EXHIBIT 4(z)
PROTECTIVE LIFE CORPORATION,
THE BANK OF NEW YORK
AND
THE CHASE MANHATTAN BANK
FORM OF PLEDGE AGREEMENT
Dated as of _______ __, 1997
TABLE OF CONTENTS
PAGE
RECITALS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1. Definitions. . . . . . . . . . . . . . . . . . . . . . . . . 2
Section 2. Pledge; Control and Perfection . . . . . . . . . . . . . . . 7
Section 2.1. The Pledge . . . . . . . . . . . . . . . . . . . . . . . . . 7
Section 2.2. Control and Perfection . . . . . . . . . . . . . . . . . . . 9
Section 3. Distributions on Pledged Collateral. . . . . . . . . . . . . 10
Section 4. Substitution, Release, Repledge and Settlement
of Preferred Securities. . . . . . . . . . . . . . . . . . . 11
Section 4.1. Substitution of Preferred Securities and the
Establishment of Growth PRIDES . . . . . . . . . . . . . . . 11
Section 4.2. Pledge of Preferred Securities and
Re-establishment of Income PRIDES. . . . . . . . . . . . . . 12
Section 4.3. Termination Event. . . . . . . . . . . . . . . . . . . . . . 12
Section 4.4. Cash Settlement. . . . . . . . . . . . . . . . . . . . . . . 13
Section 4.5. Early Settlement . . . . . . . . . . . . . . . . . . . . . . 14
Section 4.6. Application of Proceeds Settlement.. . . . . . . . . . . . . 15
Section 5. Voting Rights -- Preferred Securities. . . . . . . . . . . . 16
Section 6. Rights and Remedies. . . . . . . . . . . . . . . . . . . . . 17
Section 6.1. Rights and Remedies of the Collateral Agent. . . . . . . . . 17
Section 6.2. Liquidation of the Trust . . . . . . . . . . . . . . . . . . 18
Section 7. Representation and Warranties; Covenants . . . . . . . . . . 18
Section 7.1. Representations and Warranties . . . . . . . . . . . . . . . 18
Section 7.2. Covenants. . . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 8. The Collateral Agent . . . . . . . . . . . . . . . . . . . . 20
Section 8.1. Appointment, Powers and Immunities . . . . . . . . . . . . . 20
Section 8.2. Instructions of the Company. . . . . . . . . . . . . . . . . 21
Section 8.3. Reliance by Collateral Agent . . . . . . . . . . . . . . . . 22
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PAGE
Section 8.4. Rights in Other Capacities . . . . . . . . . . . . . . . . . 22
Section 8.5. Non-Reliance on Collateral Agent . . . . . . . . . . . . . . 22
Section 8.6. Compensation and Indemnity . . . . . . . . . . . . . . . . . 23
Section 8.7. Failure to Act . . . . . . . . . . . . . . . . . . . . . . . 23
Section 8.8. Resignation of Collateral Agent. . . . . . . . . . . . . . . 24
Section 8.9. Right to Appoint Agent or Advisor. . . . . . . . . . . . . . 25
Section 8.10. Survival . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 8.11. Indemnity. . . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 9. Amendment. . . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 9.1. Amendment Without Consent of Holders . . . . . . . . . . . . 25
Section 9.2. Amendment with Consent of Holders. . . . . . . . . . . . . . 26
Section 9.3. Execution of Amendments. . . . . . . . . . . . . . . . . . . 27
Section 9.4. Effect of Amendments . . . . . . . . . . . . . . . . . . . . 27
Section 9.5. Reference to Amendments. . . . . . . . . . . . . . . . . . . 27
Section 10. Miscellaneous. . . . . . . . . . . . . . . . . . . . . . . . 28
Section 10.1. No Waiver. . . . . . . . . . . . . . . . . . . . . . . . . . 28
Section 10.2. Governing Law. . . . . . . . . . . . . . . . . . . . . . . . 28
Section 10.3. Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Section 10.4. Successors and Assigns . . . . . . . . . . . . . . . . . . . 29
Section 10.5. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . 29
Section 10.6. Severability . . . . . . . . . . . . . . . . . . . . . . . . 29
Section 10.7. Expenses, etc. . . . . . . . . . . . . . . . . . . . . . . . 29
Section 10.8. Security Interest Absolute . . . . . . . . . . . . . . . . . 30
EXHIBIT A INSTRUCTION TO COLLATERAL AGENT
EXHIBIT B INSTRUCTION TO PURCHASE CONTRACT AGENT
EXHIBIT C
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FORM OF PLEDGE AGREEMENT
PLEDGE AGREEMENT, dated as of __________ __, 1997 (this "Agreement"), among
Protective Life Corporation, a New Jersey corporation (the "Company"), 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") and in its capacity 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 2,300,000 FELINE PRIDES (the "Securities").
Each Security, at issuance, consists of a unit (the "Income PRIDES")
comprised of (a) one stock purchase contract (the "Purchase Contract") under
which (i) the Holder will purchase from the Company on , 2001,
for an amount equal to the Stated Amount, a number of shares of Common Stock
equal to the Settlement Rate, and (ii) the Company will pay the Holder Contract
Adjustment Payments, if any, and (b) beneficial ownership of a ____% Trust
Originated Preferred Security (a "Preferred Security") issued by Protective Life
Corporation Capital II (the "Trust"), having a liquidation amount equal to $50
(the "Stated Amount") and maturing on February 17, 2003, unless settled earlier.
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 Preferred
Securities and any Treasury Securities (as defined below) delivered in exchange
therefor to secure each Holder's obligations under the related Purchase
Contract, as provided herein and subject to the terms hereof. Upon such pledge
the Preferred Securities or the Treasury Securities, as applicable, will be
beneficially owned by the Holders but will be owned of record by the Purchase
Contract Agent subject to the Pledge hereunder.
Accordingly, the Company, the Collateral Agent, the Securities Intermediary
and the Purchase Contract Agent, on its own behalf and as attorney-in-fact of
the Holders from time to time of the Securities, agree as follows:
Section 1. DEFINITIONS. For all purposes of this Agreement, except as
otherwise expressly provided or unless the context otherwise requires:
(a) the terms defined in this Article have the meanings assigned to
them in this Article and include the plural as well as the singular;
(b) the words "herein," "hereof" and "hereunder" and other words of
similar import refer to this Agreement as a whole and not to any particular
Article, Section or other subdivision;
(c) the following terms have the meanings assigned to them in the
Purchase Contract Agreement: (i)Act,(ii) Agent,(iii) Board Resolution,
(iv) Cash Settlement,(v) Certificate,(vi) Common Stock,(vii) Contract
Adjustment Payments,(viii) Debentures, (ix) Early Settlement,(x) Early
Settlement Amount,(xi) Early Settlement Date,(xii) Holder, (xiii) Opinion
of Counsel,(xiv) Outstanding Securities,(xv) Purchase Contract,(xvi)
Purchase Contract Settlement Date,(xvii) Purchase Price, (xviii)Repayment
Price,(xix) Settlement Rate,(xx) Termination Event, and (xxi) Underwriting
Agreement;
(d) the following term shall have the meaning assigned to it in the
Declaration: Institutional Trustee.
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"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 trust account (number _____) maintained at
The Chase Manhattan Bank in the name "The Bank of New York", as Purchase
Contract Agent on behalf of the holders of certain securities of PLC Capital
Trust II, Collateral Account subject to the security interest of The Chase
Manhattan Bank, as Collateral Agent, for the benefit of Protective Life
Corporation, as pledgee" and any successor account.
"Collateral Agent" has the meaning specified in the first paragraph of this
Agreement.
"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.
"Declaration" means the Amended and Restated Declaration of Trust of the
Trust, dated as of _____ __, 1997, among the Company as sponsor, the trustees
named therein and the holders from time to time of undivided beneficial
interests in the assets of the Trust.
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"Growth PRIDES" means a unit comprised of one Purchase Contract and a 1/20
undivided beneficial ownership interest in a Treasury Security that has been
substituted for Preferred Securities as collateral to secure the Holder's
obligations under such Purchase Contract.
"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
on 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 US$ 200.0 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)
repurchase agreements and reverse repurchase agreements relating to marketable
direct obligations issued or unconditionally guaranteed by the United States
Government or issued by any agency thereof and backed by the full faith and
credit of the United States Government; (v) 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 or at least equal to "P-1"
by ▇▇▇▇▇'▇ Investors Service, Inc.; and (vi) investments in money market funds
registered under the Investment Company Act of 1940, as amended, which have net
assets of at least $200.0 million and at least 85.0% of whose assets consist of
securities and other obligations of the types described in clauses (i) through
(v) above.
"Person" means any individual, corporation, limited liability company,
partnership, joint venture, association, joint-stock company, trust,
unincorporated organi-
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zation or other entity or government or any agency or political subdivision
thereof.
"Pledge" has the meaning specified in Section 2.1 hereof.
"Pledged Preferred Securities" has the meaning specified in Section 2.1
hereof.
"Pledged Treasury Securities" has the meaning specified in Section 2.1
hereof.
"Preferred Securities" has the meaning specified in the Recitals.
"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 in
respect of or in exchange for any or all of the Collateral.
"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.
"Securities" has the meaning specified in the Recitals.
"Securities Intermediary" has the meaning specified in the preamble to this
Agreement.
"Security Entitlement" has the meaning set forth in Section 8.102(a)(7) of
the Code.
"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.
5
"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) 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
(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 "securities
entitlement" (as defined in Section 8-102(a)(17) of the Code) with
respect to such securities to a securities account maintained by or
on behalf of the recipient; (ii) to issue a confirmation to the
recipient with respect to such credit and (iii) to make appropriate
notations in its books to reflect the security interest of the
recipient in such securities.
"Treasury Security" means a zero-coupon U.S. Treasury Security maturing on
February 15, 2001 (Cusip Number ____________) which are the principal strips of
the % U.S. Treasury Securities which mature on February 15, 2001.
"Trust" has the meaning specified in the Recitals.
"Value" with respect to any item of Collateral on any date means, as to (i)
a Preferred Security, the Stated Amount, (ii) Cash, the face amount thereof and
6
(iii) Treasury Securities, the aggregate principal amount thereof at maturity.
Section 2. PLEDGE; CONTROL AND PERFECTION.
Section 2.1. THE PLEDGE. The Holders from time to time acting through the
Purchase Contract Agent, as their attorney-in-fact, 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 (a) in the Preferred Securities now and
hereafter relating to the Securities and all Proceeds thereof (including any
Proceeds from the repayment of the Preferred Securities by the Trust) and any
Treasury Securities delivered in exchange for such Preferred 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, including any Preferred
Securities transferred to the Collateral Agent in the future pursuant to Section
4.2 hereof (the "Collateral"); (b) in payments made by Holders pursuant to
Section 4.4; (c) in the Collateral Account and all securities, financial assets
and other property credited thereto and all security entitlements related
thereto; (d) in any Debentures delivered to the Collateral Agent upon a
liquidation of the Trust as provided in Section 6.2; and (e) all proceeds of the
foregoing. Prior to or concurrently with the execution and delivery of this
Agreement, the Purchase Contract Agent, on behalf of the initial Holders of the
Income PRIDES, shall cause the Preferred Securities relating to the Income
PRIDES to be delivered to the Collateral Agent for the benefit of the Company by
physically delivering such securities to the Securities Intermediary endorsed in
blank and causing the Securities Intermediary to credit the Collateral Account
with such securities and send the Collateral Agent a confirmation of the deposit
of such securities. In the event a Holder of Income PRIDES so elects, such
Holder may Transfer Treasury Securities to the Collateral Agent for the benefit
of the Company in exchange for the release by the Collateral Agent on behalf of
the Company of Preferred Securities to the Purchase Contract Agent on behalf of
such Holder. Treasury Securities shall be Transferred to the Collateral Account
maintained by the Collateral Agent at the
7
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 has been credited to the Collateral
Account. For purposes of perfecting the Pledge under applicable law, including,
to the extent applicable, the TRADES Regulations of 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 Preferred
Securities (including Debentures that are pledged pursuant to Section 6.2
hereof) or Treasury Securities subject to the Pledge, excluding any Preferred
Securities (including Debentures that are pledged pursuant to Section 6.2
herein) or Treasury Securities released from the Pledge as provided in Section 4
hereof, are hereinafter referred to as "Pledged Preferred Securities" or the
"Pledged Treasury Securities," respectively. 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. Whenever directed by the Collateral
Agent acting on behalf of the Company, the Securities Intermediary shall have
the right to reregister the Preferred Securities or any other securities held in
physical form in its name.
Except as may be required in order to release Preferred Securities in
connection with a Holder's election to convert its investment from an Income
Pride to a Growth Pride, or except as otherwise required to release securities
as specified herein, the Collateral Agent shall not relinquish physical
possession of any certificate evidencing a Preferred Security 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 Preferred Securities evidenced thereby from the Pledge, the Collateral
Agent shall use its best efforts to obtain physical possession of a replacement
certificate evidencing any Preferred Securities remaining subject to the Pledge
hereunder registered to it or endorsed in blank within fifteen 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.
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Section 2.2. CONTROL AND PERFECTION. In connection with the Pledge
granted in Section 2.1, and subject to the other provisions of this Agreement,
the Holders from time to time acting through the Purchase Contract Agent, as
their attorney-in-fact, hereby authorize and direct the Securities Intermediary
(without the necessity of obtaining the further consent of the Purchase Contract
Agent or any of the Holders), and the Securities Intermediary agrees, to comply
with and follow any instructions and entitlement orders (as defined in Section
8-102(a)(8) of the Code) that the Collateral Agent on behalf of the Company may
give in writing with respect to the Collateral Account, the Collateral credited
thereto and any security entitlements with respect to any thereof. Such
instructions and entitlement orders may, without limitation, direct the
Securities Intermediary to transfer, redeem, sell, liquidate, assign, deliver or
otherwise dispose of the Pledged Preferred Securities, the Pledged Treasury
Securities and any security entitlements with respect thereto and to pay and
deliver any income, proceeds or other funds derived therefrom to the Company.
The Holders from time to time, acting through the Purchase Contract Agent,
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 to any thereof, 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. In order to assure that the Collateral
Agent receives the proceeds of any [redemption/repurchase] of the Pledged
Preferred Securities, the Purchase Contract Agent on behalf of the Holders shall
send the Trust a notice on the date hereof in substantially the form of Exhibit
C hereto and shall cause the Trust to acknowledge and agree to the terms of such
notice. Whenever a Preferred Security has been released from the Pledge created
hereby in accordance with the terms hereof, including without limitation
pursuant to Section 4.1 hereof, the Collateral Agent shall notify the Trust of
the release of such Preferred Securities. Whenever Preferred Securities are
repledged pursuant to
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Section 4.2 hereof, the Purchase Contract Agent shall send the Trust a notice in
substantially the form of Exhibit C hereto and shall cause the Trust to
acknowledge and agree to the terms of such notice.
Section 3. DISTRIBUTIONS ON PLEDGED COLLATERAL. So long as the Purchase
Contract Agent is the registered owner of the Pledged Preferred Securities it
shall receive all payments thereon. If the Pledged Preferred Securities are
reregistered, such that the Collateral Agent becomes the registered holder, all
payments of the Stated Amount of, or cash distributions on, any Pledged
Preferred Securities and all payments of the principal of, or cash distributions
on, any Pledged Treasury Securities received by the Collateral Agent that are
properly payable hereunder shall be paid by the Collateral Agent by wire
transfer in same day funds:
(i) In the case of (A) cash distributions with respect to Pledged
Preferred Securities and (B) any payments of the Stated Amount with respect
to any Preferred Securities 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 Securities, to the account designated by
the Purchase Contract Agent for such purpose, no later than 2:00 p.m., New
York City time, on the Business Day such payment is received by the
Collateral Agent (provided that in the event such payment is received by
the Collateral Agent on a day that is not a Business Day or after 12:30
p.m., New York City time, on a Business Day, then such payment shall be
made no later than 10:30 a.m., New York City time, on the next succeeding
Business Day);
(ii) In the case of any principal payments with respect to any
Treasury Securities that have been released from the Pledge pursuant to
Section 4.3 hereof, to the Holders of the related Growth PRIDES to the
accounts designated by them in writing for such purpose no later than 2:00
p.m., New York City time, on the Business Day such payment is received by
the Collateral Agent (provided that in the event such payment is received
by the Collateral Agent on a day that is not a Business Day or after 12:30
p.m., New York City time, on a Business Day, then such payment shall be
made no later than 10:30
10
a.m., New York City time, on the next succeeding Business Day); and
(iii) In the case of payments of the Stated Amount of any Pledged
Preferred Securities or the principal of any Pledged Treasury Securities,
to the Company on the relevant Payment 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 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 the Stated Amount on account of any
Preferred Security that, at the time of such payment, is a Pledged Preferred
Security or a Holder of a Growth PRIDES shall receive any payments of principal
on account of any Treasury Securities that, at the time of such payment, are
Pledged Treasury Securities, the Purchase Contract Agent or such Holder shall
hold the same as trustee of an express trust for the benefit of the Company (and
promptly deliver the same over to the Company) for application to the
obligations of the Holders under the related Purchase Contracts, and the Holders
shall acquire no right, title or interest in any such payments of Stated Amount
or principal so received.
Section 4. SUBSTITUTION, RELEASE, REPLEDGE AND SETTLEMENT OF PREFERRED
SECURITIES.
Section 4.1. SUBSTITUTION OF PREFERRED SECURITIES AND THE ESTABLISHMENT OF
GROWTH PRIDES. At any time on or prior to the second Business Day immediately
preceding the Purchase Contract Settlement Date, a Holder of Income PRIDES shall
have the right to substitute Treasury Securities for the Pledged Preferred
Securities securing such Holder's obligations under the Purchase Contract(s)
comprising a part of its Income PRIDES in integral multiples of 20 Income PRIDES
by (a) Transferring to the Collateral Agent Treasury Securities having a Value
equal to the Stated Amount of the Pledged Preferred Securities to be released
and (b) delivering the related Income PRIDES to the Purchase Contract Agent,
accompanied by a notice, substantially in the form of Exhibit B hereto, to
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the Purchase Contract Agent stating that such Holder has Transferred Treasury
Securities to the Collateral Agent pursuant to clause (a) above (stating the
Value of the Treasury Securities Transferred by such Holder) and requesting that
the Purchase Contract Agent instruct the Collateral Agent to release from the
Pledge the Pledged Preferred Securities related to such Income PRIDES. The
Purchase Contract Agent shall instruct the Collateral Agent in the form provided
in Exhibit A. Upon receipt of Treasury Securities from a Holder of Income
PRIDES and the related instruction from the Purchase Contract Agent, the
Collateral Agent shall release such Pledged Preferred Securities and shall
promptly Transfer such Pledged Preferred Securities, free and clear of any lien,
pledge or security interest created hereby, to the Purchase Contract Agent.
Section 4.2. PLEDGE OF PREFERRED SECURITIES AND RE-ESTABLISHMENT OF INCOME
PRIDES. At any time on or prior to the second Business Day immediately
preceding the Purchase Contract Settlement Date, a Holder of Growth PRIDES shall
have the right to establish or reestablish Income PRIDES consisting of the
Purchase Contracts and Preferred Securities in integral multiples of 20 Growth
PRIDES by (a) Transferring to the Collateral Agent Preferred Securities having a
Value equal to the Stated Amount of the Pledged Treasury Securities to be
released and (b) delivering the related Growth PRIDES to the Purchase Contract
Agent, accompanied by a notice, substantially in the form of Exhibit B hereto,
to the Purchase Contract Agent stating that such Holder has Transferred
Preferred Securities to the Collateral Agent pursuant to clause (a) above and
requesting that the Purchase Contract Agent instruct the Collateral Agent to
release from the Pledge the Pledged Treasury Securities related to such Growth
PRIDES. The Purchase Contract Agent shall instruct the Collateral Agent in the
form provided in Exhibit A. Upon receipt of the Preferred Securities from such
Holder and the instruction from the Purchase Contract Agent, the Collateral
Agent shall release such Pledged Treasury Securities and shall promptly Transfer
such Pledged Treasury Securities, free and clear of any 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
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Termination Event, the Collateral Agent shall release all Collateral from the
Pledge and shall promptly Transfer any Pledged Preferred Securities and Pledged
Treasury Securities to the Purchase Contract Agent for the benefit of the
Holders of the Income PRIDES and the Growth PRIDES, respectively, free and clear
of any lien, pledge or security interest or other interest created hereby.
If such Termination Event shall result from the Company's becoming a debtor
under the Bankruptcy Code, and if the Collateral Agent shall for any reason fail
promptly to effectuate the release and Transfer of all Pledged Preferred
Securities or of all Pledged Treasury Securities, as the case may be, as
provided by this Section 4.3, the Purchase Contract Agent shall (i) use its 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) 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 Preferred Securities or of all Pledged Treasury Securities, as
the case may be, as provided in this Section 4.3, then 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 Preferred Securities or of
all Pledged Treasury Securities, as the case may be, as provided by this Section
4.3 or (ii) commence an action or proceeding like that described in subsection
(i)(z) hereof within ten days after the occurrence of such Termination Event.
Section 4.4. CASH SETTLEMENT. Upon receipt by the Collateral Agent of (a)
notice from the Purchase Contract Agent prior to the Purchase Contract
Settlement Date, as provided in the Purchase Contract Agreement, that a Holder
elects to effect a Cash Settlement with respect to some or all of such Holder's
Purchase Contracts in accor-
13
dance with the terms of such Purchase Contracts and the Purchase Contract
Agreement and (b) payment by such Holder on or prior to 5:00 p.m., New York City
time, on the Business Day immediately preceding the Purchase Contract Settlement
Date, of the Purchase Price of such Purchase Contracts by certified or cashiers
check payable to or upon the order of the Company, or wire transfer in
immediately available funds, then the Collateral Agent shall, upon the written
direction of the Purchase Contract Agent, promptly invest any Cash received from
a Holder in connection with a Cash Settlement in Permitted Investments that will
mature on the Purchase Contract Settlement Date. Upon the receipt of the
proceeds of any such investment, the Collateral Agent shall pay an amount equal
to the Purchase Price to the Company on the Purchase Contract Settlement Date.
After payment of the Purchase Price to the Company on the Purchase Contract
Settlement Date, the Collateral Agent shall release from the Pledge and promptly
Transfer to the Purchase Contract Agent Pledged Preferred Securities or Pledged
Treasury Securities with a Stated Amount or principal amount, as the case may
be, equal to the product of the Stated Amount and the number of Purchase
Contracts as to which such Holder has elected to effect a Cash Settlement. The
Collateral Agent shall distribute, when received, any funds in respect of the
interest earned from any such investment to the Purchase Contract Agent, for
payment to the relevant Holders.
Section 4.5. EARLY SETTLEMENT. Upon written notice to the Collateral
Agent by the Purchase Contract Agent that one or more Holders of Securities have
elected to effect Early Settlement of their respective obligations under the
Purchase Contracts forming a part of such Securities in accordance with the
terms of the Purchase Contracts and such Purchase Contract Agreement (setting
forth the number of such Purchase Contracts as to which such Holders have
elected to effect Early Settlement), and that the Purchase Contract Agent has
received from such Holders, and paid to the Company as confirmed in writing by
the Company, the related Early Settlement Amounts pursuant to the terms of the
Purchase Contracts 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) Pledged Preferred Securities in the case of a
Holder of Income PRIDES or (b) Pledged Treasury Securities in the case of a
Holder of Growth PRIDES, as the case may be,
14
with a Stated Amount or principal amount, as the case may be, equal to the
product of (i) the Stated Amount times (ii) the number of such Purchase
Contracts as to which such Holders have elected to effect Early Settlement and
shall Transfer all such Pledged Preferred Securities 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 the Holders.
Section 4.6. APPLICATION OF PROCEEDS SETTLEMENT.
(a) In accordance with Section 5.4 of the Purchase Contract Agreement, a holder
of Income PRIDES who does not make an effective Cash Settlement or any Early
Settlement of the Purchase Contract(s) shall be deemed to have instructed the
Purchase Contract Agent, without any further instruction from the Holder of the
Income PRIDES: (a) to the extent that the Trust is still the holder of the
Debentures, to direct the Institutional Trustee to exercise the Trust's right as
a holder to put the Debentures to the Company on the Purchase Contract
Settlement Date in accordance with Section 2.8(b) of the Indenture or (b) to the
extent that the Purchase Contract Agent has become the holder of the Debentures
(as a result of the termination of the Trust or otherwise), to exercise the
Purchase Contract Agent's right as a holder to put the Debentures to the Company
on the Purchase Contract Settlement Date in accordance with Section 2.8.(b) of
the Indenture. As provided in Section 5.4 of the Purchase Contract Agreement,
the consideration received with respect to the put of the Debentures shall be
considered to be proceeds of the Preferred Securities and as such will be paid
to the Collateral Agent as secured party with respect to the Preferred
Securities and, at the written direction of the Purchase Contract Agent, shall
be invested in overnight Permitted Investments. The Collateral Agent shall
automatically pay an amount equal to the Purchase Price to the Company on the
Purchase Contract Settlement Date and such amount shall be applied by the
Company to the Purchase Price for the Purchase Contract. Any excess funds shall
be distributed by the Collateral Agent to the Purchase Contract Agent for
payment to the relevant Holders. After application of the proceeds of the put
of the Debentures to the Purchase Price, the Preferred Securities will be
returned to the Purchase Contract Agent for the benefit of the Holders free of
the lien created by this Agreement for return to the Holder of the related
Income PRIDES.
15
(b) In the event a holder of Growth PRIDES has not made an effective Cash
Settlement or an Early Settlement of the Purchase Contract(s) underlying its
Growth PRIDES, such holder shall be deemed to have elected to pay for the shares
of Common Stock to be issued under such Purchase Contract(s) from the Proceeds
of the related Pledged Treasury Securities. On the Business Day immediately
preceding the 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 in overnight Permitted Investments.
Without receiving any instruction from the Holder of Growth PRIDES, the
Collateral Agent shall apply the Proceeds of the related Pledged Treasury
Securities to the settlement of such Purchase Contracts on the Purchase Contract
Settlement Date.
In the event the sum of the Proceeds from the related Pledged Treasury
Securities and the investment earnings from the investment in overnight
Permitted Investments is in excess of the aggregate Purchase Price of the
Purchase Contracts being settled thereby, the Collateral Agent shall distribute
such excess, when received, to the Purchase Contract Agent for the benefit of
the holder of the related Purchase Contracts.
Section 5. VOTING RIGHTS -- PREFERRED SECURITIES. The Purchase Contract
Agent may exercise, or refrain from exercising, any and all voting and other
consensual rights pertaining to the Pledged Preferred Securities or any part
thereof for any purpose not inconsistent with the terms of this Agreement and in
accordance with the terms of the Purchase Contract Agreement; provided, that the
Purchase Contract Agent shall not exercise or, as the case may be, shall not
refrain from exercising such right if, in the judgment of the Company, such
action would impair or otherwise have a material adverse effect on the value of
all or any of the Pledged Preferred 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 Preferred
Securities, including notice of any meeting at which holders of Preferred
Securities are entitled to vote or solicitation of consents, waivers or proxies
of holders of Preferred Securities, the Collateral Agent
16
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 Preferred Securities (in form and substance satisfactory
to the Collateral Agent) as are prepared by the Purchase Contract Agent with
respect to the Pledged Preferred Securities.
Section 6. RIGHTS AND REMEDIES.
Section 6.1. RIGHTS AND REMEDIES OF THE COLLATERAL AGENT. (a) 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 as in effect in
the State of New York (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.
(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 principal payments of any Pledged
Treasury Securities as provided in Section 3 hereof in satisfaction of the
obligations of the Holder of the Securities to which such Pledged Treasury
Securities relate under the related Purchase Contracts, the Collateral Agent
shall have and may exercise, with reference to such Pledged Treasury Securities
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) the Stated Amount of, or
cash distributions on, the Pledged Preferred Securities, or (ii) the principal
of the Pledged Treasury Securities, subject, in each case, to the provisions of
Section 3, and as otherwise granted herein.
17
(d) The Purchase Contract Agent and each Holder of Securities, in the
event such Holder becomes the holder of a Growth PRIDES, 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. LIQUIDATION OF THE TRUST. Upon the liquidation of the
Trust, a principal amount of the Debentures constituting the assets of the Trust
and underlying the Preferred Securities equal to the aggregated Stated Amount of
the Pledged Preferred Securities shall be delivered to the Collateral Agent in
exchange for the Pledged Preferred Securities. In the event the Collateral
Agent receives such Debentures in respect of Pledged Preferred Securities upon a
liquidation of the Trust, the Collateral Agent shall Transfer the Debentures to
the Collateral Account in the manner specified herein for Pledged Preferred
Securities to secure the obligations of the Holders of the related Income PRIDES
to purchase the Company's Common Stock under the related Purchase Contracts.
Thereafter, the Collateral Agent shall have such security interests, rights and
obligations with respect to such Debentures as it had in respect of the Pledged
Preferred Securities as provided in Articles II, III, IV, V and VI hereof.
Section 7. REPRESENTATION 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 to the Collateral
Agent that:
18
(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, calls, liabilities to pay money or other
restrictions other than the security interest and lien granted
under Section 2 hereof;
(c) upon the Transfer of the Collateral to the Collateral Account,
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 such Holder of its obligations
under this Agreement will not result in the creation of any
security interest, lien or other encumbrance on such 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.
19
Section 7.2. COVENANTS. The Holders from time to time, acting through the
Purchase Contract Agent as their attorney-in-fact (it being understood that the
Purchase Contract Agent shall not be liable for any covenant made by or on
behalf of a Holder), hereby covenant to the Collateral Agent that for so long as
the Collateral remains subject to the Pledge:
(a) neither the Purchase Contract Agent nor such Holders will create
or purport to create or allow to subsist any mortgage, charge,
lien, pledge or any other security interest whatsoever over the
Collateral or any part of it other than pursuant to this
Agreement; and
(b) neither the Purchase Contract Agent nor such Holders will sell or
otherwise dispose (or attempt to dispose) of the Collateral or
any part of it except for the beneficial interest therein,
subject to the Pledge hereunder, transferred in connection with
the Transfer of the Securities.
Section 8. THE COLLATERAL AGENT. It is hereby agreed as follows:
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. The
Collateral Agent: (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 the Collateral Agent, nor shall
the Collateral Agent 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
20
to or provided for herein or therein or for any failure by the Company or any
other Person (except the Collateral Agent) 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 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, any 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 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 be liable for any amount in excess of the Value of the Collateral.
Notwithstanding the foregoing, the Collateral Agent and Securities Intermediary
in its individual capacity hereby waive any right of setoff, bankers lien, liens
or perfection rights as securities intermediary or any counterclaim with respect
to any of the Collateral.
Section 8.2. INSTRUCTIONS OF THE COMPANY. The Company shall have the
right, by one or more instruments in writing executed and delivered to the
Collateral Agent, 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,
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 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
21
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 and the Collateral Agent shall be entitled 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
and the Securities Intermediary. As to any matters not expressly provided for
by this Agreement, the Collateral 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 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, and the Collateral Agent and its 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 and the Collateral Agent covenants and
agrees with the Company that it shall not accept, receive or permit there to be
created in favor of itself and shall take no affirmative action to permit there
to be created in favor of any other Person, any security interest, lien or other
encumbrance of any kind in or upon the Collateral.
Section 8.5. NON-RELIANCE ON COLLATERAL AGENT. Neither the Securities
Intermediary nor 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
22
to inspect the properties or books of the Purchase Contract Agent or any Holder
of Securities. The Collateral Agent 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 or the Securities Intermediary or any of
their respective affiliates.
Section 8.6. COMPENSATION AND INDEMNITY. The Company agrees: (i) to pay
the Collateral Agent from time to time such compensation as shall be agreed in
writing between the Company and the Collateral Agent for all services rendered
by it hereunder and (ii) to indemnify the Collateral Agent and the Securities
Intermediary for, and to hold each of them harmless from and against, any loss,
liability or 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
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.
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 and/or any other Person with respect to any funds or
property deposited hereunder, the Collateral 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 the Collateral Agent shall not be or become liable in any way to
any of the parties hereto for its failure or refusal to comply with such
conflicting claims, demands or instructions. The Collateral 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 (ii) the Collateral Agent shall
have received security or an indemnity satisfactory to the Collateral Agent
sufficient
23
to save the Collateral Agent harmless from and against any and all loss,
liability or expense which the Collateral Agent may incur by reason of its
acting. The Collateral Agent may in addition elect to commence an interpleader
action or seek other judicial relief or orders as the Collateral Agent may deem
necessary. Notwithstanding anything contained herein to the contrary, the
Collateral Agent shall not 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 as provided below, (a) the
Collateral 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 may be removed at any time by the Company
and (c) if the Collateral 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 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. If no successor
Collateral Agent shall have been so appointed and shall have accepted such
appointment within 30 days after the retiring Collateral Agent's giving of
notice of resignation or such removal, then the retiring Collateral Agent may
petition any court of competent jurisdiction for the appointment of a successor
Collateral Agent. The Collateral Agent shall be a bank which has an office in
New York, New York with a combined capital and surplus of at least $50,000,000.
Upon the acceptance of any appointment as Collateral Agent hereunder by a
successor Collateral Agent, such successor Collateral Agent shall thereupon
succeed to and become vested with all the rights, powers, privileges and duties
of the retiring Collateral Agent, and the retiring Collateral Agent shall take
all appropriate action to transfer any money and property held by it hereunder
(including the Collateral) to such successor Collateral Agent. The retiring
Collateral Agent shall, upon such succession, be
24
discharged from its duties and obligations as Collateral Agent hereunder. After
any retiring Collateral Agent's resignation hereunder as Collateral 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.
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.
Section 8.11. INDEMNITY. Anything in this Agreement to the contrary
notwithstanding, in no event shall the Collateral 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 or the
Securities Intermediary, or any of them, incurred without any act or deed that
is found to be attributable to gross negligence on the part of the Collateral
Agent or the Securities Intermediary.
Section 9. AMENDMENT.
Section 9.1. AMENDMENT WITHOUT CONSENT OF HOLDERS. Without the consent of
any Holders, the Company, the Collateral Agent 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 and the Purchase Contract
Agent, for any of the following purposes:
(1) to evidence the succession of another Person to the Company, and
the assumption by any such successor of the covenants of the Company; or
25
(2) to add to the covenants of the Company for the benefit of the
Holders, or to surrender any right or power herein conferred upon the
Company so long as such covenants or such surrender do not adversely affect
the validity, perfection or priority of the security interests granted or
created hereunder; or
(3) to evidence and provide for the acceptance of appointment
hereunder by a successor Collateral Agent, Securities Intermediary or
Purchase Contract Agent; or
(4) to cure any ambiguity, to correct or supplement any provisions
herein which may be inconsistent with any other such provisions herein, or
to make any other provisions with respect to such matters or questions
arising under this Agreement, provided such action shall not adversely
affect the interests of the Holders.
Section 9.2. AMENDMENT WITH CONSENT OF HOLDERS. With the consent of the
Holders of not less than 66 2/3% 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, when
authorized by a Board Resolution, the Purchase Contract Agent and the Collateral
Agent 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 affected thereby,
(1) change the amount or type of Collateral underlying a Security
(except for the rights of holders of Income PRIDES to substitute Treasury
Securities for the Pledged Preferred Securities or the rights of holders of
Growth PRIDES to substitute Preferred Securities for Pledged Treasury
Securities), impair the right of the Holder of any Security to receive
distributions on the underlying Collateral or otherwise adversely affect
the Holder's rights in or to such Collateral; or
(2) otherwise effect any action that would require the consent of the
Holder of each Outstand-
26
ing Security affected thereby pursuant to the Purchase Contract Agreement
if such action were effected by an agreement supplemental thereto; or
(3) reduce the percentage of Purchase Contracts the consent of whose
Holders is required for any such amendment; or
(4) materially and adversely alter the rights of the holders of
Preferred Securities.
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 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, this Agreement shall be modified in accordance therewith,
and such amendment shall form a part of this Agreement for all purposes; and
every Holder of Certificates theretofore or thereafter authenticated, executed
on behalf of the Holders and delivered under the Purchase Contract Agreement
shall be bound thereby.
Section 9.5. REFERENCE TO AMENDMENTS. Security Certificates
authenticated, executed on behalf of the Holders and delivered after the
execution of any amendment pursuant to this Section may, and shall if required
by the Collateral Agent or the Purchase Contract Agent, bear a notation in form
approved by the Purchase Contract Agent and the Collateral Agent as to any
matter provided for in such amendment. If the Company shall so determine, new
Security Certificates so modified as to conform, in the opinion of the
Collateral Agent, the Purchase Contract Agent and the Company, to any such
amend-
27
ment 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
Securities Intermediary, 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
28
(including, without limitation, any modifications of, or waivers or consents
under, this Agreement) shall be given or made in writing (including, without
limitation, by telecopy) delivered to the intended recipient at the "Address for
Notices" specified below its name on the signature pages hereof or, 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.
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 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 for: (a) all reasonable out-of-pocket costs and expenses of the
Collateral Agent (including, without limitation, the reasonable fees and
expenses of counsel to the Collateral Agent), in connection with (i) the
negotiation, preparation, execution and delivery or performance of this
Agreement and (ii) any
29
modification, supplement or waiver of any of the terms of this Agreement; (b)
all reasonable costs and expenses of the Collateral Agent (including, without
limitation, reasonable fees and expenses of counsel) in connection with (i) any
enforcement or proceedings resulting or incurred in connection with causing any
Holder of Securities to satisfy its obligations under the Purchase Contracts
forming a part of the Securities and (ii) the enforcement of this Section 10.7;
and (c) all transfer, stamp, documentary or other similar taxes, assessments or
charges levied by any governmental or revenue authority in respect of this
Agreement or any other document referred to herein and all costs, expenses,
taxes, assessments and other charges incurred in connection with any filing,
registration, recording or perfection of any security interest contemplated
hereby.
Section 10.8. SECURITY INTEREST ABSOLUTE. All rights of the Collateral
Agent and security interests hereunder, and all obligations of the Holders from
time to time hereunder, shall be absolute and unconditional irrespective of:
(a) any lack of validity or enforceability of any provision of the
Purchase Contracts or the Securities or any other agreement or instrument
relating thereto;
(b) any change in the time, manner or place of payment of, or any other
term of, or any increase in the amount of, all or any of the obligations of
Holders of Securities under the related Purchase Contracts, or any other
amendment or waiver of any term of, or any consent to any departure from
any requirement of, the Purchase Contract Agreement or any Purchase
Contract or any other agreement or instrument relating thereto; or
(c) any other circumstance which might otherwise constitute a defense
available to, or discharge of, a borrower, a guarantor or a pledgor.
30
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
Protective Life Corporation
By:
----------------------------------
Name:
Title:
Address for Notices:
Protective Life Corporation
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: General Counsel
Telecopy: ▇▇▇-▇▇▇-▇▇▇▇
The Bank of New York
as Purchase Contract Agent and
as attorney-in-fact of the Holders
from time to time of the Securities
By:
----------------------------------
Name:
Title:
Address for Notices:
The Bank of New York
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention:
Telecopy:
The Chase Manhattan Bank
as Collateral Agent and as Securities Intermediary
By:
----------------------------------
Name:
Title: Senior Trust Officer
Address for Notices:
The Chase Manhattan Bank
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: Corporate Trust
Administration
Department
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
EXHIBIT A
INSTRUCTION FROM PURCHASE CONTRACT AGENT TO COLLATERAL AGENT
The Chase Manhattan Bank
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: Corporate Trust
Administration Department
Re: FELINE PRIDES of Protective Life Corporation (the "Company"), and
PLC Capital Trust II
We hereby notify you in accordance with Section 4.1 of the Pledge
Agreement, dated as of ______ __, 1997, (the "Pledge Agreement") among the
Company, yourselves, as Collateral Agent, and ourselves, as Purchase Contract
Agent and as attorney-in-fact for the holders of [Income PRIDES] [Growth PRIDES]
from time to time, that the holder of securities listed below (the "Holder") has
elected to substitute [$_____ aggregate principal amount of Treasury Securities]
[$_______Stated Amount of Preferred Securities] in exchange for an equal Value
of [Pledged Preferred Securities] [Pledged Treasury Securities] held by you in
accordance with the Pledge Agreement and has delivered to us a notice stating
that the Holder has Transferred [Treasury Securities] [Preferred Securities] to
you, as Collateral Agent. We hereby instruct you, upon receipt of such [Pledged
Treasury Securities] [Pledged Preferred Securities], to release the [Preferred
Securities] [Treasury Securities] related to such [Income PRIDES] [Growth
PRIDES] to us in accordance with the Holder's instructions. Capitalized terms
used herein but not defined shall have the meaning set forth in the Pledge
Agreement.
Date: THE BANK OF NEW YORK
-------------
By:
----------------------
Name:
Title:
Please print name and address of Registered Holder electing to substitute
[Treasury Securities] [Preferred Securities] for the [Pledged Preferred
Securities] [Pledged Treasury Securities]:
--------------------------- -------------------------
Name Social Security or other Taxpayer
Identification
Number, if any
---------------------------
Address
---------------------------
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EXHIBIT B
INSTRUCTION TO PURCHASE CONTRACT AGENT
The Bank of New York
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention:
Re: FELINE PRIDES of PROTECTIVE LIFE CORPORATION (the "Company"), and
PLC Capital Trust II
The undersigned Holder hereby notifies you that it has delivered to
The Chase Manhattan Bank, as Collateral Agent, $_______ aggregate [principal
amount] [Slated Amount] of [Treasury Securities] [Preferred Securities] in
exchange for an equal Value of [Pledged Preferred Securities] [Pledged Treasury
Securities] held by the Collateral Agent (the "Pledge Agreement"), in accordance
with Section 4.1 of the Pledge Agreement, dated ________ __, 1997, between you,
the Company and the Collateral Agent. The undersigned Holder hereby instructs
you to instruct the Collateral Agent to release to you on behalf of the
undersigned Holder the [Pledged Preferred Securities] [Pledged Treasury
Securities] related to such [Income PRIDES] [Growth PRIDES]. Capitalized terms
used herein but not defined shall have the meaning set forth in the Pledge
Agreement.
Dated:
------------- -------------------------
Signature
Please print name and address of Registered Holder:
------------------------- -------------------------
Name Social Security or other
Taxpayer Identification
Number, if any
-------------------------
Address
-------------------------
-------------------------
-------------------------
EXHIBIT C
, 1997
------------
PLC Capital Trust II
Protective Life Corporation
▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Reference is made to the ___ % Trust Originated Preferred Securities
identified on Schedule I hereto (the "Preferred Securities") issued by you for
which we, as agent (the "Purchase Contract Agent") for certain holders of
securities issued by the Protective Life Corporation (the "Company") known as
FELINE PRIDES (the "Securities") are the record owner. Pursuant to a Pledge
Agreement dated as of ___________, 1997 among the Company, The Chase Manhattan
Bank as collateral agent for the benefit of the Company (the "Collateral Agent")
and the Purchase Contract Agent, we have this date pledged the Preferred
Securities to the Collateral Agent as security for the obligations of the
holders of the Securities to the Company. You are hereby instructed that in the
event of a repurchase by you of the Preferred Securities, the proceeds thereof
should be paid by you to the Collateral Agent for all such Preferred Securities
except for any Preferred Securities for which you have received written notice
from the Collateral Agent that such Preferred Securities have been released from
the pledge of the Pledge Agreement.
Very truly yours,
THE BANK OF NEW YORK,
as Purchase Contract Agent
BY:
-------------------
AGREED AND ACKNOWLEDGED
PLC Capital Trust II
BY:
-----------------------------