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EXHIBIT 4.21
CONSECO, INC.,
THE FIRST NATIONAL BANK OF CHICAGO
AND
THE CHASE MANHATTAN BANK
FORM OF PLEDGE AGREEMENT
Dated as of December __, 1997
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TABLE OF CONTENTS
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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 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 4.1. Substitution of Preferred Securities and the Establishment of
Growth PRIDES . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 4.2. Pledge of Preferred Securities and Re-establishment of Income
PRIDES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 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. . . . . . . . . . . . . . 16
Section 5. Voting Rights -- Preferred Securities . . . . . . . . . . . . . . 18
Section 6. Rights and Remedies; Distribution of the Debentures; Tax Event
Redemption . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 6.1. Rights and Remedies of the Collateral Agent . . . . . . . . . . 19
Section 6.2. Distribution of the Debentures; Tax Event Redemption . . . . . 20
Section 6.3. Substitutions. . . . . . . . . . . . . . . . . . . . . . . . . 21
Section 7. Representation and Warranties; Covenants . . . . . . . . . . . . 22
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Page
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Section 7.1. Representations and Warranties . . . . . . . . . . . . . . . . 22
Section 7.2. Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 8. The Collateral Agent . . . . . . . . . . . . . . . . . . . . . . 23
Section 8.1. Appointment, Powers and Immunities . . . . . . . . . . . . . . 23
Section 8.2. Instructions of the Company . . . . . . . . . . . . . . . . . . 25
Section 8.3. Reliance by Collateral Agent . . . . . . . . . . . . . . . . . 25
Section 8.4. Rights in Other Capacities . . . . . . . . . . . . . . . . . . 25
Section 8.5. Non-Reliance on Collateral Agent . . . . . . . . . . . . . . . 26
Section 8.6. Compensation and Indemnity . . . . . . . . . . . . . . . . . . 26
Section 8.7. Failure to Act . . . . . . . . . . . . . . . . . . . . . . . . 27
Section 8.8. Resignation of Collateral Agent . . . . . . . . . . . . . . . . 27
Section 8.9. Right to Appoint Agent or Advisor . . . . . . . . . . . . . . . 28
Section 8.10. Survival . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
Section 8.11. Exculpation . . . . . . . . . . . . . . . . . . . . . . . . . 28
Section 9. Amendment . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Section 9.1. Amendment Without Consent of Holders . . . . . . . . . . . . . 29
Section 9.2. Amendment with Consent of Holders . . . . . . . . . . . . . . . 30
Section 9.3. Execution of Amendments . . . . . . . . . . . . . . . . . . . . 30
Section 9.4. Effect of Amendments . . . . . . . . . . . . . . . . . . . . . 31
Section 9.5. Reference to Amendments . . . . . . . . . . . . . . . . . . . . 31
Section 10. Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . 31
Section 10.1. No Waiver . . . . . . . . . . . . . . . . . . . . . . . . . . 31
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Page
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Section 10.2. Governing Law . . . . . . . . . . . . . . . . . . . . . . . . 31
Section 10.3. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Section 10.4. Successors and Assigns . . . . . . . . . . . . . . . . . . . . 32
Section 10.5. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . 33
Section 10.6. Severability . . . . . . . . . . . . . . . . . . . . . . . . . 33
Section 10.7. Expenses, etc. . . . . . . . . . . . . . . . . . . . . . . . . 33
Section 10.8. Security Interest Absolute . . . . . . . . . . . . . . . . . . 33
EXHIBIT A INSTRUCTION TO COLLATERAL AGENT
EXHIBIT B INSTRUCTION TO PURCHASE CONTRACT AGENT
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PLEDGE AGREEMENT
PLEDGE AGREEMENT, dated as of December __, 1997 (this "Agreement"),
among Conseco, Inc., an Indiana 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 interme-
diary" 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 First National Bank of Chicago, 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 11,500,000 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 February 16, 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) either beneficial ownership of a ____%
Trust Originated Preferred Security (a "Preferred Security") issued by Conseco
Financing Trust IV (the "Trust"), having a liquidation amount equal to $50 (the
"Stated Amount") and maturing on February 16, 2003 or upon the occurrence of a
Tax Event Redemption, the Applicable Ownership Interest.
Pursuant to the terms of the Purchase Contract Agreement and the
Purchase Contracts, the Holders, from time to time, of the Securities have
irrevocably autho-
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rized 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 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 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) Failed Remarketing, (xiii) Holders, (xiv) Opinion of Counsel, (xv)
Outstanding Securities, (xvi) Purchase Contract, (xvii) Purchase
Contract Settlement Date, (xviii) Purchase Price, (xix) Remarketing
Agent, (xx) Remarketing Agreement, (xxi) Remarketing Underwriting
Agreement, (xxii) Settlement Rate, (xxiii) Termination Event, and (xxiv)
Underwriting Agreement; and
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(d) the following terms have the meanings assigned to them in the
Declaration: (i) Applicable Ownership Interest (ii) Applicable
Principal Amount, (iii) Institutional Trustee, (iv) Investment Company
Event,(v) Primary Treasury Dealer, (vi) Quotation Agent, (vii)
Redemption Amount, (viii) Redemption Price, (ix) Tax Event, (x) Tax
Event Redemption, (xi) Tax Event Redemption Date, (xii) Treasury
Portfolio, (xiii) Treasury Portfolio Purchase Price.
"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 First National Bank of Chicago, as
Purchase Contract Agent on behalf of the holders of certain securities of
Conseco Financing Trust IV, Collateral Account subject to the security interest
of The Chase Manhattan Bank, as Collateral Agent, for the benefit of Conseco,
Inc., as pledgee" and any successor account.
"Collateral Agent" has the meaning specified in the first paragraph of
this instrument.
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"Company" means the Person named as the "Company" in the first paragraph
of this instrument until a successor shall have become such, and thereafter
"Company" shall mean such successor.
"Debenture Trustee" means the First National Bank of Chicago, as trustee
under the Indenture until a successor is appointed thereunder, and thereafter
means such successor trustee.
"Declaration" means the Amended and Restated Declaration of Trust of the
Trust, dated as of December __, 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.
"Growth PRIDES" means a Purchase Contract with respect to which Treasury
Securities have been substituted for Preferred Securities or the Treasury
Portfolio, as the case may be, as collateral to secure the Holder's obligations
under such Purchase Contract.
"Holder" when used with respect to a Security, or a Purchase Contract
constituting a part thereof, means The Depository Trust Company (or its
nominee) as the registered holder of an Income PRIDES or a Growth PRIDES, as
the case may be.
"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 US$ 200.0 million at the time of
deposit; (iii) investments with an original maturity of
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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, 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 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 upon
the sale, exchange, collection or disposition of the Collateral or any proceeds
thereof.
"Purchase Contract" has the meaning specified in the Recitals.
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"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 first
paragraph of this instrument.
"Security Entitlement" has the meaning set forth in Section 8-102(a)(17)
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.
"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;
(ii) in the case of Collateral consisting of securities maintained in
book-entry form by causing a "securities intermediary" (as
defined
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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" (as
defined in Section 8-501(a) of the Code) 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 (Cusip
Number 91280 A20) which are the principal strips of the 7 3/4% 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 (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
constituting a part of the securities and all Proceeds thereof 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 (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 the occurrence of
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an Investment Company Event or a liquidation of the Trust as provided in
Section 6.2(e); in any Treasury Portfolio, purchased on behalf of a Holder of
Income PRIDES by the Collateral Agent upon the occurrence of a Tax Event
Redemption as provided in Section 6.2 and (f) 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 comprising a part of the Income PRIDES to
be delivered to the Collateral Agent for the benefit of the Company by
physically delivering such securities to the Collateral Agent endorsed in blank
and the Collateral Agent delivering such scurries to the Securities
Intermediary 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 or Treasury Portfolio,
as the case may be, with an aggregate principal amount equal to the aggregate
principal amount of Treasury Securities so Transferred, to the Purchase
Contract Agent on behalf of such Holder. Treasury Securities and Treasury
Portfolio, as applicable, shall be Transferred to the Collateral Account
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 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
hereof) or Treasury Securities released from the Pledge as provided in Sec-
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tion 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
PRIDES to a Growth PRIDES, or except as otherwise required to release
securities as specified herein, neither the Collateral Agent nor the Securities
Intermediary shall 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 and the Securities Intermediary to
relinquish physical possession of a certificate in order to release a portion
of the Preferred Securities evidenced thereby from the Pledge, each of 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.
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
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instructions and entitlement orders may, without limitation, direct the
Securities Intermediary to transfer, redeem, sell, liquidate, assign, deliver
or otherwise dispose of the Preferred Securities, the 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.
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, if applicable,
principal amount of, or cash distributions on, any Pledged Preferred Securities
or the Treasury Portfolio, as the case may be, 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 or the Treasury Portfolio, as the case may
be, and (B) any payments of the Stated Amount or, if applicable,
principal 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
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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 Growth PRIDES to the accounts
designated by them in writing for such purpose no later than 2:00 p.m.,
New York City time, on the Business Day such payment is received by the
Collateral Agent (provided that in the event such payment is received by
the Collateral Agent on a day that is not a Business Day or after 12:30
p.m., New York City time, on a Business Day, then such payment shall be
made no later than 10:30 a.m., New York City time, on the next
succeeding Business Day); and
(iii) In the case of payments of the Stated Amount of or, if
applicable, principal amount of any Pledged Preferred Securities or the
Treasury Portfolio, as the case may be, or the principal of any Pledged
Treasury Securities, to the Company on the 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 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 or, if
applicable, principal amount on account of any Preferred Security that, at the
time of such payment, is a Pledged Preferred Security, (or the Treasury
Portfolio, as the case may be), 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 Pur-
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chase 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 fifth Business Day
immediately preceding the Purchase Contract Settlement Date (unless a Tax Event
Redemption has occurred), 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 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; provided, however, that if a Tax Event Redemption has
occurred and the Treasury Portfolio has become a component of the Income
PRIDES, Holders of Income PRIDES may make such substitution only in integral
multiples of 8,000 Income PRIDES at any time on or prior to the second Business
Day immediately preceding the Purchase Contract Settlement Date. 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 the Preferred Securities or the Treasury Portfolio, as the case may be,
and shall promptly Transfer such Preferred Securities or the Treasury
Portfolio, as the case
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may be, 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 fifth Business Day immediately
preceding the Purchase Contract Settlement Date (unless a Tax Event Redemption
has occurred), 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 Income 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;
provided, however, that if a Tax Event Redemption has occurred and the Treasury
Portfolio has become a component of the Income PRIDES, Holders of Growth PRIDES
may make such substitution only in integral multiples of 8,000 Growth PRIDES,
at any time on or prior to the Business Day immediately preceding the Purchase
Contract Settlement Date. Upon receipt of the Preferred Securities or the
Treasury Portfolio, as the case may be, from such Holder and the instruction
from the Purchase Contract Agent, the Collateral Agent shall release the
Treasury Securities and shall promptly Transfer such 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 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
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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 the 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 the 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 the 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. (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 an
Income PRIDES or Growth PRIDES 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 its Purchase Contract with cash and (ii) payment by
such Holder on or prior to 11:00 a.m., New York City time, on the Business Day
immediately preceding the
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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,
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.
(b) If a Holder of an Income PRIDES fails to notify the Agent of its
intention to make a Cash Settlement in accordance with paragraph 5.4(a)(i) of
the Purchase Contract Agreement, such failure shall constitute an event of
default under the Purchase Contract Agreement and hereunder, and the Holder
shall be deemed to have consented to the disposition of the pledged Preferred
Securities pursuant to the remarketing as described in paragraph 5.4(b) of the
Purchase Contract Agreement which is incorporated herein by reference. If a
Holder of an Income PRIDES does notify the Agent as provided in paragraph
5.4(a)(i) of the Purchase Contract Agreement of its intention to pay the
Purchase Price in cash, but fails to make such payment as required by paragraph
5.4(a)(ii) of the Purchase Contract Agreement, the Preferred 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 Preferred Securities at the direction of the Company. In addition, in
the event of a Failed Remarketing as described in paragraph 5.4(b) of the
Purchase Contract Agreement, such failed Remarketing shall constitute an event
of 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 Preferred Securities.
(c) If a Holder of a Growth PRIDES fails to notify the Purchase
Contract Agent of such Holder's intention to make a Cash Settlement in
accordance with paragraph 5.4(d)(i) of the Purchase Contract Agreement, or if a
Holder of an Income PRIDES does notify the Agent as provided in paragraph
(d)(i) of the Purchase Contract Agreement of its intention to pay the Purchase
Price in cash, but fails to make such payment as required by paragraph
5.4(d)(ii) of the Purchase Contract Agreement, then upon the maturity of any
Pledged Treasury Securities or the Treasury Portfolio, if any, held by the
Collateral Agent
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on the Business Day immediately preceding the Purchase Contract Settlement
Date, the principal amount of the Pledged Treasury Securities or the Treasury
Portfolio received by the Collateral Agent shall, upon written direction of the
Purchase Contract Agent, be invested promptly in Permitted Investments. On the
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 related Pledged Treasury Securities or the Treasury
Portfolio, as the case may be, and the investment earnings earned from such
investments is in excess of the aggregate Purchase Price of the Purchase Con-
tracts being settled thereby, the Collateral Agent will distribute such excess
to the Purchase Contract Agent for the benefit of the Holder of the related
Growth PRIDES or Income PRIDES when received.
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 the 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 or the Applicable
Ownership Interest 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, with a principal amount 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 the Applicable Ownership Interest 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.
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Section 4.6. Application of Proceeds Settlement. (a) In the event a
Holder of Income PRIDES 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 Income 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 Preferred Securities. The Collateral Agent shall, by 10:00 a.m., New
York City time, on the fourth Business Day immediately preceding the Purchase
Contract Settlement Date, without any instruction from such Holder of Income
PRIDES, present the related Preferred Securities to the Remarketing Agent for
remarketing. Upon receiving such Preferred Securities, the Remarketing Agent,
pursuant to the terms of the Remarketing Agreement and the Remarketing
Underwriting Agreement, will use its reasonable efforts to remarket such
Preferred Securities on such date at a price not less than approximately 100.5%
of the aggregate Stated Amount of such Preferred Securities, plus accrued and
unpaid distributions (including deferred distributions), if any, thereon.
After deducting as the Remarketing Fee an amount not exceeding 25 basis points
(.25%) from any amount of such Proceeds in excess of the aggregate Stated
Amount, plus such accrued and unpaid distributions (including deferred
distributions) of the remarketed Preferred Securities, the Remarketing Agent
will remit the entire amount of the Proceeds of such remarketing to the
Collateral Agent. On the Purchase Contract Settlement Date, the Collateral
Agent shall apply that portion of the Proceeds from such remarketing equal to
the aggregate Stated Amount, plus such accrued and unpaid distributions
(including deferred distributions) of such Preferred Securities to satisfy in
full the obligations of such Holders of Income PRIDES to pay the Purchase Price
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 Preferred Securities of such Holders of Income
PRIDES at a price not less than 100% of the aggregate Stated Amount of such
Preferred Securities plus any accrued and unpaid distributions (including
deferred distributions), thus
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resulting in a Failed Remarketing and an event of default under the Purchase
Contract Agreement and hereunder, the Collateral Agent, for the benefit of the
Company will dispose of the Preferred Securities in accordance with applicable
law and satisfy in full, from such disposition, such Holder's obligation to pay
the Purchase Price for the Common Stock.
(b) In the event a Holder of Growth PRIDES or Income PRIDES (if a Tax
Event Redemption has occurred) has not made an Early Settlement of the Purchase
Contract(s) underlying its Growth PRIDES or Income 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 or the Treasury Portfolio, as the case may be. On the Business Day
immediately prior to 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 or the Treasury
Portfolio, as the case may be, in overnight Permitted Investments. Without
receiving any instruction from any such Holder of Growth PRIDES or Income
PRIDES, the Collateral Agent shall apply the Proceeds of the related Pledged
Treasury Securities or Treasury Portfolio 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 or Treasury Portfolio 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.
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
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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 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; Distribution of the Debentures; Tax
Event Redemption
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 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. Without limiting the generality of the
foregoing, such remedies may include, to the extent permitted by applicable
law, (i) retention of the Preferred Securities or other Collateral in full
satisfaction of the Holders obligations under the Purchase Contracts or (ii)
sale of the Preferred Securities or other Collateral in one or more public or
private sales.
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(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 of which such Pledged Treasury
Securities is a part under the related Purchase Contracts, the inability to
make such payments shall constitute an event of default hereunder 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,
if applicable, the principal 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.
(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. Distribution of the Debentures; Tax Event Redemption.
Upon the occurrence of an Investment Company Event or a liquidation of the
Trust, a principal amount of the Debentures constituting the assets of the
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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 the occurrence of an Investment Company Event or 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 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 the Debentures as it had in respect of the Pledged Preferred
Securities as provided in Articles II, III, IV, V and VI hereof.
Upon the occurrence of a Tax Event Redemption prior to the Purchase
Contract Settlement Date, the Redemption Price payable on the Tax Event
Redemption Date with respect to the Applicable Principal Amount of Debentures
shall be delivered to the Collateral Agent by the Institutional Trustee or upon
a dissolution of the Trust and the distribution of the related Debentures, the
Debenture Trustee on or prior to 12:30 p.m., New York City time, 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 exchange for the Pledged
Preferred Securities or Debentures, as the case may be. 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 for the
benefit of the Company, the Treasury Portfolio and promptly remit the remaining
portion of such Redemption Price to the Purchase Contract Agent for payment to
the Holders of Income PRIDES. The Collateral Agent shall Transfer the Treasury
Portfolio to the Collateral Account in the manner specified herein for Pledged
Preferred Securities to secure the obligation of each Holder of an Income
PRIDES to purchase Common Stock of the Company under the Purchase Contract
constituting a part of such Income PRIDES, in substitution for the Preferred
Securities. Thereafter the Collateral Agent shall have such security
interests, rights and obligations with respect to the Treasury Portfolio as it
had in
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respect of the Preferred Security or Debentures, as the case may be, as
provided in Articles II, III, IV, V, and VI, and any reference herein to the
Preferred Securities or the Debentures shall be deemed to be reference to such
Treasury Portfolio.
Section 6.3. Substitutions. Whenever a holder has the right to
substitute Treasury Securities, Preferred Securities or Treasury Portfolio, as
the case may be, for Collateral held by the Collateral Agent, such substitution
shall not constitute a novation of the security interest created hereby.
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 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, the Collateral Agent, for the benefit of the
Company, will have a valid and perfected first
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priority security interest therein (assuming that any cen-
tral 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 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
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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 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 re-
quired 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
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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 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
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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 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
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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.
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 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 to save the Collateral Agent harmless from and
against any and all loss, liability or reasonable out-of-pocket 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
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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 $750,000,000. 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 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
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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. Exculpation. 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 or willful misconduct 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
(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
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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 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, when
duly authorized, 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 adversely affected thereby,
(1) change the amount or type of Collateral underlying a Security
(except for the rights of holders of Income PRIDES to substitute the
Treasury Securities for the Trust Preferred Securities or the rights of
Holders of Growth PRIDES to substitute Trust Preferred Securities for
the 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 Outstanding 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.
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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
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,
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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 (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
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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 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
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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.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
CONSECO, INC.
By:
-------------------------------
Name:
Title:
Address for Notices:
Conseco, Inc.
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Chief Financial Officer
Telecopy: (▇▇▇)▇▇▇-▇▇▇▇
THE FIRST NATIONAL BANK OF CHICAGO,
as Purchase Contract Agent and as attor-
ney-in-fact of the Holders from time to time
of the Securities
By:
-------------------------------
Name:
Title:
Address for Notices:
The First National Bank of Chicago
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: Corporate Trust
Administration
Telecopy: (▇▇▇)▇▇▇-▇▇▇▇
40
THE CHASE MANHATTAN BANK,
as Collateral Agent and as Securities
Intermediary
By:
-------------------------------
Name:
Title:
Address for Notices:
The Chase Manhattan Bank
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: Corporate Trust Admin-
istration Department
Telecopy: (▇▇▇)▇▇▇-▇▇▇▇
41
EXHIBIT A
INSTRUCTION FROM PURCHASE CONTRACT AGENT TO COLLATERAL AGENT
The Chase Manhattan Bank
▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: Corporate Trust
Administration Department
Re: FELINE PRIDES of Conseco, Inc. (the "Company"), and
Conseco Financing Trust IV
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] [a
principal amount of the Treasury Portfolio] in exchange for an equal Value of
[Pledged Preferred Securities or the Treasury Portfolio] [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 or the Treasury Portfolio] to you, as
Collateral Agent. We hereby instruct you, upon receipt of such [Pledged
Treasury Securities] [Pledged Preferred Securities or the Treasury Portfolio],
to release the [Preferred Securities or the Treasury Portfolio] [Treasury
Securities] related to such [Income PRIDES or the Treasury Portfolio] [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:
------------- -------------------------
By:
----------------------
Name:
Title:
42
Please print name and address of Registered Holder electing to substitute
[Treasury Securities] [Preferred Securities or the Treasury Portfolio] for the
[Pledged Preferred Securities or the Treasury Portfolio] [Pledged Treasury
Securities]:
--------------------------- ---------------------------
Name Social Security or other Tax-
--------------------------- payer
Address Identification Number, if any
---------------------------
---------------------------
43
EXHIBIT B
INSTRUCTION TO PURCHASE CONTRACT AGENT
The First National Bank of Chicago
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: Corporate Trust Administration
Telecopy: (▇▇▇)▇▇▇-▇▇▇▇
Re: FELINE PRIDES of Conseco, Inc. (the "Company"), and
Conseco Financing Trust IV
The undersigned Holder hereby notifies you that it has delivered
to ________________, as Collateral Agent, $_______ aggregate principal amount
of [Treasury Securities] [Preferred Securities or the Treasury Portfolio] in
exchange for an equal Value of [Pledged Preferred Securities or the Treasury
Portfolio] [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 or the Treasury Portfolio] [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
-------------------------
-------------------------
-------------------------