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TEXAS UTILITIES COMPANY,
THE CHASE MANHATTAN BANK
AS COLLATERAL AGENT, CUSTODIAL AGENT
AND SECURITIES INTERMEDIARY
AND
THE BANK OF NEW YORK
AS PURCHASE CONTRACT AGENT
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PLEDGE AGREEMENT
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DATED AS OF JULY 1, 1998
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TABLE OF CONTENTS
Page No.
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RECITALS . . . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 1. Definitions . . . . . . . . . . . . . . . . . 2
SECTION 2. Pledge; Control and Perfection . . . . . . . . 5
SECTION 2.1. The Pledge. . . . . . . . . . . . . . . . 6
SECTION 2.2. Control and Perfection. . . . . . . . . . 7
SECTION 3. Distributions on Pledged Collateral. . . . . . 8
SECTION 4. Substitution, Release, Repledge and Settlement of
Debt Securities . . . . . . . . . . . . . . . 9
SECTION 4.1. Substitution for Debt Securities and the
Creation of Growth PRIDES. . . . . . . . 9
SECTION 4.2. Substitution for Treasury Securities and
the Creation of Income PRIDES. . . . . . 11
SECTION 4.3. Termination Event . . . . . . . . . . . . 12
SECTION 4.4. Cash Settlement . . . . . . . . . . . . . 12
SECTION 4.5. Early Settlement . . . . . . . . . . . . 14
SECTION 4.6. Application of Proceeds; Settlement . . . 15
SECTION 5. Voting Rights -- Debt Securities . . . . . . . 17
SECTION 6. Rights and Remedies; Tax Event Redemption . . 17
SECTION 6.1. Rights and Remedies of the Collateral
Agent . . . . . . . . . . . . . . . . . . 17
SECTION 6.2. Tax Event Redemption . . . . . . . . . . 18
SECTION 6.3. Substitutions . . . . . . . . . . . . . . 19
SECTION 7. Representations and Warranties; Covenants . . 19
SECTION 7.1. Representations and Warranties . . . . . 19
SECTION 7.2. Covenants . . . . . . . . . . . . . . . . 19
SECTION 8. The Collateral Agent . . . . . . . . . . . . . 20
SECTION 8.1. Appointment, Powers and Immunities . . . 20
SECTION 8.2. Instructions of the Company . . . . . . . 21
SECTION 8.3. Reliance by Collateral Agent . . . . . . 21
SECTION 8.4. Rights in Other Capacities . . . . . . . 21
SECTION 8.5. Non-Reliance on Collateral Agent . . . . 21
SECTION 8.6. Compensation and Indemnity. . . . . . . . 22
SECTION 8.7. Failure to Act. . . . . . . . . . . . . . 22
SECTION 8.8. Resignation of Collateral Agent. . . . . 23
SECTION 8.9. Right to Appoint Agent or Advisor . . . . 23
SECTION 8.10. Survival . . . . . . . . . . . . . . . . 24
SECTION 8.11. Exculpation . . . . . . . . . . . . . . . 24
SECTION 9. Amendment . . . . . . . . . . . . . . . . . . 24
SECTION 9.1. Amendment Without Consent of Holders . . 24
SECTION 9.2. Amendment with Consent of Holders . . . . 24
SECTION 9.3. Execution of Amendments . . . . . . . . . 25
SECTION 9.4. Effect of Amendments . . . . . . . . . . 25
SECTION 9.5. Reference to Amendments . . . . . . . . . 25
SECTION 10. Miscellaneous . . . . . . . . . . . . . . . . 26
SECTION 10.1. No Waiver . . . . . . . . . . . . . . . . 26
SECTION 10.2. Governing Law . . . . . . . . . . . . . . 26
SECTION 10.3. Notices . . . . . . . . . . . . . . . . . 26
SECTION 10.4. Successors and Assigns . . . . . . . . . 27
SECTION 10.5. Counterparts . . . . . . . . . . . . . . 27
SECTION 10.6. Severability . . . . . . . . . . . . . . 27
SECTION 10.7. Expenses, etc. . . . . . . . . . . . . . 27
SECTION 10.8. Security Interest Absolute . . . . . . . 27
EXHIBIT A: Instruction From Purchase Contract Agent to
Collateral Agent . . . . . . . . . . . . . . A-1
EXHIBIT B: Instruction to Purchase Contract Agent . . . B-1
EXHIBIT C: Instruction to Custodial Agent Regarding
Remarketing . . . . . . . . . . . . . . . . C-1
EXHIBIT D: Instruction to Custodial Agent Regarding
Withdrawal From Remarketing . . . . . . . . D-1
PLEDGE AGREEMENT
PLEDGE AGREEMENT, dated as of July 1, 1998 (this
"Agreement"), by and among Texas Utilities Company, a Texas
corporation (the "Company"), as pledgee, The Chase Manhattan
Bank, a New York banking corporation, not individually but solely
as collateral agent (in such capacity, together with its
successors in such capacity, the "Collateral Agent"), as
custodial agent (in such capacity, together with its successors
in such capacity, the "Custodial Agent") and as a "securities
intermediary" as defined in Section 8-102(a)(14) of the Code (as
defined herein) (in such capacity, together with its successors
in such capacity, the "Securities Intermediary"), and The Bank of
New York, a New York banking corporation, not individually but
solely as purchase contract agent and as attorney-in-fact of the
Holders (as defined in the Purchase Contract Agreement) from time
to time of the Securities (as hereinafter defined) (in such
capacity, together with its successors in such capacity, the
"Purchase Contract Agent") under the Purchase Contract Agreement
(as hereinafter defined).
RECITALS
The Company and the Purchase Contract Agent are parties
to the Purchase Contract Agreement, dated as of the date hereof
(as modified and supplemented and in effect from time to time,
the "Purchase Contract Agreement"), pursuant to which there may
be issued up to 14,950,000 new securities (the "Securities") of
the Company.
The Securities will initially consist of 13,000,000
units and include (A) 11,700,000 units (referred to as "Income
PRIDES") with a stated amount, per Income PRIDES, equal to $50
(the "Stated Amount") and (B) 1,300,000 units (referred to as
"Growth PRIDES") with a face amount, per Growth PRIDES, equal to
the Stated Amount. Each Income PRIDES will initially be comprised
of (a) a stock purchase contract (as modified and supplemented
and in effect from time to time, a "Purchase Contract") under
which (i) the Holder will purchase from the Company not later
than August 16, 2001 ("First Purchase Contract Settlement Date"),
for $25 in cash, a number of newly issued shares of common stock,
without par value, of the Company ("Common Stock") equal to the
applicable Settlement Rate (as defined in the Purchase Contract
Agreement), (ii) the Holder will purchase from the Company not
later than August 16, 2002 ("Second Purchase Contract Settlement
Date", and with the First Purchase Contract Settlement Date, each
a "Purchase Contract Settlement Date"), for $25 in cash, a number
of newly issued shares of Common Stock equal to the applicable
Settlement Rate and (iii) the Company will pay certain Contract
Adjustment Payments to the Holders as provided in the Purchase
Contract Agreement, and (b) either (A)(i) prior to the First
Purchase Contract Settlement Date, beneficial ownership of a
6.37% Series D Senior Note due 2003 of the Company ("Series D
Note"), having a principal amount of $25, and a 6.50% Series E
Senior Note due 2004 of the Company ("Series E Note", and
together with the Series D Note, the "Debt Securities"), having a
principal amount of $25, and (ii) from the First Purchase
Contract Settlement Date to the Second Purchase Contract
Settlement Date, beneficial ownership of a Series E Note, having
a principal amount of $25 or (B) upon the occurrence of a Tax
Event Redemption prior to the Second Purchase Contract Settlement
Date, the appropriate Applicable Ownership Interest in the
Treasury Portfolio (in each case, as defined herein). Each
Growth PRIDES will initially consist of a unit with a face amount
equal to the Stated Amount comprised of (a) a Purchase Contract
under which (i) the Holder will purchase from the Company not
later than the First Purchase Contract Settlement Date, for $25
in cash, a number of newly issued shares of Common Stock equal to
the applicable Settlement Rate, (ii) the Holder will purchase
from the Company not later than the Second Purchase Contract
Settlement Date, for $25 in cash, a number of newly issued shares
of Common Stock of the Company equal to the applicable Settlement
Rate and (iii) the Company will pay certain Contract Adjustment
Payments to the Holders as provided in the Purchase Contract
Agreement, and (b) (i) prior to the First Purchase Contract
Settlement Date, a 1/40 undivided beneficial ownership interest
in a 5.43% zero-coupon U.S. Treasury Security having a principal
amount at maturity equal to $1,000 and maturing on August 15,
2001 (CUSIP No. 912820 BB 2) ("3-Year Treasury Security") and a
1/40 undivided beneficial ownership interest in a 5.45% zero
coupon U.S. Treasury Security having a principal amount at
maturity equal to $1,000 and maturing on August 15, 2002 (CUSIP
No. 912820 BE 6) ("4-Year Treasury Security" and with the 3-Year
Treasury Security, each a "Treasury Security") and (ii) from the
First Purchase Contract Settlement Date to the Second Purchase
Contract Settlement Date, a 1/40 undivided beneficial interest in
a 4-Year Treasury Security.
Pursuant to the terms of the Purchase Contract
Agreement, the Company may issue up to 1,950,000 additional
Securities and, if the Company issues such additional Securities,
the related Debt Securities or Treasury Securities will be
pledged hereunder.
Pursuant to the terms of the Indenture (as defined
below), the Company will issue the Series D Notes and the Series
E Notes in equal aggregate principal amounts which together will
be equal to or greater than the aggregate Stated Amount of all
Income PRIDES.
Pursuant to the terms of the Purchase Contract
Agreement and the Purchase Contracts, the Holders, from time to
time, of the Securities have irrevocably authorized the Purchase
Contract Agent, as attorney-in-fact of such Holders, among other
things, to execute and deliver this Agreement on behalf of such
Holders and to grant the pledge provided hereby of the Debt
Securities, any Applicable Ownership Interest in the Treasury
Portfolio and any Treasury Securities to secure each Holder's
obligations under the related Purchase Contract, as provided
herein and subject to the terms hereof. Upon such pledge, the
Debt Securities will be beneficially owned by the Holders but
will be owned of record by the Purchase Contract Agent subject to
the Pledge hereunder, and the Treasury Securities (and the
applicable Ownership Interest in the Treasury Portfolio) will be
beneficially owned by the Holders but will be held in book-entry
form by the Securities Intermediary subject to the Pledge
hereunder.
Accordingly, the Company, the Collateral Agent, the
Securities Intermediary, the Custodial Agent and the Purchase
Contract Agent, on its own behalf and as attorney-in-fact of the
Holders from time to time of the Securities, agree as follows:
SECTION 1. DEFINITIONS.
For all purposes of this Agreement, except as otherwise
expressly provided or unless the context otherwise requires:
(a) the terms defined in this Article have the
meanings assigned to them in this Article and include the
plural as well as the singular;
(b) the words "herein," "hereof" and "hereunder" and
other words of similar import refer to this Agreement as a
whole and not to any particular Article, Section or other
subdivision;
(c) terms not otherwise defined herein are used herein
with the meaning ascribed to them in the Purchase Contract
Agreement.
"3-YEAR TREASURY SECURITY" has the meaning specified in
the Recitals.
"4-YEAR TREASURY SECURITY" has the meaning specified in
the Recitals.
"AGREEMENT" means this instrument as originally
executed or as it may from time to time be supplemented or
amended by one or more agreements supplemental hereto entered
into pursuant to the applicable provisions hereof.
"BANKRUPTCY CODE" means title 11 of the United States
Code, or any other law of the United States that from time to
time provides a uniform system of bankruptcy laws.
"BUSINESS DAY" means any day other than a Saturday, a
Sunday or any other day on which banking institutions in The City
of New York (in the State of New York) are permitted or required
by any applicable law to close.
"CASH" means any coin or currency of the United States
as at the time shall be legal tender for payment of public and
private debts.
"CODE" has the meaning specified in Section 6.1 hereof.
"COLLATERAL" has the meaning specified in Section 2.1
hereof.
"COLLATERAL ACCOUNT" means the securities account
(number C 27865) maintained at The Chase Manhattan Bank in the
name "The Bank of New York, as Purchase Contract Agent on behalf
of the holders of Securities subject to the security interest of
The Chase Manhattan Bank as Collateral Agent under the Pledge
Agreement, for the benefit of Texas Utilities Company, as
pledgee" and any successor account.
"COLLATERAL AGENT" has the meaning specified in the
first paragraph of this Agreement.
"COMMON STOCK" has the meaning specified in the
Recitals.
"COMPANY" means the Person named as the "Company" in
the first paragraph of this Agreement until a successor shall
have become such, and thereafter "Company" shall mean such
successor.
"CUSTODIAL AGENT" has the meaning specified in the
first paragraph of this Agreement.
"DEBT SECURITIES" has the meaning specified in the
Recitals.
"INDENTURE" means the Indenture, dated as of July 1,
1998 between the Company and the Trustee under which the Debt
Securities are to be issued.
"INTERMEDIARY" means any entity that in the ordinary
course of its business maintains securities accounts for others
and is acting in that capacity.
"PERMITTED INVESTMENTS" means any one of the following
which shall mature not later than the next succeeding Business
Day (i) any evidence of indebtedness with an original maturity of
365 days or less issued, or directly and fully guaranteed or
insured, by the United States of America or any agency or
instrumentality thereof (provided that the full faith and credit
of the United States of America is pledged in support thereof or
such indebtedness constitutes a general obligation of it); (ii)
deposits, certificates of deposit or acceptances with an original
maturity of 365 days or less of any institution which is a member
of the Federal Reserve System having combined capital and surplus
and undivided profits of not less than U.S. $200 million at the
time of deposit; (iii) investments with an original maturity of
365 days or less of any Person that is fully and unconditionally
guaranteed by a bank referred to in clause (ii); (iv) investments
in commercial paper, other than commercial paper issued by the
Company or its affiliates, of any corporation incorporated under
the laws of the United States or any State thereof, which
commercial paper has a rating at the time of purchase at least
equal to "A-1" by Standard & Poor's Ratings Services ("S&P") or
at least equal to "P-1" by ▇▇▇▇▇'▇ Investors Service, Inc.
("Moody's"); and (v) investments in money market funds registered
under the Investment Company Act of 1940, as amended, rated in
the highest applicable rating category by S&P or Moody's.
"PERSON" means any individual, corporation, limited
liability company, partnership, joint venture, association,
joint-stock company, trust, unincorporated organization or
government or any agency or political subdivision thereof.
"PLEDGE" has the meaning specified in Section 2.1
hereof.
"PLEDGED DEBT SECURITIES" has the meaning specified in
Section 2.1 hereof.
"PLEDGED TREASURY SECURITIES" has the meaning specified
in Section 2.1 hereof.
"PROCEEDS" means all interest, dividends, cash,
instruments, securities, financial assets (as defined in Section
8-102(a)(9) of the Code) and other property from time to time
received, receivable or otherwise distributed upon the sale,
exchange, collection or disposition of the Collateral or any
proceeds thereof.
"PURCHASE CONTRACT" has the meaning specified in the
Recitals.
"PURCHASE CONTRACT AGENT" has the meaning specified in
the first paragraph of this Agreement.
"PURCHASE CONTRACT AGREEMENT" has the meaning specified
in the Recitals.
"REMAINING STATED AMOUNT" means $25.
"SECURITIES" has the meaning specified in the Recitals.
"SECURITIES INTERMEDIARY" has the meaning specified in
the first paragraph of this Agreement.
"SECURITY ENTITLEMENT" has the meaning set forth in
Section 8-102(a)(17) of the Code.
"SEPARATE DEBT SECURITIES" means any Debt Securities
that are not Pledged Debt Securities.
"STATED AMOUNT" has the meaning specified in the
Recitals.
"TRADES" means the Treasury/Reserve Automated Debt
Entry System maintained by the Federal Reserve Bank of New York
pursuant to the TRADES Regulations.
"TRADES REGULATIONS" means the regulations of the
United States Department of the Treasury, published at 31 C.F.R.
Part 357, as amended from time to time. Unless otherwise defined
herein, all terms defined in the TRADES Regulations are used
herein as therein defined.
"TRANSFER" means, with respect to the Collateral and in
accordance with the instructions of the Collateral Agent, the
Purchase Contract Agent or the Holder, as applicable:
(i) except as otherwise provided in Section 2.1
hereof, in the case of Collateral consisting of
securities which cannot be delivered by book-entry or
which the parties agree are to be delivered in physical
form, delivery in appropriate physical form to the
recipient accompanied by any duly executed instruments
of transfer, assignments in blank, transfer tax stamps
and any other documents necessary to constitute a
legally valid transfer to the recipient;
(ii) in the case of Collateral consisting of
securities maintained in book-entry form, by causing a
"securities intermediary" (as defined in Section
8-102(a)(14) of the Code) to (i) credit a "security
entitlement" (as defined in Section 8-102(a)(17) of the
Code) with respect to such securities to a "securities
account" (as defined in Section 8-501(a) of the Code)
maintained by or on behalf of the recipient and (ii) to
issue a confirmation to the recipient with respect to
such credit. In the case of Collateral to be delivered
to the Collateral Agent, the securities intermediary
shall be the Securities Intermediary and the securities
account shall be the Collateral Account.
"TREASURY SECURITY" has the meaning specified in the
Recitals.
"TRUSTEE" means The Bank of New York, as trustee under
the Indenture until a successor is appointed thereunder, and
thereafter means such successor trustee.
"VALUE" with respect to any item of Collateral on any
date means, as to (i) Debt Securities of either series, the
aggregate principal amount thereof, (ii) Cash, the face amount
thereof and (iii) Treasury Securities, the aggregate principal
amount thereof at maturity.
SECTION 2. PLEDGE; CONTROL AND PERFECTION.
SECTION 2.1. THE PLEDGE.
The Holders from time to time acting through the
Purchase Contract Agent, as their attorney-in-fact, and the
Purchase Contract Agent, as such attorney-in-fact, hereby pledge
and grant to the Collateral Agent, for the benefit of the
Company, as collateral security for the performance when due by
such Holders of their respective obligations under the related
Purchase Contracts, a security interest in (i) all of the right,
title and interest of such Holders and the Purchase Contract
Agent (a) in the Debt Securities and Treasury Securities
constituting a part of the Securities and any Treasury Securities
delivered in exchange for any Debt Securities, and any Debt
Securities delivered in exchange for any Treasury Securities, in
accordance with Section 4 hereof, in each case that have been
Transferred to or received by the Collateral Agent and not
released by the Collateral Agent to such Holders under the
provisions of this Agreement; (b) in payments made by Holders
pursuant to Section 4.4; (c) in the Collateral Account and all
securities, financial assets, Cash and other property credited
thereto and all Security Entitlements related thereto; (d) in the
Treasury Portfolio purchased on behalf of the Holders of Income
PRIDES by the Collateral Agent upon the occurrence of a Tax Event
Redemption as provided in Section 6.2 and (e) all Proceeds of the
foregoing (all of the foregoing, collectively, the "Collateral").
Prior to or concurrently with the execution and delivery of this
Agreement, the Purchase Contract Agent, on behalf of the initial
Holders of the Securities, shall cause the Debt Securities
comprising a part of the Income PRIDES, and the Treasury
Securities comprising a part of the Growth PRIDES, to be
Transferred to the Collateral Agent for the benefit of the
Company. Such Debt Securities shall be Transferred by physically
delivering such Debt Securities to the Collateral Agent endorsed
in blank. Treasury Securities and the Treasury Portfolio, as
applicable, shall be Transferred to the Collateral Account
maintained by the Collateral Agent at the Securities Intermediary
by book-entry transfer to the Collateral Account in accordance
with the TRADES Regulations and other applicable law and by the
notation by the Securities Intermediary on its books that a
Security Entitlement with respect to such Treasury Securities or
Treasury Portfolio, has been credited to the Collateral Account.
For purposes of perfecting the Pledge under applicable law,
including, to the extent applicable, the TRADES Regulations or
the Uniform Commercial Code as adopted and in effect in any
applicable jurisdiction, the Collateral Agent shall be the agent
of the Company as provided herein. The pledge provided in this
Section 2.1 is herein referred to as the "Pledge" and the Debt
Securities, Treasury Securities or Treasury Portfolio subject to
the Pledge, excluding any Debt Securities or Treasury Securities
or interest in the Treasury Portfolio released from the Pledge as
provided in Section 4 hereof, are hereinafter referred to as
"Pledged Debt Securities", the "Pledged Treasury Securities," or
"Pledged Applicable Ownership Interest in the Treasury
Portfolio," respectively, and collectively, the "Pledged
Securities." Subject to the Pledge and the provisions of Section
2.2 hereof, the Holders from time to time shall have full
beneficial ownership of the Collateral. The Collateral Agent
shall have the right to have the Debt Securities or any other
Securities held in physical form reregistered in its name or in
the name of its agent or the Securities Intermediary and credited
to the Collateral Account.
Except as may be required in order to release Debt
Securities (or if a Tax Event Redemption has occurred, the
Applicable Ownership Interest in the Treasury Portfolio) or
Treasury Securities in connection with a Holder's election to
convert its investment from Income PRIDES to Growth PRIDES, or
from Growth PRIDES to Income PRIDES, as the case may be, or
except as otherwise required to release Pledged Securities as
specified herein, neither the Collateral Agent nor the Securities
Intermediary shall relinquish physical possession of any
certificate evidencing Debt Securities (or if a Tax Event
Redemption has occurred, the Applicable Ownership Interest in the
Treasury Portfolio) or Treasury Securities prior to the
termination of this Agreement. If it becomes necessary for the
Collateral Agent to relinquish physical possession of a
certificate in order to release a portion of the Debt Securities
evidenced thereby from the Pledge, the Collateral Agent shall use
its best efforts to obtain physical possession of a replacement
certificate evidencing any Debt Securities remaining subject to
the Pledge hereunder registered to it or endorsed in blank within
ten days of the date it relinquished possession. The Collateral
Agent shall promptly notify the Company of its failure to obtain
possession of any such replacement certificate as required
hereby.
SECTION 2.2. CONTROL AND PERFECTION.
(a) In connection with the Pledge granted in Section
2.1, and subject to the other provisions of this Agreement,
the Holders from time to time acting through the Purchase
Contract Agent, as their attorney-in-fact, hereby authorize
and direct the Securities Intermediary (without the
necessity of obtaining the further consent of the Purchase
Contract Agent or any of the Holders), and the Securities
Intermediary agrees, to comply with and follow any
instructions and entitlement orders (as defined in Section
8-102(a)(8) of the Code) that the Collateral Agent on behalf
of the Company may give in writing with respect to the
Collateral Account, the Collateral credited thereto and any
security entitlements with respect to any thereof. Such
instructions and entitlement orders may, without limitation,
direct the Securities Intermediary to transfer, redeem,
sell, liquidate, assign, deliver or otherwise dispose of the
Treasury Securities, the Treasury Portfolio, and any
Security Entitlements with respect thereto and to pay and
deliver any income, proceeds or other funds derived
therefrom to the Company. The Purchase Contract Agent and
the Holders from time to time, acting through the Purchase
Contract Agent, each hereby further authorize and direct the
Collateral Agent, as Agent of the Company, to itself issue
instructions and entitlement orders, and to otherwise take
action, with respect to the Collateral Account, the
Collateral credited thereto and any security entitlements
with respect thereto, pursuant to the terms and provisions
hereof, all without the necessity of obtaining the further
consent of the Purchase Contract Agent or any of the
Holders. The Collateral Agent shall be the Agent of the
Company and shall act as directed in writing by the Company.
Without limiting the generality of the foregoing, the
Collateral Agent shall issue entitlement orders to the
Securities Intermediary when and as directed by the Company.
(b) The Securities Intermediary hereby confirms and
agrees that: (i) all securities or other property underlying
any financial assets credited to the Collateral Account
shall be registered in the name of the Securities
Intermediary, indorsed to the Securities Intermediary or in
blank or credited to another Collateral Account maintained
in the name of the Securities Intermediary and in no case
will any financial asset credited to the Collateral Account
be registered in the name of the Purchase Contract Agent,
the Company or any Holder, payable to the order of, or
specially indorsed to, the Purchase Contract Agent, the
Collateral Agent, the Company or any Holder except to the
extent the foregoing have been specially indorsed to the
Securities Intermediary or in blank; (ii) all property
delivered to the Securities Intermediary pursuant to this
Pledge Agreement (including, without limitation, any Debt
Securities, the Treasury Portfolio or Treasury Securities)
will be promptly credited to the Collateral Account; (iii)
the Collateral Account is an account to which financial
assets are or may be credited, and the Securities
Intermediary shall, subject to the terms of this Agreement,
treat the Purchase Contract Agent as entitled to exercise
the rights of any financial asset credited to the Collateral
Account; (iv) the Securities Intermediary has not entered
into, and until the termination of the this Agreement will
not enter into, any agreement with any other Person relating
to the Collateral Account and/or any financial assets
credited thereto pursuant to which it has agreed to comply
with entitlement orders (as defined in Section 8-102(a)(8)
of the Code) of such other Person; and (v) the Securities
Intermediary has not entered into, and until the termination
of this Agreement will not enter into, any agreement with
the Company, the Collateral Agent or the Purchase Contract
Agent purporting to limit or condition the obligation of the
Securities Intermediary to comply with entitlement orders as
set forth in this Section 2.2 hereof.
(c) The Securities Intermediary hereby agrees that
each item of property (whether investment property,
financial asset, security, instrument or cash) credited to
the Collateral Account shall be treated as a "financial
asset" within the meaning of Section 8-102(a)(9) of the
Code.
(d) In the event of any conflict between this
Agreement (or any portion thereof) and any other agreement
now existing or hereafter entered into, the terms of this
Agreement shall prevail.
(e) The Purchase Contract Agent hereby irrevocably
constitutes and appoints the Collateral Agent and the
Company, and each of them severally, with full power of
substitution, as the Purchase Contract Agent's attorney-in-
fact to take on behalf of, and in the name, place and stead
of the Purchase Contract Agent and the Holders, any action
necessary or desirable to perfect and to keep perfected the
security interest in the Collateral referred to in Section
2.1. The grant of such power-of-attorney shall not be
deemed to require of the Collateral Agent any specific
duties or obligations not otherwise assumed by the
Collateral Agent hereunder.
SECTION 3. DISTRIBUTIONS ON PLEDGED COLLATERAL.
So long as the Purchase Contract Agent is the
registered owner of the Pledged Debt Securities, it shall receive
all payments thereon. If the Pledged Debt Securities are
reregistered, such that the Collateral Agent becomes the
registered holder, all payments of principal or interest on such
Pledged Debt Securities, together with any payments of principal
or interest or cash distributions in respect of any other Pledged
Securities received by the Collateral Agent that are properly
payable hereunder shall be paid by the Collateral Agent by wire
transfer in same day funds:
(i) In the case of (A) payment of interest with
respect to the Pledged Debt Securities or cash
distributions on the appropriate Applicable Ownership
Interest (as specified in clause (A)(ii) or (B)(ii) of
the definition of such term) in the Treasury Portfolio,
as the case may be, and (B) any payments of principal
with respect to any Debt Securities or the appropriate
Applicable Ownership Interest (as specified in clause
(A)(i) or (B)(i) of the definition of such term) in the
Treasury Portfolio, as the case may be, that have been
released from the Pledge pursuant to Section 4.3
hereof, to the Purchase Contract Agent, for the benefit
of the relevant Holders of Income PRIDES, to the
account designated by the Purchase Contract Agent for
such purpose, no later than 2:00 p.m., New York City
time, on the Business Day such payment is received by
the Collateral Agent (provided that in the event such
payment is received by the Collateral Agent on a day
that is not a Business Day or after 12:30 p.m., New
York City time, on a Business Day, then such payment
shall be made no later than 10:30 a.m., New York City
time, on the next succeeding Business Day);
(ii) In the case of any principal payments with
respect to any Treasury Securities that have been
released from the Pledge pursuant to Section 4.3
hereof, to the Holders of the Growth PRIDES to the
accounts designated by them in writing for such purpose
no later than 2:00 p.m., New York City time, on the
Business Day such payment is received by the Collateral
Agent (provided that in the event such payment is
received by the Collateral Agent on a day that is not a
Business Day or after 12:30 p.m., New York City time,
on a Business Day, then such payment shall be made no
later than 10:30 a.m., New York City time, on the next
succeeding Business Day); and
(iii) In the case of payments of the principal
of any Pledged Debt Securities or on the appropriate
Applicable Ownership Interest (as specified in clause
(A)(i) or (B)(i) of the definition of such term) in the
Treasury Portfolio, as the case may be, or the
principal of any Pledged Treasury Securities, to the
Company on the applicable Purchase Contract Settlement
Date in accordance with the procedure set forth in
Section 4.6(a) or 4.6(b) hereof, in full satisfaction
of the respective obligations of the Holders under the
applicable portion of the related Purchase Contracts.
All payments received by the Purchase Contract Agent as provided
herein shall be applied by the Purchase Contract Agent pursuant
to the provisions of the Purchase Contract Agreement. If,
notwithstanding the foregoing, the Purchase Contract Agent shall
receive any payments of principal on account of any Debt Security
or, if applicable, the appropriate Applicable Ownership Interest
(as specified in clause (A)(i) or (B)(i) of the definition of
such term) that, at the time of such payment, is a Pledged Debt
Security or the appropriate Applicable Ownership Interest in the
Treasury Portfolio, as the case may be, or a Holder of a Growth
PRIDES shall receive any payments of principal on account of any
Treasury Securities that, at the time of such payment, are
Pledged Treasury Securities, the Purchase Contract Agent or such
Holder, as the case may be, shall transfer the Proceeds of such
payment of principal on such Pledged Debt Security, appropriate
Applicable Ownership Interest in the Treasury Portfolio so
pledged, or Pledged Treasury Securities, as the case may be, to
the Collateral Agent and the Collateral Agent shall hold such
Proceeds for the benefit of the Company as Collateral Security
for the performance when due by such Holder of its obligations
under the related Purchase Contracts.
SECTION 4. SUBSTITUTION, RELEASE, REPLEDGE AND SETTLEMENT OF
DEBT SECURITIES.
SECTION 4.1. SUBSTITUTION FOR DEBT SECURITIES AND THE
CREATION OF GROWTH PRIDES.
A Holder of an Income PRIDES may, at any time on or
prior to the fifth Business Day immediately preceding the Second
Purchase Contract Settlement Date, create a Growth PRIDES by
substituting 3-Year Treasury Securities and 4-Year Treasury
Securities for the Series D Notes and the Series E Notes, or for
the appropriate Applicable Ownership Interest in the Treasury
Portfolio, as the case may be, that form a part of such Income
PRIDES (a "Collateral Substitution") in accordance with this
Section 4.1 and Section 3.13 of the Purchase Contract Agreement;
provided, however, that such Collateral Substitutions may not be
made during the period from the fifth Business Day immediately
preceding the First Purchase Contract Settlement Date through the
First Purchase Contract Settlement Date, except that if a Tax
Event Redemption has occurred and the Treasury Portfolio has
become a component of the Income PRIDES, Holders of such Income
PRIDES may make Collateral Substitutions at any time on or prior
to the second Business Day immediately preceding the Second
Purchase Contract Settlement Date (but not during the period from
the second Business Day immediately preceding the First Purchase
Contract Settlement Date through the First Purchase Contract
Settlement Date). Holders may make Collateral Substitutions (i)
only in integral multiples of 40 Income PRIDES if Debt Securities
are being substituted by Treasury Securities, or (ii) only in
integral multiples of 1,600,000 Income PRIDES if the appropriate
Applicable Ownership Interests in the Treasury Portfolio are
being substituted by Treasury Securities. To create 40 Growth
PRIDES (if a Tax Event Redemption has not occurred), or 1,600,000
Growth PRIDES (if a Tax Event Redemption has occurred), the
Income PRIDES Holder shall
(a) if a Tax Event Redemption has not occurred, (i)
prior to the fifth Business Day preceding the First Purchase
Contract Settlement Date, deposit with the Collateral Agent
a 3-Year Treasury Security having a principal amount at
maturity of $1,000 and a 4-Year Treasury Security having a
principal amount at maturity of $1,000, or (ii) after the
First Purchase Contract Settlement Date and prior to the
fifth Business Day preceding the Second Purchase Contract
Settlement Date, deposit with the Collateral Agent a 4-Year
Treasury Security having a principal amount at maturity of
$1,000, or
(b) if a Tax Event Redemption has occurred, (i) prior
to the second Business Day immediately preceding the First
Purchase Contract Settlement Date, deposit with the
Collateral Agent 3-Year Treasury Securities having an
aggregate principal amount at maturity of $40,000,000 and 4-
Year Treasury Securities having an aggregate principal
amount at maturity of $40,000,000, or (ii) after the First
Purchase Contract Settlement Date and prior to the second
Business Day immediately preceding the Second Purchase
Contract Settlement Date, 4-Year Treasury Securities having
an aggregate principal amount at maturity of $40,000,000,
and
(c) in either case, (i) deliver to the Purchase
Contract Agent cash in an amount equal to the excess of the
Contract Adjustment Payments that would have accrued on the
Growth PRIDES being created by the Holder since the last
Payment Date through the date of such Collateral
Substitution, over the Contract Adjustment Payments that
have accrued over the same time period on the Income PRIDES
being surrendered in connection with such Collateral
Substitution, which amount the Purchase Contract Agent shall
promptly remit to the Company, and (ii) surrender and
transfer 40 Income PRIDES, or in the event a Tax Event
Redemption has occurred, 1,600,000 Income PRIDES to the
Purchase Contract Agent accompanied by a notice to the
Purchase Contract Agent, substantially in the form of
Exhibit B hereto, stating that the Holder has transferred
the relevant types and amounts of Treasury Securities to the
Collateral Agent and requesting that the Purchase Contract
Agent instruct the Collateral Agent to release the
applicable Debt Securities or the appropriate Applicable
Ownership Interest in the Treasury Portfolio, as the case
may be, underlying such Income PRIDES, whereupon the
Purchase Contract Agent shall promptly give such instruction
to the Collateral Agent, substantially in the form of
Exhibit A hereto.
Upon receipt of Treasury Securities described in (a) or
(b) above, as appropriate, from a Holder of Income PRIDES and the
related instruction from the Purchase Contract Agent described in
(c) above, the Collateral Agent shall release the Pledged Debt
Securities or the appropriate Applicable Ownership Interest in
the Treasury Portfolio, as the case may be, and shall promptly
Transfer such Pledged Debt Securities or the appropriate
Applicable Ownership Interest in the Treasury Portfolio, as the
case may be, free and clear of the lien, pledge or security
interest created hereby, to the Purchase Contract Agent.
SECTION 4.2. SUBSTITUTION FOR TREASURY SECURITIES AND THE
CREATION OF INCOME PRIDES.
A Holder of a Growth PRIDES may, at any time on or
prior to the fifth Business Day immediately preceding the Second
Purchase Contract Settlement Date, create Income PRIDES by (a)
depositing with the Collateral Agent Debt Securities or the
appropriate Applicable Ownership Interest in the Treasury
Portfolio, as the case may be, having an aggregate principal
amount equal to the aggregate principal amount of the Treasury
Securities comprising part of the Growth PRIDES in accordance
with this Section 4.2 and Section 3.14 of the Purchase Contract
Agreement; provided, however, that such Collateral Substitutions
may not be made during the period from the fifth Business Day
immediately preceding the First Purchase Contract Settlement Date
through the First Purchase Contract Settlement Date, except that
if a Tax Event Redemption has occurred and the Treasury Portfolio
has become a component of the Income PRIDES, Holders of Growth
PRIDES may make Collateral Substitutions at any time on or prior
to the second Business Day immediately preceding the Second
Purchase Contract Settlement Date (but not during the period from
the second Business Day immediately preceding the First Purchase
Contract Settlement Date through the First Purchase Contract
Settlement Date). Holders of Growth PRIDES may establish Income
PRIDES only (i) in integral multiples of 40 Growth PRIDES for 40
Income PRIDES if a Tax Event Redemption has not occurred, or (ii)
in integral multiples of 1,600,000 Growth PRIDES for 1,600,000
Income PRIDES if a Tax Event Redemption has occurred. To create
40 Income PRIDES (if a Tax Event Redemption has not occurred), or
1,600,000 Income PRIDES (if a Tax Event Redemption has occurred),
the Growth PRIDES Holder shall
(a) if a Tax Event Redemption has not occurred, (i)
prior to the fifth Business Day preceding the First Purchase
Contract Settlement Date, deposit with the Collateral Agent
$1,000 in aggregate principal amount of Series D Notes and
$1,000 in aggregate principal amount of Series E Notes, or
(ii) after the First Purchase Contract Settlement Date,
deposit with the Collateral Agent $1,000 in aggregate
principal amount of Series E Notes, or
(b) if a Tax Event Redemption has occurred prior to
the second Business Day immediately preceding the Second
Purchase Contract Settlement Date, deposit with the
Collateral Agent the Applicable Ownership Interest in
Treasury Portfolio for each Income PRIDES being created by
the Holder, and having an aggregate principal amount of
$80,000,000, or if after the First Purchase Contract
Settlement Date, $40,000,000, and
(c) in either case, transfer and surrender the 40
related Growth PRIDES, or in the event a Tax Event
Redemption has occurred, the 1,600,000 related Growth PRIDES
to the Purchase Contract Agent accompanied by a notice to
the Purchase Contract Agent, substantially in the form of
Exhibit B hereto, stating that the Holder has transferred
the relevant amount of Debt Securities or the appropriate
Applicable Ownership Interest in the Treasury Portfolio, as
the case may be, to the Collateral Agent and requesting that
the Purchase Contract Agent instruct the Collateral Agent to
release the Treasury Securities underlying such Growth
PRIDES, whereupon the Purchase Contract Agent shall promptly
give such instruction to the Collateral Agent, substantially
in the form of Exhibit A hereto.
Upon receipt of Debt Securities or the appropriate
Applicable Ownership Interest in the Treasury Portfolio, as the
case may be, described in (a) or (b) above, as appropriate from a
Holder of Growth PRIDES and the related instruction described in
(c) above from the Purchase Contract Agent, the Collateral Agent
shall release the related Pledged Treasury Securities and shall
promptly Transfer such Pledged Treasury Securities, free and
clear of the lien, pledge or security interest created hereby, to
the Purchase Contract Agent.
SECTION 4.3. TERMINATION EVENT.
Upon receipt by the Collateral Agent of written notice
from the Company or the Purchase Contract Agent that there has
occurred a Termination Event, the Collateral Agent shall release
all Collateral from the Pledge and shall promptly Transfer any
Pledged Debt Securities (or the Applicable Ownership Interest in
the Treasury Portfolio if a Tax Event Redemption has occurred)
and Pledged Treasury Securities to the Purchase Contract Agent
for the benefit of the Holders of the Income PRIDES and the
Growth PRIDES, respectively, free and clear of any lien, pledge
or security interest or other interest created hereby.
If such Termination Event shall result from the
Company's becoming a debtor under the Bankruptcy Code, and if the
Collateral Agent shall for any reason fail promptly to effectuate
the release and Transfer of all Pledged Debt Securities, the
Treasury Portfolio or the Pledged Treasury Securities, as the
case may be, as provided by this Section 4.3, any Holder may, and
the Purchase Contract Agent shall, upon receipt from the Holders
of reasonable security or indemnity against the costs, expenses
and liabilities which might be incurred by the Purchase Contract
Agent in compliance with this paragraph, (i) use its reasonable
best efforts to obtain an opinion of a nationally recognized law
firm reasonably acceptable to the Collateral Agent to the effect
that, as a result of the Company's being the debtor in such a
bankruptcy case, the Collateral Agent will not be prohibited from
releasing or Transferring the Collateral as provided in this
Section 4.3, and shall deliver such opinion to the Collateral
Agent within ten days after the occurrence of such Termination
Event, and if (y) any such Holder or the Purchase Contract Agent
shall be unable to obtain such opinion within ten days after the
occurrence of such Termination Event or (z) the Collateral Agent
shall continue, after delivery of such opinion, to refuse to
effectuate the release and Transfer of all Pledged Debt
Securities, the Treasury Portfolio or the Pledged Treasury
Securities, as the case may be, as provided in this Section 4.3,
then any Holder may, and the Purchase Contract Agent shall,
within fifteen days after the occurrence of such Termination
Event commence an action or proceeding in the court with
jurisdiction of the Company's case under the Bankruptcy Code
seeking an order requiring the Collateral Agent to effectuate the
release and transfer of all Pledged Debt Securities, the Treasury
Portfolio or the Pledged Treasury Securities, as the case may be,
as provided by this Section 4.3 or (ii) commence an action or
proceeding in the court with jurisdiction of the Company's case
under the Bankruptcy Code like that described in subsection
(i)(z) hereof within ten days after the occurrence of such
Termination Event.
SECTION 4.4. CASH SETTLEMENT.
(a) Upon receipt by the Collateral Agent of (i) a
notice from the Purchase Contract Agent promptly after the
receipt by the Purchase Contract Agent of such notice that a
Holder of an Income PRIDES or Growth PRIDES has elected, in
accordance with the procedures specified in Section
5.4(a)(i) or (d)(i) of the Purchase Contract Agreement,
respectively, to settle the applicable portion of its
Purchase Contract with Cash and (ii) payment by such Holder
of the amount required to settle the applicable portion of
such Purchase Contract on or prior to 11:00 a.m., New York
City time, on the Business Day immediately preceding a
Purchase Contract Settlement Date in lawful money of the
United States by certified or cashiers' check or wire
transfer in immediately available funds payable to or upon
the order of the Company, then the Collateral Agent shall
promptly invest any Cash received from a Holder in
connection with a Cash Settlement in Permitted Investments.
Upon receipt of the proceeds upon the maturity of the
Permitted Investments on such Purchase Contract Settlement
Date, the Collateral Agent shall pay the portion of such
proceeds and deliver any certified or cashiers' checks
received, in an aggregate amount equal to the Purchase
Price, to the Company on such Purchase Contract Settlement
Date, and shall distribute any funds in respect of the
interest earned from the Permitted Investments to the
Purchase Contract Agent for payment to the relevant Holder.
(b) If in connection with a Purchase Contract
Settlement Date a Holder of an Income PRIDES (unless a Tax
Event Redemption has occurred) fails to notify the Purchase
Contract Agent of its intention to make a Cash Settlement in
accordance with Section 5.4(a)(i) of the Purchase Contract
Agreement, such failure shall constitute a default under the
related Purchase Contract and hereunder, the Holder shall be
deemed to have consented to the disposition of the related
Pledged Debt Securities pursuant to the remarketing as
described in Section 5.4(b) of the Purchase Contract
Agreement, which is incorporated herein by reference, and
Section 4.6 hereof, and the Collateral Agent, for the
benefit of the Company, will exercise its rights as a
secured party with respect to applicable Pledged Debt
Securities (which shall be the Series D Notes in connection
with the First Purchase Contract Settlement Date and the
Series E Notes in connection with the Second Purchase
Contract Settlement Date) at the direction of the Company to
cause the remarketing of such Pledged Debt Securities. If a
Holder of an Income PRIDES (unless a Tax Event Redemption
has occurred) does notify the Purchase Contract Agent as
provided in Section 5.4(a)(i) of the Purchase Contract
Agreement of its intention to make a Cash Settlement, but
fails to make such payment as required by Section 5.4(a)(ii)
of the Purchase Contract Agreement, such failure shall
constitute a default under the related Purchase Contract and
hereunder, and the applicable Pledged Debt Securities 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
Debt Securities at the direction of the Company to retain or
dispose of the Collateral in accordance with applicable law.
In addition, in the event of a Failed Remarketing as
described in Section 5.4(b) of the Purchase Contract
Agreement, such Failed Remarketing shall constitute a
default hereunder by such Holder, and the Collateral Agent,
for the benefit of the Company, will also exercise its
rights as a secured party with respect to such Debt
Securities at the direction of the Company to retain or
dispose of the Collateral in accordance with applicable law.
(c) If in connection with a Purchase Contract
Settlement Date a Holder of a Growth PRIDES or, if a Tax
Event Redemption has occurred, an Income PRIDES, fails to
notify the Purchase Contract Agent of such Holder's
intention to make a Cash Settlement in accordance with
Section 5.4(d)(i) of the Purchase Contract Agreement, or if
a Holder of a Growth PRIDES or, if a Tax Event Redemption
has occurred, an Income PRIDES, notifies the Purchase
Contract Agent as provided in paragraph 5.4(d)(i) of the
Purchase Contract Agreement of its intention to make a Cash
Settlement, but fails to make such payment as required by
paragraph 5.4(d)(ii) of the Purchase Contract Agreement,
such failure shall constitute a default under the related
Purchase Contract and hereunder by such Holder and upon the
maturity of the related Pledged Treasury Securities or the
Treasury Portfolio, if any, held by the Collateral Agent on
the Business Day immediately preceding the applicable
Purchase Contract Settlement Date, the principal amount of
such Pledged Treasury Securities or the portion of the
Treasury Portfolio corresponding to such Purchase Contract
received by the Collateral Agent shall, upon written
direction of the Company, be invested promptly in Permitted
Investments. On the applicable Purchase Contract Settlement
Date, an amount equal to the Purchase Price will be remitted
to the Company as payment thereof. In the event the sum of
the proceeds from the appropriate related Pledged Treasury
Securities or Applicable Ownership Interest in the Treasury
Portfolio (which shall be, in the case of the First Purchase
Contract Settlement Date, the 3-Year Treasury Securities or
the portion of the Applicable Ownership Interest in the
Treasury Portfolio (as specified in clause (A) of the
definition thereof), and in the case of the Second Purchase
Contract Settlement Date, the 4-Year Treasury Securities or
the Applicable Ownership Interest in the Treasury Portfolio
(specified in clause (B) of such definition), as the case
may be, and the investment earnings earned from such
investments is in excess of the aggregate Purchase Price of
the Purchase Contracts being settled thereby, the Collateral
Agent will distribute such excess to the Purchase Contract
Agent for the benefit of the Holder of the related Growth
PRIDES or Income PRIDES when received.
(d) Series D Notes, 3-Year Treasury Securities and the
Applicable Ownership Interest in the Treasury Portfolio in
U.S. Treasury Securities maturing on or prior to August 15,
2001 are pledged to secure Holders' obligations under the
Purchase Contracts on the First Purchase Contract Settlement
Date. Series E Notes, 4-Year Treasury Securities and the
Applicable Ownership Interest in the Treasury Portfolio in
U.S. Treasury Securities maturing on or prior to August 15,
2002 are pledged to secure Holders' obligations under the
Purchase Contracts on the Second Purchase Contract
Settlement Date.
On the First Purchase Contract Settlement Date, the
Collateral Agent shall exercise remedies with respect to
(and have remarketed or otherwise sell in accordance with
this Agreement) only the Series D Notes, 3-Year Treasury
Securities (or the corresponding Applicable Ownership
Interest in the Treasury Portfolio) and associated payments
and Proceeds; on the Second Purchase Contract Settlement
Date the Collateral Agent may exercise remedies with respect
to all then remaining Collateral.
A default by a Holder in the performance of its
obligations under a Purchase Contract in connection with the
First Purchase Contract Settlement shall not in itself
constitute a default in the performance of its obligations
under such Purchase Contract on the Second Purchase Contract
Settlement Date (except in connection with Early
Settlement).
SECTION 4.5. EARLY SETTLEMENT.
Upon written notice to the Collateral Agent by the
Purchase Contract Agent that a Holder of a Security has elected
to effect Early Settlement of its entire obligation under the
Purchase Contract forming a part of such Security in accordance
with the terms of the Purchase Contracts and the Purchase
Contract Agreement, and that the Purchase Contract Agent has
received from such Holder, and paid to the Company as confirmed
in writing by the Company, the related Early Settlement Amount
pursuant to the terms of the Purchase Contract and the Purchase
Contract Agreement and that all conditions to such Early
Settlement have been satisfied, then the Collateral Agent shall
release from the Pledge, (a) the Pledged Debt Securities or the
appropriate Applicable Ownership Interest in the Treasury
Portfolio in the case of a Holder of Income PRIDES or (b) the
Pledged Treasury Securities in the case of a Holder of Growth
PRIDES, that had been components of such Security and shall
Transfer such Pledged Debt Securities, Applicable Ownership
Interest in the Treasury Portfolio or Pledged Treasury
Securities, as the case may be, free and clear of the Pledge
created hereby, to the Purchase Contract Agent for the benefit of
such Holder.
SECTION 4.6. APPLICATION OF PROCEEDS; SETTLEMENT.
(a) In connection with a Purchase Contract Settlement
Date, in the event a Holder of Income PRIDES (if a Tax Event
Redemption has not occurred) has not elected to make an
effective Cash Settlement by notifying the Purchase Contract
Agent in the manner provided for in paragraph 5.4(a)(i) in
the Purchase Contract Agreement or has not made an Early
Settlement of the Purchase Contract(s) underlying its Income
PRIDES, such Holder shall be deemed to have elected to pay
for the shares of Common Stock to be issued under such
Purchase Contract(s) from the Proceeds of the related
Pledged Debt Securities. The Collateral Agent shall, by
10:00 a.m., New York City time, on the fourth Business Day
immediately preceding such Purchase Contract Settlement
Date, without any instruction from such Holder of Income
PRIDES, present the applicable related Pledged Debt
Securities (i.e., Series D Notes in the case of the First
Purchase Contract Settlement Date and Series E Notes in the
case of the Second Purchase Contract Settlement Date) to the
Remarketing Agent for remarketing. Upon receiving such
Pledged Debt Securities, the Remarketing Agent, pursuant to
the terms of the Remarketing Agreement, will use its
reasonable efforts to remarket such Pledged Debt Securities
on such date at a price not less than approximately 100.5%
of the aggregate Value of such Pledged Debt Securities, plus
accrued and unpaid interest, if any, thereon. After
deducting as the Remarketing Fee an amount not exceeding 25
basis points (.25%) of the aggregate Value of the related
Pledged Debt Securities from any amount of such Proceeds in
excess of the aggregate Value of such Debt Securities, plus
such accrued and unpaid interest on the remarketed Pledged
Debt Securities, the Remarketing Agent will remit the entire
amount of the Proceeds of such remarketing to the Collateral
Agent. On the applicable Purchase Contract Settlement Date,
the Collateral Agent shall apply that portion of the
Proceeds from such remarketing equal to the aggregate Value
to satisfy in full the obligations of such Holders of Income
PRIDES to pay the Purchase Price on such Purchase Contract
Settlement Date to purchase the Common Stock under the
related Purchase Contracts. The remaining portion of such
Proceeds, if any, shall be distributed by the Collateral
Agent to the Purchase Contract Agent for payment to the
Holders. If the Remarketing Agent advises the Collateral
Agent in writing that it cannot remarket the related Pledged
Debt Securities of such Holders of Income PRIDES at a price
not less than 100% of the aggregate Value of such Pledged
Debt Securities plus any accrued and unpaid interest, or if
the remarketing does not occur because a condition precedent
to it has not been fulfilled, thus resulting in a Failed
Remarketing, the Collateral Agent, for the benefit of the
Company will, at the written direction of the Company,
retain or dispose of such Pledged Debt Securities in
accordance with applicable law and satisfy in full, from any
such disposition or retention, such Holder's obligation to
pay the Purchase Price for the Common Stock.
(b) In the event a Holder of Growth PRIDES or, if a
Tax Event Redemption has occurred, an Income PRIDES, has not
made an Early Settlement of the Purchase Contract(s)
underlying its Growth PRIDES or Income PRIDES, as the case
may be, such Holder shall be deemed to have elected to pay
for the shares of Common Stock to be issued under the
applicable portions of such Purchase Contract(s) from the
Proceeds of the related Pledged Treasury Securities or the
Treasury Portfolio, as the case may be. On the Business Day
immediately prior to a Purchase Contract Settlement Date,
the Collateral Agent shall, at the written direction of the
Purchase Contract Agent, invest the Cash proceeds of the
maturing Pledged Treasury Securities or the Treasury
Portfolio, as the case may be, in overnight Permitted
Investments. Without receiving any instruction from any such
Holder of Growth PRIDES or Income PRIDES, the Collateral
Agent shall apply the Proceeds of the related Pledged
Treasury Securities or Treasury Portfolio to the related
settlement of such Purchase Contracts on the applicable
Purchase Contract Settlement Date. In the event the sum of
the Proceeds from the related Pledged Treasury Securities or
related Applicable Ownership Interest in the Treasury
Portfolio and the investment earnings from the investment in
overnight Permitted Investments is in excess of the
aggregate Purchase Price of the applicable portions of the
Purchase Contracts being settled thereby on a Purchase
Contract Settlement Date, the Collateral Agent shall
distribute such excess, when received, to the Purchase
Contract Agent for the benefit of the Holders.
(c) Pursuant to the Remarketing Agreement, on or prior
to the fifth Business Day immediately preceding a Purchase
Contract Settlement Date, but no earlier than the Payment
Date immediately preceding such Purchase Contract Settlement
Date, holders of Separate Debt Securities may elect to have
their Separate Debt Securities of the appropriate series (in
the case of the First Purchase Contract Settlement Date, the
Series D Notes, and in the case of the Second Purchase
Contract Settlement Date, the Series E Notes), remarketed by
delivering such Separate Debt Securities, together with a
notice of such election, substantially in the form of
Exhibit C hereto, to the Custodial Agent. The Custodial
Agent will hold such Separate Debt Securities in an account
separate from the Collateral Account. A holder of Separate
Debt Securities electing to have its Separate Debt
Securities remarketed will also have the right to withdraw
such election by written notice to the Custodial Agent,
substantially in the form of Exhibit D hereto, on or prior
to the fifth Business Day immediately preceding the
applicable Purchase Contract Settlement Date, upon which
notice the Custodial Agent will return such Separate Debt
Securities to such holder. On the fourth Business Day
immediately preceding the applicable Purchase Contract
Settlement Date, the Custodial Agent will deliver to the
Remarketing Agent for remarketing all Separate Debt
Securities of the applicable series delivered to the
Custodial Agent pursuant to this Section 4.6(c) and not
withdrawn pursuant to the terms hereof prior to such date.
The portion of the proceeds from such remarketing equal to
the aggregate Value of such Separate Debt Securities will
automatically be remitted by the Remarketing Agent to the
Custodial Agent for the benefit of the holders of such
Separate Debt Securities. In addition, after deducting as
the Remarketing Fee an amount not exceeding 25 basis points
(.25%) of the Value of the remarketed Separate Debt
Securities, from any amount of such proceeds in excess of
the aggregate Value of the remarketed Separate Debt
Securities plus any accrued and unpaid interest thereon, the
Remarketing Agent will remit to the Custodial Agent the
remaining portion of the proceeds, if any, for the benefit
of such holders. If, despite using its reasonable efforts,
the Remarketing Agent advises the Custodial Agent in writing
that it cannot remarket the related Separate Debt Securities
of the applicable series of such holders at a price not less
than 100% of the aggregate Value of such Separate Debt
Securities plus accrued and unpaid interest or, if a
condition to the remarketing shall not have been fulfilled,
thus in either case resulting in a Failed Remarketing, the
Remarketing Agent will promptly return such Separate Debt
Securities to the Custodial Agent for redelivery to such
holders.
SECTION 5. VOTING RIGHTS -- DEBT SECURITIES.
The Purchase Contract Agent may exercise, or refrain
from exercising, any and all voting and other consensual rights
pertaining to the Pledged Debt Securities or any part thereof for
any purpose not inconsistent with the terms of this Agreement and
in accordance with the terms of the Purchase Contract Agreement;
provided, that the Purchase Contract Agent shall not exercise or,
as the case may be, shall not refrain from exercising such right
if, in the judgment of the Company, such action would impair or
otherwise have a material adverse effect on the value of all or
any of the Pledged Debt Securities; and provided, further, that
the Purchase Contract Agent shall give the Company and the
Collateral Agent at least five days' prior written notice of the
manner in which it intends to exercise, or its reasons for
refraining from exercising, any such right. Upon receipt of any
notices and other communications in respect of any Pledged Debt
Securities, including notice of any meeting at which holders of
Debt Securities are entitled to vote or solicitation of consents,
waivers or proxies of holders of Debt Securities, the Collateral
Agent shall use reasonable efforts to send promptly to the
Purchase Contract Agent such notice or communication, and as soon
as reasonably practicable after receipt of a written request
therefor from the Purchase Contract Agent, execute and deliver to
the Purchase Contract Agent such proxies and other instruments in
respect of such Pledged Debt Securities (in form and substance
satisfactory to the Collateral Agent) as are prepared by the
Purchase Contract Agent with respect to the Pledged Debt
Securities.
SECTION 6. RIGHTS AND REMEDIES; TAX EVENT REDEMPTION.
SECTION 6.1. RIGHTS AND REMEDIES OF THE COLLATERAL AGENT.
(a) In addition to the rights and remedies specified
in Section 4.4 hereof or otherwise available at law or in
equity, after an event of default hereunder, the Collateral
Agent shall have all of the rights and remedies with respect
to the Collateral of a secured party under the Uniform
Commercial Code (or any successor thereto) as in effect in
the State of New York from time to time (the "Code")
(whether or not the Code is in effect in the jurisdiction
where the rights and remedies are asserted) and the TRADES
Regulations and such additional rights and remedies to which
a secured party is entitled under the laws in effect in any
jurisdiction where any rights and remedies hereunder may be
asserted. Wherever reference is made in this Agreement to
any section of the Code, such reference shall be deemed to
include a reference to any provision of the Code which is a
successor to, or amendment of, such section. Without
limiting the generality of the foregoing, such remedies may
include, to the extent permitted by applicable law, (i)
retention of the Pledged Debt Securities or other Collateral
in full satisfaction of the Holders' obligations under the
Purchase Contracts or (ii) sale of the Pledged Debt
Securities or other Collateral in one or more public or
private sales and application of the proceeds in full
satisfaction of the Holders' obligations under the Purchase
Contracts.
(b) Without limiting any rights or powers otherwise
granted by this Agreement to the Collateral Agent, in the
event the Collateral Agent is unable to make payments to the
Company on account of the appropriate Applicable Ownership
Interest (as specified in clause (A)(i) or B(i) of the
definition of such term) of the Treasury Portfolio or on
account of principal payments of any Pledged Treasury
Securities as provided in Section 3 hereof in satisfaction
of the obligations of the Holder of the Securities of which
such Pledged Treasury Securities, or the appropriate
Applicable Ownership Interest (as specified in clause (A)(i)
or B(i) of the definition of such term) of the Treasury
Portfolio, as applicable, is a part under the related
Purchase Contracts, the inability to make such payments
shall constitute an event of default hereunder and the
Collateral Agent shall have and may exercise, with reference
to such Pledged Treasury Securities, or such appropriate
Applicable Ownership Interest (as specified in clause (A)(i)
or B(i) of the definition of such term) of the Treasury
Portfolio, as applicable, and such obligations of such
Holder, any and all of the rights and remedies available to
a secured party under the Code and the TRADES Regulations
after default by a debtor, and as otherwise granted herein
or under any other law.
(c) Without limiting any rights or powers otherwise
granted by this Agreement to the Collateral Agent, the
Collateral Agent is hereby irrevocably authorized to receive
and collect all payments of (i) principal of, or interest
on, the Pledged Debt Securities, (ii) the principal amount
of the Pledged Treasury Securities, or (iii) the appropriate
Applicable Ownership Interest in the Treasury Portfolio,
subject, in each case, to the provisions of Section 3, and
as otherwise granted herein.
(d) The Purchase Contract Agent individually and as
attorney-in-fact for each Holder of Securities, in the event
such Holder becomes the Holder of Growth PRIDES or Income
PRIDES, agree that, from time to time, upon the written
request of the Collateral Agent, the Purchase Contract Agent
or such Holder shall execute and deliver such further
documents and do such other acts and things as the
Collateral Agent may reasonably request in order to maintain
the Pledge, and the perfection and priority thereof, and to
confirm the rights of the Collateral Agent hereunder. The
Purchase Contract Agent shall have no liability to any
Holder for executing any documents or taking any such acts
requested by the Collateral Agent hereunder, except for
liability for its own negligent act, its own negligent
failure to act or its own willful misconduct.
SECTION 6.2. TAX EVENT REDEMPTION.
Upon the occurrence of a Tax Event Redemption prior to
the Second Purchase Contract Settlement Date, the Collateral
Agent will, upon the written instruction of the Company and the
Purchase Contract Agent, deliver the Applicable Principal Amount
of Pledged Debt Securities to the Trustee for payment of the
Redemption Price. The Collateral Agent shall, or in the event
the Pledged Debt Securities are registered in the name of the
Purchase Contract Agent, the Purchase Contract Agent shall,
direct the Trustee to pay the Redemption Price therefor payable
on the Tax Event Redemption Date on or prior to 12:30 p.m., New
York City time, such Redemption Price to be paid by check or wire
transfer in immediately available funds at such place and at such
account as may be designated by the Collateral Agent. In the
event the Collateral Agent receives such Redemption Price, the
Collateral Agent will, at the written direction of the Company,
apply an amount equal to the Redemption Amount of such Redemption
Price to purchase from the Quotation Agent, the Treasury
Portfolio and promptly remit the remaining portion of such
Redemption Price to the Purchase Contract Agent for payment to
the Holders of Income PRIDES. The Collateral Agent shall
Transfer the Treasury Portfolio to the Collateral Account in the
manner specified herein for Pledged Debt Securities to secure the
obligation of all Holders of Income PRIDES to purchase Common
Stock of the Company under the Purchase Contracts constituting a
part of such Income PRIDES, in substitution for the Pledged Debt
Securities. Thereafter the Collateral Agent shall have such
security interests, rights and obligations with respect to the
Treasury Portfolio as it had in respect of the Pledged Debt
Securities, as provided in Sections 2, 3, 4, 5 and 6, and any
reference herein to the Pledged Debt Securities shall be deemed
to be a reference to such Treasury Portfolio.
SECTION 6.3. SUBSTITUTIONS.
Whenever a Holder has the right to substitute Treasury
Securities, Debt Securities or the appropriate Applicable
Ownership Interest in the Treasury Portfolio, as the case may be,
for Collateral held by the Collateral Agent, such substitution
shall not constitute a novation of the security interest created
hereby.
SECTION 7. REPRESENTATIONS AND WARRANTIES; COVENANTS.
SECTION 7.1. REPRESENTATIONS AND WARRANTIES.
The Holders from time to time, acting through the
Purchase Contract Agent as their attorney-in-fact (it being
understood that the Purchase Contract Agent shall not be liable
for any representation or warranty made by or on behalf of a
Holder), hereby represent and warrant to the Collateral Agent,
which representations and warranties shall be deemed repeated on
each day a Holder Transfers Collateral that:
(a) such Holder has the power to grant a security
interest in and lien on the Collateral;
(b) such Holder is the sole beneficial owner of the
Collateral and, in the case of Collateral delivered in
physical form, is the sole holder of such Collateral and is
the sole beneficial owner of, or has the right to Transfer,
the Collateral it Transfers to the Collateral Agent, free
and clear of any security interest, lien, encumbrance, call,
liability to pay money or other restriction other than the
security interest and lien granted under Section 2 hereof;
(c) upon the Transfer of the Collateral to the
Collateral Account or physical delivery of the Debt
Securities to the Collateral Agent, the Collateral Agent,
for the benefit of the Company, will have a valid and
perfected first priority security interest therein (assuming
that any central clearing operation or any Intermediary or
other entity not within the control of the Holder involved
in the Transfer of the Collateral, including the Collateral
Agent, gives the notices and takes the action required of it
hereunder and under applicable law for perfection of that
interest and assuming the establishment and exercise of
control pursuant to Section 2.2 hereof); and
(d) the execution and performance by the Holder of its
obligations under this Agreement will not result in the
creation of any security interest, lien or other encumbrance
on the Collateral other than the security interest and lien
granted under Section 2 hereof or violate any provision of
any existing law or regulation applicable to it or of any
mortgage, charge, pledge, indenture, contract or undertaking
to which it is a party or which is binding on it or any of
its assets.
SECTION 7.2. COVENANTS.
The Holders from time to time, acting through the
Purchase Contract Agent as their attorney-in-fact (it being
understood that the Purchase Contract Agent shall not be liable
for any covenant made by or on behalf of a Holder), hereby
covenant to the Collateral Agent that for so long as the
Collateral remains subject to the Pledge:
(a) neither the Purchase Contract Agent nor such
Holders will create or purport to create or allow to subsist
any mortgage, charge, lien, pledge or any other security
interest whatsoever over the Collateral or any part of it
other than pursuant to this Agreement; and
(b) neither the Purchase Contract Agent nor such
Holders will sell or otherwise dispose (or attempt to
dispose) of the Collateral or any part of it except for the
beneficial interest therein, subject to the pledge
hereunder, transferred in connection with the Transfer of
the Securities.
SECTION 8. THE COLLATERAL AGENT.
SECTION 8.1. APPOINTMENT, POWERS AND IMMUNITIES.
The Collateral Agent shall act as Agent for the Company
hereunder with such powers as are specifically vested in the
Collateral Agent by the terms of this Agreement, together with
such other powers as are reasonably incidental thereto. Each of
the Collateral Agent, the Custodial Agent and the Securities
Intermediary: (a) shall have no duties or responsibilities except
those expressly set forth in this Agreement and no implied
covenants or obligations shall be inferred from this Agreement
against any of them, nor shall any of them be bound by the
provisions of any agreement by any party hereto beyond the
specific terms hereof; (b) shall not be responsible for any
recitals contained in this Agreement, or in any certificate or
other document referred to or provided for in, or received by it
under, this Agreement, the Securities or the Purchase Contract
Agreement, or for the value, validity, effectiveness,
genuineness, enforceability or sufficiency of this Agreement
(other than as against the Collateral Agent), the Securities or
the Purchase Contract Agreement or any other document referred to
or provided for herein or therein or for any failure by the
Company or any other Person (except the Collateral Agent, the
Custodial Agent or the Securities Intermediary, as the case may
be) to perform any of its obligations hereunder or thereunder or
for the perfection, priority or, except as expressly required
hereby, maintenance of any security interest created hereunder;
(c) shall not be required to initiate or conduct any litigation
or collection proceedings hereunder (except in the case of the
Collateral Agent, pursuant to directions furnished under Section
8.2 hereof, subject to Section 8.6 hereof); (d) shall not be
responsible for any action taken or omitted to be taken by it
hereunder or under any other document or instrument referred to
or provided for herein or in connection herewith or therewith,
except for its own negligence or willful misconduct; and (e)
shall not be required to advise any party as to selling or
retaining, or taking or refraining from taking any action with
respect to, the Securities or other property deposited hereunder.
Subject to the foregoing, during the term of this Agreement, the
Collateral Agent shall take all reasonable action in connection
with the safekeeping and preservation of the Collateral
hereunder.
No provision of this Agreement shall require the
Collateral Agent, the Custodial Agent or the Securities
Intermediary to expend or risk its own funds or otherwise incur
any financial liability in the performance of any of its duties
hereunder. In no event shall the Collateral Agent, the Custodial
Agent or the Securities Intermediary be liable for any amount in
excess of the Value of the Collateral. Notwithstanding the
foregoing, the Collateral Agent, the Custodial Agent and
Securities Intermediary, each in its individual capacity, hereby
waive any right of setoff, bankers lien, liens or perfection
rights as securities intermediary or any counterclaim with
respect to any of the Collateral.
SECTION 8.2. INSTRUCTIONS OF THE COMPANY.
The Company shall have the right, by one or more
instruments in writing executed and delivered to the Collateral
Agent, the Custodial Agent or the Securities Intermediary, as the
case may be, to direct the time, method and place of conducting
any proceeding for the realization of any right or remedy
available to the Collateral Agent, or of exercising any power
conferred on the Collateral Agent, the Custodial Agent or the
Securities Intermediary, as the case may be, or to direct the
taking or refraining from taking of any action authorized by this
Agreement; provided, however, that (i) such direction shall not
conflict with the provisions of any law or of this Agreement and
(ii) the Collateral Agent, the Custodial Agent and the Securities
Intermediary shall be adequately indemnified as provided herein.
Nothing in this Section 8.2 shall impair the right of the
Collateral Agent in its discretion to take any action or omit to
take any action which it deems proper and which is not
inconsistent with such direction.
SECTION 8.3. RELIANCE BY COLLATERAL AGENT.
Each of the Securities Intermediary, the Custodial
Agent and the Collateral Agent shall be entitled conclusively to
rely upon any certification, order, judgment, opinion, notice or
other communication (including, without limitation, any thereof
by telephone, telecopy, telex or facsimile) believed by it to be
genuine and correct and to have been signed or sent by or on
behalf of the proper Person or Persons (without being required to
determine the correctness of any fact stated therein), and upon
advice and statements of legal counsel and other experts selected
by the Collateral Agent, the Custodial Agent or the Securities
Intermediary, as the case may be. As to any matters not expressly
provided for by this Agreement, the Collateral Agent, the
Custodial Agent and the Securities Intermediary shall in all
cases be fully protected in acting, or in refraining from acting,
hereunder in accordance with instructions given by the Company in
accordance with this Agreement.
SECTION 8.4. RIGHTS IN OTHER CAPACITIES.
The Collateral Agent, the Custodial Agent and the
Securities Intermediary and their affiliates may (without having
to account therefor to the Company) accept deposits from, lend
money to, make their investments in and generally engage in any
kind of banking, trust or other business with the Purchase
Contract Agent and any Holder of Securities (and any of their
respective subsidiaries or affiliates) as if it were not acting
as the Collateral Agent, the Custodial Agent or the Securities
Intermediary, as the case may be, and the Collateral Agent, the
Custodial Agent and the Securities Intermediary and their
affiliates may accept fees and other consideration from the
Purchase Contract Agent and any Holder of Securities without
having to account for the same to the Company; provided that each
of the Securities Intermediary, the Custodial Agent and the
Collateral Agent covenants and agrees with the Company that it
shall not accept, receive or permit there to be created in favor
of itself and shall take no affirmative action to permit there to
be created in favor of any other Person, any security interest,
lien or other encumbrance of any kind in or upon the Collateral.
SECTION 8.5. NON-RELIANCE ON COLLATERAL AGENT.
None of the Securities Intermediary, the Custodial
Agent or the Collateral Agent shall be required to keep itself
informed as to the performance or observance by the Purchase
Contract Agent or any Holder of Securities of this Agreement, the
Purchase Contract Agreement, the Securities or any other document
referred to or provided for herein or therein or to inspect the
properties or books of the Purchase Contract Agent or any Holder
of Securities. The Collateral Agent, the Custodial Agent and the
Securities Intermediary shall not have any duty or responsibility
to provide the Company with any credit or other information
concerning the affairs, financial condition or business of the
Purchase Contract Agent or any Holder of Securities (or any of
their respective affiliates) that may come into the possession of
the Collateral Agent, the Custodial Agent or the Securities
Intermediary or any of their respective affiliates.
SECTION 8.6. COMPENSATION AND INDEMNITY.
The Company agrees: (i) to pay each of the Collateral
Agent and the Custodial Agent from time to time such compensation
as shall be agreed in writing between the Company and the
Collateral Agent or the Custodial Agent, as the case may be, for
all services rendered by each of them hereunder and (ii) to
indemnify the Collateral Agent, the Custodial Agent and the
Securities Intermediary for, and to hold each of them harmless
from and against, any loss, liability or reasonable out-of-pocket
expense incurred without negligence, willful misconduct or bad
faith on its part, arising out of or in connection with the
acceptance or administration of its powers and duties under this
Agreement, including the reasonable out-of-pocket costs and
expenses (including reasonable fees and expenses of counsel) of
defending itself against any claim or liability in connection
with the exercise or performance of such powers and duties. The
Collateral Agent, the Custodial Agent and the Securities
Intermediary shall each promptly notify the Company of any third
party claim which may give rise to indemnity hereunder and give
the Company the opportunity to participate in the defense of such
claim with counsel reasonably satisfactory to the indemnified
party, and no such claim shall be settled without the written
consent of the Company, which consent shall not be unreasonably
withheld.
SECTION 8.7. FAILURE TO ACT.
In the event of any ambiguity in the provisions of this
Agreement or any dispute between or conflicting claims by or
among the parties hereto or any other Person with respect to any
funds or property deposited hereunder, the Collateral Agent and
the Custodial Agent shall be entitled, after prompt notice to the
Company and the Purchase Contract Agent, at its sole option, to
refuse to comply with any and all claims, demands or instructions
with respect to such property or funds so long as such dispute or
conflict shall continue, and neither the Collateral Agent nor the
Custodial Agent shall be or become liable in any way to any of
the parties hereto for its failure or refusal to comply with such
conflicting claims, demands or instructions. The Collateral Agent
and the Custodial Agent shall be entitled to refuse to act until
either (i) such conflicting or adverse claims or demands shall
have been finally determined by a court of competent jurisdiction
or settled by agreement between the conflicting parties as
evidenced in a writing, satisfactory to the Collateral Agent or
the Custodial Agent, as the case may be, or (ii) the Collateral
Agent or the Custodial Agent, as the case may be, shall have
received security or an indemnity satisfactory to the Collateral
Agent or the Custodial Agent, as the case may be, sufficient to
save the Collateral Agent or the Custodial Agent, as the case may
be, harmless from and against any and all loss, liability or
reasonable out-of-pocket expense which the Collateral Agent or
the Custodial Agent, as the case may be, may without negligence,
willful misconduct, or bad faith on its part incur by reason of
its acting. The Collateral Agent or the Custodial Agent may in
addition elect to commence an interpleader action or seek other
judicial relief or orders as the Collateral Agent or the
Custodial Agent, as the case may be, may deem necessary.
Notwithstanding anything contained herein to the contrary,
neither the Collateral Agent nor the Custodial Agent shall be
required to take any action that is in its opinion contrary to
law or to the terms of this Agreement, or which would in its
opinion subject it or any of its officers, employees or directors
to liability.
SECTION 8.8. RESIGNATION OF COLLATERAL AGENT.
Subject to the appointment and acceptance of a
successor Collateral Agent or Custodial Agent as provided below,
(a) the Collateral Agent and the Custodial Agent may resign at
any time by giving notice thereof to the Company and the Purchase
Contract Agent as attorney-in-fact for the Holders of Securities,
(b) the Collateral Agent and the Custodial Agent may be removed
at any time by the Company and (c) if the Collateral Agent or the
Custodial Agent fails to perform any of its material obligations
hereunder in any material respect for a period of not less than
20 days after receiving written notice of such failure by the
Purchase Contract Agent and such failure shall be continuing, the
Collateral Agent or the Custodial Agent may be removed by the
Purchase Contract Agent. The Purchase Contract Agent shall
promptly notify the Company of any removal of the Collateral
Agent pursuant to clause (c) of the immediately preceding
sentence. Upon any such resignation or removal, the Company shall
have the right to appoint a successor Collateral Agent or
Custodial Agent, as the case may be. If no successor Collateral
Agent or Custodial Agent, as the case may be, shall have been so
appointed and shall have accepted such appointment within 30 days
after the retiring Collateral Agent's or Custodial Agent's giving
of notice of resignation or such removal, then the retiring
Collateral Agent or Custodial Agent, as the case may be, may
petition any court of competent jurisdiction for the appointment
of a successor Collateral Agent or Custodial Agent, as the case
may be. Each of the Collateral Agent and the Custodial Agent
shall be a bank which has an office in New York, New York with a
combined capital and surplus of at least $75,000,000. Upon the
acceptance of any appointment as Collateral Agent or Custodial
Agent, as the case may be, hereunder by a successor Collateral
Agent or Custodial Agent, as the case may be, such successor
shall thereupon succeed to and become vested with all the rights,
powers, privileges and duties of the retiring Collateral Agent or
Custodial Agent, as the case may be, and the retiring Collateral
Agent or Custodial Agent, as the case may be, shall take all
appropriate action to transfer any money and property held by it
hereunder (including the Collateral) to such successor. The
retiring Collateral Agent or Custodial Agent shall, upon such
succession, be discharged from its duties and obligations as
Collateral Agent or Custodial Agent hereunder. After any retiring
Collateral Agent's or Custodial Agent's resignation hereunder as
Collateral Agent or Custodial Agent, the provisions of this
Section 8 shall continue in effect for its benefit in respect of
any actions taken or omitted to be taken by it while it was
acting as the Collateral Agent or Custodial Agent. Any
resignation or removal of the Collateral Agent hereunder shall be
deemed for all purposes of this Agreement as the simultaneous
resignation or removal of the Custodial Agent and the Securities
Intermediary.
SECTION 8.9. RIGHT TO APPOINT AGENT OR ADVISOR.
The Collateral Agent shall have the right to appoint
agents or advisors in connection with any of its duties
hereunder, and the Collateral Agent shall not be liable for any
action taken or omitted by, or in reliance upon the advice of,
such agents or advisors selected in good faith. The appointment
of agents pursuant to this Section 8.9 shall be subject to prior
consent of the Company, which consent shall not be unreasonably
withheld.
SECTION 8.10. SURVIVAL.
The provisions of this Section 8 shall survive
termination of this Agreement and the resignation or removal of
the Collateral Agent or the Custodial Agent.
SECTION 8.11. EXCULPATION.
Anything in this Agreement to the contrary
notwithstanding, in no event shall any of the Collateral Agent,
the Custodial Agent or the Securities Intermediary or their
officers, employees or agents be liable under this Agreement to
any third party for indirect, special, punitive, or consequential
loss or damage of any kind whatsoever, including lost profits,
whether or not the likelihood of such loss or damage was known to
the Collateral Agent, the Custodial Agent or the Securities
Intermediary, or any of them, incurred without any act or deed
that is found to be attributable to gross negligence or willful
misconduct on the part of the Collateral Agent, the Custodial
Agent or the Securities Intermediary.
SECTION 9. AMENDMENT.
SECTION 9.1. AMENDMENT WITHOUT CONSENT OF HOLDERS.
Without the consent of any Holders or the holders of
any Separate Debt Securities, the Company, the Collateral Agent,
the Custodial Agent, the Securities Intermediary and the Purchase
Contract Agent, at any time and from time to time, may amend this
Agreement, in form satisfactory to the Company, the Collateral
Agent, the Custodial Agent, the Securities Intermediary and the
Purchase Contract Agent, for any of the following purposes:
(1) to evidence the succession of another Person to
the Company, and the assumption by any such successor of the
covenants of the Company; or
(2) to add to the covenants of the Company for the
benefit of the Holders, or to surrender any right or power
herein conferred upon the Company so long as such covenants
or such surrender do not adversely affect the validity,
perfection or priority of the security interests granted or
created hereunder; or
(3) to evidence and provide for the acceptance of
appointment hereunder by a successor Collateral Agent,
Custodial Agent, Securities Intermediary or Purchase
Contract Agent; or
(4) to cure any ambiguity, to correct or supplement
any provisions herein which may be inconsistent with any
other such provisions herein, or to make any other
provisions with respect to such matters or questions arising
under this Agreement, provided such action shall not
adversely affect the interests of the Holders.
SECTION 9.2. AMENDMENT WITH CONSENT OF HOLDERS.
With the consent of the Holders of not less than a
majority of the Purchase Contracts at the time outstanding, by
Act of said Holders delivered to the Company, the Purchase
Contract Agent or the Collateral Agent, as the case may be, the
Company, the Purchase Contract Agent, the Collateral Agent, the
Custodial Agent and the Securities Intermediary may amend this
Agreement for the purpose of modifying in any manner the
provisions of this Agreement or the rights of the Holders in
respect of the Securities; provided, however, that no such
supplemental agreement shall, without the consent of the Holder
of each Outstanding Security adversely affected thereby,
(1) change the amount or type of Collateral underlying
a Security (subject to the rights of Holders to make
Collateral Substitutions as contemplated by Sections 4.1 and
4.2), impair the right of the Holder of any Security to
receive distributions on the underlying Collateral or
otherwise adversely affect the Holder's rights in or to such
Collateral; or
(2) otherwise effect any action that would require the
consent of the Holder of each Outstanding Security affected
thereby pursuant to the Purchase Contract Agreement if such
action were effected by an agreement supplemental thereto;
or
(3) reduce the percentage of Purchase Contracts the
consent of whose Holders is required for any such amendment.
It shall not be necessary for any Act of Holders under this
Section to approve the particular form of any proposed amendment,
but it shall be sufficient if such Act shall approve the
substance thereof.
SECTION 9.3. EXECUTION OF AMENDMENTS.
In executing any amendment permitted by this Section,
the Collateral Agent, the Custodial Agent, the Securities
Intermediary and the Purchase Contract Agent shall be entitled to
receive and (subject to Section 6.1 hereof, with respect to the
Collateral Agent, and Section 7.1 of the Purchase Contract
Agreement, with respect to the Purchase Contract Agent) shall be
fully protected in relying upon, an Opinion of Counsel stating
that the execution of such amendment is authorized or permitted
by this Agreement and that all conditions precedent, if any, to
the execution and delivery of such amendment have been satisfied.
SECTION 9.4. EFFECT OF AMENDMENTS.
Upon the execution of any amendment under this Section
9, this Agreement shall be modified in accordance therewith, and
such amendment shall form a part of this Agreement for all
purposes; and every Holder of Certificates theretofore or
thereafter authenticated, executed on behalf of the Holders and
delivered under the Purchase Contract Agreement shall be bound
thereby.
SECTION 9.5. REFERENCE TO AMENDMENTS.
Security Certificates authenticated, executed on behalf
of the Holders and delivered after the execution of any amendment
pursuant to this Section may, and shall if required by the
Collateral Agent or the Purchase Contract Agent, bear a notation
in form approved by the Purchase Contract Agent and the
Collateral Agent as to any matter provided for in such amendment.
If the Company shall so determine, new Security Certificates so
modified as to conform, in the opinion of the Collateral Agent,
the Purchase Contract Agent and the Company, to any such
amendment may be prepared and executed by the Company and
authenticated, executed on behalf of the Holders and delivered by
the Purchase Contract Agent in accordance with the Purchase
Contract Agreement in exchange for Outstanding Security
Certificates.
SECTION 10. MISCELLANEOUS.
SECTION 10.1. NO WAIVER.
No failure on the part of the Collateral Agent or any
of its agents to exercise, and no course of dealing with respect
to, and no delay in exercising, any right, power or remedy
hereunder shall operate as a waiver thereof; nor shall any single
or partial exercise by the Collateral Agent or any of its agents
of any right, power or remedy hereunder preclude any other or
further exercise thereof or the exercise of any other right,
power or remedy. The remedies herein are cumulative and are not
exclusive of any remedies provided by law.
SECTION 10.2. GOVERNING LAW.
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. Without
limiting the foregoing, the above choice of law is expressly
agreed to by the Company, the Securities Intermediary, the
Custodial Agent, the Collateral Agent and the Holders from time
to time acting through the Purchase Contract Agent, as their
attorney-in-fact, in connection with the establishment and
maintenance of the Collateral Account. The Company, the
Collateral Agent and the Holders from time to time of the
Securities, acting through the Purchase Contract Agent as their
attorney-in-fact, hereby submit to the nonexclusive jurisdiction
of the United States District Court for the Southern District of
New York and of any New York state court sitting in New York City
for the purposes of all legal proceedings arising out of or
relating to this Agreement or the transactions contemplated
hereby. The Company, the Collateral Agent and the Holders from
time to time of the Securities, acting through the Purchase
Contract Agent as their attorney-in-fact, irrevocably waive, to
the fullest extent permitted by applicable law, any objection
which they may now or hereafter have to the laying of the venue
of any such proceeding brought in such a court and any claim that
any such proceeding brought in such a court has been brought in
an inconvenient forum.
SECTION 10.3. NOTICES.
All notices, requests, consents and other
communications provided for herein (including, without
limitation, any modifications of, or waivers or consents under,
this Agreement) shall be given or made in writing (including,
without limitation, by telecopy) delivered to the intended
recipient at the "Address for Notices" specified below its name
on the signature pages hereof (or in the case of Holders, may be
made and deemed given as provided in Sections 1.5 and 1.6 of the
Purchase Contract Agreement) or, as to any party, at such other
address as shall be designated by such party in a notice to the
other parties. Except as otherwise provided in this Agreement,
all such communications shall be deemed to have been duly given
when transmitted by telecopier or personally delivered or, in the
case of a mailed notice, upon receipt, in each case given or
addressed as aforesaid (except as aforesaid).
SECTION 10.4. SUCCESSORS AND ASSIGNS.
This Agreement shall be binding upon and inure to the
benefit of the respective successors and assigns of the Company,
the Collateral Agent, the Custodial Agent, the Securities
Intermediary and the Purchase Contract Agent, and the Holders
from time to time of the Securities, by their acceptance of the
same, shall be deemed to have agreed to be bound by the
provisions hereof and to have ratified the agreements of, and the
grant of the Pledge hereunder by, the Purchase Contract Agent.
SECTION 10.5. COUNTERPARTS.
This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one
and the same instrument, and any of the parties hereto may
execute this Agreement by signing any such counterpart.
SECTION 10.6. SEVERABILITY.
If any provision hereof is invalid and unenforceable in
any jurisdiction, then, to the fullest extent permitted by law,
(i) the other provisions hereof shall remain in full force and
effect in such jurisdiction and shall be liberally construed in
order to carry out the intentions of the parties hereto as nearly
as may be possible and (ii) the invalidity or unenforceability of
any provision hereof in any jurisdiction shall not affect the
validity or enforceability of such provision in any other
jurisdiction.
SECTION 10.7. EXPENSES, ETC.
The Company agrees to reimburse the Collateral Agent
and the Custodial Agent for: (a) all reasonable out-of-pocket
costs and expenses of the Collateral Agent and the Custodial
Agent (including, without limitation, the reasonable fees and
expenses of the necessary services of a Securities Intermediary
and of counsel to the Collateral Agent and the Custodial Agent),
in connection with (i) the negotiation, preparation, execution
and delivery or performance of this Agreement and (ii) any
modification, supplement or waiver of any of the terms of this
Agreement; (b) all reasonable costs and expenses of the
Collateral Agent (including, without limitation, reasonable fees
and expenses of counsel) in connection with (i) any enforcement
or proceedings resulting or incurred in connection with causing
any Holder of Securities to satisfy its obligations under the
Purchase Contracts forming a part of the Securities and (ii) the
enforcement of this Section 10.7; and (c) all transfer, stamp,
documentary or other similar taxes, assessments or charges levied
by any governmental or revenue authority in respect of this
Agreement or any other document referred to herein and all costs,
expenses, taxes, assessments and other charges incurred in
connection with any filing, registration, recording or perfection
of any security interest contemplated hereby.
SECTION 10.8. SECURITY INTEREST ABSOLUTE.
All rights of the Collateral Agent and security
interests hereunder, and all obligations of the Holders from time
to time hereunder, shall be absolute and unconditional
irrespective of:
(a) any lack of validity or enforceability of any
provision of the Purchase Contracts or the Securities or any
other agreement or instrument relating thereto;
(b) any change in the time, manner or place of payment
of, or any other term of, or any increase in the amount of,
all or any of the obligations of Holders of Securities under
the related Purchase Contracts, or any other amendment or
waiver of any term of, or any consent to any departure from
any requirement of, the Purchase Contract Agreement or any
Purchase Contract or any other agreement or instrument
relating thereto; or
(c) any other circumstance which might otherwise
constitute a defense available to, or discharge of, a
borrower, a guarantor or a pledgor.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed as of the day and year first above
written.
TEXAS UTILITIES COMPANY
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Treasurer and Assistant
Secretary
Address for Notices:
Texas Utilities Company
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▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: Treasurer
Telecopy:
THE BANK OF NEW YORK
as Purchase Contract Agent and as
attorney-in-fact of the Holders
from time to time of the Securities
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Vice President
Address for Notices:
The Bank of New York
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▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: Corporate Trust
Administration
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
THE CHASE MANHATTAN BANK
as Collateral Agent, Custodial
Agent and as Securities
Intermediary
By: /s/ ▇. ▇'▇▇▇▇▇
--------------------------------
Name: ▇. ▇'▇▇▇▇▇
Title: Senior Trust Officer
Address for Notices:
The Chase Manhattan Bank
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▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: Global Trust Services
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
EXHIBIT A
INSTRUCTION FROM PURCHASE CONTRACT AGENT TO COLLATERAL AGENT
The Chase Manhattan Bank, as Collateral Agent
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Attention: Global Trust Services
Re: Securities of Texas Utilities Company (the
"Company")
We hereby notify you in accordance with Section [4.1]
[4.2] of the Pledge Agreement, dated as of July 1, 1998, (the
"Pledge Agreement") among the Company, yourselves, as Collateral
Agent, Custodial Agent and Securities Intermediary and ourselves,
as Purchase Contract Agent and as attorney-in-fact for the
Holders of [Income PRIDES] [Growth PRIDES] from time to time,
that the Holder of Securities listed below (the "Holder") has
elected to substitute [$ principal amount at maturity of
-----
Treasury Securities] [$ principal amount of [Series D
-------
Notes] [Series E Notes] [the appropriate Applicable Ownership
Interest in the Treasury Portfolio] in exchange for an equal
Value of Pledged [Series D Notes] [Series E Notes] [the
appropriate Applicable Ownership Interest in the Treasury
Portfolio] [3-Year/4-Year Treasury Securities] held by you in
accordance with the Pledge Agreement and has delivered to us a
notice stating that the Holder has Transferred [Series D Notes]
[Series E Notes] [appropriate Applicable Ownership Interest in
the Treasury Portfolio] [3-Year/4-Year Treasury Securities] to
you, as Collateral Agent. We hereby instruct you, upon receipt of
such [Treasury Securities] [Series D Notes] [Series E Notes]
[appropriate Applicable Ownership Interest in the Treasury
Portfolio] so Transferred, to release the Pledged [Series D
Notes] [Series E Notes] [appropriate Applicable Ownership
Interest in the Treasury Portfolio] [3-Year/4-Year] Treasury
Securities] related to such [Income PRIDES] [Growth PRIDES] to us
in accordance with the Holder's instructions. Capitalized terms
used herein but not defined shall have the meaning set forth in
the Pledge Agreement.
Date:
------------------------ ------------------------------
By:
--------------------------
Name:
Title:
Signature Guarantee:
-----
Please print name and address of registered Holder electing to
substitute [Treasury Securities] [Debt Securities] [appropriate
Applicable Ownership Interest in the Treasury Portfolio] for
[Pledged Debt Securities] [Treasury Portfolio] [Pledged Treasury
Securities]:
------------------------------ ------------------------------
Name Social Security or other
Taxpayer Identification
Number, if any
Address
------------------------------
------------------------------
------------------------------
EXHIBIT B
INSTRUCTION TO PURCHASE CONTRACT AGENT
The Bank of New York
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▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: Corporate Trust Administration
Re: Securities of Texas Utilities Company (the
"Company")
The undersigned Holder hereby notifies you that it has
delivered to The Chase Manhattan Bank, as Collateral Agent,
[$ principal amount at maturity of [3-Year] [4-Year]
-------
Treasury Securities] [$ principal amount of [Series D
-------
Notes] [Series E Notes] [Stated Amount of the appropriate
Applicable Ownership Interest in the Treasury Portfolio] in
exchange for an equal Value of [Pledged [Series D Notes] [Series
E Notes] or the appropriate Applicable Ownership Interest in the
Treasury Portfolio] [Pledged [3-Year] [4-Year] Treasury
Securities] held by the Collateral Agent, in accordance with
Section [4.1] [4.2] of the Pledge Agreement, dated as of July 1,
1998 (the "Pledge Agreement"), between you, the Company and the
Collateral Agent. The undersigned Holder hereby instructs you to
instruct the Collateral Agent to release to you on behalf of the
undersigned Holder the [Pledged Debt Securities or the
appropriate Applicable Ownership Interest in the Treasury
Portfolio] [Pledged [3-Year] [4-Year] Treasury Securities]
related to such [Income PRIDES] [Growth PRIDES]. Capitalized
terms used herein but not defined shall have the meaning set
forth in the Pledge Agreement.
Dated:
----------------------- ------------------------------
Signature
Signature Guarantee:
----------
Please print name and address of Registered Holder:
------------------------------ ------------------------------
Name Social Security or other
Taxpayer Identification
Number, if any
Address
------------------------------
------------------------------
------------------------------
EXHIBIT C
INSTRUCTION TO CUSTODIAL AGENT REGARDING REMARKETING
Re: Securities of Texas Utilities Company (the
"Company")
The undersigned hereby notifies you in accordance with
Section 4.6(c) of the Pledge Agreement, dated as of July 1, 1998
(the "Pledge Agreement"), among the Company, yourselves, as
Collateral Agent, Securities Intermediary and Custodial Agent,
and The Bank of New York, as Purchase Contract Agent and as
attorney-in-fact for the Holders of Income PRIDES and Growth
PRIDES from time to time, that the undersigned elects to deliver
$ principal amount of [Series D Notes] [Series E Notes]
--------
for delivery to the Remarketing Agent on the fourth Business Day
immediately preceding the [First] [Second] Purchase Contract
Settlement Date for remarketing pursuant to Section 4.6(c) of the
Pledge Agreement. The undersigned will, upon request of the
Remarketing Agent, execute and deliver any additional documents
deemed by the Remarketing Agent or by the Company to be necessary
or desirable to complete the sale, assignment and transfer of the
[Series D Notes] [Series E Notes] tendered hereby.
The undersigned hereby instructs you, upon receipt of
the Proceeds of such remarketing from the Remarketing Agent to
deliver such Proceeds to the undersigned in accordance with the
instructions indicated herein under "A. Payment Instructions".
The undersigned hereby instructs you, in the event of Failed
Remarketing, upon receipt of the [Series D Notes] [Series E
Notes] tendered herewith from the Remarketing Agent, to deliver
such Debt Securities to the person(s) and the address(es)
indicated herein under "B. Delivery Instructions."
With this notice, the undersigned hereby (i) represents
and warrants that the undersigned has full power and authority to
tender, sell, assign and transfer the [Series D Notes] [Series E
Notes] tendered hereby and that the undersigned is the record
owner of any [Series D Notes] [Series E Notes] tendered herewith
in physical form or a participant in The Depositary Trust Company
("DTC") and the beneficial owner of any Debt Securities tendered
herewith by book-entry transfer to your account at DTC and (ii)
agrees to be bound by the terms and conditions of Section 4.6(c)
of the Pledge Agreement. Capitalized terms used herein but not
defined shall have the meaning set forth in the Pledge Agreement.
Date:
------------------------ ------------------------------
By:
--------------------------
Name:
Title:
Signature Guarantee:
-----
Please print name and address:
------------------------------ ------------------------------
Name Social Security or other
Taxpayer Identification
Number, if any
Address
------------------------------
------------------------------
------------------------------
A. PAYMENT INSTRUCTIONS B. DELIVERY INSTRUCTIONS
Proceeds of the remarketing In the event of a Failed
should be paid by check in the Remarketing, [Series D
name of the person(s) set Notes] [Series E Notes]
forth below and mailed to the which are in physical form
address set forth below. should be delivered to the
person(s) set forth below
Name(s) and mailed to the address
----------------------- set forth below.
(Please Print)
Name(s)
Address --------------------
(Please Print)
------------------------------
Address
------------------------------
(Please Print) ---------------------------
------------------------------ ---------------------------
(Zip Code) (Please Print)
------------------------------ ---------------------------
(Tax Identification or (Zip Code)
Social Security Number)
---------------------------
(Tax Identification or
Social Security Number)
In the event of a Failed
Remarketing, [Series D
Notes] [Series E Notes]
which are in book-entry
form should be credited to
the account at The
Depositary Trust Company
set forth below.
----------------------
DTC Account Number
Name of Account
Party:
---------------------
EXHIBIT D
INSTRUCTION TO CUSTODIAL AGENT REGARDING
WITHDRAWAL FROM REMARKETING
The Chase Manhattan Bank, as Custodial Agent
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▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: Global Trust Services
Re: Securities of Texas Utilities Company (the
"Company")
The undersigned hereby notifies you in accordance with
Section 4.6(c) of the Pledge Agreement, dated as of July 1, 1998
(the "Pledge Agreement") among the Company, yourselves, as
Collateral Agent, Securities Intermediary and Custodial Agent and
The Bank of New York, as Purchase Contract Agent and as
attorney-in-fact for the Holders of Income PRIDES and Growth
PRIDES from time to time, that the undersigned elects to withdraw
the $ principal amount of [Series D Notes] [Series E Notes]
-----
delivered to the Custodial Agent on for remarketing
------------
pursuant to Section 4.6(c) of the Pledge Agreement. The
undersigned hereby instructs you to return such [Series D Notes]
[Series E Notes] to the undersigned in accordance with the
undersigned's instructions. With this notice, the Undersigned
hereby agrees to be bound by the terms and conditions of Section
4.6(c) of the Pledge Agreement. Capitalized terms used herein but
not defined shall have the meaning set forth in the Pledge
Agreement.
Date:
------------------------ ------------------------------
By:
--------------------------
Name:
Title:
Signature Guarantee:
-----
Please print name and address:
------------------------------ ------------------------------
Name Social Security or other
Taxpayer Identification
Number, if any
Address
------------------------------
------------------------------
------------------------------