by book-entry transfer, or other appropriate procedures,
in accordance with such instructions. In the event a Holder of Income Equity
Units or Growth Equity Units fails to effect such transfer or delivery, the
Notes, the appropriate Applicable Ownership Interest of the Treasury Portfolio
or Treasury Securities, as the case may be, underlying such Income Equity Units
or Growth Equity Units, as the case may be, and any distributions thereon, shall
be held in the name of the Purchase Contract Agent or its nominee in trust for
the benefit of such Holder, until the earlier to occur of:
(i) the transfer of such Income Equity Units or Growth Equity Units
or surrender of the Income Equity Units Certificate or Growth Equity Units
Certificate or receipt by the Company and the Purchase Contract Agent from
such Holder of satisfactory evidence that such Income Equity Units
Certificate or Growth Equity Units Certificate has been destroyed, lost or
stolen, together with any indemnity that may be required by the Purchase
Contract Agent and the Company; and
(ii) the expiration of the time period specified in the abandoned
property laws of the relevant State in which the Purchase Contract Agent
holds such property.
30
Section 3.16. No Consent to Assumption.
In the event that the issuance of the Securities by the Company does not
constitute a financial accommodation under, or otherwise fall within the purview
of 365(e)(2) of, the Bankruptcy Code, each Holder of a Security, by acceptance
thereof, shall be deemed expressly to have withheld any consent to the
assumption under Section 365 of the Bankruptcy Code or otherwise, of the
Purchase Contract by the Company or its trustee, receiver, liquidator or a
person or entity performing similar functions in the event that the Company
becomes the debtor under the Bankruptcy Code or subject to other similar state
or Federal law providing for reorganization or liquidation.
ARTICLE IV
THE NOTES AND APPLICABLE OWNERSHIP INTEREST
OF THE TREASURY PORTFOLIO
Section 4.01. Interest Payments; Rights to Interest Payments Preserved.
Any distribution on any Note or on the appropriate Applicable Ownership
Interest (as specified in clause (B) of the definition thereof) of the Treasury
Portfolio, as the case may be, which is paid on any Payment Date shall, subject
to receipt thereof by the Purchase Contract Agent from the Collateral Agent as
provided by the terms of the Pledge Agreement, be paid to the Person in whose
name the Income Equity Units Certificate (or one or more Predecessor Income
Equity Units Certificates) of which such Note or the appropriate Applicable
Ownership Interest of the Treasury Portfolio, as the case may be, forms a part
is registered at the close of business on the Record Date for such Payment Date.
Each Income Equity Units Certificate evidencing Notes or the appropriate
Applicable Ownership Interest of the Treasury Portfolio delivered under this
Agreement upon registration of transfer of or in exchange for or in lieu of any
other Income Equity Units Certificate shall carry the right to accrued and
unpaid interest or distributions, and to accrue interest or distributions, which
were carried by the Notes or the appropriate Applicable Ownership Interest of
the Treasury Portfolio underlying such other Income Equity Units Certificate.
In the case of any Income Equity Units with respect to which Cash
Settlement of the underlying Purchase Contract is properly effected pursuant to
Section 5.02 hereof, or with respect to which Early Settlement of the underlying
Purchase Contract is properly effected pursuant to either of Section 5.04(b)(2)
or Section 5.07 hereof, or with respect to which a Collateral Substitution is
effected, in each case on a date that is after any Record Date and prior to or
on the next succeeding Payment Date, interest on the Notes or distributions on
the appropriate Applicable Ownership Interest of the Treasury Portfolio, as the
case may be, underlying such Income Equity Units otherwise payable on such
Payment Date shall be payable on such Payment Date notwithstanding such Cash
Settlement or Early Settlement or Collateral Substitution, and such
distributions shall, subject to receipt thereof by the Purchase Contract Agent,
be payable to the Person in whose name the Income Equity Units Certificate (or
one or more Predecessor Income Equity Units Certificates) was registered at the
close of business on the Record Date. Except as otherwise expressly provided in
the immediately preceding sentence,
31
in the case of any Income Equity Units with respect to which Cash Settlement or
Early Settlement of the underlying Purchase Contract is properly effected, or
with respect to which a Collateral Substitution has been effected, distributions
on the related Notes or the appropriate Applicable Ownership Interest of the
Treasury Portfolio, as the case may be, that would otherwise be payable after
the Purchase Contract Settlement Date, Early Settlement Date or the date of the
Collateral Substitution, as the case may be, shall not be payable hereunder to
the Holder of such Income Equity Units; provided, however, that to the extent
that such Holder continues to hold separated Notes that formerly comprised a
part of such Holder's Income Equity Units, such Holder shall be entitled to
receive interest on such separated Notes.
Section 4.02. Notice and Voting.
Under the terms of the Pledge Agreement, the Purchase Contract Agent will
be entitled to exercise the voting and any other consensual rights pertaining to
the Pledged Notes, but only to the extent instructed in writing by the Holders
as described below. Upon receipt of notice of any meeting at which holders of
Notes are entitled to vote or upon any solicitation of consents, waivers or
proxies of holders of Notes, the Purchase Contract Agent shall, as soon as
practicable thereafter, mail, first class, postage pre-paid, to the Holders of
Income Equity Units a notice:
(i) containing such information as is contained in the notice or
solicitation;
(ii) stating that each Holder on the record date set by the Purchase
Contract Agent therefor (which, to the extent possible, shall be the same
date as the record date for determining the holders of Notes, as the case
may be, entitled to vote) shall be entitled to instruct the Purchase
Contract Agent as to the exercise of the voting rights pertaining to such
Notes underlying their Income Equity Units; and
(iii) stating the manner in which such instructions may be given.
Upon the written request of the Holders of Income Equity Units on such record
date received by the Purchase Contract Agent at least six days prior to such
meeting, the Purchase Contract Agent shall endeavor insofar as practicable to
vote or cause to be voted, in accordance with the instructions set forth in such
requests, the maximum number of Notes, as the case may be, as to which any
particular voting instructions are received. In the absence of specific
instructions from the Holder of an Income Equity Unit, the Purchase Contract
Agent shall abstain from voting the Notes underlying such Income Equity Unit.
The Company hereby agrees, if applicable, to solicit Holders of Income Equity
Units to timely instruct the Purchase Contract Agent in order to enable the
Purchase Contract Agent to vote such Notes.
Section 4.03. Tax Event Redemption.
(a) Upon the occurrence of a Tax Event Redemption Date (1) prior to
February 17, 2005, (2) in the event of a Failed Initial Remarketing, prior to
April 17, 2005, or (3) in the event of a Failed Secondary Remarketing, prior to
the Purchase Contract Settlement Date, an amount equal to the Redemption Amount,
plus any accrued and unpaid interest, payable on the Tax Event Redemption Date
with respect to the principal amount of Notes that are components of Income
Equity Units shall be deposited in the Collateral Account in exchange for the
Pledged Notes. Thereafter, pursuant to the terms of the Pledge Agreement, the
Collateral Agent shall
32
cause the Securities Intermediary to apply an amount equal to the Redemption
Amount of such funds to purchase on behalf of the Holders of Income Equity Units
the Treasury Portfolio and promptly remit the remaining portion of such funds to
the Purchase Contract Agent for payment to the Holders of such Income Equity
Units.
(b) Upon the occurrence of a Tax Event Redemption Date, the Applicable
Ownership Interest (as specified in clause (A) of the definition of such term)
of the Treasury Portfolio will be substituted as Collateral for the Pledged
Notes and will be held by the Collateral Agent in accordance with the terms of
the Pledge Agreement to secure the obligation of each Holder of an Income Equity
Unit to purchase the Common Stock of the Company under the Purchase Contract
constituting a part of such Income Equity Unit. Following the occurrence of a
Tax Event Redemption Date prior to the Purchase Contract Settlement Date, the
Holders of Income Equity Units and the Collateral Agent shall have such security
interest rights and obligations with respect to the Applicable Ownership
Interest (as specified in clause (A) of the definition of such term) of the
Treasury Portfolio as the Holders of Income Equity Units and the Collateral
Agent had in respect of the Notes, as the case may be, subject to the Pledge
thereof as provided in the Pledge Agreement, and any reference herein to the
Notes shall be deemed to be a reference to such Applicable Ownership Interests
(as specified in clause (A) of the definition of such term) of the Treasury
Portfolio. The Company may cause to be made in any Income Equity Units
Certificates thereafter to be issued such change in phraseology and form (but
not in substance) as may be appropriate to reflect the substitution of the
Applicable Ownership Interest (as specified in clause (A) of the definition of
such term) of the Treasury Portfolio for Notes as Collateral.
ARTICLE V
THE PURCHASE CONTRACTS
Section 5.01. Purchase of Shares of Common Stock.
(a) Each Purchase Contract shall obligate the Holder of the related
Security to purchase, and the Company to sell, on the Purchase Contract
Settlement Date at a price equal to the Stated Amount (the "PURCHASE PRICE"), a
number of newly issued shares of Common Stock (subject to Section 5.09) equal to
the Settlement Rate unless an Early Settlement has occurred in accordance with
either of Section 5.04(b)(2) or Section 5.07 hereof or, prior to or on the
Purchase Contract Settlement Date, there shall have occurred a Termination Event
with respect to the Security of which such Purchase Contract is a part. The
"SETTLEMENT RATE" is equal to:
(i) if the Applicable Market Value (as defined below) is greater
than or equal to $30.5244 (the "THRESHOLD APPRECIATION PRICE"), 0.8190
shares of Common Stock per Purchase Contract;
(ii) if the Applicable Market Value is less than the Threshold
Appreciation Price but is greater than $25.02 (the "Reference Price"), the
number of shares of Common Stock per Purchase Contract having a value equal
to the Stated Amount divided by the Applicable Market Value; and
33
(iii) if the Applicable Market Value is less than or equal to the
Reference Price, 0.9992 shares of Common Stock per Purchase Contract,
in each case subject to adjustment as provided in Section 5.04 (and in each case
rounded upward or downward to the nearest 1/10,000th of a share).
The "APPLICABLE MARKET VALUE" means the average of the Closing Price per
share of Common Stock on each of the 20 consecutive Trading Days ending on the
third Trading Day immediately preceding the Purchase Contract Settlement Date.
The "CLOSING PRICE" per share of Common Stock on any date of determination
means:
(i) the closing sale price as of the close of the principal trading
session (or, if no closing price is reported, the last reported sale price)
per share on the New York Stock Exchange, Inc. (the "NYSE") on such date;
(ii) if the Common Stock is not listed for trading on the NYSE on
any such date, the closing sale price per share as reported in the
composite transactions for the principal United States securities exchange
on which the Common Stock is so listed;
(iii) if the Common Stock is not so listed on a United States
national or regional securities exchange, the closing sale price per share
as reported by The Nasdaq Stock Market;
(iv) if the Common Stock is not so reported, the last quoted bid
price for the Common Stock in the over-the-counter market as reported by
the National Quotation Bureau or similar organization; or
(v) if such bid price is not available, the market value of Common
Stock on such date as determined by a nationally recognized independent
investment banking firm retained for this purpose by the Company.
A "TRADING DAY" means a day on which the Common Stock (1) is not suspended
from trading on any national or regional securities exchange or association or
over-the-counter market at the close of business and (2) has traded at least
once on the national or regional securities exchange or association or over-the-
counter market that is the primary market for the trading of the Common Stock.
(b) Each Holder of an Income Equity Unit or a Growth Equity Unit, by its
acceptance thereof:
(i) irrevocably authorizes the Purchase Contract Agent to enter
into and perform the related Purchase Contract on its behalf as its
attorney-in-fact (including, without limitation, the execution of
Certificates on behalf of such Holder);
(ii) agrees to be bound by the terms and provisions thereof;
34
(iii) covenants and agrees to perform its obligations under such
Purchase Contract;
(iv) consents to the provisions hereof;
(v) irrevocably authorizes the Purchase Contract Agent to enter
into and perform this Agreement and the Pledge Agreement on its behalf as
its attorney-in-fact;
(vi) consents to, and agrees to be bound by, the Pledge of such
Holder's right, title and interest in and to the Collateral Account,
including the Notes and the Applicable Ownership Interest (as specified in
clause (A) of the definition of such term) of the Treasury Portfolio or the
Treasury Securities pursuant to the Pledge Agreement;
(vii) agrees to treat itself as the owner, for United States federal
income tax purposes, of the applicable interest in the Collateral Account,
including the Notes and the Applicable Ownership Interest of the Treasury
Portfolio or the Treasury Securities; and
(viii) agrees to treat the Notes as indebtedness for all United States
federal income tax purposes;
provided that upon a Termination Event, the rights of the Holder of such
Security under the Purchase Contract may be enforced without regard to any other
rights or obligations.
(c) Each Holder of an Income Equity Unit or a Growth Equity Unit, by its
acceptance thereof, further covenants and agrees, that to the extent and in the
manner provided in Section 5.02 and the Pledge Agreement, but subject to the
terms thereof, Proceeds of the Notes, the Treasury Securities or the Applicable
Ownership Interest (as specified in clause (A) of the definition of such term)
of the Treasury Portfolio, as applicable, on the Purchase Contract Settlement
Date, shall be paid by the Collateral Agent to the Company in satisfaction of
such Holder's obligations under such Purchase Contract and such Holder shall
acquire no right, title or interest in such Proceeds.
(d) Upon registration of transfer of a Certificate, the transferee shall
be bound (without the necessity of any other action on the part of such
transferee) by the terms of this Agreement, the Purchase Contracts underlying
such Certificate and the Pledge Agreement and the transferor shall be released
from the obligations under this Agreement, the Purchase Contracts underlying the
Certificate so transferred and the Pledge Agreement. The Company covenants and
agrees, and each Holder of a Certificate, by its acceptance thereof, likewise
covenants and agrees, to be bound by the provisions of this paragraph.
Section 5.02. Initial and Secondary Remarketing; Payment of Purchase
Price.
(a) (i) Unless a Tax Event Redemption has occurred, the Company shall
engage a nationally recognized investment banking firm as remarketing agent (the
"REMARKETING AGENT") pursuant to the Remarketing Agreement (and subject to
removal as provided in the Remarketing Agreement) to sell the Notes (the
"INITIAL REMARKETING") on the third Business Day immediately preceding February
17, 2005 (the "INITIAL REMARKETING DATE"). In order to facilitate the Initial
Remarketing, the Purchase Contract Agent or the Custodial Agent shall notify, by
11:00 a.m. (New York City time), on the Business Day immediately preceding the
Initial Remarketing Date, the Remarketing Agent of the aggregate principal
amount of Notes that are part of Income Equity Units, or aggregate principal
amount of Separate Notes that are to be
35
remarketed pursuant to clause (ii) below, as the case may be, that are to be
remarketed. Concurrently, the Collateral Agent, pursuant to the terms of the
Pledge Agreement, or the Custodial Agent, pursuant to clause (ii) below, will
present for Remarketing such Notes to the Remarketing Agent. Upon receipt of
such notice from the Purchase Contract Agent or Custodial Agent and such Notes
from the Collateral Agent or Custodial Agent, the Remarketing Agent will, on the
Initial Remarketing Date, use its reasonable efforts to remarket such Notes on
such date at a price of approximately 100.5% (but not less than 100%) of the sum
of the Treasury Portfolio Purchase Price plus the Separate Notes Purchase Price.
If the Remarketing Agent is able to remarket the Notes at a price equal to or
greater than 100% of the Treasury Portfolio Purchase Price plus the Separate
Notes Purchase Price (a "SUCCESSFUL INITIAL REMARKETING"), the portion of the
proceeds from such Successful Initial Remarketing equal to the Treasury
Portfolio Purchase Price will be applied to purchase the Treasury Portfolio. In
addition, the Remarketing Agent may deduct as a remarketing fee (the
"REMARKETING FEE") an amount not exceeding 25 basis points (0.25%) of the sum of
the Treasury Portfolio Purchase Price plus the Separate Notes Purchase Price
from any amount of such proceeds in excess of the sum of the Treasury Portfolio
Purchase Price plus the Separate Notes Purchase Price. With respect to Separate
Notes, any proceeds of the Initial Remarketing in excess of the Remarketing Fee
attributable to the Separate Notes will be remitted to the Custodial Agent for
payment to the holders of Separate Notes. With respect to Notes that are part of
Income Equity Units, any proceeds of the Initial Remarketing in excess of the
sum of the Treasury Portfolio Purchase Price plus the Remarketing Fee with
respect to such Notes will be remitted to the Purchase Contract Agent for
payment to the Holders of the related Income Equity Units. Neither the Company
nor any Income Equity Units Holders whose Notes are so remarketed will otherwise
be responsible for the payment of any Remarketing Fee in connection therewith.
The Treasury Portfolio will be substituted for the Notes of Holders of Income
Equity Units and the Applicable Ownership Interests (as specified in clause (A)
of the definition of such term) of the Treasury Portfolio will be pledged to the
Collateral Agent to secure the Income Equity Units Holders' obligation to pay
the Purchase Price for the Common Stock under the related Purchase Contracts on
the Purchase Contract Settlement Date. Following the occurrence of a Successful
Initial Remarketing, the Holders of Income Equity Units and the Collateral Agent
shall have such security interests, rights and obligations with respect to the
Applicable Ownership Interests (as specified in clause (A) of the definition of
such term) in the Treasury Portfolio as the Holder of Income Equity Units and
the Collateral Agent had in respect of the Notes, subject to the Pledge thereof
as provided in the Pledge Agreement, and any reference herein or in the
Certificates to the Notes shall be deemed to be a reference to such Applicable
Ownership Interests in the Treasury Portfolio and any reference herein or in the
Certificates to interest on the Notes shall be deemed to be a reference to
corresponding distributions on such Applicable Ownership Interests in the
Treasury Portfolio. The Company may cause to be made in any Income Equity Units
Certificates thereafter to be issued such change in phraseology and form (but
not in substance) as may be appropriate to reflect the substitution of such
Applicable Ownership Interests in the Treasury Portfolio for Notes as
Collateral.
If, in spite of using its reasonable efforts, the Remarketing Agent cannot
remarket the related Notes in the Initial Remarketing (other than to the
Company) at a price not less than 100% of the sum of the Treasury Portfolio
Purchase Price plus the Separate Notes Purchase Price or a condition precedent
set forth in the Remarketing Agreement is not fulfilled, the Remarketing will be
deemed to have failed (a "FAILED INITIAL REMARKETING"). The Company will cause
a
36
notice of a Failed Initial Remarketing to be published on the Business Day
immediately following the Initial Remarketing Date in a daily newspaper in the
English language of general circulation in The City of New York, which is
expected to be The Wall Street Journal.
(ii) A holder of a Note that is no longer part of an Income Equity
Unit may elect to have such Note remarketed in the Initial Remarketing. A
holder making such an election must notify the Custodial Agent on or prior
to the second Business Day immediately preceding the Initial Remarketing
Date (but in no event earlier than the Payment Date next preceding the
Initial Remarketing Date) of the aggregate principal amount of Notes that
are not part of Income Equity Units to be remarketed and deliver such Notes
to the Custodial Agent at that time. Any such notice will be irrevocable
(provided that, holders of such Notes may withdraw any such notice on or
prior to the second Business Day preceding the Initial Remarketing Date)
and may not be conditioned upon the level at which the Reset Rate is
established in the Remarketing. By 11:00 a.m. (New York City time) on the
Business Day immediately preceding the Initial Remarketing Date, the
Custodial Agent shall cause such Notes to be presented to the Remarketing
Agent for Remarketing.
(iii) Not later than 7 calendar days nor more than 15 calendar days
prior to the Initial Remarketing Date, the Company shall request the
Depositary to notify the Beneficial Owners or Depositary Participants
holding Securities of the procedures to be followed in the Initial
Remarketing.
(iv) If required by applicable law, the Company agrees to endeavor
to ensure that a registration statement with regard to the full amount of
the Notes to be remarketed in the Initial Remarketing shall be effective
with the Securities Exchange Commission in a form that will enable the
Remarketing Agent to rely on it in connection with the Initial Remarketing.
(v) In the event of a Failed Initial Remarketing, unless a Tax
Event Redemption has occurred, the Company shall engage the Remarketing
Agent pursuant to the Remarketing Agreement to sell the Notes (the
"SECONDARY REMARKETING") on the third Business Day immediately preceding
April 17, 2005 (the "SECONDARY REMARKETING DATE"). Such Secondary
Remarketing shall be effected pursuant to the same procedures, and on the
same terms, as those set forth in clauses (a)(i) through (a)(iv) of this
Section 5.02 as if such Secondary Remarketing were the Initial Remarketing,
except that all references to the "Initial Remarketing," the "Initial
Remarketing Date," "Successful Initial Remarketing" and "Failed Initial
Remarketing" as used in such clauses shall refer, respectively, to the
"Secondary Remarketing," the "Secondary Remarketing Date," "Successful
Secondary Remarketing" and "Failed Secondary Remarketing."
(b) (i) Unless a Tax Event Redemption Date, Successful Initial
Remarketing, Successful Secondary Remarketing, Termination Event or Early
Settlement pursuant to Section 5.07 has occurred, each Holder who intends to pay
in cash to satisfy such Holder's obligations under the Purchase Contract on the
Purchase Contract Settlement Date shall notify the Purchase Contract Agent by
use of a notice in substantially the form of Exhibit E hereto of his intention
to pay in cash ("Cash Settlement") the Purchase Price for the shares of Common
Stock to be purchased pursuant to the related Purchase Contract. Such notice
shall be given on or prior to 5:00 p.m. (New York City time) on the fifth
Business Day immediately preceding the Purchase
37
Contract Settlement Date. Prior to 11:00 a.m. (New York City time) on the next
succeeding Business Day, the Purchase Contract Agent shall notify the Collateral
Agent and the Indenture Trustee of the receipt of such notices from Holders
intending to make a Cash Settlement.
(ii) A Holder of an Income Equity Unit who has so notified the
Purchase Contract Agent of his intention to effect a Cash Settlement in
accordance with paragraph 5.02(b)(i) above shall pay the Purchase Price to
the Securities Intermediary for deposit in the Collateral Account prior to
11:00 a.m. (New York City time) on the Business Day immediately preceding
the Purchase Contract Settlement Date, in lawful money of the United States
by certified or cashiers' check or wire transfer, in each case in
immediately available funds payable to or upon the order of the Securities
Intermediary. Any cash received by the Collateral Agent shall be invested
promptly by the Securities Intermediary in Permitted Investments and paid
to the Company on the Purchase Contract Settlement Date in settlement of
the Purchase Contracts in accordance with the terms of this Agreement and
the Pledge Agreement. Any funds received by the Securities Intermediary in
respect of the investment earnings from such Permitted Investments in
excess of the Purchase Price for the shares of Common Stock to be purchased
by such Holder shall be distributed to the Purchase Contract Agent when
received for payment to the Holder.
(iii) If a Holder of an Income Equity Unit fails to notify the
Purchase Contract Agent of his intention to make a Cash Settlement in
accordance with paragraph 5.02(b)(i) above, such Holder shall be deemed to
have consented to the disposition of the Pledged Notes pursuant to the
Final Remarketing as described in paragraph 5.02(c) below.
(iv) Promptly after 11:00 a.m. (New York City time) on the fourth
Business Day preceding the Purchase Contract Settlement Date, the Purchase
Contract Agent, based on notices received by the Purchase Contract Agent
pursuant to Section 5.02(b) hereof, shall notify the Collateral Agent and
the Indenture Trustee of the aggregate principal amount of Notes to be
tendered for purchase in the Remarketing in a notice substantially in the
form of Exhibit F hereto.
(v) Not later than 7 calendar days nor more than 15 calendar days
prior to the Final Remarketing Date, the Company shall request the
Depositary to notify the Beneficial Owners or Depositary Participants
holding Securities of the procedures to be followed in the Final
Remarketing.
(vi) If required by applicable law, the Company agrees to endeavor to
ensure that a registration statement with regard to the full amount of the
Notes to be remarketed in the Final Remarketing shall be effective with the
Securities Exchange Commission in a form that will enable the Remarketing
Agent to rely on it in connection with the Final Remarketing.
(c) (i) Unless a Tax Event Redemption, a Successful Initial Remarketing
or a Successful Secondary Remarketing has occurred, the Notes of Income Equity
Units Holders who have not notified the Purchase Contract Agent of their
intention to effect a Cash Settlement as provided in paragraph 5.02(b)(i) above,
will be sold by the Remarketing Agent (the "FINAL
38
REMARKETING") on the third Business Day immediately preceding the Purchase
Contract Settlement Date (the "FINAL REMARKETING DATE"). In order to facilitate
the Final Remarketing, the Purchase Contract Agent, based on the notices
specified in Section 5.02(b)(iv), or the Custodial Agent, based on the notices
specified in Section 5.02(c)(ii), shall notify the Remarketing Agent, by 11:00
a.m. (New York City time) on the Business Day immediately preceding the Final
Remarketing Date, of the aggregate principal amount of Notes that are part of
Income Equity Units or aggregate principal amount of Notes that are no longer
part of Income Equity Units that are to be remarketed pursuant to clause (ii)
below, as the case may be, to be remarketed. Concurrently, the Collateral Agent,
pursuant to the terms of the Pledge Agreement, shall cause such Notes to be
presented to the Remarketing Agent for Remarketing.
(ii) A holder of a Note that is no longer part of an Income Equity
Unit may elect to have such Note remarketed. A holder making such an
election must notify the Custodial Agent and deliver such Notes to the
Custodial Agent on or prior to the fifth Business Day immediately preceding
the Purchase Contract Settlement Date (but in no event earlier than the
Payment Date next preceding the Final Remarketing Date), of the aggregate
number of Notes that are not part of Income Equity Units to be remarketed.
Any such notice will be irrevocable (provided that, holders of such Notes
may withdraw any such notice on or prior to the fifth Business Day
preceding the Purchase Contract Settlement Date) and may not be conditioned
upon the level at which the Reset Rate is established in the Remarketing.
By 11:00 a.m. (New York City time) on the Business Day immediately
preceding the Final Remarketing Date, the Custodial Agent shall cause such
Notes to be presented to the Remarketing Agent for Remarketing.
(iii) Upon receipt of such notice from the Purchase Contract Agent or
the Custodial Agent and such Notes from the Collateral Agent or Custodial
Agent, as set forth in clauses (i) and (ii) above, the Remarketing Agent
shall, on the Final Remarketing Date, use reasonable efforts to remarket
such Notes on such date at a price equal to 100.5% (but not less than 100%)
of the aggregate principal amount of such Notes, as provided in the
Remarketing Agreement. If the Remarketing Agent is able to remarket the
Notes at a price equal to or greater than 100% of the aggregate principal
amount of Notes (a "SUCCESSFUL FINAL REMARKETING"), the Remarketing Agent
will remit the proceeds from such Successful Final Remarketing to the
Collateral Agent; provided that the Remarketing Agent may deduct as the
Remarketing Fee an amount not exceeding 25 basis points (0.25%) of the
aggregate principal amount of the remarketed Notes from any amount of the
proceeds of a Successful Final Remarketing in excess of the aggregate
principal amount of the remarketed Notes. The proceeds from the Remarketing
remitted to the Collateral Agent shall be invested by the Collateral Agent
in Permitted Investments, in accordance with the Pledge Agreement, and then
applied to satisfy in full such Income Equity Units Holders' obligations to
pay the Purchase Price for the shares of Common Stock under the related
Purchase Contracts on the Purchase Contract Settlement Date. Any proceeds
in excess of those required to pay the Purchase Price and the Remarketing
Fee will be remitted to the Purchase Contract Agent for payment to the
Holders of the related Income Equity Units. Income Equity Units Holders
whose Notes are so remarketed will not otherwise be responsible for the
payment of any Remarketing Fee in connection therewith. With respect to
Separate Notes, any proceeds of the Secondary Remarketing in excess of the
Remarketing Fee attributable to the Separate Notes will be remitted to the
Custodial Agent for payment to the holders of Separate Notes.
39
(iv) If, in spite of using its reasonable efforts, the Remarketing
Agent cannot remarket the related Notes of such Holders of Income Equity
Units at a price not less than 100.0% of the Stated Amount or a condition
precedent set forth in the Remarketing Agreement is not fulfilled, the
remarketing will be deemed to have failed (a "FAILED FINAL REMARKETING"),
an event of default shall be deemed to have occurred under this Agreement
and the Pledge Agreement and in accordance with the terms of the Pledge
Agreement, the Collateral Agent, for the benefit of the Company, shall
exercise its rights as a secured party with respect to such Notes,
including, without limitation, those actions specified in paragraph 5.02(d)
below; provided, that if upon a Failed Final Remarketing the Collateral
Agent exercises such rights for the benefit of the Company with respect to
such Notes, any accrued and unpaid interest on such Notes shall become
payable by the Company to the Purchase Contract Agent for payment to the
Beneficial Owner of the Income Equity Units to which such Notes relate. The
Company shall cause a notice of such Failed Final Remarketing to be
published on the second Business Day immediately preceding the Purchase
Contract Settlement Date in a daily newspaper in the English language of
general circulation in the City of New York, which is expected to be The
Wall Street Journal.
(d) With respect to (i) any Notes which are subject to a Failed Final
Remarketing or (ii) any Notes which are components of Income Equity Units with
respect to which the Holder notified the Purchase Contract Agent as provided in
Section 5.02(b)(i) of his intention to pay the Purchase Price in cash, but
failed to make such payment as required by Section 5.02(b)(ii), in each case
resulting in an event of default under this Agreement, the Collateral Agent for
the benefit of the Company reserves all of its rights as a secured party with
respect thereto and, subject to applicable law and paragraph 5.02(h) below,
shall, in full satisfaction of the Holders' obligations under the Purchase
Contracts among other things, (i) retain the Notes, (ii) sell the Notes in one
or more public or private sales or (iii) take, or choose not to take, any other
action with respect to the Notes, which in every case specified in (i), (ii) and
(iii) shall constitute payment in full for the aggregate Purchase Price for the
shares of Common Stock to be purchased under the Purchase Contracts.
(e) (i) Unless a Holder of an Income Equity Unit (if a Tax Event
Redemption Date, a Successful Initial Remarketing or a Successful Secondary
Remarketing has occurred) or a Growth Equity Unit effects an Early Settlement of
the underlying Purchase Contract through the early delivery of cash to the
Purchase Contract Agent in the manner described in Section 5.07, each Holder of
an Income Equity Unit (if a Tax Event Redemption Date, a Successful Initial
Remarketing or a Successful Secondary Remarketing has occurred) or a Growth
Equity Unit who intends to pay in cash shall notify the Purchase Contract Agent
by use of a notice in substantially the form of Exhibit E hereto of his
intention to pay in cash the Purchase Price for the shares of Common Stock to be
purchased pursuant to the related Purchase Contract. Such notice shall be given
prior to 5:00 p.m. (New York City time) on the second Business Day immediately
preceding the Purchase Contract Settlement Date. Prior to 11:00 a.m. (New York
City time) on the next succeeding Business Day, the Purchase Contract Agent
shall notify the Collateral Agent of the receipt of such notices from such
Holders intending to make a Cash Settlement. Growth Equity Units holders may
make Cash Settlements only in integral multiples of 40 Growth Equity Units.
40
(ii) A Holder of an Income Equity Unit (if a Tax Event Redemption
Date, a Successful Initial Remarketing or a Successful Secondary
Remarketing has occurred) or a Growth Equity Unit who has so notified the
Purchase Contract Agent of his intention to make a Cash Settlement in
accordance with paragraph 5.02(e)(i) above shall pay the Purchase Price to
the Securities Intermediary for deposit in the Collateral Account prior to
11:00 a.m. (New York City time) on the Business Day immediately preceding
the Purchase Contract Settlement Date, in lawful money of the United States
by certified or cashiers' check or wire transfer, in each case in
immediately available funds payable to or upon the order of the Securities
Intermediary. Any cash received by the Collateral Agent shall be invested
promptly by the Securities Intermediary in Permitted Investments and paid
to the Company on the Purchase Contract Settlement Date in settlement of
the Purchase Contract in accordance with the terms of this Agreement and
the Pledge Agreement. Any funds received by the Securities Intermediary in
respect of the investment earnings from the investment in such Permitted
Investments in excess of the Purchase Price for the shares of Common Stock
to be purchased by such Holder shall be distributed to the Purchase
Contract Agent when received for payment to the Holder.
(iii) If a Holder of a Growth Equity Unit or Holder of an Income
Equity Unit (if a Tax Event Redemption Date, a Successful Initial
Remarketing or a Successful Secondary Remarketing has occurred) fails to
notify the Purchase Contract Agent of his intention to make a Cash
Settlement in accordance with paragraph 5.02(e)(i) above, or does notify
the Purchase Contract Agent as provided in paragraph 5.02(e)(i) above of
his intention to pay the Purchase Price in cash, but fails to make such
payment as required by paragraph 5.02(e)(ii) above, then upon the maturity
of the Pledged Treasury Securities or the appropriate Applicable Ownership
Interest (as specified in clause (A) of the definition of such term) of the
Treasury Portfolio held by the Securities Intermediary on the Business Day
immediately preceding the Purchase Contract Settlement Date, the principal
amount of the Treasury Securities or the appropriate Applicable Ownership
Interest (as specified in clause (A) of the definition of such term) of the
Treasury Portfolio received by the Securities Intermediary shall be
invested promptly in Permitted Investments. On the Purchase Contract
Settlement Date, an amount equal to the Purchase Price shall be remitted to
the Company as payment thereof without receiving any instructions from the
Holder. In the event the sum of the proceeds from the related Pledged
Treasury Securities or the appropriate Applicable Ownership Interest (as
specified in clause (A) of the definition of such term) of the Treasury
Portfolio and the investment earnings earned from such investments is in
excess of the aggregate Purchase Price of the Purchase Contracts being
settled thereby, the Collateral Agent shall cause the Securities
Intermediary to distribute such excess to the Purchase Contract Agent for
the benefit of the Holder of the related Growth Equity Units or Income
Equity Units when received.
(f) Any distribution to Holders of any payments described above shall be
payable at the office of the Purchase Contract Agent in New York City maintained
for that purpose or, at the option of the Holder, by check mailed to the address
of the Person entitled thereto at such address as it appears on the Security
Register.
(g) Upon Cash Settlement of any Purchase Contract:
41
(i) the Collateral Agent will in accordance with the terms of the
Pledge Agreement cause the Pledged Notes, the appropriate Applicable
Ownership Interest (as specified in clause (A) of the definition of such
term) of the Treasury Portfolio or the Pledged Treasury Securities, as the
case may be, underlying the relevant Security to be released from the
Pledge, free and clear of any security interest of the Company, and
transferred to the Purchase Contract Agent for delivery to the Holder
thereof or its designee as soon as practicable; and
(ii) subject to the receipt thereof, the Purchase Contract Agent
shall, by book-entry transfer or other appropriate procedures, in
accordance with written instructions provided by the Holder thereof,
transfer such Notes, or the appropriate Applicable Ownership Interest (as
specified in clause (A) of the definition of such term) of the Treasury
Portfolio or such Treasury Securities, as the case may be (or, if no such
instructions are given to the Purchase Contract Agent by the Holder, the
Purchase Contract Agent shall hold such Notes, or the appropriate
Applicable Ownership Interest (as specified in clause (A) of the definition
of such term) of the Treasury Portfolio or such Treasury Securities, as the
case may be, and any interest payment thereon, in the name of the Purchase
Contract Agent or its nominee in trust for the benefit of such Holder until
the expiration of the time period specified in the abandoned property laws
of the relevant state where such property is held).
(h) The obligations of the Holders to pay the Purchase Price are non-
recourse obligations and, except to the extent satisfied by Early Settlement or
Cash Settlement, are payable solely out of the proceeds of any Collateral
pledged to secure the obligations of the Holders and in no event will Holders be
liable for any deficiency between the proceeds of the disposition of Collateral
and the Purchase Price.
(i) The Company shall not be obligated to issue any shares of Common Stock
in respect of a Purchase Contract or deliver any certificates thereof to the
Holder of the related Security unless the Company shall have received payment in
full for the aggregate Purchase Price for the Common Stock to be purchased
thereunder in the manner herein set forth.
Section 5.03. Issuance of Shares of Common Stock.
Unless a Termination Event or an Early Settlement shall have occurred,
subject to Section 5.04(b), on the Purchase Contract Settlement Date upon
receipt of the aggregate Purchase Price payable on all Outstanding Securities,
the Company shall issue and deposit with the Purchase Contract Agent, for the
benefit of the Holders of the Outstanding Securities, one or more certificates
representing newly issued shares of Common Stock registered in the name of the
Purchase Contract Agent (or its nominee) as custodian for the Holders (such
certificates for shares of Common Stock, together with any dividends or
distributions for which a record date and payment date for such dividend or
distribution has occurred after the Purchase Contract Settlement Date, being
hereinafter referred to as the "PURCHASE CONTRACT SETTLEMENT FUND") to which the
Holders are entitled hereunder.
Subject to the foregoing, upon surrender of a Certificate to the Purchase
Contract Agent on or after the Purchase Contract Settlement Date or Early
Settlement Date, as the case may be,
42
together with settlement instructions thereon duly completed and executed, the
Holder of such Certificate shall be entitled to receive forthwith in exchange
therefor a certificate representing that number of newly issued whole shares of
Common Stock which such Holder is entitled to receive pursuant to the provisions
of this Article Five (after taking into account all Securities then held by such
Holder), together with cash in lieu of fractional shares as provided in Section
5.09 and any dividends or distributions with respect to such shares constituting
part of the Purchase Contract Settlement Fund, but without any interest thereon,
and the Certificate so surrendered shall forthwith be cancelled. Such shares
shall be registered in the name of the Holder or the Holder's designee as
specified in the settlement instructions provided by the Holder to the Purchase
Contract Agent. If any shares of Common Stock issued in respect of a Purchase
Contract are to be registered to a Person other than the Person in whose name
the Certificate evidencing such Purchase Contract is registered, no such
registration shall be made unless the Person requesting such registration has
paid any transfer and other taxes required by reason of such registration in a
name other than that of the registered Holder of the Certificate evidencing such
Purchase Contract or has established to the satisfaction of the Company that
such tax either has been paid or is not payable.
Section 5.04. Adjustment of Settlement Rate.
(a) Adjustments for Dividends, Distributions, Stock Splits, Etc.
(1) In case the Company shall pay or make a dividend or other distribution
on Common Stock in Common Stock, the Settlement Rate in effect at the opening of
business on the day following the date fixed for the determination of
shareholders entitled to receive such dividend or other distribution shall be
increased by dividing such Settlement Rate by a fraction of which:
(i) the numerator shall be the number of shares of Common Stock
outstanding at the close of business on the date fixed for such
determination; and
(ii) the denominator shall be the sum of such number of shares and
the total number of shares constituting such dividend or other
distribution,
such increase to become effective immediately after the opening of business on
the day following the date fixed for such determination. For the purposes of
this paragraph (1), the number of shares of Common Stock at any time outstanding
shall not include shares held in the treasury of the Company but shall include
any shares issuable in respect of any scrip certificates issued in lieu of
fractions of shares of Common Stock. The Company agrees that it shall not pay
any dividend or make any distribution on shares of Common Stock held in the
treasury of the Company.
(2) In case the Company shall issue rights, warrants or options, other
than pursuant to any dividend reinvestment plans or share purchase plans, to all
holders of its Common Stock (not being available on an equivalent basis to
Holders of the Securities upon settlement of the Purchase Contracts underlying
such Securities) entitling them, for a period expiring within 45 days after the
record date for the determination of shareholders entitled to receive such
rights, warrants or options, to subscribe for or purchase shares of Common Stock
at a price per share less than the Current Market Price per share of Common
Stock on the date of announcement of
43
such issuance, the Settlement Rate in effect at the opening of business on the
Business Day following the date of such announcement shall be increased by
dividing such Settlement Rate by a fraction of which:
(i) the numerator shall be the number of shares of Common Stock
outstanding at the close of business on the date fixed for such
determination plus the number of shares of Common Stock which the aggregate
of the offering price of the total number of shares of Common Stock so
offered for subscription or purchase would purchase at such Current Market
Price; and
(ii) the denominator shall be the number of shares of Common Stock
outstanding at the close of business on the date fixed for such
determination plus the number of shares of Common Stock so offered for
subscription or purchase,
such increase to become effective immediately after the opening of business on
the Business Day following the date of such announcement. The Company agrees
that it shall notify the Purchase Contract Agent if any issuance of such rights,
warrants or options is cancelled or not completed following the announcement
thereof and the Settlement Rate shall thereupon be readjusted to the Settlement
Rate in effect immediately prior to the date of such announcement. For the
purposes of this paragraph (2), the number of shares of Common Stock at any time
outstanding shall not include shares held in the treasury of the Company but
shall include any shares issuable in respect of any scrip certificates issued in
lieu of fractions of shares of Common Stock. The Company agrees that it shall
not issue any such rights, warrants or options in respect of shares of Common
Stock held in the treasury of the Company.
(3) In case outstanding shares of Common Stock shall be subdivided or
split into a greater number of shares of Common Stock, the Settlement Rate in
effect at the opening of business on the day following the day upon which such
subdivision or split becomes effective shall be proportionately increased, and,
conversely, in case outstanding shares of Common Stock shall each be combined
into a smaller number of shares of Common Stock, the Settlement Rate in effect
at the opening of business on the day following the day upon which such
combination becomes effective shall be proportionately reduced, such increase or
reduction, as the case may be, to become effective immediately after the opening
of business on the day following the day upon which such subdivision, split or
combination becomes effective.
(4) In case the Company shall, by dividend or otherwise, distribute to all
holders of its Common Stock evidences of its indebtedness or assets (including
securities, but excluding any rights, warrants or options referred to in
paragraph (2) of this Section 5.04(a), any dividend or distribution paid
exclusively in cash and any dividend or distribution referred to in paragraph
(1) of this Section 5.04(a)), the Settlement Rate shall be adjusted so that the
same shall equal the rate determined by dividing the Settlement Rate in effect
immediately prior to the close of business on the date fixed for the
determination of shareholders entitled to receive such distribution by a
fraction of which:
(i) the numerator shall be the Current Market Price per share of
Common Stock on the date fixed for such determination less the then fair
market value (as reasonably determined by the Board of Directors, whose
determination shall be
44
conclusive and the basis for which shall be described in a Board
Resolution) of the portion of the assets or evidences of indebtedness so
distributed applicable to one share of Common Stock; and
(ii) the denominator shall be such Current Market Price per share
of Common Stock,
such adjustment to become effective immediately prior to the opening of business
on the day following the date fixed for the determination of shareholders
entitled to receive such distribution. In any case in which this paragraph (4)
is applicable, paragraph (2) of this Section 5.04(a) shall not be applicable. In
the event that such dividend or distribution is not so paid or made, the
Settlement Rate shall again be adjusted to be the Settlement Rate which would
then be in effect if such dividend or distribution had not been declared.
(5) In case the Company shall, (I) by dividend or otherwise, distribute to
all holders of its Common Stock cash (excluding any cash that is distributed (x)
in connection with the payment by the Company of its normal quarterly dividend
in an amount up to $0.25 per share of Common Stock, (y) in a Reorganization
Event to which Section 5.04(b) applies, or (z) as part of a distribution
referred to in paragraph (4) of this Section) in an aggregate amount that,
combined together with (II) the aggregate amount of any other distributions to
all holders of its Common Stock made exclusively in cash within the 12 months
preceding the date of payment of such distribution (excluding any cash that is
distributed in connection with the payment by the Company of its normal
quarterly dividend in an amount up to $0.25 per share of Common Stock) and in
respect of which no adjustment pursuant to this paragraph (5) or paragraph (6)
of this Section has been made and (III) the aggregate amount of any cash plus
the fair market value (as determined by the Board of Directors, whose
determination shall be conclusive and described in a Board Resolution) of
consideration payable in respect of any tender or exchange offer by the Company
or any of its subsidiaries for all or any portion of the Common Stock concluded
within the 12 months preceding the date of payment of the distribution described
in clause (I) above and in respect of which no adjustment pursuant to this
paragraph (5) or paragraph (6) of this Section has been made, exceeds 10% of the
product of the Current Market Price per share of the Common Stock on the date
for the determination of holders of shares of Common Stock entitled to receive
such distribution multiplied by the number of shares of Common Stock outstanding
on such date, then, in such case, the Settlement Rate shall be increased so that
the same shall equal the rate determined by dividing the Settlement Rate in
effect immediately prior to the close of business on such record date by a
fraction of which:
(i) the numerator shall be the Current Market Price of Common
Stock on the record date less the amount of cash so distributed (and not
excluded as provided above) applicable to one share of Common Stock; and
(ii) the denominator shall be the Current Market Price of Common
Stock,
such increase to be effective immediately prior to the opening of business on
the day following the record date; provided, however, that in the event the
portion of cash so distributed applicable to one share of Common Stock is equal
to or greater than the Current Market Price per share of Common Stock on the
record date, in lieu of the foregoing adjustment, adequate provision shall
45
be made so that each holder of a Security shall have the right to receive upon
settlement of the Securities the amount of cash such Holder would have received
had such Holder settled each Security on the record date. In the event that such
dividend or distribution is not so paid or made, the Settlement Rate shall again
be adjusted to be the Settlement Rate which would then be in effect if such
dividend or distribution had not been declared.
(6) In case a tender or exchange offer made by the Company or any
subsidiary of the Company for all or any portion of Common Stock shall expire
and such tender or exchange offer (as amended upon the expiration thereof) shall
require the payment to shareholders (based on the acceptance (up to any maximum
specified in the terms of the tender or exchange offer) of Purchased Shares (as
herein defined) of (I) an aggregate consideration having a fair market value (as
reasonably determined by the Board of Directors, whose determination shall be
conclusive and the basis for which shall be described in a Board Resolution)
that combined together with the aggregate of the cash plus the fair market value
(as reasonably determined by the Board of Directors, whose determination shall
be conclusive and the basis for which shall be described in a Board Resolution),
as of the expiration of such tender or exchange offer, of consideration payable
in respect of any other tender or exchange offer, by the Company or any
subsidiary of the Company for all or any portion of Common Stock expiring within
the 12 months preceding the expiration of such tender or exchange offer and in
respect of which no adjustment pursuant to this paragraph (6) has been made, and
(II) the aggregate amount of any distributions to all holders of Common Stock
made exclusively in cash within the 12 months preceding the expiration of such
tender or exchange offer and in respect of which no adjustment pursuant to
paragraph (6) has been made, exceeds 15% of the product of the Current Market
Price per share of Common Stock as of the last time (the "EXPIRATION TIME")
tenders could have been made pursuant to such tender or exchange offer (as it
may be amended) times the number of shares of Common Stock outstanding
(including any tendered shares) on the Expiration Time, then, and in each such
case, immediately prior to the opening of business on the day after the date of
the Expiration Time, the Settlement Rate shall be adjusted so that the same
shall equal the rate determined by dividing the Settlement Rate immediately
prior to the close of business on the date of the Expiration Time by a fraction:
(i) the numerator of which shall be equal to (A) the product of
(I) the Current Market Price per share of Common Stock on the date of the
Expiration Time and (II) the number of shares of Common Stock outstanding
(including any tendered shares) on the date of the Expiration Time less (B)
the amount of cash plus the fair market value (determined as aforesaid) of
the aggregate consideration payable to shareholders based on the
transactions described in clauses (I) and (II) above (assuming in the case
of clause (I) the acceptance, up to any maximum specified in the terms of
the tender or exchange offer, of Purchased Shares); and
(ii) the denominator of which shall be equal to the product of (A)
the Current Market Price per share of Common Stock as of the Expiration
Time and (B) the number of shares of Common Stock outstanding (including
any tendered shares) as of the Expiration Time less the number of all
shares validly tendered and not withdrawn as of the Expiration Time (the
shares deemed so accepted, up to any such maximum, being referred to as the
"PURCHASED SHARES").
46
(7) The reclassification of Common Stock into securities including
securities other than Common Stock (other than any reclassification upon a
Reorganization Event to which Section 5.04(b) applies) shall be deemed to
involve:
(i) a distribution of such securities other than Common Stock to
all holders of Common Stock (and the effective date of such
reclassification shall be deemed to be "the date fixed for the
determination of shareholders entitled to receive such distribution" and
the "date fixed for such determination" within the meaning of paragraph (4)
of this Section); and
(ii) a subdivision, split or combination, as the case may be, of
the number of shares of Common Stock outstanding immediately prior to such
reclassification into the number of shares of Common Stock outstanding
immediately thereafter (and the effective date of such reclassification
shall be deemed to be "the day upon which such subdivision or split becomes
effective" or "the day upon which such combination becomes effective", as
the case may be, and "the day upon which such subdivision, split or
combination becomes effective" within the meaning of paragraph (3) of this
Section).
(8) The "CURRENT MARKET PRICE" per share of Common Stock on any date of
determination means the average of the daily Closing Prices for the ten
consecutive Trading Days ending not later than the earlier of such date of
determination and the day before the "ex date" with respect to the issuance or
distribution requiring such computation. For purposes of this paragraph, the
term "ex date," when used with respect to any issuance or distribution, shall
mean the first date on which Common Stock trades regular way on such exchange or
in such market without the right to receive such issuance or distribution.
(9) All adjustments to the Settlement Rate shall be calculated to the
nearest 1/10,000th of a share of Common Stock (or if there is not a nearest
1/10,000th of a share, to the next lower 1/10,000th of a share). No adjustment
in the Settlement Rate shall be required unless such adjustment would require an
increase or decrease of at least one percent thereof; provided, however, that
any adjustments which by reason of this subparagraph are not required to be made
shall be carried forward and taken into account in any subsequent adjustment. If
an adjustment is made to the Settlement Rate pursuant to paragraph (1), (2),
(3), (4), (5), (6), (7) or (10) of this Section 5.04(a), an adjustment shall
also be made to the Applicable Market Value solely to determine which of clauses
(i) or (ii) of the definition of Settlement Rate in Section 5.01 will apply on
the Purchase Contract Settlement Date. Such adjustment shall be made by
multiplying the Applicable Market Value by a fraction of which the numerator
shall be the Settlement Rate immediately after such adjustment pursuant to
paragraph (1), (2), (3), (4), (5), (6), (7) or (10) of this Section 5.04(a) and
the denominator shall be the Settlement Rate immediately prior to such
adjustment; provided, however, that if such adjustment to the Settlement Rate is
required to be made pursuant to the occurrence of any of the events contemplated
by paragraph (1), (2), (3), (4), (5), (6), (7) or (10) of this Section 5.04(a)
during the period taken into consideration for determining the Applicable Market
Value, appropriate and customary adjustments shall be made to the Settlement
Rate.
(10) The Company may, but shall not be required to, make such increases in
the Settlement Rate, in addition to those required by this Section, as it
considers to be advisable in
47
order to avoid or diminish any income tax to any holders of shares of Common
Stock resulting from any dividend or distribution of stock or issuance of rights
or warrants to purchase or subscribe for stock or from any event treated as such
for income tax purposes or for any other reason.
(b) Adjustment for Consolidation, Merger or Other Reorganization Event.
(1) Subject to Section 5.04(b)(2), in the event of:
(i) any consolidation or merger of the Company with or into another
Person (other than a merger or consolidation in which the Company is the
continuing corporation and in which the shares of Common Stock outstanding
immediately prior to the merger or consolidation are not exchanged for
cash, securities or other property of the Company or another corporation);
(ii) any sale, transfer, lease or conveyance to another Person of
the property of the Company as an entirety or substantially as an entirety;
(iii) any statutory share exchange of the Company with another Person
(other than in connection with a merger or acquisition); or
(iv) any liquidation, dissolution or termination of the Company
other than as a result of or after the occurrence of a Termination Event
(any such event, a "REORGANIZATION EVENT"),
each Purchase Contract will be automatically adjusted to provide that each
Holder of Securities will receive on the Purchase Contract Settlement Date or
any Early Settlement Date occurring after such Reorganization Event, as the case
may be, with respect to each Purchase Contract forming a part thereof, the kind
of securities, cash and other property receivable upon such Reorganization Event
(without any interest thereon, and without any right to dividends or
distribution thereon which have a record date that is prior to the Early
Settlement Date or Purchase Contract Settlement Date, as the case may be) by a
Holder in respect of Common Stock issuable on account of each Purchase Contract
as if the Purchase Contract Settlement Date had occurred immediately prior to
such Reorganization Event. The amount of securities, cash and other property
receivable upon settlement of each Purchase Contract (other than in connection
with an Early Settlement pursuant to Section 5.04(b)(2)) shall equal the
Adjusted Exchange Property. For purposes of the foregoing, it is assumed that
the Holder referred to in the second preceding sentence is not a Person with
which the Company consolidated or into which the Company merged or which merged
into the Company or to which such sale or transfer was made, as the case may be
(any such Person, a "CONSTITUENT PERSON"), or an Affiliate of a Constituent
Person to the extent such Reorganization Event provides for different treatment
of Common Stock held by Affiliates of the Company and non-affiliates and such
Holder failed to exercise his rights of election, if any, as to the kind or
amount of securities, cash and other property receivable upon such
Reorganization Event (provided that if the kind or amount of securities, cash
and other property receivable upon such Reorganization Event is not the same for
each share of Common Stock held immediately prior to such Reorganization Event
by other than a Constituent Person or an Affiliate thereof and in respect of
which such rights of election shall
48
not have been exercised ("NON-ELECTING SHARE"), then for the purpose of this
Section the kind and amount of securities, cash and other property receivable
upon such Reorganization Event by each non-electing share shall be deemed to be
the kind and amount so receivable per share by a plurality of the non-electing
shares).
The "ADJUSTED EXCHANGE PROPERTY" shall equal
(A) in the case of settlement of a Purchase Contract on the Purchase
Contract Settlement Date, an amount of Base Exchange Property multiplied by
the applicable Settlement Rate (which Settlement Rate, for purposes of this
Section 5.04(b)(1), shall be determined by reference to the Applicable
Exchange Property Market Value in lieu of the Applicable Market Value and
which shall be applied as if the Base Exchange Property were one share of
Common Stock); and
(B) in the case of an Early Settlement pursuant to Section 5.07, an
amount of Base Exchange Property multiplied by the Early Settlement Rate
(which shall be applied as if the Base Exchange Property were one share of
Common Stock).
"BASE EXCHANGE PROPERTY" means the hypothetical amount of securities, cash
and other property that would have been received upon consummation of the
Reorganization Event in exchange for one share of Common Stock.
"APPLICABLE EXCHANGE PROPERTY MARKET VALUE" shall mean (1) with respect to
any publicly traded securities receivable by holders of Common Stock pursuant to
a Reorganization Event, the Closing Price of such securities (substituting such
securities for Common Stock in the definition of the term Closing Price), (2) in
the case of any cash receivable by holders of Common Stock pursuant to a
Reorganization Event, the amount of such cash and (3) in the case of any other
property receivable by holders of Common Stock pursuant to a Reorganization
Event, the market value of such property, as determined by a nationally
recognized investment banking firm retained by the Company for this purpose.
In the event of such a Reorganization Event, the Person formed by such
consolidation, merger or exchange or the Person which acquires the assets of the
Company or, in the event of a liquidation, dissolution or termination of the
Company, the Company or a liquidating trust created in connection therewith,
shall execute and deliver to the Purchase Contract Agent an agreement
supplemental hereto providing that each Holder of an Outstanding Security shall
have the rights provided by this Section 5.04(b). Such supplemental agreement
shall provide for adjustments which, for events subsequent to the effective date
of such supplemental agreement, shall be as nearly equivalent as may be
practicable to the adjustments provided for in this Section 5.04. The above
provisions of this Section 5.04 shall similarly apply to successive
Reorganization Events.
(2) In the event of a consolidation or merger of the Company with or into
another Person, any merger of another Person into the Company (other than a
merger that does not result in any reclassification, conversion, exchange or
cancellation of outstanding shares of Common Stock) in which 30% or more of the
total consideration paid to the Company's shareholders consists of cash or cash
equivalents (a "CASH MERGER"), then a Holder of a Security may settle his
Purchase
49
Contract for cash as described in Section 5.02(b)(i) or 5.02(e)(i) hereof, as
applicable, on or after the date of such Cash Merger, at the applicable
Settlement Rate. Within five Business Days of the completion of a Cash Merger,
the Company shall provide written notice to Holders of Securities of such
completion of a Cash Merger, which shall specify the deadline for submitting a
notice of Early Settlement pursuant to this Section 5.04(b)(2), the Early
Settlement Date, the applicable Settlement Rate and the amount (per share of
common stock) of cash, securities and other consideration receivable by the
Holder upon settlement. For the purposes of this Section 5.04(b)(2), the date of
the closing of the merger or consolidation shall be deemed to be the Purchase
Contract Settlement Date for the purpose of determining the Applicable Market
Value and the deadline for submitting the notice to settle early and the related
cash payment shall be 5:00 p.m. (New York City time) on the tenth day after the
date the notice relating to a Cash Merger is provided to the Holders by the
Company. Growth Equity Units Holders may only effect Early Settlement pursuant
to this Section 5.04(b)(2) in integral multiples of 40 Purchase Contracts. If a
Tax Event Redemption Date, a Successful Initial Remarketing or a Successful
Secondary Remarketing has occurred, Income Equity Units Holders may only effect
Early Settlement pursuant to this Section 5.04(b)(2) in multiples of 20,000
Purchase Contracts. Other than the provisions relating to timing of notice and
settlement, which shall be as set forth above, the provisions of Section 5.01(a)
shall apply with respect to an Early Settlement following a Cash Merger pursuant
to this Section 5.04(b)(2). Notwithstanding the foregoing, no Early Settlement
will be permitted pursuant to this Section 5.04(b)(2) unless, at the time such
Early Settlement is effected, there is an effective Registration Statement with
respect to any securities to be issued and delivered in connection with such
Early Settlement, if such a Registration Statement is required (in the view of
counsel, which need not be in the form of a written opinion, for the Company)
under the Securities Act. If such a Registration Statement is so required, the
Company covenants and agrees to use its commercially reasonable efforts to (A)
have in effect a Registration Statement covering any securities to be delivered
in respect of the Purchase Contracts being settled and (B) provide a Prospectus
in connection therewith, in each case in a form that may be used in connection
with such Early Settlement.
(c) All calculations and determinations pursuant to this Section 5.04
shall be made by the Company or its agent and the Purchase Contract Agent shall
have no responsibility with respect thereto.
Section 5.05. Notice of Adjustments and Certain Other Events.
(a) Whenever the Settlement Rate is adjusted as herein provided, the
Company shall:
(i) forthwith compute the adjusted Settlement Rate in accordance
with Section 5.04 and prepare and transmit to the Purchase Contract Agent
an Officers' Certificate setting forth the Settlement Rate, the method of
calculation thereof in reasonable detail, and the facts requiring such
adjustment and upon which such adjustment is based; and
(ii) within 10 Business Days following the occurrence of an event
that requires an adjustment to the Settlement Rate pursuant to Section 5.04
(or if the Company is not aware of such occurrence, as soon as practicable
after becoming so aware), provide a written notice to the Holders of the
Securities of the occurrence of such
50
event and a statement in reasonable detail setting forth the method by
which the adjustment to the Settlement Rate was determined and setting
forth the adjusted Settlement Rate.
(b) The Purchase Contract Agent shall not at any time be under any duty or
responsibility to any Holder of Securities to determine whether any facts exist
which may require any adjustment of the Settlement Rate, or with respect to the
nature or extent or calculation of any such adjustment when made, or with
respect to the method employed in making the same. The Purchase Contract Agent
shall not be accountable with respect to the validity or value (or the kind or
amount) of any shares of Common Stock, or of any securities or property, which
may at the time be issued or delivered with respect to any Purchase Contract;
and the Purchase Contract Agent makes no representation with respect thereto.
The Purchase Contract Agent shall not be responsible for any failure of the
Company to issue, transfer or deliver any shares of Common Stock pursuant to a
Purchase Contract or to comply with any of the duties, responsibilities or
covenants of the Company contained in this Article.
Section 5.06. Termination Event; Notice.
The Purchase Contracts and all obligations and rights of the Company and
the Holders thereunder, including, without limitation, the rights of the Holders
to receive and the obligation of the Company to pay any Purchase Contract
Payments (including any deferred or accrued and unpaid Purchase Contract
Payments), if the Company shall have such obligation, and the rights and
obligations of Holders to purchase Common Stock, shall immediately and
automatically terminate, without the necessity of any notice or action by any
Holder, the Purchase Contract Agent or the Company, if, prior to or on the
Purchase Contract Settlement Date, a Termination Event shall have occurred.
Upon and after the occurrence of a Termination Event, the Securities shall
thereafter represent the right to receive the Notes, the Treasury Securities or
the appropriate Applicable Ownership Interest of the Treasury Portfolio, as the
case may be, forming part of such Securities, in accordance with the provisions
of Section 5.04 of the Pledge Agreement. Upon the occurrence of a Termination
Event, the Company shall promptly but in no event later than two Business Days
thereafter give written notice to the Purchase Contract Agent, the Collateral
Agent and the Holders, at their addresses as they appear in the Security
Register.
Section 5.07. Early Settlement.
(a) Subject to and upon compliance with the provisions of this Section
5.07, a Holder, at his option, may, with respect to the Purchase Contracts
underlying such Holder's Securities, effect Early Settlement at any time on or
prior to 5:00 p.m. (New York City time) on the fifth Business Day immediately
preceding the Purchase Contract Settlement Date. Holders of Growth Equity Units
may effect Early Settlement of the related Purchase Contracts at any time on or
prior to the second Business Day immediately preceding the Purchase Contract
Settlement Date only in integral multiples of 40 Purchase Contracts. If a Tax
Event Redemption Date, a Successful Initial Remarketing or a Successful
Secondary Remarketing has occurred, Income Equity Units Holders may effect Early
Settlement on or prior to the second Business Day immediately preceding the
Purchase Contract Settlement Date only in multiples of 20,000 Purchase
Contracts. In order to exercise the right to effect Early Settlement with
respect to any Purchase Contracts, the Holder of the Certificate evidencing
Securities shall deliver to the Purchase Contract Agent at the Corporate
51
Trust Office an "Election to Settle Early" form (on the reverse side of the
Certificate) and any other documents requested by the Purchase Contract Agent
and accompanied by payment (payable to the Company in immediately available
funds) in an amount (the "EARLY SETTLEMENT AMOUNT") equal to the product of (i)
(A) the Stated Amount times (B) the number of Purchase Contracts with respect to
which the Holder has elected to effect Early Settlement, plus (ii) if such
delivery is made with respect to any Purchase Contracts during the period from
the close of business on any Record Date next preceding any Payment Date to the
opening of business on such Payment Date, an amount equal to the Purchase
Contract Payments payable on such Payment Date with respect to such Purchase
Contracts.
Except as provided in the immediately preceding sentence and subject to
Section 5.11(c), no payment shall be made upon Early Settlement of any Purchase
Contract on account of any Purchase Contract Payments accrued on such Purchase
Contract or on account of dividends payable on the Common Stock issued upon such
Early Settlement, the record date for which payment occurs prior to the Early
Settlement Date. If the foregoing requirements are first satisfied with respect
to Purchase Contracts underlying any Securities prior to or at 5:00 p.m. (New
York City time) on a Business Day, such day shall be the "EARLY SETTLEMENT DATE"
with respect to such Securities and if such requirements are first satisfied
after 5:00 p.m. (New York City time) on a Business Day or on a day that is not a
Business Day, the "EARLY SETTLEMENT DATE" with respect to such Securities shall
be the next succeeding Business Day (so long as such next succeeding Business
Day is not later than the fifth Business Day immediately preceding the Purchase
Contract Settlement Date).
(b) No Early Settlement will be permitted under this Section 5.07 unless,
at the time of delivery of the Election to Settle Early form or the time the
Early Settlement is effected, there is an effective Registration Statement with
respect to the shares of Common Stock to be issued and delivered in connection
with such Early Settlement, if such a Registration Statement is required (in the
view of counsel, which need not be in the form of a written opinion, for either
the Company or the Purchase Contract Agent) under the Securities Act. If such a
Registration Statement is so required, the Company covenants and agrees to use
its commercially reasonable efforts to (A) have in effect a Registration
Statement covering the shares of Common Stock to be delivered in respect of the
Purchase Contracts being settled and (B) provide a Prospectus in connection
therewith, in each case in a form that the Purchase Contract Agent may use in
connection with such Early Settlement.
(c) Upon Early Settlement of Purchase Contracts by a Holder of the related
Securities, the Company shall issue, and the Holder shall be entitled to receive
0.8190 shares of Common Stock on account of each Purchase Contract as to which
Early Settlement is effected (the "EARLY SETTLEMENT RATE"). The Early Settlement
Rate shall be adjusted in the same manner and at the same time as the Settlement
Rate is adjusted.
(d) Not later than the third Business Day after the applicable Early
Settlement Date, the Company shall cause:
(i) the shares of Common Stock issuable upon Early Settlement of
Purchase Contracts to be issued and delivered, together with payment in
lieu of any fraction of a share, as provided in Section 5.09; and
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(ii) the related Notes or the appropriate Applicable Ownership
Interest (as specified in clause (A) of the definition of such term) of the
Treasury Portfolio, in the case of Income Equity Units, or the related
Treasury Securities, in the case of Growth Equity Units, to be released
from the Pledge by the Collateral Agent and transferred, in each case, to
the Purchase Contract Agent for delivery to the Holder thereof or its
designee.
(e) Upon Early Settlement of any Purchase Contracts, and subject to
receipt of shares of Common Stock from the Company and the Notes, the
appropriate Applicable Ownership Interest (as specified in clause (A) of the
definition of such term) of the Treasury Portfolio, or Treasury Securities, as
the case may be, from the Securities Intermediary, as applicable, the Purchase
Contract Agent shall, in accordance with the instructions provided by the Holder
thereof on the Election to Settle Early form (on the reverse of the Certificate
evidencing the related Securities):
(i) transfer to the Holder the Notes, the appropriate Applicable
Ownership Interest (as specified in clause (A) of the definition of such
term) of the Treasury Portfolio or Treasury Securities, as the case may be,
forming a part of such Securities;
(ii) deliver to the Holder a certificate or certificates for the full
number of shares of Common Stock issuable upon such Early Settlement,
together with payment in lieu of any fraction of a share, as provided in
Section 5.09; and
(iii) if so required under the Securities Act, deliver a Prospectus
for the shares of Common Stock issuable upon such Early Settlement as
contemplated by Section 5.07(b).
(f) In the event that Early Settlement is effected with respect to
Purchase Contracts underlying less than all the Securities evidenced by a
Certificate, upon such Early Settlement the Company shall execute and the
Purchase Contract Agent shall authenticate, countersign and deliver to the
Holder thereof, at the expense of the Company, a Certificate evidencing the
Securities as to which Early Settlement was not effected.
(g) A Holder of a Security who effects Early Settlement may elect to have
the Notes no longer a part of an Income Equity Unit remarketed. A Holder making
such an election must notify the Indenture Trustee prior to 11:00 a.m. (New York
City time) on the fourth Business Day immediately preceding the Purchase
Contract Settlement Date, of the aggregate principal amount of Notes that are
not part of Income Equity Units to be remarketed. Any such notice will be
irrevocable and may not be conditioned upon the level at which the Reset Rate is
established in the Remarketing. Concurrently, the Indenture Trustee shall cause
such Notes to be presented to the Remarketing Agent for Remarketing.
Section 5.08. Intentionally Omitted.
Section 5.09. No Fractional Shares.
No fractional shares or scrip representing fractional shares of Common
Stock shall be issued or delivered upon settlement on the Purchase Contract
Settlement Date or upon Early
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Settlement of any Purchase Contracts. If Certificates evidencing more than one
Purchase Contract shall be surrendered for settlement at one time by the same
Holder, the number of full shares of Common Stock which shall be delivered upon
settlement shall be computed on the basis of the aggregate number of Purchase
Contracts evidenced by the Certificates so surrendered. Instead of any
fractional share of Common Stock which would otherwise be deliverable upon
settlement of any Purchase Contracts on the Purchase Contract Settlement Date or
upon Early Settlement, the Company, through the Purchase Contract Agent, shall
make a cash payment in respect of such fractional interest in an amount equal to
the value of such fractional shares times the Applicable Market Value. The
Company shall provide the Purchase Contract Agent from time to time with
sufficient funds to permit the Purchase Contract Agent to make all cash payments
required by this Section 5.09 in a timely manner.
Section 5.10. Charges and Taxes.
The Company will pay all stock transfer and similar taxes attributable to
the initial issuance and delivery of the shares of Common Stock pursuant to the
Purchase Contracts; provided, however, that the Company shall not be required to
pay any such tax or taxes which may be payable in respect of any exchange of or
substitution for a Certificate evidencing a Security or any issuance of a share
of Common Stock in a name other than that of the registered Holder of a
Certificate surrendered in respect of the Securities evidenced thereby, other
than in the name of the Purchase Contract Agent, as custodian for such Holder,
and the Company shall not be required to issue or deliver such share
certificates or Certificates unless or until the Person or Persons requesting
the transfer or issuance thereof shall have paid to the Company the amount of
such tax or shall have established to the satisfaction of the Company that such
tax has been paid.
Section 5.11. Purchase Contract Payments.
(a) Subject to Section 5.12, the Company shall pay, on each Payment Date,
the Purchase Contract Payments payable in respect of each Purchase Contract to
the Person in whose name a Certificate is registered at the close of business on
the Record Date next preceding such Payment Date. The Purchase Contract
Payments will be payable at the office of the Purchase Contract Agent in New
York City maintained for that purpose or, at the option of the Holder, by check
mailed to the address of the Person entitled thereto at such Person's address as
it appears on the Security Register. If any date on which Purchase Contract
Payments are to be made is not a Business Day, then payment of the Purchase
Contract Payments payable on such date will be made on the next succeeding day
that is a Business Day (and without any interest in respect of any such delay).
Purchase Contract Payments payable for any period will be computed on the basis
of a 360-day year of twelve 30-day months.
(b) Upon the occurrence of a Termination Event, the Company's obligation
to pay future Purchase Contract Payments (including any accrued or deferred
Purchase Contract Payments) shall cease.
(c) Each Certificate delivered under this Agreement upon registration of
transfer of or in exchange for or in lieu of (including as a result of a
Collateral Substitution or the reestablishment of Income Equity Units) any other
Certificate shall carry the right to accrued or
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deferred and unpaid Purchase Contract Payments and the right to accrue Purchase
Contract Payments, which rights were carried by the Purchase Contracts
underlying such other Certificates.
(d) Subject to Section 5.04(b)(2) or Section 5.07, in the case of any
Security with respect to which Early Settlement of the underlying Purchase
Contract is effected on a date that is after any Record Date and prior to or on
the next succeeding Payment Date, Purchase Contract Payments otherwise payable
on such Payment Date shall be payable on such Payment Date notwithstanding such
Early Settlement, and such Purchase Contract Payments shall be paid to the
Person in whose name the Certificate evidencing such Security is registered at
the close of business on such Record Date. Except as otherwise expressly
provided in the immediately preceding sentence, in the case of any Security with
respect to which Early Settlement of the underlying Purchase Contract is
effected, Purchase Contract Payments that would otherwise be payable after the
Early Settlement Date with respect to such Purchase Contract shall not be
payable.
(e) The Company's obligations with respect to Purchase Contract Payments,
if any, will be subordinated and junior in right of payment to the Company's
obligations under any Senior Indebtedness.
(f) In the event (x) of any payment by, or distribution of assets of, the
Company of any kind or character, whether in cash, property or securities, to
creditors upon any dissolution, winding-up, liquidation or reorganization of the
Company, whether voluntary or involuntary or in bankruptcy, insolvency,
receivership or other proceedings, or (y) subject to the provisions of Section
5.11(h) below, that (i) a default shall have occurred and be continuing with
respect to the payment of principal, interest or any other monetary amounts due
and payable on any Senior Indebtedness and such default shall have continued
beyond the period of grace, if any, specified in the instrument evidencing such
Senior Indebtedness (and the Purchase Contract Agent shall have received written
notice thereof from the Company or one or more holders of Senior Indebtedness or
their representative or representatives or the trustee or trustees under any
indenture pursuant to which any such Senior Indebtedness may have been issued),
or (ii) the maturity of any Senior Indebtedness shall have been accelerated
because of a default in respect of such Senior Indebtedness (and the Purchase
Contract Agent shall have received written notice thereof from the Company or
one or more holders of Senior Indebtedness or their representative or
representatives or the trustee or trustees under any indenture pursuant to which
any such Senior Indebtedness may have been issued), then:
(i) the holders of all Senior Indebtedness shall first be entitled
to receive, in the case of clause (x) above, payment of all amounts due or
to become due upon all Senior Indebtedness and, in the case of subclauses
(i) and (ii) of clause (y) above, payment of all amounts due thereon, or
provision shall be made for such payment in money or money's worth, before
the Holders of any of the Securities are entitled to receive any Purchase
Contract Payments on the Purchase Contracts underlying the Securities;
(ii) any payment by, or distribution of assets of, the Company of any
kind or character, whether in cash, property or securities, to which the
Holders of any of the
55
Securities would be entitled except for the provisions of Section 5.11(e)
through (q), including any such payment or distribution which may be
payable or deliverable by reason of the payment of any other indebtedness
of the Company being subordinated to the payment of such Purchase Contract
Payments on the Purchase Contracts underlying the Securities, shall be paid
or delivered by the Person making such payment or distribution, whether a
trustee in bankruptcy, a receiver or liquidating trustee or otherwise,
directly to the holders of such Senior Indebtedness or their representative
or representatives or to the trustee or trustees under any indenture under
which any instruments evidencing any of such Senior Indebtedness may have
been issued, ratably according to the aggregate amounts remaining unpaid on
account of such Senior Indebtedness held or represented by each, to the
extent necessary to make payment in full of all Senior Indebtedness
remaining unpaid after giving effect to any concurrent payment or
distribution (or provision therefor) to the holders of such Senior
Indebtedness, before any payment or distribution is made of such Purchase
Contract Payments to the Holders of such Securities; and
(iii) in the event that, notwithstanding the foregoing, any payment
by, or distribution of assets of, the Company of any kind or character,
whether in cash, property or securities, including any such payment or
distribution which may be payable or deliverable by reason of the payment
of any other indebtedness of the Company being subordinated to the payment
of Purchase Contract Payments on the Purchase Contracts underlying the
Securities, shall be received by the Purchase Contract Agent or the Holders
of any of the Securities when such payment or distribution is prohibited
pursuant to Section 5.11(e) through (q), such payment or distribution shall
be paid over to the holders of such Senior Indebtedness or their
representative or representatives or to the trustee or trustees under any
indenture pursuant to which any instruments evidencing any such Senior
Indebtedness may have been issued, ratably as aforesaid, for application to
the payment of all Senior Indebtedness remaining unpaid until all such
Senior Indebtedness shall have been paid in full, after giving effect to
any concurrent payment or distribution (or provision therefor) to the
holders of such Senior Indebtedness.
(g) For purposes of Section 5.11(e) through (q), the words "cash, property
or securities" shall not be deemed to include shares of stock of the Company as
reorganized or readjusted, or securities of the Company or any other Person
provided for by a plan of reorganization or readjustment, the payment of which
is subordinated at least to the extent provided in Section 5.11(e) through (q)
with respect to such Purchase Contract Payments on the Securities to the payment
of all Senior Indebtedness which may at the time be outstanding; provided that
(i) the indebtedness or guarantee of indebtedness, as the case may be, that
constitutes Senior Indebtedness is assumed by the Person, if any, resulting from
any such reorganization or readjustment, and (ii) the rights of the holders of
the Senior Indebtedness are not, without the consent of each such holder
adversely affected thereby, altered by such reorganization or readjustment;
(h) Any failure by the Company to make any payment on or perform any other
obligation under Senior Indebtedness, other than any indebtedness incurred by
the Company or assumed or guaranteed, directly or indirectly, by the Company for
money borrowed (or any deferral, renewal, extension or refunding thereof) or any
indebtedness or obligation as to which
56
the provisions of Section 5.11(e) through (g) shall have been waived by the
Company in the instrument or instruments by which the Company incurred, assumed,
guaranteed or otherwise created such indebtedness or obligation, shall not be
deemed a default or event of default if (i) the Company shall be disputing its
obligation to make such payment or perform such obligation and (ii) either (A)
no final judgment relating to such dispute shall have been issued against the
Company which is in full force and effect and is not subject to further review,
including a judgment that has become final by reason of the expiration of the
time within which a party may seek further appeal or review, and (B) in the
event a judgment that is subject to further review or appeal has been issued,
the Company shall in good faith be prosecuting an appeal or other proceeding for
review and a stay of execution shall have been obtained pending such appeal or
review.
(i) Subject to the payment in full of all Senior Indebtedness, the Holders
of the Securities shall be subrogated (equally and ratably with the holders of
all obligations of the Company which by their express terms are subordinated to
Senior Indebtedness of the Company to the same extent as payment of the Purchase
Contract Payments in respect of the Purchase Contracts underlying the Securities
is subordinated and which are entitled to like rights of subrogation) to the
rights of the holders of Senior Indebtedness to receive payments or
distributions of cash, property or securities of the Company applicable to the
Senior Indebtedness until all such Purchase Contract Payments owing on the
Securities shall be paid in full, and as between the Company, its creditors
other than holders of such Senior Indebtedness and the Holders, no such payment
or distribution made to the holders of Senior Indebtedness by virtue of Section
5.11(e) through (q) that otherwise would have been made to the Holders shall be
deemed to be a payment by the Company on account of such Senior Indebtedness, it
being understood that the provisions of Section 5.11(e) through (q) are and are
intended solely for the purpose of defining the relative rights of the Holders,
on the one hand, and the holders of Senior Indebtedness, on the other hand.
(j) Nothing contained in Section 5.11(e) through (q) or elsewhere in this
Agreement or in the Securities is intended to or shall impair, as among the
Company, its creditors other than the holders of Senior Indebtedness and the
Holders, the obligation of the Company, which is absolute and unconditional, to
pay to the Holders such Purchase Contract Payments on the Securities as and when
the same shall become due and payable in accordance with their terms, or is
intended to or shall affect the relative rights of the Holders and creditors of
the Company other than the holders of Senior Indebtedness, nor shall anything
herein or therein prevent the Purchase Contract Agent or any Holder from
exercising all remedies otherwise permitted by applicable law upon default under
this Agreement, subject to the rights, if any, under Section 5.11(e) through
(q), of the holders of Senior Indebtedness in respect of cash, property or
securities of the Company received upon the exercise of any such remedy.
(k) Upon payment or distribution of assets of the Company referred to in
Section 5.11(e) through (q), the Purchase Contract Agent and the Holders shall
be entitled to rely upon any order or decree made by any court of competent
jurisdiction in which any such dissolution, winding up, liquidation or
reorganization proceeding affecting the affairs of the Company is pending or
upon a certificate of the trustee in bankruptcy, receiver, assignee for the
benefit of creditors, liquidating trustee or Purchase Contract Agent or other
person making any payment or distribution, delivered to the Purchase Contract
Agent or to the Holders, for the
57
purpose of ascertaining the Persons entitled to participate in such payment or
distribution, the holders of the Senior Indebtedness and other indebtedness of
the Company, the amount thereof or payable thereon, the amount or amounts paid
or distributed thereon and all other facts pertinent thereto or to these Section
5.11(e) through (q).
(l) The Purchase Contract Agent shall be entitled to rely on the delivery
to it of a written notice by a Person representing himself to be a holder of
Senior Indebtedness (or a trustee or representative on behalf of such holder) to
establish that such notice has been given by a holder of Senior Indebtedness or
a trustee or representative on behalf of any such holder or holders. In the
event that the Purchase Contract Agent determines in good faith that further
evidence is required with respect to the right of any Person as a holder of
Senior Indebtedness to participate in any payment or distribution pursuant to
Section 5.11(e) through (q), the Purchase Contract Agent may request such Person
to furnish evidence to the reasonable satisfaction of the Purchase Contract
Agent as to the amount of Senior Indebtedness held by such Person, the extent to
which such Person is entitled to participate in such payment or distribution and
any other facts pertinent to the rights of such Person under Section 5.11(e)
through (q), and, if such evidence is not furnished, the Purchase Contract Agent
may defer payment to such Person pending judicial determination as to the right
of such Person to receive such payment.
(m) Nothing contained in Section 5.11(e) through (q) shall affect the
obligations of the Company to make, or prevent the Company from making, payment
of the Purchase Contract Payments, except as otherwise provided in these Section
5.11(e) through (q).
(n) Each Holder of Securities, by his acceptance thereof, authorizes and
directs the Purchase Contract Agent on his, her or its behalf to take such
action as may be necessary or appropriate to effectuate the subordination
provided in Section 5.11 (e) through (q) and appoints the Purchase Contract
Agent his, her or its attorney-in-fact, as the case may be, for any and all such
purposes.
(o) The Company shall give prompt written notice to the Purchase Contract
Agent of any fact known to the Company that would prohibit the making of any
payment of moneys to or by the Purchase Contract Agent in respect of the
Securities pursuant to the provisions of this Section. Notwithstanding the
provisions of Section 5.11(e) through (q) or any other provisions of this
Agreement, the Purchase Contract Agent shall not be charged with knowledge of
the existence of any facts that would prohibit the making of any payment of
moneys to or by the Purchase Contract Agent, or the taking of any other action
by the Purchase Contract Agent, unless and until the Purchase Contract Agent
shall have received written notice thereof marked "Urgent" and mailed or
delivered to the Purchase Contract Agent at its Corporate Trust Services
department from the Company, any Holder, or the holder or representative of any
Senior Indebtedness; provided that if at least two Business Days prior to the
date upon which by the terms hereof any such moneys may become payable for any
purpose, the Purchase Contract Agent shall not have received with respect to
such moneys the notice provided for in this Section, then, anything herein
contained to the contrary notwithstanding, the Purchase Contract Agent shall
have full power and authority to receive such moneys and to apply the same to
the purpose for which they were received and shall not be affected by any notice
to the contrary that may be received by it within two Business Days prior to or
on or after such date.
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(p) The Purchase Contract Agent in its individual capacity shall be
entitled to all the rights set forth in this Section with respect to any Senior
Indebtedness at the time held by it, to the same extent as any other holder of
Senior Indebtedness and nothing in this Agreement shall deprive the Purchase
Contract Agent of any of its rights as such holder.
(q) No right of any present or future holder of any Senior Indebtedness to
enforce the subordination herein shall at any time or in any way be prejudiced
or impaired by any act or failure to act on the part of the Company or by any
noncompliance by the Company with the terms, provisions and covenants of this
Agreement, regardless of any knowledge thereof which any such holder may have or
be otherwise charged with.
(r) Nothing in this Section 5.11 shall apply to claims of, or payments to,
the Purchase Contract Agent under or pursuant to Section 7.07.
(s) With respect to the holders of Senior Indebtedness, (i) the duties and
obligations of the Purchase Contract Agent shall be determined solely by the
express provisions of this Agreement; (ii) the Purchase Contract Agent shall not
be liable except for the performance of such duties and obligations as are
specifically set forth in this Agreement; (iii) no implied covenants or
obligations shall be read into this Agreement against the Purchase Contract
Agent; and (iv) the Purchase Contract Agent shall not be deemed to be a
fiduciary as to such holders.
Section 5.12. Deferral of Purchase Contract Payments.
(a) The Company has the right to defer payment of all or part of the
Purchase Contract Payments in respect of each Purchase Contract until no later
than the Purchase Contract Settlement Date, but only if the Company shall give
the Holders and the Purchase Contract Agent written notice of its election to
defer such payment (specifying the amount to be deferred) at least ten Business
Days prior to the earlier of (i) the next succeeding Payment Date or (ii) the
date the Company is required to give notice of the Record Date or Payment Date
with respect to payment of such Purchase Contract Payments to the NYSE or other
applicable self-regulatory organization or to Holders of the Securities, but in
any event not less than one Business Day prior to such Record Date. If the
Company so elects to defer Purchase Contract Payments, the Company shall pay
additional Purchase Contract Payments on such deferred installments of Purchase
Contract Payments at a rate equal to 8.50% per annum, compounding quarterly,
until such deferred installments are paid in full. Deferred Purchase Contract
Payments shall be due on the next succeeding Payment Date except to the extent
that payment is deferred pursuant to this Section. No deferral period may end
on a date other than a Payment Date. Except as otherwise provided in Section
5.11(d), in the case of any Security with respect to which Early Settlement of
the underlying Purchase Contract is effected on an Early Settlement Date, the
Holder will have no right to receive any accrued or deferred Purchase Contract
Payments.
(b) In the event the Company elects to defer the payment of Purchase
Contract Payments on the Purchase Contracts until the Purchase Contract
Settlement Date, each Holder will receive on the Purchase Contract Settlement
Date the aggregate amount of accrued and unpaid Purchase Contract Payments. The
Company shall pay such amounts on the Purchase Contract Settlement Date in the
manner described in Section 5.02(f).
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(c) In the event the Company exercises its option to defer the payment of
Purchase Contract Payments, then, until all deferred Purchase Contract Payments
have been paid, the Company shall not, and shall not permit any of its
subsidiaries to (a) make any payment of principal, interest or premium, if any,
on or repay, repurchase or redeem any debt securities that rank junior to the
Notes in the right of payment issued by the Company or any subsidiary of the
Company, or (b) make any guarantee payments with respect to any guarantee by the
Company of any securities of any of its subsidiaries if such guarantee ranks
junior to the Notes in the right of payment, (c) declare or pay any dividends or
distributions on any of the Company's capital stock or (d) redeem, purchase,
acquire or make a liquidation payment with respect to, any of the Company's
capital stock. Notwithstanding the foregoing, the Company may (1) purchase or
acquire its capital stock in connection with the satisfaction by it of its
obligations under any employee benefit plans or pursuant to any contract or
security outstanding on the first day of any such event requiring it to purchase
its capital stock; (2) reclassify its capital stock or exchange or convert one
class or series of its capital stock for another class or series of its capital
stock; (3) purchase fractional interests in shares of its capital stock pursuant
to the conversion or exchange provisions of such capital stock or the security
being converted or exchanged; and (4) redeem or repurchase any rights pursuant
to a rights agreement.
ARTICLE VI
REMEDIES
Section 6.01. Unconditional Right of Holders to Receive Purchase Contract
Payments and to Purchase Shares of Common Stock.
Each Holder of a Security shall have the right, which is absolute and
unconditional, (i) subject to the right of the Company to defer such payments in
accordance with Section 5.12, to receive each Purchase Contract Payment with
respect to the Purchase Contract comprising part of such Security on the
respective Payment Date for such Security and (ii) except upon and following a
Termination Event, to purchase shares of Common Stock pursuant to such Purchase
Contract and, in each such case, to institute suit for the enforcement of any
such right to receive Purchase Contract Payments and the right to purchase
shares of Common Stock, and such rights shall not be impaired without the
consent of such Holder.
Section 6.02. Restoration of Rights and Remedies.
If any Holder has instituted any proceeding to enforce any right or remedy
under this Agreement and such proceeding has been discontinued or abandoned for
any reason, or has been determined adversely to such Holder, then and in every
such case, subject to any determination in such proceeding, the Company and such
Holder shall be restored severally and respectively to their former positions
hereunder, and thereafter all rights and remedies of such Holder shall continue
as though no such proceeding had been instituted.
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Section 6.03. Rights and Remedies Cumulative.
Except as otherwise provided with respect to the replacement or payment of
mutilated, destroyed, lost or stolen Certificates in the last paragraph of
Section 3.10, no right or remedy herein conferred upon or reserved to the
Holders is intended to be exclusive of any other right or remedy, and every
right and remedy shall, to the extent permitted by law, be cumulative and in
addition to every other right and remedy given hereunder or now or hereafter
existing at law or in equity or otherwise. The assertion or employment of any
right or remedy hereunder, or otherwise, shall not prevent the concurrent
assertion or employment of any other appropriate right or remedy.
Section 6.04. Delay or Omission Not Waiver.
No delay or omission of any Holder to exercise any right upon a default or
remedy upon a default shall impair any such right or remedy or constitute a
waiver of any such right. Every right and remedy given by this Article or by
law to the Holders may be exercised from time to time, and as often as may be
deemed expedient, by such Holders.
Section 6.05. Undertaking for Costs.
All parties to this Agreement agree, and each Holder of a Security, by its
acceptance of such Security shall be deemed to have agreed, that any court may
in its discretion require, in any suit for the enforcement of any right or
remedy under this Agreement, or in any suit against the Purchase Contract Agent
for any action taken, suffered or omitted by it as Purchase Contract Agent, the
filing by any party litigant in such suit of an undertaking to pay the costs of
such suit, and that such court may in its discretion assess reasonable costs,
including reasonable attorneys' fees and costs against any party litigant in
such suit, having due regard to the merits and good faith of the claims or
defenses made by such party litigant; provided that the provisions of this
Section shall not apply to any suit instituted by the Purchase Contract Agent,
to any suit instituted by any Holder, or group of Holders, holding in the
aggregate more than 10% of the Outstanding Securities, or to any suit instituted
by any Holder for the enforcement of interest on any Notes or Purchase Contract
Payments on or after the respective Payment Date therefor in respect of any
Security held by such Holder, or for enforcement of the right to purchase shares
of Common Stock under the Purchase Contracts constituting part of any Security
held by such Holder.
Section 6.06. Waiver of Stay or Extension Laws.
The Company covenants (to the extent that it may lawfully do so) that it
will not at any time insist upon, or plead, or in any manner whatsoever claim or
take the benefit or advantage of, any stay or extension law wherever enacted,
now or at any time hereafter in force, which may affect the covenants or the
performance of this Agreement; and the Company (to the extent that it may
lawfully do so) hereby expressly waives all benefit or advantage of any such law
and covenants that it will not hinder, delay or impede the execution of any
power herein granted to the Purchase Contract Agent or the Holders, but will
suffer and permit the execution of every such power as though no such law had
been enacted.
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ARTICLE VII
THE PURCHASE CONTRACT AGENT
Section 7.01. Certain Duties and Responsibilities.
(a) The Purchase Contract Agent:
(1) undertakes to perform, with respect to the Securities, such duties and
only such duties as are specifically set forth in this Agreement and the Pledge
Agreement, and no implied covenants or obligations shall be read into this
Agreement or the Pledge Agreement against the Purchase Contract Agent; and
(2) in the absence of bad faith or gross negligence on its part, may, with
respect to the Securities, conclusively rely, as to the truth of the statements
and the correctness of the opinions expressed therein, upon certificates or
opinions furnished to the Purchase Contract Agent and conforming to the
requirements of this Agreement or the Pledge Agreement or the Remarketing
Agreement, as applicable, but in the case of any certificates or opinions which
by any provision hereof are specifically required to be furnished to the
Purchase Contract Agent, the Purchase Contract Agent shall be under a duty to
examine the same to determine whether or not they conform in all material
respects to the requirements of this Agreement or the Pledge Agreement, as
applicable (but need not confirm or investigate the accuracy of the mathematical
calculations or other facts stated therein).
(b) No provision of this Agreement or the Pledge Agreement shall be
construed to relieve the Purchase Contract Agent from liability for its own
grossly negligent action, its own grossly negligent failure to act, or its own
willful misconduct, except that
(1) this Subsection shall not be construed to limit the effect of
Subsection (a) of this Section;
(2) no provision of this Agreement or the Pledge Agreement or the
Remarketing Agreement shall require the Purchase Contract Agent to expend or
risk its own funds or otherwise incur any financial liability in the performance
of any of its duties hereunder, or in the exercise of any of its rights or
powers, if indemnity satisfactory to the Purchase Contract Agent is not provided
to it; and
(3) the Purchase Contract Agent shall not be liable with respect to any
action taken or omitted to be taken by it in good faith in accordance with the
direction of the Holders of a majority in principal amount of the Outstanding
Securities.
(c) Whether or not therein expressly so provided, every provision of this
Agreement, the Pledge Agreement and the Remarketing Agreement relating to the
conduct or affecting the liability of or affording protection to the Purchase
Contract Agent shall be subject to the provisions of this Section.
(d) The Purchase Contract Agent is authorized to execute and deliver the
Pledge Agreement and the Remarketing Agreement in its capacity as Purchase
Contract Agent.
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Section 7.02. Notice of Default.
Within 30 days after the occurrence of any default by the Company hereunder
of which a Responsible Officer of the Purchase Contract Agent has actual
knowledge, the Purchase Contract Agent shall transmit by mail to the Company and
the Holders of Securities, as their names and addresses appear in the Security
Register, notice of such default hereunder, unless such default shall have been
cured or waived.
Section 7.03. Certain Rights of Purchase Contract Agent.
Subject to the provisions of Section 7.01:
(1) the Purchase Contract Agent may conclusively rely and shall be fully
protected in acting or refraining from acting upon any resolution, certificate,
statement, instrument, opinion, report, notice, request, direction, consent,
order, bond, Note, note, other evidence of indebtedness or other paper or
document believed by it to be genuine and to have been signed or presented by
the proper party or parties;
(2) any request or direction of the Company mentioned herein shall be
sufficiently evidenced by an Officers' Certificate, Issuer Order or Issuer
Request, and any resolution of the Board of Directors of the Company may be
sufficiently evidenced by a Board Resolution;
(3) whenever in the administration of this Agreement or the Pledge
Agreement or the Remarketing Agreement the Purchase Contract Agent shall deem it
desirable that a matter be proved or established prior to taking, suffering or
omitting any action hereunder, the Purchase Contract Agent (unless other
evidence be herein specifically prescribed) may, in the absence of bad faith on
its part, conclusively rely upon an Officers' Certificate of the Company;
(4) the Purchase Contract Agent may consult with counsel of its selection
appointed with due care by it hereunder and the written advice of such counsel
or any Opinion of Counsel shall be full and complete authorization and
protection in respect of any action taken, suffered or omitted by it hereunder
in good faith and in reliance thereon;
(5) the Purchase Contract Agent shall not be bound to make any
investigation into the facts or matters stated in any resolution, certificate,
statement, instrument, opinion, report, notice, request, direction, consent,
order, bond, debenture, note, other evidence of indebtedness or other paper or
document, but the Purchase Contract Agent, in its discretion, and at the expense
of the Company, may make reasonable further inquiry or investigation into such
facts or matters related to the execution, delivery and performance of the
Purchase Contracts as it may see fit, and, if the Purchase Contract Agent shall
determine to make such further inquiry or investigation, it shall be given a
reasonable opportunity to examine the relevant books, records and premises of
the Company, personally or by agent or attorney and shall incur no liability or
additional liability of any kind by reason of such inquiry or investigation;
(6) the Purchase Contract Agent may execute any of the powers hereunder or
perform any duties hereunder either directly or by or through agents or
attorneys or an Affiliate and the Purchase Contract Agent shall not be
responsible for any misconduct or negligence on the part of any agent or
attorney or an Affiliate appointed with due care by it hereunder;
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(7) the Purchase Contract Agent shall be under no obligation to exercise
any of the rights or powers vested in it by this Agreement at the request or
direction of any of the Holders pursuant to this Agreement, unless such Holders
shall have offered to the Purchase Contract Agent security or indemnity
satisfactory to the Purchase Contract Agent against the costs, expenses and
liabilities which might be incurred by it in compliance with such request or
direction;
(8) the Purchase Contract Agent shall not be liable for any action taken,
suffered, or omitted to be taken by it in good faith and reasonably believed by
it to be authorized or within the discretion or rights or powers conferred upon
it by this Agreement;
(9) the Purchase Contract Agent shall not be deemed to have notice of any
default hereunder unless a Responsible Officer of the Purchase Contract Agent
has actual knowledge thereof or unless written notice of any event which is in
fact such a default is received by the Purchase Contract Agent at the Corporate
Trust Office of the Purchase Contract Agent, and such notice references the
Securities and this Agreement;
(10) the Purchase Contract Agent may request that the Company deliver an
Officers' Certificate setting forth the names of individuals and/or titles of
officers authorized at such time to take specified actions pursuant to this
Agreement, which Officers' Certificate may be signed by any person authorized to
sign an Officers' Certificate, including any person specified as so authorized
in any such certificate previously delivered and not superseded;
(11) the rights, privileges, protections, immunities and benefits given to
the Purchase Contract Agent, including, without limitation, its right to be
indemnified, are extended to, and shall be enforceable by, the Purchase Contract
Agent in each of its capacities hereunder, and to each agent, custodian and
other Person employed to act hereunder; and
(12) The Purchase Contract Agent shall not be required to initiate or
conduct any litigation or collection proceedings hereunder and shall have no
responsibilities with respect to any default hereunder except as expressly set
forth herein.
Section 7.04. Not Responsible for Recitals or Issuance of Securities.
The recitals contained herein and in the Certificates shall be taken as the
statements of the Company, and the Purchase Contract Agent assumes no
responsibility for their accuracy. The Purchase Contract Agent makes no
representations as to the validity or sufficiency of either this Agreement or of
the Securities, or of the Pledge Agreement or the Pledge or the Collateral and
shall have no responsibility for perfecting or maintaining the perfection of any
security interest in the Collateral. The Purchase Contract Agent shall not be
accountable for the use or application by the Company of the proceeds in respect
of the Purchase Contracts.
Section 7.05. May Hold Securities.
Any Security Registrar or any other agent of the Company, or the Purchase
Contract Agent and its Affiliates, in their individual or any other capacity,
may become the owner or pledgee of Securities and may otherwise deal with the
Company, the Collateral Agent or any other Person with the same rights it would
have if it were not Security Registrar or such other
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agent, or the Purchase Contract Agent. The Company may become the owner or
pledgee of Securities.
Section 7.06. Money Held in Custody.
Money held by the Purchase Contract Agent in custody hereunder need not be
segregated from the other funds except to the extent required by law or provided
herein. The Purchase Contract Agent shall be under no obligation to invest or
pay interest on any money received by it hereunder except as otherwise provided
hereunder or agreed in writing with the Company.
Section 7.07. Compensation and Reimbursement.
The Company agrees:
(1) to pay to the Purchase Contract Agent compensation for all services
rendered by it hereunder, under the Pledge Agreement and under the Remarketing
Agreement as the Company and the Purchase Contract Agent shall from time to time
agree in writing;
(2) except as otherwise expressly provided for herein, to reimburse the
Purchase Contract Agent upon its request for all reasonable expenses,
disbursements and advances incurred or made by the Purchase Contract Agent in
accordance with any provision of this Agreement, the Pledge Agreement and the
Remarketing Agreement (including the reasonable compensation and the expenses
and disbursements of its agents and counsel), except any such expense,
disbursement or advance as may be attributable to its gross negligence, willful
misconduct or bad faith; and
(3) to indemnify the Purchase Contract Agent and any predecessor Purchase
Contract Agent for, and to hold it harmless against, any claim, demand, loss,
liability or expense incurred (or to which it is subjected to) without gross
negligence, willful misconduct or bad faith on its part, arising out of or in
connection with the acceptance or administration of its duties hereunder and
under the Pledge Agreement and the Remarketing Agreement, including the costs
and expenses of defending itself against any claim (whether asserted by the
Company, a Holder or any other person) or liability in connection with the
exercise or performance of any of its powers or duties hereunder or thereunder.
The provisions of this Section shall survive the resignation and removal of
the Purchase Contract Agent and the termination of this Agreement.
Section 7.08. Corporate Purchase Contract Agent Required; Eligibility.
There shall at all times be a Purchase Contract Agent hereunder which shall
be a corporation or bank organized and doing business under the laws of the
United States of America, any State thereof or the District of Columbia,
authorized under such laws to exercise corporate trust powers, having (or being
a member of a bank holding company having) a combined capital and surplus of at
least $50,000,000, subject to supervision or examination by Federal or State
authority and having a corporate trust office in the Borough of Manhattan, New
York City, if there be such a corporation in the Borough of Manhattan, New York
City, qualified and eligible under this Article and willing to act on reasonable
terms. If such corporation publishes reports of condition at least annually,
pursuant to law or to the requirements of said
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supervising or examining authority, then for the purposes of this Section, the
combined capital and surplus of such corporation shall be deemed to be its
combined capital and surplus as set forth in its most recent report of condition
so published. If at any time the Purchase Contract Agent shall cease to be
eligible in accordance with the provisions of this Section, it shall resign
immediately in the manner and with the effect hereinafter specified in this
Article.
Section 7.09. Resignation and Removal; Appointment of Successor.
(a) No resignation or removal of the Purchase Contract Agent and no
appointment of a successor Purchase Contract Agent pursuant to this Article
shall become effective until the acceptance of appointment by the successor
Purchase Contract Agent in accordance with the applicable requirements of
Section 7.10.
(b) The Purchase Contract Agent may resign at any time by giving written
notice thereof to the Company 60 days prior to the effective date of such
resignation. If the instrument of acceptance by a successor Purchase Contract
Agent required by Section 7.10 shall not have been delivered to the Purchase
Contract Agent within 30 days after the giving of such notice of resignation,
the resigning Purchase Contract Agent may petition, at the expense of the
Company, any court of competent jurisdiction for the appointment of a successor
Purchase Contract Agent.
(c) The Purchase Contract Agent may be removed at any time by Act of the
Holders of a majority in number of the Outstanding Securities delivered to the
Purchase Contract Agent and the Company. If the instrument of acceptance by a
successor Purchase Contract Agent required by Section 7.10 shall not have been
delivered to the Purchase Contract Agent within 30 days after such Act, the
Purchase Contract Agent being removed may petition, at the expense of the
Company, any court of competent jurisdiction for the appointment of a successor
Purchase Contract Agent.
(d) If at any time:
(1) the Purchase Contract Agent fails to comply with Section 310(b)
of the TIA, as if the Purchase Contract Agent were an indenture trustee
under an indenture qualified under the TIA, after written request therefor
by the Company or by any Holder who has been a bona fide Holder of a
Security for at least six months;
(2) the Purchase Contract Agent shall cease to be eligible under
Section 7.08 and shall fail to resign after written request therefor by the
Company or by any such Holder; or
(3) the Purchase Contract Agent shall become incapable of acting or
shall be adjudged a bankrupt or insolvent or a receiver of the Purchase
Contract Agent or of its property shall be appointed or any public officer
shall take charge or control of the Purchase Contract Agent or of its
property or affairs for the purpose of rehabilitation, conservation or
liquidation,
then, in any such case, (i) the Company by a Board Resolution may remove the
Purchase Contract Agent, or (ii) any Holder who has been a bona fide Holder of a
Security for at least six months may, on behalf of himself and all others
similarly situated, petition any court of
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competent jurisdiction for the removal of the Purchase Contract Agent and the
appointment of a successor Purchase Contract Agent.
(e) If the Purchase Contract Agent shall resign, be removed or become
incapable of acting, or if a vacancy shall occur in the office of Purchase
Contract Agent for any cause, the Company, by a Board Resolution, shall promptly
appoint a successor Purchase Contract Agent and shall comply with the applicable
requirements of Section 7.10. If no successor Purchase Contract Agent shall
have been so appointed by the Company and accepted appointment in the manner
required by Section 7.10, any Holder who has been a bona fide Holder of a
Security for at least six months, on behalf of itself and all others similarly
situated, or the Purchase Contract Agent may petition at the expense of the
Company, any court of competent jurisdiction for the appointment of a successor
Purchase Contract Agent.
(f) The Company shall give, or shall cause such successor Purchase
Contract Agent to give, notice of each resignation and each removal of the
Purchase Contract Agent and each appointment of a successor Purchase Contract
Agent by mailing written notice of such event by first-class mail, postage
prepaid, to all Holders as their names and addresses appear in the applicable
Security Register. Each notice shall include the name of the successor Purchase
Contract Agent and the address of its Corporate Trust Office.
Section 7.10. Acceptance of Appointment by Successor.
(a) In case of the appointment hereunder of a successor Purchase Contract
Agent, every such successor Purchase Contract Agent so appointed shall execute,
acknowledge and deliver to the Company and to the retiring Purchase Contract
Agent an instrument accepting such appointment, and thereupon the resignation or
removal of the retiring Purchase Contract Agent shall become effective and such
successor Purchase Contract Agent, without any further act, deed or conveyance,
shall become vested with all the rights, powers, agencies and duties of the
retiring Purchase Contract Agent; but, on the request of the Company or the
successor Purchase Contract Agent, such retiring Purchase Contract Agent shall,
upon payment of its charges, execute and deliver an instrument transferring to
such successor Purchase Contract Agent all the rights, powers and trusts of the
retiring Purchase Contract Agent and duly assign, transfer and deliver to such
successor Purchase Contract Agent all property and money held by such retiring
Purchase Contract Agent hereunder.
(b) Upon request of any such successor Purchase Contract Agent, the
Company shall execute any and all instruments for more fully and certainly
vesting in and confirming to such successor Purchase Contract Agent all such
rights, powers and agencies referred to in paragraph 7.10(a) of this Section.
(c) No successor Purchase Contract Agent shall accept its appointment
unless at the time of such acceptance such successor Purchase Contract Agent
shall be qualified and eligible under this Article.
Section 7.11. Merger, Conversion, Consolidation or Succession to Business.
Any corporation into which the Purchase Contract Agent may be merged or
converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or
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consolidation to which the Purchase Contract Agent shall be a party, or any
corporation succeeding to all or substantially all the corporate trust business
of the Purchase Contract Agent, shall be the successor of the Purchase Contract
Agent hereunder, provided that such corporation shall be otherwise qualified and
eligible under this Article, without the execution or filing of any paper or any
further act on the part of any of the parties hereto. In case any Certificates
shall have been authenticated and executed on behalf of the Holders, but not
delivered, by the Purchase Contract Agent then in office, any successor by
merger, conversion or consolidation to such Purchase Contract Agent may adopt
such authentication and execution and deliver the Certificates so authenticated
and executed with the same effect as if such successor Purchase Contract Agent
had itself authenticated and executed such Securities.
Section 7.12. Preservation of Information; Communications to Holders.
(a) The Purchase Contract Agent shall preserve, in as current a form as is
reasonably practicable, the names and addresses of Holders received by the
Purchase Contract Agent in its capacity as Security Registrar.
(b) If three or more Holders (herein referred to as "APPLICANTS") apply in
writing to the Purchase Contract Agent, and furnish to the Purchase Contract
Agent reasonable proof that each such applicant has owned a Security for a
period of at least six months preceding the date of such application, and such
application states that the applicants desire to communicate with other Holders
with respect to their rights under this Agreement or under the Securities and is
accompanied by a copy of the form of proxy or other communication which such
applicants propose to transmit, then the Purchase Contract Agent shall mail to
all the Holders copies of the form of proxy or other communication which is
specified in such request, with reasonable promptness after a tender to the
Purchase Contract Agent of the materials to be mailed and of payment, or
provision for the payment, of the reasonable expenses of such mailing.
Section 7.13. No Obligations of Purchase Contract Agent.
Except to the extent otherwise expressly provided in this Agreement, the
Purchase Contract Agent assumes no obligations and shall not be subject to any
liability under this Agreement, the Pledge Agreement or any Purchase Contract in
respect of the obligations of the Holder of any Security thereunder. The
Company agrees, and each Holder of a Certificate, by his or her acceptance
thereof, shall be deemed to have agreed, that the Purchase Contract Agent's
execution of the Certificates on behalf of the Holders shall be solely as agent
and attorney-in-fact for the Holders, and that the Purchase Contract Agent shall
have no obligation to perform such Purchase Contracts on behalf of the Holders,
except to the extent expressly provided in Article Five hereof. Anything
contained in this Agreement to the contrary notwithstanding, in no event shall
the Purchase Contract Agent or its officers, employees or agents be liable under
this Agreement to any third party for indirect, special, punitive, or
consequential loss or damage of any kind whatsoever, including lost profits,
whether or not the likelihood of such loss or damage was known to the Purchase
Contract Agent and regardless of the form of action.
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Section 7.14. Tax Compliance.
(a) The Company and the Purchase Contract Agent will comply with all
applicable certification, information reporting and withholding (including
"backup" withholding) requirements imposed by applicable tax laws, regulations
or administrative practice with respect to (i) in the case of the Company and
the Purchase Contract Agent, any payments made with respect to the Securities or
(ii) in the case of the Company, the issuance, delivery, holding, transfer,
redemption or exercise of rights under the Securities. Such compliance shall
include, without limitation, the preparation and timely filing of required
returns and the timely payment of all amounts required to be withheld to the
appropriate taxing authority or its designated agent.
(b) The Purchase Contract Agent shall comply in accordance with the terms
hereof with any written direction received from the Company with respect to the
execution or certification of any required documentation and the application of
such requirements to particular payments or Holders or in other particular
circumstances, and may for purposes of this Agreement conclusively rely on any
such direction in accordance with the provisions of Section 7.01(a)(2) hereof.
(c) The Purchase Contract Agent shall maintain all appropriate records
documenting compliance with such requirements, and shall make such records
available, on written request, to the Company or its authorized representative
within a reasonable period of time after receipt of such request.
ARTICLE VIII
SUPPLEMENTAL AGREEMENTS
Section 8.01. Supplemental Agreements Without Consent of Holders.
Without the consent of any Holders, the Company, when authorized by a Board
Resolution, and the Purchase Contract Agent, at any time and from time to time,
may enter into one or more agreements supplemental hereto, in form satisfactory
to the Company and the Purchase Contract Agent, to:
(1) evidence the succession of another Person to the Company, and the
assumption by any such successor of the covenants of the Company herein and
in the Certificates;
(2) evidence and provide for the acceptance of appointment hereunder
by a successor Purchase Contract Agent;
(3) add to the covenants of the Company for the benefit of the
Holders, or surrender any right or power herein conferred upon the Company;
(4) make provision with respect to the rights of Holders pursuant to
the requirements of Section 5.04(b); or
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(5) except as provided for in Section 5.04, cure any ambiguity,
correct or supplement any provisions herein which may be inconsistent with
any other provisions herein, or make any other provisions with respect to
such matters or questions arising under this Agreement, provided that such
action shall not adversely affect the interests of the Holders in any
material respect.
Section 8.02. Supplemental Agreements with Consent of Holders.
With the consent of the Holders of not less than a majority of the
outstanding Securities voting together as one class, by Act of said Holders
delivered to the Company and the Purchase Contract Agent, the Company, when
authorized by a Board Resolution, and the Purchase Contract Agent may enter into
an agreement or agreements supplemental hereto for the purpose of modifying in
any manner the terms of the Purchase Contracts, or the provisions of this
Agreement or the rights of the Holders in respect of the Securities; provided,
however, that, except as contemplated herein, no such supplemental agreement
shall, without the unanimous consent of the Holders of each outstanding Purchase
Contract affected thereby,
(1) change any Payment Date;
(2) change the amount or the type of Collateral required to be
Pledged to secure a Holder's obligations under the Purchase Contract,
impair the right of the Holder of any Purchase Contract to receive
distributions on the related Collateral or otherwise adversely affect the
Holder's rights in or to such Collateral or adversely alter the rights in
or to such Collateral;
(3) impair the right to institute suit for the enforcement of any
Purchase Contract, any Purchase Contract Payments or any deferred Purchase
Contract Payments;
(4) reduce the number of shares of Common Stock or the amount of any
other property to be purchased pursuant to any Purchase Contract, increase
the price to purchase shares of Common Stock or any other property upon
settlement of any Purchase Contract or change the Purchase Contract
Settlement Date or the right to Early Settlement following a Cash Merger or
otherwise adversely affect the Holder's rights under the Purchase Contract;
(5) reduce any Purchase Contract Payments or deferred Purchase
Contract Payments or change any place where, or the coin or currency in
which, any Purchase Contract Payment is payable; or
(6) reduce the percentage of the outstanding Purchase Contracts the
consent of whose Holders is required for any modification or amendment to
the provisions of this Agreement, the Purchase Contracts or the Pledge
Agreement to less than a majority;
provided that if any amendment or proposal referred to above would adversely
affect only the Income Equity Units or the Growth Equity Units, then only the
affected class of Holders as of the record date for the Holders entitled to vote
thereon will be entitled to vote on such amendment or proposal, and such
amendment or proposal shall not be effective except with the consent of Holders
of not less than a majority of such class; and provided, further, that the
70
unanimous consent of the Holders of each outstanding Purchase Contract of such
class affected thereby shall be required to approve any amendment or proposal
specified in clauses (1) through (6) above.
It shall not be necessary for any Act of Holders under this Section to
approve the particular form of any proposed supplemental agreement, but it shall
be sufficient if such Act shall approve the substance thereof.
Section 8.03. Execution of Supplemental Agreements.
In executing, or accepting the additional agencies created by, any
supplemental agreement permitted by this Article or the modifications thereby of
the agencies created by this Agreement, the Purchase Contract Agent shall be
provided, and (subject to Section 7.01) shall be fully protected in relying
upon, an Officers' Certificate and an Opinion of Counsel stating that the
execution of such supplemental agreement is authorized or permitted by this
Agreement and that any and all conditions precedent to the execution and
delivery of such supplemental agreement have been satisfied. The Purchase
Contract Agent may, but shall not be obligated to, enter into any such
supplemental agreement which affects the Purchase Contract Agent's own rights,
duties or immunities under this Agreement or otherwise.
Section 8.04. Effect of Supplemental Agreements.
Upon the execution of any supplemental agreement under this Article, this
Agreement shall be modified in accordance therewith, and such supplemental
agreement 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 hereunder, shall be bound thereby.
Section 8.05. Reference to Supplemental Agreements.
Certificates authenticated, executed on behalf of the Holders and delivered
after the execution of any supplemental agreement pursuant to this Article may,
and shall if required by the Purchase Contract Agent, bear a notation in form
approved by the Purchase Contract Agent as to any matter provided for in such
supplemental agreement. If the Company shall so determine, new Certificates so
modified as to conform, in the opinion of the Purchase Contract Agent and the
Company, to any such supplemental agreement may be prepared and executed by the
Company and authenticated, executed on behalf of the Holders and delivered by
the Purchase Contract Agent in exchange for outstanding Certificates.
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ARTICLE IX
CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE
Section 9.01. Covenant Not to Consolidate, Merge, Convey, Transfer or Lease
Property Except under Certain Conditions.
The Company covenants that it will not consolidate with or merge into any
other entity or sell, assign, transfer, lease or convey, all or substantially
all of its properties and assets to any Person, unless:
(i) either the Company shall be the continuing corporation, or the
successor (if other than the Company) shall be a corporation organized and
existing under the laws of the United States of America or a State thereof
or the District of Columbia and such corporation shall expressly assume all
the obligations of the Company under the Purchase Contracts, this
Agreement, the Pledge Agreement, the Indenture (including any supplement
thereto), the Notes and the Remarketing Agreement by one or more
supplemental agreements in form reasonably satisfactory to the Purchase
Contract Agent and the Collateral Agent, executed and delivered to the
Purchase Contract Agent and the Collateral Agent by such corporation; and
(ii) the Company or such successor corporation, as the case may be,
shall not, immediately after such consolidation, merger, sale, assignment,
transfer, lease or conveyance, be in default in its payment obligations
under the Purchase Contracts, the Notes, the Indenture (including any
supplement thereto), the Remarketing Agreement, the Pledge Agreement or
this Agreement or in material default in the performance of any of its
other obligations under such agreements.
Section 9.02. Rights and Duties of Successor Corporation.
In case of any such merger, consolidation, share exchange, sale,
assignment, transfer, lease or conveyance and upon any such assumption by a
successor corporation in accordance with Section 9.01, such successor
corporation shall succeed to and be substituted for the Company with the same
effect as if it had been named herein as the Company. Such successor
corporation thereupon may cause to be signed, and may issue either in its own
name or in the name of Sempra Energy, any or all of the Certificates evidencing
Securities issuable hereunder which theretofore shall not have been signed by
the Company and delivered to the Purchase Contract Agent; and, upon the order of
such successor corporation, instead of the Company, and subject to all the
terms, conditions and limitations in this Agreement prescribed, the Purchase
Contract Agent shall authenticate and execute on behalf of the Holders and
deliver any Certificates which previously shall have been signed and delivered
by the officers of the Company to the Purchase Contract Agent for authentication
and execution, and any Certificate evidencing Securities which such successor
corporation thereafter shall cause to be signed and delivered to the Purchase
Contract Agent for that purpose. All the Certificates issued shall in all
respects have the same legal rank and benefit under this Agreement as the
Certificates theretofore or thereafter issued in accordance with the terms of
this Agreement as though all of such Certificates had been issued at the date of
the execution hereof.
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In case of any such merger, consolidation, share exchange, sale,
assignment, transfer, lease or conveyance such change in phraseology and form
(but not in substance) may be made in the Certificates evidencing Securities
thereafter to be issued as may be appropriate.
Section 9.03. Officers' Certificate and Opinion of Counsel Given to
Purchase Contract Agent.
The Purchase Contract Agent, subject to Sections 7.01 and 7.03, shall
receive an Officers' Certificate and an Opinion of Counsel as conclusive
evidence that any such merger, consolidation, share exchange, sale, assignment,
transfer, lease or conveyance, and any such assumption, complies with the
provisions of this Article and that all conditions precedent to the consummation
of any such merger, consolidation, share exchange, sale, assignment, transfer,
lease or conveyance have been met.
ARTICLE X
COVENANTS
Section 10.01. Performance under Purchase Contracts.
The Company covenants and agrees for the benefit of the Holders from time
to time of the Securities that it will duly and punctually perform its
obligations under the Purchase Contracts in accordance with the terms of the
Purchase Contracts and this Agreement.
Section 10.02. Maintenance of Office or Agency.
The Company will maintain in the Borough of Manhattan, New York City an
office or agency where Certificates may be presented or surrendered for
acquisition of shares of Common Stock upon settlement of the Purchase Contracts
on the Purchase Contract Settlement Date or Early Settlement and for transfer of
Collateral upon occurrence of a Termination Event, where Certificates may be
surrendered for registration of transfer or exchange, for a Collateral
Substitution or reestablishment of Income Equity Units and where notices and
demands to or upon the Company in respect of the Securities and this Agreement
may be served. The Company will give prompt written notice to the Purchase
Contract Agent of the location, and any change in the location, of such office
or agency. The Company initially designates the Corporate Trust Office of the
Purchase Contract Agent as such office of the Company. If at any time the
Company shall fail to maintain any such required office or agency or shall fail
to furnish the Purchase Contract Agent with the address thereof, such
presentations, surrenders, notices and demands may be made or served at the
Corporate Trust Office, and the Company hereby appoints the Purchase Contract
Agent as its agent to receive all such presentations, surrenders, notices and
demands.
The Company may also from time to time designate one or more other offices
or agencies where Certificates may be presented or surrendered for any or all
such purposes and may from time to time rescind such designations; provided,
however, that no such designation or rescission shall in any manner relieve the
Company of its obligation to maintain an office or agency in the Borough of
Manhattan, New York City for such purposes. The Company will give prompt written
notice to the Purchase Contract Agent of any such designation or rescission and
of any
73
change in the location of any such other office or agency. The Company hereby
designates as the place of payment for the Securities the Corporate Trust Office
and appoints the Purchase Contract Agent at its Corporate Trust Office as paying
agent in such city.
Section 10.03. Company to Reserve Common Stock.
The Company shall at all times prior to the Purchase Contract Settlement
Date reserve and keep available, free from preemptive rights, out of its
authorized but unissued Common Stock the full number of shares of Common Stock
issuable against tender of payment in respect of all Purchase Contracts
constituting a part of the Securities evidenced by Outstanding Certificates.
Section 10.04. Covenants as to Common Stock.
The Company covenants that all shares of Common Stock which may be issued
against tender of payment in respect of any Purchase Contract constituting a
part of the Outstanding Securities will, upon issuance, be duly authorized,
validly issued, fully paid and nonassessable.
Section 10.05. Statements of Officers of the Company as to Default.
The Company will deliver to the Purchase Contract Agent, within 120 days
after the end of each fiscal year of the Company (which as of the date hereof is
December 31) ending after the date hereof, an Officers' Certificate (one of the
signers of which shall be the principal executive officer, principal financial
officer or principal accounting officer of the Company), stating whether or not
to the knowledge of the signers thereof the Company is in default in the
performance and observance of any of the terms, provisions and conditions
hereof, and if the Company shall be in default, specifying all such defaults and
the nature and status thereof of which they may have knowledge.
Section 10.06. ERISA.
Each Holder from time to time of the Securities that is a Plan or who used
assets of a Plan to purchase Securities hereby represents that its acquisition
of the Income Equity Units and the holding of the same satisfies the applicable
fiduciary requirements of ERISA and that it is entitled to exemption relief from
the prohibited transaction provisions of ERISA and the Code in accordance with
one or more prohibited transaction exemptions or otherwise will not result in a
nonexempt prohibited transaction.
Section 10.07. Tax Treatment.
The Company covenants and agrees to treat each Holder as the owner, for
United States federal income tax purposes, of the applicable interest in the
Collateral Account, including the Notes and Applicable Ownership Interest of the
Treasury Portfolio or the Treasury Securities.
[SIGNATURES ON THE FOLLOWING PAGE]
74
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
SEMPRA ENERGY
By: /s/ Charles A. McMonagle
------------------------------------
Name: Charles A. McMonagle
Title: Vice President and Treasurer
U.S. BANK TRUST NATIONAL ASSOCIATION,
as Purchase Contract Agent
By: /s/ Marlene J. Fahey
------------------------------------
Name: Marlene J. Fahey
Title: Vice President
EXHIBIT A
(FORM OF FACE OF INCOME EQUITY UNITS CERTIFICATE)
[For inclusion in Global Certificates only - THIS CERTIFICATE IS A GLOBAL
CERTIFICATE WITHIN THE MEANING OF THE PURCHASE CONTRACT AGREEMENT HEREINAFTER
REFERRED TO AND IS REGISTERED IN THE NAME OF CEDE & CO., AS THE NOMINEE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION (THE "DEPOSITARY"), THE
DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY. THIS CERTIFICATE IS
EXCHANGEABLE FOR CERTIFICATES REGISTERED IN THE NAME OF A PERSON OTHER THAN THE
DEPOSITARY OR ITS NOMINEE ONLY IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE
PURCHASE CONTRACT AGREEMENT AND NO TRANSFER OF THIS CERTIFICATE (OTHER THAN A
TRANSFER OF THIS CERTIFICATE AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE
DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER
NOMINEE OF THE DEPOSITARY) MAY BE REGISTERED EXCEPT IN LIMITED CIRCUMSTANCES.
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITARY FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY
CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITARY (AND ANY PAYMENT
HEREON IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF THE DEPOSITARY), ANY TRANSFER, PLEDGE OR OTHER USE
HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE THE
REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.]
No. ____ CUSIP No. _____________
Number of Income Equity Units: ______________
SEMPRA ENERGY
Income Equity Units
This Income Equity Units Certificate certifies that _______ is the
registered Holder of the number of Income Equity Units set forth above [For
inclusion in Global Certificates only - or such other number of Income Equity
Units reflected in the Schedule of Increases or Decreases in Global Certificate
attached hereto]. Each Income Equity Unit consists of (i) either (a) the
beneficial ownership by the Holder of $25 principal amount of 5.60% Senior Notes
due 2007 (the "NOTES") of Sempra Energy, a California corporation (the
"COMPANY"), subject to the Pledge of such Note by such Holder pursuant to the
Pledge Agreement, or (b) upon the occurrence of a Tax Event Redemption Date
prior to the Purchase Contract Settlement Date, a Successful Initial Remarketing
or a Successful Secondary Remarketing, the appropriate Applicable Ownership
Interest (as specified in clause (A) of the definition of such term) of the
Treasury Portfolio by such Holder pursuant to the Pledge Agreement, and (ii) the
rights and
obligations of the Holder under one Purchase Contract with the Company. All
capitalized terms used herein which are defined in the Purchase Contract
Agreement (as defined on the reverse hereof) have the meaning set forth therein.
Pursuant to the Pledge Agreement, the Notes or the appropriate Applicable
Ownership Interest (as specified in clause (A) of the definition of such term)
of the Treasury Portfolio, as the case may be, constituting part of each Income
Equity Unit evidenced hereby have been pledged to the Collateral Agent, for the
benefit of the Company, to secure the obligations of the Holder under the
Purchase Contract comprising part of such Income Equity Unit.
The Pledge Agreement provides that all payments of the principal amount
with respect to any of the Pledged Notes or the appropriate Applicable Ownership
Interest (as specified in clause (A) of the definition of such term) of the
Treasury Portfolio, as the case may be, or interest on any Pledged Notes (as
defined in the Pledge Agreement) or the appropriate Applicable Ownership
Interest (as specified in clause (B) of the definition of such term) of the
Treasury Portfolio, as the case may be, constituting part of the Income Equity
Units received by the Securities Intermediary shall be paid by wire transfer in
same day funds (i) in the case of (A) interest on Pledged Notes or cash
distributions with respect to the appropriate Applicable Ownership Interest (as
specified in clause (B) of the definition of such term) of the Treasury
Portfolio, as the case may be, and (B) any payments of the principal amount of
any Notes or liquidation amount with respect to 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, that have been released from the
Pledge pursuant to the Pledge Agreement, to the Purchase Contract Agent to the
account designated by the Purchase Contract Agent, no later than 2:00 p.m., New
York City time, on the Business Day such payment is received by the Securities
Intermediary (provided that in the event such payment is received by the
Securities Intermediary on a day that is not a Business Day or after 12:30 p.m.,
New York City time, on a Business Day, then such payment shall be made no later
than 10:30 a.m., New York City time, on the next succeeding Business Day) and
(ii) in the case of payments of the principal amount of the Notes or the
liquidation amount with respect to the appropriate Applicable Ownership Interest
(as specified in clause (A) of the definition of such term) of the Treasury
Portfolio, to the Company on the Purchase Contract Settlement Date (as described
herein) in accordance with the terms of the Pledge Agreement, in full
satisfaction of the respective obligations of the Holders of the Income Equity
Units of which such Pledged Notes or the Applicable Ownership Interest (as
specified in clause (A) of the definition of such term) of the Treasury
Portfolio, as the case may be, are a part under the Purchase Contracts forming a
part of such Income Equity Units. Interest on the Notes and distributions on the
appropriate Applicable Ownership Interest (as specified in clause (B) of the
definition of such term) of the Treasury Portfolio, as the case may be, forming
part of an Income Equity Unit evidenced hereby, which are payable quarterly in
arrears on February 17, May 17, August 17 and November 17 of each year,
commencing August 17, 2002 (a "PAYMENT DATE"), shall, subject to receipt thereof
by the Purchase Contract Agent from the Securities Intermediary, be paid to the
Person in whose name this Income Equity Units Certificate (or a Predecessor
Income Equity Units Certificate) is registered at the close of business on the
Record Date for such Payment Date.
Each Purchase Contract evidenced hereby obligates the Holder of this Income
Equity Units Certificate to purchase, and the Company to sell, on May 17, 2005
(the "PURCHASE
A-2
CONTRACT SETTLEMENT DATE"), at a price equal to $25 (the "STATED AMOUNT"), a
number of newly issued shares of Common Stock, without par value ("COMMON
STOCK"), of the Company, equal to the Settlement Rate, unless on or prior to the
Purchase Contract Settlement Date there shall have occurred a Termination Event
or an Early Settlement with respect to the Income Equity Unit of which such
Purchase Contract is a part, all as provided in the Purchase Contract Agreement
and more fully described on the reverse hereof. The purchase price (the
"PURCHASE PRICE") for the shares of Common Stock purchased pursuant to each
Purchase Contract evidenced hereby, if not paid earlier, shall be paid on the
Purchase Contract Settlement Date by application of payment received in respect
of the principal amount with respect to any Pledged Notes pursuant to the
Remarketing 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, pledged to secure the obligations under such Purchase Contract of
the Holder of the Income Equity Unit of which such Purchase Contract is a part.
The Company shall pay, on each Payment Date, in respect of each Purchase
Contract forming part of an Income Equity Unit evidenced hereby, an amount (the
"Purchase Contract Payments") equal to 2.90% per year of the Stated Amount. Such
Purchase Contract Payments shall be payable to the Person in whose name this
Income Equity Units Certificate is registered at the close of business on the
Record Date for such Payment Date. The Company may, at its option, defer such
Purchase Contract Payments.
Interest on the Notes and distributions on the Applicable Ownership
Interest (as specified in clause (B) of the definition of such term) and the
Purchase Contract Payments will be payable at the office of the Purchase
Contract Agent in New York City or, at the option of the Company, by check
mailed to the address of the Person entitled thereto as such address appears on
the Security Register.
Reference is hereby made to the further provisions set forth on the reverse
hereof, which further provisions shall for all purposes have the same effect as
if set forth at this place.
Unless the certificate of authentication hereon has been executed by the
Purchase Contract Agent by manual signature, this Income Equity Units
Certificate shall not be entitled to any benefit under the Pledge Agreement or
the Purchase Contract Agreement or be valid or obligatory for any purpose.
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IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed.
SEMPRA ENERGY
By: ________________________________
Name:
Title:
HOLDER SPECIFIED ABOVE (as to obligations
of such Holder under the Purchase
Contracts)
By: U.S. BANK TRUST NATIONAL ASSOCIATION,
not individually but solely as
Attorney-in-Fact of such Holder
By: ________________________________
Authorized Officer
DATED: April 30, 2002
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CERTIFICATE OF AUTHENTICATION
OF PURCHASE CONTRACT AGENT
This is one of the Income Equity Units Certificates referred to in the
within mentioned Purchase Contract Agreement.
By: U.S. BANK TRUST NATIONAL ASSOCIATION,
as Purchase Contract Agent
By:_________________________________
Authorized Officer
Dated: April 30, 2002
A-5
(FORM OF REVERSE OF INCOME EQUITY UNITS CERTIFICATE)
Each Purchase Contract evidenced hereby is governed by a Purchase Contract
Agreement, dated as of April 30, 2002 (as may be supplemented from time to time,
the "PURCHASE CONTRACT AGREEMENT"), between the Company and U.S. Bank Trust
National Association, as Purchase Contract Agent (including its successors
hereunder, the "PURCHASE CONTRACT AGENT"), to which Purchase Contract Agreement
and supplemental agreements thereto reference is hereby made for a description
of the respective rights, limitations of rights, obligations, duties and
immunities thereunder of the Purchase Contract Agent, the Company, and the
Holders and of the terms upon which the Income Equity Units Certificates are,
and are to be, executed and delivered.
Unless a Cash Settlement or an Early Settlement has occurred, each Purchase
Contract evidenced hereby obligates the Holder of this Income Equity Units
Certificate to purchase, and the Company to sell, on the Purchase Contract
Settlement Date at a price equal to the Stated Amount (the "PURCHASE PRICE"), a
number of shares of Common Stock equal to the Settlement Rate, unless, prior to
or on the Purchase Contract Settlement Date, there shall have occurred a
Termination Event with respect to the Security of which such Purchase Contract
is a part or an Early Settlement shall have occurred. The "SETTLEMENT RATE" is
equal to:
(1) if the Applicable Market Value (as defined below) is greater than
or equal to $30.5244 (the "THRESHOLD APPRECIATION PRICE"), 0.8190 shares of
Commo n Stock per Purchase Contract;
(2) if the Applicable Market Value is less than the Threshold
Appreciation Price but is greater than $25.02 (the "REFERENCE PRICE"), the
number of shares of Common Stock per Purchase Contract having a value equal
to the Stated Amount divided by the Applicable Market Value; and
(3) if the Applicable Market Value is less than or equal to the
Reference Price, 0.9992 shares of Common Stock per Purchase Contract,
in each case subject to adjustment as provided in the Purchase Contract
Agreement (and in each case rounded upward or downward to the nearest 1/10,000th
of a share).
No fractional shares of Common Stock will be issued upon settlement of
Purchase Contracts, as provided in Section 5.09 of the Purchase Contract
Agreement.
Each Purchase Contract evidenced hereby, which is settled either through
Early Settlement or Cash Settlement, shall obligate the Holder of the related
Income Equity Unit to purchase at the Purchase Price, and the Company to sell, a
number of newly issued shares of Common Stock equal to the Early Settlement Rate
or the Settlement Rate, as applicable.
The "APPLICABLE MARKET VALUE" means the average of the Closing Price per
share of Common Stock on each of the 20 consecutive Trading Days ending on the
third Trading Day immediately preceding the Purchase Contract Settlement Date.
The "CLOSING PRICE" per share of Common Stock on any date of
determination means:
A-6
(1) the closing sale price as of the close of the principal trading
session (or, if no closing price is reported, the last reported sale price)
per s hare on the New York Stock Exchange, Inc. (the "NYSE") on such date;
(2) if Common Stock is not listed for trading on the NYSE on any such
date, the closing sale price per share as reported in the composite
transactions for the principal United States securities exchange on which
Common Stock is so listed;
(3) if Common Stock is not so listed on a United States national or
regional securities exchange, the closing sale price per share as reported
by The Nasdaq Stock Market;
(4) if Common Stock is not so reported, the last quoted bid price for
Common Stock in the over-the-counter market as reported by the National
Quotation Bureau or similar organization; or
(5) if such bid price is not available, the market value of Common
Stock on such date as determined by a nationally recognized independent
investment banking firm retained for this purpose by the Company.
A "TRADING DAY" means a day on which Common Stock (1) is not suspended from
trading on any national or regional securities exchange or association or over-
the-counter market at the close of business and (2) has traded at least once on
the national or regional securities exchange or association or over-the-counter
market that is the primary market for the trading of Common Stock.
In accordance with the terms of the Purchase Contract Agreement, the Holder
of this Income Equity Units Certificate may pay the Purchase Price for the
shares of Common Stock purchased pursuant to each Purchase Contract evidenced
hereby by effecting a Cash Settlement or an Early Settlement or from the
proceeds of the Applicable Ownership Interest (as specified in clause (A) of the
definition of such term) of the Treasury Portfolio or a Remarketing of the
related Pledged Notes. Unless a Tax Event Redemption, a Successful Initial
Remarketing or a Successful Secondary Remarketing has occurred, a Holder of
Income Equity Units who does not (1) on or prior to 11:00 a.m. (New York City
time) on the fifth Business Day immediately preceding the Purchase Contract
Settlement Date, notify the Purchase Contract Agent of its intention to effect a
Cash Settlement, (2) on or prior to 5:00 p.m. (New York City time) on the fifth
Business Day prior to the Purchase Contract Settlement Date, make an effective
Early Settlement, shall pay the Purchase Price for the shares of Common Stock to
be delivered under the related Purchase Contract from the proceeds of the sale
of the related Pledged Notes held by the Collateral Agent. Unless a Tax Event
Redemption, a Successful Initial Remarketing or a Successful Secondary
Remarketing has occurred, such sale will be made by the Remarketing Agent
pursuant to the terms of the Remarketing Agreement on the third Business Day
prior to the Purchase Contract Settlement Date. If a Tax Event Redemption Date,
a Successful Initial Remarketing or a Successful Secondary Remarketing has
occurred, a Holder of Income Equity Units who does not notify the Purchase
Contract Agent, on or prior to 11:00 a.m. (New York City time) on the second
Business Day immediately preceding the Purchase Contract Settlement Date, of its
intention to effect a Cash Settlement or an Early Settlement, shall pay the
Purchase
A-7
Price for the shares of Common Stock to be delivered under the related
Purchase Contract from the proceeds at maturity of the Applicable Ownership
Interests (as defined in clause (A) of the definition of such term) of the
Treasury Portfolio.
If, as provided in the Purchase Contract Agreement, (i) upon the occurrence
of a Failed Final Remarketing or (ii) if a Holder notifies the Purchase Contract
Agent of its intention to effect a Cash Settlement but fails to deliver the
purchase price in cash on or prior to the Business Day immediately preceding the
Purchase Contract Settlement Date, the Collateral Agent, for the benefit of the
Company, exercises its rights as a secured creditor with respect to the Pledged
Notes related to this Income Equity Units Certificate, any accrued and unpaid
interest on such Pledged Notes will become payable by the Company to the holder
of this Income Equity Units Certificate in the manner provided for in the
Purchase Contract Agreement.
The Company shall not be obligated to issue any shares of Common Stock in
respect of a Purchase Contract or deliver any certificates therefor to the
Holder unless it shall have received payment of the aggregate Purchase Price for
the shares of Common Stock to be purchased thereunder in the manner herein set
forth.
Each Purchase Contract evidenced hereby and all obligations and rights of
the Company and the Holder thereunder shall terminate if a Termination Event
shall occur. Upon the occurrence of a Termination Event, the Company shall give
written notice to the Purchase Contract Agent and to the Holders, at their
addresses as they appear in the Security Register. Upon and after the
occurrence of a Termination Event, the Collateral Agent shall release the
Pledged Notes or the appropriate Applicable Ownership Interest (as specified in
clause (A) of the definition of such term) of the Treasury Portfolio forming a
part of each Income Equity Unit from the Pledge. An Income Equity Unit shall
thereafter represent the right to receive the Note or the appropriate Applicable
Ownership Interest of the Treasury Portfolio forming a part of such Income
Equity Unit in accordance with the terms of the Purchase Contract Agreement and
the Pledge Agreement.
Under the terms of the Pledge Agreement, the Purchase Contract Agent
will be entitled to exercise the voting and any other consensual rights
pertaining to the Pledged Notes. Upon receipt of notice of any meeting at which
holders of Notes are entitled to vote or upon the solicitation of consents,
waivers or proxies of holders of Notes, the Purchase Contract Agent shall, as
soon as practicable thereafter, mail to the Income Equity Units Holders a
notice:
(1) containing such information as is contained in the notice or
solicitation;
(2) stating that each Income Equity Units Holder on the record date
set by the Purchase Contract Agent therefor (which, to the extent possible,
shall be the same date as the record date for determining the holders of
Notes entitled to vote) shall be entitled to instruct the Purchase Contract
Agent as to the exercise of the voting rights pertaining to the Notes
constituting a part of such Holder's Income Equity Units; and
(3) stating the manner in which such instructions may be given.
Upon the written request of the Income Equity Units Holders on such record date,
the Purchase Contract Agent shall endeavor insofar as practicable to vote or
cause to be voted, in accordance
A-8
with the instructions set forth in such requests, the maximum aggregate
principal amount of Notes as to which any particular voting instructions are
received. In the absence of specific instructions from the Holder of an Income
Equity Unit, the Purchase Contract Agent shall abstain from voting the Note
evidenced by such Income Equity Unit.
Subject to Section 4.03 of the Purchase Contract Agreement, upon the
occurrence of a Tax Event Redemption Date prior to the Purchase Contract
Settlement Date, an amount equal to the Redemption Amount plus any accumulated
and unpaid interest payable on the Tax Event Redemption Date with respect to the
principal amount of the Notes that are components of the Income Equity Units
shall be deposited in the Collateral Account in exchange for the Pledged Notes.
Thereafter, pursuant to the terms of the Pledge Agreement, the Collateral Agent
shall cause the Securities Intermediary to apply an amount equal to the
Redemption Amount of such funds to purchase on behalf of the Holders of Income
Equity Units, the Treasury Portfolio and promptly (a) transfer the Applicable
Ownership Interest (as specified in clause (A) of the definition of such term)
of the Treasury Portfolio to the Collateral Account to secure the obligations of
each Holder of Income Equity Units to purchase shares of Common Stock under the
Purchase Contracts constituting a part of such Income Equity Units, (b) 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 the
benefit of the Holders of such Income Equity Units and (C) remit the remaining
portion of such funds to the Purchase Contract Agent for payment to the Holders
of such Income Equity Units.
Upon the occurrence of a Successful Initial Remarketing or a Successful
Secondary Remarketing, pursuant to the terms of the Remarketing Agreement, the
Remarketing Agent will apply an amount equal to the Treasury Portfolio Purchase
Price to purchase on behalf of the Holders of Income Equity Units, the Treasury
Portfolio, and, after deducting the Remarketing Fee to the extent permitted
under the terms of the Remarketing Agreement, promptly remit the remaining
portion of such proceeds of the Successful Initial Remarketing or Successful
Secondary Remarketing to the Purchase Contract Agent for payment to the Holders
of such Income Equity Units.
Following the occurrence of a Tax Event Redemption Date prior to the
Purchase Contract Settlement Date, or following a Successful Initial Remarketing
or a Successful Final Remarketing, the Holders of Income Equity Units and the
Collateral Agent shall have such security interest rights and obligations with
respect to the Applicable Ownership Interest (as specified in clause (A) of the
definition of such term) of the Treasury Portfolio as the Holder of Income
Equity Units and the Collateral Agent had in respect of the Notes, as the case
may be, subject to the Pledge thereof as provided in the Pledge Agreement and
any reference herein to the Notes shall be deemed to be a reference to such
Treasury Portfolio.
The Income Equity Units Certificates are issuable only in registered form
and only in denominations of a single Income Equity Unit and any integral
multiple thereof. The transfer of any Income Equity Units Certificate will be
registered and Income Equity Units Certificates may be exchanged as provided in
the Purchase Contract Agreement. The Security Registrar may require a Holder,
among other things, to furnish appropriate endorsements and transfer documents
permitted by the Purchase Contract Agreement. No service charge shall be
required for any such registration of transfer or exchange, but the Company and
the Purchase Contract Agent may require payment of a sum sufficient to cover any
tax or other governmental charge
A-9
payable in connection therewith. A Holder who elects to substitute a Treasury
Security for a Note, thereby creating a Growth Equity Unit, shall be responsible
for any fees or expenses payable in connection therewith. Except as provided in
the Purchase Contract Agreement, for so long as the Purchase Contract underlying
an Income Equity Unit remains in effect, such Income Equity Unit shall not be
separable into its constituent parts, and the rights and obligations of the
Holder of such Income Equity Unit in respect of the Note and Purchase Contract
constituting such Income Equity Unit may be transferred and exchanged only as an
Income Equity Unit.
The Holder of Income Equity Units may substitute for the Pledged Notes
securing such Holder's obligations under the related Purchase Contracts Treasury
Securities in an aggregate principal amount equal to the aggregate principal
amount of the Pledged Notes in accordance with the terms of the Purchase
Contract Agreement and the Pledge Agreement. From and after such Collateral
Substitution, each Security for which such Pledged Treasury Securities secures
the Holder's obligation under the Purchase Contract shall be referred to as a
"GROWTH EQUITY UNIT". A Holder may make such Collateral Substitution only in
integral multiples of 40 Income Equity Units for 40 Growth Equity Units.
If the Treasury Portfolio has replaced the Notes as a component of the
Income Equity Units as a result of a Tax Event Redemption, a Successful Initial
Remarketing or a Successful Secondary Remarketing, an Income Equity Units Holder
may make such Collateral Substitutions only in integral multiples of 20,000
Income Equity Units.
A Holder of Growth Equity Units may recreate Income Equity Units by
delivering to the Securities Intermediary Notes with an aggregate principal
amount equal to the aggregate principal amount at maturity of the Pledged
Treasury Securities in exchange for the release of such Pledged Treasury
Securities in accordance with the terms of the Purchase Contract Agreement and
the Pledge Agreement. A Holder may recreate Income Equity Units only in
integral multiples of 40 Growth Equity Units for 40 Income Equity Units.
If the Treasury Portfolio has replaced the Notes as a component of the
Income Equity Units as a result of a Tax Event Redemption, a Successful Initial
Remarketing or a Successful Secondary Remarketing, a Growth Equity Units Holder
may recreate Income Equity Units only in integral multiples of 20,000 Growth
Equity Units.
The Company shall pay, on each Payment Date, the Purchase Contract Payments
payable in respect of each Purchase Contract to the Person in whose name the
Income Equity Units Certificate evidencing such Purchase Contract is registered
at the close of business on the Record Date for such Payment Date. Purchase
Contract Payments will be payable at the office of the Purchase Contract Agent
in New York City or, at the option of the Holder, by check mailed to the address
of the Person entitled thereto at such address as it appears on the Security
Register.
The Company has the right to defer payment of all or part of the Purchase
Contract Payments in respect of each Purchase Contract until no later than the
Purchase Contract Settlement Date. If the Company so elects to defer Purchase
Contract Payments, the Company shall pay additional Purchase Contract Payments
on such deferred installments of Purchase Contract Payments at a rate equal to
8.50% per annum, compounding quarterly, until such deferred installments are
paid. In the event that the Company elects to defer the payment of
A-10
Purchase Contract Payments on the Purchase Contracts until the Purchase Contract
Settlement Date, each Holder will receive on the Purchase Contract Settlement
Date the aggregate amount of accrued and unpaid Purchase Contract Payments.
The Purchase Contracts and all obligations and rights of the Company and
the Holders thereunder, including, without limitation, the rights of the Holders
to receive and the obligation of the Company to pay any Purchase Contract
Payments, shall immediately and automatically terminate, without the necessity
of any notice or action by any Holder, the Purchase Contract Agent or the
Company, if, on or prior to the Purchase Contract Settlement Date, a Termination
Event shall have occurred. Upon the occurrence of a Termination Event, the
Company shall promptly but in no event later than two Business Days thereafter
give written notice to the Purchase Contract Agent, the Collateral Agent and the
Holders, at their addresses as they appear in the Security Register. Upon and
after the occurrence of a Termination Event, the Collateral Agent shall release
the Notes or the appropriate Applicable Ownership Interest (as specified in
clause (A) of the definition of such term) of the Treasury Portfolio, as the
case may be, from the Pledge in accordance with the provisions of the Pledge
Agreement.
Upon the occurrence of a Cash Merger, a Holder of Income Equity Units may
effect Early Settlement of the Purchase Contract underlying such Income Equity
Units pursuant to the terms of Section 5.04(b)(2) of the Purchase Contract
Agreement. In addition, a Holder of Income Equity Units may effect Early
Settlement of the Purchase Contract underlying such Income Equity Units pursuant
to the terms of Section 5.07 of the Purchase Contract Agreement. Upon Early
Settlement of Purchase Contracts by a Holder of the related Income Equity Units,
the Pledged Notes or Pledged Applicable Ownership Interests (as specified in
clause (A) of the definition of such term) of the Treasury Portfolio underlying
such Income Equity Units shall be released from the Pledge as provided in the
Pledge Agreement.
Upon registration of transfer of this Income Equity Units Certificate, the
transferee shall be bound (without the necessity of any other action on the part
of such transferee, except as may be required by the Purchase Contract Agent
pursuant to the Purchase Contract Agreement) under the terms of the Purchase
Contract Agreement and the Purchase Contracts evidenced hereby and the
transferor shall be released from the obligations under the Purchase Contracts
evidenced by this Income Equity Units Certificate. The Company covenants and
agrees, and the Holder, by its acceptance hereof, likewise covenants and agrees,
to be bound by the provisions of this paragraph.
The Holder of this Income Equity Units Certificate, by its acceptance
hereof, authorizes the Purchase Contract Agent to enter into and perform the
related Purchase Contracts forming part of the Income Equity Units evidenced
hereby on its behalf as its attorney-in-fact, expressly withholds any consent to
the assumption (i.e., affirmance) of the Purchase Contracts by the Company or
its trustee in the event that the Company becomes the subject of a case under
the Bankruptcy Code, agrees to be bound by the terms and provisions thereof,
covenants and agrees to perform his obligations under such Purchase Contracts,
consents to the provisions of the Purchase Contract Agreement, authorizes the
Purchase Contract Agent to enter into and perform the Purchase Contract
Agreement and the Pledge Agreement on its behalf as its attorney-in-fact, and
consents to the Pledge of the Notes or the appropriate Applicable Ownership
Interest (as specified in clause (A) of the definition of such term) of the
Treasury Portfolio, as the case may
A-11
be, underlying this Income Equity Units Certificate pursuant to the Pledge
Agreement. The Holder further covenants and agrees that, to the extent and in
the manner provided in the Purchase Contract Agreement and the Pledge Agreement,
but subject to the terms thereof, payments in respect to the aggregate principal
amount of the Pledged Notes or the appropriate Applicable Ownership Interest (as
specified in clause (A) of the definition of such term) of the Treasury
Portfolio, as the case may be, on the Purchase Contract Settlement Date shall be
paid by the Collateral Agent to the Company in satisfaction of such Holder's
obligations under such Purchase Contract and such Holder shall acquire no right,
title or interest in such payments.
Subject to certain exceptions, the provisions of the Purchase Contract
Agreement may be amended with the consent of the Holders of a majority of the
Purchase Contracts.
The Purchase Contracts shall be governed by, and construed in accordance
with, the laws of the State of New York, without regard to conflicts of laws
principles thereof.
Prior to due presentment of this Certificate for registration of transfer,
the Company, the Purchase Contract Agent and its Affiliates and any agent of the
Company or the Purchase Contract Agent may treat the Person in whose name this
Income Equity Units Certificate is registered as the owner of the Income Equity
Units evidenced hereby for the purpose of receiving payments of interest payable
on the Notes, receiving payments of Purchase Contract Payments (subject to any
applicable record date), performance of the Purchase Contracts and for all other
purposes whatsoever, whether or not any payments in respect thereof be overdue
and notwithstanding any notice to the contrary, and neither the Company, the
Purchase Contract Agent nor any such agent shall be affected by notice to the
contrary.
The Purchase Contracts shall not, prior to the settlement thereof, entitle
the Holder to any of the rights of a holder of shares of Common Stock.
A copy of the Purchase Contract Agreement is available for inspection at
the offices of the Purchase Contract Agent.
A-12
ABBREVIATIONS
The following abbreviations, when used in the inscription on the face of
this instrument, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM: as tenants in common
UNIF GIFT MIN ACT: ___________________ Custodian ___________________
(cust) (minor)
Under Uniform Gifts to Minors Act of
TENANT: as tenants by the entireties
JT TEN: as joint tenants with right of survivorship and not as
tenants in common
Additional abbreviations may also be used though not in the above list.
____________________
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto
________________________________________________________________________________
(Please insert Social Security or Taxpayer I.D. or other Identifying Number of
Assignee)
________________________________________________________________________________
(Please Print or Type Name and Address Including Postal Zip Code of Assignee)
the within Income Equity Units Certificates and all rights thereunder, hereby
irrevocably constituting and appointing attorney __________________, to transfer
said Income Equity Units Certificates on the books of Sempra Energy, with full
power of substitution in the premises.
Dated: ____________________ Signature
NOTICE: The signature to this assignment
must correspond with the name as it
appears upon the face of the within
Income Equity Units Certificates in every
particular, without alteration or
enlargement or any change whatsoever.
Signature Guarantee: ____________________
A-13
SETTLEMENT INSTRUCTIONS
The undersigned Holder directs that a certificate for shares of Common
Stock deliverable upon settlement on or after the Purchase Contract Settlement
Date of the Purchase Contracts underlying the number of Income Equity Units
evidenced by this Income Equity Units Certificate be registered in the name of,
and delivered, together with a check in payment for any fractional share, to the
undersigned at the address indicated below unless a different name and address
have been indicated below. If shares are to be registered in the name of a
Person other than the undersigned, the undersigned will pay any transfer tax
payable incident thereto.
Dated: ____________________________
If shares are to be registered in the name of and delivered to a Person other
than the Holder, please (i) print such Person's name and address and (ii)
provide a guarantee of your signature:
________________________________________________________________________________
Name
Address
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
Social Security or other Taxpayer Identification Number, if any ________________
________________________________________________________________________________
Signature
Signature Guarantee:____________________________________________________________
(if assigned to another person)
REGISTERED HOLDER
Please print name and address of Registered Holder:
________________________________________________________________________________
Name
________________________________________________________________________________
Address
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
A-14
ELECTION TO SETTLE EARLY
The undersigned Holder of this Income Equity Units Certificate hereby
irrevocably exercises the option to effect Early Settlement [following a Cash
Merger] in accordance with the terms of the Purchase Contract Agreement with
respect to the Purchase Contracts underlying the number of Income Equity Units
evidenced by this Income Equity Units Certificate specified below. The
undersigned Holder directs that a certificate for shares of Common Stock or
other securities deliverable upon such Early Settlement be registered in the
name of, and delivered, together with a check in payment for any fractional
share and any Income Equity Units Certificate representing any Income Equity
Units evidenced hereby as to which Early Settlement of the related Purchase
Contracts is not effected, to the undersigned at the address indicated below
unless a different name and address have been indicated below. Pledged Notes or
the appropriate Applicable Ownership Interest of the Treasury Portfolio, as the
case may be, deliverable upon such Early Settlement will be transferred in
accordance with the transfer instructions set forth below. If shares are to be
registered in the name of a Person other than the undersigned, the undersigned
will pay any transfer tax payable incident thereto.
Dated: ____________________ ____________________________
Signature
Signature Guarantee: _________________
A-15
Number of Securities evidenced hereby as to which Early Settlement of the
related Purchase Contracts is being elected:
If shares of Common Stock or Income Equity Units Certificates are to be
registered in the name of and delivered to and Pledged Notes or the Applicable
Ownership Interest of the Treasury Portfolio, as the case may be, are to be
transferred to a Person other than the Holder, please print such Person's name
and address:
________________________________________________________________________________
Name
________________________________________________________________________________
Address
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
Social Security or other Taxpayer Identification Number, if any ________________
REGISTERED HOLDER
Please print name and address of Registered Holder:
________________________________________________________________________________
Name
________________________________________________________________________________
Address
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
A-16
Transfer Instructions for Pledged Notes or the Applicable Ownership Interest of
the Treasury Portfolio, as the case may be, transferable upon Early Settlement
or a Termination Event:
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
A-17
[TO BE ATTACHED TO GLOBAL CERTIFICATES]
SCHEDULE OF INCREASES OR DECREASES IN GLOBAL CERTIFICATE
The following increases or decreases in this Global Certificate have been made:
================================================================================================================
Number of Income Equity Signature of
Amount of increase in Amount of decrease in Units evidenced by this authorized signatory
Number of Income Number of Income Equity Global Certificate of Purchase Contract
Equity Units evidenced Units evidenced by the following such decrease Agent or Securities
Date by the Global Certificate Global Certificate or increase Custodian
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A-18
EXHIBIT B
(FORM OF FACE OF GROWTH EQUITY UNITS CERTIFICATE)
[For inclusion in Global Certificate only - THIS CERTIFICATE IS A GLOBAL
CERTIFICATE WITHIN THE MEANING OF THE PURCHASE CONTRACT AGREEMENT HEREINAFTER
REFERRED TO AND IS REGISTERED IN THE NAME OF CEDE & CO., AS NOMINEE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION (THE "DEPOSITARY"), THE
DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY. THIS CERTIFICATE IS
EXCHANGEABLE FOR CERTIFICATES REGISTERED IN THE NAME OF A PERSON OTHER THAN THE
DEPOSITARY OR ITS NOMINEE ONLY IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE
PURCHASE CONTRACT AGREEMENT AND NO TRANSFER OF THIS CERTIFICATE (OTHER THAN A
TRANSFER OF THIS CERTIFICATE AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE
DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER
NOMINEE OF THE DEPOSITARY) MAY BE REGISTERED EXCEPT IN LIMITED CIRCUMSTANCES.
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITARY FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY
CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITARY (AND ANY PAYMENT
HEREON IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF THE DEPOSITARY), ANY TRANSFER, PLEDGE OR OTHER USE
HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE THE
REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.]
No. ____ CUSIP No. _____________
Number of Growth Equity Units: ______________
SEMPRA ENERGY
Growth Equity Units
This Growth Equity Units Certificate certifies that __________________ is
the registered Holder of the number of Growth Equity Units set forth above [For
inclusion in Global Certificates only - or such other number of Growth Equity
Units reflected in the Schedule of Increases or Decreases in Global Certificate
attached hereto]. Each Growth Equity Units consists of (i) a 1/40 undivided
beneficial ownership interest of a Treasury Security having a principal amount
at maturity equal to $1,000, subject to the Pledge of such Treasury Security by
such Holder pursuant to the Pledge Agreement, and (ii) the rights and
obligations of the Holder under one Purchase Contract with Sempra Energy, a
California corporation (the "COMPANY"). All capitalized terms used herein which
are defined in the Purchase Contract Agreement (as defined on the reverse
hereof) have the meaning set forth therein.
Pursuant to the Pledge Agreement, the Treasury Securities constituting part
of each Growth Equity Unit evidenced hereby have been pledged to the Collateral
Agent, for the benefit of the Company, to secure the obligations of the Holder
under the Purchase Contract comprising part of such Growth Equity Unit. Each
Purchase Contract evidenced hereby obligates the Holder of this Growth Equity
Units Certificate to purchase, and the Company, to sell, on May 17, 2005 (the
"PURCHASE CONTRACT SETTLEMENT DATE"), at a price equal to $25 (the "STATED
AMOUNT"), a number of newly issued shares of Common Stock, without par value
("COMMON STOCK"), of the Company, equal to the Settlement Rate, unless prior to
or on the Purchase Contract Settlement Date there shall have occurred a
Termination Event or an Early Settlement with respect to the Growth Equity Unit
of which such Purchase Contract is a part, all as provided in the Purchase
Contract Agreement and more fully described on the reverse hereof. The purchase
price (the "PURCHASE PRICE") for the shares of Common Stock purchased pursuant
to each Purchase Contract evidenced hereby, if not paid earlier, shall be paid
on the Purchase Contract Settlement Date by application of the proceeds from the
Treasury Securities at maturity pledged to secure the obligations of the Holder
under such Purchase Contract of the Growth Equity Unit of which such Purchase
Contract is a part.
The Company shall pay, on each Payment Date, in respect of each Purchase
Contract forming part of a Growth Equity Unit evidenced hereby, an amount (the
"PURCHASE CONTRACT PAYMENTS") equal to 2.90% per year of the Stated Amount.
Such Purchase Contract Payments shall be payable to the Person in whose name
this Growth Equity Units Certificate is registered at the close of business on
the Record Date for such Payment Date. The Company may, at its option, defer
such Purchase Contract Payments.
The Purchase Contract Payments will be payable at the office of the
Purchase Contract Agent in New York City or, at the option of the Company, by
check mailed to the address of the Person entitled thereto as such address
appears on the Security Register.
Reference is hereby made to the further provisions set forth on the reverse
hereof, which further provisions shall for all purposes have the same effect as
if set forth at this place.
Unless the certificate of authentication hereon has been executed by the
Purchase Contract Agent by manual signature, this Growth Equity Units
Certificate shall not be entitled to any benefit under the Pledge Agreement or
the Purchase Contract Agreement or be valid or obligatory for any purpose.
B-2
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed.
SEMPRA ENERGY
By:______________________________________
Name:
Title:
HOLDER SPECIFIED ABOVE (as to obligations
of such Holder under the Purchase
Contracts)
By: U.S. BANK TRUST NATIONAL ASSOCIATION,
not individually but solely as
Attorney-in-Fact of such Holder
By:______________________________________
Authorized Officer
DATED: April 30, 2002
B-3
CERTIFICATE OF AUTHENTICATION
OF PURCHASE CONTRACT AGENT
This is one of the Growth Equity Units Certificates referred to in the
within-mentioned Purchase Contract Agreement.
By: U.S. BANK TRUST NATIONAL ASSOCIATION,
as Purchase Contract Agent
By:___________________________________
Authorized Officer
Dated: April 30, 2002
B-4
(REVERSE OF GROWTH EQUITY UNITS CERTIFICATE)
Each Purchase Contract evidenced hereby is governed by a Purchase Contract
Agreement, dated as of April 30, 2002 (as may be supplemented from time to time,
the "PURCHASE CONTRACT AGREEMENT") between the Company and U.S. Bank Trust
National Association, as Purchase Contract Agent (including its successors
thereunder, herein called the "PURCHASE CONTRACT AGENT"), to which the Purchase
Contract Agreement and supplemental agreements thereto reference is hereby made
for a description of the respective rights, limitations of rights, obligations,
duties and immunities thereunder of the Purchase Contract Agent, the Company and
the Holders and of the terms upon which the Growth Equity Units Certificates
are, and are to be, executed and delivered.
Unless a Cash Settlement or an Early Settlement has occurred, each Purchase
Contract evidenced hereby obligates the Holder of this Growth Equity Units
Certificate to purchase, and the Company to sell, on the Purchase Contract
Settlement Date at a price equal to the Stated Amount (the "PURCHASE PRICE") a
number of newly issued shares of Common Stock equal to the Settlement Rate,
unless prior to the Purchase Contract Settlement Date, there shall have occurred
a Termination Event with respect to the Security of which such Purchase Contract
is a part or an Early Settlement shall have occurred. The "SETTLEMENT RATE" is
equal to:
(i) if the Applicable Market Value (as defined below) is greater than
or equal to $30.5244 (the "THRESHOLD APPRECIATION PRICE"), 0.8190 shares of
Common Stock per Purchase Contract;
(ii) if the Applicable Market Value is less than the Threshold
Appreciation Price but is greater than $25.02 (the "REFERENCE PRICE"), the
number of shares of Common Stock per Purchase Contract having a value equal
to the Stated Amount divided by the Applicable Market Value; and
(1) if the Applicable Market Value is less than or equal to the
Reference Price, 0.9992 shares of Common Stock per Purchase Contract,
in each case subject to adjustment as provided in the Purchase Contract
Agreement (and in each case rounded upward or downward to the nearest 1/10,000th
of a share).
No fractional shares of Common Stock will be issued upon settlement of
Purchase Contracts, as provided in Section 5.09 of the Purchase Contract
Agreement.
Each Purchase Contract evidenced hereby, which is settled either through
Early Settlement or Cash Settlement, shall obligate the Holder of the related
Growth Equity Unit to purchase at the Purchase Price for cash, and the Company
to sell, a number of newly issued shares of Common Stock equal to the Early
Settlement Rate or the Settlement Rate, as applicable.
The "APPLICABLE MARKET VALUE" means the average of the Closing Prices per
share of Common Stock on each of the 20 consecutive Trading Days ending on the
third Trading Day immediately preceding the Purchase Contract Settlement Date.
B-5
The "CLOSING PRICE" per share of Common Stock on any date of determination
means the:
(1) closing sale price as of the close of the principal trading
session (or, if no closing price is reported, the last reported sale price)
per share on the New York Stock Exchange, Inc. (the "NYSE") on such date;
(2) if the Common Stock is not listed for trading on the NYSE on any
such date, the closing sale price per share as reported in the composite
transactions for the principal United States securities exchange on which
the Common Stock is so listed;
(3) if the Common Stock is not so listed on a United States national
or regional securities exchange, the closing sale price per share as
reported by The Nasdaq Stock Market;
(4) if the Common Stock is not so reported, the last quoted bid price
for the Common Stock in the over-the-counter market as reported by the
National Quotation Bureau or similar organization; or
(5) if such bid price is not available, the market value of the
Common Stock on such date as determined by a nationally recognized
independent investment banking firm retained for this purpose by the
Company.
A "TRADING DAY" means a day on which the Common Stock (1) is not suspended
from trading on any national or regional securities exchange or association or
over-the-counter market at the close of business and (2) has traded at least
once on the national or regional securities exchange or association or over-the-
counter market that is the primary market for the trading of the Common Stock.
In accordance with the terms of the Purchase Contract Agreement, the Holder
of this Growth Equity Unit shall pay the Purchase Price for the shares of the
Common Stock purchased pursuant to each Purchase Contract evidenced hereby
either by effecting a Cash Settlement or an Early Settlement of each such
Purchase Contract or by applying a principal amount of the Pledged Treasury
Securities underlying such Holder's Growth Equity Units equal to the Stated
Amount of such Purchase Contract to the purchase of the Common Stock. A Holder
of Growth Equity Units who does not, (1) on or prior to 5:00 p.m. (New York City
time) on the second Business Day immediately preceding the Purchase Contract
Settlement Date, notify the Purchase Contract Agent of its intention to effect a
Cash Settlement, (2) on or prior to 11:00 a.m. (New York City time) on the
second Business Day immediately preceding the Purchase Contract Settlement Date,
make an effective Early Settlement or (3) deliver the Purchase Price in cash on
the Business Day immediately preceding the Purchase Contract Settlement Date
after notifying the Purchase Contract Agent of its intention to effect a Cash
Settlement, shall pay the Purchase Price for the shares of Common Stock to be
issued under the related Purchase Contract from the proceeds of the Pledged
Treasury Securities.
The Company shall not be obligated to issue any shares of Common Stock in
respect of a Purchase Contract or deliver any certificates therefor to the
Holder unless it shall have received
B-6
payment of the aggregate purchase price for the shares of Common Stock to be
purchased thereunder in the manner herein set forth.
Each Purchase Contract evidenced hereby and all obligations and rights of
the Company and the Holder thereunder shall terminate if a Termination Event
shall occur. Upon the occurrence of a Termination Event, the Company shall give
written notice to the Purchase Contract Agent and to the Holders, at their
addresses as they appear in the Security Register. Upon and after the
occurrence of a Termination Event, the Collateral Agent shall release the
Pledged Treasury Securities (as defined in the Pledge Agreement) forming a part
of each Growth Equity Unit. A Growth Equity Unit shall thereafter represent the
right to receive the Proceeds of the Treasury Security forming a part of such
Growth Equity Unit, in accordance with the terms of the Purchase Contract
Agreement and the Pledge Agreement.
The Growth Equity Units Certificates are issuable only in registered form
and only in denominations of a single Growth Equity Unit and any integral
multiple thereof. The transfer of any Growth Equity Units Certificate will be
registered and Growth Equity Units Certificates may be exchanged as provided in
the Purchase Contract Agreement. The Security Registrar may require a Holder,
among other things, to furnish appropriate endorsements and transfer documents
permitted by the Purchase Contract Agreement. No service charge shall be
required for any such registration of transfer or exchange, but the Company and
the Purchase Contract Agent may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith. A Holder who
elects to substitute Notes for Treasury Securities, thereby recreating Income
Equity Units, shall be responsible for any fees or expenses associated
therewith. Except as provided in the Purchase Contract Agreement, for so long as
the Purchase Contract underlying a Growth Equity Unit remains in effect, such
Growth Equity Unit shall not be separable into its constituent parts, and the
rights and obligations of the Holder of such Growth Equity Unit in respect of
the Treasury Security and the Purchase Contract constituting such Growth Equity
Unit may be transferred and exchanged only as a Growth Equity Unit.
A Holder of Growth Equity Units may recreate Income Equity Units by
delivering to the Securities Intermediary Notes or the Applicable Ownership
Interest (as specified in clause (A) of the definition of such term) of the
Treasury Portfolio, as the case may be, with an aggregate principal amount equal
to the aggregate principal amount at maturity of the Pledged Treasury Securities
in exchange for the release of such Pledged Treasury Securities in accordance
with the terms of the Purchase Contract Agreement and the Pledge Agreement.
From and after such substitution, the Holder's Security shall be referred to as
an "INCOME EQUITY UNIT". Any such creation of Income Equity Units may be
effected only in multiples of 40 Growth Equity Units for 40 Income Equity Units.
If the Treasury Portfolio has replaced the Notes as a component of the Income
Equity Units as a result of a Tax Event Redemption, a Successful Initial
Remarketing or a Successful Secondary Remarketing, a Growth Equity Units Holder
may recreate Income Equity Units only in integral multiples of 20,000 Growth
Equity Units.
A Holder of Income Equity Units may recreate Growth Equity Units by
delivering to the Securities Intermediary Treasury Securities in an aggregate
principal amount equal to the aggregate principal amount at maturity of the
Pledged Notes or the Applicable Ownership Interest (as specified in clause (A)
of the definition of such term) of the Treasury Portfolio, as the
B-7
case may be, in accordance with the terms of the Purchase Contract Agreement and
the Pledge Agreement. Any such recreation of Growth Equity Units may be effected
only in multiples of 40 Income Equity Units for 40 Growth Equity Units. If the
Treasury Portfolio has replaced the Notes as a component of the Income Equity
Units as a result of a Tax Event Redemption, a Successful Initial Remarketing or
a Successful Secondary Remarketing, an Income Equity Units Holder may recreate
Growth Equity Units only in integral multiples of 20,000 Income Equity Units.
The Company shall pay, on each Payment Date, the Purchase Contract Payments
payable in respect of each Purchase Contract to the Person in whose name the
Growth Equity Units Certificate evidencing such Purchase Contract is registered
at the close of business on the Record Date for such Payment Date. Purchase
Contract Payments will be payable at the office of the Purchase Contract Agent
in New York City or, at the option of the Holder, by check mailed to the address
of the Person entitled thereto at such address as it appears on the Security
Register.
The Company has the right to defer payment of all or part of the Purchase
Contract Payments in respect of each Purchase Contract until no later than the
Purchase Contract Settlement Date. If the Company so elects to defer Purchase
Contract Payments, the Company shall pay additional Purchase Contract Payments
on such deferred installments of Purchase Contract Payments at a rate equal to
8.50% per annum, compounding quarterly, until such deferred installments are
paid. In the event that the Company elects to defer the payment of Purchase
Contract Payments on the Purchase Contracts until the Purchase Contract
Settlement Date, each Holder will receive on the Purchase Contract Settlement
Date the aggregate amount of accrued and unpaid Purchase Contract Payments.
The Purchase Contracts and all obligations and rights of the Company and
the Holders thereunder, including, without limitation, the rights of the Holders
to receive and the obligation of the Company to pay any Purchase Contract
Payments, shall immediately and automatically terminate, without the necessity
of any notice or action by any Holder, the Purchase Contract Agent or the
Company, if, on or prior to the Purchase Contract Settlement Date, a Termination
Event shall have occurred. Upon the occurrence of a Termination Event, the
Company shall promptly but in no event later than two Business Days thereafter
give written notice to the Purchase Contract Agent, the Collateral Agent and the
Holders, at their addresses as they appear in the Security Register. Upon and
after the occurrence of a Termination Event, the Collateral Agent shall release
the Treasury Securities from the Pledge in accordance with the provisions of the
Pledge Agreement. A Growth Equity Unit shall thereafter represent the right to
receive the interest in the Treasury Security forming a part of such Growth
Equity Unit, in accordance with the terms of the Purchase Contract Agreement and
the Pledge Agreement.
Upon the occurrence of a Cash Merger, a Holder of Growth Equity Units may
effect Early Settlement of the Purchase Contract underlying such Growth Equity
Units pursuant to the terms of Section 5.04(b)(2) of the Purchase Contract
Agreement. In addition, a Holder of Growth Equity Units may effect Early
Settlement of the Purchase Contract underlying such Income Equity Units pursuant
to the terms of Section 5.07 of the Purchase Contract Agreement. Upon Early
Settlement of Purchase Contracts by a Holder of the related Growth Equity Units,
the Pledged Treasury Securities underlying such Growth Equity Units shall be
released from the Pledge as provided in the Pledge Agreement.
B-8
Upon registration of transfer of this Growth Equity Units Certificate, the
transferee shall be bound (without the necessity of any other action on the part
of such transferee, except as may be required by the Purchase Contract Agent
pursuant to the Purchase Contract Agreement) under the terms of the Purchase
Contract Agreement and the Purchase Contracts evidenced hereby and the
transferor shall be released from the obligations under the Purchase Contracts
evidenced by this Growth Equity Units Certificate. The Company covenants and
agrees, and the Holder, by its acceptance hereof, likewise covenants and agrees,
to be bound by the provisions of this paragraph.
The Holder of this Growth Equity Units Certificate, by its acceptance
hereof, authorizes the Purchase Contract Agent to enter into and perform the
related Purchase Contracts forming part of the Growth Equity Units evidenced
hereby on its behalf as its attorney-in-fact, expressly withholds any consent to
the assumption (i.e., affirmance) of the Purchase Contracts by the Company or
its trustee in the event that the Company becomes the subject of a case under
the Bankruptcy Code, agrees to be bound by the terms and provisions thereof,
covenants and agrees to perform its obligations under such Purchase Contracts,
consents to the provisions of the Purchase Contract Agreement, authorizes the
Purchase Contract Agent to enter into and perform the Purchase Contract
Agreement and the Pledge Agreement on its behalf as its attorney-in-fact, and
consents to the Pledge of the Treasury Securities underlying this Growth Equity
Units Certificate pursuant to the Pledge Agreement. The Holder further
covenants and agrees, that, to the extent and in the manner provided in the
Purchase Contract Agreement and the Pledge Agreement, but subject to the terms
thereof, payments in respect to the aggregate principal amount of the Pledged
Treasury Securities on the Purchase Contract Settlement Date shall be paid by
the Collateral Agent to the Company in satisfaction of such Holder's obligations
under such Purchase Contract and such Holder shall acquire no right, title or
interest in such payments.
Subject to certain exceptions, the provisions of the Purchase Contract
Agreement may be amended with the consent of the Holders of a majority of the
Purchase Contracts.
The Purchase Contracts shall for all purposes be governed by, and construed
in accordance with, the laws of the State of New York, without regard to
conflicts of laws principles thereof.
Prior to due presentment of this Certificate for registration or transfer,
the Company, the Purchase Contract Agent and its Affiliates and any agent of the
Company or the Purchase Contract Agent may treat the Person in whose name this
Growth Equity Units Certificate is registered as the owner of the Growth Equity
Units evidenced hereby for the purpose of receiving payments of interest on the
Treasury Securities, receiving payments of Purchase Contract Payments (subject
to any applicable record date), performance of the Purchase Contracts and for
all other purposes whatsoever, whether or not any payments in respect thereof be
overdue and notwithstanding any notice to the contrary, and neither the Company,
the Purchase Contract Agent nor any such agent shall be affected by notice to
the contrary.
The Purchase Contracts shall not, prior to the settlement thereof, entitle
the Holder to any of the rights of a holder of shares of Common Stock.
B-9
A copy of the Purchase Contract Agreement is available for inspection at
the offices of the Purchase Contract Agent.
B-10
ABBREVIATIONS
The following abbreviations, when used in the inscription on the face of
this instrument, shall be construed as though they were written out in full
according to applicable laws or regulations:
TEN COM: as tenants in common
UNIF GIFT MIN ACT: ___________________ Custodian ___________________
(cust) (minor)
Under Uniform Gifts to Minors Act of_____________________
_________________________________________________________
TENANT: as tenants by the entireties
JT TEN: as joint tenants with right of survivorship and not as
tenants in common
Additional abbreviations may also be used though not in the above list.
____________________
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto
________________________________________________________________________________
(Please insert Social Security or Taxpayer I.D. or other Identifying Number of
Assignee)
________________________________________________________________________________
(Please Print or Type Name and Address Including Postal Zip Code of Assignee)
the within Growth Equity Units Certificates and all rights thereunder, hereby
irrevocably constituting and appointing __________________ attorney to transfer
said Growth Equity Units Certificates on the books of Sempra Energy, with full
power of substitution in the premises.
Dated: ____________________ Signature____________________________________
NOTICE: The signature to this assignment must
correspond with the name as it appears upon
the face of the within Growth Equity Units
Certificates in every particular, without
alteration or enlargement or any change
whatsoever.
Signature Guarantee: ____________________
B-11
SETTLEMENT INSTRUCTIONS
The undersigned Holder directs that a certificate for shares of Common
Stock deliverable upon settlement on or after the Purchase Contract Settlement
Date of the Purchase Contracts underlying the number of Growth Equity Units
evidenced by this Growth Equity Units Certificate be registered in the name of,
and delivered, together with a check in payment for any fractional share, to the
undersigned at the address indicated below unless a different name and address
have been indicated below. If shares are to be registered in the name of a
Person other than the undersigned, the undersigned will pay any transfer tax
payable incident thereto.
Dated:_______________________________ ______________________________________
Signature
Signature Guarantee:
(if assigned to another person)
If shares are to be registered in the REGISTERED HOLDER
name of and delivered to a Person other
than the Holder, please (i) print such Please print name and address of
Person's name and address and (ii) Registered Holder:
provide a guarantee of your signature:
____________________________________ ______________________________________
Name Name
____________________________________ ______________________________________
Address Address
____________________________________ ______________________________________
____________________________________ ______________________________________
____________________________________ ______________________________________
Social Security or other Taxpayer
Identification Number, if any ______________________________________
B-12
ELECTION TO SETTLE EARLY
The undersigned Holder of this Growth Equity Units Certificate hereby
irrevocably exercises the option to effect Early Settlement [following a Cash
Merger] in accordance with the terms of the Purchase Contract Agreement with
respect to the Purchase Contracts underlying the number of Growth Equity Units
evidenced by this Growth Equity Units Certificate specified below. The option
to effect Early Settlement [following a Cash Merger] may be exercised only with
respect to Purchase Contracts underlying Growth Equity Units with an aggregate
Stated Amount equal to $1,000 or an integral multiple thereof. The undersigned
Holder directs that a certificate for shares of Common Stock or other securities
deliverable upon such Early Settlement be registered in the name of, and
delivered, together with a check in payment for any fractional share and any
Growth Equity Units Certificate representing any Growth Equity Units evidenced
hereby as to which Early Settlement of the related Purchase Contracts is not
effected, to the undersigned at the address indicated below unless a different
name and address have been indicated below. Pledged Treasury Securities
deliverable upon such Early Settlement will be transferred in accordance with
the transfer instructions set forth below. If shares are to be registered in
the name of a Person other than the undersigned, the undersigned will pay any
transfer tax payable incident thereto.
Dated: ______________ _____________________________
Signature
Signature Guarantee: _________________
B-13
Number of Securities evidenced hereby as to which Early Settlement of the
related Purchase Contracts is being elected:
If shares of Common Stock or Income Equity Units Certificates are to be
registered in the name of and delivered to and Pledged Notes or the Applicable
Ownership Interest of the Treasury Portfolio, as the case may be, are to be
transferred to a Person other than the Holder, please print such Person's name
and address:
________________________________________________________________________________
Name
________________________________________________________________________________
Address
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
Social Security or other Taxpayer Identification Number, if any
________________________________________________________________________________
REGISTERED HOLDER
Please print name and address of Registered Holder:
________________________________________________________________________________
Name
________________________________________________________________________________
Address
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
B-14
Transfer Instructions for Pledged Notes or the Applicable Ownership Interest of
the Treasury Portfolio, as the case may be, transferable upon Early Settlement
or a Termination Event:
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
B-15
[TO BE ATTACHED TO GLOBAL CERTIFICATES]
SCHEDULE OF INCREASES OR DECREASES IN GLOBAL CERTIFICATE
The following increases or decreases in this Global Certificate have been made:
==============================================================================================================
Number of Growth Equity Signature of
Amount of increase in Amount of decrease in Units evidenced by this authorized signatory
Number of Growth Number of Growth Equity Global Certificate of Purchase Contract
Equity Units evidenced Units evidenced by the following such decrease Agent or Securities
Date by the Global Certificate Global Certificate or increase Custodian
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B-16
EXHIBIT C
INSTRUCTION TO PURCHASE CONTRACT AGENT
U. S. Bank Trust National Association
100 Wall Street
Suite 1600
New York, New York 10005
Telecopier No.: (212) 809-5459
Re: [_______ Income Equity Units] [_______ Growth Equity Units] of Sempra
Energy, a California corporation (the "COMPANY").
The undersigned Holder hereby notifies you that it has Transferred to
[__________], as Securities Intermediary, for credit to the Collateral Account,
$______ aggregate principal amount of [Notes] [Applicable Ownership Interests
(as specified in clause (A) of the definition of such term) of the Treasury
Portfolio] [Treasury Securities] in exchange for the [Pledged Notes] [Pledged
Applicable Ownership Interests] [Pledged Treasury Securities] held in the
Collateral Account, in accordance with the Pledge Agreement, dated as of April
30, 2002 (the "PLEDGE AGREEMENT"; unless otherwise defined herein, terms defined
in the Pledge Agreement are used herein as defined therein), between you, the
Company, the Collateral Agent and the Securities Intermediary. The undersigned
Holder has paid all applicable fees and expenses relating to such exchange. The
undersigned Holder hereby instructs you to instruct the Collateral Agent to
release to you on behalf of the undersigned Holder the [Pledged Notes] [Pledged
Applicable Ownership Interests] [Pledged Treasury Securities] related to such
[Income Equity Units] [Growth Equity Units].
Date: _______________ _________________________
Signature
Signature Guarantee:__________
Please print name and address of Registered Holder:
___________________________________ ___________________________________
Name Social Security or other Taxpayer
Identification Number, if any
Address
___________________________________
___________________________________
___________________________________
___________________________________
C-2
EXHIBIT D
NOTICE FROM PURCHASE CONTRACT AGENT TO HOLDERS
(Transfer of Collateral upon Occurrence of a Termination Event)
[HOLDER]
_______________________
_______________________
Attention:
Telecopy: _________
Re: [__________ Income Equity Units] [______ Growth Equity Units] of Sempra
Energy, a California corporation (the "COMPANY")
Please refer to the Purchase Contract Agreement, dated as of April 30, 2002
(the "PURCHASE CONTRACT AGREEMENT"; unless otherwise defined herein, terms
defined in the Purchase Contract Agreement are used herein as defined therein),
between the Company and the undersigned, as Purchase Contract Agent and as
attorney-in-fact for the holders of Income Equity Units and Growth Equity Units
from time to time.
We hereby notify you that a Termination Event has occurred and that [the
Notes] [Applicable Ownership Interests (as specified in clause (A) of the
definition of such term) of the Treasury Portfolio] [the Treasury Securities]
underlying your ownership interest in _____ [Income Equity Units] [Growth Equity
Units] have been released and are being held by us for your account pending
receipt of transfer instructions with respect to such [Notes][Treasury
Securities] (the "RELEASED SECURITIES").
Pursuant to Section 3.15 of the Purchase Contract Agreement, we hereby
request written transfer instructions with respect to the Released Securities.
Upon receipt of your instructions and upon transfer to us of your [Income Equity
Units][Growth Equity Units] effected through book-entry or by delivery to us of
your [Income Equity Units Certificate][Growth Equity Units Certificate], we
shall transfer the Released Securities by book-entry transfer or other
appropriate procedures, in accordance with your instructions. In the event you
fail to effect such transfer or delivery, the Released Securities and any
distributions thereon, shall be held in our name, or a nominee in trust for your
benefit, until such time as such [Income Equity Units][Growth Equity Units] are
transferred or your [Income Equity Units Certificate] [Growth Equity Units
Certificate] is surrendered or satisfactory evidence is provided that such
[Income Equity Units Certificate][Growth Equity Units Certificate] has been
destroyed, lost or stolen, together with any indemnification that we or the
Company may require.
Date: By: U. S. BANK TRUST NATIONAL ASSOCIATION
____________________________________________
Name:
Title: Authorized Signatory
EXHIBIT E
NOTICE TO SETTLE BY SEPARATE CASH
U. S. Bank Trust National Association
100 Wall Street
Suite 1600
New York, New York 10005
Telecopier No.: (212) 809-5459
Re: [_______ Income Equity Units] [Growth Equity Units] of Sempra Energy, a
California corporation (the "COMPANY")
The undersigned Holder hereby irrevocably notifies you in accordance with
Section 5.02 of the Purchase Contract Agreement, dated as of April 30, 2002 (the
"PURCHASE CONTRACT AGREEMENT"; unless otherwise defined herein, terms defined in
the Purchase Contract Agreement are used herein as defined therein), between the
Company and you, as Purchase Contract Agent and as Attorney-in-Fact for the
Holders of the Purchase Contracts, that such Holder has elected to pay to the
Securities Intermediary for deposit in the Collateral Account, prior to or on
11:00 a.m. (New York City time) on the Business Day immediately preceding the
Purchase Contract Settlement Date (in lawful money of the United States by
certified or cashiers' check or wire transfer, in immediately available funds),
$______ as the Purchase Price for the shares of Common Stock issuable to such
Holder by the Company under the related Purchase Contracts on the Purchase
Contract Settlement Date. The undersigned Holder hereby instructs you to notify
promptly the Collateral Agent of the undersigned Holders' election to make such
cash settlement with respect to the Purchase Contracts related to such Holder's
[Income Equity Units] [Growth Equity Units].
Date: _______________ _________________________
Signature
Signature Guarantee:__________
Please print name and address of Registered Holder:
EXHIBIT F
NOTICE FROM PURCHASE CONTRACT AGENT TO COLLATERAL AGENT
(Settlement of Purchase Contract through Remarketing)
U. S. Bank Trust National Association
100 Wall Street
Suite 1600
New York, New York 10005
Telecopier No.: (212) 809-5459
Re: __________ Income Equity Units of Sempra Energy, a California corporation
(the "COMPANY")
Please refer to the Purchase Contract Agreement, dated as of April 30, 2002
(the "PURCHASE CONTRACT AGREEMENT"; unless otherwise defined herein, terms
defined in the Purchase Contract Agreement are used herein as defined therein),
between the Company and the undersigned, as Purchase Contract Agent and as
attorney-in-fact for the Holders of Income Equity Units from time to time.
In accordance with Section 5.02 of the Purchase Contract Agreement and,
based on notices of Cash Settlements received from Holders of Income Equity
Units as of 11:00 a.m. (New York City time), on the Business Day immediately
preceding the [Initial Remarketing Date] [Secondary Remarketing Date] [Final
Remarketing Date], we hereby notify you that ______ Notes are to be tendered for
purchase in the Remarketing.
Date: By: [ ]
___________________________________
Name:
Title: Authorized Signatory
ANNEX I
FORM OF REMARKETING AGREEMENT
REMARKETING AGREEMENT
REMARKETING AGREEMENT, dated as of * (the "AGREEMENT"), by and between
Sempra Energy, a California corporation (the "COMPANY"), U.S. Bank Trust
National Association, a national banking association, not individually but
solely as Purchase Contract Agent (the "PURCHASE CONTRACT AGENT") and as
attorney-in-fact of the holders of Purchase Contracts (as defined in the
Purchase Contract Agreement (as defined herein)), and . (the "REMARKETING
AGENT").
W I T N E S S E T H :
WHEREAS, the Company has issued $550,000,000 (or up to $600,000,000 if the
underwriters' overallotment option was exercised in full) aggregate Stated
Amount of its Equity Units (the "EQUITY UNITS") under the Purchase Contract
Agreement, dated as of April 30, 2002, by and between the Purchase Contract
Agent and the Company (the "PURCHASE CONTRACT AGREEMENT"); and
WHEREAS, the Equity Units initially consisted of 22,000,000 (or 24,000,000
if the underwriters' overallotment option was exercised in full) units referred
to as "Income Equity Units;"
WHEREAS, the Company issued concurrently in connection with the issuance of
the Equity Units $550,000,000 (or up to $600,00,000 if the underwriters'
overallotment option was exercised in full) aggregate principal amount of 5.60%
Senior Notes due 2007 (the "Notes") of the Company; and
WHEREAS, the Notes forming a part of the Income Equity Units have been
pledged pursuant to the Pledge Agreement (the "Pledge Agreement"), dated as of
April 30, 2002, by and among the Company, U.S. Bank Trust National Association,
as collateral agent (the "Collateral Agent") and the Purchase Contract Agent, to
secure an Income Equity Units holder's obligations under the related Purchase
Contract on the Purchase Contract Settlement Date; and
WHEREAS, the Notes of the Income Equity Units holders and of the Note
holders electing to have their Notes remarketed will be remarketed by the
Remarketing Agent on the third Business Day immediately preceding February 17,
2005 (the "Initial Remarketing Date"); and
WHEREAS, in the event of a Failed Initial Remarketing, the Notes of
the Income Equity Units holders and of the Note holders electing to have their
Notes remarketed will be remarketed by the Remarketing Agent on the third
Business Day immediately preceding April 17, 2005 (the "Secondary Remarketing
Date"); and
WHEREAS, in the event of a Failed Secondary Remarketing, the Notes of the
Note holders electing to have their Notes remarketed and of the Income Equity
Units holders who have elected not to settle the Purchase Contracts related to
their Income Equity Units by Cash Settlement will be remarketed by the
Remarketing Agent on the third Business Day immediately preceding the Purchase
Contract Settlement Date; and
WHEREAS, in the event of a Successful Initial Remarketing, the applicable
interest rate on the Notes will be reset on the Initial Remarketing Date, to the
Reset Rate to be determined by the Reset Agent as the rate that such Notes
should bear in order for the Applicable Principal Amount of the Notes to have an
approximate aggregate market value of 100.5% of the Treasury Portfolio Purchase
Price on the Initial Remarketing Date, provided that in the determination of
such Reset Rate, the Company shall, if applicable, limit the Reset Rate to the
maximum rate permitted by applicable law; and
* Denotes the big black dot
1
WHEREAS, in the event of a Failed Initial Remarketing, the applicable
interest rate on the Notes will be reset on the Secondary Remarketing Date, to
the Reset Rate to be determined by the Reset Agent as the rate that such Notes
should bear in order for the Applicable Principal Amount of the Notes to have an
approximate aggregate market value of 100.5% of the Treasury Portfolio Purchase
Price on the Secondary Remarketing Date, provided that in the determination of
such Reset Rate, the Company shall, if applicable, limit the Reset Rate to the
maximum rate permitted by applicable law; and
WHEREAS, in the event of a Failed Secondary Remarketing, the applicable
interest rate on the Notes that remain outstanding on and after the Purchase
Contract Settlement Date will be reset on the third Business Day immediately
preceding the Purchase Contract Settlement Date, to the Reset Rate to be
determined by the Reset Agent as the rate that such Notes should bear in order
to have an approximate market value of 100.5% of the aggregate principal amount
of the Notes on the third Business Day immediately preceding the Purchase
Contract Settlement Date, provided that in the determination of such Reset Rate,
the Company shall, if applicable, limit the Reset Rate to the maximum rate
permitted by applicable law; and
WHEREAS, the Company has requested . (".") to act as the Reset Agent and as
the Remarketing Agent, and as such to perform the services described herein; and
WHEREAS, . is willing to act as Reset Agent and Remarketing Agent and as
such to perform such duties on the terms and conditions expressly set forth
herein;
NOW, THEREFORE, for and in consideration of the covenants herein made, and
subject to the conditions herein set forth, the parties hereto agree as follows:
Section 1. Definitions. Capitalized terms used and not defined in this
Agreement, in the recitals hereto or in the paragraph preceding such recitals
shall have the meanings assigned to them in the Purchase Contract Agreement or,
if not therein defined, the Pledge Agreement.
Section 2. Appointment and Obligations of Remarketing Agent. (a) The
Company hereby appoints . and . hereby accepts such appointment, (i) as the
Reset Agent to determine in consultation with the Company, in the manner
provided for herein and in the Indenture (as defined in Schedule I hereto) (as
in effect on the date of this Remarketing Agreement) with respect to the Notes,
(1) the Reset Rate that, in the opinion of the Reset Agent, will, when applied
to the Notes, enable the Applicable Principal Amount of the Notes to have an
approximate aggregate market value of 100.5% of the Treasury Portfolio Purchase
Price as of the Initial Remarketing Date, (2) in the event of a Failed Initial
Remarketing, the Reset Rate that, in the opinion of the Reset Agent, will, when
applied to the Notes, enable the Applicable Principal Amount of the Notes to
have an
approximate aggregate market value of 100.5% of the Treasury Portfolio Purchase
Price as of the Secondary Remarketing Date, and (3) in the event of a Failed
Secondary Remarketing, the Reset Rate that, in the opinion of the Reset Agent,
will, when applied to the Notes, enable a Note to have an approximate market
value of 100.5% of its principal amount as of the third Business Day preceding
the Purchase Contract Settlement Date, provided, in each case, that the Company,
by notice to the Reset Agent prior to the tenth Business Day preceding (x)
February 17, 2005, in the case of the Initial Remarketing, (y) April 17, 2005,
in the case of the Secondary Remarketing, or (z) the Purchase Contract
Settlement Date, in the case of the Final Remarketing (as defined below), shall,
if applicable, limit the Reset Rate so that it does not exceed the maximum rate
permitted by applicable law and (ii) as the exclusive Remarketing Agent (subject
to the right of * to appoint additional remarketing agents hereunder as
described below) to (1) remarket the Notes of the Note holders electing to have
their Notes remarketed and of the Income Equity Units holders on the Initial
Remarketing Date, for settlement on February 17, 2005, (2) in the case of a
Failed Initial Remarketing, remarket the Notes of the Note holders electing to
have their Notes remarketed and of the Income Equity Units holders on the
Secondary Remarketing Date, for settlement on April 17, 2005 and (3) in the case
of a Failed Secondary Remarketing, remarket the Notes of the Note holders
electing to have their Notes remarketed or of the Income Equity Units holders
who have failed to notify the Purchase Contract Agent, on or prior to the fifth
Business Day immediately preceding the Purchase Contract Settlement Date, of
their intention to settle the related Purchase Contracts through Cash
Settlement. In connection with the remarketing contemplated hereby, the
Remarketing Agent will enter into a Supplemental Remarketing Agreement (the
"Supplemental Remarketing Agreement") with the Company and the Purchase Contract
Agent, which shall either be (i) substantially in the form attached hereto as
Exhibit A (with such changes as the Company, the Purchase Contract Agent and the
Remarketing Agent may agree upon, it being understood that changes may be
necessary in the representations, warranties, covenants and other provisions of
the Supplemental Remarketing Agreement due to changes in law or facts and
circumstances or in the event that * is not the sole remarketing agent, and with
such further changes therein as the Remarketing Agent may reasonably request),
or (ii) in such other form as the Remarketing Agent may reasonably request,
subject to the approval of the Company and the Purchase Contract Agent (such
approval not to be unreasonably withheld by either such party). Anything herein
to the contrary notwithstanding, * shall not be obligated to act as Remarketing
Agent or Reset Agent hereunder unless the Supplemental Remarketing Agreement is
in form and substance reasonably satisfactory to *. The Company agrees that *
shall have the right, on 15 Business Days notice to the Company, to appoint one
or more additional remarketing agents so long as any such additional remarketing
agents shall be reasonably acceptable to the Company. Upon any such appointment,
the parties shall enter into an appropriate amendment to this Agreement to
reflect the addition of any such remarketing agent.
(b) Pursuant to the Supplemental Remarketing Agreement, the Remarketing
Agent, either as sole remarketing agent or as representative of a group of
remarketing agents appointed as aforesaid, will agree, subject to the terms and
conditions set forth herein and therein, to use its reasonable efforts to (i)
remarket, on the Initial Remarketing Date, the Notes that the Custodial Agent
(as such term is defined in the Pledge Agreement) and the Purchase Contract
Agent shall have notified the Remarketing Agent have been tendered for, or
otherwise are to be included in, the Initial Remarketing, at a price per Note
such that the aggregate price for the Applicable
* Denotes the big black dot
Principal Amount of the Notes is approximately 100.5% of the Treasury Portfolio
Purchase Price, (ii) in the event of a Failed Initial Remarketing, remarket, on
the Secondary Remarketing Date, the Notes that the Custodial Agent and the
Purchase Contract Agent shall have notified the Remarketing Agent have been
tendered for, or otherwise are to be included in, the Secondary Remarketing, at
a price per Note such that the aggregate price for the Applicable Principal
Amount of the Notes is approximately 100.5% of the Treasury Portfolio Purchase
Price and (iii) in the event of a Failed Secondary Remarketing, remarket, on the
third Business Day immediately preceding the Purchase Contract Settlement Date,
the Notes that the Custodial Agent and the Purchase Contract Agent shall have
notified the Remarketing Agent have been tendered for, or otherwise are to be
included in, the Secondary Remarketing, at a price of approximately 100.5% of
the aggregate principal amount of such Notes.
Notwithstanding the preceding sentence, the Remarketing Agent shall not
remarket any Notes for a price per Note that is less than the price necessary
for the Applicable Principal Amount of the Notes to have an aggregate price
equal to 100% of the Treasury Portfolio Purchase Price (the "Minimum Pre-
Settlement Remarketing Price"), in the case of either the Initial Remarketing or
the Secondary Remarketing, or the aggregate principal amount of such Notes, in
the case of the Final Remarketing. After deducting the fee specified in Section
3 below, the proceeds of such Initial Remarketing, Secondary Remarketing or
Final Remarketing, as the case may be, shall be paid to the Collateral Agent in
accordance with Section 5.07 of the Pledge Agreement and Section 5.02 of the
Purchase Contract Agreement (each of which Sections are incorporated herein by
reference). The right of each holder of Notes or Income Equity Units to have
Notes tendered for the Initial Remarketing, the Secondary Remarketing or the
Final Remarketing, as the case may be, shall be limited to the extent that (i)
the Remarketing Agent conducts an Initial Remarketing and, in the event of a
Failed Initial Remarketing, a Secondary Remarketing pursuant to the terms of
this Agreement, (ii) the Remarketing Agent conducts a Secondary Remarketing and,
in the event of a Failed Secondary Remarketing, a Final Remarketing pursuant to
the terms of this Agreement, (iii) Notes tendered have not been called for
redemption, (iv) the Remarketing Agent is able to find a purchaser or purchasers
for tendered Notes at a price of not less than the Minimum Pre-Settlement
Remarketing Price, in the case of the Initial Remarketing or the Secondary
Remarketing, and 100% of the principal amount thereof, in the case of the Final
Remarketing and (v) such purchaser or purchasers deliver the purchase price
therefor to the Remarketing Agent as and when required.
(c) It is understood and agreed that neither the Remarketing Agent nor the
Reset Agent shall have any obligation whatsoever to purchase any Notes, whether
in the Initial Remarketing, the Secondary Remarketing, the Final Remarketing or
otherwise, and shall in no way be obligated to provide funds to make payment
upon tender of Notes for remarketing or to otherwise expend or risk their own
funds or incur or be exposed to financial liability in the performance of their
respective duties under this Agreement or the Supplemental Remarketing
Agreement, and, without limitation of the foregoing, the Remarketing Agent shall
not be deemed an underwriter of the remarketed Notes. The Company shall not be
obligated in any case to provide funds to make payment upon tender of Notes for
remarketing.
Section 3. Fees. In the event of either a Successful Initial Remarketing or
a Successful Secondary Remarketing, the Remarketing Agent shall retain as a
remarketing fee (the "Remarketing Fee") an amount not exceeding 25 basis points
(0.25%) of the Minimum Pre-
Settlement Remarketing Price from any amount received in connection with such
Initial Remarketing or Secondary Remarketing, as the case may be, in excess of
the Minimum Pre-Settlement Remarketing Price. In the event of a Successful Final
Remarketing, the Remarketing Agent shall retain as the Remarketing Fee an amount
not exceeding 25 basis points (0.25%), of the principal amount of the remarketed
Notes from any amount received in connection with such Final Remarketing in
excess of the aggregate principal amount of such remarketed Notes. In addition,
the Reset Agent shall, in either case, receive from the Company a reasonable and
customary fee (the "Reset Agent Fee"); provided, however, that if the
Remarketing Agent shall also act as the Reset Agent, then the Reset Agent shall
not be entitled to receive any such Reset Agent Fee. Payment of such Reset Agent
Fee shall be made by the Company on the Initial Remarketing Date, in the case of
a Successful Initial Remarketing, on the Secondary Remarketing Date, in the case
of a Successful Secondary Remarketing, or on the third Business Day immediately
preceding the Purchase Contract Settlement Date, in the case of a Successful
Final Remarketing, in immediately available funds or, upon the instructions of
the Reset Agent, by certified or official bank check or checks or by wire
transfer.
Section 4. Replacement and Resignation of Remarketing Agent. (a) The
Company may in its absolute discretion replace * as the Remarketing Agent and as
the Reset Agent hereunder by giving notice prior to 3:00 p.m., New York City
time (i) on the eleventh Business Day immediately prior to February 17, 2005,
(ii) in the event of a Failed Initial Remarketing, on the eleventh Business Day
immediately prior to April 17, 2005, or (iii) in the event of a Failed Secondary
Remarketing, on the eleventh Business Day immediately prior to the Purchase
Contract Settlement Date, provided, in either case, that the Company must
replace * both as Remarketing Agent and as Reset Agent unless * shall otherwise
agree. Any such replacement shall become effective upon the Company's
appointment of a successor to perform the services that would otherwise be
performed hereunder by the Remarketing Agent and the Reset Agent. Upon providing
such notice, the Company shall use all reasonable efforts to appoint such a
successor and to enter into a remarketing agreement with such successor as soon
as reasonably practicable. The Company shall notify the Purchase Contract Agent
and the Collateral Agent of the appointment of any such successor.
(b) * may resign at any time and be discharged from its duties and
obligations hereunder as the Remarketing Agent and/or as the Reset Agent by
giving notice prior to 3:00 p.m., New York City time (i) on the eleventh
Business Day immediately prior to February 17, 2005, (ii) in the event of a
Failed Initial Remarketing, on the eleventh Business Day immediately prior to
April 17, 2005, or (iii) in the event of a Failed Secondary Remarketing, on the
eleventh Business Day immediately prior to the Purchase Contract Settlement
Date. Any such resignation shall become effective upon the Company's appointment
of a successor to perform the services that would otherwise be performed
hereunder by the Remarketing Agent and/or the Reset Agent. Upon receiving notice
from the Remarketing Agent and/or the Reset Agent that it wishes to resign
hereunder, the Company shall appoint such a successor and enter into a
remarketing agreement with it as soon as reasonably practicable.
Section 5. Dealing in the Securities. Each of the Remarketing Agent and the
Reset Agent, when acting hereunder or, in the case of the Remarketing Agent,
under the Supplemental Remarketing Agreement, or when acting in its individual
or any other capacity, may, to the extent permitted by law, buy, sell, hold or
deal in any of the Notes, Growth Equity Units, Income
* Denotes the big black dot
Equity Units or any other securities of the Company. With respect to any Notes,
Growth Equity Units, Income Equity Units or any other securities of the Company
owned by it, each of the Remarketing Agent and the Reset Agent may exercise any
vote or join in any action with like effect as if it did not act in any capacity
hereunder. Each of the Remarketing Agent and the Reset Agent, in its individual
capacity, either as principal or agent, may also engage in or have an interest
in any financial or other transaction with the Company as freely as if it did
not act in any capacity hereunder. The Company may, to the extent permitted by
law, purchase any Notes that are remarketed by any Remarketing Agent.
Section 6. Registration Statement and Prospectus. (a) In connection with
the Initial Remarketing or the Secondary Remarketing, if and to the extent
required in the view of counsel (which need not be an opinion) for either the
Remarketing Agent or the Company by applicable law, regulations or
interpretations in effect at the time of such Initial Remarketing or Secondary
Remarketing, as the case may be, the Company (i) shall use its reasonable
efforts to have a registration statement relating to the Notes effective under
the Securities Act of 1933 prior to the Initial Remarketing Date or the
Secondary Remarketing Date, as the case may be, (ii) if requested by the
Remarketing Agent, shall furnish a current preliminary prospectus and, if
applicable, a current preliminary prospectus supplement to be used by the
Remarketing Agent in the Initial Remarketing or the Secondary Remarketing, as
the case may be, not later than seven Business Days prior to February 17, 2005,
in the case of the Initial Remarketing, or April 17, 2005, in the case of the
Secondary Remarketing (or, in either case, such earlier date as the Remarketing
Agent may reasonably request) and in such quantities as the Remarketing Agent
may reasonably request, and (iii) shall furnish a current final prospectus and,
if applicable, a final prospectus supplement to be used by the Remarketing Agent
in the Initial Remarketing or the Secondary Remarketing, as the case may be, not
later than the Initial Remarketing Date or the Secondary Remarketing Date, as
the case may be, in such quantities as the Remarketing Agent may reasonably
request, and shall pay all expenses relating thereto.
(b) In the event of a Failed Secondary Remarketing and in connection with
the Final Remarketing, if and to the extent required in the view of counsel
(which need not be an opinion) for either the Remarketing Agent or the Company
by applicable law, regulations or interpretations in effect at the time of such
Final Remarketing, the Company (i) shall use its reasonable efforts to have a
registration statement relating to the Notes effective under the Securities Act
of 1933 (which may be the same registration statement referred to in Section
6(a)) prior to the third Business Day immediately preceding the Purchase
Contract Settlement Date, (ii) if requested by the Remarketing Agent, shall
furnish a current preliminary prospectus and, if applicable, a current
preliminary prospectus supplement to be used by the Remarketing Agent in the
Final Remarketing not later than seven Business Days prior to the Purchase
Contract Settlement Date (or such earlier date as the Remarketing Agent may
reasonably request) and in such quantities as the Remarketing Agent may
reasonably request, and (iii) shall furnish a current final prospectus and, if
applicable, a final prospectus supplement to be used by the Remarketing Agent in
the Final Remarketing not later than the third Business Day immediately
preceding the Purchase Contract Settlement Date in such quantities as the
Remarketing Agent may reasonably request, and shall pay all expenses relating
thereto.
(c) If in connection with the Initial Remarketing, or, in the event of a
Failed Initial Remarketing, the Secondary Remarketing, or, in the event of a
Failed Secondary Remarketing,
the Final Remarketing, it shall not be possible, in the view of counsel (which
need not be an opinion) for either the Remarketing Agent or the Company, under
applicable law, regulations or interpretations in effect at the time of such
Initial Remarketing, Secondary Remarketing or such Final Remarketing to register
the offer and sale by the Company of the Notes under the Securities Act of 1933
as otherwise contemplated by this Section 6, the Company (i) shall use its
reasonable efforts to take, or cause to be taken, all action and to do, or cause
to be done, all things necessary, proper and advisable to permit and effectuate
the offer and sale of the Notes in connection with the Initial Remarketing, the
Secondary Remarketing or the Final Remarketing, as the case may be, without
registration under the Securities Act of 1933 pursuant to an exemption
therefrom, if available, including the exemption afforded by Rule l44A under the
rules and regulations promulgated under the Securities Act of 1933 by the
Securities and Exchange Commission, (ii) if requested by the Remarketing Agent,
shall furnish a current preliminary remarketing memorandum to be used by the
Remarketing Agent in the Initial Remarketing, the Secondary Remarketing or the
Final Remarketing, as the case may be, not later than seven Business Days prior
to February 17, 2005, in the case of the Initial Remarketing, April 17, 2005, in
the case of the Secondary Remarketing, or the Purchase Contract Settlement Date,
in the case of the Final Remarketing (or in either case such earlier date as the
Remarketing Agent may reasonably request) and in such quantities as the
Remarketing Agent may reasonably request and (iii) shall furnish a current final
remarketing memorandum to be used by the Remarketing Agent in the Initial
Remarketing, the Secondary Remarketing or the Final Remarketing, as the case may
be, not later than the third Business Day immediately preceding February 17,
2005, in the case of the Initial Remarketing, the third Business Day immediately
preceding April 17, 2005, in the case of the Secondary Remarketing, or the
Purchase Contract Settlement Date, in the case of the Final Remarketing, in such
quantities as the Remarketing Agent may reasonably request, and shall pay all
expenses relating thereto.
(d) The Company shall also use its reasonable efforts to take all such
actions as may (upon advice of counsel to the Company or the Remarketing Agent)
be necessary or desirable under state securities or blue sky laws in connection
with the Initial Remarketing, the Secondary Remarketing and the Final
Remarketing.
Section 7. Conditions to the Remarketing Agent's Obligations. (a) The
obligations of the Remarketing Agent and the Reset Agent under this Agreement
and, in the case of the Remarketing Agent, the Supplemental Remarketing
Agreement shall be subject to the terms and conditions of this Agreement and the
Supplemental Remarketing Agreement, including, without limitation, the following
conditions: (i) the Notes tendered for, or otherwise to be included in the
Initial Remarketing, the Secondary Remarketing or the Final Remarketing, as the
case may be, have not been called for redemption, (ii) the Remarketing Agent is
able to find a purchaser or purchasers for tendered Notes (1) in the case of
either the Initial Remarketing or the Secondary Remarketing, at a price not less
than the Minimum Pre-Settlement Remarketing Price, and (2) in the case of the
Final Remarketing, at a price per Note not less than 100% of the principal
amount thereof, (iii) the Purchase Contract Agent, the Collateral Agent, the
Custodial Agent, the Securities Intermediary, the Company and the Trustee shall
have performed their respective obligations in connection with the Initial
Remarketing and, in the event of a Failed Initial Remarketing, in connection
with the Secondary Remarketing, and, in the event of a Failed Secondary
Remarketing, in connection with the Final Remarketing, in each case pursuant to
the Purchase Contract Agreement, the Pledge Agreement, the Indenture, this
Agreement and the
Supplemental Remarketing Agreement (including, without limitation, the Quotation
Agent giving the Remarketing Agent notice of the Treasury Portfolio Purchase
Price no later than 5:00 p.m., New York City time, on the fourth Business Day
prior to February 17, 2005, in the case of the Initial Remarketing, or the
fourth Business Day prior to April 17, 2005, in the case of the Secondary
Remarketing, and the Purchase Contract Agent giving the Remarketing Agent notice
of the aggregate principal amount, as the case may be, of Notes to be
remarketed, no later than 5:00 p.m., New York City time, on the fourth Business
Day prior to the Purchase Contract Settlement Date, in the case of the Final
Remarketing, and, in each case, the Collateral Agent and the Custodial Agent
concurrently delivering the Notes to be remarketed to the Remarketing Agent),
(iv) no Event of Default (as defined in the Indenture) shall have occurred and
be continuing, (v) the accuracy of the representations and warranties of the
Company included and incorporated by reference in this Agreement and the
Supplemental Remarketing Agreement or in certificates of any officer of the
Company delivered pursuant to the provisions included or incorporated by
reference in this Agreement or the Supplemental Remarketing Agreement, (vi) the
performance by the Company of its covenants and other obligations included and
incorporated by reference in this Agreement and the Supplemental Remarketing
Agreement, and (vii) the satisfaction of the other conditions set forth and
incorporated by reference in this Agreement and the Supplemental Remarketing
Agreement.
(b) If at any time during the term of this Agreement, any Event of Default
(as defined in the Indenture) or event that with the passage of time or the
giving of notice or both would become an Event of Default has occurred and is
continuing under the Indenture, then the obligations and duties of the
Remarketing Agent and the Reset Agent under this Agreement and the Supplemental
Remarketing Agreement shall be suspended until such default or event has been
cured. The Company will promptly give the Remarketing Agent notice of all such
defaults and events of which the Company is aware.
Section 8. Termination of Remarketing Agreement. This Agreement shall
terminate as to any Remarketing Agent or Reset Agent that is replaced on the
effective date of its replacement pursuant to Section 4(a) hereof or pursuant to
Section 4(b) hereof. Notwithstanding any such termination, the obligations set
forth in Section 3 hereof shall survive and remain in full force and effect
until all amounts payable under said Section 3 shall have been paid in full;
provided, however, that if any Reset Agent resigns prior to a successful
remarketing, then the obligations set forth in Section 3 hereof shall not
survive the termination of this Agreement and no fee shall be payable to such
Reset Agent in such capacity. In addition, each former Remarketing Agent and
Reset Agent shall be entitled to the rights and benefits under Section 10 of
this Agreement, notwithstanding the replacement or resignation of such
Remarketing Agent or Reset Agent.
Section 9. Remarketing Agent's Performance; Duty of Care. The duties and
obligations of the Remarketing Agent and the Reset Agent shall be determined
solely by the express provisions of this Agreement and, in the case of the
Remarketing Agent, the Supplemental Remarketing Agreement. No implied covenants
or obligations of or against the Remarketing Agent or the Reset Agent shall be
read into this Agreement or the Supplemental Remarketing Agreement. In the
absence of bad faith on the part of the Remarketing Agent or the Reset Agent, as
the case may be, the Remarketing Agent and the Reset Agent each may conclusively
rely upon any document furnished to it which purports to conform to the
requirements of this Agreement or the Supplemental Remarketing Agreement, as the
case may
be, as to the truth of the statements expressed therein. Each of the Remarketing
Agent and the Reset Agent shall be protected in acting upon any document or
communication reasonably believed by it to be signed, presented or made by the
proper party or parties. Neither the Remarketing Agent nor the Reset Agent shall
have any obligation to determine whether there is any limitation under
applicable law on the Reset Rate on the Notes or, if there is any such
limitation, the maximum permissible Reset Rate on the Notes, and they shall rely
solely upon written notice from the Company (which the Company agrees to
provide, if necessary, prior to the tenth Business Day before (1) February 17,
2005, in the case of the Initial Remarketing, (2) April 17, 2005, in the case of
the Secondary Remarketing, and (3) the Purchase Contract Settlement Date, in the
case of the Final Remarketing) as to whether there is any such limitation and,
if so, the maximum permissible Reset Rate. Neither the Remarketing Agent nor the
Reset Agent shall incur any liability under this Agreement or the Supplemental
Remarketing Agreement to any beneficial owner or holder of Notes, or other
securities, either in its individual capacity or as Remarketing Agent or Reset
Agent, as the case may be, for any action or failure to act in connection with
the Remarketing or otherwise in connection with the transactions contemplated by
this Agreement or the Supplemental Remarketing Agreement, except to the extent
that it shall have been determined by a court of competent jurisdiction by final
and nonappealable judgment that such liability has resulted from the willful
misconduct, bad faith or gross negligence of the Remarketing Agent or the Reset
Agent or by their failure to fulfill in any material respect their express
obligations hereunder or, in the case of the Remarketing Agent, under the
Supplemental Remarketing Agreement. The provisions of this Section 9 shall
survive any termination of this Agreement and shall also continue to apply to
every Remarketing Agent and Reset Agent notwithstanding their resignation or
removal.
Section 10. Indemnification and Contribution. (a) The Company agrees to
indemnify and hold harmless the Remarketing Agent, the Reset Agent and their
respective directors, officers, employees, agents, affiliates and each person,
if any, who controls the Remarketing Agent or the Reset Agent within the meaning
of either Section 15 of the Securities Act of 1933, as amended (the "1933 ACT"),
or Section 20 of the Securities Exchange Act of 1934, as amended (the "1934
ACT") (the Remarketing Agent, the Reset Agent and each such person or entity
being an "AGENT INDEMNIFIED PARTY"), as follows:
(i) from and against any and all losses, claims, damages, liabilities
and expenses whatsoever, joint or several, as incurred, to which such Agent
Indemnified Party may become subject under any applicable federal or state
law, or otherwise, and related to, arising out of, or based on (A) the
failure to have an effective Registration Statement (as defined in the
Supplemental Remarketing Agreement) under the 1933 Act relating to the
Notes, if required, or the failure to satisfy the prospectus delivery
requirements of the 1933 Act because the Company failed to provide the
Remarketing Agent with a Prospectus (as defined in the Supplemental
Remarketing Agreement) for delivery, or (B) any untrue statement or alleged
untrue statement of a material fact contained in the Registration Statement
or any amendment thereto (including any information deemed to be a part of
the Registration Statement at the time it became effective pursuant to
paragraph (b) of Rule 430A under the 1933 Act, if applicable), or the
omission or alleged omission therefrom of a material fact required to be
stated therein or necessary to make the statements therein not misleading,
or (C) any untrue statement or alleged untrue statement of a material fact
contained in any preliminary prospectus or
the Prospectus, or any amendment or supplement thereto, or the omission or
alleged omission therefrom of a material fact necessary in order to make
the statements therein, in the light of the circumstances under which they
were made, not misleading, or (D) any untrue statement or alleged untrue
statement of a material fact contained in any preliminary remarketing
memorandum or any final remarketing memorandum, or any amendment or
supplement thereto, or the omission or alleged omission therefrom of a
material fact necessary in order to make the statements therein, in the
light or the circumstances under which they were made, not misleading, or
(E) any untrue statement or alleged untrue statement of a material fact
contained in any other information (whether oral or written) or documents
(including, without limitation, any documents incorporated or deemed to be
incorporated by reference in any such information or documents) provided by
the Company for use in connection with the remarketing of the Notes or any
of the transactions related thereto, or (F) any breach by the Company of
any of the representations, warranties or agreements included or
incorporated by reference in this Agreement or the Supplemental Remarketing
Agreement, or (G) any failure by the Company to make or consummate the
remarketing of the Notes (including, without limitation, any Failed Initial
Remarketing, Failed Secondary Remarketing or Failed Final Remarketing) or
the withdrawal, rescission, termination, amendment or extension of the
terms of such remarketing, or (H) any failure on the part of the Company to
comply, or any breach by the Company of, any of the provisions included or
incorporated by reference in this Agreement, the Supplemental Remarketing
Agreement, the Purchase Contract Agreement, the Income Equity Units, the
Growth Equity Units, the Pledge Agreement, the Indenture or the Notes
(collectively, the "Operative Documents") or (I) the remarketing of the
Notes or any other transaction contemplated by any of the Operative
Documents, or the engagement of the Remarketing Agent or the Reset Agent
pursuant to, or the performance by the Remarketing Agent or the Reset Agent
of the respective services contemplated by, this Agreement or the
Supplemental Remarketing Agreement, whether or not the Initial Remarketing,
the Secondary Remarketing or the Final Remarketing or the reset of the
interest rate on the Notes as contemplated herein actually occur;
(ii) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, to the extent of the aggregate amount paid in
settlement of any litigation or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or of any claim
whatsoever related to, arising out of or based on any matter described in
(i) above; and
(iii) against any and all expense whatsoever, as incurred (including
the fees and disbursements of counsel chosen by *), reasonably incurred in
investigating, preparing or defending against any litigation, or any
investigation or proceeding by any governmental agency or body, commenced
or threatened, or any claim whatsoever related to, arising out or based on
any matter described in (i) above, whether or not such Agent Indemnified
Party is a party and whether or not such claim, action or proceeding is
initiated or brought by or on behalf of the Company to the extent that any
such expense is not paid under (i) or (ii) above;
* Denotes the big black dot
provided, however, that the Company shall not be liable under clause (i) (B),
(i) (C), (i) (D) or (i) (E) to the extent any such loss, claim, damage,
liability or expense arises out of any untrue statement or omission or alleged
untrue statement or omission made in reliance upon and conformity with written
information furnished to the Company by the Remarketing Agent or the Reset Agent
expressly for use in the Registration Statement (or any amendment thereto), any
preliminary prospectus or the Prospectus (or any amendment or supplement
thereto) or any preliminary or final remarketing memorandum (or any amendment or
supplement thereto) or any other documents used in connection with remarketing
of the Notes, as the case may be; provided, further, that with respect to any
untrue statement or omission of a material fact made in any preliminary
prospectus, the indemnity agreement contained in this Section 10(a) shall not
inure to the benefit of the Remarketing Agent to the extent that any such loss,
claim, damage or liability of the Remarketing Agent occurs under the
circumstance where (w) the Company had previously furnished copies of the
Prospectus to *, (x) delivery of the Prospectus was required to be made to such
person, (y) the untrue statement or alleged untrue statement of a material fact
or omission or alleged omission of a material fact contained in the preliminary
prospectus was corrected in the Prospectus, and (z) there was not sent or given
to such person, at or prior to the written confirmation of the sale of Notes to
such person, a copy of the Prospectus and the delivery thereof would have
constituted a complete defense to such person's claim in respect of such untrue
statement or omission or alleged untrue statement or omission; provided,
further, that the Company shall not be liable under clause (i)(G) or (i)(I) to
the extent that such loss, claim, damage, liability or expense has, by final
judicial determination, resulted from the willful misconduct, bad faith or gross
negligence of the Remarketing Agent or the Reset Agent or by their failure to
fulfill, in any material respect, their express obligations hereunder or, in the
case of the Remarketing Agent, under the Supplemental Remarketing Agreement.
Other than as set forth in Section 10(b) below, the Company agrees that no
Agent Indemnified Party shall have any liability (whether direct or indirect, in
contract or tort or otherwise) to the Company or its respective security holders
or creditors relating to or arising out of the engagement of the Remarketing
Agent or the Reset Agent pursuant to, or the performance by the Remarketing
Agent or the Reset Agent of their respective services contemplated by, this
Agreement or the Supplemental Remarketing Agreement except to the extent that
any loss, claim, damage, liability or expense is found in a final judgment by a
court of competent jurisdiction to have resulted from the willful misconduct,
gross negligence or bad faith of the Remarketing Agent or the Reset Agent, as
the case may be.
The Company agrees that, without *'s prior written consent, it will not
settle, compromise or consent to the entry of any judgment with respect to any
litigation, or any investigation or proceeding by any governmental agency or
body, commenced or threatened, or any action or claim whatsoever in respect of
which indemnification or contribution could be sought under this Section 10(a)
(whether or not * or any other Agent Indemnified Party is an actual or potential
party to such claim, action or proceeding), unless such settlement, compromise
or consent (i) includes an unconditional release of each Agent Indemnified Party
from all liability arising out of such litigation, investigation, proceeding,
action or claim and (ii) does not include a statement as to, or an admission of,
fault, culpability or a failure to act by or on behalf of an Agent Indemnified
Party.
* Denotes the big black dot
(b) The Remarketing Agent and the Reset Agent, severally and not jointly,
agree to indemnify and hold harmless the Company, its directors and its officers
who sign the Registration Statement, and each person, if any, who controls the
Company within the meaning of either Section 15 of the 1933 Act or Section 20 of
the 1934 Act (the "COMPANY INDEMNIFIED PARTIES") to the same extent as the
foregoing indemnity from the Company to the Agent Indemnified Parties, but only
with reference to information relating to such Remarketing Agent and Reset Agent
furnished to the Company in writing by such Remarketing Agent and Reset Agent
expressly for use in the Registration Statement, any preliminary prospectus, the
Prospectus or any amendments or supplements thereto or any other documents used
in connection with the Remarketing of the Notes, as the case may be.
Each of the Remarketing Agent and the Reset Agent agrees that, without the
Company's prior written consent, it will not settle, compromise or consent to
the entry of any judgment with respect to any litigation, or any investigation
or proceeding by any governmental agency or body, commenced or threatened, or
any action or claim whatsoever in respect of which indemnification or
contribution could be sought under this Section 10(b) (whether or not the
Company or any other Company Indemnified Party is an actual or potential party
to such claim, action or proceeding), unless such settlement, compromise or
consent (i) includes an unconditional release of each Company Indemnified Party
from all liability arising out of such litigation, investigation, proceeding,
action or claim and (ii) does not include a statement as to, or an admission of
fault, culpability or a failure to act by or on behalf of a Company Indemnified
Party.
(c) If the indemnification provided for in Section 10(a) or 10(b) hereof
is for any reason unavailable to or insufficient to hold harmless any party
seeking indemnification thereunder (an "INDEMNIFIED PARTY") in respect of any
losses, liabilities, claims, damages or expenses referred to therein, then the
Company, on the one hand, and the Remarketing Agent and the Reset Agent on the
other hand, shall contribute to the aggregate amount of such losses,
liabilities, claims, damages and expenses incurred by such Indemnified Party, as
incurred, (i) in such proportion as is appropriate to reflect the relative
benefits received by the Company on the one hand and the Remarketing Agent and
the Reset Agent on the other hand from the remarketing of the Notes contemplated
hereby or (ii) if the allocation provided by clause (i) is not permitted by
applicable law, in such proportion as is appropriate to reflect not only the
relative benefits referred to in clause (i) above but also the relative fault of
the Company on the one hand and of the Remarketing Agent and the Reset Agent on
the other hand in connection with the statements, omissions or other matters
which resulted in such losses, liabilities, claims, damages or expenses, as well
as any other relevant equitable considerations. The relative benefits received
by the Company on the one hand and the Remarketing Agent and the Reset Agent on
the other hand in connection with the remarketing of the Notes contemplated
hereby shall be deemed to be in the same respective proportions as the aggregate
principal amount of the Notes which are or are to be remarketed bears to the
aggregate fees actually received by the Remarketing Agent and the Reset Agent
under Section 3 hereof. The relative fault of the Company on the one hand and
the Remarketing Agent and the Reset Agent on the other hand (i) in the case of
an untrue or alleged untrue statement of a material fact or omission or alleged
omission to state a material fact, shall be determined by reference to, among
other things, whether such untrue or alleged untrue statement of a material fact
or omission or alleged omission to state a material fact relates to information
supplied by the Company on the one hand or by the Remarketing Agent or the Reset
Agent on the other hand and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission and (ii) in the case of any other action or omission
shall be determined by reference to, among other things, whether such action or
omission was taken or omitted to be taken by the Company on the one hand, or by
the Remarketing Agent or the Reset Agent, on the other hand, and the parties'
relative intent, knowledge, access to information and opportunity to prevent or
correct such action or omission. The Company, the Remarketing Agent and the
Reset Agent agree that it would not be just and equitable if contribution
pursuant to this Section 10(c) were determined by pro rata allocation or by any
other method of allocation which does not take account of the equitable
considerations referred to above in this Section 10(c). The aggregate amount of
losses, liabilities, claims, damages and expenses incurred by an Indemnified
Party and referred to above in this Section 10(c) shall be deemed to include any
legal or other expenses incurred by such Indemnified Party in investigating,
preparing or defending against any litigation, or any investigation or
proceeding by any governmental agency or body, commenced or threatened, or any
claim whatsoever based upon any such untrue or alleged untrue statement or any
such omission or alleged omission or any other such action or omission;
provided, however, that to the extent permitted by applicable law, in no event
shall the Remarketing Agent or the Reset Agent be required to contribute any
amount which, in the aggregate, exceeds the aggregate fees received by them
under Section 3 of this Agreement. No investigation or failure to investigate by
any Indemnified Party shall impair the foregoing indemnification and
contribution agreement or any rights an Indemnified Party may have. No person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the 1933 Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation.
(d) Promptly after receipt by any Indemnified Party of written notice of
any claim or commencement of an action or proceeding with respect to which
indemnification may be sought hereunder, such party will notify the party from
whom indemnification is sought (the "INDEMNIFYING PARTY") in writing of such
claim or of the commencement of such action or proceeding, but failure to so
notify the Indemnifying Party will not relieve the Indemnifying Party from any
liability which it may have to such party seeking indemnification under this
indemnification and contribution agreement, and in any event will not relieve
the Indemnifying Party from any other liability that it may have to such party.
The Indemnified Party (or * in the case of any Agent Indemnified Party) shall
have the right to select counsel in connection with any transaction for which
any Indemnified Party may be entitled to indemnification or contribution
hereunder, provided that in no event shall the Indemnifying Parties be liable
for fees and expenses of more than one counsel (in addition to any local
counsel) separate from their own counsel, for all Indemnified Parties in
connection with any one action or separate but similar or related actions in the
same jurisdiction arising out of the same general allegations or circumstances.
(e) Anything herein or in the Supplemental Remarketing Agreement to the
contrary notwithstanding, the provisions of this Section 10, and the rights of
the Company, the Remarketing Agent, the Reset Agent and the other Indemnified
Parties hereunder, shall be in addition to, and not in limitation of, any rights
or benefits (including, without limitation, rights to indemnification or
contribution) which the Company, the Remarketing Agent, the Reset Agent or any
other Indemnified Party may have under any other instrument or agreement.
* Denotes the big black dot
Section 11. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York without regard to
principles of conflicts of laws that would require the application of the law of
any other jurisdiction.
Section 12. Term of Agreement. (a) Unless otherwise terminated in
accordance with the provisions hereof and except as otherwise provided herein,
this Agreement shall remain in full force and effect from the date hereof until
the first day thereafter on which no Notes are outstanding, or, if earlier, the
Business Day immediately following February 17, 2005, in the case of a
Successful Initial Remarketing, the Business Day immediately following April 17,
2005, in the case of a Successful Secondary Remarketing, or the Business Day
immediately following the Purchase Contract Settlement Date, in the case of a
Successful Final Remarketing. Anything herein to the contrary notwithstanding,
the provisions of the last section of Section 8 hereof and the provisions of
Sections 3, 9, 10 and 12(b) hereof shall survive any termination of this
Agreement and remain in full force and effect; provided, however, that if any
Reset Agent resigns prior to a successful remarketing, then the obligations set
forth in Section 3 hereof shall not survive the termination of this Agreement
and no fee shall be payable to such Reset Agent in such capacity.
(b) All representations and warranties included or incorporated by
reference in this Agreement, or the Supplemental Remarketing Agreement, or
contained in certificates of officers of the Company submitted pursuant hereto
or thereto, shall remain operative and in full force and effect, regardless of
any investigation made by or on behalf of the Remarketing Agent, the Reset Agent
or any of their controlling persons, or by or on behalf of the Company or the
Purchase Contract Agent, and shall survive the remarketing of the Notes.
Section 13. Successors and Assigns. Except in the case of a succession
pursuant to the terms of the Purchase Contract Agreement, the rights and
obligations of the Company and the Purchase Contract Agent (both in its capacity
as Purchase Contract Agent and as attorney-in-fact) hereunder may not be
assigned or delegated to any other person without the prior written consent of
the Remarketing Agent and the Reset Agent, which consent shall not be
unreasonably withheld and, except with respect to the Purchase Contract Agent,
in connection with the appointment of a successor thereof pursuant to the
Purchase Contract Agreement. The rights and obligations of the Remarketing Agent
and the Reset Agent hereunder may not be assigned or delegated to any other
person without the prior written consent of the Company, except that the
Remarketing Agent shall have the right to appoint additional remarketing agents
as provided herein. This Agreement shall inure to the benefit of and be binding
upon the Company, the Purchase Contract Agent, the Remarketing Agent and the
Reset Agent and their respective successors and assigns and the other
Indemnified Parties (as defined in Section 10 hereof) and the successors,
assigns, heirs and legal representatives of the Indemnified Parties. The terms
"successors" and "assigns" shall not include any purchaser of Notes merely
because of such purchase.
Section 14. Headings. Section headings have been inserted in this Agreement
and the Supplemental Remarketing Agreement as a matter of convenience of
reference only, and it is agreed that such section headings are not a part of
this Agreement or the Supplemental Remarketing Agreement and will not be used in
the interpretation of any provision of this Agreement or the Supplemental
Remarketing Agreement.
Section 15. Severability. If any provision of this Agreement or the
Supplemental Remarketing Agreement shall be held or deemed to be or shall, in
fact, be invalid, inoperative or unenforceable as applied in any particular case
in any or all jurisdictions because it conflicts with any provisions of any
constitution, statute, rule or public policy or for any other reason, then, to
the extent permitted by law, such circumstances shall not have the effect of
rendering the provision in question invalid, inoperative or unenforceable in any
other case, circumstances or jurisdiction, or of rendering any other provision
or provisions of this Agreement or the Supplemental Remarketing Agreement, as
the case may be, invalid, inoperative or unenforceable to any extent whatsoever.
Section 16. Counterparts. This Agreement and the Supplemental Remarketing
Agreement may be executed in counterparts, each of which shall be regarded as an
original and all of which shall constitute one and the same document.
Section 17. Amendments. This Agreement and the Supplemental Remarketing
Agreement may be amended by any instrument in writing signed by the parties
hereto. The Company and the Purchase Contract Agent (except with respect to the
Indenture and the Notes, to which it is not a party) agree that they will not
enter into, cause or permit any amendment or modification of the Purchase
Contract Agreement, the Indenture, the Pledge Agreement, the Notes, the Equity
Units or any other instruments or agreements relating to the Notes or the Equity
Units which would adversely affect the rights, duties or obligations of the
Remarketing Agent or the Reset Agent without the prior written consent of the
Remarketing Agent or the Reset Agent, as the case may be.
Section 18. Notices. Unless otherwise specified, any notices, requests,
consents or other communications given or made hereunder or pursuant hereto
shall be made in writing or transmitted by any standard form of
telecommunication, including telephone or telecopy, and confirmed in writing.
All written notices and confirmations of notices by telecommunication shall be
deemed to have been validly given or made when delivered or mailed, registered
or certified mail, return receipt requested and postage prepaid. All such
notices, requests, consents or other communications shall be addressed as
follows: if to the Company, to Sempra Energy, 101 Ash Street, San Diego,
California 29101 Attention: Treasurer, with a copy to Latham & Watkins, 633 West
Fifth Street, Los Angeles, California 90071, Attention Scott Hodgkins, Esq.; if
to the Remarketing Agent or Reset Agent, to *, at *, New York, New York *,
Attention: *, with a copy to Sidley Austin Brown & Wood LLP, 555 California
Street, San Francisco, California 90013, Attention: Paul Pringle, Esq; and if
to the Purchase Contract Agent, to U. S. Bank Trust National Association, 100
Wall Street, Suite 1600, New York, New York 10005, Attention: Corporate Trust
Services or to such other address as any of the above shall specify to the other
in writing.
Section 19. Information. The Company agrees to furnish the Remarketing
Agent and the Reset Agent with such information and documents as the Remarketing
Agent or the Reset Agent may reasonably request in connection with the
transactions contemplated by this Remarketing Agreement and the Supplemental
Remarketing Agreement, and make reasonably available to the Remarketing Agent,
the Reset Agent and any accountant, attorney or other advisor retained by the
Remarketing Agent or the Reset Agent such information that parties would
customarily require in connection with a due diligence investigation conducted
in
* Denotes the big black dot
accordance with applicable securities laws and cause the Company's officers,
directors, employees and accountants to participate in all such discussions and
to supply all such information reasonably requested by any such person in
connection with such investigation.
IN WITNESS WHEREOF, each of the Company, the Purchase Contract Agent and
the Remarketing Agent has caused this Agreement to be executed in its name and
on its behalf by one of its duly authorized signatories as of the date first
above written.
SEMPRA ENERGY
By: _____________________________
Name:
Title:
CONFIRMED AND ACCEPTED:
[REMARKETING AGENT]
By: _________________________
Authorized Signatory
U.S. BANK TRUST NATIONAL ASSOCIATION
not individually but solely as Purchase
Contract Agent and as attorney-in-fact
for the holders of the Purchase Contracts
By: _________________________
Name:
Title:
Exhibit A to
Remarketing Agreement
Form of Supplemental Remarketing Agreement
Supplemental Remarketing Agreement, dated as of ______________, ____, among
Sempra Energy, a California corporation (the "COMPANY"), * (the "Remarketing
Agent"), and U.S. Bank Trust National Association, as Purchase Contract Agent
and attorney-in-fact for the Holders of the Purchase Contracts (as such terms
are defined in the Purchase Contract Agreement referred to in Schedule I
hereto).
NOW, THEREFORE, for and in consideration of the covenants herein made, and
for other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, the parties hereto agree as follows:
1. Definitions. Capitalized terms used and not defined in this Agreement
shall have the meanings assigned to them in the Remarketing Agreement dated as
of * (the "Remarketing Agreement") among the Company, the Purchase
Contract Agent and * or, if not defined in the Remarketing Agreement, the
meanings assigned to them in the Purchase Contract Agreement (as defined in
Schedule I hereto).
2. Registration Statement and Prospectus. The Company has filed with the
Securities and Exchange Commission, and there has become effective, a
registration statement on Form S-3, including a prospectus, relating to the
Notes (as such term is defined on Schedule I hereto). Such Registration
Statement, as amended, and including the information deemed to be a part thereof
pursuant to Rule 430A under the Securities Act of 1933, as amended (the "1933
ACT"), and the documents incorporated or deemed to be incorporated by reference
therein, are hereinafter called, collectively, the "Registration Statement";
[the related preliminary prospectus dated ____________, including the documents
incorporated or deemed to be incorporated by reference therein, [and preliminary
prospectus supplemented dated __________] are hereinafter called, [collectively]
the "preliminary prospectus";] and the related prospectus dated _____________,
including the documents incorporated or deemed to be incorporated by reference
therein, [and prospectus supplement dated _________] are hereinafter called,
[collectively,] the "Prospectus." The Company has provided copies of the
Registration Statement [, the preliminary prospectus] and the Prospectus to the
Remarketing Agent, and hereby consents to the use of the [preliminary
prospectus] and the Prospectus in connection with the remarketing of the Notes.
(IN THE EVENT THAT A REGISTRATION STATEMENT IS NOT POSSIBLE OR NOT REQUIRED,
INSERT THE FOLLOWING: The Company has provided to the Remarketing Agent, for use
in connection with remarketing of the Notes (as such term is defined on Schedule
I hereto), a [preliminary remarketing memorandum and] remarketing memorandum and
[describe other materials, if any]. Such remarketing memorandum (including the
documents incorporated or deemed to be incorporated by reference therein, [and]
[describe other materials] are hereinafter called, collectively, the
"Prospectus," [and such preliminary marketing memorandum (including the
documents incorporated or deemed to be incorporated by reference therein) is
hereinafter called a "preliminary prospectus")]. The Company hereby consents to
the use of the Prospectus [and the preliminary prospectus] in connection with
the remarketing of the Notes.) All references in this Agreement to amendments
or supplements to the Registration
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1
Statement [, the preliminary prospectus] or the Prospectus shall be deemed to
mean and include the filing of any document under the Securities Exchange Act of
1934, as amended (the "1934 ACT"), which is incorporated or deemed to be
incorporated by reference in the Registration Statement [, the preliminary
prospectus] or the Prospectus, as the case may be.
3. Provisions Incorporated by Reference.
(a) Subject to Section 3(b), the provisions of the Purchase Agreement
referred to in Schedule I hereto (other than [Annex I and Sections 1, 3, 4, 6,
8, 9 and 11] thereof) are incorporated herein by reference, mutatis mutandis,
and the Company hereby makes the representations and warranties, and agrees to
comply with the covenants and obligations, set forth in the provisions of the
Purchase Agreement incorporated by reference herein, as modified by the
provisions of Section 3(b) hereof.
(b) With respect to the provisions of the Purchase Agreement incorporated
herein, for the purposes hereof, (i) all references therein to the "Underwriter"
or "Underwriters" shall be deemed to refer to the Remarketing Agent and all
references to the "Representative" or the "Representatives" shall be deemed to
refer to * ("*"); (ii) all references therein to the "Notes" shall be deemed to
refer to the Notes as defined herein; (iii) all references therein to the "date
of the Pricing Agreement" shall be deemed to refer to the Initial Remarketing
Date, the Secondary Remarketing Date or the Final Remarketing Date, as the case
may be; (iv) all references therein to the "Registration Statement" [, the
"Preliminary Prospectus"] or the "Prospectus" shall be deemed to refer to the
Registration Statement[, the preliminary prospectus] and the Prospectus,
respectively, as defined herein; (v) all references therein to this "Agreement,"
the "Purchase Agreement," "hereof," "herein" and all references of similar
import, shall be deemed to mean and refer to this Supplemental Remarketing
Agreement; (vi) all references therein to "the date hereof," "the date of this
Agreement" and all similar references shall be deemed to refer to the date of
this Supplemental Remarketing Agreement; (vii) all references therein to any
"settlement date" shall be disregarded; and (viii) [other changes, including
changes relating to the offer and sale of the Notes in connection with the
Remarketing without registration under the Securities Act of 1933 in reliance
upon an exemption therefrom (including the exemption afforded by Rule 144A)].]
4. Remarketing. Subject to the terms and conditions and in reliance upon
the representations and warranties herein set forth or incorporated by reference
herein and in the Remarketing Agreement, the Remarketing Agent agrees to use its
reasonable efforts to remarket, in the manner set forth in Section 2(b) of the
Remarketing Agreement, the aggregate principal amount of Notes set forth in
Schedule I hereto at a purchase price not less than 100% of the [Minimum Pre-
Settlement Remarketing Price] [aggregate principal amount of the Notes]. In
connection therewith, the registered holder or holders thereof agree, in the
manner specified in Section 5 hereof, to pay to the Remarketing Agent a
Remarketing Fee equal to an amount not exceeding 25 basis points (0.25%) of [the
Minimum Pre-Settlement Remarketing Price] [such aggregate principal amount,]
payable by deduction from any amount received in connection from such [Initial]
[Secondary] [Final] Remarketing in excess of the [Minimum Pre-Settlement
Remarketing Price] [aggregate principal amount of the Notes]. The right of each
holder of Notes to have Notes tendered for purchase shall be limited to the
extent set forth in the last sentence of Section 2(b) of the Remarketing
Agreement (which is incorporated by reference herein). As
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more fully provided in Section 2 (c) of the Remarketing Agreement (which is
incorporated by reference herein), the Remarketing Agent is not obligated to
purchase any Notes in the remarketing or otherwise, and neither the Company nor
the Remarketing Agent shall be obligated in any case to provide funds to make
payment upon tender of Notes for remarketing.
5. Delivery and Payment. Delivery of payment for the remarketed Notes by
the purchasers thereof identified by the Remarketing Agent and payment of the
Remarketing Fee shall be made on the Remarketing Closing Date at the location
and time specified in Schedule I hereto (or such later date not later than five
Business Days after such date as the Remarketing Agent shall designate), which
date and time may be postponed by agreement between the Remarketing Agent and
the Company. Delivery of the remarketed Notes and payment of the Remarketing Fee
shall be made to the Remarketing Agent against payment by the respective
purchasers of the remarketed Notes of the consideration therefor as specified
herein, which consideration shall be paid to the Collateral Agent for the
account of the persons entitled thereto by certified or official bank check or
checks drawn on or by a New York Clearing House bank and payable in immediately
available funds or in immediately available funds by wire transfer to an account
or accounts designated by the Collateral Agent.
If the Notes are not represented by a Global Security held by or on behalf
of The Depository Trust Company, certificates for the Notes shall be registered
in such names and denominations as the Remarketing Agent may request not less
than one full Business Day in advance of the Remarketing Closing Date, and the
Company, the Collateral Agent and the registered holder or holders thereof agree
to have such certificates available for inspection, packaging and checking by
the Remarketing Agent in New York, New York not later than 1:00 p.m. on the
Business Day prior to the Remarketing Closing Date.
6. Notices. Unless otherwise specified, any notices, requests, consents
or other communications given or made hereunder or pursuant hereto shall be made
in writing or transmitted by any standard form of telecommunication, including
telephone or telecopy, and confirmed in writing. All written notices and
confirmations of notices by telecommunication shall be deemed to have been
validly given or made when delivered or mailed, registered or certified mail,
return receipt requested and postage prepaid. All such notices, requests,
consents or other communications shall be addressed as follows: if to the
Company, to Sempra Energy, 101 Ash Street, San Diego, California 29101
Attention: Treasurer, with a copy to Latham & Watkins, 633 West Fifth Street,
Los Angeles, California 90071, Attention Scott Hodgkins, Esq.; if to the
Remarketing Agent or Reset Agent, to *, at *, New York, New York 10281,
Attention: *, with a copy to Sidley Austin Brown & Wood llp, 555 California
Street, San Francisco, California 90013, Attention: Paul Pringle, Esq; and if
to the Purchase Contract Agent, to U. S. Bank Trust National Association, 100
Wall Street, Suite 1600, New York, New York 10005, Attention: Corporate Trust
Services or to such other address as any of the above shall specify to the other
in writing.
7. Conditions to Obligations of Remarketing Agent. Anything herein to
the contrary notwithstanding, the parties hereto agree (and the holders and
beneficial owners of the Notes will be deemed to agree) that the obligations of
the Remarketing Agent under this Agreement and the Remarketing Agreement are
subject to the satisfaction of the conditions set forth in Section 7 of the
Remarketing Agreement (which are incorporated herein by reference), and to the
satisfaction,
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on the Remarketing Closing Date, of the conditions incorporated by reference
herein from Section 7 of the Purchase Agreement as modified by Section 3(b)
hereof (including, without limitation, the delivery of opinions of counsel,
officers' certificates and accountants' comfort letters in form and substance
satisfactory to the Remarketing Agent, the accuracy as of the Remarketing
Closing Date of the representations and warranties of the Company included and
incorporated by reference herein and the performance by the Company of its
obligations under the Remarketing Agreement and this Agreement as and when
required hereby and thereby). In addition, anything herein or in the Remarketing
Agreement to the contrary notwithstanding, the Remarketing Agreement and this
Agreement may be terminated by the Remarketing Agent, by notice to the Company
at any time prior to the time of settlement on the Remarketing Closing Date, if
any of the events or conditions set forth in Section 7(h) or (i) of the Purchase
Agreement, as modified by Section 3(b) hereof, shall have occurred or shall
exist.
8. Indemnity and Contribution. Anything herein to the contrary
notwithstanding, the Remarketing Agent shall be entitled to indemnity and
contribution on the terms and conditions set forth in the Remarketing Agreement.
If the foregoing is in accordance with your understanding of our agreement,
please sign and return to us the enclosed duplicate hereof, whereupon this
letter and your acceptance shall represent a binding agreement among the Company
and the Remarketing Agent.
Very truly yours,
SEMPRA ENERGY
By: ___________________________
Name:
Title:
CONFIRMED AND ACCEPTED:
[REMARKETING AGENT
By: _______________________
Authorized Signatory
[Add other Remarketing Agents, if any]
U.S. BANK TRUST NATIONAL ASSOCIATION
not individually but solely as Purchase
Contract Agent and as attorney-in-fact
for the holders of the Purchase Contracts
By: _______________________
Name:
Title:
SCHEDULE I
Notes subject to the remarketing: $* 5.60% Senior Notes due 2007 of the
Company (the "NOTES").
Purchase Contract Agreement, dated as of April 30, 2002 (the "PURCHASE
CONTRACT AGREEMENT"), by and between Sempra Energy, a California corporation,
and U.S. Bank Trust National Association, a national banking association.
Indenture, dated as of February 23, 2000 (the "BASE INDENTURE"), by and
between Sempra Energy, a California corporation, and U. S. Bank Trust National
Association, a national banking association.
Supplemental Indenture, dated as of April 30, 2002 (the "SUPPLEMENTAL
INDENTURE" and, together with the Base Indenture, the "INDENTURE"), by and
between Sempra Energy, a California corporation, and U. S. Bank Trust National
Association, a national banking association.
Purchase Agreement, dated April 24, 2002 (the "PURCHASE AGREEMENT"), among
Sempra Energy and Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith
Incorporated, Salomon Smith Barney Inc. and the other underwriters named
therein.
Remarketing Closing Date, Time and Location:
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