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TEXAS UTILITIES COMPANY
AND
THE BANK OF NEW YORK,
AS PURCHASE CONTRACT AGENT
AND TRUSTEE
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PURCHASE CONTRACT AGREEMENT
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Dated as of July 1, 1998
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TIE SHEET
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Section of Section of
Trust Indenture Act Purchase Contract
of 1939, as amended Agreement
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310(a) . . . . . . . . . . . . . . . . . . . . . . . 7.8
310(b) . . . . . . . . . . . . . . . . . . . . . . . 7.9(g),
11.8
310(c) . . . . . . . . . . . . . . . . . . . . . . Inapplicable
311(a) . . . . . . . . . . . . . . . . . . . . . . . 11.2(b)
311(b) . . . . . . . . . . . . . . . . . . . . . . . 11.2(b)
311(c) . . . . . . . . . . . . . . . . . . . . . . Inapplicable
312(a) . . . . . . . . . . . . . . . . . . . . . . . 11.2(a)
312(b) . . . . . . . . . . . . . . . . . . . . . . . 11.2(b)
313 . . . . . . . . . . . . . . . . . . . . . . . . . 11.3
314(a) . . . . . . . . . . . . . . . . . . . . . . . 11.4
314(b) . . . . . . . . . . . . . . . . . . . . . . Inapplicable
314(c) . . . . . . . . . . . . . . . . . . . . . . . 11.5
314(d) . . . . . . . . . . . . . . . . . . . . . . Inapplicable
314(e) . . . . . . . . . . . . . . . . . . . . . . . 1.1, 1.3,
11.5
314(f) . . . . . . . . . . . . . . . . . . . . . . . 11.1
315(a) . . . . . . . . . . . . . . . . . . . . . . . 7.1(a)
315(b) . . . . . . . . . . . . . . . . . . . . . . . 7.2
315(c) . . . . . . . . . . . . . . . . . . . . . . . 7.1(e)
315(d) . . . . . . . . . . . . . . . . . . . . . . . 7.1(b)
316(a) . . . . . . . . . . . . . . . . . . . . . . . 11.6
316(b) . . . . . . . . . . . . . . . . . . . . . . . 6.1
316(c) . . . . . . . . . . . . . . . . . . . . . . . 11.2
317(a) . . . . . . . . . . . . . . . . . . . . . . Inapplicable
317(b) . . . . . . . . . . . . . . . . . . . . . . Inapplicable
318(a) . . . . . . . . . . . . . . . . . . . . . . . 11.1(b)
318(b) . . . . . . . . . . . . . . . . . . . . . . . 11.1
318(c) . . . . . . . . . . . . . . . . . . . . . . . 11.1(a)
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* This Cross-Reference Table does not constitute part of the
Purchase Contract Agreement and shall not affect the
interpretation of any of its terms or provisions.
TABLE OF CONTENTS
Page No.
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RECITALS . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE I
Definitions and Other Provisions
of General Applications . . . . . . . . 1
SECTION 1.1. Definitions . . . . . . . . . . . . . . . . 1
SECTION 1.2. Compliance Certificates and Opinions . . . 13
SECTION 1.3. Form of Documents Delivered to Agent . . . 13
SECTION 1.4. Acts of Holders; Record Dates . . . . . . . 14
SECTION 1.5. Notices . . . . . . . . . . . . . . . . . . 15
SECTION 1.6. Notice to Holders; Waiver . . . . . . . . . 16
SECTION 1.7. Effect of Headings and Table of Contents . 16
SECTION 1.8. Successors and Assigns . . . . . . . . . . 16
SECTION 1.9. Separability Clause . . . . . . . . . . . . 16
SECTION 1.10. Benefits of Agreement . . . . . . . . . . . 16
SECTION 1.11. Governing Law . . . . . . . . . . . . . . . 16
SECTION 1.12. Legal Holidays . . . . . . . . . . . . . . 17
SECTION 1.13. Counterparts . . . . . . . . . . . . . . . 17
SECTION 1.14. Inspection of Agreement . . . . . . . . . . 17
ARTICLE II
Certificate Forms . . . . . . . . . . 17
SECTION 2.1. Forms of Certificates Generally . . . . . . 17
SECTION 2.2. Form of Agent's Certificate of
Authentication . . . . . . . . . . . . . . 18
ARTICLE III
The Securities . . . . . . . . . . 18
SECTION 3.1. Title and Terms; Denominations . . . . . . 18
SECTION 3.2. Rights and Obligations Evidenced by the
Certificates . . . . . . . . . . . . . . . 19
SECTION 3.3. Execution, Authentication, Delivery and
Dating . . . . . . . . . . . . . . . . . . 19
SECTION 3.4. Temporary Certificates . . . . . . . . . . 20
SECTION 3.5. Registration; Registration of Transfer and
Exchange . . . . . . . . . . . . . . . . . 20
SECTION 3.6. Book-Entry Interests . . . . . . . . . . . 22
SECTION 3.7. Notices to Holders . . . . . . . . . . . . 22
SECTION 3.8. Appointment of Successor Clearing Agency . 22
SECTION 3.9. Definitive Certificates . . . . . . . . . . 22
SECTION 3.10. Mutilated, Destroyed, Lost and Stolen
Certificates . . . . . . . . . . . . . . . 23
SECTION 3.11. Persons Deemed Owners . . . . . . . . . . . 24
SECTION 3.12. Cancellation . . . . . . . . . . . . . . . 24
SECTION 3.13. Establishment or Reestablishment of Growth
PRIDES . . . . . . . . . . . . . . . . . . 25
SECTION 3.14. Establishment or Reestablishment of Income
PRIDES . . . . . . . . . . . . . . . . . . 27
SECTION 3.15. Transfer of Collateral upon Occurrence of
Termination Event . . . . . . . . . . . . 28
SECTION 3.16. No Consent to Assumption . . . . . . . . . 29
ARTICLE IV
The Debt Securities . . . . . . . . . 29
SECTION 4.1. Payment of Interest; Rights to Interest
Preserved; Interest Rate Reset; Notice . . 29
SECTION 4.2. Notice and Voting . . . . . . . . . . . . . 30
SECTION 4.3. Tax Event Redemption . . . . . . . . . . . 31
SECTION 4.4. Consent to Treatment for Tax Purposes . . . 31
ARTICLE V
The Purchase Contracts . . . . . . . . 32
SECTION 5.1. Purchase of Shares of Common Stock . . . . 32
SECTION 5.2. Contract Adjustment Payments . . . . . . . 33
SECTION 5.3. Deferral of Payment Dates For Contract
Adjustment Payments . . . . . . . . . . . 34
SECTION 5.4. Payment of Purchase Price . . . . . . . . . 35
SECTION 5.5. Issuance of Shares of Common Stock . . . . 38
SECTION 5.6. Adjustment of Settlement Rate . . . . . . . 39
SECTION 5.7. Notice of Adjustments and Certain Other
Events . . . . . . . . . . . . . . . . . . 44
SECTION 5.8. Termination Event; Notice . . . . . . . . . 44
SECTION 5.9. Early Settlement . . . . . . . . . . . . . 45
SECTION 5.10. No Fractional Shares . . . . . . . . . . . 46
SECTION 5.11. Charges and Taxes . . . . . . . . . . . . . 47
ARTICLE VI
Remedies . . . . . . . . . . . . 47
SECTION 6.1. Unconditional Right of Holders to Receive
Contract Adjustment Payments and to Purchase
Common Stock . . . . . . . . . . . . . . . 47
SECTION 6.2. Restoration of Rights and Remedies . . . . 47
SECTION 6.3. Rights and Remedies Cumulative . . . . . . 48
SECTION 6.4. Delay or Omission Not Waiver . . . . . . . 48
SECTION 6.5. Undertaking for Costs . . . . . . . . . . . 48
SECTION 6.6. Waiver of Stay or Extension Laws . . . . . 48
ARTICLE VII
The Agent . . . . . . . . . . . . 49
SECTION 7.1. Certain Duties and Responsibilities . . . . 49
SECTION 7.2. Notice of Default . . . . . . . . . . . . . 50
SECTION 7.3. Certain Rights of Agent . . . . . . . . . . 50
SECTION 7.4. Not Responsible for Recitals or Issuance of
Securities . . . . . . . . . . . . . . . . 51
SECTION 7.5. May Hold Securities . . . . . . . . . . . . 51
SECTION 7.6. Money Held in Custody . . . . . . . . . . . 51
SECTION 7.7. Compensation and Reimbursement . . . . . . 51
SECTION 7.8. Corporate Agent Required; Eligibility . . . 52
SECTION 7.9. Resignation and Removal; Appointment of
Successor . . . . . . . . . . . . . . . . 52
SECTION 7.10. Acceptance of Appointment by Successor . . 53
SECTION 7.11. Merger, Conversion, Consolidation or
Succession to Business . . . . . . . . . . 54
SECTION 7.12. Preservation of Information; Communications
to Holders . . . . . . . . . . . . . . . . 54
SECTION 7.13. No Obligations of Agent . . . . . . . . . . 54
SECTION 7.14. Tax Compliance . . . . . . . . . . . . . . 54
ARTICLE VIII
Supplemental Agreements . . . . . . . . 55
SECTION 8.1. Supplemental Agreements Without Consent of
Holders . . . . . . . . . . . . . . . . . 55
SECTION 8.2. Supplemental Agreements with Consent of
Holders . . . . . . . . . . . . . . . . . 55
SECTION 8.3. Execution of Supplemental Agreements . . . 56
SECTION 8.4. Effect of Supplemental Agreements . . . . . 57
SECTION 8.5. Reference to Supplemental Agreements . . . 57
ARTICLE IX
Consolidation, Merger, Sale or Conveyance . . . . 57
SECTION 9.1. Covenant Not to Merge, Consolidate, Sell or
Convey Property Except Under Certain
Conditions . . . . . . . . . . . . . . . . 57
SECTION 9.2. Rights and Duties of Successor Corporation 57
SECTION 9.3. Opinion of Counsel Given to Agent . . . . . 58
ARTICLE X
Covenants . . . . . . . . . . . . 58
SECTION 10.1. Performance Under Purchase Contracts . . . 58
SECTION 10.2. Maintenance of Office or Agency . . . . . . 58
SECTION 10.3. Company to Reserve Common Stock . . . . . . 59
SECTION 10.4. Covenants as to Common Stock . . . . . . . 59
ARTICLE XI
Trust Indenture Act . . . . . . . . . 59
SECTION 11.1. Trust Indenture Act; Application . . . . . 59
SECTION 11.2. Lists of Holders of Securities . . . . . . 59
SECTION 11.3. Reports by the Agent . . . . . . . . . . . 60
SECTION 11.4. Periodic Reports to Agent . . . . . . . . . 60
SECTION 11.5. Evidence of Compliance with Conditions
Precedent . . . . . . . . . . . . . . . . 60
SECTION 11.6. Defaults; Waiver . . . . . . . . . . . . . 60
SECTION 11.7. Agent's Knowledge of Defaults . . . . . . . 60
SECTION 11.8. Conflicting Interests . . . . . . . . . . . 61
SECTION 11.9. Direction of Agent. . . . . . . . . . . . . 61
EXHIBIT A: FORM OF INCOME PRIDES CERTIFICATE . . . . . . . . A-1
EXHIBIT B: FORM OF GROWTH PRIDES CERTIFICATE . . . . . . . . B-1
EXHIBIT C: NOTICE TO SETTLE BY SEPARATE CASH . . . . . . . . C-1
PURCHASE CONTRACT AGREEMENT, dated as of July 1, 1998,
between Texas Utilities Company, a Texas corporation (the
"Company"), and The Bank of New York, acting as purchase contract
agent, attorney-in-fact and trustee for the Holders of Securities
from time to time (in any one or more of such capacities, the
"Agent").
RECITALS
The Company has duly authorized the execution and
delivery of this Agreement and the Certificates evidencing the
Securities.
All things necessary to make the Purchase Contracts,
when the Certificates are executed by the Company and
authenticated, executed on behalf of the Holders and delivered by
the Agent, as provided in this Agreement, the valid obligations
of the Company and the Holders, and to constitute these presents
a valid agreement of the Company, in accordance with its terms,
have been done.
WITNESSETH:
For and in consideration of the premises and the
purchase of the Securities by the Holders thereof, it is mutually
agreed as follows:
ARTICLE I
DEFINITIONS AND OTHER PROVISIONS
OF GENERAL APPLICATIONS
SECTION 1.1. DEFINITIONS.
For all purposes of this Agreement, except as otherwise
expressly provided or unless the context otherwise requires:
(a) the terms defined in this Article have the meanings
assigned to them in this Article and include the plural as
well as the singular; and nouns and pronouns of the
masculine gender include the feminine and neuter genders;
(b) all accounting terms not otherwise defined herein
have the meanings assigned to them in accordance with
generally accepted accounting principles in the United
States;
(c) the words "herein," "hereof" and "hereunder" and
other words of similar import refer to this Agreement as a
whole and not to any particular Article, Section or other
subdivision; and
(d) the following terms have the meanings given to them
in this Section 1.1(d):
"3-YEAR TREASURY SECURITY" means a % zero-coupon
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U.S. Treasury Security having a principal amount at maturity
equal to $1,000 and maturing on August 15, 2001 (CUSIP No. 912820
BB 2).
"4-YEAR TREASURY SECURITY" means a % zero-coupon
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U.S. Treasury Security having a principal amount at maturity
equal to $1,000 and maturing on August 15, 2002 (CUSIP No. 912820
BE 6).
"ACT" when used with respect to any Holder, has the
meaning specified in Section 1.4.
"AFFILIATE" has the same meaning as given to that term
in Rule 405 of the Securities Act of 1933, as amended, 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.
"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.
"APPLICABLE OWNERSHIP INTEREST" means, with respect to
each Income PRIDES and the U.S. Treasury Securities in the
Treasury Portfolio, (A) prior to the First Purchase Contract
Settlement Date, (i) 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 August
15, 2001 and 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 August 15, 2002,
and (ii) for each scheduled interest payment date on the Debt
Securities of each series that occurs after the Tax Event
Redemption Date, a .0804% undivided beneficial ownership interest
in a $1,000 face amount of each such U.S. Treasury Security which
is a principal or interest strip maturing on such date or (B)
from the First Purchase Contract Settlement Date to the Second
Purchase Contract Settlement Date, (i) a 1/40, or 2.5%, undivided
beneficial ownership interest in a $1,000 principal or interest
strip in a U.S. Treasury Security included in such Treasury
Portfolio which matures on or prior to August 15, 2002 and (ii)
for each scheduled interest payment date on the Series E Notes
that occurs after a Tax Event Redemption Date, a .0406%
undivided beneficial ownership interest in a $1,000 face amount
of such U.S. Treasury Security which is a principal or interest
strip maturing on such date.
"APPLICABLE PRINCIPAL AMOUNT" means either (i) if the
Tax Event Redemption Date occurs prior to the Second Purchase
Contract Settlement Date, the aggregate principal amount of the
Debt Securities which are components of Income PRIDES on the Tax
Event Redemption Date or (ii) if the Tax Event Redemption occurs
on or after the Second Purchase Contract Settlement Date, the
aggregate principal amount of the Debt Securities outstanding on
such Tax Event Redemption Date.
"AUTHORIZED OFFICER" means the Chairman of the Board,
the President, any Vice President, the Treasurer, any Assistant
Treasurer, or any other officer or agent of the Company duly
authorized by the Board of Directors to act in respect of matters
relating to this Agreement.
"AUTHORIZED NEWSPAPER" means a newspaper in the English
language of general circulation in the City of New York and
generally published each Business Day. As of the date of this
Agreement, the Company anticipates that for purposes of each
Reset Announcement Date the Authorized Newspaper will be the Wall
Street Journal.
"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 the board of directors of
the Company or a duly authorized committee of that board.
"BOARD RESOLUTION" means one or more resolutions of the
Board of Directors, a copy of which has been certified by the
Secretary or an Assistant Secretary of the Company to have been
duly adopted by the Board of Directors and to be in full force
and effect on the date of such certification and delivered to the
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 in ▇▇▇ ▇▇▇▇
▇▇▇▇ (▇▇ ▇▇▇ ▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇) are permitted or required by any
applicable law to close.
"CASH SETTLEMENT" has the meaning set forth in Section
5.4(a)(i).
"CERTIFICATE" means an Income PRIDES Certificate or a
Growth PRIDES Certificate.
"CLEARING AGENCY" means an organization registered as a
"Clearing Agency" pursuant to Section 17A of the Exchange Act
that is acting as a depositary for the Securities and in whose
name, or in the name of a nominee of that organization, shall be
registered a Global Certificate and which shall undertake to
effect book entry transfers and pledges of the Securities.
"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.
"COLLATERAL" has the meaning specified in Section 2.1
of the Pledge Agreement.
"COLLATERAL AGENT" means The Chase Manhattan Bank, 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" means the substitution of the
pledged components of one type of Security for pledged components
of the other type of Security in connection with establishment or
reestablishment of Growth PRIDES or Income PRIDES, as described
in Sections 3.13 and 3.14 hereof.
"COMMON STOCK" means the Common Stock, without par
value, of the Company.
"COMPANY" means the Person named as the "Company" in
the first paragraph of this instrument until a successor shall
have become such pursuant to the applicable provision of this
Agreement, and thereafter "Company" shall mean such successor.
"COMPANY CERTIFICATE" means a certificate signed by an
Authorized Officer and delivered to the Agent.
"CONTRACT ADJUSTMENT PAYMENTS" means the fees payable
by the Company in respect of each Purchase Contract issued in
connection with the Income PRIDES and the Growth PRIDES, which
fees shall be equal to (A) in the case of each Purchase Contract
issued in connection with Income PRIDES (i) for the period prior
to the First Purchase Contract Settlement Date, 2.815% per annum
of the Stated Amount, and (ii) for the period from and after the
First Purchase Contract Settlement Date until the Second Purchase
Contract Settlement Date, 2.75% per annum of the Remaining Stated
Amount, and (B) in the case of each Purchase Contract issued in
connection with Growth PRIDES (i) for the period prior to the
First Purchase Contract Settlement Date, 3.315% per annum of the
Stated Amount of such Growth PRIDES, and (ii) for the period from
and after the First Purchase Contract Settlement Date until the
Second Purchase Contract Settlement Date, 3.25% per annum of the
Remaining Stated Amount of such Growth PRIDES; in each case
computed on the basis of a 360 day year of twelve 30 day months,
plus any Deferred Contract Adjustment Payments accrued pursuant
to Section 5.2.
"CORPORATE TRUST OFFICE" means the principal corporate
trust office of the Agent at which, at any particular time, its
corporate trust business shall be administered, which office at
the date hereof is located at ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇
▇▇▇▇ ▇▇▇▇▇.
"COUPON RATE" with respect to a Debt Security means the
percentage rate per annum at which such Debt Security will bear
interest.
"CURRENT MARKET PRICE" has the meaning specified in
Section 5.6(a)(8).
"DEBT SECURITIES" means the Series D Notes and the
Series E Notes.
"DEFAULT" means a default by the Company in any of its
obligations under this Agreement.
"DEFERRED CONTRACT ADJUSTMENT PAYMENTS" has the meaning
specified in Section 5.3.
"DEPOSITARY" means, initially, DTC until another
Clearing Agency becomes its successor.
"DTC" means The Depository Trust Company, the initial
Clearing Agency.
"EARLY SETTLEMENT" has the meaning specified in Section
5.9(a).
"EARLY SETTLEMENT AMOUNT" has the meaning specified in
Section 5.9(a).
"EARLY SETTLEMENT DATE" has the meaning specified in
Section 5.9(a).
"EARLY SETTLEMENT RATE" is either the First Early
Settlement Rate or the Second Early Settlement Rate, as
applicable.
"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.
"EXPIRATION TIME" has the meaning specified in Section
5.6(a)(6).
"FAILED REMARKETING" has the meaning specified in
Section 5.4(b).
"FIRST EARLY SETTLEMENT RATE" has the meaning specified
in Section 5.9(b).
"FIRST PURCHASE CONTRACT SETTLEMENT DATE" means August
16, 2001.
"GLOBAL DEBT SECURITY CERTIFICATE" means a certificate
evidencing the rights and obligations of a Holder in respect of
the number of Debt Securities specified on such certificate and
which is registered in the name of a Clearing Agency or a nominee
thereof.
"GLOBAL CERTIFICATE" means a Certificate that evidences
all or part of the Securities and is registered in the name of a
Depositary or a nominee thereof.
"GROWTH PRIDES" means a Security, initially issued in
the form of Exhibit B hereto in a Stated Amount of $50, which
represents (i)(a) prior to the First Purchase Contract Settlement
Date, a 1/40 undivided beneficial ownership in a 3-year Treasury
Security having a principal amount at maturity equal to $1,000
and a 1/40 undivided beneficial interest in a 4-year Treasury
Security having a principal amount of maturity equal to $1,000,
and (b) from the First Purchase Contract Settlement Date to the
Second Purchase Contract Settlement Date, a 1/40 undivided
beneficial interest in a 4-year Treasury Security having a
principal amount at maturity equal to $1,000, subject to the
Pledge of each such Treasury Security by the Holder pursuant to
the Pledge Agreement, and (ii) the rights and obligations of the
Company and the Holder under one Purchase Contract.
"GROWTH PRIDES CERTIFICATE" means a certificate
evidencing the rights and obligations of a Holder in respect of
the number of Growth PRIDES specified on such certificate.
"GROWTH PRIDES REGISTER" and "GROWTH PRIDES REGISTRAR"
have the respective meanings specified in Section 3.5.
"HOLDER," when used with respect to a Security, means
the Person in whose name the Security evidenced by an Income
PRIDES Certificate and/or a Growth PRIDES Certificate is
registered on the related Income PRIDES Register and/or the
Growth PRIDES Register, as the case may be.
"INCOME PRIDES" means a Security initially issued in
the form of Exhibit A hereto in the Stated Amount of $50 which
represents (i) either (a) one Series E Note and, prior to the
First Purchase Contract Settlement Date, one Series D Note, each
in an aggregate principal amount of $25, subject to the Pledge of
such Debt Securities by the Holder pursuant to the Pledge
Agreement or (b) upon the occurrence of a Tax Event Redemption
prior to the Second Purchase Contract Settlement Date, the
appropriate Applicable Ownership Interest in the Treasury
Portfolio, subject to the Pledge of such Applicable Ownership
Interest in the Treasury Portfolio by the Holder pursuant to the
Pledge Agreement, and (ii) the rights and obligations of the
Holder under one Purchase Contract.
"INCOME PRIDES CERTIFICATE" means a certificate
evidencing the rights and obligations of a Holder in respect of
the number of Income PRIDES specified on such certificate.
"INCOME PRIDES REGISTER" and "INCOME PRIDES REGISTRAR"
have the respective meanings specified in Section 3.5.
"INDENTURE" means the Indenture dated as of July 1,
1998 between the Company and the Indenture Trustee pursuant to
which the Debt Securities are to be issued.
"INDENTURE TRUSTEE" means The Bank of New York, as
trustee under the Indenture, or any successor thereto.
"ISSUER ORDER" or "ISSUER REQUEST" means a written
order or request signed in the name of the Company by an
Authorized Officer and delivered to the Agent.
"NYSE" has the meaning specified in Section 5.1.
"OFFICER'S CERTIFICATE" means a certificate signed by
an authorized signatory of the Company establishing the terms of
the debt securities of any series pursuant to the Indenture.
"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 and who shall be reasonably acceptable to
the Agent.
"OUTSTANDING," with respect to any Income PRIDES or
Growth PRIDES means, as of the date of determination, all Income
PRIDES or Growth PRIDES evidenced by Certificates theretofore
authenticated, executed and delivered under this Agreement,
except:
(i) If a Termination Event has occurred, (A)
Growth PRIDES for which Treasury Securities have been
deposited with the Agent in trust for the Holders of
such Growth PRIDES and (B) Income PRIDES for which Debt
Securities or the appropriate Applicable Ownership
Interest in the Treasury Portfolio, (or as contemplated
in Section 3.15 hereto with respect to a Holder's
interest in the Treasury Portfolio, cash) as the case
may be, has been theretofore deposited with the Agent
in trust for the Holders of such Income PRIDES;
(ii) Income PRIDES and Growth PRIDES evidenced by
Certificates theretofore canceled by the Agent or
delivered to the Agent for cancellation or deemed
canceled pursuant to the provisions of this Agreement;
and
(iii) Income PRIDES and Growth PRIDES 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 Income
PRIDES or Growth PRIDES evidenced by such Certificate
are valid obligations of the Company;
provided, however, that in determining whether the Holders of the
requisite number of the Income PRIDES or Growth PRIDES have given
any request, demand, authorization, direction, notice, consent or
waiver hereunder, Income PRIDES or Growth PRIDES 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
Income PRIDES or Growth PRIDES which a Responsible Officer of the
Agent knows to be so owned shall be so disregarded. Income PRIDES
or Growth PRIDES so owned which have been pledged in good faith
may be regarded as Outstanding Securities if the pledgee
establishes to the satisfaction of the Agent the pledgee's right
so to act with respect to such Income PRIDES or Growth PRIDES and
that the pledgee is not the Company or any Affiliate of the
Company.
"PAYMENT DATE" means each February 16, May 16, August
16 and November 16, commencing August 16, 1998.
"PERSON" means a legal person, including any
individual, corporation, estate, partnership, joint venture,
association, joint-stock company, limited liability company,
trust, unincorporated association or government or any agency or
political subdivision thereof or any other entity of whatever
nature.
"PERMITTED INVESTMENTS" has the meaning set forth in
Section 1 of the Pledge Agreement.
"PLEDGE" means the pledge under the Pledge Agreement of
the Debt Securities, the Treasury Securities or the appropriate
Applicable Ownership Interest in the Treasury Portfolio, in each
case constituting a part of the Securities.
"PLEDGE AGREEMENT" means the Pledge Agreement, dated as
of the date hereof, by and among the Company, the Agent, the
Collateral Agent, the Custodial Agent and the Securities
Intermediary.
"PREDECESSOR CERTIFICATE" means a Predecessor Income
PRIDES Certificate or a Predecessor Growth PRIDES Certificate.
"PREDECESSOR INCOME PRIDES CERTIFICATE" of any
particular Income PRIDES Certificate means every previous Income
PRIDES Certificate evidencing all or a portion of the rights and
obligations of the Company and the Holder under the Income PRIDES
Certificate evidenced thereby; and, for the purposes of this
definition, any Income PRIDES Certificate authenticated and
delivered under Section 3.10 in exchange for or in lieu of a
mutilated, destroyed, lost or stolen Income PRIDES Certificate
shall be deemed to evidence the same rights and obligations of
the Company and the Holder as the mutilated, destroyed, lost or
stolen Income PRIDES Certificate.
"PREDECESSOR GROWTH PRIDES CERTIFICATE" of any
particular Growth PRIDES Certificate means every previous Growth
PRIDES Certificate evidencing all or a portion of the rights and
obligations of the Company and the Holder under the Growth PRIDES
Certificate evidenced thereby; and, for the purposes of this
definition, any Growth PRIDES Certificate authenticated and
delivered under Section 3.10 in exchange for or in lieu of a
mutilated, destroyed, lost or stolen Growth PRIDES Certificate
shall be deemed to evidence the same rights and obligations of
the Company and the Holder as the mutilated, destroyed, lost or
stolen Growth PRIDES Certificate.
"PRIMARY TREASURY DEALER" means a primary U.S.
government securities dealer in New York City.
"PROCEEDS" has the meaning set forth in Section 1 of
the Pledge Agreement.
"PURCHASE CONTRACT," when used with respect to any
Security, means the contract forming a part of such Security and
(A) obligating the Company to sell to the Holder of such Security
and the Holder of such Security to purchase (i) not later than
the First Purchase Contract Settlement Date, for $25 in cash, a
number of newly issued shares of Common Stock equal to the
applicable Settlement Rate and (ii) not later than the Second
Purchase Contract Settlement Date for $25 in cash, a number of
newly issued shares of Common Stock equal to the applicable
Settlement Rate, and (B) obligating the Company to pay the Holder
Contract Adjustment Payments, on the terms and subject to the
conditions set forth in Article Five hereof.
"PURCHASE CONTRACT SETTLEMENT DATE" means, as
applicable, the First Purchase Contract Settlement Date or the
Second Purchase Contract Settlement Date.
"PURCHASE CONTRACT SETTLEMENT FUND" has the meaning
specified in Section 5.5.
"PURCHASE PRICE" has the meaning specified in Section
5.1.
"PURCHASED SHARES" has the meaning specified in Section
5.6(a)(6).
"QUOTATION AGENT" means (i) ▇▇▇▇▇▇▇ Lynch, Pierce,
▇▇▇▇▇▇ & ▇▇▇▇▇ Incorporated and its respective successors,
provided, however, that, if the foregoing shall cease to be a
Primary Treasury Dealer, the Company shall substitute therefor
another Primary Treasury Dealer, and (ii) any other Primary
Treasury Dealer selected by the Company.
"RECORD DATE" for the payment of interest, distribution
and Contract Adjustment Payments 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, a
day selected by the Company which shall be at least one Business
Day but less than 60 Business Days prior to such Payment Date
(and which shall correspond to the related record date for the
Debt Securities).
"REDEMPTION AMOUNT" means for each Debt Security, the
product of (i) the principal amount of such Debt Security and
(ii) a fraction whose numerator is the Treasury Portfolio
Purchase Price and whose denominator is the Applicable Principal
Amount.
"REDEMPTION PRICE" means an amount equal per Debt
Security to the Redemption Amount plus accrued and unpaid
interest, if any, to the date of redemption.
"REGISTER" means the Income PRIDES Register and the
Growth PRIDES Register.
"REGISTRAR" means the Income PRIDES Registrar and the
Growth PRIDES Registrar.
"REMAINING STATED AMOUNT" means $25, which is equal to
one-half of the Stated Amount of the Income PRIDES and the face
amount of the Growth PRIDES, and is intended to reflect the
settlement of one-half of each Purchase Contract on or prior to
the First Purchase Contract Settlement Date.
"REMARKETING AGENT" has the meaning specified in
Section 5.4.
"REMARKETING AGREEMENT" means a Remarketing Agreement
contemplated by Section 5.4 by and between the Company, a
Remarketing Agent and the Purchase Contract Agent, including any
supplements thereto.
"REMARKETING FEE" has the meaning specified in Section
5.4.
"REORGANIZATION EVENT" has the meaning specified in
Section 5.6(b).
"RESET AGENT" means ▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ &
▇▇▇▇▇, or such other Reset Agent as the Company shall select from
time to time.
"RESET RATE" means, as applicable, the Series D Reset
Rate or the Series E Reset Rate.
"RESET ANNOUNCEMENT DATE" means the tenth Business Day
immediately preceding the applicable Purchase Contract Settlement
Date, the date on which Series D Reset Spread or Series E Reset
Spread, as applicable, and the applicable Two-Year Benchmark
Treasury will be announced by the Company.
"RESPONSIBLE OFFICER," when used with respect to the
Agent, means any officer of the Agent assigned by the Agent to
administer its corporate trust matters.
"SECOND EARLY SETTLEMENT RATE" has the meaning
specified in Section 5.9(b).
"SECOND PURCHASE CONTRACT SETTLEMENT DATE" means August
16, 2002.
"SECURITY" means an Income PRIDES or a Growth PRIDES.
"SENIOR INDEBTEDNESS" means indebtedness of any kind of
the Company (including the Debt Securities) unless the instrument
under which such indebtedness is incurred expressly provides that
it is in parity or subordinate in right of payment to the
Contract Adjustment Payments.
"SERIES D NOTES" means the series of Debt Securities of
the Company designated 6.37% Series D Senior Notes due 2003 to be
issued under the Indenture.
"SERIES D RESET RATE" means the Coupon Rate to be in
effect for the Series D Notes on and after the First Purchase
Contract Settlement Date and determined as provided in
Section 4.1.
"SERIES D RESET SPREAD" means, an amount determined by
the Reset Agent which, when added to the Two-Year Benchmark
Treasury in effect on the third Business Day immediately
preceding the First Purchase Contract Settlement Date, will
produce the rate the Series D Notes should bear in order to have
an approximate market value on the third Business Day immediately
preceding the First Purchase Contract Settlement Date of 100.5%
of their aggregate principal amount; provided that (i) the
Company may limit the Series D Reset Rate to be no higher than
the rate on the Two-Year Benchmark Treasury on such Business Day
plus 200 basis points (2.0%); (ii) such market value may be less
than 100.5% if the Company exercises such right to limit the
Series D Reset Spread; and (iii) the Series D Reset Rate shall
in no event exceed the maximum permitted by applicable law.
"SERIES E NOTES" means the series of Debt Securities of
the Company designated 6.50% Series E Senior Notes due 2004 to be
issued under the Indenture.
"SERIES E RESET RATE" means the Coupon Rate to be in
effect for the Series E Notes on and after the Second Purchase
Contract Settlement Date and determined as provided in Section
4.1.
"SERIES E RESET SPREAD" means an amount determined by
the Reset Agent which, when added to the Two-Year Benchmark
Treasury in effect on the third Business Day immediately
preceding the Second Purchase Contract Settlement Date, will
produce the rate the Series E Notes should bear in order to have
an approximate market value on the third Business Day immediately
preceding the Second Purchase Contract Settlement Date of 100.5%
of their aggregate principal amount; provided that (i) the
Company may limit the Series E Reset Rate to be no higher than
the rate on the Two-Year Benchmark Treasury on such Business Day
plus 200 basis points (2.0%); (ii) such market value may be less
than 100.5% if the Company exercises such right to limit the
Series E Reset Spread; and (iii) the Series E Reset Rate shall
in no event exceed the maximum permitted by applicable law.
"SETTLEMENT RATE" has the meaning specified in Section
5.1.
"STATED AMOUNT" means $50, which is equal to the stated
amount of the Income PRIDES and the face amount of the Growth
PRIDES.
"TAX EVENT" means the receipt by the Company of an
opinion of a nationally recognized independent tax counsel
experienced in such matters to the effect that, as a result of
(a) any amendment to, change in, or 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
interpretation or application of such laws or regulations by any
legislative body, court, governmental agency or regulatory
authority or (c) any interpretation or pronouncement by any such
legislative body, court, governmental agency or regulatory
authority that provides for a position with respect to such laws
or regulations that differs from the generally accepted position
on the date the Debt Securities are issued, which amendment,
change or proposed change is effective or which interpretation or
pronouncement is announced on or after the date of issuance of
the Debt Securities, there is more than an insubstantial risk
that interest payable by the Company on the Debt Securities would
not be deductible, in whole or in part, by the Company for United
States federal income tax purposes.
"TAX EVENT REDEMPTION" means, if a Tax Event shall
occur and be continuing, the redemption of Debt Securities, in
whole but not in part, at the option of the Company on not less
than 30 days or more than 60 days notice.
"TAX EVENT REDEMPTION DATE" means the date on which a
Tax Event Redemption is to occur.
"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 Second
Purchase Contract Settlement Date, a judgment, decree or court
order shall have been entered granting relief under the
Bankruptcy Code, adjudicating the Company to be insolvent, or
approving as properly filed a petition seeking reorganization or
liquidation of the Company or any other similar applicable
Federal or State law, and, unless such judgment, decree or order
shall have been entered within 60 days prior to the Second
Purchase Contract Settlement Date, such decree or order shall
have continued undischarged and unstayed for a period of 60 days;
or (ii) at any time on or prior to the Second Purchase Contract
Settlement Date, a judgment, decree or court order for the
appointment of a receiver or liquidator or trustee or assignee in
bankruptcy or insolvency of the Company or of its property, or
for the 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 Second Purchase Contract
Settlement Date, such judgment, decree or order shall have
continued undischarged and unstayed for a period of 60 days; or
(iii) at any time on or prior to the Second Purchase Contract
Settlement Date the Company shall file a petition for relief
under the Bankruptcy Code, or shall consent to the filing of a
bankruptcy proceeding against it, or shall file a petition or
answer or consent seeking reorganization or liquidation under the
Bankruptcy Code or any other similar applicable Federal or State
law, or shall consent to the filing of any such petition, or
shall consent to the appointment of a receiver or liquidator or
trustee or assignee in bankruptcy or insolvency of it or of its
property, or shall make an assignment for the benefit of
creditors, or shall admit in writing its inability to pay its
debts generally as they become due.
"THRESHOLD APPRECIATION PRICE" has the meaning
specified in Section 5.1.
"TIA" means, as of any time, the Trust Indenture Act of
1939, as amended, or any successor statute, as in effect at such
time.
"TRADING DAY" has the meaning specified in Section 5.1.
"TREASURY PORTFOLIO" means, with respect to the
Applicable Principal Amount of Debt Securities (a) if the Tax
Event Redemption Date occurs prior to the Second Purchase
Contract Settlement Date, a portfolio of zero-coupon U.S.
Treasury Securities consisting of (i) interest or principal
strips of U.S. Treasury Securities which mature on or prior to
August 15, 2001 in an aggregate amount equal to the Applicable
Principal Amount of Series D Notes and interest or principal
strips of U.S. Treasury Securities which mature on or prior to
August 15, 2002 in an aggregate amount equal to the Applicable
Principal Amount of Series E Notes and (ii) with respect to each
scheduled interest payment date on the Debt Securities of each
series that occurs after the Tax Event Redemption Date, interest
or principal strips of U.S. Treasury Securities which mature on
or prior to such dates in an aggregate amount equal to the
aggregate interest payment that would be due on the Applicable
Principal Amount of the Debt Securities on such date, and (b) if
the Tax Event Redemption Date occurs after the Second Purchase
Contract Settlement Date, a portfolio of zero-coupon U.S.
Treasury Securities consisting of (i) principal or interest
strips of U.S. Treasury Securities which mature on or prior to
August 15, 2003 in an aggregate principal amount equal to the
Applicable Principal Amount of Series D Notes and principal or
interest strips of U.S. Treasury Securities which mature on or
prior to August 15, 2004 in an aggregate principal amount equal
to the Applicable Principal Amount of the Series E Notes and (ii)
with respect to each scheduled interest payment date on the Debt
Securities that occurs after the Tax Event Redemption Date,
interest or principal strips of U.S. Treasury Securities which
mature on or prior to such date in an aggregate amount equal to
the aggregate interest payment that would be due on the
Applicable Principal Amount of the Debt Securities on such date.
"TREASURY PORTFOLIO PURCHASE PRICE" means the lowest
aggregate price quoted by a Primary Treasury Dealer 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, as applicable, the 3-Year
Treasury Security or the 4-Year Treasury Security.
"TWO-YEAR BENCHMARK TREASURY" on a particular
determination date shall mean direct obligations of the United
States (which may be obligations traded on a when-issued basis
only) having a maturity comparable to the remaining term to
maturity of the applicable series of Debt Securities, as agreed
upon by the Company and the Reset Agent. The rate for the
Two-Year Benchmark Treasury will be the bid side rate displayed
at 10:00 A.M., New York City time, on the third Business Day
immediately preceding the applicable Purchase Contract Settlement
Date in the Telerate system (or if the Telerate system is (a) no
longer available on the third Business Day immediately preceding
such Purchase Contract Settlement Date or (b) in the opinion of
the applicable Reset Agent (after consultation with the Company)
no longer an appropriate system from which to obtain such rate,
such other nationally recognized quotation system as, in the
opinion of the applicable Reset Agent (after consultation with
the Company), is appropriate). If such rate is not so displayed,
the rate for the Two-Year Benchmark Treasury shall be, as
calculated by the Reset Agent, the yield to maturity for the
Two-Year Benchmark Treasury, expressed as a bond equivalent on
the basis of a year of 365 or 366 days, as applicable, and
applied on a daily basis, and computed by taking the arithmetic
mean of the secondary market bid rates, as of 10:30 A.M., New
York City time, on the third Business Day immediately preceding
the applicable Purchase Contract Settlement Date of three leading
United States government securities dealers selected by the Reset
Agent (after consultation with the Company) (which may include
the applicable Reset Agent or an affiliate thereof).
"UNDERWRITING AGREEMENT" means the Underwriting
Agreement dated July 17, 1998 among the Company, ▇▇▇▇▇▇▇ Lynch,
Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇ Incorporated and ▇▇▇▇▇▇ Brothers Inc.
"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 a Company Certificate
stating that all conditions precedent, if any, provided for in
this Agreement relating to the proposed action have been complied
with and an Opinion of Counsel stating that, in the opinion of
such counsel, all such conditions precedent, if any, have been
complied with, except that in the case of any such application or
request as to which the furnishing of such documents is
specifically required by any provision of this Agreement relating
to such particular application or request, no additional
certificate or opinion need be furnished.
Every certificate or opinion with respect to compliance
with a condition or covenant provided for in this Agreement shall
include:
(1) a statement that each individual signing such
certificate or opinion has read such covenant or condition
and the definitions herein relating thereto;
(2) 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;
(3) a statement that, in the opinion of each 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
(4) a statement as to whether, in the opinion of each
such individual, such condition or covenant has been
complied with.
SECTION 1.3. FORM OF DOCUMENTS DELIVERED TO AGENT.
In any case where several matters are required to be
certified by, or covered by an opinion of, any specified Person,
it is not necessary that all such matters be certified by, or
covered by the opinion of, only one such Person, or that they be
so certified or covered by only one document, but one such Person
may certify or give an opinion with respect to some matters and
one or more other such Persons as to other matters, and any such
Person may certify or give an opinion as to such matters in one
or several documents.
Any certificate or opinion of an officer of the Company
may be based, insofar as it relates to legal matters, upon a
certificate or opinion of, or representations by, counsel, unless
such officer knows, or in the exercise of reasonable care should
know, that the certificate or opinion or representations with
respect to the matters upon which his certificate or opinion is
based are erroneous. Any such certificate or Opinion of Counsel
may be based, insofar as it relates to factual matters, upon a
certificate or opinion of, or representations by, an officer or
officers of the Company stating that the information with respect
to such factual matters is in the possession of the Company
unless such counsel knows, or in the exercise of reasonable care
should know, that the certificate or opinion or representations
with respect to such matters are erroneous.
Where any Person is required to make, give or execute
two or more applications, requests, consents, certificates,
statements, opinions or other instruments under this Agreement,
they may, but need not, be consolidated and form one instrument.
SECTION 1.4. ACTS OF HOLDERS; RECORD DATES.
(a) Any request, demand, authorization, direction,
notice, consent, waiver or other action provided by this
Agreement to be given or taken by Holders may be embodied in
and evidenced by one or more instruments of substantially
similar tenor signed by such Holders in person or by agent
duly appointed in writing; and, except as herein otherwise
expressly provided, such action shall become effective when
such instrument or instruments are delivered to the Agent
and, where it is hereby expressly required, to the Company.
Such instrument or instruments (and the action embodied
therein and evidenced thereby) are herein sometimes referred
to as the "Act" of the Holders signing such instrument or
instruments. Proof of execution of any such instrument or of
a writing appointing any such agent shall be sufficient for
any purpose of this Agreement and (subject to Section 7.1)
conclusive in favor of the Agent and the Company, if made in
the manner provided in this Section.
(b) The fact and date of the execution by any Person
of any such instrument or writing may be proved in any
manner which the Agent deems sufficient.
(c) The ownership of Securities shall be proved by the
Income PRIDES Register or the Growth PRIDES 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
Securities entitled to give, make or take any request,
demand, authorization, direction, notice, consent, waiver or
other action provided or permitted by this Agreement to be
given, made or taken by Holders of Securities. If any record
date is set pursuant to this paragraph, the Holders of the
Outstanding Income PRIDES and the Outstanding Growth PRIDES,
as the case may be, on such record date, and no other
Holders, shall be entitled to take the relevant action with
respect to the Income PRIDES or the Growth PRIDES 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 Securities 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 canceled
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 Securities on the
date such action is taken. Promptly after any record date is
set pursuant to this paragraph, the Company, at its own
expense, shall cause notice of such record date, the
proposed action by Holders and the applicable Expiration
Date to be given to the Agent in writing and to each Holder
of Securities in the manner set forth in Section 1.6.
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 Securities
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,
(1) 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 or mailed,
first-class postage prepaid, to the Agent at The Bank of New
York, ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇,
Attention: Vice President, Corporate Trust Administration,
or at any other address previously furnished in writing by
the Agent to the Holders and the Company; or
(2) 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 or mailed,
first-class postage prepaid, to the Company at Texas
Utilities Company, Energy Plaza, ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇▇, Attention: Secretary, or at any other address
previously furnished in writing to the Agent by the Company;
or
(3) 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 or
mailed, first-class postage prepaid, addressed to the
Collateral Agent at The Chase Manhattan Bank at ▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇,
Attention: , or at any other address
previously furnished in writing by the Collateral Agent to
the Agent, the Company and the Holders; or
(4) the Indenture 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 or mailed,
first-class postage prepaid, addressed to the Indenture
Trustee at The Bank of New York, ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇
▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: Vice President, Corporate
Trust Administration, other address previously furnished in
writing by the Indenture Trustee to the Company.
SECTION 1.6. NOTICE TO HOLDERS; WAIVER.
Where this Agreement provides for notice to Holders of
any event, such notice shall be sufficiently given (unless
otherwise herein expressly provided) if in writing and mailed,
first-class postage prepaid, to each Holder affected by such
event, at its address as it appears in the 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.
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
Securities shall be invalid, illegal or unenforceable, the
validity, legality and enforceability of the remaining provisions
hereof and thereof shall not in any way be affected or impaired
thereby.
SECTION 1.10. BENEFITS OF AGREEMENT.
Nothing in this Agreement or in the Securities, express
or implied, shall give to any Person, other than the parties
hereto and their successors hereunder and, to the extent provided
hereby, the Holders, any benefits or any legal or equitable
right, remedy or claim under this Agreement. The Holders from
time to time shall be beneficiaries of this Agreement and shall
be bound by all of the terms and conditions hereof and of the
Securities evidenced by their Certificates by their acceptance of
delivery of such Certificates.
SECTION 1.11. GOVERNING LAW.
THIS AGREEMENT AND THE SECURITIES SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW
YORK.
SECTION 1.12. LEGAL HOLIDAYS.
In any case where any Payment Date shall not be a
Business Day, then (notwithstanding any other provision of this
Agreement or the Income PRIDES Certificates or the Growth PRIDES
Certificates) payment of the Contract Adjustment Payments, if
any, 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, and no interest shall
accrue or be payable by the Company or any Holder 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.
In any case where any Purchase Contract Settlement Date
shall not be a Business Day, then (notwithstanding any other
provision of this Agreement, the Income PRIDES Certificates or
the Growth PRIDES Certificates), the Purchase Contracts shall not
be performed on such date, but the Purchase Contracts shall be
performed on the immediately following Business Day with the same
force and effect as if performed on the Purchase Contract
Settlement Date.
SECTION 1.13. COUNTERPARTS.
This Agreement may be executed in any number of
counterparts by the parties hereto on separate counterparts, each
of which, when so executed and delivered, shall be deemed an
original, but all such counterparts shall together constitute one
and the same instrument.
SECTION 1.14. INSPECTION OF AGREEMENT.
A copy of this Agreement shall be available at all
reasonable times during normal business hours at the Corporate
Trust Office for inspection by any Holder.
ARTICLE II
CERTIFICATE FORMS
SECTION 2.1. FORMS OF CERTIFICATES GENERALLY.
The Income PRIDES Certificates (including the form of
Purchase Contract forming part of the Income PRIDES 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 on which the Income PRIDES
are listed or any depositary therefor, or as may, consistently
herewith, be determined by the officers of the Company executing
such Income PRIDES Certificates, as evidenced by their execution
of the Income PRIDES Certificates.
The definitive Income PRIDES Certificates shall be
printed, lithographed or engraved on steel engraved borders or
may be produced in any other manner, all as determined by the
officers of the Company executing the Income PRIDES evidenced by
such Income PRIDES Certificates, consistent with the provisions
of this Agreement, as evidenced by their execution thereof.
The Growth PRIDES Certificates (including the form of
Purchase Contracts forming part of the Growth PRIDES 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 on which the Growth PRIDES
may be listed or any depositary therefor, or as may, consistently
herewith, be determined by the officers of the Company executing
such Growth PRIDES Certificates, as evidenced by their execution
of the Growth PRIDES Certificates.
The definitive Growth PRIDES Certificates shall be
printed, lithographed or engraved on steel engraved borders or
may be produced in any other manner, all as determined by the
officers of the Company executing the Growth PRIDES evidenced by
such Growth PRIDES Certificates, consistent with the provisions
of this Agreement, as evidenced by their execution thereof.
Every Global Certificate authenticated, executed on
behalf of the Holders and delivered hereunder shall bear a legend
in substantially the following form:
THIS CERTIFICATE IS A GLOBAL CERTIFICATE WITHIN THE
MEANING OF THE PURCHASE CONTRACT AGREEMENT (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 PURCHASE
CONTRACT AGREEMENT.
SECTION 2.2. FORM OF AGENT'S CERTIFICATE OF AUTHENTICATION.
The form of the Agent's certificate of authentication
of the Income PRIDES shall be in substantially the form set forth
on the form of the Income PRIDES Certificates set forth as
Exhibit A hereto.
The form of the Agent's certificate of authentication
of the Growth PRIDES shall be in substantially the form set forth
on the form of the Growth PRIDES Certificates set forth as
Exhibit B hereto..
ARTICLE III
THE SECURITIES
SECTION 3.1. TITLE AND TERMS; DENOMINATIONS.
The aggregate number of Income PRIDES and Growth PRIDES
evidenced by Certificates authenticated, executed on behalf of
the Holders and delivered hereunder is limited to 14,950,000
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, 3.12,
3.13, 5.9 or 8.5.
The Certificates shall be issuable only in registered
form and only in denominations of a single Income PRIDES or
Growth PRIDES and any integral multiple thereof.
SECTION 3.2. RIGHTS AND OBLIGATIONS EVIDENCED BY THE
CERTIFICATES.
Each Income PRIDES Certificate shall evidence the
number of Income PRIDES specified therein, with each such Income
PRIDES representing the ownership by the Holder thereof of a
beneficial interest in the Debt Securities or Applicable
Ownership Interest in the Treasury Portfolio, as the case may be,
subject to the Pledge of such Debt Securities 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
Purchase Contract. The Agent as attorney-in-fact for, and on
behalf of, the Holder of each Income PRIDES shall pledge,
pursuant to the Pledge Agreement, each Debt Security or the
Applicable Ownership Interest in the Treasury Portfolio, as the
case may be, forming a part of such Income PRIDES, to the
Collateral Agent and grant to the Collateral Agent a security
interest in the right, title, and interest of such Holder in such
Debt Security 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 one Purchase Contract
to purchase the Common Stock of the Company.
Each Growth PRIDES Certificate shall evidence the
number of Growth PRIDES specified therein, with each such Growth
PRIDES representing the ownership by the Holder thereof, prior to
the First Purchase Contract Settlement Date, of a 1/40 undivided
beneficial interest in both a 3-Year Treasury Security and a 4-
Year Treasury Security and, on and after the First Purchase
Contract Settlement Date, of a 1/40 undivided beneficial interest
in a 4-Year Treasury Security, and each subject to the Pledge of
such Treasury Security by such Holder pursuant to the Pledge
Agreement, and the rights and obligations of the Holder thereof
and the Company under one Purchase Contract. The Agent as
attorney-in-fact for, and on behalf of, the Holder of each Growth
PRIDES shall pledge, pursuant to the Pledge Agreement, each
Treasury Security forming a part of such Growth PRIDES, to the
Collateral Agent and grant to the Collateral Agent a security
interest in the right, title, and interest of such Holder in such
Treasury Security for the benefit of the Company, to secure the
obligation of the Holder under one Purchase Contract to purchase
the Common Stock of the Company.
SECTION 3.3. EXECUTION, AUTHENTICATION, DELIVERY AND DATING.
Subject to the provisions of Sections 3.13 and 3.14
hereof, upon the execution and delivery of this Agreement, and at
any time and from time to time thereafter, the Company may
deliver Certificates executed by the Company to the 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.
The Certificates shall be executed on behalf of the
Company by its Chairman of the Board, its President, one of its
Vice Presidents, its Treasurer, one of its Assistant Treasurers,
its Secretary or one of its Assistant Secretaries. The signature
of any of these officers on the Certificates may be manual or
facsimile.
Certificates bearing the manual or facsimile signatures
of individuals who were at any time the proper officers of the
Company shall bind the Company, notwithstanding that such
individuals or any of them have ceased to hold such offices prior
to the authentication and delivery of such Certificates or did
not hold such offices at the date of such Certificates.
No Purchase Contract evidenced by a Certificate shall
be valid until such Certificate has been executed on behalf of
the Holder by the manual signature of an authorized signatory of
the Agent, as such Holder's attorney-in-fact. Such signature by
an authorized signatory of the Agent shall be conclusive evidence
that the Holder of such Certificate has entered into the Purchase
Contracts evidenced by such Certificate.
Each Certificate shall be dated the date of its
authentication.
No Certificate shall be entitled to any benefit under
this Agreement or be valid or obligatory for any purpose unless
there appears on such Certificate a certificate of authentication
substantially in the form provided for herein executed by an
authorized signatory of the Agent by manual signature, and such
certificate upon any Certificate shall be conclusive evidence,
and the only evidence, that such Certificate has been duly
authenticated and delivered hereunder.
SECTION 3.4. TEMPORARY CERTIFICATES.
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 forms set forth in
Exhibit A and 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 on which the
Income PRIDES or Growth PRIDES are listed, or as may,
consistently herewith, be determined by the officers of the
Company executing such Certificates, as evidenced by their
execution of the Certificates.
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 Income PRIDES or Growth PRIDES, as
the case may be, as the temporary Certificate or Certificates so
surrendered. Until so exchanged, the temporary Certificates shall
in all respects evidence the same benefits and the same
obligations with respect to the Income PRIDES or Growth PRIDES,
as the case may be, evidenced thereby as definitive Certificates.
SECTION 3.5. REGISTRATION; REGISTRATION OF TRANSFER AND
EXCHANGE.
The Agent shall keep at the Corporate Trust Office a
register (the "Income PRIDES Register") in which, subject to such
reasonable regulations as it may prescribe, the Agent shall
provide for the registration of Income PRIDES Certificates and of
transfers of Income PRIDES Certificates (the Agent, in such
capacity, the "Income PRIDES Registrar") and a register (the
"Growth PRIDES Register") in which, subject to such reasonable
regulations as it may prescribe, the Agent shall provide for the
registration of the Growth PRIDES Certificates and transfers of
Growth PRIDES Certificates (the Agent, in such capacity, the
"Growth PRIDES Registrar").
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 any
authorized denominations, like tenor, and evidencing a like
number of Income PRIDES or Growth PRIDES, as the case may be.
At the option of the Holder, Certificates may be
exchanged for other Certificates, of any authorized denominations
and evidencing a like number of Income PRIDES or Growth PRIDES,
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.
All Certificates issued upon any registration of
transfer or exchange of a Certificate shall evidence the
ownership of the same number of Income PRIDES or Growth PRIDES,
as the case may be, and be entitled to the same benefits and
subject to the same obligations, under this Agreement as the
Income PRIDES or Growth PRIDES, as the case may be, evidenced by
the Certificate surrendered upon such registration of transfer or
exchange.
Every Certificate presented or surrendered for
registration of transfer or 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.
No service charge shall be made for any registration of
transfer or exchange of a Certificate, but the Company and the
Agent may require payment from the Holder of a sum sufficient to
cover any tax or other governmental charge that may be imposed in
connection with any registration of transfer or exchange of
Certificates, other than any exchanges pursuant to Sections 3.6
and 8.5 not involving any transfer.
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 during the period
commencing on the Business Day immediately preceding a Purchase
Contract Settlement Date and ending on such Purchase Contract
Settlement Date or on or after the Termination Date.
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 by, or on behalf of, the
Company. Such Global Certificate shall initially be registered on
the books and records of the Company in the name of Cede & Co.,
the nominee of the Depositary, and no Beneficial Owner will
receive a definitive Certificate representing such Beneficial
Owner's interest in such Global Certificate, except as provided
in Section 3.9. The Agent shall enter into 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;
(b) the Company shall be entitled to deal with the
Clearing Agency for all purposes of this Agreement
(including the payment of Contract Adjustment Payments, if
any, and receiving approvals, votes or consents hereunder)
as the Holder of the Securities 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 and
receive and transmit payments of Contract Adjustment
Payments to such 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 Securities 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 Securities,
the Company may, in its sole discretion, appoint a successor
Clearing Agency with respect to the Securities.
SECTION 3.9. DEFINITIVE CERTIFICATES.
If (i) a Clearing Agency elects to discontinue its
services as securities depositary with respect to the Securities
and a successor Clearing Agency is not appointed within 90 days
after such discontinuance pursuant to Section 3.8, or (ii) the
Company elects to terminate the book-entry system through the
Clearing Agency with respect to the Securities, then upon
surrender of the Global Certificates representing the Book-Entry
Interests with respect to the Securities by the Clearing Agency,
accompanied by registration instructions, the Company shall cause
definitive Certificates to be delivered to Beneficial Owners in
accordance with the instructions of the Clearing Agency. The
Company shall not be liable for any delay in delivery of such
instructions and may conclusively rely on and shall be protected
in relying on, such instructions.
SECTION 3.10. MUTILATED, DESTROYED, LOST AND STOLEN
CERTIFICATES.
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 Income PRIDES or
Growth PRIDES, as the case may be, and bearing a Certificate
number not contemporaneously outstanding.
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
Income PRIDES or Growth PRIDES, as the case may be, and bearing a
Certificate number not contemporaneously outstanding.
Notwithstanding the foregoing, the Company shall not be
obligated to execute and deliver to the Agent, and the Agent
shall not be obligated to authenticate, execute on behalf of the
Holder, and deliver to the Holder, a Certificate during the
period commencing on the Business Day immediately preceding a
Purchase Contract Settlement Date and such Purchase Contract
Settlement Date or on or after the Termination Date. In
addition, 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 may (i) if the Second
Purchase Contract Settlement Date has occurred, deliver the
shares of Common Stock issuable in respect of the applicable
portion of the Purchase Contracts forming a part of the
Securities evidenced by such Certificate, or (ii) if a
Termination Event shall have occurred, transfer the Debt
Securities, the appropriate Applicable Ownership Interest in the
Treasury Portfolio or the Treasury Securities, as the case may
be, forming a part of the Securities represented by such
Certificate to such Holder, in each case subject to the
applicable conditions and in accordance with the applicable
provisions of Article Five hereof.
Upon the issuance of any new Certificate under this
Section, the Company and the Agent may require the payment by the
Holder of a sum sufficient to cover any tax or other governmental
charge that may be imposed in relation thereto and any other
expenses (including the fees and expenses of the Agent) connected
therewith.
Every new Certificate issued pursuant to this Section
in lieu of any destroyed, lost or stolen Certificate shall
constitute an original additional contractual obligation of the
Company and of the Holder in respect of the Security evidenced
thereby, whether or not the destroyed, lost or stolen Certificate
(and the Securities evidenced thereby) shall be at any time
enforceable by anyone, and shall be entitled to all the benefits
and be subject to all the obligations of this Agreement equally
and proportionately with any and all other Certificates delivered
hereunder.
The provisions of this Section are exclusive and shall
preclude (to the extent lawful) all other rights and remedies
with respect to the replacement or payment of mutilated,
destroyed, lost or stolen Certificates.
SECTION 3.11. PERSONS DEEMED OWNERS.
Prior to due presentment of a Certificate for
registration of transfer, the Company and the Agent, and any
agent of the Company or the Agent, may treat the Person in whose
name such Certificate is registered on the Income PRIDES Register
or the Growth PRIDES Register, as applicable, as the owner of the
Income PRIDES or Growth PRIDES evidenced thereby, for the purpose
of receiving interest on the Debt Securities or distributions on
the maturing quarterly interest strips of the Treasury Portfolio,
as applicable, receiving payments of Contract Adjustment
Payments, performance of the Purchase Contracts and for all other
purposes whatsoever, whether or not any interest on the Debt
Securities or the Contract Adjustment Payments payable in respect
of the Purchase Contracts constituting a part of the Income
PRIDES or Growth PRIDES evidenced thereby 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.
Notwithstanding the foregoing, with respect to any
Global Certificate, nothing herein shall prevent the Company, the
Agent or any agent of the Company or the Agent, from treating the
Clearing Agency as the sole Holder of such Global Certificate or
from giving effect to any written certification, proxy or other
authorization furnished by any Clearing Agency (or its nominee),
as 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.
SECTION 3.12. CANCELLATION.
All Certificates surrendered for delivery of shares of
Common Stock on or after the Second Purchase Contract Settlement
Date, upon the transfer of Debt Securities, the appropriate
Applicable Ownership Interest in the Treasury Portfolio or
Treasury Securities, as the case may be, after the occurrence of
a Termination Event or pursuant to an Early Settlement, or upon
the registration of a transfer or exchange of a Security, or a
Collateral Substitution or the re-establishment of an Income
PRIDES shall, if surrendered to any Person other than the Agent,
be delivered to the Agent and, if not already canceled, shall be
promptly canceled 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 canceled 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 canceled as provided in this Section, except as
expressly permitted by this Agreement. All canceled Certificates
held by the Agent shall upon written request be returned to the
Company.
If the Company or any Affiliate of the Company shall
acquire any Certificate, such acquisition shall not operate as a
cancellation of such Certificate unless and until such
Certificate is delivered to the Agent canceled or for
cancellation.
SECTION 3.13. ESTABLISHMENT OR REESTABLISHMENT OF GROWTH PRIDES.
A Holder of an Income PRIDES may, at any time on or
prior to the fifth Business Day immediately preceding the Second
Purchase Contract Settlement Date, create a Growth PRIDES and
separate the Debt Securities or the appropriate Applicable
Ownership Interest in the Treasury Portfolio, as applicable, from
the related Purchase Contract in respect of such Income PRIDES by
substituting 3-Year Treasury Securities and 4-Year Treasury
Securities for all, but not less than all, of the Series D Note
and the Series E Note, respectively, or appropriate Applicable
Ownership Interest in the Treasury Portfolio, as the case may be,
that form a part of such Income PRIDES in accordance with this
Section 3.13; provided, however, that such Collateral
Substitutions may not be made during the period from the fifth
Business Day immediately preceding the First Purchase Contract
Settlement Date through the First Purchase Contract Settlement
Date, except that if a Tax Event Redemption has occurred and the
Treasury Portfolio has become a component of the Income PRIDES,
Holders of such Income PRIDES may make such Collateral
Substitutions at any time on or prior to the second Business Day
immediately preceding the Second Purchase Contract Settlement
Date (but not during the period from the second Business Day
immediately preceding the First Purchase Contract Settlement Date
through the First Purchase Contract Settlement Date). Holders
may make Collateral Substitutions (i) only in integral multiples
of 40 Income PRIDES if Debt Securities are being substituted by
Treasury Securities, or (ii) only in integral multiples of
1,600,000 Income PRIDES if the appropriate Applicable Ownership
Interests in the Treasury Portfolio are being substituted by
Treasury Securities. To create 40 Growth PRIDES (if a Tax Event
Redemption has not occurred), or 1,600,000 Growth PRIDES (if a
Tax Event Redemption has occurred), the Income PRIDES Holder
shall
(a) if a Tax Event Redemption has not occurred, (i)
prior to the fifth Business Day preceding the First Purchase
Contract Settlement Date, deposit with the Collateral Agent
a 3-Year Treasury Security having a principal amount at
maturity of $1,000 and a 4-Year Treasury Security having a
principal amount at maturity of $1,000, or (ii) after the
First Purchase Contract Settlement Date and prior to the
fifth Business Day preceding the Second Purchase Contract
Settlement Date, deposit with the Collateral Agent a 4-Year
Treasury Security having a principal amount at maturity of
$1,000; or
(b) if a Tax Event Redemption has occurred, (i) prior
to the second Business Day immediately preceding the First
Purchase Contract Settlement Date, deposit with the
Collateral Agent 3-Year Treasury Securities having an
aggregate principal amount at maturity of $40,000,000 and 4-
Year Treasury Securities having an aggregate principal
amount at maturity of $40,000,000, or (ii) after the First
Purchase Contract Settlement Date and prior to the second
Business Day immediately preceding the Second Purchase
Contract Settlement Date, 4-Year Treasury Securities having
an aggregate principal amount at maturity of $40,000,000;
and
(c) in either case, (i) deliver cash to the Agent in an
amount equal to the excess of the Contract Adjustment
Payments that would have accrued on the Growth PRIDES being
created by the Holder since the last Payment Date through
the date of Collateral Substitution, over the Contract
Adjustment Payments that have accrued over the same time
period on the Income PRIDES being surrendered in connection
with such Collateral Substitution, which amount the Agent
shall promptly remit to the Company, and (ii) transfer the
40 Income PRIDES, or, in the event a Tax Event Redemption
has occurred, 1,600,000 Income PRIDES, to the Agent
accompanied by a notice to the Agent, substantially in the
form of Exhibit B to the Pledge Agreement, stating that the
Holder has transferred the relevant types and amounts of
Treasury Securities to the Collateral Agent and requesting
that the Agent instruct the Collateral Agent to release the
applicable Debt Securities or the appropriate Applicable
Ownership Interest in the Treasury Portfolio, as the case
may be, underlying such Income PRIDES, whereupon the Agent
shall promptly give such instruction to the Collateral
Agent, substantially in the form of Exhibit A to the Pledge
Agreement.
Upon receipt of the Treasury Securities described in clause (a)
or (b) above and the instructions described in clause (c) above,
in accordance with the terms of the Pledge Agreement, the
Collateral Agent will release from the Pledge, to the Agent, on
behalf of the Holder, Debt Securities or the appropriate
Applicable Ownership Interest in the Treasury Portfolio, as the
case may be, that had been components of such Income PRIDES, free
and clear of the Company's security interest therein, and upon
receipt thereof the Agent shall promptly:
(i) cancel the related Income PRIDES surrendered
and transferred;
(ii) transfer the Debt Securities or the
appropriate Applicable Ownership Interest in the
Treasury Portfolio, as the case may be, that had been
components of such Income PRIDES to the Holder; and
(iii) authenticate, execute on behalf of such
Holder and deliver a Growth PRIDES Certificate executed
by the Company in accordance with Section 3.3
evidencing the same number of Purchase Contracts as
were evidenced by the canceled Income PRIDES.
Holders who elect to separate the Debt Securities or
the appropriate Applicable Ownership Interest in the Treasury
Portfolio, as the case may be, from the related Purchase
Contracts and to substitute Treasury Securities for such Debt
Securities or the appropriate 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.
In the event a Holder making a Collateral Substitution
pursuant to this Section 3.13 fails to effect a book-entry
transfer of the Income PRIDES or fails to deliver an Income
PRIDES Certificate to the Agent after depositing the appropriate
Treasury Securities with the Collateral Agent, the Debt
Securities or the appropriate Applicable Ownership Interest in
the Treasury Portfolio, as the case may be, constituting a part
of such Income PRIDES, and any interest on such Debt Securities
or distributions with respect to the 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 such Income PRIDES is so
transferred or the Income PRIDES Certificate is so delivered, as
the case may be, or, until such Holder provides evidence
satisfactory to the Company and the Agent that such Income PRIDES
Certificate has been destroyed, lost or stolen, together with any
indemnity that may be required by the Agent and the Company.
Except as described in this Section 3.13, for so long
as the Purchase Contract underlying an Income PRIDES remains in
effect, such Income PRIDES shall not be separable into its
constituent parts, and the rights and obligations of the Holder
in respect of the Debt Securities or the appropriate Applicable
Ownership Interest in the Treasury Portfolio, as the case may be,
and Purchase Contract comprising such Income PRIDES may be
acquired, and may be transferred and exchanged, only as an entire
Income PRIDES.
SECTION 3.14. ESTABLISHMENT OR REESTABLISHMENT OF INCOME PRIDES.
A Holder of a Growth PRIDES may, at any time on or
prior to the fifth Business Day immediately preceding the Second
Purchase Contract Settlement Date, create or recreate Income
PRIDES by (a) depositing with the Collateral Agent Debt
Securities or the appropriate Applicable Ownership Interest in
the Treasury Portfolio, as the case may be, having an aggregate
principal amount equal to the aggregate principal amount at
maturity of, and in substitution for all, but not less than all,
of the Treasury Securities comprising part of the Growth PRIDES
in accordance with this Section 3.14; provided, however, that
such substitutions may not be made during the period from the
fifth Business Day immediately preceding the First Purchase
Contract Settlement Date through the First Purchase Contract
Settlement Date, except that if a Tax Event Redemption has
occurred and the Treasury Portfolio has become a component of the
Income PRIDES, Holders of Growth PRIDES may make such Collateral
Substitutions at any time on or prior to the second Business Day
immediately preceding the Second Purchase Contract Settlement
Date (but not during the period from the second Business Day
immediately preceding the First Purchase Contract Settlement Date
through the First Purchase Contract Settlement Date). Holders of
Growth PRIDES may make such Collateral Substitutions and
establish Income PRIDES only (i) in integral multiples of 40
Growth PRIDES for 40 Income PRIDES if a Tax Event Redemption has
not occurred, or (ii) in integral multiples of 1,600,000 Growth
PRIDES for 1,600,000 Income PRIDES if a Tax Event Redemption has
occurred. To create 40 Income PRIDES (if a Tax Event Redemption
has not occurred), or 1,600,000 Income PRIDES (if a Tax Event
Redemption has occurred), the Growth PRIDES Holder shall
(a) if a Tax Event Redemption has not occurred, (i)
prior to the fifth Business Day preceding the First Purchase
Contract Settlement Date, deposit with the Collateral Agent
$1,000 in aggregate principal amount of Series D Notes and
$1,000 in aggregate principal amount of Series E Notes, or
(ii) after the First Purchase Contract Settlement Date,
deposit with the Collateral Agent $1,000 in aggregate
principal amount of Series E Notes, or
(b) if a Tax Event Redemption has occurred, deposit
with the Collateral Agent the Applicable Ownership Interest
in the Treasury Portfolio for each Income PRIDES being
created by the Holder, and having an aggregate principal
amount of $80,000,000, or if, after the First Purchase
Contract Settlement Date $40,000,000, and
(c) in either case, transfer and surrender the related
40 Growth PRIDES, or in the event a Tax Event Redemption has
occurred, 1,600,000 Income PRIDES, to the Agent accompanied
by a notice to the Agent, substantially in the form of
Exhibit B to the Pledge Agreement, stating that the Holder
has transferred the relevant amount of Debt Securities or
the appropriate Applicable Ownership Interest in the
Treasury Portfolio, as the case may be, to the Collateral
Agent and requesting that the Agent instruct the Collateral
Agent to release the Treasury Securities underlying such
Growth PRIDES, whereupon the Agent shall promptly give such
instruction to the Collateral Agent, substantially in the
form of Exhibit A to the Pledge Agreement.
Upon receipt of the Debt Securities or the appropriate Applicable
Ownership Interest in the Treasury Portfolio, as the case may be,
described in clause (a) or (b) above and the instructions
described in clause (c) above, in accordance with the terms of
the Pledge Agreement, the Collateral Agent will effect the
release of the Treasury Securities having a corresponding
aggregate principal amount from the Pledge to the Agent free and
clear of the Company's security interest therein, and upon
receipt thereof the Agent shall promptly:
(i) cancel the related Growth PRIDES surrendered
and transferred;
(ii) transfer the Treasury Securities that had
been components of such Growth PRIDES to the Holder;
and
(iii) authenticate, execute on behalf of such
Holder and deliver an Income PRIDES Certificate
executed by the Company in accordance with Section 3.3
evidencing the same number of Purchase Contracts as
were evidenced by the canceled Growth PRIDES.
Holders who elect to separate Treasury Securities from
the related Purchase Contract and to substitute Debt Securities
or the Applicable Ownership Interest in the Treasury Portfolio,
as the case may be, for such Treasury Securities 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.
In the event a Holder making a Collateral Substitution
pursuant to this Section 3.14 fails to effect a book-entry
transfer of the Growth PRIDES or fails to deliver a Growth PRIDES
Certificate to the Agent after depositing the appropriate Debt
Securities or Applicable Ownership Interest in the Treasury
Portfolio with the Collateral Agent, the Treasury Securities
constituting a part of such Growth PRIDES Certificate, and any
interest 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 Growth PRIDES is so transferred or the Growth
PRIDES is so delivered, or until such Holder provides evidence
satisfactory to the Company and the Agent that such Growth PRIDES
has been destroyed, lost or stolen, together with any indemnity
that may be required by the Agent and the Company.
Except as provided in this Section 3.14, for so long as
the Purchase Contract underlying a Growth PRIDES remains in
effect, such Growth PRIDES shall not be separable into its
constituent parts and the rights and obligations of the Holder of
such Growth PRIDES in respect of the Treasury Security and
Purchase Contract comprising such Growth PRIDES may be acquired,
and may be transferred and exchanged only as an entire Growth
PRIDES.
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 Debt Securities, the appropriate
Applicable Ownership Interest in the Treasury Portfolio or the
Treasury Securities, as the case may be, underlying the Income
PRIDES and the Growth PRIDES pursuant to the terms of the Pledge
Agreement, the Agent shall request transfer instructions with
respect to such Debt Securities or the appropriate 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
Income PRIDES Register or the Growth PRIDES Register, as the case
may be. Upon book-entry transfer of the Income PRIDES Certificate
or Growth PRIDES Certificate or delivery of an Income PRIDES or
Growth PRIDES to the Agent with such transfer instructions, the
Agent shall transfer the Debt Securities, the Treasury Portfolio
or Treasury Securities, as the case may be, underlying such
Income PRIDES or Growth PRIDES, as the case may be, to such
Holder by book-entry transfer, or other appropriate procedures,
in accordance with such instructions. In the event a Holder of
Income PRIDES or Growth PRIDES fails to effect such transfer or
delivery, the Debt Securities, the appropriate Applicable
Ownership Interest in the Treasury Portfolio or Treasury
Securities, as the case may be, underlying such Income PRIDES or
Growth PRIDES, as the case may be, and any interest thereon,
shall be held in the name of the Agent or its nominee in trust
for the benefit of such Holder, until such Income PRIDES or
Growth PRIDES are transferred or the Income PRIDES Certificate or
Growth PRIDES Certificate is surrendered or such Holder provides
satisfactory evidence that such Income PRIDES Certificate or
Growth PRIDES Certificate has been destroyed, lost or stolen,
together with any indemnity that may be required by the Agent and
the Company. In the case of the Treasury Portfolio the Purchase
Contract Agent may dispose of the subject securities for cash and
pay the applicable portion of such cash to the Holders in lieu of
such Holders Applicable Ownership interest in such Treasury
Portfolio, where that such Holder would otherwise have been
entitled to receive less than $1,000 of any such security.
SECTION 3.16. NO CONSENT TO ASSUMPTION.
Each Holder of a Security, by acceptance thereof, shall
be deemed expressly to have withheld any consent to the
assumption under Section 365 of the Bankruptcy Code or otherwise,
of the Purchase Contract by the Company, its trustee in
bankruptcy, receiver, liquidator or a person or entity performing
similar functions, 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 DEBT SECURITIES
SECTION 4.1. PAYMENT OF INTEREST; RIGHTS TO INTEREST PRESERVED;
INTEREST RATE RESET; NOTICE.
A payment of interest on any Debt Securities or
distribution with respect to the appropriate Applicable Ownership
Interest in the Treasury Portfolio, as the case may be, which is
paid on any Payment Date shall, subject to receipt thereof by the
Agent from the Collateral Agent as provided by the terms of the
Pledge Agreement, be paid to the Person in whose name the Income
PRIDES Certificate (or one or more Predecessor Income PRIDES
Certificates) of which such Debt Securities or the appropriate
Applicable Ownership Interest in the Treasury Portfolio, as the
case may be, are a part is registered at the close of business on
the Record Date for such Payment Date.
Each Income PRIDES Certificate evidencing Debt
Securities delivered under this Agreement upon registration of
transfer of or in exchange for or in lieu of any other Income
PRIDES Certificate shall carry the rights to payment of interest
accrued and unpaid, and to accrue interest, which is carried by
the Debt Securities underlying such other Income PRIDES
Certificate.
In the case of any Income PRIDES with respect to which
Cash Settlement of the underlying applicable portion of the
Purchase Contract is effected on the Business Day immediately
preceding the applicable Purchase Contract Settlement Date
pursuant to prior notice, or with respect to which Early
Settlement of the underlying Purchase Contract is effected on an
Early Settlement Date, or with respect to which a Collateral
Substitution is effected, in each case on a date that is after
any Record Date and on or prior to the next succeeding Payment
Date, interest on the Debt Securities or distributions with
respect to the appropriate Applicable Ownership Interest in the
Treasury Portfolio, as the case may be, underlying such Income
PRIDES otherwise payable on such Payment Date shall be payable on
such Payment Date notwithstanding such Cash Settlement or Early
Settlement or Collateral Substitution, and such interests shall,
subject to receipt thereof by the Agent, be payable to the Person
in whose name the Income PRIDES Certificate (or one or more
Predecessor Income PRIDES Certificate) 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 Income PRIDES with respect to which Cash Settlement
or Early Settlement of the underlying Purchase Contract is
effected on the Business Day immediately preceding the applicable
Purchase Contract Settlement Date or an Early Settlement Date, as
the case may be, or with respect to which a Collateral
Substitution has been effected, payment of interest on the
related Debt Securities or distributions with respect to the
appropriate Applicable Ownership Interest in the Treasury
Portfolio, as the case may be, that would otherwise be payable
after the applicable Purchase Contract Settlement Date or Early
Settlement Date shall not be payable hereunder to the Holder of
such Income PRIDES; provided, however, that to the extent that
such Holder continues to hold the separated Debt Securities that
formerly comprised a part of such Holder's Income PRIDES, such
Holder shall be entitled to receive the payment of interest on
such separated Debt Securities.
The applicable Coupon Rate on the Series D Notes to be
in effect on and after the First Purchase Contract Settlement
Date will be reset on the third Business Day immediately
preceding the First Purchase Contract Settlement Date to the
Series D Reset Rate (such Series D Reset Rate to be effective
from and after the First Purchase Contract Settlement Date). On
the Reset Announcement Date, the Series D Reset Spread and the
Two-Year Benchmark Treasury to be used to determine the Series D
Reset Rate will be announced by the Company. On the Business Day
immediately following the Reset Announcement Date, the Company
will cause a notice of such Series D Reset Spread and Two-Year
Benchmark Treasury to be published in an Authorized Newspaper.
The applicable Coupon Rate on the Series E Notes to be
in effect on and after the Second Purchase Contract Settlement
Date will be reset on the third Business Day immediately
preceding the Second Purchase Contract Settlement Date to the
Series E Reset Rate (such Series E Reset Rate to be in effect
from and after the Second Purchase Contract Settlement Date). On
the Reset Announcement Date the Series E Reset Spread and the
Two-Year Benchmark Treasury to be used to determine the Series E
Reset Rate will be announced by the Company. On the Business Day
immediately following the Reset Announcement Date, the Company
will cause a notice of such Series E Reset Spread and Two-Year
Benchmark Treasury to be published in an Authorized Newspaper.
Not later than 7 calendar days nor more than 15
calendar days prior to each Reset Announcement Date, the Company
will request that the Depositary notify (or any successor
Clearing Agency or its nominee) by first-class mail, postage
prepaid, the Beneficial Owners or Clearing Agency Participants
holding Income PRIDES or Growth PRIDES, of such Reset
Announcement Date and any procedures to be followed by such
Holders of Securities, who intend to settle their obligation
under the applicable portion of the Purchase Contract with
separate cash on the applicable Purchase Contract Settlement
Date.
SECTION 4.2. NOTICE AND VOTING.
Under and subject to the terms of the Pledge Agreement,
the Agent will be entitled to exercise the voting and any other
consensual rights pertaining to the Debt Securities pledged with
the Collateral Agent but only to the extent instructed by the
Holders as described below. Upon receipt of notice of any meeting
at which holders of Debt Securities are entitled to vote or upon
any solicitation of consents, waivers or proxies of holders of
Debt Securities, the Agent shall, as soon as practicable
thereafter, mail to the Holders of Income PRIDES a notice (a)
containing such information as is contained in the notice or
solicitation, (b) stating that each Holder on the record date set
by the Agent therefor (which, to the extent possible, shall be
the same date as the record date for determining the holders of
Debt Securities entitled to vote) shall be entitled to instruct
the Agent as to the exercise of the voting rights pertaining to
the Debt Securities underlying their Income PRIDES and (c)
stating the manner in which such instructions may be given. Upon
the written request of the Holders of Income PRIDES 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 Debt Securities
as to which any particular voting instructions are received. In
the absence of specific instructions from the Holder of an Income
PRIDES, the Agent shall abstain from voting the Debt Security
underlying such Income PRIDES. The Company hereby agrees, if
applicable, to solicit Holders of Income PRIDES to timely
instruct the Agent in order to enable the Agent to vote such Debt
Securities.
SECTION 4.3. TAX EVENT REDEMPTION.
Upon the occurrence of a Tax Event Redemption prior to
the Second Purchase Contract Settlement Date, the Redemption
Price payable on the Tax Event Redemption Date with respect to
the Applicable Principal Amount of Debt Securities shall be
delivered to the Collateral Agent in exchange for the Pledged
Debt Securities. Pursuant to the terms of the Pledge Agreement,
the Collateral Agent will apply an amount equal to the Redemption
Amount of such Redemption Price to purchase on behalf of the
Holders of Income PRIDES the Treasury Portfolio and promptly
remit the remaining portion of such Redemption Price to the Agent
for payment to the Holders of such Income PRIDES. The Treasury
Portfolio will be substituted for the outstanding Pledged Debt
Securities, and will be held by the Collateral Agent in
accordance with the terms of the Pledge Agreement to secure the
obligation of each Holder of an Income PRIDES to purchase the
Common Stock of the Company on the applicable Purchase Contract
Settlement Date under the Purchase Contract constituting a part
of such Income PRIDES. Following the occurrence of a Tax Event
Redemption prior to the Second Purchase Contract Settlement Date,
the Holders of Income PRIDES and the Collateral Agent shall have
such security interests, rights and obligations with respect to
the Treasury Portfolio as the Holder of Income PRIDES and the
Collateral Agent had in respect of the Debt Securities subject to
the Pledge thereof as provided in Sections 2, 3, 4, 5 and 6 of
the Pledge Agreement, and any reference herein to the Debt
Securities shall be deemed to be reference to such Treasury
Portfolio. The Company may cause to be made in any Income PRIDES
Certificates thereafter to be issued such change in phraseology
and form (but not in substance) as may be appropriate to reflect
the liquidation of the Trust and the substitution of the Treasury
Portfolio for Debt Securities as collateral.
SECTION 4.4. CONSENT TO TREATMENT FOR TAX PURPOSES.
Each Holder of an Income PRIDES or a Growth PRIDES, by
its acceptance thereof, covenants and agrees to treat itself as
the owner, for United States federal, state and local income and
franchise tax purposes, of (i) the related Debt Securities or the
appropriate Applicable Ownership Interest in the Treasury
Portfolio, in the case of the Income PRIDES, or (ii) the Treasury
Securities, in the case of the Growth PRIDES. Each Holder of an
Income PRIDES, by its acceptance thereof, further covenants and
agrees to treat the Debt Securities as indebtedness of the
Company for United States federal, state and local income and
franchise tax purposes.
ARTICLE V
THE PURCHASE CONTRACTS
SECTION 5.1. PURCHASE OF SHARES OF COMMON STOCK.
Each Purchase Contract shall, unless a Termination
Event or an Early Settlement in accordance with Section 5.9
hereof has occurred, obligate the Holder of the related Security
to purchase, and the Company to sell, on each of the First
Purchase Contract Settlement Date and the Second Purchase
Contract Settlement Date, for $25 in cash on each such date (the
"Purchase Price"), a number of newly issued shares of Common
Stock equal to the applicable Settlement Rate. The "Settlement
Rate" as determined with respect to a Purchase Contract
Settlement Date is equal to (a) if the Applicable Market Value
(as defined below) is equal to or greater than $ 49.19 (the
"Threshold Appreciation Price"), .5082 shares of Common Stock
per Purchase Contract, (b) if the Applicable Market Value is less
than the Threshold Appreciation Price, but is greater than
$41.6875, the number of shares of Common Stock equal to $25
divided by the Applicable Market Value and (c) if the Applicable
Market Value is less than or equal to $ 41.6875, .5997 shares of
Common Stock per Purchase Contract, in each case subject to
adjustment as provided in Section 5.6 (and in each case rounded
upward or downward to the nearest 1/10,000th of a share). As
provided in Section 5.10, no fractional shares of Common Stock
will be issued upon settlement of Purchase Contracts.
The "Applicable Market Value" with respect to a
Purchase Contract Settlement Date means the average of the
Closing Price per share of Common Stock on each of the twenty
consecutive Trading Days ending on the third Trading Day
immediately preceding such Purchase Contract Settlement 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, 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 at the close
of business that is the primary market for the trading of the
Common Stock.
Each Holder of an Income PRIDES or a Growth PRIDES, by
its acceptance thereof, irrevocably authorizes the Agent to enter
into and perform the related Purchase Contract on its behalf as
its attorney-in-fact (including the execution of Certificates on
behalf of such Holder), agrees to be bound by the terms and
provisions thereof, covenants and agrees to perform its
obligations under such Purchase 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 Debt Securities, the Treasury
Portfolio or the Treasury Securities pursuant to the Pledge
Agreement. Each Holder of an Income PRIDES or a Growth PRIDES,
by its acceptance thereof, further covenants and agrees, that, to
the extent and in the manner provided in Section 5.4 and the
Pledge Agreement, but subject to the terms thereof, payments in
respect of the principal of and interest on Debt Securities or
the Proceeds of the Treasury Securities or Applicable Ownership
Interest in the Treasury Portfolio on a Purchase Contract
Settlement Date shall be paid by the Collateral Agent to the
Company in satisfaction of such Holder's obligations under such
Purchase Contract and such Holder shall acquire no right, title
or interest in such payments.
Upon registration of transfer of a Certificate, the
transferee shall be bound (without the necessity of any other
action on the part of such transferee), under the terms of this
Agreement, the Purchase Contract underlying such Certificate and
the Pledge Agreement; and the transferor shall be released from
the obligations under this Agreement, the 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.
SECTION 5.2. CONTRACT ADJUSTMENT PAYMENTS.
Subject to Section 5.3 herein, the Company shall pay,
on each Payment Date, the Contract Adjustment Payments payable in
respect of each Purchase Contract to the Person in whose name a
Certificate (or one or more Predecessor Certificates) is
registered at the close of business on the Record Date next
preceding such Payment Date. The Contract Adjustment Payments
will be payable at the office of the Agent in The City of New
York maintained for that purpose or, at the option of the
Company, by check mailed to the address of the Person entitled
thereto at such Person's address as it appears on the Income
PRIDES Register or Growth PRIDES Register.
Upon the occurrence of a Termination Event, the
Company's obligation to pay Contract Adjustment Payments
(including any accrued or Deferred Contract Adjustment Payments)
shall cease.
Each Certificate delivered under this Agreement upon
registration of transfer of or in exchange for or in lieu of
(including as a result of a Collateral Substitution or the
re-establishment of an Income PRIDES) any other Certificate shall
carry the rights to Contract Adjustment Payments accrued and
unpaid, and to accrue Contract Adjustment Payments, which were
carried by the Purchase Contracts underlying such other
Certificates.
Subject to Section 5.9, in the case of any Security
with respect to which Early Settlement of the underlying Purchase
Contract is effected on an Early Settlement Date that is after
any Record Date and on or prior to the next succeeding Payment
Date, Contract Adjustment Payments, if any, otherwise payable on
such Payment Date shall be payable on such Payment Date
notwithstanding such Early Settlement, and such Contract
Adjustment Payments shall be paid to the Person in whose name the
Certificate evidencing such Security (or one or more Predecessor
Certificates) is registered at the close of business on such
Record Date. Except as otherwise expressly provided in the
immediately preceding sentence, in the case of any Security with
respect to which Early Settlement of the underlying Purchase
Contract is effected on an Early Settlement Date, Contract
Adjustment Payments that would otherwise be payable after the
Early Settlement Date with respect to such Purchase Contract
shall not be payable.
The Company's obligations with respect to Contract
Adjustment Payments, will be subordinated and junior in right of
payment to the Company's obligations under any Senior
Indebtedness.
SECTION 5.3. DEFERRAL OF PAYMENT DATES FOR CONTRACT ADJUSTMENT
PAYMENTS.
The Company shall have the right to defer the payment
of any or all of the Contract Adjustment Payments otherwise
payable on any Payment Date to a date no later than the Purchase
Contract Settlement Date next succeeding the date such deferral
commences, but only if the Company shall give the Holders and the
Agent written notice of its election to defer such payment
(specifying the amount to be deferred) at least ten Business Days
prior to the earlier of (i) the next succeeding Payment Date or
(ii) the date the Company is required to give notice of the
Record Date or Payment Date with respect to payment of such
Contract Adjustment Payments to the NYSE or other applicable
self-regulatory organization or to Holders of the Securities, but
in any event not less than one Business Day prior to such Record
Date. In connection with any Contract Adjustment Payments so
deferred, additional Contract Adjustment Payments thereon will
accrue at the rate of 9.75% per annum (computed on the basis of
360 day year of twelve 30 day months), compounding on each
succeeding Payment Date, until paid in full (such deferred
installments of Contract Adjustment Payments together with the
accrued additional Contract Adjustment Payments thereon, being
referred to herein as the "Deferred Contract Adjustment
Payments"). Deferred Contract Adjustment Payments shall be due on
the next succeeding Payment Date except to the extent that
payment is deferred pursuant to this Section. No Contract
Adjustment Payments may be deferred to a date that is after the
Purchase Contract Settlement Date next succeeding the date such
deferral commences. If the Purchase Contracts are terminated upon
the occurrence of a Termination Event, the Holder's right to
receive Contract Adjustment Payments and Deferred Contract
Adjustment Payments will terminate.
In the event that the Company elects to defer the
payment of Contract Adjustment Payments on the Purchase Contracts
until the next succeeding Purchase Contract Settlement Date, each
Holder will receive on such Purchase Contract Settlement Date, in
lieu of a cash payment, a number of shares of Common Stock (in
addition to a number of shares of Common Stock equal to the
Settlement Rate) equal to (x) the aggregate amount of Deferred
Contract Adjustment Payments payable to such Holder divided by
(y) the Applicable Market Value.
No fractional shares of Common Stock will be issued by
the Company with respect to the payment of Deferred Contract
Adjustment Payments on a Purchase Contract Settlement Date. In
lieu of fractional shares otherwise issuable with respect to such
payment of Deferred Contract Adjustment Payments, the Holder will
be entitled to receive an amount in cash as provided in Section
5.10.
In the event the Company exercises its option to defer
the payment of Contract Adjustment Payments, then, until the
Deferred Contract Adjustment Payments have been paid, the Company
shall not declare or pay dividends on, make distributions with
respect to, or redeem, purchase or acquire, or make a liquidation
payment with respect to, any of its capital stock or make
guarantee payments with respect to the foregoing (other than (i)
purchases or acquisitions of capital stock of the Company in
connection with the satisfaction by the Company of its
obligations under any employee or agent benefit plans or the
satisfaction by the Company of its obligations pursuant to any
contract or security outstanding on the date of such event
requiring the Company to purchase its capital stock, (ii) as a
result of a reclassification of the Company's capital stock or
the exchange or conversion of one class or series of the
Company's capital stock for another class or series of the
Company's capital stock, (iii) the purchase of fractional
interests in shares of the Company's capital stock pursuant to
the conversion or exchange provisions of the Company's capital
stock or the security being converted or exchanged, (iv)
dividends or distributions in capital stock of the Company (or
rights to acquire capital stock) or repurchases or redemptions of
capital stock solely from the issuance or exchange of capital
stock or (v) redemptions or repurchases of any rights outstanding
under a shareholder rights plan).
SECTION 5.4. PAYMENT OF PURCHASE PRICE.
(a) (i) Unless a Tax Event Redemption has occurred or a
Holder settles the underlying Purchase Contract through the
early delivery of cash to the Purchase Contract Agent in the
manner described in Section 5.9, each Holder of an Income
PRIDES must notify the Agent by use of a notice in
substantially the form of Exhibit C hereto of its intention
to pay in cash ("Cash Settlement") the Purchase Price for
the shares of Common Stock to be purchased pursuant to the
applicable portion of a Purchase Contract on a Purchase
Contract Settlement Date. Such notice shall be made on or
prior to 5:00 p.m., New York City time, on the fifth
Business Day immediately preceding the applicable Purchase
Contract Settlement 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.
(ii) A Holder of an Income PRIDES 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 applicable
Purchase Contract Settlement Date in lawful money of the
United States by certified or cashiers' check or wire
transfer, in each case in immediately available funds
payable to or upon the order of the Company. Any cash
received by the Collateral Agent will be invested promptly
by the Collateral Agent in Permitted Investments and paid to
the Company on the applicable Purchase Contract Settlement
Date in settlement of the applicable portion of the Purchase
Contract in accordance with the terms of this Agreement and
the Pledge Agreement. Any funds received by the Collateral
Agent in respect of the investment earnings from the
investment in such Permitted Investments, will be
distributed to the Agent when received for payment to the
Holder.
(iii) If a Holder of an Income PRIDES fails to
notify the Agent of its intention to make a Cash Settlement
in accordance with paragraph (a)(i) above, such failure
shall constitute a default under the related Purchase
Contract and the Holder shall be deemed to have consented to
the disposition of the applicable pledged Debt Securities
(which shall be Series D Notes in connection with the First
Purchase Contract Settlement Date and Series E Notes in
connection with the Second Purchase Contract Settlement
Date) pursuant to the remarketing as described in paragraph
(b) below. If a Holder of an Income PRIDES does notify the
Agent as provided in paragraph (a)(i) above of its intention
to pay the Purchase Price in cash, but fails to make such
payment as required by paragraph (a)(ii) above, such failure
shall also constitute a default; however, the Debt
Securities of such a Holder will not be remarketed but
instead the Collateral Agent, for the benefit of the
Company, will exercise its rights as a secured party with
respect to such Debt Securities, including those rights
specified in paragraph (c) below.
(b) In order to dispose of the applicable Debt
Securities (which shall be Series D Notes in connection with
the First Purchase Contract Settlement Date and Series E
Notes in connection with the Second Purchase Contract
Settlement Date) of Income PRIDES Holders who have not
notified the Agent of their intention to effect a Cash
Settlement with respect to a Purchase Contract Settlement
Date as provided in paragraph (a)(i) above, the Company
shall engage one or more nationally recognized investment
banking firms (the "Remarketing Agent") pursuant to a
Remarketing Agreement to sell such Debt Securities. In order
to facilitate the remarketing, the Agent shall notify the
Remarketing Agent, by 10:00 a.m., New York City time, on the
fourth Business Day immediately preceding such Purchase
Contract Settlement Date, of the aggregate number of Debt
Securities to be remarketed. Concurrently, the Collateral
Agent, pursuant to the terms of the Pledge Agreement, will
present for remarketing such Debt Securities to the
Remarketing Agent. Upon receipt of such notice from the
Agent and such Debt Securities from the Collateral Agent,
the Remarketing Agent will, on the third Business Day
immediately preceding such Purchase Contract Settlement
Date, use its reasonable efforts to remarket such Debt
Securities on such date at a price of approximately 100.5%
(but not less than 100%) of the aggregate principal amount
of such Debt Securities, plus accrued and unpaid interest,
if any, thereon. After deducting as the remarketing fee
("Remarketing Fee") an amount not exceeding 25 basis points
(.25%) of the aggregate principal amount of the remarketed
Debt Securities of such series from any amount of such
proceeds in excess of the aggregate principal amount of such
remarketed Debt Securities of such series plus accrued and
unpaid interest, if any, then the Remarketing Agent will
remit the remaining portion of the proceeds from such
remarketing to the Collateral Agent. Such portion of the
proceeds, equal to the aggregate principal amount of such
Debt Securities, will automatically be applied by the
Collateral Agent, in accordance with the Pledge Agreement to
satisfy in full such Income PRIDES holders' obligations to
pay the Purchase Price for the Common Stock under the
applicable portions of the related Purchase Contracts on
such Purchase Contract Settlement Date. Any proceeds in
excess of those required to pay the Purchase Price and the
Remarketing Fee will be remitted to the Agent for payment to
the Holders of the related Income PRIDES. Income PRIDES
Holders whose Debt Securities are so remarketed will not
otherwise be responsible for the payment of any Remarketing
Fee in connection therewith. If such a remarketing does not
occur because a condition precedent to such remarketing
shall not have been fulfilled, or if in spite of using its
reasonable efforts, the Remarketing Agent cannot remarket
the related Debt Securities of such Holders of Income PRIDES
at a price not less than 100% of the aggregate principal
amount of such Debt Securities plus accrued and unpaid
interest, if any, the remarketing will be deemed to have
failed (a "Failed Remarketing") and, in accordance with the
terms of the Pledge Agreement the Collateral Agent for the
benefit of the Company will exercise its rights as a secured
party with respect to such Debt Securities, including those
actions specified in paragraph (c) below; provided, that if
upon a Failed Remarketing the Collateral Agent exercises
such rights for the benefit of the Company with respect to
such Debt Securities, any accrued and unpaid interest on
such Debt Securities will become payable by the Company to
the Agent for payment to the Holder of the Income PRIDES to
which such Debt Securities relates. Such payment will be
made by the Company on or prior to 11 a.m. New York City
time on the applicable Purchase Contract Settlement Date in
lawful money of the United States by certified or cashiers'
check or wire transfer in immediately available funds
payable to or upon the order of the Agent. The Company will
cause a notice of such Failed Remarketing to be published on
the second Business Day immediately preceding such Purchase
Contract Settlement Date in an Authorized Newspaper.
(c) With respect to any Debt Securities beneficially
owned by Holders who have elected Cash Settlement but failed
to deliver cash as required in (a)(ii) above, or with
respect to Debt Securities which are subject to a 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 paragraph
(h) below, may, among other things, (i) retain such Debt
Securities in full satisfaction of the Holders obligations
under the applicable portions of the Purchase Contracts or
(ii) sell such Debt Securities in one or more public or
private sales and apply the proceeds of such sale in full
satisfaction of the Holders obligations under the
applicable portions of the Purchase Contracts.
(d) (i) Unless a Holder of Growth PRIDES or, if a Tax
Event Redemption has occurred, Income PRIDES settles the
underlying Purchase Contract through the early delivery of
cash to the Purchase Contract Agent in the manner described
in Section 5.9, each Holder of a Growth PRIDES or, if a Tax
Event Redemption has occurred, Income PRIDES must notify the
Agent by use of a notice in substantially the form of
Exhibit C hereto of its intention to pay in cash the
Purchase Price for the shares of Common Stock to be
purchased pursuant to the applicable portion of a Purchase
Contract on or prior to 5:00 p.m., New York City time, on
the second Business Day immediately preceding the applicable
Purchase Contract Settlement Date.
(ii) A Holder of a Growth PRIDES or, if a Tax
Event Redemption has occurred, Income PRIDES who has so
notified the Agent of its intention to make a Cash
Settlement in accordance with paragraph (d)(i) above 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 applicable Purchase Contract
Settlement Date in lawful money of the United States by
certified or cashiers' check or wire transfer, in each case
in immediately available funds payable to or upon the order
of the Company. Any cash received by the Collateral Agent
will be invested promptly by the Collateral Agent in
Permitted Investments and paid to the Company on the
applicable Purchase Contract Settlement Date in settlement
of the applicable portion of the Purchase Contract in
accordance with the terms of this Agreement and the Pledge
Agreement. Any funds received by the Collateral Agent in
respect of the investment earnings from the investment in
such Permitted Investments will be distributed to the Agent
when received for payment to the Holder.
(iii) If a Holder of a Growth PRIDES or, if a Tax
Event Redemption has occured, an Income PRIDES, fails to
notify the Agent of its intention to make a Cash Settlement
in accordance with paragraph (d)(i) above, or if a Holder of
a Growth PRIDES or an Income PRIDES (if a Tax Event
Redemption has occurred) does notify the Agent as provided
in paragraph (d)(i) above of its intention to pay the
Purchase Price in cash, but fails to make such payment as
required by paragraph (d)(ii) above, then such failure shall
constitute a default under the related Purchase Contract and
upon the maturity of the Pledged Treasury Securities or the
appropriate Applicable Ownership Interest in the Treasury
Portfolio, as the case may be, held by the Collateral Agent
on the Business Day immediately prior to the applicable
Purchase Contract Settlement Date, the principal amount of
the Treasury Securities or the appropriate Applicable
Ownership Interest in the Treasury Portfolio, as the case
may be, received by the Collateral Agent will be invested
promptly in overnight Permitted Investments. On the
applicable Purchase Contract Settlement Date an amount equal
to the Purchase Price will be remitted to the Company as
payment thereof without receiving any instructions from the
Holder. In the event the sum of the proceeds from the
related Pledged Treasury Securities or the appropriate
Applicable Ownership Interest in the Treasury Portfolio, as
the case may be, and the investment earnings earned from
such investments is in excess of the aggregate Purchase
Price of the applicable portions of the Purchase Contracts
being settled thereby, the Collateral Agent will distribute
such excess to the Agent for the benefit of the Holder of
the related Growth PRIDES or Income PRIDES when received.
(e) Any distribution to Holders of excess funds and
interest described 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, by check mailed to
the address of the Person entitled thereto at such address
as it appears on the Register.
(f) Unless a Holder settles the underlying Purchase
Contract through the early delivery of cash to the
Collateral Agent with respect to a Purchase Contract
Settlement Date in the manner described herein, the Company
shall not be obligated to issue any shares of Common Stock
in respect of the relevant portion of the Purchase Contract
or deliver any certificate therefor to the Holder unless it
shall have received payment in full of the Purchase Price
for the shares of Common Stock to be purchased thereunder in
the manner herein set forth.
(g) Upon Cash Settlement with respect to the
applicable portion of any Purchase Contract, (i) the
Collateral Agent will, in accordance with the terms of the
Pledge Agreement, cause the corresponding Pledged Debt
Securities or appropriate Applicable Ownership Interest in
the Treasury Portfolio, as the case may be, or the Pledged
Treasury Securities underlying the relevant Security to be
released from the Pledge by the Collateral Agent free and
clear of any security interest of the Company and
transferred to the Agent for delivery to the Holder thereof
or its designee as soon as practicable and (ii) subject to
the receipt thereof from the Collateral Agent, the Agent
shall, by book-entry transfer, or other appropriate
procedures, in accordance with instructions provided by the
Holder thereof, transfer such Debt Securities or the
appropriate Applicable Ownership Interest in the Treasury
Portfolio, as the case may be, or such Treasury Securities
(or, if no such instructions are given to the Agent by the
Holder, the Agent shall hold such Debt Securities or the
Treasury Portfolio, as the case may be, or such Treasury
Securities, and any distribution thereon, in the name of the
Agent or its nominee in trust for the benefit of such
Holder).
(h) The obligations of the Holders to pay the Purchase
Price on each Purchase Contract Settlement Date are
non-recourse obligations and are payable solely out of any
Cash Settlement or the proceeds of any Collateral pledged to
secure the obligations of the Holders with respect to such
Purchase Price, and in no event will Holders be liable for
any deficiency between the proceeds of Collateral
disposition and the Purchase Price. A default by a Holder
in the performance of its obligations under a Purchase
Contract in connection with the First Purchase Contract
Settlement Date shall not in itself be a default in the
performance of its obligations under such Purchase Contract
in connection with the Second Purchase Contract Settlement
Date (except in connection with Early Settlement).
SECTION 5.5. ISSUANCE OF SHARES OF COMMON STOCK.
Unless a Termination Event or an Early Settlement shall
have occurred, on a Purchase Contract Settlement Date, upon its
receipt of payment in full of the applicable Purchase Price for
shares of Common Stock purchased by the Holders pursuant to the
foregoing provisions of this Article and subject to Section
5.6(b), the Company shall issue and deposit with the Agent, for
the benefit of the Holders of the Outstanding Securities, one or
more certificates representing the newly issued shares of Common
Stock registered in the name of the Agent (or its nominee) as
custodian for the Holders (such certificates for shares of Common
Stock, together with any dividends or distributions for which
both a record date and payment date for such dividend or
distribution has occurred after the Purchase Contract Settlement
Date, being hereinafter referred to as the "Purchase Contract
Settlement Fund") to which the Holders are entitled hereunder.
Subject to the foregoing, upon surrender of a Certificate to the
Agent on or after a Purchase Contract Settlement Date, together
with settlement instructions thereon duly completed and executed,
the Holder of such Certificate shall be entitled to receive in
exchange therefor a certificate representing that number of whole
shares of Common Stock which such Holder is entitled to receive
pursuant to the provisions of this Article Five (after taking
into account all Securities then held by such Holder) together
with cash in lieu of fractional shares as provided in Section
5.10 and any dividends or distributions with respect to such
shares constituting part of the Purchase Contract Settlement
Fund, but without any interest thereon, and the Certificate so
surrendered shall forthwith be canceled. Such shares shall be
registered in the name of the Holder or the Holder's designee as
specified in the settlement instructions provided by the Holder
to the Agent. If any shares of Common Stock issued in respect of
a Purchase Contract are to be registered to a Person other than
the Person in whose name the Certificate evidencing such Purchase
Contract is registered, no such registration shall be made unless
the Person requesting such registration has paid any transfer and
other taxes required by reason of such registration in a name
other than that of the registered Holder of the Certificate
evidencing such Purchase Contract or has established to the
satisfaction of the Company that such tax either has been paid or
is not payable.
SECTION 5.6. ADJUSTMENT OF SETTLEMENT RATE.
(a) Adjustments for Dividends, Distributions, Stock
Splits, Etc.
(1) In case the Company shall pay or make a
dividend or other distribution on 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 of
shares and the total number of shares constituting such
dividend or other distribution, such increase to become
effective immediately after the opening of business on
the day following the date fixed for such
determination. For the purposes of this paragraph (1),
the number of shares of Common Stock at any time
outstanding shall not include shares held in the
treasury of the Company but shall include any shares
issuable in respect of any scrip certificates issued in
lieu of fractions of shares of Common Stock. The
Company will not pay any dividend or make any
distribution on shares of Common Stock held in the
treasury of the Company.
(2) In case the Company shall issue rights,
options or warrants to all holders of its Common Stock
that are not available on an equivalent basis to
Holders of the Securities upon settlement of the
Purchase Contracts underlying such Securities entitling
such holders of the Common Stock, for a period expiring
within 45 days after the record date for the
determination of stockholders entitled to receive such
rights, options or warrants, 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 plan, including such a plan that provides
for purchases of Common Stock by non-shareholders), 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 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 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 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) In case outstanding shares of Common Stock
shall be subdivided or split into a greater number of
shares of Common Stock, the Settlement Rate, in effect
at the opening of business on the day following the day
upon which such subdivision or split becomes effective
shall be proportionately increased, and, conversely, in
case outstanding shares of Common Stock shall each be
combined into a smaller number of shares of Common
Stock, the Settlement Rate, in effect at the opening of
business on the day following the day upon which such
combination becomes effective shall be proportionately
reduced, such increase or reduction, as the case may
be, to become effective immediately after the opening
of business on the day following the day upon which
such subdivision, split or combination becomes
effective.
(4) In case the Company shall, by dividend or
otherwise, distribute to all holders of its Common
Stock evidences of its indebtedness or assets
(including securities, but excluding any rights or
warrants referred to in paragraph (2) of this Section,
any dividend or distribution paid exclusively in cash
and any dividend or distribution referred to in
paragraph (1) of this Section), the Settlement Rate,
shall be adjusted so that the same shall equal the rate
determined by dividing the Settlement Rate in effect
immediately prior to the close of business on the date
fixed for the determination of stockholders entitled to
receive such distribution by a fraction of which the
numerator 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 filed with the Agent) of the portion
of the assets or evidences of indebtedness so
distributed applicable to one share of Common Stock and
the denominator 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.
(5) In case the Company shall, (I) by dividend or
otherwise, distribute to all holders of its Common
Stock cash (excluding any cash that is distributed in a
Reorganization Event to which Section 5.6(b) applies or
as part of a distribution referred to in paragraph (4)
of this Section) in an aggregate amount that, combined
together with (II) the aggregate amount of any other
distributions to all holders of its Common Stock made
exclusively in cash 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 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 (i) 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 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 (ii) the
denominator of which shall be equal to the Current
Market Price per share of the Common Stock on such date
for determination.
(6) 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) on the
Expiration Time, then, and in each such case,
immediately prior to the opening of business on the day
after the date of the Expiration Time, the Settlement
Rate, shall be adjusted so that the same shall equal
the rate determined by dividing the Settlement Rate
immediately prior to the close of business on the date
of the Expiration Time by a fraction (i) the numerator
of which shall be equal to (A) the product of (I) the
Current Market Price per share of the Common Stock on
the date of the Expiration Time and (II) the number of
shares of Common Stock outstanding (including any
tendered shares) on the Expiration Time less (B) the
amount of cash plus the fair market 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 (ii) the denominator of which
shall be equal to the product of (A) the Current Market
Price per share of the Common Stock as of the
Expiration Time and (B) the number of shares of Common
Stock outstanding (including any tendered shares) as of
the Expiration Time less the number of all shares
validly tendered and not withdrawn as of the Expiration
Time (the shares deemed so accepted, up to any such
maximum, being referred to as the "Purchased Shares").
(7) The reclassification of Common Stock into
securities including securities other than Common Stock
(other than any reclassification upon a Reorganization
Event to which Section 5.6(b) applies) shall be deemed
to involve (a) 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 (b) a
subdivision, split or combination, as the case may be,
of the number of shares of Common Stock outstanding
immediately prior to such reclassification into the
number of shares of Common Stock outstanding
immediately thereafter (and the effective date of such
reclassification shall be deemed to be "the day upon
which such subdivision or split becomes effective" or
"the day upon which such combination becomes
effective", as the case may be, and "the day upon which
such subdivision, split or combination becomes
effective" within the meaning of paragraph (3) of this
Section).
(8) The "Current Market Price" per share of
Common Stock on any day means the average of the daily
Closing Prices for the five consecutive Trading Days
selected by the Company commencing not more than 30
Trading Days before, and ending not later than, the
earlier of the day in question and the day before the
"ex date" with respect to the issuance or distribution
requiring such computation. For purposes of this
paragraph, the term "ex date," when used with respect
to any issuance or distribution, shall mean the first
date on which the Common Stock trades regular way on
such exchange or in such market without the right to
receive such issuance or distribution.
(9) All adjustments to the Settlement Rate, shall
be calculated to the nearest 1/10,000th of a share of
Common Stock (or if there is not a nearest 1/10,000th
of a share to the next lower 1/10,000th of a share). No
adjustment in the Settlement Rate shall be required
unless such adjustment would require an increase or
decrease of at least one percent therein; provided,
however, that any adjustments which by reason of this
subparagraph are not required to be made shall be
carried forward and taken into account in any
subsequent adjustment. If an adjustment is made to the
Settlement Rate pursuant to paragraph (1), (2), (3),
(4), (5), (6), (7) or (10) of this Section 5.6(a), an
adjustment shall also be made to the Applicable Market
Value solely to determine which of clauses (a), (b) or
(c) of the definition of Settlement Rate in Section 5.1
will apply on the Purchase Contract Settlement Date.
Such adjustment shall be made by multiplying the
Applicable Market Value by a fraction of which the
numerator shall be the Settlement Rate immediately
after such adjustment pursuant to paragraph (1), (2),
(3), (4), (5), (6), (7) or (10) of this Section 5.6(a)
and the denominator shall be the Settlement Rate
immediately before such adjustment; provided, however,
that if such adjustment to the Settlement Rate is
required to be made pursuant to the occurrence of any
of the events contemplated by paragraph (1), (2), (3),
(4), (5), (7) or (10) of this Section 5.6(a) during the
period taken into consideration for determining the
Applicable Market Value, appropriate and customary
adjustments shall be made to the Settlement Rate.
(10) 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 the effect of 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. In the event of (i) any consolidation
or merger of the Company with or into another Person (other
than a merger or consolidation in which the Company is the
continuing corporation and in which the 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), (ii) any sale,
transfer, lease or conveyance to another Person of the
property of the Company as an entirety or substantially as
an entirety, (iii) any statutory exchange of securities of
the Company with another Person (other than in connection
with a merger or acquisition) or (iv) 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"), the Settlement
Rate will be adjusted to provide that each Holder of
Securities will receive on the applicable Purchase Contract
Settlement Date with respect to each Purchase Contract
forming a part thereof, the kind and amount of securities,
cash and other property receivable upon such Reorganization
Event (without any interest thereon, and without any right
to dividends or distribution thereon which have a record
date that is prior to such Purchase Contract Settlement
Date) by a Holder of the number of shares of Common Stock
issuable on account of each Purchase Contract if the
Purchase Contract Settlement Date had occurred immediately
prior to such Reorganization Event assuming such Holder of
Common Stock is not a Person with which the Company
consolidated or into which the Company merged or which
merged into the Company or to which such sale or transfer
was made, as the case may be (any such Person, a
"Constituent Person"), or an Affiliate of a Constituent
Person to the extent such Reorganization Event provides for
different treatment of Common Stock held by Affiliates of
the Company and non-affiliates and such Holder failed to
exercise its 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). In the
event of such a Reorganization Event, the Person formed by
such consolidation, merger or exchange or the Person which
acquires the assets of the Company or, in the event of a
liquidation or dissolution of the Company, the Company or a
liquidating trust created in connection therewith, shall
execute and deliver to the Agent an agreement supplemental
hereto providing that the Holders of each Outstanding
Security shall have the rights provided by this Section 5.6.
Such supplemental agreement shall provide for adjustments
which, for events subsequent to the effective date of such
supplemental agreement, shall be as nearly equivalent as may
be practicable to the adjustments provided for in this
Section. The above provisions of this Section shall
similarly apply to successive Reorganization Events.
SECTION 5.7. NOTICE OF ADJUSTMENTS AND CERTAIN OTHER EVENTS.
(a) Whenever the Settlement Rate is adjusted as herein
provided, the Company shall:
(i) forthwith compute the Settlement Rate in
accordance with Section 5.6 and prepare and transmit to
the Agent a Company Certificate setting forth the
Settlement Rate, the method of calculation thereof in
reasonable detail, and the facts requiring such
adjustment and upon which such adjustment is based; and
(ii) within 10 Business Days following the
occurrence of an event that requires an adjustment to
the Settlement Rate pursuant to Section 5.6 (or if the
Company is not aware of such occurrence, as soon as
practicable after becoming so aware), provide a written
notice to the Holders of the Securities of the
occurrence of such event and a statement in reasonable
detail setting forth the method by which the adjustment
to the Settlement Rate was determined and setting forth
the adjusted Settlement Rate.
(b) The Agent shall not at any time be under any duty
or responsibility to any Holder of Securities to determine
whether any facts exist which may require any adjustment of
the Settlement Rate, or with respect to the nature or extent
or calculation of any such adjustment when made, or with
respect to the method employed in making the same. The Agent
shall not be accountable with respect to the validity or
value (or the kind or amount) of any shares of Common Stock,
or of any securities or property, which may at the time be
issued or delivered with respect to any Purchase Contract;
and the Agent makes no representation with respect thereto.
The Agent shall not be responsible for any failure of the
Company to issue, transfer or deliver any shares of Common
Stock pursuant to a Purchase Contract or to comply with any
of the duties, responsibilities or covenants of the Company
contained in this Article.
SECTION 5.8. TERMINATION EVENT; NOTICE.
The Purchase Contracts and all obligations and rights
of the Company and the Holders thereunder, including, without
limitation, the rights of the Holders to receive and the
obligation of the Company to pay any Contract Adjustment Payments
or Deferred Contract Adjustment Payments, and the rights and
obligations of Holders to purchase Common Stock, shall
immediately and automatically terminate, without the necessity of
any notice or action by any Holder, the Agent or the Company, if,
on or prior to the Second Purchase Contract Settlement Date, a
Termination Event shall have occurred. Upon and after the
occurrence of a Termination Event, the Securities shall
thereafter represent the right to receive the Debt Securities or
the appropriate Applicable Ownership Interest in the Treasury
Portfolio, as the case may be, forming a part of such Securities
in the case of Income PRIDES, or Treasury Securities in the case
of Growth PRIDES, 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 thereof to the
Agent, the Collateral Agent and to the Holders, at their
addresses as they appear in the applicable Register.
SECTION 5.9. EARLY SETTLEMENT.
(a) A holder of Income PRIDES may settle the related
Purchase Contracts in their entirety on or prior to the
fifth Business Day immediately preceding either Purchase
Contract Settlement Date in the manner described herein, but
only in integral multiples of 40 Income PRIDES; provided,
however, that such settlements may not be made during the
period from the fifth Business Day immediately preceding the
First Purchase Contract Settlement Date through the First
Purchase Contract Settlement Date, and provided, further, if
a Tax Event Redemption has occurred prior to such Purchase
Contract Settlement Date and the Treasury Portfolio has
become a component of the Income PRIDES, holders of Income
PRIDES may settle early only in integral multiples of
1,600,000 Income PRIDES at any time on or prior to the
second Business Day immediately preceding such Purchase
Contract Settlement Date (but not during the period two
Business Days immediately preceding the First Purchase
Contract Settlement Date through the First Purchase Contract
Settlement Date). A holder of Growth PRIDES may settle the
related Purchase Contracts in their entirety on or prior to
the second Business Day immediately preceding each Purchase
Contract Settlement Date in the manner described herein (in
either case, an Early Settlement but only in integral
multiples of 40 Growth PRIDES). Upon Early Settlement, (i)
the holder's rights to receive Deferred Contract Adjustment
Payments on the Purchase Contracts being settled will be
forfeited, (ii) the holder's right to receive additional
Contract Adjustment Payments in respect of such Purchase
Contracts will terminate and (iii) no adjustment will be
made to or for the holder on account of Deferred Contract
Adjustment Payments, or any amount accrued in respect of
Contract Adjustment Payments. In order to exercise the
right to effect any such early settlement ("Early
Settlement") with respect to any Purchase Contracts, the
Holder of the Certificate evidencing Securities 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 sum of (i)(A)
$50 times the number of Purchase Contracts being settled if
settled on or prior to the fifth Business Day immediately
preceding the First Purchase Contract Settlement Date or (B)
$25 times the number of Purchase Contracts being settled if
settled after the First Purchase Contract Settlement Date,
plus, in either case, (ii) if such delivery is made with
respect to any Purchase Contracts during the period from the
close of business on any Record Date next preceding any
Payment Date to the opening of business on such Payment
Date, an amount equal to the Contract Adjustment Payments
payable on such Payment Date with respect to such Purchase
Contracts. Except as provided in the immediately preceding
sentence and subject to the second to last paragraph of
Section 5.2, no payment or adjustment shall be made upon
Early Settlement of any Purchase Contract on account of any
Contract Adjustment Payments accrued on such Purchase
Contract or on account of any dividends on the Common Stock
issued upon such Early Settlement. In order for any of the
foregoing requirements to be considered satisfied or
effective with respect to a Purchase Contract underlying any
Security on or by a particular Business Day, such
requirement must be met at or prior to 5:00 p.m., New York
City time, on such Business Day; the first Business Day on
which all of the foregoing requirements have been satisfied
by 5:00 p.m., New York City time.shall be the "Early
Settlement Date" with respect to such Security.
(b) Upon Early Settlement of Purchase Contracts by a
Holder of the related Securities, the Company shall issue,
and the Holder shall be entitled to receive (i) if settled
prior to the First Purchase Contract Settlement Date, 1.0164
newly issued shares of Common Stock per Income PRIDES or
Growth PRIDES (the "First Early Settlement Rate") or (ii) if
settled after the First Purchase Contract Settlement Date
and before the Second Purchase Contract Settlement Date,
.5082 newly issued shares of Common stock per Income PRIDES
or Growth PRIDES (the "Second Early Settlement Rate"),
(regardless in either case of the market price of the Common
Stock on the date of such Early Settlement); provided,
however, that upon the Early Settlement of the Purchase
Contracts, the Holder of such related Securities will
forfeit the right to receive any Deferred Contract
Adjustment Payments. 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 Purchase Contracts in accordance
with the provisions of this Section 5.9, the Company shall
issue and shall deliver to the Agent at the Corporate Trust
Office a certificate or certificates for the full number of
shares of Common Stock issuable upon such Early Settlement
together with payment in lieu of any fraction of a share, as
provided in Section 5.10.
(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
Purchase Contracts to be issued and delivered, and (ii) the
related Debt Securities or the appropriate Applicable
Ownership Interest in the Treasury Portfolio, in the case of
Income PRIDES, or the related Treasury Securities, in the
case of Growth PRIDES, 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.
(d) Upon Early Settlement of any Purchase Contracts,
and subject to receipt of shares of Common Stock from the
Company and the Debt Securities, the appropriate Applicable
Ownership Interest in the Treasury Portfolio or 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 Securities, (i)
transfer to the Holder the Debt Securities, Treasury
Portfolio or Treasury Securities, as the case may be,
forming a part of such Securities, and (ii) deliver to the
Holder a certificate or certificates for the full number of
shares of Common Stock issuable upon such Early Settlement
together with payment in lieu of any fraction of a share, as
provided in Section 5.10.
(e) In the event that Early Settlement is effected
with respect to Purchase Contracts underlying less than all
the Securities evidenced by a Certificate, upon such Early
Settlement the Company shall execute and the Agent shall
authenticate, countersign and deliver to the Holder thereof,
at the expense of the Company, a Certificate evidencing the
Securities as to which Early Settlement was not effected.
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 a Purchase Contract Settlement Date or upon Early
Settlement of any Purchase Contracts. If Certificates evidencing
more than one Purchase Contract shall be surrendered for
settlement at one time by the same Holder, the number of full
shares of Common Stock which shall be delivered upon settlement
shall be computed on the basis of the aggregate number of
Purchase Contracts evidenced by the Certificates so surrendered.
Instead of any fractional share of Common Stock which would
otherwise be deliverable upon settlement of any Purchase
Contracts on a Purchase Contract Settlement Date or upon Early
Settlement, the Company, through the Agent, shall make a cash
payment in respect of such fractional interest in an amount equal
to the value of such fractional shares times the Applicable
Market Value. The Company shall provide the 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.
SECTION 5.11. CHARGES AND TAXES.
The Company will pay all stock transfer and similar
taxes attributable to the initial issuance and delivery of the
shares of Common Stock pursuant to the Purchase Contracts and in
payment of any Deferred Contract Adjustment Payments; provided,
however, that the Company shall not be required to pay any such
tax or taxes which may be payable in respect of any exchange of
or substitution for a Certificate evidencing a Security or any
issuance of a share of Common Stock in a name other than that of
the registered Holder of a Certificate surrendered in respect of
the Securities evidenced thereby, other than in the name of the
Agent, as custodian for such Holder, and the Company shall not be
required to issue or deliver such share certificates or
Certificates unless or until the Person or Persons requesting the
transfer or issuance thereof shall have paid to the Company the
amount of such tax or shall have established to the satisfaction
of the Company that such tax has been paid.
ARTICLE VI
REMEDIES
SECTION 6.1. UNCONDITIONAL RIGHT OF HOLDERS TO RECEIVE CONTRACT
ADJUSTMENT PAYMENTS AND TO PURCHASE COMMON STOCK.
The Holder of any Income PRIDES or Growth PRIDES shall
have the right, which is absolute and unconditional (subject to
the right of the Company to defer payment thereof pursuant to
Section 5.3, the prepayment of Contract Adjustment Payments
pursuant to Section 5.9(a) and to the forfeiture of any Deferred
Contract Adjustment Payments upon Early Settlement pursuant to
Section 5.9(b) or upon the occurrence of a Termination Event), to
receive payment of each installment of the Contract Adjustment
Payments with respect to the Purchase Contract constituting a
part of such Security on the respective Payment Date for such
Security and to purchase Common Stock pursuant to such Purchase
Contract and, in each such case, to institute suit for the
enforcement of any such payment and right to purchase Common
Stock, and such rights shall not be impaired without the consent
of such Holder.
SECTION 6.2. RESTORATION OF RIGHTS AND REMEDIES.
If any Holder has instituted any proceeding to enforce
any right or remedy under this Agreement and such proceeding has
been discontinued or abandoned for any reason, or has been
determined adversely to such Holder, then and in every such case,
subject to any determination in such proceeding, the Company and
such Holder shall be restored severally and respectively to their
former positions hereunder and thereafter all rights and remedies
of such Holder shall continue as though no such proceeding had
been instituted.
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 the last paragraph of Section 3.10, no right or
remedy herein conferred upon or reserved to the Holders is
intended to be exclusive of any other right or remedy, and every
right and remedy shall, to the extent permitted by law, be
cumulative and in addition to every other right and remedy given
hereunder or now or hereafter existing at law or in equity or
otherwise. The assertion or employment of any right or remedy
hereunder, or otherwise, shall not prevent the concurrent
assertion or employment of any other appropriate right or remedy.
SECTION 6.4. 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
Income PRIDES or Growth PRIDES, by its acceptance of such Income
PRIDES or Growth PRIDES 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
Securities, or to any suit instituted by any Holder for the
enforcement of payment of interest on any Debt Securities or
Contract Adjustment Payments, if any, on any Purchase Contract on
or after the respective Payment Date therefor in respect of any
Security held by such Holder, or for enforcement of the right to
purchase shares of Common Stock under the Purchase Contracts
constituting part of any Security held by such Holder.
SECTION 6.6. WAIVER OF STAY OR EXTENSION LAWS.
The Company covenants (to the extent that it may
lawfully do so) that it will not at any time insist upon, or
plead, or in any manner whatsoever claim or take the benefit or
advantage of, any stay or extension law wherever enacted, now or
at any time hereafter in force, which may affect the covenants or
the performance of this Agreement; and the Company (to the extent
that it may lawfully do so) hereby expressly waives all benefit
or advantage of any such law and covenants that it will not
hinder, delay or impede the execution of any power herein granted
to the Agent or the Holders, but will suffer and permit the
execution of every such power as though no such law had been
enacted.
ARTICLE VII
THE AGENT
SECTION 7.1. CERTAIN DUTIES AND RESPONSIBILITIES.
(a) Prior to a Default and after the curing or waiving
of all such Defaults that may have occurred,
(1) the Agent undertakes to perform, with respect
to the Securities, such duties and only such duties as
are specifically set forth in this Agreement and no
implied covenants or obligations shall be read into
this Agreement against the Agent; and
(2) the Agent may, with respect to the
Securities, conclusively rely, as to the truth of the
statements and the correctness of the opinions
expressed therein, in the absence of bad faith on the
part of the Agent, upon certificates or opinions
furnished to the Agent and conforming to the
requirements of this Agreement; but in the case of any
certificates or opinions which by any provision hereof
are specifically required to be furnished to the Agent,
the Agent shall be under a duty to examine the same to
determine whether or not they conform to the
requirements of this Agreement.
(b) No provision of this Agreement shall be construed
to relieve the Agent from liability for its own negligent
action, its own negligent failure to act, or its own wilful
misconduct, except that
(1) this Subsection shall not be construed to
limit the effect of Subsection (a) of this Section;
(2) the Agent shall not be liable for any error
of judgment made in good faith by a Responsible
Officer, unless it shall be proved that the Agent was
negligent in ascertaining the pertinent facts; and
(3) no provision of this Agreement shall require
the Agent to expend or risk its own funds or otherwise
incur any financial liability in the performance of any
of its duties hereunder, or in the exercise of any of
its rights or powers.
(c) Whether or not therein expressly so provided,
every provision of this Agreement relating to the conduct or
affecting the liability of or affording protection to the
Agent shall be subject to the provisions of this Section.
(d) The Agent is authorized to execute, deliver and
perform the Pledge Agreement in its capacity as Agent and to
grant the Pledge. The Agent shall be entitled to all of the
rights, privileges, immunities and indemnities contained in
this Agreement with respect to any duties of the Agent
under, or actions taken by the Agent pursuant to, such
Pledge Agreement..
(e) In case a Default has occurred (that has not been
cured or waived), and is actually known by a Responsible
Officer of the Agent, the Agent shall exercise such of the
rights and powers vested in it by this Agreement, and use
the same degree of care and skill in its exercise thereof,
as a prudent person would exercise or use under the
circumstances in the conduct of his or her own affairs.
(f) At the request of the Company, the Agent is
authorized to execute and deliver one or more Remarketing
Agreements to, among other things, effectuate Section 5.4
SECTION 7.2. NOTICE OF DEFAULT.
Within 90 days after the occurrence of any Default
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 Securities, as their names and addresses appear in
the Register, notice of such Default hereunder, unless such
Default shall have been cured or waived; provided that, except
-------------
for a default in any payment obligation hereunder, the Agent
shall be protected in withholding such notice if and so long as
the Responsible Officer of the Agent in good faith determines
that the withholding of such notice is in the interests of the
Holders of the Securities.
SECTION 7.3. CERTAIN RIGHTS OF AGENT.
Subject to the provisions of Section 7.1:
(a) the Agent may rely and shall be protected in
acting or refraining from acting upon any resolution,
certificate, statement, instrument, opinion, report, notice,
request, direction, consent, order, bond, debenture, note,
other evidence of indebtedness or other paper or document
believed by it to be genuine and to have been signed or
presented by the proper party or parties;
(b) any request or direction of the Company mentioned
herein shall be sufficiently evidenced by a Company
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;
(c) whenever in the administration of this Agreement
the Agent shall deem it desirable that a matter be proved or
established prior to taking, suffering or omitting any
action hereunder, the Agent (unless other evidence be herein
specifically prescribed) may, in the absence of bad faith on
its part, rely upon a Company Certificate;
(d) the Agent may consult with counsel of its
selection and the advice of such counsel or any Opinion of
Counsel shall be full and complete authorization and
protection in respect of any action taken, suffered or
omitted by it hereunder in good faith and in reliance
thereon;
(e) the Agent shall not be bound to make any
investigation into the facts or matters stated in any
resolution, certificate, statement, instrument, opinion,
report, notice, request, direction, consent, order, bond,
debenture, note, other evidence of indebtedness or other
paper or document, but the Agent, in its discretion, may
make reasonable further inquiry or investigation into such
facts or matters related to the execution, delivery and
performance of the Purchase Contracts as it may see fit,
and, if the Agent shall determine to make such further
inquiry or investigation, it shall be given a reasonable
opportunity to examine the books, records and premises of
the Company, personally or by agent or attorney; and
(f) the Agent may execute any of the powers hereunder
or perform any duties hereunder either directly or by or
through agents or attorneys or an Affiliate 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 OR ISSUANCE OF
SECURITIES.
The recitals contained herein and in the Certificates
shall be taken as the statements of the Company and the Agent
assumes no responsibility for their accuracy. The Agent makes no
representations as to the validity or sufficiency of either this
Agreement or of the Securities, or of the Pledge Agreement or the
Pledge. The Agent shall not be accountable for the use or
application by the Company of the proceeds in respect of the
Purchase Contracts.
SECTION 7.5. MAY HOLD SECURITIES.
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 Securities and may
otherwise deal with the Company, the Collateral Agent or any
other Person with the same rights it would have if it were not
Registrar or such other agent, or the Agent.
SECTION 7.6. MONEY HELD IN CUSTODY.
Money held by the Agent in custody hereunder need not
be segregated from the other funds except to the extent required
by law or provided herein. The Agent shall be under no obligation
to invest or pay interest on any money received by it hereunder
except as otherwise agreed in writing with the Company.
SECTION 7.7. COMPENSATION AND REIMBURSEMENT.
The Company agrees:
(a) to pay to the Agent from time to time such
compensation for all services rendered by it hereunder as
the parties shall agree from time to time (which
compensation shall not be limited by any provisions of law
in regards to the compensation of a trustee of an express
trust);
(b) except as otherwise expressly provided herein, to
reimburse the Agent upon its request for all reasonable
expenses, disbursements and advances incurred or made by the
Agent in accordance with any provision of this Agreement
(including the reasonable compensation and the expenses and
disbursements of its agents and counsel), except any such
expense, disbursement or advance as may be attributable to
its negligence or bad faith; and
(c) to indemnify the Agent and any predecessor Agent
for, and to hold it harmless against, any loss, liability or
expense incurred without negligence or bad faith on its
part, arising out of or in connection with the acceptance or
administration or the performance of its duties hereunder,
including the costs and expenses of defending itself against
any claim or liability in connection with the exercise or
performance of any of its powers or duties hereunder.
Agent for purposes of this Section 7.7 shall include
any predecessor Agent; provided, however, that the negligence or
bad faith of any Agent hereunder shall not affect the rights of
any other Agent hereunder.
When the Agent incurs expenses or renders services in
an action or proceeding commenced pursuant to Section 4.3 of the
Pledge Agreement upon the occurrence of a Termination Event, the
expenses (including the reasonable charges and expenses of its
counsel) and the compensation for the services are intended to
constitute expenses of administration under any applicable
Federal or State bankruptcy, insolvency or other similar law.
The provisions of this Section 7.7 shall survive the
termination of this Agreement and the Pledge Agreement.
SECTION 7.8. CORPORATE AGENT REQUIRED; ELIGIBILITY.
There shall at all times be an Agent hereunder which
shall be (i) not be an Affiliate of the Company and (ii) a
corporation organized and doing business under the laws of the
United States of America, any State thereof or the District of
Columbia, authorized under such laws to exercise corporate trust
powers, having (or being a member of a bank holding company
having) a combined capital and surplus of at least $50,000,000
and subject to supervision or examination by Federal or State
authority. If such corporation publishes reports of condition at
least annually, pursuant to law or to the requirements of said
supervising or examining authority, then for the purposes of this
Section, the combined capital and surplus of such corporation
shall be deemed to be its combined capital and surplus as set
forth in its most recent report of condition so published. If at
any time the Agent shall cease to be eligible in accordance with
the provisions of this Section, it shall resign immediately in
the manner and with the effect hereinafter specified in this
Article.
SECTION 7.9. RESIGNATION AND REMOVAL; APPOINTMENT OF SUCCESSOR.
(a) No resignation or removal of the Agent and no
appointment of a successor Agent pursuant to this Article
shall become effective until the 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
Securities delivered to the Agent and the Company.
(d) if at any time
(1) the Agent fails to comply with Section 310(b)
of the TIA, after written request therefor by the
Company or by any Holder who has been a bona fide
Holder of a Security for at least six months, 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, (i) the Company by a Board Resolution may remove
the Agent, or (ii) any Holder who has been a bona fide
Holder of a Security for at least six months may, on behalf
of himself and all others similarly situated, petition any
court of 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, the Agent or any Holder who has been a bona
fide Holder of a Security for at least six months may, on
behalf of himself and all others similarly situated,
petition any court of 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.
(g) If the Agent has or shall acquire any "conflicting
interest" within the meaning of Section 310(b) of the Trust
Indenture Act, the Agent and the Company shall in all
respects comply with the provisions of Section 310(b) of the
Trust Indenture Act.
SECTION 7.10. ACCEPTANCE OF APPOINTMENT BY SUCCESSOR.
(a) In case of the appointment hereunder of a
successor Agent, every such successor Agent so appointed
shall execute, acknowledge and deliver to the Company and to
the retiring Agent an instrument accepting such appointment,
and thereupon the resignation or removal of the retiring
Agent shall become effective and such successor Agent,
without any further act, deed or conveyance, shall become
vested with all the rights, powers, agencies and duties of
the retiring Agent; 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
and trusts of the retiring Agent and shall duly assign,
transfer and deliver to such successor Agent all property
and money held by such retiring Agent hereunder.
(b) Upon request of any such successor Agent, the
Company shall execute any and all instruments for more fully
and certainly vesting in and confirming to such successor
Agent all such rights, powers and agencies referred to in
paragraph (a) of this Section.
(c) No successor Agent shall accept its appointment
unless at the time of such acceptance such successor Agent
shall be qualified and eligible under this Article.
SECTION 7.11. MERGER, CONVERSION, CONSOLIDATION OR SUCCESSION TO
BUSINESS.
Any Person into which the Agent may be merged or
converted or with which it may be consolidated, or any Person
resulting from any merger, conversion or consolidation to which
the Agent shall be a party, or any Person succeeding to all or
substantially all the corporate trust business of the Agent,
shall be the successor of the Agent hereunder, provided such
Person shall be otherwise qualified and eligible under this
Article, without the execution or filing of any paper or any
further act on the part of any of the parties hereto. In case any
Certificates shall have been authenticated and executed on behalf
of the Holders, but not delivered, by the Agent then in office,
any successor by merger, conversion or consolidation to such
Agent may 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 Securities.
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 Security for a period of at least six months
preceding the date of such application, and such application
states that the applicants desire to communicate with other
Holders with respect to their rights under this Agreement or
under the Securities and is accompanied by a copy of the
form of proxy or other communication which such applicants
propose to transmit, then the 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 for the payment, of
the reasonable expenses of such mailing.
SECTION 7.13. NO OBLIGATIONS OF AGENT.
Except to the extent otherwise provided in this
Agreement, the Agent assumes no obligations and shall not be
subject to any liability under this Agreement, the Pledge
Agreement or any Purchase Contract in respect of the obligations
of the Holder of any Security thereunder. The Company agrees, and
each Holder of a Certificate, by his acceptance thereof, shall be
deemed to have agreed, that the Agent's execution of the
Certificates on behalf of the Holders shall be solely as agent
and attorney-in-fact for the Holders, and that the Agent shall
have no obligation to perform such Purchase Contracts on behalf
of the Holders, except to the extent expressly provided in
Article Five hereof.
SECTION 7.14. TAX COMPLIANCE.
(a) The Agent, on its own behalf and on behalf of the
Company, will comply with all applicable certification,
information reporting and withholding (including "backup"
withholding) requirements imposed by applicable tax laws,
regulations or administrative practice with respect to (i)
any payments made with respect to the Securities or (ii) the
issuance, delivery, holding, transfer, redemption or
exercise of rights under the Securities. Such compliance
shall include, without limitation, the preparation and
timely filing of required returns and the timely payment of
all amounts required to be withheld to the appropriate
taxing authority or its designated agent.
(b) The Agent shall comply with any written direction
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 the
provisions of Section 7.1(a)(2) hereof.
(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.
ARTICLE VIII
SUPPLEMENTAL AGREEMENTS
SECTION 8.1. SUPPLEMENTAL AGREEMENTS WITHOUT CONSENT OF
HOLDERS.
Without the consent of any Holders, the Company and the
Agent, at any time and from time to time, may enter into one or
more agreements supplemental hereto, in form satisfactory to the
Company and the Agent, for any of the following purposes:
(a) to evidence the succession of another Person to
the Company, and the assumption by any such successor of the
covenants of the Company herein and in the Certificates; or
(b) to add to the covenants of the Company for the
benefit of the Holders, or to surrender any right or power
herein conferred upon the Company; or
(c) to evidence and provide for the acceptance of
appointment hereunder by a successor Agent; or
(d) to make provision with respect to the rights of
Holders pursuant to the requirements of Section 5.6(b); or
(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.
With the consent of the Holders of not less than a
majority of the outstanding Purchase Contracts voting together as
one class, by Act of said Holders delivered to the Company and
the Agent, the Company, when authorized by a Board Resolution,
and the Agent may enter into an agreement or agreements
supplemental hereto for the purpose of modifying in any manner
the terms of the Purchase Contracts, or the provisions of this
Agreement or the rights of the Holders in respect of the
Securities; provided, however, that, except as contemplated
herein, no such supplemental agreement shall, without the consent
of the Holder of each Outstanding Security affected thereby,
(a) change any Payment Date;
(b) change the amount or the type of Collateral
required to be Pledged to secure a Holder's Obligations
under the Purchase Contract, impair the right of the Holder
of any Purchase Contract to receive distributions on the
related Collateral (except for the rights of Holders of
Income PRIDES to substitute the Treasury Securities for the
Pledged Debt Securities or the rights of holders of Growth
PRIDES to substitute Debt Securities or the 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 or adversely alter
the rights in or to such Collateral;
(c) reduce any Contract Adjustment Payments or any
Deferred Contract Adjustment Payment, or change any place
where, or the coin or currency in which, any Contract
Adjustment Payment is payable;
(d) impair the right to institute suit for the
enforcement of any Purchase Contract;
(e) reduce the number of shares of Common Stock to be
purchased pursuant to any Purchase Contract, increase the
price to purchase shares of Common Stock upon settlement of
any Purchase Contract, change a Purchase Contract Settlement
Date or the right to Early Settlement or otherwise adversely
affect the Holder's rights under any Purchase Contract; or
(f) reduce the percentage of the outstanding Purchase
Contracts the consent of whose Holders is required for any
such supplemental agreement;
provided, that if any amendment or proposal referred to above
would adversely affect only the Income PRIDES or the Growth
PRIDES, then only the Holders of the affected class of Security
as of the record date for the Holders entitled to vote thereon
will be entitled to vote on such amendment or proposal, and such
amendment or proposal shall not be effective except with the
consent of Holders of not less than a majority of such class;
provided further, however, that no such agreement, whether with
or without the consent of the Holders, shall affect Section 3.16
hereof.
It shall not be necessary for any Act of Holders under
this Section to approve the particular form of any proposed
supplemental agreement, but it shall be sufficient if such Act
shall approve the substance thereof.
SECTION 8.3. EXECUTION OF SUPPLEMENTAL AGREEMENTS.
In executing, or accepting the additional agencies
created by, any supplemental agreement permitted by this Article
or the modifications thereby of the agencies created by this
Agreement, the Agent shall be entitled to receive and (subject to
Section 7.1) shall be fully protected in relying upon, an 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.
SECTION 8.4. EFFECT OF SUPPLEMENTAL AGREEMENTS.
Upon the execution of any supplemental agreement under
this Article, this Agreement shall be modified in accordance
therewith, and such supplemental agreement shall form a part of
this Agreement for all purposes; and every Holder of Certificates
theretofore or thereafter authenticated, executed on behalf of
the Holders and delivered hereunder shall be bound thereby.
SECTION 8.5. REFERENCE TO SUPPLEMENTAL AGREEMENTS.
Certificates authenticated, executed on behalf of the
Holders and delivered after the execution of any supplemental
agreement pursuant to this Article may, and shall if required by
the Agent, bear a notation in form approved by the Agent as to
any matter provided for in such supplemental agreement. If the
Company shall so determine, new Certificates so modified as to
conform, in the opinion of the Agent and the Company, to any such
supplemental agreement may be prepared and executed by the
Company and authenticated, executed on behalf of the Holders and
delivered by the Agent in exchange for Outstanding Certificates.
ARTICLE IX
CONSOLIDATION, MERGER, SALE OR CONVEYANCE
SECTION 9.1. COVENANT NOT TO MERGE, CONSOLIDATE, SELL OR CONVEY
PROPERTY EXCEPT UNDER CERTAIN CONDITIONS.
The Company covenants that it will not merge or
consolidate with any other Person or sell, assign, transfer,
lease or convey all or substantially all of its properties and
assets to any Person or group of affiliated Persons in one
transaction or a series of related transactions, unless (i)
either the Company shall be the continuing corporation, or the
successor (if other than the Company) shall be a corporation
organized and existing under the laws of the United States of
America or a State thereof or the District of Columbia and such
corporation shall expressly assume all the obligations of the
Company under the Purchase Contracts, the Debt Securities, this
Agreement and the Pledge Agreement by one or more supplemental
agreements in form reasonably satisfactory to the Agent and the
Collateral Agent, executed and delivered to the Agent and the
Collateral Agent by such corporation, and (ii) the Company or
such successor corporation, as the case may be, shall not,
immediately after such merger or consolidation, or such sale,
assignment, transfer, lease or conveyance, be in default in its
payment obligations or in any material default in the performance
of any of its other obligations hereunder, or under any of the
Securities or the Pledge Agreement.
SECTION 9.2. RIGHTS AND DUTIES OF SUCCESSOR CORPORATION.
In case of any such consolidation, merger, sale,
assignment, transfer, lease or conveyance and upon any such
assumption by a successor corporation in accordance with Section
9.1, such successor corporation shall succeed to and be
substituted for the Company with the same effect as if it had
been named herein as the Company. Such successor corporation
thereupon may cause to be signed, and may issue either in its own
name or in the name of Texas Utilities Company any or all of the
Certificates evidencing Securities issuable hereunder which
theretofore shall not have been signed by the Company and
delivered to the Agent; and, upon the order of such successor
corporation, instead of the Company, and subject to all the
terms, conditions and limitations in this Agreement prescribed,
the Agent shall authenticate and execute on behalf of the Holders
and deliver any Certificates which previously shall have been
signed and delivered by the officers of the Company to the Agent
for authentication and execution, and any Certificate evidencing
Securities which such successor corporation thereafter shall
cause to be signed and delivered to the Agent for that purpose.
All the Certificates so issued shall in all respects have the
same legal rank and benefit under this Agreement as the
Certificates theretofore or thereafter issued in accordance with
the terms of this Agreement as though all of such Certificates
had been issued at the date of the execution hereof.
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 Securities thereafter to be issued as may
be appropriate.
SECTION 9.3. OPINION OF COUNSEL GIVEN TO AGENT.
The Agent, subject to Sections 7.1 and 7.3, shall
receive an Opinion of Counsel as conclusive evidence that any
such consolidation, merger, sale, assignment, transfer, lease or
conveyance, and any such assumption, complies with the provisions
of this Article and that all conditions precedent to the
consummation of any such consolidation, merger, sale, assignment,
transfer, lease or conveyance have been met.
ARTICLE X
COVENANTS
SECTION 10.1. PERFORMANCE UNDER PURCHASE CONTRACTS.
The Company covenants and agrees for the benefit of the
Holders from time to time of the Securities that it will duly and
punctually perform its obligations under the Purchase Contracts
in accordance with the terms of the Purchase Contracts and this
Agreement.
SECTION 10.2. MAINTENANCE OF OFFICE OR AGENCY.
The Company will maintain in the Borough of Manhattan,
The City of New York an office or agency where Certificates may
be presented or surrendered for acquisition of shares of Common
Stock upon settlement of the Purchase Contracts on the Purchase
Contract Settlement Date or Early Settlement and for transfer of
Collateral upon occurrence of a Termination Event, where
Certificates may be surrendered for registration of transfer or
exchange, for a Collateral Substitution or establishment of an
Income PRIDES and where notices and demands to or upon the
Company in respect of the Securities and this Agreement may be
served. The Company will give prompt written notice to the Agent
of the location, and any change in the location, of such office
or agency. If at any time the Company shall fail to maintain any
such required office or agency or shall fail to furnish the Agent
with the address thereof, such presentations, surrenders, notices
and demands may be made or served at the Corporate Trust Office,
and the Company hereby appoints the Agent as its agent to receive
all such presentations, surrenders, notices and demands.
The Company may also from time to time designate one or
more other offices or agencies where Certificates may be
presented or surrendered for any or all such purposes and may
from time to time rescind such designations; provided, however,
that no such designation or rescission shall in any manner
relieve the Company of its obligation to maintain an office or
agency in the Borough of Manhattan, The City of New York for such
purposes. The Company will give prompt written notice to the
Agent of any such designation or rescission and of any change in
the location of any such other office or agency. The Company
hereby designates as the place of payment for the Securities 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 Second
Purchase Contract Settlement Date reserve and keep available,
free from preemptive rights, out of its authorized but unissued
Common Stock the full number of shares of Common Stock issuable
against tender of payment in respect of all Purchase Contracts
constituting a part of the Securities evidenced by Outstanding
Certificates.
SECTION 10.4. COVENANTS AS TO COMMON STOCK.
The Company covenants that all shares of Common Stock
which may be issued against tender of payment in respect of any
Purchase Contract constituting a part of the Outstanding
Securities will, upon issuance, be duly authorized, validly
issued, fully paid and nonassessable.
ARTICLE XI
TRUST INDENTURE ACT
SECTION 11.1. TRUST INDENTURE ACT; APPLICATION.
(a) This Agreement is subject to the provisions of the
TIA that are required or deemed to be part of this Agreement
and shall, to the extent applicable, be governed by such
provisions; and
(b) if and to the extent that any provision of this
Agreement limits, qualifies or conflicts with the duties
imposed by Section 310 to 317, inclusive, of the TIA, such
imposed duties shall control.
SECTION 11.2. LISTS OF HOLDERS OF SECURITIES.
(a) The Company shall furnish or cause to be furnished
to the Agent (a) semiannually, not later than June 1 and
December 1 in each year, commencing December 1, 1998, a
list, in such form as the Agent may reasonably require, of
the names and addresses of the Holders ("List of Holders")
as of a date not more than 15 days prior to the delivery
thereof, and (b) at such other times as the Agent may
request in writing, within 30 days after the receipt by the
Company of any such request, a List of Holders as of a date
not more than 15 days prior to the time such list is
furnished; provided that, the Company shall not be obligated
to provide such List of Holders at any time the List of
Holders does not differ from the most recent List of Holders
given to the Agent by the Company. The Agent may destroy
any List of Holders previously given to it on receipt of a
new List of Holders.
(b) The Agent shall comply with its obligations under
Section 311(a) of the TIA, subject to the provisions of
Section 311(b) and Section 312(b) of the TIA.
SECTION 11.3. REPORTS BY THE AGENT.
Not later than November 1 of each year, commencing
November 1, 1998, the Agent shall provide to the Holders such
reports, if any, as are required by Section 313(a) of the TIA in
the form and in the manner provided by Section 313(a) of the TIA.
Such reports shall be as of the preceding September 15. The
Agent shall also comply with the requirements of Sections 313(b),
(c) and (d) of the TIA.
SECTION 11.4. PERIODIC REPORTS TO AGENT.
The Company shall provide to the Agent such documents,
reports and information as required by Section 314 (if any) and
the compliance certificate required by Section 314 of the TIA in
the form, in the manner and at the times required by Section 314
of the TIA.
SECTION 11.5. EVIDENCE OF COMPLIANCE WITH CONDITIONS PRECEDENT.
The Company shall provide to the Agent such evidence of
compliance with any conditions precedent provided for in this
Agreement as and to the extent required by Section 314(c) of the
TIA. Any certificate or opinion required to be given by an
officer pursuant to Section 314(c)(1) of the TIA may be given in
the form of a Company's Certificate. Any opinion required to be
given pursuant to Section 314(c)(2) of the TIA may be given in
the form of an Opinion of Counsel.
SECTION 11.6. DEFAULTS; WAIVER.
The Holders of a majority of the Outstanding Purchase
Contracts voting together as one class may, by vote, on behalf of
all of the Holders, waive any past Default and its consequences,
except a default
(a) in the payment on any Security, or
(b) in respect of a provision hereof which under
Section 8.2 cannot be modified or amended without the
consent of the Holder of each Outstanding Security affected.
Upon such waiver, any such Default shall cease to exist, and any
Default arising therefrom shall be deemed to have been cured, for
every purpose of this Agreement, but no such waiver shall extend
to any subsequent or other Default or impair any right consequent
thereon.
SECTION 11.7. AGENT'S KNOWLEDGE OF DEFAULTS.
The Agent shall not be deemed to have knowledge of any
Default unless a Responsible Officer charged with the
administration of this Agreement shall have obtained written
notice of such Default.
SECTION 11.8. CONFLICTING INTERESTS.
The Indenture, the Indenture (For Unsecured Debt
Securities Series A) dated as of October 1, 1997 of the Company
to The Bank of New York, as trustee, the Indenture (For Unsecured
Debt Securities Series B) dated as of October 1, 1997 of the
Company to the Agent, and the Indenture (For Unsecured Debt
Securities Series C) dated as of January 1, 1998 of the Company
to the Agent shall be deemed to be specifically described in this
Agreement for the purposes of clause (i) of the first proviso
contained in Section 310(b) of the TIA.
SECTION 11.9. DIRECTION OF AGENT.
Section 316(a)(1)(A) of the TIA is hereby expressly
excluded from this Agreement, as permitted by the TIA.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed as of the day and year first above
written.
TEXAS UTILITIES COMPANY
By:
--------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Treasurer
THE BANK OF NEW YORK,
as Purchase Contract Agent and
Trustee
By:
--------------------------------
Name:
Title:
EXHIBIT A
FORM OF INCOME PRIDES CERTIFICATE
THIS CERTIFICATE IS A GLOBAL CERTIFICATE WITHIN THE
MEANING OF THE 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 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.
No. _____ Cusip No. ▇▇▇▇▇▇▇▇▇
Number of Income PRIDES _______
TEXAS UTILITIES COMPANY
9.25% Income PRIDES
($50 Stated Amount)
This Income PRIDES Certificate certifies that ___________ is
the registered Holder of the number of Income PRIDES set forth
above. Each Income PRIDES represents (i) beneficial ownership by
the Holder of either (a) one 6.50% Series E Senior Note due 2004
("Series E Note") and, prior to the First Purchase Contract
Settlement Date, one 6.37% Series D Senior Note due 2003 (Series
D Note, and each Series E Note and Series D Note are collectively
referred to herein as the "Debt Securities") of Texas Utilities
Company (the "Company"), each in an aggregate principal amount of
$25, subject to the Pledge of such Debt Securities by such Holder
pursuant to the Pledge Agreement or (b) upon the occurrence of a
Tax Event Redemption prior to the Second Purchase Contract
Settlement Date, the appropriate Applicable Ownership Interest in
the Treasury Portfolio, subject to the Pledge of such Applicable
Ownership Interest in the Treasury Portfolio by such Holder
pursuant to the Pledge Agreement, and (ii) the rights and
obligations of the Holder under one Purchase Contract with the
Company. All capitalized terms used herein without definition
herein shall have the meaning set forth in the Purchase Contract
Agreement referred to below.
Pursuant to the Pledge Agreement, the Debt Securities or the
appropriate Applicable Ownership Interest in the Treasury
Portfolio, as the case may be, constituting part of each Income
PRIDES evidenced hereby have been pledged to the Collateral
Agent, for the benefit of the Company, to secure the obligations
of the Holder under the Purchase Contract comprising a portion of
such Income PRIDES.
The Pledge Agreement provides that all payments of principal
or interest on or cash distributions in respect of any Pledged
Debt Securities, or the appropriate Applicable Ownership Interest
of the Treasury Portfolio, as the case may be, constituting part
of the Income PRIDES 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) payments of interest with respect to
Pledged Debt Securities or cash distributions on the appropriate
Applicable Ownership Interest (as specified in clauses (A)(ii)
and (B)(ii) of the definition of such term) of the Treasury
Portfolio, as the case may be, and (B) any payments of the
principal with respect to any Debt Securities or on the
appropriate Applicable Ownership Interest (as specified in
clauses (A)(i) and (B)(i) of the definition of such term) in the
Treasury Portfolio, as the case may be, that have been released
from the Pledge pursuant to the Pledge Agreement, to the Agent
to the account designated by the Agent, no later than 2:00 p.m.,
New York City time, on the Business Day such payment is
received by the Collateral Agent (provided that in the event
such payment is received by the Collateral Agent on a day that
is not a Business Day or after 12:30 p.m., New York City time,
on a Business Day, then such payment shall be made no later
than 10:30 a.m., New York City time, on the next succeeding
Business Day) and (ii) in the case of payments of principal of
any Pledged Debt Securities or on the appropriate Applicable
Ownership Interest (as specified in clauses (A)(i) and (B)(i)
of the definition of such term) of the Treasury Portfolio, as
the case may be, to the Company on the Purchase Contract
Settlement 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 Income PRIDES of
which such Pledged Debt Securities or the Treasury Portfolio, as
the case may be, are a part under the Purchase Contracts forming
a part of such Income PRIDES. Payment of interest on any Debt
Security or distributions on the appropriate Applicable Ownership
Interest (as specified in clauses (A)(ii) and (B)(ii) of the
definition of such term) of the Treasury Portfolio, as the case
may be, forming part of an Income PRIDES evidenced hereby which
are payable quarterly in arrears on February 16, May 16,
August 16 and November 16 each year, commencing August 16, 1998
(a "Payment Date"), shall, subject to receipt thereof by the
Agent from the Collateral Agent, be paid to the Person in whose
name this Income PRIDES Certificate (or a Predecessor Income
PRIDES Certificate) is registered at the close of business on the
Record Date for such Payment Date.
Each Purchase Contract evidenced hereby obligates the Holder
of this Income PRIDES Certificate to purchase, and the Company to
sell, (i) not later than August 16, 2001 (the "First Purchase
Contract Settlement Date"), at a price equal to $25 in cash (the
"Purchase Price"), a number of newly issued shares of Common
Stock, no par value, of the Company ("Common Stock"), equal to
the applicable Settlement Rate (as defined below) and (ii) not
later than August 16, 2002 (the "Second Purchase Contract
Settlement Date" and with the First Purchase Contract Settlement
Date, each, a "Purchase Contract Settlement Date"), at a price of
$25 in cash, a number of newly issued shares of Common Stock,
equal to the applicable Settlement Rate, unless on or prior to
the applicable Purchase Contract Settlement Date there shall have
occurred a Termination Event or an Early Settlement with respect
to the Income PRIDES of which such Purchase Contract is a part,
all as provided in the Purchase Contract Agreement and more fully
described below.
The "Settlement Rate" with respect to a Purchase Contract
Settlement Date is equal to (a) if the Applicable Market Value
(as defined below) determined with respect to such Purchase
Contract Settlement Date is equal to or greater than $49.19 (the
"Threshold Appreciation Price"), .5082 shares of Common Stock per
Purchase Contract, (b) if such Applicable Market Value is less
than the Threshold Appreciation Price but is greater than
$41.6875, the number of shares of Common Stock per Purchase
Contract equal to $25 divided by such Applicable Market Value and
(c) if the Applicable Market Value is less than or equal to
$41.6875, .5997 shares of Common Stock per Purchase Contract, in
each case subject to adjustment as provided in the Purchase
Contract Agreement. No fractional shares of Common Stock will be
issued upon settlement of Purchase Contracts, as provided in the
Purchase Contract Agreement.
The Company shall pay, on each Payment Date, in respect of
each Purchase Contract evidenced hereby an amount (the "Contract
Adjustment Payments") equal to (A) for the period prior to the
First Purchase Contract Settlement Date, 2.815% per annum of the
Stated Amount, and (B) for the period from and after the First
Purchase Contract Settlement Date, 2.75% per annum of the
Remaining Stated Amount, computed, in each case, on the basis of
a 360 day year of twelve 30 day months, subject to deferral at
the option of the Company as provided in the Purchase Contract
Agreement and more fully described below. Such Contract
Adjustment Payments shall be payable to the Person in whose name
this Income PRIDES Certificate (or a Predecessor Income PRIDES
Certificate) is registered at the close of business on the Record
Date for such Payment Date.
Payment of interest on the Debt Securities or distributions
on the appropriate Applicable Ownership Interest (as specified in
clauses (A)(ii) and (B)(ii) of the definition of such term) in
the Treasury Portfolio, as the case may be, and Contract
Adjustment Payments 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 Income PRIDES Register.
Unless the context otherwise requires, each provision of this
security shall be part of the Purchase Comtracts evidenced hereby.
This Security and each Purchase Contract evidenced hereby is
governed by a Purchase Contract Agreement, dated as of July 1,
1998 (as may be supplemented from time to time, the "Purchase
Contract Agreement"), between the Company and The Bank of New
York, as Purchase Contract Agent and trustee including its
successor thereunder, (herein called the "Agent"), to which
Purchase Contract Agreement and supplemental agreements thereto
reference is hereby made for a description of the respective
rights, limitations of rights, obligations, duties and immunities
thereunder of the Agent, the Company, and the Holders and of the
terms upon which the Income PRIDES Certificates are, and are to
be, executed and delivered.
Each Purchase Contract evidenced hereby, which is settled
either through Early Settlement or Cash Settlement, shall
obligate the Holder of the related Income PRIDES to purchase at
the applicable Purchase Price, and the Company to sell, a number
of newly issued shares of Common Stock equal to the applicable
Early Settlement Rate or the applicable Settlement Rate, as
applicable.
The "Applicable Market Value" with respect to a Purchase
Contract Settlement Date 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 such
Purchase Contract Settlement 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, 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 at the close of business and (B) has
traded at least once on the national or regional securities
exchange or association that is the primary market for the
trading of the Common Stock.
In accordance with the terms of the Purchase Contract
Agreement, the Holder of the Income PRIDES evidenced hereby shall
pay, on each Purchase Contract Settlement Date the applicable
Purchase Price for the shares of Common Stock purchased pursuant
to each Purchase Contract evidenced hereby by effecting a Cash
Settlement or, an Early Settlement. A Holder of Income PRIDES who
does not make such payment in accordance with the Purchase
Contract Agreement or who does not notify the Agent of such
Holder's intention, on or prior to 5:00 p.m. New York City time
on the fifth Business Day immediately preceding a Purchase
Contract Settlement Date, to make an effective Cash Settlement or
an Early Settlement, shall have defaulted in its obligations
under the applicable portion of the related Purchase Contract,
and the Collateral Agent shall exercise its rights as a secured
creditor for the benefit of the Company thereunder and under the
Pledge Agreement and shall apply the Proceeds of the sale of the
applicable related Pledged Debt Securities (which shall be the
Series D Notes in connection with the First Purchase Contract
Settlement Date and Series E Notes in connection with the Second
Purchase Contract Settlement Date) held by the Collateral Agent
to satisfy the Holder's obligation under such Purchase Contract
to purchase Common Stock at the Purchase Price.
The Company shall not be obligated to issue any shares of
Common Stock in respect of any portion of a Purchase Contract on
a Purchase Contract Settlement Date or deliver any certificates
therefor to the Holder unless it shall have received payment in
full of the aggregate Purchase Price for the shares of Common
Stock to be purchased thereunder in the manner herein set forth.
Under the terms of the Pledge Agreement and the Purchase
Contract Agreement, the Agent will be entitled to exercise the
voting and any other consensual rights pertaining to the Pledged
Debt Securities. Upon receipt of notice of any meeting at which
holders of Debt Securities are entitled to vote or upon the
solicitation of consents, waivers or proxies of holders of Debt
Securities, the Agent shall, as soon as practicable thereafter,
mail to the Income PRIDES holders a notice (a) containing such
information as is contained in the notice or solicitation, (b)
stating that each Income PRIDES Holder on the record date set by
the Agent therefor shall be entitled to instruct the Agent as to
the exercise of the voting rights pertaining to the Debt
Securities constituting a part of such Holder's Income PRIDES and
(c) stating the manner in which such instructions may be given.
Upon the written request of the Income PRIDES Holders 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 Debt Securities
as to which any particular voting instructions are received. In
the absence of specific instructions from the Holder of an Income
PRIDES, the Agent shall abstain from voting any Debt Securities
evidenced by such Income PRIDES.
Upon the occurrence of a Tax Event Redemption prior to the
Second Purchase Contract Settlement Date, the Redemption Price
payable on the Tax Event Redemption Date with respect to the
Pledged Debt Securities shall be delivered to the Collateral
Agent in exchange for the Pledged Debt Securities. Pursuant to
the terms of the Pledge Agreement, the Collateral Agent for the
benefit of the Company will apply an amount equal to the
applicable Redemption Amount of such Redemption Price to purchase
the Treasury Portfolio and will promptly remit the remaining
portion of such Redemption Price to the Agent for payment to the
Holders of such Income PRIDES. Following the occurrence of a Tax
Event Redemption prior to the Second Purchase Contract Settlement
Date, the Holders of Income PRIDES and the Collateral Agent shall
have such security interests rights and obligations with respect
to the Treasury Portfolio as the Holder of Income PRIDES and the
Collateral Agent had in respect of the Debt Securities, as the
case may be, subject to the Pledge thereof as provided in the
Pledge Agreement and any reference herein to the Debt Securities
shall be deemed to be a reference to such Treasury Portfolio.
The Income PRIDES are issuable only in registered form and
only in denominations of a single Income PRIDES and any integral
multiple thereof. The transfer of any Income PRIDES Certificate
will be registered and Income PRIDES Certificates may be
exchanged as provided in the Purchase Contract Agreement. The
Income PRIDES Registrar may require a Holder, among other things,
to furnish appropriate endorsements and transfer documents
permitted by the Purchase Contract Agreement. No service charge
shall be required for any such registration of transfer or
exchange, but the Company and the Agent may require payment of a
sum sufficient to cover any tax or other governmental charge
payable in connection therewith.
A Holder of an Income PRIDES may, at any time on or prior to
the fifth Business Day immediately preceding the Second Purchase
Contract Settlement Date, create or recreate a Growth PRIDES and
separate the Debt Securities or the appropriate Applicable
Ownership Interest in the Treasury Portfolio, as applicable, from
the related Purchase Contract in respect of such Income PRIDES by
substituting 3-Year Treasury Securities and 4-Year Treasury
Securities for all, but not less than all, of the Series D Note
and the Series E Note, respectively, or appropriate Applicable
Ownership Interest in the Treasury Portfolio, as the case may be,
that form a part of such Income PRIDES in accordance with the
Purchase Contract Agreement; provided, however, that such
Collateral Substitutions may not be made during the period from
the fifth Business Day immediately preceding the First Purchase
Contract Settlement Date through the First Purchase Contract
Settlement Date, except that if a Tax Event Redemption has
occurred and the Treasury Portfolio has become a component of the
Income PRIDES, Holders of such Income PRIDES may make such
Collateral Substitutions at any time on or prior to the second
Business Day immediately preceding the Second Purchase Contract
Settlement Date (but not during the period from the second
Business Day immediately preceding the First Purchase Contract
Settlement Date through the First Purchase Contract Settlement
Date). Holders may make Collateral Substitutions (i) only in
integral multiples of 40 Income PRIDES if Debt Securities are
being substituted by Treasury Securities, or (ii) only in
integral multiples of 1,600,000 Income PRIDES if the appropriate
Applicable Ownership Interests in the Treasury Portfolio are
being substituted by Treasury Securities. To create 40 Growth
PRIDES (if a Tax Event Redemption has not occurred), or 1,600,000
Growth PRIDES (if a Tax Event Redemption has occurred), the
Income PRIDES Holder shall
(a) if a Tax Event Redemption has not occurred, (i)
prior to the fifth Business Day preceding the First Purchase
Contract Settlement Date, deposit with the Collateral Agent
a 3-Year Treasury Security having a principal amount at
maturity of $1,000 and a 4-Year Treasury Security having a
principal amount at maturity of $1,000, or (ii) after the
First Purchase Contract Settlement Date and prior to the
fifth Business Day preceding the Second Purchase Contract
Settlement Date, deposit with the Collateral Agent a 4-Year
Treasury Security having a principal amount at maturity of
$1,000; or
(b) if a Tax Event Redemption has occurred, (i) prior
to the second Business Day immediately preceding the First
Purchase Contract Settlement Date, deposit with the
Collateral Agent 3-Year Treasury Securities having an
aggregate principal amount at maturity of $40,000,000 and 4-
Year Treasury Securities having an aggregate principal
amount at maturity of $40,000,000, or (ii) after the First
Purchase Contract Settlement Date and prior to the second
Business Day immediately preceding the Second Purchase
Contract Settlement Date, 4-Year Treasury Securities having
an aggregate principal amount at maturity of $40,000,000;
and
(c) in either case, (i) deliver cash to the Agent in an
amount equal to the excess of the Contract Adjustment
Payments that would have accrued on the Growth PRIDES being
created by the Holder since the last Payment Date through
the date of Collateral Substitution, over the Contract
Adjustment Payments that have accrued over the same time
period on the Income PRIDES being surrendered in connection
with such Collateral Substitution, which amount the Agent
shall promptly remit to the Company, and (ii) transfer the
40 Income PRIDES, or, in the event a Tax Event Redemption
has occurred, 1,600,000 Income PRIDES, to the Agent
accompanied by a notice to the Agent, substantially in the
form of Exhibit B to the Pledge Agreement, stating that the
Holder has transferred the relevant types and amounts of
Treasury Securities to the Collateral Agent and requesting
that the Agent instruct the Collateral Agent to release the
applicable Debt Securities or the appropriate Applicable
Ownership Interest in the Treasury Portfolio, as the case
may be, underlying such Income PRIDES, whereupon the Agent
shall promptly give such instructions to the Collateral
Agent, substantially in the form of Exhibit A to the Pledge
Agreement.
Upon receipt of the Treasury Securities described in clause
(a) or (b) above and the instructions described in clause (c)
above, in accordance with the terms of the Pledge Agreement, the
Collateral Agent will release from the Pledge to the Agent, on
behalf of the Holder, Debt Securities or the appropriate
Applicable Ownership Interest in the Treasury Portfolio, as the
case may be, that had been components of such Income PRIDES, free
and clear of the Company's security interest therein, and upon
receipt thereof the Agent shall promptly:
(i) cancel the related Income PRIDES surrendered
and transferred;
(ii) transfer the Debt Securities or the
appropriate Applicable Ownership Interest in the
Treasury Portfolio, as the case may be, that had been
components of such Income PRIDES to the Holder; and
(iii) authenticate, execute on behalf of such
Holder and deliver a Growth PRIDES Certificate executed
by the Company in accordance with the Purchase Contract
Agreement evidencing the same number of Purchase
Contracts as were evidenced by the canceled Income
PRIDES.
Holders who elect to separate the Debt Securities or the
appropriate Applicable Ownership Interest in the Treasury
Portfolio, as the case may be, from the related Purchase
Contracts and to substitute Treasury Securities for such Debt
Securities or the appropriate 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 beresponsible for any such feesor expenses.
A Holder of Growth PRIDES may create or recreate Income
PRIDES by depositing with the Collateral Agent Debt Securities
having an aggregate principal amount, in the case of the Series D
Notes and the Series E Notes, equal to the aggregate principal
amount at maturity, of the 3-Year Treasury Securities and 4-Year
Treasury Securities, respectively, comprising part of the Growth
PRIDES, or by so depositing the appropriate Applicable Ownership
Interest in the Treasury Portfolio, in exchange for the release
of such Pledged Treasury Securities, in accordance with the terms
of the Purchase Contract Agreement and the Pledge Agreement.
The Company shall have the right, at any time prior to the
Second Purchase Contract Settlement Date, to defer the payment of
any or all of the Contract Adjustment Payments otherwise payable
on any Payment Date to a date no later than the Purchase Contract
Settlement Date next succeeding the date such deferral commences,
but only if the Company shall give the Holders and the Agent
written notice of its election to defer such payment (specifying
the amount to be deferred) as provided in the Purchase Contract
Agreement. In connection with any Contract Adjustment Payments
so deferred, additional Contract Adjustment Payments on the
amounts so deferred will accrue at the rate of 9.75% per annum
(computed on the basis of a 360 day year of twelve 30 day
months), compounding on each succeeding Payment Date, until paid
in full (such deferred installments of Contract Adjustment
Payments, if any, together with the additional Contract
Adjustment Payments accrued thereon, are referred to herein as
the "Deferred Contract Adjustment Payments"). Deferred Contract
Adjustment Payments, if any, shall be due on the next succeeding
Payment Date except to the extent that payment is deferred
pursuant to the Purchase Contract Agreement. No Contract
Adjustment Payments may be deferred to a date that is after the
Purchase Contract Settlement Date next succeeding the date such
deferral commences.
In the event that the Company elects to defer the payment of
Contract Adjustment Payments on the Purchase Contracts until the
next succeeding Purchase Contract Settlement Date, the Holder of
this Income PRIDES Certificate will receive on such Purchase
Contract Settlement Date, in lieu of a cash payment, a number of
shares of Common Stock equal to (x) the aggregate amount of
Deferred Contract Adjustment Payments payable to the Holder of
this Income PRIDES Certificate divided by (y) the Applicable
Market Value related to such Purchase Contract Settlement Date.
In the event the Company exercises its option to defer the
payment of Contract Adjustment Payments, then, until the Deferred
Contract Adjustment Payments have been paid, the Company shall
not declare or pay dividends on, make distributions with respect
to, or redeem, purchase or acquire, or make a liquidation payment
with respect to, any of its capital stock or make guarantee
payments with respect to the foregoing (other than (i) purchases
or acquisitions of capital stock of the Company in connection
with the satisfaction by the Company of its obligations under any
employee or agent benefit plans or the satisfaction by the
Company of its obligations pursuant to any contract or security
outstanding on the date of such event requiring the Company to
purchase its capital stock, (ii) as a result of a
reclassification of the Company's capital stock or the exchange
or conversion of one class or series of the Company's capital
stock for another class or series of the Company's capital stock,
(iii) the purchase of fractional interests in shares of the
Company's capital stock pursuant to the conversion or exchange
provisions of the Company's capital stock or the security being
converted or exchanged, (iv) dividends or distributions in
capital stock of the Company (or rights to acquire capital stock)
or repurchases or redemptions of capital stock solely from the
issuance or exchange of capital stock or (v) redemptions or
repurchases of any rights outstanding under a shareholder rights
plan.
The Purchase Contracts and all obligations and rights of the
Company and the Holders thereunder, including, without
limitation, the rights of the Holders to receive and the
obligation of the Company to pay any Contract Adjustment Payments
or any Deferred Contract Adjustment Payments, and the rights and
obligations 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 Second Purchase Contract Settlement Date, a
Termination Event shall have occurred. Upon the occurrence of a
Termination Event, the Company shall promptly but in no event
later than two Business Days thereafter give written notice to
the Agent, the Collateral Agent and to the Holders, at their
addresses as they appear in the Income PRIDES Register. Upon and
after the occurrence of a Termination Event, the Collateral Agent
shall release the Debt Securities or the appropriate Applicable
Ownership Interest in the Treasury Portfolio, as the case may be,
forming a part of the Income PRIDES evidenced hereby from the
Pledge in accordance with the provisions of the Pledge Agreement.
Subject to and upon compliance with the provisions of the
Purchase Contract Agreement, a Holder of Income PRIDES may settle
the related Purchase Contracts in their entirety on or prior to
the fifth Business Day immediately preceding either Purchase
Contract Settlement Date, but only in integral multiples of 40
Income PRIDES; provided, however, that such settlements may not
be made during the fifth Business Day immediately preceding the
First Purchase Contract Settlement Date through the First
Purchase Contract Settlement Date; and provided, further, that if
a Tax Event Redemption has occurred and the Treasury Portfolio
has become a component of the Income PRIDES, Holders may settle
early only in integral multiples of 1,600,000 Income PRIDES at
any time on or prior to the second Business Day immediately
preceding such Purchase Contract Settlement Date (but not during
the period two Business Days immediately preceding the First
Purchase Contract Settlement Date through the First Purchase
Contract Settlement Date). In order to exercise the right to
effect any such early settlement ("Early Settlement") with
respect to any Purchase Contracts evidenced by this Income
PRIDES, the Holder of this Income PRIDES Certificate shall
deliver this Income PRIDES 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 set forth
below duly completed and accompanied by payment in the form of
immediately available funds payable to the order of the Company
in an amount (the "Early Settlement Amount") equal to the sum of
(i)(A) $50 times the number of Purchase Contracts being settled
if settled on or prior to the fifth Business Day immediately
preceding the First Purchase Contract Settlement Date or (B) $25
times the number of Purchase Contracts being settled if settled
after the First Purchase Contract Settlement Date plus, in either
case, (ii) if such delivery is made with respect to any Purchase
Contracts during the period from the close of business on any
Record Date next preceding any Payment Date to the opening of
business on such Payment Date, an amount equal to the Contract
Adjustment Payments payable on such Payment Date with respect to
such Purchase Contracts. Upon Early Settlement of Purchase
Contracts by a Holder of the related Securities, the Pledged Debt
Securities or the appropriate Applicable Ownership Interest in
the Treasury Portfolio underlying such Securities shall be
released from the Pledge as provided in the Pledge Agreement and
the Holder shall be entitled to receive a number of shares of
Common Stock on account of each Purchase Contract forming part of
an Income PRIDES as to which Early Settlement is effected equal
to the applicable Early Settlement Rate; provided however, that
upon the Early Settlement of the Purchase Contracts, (i) the
Holder thereof will forfeit the right to receive any Deferred
Contract Adjustment Payments, if any, on such Purchase Contracts,
(ii) the Holder's right to receive additional Contract Adjustment
Payments in respect of such Purchase Contracts will terminate,
and (iii) no adjustment will be made to or for the Holder on
account of Deferred Contract Adjustment Payments, or any amount
accrued in respect of Contract Adjustment Payments. The Early
Settlement Rate shall initially be equal to 1.0164 newly issued
shares of Common Stock per Income PRIDES (the "First Early
Settlement Rate") if settled prior to the First Purchase Contract
Settlement Date, and equal to .5082 (the "Second Early Settlement
Rate") newly issued shares of Common Stock per Income PRIDES if
settled after the First Purchase Contract Settlement Date. The
First Early Settlement Rate and the Second Early Settlement Rate
shall each be adjusted in the same manner and at the same time as
the Settlement Rate is adjusted, as provided in the Purchase
Contract Agreement.
Upon registration of transfer of this Income PRIDES
Certificate, the transferee shall be bound (without the necessity
of any other action on the part of such transferee, except as may
be required by the Agent pursuant to the Purchase Contract
Agreement), under the terms of the Purchase Contract Agreement
and the Purchase Contracts evidenced hereby and the transferor
shall be released from the obligations under the Purchase
Contracts evidenced by this Income PRIDES Certificate. The
Company covenants and agrees, and the Holder, by its acceptance
thereof, likewise covenants and agrees, to be bound by the
provisions of this paragraph.
The Holder of this Income PRIDES Certificate, by its
acceptance hereof, authorizes the Agent to enter into and perform
the related Purchase Contracts forming part of the Income PRIDES
evidenced hereby on its behalf as its attorney-in-fact, expressly
withholds any consent to the assumption (i.e., affirmance) of the
Purchase Contracts by the Company or its trustee in the event
that the Company becomes the subject of a case under the
Bankruptcy Code, agrees to be bound by the terms and provisions
thereof, covenants and agrees to perform its obligations under
such Purchase Contracts, consents to the provisions of the
Purchase Contract Agreement, authorizes the Agent to enter into
and perform the Pledge Agreement on its behalf as its
attorney-in-fact, and consents to the Pledge of the Debt
Securities or the appropriate Applicable Ownership Interest in
the Treasury Portfolio, as the case may be, underlying this
Income PRIDES Certificate pursuant to the Pledge Agreement. The
Holder further covenants and agrees, that, to the extent and in
the manner provided in the Purchase Contract Agreement and the
Pledge Agreement, but subject to the terms thereof, payments in
respect of the Pledged Debt Securities, or the appropriate
Applicable Ownership Interest in the Treasury Portfolio, on each
Purchase Contract Settlement Date shall be paid by the Collateral
Agent to the Company in satisfaction of such Holder's obligations
under such Purchase Contract and such Holder shall acquire no
right, title or interest in such payments.
The Holder of this Income PRIDES Certificate, by its
acceptance hereof, covenants and agrees to treat itself as the
owner, for United States federal, state and local income and
franchise tax purposes, of the Debt Securities or the appropriate
Applicable Ownership Interest in the Treasury Portfolio forming
part of the Income PRIDES evidenced hereby. The Holder of this
Income PRIDES Certificate, by its acceptance hereof, further
covenants and agrees to treat the Debt Securities forming part of
the Income PRIDES evidenced hereby as indebtedness of the Company
for United States federal, state and local income and franchise
tax purposes.
Subject to certain exceptions, the provisions of the
Purchase Contract Agreement may be amended with the consent of
the Holders of a majority of the Purchase Contracts. In
addition, certain amendments to the Purchase Contract Agreement
may be made without any consent of the Holders as provided in the
Purchase Contract Agreement.
The Purchase Contracts evidenced hereby shall for all
purposes be governed by, and construed in accordance with, the
laws of the State of New York.
The Company and the Agent and any agent of the Company or
the Agent may treat the Person in whose name this Income PRIDES
Certificate is registered on the Income PRIDES Register as the
owner of the Income PRIDES evidenced hereby for the purpose of
receiving payments of interest payable quarterly on the Debt
Securities, receiving payments of Contract Adjustment Payments
and any Deferred Contract Adjustment Payments, performance of the
Purchase Contracts and for all other purposes whatsoever, whether
or not any payments in respect thereof be overdue and
notwithstanding any notice to the contrary, and neither the
Company, the Agent nor any such agent shall be affected by notice
to the contrary.
The Purchase Contracts shall not, prior to the settlement
thereof in accordance with the Purchase Contract Agreement,
entitle the Holder to any of the rights of a holder of shares of
Common Stock.
A copy of the Purchase Contract Agreement is available for
inspection at the offices of the Agent during regular business
hours of the Agent.
Unless the certificate of authentication hereon has been
executed by the Agent by manual signature, this Income PRIDES
Certificate shall not be entitled to any benefit under the Pledge
Agreement or the Purchase Contract Agreement or be valid or
obligatory for any purpose.
IN WITNESS WHEREOF, the Company has caused this instrument
to be duly executed.
TEXAS UTILITIES COMPANY
By:
-----------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Treasurer
HOLDER SPECIFIED ABOVE (as to
obligations of such Holder under the
Purchase Contracts evidenced hereby)
By:
---------------------------------
not individually but solely as
Attorney-in-Fact of such Holder
By:
--------------------------------
Name:
Title:
Dated: , 1998
AGENT'S CERTIFICATE OF AUTHENTICATION
This is one of the Income PRIDES Certificate referred to in
the within mentioned Purchase Contract Agreement.
THE BANK OF NEW YORK,
as Purchase Contract Agent and Trustee
By:
--------------------------------
Authorized Signatory
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.
-------------------------------------
FOR VALUE RECEIVED, the undersigned hereby sell(s),
assign(s) and transfer(s) unto
----------------------------------------------------------------
----------------------------------------------------------------
(Please insert Social Security or Taxpayer I.D. or other
Identifying Number of Assignee)
--------------------------------------------------------------
-----------------------------------------------------------------
-----------------------------------------------------------------
(Please Print or Type Name and Address Including Postal Zip
Code of Assignee) the within Income PRIDES Certificate and all
rights thereunder, hereby irrevocably constituting and appointing
-----------------------------------------------------------------
attorney to transfer said Income PRIDES Certificate on the books
of Texas Utilities Company with full power of substitution in the
premises.
Dated:_____________ __________________________
Signature
NOTICE: The signature to this
assignment must correspond
with the name as it appears
upon the face of the within
Income PRIDES Certificates in
every particular, without
alteration or enlargement or
any change whatsoever.
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.
SETTLEMENT INSTRUCTIONS
The undersigned Holder directs that a certificate for shares
of Common Stock deliverable upon settlement on or after the
[First] [Second] Purchase Contract Settlement Date of the
Purchase Contracts underlying the number of Income PRIDES
evidenced by this Income PRIDES 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)
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.
If shares are to be registered in REGISTERED HOLDER
the name of and delivered to a Person
other than the Holder, please (i) print
such Person's name and address and (ii)
provide a guarantee of your signature:
Please print name and address
of Registered Holder:
___________________________ ___________________________
Name Name
____________________________ ___________________________
Address Address
____________________________ ___________________________
____________________________ ___________________________
____________________________ ___________________________
Social Security or other Taxpayer
Identification Number, if any _____________________
ELECTION TO SETTLE EARLY
The undersigned Holder of this Income PRIDES Certificate
hereby irrevocably exercises the option to effect Early
Settlement in accordance with the terms of the Purchase Contract
Agreement with respect to the Purchase Contracts underlying the
number of Income PRIDES evidenced by this Income PRIDES
Certificate specified below. The undersigned Holder directs that
a certificate for shares of Common Stock deliverable upon such
Early Settlement be registered in the name of, and delivered,
together with a check in payment for any fractional share and any
Income PRIDES Certificate representing any Income PRIDES
evidenced hereby as to which Early Settlement of the related
Purchase Contracts is not effected, to the undersigned at the
address indicated below unless a different name and address have
been indicated below. Pledged Debt Securities or the appropriate
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: ________________________________
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.
Number of Securities evidenced hereby as to which Early
Settlement of the related Purchase Contracts is being elected:
If shares of Common Stock or
Income PRIDES Certificates
are to be registered in the REGISTERED HOLDER
name of and delivered to, and
Pledged Debt Securities, or
the Treasury Portfolio, as the
case may be, are to be trans-
ferred to, a Person other than
the Holder, please print such
Person's name and address:
Please print name and
address of Registered
Holder:
_____________________________ _________________________
Name Name
_____________________________ _________________________
Address Address
_____________________________ _________________________
_____________________________ _________________________
_____________________________ _________________________
Social Security or other
Taxpayer Identification Number,
if any _________________________
Transfer Instructions for Pledged Debt Securities, or the
Treasury Portfolio, as the case may be, Transferable Upon Early
Settlement or a Termination Event:
________________________________________________________________
________________________________________________________________
[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:
================================================================
PRINCIPAL
AMOUNT OF SIGNATURE
AMOUNT OF AMOUNT OF THIS GLOBAL OF
DECREASE IN INCREASE IN CERTIFICATE AUTHORIZED
PRINCIPAL PRINCIPAL FOLLOWING OFFICER OF
AMOUNT OF AMOUNT OF SUCH TRUSTEE OR
THE GLOBAL THE GLOBAL DECREASE OR SECURITIES
DATE CERTIFICATE CERTIFICATE INCREASE CUSTODIAN
_________________________________________________________________
_________________________________________________________________
_________________________________________________________________
_________________________________________________________________
_________________________________________________________________
_________________________________________________________________
_________________________________________________________________
_________________________________________________________________
=================================================================
EXHIBIT B
FORM OF GROWTH PRIDES CERTIFICATE
THIS CERTIFICATE IS A GLOBAL CERTIFICATE WITHIN THE MEANING
OF THE 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 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 THEREON 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 THEREIN.
No. ______________ Cusip No. ▇▇▇▇▇▇▇▇▇
Number of Growth PRIDES ___________________
TEXAS UTILITIES COMPANY
Growth PRIDES
($50 Stated Amount)
This Growth PRIDES Certificate certifies that __________ is
the registered Holder of the number of Growth PRIDES set forth
above. Each Growth PRIDES represents (i)(a) prior to the First
Purchase Contract Settlement Date, a 1/40 undivided beneficial
ownership interest in a 3-Year Treasury Security having a
principal amount at maturity equal to $1,000 and a 1/40 undivided
beneficial ownership interest in a 4-Year Treasury Security
having a principal amount of maturity equal to $1,000, and (b)
from the First Purchase Contract Settlement Date to the Second
Purchase Contract Settlement Date, a 1/40 undivided beneficial
ownership interest in a 4-Year Treasury Security having a
principal amount at maturity equal to $1,000, subject to the
Pledge of each such Treasury Security by such Holder pursuant to
the Pledge Agreement, and (ii) the rights and obligations of the
Holder under one Purchase Contract with Texas Utilities Company,
a Texas corporation (the "Company"). All capitalized terms used
herein without definition herein have the meaning set forth in
the Purchase Contract Agreement referred to below.
Pursuant to the Pledge Agreement, the Treasury Securities
constituting part of each Growth PRIDES evidenced hereby have
been pledged to the Collateral Agent, for the benefit of the
Company, to secure the obligations of the Holder under the
Purchase Contract comprising a portion of such Growth PRIDES.
The Pledge Agreement provides that all payments of the
principal of any Treasury Securities received by the Collateral
Agent shall be paid by the Collateral Agent by wire transfer of
same day funds (i) in the case of any principal payments with
respect to any Treasury Securities that have been released from
the Pledge pursuant to the Pledge Agreement, to the Holders of
the applicable Growth PRIDES to the accounts designated by them
in writing for such purpose no later than 2:00 p.m. New York City
time, on the Business Day such payment is received by the
Collateral Agent (provided that in the event such payment is
received by the Collateral Agent on a day that is not a Business
Day or after 12:30 p.m., New York City time, on a Business Day,
then such payment shall be made no later than 10:30 a.m., New
York City time, on the next succeeding Business Day), and (ii) in
the case of the principal of any Pledged Treasury Securities, to
the Company on the Purchase Contract Settlement 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 Growth PRIDES of which such Pledged Treasury Securities are a
part under the Purchaser Contracts forming a part of such Growth
PRIDES.
Each Purchase Contract evidenced hereby obligates the Holder
of this Growth PRIDES Certificate to purchase, and the Company,
to sell, (i) not later than August 16, 2001 (the "First Purchase
Contract Settlement Date"), at a price of $25 in cash, a number
of newly issued shares of Common Stock, no par value, of the
Company ("Common Stock") equal to the applicable Settlement Rate
(as defined below) and (ii), not later than August 16, 2002 (the
"Second Purchase Contract Settlement Date" and with the First
Purchase Contract Settlement Date, each a "Purchase Contract
Settlement Date") at a price of $25 in cash, a number of newly
issued shares of Common stock equal to the applicable Settlement
Rate, unless, in either case on or prior to the applicable
Purchase Contract Settlement Date there shall have occurred a
Termination Event or an Early Settlement with respect to the
Growth PRIDES of which such Purchase Contract is a part, all as
provided in the Purchase Contract Agreement and more fully
described below.
The "Settlement Rate" with respect to a Purchase Contract
Settlement Date is equal to (a) if the Applicable Market Value
(as defined below) determined with respect to such Purchase
Contract Settlement Date is equal to or greater than $49.19 (the
"Threshold Appreciation Price"), .5082 shares of Common Stock per
Purchase Contract, (b) if such Applicable Market Value is less
than the Threshold Appreciation Price but is greater than
$41.6875, the number of shares of Common Stock per Purchase
Contract equal to $25 divided by such Applicable Market Value and
(c) if the Applicable Market Value is less than or equal to
$41.6875, .5997 shares of Common Stock per Purchase Contract, in
each case subject to adjustment as provided in the Purchase
Contract Agreement. No fractional shares of Common Stock will be
issued upon settlement of Purchase Contracts, as provided in the
Purchase Contract Agreement.
The Company shall pay on each Payment Date in respect of
each Purchase Contract evidenced hereby an amount (the "Contract
Adjustment Payments") equal to (A) for the period prior to the
First Purchase Contract Settlement Date, 3.315% per annum of the
Stated Amount, or, and (B) for the period from and after the
First Purchase Contract Date, 3.25% per annum of the Remaining
Stated Amount, computed, in each case, on the basis of a 360 day
year of twelve 30 day months subject to deferral at the option of
the Company as provided in the Purchase Contract Agreement and
more fully described below. Such Contract Adjustment Payments
shall be payable to the Person in whose name this Growth PRIDES
Certificate (or a Predecessor Growth PRIDES Certificate) is
registered at the close of business on the Record Date for such
Payment Date.
Contract Adjustment Payments 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 Growth PRIDES Register.
Unless the context otherwise requires, each provision of this
security shall be part of the Purchase Contracts evidenced hereby.
This Security and each Purchase Contract evidenced hereby is
governed by a Purchase Contract Agreement, dated as of July 1,
1998 (as may be supplemented from time to time, the "Purchase
Contract Agreement") between the Company and The Bank of New
York, as Purchase Contract Agent and trustee (including its
successors thereunder, herein called the "Agent"), to which the
Purchase Contract Agreement and supplemental agreements thereto
reference is hereby made for a description of the respective
rights, limitations of rights, obligations, duties and immunities
thereunder of the Agent, the Company and the Holders and of the
terms upon which the Growth PRIDES Certificates are, and are to
be, executed and delivered.
Each Purchase Contract evidenced hereby, which is settled
either through Early Settlement or Cash Settlement, shall
obligate the Holder of the related Growth PRIDES to purchase at
the applicable Purchase Price, and the Company to sell, a number
of newly issued shares of Common Stock equal to the applicable
Early Settlement Rate or the applicable Settlement Rate, as
applicable.
The "Applicable Market Value" with respect to a Purchase
Contract Settlement Date means the average of the Closing Price
per share of Common Stock on each of the twenty consecutive
Trading Days ending on the third Trading Day immediately
preceding such Purchase Contract Settlement 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, 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.
In accordance with the terms of the Purchase Contract
Agreement, the Holder of the Growth PRIDES evidenced hereby shall
pay, on each Purchase Contract Settlement Date, the applicable
Purchase Price for the shares of Common Stock purchased pursuant
to each Purchase Contract evidenced hereby by effecting a Cash
Settlement or an Early Settlement. A Holder of Growth PRIDES who
does not make such payment in accordance with the Purchase Contract
Agreement or does not notify the Agent of such Holder's intention,
on or prior to 5:00 p.m. New York City time on the fifth
Business Day immediately preceding a Purchase Contract
Settlement Date, to make an effective Cash Settlement or an
Early Settlement, shall have defaulted in its obligations
under the applicable portion of the related Purchase Contract,
and the Collateral Agent shall exercise its rights as a secured
creditor for the benefit of the Company under the Purchase
Contract Agreement and the Pledge Agreement and shall apply the
principal amount at maturity of the related Pledged Treasury
Securities (which shall be the 3-Year Treasury Security in the
case of the First Purchase Contract Settlement Date, and the 4-
Year Treasury Security in the case of the Second Purchase
Contract Settlement Date) held by the Collateral Agent to the
Purchase Price of the Common Stock on such Purchase Contract
Settlement Date.
The Company shall not be obligated to issue any shares of
Common Stock in respect of any portion of a Purchase Contract on
a Purchase Contract Settlement Date or deliver any certificates
therefor to the Holder unless it shall have received payment in
full of the aggregate purchase price for the shares of Common
Stock to be purchased thereunder in the manner herein set forth.
The Growth PRIDES are issuable only in registered form and
only in denominations of a single Growth PRIDES and any integral
multiple thereof. The transfer of any Growth PRIDES will be
registered and Growth PRIDES may be exchanged as provided in the
Purchase Contract Agreement. The Growth PRIDES Registrar may
require a Holder, among other things, to furnish appropriate
endorsements and transfer documents permitted by the Purchase
Contract Agreement. No service charge shall be required for any
such registration of transfer or exchange, but the Company and
the Agent may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.
A Holder of a Growth PRIDES may, at any time on or prior to
the fifth Business Day immediately preceding the Second Purchase
Contract Settlement Date, create or recreate an Income PRIDES by
(a) depositing with the Collateral Agent Debt Securities or the
appropriate Applicable Ownership Interest in the Treasury
Portfolio, as the case may be, having an aggregate principal
amount equal to the aggregate principal amount at maturity of,
and in substitution for all, but not less than all, of the
Treasury Securities comprising part of the Growth PRIDES in
accordance with the Purchase Contract Agreement; provided,
however, that such Collateral Substitutions may not be made
during the period from the fifth Business Day immediately
preceding the First Purchase Contract Settlement Date through the
First Purchase Contract Settlement Date, except that if a Tax
Event Redemption has occurred and the Treasury Portfolio has
become a component of the Income PRIDES, Holders of Growth PRIDES
may make Collateral Substitutions, at any time on or prior to the
second Business Day immediately preceding the Second Purchase
Contract Settlement Date (but not during the period from the
second Business Day immediately preceding the First Purchase
Contract Settlement Date through the First Purchase Contract
Settlement Date). Holders of Growth PRIDES may make such
Collateral Substitutions and establish Income PRIDES only (i) in
integral multiples of 40 Growth PRIDES for 40 Income PRIDES if a
Tax Event Redemption has not occurred, or (ii) in integral
multiples of 1,600,000 Growth PRIDES for 1,600,000 Income PRIDES
if a Tax Event Redemption has occurred. To create 40 Income
PRIDES (if a Tax Event Redemption has not occurred), or 1,600,000
Income PRIDES (if a Tax Event Redemption has occurred), the
Growth PRIDES Holder shall
(a) if a Tax Event Redemption has not occurred, (i)
prior to the fifth Business Day preceding the First Purchase
Contract Settlement Date, deposit with the Collateral Agent
$1,000 in aggregate principal amount of Series D Notes and
$1,000 in aggregate principal amount of Series E Notes, or
(ii) after the First Purchase Contract Settlement Date,
deposit with the Collateral Agent $1,000 in aggregate
principal amount of Series E Notes, or
(b) if a Tax Event Redemption has occurred, deposit
with the Collateral Agent the Applicable Ownership Interest
in the Treasury Portfolio for each Income PRIDES being
created by the Holder and having an aggregate principal
amount of $80,000,000, or if, after the First Purchase
Contract Settlement Date $40,000,000, and
(c) in either case, transfer and surrender the related
40 Growth PRIDES, or in the event a Tax Event Redemption has
occurred, 1,600,000 Income PRIDES, to the Agent accompanied
by a notice to the Agent, substantially in the form of
Exhibit B to the Pledge Agreement, stating that the Holder
has transferred the relevant amount of Debt Securities or
the appropriate Applicable Ownership Interest in the
Treasury Portfolio, as the case may be, to the Collateral
Agent and requesting that the Agent instruct the Collateral
Agent to release the Treasury Securities underlying such
Growth PRIDES, whereupon the Agent shall promptly give such
instructions to the Collateral Agent, substantially in the
form of Exhibit A to the Pledge Agreement.
Upon receipt of the Debt Securities or the appropriate
Applicable Ownership Interest in the Treasury Portfolio, as the
case may be, described in clause (a) or (b) above and the
instructions described in clause (c) above, in accordance with
the terms of the Pledge Agreement, the Collateral Agent will
effect the release of the Treasury Securities having a
corresponding aggregate principal amount from the Pledge to the
Agent free and clear of the Company's security interest therein,
and upon receipt thereof the Agent shall promptly:
(i) cancel the related Growth PRIDES surrendered
and transferred;
(ii) transfer the Treasury Securities that had
been components of such Growth PRIDES to the Holder;
and
(iii) authenticate, execute on behalf of such
Holder and deliver an Income PRIDES Certificate
executed by the Company in accordance with the Purchase
Contract Agreement evidencing the same number of
Purchase Contracts as were evidenced by the canceled
Growth PRIDES.
Holders who elect to separate Treasury Securities from the
related Purchase Contract and to substitute Debt Securities or
the Applicable Ownership Interest in the Treasury Portfolio, as
the case may be, for such Treasury Securities 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.
A Holder of Income PRIDES may create or recreate Growth
PRIDES by depositing with the Collateral Agent 3-Year Treasury
Securities and 4-Year Treasury Securities, having an aggregate
principal amount at maturity equal to the aggregate principal
amount of the Series D Notes and the Series E Notes,
respectively, or, the appropriate Applicable Ownership Interest
in the Treasury Portfolio equal to the aggregate principal amount
of the Pledged Treasury Securities at maturity, in exchange for
the release of such Pledged Debt Securities or appropriate
Applicable Ownership Interest in the Treasury Portfolio, as the
case may be, in accordance with the terms of the Purchase
Contract Agreement and the Pledge Agreement.
The Company shall have the right, at any time prior to the
Second Purchase Contract Settlement Date, to defer the payment of
any or all of the Contract Adjustment Payments otherwise payable
on any Payment Date to a date no later than the Purchase Contract
Settlement Date next succeeding the date such deferral commences,
but only if the Company shall give the Holders and the Agent
written notice of its election to defer such payment (specifying
the amount to be deferred) as provided in the Purchase Contract
Agreement. In connection with any Contract Adjustment Payments
so deferred, additional Contract Adjustment Payments will accrue
on the amounts so deferred at the rate of 9.75% per annum
(computed on the basis of a 360 day year of twelve 30 day
months), compounding on each succeeding Payment Date, until paid
in full (such deferred installments of Contract Adjustment
Payments, if any, together with the additional Contract
Adjustment Payments accrued thereon, are referred to herein as
the "Deferred Contract Adjustment Payments"). Deferred Contract
Adjustment Payments, if any, shall be due on the next succeeding
Payment Date except to the extent that payment is deferred
pursuant to the Purchase Contract Agreement. No Contract
Adjustment Payments may be deferred to a date that is after the
Purchase Contract Settlement Date next succeeding the date such
deferrals commence.
In the event that the Company elects to defer the payment of
Contract Adjustment Payments on the Purchase Contracts until the
next succeeding Purchase Contract Settlement Date, the Holder of
this Growth PRIDES Certificate will receive on such Purchase
Contract Settlement Date, in lieu of a cash payment, a number of
shares of Common Stock equal to (x) the aggregate amount of
Deferred Contract Adjustment Payments payable to the Holder of
the Growth PRIDES Certificate divided by (y) the Applicable
Market Value related to such Purchase Contract Settlement Date.
In the event the Company exercises its option to defer the
payment of Contract Adjustment Payments, then, until the Deferred
Contract Adjustment Payments have been paid, the Company shall
not declare or pay dividends on, make distributions with respect
to, or redeem, purchase or acquire, or make a liquidation payment
with respect to, any of its capital stock or make guarantee
payments with respect to the foregoing (other than (i) purchases
or acquisitions of shares of capital stock of the Company in
connection with the satisfaction by the Company of its
obligations under any employee or agent benefit plans or the
satisfaction by the Company of its obligations pursuant to any
contract or security outstanding on the date of such event
requiring the Company to purchase its capital stock, (ii) as a
result of a reclassification of the Company's capital stock or
the exchange or conversion of one class or series of the
Company's capital stock for another class or series of the
Company's capital stock, (iii) the purchase of fractional
interests in shares of the Company's capital stock pursuant to
the conversion or exchange provisions of the Company's capital
stock or the security being converted or exchanged, (iv)
dividends or distributions in capital stock of the Company (or
rights to acquire capital stock) or repurchases or redemptions of
capital stock solely from the issuance or exchange of capital
stock or (v) redemptions or repurchases of any rights outstanding
under a shareholder rights plan.
The Purchase Contracts and all obligations and rights of the
Company and the Holders thereunder, including, without
limitation, the rights of the Holders to receive and the
obligation of the Company to pay Contract Adjustment Payments or
any Deferred Contract Adjustment Payments, and the rights and
obligations 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 Second Purchase Contract Settlement Date, a
Termination Event shall have occurred. Upon the occurrence of a
Termination Event, the Company shall promptly but in no event
later than two business days thereafter give written notice to
the Agent, the Collateral Agent and to the Holders, at their
addresses as they appear in the Growth PRIDES Register. Upon and
after the occurrence of a Termination Event, the Collateral Agent
shall release the Treasury Securities forming a part of the
Growth PRIDES evidenced hereby from the Pledge in accordance with
the provisions of the Pledge Agreement.
Subject to and upon compliance with the provisions of the
Purchase Contract Agreement, a Holder of Growth PRIDES may settle
the related Purchase Contracts in their entirety on or prior to
the second Business Day immediately preceding each Purchase
Contract Settlement Date, but only in integral multiples of 40
Growth PRIDES. In order to exercise the right to effect any such
early settlement ("an Early Settlement") with respect to any
Purchase Contracts evidenced by this Growth PRIDES Certificate,
the Holder of this Growth PRIDES Certificate shall deliver this
Growth PRIDES 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 set forth below duly
completed and accompanied by payment in the form of immediately
available funds payable to the order of the Company in an amount
(the "Early Settlement Amount") equal to the sum of (i)(A) $50
times the number of Purchase Contracts being settled, if settled
on or prior to the second Business Day immediately preceding the
First Purchase Contract Settlement Date, or (B) $25 times the
number of Purchase Contracts being settled, if settled between
the First Purchase Contract Settlement Date and the second
Business Day immediately preceding the Second Purchase Contract
Settlement Date, plus in either case, (ii) if such delivery is
made with respect to any Purchase Contracts during the period
from the close of business on any Record Date for any Payment
Date to the opening of business on such Payment Date, an amount
equal to the Contract Adjustment Payments payable, if any, on
such Payment Date with respect to such Purchase Contracts. Upon
Early Settlement of Purchase Contracts by a Holder of the related
Securities, the Pledged Treasury Securities underlying such
Securities shall be released from the Pledge as provided in the
Pledge Agreement and the Holder shall be entitled to receive, a
number of shares of Common Stock on account of each Purchase
Contract forming part of a Growth PRIDES as to which Early
Settlement is effected equal to the applicable Early Settlement
Rate which shall be 1.0164 newly issued shares of Common Stock per
Purchase Contract (the "First Early Settlement Rate") if settled
prior to the First Purchase Contract Settlement Date, or if
settled after the First Purchase Contract Settlement Date and
before the Second Purchase Contract Settlement Date, .5082 newly
issued shares of Common Stock per Purchase Contract (the "Second
Early Settlement Rate" and with the First Early Settlement Rate,
each, an "Early Settlement Rate"); provided however, that upon the
applicable Early Settlement of the Purchase Contracts, (i) the
Holder thereof will forfeit the right to receive any Deferred
Contract Adjustment Payments on such Purchase Contracts, (ii)
the Holder's right to receive additional Contract Adjustment
Payments in respect of such Purchase Contracts will terminate,
and (iii) no adjustment will be made to or for the Holder on
account of Deferred Contract Adjustment Payments, or any amount
accrued in respect of Contract Adjustment Payments. Each Early
Settlement Rate shall be adjusted in the same manner and at the
same time as the Settlement Rate is adjusted as provided in the
Purchase Contract Agreement.
Upon registration of transfer of this Growth PRIDES
Certificate, the transferee shall be bound (without the necessity
of any other action on the part of such transferee, except as may
be required by the Agent pursuant to the Purchase Contract
Agreement), under the terms of the Purchase Contract Agreement
and the Purchase Contracts evidenced hereby and the transferor
shall be released from the obligations under the Purchase
Contracts evidenced by this Growth PRIDES Certificate. The
Company covenants and agrees, and the Holder, by his acceptance
hereof, likewise covenants and agrees, to be bound by the
provisions of this paragraph.
The Holder of this Growth PRIDES Certificate, by its
acceptance hereof, authorizes the Agent to enter into and perform
the related Purchase Contracts forming part of the Growth PRIDES
evidenced hereby on its behalf as its attorney-in-fact, expressly
withholds any consent to the assumption (i.e., affirmance) of the
Purchase Contracts by the Company or its trustee in the event
that the Company becomes the subject of a case under the
Bankruptcy Code, agrees to be bound by the terms and provisions
thereof, covenants and agrees to perform its obligations under
such Purchase Contracts, consents to the provisions of the
Purchase Contract Agreement, authorizes the Agent to enter into
and perform the Pledge Agreement on its behalf as its
attorney-in-fact, and consents to the Pledge of the Treasury
Securities underlying this Growth PRIDES Certificate pursuant to
the Pledge Agreement. The Holder further covenants and agrees,
that, to the extent and in the manner provided in the Purchase
Contract Agreement and the Pledge Agreement, but subject to the
terms thereof, payments in respect of the Pledged Treasury
Securities on each Purchase Contract Settlement Date shall be
paid by the Collateral Agent to the Company in satisfaction of
such Holder's obligations under such Purchase Contract and such
Holder shall acquire no right, title or interest in such
payments.
The Holder of this Growth PRIDES Certificate, by its
acceptance hereof, covenants and agrees to treat itself as the
owner, for United States federal, state and local income and
franchise tax purposes, of the Treasury Securities forming part
of the Growth PRIDES evidenced hereby.
Subject to certain exceptions, the provisions of the
Purchase Contract Agreement may be amended with the consent of
the Holders of a majority of the Purchase Contracts. In
addition, certain amendments to the Purchase Contract Agreement
may be made without any consent on the Holders as provided in the
Purchase Contract Agreement.
The Purchase Contracts evidenced hereby shall for all
purposes be governed by, and construed in accordance with, the
laws of the State of New York.
The Company and the Agent and any agent of the Company or
the Agent may treat the Person in whose name this Growth PRIDES
Certificate is registered on the Growth PRIDES Register as the
owner of the Growth PRIDES evidenced hereby for the purpose of
receiving payments of interest on the Treasury Securities,
receiving payments of Contract Adjustment Payments and any
Deferred Contract Adjustment Payments, performance of the
Purchase Contracts and for all other purposes whatsoever, whether
or not any payments in respect thereof be overdue and
notwithstanding any notice to the contrary, and neither the
Company, the Agent nor any such agent shall be affected by notice
to the contrary.
The Purchase Contracts shall not, prior to the settlement
thereof, in accordance with the Purchase Agreement, entitle the
Holder to any of the rights of a holder of shares of Common
Stock.
A copy of the Purchase Contract Agreement is available for
inspection at the offices of the Agent during regular business
hours of the Agent.
Unless the certificate of authentication hereon has been
executed by the Agent by manual signature, this Growth PRIDES
Certificate shall not be entitled to any benefit under the Pledge
Agreement or the Purchase Contract Agreement or be valid or
obligatory for any purpose.
IN WITNESS WHEREOF, the Company has caused this instrument
to be duly executed.
TEXAS UTILITIES COMPANY
By:
--------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Treasurer
HOLDER SPECIFIED ABOVE (as to
obligations of such Holder
under the Purchase Contracts
evidenced hereby)
By:
-------------------------,
not individually but solely
as Attorney-in-Fact of such
Holder
By: _________________________
Name:
Title:
Dated: , 1998
AGENT'S CERTIFICATE OF AUTHENTICATION
This is one of the Growth PRIDES referred to in the
within-mentioned Purchase Contract Agreement.
THE BANK OF NEW YORK,
as Purchase Contract Agent
and Trustee
By:___________________________
Authorized Signatory
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.
__________________
FOR VALUE RECEIVED, the undersigned hereby sell(s),
assign(s) and transfer(s) unto
_________________________________________________________________
(Please insert Social Security or Taxpayer I.D. or other
Identifying Number of Assignee)
_________________________________________________________________
(Please Print or Type Name and Address Including Postal Zip Code
of Assignee)
the within Growth PRIDES Certificate and all rights
thereunder, hereby irrevocably constituting and appointing
_________________________________________________________________
attorney to transfer said Growth PRIDES Certificate on the books
of Texas Utilities Company with full power of substitution in the
premises.
Dated: _______________ __________________________
Signature
NOTICE: The signature to this
assignment must correspond with the
name as it appears upon the face of
the within Growth PRIDES
Certificates in every particular,
without alteration or enlargement
or any change whatsoever.
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.
SETTLEMENT INSTRUCTIONS
The undersigned Holder directs that a certificate for shares
of Common Stock deliverable upon settlement on or after the
[First] [Second] Purchase Contract Settlement Date of the
Purchase Contracts underlying the number of Growth PRIDES
evidenced by this Growth PRIDES 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:
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.
If shares are to be REGISTERED HOLDER
registered in the name
of and delivered to a
Person other than the
Holder, please print
such Person's name and
address:
Please print name and address
of Registered Holder:
_____________________________ ______________________________
Name Name
_____________________________
_______________________________
Address Address
Social Security or other Taxpayer
Identification Number, if any
______________________________
ELECTION TO SETTLE EARLY
The undersigned Holder of this Growth PRIDES Certificate
hereby irrevocably exercises the option to effect Early
Settlement in accordance with the terms of the Purchase Contract
Agreement with respect to the Purchase Contracts underlying the
number of Growth PRIDES evidenced by this Growth PRIDES
Certificate specified below. The undersigned Holder directs that
a certificate for shares of Common Stock deliverable upon such
Early Settlement be registered in the name of, and delivered,
together with a check in payment for any fractional share and any
Growth PRIDES Certificate representing any Growth PRIDES
evidenced hereby as to which Early Settlement of the related
Purchase Contracts is not effected, to the undersigned at the
address indicated below unless a different name and address have
been indicated below. Pledged Treasury Securities deliverable
upon such Early Settlement will be transferred in accordance with
the transfer instructions set forth below. If shares are to be
registered in the name of a Person other than the undersigned,
the undersigned will pay any transfer tax payable incident
thereto.
Dated: ______________ _________________________
Signature
Signature Guarantee: ___________________
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.
Number of Securities evidenced hereby as to which Early
Settlement of the related Purchase Contracts is being elected:
If shares of Common Stock REGISTERED HOLDER
of Growth PRIDES Certificates
are to be registered in the
name of and delivered to and
Pledged Treasury Securities
are to be transferred to a
Person other than the Holder,
please print such Person's
name and address:
Please print 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 or a Termination Event:
_________________________________________________________________
_________________________________________________________________
_________________________________________________________________
[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:
=================================================================
Principal
Amount of Signature
Amount of Amount of this Global of autho-
decrease in increase in Certificate rized
Principal Principal following officer of
Amount of Amount of such Trustee or
the Global the Global decrease or Securities
Date Certificate Certificate increase Custodian
_________________________________________________________________
_________________________________________________________________
_________________________________________________________________
_________________________________________________________________
_________________________________________________________________
_________________________________________________________________
_________________________________________________________________
=================================================================
EXHIBIT C
NOTICE TO SETTLE BY SEPARATE CASH
Attention:
Re: Securities of Texas Utilities Company (the
"Company")
The undersigned Holder hereby irrevocably notifies you
in accordance with Section 5.4 of the Purchase Contract
Agreement, dated as of ______ ___, 1998 among the Company,
yourselves, as Purchase Contract Agent and as Attorney-in-Fact
for the Holders of the Purchase Contracts, that such Holder has
elected to pay to the Collateral Agent, on or prior to 11:00 a.m.
New York City time, on the Business Day immediately preceding the
[First] [Second] Purchase Contract Settlement Date, (in lawful
money of the United States by [certified or cashiers check or]
wire transfer, in immediately available funds), $_________ as the
Purchase Price for the shares of Common Stock issuable to such
Holder by the Company under the related Purchase Contract on the
[First] [Second] Purchase Contract Settlement Date. The
undersigned Holder hereby instructs you to notify promptly the
Collateral Agent of the undersigned Holders election to make such
cash settlement with respect to the Purchase Contracts related to
such Holder's [Income PRIDES] [Growth PRIDES].
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:
____________________________ _____________________________
Name Social Security or other
Taxpayer Identification Number
if any
Address
____________________________
____________________________
____________________________