EXHIBIT 4.5
HOUSEHOLD INTERNATIONAL, INC.
AND
THE BANK OF NEW YORK,
AS PURCHASE CONTRACT AGENT
PURCHASE CONTRACT AGREEMENT
DATED AS OF OCTOBER 30, 2002
TABLE OF CONTENTS
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ARTICLE I DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION.......................................1
SECTION 1.1 Definitions..................................................................................1
SECTION 1.2 Compliance Certificates and Opinions........................................................15
SECTION 1.3 Form of Documents Delivered to Agent........................................................16
SECTION 1.4 Acts of Holders; Record Dates...............................................................16
SECTION 1.5 Notices.....................................................................................18
SECTION 1.6 Notice to Holders; Waiver...................................................................19
SECTION 1.7 Effect of Headings and Table of Contents....................................................19
SECTION 1.8 Successors and Assigns......................................................................19
SECTION 1.9 Separability Clause.........................................................................19
SECTION 1.10 Benefits of Agreement......................................................................19
SECTION 1.11 Governing Law..............................................................................20
SECTION 1.12 Legal Holidays.............................................................................20
SECTION 1.13 Counterparts...............................................................................20
SECTION 1.14 Inspection of Agreement....................................................................20
SECTION 1.15 Appointment of Financial Institution as Agent for the Company..............................21
SECTION 1.16 No Waiver..................................................................................21
ARTICLE II CERTIFICATE FORMS............................................................................21
SECTION 2.1 Forms of Certificates Generally.............................................................21
SECTION 2.2 Form of Agent's Certificate of Authentication...............................................22
ARTICLE III THE UNITS...................................................................................23
SECTION 3.1 Title and Terms; Denominations..............................................................23
SECTION 3.2 Rights and Obligations Evidenced by the Certificates........................................23
SECTION 3.3 Execution, Authentication, Delivery and Dating..............................................24
SECTION 3.4 Temporary Certificates......................................................................25
SECTION 3.5 Registration; Registration of Transfer and Exchange.........................................25
SECTION 3.6 Book-Entry Interests........................................................................27
SECTION 3.7 Notices to Holders..........................................................................28
SECTION 3.8 Appointment of Successor Clearing Agency....................................................28
SECTION 3.9 Definitive Certificates.....................................................................28
SECTION 3.10 Mutilated, Destroyed, Lost and Stolen Certificates.........................................29
SECTION 3.11 Persons Deemed Owners......................................................................30
SECTION 3.12 Cancellation...............................................................................30
SECTION 3.13 Establishment of Stripped Units............................................................31
SECTION 3.14 Reestablishment of Normal Units............................................................33
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SECTION 3.15 Transfer of Collateral upon Occurrence of Termination Event................................34
SECTION 3.16 No Consent to Assumption...................................................................34
SECTION 3.17 CUSIP Numbers..............................................................................35
ARTICLE IV THE NOTES....................................................................................35
SECTION 4.1 Payment of Interest; Rights to Interest Payments Preserved; Notice..........................35
SECTION 4.2 Notice and Voting...........................................................................36
SECTION 4.3 Tax Event Redemption........................................................................37
SECTION 4.4 Consent to Treatment for Tax Purposes.......................................................37
ARTICLE V THE PURCHASE CONTRACTS; THE REMARKETING.......................................................38
SECTION 5.1 Purchase of Common Stock....................................................................38
SECTION 5.2 Intentionally Omitted.......................................................................40
SECTION 5.3 Intentionally Omitted.......................................................................40
SECTION 5.4 Payment of Purchase Price; Remarketing......................................................40
SECTION 5.5 Issuance of Shares of Common Stock..........................................................45
SECTION 5.6 Adjustment of Settlement Rate...............................................................45
SECTION 5.7 Notice of Adjustments and Certain Other Events..............................................52
SECTION 5.8 Termination Event; Notice...................................................................53
SECTION 5.9 Early Settlement............................................................................54
SECTION 5.10 Early Settlement Upon Cash Merger..........................................................55
SECTION 5.11 Charges and Taxes..........................................................................57
SECTION 5.12 No Fractional Shares.......................................................................58
ARTICLE VI REMEDIES.....................................................................................58
SECTION 6.1 Unconditional Right of Holders to Purchase Common Stock.....................................58
SECTION 6.2 Restoration of Rights and Remedies..........................................................58
SECTION 6.3 Rights and Remedies Cumulative..............................................................59
SECTION 6.4 Delay or Omission Not Waiver................................................................59
SECTION 6.5 Undertaking for Costs.......................................................................59
SECTION 6.6 Waiver of Stay or Extension Laws............................................................59
ARTICLE VII THE AGENT...................................................................................60
SECTION 7.1 Certain Duties and Responsibilities.........................................................60
SECTION 7.2 Notice of Default...........................................................................61
SECTION 7.3 Certain Rights of Agent.....................................................................61
SECTION 7.4 Not Responsible for Recitals or Issuance of Units...........................................62
SECTION 7.5 May Hold Units..............................................................................62
SECTION 7.6 Money Held in Custody.......................................................................62
SECTION 7.7 Compensation and Reimbursement..............................................................62
SECTION 7.8 Corporate Agent Required; Eligibility.......................................................63
SECTION 7.9 Resignation and Removal; Appointment of Successor...........................................63
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SECTION 7.10 Acceptance of Appointment by Successor.....................................................65
SECTION 7.11 Merger, Conversion, Consolidation or Succession to Business................................65
SECTION 7.12 Preservation of Information................................................................66
SECTION 7.13 No Obligations of Agent....................................................................66
SECTION 7.14 Tax Compliance.............................................................................66
ARTICLE VIII SUPPLEMENTAL AGREEMENTS....................................................................67
SECTION 8.1 Supplemental Agreements Without Consent of Holders..........................................67
SECTION 8.2 Supplemental Agreements with Consent of Holders.............................................67
SECTION 8.3 Execution of Supplemental Agreements........................................................68
SECTION 8.4 Effect of Supplemental Agreements...........................................................69
SECTION 8.5 Reference to Supplemental Agreements........................................................69
ARTICLE IX CONSOLIDATION, MERGER, SALE OR CONVEYANCE....................................................69
SECTION 9.1 Covenant Not to Merge, Consolidate, Sell or Convey Property Except
Under Certain Conditions................................................................69
SECTION 9.2 Rights and Duties of Successor Corporation..................................................70
SECTION 9.3 Opinion of Counsel Given to Agent...........................................................70
ARTICLE X COVENANTS.....................................................................................70
SECTION 10.1 Performance Under Purchase Contracts.......................................................70
SECTION 10.2 Maintenance of Office or Agency............................................................71
SECTION 10.3 Company to Reserve Common Stock............................................................71
SECTION 10.4 Covenants as to Common Stock...............................................................71
SECTION 10.5 Statements of Officer of the Company as to Default.........................................72
EXHIBITS
EXHIBIT A.........Form of Normal Units Certificate
EXHIBIT B.........Form of Stripped Units Certificate
EXHIBIT C.........Instruction from Purchase Contract Agent to Collateral Agent
EXHIBIT D.........Instruction to Purchase Contract Agent
EXHIBIT E.........Notice to Settle by Separate Cash
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PURCHASE CONTRACT AGREEMENT, dated as of October 30, 2002,
between Household International, Inc., a Delaware corporation (the "Company"),
and The Bank of
New York, a
New York banking corporation, acting as purchase
contract agent and attorney-in-fact for the Holders of Units from time to time
(the "Agent").
RECITALS
The Company has duly authorized the execution and delivery of
this Agreement and the Certificates evidencing the Units.
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 Agent, as provided in this Agreement, the
valid obligations of the Company, and to constitute this Agreement a valid
agreement of the Company, in accordance with its terms, have been done.
WITNESSETH:
For and in consideration of the premises and the purchase of
the Units by the Holders thereof, it is mutually agreed as follows:
ARTICLE I
DEFINITIONS AND OTHER PROVISIONS
OF GENERAL APPLICATION
SECTION 1.1 Definitions.
For all purposes of this Agreement, except as otherwise
expressly provided or unless the context otherwise requires:
(a) the terms defined in this Article have the meanings
assigned to them in this Article and include the plural as well as the
singular, 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 or other subdivision; and
(d) the following terms have the meanings given to them in
this Section 1.1(d):
"Act" when used with respect to any Holder, has the meaning
specified in Section 1.4(a).
"Affiliate" has the same meaning as given to that term in Rule
405 of the Securities Act or any successor rule thereunder.
"Agent" means the Person named as the "Agent" in the first
paragraph of this Agreement until a successor Agent shall have become
such pursuant to the applicable provisions of this Agreement, and
thereafter "Agent" shall mean such Person.
"Agent-purchased Treasury Consideration" has the meaning
specified in Section 5.4(b)(i).
"Agreement" means this agreement 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 Market Value" has the meaning specified in Section
5.1(c).
"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.
"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 Clearing Agency or on the
books of a Person maintaining an account with such Clearing Agency
(directly as a Clearing Agency Participant or as an indirect
participant, in each case in accordance with the rules of such Clearing
Agency).
"Board of Directors" means either the Board of Directors of
the Company or the executive committee of such Board of Directors or
any other committee of such Board of Directors duly authorized to act
generally or in any particular respect for the Board of Directors
hereunder.
"Board Resolution" means (i) a copy of a resolution certified
by the Secretary or the 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, (ii) a copy of a unanimous
written consent of the Board of Directors or (iii) a certificate signed
by the authorized officer or officers to whom the Board of Directors
has delegated its authority, and in each case, delivered to the Agent.
2
"Book-Entry Interest" means a beneficial interest in a Global
Certificate, ownership and transfers of which shall be maintained and
made through book entries by a Clearing Agency as described in Section
3.6.
"Business Day" means any day that is not a Saturday, Sunday or
day on which banking institutions and trust companies in The City of
New York or in the city where the principal corporate trust office of
the Collateral Agent is located or at a place of payment are authorized
or required by law, regulation or executive order to close.
"Capital Stock" means any and all shares, interests, rights to
purchase, warrants, options, participations or other equivalents of or
interests in (however designated, whether voting or non-voting)
corporate stock or similar interests in other types of entities.
"Cash Merger" has the meaning set forth in Section 5.10(a).
"Cash Merger Date" means the date on which a Cash Merger is
consummated.
"Cash Settlement" has the meaning set forth in Section 5.4(a).
"Certificate" means a Normal Units Certificate or a Stripped
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 Units 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 Units.
"Clearing Agency Participant" means a broker, dealer, bank,
trust company, clearing corporation, other financial institution or
other Person for whom from time to time the Clearing Agency effects
book-entry transfers and pledges of securities deposited with the
Clearing Agency.
"Closing Price" has the meaning specified in Section 5.1(c).
"Collateral" has the meaning specified in Section 2.1(a) of
the Pledge Agreement.
"Collateral Agent" means JPMorgan Chase Bank, a
New York
banking corporation, 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.
3
"Collateral Substitution" has the meaning specified in Section
3.13(a).
"Common Stock" means the Common Stock, par value $1 per share,
of the Company.
"Company" means the Person named as the "Company" in the first
paragraph of this Agreement until a successor shall have become such
pursuant to the applicable provisions of this Agreement, and thereafter
"Company" shall mean such successor.
"Constituent Person" has the meaning specified in Section
5.6(b).
"Corporate Trust Office" means the office of the Agent at
which, at any particular time, its corporate trust business shall be
principally administered, which office at the date hereof is located at
▇▇▇▇▇ ▇▇▇▇, ▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention:
Corporate Trust Administration.
"Coupon Rate" means the percentage rate per annum at which
each Note will bear interest initially.
"Current Market Price" has the meaning specified in Section
5.6(a)(8).
"Custodial Agent" means JPMorgan Chase Bank, a
New York
banking corporation, as Custodial Agent under the Pledge Agreement
until a successor Custodial Agent shall have become such pursuant to
the applicable provisions of the Pledge Agreement, and thereafter
"Custodial Agent" shall mean the Person who is then the Custodial Agent
thereunder.
"Default" means a default by the Company in any of its
obligations under this Agreement.
"Depositary" means, initially, DTC, until another Clearing
Agency becomes its successor.
"DTC" means The Depository Trust Company, the initial Clearing
Agency.
"Early Settlement" has the meaning specified in Section
5.9(a).
"Early Settlement Amount" has the meaning specified in Section
5.9(a).
"Early Settlement Date" has the meaning specified in Section
5.9(a).
"Early Settlement Rate" has the meaning specified in Section
5.9(b).
4
"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 specified in Section 1.4(f).
"Expiration Time" has the meaning specified in Section
5.6(a)(6).
"Failed Remarketing" has the meaning specified in Section
5.4(b)(ii).
"Fair Market Value" with respect to securities distributed in
a Spin-Off means (a) in the case of any Spin-Off that is effected
simultaneously with an Initial Public Offering of such securities, the
initial public offering price of those securities and (b) in the case
of any other Spin-Off, (i) the average of the Sale Price of those
securities over the first ten Trading Days after the effective date of
such Spin-Off or (ii) if the Sale Price is required to be defined
without regard to the price on any Trading Days, the Sale Price as of
the effective date of such Spin-Off.
"First Supplemental Indenture" means the First Supplemental
Indenture, dated as of October 30, 2002, to the Indenture between
Household Finance and the Trustee.
"Global Certificate" means a Certificate that evidences all or
part of the Units and is registered in the name of a Depositary or a
nominee thereof.
"Holder" means the Person in whose name the Unit evidenced by
a Normal Units Certificate and/or a Stripped Units Certificate is
registered in the related Normal Units Register and/or the Stripped
Units Register, as the case may be.
"Household Finance" means Household Finance Corporation, a
Delaware corporation.
"Indenture" means the Indenture for Senior Debt Securities,
dated as of November 1, 1994 (including Household Finance's Standard
Multiple-Series Indenture Provisions for Senior Debt Securities, dated
as of June 1, 1992, incorporated by reference therein), between
Household Finance and the Trustee, as supplemented by the First
Supplemental Indenture, pursuant to which the Notes are to be issued,
as originally executed and delivered and as it may from time to time be
supplemented or amended by one or more indentures supplemental thereto
entered into pursuant to the applicable provisions thereof and shall
include the terms of a particular series established as contemplated
thereof.
5
"Initial Public Offering" with respect to a Spin-Off means the
first time securities of the same class or type as the securities being
distributed in such Spin-Off are bona fide offered to the public for
cash.
"Issuer Order" or "Issuer Request" means a written order or
request signed in the name of the Company by the Chief Executive
Officer, the Chief Financial Officer, the President, any
Vice-President, the Treasurer, any Assistant Treasurer, the Secretary
or any Assistant Secretary (or other officer performing similar
functions) of the Company and delivered to the Agent.
"Last Failed Remarketing" has the meaning specified in Section
5.4(b)(ii).
"Merger Early Settlement" has the meaning specified in Section
5.10(a).
"Merger Early Settlement Amount" has the meaning specified in
Section 5.10(b).
"Merger Early Settlement Date" has the meaning specified in
Section 5.10(a)(i).
"Non-electing Share" has the meaning specified in Section
5.6(b).
"Normal Unit" means the collective rights and obligations of a
Holder of a Normal Units Certificate in respect of a Note or the
appropriate Treasury Consideration, as the case may be, subject in each
case to the Pledge thereof, and the related Purchase Contract.
"Normal Units Certificate" means a certificate evidencing the
rights and obligations of a Holder in respect of the number of Normal
Units specified on such certificate, substantially in the form of
Exhibit A hereto.
"Normal Units Register" and "Normal Units Registrar" have the
respective meanings specified in Section 3.5(a).
"Notes" means the 8.875% Senior Notes due February 15, 2008 of
Household Finance issued under the Indenture.
"NYSE" has the meaning specified in Section 5.1(c).
"Officers' Certificate" means a certificate signed by the
Chief Executive Officer, the Chief Financial Officer, the President or
any Vice-President, and by the Treasurer, any Assistant Treasurer, the
Secretary or any Assistant Secretary (or other officer performing
similar functions) of the Company and delivered to the Agent.
6
"Opinion of Counsel" means an opinion in writing signed by
legal counsel, who may be an employee of or counsel to the Company or
an Affiliate of the Company and who shall be reasonably acceptable to
the Agent.
"Opt-out Treasury Consideration" has the meaning specified in
Section 5.4(b)(iv).
"Outstanding Units" means, as of the date of determination,
all Normal Units or Stripped Units evidenced by Certificates
theretofore authenticated, executed and delivered under this Agreement,
except:
(i) If a Termination Event has occurred, (A) Stripped
Units and (B) Normal Units for which the related Notes or the
appropriate Treasury Consideration, as the case may be, has
been theretofore deposited with the Agent in trust for the
Holders of such Normal Units;
(ii) Normal Units and Stripped Units evidenced by
Certificates theretofore cancelled by the Agent or delivered
to the Agent for cancellation or deemed cancelled pursuant to
the provisions of this Agreement; and
(iii) Normal Units and Stripped Units 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 Agent proof satisfactory to it that such
Certificate is held by a protected purchaser in whose hands
the Normal Units or Stripped Units evidenced by such
Certificate are valid obligations of the Company;
provided, that in determining whether the Holders of the requisite
number of the Normal Units or Stripped Units have given any request,
demand, authorization, direction, notice, consent or waiver hereunder,
Normal Units or Stripped Units owned by the Company or any Affiliate of
the Company shall be disregarded and deemed not to be outstanding,
except that, in determining whether the Agent shall be protected in
relying upon any such request, demand, authorization, direction,
notice, consent or waiver, only Normal Units or Stripped Units which a
Responsible Officer of the Agent has actual knowledge to be so owned
shall be so disregarded. Normal Units or Stripped Units so owned which
have been pledged in good faith may be regarded as Outstanding Units if
the pledgee establishes to the satisfaction of the Agent the pledgee's
right so to act with respect to such Normal Units or Stripped Units and
that the pledgee is not the Company or any Affiliate of the Company.
"Payment Date" means each February 15, May 15, August 15 and
November 15, commencing February 15, 2003 and ending on February 15,
2006.
7
"Person" means any individual, corporation, limited liability
company, partnership, joint venture, association, joint-stock company,
trust, unincorporated organization or government or any agency or
political subdivision thereof.
"Pledge" means the pledge under the Pledge Agreement of the
Notes, the Treasury Securities or the appropriate Treasury
Consideration, in each case constituting a part of the Units, property,
cash, securities, financial assets and security entitlements of the
Collateral Account (as defined in the Pledge Agreement) and any
proceeds of any of the foregoing.
"Pledge Agreement" means the Pledge Agreement, dated as of the
date hereof, by and among the Company, the Collateral Agent, the
Custodial Agent, the Securities Intermediary and the Agent, on its own
behalf and as attorney-in-fact for the Holders from time to time of the
Units.
"Pledged Notes" has the meaning set forth in Section 2.1(c) of
the Pledge Agreement.
"Pledged Treasury Consideration" has the meaning set forth in
Section 2.1(c) of the Pledge Agreement.
"Pledged Treasury Securities" has the meaning set forth in
Section 2.1(c) of the Pledge Agreement.
"Predecessor Certificate" means a Predecessor Normal Units
Certificate or a Predecessor Stripped Units Certificate.
"Predecessor Normal Units Certificate" of any particular
Normal Units Certificate means every previous Normal Units Certificate
evidencing all or a portion of the rights and obligations of the
Company and the Holder under the Normal Units evidenced thereby; and,
for the purposes of this definition, any Normal Units Certificate
authenticated and delivered under Section 3.10 in exchange for or in
lieu of a mutilated, destroyed, lost or stolen Normal 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
Normal Units Certificate.
"Predecessor Stripped Units Certificate" of any particular
Stripped Units Certificate means every previous Stripped Units
Certificate evidencing all or a portion of the rights and obligations
of the Company and the Holder under the Stripped Units evidenced
thereby; and, for the purposes of this definition, any Stripped Units
Certificate authenticated and delivered under Section 3.10 in exchange
for or in lieu of a mutilated, destroyed, lost or stolen Stripped 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 Stripped Units Certificate.
8
"Purchase Contract," when used with respect to any Unit, means
the contract forming a part of such Unit and obligating the Company to
sell and the Holder of such Unit to purchase shares of Common Stock on
the terms and subject to the conditions set forth in Article Five.
"Purchase Contract Settlement Fund" has the meaning specified
in Section 5.5.
"Purchase Price" has the meaning specified in Section 5.1(a).
"Purchased Shares" has the meaning specified in Section
5.6(a)(6).
"Quotation Agent" means ▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co. or any of its
successors or any other primary U.S. government securities dealer in
New York City selected by the Company.
"Record Date" for the payment of a distribution payable on any
Payment Date means, as to any Global Certificate, the Business Day next
preceding such Payment Date, and as to any other Certificate, the 15th
calendar day preceding such Payment Date.
"Redemption Price" means, for each Note, the product of (i)
the principal amount of such Note and (ii) a fraction whose numerator
is the applicable Treasury Portfolio Purchase Price and whose
denominator is the applicable Tax Event Redemption Principal Amount.
"Register" means the Normal Units Register and the Stripped
Units Register, as applicable.
"Registrar" means the Normal Units Registrar and the Stripped
Units Registrar, as applicable.
"Remarketing Agent" has the meaning specified in Section
5.4(b)(i).
"Remarketing Agreement" means the Remarketing Agreement to be
entered into by and among the Company, Household Finance, the
Remarketing Agent and the Agent.
"Remarketing Date" means the third Business Day preceding
November 15, 2005.
"Remarketing Fee" has the meaning specified in Section
5.4(b)(i).
"Remarketing Period" means each of (i) the three Business Day
period beginning on the Remarketing Date and ending after the two
immediately following Business Days; (ii) the three Business Day period
immediately
9
preceding December 15, 2005; and (iii) the third Business Day
immediately preceding the Stock Purchase Date.
"Remarketing Rate" means the percentage rate per year at which
each Note will bear interest on and following the Reset Date.
"Remarketing Value" means the sum of
(i) the value at the Remarketing Date or any
Subsequent Remarketing Date, as the case may be, of U.S.
Treasury securities that will pay, on or prior to the Stock
Purchase Date, an amount of cash equal to the interest payment
scheduled to be payable on that date on the Note, assuming for
that purpose, even if not true, that the interest rate on the
Note is equal to the Coupon Rate, and
(ii) the value at the Remarketing Date or any
Subsequent Remarketing Date, as the case may be, of U.S.
Treasury securities that will pay, on or prior to the Stock
Purchase Date, an amount of cash equal to the Stated Amount of
such Note;
provided that for purposes of clauses (i) and (ii) above, the
Remarketing Value shall be calculated on the assumptions that (x) the
U.S. Treasury securities are highly liquid and mature on or within 35
days prior to the Stock Purchase Date, as determined in good faith by
the Remarketing Agent in a manner intended to minimize the cash value
of the U.S. Treasury securities, and (y) the U.S. Treasury securities
are valued based on the ask-side price of such U.S. Treasury securities
at a time between 9:00 a.m. and 11:00 a.m.,
New York City time,
selected by the Remarketing Agent, on the Remarketing Date or any
Subsequent Remarketing Date, as the case may be, as determined on a
third-day settlement basis by a reasonable and customary means selected
in good faith by the Remarketing Agent, plus accrued interest to that
date.
"Reorganization Event" has the meaning specified in Section
5.6(b).
"Reset Date" means the date following the Remarketing Date or
a Subsequent Remarketing Date, as applicable, on which the trades in a
successful remarketing of the Notes, pursuant to the provisions of
Section 5.4, settle.
"Responsible Officer" means, when used with respect to the
Agent, any officer within the Corporate Finance Unit of the Corporate
Trust Division of the Agent (or any successor unit or department of the
Agent) located at the Corporate Trust Office of the Agent who has
direct responsibility for the administration of this Agreement and, for
the purposes of Section 7.1(b)(2), shall also include any officer of
the Agent to whom any corporate trust matter is referred because of
such person's knowledge of and familiarity with the particular subject.
10
"Sale Price" of any securities distributed in a Spin-Off on
any Trading Day means the closing sale price per share (or if no
closing sale price is reported, the average of the bid and ask prices
or, if more than one in either case, the average of the average bid and
average ask prices) on such Trading Day as reported in composite
transactions for the principal U.S. securities exchange on which such
securities are traded or, if such securities are not listed on a U.S.
national or regional securities exchange, as reported by The Nasdaq
Stock Market, or if such securities are not so reported, the last
quoted bid price for such securities in the over-the-counter market as
reported by the National Quotation Bureau or similar organization, or,
if such bid price is not available, the market value of such securities
on such date as determined by a nationally recognized independent
investment banking firm retained by the Company for this purpose.
"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 JPMorgan Chase Bank, a
New
York banking corporation, in its capacity as Securities Intermediary
under the Pledge Agreement, together with its successors in such
capacity.
"Separate Notes" has the meaning set forth in the Pledge
Agreement.
"Settlement Date" means any Early Settlement Date or Merger
Early Settlement Date or the Stock Purchase Date.
"Settlement Rate" has the meaning specified in Section 5.1(a).
"Stock Purchase Date" means February 15, 2006.
"Spin-Off" means a dividend or other distribution on the
Common Stock or shares of Capital Stock of any class or series, or
similar equity interests, of or relating to a subsidiary or other
business unit of the Company.
"Stated Amount" means, with respect to any one Normal Unit,
Stripped Unit or Note, $25.
"Stripped Unit" means the collective rights and obligations of
a Holder of a Stripped Units Certificate in respect of a 1/40 undivided
beneficial interest in a Treasury Security, subject to the Pledge
thereof, and the related Purchase Contract.
"Stripped Units Certificate" means a certificate evidencing
the rights and obligations of a Holder in respect of the number of
Stripped Units specified on such certificate, substantially in the form
of Exhibit B hereto.
11
"Stripped Units Register" and "Stripped Units Registrar" have
the respective meanings specified in Section 3.5(a).
"Subsequent Remarketing" has the meaning specified in Section
5.4(b)(ii).
"Subsequent Remarketing Date" means any date during any
Remarketing Period on which the Remarketing Agent attempts a Subsequent
Remarketing in accordance with Section 5.4 hereof.
"Tax Event" means the receipt by the Company of an opinion of
a nationally recognized tax counsel experienced in such matters to the
effect that there is more than an insubstantial risk that interest
payable by Household Finance on the Notes on the next Payment Date will
not be deductible, in whole or in part, by Household Finance for United
States federal income tax purposes, as a result of (a) any amendment
to, or change (including any announced proposed change) in, the laws
(or any regulations thereunder) of the United States or any political
subdivision or taxing authority thereof or therein affecting taxation,
(b) any amendment to or change in an official interpretation or
application of such laws or regulations by any legislative body, court,
governmental agency or regulatory authority or (c) any official
interpretation, pronouncement or application that provides for a
position with respect to such laws or regulations that differs from the
generally accepted position on October 24, 2002, which amendment,
change or proposed change is effective or which interpretation or
pronouncement is announced on or after October 24, 2002.
"Tax Event Redemption" means, if a Tax Event shall occur and
be continuing, the redemption of the Notes, at the option of Household
Finance, in whole but not in part, on not less than 30 days nor more
than 60 days' prior written notice.
"Tax Event Redemption Date" means the date upon which a Tax
Event Redemption is to occur.
"Tax Event Redemption Principal Amount" means (i) in the case
of a Tax Event Redemption Date occurring prior to a successful
remarketing of the Notes pursuant to Section 5.4 hereof, the aggregate
principal amount of Notes included in Normal Units outstanding on such
date, and (ii) in the case of a Tax Event Redemption Date occurring
after either a successful remarketing of the Notes pursuant to Section
5.4 hereof or the Stock Purchase Date, the aggregate principal amount
of the Notes outstanding on such date.
"Tax Event Redemption Treasury Consideration" means, with
respect to a Normal Unit and the U.S. Treasury securities in the
Treasury Portfolio, (A) a 1/40, or 2.5%, undivided beneficial ownership
interest in a $1,000 principal or interest amount of a principal or
interest strip in a U.S. Treasury security included in such Treasury
Portfolio which matures on or prior to the Stock Purchase Date
12
and (B) for each scheduled interest Payment Date on the Notes that
occurs after the Tax Event Redemption Date and on or before the Stock
Purchase Date a 2.1875% undivided beneficial ownership interest in a
$1,000 principal or interest of a principal or interest strip in a U.S.
Treasury security included in the Treasury Portfolio that matures on or
prior to that interest Payment Date.
"Termination Date" means the date, if any, on which a
Termination Event occurs.
"Termination Event" means the occurrence of any of the
following events:
(i) at any time on or prior to the Stock Purchase
Date, a judgment, decree or court order shall have been
entered granting relief under the Bankruptcy Code or any other
similar foreign, federal or state law, adjudicating the
Company or Household Finance to be insolvent, or approving as
properly filed a petition seeking reorganization or
liquidation of the Company or Household Finance, and, unless
such judgment, decree or order shall have been entered within
60 days prior to the Stock Purchase Date, such decree or order
shall have continued undischarged and unstayed for a period of
60 days;
(ii) at any time on or prior to the Stock Purchase
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 Household Finance or of any of
the Company's or Household Finance's property substantially in
its entirety, or for the winding up or liquidation of the
affairs of the Company or Household Finance, shall have been
entered, and, unless such judgment, decree or order shall have
been entered within 60 days prior to the Stock Purchase 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 Stock Purchase
Date, either the Company or Household Finance shall file a
petition for relief under the Bankruptcy Code or any other
similar foreign, federal or state law, or shall consent to the
filing of a bankruptcy proceeding against either of the
Company or Household Finance, or shall file a petition or
answer or consent seeking reorganization or liquidation under
the Bankruptcy Code or any other similar foreign, 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 the Company or Household Finance or of the Company's or
Household Finance's property substantially in its entirety, 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.
13
"Threshold Appreciation Price" has the meaning specified in
Section 5.1(a).
"TIA" means the Trust Indenture Act of 1939, and any statute
successor thereto, in each case as amended from time to time, and the
rules and regulations promulgated thereunder.
"Trading Day" has the meaning specified in Section 5.1(c).
"Treasury Consideration" means the Agent-purchased Treasury
Consideration, the Opt-out Treasury Consideration or the Tax Event
Redemption Treasury Consideration.
"Treasury Portfolio" means: (i) if a Tax Event Redemption
occurs prior to a successful remarketing of the Notes pursuant to the
provisions of Section 5.4 hereof, a portfolio of (A) zero-coupon U.S.
Treasury securities consisting of principal or interest strips of U.S.
Treasury securities that mature on or prior to the Stock Purchase Date
in an aggregate amount equal to the applicable Tax Event Redemption
Principal Amount and (B) with respect to each scheduled interest
Payment Date on the Notes that occurs after the Tax Event Redemption
Date and on or before the Stock Purchase Date, interest or principal
strips of U.S. Treasury securities that mature on or prior to such
interest Payment Date in an aggregate amount equal to the aggregate
interest payment that would be due on the applicable Tax Event
Redemption Principal Amount on such date if the interest rate of the
Notes were not reset on the Reset Date, and (ii) solely for purposes of
determining the Treasury Portfolio Purchase Price in the case of a Tax
Event Redemption Date occurring after either of a successful
remarketing of the Notes or the Stock Purchase Date, a portfolio of (A)
zero-coupon U.S. Treasury securities consisting of principal or
interest strips of U.S. Treasury securities that mature on or prior to
February 15, 2008 in an aggregate amount equal to the applicable Tax
Event Redemption Principal Amount and (B) with respect to each
scheduled interest Payment Date on the Notes that occurs after the Tax
Event Redemption Date and on or before February 15, 2008, interest or
principal strips of U.S. Treasury securities that mature on or prior to
such interest Payment Date in an aggregate amount equal to the
aggregate interest payment that would be due on the applicable Tax
Event Redemption Principal Amount.
"Treasury Portfolio Purchase Price" means the lowest aggregate
price quoted by a primary U.S. government securities dealer in
New York
City to the Quotation Agent on the third Business Day immediately
preceding the Tax Event Redemption Date for the purchase of the
Treasury Portfolio for settlement on the Tax Event Redemption Date.
"Treasury Security" means a zero-coupon U.S. Treasury security
(CUSIP Number ▇▇▇▇▇▇▇▇▇) maturing on February 15, 2006 that will pay
$1,000 on such maturity date.
14
"Trustee" means The Bank of New York, a New York banking
corporation, as successor-in-interest to NationsBank of Tennessee as
trustee under the Indenture, and trustee under the First Supplemental
Indenture, or any successor thereto.
"Underwriting Agreement" means the Underwriting Agreement
relating to the Units dated October 24, 2002 among the Company,
Household Finance and ▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co.
"Unit" means a Normal Unit or a Stripped Unit.
"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 1.2 Compliance Certificates and Opinions.
Except as otherwise expressly provided by this Agreement, upon
any application or request by the Company to the Agent to take any action under
any provision of this Agreement, the Company shall furnish to the 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 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.
Every certificate or opinion with respect to compliance with a
condition or covenant provided for in this Agreement shall include:
(a) a statement that the individual signing such certificate
or opinion has read such covenant or condition and the definitions
herein relating thereto;
(b) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions
contained in such certificate or opinion are based;
(c) a statement that, in the opinion of such individual, he or
she has made such examination or investigation as is necessary to
enable such individual to express an informed opinion as to whether or
not such covenant or condition has been complied with; and
(d) a statement as to whether, in the opinion of such
individual based on his or her knowledge, such condition or covenant
has been complied with.
15
SECTION 1.3 Form of Documents Delivered to Agent.
(a) 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.
(b) 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 1.4 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 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 7.1) conclusive in
favor of the 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 Agent
deems sufficient.
16
(c) The ownership of Units shall be proved by the Normal Units
Register or the Stripped Units Register, as the case may be.
(d) Any request, demand, authorization, direction, notice,
consent, waiver or other Act of the Holder of any Certificate shall
bind every future Holder of the same Certificate and the Holder of
every Certificate 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 Agent or the Company in reliance
thereon, whether or not notation of such action is made upon such
Certificate.
(e) The Company may set any day as a record date for the
purpose of determining the Holders of Outstanding Units 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 Units. If any record
date is set pursuant to this paragraph, the Holders of the Outstanding
Normal Units and the Outstanding Stripped 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 Normal Units or the Stripped 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 on or prior to the applicable Expiration Date by
Holders of the requisite number of Outstanding Units on such record
date. Nothing 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 of no effect), and nothing in
this paragraph shall be construed to render ineffective any action
taken by Holders of the requisite number of Outstanding Units 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 Agent in writing and
to each Holder of Units in the manner set forth in Section 1.6.
(f) 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 Agent in
writing, and to each Holder of Units in the manner set forth in Section
1.6, on or prior to 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
17
foregoing, no Expiration Date shall be later than the 180th day after
the applicable record date.
SECTION 1.5 Notices.
Any request, demand, authorization, direction, notice,
consent, waiver or Act of Holders or other document provided or permitted by
this Agreement to be made upon, given or furnished to, or filed with:
(a) the Agent by any Holder or by the Company shall be
sufficient for every purpose hereunder (unless otherwise herein
expressly provided) if made, given, furnished or filed in writing and
personally delivered, mailed, first-class postage prepaid, telecopied
or delivered by overnight air courier guaranteeing next day delivery,
addressed to and received by the Agent at The Bank of New York, Suite
1020, ▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention:
Corporate Trust Administration, telecopy: (▇▇▇) ▇▇▇-▇▇▇▇, or at any
other address furnished in writing by the Agent to the Holders and the
Company; or
(b) the Company by the Agent or by any Holder shall be
sufficient for every purpose hereunder (unless otherwise herein
expressly provided) if made, given, furnished or filed in writing and
personally delivered, mailed, first-class postage prepaid, telecopied
or delivered by overnight air courier guaranteeing at least second day
delivery, addressed to and received by the Company at ▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: Treasurer, telecopy:
(▇▇▇) ▇▇▇-▇▇▇▇, or at any other address furnished in writing to the
Agent by the Company; or
(c) the Collateral Agent by the Agent, the Company or any
Holder shall be sufficient for every purpose hereunder (unless
otherwise herein expressly provided) if made, given, furnished or filed
in writing and personally delivered, mailed, first-class postage
prepaid, telecopied or delivered by overnight air courier guaranteeing
next day delivery, addressed to and received by the Collateral Agent at
JPMorgan Chase Bank, 4 New York Plaza, 15th Floor, New York, New York
10004, Attention: Institutional Trust Services, telecopy: (212)
623-6167, or at any other address furnished in writing by the
Collateral Agent to the Agent, the Company and the Holders; or
(d) the Trustee by the Company shall be sufficient for every
purpose hereunder (unless otherwise herein expressly provided) if made,
given, furnished or filed in writing and personally delivered, mailed,
first-class postage prepaid, telecopied or delivered by overnight air
courier guaranteeing next day delivery, addressed to and received by
the Trustee at The Bank of New York, Suite 1020, ▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: Corporate Trust
Administration, telecopy: (▇▇▇) ▇▇▇-▇▇▇▇, or at any other address
furnished in writing by the Trustee to the Company.
18
SECTION 1.6 Notice to Holders; Waiver.
(a) 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 applicable 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 Agent, but such filing
shall not be a condition precedent to the validity of any action taken
in reliance upon such waiver.
(b) 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 Agent shall constitute a sufficient notification
for every purpose hereunder.
SECTION 1.7 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 1.8 Successors and Assigns.
All covenants and agreements in this Agreement by the Company
shall bind its successors and assigns, whether so expressed or not.
SECTION 1.9 Separability Clause.
If any provision hereof is invalid and unenforceable in any
jurisdiction, then, to the fullest extent permitted by law, (i) the other
provisions hereof shall remain in full force and effect in such jurisdiction and
shall be liberally construed in order to carry out the intentions of the parties
hereto as nearly as may be possible and (ii) the invalidity or unenforceability
of any provision hereof in any jurisdiction shall not affect the validity or
enforceability of such provision in any other jurisdiction.
SECTION 1.10 Benefits of Agreement.
Nothing in this Agreement or in the Units, 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
19
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 Units evidenced by their Certificates by their acceptance of delivery
of such Certificates.
SECTION 1.11 Governing Law.
(a) This Agreement and the Units shall be governed by, deemed
to be a contract under, and construed in accordance with, the laws of the State
of New York (including without limitation Section 5-1401 of the New York General
Obligations Law or any successor to such statute), and (by their acceptance of
the Units) the Holders agree to submit to the non-exclusive jurisdiction of any
United States federal or state court located in the Borough of Manhattan, in
the City of New York, in any action or proceeding arising out of or relating to
this Agreement or the Units.
(b) The Agent and the Company hereby knowingly, voluntarily
and intentionally waive any rights they may have to a trial by jury in respect
of any litigation based hereon, or arising out of, under or in connection with,
this Agreement or any course of conduct, course of dealing, statements (whether
oral or written) or actions of the Agent or the Company relating thereto. The
Company acknowledges and agrees that it has received full and sufficient
consideration for this provision and that this provision is a material
inducement for the Agent and the Holders entering into this Agreement.
SECTION 1.12 Legal Holidays.
(a) In any case where any Payment Date shall not be a Business
Day, then (notwithstanding any other provision of this Agreement or the
Normal Units Certificates) payments on the Notes shall not be made on
such date, but such payments shall be made on the next succeeding day
which is a 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 in respect of such payment for the period from and after
any such Payment Date, except that if such next succeeding Business Day
is in the next succeeding calendar year, such payment shall be made on
the immediately preceding Business Day with the same force and effect
as if made on such Payment Date.
(b) Intentionally omitted.
(c) In any case where the Stock Purchase Date shall not be a
Business Day, then (notwithstanding any other provision of this
Agreement or the Certificates), the Purchase Contracts shall not be
performed on such date, but the Purchase Contracts shall be performed
on the next succeeding day which is a Business Day with the same force
and effect as if performed on the Stock Purchase Date.
SECTION 1.13 Counterparts.
This Agreement may be executed in any number of counterparts,
all of which taken together shall constitute one and the same instrument, and
any of the parties hereto may execute this Agreement by signing any such
counterpart.
SECTION 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.
20
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 Agent and the
Holders, under this Agreement and the Purchase Contracts, by giving notice of
such appointment in the manner provided in Section 1.5 hereof. Any such
appointment shall not relieve the Company in any way from its obligation
hereunder.
SECTION 1.16 No Waiver.
No failure on the part of the Company, the 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 Agent, the
Collateral Agent, the Securities Intermediary or any of their respective agents
of any right, power or remedy hereunder preclude any further exercise thereof or
the exercise of any right, power or remedy. The remedies herein are cumulative
and are not exclusive of any remedies provided by law.
ARTICLE II
CERTIFICATE FORMS
SECTION 2.1 Forms of Certificates Generally.
(a) The Normal Units Certificates (including the form of
Purchase Contract forming part of the Normal Units evidenced thereby)
shall be in substantially the form set forth in Exhibit A hereto, 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 or
quotation system on which the Normal Units are listed or quoted for
trading or any depositary therefor, or as may, consistently herewith,
be determined by the officers of the Company executing such Normal
Units Certificates, as evidenced by their execution of the Normal Units
Certificates.
(b) The definitive Normal Units 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 such Normal Units Certificates, consistent with the
provisions of this Agreement, as evidenced by their execution thereof.
(c) The Stripped Units Certificates (including the form of
Purchase Contracts forming part of the Stripped Units evidenced
thereby) shall be in substantially the form set forth in Exhibit B
hereto, with such letters, numbers or
21
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 or the quotation
system on which the Stripped Units may be listed or quoted for trading
or any depositary therefor, or as may, consistently herewith, be
determined by the officers of the Company executing such Stripped Units
Certificates, as evidenced by their execution of the Stripped Units
Certificates.
(d) The definitive Stripped Units 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 such Stripped Units Certificates, consistent with the
provisions of this Agreement, as evidenced by their execution thereof.
(e) 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 (AS DEFINED ON THE REVERSE
HEREOF) AND IS REGISTERED IN THE NAME OF THE CLEARING AGENCY
OR A NOMINEE THEREOF. THIS CERTIFICATE MAY NOT BE EXCHANGED IN
WHOLE OR IN PART FOR A CERTIFICATE REGISTERED, AND NO TRANSFER
OF THIS CERTIFICATE IN WHOLE OR IN PART MAY BE REGISTERED, IN
THE NAME OF ANY PERSON OTHER THAN SUCH CLEARING AGENCY OR A
NOMINEE THEREOF, EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED
IN THE
PURCHASE CONTRACT AGREEMENT.
[Unless this Certificate is presented by an authorized
representative of the Depository Trust Company (55 ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇) to the Company or its agent for
registration or 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 Depository Trust Company, and any payment hereon is
made to Cede & Co., ANY TRANSFER PLEDGE OR OTHER USE HEREOF OR
OTHERWISE BY A PERSON IS WRONGFUL since the registered owner
hereof, Cede & Co., has an interest herein.]"
SECTION 2.2 Form of Agent's Certificate of Authentication.
(a) The form of the Agent's certificate of authentication of
the Normal Units shall be in substantially the form set forth on the
form of the Normal Units Certificates.
22
(b) The form of the Agent's certificate of authentication of
the Stripped Units shall be in substantially the form set forth on the
form of the Stripped Units Certificates.
ARTICLE III
THE UNITS
SECTION 3.1 Title and Terms; Denominations.
(a) The aggregate number of Normal Units and Stripped Units,
if any, evidenced by Certificates authenticated, executed on behalf of
the Holders and delivered hereunder is limited to 20,000,000
(23,000,000 if the underwriter's option to purchase additional Normal
Units pursuant to the Underwriting Agreement is exercised in full),
except for Certificates authenticated, executed on behalf of the Holder
and delivered upon registration of transfer of, in exchange for, or in
lieu of, other Certificates pursuant to Section 3.4, 3.5, 3.10, 3.13,
3.14, 5.9(e), 5.10(e) or 8.5.
(b) The Certificates shall be issuable only in registered form
and only in denominations of a single Unit and any integral multiple
thereof.
SECTION 3.2 Rights and Obligations Evidenced by the
Certificates.
(a) Each Normal Units Certificate shall evidence the number of
Normal Units specified therein, with each such Normal Unit representing
the ownership by the Holder thereof of a Note or the appropriate
Treasury Consideration, as the case may be, subject to the Pledge of
the Note or such Treasury Consideration, as the case may be, by such
Holder pursuant to the Pledge Agreement, and the rights and obligations
of the Holder thereof and the Company under one Purchase Contract. The
Agent as attorney-in-fact for, and on behalf of, the Holder of each
Normal Unit shall pledge, pursuant to the Pledge Agreement, the Note or
the Treasury Consideration forming a part of such Normal Unit, to the
Collateral Agent and grant to the Collateral Agent a security interest
in the right, title, and interest of such Holder in the Note or
Treasury Consideration for the benefit of the Company, to secure the
obligation of such Holder under the related Purchase Contract to
purchase shares of Common Stock of the Company.
(b) Each Stripped Units Certificate shall evidence the number
of Stripped Units specified therein, with each such Stripped Unit
representing the ownership by the Holder thereof of a 1/40 undivided
beneficial interest in a Treasury Security, subject to the Pledge of
such interest in such Treasury Security by such Holder pursuant to the
Pledge Agreement, and the rights and obligations of the Holder thereof
and the Company under one Purchase Contract. The Agent as
attorney-in-fact for, and on behalf of, the Holder of each Stripped
Unit shall
23
pledge, pursuant to the Pledge Agreement, the interest in the Treasury
Security forming a part of such Stripped 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 interest in the Treasury
Security for the benefit of the Company, to secure the obligation of
such Holder under the related Purchase Contract to purchase shares of
Common Stock of the Company.
(c) Prior to the purchase of shares of Common Stock under each
Purchase Contract, such Purchase Contract shall not entitle the Holder
of the related Units Certificates 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
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 3.3 Execution, Authentication, Delivery and Dating.
(a) Subject to the provisions of Sections 3.13 and 3.14, 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 Agent for authentication, execution on behalf of
the Holders and delivery, together with its Issuer Order for
authentication of such Certificates, and the Agent in accordance with
such Issuer Order shall authenticate, execute on behalf of the Holders
and deliver such Certificates.
(b) The Certificates shall be executed on behalf of the
Company by the Chief Executive Officer, the Chief Financial Officer,
the President, any Vice-President, the Treasurer, any Assistant
Treasurer, the Secretary or any Assistant Secretary (or other officer
performing similar functions) of the Company and delivered to the
Agent. The signature of any of these officers on the Certificates may
be manual or facsimile.
(c) 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.
(d) 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 signatory of the Agent, as
such Holder's attorney-in-fact. Such signature by an authorized
signatory of the Agent shall be conclusive evidence that the Holder of
such Certificate has entered into the Purchase Contract or Purchase
Contracts evidenced by such Certificate.
(e) Each Certificate shall be dated the date of its
authentication.
24
(f) 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
signatory of the 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 3.4 Temporary Certificates.
(a) Pending the preparation of definitive Certificates, the
Company shall execute and deliver to the Agent, and the 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 Normal Units or Stripped Units, as the
case may be, are listed or quoted for trading or any depositary
transfer, or as may, consistently herewith, be determined by the
officers of the Company executing such Certificates, as evidenced by
their execution of the Certificates.
(b) 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 Agent, and the 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 Normal Units or Stripped
Units, as the case may be, 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 Normal Units or Stripped Units, as the case may be,
evidenced thereby as definitive Certificates.
SECTION 3.5 Registration; Registration of Transfer and
Exchange.
(a) The Agent shall keep at the Corporate Trust Office a
register (the "Normal Units Register") in which, subject to such
reasonable regulations as it may prescribe, the Agent shall provide for
the registration of Normal Units Certificates and of transfers of
Normal Units Certificates (the Agent, in such capacity, the "Normal
Units Registrar") and a register (the "Stripped Units Register") in
which, subject to such reasonable regulations as it may prescribe, the
25
Agent shall provide for the registration of the Stripped Units
Certificates and transfers of Stripped Units Certificates (the Agent,
in such capacity, the "Stripped Units Registrar").
(b) Upon surrender for registration of transfer of any
Certificate at the Corporate Trust Office, the Company shall execute
and deliver to the Agent, and the Agent shall authenticate, execute on
behalf of the designated transferee or transferees, and deliver one or
more new Certificates of like tenor and denominations, registered in
the name of the designated transferee or transferees, and evidencing a
like number of Normal Units or Stripped Units, as the case may be.
(c) At the option of the Holder, Certificates may be exchanged
for other Certificates, of like tenor and denominations and evidencing
a like number of Normal Units or Stripped 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 Agent, and the
Agent shall authenticate, execute on behalf of the Holder, and deliver
the Certificates which the Holder making the exchange is entitled to
receive.
(d) All Certificates issued upon any registration of transfer
or exchange of a Certificate shall evidence the ownership of the same
number of Normal Units or Stripped Units, as the case may be, and be
entitled to the same benefits and subject to the same obligations,
under this Agreement as the Normal Units or Stripped Units, as the case
may be, evidenced by the Certificate surrendered upon such registration
of transfer or exchange.
(e) Every Certificate presented or surrendered for
registration of transfer or for exchange shall (if so required by the
Company or the Agent) be duly endorsed, or be accompanied by a written
instrument of transfer in form satisfactory to the Company and the
Agent duly executed by the Holder thereof or its attorney duly
authorized in writing.
(f) No service charge shall be made for any registration of
transfer or exchange of a Certificate, but the Company and the 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 3.6, 3.9 and 8.5 not involving any
transfer.
(g) Notwithstanding the foregoing, the Company shall not be
obligated to execute and deliver to the Agent, and the Agent shall not
be obligated to authenticate, execute on behalf of the Holder and
deliver, any Certificate presented or surrendered for registration of
transfer or for exchange on or after the Business Day immediately
preceding the earlier of the Stock Purchase Date or the
26
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 Agent shall,
(i) if the Stock Purchase Date has occurred, deliver
the shares of Common Stock issuable in respect of the Purchase
Contracts forming a part of the Units evidenced by such
Certificate,
(ii) in the case of Normal Units, if a Termination
Event shall have occurred prior to the Stock Purchase Date,
transfer the Notes or the appropriate Treasury Consideration,
as applicable, relating to such Normal Units, or
(iii) in the case of Stripped Units, if a Termination
Event shall have occurred prior to the Stock Purchase Date,
transfer the Treasury Securities relating to such Stripped
Units,
in each case subject to the applicable conditions and in accordance
with the applicable provisions of Article V.
SECTION 3.6 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 a nominee or custodian thereof by, or on behalf of, the Company.
Such Global Certificate 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 3.9. The Agent shall enter into a customary 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 3.9:
(a) the provisions of this Section 3.6 shall be in full force
and effect;
(b) the Company and the Agent shall be entitled to deal with
the Clearing Agency for all purposes of this Agreement (including
receiving approvals, votes or consents hereunder) as the Holder of the
Units and the sole holder of the Global Certificate(s) and shall have
no obligation to the Beneficial Owners;
(c) to the extent that the provisions of this Section 3.6
conflict with any other provisions of this Agreement or any
Certificate, the provisions of this Section 3.6 shall control; and
(d) the rights of the Beneficial Owners shall be exercised
only through the Clearing Agency and shall be limited to those
established by law and
27
agreements between such Beneficial Owners and the Clearing Agency
and/or the Clearing Agency Participants.
The Clearing Agency will make book-entry transfers among
Clearing Agency Participants.
SECTION 3.7 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 Units registered in the name of a Clearing Agency or the nominee of a
Clearing Agency, the Company or the Company's agent shall, except as set forth
herein, have no obligations to the Beneficial Owners.
SECTION 3.8 Appointment of Successor Clearing Agency.
If any Clearing Agency elects to discontinue its services as
securities depositary with respect to the Units, the Company may, in its sole
discretion, appoint a successor Clearing Agency with respect to the Units.
SECTION 3.9 Definitive Certificates.
If
(i) a Clearing Agency notifies the Company that it is
unwilling or unable to continue its services as securities
depositary with respect to the Units and a successor Clearing
Agency is not appointed within 90 days after such
discontinuance pursuant to Section 3.8,
(ii) the Company elects to terminate the book-entry
system arrangements through the Clearing Agency with respect
to the Units, or
(iii) there shall have occurred and be continuing a
default by the Company in respect of its obligations under one
or more Purchase Contracts,
then upon surrender of the Global Certificates representing the Book-Entry
Interests with respect to the Units by the Clearing Agency, accompanied by
registration instructions, the Company shall cause definitive Certificates to be
delivered to Beneficial Owners in accordance with the instructions of the
Clearing Agency. The Company 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.
28
SECTION 3.10 Mutilated, Destroyed, Lost and Stolen
Certificates.
(a) If any mutilated Certificate is surrendered to the Agent,
the Company shall execute and deliver to the Agent, and the Agent shall
authenticate, execute on behalf of the Holder, and deliver in exchange
therefor, a new Certificate at the cost of the Holder, evidencing the
same number of Normal Units or Stripped Units, as the case may be, and
bearing a Certificate number not contemporaneously outstanding.
(b) If there shall be delivered to the Company and the Agent
(i) evidence to their satisfaction of the destruction, loss or theft of
any Certificate, and (ii) such security or indemnity at the cost of the
Holder as may be required by them to hold each of them and any agent of
either of them harmless, then, in the absence of notice to the Company
or to a Responsible Officer of the Agent that such Certificate has been
acquired by a protected purchaser, the Company shall execute and
deliver to the Agent, and the 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 Normal Units or Stripped Units, as the case may be,
and bearing a Certificate number not contemporaneously outstanding.
(c) Notwithstanding the foregoing, the Company shall not be
obligated to execute and deliver to the Agent, and the 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 earlier of the Stock Purchase 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 Agent shall
(i) if the Stock Purchase Date has occurred, deliver
the shares of Common Stock issuable in respect of the Purchase
Contracts forming a part of the Units evidenced by such
Certificate,
(ii) in the case of Normal Units, if a Termination
Event shall have occurred prior to the Stock Purchase Date,
transfer the Notes or the appropriate Treasury Consideration,
as applicable, relating to such Normal Units, or
(iii) in the case of Stripped Units, if a Termination
Event shall have occurred prior to the Stock Purchase Date,
transfer the Treasury Securities relating to such Stripped
Units,
in each case subject to the applicable conditions and in accordance
with the applicable provisions of Article V.
29
(d) Upon the issuance of any new Certificate under this
Section, the Company and the 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 expenses
(including the fees and expenses of the Agent) connected therewith.
(e) 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 Unit evidenced thereby, whether or not the
destroyed, lost or stolen Certificate (and the Units 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.
(f) 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.
(a) Prior to due presentment of a Certificate for registration
of transfer, the Company and the Agent, and any agent of the Company or
the Agent, may treat the Person in whose name such Certificate is
registered on the Register as the owner of the Units evidenced thereby,
for the purpose of receiving quarterly payments of interest on the
Notes or the Treasury Consideration, performance of the Purchase
Contracts and for all other purposes whatsoever, whether or not any
such payments shall be overdue and notwithstanding any notice to the
contrary, and neither the Company nor the Agent, nor any agent of the
Company or the Agent, shall be affected by notice to the contrary.
(b) Notwithstanding the foregoing, with respect to any Global
Certificate, nothing herein shall prevent the Company, the Agent or any
agent of the Company or the Agent, from treating the Clearing Agency as
the sole Holder of such Global Certificate or from giving effect to any
written certification, proxy or other authorization furnished by any
Clearing Agency (or its nominee), as a Holder of such Global
Certificate, with respect to such Global Certificate or impair, as
between such Clearing Agency and owners of beneficial interests in such
Global Certificate, the operation of customary practices governing the
exercise of rights of such Clearing Agency (or its nominee) as a Holder
of such Global Certificate.
SECTION 3.12 Cancellation.
(a) All Certificates surrendered (i) for delivery of Common
Stock on or after any Settlement Date; (ii) upon the transfer of Notes
or Treasury
30
Consideration or Treasury Securities, as the case may be, after the
occurrence of a Termination Event or pursuant to an Early Settlement or
Merger Early Settlement, or a Collateral Substitution or an
establishment or re-establishment of a Normal Unit; or (iii) upon the
registration of a transfer or exchange of a Unit shall, if surrendered
to any Person other than the Agent, be delivered to the Agent and, if
not already cancelled, shall be promptly cancelled by it. The Company
may at any time deliver to the Agent for cancellation any Certificates
previously authenticated, executed on behalf of the Holder and
delivered hereunder which the Company may have acquired in any manner
whatsoever, and all Certificates so delivered shall, upon Issuer Order,
be promptly cancelled by the 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 Agreement. All cancelled
Certificates held by the Agent shall be disposed of by the Agent in
accordance with its then customary procedures.
(b) 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 Agent cancelled or for cancellation.
SECTION 3.13 Establishment of Stripped Units.
(a) A Holder may separate the Pledged Notes or Pledged
Treasury Consideration, as applicable, from the related Purchase
Contracts in respect of the Normal Units held by such Holder by
substituting for such Pledged Notes or Pledged Treasury Consideration,
as the case may be, Treasury Securities that will pay at the Stock
Purchase Date an amount equal to the aggregate Stated Amount of such
Normal Units (a "Collateral Substitution"), at any time from and after
the date of this Agreement and on or prior to the second Business Day
immediately preceding the Stock Purchase Date, by (i) depositing with
the Collateral Agent Treasury Securities having an aggregate principal
amount equal to the aggregate Stated Amount of such Normal Units, and
(ii) transferring the related Normal Units to the Agent accompanied by
a notice to the Agent, substantially in the form of Exhibit D hereto,
stating that the Holder has transferred the relevant amount of Treasury
Securities to the Collateral Agent and requesting that the Agent
instruct the Collateral Agent to release the Pledged Notes or Pledged
Treasury Consideration, as the case may be, underlying such Normal
Units, whereupon the Agent shall promptly give such instruction to the
Collateral Agent, substantially in the form of Exhibit C hereto.
Notwithstanding the foregoing, a Holder may not separate the Pledged
Notes or Pledged Treasury Consideration from the related Purchase
Contracts in respect of the Normal Units held by such Holder during the
periods beginning on the fourth Business Day prior to the first day of
any Remarketing Period and ending on the third Business Day after the
end of such Remarketing Period. Upon receipt of the Treasury Securities
described in
31
clause (i) above and the instruction described in clause (ii) above, in
accordance with the terms of the Pledge Agreement, the Collateral Agent
will release to the Agent, on behalf of the Holder, such Pledged Notes
or Pledged Treasury Consideration from the Pledge, free and clear of
the Company's security interest therein, and upon receipt thereof the
Agent shall promptly:
(x) cancel the related Normal Units;
(y) transfer the Pledged Notes or Pledged Treasury
Consideration, as the case may be, to the Holder; and
(z) authenticate, execute on behalf of such Holder
and deliver a Stripped Units Certificate executed by the
Company in accordance with Section 3.3 evidencing the same
number of Purchase Contracts as were evidenced by the
cancelled Normal Units.
(b) Holders who elect to separate the Pledged Notes or Pledged
Treasury Consideration, as the case may be, from the related Purchase
Contract and to substitute Treasury Securities for such Pledged Notes
or Pledged Treasury Consideration shall be responsible for any fees or
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.
(c) Holders may make Collateral Substitutions (i) if Treasury
Securities are being substituted for Pledged Notes, only in integral
multiples of 40 Normal Units, or (ii) if the Collateral Substitutions
occur after a successful remarketing of the Notes pursuant to the
provisions of Section 5.4 or after a Tax Event Redemption, as the case
may be, only in integral multiples of Normal Units such that the
Treasury Securities to be deposited and the Treasury Consideration to
be released are in integral multiples of $1,000.
(d) In the event a Holder making a Collateral Substitution
pursuant to this Section 3.13 fails to effect a book-entry transfer of
the Normal Units or fails to deliver a Normal Units Certificate to the
Agent after depositing Treasury Securities with the Collateral Agent,
the Pledged Notes or Pledged Treasury Consideration, as the case may
be, constituting a part of such Normal Units, and any distributions on
such Pledged Notes or Pledged Treasury Consideration shall be held in
the name of the Agent or its nominee in trust for the benefit of such
Holder, until such Normal Units are so transferred or the Normal Units
Certificate is so delivered, as the case may be, or, with respect to a
Normal Units Certificate, such Holder provides evidence satisfactory to
the Company and the Agent that such Normal Units Certificate has been
destroyed, lost or stolen, together with any indemnity that may be
required by the Agent and the Company.
(e) Except as described in this Section 3.13, for so long as
the Purchase Contract underlying a Normal Unit remains in effect, such
Normal Unit
32
shall not be separable into its constituent parts, and the rights and
obligations of the Holder of such Normal Unit in respect of the Pledged
Note or the Pledged Treasury Consideration, as the case may be, and the
Purchase Contract comprising such Normal Unit may be acquired, and may
be transferred and exchanged, only as a Normal Unit.
SECTION 3.14 Reestablishment of Normal Units.
(a) A Holder of Stripped Units may reestablish Normal Units at
any time from and after the date of this Agreement and on or prior to
the second Business Day immediately preceding the Stock Purchase Date,
by (i) depositing with the Collateral Agent the Notes or the
appropriate Treasury Consideration (identified and calculated by
reference to the Treasury Consideration then comprising Normal Units),
as the case may be, then comprising such number of Normal Units as is
equal to the number of such Stripped Units and (ii) transferring such
Stripped Units to the Agent accompanied by a notice to the Agent,
substantially in the form of Exhibit D hereto, stating that the Holder
has transferred the relevant amount of Notes or the appropriate
Treasury Consideration, as the case may be, to the Collateral Agent and
requesting that the Agent instruct the Collateral Agent to release the
Pledged Treasury Securities underlying such Stripped Unit, whereupon
the Agent shall promptly give such instruction to the Collateral Agent,
substantially in the form of Exhibit C hereto. Notwithstanding the
foregoing, a Holder may not reestablish Normal Units during the periods
beginning on the fourth Business Day prior to the first day of any
Remarketing Period and ending on the third Business Day after the end
of such Remarketing Period. Upon receipt of the Notes or the
appropriate Treasury Consideration, as the case may be, described in
clause (i) above and the instruction described in clause (ii) above, in
accordance with the terms of the Pledge Agreement, the Collateral Agent
will release to the Agent, on behalf of the Holder, such Pledged
Treasury Securities from the Pledge, free and clear of the Company's
security interest therein, and upon receipt thereof the Agent shall
promptly:
(x) cancel the related Stripped Units;
(y) transfer the Pledged Treasury Securities to the
Holder; and
(z) authenticate, execute on behalf of such Holder
and deliver a Normal Units Certificate executed by the Company
in accordance with Section 3.3 evidencing the same number of
Purchase Contracts as were evidenced by the cancelled Stripped
Units.
(b) Holders of Stripped Units may reestablish Normal Units (i)
if Notes are being substituted for the Pledged Treasury Securities,
only in integral multiples of 40 Stripped Units for 40 Normal Units or
(ii) if the reestablishment occurs after a successful remarketing of
the Notes pursuant to the provisions of
33
Section 5.4 or after a Tax Event Redemption, as the case may be, only
in integral multiples of Stripped Units such that the Treasury
Consideration to be deposited and the Treasury Securities to be
released are in integral multiples of $1,000.
(c) Except as provided in this Section 3.14, for so long as
the Purchase Contract underlying a Stripped Unit remains in effect,
such Stripped Unit shall not be separable into its constituent parts,
and the rights and obligations of the Holder of such Stripped Unit in
respect of the Pledged Treasury Securities and Purchase Contract
comprising such Stripped Unit may be acquired, and may be transferred
and exchanged, only as a Stripped Unit.
SECTION 3.15 Transfer of Collateral upon Occurrence of
Termination Event.
Upon the occurrence of a Termination Event and the transfer to
the Agent of the Notes or the appropriate Treasury Consideration or the Treasury
Securities, as the case may be, underlying the Normal Units and the Stripped
Units pursuant to the terms of the Pledge Agreement, the Agent shall request
transfer instructions with respect to such Notes or the appropriate Treasury
Consideration or Treasury Securities, as the case may be, from each Holder by
written request mailed to such Holder at its address as it appears in the Normal
Units Register or the Stripped Units Register, as the case may be. Upon
book-entry transfer of the Normal Units or Stripped Units or delivery of a
Normal Units Certificate or Stripped Units Certificate to the Agent with such
transfer instructions, the Agent shall transfer the Notes, the appropriate
Treasury Consideration or the Treasury Securities underlying such Normal Units
or Stripped 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 Normal Units or Stripped Units fails to effect such transfer or
delivery, the Notes, the appropriate Treasury Consideration or the Treasury
Securities, as the case may be, underlying such Normal Units or Stripped Units,
as the case may be, and any distributions thereon, shall be held in the name of
the Agent or its nominee in trust for the benefit of such Holder, until such
Normal Units or Stripped Units are transferred or the Normal Units Certificate
or Stripped Units Certificate is surrendered or such Holder provides
satisfactory evidence that such Normal Units Certificate or Stripped Units
Certificate has been destroyed, lost or stolen, together with any indemnity that
may be required by the Agent and the Company. In the case of the Treasury
Portfolio or any Treasury Securities, the Agent may dispose of the subject
securities for cash and pay the applicable portion of such cash to the Holders
in lieu of such Holders' Treasury Securities, where such Holder would otherwise
have been entitled to receive less than $1,000 of any such security.
SECTION 3.16 No Consent to Assumption.
Each Holder of a Unit, by acceptance thereof, shall be deemed
expressly to have withheld any consent to the assumption (i.e., affirmance),
under Section 365 of the Bankruptcy Code or otherwise, of the Purchase Contract
by the Company, any
34
receiver, liquidator or person or entity performing similar functions or its
trustee 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.
SECTION 3.17 CUSIP Numbers.
The Company in issuing the Securities may use "CUSIP" and/or other
similar numbers (if then generally in use), and, if so, the Agent shall use
"CUSIP" and/or other similar numbers in notices of redemption as a convenience
to Holders; provided that any such notice may state that no representation is
made as to the correctness of such numbers either as printed on the Securities
or as contained in any notice of a redemption and that reliance may be placed
only on the other identification numbers printed on the Securities, and any such
redemption shall not be affected by any defect in or omission of such numbers.
The Company will promptly notify the Agent of any changes in the "CUSIP" and/or
other similar numbers.
ARTICLE IV
THE NOTES
SECTION 4.1 Payment of Interest; Rights to Interest Payments Preserved;
Notice.
(a) A payment on any Note or Treasury Consideration, as the
case may be, which is paid on any Payment Date shall, subject to
receipt thereof by the Agent from the Collateral Agent as provided by
the terms of the Pledge Agreement, be paid to the Person in whose name
the Normal Units Certificate (or one or more Predecessor Normal Units
Certificates) of which such Note or the appropriate Treasury
Consideration is a part is registered at the close of business on the
Record Date for such Payment Date.
(b) Each Normal Units Certificate evidencing Notes delivered
under this Agreement upon registration of transfer of or in exchange
for or in lieu of any other Normal Units Certificate shall carry the
rights to interest accrued and unpaid, and rights to accrue interest,
which were carried by the Notes underlying such other Normal Units
Certificate.
(c) In the case of any Normal Unit with respect to which Early
Settlement of the underlying Purchase Contract is effected on an Early
Settlement Date, or with respect to which Merger Early Settlement of
the underlying Purchase Contract is effected on a Merger Early
Settlement Date, or with respect to which Cash Settlement is effected
on the Business Day immediately preceding the Stock Purchase Date, or
with respect to which a Collateral Substitution is effected, in each
case on a date that is after any Record Date and on or prior to the
next succeeding Payment Date, payments on the Note or the appropriate
Treasury Consideration, as the case may be, underlying such Normal Unit
otherwise
35
payable on such Payment Date shall be payable on such Payment Date
notwithstanding such Early Settlement, Merger Early Settlement, Cash
Settlement or Collateral Substitution, as the case may be, and such
payments shall, subject to receipt thereof by the Agent, be payable to
the Person in whose name the Normal Units Certificate (or one or more
Predecessor Normal Unit Certificates) was 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 Normal Unit with
respect to which Early Settlement, Merger Early Settlement or Cash
Settlement of the underlying Purchase Contract is effected, or with
respect to which a Collateral Substitution has been effected, payments
on the related Notes or payments on the appropriate Treasury
Consideration that would otherwise be payable after the applicable
Settlement Date or after such Collateral Substitution, as the case may
be, shall not be payable hereunder to the Holder of such Normal Unit;
provided, that to the extent that such Holder continues to hold the
separated Notes that formerly comprised a part of such Holder's Normal
Units, such Holder shall be entitled to receive any payments on such
separated Notes.
(d) By purchasing and accepting the Units or the Separate
Notes, a Holder of the Units or a holder of the Separate Notes, as the
case may be, will be deemed to have agreed to treat for all U.S.
federal income tax purposes the Notes forming a part of such Units or
the Separate Notes, as the case may be, as "contingent payment debt
instruments" as the term is used in Treasury regulation section
1.1275-4.
SECTION 4.2 Notice and Voting.
Under and subject to the terms of the Pledge Agreement and this
Agreement, the Agent will be entitled to exercise the voting and any other
consensual rights pertaining to the Pledged Notes but only to the extent
instructed 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 Agent shall, as soon as
practicable thereafter, mail to the Holders of Normal Units a notice (a)
containing such information as is contained in the notice or solicitation, (b)
stating that each Holder on the record date set by the 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 Agent
as to the exercise of the voting rights pertaining to the Pledged Notes
underlying their Normal Units and (c) stating the manner in which such
instructions may be given. Upon the written request of any Holder of Normal
Units on such record date, the Agent shall endeavor insofar as practicable to
vote or cause to be voted, in accordance with the instructions set forth in such
request, the maximum number of Pledged Notes as to which any particular voting
instructions are received. In the absence of specific instructions from the
Holder of a Normal Unit, the Agent shall abstain from voting the Pledged Note
underlying such Normal Unit. The Company hereby agrees, if applicable, to
solicit Holders of Normal
36
Units to timely instruct the Agent in order to enable the Agent to vote such
Pledged Notes.
SECTION 4.3 Tax Event Redemption.
Upon the occurrence of a Tax Event Redemption prior to the successful
remarketing of the Notes pursuant to the provisions of Section 5.4, the Company
may elect to instruct in writing the Collateral Agent to apply, and upon such
written instruction, the Collateral Agent shall apply, out of the aggregate
Redemption Price for the Notes that are components of Normal Units, an amount
equal to the Tax Event Redemption Principal Amount to purchase on behalf of the
Holders of Normal Units the Treasury Portfolio and promptly remit the remaining
portion of such Redemption Price to the Agent for payment to the Holders of such
Normal Units. The Treasury Portfolio will be substituted for the Pledged Notes,
and will be pledged to the Collateral Agent in accordance with the terms of the
Pledge Agreement to secure the obligation of each Holder of a Normal Unit to
purchase the Common Stock under the Purchase Contract constituting a part of
such Normal Unit. Following the occurrence of a Tax Event Redemption prior to a
successful remarketing of the Notes pursuant to the provisions of Section 5.4,
the Holders of Normal Units and the Collateral Agent shall have such security
interests, rights and obligations with respect to the Treasury Portfolio as the
Holder of Normal Units and the Collateral Agent had in respect of the Notes, as
the case may be, subject to the Pledge thereof as provided in Articles II, III,
IV, V and VI of the Pledge Agreement, and any reference herein or in the
Certificates to the Note shall be deemed to be a reference to such 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 the
Treasury Portfolio. The Company may cause to be made in any Normal Unit
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
Treasury Portfolio for Notes as collateral.
Upon the occurrence of a Tax Event Redemption after the successful
remarketing of the Notes, the Redemption Price will be payable in cash to the
holders of the Notes.
SECTION 4.4 Consent to Treatment for Tax Purposes.
Each Holder of a Normal Unit or a Stripped Unit, by its acceptance
thereof, covenants and agrees to treat itself as the owner, for federal, state
and local income and franchise tax purposes of (i) the related Notes or the
appropriate Treasury Consideration, in the case of the Normal Units, or (ii) the
Treasury Securities, in the case of the Stripped Units. Each Holder of a Normal
Unit, by its acceptance thereof, further covenants and agrees (i) to treat the
Notes as indebtedness of Household Finance for federal, state and local income
and franchise tax purposes and (ii) to allocate $23.55 of the issue price of a
Normal Unit to the Note and $1.45 of the issue price to the Purchase Contract.
37
ARTICLE V
THE PURCHASE CONTRACTS; THE REMARKETING
SECTION 5.1 Purchase of Common Stock.
(a) Each Purchase Contract shall, unless an Early Settlement has
occurred in accordance with Section 5.9, or a Merger Early Settlement has
occurred in accordance with Section 5.10, obligate the Holder of the related
Unit to purchase, and the Company to sell, on the Stock Purchase Date at a price
equal to $25 (the "Purchase Price"), a number of newly issued shares of Common
Stock equal to the Settlement Rate unless, on or prior to the Stock Purchase
Date, a Termination Event shall have occurred. The "Settlement Rate" is equal
to,
(i) if the Applicable Market Value (as defined below) is equal
to or greater than $25.68 (the "Threshold Appreciation Price"), 0.9735
shares of Common Stock per Purchase Contract,
(ii) if the Applicable Market Value is less than the Threshold
Appreciation Price, but is greater than $21.40, the number of shares of
Common Stock per Purchase Contract equal to the Purchase Price divided
by the Applicable Market Value, and
(iii) if the Applicable Market Value is equal to or less than
$21.40, 1.1682 shares of Common Stock per Purchase Contract,
in each case subject to adjustment as provided in Section 5.6 (and in each case
rounded upward or downward to the nearest 1/10,000th of a share).
(b) Intentionally omitted.
(c) 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 Stock Purchase Date.
The "Closing Price" of the Common Stock on any date of determination means the
closing sale price (or, if no closing price is reported, the last reported sale
price) of the Common Stock on the New York Stock Exchange (the "NYSE") on such
date or, if the Common Stock is not listed for trading on the NYSE on any such
date, as reported in the composite transactions for the principal United States
securities exchange on which the Common Stock is so listed, or if the Common
Stock is not so listed on a United States securities exchange, as reported by
The Nasdaq Stock Market, or, 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, if such bid price
is not
38
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
(A) are not suspended from trading on any national or regional securities
exchange or association or over-the-counter market at the close of business and
(B) have 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 at the close of business on such day.
(d) Each Holder of a Unit, by its acceptance thereof, irrevocably
authorizes the Agent to enter into and perform the related Purchase Contract on
its behalf as its attorney-in-fact (including the execution of Certificates on
behalf of such Holder), agrees to be bound by the terms and provisions thereof,
covenants and agrees to perform its obligations under such Purchase Contract,
consents to the provisions hereof, irrevocably authorizes the Agent as its
attorney-in-fact to enter into and perform the Pledge Agreement on its behalf as
its attorney-in-fact, and consents to and agrees to be bound by the Pledge of
the Notes, the appropriate Treasury Consideration or the Treasury Securities
pursuant to the Pledge Agreement; provided that upon a Termination Event, the
rights of the Holder of such Unit under the Purchase Contract may be enforced
without regard to any other rights or obligations. Each Holder of a Unit, by its
acceptance thereof, further covenants and agrees, that, to the extent and in the
manner provided in Section 5.4 and the Pledge Agreement, but subject to the
terms thereof, payments in respect of the Pledged Notes, the Pledged Treasury
Consideration or the Pledged Treasury Securities to be paid upon settlement of
such Holder's obligations to purchase shares of Common Stock under the Purchase
Contract, shall be paid on the Stock Purchase Date 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.
(e) 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) under 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.
39
SECTION 5.2 Intentionally Omitted.
SECTION 5.3 Intentionally Omitted.
SECTION 5.4 Payment of Purchase Price; Remarketing.
(a) Unless a Tax Event Redemption, successful remarketing of the Notes
pursuant to the provisions of this Section 5.4 or Termination Event has
occurred, or a Holder of a Unit has settled the underlying Purchase Contract
through an Early Settlement pursuant to Section 5.9 or a Merger Early Settlement
pursuant to Section 5.10, each Holder of a Normal Unit may pay in cash ("Cash
Settlement") the Purchase Price for the shares of Common Stock to be purchased
pursuant to a Purchase Contract if such Holder notifies the Agent by surrender
of the Normal Unit Certificate and delivery of a notice in substantially the
form of Exhibit E hereto of its intention to make a Cash Settlement. Such notice
shall be made on or prior to 5:00 p.m., New York City time, on the seventh
Business Day immediately preceding the Stock Purchase Date. The Agent shall
promptly notify the Collateral Agent of the receipt of such a notice from a
Holder intending to make a Cash Settlement.
(i) A Holder of a Normal Unit who has so notified the Agent of
its intention to make a Cash Settlement is required to pay the Purchase
Price to the Collateral Agent prior to 11:00 a.m., New York City time,
on the Business Day immediately preceding the Stock Purchase 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 Company. Any cash received by the Collateral
Agent will be paid to the Company on the Stock Purchase Date in
settlement of the Purchase Contract in accordance with the terms of
this Agreement and the Pledge Agreement.
(ii) If a Holder of a Normal Unit fails to notify the Agent of
its intention to make a Cash Settlement in accordance with paragraph
(a)(i) above, the Holder shall be deemed to have consented to the
disposition of the Pledged Notes pursuant to the remarketing as
described in paragraph (b) below. If a Holder of a Normal Unit does
notify the Agent as provided in paragraph (a)(i) above of its intention
to pay the Purchase Price in cash, but fails to make such payment as
required by paragraph (a)(i) above, such failure shall constitute an
event of default; however, the Notes of such a Holder will not be
remarketed but instead the Collateral Agent, for the benefit of the
Company, will exercise its rights as a secured party with respect to
such Notes, including but not limited to those rights specified in
subsection (b)(iii) below.
(b) (i) Unless a Tax Event Redemption has occurred, the Company and
Household Finance shall engage a nationally recognized investment bank (the
40
"Remarketing Agent") pursuant to a Remarketing Agreement to be mutually agreed
on by the Company, Household Finance, the Agent and the Remarketing Agent, but
providing for remarketing procedures substantially as set forth below to sell
the Notes of Holders of Normal Units, other than Holders that have elected not
to participate in the remarketing pursuant to the procedures set forth in clause
(iv) below, and holders of Separate Notes that have elected to participate in
the remarketing pursuant to the procedures set forth in Section 4.5(d) of the
Pledge Agreement. On the seventh Business Day prior to first day of each
Remarketing Period, the Agent shall give Holders of Normal Units and holders of
Separate Notes notice of the remarketing 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) including the specific U.S. Treasury security or
securities (including the CUSIP number and/or the principal terms of such
Treasury security or securities) described in clause (iv) below, that must be
delivered by Holders of Normal Units that elect not to participate in the
remarketing pursuant to clause (iv) below no later than 10:00 a.m., New York
City time, on the fourth Business Day preceding the first day of such
Remarketing Period. The Company or the Agent, at the Company's request, shall
request not later than seven nor more than 15 calendar days prior to any
Remarketing Period, that the Clearing Agency notify the Clearing Agency
participants of such Remarketing Period. The Agent shall notify, by 10:00 a.m.,
New York City time, on the third Business Day preceding the first day of such
Remarketing Period, the Remarketing Agent and the Collateral Agent of the
aggregate number of Notes of Normal Unit Holders to be remarketed. On the third
Business Day preceding the first day of such Remarketing Period, no later than
by 10:00 a.m., New York City time, pursuant to the terms of the Pledge
Agreement, the Custodial Agent will notify the Remarketing Agent of the
aggregate number of Separate Notes to be remarketed. No later than 10:00 a.m.,
New York City time, on the Business Day immediately preceding the first day of
such Remarketing Period, the Collateral Agent and the Custodial Agent, pursuant
to the terms of the Pledge Agreement, will deliver for remarketing to the
Remarketing Agent all Notes to be remarketed. Upon receipt of such notice from
the Agent and the Custodial Agent and such Notes from the Collateral Agent and
the Custodial Agent, the Remarketing Agent will, on the Remarketing Date, use
its commercially reasonable best efforts to sell such Notes on such date at an
aggregate price equal to at least 100.25% of the Remarketing Value. The
Remarketing Agent will use the proceeds from a successful remarketing to
purchase the appropriate U.S. Treasury securities (the "Agent-purchased Treasury
Consideration") with the CUSIP numbers, if any, selected by the Remarketing
Agent, described in clauses (i)(1) and (ii)(1) of the definition of Remarketing
Value related to the Notes of Holders of Normal Units that were remarketed. On
or prior to the third Business Day following the Remarketing Date or any
Subsequent Remarketing Date on which the Notes are successfully remarketed, the
Remarketing Agent shall deliver such Agent-purchased Treasury Consideration to
the Agent, which shall thereupon deliver such Agent-purchased Treasury
Consideration to the Collateral Agent. The
41
Collateral Agent, for the benefit of the Company, will thereupon apply such
Agent-purchased Treasury Consideration, in accordance with the Pledge Agreement,
to secure such Holders' obligations under the Purchase Contracts. In the event
of a successful remarketing pursuant to this Section 5.4, the Remarketing Agent
will deduct as a remarketing fee an amount not exceeding 25 basis points (.25%)
of the total proceeds from the remarketing (the "Remarketing Fee"). The
Remarketing Agent will remit (1) the portion of the proceeds from the
remarketing attributable to the Separate Notes to the holders of Separate Notes
that were remarketed and (2) the remaining portion of the proceeds, less those
proceeds used to purchase the Agent-purchased Treasury Consideration, to the
Agent for the benefit of the Holders of the Normal Units that were remarketed,
all determined on a pro rata basis, in each case, on or prior to the third
Business Day following the Remarketing Date or any Subsequent Remarketing Date
on which the Notes were successfully remarketed. Holders whose Notes are so
remarketed will not otherwise be responsible for the payment of any Remarketing
Fee in connection therewith.
(ii) If, in spite of using its commercially reasonable best
efforts, the Remarketing Agent cannot remarket the Notes included in
the remarketing at a price equal to at least 100.25% of the Remarketing
Value on the Remarketing Date, the Remarketing Agent will attempt to
establish a Remarketing Rate meeting these requirements on each of the
two immediately following Business Days. If the Remarketing Agent
cannot establish a Remarketing Rate meeting these requirements on
either of those days, the remarketing in such period will be deemed to
have failed (a "Failed Remarketing"). In the event of a Failed
Remarketing with respect to the first Remarketing Period, the
Remarketing Agent will undertake the procedures set forth in clause (i)
above on each of the three Business Days in the second Remarketing
Period. In the event of a Failed Remarketing in the second Remarketing
Period, the Remarketing Agent will further attempt to establish such a
Remarketing Rate on the third Business Day immediately preceding the
Stock Purchase Date. If, in spite of using its commercially reasonable
best efforts, the Remarketing Agent fails to remarket the Notes
underlying the Normal Units at a price equal to at least 100.25% of the
Remarketing Value in accordance with the terms of the Pledge Agreement
by 4:00 p.m., New York City time, on the third Business Day immediately
preceding the Stock Purchase Date, the "Last Failed Remarketing" will
be deemed to have occurred. Each remarketing attempt that takes place
in accordance with this Section 5.4 after the Remarketing Date is
referred to herein as a "Subsequent Remarketing." Within three Business
Days following the date of a Failed Remarketing or the Last Failed
Remarketing, as the case may be, the Remarketing Agent shall return any
Notes delivered to it to the Collateral Agent and the Custodial Agent,
as applicable. The Collateral Agent, for the benefit of the Company,
may exercise its rights as a secured party with respect to
42
such Notes, including those actions specified in (b) (iii) below;
provided that if upon the Last Failed Remarketing, the Collateral Agent
exercises such rights for the benefit of the Company with respect to
such Notes, any accumulated and unpaid interest on such Notes will
become payable by Household Finance to the Agent for payment to the
Holders of the Normal Units to which such Notes relate. Such payment
will be made by Household Finance on or prior to 11:00 a.m., New York
City time, on the Stock Purchase Date in lawful money of the United
States by certified or cashier's check or wire transfer in immediately
available funds payable to or upon the order of the Agent. The Company
will cause a notice of any Failed Remarketing and of the Last Failed
Remarketing to be published on the fourth Business Day following each
Failed Remarketing and the Last Failed Remarketing, as the case may be,
in a daily newspaper in the English language of general circulation in
The City of New York, which shall be The Wall Street Journal, if such
newspaper is then so published. The Company will also release this
information by means of Bloomberg and Reuters newswire.
(iii) With respect to any Notes which constitute part of
Normal Units which are subject to the Last Failed Remarketing, 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 Section 5.4 (e) below, may, among other things, (A)
retain such Notes in full satisfaction of the Holders' obligations
under the Purchase Contracts or (B) sell such Notes in one or more
public or private sales or otherwise.
(iv) A Holder of Normal Units may elect not to participate in
the remarketing and retain the Notes underlying such Units by notifying
the Agent of such election and delivering the specific U.S. Treasury
security or securities (including the CUSIP number and/or the principal
terms of such security or securities) identified by the Agent (as
having been based solely on the identification that the Remarketing
Agent shall have advised the Agent) that constitute the U.S. Treasury
securities described in clauses (i) and (ii) of the definition of
Remarketing Value relating to the retained Notes (as if only such Notes
were being remarketed) (the "Opt-out Treasury Consideration") to the
Agent not later than 10:00 a.m., New York City time, on the fourth
Business Day prior to the beginning of any Remarketing Period. Upon
receipt thereof by the Agent, the Agent shall deliver such Opt-out
Treasury Consideration to the Collateral Agent, which will, for the
benefit of the Company, thereupon apply such Opt-out Treasury
Consideration to secure such Holder's obligations under the Purchase
Contracts. On the Business Day immediately preceding the first day of a
Remarketing Period, the Collateral Agent, pursuant to the terms of the
Pledge Agreement, will deliver the Pledged Notes of such Holder to the
Agent. Within three
43
Business Days following the last day of such Remarketing Period, (A) if
the remarketing was successful, the Agent shall distribute such Notes
to the Holders thereof, and (B) if there was a Failed Remarketing on
such date, the Agent will deliver such Notes to the Collateral Agent,
which will, for the benefit of the Company, thereupon apply such Notes
to secure such Holders' obligations under the Purchase Contract and
return the Opt-out Treasury Consideration delivered by such Holders to
such Holders. A Holder that does not so deliver the Opt-out Treasury
Consideration or does not so notify the agent of its election not to
participate in the remarketing pursuant to this clause (iv) shall be
deemed to have elected to participate in the remarketing.
(c) Upon the maturity of the Pledged Treasury Securities underlying the
Stripped Units and, in the event of a successful remarketing or a Tax Event
Redemption, the Pledged Treasury Consideration underlying the Normal Units on
the Stock Purchase Date, the Collateral Agent shall remit to the Company an
amount equal to the aggregate Purchase Price applicable to such Units, as
payment for the shares of Common Stock issuable upon settlement thereof without
needing to receive any instructions from the Holders of such Units. In the event
the payments in respect of the Pledged Treasury Securities or the Pledged
Treasury Consideration underlying a Unit is in excess of the Purchase Price of
the Purchase Contract being settled thereby, the Collateral Agent will
distribute such excess to the Agent for the benefit of the Holder of such Unit
when received.
(d) Any distribution to Holders of excess funds and interest described
in Section 5.4 (b) and (c) above shall be payable at the Corporate Trust Office
or, at the option of the Holder or the holder of Separate Notes, as applicable,
by check mailed to the address of the Person entitled thereto at such address as
it appears on the Register or by wire transfer to an account maintained in the
United States specified by the Holder or the holder of Separate Notes, as
applicable.
(e) Notwithstanding anything to the contrary herein or in the Pledge
Agreement, subject to Section 3.2 of the Pledge Agreement, the obligations of
each Holder to pay the Purchase Price are non-recourse obligations and are
payable solely out of the proceeds of any Collateral pledged to secure the
obligations of the Holders (except to the extent paid by Cash Settlement, Early
Settlement or Merger Early Settlement) and in no event will Holders be liable
for any deficiency between such payments and the Purchase Price.
(f) Notwithstanding anything to the contrary herein, 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 of the related Unit
unless the Company shall have (i) received payment in full of the aggregate
Purchase Price for the shares of Common Stock to be purchased thereunder by
44
such Holder in the manner herein set forth or (ii) exercised its rights as a
secured party under Section 5.4(b)(iii).
SECTION 5.5 Issuance of Shares of Common Stock.
Unless a Termination Event shall have occurred on or prior to the Stock
Purchase Date or an Early Settlement or a Merger Early Settlement shall have
occurred, on the Stock Purchase Date, upon the Company's receipt of payment in
full of the Purchase Price for the shares of Common Stock purchased by the
Holders pursuant to the foregoing provisions of this Article and subject to
Section 5.6(b) or the Company's exercise of its rights as a secured party
pursuant to Section 5.4(b)(iii), the Company shall issue and deposit with the
Agent, for the benefit of the Holders of the Outstanding Units, one or more
certificates representing the newly issued shares of Common Stock, registered in
the name of the Agent (or its nominee) as custodian for the Holders (such
certificates for shares of Common Stock, together with any dividends or
distributions for which both a record date and payment date for such dividend or
distribution has occurred after the Stock Purchase 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 Agent on or after the Stock Purchase Date, together with
settlement instructions thereon duly completed and executed, the Holder of such
Certificate shall be entitled to receive in exchange therefor a certificate
representing that number of whole shares of Common Stock which such Holder is
entitled to receive pursuant to the provisions of this Article V (after taking
into account all Units then held by such Holder) together with cash in lieu of
fractional shares as provided in Section 5.12 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 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 such
Certificate or has established to the satisfaction of the Company that such tax
either has been paid or is not payable.
SECTION 5.6 Adjustment of Settlement Rate.
(a) Adjustments for Dividends, Distributions, Stock Splits, Etc.
(1) Stock Dividends. In case the Company shall pay or make a
dividend or other distribution on its Common Stock in shares of Common
Stock, the Settlement Rate, as 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
45
dividing such Settlement Rate by a fraction of which 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 the
denominator shall be the sum of such number of shares of Common Stock
and the total number of shares of Common Stock 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 the 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 will not pay any
dividend or make any distribution on Common Stock held in the treasury
of the Company.
(2) Share Purchase Rights. In case the Company shall issue
rights, options or warrants to all holders of Common Stock (that are
not available on an equivalent basis to Holders of the Units upon
settlement of the Purchase Contracts underlying such Units) entitling
them, for a period expiring within 45 days after the record date for
the determination of shareholders entitled to receive such rights,
options or warrants, to subscribe for or purchase Common Stock at a
price per share less than the Current Market Price per share of Common
Stock on the date fixed for the determination of shareholders entitled
to receive such rights, options or warrants (other than pursuant to a
dividend reinvestment, share purchase or similar plan), the Settlement
Rate in effect at the opening of business on the day following the date
fixed for such determination shall be increased by dividing such
Settlement Rate by a fraction, the numerator of which 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 per share of
Common Stock and the denominator of which 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 day following the date
fixed for such determination. 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 shall not issue any
such rights, options or warrants in respect of Common Stock held in the
treasury of the Company.
46
(3) Stock Splits; Reverse Splits. 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) Debt or Asset Distributions. (i) 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 or warrants referred to in
paragraph (2) of this Section, shares of capital stock of any class or
series, or similar equity interests, of or relating to a subsidiary or
other business unit in the case of a Spin-Off referred to in the next
paragraph, or any dividend or distribution paid exclusively in cash and
any dividend or distribution referred to in paragraph (1) of this
Section), 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, the numerator of which 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 determined by the Board of Directors,
whose determination shall be conclusive and described in a Board
Resolution filed with the Agent) of the portion of the assets or
evidences of indebtedness so distributed applicable to one share of
Common Stock and the denominator of which 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 shall not be applicable.
(ii) In the case of a Spin-Off, the Settlement Rate in effect
immediately before the close of business on the record date fixed for
determination of shareholders entitled to receive that distribution
will be increased by multiplying the Settlement Rate by a fraction, the
numerator of which is the Current Market Price per share of Common
Stock plus the Fair Market Value of the portion of those shares of
Capital Stock or similar equity interests so distributed applicable to
one share of Common
47
Stock and the denominator of which is the Current Market Price per
share of Common Stock. Any adjustment to the settlement rate under this
paragraph 4(ii) will occur on the date that is the earlier of (1) the
tenth Trading Day following the effective date of the Spin-Off and (2)
the date of the securities being offered in the Initial Public Offering
of the Spin-Off, if that Initial Public Offering is effected
simultaneously with the Spin-Off.
(5) Cash Distributions. In case the Company shall, (i) by
dividend or otherwise, distribute to all holders of its Common Stock
cash (excluding any regular quarterly cash dividends or any cash that
is distributed in a Reorganization Event to which Section 5.6(b)
applies or 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 (other than regular quarterly
cash dividends) within the 12 months preceding the date of payment of
such distribution 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 of any cash plus the fair market value as of the
date or expiration of the tender or exchange offer referred to below
(as determined by the Board of Directors, whose determination shall be
conclusive and described in a Board Resolution filed with the Agent) of
consideration payable in respect of any tender or exchange offer (other
than consideration payable in respect of any odd-lot tender offer) by
the Company or any of its subsidiaries for all or any portion of its
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 Common Stock on the date for
the determination of holders of Common Stock entitled to receive such
distribution times the number of shares of Common Stock outstanding on
such date, then, and in each such case, immediately after the close of
business on such date for determination, 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 the date fixed for determination of the shareholders
entitled to receive such distribution by a fraction (A) the numerator
of which shall be equal to the Current Market Price per share of Common
Stock on the date fixed for such determination less an amount equal to
the quotient of (x) the combined amount distributed or payable in the
transactions described in clauses (i), (ii) and (iii) above and (y) the
number of shares of Common Stock outstanding on such date for
determination and (B) the denominator of which shall be equal to the
Current Market Price per share of Common Stock on such date for
determination.
48
(6) Tender Offers. In case (i) a tender or exchange offer made
by the Company or any subsidiary of the Company for all or any portion
of the 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) of an
aggregate consideration having a fair market value (as determined by
the Board of Directors, whose determination shall be conclusive and
described in a Board Resolution filed with the Agent) that when
combined together with (ii) the aggregate of the cash plus the fair
market value (as determined by the Board of Directors, whose
determination shall be conclusive and described in a Board Resolution
filed with the Agent), as of the expiration of such tender or exchange
offer (other than consideration payable in respect of any odd-lot
tender 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 the 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 paragraph (5) of this
Section or this paragraph (6) has been made and (iii) the aggregate
amount of any distributions to all holders of the Common Stock made
exclusively in cash (other than regular quarterly cash dividends)
within the 12 months preceding the expiration of such tender or
exchange offer and in respect of which no adjustment pursuant to
paragraph (5) of this Section or this paragraph (6) has been made,
exceeds 10% 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 (A) the numerator of which
shall be equal to (x) 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 Expiration Time less (y) 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), (ii) and (iii) 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 (B) the
denominator of which shall be equal to the product of (x) the Current
Market Price per share of Common Stock as of the Expiration Time and
(y) the number of shares of Common Stock outstanding (including any
49
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").
(7) Reclassification. The reclassification of Common Stock
into securities including securities other than Common Stock (other
than any reclassification upon a Reorganization Event to which Section
5.6(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) "Current Market Price". The "Current Market Price" per
share of Common Stock means (a) on any day the average of the Closing
Price per share of Common Stock on each of the 20 consecutive Trading
Days ending on the earlier of the day in question and the day before
the "ex date" with respect to the issuance or distribution requiring
such computation, (b) in the case of any Spin-Off that is effected
simultaneously with an Initial Public Offering of the securities being
distributed in the Spin-Off, the Closing Price of the Common Stock on
the Trading Day on which the initial price of the securities being
distributed in the Spin-Off is determined, and (c) in the case of any
other Spin-Off, the average of the Closing Prices per share of Common
Stock over the first 10 Trading Days after the effective date of such
Spin-Off. 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 the Common Stock trades regular way on such exchange or in
such market without the right to receive such issuance or distribution.
(9) Calculation of Adjustments. 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
50
decrease of at least one percent therein; provided, 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
5.6(a), an adjustment shall also be made to the Applicable Market Value
solely to determine which of clauses (i), (ii) or (iii) of the
definition of Settlement Rate in Section 5.1(a) will apply on the Stock
Purchase Date. Such adjustment shall be made by multiplying the
Applicable Market Value by a fraction, the numerator of which shall be
the Settlement Rate immediately after such adjustment pursuant to
paragraph (1), (2), (3), (4), (5), (6), (7) or (10) of this Section
5.6(a) and the denominator of which shall be the Settlement Rate
immediately before such adjustment; provided, 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), (7) or (10) of this Section 5.6(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) Increase of Settlement Rate. The Company may make such
increases in the Settlement Rate, in addition to those required by this
Section, as it considers to be advisable in order to avoid or diminish
any income tax to any holders of shares of Common Stock resulting from
any dividend or distribution of Capital 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 reasons.
(b) Adjustment for Consolidation, Merger or Other Reorganization Event.
In the event of
(1) 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 is
not exchanged for cash, securities or other property of the Company or
another corporation),
(2) any sale, transfer, lease or conveyance to another Person
of the property of the Company as an entirety or substantially as an
entirety,
(3) any statutory exchange of securities of the Company with
another Person (other than in connection with a merger or acquisition),
or
51
(4) any liquidation, dissolution or winding up of the Company
other than as a result of or after the occurrence of a Termination
Event (any such event, a "Reorganization Event"),
each share of Common Stock covered by each Purchase Contract forming part of a
Unit immediately prior to such Reorganization Event shall, after such
Reorganization Event, be converted for purposes of the Purchase Contract into
the kind and amount of securities, cash and other property receivable in 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
Stock Purchase Date per share of Common Stock) by a holder of shares of Common
Stock that (i) 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 shares of Common Stock held by Affiliates of
the Company and non-Affiliates, and (ii) 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 a Person other than a
Constituent Person or an Affiliate thereof and in respect of which such rights
of election shall 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 of Common
Stock by a plurality of the Non-electing Shares). On the Stock Purchase Date,
the Settlement Rate then in effect will be applied to the value on the Stock
Purchase Date of such securities, cash or other property.
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 or dissolution of the Company, the
Company or a liquidating trust created in connection therewith, shall execute
and deliver to the Agent an agreement supplemental hereto providing that the
Holder of each Outstanding Unit shall have the rights provided by this Section
5.6. 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. The above provisions of this Section shall similarly apply to
successive Reorganization Events.
SECTION 5.7 Notice of Adjustments and Certain Other Events.
(a) Whenever the Settlement Rate is adjusted as herein provided, the
Company shall:
52
(i) forthwith compute the Settlement Rate in accordance with
Section 5.6 and prepare and transmit to the 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) as soon as practicable following the occurrence of an
event that requires an adjustment to the Settlement Rate pursuant to
Section 5.6 (or if the Company is not aware of such occurrence, as soon
as practicable after becoming so aware), provide a written notice to
the Agent and the Holders of the occurrence of such event and a
statement setting forth in reasonable detail the method by which the
adjustment to the Settlement Rate was determined and setting forth the
adjusted Settlement Rate.
(b) The Agent shall not at any time be under any duty or responsibility
to any Holder of Units 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 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 Agent makes no representation with respect thereto. The 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 5.8 Termination Event; Notice.
The Purchase Contracts and all obligations and rights of the Company
and the Holders thereunder, including, without limitation, the obligations of
Holders to purchase shares of Common Stock, shall immediately and automatically
terminate, without the necessity of any notice or action by any Holder, the
Agent or the Company, if, on or prior to the Stock Purchase Date, a Termination
Event shall have occurred. Upon and after the occurrence of a Termination Event,
the Normal Units shall thereafter represent the right to receive the Notes or
the appropriate Treasury Consideration, as the case may be, forming a part of
such Normal Units, and the Stripped Units shall thereafter represent the right
to receive the Treasury Securities forming a part of such Stripped Units, in
each case in accordance with the provisions of Section 4.3 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 Agent, the Collateral Agent and to the Holders, at their addresses
as they appear in the Register.
53
SECTION 5.9 Early Settlement.
(a) Subject to and upon compliance with the provisions of this Section
5.9, Purchase Contracts underlying Units having an aggregate Stated Amount equal
to $1,000 or an integral multiple thereof may, at the option of the Holder
thereof, be settled early ("Early Settlement") on or prior to 10:00 a.m., New
York City time, on the seventh Business Day immediately preceding the Stock
Purchase Date. Holders of Stripped Units may only effect Early Settlement of the
related Purchase Contracts in integral multiples of 40 Stripped Units, and if
Treasury Consideration has been substituted for the Notes as a component in the
Normal Units due to a successful remarketing or the occurrence of a Tax Event
Redemption, Purchase Contracts underlying such Normal Units may only be settled
early in integral multiples of Normal Units such that the Treasury Consideration
to be deposited and the Treasury Consideration to be released are in integral
multiples of $1,000. In order to exercise the right to effect Early Settlement
with respect to any Purchase Contracts, the Holder of the Certificate evidencing
the related Units shall deliver such Certificate to the Agent at the Corporate
Trust Office duly endorsed for transfer to the Company or in blank with the form
of Election to Settle Early on the reverse thereof duly completed 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) the
Purchase Price multiplied by (ii) the number of Purchase Contracts with respect
to which the Holder has elected to effect Early Settlement. Except as provided
in the immediately preceding sentence, no payment or adjustment shall be made
upon Early Settlement of any Purchase Contract on account of any dividends on
the shares of Common Stock issued upon such Early Settlement. If the foregoing
requirements are first satisfied with respect to Purchase Contracts underlying
any Unit at or prior to 5:00 p.m., New York City time, on a Business Day, such
day shall be the "Early Settlement Date" with respect to such Unit 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 Units shall be the next succeeding Business Day.
(b) Upon Early Settlement of any Purchase Contract by the Holder of the
related Units, the Company shall issue, and the Holder shall be entitled to
receive, 0.9735 shares of Common Stock on account of such Purchase Contract (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 pursuant to
Section 5.6. As promptly as practicable after Early Settlement of Purchase
Contracts in accordance with the provisions of this Section 5.9, the Company
shall issue and shall deliver to the Agent at the Corporate Trust Office 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 5.12.
54
(c) No 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, and (ii)
the related Pledged Notes or Pledged Treasury Consideration, in the case of
Normal Units, or the related Pledged Treasury Securities, in the case of
Stripped Units, to be released from the Pledge by the Collateral Agent and
transferred, in each case, to the Agent for delivery to the Holder thereof or
the Holder's designee.
(d) Upon Early Settlement of any Purchase Contracts, and subject to
receipt of shares of Common Stock from the Company and the Pledged Notes,
Pledged Treasury Consideration or Pledged Treasury Securities, as the case may
be, from the Collateral Agent, as applicable, the Agent shall, in accordance
with the instructions provided by the Holder thereof on the applicable form of
Election to Settle Early on the reverse of the Certificate evidencing the
related Units, (i) transfer to the Holder the Pledged Notes, Pledged Treasury
Consideration or Pledged Treasury Securities, as the case may be, forming a part
of such Units, and (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
5.12.
(e) In the event that Early Settlement is effected with respect to
Purchase Contracts underlying less than all the Units evidenced by a
Certificate, upon such Early Settlement the Company shall execute and the Agent
shall authenticate, execute on behalf of the Holder and deliver to the Holder
thereof, at the expense of the Company, a Certificate evidencing the Units as to
which Early Settlement was not effected.
(f) No Early Settlement will be permitted under this Section 5.9
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 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 Agent may use in connection with such
Early Settlement.
SECTION 5.10 Early Settlement Upon Cash Merger.
(a) In the event of a merger or consolidation of the Company of the
type described in clause (1) of Section 5.6(b) in which the shares of Common
55
Stock outstanding immediately prior to such merger or consolidation are
exchanged for consideration consisting of at least 30% cash or cash equivalents
(any such event a "Cash Merger"), then the Company (or the successor to the
Company hereunder) shall be required to offer the Holder of each Unit the right
to settle the Purchase Contract underlying such Unit prior to the Stock Purchase
Date ("Merger Early Settlement") as provided herein. On or before the fifth
Business Day after the consummation of a Cash Merger, the Company or, at the
request and expense of the Company, the Agent, shall give all Holders notice of
the occurrence of the Cash Merger and of the right of Merger Early Settlement
arising as a result thereof. The Company shall also deliver a copy of such
notice to the Agent and the Collateral Agent.
Each such notice shall contain:
(i) the date, which shall be not less than 20 nor more than 30
calendar days after the date of such notice, on which the Merger Early
Settlement will be effected (the "Merger Early Settlement Date");
(ii) the date, which shall be on or one Business Day prior to
the Merger Early Settlement Date, by which the Merger Early Settlement
right must be exercised;
(iii) the Settlement Rate in effect as a result of such Cash
Merger and the kind and amount of securities, cash and other property
receivable by the Holder upon settlement of each Purchase Contract
pursuant to Section 5.6(b);
(iv) a statement to the effect that all or a portion of the
Purchase Price payable by the Holder to settle the Purchase Contract
will be offset against the amount of cash so receivable upon exercise
of Merger Early Settlement, as applicable; and
(v) the instructions a Holder must follow to exercise the
Merger Early Settlement right.
(b) To exercise a Merger Early Settlement right, a Holder shall deliver
to the Agent at the Corporate Trust Office on or before 5:00 p.m., New York
City time, on the date specified in the notice the Certificate(s) evidencing
the Units with respect to which the Merger Early Settlement right is being
exercised duly endorsed for transfer to the Company or in blank with the
form of Election to Settle Early on the reverse thereof duly completed and
accompanied by payment payable to the Company in immediately available funds
in an amount equal to the Early Settlement Amount less the amount of cash
that otherwise would be deliverable by the Company or its successor upon
settlement of the Purchase Contract in lieu of shares of Common Stock
pursuant to Section 5.6(b) and as described in the notice to Holders (the
"Merger Early Settlement Amount").
56
(c) On the Merger Early Settlement Date, the Company shall deliver or
cause to be delivered (i) the net cash, securities and other property to be
received by such exercising Holder, equal to the Settlement Rate as adjusted
pursuant to Section 5.6, in respect of the number of Purchase Contracts for
which such Merger Early Settlement right was exercised, and (ii) the related
Pledged Notes or Pledged Treasury Consideration, in the case of Normal
Units, or Pledged Treasury Securities, in the case of Stripped Units, to be
released from the Pledge by the Collateral Agent and transferred, in each
case, to the Corporate Trust Office for delivery to the Holder thereof or
its designee. In the event a Merger Early Settlement right shall be
exercised by a Holder in accordance with the terms hereof, all references
herein to the Stock Purchase Date shall be deemed to refer to such Merger
Early Settlement Date.
(d) Upon Merger Early Settlement of any Purchase Contracts, and subject
to receipt of such net cash, securities or other property from the Company
and the Pledged Notes, Pledged Treasury Consideration or Pledged Treasury
Securities, as the case may be, from the Collateral Agent, as applicable,
the Agent shall, in accordance with the instructions provided by the Holder
thereof on the applicable form of Election to Settle Early on the reverse of
the Certificate evidencing the related Units, (i) transfer to the Holder the
Pledged Notes, Pledged Treasury Consideration or Pledged Treasury
Securities, as the case may be, forming a part of such Units, and (ii)
deliver to the Holder such net cash, securities or other property issuable
upon such Merger Early Settlement together with payment in lieu of any
fraction of a share, as provided in Section 5.12.
(e) In the event that Merger Early Settlement is effected with respect
to Purchase Contracts underlying less than all the Units evidenced by a
Certificate, upon such Merger Early Settlement the Company (or the successor
to the Company hereunder) shall execute and the Agent shall authenticate,
execute on behalf of the Holder and deliver to the Holder thereof, at the
expense of the Company, a Certificate evidencing the Units as to which
Merger Early Settlement was not effected.
SECTION 5.11 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, 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 Unit 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 Units evidenced thereby, other than in the name of
the Agent, as custodian for such Holder, and the Company shall not be required
to issue or deliver such share of Common Stock certificates or Certificates
unless and until the Person or Persons requesting the transfer
57
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 5.12 No Fractional Shares.
No fractional shares or scrip representing fractional shares of Common
Stock shall be issued or delivered upon settlement on the Stock Purchase Date or
upon Early Settlement or Merger Early 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
applicable Settlement Date or upon Early Settlement or Merger Early Settlement,
the Company, through the Agent, shall make a cash payment in respect of such
fractional shares in an amount equal to the value of such fractional shares
times the Applicable Market Value. The Company shall provide the Agent from time
to time with sufficient funds to permit the Agent to make all cash payments
required by this Section 5.12 in a timely manner.
ARTICLE VI
REMEDIES
SECTION 6.1 Unconditional Right of Holders to Purchase Common Stock.
The Holder of any Unit shall have the right, which is absolute and
unconditional, to purchase shares of Common Stock pursuant to the Purchase
Contract constituting a part of such Unit and to institute suit for the
enforcement of any such right to purchase shares of Common Stock, and such
rights shall not be impaired without the consent of such Holder.
SECTION 6.2 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.
58
SECTION 6.3 Rights and Remedies Cumulative.
Except as otherwise provided with respect to the replacement or payment
of mutilated, destroyed, lost or stolen Certificates in Section 3.10(f), 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 6.4 Delay or Omission Not Waiver.
No delay or omission of any Holder to exercise any right 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 6.5 Undertaking for Costs.
All parties to this Agreement agree, and each Holder of a Unit, by its
acceptance of such Unit 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 Agent for any action taken,
suffered or omitted by it as 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,
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
Company, to any suit instituted by the Agent, to any suit instituted by any
Holder, or group of Holders, holding in the aggregate more than 10% of the
Outstanding Units, or to any suit instituted by any Holder for the enforcement
of distributions on any Notes on or after the respective Payment Date therefor
in respect of any Unit held by such Holder, or for enforcement of the right to
purchase shares of Common Stock under the Purchase Contract constituting part of
any Unit held by such Holder.
SECTION 6.6 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, 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 AGENT
SECTION 7.1 Certain Duties and Responsibilities.
(a) (1) The Agent undertakes to perform such duties and only such
duties as are specifically set forth in this Agreement and the Pledge
Agreement, and no implied covenants, duties or obligations shall be read
into this Agreement and/or the Pledge Agreement against the Agent; and
(2) in the absence of bad faith on its part, the Agent may, with
respect to the Units and Separate Notes, conclusively rely, as to the
truth of the statements and the correctness of the opinions expressed
therein, upon certificates or opinions furnished to the Agent and
conforming to the requirements of this Agreement, but in the case of
any certificates or opinions which by any provision hereof are
specifically required to be furnished to the Agent, the Agent shall be
under a duty to examine the same to determine whether or not they
conform to the requirements of this Agreement (but need not confirm or
investigate the accuracy of the mathematical calculations or other
facts stated therein).
(b) No provision of this Agreement shall be construed to relieve the
Agent from liability for its own negligent action, its own negligent failure
to act or its own willful misconduct, except that:
(1) this paragraph (b) shall not be construed to limit the effect
of paragraph (a) of this Section;
(2) the Agent shall not be liable for any error of judgment made
in good faith by a Responsible Officer, unless it shall be proved that
the Agent was negligent in ascertaining the pertinent facts; and
(3) no provision of this Agreement shall require the 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.
(c) Whether or not therein expressly so provided, every provision of
this Agreement relating to the conduct or affecting the liability of or
affording protection to the Agent shall be subject to the provisions of this
Section.
(d) The Agent is authorized to execute and deliver the Pledge Agreement
in its capacity as Agent. The Agent shall be entitled to all of the rights,
privileges, immunities and indemnities contained in this Agreement with
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respect to any duties of the Agent under, or actions taken, omitted to be
taken or suffered by the Agent pursuant to the Pledge Agreement.
SECTION 7.2 Notice of Default.
Within 30 days after the occurrence of any default by the Company
hereunder of which a Responsible Officer of the Agent has actual knowledge, the
Agent shall transmit by mail to the Company and the Holders of Units, as their
names and addresses appear in the applicable Register, notice of such default
hereunder, unless such default shall have been cured or waived.
SECTION 7.3 Certain Rights of Agent.
Subject to the provisions of Section 7.1:
(a) the 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, debenture, note, other evidence of indebtedness or other paper
or document reasonably believed by it to be genuine and to have been signed
or presented by the proper party or parties;
(b) 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 may be sufficiently
evidenced by a Board Resolution;
(c) whenever in the administration of this Agreement the Agent shall
deem it desirable that a matter be proved or established prior to taking,
suffering or omitting any action hereunder, the Agent (unless other evidence
be herein specifically prescribed) may, in the absence of bad faith on its
part, rely upon an Officers' Certificate of the Company;
(d) the Agent may consult with counsel and the 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;
(e) the 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 Agent, in its discretion, 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 Agent shall determine to make such further inquiry or
investigation, it shall be given a reasonable opportunity to examine the
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books, records and premises of the Company, personally or by agent or
attorney at the sole cost of the Company and shall incur no liability or
additional liability of any kind by reason of such inquiry or investigation;
(f) the 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 of the Agent and the Agent shall not be responsible for any
misconduct or negligence on the part of any agent or attorney or an
Affiliate appointed by the Agent with due care.
(g) the Agent shall not be liable for any action taken, suffered or
omitted by it in good faith and believed by it to be authorized or within
the discretion or rights or powers conferred upon by this Agreement;
(h) the Agent shall not be deemed to have or be charged with knowledge
of any default unless a Responsible Officer receives written notice at its
Corporate Trust Office of such default giving rise thereto from the Company
or any of the Holders and such notice references the Units and this
Agreement;
(i) in no event shall the Agent be liable for any consequential,
punitive, indirect or special loss or damages of any kind whatsoever
(including but not limited to lost profit), even if the Agent has been
advised of the likelihood of such loss or damage and regardless of the form
of action; and
(j) the Agent shall not be responsible or liable for any failure or
delay in the performance of its obligations under this Agreement arising out
of or caused, directly or indirectly, by circumstances beyond its reasonable
control, including without limitation, act of God; earthquakes; fires;
floods; wars; civil or military disturbances; terrorist acts; sabotage;
epidemics; riots; interruptions, loss or malfunctions of utilities, computer
(hardware or software) or communications service; accidents; labor disputes;
and acts of civil or military authority or governmental actions; it being
understood that the Agent shall use reasonable efforts which are consistent
with accepted practices in the banking industry to resume performance as
soon as practicable under the circumstances.
SECTION 7.4 Not Responsible for Recitals or Issuance of Units.
The recitals contained herein and in the Certificates shall be taken
as the statements of the Company and the Agent assumes no responsibility for
their accuracy. The Agent makes no representations as to the validity or
sufficiency of either this Agreement or of the Units, or of the Pledge Agreement
or the Pledge. The Agent shall not be accountable for the use or application by
the Company of the Units or the proceeds therefrom or in respect of the Purchase
Contracts and shall not be responsible for the perfection, priority or
maintenance of any security interest created pursuant to the Pledge Agreement.
SECTION 7.5 May Hold Units.
Any Registrar or any other agent of the Company, or the Agent and its
Affiliates, in their individual or any other capacity, may become the owner or
pledgee of Units 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 Registrar
or such other agent, or the Agent.
SECTION 7.6 Money Held in Custody.
Money held by the Agent in custody hereunder need not be segregated
from the Agent's other funds except to the extent required by law or provided
herein. The Agent shall be under no obligation to invest or pay interest on any
money received by it hereunder except as otherwise agreed in writing with the
Company.
SECTION 7.7 Compensation and Reimbursement.
The Company agrees:
(a) to pay to the Agent from time to time reasonable compensation for
all services rendered by it hereunder;
(b) except as otherwise expressly provided herein, to reimburse the
Agent upon its request for all reasonable expenses, disbursements and
advances incurred or made by the Agent in accordance with any provision of
this Agreement (including the reasonable compensation and the reasonable
expenses
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and disbursements of its agents and counsel), except any such expense,
disbursement or advance as may be attributable to its negligence or willful
misconduct; and
(c) to indemnify the Agent, as agent in any of the other capacities
contemplated hereunder, any predecessor Agent for, and their officers,
directors, employees and agents and to hold them harmless against, any loss,
liability or expense incurred without negligence or willful misconduct on their
part, arising out of or in connection with the acceptance or administration of
their duties hereunder, including the costs and expenses of defending themselves
against any claim or liability arising out of, relating to or in connection with
this Agreement, the transactions contemplated hereby or thereby, the
administration of this trust or its rights or duties hereunder, including the
reasonable costs (including reasonable counsel fees and expenses) and expenses
of defending itself against any claim or liability in connection with any
thereof, including the expenses of enforcing this provision.
For purposes of this Section 7.7, "Agent" shall include any predecessor
Agent; provided, however, that the negligence, bad faith or willful misconduct
of any Agent hereunder shall not affect the rights of any other Agent hereunder.
The provisions of this Section 7.7 shall survive the termination of
this Agreement, the satisfaction or discharge of the Units and/or the Separate
Notes and/or the resignation or removal of the Agent.
In addition to and without prejudice to the rights provided to the
Agent under any of the provisions of this Agreement, when the Agent (in its
capacity as Agent and, if applicable, in any of its other capacities
contemplated hereunder) incurs expenses (including the reasonable charges and
expenses of counsel) or renders services after any default, such expenses and
the compensation for services are intended to constitute expenses of
administration under any applicable bankruptcy law.
The Company's obligations under this Section 7.7 shall survive the
resignation or removal of the Agent, the discharge of the Company's obligations
and any rejection or termination of this Agreement under any applicable
bankruptcy law or other termination of this Agreement.
SECTION 7.8 Corporate Agent Required; Eligibility.
There shall at all times be an Agent hereunder which shall be a
corporation 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, The City of New York, if
there be such a corporation, 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
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 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 7.9 Resignation and Removal; Appointment of Successor.
(a) No resignation or removal of the Agent and no appointment of a
successor Agent pursuant to this Article shall become effective until the
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acceptance of appointment by the successor Agent in accordance with the
applicable requirements of Section 7.10.
(b) The 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 Agent required by Section 7.10
shall not have been delivered to the Agent within 30 days after the giving
of such notice of resignation, the resigning Agent may petition any court of
competent jurisdiction for the appointment of a successor Agent.
(c) The Agent may be removed at any time by Act of the Holders of a
majority in number of the Outstanding Units delivered to the Agent and the
Company.
(d) If at any time:
(1) the Agent fails to comply with Section 310(b) of the TIA,
as if the 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 Unit for at least six
months; or
(2) the Agent shall cease to be eligible under Section 7.8 and
shall fail to resign after written request therefor by the Company or
by any such Holder; or
(3) the Agent shall become incapable of acting or shall be
adjudged a bankrupt or insolvent or a receiver of the Agent or of its
property shall be appointed or any public officer shall take charge or
control of the Agent or of its property or affairs for the purpose of
rehabilitation, conservation or liquidation;
then, in any such case, (x) the Company by a Board Resolution may remove the
Agent, or (y) any Holder who has been a bona fide Holder of a Unit for at
least six months may, on behalf of himself and all others similarly
situated, petition any court of competent jurisdiction for the removal of
the Agent and the appointment of a successor Agent.
(e) If the Agent shall resign, be removed or become incapable of
acting, or if a vacancy shall occur in the office of Agent for any reason,
the Company, by a Board Resolution, shall promptly appoint a successor Agent
and shall comply with the applicable requirements of Section 7.10. If no
successor 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 Unit for at least six months may, on behalf of
itself and all others similarly
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situated, petition any court of competent jurisdiction for the appointment
of a successor Agent.
(f) The Company shall give, or shall cause such successor Agent to
give, notice of each resignation and each removal of the Agent and each
appointment of a successor 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 Register. Each notice shall include the
name of the successor 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 Agent, every
such successor Agent so appointed shall execute, acknowledge and deliver to
the Company and to the retiring Agent an instrument accepting such
appointment, and thereupon the resignation or removal of the retiring Agent
shall become effective and such successor Agent, without any further act,
deed or conveyance, shall become vested with all the rights, powers,
agencies and duties of the retiring Agent. On the request of the Company or
the successor Agent, such retiring Agent shall, upon payment of its charges,
execute and deliver an instrument transferring to such successor Agent all
the rights, powers and trusts of the retiring Agent and shall duly assign,
transfer and deliver to such successor Agent all property and money held by
such retiring Agent hereunder.
(b) Upon request of any such successor Agent, the Company shall execute
any and all instruments for more fully and certainly vesting in and
confirming to such successor Agent all such rights, powers and agencies
referred to in paragraph (a) of this Section.
(c) No successor Agent shall accept its appointment unless at the time
of such acceptance such successor Agent shall be qualified and eligible
under this Article.
SECTION 7.11 Merger, Conversion, Consolidation or Succession to
Business.
Any Person into which the Agent may be merged or converted or with
which it may be consolidated, or any Person resulting from any merger,
conversion or consolidation to which the Agent shall be a party, or any Person
succeeding to all or substantially all the corporate trust business of the
Agent, shall be the successor of the Agent hereunder, provided such Person 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 Agent then in office, any successor to
such Agent shall adopt such authentication and execution and deliver the
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Certificates so authenticated and executed with the same effect as if such
successor Agent had itself authenticated and executed such Units.
SECTION 7.12 Preservation of Information.
The Agent shall preserve, in as current a form as is reasonably
practicable, the names and addresses of Holders received by the Agent in its
capacity as Registrar.
SECTION 7.13 No Obligations of Agent.
Except to the extent otherwise provided in this Agreement, the Agent
assumes no obligation 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 Unit thereunder. The Company agrees, and each
Holder of a Certificate, by such Holder's acceptance thereof, shall be deemed to
have agreed, that the 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 Agent shall have no obligation to perform such Purchase Contracts on behalf
of the Holders, except to the extent expressly provided in Article V.
SECTION 7.14 Tax Compliance.
(a) The Agent, on its own behalf and on behalf of the Company, 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) any payments made with respect to the Units or (ii) the issuance,
delivery, holding, transfer, redemption or exercise of rights under the
Units. Such compliance shall include, without limitation, the preparation
and timely filing of such aforementioned required returns related thereto
and the timely payment of all amounts in connection therewith required to be
withheld to the appropriate taxing authority or its designated agent.
(b) The Agent shall comply with any reasonable written direction timely
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 7.1(a)(2).
(c) The 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.
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ARTICLE VIII
SUPPLEMENTAL AGREEMENTS
SECTION 8.1 Supplemental Agreements Without Consent of Holders.
Without the consent of any Holders, the Company and the 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 Agent, for any of the following
purposes:
(a) to evidence the succession of another Person to the Company, and
the assumption by any such successor of the covenants of the Company herein
and in the Certificates; or
(b) to add to the covenants of the Company for the benefit of the
Holders, or to surrender any right or power herein conferred upon the
Company; or
(c) to evidence and provide for the acceptance of appointment hereunder
by a successor Agent; or
(d) to make provision with respect to the rights of Holders pursuant to
the requirements of Section 5.6(b) or 5.10; or
(e) to cure any ambiguity, to correct or supplement any provisions
herein which may be inconsistent with any other provisions herein, or to
make any other provisions with respect to such matters or questions arising
under this Agreement, provided such action shall not adversely affect the
interests of the Holders.
SECTION 8.2 Supplemental Agreements with Consent of Holders.
(a) With the consent of the Holders of not less than a majority of the
outstanding Purchase Contracts voting together as one class, by Act of said
Holders delivered to the Company and the Agent, the Company, when authorized
by a Board Resolution, and the 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 Units; provided, however, that,
except as contemplated herein, no such supplemental agreement shall, without
the consent of the Holder of each Outstanding Unit 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,
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impair the right of the Holder of any Purchase Contract to receive
distributions on the related Collateral (except for the rights of
Holders of Normal Units to substitute the Treasury Securities for the
Pledged Notes or Pledged Treasury Consideration or the rights of
holders of Stripped Units to substitute Notes or appropriate Treasury
Consideration for the Pledged Treasury Securities) or otherwise
materially adversely affect the Holder's rights in or to such
Collateral;
(3) increase any amounts payable in respect of the Units or
decrease any amounts receivable by Holders in respect of the Units;
(4) impair the right to institute suit for the enforcement of
any Purchase Contract;
(5) reduce the number of shares of Common Stock to be
purchased pursuant to any Purchase Contract, increase the price to
purchase shares of Common Stock upon settlement of any Purchase
Contract, change the Stock Purchase Date or otherwise materially
adversely affect the Holder's rights under any Purchase Contract; or
(6) reduce the percentage of the outstanding Purchase
Contracts the consent of whose Holders is required for any such
supplemental agreement;
provided, that if any amendment or proposal referred to above would
adversely affect only the Normal Units or the Stripped Units, then only the
affected class of Holder as of the record date for the Holders entitled to
vote thereon will be entitled to vote on or consent to such amendment or
proposal, and such amendment or proposal shall not be effective except with
the consent of Holders of not less than a majority of such class; provided,
however, that no such agreement, whether with or without the consent of
Holders, shall affect Section 3.16.
(b) 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 8.3 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 Agent shall be entitled to receive
and (subject to Section 7.1) 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 all conditions precedent to the execution of such supplemental agreement
have been satisfied. The Agent shall enter into
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any such supplemental agreement which does not materially adversely affect the
Agent's own rights, duties or immunities under this Agreement or otherwise.
SECTION 8.4 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 8.5 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 Agent, bear a notation in form
approved by the 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 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 Agent in exchange for
Outstanding Certificates.
ARTICLE IX
CONSOLIDATION, MERGER, SALE OR CONVEYANCE
SECTION 9.1 Covenant Not to Merge, Consolidate, Sell or Convey Property
Except Under Certain Conditions.
The Company covenants that, so long as any Units are outstanding, it
will not (a) merge with or into or consolidate with any other Person or (b)
transfer, lease or convey all or substantially all its assets to any Person,
unless (i) either the Company shall be the continuing entity, or the successor
(if other than the Company) shall be a corporation, partnership or trust
organized and existing under the laws of the United States of America or a State
thereof or the District of Columbia and such Person shall expressly assume all
the obligations of the Company under the Purchase Contracts, this Agreement, the
Remarketing Agreement and the Pledge Agreement by one or more supplemental
agreements in form reasonably satisfactory to the Agent and the Collateral
Agent, executed and delivered to the Agent and the Collateral Agent by such
Person, and (ii) the Company or such successor, as the case may be, shall not,
immediately after such merger or consolidation, or such transfer, lease or
conveyance, be in default in the performance of any covenant or condition
hereunder, under any of the Purchase Contracts, under the Remarketing Agreement
or under the Pledge Agreement.
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SECTION 9.2 Rights and Duties of Successor Corporation.
(a) In case of any such consolidation, merger, transfer, lease or
conveyance and upon any such assumption by a successor entity in accordance
with Section 9.1, such successor entity 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 entity thereupon may cause to be signed, and may
issue either in its own name or in the name of the Company, any or all of
the Certificates evidencing Units issuable hereunder which theretofore shall
not have been signed by the Company and delivered to the 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 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 Agent for authentication,
execution on behalf of the Holder and delivery, and any Certificate
evidencing Units which such successor entity thereafter shall cause to be
signed and delivered to the Agent for that purpose. All the Certificates so
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.
(b) In case of any such consolidation, merger, transfer, lease or
conveyance such change in phraseology and form (but not in substance) may be
made in the Certificates evidencing Units thereafter to be issued as may be
appropriate.
SECTION 9.3 Opinion of Counsel Given to Agent.
The Agent, subject to Sections 7.1 and 7.3, shall receive an Opinion of
Counsel as conclusive evidence that any such consolidation, merger, 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
consolidation, merger, sale, assignment, transfer, lease or conveyance have been
met.
ARTICLE X
COVENANTS
SECTION 10.1 Performance Under Purchase Contracts.
The Company covenants and agrees for the benefit of the Holders from
time to time of the Units 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.
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SECTION 10.2 Maintenance of Office or Agency.
(a) The Company will maintain in the Borough of Manhattan, The City of
New York 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 any Settlement Date 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 Normal Units and where notices and
demands to or upon the Company in respect of the Units and this Agreement
may be served. The Company will give prompt written notice to the Agent of
the location, and any change in the location, of such office or agency. If
at any time the Company shall fail to maintain any such required office or
agency or shall fail to furnish the 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 Agent as its
agent to receive all such presentations, surrenders, notices and demands.
(b) 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, The City of New York for such
purposes. The Company will give prompt written notice to the Agent of any
such designation or rescission and of any change in the location of any such
other office or agency. The Company hereby designates as the place of
payment for the Units the Corporate Trust Office and appoints the Agent at
its Corporate Trust Office as paying agent in such city.
SECTION 10.3 Company to Reserve Common Stock.
The Company shall at all times prior to the Stock Purchase Date reserve
and keep available, free from preemptive rights, out of its authorized but
unissued Common Stock the maximum number of shares of Common Stock issuable
against tender of payment in respect of all Purchase Contracts constituting a
part of the Units evidenced by Outstanding Certificates.
SECTION 10.4 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 Units will, upon issuance, be duly
authorized, validly issued, fully paid and nonassessable.
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SECTION 10.5 Statements of Officer of the Company as to Default.
The Company will deliver to the Agent, within 120 days after the end of
each fiscal year of the Company ending after the date hereof, an Officers'
Certificate, stating whether or not to the best 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 such
Officers may have knowledge. In the event the Company shall change its fiscal
year at any time the Units are outstanding, the Company shall notify the Agent
of the effective date of such change.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
HOUSEHOLD INTERNATIONAL, INC.
By:
----------------------------------------
Name:
Title:
THE BANK OF NEW YORK,
as Purchase Contract Agent
By:
----------------------------------------
Name:
Title:
EXHIBIT A
FORM OF NORMAL UNITS CERTIFICATE
(FORM OF GLOBAL CERTIFICATE LEGEND)
[THIS CERTIFICATE IS A GLOBAL CERTIFICATE WITHIN THE MEANING OF THE
PURCHASE
CONTRACT AGREEMENT (AS DEFINED ON THE REVERSE HEREOF) AND IS REGISTERED IN THE
NAME OF THE CLEARING AGENCY OR A NOMINEE THEREOF. THIS CERTIFICATE MAY NOT BE
EXCHANGED IN WHOLE OR IN PART FOR A CERTIFICATE REGISTERED, AND NO TRANSFER OF
THIS CERTIFICATE IN WHOLE OR IN PART MAY BE REGISTERED, IN THE NAME OF ANY
PERSON OTHER THAN SUCH CLEARING AGENCY OR A NOMINEE THEREOF, EXCEPT IN THE
LIMITED CIRCUMSTANCES DESCRIBED IN THE
PURCHASE CONTRACT AGREEMENT.]*
[SO LONG AS DTC IS THE DEPOSITARY, INSERT: Unless this Certificate is presented
by an authorized representative of The Depository Trust Company (55 ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇) to the Company or its agent for registration or
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 Depository Trust Company, and any payment hereon is made
to Cede & Co., ANY TRANSFER PLEDGE OR OTHER USE HEREOF OR OTHERWISE BY A PERSON
IS wrongful since the registered owner hereof, Cede & Co., has an interest
herein.]
(Form of Face of Normal Units Certificate)
Household International, Inc.
8.875% Adjustable Conversion-Rate Equity Security Units
No._________________ CUSIP No. ▇▇▇▇▇▇▇▇▇
Number of Normal Units _______________
This Normal Units Certificate certifies that _____ is the
registered Holder of the number of Normal Units set forth above. Each Normal
Unit represents (i) either (a) one 8.875% Senior Note due February 15, 2008 (the
"Note") of Household Finance Corporation, a Delaware corporation, having a
principal amount of $25, subject to the Pledge of such Note by such Holder
pursuant to the Pledge Agreement, or (b) if the Note has been remarketed by the
Remarketing Agent (or if the Holder has elected not to have the Note remarketed
or a Tax Event Redemption has occurred), the appropriate Treasury Consideration,
subject to the Pledge of such Treasury Consideration by such Holder pursuant to
the Pledge Agreement, and (ii) the rights and obligations of the Holder under
one Purchase Contract with Household International, Inc., a Delaware corporation
(the "Company"). Each Normal Unit will have a stated amount of $25 (the "Stated
--------------------
* To be inserted in Global Certificates only.
A-1
Amount"). All capitalized terms used herein which are defined in the
Purchase
Contract Agreement have the meanings set forth therein.
Pursuant to the Pledge Agreement, the Note or the interest in
the appropriate Treasury Consideration, as the case may be, constituting part of
each Normal Unit evidenced hereby has been pledged to the Collateral Agent, for
the benefit of the Company, to secure the obligations of the Holder under the
Purchase Contract comprising a part of such Normal Unit to purchase shares of
Common Stock of the Company. Prior to the purchase of shares of Common Stock
under each Purchase Contract, such Purchase Contracts shall not entitle the
Holders of Normal Units Certificates 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 shareholders
in respect of the meetings of shareholders, or for the election of directors of
the Company or for any other matter or any other rights whatsoever as
shareholder of the Company.
The Pledge Agreement provides that all payments in respect of
the Pledged Notes or Pledged Treasury Consideration received by the Collateral
Agent shall be paid by the Collateral Agent by wire transfer in same day funds
(i) in the case of (A) quarterly cash distributions on Normal Units which
include Pledged Notes or Pledged Treasury Consideration and (B) any payments in
respect of the Notes or Treasury Consideration, as the case may be, that have
been released from the Pledge pursuant to the Pledge Agreement, to the Agent to
the account designated by the Agent, no later than 10:00 a.m., New York City
time, on the Business Day such payment is received by the Collateral Agent
(provided that in the event such payment is received by the Collateral Agent on
a day that is not a Business Day or after 9:00 a.m., New York City time, on a
Business Day, then such payment shall be made no later than 9:30 a.m., New York
City time, on the next succeeding Business Day) and (ii) in the case of payments
in respect of any Pledged Notes or Pledged Treasury Consideration, as the case
may be, to be paid upon settlement of such Holder's obligations to purchase
shares of Common Stock under the Purchase Contract, to the Company on the Stock
Purchase Date (as defined herein) in accordance with the terms of the Pledge
Agreement, in full satisfaction of the respective obligations of the Holders of
the Normal Units of which such Pledged Notes or Pledged Treasury Consideration
are a part under the Purchase Contracts forming a part of such Normal Units.
Quarterly distributions on Normal Units which include Pledged Notes or Pledged
Treasury Consideration which are payable quarterly in arrears on February 15,
May 15, August 15 and November 15 each year, commencing February 15, 2003 (a
"Payment Date"), shall, subject to receipt thereof by the Agent from the Trustee
or Collateral Agent, as the case may be, be paid to the Person in whose name
this Normal Units Certificate (or a Predecessor Normal 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 Normal Units Certificate to purchase, and the Company to sell, on
February 15, 2006 (the "Stock Purchase Date"), at a price equal to $25 (the
"Purchase Price"), a number of
A-2
shares of Common Stock, $1.00 par value per share ("Common Stock"), of the
Company, equal to the Settlement Rate, unless on or prior to the Stock Purchase
Date there shall have occurred a Termination Event or an Early Settlement or
Merger Early Settlement with respect to the Normal Units of which such Purchase
Contract is a part, all as provided in the
Purchase Contract Agreement, as
defined and more fully described on the reverse hereof. The Purchase Price for
the shares of Common Stock purchased pursuant to each Purchase Contract
evidenced hereby, if not paid earlier, shall be satisfied on the Stock Purchase
Date by either (i) the application of payments received with regard to Pledged
Treasury Consideration, or (ii) the exercise of the Company's rights as a
secured party in connection with the Pledged Notes, as the case may be.
Payments on the Notes or the appropriate Treasury
Consideration will be payable at the office of the Agent in The City of New York
or, at the option of the Company, by check mailed to the address of the Person
entitled thereto as such address appears on the Normal Units Register or by wire
transfer to an account specified by the Company.
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 Agent by manual signature, this Normal 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.
A-3
IN WITNESS WHEREOF, the Company has caused this instrument to
be duly executed.
Dated: ____________
HOUSEHOLD INTERNATIONAL, INC.
By: __________________________________
Name:
Title:
HOLDER SPECIFIED ABOVE (as to obligations
of such Holder under the Purchase Contracts
evidenced hereby)
By: THE BANK OF NEW YORK,
not individually but solely as
Attorney-in-Fact of such Holder
By:_______________________________
Name:
Title:
A-4
AGENT'S CERTIFICATE OF AUTHENTICATION
This is one of the Normal Units Certificates referred to in
the within mentioned
Purchase Contract Agreement.
THE BANK OF NEW YORK,
as Purchase Contract Agent
Dated: ___________________ By:__________________________________
Authorized Officer
A-5
(Form of Reverse of Normal Units Certificate)
Each Purchase Contract evidenced hereby is governed by a
Purchase Contract Agreement, dated as of October 30, 2002 (as may be
supplemented from time to time, the "Purchase Contract Agreement"), between the
Company and The Bank of New York, as Purchase Contract Agent (including its
successors thereunder, herein called the "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 Agent, the Company, and the Holders and of the
terms upon which the Normal Units Certificates are, and are to be, executed and
delivered. All defined terms used but not defined in this Certificate have the
meanings ascribed to them in the Purchase Contract Agreement.
Each Purchase Contract evidenced hereby obligates the Holder
of this Normal Units Certificate to purchase, and the Company to sell, on the
Stock Purchase Date at a price equal to $25 (the "Purchase Price"), a number of
shares of Common Stock of the Company equal to the Settlement Rate, unless, on
or prior to the Stock Purchase Date, there shall have occurred a Termination
Event or a Cash Settlement, Early Settlement or Merger Early Settlement with
respect to the Unit of which such Purchase Contract is a part. The "Settlement
Rate" is equal to (a) if the Applicable Market Value (as defined below) is equal
to or greater than $25.68 (the "Threshold Appreciation Price"), 0.9735 shares of
Common Stock per Purchase Contract, (b) if the Applicable Market Value is less
than the Threshold Appreciation Price but is greater than $21.40, the number of
shares of Common Stock per Purchase Contract equal to the Purchase Price divided
by the Applicable Market Value and (c) if the Applicable Market Value is equal
to or less than $21.40, 1.1682 shares of Common Stock per Purchase Contract, in
each case subject to adjustment as provided in the Purchase Contract Agreement.
No fractional shares of Common Stock will be issued upon settlement of Purchase
Contracts, as provided in the Purchase Contract Agreement.
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 Stock Purchase Date
or, in the event of a Cash Merger, the Cash Merger Date.
The "Closing Price" of the Common Stock on any date of
determination means the closing sale price (or, if no closing sale price is
reported, the last reported sale price) of the Common Stock on the New York
Stock Exchange (the "NYSE") on such date or, if the Common Stock is not listed
for trading on the NYSE on any such date, as reported in the composite
transactions for the principal United States securities exchange on which the
Common Stock is so listed, or if the Common Stock is not so listed on a United
States national or regional securities exchange, as reported by The Nasdaq Stock
Market, or, 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, if such bid price is not
available, the market value of
A-6
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 (A) 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 (B) 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 at the close of business on such day.
Each Purchase Contract evidenced hereby may be settled prior
to the Stock Purchase Date through Cash Settlement, Early Settlement or Merger
Early Settlement, in accordance with the terms of the Purchase Contract
Agreement.
In accordance with the terms of the Purchase Contract
Agreement, the Holder of this Normal Units Certificate shall pay the Purchase
Price for the shares of Common Stock purchased pursuant to each Purchase
Contract evidenced hereby (i) by effecting a Cash Settlement, an Early
Settlement or Merger Early Settlement, (ii) by application of payments received
in respect of the Pledged Treasury Consideration acquired from the proceeds of a
remarketing of the related Pledged Notes underlying the Normal Units represented
by this Normal Units Certificate as contemplated by Section 5.4 of the Purchase
Contract Agreement or (iii) if the Holder has elected not to participate in the
remarketing, by application of payments received in respect of the Pledged
Opt-out Treasury Consideration deposited by such Holder in respect of such
Purchase Contract or (iv) if a Tax Event Redemption has occurred prior to the
successful remarketing of the Notes as contemplated by Section 5.4 of the
Purchase Contract Agreement, by application of payments received in respect of
the Pledged Treasury Consideration purchased by the Collateral Agent on behalf
of the Holder of this Normal Units Certificate. If, as provided in the Purchase
Contract Agreement, upon the occurrence of a Last Failed Remarketing 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 Normal Units
Certificate, any accrued and unpaid interest on such Pledged Notes will become
payable by the Company to the Holder of this Normal Units Certificate in the
manner provided for in the Purchase Contract Agreement.
Under and subject to the terms of the Pledge Agreement and the
Purchase Contract Agreement, the Agent will be entitled to exercise the voting
and any other consensual rights pertaining to the Pledged Notes, but only to the
extent instructed by the Holders as described below. 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 Agent
shall, as soon as practicable thereafter, mail to the Holders of Normal Units a
notice (a) containing such information as is contained in the notice or
solicitation, (b) stating that each such Holder on the record date set by the
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 Agent as to the exercise of the voting rights
pertaining to the Pledged Notes constituting a part of such
A-7
Holder's Normal Units and (c) stating the manner in which such instructions may
be given. Upon the written request of any Holder of Normal Units on such record
date, the Agent shall endeavor insofar as practicable to vote or cause to be
voted, in accordance with the instructions set forth in such request the maximum
number of Pledged Notes as to which any particular voting instructions are
received. In the absence of specific instructions from the Holder of a Normal
Unit, the Agent shall abstain from voting the Pledged Note evidenced by such
Normal Unit.
The Normal Units Certificates are issuable only in registered
form and only in denominations of a single Normal Unit and any integral multiple
thereof. The transfer of any Normal Units Certificate will be registered and
Normal Units Certificates may be exchanged as provided in the Purchase Contract
Agreement. The Normal Units 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 of a Normal Units Certificate, but the
Company and the Agent may require payment 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 exchanges not
involving any transfer as provided for in the Purchase Contract Agreement. The
Holder of a Normal Unit may substitute for the Pledged Notes or Pledged Treasury
Consideration securing its obligations under the related Purchase Contract
Treasury Securities in accordance with the terms of the Purchase Contract
Agreement and the Pledge Agreement. From and after such Collateral Substitution,
the Unit for which such Pledged Treasury Securities secures the Holder's
obligation under the Purchase Contract shall be referred to as a "Stripped
Unit." A Holder that elects to substitute Treasury Securities for Pledged Notes
or Pledged Treasury Consideration, thereby creating Stripped Units, 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 a Normal Unit remains in effect, such Normal Unit shall not
be separable into its constituent parts, and the rights and obligations of the
Holder of such Normal Units in respect of the Pledged Note or Pledged Treasury
Consideration and Purchase Contract comprising such Normal Unit may be acquired,
and may be transferred and exchanged, only as a Normal Unit.
A Holder of Stripped Units may reestablish Normal Units at any
time from and after the date of the Purchase Contract Agreement and on or prior
to the second Business Day immediately preceding the Stock Purchase Date by
depositing with the Collateral Agent the Notes or the appropriate Treasury
Consideration in exchange for the release of the Pledged Treasury Securities in
accordance with the terms of the Purchase Contract Agreement and the Pledge
Agreement.
The Purchase Contracts and all obligations and rights of the
Company and the Holders thereunder and the obligations of the Holders to
purchase shares of Common Stock, shall immediately and automatically terminate,
without the necessity of any notice or action by any Holder, the Agent or the
Company, if, on or prior to the Stock Purchase Date, a Termination Event shall
have occurred. Upon the occurrence of a Termination
A-8
Event, the Company shall promptly but in no event later than two Business Days
thereafter give written notice to the Agent, the Collateral Agent and to the
Holders, at their addresses as they appear in the Normal Units Register. Upon
and after the occurrence of a Termination Event, the Collateral Agent shall
release the Pledged Notes or Pledged Treasury Consideration from the Pledge in
accordance with the provisions of the Pledge Agreement.
Upon registration of transfer of this Normal 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 Agent
pursuant to the Purchase Contract Agreement), under the terms of the Purchase
Contract Agreement, the Purchase Contracts evidenced hereby and the Pledge
Agreement and the transferor shall be released from the obligations under the
Purchase Contract Agreement, the Purchase Contracts evidenced by this Normal
Units Certificate and the Pledge Agreement. 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 Normal Units Certificate, by its acceptance
hereof, irrevocably authorizes the Agent to enter into and perform the related
Purchase Contracts forming part of the Normal Units evidenced hereby on his
behalf as his 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 such Holder's obligations under such Purchase
Contracts, consents to the provisions of the Purchase Contract Agreement,
authorizes the Agent to enter into and perform the Pledge Agreement on such
Holder's behalf as attorney-in-fact, and consents to the Pledge of the Notes or
the appropriate Treasury Consideration underlying this Normal 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 of
the Pledged Notes or the Pledged Treasury Consideration to be paid upon
settlement of such Holder's obligations to purchase shares of Common Stock under
the Purchase Contract, shall be paid on the Stock Purchase Date 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. The obligations of each Holder to pay the Purchase
Price are non-recourse obligations and except to the extent paid by Cash
Settlement, Early Settlement or Merger Early 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 such
payments and the Purchase Price. Notwithstanding anything to the contrary
herein, 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 of the related Unit unless the Company shall have (i) received payment in
full of the aggregate Purchase Price for the shares of Common Stock to be
purchased thereunder by such Holder in the manner herein set forth
A-9
or (ii) exercised its rights as a secured party under Section 5.4(b)(iii) of the
Purchase Contract Agreement.
Each Holder of any Unit, and each Beneficial Owner thereof, by
its acceptance thereof or of its interest therein, further agrees to treat (i)
itself as the owner of the related Notes, Treasury Consideration or Treasury
Securities, as the case may be, (ii) the Notes as indebtedness of Household
Finance Corporation, in each case, for United States federal, state and local
income and franchise tax purposes, and (iii) the Purchase Contract and the
Notes, the Treasury Consideration or Treasury Securities, as the case may be, as
separate financial instruments, in each case, for all tax purposes.
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 outstanding Purchase Contracts.
The Purchase Contracts shall for all purposes be governed by,
deemed to be a contract under, and construed in accordance with, the laws of the
State of New York, without regard to the conflicts of laws principles thereof.
The Company, the Agent and its Affiliates and any agent of the
Company or the Agent may treat the Person in whose name this Normal Units
Certificate is registered as the owner of the Normal Units evidenced hereby for
the purpose of receiving quarterly payments of interest on the Notes or the
Treasury Consideration, as the case may be, 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 Agent, such Affiliates 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 Agent.
A-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
----------------------------------
(State)
TEN ENT - 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.
A-11
ASSIGNMENT
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 Normal Units Certificates and all rights thereunder, hereby
irrevocably constituting and appointing __________________________ attorney to
transfer said Normal Units Certificates on the books of Household International,
Inc. 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 Normal Units
Certificates in every
particular, without alteration
or enlargement or any change
whatsoever.
Signature Guarantee:
-----------------------------------------------------------
A-12
SETTLEMENT INSTRUCTIONS
The undersigned Holder directs that a certificate for shares
of Common Stock deliverable upon settlement on or after the Stock Purchase Date
of the Purchase Contracts underlying the number of Normal Units evidenced by
this Normal 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
A-13
ELECTION TO SETTLE EARLY
The undersigned Holder of this Normal Units Certificate hereby
irrevocably exercises the option to effect Early Settlement in accordance with
the terms of the Purchase Contract Agreement with respect to the Purchase
Contracts underlying the number of Normal Units evidenced by this Normal Units
Certificate specified below. The option to effect Early Settlement may be
exercised only with respect to Purchase Contracts underlying Normal Units with
an aggregate Purchase Price equal to $1,000 or an integral multiple thereof. The
undersigned Holder directs that a certificate for shares of Common Stock
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
Normal Units Certificate representing any Normal 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 Pledged Treasury Consideration
deliverable upon such Early Settlement will be transferred in accordance with
the transfer instructions set forth below. If shares of Common Stock 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: Signature Guarantee:
---------- ----------------
Number of Units evidenced hereby as to which Early Settlement
of the related Purchase Contracts is being elected:
If shares of Common Stock are to be REGISTERED HOLDER
registered in the name of and
delivered to and Pledged Notes or Please print name and address of
Pledged Treasury Consideration are Registered Holder:
to be transferred to a Person other
than the Holder, please print such
Person's name and address:
-------------------------------------- ------------------------------------
Name Name
-------------------------------------- ------------------------------------
Address Address
Social Security or other Taxpayer Identification
Number, if any
Transfer instructions for Pledged Notes or Pledged Treasury Consideration
transferable upon Early Settlement or a Termination Event:
A-14
[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:
STATED AMOUNT
AMOUNT OF AMOUNT OF OF THE GLOBAL
DECREASE IN INCREASE IN CERTIFICATE SIGNATURE OF
STATED AMOUNT STATED AMOUNT FOLLOWING AUTHORIZED
OF THE GLOBAL OF THE GLOBAL SUCH DECREASE OFFICER OF
DATE CERTIFICATE CERTIFICATE OR INCREASE AGENT
---- ----------- ----------- -- -------- -----
A-15
EXHIBIT B
FORM OF STRIPPED UNITS CERTIFICATE
(FORM OF GLOBAL CERTIFICATE LEGEND)
[THIS CERTIFICATE IS A GLOBAL CERTIFICATE WITHIN THE MEANING OF THE PURCHASE
CONTRACT AGREEMENT (AS DEFINED ON THE REVERSE HEREOF) AND IS REGISTERED IN THE
NAME OF A CLEARING AGENCY OR A NOMINEE THEREOF. THIS CERTIFICATE MAY NOT BE
EXCHANGED IN WHOLE OR IN PART FOR A CERTIFICATE REGISTERED, AND NO TRANSFER OF
THIS CERTIFICATE IN WHOLE OR IN PART MAY BE REGISTERED, IN THE NAME OF ANY
PERSON OTHER THAN SUCH CLEARING AGENCY OR A NOMINEE THEREOF, EXCEPT IN THE
LIMITED CIRCUMSTANCES DESCRIBED IN THE PURCHASE CONTRACT AGREEMENT.] *
[SO LONG AS DTC IS THE DEPOSITARY, INSERT: Unless this Certificate is presented
by an authorized representative of The Depository Trust Company (55 ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇) to the Company or its agent 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 Depository Trust Company, and any payment hereon is made
to Cede & Co., ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE
BY A PERSON IS WRONGFUL since the registered owner hereof, Cede & Co., has an
interest herein.]
(Form of Face of Stripped Units Certificate)
Household International, Inc.
8.875% Adjustable Conversion-Rate Equity Security Units
No. CUSIP No. ▇▇▇▇▇▇▇▇▇
Number of Stripped Units
This Stripped Units Certificate certifies that _________ is
the registered Holder of the number of Stripped Units set forth above. Each
Stripped Unit represents (i) a 1/40 undivided beneficial ownership interest in a
Treasury Security, subject to the Pledge of such interest in 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 Household
International, Inc., a Delaware corporation (the "Company"). Each Stripped Unit
will have a stated amount of $25 (the "Stated Amount"). All capitalized terms
used herein which are defined in the Purchase Contract Agreement have the
meaning set forth therein.
---------------------
* To be inserted in Global Certificates only.
B-1
Pursuant to the Pledge Agreement, the Treasury Security
constituting part of each Stripped Unit evidenced hereby has been pledged to the
Collateral Agent, for the benefit of the Company, to secure the obligations of
the Holder under the Purchase Contract comprising a part of such Stripped Unit
to purchase shares of Common Stock of the Company. Prior to the purchase of
shares of Common Stock under each Purchase Contract, such Purchase Contracts
shall not entitle the Holders of Normal Units Certificates 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 shareholders in respect of the meetings of shareholders, or for the
election of directors of the Company or for any other matter or any other rights
whatsoever as shareholder of the Company.
Each Purchase Contract evidenced hereby obligates the Holder
of this Stripped Units Certificate to purchase, and the Company to sell, on
February 15, 2006 (the "Stock Purchase Date"), at a price equal to $25 (the
"Purchase Price"), a number of shares of Common Stock, $1.00 par value per share
("Common Stock"), of the Company, equal to the Settlement Rate, unless on or
prior to the Stock Purchase Date there shall have occurred a Termination Event
or an Early Settlement or Merger Early Settlement with respect to the Stripped
Units 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 (as defined herein) for the shares of Common Stock purchased pursuant to
each Purchase Contract evidenced hereby, if not paid earlier, shall be paid on
the Stock Purchase Date by application of payments received in respect of the
Pledged Treasury Securities pledged to secure the obligations of the Holder
under such Purchase Contract in accordance with the terms of the Pledge
Agreement.
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 Agent by manual signature, this Stripped 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.
Dated: ____________
HOUSEHOLD INTERNATIONAL, INC.
By: ________________________________
Name:
Title:
HOLDER SPECIFIED ABOVE (as to
obligations of such Holder under the
Purchase Contracts evidenced hereby)
By: THE BANK OF NEW YORK, not
individually but solely as
Attorney-in-Fact of such Holder
By: ____________________________
Name:
Title:
B-3
AGENT'S CERTIFICATE OF AUTHENTICATION
This is one of the Stripped Units Certificates referred to in
the within-mentioned Purchase Contract Agreement.
Dated: ____________
THE BANK OF NEW YORK,
as Purchase Contract Agent
By:____________________________
Authorized Officer
B-4
(Form of Reverse of Stripped Units Certificate)
Each Purchase Contract evidenced hereby is governed by a
Purchase Contract Agreement, dated as of October 30, 2002 (as may be
supplemented from time to time, the "Purchase Contract Agreement"), between the
Company and The Bank of New York, as Purchase Contract Agent (including its
successors thereunder, herein called the "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 Agent, the Company and the Holders and
of the terms upon which the Stripped Units Certificates are, and are to be,
executed and delivered.
Each Purchase Contract evidenced hereby obligates the Holder
of this Stripped Units Certificate to purchase, and the Company to sell, on the
Stock Purchase Date at a price equal to $25 (the "Purchase Price"), a number of
shares of Common Stock of the Company equal to the Settlement Rate, unless, on
or prior to the Stock Purchase Date, there shall have occurred a Termination
Event or a Cash Settlement, an Early Settlement or Merger Early Settlement with
respect to the Unit of which such Purchase Contract is a part. The "Settlement
Rate" is equal to (a) if the Applicable Market Value (as defined below) is equal
to or greater than $25.68 (the "Threshold Appreciation Price"), 0.9735 shares of
Common Stock per Purchase Contract, (b) if the Applicable Market Value is less
than the Threshold Appreciation Price but is greater than $21.40, the number of
shares of Common Stock per Purchase Contract equal to the Purchase Price divided
by the Applicable Market Value and (c) if the Applicable Market Value is equal
to or less than $21.40, 1.1682 shares of Common Stock per Purchase Contract, in
each case subject to adjustment as provided in the Purchase Contract Agreement.
No fractional shares of Common Stock will be issued upon settlement of Purchase
Contracts, as provided in the Purchase Contract Agreement.
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 Stock Purchase Date or
in the event of a Cash Merger, the Cash Merger Date.
The "Closing Price" of the Common Stock on any date of
determination means the closing sale price (or, if no closing sale price is
reported, the last reported sale price) of the Common Stock on the New York
Stock Exchange (the "NYSE") on such date or, if the Common Stock is not listed
for trading on the NYSE on any such date, as reported in the composite
transactions for the principal United States securities exchange on which the
Common Stock is so listed, or if the Common Stock is not so listed on a United
States national or regional securities exchange, as reported by The Nasdaq Stock
Market, or, 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, if such bid price is not
available, the market value of
B-5
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 (A) 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 (B) 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 at the close of business of such day.
Each Purchase Contract evidenced hereby may be settled prior
to the Stock Purchase Date through Cash Settlement, Early Settlement or Merger
Early Settlement, in accordance with the terms of the Purchase Contract
Agreement.
In accordance with the terms of the Purchase Contract
Agreement, the Holder of this Stripped Units Certificate shall pay the Purchase
Price for the shares of Common Stock purchased pursuant to each Purchase
Contract evidenced hereby (i) by effecting a Cash Settlement, an Early
Settlement or Merger Early Settlement or (ii) by application of payments
received in respect of the Pledged Treasury Securities underlying the Stripped
Units represented by this Stripped Units Certificate.
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 in full of the
aggregate Purchase Price for the shares of Common Stock to be purchased
thereunder in the manner herein set forth.
The Stripped Units Certificates are issuable only in
registered form and only in denominations of a single Stripped Unit and any
integral multiple thereof. The transfer of any Stripped Units Certificate will
be registered and Stripped Units Certificates may be exchanged as provided in
the Purchase Contract Agreement. The Stripped Units 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 of a Stripped
Units Certificate, but the Company and the 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 exchanges not involving any transfer as provided for in
the Purchase Contract Agreement. The Holder of a Stripped Unit may substitute
for the Pledged Treasury Securities securing its obligations under the related
Purchase Contract Notes or the appropriate Treasury Consideration in accordance
with the terms of the Purchase Contract Agreement and the Pledge Agreement. From
and after such Collateral Substitution, the Unit for which such Pledged Notes or
Pledged Treasury Consideration secures the Holder's obligation under the
Purchase Contract shall be referred to as a "Normal Unit." A Holder that elects
to substitute Notes or the appropriate Treasury Consideration for Pledged
Treasury Securities, thereby reestablishing Normal Units, shall
B-6
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 a Stripped Unit remains in effect, such Stripped Unit shall
not be separable into its constituent parts, and the rights and obligations of
the Holder of such Stripped Unit in respect of the Pledged Treasury Security and
the Purchase Contract comprising such Stripped Unit may be acquired, and may be
transferred and exchanged, only as a Stripped Unit.
A Holder of Normal Units may establish Stripped Units at any
time from and after the date of the Purchase Contract Agreement and on or prior
to the second Business Day immediately preceding the Stock Purchase Date by
depositing with the Collateral Agent Treasury Securities in exchange for the
release of the Pledged Notes or the appropriate Pledged Treasury Consideration
in accordance with the terms of the Purchase Contract Agreement and the Pledge
Agreement.
The Purchase Contracts and all obligations and rights of the
Company and the Holders thereunder and the obligations of the Holders to
purchase shares of Common Stock, shall immediately and automatically terminate,
without the necessity of any notice or action by any Holder, the Agent or the
Company, if, on or prior to the Stock Purchase 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 Agent, the Collateral Agent and to the Holders, at their addresses
as they appear in the Stripped Units Register. Upon and after the occurrence of
a Termination Event, the Collateral Agent shall release the Pledged Treasury
Securities from the Pledge in accordance with the provisions of the Pledge
Agreement.
Upon registration of transfer of this Stripped 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 Agent
pursuant to the Purchase Contract Agreement), under the terms of the Purchase
Contract Agreement, the Purchase Contracts evidenced hereby and the Pledge
Agreement and the transferor shall be released from the obligations under the
Purchase Contract Agreement, the Purchase Contracts evidenced by this Stripped
Units Certificate and the Pledge Agreement. The Company covenants and agrees,
and the Holder, by his acceptance hereof, likewise covenants and agrees, to be
bound by the provisions of this paragraph.
The Holder of this Stripped Units Certificate, by its
acceptance hereof, irrevocably authorizes the Agent to enter into and perform
the related Purchase Contracts forming part of the Stripped Units evidenced
hereby on his 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 such Holder's obligations under such Purchase
Contracts, consents to the provisions of the Purchase Contract Agreement,
B-7
authorizes the Agent to enter into and perform the Pledge Agreement on such
Holder's behalf as attorney-in-fact, and consents to the Pledge of the Treasury
Securities underlying this Stripped 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 of the Pledged Treasury
Securities, to be paid upon settlement of such Holder's obligations to purchase
shares of Common Stock under the Purchase Contract, shall be paid on the Stock
Purchase Date 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. The obligations of each Holder to
pay the Purchase Price are non-recourse obligations and except to the extent
paid by Early Settlement or Merger Early 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 such payments
and the Purchase Price.
Each Holder of any Unit, and each Beneficial Owner thereof, by
its acceptance thereof or of its interest therein, further agrees to treat (i)
itself as the owner of the related Notes, Treasury Consideration or Treasury
Securities, as the case may be, (ii) the Notes as indebtedness of Household
Finance Corporation, in each case, for United States federal, state and local
income and franchise tax purposes, and (iii) the Purchase Contract and the
Notes, the Treasury Consideration or Treasury Securities, as the case may be, as
separate financial instruments, in each case, for all tax purposes.
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 deemed to be a contract under, and construed in accordance with, the laws of
the State of New York, without regard to conflicts of laws principles thereof.
The Company, the Agent and its Affiliates and any agent of the
Company or the Agent may treat the Person in whose name this Stripped Units
Certificate is registered as the owner of the Stripped Units evidenced hereby
for the purpose of 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
Agent, such Affiliate, 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 Agent.
B-8
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
--------------------------------
(State)
TEN ENT - 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.
B-9
ASSIGNMENT
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 Stripped Units Certificates and all rights thereunder, hereby
irrevocably constituting and appointing _____________________________________
attorney to transfer said Stripped Units Certificates on the books of Household
International, Inc. 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
Stripped Units Certificates in
every particular, without
alteration or enlargement or
any change whatsoever.
Signature Guarantee:
-----------------------------------------------------------
B-10
SETTLEMENT INSTRUCTIONS
The undersigned Holder directs that a certificate for shares
of Common Stock deliverable upon settlement on or after the Stock Purchase Date
of the Purchase Contracts underlying the number of Stripped Units evidenced by
this Stripped 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) Please print name and address of
print such Person's name and address Registered Holder:
and (ii) provide a guarantee of your
signature:
------------------------------------ -------------------------------------
Name Name
------------------------------------ -------------------------------------
Address Address
Social Security or other Taxpayer Identification
Number, if any
B-11
ELECTION TO SETTLE EARLY
The undersigned Holder of this Stripped Units Certificate
hereby irrevocably exercises the option to effect Early Settlement in accordance
with the terms of the Purchase Contract Agreement with respect to the Purchase
Contracts underlying the number of Stripped Units evidenced by this Stripped
Units Certificate specified below. The option to effect Early Settlement may be
exercised only with respect to Purchase Contracts underlying Stripped Units with
an aggregate Purchase Price equal to $1,000 or an integral multiple thereof. The
undersigned Holder directs that a certificate for shares of Common Stock
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
Stripped Units Certificate representing any Stripped 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:
--------------
Number of Units evidenced hereby as to which Early Settlement
of the related Purchase Contracts is being elected:
If shares of Common Stock are to be REGISTERED HOLDER
registered in the name of and
delivered to and Pledged Treasury Please print name and address of
Securities are to be transferred to a Registered Holder:
Person other than the Holder, please
print such Person's name and address:
------------------------------------ -------------------------------------
Name Name
------------------------------------ -------------------------------------
Address Address
Social Security or other Taxpayer Identification
Number, if any
Transfer instructions for Pledged Treasury Securities, transferable upon Early
Settlement or a Termination Event:
B-12
[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:
STATED AMOUNT OF
AMOUNT OF DECREASE AMOUNT OF INCREASE THE GLOBAL
IN STATED AMOUNT OF IN STATED AMOUNT CERTIFICATE SIGNATURE OF
THE GLOBAL OF THE GLOBAL FOLLOWING SUCH AUTHORIZED OFFICER
DATE CERTIFICATE CERTIFICATE DECREASE OR INCREASE OF AGENT
---- ----------- ----------- -------------------- --------
B-13
EXHIBIT C
INSTRUCTION FROM PURCHASE CONTRACT AGENT TO
COLLATERAL AGENT
JPMorgan Chase Bank
4 New York ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: Institutional Trust Services
Re: 8.875% Adjustable Conversion-Rate Equity Security
Units of Household International, Inc. (the "Company")
We hereby notify you in accordance with Section 4.1 of the
Pledge Agreement, dated as of October 30, 2002, among the Company, you, as
Collateral Agent, Custodial Agent and Securities Intermediary, and us, as
Purchase Contract Agent and as attorney-in-fact for the holders of [Normal
Units] [Stripped Units] from time to time, that the holder of securities listed
below (the "Holder") has elected to substitute [$ _______ aggregate principal
amount of Treasury Securities (CUSIP No. _____)] [$_______ principal amount of
Notes or the appropriate Treasury Consideration, as the case may be,] in
exchange for the related [Pledged Notes or Pledged Treasury Consideration]
[Pledged Treasury Securities (CUSIP No. ____),] held by you in accordance with
the Pledge Agreement and has delivered to us a notice stating that the Holder
has transferred [Treasury Securities] [Notes or the appropriate Treasury
Consideration] to you, as Collateral Agent. We hereby instruct you, upon receipt
of such [Pledged Treasury Securities] [Pledged Notes or Pledged Treasury
Consideration], and upon the payment by such Holder of any applicable fees, to
release the [Notes or Treasury Consideration, as the case may be,] [Treasury
Securities] related to such [Normal Units] [Stripped Units] to us in accordance
with the Holder's instructions. Capitalized terms used herein but not defined
shall have the meaning set forth in the Purchase Contract Agreement.
Date:
----------------------
THE BANK OF NEW YORK,
As Purchase Contract Agent under the Purchase
Contract Agreement, dated as of October 30, 2002,
between the Company and the Purchase Contract
Agent
By:
----------------------------------------------
Name:
Title:
C-1
Please print name and address of Registered Holder electing to substitute
[Treasury Securities] [Notes or Treasury Consideration, as the case may be,] for
the [Pledged Notes or Pledged Treasury Consideration, as the case may be,]
[Pledged Treasury Securities]:
Name
Address
Social Security or other Taxpayer
Identification Number, if any
C-2
EXHIBIT D
INSTRUCTION TO PURCHASE CONTRACT AGENT
The Bank of New York
Suite 1020
▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: Corporate Trust Administration
Re: 8.875% Adjustable Conversion-Rate Equity Security
Units of Household International, Inc. (the "Company")
The undersigned Holder hereby notifies you, as Purchase
Contract Agent under the Purchase Contract Agreement, dated as of October 30,
2002, between the Company and you, that it has delivered to JPMorgan Chase Bank,
as Collateral Agent, Custodial Agent and Securities Intermediary [$_________
aggregate principal amount of Treasury Securities] [$_________ principal amount
of Notes or the appropriate Treasury Consideration, as the case may be,] in
exchange for the related [Pledged Notes or Pledged Treasury Consideration, as
the case may be,] [Pledged Treasury Securities] held by the Collateral Agent, in
accordance with Section 4.1 of the Pledge Agreement, dated as of October 30,
2002, among you, the Company and the Collateral Agent. The undersigned Holder
has paid the Collateral Agent all applicable fees relating to such exchange. The
undersigned Holder hereby instructs you to instruct the Collateral Agent to
release to you on behalf of the undersigned Holder the [Pledged Notes or Pledged
Treasury Consideration, as the case may be,] [Pledged Treasury Securities]
related to such [Normal Units] [Stripped Units]. Capitalized terms used herein
but not defined shall have the meaning set forth in the Purchase Contract
Agreement.
Date:
By:
-----------------------------------
Signature Guarantee:
-------------------
Dated:
Please print name and address of
Registered Holder:
Name Social Security or other Taxpayer
Identification Number, if any
Address
EXHIBIT E
NOTICE TO SETTLE BY SEPARATE CASH
The Bank of New York
Suite 1020
▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: Corporate Trust Administration
Re: 8.875% Adjustable Conversion-Rate Equity Security
Units of Household International, Inc. (the "Company")
The undersigned Holder hereby notifies you in accordance with
Section 5.4 of the Purchase Contract Agreement, dated as of October 30, 2002,
between the Company and you, that it has delivered to JPMorgan Chase Bank, as
Collateral Agent, Custodial Agent and Securities Intermediary as Purchase
Contract Agent, Attorney-in-Fact and Trustee for the Holders of the Purchase
Contracts, that such Holder has elected to pay to the Collateral Agent, on or
prior to 11:00 a.m. New York City time, on the Business Day immediately
preceding the Stock Purchase Date, (in lawful money of the United States by
certified or cashiers check or wire transfer, in each case 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 Contract
on the Stock Purchase Date. The undersigned Holder hereby instructs you to
notify promptly the Collateral Agent of the undersigned Holder's election to
make such cash settlement with respect to the Purchase Contracts related to such
Holder's Normal Units. Capitalized terms used herein but not defined shall have
the meaning set forth in the Purchase Contract Agreement.
Date:
By:
-----------------------------------
Signature Guarantee:
-------------------
Dated:
Signatures must be guaranteed by an "eligible guarantor institution" meeting the
requirements of the Registrar, which requirements include membership or
participation in the Security Transfer Agent Medallion Program ("STAMP") or such
other "signature guarantee program" as may be determined by the Registrar in
addition to, or in substitution for, STAMP, all in accordance with the
Securities Exchange Act of 1934, as amended.
Please print name and address of
Registered Holder:
Name Social Security or other Taxpayer
Identification Number, if any
Address