Registration No. 333-56055
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
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POST-EFFECTIVE
AMENDMENT NO. 2
TO
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
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TEXAS UTILITIES COMPANY
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
TEXAS 75-2669310
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER
INCORPORATION OR ORGANIZATION) IDENTIFICATION NO.)
1601 Bryan Street
Dallas, Texas 75201
(214) 812-4600
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
ROBERT A. WOOLDRIDGE, Esq. PETER B. TINKHAM ROBERT J. REGER, JR.,
Worsham, Forsythe Texas Utilities Esq.
& Wooldridge, L.L.P. Company Thelen Reid & Priest LLP
1601 Bryan Street Secretary and 40 West 57th Street
Dallas, Texas 75201 Assistant New York, New York 10019
(214) 979-3000 Treasurer (212) 603-2000
1601 Bryan Street
Dallas, Texas
75201
(214) 812-4600
(NAMES AND ADDRESSES, INCLUDING ZIP CODES, AND TELEPHONE NUMBERS, INCLUDING
AREA CODES, OF AGENTS FOR SERVICE)
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It is respectfully requested that the Commission send copies of all
notices, orders and communications to:
STEPHEN K. WAITE, Esq.
Winthrop, Stimson, Putnam & Roberts
One Battery Park Plaza
New York, New York 10004-1490
(212) 858-1000
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<PAGE>
PART II.
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 16. EXHIBITS.
PREVIOUSLY FILED*
______________________
WITH
FILE AS
EXHIBIT NUMBER EXHIBIT
_______ _______ _______
1(a) ** 1(a) -- Form of Underwriting Agreement
with respect to Common Stock.
1(b) ** 1(b) -- Form of Underwriting Agreement
with respect to Stock Purchase
Units.
1(c) ** 1(c) -- Form of Underwriting Agreement
with respect to Unsecured Senior
Notes.
4(a) 333-12391 3(a) -- Restated Articles of Incorporation
of the Company
4(b) 333-45657 4(b) -- Bylaws of the Company, as amended.
4(c) ** 4(c) -- Form of Indenture relating to the
Debt Securities.
4(d) ** 4(d) -- Form of Officers' Certificate
establishing a series of the Debt
Securities, including Form of the
Debt Securities.
4(d)-1 -- Form of Officer's Certificate
establishing 6.37% Series D Senior
Notes due 2003 and 6.50% Series E
Senior Notes due 2004, including
Forms of such Senior Notes.
4(e) -- Revised form of Purchase Contract
Agreement.
4(f) -- Revised form of Pledge Agreement.
4(g) ** 4(g) -- Form of Remarketing Agreement.
5(a) *** -- Opinion of Worsham, Forsythe &
Wooldridge, L.L.P., General
Counsel for the Company.
5(b) *** -- Opinion of Reid & Priest LLP, of
counsel to the Company.
12 ** 12 -- Computation of Ratio of Earnings
to Fixed Charges of the Company.
15 ** 15 -- Letter of Deloitte & Touche LLP
regarding unaudited condensed
interim financial information.
23(a) ** 23(a) -- Independent Auditors' Consent.
23(b) *** 23(b) -- Consents of Worsham, Forsythe &
Wooldridge, L.L.P. and Reid &
Priest LLP are contained in
Exhibits 5(a) and 5(b),
respectively.
23(c) -- Consent of Ernst & Young.
24 ** Page II-7 -- Power of Attorney.
25(a) ** 25(a) -- Statement of Eligibility on Form
T-1 of The Bank of New York
relating to Indenture for the
Debt Securities.
25(b) **** 25(b) -- Statement of Eligibility on Form
T-1 of The Bank of New York as
Purchase Contract Agent and
Trustee under the Purchase
Contract Agreement.
___________________
* Incorporated herein by reference.
** Previously filed with the original Registration Statement
(333-56055) on June 4, 1998.
*** Previously filed with Amendment No. 1 to the Registration
Statement (333-56055) on June 29, 1998.
**** Previously filed with Post-Effective Amendment No. 1 to the
Registration Statement (333-56055) on July 10, 1998.
II-1
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE
REGISTRANT CERTIFIES THAT IT HAS REASONABLE GROUNDS TO BELIEVE THAT IT
MEETS ALL OF THE REQUIREMENTS FOR FILING ON FORM S-3 AND HAS DULY CAUSED
THIS AMENDMENT TO THE REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY
THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF NEW YORK, AND
STATE OF NEW YORK, ON THE 21ST OF JULY, 1998.
TEXAS UTILITIES COMPANY
BY /s/ Robet J. Reger, Jr.
------------------------------
(ROBERT J. REGER, JR., ESQ.,
ATTORNEY-IN-FACT)
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
AMENDMENT TO THE REGISTRATION STATEMENT HAS BEEN SIGNED BELOW BY THE
FOLLOWING PERSONS IN THE CAPACITIES AND ON THE DATE INDICATED.
Signature Title Date
--------- ----- ----
Erle Nye* Principal
------------------------------------- Executive
(ERLE NYE, CHAIRMAN OF THE BOARD Officer and
AND CHIEF EXECUTIVE) Director
Michael J. McNally* Principal
------------------------------------- Financial
(MICHAEL J. MCNALLY, EXECUTIVE VICE Officer
PRESIDENT AND CHIEF FINANCIAL
OFFICER)
Jerry W. Pinkerton* Principal
------------------------------------- Accounting
(JERRY W. PINKERTON, CONTROLLER) Officer
J. S. Farrington* Director
-------------------------------------
(J. S. FARRINGTON)
Bayard H. Friedman* Director
-------------------------------------
(BAYARD H. FRIEDMAN)
William M. Griffin* Director July 21, 1998
-------------------------------------
(WILLIAM M. GRIFFIN)
Kerney Laday* Director
-------------------------------------
(KERNEY LADAY)
Margaret N. Maxey* Director
-------------------------------------
(MARGARET N. MAXEY)
James A. Middleton* Director
-------------------------------------
(JAMES A. MIDDLETON)
J. E. Oesterreicher* Director
-------------------------------------
(J. E. OESTERREICHER)
Charles R. Perry* Director
-------------------------------------
(CHARLES R. PERRY)
Herbert H. Richardson* Director
-------------------------------------
(HERBERT H. RICHARDSON)
*BY: /s/ Robert J. Reger, Jr.
------------------------------------------------
(ROBERT J. REGER, JR., ATTORNEY-IN-FACT)
II-2
<PAGE>
PREVIOUSLY FILED*
______________________
WITH
FILE AS
EXHIBIT NUMBER EXHIBIT
_______ _______ _______
1(a) ** 1(a) -- Form of Underwriting Agreement
with respect to Common Stock.
1(b) ** 1(b) -- Form of Underwriting Agreement
with respect to Stock Purchase
Units.
1(c) ** 1(c) -- Form of Underwriting Agreement
with respect to Unsecured Senior
Notes.
4(a) 333-12391 3(a) -- Restated Articles of Incorporation
of the Company
4(b) 333-45657 4(b) -- Bylaws of the Company, as amended.
4(c) ** 4(c) -- Form of Indenture relating to the
Debt Securities.
4(d) ** 4(d) -- Form of Officers' Certificate
establishing a series of the Debt
Securities, including Form of the
Debt Securities.
4(d)-1 -- Form of Officer's Certificate
establishing 6.37% Series D Senior
Notes due 2003 and 6.50% Series E
Senior Notes due 2004, including
Forms of such Senior Notes.
4(e) -- Revised form of Purchase Contract
Agreement.
4(f) -- Revised form of Pledge Agreement.
4(g) ** 4(g) -- Form of Remarketing Agreement.
5(a) *** -- Opinion of Worsham, Forsythe &
Wooldridge, L.L.P., General
Counsel for the Company.
5(b) *** -- Opinion of Reid & Priest LLP, of
counsel to the Company.
12 ** 12 -- Computation of Ratio of Earnings
to Fixed Charges of the Company.
15 ** 15 -- Letter of Deloitte & Touche LLP
regarding unaudited condensed
interim financial information.
23(a) ** 23(a) -- Independent Auditors' Consent.
23(b) *** 23(b) -- Consents of Worsham, Forsythe &
Wooldridge, L.L.P. and Reid &
Priest LLP are contained in
Exhibits 5(a) and 5(b),
respectively.
23(c) -- Consent of Ernst & Young.
24 ** Page II-7 -- Power of Attorney.
25(a) ** 25(a) -- Statement of Eligibility on Form
T-1 of The Bank of New York
relating to Indenture for the
Debt Securities.
25(b) **** 25(b) -- Statement of Eligibility on Form
T-1 of The Bank of New York as
Purchase Contract Agent and
Trustee under the Purchase
Contract Agreement.
___________________
* Incorporated herein by reference.
** Previously filed with the original Registration Statement
(333-56055) on June 4, 1998.
*** Previously filed with Amendment No. 1 to the Registration
Statement (333-56055) on June 29, 1998.
**** Previously filed with Post-Effective Amendment No. 1 to the
Registration Statement (333-56055) on July 10, 1998.
TEXAS UTILITIES COMPANY
OFFICER'S CERTIFICATE
Robert S. Shapard, the Treasurer of Texas Utilities Company
(the "Company"), pursuant to the authority granted in the Board
Resolutions of the Company dated February 19 and 20, 1998, and
Sections 201, 301, 1501 and 1502 of the Indenture defined herein,
does hereby certify to The Bank of New York (the "Trustee"), as
Trustee under the Indenture of the Company (For Unsecured Debt
Securities Series D and Series E) dated as of July 1, 1998 (the
"Indenture") that:
1. The securities of the first series to be issued under the
Indenture shall be designated "6.37% Series D Senior Notes
due 2003" (the "Series D Notes"). The securities of the
second series to be issued under the Indenture shall be
designated "6.50% Series E Senior Notes due 2004" (the
"Series E Notes" and, together with the Series D Notes,
hereinafter sometimes referred to as the "Senior Notes").
All capitalized terms used in this certificate which are not
defined herein shall have the meanings set forth in the
Indenture;
2. The Series D Notes shall be limited in aggregate principal
amount to $373,750,000 at any time Outstanding, except as
contemplated in Section 301(b) of the Indenture. The Series
E Notes shall be limited in aggregate principal amount to
$373,750,000 at any time Outstanding, except as contemplated
in Section 301(b) of the Indenture;
3. The Series D Notes shall mature and the principal shall be
due and payable together with all accrued and unpaid
interest thereon on August 16, 2003. The Series E Notes
shall mature and the principal shall be due and payable
together with all accrued and unpaid interest thereon on
August 16, 2004;
4. The Series D Notes and the Series E Notes shall be issued in
the denominations of $25 and integral multiples thereof;
5. The Series D Notes shall bear interest initially at the rate
of 6.37% per annum payable quarterly in arrears on February
16, May 16, August 16 and November 16 of each year (each, an
"Interest Payment Date") commencing August 16, 1998. The
Series E Notes shall bear interest initially at the rate of
6.50% per annum payable quarterly in arrears on each
Interest Payment Date commencing August 16, 1998.
The amount of interest payable on the Series D Notes and the
Series E Notes will be computed on the basis of a 360-day
year of twelve 30-day months. Interest on the Series D Notes
and the Series E Notes will accrue from the original date of
issuance, but if interest has been paid on such Series D
Notes or Series E Notes, as applicable, then from the most
recent Interest Payment Date to which interest has been paid
or duly provided for. In the event that any Interest Payment
Date is not a Business Day, then payment of interest payable
on such date will be made on the next succeeding day which
is a Business Day (and without any interest or other payment
in respect of such delay), except that, if such Business Day
is in the next succeeding calendar year, then such payment
shall be made on the immediately preceding Business Day, in
each case, with the same force and effect as if made on such
Interest Payment Date;
The interest rate on the Series D Notes that remain
Outstanding on and after August 16, 2001 (the "First
Purchase Contract Settlement Date") will be reset on the
third Business Day immediately preceding the First Purchase
Contract Settlement Date to the rate (the "Series D Reset
Rate") determined by a Reset Agent, appointed by the Company
(the "Reset Agent") in the manner described below. From and
after the First Purchase Contract Settlement Date, the
Series D Notes will bear interest at the Series D Reset
Rate.
The interest rate on the Series E Notes that remain
Outstanding on and after August 16, 2002 (the "Second
Purchase Contract Settlement Date") will be reset on the
third Business Day immediately preceding the Second Purchase
Contract Settlement Date to the rate (the "Series E Reset
Rate") determined by the applicable Reset Agent in the
manner described below. From and after the Second Purchase
Contract Settlement Date, the Series E Notes will bear
interest at the Series E Reset Rate.
On the tenth Business Day immediately preceding the
applicable Purchase Contract Settlement Date, the Reset
Agent will select the Two-Year Benchmark Treasury, as
defined below, to be used to determine the applicable Reset
Rate (which will be the Series D Reset Rate in connection
with the First Purchase Contract Settlement Date and the
Series E Reset Rate in connection with the Second Purchase
Contract Settlement Date). On the same day, the Reset Agent
will determine the spread (the "Reset Spread") which, in the
opinion of such Reset Agent, when added to the rate on the
Two-Year Benchmark Treasury on the third Business Day prior
to the applicable Purchase Contract Settlement Date, will
equal the interest rate the Senior Notes of the applicable
Series (which will be the Series D Notes in connection with
the First Purchase Contract Settlement Date and the Series E
Notes in connection with the Second Purchase Contract
Settlement Date) should bear in order to have an approximate
market value on the third Business Day preceding the
applicable Purchase Contract Settlement Date of 100.5% of
their aggregate principal amount, plus accrued and unpaid
interest, if any; provided, that the Company may limit the
Series D Reset Rate to be no higher than the rate on the
Two-Year Benchmark Treasury on third Business Day
immediately preceding the First Purchase Contract Settlement
Date plus 200 basis points (2.0%) and the Series E Reset
Rate to be no higher than the rate on the Two-Year Treasury
on the third Business Day immediately preceding the Second
Purchase Contract Settlement Date plus 200 basis points
(2.0%). In no event shall the Series D Reset Rate or the
Series E Reset Rate exceed the maximum permitted by
applicable law.
On such tenth Business Day immediately preceding the
applicable Purchase Contract Settlement Date, the Company
shall announce the applicable Reset Spread and the
applicable Two-Year Benchmark Treasury (the "Reset
Announcement Date"). The Company will cause a notice of the
applicable Reset Spread and applicable Two-Year Benchmark
Treasury to be published on the Business Day following the
applicable Reset Announcement Date by publication in a
newspaper in the English language of general circulation in
The City of New York and generally published each Business
Day, which is expected to be The Wall Street Journal.
The Company will request, not later than 7 nor more than 15
calendar days prior to each Reset Announcement Date that
DTC, defined below, notify its participants holding
beneficial interests in the Senior Notes of such applicable
Reset Announcement Date and of the procedures that must be
followed by the holders of such Senior Notes wishing to
offer their Senior Notes of the appropriate series (which in
the case of the First Purchase Contract Settlement Date will
be the Series D Notes, and in the case of the Second
Purchase Contract Settlement Date will be the Series E
Notes) in the applicable Remarketing.
Pursuant to one or more Remarketing Agreements ("Remarketing
Agreements") to be entered into by the Company and one or
more nationally recognized investment banking firms chosen
by the Company, as the remarketing Agent (the "Remarketing
Agent"), in connection with each Purchase Contract
Settlement Date, on or prior to the fifth Business Day
immediately preceding the applicable Purchase Contract
Settlement Date, but not earlier than the Interest Payment
Date immediately preceding such Purchase Contract Settlement
Date, each Holder of Senior Notes of the applicable Series
(which in the case of the First Purchase Contract Settlement
Date shall be the Series D Notes and in the case of the
Second Purchase Contract Settlement Date shall be the Series
E Notes) may elect to have such Senior Notes of such Series
remarketed (the applicable "Remarketing") by tendering such
Senior Notes, along with a notice of such election, to the
Custodial Agent under, and in accordance with, the Pledge
Agreement, defined below. Holders of Senior Notes electing
to have their Senior Notes remarketed will also have the
right to withdraw such election on or prior to the fifth
Business day immediately preceding the applicable Purchase
Contract Settlement Date by notice to the Custodial Agent in
accordance with the provisions of the Pledge Agreement.
On the third Business Day immediately preceding the First
Purchase Contract Settlement Date, the applicable Reset
Agent shall determine the Series D Reset Rate for the Series
D Notes by adding the applicable Reset Spread to the rate
for Two-Year Benchmark Treasury on such date. On the third
Business Day immediately preceding the Second Purchase
Contract Settlement Date, the applicable Reset Agent shall
determine the Series E Reset Rate for the Series E Notes by
adding the applicable Reset Spread to the rate for the Two-
Year Benchmark Treasury on such date.
The Remarketing Agent will use its reasonable efforts to
remarket, on the third Business Day immediately preceding
the applicable Purchase Contract Settlement Date, the Senior
Notes tendered for such Remarketing for settlement on such
Purchase Contract Settlement Date at a price of
approximately 100.5% of the aggregate principal amount of
such tendered Senior Notes, plus accrued and unpaid
interest, if any. After deducting as the remarketing fee an
amount not exceeding 25 basis points (.25%) of the aggregate
principal amount of the Senior Notes so remarketed from any
amount of the proceeds of such remarketing in excess of the
aggregate principal amount of the Senior Notes so
remarketed, plus such accrued and unpaid interest, the
Remarketing Agent will remit the entire amount of the
proceeds of such remarketing to the Collateral Agent (with
respect to Senior Notes that had been components of Income
PRIDES) or the Custodial Agent (with respect to other Senior
Notes) in each case under the Pledge Agreement to be
distributed to holders as provided in the Pledge Agreement.
If the Remarketing Agent cannot remarket the Senior Notes
tendered for a Remarketing at a price not less than the
aggregate principal amount of such tendered Senior Notes,
plus accrued and unpaid interest, if any, or if a condition
precedent to a Remarketing shall not have been fulfilled,
then such Remarketing shall be deemed to be a Failed
Remarketing with respect to such series of Senior Notes.
The "Two-Year Benchmark Treasury" on a particular
determination date shall mean direct obligations of the
United States (which may be obligations traded on a
when-issued basis only) having a maturity comparable to the
remaining term to maturity of the applicable series of
Senior Notes, as agreed upon by the Company and the
applicable Reset Agent. The rate for the Two-Year Benchmark
Treasury will be the bid side rate displayed at 10:00 A.M.,
New York City time, on the third Business Day immediately
preceding the applicable Purchase Contract Settlement Date
in the Telerate system (or if the Telerate system is (a) no
longer available on the third Business Day immediately
preceding such Purchase Contract Settlement Date or (b) in
the opinion of the applicable Reset Agent (after
consultation with the Company) no longer an appropriate
system from which to obtain such rate, such other nationally
recognized quotation system as, in the opinion of the
applicable Reset Agent (after consultation with the
Company), is appropriate). If such rate is not so
displayed, the rate for the Two-Year Benchmark Treasury
shall be, as calculated by the applicable Reset Agent, the
yield to maturity for the Two-Year Benchmark Treasury,
expressed as a bond equivalent on the basis of a year of 365
or 366 days, as applicable, and applied on a daily basis,
and computed by taking the arithmetic mean of the secondary
market bid rates, as of 10:30 A.M., New York City time, on
the third Business Day immediately preceding the applicable
Purchase Contract Settlement Date of three leading United
States government securities dealers selected by the
applicable Reset Agent (after consultation with the Company)
(which may include the applicable Reset Agent or an
affiliate thereof).
6. Each installment of interest on a Series D Note and on a
Series E Note shall be payable to the Person in whose name
such Series D Note or such Series D Note is registered at
the close of business on the Regular Record Date for such
interest installment, which shall be the Business Day next
preceding the corresponding Interest Payment Date for the
Senior Notes. The Security Registrar may, but shall not be
required to, register the transfer of Senior Notes during
the ten days immediately preceding an Interest Payment Date.
Any installment of interest on the Series D Notes or on the
Series E Notes not punctually paid or duly provided for
shall forthwith cease to be payable to the Holders of such
Series D Notes or of the Series E Notes on such Regular
Record Date, and may be paid to the Persons in whose name
such Series D Notes or such Series E Notes, respectively,
are registered at the close of business on a Special Record
Date to be fixed by the Trustee for the payment of such
Defaulted Interest. Notice of such Defaulted Interest and
Special Record Date shall be given to the Holders of such
Series D Notes and Series E Notes not less than 10 days
prior to such Special Record Date, or may be paid at any
time in any other lawful manner not inconsistent with the
requirements of any securities exchange on which such Series
D Notes and the Series E Notes may be listed, and upon such
notice as may be required by such exchange, all as more
fully provided in the Indenture;
7. The principal and each installment of interest on the Series
D Notes and on the Series E Notes shall be payable at, and
registration and registration of transfers and exchanges in
respect of the Series D Notes and the Series E Notes may be
effected at, the office or agency of the Company in The City
of New York; provided that payment of interest may be made
at the option of the Company by check mailed to the address
of the persons entitled thereto or by wire transfer to an
account designated by the person entitled thereto. Notices
and demands to or upon the Company in respect of the Series
D Notes and the Series E Notes may be served at the office
or agency of the Company in The City of New York. The
Corporate Trust Office of the Trustee will initially be the
agency of the Company for such payment, registration and
registration of transfers and exchanges and service of
notices and demands and the Company hereby appoints the
Trustee as its agent for all such purposes; provided,
however, that the Company reserves the right to change, by
one or more Officer's Certificates, any such office or
agency and such agent. The Trustee will initially be the
Security Registrar and the Paying Agent for the Series D
Notes and for the Series E Notes;
8. If a Tax Event shall occur and be continuing, the Company
may, at its option, redeem the Senior Notes in whole (but
not in part) at any time at a Redemption Price equal to, for
each Senior Note, the Redemption Amount plus accrued and
unpaid interest thereon, to the date of redemption (the "Tax
Event Redemption Date"). If such Tax Event Redemption
occurs prior to the Second Purchase Contract Settlement
Date, the Redemption Price payable with respect to the
Senior Notes pledged to the Collateral Agent under the
Pledge Agreement dated as of July 1, 1998 by and among the
Company, The Chase Manhattan Bank, as Collateral Agent,
Custodial Agent and Securities Intermediary, and The Bank of
New York, as Purchase Contract Agent, (the "Pledge
Agreement") will be paid to the Collateral Agent on the Tax
Event Redemption Date 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
Senior Notes pledged to the Collateral Agent.
"Tax Event" means the receipt by the Company of an opinion
of a nationally recognized independent tax counsel
experienced in such matters to the effect that, as a result
of (a) any amendment to, change in, or announced proposed
change in, the laws (or any regulations thereunder) of the
United States or any political subdivision or taxing
authority thereof or therein affecting taxation, (b) any
amendment to or change in an interpretation or application
of such laws or regulations by any legislative body, court,
governmental agency or regulatory authority or (c) any
interpretation or pronouncement by any such legislative
body, court, governmental agency or regulatory authority
that provides for a position with respect to such laws or
regulations that differs from the generally accepted
position on the date the Senior Notes are issued, which
amendment, change or proposed change is effective or which
interpretation or pronouncement is announced on or after the
date of issuance of the Senior Notes, there is more than an
insubstantial risk that interest payable by the Company on
the Senior Notes would not be deductible, in whole or in
part, by the Company for United States federal income tax
purposes.
Notice of any redemption will be mailed at least 30 days but
not more than 60 days before the redemption date to each
registered Holder of Senior Notes to be prepaid at its
registered address as more fully provided in the Indenture.
Unless the Company defaults in payment of the Redemption
Price, on and after the redemption date interest shall cease
to accrue on such Senior Notes.
"Applicable Principal Amount" means either (i) if the Tax
Event Redemption Date occurs prior to the Second Purchase
Contract Settlement Date, the aggregate principal amount of
the Senior Notes which are components of Income PRIDES, as
defined below, on the Tax Event Redemption Date or (ii) if
the Tax Event Redemption occurs on or after the Second
Purchase Contract Settlement Date, the aggregate principal
amount of the Senior Notes Outstanding on such Tax Event
Redemption Date.
"Primary Treasury Dealer" means a primary U.S. government
securities dealer in New York City.
"Quotation Agent" means (i) Merrill Lynch, Pierce, Fenner &
Smith Incorporated and its respective successors, provided,
however, that, if the foregoing shall cease to be a Primary
Treasury Dealer, the Company shall substitute therefor
another Primary Treasury Dealer, and (ii) any other Primary
Treasury Dealer selected by the Company.
"Redemption Amount" means for each Senior Note, the product
of (i) the principal amount of such Senior Note and (ii) a
fraction whose numerator is the Treasury Portfolio Purchase
Price and whose denominator is the Applicable Principal
Amount.
"Treasury Portfolio" means, with respect to the Applicable
Principal Amount of Senior Notes (a) if the Tax Event
Redemption Date occurs prior to the Second Purchase Contract
Settlement Date, a portfolio of zero-coupon U.S. Treasury
Securities consisting of (i) interest or principal strips of
U.S. Treasury Securities which mature on or prior to August
15, 2001 in an aggregate amount equal to the Applicable
Principal Amount of the Series D Notes and interest or
principal strips of U.S. Treasury Securities which mature on
or prior to August 15, 2002 in an aggregate amount equal to
the Applicable Principal Amount of the Series E Notes and
(ii) with respect to each scheduled interest payment date on
the Senior Notes of each series that occurs after the Tax
Event Redemption Date, interest or principal strips of U.S.
Treasury Securities which mature on or prior to such dates
in an aggregate amount equal to the aggregate interest
payment that would be due on the Applicable Principal Amount
of the Senior Notes on such date, and (b) if the Tax Event
Redemption Date occurs after the Second Purchase Contract
Settlement Date, a portfolio of zero-coupon U.S. Treasury
Securities consisting of (i) principal or interest strips of
U.S. Treasury Securities which mature on or prior to August
15, 2003 in an aggregate principal amount equal to the
Applicable Principal Amount of the Series D Notes and
principal or interest strips of U.S. Treasury Securities
which mature on or prior to August 15, 2004 in an aggregate
principal amount equal to the Applicable Principal Amount of
the Series E Notes and (ii) with respect to each scheduled
interest payment date on the Senior Notes that occurs after
the Tax Event Redemption Date, interest or principal strips
of U.S. Treasury Securities which mature on or prior to such
date in an aggregate amount equal to the aggregate interest
payment that would be due on the Applicable Principal Amount
of the Senior Notes on such date.
"Treasury Portfolio Purchase Price" means the lowest
aggregate price quoted by a Primary Treasury Dealer to the
Quotation Agent on the third Business Day immediately
preceding the Tax Event Redemption Date for the purchase of
the Treasury Portfolio for settlement on the Tax Event
Redemption Date.
9. Upon a Failed Remarketing with respect to the First Purchase
Contract Settlement Date, holders of Series D Notes will
have the right to put their Series D Notes to the Company on
September 1, 2001 as provided in the form of Series D Notes;
and (ii) upon a Failed Remarketing with respect to the
Second Purchase Contract Settlement Date, holders of Series
E Notes will have the right to put their Series E Notes
directly to the Company on September 1, 2002 as provided in
the form of Series E Notes.
10. Initially the Senior Notes will be issued in certificated
form registered in the name of The Bank of New York, as
Agent under the Purchase Contract Agreement dated as of July
1, 1998 between the Company and The Bank of New York, as
Agent (the "Purchase Contract Agreement") as components of
certain securities of the Company referred to as Income
PRIDES, or in the name of Cede & Co. (as nominee for the
Depository Trust Company ("DTC"), the initial securities
depository for the Senior Notes that are not components of
Income PRIDES, and may bear such legends as either the Agent
or DTC, respectively, may reasonably request.
Notwithstanding section 6 hereof, if the Senior Notes are
registered in the names of additional Holders, the Company
shall have the right to select a Regular Record Date for
such Senior Notes, which shall be at least one Business Day
but not more than 60 Business Days prior to the relevant
Interest Payment Date; provided that, unless the Purchase
Contracts described in such Purchase Contract Agreement have
been terminated, such Regular Record Date must be the same
as the record date for the Income PRIDES described in such
Purchase Contract Agreement.
11. No service charge shall be made for the registration of
transfer or exchange of the Series D Notes or of the Series
E Notes; provided, however, that the Company may require
payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in connection with
the exchange or transfer;
12. If the Company shall make any deposit of money and/or
Eligible Obligations with respect to any Senior Notes, or
any portion of the principal amount thereof, as contemplated
by Section 701 of the Indenture, the Company shall not
deliver an Officer's Certificate described in clause (z) in
the first paragraph of said Section 701 unless the Company
shall also deliver to the Trustee, together with such
Officer's Certificate, either:
(A) an instrument wherein the Company, notwithstanding
the satisfaction and discharge of its indebtedness in
respect of the Series D Notes and the Series E Notes, shall
assume the obligation (which shall be absolute and
unconditional) to irrevocably deposit with the Trustee or
Paying Agent such additional sums of money, if any, or
additional Eligible Obligations (meeting the requirements of
Section 701), if any, or any combination thereof, at such
time or times, as shall be necessary, together with the
money and/or Eligible Obligations theretofore so deposited,
to pay when due the principal of and premium, if any, and
interest due and to become due on such Senior Notes or
portions thereof, all in accordance with and subject to the
provisions of said Section 701; provided, however, that such
instrument may state that the obligation of the Company to
make additional deposits as aforesaid shall be subject to
the delivery to the Company by the Trustee of a notice
asserting the deficiency accompanied by an opinion of an
independent public accountant of nationally recognized
standing, selected by the Trustee, showing the calculation
thereof; or
(B) an Opinion of Counsel to the effect that, as a
result of a change in law occurring after the date of this
certificate, the Holders of such Senior Notes, or portions
of the principal amount thereof, will not recognize income,
gain or loss for United States federal income tax purposes
as a result of the satisfaction and discharge of the
Company's indebtedness in respect thereof and will be
subject to United States federal income tax on the same
amounts, at the same times and in the same manner as if such
satisfaction and discharge had not been effected.
13. The Series D Notes and the Series E Notes shall have such
other terms and provisions as are provided in the forms
thereof set forth in Exhibit A and Exhibit B hereto,
respectively, and shall be issued in substantially such
forms.
14. The undersigned has read all of the covenants and conditions
contained in the Indenture relating to the issuance of the
Series D Notes and the Series E Notes and the definitions in
the Indenture relating thereto and in respect of which this
certificate is made;
15. The statements contained in this certificate are based upon
the familiarity of the undersigned with the Indenture, the
documents accompanying this certificate, and upon
discussions by the undersigned with officers and employees
of the Company familiar with the matters set forth herein;
16. In the opinion of the undersigned, he has made such
examination or investigation as is necessary to enable him
to express an informed opinion whether or not such covenants
and conditions have been complied with; and
17. In the opinion of the undersigned, such conditions and
covenants and conditions precedent, if any (including any
covenants compliance with which constitutes a condition
precedent) to the authentication and delivery of the Series
D Notes and the Series E Notes requested in the accompanying
Company Order have been complied with.
<PAGE>
IN WITNESS WHEREOF, I have executed this Officer's
Certificate this ____ day of _____, 1998.
-----------------------------
Treasurer
<PAGE>
EXHIBIT A
[depository legend]
[Unless this Certificate is presented by an authorized
representative of The Depository Trust Company, a New York
corporation ("DTC"), to the Company or its agent for registration
of transfer, exchange, or payment, and any certificate issued is
registered in the name of Cede & Co. or in such other name as is
requested by an authorized representative of DTC (and any payment
is made to Cede & Co. or to such other entity as is requested by
an authorized representative of DTC), ANY TRANSFER, PLEDGE, OR
OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS
WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has
an interest herein.]
[FORM OF FACE OF SENIOR NOTE]
TEXAS UTILITIES COMPANY
6.37% SERIES D SENIOR NOTE DUE 2003
TEXAS UTILITIES COMPANY, a corporation duly organized
and existing under the laws of the State of Texas (herein
referred to as the "Company", which term includes any successor
Person under the Indenture), for value received, hereby promises
to pay to
or registered assigns, the principal sum of ____________________
Dollars on August 16, 2003, and to pay interest on said principal
sum quarterly on February 16, May 16, August 16 and November 16
of each year (each an Interest Payment Date) commencing August
16, 1998, initially at the rate of 6.37% per annum until August
16, 2001, and at the Series D Reset Rate thereafter until the
principal hereof is paid or made available for payment. Interest
on the Securities of this series will accrue from July 22, 1998,
to the first Interest Payment Date, and thereafter will accrue
from the last Interest Payment Date to which interest has been
paid or duly provided for. In the event that any Interest Payment
Date is not a Business Day, then payment of interest payable on
such date will be made on the next succeeding day which is a
Business Day (and without any interest or other payment in
respect of such delay), except that, if such Business Day is in
the next succeeding calendar year, then such payment shall be
made on the immediately preceding Business Day, in each case,
with the same force and effect as if made on the Interest Payment
Date. The interest so payable, and punctually paid or duly
provided for, on any Interest Payment Date will, as provided in
such Indenture, be paid to the Person in whose name this Security
(or one or more Predecessor Securities) is registered at the
close of business on the Regular Record Date for such interest,
which shall be the [__] Business Day next preceding the
corresponding Interest Payment Date. Any such interest not so
punctually paid or duly provided for will forthwith cease to be
payable to the Holder on such Regular Record Date and may either
be paid to the Person in whose name this Security (or one or more
Predecessor Securities) is registered at the close of business on
a Special Record Date for the payment of such Defaulted Interest
to be fixed by the Trustee, notice whereof shall be given to
Holders of Securities of this series not less than 10 days prior
to such Special Record Date, or be paid at any time in any other
lawful manner not inconsistent with the requirements of any
securities exchange on which the Securities of this series may be
listed, and upon such notice as may be required by such exchange,
all as more fully provided in the Indenture referred to on the
reverse hereof.
Payment of the principal of (and premium, if any) and
interest on this Security will be made at the office or agency of
the Company maintained for that purpose in The City of New York,
the State of New York in such coin or currency of the United
States of America as at the time of payment is legal tender for
payment of public and private debts, provided, however, that, at
the option of the Company, interest on this Security may be paid
by check mailed to the address of the person entitled thereto, as
such address shall appear on the Security Register.
Reference is hereby made to the further provisions of
this Security set forth on the reverse hereof, which further
provisions shall for all purposes have the same effect as if set
forth at this place.
Unless the certificate of authentication hereon has
been executed by the Trustee referred to on the reverse hereof by
manual signature, this Security shall not be entitled to any
benefit under the Indenture or be valid or obligatory for any
purpose.
<PAGE>
IN WITNESS WHEREOF, the Company has caused this
instrument to be duly executed.
TEXAS UTILITIES COMPANY
By:____________________________
ATTEST:
____________________________
CERTIFICATE OF AUTHENTICATION
Dated:
This is one of the Securities of the series designated
therein referred to in the within-mentioned Indenture.
THE BANK OF NEW YORK, as Trustee
By:_______________________________
Authorized Signatory
<PAGE>
[FORM OF REVERSE OF SENIOR NOTE]
This Security is one of a duly authorized issue of
securities of the Company (herein called the "Securities"),
issued and to be issued in one or more series under an Indenture
(for Unsecured Debt Securities Series D and Series E), dated as
of July 1, 1998 (herein, together with any amendments thereto,
called the "Indenture", which term shall have the meaning
assigned to it in such instrument), between the Company and The
Bank of New York, as Trustee (herein called the "Trustee", which
term includes any successor trustee under the Indenture), and
reference is hereby made to the Indenture, including the Board
Resolutions and Officer's Certificate filed with the Trustee on
July 22, 1998 creating the series designated on the face hereof,
for a statement of the respective rights, limitations of rights,
duties and immunities thereunder of the Company, the Trustee and
the Holders of the Securities and of the terms upon which the
Securities are, and are to be, authenticated and delivered. This
Security is one of the series designated on the face hereof,
limited in aggregate principal amount to $373,750,000.
If a Tax Event shall occur and be continuing, the
Company may, at its option, redeem the Securities of this series
in whole (but not in part) at any time at a Redemption Price
equal to the Redemption Amount plus accrued and unpaid interest
thereon to the Tax Event Redemption Date.
The Holder of this Security may, on or prior to the
fifth Business Day immediately preceding August 16, 2001, tender
this Security for Remarketing to The Chase Manhattan Bank, as
Custodial Agent, in accordance with the Pledge Agreement dated as
of July 1, 1998 among the Company, The Bank of New York and The
Chase Manhattan Bank, as Collateral Agent, Custodial Agent and
Securities Intermediary.
If a Failed Remarketing has occurred with respect to
Securities of this series, each holder of Securities of this
series who holds such Securities on the day immediately following
the First Purchase Contract Settlement Date shall have the right
to put such holder's Securities of this series to the Company on
September 1, 2001 (the "Put Option Exercise Date"), upon at least
three Business Days' prior notice, at a price equal to the
principal amount of such Securities, plus accrued and unpaid
interest, if any thereon (the "Repayment Price").
In order for the Securities to be so repurchased, the
Company must receive, on or prior to 5:00 p.m. New York City Time
on the third Business Day immediately preceding the Put Option
Exercise Date, at the then principal executive offices of the
Company, the Securities of this series to be repurchased with the
form entitled "Option to Elect Repayment" on the reverse of or
otherwise accompanying such Securities duly completed. Any such
notice received by the Company shall be irrevocable. All
questions as to the validity, eligibility (including time of
receipt) and acceptance of the Securities of this series for
repayment shall be determined by the Company, whose determination
shall be final and binding. The payment of the Repayment Price
in respect of such Securities of this series shall be made,
either through the Trustee or the Company acting as Paying Agent,
no later than 12:00 noon, New York City time, on the Put Option
Exercise Date.
The Indenture contains provisions for defeasance at any
time of the entire indebtedness of this Security upon compliance
with certain conditions set forth in the Indenture.
If an Event of Default with respect to Securities of
this series shall occur and be continuing, the principal of the
Securities of this series may be declared due and payable in the
manner and with the effect provided in the Indenture.
The Indenture permits, with certain exceptions as
therein provided, the amendment thereof and the modification of
the rights and obligations of the Company and the rights of the
Holders of the Securities of each series to be affected under the
Indenture at any time by the Company and the Trustee with the
consent of the Holders of a majority in principal amount of the
Securities at the time Outstanding of all series to be affected.
The Indenture contains provisions permitting the Holders of a
majority in aggregate principal amount of the Securities of all
series then Outstanding to waive compliance by the Company with
certain provisions of the Indenture. The Indenture also contains
provisions permitting the Holders of specified percentages in
principal amount of the Securities of each series at the time
Outstanding, on behalf of the Holders of all Securities of such
series, to waive compliance by the Company with certain
provisions of the Indenture and certain past defaults under the
Indenture and their consequences. Any such consent or waiver by
the Holder of this Security shall be conclusive and binding upon
such Holder and upon all future Holders of this Security and of
any Security issued upon the registration of transfer hereof or
in exchange herefor or in lieu hereof, whether or not notation of
such consent or waiver is made upon this Security.
As provided in and subject to the provisions of the
Indenture, the Holder of this Security shall not have the right
to institute any proceeding with respect to the Indenture or for
the appointment of a receiver or trustee or for any other remedy
thereunder, unless such Holder shall have previously given the
Trustee written notice of a continuing Event of Default with
respect to the Securities of this series, the Holders of a
majority in aggregate principal amount of the Securities of all
series at the time Outstanding in respect of which an Event of
Default shall have occurred and be continuing shall have made
written request to the Trustee to institute proceedings in
respect of such Event of Default as Trustee and offered the
Trustee reasonable indemnity, and the Trustee shall not have
received from the Holders of a majority in aggregate principal
amount of Securities of all series at the time Outstanding in
respect of which an Event of Default shall have occurred and be
continuing a direction inconsistent with such request, and shall
have failed to institute any such proceeding, for 60 days after
receipt of such notice, request and offer of indemnity. The
foregoing shall not apply to any suit instituted by the Holder of
this Security for the enforcement of any payment of principal
hereof or any premium or interest hereon on or after the
respective due dates expressed herein.
No reference herein to the Indenture and no provision
of this Security or of the Indenture shall alter or impair the
obligation of the Company, which is absolute and unconditional,
to pay the principal of and any premium and interest on this
Security at the times, place and rate, and in the coin or
currency, herein prescribed.
The Securities of this series are issuable only in
registered form without coupons in denominations of $25. As
provided in the Indenture and subject to certain limitations
therein set forth, Securities of this series are exchangeable for
a like aggregate principal amount of Securities of this series
and of like tenor and of authorized denominations, as requested
by the Holder surrendering the same.
No service charge shall be made for any such
registration of transfer or exchange, but the Company may require
payment of a sum sufficient to cover any tax or other
governmental charge payable in connection therewith.
The Company, the Trustee and any agent of the Company
or the Trustee may treat the Person in whose name this Security
is registered as the absolute owner hereof for all purposes,
whether or not this Security be overdue, and neither the Company,
the Trustee nor any such agent shall be affected by notice to the
contrary.
All terms used in this Security which are defined in
the Indenture shall have the meanings assigned to them in the
Indenture and in the Officer's Certificate establishing the terms
of the Securities of this Series.
<PAGE>
OPTION TO ELECT REPAYMENT
The undersigned hereby irrevocably requests and instructs
the Company to repay $_____ principal amount of the within
Security, pursuant to its terms, on the "Put Option Exercise
Date," together with any interest thereon accrued but unpaid to
the date of repayment, to the undersigned at:
---------------------------------------------------------------
(Please print or type name and address of the undersigned)
and to issue to the undersigned, pursuant to the terms of the
Security, a new Security or Securities representing the remaining
aggregate principal amount of this Security.
For this Option to Elect Repayment to be effective, this Security
with the Option to Elect Repayment duly completed must be
received by the Company at its principal executive office, Attn:
Secretary, no later than 5:00 p.m. on the third Business Day
prior to September 1, 2001.
Dated: Signature:
-------------------------
Signature Guarantee:
---------------
Note: The signature to this Option to Elect Repayment must
correspond with the name as written upon the face of the within
Security without alternation or enlargement or any change
whatsoever.
SIGNATURE GUARANTEE
Signatures must be guaranteed by an "eligible guarantor
institution" meeting the requirements of the Registrar, which
requirements include membership or participation in the Security
Transfer Agent Medallion Program ("STAMP") or such other
"signature guarantee program" as may be determined by the
Registrar in addition to, or in substitution for, STAMP, all in
accordance with the Securities Exchange Act of 1934, as amended.
<PAGE>
----------------
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned assigns and transfers this
Security to:
-----------------------------------------------------------------
-----------------------------------------------------------------
-----------------------------------------------------------------
(Insert assignee's social security or tax identification number)
-----------------------------------------------------------------
-----------------------------------------------------------------
-----------------------------------------------------------------
(Insert address and zip code of assignee)
and irrevocably appoints
-----------------------------------------------------------------
-----------------------------------------------------------------
-----------------------------------------------------------------
agent to transfer this Security on the books of the Company. The
agent may substitute another to act for him or her.
Date: ____________________________________
Signature:
-------------------------
Signature Guarantee:
---------------
(Sign exactly as your name appears on the other side of this
Security)
SIGNATURE GUARANTEE
Signatures must be guaranteed by an "eligible guarantor
institution" meeting the requirements of the Registrar, which
requirements include membership or participation in the Security
Transfer Agent Medallion Program ("STAMP") or such other
"signature guarantee program" as may be determined by the
Registrar in addition to, or in substitution for, STAMP, all in
accordance with the Securities Exchange Act of 1934, as amended.
<PAGE>
EXHIBIT B
[depository legend]
[Unless this Certificate is presented by an authorized
representative of The Depository Trust Company, a New York
corporation ("DTC"), to the Company or its agent for registration
of transfer, exchange, or payment, and any certificate issued is
registered in the name of Cede & Co. or in such other name as is
requested by an authorized representative of DTC (and any payment
is made to Cede & Co. or to such other entity as is requested by
an authorized representative of DTC), ANY TRANSFER, PLEDGE, OR
OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS
WRONGFUL inasmuch as the registered owner hereof, Cede & Co., has
an interest herein.]
[FORM OF FACE OF SENIOR NOTE]
TEXAS UTILITIES COMPANY
6.50% SERIES E SENIOR NOTE DUE 2004
TEXAS UTILITIES COMPANY, a corporation duly organized
and existing under the laws of the State of Texas (herein
referred to as the "Company", which term includes any successor
Person under the Indenture), for value received, hereby promises
to pay to
or registered assigns, the principal sum of ____________________
Dollars on August 16, 2004, and to pay interest on said principal
sum quarterly on February 16, May 16, August 16 and November 16
of each year (each an Interest Payment Date) commencing August
16, 1998, initially at the rate of 6.50% per annum until August
16, 2002, and at the Series E Reset Rate thereafter until the
principal hereof is paid or made available for payment. Interest
on the Securities of this series will accrue from July 22, 1998,
to the first Interest Payment Date, and thereafter will accrue
from the last Interest Payment Date to which interest has been
paid or duly provided for. In the event that any Interest Payment
Date is not a Business Day, then payment of interest payable on
such date will be made on the next succeeding day which is a
Business Day (and without any interest or other payment in
respect of such delay), except that, if such Business Day is in
the next succeeding calendar year, then such payment shall be
made on the immediately preceding Business Day, in each case,
with the same force and effect as if made on the Interest Payment
Date. The interest so payable, and punctually paid or duly
provided for, on any Interest Payment Date will, as provided in
such Indenture, be paid to the Person in whose name this Security
(or one or more Predecessor Securities) is registered at the
close of business on the Regular Record Date for such interest,
which shall be the [__] Business Day next preceding the
corresponding Interest Payment Date. The Security Registrar may,
but shall not be required to, register the transfer of this
Security in whole or in part during the ten days immediately
preceding an Interest Payment Date. Any such interest not so
punctually paid or duly provided for will forthwith cease to be
payable to the Holder on such Regular Record Date and may either
be paid to the Person in whose name this Security (or one or more
Predecessor Securities) is registered at the close of business on
a Special Record Date for the payment of such Defaulted Interest
to be fixed by the Trustee, notice whereof shall be given to
Holders of Securities of this series not less than 10 days prior
to such Special Record Date, or be paid at any time in any other
lawful manner not inconsistent with the requirements of any
securities exchange on which the Securities of this series may be
listed, and upon such notice as may be required by such exchange,
all as more fully provided in the Indenture referred to on the
reverse hereof.
Payment of the principal of (and premium, if any) and
interest on this Security will be made at the office or agency of
the Company maintained for that purpose in The City of New York,
the State of New York in such coin or currency of the United
States of America as at the time of payment is legal tender for
payment of public and private debts, provided, however, that, at
the option of the Company, interest on this Security may be paid
by check mailed to the address of the person entitled thereto, as
such address shall appear on the Security Register.
Reference is hereby made to the further provisions of
this Security set forth on the reverse hereof, which further
provisions shall for all purposes have the same effect as if set
forth at this place.
Unless the certificate of authentication hereon has
been executed by the Trustee referred to on the reverse hereof by
manual signature, this Security shall not be entitled to any
benefit under the Indenture or be valid or obligatory for any
purpose.
<PAGE>
IN WITNESS WHEREOF, the Company has caused this
instrument to be duly executed.
TEXAS UTILITIES COMPANY
By:______________________________
ATTEST:
____________________________
CERTIFICATE OF AUTHENTICATION
Dated:
This is one of the Securities of the series designated
therein referred to in the within-mentioned Indenture.
THE BANK OF NEW YORK, as Trustee
By:______________________________
Authorized Signatory
<PAGE>
[FORM OF REVERSE OF SENIOR NOTE]
This Security is one of a duly authorized issue of
securities of the Company (herein called the "Securities"),
issued and to be issued in one or more series under an Indenture
(for Unsecured Debt Securities Series D and Series E), dated as
of July 1, 1998 (herein, together with any amendments thereto,
called the "Indenture", which term shall have the meaning
assigned to it in such instrument), between the Company and The
Bank of New York, as Trustee (herein called the "Trustee", which
term includes any successor trustee under the Indenture), and
reference is hereby made to the Indenture, including the Board
Resolutions and Officer's Certificate filed with the Trustee on
July 22, 1998 creating the series designated on the face hereof,
for a statement of the respective rights, limitations of rights,
duties and immunities thereunder of the Company, the Trustee and
the Holders of the Securities and of the terms upon which the
Securities are, and are to be, authenticated and delivered. This
Security is one of the series designated on the face hereof,
limited in aggregate principal amount to $373,750,000.
If a Tax Event shall occur and be continuing, the
Company may, at its option, redeem the Securities of this series
in whole (but not in part) at any time at a Redemption Price
equal to the Redemption Amount plus accrued and unpaid interest
thereon to the Tax Event Redemption Date.
The Holder of this Security may, on or prior to the
fifth Business Day immediately preceding August 16, 2002, tender
this Security for Remarketing to The Chase Manhattan Bank, as
Custodial Agent, in accordance with the Pledge Agreement dated as
of July 1, 1998 among the Company, The Bank of New York and The
Chase Manhattan Bank, as Collateral Agent, Custodial Agent and
Securities Intermediary.
If a Failed Remarketing has occurred with respect to
Securities of this series, each holder of Securities of this
series who holds such Securities on the day immediately following
the First Purchase Contract Settlement Date shall have the right
to put such holder's Securities of this series to the Company on
September 1, 2002 (the "Put Option Exercise Date"), upon at least
three Business Days' prior notice, at a price equal to the
principal amount of such Securities, plus accrued and unpaid
interest, if any thereon (the "Repayment Price").
In order for the Securities to be so repurchased, the
Company must receive, on or prior to 5:00 p.m. New York City Time
on the third Business Day immediately preceding the Put Option
Exercise Date, at the then principal executive offices of the
Company, the Securities of this series to be repurchased with the
form entitled "Option to Elect Repayment" on the reverse of or
otherwise accompanying such Securities duly completed. Any such
notice received by the Trustee shall be irrevocable. All
questions as to the validity, eligibility (including time of
receipt) and acceptance of the Securities of this series for
repayment shall be determined by the Company, whose determination
shall be final and binding. The payment of the Repayment Price
in respect of such Securities of this series shall be made,
either through the Trustee or the Company acting as Paying Agent,
no later than 12:00 noon, New York City time, on the Put Option
Exercise Date.
The Indenture contains provisions for defeasance at any
time of the entire indebtedness of this Security upon compliance
with certain conditions set forth in the Indenture.
If an Event of Default with respect to Securities of
this series shall occur and be continuing, the principal of the
Securities of this series may be declared due and payable in the
manner and with the effect provided in the Indenture.
The Indenture permits, with certain exceptions as
therein provided, the amendment thereof and the modification of
the rights and obligations of the Company and the rights of the
Holders of the Securities of each series to be affected under the
Indenture at any time by the Company and the Trustee with the
consent of the Holders of a majority in principal amount of the
Securities at the time Outstanding of all series to be affected.
The Indenture contains provisions permitting the Holders of a
majority in aggregate principal amount of the Securities of all
series then Outstanding to waive compliance by the Company with
certain provisions of the Indenture. The Indenture also contains
provisions permitting the Holders of specified percentages in
principal amount of the Securities of each series at the time
Outstanding, on behalf of the Holders of all Securities of such
series, to waive compliance by the Company with certain
provisions of the Indenture and certain past defaults under the
Indenture and their consequences. Any such consent or waiver by
the Holder of this Security shall be conclusive and binding upon
such Holder and upon all future Holders of this Security and of
any Security issued upon the registration of transfer hereof or
in exchange herefor or in lieu hereof, whether or not notation of
such consent or waiver is made upon this Security.
As provided in and subject to the provisions of the
Indenture, the Holder of this Security shall not have the right
to institute any proceeding with respect to the Indenture or for
the appointment of a receiver or trustee or for any other remedy
thereunder, unless such Holder shall have previously given the
Trustee written notice of a continuing Event of Default with
respect to the Securities of this series, the Holders of a
majority in aggregate principal amount of the Securities of all
series at the time Outstanding in respect of which an Event of
Default shall have occurred and be continuing shall have made
written request to the Trustee to institute proceedings in
respect of such Event of Default as Trustee and offered the
Trustee reasonable indemnity, and the Trustee shall not have
received from the Holders of a majority in aggregate principal
amount of Securities of all series at the time Outstanding in
respect of which an Event of Default shall have occurred and be
continuing a direction inconsistent with such request, and shall
have failed to institute any such proceeding, for 60 days after
receipt of such notice, request and offer of indemnity. The
foregoing shall not apply to any suit instituted by the Holder of
this Security for the enforcement of any payment of principal
hereof or any premium or interest hereon on or after the
respective due dates expressed herein.
No reference herein to the Indenture and no provision
of this Security or of the Indenture shall alter or impair the
obligation of the Company, which is absolute and unconditional,
to pay the principal of and any premium and interest on this
Security at the times, place and rate, and in the coin or
currency, herein prescribed.
The Securities of this series are issuable only in
registered form without coupons in denominations of $25. As
provided in the Indenture and subject to certain limitations
therein set forth, Securities of this series are exchangeable for
a like aggregate principal amount of Securities of this series
and of like tenor and of authorized denominations, as requested
by the Holder surrendering the same.
No service charge shall be made for any such
registration of transfer or exchange, but the Company may require
payment of a sum sufficient to cover any tax or other
governmental charge payable in connection therewith.
The Company, the Trustee and any agent of the Company
or the Trustee may treat the Person in whose name this Security
is registered as the absolute owner hereof for all purposes,
whether or not this Security be overdue, and neither the Company,
the Trustee nor any such agent shall be affected by notice to the
contrary.
All terms used in this Security which are defined in
the Indenture shall have the meanings assigned to them in the
Indenture and in the Officer's Certificate establishing the terms
of the Securities of this Series.
<PAGE>
OPTION TO ELECT REPAYMENT
The undersigned hereby irrevocably requests and instructs
the Company to repay $_____ principal amount of the within
Security, pursuant to its terms, on the "Put Option Exercise
Date," together with any interest thereon accrued but unpaid to
the date of repayment, to the undersigned at:
-----------------------------------------------------------------
(Please print or type name and address of the undersigned)
and to issue to the undersigned, pursuant to the terms of the
Security, a new Security or Securities representing the remaining
aggregate principal amount of this Security.
For this Option to Elect Repayment to be effective, this Security
with the Option to Elect Repayment duly completed must be
received by the Company at its principal executive office, Attn:
Secretary, no later than 5:00 p.m. on the third Business Day
prior to September 1, 2002.
Dated: Signature:
-------------------------
Signature Guarantee:
---------------
Note: The signature to this Option to Elect Repayment must
correspond with the name as written upon the face of the within
Security without alternation or enlargement or any change
whatsoever.
SIGNATURE GUARANTEE
Signatures must be guaranteed by an "eligible guarantor
institution" meeting the requirements of the Registrar, which
requirements include membership or participation in the Security
Transfer Agent Medallion Program ("STAMP") or such other
"signature guarantee program" as may be determined by the
Registrar in addition to, or in substitution for, STAMP, all in
accordance with the Securities Exchange Act of 1934, as amended.
<PAGE>
----------------
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned assigns and transfers this
Security to:
-----------------------------------------------------------------
-----------------------------------------------------------------
-----------------------------------------------------------------
(Insert assignee's social security or tax identification number)
-----------------------------------------------------------------
-----------------------------------------------------------------
-----------------------------------------------------------------
(Insert address and zip code of assignee)
and irrevocably appoints
----------------------------------------------------------------
----------------------------------------------------------------
----------------------------------------------------------------
agent to transfer this Security on the books of the Company. The
agent may substitute another to act for him or her.
Date: ____________________________________
Signature:
-------------------------
Signature Guarantee:
---------------
(Sign exactly as your name appears on the other side of this
Security)
SIGNATURE GUARANTEE
Signatures must be guaranteed by an "eligible guarantor
institution" meeting the requirements of the Registrar, which
requirements include membership or participation in the Security
Transfer Agent Medallion Program ("STAMP") or such other
"signature guarantee program" as may be determined by the
Registrar in addition to, or in substitution for, STAMP, all in
accordance with the Securities Exchange Act of 1934, as amended.
=================================================================
TEXAS UTILITIES COMPANY
AND
THE BANK OF NEW YORK,
AS PURCHASE CONTRACT AGENT
AND TRUSTEE
------------------------------
PURCHASE CONTRACT AGREEMENT
------------------------------
Dated as of July 1, 1998
=================================================================
<PAGE>
TIE SHEET
---------
Section of Section of
Trust Indenture Act Purchase Contract
of 1939, as amended Agreement
------------------- ------------------
310(a) . . . . . . . . . . . . . . . . . . . . . . . 7.8
310(b) . . . . . . . . . . . . . . . . . . . . . . . 7.9(g),
11.8
310(c) . . . . . . . . . . . . . . . . . . . . . . Inapplicable
311(a) . . . . . . . . . . . . . . . . . . . . . . . 11.2(b)
311(b) . . . . . . . . . . . . . . . . . . . . . . . 11.2(b)
311(c) . . . . . . . . . . . . . . . . . . . . . . Inapplicable
312(a) . . . . . . . . . . . . . . . . . . . . . . . 11.2(a)
312(b) . . . . . . . . . . . . . . . . . . . . . . . 11.2(b)
313 . . . . . . . . . . . . . . . . . . . . . . . . . 11.3
314(a) . . . . . . . . . . . . . . . . . . . . . . . 11.4
314(b) . . . . . . . . . . . . . . . . . . . . . . Inapplicable
314(c) . . . . . . . . . . . . . . . . . . . . . . . 11.5
314(d) . . . . . . . . . . . . . . . . . . . . . . Inapplicable
314(e) . . . . . . . . . . . . . . . . . . . . . . . 1.1, 1.3,
11.5
314(f) . . . . . . . . . . . . . . . . . . . . . . . 11.1
315(a) . . . . . . . . . . . . . . . . . . . . . . . 7.1(a)
315(b) . . . . . . . . . . . . . . . . . . . . . . . 7.2
315(c) . . . . . . . . . . . . . . . . . . . . . . . 7.1(e)
315(d) . . . . . . . . . . . . . . . . . . . . . . . 7.1(b)
316(a) . . . . . . . . . . . . . . . . . . . . . . . 11.6
316(b) . . . . . . . . . . . . . . . . . . . . . . . 6.1
316(c) . . . . . . . . . . . . . . . . . . . . . . . 11.2
317(a) . . . . . . . . . . . . . . . . . . . . . . Inapplicable
317(b) . . . . . . . . . . . . . . . . . . . . . . Inapplicable
318(a) . . . . . . . . . . . . . . . . . . . . . . . 11.1(b)
318(b) . . . . . . . . . . . . . . . . . . . . . . . 11.1
318(c) . . . . . . . . . . . . . . . . . . . . . . . 11.1(a)
-------------
* This Cross-Reference Table does not constitute part of the
Purchase Contract Agreement and shall not affect the
interpretation of any of its terms or provisions.
<PAGE>
TABLE OF CONTENTS
Page No.
--------
RECITALS . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE I
Definitions and Other Provisions
of General Applications . . . . . . . . 1
SECTION 1.1. Definitions . . . . . . . . . . . . . . . . 1
SECTION 1.2. Compliance Certificates and Opinions . . . 13
SECTION 1.3. Form of Documents Delivered to Agent . . . 13
SECTION 1.4. Acts of Holders; Record Dates . . . . . . . 14
SECTION 1.5. Notices . . . . . . . . . . . . . . . . . . 15
SECTION 1.6. Notice to Holders; Waiver . . . . . . . . . 16
SECTION 1.7. Effect of Headings and Table of Contents . 16
SECTION 1.8. Successors and Assigns . . . . . . . . . . 16
SECTION 1.9. Separability Clause . . . . . . . . . . . . 16
SECTION 1.10. Benefits of Agreement . . . . . . . . . . . 16
SECTION 1.11. Governing Law . . . . . . . . . . . . . . . 16
SECTION 1.12. Legal Holidays . . . . . . . . . . . . . . 17
SECTION 1.13. Counterparts . . . . . . . . . . . . . . . 17
SECTION 1.14. Inspection of Agreement . . . . . . . . . . 17
ARTICLE II
Certificate Forms . . . . . . . . . . 17
SECTION 2.1. Forms of Certificates Generally . . . . . . 17
SECTION 2.2. Form of Agent's Certificate of
Authentication . . . . . . . . . . . . . . 18
ARTICLE III
The Securities . . . . . . . . . . 18
SECTION 3.1. Title and Terms; Denominations . . . . . . 18
SECTION 3.2. Rights and Obligations Evidenced by the
Certificates . . . . . . . . . . . . . . . 19
SECTION 3.3. Execution, Authentication, Delivery and
Dating . . . . . . . . . . . . . . . . . . 19
SECTION 3.4. Temporary Certificates . . . . . . . . . . 20
SECTION 3.5. Registration; Registration of Transfer and
Exchange . . . . . . . . . . . . . . . . . 20
SECTION 3.6. Book-Entry Interests . . . . . . . . . . . 22
SECTION 3.7. Notices to Holders . . . . . . . . . . . . 22
SECTION 3.8. Appointment of Successor Clearing Agency . 22
SECTION 3.9. Definitive Certificates . . . . . . . . . . 22
SECTION 3.10. Mutilated, Destroyed, Lost and Stolen
Certificates . . . . . . . . . . . . . . . 23
SECTION 3.11. Persons Deemed Owners . . . . . . . . . . . 24
SECTION 3.12. Cancellation . . . . . . . . . . . . . . . 24
SECTION 3.13. Establishment or Reestablishment of Growth
PRIDES . . . . . . . . . . . . . . . . . . 25
SECTION 3.14. Establishment or Reestablishment of Income
PRIDES . . . . . . . . . . . . . . . . . . 27
SECTION 3.15. Transfer of Collateral upon Occurrence of
Termination Event . . . . . . . . . . . . 28
SECTION 3.16. No Consent to Assumption . . . . . . . . . 29
ARTICLE IV
The Debt Securities . . . . . . . . . 29
SECTION 4.1. Payment of Interest; Rights to Interest
Preserved; Interest Rate Reset; Notice . . 29
SECTION 4.2. Notice and Voting . . . . . . . . . . . . . 30
SECTION 4.3. Tax Event Redemption . . . . . . . . . . . 31
SECTION 4.4. Consent to Treatment for Tax Purposes . . . 31
ARTICLE V
The Purchase Contracts . . . . . . . . 32
SECTION 5.1. Purchase of Shares of Common Stock . . . . 32
SECTION 5.2. Contract Adjustment Payments . . . . . . . 33
SECTION 5.3. Deferral of Payment Dates For Contract
Adjustment Payments . . . . . . . . . . . 34
SECTION 5.4. Payment of Purchase Price . . . . . . . . . 35
SECTION 5.5. Issuance of Shares of Common Stock . . . . 38
SECTION 5.6. Adjustment of Settlement Rate . . . . . . . 39
SECTION 5.7. Notice of Adjustments and Certain Other
Events . . . . . . . . . . . . . . . . . . 44
SECTION 5.8. Termination Event; Notice . . . . . . . . . 44
SECTION 5.9. Early Settlement . . . . . . . . . . . . . 45
SECTION 5.10. No Fractional Shares . . . . . . . . . . . 46
SECTION 5.11. Charges and Taxes . . . . . . . . . . . . . 47
ARTICLE VI
Remedies . . . . . . . . . . . . 47
SECTION 6.1. Unconditional Right of Holders to Receive
Contract Adjustment Payments and to Purchase
Common Stock . . . . . . . . . . . . . . . 47
SECTION 6.2. Restoration of Rights and Remedies . . . . 47
SECTION 6.3. Rights and Remedies Cumulative . . . . . . 48
SECTION 6.4. Delay or Omission Not Waiver . . . . . . . 48
SECTION 6.5. Undertaking for Costs . . . . . . . . . . . 48
SECTION 6.6. Waiver of Stay or Extension Laws . . . . . 48
ARTICLE VII
The Agent . . . . . . . . . . . . 49
SECTION 7.1. Certain Duties and Responsibilities . . . . 49
SECTION 7.2. Notice of Default . . . . . . . . . . . . . 50
SECTION 7.3. Certain Rights of Agent . . . . . . . . . . 50
SECTION 7.4. Not Responsible for Recitals or Issuance of
Securities . . . . . . . . . . . . . . . . 51
SECTION 7.5. May Hold Securities . . . . . . . . . . . . 51
SECTION 7.6. Money Held in Custody . . . . . . . . . . . 51
SECTION 7.7. Compensation and Reimbursement . . . . . . 51
SECTION 7.8. Corporate Agent Required; Eligibility . . . 52
SECTION 7.9. Resignation and Removal; Appointment of
Successor . . . . . . . . . . . . . . . . 52
SECTION 7.10. Acceptance of Appointment by Successor . . 53
SECTION 7.11. Merger, Conversion, Consolidation or
Succession to Business . . . . . . . . . . 54
SECTION 7.12. Preservation of Information; Communications
to Holders . . . . . . . . . . . . . . . . 54
SECTION 7.13. No Obligations of Agent . . . . . . . . . . 54
SECTION 7.14. Tax Compliance . . . . . . . . . . . . . . 54
ARTICLE VIII
Supplemental Agreements . . . . . . . . 55
SECTION 8.1. Supplemental Agreements Without Consent of
Holders . . . . . . . . . . . . . . . . . 55
SECTION 8.2. Supplemental Agreements with Consent of
Holders . . . . . . . . . . . . . . . . . 55
SECTION 8.3. Execution of Supplemental Agreements . . . 56
SECTION 8.4. Effect of Supplemental Agreements . . . . . 57
SECTION 8.5. Reference to Supplemental Agreements . . . 57
ARTICLE IX
Consolidation, Merger, Sale or Conveyance . . . . 57
SECTION 9.1. Covenant Not to Merge, Consolidate, Sell or
Convey Property Except Under Certain
Conditions . . . . . . . . . . . . . . . . 57
SECTION 9.2. Rights and Duties of Successor Corporation 57
SECTION 9.3. Opinion of Counsel Given to Agent . . . . . 58
ARTICLE X
Covenants . . . . . . . . . . . . 58
SECTION 10.1. Performance Under Purchase Contracts . . . 58
SECTION 10.2. Maintenance of Office or Agency . . . . . . 58
SECTION 10.3. Company to Reserve Common Stock . . . . . . 59
SECTION 10.4. Covenants as to Common Stock . . . . . . . 59
ARTICLE XI
Trust Indenture Act . . . . . . . . . 59
SECTION 11.1. Trust Indenture Act; Application . . . . . 59
SECTION 11.2. Lists of Holders of Securities . . . . . . 59
SECTION 11.3. Reports by the Agent . . . . . . . . . . . 60
SECTION 11.4. Periodic Reports to Agent . . . . . . . . . 60
SECTION 11.5. Evidence of Compliance with Conditions
Precedent . . . . . . . . . . . . . . . . 60
SECTION 11.6. Defaults; Waiver . . . . . . . . . . . . . 60
SECTION 11.7. Agent's Knowledge of Defaults . . . . . . . 60
SECTION 11.8. Conflicting Interests . . . . . . . . . . . 61
SECTION 11.9. Direction of Agent. . . . . . . . . . . . . 61
EXHIBIT A: FORM OF INCOME PRIDES CERTIFICATE . . . . . . . . A-1
EXHIBIT B: FORM OF GROWTH PRIDES CERTIFICATE . . . . . . . . B-1
EXHIBIT C: NOTICE TO SETTLE BY SEPARATE CASH . . . . . . . . C-1
<PAGE>
PURCHASE CONTRACT AGREEMENT, dated as of July 1, 1998,
between Texas Utilities Company, a Texas corporation (the
"Company"), and The Bank of New York, acting as purchase contract
agent, attorney-in-fact and trustee for the Holders of Securities
from time to time (in any one or more of such capacities, the
"Agent").
RECITALS
The Company has duly authorized the execution and
delivery of this Agreement and the Certificates evidencing the
Securities.
All things necessary to make the Purchase Contracts,
when the Certificates are executed by the Company and
authenticated, executed on behalf of the Holders and delivered by
the Agent, as provided in this Agreement, the valid obligations
of the Company and the Holders, and to constitute these presents
a valid agreement of the Company, in accordance with its terms,
have been done.
WITNESSETH:
For and in consideration of the premises and the
purchase of the Securities by the Holders thereof, it is mutually
agreed as follows:
ARTICLE I
DEFINITIONS AND OTHER PROVISIONS
OF GENERAL APPLICATIONS
SECTION 1.1. DEFINITIONS.
For all purposes of this Agreement, except as otherwise
expressly provided or unless the context otherwise requires:
(a) the terms defined in this Article have the meanings
assigned to them in this Article and include the plural as
well as the singular; and nouns and pronouns of the
masculine gender include the feminine and neuter genders;
(b) all accounting terms not otherwise defined herein
have the meanings assigned to them in accordance with
generally accepted accounting principles in the United
States;
(c) the words "herein," "hereof" and "hereunder" and
other words of similar import refer to this Agreement as a
whole and not to any particular Article, Section or other
subdivision; and
(d) the following terms have the meanings given to them
in this Section 1.1(d):
"3-YEAR TREASURY SECURITY" means a % zero-coupon
------
U.S. Treasury Security having a principal amount at maturity
equal to $1,000 and maturing on August 15, 2001 (CUSIP No. 912820
BB 2).
"4-YEAR TREASURY SECURITY" means a % zero-coupon
------
U.S. Treasury Security having a principal amount at maturity
equal to $1,000 and maturing on August 15, 2002 (CUSIP No. 912820
BE 6).
"ACT" when used with respect to any Holder, has the
meaning specified in Section 1.4.
"AFFILIATE" has the same meaning as given to that term
in Rule 405 of the Securities Act of 1933, as amended, or any
successor rule thereunder.
"AGENT" means the Person named as the "Agent" in the
first paragraph of this instrument until a successor Agent shall
have become such pursuant to the applicable provisions of this
Agreement, and thereafter "Agent" shall mean such Person.
"AGREEMENT" means this instrument as originally
executed or as it may from time to time be supplemented or
amended by one or more agreements supplemental hereto entered
into pursuant to the applicable provisions hereof.
"APPLICABLE MARKET VALUE" has the meaning specified in
Section 5.1.
"APPLICABLE OWNERSHIP INTEREST" means, with respect to
each Income PRIDES and the U.S. Treasury Securities in the
Treasury Portfolio, (A) prior to the First Purchase Contract
Settlement Date, (i) a 1/40, or 2.5%, undivided beneficial
ownership interest in a $1,000 principal or interest amount of a
principal or interest strip in a U.S. Treasury Security included
in such Treasury Portfolio which matures on or prior to August
15, 2001 and a 1/40, or 2.5%, undivided beneficial ownership
interest in a $1,000 principal or interest amount of a principal
or interest strip in a U.S. Treasury Security included in such
Treasury Portfolio which matures on or prior to August 15, 2002,
and (ii) for each scheduled interest payment date on the Debt
Securities of each series that occurs after the Tax Event
Redemption Date, a .0804% undivided beneficial ownership interest
in a $1,000 face amount of each such U.S. Treasury Security which
is a principal or interest strip maturing on such date or (B)
from the First Purchase Contract Settlement Date to the Second
Purchase Contract Settlement Date, (i) a 1/40, or 2.5%, undivided
beneficial ownership interest in a $1,000 principal or interest
strip in a U.S. Treasury Security included in such Treasury
Portfolio which matures on or prior to August 15, 2002 and (ii)
for each scheduled interest payment date on the Series E Notes
that occurs after a Tax Event Redemption Date, a .0406%
undivided beneficial ownership interest in a $1,000 face amount
of such U.S. Treasury Security which is a principal or interest
strip maturing on such date.
"APPLICABLE PRINCIPAL AMOUNT" means either (i) if the
Tax Event Redemption Date occurs prior to the Second Purchase
Contract Settlement Date, the aggregate principal amount of the
Debt Securities which are components of Income PRIDES on the Tax
Event Redemption Date or (ii) if the Tax Event Redemption occurs
on or after the Second Purchase Contract Settlement Date, the
aggregate principal amount of the Debt Securities outstanding on
such Tax Event Redemption Date.
"AUTHORIZED OFFICER" means the Chairman of the Board,
the President, any Vice President, the Treasurer, any Assistant
Treasurer, or any other officer or agent of the Company duly
authorized by the Board of Directors to act in respect of matters
relating to this Agreement.
"AUTHORIZED NEWSPAPER" means a newspaper in the English
language of general circulation in the City of New York and
generally published each Business Day. As of the date of this
Agreement, the Company anticipates that for purposes of each
Reset Announcement Date the Authorized Newspaper will be the Wall
Street Journal.
"BANKRUPTCY CODE" means title 11 of the United States
Code, or any other law of the United States that from time to
time provides a uniform system of bankruptcy laws.
"BENEFICIAL OWNER" means, with respect to a Book-Entry
Interest, a Person who is the beneficial owner of such Book-Entry
Interest as reflected on the books of the Clearing Agency or on
the books of a Person maintaining an account with such Clearing
Agency (directly as a Clearing Agency Participant or as an
indirect participant, in each case in accordance with the rules
of such Clearing Agency).
"BOARD OF DIRECTORS" means the board of directors of
the Company or a duly authorized committee of that board.
"BOARD RESOLUTION" means one or more resolutions of the
Board of Directors, a copy of which has been certified by the
Secretary or an Assistant Secretary of the Company to have been
duly adopted by the Board of Directors and to be in full force
and effect on the date of such certification and delivered to the
Agent.
"BOOK-ENTRY INTEREST" means a beneficial interest in a
Global Certificate, ownership and transfers of which shall be
maintained and made through book entries by a Clearing Agency as
described in Section 3.6.
"BUSINESS DAY" means any day other than a Saturday,
Sunday or any other day on which banking institutions in New York
City (in the State of New York) are permitted or required by any
applicable law to close.
"CASH SETTLEMENT" has the meaning set forth in Section
5.4(a)(i).
"CERTIFICATE" means an Income PRIDES Certificate or a
Growth PRIDES Certificate.
"CLEARING AGENCY" means an organization registered as a
"Clearing Agency" pursuant to Section 17A of the Exchange Act
that is acting as a depositary for the Securities and in whose
name, or in the name of a nominee of that organization, shall be
registered a Global Certificate and which shall undertake to
effect book entry transfers and pledges of the Securities.
"CLEARING AGENCY PARTICIPANT" means a broker, dealer,
bank, other financial institution or other Person for whom from
time to time the Clearing Agency effects book entry transfers and
pledges of securities deposited with the Clearing Agency.
"CLOSING PRICE" has the meaning specified in Section
5.1.
"COLLATERAL" has the meaning specified in Section 2.1
of the Pledge Agreement.
"COLLATERAL AGENT" means The Chase Manhattan Bank, as
Collateral Agent under the Pledge Agreement until a successor
Collateral Agent shall have become such pursuant to the
applicable provisions of the Pledge Agreement, and thereafter
"Collateral Agent" shall mean the Person who is then the
Collateral Agent thereunder.
"COLLATERAL SUBSTITUTION" means the substitution of the
pledged components of one type of Security for pledged components
of the other type of Security in connection with establishment or
reestablishment of Growth PRIDES or Income PRIDES, as described
in Sections 3.13 and 3.14 hereof.
"COMMON STOCK" means the Common Stock, without par
value, of the Company.
"COMPANY" means the Person named as the "Company" in
the first paragraph of this instrument until a successor shall
have become such pursuant to the applicable provision of this
Agreement, and thereafter "Company" shall mean such successor.
"COMPANY CERTIFICATE" means a certificate signed by an
Authorized Officer and delivered to the Agent.
"CONTRACT ADJUSTMENT PAYMENTS" means the fees payable
by the Company in respect of each Purchase Contract issued in
connection with the Income PRIDES and the Growth PRIDES, which
fees shall be equal to (A) in the case of each Purchase Contract
issued in connection with Income PRIDES (i) for the period prior
to the First Purchase Contract Settlement Date, 2.815% per annum
of the Stated Amount, and (ii) for the period from and after the
First Purchase Contract Settlement Date until the Second Purchase
Contract Settlement Date, 2.75% per annum of the Remaining Stated
Amount, and (B) in the case of each Purchase Contract issued in
connection with Growth PRIDES (i) for the period prior to the
First Purchase Contract Settlement Date, 3.315% per annum of the
Stated Amount of such Growth PRIDES, and (ii) for the period from
and after the First Purchase Contract Settlement Date until the
Second Purchase Contract Settlement Date, 3.25% per annum of the
Remaining Stated Amount of such Growth PRIDES; in each case
computed on the basis of a 360 day year of twelve 30 day months,
plus any Deferred Contract Adjustment Payments accrued pursuant
to Section 5.2.
"CORPORATE TRUST OFFICE" means the principal corporate
trust office of the Agent at which, at any particular time, its
corporate trust business shall be administered, which office at
the date hereof is located at 101 Barclay Street, New York, New
York 10286.
"COUPON RATE" with respect to a Debt Security means the
percentage rate per annum at which such Debt Security will bear
interest.
"CURRENT MARKET PRICE" has the meaning specified in
Section 5.6(a)(8).
"DEBT SECURITIES" means the Series D Notes and the
Series E Notes.
"DEFAULT" means a default by the Company in any of its
obligations under this Agreement.
"DEFERRED CONTRACT ADJUSTMENT PAYMENTS" has the meaning
specified in Section 5.3.
"DEPOSITARY" means, initially, DTC until another
Clearing Agency becomes its successor.
"DTC" means The Depository Trust Company, the initial
Clearing Agency.
"EARLY SETTLEMENT" has the meaning specified in Section
5.9(a).
"EARLY SETTLEMENT AMOUNT" has the meaning specified in
Section 5.9(a).
"EARLY SETTLEMENT DATE" has the meaning specified in
Section 5.9(a).
"EARLY SETTLEMENT RATE" is either the First Early
Settlement Rate or the Second Early Settlement Rate, as
applicable.
"EXCHANGE ACT" means the Securities Exchange Act of
1934 and any statute successor thereto, in each case as amended
from time to time, and the rules and regulations promulgated
thereunder.
"EXPIRATION DATE" has the meaning specified in Section
1.4.
"EXPIRATION TIME" has the meaning specified in Section
5.6(a)(6).
"FAILED REMARKETING" has the meaning specified in
Section 5.4(b).
"FIRST EARLY SETTLEMENT RATE" has the meaning specified
in Section 5.9(b).
"FIRST PURCHASE CONTRACT SETTLEMENT DATE" means August
16, 2001.
"GLOBAL DEBT SECURITY CERTIFICATE" means a certificate
evidencing the rights and obligations of a Holder in respect of
the number of Debt Securities specified on such certificate and
which is registered in the name of a Clearing Agency or a nominee
thereof.
"GLOBAL CERTIFICATE" means a Certificate that evidences
all or part of the Securities and is registered in the name of a
Depositary or a nominee thereof.
"GROWTH PRIDES" means a Security, initially issued in
the form of Exhibit B hereto in a Stated Amount of $50, which
represents (i)(a) prior to the First Purchase Contract Settlement
Date, a 1/40 undivided beneficial ownership in a 3-year Treasury
Security having a principal amount at maturity equal to $1,000
and a 1/40 undivided beneficial interest in a 4-year Treasury
Security having a principal amount of maturity equal to $1,000,
and (b) from the First Purchase Contract Settlement Date to the
Second Purchase Contract Settlement Date, a 1/40 undivided
beneficial interest in a 4-year Treasury Security having a
principal amount at maturity equal to $1,000, subject to the
Pledge of each such Treasury Security by the Holder pursuant to
the Pledge Agreement, and (ii) the rights and obligations of the
Company and the Holder under one Purchase Contract.
"GROWTH PRIDES CERTIFICATE" means a certificate
evidencing the rights and obligations of a Holder in respect of
the number of Growth PRIDES specified on such certificate.
"GROWTH PRIDES REGISTER" and "GROWTH PRIDES REGISTRAR"
have the respective meanings specified in Section 3.5.
"HOLDER," when used with respect to a Security, means
the Person in whose name the Security evidenced by an Income
PRIDES Certificate and/or a Growth PRIDES Certificate is
registered on the related Income PRIDES Register and/or the
Growth PRIDES Register, as the case may be.
"INCOME PRIDES" means a Security initially issued in
the form of Exhibit A hereto in the Stated Amount of $50 which
represents (i) either (a) one Series E Note and, prior to the
First Purchase Contract Settlement Date, one Series D Note, each
in an aggregate principal amount of $25, subject to the Pledge of
such Debt Securities by the Holder pursuant to the Pledge
Agreement or (b) upon the occurrence of a Tax Event Redemption
prior to the Second Purchase Contract Settlement Date, the
appropriate Applicable Ownership Interest in the Treasury
Portfolio, subject to the Pledge of such Applicable Ownership
Interest in the Treasury Portfolio by the Holder pursuant to the
Pledge Agreement, and (ii) the rights and obligations of the
Holder under one Purchase Contract.
"INCOME PRIDES CERTIFICATE" means a certificate
evidencing the rights and obligations of a Holder in respect of
the number of Income PRIDES specified on such certificate.
"INCOME PRIDES REGISTER" and "INCOME PRIDES REGISTRAR"
have the respective meanings specified in Section 3.5.
"INDENTURE" means the Indenture dated as of July 1,
1998 between the Company and the Indenture Trustee pursuant to
which the Debt Securities are to be issued.
"INDENTURE TRUSTEE" means The Bank of New York, as
trustee under the Indenture, or any successor thereto.
"ISSUER ORDER" or "ISSUER REQUEST" means a written
order or request signed in the name of the Company by an
Authorized Officer and delivered to the Agent.
"NYSE" has the meaning specified in Section 5.1.
"OFFICER'S CERTIFICATE" means a certificate signed by
an authorized signatory of the Company establishing the terms of
the debt securities of any series pursuant to the Indenture.
"OPINION OF COUNSEL" means an opinion in writing signed
by legal counsel, who may be an employee of or counsel to the
Company or an Affiliate and who shall be reasonably acceptable to
the Agent.
"OUTSTANDING," with respect to any Income PRIDES or
Growth PRIDES means, as of the date of determination, all Income
PRIDES or Growth PRIDES evidenced by Certificates theretofore
authenticated, executed and delivered under this Agreement,
except:
(i) If a Termination Event has occurred, (A)
Growth PRIDES for which Treasury Securities have been
deposited with the Agent in trust for the Holders of
such Growth PRIDES and (B) Income PRIDES for which Debt
Securities or the appropriate Applicable Ownership
Interest in the Treasury Portfolio, (or as contemplated
in Section 3.15 hereto with respect to a Holder's
interest in the Treasury Portfolio, cash) as the case
may be, has been theretofore deposited with the Agent
in trust for the Holders of such Income PRIDES;
(ii) Income PRIDES and Growth PRIDES evidenced by
Certificates theretofore canceled by the Agent or
delivered to the Agent for cancellation or deemed
canceled pursuant to the provisions of this Agreement;
and
(iii) Income PRIDES and Growth PRIDES evidenced by
Certificates in exchange for or in lieu of which other
Certificates have been authenticated, executed on
behalf of the Holder and delivered pursuant to this
Agreement, other than any such Certificate in respect
of which there shall have been presented to the Agent
proof satisfactory to it that such Certificate is held
by a bona fide purchaser in whose hands the Income
PRIDES or Growth PRIDES evidenced by such Certificate
are valid obligations of the Company;
provided, however, that in determining whether the Holders of the
requisite number of the Income PRIDES or Growth PRIDES have given
any request, demand, authorization, direction, notice, consent or
waiver hereunder, Income PRIDES or Growth PRIDES owned by the
Company or any Affiliate of the Company shall be disregarded and
deemed not to be outstanding, except that, in determining whether
the Agent shall be protected in relying upon any such request,
demand, authorization, direction, notice, consent or waiver, only
Income PRIDES or Growth PRIDES which a Responsible Officer of the
Agent knows to be so owned shall be so disregarded. Income PRIDES
or Growth PRIDES so owned which have been pledged in good faith
may be regarded as Outstanding Securities if the pledgee
establishes to the satisfaction of the Agent the pledgee's right
so to act with respect to such Income PRIDES or Growth PRIDES and
that the pledgee is not the Company or any Affiliate of the
Company.
"PAYMENT DATE" means each February 16, May 16, August
16 and November 16, commencing August 16, 1998.
"PERSON" means a legal person, including any
individual, corporation, estate, partnership, joint venture,
association, joint-stock company, limited liability company,
trust, unincorporated association or government or any agency or
political subdivision thereof or any other entity of whatever
nature.
"PERMITTED INVESTMENTS" has the meaning set forth in
Section 1 of the Pledge Agreement.
"PLEDGE" means the pledge under the Pledge Agreement of
the Debt Securities, the Treasury Securities or the appropriate
Applicable Ownership Interest in the Treasury Portfolio, in each
case constituting a part of the Securities.
"PLEDGE AGREEMENT" means the Pledge Agreement, dated as
of the date hereof, by and among the Company, the Agent, the
Collateral Agent, the Custodial Agent and the Securities
Intermediary.
"PREDECESSOR CERTIFICATE" means a Predecessor Income
PRIDES Certificate or a Predecessor Growth PRIDES Certificate.
"PREDECESSOR INCOME PRIDES CERTIFICATE" of any
particular Income PRIDES Certificate means every previous Income
PRIDES Certificate evidencing all or a portion of the rights and
obligations of the Company and the Holder under the Income PRIDES
Certificate evidenced thereby; and, for the purposes of this
definition, any Income PRIDES Certificate authenticated and
delivered under Section 3.10 in exchange for or in lieu of a
mutilated, destroyed, lost or stolen Income PRIDES Certificate
shall be deemed to evidence the same rights and obligations of
the Company and the Holder as the mutilated, destroyed, lost or
stolen Income PRIDES Certificate.
"PREDECESSOR GROWTH PRIDES CERTIFICATE" of any
particular Growth PRIDES Certificate means every previous Growth
PRIDES Certificate evidencing all or a portion of the rights and
obligations of the Company and the Holder under the Growth PRIDES
Certificate evidenced thereby; and, for the purposes of this
definition, any Growth PRIDES Certificate authenticated and
delivered under Section 3.10 in exchange for or in lieu of a
mutilated, destroyed, lost or stolen Growth PRIDES Certificate
shall be deemed to evidence the same rights and obligations of
the Company and the Holder as the mutilated, destroyed, lost or
stolen Growth PRIDES Certificate.
"PRIMARY TREASURY DEALER" means a primary U.S.
government securities dealer in New York City.
"PROCEEDS" has the meaning set forth in Section 1 of
the Pledge Agreement.
"PURCHASE CONTRACT," when used with respect to any
Security, means the contract forming a part of such Security and
(A) obligating the Company to sell to the Holder of such Security
and the Holder of such Security to purchase (i) not later than
the First Purchase Contract Settlement Date, for $25 in cash, a
number of newly issued shares of Common Stock equal to the
applicable Settlement Rate and (ii) not later than the Second
Purchase Contract Settlement Date for $25 in cash, a number of
newly issued shares of Common Stock equal to the applicable
Settlement Rate, and (B) obligating the Company to pay the Holder
Contract Adjustment Payments, on the terms and subject to the
conditions set forth in Article Five hereof.
"PURCHASE CONTRACT SETTLEMENT DATE" means, as
applicable, the First Purchase Contract Settlement Date or the
Second Purchase Contract Settlement Date.
"PURCHASE CONTRACT SETTLEMENT FUND" has the meaning
specified in Section 5.5.
"PURCHASE PRICE" has the meaning specified in Section
5.1.
"PURCHASED SHARES" has the meaning specified in Section
5.6(a)(6).
"QUOTATION AGENT" means (i) Merrill Lynch, Pierce,
Fenner & Smith Incorporated and its respective successors,
provided, however, that, if the foregoing shall cease to be a
Primary Treasury Dealer, the Company shall substitute therefor
another Primary Treasury Dealer, and (ii) any other Primary
Treasury Dealer selected by the Company.
"RECORD DATE" for the payment of interest, distribution
and Contract Adjustment Payments payable on any Payment Date
means, as to any Global Certificate, the Business Day next
preceding such Payment Date, and as to any other Certificate, a
day selected by the Company which shall be at least one Business
Day but less than 60 Business Days prior to such Payment Date
(and which shall correspond to the related record date for the
Debt Securities).
"REDEMPTION AMOUNT" means for each Debt Security, the
product of (i) the principal amount of such Debt Security and
(ii) a fraction whose numerator is the Treasury Portfolio
Purchase Price and whose denominator is the Applicable Principal
Amount.
"REDEMPTION PRICE" means an amount equal per Debt
Security to the Redemption Amount plus accrued and unpaid
interest, if any, to the date of redemption.
"REGISTER" means the Income PRIDES Register and the
Growth PRIDES Register.
"REGISTRAR" means the Income PRIDES Registrar and the
Growth PRIDES Registrar.
"REMAINING STATED AMOUNT" means $25, which is equal to
one-half of the Stated Amount of the Income PRIDES and the face
amount of the Growth PRIDES, and is intended to reflect the
settlement of one-half of each Purchase Contract on or prior to
the First Purchase Contract Settlement Date.
"REMARKETING AGENT" has the meaning specified in
Section 5.4.
"REMARKETING AGREEMENT" means a Remarketing Agreement
contemplated by Section 5.4 by and between the Company, a
Remarketing Agent and the Purchase Contract Agent, including any
supplements thereto.
"REMARKETING FEE" has the meaning specified in Section
5.4.
"REORGANIZATION EVENT" has the meaning specified in
Section 5.6(b).
"RESET AGENT" means Merrill Lynch, Pierce, Fenner &
Smith, or such other Reset Agent as the Company shall select from
time to time.
"RESET RATE" means, as applicable, the Series D Reset
Rate or the Series E Reset Rate.
"RESET ANNOUNCEMENT DATE" means the tenth Business Day
immediately preceding the applicable Purchase Contract Settlement
Date, the date on which Series D Reset Spread or Series E Reset
Spread, as applicable, and the applicable Two-Year Benchmark
Treasury will be announced by the Company.
"RESPONSIBLE OFFICER," when used with respect to the
Agent, means any officer of the Agent assigned by the Agent to
administer its corporate trust matters.
"SECOND EARLY SETTLEMENT RATE" has the meaning
specified in Section 5.9(b).
"SECOND PURCHASE CONTRACT SETTLEMENT DATE" means August
16, 2002.
"SECURITY" means an Income PRIDES or a Growth PRIDES.
"SENIOR INDEBTEDNESS" means indebtedness of any kind of
the Company (including the Debt Securities) unless the instrument
under which such indebtedness is incurred expressly provides that
it is in parity or subordinate in right of payment to the
Contract Adjustment Payments.
"SERIES D NOTES" means the series of Debt Securities of
the Company designated 6.37% Series D Senior Notes due 2003 to be
issued under the Indenture.
"SERIES D RESET RATE" means the Coupon Rate to be in
effect for the Series D Notes on and after the First Purchase
Contract Settlement Date and determined as provided in
Section 4.1.
"SERIES D RESET SPREAD" means, an amount determined by
the Reset Agent which, when added to the Two-Year Benchmark
Treasury in effect on the third Business Day immediately
preceding the First Purchase Contract Settlement Date, will
produce the rate the Series D Notes should bear in order to have
an approximate market value on the third Business Day immediately
preceding the First Purchase Contract Settlement Date of 100.5%
of their aggregate principal amount; provided that (i) the
Company may limit the Series D Reset Rate to be no higher than
the rate on the Two-Year Benchmark Treasury on such Business Day
plus 200 basis points (2.0%); (ii) such market value may be less
than 100.5% if the Company exercises such right to limit the
Series D Reset Spread; and (iii) the Series D Reset Rate shall
in no event exceed the maximum permitted by applicable law.
"SERIES E NOTES" means the series of Debt Securities of
the Company designated 6.50% Series E Senior Notes due 2004 to be
issued under the Indenture.
"SERIES E RESET RATE" means the Coupon Rate to be in
effect for the Series E Notes on and after the Second Purchase
Contract Settlement Date and determined as provided in Section
4.1.
"SERIES E RESET SPREAD" means an amount determined by
the Reset Agent which, when added to the Two-Year Benchmark
Treasury in effect on the third Business Day immediately
preceding the Second Purchase Contract Settlement Date, will
produce the rate the Series E Notes should bear in order to have
an approximate market value on the third Business Day immediately
preceding the Second Purchase Contract Settlement Date of 100.5%
of their aggregate principal amount; provided that (i) the
Company may limit the Series E Reset Rate to be no higher than
the rate on the Two-Year Benchmark Treasury on such Business Day
plus 200 basis points (2.0%); (ii) such market value may be less
than 100.5% if the Company exercises such right to limit the
Series E Reset Spread; and (iii) the Series E Reset Rate shall
in no event exceed the maximum permitted by applicable law.
"SETTLEMENT RATE" has the meaning specified in Section
5.1.
"STATED AMOUNT" means $50, which is equal to the stated
amount of the Income PRIDES and the face amount of the Growth
PRIDES.
"TAX EVENT" means the receipt by the Company of an
opinion of a nationally recognized independent tax counsel
experienced in such matters to the effect that, as a result of
(a) any amendment to, change in, or announced proposed change in,
the laws (or any regulations thereunder) of the United States or
any political subdivision or taxing authority thereof or therein
affecting taxation, (b) any amendment to or change in an
interpretation or application of such laws or regulations by any
legislative body, court, governmental agency or regulatory
authority or (c) any interpretation or pronouncement by any such
legislative body, court, governmental agency or regulatory
authority that provides for a position with respect to such laws
or regulations that differs from the generally accepted position
on the date the Debt Securities are issued, which amendment,
change or proposed change is effective or which interpretation or
pronouncement is announced on or after the date of issuance of
the Debt Securities, there is more than an insubstantial risk
that interest payable by the Company on the Debt Securities would
not be deductible, in whole or in part, by the Company for United
States federal income tax purposes.
"TAX EVENT REDEMPTION" means, if a Tax Event shall
occur and be continuing, the redemption of Debt Securities, in
whole but not in part, at the option of the Company on not less
than 30 days or more than 60 days notice.
"TAX EVENT REDEMPTION DATE" means the date on which a
Tax Event Redemption is to occur.
"TERMINATION DATE" means the date, if any, on which a
Termination Event occurs.
"TERMINATION EVENT" means the occurrence of any of the
following events: (i) at any time on or prior to the Second
Purchase Contract Settlement Date, a judgment, decree or court
order shall have been entered granting relief under the
Bankruptcy Code, adjudicating the Company to be insolvent, or
approving as properly filed a petition seeking reorganization or
liquidation of the Company or any other similar applicable
Federal or State law, and, unless such judgment, decree or order
shall have been entered within 60 days prior to the Second
Purchase Contract Settlement Date, such decree or order shall
have continued undischarged and unstayed for a period of 60 days;
or (ii) at any time on or prior to the Second Purchase Contract
Settlement Date, a judgment, decree or court order for the
appointment of a receiver or liquidator or trustee or assignee in
bankruptcy or insolvency of the Company or of its property, or
for the winding up or liquidation of its affairs, shall have been
entered, and, unless such judgment, decree or order shall have
been entered within 60 days prior to the Second Purchase Contract
Settlement Date, such judgment, decree or order shall have
continued undischarged and unstayed for a period of 60 days; or
(iii) at any time on or prior to the Second Purchase Contract
Settlement Date the Company shall file a petition for relief
under the Bankruptcy Code, or shall consent to the filing of a
bankruptcy proceeding against it, or shall file a petition or
answer or consent seeking reorganization or liquidation under the
Bankruptcy Code or any other similar applicable Federal or State
law, or shall consent to the filing of any such petition, or
shall consent to the appointment of a receiver or liquidator or
trustee or assignee in bankruptcy or insolvency of it or of its
property, or shall make an assignment for the benefit of
creditors, or shall admit in writing its inability to pay its
debts generally as they become due.
"THRESHOLD APPRECIATION PRICE" has the meaning
specified in Section 5.1.
"TIA" means, as of any time, the Trust Indenture Act of
1939, as amended, or any successor statute, as in effect at such
time.
"TRADING DAY" has the meaning specified in Section 5.1.
"TREASURY PORTFOLIO" means, with respect to the
Applicable Principal Amount of Debt Securities (a) if the Tax
Event Redemption Date occurs prior to the Second Purchase
Contract Settlement Date, a portfolio of zero-coupon U.S.
Treasury Securities consisting of (i) interest or principal
strips of U.S. Treasury Securities which mature on or prior to
August 15, 2001 in an aggregate amount equal to the Applicable
Principal Amount of Series D Notes and interest or principal
strips of U.S. Treasury Securities which mature on or prior to
August 15, 2002 in an aggregate amount equal to the Applicable
Principal Amount of Series E Notes and (ii) with respect to each
scheduled interest payment date on the Debt Securities of each
series that occurs after the Tax Event Redemption Date, interest
or principal strips of U.S. Treasury Securities which mature on
or prior to such dates in an aggregate amount equal to the
aggregate interest payment that would be due on the Applicable
Principal Amount of the Debt Securities on such date, and (b) if
the Tax Event Redemption Date occurs after the Second Purchase
Contract Settlement Date, a portfolio of zero-coupon U.S.
Treasury Securities consisting of (i) principal or interest
strips of U.S. Treasury Securities which mature on or prior to
August 15, 2003 in an aggregate principal amount equal to the
Applicable Principal Amount of Series D Notes and principal or
interest strips of U.S. Treasury Securities which mature on or
prior to August 15, 2004 in an aggregate principal amount equal
to the Applicable Principal Amount of the Series E Notes and (ii)
with respect to each scheduled interest payment date on the Debt
Securities that occurs after the Tax Event Redemption Date,
interest or principal strips of U.S. Treasury Securities which
mature on or prior to such date in an aggregate amount equal to
the aggregate interest payment that would be due on the
Applicable Principal Amount of the Debt Securities on such date.
"TREASURY PORTFOLIO PURCHASE PRICE" means the lowest
aggregate price quoted by a Primary Treasury Dealer to the
Quotation Agent on the third Business Day immediately preceding
the Tax Event Redemption Date for the purchase of the Treasury
Portfolio for settlement on the Tax Event Redemption Date.
"TREASURY SECURITY" means, as applicable, the 3-Year
Treasury Security or the 4-Year Treasury Security.
"TWO-YEAR BENCHMARK TREASURY" on a particular
determination date shall mean direct obligations of the United
States (which may be obligations traded on a when-issued basis
only) having a maturity comparable to the remaining term to
maturity of the applicable series of Debt Securities, as agreed
upon by the Company and the Reset Agent. The rate for the
Two-Year Benchmark Treasury will be the bid side rate displayed
at 10:00 A.M., New York City time, on the third Business Day
immediately preceding the applicable Purchase Contract Settlement
Date in the Telerate system (or if the Telerate system is (a) no
longer available on the third Business Day immediately preceding
such Purchase Contract Settlement Date or (b) in the opinion of
the applicable Reset Agent (after consultation with the Company)
no longer an appropriate system from which to obtain such rate,
such other nationally recognized quotation system as, in the
opinion of the applicable Reset Agent (after consultation with
the Company), is appropriate). If such rate is not so displayed,
the rate for the Two-Year Benchmark Treasury shall be, as
calculated by the Reset Agent, the yield to maturity for the
Two-Year Benchmark Treasury, expressed as a bond equivalent on
the basis of a year of 365 or 366 days, as applicable, and
applied on a daily basis, and computed by taking the arithmetic
mean of the secondary market bid rates, as of 10:30 A.M., New
York City time, on the third Business Day immediately preceding
the applicable Purchase Contract Settlement Date of three leading
United States government securities dealers selected by the Reset
Agent (after consultation with the Company) (which may include
the applicable Reset Agent or an affiliate thereof).
"UNDERWRITING AGREEMENT" means the Underwriting
Agreement dated July 17, 1998 among the Company, Merrill Lynch,
Pierce, Fenner & Smith Incorporated and Lehman Brothers Inc.
"VICE PRESIDENT" means any vice president, whether or
not designated by a number or a word or words added before or
after the title "vice president."
SECTION 1.2. COMPLIANCE CERTIFICATES AND OPINIONS.
Except as otherwise expressly provided by this
Agreement, upon any application or request by the Company to the
Agent to take any action under any provision of this Agreement,
the Company shall furnish to the Agent a Company Certificate
stating that all conditions precedent, if any, provided for in
this Agreement relating to the proposed action have been complied
with and an Opinion of Counsel stating that, in the opinion of
such counsel, all such conditions precedent, if any, have been
complied with, except that in the case of any such application or
request as to which the furnishing of such documents is
specifically required by any provision of this Agreement relating
to such particular application or request, no additional
certificate or opinion need be furnished.
Every certificate or opinion with respect to compliance
with a condition or covenant provided for in this Agreement shall
include:
(1) a statement that each individual signing such
certificate or opinion has read such covenant or condition
and the definitions herein relating thereto;
(2) a brief statement as to the nature and scope of
the examination or investigation upon which the statements
or opinions contained in such certificate or opinion are
based;
(3) a statement that, in the opinion of each such
individual, he or she has made such examination or
investigation as is necessary to enable such individual to
express an informed opinion as to whether or not such
covenant or condition has been complied with; and
(4) a statement as to whether, in the opinion of each
such individual, such condition or covenant has been
complied with.
SECTION 1.3. FORM OF DOCUMENTS DELIVERED TO AGENT.
In any case where several matters are required to be
certified by, or covered by an opinion of, any specified Person,
it is not necessary that all such matters be certified by, or
covered by the opinion of, only one such Person, or that they be
so certified or covered by only one document, but one such Person
may certify or give an opinion with respect to some matters and
one or more other such Persons as to other matters, and any such
Person may certify or give an opinion as to such matters in one
or several documents.
Any certificate or opinion of an officer of the Company
may be based, insofar as it relates to legal matters, upon a
certificate or opinion of, or representations by, counsel, unless
such officer knows, or in the exercise of reasonable care should
know, that the certificate or opinion or representations with
respect to the matters upon which his certificate or opinion is
based are erroneous. Any such certificate or Opinion of Counsel
may be based, insofar as it relates to factual matters, upon a
certificate or opinion of, or representations by, an officer or
officers of the Company stating that the information with respect
to such factual matters is in the possession of the Company
unless such counsel knows, or in the exercise of reasonable care
should know, that the certificate or opinion or representations
with respect to such matters are erroneous.
Where any Person is required to make, give or execute
two or more applications, requests, consents, certificates,
statements, opinions or other instruments under this Agreement,
they may, but need not, be consolidated and form one instrument.
SECTION 1.4. ACTS OF HOLDERS; RECORD DATES.
(a) Any request, demand, authorization, direction,
notice, consent, waiver or other action provided by this
Agreement to be given or taken by Holders may be embodied in
and evidenced by one or more instruments of substantially
similar tenor signed by such Holders in person or by agent
duly appointed in writing; and, except as herein otherwise
expressly provided, such action shall become effective when
such instrument or instruments are delivered to the Agent
and, where it is hereby expressly required, to the Company.
Such instrument or instruments (and the action embodied
therein and evidenced thereby) are herein sometimes referred
to as the "Act" of the Holders signing such instrument or
instruments. Proof of execution of any such instrument or of
a writing appointing any such agent shall be sufficient for
any purpose of this Agreement and (subject to Section 7.1)
conclusive in favor of the Agent and the Company, if made in
the manner provided in this Section.
(b) The fact and date of the execution by any Person
of any such instrument or writing may be proved in any
manner which the Agent deems sufficient.
(c) The ownership of Securities shall be proved by the
Income PRIDES Register or the Growth PRIDES Register, as the
case may be.
(d) Any request, demand, authorization, direction,
notice, consent, waiver or other Act of the Holder of any
Certificate shall bind every future Holder of the same
Certificate and the Holder of every Certificate issued upon
the registration of transfer thereof or in exchange therefor
or in lieu thereof in respect of anything done, omitted or
suffered to be done by the Agent or the Company in reliance
thereon, whether or not notation of such action is made upon
such Certificate.
(e) The Company may set any day as a record date for
the purpose of determining the Holders of Outstanding
Securities entitled to give, make or take any request,
demand, authorization, direction, notice, consent, waiver or
other action provided or permitted by this Agreement to be
given, made or taken by Holders of Securities. If any record
date is set pursuant to this paragraph, the Holders of the
Outstanding Income PRIDES and the Outstanding Growth PRIDES,
as the case may be, on such record date, and no other
Holders, shall be entitled to take the relevant action with
respect to the Income PRIDES or the Growth PRIDES as the
case may be, whether or not such Holders remain Holders
after such record date; provided that no such action shall
be effective hereunder unless taken on or prior to the
applicable Expiration Date by Holders of the requisite
number of Outstanding Securities on such record date.
Nothing in this paragraph shall be construed to prevent the
Company from setting a new record date for any action for
which a record date has previously been set pursuant to this
paragraph (whereupon the record date previously set shall
automatically and with no action by any Person be canceled
and of no effect), and nothing in this paragraph shall be
construed to render ineffective any action taken by Holders
of the requisite number of Outstanding Securities on the
date such action is taken. Promptly after any record date is
set pursuant to this paragraph, the Company, at its own
expense, shall cause notice of such record date, the
proposed action by Holders and the applicable Expiration
Date to be given to the Agent in writing and to each Holder
of Securities in the manner set forth in Section 1.6.
With respect to any record date set pursuant to this
Section, the Company may designate any date as the "Expiration
Date" and from time to time may change the Expiration Date to any
earlier or later day; provided that no such change shall be
effective unless notice of the proposed new Expiration Date is
given to the Agent in writing, and to each Holder of Securities
in the manner set forth in Section 1.6, on or prior to the
existing Expiration Date. If an Expiration Date is not designated
with respect to any record date set pursuant to this Section, the
Company shall be deemed to have initially designated the 180th
day after such record date as the Expiration Date with respect
thereto, subject to its right to change the Expiration Date as
provided in this paragraph. Notwithstanding the foregoing, no
Expiration Date shall be later than the 180th day after the
applicable record date.
SECTION 1.5. NOTICES.
Any request, demand, authorization, direction, notice,
consent, waiver or Act of Holders or other document provided or
permitted by this Agreement to be made upon, given or furnished
to, or filed with,
(1) the Agent by any Holder or by the Company shall be
sufficient for every purpose hereunder (unless otherwise
herein expressly provided) if made, given, furnished or
filed in writing and personally delivered or mailed,
first-class postage prepaid, to the Agent at The Bank of New
York, 101 Barclay Street, New York, New York 10286,
Attention: Vice President, Corporate Trust Administration,
or at any other address previously furnished in writing by
the Agent to the Holders and the Company; or
(2) the Company by the Agent or by any Holder shall be
sufficient for every purpose hereunder (unless otherwise
herein expressly provided) if made, given, furnished or
filed in writing and personally delivered or mailed,
first-class postage prepaid, to the Company at Texas
Utilities Company, Energy Plaza, 1601 Bryan Street, Dallas,
Texas 75201, Attention: Secretary, or at any other address
previously furnished in writing to the Agent by the Company;
or
(3) the Collateral Agent by the Agent, the Company or
any Holder shall be sufficient for every purpose hereunder
(unless otherwise herein expressly provided) if made, given,
furnished or filed in writing and personally delivered or
mailed, first-class postage prepaid, addressed to the
Collateral Agent at The Chase Manhattan Bank at 450 West
33rd Street, New York, New York 10001,
Attention: , or at any other address
previously furnished in writing by the Collateral Agent to
the Agent, the Company and the Holders; or
(4) the Indenture Trustee by the Company shall be
sufficient for every purpose hereunder (unless otherwise
herein expressly provided) if made, given, furnished or
filed in writing and personally delivered or mailed,
first-class postage prepaid, addressed to the Indenture
Trustee at The Bank of New York, 101 Barclay Street, New
York, New York 10286, Attention: Vice President, Corporate
Trust Administration, other address previously furnished in
writing by the Indenture Trustee to the Company.
SECTION 1.6. NOTICE TO HOLDERS; WAIVER.
Where this Agreement provides for notice to Holders of
any event, such notice shall be sufficiently given (unless
otherwise herein expressly provided) if in writing and mailed,
first-class postage prepaid, to each Holder affected by such
event, at its address as it appears in the applicable Register,
not later than the latest date, and not earlier than the earliest
date, prescribed for the giving of such notice. In any case where
notice to Holders is given by mail, neither the failure to mail
such notice, nor any defect in any notice so mailed to any
particular Holder shall affect the sufficiency of such notice
with respect to other Holders. Where this Agreement provides for
notice in any manner, such notice may be waived in writing by the
Person entitled to receive such notice, either before or after
the event, and such waiver shall be the equivalent of such
notice. Waivers of notice by Holders shall be filed with the
Agent, but such filing shall not be a condition precedent to the
validity of any action taken in reliance upon such waiver.
In case by reason of the suspension of regular mail
service or by reason of any other cause it shall be impracticable
to give such notice by mail, then such notification as shall be
made with the approval of the Agent shall constitute a sufficient
notification for every purpose hereunder.
SECTION 1.7. EFFECT OF HEADINGS AND TABLE OF CONTENTS.
The Article and Section headings herein and the Table
of Contents are for convenience only and shall not affect the
construction hereof.
SECTION 1.8. SUCCESSORS AND ASSIGNS.
All covenants and agreements in this Agreement by the
Company shall bind its successors and assigns, whether so
expressed or not.
SECTION 1.9. SEPARABILITY CLAUSE.
In case any provision in this Agreement or in the
Securities shall be invalid, illegal or unenforceable, the
validity, legality and enforceability of the remaining provisions
hereof and thereof shall not in any way be affected or impaired
thereby.
SECTION 1.10. BENEFITS OF AGREEMENT.
Nothing in this Agreement or in the Securities, express
or implied, shall give to any Person, other than the parties
hereto and their successors hereunder and, to the extent provided
hereby, the Holders, any benefits or any legal or equitable
right, remedy or claim under this Agreement. The Holders from
time to time shall be beneficiaries of this Agreement and shall
be bound by all of the terms and conditions hereof and of the
Securities evidenced by their Certificates by their acceptance of
delivery of such Certificates.
SECTION 1.11. GOVERNING LAW.
THIS AGREEMENT AND THE SECURITIES SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW
YORK.
SECTION 1.12. LEGAL HOLIDAYS.
In any case where any Payment Date shall not be a
Business Day, then (notwithstanding any other provision of this
Agreement or the Income PRIDES Certificates or the Growth PRIDES
Certificates) payment of the Contract Adjustment Payments, if
any, shall not be made on such date, but such payments shall be
made on the next succeeding Business Day with the same force and
effect as if made on such Payment Date, and no interest shall
accrue or be payable by the Company or any Holder for the period
from and after any such Payment Date, except that, if such next
succeeding Business Day is in the next succeeding calendar year,
such payment shall be made on the immediately preceding Business
Day with the same force and effect as if made on such Payment
Date.
In any case where any Purchase Contract Settlement Date
shall not be a Business Day, then (notwithstanding any other
provision of this Agreement, the Income PRIDES Certificates or
the Growth PRIDES Certificates), the Purchase Contracts shall not
be performed on such date, but the Purchase Contracts shall be
performed on the immediately following Business Day with the same
force and effect as if performed on the Purchase Contract
Settlement Date.
SECTION 1.13. COUNTERPARTS.
This Agreement may be executed in any number of
counterparts by the parties hereto on separate counterparts, each
of which, when so executed and delivered, shall be deemed an
original, but all such counterparts shall together constitute one
and the same instrument.
SECTION 1.14. INSPECTION OF AGREEMENT.
A copy of this Agreement shall be available at all
reasonable times during normal business hours at the Corporate
Trust Office for inspection by any Holder.
ARTICLE II
CERTIFICATE FORMS
SECTION 2.1. FORMS OF CERTIFICATES GENERALLY.
The Income PRIDES Certificates (including the form of
Purchase Contract forming part of the Income PRIDES evidenced
thereby) shall be in substantially the form set forth in Exhibit
A hereto, with such letters, numbers or other marks of
identification or designation and such legends or endorsements
printed, lithographed or engraved thereon as may be required by
the rules of any securities exchange on which the Income PRIDES
are listed or any depositary therefor, or as may, consistently
herewith, be determined by the officers of the Company executing
such Income PRIDES Certificates, as evidenced by their execution
of the Income PRIDES Certificates.
The definitive Income PRIDES Certificates shall be
printed, lithographed or engraved on steel engraved borders or
may be produced in any other manner, all as determined by the
officers of the Company executing the Income PRIDES evidenced by
such Income PRIDES Certificates, consistent with the provisions
of this Agreement, as evidenced by their execution thereof.
The Growth PRIDES Certificates (including the form of
Purchase Contracts forming part of the Growth PRIDES evidenced
thereby) shall be in substantially the form set forth in Exhibit
B hereto, with such letters, numbers or other marks of
identification or designation and such legends or endorsements
printed, lithographed or engraved thereon as may be required by
the rules of any securities exchange on which the Growth PRIDES
may be listed or any depositary therefor, or as may, consistently
herewith, be determined by the officers of the Company executing
such Growth PRIDES Certificates, as evidenced by their execution
of the Growth PRIDES Certificates.
The definitive Growth PRIDES Certificates shall be
printed, lithographed or engraved on steel engraved borders or
may be produced in any other manner, all as determined by the
officers of the Company executing the Growth PRIDES evidenced by
such Growth PRIDES Certificates, consistent with the provisions
of this Agreement, as evidenced by their execution thereof.
Every Global Certificate authenticated, executed on
behalf of the Holders and delivered hereunder shall bear a legend
in substantially the following form:
THIS CERTIFICATE IS A GLOBAL CERTIFICATE WITHIN THE
MEANING OF THE PURCHASE CONTRACT AGREEMENT (AS HEREINAFTER
DEFINED) AND IS REGISTERED IN THE NAME OF THE CLEARING AGENCY OR
A NOMINEE THEREOF. THIS CERTIFICATE MAY NOT BE EXCHANGED IN WHOLE
OR IN PART FOR A CERTIFICATE REGISTERED, AND NO TRANSFER OF THIS
CERTIFICATE IN WHOLE OR IN PART MAY BE REGISTERED, IN THE NAME OF
ANY PERSON OTHER THAN SUCH CLEARING AGENCY OR A NOMINEE THEREOF,
EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE PURCHASE
CONTRACT AGREEMENT.
SECTION 2.2. FORM OF AGENT'S CERTIFICATE OF AUTHENTICATION.
The form of the Agent's certificate of authentication
of the Income PRIDES shall be in substantially the form set forth
on the form of the Income PRIDES Certificates set forth as
Exhibit A hereto.
The form of the Agent's certificate of authentication
of the Growth PRIDES shall be in substantially the form set forth
on the form of the Growth PRIDES Certificates set forth as
Exhibit B hereto..
ARTICLE III
THE SECURITIES
SECTION 3.1. TITLE AND TERMS; DENOMINATIONS.
The aggregate number of Income PRIDES and Growth PRIDES
evidenced by Certificates authenticated, executed on behalf of
the Holders and delivered hereunder is limited to 14,950,000
except for Certificates authenticated, executed and delivered
upon registration of transfer of, in exchange for, or in lieu of,
other Certificates pursuant to Section 3.4, 3.5, 3.10, 3.12,
3.13, 5.9 or 8.5.
The Certificates shall be issuable only in registered
form and only in denominations of a single Income PRIDES or
Growth PRIDES and any integral multiple thereof.
SECTION 3.2. RIGHTS AND OBLIGATIONS EVIDENCED BY THE
CERTIFICATES.
Each Income PRIDES Certificate shall evidence the
number of Income PRIDES specified therein, with each such Income
PRIDES representing the ownership by the Holder thereof of a
beneficial interest in the Debt Securities or Applicable
Ownership Interest in the Treasury Portfolio, as the case may be,
subject to the Pledge of such Debt Securities or Applicable
Ownership Interest in the Treasury Portfolio, as the case may be,
by such Holder pursuant to the Pledge Agreement, and the rights
and obligations of the Holder thereof and the Company under one
Purchase Contract. The Agent as attorney-in-fact for, and on
behalf of, the Holder of each Income PRIDES shall pledge,
pursuant to the Pledge Agreement, each Debt Security or the
Applicable Ownership Interest in the Treasury Portfolio, as the
case may be, forming a part of such Income PRIDES, to the
Collateral Agent and grant to the Collateral Agent a security
interest in the right, title, and interest of such Holder in such
Debt Security or Applicable Ownership Interest in the Treasury
Portfolio, as the case may be, for the benefit of the Company, to
secure the obligation of the Holder under one Purchase Contract
to purchase the Common Stock of the Company.
Each Growth PRIDES Certificate shall evidence the
number of Growth PRIDES specified therein, with each such Growth
PRIDES representing the ownership by the Holder thereof, prior to
the First Purchase Contract Settlement Date, of a 1/40 undivided
beneficial interest in both a 3-Year Treasury Security and a 4-
Year Treasury Security and, on and after the First Purchase
Contract Settlement Date, of a 1/40 undivided beneficial interest
in a 4-Year Treasury Security, and each subject to the Pledge of
such Treasury Security by such Holder pursuant to the Pledge
Agreement, and the rights and obligations of the Holder thereof
and the Company under one Purchase Contract. The Agent as
attorney-in-fact for, and on behalf of, the Holder of each Growth
PRIDES shall pledge, pursuant to the Pledge Agreement, each
Treasury Security forming a part of such Growth PRIDES, to the
Collateral Agent and grant to the Collateral Agent a security
interest in the right, title, and interest of such Holder in such
Treasury Security for the benefit of the Company, to secure the
obligation of the Holder under one Purchase Contract to purchase
the Common Stock of the Company.
SECTION 3.3. EXECUTION, AUTHENTICATION, DELIVERY AND DATING.
Subject to the provisions of Sections 3.13 and 3.14
hereof, upon the execution and delivery of this Agreement, and at
any time and from time to time thereafter, the Company may
deliver Certificates executed by the Company to the Agent for
authentication, execution on behalf of the Holders and delivery,
together with its Issuer Order for authentication of such
Certificates, and the Agent in accordance with such Issuer Order
shall authenticate, execute on behalf of the Holders and deliver
such Certificates.
The Certificates shall be executed on behalf of the
Company by its Chairman of the Board, its President, one of its
Vice Presidents, its Treasurer, one of its Assistant Treasurers,
its Secretary or one of its Assistant Secretaries. The signature
of any of these officers on the Certificates may be manual or
facsimile.
Certificates bearing the manual or facsimile signatures
of individuals who were at any time the proper officers of the
Company shall bind the Company, notwithstanding that such
individuals or any of them have ceased to hold such offices prior
to the authentication and delivery of such Certificates or did
not hold such offices at the date of such Certificates.
No Purchase Contract evidenced by a Certificate shall
be valid until such Certificate has been executed on behalf of
the Holder by the manual signature of an authorized signatory of
the Agent, as such Holder's attorney-in-fact. Such signature by
an authorized signatory of the Agent shall be conclusive evidence
that the Holder of such Certificate has entered into the Purchase
Contracts evidenced by such Certificate.
Each Certificate shall be dated the date of its
authentication.
No Certificate shall be entitled to any benefit under
this Agreement or be valid or obligatory for any purpose unless
there appears on such Certificate a certificate of authentication
substantially in the form provided for herein executed by an
authorized signatory of the Agent by manual signature, and such
certificate upon any Certificate shall be conclusive evidence,
and the only evidence, that such Certificate has been duly
authenticated and delivered hereunder.
SECTION 3.4. TEMPORARY CERTIFICATES.
Pending the preparation of definitive Certificates, the
Company shall execute and deliver to the Agent, and the Agent
shall authenticate, execute on behalf of the Holders, and
deliver, in lieu of such definitive Certificates, temporary
Certificates which are in substantially the forms set forth in
Exhibit A and Exhibit B hereto, with such letters, numbers or
other marks of identification or designation and such legends or
endorsements printed, lithographed or engraved thereon as may be
required by the rules of any securities exchange on which the
Income PRIDES or Growth PRIDES are listed, or as may,
consistently herewith, be determined by the officers of the
Company executing such Certificates, as evidenced by their
execution of the Certificates.
If temporary Certificates are issued, the Company will
cause definitive Certificates to be prepared without unreasonable
delay. After the preparation of definitive Certificates, the
temporary Certificates shall be exchangeable for definitive
Certificates upon surrender of the temporary Certificates at the
Corporate Trust Office, at the expense of the Company and without
charge to the Holder. Upon surrender for cancellation of any one
or more temporary Certificates, the Company shall execute and
deliver to the Agent, and the Agent shall authenticate, execute
on behalf of the Holder, and deliver in exchange therefor, one or
more definitive Certificates of like tenor and denominations and
evidencing a like number of Income PRIDES or Growth PRIDES, as
the case may be, as the temporary Certificate or Certificates so
surrendered. Until so exchanged, the temporary Certificates shall
in all respects evidence the same benefits and the same
obligations with respect to the Income PRIDES or Growth PRIDES,
as the case may be, evidenced thereby as definitive Certificates.
SECTION 3.5. REGISTRATION; REGISTRATION OF TRANSFER AND
EXCHANGE.
The Agent shall keep at the Corporate Trust Office a
register (the "Income PRIDES Register") in which, subject to such
reasonable regulations as it may prescribe, the Agent shall
provide for the registration of Income PRIDES Certificates and of
transfers of Income PRIDES Certificates (the Agent, in such
capacity, the "Income PRIDES Registrar") and a register (the
"Growth PRIDES Register") in which, subject to such reasonable
regulations as it may prescribe, the Agent shall provide for the
registration of the Growth PRIDES Certificates and transfers of
Growth PRIDES Certificates (the Agent, in such capacity, the
"Growth PRIDES Registrar").
Upon surrender for registration of transfer of any
Certificate at the Corporate Trust Office, the Company shall
execute and deliver to the Agent, and the Agent shall
authenticate, execute on behalf of the designated transferee or
transferees, and deliver, in the name of the designated
transferee or transferees, one or more new Certificates of any
authorized denominations, like tenor, and evidencing a like
number of Income PRIDES or Growth PRIDES, as the case may be.
At the option of the Holder, Certificates may be
exchanged for other Certificates, of any authorized denominations
and evidencing a like number of Income PRIDES or Growth PRIDES,
as the case may be, upon surrender of the Certificates to be
exchanged at the Corporate Trust Office. Whenever any
Certificates are so surrendered for exchange, the Company shall
execute and deliver to the Agent, and the Agent shall
authenticate, execute on behalf of the Holder, and deliver the
Certificates which the Holder making the exchange is entitled to
receive.
All Certificates issued upon any registration of
transfer or exchange of a Certificate shall evidence the
ownership of the same number of Income PRIDES or Growth PRIDES,
as the case may be, and be entitled to the same benefits and
subject to the same obligations, under this Agreement as the
Income PRIDES or Growth PRIDES, as the case may be, evidenced by
the Certificate surrendered upon such registration of transfer or
exchange.
Every Certificate presented or surrendered for
registration of transfer or for exchange shall (if so required by
the Agent) be duly endorsed, or be accompanied by a written
instrument of transfer in form satisfactory to the Company and
the Agent duly executed, by the Holder thereof or its attorney
duly authorized in writing.
No service charge shall be made for any registration of
transfer or exchange of a Certificate, but the Company and the
Agent may require payment from the Holder of a sum sufficient to
cover any tax or other governmental charge that may be imposed in
connection with any registration of transfer or exchange of
Certificates, other than any exchanges pursuant to Sections 3.6
and 8.5 not involving any transfer.
Notwithstanding the foregoing, the Company shall not be
obligated to execute and deliver to the Agent, and the Agent
shall not be obligated to authenticate, execute on behalf of the
Holder and deliver any Certificate presented or surrendered for
registration of transfer or for exchange during the period
commencing on the Business Day immediately preceding a Purchase
Contract Settlement Date and ending on such Purchase Contract
Settlement Date or on or after the Termination Date.
SECTION 3.6. BOOK-ENTRY INTERESTS.
The Certificates, on original issuance, will be issued
in the form of one or more fully registered Global Certificates,
to be delivered to the Depositary by, or on behalf of, the
Company. Such Global Certificate shall initially be registered on
the books and records of the Company in the name of Cede & Co.,
the nominee of the Depositary, and no Beneficial Owner will
receive a definitive Certificate representing such Beneficial
Owner's interest in such Global Certificate, except as provided
in Section 3.9. The Agent shall enter into an agreement with the
Depositary if so requested by the Company. Unless and until
definitive, fully registered Certificates have been issued to
Beneficial Owners pursuant to Section 3.9:
(a) the provisions of this Section 3.6 shall be in full
force and effect;
(b) the Company shall be entitled to deal with the
Clearing Agency for all purposes of this Agreement
(including the payment of Contract Adjustment Payments, if
any, and receiving approvals, votes or consents hereunder)
as the Holder of the Securities and the sole holder of the
Global Certificate(s) and shall have no obligation to the
Beneficial Owners;
(c) to the extent that the provisions of this Section
3.6 conflict with any other provisions of this Agreement,
the provisions of this Section 3.6 shall control; and
(d) the rights of the Beneficial Owners shall be
exercised only through the Clearing Agency and shall be
limited to those established by law and agreements between
such Beneficial Owners and the Clearing Agency and/or the
Clearing Agency Participants. The Clearing Agency will make
book entry transfers among Clearing Agency Participants and
receive and transmit payments of Contract Adjustment
Payments to such Clearing Agency Participants.
SECTION 3.7. NOTICES TO HOLDERS.
Whenever a notice or other communication to the Holders
is required to be given under this Agreement, the Company or the
Company's agent shall give such notices and communications to the
Holders and, with respect to any Securities registered in the
name of a Clearing Agency or the nominee of a Clearing Agency,
the Company or the Company's agent shall, except as set forth
herein, have no obligations to the Beneficial Owners.
SECTION 3.8. APPOINTMENT OF SUCCESSOR CLEARING AGENCY.
If any Clearing Agency elects to discontinue its
services as securities depositary with respect to the Securities,
the Company may, in its sole discretion, appoint a successor
Clearing Agency with respect to the Securities.
SECTION 3.9. DEFINITIVE CERTIFICATES.
If (i) a Clearing Agency elects to discontinue its
services as securities depositary with respect to the Securities
and a successor Clearing Agency is not appointed within 90 days
after such discontinuance pursuant to Section 3.8, or (ii) the
Company elects to terminate the book-entry system through the
Clearing Agency with respect to the Securities, then upon
surrender of the Global Certificates representing the Book-Entry
Interests with respect to the Securities by the Clearing Agency,
accompanied by registration instructions, the Company shall cause
definitive Certificates to be delivered to Beneficial Owners in
accordance with the instructions of the Clearing Agency. The
Company shall not be liable for any delay in delivery of such
instructions and may conclusively rely on and shall be protected
in relying on, such instructions.
SECTION 3.10. MUTILATED, DESTROYED, LOST AND STOLEN
CERTIFICATES.
If any mutilated Certificate is surrendered to the
Agent, the Company shall execute and deliver to the Agent, and
the Agent shall authenticate, execute on behalf of the Holder,
and deliver in exchange therefor, a new Certificate at the cost
of the Holder, evidencing the same number of Income PRIDES or
Growth PRIDES, as the case may be, and bearing a Certificate
number not contemporaneously outstanding.
If there shall be delivered to the Company and the
Agent (i) evidence to their satisfaction of the destruction, loss
or theft of any Certificate, and (ii) such security or indemnity
at the cost of the Holder as may be required by them to hold each
of them and any agent of any of them harmless, then, in the
absence of notice to the Company or the Agent that such
Certificate has been acquired by a bona fide purchaser, the
Company shall execute and deliver to the Agent, and the Agent
shall authenticate, execute on behalf of the Holder, and deliver
to the Holder, in lieu of any such destroyed, lost or stolen
Certificate, a new Certificate, evidencing the same number of
Income PRIDES or Growth PRIDES, as the case may be, and bearing a
Certificate number not contemporaneously outstanding.
Notwithstanding the foregoing, the Company shall not be
obligated to execute and deliver to the Agent, and the Agent
shall not be obligated to authenticate, execute on behalf of the
Holder, and deliver to the Holder, a Certificate during the
period commencing on the Business Day immediately preceding a
Purchase Contract Settlement Date and such Purchase Contract
Settlement Date or on or after the Termination Date. In
addition, in lieu of delivery of a new Certificate, upon
satisfaction of the applicable conditions specified above in this
Section and receipt of appropriate registration or transfer
instructions from such Holder, the Agent may (i) if the Second
Purchase Contract Settlement Date has occurred, deliver the
shares of Common Stock issuable in respect of the applicable
portion of the Purchase Contracts forming a part of the
Securities evidenced by such Certificate, or (ii) if a
Termination Event shall have occurred, transfer the Debt
Securities, the appropriate Applicable Ownership Interest in the
Treasury Portfolio or the Treasury Securities, as the case may
be, forming a part of the Securities represented by such
Certificate to such Holder, in each case subject to the
applicable conditions and in accordance with the applicable
provisions of Article Five hereof.
Upon the issuance of any new Certificate under this
Section, the Company and the Agent may require the payment by the
Holder of a sum sufficient to cover any tax or other governmental
charge that may be imposed in relation thereto and any other
expenses (including the fees and expenses of the Agent) connected
therewith.
Every new Certificate issued pursuant to this Section
in lieu of any destroyed, lost or stolen Certificate shall
constitute an original additional contractual obligation of the
Company and of the Holder in respect of the Security evidenced
thereby, whether or not the destroyed, lost or stolen Certificate
(and the Securities evidenced thereby) shall be at any time
enforceable by anyone, and shall be entitled to all the benefits
and be subject to all the obligations of this Agreement equally
and proportionately with any and all other Certificates delivered
hereunder.
The provisions of this Section are exclusive and shall
preclude (to the extent lawful) all other rights and remedies
with respect to the replacement or payment of mutilated,
destroyed, lost or stolen Certificates.
SECTION 3.11. PERSONS DEEMED OWNERS.
Prior to due presentment of a Certificate for
registration of transfer, the Company and the Agent, and any
agent of the Company or the Agent, may treat the Person in whose
name such Certificate is registered on the Income PRIDES Register
or the Growth PRIDES Register, as applicable, as the owner of the
Income PRIDES or Growth PRIDES evidenced thereby, for the purpose
of receiving interest on the Debt Securities or distributions on
the maturing quarterly interest strips of the Treasury Portfolio,
as applicable, receiving payments of Contract Adjustment
Payments, performance of the Purchase Contracts and for all other
purposes whatsoever, whether or not any interest on the Debt
Securities or the Contract Adjustment Payments payable in respect
of the Purchase Contracts constituting a part of the Income
PRIDES or Growth PRIDES evidenced thereby shall be overdue and
notwithstanding any notice to the contrary, and neither the
Company nor the Agent, nor any agent of the Company or the Agent,
shall be affected by notice to the contrary.
Notwithstanding the foregoing, with respect to any
Global Certificate, nothing herein shall prevent the Company, the
Agent or any agent of the Company or the Agent, from treating the
Clearing Agency as the sole Holder of such Global Certificate or
from giving effect to any written certification, proxy or other
authorization furnished by any Clearing Agency (or its nominee),
as Holder, with respect to such Global Certificate or impair, as
between such Clearing Agency and owners of beneficial interests
in such Global Certificate, the operation of customary practices
governing the exercise of rights of such Clearing Agency (or its
nominee) as Holder of such Global Certificate.
SECTION 3.12. CANCELLATION.
All Certificates surrendered for delivery of shares of
Common Stock on or after the Second Purchase Contract Settlement
Date, upon the transfer of Debt Securities, the appropriate
Applicable Ownership Interest in the Treasury Portfolio or
Treasury Securities, as the case may be, after the occurrence of
a Termination Event or pursuant to an Early Settlement, or upon
the registration of a transfer or exchange of a Security, or a
Collateral Substitution or the re-establishment of an Income
PRIDES shall, if surrendered to any Person other than the Agent,
be delivered to the Agent and, if not already canceled, shall be
promptly canceled by it. The Company may at any time deliver to
the Agent for cancellation any Certificates previously
authenticated, executed and delivered hereunder which the Company
may have acquired in any manner whatsoever, and all Certificates
so delivered shall, upon Issuer Order, be promptly canceled by
the Agent. No Certificates shall be authenticated, executed on
behalf of the Holder and delivered in lieu of or in exchange for
any Certificates canceled as provided in this Section, except as
expressly permitted by this Agreement. All canceled Certificates
held by the Agent shall upon written request be returned to the
Company.
If the Company or any Affiliate of the Company shall
acquire any Certificate, such acquisition shall not operate as a
cancellation of such Certificate unless and until such
Certificate is delivered to the Agent canceled or for
cancellation.
SECTION 3.13. ESTABLISHMENT OR REESTABLISHMENT OF GROWTH PRIDES.
A Holder of an Income PRIDES may, at any time on or
prior to the fifth Business Day immediately preceding the Second
Purchase Contract Settlement Date, create a Growth PRIDES and
separate the Debt Securities or the appropriate Applicable
Ownership Interest in the Treasury Portfolio, as applicable, from
the related Purchase Contract in respect of such Income PRIDES by
substituting 3-Year Treasury Securities and 4-Year Treasury
Securities for all, but not less than all, of the Series D Note
and the Series E Note, respectively, or appropriate Applicable
Ownership Interest in the Treasury Portfolio, as the case may be,
that form a part of such Income PRIDES in accordance with this
Section 3.13; provided, however, that such Collateral
Substitutions may not be made during the period from the fifth
Business Day immediately preceding the First Purchase Contract
Settlement Date through the First Purchase Contract Settlement
Date, except that if a Tax Event Redemption has occurred and the
Treasury Portfolio has become a component of the Income PRIDES,
Holders of such Income PRIDES may make such Collateral
Substitutions at any time on or prior to the second Business Day
immediately preceding the Second Purchase Contract Settlement
Date (but not during the period from the second Business Day
immediately preceding the First Purchase Contract Settlement Date
through the First Purchase Contract Settlement Date). Holders
may make Collateral Substitutions (i) only in integral multiples
of 40 Income PRIDES if Debt Securities are being substituted by
Treasury Securities, or (ii) only in integral multiples of
1,600,000 Income PRIDES if the appropriate Applicable Ownership
Interests in the Treasury Portfolio are being substituted by
Treasury Securities. To create 40 Growth PRIDES (if a Tax Event
Redemption has not occurred), or 1,600,000 Growth PRIDES (if a
Tax Event Redemption has occurred), the Income PRIDES Holder
shall
(a) if a Tax Event Redemption has not occurred, (i)
prior to the fifth Business Day preceding the First Purchase
Contract Settlement Date, deposit with the Collateral Agent
a 3-Year Treasury Security having a principal amount at
maturity of $1,000 and a 4-Year Treasury Security having a
principal amount at maturity of $1,000, or (ii) after the
First Purchase Contract Settlement Date and prior to the
fifth Business Day preceding the Second Purchase Contract
Settlement Date, deposit with the Collateral Agent a 4-Year
Treasury Security having a principal amount at maturity of
$1,000; or
(b) if a Tax Event Redemption has occurred, (i) prior
to the second Business Day immediately preceding the First
Purchase Contract Settlement Date, deposit with the
Collateral Agent 3-Year Treasury Securities having an
aggregate principal amount at maturity of $40,000,000 and 4-
Year Treasury Securities having an aggregate principal
amount at maturity of $40,000,000, or (ii) after the First
Purchase Contract Settlement Date and prior to the second
Business Day immediately preceding the Second Purchase
Contract Settlement Date, 4-Year Treasury Securities having
an aggregate principal amount at maturity of $40,000,000;
and
(c) in either case, (i) deliver cash to the Agent in an
amount equal to the excess of the Contract Adjustment
Payments that would have accrued on the Growth PRIDES being
created by the Holder since the last Payment Date through
the date of Collateral Substitution, over the Contract
Adjustment Payments that have accrued over the same time
period on the Income PRIDES being surrendered in connection
with such Collateral Substitution, which amount the Agent
shall promptly remit to the Company, and (ii) transfer the
40 Income PRIDES, or, in the event a Tax Event Redemption
has occurred, 1,600,000 Income PRIDES, to the Agent
accompanied by a notice to the Agent, substantially in the
form of Exhibit B to the Pledge Agreement, stating that the
Holder has transferred the relevant types and amounts of
Treasury Securities to the Collateral Agent and requesting
that the Agent instruct the Collateral Agent to release the
applicable Debt Securities or the appropriate Applicable
Ownership Interest in the Treasury Portfolio, as the case
may be, underlying such Income PRIDES, whereupon the Agent
shall promptly give such instruction to the Collateral
Agent, substantially in the form of Exhibit A to the Pledge
Agreement.
Upon receipt of the Treasury Securities described in clause (a)
or (b) above and the instructions described in clause (c) above,
in accordance with the terms of the Pledge Agreement, the
Collateral Agent will release from the Pledge, to the Agent, on
behalf of the Holder, Debt Securities or the appropriate
Applicable Ownership Interest in the Treasury Portfolio, as the
case may be, that had been components of such Income PRIDES, free
and clear of the Company's security interest therein, and upon
receipt thereof the Agent shall promptly:
(i) cancel the related Income PRIDES surrendered
and transferred;
(ii) transfer the Debt Securities or the
appropriate Applicable Ownership Interest in the
Treasury Portfolio, as the case may be, that had been
components of such Income PRIDES to the Holder; and
(iii) authenticate, execute on behalf of such
Holder and deliver a Growth PRIDES Certificate executed
by the Company in accordance with Section 3.3
evidencing the same number of Purchase Contracts as
were evidenced by the canceled Income PRIDES.
Holders who elect to separate the Debt Securities or
the appropriate Applicable Ownership Interest in the Treasury
Portfolio, as the case may be, from the related Purchase
Contracts and to substitute Treasury Securities for such Debt
Securities or the appropriate Applicable Ownership Interest in
the Treasury Portfolio, as the case may be, shall be responsible
for any fees or expenses payable to the Collateral Agent for its
services as Collateral Agent in respect of the substitution, and
the Company shall not be responsible for any such fees or
expenses.
In the event a Holder making a Collateral Substitution
pursuant to this Section 3.13 fails to effect a book-entry
transfer of the Income PRIDES or fails to deliver an Income
PRIDES Certificate to the Agent after depositing the appropriate
Treasury Securities with the Collateral Agent, the Debt
Securities or the appropriate Applicable Ownership Interest in
the Treasury Portfolio, as the case may be, constituting a part
of such Income PRIDES, and any interest on such Debt Securities
or distributions with respect to the Applicable Ownership
Interest in the Treasury Portfolio, as the case may be, shall be
held in the name of the Agent or its nominee in trust for the
benefit of such Holder, until such Income PRIDES is so
transferred or the Income PRIDES Certificate is so delivered, as
the case may be, or, until such Holder provides evidence
satisfactory to the Company and the Agent that such Income PRIDES
Certificate has been destroyed, lost or stolen, together with any
indemnity that may be required by the Agent and the Company.
Except as described in this Section 3.13, for so long
as the Purchase Contract underlying an Income PRIDES remains in
effect, such Income PRIDES shall not be separable into its
constituent parts, and the rights and obligations of the Holder
in respect of the Debt Securities or the appropriate Applicable
Ownership Interest in the Treasury Portfolio, as the case may be,
and Purchase Contract comprising such Income PRIDES may be
acquired, and may be transferred and exchanged, only as an entire
Income PRIDES.
SECTION 3.14. ESTABLISHMENT OR REESTABLISHMENT OF INCOME PRIDES.
A Holder of a Growth PRIDES may, at any time on or
prior to the fifth Business Day immediately preceding the Second
Purchase Contract Settlement Date, create or recreate Income
PRIDES by (a) depositing with the Collateral Agent Debt
Securities or the appropriate Applicable Ownership Interest in
the Treasury Portfolio, as the case may be, having an aggregate
principal amount equal to the aggregate principal amount at
maturity of, and in substitution for all, but not less than all,
of the Treasury Securities comprising part of the Growth PRIDES
in accordance with this Section 3.14; provided, however, that
such substitutions may not be made during the period from the
fifth Business Day immediately preceding the First Purchase
Contract Settlement Date through the First Purchase Contract
Settlement Date, except that if a Tax Event Redemption has
occurred and the Treasury Portfolio has become a component of the
Income PRIDES, Holders of Growth PRIDES may make such Collateral
Substitutions at any time on or prior to the second Business Day
immediately preceding the Second Purchase Contract Settlement
Date (but not during the period from the second Business Day
immediately preceding the First Purchase Contract Settlement Date
through the First Purchase Contract Settlement Date). Holders of
Growth PRIDES may make such Collateral Substitutions and
establish Income PRIDES only (i) in integral multiples of 40
Growth PRIDES for 40 Income PRIDES if a Tax Event Redemption has
not occurred, or (ii) in integral multiples of 1,600,000 Growth
PRIDES for 1,600,000 Income PRIDES if a Tax Event Redemption has
occurred. To create 40 Income PRIDES (if a Tax Event Redemption
has not occurred), or 1,600,000 Income PRIDES (if a Tax Event
Redemption has occurred), the Growth PRIDES Holder shall
(a) if a Tax Event Redemption has not occurred, (i)
prior to the fifth Business Day preceding the First Purchase
Contract Settlement Date, deposit with the Collateral Agent
$1,000 in aggregate principal amount of Series D Notes and
$1,000 in aggregate principal amount of Series E Notes, or
(ii) after the First Purchase Contract Settlement Date,
deposit with the Collateral Agent $1,000 in aggregate
principal amount of Series E Notes, or
(b) if a Tax Event Redemption has occurred, deposit
with the Collateral Agent the Applicable Ownership Interest
in the Treasury Portfolio for each Income PRIDES being
created by the Holder, and having an aggregate principal
amount of $80,000,000, or if, after the First Purchase
Contract Settlement Date $40,000,000, and
(c) in either case, transfer and surrender the related
40 Growth PRIDES, or in the event a Tax Event Redemption has
occurred, 1,600,000 Income PRIDES, to the Agent accompanied
by a notice to the Agent, substantially in the form of
Exhibit B to the Pledge Agreement, stating that the Holder
has transferred the relevant amount of Debt Securities or
the appropriate Applicable Ownership Interest in the
Treasury Portfolio, as the case may be, to the Collateral
Agent and requesting that the Agent instruct the Collateral
Agent to release the Treasury Securities underlying such
Growth PRIDES, whereupon the Agent shall promptly give such
instruction to the Collateral Agent, substantially in the
form of Exhibit A to the Pledge Agreement.
Upon receipt of the Debt Securities or the appropriate Applicable
Ownership Interest in the Treasury Portfolio, as the case may be,
described in clause (a) or (b) above and the instructions
described in clause (c) above, in accordance with the terms of
the Pledge Agreement, the Collateral Agent will effect the
release of the Treasury Securities having a corresponding
aggregate principal amount from the Pledge to the Agent free and
clear of the Company's security interest therein, and upon
receipt thereof the Agent shall promptly:
(i) cancel the related Growth PRIDES surrendered
and transferred;
(ii) transfer the Treasury Securities that had
been components of such Growth PRIDES to the Holder;
and
(iii) authenticate, execute on behalf of such
Holder and deliver an Income PRIDES Certificate
executed by the Company in accordance with Section 3.3
evidencing the same number of Purchase Contracts as
were evidenced by the canceled Growth PRIDES.
Holders who elect to separate Treasury Securities from
the related Purchase Contract and to substitute Debt Securities
or the Applicable Ownership Interest in the Treasury Portfolio,
as the case may be, for such Treasury Securities shall be
responsible for any fees or expenses payable to the Collateral
Agent for its services as Collateral Agent in respect of the
substitution, and the Company shall not be responsible for any
such fees or expenses.
In the event a Holder making a Collateral Substitution
pursuant to this Section 3.14 fails to effect a book-entry
transfer of the Growth PRIDES or fails to deliver a Growth PRIDES
Certificate to the Agent after depositing the appropriate Debt
Securities or Applicable Ownership Interest in the Treasury
Portfolio with the Collateral Agent, the Treasury Securities
constituting a part of such Growth PRIDES Certificate, and any
interest on such Treasury Securities, shall be held in the name
of the Agent or its nominee in trust for the benefit of such
Holder, until such Growth PRIDES is so transferred or the Growth
PRIDES is so delivered, or until such Holder provides evidence
satisfactory to the Company and the Agent that such Growth PRIDES
has been destroyed, lost or stolen, together with any indemnity
that may be required by the Agent and the Company.
Except as provided in this Section 3.14, for so long as
the Purchase Contract underlying a Growth PRIDES remains in
effect, such Growth PRIDES shall not be separable into its
constituent parts and the rights and obligations of the Holder of
such Growth PRIDES in respect of the Treasury Security and
Purchase Contract comprising such Growth PRIDES may be acquired,
and may be transferred and exchanged only as an entire Growth
PRIDES.
SECTION 3.15. TRANSFER OF COLLATERAL UPON OCCURRENCE OF
TERMINATION EVENT.
Upon the occurrence of a Termination Event and the
transfer to the Agent of the Debt Securities, the appropriate
Applicable Ownership Interest in the Treasury Portfolio or the
Treasury Securities, as the case may be, underlying the Income
PRIDES and the Growth PRIDES pursuant to the terms of the Pledge
Agreement, the Agent shall request transfer instructions with
respect to such Debt Securities or the appropriate Applicable
Ownership Interest in the Treasury Portfolio or Treasury
Securities, as the case may be, from each Holder by written
request mailed to such Holder at its address as it appears in the
Income PRIDES Register or the Growth PRIDES Register, as the case
may be. Upon book-entry transfer of the Income PRIDES Certificate
or Growth PRIDES Certificate or delivery of an Income PRIDES or
Growth PRIDES to the Agent with such transfer instructions, the
Agent shall transfer the Debt Securities, the Treasury Portfolio
or Treasury Securities, as the case may be, underlying such
Income PRIDES or Growth PRIDES, as the case may be, to such
Holder by book-entry transfer, or other appropriate procedures,
in accordance with such instructions. In the event a Holder of
Income PRIDES or Growth PRIDES fails to effect such transfer or
delivery, the Debt Securities, the appropriate Applicable
Ownership Interest in the Treasury Portfolio or Treasury
Securities, as the case may be, underlying such Income PRIDES or
Growth PRIDES, as the case may be, and any interest thereon,
shall be held in the name of the Agent or its nominee in trust
for the benefit of such Holder, until such Income PRIDES or
Growth PRIDES are transferred or the Income PRIDES Certificate or
Growth PRIDES Certificate is surrendered or such Holder provides
satisfactory evidence that such Income PRIDES Certificate or
Growth PRIDES Certificate has been destroyed, lost or stolen,
together with any indemnity that may be required by the Agent and
the Company. In the case of the Treasury Portfolio the Purchase
Contract Agent may dispose of the subject securities for cash and
pay the applicable portion of such cash to the Holders in lieu of
such Holders Applicable Ownership interest in such Treasury
Portfolio, where that such Holder would otherwise have been
entitled to receive less than $1,000 of any such security.
SECTION 3.16. NO CONSENT TO ASSUMPTION.
Each Holder of a Security, by acceptance thereof, shall
be deemed expressly to have withheld any consent to the
assumption under Section 365 of the Bankruptcy Code or otherwise,
of the Purchase Contract by the Company, its trustee in
bankruptcy, receiver, liquidator or a person or entity performing
similar functions, its trustee in the event that the Company
becomes the debtor under the Bankruptcy Code or subject to other
similar state or federal law providing for reorganization or
liquidation.
ARTICLE IV
THE DEBT SECURITIES
SECTION 4.1. PAYMENT OF INTEREST; RIGHTS TO INTEREST PRESERVED;
INTEREST RATE RESET; NOTICE.
A payment of interest on any Debt Securities or
distribution with respect to the appropriate Applicable Ownership
Interest in the Treasury Portfolio, as the case may be, which is
paid on any Payment Date shall, subject to receipt thereof by the
Agent from the Collateral Agent as provided by the terms of the
Pledge Agreement, be paid to the Person in whose name the Income
PRIDES Certificate (or one or more Predecessor Income PRIDES
Certificates) of which such Debt Securities or the appropriate
Applicable Ownership Interest in the Treasury Portfolio, as the
case may be, are a part is registered at the close of business on
the Record Date for such Payment Date.
Each Income PRIDES Certificate evidencing Debt
Securities delivered under this Agreement upon registration of
transfer of or in exchange for or in lieu of any other Income
PRIDES Certificate shall carry the rights to payment of interest
accrued and unpaid, and to accrue interest, which is carried by
the Debt Securities underlying such other Income PRIDES
Certificate.
In the case of any Income PRIDES with respect to which
Cash Settlement of the underlying applicable portion of the
Purchase Contract is effected on the Business Day immediately
preceding the applicable Purchase Contract Settlement Date
pursuant to prior notice, or with respect to which Early
Settlement of the underlying Purchase Contract is effected on an
Early Settlement Date, or with respect to which a Collateral
Substitution is effected, in each case on a date that is after
any Record Date and on or prior to the next succeeding Payment
Date, interest on the Debt Securities or distributions with
respect to the appropriate Applicable Ownership Interest in the
Treasury Portfolio, as the case may be, underlying such Income
PRIDES otherwise payable on such Payment Date shall be payable on
such Payment Date notwithstanding such Cash Settlement or Early
Settlement or Collateral Substitution, and such interests shall,
subject to receipt thereof by the Agent, be payable to the Person
in whose name the Income PRIDES Certificate (or one or more
Predecessor Income PRIDES Certificate) was registered at the
close of business on the Record Date. Except as otherwise
expressly provided in the immediately preceding sentence, in the
case of any Income PRIDES with respect to which Cash Settlement
or Early Settlement of the underlying Purchase Contract is
effected on the Business Day immediately preceding the applicable
Purchase Contract Settlement Date or an Early Settlement Date, as
the case may be, or with respect to which a Collateral
Substitution has been effected, payment of interest on the
related Debt Securities or distributions with respect to the
appropriate Applicable Ownership Interest in the Treasury
Portfolio, as the case may be, that would otherwise be payable
after the applicable Purchase Contract Settlement Date or Early
Settlement Date shall not be payable hereunder to the Holder of
such Income PRIDES; provided, however, that to the extent that
such Holder continues to hold the separated Debt Securities that
formerly comprised a part of such Holder's Income PRIDES, such
Holder shall be entitled to receive the payment of interest on
such separated Debt Securities.
The applicable Coupon Rate on the Series D Notes to be
in effect on and after the First Purchase Contract Settlement
Date will be reset on the third Business Day immediately
preceding the First Purchase Contract Settlement Date to the
Series D Reset Rate (such Series D Reset Rate to be effective
from and after the First Purchase Contract Settlement Date). On
the Reset Announcement Date, the Series D Reset Spread and the
Two-Year Benchmark Treasury to be used to determine the Series D
Reset Rate will be announced by the Company. On the Business Day
immediately following the Reset Announcement Date, the Company
will cause a notice of such Series D Reset Spread and Two-Year
Benchmark Treasury to be published in an Authorized Newspaper.
The applicable Coupon Rate on the Series E Notes to be
in effect on and after the Second Purchase Contract Settlement
Date will be reset on the third Business Day immediately
preceding the Second Purchase Contract Settlement Date to the
Series E Reset Rate (such Series E Reset Rate to be in effect
from and after the Second Purchase Contract Settlement Date). On
the Reset Announcement Date the Series E Reset Spread and the
Two-Year Benchmark Treasury to be used to determine the Series E
Reset Rate will be announced by the Company. On the Business Day
immediately following the Reset Announcement Date, the Company
will cause a notice of such Series E Reset Spread and Two-Year
Benchmark Treasury to be published in an Authorized Newspaper.
Not later than 7 calendar days nor more than 15
calendar days prior to each Reset Announcement Date, the Company
will request that the Depositary notify (or any successor
Clearing Agency or its nominee) by first-class mail, postage
prepaid, the Beneficial Owners or Clearing Agency Participants
holding Income PRIDES or Growth PRIDES, of such Reset
Announcement Date and any procedures to be followed by such
Holders of Securities, who intend to settle their obligation
under the applicable portion of the Purchase Contract with
separate cash on the applicable Purchase Contract Settlement
Date.
SECTION 4.2. NOTICE AND VOTING.
Under and subject to the terms of the Pledge Agreement,
the Agent will be entitled to exercise the voting and any other
consensual rights pertaining to the Debt Securities pledged with
the Collateral Agent but only to the extent instructed by the
Holders as described below. Upon receipt of notice of any meeting
at which holders of Debt Securities are entitled to vote or upon
any solicitation of consents, waivers or proxies of holders of
Debt Securities, the Agent shall, as soon as practicable
thereafter, mail to the Holders of Income PRIDES a notice (a)
containing such information as is contained in the notice or
solicitation, (b) stating that each Holder on the record date set
by the Agent therefor (which, to the extent possible, shall be
the same date as the record date for determining the holders of
Debt Securities entitled to vote) shall be entitled to instruct
the Agent as to the exercise of the voting rights pertaining to
the Debt Securities underlying their Income PRIDES and (c)
stating the manner in which such instructions may be given. Upon
the written request of the Holders of Income PRIDES on such
record date, the Agent shall endeavor insofar as practicable to
vote or cause to be voted, in accordance with the instructions
set forth in such requests, the maximum number of Debt Securities
as to which any particular voting instructions are received. In
the absence of specific instructions from the Holder of an Income
PRIDES, the Agent shall abstain from voting the Debt Security
underlying such Income PRIDES. The Company hereby agrees, if
applicable, to solicit Holders of Income PRIDES to timely
instruct the Agent in order to enable the Agent to vote such Debt
Securities.
SECTION 4.3. TAX EVENT REDEMPTION.
Upon the occurrence of a Tax Event Redemption prior to
the Second Purchase Contract Settlement Date, the Redemption
Price payable on the Tax Event Redemption Date with respect to
the Applicable Principal Amount of Debt Securities shall be
delivered to the Collateral Agent in exchange for the Pledged
Debt Securities. Pursuant to the terms of the Pledge Agreement,
the Collateral Agent will apply an amount equal to the Redemption
Amount of such Redemption Price to purchase on behalf of the
Holders of Income PRIDES the Treasury Portfolio and promptly
remit the remaining portion of such Redemption Price to the Agent
for payment to the Holders of such Income PRIDES. The Treasury
Portfolio will be substituted for the outstanding Pledged Debt
Securities, and will be held by the Collateral Agent in
accordance with the terms of the Pledge Agreement to secure the
obligation of each Holder of an Income PRIDES to purchase the
Common Stock of the Company on the applicable Purchase Contract
Settlement Date under the Purchase Contract constituting a part
of such Income PRIDES. Following the occurrence of a Tax Event
Redemption prior to the Second Purchase Contract Settlement Date,
the Holders of Income PRIDES and the Collateral Agent shall have
such security interests, rights and obligations with respect to
the Treasury Portfolio as the Holder of Income PRIDES and the
Collateral Agent had in respect of the Debt Securities subject to
the Pledge thereof as provided in Sections 2, 3, 4, 5 and 6 of
the Pledge Agreement, and any reference herein to the Debt
Securities shall be deemed to be reference to such Treasury
Portfolio. The Company may cause to be made in any Income PRIDES
Certificates thereafter to be issued such change in phraseology
and form (but not in substance) as may be appropriate to reflect
the liquidation of the Trust and the substitution of the Treasury
Portfolio for Debt Securities as collateral.
SECTION 4.4. CONSENT TO TREATMENT FOR TAX PURPOSES.
Each Holder of an Income PRIDES or a Growth PRIDES, by
its acceptance thereof, covenants and agrees to treat itself as
the owner, for United States federal, state and local income and
franchise tax purposes, of (i) the related Debt Securities or the
appropriate Applicable Ownership Interest in the Treasury
Portfolio, in the case of the Income PRIDES, or (ii) the Treasury
Securities, in the case of the Growth PRIDES. Each Holder of an
Income PRIDES, by its acceptance thereof, further covenants and
agrees to treat the Debt Securities as indebtedness of the
Company for United States federal, state and local income and
franchise tax purposes.
ARTICLE V
THE PURCHASE CONTRACTS
SECTION 5.1. PURCHASE OF SHARES OF COMMON STOCK.
Each Purchase Contract shall, unless a Termination
Event or an Early Settlement in accordance with Section 5.9
hereof has occurred, obligate the Holder of the related Security
to purchase, and the Company to sell, on each of the First
Purchase Contract Settlement Date and the Second Purchase
Contract Settlement Date, for $25 in cash on each such date (the
"Purchase Price"), a number of newly issued shares of Common
Stock equal to the applicable Settlement Rate. The "Settlement
Rate" as determined with respect to a Purchase Contract
Settlement Date is equal to (a) if the Applicable Market Value
(as defined below) is equal to or greater than $ 49.19 (the
"Threshold Appreciation Price"), .5082 shares of Common Stock
per Purchase Contract, (b) if the Applicable Market Value is less
than the Threshold Appreciation Price, but is greater than
$41.6875, the number of shares of Common Stock equal to $25
divided by the Applicable Market Value and (c) if the Applicable
Market Value is less than or equal to $ 41.6875, .5997 shares of
Common Stock per Purchase Contract, in each case subject to
adjustment as provided in Section 5.6 (and in each case rounded
upward or downward to the nearest 1/10,000th of a share). As
provided in Section 5.10, no fractional shares of Common Stock
will be issued upon settlement of Purchase Contracts.
The "Applicable Market Value" with respect to a
Purchase Contract Settlement Date means the average of the
Closing Price per share of Common Stock on each of the twenty
consecutive Trading Days ending on the third Trading Day
immediately preceding such Purchase Contract Settlement Date. The
"Closing Price" of the Common Stock on any date of determination
means the closing sale price (or, if no closing price is
reported, the last reported sale price) of the Common Stock on
the New York Stock Exchange (the "NYSE") on such date or, if the
Common Stock is not listed for trading on the NYSE on any such
date, as reported in the composite transactions for the principal
United States securities exchange on which the Common Stock is so
listed, or if the Common Stock is not so listed on a United
States national or regional securities exchange, the last quoted
bid price for the Common Stock in the over-the-counter market as
reported by the National Quotation Bureau or similar
organization, or, if such bid price is not available, the market
value of the Common Stock on such date as determined by a
nationally recognized independent investment banking firm
retained for this purpose by the Company. A "Trading Day" means
a day on which the Common Stock (A) is not suspended from trading
on any national or regional securities exchange or association or
over-the-counter market at the close of business and (B) has
traded at least once on the national or regional securities
exchange or association or over-the-counter market at the close
of business that is the primary market for the trading of the
Common Stock.
Each Holder of an Income PRIDES or a Growth PRIDES, by
its acceptance thereof, irrevocably authorizes the Agent to enter
into and perform the related Purchase Contract on its behalf as
its attorney-in-fact (including the execution of Certificates on
behalf of such Holder), agrees to be bound by the terms and
provisions thereof, covenants and agrees to perform its
obligations under such Purchase Contracts, and consents to the
provisions hereof, irrevocably authorizes the Agent as its
attorney-in-fact to enter into and perform the Pledge Agreement
on its behalf as its attorney-in-fact, and consents to and agrees
to be bound by the Pledge of the Debt Securities, the Treasury
Portfolio or the Treasury Securities pursuant to the Pledge
Agreement. Each Holder of an Income PRIDES or a Growth PRIDES,
by its acceptance thereof, further covenants and agrees, that, to
the extent and in the manner provided in Section 5.4 and the
Pledge Agreement, but subject to the terms thereof, payments in
respect of the principal of and interest on Debt Securities or
the Proceeds of the Treasury Securities or Applicable Ownership
Interest in the Treasury Portfolio on a Purchase Contract
Settlement Date shall be paid by the Collateral Agent to the
Company in satisfaction of such Holder's obligations under such
Purchase Contract and such Holder shall acquire no right, title
or interest in such payments.
Upon registration of transfer of a Certificate, the
transferee shall be bound (without the necessity of any other
action on the part of such transferee), under the terms of this
Agreement, the Purchase Contract underlying such Certificate and
the Pledge Agreement; and the transferor shall be released from
the obligations under this Agreement, the Purchase Contracts
underlying the Certificates so transferred and the Pledge
Agreement. The Company covenants and agrees, and each Holder of a
Certificate, by its acceptance thereof, likewise covenants and
agrees, to be bound by the provisions of this paragraph.
SECTION 5.2. CONTRACT ADJUSTMENT PAYMENTS.
Subject to Section 5.3 herein, the Company shall pay,
on each Payment Date, the Contract Adjustment Payments payable in
respect of each Purchase Contract to the Person in whose name a
Certificate (or one or more Predecessor Certificates) is
registered at the close of business on the Record Date next
preceding such Payment Date. The Contract Adjustment Payments
will be payable at the office of the Agent in The City of New
York maintained for that purpose or, at the option of the
Company, by check mailed to the address of the Person entitled
thereto at such Person's address as it appears on the Income
PRIDES Register or Growth PRIDES Register.
Upon the occurrence of a Termination Event, the
Company's obligation to pay Contract Adjustment Payments
(including any accrued or Deferred Contract Adjustment Payments)
shall cease.
Each Certificate delivered under this Agreement upon
registration of transfer of or in exchange for or in lieu of
(including as a result of a Collateral Substitution or the
re-establishment of an Income PRIDES) any other Certificate shall
carry the rights to Contract Adjustment Payments accrued and
unpaid, and to accrue Contract Adjustment Payments, which were
carried by the Purchase Contracts underlying such other
Certificates.
Subject to Section 5.9, in the case of any Security
with respect to which Early Settlement of the underlying Purchase
Contract is effected on an Early Settlement Date that is after
any Record Date and on or prior to the next succeeding Payment
Date, Contract Adjustment Payments, if any, otherwise payable on
such Payment Date shall be payable on such Payment Date
notwithstanding such Early Settlement, and such Contract
Adjustment Payments shall be paid to the Person in whose name the
Certificate evidencing such Security (or one or more Predecessor
Certificates) is registered at the close of business on such
Record Date. Except as otherwise expressly provided in the
immediately preceding sentence, in the case of any Security with
respect to which Early Settlement of the underlying Purchase
Contract is effected on an Early Settlement Date, Contract
Adjustment Payments that would otherwise be payable after the
Early Settlement Date with respect to such Purchase Contract
shall not be payable.
The Company's obligations with respect to Contract
Adjustment Payments, will be subordinated and junior in right of
payment to the Company's obligations under any Senior
Indebtedness.
SECTION 5.3. DEFERRAL OF PAYMENT DATES FOR CONTRACT ADJUSTMENT
PAYMENTS.
The Company shall have the right to defer the payment
of any or all of the Contract Adjustment Payments otherwise
payable on any Payment Date to a date no later than the Purchase
Contract Settlement Date next succeeding the date such deferral
commences, but only if the Company shall give the Holders and the
Agent written notice of its election to defer such payment
(specifying the amount to be deferred) at least ten Business Days
prior to the earlier of (i) the next succeeding Payment Date or
(ii) the date the Company is required to give notice of the
Record Date or Payment Date with respect to payment of such
Contract Adjustment Payments to the NYSE or other applicable
self-regulatory organization or to Holders of the Securities, but
in any event not less than one Business Day prior to such Record
Date. In connection with any Contract Adjustment Payments so
deferred, additional Contract Adjustment Payments thereon will
accrue at the rate of 9.75% per annum (computed on the basis of
360 day year of twelve 30 day months), compounding on each
succeeding Payment Date, until paid in full (such deferred
installments of Contract Adjustment Payments together with the
accrued additional Contract Adjustment Payments thereon, being
referred to herein as the "Deferred Contract Adjustment
Payments"). Deferred Contract Adjustment Payments shall be due on
the next succeeding Payment Date except to the extent that
payment is deferred pursuant to this Section. No Contract
Adjustment Payments may be deferred to a date that is after the
Purchase Contract Settlement Date next succeeding the date such
deferral commences. If the Purchase Contracts are terminated upon
the occurrence of a Termination Event, the Holder's right to
receive Contract Adjustment Payments and Deferred Contract
Adjustment Payments will terminate.
In the event that the Company elects to defer the
payment of Contract Adjustment Payments on the Purchase Contracts
until the next succeeding Purchase Contract Settlement Date, each
Holder will receive on such Purchase Contract Settlement Date, in
lieu of a cash payment, a number of shares of Common Stock (in
addition to a number of shares of Common Stock equal to the
Settlement Rate) equal to (x) the aggregate amount of Deferred
Contract Adjustment Payments payable to such Holder divided by
(y) the Applicable Market Value.
No fractional shares of Common Stock will be issued by
the Company with respect to the payment of Deferred Contract
Adjustment Payments on a Purchase Contract Settlement Date. In
lieu of fractional shares otherwise issuable with respect to such
payment of Deferred Contract Adjustment Payments, the Holder will
be entitled to receive an amount in cash as provided in Section
5.10.
In the event the Company exercises its option to defer
the payment of Contract Adjustment Payments, then, until the
Deferred Contract Adjustment Payments have been paid, the Company
shall not declare or pay dividends on, make distributions with
respect to, or redeem, purchase or acquire, or make a liquidation
payment with respect to, any of its capital stock or make
guarantee payments with respect to the foregoing (other than (i)
purchases or acquisitions of capital stock of the Company in
connection with the satisfaction by the Company of its
obligations under any employee or agent benefit plans or the
satisfaction by the Company of its obligations pursuant to any
contract or security outstanding on the date of such event
requiring the Company to purchase its capital stock, (ii) as a
result of a reclassification of the Company's capital stock or
the exchange or conversion of one class or series of the
Company's capital stock for another class or series of the
Company's capital stock, (iii) the purchase of fractional
interests in shares of the Company's capital stock pursuant to
the conversion or exchange provisions of the Company's capital
stock or the security being converted or exchanged, (iv)
dividends or distributions in capital stock of the Company (or
rights to acquire capital stock) or repurchases or redemptions of
capital stock solely from the issuance or exchange of capital
stock or (v) redemptions or repurchases of any rights outstanding
under a shareholder rights plan).
SECTION 5.4. PAYMENT OF PURCHASE PRICE.
(a) (i) Unless a Tax Event Redemption has occurred or a
Holder settles the underlying Purchase Contract through the
early delivery of cash to the Purchase Contract Agent in the
manner described in Section 5.9, each Holder of an Income
PRIDES must notify the Agent by use of a notice in
substantially the form of Exhibit C hereto of its intention
to pay in cash ("Cash Settlement") the Purchase Price for
the shares of Common Stock to be purchased pursuant to the
applicable portion of a Purchase Contract on a Purchase
Contract Settlement Date. Such notice shall be made on or
prior to 5:00 p.m., New York City time, on the fifth
Business Day immediately preceding the applicable Purchase
Contract Settlement Date. The Agent shall promptly notify
the Collateral Agent of the receipt of such a notice from a
Holder intending to make a Cash Settlement.
(ii) A Holder of an Income PRIDES who has so
notified the Agent of its intention to make a Cash
Settlement is required to pay the Purchase Price to the
Collateral Agent prior to 11:00 a.m., New York City time, on
the Business Day immediately preceding the applicable
Purchase Contract Settlement Date in lawful money of the
United States by certified or cashiers' check or wire
transfer, in each case in immediately available funds
payable to or upon the order of the Company. Any cash
received by the Collateral Agent will be invested promptly
by the Collateral Agent in Permitted Investments and paid to
the Company on the applicable Purchase Contract Settlement
Date in settlement of the applicable portion of the Purchase
Contract in accordance with the terms of this Agreement and
the Pledge Agreement. Any funds received by the Collateral
Agent in respect of the investment earnings from the
investment in such Permitted Investments, will be
distributed to the Agent when received for payment to the
Holder.
(iii) If a Holder of an Income PRIDES fails to
notify the Agent of its intention to make a Cash Settlement
in accordance with paragraph (a)(i) above, such failure
shall constitute a default under the related Purchase
Contract and the Holder shall be deemed to have consented to
the disposition of the applicable pledged Debt Securities
(which shall be Series D Notes in connection with the First
Purchase Contract Settlement Date and Series E Notes in
connection with the Second Purchase Contract Settlement
Date) pursuant to the remarketing as described in paragraph
(b) below. If a Holder of an Income PRIDES does notify the
Agent as provided in paragraph (a)(i) above of its intention
to pay the Purchase Price in cash, but fails to make such
payment as required by paragraph (a)(ii) above, such failure
shall also constitute a default; however, the Debt
Securities of such a Holder will not be remarketed but
instead the Collateral Agent, for the benefit of the
Company, will exercise its rights as a secured party with
respect to such Debt Securities, including those rights
specified in paragraph (c) below.
(b) In order to dispose of the applicable Debt
Securities (which shall be Series D Notes in connection with
the First Purchase Contract Settlement Date and Series E
Notes in connection with the Second Purchase Contract
Settlement Date) of Income PRIDES Holders who have not
notified the Agent of their intention to effect a Cash
Settlement with respect to a Purchase Contract Settlement
Date as provided in paragraph (a)(i) above, the Company
shall engage one or more nationally recognized investment
banking firms (the "Remarketing Agent") pursuant to a
Remarketing Agreement to sell such Debt Securities. In order
to facilitate the remarketing, the Agent shall notify the
Remarketing Agent, by 10:00 a.m., New York City time, on the
fourth Business Day immediately preceding such Purchase
Contract Settlement Date, of the aggregate number of Debt
Securities to be remarketed. Concurrently, the Collateral
Agent, pursuant to the terms of the Pledge Agreement, will
present for remarketing such Debt Securities to the
Remarketing Agent. Upon receipt of such notice from the
Agent and such Debt Securities from the Collateral Agent,
the Remarketing Agent will, on the third Business Day
immediately preceding such Purchase Contract Settlement
Date, use its reasonable efforts to remarket such Debt
Securities on such date at a price of approximately 100.5%
(but not less than 100%) of the aggregate principal amount
of such Debt Securities, plus accrued and unpaid interest,
if any, thereon. After deducting as the remarketing fee
("Remarketing Fee") an amount not exceeding 25 basis points
(.25%) of the aggregate principal amount of the remarketed
Debt Securities of such series from any amount of such
proceeds in excess of the aggregate principal amount of such
remarketed Debt Securities of such series plus accrued and
unpaid interest, if any, then the Remarketing Agent will
remit the remaining portion of the proceeds from such
remarketing to the Collateral Agent. Such portion of the
proceeds, equal to the aggregate principal amount of such
Debt Securities, will automatically be applied by the
Collateral Agent, in accordance with the Pledge Agreement to
satisfy in full such Income PRIDES holders' obligations to
pay the Purchase Price for the Common Stock under the
applicable portions of the related Purchase Contracts on
such Purchase Contract Settlement Date. Any proceeds in
excess of those required to pay the Purchase Price and the
Remarketing Fee will be remitted to the Agent for payment to
the Holders of the related Income PRIDES. Income PRIDES
Holders whose Debt Securities are so remarketed will not
otherwise be responsible for the payment of any Remarketing
Fee in connection therewith. If such a remarketing does not
occur because a condition precedent to such remarketing
shall not have been fulfilled, or if in spite of using its
reasonable efforts, the Remarketing Agent cannot remarket
the related Debt Securities of such Holders of Income PRIDES
at a price not less than 100% of the aggregate principal
amount of such Debt Securities plus accrued and unpaid
interest, if any, the remarketing will be deemed to have
failed (a "Failed Remarketing") and, in accordance with the
terms of the Pledge Agreement the Collateral Agent for the
benefit of the Company will exercise its rights as a secured
party with respect to such Debt Securities, including those
actions specified in paragraph (c) below; provided, that if
upon a Failed Remarketing the Collateral Agent exercises
such rights for the benefit of the Company with respect to
such Debt Securities, any accrued and unpaid interest on
such Debt Securities will become payable by the Company to
the Agent for payment to the Holder of the Income PRIDES to
which such Debt Securities relates. Such payment will be
made by the Company on or prior to 11 a.m. New York City
time on the applicable Purchase Contract Settlement Date in
lawful money of the United States by certified or cashiers'
check or wire transfer in immediately available funds
payable to or upon the order of the Agent. The Company will
cause a notice of such Failed Remarketing to be published on
the second Business Day immediately preceding such Purchase
Contract Settlement Date in an Authorized Newspaper.
(c) With respect to any Debt Securities beneficially
owned by Holders who have elected Cash Settlement but failed
to deliver cash as required in (a)(ii) above, or with
respect to Debt Securities which are subject to a Failed
Remarketing, the Collateral Agent for the benefit of the
Company reserves all of its rights as a secured party with
respect thereto and, subject to applicable law and paragraph
(h) below, may, among other things, (i) retain such Debt
Securities in full satisfaction of the Holders obligations
under the applicable portions of the Purchase Contracts or
(ii) sell such Debt Securities in one or more public or
private sales and apply the proceeds of such sale in full
satisfaction of the Holders obligations under the
applicable portions of the Purchase Contracts.
(d) (i) Unless a Holder of Growth PRIDES or, if a Tax
Event Redemption has occurred, Income PRIDES settles the
underlying Purchase Contract through the early delivery of
cash to the Purchase Contract Agent in the manner described
in Section 5.9, each Holder of a Growth PRIDES or, if a Tax
Event Redemption has occurred, Income PRIDES must notify the
Agent by use of a notice in substantially the form of
Exhibit C hereto of its intention to pay in cash the
Purchase Price for the shares of Common Stock to be
purchased pursuant to the applicable portion of a Purchase
Contract on or prior to 5:00 p.m., New York City time, on
the second Business Day immediately preceding the applicable
Purchase Contract Settlement Date.
(ii) A Holder of a Growth PRIDES or, if a Tax
Event Redemption has occurred, Income PRIDES who has so
notified the Agent of its intention to make a Cash
Settlement in accordance with paragraph (d)(i) above is
required to pay the Purchase Price to the Collateral Agent
prior to 11:00 a.m., New York City time, on the Business Day
immediately preceding the applicable Purchase Contract
Settlement Date in lawful money of the United States by
certified or cashiers' check or wire transfer, in each case
in immediately available funds payable to or upon the order
of the Company. Any cash received by the Collateral Agent
will be invested promptly by the Collateral Agent in
Permitted Investments and paid to the Company on the
applicable Purchase Contract Settlement Date in settlement
of the applicable portion of the Purchase Contract in
accordance with the terms of this Agreement and the Pledge
Agreement. Any funds received by the Collateral Agent in
respect of the investment earnings from the investment in
such Permitted Investments will be distributed to the Agent
when received for payment to the Holder.
(iii) If a Holder of a Growth PRIDES or, if a Tax
Event Redemption has occured, an Income PRIDES, fails to
notify the Agent of its intention to make a Cash Settlement
in accordance with paragraph (d)(i) above, or if a Holder of
a Growth PRIDES or an Income PRIDES (if a Tax Event
Redemption has occurred) does notify the Agent as provided
in paragraph (d)(i) above of its intention to pay the
Purchase Price in cash, but fails to make such payment as
required by paragraph (d)(ii) above, then such failure shall
constitute a default under the related Purchase Contract and
upon the maturity of the Pledged Treasury Securities or the
appropriate Applicable Ownership Interest in the Treasury
Portfolio, as the case may be, held by the Collateral Agent
on the Business Day immediately prior to the applicable
Purchase Contract Settlement Date, the principal amount of
the Treasury Securities or the appropriate Applicable
Ownership Interest in the Treasury Portfolio, as the case
may be, received by the Collateral Agent will be invested
promptly in overnight Permitted Investments. On the
applicable Purchase Contract Settlement Date an amount equal
to the Purchase Price will be remitted to the Company as
payment thereof without receiving any instructions from the
Holder. In the event the sum of the proceeds from the
related Pledged Treasury Securities or the appropriate
Applicable Ownership Interest in the Treasury Portfolio, as
the case may be, and the investment earnings earned from
such investments is in excess of the aggregate Purchase
Price of the applicable portions of the Purchase Contracts
being settled thereby, the Collateral Agent will distribute
such excess to the Agent for the benefit of the Holder of
the related Growth PRIDES or Income PRIDES when received.
(e) Any distribution to Holders of excess funds and
interest described above, shall be payable at the office of
the Agent in The City of New York maintained for that
purpose or, at the option of the Holder, by check mailed to
the address of the Person entitled thereto at such address
as it appears on the Register.
(f) Unless a Holder settles the underlying Purchase
Contract through the early delivery of cash to the
Collateral Agent with respect to a Purchase Contract
Settlement Date in the manner described herein, the Company
shall not be obligated to issue any shares of Common Stock
in respect of the relevant portion of the Purchase Contract
or deliver any certificate therefor to the Holder unless it
shall have received payment in full of the Purchase Price
for the shares of Common Stock to be purchased thereunder in
the manner herein set forth.
(g) Upon Cash Settlement with respect to the
applicable portion of any Purchase Contract, (i) the
Collateral Agent will, in accordance with the terms of the
Pledge Agreement, cause the corresponding Pledged Debt
Securities or appropriate Applicable Ownership Interest in
the Treasury Portfolio, as the case may be, or the Pledged
Treasury Securities underlying the relevant Security to be
released from the Pledge by the Collateral Agent free and
clear of any security interest of the Company and
transferred to the Agent for delivery to the Holder thereof
or its designee as soon as practicable and (ii) subject to
the receipt thereof from the Collateral Agent, the Agent
shall, by book-entry transfer, or other appropriate
procedures, in accordance with instructions provided by the
Holder thereof, transfer such Debt Securities or the
appropriate Applicable Ownership Interest in the Treasury
Portfolio, as the case may be, or such Treasury Securities
(or, if no such instructions are given to the Agent by the
Holder, the Agent shall hold such Debt Securities or the
Treasury Portfolio, as the case may be, or such Treasury
Securities, and any distribution thereon, in the name of the
Agent or its nominee in trust for the benefit of such
Holder).
(h) The obligations of the Holders to pay the Purchase
Price on each Purchase Contract Settlement Date are
non-recourse obligations and are payable solely out of any
Cash Settlement or the proceeds of any Collateral pledged to
secure the obligations of the Holders with respect to such
Purchase Price, and in no event will Holders be liable for
any deficiency between the proceeds of Collateral
disposition and the Purchase Price. A default by a Holder
in the performance of its obligations under a Purchase
Contract in connection with the First Purchase Contract
Settlement Date shall not in itself be a default in the
performance of its obligations under such Purchase Contract
in connection with the Second Purchase Contract Settlement
Date (except in connection with Early Settlement).
SECTION 5.5. ISSUANCE OF SHARES OF COMMON STOCK.
Unless a Termination Event or an Early Settlement shall
have occurred, on a Purchase Contract Settlement Date, upon its
receipt of payment in full of the applicable Purchase Price for
shares of Common Stock purchased by the Holders pursuant to the
foregoing provisions of this Article and subject to Section
5.6(b), the Company shall issue and deposit with the Agent, for
the benefit of the Holders of the Outstanding Securities, one or
more certificates representing the newly issued shares of Common
Stock registered in the name of the Agent (or its nominee) as
custodian for the Holders (such certificates for shares of Common
Stock, together with any dividends or distributions for which
both a record date and payment date for such dividend or
distribution has occurred after the Purchase Contract Settlement
Date, being hereinafter referred to as the "Purchase Contract
Settlement Fund") to which the Holders are entitled hereunder.
Subject to the foregoing, upon surrender of a Certificate to the
Agent on or after a Purchase Contract Settlement Date, together
with settlement instructions thereon duly completed and executed,
the Holder of such Certificate shall be entitled to receive in
exchange therefor a certificate representing that number of whole
shares of Common Stock which such Holder is entitled to receive
pursuant to the provisions of this Article Five (after taking
into account all Securities then held by such Holder) together
with cash in lieu of fractional shares as provided in Section
5.10 and any dividends or distributions with respect to such
shares constituting part of the Purchase Contract Settlement
Fund, but without any interest thereon, and the Certificate so
surrendered shall forthwith be canceled. Such shares shall be
registered in the name of the Holder or the Holder's designee as
specified in the settlement instructions provided by the Holder
to the Agent. If any shares of Common Stock issued in respect of
a Purchase Contract are to be registered to a Person other than
the Person in whose name the Certificate evidencing such Purchase
Contract is registered, no such registration shall be made unless
the Person requesting such registration has paid any transfer and
other taxes required by reason of such registration in a name
other than that of the registered Holder of the Certificate
evidencing such Purchase Contract or has established to the
satisfaction of the Company that such tax either has been paid or
is not payable.
SECTION 5.6. ADJUSTMENT OF SETTLEMENT RATE.
(a) Adjustments for Dividends, Distributions, Stock
Splits, Etc.
(1) In case the Company shall pay or make a
dividend or other distribution on the Common Stock in
Common Stock, the Settlement Rate, as in effect at the
opening of business on the day following the date fixed
for the determination of stockholders entitled to
receive such dividend or other distribution shall be
increased by dividing such Settlement Rate by a
fraction of which the numerator shall be the number of
shares of Common Stock outstanding at the close of
business on the date fixed for such determination and
the denominator shall be the sum of such number of
shares and the total number of shares constituting such
dividend or other distribution, such increase to become
effective immediately after the opening of business on
the day following the date fixed for such
determination. For the purposes of this paragraph (1),
the number of shares of Common Stock at any time
outstanding shall not include shares held in the
treasury of the Company but shall include any shares
issuable in respect of any scrip certificates issued in
lieu of fractions of shares of Common Stock. The
Company will not pay any dividend or make any
distribution on shares of Common Stock held in the
treasury of the Company.
(2) In case the Company shall issue rights,
options or warrants to all holders of its Common Stock
that are not available on an equivalent basis to
Holders of the Securities upon settlement of the
Purchase Contracts underlying such Securities entitling
such holders of the Common Stock, for a period expiring
within 45 days after the record date for the
determination of stockholders entitled to receive such
rights, options or warrants, to subscribe for or
purchase shares of Common Stock at a price per share
less than the Current Market Price per share of the
Common Stock on the date fixed for the determination of
stockholders entitled to receive such rights, options
or warrants (other than pursuant to a dividend
reinvestment plan, including such a plan that provides
for purchases of Common Stock by non-shareholders), the
Settlement Rate, in effect at the opening of business
on the day following the date fixed for such
determination shall be increased by dividing such
Settlement Rate, by a fraction of which the numerator
shall be the number of shares of Common Stock
outstanding at the close of business on the date fixed
for such determination plus the number of shares of
Common Stock which the aggregate of the offering price
of the total number of shares of Common Stock so
offered for subscription or purchase would purchase at
such Current Market Price and the denominator shall be
the number of shares of Common Stock outstanding at the
close of business on the date fixed for such
determination plus the number of shares of Common Stock
so offered for subscription or purchase, such increase
to become effective immediately after the opening of
business on the day following the date fixed for such
determination. For the purposes of this paragraph (2),
the number of shares of Common Stock at any time
outstanding shall not include shares held in the
treasury of the Company but shall include any shares
issuable in respect of any scrip certificates issued in
lieu of fractions of shares of Common Stock. The
Company shall not issue any such rights, options or
warrants in respect of shares of Common Stock held in
the treasury of the Company.
(3) In case outstanding shares of Common Stock
shall be subdivided or split into a greater number of
shares of Common Stock, the Settlement Rate, in effect
at the opening of business on the day following the day
upon which such subdivision or split becomes effective
shall be proportionately increased, and, conversely, in
case outstanding shares of Common Stock shall each be
combined into a smaller number of shares of Common
Stock, the Settlement Rate, in effect at the opening of
business on the day following the day upon which such
combination becomes effective shall be proportionately
reduced, such increase or reduction, as the case may
be, to become effective immediately after the opening
of business on the day following the day upon which
such subdivision, split or combination becomes
effective.
(4) In case the Company shall, by dividend or
otherwise, distribute to all holders of its Common
Stock evidences of its indebtedness or assets
(including securities, but excluding any rights or
warrants referred to in paragraph (2) of this Section,
any dividend or distribution paid exclusively in cash
and any dividend or distribution referred to in
paragraph (1) of this Section), the Settlement Rate,
shall be adjusted so that the same shall equal the rate
determined by dividing the Settlement Rate in effect
immediately prior to the close of business on the date
fixed for the determination of stockholders entitled to
receive such distribution by a fraction of which the
numerator shall be the Current Market Price per share
of the Common Stock on the date fixed for such
determination less the then fair market value (as
determined by the Board of Directors, whose
determination shall be conclusive and described in a
Board Resolution filed with the Agent) of the portion
of the assets or evidences of indebtedness so
distributed applicable to one share of Common Stock and
the denominator shall be such Current Market Price per
share of the Common Stock, such adjustment to become
effective immediately prior to the opening of business
on the day following the date fixed for the
determination of stockholders entitled to receive such
distribution. In any case in which this paragraph (4)
is applicable, paragraph (2) of this Section shall not
be applicable.
(5) In case the Company shall, (I) by dividend or
otherwise, distribute to all holders of its Common
Stock cash (excluding any cash that is distributed in a
Reorganization Event to which Section 5.6(b) applies or
as part of a distribution referred to in paragraph (4)
of this Section) in an aggregate amount that, combined
together with (II) the aggregate amount of any other
distributions to all holders of its Common Stock made
exclusively in cash within the 12 months preceding the
date of payment of such distribution and in respect of
which no adjustment pursuant to this paragraph (5) or
paragraph (6) of this Section has been made and (III)
the aggregate of any cash plus the fair market value
(as determined by the Board of Directors, whose
determination shall be conclusive and described in a
Board Resolution) of consideration payable in respect
of any tender or exchange offer by the Company or any
of its subsidiaries for all or any portion of the
Common Stock concluded within the 12 months preceding
the date of payment of the distribution described in
clause (I) above and in respect of which no adjustment
pursuant to this paragraph (5) or paragraph (6) of this
Section has been made, exceeds 15% of the product of
the Current Market Price per share of the Common Stock
on the date for the determination of holders of shares
of Common Stock entitled to receive such distribution
times the number of shares of Common Stock outstanding
on such date, then, and in each such case, immediately
after the close of business on such date for
determination, the Settlement Rate, shall be increased
so that the same shall equal the rate determined by
dividing the Settlement Rate in effect immediately
prior to the close of business on the date fixed for
determination of the stockholders entitled to receive
such distribution by a fraction (i) the numerator of
which shall be equal to the Current Market Price per
share of the Common Stock on the date fixed for such
determination less an amount equal to the quotient of
(x) the combined amount distributed or payable in the
transactions described in clauses (I), (II) and (III)
above and (y) the number of shares of Common Stock
outstanding on such date for determination and (ii) the
denominator of which shall be equal to the Current
Market Price per share of the Common Stock on such date
for determination.
(6) In case (I) a tender or exchange offer made
by the Company or any subsidiary of the Company for all
or any portion of the Common Stock shall expire and
such tender or exchange offer (as amended upon the
expiration thereof) shall require the payment to
stockholders (based on the acceptance (up to any
maximum specified in the terms of the tender or
exchange offer) of Purchased Shares) of an aggregate
consideration having a fair market value (as determined
by the Board of Directors, whose determination shall be
conclusive and described in a Board Resolution) that
combined together with (II) the aggregate of the cash
plus the fair market value (as determined by the Board
of Directors, whose determination shall be conclusive
and described in a Board Resolution), as of the
expiration of such tender or exchange offer, of
consideration payable in respect of any other tender or
exchange offer, by the Company or any subsidiary of the
Company for all or any portion of the Common Stock
expiring within the 12 months preceding the expiration
of such tender or exchange offer and in respect of
which no adjustment pursuant to paragraph (5) of this
Section or this paragraph (6) has been made and (III)
the aggregate amount of any distributions to all
holders of the Company's Common Stock made exclusively
in cash within the 12 months preceding the expiration
of such tender or exchange offer and in respect of
which no adjustment pursuant to paragraph (5) of this
Section or this paragraph (6) has been made, exceeds
15% of the product of the Current Market Price per
share of the Common Stock as of the last time (the
"Expiration Time") tenders could have been made
pursuant to such tender or exchange offer (as it may be
amended) times the number of shares of Common Stock
outstanding (including any tendered shares) on the
Expiration Time, then, and in each such case,
immediately prior to the opening of business on the day
after the date of the Expiration Time, the Settlement
Rate, shall be adjusted so that the same shall equal
the rate determined by dividing the Settlement Rate
immediately prior to the close of business on the date
of the Expiration Time by a fraction (i) the numerator
of which shall be equal to (A) the product of (I) the
Current Market Price per share of the Common Stock on
the date of the Expiration Time and (II) the number of
shares of Common Stock outstanding (including any
tendered shares) on the Expiration Time less (B) the
amount of cash plus the fair market value (determined
as aforesaid) of the aggregate consideration payable to
stockholders based on the transactions described in
clauses (I), (II) and (III) above (assuming in the case
of clause (I) the acceptance, up to any maximum
specified in the terms of the tender or exchange offer,
of Purchased Shares), and (ii) the denominator of which
shall be equal to the product of (A) the Current Market
Price per share of the Common Stock as of the
Expiration Time and (B) the number of shares of Common
Stock outstanding (including any tendered shares) as of
the Expiration Time less the number of all shares
validly tendered and not withdrawn as of the Expiration
Time (the shares deemed so accepted, up to any such
maximum, being referred to as the "Purchased Shares").
(7) The reclassification of Common Stock into
securities including securities other than Common Stock
(other than any reclassification upon a Reorganization
Event to which Section 5.6(b) applies) shall be deemed
to involve (a) a distribution of such securities other
than Common Stock to all holders of Common Stock (and
the effective date of such reclassification shall be
deemed to be "the date fixed for the determination of
stockholders entitled to receive such distribution" and
the "date fixed for such determination" within the
meaning of paragraph (4) of this Section), and (b) a
subdivision, split or combination, as the case may be,
of the number of shares of Common Stock outstanding
immediately prior to such reclassification into the
number of shares of Common Stock outstanding
immediately thereafter (and the effective date of such
reclassification shall be deemed to be "the day upon
which such subdivision or split becomes effective" or
"the day upon which such combination becomes
effective", as the case may be, and "the day upon which
such subdivision, split or combination becomes
effective" within the meaning of paragraph (3) of this
Section).
(8) The "Current Market Price" per share of
Common Stock on any day means the average of the daily
Closing Prices for the five consecutive Trading Days
selected by the Company commencing not more than 30
Trading Days before, and ending not later than, the
earlier of the day in question and the day before the
"ex date" with respect to the issuance or distribution
requiring such computation. For purposes of this
paragraph, the term "ex date," when used with respect
to any issuance or distribution, shall mean the first
date on which the Common Stock trades regular way on
such exchange or in such market without the right to
receive such issuance or distribution.
(9) All adjustments to the Settlement Rate, shall
be calculated to the nearest 1/10,000th of a share of
Common Stock (or if there is not a nearest 1/10,000th
of a share to the next lower 1/10,000th of a share). No
adjustment in the Settlement Rate shall be required
unless such adjustment would require an increase or
decrease of at least one percent therein; provided,
however, that any adjustments which by reason of this
subparagraph are not required to be made shall be
carried forward and taken into account in any
subsequent adjustment. If an adjustment is made to the
Settlement Rate pursuant to paragraph (1), (2), (3),
(4), (5), (6), (7) or (10) of this Section 5.6(a), an
adjustment shall also be made to the Applicable Market
Value solely to determine which of clauses (a), (b) or
(c) of the definition of Settlement Rate in Section 5.1
will apply on the Purchase Contract Settlement Date.
Such adjustment shall be made by multiplying the
Applicable Market Value by a fraction of which the
numerator shall be the Settlement Rate immediately
after such adjustment pursuant to paragraph (1), (2),
(3), (4), (5), (6), (7) or (10) of this Section 5.6(a)
and the denominator shall be the Settlement Rate
immediately before such adjustment; provided, however,
that if such adjustment to the Settlement Rate is
required to be made pursuant to the occurrence of any
of the events contemplated by paragraph (1), (2), (3),
(4), (5), (7) or (10) of this Section 5.6(a) during the
period taken into consideration for determining the
Applicable Market Value, appropriate and customary
adjustments shall be made to the Settlement Rate.
(10) The Company may make such increases in the
Settlement Rate, in addition to those required by this
Section, as it considers to be advisable in order to
avoid or diminish the effect of any income tax to any
holders of shares of Common Stock resulting from any
dividend or distribution of stock or issuance of rights
or warrants to purchase or subscribe for stock or from
any event treated as such for income tax purposes or
for any other reasons.
(b) Adjustment for Consolidation, Merger or Other
Reorganization Event. In the event of (i) any consolidation
or merger of the Company with or into another Person (other
than a merger or consolidation in which the Company is the
continuing corporation and in which the Common Stock
outstanding immediately prior to the merger or consolidation
is not exchanged for cash, securities or other property of
the Company or another corporation), (ii) any sale,
transfer, lease or conveyance to another Person of the
property of the Company as an entirety or substantially as
an entirety, (iii) any statutory exchange of securities of
the Company with another Person (other than in connection
with a merger or acquisition) or (iv) any liquidation,
dissolution or winding up of the Company other than as a
result of or after the occurrence of a Termination Event
(any such event, a "Reorganization Event"), the Settlement
Rate will be adjusted to provide that each Holder of
Securities will receive on the applicable Purchase Contract
Settlement Date with respect to each Purchase Contract
forming a part thereof, the kind and amount of securities,
cash and other property receivable upon such Reorganization
Event (without any interest thereon, and without any right
to dividends or distribution thereon which have a record
date that is prior to such Purchase Contract Settlement
Date) by a Holder of the number of shares of Common Stock
issuable on account of each Purchase Contract if the
Purchase Contract Settlement Date had occurred immediately
prior to such Reorganization Event assuming such Holder of
Common Stock is not a Person with which the Company
consolidated or into which the Company merged or which
merged into the Company or to which such sale or transfer
was made, as the case may be (any such Person, a
"Constituent Person"), or an Affiliate of a Constituent
Person to the extent such Reorganization Event provides for
different treatment of Common Stock held by Affiliates of
the Company and non-affiliates and such Holder failed to
exercise its rights of election, if any, as to the kind or
amount of securities, cash and other property receivable
upon such Reorganization Event (provided that if the kind or
amount of securities, cash and other property receivable
upon such Reorganization Event is not the same for each
share of Common Stock held immediately prior to such
Reorganization Event by other than a Constituent Person or
an Affiliate thereof and in respect of which such rights of
election shall not have been exercised ("non-electing
share"), then for the purpose of this Section the kind and
amount of securities, cash and other property receivable
upon such Reorganization Event by each non-electing share
shall be deemed to be the kind and amount so receivable per
share by a plurality of the non-electing shares). In the
event of such a Reorganization Event, the Person formed by
such consolidation, merger or exchange or the Person which
acquires the assets of the Company or, in the event of a
liquidation or dissolution of the Company, the Company or a
liquidating trust created in connection therewith, shall
execute and deliver to the Agent an agreement supplemental
hereto providing that the Holders of each Outstanding
Security shall have the rights provided by this Section 5.6.
Such supplemental agreement shall provide for adjustments
which, for events subsequent to the effective date of such
supplemental agreement, shall be as nearly equivalent as may
be practicable to the adjustments provided for in this
Section. The above provisions of this Section shall
similarly apply to successive Reorganization Events.
SECTION 5.7. NOTICE OF ADJUSTMENTS AND CERTAIN OTHER EVENTS.
(a) Whenever the Settlement Rate is adjusted as herein
provided, the Company shall:
(i) forthwith compute the Settlement Rate in
accordance with Section 5.6 and prepare and transmit to
the Agent a Company Certificate setting forth the
Settlement Rate, the method of calculation thereof in
reasonable detail, and the facts requiring such
adjustment and upon which such adjustment is based; and
(ii) within 10 Business Days following the
occurrence of an event that requires an adjustment to
the Settlement Rate pursuant to Section 5.6 (or if the
Company is not aware of such occurrence, as soon as
practicable after becoming so aware), provide a written
notice to the Holders of the Securities of the
occurrence of such event and a statement in reasonable
detail setting forth the method by which the adjustment
to the Settlement Rate was determined and setting forth
the adjusted Settlement Rate.
(b) The Agent shall not at any time be under any duty
or responsibility to any Holder of Securities to determine
whether any facts exist which may require any adjustment of
the Settlement Rate, or with respect to the nature or extent
or calculation of any such adjustment when made, or with
respect to the method employed in making the same. The Agent
shall not be accountable with respect to the validity or
value (or the kind or amount) of any shares of Common Stock,
or of any securities or property, which may at the time be
issued or delivered with respect to any Purchase Contract;
and the Agent makes no representation with respect thereto.
The Agent shall not be responsible for any failure of the
Company to issue, transfer or deliver any shares of Common
Stock pursuant to a Purchase Contract or to comply with any
of the duties, responsibilities or covenants of the Company
contained in this Article.
SECTION 5.8. TERMINATION EVENT; NOTICE.
The Purchase Contracts and all obligations and rights
of the Company and the Holders thereunder, including, without
limitation, the rights of the Holders to receive and the
obligation of the Company to pay any Contract Adjustment Payments
or Deferred Contract Adjustment Payments, and the rights and
obligations of Holders to purchase Common Stock, shall
immediately and automatically terminate, without the necessity of
any notice or action by any Holder, the Agent or the Company, if,
on or prior to the Second Purchase Contract Settlement Date, a
Termination Event shall have occurred. Upon and after the
occurrence of a Termination Event, the Securities shall
thereafter represent the right to receive the Debt Securities or
the appropriate Applicable Ownership Interest in the Treasury
Portfolio, as the case may be, forming a part of such Securities
in the case of Income PRIDES, or Treasury Securities in the case
of Growth PRIDES, in accordance with the provisions of Section
4.3 of the Pledge Agreement. Upon the occurrence of a Termination
Event, the Company shall promptly but in no event later than two
Business Days thereafter give written notice thereof to the
Agent, the Collateral Agent and to the Holders, at their
addresses as they appear in the applicable Register.
SECTION 5.9. EARLY SETTLEMENT.
(a) A holder of Income PRIDES may settle the related
Purchase Contracts in their entirety on or prior to the
fifth Business Day immediately preceding either Purchase
Contract Settlement Date in the manner described herein, but
only in integral multiples of 40 Income PRIDES; provided,
however, that such settlements may not be made during the
period from the fifth Business Day immediately preceding the
First Purchase Contract Settlement Date through the First
Purchase Contract Settlement Date, and provided, further, if
a Tax Event Redemption has occurred prior to such Purchase
Contract Settlement Date and the Treasury Portfolio has
become a component of the Income PRIDES, holders of Income
PRIDES may settle early only in integral multiples of
1,600,000 Income PRIDES at any time on or prior to the
second Business Day immediately preceding such Purchase
Contract Settlement Date (but not during the period two
Business Days immediately preceding the First Purchase
Contract Settlement Date through the First Purchase Contract
Settlement Date). A holder of Growth PRIDES may settle the
related Purchase Contracts in their entirety on or prior to
the second Business Day immediately preceding each Purchase
Contract Settlement Date in the manner described herein (in
either case, an Early Settlement but only in integral
multiples of 40 Growth PRIDES). Upon Early Settlement, (i)
the holder's rights to receive Deferred Contract Adjustment
Payments on the Purchase Contracts being settled will be
forfeited, (ii) the holder's right to receive additional
Contract Adjustment Payments in respect of such Purchase
Contracts will terminate and (iii) no adjustment will be
made to or for the holder on account of Deferred Contract
Adjustment Payments, or any amount accrued in respect of
Contract Adjustment Payments. In order to exercise the
right to effect any such early settlement ("Early
Settlement") with respect to any Purchase Contracts, the
Holder of the Certificate evidencing Securities shall
deliver such Certificate to the Agent at the Corporate Trust
Office duly endorsed for transfer to the Company or in blank
with the form of Election to Settle Early on the reverse
thereof duly completed and accompanied by payment (payable
to the Company in immediately available funds in an amount
(the "Early Settlement Amount") equal to the sum of (i)(A)
$50 times the number of Purchase Contracts being settled if
settled on or prior to the fifth Business Day immediately
preceding the First Purchase Contract Settlement Date or (B)
$25 times the number of Purchase Contracts being settled if
settled after the First Purchase Contract Settlement Date,
plus, in either case, (ii) if such delivery is made with
respect to any Purchase Contracts during the period from the
close of business on any Record Date next preceding any
Payment Date to the opening of business on such Payment
Date, an amount equal to the Contract Adjustment Payments
payable on such Payment Date with respect to such Purchase
Contracts. Except as provided in the immediately preceding
sentence and subject to the second to last paragraph of
Section 5.2, no payment or adjustment shall be made upon
Early Settlement of any Purchase Contract on account of any
Contract Adjustment Payments accrued on such Purchase
Contract or on account of any dividends on the Common Stock
issued upon such Early Settlement. In order for any of the
foregoing requirements to be considered satisfied or
effective with respect to a Purchase Contract underlying any
Security on or by a particular Business Day, such
requirement must be met at or prior to 5:00 p.m., New York
City time, on such Business Day; the first Business Day on
which all of the foregoing requirements have been satisfied
by 5:00 p.m., New York City time.shall be the "Early
Settlement Date" with respect to such Security.
(b) Upon Early Settlement of Purchase Contracts by a
Holder of the related Securities, the Company shall issue,
and the Holder shall be entitled to receive (i) if settled
prior to the First Purchase Contract Settlement Date, 1.0164
newly issued shares of Common Stock per Income PRIDES or
Growth PRIDES (the "First Early Settlement Rate") or (ii) if
settled after the First Purchase Contract Settlement Date
and before the Second Purchase Contract Settlement Date,
.5082 newly issued shares of Common stock per Income PRIDES
or Growth PRIDES (the "Second Early Settlement Rate"),
(regardless in either case of the market price of the Common
Stock on the date of such Early Settlement); provided,
however, that upon the Early Settlement of the Purchase
Contracts, the Holder of such related Securities will
forfeit the right to receive any Deferred Contract
Adjustment Payments. The Early Settlement Rate shall be
adjusted in the same manner and at the same time as the
Settlement Rate is adjusted. As promptly as practicable
after Early Settlement of Purchase Contracts in accordance
with the provisions of this Section 5.9, the Company shall
issue and shall deliver to the Agent at the Corporate Trust
Office a certificate or certificates for the full number of
shares of Common Stock issuable upon such Early Settlement
together with payment in lieu of any fraction of a share, as
provided in Section 5.10.
(c) No later than the third Business Day after the
applicable Early Settlement Date the Company shall cause (i)
the shares of Common Stock issuable upon Early Settlement of
Purchase Contracts to be issued and delivered, and (ii) the
related Debt Securities or the appropriate Applicable
Ownership Interest in the Treasury Portfolio, in the case of
Income PRIDES, or the related Treasury Securities, in the
case of Growth PRIDES, to be released from the Pledge by the
Collateral Agent and transferred, in each case to the Agent
for delivery to the Holder thereof or its designee.
(d) Upon Early Settlement of any Purchase Contracts,
and subject to receipt of shares of Common Stock from the
Company and the Debt Securities, the appropriate Applicable
Ownership Interest in the Treasury Portfolio or Treasury
Securities, as the case may be, from the Collateral Agent,
as applicable, the Agent shall, in accordance with the
instructions provided by the Holder thereof on the
applicable form of Election to Settle Early on the reverse
of the Certificate evidencing the related Securities, (i)
transfer to the Holder the Debt Securities, Treasury
Portfolio or Treasury Securities, as the case may be,
forming a part of such Securities, and (ii) deliver to the
Holder a certificate or certificates for the full number of
shares of Common Stock issuable upon such Early Settlement
together with payment in lieu of any fraction of a share, as
provided in Section 5.10.
(e) In the event that Early Settlement is effected
with respect to Purchase Contracts underlying less than all
the Securities evidenced by a Certificate, upon such Early
Settlement the Company shall execute and the Agent shall
authenticate, countersign and deliver to the Holder thereof,
at the expense of the Company, a Certificate evidencing the
Securities as to which Early Settlement was not effected.
SECTION 5.10. NO FRACTIONAL SHARES.
No fractional shares or scrip representing fractional
shares of Common Stock shall be issued or delivered upon
settlement on a Purchase Contract Settlement Date or upon Early
Settlement of any Purchase Contracts. If Certificates evidencing
more than one Purchase Contract shall be surrendered for
settlement at one time by the same Holder, the number of full
shares of Common Stock which shall be delivered upon settlement
shall be computed on the basis of the aggregate number of
Purchase Contracts evidenced by the Certificates so surrendered.
Instead of any fractional share of Common Stock which would
otherwise be deliverable upon settlement of any Purchase
Contracts on a Purchase Contract Settlement Date or upon Early
Settlement, the Company, through the Agent, shall make a cash
payment in respect of such fractional interest in an amount equal
to the value of such fractional shares times the Applicable
Market Value. The Company shall provide the Agent from time to
time with sufficient funds to permit the Agent to make all cash
payments required by this Section 5.10 in a timely manner.
SECTION 5.11. CHARGES AND TAXES.
The Company will pay all stock transfer and similar
taxes attributable to the initial issuance and delivery of the
shares of Common Stock pursuant to the Purchase Contracts and in
payment of any Deferred Contract Adjustment Payments; provided,
however, that the Company shall not be required to pay any such
tax or taxes which may be payable in respect of any exchange of
or substitution for a Certificate evidencing a Security or any
issuance of a share of Common Stock in a name other than that of
the registered Holder of a Certificate surrendered in respect of
the Securities evidenced thereby, other than in the name of the
Agent, as custodian for such Holder, and the Company shall not be
required to issue or deliver such share certificates or
Certificates unless or until the Person or Persons requesting the
transfer or issuance thereof shall have paid to the Company the
amount of such tax or shall have established to the satisfaction
of the Company that such tax has been paid.
ARTICLE VI
REMEDIES
SECTION 6.1. UNCONDITIONAL RIGHT OF HOLDERS TO RECEIVE CONTRACT
ADJUSTMENT PAYMENTS AND TO PURCHASE COMMON STOCK.
The Holder of any Income PRIDES or Growth PRIDES shall
have the right, which is absolute and unconditional (subject to
the right of the Company to defer payment thereof pursuant to
Section 5.3, the prepayment of Contract Adjustment Payments
pursuant to Section 5.9(a) and to the forfeiture of any Deferred
Contract Adjustment Payments upon Early Settlement pursuant to
Section 5.9(b) or upon the occurrence of a Termination Event), to
receive payment of each installment of the Contract Adjustment
Payments with respect to the Purchase Contract constituting a
part of such Security on the respective Payment Date for such
Security and to purchase Common Stock pursuant to such Purchase
Contract and, in each such case, to institute suit for the
enforcement of any such payment and right to purchase Common
Stock, and such rights shall not be impaired without the consent
of such Holder.
SECTION 6.2. RESTORATION OF RIGHTS AND REMEDIES.
If any Holder has instituted any proceeding to enforce
any right or remedy under this Agreement and such proceeding has
been discontinued or abandoned for any reason, or has been
determined adversely to such Holder, then and in every such case,
subject to any determination in such proceeding, the Company and
such Holder shall be restored severally and respectively to their
former positions hereunder and thereafter all rights and remedies
of such Holder shall continue as though no such proceeding had
been instituted.
SECTION 6.3. RIGHTS AND REMEDIES CUMULATIVE.
Except as otherwise provided with respect to the
replacement or payment of mutilated, destroyed, lost or stolen
Certificates in the last paragraph of Section 3.10, no right or
remedy herein conferred upon or reserved to the Holders is
intended to be exclusive of any other right or remedy, and every
right and remedy shall, to the extent permitted by law, be
cumulative and in addition to every other right and remedy given
hereunder or now or hereafter existing at law or in equity or
otherwise. The assertion or employment of any right or remedy
hereunder, or otherwise, shall not prevent the concurrent
assertion or employment of any other appropriate right or remedy.
SECTION 6.4. DELAY OR OMISSION NOT WAIVER.
No delay or omission of any Holder to exercise any
right or remedy upon a default shall impair any such right or
remedy or constitute a waiver of any such right. Every right and
remedy given by this Article or by law to the Holders may be
exercised from time to time, and as often as may be deemed
expedient, by such Holders.
SECTION 6.5. UNDERTAKING FOR COSTS.
All parties to this Agreement agree, and each Holder of
Income PRIDES or Growth PRIDES, by its acceptance of such Income
PRIDES or Growth PRIDES shall be deemed to have agreed, that any
court may in its discretion require, in any suit for the
enforcement of any right or remedy under this Agreement, or in
any suit against the Agent for any action taken, suffered or
omitted by it as Agent, the filing by any party litigant in such
suit of an undertaking to pay the costs of such suit, and that
such court may in its discretion assess reasonable costs,
including reasonable attorneys' fees, against any party litigant
in such suit, having due regard to the merits and good faith of
the claims or defenses made by such party litigant; provided that
the provisions of this Section shall not apply to any suit
instituted by the Company, to any suit instituted by the Agent,
to any suit instituted by any Holder, or group of Holders,
holding in the aggregate more than 10% of the Outstanding
Securities, or to any suit instituted by any Holder for the
enforcement of payment of interest on any Debt Securities or
Contract Adjustment Payments, if any, on any Purchase Contract on
or after the respective Payment Date therefor in respect of any
Security held by such Holder, or for enforcement of the right to
purchase shares of Common Stock under the Purchase Contracts
constituting part of any Security held by such Holder.
SECTION 6.6. WAIVER OF STAY OR EXTENSION LAWS.
The Company covenants (to the extent that it may
lawfully do so) that it will not at any time insist upon, or
plead, or in any manner whatsoever claim or take the benefit or
advantage of, any stay or extension law wherever enacted, now or
at any time hereafter in force, which may affect the covenants or
the performance of this Agreement; and the Company (to the extent
that it may lawfully do so) hereby expressly waives all benefit
or advantage of any such law and covenants that it will not
hinder, delay or impede the execution of any power herein granted
to the Agent or the Holders, but will suffer and permit the
execution of every such power as though no such law had been
enacted.
ARTICLE VII
THE AGENT
SECTION 7.1. CERTAIN DUTIES AND RESPONSIBILITIES.
(a) Prior to a Default and after the curing or waiving
of all such Defaults that may have occurred,
(1) the Agent undertakes to perform, with respect
to the Securities, such duties and only such duties as
are specifically set forth in this Agreement and no
implied covenants or obligations shall be read into
this Agreement against the Agent; and
(2) the Agent may, with respect to the
Securities, conclusively rely, as to the truth of the
statements and the correctness of the opinions
expressed therein, in the absence of bad faith on the
part of the Agent, upon certificates or opinions
furnished to the Agent and conforming to the
requirements of this Agreement; but in the case of any
certificates or opinions which by any provision hereof
are specifically required to be furnished to the Agent,
the Agent shall be under a duty to examine the same to
determine whether or not they conform to the
requirements of this Agreement.
(b) No provision of this Agreement shall be construed
to relieve the Agent from liability for its own negligent
action, its own negligent failure to act, or its own wilful
misconduct, except that
(1) this Subsection shall not be construed to
limit the effect of Subsection (a) of this Section;
(2) the Agent shall not be liable for any error
of judgment made in good faith by a Responsible
Officer, unless it shall be proved that the Agent was
negligent in ascertaining the pertinent facts; and
(3) no provision of this Agreement shall require
the Agent to expend or risk its own funds or otherwise
incur any financial liability in the performance of any
of its duties hereunder, or in the exercise of any of
its rights or powers.
(c) Whether or not therein expressly so provided,
every provision of this Agreement relating to the conduct or
affecting the liability of or affording protection to the
Agent shall be subject to the provisions of this Section.
(d) The Agent is authorized to execute, deliver and
perform the Pledge Agreement in its capacity as Agent and to
grant the Pledge. The Agent shall be entitled to all of the
rights, privileges, immunities and indemnities contained in
this Agreement with respect to any duties of the Agent
under, or actions taken by the Agent pursuant to, such
Pledge Agreement..
(e) In case a Default has occurred (that has not been
cured or waived), and is actually known by a Responsible
Officer of the Agent, the Agent shall exercise such of the
rights and powers vested in it by this Agreement, and use
the same degree of care and skill in its exercise thereof,
as a prudent person would exercise or use under the
circumstances in the conduct of his or her own affairs.
(f) At the request of the Company, the Agent is
authorized to execute and deliver one or more Remarketing
Agreements to, among other things, effectuate Section 5.4
SECTION 7.2. NOTICE OF DEFAULT.
Within 90 days after the occurrence of any Default
hereunder of which a Responsible Officer of the Agent has actual
knowledge, the Agent shall transmit by mail to the Company and
the Holders of Securities, as their names and addresses appear in
the Register, notice of such Default hereunder, unless such
Default shall have been cured or waived; provided that, except
-------------
for a default in any payment obligation hereunder, the Agent
shall be protected in withholding such notice if and so long as
the Responsible Officer of the Agent in good faith determines
that the withholding of such notice is in the interests of the
Holders of the Securities.
SECTION 7.3. CERTAIN RIGHTS OF AGENT.
Subject to the provisions of Section 7.1:
(a) the Agent may rely and shall be protected in
acting or refraining from acting upon any resolution,
certificate, statement, instrument, opinion, report, notice,
request, direction, consent, order, bond, debenture, note,
other evidence of indebtedness or other paper or document
believed by it to be genuine and to have been signed or
presented by the proper party or parties;
(b) any request or direction of the Company mentioned
herein shall be sufficiently evidenced by a Company
Certificate, Issuer Order or Issuer Request, and any
resolution of the Board of Directors of the Company may be
sufficiently evidenced by a Board Resolution;
(c) whenever in the administration of this Agreement
the Agent shall deem it desirable that a matter be proved or
established prior to taking, suffering or omitting any
action hereunder, the Agent (unless other evidence be herein
specifically prescribed) may, in the absence of bad faith on
its part, rely upon a Company Certificate;
(d) the Agent may consult with counsel of its
selection and the advice of such counsel or any Opinion of
Counsel shall be full and complete authorization and
protection in respect of any action taken, suffered or
omitted by it hereunder in good faith and in reliance
thereon;
(e) the Agent shall not be bound to make any
investigation into the facts or matters stated in any
resolution, certificate, statement, instrument, opinion,
report, notice, request, direction, consent, order, bond,
debenture, note, other evidence of indebtedness or other
paper or document, but the Agent, in its discretion, may
make reasonable further inquiry or investigation into such
facts or matters related to the execution, delivery and
performance of the Purchase Contracts as it may see fit,
and, if the Agent shall determine to make such further
inquiry or investigation, it shall be given a reasonable
opportunity to examine the books, records and premises of
the Company, personally or by agent or attorney; and
(f) the Agent may execute any of the powers hereunder
or perform any duties hereunder either directly or by or
through agents or attorneys or an Affiliate and the Agent
shall not be responsible for any misconduct or negligence on
the part of any agent or attorney or an Affiliate appointed
with due care by it hereunder.
SECTION 7.4. NOT RESPONSIBLE FOR RECITALS OR ISSUANCE OF
SECURITIES.
The recitals contained herein and in the Certificates
shall be taken as the statements of the Company and the Agent
assumes no responsibility for their accuracy. The Agent makes no
representations as to the validity or sufficiency of either this
Agreement or of the Securities, or of the Pledge Agreement or the
Pledge. The Agent shall not be accountable for the use or
application by the Company of the proceeds in respect of the
Purchase Contracts.
SECTION 7.5. MAY HOLD SECURITIES.
Any Registrar or any other agent of the Company, or the
Agent and its Affiliates, in their individual or any other
capacity, may become the owner or pledgee of Securities and may
otherwise deal with the Company, the Collateral Agent or any
other Person with the same rights it would have if it were not
Registrar or such other agent, or the Agent.
SECTION 7.6. MONEY HELD IN CUSTODY.
Money held by the Agent in custody hereunder need not
be segregated from the other funds except to the extent required
by law or provided herein. The Agent shall be under no obligation
to invest or pay interest on any money received by it hereunder
except as otherwise agreed in writing with the Company.
SECTION 7.7. COMPENSATION AND REIMBURSEMENT.
The Company agrees:
(a) to pay to the Agent from time to time such
compensation for all services rendered by it hereunder as
the parties shall agree from time to time (which
compensation shall not be limited by any provisions of law
in regards to the compensation of a trustee of an express
trust);
(b) except as otherwise expressly provided herein, to
reimburse the Agent upon its request for all reasonable
expenses, disbursements and advances incurred or made by the
Agent in accordance with any provision of this Agreement
(including the reasonable compensation and the expenses and
disbursements of its agents and counsel), except any such
expense, disbursement or advance as may be attributable to
its negligence or bad faith; and
(c) to indemnify the Agent and any predecessor Agent
for, and to hold it harmless against, any loss, liability or
expense incurred without negligence or bad faith on its
part, arising out of or in connection with the acceptance or
administration or the performance of its duties hereunder,
including the costs and expenses of defending itself against
any claim or liability in connection with the exercise or
performance of any of its powers or duties hereunder.
Agent for purposes of this Section 7.7 shall include
any predecessor Agent; provided, however, that the negligence or
bad faith of any Agent hereunder shall not affect the rights of
any other Agent hereunder.
When the Agent incurs expenses or renders services in
an action or proceeding commenced pursuant to Section 4.3 of the
Pledge Agreement upon the occurrence of a Termination Event, the
expenses (including the reasonable charges and expenses of its
counsel) and the compensation for the services are intended to
constitute expenses of administration under any applicable
Federal or State bankruptcy, insolvency or other similar law.
The provisions of this Section 7.7 shall survive the
termination of this Agreement and the Pledge Agreement.
SECTION 7.8. CORPORATE AGENT REQUIRED; ELIGIBILITY.
There shall at all times be an Agent hereunder which
shall be (i) not be an Affiliate of the Company and (ii) a
corporation organized and doing business under the laws of the
United States of America, any State thereof or the District of
Columbia, authorized under such laws to exercise corporate trust
powers, having (or being a member of a bank holding company
having) a combined capital and surplus of at least $50,000,000
and subject to supervision or examination by Federal or State
authority. If such corporation publishes reports of condition at
least annually, pursuant to law or to the requirements of said
supervising or examining authority, then for the purposes of this
Section, the combined capital and surplus of such corporation
shall be deemed to be its combined capital and surplus as set
forth in its most recent report of condition so published. If at
any time the Agent shall cease to be eligible in accordance with
the provisions of this Section, it shall resign immediately in
the manner and with the effect hereinafter specified in this
Article.
SECTION 7.9. RESIGNATION AND REMOVAL; APPOINTMENT OF SUCCESSOR.
(a) No resignation or removal of the Agent and no
appointment of a successor Agent pursuant to this Article
shall become effective until the acceptance of appointment
by the successor Agent in accordance with the applicable
requirements of Section 7.10.
(b) The Agent may resign at any time by giving written
notice thereof to the Company 60 days prior to the effective
date of such resignation. If the instrument of acceptance by
a successor Agent required by Section 7.10 shall not have
been delivered to the Agent within 30 days after the giving
of such notice of resignation, the resigning Agent may
petition any court of competent jurisdiction for the
appointment of a successor Agent.
(c) The Agent may be removed at any time by Act of the
Holders of a majority in number of the Outstanding
Securities delivered to the Agent and the Company.
(d) if at any time
(1) the Agent fails to comply with Section 310(b)
of the TIA, after written request therefor by the
Company or by any Holder who has been a bona fide
Holder of a Security for at least six months, or
(2) the Agent shall cease to be eligible under
Section 7.8 and shall fail to resign after written
request therefor by the Company or by any such Holder,
or
(3) the Agent shall become incapable of acting or
shall be adjudged a bankrupt or insolvent or a receiver of
the Agent or of its property shall be appointed or any
public officer shall take charge or control of the Agent or
of its property or affairs for the purpose of
rehabilitation, conservation or liquidation, then, in any
such case, (i) the Company by a Board Resolution may remove
the Agent, or (ii) any Holder who has been a bona fide
Holder of a Security for at least six months may, on behalf
of himself and all others similarly situated, petition any
court of competent jurisdiction for the removal of the Agent
and the appointment of a successor Agent.
(e) If the Agent shall resign, be removed or become
incapable of acting, or if a vacancy shall occur in the
office of Agent for any cause, the Company, by a Board
Resolution, shall promptly appoint a successor Agent and
shall comply with the applicable requirements of Section
7.10. If no successor Agent shall have been so appointed by
the Company and accepted appointment in the manner required
by Section 7.10, the Agent or any Holder who has been a bona
fide Holder of a Security for at least six months may, on
behalf of himself and all others similarly situated,
petition any court of competent jurisdiction for the
appointment of a successor Agent.
(f) The Company shall give, or shall cause such
successor Agent to give, notice of each resignation and each
removal of the Agent and each appointment of a successor
Agent by mailing written notice of such event by first-class
mail, postage prepaid, to all Holders as their names and
addresses appear in the applicable Register. Each notice
shall include the name of the successor Agent and the
address of its Corporate Trust Office.
(g) If the Agent has or shall acquire any "conflicting
interest" within the meaning of Section 310(b) of the Trust
Indenture Act, the Agent and the Company shall in all
respects comply with the provisions of Section 310(b) of the
Trust Indenture Act.
SECTION 7.10. ACCEPTANCE OF APPOINTMENT BY SUCCESSOR.
(a) In case of the appointment hereunder of a
successor Agent, every such successor Agent so appointed
shall execute, acknowledge and deliver to the Company and to
the retiring Agent an instrument accepting such appointment,
and thereupon the resignation or removal of the retiring
Agent shall become effective and such successor Agent,
without any further act, deed or conveyance, shall become
vested with all the rights, powers, agencies and duties of
the retiring Agent; but, on the request of the Company or
the successor Agent, such retiring Agent shall, upon payment
of its charges, execute and deliver an instrument
transferring to such successor Agent all the rights, powers
and trusts of the retiring Agent and shall duly assign,
transfer and deliver to such successor Agent all property
and money held by such retiring Agent hereunder.
(b) Upon request of any such successor Agent, the
Company shall execute any and all instruments for more fully
and certainly vesting in and confirming to such successor
Agent all such rights, powers and agencies referred to in
paragraph (a) of this Section.
(c) No successor Agent shall accept its appointment
unless at the time of such acceptance such successor Agent
shall be qualified and eligible under this Article.
SECTION 7.11. MERGER, CONVERSION, CONSOLIDATION OR SUCCESSION TO
BUSINESS.
Any Person into which the Agent may be merged or
converted or with which it may be consolidated, or any Person
resulting from any merger, conversion or consolidation to which
the Agent shall be a party, or any Person succeeding to all or
substantially all the corporate trust business of the Agent,
shall be the successor of the Agent hereunder, provided such
Person shall be otherwise qualified and eligible under this
Article, without the execution or filing of any paper or any
further act on the part of any of the parties hereto. In case any
Certificates shall have been authenticated and executed on behalf
of the Holders, but not delivered, by the Agent then in office,
any successor by merger, conversion or consolidation to such
Agent may adopt such authentication and execution and deliver the
Certificates so authenticated and executed with the same effect
as if such successor Agent had itself authenticated and executed
such Securities.
SECTION 7.12. PRESERVATION OF INFORMATION; COMMUNICATIONS TO
HOLDERS.
(a) The Agent shall preserve, in as current a form as
is reasonably practicable, the names and addresses of
Holders received by the Agent in its capacity as Registrar.
(b) If three or more Holders (herein referred to as
"applicants") apply in writing to the Agent, and furnish to
the Agent reasonable proof that each such applicant has
owned a Security for a period of at least six months
preceding the date of such application, and such application
states that the applicants desire to communicate with other
Holders with respect to their rights under this Agreement or
under the Securities and is accompanied by a copy of the
form of proxy or other communication which such applicants
propose to transmit, then the Agent shall mail to all the
Holders copies of the form of proxy or other communication
which is specified in such request, with reasonable
promptness after a tender to the Agent of the materials to
be mailed and of payment, or provision for the payment, of
the reasonable expenses of such mailing.
SECTION 7.13. NO OBLIGATIONS OF AGENT.
Except to the extent otherwise provided in this
Agreement, the Agent assumes no obligations and shall not be
subject to any liability under this Agreement, the Pledge
Agreement or any Purchase Contract in respect of the obligations
of the Holder of any Security thereunder. The Company agrees, and
each Holder of a Certificate, by his acceptance thereof, shall be
deemed to have agreed, that the Agent's execution of the
Certificates on behalf of the Holders shall be solely as agent
and attorney-in-fact for the Holders, and that the Agent shall
have no obligation to perform such Purchase Contracts on behalf
of the Holders, except to the extent expressly provided in
Article Five hereof.
SECTION 7.14. TAX COMPLIANCE.
(a) The Agent, on its own behalf and on behalf of the
Company, will comply with all applicable certification,
information reporting and withholding (including "backup"
withholding) requirements imposed by applicable tax laws,
regulations or administrative practice with respect to (i)
any payments made with respect to the Securities or (ii) the
issuance, delivery, holding, transfer, redemption or
exercise of rights under the Securities. Such compliance
shall include, without limitation, the preparation and
timely filing of required returns and the timely payment of
all amounts required to be withheld to the appropriate
taxing authority or its designated agent.
(b) The Agent shall comply with any written direction
received from the Company with respect to the application of
such requirements to particular payments or Holders or in
other particular circumstances, and may for purposes of this
Agreement rely on any such direction in accordance with the
provisions of Section 7.1(a)(2) hereof.
(c) The Agent shall maintain all appropriate records
documenting compliance with such requirements, and shall
make such records available, on written request, to the
Company or its authorized representative within a reasonable
period of time after receipt of such request.
ARTICLE VIII
SUPPLEMENTAL AGREEMENTS
SECTION 8.1. SUPPLEMENTAL AGREEMENTS WITHOUT CONSENT OF
HOLDERS.
Without the consent of any Holders, the Company and the
Agent, at any time and from time to time, may enter into one or
more agreements supplemental hereto, in form satisfactory to the
Company and the Agent, for any of the following purposes:
(a) to evidence the succession of another Person to
the Company, and the assumption by any such successor of the
covenants of the Company herein and in the Certificates; or
(b) to add to the covenants of the Company for the
benefit of the Holders, or to surrender any right or power
herein conferred upon the Company; or
(c) to evidence and provide for the acceptance of
appointment hereunder by a successor Agent; or
(d) to make provision with respect to the rights of
Holders pursuant to the requirements of Section 5.6(b); or
(e) to cure any ambiguity, to correct or supplement
any provisions herein which may be inconsistent with any
other provisions herein, or to make any other provisions
with respect to such matters or questions arising under this
Agreement, provided such action shall not adversely affect
the interests of the Holders.
SECTION 8.2. SUPPLEMENTAL AGREEMENTS WITH CONSENT OF HOLDERS.
With the consent of the Holders of not less than a
majority of the outstanding Purchase Contracts voting together as
one class, by Act of said Holders delivered to the Company and
the Agent, the Company, when authorized by a Board Resolution,
and the Agent may enter into an agreement or agreements
supplemental hereto for the purpose of modifying in any manner
the terms of the Purchase Contracts, or the provisions of this
Agreement or the rights of the Holders in respect of the
Securities; provided, however, that, except as contemplated
herein, no such supplemental agreement shall, without the consent
of the Holder of each Outstanding Security affected thereby,
(a) change any Payment Date;
(b) change the amount or the type of Collateral
required to be Pledged to secure a Holder's Obligations
under the Purchase Contract, impair the right of the Holder
of any Purchase Contract to receive distributions on the
related Collateral (except for the rights of Holders of
Income PRIDES to substitute the Treasury Securities for the
Pledged Debt Securities or the rights of holders of Growth
PRIDES to substitute Debt Securities or the Applicable
Ownership Interest in the Treasury Portfolio for the Pledged
Treasury Securities) or otherwise adversely affect the
Holder's rights in or to such Collateral or adversely alter
the rights in or to such Collateral;
(c) reduce any Contract Adjustment Payments or any
Deferred Contract Adjustment Payment, or change any place
where, or the coin or currency in which, any Contract
Adjustment Payment is payable;
(d) impair the right to institute suit for the
enforcement of any Purchase Contract;
(e) reduce the number of shares of Common Stock to be
purchased pursuant to any Purchase Contract, increase the
price to purchase shares of Common Stock upon settlement of
any Purchase Contract, change a Purchase Contract Settlement
Date or the right to Early Settlement or otherwise adversely
affect the Holder's rights under any Purchase Contract; or
(f) reduce the percentage of the outstanding Purchase
Contracts the consent of whose Holders is required for any
such supplemental agreement;
provided, that if any amendment or proposal referred to above
would adversely affect only the Income PRIDES or the Growth
PRIDES, then only the Holders of the affected class of Security
as of the record date for the Holders entitled to vote thereon
will be entitled to vote on such amendment or proposal, and such
amendment or proposal shall not be effective except with the
consent of Holders of not less than a majority of such class;
provided further, however, that no such agreement, whether with
or without the consent of the Holders, shall affect Section 3.16
hereof.
It shall not be necessary for any Act of Holders under
this Section to approve the particular form of any proposed
supplemental agreement, but it shall be sufficient if such Act
shall approve the substance thereof.
SECTION 8.3. EXECUTION OF SUPPLEMENTAL AGREEMENTS.
In executing, or accepting the additional agencies
created by, any supplemental agreement permitted by this Article
or the modifications thereby of the agencies created by this
Agreement, the Agent shall be entitled to receive and (subject to
Section 7.1) shall be fully protected in relying upon, an Opinion
of Counsel stating that the execution of such supplemental
agreement is authorized or permitted by this Agreement. The Agent
may, but shall not be obligated to, enter into any such
supplemental agreement which affects the Agent's own rights,
duties or immunities under this Agreement or otherwise.
SECTION 8.4. EFFECT OF SUPPLEMENTAL AGREEMENTS.
Upon the execution of any supplemental agreement under
this Article, this Agreement shall be modified in accordance
therewith, and such supplemental agreement shall form a part of
this Agreement for all purposes; and every Holder of Certificates
theretofore or thereafter authenticated, executed on behalf of
the Holders and delivered hereunder shall be bound thereby.
SECTION 8.5. REFERENCE TO SUPPLEMENTAL AGREEMENTS.
Certificates authenticated, executed on behalf of the
Holders and delivered after the execution of any supplemental
agreement pursuant to this Article may, and shall if required by
the Agent, bear a notation in form approved by the Agent as to
any matter provided for in such supplemental agreement. If the
Company shall so determine, new Certificates so modified as to
conform, in the opinion of the Agent and the Company, to any such
supplemental agreement may be prepared and executed by the
Company and authenticated, executed on behalf of the Holders and
delivered by the Agent in exchange for Outstanding Certificates.
ARTICLE IX
CONSOLIDATION, MERGER, SALE OR CONVEYANCE
SECTION 9.1. COVENANT NOT TO MERGE, CONSOLIDATE, SELL OR CONVEY
PROPERTY EXCEPT UNDER CERTAIN CONDITIONS.
The Company covenants that it will not merge or
consolidate with any other Person or sell, assign, transfer,
lease or convey all or substantially all of its properties and
assets to any Person or group of affiliated Persons in one
transaction or a series of related transactions, unless (i)
either the Company shall be the continuing corporation, or the
successor (if other than the Company) shall be a corporation
organized and existing under the laws of the United States of
America or a State thereof or the District of Columbia and such
corporation shall expressly assume all the obligations of the
Company under the Purchase Contracts, the Debt Securities, this
Agreement and the Pledge Agreement by one or more supplemental
agreements in form reasonably satisfactory to the Agent and the
Collateral Agent, executed and delivered to the Agent and the
Collateral Agent by such corporation, and (ii) the Company or
such successor corporation, as the case may be, shall not,
immediately after such merger or consolidation, or such sale,
assignment, transfer, lease or conveyance, be in default in its
payment obligations or in any material default in the performance
of any of its other obligations hereunder, or under any of the
Securities or the Pledge Agreement.
SECTION 9.2. RIGHTS AND DUTIES OF SUCCESSOR CORPORATION.
In case of any such consolidation, merger, sale,
assignment, transfer, lease or conveyance and upon any such
assumption by a successor corporation in accordance with Section
9.1, such successor corporation shall succeed to and be
substituted for the Company with the same effect as if it had
been named herein as the Company. Such successor corporation
thereupon may cause to be signed, and may issue either in its own
name or in the name of Texas Utilities Company any or all of the
Certificates evidencing Securities issuable hereunder which
theretofore shall not have been signed by the Company and
delivered to the Agent; and, upon the order of such successor
corporation, instead of the Company, and subject to all the
terms, conditions and limitations in this Agreement prescribed,
the Agent shall authenticate and execute on behalf of the Holders
and deliver any Certificates which previously shall have been
signed and delivered by the officers of the Company to the Agent
for authentication and execution, and any Certificate evidencing
Securities which such successor corporation thereafter shall
cause to be signed and delivered to the Agent for that purpose.
All the Certificates so issued shall in all respects have the
same legal rank and benefit under this Agreement as the
Certificates theretofore or thereafter issued in accordance with
the terms of this Agreement as though all of such Certificates
had been issued at the date of the execution hereof.
In case of any such consolidation, merger, sale,
assignment, transfer, lease or conveyance such change in
phraseology and form (but not in substance) may be made in the
Certificates evidencing Securities thereafter to be issued as may
be appropriate.
SECTION 9.3. OPINION OF COUNSEL GIVEN TO AGENT.
The Agent, subject to Sections 7.1 and 7.3, shall
receive an Opinion of Counsel as conclusive evidence that any
such consolidation, merger, sale, assignment, transfer, lease or
conveyance, and any such assumption, complies with the provisions
of this Article and that all conditions precedent to the
consummation of any such consolidation, merger, sale, assignment,
transfer, lease or conveyance have been met.
ARTICLE X
COVENANTS
SECTION 10.1. PERFORMANCE UNDER PURCHASE CONTRACTS.
The Company covenants and agrees for the benefit of the
Holders from time to time of the Securities that it will duly and
punctually perform its obligations under the Purchase Contracts
in accordance with the terms of the Purchase Contracts and this
Agreement.
SECTION 10.2. MAINTENANCE OF OFFICE OR AGENCY.
The Company will maintain in the Borough of Manhattan,
The City of New York an office or agency where Certificates may
be presented or surrendered for acquisition of shares of Common
Stock upon settlement of the Purchase Contracts on the Purchase
Contract Settlement Date or Early Settlement and for transfer of
Collateral upon occurrence of a Termination Event, where
Certificates may be surrendered for registration of transfer or
exchange, for a Collateral Substitution or establishment of an
Income PRIDES and where notices and demands to or upon the
Company in respect of the Securities and this Agreement may be
served. The Company will give prompt written notice to the Agent
of the location, and any change in the location, of such office
or agency. If at any time the Company shall fail to maintain any
such required office or agency or shall fail to furnish the Agent
with the address thereof, such presentations, surrenders, notices
and demands may be made or served at the Corporate Trust Office,
and the Company hereby appoints the Agent as its agent to receive
all such presentations, surrenders, notices and demands.
The Company may also from time to time designate one or
more other offices or agencies where Certificates may be
presented or surrendered for any or all such purposes and may
from time to time rescind such designations; provided, however,
that no such designation or rescission shall in any manner
relieve the Company of its obligation to maintain an office or
agency in the Borough of Manhattan, The City of New York for such
purposes. The Company will give prompt written notice to the
Agent of any such designation or rescission and of any change in
the location of any such other office or agency. The Company
hereby designates as the place of payment for the Securities the
Corporate Trust Office and appoints the Agent at its Corporate
Trust Office as paying agent in such city.
SECTION 10.3. COMPANY TO RESERVE COMMON STOCK.
The Company shall at all times prior to the Second
Purchase Contract Settlement Date reserve and keep available,
free from preemptive rights, out of its authorized but unissued
Common Stock the full number of shares of Common Stock issuable
against tender of payment in respect of all Purchase Contracts
constituting a part of the Securities evidenced by Outstanding
Certificates.
SECTION 10.4. COVENANTS AS TO COMMON STOCK.
The Company covenants that all shares of Common Stock
which may be issued against tender of payment in respect of any
Purchase Contract constituting a part of the Outstanding
Securities will, upon issuance, be duly authorized, validly
issued, fully paid and nonassessable.
ARTICLE XI
TRUST INDENTURE ACT
SECTION 11.1. TRUST INDENTURE ACT; APPLICATION.
(a) This Agreement is subject to the provisions of the
TIA that are required or deemed to be part of this Agreement
and shall, to the extent applicable, be governed by such
provisions; and
(b) if and to the extent that any provision of this
Agreement limits, qualifies or conflicts with the duties
imposed by Section 310 to 317, inclusive, of the TIA, such
imposed duties shall control.
SECTION 11.2. LISTS OF HOLDERS OF SECURITIES.
(a) The Company shall furnish or cause to be furnished
to the Agent (a) semiannually, not later than June 1 and
December 1 in each year, commencing December 1, 1998, a
list, in such form as the Agent may reasonably require, of
the names and addresses of the Holders ("List of Holders")
as of a date not more than 15 days prior to the delivery
thereof, and (b) at such other times as the Agent may
request in writing, within 30 days after the receipt by the
Company of any such request, a List of Holders as of a date
not more than 15 days prior to the time such list is
furnished; provided that, the Company shall not be obligated
to provide such List of Holders at any time the List of
Holders does not differ from the most recent List of Holders
given to the Agent by the Company. The Agent may destroy
any List of Holders previously given to it on receipt of a
new List of Holders.
(b) The Agent shall comply with its obligations under
Section 311(a) of the TIA, subject to the provisions of
Section 311(b) and Section 312(b) of the TIA.
SECTION 11.3. REPORTS BY THE AGENT.
Not later than November 1 of each year, commencing
November 1, 1998, the Agent shall provide to the Holders such
reports, if any, as are required by Section 313(a) of the TIA in
the form and in the manner provided by Section 313(a) of the TIA.
Such reports shall be as of the preceding September 15. The
Agent shall also comply with the requirements of Sections 313(b),
(c) and (d) of the TIA.
SECTION 11.4. PERIODIC REPORTS TO AGENT.
The Company shall provide to the Agent such documents,
reports and information as required by Section 314 (if any) and
the compliance certificate required by Section 314 of the TIA in
the form, in the manner and at the times required by Section 314
of the TIA.
SECTION 11.5. EVIDENCE OF COMPLIANCE WITH CONDITIONS PRECEDENT.
The Company shall provide to the Agent such evidence of
compliance with any conditions precedent provided for in this
Agreement as and to the extent required by Section 314(c) of the
TIA. Any certificate or opinion required to be given by an
officer pursuant to Section 314(c)(1) of the TIA may be given in
the form of a Company's Certificate. Any opinion required to be
given pursuant to Section 314(c)(2) of the TIA may be given in
the form of an Opinion of Counsel.
SECTION 11.6. DEFAULTS; WAIVER.
The Holders of a majority of the Outstanding Purchase
Contracts voting together as one class may, by vote, on behalf of
all of the Holders, waive any past Default and its consequences,
except a default
(a) in the payment on any Security, or
(b) in respect of a provision hereof which under
Section 8.2 cannot be modified or amended without the
consent of the Holder of each Outstanding Security affected.
Upon such waiver, any such Default shall cease to exist, and any
Default arising therefrom shall be deemed to have been cured, for
every purpose of this Agreement, but no such waiver shall extend
to any subsequent or other Default or impair any right consequent
thereon.
SECTION 11.7. AGENT'S KNOWLEDGE OF DEFAULTS.
The Agent shall not be deemed to have knowledge of any
Default unless a Responsible Officer charged with the
administration of this Agreement shall have obtained written
notice of such Default.
SECTION 11.8. CONFLICTING INTERESTS.
The Indenture, the Indenture (For Unsecured Debt
Securities Series A) dated as of October 1, 1997 of the Company
to The Bank of New York, as trustee, the Indenture (For Unsecured
Debt Securities Series B) dated as of October 1, 1997 of the
Company to the Agent, and the Indenture (For Unsecured Debt
Securities Series C) dated as of January 1, 1998 of the Company
to the Agent shall be deemed to be specifically described in this
Agreement for the purposes of clause (i) of the first proviso
contained in Section 310(b) of the TIA.
SECTION 11.9. DIRECTION OF AGENT.
Section 316(a)(1)(A) of the TIA is hereby expressly
excluded from this Agreement, as permitted by the TIA.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed as of the day and year first above
written.
<PAGE>
TEXAS UTILITIES COMPANY
By:
--------------------------------
Name: Robert S. Shapard
Title: Treasurer
<PAGE>
THE BANK OF NEW YORK,
as Purchase Contract Agent and
Trustee
By:
--------------------------------
Name:
Title:
<PAGE>
EXHIBIT A
FORM OF INCOME PRIDES CERTIFICATE
THIS CERTIFICATE IS A GLOBAL CERTIFICATE WITHIN THE
MEANING OF THE PURCHASE CONTRACT AGREEMENT (AS HEREINAFTER
DEFINED) AND IS REGISTERED IN THE NAME OF THE CLEARING AGENCY OR
A NOMINEE THEREOF. THIS CERTIFICATE MAY NOT BE EXCHANGED IN WHOLE
OR IN PART FOR A CERTIFICATE REGISTERED, AND NO TRANSFER OF THIS
CERTIFICATE IN WHOLE OR IN PART MAY BE REGISTERED, IN THE NAME OF
ANY PERSON OTHER THAN SUCH CLEARING AGENCY OR A NOMINEE THEREOF,
EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE PURCHASE
CONTRACT AGREEMENT.
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (55 WATER STREET,
NEW YORK, NEW YORK) TO THE COMPANY OR ITS AGENT FOR REGISTRATION
OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY CERTIFICATE ISSUED IS
REGISTERED IN THE NAME OF CEDE & CO., OR SUCH OTHER NAME AS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST
COMPANY, AND ANY PAYMENT HEREON IS MADE TO CEDE & CO., ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY A
PERSON IS WRONGFUL SINCE THE REGISTERED OWNER HEREOF, CEDE & CO.,
HAS AN INTEREST HEREIN.
No. _____ Cusip No. 882848203
Number of Income PRIDES _______
TEXAS UTILITIES COMPANY
9.25% Income PRIDES
($50 Stated Amount)
This Income PRIDES Certificate certifies that ___________ is
the registered Holder of the number of Income PRIDES set forth
above. Each Income PRIDES represents (i) beneficial ownership by
the Holder of either (a) one 6.50% Series E Senior Note due 2004
("Series E Note") and, prior to the First Purchase Contract
Settlement Date, one 6.37% Series D Senior Note due 2003 (Series
D Note, and each Series E Note and Series D Note are collectively
referred to herein as the "Debt Securities") of Texas Utilities
Company (the "Company"), each in an aggregate principal amount of
$25, subject to the Pledge of such Debt Securities by such Holder
pursuant to the Pledge Agreement or (b) upon the occurrence of a
Tax Event Redemption prior to the Second Purchase Contract
Settlement Date, the appropriate Applicable Ownership Interest in
the Treasury Portfolio, subject to the Pledge of such Applicable
Ownership Interest in the Treasury Portfolio by such Holder
pursuant to the Pledge Agreement, and (ii) the rights and
obligations of the Holder under one Purchase Contract with the
Company. All capitalized terms used herein without definition
herein shall have the meaning set forth in the Purchase Contract
Agreement referred to below.
Pursuant to the Pledge Agreement, the Debt Securities or the
appropriate Applicable Ownership Interest in the Treasury
Portfolio, as the case may be, constituting part of each Income
PRIDES evidenced hereby have been pledged to the Collateral
Agent, for the benefit of the Company, to secure the obligations
of the Holder under the Purchase Contract comprising a portion of
such Income PRIDES.
The Pledge Agreement provides that all payments of principal
or interest on or cash distributions in respect of any Pledged
Debt Securities, or the appropriate Applicable Ownership Interest
of the Treasury Portfolio, as the case may be, constituting part
of the Income PRIDES received by the Collateral Agent shall be
paid by the Collateral Agent by wire transfer in same day funds
(i) in the case of (A) payments of interest with respect to
Pledged Debt Securities or cash distributions on the appropriate
Applicable Ownership Interest (as specified in clauses (A)(ii)
and (B)(ii) of the definition of such term) of the Treasury
Portfolio, as the case may be, and (B) any payments of the
principal with respect to any Debt Securities or on the
appropriate Applicable Ownership Interest (as specified in
clauses (A)(i) and (B)(i) of the definition of such term) in the
Treasury Portfolio, as the case may be, that have been released
from the Pledge pursuant to the Pledge Agreement, to the Agent
to the account designated by the Agent, no later than 2:00 p.m.,
New York City time, on the Business Day such payment is
received by the Collateral Agent (provided that in the event
such payment is received by the Collateral Agent on a day that
is not a Business Day or after 12:30 p.m., New York City time,
on a Business Day, then such payment shall be made no later
than 10:30 a.m., New York City time, on the next succeeding
Business Day) and (ii) in the case of payments of principal of
any Pledged Debt Securities or on the appropriate Applicable
Ownership Interest (as specified in clauses (A)(i) and (B)(i)
of the definition of such term) of the Treasury Portfolio, as
the case may be, to the Company on the Purchase Contract
Settlement Date (as defined herein) in accordance with the
terms of the Pledge Agreement, in full satisfaction of the
respective obligations of the Holders of the Income PRIDES of
which such Pledged Debt Securities or the Treasury Portfolio, as
the case may be, are a part under the Purchase Contracts forming
a part of such Income PRIDES. Payment of interest on any Debt
Security or distributions on the appropriate Applicable Ownership
Interest (as specified in clauses (A)(ii) and (B)(ii) of the
definition of such term) of the Treasury Portfolio, as the case
may be, forming part of an Income PRIDES evidenced hereby which
are payable quarterly in arrears on February 16, May 16,
August 16 and November 16 each year, commencing August 16, 1998
(a "Payment Date"), shall, subject to receipt thereof by the
Agent from the Collateral Agent, be paid to the Person in whose
name this Income PRIDES Certificate (or a Predecessor Income
PRIDES Certificate) is registered at the close of business on the
Record Date for such Payment Date.
Each Purchase Contract evidenced hereby obligates the Holder
of this Income PRIDES Certificate to purchase, and the Company to
sell, (i) not later than August 16, 2001 (the "First Purchase
Contract Settlement Date"), at a price equal to $25 in cash (the
"Purchase Price"), a number of newly issued shares of Common
Stock, no par value, of the Company ("Common Stock"), equal to
the applicable Settlement Rate (as defined below) and (ii) not
later than August 16, 2002 (the "Second Purchase Contract
Settlement Date" and with the First Purchase Contract Settlement
Date, each, a "Purchase Contract Settlement Date"), at a price of
$25 in cash, a number of newly issued shares of Common Stock,
equal to the applicable Settlement Rate, unless on or prior to
the applicable Purchase Contract Settlement Date there shall have
occurred a Termination Event or an Early Settlement with respect
to the Income PRIDES of which such Purchase Contract is a part,
all as provided in the Purchase Contract Agreement and more fully
described below.
The "Settlement Rate" with respect to a Purchase Contract
Settlement Date is equal to (a) if the Applicable Market Value
(as defined below) determined with respect to such Purchase
Contract Settlement Date is equal to or greater than $49.19 (the
"Threshold Appreciation Price"), .5082 shares of Common Stock per
Purchase Contract, (b) if such Applicable Market Value is less
than the Threshold Appreciation Price but is greater than
$41.6875, the number of shares of Common Stock per Purchase
Contract equal to $25 divided by such Applicable Market Value and
(c) if the Applicable Market Value is less than or equal to
$41.6875, .5997 shares of Common Stock per Purchase Contract, in
each case subject to adjustment as provided in the Purchase
Contract Agreement. No fractional shares of Common Stock will be
issued upon settlement of Purchase Contracts, as provided in the
Purchase Contract Agreement.
The Company shall pay, on each Payment Date, in respect of
each Purchase Contract evidenced hereby an amount (the "Contract
Adjustment Payments") equal to (A) for the period prior to the
First Purchase Contract Settlement Date, 2.815% per annum of the
Stated Amount, and (B) for the period from and after the First
Purchase Contract Settlement Date, 2.75% per annum of the
Remaining Stated Amount, computed, in each case, on the basis of
a 360 day year of twelve 30 day months, subject to deferral at
the option of the Company as provided in the Purchase Contract
Agreement and more fully described below. Such Contract
Adjustment Payments shall be payable to the Person in whose name
this Income PRIDES Certificate (or a Predecessor Income PRIDES
Certificate) is registered at the close of business on the Record
Date for such Payment Date.
Payment of interest on the Debt Securities or distributions
on the appropriate Applicable Ownership Interest (as specified in
clauses (A)(ii) and (B)(ii) of the definition of such term) in
the Treasury Portfolio, as the case may be, and Contract
Adjustment Payments will be payable at the office of the Agent in
The City of New York or, at the option of the Company, by check
mailed to the address of the Person entitled thereto as such
address appears on the Income PRIDES Register.
Unless the context otherwise requires, each provision of this
security shall be part of the Purchase Comtracts evidenced hereby.
This Security and each Purchase Contract evidenced hereby is
governed by a Purchase Contract Agreement, dated as of July 1,
1998 (as may be supplemented from time to time, the "Purchase
Contract Agreement"), between the Company and The Bank of New
York, as Purchase Contract Agent and trustee including its
successor thereunder, (herein called the "Agent"), to which
Purchase Contract Agreement and supplemental agreements thereto
reference is hereby made for a description of the respective
rights, limitations of rights, obligations, duties and immunities
thereunder of the Agent, the Company, and the Holders and of the
terms upon which the Income PRIDES Certificates are, and are to
be, executed and delivered.
Each Purchase Contract evidenced hereby, which is settled
either through Early Settlement or Cash Settlement, shall
obligate the Holder of the related Income PRIDES to purchase at
the applicable Purchase Price, and the Company to sell, a number
of newly issued shares of Common Stock equal to the applicable
Early Settlement Rate or the applicable Settlement Rate, as
applicable.
The "Applicable Market Value" with respect to a Purchase
Contract Settlement Date means the average of the Closing Price
per share of Common Stock on each of the 20 consecutive Trading
Days ending on the third Trading Day immediately preceding such
Purchase Contract Settlement Date. The "Closing Price" of the
Common Stock on any date of determination means the closing sale
price (or, if no closing price is reported, the last reported
sale price) of the Common Stock on the New York Stock Exchange
(the "NYSE") on such date or, if the Common Stock is not listed
for trading on the NYSE on any such date, as reported in the
composite transactions for the principal United States securities
exchange on which the Common Stock is so listed, or if the Common
Stock is not so listed on a United States national or regional
securities exchange, the last quoted bid price for the Common
Stock in the over-the-counter market as reported by the National
Quotation Bureau or similar organization, or, if such bid price
is not available, the market value of the Common Stock on such
date as determined by a nationally recognized independent
investment banking firm retained for this purpose by the Company.
A "Trading Day" means a day on which the Common Stock (A) is not
suspended from trading on any national or regional securities
exchange or association at the close of business and (B) has
traded at least once on the national or regional securities
exchange or association that is the primary market for the
trading of the Common Stock.
In accordance with the terms of the Purchase Contract
Agreement, the Holder of the Income PRIDES evidenced hereby shall
pay, on each Purchase Contract Settlement Date the applicable
Purchase Price for the shares of Common Stock purchased pursuant
to each Purchase Contract evidenced hereby by effecting a Cash
Settlement or, an Early Settlement. A Holder of Income PRIDES who
does not make such payment in accordance with the Purchase
Contract Agreement or who does not notify the Agent of such
Holder's intention, on or prior to 5:00 p.m. New York City time
on the fifth Business Day immediately preceding a Purchase
Contract Settlement Date, to make an effective Cash Settlement or
an Early Settlement, shall have defaulted in its obligations
under the applicable portion of the related Purchase Contract,
and the Collateral Agent shall exercise its rights as a secured
creditor for the benefit of the Company thereunder and under the
Pledge Agreement and shall apply the Proceeds of the sale of the
applicable related Pledged Debt Securities (which shall be the
Series D Notes in connection with the First Purchase Contract
Settlement Date and Series E Notes in connection with the Second
Purchase Contract Settlement Date) held by the Collateral Agent
to satisfy the Holder's obligation under such Purchase Contract
to purchase Common Stock at the Purchase Price.
The Company shall not be obligated to issue any shares of
Common Stock in respect of any portion of a Purchase Contract on
a Purchase Contract Settlement Date or deliver any certificates
therefor to the Holder unless it shall have received payment in
full of the aggregate Purchase Price for the shares of Common
Stock to be purchased thereunder in the manner herein set forth.
Under the terms of the Pledge Agreement and the Purchase
Contract Agreement, the Agent will be entitled to exercise the
voting and any other consensual rights pertaining to the Pledged
Debt Securities. Upon receipt of notice of any meeting at which
holders of Debt Securities are entitled to vote or upon the
solicitation of consents, waivers or proxies of holders of Debt
Securities, the Agent shall, as soon as practicable thereafter,
mail to the Income PRIDES holders a notice (a) containing such
information as is contained in the notice or solicitation, (b)
stating that each Income PRIDES Holder on the record date set by
the Agent therefor shall be entitled to instruct the Agent as to
the exercise of the voting rights pertaining to the Debt
Securities constituting a part of such Holder's Income PRIDES and
(c) stating the manner in which such instructions may be given.
Upon the written request of the Income PRIDES Holders on such
record date, the Agent shall endeavor insofar as practicable to
vote or cause to be voted, in accordance with the instructions
set forth in such requests, the maximum number of Debt Securities
as to which any particular voting instructions are received. In
the absence of specific instructions from the Holder of an Income
PRIDES, the Agent shall abstain from voting any Debt Securities
evidenced by such Income PRIDES.
Upon the occurrence of a Tax Event Redemption prior to the
Second Purchase Contract Settlement Date, the Redemption Price
payable on the Tax Event Redemption Date with respect to the
Pledged Debt Securities shall be delivered to the Collateral
Agent in exchange for the Pledged Debt Securities. Pursuant to
the terms of the Pledge Agreement, the Collateral Agent for the
benefit of the Company will apply an amount equal to the
applicable Redemption Amount of such Redemption Price to purchase
the Treasury Portfolio and will promptly remit the remaining
portion of such Redemption Price to the Agent for payment to the
Holders of such Income PRIDES. Following the occurrence of a Tax
Event Redemption prior to the Second Purchase Contract Settlement
Date, the Holders of Income PRIDES and the Collateral Agent shall
have such security interests rights and obligations with respect
to the Treasury Portfolio as the Holder of Income PRIDES and the
Collateral Agent had in respect of the Debt Securities, as the
case may be, subject to the Pledge thereof as provided in the
Pledge Agreement and any reference herein to the Debt Securities
shall be deemed to be a reference to such Treasury Portfolio.
The Income PRIDES are issuable only in registered form and
only in denominations of a single Income PRIDES and any integral
multiple thereof. The transfer of any Income PRIDES Certificate
will be registered and Income PRIDES Certificates may be
exchanged as provided in the Purchase Contract Agreement. The
Income PRIDES Registrar may require a Holder, among other things,
to furnish appropriate endorsements and transfer documents
permitted by the Purchase Contract Agreement. No service charge
shall be required for any such registration of transfer or
exchange, but the Company and the Agent may require payment of a
sum sufficient to cover any tax or other governmental charge
payable in connection therewith.
A Holder of an Income PRIDES may, at any time on or prior to
the fifth Business Day immediately preceding the Second Purchase
Contract Settlement Date, create or recreate a Growth PRIDES and
separate the Debt Securities or the appropriate Applicable
Ownership Interest in the Treasury Portfolio, as applicable, from
the related Purchase Contract in respect of such Income PRIDES by
substituting 3-Year Treasury Securities and 4-Year Treasury
Securities for all, but not less than all, of the Series D Note
and the Series E Note, respectively, or appropriate Applicable
Ownership Interest in the Treasury Portfolio, as the case may be,
that form a part of such Income PRIDES in accordance with the
Purchase Contract Agreement; provided, however, that such
Collateral Substitutions may not be made during the period from
the fifth Business Day immediately preceding the First Purchase
Contract Settlement Date through the First Purchase Contract
Settlement Date, except that if a Tax Event Redemption has
occurred and the Treasury Portfolio has become a component of the
Income PRIDES, Holders of such Income PRIDES may make such
Collateral Substitutions at any time on or prior to the second
Business Day immediately preceding the Second Purchase Contract
Settlement Date (but not during the period from the second
Business Day immediately preceding the First Purchase Contract
Settlement Date through the First Purchase Contract Settlement
Date). Holders may make Collateral Substitutions (i) only in
integral multiples of 40 Income PRIDES if Debt Securities are
being substituted by Treasury Securities, or (ii) only in
integral multiples of 1,600,000 Income PRIDES if the appropriate
Applicable Ownership Interests in the Treasury Portfolio are
being substituted by Treasury Securities. To create 40 Growth
PRIDES (if a Tax Event Redemption has not occurred), or 1,600,000
Growth PRIDES (if a Tax Event Redemption has occurred), the
Income PRIDES Holder shall
(a) if a Tax Event Redemption has not occurred, (i)
prior to the fifth Business Day preceding the First Purchase
Contract Settlement Date, deposit with the Collateral Agent
a 3-Year Treasury Security having a principal amount at
maturity of $1,000 and a 4-Year Treasury Security having a
principal amount at maturity of $1,000, or (ii) after the
First Purchase Contract Settlement Date and prior to the
fifth Business Day preceding the Second Purchase Contract
Settlement Date, deposit with the Collateral Agent a 4-Year
Treasury Security having a principal amount at maturity of
$1,000; or
(b) if a Tax Event Redemption has occurred, (i) prior
to the second Business Day immediately preceding the First
Purchase Contract Settlement Date, deposit with the
Collateral Agent 3-Year Treasury Securities having an
aggregate principal amount at maturity of $40,000,000 and 4-
Year Treasury Securities having an aggregate principal
amount at maturity of $40,000,000, or (ii) after the First
Purchase Contract Settlement Date and prior to the second
Business Day immediately preceding the Second Purchase
Contract Settlement Date, 4-Year Treasury Securities having
an aggregate principal amount at maturity of $40,000,000;
and
(c) in either case, (i) deliver cash to the Agent in an
amount equal to the excess of the Contract Adjustment
Payments that would have accrued on the Growth PRIDES being
created by the Holder since the last Payment Date through
the date of Collateral Substitution, over the Contract
Adjustment Payments that have accrued over the same time
period on the Income PRIDES being surrendered in connection
with such Collateral Substitution, which amount the Agent
shall promptly remit to the Company, and (ii) transfer the
40 Income PRIDES, or, in the event a Tax Event Redemption
has occurred, 1,600,000 Income PRIDES, to the Agent
accompanied by a notice to the Agent, substantially in the
form of Exhibit B to the Pledge Agreement, stating that the
Holder has transferred the relevant types and amounts of
Treasury Securities to the Collateral Agent and requesting
that the Agent instruct the Collateral Agent to release the
applicable Debt Securities or the appropriate Applicable
Ownership Interest in the Treasury Portfolio, as the case
may be, underlying such Income PRIDES, whereupon the Agent
shall promptly give such instructions to the Collateral
Agent, substantially in the form of Exhibit A to the Pledge
Agreement.
Upon receipt of the Treasury Securities described in clause
(a) or (b) above and the instructions described in clause (c)
above, in accordance with the terms of the Pledge Agreement, the
Collateral Agent will release from the Pledge to the Agent, on
behalf of the Holder, Debt Securities or the appropriate
Applicable Ownership Interest in the Treasury Portfolio, as the
case may be, that had been components of such Income PRIDES, free
and clear of the Company's security interest therein, and upon
receipt thereof the Agent shall promptly:
(i) cancel the related Income PRIDES surrendered
and transferred;
(ii) transfer the Debt Securities or the
appropriate Applicable Ownership Interest in the
Treasury Portfolio, as the case may be, that had been
components of such Income PRIDES to the Holder; and
(iii) authenticate, execute on behalf of such
Holder and deliver a Growth PRIDES Certificate executed
by the Company in accordance with the Purchase Contract
Agreement evidencing the same number of Purchase
Contracts as were evidenced by the canceled Income
PRIDES.
Holders who elect to separate the Debt Securities or the
appropriate Applicable Ownership Interest in the Treasury
Portfolio, as the case may be, from the related Purchase
Contracts and to substitute Treasury Securities for such Debt
Securities or the appropriate Applicable Ownership Interest in
the Treasury Portfolio, as the case may be, shall be responsible
for any fees or expenses payable to the Collateral Agent for its
services as Collateral Agent in respect of the substitution, and
the Company shall not beresponsible for any such feesor expenses.
A Holder of Growth PRIDES may create or recreate Income
PRIDES by depositing with the Collateral Agent Debt Securities
having an aggregate principal amount, in the case of the Series D
Notes and the Series E Notes, equal to the aggregate principal
amount at maturity, of the 3-Year Treasury Securities and 4-Year
Treasury Securities, respectively, comprising part of the Growth
PRIDES, or by so depositing the appropriate Applicable Ownership
Interest in the Treasury Portfolio, in exchange for the release
of such Pledged Treasury Securities, in accordance with the terms
of the Purchase Contract Agreement and the Pledge Agreement.
The Company shall have the right, at any time prior to the
Second Purchase Contract Settlement Date, to defer the payment of
any or all of the Contract Adjustment Payments otherwise payable
on any Payment Date to a date no later than the Purchase Contract
Settlement Date next succeeding the date such deferral commences,
but only if the Company shall give the Holders and the Agent
written notice of its election to defer such payment (specifying
the amount to be deferred) as provided in the Purchase Contract
Agreement. In connection with any Contract Adjustment Payments
so deferred, additional Contract Adjustment Payments on the
amounts so deferred will accrue at the rate of 9.75% per annum
(computed on the basis of a 360 day year of twelve 30 day
months), compounding on each succeeding Payment Date, until paid
in full (such deferred installments of Contract Adjustment
Payments, if any, together with the additional Contract
Adjustment Payments accrued thereon, are referred to herein as
the "Deferred Contract Adjustment Payments"). Deferred Contract
Adjustment Payments, if any, shall be due on the next succeeding
Payment Date except to the extent that payment is deferred
pursuant to the Purchase Contract Agreement. No Contract
Adjustment Payments may be deferred to a date that is after the
Purchase Contract Settlement Date next succeeding the date such
deferral commences.
In the event that the Company elects to defer the payment of
Contract Adjustment Payments on the Purchase Contracts until the
next succeeding Purchase Contract Settlement Date, the Holder of
this Income PRIDES Certificate will receive on such Purchase
Contract Settlement Date, in lieu of a cash payment, a number of
shares of Common Stock equal to (x) the aggregate amount of
Deferred Contract Adjustment Payments payable to the Holder of
this Income PRIDES Certificate divided by (y) the Applicable
Market Value related to such Purchase Contract Settlement Date.
In the event the Company exercises its option to defer the
payment of Contract Adjustment Payments, then, until the Deferred
Contract Adjustment Payments have been paid, the Company shall
not declare or pay dividends on, make distributions with respect
to, or redeem, purchase or acquire, or make a liquidation payment
with respect to, any of its capital stock or make guarantee
payments with respect to the foregoing (other than (i) purchases
or acquisitions of capital stock of the Company in connection
with the satisfaction by the Company of its obligations under any
employee or agent benefit plans or the satisfaction by the
Company of its obligations pursuant to any contract or security
outstanding on the date of such event requiring the Company to
purchase its capital stock, (ii) as a result of a
reclassification of the Company's capital stock or the exchange
or conversion of one class or series of the Company's capital
stock for another class or series of the Company's capital stock,
(iii) the purchase of fractional interests in shares of the
Company's capital stock pursuant to the conversion or exchange
provisions of the Company's capital stock or the security being
converted or exchanged, (iv) dividends or distributions in
capital stock of the Company (or rights to acquire capital stock)
or repurchases or redemptions of capital stock solely from the
issuance or exchange of capital stock or (v) redemptions or
repurchases of any rights outstanding under a shareholder rights
plan.
The Purchase Contracts and all obligations and rights of the
Company and the Holders thereunder, including, without
limitation, the rights of the Holders to receive and the
obligation of the Company to pay any Contract Adjustment Payments
or any Deferred Contract Adjustment Payments, and the rights and
obligations of the Holders to purchase Common Stock, shall
immediately and automatically terminate, without the necessity of
any notice or action by any Holder, the Agent or the Company, if,
on or prior to the Second Purchase Contract Settlement Date, a
Termination Event shall have occurred. Upon the occurrence of a
Termination Event, the Company shall promptly but in no event
later than two Business Days thereafter give written notice to
the Agent, the Collateral Agent and to the Holders, at their
addresses as they appear in the Income PRIDES Register. Upon and
after the occurrence of a Termination Event, the Collateral Agent
shall release the Debt Securities or the appropriate Applicable
Ownership Interest in the Treasury Portfolio, as the case may be,
forming a part of the Income PRIDES evidenced hereby from the
Pledge in accordance with the provisions of the Pledge Agreement.
Subject to and upon compliance with the provisions of the
Purchase Contract Agreement, a Holder of Income PRIDES may settle
the related Purchase Contracts in their entirety on or prior to
the fifth Business Day immediately preceding either Purchase
Contract Settlement Date, but only in integral multiples of 40
Income PRIDES; provided, however, that such settlements may not
be made during the fifth Business Day immediately preceding the
First Purchase Contract Settlement Date through the First
Purchase Contract Settlement Date; and provided, further, that if
a Tax Event Redemption has occurred and the Treasury Portfolio
has become a component of the Income PRIDES, Holders may settle
early only in integral multiples of 1,600,000 Income PRIDES at
any time on or prior to the second Business Day immediately
preceding such Purchase Contract Settlement Date (but not during
the period two Business Days immediately preceding the First
Purchase Contract Settlement Date through the First Purchase
Contract Settlement Date). In order to exercise the right to
effect any such early settlement ("Early Settlement") with
respect to any Purchase Contracts evidenced by this Income
PRIDES, the Holder of this Income PRIDES Certificate shall
deliver this Income PRIDES Certificate to the Agent at the
Corporate Trust Office duly endorsed for transfer to the Company
or in blank with the form of Election to Settle Early set forth
below duly completed and accompanied by payment in the form of
immediately available funds payable to the order of the Company
in an amount (the "Early Settlement Amount") equal to the sum of
(i)(A) $50 times the number of Purchase Contracts being settled
if settled on or prior to the fifth Business Day immediately
preceding the First Purchase Contract Settlement Date or (B) $25
times the number of Purchase Contracts being settled if settled
after the First Purchase Contract Settlement Date plus, in either
case, (ii) if such delivery is made with respect to any Purchase
Contracts during the period from the close of business on any
Record Date next preceding any Payment Date to the opening of
business on such Payment Date, an amount equal to the Contract
Adjustment Payments payable on such Payment Date with respect to
such Purchase Contracts. Upon Early Settlement of Purchase
Contracts by a Holder of the related Securities, the Pledged Debt
Securities or the appropriate Applicable Ownership Interest in
the Treasury Portfolio underlying such Securities shall be
released from the Pledge as provided in the Pledge Agreement and
the Holder shall be entitled to receive a number of shares of
Common Stock on account of each Purchase Contract forming part of
an Income PRIDES as to which Early Settlement is effected equal
to the applicable Early Settlement Rate; provided however, that
upon the Early Settlement of the Purchase Contracts, (i) the
Holder thereof will forfeit the right to receive any Deferred
Contract Adjustment Payments, if any, on such Purchase Contracts,
(ii) the Holder's right to receive additional Contract Adjustment
Payments in respect of such Purchase Contracts will terminate,
and (iii) no adjustment will be made to or for the Holder on
account of Deferred Contract Adjustment Payments, or any amount
accrued in respect of Contract Adjustment Payments. The Early
Settlement Rate shall initially be equal to 1.0164 newly issued
shares of Common Stock per Income PRIDES (the "First Early
Settlement Rate") if settled prior to the First Purchase Contract
Settlement Date, and equal to .5082 (the "Second Early Settlement
Rate") newly issued shares of Common Stock per Income PRIDES if
settled after the First Purchase Contract Settlement Date. The
First Early Settlement Rate and the Second Early Settlement Rate
shall each be adjusted in the same manner and at the same time as
the Settlement Rate is adjusted, as provided in the Purchase
Contract Agreement.
Upon registration of transfer of this Income PRIDES
Certificate, the transferee shall be bound (without the necessity
of any other action on the part of such transferee, except as may
be required by the Agent pursuant to the Purchase Contract
Agreement), under the terms of the Purchase Contract Agreement
and the Purchase Contracts evidenced hereby and the transferor
shall be released from the obligations under the Purchase
Contracts evidenced by this Income PRIDES Certificate. The
Company covenants and agrees, and the Holder, by its acceptance
thereof, likewise covenants and agrees, to be bound by the
provisions of this paragraph.
The Holder of this Income PRIDES Certificate, by its
acceptance hereof, authorizes the Agent to enter into and perform
the related Purchase Contracts forming part of the Income PRIDES
evidenced hereby on its behalf as its attorney-in-fact, expressly
withholds any consent to the assumption (i.e., affirmance) of the
Purchase Contracts by the Company or its trustee in the event
that the Company becomes the subject of a case under the
Bankruptcy Code, agrees to be bound by the terms and provisions
thereof, covenants and agrees to perform its obligations under
such Purchase Contracts, consents to the provisions of the
Purchase Contract Agreement, authorizes the Agent to enter into
and perform the Pledge Agreement on its behalf as its
attorney-in-fact, and consents to the Pledge of the Debt
Securities or the appropriate Applicable Ownership Interest in
the Treasury Portfolio, as the case may be, underlying this
Income PRIDES Certificate pursuant to the Pledge Agreement. The
Holder further covenants and agrees, that, to the extent and in
the manner provided in the Purchase Contract Agreement and the
Pledge Agreement, but subject to the terms thereof, payments in
respect of the Pledged Debt Securities, or the appropriate
Applicable Ownership Interest in the Treasury Portfolio, on each
Purchase Contract Settlement Date shall be paid by the Collateral
Agent to the Company in satisfaction of such Holder's obligations
under such Purchase Contract and such Holder shall acquire no
right, title or interest in such payments.
The Holder of this Income PRIDES Certificate, by its
acceptance hereof, covenants and agrees to treat itself as the
owner, for United States federal, state and local income and
franchise tax purposes, of the Debt Securities or the appropriate
Applicable Ownership Interest in the Treasury Portfolio forming
part of the Income PRIDES evidenced hereby. The Holder of this
Income PRIDES Certificate, by its acceptance hereof, further
covenants and agrees to treat the Debt Securities forming part of
the Income PRIDES evidenced hereby as indebtedness of the Company
for United States federal, state and local income and franchise
tax purposes.
Subject to certain exceptions, the provisions of the
Purchase Contract Agreement may be amended with the consent of
the Holders of a majority of the Purchase Contracts. In
addition, certain amendments to the Purchase Contract Agreement
may be made without any consent of the Holders as provided in the
Purchase Contract Agreement.
The Purchase Contracts evidenced hereby shall for all
purposes be governed by, and construed in accordance with, the
laws of the State of New York.
The Company and the Agent and any agent of the Company or
the Agent may treat the Person in whose name this Income PRIDES
Certificate is registered on the Income PRIDES Register as the
owner of the Income PRIDES evidenced hereby for the purpose of
receiving payments of interest payable quarterly on the Debt
Securities, receiving payments of Contract Adjustment Payments
and any Deferred Contract Adjustment Payments, performance of the
Purchase Contracts and for all other purposes whatsoever, whether
or not any payments in respect thereof be overdue and
notwithstanding any notice to the contrary, and neither the
Company, the Agent nor any such agent shall be affected by notice
to the contrary.
The Purchase Contracts shall not, prior to the settlement
thereof in accordance with the Purchase Contract Agreement,
entitle the Holder to any of the rights of a holder of shares of
Common Stock.
A copy of the Purchase Contract Agreement is available for
inspection at the offices of the Agent during regular business
hours of the Agent.
Unless the certificate of authentication hereon has been
executed by the Agent by manual signature, this Income PRIDES
Certificate shall not be entitled to any benefit under the Pledge
Agreement or the Purchase Contract Agreement or be valid or
obligatory for any purpose.
IN WITNESS WHEREOF, the Company has caused this instrument
to be duly executed.
TEXAS UTILITIES COMPANY
By:
-----------------------------
Name: Robert S. Shapard
Title: Treasurer
HOLDER SPECIFIED ABOVE (as to
obligations of such Holder under the
Purchase Contracts evidenced hereby)
By:
---------------------------------
not individually but solely as
Attorney-in-Fact of such Holder
By:
--------------------------------
Name:
Title:
Dated: , 1998
AGENT'S CERTIFICATE OF AUTHENTICATION
This is one of the Income PRIDES Certificate referred to in
the within mentioned Purchase Contract Agreement.
THE BANK OF NEW YORK,
as Purchase Contract Agent and Trustee
By:
--------------------------------
Authorized Signatory
<PAGE>
ABBREVIATIONS
The following abbreviations, when used in the inscription on
the face of this instrument, shall be construed as though they
were written out in full according to applicable laws or
regulations:
TEN COM - as tenants in common
UNIF GIFT MIN ACT - ------------Custodian------------
(cust) (minor)
Under Uniform Gifts to Minors Act
----------------------------------
(State)
TEN ENT - as tenants by the entireties
JT TEN - as joint tenants with right of
survivorship and not as tenants in
common
Additional abbreviations may also be used though not in the
above list.
-------------------------------------
FOR VALUE RECEIVED, the undersigned hereby sell(s),
assign(s) and transfer(s) unto
----------------------------------------------------------------
----------------------------------------------------------------
(Please insert Social Security or Taxpayer I.D. or other
Identifying Number of Assignee)
--------------------------------------------------------------
-----------------------------------------------------------------
-----------------------------------------------------------------
(Please Print or Type Name and Address Including Postal Zip
Code of Assignee) the within Income PRIDES Certificate and all
rights thereunder, hereby irrevocably constituting and appointing
-----------------------------------------------------------------
attorney to transfer said Income PRIDES Certificate on the books
of Texas Utilities Company with full power of substitution in the
premises.
Dated:_____________ __________________________
Signature
NOTICE: The signature to this
assignment must correspond
with the name as it appears
upon the face of the within
Income PRIDES Certificates in
every particular, without
alteration or enlargement or
any change whatsoever.
Signature Guarantee: ______________________________
Signatures must be guaranteed by an "eligible guarantor
institution" meeting the requirements of the Registrar, which
requirements include membership or participation in the Security
Transfer Agent Medallion Program ("STAMP") or such other
"signature guarantee program" as may be determined by the
Registrar in addition to, or in substitution for, STAMP, all in
accordance with the Securities Exchange Act of 1934, as amended.
<PAGE>
SETTLEMENT INSTRUCTIONS
The undersigned Holder directs that a certificate for shares
of Common Stock deliverable upon settlement on or after the
[First] [Second] Purchase Contract Settlement Date of the
Purchase Contracts underlying the number of Income PRIDES
evidenced by this Income PRIDES Certificate be registered in the
name of, and delivered, together with a check in payment for any
fractional share, to the undersigned at the address indicated
below unless a different name and address have been indicated
below. If shares are to be registered in the name of a Person
other than the undersigned, the undersigned will pay any transfer
tax payable incident thereto.
Dated: _________________ ____________________________
Signature
Signature
Guarantee: ________________
(if assigned to another person)
Signatures must be guaranteed by an "eligible guarantor
institution" meeting the requirements of the Registrar, which
requirements include membership or participation in the Security
Transfer Agent Medallion Program ("STAMP") or such other
"signature guarantee program" as may be determined by the
Registrar in addition to, or in substitution for, STAMP, all in
accordance with the Securities Exchange Act of 1934, as amended.
If shares are to be registered in REGISTERED HOLDER
the name of and delivered to a Person
other than the Holder, please (i) print
such Person's name and address and (ii)
provide a guarantee of your signature:
Please print name and address
of Registered Holder:
___________________________ ___________________________
Name Name
____________________________ ___________________________
Address Address
____________________________ ___________________________
____________________________ ___________________________
____________________________ ___________________________
Social Security or other Taxpayer
Identification Number, if any _____________________
<PAGE>
ELECTION TO SETTLE EARLY
The undersigned Holder of this Income PRIDES Certificate
hereby irrevocably exercises the option to effect Early
Settlement in accordance with the terms of the Purchase Contract
Agreement with respect to the Purchase Contracts underlying the
number of Income PRIDES evidenced by this Income PRIDES
Certificate specified below. The undersigned Holder directs that
a certificate for shares of Common Stock deliverable upon such
Early Settlement be registered in the name of, and delivered,
together with a check in payment for any fractional share and any
Income PRIDES Certificate representing any Income PRIDES
evidenced hereby as to which Early Settlement of the related
Purchase Contracts is not effected, to the undersigned at the
address indicated below unless a different name and address have
been indicated below. Pledged Debt Securities or the appropriate
Applicable Ownership Interest in the Treasury Portfolio, as the
case may be, deliverable upon such Early Settlement will be
transferred in accordance with the transfer instructions set
forth below. If shares are to be registered in the name of a
Person other than the undersigned, the undersigned will pay any
transfer tax payable incident thereto.
Dated:________________ _____________________________
Signature
Signature Guarantee: ________________________________
Signatures must be guaranteed by an "eligible guarantor
institution" meeting the requirements of the Registrar, which
requirements include membership or participation in the Security
Transfer Agent Medallion Program ("STAMP") or such other
"signature guarantee program" as may be determined by the
Registrar in addition to, or in substitution for, STAMP, all in
accordance with the Securities Exchange Act of 1934, as amended.
Number of Securities evidenced hereby as to which Early
Settlement of the related Purchase Contracts is being elected:
If shares of Common Stock or
Income PRIDES Certificates
are to be registered in the REGISTERED HOLDER
name of and delivered to, and
Pledged Debt Securities, or
the Treasury Portfolio, as the
case may be, are to be trans-
ferred to, a Person other than
the Holder, please print such
Person's name and address:
Please print name and
address of Registered
Holder:
_____________________________ _________________________
Name Name
_____________________________ _________________________
Address Address
_____________________________ _________________________
_____________________________ _________________________
_____________________________ _________________________
Social Security or other
Taxpayer Identification Number,
if any _________________________
Transfer Instructions for Pledged Debt Securities, or the
Treasury Portfolio, as the case may be, Transferable Upon Early
Settlement or a Termination Event:
________________________________________________________________
________________________________________________________________
[TO BE ATTACHED TO GLOBAL CERTIFICATES]
SCHEDULE OF INCREASES OR DECREASES IN GLOBAL CERTIFICATE
The following increases or decreases in this Global
Certificate have been made:
================================================================
PRINCIPAL
AMOUNT OF SIGNATURE
AMOUNT OF AMOUNT OF THIS GLOBAL OF
DECREASE IN INCREASE IN CERTIFICATE AUTHORIZED
PRINCIPAL PRINCIPAL FOLLOWING OFFICER OF
AMOUNT OF AMOUNT OF SUCH TRUSTEE OR
THE GLOBAL THE GLOBAL DECREASE OR SECURITIES
DATE CERTIFICATE CERTIFICATE INCREASE CUSTODIAN
_________________________________________________________________
_________________________________________________________________
_________________________________________________________________
_________________________________________________________________
_________________________________________________________________
_________________________________________________________________
_________________________________________________________________
_________________________________________________________________
=================================================================
<PAGE>
EXHIBIT B
FORM OF GROWTH PRIDES CERTIFICATE
THIS CERTIFICATE IS A GLOBAL CERTIFICATE WITHIN THE MEANING
OF THE PURCHASE CONTRACT AGREEMENT (AS HEREINAFTER DEFINED) AND
IS REGISTERED IN THE NAME OF A CLEARING AGENCY OR A NOMINEE
THEREOF. THIS CERTIFICATE MAY NOT BE EXCHANGED IN WHOLE OR IN
PART FOR A CERTIFICATE REGISTERED, AND NO TRANSFER OF THIS
CERTIFICATE IN WHOLE OR IN PART MAY BE REGISTERED, IN THE NAME OF
ANY PERSON OTHER THAN SUCH CLEARING AGENCY OR A NOMINEE THEREOF,
EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE PURCHASE
CONTRACT AGREEMENT.
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (55 WATER STREET,
NEW YORK, NEW YORK) TO THE COMPANY OR ITS AGENT FOR REGISTRATION
OF TRANSFER, EXCHANGE OR PAYMENT AND ANY CERTIFICATE ISSUED IS
REGISTERED IN THE NAME OF CEDE & CO., OR SUCH OTHER NAME AS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST
COMPANY, AND ANY PAYMENT THEREON IS MADE TO CEDE & CO., ANY
TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY A
PERSON IS WRONGFUL SINCE THE REGISTERED OWNER HEREOF, CEDE & CO.,
HAS AN INTEREST THEREIN.
No. ______________ Cusip No. 882848401
Number of Growth PRIDES ___________________
TEXAS UTILITIES COMPANY
Growth PRIDES
($50 Stated Amount)
This Growth PRIDES Certificate certifies that __________ is
the registered Holder of the number of Growth PRIDES set forth
above. Each Growth PRIDES represents (i)(a) prior to the First
Purchase Contract Settlement Date, a 1/40 undivided beneficial
ownership interest in a 3-Year Treasury Security having a
principal amount at maturity equal to $1,000 and a 1/40 undivided
beneficial ownership interest in a 4-Year Treasury Security
having a principal amount of maturity equal to $1,000, and (b)
from the First Purchase Contract Settlement Date to the Second
Purchase Contract Settlement Date, a 1/40 undivided beneficial
ownership interest in a 4-Year Treasury Security having a
principal amount at maturity equal to $1,000, subject to the
Pledge of each such Treasury Security by such Holder pursuant to
the Pledge Agreement, and (ii) the rights and obligations of the
Holder under one Purchase Contract with Texas Utilities Company,
a Texas corporation (the "Company"). All capitalized terms used
herein without definition herein have the meaning set forth in
the Purchase Contract Agreement referred to below.
Pursuant to the Pledge Agreement, the Treasury Securities
constituting part of each Growth PRIDES evidenced hereby have
been pledged to the Collateral Agent, for the benefit of the
Company, to secure the obligations of the Holder under the
Purchase Contract comprising a portion of such Growth PRIDES.
The Pledge Agreement provides that all payments of the
principal of any Treasury Securities received by the Collateral
Agent shall be paid by the Collateral Agent by wire transfer of
same day funds (i) in the case of any principal payments with
respect to any Treasury Securities that have been released from
the Pledge pursuant to the Pledge Agreement, to the Holders of
the applicable Growth PRIDES to the accounts designated by them
in writing for such purpose no later than 2:00 p.m. New York City
time, on the Business Day such payment is received by the
Collateral Agent (provided that in the event such payment is
received by the Collateral Agent on a day that is not a Business
Day or after 12:30 p.m., New York City time, on a Business Day,
then such payment shall be made no later than 10:30 a.m., New
York City time, on the next succeeding Business Day), and (ii) in
the case of the principal of any Pledged Treasury Securities, to
the Company on the Purchase Contract Settlement Date (as defined
herein) in accordance with the terms of the Pledge Agreement, in
full satisfaction of the respective obligations of the Holders of
the Growth PRIDES of which such Pledged Treasury Securities are a
part under the Purchaser Contracts forming a part of such Growth
PRIDES.
Each Purchase Contract evidenced hereby obligates the Holder
of this Growth PRIDES Certificate to purchase, and the Company,
to sell, (i) not later than August 16, 2001 (the "First Purchase
Contract Settlement Date"), at a price of $25 in cash, a number
of newly issued shares of Common Stock, no par value, of the
Company ("Common Stock") equal to the applicable Settlement Rate
(as defined below) and (ii), not later than August 16, 2002 (the
"Second Purchase Contract Settlement Date" and with the First
Purchase Contract Settlement Date, each a "Purchase Contract
Settlement Date") at a price of $25 in cash, a number of newly
issued shares of Common stock equal to the applicable Settlement
Rate, unless, in either case on or prior to the applicable
Purchase Contract Settlement Date there shall have occurred a
Termination Event or an Early Settlement with respect to the
Growth PRIDES of which such Purchase Contract is a part, all as
provided in the Purchase Contract Agreement and more fully
described below.
The "Settlement Rate" with respect to a Purchase Contract
Settlement Date is equal to (a) if the Applicable Market Value
(as defined below) determined with respect to such Purchase
Contract Settlement Date is equal to or greater than $49.19 (the
"Threshold Appreciation Price"), .5082 shares of Common Stock per
Purchase Contract, (b) if such Applicable Market Value is less
than the Threshold Appreciation Price but is greater than
$41.6875, the number of shares of Common Stock per Purchase
Contract equal to $25 divided by such Applicable Market Value and
(c) if the Applicable Market Value is less than or equal to
$41.6875, .5997 shares of Common Stock per Purchase Contract, in
each case subject to adjustment as provided in the Purchase
Contract Agreement. No fractional shares of Common Stock will be
issued upon settlement of Purchase Contracts, as provided in the
Purchase Contract Agreement.
The Company shall pay on each Payment Date in respect of
each Purchase Contract evidenced hereby an amount (the "Contract
Adjustment Payments") equal to (A) for the period prior to the
First Purchase Contract Settlement Date, 3.315% per annum of the
Stated Amount, or, and (B) for the period from and after the
First Purchase Contract Date, 3.25% per annum of the Remaining
Stated Amount, computed, in each case, on the basis of a 360 day
year of twelve 30 day months subject to deferral at the option of
the Company as provided in the Purchase Contract Agreement and
more fully described below. Such Contract Adjustment Payments
shall be payable to the Person in whose name this Growth PRIDES
Certificate (or a Predecessor Growth PRIDES Certificate) is
registered at the close of business on the Record Date for such
Payment Date.
Contract Adjustment Payments will be payable at the office
of the Agent in The City of New York or, at the option of the
Company, by check mailed to the address of the Person entitled
thereto as such address appears on the Growth PRIDES Register.
Unless the context otherwise requires, each provision of this
security shall be part of the Purchase Contracts evidenced hereby.
This Security and each Purchase Contract evidenced hereby is
governed by a Purchase Contract Agreement, dated as of July 1,
1998 (as may be supplemented from time to time, the "Purchase
Contract Agreement") between the Company and The Bank of New
York, as Purchase Contract Agent and trustee (including its
successors thereunder, herein called the "Agent"), to which the
Purchase Contract Agreement and supplemental agreements thereto
reference is hereby made for a description of the respective
rights, limitations of rights, obligations, duties and immunities
thereunder of the Agent, the Company and the Holders and of the
terms upon which the Growth PRIDES Certificates are, and are to
be, executed and delivered.
Each Purchase Contract evidenced hereby, which is settled
either through Early Settlement or Cash Settlement, shall
obligate the Holder of the related Growth PRIDES to purchase at
the applicable Purchase Price, and the Company to sell, a number
of newly issued shares of Common Stock equal to the applicable
Early Settlement Rate or the applicable Settlement Rate, as
applicable.
The "Applicable Market Value" with respect to a Purchase
Contract Settlement Date means the average of the Closing Price
per share of Common Stock on each of the twenty consecutive
Trading Days ending on the third Trading Day immediately
preceding such Purchase Contract Settlement Date. The "Closing
Price" of the Common Stock on any date of determination means the
closing sale price (or, if no closing price is reported, the last
reported sale price) of the Common Stock on the New York Stock
Exchange (the "NYSE") on such date or, if the Common Stock is not
listed for trading on the NYSE on any such date, as reported in
the composite transactions for the principal United States
securities exchange on which the Common Stock is so listed, or if
the Common Stock is not so listed on a United States national or
regional securities exchange, the last quoted bid price for the
Common Stock in the over-the-counter market as reported by the
National Quotation Bureau or similar organization, or, if such
bid price is not available, the market value of the Common Stock
on such date as determined by a nationally recognized independent
investment banking firm retained for this purpose by the Company.
A "Trading Day" means a day on which the Common Stock (A) is not
suspended from trading on any national or regional securities
exchange or association or over-the-counter market at the close
of business and (B) has traded at least once on the national or
regional securities exchange or association or over-the-counter
market that is the primary market for the trading of the Common
Stock.
In accordance with the terms of the Purchase Contract
Agreement, the Holder of the Growth PRIDES evidenced hereby shall
pay, on each Purchase Contract Settlement Date, the applicable
Purchase Price for the shares of Common Stock purchased pursuant
to each Purchase Contract evidenced hereby by effecting a Cash
Settlement or an Early Settlement. A Holder of Growth PRIDES who
does not make such payment in accordance with the Purchase Contract
Agreement or does not notify the Agent of such Holder's intention,
on or prior to 5:00 p.m. New York City time on the fifth
Business Day immediately preceding a Purchase Contract
Settlement Date, to make an effective Cash Settlement or an
Early Settlement, shall have defaulted in its obligations
under the applicable portion of the related Purchase Contract,
and the Collateral Agent shall exercise its rights as a secured
creditor for the benefit of the Company under the Purchase
Contract Agreement and the Pledge Agreement and shall apply the
principal amount at maturity of the related Pledged Treasury
Securities (which shall be the 3-Year Treasury Security in the
case of the First Purchase Contract Settlement Date, and the 4-
Year Treasury Security in the case of the Second Purchase
Contract Settlement Date) held by the Collateral Agent to the
Purchase Price of the Common Stock on such Purchase Contract
Settlement Date.
The Company shall not be obligated to issue any shares of
Common Stock in respect of any portion of a Purchase Contract on
a Purchase Contract Settlement Date or deliver any certificates
therefor to the Holder unless it shall have received payment in
full of the aggregate purchase price for the shares of Common
Stock to be purchased thereunder in the manner herein set forth.
The Growth PRIDES are issuable only in registered form and
only in denominations of a single Growth PRIDES and any integral
multiple thereof. The transfer of any Growth PRIDES will be
registered and Growth PRIDES may be exchanged as provided in the
Purchase Contract Agreement. The Growth PRIDES Registrar may
require a Holder, among other things, to furnish appropriate
endorsements and transfer documents permitted by the Purchase
Contract Agreement. No service charge shall be required for any
such registration of transfer or exchange, but the Company and
the Agent may require payment of a sum sufficient to cover any
tax or other governmental charge payable in connection therewith.
A Holder of a Growth PRIDES may, at any time on or prior to
the fifth Business Day immediately preceding the Second Purchase
Contract Settlement Date, create or recreate an Income PRIDES by
(a) depositing with the Collateral Agent Debt Securities or the
appropriate Applicable Ownership Interest in the Treasury
Portfolio, as the case may be, having an aggregate principal
amount equal to the aggregate principal amount at maturity of,
and in substitution for all, but not less than all, of the
Treasury Securities comprising part of the Growth PRIDES in
accordance with the Purchase Contract Agreement; provided,
however, that such Collateral Substitutions may not be made
during the period from the fifth Business Day immediately
preceding the First Purchase Contract Settlement Date through the
First Purchase Contract Settlement Date, except that if a Tax
Event Redemption has occurred and the Treasury Portfolio has
become a component of the Income PRIDES, Holders of Growth PRIDES
may make Collateral Substitutions, at any time on or prior to the
second Business Day immediately preceding the Second Purchase
Contract Settlement Date (but not during the period from the
second Business Day immediately preceding the First Purchase
Contract Settlement Date through the First Purchase Contract
Settlement Date). Holders of Growth PRIDES may make such
Collateral Substitutions and establish Income PRIDES only (i) in
integral multiples of 40 Growth PRIDES for 40 Income PRIDES if a
Tax Event Redemption has not occurred, or (ii) in integral
multiples of 1,600,000 Growth PRIDES for 1,600,000 Income PRIDES
if a Tax Event Redemption has occurred. To create 40 Income
PRIDES (if a Tax Event Redemption has not occurred), or 1,600,000
Income PRIDES (if a Tax Event Redemption has occurred), the
Growth PRIDES Holder shall
(a) if a Tax Event Redemption has not occurred, (i)
prior to the fifth Business Day preceding the First Purchase
Contract Settlement Date, deposit with the Collateral Agent
$1,000 in aggregate principal amount of Series D Notes and
$1,000 in aggregate principal amount of Series E Notes, or
(ii) after the First Purchase Contract Settlement Date,
deposit with the Collateral Agent $1,000 in aggregate
principal amount of Series E Notes, or
(b) if a Tax Event Redemption has occurred, deposit
with the Collateral Agent the Applicable Ownership Interest
in the Treasury Portfolio for each Income PRIDES being
created by the Holder and having an aggregate principal
amount of $80,000,000, or if, after the First Purchase
Contract Settlement Date $40,000,000, and
(c) in either case, transfer and surrender the related
40 Growth PRIDES, or in the event a Tax Event Redemption has
occurred, 1,600,000 Income PRIDES, to the Agent accompanied
by a notice to the Agent, substantially in the form of
Exhibit B to the Pledge Agreement, stating that the Holder
has transferred the relevant amount of Debt Securities or
the appropriate Applicable Ownership Interest in the
Treasury Portfolio, as the case may be, to the Collateral
Agent and requesting that the Agent instruct the Collateral
Agent to release the Treasury Securities underlying such
Growth PRIDES, whereupon the Agent shall promptly give such
instructions to the Collateral Agent, substantially in the
form of Exhibit A to the Pledge Agreement.
Upon receipt of the Debt Securities or the appropriate
Applicable Ownership Interest in the Treasury Portfolio, as the
case may be, described in clause (a) or (b) above and the
instructions described in clause (c) above, in accordance with
the terms of the Pledge Agreement, the Collateral Agent will
effect the release of the Treasury Securities having a
corresponding aggregate principal amount from the Pledge to the
Agent free and clear of the Company's security interest therein,
and upon receipt thereof the Agent shall promptly:
(i) cancel the related Growth PRIDES surrendered
and transferred;
(ii) transfer the Treasury Securities that had
been components of such Growth PRIDES to the Holder;
and
(iii) authenticate, execute on behalf of such
Holder and deliver an Income PRIDES Certificate
executed by the Company in accordance with the Purchase
Contract Agreement evidencing the same number of
Purchase Contracts as were evidenced by the canceled
Growth PRIDES.
Holders who elect to separate Treasury Securities from the
related Purchase Contract and to substitute Debt Securities or
the Applicable Ownership Interest in the Treasury Portfolio, as
the case may be, for such Treasury Securities shall be
responsible for any fees or expenses payable to the Collateral
Agent for its services as Collateral Agent in respect of the
substitution, and the Company shall not be responsible for any
such fees or expenses.
A Holder of Income PRIDES may create or recreate Growth
PRIDES by depositing with the Collateral Agent 3-Year Treasury
Securities and 4-Year Treasury Securities, having an aggregate
principal amount at maturity equal to the aggregate principal
amount of the Series D Notes and the Series E Notes,
respectively, or, the appropriate Applicable Ownership Interest
in the Treasury Portfolio equal to the aggregate principal amount
of the Pledged Treasury Securities at maturity, in exchange for
the release of such Pledged Debt Securities or appropriate
Applicable Ownership Interest in the Treasury Portfolio, as the
case may be, in accordance with the terms of the Purchase
Contract Agreement and the Pledge Agreement.
The Company shall have the right, at any time prior to the
Second Purchase Contract Settlement Date, to defer the payment of
any or all of the Contract Adjustment Payments otherwise payable
on any Payment Date to a date no later than the Purchase Contract
Settlement Date next succeeding the date such deferral commences,
but only if the Company shall give the Holders and the Agent
written notice of its election to defer such payment (specifying
the amount to be deferred) as provided in the Purchase Contract
Agreement. In connection with any Contract Adjustment Payments
so deferred, additional Contract Adjustment Payments will accrue
on the amounts so deferred at the rate of 9.75% per annum
(computed on the basis of a 360 day year of twelve 30 day
months), compounding on each succeeding Payment Date, until paid
in full (such deferred installments of Contract Adjustment
Payments, if any, together with the additional Contract
Adjustment Payments accrued thereon, are referred to herein as
the "Deferred Contract Adjustment Payments"). Deferred Contract
Adjustment Payments, if any, shall be due on the next succeeding
Payment Date except to the extent that payment is deferred
pursuant to the Purchase Contract Agreement. No Contract
Adjustment Payments may be deferred to a date that is after the
Purchase Contract Settlement Date next succeeding the date such
deferrals commence.
In the event that the Company elects to defer the payment of
Contract Adjustment Payments on the Purchase Contracts until the
next succeeding Purchase Contract Settlement Date, the Holder of
this Growth PRIDES Certificate will receive on such Purchase
Contract Settlement Date, in lieu of a cash payment, a number of
shares of Common Stock equal to (x) the aggregate amount of
Deferred Contract Adjustment Payments payable to the Holder of
the Growth PRIDES Certificate divided by (y) the Applicable
Market Value related to such Purchase Contract Settlement Date.
In the event the Company exercises its option to defer the
payment of Contract Adjustment Payments, then, until the Deferred
Contract Adjustment Payments have been paid, the Company shall
not declare or pay dividends on, make distributions with respect
to, or redeem, purchase or acquire, or make a liquidation payment
with respect to, any of its capital stock or make guarantee
payments with respect to the foregoing (other than (i) purchases
or acquisitions of shares of capital stock of the Company in
connection with the satisfaction by the Company of its
obligations under any employee or agent benefit plans or the
satisfaction by the Company of its obligations pursuant to any
contract or security outstanding on the date of such event
requiring the Company to purchase its capital stock, (ii) as a
result of a reclassification of the Company's capital stock or
the exchange or conversion of one class or series of the
Company's capital stock for another class or series of the
Company's capital stock, (iii) the purchase of fractional
interests in shares of the Company's capital stock pursuant to
the conversion or exchange provisions of the Company's capital
stock or the security being converted or exchanged, (iv)
dividends or distributions in capital stock of the Company (or
rights to acquire capital stock) or repurchases or redemptions of
capital stock solely from the issuance or exchange of capital
stock or (v) redemptions or repurchases of any rights outstanding
under a shareholder rights plan.
The Purchase Contracts and all obligations and rights of the
Company and the Holders thereunder, including, without
limitation, the rights of the Holders to receive and the
obligation of the Company to pay Contract Adjustment Payments or
any Deferred Contract Adjustment Payments, and the rights and
obligations of the Holders to purchase Common Stock shall
immediately and automatically terminate, without the necessity of
any notice or action by any Holder, the Agent or the Company, if,
on or prior to the Second Purchase Contract Settlement Date, a
Termination Event shall have occurred. Upon the occurrence of a
Termination Event, the Company shall promptly but in no event
later than two business days thereafter give written notice to
the Agent, the Collateral Agent and to the Holders, at their
addresses as they appear in the Growth PRIDES Register. Upon and
after the occurrence of a Termination Event, the Collateral Agent
shall release the Treasury Securities forming a part of the
Growth PRIDES evidenced hereby from the Pledge in accordance with
the provisions of the Pledge Agreement.
Subject to and upon compliance with the provisions of the
Purchase Contract Agreement, a Holder of Growth PRIDES may settle
the related Purchase Contracts in their entirety on or prior to
the second Business Day immediately preceding each Purchase
Contract Settlement Date, but only in integral multiples of 40
Growth PRIDES. In order to exercise the right to effect any such
early settlement ("an Early Settlement") with respect to any
Purchase Contracts evidenced by this Growth PRIDES Certificate,
the Holder of this Growth PRIDES Certificate shall deliver this
Growth PRIDES Certificate to the Agent at the Corporate Trust
Office duly endorsed for transfer to the Company or in blank with
the form of Election to Settle Early set forth below duly
completed and accompanied by payment in the form of immediately
available funds payable to the order of the Company in an amount
(the "Early Settlement Amount") equal to the sum of (i)(A) $50
times the number of Purchase Contracts being settled, if settled
on or prior to the second Business Day immediately preceding the
First Purchase Contract Settlement Date, or (B) $25 times the
number of Purchase Contracts being settled, if settled between
the First Purchase Contract Settlement Date and the second
Business Day immediately preceding the Second Purchase Contract
Settlement Date, plus in either case, (ii) if such delivery is
made with respect to any Purchase Contracts during the period
from the close of business on any Record Date for any Payment
Date to the opening of business on such Payment Date, an amount
equal to the Contract Adjustment Payments payable, if any, on
such Payment Date with respect to such Purchase Contracts. Upon
Early Settlement of Purchase Contracts by a Holder of the related
Securities, the Pledged Treasury Securities underlying such
Securities shall be released from the Pledge as provided in the
Pledge Agreement and the Holder shall be entitled to receive, a
number of shares of Common Stock on account of each Purchase
Contract forming part of a Growth PRIDES as to which Early
Settlement is effected equal to the applicable Early Settlement
Rate which shall be 1.0164 newly issued shares of Common Stock per
Purchase Contract (the "First Early Settlement Rate") if settled
prior to the First Purchase Contract Settlement Date, or if
settled after the First Purchase Contract Settlement Date and
before the Second Purchase Contract Settlement Date, .5082 newly
issued shares of Common Stock per Purchase Contract (the "Second
Early Settlement Rate" and with the First Early Settlement Rate,
each, an "Early Settlement Rate"); provided however, that upon the
applicable Early Settlement of the Purchase Contracts, (i) the
Holder thereof will forfeit the right to receive any Deferred
Contract Adjustment Payments on such Purchase Contracts, (ii)
the Holder's right to receive additional Contract Adjustment
Payments in respect of such Purchase Contracts will terminate,
and (iii) no adjustment will be made to or for the Holder on
account of Deferred Contract Adjustment Payments, or any amount
accrued in respect of Contract Adjustment Payments. Each Early
Settlement Rate shall be adjusted in the same manner and at the
same time as the Settlement Rate is adjusted as provided in the
Purchase Contract Agreement.
Upon registration of transfer of this Growth PRIDES
Certificate, the transferee shall be bound (without the necessity
of any other action on the part of such transferee, except as may
be required by the Agent pursuant to the Purchase Contract
Agreement), under the terms of the Purchase Contract Agreement
and the Purchase Contracts evidenced hereby and the transferor
shall be released from the obligations under the Purchase
Contracts evidenced by this Growth PRIDES Certificate. The
Company covenants and agrees, and the Holder, by his acceptance
hereof, likewise covenants and agrees, to be bound by the
provisions of this paragraph.
The Holder of this Growth PRIDES Certificate, by its
acceptance hereof, authorizes the Agent to enter into and perform
the related Purchase Contracts forming part of the Growth PRIDES
evidenced hereby on its behalf as its attorney-in-fact, expressly
withholds any consent to the assumption (i.e., affirmance) of the
Purchase Contracts by the Company or its trustee in the event
that the Company becomes the subject of a case under the
Bankruptcy Code, agrees to be bound by the terms and provisions
thereof, covenants and agrees to perform its obligations under
such Purchase Contracts, consents to the provisions of the
Purchase Contract Agreement, authorizes the Agent to enter into
and perform the Pledge Agreement on its behalf as its
attorney-in-fact, and consents to the Pledge of the Treasury
Securities underlying this Growth PRIDES Certificate pursuant to
the Pledge Agreement. The Holder further covenants and agrees,
that, to the extent and in the manner provided in the Purchase
Contract Agreement and the Pledge Agreement, but subject to the
terms thereof, payments in respect of the Pledged Treasury
Securities on each Purchase Contract Settlement Date shall be
paid by the Collateral Agent to the Company in satisfaction of
such Holder's obligations under such Purchase Contract and such
Holder shall acquire no right, title or interest in such
payments.
The Holder of this Growth PRIDES Certificate, by its
acceptance hereof, covenants and agrees to treat itself as the
owner, for United States federal, state and local income and
franchise tax purposes, of the Treasury Securities forming part
of the Growth PRIDES evidenced hereby.
Subject to certain exceptions, the provisions of the
Purchase Contract Agreement may be amended with the consent of
the Holders of a majority of the Purchase Contracts. In
addition, certain amendments to the Purchase Contract Agreement
may be made without any consent on the Holders as provided in the
Purchase Contract Agreement.
The Purchase Contracts evidenced hereby shall for all
purposes be governed by, and construed in accordance with, the
laws of the State of New York.
The Company and the Agent and any agent of the Company or
the Agent may treat the Person in whose name this Growth PRIDES
Certificate is registered on the Growth PRIDES Register as the
owner of the Growth PRIDES evidenced hereby for the purpose of
receiving payments of interest on the Treasury Securities,
receiving payments of Contract Adjustment Payments and any
Deferred Contract Adjustment Payments, performance of the
Purchase Contracts and for all other purposes whatsoever, whether
or not any payments in respect thereof be overdue and
notwithstanding any notice to the contrary, and neither the
Company, the Agent nor any such agent shall be affected by notice
to the contrary.
The Purchase Contracts shall not, prior to the settlement
thereof, in accordance with the Purchase Agreement, entitle the
Holder to any of the rights of a holder of shares of Common
Stock.
A copy of the Purchase Contract Agreement is available for
inspection at the offices of the Agent during regular business
hours of the Agent.
Unless the certificate of authentication hereon has been
executed by the Agent by manual signature, this Growth PRIDES
Certificate shall not be entitled to any benefit under the Pledge
Agreement or the Purchase Contract Agreement or be valid or
obligatory for any purpose.
<PAGE>
IN WITNESS WHEREOF, the Company has caused this instrument
to be duly executed.
TEXAS UTILITIES COMPANY
By:
--------------------------
Name: Robert S. Shapard
Title: Treasurer
HOLDER SPECIFIED ABOVE (as to
obligations of such Holder
under the Purchase Contracts
evidenced hereby)
By:
-------------------------,
not individually but solely
as Attorney-in-Fact of such
Holder
By: _________________________
Name:
Title:
Dated: , 1998
AGENT'S CERTIFICATE OF AUTHENTICATION
This is one of the Growth PRIDES referred to in the
within-mentioned Purchase Contract Agreement.
THE BANK OF NEW YORK,
as Purchase Contract Agent
and Trustee
By:___________________________
Authorized Signatory
<PAGE>
ABBREVIATIONS
The following abbreviations, when used in the inscription on
the face of this instrument, shall be construed as though they
were written out in full according to applicable laws or
regulations:
TEN COM - as tenants in common
UNIF GIFT MIN ACT - ---------Custodian---------
(cust) (minor)
Under Uniform Gifts to Minors
Act
------------------------------
(State)
TEN ENT - as tenants by the entireties
JT TEN - as joint tenants with right of
survivorship and not as
tenants in common
Additional abbreviations may also be used though not in the
above list.
__________________
FOR VALUE RECEIVED, the undersigned hereby sell(s),
assign(s) and transfer(s) unto
_________________________________________________________________
(Please insert Social Security or Taxpayer I.D. or other
Identifying Number of Assignee)
_________________________________________________________________
(Please Print or Type Name and Address Including Postal Zip Code
of Assignee)
the within Growth PRIDES Certificate and all rights
thereunder, hereby irrevocably constituting and appointing
_________________________________________________________________
attorney to transfer said Growth PRIDES Certificate on the books
of Texas Utilities Company with full power of substitution in the
premises.
Dated: _______________ __________________________
Signature
NOTICE: The signature to this
assignment must correspond with the
name as it appears upon the face of
the within Growth PRIDES
Certificates in every particular,
without alteration or enlargement
or any change whatsoever.
Signature Guarantee: _______________________
Signatures must be guaranteed by an "eligible guarantor
institution" meeting the requirements of the Registrar, which
requirements include membership or participation in the Security
Transfer Agent Medallion Program ("STAMP") or such other
"signature guarantee program" as may be determined by the
Registrar in addition to, or in substitution for, STAMP, all in
accordance with the Securities Exchange Act of 1934, as amended.
<PAGE>
SETTLEMENT INSTRUCTIONS
The undersigned Holder directs that a certificate for shares
of Common Stock deliverable upon settlement on or after the
[First] [Second] Purchase Contract Settlement Date of the
Purchase Contracts underlying the number of Growth PRIDES
evidenced by this Growth PRIDES Certificate be registered in the
name of, and delivered, together with a check in payment for any
fractional share, to the undersigned at the address indicated
below unless a different name and address have been indicated
below. If shares are to be registered in the name of a Person
other than the undersigned, the undersigned will pay any transfer
tax payable incident thereto.
Dated: ________________ ____________________________
Signature
Signature Guarantee:
Signatures must be guaranteed by an "eligible guarantor
institution" meeting the requirements of the Registrar, which
requirements include membership or participation in the Security
Transfer Agent Medallion Program ("STAMP") or such other
"signature guarantee program" as may be determined by the
Registrar in addition to, or in substitution for, STAMP, all in
accordance with the Securities Exchange Act of 1934, as amended.
If shares are to be REGISTERED HOLDER
registered in the name
of and delivered to a
Person other than the
Holder, please print
such Person's name and
address:
Please print name and address
of Registered Holder:
_____________________________ ______________________________
Name Name
_____________________________
_______________________________
Address Address
Social Security or other Taxpayer
Identification Number, if any
______________________________
<PAGE>
ELECTION TO SETTLE EARLY
The undersigned Holder of this Growth PRIDES Certificate
hereby irrevocably exercises the option to effect Early
Settlement in accordance with the terms of the Purchase Contract
Agreement with respect to the Purchase Contracts underlying the
number of Growth PRIDES evidenced by this Growth PRIDES
Certificate specified below. The undersigned Holder directs that
a certificate for shares of Common Stock deliverable upon such
Early Settlement be registered in the name of, and delivered,
together with a check in payment for any fractional share and any
Growth PRIDES Certificate representing any Growth PRIDES
evidenced hereby as to which Early Settlement of the related
Purchase Contracts is not effected, to the undersigned at the
address indicated below unless a different name and address have
been indicated below. Pledged Treasury Securities deliverable
upon such Early Settlement will be transferred in accordance with
the transfer instructions set forth below. If shares are to be
registered in the name of a Person other than the undersigned,
the undersigned will pay any transfer tax payable incident
thereto.
Dated: ______________ _________________________
Signature
Signature Guarantee: ___________________
Signatures must be guaranteed by an "eligible guarantor
institution" meeting the requirements of the Registrar, which
requirements include membership or participation in the Security
Transfer Agent Medallion Program ("STAMP") or such other
"signature guarantee program" as may be determined by the
Registrar in addition to, or in substitution for, STAMP, all in
accordance with the Securities Exchange Act of 1934, as amended.
<PAGE>
Number of Securities evidenced hereby as to which Early
Settlement of the related Purchase Contracts is being elected:
If shares of Common Stock REGISTERED HOLDER
of Growth PRIDES Certificates
are to be registered in the
name of and delivered to and
Pledged Treasury Securities
are to be transferred to a
Person other than the Holder,
please print such Person's
name and address:
Please print name and address
of Registered Holder:
_________________________ ____________________________
Name Name
_________________________ ____________________________
Address Address
Social Security or other Taxpayer
Identification Number, if any
_________________________________
Transfer Instructions for Pledged Treasury Securities
Transferable Upon Early Settlement or a Termination Event:
_________________________________________________________________
_________________________________________________________________
_________________________________________________________________
<PAGE>
[TO BE ATTACHED TO GLOBAL CERTIFICATES]
SCHEDULE OF INCREASES OR DECREASES IN GLOBAL CERTIFICATE
The following increases or decreases in this Global
Certificate have been made:
=================================================================
Principal
Amount of Signature
Amount of Amount of this Global of autho-
decrease in increase in Certificate rized
Principal Principal following officer of
Amount of Amount of such Trustee or
the Global the Global decrease or Securities
Date Certificate Certificate increase Custodian
_________________________________________________________________
_________________________________________________________________
_________________________________________________________________
_________________________________________________________________
_________________________________________________________________
_________________________________________________________________
_________________________________________________________________
=================================================================
<PAGE>
EXHIBIT C
NOTICE TO SETTLE BY SEPARATE CASH
Attention:
Re: Securities of Texas Utilities Company (the
"Company")
The undersigned Holder hereby irrevocably notifies you
in accordance with Section 5.4 of the Purchase Contract
Agreement, dated as of ______ ___, 1998 among the Company,
yourselves, as Purchase Contract Agent and as Attorney-in-Fact
for the Holders of the Purchase Contracts, that such Holder has
elected to pay to the Collateral Agent, on or prior to 11:00 a.m.
New York City time, on the Business Day immediately preceding the
[First] [Second] Purchase Contract Settlement Date, (in lawful
money of the United States by [certified or cashiers check or]
wire transfer, in immediately available funds), $_________ as the
Purchase Price for the shares of Common Stock issuable to such
Holder by the Company under the related Purchase Contract on the
[First] [Second] Purchase Contract Settlement Date. The
undersigned Holder hereby instructs you to notify promptly the
Collateral Agent of the undersigned Holders election to make such
cash settlement with respect to the Purchase Contracts related to
such Holder's [Income PRIDES] [Growth PRIDES].
Dated:____________ _______________________
Signature
Signature Guarantee: ___________________
Signatures must be guaranteed by an "eligible guarantor
institution" meeting the requirements of the Registrar, which
requirements include membership or participation in the Security
Transfer Agent Medallion Program ("STAMP") or such other
"signature guarantee program" as may be determined by the
Registrar in addition to, or in substitution for, STAMP, all in
accordance with the Securities Exchange Act of 1934, as amended.
Please print name and address of Registered Holder:
____________________________ _____________________________
Name Social Security or other
Taxpayer Identification Number
if any
Address
____________________________
____________________________
____________________________
=================================================================
TEXAS UTILITIES COMPANY,
THE CHASE MANHATTAN BANK
AS COLLATERAL AGENT, CUSTODIAL AGENT
AND SECURITIES INTERMEDIARY
AND
THE BANK OF NEW YORK
AS PURCHASE CONTRACT AGENT
--------------------
PLEDGE AGREEMENT
--------------------
DATED AS OF JULY 1, 1998
=================================================================
<PAGE>
TABLE OF CONTENTS
Page No.
--------
RECITALS . . . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 1. Definitions . . . . . . . . . . . . . . . . . 2
SECTION 2. Pledge; Control and Perfection . . . . . . . . 5
SECTION 2.1. The Pledge. . . . . . . . . . . . . . . . 5
SECTION 2.2. Control and Perfection. . . . . . . . . . 6
SECTION 3. Distributions on Pledged Collateral. . . . . . 8
SECTION 4. Substitution, Release, Repledge and
Settlement of Debt Securities . . . . . . . . 9
SECTION 4.1. Substitution for Debt Securities and the
Creation of Growth PRIDES. . . . . . . . 9
SECTION 4.2. Substitution of Treasury Securities and
the Creation of
Income PRIDES. . . . . . . . . . . . . . 10
SECTION 4.3. Termination Event . . . . . . . . . . . . 12
SECTION 4.4. Cash Settlement . . . . . . . . . . . . . 12
SECTION 4.5. Early Settlement . . . . . . . . . . . . . 14
SECTION 4.6. Application of Proceeds; Settlement . . . 14
SECTION 5. Voting Rights -- Debt Securities . . . . . . . 16
SECTION 6. Rights and Remedies; Tax Event Redemption . . 16
SECTION 6.1. Rights and Remedies of the Collateral
Agent . . . . . . . . . . . . . . . . . 16
SECTION 6.2. Tax Event Redemption . . . . . . . . . . . 18
SECTION 6.3. Substitutions . . . . . . . . . . . . . . 18
SECTION 7. Representations and Warranties; Covenants . . 18
SECTION 7.1. Representations and Warranties . . . . . . 18
SECTION 7.2. Covenants . . . . . . . . . . . . . . . . 19
SECTION 8. The Collateral Agent . . . . . . . . . . . . . 19
SECTION 8.1. Appointment, Powers and Immunities . . . . 19
SECTION 8.2. Instructions of the Company . . . . . . . 20
SECTION 8.3. Reliance by Collateral Agent . . . . . . . 20
SECTION 8.4. Rights in Other Capacities . . . . . . . . 21
SECTION 8.5. Non-Reliance on Collateral Agent . . . . . 21
SECTION 8.6. Compensation and Indemnity. . . . . . . . 21
SECTION 8.7. Failure to Act. . . . . . . . . . . . . . 22
SECTION 8.8. Resignation of Collateral Agent. . . . . . 22
SECTION 8.9. Right to Appoint Agent or Advisor . . . . 23
SECTION 8.10. Survival . . . . . . . . . . . . . . . . 23
SECTION 8.11. Exculpation . . . . . . . . . . . . . . . 23
SECTION 9. Amendment . . . . . . . . . . . . . . . . . . 23
SECTION 9.1. Amendment Without Consent of Holders . . . 23
SECTION 9.2. Amendment with Consent of Holders . . . . 24
SECTION 9.3. Execution of Amendments . . . . . . . . . 24
SECTION 9.4. Effect of Amendments . . . . . . . . . . . 25
SECTION 9.5. Reference to Amendments . . . . . . . . . 25
SECTION 10. Miscellaneous . . . . . . . . . . . . . . . . 25
SECTION 10.1. No Waiver . . . . . . . . . . . . . . . . 25
SECTION 10.2. Governing Law . . . . . . . . . . . . . . 25
SECTION 10.3. Notices . . . . . . . . . . . . . . . . . 26
SECTION 10.4. Successors and Assigns . . . . . . . . . 26
SECTION 10.5. Counterparts . . . . . . . . . . . . . . 26
SECTION 10.6. Severability . . . . . . . . . . . . . . 26
SECTION 10.7. Expenses, etc. . . . . . . . . . . . . . 26
SECTION 10.8. Security Interest Absolute . . . . . . . 27
EXHIBIT A: Instruction From Purchase Contract Agent to
Collateral Agent . . . . . . . . . . . . . A-1
EXHIBIT B: Instruction to Purchase Contract Agent . . . . . B-1
EXHIBIT C: Instruction to Custodial Agent Regarding
Remarketing . . . . . . . . . . . . . . . . C-1
EXHIBIT D: Instruction to Custodial Agent Regarding
Withdrawal From Remarketing . . . . . . . . D-1
<PAGE>
PLEDGE AGREEMENT
PLEDGE AGREEMENT, dated as of , 1998 (this
---------
"Agreement"), by and among Texas Utilities Company, a Texas
corporation (the "Company"), as pledgee, The Chase Manhattan
Bank, a New York banking corporation, not individually but solely
as collateral agent (in such capacity, together with its
successors in such capacity, the "Collateral Agent"), as
custodial agent (in such capacity, together with its successors
in such capacity, the "Custodial Agent") and as a "securities
intermediary" as defined in Section 8-102(a)(14) of the Code (as
defined herein) (in such capacity, together with its successors
in such capacity, the "Securities Intermediary"), and The Bank of
New York, a New York banking corporation, not individually but
solely as purchase contract agent and as attorney-in-fact of the
Holders (as defined in the Purchase Contract Agreement) from time
to time of the Securities (as hereinafter defined) (in such
capacity, together with its successors in such capacity, the
"Purchase Contract Agent") under the Purchase Contract Agreement
(as hereinafter defined).
RECITALS
The Company and the Purchase Contract Agent are parties
to the Purchase Contract Agreement, dated as of the date hereof
(as modified and supplemented and in effect from time to time,
the "Purchase Contract Agreement"), pursuant to which there may
be issued up to 14,950,000 new securities (the "Securities") of
the Company.
The Securities will initially consist of 13,000,000
units and include (A) 11,700,000 units (referred to as "Income
PRIDES") with a stated amount, per Income PRIDES, equal to $50
(the "Stated Amount") and (B) 1,300,000 units (referred to as
"Growth PRIDES") with a face amount, per Growth PRIDES, equal to
the Stated Amount. Each Income PRIDES will initially be comprised
of (a) a stock purchase contract (as modified and supplemented
and in effect from time to time, a "Purchase Contract") under
which (i) the Holder will purchase from the Company not later
than August 16, 2001 ("First Purchase Contract Settlement Date"),
for $25 in cash, a number of newly issued shares of common stock,
without par value, of the Company ("Common Stock") equal to the
applicable Settlement Rate (as defined in the Purchase Contract
Agreement), (ii) the Holder will purchase from the Company not
later than August 16, 2002 ("Second Purchase Contract Settlement
Date", and with the First Purchase Contract Settlement Date, each
a "Purchase Contract Settlement Date"), for $25 in cash, a number
of newly issued shares of Common Stock equal to the applicable
Settlement Rate and (iii) the Company will pay certain Contract
Adjustment Payments to the Holders as provided in the Purchase
Contract Agreement, and (b) either (A)(i) prior to the First
Purchase Contract Settlement Date, beneficial ownership of a
6.37% Series D Senior Note due 2003 of the Company ("Series D
Note"), having a principal amount of $25, and a 6.50% Series E
Senior Note due 2004 of the Company ("Series E Note", and
together with the Series D Note, the "Debt Securities"), having a
principal amount of $25, and (ii) from the First Purchase
Contract Settlement Date to the Second Purchase Contract
Settlement Date, beneficial ownership of a Series E Note, having
a principal amount of $25 or (B) upon the occurrence of a Tax
Event Redemption prior to the Second Purchase Contract Settlement
Date, the appropriate Applicable Ownership Interest in the
Treasury Portfolio (in each case, as defined herein). Each
Growth PRIDES will initially consist of a unit with a face amount
equal to the Stated Amount comprised of (a) a Purchase Contract
under which (i) the Holder will purchase from the Company not
later than the First Purchase Contract Settlement Date, for $25
in cash, a number of newly issued shares of Common Stock equal to
the applicable Settlement Rate, (ii) the Holder will purchase
from the Company not later than the Second Purchase Contract
Settlement Date, for $25 in cash, a number of newly issued shares
of Common Stock of the Company equal to the applicable Settlement
Rate and (iii) the Company will pay certain Contract Adjustment
Payments to the Holders as provided in the Purchase Contract
Agreement, and (b) (i) prior to the First Purchase Contract
Settlement Date, a 1/40 undivided beneficial ownership interest
in a % zero-coupon U.S. Treasury Security having a principal
--
amount at maturity equal to $1,000 and maturing on August 15,
2001 (CUSIP No. 912820 BB 2) ("3-Year Treasury Security") and a
1/40 undivided beneficial ownership interest in a % zero
----
coupon U.S. Treasury Security having a principal amount at
maturity equal to $1,000 and maturing on August 15, 2002 (CUSIP
No. 912820 BE 6) ("4-Year Treasury Security" and with the 3-Year
Treasury Security, each a "Treasury Security") and (ii) from the
First Purchase Contract Settlement Date to the Second Purchase
Contract Settlement Date, a 1/40 undivided beneficial interest in
a 4-Year Treasury Security.
Pursuant to the terms of the Purchase Contract
Agreement, the Company may issue up to 1,950,000 additional
Securities and, if the Company issues such additional Securities,
the related Debt Securities or Treasury Securities will be
pledged hereunder.
Pursuant to the terms of the Indenture (as defined
below), the Company will issue the Series D Notes and the
Series E Notes in equal aggregate principal amounts which
together will be equal to or greater than the aggregate Stated
Amount of all Income PRIDES.
Pursuant to the terms of the Purchase Contract
Agreement and the Purchase Contracts, the Holders, from time to
time, of the Securities have irrevocably authorized the Purchase
Contract Agent, as attorney-in-fact of such Holders, among other
things, to execute and deliver this Agreement on behalf of such
Holders and to grant the pledge provided hereby of the Debt
Securities, any Applicable Ownership Interest in the Treasury
Portfolio and any Treasury Securities to secure each Holder's
obligations under the related Purchase Contract, as provided
herein and subject to the terms hereof. Upon such pledge, the
Debt Securities will be beneficially owned by the Holders but
will be owned of record by the Purchase Contract Agent subject to
the Pledge hereunder, and the Treasury Securities (and the
applicable Ownership Interest in the Treasury Portfolio) will be
beneficially owned by the Holders but will be held in book-entry
form by the Securities Intermediary subject to the Pledge
hereunder.
Accordingly, the Company, the Collateral Agent, the
Securities Intermediary, the Custodial Agent and the Purchase
Contract Agent, on its own behalf and as attorney-in-fact of the
Holders from time to time of the Securities, agree as follows:
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) terms not otherwise defined herein are used herein
with the meaning ascribed to them in the Purchase Contract
Agreement.
"3-YEAR TREASURY SECURITY" has the meaning specified in
the Recitals.
"4-YEAR TREASURY SECURITY" has the meaning specified in
the Recitals.
"AGREEMENT" means this instrument as originally
executed or as it may from time to time be supplemented or
amended by one or more agreements supplemental hereto entered
into pursuant to the applicable provisions hereof.
"BANKRUPTCY CODE" means title 11 of the United States
Code, or any other law of the United States that from time to
time provides a uniform system of bankruptcy laws.
"BUSINESS DAY" means any day other than a Saturday, a
Sunday or any other day on which banking institutions in The City
of New York (in the State of New York) are permitted or required
by any applicable law to close.
"CASH" means any coin or currency of the United States
as at the time shall be legal tender for payment of public and
private debts.
"CODE" has the meaning specified in Section 6.1 hereof.
"COLLATERAL" has the meaning specified in Section 2.1
hereof.
"COLLATERAL ACCOUNT" means the securities account
(number ) maintained at The Chase Manhattan Bank in the name
-----
"The Bank of New York, as Purchase Contract Agent on behalf of
the holders of Securities subject to the security interest of The
Chase Manhattan Bank as Collateral Agent under the Pledge
Agreement, for the benefit of Texas Utilities Company, as
pledgee" and any successor account.
"COLLATERAL AGENT" has the meaning specified in the
first paragraph of this Agreement.
"COMMON STOCK" has the meaning specified in the
Recitals.
"COMPANY" means the Person named as the "Company" in
the first paragraph of this Agreement until a successor shall
have become such, and thereafter "Company" shall mean such
successor.
"CUSTODIAL AGENT" has the meaning specified in the
first paragraph of this Agreement.
"DEBT SECURITIES" has the meaning specified in the
Recitals.
"INDENTURE" means the Indenture, dated as of July 1,
1998 between the Company and the Trustee under which the Debt
Securities are to be issued.
"INTERMEDIARY" means any entity that in the ordinary
course of its business maintains securities accounts for others
and is acting in that capacity.
"OFFICER'S CERTIFICATE" means the instrument setting
forth the terms of the Debt Secrities pursuant to the Indenture.
"PERMITTED INVESTMENTS" means any one of the following
which shall mature not later than the next succeeding Business
Day (i) any evidence of indebtedness with an original maturity of
365 days or less issued, or directly and fully guaranteed or
insured, by the United States of America or any agency or
instrumentality thereof (provided that the full faith and credit
of the United States of America is pledged in support thereof or
such indebtedness constitutes a general obligation of it); (ii)
deposits, certificates of deposit or acceptances with an original
maturity of 365 days or less of any institution which is a member
of the Federal Reserve System having combined capital and surplus
and undivided profits of not less than U.S. $200 million at the
time of deposit; (iii) investments with an original maturity of
365 days or less of any Person that is fully and unconditionally
guaranteed by a bank referred to in clause (ii); (iv) investments
in commercial paper, other than commercial paper issued by the
Company or its affiliates, of any corporation incorporated under
the laws of the United States or any State thereof, which
commercial paper has a rating at the time of purchase at least
equal to "A-1" by Standard & Poor's Ratings Services ("S&P") or
at least equal to "P-1" by Moody's Investors Service, Inc.
("Moody's"); and (v) investments in money market funds registered
under the Investment Company Act of 1940, as amended, rated in
the highest applicable rating category by S&P or Moody's.
"PERSON" means any individual, corporation, limited
liability company, partnership, joint venture, association,
joint-stock company, trust, unincorporated organization or
government or any agency or political subdivision thereof.
"PLEDGE" has the meaning specified in Section 2.1
hereof.
"PLEDGED DEBT SECURITIES" has the meaning specified in
Section 2.1 hereof.
"PLEDGED TREASURY SECURITIES" has the meaning specified
in Section 2.1 hereof.
"PROCEEDS" means all interest, dividends, cash,
instruments, securities, financial assets (as defined in Section
8-102(a)(9) of the Code) and other property from time to time
received, receivable or otherwise distributed upon the sale,
exchange, collection or disposition of the Collateral or any
proceeds thereof.
"PURCHASE CONTRACT" has the meaning specified in the
Recitals.
"PURCHASE CONTRACT AGENT" has the meaning specified in
the first paragraph of this Agreement.
"PURCHASE CONTRACT AGREEMENT" has the meaning specified
in the Recitals.
"REMAINING STATED AMOUNT" means $25.
"SECURITIES" has the meaning specified in the Recitals.
"SECURITIES INTERMEDIARY" has the meaning specified in
the first paragraph of this Agreement.
"SECURITY ENTITLEMENT" has the meaning set forth in
Section 8-102(a)(17) of the Code.
"SEPARATE DEBT SECURITIES" means any Debt Securities
that are not Pledged Debt Securities.
"STATED AMOUNT" has the meaning specified in the
Recitals.
"TRADES" means the Treasury/Reserve Automated Debt
Entry System maintained by the Federal Reserve Bank of New York
pursuant to the TRADES Regulations.
"TRADES REGULATIONS" means the regulations of the
United States Department of the Treasury, published at 31 C.F.R.
Part 357, as amended from time to time. Unless otherwise defined
herein, all terms defined in the TRADES Regulations are used
herein as therein defined.
"TRANSFER" means, with respect to the Collateral and in
accordance with the instructions of the Collateral Agent, the
Purchase Contract Agent or the Holder, as applicable:
(i) except as otherwise provided in Section 2.1
hereof, in the case of Collateral consisting of
securities which cannot be delivered by book-entry or
which the parties agree are to be delivered in physical
form, delivery in appropriate physical form to the
recipient accompanied by any duly executed instruments
of transfer, assignments in blank, transfer tax stamps
and any other documents necessary to constitute a
legally valid transfer to the recipient;
(ii) in the case of Collateral consisting of
securities maintained in book-entry form by causing a
"securities intermediary" (as defined in Section
8-102(a)(14) of the Code) to (i) credit a "security
entitlement" (as defined in Section 8-102(a)(17) of the
Code) with respect to such securities to a "securities
account" (as defined in Section 8-501(a) of the Code)
maintained by or on behalf of the recipient and (ii) to
issue a confirmation to the recipient with respect to
such credit. In the case of Collateral to be delivered
to the Collateral Agent, the securities intermediary
shall be the Securities Intermediary and the securities
account shall be the Collateral Account.
"TREASURY SECURITY" has the meaning specified in the
Recitals.
"TRUSTEE" means The Bank of New York, as trustee under
the Indenture until a successor is appointed thereunder, and
thereafter means such successor trustee.
"VALUE" with respect to any item of Collateral on any
date means, as to (i) Debt Securities of either series, the
aggregate principal amount thereof, (ii) Cash, the face amount
thereof and (iii) Treasury Securities, the aggregate principal
amount thereof at maturity.
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, and the
Purchase Contract Agent, as such attorney-in-fact, hereby pledge
and grant to the Collateral Agent, for the benefit of the
Company, as collateral security for the performance when due by
such Holders of their respective obligations under the related
Purchase Contracts, a security interest in (i) all of the right,
title and interest of such Holders and the Purchase Contract
Agent (a) in the Debt Securities and Treasury Securities
constituting a part of the Securities and any Treasury Securities
delivered in exchange for any Debt Securities, and any Debt
Securities delivered in exchange for any Treasury Securities, in
accordance with Section 4 hereof, in each case that have been
Transferred to or received by the Collateral Agent and not
released by the Collateral Agent to such Holders under the
provisions of this Agreement; (b) in payments made by Holders
pursuant to Section 4.4; (c) in the Collateral Account and all
securities, financial assets, Cash and other property credited
thereto and all Security Entitlements related thereto; (d) in the
Treasury Portfolio purchased on behalf of the Holders of Income
PRIDES by the Collateral Agent upon the occurrence of a Tax Event
Redemption as provided in Section 6.2 and (e) all Proceeds of the
foregoing (all of the foregoing, collectively, the "Collateral").
Prior to or concurrently with the execution and delivery of this
Agreement, the Purchase Contract Agent, on behalf of the initial
Holders of the Securities, shall cause the Debt Securities
comprising a part of the Income PRIDES, and the Treasury
Securities comprising a part of the Growth PRIDES, to be
Transferred to the Collateral Agent for the benefit of the
Company. Such Debt Securities shall be Transferred by physically
delivering such Debt Securities to the Collateral Agent endorsed
in blank and crediting such Debt Securities to the Collateral
Account. Treasury Securities and the 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 or
the Uniform Commercial Code as adopted and in effect in any
applicable jurisdiction, the Collateral Agent shall be the agent
of the Company as provided herein. The pledge provided in this
Section 2.1 is herein referred to as the "Pledge" and the Debt
Securities, Treasury Securities or Treasury Portfolio subject to
the Pledge, excluding any Debt Securities or Treasury Securities
or interest in the Treasury Portfolio released from the Pledge as
provided in Section 4 hereof, are hereinafter referred to as
"Pledged Debt Securities", the "Pledged Treasury Securities," or
Pledged Applicable Ownership Interest in Treasury Portfolio
respectively and collectively, the "Pledged Securities." Subject
to the Pledge and the provisions of Section 2.2 hereof, the
Holders from time to time shall have full beneficial ownership of
the Collateral. The Collateral Agent shall have the right to
have the Debt Securities or any other Securities held in physical
form reregistered in its name or in the name of its agent or the
Securities Intermediary.
Except as may be required in order to release Debt
Securities (or if a Tax Event Redemption has occurred, the
Applicable Ownership Interest in Treasury Portfolio) or Treasury
Securities in connection with a Holder's election to convert its
investment from Income PRIDES to Growth PRIDES, or from Growth
PRIDES to Income PRIDES, as the case may be, or except as
otherwise required to release Pledged Securities as specified
herein, neither the Collateral Agent nor the Securities
Intermediary shall relinquish physical possession of any
certificate evidencing Debt Securities (or if a Tax Event
Redemption has occurred, the Applicable Ownership Interest in
Treasury Portfolio) or Treasury Securities prior to the
termination of this Agreement. If it becomes necessary for the
Collateral Agent to relinquish physical possession of a
certificate in order to release a portion of the Debt Securities
evidenced thereby from the Pledge, the Collateral Agent shall use
its best efforts to obtain physical possession of a replacement
certificate evidencing any Debt Securities remaining subject to
the Pledge hereunder registered to it or endorsed in blank within
[five] days of the date it relinquished possession. The
Collateral Agent shall promptly notify the Company of its failure
to obtain possession of any such replacement certificate as
required hereby.
SECTION 2.2. CONTROL AND PERFECTION.
(a) In connection with the Pledge granted in Section
2.1, and subject to the other provisions of this Agreement,
the Holders from time to time acting through the Purchase
Contract Agent, as their attorney-in-fact, hereby authorize
and direct the Securities Intermediary (without the
necessity of obtaining the further consent of the Purchase
Contract Agent or any of the Holders), and the Securities
Intermediary agrees, to comply with and follow any
instructions and entitlement orders (as defined in Section
8-102(a)(8) of the Code) that the Collateral Agent on behalf
of the Company may give in writing with respect to the
Collateral Account, the Collateral credited thereto and any
security entitlements with respect to any thereof. Such
instructions and entitlement orders may, without limitation,
direct the Securities Intermediary to transfer, redeem,
sell, liquidate, assign, deliver or otherwise dispose of the
Treasury Securities, the Treasury Portfolio, and any
Security Entitlements with respect thereto and to pay and
deliver any income, proceeds or other funds derived
therefrom to the Company. The Purchase Contract Agent and
the Holders from time to time acting through the Purchase
Contract Agent each hereby further authorize and direct the
Collateral Agent, as Agent of the Company, to itself issue
instructions and entitlement orders, and to otherwise take
action, with respect to the Collateral Account, the
Collateral credited thereto and any security entitlements
with respect thereto, pursuant to the terms and provisions
hereof, all without the necessity of obtaining the further
consent of the Purchase Contract Agent or any of the
Holders. The Collateral Agent shall be the Agent of the
Company and shall act as directed in writing by the Company.
Without limiting the generality of the foregoing, the
Collateral Agent shall issue entitlement orders to the
Securities Intermediary when and as directed by the Company.
(b) The Securities Intermediary hereby confirms and
agrees that: (i) all securities or other property underlying
any financial assets credited to the Collateral Account
shall be registered in the name of the Securities
Intermediary, indorsed to the Securities Intermediary or in
blank or credited to another Collateral Account maintained
in the name of the Securities Intermediary and in no case
will any financial asset credited to the Collateral Account
be registered in the name of the Purchase Contract Agent,
the Company or any Holder, payable to the order of, or
specially indorsed to, the Purchase Contract Agent, the
Collateral Agent, the Company or any Holder except to the
extent the foregoing have been specially indorsed to the
Securities Intermediary or in blank; (ii) all property
delivered to the Securities Intermediary pursuant to this
Pledge Agreement (including, without limitation, any Debt
Securities, the Treasury Portfolio or Treasury Securities)
will be promptly credited to the Collateral Account; (iii)
the Collateral Account is an account to which financial
assets are or may be credited, and the Securities
Intermediary shall, subject to the terms of this Agreement,
treat the Purchase Contract Agent as entitled to exercise
the rights of any financial asset credited to the Collateral
Account; (iv) the Securities Intermediary has not entered
into, and until the termination of the this Agreement will
not enter into, any agreement with any other Person relating
to the Collateral Account and/or any financial assets
credited thereto pursuant to which it has agreed to comply
with entitlement orders (as defined in Section 8-102(a)(8)
of the Code) of such other Person; and (v) the Securities
Intermediary has not entered into, and until the termination
of this Agreement will not enter into, any agreement with
the Company, the Collateral Agent or the Purchase Contract
Agent purporting to limit or condition the obligation of the
Securities Intermediary to comply with entitlement orders as
set forth in this Section 2.2 hereof.
(c) The Securities Intermediary hereby agrees that
each item of property (whether investment property,
financial asset, security, instrument or cash) credited to
the Collateral Account shall be treated as a "financial
asset" within the meaning of Section 8-102(a)(9) of the
Code.
(d) In the event of any conflict between this
Agreement (or any portion thereof) and any other agreement
now existing or hereafter entered into, the terms of this
Agreement shall prevail.
(e) The Purchase Contract Agent hereby irrevocably
constitutes and appoints the Collateral Agent and the
Company, with full power of substitution, as the Purchase
Contract Agent's attorney-in-fact to take on behalf of, and
in the name, place and stead of the Purchase Contract Agent
and the Holders, any action necessary or desirable to
perfect and to keep perfected the security interest in the
Collateral referred to in Section 2.1. The grant of such
power-of-attorney shall not be deemed to require of the
Collateral Agent any specific duties or obligations not
otherwise assumed by the Collateral Agent hereunder.
SECTION 3. DISTRIBUTIONS ON PLEDGED COLLATERAL.
So long as the Purchase Contract Agent is the
registered owner of the Pledged Debt Securities, it shall receive
all payments thereon. If the Pledged Debt Securities are
reregistered, such that the Collateral Agent becomes the
registered holder, all payments of principal or interest on, any
Pledged Securities received by the Collateral Agent that are
properly payable hereunder shall be paid by the Collateral Agent
by wire transfer in same day funds:
(i) In the case of (A) payment of interest with
respect to the Pledged Debt Securities or cash
distributions on the appropriate Applicable Ownership
Interest (as specified in clause (A)(ii) or (B)(ii) of
the definition of such term) in the Treasury Portfolio,
as the case may be, and (B) any payments of principal
with respect to any Debt Securities or the appropriate
Applicable Ownership Interest (as specified in clause
(A)(i) or (B)(i) of the definition of such term) in the
Treasury Portfolio as the case may be, that have been
released from the Pledge pursuant to 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 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 principal
of any Pledged Debt Securities or on the appropriate
Applicable Ownership Interest (as specified in clause
(A)(i) or (B)(i) of the definition of such term) in the
Treasury Portfolio, as the case may be, or the
principal of any Pledged Treasury Securities, to the
Company on the applicable Purchase Contract Settlement
Date in accordance with the procedure set forth in
Section 4.6(a) or 4.6(b) hereof, in full satisfaction
of the respective obligations of the Holders under the
applicable portion of the related Purchase Contracts.
All payments received by the Purchase Contract Agent as provided
herein shall be applied by the Purchase Contract Agent pursuant
to the provisions of the Purchase Contract Agreement. If,
notwithstanding the foregoing, the Purchase Contract Agent shall
receive any payments of principal on account of any Debt Security
or, if applicable, the appropriate Applicable Ownership Interest
(as specified in clause (A)(i) or (B)(i) of the definition of
such term) that, at the time of such payment, is a Pledged Debt
Security or the appropriate Applicable Ownership Interest in 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 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 principal so
received.
SECTION 4. SUBSTITUTION, RELEASE, REPLEDGE AND SETTLEMENT OF
DEBT SECURITIES.
SECTION 4.1. SUBSTITUTION FOR DEBT SECURITIES AND THE
CREATION OF GROWTH PRIDES.
A Holder of an Income PRIDES may, at any time on or
prior to the fifth Business Day immediately preceding the Second
Purchase Contract Settlement Date, create a Growth PRIDES by
substituting 3-Year Treasury Securities and 4-Year Treasury
Securities for the Series D Notes and the Series E Notes, or for
the appropriate Applicable Ownership Interest in the Treasury
Portfolio, as the case may be, that form a part of such Income
PRIDES (a "Collateral Substitution") in accordance with this
Section 4.1 and Section 3.13 of the Purchase Contract Agreement;
provided, however, that such Collateral Substitutions may not be
made during the period from the fifth Business Day immediately
preceding the First Purchase Contract Settlement Date through the
First Purchase Contract Settlement Date, except that if a Tax
Event Redemption has occurred and the Treasury Portfolio has
become a component of the Income PRIDES, Holders of such Income
PRIDES may make collateral substitutions at any time on or prior
to the second Business Day immediately preceding the Second
Purchase Contract Settlement Date (but not during the period from
the second Business Day immediately preceding the First Purchase
Contract Settlement Date through the First Purchase Contract
Settlement Date). Holders may make Collateral Substitutions (i)
only in integral multiples of 40 Income PRIDES if Debt Securities
are being substituted by Treasury Securities, or (ii) only in
integral multiples of 1,600,000 Income PRIDES if the appropriate
Applicable Ownership Interests in the Treasury Portfolio are
being substituted by Treasury Securities. To create 40 Growth
PRIDES (if a Tax Event Redemption has not occurred), or 1,600,000
Growth PRIDES (if a Tax Event Redemption has occurred), the
Income PRIDES Holder shall
(a) if a Tax Event Redemption has not occurred, (i)
prior to the fifth Business Day preceding the First Purchase
Contract Settlement Date, deposit with the Collateral Agent
a 3-Year Treasury Security having a principal amount at
maturity of $1,000 and a 4-Year Treasury Security having a
principal amount at maturity of $1,000, or (ii) after the
First Purchase Contract Settlement Date and prior to the
fifth Business Day preceding the Second Purchase Contract
Settlement Date, deposit with the Collateral Agent a 4-Year
Treasury Security having a principal amount at maturity of
$1,000, or
(b) if a Tax Event Redemption has occurred, (i) prior
to the second Business Day immediately preceding the First
Purchase Contract Settlement Date, deposit with the
Collateral Agent 3-Year Treasury Securities having an
aggregate principal amount at maturity of $40,000,000 and 4-
Year Treasury Securities having an aggregate principal
amount at maturity of $40,000,000, or (ii) after the First
Purchase Contract Settlement Date and prior to the second
Business Day immediately preceding the Second Purchase
Contract Settlement Date, 4-year Treasury Securities having
an aggregate principal amount at maturity of $40,000,000,
and
(c) in either case, (i) deliver to the Purchase
Contract Agent cash in an amount equal to the excess of the
Contract Adjustment Payments that would have accrued on the
Growth PRIDES being created by the Holder since the last
Payment Date through the date of Collateral, Substitution,
over the Contract Adjustment Payments that have accrued over
the same time period on the Income PRIDES being surrendered
in connection with such Collateral Substitution, which
amount the Purchase Contract Agent shall promptly remit to
the Company, and (ii) surrender and transfer 40 Income
PRIDES, or in the event a Tax Event Redemption has occurred,
1,600,000 Income PRIDES to the Purchase Contract Agent
accompanied by a notice to the Purchase Contract Agent,
substantially in the form of Exhibit B hereto, stating that
the Holder has transferred the relevant types and amounts of
Treasury Securities to the Collateral Agent and requesting
that the Purchase Contract Agent instruct the Collateral
Agent to release the applicable Debt Securities or the
appropriate Applicable Ownership Interest in the Treasury
Portfolio, as the case may be, underlying such Income
PRIDES, whereupon the Purchase Contract Agent shall promptly
give such instruction to the Collateral Agent, substantially
in the form of Exhibit A hereto.
Upon receipt of Treasury Securities described in (a) or
(b) above, as appropriate from a Holder of Income PRIDES and the
related instruction from the Purchase Contract Agent described in
(c) above, the Collateral Agent shall release the Pledged Debt
Securities or the appropriate Applicable Ownership Interest in
the Treasury Portfolio, as the case may be, and shall promptly
Transfer such Pledged Debt Securities or the appropriate
Applicable Ownership Interest in the Treasury Portfolio, as the
case may be, free and clear of the lien, pledge or security
interest created hereby, to the Purchase Contract Agent.
SECTION 4.2. SUBSTITUTION FOR TREASURY SECURITIES AND THE
CREATION OF INCOME PRIDES.
A Holder of a Growth PRIDES may, at any time on or
prior to the fifth Business Day immediately preceding the Second
Purchase Contract Settlement Date, create Income PRIDES by (a)
depositing with the Collateral Agent Debt Securities or the
appropriate Applicable Ownership Interest in the Treasury
Portfolio, as the case may be, having an aggregate principal
amount equal to the aggregate principal amount of the Treasury
Securities comprising part of the Growth PRIDES in accordance
with this Section 4.2 and Section 3.14 of the Purchase Contract
Agreement; provided, however, that such Collateral Substitutions
may not be made during the period from the fifth Business Day
immediately preceding the First Purchase Contract Settlement Date
through the First Purchase Contract Settlement Date, except that
if a Tax Event Redemption has occurred and the Treasury Portfolio
has become a component of the Income PRIDES, Holders of Growth
PRIDES may make Collateral Substitutions at any time on or prior
to the second Business Day immediately preceding the Second
Purchase Contract Settlement Date (but not during the period from
the second Business Day immediately preceding the First Purchase
Contract Settlement Date through the First Purchase Contract
Settlement Date). Holders of Growth PRIDES may establish Income
PRIDES only (i) in integral multiples of 40 Growth PRIDES for 40
Income PRIDES if a Tax Event Redemption has not occurred, or (ii)
in integral multiples of 1,600,000 Growth PRIDES for 1,600,000
Income PRIDES if a Tax Event Redemption has occurred. To create
40 Income PRIDES (if a Tax Event Redemption has not occurred), or
1,600,000 Income PRIDES (if a Tax Event Redemption has occurred),
the Growth PRIDES Holder shall
(a) if a Tax Event Redemption has not occurred, (i)
prior to the fifth Business Day preceding the First Purchase
Contract Settlement Date, deposit with the Collateral Agent
$1,000 in aggregate principal amount of Series D Notes and
$1,000 in aggregate principal amount of Series E Notes, or
(ii) after the First Purchase Contract Settlement Date,
deposit with the Collateral Agent $1,000 in aggregate
principal amount of Series E Notes, or
(b) if a Tax Event Redemption has occurred, deposit
with the Collateral Agent the Applicable Ownership Interest
in Treasury Portfolio for each Income PRIDES being created
by the Holder, and having an aggregate principal amount of
$80,000,000, or if after the First Purchase Contract
Settlement Date, $40,000,000, and
(c) in either case, transfer and surrender the 40
related Growth PRIDES, or in the event a Tax Event
Redemption has occurred, the 1,600,000 related Growth PRIDES
to the Purchase Contract Agent accompanied by a notice to
the Purchase Contract Agent, substantially in the form of
Exhibit B hereto, stating that the Holder has transferred
the relevant amount of Debt Securities or the appropriate
Applicable Ownership Interest in the Treasury Portfolio, as
the case may be, to the Collateral Agent and requesting that
the Purchase Contract Agent instruct the Collateral Agent to
release the Treasury Securities underlying such Growth
PRIDES, whereupon the Purchase Contract Agent shall promptly
give such instruction to the Collateral Agent, substantially
in the form of Exhibit A hereto.
Upon receipt of Debt Securities or the appropriate
Applicable Ownership Interest in the Treasury Portfolio, as the
case may be, described in (a) or (b) above, as appropriate from a
Holder of Growth PRIDES and the related instruction described in
(c) above from the Purchase Contract Agent, the Collateral Agent
shall release the related Pledged Treasury Securities and shall
promptly Transfer such Pledged Treasury Securities, free and
clear of the lien, pledge or security interest created hereby, to
the Purchase Contract Agent.
SECTION 4.3. TERMINATION EVENT.
Upon receipt by the Collateral Agent of written notice
from the Company or the Purchase Contract Agent that there has
occurred a Termination Event, the Collateral Agent shall release
all Collateral from the Pledge and shall promptly Transfer any
Pledged Debt Securities (or the Applicable Ownership Interest in
the Treasury Portfolio if a Tax Event Redemption has occurred)
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 Debt Securities, the
Treasury Portfolio or the Pledged Treasury Securities, as the
case may be, as provided by this Section 4.3, the Purchase
Contract Agent shall, upon receipt from the Holders of reasonable
security or indemnity against the costs, expenses and liabilities
which might be incurred by it in compliance with this paragraph,
(i) use its reasonable best efforts to obtain an opinion of a
nationally recognized law firm reasonably acceptable to the
Collateral Agent to the effect that, as a result of the Company's
being the debtor in such a bankruptcy case, the Collateral Agent
will not be prohibited from releasing or Transferring the
Collateral as provided in this Section 4.3, and shall deliver
such opinion to the Collateral Agent within ten days after the
occurrence of such Termination Event, and if (y) the Purchase
Contract Agent shall be unable to obtain such opinion within ten
days after the occurrence of such Termination Event or (z) the
Collateral Agent shall continue, after delivery of such opinion,
to refuse to effectuate the release and Transfer of all Pledged
Debt Securities, the Treasury Portfolio or 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 Debt Securities, the Treasury Portfolio or the Pledged
Treasury Securities, as the case may be, as provided by this
Section 4.3 or (ii) commence an action or proceeding in the court
with jurisdiction of the Company's case under the Bankruptcy Code
like that described in subsection (i)(z) hereof within ten days
after the occurrence of such Termination Event.
SECTION 4.4. CASH SETTLEMENT.
(a) Upon receipt by the Collateral Agent of (i) a
notice from the Purchase Contract Agent promptly after the
receipt by the Purchase Contract Agent of such notice that a
Holder of 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 of the amount required to settle
the applicable portion of such Purchase Contract on or prior
to 11:00 a.m., New York City time, on the Business Day
immediately preceding a Purchase Contract Settlement Date in
lawful money of the United States by certified or cashiers'
check or wire transfer in immediately available funds
payable to or upon the order of the Company, then the
Collateral Agent shall promptly invest any Cash received
from a Holder in connection with a Cash Settlement in
Permitted Investments. Upon receipt of the proceeds upon the
maturity of the Permitted Investments on such Purchase
Contract Settlement Date, the Collateral Agent shall pay the
portion of such proceeds and deliver any certified or
cashiers' checks received, in an aggregate amount equal to
the Purchase Price, to the Company on such Purchase Contract
Settlement Date, and shall distribute any funds in respect
of the interest earned from the Permitted Investments to the
Purchase Contract Agent for payment to the relevant Holder.
(b) If in connection with a Purchase Contract
Settlement Date a Holder of an Income PRIDES (unless a Tax
Event Redemption has occurred) fails to notify the Purchase
Contract Agent of its intention to make a Cash Settlement in
accordance with Section 5.4(a)(i) of the Purchase Contract
Agreement, such failure shall constitute a default under the
related Purchase Contract and hereunder, the Holder shall be
deemed to have consented to the disposition of the Pledged
Debt Securities pursuant to the remarketing as described in
Section 5.4(b) of the Purchase Contract Agreement and
Section 4.4 hereof, which is incorporated herein by
reference, and the Collateral Agent, for the benefit of the
Company, will exercise its rights as a secured party with
respect to applicable Pledged Debt Securities (which shall
be the Series D Notes in connection with the First Purchase
Contract Settlement Date and the Series E Notes in
connection with the Second Purchase Contract Settlement
Date) at the direction of the Company to cause the
remarketing of such Pledged Debt Securities. If a Holder of
an Income PRIDES (unless of Tax Event Redemption has
occurred) does notify the Purchase Contract Agent as
provided in Section 5.4(a)(i) of the Purchase Contract
Agreement of its intention to make a Cash Settlement, but
fails to make such payment as required by Section 5.4(a)(ii)
of the Purchase Contract Agreement, such failure shall
constitute a default under the related Purchase Contract and
hereunder, and the applicable Pledged Debt Securities of
such a Holder will not be remarketed but instead the
Collateral Agent, for the benefit of the Company, will
exercise its rights as a secured party with respect to such
Debt Securities at the direction of the Company to retain or
dispose of the Collateral in accordance with applicable law.
In addition, in the event of a Failed Remarketing as
described in Section 5.4(b) of the Purchase Contract
Agreement, such Failed Remarketing shall constitute a
default hereunder by such Holder, and the Collateral Agent,
for the benefit of the Company, will also exercise its
rights as a secured party with respect to such Debt
Securities at the direction of the Company to retain or
dispose of the Collateral in accordance with applicable law.
(c) If in connection with a Purchase Contract
Settlement Date a Holder of a Growth PRIDES or, if a Tax
Event Redemption has occurred, an Income PRIDES, fails to
notify the Purchase Contract Agent of such Holder's
intention to make a Cash Settlement in accordance with
Section 5.4(d)(i) of the Purchase Contract Agreement, or if
a Holder of a Growth PRIDES or, if a Tax Event Redemption
has occurred, an Income PRIDES, notifies the Purchase
Contract Agent as provided in paragraph 5.4(d)(i) of the
Purchase Contract Agreement of its intention to make a Cash
Settlement, but fails to make such payment as required by
paragraph 5.4(d)(ii) of the Purchase Contract Agreement,
such failure shall constitute a default under the related
Purchase Contract and hereunder by such Holder and upon the
maturity of the related Pledged Treasury Securities or the
Treasury Portfolio, if any, held by the Collateral Agent on
the Business Day immediately preceding the Purchase Contract
Settlement Date, the principal amount of such Pledged
Treasury Securities or the portion of the Treasury Portfolio
corresponding to such Purchase Contract received by the
Collateral Agent shall, upon written direction of the
Company, be invested promptly in Permitted Investments. On
the applicable Purchase Contract Settlement Date, an amount
equal to the Purchase Price will be remitted to the Company
as payment thereof. In the event the sum of the proceeds
from the appropriate related Pledged Treasury Securities or
Applicable Ownership Interest in the Treasury Portfolio
(which shall be, in connection with the First Purchase
Contract Settlement Date, the 3-Year Treasury Securities or
the portion of the Applicable Ownership Interest in Treasury
Portfolio (as specified in clause (A) of the definition
thereof), and in the case of the Second Purchase Contract
Settlement Date, the 4-Year Treasury Securities or the
Applicable Ownership Interest in Treasury Portfolio
(specified in clause (B) of such definition), as the case
may be, and the investment earnings earned from such
investments is in excess of the aggregate Purchase Price of
the Purchase Contracts being settled thereby, the Collateral
Agent will distribute such excess to the Purchase Contract
Agent for the benefit of the Holder of the related Growth
PRIDES or Income PRIDES when received.
(d) A default by a Holder in the performance of its
obligations under a Purchase Contract in connection with the
First Purchase Contract Settlement shall not in itself
constitute a default in the performance of its obligations
under such Purchase Contract on the Second Purchase Contract
Settlement Date (except in connection with Early
Settlement).
Series D Notes, 3-Year Treasury Securities and the
Applicable Ownership Interest in the Treasury Portfolio in
U.S. Treasury Securities maturing on or prior to August 15,
2001 are pledged to secure Holder's obligations under the
Purchase Contracts on the First Purchase Contract Settlement
Date. Series E Notes, 4-Year Treasury Securities and the
Applicable Ownership Interest in the Treasury Portfolio in
U.S. Treasury Securities maturing on or prior to August 15,
2002 are pledged to secure such Holders obligations under
the Purchase Contracts on the Second Purchase Contract
Settlement Date.
On the First Purchase Contract Settlement Date, the
Collateral Agent shall exercise remedies with respect to
(and have remarketed or otherwise sell in accordance with
this Agreement) only the Series D Notes, 3-Year Treasury
Securities (or the corresponding Applicable Ownership
Interest in the Treasury Portfolio) and associated payments
and Proceeds; on the Second Purchase Contract Settlement
Date the Collateral Agent may exercise remedies with respect
to all then remaining collateral.
SECTION 4.5. EARLY SETTLEMENT.
Upon written notice to the Collateral Agent by the
Purchase Contract Agent that a Holder of a Security has elected
to effect Early Settlement of its entire obligation under the
Purchase Contract forming a part of such Security in accordance
with the terms of the Purchase Contracts and the Purchase
Contract Agreement, and that the Purchase Contract Agent has
received from such Holder, and paid to the Company as confirmed
in writing by the Company, the related Early Settlement Amount
pursuant to the terms of the Purchase Contract and the Purchase
Contract Agreement and that all conditions to such Early
Settlement have been satisfied, then the Collateral Agent shall
release from the Pledge, (a) the Pledged Debt Securities or the
appropriate Applicable Ownership Interest in the Treasury
Portfolio in the case of a Holder of Income PRIDES or (b) the
Pledged Treasury Securities in the case of a Holder of Growth
PRIDES, that had been components of such Security and shall
Transfer such Pledged Debt Securities or Applicable Ownership
Interest in the Treasury Portfolio or Pledged Treasury
Securities, as the case may be, free and clear of the Pledge
created hereby, to the Purchase Contract Agent for the benefit of
such Holder.
SECTION 4.6. APPLICATION OF PROCEEDS; SETTLEMENT.
(a) In connection with a Purchase Contract Settlement
Date, in the event a Holder of Income PRIDES (if a Tax Event
Redemption has not occurred) 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 Debt Securities. The Collateral Agent shall, by
10:00 a.m., New York City time, on the fourth Business Day
immediately preceding such Purchase Contract Settlement
Date, without any instruction from such Holder of Income
PRIDES, present the applicable related Pledged Debt
Securities (i.e., Series D Notes in the case of the First
Purchase Contract Settlement Date and Series E Notes in case
of the Second Purchase Contract Settlement Date) to the
Remarketing Agent for remarketing. Upon receiving such
Pledged Debt Securities, the Remarketing Agent, pursuant to
the terms of the Remarketing Agreement, will use its
reasonable efforts to remarket such Pledged Debt Securities
on such date at a price not less than approximately 100.5%
of the aggregate Value of such Pledged Debt Securities, plus
accrued and unpaid interest, if any, thereon. After
deducting as the Remarketing Fee an amount not exceeding 25
basis points (.25%) of the aggregate Value of the related
Pledged Debt Securities from any amount of such Proceeds in
excess of the aggregate Value of the Debt Securities of such
series, plus such accrued and unpaid interest on the
remarketed Pledged Debt Securities, the Remarketing Agent
will remit the entire amount of the Proceeds of such
remarketing to the Collateral Agent. On the applicable
Purchase Contract Settlement Date, the Collateral Agent
shall apply that portion of the Proceeds from such
remarketing equal to the aggregate Value, plus such accrued
and unpaid interest of such Pledged Debt Securities, to
satisfy in full the obligations of such Holders of Income
PRIDES to pay the Purchase Price on such Purchase Contract
Settlement Date to purchase the Common Stock under the
related Purchase Contracts. The remaining portion of such
Proceeds, if any, shall be distributed by the Collateral
Agent to the Purchase Contract Agent for payment to the
Holders. If the Remarketing Agent advises the Collateral
Agent in writing that it cannot remarket the related Pledged
Debt Securities of such Holders of Income PRIDES at a price
not less than 100% of the aggregate Value of such Pledged
Debt Securities plus any accrued and unpaid interest, or if
the remarketing does not occur because a condition precedent
to it has not been fulfilled, thus resulting in a Failed
Remarketing, the Collateral Agent, for the benefit of the
Company will, at the written direction of the Company,
retain or dispose of such Pledged Debt Securities in
accordance with applicable law and satisfy in full, from any
such disposition or retention, such Holder's obligation to
pay the Purchase Price for the Common Stock.
(b) In the event a Holder of Growth PRIDES or, if a
Tax Event Redemption has occurred, Income PRIDES, has not
made an Early Settlement of the Purchase Contract(s)
underlying its Growth PRIDES or Income PRIDES, as the case
may be, such Holder shall be deemed to have elected to pay
for the shares of Common Stock to be issued under the
applicable portions of such Purchase Contract(s) from the
Proceeds of the related Pledged Treasury Securities or the
Treasury Portfolio, as the case may be. On the Business Day
immediately prior to a Purchase Contract Settlement Date,
the Collateral Agent shall, at the written direction of the
Purchase Contract Agent, invest the Cash proceeds of the
maturing Pledged Treasury Securities or the Treasury
Portfolio, as the case may be, in overnight Permitted
Investments. 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 related
settlement of such Purchase Contracts on the applicable
Purchase Contract Settlement Date. In the event the sum of
the Proceeds from the related Pledged Treasury Securities or
related Applicable Ownership Interest in the Treasury
Portfolio and the investment earnings from the investment in
overnight Permitted Investments is in excess of the
aggregate Purchase Price of the applicable portions of the
Purchase Contracts being settled thereby on a Purchase
Contract Settlement Date, the Collateral Agent shall
distribute such excess, when received, to the Purchase
Contract Agent for the benefit of the Holders.
(c) Pursuant to the Remarketing Agreement, on or prior
to the fifth Business Day immediately preceding a Purchase
Contract Settlement Date, but no earlier than the Payment
Date immediately preceding such Purchase Contract Settlement
Date, holders of Separate Debt Securities may elect to have
their Separate Debt Securities of the appropriate series (in
the case of the First Purchase Contract Settlement Date, the
Series D Notes, and in the case of the Second Purchase
Contract Settlement Date, the Series E Notes), remarketed by
delivering such Separate Debt Securities, together with a
notice of such election, substantially in the form of
Exhibit C hereto, to the Custodial Agent. The Custodial
Agent will hold such Separate Debt Securities in an account
separate from the Collateral Account. A holder of Separate
Debt Securities electing to have its Separate Debt
Securities remarketed will also have the right to withdraw
such election by written notice to the Custodial Agent,
substantially in the form of Exhibit D hereto, on or prior
to the fifth Business Day immediately preceding the
applicable Purchase Contract Settlement Date, upon which
notice the Custodial Agent will return such Separate Debt
Securities to such holder. On the fourth Business Day
immediately preceding the applicable Purchase Contract
Settlement Date, the Custodial Agent will deliver to the
Remarketing Agent for remarketing all Separate Debt
Securities of the applicable series delivered to the
Custodial Agent pursuant to this Section 4.6(c) and not
withdrawn pursuant to the terms hereof prior to such date.
The portion of the proceeds from such remarketing equal to
the aggregate Value of such Separate Debt Securities will
automatically be remitted by the Remarketing Agent to the
Custodial Agent for the benefit of the holders of such
Separate Debt Securities. In addition, after deducting as
the Remarketing Fee an amount not exceeding 25 basis points
(.25%) of the Value of the remarketed Separate Debt
Securities, from any amount of such proceeds in excess of
the aggregate Value of the remarketed Separate Debt
Securities plus any accrued and unpaid interest thereon, the
Remarketing Agent will remit to the Custodial Agent the
remaining portion of the proceeds, if any, for the benefit
of such holders. If, despite using its reasonable efforts,
the Remarketing Agent advises the Custodial Agent in writing
that it cannot remarket the related Separate Debt Securities
of the applicable series of such holders at a price not less
than 100% of the aggregate Value of such Separate Debt
Securities plus accrued and unpaid interest or, if a
condition to the remarketing shall not have been fulfilled,
thus in either case resulting in a Failed Remarketing, the
Remarketing Agent will promptly return such Separate Debt
Securities to the Custodial Agent for redelivery to such
holders.
SECTION 5. VOTING RIGHTS -- DEBT SECURITIES.
The Purchase Contract Agent may exercise, or refrain
from exercising, any and all voting and other consensual rights
pertaining to the Pledged Debt Securities or any part thereof for
any purpose not inconsistent with the terms of this Agreement and
in accordance with the terms of the Purchase Contract Agreement;
provided, that the Purchase Contract Agent shall not exercise or,
as the case may be, shall not refrain from exercising such right
if, in the judgment of the Company, such action would impair or
otherwise have a material adverse effect on the value of all or
any of the Pledged Debt Securities; and provided, further, that
the Purchase Contract Agent shall give the Company and the
Collateral Agent at least five days' prior written notice of the
manner in which it intends to exercise, or its reasons for
refraining from exercising, any such right. Upon receipt of any
notices and other communications in respect of any Pledged Debt
Securities, including notice of any meeting at which holders of
Debt Securities are entitled to vote or solicitation of consents,
waivers or proxies of holders of Debt Securities, the Collateral
Agent shall use reasonable efforts to send promptly to the
Purchase Contract Agent such notice or communication, and as soon
as reasonably practicable after receipt of a written request
therefor from the Purchase Contract Agent, execute and deliver to
the Purchase Contract Agent such proxies and other instruments in
respect of such Pledged Debt Securities (in form and substance
satisfactory to the Collateral Agent) as are prepared by the
Purchase Contract Agent with respect to the Pledged Debt
Securities.
SECTION 6. RIGHTS AND REMEDIES; 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 (or any successor thereto) as in effect in
the State of New York from time to time (the "Code")
(whether or not the Code is in effect in the jurisdiction
where the rights and remedies are asserted) and the TRADES
Regulations and such additional rights and remedies to which
a secured party is entitled under the laws in effect in any
jurisdiction where any rights and remedies hereunder may be
asserted. Wherever reference is made in this Agreement to
any section of the Code, such reference shall be deemed to
include a reference to any provision of the Code which is a
successor to, or amendment of, such section. Without
limiting the generality of the foregoing, such remedies may
include, to the extent permitted by applicable law, (i)
retention of the Pledged Debt Securities or other Collateral
in full satisfaction of the Holders' obligations under the
Purchase Contracts or (ii) sale of the Pledged Debt
Securities or other Collateral in one or more public or
private sales and application of the proceeds in full
satisfaction of the Holders' obligations under the Purchase
Contracts.
(b) Without limiting any rights or powers otherwise
granted by this Agreement to the Collateral Agent, in the
event the Collateral Agent is unable to make payments to the
Company on account of the appropriate Applicable Ownership
Interest (as specified in clause (A)(i) or B(i) of the
definition of such term) of the Treasury Portfolio or on
account of principal payments of any Pledged Treasury
Securities as provided in Section 3 hereof in satisfaction
of the obligations of the Holder of the Securities of which
such Pledged Treasury Securities, or the appropriate
Applicable Ownership Interest (as specified in clause (A)(i)
or B(i) of the definition of such term) of the Treasury
Portfolio, as applicable, is a part under the related
Purchase Contracts, the inability to make such payments
shall constitute an event of default hereunder and the
Collateral Agent shall have and may exercise, with reference
to such Pledged Treasury Securities, or such appropriate
Applicable Ownership Interest (as specified in clause (A)(i)
or B(i) of the definition of such term) of the Treasury
Portfolio, as applicable, and such obligations of such
Holder, any and all of the rights and remedies available to
a secured party under the Code and the TRADES Regulations
after default by a debtor, and as otherwise granted herein
or under any other law.
(c) Without limiting any rights or powers otherwise
granted by this Agreement to the Collateral Agent, the
Collateral Agent is hereby irrevocably authorized to receive
and collect all payments of (i) principal of, or interest
on, the Pledged Debt Securities, (ii) the principal amount
of the Pledged Treasury Securities, or (iii) the appropriate
Applicable Ownership Interest in the Treasury Portfolio,
subject, in each case, to the provisions of Section 3, and
as otherwise granted herein.
(d) The Purchase Contract Agent individually and as
attorney-in-fact for each Holder of Securities, in the event
such Holder becomes the Holder of Growth PRIDES, agree 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. TAX EVENT REDEMPTION.
Upon the occurrence of a Tax Event Redemption prior to
the Second Purchase Contract Settlement Date, the Collateral
Agent will, upon the written instruction of the Purchase Contract
Agent, deliver the Applicable Principal Amount of Pledged Debt
Securities to the Trustee in exchange for the Redemption Price
therefor payable on the Tax Event Redemption Date on or prior to
12:30 p.m., New York City time, such Redemption Price to be paid
by check or wire transfer in immediately available funds at such
place and at such account as may be designated by the Collateral
Agent. In the event the Collateral Agent receives such
Redemption Price, the Collateral Agent will, at the written
direction of the Company, apply an amount equal to the Redemption
Amount of such Redemption Price to purchase from the Quotation
Agent, the 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 Debt
Securities to secure the obligation of all Holders of Income
PRIDES to purchase Common Stock of the Company under the Purchase
Contracts constituting a part of such Income PRIDES, in
substitution for the Pledged Debt Securities. Thereafter the
Collateral Agent shall have such security interests, rights and
obligations with respect to the Treasury Portfolio as it had in
respect of the Pledged Debt Securities, as provided in Sections
2, 3, 4, 5 and 6, and any reference herein to the Pledged Debt
Securities shall be deemed to be a reference to such Treasury
Portfolio.
SECTION 6.3. SUBSTITUTIONS.
Whenever a Holder has the right to substitute Treasury
Securities, Debt Securities or the appropriate Applicable
Ownership Interest in the 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. REPRESENTATIONS AND WARRANTIES; COVENANTS.
SECTION 7.1. REPRESENTATIONS AND WARRANTIES.
The Holders from time to time, acting through the
Purchase Contract Agent as their attorney-in-fact (it being
understood that the Purchase Contract Agent shall not be liable
for any representation or warranty made by or on behalf of a
Holder), hereby represent and warrant to the Collateral Agent,
which representations and warranties shall be deemed repeated on
each day a Holder Transfers Collateral that:
(a) such Holder has the power to grant a security
interest in and lien on the Collateral;
(b) such Holder is the sole beneficial owner of the
Collateral and, in the case of Collateral delivered in
physical form, is the sole holder of such Collateral and is
the sole beneficial owner of, or has the right to Transfer,
the Collateral it Transfers to the Collateral Agent, free
and clear of any security interest, lien, encumbrance, call,
liability to pay money or other restriction other than the
security interest and lien granted under Section 2 hereof;
(c) upon the Transfer of the Collateral to the
Collateral Account or physical delivery of the Debt
Securities to the Collateral Agent, the Collateral Agent,
for the benefit of the Company, will have a valid and
perfected first priority security interest therein (assuming
that any central clearing operation or any Intermediary or
other entity not within the control of the Holder involved
in the Transfer of the Collateral, including the Collateral
Agent, gives the notices and takes the action required of it
hereunder and under applicable law for perfection of that
interest and assuming the establishment and exercise of
control pursuant to Section 2.2 hereof); and
(d) the execution and performance by the Holder of its
obligations under this Agreement will not result in the
creation of any security interest, lien or other encumbrance
on the Collateral other than the security interest and lien
granted under Section 2 hereof or violate any provision of
any existing law or regulation applicable to it or of any
mortgage, charge, pledge, indenture, contract or undertaking
to which it is a party or which is binding on it or any of
its assets.
SECTION 7.2. COVENANTS.
The Holders from time to time, acting through the
Purchase Contract Agent as their attorney-in-fact (it being
understood that the Purchase Contract Agent shall not be liable
for any covenant made by or on behalf of a Holder), hereby
covenant to the Collateral Agent that for so long as the
Collateral remains subject to the Pledge:
(a) neither the Purchase Contract Agent nor such
Holders will create or purport to create or allow to subsist
any mortgage, charge, lien, pledge or 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. Each of
the Collateral Agent, the Custodial Agent and the Securities
Intermediary: (a) shall have no duties or responsibilities except
those expressly set forth in this Agreement and no implied
covenants or obligations shall be inferred from this Agreement
against any of them, nor shall any of them be bound by the
provisions of any agreement by any party hereto beyond the
specific terms hereof; (b) shall not be responsible for any
recitals contained in this Agreement, or in any certificate or
other document referred to or provided for in, or received by it
under, this Agreement, the Securities or the Purchase Contract
Agreement, or for the value, validity, effectiveness,
genuineness, enforceability or sufficiency of this Agreement
(other than as against the Collateral Agent), the Securities or
the Purchase Contract Agreement or any other document referred to
or provided for herein or therein or for any failure by the
Company or any other Person (except the Collateral Agent, the
Custodial Agent or the Securities Intermediary, as the case may
be) to perform any of its obligations hereunder or thereunder or
for the perfection, priority or, except as expressly required
hereby, maintenance of any security interest created hereunder;
(c) shall not be required to initiate or conduct any litigation
or collection proceedings hereunder (except in the case of the
Collateral Agent, pursuant to directions furnished under Section
8.2 hereof, subject to Section 8.6 hereof); (d) shall not be
responsible for any action taken or omitted to be taken by it
hereunder or under any other document or instrument referred to
or provided for herein or in connection herewith or therewith,
except for its own negligence or willful misconduct; and (e)
shall not be required to advise any party as to selling or
retaining, or taking or refraining from taking any action with
respect to, the Securities or other property deposited hereunder.
Subject to the foregoing, during the term of this Agreement, the
Collateral Agent shall take all reasonable action in connection
with the safekeeping and preservation of the Collateral
hereunder.
No provision of this Agreement shall require the
Collateral Agent, the Custodial Agent or the Securities
Intermediary to expend or risk its own funds or otherwise incur
any financial liability in the performance of any of its duties
hereunder. In no event shall the Collateral Agent, the Custodial
Agent or the Securities Intermediary be liable for any amount in
excess of the Value of the Collateral. Notwithstanding the
foregoing, the Collateral Agent, the Custodial Agent and
Securities Intermediary, each in its individual capacity, hereby
waive any right of setoff, bankers lien, liens or perfection
rights as securities intermediary or any counterclaim with
respect to any of the Collateral.
SECTION 8.2. INSTRUCTIONS OF THE COMPANY.
The Company shall have the right, by one or more
instruments in writing executed and delivered to the Collateral
Agent, the Custodial Agent or the Securities Intermediary, as the
case may be, to direct the time, method and place of conducting
any proceeding for the realization of any right or remedy
available to the Collateral Agent, or of exercising any power
conferred on the Collateral Agent, the Custodial Agent or the
Securities Intermediary, as the case may be, or to direct the
taking or refraining from taking of any action authorized by this
Agreement; provided, however, that (i) such direction shall not
conflict with the provisions of any law or of this Agreement and
(ii) the Collateral Agent, the Custodial Agent and the Securities
Intermediary shall be adequately indemnified as provided herein.
Nothing in this Section 8.2 shall impair the right of the
Collateral Agent in its discretion to take any action or omit to
take any action which it deems proper and which is not
inconsistent with such direction.
SECTION 8.3. RELIANCE BY COLLATERAL AGENT.
Each of the Securities Intermediary, the Custodial
Agent and the Collateral Agent shall be entitled conclusively to
rely upon any certification, order, judgment, opinion, notice or
other communication (including, without limitation, any thereof
by telephone, telecopy, telex or facsimile) believed by it to be
genuine and correct and to have been signed or sent by or on
behalf of the proper Person or Persons (without being required to
determine the correctness of any fact stated therein), and upon
advice and statements of legal counsel and other experts selected
by the Collateral Agent, the Custodial Agent or the Securities
Intermediary, as the case may be. As to any matters not expressly
provided for by this Agreement, the Collateral Agent, the
Custodial Agent and the Securities Intermediary shall in all
cases be fully protected in acting, or in refraining from acting,
hereunder in accordance with instructions given by the Company in
accordance with this Agreement.
SECTION 8.4. RIGHTS IN OTHER CAPACITIES.
The Collateral Agent, the Custodial Agent and the
Securities Intermediary and their affiliates may (without having
to account therefor to the Company) accept deposits from, lend
money to, make their investments in and generally engage in any
kind of banking, trust or other business with the Purchase
Contract Agent and any Holder of Securities (and any of their
respective subsidiaries or affiliates) as if it were not acting
as the Collateral Agent, the Custodial Agent or the Securities
Intermediary, as the case may be, and the Collateral Agent, the
Custodial Agent and the Securities Intermediary and their
affiliates may accept fees and other consideration from the
Purchase Contract Agent and any Holder of Securities without
having to account for the same to the Company; provided that each
of the Securities Intermediary, the Custodial Agent and the
Collateral Agent covenants and agrees with the Company that it
shall not accept, receive or permit there to be created in favor
of itself and shall take no affirmative action to permit there to
be created in favor of any other Person, any security interest,
lien or other encumbrance of any kind in or upon the Collateral.
SECTION 8.5. NON-RELIANCE ON COLLATERAL AGENT.
None of the Securities Intermediary, the Custodial
Agent or the Collateral Agent shall be required to keep itself
informed as to the performance or observance by the Purchase
Contract Agent or any Holder of Securities of this Agreement, the
Purchase Contract Agreement, the Securities or any other document
referred to or provided for herein or therein or to inspect the
properties or books of the Purchase Contract Agent or any Holder
of Securities. The Collateral Agent, the Custodial Agent and the
Securities Intermediary shall not have any duty or responsibility
to provide the Company with any credit or other information
concerning the affairs, financial condition or business of the
Purchase Contract Agent or any Holder of Securities (or any of
their respective affiliates) that may come into the possession of
the Collateral Agent, the Custodial Agent or the Securities
Intermediary or any of their respective affiliates.
SECTION 8.6. COMPENSATION AND INDEMNITY.
The Company agrees: (i) to pay each of the Collateral
Agent and the Custodial Agent from time to time such compensation
as shall be agreed in writing between the Company and the
Collateral Agent or the Custodial Agent, as the case may be, for
all services rendered by each of them hereunder and (ii) to
indemnify the Collateral Agent, the Custodial Agent and the
Securities Intermediary for, and to hold each of them harmless
from and against, any loss, liability or reasonable out-of-pocket
expense incurred without negligence, willful misconduct or bad
faith on its part, arising out of or in connection with the
acceptance or administration of its powers and duties under this
Agreement, including the reasonable out-of-pocket costs and
expenses (including reasonable fees and expenses of counsel) of
defending itself against any claim or liability in connection
with the exercise or performance of such powers and duties. The
Collateral Agent, the Custodial Agent and the Securities
Intermediary shall each promptly notify the Company of any third
party claim which may give rise to indemnity hereunder and give
the Company the opportunity to participate in the defense of such
claim with counsel reasonably satisfactory to the indemnified
party, and no such claim shall be settled without the written
consent of the Company, which consent shall not be unreasonably
withheld.
SECTION 8.7. FAILURE TO ACT.
In the event of any ambiguity in the provisions of this
Agreement or any dispute between or conflicting claims by or
among the parties hereto or any other Person with respect to any
funds or property deposited hereunder, the Collateral Agent and
the Custodial Agent shall be entitled, after prompt notice to the
Company and the Purchase Contract Agent, at its sole option, to
refuse to comply with any and all claims, demands or instructions
with respect to such property or funds so long as such dispute or
conflict shall continue, and neither the Collateral Agent nor the
Custodial Agent shall be or become liable in any way to any of
the parties hereto for its failure or refusal to comply with such
conflicting claims, demands or instructions. The Collateral Agent
and the Custodial Agent shall be entitled to refuse to act until
either (i) such conflicting or adverse claims or demands shall
have been finally determined by a court of competent jurisdiction
or settled by agreement between the conflicting parties as
evidenced in a writing, satisfactory to the Collateral Agent or
the Custodial Agent, as the case may be, or (ii) the Collateral
Agent or the Custodial Agent, as the case may be, shall have
received security or an indemnity satisfactory to the Collateral
Agent or the Custodial Agent, as the case may be, sufficient to
save the Collateral Agent or the Custodial Agent, as the case may
be, harmless from and against any and all loss, liability or
reasonable out-of-pocket expense which the Collateral Agent or
the Custodial Agent, as the case may be, may without negligence,
willful misconduct, or bad faith on its part incur by reason of
its acting. The Collateral Agent or the Custodial Agent may in
addition elect to commence an interpleader action or seek other
judicial relief or orders as the Collateral Agent or the
Custodial Agent, as the case may be, may deem necessary.
Notwithstanding anything contained herein to the contrary,
neither the Collateral Agent nor the Custodial Agent shall be
required to take any action that is in its opinion contrary to
law or to the terms of this Agreement, or which would in its
opinion subject it or any of its officers, employees or directors
to liability.
SECTION 8.8. RESIGNATION OF COLLATERAL AGENT.
Subject to the appointment and acceptance of a
successor Collateral Agent or Custodial Agent as provided below,
(a) the Collateral Agent and the Custodial Agent may resign at
any time by giving notice thereof to the Company and the Purchase
Contract Agent as attorney-in-fact for the Holders of Securities,
(b) the Collateral Agent and the Custodial Agent may be removed
at any time by the Company and (c) if the Collateral Agent or the
Custodial Agent fails to perform any of its material obligations
hereunder in any material respect for a period of not less than
20 days after receiving written notice of such failure by the
Purchase Contract Agent and such failure shall be continuing, the
Collateral Agent or the Custodial Agent may be removed by the
Purchase Contract Agent. The Purchase Contract Agent shall
promptly notify the Company of any removal of the Collateral
Agent pursuant to clause (c) of the immediately preceding
sentence. Upon any such resignation or removal, the Company shall
have the right to appoint a successor Collateral Agent or
Custodial Agent, as the case may be. If no successor Collateral
Agent or Custodial Agent, as the case may be, shall have been so
appointed and shall have accepted such appointment within 30 days
after the retiring Collateral Agent's or Custodial Agent's giving
of notice of resignation or such removal, then the retiring
Collateral Agent or Custodial Agent, as the case may be, may
petition any court of competent jurisdiction for the appointment
of a successor Collateral Agent or Custodial Agent, as the case
may be. Each of the Collateral Agent and the Custodial Agent
shall be a bank which has an office in New York, New York with a
combined capital and surplus of at least $75,000,000. Upon the
acceptance of any appointment as Collateral Agent or Custodial
Agent, as the case may be, hereunder by a successor Collateral
Agent or Custodial Agent, as the case may be, such successor
shall thereupon succeed to and become vested with all the rights,
powers, privileges and duties of the retiring Collateral Agent or
Custodial Agent, as the case may be, and the retiring Collateral
Agent or Custodial Agent, as the case may be, shall take all
appropriate action to transfer any money and property held by it
hereunder (including the Collateral) to such successor. The
retiring Collateral Agent or Custodial Agent shall, upon such
succession, be discharged from its duties and obligations as
Collateral Agent or Custodial Agent hereunder. After any retiring
Collateral Agent's or Custodial Agent's resignation hereunder as
Collateral Agent or Custodial Agent, the provisions of this
Section 8 shall continue in effect for its benefit in respect of
any actions taken or omitted to be taken by it while it was
acting as the Collateral Agent or Custodial Agent. Any
resignation or removal of the Collateral Agent hereunder shall be
deemed for all purposes of this Agreement as the simultaneous
resignation or removal of the Custodial Agent and the Securities
Intermediary.
SECTION 8.9. RIGHT TO APPOINT AGENT OR ADVISOR.
The Collateral Agent shall have the right to appoint
agents or advisors in connection with any of its duties
hereunder, and the Collateral Agent shall not be liable for any
action taken or omitted by, or in reliance upon the advice of,
such agents or advisors selected in good faith. The appointment
of agents pursuant to this Section 8.9 shall be subject to prior
consent of the Company, which consent shall not be unreasonably
withheld.
SECTION 8.10. SURVIVAL.
The provisions of this Section 8 shall survive
termination of this Agreement and the resignation or removal of
the Collateral Agent or the Custodial Agent.
SECTION 8.11. EXCULPATION.
Anything in this Agreement to the contrary
notwithstanding, in no event shall any of the Collateral Agent,
the Custodial Agent or the Securities Intermediary or their
officers, employees or agents be liable under this Agreement to
any third party for indirect, special, punitive, or consequential
loss or damage of any kind whatsoever, including lost profits,
whether or not the likelihood of such loss or damage was known to
the Collateral Agent, the Custodial Agent or the Securities
Intermediary, or any of them, incurred without any act or deed
that is found to be attributable to gross negligence or willful
misconduct on the part of the Collateral Agent, the Custodial
Agent or the Securities Intermediary.
SECTION 9. AMENDMENT.
SECTION 9.1. AMENDMENT WITHOUT CONSENT OF HOLDERS.
Without the consent of any Holders or the holders of
any Separate Debt Securities, the Company, the Collateral Agent,
the Custodial Agent, the Securities Intermediary and the Purchase
Contract Agent, at any time and from time to time, may amend this
Agreement, in form satisfactory to the Company, the Collateral
Agent, the Custodial Agent, the Securities Intermediary and the
Purchase Contract Agent, for any of the following purposes:
(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 Agent,
Custodial 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, the Purchase Contract Agent, the Collateral Agent, the
Custodial Agent and the Securities Intermediary may amend this
Agreement for the purpose of modifying in any manner the
provisions of this Agreement or the rights of the Holders in
respect of the Securities; provided, however, that no such
supplemental agreement shall, without the consent of the Holder
of each Outstanding Security adversely affected thereby,
(1) change the amount or type of Collateral underlying
a Security (subject to the rights of Holders to make
Collateral Substitutions as contemplated by Sections 4.1 and
4.2), impair the right of the Holder of any Security to
receive distributions on the underlying Collateral or
otherwise adversely affect the Holder's rights in or to such
Collateral; or
(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.
It shall not be necessary for any Act of Holders under this
Section to approve the particular form of any proposed amendment,
but it shall be sufficient if such Act shall approve the
substance thereof.
SECTION 9.3. EXECUTION OF AMENDMENTS.
In executing any amendment permitted by this Section,
the Collateral Agent, the Custodial Agent, the Securities
Intermediary and the Purchase Contract Agent shall be entitled to
receive and (subject to Section 6.1 hereof, with respect to the
Collateral Agent, and Section 7.1 of the Purchase Contract
Agreement, with respect to the Purchase Contract Agent) shall be
fully protected in relying upon, an Opinion of Counsel stating
that the execution of such amendment is authorized or permitted
by this Agreement and that all conditions precedent, if any, to
the execution and delivery of such amendment have been satisfied.
SECTION 9.4. EFFECT OF AMENDMENTS.
Upon the execution of any amendment under this Section
9, this Agreement shall be modified in accordance therewith, and
such amendment shall form a part of this Agreement for all
purposes; and every Holder of Certificates theretofore or
thereafter authenticated, executed on behalf of the Holders and
delivered under the Purchase Contract Agreement shall be bound
thereby.
SECTION 9.5. REFERENCE TO AMENDMENTS.
Security Certificates authenticated, executed on behalf
of the Holders and delivered after the execution of any amendment
pursuant to this Section may, and shall if required by the
Collateral Agent or the Purchase Contract Agent, bear a notation
in form approved by the Purchase Contract Agent and the
Collateral Agent as to any matter provided for in such amendment.
If the Company shall so determine, new Security Certificates so
modified as to conform, in the opinion of the Collateral Agent,
the Purchase Contract Agent and the Company, to any such
amendment may be prepared and executed by the Company and
authenticated, executed on behalf of the Holders and delivered by
the Purchase Contract Agent in accordance with the Purchase
Contract Agreement in exchange for Outstanding Security
Certificates.
SECTION 10. MISCELLANEOUS.
SECTION 10.1. NO WAIVER.
No failure on the part of the Collateral Agent or any
of its agents to exercise, and no course of dealing with respect
to, and no delay in exercising, any right, power or remedy
hereunder shall operate as a waiver thereof; nor shall any single
or partial exercise by the Collateral Agent or any of its agents
of any right, power or remedy hereunder preclude any other or
further exercise thereof or the exercise of any other right,
power or remedy. The remedies herein are cumulative and are not
exclusive of any remedies provided by law.
SECTION 10.2. GOVERNING LAW.
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. Without
limiting the foregoing, the above choice of law is expressly
agreed to by the Company, the Securities Intermediary, the
Custodial Agent, the Collateral Agent and the Holders from time
to time acting through the Purchase Contract Agent, as their
attorney-in-fact, in connection with the establishment and
maintenance of the Collateral Account. The Company, the
Collateral Agent and the Holders from time to time of the
Securities, acting through the Purchase Contract Agent as their
attorney-in-fact, hereby submit to the nonexclusive jurisdiction
of the United States District Court for the Southern District of
New York and of any New York state court sitting in New York City
for the purposes of all legal proceedings arising out of or
relating to this Agreement or the transactions contemplated
hereby. The Company, the Collateral Agent and the Holders from
time to time of the Securities, acting through the Purchase
Contract Agent as their attorney-in-fact, irrevocably waive, to
the fullest extent permitted by applicable law, any objection
which they may now or hereafter have to the laying of the venue
of any such proceeding brought in such a court and any claim that
any such proceeding brought in such a court has been brought in
an inconvenient forum.
SECTION 10.3. NOTICES.
All notices, requests, consents and other
communications provided for herein (including, without
limitation, any modifications of, or waivers or consents under,
this Agreement) shall be given or made in writing (including,
without limitation, by telecopy) delivered to the intended
recipient at the "Address for Notices" specified below its name
on the signature pages hereof (or in the case of Holders, may be
made and deemed given as provided in Sections 1.5 and 1.6 of the
Purchase Contract Agreement) or, as to any party, at such other
address as shall be designated by such party in a notice to the
other parties. Except as otherwise provided in this Agreement,
all such communications shall be deemed to have been duly given
when transmitted by telecopier or personally delivered or, in the
case of a mailed notice, upon receipt, in each case given or
addressed as aforesaid (except as aforesaid).
SECTION 10.4. SUCCESSORS AND ASSIGNS.
This Agreement shall be binding upon and inure to the
benefit of the respective successors and assigns of the Company,
the Collateral Agent, the Custodial Agent, the Securities
Intermediary and the Purchase Contract Agent, and the Holders
from time to time of the Securities, by their acceptance of the
same, shall be deemed to have agreed to be bound by the
provisions hereof and to have ratified the agreements of, and the
grant of the Pledge hereunder by, the Purchase Contract Agent.
SECTION 10.5. COUNTERPARTS.
This Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one
and the same instrument, and any of the parties hereto may
execute this Agreement by signing any such counterpart.
SECTION 10.6. SEVERABILITY.
If any provision hereof is invalid and unenforceable in
any jurisdiction, then, to the fullest extent permitted by law,
(i) the other provisions hereof shall remain in full force and
effect in such jurisdiction and shall be liberally construed in
order to carry out the intentions of the parties hereto as nearly
as may be possible and (ii) the invalidity or unenforceability of
any provision hereof in any jurisdiction shall not affect the
validity or enforceability of such provision in any other
jurisdiction.
SECTION 10.7. EXPENSES, ETC.
The Company agrees to reimburse the Collateral Agent
and the Custodial Agent for: (a) all reasonable out-of-pocket
costs and expenses of the Collateral Agent and the Custodial
Agent (including, without limitation, the reasonable fees and
expenses of the necessary services of a Securities Intermediary
and of counsel to the Collateral Agent and the Custodial Agent),
in connection with (i) the negotiation, preparation, execution
and delivery or performance of this Agreement and (ii) any
modification, supplement or waiver of any of the terms of this
Agreement; (b) all reasonable costs and expenses of the
Collateral Agent (including, without limitation, reasonable fees
and expenses of counsel) in connection with (i) any enforcement
or proceedings resulting or incurred in connection with causing
any Holder of Securities to satisfy its obligations under the
Purchase Contracts forming a part of the Securities and (ii) the
enforcement of this Section 10.7; and (c) all transfer, stamp,
documentary or other similar taxes, assessments or charges levied
by any governmental or 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.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed as of the day and year first above
written.
TEXAS UTILITIES COMPANY
By:
------------------------------
Name:
Title:
Address for Notices:
Texas Utilities Company
1601 Bryan Street
Dallas, Texas 75201
Attention: Treasurer
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
101 Barclay Street
New York, New York 10286
Attention: Corporate Trust
Administration
Telecopy: (212) 815-5915
THE CHASE MANHATTAN BANK
as Collateral Agent, Custodial
Agent and as Securities
Intermediary
By:
------------------------------
Name:
Title:
Address for Notices:
The Chase Manhattan Bank
450 West 33rd Street, 15th Floor
New York, New York 10001
Attention: Global Trust Services
Telecopy: (212) 946-
<PAGE>
EXHIBIT A
INSTRUCTION FROM PURCHASE CONTRACT AGENT TO COLLATERAL AGENT
The Chase Manhattan Bank, as Collateral Agent
450 West 33rd Street, 15th Floor
New York, New York 10001
Attention: Global Trust Services
Re: Securities of Texas Utilities Company (the
"Company")
We hereby notify you in accordance with Section [4.1]
[4.2] of the Pledge Agreement, dated as of July 1, 1998, (the
"Pledge Agreement") among the Company, yourselves, as Collateral
Agent, Custodial Agent and Securities Intermediary and ourselves,
as Purchase Contract Agent and as attorney-in-fact for the
Holders of [Income PRIDES] [Growth PRIDES] from time to time,
that the Holder of Securities listed below (the "Holder") has
elected to substitute [$_____ principal amount of Treasury
Securities] [$_______ principal amount of [Series D Notes]
[Series E Notes] of the appropriate Applicable Ownership Interest
in the Treasury Portfolio] in exchange for an equal Value of
[3-Year/4-Year Treasury Securities] [the appropriate Applicable
Ownership Interest in the Treasury Portfolio] of Pledged
[Series D Notes] [Series E Notes] held by you in accordance with
the Pledge Agreement and has delivered to us a notice stating
that the Holder has Transferred [3-Year/4-Year Treasury
Securities] [Series D Notes] [Series E Notes] [appropriate
Applicable Ownership Interest in the Treasury Portfolio] to you,
as Collateral Agent. We hereby instruct you, upon receipt of such
[Treasury Securities] [Series D Notes] [Series E Notes] or the
appropriate Applicable Ownership Interest in the Treasury
Portfolio] so Transferred, to release the Pledged [Series D
Notes] [Series E Notes] [appropriate Applicable Ownership
Interest in the Treasury Portfolio] [3-Year/4-Year] 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:________________ ________________________
By:________________________
Name:
Title:
Signature Guarantee:________
<PAGE>
Please print name and address of registered Holder electing
to substitute [Treasury Securities] [Debt Securities]
[appropriate Applicable Ownership Interest in the Treasury
Portfolio] for [Pledged Debt Securities] [Treasury Portfolio]
[Pledged Treasury Securities]:
_________________________ ________________________
Name Social Security or other
Taxpayer Identification
Number, if any
Address
________________________________
________________________________
________________________________
<PAGE>
EXHIBIT B
INSTRUCTION TO PURCHASE CONTRACT AGENT
The Bank of New York
101 Barclay Street
New York, New York 10286
Attention: Corporate Trust Administration
Re: Securities of Texas Utilities Company (the
"Company")
The undersigned Holder hereby notifies you that it has
delivered to The Chase Manhattan Bank, as Collateral Agent,
[$_______ principal amount of [3-Year] [4-Year] Treasury
Securities] [$_______ principal amount of [Series D Notes]
[Series E Notes] [Stated Amount of the appropriate Applicable
Ownership Interest in the Treasury Portfolio] in exchange for an
equal Value of [Pledged [Series D Notes] [Series E Notes] or the
appropriate Applicable Ownership Interest in the Treasury
Portfolio] [Pledged [3-Year] [4-Year] Treasury Securities] held
by the Collateral Agent, in accordance with Section [4.1] [4.2]
of the Pledge Agreement, dated as of July 1, 1998 (the "Pledge
Agreement"), 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 Debt Securities or the appropriate Applicable
Ownership Interest in the Treasury Portfolio] [Pledged [3-Year]
[4-Year] 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
Signature Guarantee:___________
<PAGE>
Please print name and address of Registered Holder:
_________________________ _________________________
Name Social Security or other
Taxpayer Identification
Number, if any
Address
______________________________
_______________________________
_______________________________
<PAGE>
EXHIBIT C
INSTRUCTION TO CUSTODIAL AGENT REGARDING REMARKETING
Re: Securities of Texas Utilities Company (the
"Company")
The undersigned hereby notifies you in accordance with
Section 4.6(c) of the Pledge Agreement, dated as of July 1, 1998
(the "Pledge Agreement"), among the Company, yourselves, as
Collateral Agent, Securities Intermediary and Custodial Agent,
and The Bank of New York, as Purchase Contract Agent and as
attorney-in-fact for the Holders of Income PRIDES and Growth
PRIDES from time to time, that the undersigned elects to deliver
$________ principal amount of [Series D Notes] [Series E Notes]
for delivery to the Remarketing Agent on the fourth Business Day
immediately preceding the [First] [Second] Purchase Contract
Settlement Date for remarketing pursuant to Section 4.6(c) of the
Pledge Agreement. The undersigned will, upon request of the
Remarketing Agent, execute and deliver any additional documents
deemed by the Remarketing Agent or by the Company to be necessary
or desirable to complete the sale, assignment and transfer of the
[Series D Notes] [Series E Notes] tendered hereby.
The undersigned hereby instructs you, upon receipt of
the Proceeds of such remarketing from the Remarketing Agent to
deliver such Proceeds to the undersigned in accordance with the
instructions indicated herein under "A. Payment Instructions".
The undersigned hereby instructs you, in the event of Failed
Remarketing, upon receipt of the [Series D Notes] [Series E
Notes] tendered herewith from the Remarketing Agent, to deliver
such Debt Securities to the person(s) and the address(es)
indicated herein under "B. Delivery Instructions."
With this notice, the undersigned hereby (i) represents
and warrants that the undersigned has full power and authority to
tender, sell, assign and transfer the [Series D Notes] [Series E
Notes] tendered hereby and that the undersigned is the record
owner of any [Series D Notes] [Series E Notes] tendered herewith
in physical form or a participant in The Depositary Trust Company
("DTC") and the beneficial owner of any Debt Securities tendered
herewith by book-entry transfer to your account at DTC and (ii)
agrees to be bound by the terms and conditions of Section 4.6(c)
of the Pledge Agreement. Capitalized terms used herein but not
defined shall have the meaning set forth in the Pledge Agreement.
Date:__________________ _____________________________
By:___________________________
Name:
Title:
Signature Guarantee:_______
<PAGE>
Please print name and address:
__________________________ _______________________
Name Social Security or other
Taxpayer Identification
Number, if any
Address
_________________________________
_________________________________
_________________________________
<PAGE>
A. PAYMENT INSTRUCTIONS B. DELIVERY INSTRUCTIONS
Proceeds of the remarketing In the event of a Failed
should be paid by check in the Remarketing, [Series D
name of the person(s) set Notes] [Series E Notes]
forth below and mailed to the which are in physical form
address set forth below. should be delivered to the
person(s) set forth below
Name(s) and mailed to the address
______________________________ set forth below.
(Please Print)
Name(s)
Address ___________________________
(Please Print)
______________________________
Address
______________________________
(Please Print) __________________________
______________________________ ___________________________
(Zip Code) (Please Print)
_____________________________ ___________________________
(Tax Identification or (Zip Code)
Social Security Number)
__________________________
(Tax Identification or
Social Security Number)
In the event of a Failed
Remarketing, [Series D
Notes] [Series E Notes]
which are in book-entry
form should be credited to
the account at The
Depositary Trust Company
set forth below.
______________________
DTC Account Number
Name of Account
Party:__________________
<PAGE>
EXHIBIT D
INSTRUCTION TO CUSTODIAL AGENT REGARDING
WITHDRAWAL FROM REMARKETING
The Chase Manhattan Bank, as Custodial Agent
450 West 33rd Street, 15th Floor
New York, New York 10001
Attention: Global Trust Services
Re: Securities of Texas Utilities Company (the
"Company")
The undersigned hereby notifies you in accordance with
Section 4.6(c) of the Pledge Agreement, dated as of July 1, 1998
(the "Pledge Agreement") among the Company, yourselves, as
Collateral Agent, Securities Intermediary and Custodial Agent and
The Bank of New York, as Purchase Contract Agent and as
attorney-in-fact for the Holders of Income PRIDES and Growth
PRIDES from time to time, that the undersigned elects to withdraw
the $_____ principal amount of [Series D Notes] [Series E Notes]
delivered to the Custodial Agent on ____________ for remarketing
pursuant to Section 4.6(c) of the Pledge Agreement. The
undersigned hereby instructs you to return such [Series D Notes]
[Series E Notes] to the undersigned in accordance with the
undersigned's instructions. With this notice, the Undersigned
hereby agrees to be bound by the terms and conditions of Section
4.6(c) of the Pledge Agreement. Capitalized terms used herein but
not defined shall have the meaning set forth in the Pledge
Agreement.
Date:______________ ________________________
By:________________________
Name:
Title:
Signature Guarantee:________
<PAGE>
Please print name and address:
___________________________ ________________________
Name Social Security or other
Taxpayer Identification
Number, if any
Address
_____________________________
_____________________________
_____________________________
EXHIBIT 23(C)
CONSENT OF INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption "Experts"
in the Prospectus supplement, dated July 17, 1998, relating to the
Registration Statement (Form S-3 No. 333-56055), as amended, of Texas
Utilities Company and to the incorporation by reference therein of
our report dated June 12, 1997, except for Note 31 -- Subsequent
Events, as to which the date is August 1, 1997, on the consolidated
financial statements of The Energy Group PLC included in Amendment
No. 1 to the Current Report on Form 8-K dated May 19, 1998, of
Texas Utilities Company filed with the Securities and Exchange
Commission.
/s/ Ernst & Young
ERNST & YOUNG
London, England
July 17, 1998
