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TXU CORP.
AND
THE CHASE MANHATTAN BANK
AS COLLATERAL AGENT, CUSTODIAL AGENT
AND SECURITIES INTERMEDIARY
AND
THE BANK OF NEW YORK
AS PURCHASE CONTRACT AGENT
PLEDGE AGREEMENT
DATED AS OF OCTOBER 1, 2001
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TABLE OF CONTENTS
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Page No.
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SECTION 1. DEFINITIONS.......................................................3
SECTION 2. PLEDGE; CONTROL AND PERFECTION....................................6
SECTION 2.1. THE PLEDGE...................................................6
SECTION 2.2. CONTROL AND PERFECTION.......................................7
SECTION 3. DISTRIBUTIONS ON PLEDGED COLLATERAL...............................9
SECTION 4. SUBSTITUTION, RELEASE, REPLEDGE AND SETTLEMENT OF DEBT
SECURITIES.......................................................10
SECTION 4.1. SUBSTITUTION FOR DEBT SECURITIES AND THE CREATION OF
TREASURY UNITS..............................................10
SECTION 4.2. SUBSTITUTION FOR TREASURY SECURITIES AND THE CREATION
OF CORPORATE UNITS..........................................12
SECTION 4.3. TERMINATION EVENT...........................................13
SECTION 4.4. CASH SETTLEMENT.............................................14
SECTION 4.5. EARLY SETTLEMENT............................................16
SECTION 4.6. APPLICATION OF PROCEEDS; SETTLEMENT.........................17
SECTION 5. VOTING RIGHTS--DEBT SECURITIES...................................18
SECTION 6. RIGHTS AND REMEDIES; SUBSTITUTION OF A TREASURY PORTFOLIO
FOR DEBT SECURITIES..............................................19
SECTION 6.1. RIGHTS AND REMEDIES OF THE COLLATERAL AGENT.................19
SECTION 6.2. SUBSTITUTION OF A TREASURY PORTFOLIO FOR DEBT SECURITIES....20
SECTION 6.3. SUBSTITUTIONS...............................................21
SECTION 7. REPRESENTATIONS AND WARRANTIES; COVENANTS........................22
SECTION 7.1. REPRESENTATIONS AND WARRANTIES..............................22
SECTION 7.2. COVENANTS...................................................22
SECTION 8. THE COLLATERAL AGENT.............................................23
SECTION 8.1. APPOINTMENT, POWERS AND IMMUNITIES..........................23
SECTION 8.2. INSTRUCTIONS OF THE COMPANY.................................24
SECTION 8.3. RELIANCE BY COLLATERAL AGENT................................24
SECTION 8.4. RIGHTS IN OTHER CAPACITIES..................................24
SECTION 8.5. NON-RELIANCE ON COLLATERAL AGENT............................25
SECTION 8.6. COMPENSATION AND INDEMNITY..................................25
SECTION 8.7. FAILURE TO ACT..............................................25
SECTION 8.8. RESIGNATION OF COLLATERAL AGENT.............................26
SECTION 8.9. RIGHT TO APPOINT AGENT OR ADVISOR...........................27
SECTION 8.10. SURVIVAL....................................................27
SECTION 8.11. EXCULPATION.................................................27
SECTION 9. AMENDMENT........................................................27
SECTION 9.1. AMENDMENT WITHOUT CONSENT OF HOLDERS........................27
SECTION 9.2. AMENDMENT WITH CONSENT OF HOLDERS...........................28
SECTION 9.3. EXECUTION OF AMENDMENTS.....................................28
SECTION 9.4. EFFECT OF AMENDMENTS........................................28
SECTION 9.5. REFERENCE TO AMENDMENTS.....................................29
SECTION 10. MISCELLANEOUS....................................................29
SECTION 10.1. NO WAIVER...................................................29
SECTION 10.2. GOVERNING LAW...............................................29
SECTION 10.3. NOTICES.....................................................29
SECTION 10.4. SUCCESSORS AND ASSIGNS......................................30
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SECTION 10.5. COUNTERPARTS................................................30
SECTION 10.6. SEVERABILITY................................................30
SECTION 10.7. EXPENSES, ETC...............................................30
SECTION 10.8. SECURITY INTEREST ABSOLUTE..................................31
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PLEDGE AGREEMENT
PLEDGE AGREEMENT, dated as of October 1, 2001 (this "Agreement"), by
and among TXU Corp., a Texas corporation (the "Company"), as pledgee, The Chase
Manhattan Bank, a
New York banking corporation, not individually but solely as
collateral agent (in such capacity, together with its successors in such
capacity, the "Collateral Agent"), as custodial agent (in such capacity,
together with its successors in such capacity, the "Custodial Agent") and as a
"securities intermediary" as defined in Section 8-102(a)(14) of the Code (as
defined herein) (in such capacity, together with its successors in such
capacity, the "Securities Intermediary"), and The Bank of
New York, a
New York
banking corporation, not individually but solely as purchase contract agent and
as attorney-in-fact of the Holders (as defined in the Purchase Contract
Agreement) from time to time of the Securities (as hereinafter defined) (in such
capacity, together with its successors in such capacity, the "Purchase Contract
Agent") under the Purchase Contract Agreement (as hereinafter defined).
RECITALS
The Company and the Purchase Contract Agent are parties to the
Purchase Contract Agreement, dated as of the date hereof (as modified and
supplemented and in effect from time to time, the "Purchase Contract
Agreement"), pursuant to which there may be issued up to 20,000,000 new
securities (the "Securities") of the Company.
The Securities will initially consist of 17,500,000 units (referred to
as "Equity Units") with a stated amount, per Equity Unit, equal to $50 (the
"Stated Amount"). The Equity Units will initially consist of 17,500,000
Corporate Units and 0 Treasury Units. Each Corporate Unit will initially be
comprised of (a) a stock purchase contract (as modified and supplemented and in
effect from time to time, a "Purchase Contract") under which (i) the Holder will
purchase from the Company not later than November 16, 2004 ("First Purchase
Contract Settlement Date"), for $25 in cash, a number of newly issued shares of
common stock, without par value, of the Company ("Common Stock") equal to the
applicable Settlement Rate (as defined in the Purchase Contract Agreement), (ii)
the Holder will purchase from the Company not later than November 16, 2005
("Second Purchase Contract Settlement Date", and with the First Purchase
Contract Settlement Date, each a "Purchase Contract Settlement Date"), for $25
in cash, a number of newly issued shares of Common Stock equal to the applicable
Settlement Rate and (iii) the Company will pay certain Contract Adjustment
Payments (as defined in the Purchase Contract Agreement) to the Holders as
provided in the Purchase Contract Agreement, and (b) either (A) prior to the
First Purchase Contract Settlement Date so long as no Tax Event Redemption has
occurred, (i) beneficial ownership of a Series K Senior Note due November 16,
2006 of the Company ("Series K Note"), having a principal amount of $25, and a
Series L Senior Note due November 16, 2007 of the Company ("Series L Note", and
together with the Series K Note, the "Debt Securities"), having a principal
amount of $25, or (ii) following a successful remarketing of the Series K Notes
on the third Business Day immediately preceding August 16, 2004, $25 principal
amount of Series L Notes and the Applicable Ownership Interest in the 3-Year
Treasury Portfolio (as defined below), (B) from the First Purchase Contract
Settlement Date to the Second Purchase Contract Settlement Date so long as no
Tax Event Redemption has occurred, (i) beneficial ownership of a Series L Note,
having a principal amount of $25, or (ii) following a successful remarketing of
the Series L Notes on the third Business Day immediately preceding August 16,
2005, the Applicable Ownership Interest in the 4-Year Treasury Portfolio (as
defined below), or (C) upon the occurrence of a Tax Event Redemption prior to
the Second Purchase Contract Settlement Date, the appropriate Applicable
Ownership Interest in the Tax Event Treasury Portfolio (as defined below).
Each Treasury Unit will initially be comprised of (a) a Purchase
Contract under which (i) the Holder will purchase from the Company not later
than the First Purchase Contract Settlement Date, for $25 in cash, a number of
newly issued shares of Common Stock equal to the applicable Settlement Rate,
(ii) the Holder will purchase from the Company not later than the Second
Purchase Contract Settlement Date, for $25 in cash, a number of newly issued
shares of Common Stock of the Company equal to the applicable Settlement Rate
and (iii) the Company will pay certain Contract Adjustment Payments to the
Holders as provided in the Purchase Contract Agreement, and (b) (i) prior to the
First Purchase Contract Settlement Date, a 1/40, or 2.5% undivided beneficial
ownership interest in a zero-coupon U.S. Treasury Security having a principal
amount at maturity equal to $1,000 and maturing on November 15, 2004 (CUSIP No.
▇▇▇▇▇▇▇▇▇) ("3-Year Treasury Security") and a 1/40, or 2.5% undivided beneficial
ownership interest in a zero coupon U.S. Treasury Security having a principal
amount at maturity equal to $1,000 and maturing on November 15, 2005 (CUSIP No.
▇▇▇▇▇▇▇▇▇) ("4-Year Treasury Security" and with the 3-Year Treasury Security,
the "Treasury Securities" and each a "Treasury Security") and (ii) from the
First Purchase Contract Settlement Date to the Second Purchase Contract
Settlement Date, a 1/40, or 2.5%, undivided beneficial interest in a 4-Year
Treasury Security.
Pursuant to the terms of the Purchase Contract Agreement, the Company
may issue up to 2,500,000 additional Corporate Units and, if the Company issues
such additional Corporate Units, the related Debt Securities will be pledged
hereunder.
Pursuant to the terms of the Indenture (as defined below), the Company
will issue the Series K Notes and the Series L Notes in equal aggregate
principal amounts which together will be equal to or greater than the aggregate
Stated Amount of all Corporate Units.
Pursuant to the terms of the Purchase Contract Agreement and the
Purchase Contracts, the Holders, from time to time, of the Securities have
irrevocably authorized the Purchase Contract Agent, as attorney-in-fact of such
Holders, among other things, to execute and deliver this Agreement on behalf of
such Holders and to grant the pledge provided hereby of the Debt Securities, any
Applicable Ownership Interest in the Treasury Portfolio and any Treasury
Securities to secure each Holder's obligations under the related Purchase
Contract, as provided herein and subject to the terms hereof. Upon such pledge,
the Debt Securities will be beneficially owned by the Holders but will be owned
of record by the Purchase Contract Agent subject to the Pledge hereunder, and
the Treasury Securities (and the appropriate Applicable Ownership Interest in a
Treasury Portfolio) will be beneficially owned by the Holders but will be held
in book-entry form by the Securities Intermediary subject to the Pledge
hereunder.
Accordingly, the Company, the Collateral Agent, the Securities
Intermediary, the Custodial Agent and the Purchase Contract Agent, on its own
behalf and as attorney-in-fact of the Holders from time to time of the
Securities, agree as follows:
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SECTION 1. DEFINITIONS.
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For all purposes of this Agreement, except as otherwise expressly
provided or unless the context otherwise requires:
(a) the terms defined in this Article have the meanings assigned to
them in this Article and include the plural as well as the singular;
(b) the words "herein," "hereof" and "hereunder" and other words of
similar import refer to this Agreement as a whole and not to any particular
Article, Section or other subdivision;
(c) terms not otherwise defined herein are used herein with the
meaning ascribed to them in the Purchase Contract Agreement.
"3-YEAR TREASURY SECURITY" has the meaning specified in the Recitals.
"4-YEAR TREASURY SECURITY" has the meaning specified in the Recitals.
"AGREEMENT" means this instrument as originally executed or as it may
from time to time be supplemented or amended by one or more agreements
supplemental hereto entered into pursuant to the applicable provisions hereof.
"BANKRUPTCY CODE" means title 11 of the United States Code, or any
other law of the United States that from time to time provides a uniform system
of bankruptcy laws.
"BUSINESS DAY" means any day other than a Saturday, a Sunday or any
other day on which banking institutions in The City of
New York (in the State of
New York) are permitted or required by any applicable law to close.
"CASH" means any coin or currency of the United States as at the time
shall be legal tender for payment of public and private debts.
"CODE" has the meaning specified in Section 6.1 hereof.
"COLLATERAL" has the meaning specified in Section 2.1 hereof.
"COLLATERAL ACCOUNT" means the securities account (number 160881.1)
maintained at The Chase Manhattan Bank in the name "The Bank of
New York, as
Purchase Contract Agent on behalf of the holders of Securities subject to the
security interest of The Chase Manhattan Bank as Collateral Agent under the
Pledge Agreement, for the benefit of TXU Corp., as pledgee" and any successor
account.
"COLLATERAL AGENT" has the meaning specified in the first paragraph of
this Agreement.
"COMMON STOCK" has the meaning specified in the Recitals.
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"COMPANY" means the Person named as the "Company" in the first
paragraph of this Agreement until a successor shall have become such, and
thereafter "Company" shall mean such successor.
"CUSTODIAL AGENT" has the meaning specified in the first paragraph of
this Agreement.
"DEBT SECURITIES" has the meaning specified in the Recitals.
"INDENTURE" means the Indenture dated as of October 1, 2001 between
the Company and the Indenture Trustee pursuant to which the Debt Securities are
to be issued, as originally executed and delivered and as it may from time to
time be supplemented or amended by one or more indentures supplemental thereto
entered into pursuant to the applicable provisions thereof and shall include the
terms of a particular series of securities established as contemplated by
Section 301 thereof.
"INTERMEDIARY" means any entity that in the ordinary course of its
business maintains securities accounts for others and is acting in that
capacity.
"PERMITTED INVESTMENTS" means any one of the following which shall
mature not later than the next succeeding Business Day (i) any evidence of
indebtedness with an original maturity of 365 days or less issued, or directly
and fully guaranteed or insured, by the United States of America or any agency
or instrumentality thereof (provided that the full faith and credit of the
United States of America is pledged in support thereof or such indebtedness
constitutes a general obligation of it); (ii) deposits, certificates of deposit
or acceptances with an original maturity of 365 days or less of any institution
which is a member of the Federal Reserve System having combined capital and
surplus and undivided profits of not less than U.S. $200 million at the time of
deposit; (iii) investments with an original maturity of 365 days or less of any
Person that is fully and unconditionally guaranteed by a bank referred to in
clause (ii); (iv) investments in commercial paper, other than commercial paper
issued by the Company or its affiliates, of any corporation incorporated under
the laws of the United States or any State thereof, which commercial paper has a
rating at the time of purchase at least equal to "A-1" by Standard & Poor's
Ratings Services ("S&P") or at least equal to "P-1" by ▇▇▇▇▇'▇ Investors
Service, Inc. ("Moody's"); and (v) investments in money market funds registered
under the Investment Company Act of 1940, as amended, rated in the highest
applicable rating category by S&P or Moody's.
"PERSON" means any individual, corporation, limited liability company,
partnership, joint venture, association, joint-stock company, trust,
unincorporated organization or government or any agency or political subdivision
thereof.
"PLEDGE" has the meaning specified in Section 2.1 hereof.
"PLEDGED APPLICABLE OWNERSHIP INTEREST IN A TREASURY PORTFOLIO" has
the meaning specified in Section 2.1 hereof.
"PLEDGED DEBT SECURITIES" has the meaning specified in Section 2.1
hereof.
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"PLEDGED TREASURY SECURITIES" has the meaning specified in Section 2.1
hereof.
"PROCEEDS" means all interest, dividends, cash, instruments,
securities, financial assets (as defined in Section 8-102(a)(9) of the Code) and
other property from time to time received, receivable or otherwise distributed
upon the sale, exchange, collection or disposition of the Collateral or any
proceeds thereof.
"PURCHASE CONTRACT" has the meaning specified in the Recitals.
"PURCHASE CONTRACT AGENT" has the meaning specified in the first
paragraph of this Agreement.
"PURCHASE CONTRACT AGREEMENT" has the meaning specified in the
Recitals.
"REMAINING STATED AMOUNT" means $25.
"SECURITIES" has the meaning specified in the Recitals.
"SECURITIES INTERMEDIARY" has the meaning specified in the first
paragraph of this Agreement.
"SECURITY ENTITLEMENT" has the meaning set forth in Section
8-102(a)(17) of the Code.
"SEPARATE DEBT SECURITIES" means any Debt Securities that are not
Pledged Debt Securities.
"STATED AMOUNT" has the meaning specified in the Recitals.
"TRADES" means the Treasury/Reserve Automated Debt Entry System
maintained by the Federal Reserve Bank of
New York pursuant to the TRADES
Regulations.
"TRADES REGULATIONS" means the regulations of the United States
Department of the Treasury, published at 31 C.F.R. Part 357, as amended from
time to time. Unless otherwise defined herein, all terms defined in the TRADES
Regulations are used herein as therein defined.
"TRANSFER" means, with respect to the Collateral and in accordance
with the instructions of the Collateral Agent, the Purchase Contract Agent or
the Holder, as applicable:
(i) except as otherwise provided in Section 2.1 hereof, in the case of
Collateral consisting of securities which cannot be delivered by book-entry
or which the parties agree are to be delivered in physical form, delivery
in appropriate physical form to the recipient accompanied by any duly
executed instruments of transfer, assignments in blank, transfer tax stamps
and any other documents necessary to constitute a legally valid transfer to
the recipient; and
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(ii) in the case of Collateral consisting of securities maintained in
book-entry form, by causing a "securities intermediary" (as defined in
Section 8-102(a)(14) of the Code) to (i) credit a "security entitlement"
(as defined in Section 8-102(a)(17) of the Code) with respect to such
securities to a "securities account" (as defined in Section 8-501(a) of the
Code) maintained by or on behalf of the recipient and (ii) to issue a
confirmation to the recipient with respect to such credit. In the case of
Collateral to be delivered to the Collateral Agent, the securities
intermediary shall be the Securities Intermediary and the securities
account shall be the Collateral Account.
"TREASURY SECURITY" has the meaning specified in the Recitals.
"TRUSTEE" means The Bank of
New York, as trustee under the Indenture
until a successor is appointed thereunder, and thereafter means such successor
trustee.
"VALUE" with respect to any item of Collateral on any date means, as
to (i) Debt Securities of either series, the aggregate principal amount thereof,
(ii) Cash, the face amount thereof and (iii) Treasury Securities, the aggregate
principal amount thereof at maturity; provided however, that in the case of the
remarketing of Series K Notes and Series L Notes on the third Business Day
immediately preceding each of August 16, 2004 and August 16, 2005, respectively,
Value means the applicable Treasury Portfolio Purchase Price.
SECTION 2. PLEDGE; CONTROL AND PERFECTION.
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SECTION 2.1. THE PLEDGE.
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The Holders from time to time acting through the Purchase Contract
Agent, as their attorney-in-fact, and the Purchase Contract Agent, as such
attorney-in-fact, hereby pledge and grant to the Collateral Agent, for the
benefit of the Company, as collateral security for the performance when due by
such Holders of their respective obligations under the related Purchase
Contracts, a security interest in (i) all of the right, title and interest of
such Holders and the Purchase Contract Agent (a) in the Debt Securities and
Treasury Securities constituting a part of the Securities and any Treasury
Securities delivered in exchange for any Debt Securities, and any Debt
Securities delivered in exchange for any Treasury Securities, in accordance with
Section 4 hereof, in each case that have been Transferred to or received by the
Collateral Agent and not released by the Collateral Agent to such Holders under
the provisions of this Agreement; (b) in payments made by Holders pursuant to
Section 4.4; (c) in the Collateral Account and all securities, financial assets,
Cash and other property credited thereto and all Security Entitlements related
thereto; (d) in the appropriate Applicable Ownership Interest in a Treasury
Portfolio purchased on behalf of the Holders of Corporate Units by the
Collateral Agent upon (i) the occurrence of a Tax Event Redemption as provided
in Section 6.2 or (ii) upon the occurrence of a successful remarketing of the
Series K Notes or the Series L Notes, as the case may be, and (e) all Proceeds
of the foregoing (all of the foregoing, collectively, the "Collateral"). Prior
to or concurrently with the execution and delivery of this Agreement, the
Purchase Contract Agent, on behalf of the initial Holders of the Securities,
shall cause the Debt Securities comprising a part of the Corporate Units to be
Transferred to the Collateral Agent for the benefit of the Company. Such Debt
Securities shall be Transferred by physically delivering such Debt Securities to
the Collateral Agent endorsed in blank. Treasury Securities and any Treasury
Portfolio, as applicable, shall be Transferred to the Collateral Account
6
maintained by the Collateral Agent at the Securities Intermediary by book-entry
transfer to the Collateral Account in accordance with the TRADES Regulations and
other applicable law and by the notation by the Securities Intermediary on its
books that a Security Entitlement with respect to such Treasury Securities or
Treasury Portfolio has been credited to the Collateral Account. For purposes of
perfecting the Pledge under applicable law, including, to the extent applicable,
the TRADES Regulations or the Uniform Commercial Code as adopted and in effect
in any applicable jurisdiction, the Collateral Agent shall be the agent of the
Company as provided herein. The pledge provided in this Section 2.1 is herein
referred to as the "Pledge" and the Debt Securities, Treasury Securities or any
Treasury Portfolio subject to the Pledge, excluding any Debt Securities or
Treasury Securities or interest in any Treasury Portfolio released from the
Pledge as provided in Section 4 hereof, are hereinafter referred to as "Pledged
Debt Securities", the "Pledged Treasury Securities," or "Pledged Applicable
Ownership Interest in a Treasury Portfolio," respectively, and collectively, the
"Pledged Securities." Subject to the Pledge and the provisions of Section 2.2
hereof, the Holders from time to time shall have full beneficial ownership of
the Collateral. The Collateral Agent shall have the right to have the Debt
Securities or any other Securities held in physical form reregistered in its
name or in the name of its agent or the Securities Intermediary and credited to
the Collateral Account.
Except as may be required in order to release Debt Securities (or, if
(i) a Tax Event Redemption or (ii) a successful remarking of the Series K Notes
or Series L Notes, as the case may be, has occurred, the appropriate Applicable
Ownership Interest in a Treasury Portfolio) or Treasury Securities in connection
with a Holder's election to convert its investment from Corporate Units to
Treasury Units, or from Treasury Units to Corporate Units, as the case may be,
or except as otherwise required to release Pledged Securities as specified
herein, neither the Collateral Agent nor the Securities Intermediary shall
relinquish physical possession of any certificate evidencing Debt Securities
(or, if (i) a Tax Event Redemption or (ii) a successful remarking of the Series
K Notes or Series L Notes, as the case may be, has occurred, the appropriate
Applicable Ownership Interest in a Treasury Portfolio) or Treasury Securities
prior to the termination of this Agreement. If it becomes necessary for the
Collateral Agent to relinquish physical possession of a certificate in order to
release a portion of the Debt Securities evidenced thereby from the Pledge, the
Collateral Agent shall use its best efforts to obtain physical possession of a
replacement certificate evidencing any Debt Securities remaining subject to the
Pledge hereunder registered to it or endorsed in blank within ten days of the
date it relinquished possession. The Collateral Agent shall promptly notify the
Company of its failure to obtain possession of any such replacement certificate
as required hereby.
SECTION 2.2. CONTROL AND PERFECTION.
----------------------
(a) In connection with the Pledge granted in Section 2.1, and subject
to the other provisions of this Agreement, the Holders from time to time acting
through the Purchase Contract Agent, as their attorney-in-fact, hereby authorize
and direct the Securities Intermediary (without the necessity of obtaining the
further consent of the Purchase Contract Agent or any of the Holders), and the
Securities Intermediary agrees, to comply with and follow any instructions and
entitlement orders (as defined in Section 8-102(a)(8) of the Code) that the
Collateral Agent on behalf of the Company may give in writing with respect to
the Collateral Account, the Collateral credited thereto and any Security
Entitlements with respect to any thereof. Such instructions and entitlement
7
orders may, without limitation, direct the Securities Intermediary to transfer,
redeem, sell, liquidate, assign, deliver or otherwise dispose of the Debt
Securities, the Treasury Securities, any Treasury Portfolio and any Security
Entitlements with respect thereto and to pay and deliver any income, proceeds or
other funds derived therefrom to the Company. The Purchase Contract Agent and
the Holders from time to time, acting through the Purchase Contract Agent, each
hereby further authorize and direct the Collateral Agent, as Agent of the
Company, to itself issue instructions and entitlement orders, and to otherwise
take action, with respect to the Collateral Account, the Collateral credited
thereto and any Security Entitlements with respect thereto, pursuant to the
terms and provisions hereof, all without the necessity of obtaining the further
consent of the Purchase Contract Agent or any of the Holders. The Collateral
Agent shall be the Agent of the Company and shall act as directed in writing by
the Company. Without limiting the generality of the foregoing, the Collateral
Agent shall issue entitlement orders to the Securities Intermediary when and as
directed by the Company.
(b) The Securities Intermediary hereby confirms and agrees that: (i)
all securities or other property underlying any financial assets credited to the
Collateral Account shall be registered in the name of the Securities
Intermediary, indorsed to the Securities Intermediary or in blank or credited to
another Collateral Account maintained in the name of the Securities Intermediary
and in no case will any financial asset credited to the Collateral Account be
registered in the name of the Purchase Contract Agent, the Company or any
Holder, payable to the order of, or specially indorsed to, the Purchase Contract
Agent, the Collateral Agent, the Company or any Holder except to the extent the
foregoing have been specially indorsed to the Securities Intermediary or in
blank; (ii) all property delivered to the Securities Intermediary pursuant to
this
Pledge Agreement (including, without limitation, any Debt Securities, any
Treasury Portfolio or any Treasury Securities) will be promptly credited to the
Collateral Account; (iii) the Collateral Account is an account to which
financial assets are or may be credited, and the Securities Intermediary shall,
subject to the terms of this Agreement, treat the Purchase Contract Agent as
entitled to exercise the rights of any financial asset credited to the
Collateral Account; (iv) the Securities Intermediary has not entered into, and
until the termination of this Agreement will not enter into, any agreement with
any other Person relating to the Collateral Account and/or any financial assets
credited thereto pursuant to which it has agreed to comply with entitlement
orders (as defined in Section 8-102(a)(8) of the Code) of such other Person; and
(v) the Securities Intermediary has not entered into, and until the termination
of this Agreement will not enter into, any agreement with the Company, the
Collateral Agent, the Purchase Contract Agent or the Holders of the Securities
purporting to limit or condition the obligation of the Securities Intermediary
to comply with entitlement orders as set forth in this Section 2.2 hereof.
(c) The Securities Intermediary hereby agrees that each item of
property (whether investment property, financial asset, security, instrument or
cash) credited to the Collateral Account shall be treated as a "financial asset"
within the meaning of Section 8-102(a)(9) of the Code.
(d) In the event of any conflict between this Agreement (or any
portion thereof) and any other agreement now existing or hereafter entered into,
the terms of this Agreement shall prevail.
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(e) The Purchase Contract Agent hereby irrevocably constitutes and
appoints the Collateral Agent and the Company, and each of them severally, with
full power of substitution, as the Purchase Contract Agent's attorney-in-fact to
take on behalf of, and in the name, place and stead of the Purchase Contract
Agent and the Holders, any action necessary or desirable to perfect and to keep
perfected the security interest in the Collateral referred to in Section 2.1.
The grant of such power-of-attorney shall not be deemed to require of the
Collateral Agent any specific duties or obligations not otherwise assumed by the
Collateral Agent hereunder.
SECTION 3. DISTRIBUTIONS ON PLEDGED COLLATERAL.
-----------------------------------
So long as the Purchase Contract Agent is the registered owner of the
Pledged Debt Securities, it shall receive all payments thereon. If the Pledged
Debt Securities are reregistered, such that the Collateral Agent becomes the
registered holder, all payments of principal or interest on such Pledged Debt
Securities, together with any payments of principal or interest or cash
distributions in respect of any other Pledged Securities received by the
Collateral Agent that are properly payable hereunder shall be paid by the
Collateral Agent by wire transfer in same day funds:
(a) In the case of (A) payment of interest with respect to the Pledged
Debt Securities or cash distributions on the appropriate Pledged Applicable
Ownership Interest in a Treasury Portfolio (as specified in clauses (1)(ii),
(2)(ii), (3)(A)(ii) or (3)(B)(ii) of the definition of the term Applicable
Ownership Interest in the Purchase Contract Agreement), as the case may be, and
(B) any payments of principal with respect to any Debt Securities or the
appropriate Applicable Ownership Interest (as specified in clauses (1)(i),
(2)(i), (3)(A)(i) or (3)(B)(i) of the definition of such term) in a Treasury
Portfolio, as the case may be, that have been released from the Pledge pursuant
to Section 4.3 hereof, to the Purchase Contract Agent, for the benefit of the
relevant Holders of Corporate Units, to the account designated by the Purchase
Contract Agent for such purpose, no later than 2:00 p.m.,
New York City time, on
the Business Day such payment is received by the Collateral Agent (provided that
in the event such payment is received by the Collateral Agent on a day that is
not a Business Day or after 12:30 p.m., New York City time, on a Business Day,
then such payment shall be made no later than 10:30 a.m., New York City time, on
the next succeeding Business Day);
(b) In the case of any principal payments with respect to any Treasury
Securities that have been released from the Pledge pursuant to Section 4.3
hereof, to the Holders of the Treasury Units 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
(c) In the case of payments of the principal of any Pledged Debt
Securities or on the appropriate Pledged Applicable Ownership Interest in a
Treasury Portfolio (as specified in clauses (1)(i), (2)(i), (3)(A)(i) or
(3)(B)(i) of the definition of Applicable Ownership Interest in the Purchase
Contract Agreement), as the case may be, or the principal of any Pledged
9
Treasury Securities, to the Company on the applicable Purchase Contract
Settlement Date in accordance with the procedure set forth in Section 4.6(a) or
4.6(b) hereof, in full satisfaction of the respective obligations of the Holders
under the applicable portion of the related Purchase Contracts.
All payments received by the Purchase Contract Agent as provided herein shall be
applied by the Purchase Contract Agent pursuant to the provisions of the
Purchase Contract Agreement. If, notwithstanding the foregoing, the Purchase
Contract Agent shall receive any payments of principal on account of any Debt
Security or, if applicable, the appropriate Applicable Ownership Interest (as
specified in clauses (1)(i), (2)(i), (3)(A)(i) or (3)(B)(i) of the definition of
such term) that, at the time of such payment, is a Pledged Debt Security or a
Pledged Applicable Ownership Interest in a Treasury Portfolio, as the case may
be, or a Holder of a Treasury Unit shall receive any payments of principal on
account of any Treasury Securities that, at the time of such payment, are
Pledged Treasury Securities, the Purchase Contract Agent or such Holder, as the
case may be, shall transfer the Proceeds of such payment of principal on such
Pledged Debt Security, Pledged Applicable Ownership Interest in a Treasury
Portfolio or Pledged Treasury Securities, as the case may be, to the Collateral
Agent and the Collateral Agent shall hold such Proceeds for the benefit of the
Company as Collateral for the performance when due by such Holder of its
obligations under the related Purchase Contracts.
SECTION 4. SUBSTITUTION, RELEASE, REPLEDGE AND SETTLEMENT OF DEBT SECURITIES.
-----------------------------------------------------------------
SECTION 4.1. SUBSTITUTION FOR DEBT SECURITIES AND THE CREATION OF
----------------------------------------------------
TREASURY UNITS.
--------------
A Holder of a Corporate Unit may, at any time on or prior to the fifth
Business Day immediately preceding the Second Purchase Contract Settlement Date,
create or recreate a Treasury Unit and separate the Debt Securities or the
appropriate Applicable Ownership Interest in a Treasury Portfolio, as
applicable, from the related Purchase Contract in respect of such Corporate Unit
by substituting 3-Year Treasury Securities and 4-Year Treasury Securities for
all, but not less than all, of the Series K Note and the Series L Note,
respectively, or appropriate Applicable Ownership Interest in a 3-Year Treasury
Portfolio or 4-Year Treasury Portfolio, respectively, or a Tax Event Treasury
Portfolio, as the case may be, that form a part of such Corporate Unit in
accordance with this Section 4.1 and 3.13 of the Purchase Contract Agreement;
provided, however, that if a Treasury Portfolio has not replaced any Debt
Securities as a component of Corporate Units as a result of a successful
remarketing or a Tax Event Redemption, 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; if a 3-Year Treasury Portfolio has replaced Series K Notes as a
component of Corporate Units as a result of a successful remarketing of Series K
Notes, and a Tax Event Redemption has not occurred, such Collateral
Substitutions may not be made during the period from the second Business Day
immediately preceding the First Purchase Contract Settlement Date through the
10
First Purchase Contract Settlement Date; and if a Tax Event Redemption has
occurred or the 4-Year Treasury Portfolio has replaced the Series L Notes as a
result of a successful remarketing of the Series L Notes, Holders of such
Corporate Units 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 and establish Treasury Units (i) only in integral multiples of 40
Corporate Units if only Debt Securities are being substituted by Treasury
Securities, or (ii) only in integral multiples of 1,600,000 Corporate Units if
the appropriate Applicable Ownership Interests in any Treasury Portfolio are
being substituted by any Treasury Security. To create 40 Treasury Units (if a
Tax Event Redemption has not occurred and Series K Notes and Series L Notes
remain components of Corporate Units), or 1,600,000 Treasury Units (if a Tax
Event Redemption has occurred or a Treasury Portfolio has replaced either series
of Debt Securities as a result of a successful remarketing of such Debt
Securities), the Corporate Unit Holder shall
(a) if a Treasury Portfolio has not replaced any Debt Securities as a
component of Corporate Units as a result of a successful remarketing or a Tax
Event Redemption, (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 3-Year Treasury Portfolio has replaced Series K Notes as a
component of Corporate Units as a result of a successful remarketing of Series K
Notes and a Tax Event Redemption has not occurred, 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
(c) if a 4-Year Treasury Portfolio has replaced Series L Notes as a
component of Corporate Units as a result of a successful remarketing of Series L
Notes or 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
(d) in each case, transfer the 40 Corporate Units, or, in the event a
Treasury Portfolio is a component of Corporate Units, 1,600,000 Corporate Units,
to the Purchase Contract Agent accompanied by a notice to the Purchase Contract
Agent, substantially in the form of Exhibit B hereto, stating that the Holder
has transferred the relevant types and amounts of Treasury Securities to the
Collateral Agent and requesting that the Purchase Contract Agent instruct the
Collateral Agent to release the applicable Debt Securities or the appropriate
Applicable Ownership Interest in the relevant Treasury Portfolio, as the case
may be, underlying such Corporate Unit, whereupon the Purchase Contract Agent
shall promptly give such instruction to the Collateral Agent, substantially in
the form of Exhibit A hereto.
11
Upon receipt of the Treasury Securities described in clause (a), (b)
or (c) above and the instructions described in clause (d) above,the Collateral
Agent shall release the Pledged Debt Securities or the appropriate Applicable
Ownership Interest in a Treasury Portfolio, as the case may be, and shall
promptly Transfer such Pledged Debt Securities or the appropriate Applicable
Ownership Interest in a Treasury Portfolio, as the case may be, free and clear
of the lien, pledge or security interest created hereby, to the Purchase
Contract Agent.
SECTION 4.2. SUBSTITUTION FOR TREASURY SECURITIES AND THE CREATION OF
--------------------------------------------------------
CORPORATE UNITS.
---------------
A Holder of a Treasury Unit may, at any time on or prior to the fifth
Business Day immediately preceding the Second Purchase Contract Settlement Date,
create or recreate Corporate Units by depositing with the Collateral Agent Debt
Securities or the appropriate Applicable Ownership Interest in a 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 Treasury Unit
in accordance with this Section 4.2 and 3.14 of the Purchase Contract Agreement;
provided, however, that if a Treasury Portfolio has not replaced any Debt
Securities as a component of Corporate Units as a result of a successful
remarketing or a Tax Event Redemption, 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; if a 3-Year Treasury Portfolio has replaced Series K Notes as a
component of Corporate Units as a result of a successful remarketing of Series K
Notes and a Tax Event Redemption has not occurred, such Collateral Substitutions
may not be made during the period from the second Business Day immediately
preceding the First Purchase Contract Settlement Date through the First Purchase
Contract Settlement Date; and if a Tax Event Redemption has occurred or the
4-Year Treasury Portfolio has replaced the Series L Notes as a result of a
successful remarketing of the Series L Notes, Holders of Treasury Units 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 Treasury Units may make such Collateral Substitutions and
establish Corporate Units (i) only in integral multiples of 40 Treasury Units if
Treasury Securities are being replaced by only Debt Securities, or (ii) only in
integral multiples of 1,600,000 Treasury Units if any Treasury Security is being
replaced by the Applicable Ownership Interest in a Treasury Portfolio. To create
40 Corporate Units (if a Tax Event Redemption has not occurred and Series K
Notes and Series L Notes remain components of Corporate Units), or 1,600,000
Corporate Units (if a Tax Event Redemption has occurred or a Treasury Portfolio
has replaced either series of Debt Securities as a result of a successful
remarketing of such Debt Securities), the Treasury Unit Holder shall
(a) if a Treasury Portfolio has not replaced any Debt Securities as a
component of Corporate Units as a result of a successful remarketing or a Tax
Event Redemption, (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 K Notes and $1,000 in aggregate principal
amount of Series L Notes, or (ii) after the First Purchase Contract Settlement
12
Date, deposit with the Collateral Agent $1,000 in aggregate principal amount of
Series L Notes; or
(b) if a 3-Year Treasury Portfolio has replaced Series K Notes as a
component of Corporate Units as a result of a successful remarketing of Series K
Notes and a Tax Event Redemption has not occurred, prior to the second Business
Day immediately preceding the First Purchase Contract Settlement Date, deposit
with the Collateral Agent the Applicable Ownership Interest in a 3-Year Treasury
Portfolio and $40,000,000 aggregate principal amount of Series L Notes; or
(c) if a 4-Year Treasury Portfolio has replaced Series L Notes as a
component of Corporate Units as a result of a successful remarketing of Series L
Notes or a Tax Event Redemption has occurred prior to the second Business Day
immediately preceding the Second Purchase Contract Settlement Date, deposit with
the Collateral Agent the Applicable Ownership Interest in the applicable
Treasury Portfolio for each 1,600,000 Corporate Units 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
(d) in each case, transfer and surrender the related 40 Treasury
Units, or in the event a Treasury Portfolio is a component of Corporate Units,
1,600,000 Corporate Units, to the Purchase Contract Agent accompanied by a
notice to the Purchase Contract Agent, substantially in the form of Exhibit B
hereto, stating that the Holder has transferred the relevant amount of Debt
Securities or the appropriate Applicable Ownership Interest in the relevant
Treasury Portfolio, as the case may be, to the Collateral Agent and requesting
that the Purchase Contract Agent instruct the Collateral Agent to release the
Treasury Securities underlying such Treasury Units, whereupon the Purchase
Contract Agent shall promptly give such instruction to the Collateral Agent,
substantially in the form of Exhibit A hereto.
Upon receipt of the Debt Securities or the appropriate Applicable
Ownership Interest in the applicable Treasury Portfolio, as the case may be,
described in clause (a), (b) or (c) above and the instructions described in
clause (d) above, from the Purchase Contract Agent, the Collateral Agent shall
release the related Pledged Treasury Securities and shall promptly Transfer such
Pledged Treasury Securities, free and clear of the lien, pledge or security
interest created hereby, to the Purchase Contract Agent.
SECTION 4.3. TERMINATION EVENT.
-----------------
Upon receipt by the Collateral Agent of written notice from the
Company or the Purchase Contract Agent that there has occurred a Termination
Event, the Collateral Agent shall release all Collateral from the Pledge and
shall promptly Transfer any Pledged Debt Securities (or, if (i) a Tax Event
Redemption or (ii) a successful remarketing of the Series K Notes or Series L
Notes, as the case may be, has occurred, the Pledged Applicable Ownership
Interest in a Treasury Portfolio) and Pledged Treasury Securities to the
Purchase Contract Agent for the benefit of the Holders of the Corporate Units
and the Treasury Units, respectively, free and clear of any lien, pledge or
security interest or other interest created hereby.
13
If such Termination Event shall result from the Company's becoming a
debtor under the Bankruptcy Code, and if the Collateral Agent shall for any
reason fail promptly to effectuate the release and Transfer of all Pledged Debt
Securities, Pledged Applicable Ownership Interest in a Treasury Portfolio or the
Pledged Treasury Securities, as the case may be, as provided by this Section
4.3, any Holder may, and the Purchase Contract Agent shall, upon receipt from
the Holders of reasonable security or indemnity against the costs, expenses and
liabilities which might be incurred by the Purchase Contract Agent in compliance
with this paragraph, (i) use its reasonable best efforts to obtain an opinion of
a nationally recognized law firm reasonably acceptable to the Collateral Agent
to the effect that, as a result of the Company's being the debtor in such a
bankruptcy case, the Collateral Agent will not be prohibited from releasing or
Transferring the Collateral as provided in this Section 4.3, and shall deliver
such opinion to the Collateral Agent within ten days after the occurrence of
such Termination Event, and if (y) any such Holder or the Purchase Contract
Agent shall be unable to obtain such opinion within ten days after the
occurrence of such Termination Event or (z) the Collateral Agent shall continue,
after delivery of such opinion, to refuse to effectuate the release and Transfer
of all Pledged Debt Securities, Pledged Applicable Ownership Interest in a
Treasury Portfolio or the Pledged Treasury Securities, as the case may be, as
provided in this Section 4.3, then any Holder may, and the Purchase Contract
Agent shall, within fifteen days after the occurrence of such Termination Event
commence an action or proceeding in the court with jurisdiction of the Company's
case under the Bankruptcy Code seeking an order requiring the Collateral Agent
to effectuate the release and transfer of all Pledged Debt Securities, a
Treasury Portfolio or the Pledged Treasury Securities, as the case may be, as
provided by this Section 4.3 or (ii) commence an action or proceeding in the
court with jurisdiction of the Company's case under the Bankruptcy Code like
that described in subsection (i)(z) hereof within ten days after the occurrence
of such Termination Event.
SECTION 4.4. CASH SETTLEMENT.
---------------
(a) Upon receipt by the Collateral Agent of (i) a notice from the
Purchase Contract Agent promptly after the receipt by the Purchase Contract
Agent of such notice that a Holder of a Corporate Unit or Treasury Unit has
elected, in accordance with the procedures specified in Section 5.4(a)(i) or
(d)(i) of the Purchase Contract Agreement, respectively, to settle the
applicable portion of its Purchase Contract with Cash and (ii) payment by such
Holder of the amount required to settle the applicable portion of such Purchase
Contract on or prior to 11:00 a.m., New York City time, on the Business Day
immediately preceding a Purchase Contract Settlement Date in lawful money of the
United States by certified or cashiers' check or wire transfer in immediately
available funds payable to or upon the order of the Company, then the Collateral
Agent shall promptly invest any Cash received from a Holder in connection with a
Cash Settlement in Permitted Investments. Upon receipt of the proceeds upon the
maturity of the Permitted Investments on such Purchase Contract Settlement Date,
the Collateral Agent shall pay the portion of such proceeds and deliver any
certified or cashiers' checks received, in an aggregate amount equal to the
Purchase Price, to the Company on such Purchase Contract Settlement Date, and
shall distribute any funds in respect of the interest earned from the Permitted
Investments to the Purchase Contract Agent for payment to the relevant Holder.
(b) If in connection with a Purchase Contract Settlement Date a Holder
of a Corporate Unit (unless a Treasury Portfolio has replaced the relevant Debt
Securities) fails to notify the Purchase Contract Agent of its intention to make
14
a Cash Settlement in accordance with Section 5.4(a)(i) of the Purchase Contract
Agreement, such failure shall constitute a default under the related Purchase
Contract and hereunder, the Holder shall be deemed to have consented to the
disposition of the related Pledged Debt Securities pursuant to the remarketing
as described in Section 5.4(b) of the Purchase Contract Agreement, which is
incorporated herein by reference, and Section 4.6 hereof, and the Collateral
Agent, for the benefit of the Company, will exercise its rights as a secured
party with respect to applicable Pledged Debt Securities (which shall be the
Series K Notes in connection with the First Purchase Contract Settlement Date
and the Series L Notes in connection with the Second Purchase Contract
Settlement Date) at the direction of the Company to cause the remarketing of
such Pledged Debt Securities. If a Holder of a Corporate Unit (unless a Treasury
Portfolio has replaced the relevant Debt Securities) does notify the Purchase
Contract Agent as provided in Section 5.4(a)(i) of the Purchase Contract
Agreement of its intention to make a Cash Settlement, but fails to make such
payment as required by Section 5.4(a)(ii) of the Purchase Contract Agreement,
such failure shall constitute a default under the related Purchase Contract and
hereunder, and the applicable Pledged Debt Securities of such a Holder will not
be remarketed but instead the Collateral Agent, for the benefit of the Company,
will exercise its rights as a secured party with respect to such Debt Securities
at the direction of the Company to retain or dispose of the Collateral in
accordance with applicable law. In addition, in the event of a Failed
Remarketing as described in Section 5.4(b) of the Purchase Contract Agreement,
such Failed Remarketing shall constitute a default hereunder by such Holder, and
the Collateral Agent, for the benefit of the Company, will also exercise its
rights as a secured party with respect to such Debt Securities at the direction
of the Company to retain or dispose of the Collateral in accordance with
applicable law.
(c) If in connection with a Purchase Contract Settlement Date a Holder
of a Treasury Unit or, if a Treasury Portfolio has replaced the relevant Debt
Securities, a Corporate Unit, fails to notify the Purchase Contract Agent of
such Holder's intention to make a Cash Settlement in accordance with Section
5.4(d)(i) of the Purchase Contract Agreement, or if a Holder of a Treasury Unit
or, if a Treasury Portfolio has replaced the relevant Debt Securities, a
Corporate Unit, notifies the Purchase Contract Agent as provided in paragraph
5.4(d)(i) of the Purchase Contract Agreement of its intention to make a Cash
Settlement, but fails to make such payment as required by paragraph 5.4(d)(ii)
of the Purchase Contract Agreement, such failure shall constitute a default
under the related Purchase Contract and hereunder by such Holder and upon the
maturity of the related Pledged Treasury Securities or the Pledged Applicable
Ownership Interest in a Treasury Portfolio, if any, held by the Collateral Agent
on the Business Day immediately preceding the applicable Purchase Contract
Settlement Date, the principal amount of such Pledged Treasury Securities or the
portion of the Pledged Applicable Ownership Interest in a Treasury Portfolio
corresponding to such Purchase Contract received by the Collateral Agent shall,
upon written direction of the Company, be invested promptly in Permitted
Investments. On the applicable Purchase Contract Settlement Date, an amount
equal to the Purchase Price will be remitted to the Company as payment thereof.
In the event the sum of the proceeds from the appropriate related Pledged
Treasury Securities or Pledged Applicable Ownership Interest in a Treasury
Portfolio (which shall be, in the case of the First Purchase Contract Settlement
Date, the 3-Year Treasury Securities, the portion of the Applicable Ownership
Interest in the 3-Year Treasury Portfolio or Tax Event Treasury Portfolio (as
specified in clauses (1) or 3(A), respectively, of the definition of Applicable
Ownership Interest in the Purchase Contract Agreement), and in the case of the
Second Purchase Contract Settlement Date, the 4-Year Treasury Securities or the
15
Applicable Ownership Interest in the 4-Year Treasury Portfolio or Tax Event
Treasury Portfolio (specified in clauses (2) or 3(B), respectively, of such
definition), as the case may be, and the investment earnings earned from such
investments is in excess of the aggregate Purchase Price of the Purchase
Contracts being settled thereby, the Collateral Agent will distribute such
excess to the Purchase Contract Agent for the benefit of the Holder of the
related Treasury Units or Corporate Units when received.
(d) Series K Notes, 3-Year Treasury Securities, the Applicable
Ownership Interest in the 3-Year Treasury Portfolio and the Applicable Ownership
Interest in a Tax Event Treasury Portfolio in U.S. Treasury Securities maturing
on or prior to November 16, 2004 are pledged to secure Holders' obligations
under the Purchase Contracts on the First Purchase Contract Settlement Date.
Series L Notes, 4-Year Treasury Securities, the Applicable Ownership Interest in
the 4-Year Treasury Portfolio and the Applicable Ownership Interest in a Tax
Event Treasury Portfolio in U.S. Treasury Securities maturing on or prior to
November 16, 2005 are pledged to secure Holders' obligations under the Purchase
Contracts on the Second Purchase Contract Settlement Date.
On the First Purchase Contract Settlement Date, the Collateral Agent
shall exercise remedies with respect to (and have remarketed or otherwise sell
in accordance with this Agreement) only the Series K Notes, 3-Year Treasury
Securities (or the corresponding Applicable Ownership Interest in a Treasury
Portfolio) and associated payments and Proceeds; on the Second Purchase Contract
Settlement Date the Collateral Agent may exercise remedies with respect to all
then remaining Collateral.
A default by a Holder in the performance of its obligations under a
Purchase Contract in connection with the First Purchase Contract Settlement
shall not in itself constitute a default in the performance of its obligations
under such Purchase Contract on the Second Purchase Contract Settlement Date
(except in connection with Early Settlement).
SECTION 4.5. EARLY SETTLEMENT.
----------------
Upon written notice to the Collateral Agent by the Purchase Contract
Agent that a Holder of a Security has elected to effect Early Settlement of its
entire obligation under the Purchase Contract forming a part of such Security in
accordance with the terms of the Purchase Contracts and the Purchase Contract
Agreement, and that the Purchase Contract Agent has received from such Holder,
and paid to the Company as confirmed in writing by the Company, the related
Early Settlement Amount pursuant to the terms of the Purchase Contract and the
Purchase Contract Agreement and that all conditions to such Early Settlement
have been satisfied, then the Collateral Agent shall release from the Pledge,
(a) the Pledged Debt Securities or the appropriate Pledged Applicable Ownership
Interest in a Treasury Portfolio in the case of a Holder of Corporate Units or
(b) the Pledged Treasury Securities in the case of a Holder of Treasury Units,
that had been components of such Security and shall Transfer such Pledged Debt
Securities, appropriate Pledged Applicable Ownership Interest in a Treasury
Portfolio or Pledged Treasury Securities, as the case may be, free and clear of
the Pledge created hereby, to the Purchase Contract Agent for the benefit of
such Holder.
16
SECTION 4.6. APPLICATION OF PROCEEDS; SETTLEMENT.
-----------------------------------
(a) In connection with a Purchase Contract Settlement Date, in the
event a Holder of Corporate Units (unless a Treasury Portfolio has replaced the
relevant Debt Securities) has not elected to make an effective Cash Settlement
by notifying the Purchase Contract Agent in the manner provided for in paragraph
5.4(a)(i) in the Purchase Contract Agreement or has not made an Early Settlement
of the Purchase Contract(s) underlying its Corporate Units, such Holder shall be
deemed to have elected to pay for the shares of Common Stock to be issued under
such Purchase Contract(s) from the Proceeds of the related Pledged Debt
Securities. The Collateral Agent shall, by 10:00 a.m., New York City time, on
the fourth Business Day immediately preceding such Purchase Contract Settlement
Date, without any instruction from such Holder of Corporate Units, present the
applicable related Pledged Debt Securities (i.e., Series K Notes in the case of
the First Purchase Contract Settlement Date and Series L Notes in the case of
the Second Purchase Contract Settlement Date) to the Remarketing Agent for
remarketing. Upon receiving such Pledged Debt Securities, the Remarketing Agent,
pursuant to the terms of the Remarketing Agreement, will use its reasonable
efforts to remarket such Pledged Debt Securities on such date at a price not
less than approximately 100.5% of the aggregate Value of such Pledged Debt
Securities, plus accrued and unpaid interest, if any, thereon. After deducting
as the Remarketing Fee an amount not exceeding 25 basis points (.25%) of the
aggregate Value of the related Pledged Debt Securities from any amount of such
Proceeds in excess of the aggregate Value of such Debt Securities, plus such
accrued and unpaid interest on the remarketed Pledged Debt Securities, the
Remarketing Agent will remit the entire amount of the Proceeds of such
remarketing to the Collateral Agent. On the applicable Purchase Contract
Settlement Date, the Collateral Agent shall apply that portion of the Proceeds
from such remarketing equal to the aggregate Value to satisfy in full the
obligations of such Holders of Corporate Units to pay the Purchase Price on such
Purchase Contract Settlement Date to purchase the Common Stock under the related
Purchase Contracts. The remaining portion of such Proceeds, if any, shall be
distributed by the Collateral Agent to the Purchase Contract Agent for payment
to the Holders. If the Remarketing Agent advises the Collateral Agent in writing
that it cannot remarket the related Pledged Debt Securities of such Holders of
Corporate Units at a price not less than 100% of the aggregate Value of such
Pledged Debt Securities plus any accrued and unpaid interest, or if the
remarketing does not occur because a condition precedent to it has not been
fulfilled, thus resulting in a Failed Remarketing, the Collateral Agent, for the
benefit of the Company will, at the written direction of the Company, retain or
dispose of such Pledged Debt Securities in accordance with applicable law and
satisfy in full, from any such disposition or retention, such Holder's
obligation to pay the Purchase Price for the Common Stock.
(b) In the event a Holder of a Treasury Unit or, if a Treasury
Portfolio has replaced the relevant Debt Securities, a Corporate Unit, has not
made an Early Settlement of the Purchase Contract(s) underlying its Treasury
Unit or Corporate Unit, as the case may be, such Holder shall be deemed to have
elected to pay for the shares of Common Stock to be issued under the applicable
portions of such Purchase Contract(s) from the Proceeds of the related Pledged
Treasury Securities or the Treasury Portfolio, as the case may be. On the
Business Day immediately prior to a Purchase Contract Settlement Date, the
Collateral Agent shall, at the written direction of the Purchase Contract Agent,
invest the Cash proceeds of the maturing Pledged Treasury Securities or the
Treasury Portfolio, as the case may be, in overnight Permitted Investments.
17
Without receiving any instruction from any such Holder of Treasury Units or
Corporate Units, the Collateral Agent shall apply the Proceeds of the related
Pledged Treasury Securities or Treasury Portfolio to the related settlement of
such Purchase Contracts on the applicable Purchase Contract Settlement Date. In
the event the sum of the Proceeds from the related Pledged Treasury Securities
or related Pledged Applicable Ownership Interest in a Treasury Portfolio and the
investment earnings from the investment in overnight Permitted Investments is in
excess of the aggregate Purchase Price of the applicable portions of the
Purchase Contracts being settled thereby on a Purchase Contract Settlement Date,
the Collateral Agent shall distribute such excess, when received, to the
Purchase Contract Agent for the benefit of the Holders.
(c) Pursuant to the Remarketing Agreement, on or prior to the fifth
Business Day immediately preceding each Reset Date, but no earlier than the
Payment Date immediately preceding such Reset Date, holders of Separate Debt
Securities may elect to have their Separate Debt Securities of the appropriate
series (in the case of the Series K Reset Date, the Series K Notes, and in the
case of the Series L Reset Date, the Series L Notes), remarketed by delivering
such Separate Debt Securities, together with a notice of such election,
substantially in the form of Exhibit C hereto, to the Custodial Agent. The
Custodial Agent will hold such Separate Debt Securities in an account separate
from the Collateral Account. A holder of Separate Debt Securities electing to
have its Separate Debt Securities remarketed will also have the right to
withdraw such election by written notice to the Custodial Agent, substantially
in the form of Exhibit D hereto, on or prior to the fifth Business Day
immediately preceding the applicable Reset Date, upon which notice the Custodial
Agent will return such Separate Debt Securities to such holder. On the fourth
Business Day immediately preceding the applicable Reset Date, the Custodial
Agent will deliver to the Remarketing Agent for remarketing all Separate Debt
Securities of the applicable series delivered to the Custodial Agent pursuant to
this Section 4.6(c) and not withdrawn pursuant to the terms hereof prior to such
date. The portion of the proceeds from such remarketing equal to the aggregate
Value of such Separate Debt Securities will automatically be remitted by the
Remarketing Agent to the Custodial Agent for the benefit of the holders of such
Separate Debt Securities. In addition, after deducting as the Remarketing Fee an
amount not exceeding 25 basis points (.25%) of the Value of the remarketed
Separate Debt Securities, from any amount of such proceeds in excess of the
aggregate Value of the remarketed Separate Debt Securities plus any accrued and
unpaid interest thereon, the Remarketing Agent will remit to the Custodial Agent
the remaining portion of the proceeds, if any, for the benefit of such holders.
If, despite using its reasonable efforts, the Remarketing Agent advises the
Custodial Agent in writing that it cannot remarket the related Separate Debt
Securities of the applicable series of such holders at a price not less than
100% of the aggregate Value of such Separate Debt Securities plus accrued and
unpaid interest or, if a condition to the remarketing shall not have been
fulfilled, thus in either case resulting in a Failed Remarketing, the
Remarketing Agent will promptly return such Separate Debt Securities to the
Custodial Agent for redelivery to such holders.
SECTION 5. VOTING RIGHTS -- DEBT SECURITIES.
--------------------------------
The Purchase Contract Agent may exercise, or refrain from exercising,
any and all voting and other consensual rights pertaining to the Pledged Debt
Securities or any part thereof for any purpose not inconsistent with the terms
of this Agreement and in accordance with the terms of the Purchase Contract
18
Agreement; provided, that the Purchase Contract Agent shall not exercise or, as
the case may be, shall not refrain from exercising such right if, in the
judgment of the Company, such action would impair or otherwise have a material
adverse effect on the value of all or any of the Pledged Debt Securities; and
provided, further, that the Purchase Contract Agent shall give the Company and
the Collateral Agent at least five days' prior written notice of the manner in
which it intends to exercise, or its reasons for refraining from exercising, any
such right. Upon receipt of any notices and other communications in respect of
any Pledged Debt Securities, including notice of any meeting at which holders of
Debt Securities are entitled to vote or solicitation of consents, waivers or
proxies of holders of Debt Securities, the Collateral Agent shall use reasonable
efforts to send promptly to the Purchase Contract Agent such notice or
communication, and as soon as reasonably practicable after receipt of a written
request therefor from the Purchase Contract Agent, execute and deliver to the
Purchase Contract Agent such proxies and other instruments in respect of such
Pledged Debt Securities (in form and substance satisfactory to the Collateral
Agent) as are prepared by the Purchase Contract Agent with respect to the
Pledged Debt Securities.
SECTION 6. RIGHTS AND REMEDIES; SUBSTITUTION OF A TREASURY PORTFOLIO FOR
-------------------------------------------------------------
DEBT SECURITIES.
---------------
SECTION 6.1. RIGHTS AND REMEDIES OF THE COLLATERAL AGENT.
-------------------------------------------
(a) In addition to the rights and remedies specified in Section 4.4
hereof or otherwise available at law or in equity, after an event of default
hereunder, the Collateral Agent shall have all of the rights and remedies with
respect to the Collateral of a secured party under the Uniform Commercial Code
(or any successor thereto) as in effect in the State of New York from time to
time (the "Code") (whether or not the Code is in effect in the jurisdiction
where the rights and remedies are asserted) and the TRADES Regulations and such
additional rights and remedies to which a secured party is entitled under the
laws in effect in any jurisdiction where any rights and remedies hereunder may
be asserted. Wherever reference is made in this Agreement to any section of the
Code, such reference shall be deemed to include a reference to any provision of
the Code which is a successor to, or amendment of, such section. Without
limiting the generality of the foregoing, such remedies may include, to the
extent permitted by applicable law, (i) retention of the Pledged Debt Securities
or other Collateral in full satisfaction of the Holders' obligations under the
Purchase Contracts or (ii) sale of the Pledged Debt Securities or other
Collateral in one or more public or private sales and application of the
proceeds in full satisfaction of the Holders' obligations under the Purchase
Contracts.
(b) Without limiting any rights or powers otherwise granted by this
Agreement to the Collateral Agent, in the event the Collateral Agent is unable
to make payments to the Company on account of the appropriate Pledged Applicable
Ownership Interest of a Treasury Portfolio (as specified in clauses (1)(i),
(2)(i), (3)(A)(i) or (3)(B)(i) of the definition of the term Applicable
Ownership Interest) or on account of principal payments of any Pledged Treasury
Securities as provided in Section 3 hereof in satisfaction of the obligations of
the Holder of the Securities of which such Pledged Treasury Securities, or the
appropriate Pledged Applicable Ownership Interest of a Treasury Portfolio (as
specified in clauses (1)(i), (2)(i), (3)(A)(i) or (3)(B)(i) of the definition of
the term Applicable Ownership Interest), as applicable, is a part under the
related Purchase Contracts, the inability to make such payments shall constitute
19
an event of default hereunder and the Collateral Agent shall have and may
exercise, with reference to such Pledged Treasury Securities, or such
appropriate Pledged Applicable Ownership Interest of a Treasury Portfolio (as
specified in clauses (1)(i), (2)(i), (3)(A)(i) or (3)(B)(i) of the definition of
the term Applicable Ownership Interest), as applicable, and such obligations of
such Holder, any and all of the rights and remedies available to a secured party
under the Code and the TRADES Regulations after default by a debtor, and as
otherwise granted herein or under any other law.
(c) Without limiting any rights or powers otherwise granted by this
Agreement to the Collateral Agent, the Collateral Agent is hereby irrevocably
authorized to receive and collect all payments of (i) principal of, or interest
on, the Pledged Debt Securities, (ii) the principal amount of the Pledged
Treasury Securities, or (iii) the appropriate Pledged Applicable Ownership
Interest in a Treasury Portfolio, subject, in each case, to the provisions of
Section 3, and as otherwise granted herein.
(d) The Purchase Contract Agent individually and as attorney-in-fact
for each Holder of Securities, in the event such Holder becomes the Holder of
Treasury Units or Corporate Units, agrees that, from time to time, upon the
written request of the Collateral Agent, the Purchase Contract Agent or such
Holder shall execute and deliver such further documents and do such other acts
and things as the Collateral Agent may reasonably request in order to maintain
the Pledge, and the perfection and priority thereof, and to confirm the rights
of the Collateral Agent hereunder. The Purchase Contract Agent shall have no
liability to any Holder for executing any documents or taking any such acts
requested by the Collateral Agent hereunder, except for liability for its own
negligent act, its own negligent failure to act or its own willful misconduct.
SECTION 6.2. SUBSTITUTION OF A TREASURY PORTFOLIO FOR DEBT SECURITIES.
--------------------------------------------------------
(a) Upon the occurrence of a Tax Event Redemption prior to the Second
Purchase Contract Settlement Date, the Collateral Agent will, upon the written
instruction of the Company and the Purchase Contract Agent, deliver the
Applicable Principal Amount of Pledged Debt Securities to the Trustee for
payment of the Redemption Price. The Collateral Agent shall, or in the event the
Pledged Debt Securities are registered in the name of the Purchase Contract
Agent, the Purchase Contract Agent shall, direct the Trustee to pay the
Redemption Price therefor payable on the Tax Event Redemption Date on or prior
to 12:30 p.m., New York City time, such Redemption Price to be paid by check or
wire transfer in immediately available funds at such place and at such account
as may be designated by the Collateral Agent. In the event the Collateral Agent
receives such Redemption Price, the Collateral Agent will, at the written
direction of the Company, apply an amount equal to the Redemption Amount of such
Redemption Price to purchase from the Quotation Agent, the Tax Event Treasury
Portfolio and promptly remit the remaining portion of such Redemption Price to
the Purchase Contract Agent for payment to the Holders of Corporate Units. The
Collateral Agent shall Transfer the Tax Event Treasury Portfolio to the
Collateral Account in the manner specified herein for Pledged Debt Securities to
secure the obligation of all Holders of Corporate Units to purchase Common Stock
of the Company under the Purchase Contracts constituting a part of such
Corporate Units, in substitution for the Pledged Debt Securities. Thereafter the
Collateral Agent shall have such security interests, rights and obligations with
respect to the Tax Event Treasury Portfolio as it had in respect of the Pledged
20
Debt Securities, as provided in Sections 2, 3, 4, 5 and 6, and any reference
herein to the Pledged Debt Securities shall be deemed to be a reference to such
Tax Event Treasury Portfolio.
(b) Upon the successful remarketing of Series K Notes on the third
Business Day immediately preceding August 16, 2004, the proceeds of such
remarketing (after deducting any Remarketing Fee) shall be delivered to the
Collateral Agent in exchange for the Pledged Series K Notes. Pursuant to the
terms of this Agreement, the Collateral Agent will apply an amount equal to the
3-Year Treasury Portfolio Purchase Price to purchase on behalf of the Holders of
Corporate Units the 3-Year Treasury Portfolio and promptly remit the remaining
portion of such proceeds to the Purchase Contract Agent for payment to the
Holders of such Corporate Units. The 3-Year Treasury Portfolio will be
substituted for the outstanding Pledged Series K Notes, and will be held by the
Collateral Agent in accordance with the terms of this Agreement to secure the
obligation of each Holder of a Corporate Unit to purchase the Common Stock of
the Company on the First Purchase Contract Settlement Date under the Purchase
Contract constituting a part of such Corporate Unit. Following the remarketing
of the Pledged Series K Notes on the third business day immediately preceding
August 16, 2004, the Holders of Corporate Units and the Collateral Agent shall
have such security interests, rights and obligations with respect to the 3-Year
Treasury Portfolio as the Holder of Corporate Units and the Collateral Agent had
in respect of the Pledged Series K Notes subject to the Pledge thereof as
provided in Sections 2, 3, 4, 5 and 6 of this Agreement, and any reference
herein to the Pledged Series K Notes shall be deemed to be reference to such
3-Year Treasury Portfolio.
(c) Upon the successful remarketing of Series L Notes on the third
Business Day immediately preceding August 16, 2005, the proceeds of such
remarketing (after deducting any Remarketing Fee) shall be delivered to the
Collateral Agent in exchange for the Pledged Series L Notes. Pursuant to the
terms of the this Agreement, the Collateral Agent will apply an amount equal to
the 4-Year Treasury Portfolio Purchase Price to purchase on behalf of the
Holders of Corporate Units the 4-Year Treasury Portfolio and promptly remit the
remaining portion of such proceeds to the Purchase Contract Agent for payment to
the Holders of such Corporate Units. The 4-Year Treasury Portfolio will be
substituted for the outstanding Pledged Series L Notes, and will be held by the
Collateral Agent in accordance with the terms of this Agreement to secure the
obligation of each Holder of a Corporate Unit to purchase the Common Stock of
the Company on the Second Purchase Contract Settlement Date under the Purchase
Contract constituting a part of such Corporate Unit. Following the remarketing
of the Pledged Series L Notes on the third business day immediately preceding
August 16, 2005, the Holders of Corporate Units and the Collateral Agent shall
have such security interests, rights and obligations with respect to the 4-Year
Treasury Portfolio as the Holder of Corporate Units and the Collateral Agent had
in respect of the Pledged Series L Notes subject to the Pledge thereof as
provided in Sections 2, 3, 4, 5 and 6 of this Agreement, and any reference
herein to the Pledged Series L Notes shall be deemed to be reference to such
4-Year Treasury Portfolio.
SECTION 6.3. SUBSTITUTIONS.
-------------
Whenever a Holder has the right to substitute Treasury Securities,
Debt Securities or the appropriate Applicable Ownership Interest in a Treasury
Portfolio, as the case may be, for Collateral held by the Collateral Agent, such
21
substitution shall not constitute a novation of the security interest created
hereby.
SECTION 7. REPRESENTATIONS AND WARRANTIES; COVENANTS.
-----------------------------------------
SECTION 7.1. REPRESENTATIONS AND WARRANTIES.
------------------------------
The Holders from time to time, acting through the Purchase Contract
Agent as their attorney-in-fact (it being understood that the Purchase Contract
Agent shall not be liable for any representation or warranty made by or on
behalf of a Holder), hereby represent and warrant to the Collateral Agent, which
representations and warranties shall be deemed repeated on each day a Holder
Transfers Collateral that:
(a) such Holder has the power to grant a security interest in and lien
on the Collateral;
(b) such Holder is the sole beneficial owner of the Collateral and, in
the case of Collateral delivered in physical form, is the sole holder of such
Collateral and is the sole beneficial owner of, or has the right to Transfer,
the Collateral it Transfers to the Collateral Agent, free and clear of any
security interest, lien, encumbrance, call, liability to pay money or other
restriction other than the security interest and lien granted under Section 2
hereof;
(c) upon the Transfer of the Collateral to the Collateral Account or
physical delivery of the Debt Securities to the Collateral Agent, the Collateral
Agent, for the benefit of the Company, will have a valid and perfected first
priority security interest therein (assuming that any central clearing operation
or any Intermediary or other entity not within the control of the Holder
involved in the Transfer of the Collateral, including the Collateral Agent,
gives the notices and takes the action required of it hereunder and under
applicable law for perfection of that interest and assuming the establishment
and exercise of control pursuant to Section 2.2 hereof); and
(d) the execution and performance by the Holder of its obligations
under this Agreement will not result in the creation of any security interest,
lien or other encumbrance on the Collateral other than the security interest and
lien granted under Section 2 hereof or violate any provision of any existing law
or regulation applicable to it or of any mortgage, charge, pledge, indenture,
contract or undertaking to which it is a party or which is binding on it or any
of its assets.
SECTION 7.2. COVENANTS.
---------
The Holders from time to time, acting through the Purchase Contract
Agent as their attorney-in-fact (it being understood that the Purchase Contract
Agent shall not be liable for any covenant made by or on behalf of a Holder),
hereby covenant to the Collateral Agent that for so long as the Collateral
remains subject to the Pledge:
(a) neither the Purchase Contract Agent nor such Holders will create
or purport to create or allow to subsist any mortgage, charge, lien, pledge or
22
any other security interest whatsoever over the Collateral or any part of it
other than pursuant to this Agreement; and
(b) neither the Purchase Contract Agent nor such Holders will sell or
otherwise dispose (or attempt to dispose) of the Collateral or any part of it
except for the beneficial interest therein, subject to the pledge hereunder,
transferred in connection with the Transfer of the Securities.
SECTION 8. THE COLLATERAL AGENT.
--------------------
SECTION 8.1. APPOINTMENT, POWERS AND IMMUNITIES.
----------------------------------
The Collateral Agent shall act as Agent for the Company hereunder with
such powers as are specifically vested in the Collateral Agent by the terms of
this Agreement, together with such other powers as are reasonably incidental
thereto. Each of the Collateral Agent, the Custodial Agent and the Securities
Intermediary: (a) shall have no duties or responsibilities except those
expressly set forth in this Agreement and no implied covenants or obligations
shall be inferred from this Agreement against any of them, nor shall any of them
be bound by the provisions of any agreement by any party hereto beyond the
specific terms hereof; (b) shall not be responsible for any recitals contained
in this Agreement, or in any certificate or other document referred to or
provided for in, or received by it under, this Agreement, the Securities or the
Purchase Contract Agreement, or for the value, validity, effectiveness,
genuineness, enforceability or sufficiency of this Agreement (other than as
against the Collateral Agent), the Securities or the Purchase Contract Agreement
or any other document referred to or provided for herein or therein or for any
failure by the Company or any other Person (except the Collateral Agent, the
Custodial Agent or the Securities Intermediary, as the case may be) to perform
any of its obligations hereunder or thereunder or for the perfection, priority
or, except as expressly required hereby, maintenance of any security interest
created hereunder; (c) shall not be required to initiate or conduct any
litigation or collection proceedings hereunder (except in the case of the
Collateral Agent, pursuant to directions furnished under Section 8.2 hereof,
subject to Section 8.6 hereof); (d) shall not be responsible for any action
taken or omitted to be taken by it hereunder or under any other document or
instrument referred to or provided for herein or in connection herewith or
therewith, except for its own negligence or willful misconduct; and (e) shall
not be required to advise any party as to selling or retaining, or taking or
refraining from taking any action with respect to, the Securities or other
property deposited hereunder. Subject to the foregoing, during the term of this
Agreement, the Collateral Agent shall take all reasonable action in connection
with the safekeeping and preservation of the Collateral hereunder.
No provision of this Agreement shall require the Collateral Agent, the
Custodial Agent or the Securities Intermediary to expend or risk its own funds
or otherwise incur any financial liability in the performance of any of its
duties hereunder. In no event shall the Collateral Agent, the Custodial Agent or
the Securities Intermediary be liable for any amount in excess of the Value of
the Collateral. Notwithstanding the foregoing, the Collateral Agent, the
Custodial Agent and Securities Intermediary, each in its individual capacity,
hereby waive any right of setoff, bankers lien, liens or perfection rights as
securities intermediary or any counterclaim with respect to any of the
Collateral.
23
SECTION 8.2. INSTRUCTIONS OF THE COMPANY.
---------------------------
The Company shall have the right, by one or more instruments in
writing executed and delivered to the Collateral Agent, the Custodial Agent or
the Securities Intermediary, as the case may be, to direct the time, method and
place of conducting any proceeding for the realization of any right or remedy
available to the Collateral Agent, or of exercising any power conferred on the
Collateral Agent, the Custodial Agent or the Securities Intermediary, as the
case may be, or to direct the taking or refraining from taking of any action
authorized by this Agreement; provided, however, that (i) such direction shall
not conflict with the provisions of any law or of this Agreement and (ii) the
Collateral Agent, the Custodial Agent and the Securities Intermediary shall be
adequately indemnified as provided herein. Nothing in this Section 8.2 shall
impair the right of the Collateral Agent in its discretion to take any action or
omit to take any action which it deems proper and which is not inconsistent with
such direction.
SECTION 8.3. RELIANCE BY COLLATERAL AGENT.
----------------------------
Each of the Securities Intermediary, the Custodial Agent and the
Collateral Agent shall be entitled conclusively to rely upon any certification,
order, judgment, opinion, notice or other communication (including, without
limitation, any thereof by telephone, telecopy, telex or facsimile) believed by
it to be genuine and correct and to have been signed or sent by or on behalf of
the proper Person or Persons (without being required to determine the
correctness of any fact stated therein), and upon advice and statements of legal
counsel and other experts selected by the Collateral Agent, the Custodial Agent
or the Securities Intermediary, as the case may be. As to any matters not
expressly provided for by this Agreement, the Collateral Agent, the Custodial
Agent and the Securities Intermediary shall in all cases be fully protected in
acting, or in refraining from acting, hereunder in accordance with instructions
given by the Company in accordance with this Agreement.
SECTION 8.4. RIGHTS IN OTHER CAPACITIES.
--------------------------
The Collateral Agent, the Custodial Agent and the Securities
Intermediary and their affiliates may (without having to account therefor to the
Company) accept deposits from, lend money to, make their investments in and
generally engage in any kind of banking, trust or other business with the
Purchase Contract Agent and any Holder of Securities (and any of their
respective subsidiaries or affiliates) as if it were not acting as the
Collateral Agent, the Custodial Agent or the Securities Intermediary, as the
case may be, and the Collateral Agent, the Custodial Agent and the Securities
Intermediary and their affiliates may accept fees and other consideration from
the Purchase Contract Agent and any Holder of Securities without having to
account for the same to the Company; provided that each of the Securities
Intermediary, the Custodial Agent and the Collateral Agent covenants and agrees
with the Company that it shall not accept, receive or permit there to be created
in favor of itself and shall take no affirmative action to permit there to be
created in favor of any other Person, any security interest, lien or other
encumbrance of any kind in or upon the Collateral.
24
SECTION 8.5. NON-RELIANCE ON COLLATERAL AGENT.
--------------------------------
None of the Securities Intermediary, the Custodial Agent or the
Collateral Agent shall be required to keep itself informed as to the performance
or observance by the Purchase Contract Agent or any Holder of Securities of this
Agreement, the Purchase Contract Agreement, the Securities or any other document
referred to or provided for herein or therein or to inspect the properties or
books of the Purchase Contract Agent or any Holder of Securities. The Collateral
Agent, the Custodial Agent and the Securities Intermediary shall not have any
duty or responsibility to provide the Company with any credit or other
information concerning the affairs, financial condition or business of the
Purchase Contract Agent or any Holder of Securities (or any of their respective
affiliates) that may come into the possession of the Collateral Agent, the
Custodial Agent or the Securities Intermediary or any of their respective
affiliates.
SECTION 8.6. COMPENSATION AND INDEMNITY.
--------------------------
The Company agrees: (i) to pay each of the Collateral Agent and the
Custodial Agent from time to time such compensation as shall be agreed in
writing between the Company and the Collateral Agent or the Custodial Agent, as
the case may be, for all services rendered by each of them hereunder and (ii) to
indemnify the Collateral Agent, the Custodial Agent and the Securities
Intermediary for, and to hold each of them harmless from and against, any loss,
liability or reasonable out-of-pocket expense incurred without negligence,
willful misconduct or bad faith on its part, arising out of or in connection
with the acceptance or administration of its powers and duties under this
Agreement, including the reasonable out-of-pocket costs and expenses (including
reasonable fees and expenses of counsel) of defending itself against any claim
or liability in connection with the exercise or performance of such powers and
duties. The Collateral Agent, the Custodial Agent and the Securities
Intermediary shall each promptly notify the Company of any third party claim
which may give rise to indemnity hereunder and give the Company the opportunity
to participate in the defense of such claim with counsel reasonably satisfactory
to the indemnified party, and no such claim shall be settled without the written
consent of the Company, which consent shall not be unreasonably withheld.
SECTION 8.7. FAILURE TO ACT.
--------------
In the event of any ambiguity in the provisions of this Agreement or
any dispute between or conflicting claims by or among the parties hereto or any
other Person with respect to any funds or property deposited hereunder, the
Collateral Agent and the Custodial Agent shall be entitled, after prompt notice
to the Company and the Purchase Contract Agent, at its sole option, to refuse to
comply with any and all claims, demands or instructions with respect to such
property or funds so long as such dispute or conflict shall continue, and
neither the Collateral Agent nor the Custodial Agent shall be or become liable
in any way to any of the parties hereto for its failure or refusal to comply
with such conflicting claims, demands or instructions. The Collateral Agent and
the Custodial Agent shall be entitled to refuse to act until either (i) such
conflicting or adverse claims or demands shall have been finally determined by a
court of competent jurisdiction or settled by agreement between the conflicting
parties as evidenced in a writing, satisfactory to the Collateral Agent or the
Custodial Agent, as the case may be, or (ii) the Collateral Agent or the
Custodial Agent, as the case may be, shall have received security or an
25
indemnity satisfactory to the Collateral Agent or the Custodial Agent, as the
case may be, sufficient to save the Collateral Agent or the Custodial Agent, as
the case may be, harmless from and against any and all loss, liability or
reasonable out-of-pocket expense which the Collateral Agent or the Custodial
Agent, as the case may be, may without negligence, willful misconduct, or bad
faith on its part incur by reason of its acting. The Collateral Agent or the
Custodial Agent may in addition elect to commence an interpleader action or seek
other judicial relief or orders as the Collateral Agent or the Custodial Agent,
as the case may be, may deem necessary. Notwithstanding anything contained
herein to the contrary, neither the Collateral Agent nor the Custodial Agent
shall be required to take any action that is in its opinion contrary to law or
to the terms of this Agreement, or which would in its opinion subject it or any
of its officers, employees or directors to liability.
SECTION 8.8. RESIGNATION OF COLLATERAL AGENT.
-------------------------------
Subject to the appointment and acceptance of a successor Collateral
Agent or Custodial Agent as provided below, (a) the Collateral Agent and the
Custodial Agent may resign at any time by giving notice thereof to the Company
and the Purchase Contract Agent as attorney-in-fact for the Holders of
Securities, (b) the Collateral Agent and the Custodial Agent may be removed at
any time by the Company and (c) if the Collateral Agent or the Custodial Agent
fails to perform any of its material obligations hereunder in any material
respect for a period of not less than 20 days after receiving written notice of
such failure by the Purchase Contract Agent and such failure shall be
continuing, the Collateral Agent or the Custodial Agent may be removed by the
Purchase Contract Agent. The Purchase Contract Agent shall promptly notify the
Company of any removal of the Collateral Agent pursuant to clause (c) of the
immediately preceding sentence. Upon any such resignation or removal, the
Company shall have the right to appoint a successor Collateral Agent or
Custodial Agent, as the case may be. If no successor Collateral Agent or
Custodial Agent, as the case may be, shall have been so appointed and shall have
accepted such appointment within 30 days after the retiring Collateral Agent's
or Custodial Agent's giving of notice of resignation or such removal, then the
retiring Collateral Agent or Custodial Agent, as the case may be, may petition
any court of competent jurisdiction for the appointment of a successor
Collateral Agent or Custodial Agent, as the case may be. Each of the Collateral
Agent and the Custodial Agent shall be a bank which has an office in New York,
New York with a combined capital and surplus of at least $75,000,000. Upon the
acceptance of any appointment as Collateral Agent or Custodial Agent, as the
case may be, hereunder by a successor Collateral Agent or Custodial Agent, as
the case may be, such successor shall thereupon succeed to and become vested
with all the rights, powers, privileges and duties of the retiring Collateral
Agent or Custodial Agent, as the case may be, and the retiring Collateral Agent
or Custodial Agent, as the case may be, shall take all appropriate action to
transfer any money and property held by it hereunder (including the Collateral)
to such successor. The retiring Collateral Agent or Custodial Agent shall, upon
such succession, be discharged from its duties and obligations as Collateral
Agent or Custodial Agent hereunder. After any retiring Collateral Agent's or
Custodial Agent's resignation hereunder as Collateral Agent or Custodial Agent,
the provisions of this Section 8 shall continue in effect for its benefit in
respect of any actions taken or omitted to be taken by it while it was acting as
the Collateral Agent or Custodial Agent. Any resignation or removal of the
Collateral Agent hereunder shall be deemed for all purposes of this Agreement as
the simultaneous resignation or removal of the Custodial Agent and the
Securities Intermediary.
26
SECTION 8.9. RIGHT TO APPOINT AGENT OR ADVISOR.
---------------------------------
The Collateral Agent shall have the right to appoint agents or
advisors in connection with any of its duties hereunder, and the Collateral
Agent shall not be liable for any action taken or omitted by, or in reliance
upon the advice of, such agents or advisors selected in good faith. The
appointment of agents pursuant to this Section 8.9 shall be subject to prior
consent of the Company, which consent shall not be unreasonably withheld.
SECTION 8.10. SURVIVAL.
--------
The provisions of this Section 8 shall survive termination of this
Agreement and the resignation or removal of the Collateral Agent or the
Custodial Agent.
SECTION 8.11. EXCULPATION.
-----------
Anything in this Agreement to the contrary notwithstanding, in no
event shall any of the Collateral Agent, the Custodial Agent or the Securities
Intermediary or their officers, employees or agents be liable under this
Agreement to any third party for indirect, special, punitive, or consequential
loss or damage of any kind whatsoever, including lost profits, whether or not
the likelihood of such loss or damage was known to the Collateral Agent, the
Custodial Agent or the Securities Intermediary, or any of them, incurred without
any act or deed that is found to be attributable to gross negligence or willful
misconduct on the part of the Collateral Agent, the Custodial Agent or the
Securities Intermediary.
SECTION 9. AMENDMENT.
---------
SECTION 9.1. AMENDMENT WITHOUT CONSENT OF HOLDERS.
------------------------------------
Without the consent of any Holders or the holders of any Separate Debt
Securities, the Company, the Collateral Agent, the Custodial Agent, the
Securities Intermediary and the Purchase Contract Agent, at any time and from
time to time, may amend this Agreement, in form satisfactory to the Company, the
Collateral Agent, the Custodial Agent, the Securities Intermediary and the
Purchase Contract Agent, for any of the following purposes:
(a) to evidence the succession of another Person to the Company, and
the assumption by any such successor of the covenants of the Company; 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 so
long as such covenants or such surrender do not adversely affect the validity,
perfection or priority of the security interests granted or created hereunder;
or
(c) to evidence and provide for the acceptance of appointment
hereunder by a successor Collateral Agent, Custodial Agent, Securities
Intermediary or Purchase Contract Agent; or
(d) to cure any ambiguity, to correct or supplement any provisions
herein which may be inconsistent with any other such provisions herein, or to
make any other provisions with respect to such matters or questions arising
27
under this Agreement, provided such action shall not adversely affect the
interests of the Holders.
SECTION 9.2. AMENDMENT WITH CONSENT OF HOLDERS.
---------------------------------
With the consent of the Holders of not less than a majority of the
Purchase Contracts at the time outstanding, by Act of said Holders delivered to
the Company, the Purchase Contract Agent or the Collateral Agent, as the case
may be, the Company, the Purchase Contract Agent, the Collateral Agent, the
Custodial Agent and the Securities Intermediary may amend this Agreement for the
purpose of modifying in any manner the provisions of this Agreement or the
rights of the Holders in respect of the Securities; provided, however, that no
such supplemental agreement shall, without the consent of the Holder of each
Outstanding Security adversely affected thereby,
(a) change the amount or type of Collateral underlying a Security
(subject to the rights of Holders to make Collateral Substitutions as
contemplated by Sections 4.1 and 4.2), impair the right of the Holder of any
Security to receive distributions on the underlying Collateral or otherwise
adversely affect the Holder's rights in or to such Collateral; or
(b) otherwise effect any action that would require the consent of the
Holder of each Outstanding Security affected thereby pursuant to the Purchase
Contract Agreement if such action were effected by an agreement supplemental
thereto; or
(c) reduce the percentage of Purchase Contracts the consent of whose
Holders is required for any such amendment.
It shall not be necessary for any Act of Holders under this Section to approve
the particular form of any proposed amendment, but it shall be sufficient if
such Act shall approve the substance thereof.
SECTION 9.3. EXECUTION OF AMENDMENTS.
-----------------------
In executing any amendment permitted by this Section, the Collateral
Agent, the Custodial Agent, the Securities Intermediary and the Purchase
Contract Agent shall be entitled to receive and (subject to Section 6.1 hereof,
with respect to the Collateral Agent, and Section 7.1 of the Purchase Contract
Agreement, with respect to the Purchase Contract Agent) shall be fully protected
in relying upon, an Opinion of Counsel stating that the execution of such
amendment is authorized or permitted by this Agreement and that all conditions
precedent, if any, to the execution and delivery of such amendment have been
satisfied.
SECTION 9.4. EFFECT OF AMENDMENTS.
--------------------
Upon the execution of any amendment under this Section 9, this
Agreement shall be modified in accordance therewith, and such amendment shall
form a part of this Agreement for all purposes; and every Holder of Certificates
theretofore or thereafter authenticated, executed on behalf of the Holders and
delivered under the Purchase Contract Agreement shall be bound thereby.
28
SECTION 9.5. REFERENCE TO AMENDMENTS.
-----------------------
Security Certificates authenticated, executed on behalf of the Holders
and delivered after the execution of any amendment pursuant to this Section may,
and shall if required by the Collateral Agent or the Purchase Contract Agent,
bear a notation in form approved by the Purchase Contract Agent and the
Collateral Agent as to any matter provided for in such amendment. If the Company
shall so determine, new Security Certificates so modified as to conform, in the
opinion of the Collateral Agent, the Purchase Contract Agent and the Company, to
any such amendment may be prepared and executed by the Company and
authenticated, executed on behalf of the Holders and delivered by the Purchase
Contract Agent in accordance with the Purchase Contract Agreement in exchange
for Outstanding Security Certificates.
SECTION 10. MISCELLANEOUS.
-------------
SECTION 10.1. NO WAIVER.
---------
No failure on the part of the Collateral Agent or any of its agents to
exercise, and no course of dealing with respect to, and no delay in exercising,
any right, power or remedy hereunder shall operate as a waiver thereof; nor
shall any single or partial exercise by the Collateral Agent or any of its
agents of any right, power or remedy hereunder preclude any other or further
exercise thereof or the exercise of any other right, power or remedy. The
remedies herein are cumulative and are not exclusive of any remedies provided by
law.
SECTION 10.2. GOVERNING LAW.
-------------
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK. Without limiting the foregoing, the above
choice of law is expressly agreed to by the Company, the Securities
Intermediary, the Custodial Agent, the Collateral Agent and the Holders from
time to time acting through the Purchase Contract Agent, as their
attorney-in-fact, in connection with the establishment and maintenance of the
Collateral Account. The Company, the Collateral Agent and the Holders from time
to time of the Securities, acting through the Purchase Contract Agent as their
attorney-in-fact, hereby submit to the nonexclusive jurisdiction of the United
States District Court for the Southern District of New York and of any New York
state court sitting in New York City for the purposes of all legal proceedings
arising out of or relating to this Agreement or the transactions contemplated
hereby. The Company, the Collateral Agent and the Holders from time to time of
the Securities, acting through the Purchase Contract Agent as their
attorney-in-fact, irrevocably waive, to the fullest extent permitted by
applicable law, any objection which they may now or hereafter have to the laying
of the venue of any such proceeding brought in such a court and any claim that
any such proceeding brought in such a court has been brought in an inconvenient
forum.
SECTION 10.3. NOTICES.
-------
All notices, requests, consents and other communications provided for
herein (including, without limitation, any modifications of, or waivers or
consents under, this Agreement) shall be given or made in writing (including,
without limitation, by telecopy) delivered to the intended recipient at the
29
"Address for Notices" specified below its name on the signature pages hereof (or
in the case of Holders, may be made and deemed given as provided in Sections 1.5
and 1.6 of the Purchase Contract Agreement) or, as to any party, at such other
address as shall be designated by such party in a notice to the other parties.
Except as otherwise provided in this Agreement, all such communications shall be
deemed to have been duly given when transmitted by telecopier or personally
delivered or, in the case of a mailed notice, upon receipt, in each case given
or addressed as aforesaid (except as aforesaid).
SECTION 10.4. SUCCESSORS AND ASSIGNS.
----------------------
This Agreement shall be binding upon and inure to the benefit of the
respective successors and assigns of the Company, the Collateral Agent, the
Custodial Agent, the Securities Intermediary and the Purchase Contract Agent,
and the Holders from time to time of the Securities, by their acceptance of the
same, shall be deemed to have agreed to be bound by the provisions hereof and to
have ratified the agreements of, and the grant of the Pledge hereunder by, the
Purchase Contract Agent.
SECTION 10.5. COUNTERPARTS.
------------
This Agreement may be executed in any number of counterparts, all of
which taken together shall constitute one and the same instrument, and any of
the parties hereto may execute this Agreement by signing any such counterpart.
SECTION 10.6. SEVERABILITY.
------------
If any provision hereof is invalid and unenforceable in any
jurisdiction, then, to the fullest extent permitted by law, (i) the other
provisions hereof shall remain in full force and effect in such jurisdiction and
shall be liberally construed in order to carry out the intentions of the parties
hereto as nearly as may be possible and (ii) the invalidity or unenforceability
of any provision hereof in any jurisdiction shall not affect the validity or
enforceability of such provision in any other jurisdiction.
SECTION 10.7. EXPENSES, ETC.
-------------
The Company agrees to reimburse the Collateral Agent and the Custodial
Agent for: (a) all reasonable out-of-pocket costs and expenses of the Collateral
Agent and the Custodial Agent (including, without limitation, the reasonable
fees and expenses of the necessary services of a Securities Intermediary and of
counsel to the Collateral Agent and the Custodial Agent), in connection with (i)
the negotiation, preparation, execution and delivery or performance of this
Agreement and (ii) any modification, supplement or waiver of any of the terms of
this Agreement; (b) all reasonable costs and expenses of the Collateral Agent
(including, without limitation, reasonable fees and expenses of counsel) in
connection with (i) any enforcement or proceedings resulting or incurred in
connection with causing any Holder of Securities to satisfy its obligations
under the Purchase Contracts forming a part of the Securities and (ii) the
enforcement of this Section 10.7; and (c) all transfer, stamp, documentary or
other similar taxes, assessments or charges levied by any governmental or
30
revenue authority in respect of this Agreement or any other document referred to
herein and all costs, expenses, taxes, assessments and other charges incurred in
connection with any filing, registration, recording or perfection of any
security interest contemplated hereby.
SECTION 10.8. SECURITY INTEREST ABSOLUTE.
--------------------------
All rights of the Collateral Agent and security interests hereunder,
and all obligations of the Holders from time to time hereunder, shall be
absolute and unconditional irrespective of:
(a) any lack of validity or enforceability of any provision of the
Purchase Contracts or the Securities or any other agreement or instrument
relating thereto;
(b) any change in the time, manner or place of payment of, or any
other term of, or any increase in the amount of, all or any of the obligations
of Holders of Securities under the related Purchase Contracts, or any other
amendment or waiver of any term of, or any consent to any departure from any
requirement of, the Purchase Contract Agreement or any Purchase Contract or any
other agreement or instrument relating thereto; or
(c) any other circumstance which might otherwise constitute a defense
available to, or discharge of, a borrower, a guarantor or a pledgor.
31
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed as of the day and year first above written.
TXU CORP.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Executive Vice President
Address for Notices:
TXU Corp.
Energy Plaza
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: Treasurer
Telecopy: ▇▇▇-▇▇▇-▇▇▇▇
▇▇
▇▇▇ ▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇
as Purchase Contract Agent and as
attorney-in-fact of the Holders from
time to time of the Securities
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇
Title: Vice President
Address for Notices:
The Bank of New York
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: Corporate Trust Administration
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
33
THE CHASE MANHATTAN BANK
as Collateral Agent, Custodial
Agent and as Securities Intermediary
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Vice President
Address for Notices:
The Chase Manhattan Bank
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: Global Trust Services
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
34
EXHIBIT A
INSTRUCTION FROM PURCHASE CONTRACT AGENT TO COLLATERAL AGENT
The Chase Manhattan Bank, as Collateral Agent
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: Global Trust Services
Re: Securities of TXU Corp. (the "Company")
We hereby notify you in accordance with Section [4.1] [4.2] of the
Pledge Agreement, dated as of October 1, 2001, (the "
Pledge Agreement") among
the Company, yourselves, as Collateral Agent, Custodial Agent and Securities
Intermediary and ourselves, as Purchase Contract Agent and as attorney-in-fact
for the Holders of [Corporate Units] [Treasury Units] from time to time, that
the Holder of Securities listed below (the "Holder") has elected to substitute
[$_____ principal amount at maturity of [3-Year] [4-Year] Treasury Securities]
[$_______ principal amount of [Series K Notes] [Series L Notes] [the appropriate
Applicable Ownership Interest in the [3-Year] [4-Year] [Tax Event] Treasury
Portfolio] in exchange for an equal Value of Pledged [Series K Notes] [Series L
Notes] [the appropriate Applicable Ownership Interest in the [3-Year] [4-Year]
[Tax Event] Treasury Portfolio] [3-Year] [4-Year] Treasury Securities] held by
you in accordance with the
Pledge Agreement and has delivered to us a notice
stating that the Holder has Transferred [Series K Notes] [Series L Notes]
[appropriate Applicable Ownership Interest in the [3-Year] [4-Year] [Tax Event]
Treasury Portfolio] [3-Year] [4-Year] Treasury Securities] to you, as Collateral
Agent. We hereby instruct you, upon receipt of such [Treasury Securities]
[Series K Notes] [Series L Notes] [appropriate Applicable Ownership Interest in
the [3-Year] [4-Year] [Tax Event] Treasury Portfolio] so Transferred, to release
the Pledged [Series K Notes] [Series L Notes] [appropriate Applicable Ownership
Interest in the [3-Year] [4-Year] [Tax Event] Treasury Portfolio] [3-Year]
[4-Year] Treasury Securities] related to such [Corporate Units] [Treasury Units]
to us in accordance with the Holder's instructions. Capitalized terms used
herein but not defined shall have the meaning set forth in the
Pledge Agreement.
Date:
-------------------- ---------------------------------------
By:
------------------------------------
Name:
Title:
Signature Guarantee:
----------------
Please print name and address of registered Holder electing to substitute
[Treasury Securities] [Debt Securities] [appropriate Applicable Ownership
Interest in the Treasury Portfolio] for [Pledged Debt Securities] [Treasury
Portfolio] [Pledged Treasury Securities]:
------------------------------ ----------------------------------------
Name Social Security or other Taxpayer
Identification Number, if any
Address
------------------------------
------------------------------
------------------------------
EXHIBIT B
INSTRUCTION TO PURCHASE CONTRACT AGENT
The Bank of New York
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: Corporate Trust Administration
Re: Securities of TXU Corp. (the "Company")
The undersigned Holder hereby notifies you that it has delivered to
The Chase Manhattan Bank, as Collateral Agent, [$_______ principal amount at
maturity of [3-Year] [4-Year] Treasury Securities] [$_______ principal amount of
[Series K Notes] [Series L Notes] [Stated Amount of the appropriate Applicable
Ownership Interest in the Treasury Portfolio] in exchange for an equal Value of
[Pledged [Series K Notes] [Series L Notes] or the appropriate Pledged Applicable
Ownership Interest in the [3-Year] [4-Year] [Tax Event] Treasury Portfolio]
[Pledged [3-Year] [4-Year] Treasury Securities] held by the Collateral Agent, in
accordance with Section [4.1] [4.2] of the
Pledge Agreement, dated as of October
1, 2001 (the "Pledge Agreement"), among you, the Company and the Collateral
Agent. The undersigned Holder hereby instructs you to instruct the Collateral
Agent to release to you on behalf of the undersigned Holder the [Pledged Debt
Securities or the appropriate Pledged Applicable Ownership Interest in the
[3-Year] [4-Year] [Tax Event] Treasury Portfolio] [Pledged [3-Year] [4-Year]
Treasury Securities] related to such [Corporate Units] [Treasury Units].
Capitalized terms used herein but not defined shall have the meaning set forth
in the Pledge Agreement.
Date:
-------------------- ---------------------------------------
Signature Guarantee:
-------------------
Please print name and address of Registered Holder:
------------------------------ ----------------------------------------
Name Social Security or other Taxpayer
Identification Number, if any
Address
------------------------------
------------------------------
------------------------------
EXHIBIT C
INSTRUCTION TO CUSTODIAL AGENT REGARDING REMARKETING
Re: Securities of TXU Corp. (the "Company")
The undersigned hereby notifies you in accordance with Section 4.6(c)
of the Pledge Agreement, dated as of October 1, 2001 (the "Pledge Agreement"),
among the Company, yourselves, as Collateral Agent, Securities Intermediary and
Custodial Agent, and The Bank of New York, as Purchase Contract Agent and as
attorney-in-fact for the Holders of Corporate Units and Treasury Units from time
to time, that the undersigned elects to deliver $________ principal amount of
[Series K Notes] [Series L Notes] for delivery to the Remarketing Agent on the
fourth Business Day immediately preceding the [Series K] [Series L] Reset Date
for remarketing pursuant to Section 4.6(c) of the Pledge Agreement. The
undersigned will, upon request of the Remarketing Agent, execute and deliver any
additional documents deemed by the Remarketing Agent or by the Company to be
necessary or desirable to complete the sale, assignment and transfer of the
[Series K Notes] [Series L Notes] tendered hereby.
The undersigned hereby instructs you, upon receipt of the Proceeds of
such remarketing from the Remarketing Agent to deliver such Proceeds to the
undersigned in accordance with the instructions indicated herein under "A.
Payment Instructions". The undersigned hereby instructs you, in the event of
Failed Remarketing, upon receipt of the [Series K Notes] [Series L Notes]
tendered herewith from the Remarketing Agent, to deliver such Debt Securities to
the person(s) and the address(es) indicated herein under "B. Delivery
Instructions."
With this notice, the undersigned hereby (i) represents and warrants
that the undersigned has full power and authority to tender, sell, assign and
transfer the [Series K Notes] [Series L Notes] tendered hereby and that the
undersigned is the record owner of any [Series K Notes] [Series L Notes]
tendered herewith in physical form or a participant in The Depositary Trust
Company ("DTC") and the beneficial owner of any Debt Securities tendered
herewith by book-entry transfer to your account at DTC and (ii) agrees to be
bound by the terms and conditions of Section 4.6(c) of the Pledge Agreement.
Capitalized terms used herein but not defined shall have the meaning set forth
in the Pledge Agreement.
Date:
-------------------- ---------------------------------------
By:
------------------------------------
Name:
Title:
Signature Guarantee:
----------------
Please print name and address:
------------------------------ ----------------------------------------
Name Social Security or other Taxpayer
Identification Number, if any
Address
------------------------------
------------------------------
------------------------------
A. PAYMENT INSTRUCTIONS B. DELIVERY INSTRUCTIONS
Proceeds of the remarketing should be In the event of a Failed Remarketing,
paid by check in the name of the [Series K Notes] [Series L Notes] which
person(s) set forth below and are in physical form should be
mailed to the address set delivered to the person(s) set forth
forth below. below and mailed to the address set
forth below.
Name(s) Name(s)
----------------------------------- -----------------------------------
(Please Print) (Please Print)
Address Address
----------------------------------- -----------------------------------
----------------------------------- -----------------------------------
(Please Print) (Please Print)
----------------------------------- -----------------------------------
(Zip Code) (Zip Code)
----------------------------------- -----------------------------------
Tax Identification or Social (Tax Identification or Social
Security Number) Security Number)
In the event of a Failed Remarketing,
[Series K Notes] [Series L Notes]
which are in book-entry form should
be credited to the account at The
Depositary Trust Company set forth
below.
----------------------------
DTC Account Number
Name of Account
Party:
-------------------------------
EXHIBIT D
INSTRUCTION TO CUSTODIAL AGENT REGARDING
WITHDRAWAL FROM REMARKETING
The Chase Manhattan Bank, as Custodial Agent
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: Global Trust Services
Re: Securities of TXU Corp. (the "Company")
The undersigned hereby notifies you in accordance with Section 4.6(c)
of the Pledge Agreement, dated as of October 1, 2001 (the "Pledge Agreement")
among the Company, yourselves, as Collateral Agent, Securities Intermediary and
Custodial Agent and The Bank of New York, as Purchase Contract Agent and as
attorney-in-fact for the Holders of Corporate Units and Treasury Units from time
to time, that the undersigned elects to withdraw the $_____ principal amount of
[Series K Notes] [Series L Notes] delivered to the Custodial Agent on
____________ for remarketing pursuant to Section 4.6(c) of the Pledge Agreement.
The undersigned hereby instructs you to return such [Series K Notes] [Series L
Notes] to the undersigned in accordance with the undersigned's instructions.
With this notice, the Undersigned hereby agrees to be bound by the terms and
conditions of Section 4.6(c) of the Pledge Agreement. Capitalized terms used
herein but not defined shall have the meaning set forth in the Pledge Agreement.
Date:
-------------------- ---------------------------------------
By:
------------------------------------
Name:
Title:
Signature Guarantee:
----------------
Please print name and address:
------------------------------ ----------------------------------------
Name Social Security or other Taxpayer
Identification Number, if any
Address
------------------------------
------------------------------
------------------------------