Exhibit 4.5
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SOLUTIA INC.
AND
JPMORGAN CHASE BANK,
AS FORWARD PURCHASE CONTRACT AGENT
FORWARD PURCHASE CONTRACT AGREEMENT
DATED AS OF FEBRUARY , 2002
Table of Contents
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ARTICLE I. DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION............1
Section 1.1 Definitions........................................1
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Section 1.2 Compliance Certificates and Opinions..............13
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Section 1.3 Form of Documents Delivered to Agent..............14
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Section 1.4 Acts of Holders; Record Dates.....................14
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Section 1.5 Notices...........................................16
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Section 1.6 Notice to Holders; Waiver.........................17
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Section 1.7 Effect of Headings and Table of Contents..........17
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Section 1.8 Successors and Assigns............................17
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Section 1.9 Separability Clause...............................17
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Section 1.10 Benefits of Agreement.............................18
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Section 1.11 Governing Law.....................................18
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Section 1.12 Legal Holidays....................................18
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Section 1.13 Counterparts......................................18
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Section 1.14 Inspection of Agreement...........................18
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ARTICLE II. CERTIFICATE FORMS................................................19
Section 2.1 Forms of Certificates Generally...................19
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Section 2.2 Form of Agent's Certificate of Authentication.....20
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ARTICLE III. THE DECS........................................................20
Section 3.1 Title and Terms; Denominations....................20
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Section 3.2 Rights and Obligations Evidenced by the
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Certificates......................................20
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Section 3.3 Execution, Authentication, Delivery and Dating....21
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Section 3.4 Temporary Certificates............................22
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Section 3.5 Registration; Registration of Transfer and
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Exchange..........................................23
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Section 3.6 Book-Entry Interests..............................24
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Section 3.7 Notices To Holders................................25
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Section 3.8 Appointment of Successor Clearing Agency..........25
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Section 3.9 Definitive Certificates...........................25
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Section 3.10 Mutilated, Destroyed, Lost and Stolen
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Certificates......................................26
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Section 3.11 Persons Deemed Owners.............................27
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Section 3.12 Cancellation......................................27
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Section 3.13 Establishment of Stripped DECS....................28
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Section 3.14 Reestablishment of Upper DECS.....................30
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Section 3.15 Transfer of Collateral Upon Occurrence of
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Termination Event.................................31
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Section 3.16 No Consent to Assumption..........................32
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ARTICLE IV. THE NOTES........................................................32
Section 4.1 Payment of Interest; Rights to Interest Payments
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Preserved; Notice.................................32
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Section 4.2 Notice and Voting.................................33
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Section 4.3 Tax Event Redemption..............................34
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Table of Contents
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(continued)
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ARTICLE V. THE FORWARD PURCHASE CONTRACTS; THE REMARKETING...................35
Section 5.1 Purchase of Shares of Common Stock................35
Section 5.2 Payment of Purchase Price: Remarketing...........37
Section 5.3 Issuance of Shares of Common Stock................42
Section 5.4 Adjustment of Settlement Rate.....................42
Section 5.5 Notice of Adjustments and Certain Other Events....50
Section 5.6 Termination Event; Notice.........................51
Section 5.7 Early Settlement..................................51
Section 5.8 Early Settlement Upon Merger......................52
Section 5.9 Charges and Taxes.................................54
Section 5.10 No Fractional Shares..............................55
ARTICLE VI. REMEDIES.........................................................55
Section 6.1 Unconditional Right of Holders to Purchase
Common Stock......................................55
Section 6.2 Restoration of Rights and Remedies................55
Section 6.3 Rights and Remedies Cumulative....................55
Section 6.4 Delay or Omission Not Waiver......................56
Section 6.5 Undertaking For Costs.............................56
Section 6.6 Waiver of Stay or Extension Laws..................56
ARTICLE VII. THE AGENT.......................................................57
Section 7.1 Certain Duties, Rights and Immunities.............57
Section 7.2 Notice of Default.................................59
Section 7.3 Certain Rights of Agent...........................59
Section 7.4 Not Responsible For Recitals, Etc.................60
Section 7.5 May Hold DECS and Other Dealings..................60
Section 7.6 Money Held In Custody.............................60
Section 7.7 Compensation and Reimbursement....................61
Section 7.8 Corporate Agent Required; Eligibility.............61
Section 7.9 Resignation and Removal; Appointment of Successor.62
Section 7.10 Acceptance of Appointment By Successor............63
Section 7.11 Merger, Conversion, Consolidation or Succession
to Business.......................................63
Section 7.12 Preservation of Information; Communications to
Holders...........................................64
Section 7.13 Failure to Act....................................64
Section 7.14 No Obligations of Agent...........................65
Section 7.15 Tax Compliance....................................65
ARTICLE VIII. SUPPLEMENTAL AGREEMENTS........................................66
Section 8.1 Supplemental Agreements Without Consent of
Holders...........................................66
Section 8.2 Supplemental Agreements With Consent of Holders...66
Section 8.3 Execution of Supplemental Agreements..............67
Section 8.4 Effect of Supplemental Agreements.................68
Section 8.5 Reference to Supplemental Agreements..............68
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Table of Contents
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(continued)
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ARTICLE IX. CONSOLIDATION, MERGER, SALE OR CONVEYANCE........................68
Section 9.1 Company May Consolidate, Etc., Only on Certain
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Terms.............................................68
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Section 9.2 Successor Substituted.............................69
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ARTICLE X. COVENANTS.........................................................69
Section 10.1 Performance Under Purchase Contracts..............69
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Section 10.2 Maintenance of Office or Agency...................69
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Section 10.3 Company to Reserve Common Stock...................70
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Section 10.4 Covenants as to Common Stock......................70
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Section 10.5 Statements of Officer of the Company as to
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Default...........................................70
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FORWARD PURCHASE CONTRACT AGREEMENT, dated as of February , 2002,
between Solutia Inc., a Delaware corporation (the "Company"), and JPMorgan
Chase Bank, a New York banking corporation, acting as Forward Purchase
Contract Agent for the Holders of DECS from time to time (the "Agent").
RECITALS
The Company has duly authorized the execution and delivery of this
Agreement and the Certificates evidencing the DECS.
All things necessary to make the Forward Purchase Contracts, when
the Certificates are executed by the Company and authenticated, executed on
behalf of the Holders and delivered by the Agent, as provided in this
Agreement, the valid obligations of the Company, and to constitute this
Agreement a valid agreement of the Company, in accordance with its terms,
have been done.
For and in consideration of the premises and the purchase of the
DECS by the Holders thereof, the Company and the Agent mutually agree as
follows:
ARTICLE I.
DEFINITIONS AND OTHER PROVISIONS
OF GENERAL APPLICATION
Section 1.1 Definitions.
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For all purposes of this Agreement, except as otherwise expressly
provided or unless the context otherwise requires:
(a) the terms defined in this Article have the meanings
assigned to them in this Article and include the plural as well as the
singular, and nouns and pronouns of the masculine gender include
the feminine and neuter genders;
(b) all accounting terms not otherwise defined herein have
the meanings assigned to them in accordance with generally accepted
accounting principles in the United States;
(c) the words "herein," "hereof" and "hereunder" and other
words of similar import refer to this Agreement as a whole and not
to any particular Article, Section or other subdivision; and
(d) the following terms have the meanings given to them in
this Section 1.1(d):
"Act" when used with respect to any Holder, has the meaning
specified in Section 1.4.
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"Affiliate" has the same meaning as given to that term in Rule 405
under the Securities Act or any successor rule thereunder.
"Agent" means the Person named as the "Agent" in the first
paragraph of this instrument until a successor Agent shall have become such
pursuant to the applicable provisions of this Agreement, and thereafter
"Agent" shall mean such Person.
"Agent-purchased Treasury Consideration" has the meaning specified
in Section 5.2(b)(i).
"Agreement" means this instrument as originally executed or as it
may from time to time be supplemented or amended by one or more agreements
supplemental hereto entered into pursuant to the applicable provisions
hereof.
"Applicable Market Value" has the meaning specified in Section
5.1(c).
"Applicable Ownership Interest" means, with respect to an Upper
DECS and the Treasury Securities in the Treasury Portfolio, (A) a 1/40, or
2.5%, undivided beneficial ownership interest in a $1,000 principal or
interest amount of a principal or interest strip in a U.S. Treasury security
included in such Treasury Portfolio which matures on or prior to , 2005 and
(B) for the scheduled interest Payment Date on the Notes that occurs on the
Stock Purchase Date, in the case of a successful remarketing, or for each
scheduled interest Payment Date on the Notes that occurs after the Tax Event
Redemption Date and on or before the Stock Purchase Date, in the case of a
Tax Event Redemption, a 2.5% undivided beneficial ownership interest in a
$1,000 principal or interest amount of a principal or interest strip in a
U.S. Treasury security included in the Treasury Portfolio that matures on or
prior to that interest Payment Date or Dates.
"Applicants" has the meaning specified in Section 7.12(b).
"Bankruptcy Code" means Title 11 of the United States Code, or any
other law of the United States that from time to time provides a uniform
system of bankruptcy laws.
"Beneficial Owner" means, with respect to a Book-Entry Interest, a
Person who is the beneficial owner of such Book-Entry Interest as reflected
on the books of the Clearing Agency or on the books of a Person maintaining
an account with such Clearing Agency (directly as a Clearing Agency
Participant or as an indirect participant, in each case in accordance with
the rules of such Clearing Agency).
"Board of Directors" means either the Board of Directors of the
Company or the Securities Issuance Committee of such Board or any other
committee of such Board duly authorized to act generally or in any
particular respect for such Board hereunder.
"Board Resolution" means (i) a copy of a resolution certified by
the Secretary or an Assistant Secretary of the Company to have been duly
adopted by the Board of Directors and to be in full force and effect on the
date of such certification, (ii) a copy of a unanimous
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written consent of the Board of Directors or (iii) a certificate signed by
the authorized officer or officers to whom the Board of Directors has
delegated its authority, and in each case, delivered to the Agent.
"Book-Entry Interest" means a beneficial interest in a Global
Certificate, ownership and transfers of which shall be maintained and made
through book entries by a Clearing Agency as described in Section 3.6.
"Business Day" means any day other than a Saturday, Sunday or any
other day on which banking institutions and trust companies in the State of
New York or at a place of payment are authorized or required by law,
regulation or executive order to be closed.
"Capital Stock" means any and all shares, interests, rights to
purchase, warrants, options, participations or other equivalents of or
interests in (however designated, whether voting or non-voting) corporate
stock or similar interests in other types of entities.
"Cash Merger" has the meaning specified in Section 5.8(a).
"Cash Settlement" has the meaning specified in Section 5.2(a).
"Certificate" means an Upper DECS Certificate or a Stripped DECS
Certificate.
"Clearing Agency" means an organization registered as a "Clearing
Agency" pursuant to Section 17A of the Exchange Act that is acting as a
depositary for the DECS and in whose name, or in the name of a nominee of
that organization, shall be registered a Global Certificate and which shall
undertake to effect book-entry transfers and pledges of the DECS.
"Clearing Agency Participant" means a broker, dealer, bank, other
financial institution or other Person for whom from time to time the
Clearing Agency effects book-entry transfers and pledges of securities
deposited with the Clearing Agency.
"Closing Price" has the meaning specified in Section 5.1(c).
"Collateral" has the meaning specified in Section 2.1(a) of the
Pledge Agreement.
"Collateral Agent" means Wachovia Bank, N.A., as Collateral Agent
under the Pledge Agreement until a successor Collateral Agent shall have
become such pursuant to the applicable provisions of the Pledge Agreement,
and thereafter "Collateral Agent" shall mean the Person who is then the
Collateral Agent thereunder.
"Collateral Substitution" has the meaning specified in Section
3.13(a).
"Common Stock" means the common stock, par value $0.01 per share,
of the Company.
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"Company" means the Person named as the "Company" in the first
paragraph of this instrument until a successor shall have become such
pursuant to the applicable provisions of this Agreement, and thereafter
"Company" shall mean such successor.
"Constituent Person" has the meaning specified in Section 5.4(b).
"Corporate Trust Office" means the office of the Agent at which, at
any particular time, its corporate trust business shall be principally
administered, which office at the date hereof is located at ▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇.
"Coupon Rate" means the percentage rate per annum at which each
Note will bear interest initially.
"Current Market Price" has the meaning specified in Section
5.4(a)(8).
"Custodial Agent" means Wachovia Bank, N.A., as Custodial Agent
under the Pledge Agreement until a successor Custodial Agent shall have
become such pursuant to the applicable provisions of the Pledge Agreement,
and thereafter "Custodial Agent" shall mean the Person who is then the
Custodial Agent thereunder.
"DECS" means an Upper DECS or a Stripped DECS.
"Depositary" means, initially, DTC, until another Clearing Agency
becomes its successor, and thereafter "Depositary" shall mean such
successor.
"DTC" means The Depository Trust Company, the initial Clearing Agency.
"Early Settlement" has the meaning specified in Section 5.7(a).
"Early Settlement Amount" has the meaning specified in Section
5.7(a).
"Early Settlement Date" has the meaning specified in Section
5.7(a).
"Early Settlement Rate" has the meaning specified in Section
5.7(b).
"Exchange Act" means the Securities Exchange Act of 1934 and any
statute successor thereto, in each case as amended from time to time, and
the rules and regulations promulgated thereunder.
"Expiration Date" has the meaning specified in Section 1.4(f).
"Expiration Time" has the meaning specified in Section 5.4(a)(6).
"Failed Remarketing" has the meaning specified in Section
5.2(b)(ii).
"Fair Market Value" with respect to securities distributed in a
Spin-Off means (a) in the case of any Spin-Off that is effected
simultaneously with an Initial Public Offering of
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such securities, the Initial Public Offering price of those securities, and
(b) in the case of any other Spin-Off, the average of the Sale Prices of
those securities over the first 10 Trading Days after the effective date of
such Spin-Off.
"Forward Purchase Contract," when used with respect to any DECS,
means the contract forming a part of such DECS and obligating the Company to
sell and the Holder of such DECS to purchase Common Stock on the terms and
subject to the conditions set forth in Article Five.
"Forward Purchase Contract Settlement Fund" has the meaning
specified in Section 5.3.
"Global Certificate" means a Certificate that evidences all or part
of the DECS and is registered in the name of a Depositary or a nominee
thereof.
"Holder" means the Person in whose name the DECS evidenced by an
Upper DECS Certificate or a Stripped DECS Certificate is registered in the
Upper DECS Register or the Stripped DECS Register, as the case may be.
"Indenture" means the Indenture, dated as of February , 2002,
between the Company and the Trustee as supplemented by any officers'
certificate or supplemental indenture.
"Initial Public Offering," with respect to any Spin-Off, means the
first time securities of the same class or type as the securities being
distributed in the Spin-Off are bona fide offered to the public for cash.
"Issuer Order" or "Issuer Request" means a written order or request
signed in the name of the Company by the Chief Executive Officer, the Chief
Financial Officer, the President, any Vice-President, the Treasurer, any
Assistant Treasurer, the Secretary or any Assistant Secretary (or other
officer performing similar functions) of the Company and delivered to the
Agent.
"Last Failed Remarketing" has the meaning specified in Section
5.2(b)(ii).
"Merger Early Settlement" has the meaning specified in Section
5.8(a).
"Merger Early Settlement Amount" has the meaning specified in
Section 5.8(b).
"Merger Early Settlement Date" has the meaning specified in Section
5.8(a)(i).
"Non-electing Share" has the meaning specified in Section 5.4(b).
"Notes" means the series of senior debt securities of the Company
designated the % Senior Notes due 2007, to be issued under the Indenture.
"NYSE" has the meaning specified in Section 5.1(c).
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"Officer's Certificate" means a certificate signed by the Chief
Executive Officer, the Chief Financial Officer, the President, any
Vice-President, the Treasurer, any Assistant Treasurer, the Secretary or any
Assistant Secretary (or other officer performing similar functions) of the
Company and delivered to the Agent.
"Opinion of Counsel" means an opinion in writing signed by legal
counsel, who may be an employee of or counsel to the Company or an Affiliate
of the Company and who shall be reasonably acceptable to the Agent.
"Opt-out Treasury Consideration" has the meaning specified in
Section 5.2(b)(iv).
"Outstanding DECS" means, as of the date of determination, all
Upper DECS or Stripped DECS evidenced by Certificates theretofore
authenticated, executed and delivered under this Agreement, except:
(i) If a Termination Event has occurred, (A) Stripped
DECS and (B) Upper DECS for which the related Note or the
appropriate Treasury Consideration or Applicable Ownership
Interest in the Treasury Portfolio, as the case may be,
has been theretofore deposited with the Agent in trust for
the Holders of such Upper DECS;
(ii) Upper DECS and Stripped DECS evidenced by
Certificates theretofore cancelled by the Agent or delivered
to the Agent for cancellation or deemed cancelled pursuant
to the provisions of this Agreement; and
(iii) Upper DECS and Stripped DECS evidenced by
Certificates in exchange for or in lieu of which other
Certificates have been authenticated, executed on behalf of
the Holder and delivered pursuant to this Agreement, other
than any such Certificate in respect of which there shall
have been presented to the Agent proof satisfactory to it
that such Certificate is held by a bona fide purchaser in
whose hands the Upper DECS or Stripped DECS evidenced by such
Certificate are valid obligations of the Company;
provided, that in determining whether the Holders of the requisite number of
the Upper DECS or Stripped DECS have given any request, demand,
authorization, direction, notice, consent or waiver hereunder, Upper DECS or
Stripped DECS owned by the Company or any Affiliate of the Company shall be
disregarded and deemed not to be outstanding, except that, in determining
whether the Agent shall be protected in relying upon any such request,
demand, authorization, direction, notice, consent or waiver, only Upper DECS
or Stripped DECS which a Responsible Officer of the Agent knows to be so
owned shall be so disregarded. Upper DECS or Stripped DECS so owned which
have been pledged in good faith may be regarded as Outstanding DECS if the
pledgee establishes to the satisfaction of the Agent the pledgee's right so
to act with respect to such Upper DECS or Stripped DECS and that the pledgee
is not the Company or any Affiliate of the Company.
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"Payment Date" means each , , and , commencing , 2002.
"Person" means any individual, corporation, limited liability
company, partnership, joint venture, association, joint-stock company,
trust, unincorporated organization or government or any agency or political
subdivision thereof.
"Pledge" means the pledge under the Pledge Agreement of the Notes,
the Treasury Securities or the appropriate Treasury Consideration or
Applicable Ownership Interest in the Treasury Portfolio, in each case
constituting a part of the DECS, property, cash, securities, financial
assets and security entitlements of the Collateral Account (as defined in
Section 1.1 of the Pledge Agreement) and any proceeds of any of the
foregoing.
"Pledge Agreement" means the Pledge Agreement, dated as of the date
hereof, by and among the Company, the Collateral Agent, the Custodial Agent,
the Securities Intermediary and the Agent, on its own behalf and as
attorney-in-fact for the Holders from time to time of the DECS.
"Pledged Applicable Ownership Interest in the Treasury Portfolio"
has the meaning specified in Section 2.1(c) of the Pledge Agreement.
"Pledged Notes" has the meaning specified in Section 2.1(c) of the
Pledge Agreement.
"Pledged Treasury Consideration" has the meaning specified in
Section 2.1(c) of the Pledge Agreement.
"Pledged Treasury Securities" has the meaning specified in Section
2.1(c) of the Pledge Agreement.
"Predecessor Certificate" means a Predecessor Upper DECS
Certificate or a Predecessor Stripped DECS Certificate.
"Predecessor Stripped DECS Certificate" of any particular Stripped
DECS Certificate means every previous Stripped DECS Certificate evidencing
all or a portion of the rights and obligations of the Company and the Holder
under the Stripped DECS evidenced thereby; and, for the purposes of this
definition, any Stripped DECS Certificate authenticated and delivered under
Section 3.10 in exchange for or in lieu of a mutilated, destroyed, lost or
stolen Stripped DECS Certificate shall be deemed to evidence the same rights
and obligations of the Company and the Holder as the mutilated, destroyed,
lost or stolen Stripped DECS Certificate.
"Predecessor Upper DECS Certificate" of any particular Upper DECS
Certificate means every previous Upper DECS Certificate evidencing all or a
portion of the rights and obligations of the Company and the Holder under
the Upper DECS evidenced thereby; and, for the purposes of this definition,
any Upper DECS Certificate authenticated and delivered under Section 3.10 in
exchange for or in lieu of a mutilated, destroyed, lost or
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stolen Upper DECS Certificate shall be deemed to evidence the same rights
and obligations of the Company and the Holder as the mutilated, destroyed,
lost or stolen Upper DECS Certificate.
"Purchase Price" has the meaning specified in Section 5.1(a).
"Purchased Shares" has the meaning specified in Section 5.4(a)(6).
"Quotation Agent" means ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ Inc. or its successor or
any other primary U.S. government securities dealer in New York City
selected by the Company.
"Record Date" for the distribution payable on any Payment Date
means, as to any Global Certificate, the Business Day next preceding such
Payment Date, and as to any other Certificate, the 15th day preceding such
Payment Date.
"Redemption Amount" means, in the case of a Tax Event Redemption
occurring prior to a successful remarketing of the Notes, for each Note the
product of (i) the principal amount of such Note and (ii) a fraction whose
numerator is the applicable Treasury Portfolio Purchase Price and whose
denominator is the aggregate principal amount of Notes outstanding on the
Tax Event Redemption Date, and in the case of a Tax Event Redemption
occurring after a successful remarketing of the Notes, for each Note the
Stated Amount of the Note.
"Redemption Price" means the redemption price per Note equal to the
Redemption Amount plus any accrued and unpaid interest on such Note to the
date of redemption.
"Register" means the Upper DECS Register and the Stripped DECS
Register, as applicable.
"Registrar" means the Upper DECS Registrar and the Stripped DECS
Registrar, as applicable.
"Remarketing Agent" has the meaning specified in Section 5.2(b)(i).
"Remarketing Agreement" means the Remarketing Agreement to be
entered into by and among the Company, the Remarketing Agent and the Agent.
"Remarketing Date" means the third business day preceding , 2004.
"Remarketing Fee" has the meaning specified in Section 5.2(b)(i).
"Remarketing Period" means the three Business Day period either (i)
beginning on the Remarketing Date and ending after the two immediately
following Business Days; (ii) immediately preceding ; or (iii) immediately
preceding , 2005.
"Remarketing Value" means the sum of
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(i) the value at the Remarketing Date or any Subsequent
Remarketing Date, as the case may be, of U.S. Treasury
securities that will pay, on or prior to the Payment Date
falling on the Stock Purchase Date, an amount of cash equal
to the aggregate interest payments that are scheduled to be
payable on that Payment Date, on (a) the Notes which are
included in Upper DECS and are participating in the
remarketing and (b) the Separate Notes which are to be
remarketed pursuant to Section 4.5(d) of the Pledge
Agreement, assuming for that purpose that the interest rate
on the Notes is equal to the Coupon Rate, and
(ii) the value at the Remarketing Date or any Subsequent
Remarketing Date, as the case may be, of U.S. Treasury
securities that will pay, on or prior to the Stock
Purchase Date, an amount of cash equal to the Stated
Amount (a) of such Notes that are included in Upper DECS
and are participating in the remarketing and (b) the
Separate Notes which are to be remarketed pursuant to
Section 4.5(d) of the Pledge Agreement,
provided that for purposes of clauses (i) and (ii) above,
the Remarketing Value shall be calculated on the
assumptions that (x) the U.S. Treasury securities are
highly liquid and mature on or within 35 days prior to the
Stock Purchase Date, as determined in good faith by the
Remarketing Agent in a manner intended to minimize the
cash value of the U.S. Treasury securities, and (y) the
U.S. Treasury securities are valued based on the ask-side
price of the U.S. Treasury securities at a time between
9:00 a.m. and 11:00 a.m., New York City time, selected by
the Remarketing Agent, on the Remarketing Date or any
Subsequent Remarketing Date, as the case may be, as
determined on a third-day settlement basis by a reasonable
and customary means selected in good faith by the
Remarketing Agent, plus accrued interest to that date.
"Reorganization Event" has the meaning specified in Section 5.4(b).
"Responsible Officer" means, when used with respect to the Agent,
any officer within the corporate trust department of the Agent (or any
successor of the Agent), including any Vice-President, any assistant
Vice-President, any assistant secretary, the treasurer, any assistant
treasurer, any trust officer, any senior trust officer or any other officer
of the Agent who customarily performs functions similar to those performed
by the Persons who at the time shall be such officers, respectively, or to
whom any corporate trust matter is referred because of such Person's
knowledge of and familiarity with the particular subject and who, in each of
the above cases, shall have direct responsibility for the administration of
this Agreement.
"Sale Price" of the Common Stock or any securities distributed in a
Spin-Off, as the case may be, on any Trading Day means the closing sale
price per share (or if no closing sale price is reported, the average of the
bid and asked prices or, if more than one in either
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case, the average of the average bid and the average asked prices) on such
Trading Day as reported in composite transactions for the principal U.S.
securities exchange on which the Common Stock or such securities are traded
or, if the Common Stock or such securities are not listed on a U.S. national
or regional securities exchange, as reported by Nasdaq.
"Securities Act" means the Securities Act of 1933, as amended.
"Securities Intermediary" means Wachovia Bank, N.A., in its capacity
as Securities Intermediary under the Pledge Agreement, together with its
successors in such capacity.
"Separate Notes" has the meaning specified in Section 1.1 of the
Pledge Agreement.
"Settlement Date" means any Early Settlement Date or Merger Early
Settlement Date or the Stock Purchase Date.
"Settlement Rate" has the meaning specified in Section 5.1(a).
"Spin-Off" means a dividend or other distribution of shares of
Capital Stock of any class or series, or similar equity interests, of or
relating to a subsidiary or other business unit of the Company.
"Stated Amount" means, with respect to any one Note, Upper DECS or
Stripped DECS, $25.
"Stock Purchase Date" means , 2005.
"Stripped DECS" means the collective rights and obligations of a
holder of a Stripped DECS Certificate in respect of a 1/40 undivided
beneficial interest in a Treasury Security, subject in each case to the
Pledge thereof, and the related Forward Purchase Contract.
"Stripped DECS Certificate" means a certificate evidencing the
rights and obligations of a Holder in respect of the number of Stripped DECS
specified on such certificate, substantially in the form of Exhibit B
hereto.
"Stripped DECS Register" and "Stripped DECS Registrar" have the
respective meanings specified in Section 3.5(a).
"Subsequent Remarketing Date" means, provided there has been one or
more Failed Remarketings, the date on which the Remarketing Agent has
consummated a successful remarketing in accordance with Section 5.2 hereof,
such date to be no later than the Business Day immediately preceding the
Stock Purchase Date.
"Tax Event" means the receipt by the Company of an opinion of a
nationally recognized tax counsel experienced in such matters, which may be
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP, to the effect that there is more than an
insubstantial risk that interest payable by the
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Company on the Notes on the next Payment Date would not be deductible, in
whole or in part, by the Company for United States federal income tax
purposes, as a result of (a) any amendment to, or change (including any
announced proposed change) in, the laws (or any regulations thereunder) of
the United States or any political subdivision or taxing authority thereof
or therein affecting taxation, (b) any amendment to or change in an official
interpretation or application of such laws or regulations by any legislative
body, court, governmental agency or regulatory authority or (c) any official
interpretation or pronouncement that provides for a position with respect to
such laws or regulations that differs from the generally accepted position
on February , 2002, which amendment, change or proposed change is effective
or which interpretation or pronouncement is announced on or after February ,
2002.
"Tax Event Redemption" means, if a Tax Event shall occur and be
continuing, the redemption of the Notes, at the option of the Company, in
whole but not in part, on not less than 30 days' nor more than 60 days'
written notice.
"Tax Event Redemption Date" means the date upon which a Tax Event
Redemption is to occur.
"Tax Event Redemption Principal Amount" means in the case of a Tax
Event Redemption occurring prior to a successful remarketing of the Notes,
for each Note the product of the principal amount of the Note and a fraction
whose numerator is the Treasury Portfolio Purchase Price and whose
denominator is the aggregate principal amount of Notes outstanding on the
Tax Event Redemption Date, and in the case of a Tax Event Redemption Date
occurring after a successful remarketing of the Notes, the Stated Amount of
the Notes.
"Termination Date" means the date, if any, on which a Termination
Event occurs.
"Termination Event" means the occurrence of any of the following
events:
(i) at any time on or prior to the Stock Purchase Date,
a judgment, decree or court order shall have been entered
granting relief under the Bankruptcy Code or any other
similar Federal or state law, adjudicating the Company to
be insolvent, or approving as properly filed a petition
seeking reorganization or liquidation of the Company, and,
unless such judgment, decree or order shall have been
entered within 60 days prior to the Stock Purchase Date,
such decree or order shall have continued undischarged and
unstayed for a period of 60 days;
(iv) at any time on or prior to the Stock Purchase Date,
a judgment, decree or court order for the appointment of a
receiver or liquidator or trustee or assignee in
bankruptcy or insolvency of the Company or of its
property, or for the winding up or liquidation of its
affairs, shall have been entered, and, unless such
judgment, decree or order shall have been entered within
60 days prior to the Stock Purchase Date,
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such judgment, decree or order shall have continued
undischarged and unstayed for a period of 60 days; or
(v) at any time on or prior to the Stock Purchase Date
the Company shall file a petition for relief under the
Bankruptcy Code or any other similar federal or state law,
or shall consent to the filing of a bankruptcy proceeding
against it, or shall file a petition or answer or consent
seeking reorganization or liquidation under the Bankruptcy
Code or any other similar federal or state law, or shall
consent to the filing of any such petition, or shall consent
to the appointment of a receiver or liquidator or trustee
or assignee in bankruptcy or insolvency of it or of its
property, or shall make an assignment for the benefit of
creditors, or shall admit in writing its inability to pay
its debts generally as they become due.
"Threshold Appreciation Price" has the meaning specified in Section
5.1(a)(i).
"TIA" means the Trust Indenture Act of 1939, as amended.
"Trading Day" has the meaning specified in Section 5.1(c).
"Transaction Documents" has the meaning specified in Section 7.1(a).
"Treasury Consideration" means the Agent-purchased Treasury
Consideration or the Opt-out Treasury Consideration.
"Treasury Portfolio" means: (i) if a Tax Event Redemption occurs
prior to a successful remarketing of the Notes, a portfolio of principal or
interest strips of U.S. Treasury Securities that mature on or prior to the
Stock Purchase Date in an aggregate amount equal to the aggregate principal
amount of the Notes included in the Upper DECS on the Tax Event Redemption
Date and with respect to each scheduled interest Payment Date on the Notes
that occurs after the Tax Event Redemption Date and on or before the Stock
Purchase Date, interest or principal strips of U.S. Treasury Securities that
mature on or prior to such interest Payment Date in an aggregate amount
equal to the aggregate interest payment that would be due on the aggregate
principal amount of the Notes on such date if the interest rate of the Notes
were not reset on the applicable Remarketing Date, and (ii) solely for
purposes of determining the Treasury Portfolio Purchase Price in the case of
a Tax Event Redemption Date occurring prior to a successful remarketing of
the Notes, a portfolio of U.S. Treasury Securities consisting of principal
or interest strips of U.S. Treasury Securities that mature on or prior to
the Stock Purchase Date in an aggregate amount equal to the aggregate
principal amount of the Notes outstanding on the Tax Event Redemption Date
and with respect to each scheduled interest Payment Date on the Notes that
occurs after the Tax Event Redemption Date and on or before the Stock
Purchase Date, interest or principal strips of U.S. Treasury Securities that
mature on or prior to such interest Payment Date in an aggregate amount
equal to the aggregate interest payment that would be due on the aggregate
principal amount of the Notes outstanding on the Tax Event Redemption Date.
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"Treasury Portfolio Purchase Price" means the lowest aggregate
price quoted by a primary U.S. government securities dealer in New York City
to the Quotation Agent on the third Business Day immediately preceding the
Tax Event Redemption Date for the purchase of the Treasury Portfolio for
settlement on the Tax Event Redemption Date.
"Treasury Security" means a zero-coupon U.S. Treasury security
(CUSIP Number ) maturing on the Stock Purchase Date that will pay $1,000 on
such maturity date.
"Trustee" means JPMorgan Chase Bank, a New York banking
corporation, as trustee under the Indenture, or any successor thereto.
"Underwriting Agreement" means the Underwriting Agreement relating
to the DECS dated , 2002 among the Company and the underwriters named
therein.
"Upper DECS" means the collective rights and obligations of a
Holder of an Upper DECS Certificate in respect of a Note or the appropriate
Treasury Consideration or Applicable Ownership Interest in the Treasury
Portfolio, as the case may be, subject in each case to the Pledge thereof,
and the related Forward Purchase Contract.
"Upper DECS Certificate" means a certificate evidencing the rights
and obligations of a Holder in respect of the number of Upper DECS specified
on such certificate, substantially in the form of Exhibit A hereto.
"Upper DECS Register" and "Upper DECS Registrar" have the
respective meanings specified in Section 3.5(a).
"Vice-President" means any vice-president, whether or not
designated by a number or a word or words added before or after the title
"vice-president."
Section 1.2 Compliance Certificates and Opinions.
------------------------------------
Except as otherwise expressly provided by this Agreement, upon any
application or request by the Company to the Agent to take any action under
any provision of this Agreement, the Company shall furnish to the Agent an
Officer's Certificate stating that all conditions precedent, if any,
provided for in this Agreement relating to the proposed action have been
complied with and, if requested by the Agent, an Opinion of Counsel stating
that, in the opinion of such counsel, all such conditions precedent, if any,
have been complied with, except that in the case of any such application or
request as to which the furnishing of such documents is specifically
required by any provision of this Agreement relating to such particular
application or request, no additional certificate or opinion need be
furnished.
Every certificate or opinion with respect to compliance with a
condition or covenant provided for in this Agreement (other than the
Officer's Certificate provided for in Section 10.5) shall include:
-13-
(a) a statement that the individual signing such certificate or
opinion has read such covenant or condition and the definitions herein
relating thereto;
(b) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions
contained in such certificate or opinion are based;
(c) a statement that, in the opinion of such individual, he or
she has made such examination or investigation as is necessary to
enable such individual to express an informed opinion as to whether
or not such covenant or condition has been complied with; and
(d) a statement as to whether, in the opinion of such individual,
such condition or covenant has been complied with.
Section 1.3 Form of Documents Delivered to Agent.
------------------------------------
(a) In any case where several matters are required to be
certified by, or covered by an opinion of, any specified Person, it is
not necessary that all such matters be certified by, or covered by the
opinion of, only one such Person, or that they be so certified or
covered by only one document, but one such Person may certify or
give an opinion with respect to some matters and one or more other
such Persons as to other matters, and any such Person may certify
or give an opinion as to such matters in one or several documents.
(b) Any certificate or opinion of an officer of the Company may
be based, insofar as it relates to legal matters, upon a certificate or
opinion of, or representations by, counsel, unless such officer knows,
or in the exercise of reasonable care should know, that the certificate
or opinion or representations with respect to the matters upon which
his certificate or opinion is based are erroneous. Any such certificate
or Opinion of Counsel may be based, insofar as it relates to factual
matters, upon a certificate or opinion of, or representations by, an
officer or officers of the Company stating that the information with
respect to such factual matters is in the possession of the Company
unless such counsel knows, or in the exercise of reasonable care should
know, that the certificate or opinion or representations with respect
to such matters are erroneous.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or
other instruments under this Agreement, they may, but need not, be
consolidated and form one instrument.
Section 1.4 Acts of Holders; Record Dates.
-----------------------------
(a) Any request,demand, authorization, direction, notice, consent,
waiver or other action provided by this Agreement to be given or taken
by Holders may be embodied in and evidenced by one or more instruments
of substantially
-14-
similar tenor signed by such Holders in person or by an agent
of such Holders duly appointed in writing; and, except as
herein otherwise expressly provided, such action shall become
effective when such instrument or instruments are delivered to the
Agent and, where it is hereby expressly required, to the Company.
Such instrument or instruments (and the action embodied therein and
evidenced thereby) are herein sometimes referred to as the "Act" of
the Holders signing such instrument or instruments. Proof of
execution of any such instrument or of a writing appointing any such
agent shall be sufficient for any purpose of this Agreement and
(subject to Section 7.1) conclusive in favor of the Agent and the
Company, if made in the manner provided in this Section.
(b) The fact and date of the execution by any Person of any such
instrument or writing may be proved in any manner which the Agent
deems sufficient.
(c) The ownership of DECS shall be proved by the Upper DECS
Register or the Stripped DECS Register, as the case may be.
(d) Any request, demand, authorization, direction, notice,
consent, waiver or other Act of the Holder of any Certificate shall
bind every future Holder of the same Certificate and the Holder of
every Certificate issued upon the registration of transfer thereof or
in exchange therefor or in lieu thereof in respect of anything done,
omitted or suffered to be done by the Agent or the Company in
reliance thereon, whether or not notation of such action is made
upon such Certificate.
(e) The Company may set any day as a record date for the purpose
of determining the Holders of Outstanding DECS entitled to give, make
or take any request, demand, authorization, direction, notice, consent,
waiver or other action provided or permitted by this Agreement to be
given, made or taken by Holders of DECS. If any record date is set
pursuant to this paragraph, the Holders of the Outstanding Upper DECS
and the Outstanding Stripped DECS, as the case may be, on such record
date, and no other Holders, shall be entitled to take the relevant
action with respect to the Upper DECS or the Stripped DECS, as the
case may be, whether or not such Holders remain Holders after such
record date; provided that no such action shall be effective hereunder
unless taken on or prior to the applicable Expiration Date by Holders
of the requisite number of Outstanding DECS on such record date.
Nothing in this paragraph shall be construed to prevent the Company
from setting a new record date for any action for which a record date
has previously been set pursuant to this paragraph (whereupon the
record date previously set shall automatically and with no action by
any Person be cancelled and of no effect), and nothing in this
paragraph shall be construed to render ineffective any action taken
by Holders of the requisite number of Outstanding DECS on the date
such action is taken. Promptly after any record date is set pursuant
to this paragraph, the Company, at its own expense, shall cause
notice of such record date, the proposed
-15-
action by Holders and the applicable Expiration Date to be given to
the Agent in writing and to each Holder of DECS in the manner set
forth in Section 1.6.
(f) With respect to any record date set pursuant to this
Section, the Company may designate any date as the "Expiration Date"
and from time to time may change the Expiration Date to any earlier
or later day; provided that no such change shall be effective unless
notice of the proposed new Expiration Date is given to the Agent in
writing, and to each Holder of DECS in the manner set forth in Section
1.6, on or prior to the existing Expiration Date. If an Expiration Date
is not designated with respect to any record date set pursuant to this
Section, the Company shall be deemed to have initially designated the
180th day after such record date as the Expiration Date with respect
thereto, subject to its right to change the Expiration Date as provided
in this paragraph. Notwithstanding the foregoing, no Expiration Date
shall be later than the 180th day after the applicable record date.
Section 1.5 Notices.
-------
Any request, demand, authorization, direction, notice, consent,
waiver or Act of Holders or other document provided or permitted by this
Agreement to be made upon, given or furnished to, or filed with:
(a) the Agent by any Holder or by the Company shall be sufficient
for every purpose hereunder (unless otherwise herein expressly
provided) if made, given, furnished or filed in writing and
personally delivered, mailed, first-class postage prepaid,
telecopied or delivered by overnight air courier guaranteeing next
day delivery, to the Agent at ▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇
▇▇▇▇ ▇▇▇▇▇, Attention: Institutional Trust Services, telecopy:
▇▇▇-▇▇▇-▇▇▇▇, or at any other address furnished in writing by the
Agent to the Holders and the Company; or
(b) the Company by the Agent or by any Holder shall be sufficient
for every purpose hereunder (unless otherwise herein expressly
provided) if made, given, furnished or filed in writing and personally
delivered, mailed, first-class postage prepaid, telecopied or
delivered by overnight air courier guaranteeing next day delivery,
to the Company at Solutia Inc., ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Drive,
▇.▇. ▇▇▇ ▇▇▇▇▇, ▇▇. ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇ (if by courier,
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇. ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ 63141), telecopy
number: ▇▇▇-▇▇▇-▇▇▇▇, Attention: Secretary, with a copy to the General
Counsel, or at any other address furnished in writing to the Agent and
the Holders by the Company; or
(c) the Collateral Agent by the Agent, the Company or any Holder
shall be sufficient for every purpose hereunder (unless otherwise
herein expressly provided) if made, given, furnished or filed in
writing and personally delivered, mailed, first-class postage prepaid,
telecopied or delivered by overnight air courier guaranteeing next
day delivery, addressed to the Collateral Agent at Wachovia Bank,
N.A., , Attention: , or at any other address furnished in writing
by the Collateral Agent to the Agent, the Company and the Holders;
or
-16-
(d) the Trustee by the Company shall be sufficient for every
purpose hereunder (unless otherwise herein expressly provided) if made,
given, furnished or filed in writing and personally delivered,
mailed, first-class postage prepaid, telecopied or delivered by
overnight air courier guaranteeing next day delivery, addressed to
the Trustee at JPMorgan Chase Bank, ▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇,
▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: Institutional Trust Services, telecopy:
▇▇▇-▇▇▇-▇▇▇▇ or at any other address furnished in writing by the
Trustee to the Company.
Section 1.6 Notice to Holders; Waiver.
-------------------------
(a) Where this Agreement provides for notice to Holders of any
event, such notice shall be sufficiently given (unless otherwise herein
expressly provided) if in writing and mailed, first-class postage
prepaid, to each Holder affected by such event, at its address as it
appears in the applicable Register, not later than the latest date, and
not earlier than the earliest date, prescribed for the giving of such
notice. In any case where notice to Holders is given by mail, neither
the failure to mail such notice nor any defect in any notice so mailed
to any particular Holder shall affect the sufficiency of such notice
with respect to other Holders. Where this Agreement provides for notice
in any manner, such notice may be waived in writing by the Person
entitled to receive such notice, either before or after the event, and
such waiver shall be the equivalent of such notice. Waivers of notice
by Holders shall be filed with the Agent, but such filing shall not be
a condition precedent to the validity of any action taken in reliance
upon such waiver.
(b) In case by reason of the suspension of regular mail service
or by reason of any other cause it shall be impracticable to give such
notice by mail, then such notification as shall be made with the
approval of the Agent shall constitute a sufficient notification
for every purpose hereunder.
Section 1.7 Effect of Headings and Table of Contents.
----------------------------------------
The Article and Section headings herein and the Table of Contents
are for convenience only and shall not affect the construction hereof.
Section 1.8 Successors and Assigns.
----------------------
All covenants and agreements in this Agreement by the Company shall
bind its successors and assigns, whether so expressed or not.
Section 1.9 Separability Clause.
-------------------
In case any provision in this Agreement or in the DECS shall be
invalid, illegal or unenforceable, the validity, legality and enforceability
of the remaining provisions hereof and thereof shall not in any way be
affected or impaired thereby.
-17-
Section 1.10 Benefits of Agreement.
---------------------
Nothing in this Agreement or in the DECS, express or implied, shall
give to any Person, other than the parties hereto and their successors
hereunder and, to the extent provided hereby, the Holders, any benefits or
any legal or equitable right, remedy or claim under this Agreement. The
Holders from time to time shall be beneficiaries of this Agreement and shall
be bound by all of the terms and conditions hereof and of the DECS evidenced
by their Certificates by their acceptance of delivery of such Certificates.
Section 1.11 Governing Law.
-------------
This Agreement and the DECS shall be governed by and construed in
accordance with the laws of the State of New York, without regard to its
principles of conflicts of laws.
Section 1.12 Legal Holidays.
--------------
(a) In any case where any Payment Date shall not be a Business
Day, then (notwithstanding any other provision of this Agreement or
the Upper DECS Certificates) payments on the Notes shall not be made on
such date, but such payments shall be made on the next succeeding
Business Day with the same force and effect as if made on such Payment
Date, provided that no interest shall accrue or be payable by the
Company for the period from and after any such Payment Date, except
that if such next succeeding Business Day is in the next succeeding
calendar year, such payment shall be made on the immediately preceding
Business Day with the same force and effect as if made on such Payment
Date.
(b) In any case where the Stock Purchase Date shall not be a
Business Day, then (notwithstanding any other provision of this
Agreement or the Certificates), the Forward Purchase Contracts shall
not be performed on such date, but the Forward Purchase Contracts
shall be performed on the immediately following Business Day with the
same force and effect as if performed on the Stock Purchase Date.
Section 1.13 Counterparts.
------------
This Agreement may be executed in any number of counterparts by the
parties hereto, each of which, when so executed and delivered, shall be
deemed an original, but all such counterparts shall together constitute one
and the same instrument.
Section 1.14 Inspection of Agreement.
-----------------------
A copy of this Agreement shall be available at all reasonable times
during normal business hours at the Corporate Trust Office for inspection by
any Holder.
-18-
ARTICLE II.
CERTIFICATE FORMS
Section 2.1 Forms of Certificates Generally.
-------------------------------
(a) The Upper DECS Certificates (including the form of Forward
Purchase Contract forming part of the Upper DECS evidenced thereby)
shall be in substantially the form set forth in Exhibit A hereto, with
such letters, numbers or other marks of identification or designation
and such legends or endorsements printed, lithographed or engraved
thereon as may be required by the rules of any securities exchange or
quotation system on which the Upper DECS are listed or quoted for
trading or any depositary therefor, or as may, consistently herewith,
be determined by the officers of the Company executing such Upper DECS
Certificates, as evidenced by their execution of the Upper DECS
Certificates.
(b) The definitive Upper DECS Certificates shall be printed,
lithographed or engraved on steel engraved borders or may be
produced in any other manner, all as determined by the officers of
the Company executing such Upper DECS Certificates, consistent with
the provisions of this Agreement, as evidenced by their execution
thereof.
(c) The Stripped DECS Certificates (including the form of Forward
Purchase Contracts forming part of the Stripped DECS evidenced thereby)
shall be in substantially the form set forth in Exhibit B hereto, with
such letters, numbers or other marks of identification or designation
and such legends or endorsements printed, lithographed or engraved
thereon as may be required by the rules of any securities exchange or
quotation system on which the Stripped DECS may be listed or quoted
for trading or any depositary therefor, or as may, consistently
herewith, be determined by the officers of the Company executing such
Stripped DECS Certificates, as evidenced by their execution of the
Stripped DECS Certificates.
(d) The definitive Stripped DECS Certificates shall be printed,
lithographed or engraved on steel engraved borders or may be
produced in any other manner, all as determined by the officers of
the Company executing such Stripped DECS Certificates, consistent
with the provisions of this Agreement, as evidenced by their
execution thereof.
(e) Every Global Certificate authenticated, executed on behalf
of the Holders and delivered hereunder shall bear a legend in
substantially the following form:
"THIS CERTIFICATE IS A GLOBAL CERTIFICATE WITHIN THE MEANING OF THE
FORWARD PURCHASE CONTRACT AGREEMENT (AS HEREINAFTER DEFINED) AND IS
REGISTERED IN THE NAME OF THE CLEARING AGENCY OR A NOMINEE THEREOF. THIS
CERTIFICATE MAY NOT BE EXCHANGED IN WHOLE OR IN PART FOR A CERTIFICATE
-19-
REGISTERED, AND NO TRANSFER OF THIS CERTIFICATE IN WHOLE OR IN PART MAY BE
REGISTERED, IN THE NAME OF ANY PERSON OTHER THAN SUCH CLEARING AGENCY OR A
NOMINEE THEREOF, EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE
FORWARD PURCHASE CONTRACT AGREEMENT."
Section 2.2 Form of Agent's Certificate of Authentication.
---------------------------------------------
(a) The form of the Agent's certificate of authentication of the
Upper DECS shall be in substantially the form set forth on the form of
the Upper DECS Certificates.
(b) The form of the Agent's certificate of authentication of the
Stripped DECS shall be in substantially the form set forth on the
form of the Stripped DECS Certificates.
ARTICLE III.
THE DECS
Section 3.1 Title and Terms; Denominations.
------------------------------
(a) The aggregate number of Upper DECS and Stripped DECS, if any,
evidenced by Certificates authenticated, executed on behalf of the
Holders and delivered hereunder is limited to 4,000,000 (4,600,000
if the Underwriters' (as defined in the Underwriting Agreement)
over-allotment option pursuant to the Underwriting Agreement is
exercised in full), except for Certificates authenticated, executed
and delivered upon registration of transfer of, in exchange for, or
in lieu of other Certificates pursuant to Section 3.4, 3.5, 3.10,
3.13, 3.14, 5.7, 5.8 or 8.5.
(b) The Certificates shall be issuable only in registered form
and only in denominations of a single DECS and any integral multiple
thereof.
Section 3.2 Rights and Obligations Evidenced by the Certificates.
----------------------------------------------------
(a) Each Upper DECS Certificate shall evidence the number of
Upper DECS specified therein, with each such Upper DECS representing
the ownership by the Holder thereof of a beneficial interest in a
Note or the appropriate Treasury Consideration or Applicable Ownership
Interest in the Treasury Portfolio, as the case may be, subject to
the Pledge of such Note or such Treasury Consideration or Applicable
Ownership Interest in the Treasury Portfolio, as the case may be,
by such Holder pursuant to the Pledge Agreement, and the rights and
obligations of the Holder thereof and the Company under one Forward
Purchase Contract. The Agent as attorney-in-fact for, and on behalf
of, the Holder of each Upper DECS shall pledge, pursuant to the
Pledge Agreement, the Note or the appropriate Treasury Consideration
or Applicable Ownership Interest in the Treasury Portfolio, as the
case may be, forming a part of such Upper DECS, to the Collateral
Agent and grant
-20-
to the Collateral Agent a security interest in the right, title,
and interest of such Holder in such Note or such Treasury
Consideration or Applicable Ownership Interest in the Treasury
Portfolio, as the case may be, for the benefit of the Company,
to secure the obligation of the Holder under each Forward Purchase
Contract to purchase the Common Stock of the Company. Prior to the
purchase of shares of Common Stock under each Forward Purchase
Contract, such Forward Purchase Contracts shall not entitle the
Holders of Upper DECS Certificates to any of the rights of a holder of
shares of Common Stock, including, without limitation, the right to
vote or receive any dividends or other payments or to consent or to
receive notice as stockholders in respect of the meetings of
stockholders or for the election of directors of the Company or for
any other matter, or any other rights whatsoever as stockholders of
the Company.
(b) Each Stripped DECS Certificate shall evidence the number
of Stripped DECS specified therein, with each such Stripped DECS
representing the ownership by the Holder thereof of a 1/40 undivided
beneficial interest in a Treasury Security, subject to the Pledge of
such interest in such Treasury Security by such Holder pursuant to the
Pledge Agreement, and the rights and obligations of the Holder thereof
and the Company under one Forward Purchase Contract. Prior to the
purchase of shares of Common Stock under each Forward Purchase
Contract, such Forward Purchase Contracts shall not entitle the Holders
of Stripped DECS Certificates to any of the rights of a holder of
shares of Common Stock, including, without limitation, the right to
vote or receive any dividends or other payments or to consent or to
receive notice as stockholders in respect of the meetings of
stockholders or for the election of directors of the Company or for any
other matter, or any other rights whatsoever as stockholders of the
Company.
Section 3.3 Execution, Authentication, Delivery and Dating.
----------------------------------------------
(a) Subject to the provisions of Sections 3.13 and 3.14, upon the
execution and delivery of this Agreement, and at any time and from
time to time thereafter, the Company may deliver Certificates
executed by the Company to the Agent for authentication, execution
on behalf of the Holders and delivery, together with its Issuer
Order for authentication of such Certificates, and the Agent in
accordance with such Issuer Order shall authenticate, execute on
behalf of the Holders and deliver such Certificates.
(b) The Certificates shall be executed on behalf of the Company
by the Chief Executive Officer, the Chief Financial Officer, the
President, any Vice-President, the Treasurer, any Assistant
Treasurer, the Secretary or any Assistant Secretary (or other
officer performing similar functions) of the Company and delivered
to the Agent. The signature of any of these officers on the
Certificates may be manual or facsimile.
-21-
(c) Certificates bearing the manual or facsimile signatures of
individuals who were at any time the proper officers of the Company
shall bind the Company, notwithstanding that such individuals or
any of them have ceased to hold such offices prior to the
authentication and delivery of such Certificates or did not hold
such offices at the date of such Certificates.
(d) No Forward Purchase Contract evidenced by a Certificate shall
be valid until such Certificate has been executed on behalf of the
Holder by the manual signature of an authorized officer of the
Agent, as such Holder's attorney-in-fact. Such signature by an
authorized officer of the Agent shall be conclusive evidence that
the Holder of such Certificate has entered into the Forward
Purchase Contracts evidenced by such Certificate.
(e) Each Certificate shall be dated the date of its
authentication.
(f) No Certificate shall be entitled to any benefit under this
Agreement or be valid or obligatory for any purpose unless there
appears on such Certificate a certificate of authentication
substantially in the form provided for herein executed by an
authorized officer of the Agent by manual signature, and such
certificate upon any Certificate shall be conclusive evidence, and
the only evidence, that such Certificate has been duly
authenticated and delivered hereunder.
Section 3.4 Temporary Certificates.
----------------------
(a) Pending the preparation of definitive Certificates, the
Company shall execute and deliver to the Agent, and the Agent shall
authenticate, execute on behalf of the Holders, and deliver, in lieu
of such definitive Certificates, temporary Certificates which are in
substantially the form set forth in Exhibit A or Exhibit B hereto, as
the case may be, with such letters, numbers or other marks of
identification or designation and such legends or endorsements printed,
lithographed or engraved thereon as may be required by the rules of any
securities exchange on which the Upper DECS or Stripped DECS, as the
case may be, are listed, or as may, consistent herewith, be determined
by the officers of the Company executing such Certificates, as
evidenced by their execution of the Certificates.
(b) If temporary Certificates are issued, the Company will cause
definitive Certificates to be prepared without unreasonable delay.
After the preparation of definitive Certificates, the temporary
Certificates shall be exchangeable for definitive Certificates upon
surrender of the temporary Certificates at the Corporate Trust Office,
at the expense of the Company and without charge to the Holder. Upon
surrender for cancellation of any one or more temporary Certificates,
the Company shall execute and deliver to the Agent, and the Agent shall
authenticate, execute on behalf of the Holder, and deliver in exchange
therefor, one or more definitive Certificates of like tenor and
denominations and evidencing a like number of Upper DECS or Stripped
DECS, as
-22-
the case may be, as the temporary Certificate or Certificates
so surrendered. Until so exchanged, the temporary Certificates shall in
all respects evidence the same benefits and the same obligations with
respect to the Upper DECS or Stripped DECS, as the case may be,
evidenced thereby as definitive Certificates.
Section 3.5 Registration; Registration of Transfer and Exchange.
---------------------------------------------------
(a) The Agent shall keep at the Corporate Trust Office a register
(the "Upper DECS Register") in which, subject to such reasonable
regulations as it may prescribe, the Agent shall provide for the
registration of Upper DECS Certificates and of transfers of Upper
DECS Certificates (the Agent, in such capacity, the "Upper DECS
Registrar") and a register (the "Stripped DECS Register") in which,
subject to such reasonable regulations as it may prescribe, the
Agent shall provide for the registration of the Stripped DECS
Certificates and transfers of Stripped DECS Certificates (the
Agent, in such capacity, the "Stripped DECS Registrar").
(b) Upon surrender for registration of transfer of any Certificate
at the Corporate Trust Office, the Company shall execute and deliver
to the Agent, and the Agent shall authenticate, execute on behalf
of the designated transferee or transferees, and deliver, in the
name of the designated transferee or transferees, one or more new
Certificates of like tenor and denominations, and evidencing a like
number of Upper DECS or Stripped DECS, as the case may be.
(c) At the option of the Holder, Certificates may be exchanged for
other Certificates, of like tenor and denominations and evidencing
a like number of Upper DECS or Stripped DECS, as the case may be,
upon surrender of the Certificates to be exchanged at the Corporate
Trust Office. Whenever any Certificates are so surrendered for
exchange, the Company shall execute and deliver to the Agent, and
the Agent shall authenticate, execute on behalf of the Holder, and
deliver the Certificates which the Holder making the exchange is
entitled to receive.
(d) All Certificates issued upon any registration of transfer or
exchange of a Certificate shall evidence the ownership of the same
number of Upper DECS or Stripped DECS, as the case may be, and be
entitled to the same benefits and subject to the same obligations,
under this Agreement as the Upper DECS or Stripped DECS, as the
case may be, evidenced by the Certificate surrendered upon such
registration of transfer or exchange.
(e) Every Certificate presented or surrendered for registration
of transfer or for exchange shall (if so required by the Agent) be
duly endorsed, or be accompanied by a written instrument of
transfer in form satisfactory to the Company and the Agent duly
executed, by the Holder thereof or its attorney duly authorized in
writing.
-23-
(f) No service charge shall be made for any registration of
transfer or exchange of a Certificate, but the Company and the Agent
may require payment from the Holder of a sum sufficient to cover any
tax or other governmental charge that may be imposed in connection
with any registration of transfer or exchange of Certificates,
other than any exchanges pursuant to Sections 3.4, 3.6, 3.9 and 8.5
not involving any transfer.
(g) Notwithstanding the foregoing, the Company shall not be
obligated to execute and deliver to the Agent, and the Agent shall
not be obligated to authenticate, execute on behalf of the Holder and
deliver any Certificate presented or surrendered for registration
of transfer or for exchange on or after the Business Day
immediately preceding the earlier of the Stock Purchase Date or the
Termination Date. In lieu of delivery of a new Certificate, upon
satisfaction of the applicable conditions specified above in this
Section and receipt of appropriate registration or transfer
instructions from such Holder, the Agent shall,
(i) if the Stock Purchase Date has occurred, deliver
the shares of Common Stock issuable in respect of the Forward
Purchase Contracts forming a part of the DECS evidenced by
such Certificate,
(ii) in the case of Upper DECS, if a Termination Event
shall have occurred prior to the Stock Purchase Date, transfer
the Notes or the appropriate Treasury Consideration or
Applicable Ownership Interest in the Treasury Portfolio,
as applicable, relating to such Upper DECS, or
(iii) in the case of Stripped DECS, if a Termination
Event shall have occurred prior to the Stock Purchase Date,
transfer the Treasury Securities relating to such Stripped DECS,
in each case subject to the applicable conditions and in
accordance with the applicable provisions of Article V.
Section 3.6 Book-Entry Interests.
--------------------
The Certificates, on original issuance will be issued in the form
of one or more fully registered Global Certificates, to be delivered to the
Depositary or its custodian by, or on behalf of, the Company. Such Global
Certificate shall initially be registered in the applicable Register in the
name of Cede & Co., the nominee of the Depositary, and no Beneficial Owner
will receive a definitive Certificate representing such Beneficial Owner's
interest in such Global Certificate, except as provided in Section 3.9. The
Agent shall enter into an agreement with the Depositary if so requested by
the Company. Unless and until definitive, fully registered Certificates have
been issued to Beneficial Owners pursuant to Section 3.9:
(a) the provisions of this Section 3.6 shall be in full force
and effect;
-24-
(b) the Company shall be entitled to deal with the Clearing
Agency for all purposes of this Agreement (including receiving
approvals, votes or consents hereunder) as the Holder of the DECS and
the sole holder of the Global Certificate(s) and shall have no
obligation to the Beneficial Owners;
(c) to the extent that the provisions of this Section 3.6
conflict with any other provisions of this Agreement, the provisions
of this Section 3.6 shall control; and
(d) the rights of the Beneficial Owners shall be exercised only
through the Clearing Agency and shall be limited to those established
by law and agreements between such Beneficial Owners and the Clearing
Agency and/or the Clearing Agency Participants. The Clearing Agency
will make book-entry transfers among Clearing Agency Participants.
Section 3.7 Notices To Holders.
------------------
Whenever a notice or other communication to the Holders is required
to be given under this Agreement, the Company or the Company's agent shall
give such notices and communications to the Holders and, with respect to any
DECS registered in the name of a Clearing Agency or the nominee of a
Clearing Agency, the Company or the Company's agent shall, except as set
forth herein, have no obligations to the Beneficial Owners.
Section 3.8 Appointment of Successor Clearing Agency.
----------------------------------------
If any Clearing Agency elects to discontinue its services as
securities depositary with respect to the DECS, the Company may, in its sole
discretion, appoint a successor Clearing Agency with respect to the DECS.
Section 3.9 Definitive Certificates.
-----------------------
If
(i) a Clearing Agency elects to discontinue its
services as securities depositary with respect to the DECS
and a successor Clearing Agency is not appointed within 90
days after such discontinuance pursuant to Section 3.8,
(ii) the Company elects to terminate the book-entry
system through the Clearing Agency with respect to the
DECS, or
(iii) there shall have occurred and be continuing a
default by the Company in respect of its obligations under
one or more Forward Purchase Contracts,
-25-
then upon surrender of the Global Certificates representing the Book-Entry
Interests with respect to the DECS by the Clearing Agency, accompanied by
registration instructions, the Company shall cause definitive Certificates
to be delivered to Clearing Agency Participants in accordance with the
instructions of the Clearing Agency. The Company and the Agent shall not be
liable for any delay in delivery of such instructions and may conclusively
rely on and shall be protected in relying on such instructions.
Section 3.10 Mutilated, Destroyed, Lost and Stolen Certificates.
--------------------------------------------------
(a) If any mutilated Certificate is surrendered to the Agent, the
Company shall execute and deliver to the Agent, and the Agent shall
authenticate, execute on behalf of the Holder, and deliver in
exchange therefor, a new Certificate at the cost of the Holder,
evidencing the same number of Upper DECS or Stripped DECS, as the
case may be, and bearing a Certificate number not contemporaneously
outstanding.
(b) If there shall be delivered to the Company and the Agent
(i) evidence to their satisfaction of the destruction, loss or theft
of any Certificate, and (ii) such security or indemnity at the cost
of the Holder as may be required by them to hold each of them and
any agent of any of them harmless, then, in the absence of notice to
the Company or the Agent that such Certificate has been acquired by a
bona fide purchaser, the Company shall execute and deliver to the
Agent, and the Agent shall authenticate, execute on behalf of the
Holder, and deliver to the Holder, in lieu of any such destroyed, lost
or stolen Certificate, a new Certificate, evidencing the same number
of Upper DECS or Stripped DECS, as the case may be, and bearing a
Certificate number not contemporaneously outstanding.
(c) Notwithstanding the foregoing, the Company shall not be
obligated to execute and deliver to the Agent, and the Agent shall not
be obligated to authenticate, execute on behalf of the Holder, and
deliver to the Holder, a Certificate on or after the Business Day
immediately preceding the earlier of the Stock Purchase Date or the
Termination Date. In lieu of delivery of a new Certificate, upon
satisfaction of the applicable conditions specified above in this
Section and receipt of appropriate registration or transfer
instructions from such Holder, the Agent shall (i) if the Stock
Purchase Date has occurred, deliver the shares of Common Stock
issuable in respect of the Forward Purchase Contracts forming a part
of the DECS evidenced by such Certificate, or (ii) if a Termination
Event shall have occurred prior to the Stock Purchase Date, transfer
the Notes, the appropriate Treasury Consideration or Applicable
Ownership Interest in the Treasury Portfolio, or the Treasury
Securities, as the case may be, evidenced thereby, in each case
subject to the applicable conditions and in accordance with the
applicable provisions of Article V.
(d) Upon the issuance of any new Certificate under this Section,
the Company and the Agent may require the payment by the Holder of a
sum sufficient
-26-
to cover any tax or other governmental charge that may be imposed
in relation thereto and any other expenses (including the fees and
expenses of the Agent) connected therewith.
(e) Every new Certificate issued pursuant to this Section in lieu
of any destroyed, lost or stolen Certificate shall constitute an
original additional contractual obligation of the Company and of
the Holder in respect of the DECS evidenced thereby, whether or not
the destroyed, lost or stolen Certificate (and the DECS evidenced
thereby) shall be at any time enforceable by anyone, and shall be
entitled to all the benefits and be subject to all the obligations
of this Agreement equally and proportionately with any and all
other Certificates delivered hereunder.
(f) The provisions of this Section are exclusive and shall
preclude (to the extent lawful) all other rights and remedies with
respect to the replacement or payment of mutilated, destroyed, lost
or stolen Certificates.
Section 3.11 Persons Deemed Owners.
---------------------
(a) Prior to due presentment of a Certificate for registration
of transfer, the Company and the Agent, and any agent of the Company
or the Agent, may treat the Person in whose name such Certificate is
registered as the owner of the DECS evidenced thereby, for the purpose
of receiving interest payments on the Notes, performance of the
Forward Purchase Contracts and for all other purposes whatsoever
(subject to Section 4.1(a)), whether or not any such payments shall
be overdue and notwithstanding any notice to the contrary, and neither
the Company nor the Agent, nor any agent of the Company or the Agent,
shall be affected by notice to the contrary.
(b) Notwithstanding the foregoing, with respect to any Global
Certificate, nothing herein shall prevent the Company, the Agent or any
agent of the Company or the Agent from giving effect to any written
certification, proxy or other authorization furnished by any Clearing
Agency (or its nominee), as a Holder, with respect to such Global
Certificate or impair, as between such Clearing Agency and owners of
beneficial interests in such Global Certificate, the operation of
customary practices governing the exercise of rights of such Clearing
Agency (or its nominee) as Holder of such Global Certificate. None
of the Company, the Agent, or any agent of the Company or the Agent
will have any responsibility or liability for any aspect of the
records relating to or payments made on account of beneficial
ownership interests in a Global Certificate or maintaining,
supervising or reviewing any records relating to such beneficial
ownership interests.
Section 3.12 Cancellation.
------------
(a) All Certificates surrendered (i) for delivery of shares of
Common Stock on or after any Settlement Date; (ii) upon the transfer of
Notes, the appropriate Treasury Consideration or Applicable Ownership
Interest in the
-27-
Treasury Portfolio, or Treasury Securities, as the case may be,
after the occurrence of a Termination Event; or (iii) upon the
registration of a transfer or exchange of a DECS shall, if surrendered
to any Person other than the Agent, be delivered to the Agent and, if
not already cancelled, shall be promptly cancelled by it. The Company
may at any time deliver to the Agent for cancellation any Certificates
previously authenticated, executed and delivered hereunder which the
Company may have acquired in any manner whatsoever, and all
Certificates so delivered shall, upon Issuer Order, be promptly
cancelled by the Agent. No Certificates shall be authenticated,
executed on behalf of the Holder and delivered in lieu of or in
exchange for any Certificates cancelled as provided in this Section,
except as expressly permitted by this Agreement. All cancelled
Certificates held by the Agent shall be disposed of by the Agent in
accordance with its customary procedures unless otherwise directed by
Issuer Order.
(b) If the Company or any Affiliate of the Company shall acquire
any Certificate, such acquisition shall not operate as a cancellation
of such Certificate unless and until such Certificate is cancelled
or delivered to the Agent for cancellation.
Section 3.13 Establishment of Stripped DECS.
------------------------------
(a) A Holder may separate the Pledged Notes, Pledged Treasury
Consideration or Pledged Applicable Ownership Interest in the Treasury
Portfolio, as applicable, from the related Forward Purchase Contracts
in respect of the Upper DECS held by such Holder by substituting for
such Pledged Notes, Pledged Treasury Consideration or Pledged
Applicable Ownership Interest in the Treasury Portfolio, as the case
may be, Treasury Securities that will pay, on the Stock Purchase Date,
an amount equal to the aggregate principal amount of such Notes or the
appropriate Treasury Consideration or Applicable Ownership Interest (as
specified in clause (A) of the definition of such term) of the Treasury
Portfolio (a "Collateral Substitution"), at any time from and after the
date of this Agreement and on or prior to the second Business Day
immediately preceding the Stock Purchase Date, by (i) depositing with
the Collateral Agent Treasury Securities having an aggregate principal
amount equal to the aggregate Stated Amount of such Upper DECS, and
(ii) transferring the related Upper DECS to the Agent accompanied by a
notice to the Agent, substantially in the form of Exhibit D hereto,
stating that the Holder has transferred the relevant amount of Treasury
Securities to the Collateral Agent and requesting that the Agent
instruct the Collateral Agent to release the Pledged Notes, Pledged
Treasury Consideration or Pledged Applicable Ownership Interest in the
Treasury Portfolio, as the case may be, underlying such Upper DECS,
whereupon the Agent shall promptly give such instruction to the
Collateral Agent, substantially in the form of Exhibit C hereto.
Notwithstanding the foregoing, a Holder may not separate the Pledged
Notes, Pledged Treasury Consideration or Pledged Applicable Ownership
Interest in the Treasury Portfolio, as the case may be, from the
related Forward Purchase Contracts in respect of the
-28-
Upper DECS held by such Holder during the periods beginning on the
fourth Business Day prior to any Remarketing Period and ending on the
third Business Day after the end of such Remarketing Period. Upon
receipt in the Treasury Securities described in clause (i) above and
the instruction described in clause (ii) above, in accordance with the
terms of the Pledge Agreement, the Collateral Agent will release to the
Agent, on behalf of the Holder, such Pledged Notes, Pledged Treasury
Consideration or Pledged Applicable Ownership Interest in the Treasury
Portfolio, as the case may be, from the Pledge, free and clear of the
Company's security interest therein, and upon receipt thereof the Agent
shall promptly:
(i) cancel the related Upper DECS;
(ii) transfer the Pledged Notes, Pledged Treasury
Consideration or Pledged Applicable Ownership Interest in
the Treasury Portfolio, as the case may be, to the Holder; and
(iii) authenticate, execute on behalf of such Holder
and deliver to such Holder a Stripped DECS Certificate
executed by the Company in accordance with Section 3.3
evidencing the same number of Forward Purchase Contracts as
were evidenced by the cancelled Upper DECS.
(b) Holders who elect to separate the Pledged Notes, Pledged
Treasury Consideration or Pledged Applicable Ownership Interest in the
Treasury Portfolio, as the case may be, from the related Forward
Purchase Contract and to substitute Treasury Securities for such
Pledged Notes, Pledged Treasury Consideration or Pledged Applicable
Ownership Interest in the Treasury Portfolio, as the case may be,
shall be responsible for any fees or expenses payable to the
Collateral Agent for its services as Collateral Agent in respect of
the substitution, and the Company shall not be responsible for any
such fees or expenses.
(c) Holders may make Collateral Substitutions (i) if Treasury
Securities are being substituted for Pledged Notes, only in
integral multiples of 40 Upper DECS, or (ii) if the Collateral
Substitutions occur after the Remarketing Date or any Subsequent
Remarketing Date, as the case may be, only in integral multiples of
Upper DECS such that the Treasury Securities to be deposited and
the Treasury Consideration to be released are in integral multiples
of $1,000.
(d) In the event a Holder making a Collateral Substitution
pursuant to this Section 3.13 fails to effect a book-entry transfer of
the Upper DECS or fails to deliver an Upper DECS Certificate to the
Agent after depositing Treasury Securities with the Collateral Agent,
the Pledged Notes or Pledged Treasury Consideration or Pledged
Applicable Ownership Interest in the Treasury Portfolio, as the case
may be, constituting a part of such Upper DECS, and any distributions
on such Pledged Notes or Pledged Treasury Consideration or Pledged
Applicable Ownership Interest in the Treasury Portfolio, as the case
may be, shall be held in the name of the Agent or its nominee in trust
for the benefit of such Holder, until
-29-
such Upper DECS are so transferred or the Upper DECS Certificate is so
delivered, as the case may be, or, with respect to an Upper DECS
Certificate, such Holder provides evidence satisfactory to the Company
and the Agent that such Upper DECS Certificate has been destroyed, lost
or stolen, together with any indemnity that may be required by the
Agent and the Company.
(e) Except as described in this Section 3.13, for so long as the
Forward Purchase Contract underlying an Upper DECS remains in
effect, such Upper DECS shall not be separable into its constituent
parts, and the rights and obligations of the Holder of such Upper
DECS in respect of the Note or the appropriate Treasury
Consideration or Applicable Ownership Interest in the Treasury
Portfolio, as the case may be, and the Forward Purchase Contract
comprising such Upper DECS may be acquired, and may be transferred
and exchanged, only as an Upper DECS.
Section 3.14 Reestablishment of Upper DECS.
-----------------------------
(a) A Holder of Stripped DECS may reestablish Upper DECS at any
time from and after the date of this Agreement and on or prior to the
second Business Day immediately preceding the Stock Purchase Date,
by (i) depositing with the Collateral Agent the Notes or the
appropriate Treasury Consideration or Applicable Ownership Interest
in the Treasury Portfolio (identified and calculated by reference
to the Treasury Consideration then comprising Upper DECS), as the case
may be, then comprising such number of Upper DECS as is equal to such
Stripped DECS and (ii) transferring such Stripped DECS to the Agent
accompanied by a notice to the Agent, substantially in the form of
Exhibit D hereto, stating that the Holder has transferred the relevant
amount of Notes or the appropriate Treasury Consideration or Applicable
Ownership Interest in the Treasury Portfolio, as the case may be, to
the Collateral Agent and requesting that the Agent instruct the
Collateral Agent to release the Pledged Treasury Securities underlying
such Stripped DECS, whereupon the Agent shall promptly give such
instruction to the Collateral Agent, substantially in the form of
Exhibit C hereto. Notwithstanding the foregoing, a Holder may not
reestablish Upper DECS during the periods beginning on the fourth
Business Day prior to any Remarketing Period and ending on the third
business day after the end of such Remarketing Period. Upon receipt of
the Notes or the appropriate Treasury Consideration or Applicable
Ownership Interest in the Treasury Portfolio, as the case may be,
described in clause (i) above and the instruction described in clause
(ii) above, in accordance with the terms of the Pledge Agreement, the
Collateral Agent will release to the Agent, on behalf of the Holder,
such Pledged Treasury Securities from the Pledge, free and clear of the
Company's security interest therein, and upon receipt thereof the Agent
shall promptly:
(i) cancel the related Stripped DECS;
(ii) transfer the Pledged Treasury Securities to the
Holder; and
-30-
(iii) authenticate, execute on behalf of such Holder
and deliver an Upper DECS Certificate executed by the Company
in accordance with Section 3.3 evidencing the same number of
Forward Purchase Contracts as were evidenced by the
cancelled Stripped DECS.
(b) Holders of Stripped DECS may reestablish Upper DECS (i)
only in integral multiples of 40 Stripped DECS for 40 Upper DECS or
(ii) if the reestablishment occurs after the Remarketing Date (if
such remarketing is successful) or any Subsequent Remarketing Date,
or after a Tax Event Redemption, only in integral multiples of
Stripped DECS such that the Treasury Consideration to be deposited
and the Treasury Securities to be released are in integral
multiples of $1,000.
(c) Except as provided in this Section 3.14, for so long as
the Forward Purchase Contract underlying a Stripped DECS remains in
effect, such Stripped DECS shall not be separable into its
constituent parts, and the rights and obligations of the Holder of
such Stripped DECS in respect of the Treasury Security and Forward
Purchase Contract comprising such Stripped DECS may be acquired,
and may be transferred and exchanged, only as a Stripped DECS.
(d) Holders of Stripped DECS who reestablish Upper DECS shall
be responsible for any fees or expenses payable to the Collateral
Agent for its services as Collateral Agent in respect of the
substitution, and the Company shall not be responsible for any such
fees or expenses.
(e) In the event a Holder who reestablishes Upper DECS
pursuant to this Section 3.14 fails to effect a book-entry transfer
of the Stripped DECS or fails to deliver a Stripped DECS
Certificate to the Agent after depositing Pledged Notes, the
Pledged Treasury Consideration or Pledged Applicable Ownership
Interest in the Treasury Portfolio, as the case may be, with the
Collateral Agent, the Treasury Securities constituting a part of
such Stripped DECS, and any distributions on such Treasury
Securities shall be held in the name of the Agent or its nominee in
trust for the benefit of such Holder, until such Stripped DECS are
so transferred or the Stripped DECS Certificate is so delivered, as
the case may be, or, with respect to a Stripped DECS Certificate,
such Holder provides evidence satisfactory to the Company and the
Agent that such Stripped DECS Certificate has been destroyed, lost
or stolen, together with any indemnity that may be required by the
Agent and the Company.
Section 3.15 Transfer of Collateral Upon Occurrence of Termination
-----------------------------------------------------
Event.
-----
Upon the occurrence of a Termination Event and the transfer to the
Agent of the Notes, the appropriate Treasury Consideration or Applicable
Ownership Interest in the Treasury Portfolio, or the Treasury Securities, as
the case may be, underlying the Upper DECS and the Stripped DECS pursuant to
the terms of the Pledge Agreement, the Agent shall request transfer
instructions with respect to such Notes or the appropriate Treasury
-31-
Consideration or Applicable Ownership Interest in the Treasury Portfolio, or
Treasury Securities, as the case may be, from each Holder by written request
mailed to such Holder at its address as it appears in the Upper DECS
Register or the Stripped DECS Register, as the case may be. Upon book-entry
transfer of the Upper DECS or Stripped DECS or delivery of an Upper DECS
Certificate or Stripped DECS Certificate to the Agent with such transfer
instructions, the Agent shall transfer the Notes, the appropriate Treasury
Consideration or Applicable Ownership Interest in the Treasury Portfolio, or
Treasury Securities or Applicable Ownership Interest in the Treasury
Portfolio, as the case may be, underlying such Upper DECS or Stripped DECS,
as the case may be, to such Holder by book-entry transfer, or other
appropriate procedures, in accordance with such instructions. In the event a
Holder of Upper DECS or Stripped DECS fails to effect such transfer or
delivery, the Notes, the appropriate Treasury Consideration or Treasury
Securities, as the case may be, underlying such Upper DECS or Stripped DECS,
as the case may be, and any distributions thereon, shall be held in the name
of the Agent or its nominee in trust for the benefit of such Holder, until
such Upper DECS or Stripped DECS are transferred or the Upper DECS
Certificate or Stripped DECS Certificate is surrendered or such Holder
provides satisfactory evidence that such Upper DECS Certificate or Stripped
DECS Certificate has been destroyed, lost or stolen, together with any
indemnity that may be required by the Agent and the Company.
Section 3.16 No Consent to Assumption.
------------------------
Each Holder of a DECS, by acceptance thereof, shall be deemed
expressly to have withheld any consent to the assumption under Section 365
of the Bankruptcy Code or otherwise, of the Forward Purchase Contract by the
Company, any receiver, liquidator or person or entity performing similar
functions or its trustee in the event that the Company becomes the debtor
under the Bankruptcy Code or subject to other similar state or federal law
providing for reorganization or liquidation.
ARTICLE IV.
THE NOTES
Section 4.1 Payment of Interest; Rights to Interest Payments
------------------------------------------------
Preserved; Notice.
-----------------
(a) A payment on any Note, Treasury Consideration or Applicable
Ownership Interest in the Treasury Portfolio, as the case may be, which
is paid on any Payment Date other than a Payment Date with respect to
the Stated Amount due on Treasury Consideration or Applicable Ownership
Interest in the Treasury Portfolio shall, subject to receipt thereof by
the Agent from the Collateral Agent (if the Collateral Agent is the
registered owner thereof) as provided by the terms of the Pledge
Agreement, be paid to the Person in whose name the Upper DECS
Certificate (or one or more Predecessor Upper DECS Certificates) of
which such Note or the appropriate Treasury Consideration or Applicable
Ownership Interest
-32-
in the Treasury Portfolio, as the case may be, is a part is
registered at the close of business on the Record Date for such
Payment Date.
(b) Each Upper DECS Certificate evidencing Notes delivered under
this Agreement upon registration of transfer of or in exchange for or
in lieu of any other Upper DECS Certificate shall carry the rights to
interest accrued and unpaid which were carried by the Notes and
Treasury Consideration or Applicable Ownership Interest in the
Treasury Portfolio, as the case may be, underlying such other Upper
DECS Certificate.
(c) In the case of any Upper DECS with respect to which Early
Settlement of the underlying Forward Purchase Contract is effected
on an Early Settlement Date, Merger Early Settlement of the
underlying Forward Purchase Contract is effected on a Merger Early
Settlement Date, Cash Settlement is effected on the Business Day
immediately preceding the Stock Purchase Date, or a Collateral
Substitution is effected, in each case on a date that is after any
Record Date and on or prior to the next succeeding Payment Date,
payments on the Note or the appropriate Treasury Consideration or
Applicable Ownership Interest in the Treasury Portfolio, as the
case may be, underlying such Upper DECS otherwise payable on such
Payment Date shall be payable on such Payment Date notwithstanding
such Early Settlement, Merger Early Settlement, Cash Settlement or
Collateral Substitution, as the case may be, and such payments
shall, subject to receipt thereof by the Agent, be payable to the
Person in whose name the Upper DECS Certificate (or one or more
Predecessor Upper DECS Certificates) was registered at the close of
business on the Record Date. Except as otherwise expressly provided
in the immediately preceding sentence, in the case of any Upper
DECS with respect to which Early Settlement, Merger Early
Settlement or Cash Settlement of the underlying Forward Purchase
Contract is effected, or with respect to which a Collateral
Substitution has been effected, payments on the related Notes or
payments on the appropriate Treasury Consideration or Applicable
Ownership Interest in the Treasury Portfolio, as the case may be,
that would otherwise be payable after the applicable Settlement
Date or after such Collateral Substitution, as the case may be,
shall not be payable hereunder to the Holder of such Upper DECS;
provided, that to the extent that such Holder continues to hold the
Separate Notes that formerly comprised a part of such Holder's
Upper DECS, such Holder shall be entitled to receive the payments
on such Separate Notes.
Section 4.2 Notice and Voting.
-----------------
Under the terms of the Pledge Agreement, the Agent will be entitled
to exercise the voting and any other consensual rights pertaining to the
Pledged Notes but only to the extent instructed by the Holders as described
below. Upon receipt of notice of any meeting at which holders of Notes are
entitled to vote or upon any solicitation of consents, waivers or proxies of
holders of Notes, the Agent shall, as soon as practicable thereafter, mail
to the Holders of Upper DECS a notice (a) containing such information as is
contained in the
-33-
notice or solicitation, (b) stating that each Holder on the record date set
by the Agent therefor (which, to the extent possible, shall be the same date
as the record date for determining the holders of Notes entitled to vote)
shall be entitled to instruct the Agent as to the exercise of the voting
rights pertaining to the Pledged Notes underlying their Upper DECS and (c)
stating the manner in which such instructions may be given. Upon the written
request of the Holders of Upper DECS on such record date, the Agent shall
endeavor insofar as practicable to vote or cause to be voted, in accordance
with the instructions set forth in such requests, the maximum number of
Pledged Notes as to which any particular voting instructions are received.
In the absence of specific instructions from the Holder of an Upper DECS,
the Agent shall abstain from voting the Pledged Note underlying such Upper
DECS. The Company hereby agrees, if applicable, to solicit Holders of Upper
DECS to timely instruct the Agent in order to enable the Agent to vote such
Pledged Notes.
Section 4.3 Tax Event Redemption
--------------------
Upon the occurrence of a Tax Event Redemption prior to the
successful remarketing of the Notes, the Company may elect to instruct in
writing the Collateral Agent to apply, and upon such written instruction,
the Collateral Agent shall apply, out of the aggregate Redemption Price for
the Notes that are components of Upper DECS, an amount equal to the
aggregate Tax Event Redemption Principal Amount for the Notes that are
components of Upper DECS to purchase on behalf of the Holders of Upper DECS
the Treasury Portfolio and promptly remit the remaining portion of such
Redemption Price to the Agent for payment to the Holders of such Upper DECS.
The Treasury Portfolio will be substituted for the Pledged Notes, and will
be pledged to the Collateral Agent in accordance with the terms of the
Pledge Agreement to secure the obligation of each Holder of an Upper DECS to
purchase the Common Stock under the Forward Purchase Contract constituting a
part of such Upper DECS. Following the occurrence of a Tax Event Redemption
prior to a successful remarketing of the Notes, the Holders of Upper DECS
and the Collateral Agent shall have such security interests, rights and
obligations with respect to the Treasury Portfolio as the Holder of Upper
DECS and the Collateral Agent had in respect of the Notes, as the case may
be, subject to the Pledge thereof as provided in Articles II, III, IV, V and
VI of the Pledge Agreement, and any reference herein or in the Certificates
to the Note shall be deemed to be a reference to such Treasury Portfolio and
any reference herein or in the Certificates to interest on the Notes shall
be deemed to be a reference to corresponding distributions on the Treasury
Portfolio. The Company may cause to be made in any Upper DECS Certificates
thereafter to be issued such change in phraseology and form (but not in
substance) as may be appropriate to reflect the substitution of the Treasury
Portfolio for Notes as collateral.
The Company shall cause notice of any Tax Event Redemption to be
mailed, at least 30 calendar days but not more than 60 calendar days before
the relevant Tax Event Redemption Date, to each Holder of Upper DECS
including Notes to be redeemed at its registered address.
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Upon the occurrence of a Tax Event Redemption after the successful
remarketing of the Notes, the Redemption Price will be payable in cash to
the holders of the Notes.
ARTICLE V.
THE FORWARD PURCHASE CONTRACTS; THE REMARKETING
Section 5.1 Purchase of Shares of Common Stock.
----------------------------------
(a) Each Forward Purchase Contract shall, unless an Early
Settlement has occurred in accordance with Section 5.7, or a Merger
Early Settlement has occurred in accordance with Section 5.8, obligate
the Holder of the related DECS to purchase, and the Company to
sell, on the Stock Purchase Date at a price equal to $25 (the
"Purchase Price"), a number of newly issued shares of Common Stock
equal to the Settlement Rate unless, on or prior to the Stock
Purchase Date, there shall have occurred a Termination Event with
respect to the DECS of which such Forward Purchase Contract is a
part. The "Settlement Rate" is equal to,
(i) if the Applicable Market Value (as defined below)
is greater than or equal to $ (the "Threshold Appreciation
Price"), shares of Common Stock per Forward Purchase
Contract,
(ii) if the Applicable Market Value is less than the
Threshold Appreciation Price, but is greater than $ , the
number of shares of Common Stock per Forward Purchase
Contract equal to the Stated Amount of the related DECS
divided by the Applicable Market Value, and
(iii) if the Applicable Market Value is equal to or less
than $ , shares of Common Stock per Forward Purchase
Contract, in each case subject to adjustment as provided
in Section 5.4 (and in each case rounded upward or
downward to the nearest 1/10,000th of a share). As
provided in Section 5.10, no fractional shares of Common
Stock will be issued upon settlement of Forward Purchase
Contracts.
(b) No fractional shares of Common Stock will be issued by the
Company with respect to the payment of Contract Adjustment Payments
on the Stock Purchase Date. In lieu of fractional shares otherwise
issuable with respect to such payment of Contract Adjustment
Payments, the Holder will be entitled to receive an amount in cash
as provided in Section 5.10.
(c) The "Applicable Market Value" means the average of the Closing
Price per share of Common Stock on each of the 20 consecutive Trading
Days ending on the third Trading Day immediately preceding the Stock
Purchase Date. The "Closing Price" of the Common Stock on any date
of determination means the closing sale price (or, if no closing
price is reported, the last reported sale price) of the Common
Stock on the New York Stock Exchange (the "NYSE") on such date or,
if the Common Stock is not listed for trading on the NYSE on any
such date, as
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reported in the composite transactions for the principal United
States securities exchange on which the Common Stock is so listed,
or if the Common Stock is not so listed on a United States
national or regional securities exchange, as reported by The Nasdaq
Stock Market, or, if the Common Stock is not so reported, the last
quoted bid price for the Common Stock in the over-the-counter market
as reported by the National Quotation Bureau or similar organization,
or, if such bid price is not available, the market value of the
Common Stock on such date as determined by a nationally recognized
independent investment banking firm retained for this purpose by
the Company. A "Trading Day" means a day on which the Common Stock
(A) is not suspended from trading on any national or regional
securities exchange or association or over-the-counter market at
the close of business and (B) has traded at least once on the
national or regional securities exchange or association or over-the-
counter market that is the primary market for the trading of the
Common Stock.
(d) Each Holder of a DECS, by its acceptance thereof, irrevocably
authorizes the Agent to enter into and perform the related Forward
Purchase Contract on its behalf as its attorney-in-fact (including
the execution of Certificates on behalf of such Holder), agrees to
be bound by the terms and provisions thereof, covenants and agrees
to perform its obligations under such Forward Purchase Contracts,
and consents to the provisions hereof, irrevocably authorizes the
Agent as its attorney-in-fact to enter into and perform the Pledge
Agreement on its behalf as its attorney-in-fact, and consents to
and agrees to be bound by the Pledge of the Notes, the appropriate
Treasury Consideration or Applicable Ownership Interest in the
Treasury Portfolio, or the Treasury Securities pursuant to the Pledge
Agreement; provided that upon a Termination Event, the rights of the
Holder of such DECS under the Forward Purchase Contract may be
enforced without regard to any other rights or obligations. Each
Holder of a DECS, by its acceptance thereof, further covenants and
agrees, that, to the extent and in the manner provided in Section
5.2 and the Pledge Agreement, but subject to the terms thereof,
payments in respect of the Notes, the appropriate Treasury
Consideration or Applicable Ownership Interest in the Treasury
Portfolio, or the Treasury Securities to be paid upon settlement of
such Holder's obligations to purchase Common Stock under the
Forward Purchase Contract, shall be paid on the Stock Purchase Date
by the Collateral Agent to the Company in satisfaction of such
Holder's obligations under such Forward Purchase Contract.
(e) Upon registration of transfer of a Certificate, the
transferee shall be bound (without the necessity of any other
action on the part of such transferee) under the terms of this
Agreement, the Forward Purchase Contracts underlying such
Certificate and the Pledge Agreement, and the transferor shall be
released from the obligations under this Agreement, the Forward
Purchase Contracts underlying the Certificates so transferred and
the Pledge Agreement. The Company covenants and agrees, and each
Holder of a Certificate, by its acceptance thereof, likewise
covenants and agrees, to be bound by the provisions of this
paragraph.
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Section 5.2 Payment of Purchase Price: Remarketing.
--------------------------------------
(a) Unless a Tax Event Redemption, successful remarketing,
Termination Event, Merger Early Settlement or Early Settlement has
occurred, each Holder of an Upper DECS may pay in cash ("Cash
Settlement") the Purchase Price for the shares of Common Stock to be
purchased pursuant to a Forward Purchase Contract if such Holder
notifies the Agent by use of a notice in substantially the form of
Exhibit E hereto of its intention to make a Cash Settlement. Such
notice shall be made on or prior to 5:00 p.m., New York City time,
on the seventh Business Day immediately preceding the Stock Purchase
Date. The Agent shall promptly notify the Collateral Agent of the
receipt of such a notice from a Holder intending to make a Cash
Settlement.
(i) A Holder of an Upper DECS who has so notified
the Agent of its intention to make a Cash Settlement is
required to pay the Purchase Price to the Collateral Agent
prior to 11:00 a.m., New York City time, on the Business Day
immediately preceding the Stock Purchase Date in lawful money
of the United States by certified or cashiers' check or
wire transfer, in each case payable to or upon the order of
the Company. Any cash received by the Collateral Agent will
be paid to the Company on the Stock Purchase Date in
settlement of the Forward Purchase Contract in accordance
with the terms of this Agreement and the Pledge Agreement.
(ii) If a Holder of an Upper DECS fails to notify the
Agent of its intention to make a Cash Settlement in
accordance with this paragraph (a), such failure shall
constitute an event of default and the Holder shall be
deemed to have consented to the disposition of the
Pledged Notes pursuant to the remarketing as described in
paragraph (b) below. If a Holder of an Upper DECS does
notify the Agent as provided in this paragraph (a) of its
intention to pay the Purchase Price in cash, but fails to
make such payment as required by paragraph (a)(i)
above, such failure shall also constitute a default;
however, the Notes of such a Holder will not be remarketed
but instead the Collateral Agent, for the benefit of the
Company, will exercise its rights as a secured party with
respect to such Notes, including but not limited to
those rights specified in subsection (b)(iii) below.
(b) (i) The Company shall engage a nationally recognized
investment bank (the "Remarketing Agent") pursuant to a Remarketing
Agreement to be mutually agreed on by the Company, the Agent and the
Remarketing Agent, but substantially as set forth in Exhibit F hereto
to sell the Notes of Holders of Upper DECS, other than Holders that
have elected not to participate in the remarketing pursuant to the
procedures set forth in clause (iv) below, and holders of Separate
Notes that have elected to participate in the remarketing pursuant to
the procedures set forth in Section 4.5(d) of the Pledge Agreement. On
the seventh day prior to the Remarketing Date the Agent shall give
Holders of Upper DECS and holders of
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Separate Notes notice of the remarketing (the form of which notice
to be provided by the Company) in a daily newspaper in the English
language of general circulation in The City of New York, which is
expected to be The Wall Street Journal, including the specific U.S.
Treasury security or securities (including the CUSIP number and/or the
principal terms of such Treasury security or securities) described in
clause (iv) below, that must be delivered by Holders of Upper DECS that
elect not to participate in the remarketing pursuant to clause (iv)
below, no later than 10:00 a.m. on the fourth Business Day preceding
the Remarketing Date. The Agent shall notify, by 10:00 a.m., New York
City time, on the third Business Day preceding the Remarketing Date,
the Remarketing Agent and the Collateral Agent of the aggregate number
of Notes of Upper DECS Holders to be remarketed. On the third Business
Day immediately preceding the Remarketing Date, no later than
by 10:00 a.m. New York City time, pursuant to the terms of the Pledge
Agreement, the Custodial Agent will notify the Remarketing Agent of the
aggregate number of Separate Notes to be remarketed. On the third
Business Day immediately preceding the Remarketing Date, the Collateral
Agent and the Custodial Agent, pursuant to the terms of the Pledge
Agreement, will deliver for remarketing to the Remarketing Agent all
Notes to be remarketed. Upon receipt of such notice from the Agent and
the Custodial Agent and such Notes from the Collateral Agent and the
Custodial Agent, the Remarketing Agent will, on the third Business Day
following the Remarketing Date, use its reasonable best efforts to (i)
establish a rate of interest that, in the opinion of the Remarketing
Agent, will, when applied to the Notes (assuming, even if not true,
that all of the Notes are included in the remarketing), enable the then
current aggregate market value of the Notes to have a value equal to at
least 100.5% of the Remarketing Value as of the Remarketing Date or as
of any Subsequent Remarketing Date, as the case may be (the "Reset
Rate") and (ii) sell such Notes on such date at a price equal to 100.5%
of the Remarketing Value. The Remarketing Agent will use the proceeds
from a successful remarketing to purchase the appropriate U.S. Treasury
securities (the "Agent-purchased Treasury Consideration") with the
CUSIP numbers, if any, selected by the Remarketing Agent, described in
clauses (i) and (ii) of the definition of Remarketing Value related to
the Notes of Holders of Upper DECS that were remarketed. On or prior to
the third Business Day following the Remarketing Date, the Remarketing
Agent shall deliver such Agent-purchased Treasury Consideration to the
Agent, which shall thereupon deliver such Agent-purchased Treasury
Consideration to the Collateral Agent. The Collateral Agent, for the
benefit of the Company, will thereupon apply such Agent-purchased
Treasury Consideration, in accordance with the Pledge Agreement, to
secure such Holders' obligations under the Forward Purchase Contracts.
The Remarketing Agent will deduct as a remarketing fee an amount not
exceeding 25 basis points (0.25%) of the total proceeds from the
remarketing (the "Remarketing Fee"). The Remarketing Agent will remit
(1) the portion of the proceeds from the remarketing attributable to
the Separate Notes to the Custodial Agent for the benefit of the
holders of Separate Notes that were remarketed and (2) the remaining
portion of the proceeds, less those proceeds used to purchase the
Agent-purchased Treasury Consideration, to the Forward Purchase
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Contract Agent for payment to the Holders of the Upper DECS that were
remarketed, all determined on a pro rata basis, in each case, on or
prior to the third Business Day following the Remarketing Date.
Holders whose Notes are so remarketed will not otherwise be
responsible for the payment of any Remarketing Fee in connection
therewith.
(ii) If, in spite of using its commercially reasonable
best efforts, the Remarketing Agent cannot remarket the Notes
included in the remarketing at a price equal to at least
100.5% of the Remarketing Value, the Remarketing Agent will
again attempt to remarket the Notes included in the
remarketing at a price equal to at least 100.5% of the
Remarketing Value on each of the two immediately following
Business Days. If the Remarketing Agent cannot remarket
the Notes included in the remarketing at a price equal to
at least 100.5% of the Remarketing Value on either of
those days, it will attempt to remarket the Notes included
in the remarketing at a price equal to at least 100.5% of
the Remarketing Value on each of the three Business Days
immediately preceding . If the Remarketing Agent cannot
remarket the Notes included in the remarketing at a price
equal to at least 100.5% of the Remarketing Value either on
any of the two Business Days immediately following the
Remarketing Date or on any of the three Business Days
immediately preceding , the remarketing in each such
period will be deemed to have failed (each, a "Failed
Remarketing"). If the Remarketing Agent cannot remarket the
Notes included in the remarketing at a price equal to at
least 100.5% of the Remarketing Value on any of the three
Business Days immediately preceding , the Remarketing Agent
will further attempt to remarket the Notes included in the
remarketing at a price equal to at least 100.5% of the
Remarketing Value on each of the three Business Days
immediately preceding the Stock Purchase Date. If, in spite
of using its commercially reasonable best efforts, the
Remarketing Agent fails to remarket the Notes underlying
the Upper DECS at a price equal to at least 100.5% of the
Remarketing Value in accordance with the terms of the Pledge
Agreement by 4:00 p.m., New York City time, on the Business
Day immediately preceding the Stock Purchase Date, the
"Last Failed Remarketing" will be deemed to have occurred.
In this case, within three Business Days following
the date of the Last Failed Remarketing, the Remarketing
Agent shall return any Notes delivered to it to the
Collateral Agent. The Collateral Agent, for the benefit
of the Company, may exercise its rights as a secured party
with respect to such Notes, including those actions specified
in subsection (b) (iii) below; provided, that if upon the
Last Failed Remarketing, the Collateral Agent delivers any
Notes to the Company in full satisfaction of the Holder's
obligation under the related Forward Purchase Contracts, any
accumulated and unpaid interest on such Notes will become
payable by the Company to the Agent for payment to the
Holder of the Upper DECS to which such Notes relate. Such
payment will be made by the Company on or prior to
11 a.m., New York City time, on the
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Stock Purchase Date in lawful money of the United States
by certified or cashier's check or wire transfer in
immediately available funds payable to or upon the order
of the Agent. If any holder of Notes exercises its right
to put such holder's Notes to the Company pursuant to the
terms of the Notes, the proceeds of the put shall be paid
(a) to the Collateral Agent on behalf of such holder
to satisfy such holder's obligation under the related Forward
Purchase Contract if such Notes are part of an Upper DECS
and (b) to the Holder of such Notes if the Notes are
Separate Notes. The Company will cause a notice of any
Failed Remarketing or the Last Failed Remarketing to be
published on the fourth Business Day following the
Remarketing Date, any Subsequent Remarketing Date and the
date of the Last Failed Remarketing, as the case may be,
in a daily newspaper in the English language of general
circulation in The City of New York, which is expected to
be The Wall Street Journal. The Company will also release
this information by means of Bloomberg and Reuters newswire.
(iii) With respect to any Notes which constitute part of
Upper DECS which are subject to the Last Failed Remarketing,
the Collateral Agent for the benefit of the Company reserves
all of its rights as a secured party with respect thereto
and, subject to applicable law and Section 5.2 (e) below,
may, among other things, permit the Company to cause the
Notes to be sold or to retain and cancel such Notes, in
either case, in full satisfaction of the Holders'
obligations under the Forward Purchase Contracts.
(iv) A Holder of Upper DECS may elect not to
participate in the remarketing and retain the Notes
underlying such DECS by notifying the Agent of such election
and delivering the specific U.S. Treasury security or
securities (including the CUSIP number and/or the principal
terms of such security or securities) identified by the Agent
that constitute the U.S. Treasury securities described in
clauses (i) and (ii) of the definition of Remarketing
Value relating to the retained Notes (as if only such Notes
were being remarketed) (the "Opt-out Treasury Consideration")
to the Agent not later than 10:00 a.m. on the fourth Business
Day prior to the Remarketing Date (or, in the case of a
Failed Remarketing, not later than 10:00 a.m. on the
Business Day immediately prior to the Subsequent
Remarketing Date). Upon receipt thereof by the Agent, the
Agent shall deliver such Opt-out Treasury Consideration
to the Collateral Agent, which will, for the benefit of
the Company, thereupon apply such Opt-out Treasury
Consideration to secure such Holder's obligations
under the Forward Purchase Contracts. On the first Business
Day immediately preceding the Remarketing Date, the
Collateral Agent, pursuant to the terms of the Pledge
Agreement, will deliver the Pledged Notes of such Holder to
the Agent. Within three Business Days following the
Remarketing Date, (A) if the remarketing was successful,
the Agent shall distribute such Notes to the Holders thereof,
and (B) if there was a Failed Remarketing on such
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date, the Agent will deliver such Notes to the Collateral
Agent, which will, for the benefit of the Company, thereupon
apply such Notes to secure such Holders' obligations under
the Forward Purchase Contracts and return the Opt-out
Treasury Consideration delivered by such Holders to such
Holders. A Holder that does not so deliver the Opt-out
Treasury Consideration pursuant to this clause (iv) shall be
deemed to have elected to participate in the remarketing.
(c) Upon the maturity of the Pledged Treasury Securities
underlying the Stripped DECS and the Pledged Treasury Consideration or
Pledged Applicable Ownership Interest in the Treasury Portfolio, as
the case may be, underlying the Upper DECS, on the Stock Purchase Date,
the Collateral Agent shall remit to the Company an amount equal to the
aggregate Purchase Price applicable to such DECS, as payment for the
Common Stock issuable upon settlement thereof without receiving any
instructions from the Holders of such DECS. In the event the payments
in respect of the Pledged Treasury Securities, Pledged Treasury
Consideration or Pledged Applicable Ownership Interest in the
Treasury Portfolio underlying a DECS is in excess of the Purchase
Price under the Forward Purchase Contract being settled thereby,
the Collateral Agent will distribute such excess to the Agent for
the benefit of the Holder of such DECS when received.
(d) Any distribution to Holders of excess funds and interest
described in Section 5.2(b) and (c) above shall be payable at the
office of the Agent in The City of New York maintained for that purpose
or, at the option of the Holder or the holder of Separate Notes, as
applicable, by check mailed to the address of the Person entitled
thereto at such address as it appears on the relevant Register or
by wire transfer to an account specified by the Holder or the
holder of Separate Notes, as applicable.
(e) The obligations of each Holder to pay the Purchase Price are
non-recourse obligations and except to the extent paid by Cash
Settlement, Early Settlement or Merger Early Settlement, are
payable solely out of the proceeds of any Collateral pledged to
secure the obligations of the Holder, and in no event will any
Holder be liable for any deficiency between such proceeds and the
Purchase Price.
(f) Notwithstanding anything to the contrary herein, the Company
shall not be obligated to issue any Common Stock in respect of a
Forward Purchase Contract or deliver any certificates therefor to the
Holder of the related DECS unless the Company shall have received
payment in full for the shares of Common Stock to be purchased
thereunder by such Holder in the manner herein set forth.
(g) In the event of a successful remarketing, the interest rate
on all of the outstanding Notes (whether or not included in the
remarketing) shall be adjusted to the Reset Rate.
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Section 5.3 Issuance of Shares of Common Stock.
----------------------------------
Unless a Termination Event shall have occurred on or prior to the
Stock Purchase Date or an Early Settlement or a Merger Early Settlement
shall have occurred, on the Stock Purchase Date, upon its receipt of payment
for the shares of Common Stock purchased by the Holders pursuant to the
foregoing provisions of this Article and subject to Section 5.4, the Company
shall issue and deposit with the Agent, for the benefit of the Holders of
the Outstanding DECS, one or more certificates or book-entry interests
representing the newly issued shares of Common Stock registered in the name
of the Agent (or its nominee) as custodian for the Holders (such
certificates or book-entry interests for shares of Common Stock, together
with any dividends or distributions for which a record date and payment date
for such dividend or distribution has occurred after the Stock Purchase
Date, being hereinafter referred to as the "Forward Purchase Contract
Settlement Fund") to which the Holders are entitled hereunder. Subject to
the foregoing, upon surrender of a Certificate to the Agent on or after the
Stock Purchase Date, together with settlement instructions thereon duly
completed and executed, the Holder of such Certificate shall be entitled to
receive in exchange therefor a certificate or book-entry interest
representing that number of whole shares of Common Stock which such Holder
is entitled to receive pursuant to the provisions of this Article V (after
taking into account all DECS then held by such Holder) together with cash in
lieu of fractional shares as provided in Section 5.10 and any dividends or
distributions with respect to such shares constituting part of the Forward
Purchase Contract Settlement Fund, but without any interest thereon, and the
Certificate so surrendered shall forthwith be cancelled. Such shares shall
be registered in the name of the Holder or the Holder's designee as
specified in the settlement instructions provided by the Holder to the
Agent. If any shares of Common Stock issued in respect of a Forward Purchase
Contract are to be registered to a Person other than the Person in whose
name the Certificate evidencing such Forward Purchase Contract is
registered, no such registration shall be made unless the Person requesting
such registration has paid any transfer and other taxes required by reason
of such registration in a name other than that of the registered Holder of
such Certificate or has established to the satisfaction of the Company that
such tax either has been paid or is not payable.
Section 5.4 Adjustment of Settlement Rate.
-----------------------------
(a) Adjustments for Dividends, Distributions, Stock Splits, Etc.
-------------------------------------------------------------
(1) Stock Dividends. In case the Company shall pay or
---------------
make a dividend or other distribution on the Common Stock in
Common Stock, the Settlement Rate, as in effect at the opening
of business on the day following the date fixed for the
determination of stockholders entitled to receive such dividend
or other distribution shall be increased by dividing such
Settlement Rate by a fraction of which the numerator shall be
the number of shares of Common Stock outstanding at the close
of business on the date fixed for such determination and the
denominator shall be the sum of such number
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of shares and the total number of shares constituting such
dividend or other distribution, such increase to become effective
immediately after the opening of business on the day following
the date fixed for such determination. For the purposes of this
paragraph (1), the number of shares of Common Stock at the time
outstanding shall not include shares held in the treasury of the
Company but shall include any shares issuable in respect of any
scrip certificates issued in lieu of fractions of shares of
Common Stock. The Company will not pay any dividend or make any
distribution on shares of Common Stock held in the treasury of
the Company.
(2) Stock Purchase Rights. In case the Company shall
---------------------
issue rights, options or warrants to all holders of its Common
Stock (not being available on an equivalent basis to Holders
of the DECS upon settlement of the Forward Purchase Contracts
underlying such DECS) entitling them to subscribe for or purchase
shares of Common Stock at a price per share less than the Current
Market Price per share of the Common Stock on the date fixed for
the determination of stockholders entitled to receive such rights,
options or warrants (other than pursuant to a dividend
reinvestment, share purchase or similar plan), the Settlement
Rate in effect at the opening of business on the day following
the date fixed for such determination shall be increased by
dividing such Settlement Rate by a fraction, the numerator of
which shall be the number of shares of Common Stock
outstanding at the close of business on the date fixed for such
determination plus the number of shares of Common Stock which the
aggregate of the offering price of the total number of shares of
Common Stock so offered for subscription or purchase would
purchase at such Current Market Price and the denominator of
which shall be the number of shares of Common Stock outstanding
at the close of business on the date fixed for such determination
plus the number of shares of Common Stock so offered for
subscription or purchase, such increase to become effective
immediately after the opening of business on the day
following the date fixed for such determination. For the purposes
of this paragraph (2), the number of shares of Common Stock at
any time outstanding shall not include shares held in the
treasury of the Company but shall include any shares issuable in
respect of any scrip certificates issued in lieu of fractions
of shares of Common Stock. The Company shall not issue any such
rights, options or warrants in respect of shares of Common Stock
held in the treasury of the Company.
(3) Stock Splits; Reverse Splits. In case outstanding
----------------------------
shares of Common Stock shall be subdivided or split into a
greater
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number of shares of Common Stock, the Settlement Rate in
effect at the opening of business on the day following the day
upon which such subdivision or split becomes effective shall be
proportionately increased, and, conversely, in case outstanding
shares of Common Stock shall be combined into a smaller number
of shares of Common Stock, the Settlement Rate in effect at the
opening of business on the day following the day upon which such
combination becomes effective shall be proportionately reduced,
such increase or reduction, as the case may be, to become
effective immediately after the opening of business on
the day following the day upon which such subdivision, split or
combination becomes effective.
(4) Debt or Asset Distributions. (i) In case the
---------------------------
Company shall, by dividend or otherwise, distribute to all
holders of its Common Stock evidences of its indebtedness or
assets (including securities, but excluding any rights or
warrants referred to in paragraph (2) of this Section, any
dividend or distribution paid exclusively in cash and any
dividend, shares of capital stock of any class or series, or
similar equity interests, of or relating to a subsidiary or other
business unit in the case of a Spin-Off referred to in the next
paragraph, or distribution referred to in paragraph (1) of this
Section), the Settlement Rate shall be adjusted so that the same
shall equal the rate determined by dividing the Settlement Rate
in effect immediately prior to the close of business on the date
fixed for the determination of stockholders entitled to receive
such distribution by a fraction, the numerator of which shall
be the Current Market Price per share of the Common Stock
on the date fixed for such determination less the then fair market
value (as determined by the Board of Directors, whose
determination shall be conclusive and described in a Board
Resolution) of the portion of the assets or evidences of
indebtedness so distributed applicable to one share of Common
Stock and the denominator of which shall be such Current Market
Price per share of the Common Stock, such adjustment to
become effective immediately prior to the opening of business on
the day following the date fixed for the determination of
stockholders entitled to receive such distribution. In any case
in which this paragraph (4) is applicable, paragraph (2) of this
Section shall not be applicable.
(ii) In the case of a Spin-Off, the Settlement Rate in effect
immediately before the close of business on the record date
fixed for determination of stockholders entitled to receive
that distribution will be increased by multiplying the
Settlement Rate by a fraction, the numerator of
which is the Current Market Price per share of the Common
Stock plus
-44-
the Fair Market Value of the portion of those shares
of Capital Stock or similar equity interests so
distributed applicable to one share of Common Stock and
the denominator of which is the Current Market Price per
share of the Common Stock. Any adjustment to the Settlement
Rate under this paragraph 4(ii) will occur at the earlier
of (1) the tenth Trading Day from, and including, the
effective date of the Spin-Off and (2) the date of the
securities being offered in the Initial Public Offering
of the Spin-Off, if that Initial Public Offering is
effected simultaneously with the Spin-Off.
(5) Cash Distributions. In case the Company shall,
------------------
(i) by dividend or otherwise, distribute to all holders of its
Common Stock cash (excluding any cash that is distributed in a
Reorganization Event to which Section 5.4(b) applies or as part
of a distribution referred to in paragraph (4) of this Section)
in an aggregate amount that, combined together with (ii) the
aggregate amount of any other distributions to all holders of
its Common Stock made exclusively in cash within the 12 months
preceding the date of payment of such distribution and in respect
of which no adjustment pursuant to this paragraph (5) or
paragraph (6) of this Section has been made and (iii) the
aggregate of any cash plus the fair market value as of the
date of the expiration of the tender or exchange offer referred
to below (as determined by the Board of Directors, whose
determination shall be conclusive and described in a Board
Resolution) of consideration payable in respect of any tender
or exchange offer by the Company or any of its subsidiaries for
all or any portion of the Common Stock concluded within the
12 months preceding the date of payment of the distribution
described in clause (i) above and in respect of which
no adjustment pursuant to this paragraph (5) or paragraph (6) of
this Section has been made, exceeds 15% of the product of the
Current Market Price per share of the Common Stock on the date
for the determination of holders of shares of Common Stock
entitled to receive such distribution times the number of shares
of Common Stock outstanding on such date, then, and in each
such case, immediately after the close of business on such date
for determination, the Settlement Rate shall be increased so
that the same shall equal the rate determined by dividing
the Settlement Rate in effect immediately prior to the close of
business on the date fixed for determination of the stockholders
entitled to receive such distribution by a fraction (A) the
numerator of which shall be equal to the Current Market Price
per share of the Common Stock on the date fixed for such
determination less an amount equal to the quotient of (x) the
combined amount distributed
-45-
or payable in the transactions described in clauses (i), (ii) and
(iii) above and (y) the number of shares of Common Stock
outstanding on such date for determination and (B) the
denominator of which shall be equal to the Current Market Price
per share of the Common Stock on such date for determination.
(6) Tender Offers. In case (i) a tender or exchange
-------------
offer made by the Company or any subsidiary of the Company for
all or any portion of the Common Stock shall expire and such
tender or exchange offer (as amended upon the expiration thereof)
shall require the payment to stockholders (based on the
acceptance (up to any maximum specified in the terms of the
tender or exchange offer) of Purchased Shares) of an aggregate
consideration having a fair market value (as determined by the
Board of Directors, whose determination shall be conclusive and
described in a Board Resolution) that combined together with
(ii) the aggregate of the cash plus the fair market value (as
determined by the Board of Directors, whose determination shall
be conclusive and described in a Board Resolution), as of the
expiration of such tender or exchange offer, of consideration
payable in respect of any other tender or exchange offer, by the
Company or any subsidiary of the Company for all or any portion
of the Common Stock expiring within the 12 months preceding the
expiration of such tender or exchange offer and in respect of
which no adjustment pursuant to paragraph (5) of this Section
or this paragraph (6) has been made and (iii) the aggregate
amount of any distributions to all holders of the Company's
Common Stock made exclusively in cash within the 12 months
preceding the expiration of such tender or exchange offer and in
respect of which no adjustment pursuant to paragraph (5) of this
Section or this paragraph (6) has been made, exceeds 15% of the
product of the Current Market Price per share of the Common Stock
as of the last time (the "Expiration Time") tenders could have
been made pursuant to such tender or exchange offer (as it may
be amended) times the number of shares of Common Stock
outstanding (including any tendered shares) at the Expiration
Time, then, and in each such case, immediately prior to the
opening of business on the day after the date of the Expiration
Time, the Settlement Rate shall be adjusted so that the same
shall equal the rate determined by dividing the Settlement Rate
immediately prior to the close of business on the date of
the Expiration Time by a fraction (A) the numerator of which
shall be equal to (x) the product of (I) the Current Market
Price per share of the Common Stock on the date of the
Expiration Time and (II) the number of shares of Common Stock
outstanding (including any tendered shares) at the Expiration
Time less (y) the amount of cash plus the fair market
-46-
value (determined as aforesaid) of the aggregate consideration
payable to stockholders based on the transactions described in
clauses (i), (ii) and (iii) above (assuming in the case of clause
(i) the acceptance, up to any maximum specified in the terms of
the tender or exchange offer, of Purchased Shares), and (B) the
denominator of which shall be equal to the product of (x) the
Current Market Price per share of the Common Stock as of
the Expiration Time and (y) the number of shares of Common Stock
outstanding (including any tendered shares) as of the Expiration
Time less the number of all shares validly tendered and not
withdrawn as of the Expiration Time (the shares deemed so
accepted, up to any such maximum, being referred to as the
"Purchased Shares").
(7) Reclassification. The reclassification of Common
----------------
Stock into securities including securities other than Common
Stock (other than any reclassification upon a Reorganization
Event to which Section 5.4(b) applies) shall be deemed to involve
(i) a distribution of such securities other than Common Stock
to all holders of Common Stock (and the effective date of such
reclassification shall be deemed to be "the date fixed for the
determination of stockholders entitled to receive such
distribution" and the "date fixed for such determination"
within the meaning of paragraph (4) of this Section), and (ii) a
subdivision, split or combination, as the case may be, of the
number of shares of Common Stock outstanding immediately prior
to such reclassification into the number of shares of Common
Stock outstanding immediately thereafter (and the effective date
of such reclassification shall be deemed to be "the day upon
which such subdivision or split becomes effective" or "the day
upon which such combination becomes effective," as the case may
be, and "the day upon which such subdivision, split or
combination becomes effective" within the meaning of paragraph
(3) of this Section).
(8) "Current Market Price". The "Current Market Price"
---------------------
of the Common Stock means (a) on any day the average of the Sales
Prices for the 5 consecutive Trading Days preceding the earlier
of the day preceding the day in question and the day before the
"ex date" with respect to the issuance or distribution requiring
computation, (b) in the case of any Spin-Off that is effected
simultaneously with an Initial Public Offering of the securities
being distributed in the Spin-Off, the Sale Price of the
Common Stock on the Trading Day on which the Initial Public
Offering price of the securities being distributed in the
Spin-Off is determined, and (c) in the case of any other Spin-Off,
the average of the Sale Prices of the Common Stock over the first
10 Trading Days after the
-47-
effective date of such Spin-Off. For purposes of this paragraph,
the term "ex date," when used with respect to any issuance or
distribution, shall mean the first date on which the Common Stock
trades regular way on the relevant exchange or in the relevant
market without the right to receive such issuance or distribution.
(9) Calculation of Adjustments. All adjustments to the
--------------------------
Settlement Rate shall be calculated to the nearest 1/10,000th
of a share of Common Stock (or if there is not a nearest
1/10,000th of a share to the next lower 1/10,000th of a share).
No adjustment in the Settlement Rate shall be required unless
such adjustment would require an increase or decrease of at least
one percent therein; provided, that any adjustments which by
reason of this subparagraph are not required to be made shall be
carried forward and taken into account in any subsequent
adjustment. If an adjustment is made to the Settlement Rate
pursuant to paragraph (1), (2), (3), (4), (5), (6), (7) or (10)
of this Section 5.4(a), an adjustment shall also be made to the
Applicable Market Value solely to determine which of clauses
(i), (ii) or (iii) of the definition of Settlement Rate in
Section 5.1(a) will apply on the Stock Purchase Date. Such
adjustment shall be made by multiplying the Applicable
Market Value by a fraction, the numerator of which shall be
the Settlement Rate immediately after such adjustment pursuant
to paragraph (1), (2), (3), (4), (5), (6), (7) or (10) of this
Section 5.4(a) and the denominator of which shall be the
Settlement Rate immediately before such adjustment;
provided, that if such adjustment to the Settlement Rate is
required to be made pursuant to the occurrence of any of the
events contemplated by paragraph (1), (2), (3), (4), (5), (7)
or (10) of this Section 5.4(a) during the period taken into
consideration for determining the Applicable Market Value,
appropriate and customary adjustments shall be made to the
Settlement Rate.
(10) Increase of Settlement Rate. The Company may make
---------------------------
such increases in the Settlement Rate, in addition to those
required by this Section, as it considers to be advisable in
order to avoid or diminish any income tax to any holders of shares
of Common Stock resulting from any dividend or distribution of
stock or issuance of rights or warrants to purchase or subscribe
for stock or from any event treated as such for income tax
purposes or for any other reasons.
(b) Adjustment for Consolidation, Merger or Other Reorganization
Event.
-48-
In the event of
(1) any consolidation or merger of the Company with
or into another Person (other than a merger or consolidation in
which the Company is the continuing corporation and in which the
Common Stock outstanding immediately prior to the merger
or consolidation is not exchanged for cash, securities or other
property of the Company or another corporation),
(2) any sale, transfer, lease or conveyance to another
Person of the property of the Company as an entirety or
substantially as an entirety,
(3) any statutory exchange of securities of the Company
with another Person (other than in connection with a merger or
acquisition), or
(4) any liquidation, dissolution or winding up of the
Company other than as a result of or after the occurrence of a
Termination Event (any such event, a "Reorganization Event"),
each share of Common Stock covered by each Forward Purchase Contract forming
a part of a DECS immediately prior to such Reorganization Event shall, after
such Reorganization Event, be converted for purposes of the Forward Purchase
Contract into the kind and amount of securities, cash and other property
receivable in such Reorganization Event (without any interest thereon, and
without any right to dividends or distributions thereon which have a record
date that is prior to the Stock Purchase Date) per share of Common Stock by
a holder of Common Stock that (i) is not a Person with which the Company
consolidated or into which the Company merged or which merged into the
Company or to which such sale or transfer was made, as the case may be (any
such Person, a "Constituent Person"), or an Affiliate of a Constituent
Person to the extent such Reorganization Event provides for different
treatment of Common Stock held by Affiliates of the Company and
non-Affiliates, and (ii) failed to exercise his rights of election, if any,
as to the kind or amount of securities, cash and other property receivable
upon such Reorganization Event (provided that if the kind or amount of
securities, cash and other property receivable upon such Reorganization
Event is not the same for each share of Common Stock held immediately prior
to such Reorganization Event by other than a Constituent Person or an
Affiliate thereof and in respect of which such rights of election shall not
have been exercised ("Non-electing Share"), then for the purpose of this
Section the kind and amount of securities, cash and other property
receivable upon such Reorganization Event by each Non-electing Share shall
be deemed to be the kind and amount so receivable per share by a plurality
of the Non-electing Shares). On the Stock Purchase Date, the Settlement Rate
then in effect will be applied to the value on the Stock Purchase Date of
such securities, cash or other property. In the event of such a
Reorganization Event, the Person formed by such consolidation, merger or
exchange or the
-49-
Person which acquires the assets of the Company or, in the event of a
liquidation or dissolution of the Company, the Company or a liquidating
trust created in connection therewith, shall execute and deliver to the
Agent an agreement supplemental hereto providing that the Holder of each
Outstanding DECS shall have the rights provided by this Section 5.4. Such
supplemental agreement shall provide for adjustments which, for events
subsequent to the effective date of such supplemental agreement, shall be as
nearly equivalent as may be practicable to the adjustments provided for in
this Section. The above provisions of this Section shall similarly apply to
successive Reorganization Events.
Section 5.5 Notice of Adjustments and Certain Other Events.
----------------------------------------------
(a) Whenever the Settlement Rate is adjusted as herein provided,
the Company shall:
(i) forthwith compute the Settlement Rate and the
Applicable Market Value in accordance with Section 5.4 and
prepare and transmit to the Agent an Officer's Certificate
setting forth the Settlement Rate and the Applicable Market
Value, the method of calculation thereof in reasonable detail,
and the facts requiring such adjustment and upon which
such adjustment is based; and
(ii) as soon as practicable following the occurrence of
an event that requires an adjustment to the Settlement Rate
pursuant to Section 5.4 (or if the Company is not aware of
such occurrence, as soon as practicable after becoming so
aware), provide a written notice to the Holders of the
DECS of the occurrence of such event and a statement in
reasonable detail setting forth the method by which the
adjustment to the Settlement Rate and the Applicable
Market Value was determined and setting forth the adjusted
Settlement Rate and the Applicable Market Value.
(b) The Agent shall not at any time be under any duty or
responsibility to any Holder of DECS to determine whether any facts
exist which may require any adjustment of the Settlement Rate and the
Applicable Market Value, or with respect to the nature or extent or
calculation of any such adjustment when made, or with respect to the
method employed in making the same. The Agent shall not be accountable
with respect to the validity or value (or the kind or amount) of any
shares of Common Stock, or of any securities or property, which may
at any time be issued or delivered with respect to any Forward
Purchase Contract; and the Agent makes no representation with respect
thereto. The Agent shall not be responsible for any failure of the
Company to issue, transfer or deliver any shares of Common Stock
pursuant to a Forward Purchase Contract or to comply with any
of the duties, responsibilities or covenants of the Company contained
in this Article.
-50-
Section 5.6 Termination Event; Notice.
-------------------------
The Forward Purchase Contracts and all obligations and rights of
the Company and the Holders thereunder, including the rights and obligations
of Holders to purchase Common Stock, shall immediately and automatically
terminate, without the necessity of any notice or action by any Holder, the
Agent or the Company, if, on or prior to the Stock Purchase Date, a
Termination Event shall have occurred. Upon and after the occurrence of a
Termination Event, the Upper DECS shall thereafter represent the right to
receive the Notes or the appropriate Treasury Consideration or Applicable
Ownership Interest in the Treasury Portfolio, as the case may be, forming a
part of such Upper DECS, and the Stripped DECS shall thereafter represent
the right to receive the Treasury Securities forming a part of such Stripped
DECS, in each case in accordance with the provisions of Section 4.3 of the
Pledge Agreement. Upon the occurrence of a Termination Event, the Company
shall promptly but in no event later than two Business Days thereafter give
written notice to the Agent, the Collateral Agent and to the Holders, at
their addresses as they appear in the applicable Register.
Section 5.7 Early Settlement.
----------------
(a) Subject to and upon compliance with the provisions of this
Section 5.7, Forward Purchase Contracts underlying DECS having an
aggregate Stated Amount equal to $1,000 or an integral multiple
thereof, may, at the option of the Holder thereof, be settled early
("Early Settlement") on or prior to 10:00 a.m. on the seventh Business
Day immediately preceding the Stock Purchase Date. In order
to exercise the right to effect Early Settlement with respect to any
Forward Purchase Contracts, the Holder of the Certificate evidencing
the related DECS shall deliver such Certificate to the Agent at the
Corporate Trust Office duly endorsed for transfer to the Company or
in blank with the form of Election to Settle Early on the reverse
thereof duly completed and accompanied by payment payable to the
Company in immediately available funds in an amount (the "Early
Settlement Amount") equal to the product of (i) the Stated Amount
of such DECS multiplied by (ii) the number of Forward Purchase
Contracts with respect to which the Holder has elected to effect Early
Settlement. No payment or adjustment shall be made upon Early
Settlement of any Forward Purchase Contract on account of any
dividends on the Common Stock issued upon such Early Settlement.
If the foregoing requirements are first satisfied with respect to
Forward Purchase Contracts underlying any DECS at or prior to
5:00 p.m., New York City time, on a Business Day, such day shall be
the "Early Settlement Date" with respect to such DECS and if
such requirements are first satisfied after 5:00 p.m., New York City
time, on a Business Day or on a day that is not a Business Day, the
"Early Settlement Date" with respect to such DECS shall be the next
succeeding Business Day.
(b) Upon Early Settlement of any Forward Purchase Contract by
the Holder of the related DECS, the Company shall issue, and the
Holder shall be
-51-
entitled to receive, shares of Common Stock on account of such
Forward Purchase Contract (the "Early Settlement Rate"). The Early
Settlement Rate shall be adjusted in the same manner and at the same
time as the Settlement Rate is adjusted. As promptly as practicable
after Early Settlement of Forward Purchase Contracts in accordance with
the provisions of this Section 5.7, the Company shall issue and shall
deliver to the Agent at the Corporate Trust Office a certificate or
certificates or book entry interest for the full number of shares of
Common Stock issuable upon such Early Settlement together with payment
in lieu of any fraction of a share, as provided in Section 5.10.
(c) No later than the third Business Day after the applicable
Early Settlement Date the Company shall cause (i) the shares of Common
Stock issuable upon Early Settlement of Forward Purchase Contracts
to be issued and delivered, and (ii) the related Pledged Notes or
Pledged Treasury Consideration or Pledged Applicable Ownership
Interest in the Treasury Portfolio, in the case of Upper DECS, or
the related Pledged Treasury Securities, in the case of Stripped
DECS, to be released from the Pledge by the Collateral Agent and
transferred, in each case, to the Agent for delivery to the Holder
thereof or the Holder's designee.
(d) Upon Early Settlement of any Forward Purchase Contracts, and
subject to receipt of shares of Common Stock from the Company and the
Pledged Notes, Pledged Treasury Consideration, Pledged Applicable
Ownership Interest in the Treasury Portfolio, or Pledged Treasury
Securities, as the case may be, from the Collateral Agent, as
applicable, the Agent shall, in accordance with the instructions
provided by the Holder thereof on the applicable form of Election to
Settle Early on the reverse of the Certificate evidencing the related
DECS, (i) transfer to the Holder the Pledged Notes, Pledged Treasury
Consideration, Pledged Applicable Ownership Interest in the Treasury
Portfolio, or Pledged Treasury Securities, as the case may be, forming
a part of such DECS, and (ii) deliver to the Holder a certificate or
certificates or book-entry interest for the full number of shares of
Common Stock issuable upon such Early Settlement together with payment
in lieu of any fraction of a share, as provided in Section 5.10.
(e) In the event that Early Settlement is effected with respect
to Forward Purchase Contracts underlying less than all the DECS
evidenced by a Certificate, upon such Early Settlement the Company
shall execute and the Agent shall authenticate, execute on behalf
of the Holder thereof and deliver to the Holder thereof, at the
expense of the Company, a Certificate evidencing the DECS as to
which Early Settlement was not effected.
Section 5.8 Early Settlement Upon Merger.
----------------------------
(a) In the event of a merger or consolidation of the Company
of the type described in clause (1) of Section 5.4(b) in which the
Common Stock outstanding immediately prior to such merger or
consolidation is exchanged for consideration
-52-
consisting of at least 30% cash or cash equivalents (any such event a
"Cash Merger"), then the Company (or the successor to the Company
hereunder) shall be required to offer the Holder of each DECS the
right to settle the Forward Purchase Contract underlying such DECS
prior to the Stock Purchase Date ("Merger Early Settlement") as
provided herein. On or before the fifth Business Day after the
consummation of a Cash Merger, the Company or, at the request and
expense of the Company, the Agent, shall give all Holders notice of
the occurrence of the Cash Merger and of the right of Merger Early
Settlement arising as a result thereof. The Company shall also
deliver a copy of such notice to the Agent and the Collateral Agent.
Each such notice shall contain:
(i) the date, which shall be not less than 20 nor more
than 30 calendar days after the date of such notice, on which
the Merger Early Settlement will be effected (the "Merger
Early Settlement Date");
(ii) the date, which shall be on or one Business Day
prior to the Merger Early Settlement Date, by which the Merger
Early Settlement right must be exercised;
(iii) the Settlement Rate in effect as a result of such
Cash Merger and the kind and amount of securities, cash and
other property receivable by the Holder upon settlement of
each Forward Purchase Contract pursuant to Section 5.4(b);
(iv) a statement to the effect that all or a portion
of the Purchase Price payable by the Holder to settle the
Forward Purchase Contract will be offset against the amount
of cash so receivable upon exercise of Merger Early
Settlement, as applicable; and
(v) the instructions a Holder must follow to exercise
the Merger Early Settlement right.
(b) To exercise a Merger Early Settlement right, a Holder shall
deliver to the Agent at the Corporate Trust Office on or before
5:00 p.m., New York City time on the date specified in the notice the
Certificate(s) evidencing the DECS with respect to which the Merger
Early Settlement right is being exercised duly endorsed for transfer to
the Company or in blank with the form of Election to Settle Early on
the reverse thereof duly completed and accompanied by payment payable
to the Company in immediately available funds in an amount equal to the
Early Settlement Amount less the amount of cash that otherwise would be
deliverable by the Company or its successor upon settlement of the
Forward Purchase Contract in lieu of Common Stock pursuant to Section
5.4(b) and as described in the notice to Holders (the "Merger Early
Settlement Amount").
-53-
(c) On the Merger Early Settlement Date, the Company shall
deliver or cause to be delivered (i) the net cash, securities and
other property to be received by such exercising Holder, equal to the
Settlement Rate as adjusted pursuant to Section 5.4, in respect of the
number of Forward Purchase Contracts for which such Merger Early
Settlement right was exercised, and (ii) the related Pledged Notes,
Pledged Treasury Consideration or Pledged Applicable Ownership Interest
in the Treasury Portfolio, in the case of Upper DECS, or Pledged
Treasury Securities, in the case of Stripped DECS, to be released from
the Pledge by the Collateral Agent and transferred, in each case, to
the Agent for delivery to the Holder thereof or its designee. In the
event a Merger Early Settlement right shall be exercised by a Holder in
accordance with the terms hereof, all references herein to the Stock
Purchase Date shall be deemed to refer to such Merger Early Settlement
Date.
(d) Upon Merger Early Settlement of any Forward Purchase
Contracts, and subject to receipt of such net cash, securities or
other property from the Company and the Pledged Notes, Pledged
Treasury Consideration, Pledged Applicable Ownership Interest in the
Treasury Portfolio or Pledged Treasury Securities, as the case may be,
from the Collateral Agent, as applicable, the Agent shall, in
accordance with the instructions provided by the Holder thereof on the
applicable form of Election to Settle Early on the reverse of the
Certificate evidencing the related DECS, (i) transfer to the Holder the
Pledged Notes, Pledged Treasury Consideration, Pledged Applicable
Ownership Interest in the Treasury Portfolio, or Pledged Treasury
Securities, as the case may be, forming a part of such DECS, and (ii)
deliver to the Holder such net cash, securities or other property
issuable upon such Merger Early Settlement together with payment in
lieu of any fraction of a share, as provided in Section 5.10.
(e) In the event that Merger Early Settlement is effected with
respect to Forward Purchase Contracts underlying less than all the DECS
evidenced by a Certificate, upon such Merger Early Settlement the
Company (or the successor to the Company hereunder) shall execute
and the Agent shall authenticate, execute on behalf of the Holder
thereof and deliver to the Holder thereof, at the expense of the
Company, a Certificate evidencing the DECS as to which Merger Early
Settlement was not effected.
Section 5.9 Charges and Taxes.
-----------------
The Company will pay all stock transfer and similar taxes
attributable to the initial issuance and delivery of the shares of Common
Stock pursuant to the Forward Purchase Contracts; provided, that the Company
shall not be required to pay any such tax or taxes which may be payable in
respect of any exchange of or substitution for a Certificate evidencing a
DECS or any issuance of a share of Common Stock in a name other than that of
the registered Holder of a Certificate surrendered in respect of the DECS
evidenced thereby, other than in the name of the Agent, as custodian for
such Holder, and the Company shall not be required to issue or deliver such
share certificates or book-entry
-54-
interest in Common Stock or Certificates unless and until the Person or Persons
requesting the transfer or issuance thereof shall have paid to the Company
the amount of such tax or shall have established to the satisfaction of the
Company that such tax has been paid.
Section 5.10 No Fractional Shares.
--------------------
No fractional shares or scrip representing fractional shares of
Common Stock shall be issued or delivered upon settlement on the Stock
Purchase Date or upon Early Settlement or Merger Early Settlement of any
Forward Purchase Contracts. If Certificates evidencing more than one Forward
Purchase Contract shall be surrendered for settlement at one time by the
same Holder, the number of full shares of Common Stock which shall be
delivered upon settlement shall be computed on the basis of the aggregate
number of Forward Purchase Contracts evidenced by the Certificates so
surrendered. Instead of any fractional share of Common Stock which would
otherwise be deliverable upon settlement of any Forward Purchase Contracts
on the applicable Settlement Date or upon Early Settlement or Merger Early
Settlement, the Company, through the Agent, shall make a cash payment in
respect of such fractional share in an amount equal to the value of such
fractional share times the Applicable Market Value. The Company shall
provide the Agent from time to time with sufficient funds to permit the
Agent to make all cash payments required by this Section 5.10 in a timely
manner.
ARTICLE VI.
REMEDIES
Section 6.1 Unconditional Right of Holders to Purchase Common
-------------------------------------------------
Stock.
-----
Subject to Section 5.6, the Holder of any DECS shall have the
right, which is absolute and unconditional, to purchase Common Stock
pursuant to the Forward Purchase Contract constituting a part of such DECS
and to institute suit for the enforcement of any such right to purchase
Common Stock, and such right shall not be impaired without the consent of
such Holder.
Section 6.2 Restoration of Rights and Remedies.
----------------------------------
If any Holder has instituted any proceeding to enforce any right or
remedy under this Agreement and such proceeding has been discontinued or
abandoned for any reason, or has been determined adversely to such Holder,
then and in every such case, subject to any determination in such
proceeding, the Company and such Holder shall be restored severally and
respectively to their former positions hereunder and thereafter all rights
and remedies of such Holder shall continue as though no such proceeding had
been instituted.
Section 6.3 Rights and Remedies Cumulative.
------------------------------
Except as otherwise provided with respect to the replacement or
payment of mutilated, destroyed, lost or stolen Certificates in Section
3.10(f), no right or remedy herein conferred upon or reserved to the Holders
is intended to be exclusive of any other
-55-
right or remedy, and every right and remedy shall, to the extent permitted
by law, be cumulative and in addition to every other right and remedy given
hereunder or now or hereafter existing at law or in equity or otherwise. The
assertion or employment of any right or remedy hereunder, or otherwise,
shall not prevent the concurrent assertion or employment of any other
appropriate right or remedy.
Section 6.4 Delay or Omission Not Waiver.
----------------------------
No delay or omission of any Holder to exercise any right or remedy
upon a default shall impair any such right or remedy or constitute a waiver
of any such right. Every right and remedy given by this Article or by law to
the Holders may be exercised from time to time, and as often as may be
deemed expedient, by such Holders.
Section 6.5 Undertaking For Costs.
---------------------
All parties to this Agreement agree, and each Holder of a DECS, by
its acceptance of such DECS shall be deemed to have agreed, that any court
may in its discretion require, in any suit for the enforcement of any right
or remedy under this Agreement, or in any suit against the Agent for any
action taken, suffered or omitted by it as Agent, the filing by any party
litigant in such suit of an undertaking to pay the costs of such suit, and
that such court may in its discretion assess reasonable costs, including
reasonable attorneys' fees, against any party litigant in such suit, having
due regard to the merits and good faith of the claims or defenses made by
such party litigant; provided that the provisions of this Section shall not
apply to any suit instituted by the Company, to any suit instituted by the
Agent, to any suit instituted by any Holder, or group of Holders, holding in
the aggregate more than 10% of the Outstanding DECS, or to any suit
instituted by any Holder for the enforcement of distributions on any Notes
or any Forward Purchase Contract on or after the respective Payment Date
therefor in respect of any DECS held by such Holder, or for enforcement of
the right to purchase shares of Common Stock under the Forward Purchase
Contract constituting part of any DECS held by such Holder.
Section 6.6 Waiver of Stay or Extension Laws.
--------------------------------
The Company covenants (to the extent that it may lawfully do so)
that it will not at any time insist upon, or plead, or in any manner
whatsoever claim or take the benefit or advantage of, any stay or extension
law wherever enacted, now or at any time hereafter in force, which may
affect the covenants in or the performance of this Agreement; and the
Company (to the extent that it may lawfully do so) hereby expressly waives
all benefit or advantage of any such law, but will suffer and permit the
execution of every power of the Agent and the Holders as though no such law
had been enacted.
-56-
ARTICLE VII.
THE AGENT
Section 7.1 Certain Duties, Rights and Immunities.
-------------------------------------
(a) The Agent shall act as agent for the Holders of the DECS
hereunder with such powers as are specifically vested in the Agent
by the terms of this Agreement, the Pledge Agreement, the Remarketing
Agreement, the Notes and the DECS, and any documents evidencing
them or related thereto (the "Transaction Documents"), together
with such other powers as are reasonably incidental thereto. The
Agent:
(1) shall have no duties or responsibilities except
those expressly set forth in the Transaction Documents and
no implied covenants or obligations shall be inferred from
any Transaction Documents against the Agent, nor shall the
Agent be bound by the provisions of any agreement by any
party hereto beyond the specific terms hereof;
(2) shall be entitled conclusively to rely upon (x) any
certification, order, judgment, opinion, notice or other
communication (including, without limitation, any thereof by
telephone or facsimile) reasonably 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),
(y) the truth of the statements and the correctness of the
opinions expressed therein and (z) advice and statements of
legal counsel and other experts selected by the Agent;
(3) as to any matters not expressly provided for by
any Transaction Document, shall in all cases be fully
protected in acting, or in refraining from acting, hereunder
or thereunder in accordance with instructions given by the
Company or the Holders in accordance with the Transaction
Documents;
(4) shall not be responsible for any recitals contained
in any Transaction Document, or in any certificate or other
document referred to or provided for in, or received by it
under, any Transaction Document or the DECS, or for the value,
validity, effectiveness, genuineness, enforceability or
sufficiency of any Transaction Document (other than as
against the Agent) or the DECS or any other document referred
to or provided for herein or therein or for any failure by
the Company, any Holder or any other Person (except the
Agent) to perform any of its obligations hereunder or
thereunder or for the perfection, priority or, except as
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expressly required hereby, existence, validity, perfection or
maintenance of any security interest created under the Pledge
Agreement, or for the use or application by the Company of
the proceeds in respect of the Forward Purchase Contracts;
(5) shall not be required to initiate or conduct any
litigation or collection proceedings hereunder;
(6) 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
gross negligence, bad faith or willful misconduct; and
(7) 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 DECS or other rights under
any Transaction Document.
(b) No provision of any Transaction Document shall be construed to
relieve the Agent from liability for its own negligent action, its
own negligent failure to act, its own bad faith, or its own willful
misconduct, except that:
(1) this paragraph (b) shall not be construed to limit
the effect of paragraph (a) of this Section;
(2) the Agent shall not be liable for any error of
judgment made in good faith by a Responsible Officer,
unless it shall be proved that the Agent was grossly
negligent in ascertaining the pertinent facts; and
(3) in no event shall the Agent be required to expend
or risk its own funds or otherwise incur any financial
liability in the performance of any of its duties
hereunder.
(c) In no event shall the Agent or its officers, employees or
agents be liable for any special, indirect, individual, punitive or
consequential loss or damages, lost profits or loss of business,
arising in connection with any Transaction Document, whether or not
the likelihood of such loss or damage was known to the Agent, and
regardless of the form of action.
(d) Whether or not therein expressly so provided, every provision
of every Transaction Document relating to the conduct or affecting the
liability of or affording protection to the Agent shall be subject
to the provisions of this Section.
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(e) The Agent is authorized to execute and deliver the Pledge
Agreement and the Remarketing Agreement and any supplement thereto in
its capacity as Agent.
(f) The Agent shall have no liability whatsoever for the action or
inaction of any Clearing Agency or any book-entry system thereof.
In no event shall any Clearing Agency or any book-entry system
thereof be deemed an agent or subcustodian of the Agent.
(g) The Agent shall not be responsible or liable for any failure
or delay in the performance of its obligations under any Transaction
Document arising out of or caused, directly or indirectly, by
circumstances beyond its reasonable control, including, without
limitation, acts of God; acts of terrorism; earthquakes; fires; floods;
wars; civil or military disturbances; sabotage; epidemics; riots;
interruptions, loss or malfunctions of utilities, computer (hardware or
software) or communications service; accidents; labor disputes; acts of
civil or military authority; governmental actions; or inability to
obtain labor, material, equipment or transportation.
Section 7.2 Notice of Default.
-----------------
Within 30 days after the occurrence of any default by the Company
hereunder of which a Responsible Officer of the Agent has actual knowledge,
the Agent shall transmit by mail to the Company and the Holders of DECS, as
their names and addresses appear in the Register, notice of such default
hereunder, unless such default shall have been cured or waived.
Section 7.3 Certain Rights of Agent.
-----------------------
Subject to the provisions of Section 7.1:
(a) any request or direction of the Company mentioned herein shall
be sufficiently evidenced by an Officer's Certificate, Issuer Order or
Issuer Request, and any resolution of the Board of Directors of the
Company may be sufficiently evidenced by a Board Resolution;
(b) whenever in the administration of this Agreement the Agent
shall deem it desirable that a matter be proved or established prior to
taking, suffering or omitting any action hereunder, the Agent
(unless other evidence be herein specifically prescribed) may, in
the absence of bad faith on its part, rely upon an Officer's
Certificate of the Company;
(c) the Agent may consult with counsel and the written advice of
such counsel or any Opinion of Counsel shall be full and complete
authorization and protection in respect of any action taken,
suffered or omitted by it hereunder in good faith and in reliance
thereon;
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(d) the Agent shall not be bound to make any investigation into
the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent,
order, bond, debenture, note, other evidence of indebtedness or other
paper or document, but the Agent, in its discretion, may make
reasonable further inquiry or investigation into such facts or
matters related to the execution, delivery and performance of the
Forward Purchase Contracts as it may see fit, and, if the Agent shall
determine to make such further inquiry or investigation, it shall be
given a reasonable opportunity to examine the books, records and
premises of the Company, personally or by agent or attorney; and
(e) the Agent may execute any of the powers hereunder or perform
any duties hereunder either directly or by or through agents or
attorneys or an Affiliate of the Agent and the Agent shall not be
responsible for any misconduct or negligence on the part of any
agent or attorney or an Affiliate appointed with due care by it
hereunder.
Section 7.4 Not Responsible For Recitals, Etc.
----------------------------------
The recitals contained herein and in the Certificates shall be
taken as the statements of the Company.
Section 7.5 May Hold DECS and Other Dealings.
--------------------------------
Any Registrar or any other agent of the Company, or the Agent and
its Affiliates, in their individual or any other capacity, may become the
owner or pledgee of DECS and may otherwise deal with the Company, the
Collateral Agent or any other Person with the same rights it would have if
it were not Registrar or such other agent, or the Agent. The Agent and its
Affiliates may (without having to account therefor to the Company or any
Holder of DECS or holder of Separate Notes) accept deposits from, lend money
to, make other investments in and generally engage in any kind of banking,
trust or other business with the Company, any Holder of DECS and any holder
of Separate Notes (and any of their respective subsidiaries or Affiliates)
as if it were not acting as the Agent and the Agent and its Affiliates may
accept fees and other consideration from the Company, any Holder of DECS or
any holder of Separate Notes without having to account for the same to any
such Person.
Section 7.6 Money Held In Custody.
---------------------
Money held by the Agent in custody hereunder need not be segregated
from the Agent's other funds except to the extent required by law or
provided herein. The Agent shall be under no obligation to invest or pay
interest on any money received by it hereunder except as otherwise agreed in
writing with the Company.
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Section 7.7 Compensation and Reimbursement.
------------------------------
The Company agrees:
(a) to pay to the Agent from time to time compensation for all
services rendered by it hereunder or under the Transaction Documents as
shall be agreed in writing between the Company and the Agent;
(b) to reimburse the Agent upon its request for all reasonable
expenses, disbursements and advances incurred or made by the Agent
in accordance with any provision of this Agreement or the
Transaction Documents (including the reasonable compensation and
the reasonable expenses and disbursements of its agents and
counsel), except any such expense, disbursement or advance as may
be attributable to its negligence, willful misconduct or bad faith;
and
(c) to indemnify the Agent for, and to hold it harmless against,
any loss, liability or reasonable out-of-pocket expense incurred
without gross negligence, willful misconduct or bad faith on its part,
arising out of or in connection with the acceptance or administration
of its duties under the Transaction Documents, including the 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 any of its powers or duties under the
Transaction Documents. The Agent shall promptly notify the Company of
any third party claim which may give rise to the 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,
provided that any failure to give any such notice shall not affect the
obligation of the Company under this Section. The provisions of this
Section 7.7 shall survive the termination of this Agreement or the
resignation or removal of the Agent.
Section 7.8 Corporate Agent Required; Eligibility.
-------------------------------------
There shall at all times be an Agent hereunder which shall be a
corporation organized and doing business under the laws of the United States
of America, any State thereof or the District of Columbia, authorized under
such laws to exercise corporate trust powers, having (or being a member of a
bank holding company having) a combined capital and surplus of at least
$500,000,000, subject to supervision or examination by federal or state
authority and having a Corporate Trust Office in the Borough of Manhattan,
the City of New York, if there be such a corporation, qualified and eligible
under this Article and willing to act on reasonable terms. If such
corporation publishes reports of condition at least annually, pursuant to
law or to the requirements of said supervising or examining authority, then
for the purposes of this Section, the combined capital and surplus of such
corporation shall be deemed to be its combined capital and surplus as set
forth in its most recent report of condition so published. If at any time
the Agent shall cease to be eligible in
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accordance with the provisions of this Section, it shall resign immediately
in the manner and with the effect hereinafter specified in this Article.
Section 7.9 Resignation and Removal; Appointment of Successor.
-------------------------------------------------
(a) No resignation or removal of the Agent and no appointment of
a successor Agent pursuant to this Article shall become effective
until the acceptance of appointment by the successor Agent in
accordance with the applicable requirements of Section 7.10.
(b) The Agent may resign at any time by giving written notice
thereof to the Company 60 days prior to the effective date of such
resignation. If the instrument of acceptance by a successor Agent
required by Section 7.10 shall not have been delivered to the Agent
within 30 days after the giving of such notice of resignation, the
resigning Agent may petition any court of competent jurisdiction
for the appointment of a successor Agent.
(c) The Agent may be removed at any time by Act of the Holders of
a majority in number of the Outstanding DECS delivered to the Agent
and the Company.
(d) If at any time:
(1) the Agent has a "conflicting interest" (as defined
in Section 310(b) of the TIA) and fails to eliminate the
conflicting interest or resign pursuant to Section 310(b)
of the TIA upon written request therefor by the Company or
by any Holder who has been a bona fide Holder of a DECS for
at least six months, as if this Agreement were an indenture
qualified under the TIA, as if the DECS were in default and
as if such default had not been cured or waived within the
applicable period under Section 310(b) of the TIA; or
(2) the Agent shall cease to be eligible under
Section 7.8 and shall fail to resign after written request
therefor by the Company or by any such Holder; or
(3) the Agent shall become incapable of acting or
shall be adjudged a bankrupt or insolvent or a receiver of
the Agent or of its property shall be appointed or any
public officer shall take charge or control of the Agent
or of its property or affairs for the purpose of
rehabilitation, conservation or liquidation;
then, in any such case, (x) the Company by a Board Resolution may remove the
Agent, or (y) any Holder who has been a bona fide Holder of a DECS for at
least six months may, on
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behalf of himself and all others similarly situated, petition any court of
competent jurisdiction for the removal of the Agent and the appointment of a
successor Agent.
(e) If the Agent shall resign, be removed or become incapable of
acting, or if a vacancy shall occur in the office of Agent for any
cause, the Company, by a Board Resolution, shall promptly appoint a
successor Agent and shall comply with the applicable requirements
of Section 7.10. If no successor Agent shall have been so appointed
by the Company and accepted appointment in the manner required by
Section 7.10, any Holder who has been a bona fide Holder of a DECS
for at least six months may, on behalf of himself and all others
similarly situated, petition any court of competent jurisdiction
for the appointment of a successor Agent.
(f) The Company shall give, or shall cause such successor Agent to
give, notice of each resignation and each removal of the Agent and
each appointment of a successor Agent by mailing written notice of
such event by first-class mail, postage prepaid, to all Holders as
their names and addresses appear in the applicable Register. Each
notice shall include the name of the successor Agent and the
address of its Corporate Trust Office.
Section 7.10 Acceptance of Appointment By Successor.
--------------------------------------
(a) In case of the appointment hereunder of a successor Agent,
every such successor Agent so appointed shall execute, acknowledge and
deliver to the Company and to the retiring Agent an instrument
accepting such appointment, and thereupon the resignation or removal of
the retiring Agent shall become effective and such successor Agent,
without any further act, deed or conveyance, shall become vested with
all the rights, powers, agencies, trusts and duties of the retiring
Agent; but, on the request of the Company or the successor Agent, such
retiring Agent shall, upon payment of its charges, execute and deliver
an instrument transferring to such successor Agent all the rights,
powers, agencies, trusts and duties of the retiring Agent and duly
assign, transfer and deliver to such successor Agent all property and
money held by such retiring Agent hereunder.
(b) Upon request of any such successor Agent, the Company shall
execute any and all instruments for more fully and certainly vesting
in and confirming to such successor Agent all such rights, powers,
agencies, trusts and duties referred to in paragraph (a) of this
Section.
(c) No successor Agent shall accept its appointment unless at the
time of such acceptance such successor Agent shall be qualified and
eligible under this Article.
Section 7.11 Merger, Conversion, Consolidation or Succession to
--------------------------------------------------
Business.
--------
Any corporation into which the Agent may be merged or converted or
with which it may be consolidated, or any corporation resulting from any
merger, conversion or
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consolidation to which the Agent shall be a party, or any corporation
succeeding to all or substantially all the corporate trust business of the
Agent, shall be the successor of the Agent hereunder, provided such
corporation shall be otherwise qualified and eligible under this Article,
without the execution or filing of any paper or any further act on the part
of any of the parties hereto. In case any Certificates shall have been
authenticated and executed on behalf of the Holders, but not delivered, by
the Agent then in office, any successor by merger, conversion or
consolidation to such Agent shall adopt such authentication and execution
and deliver the Certificates so authenticated and executed with the same
effect as if such successor Agent had itself authenticated and executed such
DECS.
Section 7.12 Preservation of Information; Communications to
----------------------------------------------
Holders.
-------
(a) The Agent shall preserve, in as current a form as is
reasonably practicable, the names and addresses of Holders received
by the Agent in its capacity as Registrar.
(b) If three or more Holders (herein referred to as "Applicants")
apply in writing to the Agent, and furnish to the Agent reasonable
proof that each such applicant has owned a DECS for a period of at
least six months preceding the date of such application, and such
application states that the Applicants desire to communicate with other
Holders with respect to their rights under this Agreement or under the
DECS and is accompanied by a copy of the form of proxy or other
communication which such Applicants propose to transmit, then the
Agent shall mail to all the Holders copies of the form of proxy or
other communication which is specified in such request, with
reasonable promptness after a tender to the Agent of the materials to
be mailed and of payment, or provision, in the absence of bad faith,
satisfactory to the Agent for the payment, of the reasonable expenses
of such mailing.
Section 7.13 Failure to Act.
--------------
In the event of any ambiguity in the provisions of any Transaction
Document or any dispute between or conflicting claims by or among the
parties hereto or any other Person, the Agent shall be entitled, after
prompt notice to the Company and the Holders of DECS, at its sole option, to
refuse to comply with any and all such claims, demands or instructions so
long as such dispute or conflict shall continue, and the Agent shall not be
or become liable in any way to any of the parties hereto for its failure or
refusal to comply with such conflicting claims, demands or instructions. The
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, reasonably satisfactory to the Agent, or
(ii) the Agent shall have received security or an indemnity reasonably
satisfactory to the Agent sufficient to save the Agent harmless from and
against any and all loss, liability or reasonable out-of-pocket expense
which the Agent may incur by reason of its acting without bad faith, willful
misconduct or gross negligence. The Agent may in addition elect
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to commence an interpleader action or seek other judicial relief or orders
as the Agent may deem necessary. Notwithstanding anything contained herein
to the contrary, the Agent shall not be required to take any action that is
in its opinion contrary to law or to the terms of any Transaction Document,
or which would in its opinion subject it or any of its officers, employees
or directors to liability.
Section 7.14 No Obligations of Agent.
-----------------------
Except to the extent otherwise provided in this Agreement, the
Agent assumes no obligation and shall not be subject to any liability under
this Agreement, the Pledge Agreement or any Forward Purchase Contract in
respect of the obligations of the Holder of any DECS thereunder. The Company
agrees, and each Holder of a Certificate, by such Holder's acceptance
thereof, shall be deemed to have agreed, that the Agent's execution of the
Certificates on behalf of the Holders shall be solely as agent and
attorney-in-fact for the Holders, and that the Agent shall have no
obligation to perform such Forward Purchase Contracts on behalf of the
Holders, except to the extent expressly provided in Article V.
Section 7.15 Tax Compliance.
--------------
(a) The Agent, on its own behalf and on behalf of the Company,
will comply with all applicable certification, information reporting
and withholding (including "backup" withholding) requirements imposed
on it as a paying agent by applicable tax laws, regulations or
administrative practice with respect to any payments made with
respect to the DECS. Such compliance shall include, without
limitation, the preparation and timely filing of required returns
and the timely payment of all amounts required to be withheld to
the appropriate taxing authority or its designated agent.
(b) The Agent shall comply with any reasonable written direction
timely received from the Company with respect to the application of
such requirements to particular payments or Holders or in other
particular circumstances, and may for purposes of this Agreement
rely on any such direction in accordance with Section 7.1(a)(2).
(c) The Agent shall maintain all appropriate records documenting
compliance with such requirements, and shall make such records
available, on written request, to the Company or its authorized
representative within a reasonable period of time after receipt of
such request.
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ARTICLE VIII.
SUPPLEMENTAL AGREEMENTS
Section 8.1 Supplemental Agreements Without Consent of Holders.
--------------------------------------------------
Without the consent of any Holders, the Company and the Agent, at
any time and from time to time, may enter into one or more agreements
supplemental hereto, in form satisfactory to the Company and the Agent, for
any of the following purposes:
(a) to evidence the succession of another Person to the Company,
and the assumption by any such successor of the covenants of the
Company herein and in the Certificates; or
(b) to add to the covenants of the Company for the benefit of
the Holders, or to surrender any right or power herein conferred upon
the Company; or
(c) to evidence and provide for the acceptance of appointment
hereunder by a successor Agent; or
(d) to make provision with respect to the rights of Holders
pursuant to the requirements of Section 5.4(b) or 5.8; or
(e) to cure any ambiguity, to correct or supplement any provisions
herein which may be inconsistent with any other provisions herein,
or to make any other provisions with respect to such matters or
questions arising under this Agreement, provided such action shall
not adversely affect the interests of the Holders.
Section 8.2 Supplemental Agreements With Consent of Holders.
-----------------------------------------------
(a) With the consent of the Holders of not less than a majority
of the outstanding Forward Purchase Contracts voting together as one
class, by Act of said Holders delivered to the Company and the Agent,
the Company, when authorized by a Board Resolution, and the Agent may
enter into an agreement or agreements supplemental hereto, in form
satisfactory to the Company and the Agent, for the purpose of modifying
in any manner the terms of the Forward Purchase Contracts, or the
provisions of this Agreement or the rights of the Holders in respect of
the DECS; provided, that, except as contemplated herein, no such
supplemental agreement shall, without the consent of the Holder of each
Outstanding DECS affected thereby:
(1) change any Payment Date;
(2) change the amount or the type of Collateral required
to be Pledged to secure a Holder's Obligations under the
Forward Purchase Contract, impair the right of the Holder of
any Forward
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Purchase Contract to receive distributions on the related
Collateral (except for the rights of Holders of Upper
DECS to substitute the Treasury Securities for the Pledged
Notes, Pledged Treasury Consideration or Pledged Applicable
Ownership Interest in the Treasury Portfolio, or the rights
of holders of Stripped DECS to substitute Notes or appropriate
Treasury Consideration or Applicable Ownership Interest in
the Treasury Portfolio for the Pledged Treasury Securities)
or otherwise adversely affect the Holder's rights in or to
such Collateral;
(3) impair the right to institute suit for the
enforcement of any Forward Purchase Contract;
(4) reduce the number of shares of Common Stock to be
purchased pursuant to any Forward Purchase Contract, increase
the price to purchase shares of Common Stock upon settlement
of any Forward Purchase Contract, change the Stock Purchase
Date or otherwise materially adversely affect the Holder's
rights under any Forward Purchase Contract; or
(5) reduce the percentage of the outstanding Forward
Purchase Contracts the consent of whose Holders is required
for any such supplemental agreement;
provided, that if any amendment or proposal referred to above would
adversely affect only the Upper DECS or the Stripped DECS, then only the
affected class of Holder as of the record date for the Holders entitled to
vote thereon will be entitled to vote on such amendment or proposal, and
such amendment or proposal shall not be effective except with the consent of
Holders of not less than a majority or 100% of such class, as the case may
be.
(b) It shall not be necessary for any Act of Holders under this
Section to approve the particular form of any proposed supplemental
agreement, but it shall be sufficient if such Act shall approve the
substance thereof.
Section 8.3 Execution of Supplemental Agreements.
------------------------------------
In executing, or accepting the additional agencies created by, any
supplemental agreement permitted by this Article or the modifications
thereby of the agencies created by this Agreement, the Agent shall be
provided and (subject to Section 7.1) shall be fully protected in relying
upon, an Opinion of Counsel stating that the execution of such supplemental
agreement is authorized or permitted by this Agreement. The Agent may, but
shall not be obligated to, enter into any such supplemental agreement which
affects the Agent's own rights, duties or immunities under this Agreement or
otherwise.
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Section 8.4 Effect of Supplemental Agreements.
---------------------------------
Upon the execution of any supplemental agreement under this
Article, this Agreement shall be modified in accordance therewith, and such
supplemental agreement shall form a part of this Agreement for all purposes;
and every Holder of Certificates theretofore or thereafter authenticated,
executed on behalf of the Holders and delivered hereunder shall be bound
thereby.
Section 8.5 Reference to Supplemental Agreements.
------------------------------------
Certificates authenticated, executed on behalf of the Holders and
delivered after the execution of any supplemental agreement pursuant to this
Article may, and shall if required by the Agent, bear a notation in form
approved by the Agent as to any matter provided for in such supplemental
agreement. If the Company shall so determine, new Certificates so modified
as to conform, in the opinion of the Agent and the Company, to any such
supplemental agreement may be prepared and executed by the Company and
authenticated, executed on behalf of the Holders and delivered by the Agent
in exchange for outstanding Certificates.
ARTICLE IX.
CONSOLIDATION, MERGER, SALE OR CONVEYANCE
Section 9.1 Company May Consolidate, Etc., Only on Certain
----------------------------------------------
Terms.
-----
The Company shall not consolidate with or merge into any other
Person or convey, transfer or lease its properties and assets substantially
as an entirety to any Person, unless:
(a) the Person formed by such consolidation or into which the
Company is merged or the Person which acquires by conveyance,
transfer or lease the properties and assets of the Company
substantially as an entirety shall be a corporation, partnership,
limited liability company or trust, shall be organized and validly
existing under the laws of the United States of America, any State
thereof or the District of Columbia and shall expressly assume
every covenant of this Agreement, the Forward Purchase Contracts,
the Notes, the Remarketing Agreement and the Pledge Agreement on
the part of the Company to be performed or observed by one or more
supplemental agreements in form reasonably satisfactory to the Agent
and the Collateral Agent, executed and delivered to the Agent and
the Collateral Agent by such Person;
(b) immediately after giving effect to such transaction, no
default under this Agreement, the Forward Purchase Contracts, the
Remarketing Agreement or the Pledge Agreement shall have happened
and be continuing; and
(c) the Company has delivered to the Agent an Officers'
Certificate and an Opinion of Counsel, each stating that such
consolidation, merger, conveyance, transfer or lease and such
supplemental agreement(s) comply with this Section 9.1
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and that all conditions precedent herein provided for relating to
such transaction have been complied with.
This Section 9.1 shall not apply to any merger or consolidation in which the
Company is the surviving corporation.
Section 9.2 Successor Substituted.
---------------------
(a) Upon any consolidation with or merger of the Company into
any other Person, or any conveyance, transfer or lease of the
properties and assets of the Company substantially as an entirety in
accordance with Section 9.1, the successor Person formed by such
consolidation or into which the Company is merged or to which such
conveyance, transfer or lease is made shall succeed to, and be
substituted for, and may exercise every right and power of, the Company
under this Agreement with the same effect as if such successor Person
had been named as the Company herein, and thereafter, except in the
case of a lease, the predecessor Person shall be relieved of all
obligations and covenants under this Agreement, the Forward Purchase
Contracts, the Notes, the DECS, the Remarketing Agreement and the
Pledge Agreement.
(b) In case of any such consolidation, merger, sale, assignment,
transfer, lease or conveyance such change in phraseology and form
(but not in substance) may be made in the Certificates evidencing
DECS thereafter to be issued as may be appropriate.
ARTICLE X.
COVENANTS
Section 10.1 Performance Under Purchase Contracts.
------------------------------------
The Company covenants and agrees for the benefit of the Holders
from time to time of the DECS that it will duly and punctually perform its
obligations under the Forward Purchase Contracts in accordance with the
terms of the Forward Purchase Contracts and this Agreement.
Section 10.2 Maintenance of Office or Agency.
-------------------------------
(a) The Company will maintain in the Borough of Manhattan,
The City of New York an office or agency where Certificates may
be presented or surrendered for acquisition of shares of Common Stock
upon settlement of the Forward Purchase Contracts on any Settlement
Date and for transfer of Collateral upon occurrence of a Termination
Event, where Certificates may be surrendered for registration of
transfer or exchange, for a Collateral Substitution or reestablishment
of Upper DECS and where notices and demands to or upon the Company in
respect of the DECS and this Agreement may be served. The Company
will give prompt written notice to the Agent of the location, and
any change in the location, of such office or agency. If at any time
the Company shall
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fail to maintain any such required office or agency or shall fail
to furnish the Agent with the address thereof, such presentations,
surrenders, notices and demands may be made or served at the
Corporate Trust Office, and the Company hereby appoints the
Agent as its agent to receive all such presentations, surrenders,
notices and demands.
(b) The Company may also from time to time designate one or
more other offices or agencies where Certificates may be presented or
surrendered for any or all such purposes and may from time to time
rescind such designations; provided, that no such designation or
rescission shall in any manner relieve the Company of its obligation to
maintain an office or agency in the Borough of Manhattan, The City of
New York for such purposes. The Company will give prompt written notice
to the Agent of any such designation or rescission and of any change in
the location of any such other office or agency. The Company hereby
designates as the place of payment for the DECS the Corporate Trust
Office and appoints the Agent at its Corporate Trust Office as paying
agent in such city.
Section 10.3 Company to Reserve Common Stock.
-------------------------------
The Company shall at all times prior to the Stock Purchase Date
reserve and keep available, free from preemptive rights, out of its
authorized but unissued Common Stock the full number of shares of Common
Stock issuable against tender of payment in respect of all Forward Purchase
Contracts constituting a part of the DECS evidenced by outstanding
Certificates.
Section 10.4 Covenants as to Common Stock.
----------------------------
The Company covenants that all shares of Common Stock which may be
issued against tender of payment in respect of any Forward Purchase Contract
constituting a part of the Outstanding DECS will, upon issuance, be duly
authorized, validly issued, fully paid and nonassessable.
Section 10.5 Statements of Officer of the Company as to Default.
--------------------------------------------------
The Company will deliver to the Agent, within 120 days after the
end of each fiscal year of the Company ending after the date hereof, an
Officer's Certificate, stating whether or not to the best knowledge of the
signer thereof the Company is in default in the performance and observance
of any of the terms, provisions and conditions hereof, and if the Company
shall be in default, specifying all such defaults and the nature and status
thereof of which such officer may have knowledge.
[SIGNATURE PAGES FOLLOW]
-70-
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be duly executed as of the day and year first above written.
SOLUTIA INC.
By: ____________________________________
Name:
Title:
JPMORGAN CHASE BANK
as Forward Purchase Contract Agent
By: ____________________________________
Name:
Title:
EXHIBIT A
FORM OF UPPER DECS CERTIFICATE
[FOR INCLUSION IN GLOBAL CERTIFICATES ONLY -- THIS CERTIFICATE IS A
GLOBAL CERTIFICATE WITHIN THE MEANING OF THE FORWARD PURCHASE CONTRACT
AGREEMENT (AS HEREINAFTER DEFINED) AND IS REGISTERED IN THE NAME OF THE
CLEARING AGENCY OR A NOMINEE THEREOF. THIS CERTIFICATE MAY NOT BE EXCHANGED
IN WHOLE OR IN PART FOR A CERTIFICATE REGISTERED, AND NO TRANSFER OF THIS
CERTIFICATE IN WHOLE OR IN PART MAY BE REGISTERED, IN THE NAME OF ANY PERSON
OTHER THAN SUCH CLEARING AGENCY OR A NOMINEE THEREOF, EXCEPT IN THE LIMITED
CIRCUMSTANCES DESCRIBED IN THE FORWARD PURCHASE CONTRACT AGREEMENT.
Unless this Certificate is presented by an authorized
representative of The Depository Trust Company (55 ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇,
▇▇▇ ▇▇▇▇) to the Company or its agent for registration of transfer, exchange
or payment, and any Certificate issued is registered in the name of Cede &
Co., or such other name as requested by an authorized representative of The
Depository Trust Company, and any payment hereon is made to Cede & Co., ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY A PERSON IS
WRONGFUL since the registered owner hereof, Cede & Co., has an interest
herein.]
(Form of Face of Upper DECS Certificate)
No. ______________ CUSIP No. ____________
Number of Upper DECS____________
This Upper DECS Certificate certifies that [For inclusion in Global
Certificates only -- Cede & Co.] is the registered Holder of the number of
Upper DECS set forth above [For inclusion in Global Certificates only - or
such other number of Upper DECS reflected in the Schedule of Increases or
Decreases in Global Certificates attached hereto]. Each Upper DECS
represents (i) either (a) beneficial ownership by the Holder of one %
Senior Note due (the "Note") of Solutia Inc., a Delaware corporation (the
"Company") having a principal amount of $ , subject to the Pledge of such
Note by such Holder pursuant to the Pledge Agreement, or (b) if the Note has
been remarketed by the Remarketing Agent (or if the Holder has elected not
to have the Note remarketed by delivering the appropriate Treasury
Consideration specified by the Remarketing Agent), the appropriate Treasury
Consideration, subject to the Pledge of such Treasury Consideration by such
Holder pursuant to the Pledge Agreement, or (c) if a Tax Event Redemption
has occurred, the appropriate Applicable Ownership Interest in the Treasury
Portfolio subject to the Pledge of such Applicable Ownership Interest in the
Treasury Portfolio pursuant to the Pledge Agreement, and (ii) the rights and
obligations of the Holder under one Forward Purchase
A-1
Contract with the Company. All capitalized terms used herein which are
defined in the Forward Purchase Contract Agreement have the meaning set
forth therein.
Pursuant to the Pledge Agreement, the Note or the appropriate
Treasury Consideration or Applicable Ownership Interest in the Treasury
Portfolio, as the case may be, constituting part of each Upper DECS
evidenced hereby has been pledged to the Collateral Agent, for the benefit
of the Company, to secure the obligations of the Holder under the Forward
Purchase Contract comprising a part of such Upper DECS.
The Pledge Agreement provides that all payments in respect of the
Pledged Notes, Pledged Treasury Consideration or Pledged Applicable
Ownership Interest in the Treasury Portfolio received by the Collateral
Agent shall be paid by the Collateral Agent by wire transfer in same day
funds (i) in the case of (A) quarterly cash distributions on Upper DECS
which include Pledged Notes, Pledged Treasury Consideration or Pledged
Applicable Ownership Interest in the Treasury Portfolio and (B) any payments
in respect of the Notes, Treasury Consideration or Applicable Ownership
Interest in the Treasury Portfolio, as the case may be, that have been
released from the Pledge pursuant to the Pledge Agreement, to the Agent to
the account designated by the Agent, no later than 10:00 a.m., New York City
time, on the Business Day such payment is received by the Collateral Agent
(provided that in the event such payment is received by the Collateral Agent
on a day that is not a Business Day or after 9:00 a.m., New York City time,
on a Business Day, then such payment shall be made no later than 9:30 a.m.,
New York City time, on the next succeeding Business Day) and (ii) in the
case of payments in respect of any Pledged Notes, Pledged Treasury
Consideration or Pledged Applicable Ownership Interest in the Treasury
Portfolio, as the case may be, to be paid upon settlement of such Holder's
obligations to purchase Common Stock under the Forward Purchase Contract, to
the Company on the Stock Purchase Date (as defined herein) in accordance
with the terms of the Pledge Agreement, in full satisfaction of the
respective obligations of the Holders of the Upper DECS of which such
Pledged Notes, Pledged Treasury Consideration or Pledged Applicable
Ownership Interest in the Treasury Portfolio, as the case may be, are a part
under the Forward Purchase Contracts forming a part of such Upper DECS.
Quarterly distributions on Upper DECS which include Pledged Notes, Pledged
Treasury Consideration or Pledged Applicable Ownership Interest in the
Treasury Portfolio, as the case may be, which are payable quarterly in
arrears on , , and each year, commencing , 2002 (a "Payment Date"),
shall, subject to receipt thereof by the Agent from the Collateral Agent (if
the Collateral Agent is the registered owner thereof), be paid to the Person
in whose name this Upper DECS Certificate (or a Predecessor Upper DECS
Certificate) is registered at the close of business on the Record Date for
such Payment Date.
Each Forward Purchase Contract evidenced hereby obligates the
Holder of this Upper DECS Certificate to purchase, and the Company to sell,
on (the "Stock Purchase Date"), at a price equal to $ (the "Stated
Amount"), a number of newly issued shares of common stock, $0.01 par value
per share ("Common Stock"), of the Company, equal to the Settlement Rate,
unless on or prior to the Stock Purchase Date there shall have occurred a
A-2
Termination Event or a Cash Settlement, Early Settlement or Merger Early
Settlement with respect to the Upper DECS of which such Forward Purchase
Contract is a part, all as provided in the Forward Purchase Contract
Agreement and more fully described on the reverse hereof. The Purchase Price
(as defined herein) for the shares of Common Stock purchased pursuant to
each Forward Purchase Contract evidenced hereby, if not paid earlier, shall
be paid on the Stock Purchase Date by application of payments received in
respect of the Pledged Notes, Pledged Treasury Consideration or Pledged
Applicable Ownership Interest in the Treasury Portfolio, as the case may be,
pledged to secure the obligations of the Holder under such Forward Purchase
Contract.
Payments on the Notes or the appropriate Treasury Consideration or
Applicable Ownership Interest in the Treasury Portfolio, as the case may be,
will be payable at the office of the Agent in The City of New York or, at
the option of the Company, by check mailed to the address of the Person
entitled thereto as such address appears on the Upper DECS Register or by
wire transfer to an account specified by such Person at least five Business
Days prior to the applicable Payment Date.
Reference is hereby made to the further provisions set forth on the
reverse hereof, which further provisions shall for all purposes have the
same effect as if set forth at this place.
Unless the certificate of authentication hereon has been executed
by the Agent by manual signature, this Upper DECS Certificate shall not be
entitled to any benefit under the Pledge Agreement or the Forward Purchase
Contract Agreement or be valid or obligatory for any purpose.
A-3
IN WITNESS WHEREOF, the Company has caused this instrument to be
duly executed.
SOLUTIA INC.
By: _________________________________________
Name:
Title:
HOLDER SPECIFIED ABOVE (as to obligations of
such Holder under the Forward Purchase
Contracts evidenced hereby)
By: JPMORGAN CHASE BANK, not individually but
solely as Attorney-in-Fact of such Holder
By: _________________________________________
Authorized Officer
A-4
AGENT'S CERTIFICATE OF AUTHENTICATION
This is one of the Upper DECS Certificates referred to in the
within-mentioned Forward Purchase Contract Agreement.
▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ BANK,
as Forward Purchase Contract Agent
Dated: _____________________ By: _________________________________
Authorized Officer
A-5
(Form of Reverse of Upper DECS Certificate)
Each Forward Purchase Contract evidenced hereby is governed by a
Forward Purchase Contract Agreement, dated as of , 2002 (as may be
supplemented from time to time, the "Forward Purchase Contract Agreement"),
between the Company and JPMorgan Chase Bank, as Forward Purchase Contract
Agent (including its successors thereunder, herein called the "Agent"), to
which Forward Purchase Contract Agreement and supplemental agreements
thereto reference is hereby made for a description of the respective rights,
limitations of rights, obligations, duties and immunities thereunder of the
Agent, the Company, and the Holders and of the terms upon which the Upper
DECS Certificates are, and are to be, executed and delivered.
Each Forward Purchase Contract evidenced hereby obligates the
Holder of this Upper DECS Certificate to purchase, and the Company to sell,
on the Stock Purchase Date at a price equal to $25 (the "Purchase Price"), a
number of shares of Common Stock of the Company equal to the Settlement
Rate, unless, on or prior to the Stock Purchase Date, there shall have
occurred a Termination Event or an Early Settlement, Merger Early Settlement
or Cash Settlement with respect to the DECS of which such Forward Purchase
Contract is a part. The "Settlement Rate" is equal to (a) if the Applicable
Market Value (as defined below) is greater than or equal to $ (the
"Threshold Appreciation Price"), shares of Common Stock per Forward
Purchase Contract, (b) if the Applicable Market Value is less than the
Threshold Appreciation Price but is greater than $ , the number of shares of
Common Stock per Forward Purchase Contract equal to the Stated Amount
divided by the Applicable Market Value and (c) if the Applicable Market
Value is less than or equal to $ , shares of Common Stock per Forward
Purchase Contract, in each case subject to adjustment as provided in the
Forward Purchase Contract Agreement. No fractional shares of Common Stock
will be issued upon settlement of Forward Purchase Contracts, as provided in
the Forward Purchase Contract Agreement.
The "Applicable Market Value" means the average of the Closing
Price per share of Common Stock on each of the 20 consecutive Trading Days
ending on the third Trading Day immediately preceding the Stock Purchase
Date.
The "Closing Price" of the Common Stock on any date of
determination means the closing sale price (or, if no closing price is
reported, the last reported sale price) of the Common Stock on the New York
Stock Exchange (the "NYSE") on such date or, if the Common Stock is not
listed for trading on the NYSE on any such date, as reported in the
composite transactions for the principal United States securities exchange
on which the Common Stock is so listed, or if the Common Stock is not so
listed on a United States national or regional securities exchange, as
reported by The Nasdaq Stock Market, or, if the Common Stock is not so
reported, the last quoted bid price for the Common Stock in the
over-the-counter market as reported by the National Quotation Bureau or
similar organization, or, if such bid price is not available, the market
value of the Common Stock on such date as determined by a nationally
recognized independent investment banking firm retained for this purpose by
the Company.
A-6
A "Trading Day" means a day on which the Common Stock (A) is not
suspended from trading on any national or regional securities exchange or
association or over-the-counter market at the close of business and (B) has
traded at least once on the national or regional securities exchange or
association or over-the-counter market that is the primary market for the
trading of the Common Stock.
Each Forward Purchase Contract evidenced hereby may be settled
prior to the Stock Purchase Date through Early Settlement or Merger Early
Settlement, in accordance with the terms of the Forward Purchase Contract
Agreement.
In accordance with the terms of the Forward Purchase Contract
Agreement, the Holder of this Upper DECS Certificate shall pay the Purchase
Price for the shares of Common Stock purchased pursuant to each Forward
Purchase Contract evidenced hereby (i) by effecting a Cash Settlement, Early
Settlement or Merger Early Settlement, (ii) by application of payments
received in respect of the Pledged Treasury Consideration acquired from the
proceeds of a remarketing of the related Pledged Notes underlying the Upper
DECS represented by this Upper DECS Certificate, (iii) if the Holder has
elected not to participate in the remarketing, by application of payments
received in respect of the Pledged Treasury Consideration deposited by such
Holder in respect of such Forward Purchase Contract, or (iv) if a Tax Event
Redemption has occurred prior to the successful remarketing of the Notes, by
application of payments received in respect of the Pledged Applicable
Ownership Interest in the Treasury Portfolio purchased by the Collateral
Agent on behalf of the Holder of this Upper DECS Certificate. If, as
provided in the Forward Purchase Contract Agreement, upon the occurrence of
a Last Failed Remarketing the Collateral Agent, for the benefit of the
Company, exercises its rights as a secured creditor with respect to the
Pledged Notes related to this Upper DECS Certificate, any accrued and unpaid
interest on such Pledged Notes will become payable by the Company to the
Holder of this Upper DECS Certificate in the manner provided for in the
Forward Purchase Contract Agreement.
The Company shall not be obligated to issue any shares of Common
Stock in respect of a Forward Purchase Contract or deliver any certificates
or book-entry interest therefor to the Holder unless it shall have received
payment in full of the aggregate Purchase Price for the shares of Common
Stock to be purchased thereunder in the manner herein set forth.
Under the terms of the Pledge Agreement, the Agent will be entitled
to exercise the voting and any other consensual rights pertaining to the
Pledged Notes. Upon receipt of notice of any meeting at which holders of
Notes are entitled to vote or upon the solicitation of consents, waivers or
proxies of holders of Notes, the Agent shall, as soon as practicable
thereafter, mail to the Holders of Upper DECS a notice (a) containing such
information as is contained in the notice or solicitation, (b) stating that
each such Holder on the record date set by the Agent therefor (which, to the
extent possible, shall be the same date as the record date for determining
the holders of Notes entitled to vote) shall be entitled to instruct the
Agent as to the exercise of the voting rights pertaining to the Pledged
Notes constituting a
A-7
part of such Holder's Upper DECS and (c) stating the manner in which such
instructions may be given. Upon the written request of the Holders of Upper
DECS on such record date, the Agent shall endeavor insofar as practicable to
vote or cause to be voted, in accordance with the instructions set forth in
such requests, the maximum number of Pledged Notes as to which any
particular voting instructions are received. In the absence of specific
instructions from the Holder of an Upper DECS, the Agent shall abstain from
voting the Pledged Note evidenced by such Upper DECS.
The Upper DECS Certificates are issuable only in registered form
and only in denominations of a single Upper DECS and any integral multiple
thereof. The transfer of any Upper DECS Certificate will be registered and
Upper DECS Certificates may be exchanged as provided in the Forward Purchase
Contract Agreement. The Upper DECS Registrar may require a Holder, among
other things, to furnish appropriate endorsements and transfer documents
permitted by the Forward Purchase Contract Agreement. No service charge
shall be required for any such registration of transfer or exchange, but the
Company and the Agent may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith. The Holder
of an Upper DECS may substitute for the Pledged Notes, Pledged Treasury
Consideration or Pledged Applicable Ownership Interest in the Treasury
Portfolio, as the case may be, securing its obligations under the related
Forward Purchase Contract Treasury Securities in accordance with the terms
of the Forward Purchase Contract Agreement and the Pledge Agreement. From
and after such Collateral Substitution, the DECS for which such Pledged
Treasury Securities secure the Holder's obligation under the Forward
Purchase Contract shall be referred to as a "Stripped DECS." A Holder that
elects to substitute a Treasury Security for Pledged Notes, Pledged Treasury
Consideration or Pledged Applicable Ownership Interest in the Treasury
Portfolio, as the case may be, thereby creating Stripped DECS, shall be
responsible for any fees or expenses payable in connection therewith. Except
as provided in the Forward Purchase Contract Agreement, for so long as the
Forward Purchase Contract underlying an Upper DECS remains in effect, such
Upper DECS shall not be separable into its constituent parts, and the rights
and obligations of the Holder of such Upper DECS in respect of the Pledged
Note, Pledged Treasury Consideration or Pledged Applicable Ownership
Interest in the Treasury Portfolio, as the case may be, and Forward Purchase
Contract constituting such Upper DECS may be transferred and exchanged only
as an Upper DECS.
A Holder of Stripped DECS may reestablish Upper DECS by delivering
to the Collateral Agent Notes or the appropriate Treasury Consideration or
Applicable Ownership Interest in the Treasury Portfolio, as the case may be,
in exchange for the release of the Pledged Treasury Securities in accordance
with the terms of the Forward Purchase Contract Agreement and the Pledge
Agreement.
The Forward Purchase Contracts and all obligations and rights of
the Company and the Holders thereunder, including, without limitation, the
rights of the Holders to purchase Common Stock, shall immediately and
automatically terminate, without the necessity of any notice or action by
any Holder, the Agent or the Company, if, on or prior to the Stock
A-8
Purchase Date, a Termination Event shall have occurred. Upon the occurrence
of a Termination Event, the Company shall promptly but in no event later
than two Business Days thereafter give written notice to the Agent, the
Collateral Agent and to the Holders, at their addresses as they appear in
the Upper DECS Register. Upon and after the occurrence of a Termination
Event, the Collateral Agent shall release the Pledged Notes, Pledged
Treasury Consideration or Pledged Applicable Ownership Interest in the
Treasury Portfolio, as the case may be, from the Pledge in accordance with
the provisions of the Pledge Agreement.
Upon registration of transfer of this Upper DECS Certificate, the
transferee shall be bound (without the necessity of any other action on the
part of such transferee, except as may be required by the Agent pursuant to
the Forward Purchase Contract Agreement), by the terms of the Forward
Purchase Contract Agreement and the Forward Purchase Contracts evidenced
hereby and the transferor shall be released from the obligations under the
Forward Purchase Contracts evidenced by this Upper DECS Certificate. The
Company covenants and agrees, and the Holder, by its acceptance hereof,
likewise covenants and agrees, to be bound by the provisions of this
paragraph.
The Holder of this Upper DECS Certificate, by its acceptance
hereof, authorizes the Agent to enter into and perform the related Forward
Purchase Contracts forming part of the Upper DECS evidenced hereby on its
behalf as its attorney-in-fact, expressly withholds any consent to the
assumption (i.e., affirmance) of the Forward Purchase Contracts by the
Company or its trustee in the event that the Company becomes the subject of
a case under the Bankruptcy Code, agrees to be bound by the terms and
provisions of the Forward Purchase Contracts, covenants and agrees to
perform such Holder's obligations under such Forward Purchase Contracts,
consents to the provisions of the Forward Purchase Contract Agreement,
authorizes the Agent to enter into and perform the Pledge Agreement on such
Holder's behalf as attorney-in-fact, and consents to the Pledge of the Notes
or the appropriate Treasury Consideration or Applicable Ownership Interest
in the Treasury Portfolio, as the case may be, underlying this Upper DECS
Certificate pursuant to the Pledge Agreement. The Holder further covenants
and agrees, that, to the extent and in the manner provided in the Forward
Purchase Contract Agreement and the Pledge Agreement, but subject to the
terms thereof, payments in respect of the Pledged Notes, Pledged Treasury
Consideration or Pledged Applicable Ownership Interest in the Treasury
Portfolio, as the case may be, to be paid upon settlement of such Holder's
obligations to purchase Common Stock under the Forward Purchase Contract,
shall be paid on the Stock Purchase Date by the Collateral Agent to the
Company in satisfaction of such Holder's obligations under such Forward
Purchase Contract and such Holder shall acquire no right, title or interest
in such payments.
Each Holder of any DECS, and each Beneficial Owner thereof, by its
acceptance thereof or of its interest therein, further agrees to treat (i)
itself as the owner of the related Notes, Treasury Consideration, Applicable
Ownership Interest in the Treasury Portfolio or Treasury Securities, as the
case may be, and (ii) the Notes as indebtedness of the Company,
A-9
in each case, for all United States federal, state and local income and
franchise tax purposes.
Subject to certain exceptions, the provisions of the Forward
Purchase Contract Agreement may be amended with the consent of the Holders
of a majority of the Forward Purchase Contracts.
The Forward Purchase Contracts shall for all purposes be governed
by, and construed in accordance with, the laws of the State of New York,
without regard to its principles of conflicts of laws.
The Company, the Agent and its Affiliates and any agent of the
Company or the Agent may treat the Person in whose name this Upper DECS
Certificate is registered as the owner of the Upper DECS evidenced hereby
for the purpose of receiving quarterly payments on the Notes, the Treasury
Consideration or the Applicable Ownership Interest in the Treasury
Portfolio, as the case may be, performance of the Forward Purchase Contracts
and for all other purposes whatsoever (subject to the Record Date provisions
hereof), whether or not any payments in respect thereof be overdue and
notwithstanding any notice to the contrary, and neither the Company, the
Agent, such Affiliates nor any such agent shall be affected by notice to the
contrary.
The Forward Purchase Contracts shall not, prior to the settlement
thereof, entitle the Holder to any of the rights of a holder of shares of
Common Stock.
A copy of the Forward Purchase Contract Agreement is available for
inspection at the offices of the Agent.
A-10
ABBREVIATIONS
The following abbreviations, when used in the inscription on the
face of this instrument, shall be construed as though they were written out
in full according to applicable laws or regulations:
TEN COM - as tenants in common
UNIF GIFT MIN ACT - Custodian
(cust) (minor)
Under Uniform Gifts to Minors Act
(State)
TEN ENT - as tenants by the entireties
JT TEN - as joint tenants with right of survivorship
and not as tenants in common
Additional abbreviations may also be used though not in the above list.
A-11
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto
(Please insert Social Security or Taxpayer I.D. or other Identifying
Number of Assignee)
(Please Print or Type Name and Address Including Postal Zip Code
of Assignee)
the within Upper DECS Certificate and all rights thereunder, hereby
irrevocably constituting and appointing ___________________________ attorney
to transfer said Upper DECS Certificate on the books of Solutia Inc. with
full power of substitution in the premises.
Dated: _________________________
Signature: _____________________________
NOTICE: The signature to this assignment must correspond with the
name as it appears upon the face of the within Upper DECS Certificate in
every particular, without alteration or enlargement or any change
whatsoever.
Signature Guarantee: ___________________________.
A-12
SETTLEMENT INSTRUCTIONS
The undersigned Holder directs that a certificate or book-entry
interest for shares of Common Stock deliverable upon settlement on or after
the Stock Purchase Date of the Forward Purchase Contracts underlying the
number of Upper DECS evidenced by this Upper DECS Certificate be registered
in the name of, and delivered, together with a check in payment for any
fractional share, to the undersigned at the address indicated below unless a
different name and address have been indicated below. If shares are to be
registered in the name of a Person other than the undersigned, the
undersigned will pay any transfer tax payable incident thereto.
Dated: ______________________ Signature: _________________________
Signature Guarantee: _______________
(if assigned to another person)
If shares are to be registered in the name of REGISTERED HOLDER and
delivered to a Person other than the Holder, please (i) print such Person's
name Please print name and address of and address and (ii) provide a
guarantee of Registered Holder: your signature:
Name Name
Address Address
Social Security or other Taxpayer
Identification Number, if any
A-13
ELECTION TO SETTLE EARLY
The undersigned Holder of this Upper DECS Certificate hereby
irrevocably exercises the option to effect Early Settlement in accordance
with the terms of the Forward Purchase Contract Agreement with respect to
the Forward Purchase Contracts underlying the number of Upper DECS evidenced
by this Upper DECS Certificate specified below. The option to effect Early
Settlement may be exercised only with respect to Forward Purchase Contracts
underlying Upper DECS with an aggregate Stated Amount equal to $1,000 or an
integral multiple thereof. The undersigned Holder directs that a certificate
or book-entry interest for shares of Common Stock deliverable upon such
Early Settlement be registered in the name of, and delivered, together with
a check in payment for any fractional share and any Upper DECS Certificate
representing any Upper DECS evidenced hereby as to which Early Settlement of
the related Forward Purchase Contracts is not effected, to the undersigned
at the address indicated below unless a different name and address have been
indicated below. The Pledged Notes, Pledged Treasury Consideration or
Pledged Applicable Ownership Interest in the Treasury Portfolio, as the case
may be, deliverable upon such Early Settlement will be transferred in
accordance with the transfer instructions set forth below. If shares are to
be registered in the name of a Person other than the undersigned, the
undersigned will pay any transfer tax payable incident thereto.
Dated: ____________________ Signature: ___________________________
Signature Guarantee: _________________
Number of DECS evidenced hereby as to which Early Settlement of the
related Forward Purchase Contracts is being elected:
If shares of Common Stock are to be REGISTERED HOLDER
registered in the name of and delivered to
and Pledged Notes, Pledged Treasury Please print name and address of
Consideration or Pledged Applicable Registered Holder:
Ownership Interest in the Treasury
Portfolio, as the case may be, are to be
transferred to a Person other than the
Holder, please print such Person's name and
address:
Name Name
Address Address
Social Security or other Taxpayer
Identification Number, if any
A-14
Transfer instructions for Pledged Notes, Pledged Treasury
Consideration or the Pledged Applicable Ownership Interest in the Treasury
Portfolio, as the case may be, transferable upon Early Settlement:
A-15
(TO BE ATTACHED TO GLOBAL CERTIFICATES)
SCHEDULE OF INCREASES OR DECREASES IN GLOBAL CERTIFICATE
The following increases or decreases in this Global Certificate
have been made:
Stated Amount of
the Global
Certificate
Amount of Decrease in Amount of Increase in Following Such
Stated Amount of the Stated Amount of the Decrease or Signature of
Date Global Certificate Global Certificate Increase Authorizing Officer
A-16
EXHIBIT B
FORM OF STRIPPED DECS CERTIFICATE
[FOR INCLUSION IN GLOBAL CERTIFICATES ONLY -- THIS CERTIFICATE IS A
GLOBAL CERTIFICATE WITHIN THE MEANING OF THE FORWARD PURCHASE CONTRACT
AGREEMENT (AS HEREINAFTER DEFINED) AND IS REGISTERED IN THE NAME OF A
CLEARING AGENCY OR A NOMINEE THEREOF. THIS CERTIFICATE MAY NOT BE EXCHANGED
IN WHOLE OR IN PART FOR A CERTIFICATE REGISTERED, AND NO TRANSFER OF THIS
CERTIFICATE IN WHOLE OR IN PART MAY BE REGISTERED, IN THE NAME OF ANY PERSON
OTHER THAN SUCH CLEARING AGENCY OR A NOMINEE THEREOF, EXCEPT IN THE LIMITED
CIRCUMSTANCES DESCRIBED IN THE FORWARD PURCHASE CONTRACT AGREEMENT.
Unless this Certificate is presented by an authorized
representative of The Depository Trust Company (55 ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇,
▇▇▇ ▇▇▇▇) to the Company or its agent for registration of transfer, exchange
or payment, and any Certificate issued is registered in the name of Cede &
Co., or such other name as requested by an authorized representative of The
Depository Trust Company, and any payment hereon is made to Cede & Co., ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY A PERSON IS
WRONGFUL since the registered owner hereof, Cede & Co., has an interest
herein.]
(Form of Face of Stripped DECS Certificate)
No. _________________ CUSIP No. ____________
Number of Stripped DECS ____________________
This Stripped DECS Certificate certifies that [For inclusion in
Global Certificates only -- Cede & Co.] is the registered Holder of the
number of Stripped DECS set forth above [For inclusion in Global
Certificates only - or such other number of Stripped DECS reflected in the
Schedule of Increases or Decreases in Global Certificate attached hereto].
Each Stripped DECS represents (i) a undivided beneficial ownership
interest in a Treasury Security, subject to the Pledge of such interest in
such Treasury Security by such Holder pursuant to the Pledge Agreement, and
(ii) the rights and obligations of the Holder under one Forward Purchase
Contract with Solutia Inc., a Delaware corporation (the "Company"). All
capitalized terms used herein which are defined in the Forward Purchase
Contract Agreement have the meaning set forth therein.
Pursuant to the Pledge Agreement, the Treasury Security
constituting part of each Stripped DECS evidenced hereby has been pledged to
the Collateral Agent, for the benefit of the Company, to secure the
obligations of the Holder under the Forward Purchase Contract comprising a
part of such Stripped DECS.
Each Forward Purchase Contract evidenced hereby obligates the
Holder of this Stripped DECS Certificate to purchase, and the Company to
sell, on (the "Stock Purchase Date"), at a price equal to $ (the "Stated
Amount"), a number of shares of common stock, $0.01 par value per share
("Common Stock"), of the Company, equal to the Settlement Rate, unless on or
prior to the
B-1
Stock Purchase Date there shall have occurred a Termination Event or an
Early Settlement, Merger Early Settlement or Cash Settlement with respect to
the Stripped DECS of which such Forward Purchase Contract is a part, all as
provided in the Forward Purchase Contract Agreement and more fully described
on the reverse hereof. The Purchase Price (as defined herein) for the shares
of Common Stock purchased pursuant to each Forward Purchase Contract
evidenced hereby, if not paid earlier, shall be paid on the Stock Purchase
Date by application of payments received in respect of the Pledged Treasury
Securities pledged to secure the obligations under such Forward Purchase
Contract in accordance with the terms of the Pledge Agreement.
Reference is hereby made to the further provisions set forth on the
reverse hereof, which further provisions shall for all purposes have the
same effect as if set forth at this place.
Unless the certificate of authentication hereon has been executed
by the Agent by manual signature, this Stripped DECS Certificate shall not
be entitled to any benefit under the Pledge Agreement or the Forward
Purchase Contract Agreement or be valid or obligatory for any purpose.
B-2
IN WITNESS WHEREOF, the Company has caused this instrument to be
duly executed.
SOLUTIA INC.
By: ____________________________________
Name:
Title:
HOLDER SPECIFIED ABOVE (as to obligations of such Holder
under the Forward Purchase Contracts)
By: JPMORGAN CHASE BANK, not individually but
solely as Attorney-in-Fact of such Holder
By: ____________________________________
Authorized Officer
B-3
AGENT'S CERTIFICATE OF AUTHENTICATION
This is one of the Stripped DECS referred to in the
within-mentioned Forward Purchase Contract Agreement.
JPMORGAN CHASE BANK,
as Forward Purchase Contract Agent
Dated: ________________________ By: _____________________________________
Authorized Officer
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(Reverse of Stripped DECS Certificate)
Each Forward Purchase Contract evidenced hereby is governed by a
Forward Purchase Contract Agreement, dated as of , 2002 (as may be
supplemented from time to time, the "Forward Purchase Contract Agreement"),
between the Company and JPMorgan Chase Bank, as Forward Purchase Contract
Agent (including its successors thereunder, herein called the "Agent"), to
which Forward Purchase Contract Agreement and supplemental agreements
thereto reference is hereby made for a description of the respective rights,
limitations of rights, obligations, duties and immunities thereunder of the
Agent, the Company and the Holders and of the terms upon which the Stripped
DECS Certificates are, and are to be, executed and delivered.
Each Forward Purchase Contract evidenced hereby obligates the
Holder of this Stripped DECS Certificate to purchase, and the Company to
sell, on the Stock Purchase Date at a price equal to $ (the "Purchase
Price"), a number of shares of Common Stock of the Company equal to the
Settlement Rate, unless, on or prior to the Stock Purchase Date, there shall
have occurred a Termination Event or an Early Settlement, Merger Early
Settlement or Cash Settlement with respect to the DECS of which such Forward
Purchase Contract is a part. The "Settlement Rate" is equal to (a) if the
Applicable Market Value (as defined below) is greater than or equal to $
(the "Threshold Appreciation Price"), shares of Common Stock per Forward
Purchase Contract, (b) if the Applicable Market Value is less than the
Threshold Appreciation Price but is greater than $ , the number of shares of
Common Stock per Forward Purchase Contract equal to the Stated Amount
divided by the Applicable Market Value and (c) if the Applicable Market
Value is less than or equal to $ , shares of Common Stock per Forward
Purchase Contract, in each case subject to adjustment as provided in the
Forward Purchase Contract Agreement. No fractional shares of Common Stock
will be issued upon settlement of Forward Purchase Contracts, as provided in
the Forward Purchase Contract Agreement.
The "Applicable Market Value" means the average of the Closing
Price per share of Common Stock on each of the 20 consecutive Trading Days
ending on the third Trading Day immediately preceding the Stock Purchase
Date.
The "Closing Price" of the Common Stock on any date of
determination means the closing sale price (or, if no closing price is
reported, the last reported sale price) of the Common Stock on the New York
Stock Exchange (the "NYSE") on such date or, if the Common Stock is not
listed for trading on the NYSE on any such date, as reported in the
composite transactions for the principal United States securities exchange
on which the Common Stock is so listed, or if the Common Stock is not so
listed on a United States national or regional securities exchange, as
reported by The Nasdaq Stock Market, or, if the Common Stock is not so
reported, the last quoted bid price for the Common Stock in the
over-the-counter market as reported by the National Quotation Bureau or
similar organization, or, if such bid price is not available, the market
value of the Common Stock on such date as determined by a nationally
recognized independent investment banking firm retained for this purpose by
the Company.
A "Trading Day" means a day on which the Common Stock (A) is not
suspended from trading on any national or regional securities exchange or
association or over-the-counter market at the close of business and (B) has
traded at least once on the national or regional securities
B-5
exchange or association or over-the-counter market that is the primary
market for the trading of the Common Stock.
Each Forward Purchase Contract evidenced hereby may be settled
prior to the Stock Purchase Date through Early Settlement, Merger Early
Settlement or Cash Settlement, in accordance with the terms of the Forward
Purchase Contract Agreement.
In accordance with the terms of the Forward Purchase Contract
Agreement, the Holder of this Stripped DECS Certificate shall pay the
Purchase Price for the shares of Common Stock purchased pursuant to each
Forward Purchase Contract evidenced hereby (i) by effecting an Early
Settlement, Merger Early Settlement or Cash Settlement or (ii) by
application of payments received in respect of the Pledged Treasury
Securities underlying the Stripped DECS represented by this Stripped DECS
Certificate.
The Company shall not be obligated to issue any shares of Common
Stock in respect of a Forward Purchase Contract or deliver any certificates
or book-entry interest therefor to the Holder unless it shall have received
payment in full of the aggregate Purchase Price for the shares of Common
Stock to be purchased thereunder in the manner herein set forth.
The Stripped DECS Certificates are issuable only in registered form
and only in denominations of a single Stripped DECS and any integral
multiple thereof. The transfer of any Stripped DECS Certificate will be
registered and Stripped DECS Certificates may be exchanged as provided in
the Forward Purchase Contract Agreement. The Stripped DECS Registrar may
require a Holder, among other things, to furnish appropriate endorsements
and transfer documents permitted by the Forward Purchase Contract Agreement.
No service charge shall be required for any such registration of transfer or
exchange, but the Company and the Agent may require payment of a sum
sufficient to cover any tax or other governmental charge payable in
connection therewith. The Holder of a Stripped DECS may substitute for the
Pledged Treasury Securities securing its obligations under the related
Forward Purchase Contract Notes or the appropriate Treasury Consideration or
Applicable Ownership Interest in the Treasury Portfolio in accordance with
the terms of the Forward Purchase Contract Agreement and the Pledge
Agreement. From and after such substitution, the DECS for which such Pledged
Notes, Pledged Treasury Consideration or Pledged Applicable Ownership
Interest in the Treasury Portfolio secures the Holder's obligation under the
Forward Purchase Contract shall be referred to as an "Upper DECS." A Holder
that elects to substitute Notes or the appropriate Treasury Consideration or
Applicable Ownership Interest in the Treasury Portfolio, as the case may be,
for Pledged Treasury Securities, thereby reestablishing Upper DECS, shall be
responsible for any fees or expenses payable in connection therewith. Except
as provided in the Forward Purchase Contract Agreement, for so long as the
Forward Purchase Contract underlying a Stripped DECS remains in effect, such
Stripped DECS shall not be separable into its constituent parts, and the
rights and obligations of the Holder of such Stripped DECS in respect of the
Pledged Treasury Security and the Forward Purchase Contract constituting
such Stripped DECS may be transferred and exchanged only as a Stripped DECS.
The Forward Purchase Contracts and all obligations and rights of
the Company and the Holders thereunder, including, without limitation, the
rights and obligations of Holders to purchase Common Stock, shall
immediately and automatically terminate, without the necessity of
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any notice or action by any Holder, the Agent or the Company, if, on or
prior to the Stock Purchase Date, a Termination Event shall have occurred.
Upon the occurrence of a Termination Event, the Company shall promptly but
in no event later than two Business Days thereafter give written notice to
the Agent, the Collateral Agent and to the Holders, at their addresses as
they appear in the Stripped DECS Register. Upon and after the occurrence of
a Termination Event, the Collateral Agent shall release the Pledged Treasury
Securities from the Pledge in accordance with the provisions of the Pledge
Agreement.
Upon registration of transfer of this Stripped DECS Certificate,
the transferee shall be bound (without the necessity of any other action on
the part of such transferee, except as may be required by the Agent pursuant
to the Forward Purchase Contract Agreement), by the terms of the Forward
Purchase Contract Agreement and the Forward Purchase Contracts evidenced
hereby and the transferor shall be released from the obligations under the
Forward Purchase Contracts evidenced by this Stripped DECS Certificate. The
Company covenants and agrees, and the Holder, by its acceptance hereof,
likewise covenants and agrees, to be bound by the provisions of this
paragraph.
The Holder of this Stripped DECS Certificate, by its acceptance
hereof, authorizes the Agent to enter into and perform the related Forward
Purchase Contracts forming part of the Stripped DECS evidenced hereby on its
behalf as its attorney-in-fact, expressly withholds any consent to the
assumption (i.e., affirmance) of the Forward Purchase Contracts by the
Company or its trustee in the event that the Company becomes the subject of
a case under the Bankruptcy Code, agrees to be bound by the terms and
provisions of the Forward Purchase Contracts, covenants and agrees to
perform such Holder's obligations under such Forward Purchase Contracts,
consents to the provisions of the Forward Purchase Contract Agreement,
authorizes the Agent to enter into and perform the Pledge Agreement on such
Holder's behalf as attorney-in-fact, and consents to the Pledge of the
Treasury Securities underlying this Stripped DECS Certificate pursuant to
the Pledge Agreement. The Holder further covenants and agrees, that, to the
extent and in the manner provided in the Forward Purchase Contract Agreement
and the Pledge Agreement, but subject to the terms thereof, payments in
respect of the Pledged Treasury Securities, to be paid upon settlement of
such Holder's obligations to purchase Common Stock under the Forward
Purchase Contract, shall be paid on the Stock Purchase Date by the
Collateral Agent to the Company in satisfaction of such Holder's obligations
under such Forward Purchase Contract and such Holder shall acquire no right,
title or interest in such payments.
Each Holder of any DECS, and each Beneficial Owner thereof, by its
acceptance thereof or of its interest therein, further agrees to treat (i)
itself as the owner of the related Notes, Treasury Consideration or Treasury
Securities, as the case may be, and (ii) the Notes as indebtedness of the
Company, in each case, for United States federal, state and local income and
franchise tax purposes.
Subject to certain exceptions, the provisions of the Forward
Purchase Contract Agreement may be amended with the consent of the Holders
of a majority of the Forward Purchase Contracts.
The Forward Purchase Contracts shall for all purposes be governed
by, and construed in accordance with, the laws of the State of New York,
without regard to its principles of conflicts of laws.
B-7
The Company, the Agent and its Affiliates and any agent of the
Company or the Agent may treat the Person in whose name this Stripped DECS
Certificate is registered as the owner of the Stripped DECS evidenced hereby
for the purpose of performance of the Forward Purchase Contracts and for all
other purposes whatsoever (subject to the Record Date provisions hereof),
whether or not any payments in respect thereof be overdue and
notwithstanding any notice to the contrary, and neither the Company, the
Agent, such Affiliate, nor any such agent shall be affected by notice to the
contrary.
The Forward Purchase Contracts shall not, prior to the settlement
thereof, entitle the Holder to any of the rights of a holder of shares of
Common Stock.
A copy of the Forward Purchase Contract Agreement is available for
inspection at the offices of the Agent.
B-8
ABBREVIATIONS
The following abbreviations, when used in the inscription on the
face of this instrument, shall be construed as though they were written out
in full according to applicable laws or regulations:
TEN COM - as tenants in common
UNIF GIFT MIN ACT - Custodian
(cust) (minor)
Under Uniform Gifts to Minors Act
(State)
TEN ENT - as tenants by the entireties
JT TEN - as joint tenants with right of survivorship and
not as tenants in common
Additional abbreviations may also be used though not in the above
list.
B-9
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and
transfer(s) unto
(Please insert Social Security or Taxpayer I.D. or other Identifying
Number of Assignee)
(Please Print or Type Name and Address Including Postal Zip Code
of Assignee)
the within Stripped DECS Certificate and all rights thereunder, hereby
irrevocably constituting and appointing ____________________________
attorney to transfer said Stripped DECS Certificate on the books of Solutia
Inc. with full power of substitution in the premises.
Dated: ______________________ Signature: ___________________________
NOTICE: The signature to this assignment
must correspond with the name as it
appears upon the face of the within
Stripped DECS Certificate in every
particular, without alteration or
enlargement or any change whatsoever.
Signature Guarantee: ___________________________________________________
B-10
SETTLEMENT INSTRUCTIONS
The undersigned Holder directs that a certificate or book-entry
interest for shares of Common Stock deliverable upon settlement on or after
the Stock Purchase Date of the Forward Purchase Contracts underlying the
number of Stripped DECS evidenced by this Stripped DECS Certificate be
registered in the name of, and delivered, together with a check in payment
for any fractional share, to the undersigned at the address indicated below
unless a different name and address have been indicated below. If shares are
to be registered in the name of a Person other than the undersigned, the
undersigned will pay any transfer tax payable incident thereto.
Dated: _________________ Signature: _________________________________________
Signature Guarantee: _______________________________
(if assigned to another person)
If shares are to be registered in the REGISTERED HOLDER name of and
delivered to a Person other than the Holder, please (i) print such Please
print name and address of Person's name and address and (ii) Registered
Holder: provide a guarantee of your signature:
Name Name
Address Address
Social Security or other Taxpayer
Identification Number, if any
B-11
ELECTION TO SETTLE EARLY
The undersigned Holder of this Stripped DECS Certificate hereby
irrevocably exercises the option to effect Early Settlement in accordance
with the terms of the Forward Purchase Contract Agreement with respect to
the Forward Purchase Contracts underlying the number of Stripped DECS
evidenced by this Stripped DECS Certificate specified below. The option to
effect Early Settlement may be exercised only with respect to Forward
Purchase Contracts underlying Stripped DECS with an aggregate Stated Amount
equal to $1,000 or an integral multiple thereof. The undersigned Holder
directs that a certificate or book-entry interest for shares of Common Stock
deliverable upon such Early Settlement be registered in the name of, and
delivered, together with a check in payment for any fractional share and any
Stripped DECS Certificate representing any Stripped DECS evidenced hereby as
to which Early Settlement of the related Forward Purchase Contracts is not
effected, to the undersigned at the address indicated below unless a
different name and address have been indicated below. Pledged Treasury
Securities deliverable upon such Early Settlement will be transferred in
accordance with the transfer instructions set forth below. If shares are to
be registered in the name of a Person other than the undersigned, the
undersigned will pay any transfer tax payable incident thereto.
Dated: ____________________ Signature: ___________________________________
Signature Guarantee: _________________________
Number of DECS evidenced hereby as to which Early Settlement of the
related Forward Purchase Contracts is being elected:
If shares of Common Stock are to be registered REGISTERED HOLDER
in the name of and delivered to and Pledged
Treasury Securities are to be transferred
to a Person other than the Holder, please Please print name and address
print such Person's name and address: of Registered Holder:
Name Name
---- ----
Address Address
Social Security or other Taxpayer
Identification Number, if any
Transfer instructions for Pledged Treasury Securities transferable
upon Early Settlement:
B-12
(TO BE ATTACHED TO GLOBAL CERTIFICATES)
SCHEDULE OF INCREASES OR DECREASES IN GLOBAL CERTIFICATE
The following increases or decreases in this Global Certificate
have been made:
Amount of Increase Stated Amount of the
Amount of Decrease in in Stated Amount of Global Certificate
Stated Amount of the the Global Following Such Signature of
Date Global Certificate Certificate Decrease or Increase Authorizing Officer
B-13
EXHIBIT C
INSTRUCTION FROM FORWARD PURCHASE CONTRACT AGENT
TO COLLATERAL AGENT
[name and address of Collateral Agent]
Re: DECS of Solutia Inc. (the "Company")
------------------------------------
We hereby notify you in accordance with Section [4.1] [4.2] of the
Pledge Agreement, dated as of , 2002, (the "Pledge Agreement") among the
Company, you, as Collateral Agent, Custodial Agent and Securities
Intermediary and us, as Forward Purchase Contract Agent and as
attorney-in-fact for the holders of [Upper DECS] [Stripped DECS] from time
to time, that the Holder of DECS listed below (the "Holder") has elected to
substitute [$_____ aggregate principal amount of Treasury Securities (CUSIP
No. _________)] [$_______ aggregate principal amount of Notes or $_____
aggregate principal amount of Treasury Consideration (CUSIP No. _____) or
the Applicable Ownership Interest in the Treasury Portfolio, as the case may
be,] in exchange for the related [Pledged Notes, Pledged Treasury
Consideration or the appropriate Pledged Applicable Ownership Interest in
the Treasury Portfolio, as the case may be,] [Pledged Treasury Securities]
held by you in accordance with the Pledge Agreement and has delivered to us
a notice stating that the Holder has Transferred [Treasury Securities]
[Notes, the Treasury Consideration or the appropriate Applicable Ownership
Interest in the Treasury Portfolio, as the case may be,] to you, as
Collateral Agent. We hereby instruct you, upon receipt of such [Pledged
Treasury Securities] [Pledged Notes, Pledged Treasury Consideration or the
appropriate Pledged Applicable Ownership Interest in the Treasury Portfolio,
as the case may be,], and upon the payment by such Holder of any applicable
fees, to release the [Notes, the Treasury Consideration or the appropriate
Applicable Ownership Interest in the Treasury Portfolio, as the case may
be,] [Treasury Securities] related to such [Upper DECS] [Stripped DECS] 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: _____________________
JPMORGAN CHASE BANK,
AS FORWARD PURCHASE CONTRACT AGENT
By: _________________________________
Name:
Title:
C-1
Please print name and address of Registered Holder electing to
substitute [Treasury Securities] [Notes, Treasury Consideration or the
appropriate Applicable Ownership Interest in the Treasury Portfolio] for the
[Pledged Notes, Pledged Treasury Consideration or the appropriate Pledged
Applicable Ownership Interest in the Treasury Portfolio] [Pledged Treasury
Securities]:
Name:
Social Security or other Taxpayer
Identification Number, if any:
Address:
C-2
EXHIBIT D
INSTRUCTION TO FORWARD PURCHASE CONTRACT AGENT
JPMorgan Chase Bank,
as Forward Purchase Contract Agent
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: Institutional Trust Services
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Re: DECS of Solutia Inc. (the "Company")
The undersigned Holder hereby notifies you that it has delivered to
, as Collateral Agent, Custodial Agent and Securities Intermediary
[$_______ aggregate principal amount of Treasury Securities (CUSIP No.
_________)] [$_______ aggregate principal amount of Notes or $_____
principal amount of Treasury Consideration (CUSIP No. _____) or the
appropriate Applicable Ownership Interest in the Treasury Portfolio, as the
case may be] in exchange for the related [Pledged Notes, Pledged Treasury
Consideration or the appropriate Pledged Applicable Ownership Interest in
the Treasury Portfolio, as the case may be] [Pledged Treasury Securities]
held by the Collateral Agent, in accordance with Section [4.1] [4.2] of the
Pledge Agreement, dated , 2002 (the "Pledge Agreement"), among you, the
Company and the Collateral Agent. The undersigned Holder has paid the
Collateral Agent all applicable fees relating to such exchange. The
undersigned Holder hereby instructs you to instruct the Collateral Agent to
release to you on behalf of the undersigned Holder the [Pledged Notes,
Pledged Treasury Consideration or the appropriate Pledged Applicable
Ownership Interest in the Treasury Portfolio, as the case may be] [Pledged
Treasury Securities] related to such [Upper DECS] [Stripped DECS].
Capitalized terms used herein but not defined shall have the meaning set
forth in the Pledge Agreement.
Date: ___________________ Signature: ___________________________________
Signature Guarantee: _________________________
Please print name and address of Registered Holder:
Name:
Social Security or other Taxpayer Identification Number, if any:
Address:
D-1
EXHIBIT E
NOTICE TO SETTLE BY SEPARATE CASH
JPMorgan Chase Bank,
as Forward Purchase Contract Agent
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attn: Institutional Trust Services
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Re: DECS of Solutia Inc. (the "Company")
The undersigned Holder hereby irrevocably notifies you in
accordance with Section 5.3 of the Forward Purchase Contract Agreement dated
as of , 2002 among the Company and yourselves, as Forward Purchase Contract
Agent and as Attorney-in-Fact for the Holders of the Forward Purchase
Contracts, that such Holder has elected to pay to the Collateral Agent, on
or prior to 11:00 a.m. New York City time, on the Business Day immediately
preceding the Stock Purchase Date, (in lawful money of the United States by
[certified or cashiers check or] wire transfer, in each case in immediately
available funds), $_________ as the Purchase Price for the shares of Common
Stock issuable to such Holder by the Company under the related Forward
Purchase Contract on the Stock Purchase Date. The undersigned Holder hereby
instructs you to notify promptly the Collateral Agent of the undersigned
Holder's election to make such cash settlement with respect to the Forward
Purchase Contracts related to such Holder's Upper DECS.
Dated:_____________ __________________________________________
Signature
Signature Guarantee:______________________
Signatures must be guaranteed by an "eligible guarantor institution" meeting
the requirements of the Registrar, which requirements include membership or
participation in the Security Transfer Agent Medallion Program ("STAMP") or
such other "signature guarantee program" as may be determined by the
Registrar in addition to, or in substitution for, STAMP, all in accordance
with the Securities Exchange Act of 1934, as amended.
Please print name and address of Registered Holder:
Social Security or other Taxpayer Identification Number, if any:
E-1
EXHIBIT F
FORM OF REMARKETING AGREEMENT
F-1