EXHIBIT 4
EXECUTION VERSION
COLLATERAL AGREEMENT
Among
AT&T BROADBAND CSC HOLDINGS, INC.
As Pledgor,
THE BANK OF NEW YORK, As Collateral Agent
and
EQUITY SECURITIES TRUST II
Dated as of
December 18, 2001
name.
The following Table of Contents has been inserted for convenience of
reference only and does not constitute a part of the Collateral Agreement.
TABLE OF CONTENTS
SECTION
1. The Security Interests...............................................1
2. Definitions..........................................................2
3. Representations and Warranties of the Pledgor........................6
4. Representations and Warranties of the Collateral Agent...............7
5. Certain Covenants of the Pledgor.....................................8
6. Administration of the Collateral and Valuation of the Securities.....9
7. Income and Voting Rights on Collateral..............................14
8. Remedies upon Events of Default.....................................15
9. The Collateral Agent................................................17
10. Miscellaneous.......................................................20
11. Termination of Collateral Agreement.................................21
12. No Personal Liability of Trustees...................................21
Exhibit A - Certificate for Substituted Collateral
Exhibit B - Certificate for Additional Government Securities
Exhibit C - Certificate for Additional Collateral
COLLATERAL AGREEMENT
THIS COLLATERAL AGREEMENT (the "Agreement"), dated as of December 18,
2001, among AT&T Broadband CSC Holdings, Inc., a corporation organized under
the laws of the State of Delaware, (the "Pledgor"), The Bank of New York, a New
York banking corporation, as collateral agent (the "Collateral Agent")
hereunder for the benefit of Equity Securities Trust II, a statutory business
trust organized under the Business Trust Act of the State of Delaware (such
trust and the trustees thereof acting in their capacity as such being referred
to herein as the "Trust"), and the Trust;
W I T N E S S E T H:
WHEREAS, pursuant to the Forward Contract Agreement (the "Forward
Contract"), dated as of the date hereof, between Pledgor and the Trust, the
Pledgor has agreed to deliver and the Trust has agreed to acquire Rainbow Media
Group Class A common stock, or the cash value thereof, $.01 par value, of
Cablevision Systems Corporation, a Delaware corporation (the "Company"),
subject to the terms and conditions of the Forward Contract; and
NOW, THEREFORE, to secure the performance by the Pledgor of its
obligations under the Forward Contract and to secure the observance and
performance of the covenants and agreements contained herein and in the Forward
Contract, the parties hereto agree as follows:
1. The Security Interests.
In order to secure the observance and performance of the covenants,
agreements and obligations contained herein and in the Forward Contract:
(a) Security Interests. The Pledgor hereby grants and pledges unto the
Collateral Agent, as agent of and for the benefit of the Trust, a security
interest in and to, and a lien upon and right of set-off against, all of
Pledgor's right, title and interest in and to (i) the Pledged Items described
in paragraphs (b), (c) and (d); (ii) all additions to and substitutions for
such Pledged Items; (iii) (subject to the remittance of certain payments upon
satisfaction of the conditions specified in Section 7(a) hereof) all income,
proceeds and collections received or to be received, or derived or to be
derived, now or any time hereafter from or in connection with the Pledged Items
(whether such proceeds arise before or after the commencement of any proceeding
under any applicable bankruptcy, insolvency or other similar law, by or against
the Pledgor with respect to the Pledgor); and (iv) all powers and rights now
owned or hereafter acquired under or with respect to the Pledged Items (such
Pledged Items, additions, substitutions, income, proceeds, collections, powers
and rights being herein collectively called the "Collateral"). The Collateral
Agent shall have all of the rights, remedies and recourses with respect to the
Collateral afforded a secured party by the New York Uniform Commercial Code, in
addition to, and not in limitation of, the other rights, remedies and recourses
afforded to the Collateral Agent by this Agreement.
(b) Firm Payment Date. At the Firm Payment Date, the Pledgor shall deliver
to the Collateral Agent in pledge hereunder one or more certificates in
registered form representing in the aggregate 8,514,206 shares of Common Stock,
indorsed in blank or in the
name of the Collateral Agent for the benefit of the Trust (together with all
signature guarantees and other documents necessary to permit the Collateral
Agent to effect the re-registration of such Common Stock without further action
by the Pledgor) or, if such Common Stock is not issuable in certificated form
but is held in book entry form by The Depository Trust Company, the Pledgor
shall transfer such number of shares of Common Stock to an account of the
Collateral Agent or to an account (other than an account of the Pledgor)
designated by the Collateral Agent with The Depository Trust Company.
(c) Option Closing Date. Effective upon and subject to the receipt by the
Pledgor of the Additional Contract Price, at the Option Closing Date, the
Pledgor shall deliver to the Collateral Agent in pledge hereunder one or more
certificates in registered form representing in the aggregate a number of
shares of Common Stock equal to the Additional Share Base Amount, indorsed in
blank or in the name of the Collateral Agent for the benefit of the Trust
(together with all signature guarantees and other documents necessary to permit
the Collateral Agent to effect the re-registration of such Common Stock without
further action by the Pledgor) or, if such Common Stock is not issuable in
certificated form but is held in book entry form by The Depository Trust
Company, the Pledgor shall transfer such number of shares of Common Stock to an
account of the Collateral Agent or to an account (other than an account of the
Pledgor) designated by the Collateral Agent with The Depository Trust Company.
(d) Extension of Exchange Date. Prior to, or simultaneously with Pledgor's
election to extend the Exchange Date pursuant to Section 1.3(f) of the Forward
Contract, the Pledgor shall deliver to the Collateral Agent in pledge hereunder
Additional Government Securities meeting the requirements of Section 1.3(f) of
the Forward Contract.
2. Definitions.
Capitalized terms used and not otherwise defined herein shall have the
meanings ascribed to them in the Forward Contract. Capitalized terms used
herein shall have the meanings as follows:
"Additional Government Securities" means collateral that must be pledged
to the Collateral Agent in connection with the Pledgor's election to extend the
Exchange Date and, consisting of U.S. Government Securities which through the
scheduled payment of principal and interest in accordance with their terms will
provide, not later than one Business Day before the extended Exchange Date,
money in an amount not less than the Extension Amount.
"Authorized Representative" of the Pledgor means any trustee, officer or
other representative as to whom Pledgor shall have delivered notice to the
Collateral Agent that such trustee or other representative is authorized to act
hereunder on behalf of Pledgor.
"Business Day" means any day except a Saturday, Sunday or other day on
which banking institutions in New York City are authorized or obligated by law
or regulation to close or a day on which the New York Stock Exchange, Inc. is
closed.
"Cash Delivery Obligations" means, at any time (A) if no Adjustment Event
shall have occurred prior to such time, zero, and (B) from and after the
occurrence of any Adjustment Event, (i) the Firm Share Base Amount plus the
Additional Share Base Amount (if any)
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multiplied by (ii) the Transaction Value of any property other than Reported
Securities received by the Pledgor in such Adjustment Event, multiplied
successively by each number by which the Exchange Rate shall have been
multiplied on or prior to the Adjustment Event pursuant to the adjustments
provided for under Section 6.1 of the Forward Contract; provided, however, that
upon the occurrence of an Adjustment Event in connection with which holders of
Common Stock receive consideration other than Reported Securities with a
Transaction Value of 25% or more of the Aggregate Transaction Value for such
Adjustment Event, then the Cash Delivery Obligations shall be zero.
"Cash Equivalents" means (i) United States dollars, (ii) securities issued
or directly and fully guaranteed or insured by the United States government or
any agency or instrumentality thereof (provided that the full faith and credit
of the United States is pledged in support thereof) having maturities of not
more than six months from the date of acquisition, (iii) certificates of
deposit with maturities of six months or less from the date of the acquisition,
bankers' acceptances with maturities not exceeding six months and overnight
bank deposits, in each case with any domestic commercial bank having capital
and surplus in excess of $500 million and a ▇▇▇▇▇▇▇▇ Bank Watch Rating of "B"
or better, (iv) repurchase obligations with a term of not more than seven days
for underlying securities of the types described in clause (ii) above entered
into with any financial institution meeting the qualifications specified in
clause (iii) above, (v) commercial paper having the highest rating obtainable
from ▇▇▇▇▇'▇ Investors Service, Inc. or Standard & Poor's Ratings Group and in
each case maturing within six months after the date of acquisition and (vi)
money market funds at least 95% of the assets of which constitute Cash
equivalents of the kinds described in clauses (i)-(v) of this definition.
"Collateral" has the meaning specified in Section 1(a).
"Collateral Agent" means the financial institution identified as such in
the preliminary paragraph hereof, or any successor appointed in accordance with
Section 9.
"Collateral Agreement" means this Collateral Agreement and any exhibits
hereto.
"Collateral Event of Default" has the meaning specified in Section 6(e).
"Collateral Requirement" means, as of any date and with respect to: (i)
any Common Stock, 100%; (ii) any Reported Securities, 100%; (iii) any U.S.
Government Securities or Cash Equivalents pledged in respect of Cash Delivery
Obligations, 105%; (iv) any other U.S. Government Securities or Cash
Equivalents (other than Additional Government Securities), 150%, provided that
upon and after any failure to cure an Insufficiency Determination by 4:00 p.m.
New York City time on the Business Day following telephonic notice of such
Insufficiency Determination as described in Section 6(e), which insufficiency
shall be continuing on such Business Day, the Collateral Requirement relating
to any U.S. Government Securities or Cash Equivalents (other than (i)
Additional Government Securities and (ii) U.S. Government Securities or Cash
Equivalents pledged in respect of Cash Delivery Obligations) shall be 200%; and
(v) any Additional Government Securities, 100%. The portion of any pledged U.S.
Government Securities or Cash Equivalents that shall be deemed at any time to
be in respect of Cash Delivery Obligations shall be as provided in Section
6(e).
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"Common Stock" means the Rainbow Media Group Class A common stock of
Cablevision Systems Corporation, par value $.01 per share.
"Delivery Date" has the meaning specified in Section 8(a).
"Eligible Collateral" means (i) Common Stock, (ii) U.S. Government
Securities, (iii) Cash Equivalents, (iv) from and after Pledgor's election to
extend the Exchange Date pursuant to Section 1.3(f) of the Forward Contract,
Additional Government Securities, and (v) from and after any Adjustment Event,
Reported Securities, provided, in each case, that (A) the Pledgor has good and
marketable title thereto, free of all Liens (other than the Liens created by
this Collateral Agreement) and Transfer Restrictions except as contemplated by
Section 3(e) and (B) the Collateral Agent has a valid, first priority perfected
security interest therein and first lien thereon, and provided further that to
the extent the number of shares of Common Stock or Reported Securities pledged
hereunder exceeds at any time the Maximum Deliverable Number thereof, such
excess shares shall not be Eligible Collateral.
"Event of Default" means the occurrence of: (i) an event described in
clause (a) or (b) of Article VII of the Forward Contract, (ii) a Collateral
Event of Default, (iii) a failure by Pledgor to have caused the Collateral to
meet the requirements described in Section 5(d), (iv) if an Adjustment Event
shall have occurred prior to the Exchange Date, failure by Pledgor to cause to
be delivered to the Trust on the Exchange Date the consideration then required
to be delivered pursuant to Section 6.2 of the Forward Contract or (v) if
Pledgor shall have exercised its Cash Delivery Option, a failure by the Pledgor
to deliver cash on the Exchange Date in the amount required under Section
1.3(d) of the Forward Contract.
"Ineligible Collateral" means Collateral that does not constitute
"Eligible Collateral".
"Insufficiency Determination" has the meaning specified in Section 6(e).
"Lien" means any lien, mortgage, security interest, pledge, charge or
encumbrance of any kind.
"Market Value" means, as of any date: (a) with respect to any Common Stock
(except as otherwise provided in Section 6(e)(2)), the Closing Price of the
Common Stock on such date; (b) with respect to any U.S. Government Security,
(x)(i) the average unit bid price for such security on the Trading Day prior to
such date as published in the New York edition of The Wall Street Journal or
The New York Times or, if not so published, (ii) the lower bid price quoted
(which quotation shall be evidenced in writing) on such date (or if such date
is not a Trading Day, on the preceding Trading Day) by either of two nationally
recognized dealers making a market in such security which are members of the
National Association of Securities Dealers, Inc. multiplied by (y) the number
of such units comprised in the outstanding principal amount of such U.S.
Government Security; (c) with respect to any unit of Reported Securities, the
Closing Price thereof on such date; provided that the "Market Value" of any
Ineligible Collateral shall be zero; and (d) with respect to any Cash
Equivalent, the face value of such instrument.
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"Maximum Deliverable Number" means, on any date, with respect to the
Common Stock, the product of the Firm Share Base Amount plus the Additional
Share Base Amount (if any), multiplied successively by each number by which the
Exchange Rate shall have been multiplied on or prior to such date pursuant to
the adjustments provided for under Article VI of the Forward Contract. The
Maximum Deliverable Number of Reported Securities means, on any date, (i) the
Firm Share Base Amount plus the Additional Share Base Amount (if any)
multiplied by (ii) the number of Reported Securities received by the Pledgor in
the Adjustment Event for each share of Common Stock, multiplied successively by
each number by which the Exchange Rate shall have been multiplied on or prior
to such date and after the date of such Adjustment Event pursuant to the
adjustments provided for under Article VI of the Forward Contract.
"Person" means an individual, a corporation, a partnership, an
association, a limited liability company, a trust or any other entity or
organization, including a government or political subdivision or an agency or
instrumentality thereof.
"Pledge Value" means, as of any date and with respect to any particular
type of Collateral, an amount equal to the aggregate Market Value of such
Collateral divided by the Collateral Requirement for such Collateral.
"Pledge Value Requirement" means, as of any date, (a) the aggregate Market
Value on such date of the Maximum Deliverable Number of shares of Common Stock
or, from and after an Adjustment Event, Reported Securities, on such date plus
(b) from and after an Adjustment Event, the Cash Delivery Obligations plus (c)
from and after the Pledgor's extension of the Exchange Date pursuant to Section
1.3(f) of the Forward Contract, the aggregate Market Value on such date of the
Additional Government Securities.
"Pledged Items" means, as of any date, any and all securities and
instruments delivered by the Pledgor to be held by the Collateral Agent under
this Collateral Agreement as Collateral, whether Eligible Collateral or
Ineligible Collateral.
"Prior Collateral" has the meaning specified in Section 6(b)(1).
"Responsible Officer" means, when used with respect to the Collateral
Agent, any vice president, assistant vice president, assistant treasurer or
assistant secretary located in the division or department of the Collateral
Agent responsible for performing the obligations of the Collateral Agent under
this Collateral Agreement, or in any other division or department of the
Collateral Agent performing operations substantially equivalent to those
performed by such division or department pursuant hereto, or any other officer
of the Collateral Agent or any successor Collateral Agent customarily
performing functions similar to those performed by any of the aforesaid
officers, and also means, with respect to any matter relating to this
Collateral Agreement or the Collateral, any other officer to whom such matter
is referred because of his knowledge of and familiarity with the particular
subject.
"Transfer Restriction" means, with respect to any item of Collateral, any
condition to or restriction on the ability of the holder thereof to sell,
assign or otherwise transfer such item of Collateral to the Trust or to enforce
the provisions thereof or of any document
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related thereto whether set forth in such item of Collateral itself or in any
document related thereto, including, without limitation, (i) any requirement
that any sale, assignment or other transfer or enforcement of such item of
Collateral be consented to or approved by any Person, including, without
limitation, the issuer thereof or any other obligor thereon, (ii) any
limitations on the type or status, financial or otherwise, of any purchaser,
pledgee, assignee or transferee of such item of Collateral, (iii) any
requirement of the delivery of any certificate, consent, agreement, opinion of
counsel, notice or any other document of any Person to the issuer of, any other
obligor on or any registrar or transfer agent for, such item of Collateral,
prior to the sale, pledge, assignment or other transfer or enforcement of such
item of Collateral and (iv) any registration or qualification requirement for
such item of Collateral pursuant to any federal or state securities law;
provided that the required delivery of any assignment from the seller, pledgor,
assignor or transferor of such item of Collateral, together with any evidence
of the corporate or other authority of such Person, shall not constitute a
"Transfer Restriction."
"Trustee" or "Trustees" means any trustee or trustees of the Trust
identified on the signature pages hereto, or any successor as such trustee or
trustees.
"UCC" means the Uniform Commercial Code as in effect in the State of New
York.
"U.S. Government Securities" means direct obligations of the United States
of America that mature on a date that is one year or less from the date such
obligations are pledged hereunder, but in any event prior to the Exchange Date
(or the extended Exchange Date in the case of Additional Government Securities
pledged in connection with an extension of the Exchange Date pursuant to
Section 1.3(f) of the Forward Contract).
3. Representations and Warranties of the Pledgor.
The Pledgor hereby represents and warrants to the Collateral Agent and the
Trust that:
(a) Power. The Pledgor has full power and authority to execute and
deliver this Collateral Agreement and to perform and observe the
provisions hereof;
(b) Non-Contravention. The execution, delivery and performance by the
Pledgor of this Collateral Agreement do not and will not violate,
contravene or constitute a default under any provision of applicable law
or regulation or of any material agreement, judgment, injunction, order,
decree or other instrument binding upon the Pledgor. The Pledgor is not in
default under any material agreement by which the Collateral may be bound
and no litigation, arbitration or administrative proceedings are current
or pending, which default, litigation, arbitration or administrative
proceedings are material to the Collateral in the context of this
Collateral Agreement.
(c) Binding Effect. This Collateral Agreement constitutes a valid and
binding agreement of the Pledgor enforceable against the Pledgor in
accordance with its terms except as such enforceability may be limited by
applicable bankruptcy, insolvency and similar laws affecting creditors'
rights generally and by general equitable principles.
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(d) Solvency. The Pledgor is presently solvent and able to pay, and
paying its debts as they become due, and anticipates that it will continue
to be able to pay its debts as they become due for the foreseeable future.
(e) No Transfer Restrictions. Except for (i) any legend with respect
to restrictions pursuant to applicable federal and state securities laws
on transfer of the Common Stock pledged by the Pledgor hereunder which
appears on the certificates representing such Common Stock (and which (A)
will not be applicable to the delivery of any such Common Stock to the
Trust pursuant to the Forward Contract and this Agreement or to the
delivery of any such Common Stock by the Trust to the holders of Equity
Trust Securities pursuant to the Equity Trust Securities and (B) will be
removed at the request of the Collateral Agent to the transfer agent for
the Common Stock prior to any such delivery to the holders of Equity Trust
Securities) and (ii) any restrictions on the Common Stock pursuant to the
Stockholders Agreement, dated as of March 4, 1998, as amended by the
Letter Agreements dated August 8, 2001, September 10, 2001 and October 5,
2001 (which such Agreement, as amended, shall not have any effect on the
Common Stock pledged hereunder for so long as the Common Stock remains
pledged pursuant to the terms of this Agreement and when such Common Stock
is delivered by the Collateral Agent to the Trust on the Exchange Date or
in connection with the occurrence of an Event of Default), no Transfer
Restrictions exist with respect to or otherwise apply to the assignment
of, or transfer by the Pledgor of possession of, any items of Collateral
to the Collateral Agent hereunder, or the subsequent sale or transfer of
such items of Collateral by the Collateral Agent pursuant to the terms
hereof.
(f) Title to Collateral; Perfected Security Interest. The Pledgor has
good and marketable title to the Pledged Items, free of all Liens (other
than the Lien created by this Collateral Agreement) and Transfer
Restrictions (except for any restrictions as contemplated in Section 3(e)
hereof). Upon delivery or transfer of the Pledged Items as described in
paragraph (b), (c) and (d) of Section 1 to the Collateral Agent hereunder,
the Collateral Agent will obtain a valid and, to the extent that
perfection can be obtained under the UCC, first priority perfected
security interest in such Pledged Items subject to no other Lien. None of
the Collateral is or shall be pledged by the Pledgor as collateral for any
other purpose.
4. Representations and Warranties of the Collateral Agent.
The Collateral Agent represents and warrants to the Pledgor and the Trust
that:
(a) Corporate Existence and Power. The Collateral Agent is a banking
corporation, duly incorporated, validly existing and in good standing
under the laws of the jurisdiction of its incorporation, and has all
corporate powers and all material governmental licenses, authorizations,
consents and approvals required to enter into, and perform its obligations
under, this Collateral Agreement.
(b) Authorization and Non-Contravention. The execution, delivery and
performance by the Collateral Agent of this Collateral Agreement have been
duly authorized by all necessary corporate action on the part of the
Collateral Agent (no action
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by the shareholders of the Collateral Agent being required) and do not and
will not violate, contravene or constitute a default under any provision
of applicable law or regulation or of the charter or by-laws of the
Collateral Agent or of any material agreement, judgment, injunction,
order, decree or other instrument binding upon the Collateral Agent.
(c) Binding Effect. This Collateral Agreement constitutes a valid and
binding agreement of the Collateral Agent enforceable against the
Collateral Agent in accordance with its terms.
5. Certain Covenants of the Pledgor.
The Pledgor agrees that, so long as any of its obligations under the
Forward Contract remain outstanding:
(a) Title to Collateral. The Pledgor shall, subject to the terms of
this Agreement, at all times hereafter have good title to the Collateral
pledged hereunder, free of all Liens (other than the Liens created by this
Collateral Agreement) and Transfer Restrictions (except for those
permitted by Section 3(e) hereof), and, subject to the terms of this
Collateral Agreement, will at all times hereafter have good, right and
lawful authority to assign, transfer and pledge such Collateral and all
such additions thereto and substitutions therefor under this Collateral
Agreement.
(b) Pledge Value Requirement. The Pledgor shall cause the aggregate
Pledge Value of the Collateral to be equal to or greater than the Pledge
Value Requirement at all times, and shall pledge additional Collateral in
the manner described in Section 6(d) as necessary to cause such
requirement to be met.
(c) Pledge upon Adjustment Event. Upon the occurrence of an
Adjustment Event, the Pledgor shall immediately cause to be delivered to
the Collateral Agent, in the manner provided in Section 6(d): (i) U.S.
Government Securities or Cash Equivalents (other than cash) having an
aggregate Market Value at least equal to 105% of the Cash Delivery
Obligations, if any, or at Pledgor's election, U.S. dollars in an amount
equal to at least 100% of the Cash Delivery Obligations, if any; and (ii)
Reported Securities in an amount at least equal to the Maximum Deliverable
Number thereof (if any), or, at Pledgor's election, U.S. Government
Securities or Cash Equivalents having an aggregate Market Value at least
equal to 150% of such Maximum Deliverable Number of Reported Securities;
in each case to be held as substitute or additional Collateral hereunder.
(d) Composition of Pledged Items. Notwithstanding Pledgor's right to
substitute Collateral pursuant to Section 6(b), the Pledgor shall cause
the Collateral to include, on the Exchange Date, unless Pledgor shall have
exercised its Cash Delivery Option, a number of shares of Common Stock
(and/or, if an Adjustment Event shall have occurred, Reported Securities)
at least equal to the number of shares of Common Stock (and/or, if an
Adjustment Event shall have occurred, Reported Securities) required to be
delivered under the Forward Contract on the Exchange Date. If the Pledgor
shall have
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extended the Exchange Date pursuant to Section 1.3(f) of the Forward
Contract, the Pledgor shall cause Collateral for Pledgor's obligations to
deliver the Extension Amount to consist entirely of Additional Government
Securities.
(e) Further Assurances. The Pledgor shall, at its expense and in such
manner and form as the Trust or the Collateral Agent may reasonably
require, give, execute, deliver, file and record any financing statement,
notice, instrument, document, agreement or other papers that may be
necessary in order to create, preserve, perfect, substantiate or validate
any security interest granted pursuant hereto or to enable the Collateral
Agent to exercise and enforce its rights and the rights of the Trust
hereunder with respect to such security interest. To the extent permitted
by applicable law, the Pledgor hereby authorizes the Collateral Agent to
execute and file, in the name of the Pledgor or otherwise, Uniform
Commercial Code financing or continuation statements (which may be carbon,
photographic, photostatic or other reproductions of this Agreement or of a
financing statement relating to this Agreement) which the Collateral Agent
may reasonably deem necessary or appropriate to further perfect, or
maintain the perfection of the security interests granted hereby.
(f) The Pledgor shall not consolidate with or merge with or into, or
transfer all or substantially of its assets to, any other Person unless:
(i) either (x) the Pledgor shall be the resulting or surviving
entity or (y) such other Person is an entity organized and existing
under the laws of the United States, a State thereof or the District
of Columbia, such other Person expressly assumes by supplemental
agreement executed and delivered to the Trust, in form satisfactory
to counsel to the Trust, all the obligations of the Pledgor under the
Underwriting Agreement, Collateral Agreement, the Reimbursement
Agreement, and this Agreement (in which case all such obligations of
the Pledgor shall terminate); and
(ii) the Pledgor shall deliver to the Trust prior to the
proposed transaction an Officer's Certificate and an Opinion of
Counsel, each of which shall state that such consolidation, merger or
transfer and such supplemental agreement comply with this Section
5(f) and that all conditions precedent herein provided for relating
to such transaction have been complied with.
Upon any consolidation or merger, or any transfer of all or
substantially all of the assets of the Pledgor in accordance with this
Section 5(f), the successor entity formed by such consolidation or into
which the Pledgor is merged or to which such transfer is made shall
succeed to, and be substituted for, and may exercise every right and power
of the Pledgor under this Agreement with the same effect as if such
successor entity had been named as the Pledgor herein, and the predecessor
entity, shall be relieved of any further obligation under this Agreement.
6. Administration of the Collateral and Valuation of the Securities.
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(a) Valuation of Collateral. The Collateral Agent shall determine on
each Business Day whether the Pledge Value is at least equal to the Pledge
Value Requirement and whether an Insufficiency Determination or Collateral
Event of Default shall have occurred and, from and after any substitution
of U.S. Government Securities or Cash Equivalents for pledged Common Stock
or Reported Securities pursuant to paragraph (b) of this Section 6, shall
determine the Pledge Value on each Business Day and shall provide written
notice of the Pledge Value to the Pledgor.
(b) Substitution of Collateral. The Pledgor may substitute Collateral
in accordance with the following provisions:
(1) Unless an Event of Default or a failure by the Pledgor to
meet any of its obligations under Section 5(b) or (c) hereof has
occurred and is continuing, the Pledgor shall have the right at any
time and from time to time to deposit Eligible Collateral with the
Collateral Agent in substitution for Pledged Items previously
deposited hereunder ("Prior Collateral") and to obtain the release
from the Lien hereof of such Prior Collateral.
(2) If the Pledgor wishes to deposit Eligible Collateral with
the Collateral Agent in substitution for Prior Collateral, the
Pledgor shall (i) give written notice to the Collateral Agent
identifying the Prior Collateral to be released from the Lien hereof,
and (ii) deliver to the Collateral Agent concurrently with such
Eligible Collateral a certificate of the Pledgor substantially in the
form of Exhibit A hereto and dated the date of such delivery, (A)
identifying the items of Eligible Collateral being substituted for
the Prior Collateral and the Prior Collateral that is to be
transferred to the Pledgor and (B) certifying that the
representations and warranties contained in such Exhibit A hereto are
true and correct on and as of the date thereof. The Pledgor hereby
covenants and agrees to take all actions required under Section 6(d)
and any other actions necessary to create for the benefit of the
Collateral Agent a valid, first priority perfected security interest
in, and a first lien upon, such Eligible Collateral deposited with
the Collateral Agent in substitution for Prior Collateral.
(3) No such substitution shall be made unless and until the
Collateral Agent shall have determined that the aggregate Pledge
Value of all of the Collateral at the time of such proposed
substitution, after giving effect to the proposed substitution, shall
at least equal the Pledge Value Requirement.
(c) Additional Collateral. The Pledgor may pledge additional Collateral
(excluding Additional Government Securities) hereunder at any time and may
pledge Additional Government Securities hereunder at any time prior to or
simultaneously with Pledgor's election to extend the Exchange Date pursuant to
Section 1.3(f) of the Forward Contract. Concurrently with the delivery of any
additional Eligible Collateral, the Pledgor shall deliver in the case of
Eligible Collateral consisting of Additional Government Securities, a
certificate of the Pledgor substantially in the form of Exhibit B hereto, or in
the case of all other Eligible Collateral, a certificate of the Pledgor
substantially in the form of Exhibit C hereto and dated the date of such
delivery, in each case (A) identifying the additional items of Eligible
Collateral being pledged and (B) certifying that with respect to such items of
additional Eligible Collateral the
10
representations and warranties contained in such Exhibit B or Exhibit C, as the
case may be, hereto are true and correct on and as of the date thereof. The
Pledgor hereby covenants and agrees to take all actions required under Section
6(d) and any other actions necessary to create for the benefit of the
Collateral Agent a valid, first priority perfected security interest in, and a
first lien upon, such additional Eligible Collateral.
(d) Delivery of Collateral. The Pledgor shall deliver all Collateral to
the Collateral Agent in accordance with the following provisions:
(1) Pledged Common Stock. In the case of Collateral consisting of
Common Stock, by delivery of certificates evidencing such Common Stock,
indorsed in blank (together with all signature guarantees and any other
documents necessary to permit the Collateral Agent to effect the
re-registration thereof without further action by the Pledgor) or
registered in the name of the Collateral Agent or its nominee or, if such
Common Stock is held in book entry form by The Depository Trust Company,
by transfer to an account of the Collateral Agent or to an account (other
than an account of the Pledgor) designated by the Collateral Agent with
The Depository Trust Company;
(2) Pledged Government Securities. In the case of Collateral
consisting of U.S. Government Securities or Additional Government
Securities, by transfer thereof through the Book Entry System of the
Federal Reserve System to the account of the Collateral Agent or to an
account (other than an account of the Pledgor) designated by the
Collateral Agent; and
(3) Pledged Cash Equivalents. In the case of Collateral consisting of
Cash Equivalents under (i) of the definition of Cash Equivalents, by wire
transfer in immediately available funds to the account of the Collateral
Agent or to an account (other than an account of the Pledgor) designated
by the Collateral Agent and over which the Collateral Agent has sole
control; in the case of Collateral consisting of Cash Equivalents under
(ii) of the definition of Cash Equivalents, by transfer thereof through
the Book Entry System of the Federal Reserve System to the account of the
Collateral Agent or to an account (other than an account of the Pledgor)
designated by the Collateral Agent or, if such Cash Equivalents are held
in book entry form by The Depository Trust Company, by transfer to an
account of the Collateral Agent or to an account (other than an account of
the Pledgor) designated by the Collateral Agent with The Depository Trust
Company; in the case of Collateral consisting of Cash Equivalents under
(iv) of the definition of Cash Equivalents, by transfer of the underlying
securities to a security account maintained by the Collateral Agent with a
securities intermediary in its name, pursuant to a contract between the
Collateral Agent and a third party; and in each other case of Collateral
consisting of Cash Equivalents under the definition of Cash Equivalents,
by physically delivering certificates evidencing the Cash Equivalents
indorsed in blank (together with all documents necessary to permit the
Collateral Agent to effect the re-registration thereof without further
action by the Pledgor) or registered in the name of the Collateral Agent
issued to or otherwise payable to the Collateral Agent or its nominee or,
if such Cash Equivalents are held in book entry form by a securities
intermediary, by transfer to an account of the Collateral Agent or to an
Account (other than an account of the Pledgor) designated by the
Collateral Agent with such securities intermediary, or by
11
crediting the Cash Equivalents to a securities account maintained by the
Collateral Agent or to an account designated by the Collateral Agent with
a securities intermediary in its name.
(4) Pledged Reported Securities. In the case of Collateral consisting
of Reported Securities, by delivery of certificates evidencing such
Reported Securities, indorsed in blank (together with all signature
guarantees and other documents necessary to permit the Collateral Agent to
effect the re-registration thereof without further action by the Pledgor)
or registered in the name of the Collateral Agent or its nominee or, if
such Reported Securities are not issuable in certificated form but are
held in book entry form by The Depository Trust Company, by transfer to an
account of the Collateral Agent or to an account (other than an account of
the Pledgor) designated by the Collateral Agent with The Depository Trust
Company.
Upon delivery of any Pledged Item under this Collateral Agreement, the
Collateral Agent shall examine such Pledged Item and any certificates delivered
pursuant to Sections 6(b), 6(c), 6(d)(3) or otherwise pursuant to the terms
hereof in connection therewith to determine that they comply as to form with
the requirements for Eligible Collateral. Immediately following an Event of
Default, the Collateral Agent shall cause all Collateral in the form of
certificates indorsed in blank to be re-registered on the books of the
applicable transfer agent into the name of the Collateral Agent or its nominee,
and shall thereafter maintain all such Collateral in such form until the
termination of this Agreement; provided, however, that at any time following
such delivery to the Collateral Agent, the Collateral Agent may cause any such
certificates to be deposited with The Depository Trust Company and thereafter
hold such certificates in book entry form in an account (other than an account
of Pledgor) designated by the Collateral Agent. The Pledgor hereby designates
the Collateral Agent as the person in whose name any Collateral held in book
entry form in the Federal Reserve System shall be recorded.
(e) Insufficiency Determination.
(1) If on any Business Day the Collateral Agent determines that the
aggregate Pledge Value of the Collateral is less than the Pledge Value
Requirement (any such determination, an "Insufficiency Determination"),
the Collateral Agent shall, by telephone call to an Authorized
Representative of the Pledgor followed by a written confirmation of such
call, promptly notify the Pledgor of such determination and of the amount
of the insufficiency.
(2) If, by 4:00 p.m., New York City time on the Business Day
following the day on which telephonic notice shall have been given
pursuant to the preceding paragraph (e)(1), the Pledgor shall have failed
to deliver, in the manner set forth in paragraphs (c) and (d) of this
Section 6, sufficient additional Eligible Collateral so that, after giving
effect to such delivery (and taking into account that Common Stock and
Reported Securities in excess of the Maximum Deliverable Number thereof
shall not constitute Eligible Collateral), the aggregate Pledge Value of
the Collateral, as of such Business Day, is at least equal to the Pledge
Value Requirement, then (x) the Collateral Requirement with respect to any
U.S. Government Securities or Cash Equivalents pledged hereunder (other
than in respect of Cash Delivery Obligations) shall be increased
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from 150% to 200%, and (y) unless a Collateral Event of Default shall have
occurred and be continuing, the Collateral Agent shall:
(i) commence sales, in the manner described in paragraph (3)
below, of such portion of the Collateral consisting of U.S.
Government Securities or Cash Equivalents as may be required to be
sold in order to generate proceeds sufficient to purchase Common
Stock and/or, after an Adjustment Event, Reported Securities, as
described in the following clause (ii); and
(ii) commence purchases, in the manner described in paragraph
(3) below, of Common Stock and/or, after an Adjustment Event,
Reported Securities, in an amount sufficient to cause the aggregate
Pledge Value of the Collateral to be at least equal to the Pledge
Value Requirement.
Notwithstanding the foregoing, the Collateral Agent shall discontinue
sales and purchases pursuant to the preceding clauses (i) and (ii),
respectively, if at any time a Collateral Event of Default shall have
occurred and be continuing. The Collateral Agent shall determine the
Market Value and the Pledge Value of the Collateral after each purchase of
Common Stock or Reported Securities pursuant to the preceding clause (ii)
in order to determine whether the Pledge Value Requirement is met and
whether a Collateral Event of Default has occurred. Solely for purposes of
such calculation, the Market Value of the Common Stock or Reported
Securities shall be the most recent sales price as reported in the
composite transactions for the principal securities exchange on which the
Common Stock or Reported Securities, as the case may be, are then listed
or, if such securities are not so listed, the last quoted ask price for
such securities in the over-the-counter market as reported by The NASDAQ
National Market or, if not so reported, by the National Quotation Bureau
or a similar organization.
A "Collateral Event of Default" shall mean, at any time, the
occurrence of any of the following: (A) failure of the aggregate Market
Value of the Collateral to equal or exceed the Pledge Value Requirement;
(B) failure of the Market Value of any U.S. Government Securities and Cash
Equivalents pledged at such time (not including any (i) Additional
Government Securities or (ii) U.S. Government Securities and Cash
Equivalents pledged in respect of Cash Delivery Obligations at such time)
to have an aggregate Market Value of at least 105% of the Market Value of
a number of shares of Common Stock (or, from and after any Adjustment
Event, Reported Securities) equal to (x) the Maximum Deliverable Number
thereof minus (y) the number thereof pledged as Collateral hereunder at
such time; or (C) from and after any Adjustment Event, failure of the U.S.
Government Securities and Cash Equivalents (other than cash) pledged in
respect of Cash Delivery Obligations to have an aggregate Market Value at
least equal to 105% of the Cash Delivery Obligations at such time or, in
the case of cash pledged in respect of Cash Delivery Obligations, failure
of such cash to be at least equal to the Cash Delivery Obligations at such
time, if, in the case of a failure described in this clause (C), such
failure shall continue to be in effect at 4:00 p.m., New York City time,
on the Business Day following the day on which telephonic notice in
respect thereof shall have been given pursuant to paragraph (e)(1) above.
For purposes of this Agreement, the
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portion of any pledged U.S. Government Securities and Cash Equivalents
that shall be deemed to be in respect of Cash Delivery Obligations at any
time shall be a portion having a Market Value equal to 105% of the Cash
Delivery Obligations at such time (or, if less, the aggregate Market Value
of all U.S. Government Securities and Cash Equivalents pledged at such
time). To the extent that any pledged U.S. Government Securities and Cash
Equivalents have a Market Value exceeding 105%, the U.S. Government
Securities shall be applied to satisfy the 105% requirement in the first
instance.
(3) Collateral sold and Common Stock or shares of Reported Securities
purchased by the Collateral Agent pursuant to the preceding paragraphs
(e)(2)(i) and (ii) may be sold and purchased on any securities exchange or
in any over-the-counter market or in any private purchase transaction, and
at such price or prices, in each case as the Collateral Agent may deem
satisfactory. The Pledgor covenants and agrees that it will execute and
deliver such documents and take such other action as the Collateral Agent
deems necessary or advisable in order that any such sales and purchases
may be made in compliance with law.
(f) Release of Excess Collateral. If on any Business Day the Collateral
Agent determines that the aggregate Pledge Value of the Pledgor's Eligible
Collateral exceeds the Pledge Value Requirement and no Event of Default or
failure by the Pledgor to meet any of its obligations under Sections 5 or 6
hereof has occurred and is continuing, the Pledgor may obtain the release from
the Lien hereof of any Collateral having an aggregate Pledge Value on such
Business Day less than or equal to such excess, upon delivery to the Collateral
Agent of a written notice from an Authorized Representative of the Pledgor
indicating the items of Collateral to be released. Such Collateral shall be
released only after the Collateral Agent shall have determined that the
aggregate Pledge Value of all of the Collateral remaining after such release as
determined on such Business Day is at least equal to the Pledge Value
Requirement.
(g) Delivery of Forward Contract Consideration. On the Exchange Date,
unless Pledgor shall have exercised its Cash Delivery Option, the Collateral
Agent shall deliver to the Trust Common Stock (or, if an Adjustment Event shall
have occurred, Reported Securities) then held by it hereunder representing the
number of shares of Common Stock (or, if an Adjustment Event shall have
occurred, Reported Securities) then required to be delivered under the Forward
Contract. Upon such delivery, the Trust shall hold such Common Stock or
Reported Securities, as the case may be, absolutely and free from any claim or
right whatsoever.
(h) Investment of Cash Collateral. The Collateral Agent shall invest any
cash received by it pursuant to Section 6.2 of the Forward Contract in direct
obligations of the United States of America maturing on or before the Exchange
Date.
7. Income and Voting Rights on Collateral.
(a) Unless an Event of Default or failure by the Pledgor to
meet any of Pledgor's obligations under Section 5(b) or (c) hereof has occurred
and is continuing, the Pledgor shall be entitled to receive for Pledgor's own
account all dividends, interest and, if any, principal and premium relating to
all of the Collateral, unless the payment thereof to the Pledgor
14
would reduce the aggregate Pledge Value of the Collateral below the Pledge
Value Requirement. The Collateral Agent agrees to remit to the Pledgor on the
Business Day received or the first Business Day thereafter all such payments
received by it. If an Event of Default or failure by the Pledgor to meet any of
its obligations under Section 5(b) or (c) hereof has occurred and is
continuing, all such payments made or accrued after and during the continuance
of such Event of Default or failure shall be retained by the Collateral Agent,
and any such payments which are received by the Pledgor shall be received in
trust for the benefit of the Trust, shall be segregated from other funds of the
Pledgor and shall forthwith be paid over to the Collateral Agent. Any such
payments so retained by, or paid over to, the Collateral Agent shall be held by
the Collateral Agent as Collateral hereunder. If any such Event of Default or
failure is no longer continuing, then the Collateral Agent shall remit any such
payments that are so retained by, or paid to it, on the first Business Day
after the Collateral Agent shall have received notice from the Trust that such
Event of Default or failure is no longer continuing, unless the payment thereof
to the Pledgor would reduce the aggregate Pledge Value of the Collateral below
the Pledge Value Requirement.
(b) Unless an Event of Default has occurred and is continuing, the Pledgor
shall have the right, from time to time, to vote and to give all approvals,
consents, ratifications and waivers with respect to the Collateral (including
all shares of Common Stock), and the Collateral Agent shall promptly deliver to
the Pledgor such proxies, powers of attorney, consents, ratifications and
waivers in respect of any of the Collateral which is registered in the name of
the Collateral Agent or its nominee and shall further deliver such documents
and instruments as shall be specified in a written request by the Pledgor.
If an Event of Default shall have occurred and be continuing, the
Collateral Agent shall have the right to the extent permitted by law, and the
Pledgor shall take all such action as may be necessary or appropriate to give
effect to such right, to vote and to give all approvals, consents,
ratifications and waivers, and take any other action with respect to any or all
of the Collateral with the same force and effect as if the Collateral Agent
were the absolute and sole owner thereof.
8. Remedies upon Events of Default.
(a) If any Event of Default shall have occurred and be continuing, the
Collateral Agent may exercise on behalf of the Trust all the rights of a
secured party under the UCC (whether or not in effect in the jurisdiction where
such rights are exercised) and, in addition, without being required to give any
notice, except as herein provided or as may be required by mandatory provisions
of law, shall: (i) deliver all Collateral consisting of Common Stock or
Reported Securities (but not, in either case, in excess of the number of shares
thereof deliverable under the Forward Contract at such time) to the Trust on
the date of the notice delivered to the Collateral Agent pursuant to the last
paragraph of Article VII of the Forward Contract relating to such Event of
Default (or, in the case of an Event of Default described in clause (iii), (iv)
or (v) of the definition thereof in this Agreement, on the Exchange Date) (in
either case, the "Delivery Date"), whereupon the Trust shall hold such Common
Stock or Reported Securities absolutely free from any claim or right of
whatsoever kind, including any equity or right of redemption of the Pledgor
which may be waived, and the Pledgor, to the extent permitted by law, hereby
specifically waives all rights of redemption, stay or appraisal which
15
Pledgor has or may have under any law now existing or hereafter adopted; and
(ii) if such delivery shall be insufficient to satisfy in full all of the
obligations of Pledgor under the Forward Contract, sell all of the remaining
Collateral, or such lesser portion thereof as may be necessary to generate
proceeds sufficient to satisfy in full all of the obligations of Pledgor under
the Forward Contract, at public or private sale or at any broker's board or on
any securities exchange, for cash, upon credit or for future delivery, and at
such price or prices as the Collateral Agent may deem satisfactory. The Pledgor
covenants and agrees to execute and deliver such documents and take such other
action as the Collateral Agent deems necessary or advisable in order that any
such sale may be made in compliance with law. Upon any such sale the Collateral
Agent shall have the right to deliver, assign and transfer to the purchaser
thereof the Collateral so sold. Each purchaser at any such sale shall hold the
Collateral so sold absolutely and free from any claim or right of whatsoever
kind, including any equity or right of redemption of the Pledgor which may be
waived, and the Pledgor, to the extent permitted by law, hereby specifically
waives all rights of redemption, stay or appraisal which Pledgor has or may
have under any law now existing or hereafter adopted. The notice (if any) of
such sale required by Article 9 of the UCC shall (1) in case of a public sale,
state the time and place fixed for such sale, (2) in case of sale at a broker's
board or on a securities exchange, state the board or exchange at which such
sale is to be made and the day on which the Collateral, or the portion thereof
so being sold, will first be offered for sale at such board or exchange, and
(3) in the case of a private sale, state the day after which such sale may be
consummated. Any such public sale shall be held at such time or times within
ordinary business hours and at such place or places as the Collateral Agent may
fix in the notice of such sale. At any such sale the Collateral may be sold in
one lot as an entirety or in separate parcels, as the Collateral Agent may
determine. The Collateral Agent shall not be obligated to make any such sale
pursuant to any such notice. The Collateral Agent may, without notice or
publication, adjourn any public or private sale or cause the same to be
adjourned from time to time by announcement at the time and place fixed for the
sale, and such sale may be made at any time or place to which the same may be
so adjourned. In case of any sale of all or any part of the Collateral on
credit or for future delivery, the Collateral so sold may be retained by the
Collateral Agent until the selling price is paid by the purchaser thereof, but
the Collateral Agent shall not incur any liability in case of the failure of
such purchaser to take up and pay for the Collateral so sold and, in case of
any such failure, such Collateral may again be sold upon like notice. The
Collateral Agent, instead of exercising the power of sale herein conferred upon
it, may proceed by a suit or suits at law or in equity to foreclose the
security interests and sell the Collateral, or any portion thereof, under a
judgment or decree of a court or courts of competent jurisdiction.
(b) Power of Attorney. The Collateral Agent is hereby irrevocably
appointed the true and lawful attorney of the Pledgor with full power and
authority, in the name and stead of the Pledgor, to do all of the following:
(i) upon any delivery or sale of all or any part of any Collateral made either
under the power of delivery or sale given hereunder or under judgment or decree
in any judicial proceedings for foreclosure or otherwise for the enforcement of
this Collateral Agreement, to make all necessary deeds, bills of sale and
instruments of assignment, transfer or conveyance of the property thus
delivered or sold; (ii) if an Event of Default shall have occurred and be
continuing, upon the occurrence of an Adjustment Event while any shares of
Common Stock are Pledged Items, to take any necessary actions with respect to
such shares of Common Stock to cause the Pledged Items to conform to the
requirements of this Agreement following the occurrence of the Adjustment
Event, including, without limitation, the tender of
16
shares of Common Stock and the sale of property (other than Reported
Securities) received in respect of Common Stock. The grant of the foregoing
power of attorney shall not be deemed to be a grant of a power of attorney to
vote or grant proxies with respect to any shares of Common Stock, except as
provided in Section 7(b). For such purposes the Collateral Agent may execute
all necessary documents and instruments. This power of attorney shall be deemed
coupled with an interest, and the Pledgor hereby ratifies and confirms all that
its attorneys acting under such power, or such attorneys' successors or agents,
shall lawfully do so by virtue of this Collateral Agreement. If so requested by
the Collateral Agent, by the Trustees or by any purchaser of the Collateral or
a portion thereof, the Pledgor shall further ratify and confirm any such
delivery or sale by executing and delivering to the Collateral Agent, to the
Trustees or to such purchaser or purchasers at the expense of the Pledgor all
proper deeds, bills of sale, instruments of assignment, conveyance of transfer
and releases as may be designated in any such request. The Pledgor's
obligations and authorizations hereunder shall not be terminated by operation
of law or the occurrence of any event whatsoever, including the death or
disability of the Pledgor, or the occurrence of any other event.
(c) Application of Collateral and Proceeds. In the case of an Event of
Default, the Collateral Agent may proceed to realize upon the security interest
in the Collateral against any one or more of the types of Collateral, at any
one time, as the Collateral Agent shall determine in its sole discretion
subject to the foregoing provisions of this Section 8. The proceeds of any sale
of, or other realization upon, or other receipt from, any of the Collateral
remaining after delivery to the Trust pursuant to Section 8(a) shall be applied
by the Collateral Agent in the following order of priorities:
(1) first, to the payment to the Trust of an amount equal to: (A) the
aggregate Market Value of a number of shares of Common Stock equal to
(1) the number of shares of Common Stock required to be delivered
under the Forward Contract on the Delivery Date minus (2) the number
of shares of Common Stock delivered by the Collateral Agent to the
Trust on the Delivery Date as described above; or (B) from and after
an Adjustment Event, the sum of (1) the Cash Delivery Obligations on
the Delivery Date plus (2) the aggregate Market Value on the Delivery
Date of a number of Reported Securities (and, if applicable, shares
of Common Stock) equal to (x) the number thereof required to be
delivered on the Delivery Date under Section 6.2 of the Forward
Contract minus (y) the number thereof delivered by the Collateral
Agent to the Trust on the Delivery Date as described above; and/or
(C) if the Pledgor shall have exercised its Cash Delivery Option, the
amount of cash required to be delivered under Section 1.3(d) of the
Forward Contract minus the amount of cash so delivered; and (D) if
the Pledgor shall have extended the Exchange Date pursuant to Section
1.3(f) of the Forward Contract, the amount of cash required to be
delivered under said Section 1.3(f) (or, if the Pledgor shall have
accelerated the Exchange Date pursuant to Section 1.3(g) thereof, the
amount of cash deliverable pursuant to said Section 1.3(g));
(2) second, to the payment to the Collateral Agent of the expenses of
such sale or other realization, including reasonable compensation to
the Collateral Agent and its agents and counsel, and all expenses,
liabilities and advances incurred or made
17
by the Collateral Agent in connection therewith, including brokerage
fees in connection with the sale by the Collateral Agent of any
Pledged Item; and
(3) finally, if all of the obligations of the Pledgor hereunder and under
the Forward Contract have been fully discharged or sufficient funds
have been set aside by the Collateral Agent at the request of the
Pledgor for the discharge thereof, any remaining proceeds shall be
released to the Pledgor.
9. The Collateral Agent.
The Collateral Agent accepts its duties and responsibilities hereunder as
agent for the Trust, on and subject to the following terms and conditions:
(a) Performance of Duties; Force Majeure. The Collateral Agent undertakes
to perform such duties and only such duties as are expressly set forth herein
and, beyond the exercise of reasonable care in the performance of such duties,
no implied covenants or obligations shall be read into this Collateral
Agreement against the Collateral Agent. No provision hereof shall be construed
to relieve the Collateral Agent from liability for its own grossly negligent
action, grossly negligent failure to act or its own willful misconduct, subject
to the following:
(1) The Collateral Agent may consult with counsel, and the advice or
opinion of such counsel shall be full and complete authorization and
protection in respect of an action taken or suffered hereunder in good
faith and in accordance with such advice or opinion of counsel.
(2) The Collateral Agent shall not be liable with respect to any
action taken, suffered or omitted by it in good faith (i) reasonably
believed by it to be authorized or within the discretion or rights or
powers conferred on it by this Collateral Agreement or (ii) in accordance
with any direction or request of the Trustees.
(3) The Collateral Agent shall not be liable for any error of
judgment made in good faith by any of its officers, unless the Collateral
Agent was grossly negligent in ascertaining the pertinent facts.
(4) The Collateral Agent shall not be liable for any claims, losses,
liabilities, damages or expenses (including attorneys' fees and expenses)
due to forces beyond the reasonable control of the Collateral Agent,
including without limitation strikes, work stoppages, acts of war or
terrorism, insurrection, revolution, nuclear or natural catastrophes or
acts of God, and interruptions, loss or malfunctions of utilities,
communications or computer (software and hardware) services; provided that
this provision shall not protect the Collateral Agent against any
liability to which it would otherwise be subject by reason of willful
misfeasance, bad faith or gross negligence in the performance of its
duties or by reason of its reckless disregard of its obligations and
duties hereunder.
(5) In the absence of bad faith on its part, the Collateral Agent may
conclusively rely, as to the truth of the statements and the correctness
of the opinions
18
expressed therein, upon any note, notice, resolution, consent,
certificate, affidavit, letter, telegram, teletype message, statement,
order or other document believed by it to be genuine and correct and to
have been signed or sent by the proper Person or Persons.
(6) No provision of this Collateral Agreement shall require the
Collateral Agent to expend or risk its own funds or otherwise incur any
financial liability in the performance of any of its duties hereunder, or
in the exercise of any of its rights or powers, if it shall have
reasonable grounds for believing that repayment of such funds or adequate
indemnity against such risk or liability is not reasonably assured to it.
(7) The Collateral Agent may perform any duties hereunder either
directly or by or through agents or attorneys, and the Collateral Agent
shall not be responsible for any willful misconduct or gross negligence on
the part of any agent or attorney appointed with due care by it hereunder.
In furtherance thereof, any subsidiary owned or controlled by the
Collateral Agent, or its successors, as agent for the Collateral Agent,
may perform any or all of the duties of the Collateral Agent relating to
the valuation of securities and other instruments constituting Collateral
hereunder.
(8) In no event shall the Collateral Agent be personally liable for
any taxes or other governmental charges imposed upon or in respect of (i)
the collateral or (ii) the income or other distributions thereon.
(9) Unless and until the Collateral Agent shall have received notice
from the Pledgor, or unless and until a Responsible Officer of the
Collateral Agent shall have actual knowledge to the contrary, the
Collateral Agent shall be entitled to deem and treat all Collateral
delivered to it hereunder as Eligible Collateral hereunder, provided that
the Collateral Agent has carried out the duties specified in Section 6
with respect to such Collateral at the time of delivery thereof.
The Collateral Agent shall not be responsible for the correctness of the
recitals and statements herein which are made by the Pledgor or for any
statement or certificate delivered by the Pledgor pursuant hereto. Except as
specifically provided herein, the Collateral Agent shall not be responsible for
the validity, sufficiency, collectibility or marketability of any Collateral
given to or held by it hereunder or for the validity or sufficiency of the
Forward Contract or the Lien on the Collateral purported to be created hereby.
(b) Knowledge. The Collateral Agent shall not be deemed to have knowledge
of any Event of Default (except a Collateral Event of Default), unless and
until a Responsible Officer of the Collateral Agent shall have actual knowledge
thereof or shall have received written notice thereof.
(c) Merger. Any corporation or association into which the Collateral Agent
may be converted or merged, or with which it may be consolidated, or to which
it may sell or transfer its agency business and assets as a whole or
substantially as a whole, or any corporation or association resulting from any
such conversion, sale, merger, consolidation or transfer to which it is a
party, shall, subject to the prior written consent of the Trust, be and become
a successor Collateral Agent hereunder and vested with all of the title to the
Collateral and all of
19
the powers, discretions, immunities, privileges and other matters as was its
predecessor without, except as provided above, the execution or filing of any
instrument or any further act, deed or conveyance on the part of any of the
parties hereto, anything herein to the contrary notwithstanding.
(d) Resignation. The Collateral Agent and any successor Collateral Agent
may at any time resign by giving 30 days' written notice by registered or
certified mail to the Pledgor and notice to the Trust in accordance with the
provisions of Section 10(d) hereof. Such resignation shall take effect upon the
appointment of a successor Collateral Agent by the Trust.
(e) Removal. The Collateral Agent may be removed at any time by an
instrument or concurrent instruments in writing delivered to the Collateral
Agent and to the Pledgor and signed by the Trust.
(f) Appointment of Successor. (1) If the Collateral Agent hereunder shall
resign or be removed, or be dissolved or shall be in the course of dissolution
or liquidation or otherwise become incapable of action hereunder, or if it
shall be taken under the control of any public officer or officers or of a
receiver appointed by a court, a successor may be appointed by the Trust by an
instrument or concurrent instruments in writing signed by the Trust or by its
attorneys in fact fully authorized, a copy of such instrument or concurrent
instruments shall be sent by registered mail to the Pledgor.
(2) Every such temporary or permanent successor Collateral Agent appointed
pursuant to the provisions hereof shall be a trust company or bank in good
standing, having a reported capital and surplus of not less than $100,000,000
and capable of holding the Collateral in the State of New York, if there be
such an institution willing, qualified and able to accept the duties of the
Collateral Agent hereunder upon customary terms.
(g) Acceptance by Successor. Every temporary or permanent successor
Collateral Agent appointed hereunder shall execute, acknowledge and deliver to
its predecessor and also to the Pledgor an instrument in writing accepting such
appointment hereunder, whereupon such successor, without any further act, deed
or conveyance, shall become fully vested with all the estates, properties,
rights, powers, duties and obligations of its predecessors. Such predecessor
shall, nevertheless, on the written request of its successor or the Pledgor,
execute and deliver an instrument transferring to such successor all the
estates, properties, rights and powers of such predecessor hereunder. Every
predecessor Collateral Agent shall deliver all Collateral held by it as the
Collateral Agent hereunder to its successor. Should any instrument in writing
from the Pledgor be reasonably required by a successor Collateral Agent for
more fully and certainly vesting in such successor the estates, properties,
rights, powers, duties and obligations hereby vested or intended to be vested
in the predecessor, any and all such instruments in writing shall, at the
request of the temporary or permanent successor Collateral Agent, be forthwith
executed, acknowledged and delivered by the Pledgor.
10. Miscellaneous.
(a) Benefit of Agreement; Successors and Assigns. Whenever any of the
parties hereto is referred to, such reference shall be deemed to include the
successors and assigns
20
of such party. All the covenants and agreements herein contained by or on
behalf of the Pledgor and the Collateral Agent shall bind, and inure to the
benefit of, their respective successors and assigns whether so expressed or
not, and shall be enforceable by and inure to the benefit of the Trust and its
successors and assigns.
(b) Separability. To the extent permitted by law, the unenforceability or
invalidity of any provision or provisions of this Collateral Agreement shall
not render any other provision or provisions herein contained unenforceable or
invalid.
(c) Amendments and Waivers. Any term, covenant, agreement or condition of
this Collateral Agreement may be amended or compliance therewith may be waived
(either generally or in a particular instance and either retrospectively or
prospectively) but only by a writing signed by the Collateral Agent, the
Pledgor and the Trust.
(d) Notices.
(1) Any notice provided for herein, unless otherwise specified, shall
be in writing (including transmittals by telex or telecopier) and shall be
given to a party at the address set forth opposite such party's name on
the signature pages hereto or at such other address as may be designated
by notice duly given in accordance with this Section 10(d) to each other
party hereto.
(2) Each such notice given pursuant to paragraph (1) shall be
effective (i) if sent by certified mail (return receipt requested), 72
hours after being deposited in the United States mail, postage prepaid;
(ii) if given by telex or telecopier, when such telex or telecopied notice
is transmitted; or (iii) if given by any other means, when delivered at
the address specified in this Section 10(d).
(e) Governing Law. This Collateral Agreement shall in all respects be
construed in accordance with and governed by the laws of the State of New York;
provided that as to Pledged Items located in any jurisdiction other than the
State of New York, the Collateral Agent on behalf of the Trust shall have all
of the rights to which a secured party is entitled under the laws of such other
jurisdiction.
(f) Counterparts. This Collateral Agreement may be executed, acknowledged
and delivered in any number of counterparts and such counterparts taken
together shall constitute one and the same instrument.
(g) Application of Bankruptcy Code. The parties hereto acknowledge and
agree that the Collateral Agent is a "financial institution" within the meaning
of Section 101(22) of the Bankruptcy Code and is acting as agent and custodian
for the Trust in connection with the Forward Contract and that the Trust is a
"customer" of the Collateral Agent within the meaning of said Section 101(22).
(h) WAIVER OF JURY TRIAL. TO THE EXTENT PERMITTED BY APPLICABLE LAW, THE
PARTIES HERETO HEREBY WAIVE AND COVENANT THAT THEY WILL NOT ASSERT (WHETHER AS
PLAINTIFF, DEFENDANT OR OTHERWISE) ANY RIGHT TO TRIAL BY JURY IN ANY FORUM IN
RESPECT OF ANY ISSUE, CLAIM,
21
DEMAND, ACTION OR CAUSE OF ACTION ARISING OUT OF OR BASED UPON THIS AGREEMENT
OR THE SUBJECT MATTER HEREOF, IN EACH CASE WHETHER NOW EXISTING OR HEREAFTER
ARISING OR WHETHER IN CONTRACT OR TORT OR OTHERWISE. EACH PARTY HERETO
ACKNOWLEDGES THAT IT OR HE HAS BEEN INFORMED BY THE OTHER PARTY HERETO THAT THE
PROVISIONS OF THIS SECTION CONSTITUTE A MATERIAL INDUCEMENT UPON WHICH SUCH
OTHER PARTY HERETO HAS RELIED, IS RELYING AND WILL RELY IN ENTERING INTO THIS
AGREEMENT AND ANY DOCUMENT RELATED THERETO. EACH PARTY HERETO MAY FILE AN
ORIGINAL COUNTERPART OF THIS SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THE
CONSENT OF THE OTHER PARTY HERETO TO THE WAIVER OF ITS RIGHTS TO TRIAL BY JURY.
11. Termination of Collateral Agreement.
This Collateral Agreement and the rights hereby granted by the Pledgor in
the Collateral shall cease, terminate and be void upon fulfillment of all of
the obligations of the Pledgor under the Forward Contract, and the Pledgor
shall have no further liability hereunder upon such termination. Any Collateral
remaining at the time of such termination shall be fully released and
discharged from the Lien hereof and delivered to the Pledgor by the Collateral
Agent, all at the expense of the Pledgor.
12. No Personal Liability of Trustees.
By executing this Collateral Agreement none of the Trustees assumes any
personal liability hereunder.
22
IN WITNESS WHEREOF, each of the Pledgor, the Collateral Agent and the
Trust has caused this Collateral Agreement to be duly executed on its behalf as
of the date hereof.
PLEDGOR:
AT&T BROADBAND CSC HOLDINGS, INC.
By:
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Name:
Title:
Address for Notices:
COPY TO
▇▇▇▇▇ ▇▇▇▇ and ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Fax. No. (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇
THE TRUST:
EQUITY SECURITIES TRUST II
By:
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▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇,
as Managing Trustee
Address for Notices:
c/o Puglisi & Associates
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ - ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
COLLATERAL AGENT:
THE BANK OF NEW YORK
as Collateral Agent
By:
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Name:
Title:
Address for Notices:
▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇
2
Exhibit A
to
Collateral Agreement
CERTIFICATE FOR SUBSTITUTED COLLATERAL
The undersigned, _____________ (the "Pledgor"), hereby certifies, pursuant to
Section 6(b) of the Collateral Agreement dated as of December 18, 2001 among
the Pledgor, The Bank of New York, as Collateral Agent, and Equity Securities
Trust II (the "Collateral Agreement"; terms defined in the Collateral Agreement
being used herein as defined therein), that:
1. The Pledgor is delivering the following securities to the Collateral
Agent to be held by the Collateral Agent as substituted Collateral (the
"Substituted Collateral"):
2. The Pledgor requests that the Collateral Agent transfer to the Pledgor
the following Prior Collateral, pursuant to Section 6(b) of the Collateral
Agreement:
3. The Pledgor hereby represents and warrants to the Collateral Agent and
the Trust that:
(a) Consents to Transfer. No Transfer Restrictions exist with respect
to or otherwise apply to the assignment of, or transfer by the Pledgor of
possession of, any items of Substituted Collateral to the Collateral Agent
under the Collateral Agreement, or the subsequent sale or transfer of such
items of Substituted Collateral by the Collateral Agent pursuant to the
terms of the Collateral Agreement.
(b) Title to Collateral; Perfected Security Interest. The Pledgor has
good and marketable title to the Substituted Collateral, free of all Liens
(other than the Lien created by the Collateral Agreement) and Transfer
Restrictions. Upon delivery of the Collateral to the Collateral Agent, the
Collateral Agent will obtain a valid, first priority perfected security
interest in, and a first lien upon, such Substituted Collateral subject to
no other Lien. None of such Substituted Collateral is or shall be pledged
by the Pledgor as collateral for any other purpose.
This Certificate may be relied upon by the Trust as fully and to the same
extent as if this Certificate had been specifically addressed to the Trust.
a-1
IN WITNESS WHEREOF, the undersigned has executed this Certificate this
_____ day of ______, 200_.
----------------------------------
Name:
Title:
Exhibit B
to
Collateral Agreement
CERTIFICATE FOR ADDITIONAL GOVERNMENT SECURITIES
The undersigned, __________________ (the "Pledgor"), hereby certifies,
pursuant to Section 6(c) of the Collateral Agreement, dated as of December 18,
2001, among the Pledgor, The Bank of New York, as Collateral Agent, and Equity
Securities Trust II (the "Collateral Agreement"; terms defined in the
Collateral Agreement being used herein as defined therein), that:
1. The Pledgor is delivering the following securities to the Collateral
Agent to be held by the Collateral Agent as Collateral deliverable in
connection with Pledgor's option to extend the Exchange Date in accordance with
Section 1.3(f) of the Forward Contract (the "Additional Government
Securities"):
2. The Pledgor hereby represents and warrants to the Collateral Agent
that:
(a) Consents to Transfer. No Transfer Restrictions exist with respect
to or otherwise apply to the assignment of, or transfer by the Pledgor of
possession of, any items of Additional Government Securities to the
Collateral Agent under the Collateral Agreement, or the subsequent sale or
transfer of such items of Additional Government Securities by the
Collateral Agent pursuant to the terms of the Collateral Agreement.
(b) Title to Collateral; Perfected Security Interest. The Pledgor has
good and marketable title to the Additional Government Securities, free of
all Liens (other than the Lien created by the Collateral Agreement) and
Transfer Restrictions. Upon delivery of the Collateral to the Collateral
Agent, the Collateral Agent will obtain a valid, first priority perfected
security interest in, and a first lien upon, such Additional Government
Securities subject to no other Lien. None of such Additional Government
Securities is or shall be pledged by the Pledgor as collateral for any
other purpose.
This Certificate may be relied upon by the Trust as fully and to the same
extent as if this Certificate had been specifically addressed to the Trust.
B-1
IN WITNESS WHEREOF, the undersigned has executed this Certificate this
_____ day of _____, 200_.
----------------------------------
Name:
Title:
Exhibit C
to
Collateral Agreement
CERTIFICATE FOR ADDITIONAL COLLATERAL
The undersigned, __________________ (the "Pledgor"), hereby certifies,
pursuant to Section 6(c) of the Collateral Agreement, dated as of December 18,
2001, among the Pledgor, The Bank of New York, as Collateral Agent, and Equity
Securities Trust II (the "Collateral Agreement"; terms defined in the
Collateral Agreement being used herein as defined therein), that:
1. The Pledgor is delivering the following securities to the Collateral
Agent to be held by the Collateral Agent as additional Collateral (the
"Additional Collateral"):
2. The Pledgor hereby represents and warrants to the Collateral Agent
that:
(a) Consents to Transfer. No Transfer Restrictions exist with respect
to or otherwise apply to the assignment of, or transfer by the Pledgor of
possession of, any items of Additional Collateral to the Collateral Agent
under the Collateral Agreement, or the subsequent sale or transfer of such
items of Additional Collateral by the Collateral Agent pursuant to the
terms of the Collateral Agreement.
(b) Title to Collateral; Perfected Security
Interest. The Pledgor has good and marketable title to the Additional
Collateral, free of all Liens (other than the Lien created by the
Collateral Agreement) and Transfer Restrictions. Upon delivery of the
Collateral to the Collateral Agent, the Collateral Agent will obtain a
valid, first priority perfected security interest in, and a first lien
upon, such additional Collateral subject to no other Lien. None of
such Additional Collateral is or shall be pledged by the Pledgor as
collateral for any other purpose.
This Certificate may be relied upon by the Trust as fully and
to the same extent as if this Certificate had been specifically addressed to
the Trust.
IN WITNESS WHEREOF, the undersigned has executed this Certificate this
_____ day of _____, 200_.
----------------------------------
Name:
Title:
C-2