-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, KcPqE2mBL4NSxU1dP1xgPH0LqFqSEk1hf7iUwSmXxtA1CCkhtOHrJdDvvy3w4nHq 1MGEATylrD7q/zF6U72Qgw== 0000950129-02-003253.txt : 20020626 0000950129-02-003253.hdr.sgml : 20020626 20020626123532 ACCESSION NUMBER: 0000950129-02-003253 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 10 CONFORMED PERIOD OF REPORT: 20020626 ITEM INFORMATION: Other events ITEM INFORMATION: Financial statements and exhibits FILED AS OF DATE: 20020626 FILER: COMPANY DATA: COMPANY CONFORMED NAME: EL PASO CORP/DE CENTRAL INDEX KEY: 0001066107 STANDARD INDUSTRIAL CLASSIFICATION: NATURAL GAS TRANSMISSION [4922] IRS NUMBER: 760568816 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-14365 FILM NUMBER: 02687410 BUSINESS ADDRESS: STREET 1: 1001 LOUISIANA ST, SUITE 2955A STREET 2: EL PASO BLDG CITY: HOUSTON STATE: TX ZIP: 77002 BUSINESS PHONE: 7134202600 MAIL ADDRESS: STREET 1: 1001 LOUISIANA ST STREET 2: SUITE 2955A CITY: HOUSTON STATE: TX ZIP: 77002 FORMER COMPANY: FORMER CONFORMED NAME: EL PASO ENERGY CORP/DE DATE OF NAME CHANGE: 19980716 8-K 1 h97915e8vk.txt EL PASO CORPORATION DATED JUNE 26, 2002 ================================================================================ UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 ---------- FORM 8-K CURRENT REPORT Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 DATE OF REPORT: JUNE 26, 2002 (DATE OF EARLIEST EVENT REPORTED: JUNE 20, 2002) EL PASO CORPORATION (Exact name of registrant as specified in its charter) DELAWARE 1-14365 76-0568816 (State or other jurisdiction of (Commission File Number) (I.R.S. employer incorporation or organization) identification number)
EL PASO BUILDING 1001 LOUISIANA HOUSTON, TEXAS 77002 (Address of principal executive offices) (Zip Code) (713) 420-2600 (Registrant's telephone number, including area code) ================================================================================ Item 5. Other Events On June 20, 2002, El Paso Corporation (the "Company") entered into an Underwriting Agreement with Credit Suisse First Boston Corporation and J.P. Morgan Securities Inc., as representatives of the several underwriters named therein, relating to the offering and sale (the "Units Offering") by the Company of up to 11,500,000 Equity Security Units (the "Units"). Each Unit initially consists of (i) a purchase contract to purchase shares of the Company's common stock, par value $3.00 per share ("Common Stock"), on the stock purchase date and (ii) a senior note due August 16, 2007 of the Company ("Senior Notes"). The number of shares of Common Stock to be issued on the stock purchase date will be between 2.0886 and 2.5063 shares per Unit depending on the 20-trading day average closing price of the Common Stock on the third trading day immediately preceding the stock purchase date. In connection with the Units Offering, up to $575,000,000 aggregate principal amount of Senior Notes will be issued by the Company. On June 21, 2002, the Company filed a Prospectus Supplement relating to the Units Offering, dated June 20, 2002, to the Prospectus dated February 27, 2002 (the "Prospectus"), included as part of the Registration Statement on Form S-3 of the Company (File Nos. 333-82412, 333-82412-01 and 333-82412-02) (the "Registration Statement"). On June 20, 2002, the Company entered into an Underwriting Agreement with Credit Suisse First Boston Corporation and J.P. Morgan Securities Inc., as representatives of the several underwriters named therein, relating to the offering and sale (the "Equity Offering") by the Company of up to 51,750,000 shares of the Company's Common Stock. On June 21, 2002, the Company filed a Prospectus Supplement relating to the Equity Offering, dated June 20, 2002, to the Prospectus, included as part of the Registration Statement. In connection with the Units Offering and the Equity Offering, the Company is filing certain exhibits as part of this Form 8-K. See "Item 7. Exhibits." A copy of certain agreements, opinions and documents related to the Units Offering and the Equity Offering are attached hereto as exhibits and are incorporated by reference in their entirety into the Registration Statement. Item 7. Exhibits. (c) Exhibits. 1.A Underwriting Agreement, dated June 20, 2002, among the Company and Credit Suisse First Boston Corporation and J.P. Morgan Securities Inc., as representatives of the several underwriters named therein, in connection with the offer and sale of up to 11,500,000 Equity Security Units. 1.B Underwriting Agreement, dated June 20, 2002, among the Company and Credit Suisse First Boston Corporation and J.P. Morgan Securities Inc., as representatives of the several underwriters named therein, in connection with the offer and sale of up to 51,750,000 shares of the Company's Common Stock. 4.A Eighth Supplemental Indenture, dated as of June 26, 2002, between the Company and JPMorgan Chase Bank (formerly known as The Chase Manhattan Bank), as Trustee (including form of Senior Note due August 16, 2007). 4.B Purchase Contract Agreement (including forms of Units and Stripped Units), dated as of June 26, 2002, between the Company and JPMorgan Chase Bank, as Purchase Contract Agent. 4.C Pledge Agreement, dated as of June 26, 2002, among the Company, The Bank of New York, as Collateral Agent, Custodial Agent and Securities Intermediary, and JPMorgan Chase Bank, as Purchase Contract Agent. 4.D Remarketing Agreement, dated as of June 26, 2002, among the Company, JPMorgan Chase Bank, as Purchase Contract Agent, and Credit Suisse First Boston Corporation, as Remarketing Agent. 4.E Form of Senior Note due August 16, 2007 (included in Exhibit 4.A hereto). 4.F Form of Unit (included in Exhibit 4.B hereto). 4.G Form of Stripped Unit (included in Exhibit 4.B hereof). 5.A Opinion of Locke Liddell & Sapp LLP regarding the legality of the Common Stock. 5.B Opinion of Locke Liddell & Sapp LLP regarding the legality of the Units. 8.A Tax Opinion of Locke Liddell & Sapp LLP. SIGNATURE Pursuant to the requirements of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized. Dated: June 26, 2002 EL PASO CORPORATION /s/ H. BRENT AUSTIN ------------------------------- By: H. Brent Austin Executive Vice President and Chief Financial Officer EXHIBIT INDEX 1.A Underwriting Agreement, dated June 20, 2002, among the Company and Credit Suisse First Boston Corporation and J.P. Morgan Securities Inc., as representatives of the several underwriters named therein, in connection with the offer and sale of up to 11,500,000 Equity Security Units. 1.B Underwriting Agreement, dated June 20, 2002, among the Company and Credit Suisse First Boston Corporation and J.P. Morgan Securities Inc., as representatives of the several underwriters named therein, in connection with the offer and sale of up to 51,750,000 shares of the Company's Common Stock. 4.A Eighth Supplemental Indenture, dated as of June 26, 2002, between the Company and JPMorgan Chase Bank (formerly known as The Chase Manhattan Bank), as Trustee (including form of Senior Note due August 16, 2007). 4.B Purchase Contract Agreement (including forms of Units and Stripped Units), dated as of June 26, 2002, between the Company and JPMorgan Chase Bank, as Purchase Contract Agent. 4.C Pledge Agreement, dated as of June 26, 2002, among the Company, The Bank of New York, as Collateral Agent, Custodial Agent and Securities Intermediary, and JPMorgan Chase Bank, as Purchase Contract Agent. 4.D Remarketing Agreement, dated as of June 26, 2002, among the Company, JPMorgan Chase Bank, as Purchase Contract Agent, and Credit Suisse First Boston Corporation, as Remarketing Agent. 4.E Form of Senior Note due August 16, 2007 (included in Exhibit 4.A hereto). 4.F Form of Unit (included in Exhibit 4.B hereto). 4.G Form of Stripped Unit (included in Exhibit 4.B hereof). 5.A Opinion of Locke Liddell & Sapp LLP regarding the legality of the Common Stock. 5.B Opinion of Locke Liddell & Sapp LLP regarding the legality of the Units. 8.A Tax Opinion of Locke Liddell & Sapp LLP. EX-1.A 3 h97915exv1wa.txt UNDERWRITING AGREEMENT - EQUITY SECURITY UNITS EXHIBIT 1.A EL PASO CORPORATION 10,000,000 9.00% Equity Security Units Underwriting Agreement June 20, 2002 Credit Suisse First Boston Corporation Eleven Madison Avenue New York, New York 10010 J.P. Morgan Securities Inc. 270 Park Avenue New York, New York 10017 As Representatives of the Several Underwriters Ladies and Gentlemen: El Paso Corporation, a Delaware corporation (the "Company"), proposes to issue and sell to the several underwriters named in Schedule I hereto (the "Underwriters") for whom Credit Suisse First Boston Corporation and J.P. Morgan Securities Inc. are acting as representatives (the "Representatives"), an aggregate of 10,000,000 of its 9.00% Equity Security Units (the "Underwritten Securities") with a stated amount, per Equity Security Unit, of $50 (the "Stated Amount"). Each Equity Security Unit will initially consist of (a) a purchase contract (a "Purchase Contract") under which the holder will agree to purchase from the Company not later than August 16, 2005 (the "Stock Purchase Date"), for an amount of cash equal to the Stated Amount, a number of shares of common stock, $3.00 par value per share ("Common Stock"), of the Company equal to the Settlement Rate (as defined in the Purchase Contract Agreement) referred to below) and (b) $50 principal amount of the Company's senior notes due August 16, 2007 (the "Notes") issued pursuant to the Indenture (as defined below). The Company also proposes to grant to the Underwriters an option to purchase up to an additional 1,500,000 of its Equity Security Units to cover over-allotments (the "Option Securities"); the Option Securities, together with the Underwritten Securities are herein referred to as the "Securities." The Notes that initially constitute a component of the Equity Security Units are hereinafter sometimes referred to as the "Underlying Notes." In accordance with the terms of the purchase contract agreement, to be dated as of June 26, 2002 (the "Purchase Contract Agreement"), between the Company and JPMorgan Chase Bank, as -2- purchase contract agent (the "Purchase Contract Agent"), pursuant to which the Purchase Contracts will be issued, the Underlying Notes will be pledged by the Purchase Contract Agent, on behalf of the holders of the Equity Security Units, to The Bank of New York, as collateral agent (the "Collateral Agent"), pursuant to the pledge agreement, to be dated as of June 26, 2002 (the "Pledge Agreement"), among the Company, the Purchase Contract Agent, the Collateral Agent and The Bank of New York, as custodial agent (the "Custodial Agent") and as securities intermediary (the "Securities Intermediary") to secure the holders' obligations to purchase Common Stock under the Purchase Contracts. The shares of Common Stock issuable pursuant to the Purchase Contracts are hereinafter called the "Shares." The rights and obligations of a holder of Securities in respect of Notes (subject to the pledge thereof) and Purchase Contracts will initially be evidenced by an Equity Security Unit Certificate (as defined in the Purchase Contract Agreement). The Notes will be issued pursuant to an indenture dated as of May 10, 1999, as supplemented by eight supplemental indentures (collectively, the "Indenture"), between the Company and JPMorgan Chase Bank (formerly The Chase Manhattan Bank), as trustee (the "Trustee"). The Securities and the Indenture are more fully described in the Prospectus referred to below. Pursuant to a remarketing agreement (the "Remarketing Agreement") to be dated as of June 26, 2002, among the Company, the Purchase Contract Agent and Credit Suisse First Boston Corporation, as remarketing agent (the "Remarketing Agent"), the Notes may be remarketed, subject to certain terms and conditions. As used in this Agreement, the term "Operative Documents" means, collectively, the Purchase Contract Agreement, the Pledge Agreement, the Remarketing Agreement and the Indenture. The Company has prepared and filed with the Securities and Exchange Commission (the "Commission") in accordance with the provisions of the Securities Act of 1933, as amended, and the rules and regulations of the Commission thereunder (collectively, the "Securities Act"), a registration statement (File No. 333-82412) including a prospectus, relating to the Securities, the Purchase Contracts, the Underlying Notes and the Shares. The registration statement as amended to the date of this Agreement is referred to in this Agreement as the "Registration Statement." The term "Base Prospectus" means the prospectus included in the Registration Statement. The Company has filed with, or transmitted for filing to, or shall promptly hereafter file with or transmit for filing to, the Commission a prospectus supplement (the "Prospectus Supplement") specifically relating to the Securities, the Purchase Contracts, the Underlying Notes and the Shares pursuant to Rule 424 under the Securities Act. If the Company has filed an abbreviated registration statement pursuant to Rule 462(b) under the Securities Act (the "Rule 462 Registration Statement"), then any reference herein to the term "Registration Statement" shall be deemed to include -3- such Rule 462 Registration Statement. The Base Prospectus as supplemented by any applicable Prospectus Supplement specifically relating to the Securities in the form first used to confirm sales of the Securities is hereinafter referred to as the "Prospectus." Any reference in this Agreement to the Registration Statement, the Base Prospectus, the Prospectus or any amendment or supplement thereto shall be deemed to refer to and include the documents incorporated by reference therein pursuant to Item 12 of Form S-3 under the Securities Act, and any reference to "amend", "amendment" or "supplement" with respect to the Registration Statement, the Base Prospectus or the Prospectus shall be deemed to refer to and include any documents filed after such date under the Securities Exchange Act of 1934, as amended, and the rules and regulations of the Commission thereunder (collectively, the "Exchange Act") that are deemed to be incorporated by reference therein. The Company hereby agrees with the several Underwriters as follows: 1. The Company agrees to issue and sell the Underwritten Securities to the Underwriters as hereinafter provided, and the Underwriters, severally and not jointly, upon the basis of the representations and warranties herein contained, but subject to the terms and conditions hereinafter stated, agree to purchase from the Company the Underwritten Securities at a purchase price per Equity Security Unit of $48.50 (the "Purchase Price"). In addition, the Company agrees to issue and sell the Option Securities to the Underwriters as hereinafter provided, and the Underwriters, severally and not jointly on the basis of the representations and warranties herein contained, but subject to the terms and conditions hereinafter stated, shall have the option to purchase from the Company up to an aggregate of 1,500,000 Option Securities at the Purchase Price, for the sole purpose of covering over-allotments (if any) in the sale of Underwritten Securities by the Underwriters. The Underwriters may exercise the option to purchase the Option Securities at any time on or before the thirteenth day following the Closing Date (as defined in Section 3 hereof), by written notice from both Representatives to the Company. Such notice shall set forth the aggregate number of Option Securities as to which the option is being exercised and the date and time when the Option Securities are to be delivered and paid for which may be the same date and time as the Closing Date (as hereinafter defined) but shall not be earlier than the Closing Date nor later than three full Business Days (as hereinafter defined) after the date of such notice (unless such time and date are postponed in accordance with the provisions of Section 9 hereof), but in any event not later than the thirteenth day following the Closing Date. Any such notice shall be given at least two Business Days prior to the date and time of delivery specified therein. 2. The Company understands that the Underwriters intend (i) to make a public offering of the Securities as soon as in their judgment is advisable after the parties -4- hereto have executed and delivered this Agreement and (ii) initially to offer the Securities upon the terms set forth in the Prospectus. 3. Payment for the Securities shall be made by wire transfer in immediately available funds to the account specified by the Company to the Underwriters, in the case of the Underwritten Securities, at 10:00 a.m. (New York City time) on June 26, 2002, or at such other time on the same or such other date, not later than the fifth Business Day thereafter, as the Representatives and the Company may agree upon in writing or, in the case of the Option Securities, on the date and time specified by the Representatives in the written notice of the Underwriters' election to purchase such Option Securities. The time and date of such payment for the Underwritten Securities are referred to herein as the "Closing Date" and the time and date for such payment for the Option Securities, if other than the Closing Date, are referred to herein as the "Additional Closing Date." As used herein, the term "Business Day" means any day other than a day on which banks are permitted or required to be closed in New York City. Delivery of the Securities to be purchased on the Closing Date or the Additional Closing Date, as the case may be, shall be made to the Representatives for the respective accounts of the several Underwriters against payment by the several Underwriters through the Representatives of the purchase price thereof to or upon the order of the Company by wire transfer payable in same-day funds to the account specified by the Company. Delivery of the Underwritten Securities and the Option Securities shall be made through the facilities of The Depository Trust Company ("DTC") unless the Representatives shall otherwise instruct. 4. The Company represents and warrants to the several Underwriters that: (a) the Company and the transactions contemplated by this Agreement meet the requirements and conditions for using a registration statement on Form S-3 under the Securities Act, and the Registration Statement has been declared effective by the Commission; no stop order suspending the effectiveness of the Registration Statement has been issued and no proceeding for that purpose has been instituted or, to the knowledge of the Company, threatened by the Commission; (b) on the effective date of the Registration Statement, the Registration Statement conformed in all material respects to the requirements of the Securities Act and the rules and regulations of the Commission thereunder, and the Trust Indenture Act of 1939, as amended (the "Trust Indenture Act"), and the applicable rules and regulations thereunder, and did not include any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading; the Registration Statement, as of the date of this Agreement, conforms and, as amended or supplemented, if applicable, will conform in -5- all material respects to the requirements of the Securities Act and the rules and regulations on the Commission thereunder, and the Trust Indenture Act, and the applicable rules and regulations thereunder, and does not include and, as amended or supplemented, if applicable, will not include any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading; the Prospectus, as of the date of its filing, and as amended or supplemented, if applicable, conforms or will conform in all material respects to the requirements of the Securities Act and the rules and regulations on the Commission thereunder and, as of the date of its filing, did not or will not include, and as of the Closing Date or the Additional Closing Date or as amended or supplemented, if applicable, will not include any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading; provided that the foregoing representations and warranties shall not apply to statements in or omissions from the Registration Statement or the Prospectus made in reliance upon and in conformity with information relating to the Underwriters furnished to the Company in writing by the Underwriters expressly for use therein, it being understood and agreed that the only such information is that described as such in the second paragraph of Section 7 hereof; (c) the documents incorporated or deemed to be incorporated by reference in the Registration Statement and the Prospectus, when they became effective or at the time they were or hereafter are filed with the Commission, conformed and will conform in all material respects with the requirements of the Securities Act, the Exchange Act or the rules and regulations of the Commission thereunder, as applicable, and, when read together with the other information in the Prospectus, at the time the Registration Statement became effective, at the time the Prospectus was filed and on the Closing Date and the Additional Closing Date, as the case may be, did not and will not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, and with respect to the Prospectus, in light of the circumstances under which they were made, not misleading; (d) the Company has been duly incorporated and is an existing corporation in good standing under the laws of the State of Delaware, with full corporate power and authority to own its properties and conduct its business as described in the Prospectus; and the Company is duly qualified to do business as a foreign corporation in good standing in all other jurisdictions in which its ownership or lease of property or the conduct of its business requires such qualification, except where the failure to be so qualified, individually or in the aggregate, would not have a material adverse effect -6- on the financial condition, business, properties or results of operations of the Company and its subsidiaries taken as a whole ("Material Adverse Effect"); (e) each subsidiary set forth on Schedule II hereto (each, a "Significant Subsidiary") of the Company has been duly incorporated or formed, as the case may be, and is an existing corporation, limited liability company or limited partnership in good standing under the laws of the jurisdiction of its incorporation or formation, as the case may be, with power and authority (corporate or other) to own its properties and conduct its business as described in the Prospectus; and each such Significant Subsidiary is duly qualified to do business as a foreign corporation, limited liability company or limited partnership in good standing in all other jurisdictions in which its ownership or lease of property or the conduct of its business requires such qualification, except where the failure to be so qualified, individually or in the aggregate, would not have a Material Adverse Effect; all of the issued and outstanding equity interests of each Significant Subsidiary have been duly authorized and validly issued and are fully paid and nonassessable (other than the shares of Series A Preferred Stock of El Paso Tennessee Pipeline Co. that are listed on the New York Stock Exchange); and the equity interests of each Significant Subsidiary owned by the Company, directly or through subsidiaries, are owned free from liens, claims, or adverse interests of any nature; (f) except for the registration of the Securities, the Purchase Contracts and the Notes under the Securities Act and such consents, approvals, authorizations, registrations or qualifications as may be required under the Trust Indenture Act, the Exchange Act and applicable state securities laws and rules and regulations of the National Association of Securities Dealers, Inc. ("NASD") in connection with the purchase and distribution of the Securities, the Purchase Contracts or the Notes by the Underwriters or the issuance of the Shares pursuant to the Purchase Contracts, no consent, approval, authorization or order of, or filing or registration with, any such court or governmental agency or body is required for the execution, delivery and performance of this Agreement by the Company and the consummation of the transactions contemplated hereby and thereby; (g) the execution, delivery and performance of this Agreement, the Purchase Contract Agreement (including the Purchase Contracts), the Indenture, the Pledge Agreement and the Remarketing Agreement and the issuance and sale of the Securities and compliance with the terms and provisions of this Agreement, the Indenture and the other Operative Documents, the Securities, the Notes and the Purchase Contracts will not result in a breach or violation of any of the terms and provisions of, or constitute a default under, (i) any statute, any rule, regulation or order of any governmental agency or body or any court, domestic or foreign, having -7- jurisdiction over the Company or any Significant Subsidiary or any of their properties, or (ii) any agreement or instrument to which the Company or any such Significant Subsidiary is a party or by which the Company or any such Significant Subsidiary is bound or to which any of the properties of the Company or any Significant Subsidiary is subject, or (iii) the charter or by-laws of the Company or any such Significant Subsidiary, except in the case of clauses (i) and (ii), for any such breach or violation which would not, individually or in the aggregate, have a Material Adverse Effect and the Company has full power and authority to authorize, issue and sell the Securities as contemplated by this Agreement; (h) this Agreement has been duly authorized, executed and delivered by the Company; (i) the Shares to be issued and sold by the Company pursuant to the Purchase Contracts have been duly authorized and reserved for issuance, and when issued and delivered in accordance with the terms of the Purchase Contracts, will be validly issued, fully paid and nonassessable and free of any preemptive or similar rights and will conform to the description thereof contained in the Company's Form 8-A/A filed pursuant to the Exchange Act and incorporated by reference in the Prospectus; (j) the Company has an authorized capitalization as set forth in the Prospectus, and all of the issued and outstanding shares of capital stock of the Company have been duly and validly authorized and issued, are fully paid and non-assessable, and conform to the description thereof contained in the Prospectus; (k) the Remarketing Agreement has been duly authorized by the Company and when executed and delivered by the Company and assuming due authorization, execution and delivery thereof by the other parties thereto, will constitute the valid and binding obligation of the Company enforceable against the Company in accordance with its terms, except to the extent that enforcement thereof may be limited by (i) the effects of bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance and other similar laws relating to or affecting creditors' rights generally, (ii) general equitable principles (whether considered in a proceeding in equity or at law) and (iii) an implied covenant of good faith and fair dealing; and will conform in all material respects to the descriptions thereof in the Prospectus; in addition, rights to indemnification thereunder may not be enforceable due to considerations of public policy; (l) each of the Purchase Contract Agreement and the Pledge Agreement has been duly authorized by the Company and, when executed and delivered by the Company and assuming due authorization, execution and delivery thereof by the other -8- parties thereto, the Purchase Contract Agreement and the Pledge Agreement will constitute valid and binding obligations of the Company enforceable against the Company in accordance with their respective terms, except to the extent that enforcement thereof may be limited by (i) the effects of bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance and other similar laws relating to or affecting creditors' rights generally, (ii) general equitable principles (whether considered in a proceeding in equity or at law) and (iii) an implied covenant of good faith and fair dealing; and each will conform in all material respects to the descriptions thereof in the Prospectus; (m) the Pledge Agreement creates, as collateral security for the performance when due by the holders from time to time of the Securities of their respective obligations under the Purchase Contracts constituting part of such Securities, a legal, valid and perfected security interest (as defined in the Uniform Commercial Code, as adopted and in effect in the State of New York), in favor of the Collateral Agent for the benefit of the Company, in the right, title and interest of such holders in the securities and other assets and interests pledged to the Collateral Agent pursuant to the Pledge Agreement; (n) the Indenture has been duly authorized, executed and delivered by the Company and duly qualified under the Trust Indenture Act, and constitutes the valid and binding obligations of the Company enforceable against the Company in accordance with its terms, except to the extent that enforcement thereof may be limited by (i) the effects of bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance and other similar laws relating to or affecting creditors' rights generally, (ii) general equitable principles (whether considered in a proceeding in equity or at law) and (iii) an implied covenant of good faith and fair dealing; and the Indenture will conform in all material respects to the descriptions thereof in the Prospectus; (o) the Notes have been duly authorized and when issued and delivered and upon payment for the Securities, will have been duly executed, authenticated (assuming due authentication by the Trustee), issued and delivered, and will constitute the valid and binding obligations of the Company, entitled to the benefits provided by the Indenture, and enforceable against the Company in accordance with their terms, except to the extent that enforcement thereof may be limited by (i) the effects of bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance and other similar laws relating to or affecting creditors' rights generally, (ii) general equitable principles (whether considered in a proceeding in equity or at law) and (iii) an implied covenant of good faith and fair dealing; and the Notes will conform in all material respects to the descriptions thereof in the Prospectus; -9- (p) the Securities have been duly authorized by the Company and at the Closing Date and the Additional Closing Date, as the case may be, after payment therefor and execution and delivery thereof in accordance with this Agreement, assuming due authentication thereof in accordance with the terms of the Purchase Contract Agreement, due authorization, execution and delivery thereof by the Purchase Contract Agent as attorney-in-fact for the holders thereof, and due authentication of the Notes by the Trustee will constitute the valid and binding obligations of the Company enforceable against the Company in accordance with their terms and entitled to the benefits of the Purchase Contract Agreement, except to the extent that enforcement thereof may be limited by (i) the effects of bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance and other similar laws relating to or affecting creditors' rights generally, (ii) general equitable principles (whether considered in a proceeding in equity or at law) and (iii) an implied covenant of good faith and fair dealing; and the Securities will conform in all material respects to the description thereof in the Prospectus. The Securities and the Shares have been duly registered under the Exchange Act and have been approved for listing on the New York Stock Exchange, subject to official notice of issuance; and the issuance of the Securities is not subject to preemptive or other similar rights. (q) neither the Company nor any Significant Subsidiary is (i) in violation of its respective charter or by-laws or (ii) in default in the performance of any obligation, agreement, covenant or condition contained in any indenture, loan agreement, mortgage, lease or other agreement or instrument that is material to the Company and its subsidiaries, taken as a whole, to which the Company or any Significant Subsidiary is a party or by which the Company or any Significant Subsidiary or their respective property is bound, except in the case of clause (ii) for any such default as would not, individually or in the aggregate, have a Material Adverse Effect; (r) except as disclosed in the Prospectus, the Company and its Significant Subsidiaries have good and indefeasible title to all real properties and all other properties and assets owned by them, in each case free from liens, encumbrances and defects that would materially affect the value thereof or materially interfere with the use made or to be made thereof by them; and except as disclosed in the Prospectus, the Company and its Significant Subsidiaries hold any leased real or personal property under valid and enforceable leases with no exceptions that would materially interfere with the use made or to be made thereof by them; (s) except as disclosed in the Prospectus, neither the Company nor any of its Significant Subsidiaries is in violation of any statute, any rule, regulation, decision or order of any governmental agency or body or any court, domestic or foreign, relating to the use, disposal or release of hazardous or toxic substances or relating to -10- the protection or restoration of the environment or human exposure to hazardous or toxic substances (collectively, "environmental laws"), owns or operates any real property contaminated with any substance that is subject to any environmental laws, is liable for any off-site disposal or contamination pursuant to any environmental laws, or is subject to any claim relating to any environmental laws, which violation, contamination, liability or claim would, individually or in the aggregate, have a Material Adverse Effect; and, except as disclosed in the Prospectus, the Company is not aware of any pending investigation which could reasonably be expected by the Company to lead to such a claim; (t) except as disclosed in the Prospectus and the documents incorporated by reference therein, there are no pending actions, suits or proceedings against or affecting the Company, any of its Significant Subsidiaries or any of their respective properties that, if determined adversely to the Company or any of its Significant Subsidiaries, would individually or in the aggregate have a Material Adverse Effect, or would materially and adversely affect the ability of the Company to perform its obligations under this Agreement, or which are otherwise material in the context of the sale of the Securities; and no such actions, suits or proceedings are, to the Company's knowledge, threatened or contemplated; (u) the financial statements incorporated by reference in the Registration Statement and the Prospectus present fairly the consolidated financial position of the Company and its consolidated subsidiaries as of the dates shown and their results of operations and cash flows for the periods shown, and, except as otherwise disclosed in the Prospectus, such consolidated financial statements have been prepared in conformity with the generally accepted accounting principles in the United States applied on a consistent basis; and the schedules included in the Registration Statement present fairly the information required to be stated therein; and the assumptions used in preparing the pro forma financial statements incorporated by reference in the Registration Statement and the Prospectus provide a reasonable basis for presenting the significant effects directly attributable to the transactions or events described therein, the related pro forma adjustments give appropriate effect to those assumptions, and the pro forma columns therein reflect the proper application of those adjustments to the corresponding historical financial statement amounts; (v) except as disclosed in the Prospectus, since the date of the latest audited financial statements incorporated by reference in the Prospectus, there has been no material adverse change, nor any development or event involving a prospective material adverse change, in the financial condition, business, properties or results of operations of the Company and its subsidiaries taken as a whole, and, except as disclosed in or contemplated by the Prospectus, there has been no dividend or distribution of any kind declared, paid or made by the Company on any class of its capital stock; -11- (w) no "nationally recognized statistical rating organization" as such term is defined for purposes of Rule 436(g)(2) under the Securities Act has indicated to the Company that it is considering (i) the downgrading, suspension or withdrawal of, or any review for a possible change that does not indicate the direction of the possible change in, any rating assigned to the Company or any securities of the Company or (ii) any change in the outlook for any rating of the Company or any securities of the Company; (x) the Company is not and, after giving effect to the offering and sale of the Securities and the application of the proceeds thereof as described in the Prospectus, will not be (i) an "investment company" as defined in the Investment Company Act of 1940, as amended, or (ii) a "holding company" within the meaning of, or subject to regulation under, the Public Utility Holding Company Act of 1935, as amended, and the rules and regulations promulgated by the Commission thereunder; (y) each of PricewaterhouseCoopers LLP and Deloitte & Touche LLP, who have expressed their opinions on the audited financial statements and related schedules included or incorporated by reference in the Registration Statement and the Prospectus are independent public accountants as required by the Securities Act; (z) the Company is subject to and in compliance with the reporting requirements of Section 13 or Section 15(d) of the Exchange Act. The Common Stock is registered pursuant to Section 12(b) of the Exchange Act and is listed on the New York Stock Exchange and the Pacific Exchange, and the Company has taken no action designed to, or likely to have the effect of, terminating the registration of the Common Stock under the Exchange Act or delisting the Common Stock from the New York Stock Exchange or the Pacific Exchange, nor has the Company received any notification that the Commission or the NASD is contemplating terminating such registration or listing; and the Securities have been approved for listing on the New York Stock Exchange, subject to notice of issuance; and (aa) the Company has not distributed and, prior to the later of (i) the Closing Date and (ii) the completion of the distribution of the Securities, will not distribute any written offering material in connection with the offering and sale of the Securities other than the Registration Statement or any amendment thereto, or the Prospectus or any amendment or supplement thereto, or other materials, if any, permitted by the Securities Act. -12- 5. The Company covenants and agrees with the several Underwriters as follows: (a) to file the final Prospectus with the Commission within the time period specified by Rule 424(b) under the Securities Act and to file promptly all reports and any definitive proxy or information statements required to be filed by the Company with the Commission pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the date of the Prospectus and for so long as the delivery of a prospectus is required in connection with the offering or sale of the Securities; and to furnish copies of the Prospectus to the Underwriters in New York City prior to 10:00 a.m., New York City time, on the Business Day next succeeding the date of this Agreement in such quantities as the Representatives may reasonably request; (b) to deliver, at the expense of the Company, to the Underwriters signed copies of the Registration Statement (as originally filed) and each amendment thereto, in each case including exhibits and documents incorporated by reference therein, and as many copies of the Prospectus (including all amendments and supplements thereto) and documents incorporated by reference therein as the Representatives may reasonably request; (c) before filing any amendment or supplement to the Registration Statement or the Prospectus during such period of time after the first date of the public offering of the Securities a prospectus relating to the Securities is required by law to be delivered in connection with sales by the Underwriters or any dealer (the "Distribution Period") to furnish to the Underwriters a copy of the proposed amendment or supplement for review and not to file any such proposed amendment or supplement to which the Representatives reasonably and timely object; (d) to advise both Representatives promptly, and to confirm such advice in writing, (i) when any amendment to the Registration Statement has been filed or becomes effective, (ii) when any supplement to the Prospectus or any amended Prospectus has been filed and to furnish the Underwriters with copies thereof, (iii) of any request by the Commission for any amendment to the Registration Statement or any amendment or supplement to the Prospectus or for any additional information, (iv) of the issuance by the Commission of any stop order suspending the effectiveness of the Registration Statement or of any order preventing or suspending the use of the Prospectus or any supplemental prospectus or the initiation or, to the Company's knowledge, threatening of any proceeding for that purpose, (v) of the occurrence of any event, as a result of which the Prospectus as then amended or supplemented would include an untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein, in light of the circumstances when the Prospectus is delivered to a purchaser, not misleading, and (vi) of the receipt by the -13- Company of any notification with respect to any suspension of the registration or qualification of the Securities for offer and sale in any jurisdiction or the initiation or, to the Company's knowledge, threatening of any proceeding for such purpose, and to use its commercially reasonable efforts to prevent the issuance of any such stop order, or of any order preventing or suspending the use of the Prospectus or any supplemental prospectus, or of any order suspending any such registration or qualification of the Securities, or notification of any such order thereof and, if issued, to obtain as soon as possible the withdrawal thereof; (e) if, during the Distribution Period, any event shall occur as a result of which it is necessary for the Underwriters to amend or supplement the Prospectus in order to make the statements therein, in light of the circumstances when the Prospectus is delivered to a purchaser, not misleading, or if it is necessary for the Underwriters to amend or supplement the Prospectus to comply with applicable law, the Company shall use its commercially reasonable efforts forthwith to prepare and furnish, at the expense of the Company, to the Underwriters and to the dealers (whose names and addresses the Underwriters will furnish to the Company) to which Securities may have been sold by the Underwriters and to any other dealers upon request, such amendments or supplements to the Prospectus as may be necessary so that the statements in the Prospectus as so amended or supplemented will not, in light of the circumstances when the Prospectus is delivered to a purchaser, be misleading or so that the Prospectus will comply with law; neither the Representatives' consent to, nor the Underwriters' delivery of, any such amendment or supplement shall constitute a waiver of any of the conditions set forth in Section 6 hereof; (f) to endeavor to register or qualify the Securities for offer and sale under the securities or blue sky laws of such jurisdictions as the Representatives shall reasonably request and to continue such registration or qualification in effect so long as reasonably required for distribution of the Securities; provided that the Company shall not be required to file a general consent to service of process in any such jurisdiction or to qualify as a foreign corporation in any jurisdiction in which it is not so qualified; (g) to make generally available to its security holders and to the Underwriters as soon as practicable an earnings statement covering a period of at least twelve months beginning not later than the first fiscal quarter of the Company occurring after the date hereof, which shall satisfy the provisions of Section 11(a) of the Securities Act and Rule 158 promulgated thereunder; (h) during the period when the Prospectus is required to be delivered under the Securities Act or the Exchange Act in connection with sales of the Securities, to file all documents required to be filed by it with the Commission pursuant to Section 13, 14 or 15 of the Exchange Act within the time periods required by the Exchange Act; -14- (i) for a period of 90 days from the date of the public offering of the Securities not to directly or indirectly (i) offer, pledge, announce the intention to sell, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase, or otherwise transfer or dispose of, directly or indirectly, or file with the Commission a registration statement under the Act relating to, any Securities, Purchase Contracts or Common Stock or any securities substantially similar to Securities, Purchase Contracts or Common Stock or any securities convertible into or exchangeable or exercisable for Securities, Purchase Contracts or Common Stock or (ii) enter into any swap, option, future, forward or other agreement that transfers, in whole or in part, any of the economic consequences of ownership of the Securities, Purchase Contracts or Common Stock, whether any such transaction described in clause (i) or (ii) above is to be settled by delivery of Common Stock or such other securities, in cash or otherwise without the prior written consent of both Representatives, which shall not be unreasonably withheld, other than (i) the Securities to be sold hereunder, (ii) any shares of Common Stock of the Company issued upon the conversion of any convertible debentures, convertible preferred stock or other convertible securities or the exercise of options, warrants and rights, in each case, outstanding on the date of the Prospectus, (iii) stock issued upon the exercise of options or options granted or under existing employee stock purchase or option plans or (iv) shares issued under the Company's direct stock purchase and dividend reinvestment plan; (j) to use the net proceeds received by the Company from the sale of the Securities pursuant to this Agreement in the manner specified in the Prospectus under the caption "Use of Proceeds"; (k) whether or not the transactions contemplated in this Agreement are consummated or this Agreement is terminated, to pay or cause to be paid all reasonable costs and expenses incident to the performance of its obligations hereunder, including without limiting the generality of the foregoing, all costs and expenses (i) incident to the preparation, issuance, execution and delivery of the Securities, (ii) incident to the preparation, printing and filing under the Securities Act of the Registration Statement, the Prospectus and any supplemental prospectus (including in each case all exhibits, amendments and supplements thereto), (iii) incurred in connection with the registration or qualification of the Securities under the securities or blue sky laws of such jurisdictions in the United States as the Representatives may reasonably designate (including fees of counsel for the Underwriters and its disbursements), (iv) in connection with the listing of the Securities on the New York -15- Stock Exchange, (v) expenses related to any filing with the NASD, (vi) in connection with the printing (including word processing and duplication costs) and delivery of this Agreement, any blue sky survey and the furnishing to the Underwriters and dealers of copies of the Registration Statement and the Prospectus, including mailing and shipping, as herein provided, (vii) any expenses incurred by the Company in connection with a "road show" presentation to potential investors, (viii) the cost of preparing certificates and (ix) the cost and charges of any transfer agent and any registrar provided that, except as otherwise provided herein, the Underwriters shall pay their own costs and expenses including the fees and expenses of their counsel and any transfer taxes on the Securities which they may sell and the expenses of advertising any offering of the Securities made by the Underwriters; and (l) to use its best efforts, subject to official notice of issuance, to list the Securities and Shares on the New York Stock Exchange. 6. The obligations of the several Underwriters hereunder to purchase the Securities on the Closing Date or the Additional Closing Date, as the case may be, are subject to the performance by the Company of its obligations hereunder and to the following additional conditions: (a) no stop order suspending the effectiveness of the Registration Statement or any post-effective amendment shall be in effect, and no proceedings for such purpose shall be pending before or threatened by the Commission; the Prospectus shall have been filed with the Commission pursuant to Rule 424(b) within the applicable time period prescribed for such filing by the rules and regulations under the Securities Act and in accordance with Section 5(a) hereof; and all requests for additional information shall have been complied with to the satisfaction of the Underwriters; (b) the representations and warranties of the Company contained herein are true and correct on and as of the Closing Date or the Additional Closing Date, as the case may be, as if made on and as of the Closing Date or the Additional Closing Date, as the case may be, and the Company shall have complied with all agreements and all conditions on its part to be performed or satisfied hereunder at or prior to the Closing Date or the Additional Closing Date, as the case may be; (c) subsequent to the execution and delivery of this Agreement and prior to the Closing Date or the Additional Closing Date, as the case may be, there shall not have occurred any downgrading, nor shall any notice have been given of (i) any downgrading, (ii) any intended or potential downgrading or (iii) any review or possible change that does not indicate an improvement, in the rating accorded any securities of or guaranteed by the Company by any "nationally recognized statistical rating organization", as such term is defined for purposes of Rule 436(g)(2) under the Securities Act; -16- (d) since the respective dates as of which information is given in the Prospectus there shall not have been any change in the capital stock or long-term debt of the Company or any of its subsidiaries or any material adverse change, or any development involving a prospective material adverse change, in or affecting the financial condition, business, properties or results of operations of the Company and its subsidiaries, taken as a whole, otherwise than as set forth or contemplated in the Prospectus, the effect of which in the judgment of a majority in interest of the Underwriters, including both Representatives, makes it impracticable or inadvisable to proceed with the public offering or the delivery of the Securities on the Closing Date or the Additional Closing Date, as the case may be, on the terms and in the manner contemplated in the Prospectus; and neither the Company nor any of its subsidiaries has sustained since the date of the latest audited financial statements included or incorporated by reference in the Prospectus any material loss or interference with its business from fire, explosion, flood or other calamity, whether or not covered by insurance, or from any labor dispute or court or governmental action, order or decree, otherwise than as set forth or contemplated in the Prospectus; (e) the Underwriters shall have received on and as of the Closing Date or the Additional Closing Date, as the case may be, a certificate of an executive officer of the Company, with specific knowledge about the Company's financial matters, satisfactory to the Underwriters to the effect set forth in subsections (a) through (d) of this Section and to the further effect that there has not occurred any material adverse change, or any development involving a prospective material adverse change, in or affecting the financial condition, business, properties or results of operations of the Company and its subsidiaries taken as a whole from that set forth or contemplated in the Registration Statement; (f) Locke Liddell & Sapp LLP, counsel for the Company, shall have furnished to the Underwriters their written opinion, dated the Closing Date or the Additional Closing Date, as the case may be, in form and substance satisfactory to the Underwriters, to the effect that: (i) the Shares to be issued and sold by the Company pursuant to the settlement of the Purchase Contracts, without regard to the antidilution provisions thereof, have been duly authorized and reserved for issuance, and when issued and delivered in accordance with the terms of the Purchase Contract Agreement, will be duly and validly issued, fully paid and non-assessable and free of any preemptive or similar rights; and the authorized capital stock of the Company conforms, as to legal matters, in all material -17- respects to the description thereof contained in the Company's Form 8-A/A filed pursuant to the Exchange Act and incorporated by reference in the Prospectus; (ii) no consent, approval, authorization or order of, or filing with, any governmental agency or body or any court is required for the consummation of the transactions contemplated by this Agreement in connection with the issuance or sale of the Securities, the Purchase Contracts or the Notes by the Company or the issuance of the Shares pursuant to the Purchase Contracts, except such as have been obtained and made under the Securities Act, the Trust Indenture Act or the Exchange Act and such as may be required under state securities laws, as to which such counsel need not opine; (iii) the execution and delivery by the Company of, and the performance by the Company of its obligations under, this Agreement, the Purchase Contract Agreement (including the Purchase Contracts), the Indenture, the Pledge Agreement and the Remarketing Agreement, and the issuance and sale by the Company of the Securities, the Purchase Contracts and the Notes will not violate (i) any provision of applicable United States federal law, New York law or Delaware General Corporation Law, or (ii) the Certificate of Incorporation or Bylaws of the Company, and the Company has full power and authority to authorize, issue and sell the Securities, the Purchase Contracts and the Notes as contemplated by this Agreement and to issue the Shares pursuant to the Purchase Contracts; (iv) the Registration Statement has become effective under the Securities Act, the Prospectus was filed with the Commission pursuant to Rule 424(b) of the rules and regulations of the Commission thereunder, and to such counsel's knowledge, no stop order suspending the effectiveness of the Registration Statement or any part thereof has been issued and no proceedings for that purpose have been instituted or are pending or contemplated under the Securities Act, and the Registration Statement, as of its effective date, and the Prospectus, as of the date of this Agreement, and any amendment or supplement thereto, as of its date, complied as to form in all material respects with the requirements of the Securities Act and the rules and regulations of the Commission thereunder; the descriptions in the Registration Statement and Prospectus of statutes, legal and governmental proceedings and contracts and other documents are accurate in all material respects and fairly present in all material respects the information required to be shown; and such counsel does not know of any legal or governmental proceedings required to be described in the Prospectus which are not described as required or of any contracts or -18- documents of a character required to be described in the Registration Statement or Prospectus or to be filed as exhibits to the Registration Statement which are not described and filed as required, it being understood that such counsel need not express an opinion as to the financial statements and schedules or other financial data contained in the Registration Statement or the Prospectus; (v) each document, if any, filed pursuant to the Exchange Act and incorporated by reference in the Prospectus (except for financial statements and schedules and other financial or statistical data included or incorporated by reference therein or omitted therefrom, as to which such counsel need not express an opinion) appeared on its face to be appropriately responsive in all material respects with the Exchange Act; and the Registration Statement and Prospectus (except for financial statements and schedules and other financial or statistical data included or incorporated by reference therein or omitted therefrom, as to which such counsel need not express an opinion) appeared on their face to be appropriately responsive in all material respects with the requirements of the Securities Act; (vi) this Agreement has been duly authorized, executed and delivered by the Company; (vii) the Company is not and, after giving effect to the offering and sale of the Securities and the application of the proceeds thereof as described in the Prospectus, will not be, (i) an "investment company" as such term is defined in the Investment Company Act of 1940, as amended, or (ii) a "holding company" within the meaning of, or subject to regulation under, the Public Utility Holding Company Act of 1935, as amended, and the rules and regulations promulgated by the Commission thereunder; (viii) the Purchase Contract Agreement has been duly authorized, executed and delivered by the Company and, assuming due authorization, execution and delivery by the Purchase Contract Agent, constitutes a valid and legally binding obligation of the Company enforceable against the Company in accordance with its terms, except to the extent that enforcement thereof may be limited by the effects of bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance and other similar laws relating to or affecting creditors' rights generally, general equitable principles (whether considered in a proceeding in equity or at law) or an implied covenant of good faith and fair dealing; (ix) the Securities have been duly authorized, executed and issued by the Company and assuming (a) due execution of the Securities by the Purchase Contract Agent, as attorney-in-fact of the holders thereof, (b) due -19- authentication of the Securities by the Purchase Contract Agent and (c) due authentication of the Notes by the Trustee, upon payment and delivery thereof in accordance with the Underwriting Agreement, the Securities will constitute valid and legally binding obligations of the Company enforceable against the Company in accordance with their terms and entitled to the benefits of the Purchase Contract Agreement, except to the extent that enforcement thereof may be limited by the effects of bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance and other similar laws relating to or affecting creditors' rights generally, general equitable principles (whether considered in a proceeding in equity or at law) or an implied covenant of good faith and fair dealing; and the Securities conform in all material respects, as to legal matters, to the statements with respect thereto made in the Registration Statement and the Prospectus, as supplemented by the Prospectus Supplement; (x) the Pledge Agreement has been duly authorized, executed and delivered by the Company, and assuming due authorization, execution and delivery by the other parties thereto, the Pledge Agreement constitutes a valid and legally binding obligation of the Company enforceable against the Company in accordance with its terms, except to the extent that enforcement thereof may be limited by the effects of bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance and other similar laws relating to or affecting creditors' rights generally, general equitable principles (whether considered in a proceeding in equity or at law) or an implied covenant of good faith and fair dealing; (xi) the Remarketing Agreement has been duly authorized, executed and delivered by the Company, and assuming due authorization, execution and delivery by the Remarketing Agent, the Remarketing Agreement constitutes a valid and legally binding obligation of the Company enforceable against the Company in accordance with its terms, except to the extent that enforcement thereof may be limited by the effects of bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance and other similar laws relating to or affecting creditors' rights generally, general equitable principles (whether considered in a proceeding in equity or at law) or an implied covenant of good faith and fair dealing; in addition, rights to indemnification thereunder may not be enforceable due to considerations of public policy; (xii) the Indenture has been duly authorized, executed and delivered by the Company and duly qualified under the Trust Indenture Act of 1939, as amended and, assuming due authorization, execution and delivery by the Trustee, constitutes a valid and binding obligation of the Company enforceable -20- against the Company in accordance with its terms, except to the extent that enforcement thereof may be limited by the effects of bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance and other similar laws relating to or affecting creditors' rights generally, general equitable principles (whether considered in a proceeding in equity or at law) or an implied covenant of good faith and fair dealing; and (xiii) the Senior Notes have been duly authorized, executed and issued by the Company and, assuming due authentication thereof by the Trustee, and upon payment thereof by you in accordance with the Underwriting Agreement, will constitute valid and legally binding obligations of the Company enforceable against the Company in accordance with their terms, except to the extent that enforcement thereof may be limited by the effects of bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance and other similar laws relating to or affecting creditors' rights generally, general equitable principles (whether considered in a proceeding in equity or at law) or an implied covenant of good faith and fair dealing; and the Senior Notes conform in all material respects, as to legal matters, to the statements with respect thereto made in the Registration Statement and the Prospectus, as supplemented by the Prospectus Supplement. (xiv) the statements made in the Prospectus Supplement under the captions "Prospectus Supplement Summary -The Offering", "Description of the Equity Security Units" and "Description of the Senior Notes" and the statements made in the Basic Prospectus under the captions "Description of Capital Stock", "Description of the Debt Securities", "Description of Purchase Contracts" and "Description of Units", insofar as they purport to constitute summaries of certain terms of documents referred to therein, constitute accurate summaries of the terms of such documents in all material respects. (xv) subject to the qualifications, exceptions, assumptions and limitations stated therein, the statements made in the Prospectus Supplement under the caption "United States Federal Income Tax Consequences", insofar as they purport to constitute summaries of matters of United States federal tax law and regulations or legal conclusions with respect thereto, constitute accurate summaries of the matters described therein in all material respects. Such opinion shall state that the opinions set forth therein, and, in particular, with respect to paragraphs (viii) through (xiii) above, are subject (i) to the effects of bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance and other similar laws relating to or affecting creditors' rights generally, (ii) general equitable principles (whether considered in a proceeding in equity or at law) and (iii) an implied -21- covenant of good faith and fair dealing; provided, however, that the upon the occurrence of a Termination Event (as defined in the Purchase Contract Agreement), the Bankruptcy Code (11 U.S.C. Sections 101-1330, as amended) should not substantively limit the provisions of Sections 3.15 and 5.8 of the Purchase Contract Agreement and Section 4.3 of the Pledge Agreement that require termination of the Purchase Contracts and release of the Collateral Agent's security interest in, as the case may be, (x) the Pledged Notes (as defined in the Pledge Agreement) , the Pledged Treasury Consideration (as defined in the Pledge Agreement) and the Pledged Applicable Ownership Interest in the Treasury Portfolio (as defined in the Pledge Agreement), in the case of Equity Security Units, or (y) the Pledged Treasury Securities (as defined in the Pledge Agreement), in the case of Stripped Units (as defined in the Pledge Agreement); and provided further, that no opinion is expressed as to whether a court exercising bankruptcy jurisdiction might issue a temporary restraining order or provide other interim relief that would delay the exercise of such termination right for a period of time pending final adjudication of any challenge to the exercise of such right during a bankruptcy case involving the Company. In rendering such opinions, such counsel may rely (A) as to matters involving the application of laws other than the laws of the United States and the States of Delaware, New York and Texas, to the extent such counsel deems proper and to the extent specified in such opinion, if at all, upon an opinion or opinions (in form and substance reasonably satisfactory to Underwriters' counsel) of other counsel reasonably acceptable to the Underwriters' counsel, familiar with the applicable laws; and (B) as to matters of fact, to the extent such counsel deems proper, on certificates of responsible officers of the Company and certificates or other written statements of officials of jurisdictions having custody of documents respecting the corporate existence or good standing of the Company. The opinion of such counsel for the Company shall state that the opinion of any such other counsel upon which they relied is in form satisfactory to such counsel and, in such counsel's opinion, the Underwriters and it is justified in relying thereon. In addition, such counsel shall state that in the course of the preparation by the Company of the Registration Statement and the Prospectus (including the documents incorporated by reference therein), such counsel has participated in conferences with certain of the officers and representatives of the Company, the Company's independent accountants, the Underwriters and counsel for the Underwriters at which the Registration Statement and the Prospectus were discussed. Between the date of effectiveness of the Registration Statement, the Closing Date and the Additional Closing Date, if applicable, such counsel participated in additional conferences with certain officers and representatives of the Company, the Company's independent accountants, the Underwriters and counsel for the Underwriters at which portions of -22- the Registration Statement and the Prospectus were discussed. Such counsel need not pass upon and or assume any responsibility for the accuracy, completeness or fairness of the statements contained or incorporated by reference in the Registration Statement or the Prospectus nor make an independent check or verification thereof, except as specifically described in the opinion in paragraphs (iv) and (v) above. Such counsel shall further state that, subject to the foregoing, no facts have come to such counsel's attention that have caused them to believe that the Registration Statement, at the time it became effective, contained or incorporated by reference any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein not misleading, or that Prospectus, as of its date, contained or incorporated by reference any untrue statement of a material fact or omitted to state a material fact necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. Also, subject to the foregoing, such counsel shall state that no facts have come to such counsel's attention in the course of the proceedings described in the first and second sentences of this paragraph that caused them to believe that the Prospectus as of the Closing Date or Additional Closing Date, as applicable, contains or incorporates by reference any untrue statement of a material fact or omits to state a material fact necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. Such counsel need express no belief, however, with respect to financial statements, schedules or notes thereto or other financial data included or incorporated by reference in or omitted from the Registration Statement or Prospectus. The opinion of Locke Liddell & Sapp LLP described above shall be rendered to the Underwriters at the request of the Company and shall so state therein; (g) David Siddall, Associate General Counsel for the Company, shall have furnished to the Underwriters his written opinion, dated the Closing Date or the Additional Closing Date, as the case may be, in form and substance satisfactory to the Underwriters, to the effect that: (i) each of the Company and its Significant Subsidiaries has been duly incorporated, is validly existing as a corporation in good standing under the laws of its jurisdiction of incorporation and has the corporate power and authority to own, lease and operate its properties and to conduct its business as described in the Prospectus, and each is duly qualified as a foreign corporation to transact business and is in good standing in each jurisdiction in which the conduct of its business or its ownership or leasing of property requires such qualification, except where the failure to be so qualified or to be in good standing, individually or in the aggregate, would not have a material adverse -23- effect on the business, properties, financial condition or results of operations of the Company and its subsidiaries, taken as a whole; (ii) the execution, delivery and performance of this Agreement, the Purchase Contract Agreement (including the Purchase Contracts), the Indenture, the Notes, the Pledge Agreement and the Remarketing Agreement, the compliance by the Company with all the provisions hereof and thereof and the consummation of the transactions contemplated hereby and thereby will not, to such counsel's knowledge, (A) violate any indenture, loan agreement, mortgage, lease or other agreement or instrument to which the Company or any Significant Subsidiary is a party or by which the Company or any subsidiary or their respective property is bound or (B) violate or conflict with any judgment, order or decree of any court or any governmental body or agency having jurisdiction over the Company, any subsidiary or their respective property, except in each case, for such violations as would not have a material adverse effect on the business, properties, financial condition or results of operation of the Company and its subsidiaries, taken as a whole; (iii) to such counsel's knowledge after due inquiry, there are no legal or governmental proceedings required to be described in the Prospectus which are not described as required or of any contracts or documents of a character required to be described in the Registration Statement or Prospectus or to be filed as exhibits to the Registration Statement which are not described and filed as required; it being understood that such counsel need express no opinion as to the financial statements or schedules or other financial data contained in the Registration Statement or the Prospectus; (iv) the statements under (A) the caption "Item 3 - Legal Proceedings" of the Company's most recent annual report on Form 10-K incorporated by reference into the Prospectus and (B) the caption "Item 1 - Legal Proceedings" of Part II of the Company's quarterly report on Form 10-Q filed since such annual report, in each case insofar as such statements constitute summaries of the legal matters, documents or proceedings referred to therein, fairly present as of the date of the applicable report the information disclosed therein in all material respects; and (v) (A) the execution and delivery by the Company of, and the performance by the Company of its obligations under, this Agreement, the Purchase Contract Agreement (including the Purchase Contracts), the Indenture, the Notes, the Pledge Agreement and the Remarketing Agreement will not violate any provisions of any applicable laws and regulations specifically governing the generation, transportation, distribution or delivery of natural gas, oil, -24- electricity or other related commodities or services, including pipelines, transmission lines, storage facilities and related facilities and equipment, or the import or export of such commodities or services (collectively, the "Energy Industry") and (B) no consent, approval, authorization or order of or qualification with any United States federal body or agency specifically regulating the Energy Industry is required for the performance by the Company of its obligations under this Agreement, except in each of the foregoing cases for such violations or failures to obtain such consent, approval, authorization, order or qualification as would not have a material adverse effect on the business, properties, financial condition or results of operation of the Company and its subsidiaries, taken as a whole. The opinion of David Siddall described above shall be rendered to the Underwriters at the request of the Company and shall so state therein; (h) on the Closing Date or Additional Closing Date, each of PricewaterhouseCoopers LLP and Deloitte and Touche LLP shall have furnished to the Underwriters letters, dated the respective dates of delivery thereof, in form and substance satisfactory to the Representatives, containing statements and information of the type customarily included in accountants' "comfort letters" to underwriters with respect to the financial statements and certain financial information contained in the Registration Statement and the Prospectus; (i) the Underwriters shall have received on and as of the Closing Date or Additional Closing Date, as the case may be, opinions of Andrews & Kurth Mayor, Day, Caldwell & Keeton L.L.P. and Simpson Thacher & Bartlett, counsel to the Underwriters, with respect to such matters as the Underwriters may reasonably request, and such counsel shall have received such papers and information as they may reasonably request to enable them to pass upon such matters; (j) the Underwriters shall have received on and as of the Closing Date or Additional Closing Date, as the case may be, an opinion of Cravath, Swaine & Moore, counsel to the Purchase Contract Agent, with respect to such matters as the Underwriters may reasonably request; (k) the "lock-up" agreements, each substantially in the form of Exhibit A hereto, between you on the one hand and each of the executive officers and directors of the Company, on the other hand, relating to sales and certain other dispositions of Securities, Purchase Contracts, shares of Common Stock or certain other securities, delivered to you on or before the date hereof, shall be in full force and effect on the Closing Date or Additional Closing Date, as the case may be; and -25- (l) on or prior to the Closing Date or Additional Closing Date, as the case may be, the Company shall have furnished to the Underwriters such further certificates and documents as the Representatives shall reasonably request. 7. The Company agrees to indemnify and hold harmless each Underwriter, each affiliate of any Underwriter which assists the Underwriters in the distribution of the Securities and each person, if any, who controls any Underwriter within the meaning of either Section 15 of the Securities Act or Section 20 of the Exchange Act, from and against any and all losses, claims, damages and liabilities (including, without limitation, the legal fees and other expenses reasonably incurred in connection with any suit, action or proceeding or any claim asserted as such expenses are incurred) insofar as such losses, claims, damages or liabilities are (i) caused by any untrue statement or alleged untrue statement of a material fact contained in the Registration Statement or the Prospectus (the term Prospectus for the purpose of this Section 7 being deemed to include the Prospectus and the Prospectus as amended or supplemented if the Company shall have furnished any amendments or supplements thereto) or (ii) caused by any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, provided in any case that the Company shall not be liable to the extent that such losses, claims, damages or liabilities are caused by any untrue statement or omission or alleged untrue statement or omission made in reliance upon and in conformity with information relating to any Underwriter furnished to the Company in writing by the Underwriters expressly for use therein, it being understood and agreed that the only such information furnished by any Underwriter consists of the information described as such in the paragraph below. Each Underwriter agrees, severally and not jointly, to indemnify and hold harmless the Company, its directors, its officers who sign the Registration Statement and each person who controls the Company within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act to the same extent as the foregoing indemnity from the Company to each Underwriter, but only with reference to information relating to such Underwriter furnished to the Company in writing by such Underwriter expressly for use in the Registration Statement, the Prospectus, any amendment or supplement thereto, it being understood and agreed that the only such information furnished by any Underwriter consists of the following information in the Prospectus furnished on behalf of each Underwriter: the table in the first paragraph, the concession and reallowance figures appearing in the third paragraph and the information in the seventh paragraph, each under the caption "Underwriting." If any suit, action, proceeding (including any governmental or regulatory investigation), claim or demand shall be brought or asserted against any person in respect of which indemnity may be sought pursuant to either of the two preceding paragraphs, such person (the "Indemnified Person") shall promptly notify the person against whom such -26- indemnity may be sought (the "Indemnifying Person") in writing, and the Indemnifying Person, upon request of the Indemnified Person, shall retain counsel reasonably satisfactory to the Indemnified Person to represent the Indemnified Person and any others the Indemnifying Person may designate in such proceeding and shall pay the reasonable fees and expenses of such counsel related to such proceeding. In any such proceeding, any Indemnified Person shall have the right to retain its own counsel, but the fees and expenses of such counsel shall be at the expense of such Indemnified Person unless (i) the Indemnifying Person and the Indemnified Person shall have mutually agreed to the contrary, (ii) the Indemnifying Person has failed within a reasonable time to retain counsel reasonably satisfactory to the Indemnified Person or (iii) the named parties in any such proceeding (including any impleaded parties) include both the Indemnifying Person and the Indemnified Person and representation of both parties by the same counsel would be inappropriate due to actual or potential differing interests between them. It is understood that the Indemnifying Person shall not, in connection with any proceeding or related proceeding in the same jurisdiction, be liable for the reasonable fees and expenses of more than one separate firm (in addition to any local counsel) for all Indemnified Persons, and that all such fees and expenses shall be reimbursed as they are incurred. Any such separate firm for the Underwriters, each affiliate of the Underwriters which assists the Underwriters in the distribution of the Securities and such control persons of the Underwriters shall be designated in writing by the Underwriters and any such separate firm for the Company, its directors, its officers who sign the Registration Statement and such control persons of the Company shall be designated in writing by the Company. The Indemnifying Person shall not be liable for any settlement of any proceeding effected without its written consent, but if settled with such consent or if there be a final judgment for the plaintiff in any such action, the Indemnifying Person agrees to indemnify and hold harmless any Indemnified Person from and against any loss or liability by reason of such settlement or judgment. Notwithstanding the foregoing sentence, if at any time an Indemnified Person shall have requested an Indemnifying Person to reimburse the Indemnified Person for fees and expenses of counsel as contemplated by the second and third sentences of this paragraph, the Indemnifying Person agrees that it shall be liable for any settlement of any proceeding effected without its written consent if (i) such settlement is entered into more than 45 days after receipt by such Indemnifying Person of the aforesaid request and (ii) such Indemnifying Person shall not have reimbursed the Indemnified Person in accordance with such request prior to the date of such settlement. No Indemnifying Person shall, without the prior written consent of the Indemnified Person, effect any settlement of any pending or threatened proceeding in respect of which any Indemnified Person is or could have been a party and indemnity could have been sought hereunder by such Indemnified Person, unless such settlement includes an unconditional release of such Indemnified Person from all liability on claims that are the subject matter of such proceeding. If the indemnification provided for in the first or second paragraphs of this Section 7 is unavailable to an Indemnified Person or insufficient in respect of any losses, -27- claims, damages or liabilities referred to therein, then each Indemnifying Person under such paragraph, in lieu of indemnifying such Indemnified Person thereunder, shall contribute to the amount paid or payable by such Indemnified Person as a result of such losses, claims, damages or liabilities (i) in such proportion as is appropriate to reflect the relative benefits received by the Company on the one hand and the Underwriters on the other hand from the offering of the Securities or (ii) if the allocation provided by clause (i) above is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause (i) above but also the relative fault of the Company on the one hand and the Underwriters on the other hand in connection with the statements or omissions that resulted in such losses, claims, damages or liabilities, as well as any other relevant equitable considerations. The relative benefits received by the Company on the one hand and the Underwriters on the other hand shall be deemed to be in the same respective proportions as the net proceeds from the offering (before deducting expenses) received by the Company and the total underwriting discounts received by the Underwriters, in each case as set forth in the table on the cover of the Prospectus, bear to the aggregate public offering price of the Shares. The relative fault of the Company on the one hand and the Underwriters on the other hand shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the Company or by the Underwriters and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The Company and the Underwriters agree that it would not be just and equitable if contribution pursuant to this Section 7 were determined by pro rata allocation or by any other method of allocation that does not take account of the equitable considerations referred to in the immediately preceding paragraph. The amount paid or payable by an Indemnified Person as a result of the losses, claims, damages and liabilities referred to in the immediately preceding paragraph shall be deemed to include, subject to the limitations set forth above, any legal or other expenses incurred by such Indemnified Person in connection with investigating or defending any such action or claim. Notwithstanding the provisions of this Section 7, in no event shall any Underwriter be required to contribute any amount in excess of the amount by which the total price at which the Securities underwritten by it and distributed to the public were offered to the public exceeds the amount of any damages that such Underwriter has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. The Underwriters' obligations in this paragraph to contribute are several in proportion to their underwriting obligations and not joint. -28- The remedies provided for in this Section 7 are not exclusive and shall not limit any rights or remedies which may otherwise be available to any indemnified party at law or in equity. The indemnity and contribution agreements contained in this Section 7 and the representations and warranties of the Company set forth in this Agreement shall remain operative and in full force and effect regardless of (i) any termination of this Agreement, (ii) any investigation made by or on behalf of the Underwriters or any person controlling the Underwriters or by or on behalf of the Company, its officers or directors or any other person controlling the Company and (iii) acceptance of and payment for any of the Securities. 8. Notwithstanding anything herein contained, this Agreement (or the obligations of the Underwriters with respect to the Option Securities) may be terminated in the mutual absolute discretion of both of the Representatives, by notice given by both Representatives to the Company, if after the execution and delivery of this Agreement and prior to the Closing Date (or, in the case of the Option Securities, prior to the Additional Closing Date) (i) trading generally shall have been suspended or materially limited on or by, as the case may be, any of the New York Stock Exchange or the American Stock Exchange or the Nasdaq National Market, (ii) trading of any securities of the Company shall have been suspended on any exchange or in any over-the-counter market, (iii) any change in U.S. or international financial, political or economic conditions or currency exchange rates or exchange controls as would in the judgment of a majority in interest of the Underwriters including both Representatives, be likely to prejudice materially the success of the proposed issue, sale or distribution of the Securities, whether in the primary market or in respect of dealings in the secondary market, (iv) a general moratorium on commercial banking activities in New York shall have been declared by either federal or New York State authorities, or if there has been a material disruption in securities settlement or clearance services in the United States, or (iv) there shall have occurred any outbreak or escalation of hostilities or any change in financial markets or any calamity or crisis that, in the judgment of a majority in interest of the Underwriters (including both Representatives), is material and adverse and which, in the judgment of a majority in interest of the Underwriters (including both Representatives), makes it impracticable or inadvisable to market the Securities being delivered at the Closing Date or the Additional Closing Date, as the case may be, on the terms and in the manner contemplated in the Prospectus. 9. This Agreement shall become effective upon execution and delivery hereof by the parties hereto. 10. If any Underwriter or Underwriters default in their obligations to purchase Securities hereunder on the Closing Date or the Additional Closing Date, as the case may be, and the aggregate stated amount of Securities that such defaulting Underwriter or Underwriters agreed but failed to purchase does not exceed 10% of the total stated amount of -29- Securities that the Underwriters are obligated to purchase on such Closing Date, the Representatives may make arrangements satisfactory to the Company for the purchase of such Securities by other persons, including any of the Underwriters, but if no such arrangements are made by such Closing Date, the non-defaulting Underwriters shall be obligated severally, in proportion to their respective commitments hereunder, to purchase the Securities that such defaulting Underwriters agreed but failed to purchase on such Closing Date. If any Underwriter or Underwriters so default and the aggregate stated amount of Securities with respect to which such default or defaults occur exceeds 10% of the total stated amount of Securities that the Underwriters are obligated to purchase on such Closing Date and arrangements satisfactory to the Representatives and the Company for the purchase of such Securities by other persons are not made within 36 hours after such default, this Agreement will terminate without liability on the part of any non-defaulting Underwriter or the Company. As used in this Agreement, the term "Underwriter" includes any person substituted for an Underwriter under this Section. Nothing herein will relieve a defaulting Underwriter from liability for its default. 11. If this Agreement shall be terminated by the Underwriters because of any failure or refusal on the part of the Company to comply with the terms or to fulfill any of the conditions of this Agreement, or if for any reason the Company shall be unable to perform its obligations under this Agreement or any condition of the Underwriters' obligations cannot be fulfilled, the Company agrees to reimburse the Underwriters for all out-of-pocket expenses (including the fees and expenses of its counsel) reasonably incurred by the Underwriters in connection with this Agreement or the offering contemplated hereunder and upon demand the Company shall pay the full amount thereof to the Underwriters. 12. This Agreement shall inure to the benefit of and be binding upon the Company, the Underwriters, each affiliate of the Underwriters which assists the Underwriters in the distribution of the Securities, directors and officers of the Company any controlling persons referred to herein and their respective successors and assigns. Nothing expressed or mentioned in this Agreement is intended or shall be construed to give any other person, firm or corporation any legal or equitable right, remedy or claim under or in respect of this Agreement or any provision herein contained. No purchaser of Securities from the Underwriters shall be deemed to be a successor by reason merely of such purchase. 13. All notices and other communications hereunder shall be in writing and shall be deemed to have been duly given if mailed or transmitted by any standard form of telecommunication. Notices to the Underwriters shall be given to Credit Suisse First Boston Corporation at Eleven Madison Avenue, New York, New York 10010 (telefax: 212-325-4296); Attention: Transactions Advisory Group, and to J.P. Morgan Securities Inc., 270 Park Avenue, New York, New York 10017 (telefax: 212-648-5552); Attention: Syndicate -30- Department. Notices to the Company shall be given to it at 1001 Louisiana Street, Houston, Texas 77002; Attention: Legal Department (telefax: 713-420-4099). 14. This Agreement may be signed in counterparts, each of which shall be an original and all of which together shall constitute one and the same instrument. 15. This Agreement shall be governed by and construed in accordance with the laws of the state of New York. 16. The Company hereby submits to the non-exclusive jurisdiction of the Federal and state courts in the Borough of Manhattan in The City of New York in any suit or proceeding arising out of or relating to this Agreement or the transactions contemplated hereby. 17. The invalidity or unenforceability of any Section, paragraph or provision of this Agreement shall not affect the validity or enforceability of any other Section, paragraph or provision hereof. If any Section, paragraph or provision of this Agreement is for any reason determined to be invalid or unenforceable, there shall be deemed to be made such minor changes (and only such minor changes) as are necessary to make it valid and enforceable. 18. This Agreement constitutes the entire agreement of the parties to this Agreement and supersedes all prior written or oral and all contemporaneous oral agreements, understandings and negotiations with respect to the subject matter hereof. In this Agreement, the masculine, feminine and neuter genders and the singular and plural include one another. This Agreement may be amended or modified, and the observance of any term of this Agreement may be waived, only by a writing signed by the Company and the Underwriters. -31- If the foregoing is in accordance with your understanding, please sign and return nine counterparts hereof. Very truly yours, EL PASO CORPORATION By: /s/ John J. Hopper ------------------------------ Name: John J. Hopper Title: Vice President and Treasurer Accepted as of the date first written above: CREDIT SUISSE FIRST BOSTON CORPORATION By: /s/ Paul A. Davis ---------------------------------------- Name: Paul A. Davis Title: Director J.P. MORGAN SECURITIES INC. By: /s/ Arnold Evans ---------------------------------------- Name: Arnold Evans Title: Vice President On behalf of the Several Underwriters named in Schedule I of the Underwriting Agreement SCHEDULE I
Number of Number of Underwriter Underwritten Securities Option Securities - ----------- ----------------------- ----------------- Credit Suisse First Boston Corporation................ 3,250,000 487,500 J.P. Morgan Securities Inc............................ 3,250,000 487,500 Banc of America Securities LLC........................ 875,000 131,250 Lehman Brothers Inc................................... 875,000 131,250 Morgan Stanley & Co. Incorporated..................... 875,000 131,250 Salomon Smith Barney Inc.............................. 875,000 131,250 ---------- --------- Total........................................ 10,000,000 1,500,000 ---------- =========
SCHEDULE II El Paso Natural Gas Company El Paso Tennessee Pipeline Co. Southern Natural Gas Company El Paso Production Holding Company El Paso CGP Company EXHIBIT A [Form of Lock-Up Agreement] Credit Suisse First Boston Corporation Eleven Madison Avenue New York, New York 10010 J.P. Morgan Securities, Inc. 270 Park Avenue New York, New York 10017 On behalf of the Several Underwriters named in Schedule I to the Underwriting Agreement Re: El Paso Corporation - Equity Security Units Offering Ladies and Gentlemen: The undersigned understands that you have entered into an Underwriting Agreement (the "Underwriting Agreement") with El Paso Corporation, a Delaware corporation (the "Company"), providing for the public offering (the "Public Offering") by you (the "Underwriters") of 9.00% Equity Security Units (the "Securities"), of the Company. Capitalized terms used herein and not otherwise defined shall have the meanings set forth in the Underwriting Agreement. In consideration of your agreement to purchase and make the Public Offering of the Securities, and for other good and valuable consideration receipt of which is hereby acknowledged, the undersigned hereby agrees that, without your prior written consent, which shall not be unreasonably withheld, the undersigned will not, during the period (the "Lock-Up Period") ending 45 days after the date of the prospectus relating to the Public Offering (the "Prospectus"), (1) offer, pledge, announce the intention to sell, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase, or otherwise transfer or dispose of, directly or indirectly, any Securities, Purchase Contracts or shares of Common Stock of the Company or any securities of the Company which are substantially similar to Securities, Purchase Contracts or shares of Common Stock of the Company or any securities convertible into or exercisable or exchangeable for Securities, Purchase Contracts or Common Stock of the Company (including, but not limited to, Common Stock which may be deemed to be beneficially owned by the undersigned in accordance with the rules and regulations of the Securities and -2- Exchange Commission and securities which may be issued upon exercise of a stock option or warrant) other than (a) as a bona fide gift or bona fide gifts, provided, however, that the recipient of such bona fide gift or bona fide gifts shall execute a copy of and be bound by the terms of, this Agreement prior to such transfer, (b) the sale of any shares of Common Stock acquired upon the exercise of options granted under the Company's stock option or stock incentive plans that would otherwise expire during the Lock-Up Period or (c) the adoption of a written plan for trading securities consistent with Rule 10b5-1 of the Securities Exchange Act of 1934, as amended, as long as any sales under such written plan occur after the Lock-Up Period (2) enter into any swap, option, future, forward or other agreement that transfers, in whole or in part, any of the economic consequences of ownership of the Securities, Purchase Contracts or Common Stock of the Company or any securities of the Company which are substantially similar to the Securities, Purchase Contracts or Common Stock of the Company or any security convertible into or exercisable or exchangeable for Securities, Purchase Contracts or Common Stock of the Company, whether any such transaction described in clause (1) or (2) above is to be settled by delivery of Securities, Purchase Contracts or Common Stock or such other securities, in cash or otherwise. In addition, the undersigned agrees that, without the prior written consent of both Representatives, which shall not be unreasonably withheld, it will not, during the period ending 45 days after the date of the Prospectus, make any demand for or exercise any right with respect to, the registration of any Securities, Purchase Contracts or shares of Common Stock or any securities of the Company which are substantially similar to Securities, Purchase Contracts or Common Stock or any security convertible into or exercisable or exchangeable for Securities, Purchase Contracts or Common Stock. In furtherance of the foregoing, the Company and any duly appointed transfer agent for the registration or transfer of the securities described herein are hereby authorized to decline to make any transfer of securities if such transfer would constitute a violation or breach of this Lock-Up Agreement. The undersigned hereby represents and warrants that the undersigned has full power and authority to enter into this Lock-Up Agreement. All authority herein conferred or agreed to be conferred and any obligations of the undersigned shall be binding upon the successors, assigns, heirs or personal representatives of the undersigned. The undersigned understands that, if the Underwriting Agreement (other than the provisions thereof which survive termination) shall terminate or be terminated prior to payment for and delivery of the Securities to be sold thereunder, this Lock-Up Agreement shall terminate and be of no further force or effect, and the undersigned shall be released from all obligations under this Lock-Up Agreement. The undersigned understands that the Underwriters propose to proceed with the Public Offering in reliance upon this Lock-Up Agreement. -3- THIS LOCK-UP AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO THE CONFLICTS OF LAWS PROVISIONS THEREOF. Very truly yours, By: --------------------------------- Name: Title: EX-1.B 4 h97915exv1wb.txt UNDERWRITING AGREEMENT - COMMON STOCK EXHIBIT 1.B EL PASO CORPORATION 45,000,000 Shares of Common Stock Underwriting Agreement June 20, 2002 Credit Suisse First Boston Corporation Eleven Madison Avenue New York, New York 10010 J.P. Morgan Securities Inc. 270 Park Avenue New York, New York 10017 As Representatives of the Several Underwriters Ladies and Gentlemen: El Paso Corporation, a Delaware corporation (the "Company"), proposes to issue and sell to the several underwriters named in Schedule I hereto (the "Underwriters") for whom Credit Suisse First Boston Corporation and J.P. Morgan Securities Inc. are acting as representatives (the "Representatives"), an aggregate of 45,000,000 shares of Common Stock, par value $3.00 per share, of the Company (the "Underwritten Shares") and, for the sole purpose of covering over-allotments in connection with the sale of the Underwritten Shares, at the option of the Representatives, up to an additional 6,750,000 shares of Common Stock of the Company (the "Option Shares"). The Underwritten Shares and the Option Shares are herein referred to as the "Shares". The shares of Common Stock of the Company to be outstanding after giving effect to the sale of the Shares are herein referred to as the "Common Stock". The Common Stock, including the Shares, have attached thereto certain rights (the "Rights") to purchase one two-hundredth of a share of Series A Junior Participating Preferred Stock (the "Series A Preferred"). The Rights are to be issued pursuant to an amended and restated rights agreement dated as of January 20, 1999 between EquiServe Trust Company, N.A. and the Company, as amended. The Company has prepared and filed with the Securities and Exchange Commission (the "Commission") in accordance with the provisions of the Securities Act of 1933, as amended, and the rules and regulations of the Commission thereunder (collectively, the "Securities Act"), a registration statement (File No. 333-82412), including a prospectus, relating to the Shares and Rights. The registration statement as amended to the date of this -2- Agreement is referred to in this Agreement as the "Registration Statement". The term "Base Prospectus" means the prospectus included in the Registration Statement. The Company has filed with, or transmitted for filing to, or shall promptly hereafter file with or transmit for filing to, the Commission a prospectus supplement (the "Prospectus Supplement") specifically relating to the Shares pursuant to Rule 424 under the Securities Act. If the Company has filed an abbreviated registration statement pursuant to Rule 462(b) under the Securities Act (the "Rule 462 Registration Statement"), then any reference herein to the term "Registration Statement" shall be deemed to include such Rule 462 Registration Statement. The Base Prospectus as supplemented by any applicable Prospectus Supplement specifically relating to the Securities in the form first used to confirm sales of the Securities is hereinafter referred to as the "Prospectus." Any reference in this Agreement to the Registration Statement, the Base Prospectus, the Prospectus or any amendment or supplement thereto shall be deemed to refer to and include the documents incorporated by reference therein pursuant to Item 12 of Form S-3 under the Securities Act, and any reference to "amend", "amendment" or "supplement" with respect to the Registration Statement, the Base Prospectus or the Prospectus shall be deemed to refer to and include any documents filed after such date under the Securities Exchange Act of 1934, as amended, and the rules and regulations of the Commission thereunder (collectively, the "Exchange Act") that are deemed to be incorporated by reference therein. The Company hereby agrees with the several Underwriters as follows: 1. The Company agrees to issue and sell the Underwritten Shares to the Underwriters as hereinafter provided, and the Underwriters, severally and not jointly, upon the basis of the representations and warranties herein contained, but subject to the terms and conditions hereinafter stated, agree to purchase from the Company the Underwritten Shares at a purchase price per share of $19.35 (the "Purchase Price"). In addition, the Company agrees to issue and sell the Option Shares to the Underwriters as hereinafter provided, and the Underwriters, severally and not jointly on the basis of the representations and warranties herein contained, but subject to the terms and conditions hereinafter stated, shall have the option to purchase from the Company up to an aggregate of 6,750,000 Option Shares at the Purchase Price, for the sole purpose of covering over-allotments (if any) in the sale of Underwritten Shares by the Underwriters. The Underwriters may exercise the option to purchase the Option Shares at any time on or before the thirtieth day following the date of this Agreement, by written notice from both Representatives to the Company. Such notice shall set forth the aggregate number of Option Shares as to which the option is being exercised and the date and time when the Option Shares are to be delivered and paid for which may be the same date and time as the Closing Date (as hereinafter defined) but shall not be earlier than the Closing Date nor later than ten full Business Days (as hereinafter defined) after the date of such notice (unless such time -3- and date are postponed in accordance with the provisions of Section 9 hereof). Any such notice shall be given at least two Business Days prior to the date and time of delivery specified therein. 2. The Company understands that the Underwriters intend (i) to make a public offering of the Shares as soon as in their judgment is advisable after the parties hereto have executed and delivered this Agreement and (ii) initially to offer the Shares upon the terms set forth in the Prospectus. 3. Payment for the Shares shall be made by wire transfer in immediately available funds to the account specified by the Company to the Underwriters, in the case of the Underwritten Shares, at 10:00 a.m. EST on June 26, 2002, or at such other time on the same or such other date, not later than the fifth Business Day thereafter, as the Representatives and the Company may agree upon in writing or, in the case of the Option Shares, on the date and time specified by the Representatives in the written notice of the Underwriters' election to purchase such Option Shares. The time and date of such payment for the Underwritten Shares are referred to herein as the "Closing Date" and the time and date for such payment for the Option Shares, if other than the Closing Date, are referred to herein as the "Additional Closing Date". As used herein, the term "Business Day" means any day other than a day on which banks are permitted or required to be closed in New York City. Payment for the Shares to be purchased on the Closing Date or the Additional Closing Date, as the case may be, shall be made against delivery to the Underwriters for their respective accounts of the Shares to be purchased on such date registered in such names and in such denominations as the Representatives shall request in writing not later than two full Business Days prior to the Closing Date or the Additional Closing Date, as the case may be, with any transfer taxes payable in connection with the transfer to the Underwriters of the Shares duly paid by the Company. The certificates for the Shares will be made available for inspection and packaging by the Underwriters at its office set forth above not later than 1:00 P.M., New York City time, on the Business Day prior to the Closing Date or the Additional Closing Date, as the case may be. 4. The Company represents and warrants to the several Underwriters that: (a) the Company and the transactions contemplated by this Agreement meet the requirements and conditions for using a registration statement on Form S-3 under the Securities Act, and the Registration Statement has been declared effective by the Commission; no stop order suspending the effectiveness of the Registration Statement has been issued and no proceeding for that purpose has been instituted or, to the knowledge of the Company, threatened by the Commission; -4- (b) on the effective date of the Registration Statement, the Registration Statement conformed in all material respects to the requirements of the Securities Act and the rules and regulations of the Commission thereunder and did not include any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading; the Registration Statement, as of the date of this Agreement, conforms and, as amended or supplemented, if applicable, will conform in all material respects to the requirements of the Securities Act and the rules and regulations on the Commission thereunder, and does not include and, as amended or supplemented, if applicable, will not include any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein not misleading; the Prospectus, as of the date of its filing, and as amended or supplemented, if applicable, conforms or will conform in all material respects to the requirements of the Securities Act and the rules and regulations on the Commission thereunder and, as of the date of its filing, did not or will not include, and as of the Closing Date or the Additional Closing Date or as amended or supplemented, if applicable, will not include any untrue statement of a material fact or omit to state any material fact required to be stated therein or necessary to make the statements therein, in light of the circumstances under which they were made, not misleading; provided that the foregoing representations and warranties shall not apply to statements in or omissions from the Registration Statement or the Prospectus made in reliance upon and in conformity with information relating to the Underwriters furnished to the Company in writing by the Underwriters expressly for use therein, it being understood and agreed that the only such information is that described as such in the second paragraph of Section 7 hereof; (c) the documents incorporated or deemed to be incorporated by reference in the Registration Statement and the Prospectus, when they became effective or at the time they were or hereafter are filed with the Commission, conformed and will conform in all material respects with the requirements of the Securities Act, the Exchange Act or the rules and regulations of the Commission thereunder, as applicable, and, when read together with the other information in the Prospectus, at the time the Registration Statement became effective, at the time the Prospectus was filed and on the Closing Date and the Additional Closing Date, as the case may be, did not and will not contain an untrue statement of a material fact or omit to state a material fact required to be stated therein or necessary to make the statements therein, and with respect to the Prospectus, in light of the circumstances under which they were made, not misleading; (d) the Company has been duly incorporated and is an existing corporation in good standing under the laws of the State of Delaware, with full corporate power and authority to own its properties and conduct its business as described in the Prospectus; and the Company is duly qualified to do business as a foreign corporation in -5- good standing in all other jurisdictions in which its ownership or lease of property or the conduct of its business requires such qualification, except where the failure to be so qualified, individually or in the aggregate, would not have a material adverse effect on the financial condition, business, properties or results of operations of the Company and its subsidiaries taken as a whole ("Material Adverse Effect"); (e) each subsidiary set forth on Schedule II hereto (each, a "Significant Subsidiary") of the Company has been duly incorporated or formed, as the case may be, and is an existing corporation, limited liability company or limited partnership in good standing under the laws of the jurisdiction of its incorporation or formation, as the case may be, with power and authority (corporate or other) to own its properties and conduct its business as described in the Prospectus; and each such Significant Subsidiary is duly qualified to do business as a foreign corporation, limited liability company or limited partnership in good standing in all other jurisdictions in which its ownership or lease of property or the conduct of its business requires such qualification, except where the failure to be so qualified, individually or in the aggregate, would not have a Material Adverse Effect; all of the issued and outstanding equity interests of each Significant Subsidiary have been duly authorized and validly issued and are fully paid and nonassessable (other than the shares of Series A Preferred Stock of El Paso Tennessee Pipeline Co. that are listed on the New York Stock Exchange); and the equity interests of each Significant Subsidiary owned by the Company, directly or through subsidiaries, are owned free from liens, claims, or adverse interests of any nature; (f) except for the registration of the Shares under the Securities Act and such consents, approvals, authorizations, registrations or qualifications as may be required under the Exchange Act and applicable state securities laws and rules and regulations of the National Association of Securities Dealers, Inc. ("NASD") in connection with the purchase and distribution of the Shares by the Underwriters, no consent, approval, authorization or order of, or filing or registration with, any such court or governmental agency or body is required for the execution, delivery and performance of this Agreement by the Company and the consummation of the transactions contemplated hereby; (g) the execution, delivery and performance of this Agreement, and the issuance and sale of the Shares and compliance with the terms and provisions thereof will not result in a breach or violation of any of the terms and provisions of, or constitute a default under, (i) any statute, any rule, regulation or order of any governmental agency or body or any court, domestic or foreign, having jurisdiction over the Company or any Significant Subsidiary or any of their properties, or (ii) any agreement or instrument to which the Company or any such Significant Subsidiary is a party or by -6- which the Company or any such Significant Subsidiary is bound or to which any of the properties of the Company or any Significant Subsidiary is subject, or (iii) the charter or by-laws of the Company or any such Significant Subsidiary, except in the case of clauses (i) and (ii), for any such breach or violation which would not, individually or in the aggregate, have a Material Adverse Effect and the Company has full power and authority to authorize, issue and sell the Shares as contemplated by this Agreement; (h) this Agreement has been duly authorized, executed and delivered by the Company; (i) the Shares to be issued and sold by the Company to the Underwriters hereunder have been duly and validly authorized and, when issued and delivered against payment therefor as provided herein, will be duly and validly issued, fully paid and nonassessable and free of any preemptive or similar rights and will conform to the description thereof contained in the Company's Form 8-A/A filed pursuant to the Exchange Act and incorporated by reference in the Prospectus; (j) the Company has an authorized capitalization as set forth in the Prospectus, and all of the issued and outstanding shares of capital stock of the Company, including the Shares, when issued and delivered in accordance with this Agreement, have been duly and validly authorized and issued, are fully paid and non-assessable and conform to the description thereof contained in the Prospectus; (k) the Rights Agreement has been duly authorized, executed and delivered by the Company; the Rights have been duly authorized and validly issued by the Company, and the Series A Preferred has been duly authorized by the Company and validly reserved for issuance and upon the exercise of the Rights in accordance with the terms of the Rights Agreement, will be validly issued, fully paid and non-assessable; (l) neither the Company nor any Significant Subsidiary is (i) in violation of its respective charter or by-laws or (ii) in default in the performance of any obligation, agreement, covenant or condition contained in any indenture, loan agreement, mortgage, lease or other agreement or instrument that is material to the Company and its subsidiaries, taken as a whole, to which the Company or any Significant Subsidiary is a party or by which the Company or any Significant Subsidiary or their respective property is bound, except in the case of clause (ii) for any such default as would not, individually or in the aggregate, have a Material Adverse Effect; (m) except as disclosed in the Prospectus, the Company and its Significant Subsidiaries have good and indefeasible title to all real properties and all other properties and assets owned by them, in each case free from liens, encumbrances and defects that would materially affect the value thereof or materially interfere with the use made -7- or to be made thereof by them; and except as disclosed in the Prospectus, the Company and its Significant Subsidiaries hold any leased real or personal property under valid and enforceable leases with no exceptions that would materially interfere with the use made or to be made thereof by them. (n) except as disclosed in the Prospectus, neither the Company nor any of its Significant Subsidiaries is in violation of any statute, any rule, regulation, decision or order of any governmental agency or body or any court, domestic or foreign, relating to the use, disposal or release of hazardous or toxic substances or relating to the protection or restoration of the environment or human exposure to hazardous or toxic substances (collectively, "environmental laws"), owns or operates any real property contaminated with any substance that is subject to any environmental laws, is liable for any off-site disposal or contamination pursuant to any environmental laws, or is subject to any claim relating to any environmental laws, which violation, contamination, liability or claim would, individually or in the aggregate, have a Material Adverse Effect; and, except as disclosed in the Prospectus, the Company is not aware of any pending investigation which could reasonably be expected by the Company to lead to such a claim; (o) except as disclosed in the Prospectus and the documents incorporated by reference therein, there are no pending actions, suits or proceedings against or affecting the Company, any of its subsidiaries or any of their respective properties that, if determined adversely to the Company or any of its subsidiaries, would individually or in the aggregate have a Material Adverse Effect, or would materially and adversely affect the ability of the Company to perform its obligations under this Agreement, or which are otherwise material in the context of the sale of the Shares; and no such actions, suits or proceedings are, to the Company's knowledge, threatened or contemplated; (p) the financial statements incorporated by reference in the Registration Statement and the Prospectus present fairly the consolidated financial position of the Company and its consolidated subsidiaries as of the dates shown and their results of operations and cash flows for the periods shown, and, except as otherwise disclosed in the Prospectus, such consolidated financial statements have been prepared in conformity with the generally accepted accounting principles in the United States applied on a consistent basis; and the schedules included in the Registration Statement present fairly the information required to be stated therein; and the assumptions used in preparing the pro forma financial statements incorporated by reference in the Registration Statement and the Prospectus provide a reasonable basis for presenting the significant effects directly attributable to the transactions or events described therein, the related pro forma adjustments give appropriate effect to those assumptions, and the pro forma -8- columns therein reflect the proper application of those adjustments to the corresponding historical financial statement amounts; (q) except as disclosed in the Prospectus, since the date of the latest audited financial statements incorporated by reference in the Prospectus there has been no material adverse change, nor any development or event involving a prospective material adverse change, in the financial condition, business, properties or results of operations of the Company and its subsidiaries taken as a whole, and, except as disclosed in or contemplated by the Prospectus, there has been no dividend or distribution of any kind declared, paid or made by the Company on any class of its capital stock; (r) no "nationally recognized statistical rating organization" as such term is defined for purposes of Rule 436(g)(2) under the Securities Act has indicated to the Company that it is considering (i) the downgrading, suspension or withdrawal of, or any review for a possible change that does not indicate the direction of the possible change in, any rating assigned to the Company or any securities of the Company or (ii) any change in the outlook for any rating of the Company or any securities of the Company; (s) the Company is not and, after giving effect to the offering and sale of the Shares and the application of the proceeds thereof as described in the Prospectus, will not be (i) an "investment company" as defined in the Investment Company Act of 1940, as amended, or (ii) a "holding company" within the meaning of, or subject to regulation under, the Public Utility Holding Company Act of 1935, as amended, and the rules and regulations promulgated by the Commission thereunder; (t) each of PricewaterhouseCoopers LLP and Deloitte & Touche LLP, who have expressed their opinions on the audited financial statements and related schedules included or incorporated by reference in the Registration Statement and the Prospectus are independent public accountants as required by the Securities Act; (u) the Company is subject to and in compliance with the reporting requirements of Section 13 or Section 15(d) of the Exchange Act. The Common Stock is registered pursuant to Section 12(b) of the Exchange Act and is listed on The New York Stock Exchange and the Pacific Exchange, and the Company has taken no action designed to, or likely to have the effect of, terminating the registration of the Common Stock under the Exchange Act or delisting the Common Stock from The New York Stock Exchange or the Pacific Exchange, nor has the Company received any notification that the Commission or the NASD is contemplating terminating such registration or listing; and the Shares have been approved for listing on The New York Stock Exchange, subject to notice of issuance; and -9- (v) the Company has not distributed and, prior to the later of (i) the Closing Date and (ii) the completion of the distribution of the Shares, will not distribute any written offering material in connection with the offering and sale of the Shares other than the Registration Statement or any amendment thereto, or the Prospectus or any amendment or supplement thereto, or other materials, if any, permitted by the Securities Act. 5. The Company covenants and agrees with the several Underwriters as follows: (a) to file the final Prospectus with the Commission within the time period specified by Rule 424(b) under the Securities Act and to file promptly all reports and any definitive proxy or information statements required to be filed by the Company with the Commission pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act subsequent to the date of the Prospectus and for so long as the delivery of a prospectus is required in connection with the offering or sale of the Shares; and to furnish copies of the Prospectus to the Underwriters in New York City prior to 10:00 a.m., New York City time, on the Business Day next succeeding the date of this Agreement in such quantities as the Representatives may reasonably request; (b) to deliver, at the expense of the Company, to the Underwriters signed copies of the Registration Statement (as originally filed) and each amendment thereto, in each case including exhibits and documents incorporated by reference therein, and as many copies of the Prospectus (including all amendments and supplements thereto) and documents incorporated by reference therein as the Representatives may reasonably request; (c) before filing any amendment or supplement to the Registration Statement or the Prospectus during the Distribution Period to furnish to the Underwriters a copy of the proposed amendment or supplement for review and not to file any such proposed amendment or supplement to which the Representatives reasonably and timely object; (d) to advise both Representatives promptly, and to confirm such advice in writing, (i) when any amendment to the Registration Statement has been filed or becomes effective, (ii) when any supplement to the Prospectus or any amended Prospectus has been filed and to furnish the Underwriters with copies thereof, (iii) of any request by the Commission for any amendment to the Registration Statement or any amendment or supplement to the Prospectus or for any additional information, (iv) of the issuance by the Commission of any stop order suspending the effectiveness of the Registration Statement or of any order preventing or suspending the use of the Prospectus or any supplemental prospectus or the initiation or, to the Company's knowledge, -10- threatening of any proceeding for that purpose, (v) of the occurrence of any event, as a result of which the Prospectus as then amended or supplemented would include an untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein, in light of the circumstances when the Prospectus is delivered to a purchaser, not misleading, and (vi) of the receipt by the Company of any notification with respect to any suspension of the registration or qualification of the Shares for offer and sale in any jurisdiction or the initiation or, to the Company's knowledge, threatening of any proceeding for such purpose, and to use its commercially reasonable efforts to prevent the issuance of any such stop order, or of any order preventing or suspending the use of the Prospectus or any supplemental prospectus, or of any order suspending any such registration or qualification of the Shares, or notification of any such order thereof and, if issued, to obtain as soon as possible the withdrawal thereof; (e) if, during such period of time after the first date of the public offering of the Shares a prospectus relating to the Shares is required by law to be delivered in connection with sales by the Underwriters or any dealer (the "Distribution Period"), any event shall occur as a result of which it is necessary for the Underwriters to amend or supplement the Prospectus in order to make the statements therein, in light of the circumstances when the Prospectus is delivered to a purchaser, not misleading, or if it is necessary for the Underwriters to amend or supplement the Prospectus to comply with applicable law, the Company shall use its commercially reasonable efforts forthwith to prepare and furnish, at the expense of the Company, to the Underwriters and to the dealers (whose names and addresses the Underwriters will furnish to the Company) to which Shares may have been sold by the Underwriters and to any other dealers upon request, such amendments or supplements to the Prospectus as may be necessary so that the statements in the Prospectus as so amended or supplemented will not, in light of the circumstances when the Prospectus is delivered to a purchaser, be misleading or so that the Prospectus will comply with law; neither the Representatives' consent to, nor the Underwriters' delivery of, any such amendment or supplement shall constitute a waiver of any of the conditions set forth in Section 6 hereof; (f) to endeavor to register or qualify the Shares for offer and sale under the securities or blue sky laws of such jurisdictions as the Representatives shall reasonably request and to continue such registration or qualification in effect so long as reasonably required for distribution of the Shares; provided that the Company shall not be required to file a general consent to service of process in any such jurisdiction or to qualify as a foreign corporation in any jurisdiction in which it is not so qualified; (g) to make generally available to its security holders and to the Underwriters as soon as practicable an earnings statement covering a period of at least twelve -11- months beginning not later than the first fiscal quarter of the Company occurring after the date hereof, which shall satisfy the provisions of Section 11(a) of the Securities Act and Rule 158 promulgated thereunder; (h) during the period when the Prospectus is required to be delivered under the Securities Act or the Exchange Act in connection with sales of the Securities, to file all documents required to be filed by it with the Commission pursuant to Section 13, 14 or 15 of the Exchange Act within the time periods required by the Exchange Act; (i) for a period of 90 days from the date of the initial public offering of the Shares not to directly or indirectly (i) offer, pledge, announce the intention to sell, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase, or otherwise transfer or dispose of, directly or indirectly, or file with the Commission a registration statement under the Act relating to, any shares of Common Stock, or any securities of the Company which are substantially similar to the Common Stock, or (ii) enter into any swap, option, future, forward or other agreement that transfers, in whole or in part, any of the economic consequences of ownership of the Common Stock, whether any such transaction described in clause (i) or (ii) above is to be settled by delivery of Common Stock or such other securities, in cash or otherwise without the prior written consent of both Representatives, which shall not be unreasonably withheld, other than (i) the Shares to be sold hereunder, (ii) any shares of Common Stock of the Company issued upon the conversion of any convertible debentures, convertible preferred stock or other convertible securities or the exercise of options, warrants and rights, in each case, outstanding on the date of the Prospectus, (iii) stock issued or options granted or under existing employee stock purchase or option plans or (iv) shares issued under the Company's direct stock purchase and dividend reinvestment plan; (j) to use the net proceeds received by the Company from the sale of the Shares pursuant to this Agreement in the manner specified in the Prospectus under the caption "Use of Proceeds"; and (k) whether or not the transactions contemplated in this Agreement are consummated or this Agreement is terminated, to pay or cause to be paid all reasonable costs and expenses incident to the performance of its obligations hereunder, including without limiting the generality of the foregoing, all costs and expenses (i) incident to the preparation, issuance, execution and delivery of the Shares, (ii) incident to the preparation, printing and filing under the Securities Act of the Registration Statement, the Prospectus and any supplemental prospectus (including in each case all exhibits, amendments and supplements thereto), (iii) incurred in connection with the -12- registration or qualification of the Shares under the securities or blue sky laws of such jurisdictions in the United States as the Representatives may reasonably designate (including fees of counsel for the Underwriters and its disbursements), (iv) in connection with the listing of the Shares on The New York Stock Exchange, (v) expenses related to any filing with the NASD, (vi) in connection with the printing (including word processing and duplication costs) and delivery of this Agreement, any blue sky survey and the furnishing to the Underwriters and dealers of copies of the Registration Statement and the Prospectus, including mailing and shipping, as herein provided, (vii) any expenses incurred by the Company in connection with a "road show" presentation to potential investors, (viii) the cost of preparing stock certificates and (ix) the cost and charges of any transfer agent and any registrar provided that, except as otherwise provided herein, the Underwriters shall pay their own costs and expenses including the fees and expenses of their counsel and any transfer taxes on the Shares which they may sell and the expenses of advertising any offering of the Shares made by the Underwriters. 6. The obligations of the several Underwriters hereunder to purchase the Shares on the Closing Date or the Additional Closing Date, as the case may be, are subject to the performance by the Company of its obligations hereunder and to the following additional conditions: (a) no stop order suspending the effectiveness of the Registration Statement or any post-effective amendment shall be in effect, and no proceedings for such purpose shall be pending before or threatened by the Commission; the Prospectus shall have been filed with the Commission pursuant to Rule 424(b) within the applicable time period prescribed for such filing by the rules and regulations under the Securities Act and in accordance with Section 5(a) hereof; and all requests for additional information shall have been complied with to the satisfaction of the Underwriters; (b) the representations and warranties of the Company contained herein are true and correct on and as of the Closing Date or the Additional Closing Date, as the case may be, as if made on and as of the Closing Date or the Additional Closing Date, as the case may be, and the Company shall have complied with all agreements and all conditions on its part to be performed or satisfied hereunder at or prior to the Closing Date or the Additional Closing Date, as the case may be; (c) subsequent to the execution and delivery of this Agreement and prior to the Closing Date or the Additional Closing Date, as the case may be, there shall not have occurred any downgrading, nor shall any notice have been given of (i) any downgrading, (ii) any intended or potential downgrading or (iii) any review or possible change that does not indicate an improvement, in the rating accorded any securities of -13- or guaranteed by the Company by any "nationally recognized statistical rating organization", as such term is defined for purposes of Rule 436(g)(2) under the Securities Act; (d) since the respective dates as of which information is given in the Prospectus there shall not have been any change in the capital stock or long-term debt of the Company or any of its subsidiaries or any material adverse change, or any development involving a prospective material adverse change, in or affecting the financial condition, business, properties or results of operations of the Company and its subsidiaries, taken as a whole, otherwise than as set forth or contemplated in the Prospectus, the effect of which in the judgment of a majority in interest of the Underwriters, including both Representatives, makes it impracticable or inadvisable to proceed with the public offering or the delivery of the Shares on the Closing Date or the Additional Closing Date, as the case may be, on the terms and in the manner contemplated in the Prospectus; and neither the Company nor any of its subsidiaries has sustained since the date of the latest audited financial statements included or incorporated by reference in the Prospectus any material loss or interference with its business from fire, explosion, flood or other calamity, whether or not covered by insurance, or from any labor dispute or court or governmental action, order or decree, otherwise than as set forth or contemplated in the Prospectus; (e) the Underwriters shall have received on and as of the Closing Date or the Additional Closing Date, as the case may be, a certificate of an executive officer of the Company, with specific knowledge about the Company's financial matters, satisfactory to the Underwriters to the effect set forth in subsections (a) through (d) of this Section and to the further effect that there has not occurred any material adverse change, or any development involving a prospective material adverse change, in or affecting the financial condition, business, properties or results of operations of the Company and its subsidiaries taken as a whole from that set forth or contemplated in the Registration Statement; (f) Locke Liddell & Sapp LLP, counsel for the Company, shall have furnished to the Underwriters their written opinion, dated the Closing Date or the Additional Closing Date, as the case may be, in form and substance satisfactory to the Underwriters, to the effect that: (i) the Shares have been duly authorized and are validly issued, fully paid and non-assessable; and the authorized capital stock of the Company conform, as to legal matters, in all material respects to the description thereof contained in the Company's Form 8-A/A filed pursuant to the Exchange Act and incorporated by reference in the Prospectus; -14- (ii) no consent, approval, authorization or order of, or filing with, any governmental agency or body or any court is required for the consummation of the transactions contemplated by this Agreement in connection with the issuance or sale of the Shares by the Company, except such as have been obtained and made under the Securities Act and such as may be required under state securities laws, as to which such counsel need not opine; (iii) the execution and delivery by the Company of, and the performance by the Company of its obligations under, this Agreement, and the issuance and sale by the Company of the Shares will not violate (i) any provision of applicable United States federal law, New York law or Delaware General Corporation Law, or (ii) the Certificate of Incorporation or Bylaws of the Company, and the Company has full power and authority to authorize, issue and sell the Shares as contemplated by this Agreement; (iv) the Registration Statement has become effective under the Securities Act, the Prospectus was filed with the Commission pursuant to Rule 424(b) of the rules and regulations of the Commission thereunder, and to such counsel's knowledge, no stop order suspending the effectiveness of the Registration Statement or any part thereof has been issued and no proceedings for that purpose have been instituted or are pending or contemplated under the Securities Act, and the Registration Statement, as of its effective date, and the Prospectus, as of the date of this Agreement, and any amendment or supplement thereto, as of its date, complied as to form in all material respects with the requirements of the Securities Act and the rules and regulations of the Commission thereunder; the descriptions in the Registration Statement and Prospectus of statutes, legal and governmental proceedings and contracts and other documents are accurate in all material respects and fairly present in all material respects the information required to be shown; and such counsel does not know of any legal or governmental proceedings required to be described in the Prospectus which are not described as required or of any contracts or documents of a character required to be described in the Registration Statement or Prospectus or to be filed as exhibits to the Registration Statement which are not described and filed as required, it being understood that such counsel need not express an opinion as to the financial statements and schedules or other financial data contained in the Registration Statement or the Prospectus; (v) each document, if any, filed pursuant to the Exchange Act and incorporated by reference in the Prospectus (except for financial statements and schedules and other financial data included or incorporated by reference therein or omitted therefrom, as to which such counsel need not express an opinion) -15- appeared on its face to be appropriately responsive in all material respects with the Exchange Act; and the Registration Statement and Prospectus (except for financial statements and schedules and other financial data included or incorporated by reference therein or omitted therefrom, as to which such counsel need not express an opinion) appeared on their face to be appropriately responsive in all material respects with the requirements of the Securities Act; and (vi) this Agreement has been duly authorized, executed and delivered by the Company; and (vii) the Company is not and, after giving effect to the offering and sale of the Shares and the application of the proceeds thereof as described in the Prospectus, will not be, (i) an "investment company" as such term is defined in the Investment Company Act of 1940, as amended, or (ii) a "holding company" within the meaning of, or subject to regulation under, the Public Utility Holding Company Act of 1935, as amended, and the rules and regulations promulgated by the Commission thereunder. In rendering such opinions, such counsel may rely (A) as to matters involving the application of laws other than the laws of the United States and the States of Delaware, New York and Texas, to the extent such counsel deems proper and to the extent specified in such opinion, if at all, upon an opinion or opinions (in form and substance reasonably satisfactory to Underwriters' counsel) of other counsel reasonably acceptable to the Underwriters' counsel, familiar with the applicable laws; and (B) as to matters of fact, to the extent such counsel deems proper, on certificates of responsible officers of the Company and certificates or other written statements of officials of jurisdictions having custody of documents respecting the corporate existence or good standing of the Company. The opinion of such counsel for the Company shall state that the opinion of any such other counsel upon which they relied is in form satisfactory to such counsel and, in such counsel's opinion, the Underwriters and it is justified in relying thereon. In addition, such counsel shall state that in the course of the preparation by the Company of the Registration Statement and the Prospectus (including the documents incorporated by reference therein), such counsel has participated in conferences with certain of the officers and representatives of the Company, the Company's independent accountants, the Underwriters and counsel for the Underwriters at which the Registration Statement and the Prospectus were discussed. Between the date of effectiveness of the Registration Statement, the Closing Date and the Additional Closing Date, if applicable, such counsel participated in additional conferences with certain officers and representatives of the Company, the Company's independent accountants, the -16- Underwriters and counsel for the Underwriters at which portions of the Registration Statement and the Prospectus were discussed. Such counsel need not pass upon and or assume any responsibility for the accuracy, completeness or fairness of the statements contained or incorporated by reference in the Registration Statement or the Prospectus nor make an independent check or verification thereof, except as specifically described in the opinion in paragraphs (iv) and (v) above. Such counsel shall further state that, subject to the foregoing, no facts have come to such counsel's attention that have caused them to believe that the Registration Statement, at the time it became effective, contained or incorporated by reference any untrue statement of a material fact or omitted to state a material fact required to be stated therein or necessary in order to make the statements therein not misleading, or that Prospectus, as of its date, contained or incorporated by reference any untrue statement of a material fact or omitted to state a material fact necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. Also, subject to the foregoing, such counsel shall state that no facts have come to such counsel's attention in the course of the proceedings described in the first and second sentences of this paragraph that caused them to believe that the Prospectus as of the Closing Date or Additional Closing Date, as applicable, contains or incorporates by reference any untrue statement of a material fact or omits to state a material fact necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. Such counsel need express no belief, however, with respect to financial statements, schedules or notes thereto or other financial data included or incorporated by reference in or omitted from the Registration Statement or Prospectus. The opinion of Locke Liddell & Sapp LLP described above shall be rendered to the Underwriters at the request of the Company and shall so state therein; (g) David Siddall, Associate General Counsel for the Company, shall have furnished to the Underwriters his written opinion, dated the Closing Date or the Additional Closing Date, as the case may be, in form and substance satisfactory to the Underwriters, to the effect that: (i) each of the Company and its Significant Subsidiaries has been duly incorporated, is validly existing as a corporation in good standing under the laws of its jurisdiction of incorporation and has the corporate power and authority to own, lease and operate its properties and to conduct its business as described in the Prospectus, and each is duly qualified as a foreign corporation to transact business and is in good standing in each jurisdiction in which the conduct of its business or its ownership or leasing of property requires such qualification, except where the failure to be so qualified or to be in good standing, individually or in the aggregate, would not have a material adverse effect -17- on the business, properties, financial condition or results of operations of the Company and its subsidiaries, taken as a whole; (ii) the execution, delivery and performance of this Agreement, the compliance by the Company with all the provisions hereof and the consummation of the transactions contemplated hereby and thereby will not, to such counsel's knowledge, (A) violate any indenture, loan agreement, mortgage, lease or other agreement or instrument to which the Company or any Significant Subsidiary is a party or by which the Company or any subsidiary or their respective property is bound or (B) violate or conflict with any judgment, order or decree of any court or any governmental body or agency having jurisdiction over the Company, any subsidiary or their respective property, except in each case, for such violations as would not have a material adverse effect on the business, properties, financial condition or results of operation of the Company and its subsidiaries, taken as a whole; (iii) to such counsel's knowledge after due inquiry, there are no legal or governmental proceedings required to be described in the Prospectus which are not described as required or of any contracts or documents of a character required to be described in the Registration Statement or Prospectus or to be filed as exhibits to the Registration Statement which are not described and filed as required; it being understood that such counsel need express no opinion as to the financial statements or schedules or other financial data contained in the Registration Statement or the Prospectus; (iv) the statements under (A) the caption "Item 3 - Legal Proceedings" of the Company's most recent annual report on Form 10-K incorporated by reference into the Prospectus and (B) the caption "Item 1 - Legal Proceedings" of Part II of the Company's quarterly reports on Form 10-Q filed since such annual report, in each case insofar as such statements constitute summaries of the legal matters, documents or proceedings referred to therein, fairly present as of the date of the applicable report the information disclosed therein in all material respects; and (v) (A) the execution and delivery by the Company of, and the performance by the Company of its obligations under, this Agreement will not violate any provisions of any applicable laws and regulations specifically governing the generation, transportation, distribution or delivery of natural gas, oil, electricity or other related commodities or services, including pipelines, transmission lines, storage facilities and related facilities and equipment, or the import or export of such commodities or services (collectively, the "Energy Industry") -18- and (B) no consent, approval, authorization or order of or qualification with any United States federal body or agency specifically regulating the Energy Industry is required for the performance by the Company of its obligations under this Agreement, except in each of the foregoing cases for such violations or failures to obtain such consent, approval, authorization, order or qualification as would not have a material adverse effect on the business, properties, financial condition or results of operation of the Company and its subsidiaries, taken as a whole. The opinion of David Siddall described above shall be rendered to the Underwriters at the request of the Company and shall so state therein; (h) on the Closing Date or Additional Closing Date, each of PricewaterhouseCoopers LLP and Deloitte and Touche LLP shall have furnished to the Underwriters letters, dated the respective dates of delivery thereof, in form and substance satisfactory to you, containing statements and information of the type customarily included in accountants' "comfort letters" to underwriters with respect to the financial statements and certain financial information contained in the Registration Statement and the Prospectus; (i) the Underwriters shall have received on and as of the Closing Date or Additional Closing Date, as the case may be, an opinion of Andrews & Kurth Mayor, Day, Caldwell & Keeton L.L.P. counsel to the Underwriters, with respect to the due authorization and valid issuance of the Shares, the Registration Statement, the Prospectus and other related matters as the Underwriters may reasonably request, and such counsel shall have received such papers and information as they may reasonably request to enable them to pass upon such matters; (j) the "lock-up" agreements, each substantially in the form of Exhibit A hereto, between you on the one hand and each of the executive officers and directors of the Company, on the other hand, relating to sales and certain other dispositions of shares of Common Stock or certain other securities, delivered to you on or before the date hereof, shall be in full force and effect on the Closing Date or Additional Closing Date, as the case may be; and (k) on or prior to the Closing Date or Additional Closing Date, as the case may be, the Company shall have furnished to the Underwriters such further certificates and documents as the Representatives shall reasonably request. 7. The Company agrees to indemnify and hold harmless each Underwriter, each affiliate of any Underwriter which assists the Underwriters in the distribution of the Shares and each person, if any, who controls any Underwriter within the meaning of either -19- Section 15 of the Securities Act or Section 20 of the Exchange Act, from and against any and all losses, claims, damages and liabilities (including, without limitation, the legal fees and other expenses reasonably incurred in connection with any suit, action or proceeding or any claim asserted as such expenses are incurred) insofar as such losses, claims, damages or liabilities are (i) caused by any untrue statement or alleged untrue statement of a material fact contained in the Registration Statement or the Prospectus (the term Prospectus for the purpose of this Section 7 being deemed to include the Prospectus and the Prospectus as amended or supplemented if the Company shall have furnished any amendments or supplements thereto) or (ii) caused by any omission or alleged omission to state therein a material fact required to be stated therein or necessary to make the statements therein not misleading, provided in any case that the Company shall not be liable to the extent that such losses, claims, damages or liabilities are caused by any untrue statement or omission or alleged untrue statement or omission made in reliance upon and in conformity with information relating to any Underwriter furnished to the Company in writing by the Underwriters expressly for use therein, it being understood and agreed that the only such information furnished by any Underwriter consists of the information described as such in the paragraph below. Each Underwriter agrees, severally and not jointly, to indemnify and hold harmless the Company, its directors, its officers who sign the Registration Statement and each person who controls the Company within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act to the same extent as the foregoing indemnity from the Company to each Underwriter, but only with reference to information relating to suchUnderwriter furnished to the Company in writing by such Underwriter expressly for use in the Registration Statement, the Prospectus, any amendment or supplement thereto, it being understood and agreed that the only such information furnished by any Underwriter consists of the following information in the Prospectus furnished on behalf of each Underwriter: the table in the first paragraph, the concession and reallowance figures and the last sentence in the third paragraph, and the sixth paragraph under the caption "Underwriting." If any suit, action, proceeding (including any governmental or regulatory investigation), claim or demand shall be brought or asserted against any person in respect of which indemnity may be sought pursuant to either of the two preceding paragraphs, such person (the "Indemnified Person") shall promptly notify the person against whom such indemnity may be sought (the "Indemnifying Person") in writing, and the Indemnifying Person, upon request of the Indemnified Person, shall retain counsel reasonably satisfactory to the Indemnified Person to represent the Indemnified Person and any others the Indemnifying Person may designate in such proceeding and shall pay the reasonable fees and expenses of such counsel related to such proceeding. In any such proceeding, any Indemnified Person shall have the right to retain its own counsel, but the fees and expenses of such counsel shall be at the expense of such Indemnified Person unless (i) the Indemnifying Person and the Indemnified Person shall have mutually agreed to the contrary, (ii) the Indemnifying Person has failed within a reasonable -20- time to retain counsel reasonably satisfactory to the Indemnified Person or (iii) the named parties in any such proceeding (including any impleaded parties) include both the Indemnifying Person and the Indemnified Person and representation of both parties by the same counsel would be inappropriate due to actual or potential differing interests between them. It is understood that the Indemnifying Person shall not, in connection with any proceeding or related proceeding in the same jurisdiction, be liable for the reasonable fees and expenses of more than one separate firm (in addition to any local counsel) for all Indemnified Persons, and that all such fees and expenses shall be reimbursed as they are incurred. Any such separate firm for the Underwriters, each affiliate of the Underwriters which assists the Underwriters in the distribution of the Shares and such control persons of the Underwriters shall be designated in writing by the Underwriters and any such separate firm for the Company, its directors, its officers who sign the Registration Statement and such control persons of the Company shall be designated in writing by the Company. The Indemnifying Person shall not be liable for any settlement of any proceeding effected without its written consent, but if settled with such consent or if there be a final judgment for the plaintiff in any such action, the Indemnifying Person agrees to indemnify and hold harmless any Indemnified Person from and against any loss or liability by reason of such settlement or judgment. Notwithstanding the foregoing sentence, if at any time an Indemnified Person shall have requested an Indemnifying Person to reimburse the Indemnified Person for fees and expenses of counsel as contemplated by the second and third sentences of this paragraph, the Indemnifying Person agrees that it shall be liable for any settlement of any proceeding effected without its written consent if (i) such settlement is entered into more than 45 days after receipt by such Indemnifying Person of the aforesaid request and (ii) such Indemnifying Person shall not have reimbursed the Indemnified Person in accordance with such request prior to the date of such settlement. No Indemnifying Person shall, without the prior written consent of the Indemnified Person, effect any settlement of any pending or threatened proceeding in respect of which any Indemnified Person is or could have been a party and indemnity could have been sought hereunder by such Indemnified Person, unless such settlement includes an unconditional release of such Indemnified Person from all liability on claims that are the subject matter of such proceeding. If the indemnification provided for in the first or second paragraphs of this Section 7 is unavailable to an Indemnified Person or insufficient in respect of any losses, claims, damages or liabilities referred to therein, then each Indemnifying Person under such paragraph, in lieu of indemnifying such Indemnified Person thereunder, shall contribute to the amount paid or payable by such Indemnified Person as a result of such losses, claims, damages or liabilities (i) in such proportion as is appropriate to reflect the relative benefits received by the Company on the one hand and the Underwriters on the other hand from the offering of the Shares or (ii) if the allocation provided by clause (i) above is not permitted by applicable law, in such proportion as is appropriate to reflect not only the relative benefits referred to in clause (i) above but also the relative fault of the Company on the one hand and the Underwriters on the other hand in connection with the statements or omissions that resulted in -21- such losses, claims, damages or liabilities, as well as any other relevant equitable considerations. The relative benefits received by the Company on the one hand and the Underwriters on the other hand shall be deemed to be in the same respective proportions as the net proceeds from the offering (before deducting expenses) received by the Company and the total underwriting discounts received by the Underwriters, in each case as set forth in the table on the cover of the Prospectus, bear to the aggregate public offering price of the Shares. The relative fault of the Company on the one hand and the Underwriters on the other hand shall be determined by reference to, among other things, whether the untrue or alleged untrue statement of a material fact or the omission or alleged omission to state a material fact relates to information supplied by the Company or by the Underwriters and the parties' relative intent, knowledge, access to information and opportunity to correct or prevent such statement or omission. The Company and the Underwriters agree that it would not be just and equitable if contribution pursuant to this Section 7 were determined by pro rata allocation or by any other method of allocation that does not take account of the equitable considerations referred to in the immediately preceding paragraph. The amount paid or payable by an Indemnified Person as a result of the losses, claims, damages and liabilities referred to in the immediately preceding paragraph shall be deemed to include, subject to the limitations set forth above, any legal or other expenses incurred by such Indemnified Person in connection with investigating or defending any such action or claim. Notwithstanding the provisions of this Section 7, in no event shall any Underwriter be required to contribute any amount in excess of the amount by which the total price at which the Shares underwritten by it and distributed to the public were offered to the public exceeds the amount of any damages that such Underwriter has otherwise been required to pay by reason of such untrue or alleged untrue statement or omission or alleged omission. No person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any person who was not guilty of such fraudulent misrepresentation. The Underwriters' obligations in this paragraph to contribute are several in proportion to their underwriting obligations and not joint. The remedies provided for in this Section 7 are not exclusive and shall not limit any rights or remedies which may otherwise be available to any indemnified party at law or in equity. The indemnity and contribution agreements contained in this Section 7 and the representations and warranties of the Company set forth in this Agreement shall remain operative and in full force and effect regardless of (i) any termination of this Agreement, (ii) any investigation made by or on behalf of the Underwriters or any person controlling the Underwriters or by or on behalf of the Company, its officers or directors or any other person controlling the Company and (iii) acceptance of and payment for any of the Shares. -22- 8. Notwithstanding anything herein contained, this Agreement (or the obligations of the Underwriters with respect to the Option Shares) may be terminated in the mutual absolute discretion of both of the Representatives, by notice given by both Representatives to the Company, if after the execution and delivery of this Agreement and prior to the Closing Date (or, in the case of the Option Shares, prior to the Additional Closing Date) (i) trading generally shall have been suspended or materially limited on or by, as the case may be, any of the New York Stock Exchange or the American Stock Exchange or the Nasdaq National Market, (ii) trading of any securities of the Company shall have been suspended on any exchange or in any over-the-counter market, (iii) any change in U.S. or international financial, political or economic conditions or currency exchange rates or exchange controls as would in the judgment of a majority in interest of the Underwriters including both Representatives, be likely to prejudice materially the success of the proposed issue, sale or distribution of the Shares, whether in the primary market or in respect of dealings in the secondary market, (iv) a general moratorium on commercial banking activities in New York shall have been declared by either federal or New York State authorities, or if there has been a material disruption in securities settlement or clearance services in the United States, or (iv) there shall have occurred any outbreak or escalation of hostilities or any change in financial markets or any calamity or crisis that, in the judgment of a majority in interest of the Underwriters, including both Representatives, is material and adverse and which, in the judgment of a majority in interest of the Underwriters, including both Representatives, makes it impracticable or inadvisable to market the Shares being delivered at the Closing Date or the Additional Closing Date, as the case may be, on the terms and in the manner contemplated in the Prospectus. 9. This Agreement shall become effective upon execution and delivery hereof by the parties hereto. 10. If any Underwriter or Underwriters default in their obligations to purchase Offered Securities hereunder on the Closing Date and the aggregate principal amount of Offered Securities that such defaulting Underwriter or Underwriters agreed but failed to purchase does not exceed 10% of the total principal amount of Shares that the Underwriters are obligated to purchase on such Closing Date, the Representatives may make arrangements satisfactory to the Company for the purchase of such Shares by other persons, including any of the Underwriters, but if no such arrangements are made by such Closing Date, the non-defaulting Underwriters shall be obligated severally, in proportion to their respective commitments hereunder, to purchase the Shares that such defaulting Underwriters agreed but failed to purchase on such Closing Date. If any Underwriter or Underwriters so default and the aggregate principal amount of Shares with respect to which such default or defaults occur exceeds 10% of the total principal amount of Shares that the Underwriters are obligated to purchase on such Closing Date and arrangements satisfactory to the Representatives and the Company for the purchase of such Shares by other persons are not made within 36 hours after such default, this Agreement will terminate without liability on the part of any non-defaulting -23- Underwriter or the Company. As used in this Agreement, the term "Underwriter" includes any person substituted for an Underwriter under this Section. Nothing herein will relieve a defaulting Underwriter from liability for its default. 11. If this Agreement shall be terminated by the Underwriters because of any failure or refusal on the part of the Company to comply with the terms or to fulfill any of the conditions of this Agreement, or if for any reason the Company shall be unable to perform its obligations under this Agreement or any condition of the Underwriters' obligations cannot be fulfilled, the Company agrees to reimburse the Underwriters for all out-of-pocket expenses (including the fees and expenses of its counsel) reasonably incurred by the Underwriters in connection with this Agreement or the offering contemplated hereunder and upon demand the Company shall pay the full amount thereof to the Underwriters. 12. This Agreement shall inure to the benefit of and be binding upon the Company, the Underwriters, each affiliate of the Underwriters which assists the Underwriters in the distribution of the Shares, directors and officers of the Company any controlling persons referred to herein and their respective successors and assigns. Nothing expressed or mentioned in this Agreement is intended or shall be construed to give any other person, firm or corporation any legal or equitable right, remedy or claim under or in respect of this Agreement or any provision herein contained. No purchaser of Shares from the Underwriters shall be deemed to be a successor by reason merely of such purchase. 13. All notices and other communications hereunder shall be in writing and shall be deemed to have been duly given if mailed or transmitted by any standard form of telecommunication. Notices to the Underwriters shall be given to Credit Suisse First Boston Corporation at Eleven Madison Avenue, New York, New York 10010 (telefax: 212-325-4296); Attention: Transactions Advisory Group, and to J.P. Morgan Securities Inc., 270 Park Avenue, New York, New York 10017 (telefax: 212-648-5552); Attention: Syndicate Department. Notices to the Company shall be given to it at 1001 Louisiana Street, Houston, Texas 77002; Attention: Legal Department (telefax: 713-420-4099). 14. This Agreement may be signed in counterparts, each of which shall be an original and all of which together shall constitute one and the same instrument. 15. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO THE CONFLICTS OF LAWS PROVISIONS THEREOF. 16. The Company hereby submits to the non-exclusive jurisdiction of the Federal and state courts in the Borough of Manhattan in The City of New York in any suit or proceeding arising out of or relating to this Agreement or the transactions contemplated hereby. -24- 17. The invalidity or unenforceability of any Section, paragraph or provision of this Agreement shall not affect the validity or enforceability of any other Section, paragraph or provision hereof. If any Section, paragraph or provision of this Agreement is for any reason determined to be invalid or unenforceable, there shall be deemed to be made such minor changes (and only such minor changes) as are necessary to make it valid and enforceable. 18. This Agreement constitutes the entire agreement of the parties to this Agreement and supersedes all prior written or oral and all contemporaneous oral agreements, understandings and negotiations with respect to the subject matter hereof. In this Agreement, the masculine, feminine and neuter genders and the singular and plural include one another. This Agreement may be amended or modified, and the observance of any term of this Agreement may be waived, only by a writing signed by the Company and the Underwriters. -25- If the foregoing is in accordance with your understanding, please sign and return five counterparts hereof. Very truly yours, EL PASO CORPORATION By: /s/ John J. Hopper --------------------------------------- Name: John J. Hopper Title: Vice President and Treasurer Accepted as of the date first written above: CREDIT SUISSE FIRST BOSTON CORPORATION By: /s/ Paul A. Davis ------------------------------- Name: Paul A. Davis Title: Director J.P. MORGAN SECURITIES INC. By: /s/ Arnold Evans ------------------------------- Name: Arnold Evans Title: Vice President On behalf of the Several Underwriters named in Schedule I hereto SCHEDULE I
Number of Underwriter Underwritten Shares - ----------- ------------------- Credit Suisse First Boston Corporation...................... 13,500,000 J.P. Morgan Securities Inc.................................. 13,500,000 Banc of America LLC......................................... 3,375,000 Lehman Brothers Inc......................................... 3,375,000 Morgan Stanley & Co. Incorporated........................... 3,375,000 Salomon Smith Barney Inc. .................................. 3,375,000 ABN AMRO Rothschild LLC..................................... 1,125,000 BNY Capital Markets, Inc. .................................. 1,125,000 Howard Weil, a division of Legg Mason Wood Walker, Inc. ..................................... 1,125,000 Sanders Morris Harris....................................... 1,125,000 ---------- Total.............................................. 45,000,000 ==========
SCHEDULE II El Paso Natural Gas Company El Paso Tennessee Pipeline Co. Southern Natural Gas Company El Paso Production Holding Company El Paso CGP Company EXHIBIT A [Form of Lock-Up Agreement] Credit Suisse First Boston Corporation Eleven Madison Avenue New York, New York 10010 J.P. Morgan Securities Inc. 270 Park Avenue New York, New York 10017 On behalf of the Several Underwriters named in Schedule I to the Underwriting Agreement Re: El Paso Corporation - Common Stock Offering Ladies and Gentlemen: The undersigned understands that you have entered into an Underwriting Agreement (the "Underwriting Agreement") with El Paso Corporation, a Delaware corporation (the "Company"), providing for the public offering (the "Public Offering") by you (the "Underwriters") of Common Stock, par value $3.00 per share (the "Common Stock"), of the Company. Capitalized terms used herein and not otherwise defined shall have the meanings set forth in the Underwriting Agreement. In consideration of your agreement to purchase and make the Public Offering of the Common Stock, and for other good and valuable consideration receipt of which is hereby acknowledged, the undersigned hereby agrees that, without your prior written consent, which shall not be unreasonably withheld, the undersigned will not, during the period (the "Lock-Up Period") ending 45 days after the date of the prospectus relating to the Public Offering (the "Prospectus"), (1) offer, pledge, announce the intention to sell, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase, or otherwise transfer or dispose of, directly or indirectly, or publicly disclose the intention to do any of the foregoing, any shares of Common Stock of the Company or any securities convertible into or exercisable or exchangeable for Common Stock (including, but not limited to, Common Stock which may be deemed to be beneficially owned by the undersigned in accordance with the rules and regulations of the Securities and Exchange Commission and securities which may be issued upon exercise of a stock option or warrant) other than (A) as a bona fide gift or bona fide gifts, provided, however, that the recipient of such bona fide gift or bona fide gifts shall execute a copy of and be bound by the -2- terms of, this Agreement prior to such transfer or (B) the sale of any shares of Common Stock acquired upon the exercise of options granted under the Company's stock option or stock incentive plans that would otherwise expire during the Lock-Up Period or (C) the adoption of a written plan for trading securities consistent with Rule 10b5-1 of the Securities Exchange Act of 1934, as amended, as long as any sales under such written plan occur after the Lock-Up Period or (2) enter into any swap, option, future, forward or other agreement that transfers, in whole or in part, any of the economic consequences of ownership of the Common Stock or any securities of the Company which are substantially similar to the Common Stock, including, but not limited to, any security convertible into or exercisable or exchangeable for Common Stock, whether any such transaction described in clause (1) or (2) above is to be settled by delivery of Common Stock or such other securities, in cash or otherwise. In addition, the undersigned agrees that, without the prior written consent of both Representatives, which shall not be unreasonably withheld, it will not, during the period ending 45 days after the date of the Prospectus, make any demand for or exercise any right with respect to, the registration of any shares of Common Stock or any security convertible into or exercisable or exchangeable for Common Stock. In furtherance of the foregoing, the Company and any duly appointed transfer agent for the registration or transfer of the securities described herein are hereby authorized to decline to make any transfer of securities if such transfer would constitute a violation or breach of this Lock-Up Agreement. The undersigned hereby represents and warrants that the undersigned has full power and authority to enter into this Lock-Up Agreement. All authority herein conferred or agreed to be conferred and any obligations of the undersigned shall be binding upon the successors, assigns, heirs or personal representatives of the undersigned. The undersigned understands that, if the Underwriting Agreement (other than the provisions thereof which survive termination) shall terminate or be terminated prior to payment for and delivery of the Common Stock to be sold thereunder, this Lock-Up Agreement shall terminate and be of no further force or effect, and the undersigned shall be released from all obligations under this Lock-Up Agreement. The undersigned understands that the Underwriters propose to proceed with the Public Offering in reliance upon this Lock-Up Agreement. -3- THIS LOCK-UP AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO THE CONFLICTS OF LAWS PROVISIONS THEREOF. Very truly yours, By: --------------------------------------- Name: Title: EX-4.A 5 h97915exv4wa.txt 8TH SUPPLEMENTAL INDENTURE DATED 6/26/2002 EXHIBIT 4.A ================================================================================ EL PASO CORPORATION ISSUER AND JPMORGAN CHASE BANK TRUSTEE ---------- EIGHTH SUPPLEMENTAL INDENTURE DATED AS OF JUNE 26, 2002 TO INDENTURE DATED AS OF MAY 10, 1999 ---------- SENIOR NOTES DUE AUGUST 16, 2007 ---------- ================================================================================ EIGHTH SUPPLEMENTAL INDENTURE, dated as of June 26, 2002 (herein called the "Eighth Supplemental Indenture"), between EL PASO CORPORATION (formerly known as El Paso Energy Corporation), a Delaware corporation (herein called the "Company"), having its principal office at 1001 Louisiana Street, Houston, Texas 77002 and JPMORGAN CHASE BANK (formerly known as The Chase Manhattan Bank), a banking corporation duly organized and existing under the laws of the State of New York, as trustee under the Indenture referred to below (herein called the "Trustee"). RECITALS OF THE COMPANY WHEREAS, the Company has heretofore executed and delivered to the Trustee the Indenture, dated as of May 10, 1999 (herein called the "Original Indenture"), providing for the issuance from time to time of one or more series of the Company's unsecured debentures, notes or other evidences of indebtedness (herein called the "Securities"), the terms of which are to be determined as set forth in Section 301 of the Original Indenture; WHEREAS, Section 901 of the Original Indenture provides, among other things, that the Company and the Trustee may enter into indentures supplemental to the Original Indenture for, among other things, the purpose of establishing the form or terms of Securities of any series as permitted by Sections 201 and 301 of the Original Indenture; WHEREAS, the Company desires to create a series of the Securities in an aggregate principal amount of $500,000,000 (up to $575,000,000 if the over-allotment option of the Underwriters (as defined in the Underwriting Agreement) is exercised pursuant to the Underwriting Agreement), which series shall be designated the Senior Notes Due August 16, 2007 (the "Notes"), and all action on the part of the Company necessary to authorize the issuance of the Notes under the Original Indenture and this Eighth Supplemental Indenture has been duly taken; and WHEREAS, all acts and things necessary to make the Notes, when executed by the Company and completed, authenticated and delivered by the Trustee as provided in the Original Indenture and this Eighth Supplemental Indenture, the valid and binding obligations of the Company and to constitute these presents a valid and binding supplemental indenture and agreement according to its terms, have been done and performed. NOW, THEREFORE, THIS EIGHTH SUPPLEMENTAL INDENTURE WITNESSETH: That in consideration of the premises and the issuance of the Notes, the Company covenants and agrees with the Trustee, for the equal and proportionate benefit of all Holders of the Notes, as follows: ARTICLE I TERMS AND ISSUANCE OF SENIOR NOTES DUE AUGUST 16, 2007 SECTION 1.01 Establishment, Designation and Principal Amount. (a) There shall be and is hereby authorized a series of Securities under the Original Indenture designated the "Senior Notes Due August 16, 2007," in the initial aggregate principal amount of $500,000,000 (up to $575,000,000 if the Underwriters' over-allotment option is exercised), which amount shall be as set forth in the Company Order for the authentication and delivery of the Notes pursuant to Sections 201 and 303 of the Original Indenture. (b) The Notes shall mature and the principal shall be due and payable together with all accrued and unpaid interest thereon on August 16, 2007. (c) The Notes shall initially be issued in definitive, fully registered form (the "Definitive Securities"), without coupons, in substantially the form set out in Exhibit A hereto. The entire principal amount of the Notes shall initially be evidenced by one or more certificates issued to JPMorgan Chase Bank, as Purchase Contract Agent under the Purchase Contract Agreement (as defined below). (d) The Notes that, in accordance with the Purchase Contract Agreement, are no longer held as part of Equity Security Units shall be represented initially by Global Securities. Each such Definitive Security and Global Security shall represent such aggregate principal amount of the Outstanding Notes as shall be from time to time endorsed thereon, which principal amounts may be increased or decreased, as applicable, to reflect Transfers from Pledged Notes to Separate Notes and Transfers from Separate Notes to Pledged Notes. Any such increase or decrease in the aggregate principal amount of (i) Definitive Securities shall be made by the Collateral Agent and (ii) Global Securities representing Notes shall be made by the Trustee, as custodian of the Global Securities, in each case upon the instructions of the Purchase Contract Agent given pursuant to Article IV of the Pledge Agreement; provided, however, that the combined aggregate principal amount of the Outstanding Notes represented by the Definitive Securities and Global Securities shall never exceed the amounts specified in Section 1.01(a) hereof. ARTICLE II GENERAL TERMS AND CONDITIONS OF THE NOTES SECTION 2.01 Definitions. For purposes of this Eighth Supplemental Indenture and the Notes, the following terms shall have the meanings indicated below. Capitalized terms used herein but not defined herein shall have the meaning assigned to them in the Original Indenture, the Purchase Contract Agreement, the Remarketing Agreement or the Pledge Agreement, as the case may be and as the context may require. To the extent of conflicts between definitions in the Original Indenture and definitions set forth or incorporated herein, the definitions herein shall control. -2- "Applicable Spread" means the spread determined as set forth below, based on the Prevailing Rating of the Notes in effect at the close of business on the fifth Business Day immediately preceding the Stock Purchase Date:
Prevailing Rating Spread ----------------- ------ AA/"Aa2"........................................................ 2.00% A/"A2".......................................................... 3.00% BBB/"Baa2"...................................................... 4.00% BBB-/"Baa3"..................................................... 6.00% Below BBB-/"Baa3"............................................... 7.00%
"Business Day" means any day other than a Saturday or Sunday or a day on which banking institutions and trust companies in the State of New York are authorized or required by law, regulation or executive order to be closed or a day on which the Purchase Contract Agent, the Collateral Agent or the Trustee is closed for business. "Company" has the meaning set forth in the preamble. "Contingent Payment Regulations" has the meaning set forth in Section 2.11. "DTC" means The Depository Trust Company. "Interest Payment Date" has the meaning set forth in Section 2.02. "Moody's" means Moody's Investors Service, Inc. "Notes" has the meaning set forth in the recitals. "Pledge Agreement" means the Pledge Agreement, dated as of June 26, 2002, between the Company and JPMorgan Chase Bank, as Purchase Contract Agent, and The Bank of New York, as Collateral Agent, Custodial Agent and Securities Intermediary. "Prevailing Rating" means, for purposes of determining the Applicable Spread: (1) AA/"Aa2" if the Notes have a credit rating of AA or better by S&P and "Aa2" or better by Moody's or the equivalent of such ratings by such agencies or a substitute rating agency or agencies selected by the Remarketing Agent, after consultation with the Company; (2) if not under clause (1) above, then A/"A2" if the Notes have a credit rating of A or better by S&P and "A2" or better by Moody's or the equivalent of such ratings by such agencies or a substitute rating agency or agencies selected by the Remarketing Agent, after consultation with the Company; (3) if not under clause (1) or (2) above, then BBB/"Baa2" if the Notes have a credit rating of BBB or better by S&P and "Baa2" or better by Moody's or the equivalent of such ratings by such agencies or a substitute rating agency or agencies selected by the Remarketing Agent, after consultation with the Company; or -3- (4) if not under clause (1), (2), (3) above, then BBB-/"Baa3" if the Notes have a credit rating of BBB- or better by S&P and "Baa3" or better by Moody's or the equivalent of such ratings by such agencies or a substitute rating agency or agencies selected by the Remarketing Agent, after consultation with the Company; or (5) if not under clauses (1), (2), (3) or (4) above, then Below BBB-/"Baa3." Notwithstanding the foregoing, if: (A)(1) the credit rating of the Notes by S&P shall be on the "Credit Watch" of S&P with a designation of "negative implications" or "developing," or (2) the credit rating of the Notes by Moody's shall be on the "Corporate Credit Watch List" of Moody's with a designation of "downgrade" or "uncertain," or, in each case, on any successor list of S&P or Moody's with a comparable designation, the Prevailing Rating of the Notes shall be deemed to be within a range one full level lower in the above table than those actually assigned to the Notes by S&P and Moody's is rating the Notes. (B) the Notes are not rated by both S&P and Moody's on or before the fifth Business Day immediately preceding the Stock Purchase Date, the Prevailing Rating will at all times be determined by reference to the rating of whichever of S&P and Moody's is rating the Notes. However, if neither S&P nor Moody's shall have in effect a rating of the Notes and the Remarketing Agent is unable to identify a substitute rating agency or agencies, the Prevailing Rating shall be Below BBB-/"Baa3." "Purchase Contract Agreement" means the agreement, dated as of June 26, 2002, between the Company and the Purchase Contract Agent, pursuant to which the Equity Security Units and Stripped Units will be issued. "Regular Record Date" means, with respect to each Interest Payment Date, the close of business on the Business Day preceding such Interest Payment Date; provided, that with respect to Notes that are not in book-entry only form, the Regular Record Date shall be the close of business on the 15th day preceding such Interest Payment Date. "Remarketing Agreement" means the Remarketing Agreement, dated as of June 26, 2002, by and among the Company, the Remarketing Agent and the Purchase Contract Agent. "Reset Rate" means the interest rate per annum with respect to the Notes that is determined by the Remarketing Agent pursuant to the Remarketing Agreement as follows: (i) in connection with a successful remarketing, the rate of interest that, in the opinion of the Remarketing Agent, will, when applied to the Notes participating in the remarketing, enable the then current aggregate market value of the Notes to have a value equal to approximately, but not less than, 100.5% of the Remarketing Value as of the -4- Initial Remarketing Date or as of any Subsequent Remarketing Date, as the case may be; or (ii) if the Last Failed Remarketing shall have occurred or if there were no Equity Security Units outstanding on the Initial Remarketing Date or any Subsequent Remarketing Date and none of the Holders of Separate Notes elected during any Remarketing Period to have their Separate Notes participate in a remarketing, the rate of interest equal to the Two-Year Benchmark Treasury Rate plus the Applicable Spread, in each case subject to Section 2.05(l). "S&P" means Standard & Poor's Ratings Services. "Stated Maturity" means August 16, 2007. "Telerate" means the Dow Jones Telerate Service. "Two-Year Benchmark Treasury" means 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 Notes, as agreed upon by the Company and the Remarketing Agent. "Two-Year Benchmark Rate" means (i) the bid side rate of the Two-Year Benchmark Treasury displayed at 10:00 a.m., New York City time, on the fifth Business Day immediately preceding the Stock Purchase Date in the Telerate system (or, if the Telerate system is (a) no longer available on such date or (b) in the judgment of the Remarketing 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 judgment of the Remarketing Agent (after consultation with the Company), is appropriate) or (ii) if such rate cannot be determined as set forth in clause (i) above, the yield to maturity for the Two-Year Benchmark Treasury, as calculated by the Remarketing Agent, 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 fifth Business Day immediately preceding the Stock Purchase Date of three leading United States government securities dealers selected by the Remarketing Agent (after consultation with the Company) (which may include the Remarketing Agent or an affiliate thereof). However, if, in the judgment of the Remarketing Agent (after consultation with the Company), direct obligations of the United States are no longer appropriate benchmarks for the purpose of setting the Reset Rate if the Last Failed Remarketing has occurred, the Company and the Remarketing Agent shall agree upon another two-year benchmark rate. SECTION 2.02 Payment of Principal and Interest. (a) The unpaid principal amount of the Notes shall initially bear interest at the rate of 6.14% per annum, payable in arrears on each February 16, May 16, August 16 and November 16 (each, with respect to the Notes, an "Interest Payment Date"), commencing August 16, 2002, from the original date of issuance, to, but excluding, the earlier of (i) the settlement date of a successful remarketing under the Purchase Contract Agreement or (ii) the Stock Purchase Date, -5- and, thereafter, at the Reset Rate to, but excluding, the date on which the principal of the Notes has been paid or made available for payment. (b) Interest shall be payable quarterly in arrears on each Interest Payment Date to the Person in whose name the Notes are registered on the Regular Record Date for such Interest Payment Date; provided that interest payable on the Stated Maturity shall be paid to the person to whom principal is payable. As provided in Section 307 of the Original Indenture, any such interest not punctually paid or duly provided for with respect to any Interest Payment Date shall forthwith cease to be payable to the registered holders on such Regular Record Date, and may be paid to the person or persons in whose name the Notes 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 whereof shall be given to the registered holders of the Notes not less than ten 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, if any, on which the Notes may be listed, and upon such notice as may be required by such exchange, all as more fully provided in Section 307 of the Original Indenture. (c) The amount of interest payable for any period will be computed: (1) for any full quarterly period, on the basis of a 360-day year of twelve 30-day months, (2) for any period shorter than a full quarterly period, on the basis of a 30-day month; and (3) for periods of less than a month, on the basis of the actual number of days elapsed per 30-day month. If any date on which interest or principal is payable is not a Business Day, then payment of interest or principal 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 any such delay), except that, if such Business Day is in the next succeeding calendar year, 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 date. (d) Payment of the principal of and interest on the Notes shall be made at an office or agency of the Company maintained for that purpose in the Borough of Manhattan, The City of New York, at the Office of the Agent in The City of New York (in the case of Pledged Notes) or at the Corporate Trust Office (in the case of Separate Notes) 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, with any such payment that is due on the Stated Maturity being made upon surrender of such Notes to the Office of the Agent in The City of New York or the Corporate Trust Office, as the case may be. Payments of interest will be made, subject to such surrender upon payment of principal at Stated Maturity, at the option of the Company, (i) by check mailed to the address of the person entitled thereto as such address shall appear in the Security Register or (ii) by wire transfer at such place and to such account at a banking institution in the United States as may be designated in writing to the Trustee at least five Business Days prior to the date for payment by the Person entitled hereto. -6- SECTION 2.03 Denominations. The Notes shall be issued in denominations of $50 and integral multiples of $50. SECTION 2.04 Global Securities. (a) The Notes that, in accordance with the Purchase Contract Agreement, are no longer part of the Equity Security Units will be exchanged for Notes in the form of one or more Global Securities registered in the name of DTC or its nominee. Except under the limited circumstances described below or in Section 2.04(c) below, Notes represented by such Global Securities will not be exchangeable for, and will not otherwise be issuable as, Notes in definitive form. The Global Securities described above may not be transferred except by DTC to a nominee of DTC or by a nominee of DTC to DTC or another nominee of DTC or to a successor Depository or its nominee. (b) Owners of beneficial interests in such a Global Security will not be considered the Holders thereof for any purpose under the Indenture, and no Global Security representing a Note shall be exchangeable, except for another Global Security of like denomination and tenor to be registered in the name of DTC or its nominee or to a successor Depositary or its nominee or except as described below. The rights of owners of beneficial interests in such a Global Security shall be exercised only through DTC. (c) Notwithstanding anything to the contrary in Section 305 of the Original Indenture, a Global Security shall be exchangeable for Notes registered in the names of persons other than DTC or its nominee only if: (i) DTC notifies the Company that it is unwilling or unable to continue as a Depositary for such Global Security and no successor Depositary shall have been appointed by the Company within 90 days of receipt by the Company of such notification; (ii) if at any time DTC ceases to be a clearing agency registered under the Securities Exchange Act of 1934 at a time when DTC is required to be so registered to act as such Depositary and no successor Depositary shall have been appointed by the Company within 90 days after it becomes aware of such cessation; (iii) the Company in its sole discretion determines that it no longer has any senior debt securities represented by global securities or that it will permit a Global Security to be exchangeable; or (iv) an Event of Default under the Indenture has occurred and is continuing. Any Global Security that is exchangeable pursuant to the preceding sentence shall be exchangeable for Notes registered in such names as DTC shall direct. SECTION 2.05 Remarketing. (a) The Pledged Notes comprising part of Equity Security Units and the Separate Notes of holders of Separate Notes that have elected in accordance with Section 2.06(a) hereof to participate in a remarketing shall be remarketed by the Remarketing Agent. -7- (b) On the seventh Business Day immediately preceding the Initial Remarketing Date or the first day of any subsequent Remarketing Period, as applicable, the Company shall give Holders of Separate Notes notice of the upcoming remarketing in a daily newspaper in the English language of general circulation in The City of New York, which is expected to be The Wall Street Journal. Not later than seven nor more than 15 calendar days prior to the Initial Remarketing Date or the first day of any subsequent Remarketing Period, as applicable, the Company shall request DTC (or any successor Clearing Agency) to notify, directly or indirectly, each Beneficial Owner or Clearing Agency Participant holding an Equity Security Unit or Stripped Units and each Beneficial Owner of a Separate Note of the upcoming remarketing and of the procedures that must be followed in connection with the upcoming remarketing, as applicable. (c) On the third Business Date immediately preceding the Initial Remarketing Date or the first day of any subsequent Remarketing Period, as applicable, not later than 10:00 a.m., New York City time, pursuant to the terms of the Pledge Agreement, the Collateral Agent shall notify the Remarketing Agent of the aggregate number of Pledged Notes to be remarketed. On the third Business Day immediately preceding the Initial Remarketing Date or the first day of any subsequent Remarketing Period, as applicable, not later than by 10:00 a.m., New York City time, pursuant to the terms of the Pledge Agreement, the Custodial Agent will notify the Remarketing Agent of the aggregate number of Separate Notes to be remarketed. On the third Business Day immediately preceding the Initial Remarketing Date or the first day of any subsequent Remarketing Period, as applicable, the Collateral Agent and the Custodial Agent, pursuant to the terms of the Pledge Agreement, will deliver for remarketing to the Remarketing Agent all Pledged Notes and all Separate Notes delivered to the Custodial Agent pursuant to Section 4.5(d) of the Pledge Agreement and not withdrawn pursuant to the terms thereof prior to such date. (d) The right of each Holder of Notes to have its Notes tendered for purchase will be limited to the extent that (i) the Remarketing Agent conducts a remarketing pursuant to the terms of the Remarketing Agreement, (ii) the Remarketing Agent is able to find a purchaser or purchasers for the tendered Notes and (iii) such purchaser or purchasers deliver the purchase price therefor to the Remarketing Agent. (e) Upon receipt of the notice provided for in Section 2.05(c) from the Collateral Agent and the Custodial Agent and such Notes from the Collateral Agent and the Custodial Agent, the Remarketing Agent will, on the Initial Remarketing Date, use its commercially reasonable best efforts to (i) establish the Reset Rate (as defined in clause (i) of the definition of such term) and (ii) sell the Notes participating in such remarketing on such date at a price equal to approximately, but not less than, 100.5% of the Remarketing Value. (f) If, despite using its commercially reasonable best efforts, the Remarketing Agent cannot, on the Initial Remarketing Date, establish the Reset Rate (as defined in clause (i) of the definition of such term) and remarket the Notes participating in the remarketing at a price equal to approximately, but not less than, 100.5% of the Remarketing Value, the Remarketing Agent will again attempt to establish the Reset Rate (as defined in clause (i) of the definition of such term) and remarket the Notes participating in the remarketing at a price equal to approximately, but not less than, 100.5% of the Remarketing Value on each of the two next succeeding Business Days. If the Remarketing Agent cannot remarket the Notes participating in the remarketing at a price equal to approximately, but not less than, 100.5% of the Remarketing Value on either of -8- those days, it will attempt to establish the Reset Rate (as defined in clause (i) of the definition of such term) and remarket the Notes participating in the remarketing at a price equal to approximately, but not less than, 100.5% of the Remarketing Value on each of the three Business Days immediately preceding July 1, 2005. If the Remarketing Agent cannot establish the Reset Rate (as defined in clause (i) of the definition of such term) and remarket the Notes participating in the remarketing at a price equal to approximately, but not less than, 100.5% of the Remarketing Value either on the Initial Remarketing Date or any of the two Business Days next succeeding the Initial Remarketing Date or on any of the three Business Days immediately preceding July 1, 2005, the remarketing in each such period will be deemed to have failed (each, a "Failed Remarketing"). If there have been two Failed Remarketings, the Remarketing Agent will further attempt to establish the Reset Rate (as defined in clause (i) of the definition of such term) and remarket the Notes participating in the remarketing at a price equal to approximately, but not less than, 100.5% of the Remarketing Value on each of the seventh, sixth and fifth Business Days immediately preceding the Stock Purchase Date. If, despite using its commercially reasonable best efforts, the Remarketing Agent fails to remarket the Notes participating in the remarketing at a price equal to approximately, but not less than, 100.5% of the Remarketing Value by 4:00 p.m., New York City time, on the fifth Business Day immediately preceding the Stock Purchase Date, the "Last Failed Remarketing" will be deemed to have occurred. (g) Upon the occurrence of a successful remarketing, by approximately 4:30 p.m., New York City time, on the date of the successful remarketing, the Remarketing Agent shall advise, by telephone (promptly confirmed in writing in the case of clause (i)): (i) the Company, the Purchase Contract Agent, the Collateral Agent, the Custodial Agent, the Securities Intermediary, DTC and the Trustee of the Reset Rate determined in the remarketing in accordance with clause (i) of the definition of Reset Rate; (ii) each purchaser (or the Clearing Agency Participant thereof) of Notes in the remarketing of the Reset Rate and the number of Notes such purchaser is to purchase; and (iii) each purchaser to give instructions to its Clearing Agency Participant to pay the purchase price on the date of settlement for such remarketing in same day funds against delivery of the remarketed Notes purchased through the facilities of DTC. The Remarketing Agent also shall, in accordance with the Purchase Contract Agreement and the Remarketing Agreement, use the proceeds from the successful remarketing attributable to the Pledged Notes to purchase the Treasury Consideration with the CUSIP numbers, if any, selected by the Remarketing Agent, described in clauses (1) and (2) of the definition of Remarketing Value. (h) On the date of settlement of the successful remarketing, which shall be the third Business Day following the Initial Remarketing Date or such Subsequent Remarketing Date, as the case may be, the Notes will begin bearing interest at the Reset Rate and the Remarketing Agent shall deliver such Treasury Consideration to the Purchase Contract Agent, which shall thereupon deliver such Treasury Consideration to the Collateral Agent. The Collateral Agent, -9- for the benefit of the Company, shall thereupon apply such Treasury Consideration, in accordance with the Pledge Agreement, to secure such Holders' obligations under the Purchase Contracts related to Equity Security Units. On the third Business Day following such Initial Remarketing Date or Subsequent Remarketing Date, as the case may be, the Remarketing Agent also shall: (i) deduct and retain for itself the Remarketing Fee; (ii) remit the remaining portion of the proceeds from the successful remarketing attributable to the Separate Notes to the Custodial Agent for payment to the holders of Separate Notes that were remarketed; and (iii) remit the remaining portion, if any, of the proceeds to the Purchase Contract Agent for payment to the Holders of the Equity Security Units. (i) Any distribution to Holders of excess funds and interest described in this Section 2.05 shall be payable at the Office of the Agent in The City of New York (in the case of Pledged Notes) or Corporate Trust Office (in the case of Separate Notes), as the case may be, maintained for that purpose or, at the option of the Holder or the holder of Separate Notes, as applicable, by check mailed to the address of the Person entitled thereto at such address as it appears on the relevant Register or by wire transfer to an account specified by the Holder or the holder of Separate Notes, as applicable. (j) Upon the occurrence of a Failed Remarketing, the Remarketing Agent and the Company, as applicable, shall take the following actions: (i) the Remarketing Agent shall notify by telephone the Company, the Purchase Contract Agent, the Collateral Agent, the Custodial Agent and the Trustee that a Failed Remarketing has occurred, whereupon the Company shall notify DTC, by telephone, that a Failed Remarketing has occurred; (ii) the Company shall cause a notice of the Failed Remarketing to be published, not later than the fourth Business Day following the last day of such Remarketing Period, by means of Bloomberg and Reuters newswires and a daily newspaper in the English language of general circulation in The City of New York, which is expected to be The Wall Street Journal; and (iii) the Remarketing Agent shall, within three Business Days following the last day of such Remarketing Period, return the Pledged Notes that were to be remarketed to the Collateral Agent and the Separate Notes that were to be remarketed to the Custodial Agent for redelivery to such holders of such Separate Notes. (k) Upon the occurrence of the Last Failed Remarketing, the Remarketing Agent shall notify by telephone the Company, the Agent, the Collateral Agent, the Custodial Agent and the Trustee that the Last Failed Remarketing has occurred, whereupon the Company shall notify the Depositary that the Last Failed Remarketing has occurred. The Company also shall cause a notice of the Last Failed Remarketing to be published not later than the fourth Business Day following the fifth Business Day immediately preceding the Stock Purchase Date by means of Bloomberg and Reuters newswires and a daily newspaper in the English language of general -10- circulation in the City of New York, which is expected to be The Wall Street Journal. The Remarketing Agent also shall, within three Business Days following the fifth Business Day immediately preceding the Stock Purchase Date, return the Pledged Notes to the Collateral Agent and the Separate Notes that were to be remarketed to the Custodial Agent for redelivery to such holders of such Separate Notes. In addition, pursuant to the written direction of the Company, the Collateral Agent shall, for the benefit of the Company, deliver or dispose of any Pledged Notes in accordance with the Company's written direction to satisfy in full, from any such disposition or delivery, such Holders' obligations under the related Purchase Contracts to pay the Purchase Price for the Common Stock, and any accrued and unpaid interest on such Notes will become payable by the Company to the Purchase Contract Agent for payment to the Holders of the Equity Security Units to which such Notes relate in accordance with the Purchase Contract Agreement. Such payment will be made by the Company not later than 11:00 a.m., New York City time, on the Stock Purchase Date in lawful money of the United States by certified or cashier's check or wire transfer in immediately available funds payable to or upon the order of the Purchase Contract Agent. In addition, the Remarketing Agent shall notify the Company, the Custodial Agent and the Trustee of the Reset Rate as determined in accordance with clause (ii) of the definition of Reset Rate and the Notes will begin bearing interest at such Reset Rate on the Stock Purchase Date. (l) Anything herein to the contrary notwithstanding, the Reset Rate shall in no event exceed the maximum rate permitted by applicable law and, as provided in the Remarketing Agreement, the Remarketing Agent shall have no obligation to determine whether there is any limitation under applicable law on the Reset Rate or, if there is any such limitation, the maximum permissible Reset Rate on the Notes and it shall rely solely upon written notice from the Company (which the Company agrees to provide prior to the eighth Business Day immediately preceding the Initial Remarketing Date) as to whether or not there is any such limitation and, if so, the maximum permissible Reset Rate. (m) In accordance with DTC's normal procedures, on the date of settlement of such Remarketing or the Stock Purchase Date, as applicable, the transactions described above with respect to each Note remarketed in the remarketing shall be executed through DTC, and the accounts of the respective Clearing Agency Participants shall be debited and credited and such remarketed Notes delivered by book entry as necessary to effect purchases and sales of such remarketed Notes. DTC shall make payment in accordance with its normal procedures. (n) If any Holder of Notes selling Notes in the remarketing fails to deliver such Notes, the direct or indirect Clearing Agency Participant of such selling Holder and of any other Person who was to have purchased Notes in the remarketing may deliver to any such other Person an aggregate principal amount of Notes that is less than the aggregate principal amount of Notes that otherwise was to be purchased by such Person. In such event, the aggregate principal amount of Notes to be so delivered shall be determined by such direct or indirect Clearing Agency Participant, and delivery of such lesser aggregate principal amount of Notes shall constitute good delivery. (o) The Remarketing Agent is not obligated to purchase any Notes that otherwise would remain unsold in the remarketing. Neither the Company nor the Remarketing Agent shall be obligated in any case to provide funds to make payment upon tender of the Notes for remarketing. -11- (p) Under the Remarketing Agreement, the Company, in its capacity as issuer of the Notes, shall be liable for, and shall pay, any and all costs and expenses incurred in connection with the remarketing, other than the Remarketing Fee. (q) The settlement procedures set forth herein, including provisions for payment by purchasers of the remarketed Notes in the remarketing, shall be subject to modification to the extent required by DTC or if the book-entry system is no longer available for the remarketed Notes at the time of the remarketing, to facilitate the remarketing of the remarketed Notes in certificated form, and shall provide for the authentication and delivery of Notes in a principal amount equal to the unremarketed portion of such Notes. In addition, the Remarketing Agent may modify the settlement procedures set forth herein in order to facilitate the settlement process. SECTION 2.06 Optional Remarketing. (a) At any time after the Interest Payment Date immediately preceding the last Interest Payment Date before the Stock Purchase Date and prior to 11:00 a.m., New York City time, on the fourth Business Day immediately preceding the Initial Remarketing Date or the first day of any subsequent Remarketing Period, as applicable, holders of Separate Notes may elect to have their Separate Notes remarketed by Transferring such Separate Notes and delivering a notice of such election, substantially in the form of Exhibit C to the Pledge Agreement, to the Custodial Agent. Pursuant to the terms of the Pledge Agreement, the Custodial Agent will hold such Separate Notes in an account separate from the Collateral Account. On the third Business Day immediately preceding the Initial Remarketing Date or the first day of any subsequent Remarketing Period, as applicable, not later than 10:00 a.m., New York City time, pursuant to the terms of the Pledge Agreement, the Custodial Agent shall notify the Remarketing Agent of the aggregate number of Separate Notes to be remarketed. A holder of Separate Notes electing to have its Separate Notes remarketed will also have the right to withdraw such election by written notice to the Custodial Agent, substantially in the form of Exhibit D to the Pledge Agreement, prior to 11:00 a.m., New York City time, on the fourth Business Day immediately preceding the Initial Remarketing Date or the first day of a subsequent Remarketing Period, as applicable, upon which notice the Custodial Agent will return such Separate Notes to such holder. (b) On the third Business Day immediately preceding the Initial Remarketing Date or the first day of any subsequent Remarketing Period, as applicable, the Custodial Agent, pursuant to the terms of the Pledge Agreement, will deliver to the Remarketing Agent for remarketing all Separate Notes delivered to the Custodial Agent pursuant to Section 4.5(d) of the Pledge Agreement and not withdrawn pursuant to the terms thereof prior to such date. If the holder of the Separate Notes delivers only such notice but not the Separate Notes subject to such notice, then none of such holder's Separate Notes shall be included in the remarketing. Once the holder of Separate Notes elects to participate in the remarketing, such Separate Notes will be remarketed in the remarketing, unless such notice is properly withdrawn. After deducting and retaining for itself the Remarketing Fee, the Remarketing Agent will remit the remaining portion of the proceeds from the successful remarketing attributable to the Separate Notes to the Custodial Agent for payment to the holders of Separate Notes that were remarketed. In accordance with Section 4.5(d) of the Pledge Agreement, upon the occurrence of a Failed Remarketing, the Remarketing Agent will, within three Business Days following the last day of -12- such Remarketing Period, return such Separate Notes that were to be remarketed to the Custodial Agent for redelivery to such holders of such Separate Notes. SECTION 2.07 Sinking Fund. The Notes shall not be entitled to any sinking fund. SECTION 2.08 Redemption and Repurchase. Except as provided in Section 2.10, the Notes shall not be redeemable prior to their Stated Maturity. SECTION 2.09 Defeasance. The provisions of Article Thirteen of the Original Indenture shall not apply to the Notes. SECTION 2.10 Tax Event Redemption. (a) If a Tax Event shall occur, the Company may, at its option, redeem the Notes in whole (but not in part) at any time at a price equal to the Redemption Price. Installments of interest on the Notes that are due and payable on or prior to the date of redemption (the "Tax Event Redemption Date") will be payable to the Holders of the Notes registered as such on the Record Date next preceding such Tax Event Redemption Date. (b) If, following the occurrence of a Tax Event prior to the earlier of a successful remarketing and the Stock Purchase Date, the Company exercises its option to redeem the Notes, the Company shall appoint the Quotation Agent to assist the Collateral Agent in purchasing the Treasury Portfolio, in consultation with the Company. (c) Payment of the Redemption Price owed to each Holder of Notes shall be made by the Company, not later than 12:00 noon, New York City time, on the Tax Event Redemption Date, by check or wire transfer in immediately available funds (provided the necessary wire instructions have been provided to the Trustee at least 15 days prior to the Tax Event Redemption Date) at such place and to such account as may be designated by each such Holder of Notes, in the case of Separate Notes, or to the Collateral Agent, in the case of Pledged Notes. The Collateral Agent shall, in accordance with Section 4.3 of the Purchase Contract Agreement and Section 6.3 of the Pledge Agreement, apply the aggregate Redemption Price for the Pledged Notes to the purchase of the Treasury Portfolio and promptly remit the remaining portion, if any, of such aggregate Redemption Price to the Purchase Contract Agent for payment to the Holders of the Equity Security Units. The Treasury Portfolio will be substituted for the Pledged Notes, and will be pledged to the Collateral Agent in accordance with the terms of the Pledge Agreement to secure the obligation of each Holder of an Equity Security Unit to purchase the Common Stock under the Purchase Contract constituting a part of such Equity Security Units. If the Trustee or Collateral Agent, as the case may be, holds immediately available funds sufficient to pay the Redemption Price of the Notes, then, on such Tax Event Redemption Date, such Notes will cease to be Outstanding. (d) The Trustee shall have no duty or liability to determine or verify the Redemption Price. Notice of a Tax Event Redemption will be mailed at least 30 days but not more than 60 days before the Tax Event Redemption Date to each registered Holder of the Notes to be redeemed at its registered address. Unless the Company defaults in payment of the Redemption Price, interest shall cease to accrue on the Notes on and after the Tax Event Redemption Date, whether or not such Notes have been received by the Company, and all other rights of the -13- Holders in respect of the Notes shall terminate and lapse (other than the right to receive the Redemption Price upon delivery of such Notes but without interest on such Redemption Price). SECTION 2.11 Tax Treatment. The Company agrees, and by acceptance of a beneficial ownership interest in the Notes, each beneficial holder of Notes will be deemed to have agreed, to: (1) treat the acquisition of an Equity Security Unit as the acquisition of the Note and the Purchase Contract constituting the Equity Security Unit and to allocate the purchase price of the Equity Security Unit between the Note and the Purchase Contract as $50 and $0, respectively; (2) treat the Notes as indebtedness that is subject to Treas. Reg. Sec. 1.1275-4 (the "Contingent Payment Regulations") for United States federal income tax purposes; and (3) be bound by the Company's determination of the "comparable yield" and "projected payment schedule," within the meaning of the Contingent Payment Regulations, with respect to the Notes for United States federal income tax purposes. A Holder of Notes may obtain the amount of original issue discount, issue date, yield to maturity, comparable yield and projected payment schedule by submitting a written request for it to the Company at the following address: El Paso Corporation, Investor Relations, 1001 Louisiana Street, Houston, Texas 77002. ARTICLE III CERTAIN AMENDMENTS TO THE ORIGINAL INDENTURE SECTION 3.01 Modification of Section 1104 in Respect of the Senior Notes. Notwithstanding the terms of Section 1104 of the Original Indenture, if the Company elects to redeem any of the Outstanding Notes upon the occurrence of a Tax Event, the notice of redemption required to be furnished pursuant to Section 1104 of the Original Indenture does not need to specify the Redemption Price, but such notice of redemption may instead specify the manner of calculation of the Redemption Price. In such event, the Company shall notify the Trustee of the Redemption Price with respect to such redemption promptly after the calculation thereof, and the Trustee shall not be responsible for such calculation. ARTICLE IV MISCELLANEOUS SECTION 4.01 Recitals by Company. This Eighth Supplemental Indenture is executed and shall be construed as an indenture supplemental to the Original Indenture and, as provided in the Original Indenture, this Eighth Supplemental Indenture forms a part thereof. Except as herein expressly otherwise defined, the use of the terms and expressions herein is in accordance with the definitions, uses and constructions contained in the Original Indenture. -14- SECTION 4.02 Responsibility for Recitals, Etc. The recitals herein and in the Notes (except in the Trustee's certificate of authentication) shall be taken as the statements of the Company, and the Trustee assumes no responsibility for the correctness thereof. The Trustee makes no representations as to the validity or sufficiency of this Eighth Supplemental Indenture or of the Notes. The Trustee shall not be accountable for the use or application by the Company of the Notes or of the proceeds thereof. SECTION 4.03 Provisions Binding on Company's Successors. All the covenants, stipulations, promises and agreements in this Eighth Supplemental Indenture contained by the Company shall bind its successors and assigns whether so expressed or not. SECTION 4.04 Governing Law. This Eighth Supplemental Indenture and each Note shall be governed by, and construed in accordance with, the laws of the State of New York. SECTION 4.05 Execution and Counterparts. This Eighth Supplemental Indenture may be executed with counterpart signature pages or in any number of counterparts, each of which shall be an original but such counterparts shall together constitute but one and the same instrument. -15- IN WITNESS WHEREOF, EL PASO CORPORATION has caused this Eighth Supplemental Indenture to be executed in its corporate name by its Chairman of the Board or its President or one of its Vice Presidents, and JPMORGAN CHASE BANK has caused this Eighth Supplemental Indenture to be executed in its corporate name by one of its Assistant Vice Presidents as of June 26, 2002. EL PASO CORPORATION By: /s/ John J. Hopper -------------------------------------------- Name: John J. Hopper Title: Vice President and Treasurer JPMORGAN CHASE BANK, as Trustee By: /s/ R. Lorenzen -------------------------------------------- Name: R. Lorenzen Title: Assistant Vice President -16- EXHIBIT A (Face of Note) [THIS SECURITY IS A GLOBAL SECURITY WITHIN THE MEANING OF THE INDENTURE HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF A DEPOSITARY OR A NOMINEE THEREOF. THIS SECURITY MAY NOT BE TRANSFERRED TO, OR REGISTERED OR EXCHANGED FOR SECURITIES REGISTERED IN THE NAME OF, ANY PERSON OTHER THAN THE DEPOSITARY OR A NOMINEE THEREOF AND NO SUCH TRANSFER MAY BE REGISTERED, EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE. EVERY SECURITY AUTHENTICATED AND DELIVERED UPON REGISTRATION OF TRANSFER OF, OR IN EXCHANGE FOR OR IN LIEU OF, THIS SECURITY SHALL BE A GLOBAL SECURITY SUBJECT TO THE FOREGOING, EXCEPT IN SUCH LIMITED CIRCUMSTANCES. UNLESS THIS SECURITY IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION, TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY SECURITY ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY (AND ANY PAYMENT IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL SINCE THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST HEREIN.]* CUSIP No. 28336L AF 6 ISIN No. US28336L AF 67 No.: ___ $_______________ EL PASO CORPORATION Senior Note Due August 16, 2007 El Paso Corporation, a corporation duly organized and existing under the laws of Delaware (the "Company," which term includes any successor corporation under the Indenture hereinafter referred to), for value received, hereby promises to pay to [Cede & Co., as nominee for The Depository Trust Company]* or its registered assigns, the principal sum of _______________________ United States Dollars [, or such other principal amount as shall be set forth in the Schedule of Increases or Decreases attached hereto,]** at the Corporate Trust Office or the Office of the Agent in The City of New York, on August 16, 2007 in such coin or currency of the United States of America as at the time of payment shall be legal tender for the - ---------- * Insert in Global Securities. ** Insert in Global Securities and Pledged Notes. A-1 payment of public and private debts, and to pay interest thereon from June 26, 2002 or from the next most recent date to which interest has been paid or duly provided for, quarterly in arrears on each February 16, May 16, August 16 and November 16 of each year (each such date, an "Interest Payment Date"), commencing on August 16, 2002, at the rate of 6.14% per annum to, but excluding, the earlier of (i) the date of settlement of a successful remarketing under the Purchase Contract Agreement or (ii) the Stock Purchase Date, and, thereafter, at the Reset Rate to, but excluding, the date on which the principal hereof has been paid or made available for payment. The amount of interest so payable for any period shall be computed (i) for any full quarterly period on the basis of a 360-day year of twelve 30-day months; (ii) for any period shorter than a full quarterly period, on the basis of a 30-day month; and (iii) for periods of less than a month, on the basis of the actual number of days elapsed per 30-day month. In the event that any Interest Payment Date is not a Business Day, then payment of the interest or principal payable on such date will be made on the next succeeding day which is a Business Day and no interest shall accrue in respect of the amounts which payment is so delayed for the period from and after such Interest Payment Date, except that, if such Business Day is in the next succeeding calendar year, 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 date. Payments of the principal of and interest on the Notes shall be made at the Corporate Trust Office or the Office of the Agent in The City of New York; provided that, unless this Note is a Note issued in global form ("Global Security"), interest may be paid, at the option of the Company, (i) by check mailed to the address of the Person entitled thereto as such address shall appear in the Security Register or (ii) by wire transfer at such place and to such account at a banking institution in the United States as may be designated in writing to the Trustee at least five Business Days prior to the date for payment by the Person entitled thereto. The interest so payable, and punctually paid or duly provided for, on any Interest Payment Date, as provided in the Indenture, as hereinafter defined, shall be paid to the Person in whose name this Note (or one or more Predecessor Securities) shall have been registered at the close of business on the Regular Record Date with respect to such Interest Payment Date, provided that interest payable on the Stated Maturity shall be paid to the Person to whom principal is paid. Any such interest not so punctually paid or duly provided for shall forthwith cease to be payable to the Holder on such Regular Record Date and shall be paid as provided in said Indenture. Reference is hereby made to the further provisions of this Note set forth herein, 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 herein by manual signature, this Note shall not be entitled to any benefit under the Indenture or be valid or obligatory for any purpose. A-2 IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed. Dated: ___________________ EL PASO CORPORATION By: --------------------------------- Name: Title: A-3 TRUSTEE'S CERTIFICATE OF AUTHENTICATION This is one of the Securities of the series designated therein referred to in the within-mentioned Indenture. Dated: ___________________ JPMORGAN CHASE BANK, as Trustee By: --------------------------------- Authorized Officer A-4 [Reverse of Note] El Paso Corporation Senior Note Due August 16, 2007 This Note is one of a duly authorized issue of securities of the Company (the "Securities"), issued and to be issued in one or more series under an Indenture, dated as of May 10, 1999 (the "Original Indenture"), as previously supplemented and as supplemented by an eighth supplemental indenture, dated as of June 26, 2002 (the "Eighth Supplemental Indenture" and the Original Indenture, as so supplemented, the "Indenture"), between the Company and JPMorgan Chase Bank, a New York banking corporation, as trustee (the "Trustee," which term includes any successor trustee under the Indenture), and reference is hereby made to the Indenture for a statement of the respective rights, limitations of rights, duties and immunities thereunder of the Company, the Trustee and the Holders and of the terms upon which the Securities are, and are to be, authenticated and delivered. This Note is one of a series designated as Senior Notes Due August 16, 2007 of the Company (hereinafter called the "Notes"), issued under the Original Indenture, which Notes are limited in aggregate principal amount to $500,000,000 (up to $575,000,000 if the over-allotment option of the Underwriters (as such term is defined in the Underwriting Agreement) is exercised pursuant to the Underwriting Agreement). Except as provided in Sections 1006 and 1007 of the Original Indenture, neither the Original Indenture nor the Notes limit or otherwise restrict the amount of indebtedness which may be incurred or other securities which may be issued by the Company. The Notes issued under the Indenture are direct, unsecured obligations of the Company and will mature on August 16, 2007. The Notes rank on parity with all other unsecured, unsubordinated indebtedness of the Company. The Notes will bear interest as set forth on the face hereof and in the Eighth Supplemental Indenture. The Reset Rate will be the interest rate per annum that is determined by the Remarketing Agent pursuant to the Remarketing Agreement as follows: (i) in connection with a successful remarketing, the rate of interest that, in the opinion of the Remarketing Agent, will, when applied to the Notes participating in the remarketing, enable the then current aggregate market value of the Notes to have a value equal to approximately, but not less than, 100.5% of the Remarketing Value as of the Initial Remarketing Date or as of any Subsequent Remarketing Date, as the case may be, or (ii) if the Last Failed Remarketing shall have occurred or if there were no Equity Security Units outstanding on the Initial Remarketing Date or any Subsequent Remarketing Date and none of the Holders of Separate Notes elected during any Remarketing Period to have their Separate Notes participate in a remarketing, the rate of interest equal to the Two-Year Benchmark Treasury Rate plus the Applicable Spread. Notwithstanding anything contained herein to the contrary, the Reset Rate shall in no event exceed the maximum rate, if any, permitted by applicable law. The Notes are not redeemable prior to maturity except pursuant to a Tax Event in accordance with the Eighth Supplemental Indenture. If a Tax Event shall occur, the Company A-5 may, at its option, redeem the Notes in whole (but not in part) at any time at a price equal to the Redemption Price. Installments of interest on the Notes that are due and payable on or prior to the Tax Event Redemption Date will be payable to the Holders of the Notes registered as such on the Record Date next preceding such Tax Event Redemption Date. The Company agrees, and by acceptance of a beneficial ownership interest in the Notes, each beneficial holder of Senior Notes will be deemed to have agreed (1) to treat the acquisition of an Equity Security Unit as the acquisition of the Note and the Purchase Contract constituting the Equity Security Unit and to allocate the purchase price of the Equity Security Unit between the Note and the Purchase Contract Payment as $50 and $0, respectively, (2) to treat the Notes as indebtedness that is subject to Treas. Reg. Sec. 1.1275-4 (the "Contingent Payment Regulations") for United States federal income tax purposes and (3) to be bound by the Company's determination of the "comparable yield" and "projected payment schedule," within the meaning of the Contingent Payment Regulations, with respect to the Notes for United States federal income tax purposes. A Holder of Notes may obtain the amount of original issue discount, issue date, yield to maturity, comparable yield and projected payment schedule by submitting a written request for it to the Company at the following address: El Paso Corporation, Investor Relations, 1001 Louisiana Street, Houston, Texas 77002. The Notes are not entitled to any sinking fund. The Notes that are a component of Equity Security Units or that so elect under Section 2.06 of the Supplemental Indenture will be subject to remarketing and, in the case of the Last Failed Remarketing, the Collateral Agent for the benefit of the Company reserves all of its rights as a secured party of the Pledged Notes with respect thereto and, subject to applicable law and Section 5.4 of the Purchase Contract Agreement, may, among other things, permit the Company to cause the Notes to be sold or to retain and cancel such Notes, in either case, in full satisfaction of the Holders' obligations under the Purchase Contracts. If an Event of Default with respect to the Notes shall occur and be continuing, the principal of the Notes 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 aggregate principal amount of the Outstanding Securities of all series to be affected (voting as one class). The Indenture also contains provisions permitting the Holders of a majority in aggregate principal amount of the Outstanding Securities of all affected series (voting as one class), on behalf of the Holders of all Securities of such series, to waive compliance by the Company with certain provisions of the Indenture. The Indenture permits, with certain exceptions as therein provided, the Holders of a majority in aggregate principal amount of Securities of any series then Outstanding to waive past defaults under the Indenture with respect to such series 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 A-6 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 not less than 25% in principal amount of the Securities of this series at the time Outstanding 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 principal amount of the Securities of this series at the time Outstanding 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 interest hereon on or after the respective due dates expressed herein. No reference herein to the Indenture and no provision of this Note or of the Indenture shall alter or impair the obligation of the Company, which are absolute and unconditional, to pay the principal of, and premium, if any, and interest on this Note at the times, place(s) and rates, and in the coin or currency, herein prescribed. [The holders of beneficial interests in this Global Security will not be entitled to receive physical delivery of Definitive Securities except as described in the Indenture and will not be considered the Holders hereof for any purpose under the Indenture.]* As provided in the Indenture and subject to certain limitations set forth, the transfer of this Security is registrable in the Security Register, upon surrender of this Security for registration of transfer at the office or agency of the Company in the Borough of Manhattan, The City of New York, or at such other offices or agencies as the Company may designate, duly endorsed by, or accompanied by a written instrument of transfer in form satisfactory to the Company and the Security Registrar duly executed by, the Holder hereof or his attorney duly authorized in writing, and thereupon one or more new Securities of this series and of like tenor, of authorized denominations and for a like aggregate principal amount, will be issued to the designated transferee or transferees. The Notes are issuable only in registered forms without coupons, in minimum denominations of $50 or any integral multiple thereof. As provided in the Indenture and subject to certain limitations therein set forth, the Securities of this series are exchangeable for a like aggregate principal amount of Securities of this series and of like tenor of a different authorized denomination, 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 transfer tax or other similar governmental charge payable in connection therewith. A-7 Prior to due presentment of this Security for registration of transfer, 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 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. No recourse under or upon any obligation, covenant or agreement of or contained in the Indenture or of or contained in any Security, or for any claim based thereon or otherwise in respect thereof, or in any Security, or because of the creation of any indebtedness represented thereby, shall be had against any incorporator, stockholder, officer or director, as such, past, present or future, of the Company or of any successor Person, either directly or through the Company or any successor Person, whether by virtue of any constitution, statute or rule of law, or by the enforcement of any assessment, penalty or otherwise; it being expressly understood that all such liability is hereby expressly waived and released by the acceptance hereof and as a condition of, and as part of the consideration for, the Securities and the execution of the Indenture. THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK. All terms used in this Note (and not otherwise defined in this Note) but not defined herein shall have the meanings assigned to them in the Indenture, the Purchase Contract Agreement, the Remarketing Agreement or the Pledge Agreement, as the case may be and as the context may require. A-8 [FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and transfer(s) unto ------------------------------------------------------------ (Please Print or Typewrite Name and Address of Assignee) the within instrument of EL PASO CORPORATION and does hereby irrevocably constitute and appoint ________________________ Attorney to transfer said instrument on the books of the within-named Company, with full power of substitution in the premises. Please Insert Social Security or Other Identifying Number of Assignee: - -------------------------------------------- -------------------------------------------- Dated: ------------------------------------ -------------------------------------------- (Signature)
NOTICE: The signature to this assignment must correspond with the name as written upon the face of the within instrument in every particular, without alteration or enlargement or any change whatever.]** A-9 [TO BE ATTACHED TO GLOBAL CERTIFICATES AND PLEDGED NOTES] SCHEDULE OF INCREASES OR DECREASES The following increases or decreases in this [Global Certificate] [Pledged Note] have been made:
Principal amount of Amount of decrease Amount of increase in Senior Notes in principal amount principal amount of evidenced by the of Senior Notes Senior Notes [Global Certificate] Signature of evidenced by the evidenced by the [Pledged Note] authorized officer [Global Certificate] [Global Certificate] following such of Trustee or Date [Pledged Note] [Pledged Note] decrease or increase Collateral Agent - ------------------------- ---------------------- ----------------------- ---------------------- ---------------------- - ------------------------- ---------------------- ----------------------- ---------------------- ---------------------- - ------------------------- ---------------------- ----------------------- ---------------------- ---------------------- - ------------------------- ---------------------- ----------------------- ---------------------- ---------------------- - ------------------------- ---------------------- ----------------------- ---------------------- ---------------------- - ------------------------- ---------------------- ----------------------- ---------------------- ---------------------- - ------------------------- ---------------------- ----------------------- ---------------------- ---------------------- - ------------------------- ---------------------- ----------------------- ---------------------- ---------------------- - ------------------------- ---------------------- ----------------------- ---------------------- ---------------------- - ------------------------- ---------------------- ----------------------- ---------------------- ---------------------- - ------------------------- ---------------------- ----------------------- ---------------------- ---------------------- - ------------------------- ---------------------- ----------------------- ---------------------- ---------------------- - ------------------------- ---------------------- ----------------------- ---------------------- ----------------------
- ---------- * Insert in Global Notes only. ** Insert in Certificated Notes only. A-10 EX-4.B 6 h97915exv4wb.txt PURCHASE CONTRACT AGREEMENT DATED 6/26/2002 EXHIBIT 4.B EL PASO CORPORATION AND JPMORGAN CHASE BANK, AS PURCHASE CONTRACT AGENT PURCHASE CONTRACT AGREEMENT DATED AS OF JUNE 26, 2002 TABLE OF CONTENTS
PAGE ---- ARTICLE I. DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION...............................................1 Section 1.1 Definitions............................................................................1 Section 1.2 Compliance Certificates and Opinions..................................................13 Section 1.3 Form of Documents Delivered to Agent..................................................14 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................................................................17 Section 1.9 Separability Clause...................................................................17 Section 1.10 Benefits of Agreement.................................................................17 Section 1.11 Governing Law; Submission to Jurisdiction; Waiver of Jury Trial.......................17 Section 1.12 Legal Holidays........................................................................18 Section 1.13 Counterparts..........................................................................18 Section 1.14 Inspection of Agreement...............................................................18 ARTICLE II. CERTIFICATE FORMS...................................................................................18 Section 2.1 Forms of Certificates Generally.......................................................18 Section 2.2 Form of Agent's Certificate of Authentication.........................................19 ARTICLE III. THE EQUITY SECURITY UNITS..........................................................................20 Section 3.1 Title and Terms; Denominations........................................................20 Section 3.2 Rights and Obligations Evidenced by the Certificates..................................20 Section 3.3 Execution, Authentication, Delivery and Dating........................................21 Section 3.4 Temporary Certificates................................................................22 Section 3.5 Registration; Registration of Transfer and Exchange...................................22 Section 3.6 Book-Entry Interests..................................................................23 Section 3.7 Notices to Holders....................................................................24 Section 3.8 Appointment of Successor Clearing Agency..............................................24 Section 3.9 Definitive Certificates...............................................................24 Section 3.10 Mutilated, Destroyed, Lost and Stolen Certificates....................................25 Section 3.11 Persons Deemed Owners.................................................................26 Section 3.12 Cancellation..........................................................................26 Section 3.13 Creation of Stripped Units............................................................27 Section 3.14 Recreation of Equity Security Units...................................................28 Section 3.15 Transfer of Collateral Upon Occurrence of Termination Event...........................29 Section 3.16 No Consent to Assumption..............................................................30 ARTICLE IV. THE NOTES, TREASURY CONSIDERATION AND APPLICABLE OWNERSHIP INTERESTS IN THE TREASURY PORTFOLIO......30 Section 4.1 Payment of Interest; Rights to Interest Payments Preserved; Notice....................30 Section 4.2 Notice and Voting.....................................................................31
i Section 4.3 Tax Event Redemption..................................................................32 ARTICLE V. THE PURCHASE CONTRACTS; THE REMARKETING..............................................................33 Section 5.1 Purchase of Shares of Common Stock....................................................33 Section 5.2 Contract Adjustment Payments..........................................................35 Section 5.3 Deferral of Contract Adjustment Payments..............................................36 Section 5.4 Payment of Purchase Price; Remarketing................................................37 Section 5.5 Issuance of Shares of Common Stock....................................................42 Section 5.6 Adjustment of Settlement Rate.........................................................43 Section 5.7 Notice of Adjustments and Certain Other Events........................................48 Section 5.8 Termination Event; Notice.............................................................49 Section 5.9 Early Settlement......................................................................49 Section 5.10 Early Settlement Upon Merger..........................................................51 Section 5.11 Charges and Taxes.....................................................................53 Section 5.12 No Fractional Shares..................................................................54 Section 5.13 Tax Treatment.........................................................................54 Section 5.14 ERISA.................................................................................54 ARTICLE VI. REMEDIES............................................................................................55 Section 6.1 Unconditional Right of Holders to Purchase Common Stock...............................55 Section 6.2 Restoration of Rights and Remedies....................................................55 Section 6.3 Rights and Remedies Cumulative........................................................55 Section 6.4 Delay or Omission Not Waiver..........................................................55 Section 6.5 Undertaking For Costs.................................................................56 Section 6.6 Waiver of Stay or Extension Laws......................................................56 ARTICLE VII. THE AGENT..........................................................................................56 Section 7.1 Certain Duties, Rights and Immunities.................................................56 Section 7.2 Notice of Default.....................................................................58 Section 7.3 Certain Rights of Agent...............................................................58 Section 7.4 Not Responsible For Recitals, Etc. ...................................................59 Section 7.5 May Hold Equity Security Units and Stripped Units and Other Dealings..................60 Section 7.6 Money Held In Custody.................................................................60 Section 7.7 Compensation and Reimbursement........................................................60 Section 7.8 Corporate Agent Required; Eligibility.................................................61 Section 7.9 Resignation and Removal; Appointment of Successor.....................................61 Section 7.10 Acceptance of Appointment by Successor................................................62 Section 7.11 Merger, Conversion, Consolidation or Succession to Business...........................63 Section 7.12 Preservation of Information; Communications to Holders................................63 Section 7.13 Failure to Act........................................................................63 Section 7.14 No Obligations of Agent...............................................................64 Section 7.15 Tax Compliance........................................................................64 ARTICLE VIII. SUPPLEMENTAL AGREEMENTS...........................................................................64 Section 8.1 Supplemental Agreements Without Consent of Holders....................................64 Section 8.2 Supplemental Agreements With Consent of Holders.......................................65
ii Section 8.3 Execution of Supplemental Agreements..................................................66 Section 8.4 Effect of Supplemental Agreements.....................................................66 Section 8.5 Reference to Supplemental Agreements..................................................66 ARTICLE IX. CONSOLIDATION, MERGER, SALE OR CONVEYANCE...........................................................67 Section 9.1 Company May Consolidate, Etc., Only on Certain Terms..................................67 Section 9.2 Successor Substituted.................................................................67 ARTICLE X. COVENANTS............................................................................................68 Section 10.1 Performance Under Purchase Contracts and this Agreement...............................68 Section 10.2 Maintenance of Office or Agency.......................................................68 Section 10.3 Company to Reserve Common Stock.......................................................69 Section 10.4 Covenants as to Common Stock..........................................................69 Section 10.5 Statements of Officer of the Company as to Default....................................69
EXHIBITS Exhibit A Form of Equity Security Units Certificate Exhibit B Form of Stripped Units Certificate Exhibit C Instruction from Purchase Contract Agent to Collateral Agent Regarding Creation of Stripped Units or Recreation of Equity Security Units Exhibit D Instruction from Holder to Purchase Contract Agent Regarding Creation of Stripped Units or Recreation of Equity Security Units Exhibit E Notice to Settle by Cash Exhibit F Election to Settle Early iii PURCHASE CONTRACT AGREEMENT, dated as of June 26, 2002, between El Paso Corporation, a Delaware corporation (the "Company"), and JPMorgan Chase Bank, a New York banking corporation, acting as Purchase Contract Agent for the Holders of Equity Security Units and Stripped Units from time to time (the "Agent"). RECITALS The Company has duly authorized the execution and delivery of this Agreement and the Certificates evidencing the Equity Security Units and Stripped Units. 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 to constitute this Agreement a valid agreement of the Company, in accordance with its terms, have been done. For and in consideration of the premises and the purchase of the Equity Security Units by the Holders thereof, the Company and the Agent mutually agree as follows: ARTICLE I. DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION 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): "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 under the Securities Act 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(b). "Applicable Ownership Interest" means, with respect to the U.S. Treasury securities in the Treasury Portfolio, (A) for each $50 Stated Amount of a Note, a 1/20, or 5.0%, 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 the Business Day immediately preceding the Stock Purchase Date and (B) for each scheduled Payment Date on the Notes that occurs after the Tax Event Redemption Date and on or before the Stock Purchase Date, a 0.07675% 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 the Treasury Portfolio that matures on the Business Day immediately preceding that Payment Date or Dates. "Applicants" has the meaning specified in Section 7.12(b). "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 either the Board of Directors of the Company or any other committee of such Board duly authorized to act generally or in any particular respect for such Board hereunder. "Board Resolution" means (i) a copy of a resolution 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 or (ii) a copy of a unanimous written consent of the Board of Directors. "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 or Sunday or a day on which banking institutions and trust companies in the State of New York are authorized or required by law, regulation or executive order to be closed or a day on which the Agent, the Collateral Agent or the Trustee is closed for business. "Capital Stock" means any and all shares, interests, rights to purchase, warrants, options, participations or other equivalents of or interests in (however designated, whether voting or non-voting) corporate stock or similar interests in other types of entities. 2 "Cash Merger" has the meaning specified in Section 5.10(a). "Cash Settlement" has the meaning specified in Section 5.4(a). "Certificate" means an Equity Security Units Certificate or a Stripped Units 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 Equity Security Units and Stripped Units 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 Equity Security Units and Stripped Units. "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(b). "Code" means Internal Revenue Code of 1986, as amended, and the rules and regulations promulgated thereunder. "Collateral" has the meaning specified in Section 2.1(a) of the Pledge Agreement. "Collateral Account" has the meaning specified in Section 1.1(c) of the Pledge Agreement. "Collateral Agent" means The Bank of New York, 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" has the meaning specified in Section 3.13(a). "Common Stock" means the common stock, par value $3.00 per share, 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 provisions of this Agreement, and thereafter "Company" shall mean such successor. "Constituent Person" has the meaning specified in Section 5.6(b). "Contract Adjustment Payments" means, in the case of Equity Security Units and Stripped Units, the amount payable by the Company in respect of each Purchase Contract constituting a part of such Equity Security Units or Stripped Units, equal to 2.86% per year of the Stated Amount, in each case computed: (1) for any full quarterly period on the basis of a 360-day year of twelve 30-day months, 3 (2) for any period shorter than a full quarterly period, on the basis of a 30-day month; and (3) for periods of less than a month, on the basis of the actual number of days elapsed per 30-day month, plus any Deferred Contract Adjustment Payments accrued pursuant to Section 5.3. "Corporate Trust Office" means the office of the Agent at which, at any particular time, its corporate trust business shall be principally administered, which office at the date hereof is located at JPMorgan Chase Bank, 450 West 33rd Street, New York, New York 10001. "Coupon Rate" means the percentage rate per annum at which each Note will bear interest initially. "Current Market Price" has the meaning specified in Section 5.6(a)(8). "Custodial Agent" means The Bank of New York, as Custodial Agent under the Pledge Agreement until a successor Custodial Agent shall have become such pursuant to the applicable provisions of the Pledge Agreement, and thereafter "Custodial Agent" shall mean the Person who is then the Custodial Agent thereunder. "Deferred Contract Adjustment Payments" has the meaning specified in Section 5.3(a). "Depositary" means, initially, The Depository Trust Company, until another Clearing Agency becomes its successor, and thereafter "Depositary" shall mean such successor. "Early Settlement" has the meaning specified in Section 5.9(a). "Early Settlement Amount" has the meaning specified in Section 5.9(a)(2). "Early Settlement Date" has the meaning specified in Section 5.9(a). "Early Settlement Rate" has the meaning specified in Section 5.9(c). "Equity Security Units" means the collective rights and obligations of a Holder of an Equity Security Units Certificate in respect of a Note, the Treasury Consideration or the Applicable Ownership Interest in the Treasury Portfolio, as the case may be, subject in each case to the Pledge thereof, and the related Purchase Contract. "Equity Security Units Certificate" means a certificate evidencing the rights and obligations of a Holder in respect of the number of Equity Security Units specified on such certificate, substantially in the form of Exhibit A hereto. "Equity Security Units Register" and "Equity Security Units Registrar" have the respective meanings specified in Section 3.5(a). "ERISA" means the Employee Retirement Income Security Act of 1974 and any statute successor thereto, in each case as amended from time to time. 4 "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(f). "Expiration Time" has the meaning specified in Section 5.6(a)(6). "Failed Remarketing" has the meaning specified in Section 5.4(e)(i). "Fair Market Value" with respect to securities distributed in a Spin-Off means: (a) in the case of any Spin-Off that is effected simultaneously with an Initial Public Offering of such securities, the Initial Public Offering price of those securities, and (b) in the case of any other Spin-Off, the average of the Sale Prices of those securities over the first 10 Trading Days after the effective date of such Spin-Off. "Global Certificate" means a Global Equity Security Units Certificate or a Global Stripped Units Certificate. "Global Equity Security Units Certificate" and "Global Stripped Units Certificate" mean a Certificate that evidences all or part of the Equity Security Units or Stripped Units, as the case may be, and is registered in the name of a Depositary or a nominee thereof. "Holder" means the Person in whose name the Equity Security Units evidenced by an Equity Security Units Certificate or Stripped Units evidenced by a Stripped Units Certificate is registered in the Equity Security Units Register or the Stripped Units Register, as the case may be. "Indenture" means the Indenture, dated as of May 10, 1999, between the Company and the Trustee as supplemented or amended by any officers' certificate or supplemental indenture. "Initial Public Offering," with respect to any Spin-Off, means the first time securities of the same class or type as the securities being distributed in the Spin-Off are bona fide offered to the public for cash. "Initial Remarketing Date" means the third Business Day immediately preceding May 16, 2005. "Issuer Order" or "Issuer Request" means a written order or request signed in the name of the Company by the Chairman of the Board, the Chief Executive Officer, the President, any Vice President or any other authorized officer of the Company or a person duly authorized by any of them and delivered to the Agent. "Last Failed Remarketing" has the meaning specified in Section 5.4(e)(i). "Merger Early Settlement" has the meaning specified in Section 5.10(a). "Merger Early Settlement Amount" has the meaning specified in Section 5.10(b)(2). 5 "Merger Early Settlement Date" has the meaning specified in Section 5.10(a)(i). "Non-electing Share" has the meaning specified in Section 5.6(b). "Notes" means the series of senior debt securities of the Company designated the Senior Notes Due August 16, 2007, to be issued under the Indenture. "NYSE" means the New York Stock Exchange. "Office of the Agent in The City of New York" means an office where Certificates may be presented or surrendered for acquisition of shares of Common Stock, transfer or exchange, Notes may be presented for payment or surrendered for transfer or exchange, and where notices and demands to or upon the Company in respect of Equity Security Units and Stripped Units may be served, such office being located initially at 450 West 33rd Street, New York, New York 10001. "Officer's Certificate" means a certificate signed by the Chairman of the Board, Chief Executive Officer, the President, any Vice President or any other authorized officer of the Company or a person duly authorized by any of them and delivered to the Agent. "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 of the Company. "Outstanding Units" means, as of the date of determination, all Equity Security Units or Stripped Units evidenced by Certificates theretofore authenticated, executed and delivered under this Agreement, except: (i) If a Termination Event has occurred, (A) Stripped Units and (B) Equity Security Units for which the related Note, the Treasury Consideration or the Applicable Ownership Interest in the Treasury Portfolio, as the case may be, has been theretofore deposited with the Agent in trust for the Holders of such Equity Security Units; (ii) Equity Security Units and Stripped Units evidenced by Certificates theretofore cancelled by the Agent or delivered to the Agent for cancellation or deemed cancelled pursuant to the provisions of this Agreement; and (iii) Equity Security Units and Stripped Units 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 Equity Security Units or Stripped Units evidenced by such Certificate are valid obligations of the Company; provided, that in determining whether the Holders of the requisite number of the Equity Security Units or Stripped Units have given any request, demand, authorization, direction, notice, consent or waiver hereunder, Equity Security Units or Stripped Units 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, 6 authorization, direction, notice, consent or waiver, only Equity Security Units or Stripped Units which a Responsible Officer of the Agent actually knows to be so owned shall be so disregarded. Equity Security Units or Stripped Units so owned which have been pledged in good faith may be regarded as Outstanding Units if the pledgee establishes to the satisfaction of the Agent the pledgee's right so to act with respect to such Equity Security Units or Stripped Units 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, 2002. "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. "Plan" means an employee benefit plan that is subject to Title I of ERISA, a plan, individual retirement account or other arrangement that is subject to Section 4975 of the Code or any Similar Laws or any entity whose underlying assets are considered to include "plan assets" of any such plan, account or arrangement. "Pledge" has the meaning specified in Section 2.1(c) of the Pledge Agreement. "Pledge Agreement" means the Pledge Agreement, dated as of the date hereof, by and among the Company, the Collateral Agent, the Custodial Agent, the Securities Intermediary and the Agent, on its own behalf and as attorney-in-fact for the Holders from time to time of the Equity Security Units and Stripped Units. "Pledged Applicable Ownership Interests in the Treasury Portfolio" has the meaning specified in Section 2.1(c) of the Pledge Agreement. "Pledged Notes" has the meaning specified in Section 2.1(c) of the Pledge Agreement. "Pledged Treasury Consideration" has the meaning specified in Section 2.1(c) of the Pledge Agreement. "Pledged Treasury Securities" has the meaning specified in Section 2.1(c) of the Pledge Agreement. "Predecessor Certificate" means a Predecessor Equity Security Units Certificate or a Predecessor Stripped Units Certificate. "Predecessor Equity Security Units Certificate" of any particular Equity Security Units Certificate means every previous Equity Security Units Certificate evidencing all or a portion of the rights and obligations of the Company and the Holder under the Equity Security Units evidenced thereby; and, for the purposes of this definition, any Equity Security Units Certificate authenticated and delivered under Section 3.10 in exchange for or in lieu of a mutilated, destroyed, lost or stolen Equity Security Units Certificate shall be deemed to evidence the same rights and obligations of the Company and the Holder as the mutilated, destroyed, lost or stolen Equity Security Units Certificate. 7 "Predecessor Stripped Units Certificate" of any particular Stripped Units Certificate means every previous Stripped Units Certificate evidencing all or a portion of the rights and obligations of the Company and the Holder under the Stripped Units evidenced thereby; and, for the purposes of this definition, any Stripped Units Certificate authenticated and delivered under Section 3.10 in exchange for or in lieu of a mutilated, destroyed, lost or stolen Stripped Units Certificate shall be deemed to evidence the same rights and obligations of the Company and the Holder as the mutilated, destroyed, lost or stolen Stripped Units Certificate. "Purchase Contract," when used with respect to any Equity Security Units or Stripped Units, means the contract forming a part of such Equity Security Unit or Stripped Unit and obligating the Company to sell and the Holder of such Equity Security Unit or Stripped Unit to purchase Common Stock on the terms and subject to the conditions set forth in Article Five. "Purchase Contract Settlement Fund" has the meaning specified in Section 5.5. "Purchase Price" has the meaning specified in Section 5.1(a). "Purchased Shares" has the meaning specified in Section 5.6(a)(6). "Quotation Agent" means Credit Suisse First Boston Corporation or its successor or any other primary U.S. government securities dealer in New York City selected by the Company. "Record Date" for the distribution 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, the 15th day preceding such Payment Date. "Redemption Amount" means, for each Note, the product of (i) the Stated Amount of such Note and (ii) a fraction whose numerator is the applicable Treasury Portfolio Purchase Price and whose denominator is the aggregate principal amount of Notes outstanding on the Tax Event Redemption Date. "Redemption Price" means, for each Note, the amount equal to the Redemption Amount. "Reference Price" has the meaning set forth in Section 5.1(a)(ii). "Register" means the Equity Security Units Register and the Stripped Units Register, as applicable. "Registrar" means the Equity Security Units Registrar and the Stripped Units Registrar, as applicable. "Remarketing Agent" means Credit Suisse First Boston Corporation or its successor under the Remarketing Agreement. "Remarketing Agreement" means the Remarketing Agreement dated June 26, 2002 by and among the Company, the Remarketing Agent and the Agent. "Remarketing Fee" has the meaning specified in Section 5.4(d). 8 "Remarketing Period" means the three Business Day period: (i) beginning on the Initial Remarketing Date and ending after the two immediately following Business Days; (ii) immediately preceding July 1, 2005; or (iii) consisting of the seventh, sixth and fifth Business Day immediately preceding the Stock Purchase Date; provided, however, that in each case if any one or more of the days in the three day period shall not be a Business Day, no remarketing shall occur on such day and the Remarketing Period shall be shorter than a three Business Day period. "Remarketing Value" means the sum of: (1) the value at the Initial Remarketing Date or any Subsequent Remarketing Date, as the case may be, of U.S. Treasury securities that will pay, on the Business Day immediately preceding the Payment Date falling on the Stock Purchase Date, an amount of cash equal to the aggregate interest payment that is scheduled to be payable on that Payment Date, on (x) the Notes which are included in Equity Security Units and (y) the Separate Notes which are to be remarketed pursuant to Section 4.5(d) of the Pledge Agreement and Section 2.06 of the Supplemental Indenture, assuming for that purpose, even if not true, that the interest rate on the Notes is equal to the Coupon Rate; and (2) the value at the Initial Remarketing Date or any Subsequent Remarketing Date, as the case may be, of U.S. Treasury securities that will pay, on the Business Day immediately preceding the Stock Purchase Date, an amount of cash equal to the Stated Amount of (x) the Notes which are included in Equity Security Units and (y) the Separate Notes which are to be remarketed pursuant to Section 4.5(d) of the Pledge Agreement and Section 2.06 of the Supplemental Indenture; provided, that for purposes of clauses (1) and (2) above, the Remarketing Value shall be calculated on the assumptions that (x) the U.S. Treasury securities are highly liquid and mature on or within 35 days prior to the Stock Purchase Date, as determined in good faith by the Remarketing Agent in a manner intended to minimize the cash value of the U.S. Treasury securities, and (y) the U.S. Treasury securities are valued based on the ask-side price of the U.S. Treasury securities at a time between 9:00 a.m. and 11:00 a.m., New York City time, selected by the Remarketing Agent, on the Initial Remarketing Date or any Subsequent Remarketing Date, as the case may be, as determined on a third-day settlement basis by reasonable and customary means selected in good faith by the Remarketing Agent, plus accrued interest to that date. "Reorganization Event" has the meaning specified in Section 5.6(b). "Reset Rate" has the meaning specified in Section 2.01 of the Supplemental Indenture. "Responsible Officer" means, when used with respect to the Agent, any officer within the corporate trust department of the Agent (or any successor of the Agent), including any Vice-President, any assistant Vice-President, any assistant secretary, any assistant treasurer, any trust officer, any senior trust officer or any other officer of the Agent who customarily performs functions similar to those performed by the Persons who at the time shall be such officers, respectively, or to whom any corporate trust matter is referred because of such Person's knowledge of and familiarity with the particular subject and who, in each of the above cases, shall have direct responsibility for the administration of this Agreement. 9 "Sale Price" of the Common Stock or any securities distributed in a Spin-Off, as the case may be, on any Trading Day means the closing sale price per share (or if no closing sale price is reported, the average of the bid and asked prices or, if more than one in either case, the average of the average bid and the average asked prices) on such Trading Day as reported in composite transactions for the principal U.S. securities exchange on which the Common Stock or such securities are traded or, if the Common Stock or such securities are not listed on a U.S. national or regional securities exchange, as reported by NASDAQ. "Securities Act" means the Securities Act of 1933, and any statute successor thereto, in each case as amended from time to time, and the rules and regulations promulgated thereunder. "Securities Intermediary" means The Bank of New York, in its capacity as securities intermediary under the Pledge Agreement, together with its successors in such capacity. "Separate Notes" has the meaning specified in Section 1.1 of the Pledge Agreement. "Settlement Date" means any Early Settlement Date or Merger Early Settlement Date or the Stock Purchase Date. "Settlement Rate" has the meaning specified in Section 5.1(a). "Similar Laws" means any federal, state, local, non-U.S. or other laws or regulations that are similar to Title I of ERISA or Section 4975 of the Code. "Spin-Off" means a dividend or other distribution of shares of Capital Stock of any class or series, or similar equity interests, of or relating to a subsidiary or other business unit of the Company. "Stated Amount" means, with respect to any one Note, Equity Security Unit or Stripped Unit, $50. "Stock Purchase Date" means August 16, 2005. "Stripped Units" means the collective rights and obligations of a holder of a Stripped Units Certificate in respect of a 1/20 undivided beneficial interest in a Treasury Security, subject in each case to the Pledge thereof, and the related Purchase Contract. "Stripped Units Certificate" means a certificate evidencing the rights and obligations of a Holder in respect of the number of Stripped Units specified on such certificate, substantially in the form of Exhibit B hereto. "Stripped Units Register" and "Stripped Units Registrar" have the respective meanings specified in Section 3.5(a). "Subsequent Remarketing Date" means, provided a successful remarketing did not occur on the Initial Remarketing Date, the date on which the Remarketing Agent has consummated a remarketing in accordance with Section 5.4 hereof and Section 2.05 of the Supplemental 10 Indenture, such date to be not later than the fifth Business Day immediately preceding the Stock Purchase Date. "Supplemental Indenture" means the eighth supplemental indenture to the Indenture, dated as of June 26, 2002, between the Company and the Trustee. "Tax Event" means the receipt by the Company of an opinion of nationally recognized independent tax counsel experienced in such matters, which may be Locke Liddell & Sapp LLP, to the effect that there is more than an insubstantial risk that interest payable or accruable by the Company on the Notes on the next Payment Date would not be deductible, in whole or in part, by the Company for United States federal income tax purposes, as a result of: (a) any amendment to, or change (including any 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; or (b) any amendment to or change in an official interpretation or application of such laws or regulations by any legislative body, court, governmental agency or regulatory authority or any official interpretation or pronouncement that provides for a position with respect to such laws or regulations that differs from the generally accepted position on June 20, 2002, which amendment, change or announced proposed change is effective or which interpretation or pronouncement is announced on or after June 20, 2002. "Tax Event Redemption" means, if a Tax Event shall occur, the redemption of the Notes, at the option of the Company, in whole but not in part, on not less than 30 days' nor more than 60 days' written notice. "Tax Event Redemption Date" means the date upon 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, at any time on or prior to the Stock Purchase Date: (i) the entry by a court having competent jurisdiction of: (a) a decree or order for relief in respect of the Company in an involuntary proceeding under any applicable bankruptcy, insolvency, reorganization or other similar law or a decree or order adjudging the Company to be insolvent, or approving a petition seeking reorganization, arrangement, adjustment or composition of the Company and such decree or order shall remain unstayed and in effect for a period of 60 consecutive days; or (b) a final and non-appealable order appointing a custodian, receiver, liquidator, assignee, trustee or other similar official of the Company or of any 11 substantial part of the property of the Company ordering the winding up or liquidation of the affairs of the Company; or (ii) the commencement by the Company of a voluntary proceeding under any applicable bankruptcy, insolvency, reorganization or other similar law or of a voluntary proceeding seeking to be adjudicated insolvent or the consent by the Company to the entry of a decree or order for relief in an involuntary proceeding under any applicable bankruptcy, insolvency, reorganization or other similar law or to the commencement of any insolvency proceedings against it, or the filing by the Company of a petition or answer or consent seeking organization or relief under any applicable law, or the consent by the Company to the filing of such petition or to the appointment of or taking possession by a custodian, receiver, liquidator, assignee, trustee or similar official of all or any substantial part of the property of the Company or the making by the Company of an assignment for the benefit of creditors, or the taking of corporate action by the Company or any in furtherance of any such action. "Threshold Appreciation Price" has the meaning specified in Section 5.1(a)(i). "TIA" means the Trust Indenture Act of 1939, and any statute successor thereto, in each case as amended from time to time, and the rules and regulations promulgated thereunder. "Trading Day" has the meaning specified in Section 5.1(b). "Transaction Documents" has the meaning specified in Section 7.1(a). "Treasury Consideration" has the meaning specified in Section 5.4(d). "Treasury Portfolio" means a portfolio of U.S. Treasury securities consisting of principal or interest strips of U.S. Treasury securities that mature on: (i) if a Tax Event Redemption occurs prior to the earlier of the date of a successful remarketing of the Notes or the Stock Purchase Date, (A) the Business Day immediately preceding the Stock Purchase Date in an amount equal to the aggregate Stated Amount of the Notes outstanding on the Tax Event Redemption Date and (B) the Business Day immediately preceding each Payment Date on the Notes scheduled to occur after the Tax Event Redemption Date and on or before the Stock Purchase Date in an amount equal to the aggregate interest payments that would be due on the aggregate Stated Amount of the Notes outstanding on the Tax Event Redemption Date; and (ii) if a Tax Event Redemption occurs on or after the date of a successful remarketing of the Notes or the Stock Purchase Date, (A) the Business Day immediately preceding August 16, 2007 in an amount equal to the aggregate Stated Amount of the Notes outstanding on the Tax Event Redemption Date and (B) the Business Day immediately preceding each Payment Date on the Notes scheduled to occur after the Tax Event Redemption Date and on or before August 16, 2007 in an amount equal to the aggregate interest payments that would be due on the aggregate Stated Amount of the Notes outstanding on the Tax Event Redemption Date (and interest is calculated at the Reset Rate). 12 "Treasury Portfolio Purchase Price" means the lowest aggregate price quoted by a primary U.S. government securities dealer in New York City 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 a zero-coupon U.S. Treasury security (CUSIP Number 912803 AG 8) maturing on August 15, 2005 that will pay $1,000 on such maturity date. "Trustee" means JPMorgan Chase Bank, a New York banking corporation, as trustee under the Indenture, or any successor thereto. "Underwriting Agreement" means the Underwriting Agreement relating to the Equity Security Units dated June 20, 2002 between the Company and the underwriters named therein. "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 an Officer's Certificate stating that all conditions precedent, if any, provided for in this Agreement relating to the proposed action have been complied with and, if requested by the Agent, 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 (other than the Officer's Certificate provided for in Section 10.5) shall include: (a) a statement that the individual signing such certificate or opinion has read such covenant or condition and the definitions herein relating thereto; (b) 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; (c) a statement that, in the opinion of 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 (d) a statement as to whether, in the opinion of such individual, such condition or covenant has been complied with. 13 Section 1.3 Form of Documents Delivered to Agent. (a) 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. (b) Any Officer's Certificate 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 Officer's 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. (c) 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 an agent of such Holders 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 Equity Security Units or Stripped Units shall be proved by the Equity Security Units Register or the Stripped Units 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. 14 (e) The Company may set any day as a record date for the purpose of determining the Holders of Outstanding Units 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 Equity Security Units and Stripped Units. If any record date is set pursuant to this paragraph, the Holders of the Outstanding Units on such record date, and no other Holders, shall be entitled to take the relevant action with respect to the Equity Security Units or the Stripped Units, 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 Units on such record date. Nothing contained 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 cancelled and of no effect), and nothing contained in this paragraph shall be construed to render ineffective any action taken by Holders of the requisite number of Outstanding Units 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 Equity Security Units and Stripped Units in the manner set forth in Section 1.6. (f) 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 Equity Security Units and Stripped Units 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: (a) 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, mailed, first-class postage prepaid, faxed or delivered by overnight air courier guaranteeing next day delivery, to the Agent at 450 West 33rd Street, New York, New York 10001, facsimile number: (212) 946-8159, Attention: Institutional Trust Services, or at any other address furnished in writing by the Agent to the Holders and the Company; (b) 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, mailed, first-class postage prepaid, faxed or 15 delivered by overnight air courier guaranteeing next day delivery, to the Company at El Paso Corporation, 1001 Louisiana Street, Houston, Texas 77002, facsimile number: (713) 420-4099, Attention: Legal Department, or at any other address furnished in writing to the Agent and the Holders by the Company; (c) 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, mailed, first-class postage prepaid, faxed or delivered by overnight air courier guaranteeing next day delivery, addressed to the Collateral Agent at 101 Barclay Street, New York, New York 10286, facsimile number: (212) 328-8243, Attention: Corporate Trust Department, or at any other address furnished in writing by the Collateral Agent to the Agent, the Company and the Holders; or (d) the 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, mailed, first-class postage prepaid, faxed or delivered by overnight air courier guaranteeing next day delivery, addressed to the Trustee at JPMorgan Chase Bank, 450 West 33rd Street, New York, New York 10001, facsimile number: (212) 946-8159, Attention: Institutional Trust Services, or at any other address furnished in writing by the Trustee to the Company. Section 1.6 Notice to Holders; Waiver. (a) 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. (b) 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. 16 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 Equity Security Units or Stripped Units 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 contained in this Agreement or in the Equity Security Units or Stripped Units, 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 Equity Security Units and Stripped Units evidenced by their Certificates by their acceptance of delivery of such Certificates. Section 1.11 Governing Law; Submission to Jurisdiction; Waiver of Jury Trial. (a) This Agreement, the Equity Security Units and Stripped Units shall be governed by, and construed in accordance with, the laws of the State of New York. (b) Each Holder of an Equity Security Unit or a Stripped Unit, by its acceptance thereof, the Company and the Agent each submit to the jurisdiction of the courts of the State of New York and the courts of the United States of America, in each case located in the Borough of Manhattan, City of New York and State of New York over any suit, action or proceeding with respect to this Agreement or the transactions contemplated hereby. Each Holder of an Equity Security Unit or a Stripped Unit, by its acceptance thereof, the Company and the Agent each waive any objection that any of them may have to the venue of any suit, action or proceeding with respect to this Agreement or the transactions contemplated hereby in the courts of the State of New York or the courts of the United States of America, in each case located in the Borough of Manhattan, City of New York and State of New York, or that such suit, action or proceeding brought in the courts of the State of New York or the courts of the United States of America, in each case located in the Borough of Manhattan, City of New York and State of New York, was brought in an inconvenient court and agrees not to plead or claim the same. (c) Each Holder of an Equity Security Unit or a Stripped Unit, by its acceptance thereof, the Company and the Agent each acknowledge and agree that any controversy which may arise under this Agreement is likely to involve complicated and difficult issues, and therefore irrevocably and unconditionally waive any right it may have to a trial by jury in respect of any litigation directly or indirectly arising out of relating to this Agreement or the transactions contemplated hereby. 17 Section 1.12 Legal Holidays. (a) In any case where any Payment Date shall not be a Business Day, then (notwithstanding any other provision of this Agreement or the Certificates) payment of the Contract Adjustment Payments payable on that date shall not be made on such date, but shall be made on the next succeeding Business Day with the same force and effect as if made on such Payment Date, provided that no interest or additional payment shall be payable by the Company in respect of the delay. However, if the next succeeding Business Day is in the next succeeding calendar year, such payment shall be made on the Business Day immediately preceding the Payment Date with the same force and effect as if made on such Payment Date. (b) In any case where the Stock Purchase Date, Early Settlement Date or Merger Early Settlement Date, as applicable, shall not be a Business Day, then (notwithstanding any other provision of this Agreement or the Certificates), the Purchase Contracts shall not be performed and Early Settlement and Merger Early Settlement shall not be effected on such date, but the Purchase Contracts shall be performed or Early Settlement or Merger Early Settlement shall be effected, as applicable, on the next succeeding Business Day with the same force and effect as if performed on the Stock Purchase Date, Early Settlement Date or Merger Early Settlement Date, as applicable. Section 1.13 Counterparts. This Agreement may be executed in any number of counterparts by the parties hereto, 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. (a) The Equity Security Units Certificates (including the form of Purchase Contract forming part of the Equity Security Units 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 thereon, as may be required by the rules of any securities exchange or quotation system on which the Equity Security Units are listed or quoted for trading or any depositary therefor, or as may, consistently herewith, be determined by the officers of the Company executing such Equity Security Units Certificates, as evidenced by their execution of the Equity Security Units Certificates. (b) The definitive Equity Security Units Certificates shall be printed or may be produced in any other manner, all as determined by the officers of the Company executing such Equity Security Units Certificates, consistent with the provisions of this Agreement, as evidenced by their execution thereof. 18 (c) The Stripped Units Certificates (including the form of Purchase Contracts forming part of the Stripped Units 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 thereon as may be required by the rules of any securities exchange or quotation system on which the Stripped Units may be listed or quoted for trading or any depositary therefor, or as may, consistently herewith, be determined by the officers of the Company executing such Stripped Units Certificates, as evidenced by their execution of the Stripped Units Certificates. (d) The definitive Stripped Units Certificates shall be printed or may be produced in any other manner, all as determined by the officers of the Company executing such Stripped Units Certificates, consistent with the provisions of this Agreement, as evidenced by their execution thereof. (e) 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 DEPOSITORY TRUST COMPANY 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 THE DEPOSITORY TRUST COMPANY 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." Section 2.2 Form of Agent's Certificate of Authentication. (a) The form of the Agent's certificate of authentication of the Equity Security Units shall be in substantially the form set forth on the form of the Equity Security Units Certificates. (b) The form of the Agent's certificate of authentication of the Stripped Units shall be in substantially the form set forth on the form of the Stripped Units Certificates. 19 ARTICLE III. THE EQUITY SECURITY UNITS Section 3.1 Title and Terms; Denominations. (a) The aggregate number of Equity Security Units and Stripped Units, if any, evidenced by Certificates authenticated, executed on behalf of the Holders and delivered hereunder is limited to 10,000,000 (up to 11,500,000 if the over-allotment option of the Underwriters (as defined in the Underwriting Agreement) is exercised pursuant to the Underwriting Agreement), 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, 3.13, 3.14, 5.9, 5.10 or 8.5. (b) The Certificates shall be issuable only in registered form and only in denominations of a single Equity Security Unit and any integral multiple thereof or a single Stripped Unit and any integral multiple thereof. Section 3.2 Rights and Obligations Evidenced by the Certificates. (a) Each Equity Security Units Certificate shall evidence the number of Equity Security Units specified therein, with each such Equity Security Units Certificate representing the ownership by the Holder thereof of a beneficial interest in a Note, the Treasury Consideration or the Applicable Ownership Interest in the Treasury Portfolio, as the case may be, subject to the Pledge of such Note, such Treasury Consideration or such 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 Equity Security Unit shall pledge, pursuant to the Pledge Agreement, the Note, the Treasury Consideration or the Applicable Ownership Interest in the Treasury Portfolio, as the case may be, forming a part of such Equity Security Units, to the Collateral Agent and grant to the Collateral Agent a security interest in the right, title, and interest of such Holder in such Note, such Treasury Consideration or such 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 each Purchase Contract to purchase the Common Stock of the Company. Prior to the purchase of shares of Common Stock under each Purchase Contract, such Purchase Contracts shall not entitle the Holders of Equity Security Units Certificates to any of the rights of a holder of shares of Common Stock, including, without limitation, the right to vote or receive any dividends or other payments or to consent or to receive notice as stockholders in respect of the meetings of stockholders or for the election of directors of the Company or for any other matter, or any other rights whatsoever as stockholders of the Company. (b) Each Stripped Units Certificate shall evidence the number of Stripped Units specified therein, with each such Stripped Units Certificate representing the ownership by the Holder thereof of a 1/20 undivided beneficial interest in a Treasury Security, subject to the Pledge of such interest in 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 Stripped Unit shall pledge, 20 pursuant to the Pledge Agreement, the Treasury Security, forming a part of such Stripped Unit, 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 each Purchase Contract to purchase shares of Common Stock pursuant to this Agreement and the related Purchase Contract. Prior to the purchase of shares of Common Stock under each Purchase Contract, such Purchase Contracts shall not entitle the Holders of Stripped Units Certificates to any of the rights of a holder of shares of Common Stock, including, without limitation, the right to vote or receive any dividends or other payments or to consent or to receive notice as stockholders in respect of the meetings of stockholders or for the election of directors of the Company or for any other matter, or any other rights whatsoever as stockholders of the Company. Section 3.3 Execution, Authentication, Delivery and Dating. (a) Subject to the provisions of Sections 3.1, 3.13 and 3.14, 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. (b) The Certificates shall be executed on behalf of the Company by the Chairman of the Board, the Chief Executive Officer, the President, any Vice President or any other authorized officer of the Company or a person duly authorized by any of them and delivered to the Agent. The signature of any of these officers on the Certificates may be manual or by facsimile. (c) 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. (d) 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 officer of the Agent, as such Holder's attorney-in-fact. Such signature by an authorized officer of the Agent shall be conclusive evidence that the Holder of such Certificate has entered into the Purchase Contracts evidenced by such Certificate. (e) Each Certificate shall be dated the date of its authentication. (f) 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 officer 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. 21 Section 3.4 Temporary Certificates. (a) 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 form set forth in Exhibit A or Exhibit B hereto, as the case may be, 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 Equity Security Units or Stripped Units, as the case may be, are listed, or as may, consistent herewith, be determined by the officers of the Company executing such Certificates, as evidenced by their execution of the Certificates. (b) 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 Equity Security Units or Stripped Units, 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 Equity Security Units or Stripped Units, as the case may be, evidenced thereby as definitive Certificates. Section 3.5 Registration; Registration of Transfer and Exchange. (a) The Agent shall keep at the Corporate Trust Office a register (the "Equity Security Units Register") in which, subject to such reasonable regulations as it may prescribe, the Agent shall provide for the registration of Equity Security Units Certificates and of transfers of Equity Security Units Certificates (the Agent, in such capacity, the "Equity Security Units Registrar") and a register (the "Stripped Units Register") in which, subject to such reasonable regulations as it may prescribe, the Agent shall provide for the registration of the Stripped Units Certificates and transfers of Stripped Units Certificates (the Agent, in such capacity, the "Stripped Units Registrar"). (b) 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 like tenor and denominations, and evidencing a like number of Equity Security Units or Stripped Units, as the case may be. (c) At the option of the Holder, Certificates may be exchanged for other Certificates, evidencing a like aggregate number of Equity Security Units or Stripped Units, 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, 22 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. (d) All Certificates issued upon any registration of transfer or exchange of a Certificate shall evidence the ownership of the same number of Equity Security Units or Stripped Units, as the case may be, and be entitled to the same benefits and subject to the same obligations, under this Agreement as the Equity Security Units or Stripped Units, as the case may be, evidenced by the Certificate surrendered upon such registration of transfer or exchange. (e) 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. (f) 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 3.4, 3.6, 3.9 and 8.5 not involving any transfer. (g) 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 on or after the Business Day immediately preceding the earlier of the Stock Purchase Date and the Termination Date. 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 shall, (i) if the Stock Purchase Date has occurred, deliver the shares of Common Stock issuable in respect of the Purchase Contracts forming a part of the Equity Security Units or Stripped Units, as the case may be, evidenced by such Certificate, (ii) in the case of Equity Security Units, if a Termination Event shall have occurred prior to the Stock Purchase Date, transfer the Notes, the Treasury Consideration or the Applicable Ownership Interests in the Treasury Portfolio, as applicable, relating to such Equity Security Units, or (iii) in the case of Stripped Units, if a Termination Event shall have occurred prior to the Stock Purchase Date, transfer the Treasury Securities relating to such Stripped Units, in each case subject to the applicable conditions and in accordance with the applicable provisions of Article V. 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 or its custodian by, or on behalf of, 23 the Company. Each Global Certificate shall initially be registered in the applicable Register 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 and if required by the Depositary. 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 receiving approvals, votes or consents hereunder) as the Holder of the Equity Security Units and Stripped Units 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. 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 Equity Security Units or Stripped Units 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 Equity Security Units and Stripped Units or ceases to be eligible as a "clearing agency" under the Exchange Act, the Company may, in its sole discretion, appoint a successor Clearing Agency with respect to the Equity Security Units and Stripped Units. Section 3.9 Definitive Certificates. If: (i) a Clearing Agency elects to discontinue its services as securities depositary with respect to the Equity Security Units and Stripped Units or ceases to be eligible as a "clearing agency" under the Exchange Act and a successor Clearing Agency is not appointed within 90 days after such discontinuance pursuant to Section 3.8, (ii) the Company elects to terminate the book-entry system through the Clearing Agency with respect to the Equity Security Units and Stripped Units, or 24 (iii) there shall have occurred and be continuing a default by the Company in respect of its obligations under one or more Purchase Contracts, this Agreement, the Indenture, the Notes, the Equity Security Units, the Stripped Units, the Pledge Agreement or any other principal agreements or instruments executed in connection with the offering of Equity Security Units, then upon surrender of the Global Certificates representing the Book-Entry Interests with respect to the Equity Security Units and Stripped Units by the Clearing Agency, accompanied by registration instructions, the Company shall cause definitive Certificates to be delivered to Clearing Agency Participants in accordance with the instructions of the Clearing Agency. The Company and the Agent 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. (a) 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 Equity Security Units or Stripped Units, as the case may be, and bearing a Certificate number not contemporaneously outstanding. (b) 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 Equity Security Units or Stripped Units, as the case may be, and bearing a Certificate number not contemporaneously outstanding. (c) 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 on or after the Business Day immediately preceding the earlier of the Stock Purchase Date and the Termination Date. 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 shall (i) if the Stock Purchase Date has occurred, deliver the shares of Common Stock issuable in respect of the Purchase Contracts forming a part of the Equity Security Units or Stripped Units evidenced by such Certificate, or (ii) if a Termination Event shall have occurred prior to the Stock Purchase Date, transfer the Notes, the Treasury Consideration or the Applicable Ownership Interests in the Treasury Portfolio or the Treasury Securities, as the case may be, evidenced thereby, in each case subject to the applicable conditions and in accordance with the applicable provisions of Article V. (d) 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 25 governmental charge that may be imposed in relation thereto and any other expenses (including the fees and expenses of the Agent) connected therewith. (e) Every new Certificate issued pursuant to this Section in lieu of any destroyed, lost or stolen Certificate shall constitute an original contractual obligation of the Company and of the Holder in respect of the Equity Security Units or Stripped Units, as the case may be, evidenced thereby, whether or not the destroyed, lost or stolen Certificate (and the Equity Security Units and Stripped Units 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. (f) 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. (a) 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 as the owner of the Equity Security Units or Stripped Units, as the case may be, evidenced thereby, for the purpose of receiving interest payments on the Notes (in the case of Equity Security Units), receiving payment of Contract Adjustment Payments, performance of the Purchase Contracts and for all other purposes whatsoever (subject to Section 4.1(a) and 5.2(a)), whether or not any such payments 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. (b) Notwithstanding the foregoing, with respect to any Global Certificate, nothing contained herein shall prevent the Company, the Agent or any agent of the Company or the Agent from giving effect to any written certification, proxy or other authorization furnished by any Clearing Agency (or its nominee), as a 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. None of the Company, the Agent, or any agent of the Company or the Agent will have any responsibility or liability for any aspect of the records relating to or payments made on account of beneficial ownership interests in a Global Certificate or maintaining, supervising or reviewing any records relating to such beneficial ownership interests. Section 3.12 Cancellation. (a) All Certificates surrendered (i) for delivery of shares of Common Stock on or after any Settlement Date; (ii) upon the transfer of Notes, the Treasury Consideration or the Applicable Ownership Interests in the Treasury Portfolio or the Treasury Securities, as the case may be, after the occurrence of a Termination Event; or (iii) upon the registration of a transfer or exchange of Equity Security Units or Stripped Units, as the case may be, shall, if surrendered to any Person other than the Agent, be delivered to the Agent and, if not already cancelled, shall be promptly 26 cancelled 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 cancelled 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 cancelled as provided in this Section, except as expressly permitted by this Agreement. All cancelled Certificates held by the Agent shall be disposed of by the Agent in accordance with its customary procedures. (b) 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 cancelled or delivered to the Agent for cancellation. Section 3.13 Creation of Stripped Units. (a) Unless a successful remarketing or a Tax Event Redemption has occurred, at any time from and after the date of this Agreement (A) other than during the period that commences at 5:00 p.m., New York City time, on May 5, 2005 and ends at 9:00 a.m., New York City time, on May 19, 2005 and during the period that commences at 5:00 p.m., New York City time, on June 22, 2005 and ends at 9:00 a.m., New York City time, on July 7, 2005 and (B) prior to 5:00 p.m., New York City time, on the eleventh Business Day immediately preceding the Stock Purchase Date, a Holder may withdraw the Pledged Notes from the related Purchase Contracts in respect of the Equity Security Units held by such Holder by substituting for such Pledged Notes Treasury Securities that will pay, on the Stock Purchase Date, an amount equal to the aggregate principal amount of such Notes (a "Collateral Substitution") by (1) depositing with the Collateral Agent Treasury Securities having an aggregate principal amount equal to the aggregate Stated Amount of such Equity Security Units, and (2) instructing the Agent, in its capacity as custodian for the Depositary, to decrease the number of Equity Security Units evidenced by the Global Equity Security Units Certificate(s), by a notice substantially in the form of Exhibit D hereto, and notifying the Agent that the Holder has transferred the relevant amount of Treasury Securities to the Collateral Agent and requesting that the Agent instruct the Collateral Agent to release the Pledged Notes underlying such Equity Security Units (or, if the Equity Security Units are held in certificated form, transferring the related Equity Security Units to the Agent accompanied by a notice to the Agent, substantially in the form of Exhibit D hereto), whereupon the Agent shall promptly give such instruction to the Collateral Agent, substantially in the form of Exhibit C hereto. Upon receipt of the Treasury Securities described in clause (1) above and the instruction described in clause (2) above, in accordance with the terms of the Pledge Agreement, the Collateral Agent will release to the Agent, on behalf of the Holder, such Pledged Notes from the Pledge, free and clear of the Company's security interest therein, and upon receipt thereof the Agent shall promptly: (i) decrease the number of Equity Security Units evidenced by the Global Equity Security Units Certificate(s) (or, if the Equity Security Units are held in certificated form, cancel the related Equity Security Units Certificates); (ii) transfer the Pledged Notes to the Holder; and 27 (iii) increase the number of Stripped Units evidenced by the Global Stripped Units Certificate(s) (or, if the Stripped Units are held in certificated form, authenticate, execute on behalf of such Holder and deliver to such Holder a Stripped Units Certificate executed by the Company in accordance with Section 3.3 evidencing the same number of Purchase Contracts as were evidenced by the cancelled Equity Security Units). (b) Holders who elect to withdraw the Pledged Notes from the related Purchase Contracts by substituting Treasury Securities for such Pledged Notes 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. (c) Holders may make Collateral Substitutions only in integral multiples of 20 Equity Security Units. (d) In the event a Holder making a Collateral Substitution pursuant to this Section 3.13 fails to effect a book-entry transfer of the Equity Security Units or fails to deliver an Equity Security Units Certificate to the Agent after depositing Treasury Securities with the Collateral Agent, the Pledged Notes constituting a part of such Equity Security Units, and any distributions on such Pledged Notes shall be held in the name of the Agent or its nominee in trust for the benefit of such Holder, until such Equity Security Units are so transferred or the Equity Security Units Certificate is so delivered, as the case may be, or, with respect to an Equity Security Units Certificate, such Holder provides evidence satisfactory to the Company and the Agent that such Equity Security Units Certificate has been destroyed, lost or stolen, together with any indemnity that may be required by the Agent and the Company. (e) Except as described in this Section 3.13, for so long as the Purchase Contract underlying an Equity Security Unit remains in effect, the rights and obligations of the Holder of such Equity Security Unit in respect of the Note, the Treasury Consideration or the Applicable Ownership Interest in the Treasury Portfolio, as the case may be, and the Purchase Contract comprising such Equity Security Unit may be acquired, and may be transferred and exchanged, only as an Equity Security Unit. Section 3.14 Recreation of Equity Security Units. (a) Unless a successful remarketing or a Tax Event Redemption has occurred, at any time from and after the date of this Agreement (A) other than during the period that commences at 5:00 p.m., New York City time, on May 5, 2005 and ends at 9:00 a.m., New York City time, on May 19, 2005 and during the period that commences at 5:00 p.m., New York City time, on June 22, 2005 and ends at 9:00 a.m., New York City time, on July 7, 2005 and (B) prior to 5:00 p.m., New York City time, on the eleventh Business Day immediately preceding the Stock Purchase Date a Holder of Stripped Units may recreate Equity Security Units by (1) depositing with the Collateral Agent the Notes then comprising such number of Equity Security Units as is equal to such Stripped Units and (2) instructing the Agent, in its capacity as custodian for the depositary, to decrease the number of Stripped Units evidenced by the Global Stripped Units Certificate(s), by a notice substantially in the form of Exhibit D hereto, and notifying the Agent that the Holder has transferred the relevant amount of Notes to the Collateral Agent and requesting that the Agent instruct the Collateral Agent to release the Pledged Treasury Securities underlying 28 such Stripped Units (or, if the Stripped Units are held in certificated form, transferring such Stripped Units to the Agent accompanied by a notice to the Agent, substantially in the form of Exhibit D hereto), whereupon the Agent shall promptly give such instruction to the Collateral Agent, substantially in the form of Exhibit C hereto. Upon receipt of the Notes described in clause (1) above and the instruction described in clause (2) above, in accordance with the terms of the Pledge Agreement, the Collateral Agent will release to the Agent, on behalf of the Holder, such Pledged Treasury Securities from the Pledge, free and clear of the Company's security interest therein, and upon receipt thereof the Agent shall promptly: (i) decrease the number of Stripped Units evidenced by the Global Stripped Units Certificate(s) (or, if the Stripped Units are held in certificated form, cancel the related Stripped Units Certificates); (ii) transfer the Pledged Treasury Securities to the Holder; and (iii) increase the number of Equity Security Units evidenced by the Global Equity Security Units Certificate(s) (or, if the Equity Security Units are held in certificated form, authenticate, execute on behalf of such Holder and deliver an Equity Security Units Certificate executed by the Company in accordance with Section 3.3 evidencing the same number of Purchase Contracts as were evidenced by the cancelled Stripped Units). (b) Holders of Stripped Units who recreate Equity Security Units 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. (c) Holders of Stripped Units may recreate Equity Security Units only in integral multiples of 20 Stripped Units. (d) In the event a Holder who recreates Equity Security Units pursuant to this Section 3.14 fails to effect a book-entry transfer of the Stripped Units or fails to deliver a Stripped Units Certificate to the Agent after depositing Notes with the Collateral Agent, the Treasury Securities constituting a part of such Stripped Units, and any distributions 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 Stripped Units are so transferred or the Stripped Units Certificate is so delivered, as the case may be, or, with respect to a Stripped Units Certificate, such Holder provides evidence satisfactory to the Company and the Agent that such Stripped Units Certificate has been destroyed, lost or stolen, together with any indemnity that may be required by the Agent and the Company. (e) Except as provided in this Section 3.14, for so long as the Purchase Contract underlying a Stripped Unit remains in effect, the rights and obligations of the Holder of such Stripped Unit in respect of the Treasury Security and Purchase Contract comprising such Stripped Unit may be acquired, and may be transferred and exchanged, only as a Stripped Unit. Section 3.15 Transfer of Collateral Upon Occurrence of Termination Event. Upon the occurrence of a Termination Event and the transfer to the Agent by the Collateral Agent of the Notes, the Treasury Consideration or the Applicable Ownership Interests in the Treasury Portfolio or the Treasury Securities, as the case may be, underlying the Equity Security 29 Units or the Stripped Units, as the case may be, pursuant to the terms of the Pledge Agreement, the Agent shall request transfer instructions with respect to such Notes, such Treasury Consideration, such Applicable Ownership Interests in the Treasury Portfolio or such 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 Equity Security Units Register or the Stripped Units Register, as the case may be. Upon book-entry transfer of the Equity Security Units or Stripped Units or delivery of an Equity Security Units Certificate or Stripped Units Certificate to the Agent with such transfer instructions, the Agent shall transfer the Notes, the Treasury Consideration, the Applicable Ownership Interests in the Treasury Portfolio or the Treasury Securities, as the case may be, underlying such Equity Security Units or Stripped Units, 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 would be entitled to receive less than $1,000 principal amount at maturity of any U.S. Treasury security, the Agent shall dispose of such U.S. Treasury security for cash and deliver such cash to the Holder. In the event a Holder of Equity Security Units or Stripped Units fails to effect such transfer or delivery, the Notes, the Treasury Consideration, the Applicable Ownership Interests in the Treasury Portfolio or Treasury Securities, as the case may be, underlying such Equity Security Units or Stripped Units, as the case may be, and any distributions thereon, shall be held in the name of the Agent or its nominee in trust for the benefit of such Holder, until: (i) such Equity Security Units or Stripped Units are transferred or the Equity Security Units Certificate or Stripped Units Certificate is surrendered or such Holder provides satisfactory evidence that such Equity Security Units Certificate or Stripped Units Certificate has been destroyed, lost or stolen, together with any indemnity that may be required by the Agent and the Company; and (ii) the expiration of the time period specified in the abandoned property laws of the relevant State. Section 3.16 No Consent to Assumption. Each Holder of Equity Security Units or Stripped Units, as the case may be, 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, any receiver, liquidator or person or entity performing similar functions or 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 NOTES, TREASURY CONSIDERATION AND APPLICABLE OWNERSHIP INTERESTS IN THE TREASURY PORTFOLIO Section 4.1 Payment of Interest; Rights to Interest Payments Preserved; Notice. (a) Any payment on any Note or any distribution on the Treasury Consideration (as specified in clause (1) of the definition of Remarketing Value) or the Applicable Ownership Interest (as specified in clause (B) of the definition of such term) 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 30 the Collateral Agent as provided by the terms of the Pledge Agreement, be paid to the Person in whose name the Equity Security Units Certificate (or one or more Predecessor Equity Security Units Certificates) of which such Note, such Treasury Consideration or such Applicable Ownership Interest in the Treasury Portfolio, as the case may be, is a part is registered at the close of business on the Record Date for such Payment Date. (b) Each Equity Security Units Certificate evidencing Notes, Treasury Consideration or Applicable Ownership Interests in the Treasury Portfolio delivered under this Agreement upon registration of transfer of or in exchange for or in lieu of any other Equity Security Units Certificate shall carry the rights to accrued and unpaid interest or distributions, or to accrue interest or distributions, which were carried by the Notes, Treasury Consideration or Applicable Ownership Interests in the Treasury Portfolio, as the case may be, underlying such other Equity Security Units Certificate. (c) In the case of any Equity Security Units with respect to which Early Settlement of the underlying Purchase Contract is effected on an Early Settlement Date, Merger Early Settlement of the underlying Purchase Contract is effected on a Merger Early Settlement Date, Cash Settlement is effected on the eighth Business Day immediately preceding the Stock Purchase Date, or 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, payments on the Notes, the Treasury Consideration or the Applicable Ownership Interests in the Treasury Portfolio, as the case may be, underlying such Equity Security Units otherwise payable on such Payment Date shall be payable on such Payment Date notwithstanding such Early Settlement, Merger Early Settlement, Cash Settlement or Collateral Substitution, as the case may be, and such payments shall, subject to receipt thereof by the Agent, be payable to the Person in whose name the Equity Security Units Certificate (or one or more Predecessor Equity Security Units Certificates) 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 Equity Security Units with respect to which Early Settlement, Merger Early Settlement or Cash Settlement of the underlying Purchase Contract is effected, or with respect to which a Collateral Substitution has been effected, payments on the related Notes or payments on the Treasury Consideration or the Applicable Ownership Interests in the Treasury Portfolio, as the case may be, that would otherwise be payable after the applicable Settlement Date or after such Collateral Substitution, as the case may be, shall not be payable hereunder to the Holder of such Equity Security Units; provided, that to the extent that such Holder continues to hold the Separate Notes that formerly comprised a part of such Holder's Equity Security Units, such Holder shall be entitled to receive the payments on such Separate Notes. Section 4.2 Notice and Voting. Under the terms of the Pledge Agreement, the Agent will be entitled to exercise the voting and any other consensual rights pertaining to the Pledged Notes but only to the extent instructed by the Holders as described below. Upon receipt of notice of any meeting at which holders of Notes are entitled to vote or upon any solicitation of consents, waivers or proxies of holders of Notes, the Agent shall, as soon as practicable thereafter, mail to the Holders of Equity Security Units a notice: (a) containing such information as is contained in the notice or solicitation, 31 (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 Notes entitled to vote) shall be entitled to instruct the Agent as to the exercise of the voting rights pertaining to the Pledged Notes underlying their Equity Security Units; and (c) stating the manner in which such instructions may be given. Upon the written request of the Holders of Equity Security Units 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 Pledged Notes as to which any particular voting instructions are received. In the absence of specific instructions from the Holder of an Equity Security Unit, the Agent shall abstain from voting the Pledged Note underlying such Equity Security Units. The Company hereby agrees, if applicable, to solicit Holders of Equity Security Units to timely instruct the Agent in order to enable the Agent to vote such Pledged Notes. Section 4.3 Tax Event Redemption. Upon the occurrence of a Tax Event Redemption prior to the earlier of a successful remarketing of the Notes and the Stock Purchase Date, the Collateral Agent shall apply, out of the aggregate Redemption Price for the Pledged Notes, an amount equal to the aggregate Redemption Amount for the Pledged Notes to purchase on behalf of the Holders of Equity Security Units the Treasury Portfolio and promptly remit the remaining portion, if any, of such aggregate Redemption Price to the Agent for payment to the Holders of such Equity Security Units. The Treasury Portfolio will be substituted for the Pledged Notes, and will be pledged to the Collateral Agent in accordance with the terms of the Pledge Agreement to secure the obligation of each Holder of an Equity Security Units to purchase the Common Stock under the Purchase Contract constituting a part of such Equity Security Unit. Following the occurrence of a Tax Event Redemption prior to the earlier of a successful remarketing of the Notes and the Stock Purchase Date, the Holders of Equity Security Units and the Collateral Agent shall have such security interests, rights and obligations with respect to the Treasury Portfolio as the Holder of Equity Security Units and the Collateral Agent had in respect of the Notes, as the case may be, subject to the Pledge thereof as provided in Articles II, III, IV, V and VI of the Pledge Agreement, and any reference herein or in the Certificates to the Note shall be deemed to be a reference to such Treasury Portfolio and any reference herein or in the Certificates to interest on the Notes shall be deemed to be a reference to corresponding distributions on the Treasury Portfolio. The Company may cause to be made in any Equity Security Units Certificates thereafter to be issued such change in phraseology and form (but not in substance) as may be appropriate to reflect the substitution of the Treasury Portfolio for Notes as collateral. The Company shall cause notice of any Tax Event Redemption to be mailed, at least 30 calendar days but not more than 60 calendar days before such Tax Event Redemption Date, to each Holder of Equity Security Units including Notes to be redeemed at its registered address. Upon the occurrence of a Tax Event Redemption after the earlier of a successful remarketing of the Notes or the Stock Purchase Date, the Redemption Price will be payable in cash to the holders of the Notes. 32 ARTICLE V. THE PURCHASE CONTRACTS; THE REMARKETING Section 5.1 Purchase of Shares of Common Stock. (a) Each Purchase Contract shall, unless (x) an Early Settlement has occurred in accordance with Section 5.9, (y) a Merger Early Settlement has occurred in accordance with Section 5.10 or (z) a Termination Event has occurred in accordance with Section 5.8, obligate the Holder of the related Equity Security Unit or Stripped Unit, as the case may be, to purchase, and the Company to sell, on the Stock Purchase Date at a price equal to $50 (the "Purchase Price"), a number of newly issued shares of Common Stock equal to the Settlement Rate. The "Settlement Rate" is equal to: (i) if the Applicable Market Value is greater than or equal to $23.94 (the "Threshold Appreciation Price"), 2.0886 shares of Common Stock per Purchase Contract; (ii) if the Applicable Market Value is less than the Threshold Appreciation Price but is greater than $19.95 (the "Reference Price"), the number of shares of Common Stock per Purchase Contract equal to the Stated Amount divided by the Applicable Market Value; and (iii) if the Applicable Market Value is equal to or less than the Reference Price, 2.5063 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 5.12, no fractional shares of Common Stock will be issued upon settlement of Purchase Contracts. Promptly after the calculation of the Settlement Rate and the Applicable Market Value, the Company shall give the Agent notice thereof. All calculations and determinations of the Settlement Rate and the Applicable Market Value shall be made by the Company or its agents based on their good faith calculations, and the Agent shall have no responsibility with respect thereto. (b) The "Applicable Market Value" 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 the Stock Purchase Date; provided, that, in the case of a Merger Early Settlement, the 20 consecutive Trading Days shall end on the date of completion of the Cash Merger. The "Closing Price" of the Common Stock on any date of determination means: (i) the closing sale price (or, if no closing price is reported, the last reported sale price) of the Common Stock on the NYSE on such date; 33 (ii) 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; (iii) if the Common Stock is not so listed on a United States national or regional securities exchange, as reported by the Nasdaq Stock Market; (iv) if the Common Stock is not so reported, 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 (v) 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: (i) 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 (ii) 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. (c) Each Holder of Equity Security Units or Stripped Units, as the case may be, 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 Notes, the Treasury Consideration, the Applicable Ownership Interests in the Treasury Portfolio or the Treasury Securities pursuant to the Pledge Agreement. Each Holder of Equity Security Units or Stripped Units, as the case may be, 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 Notes, the Treasury Consideration, the Applicable Ownership Interests in the Treasury Portfolio or the Treasury Securities, to be paid upon settlement of such Holder's obligations to purchase Common Stock under the Purchase Contract, shall be paid on the Stock Purchase Date 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 payment. (d) 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 Contracts 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 34 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. (a) Contract Adjustment Payments shall accumulate on each Purchase Contract constituting a part of an Equity Security Unit or Stripped Unit at 2.86% per year of the Stated Amount of such Equity Security Unit or Stripped Unit, from June 26, 2002 through and including the Stock Purchase Date. Subject to Section 5.3 herein, the Company shall pay, on each Payment Date, the Contract Adjustment Payments, if any, 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 immediately preceding such Payment Date in such coin or currency of the United States as at the time of payment shall be legal tender for payments. The Contract Adjustment Payments, if any, 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 at such Person's address as it appears on the Register or by wire transfer to the account designated to the Agent by a prior written notice by such Person delivered at least five Business Days prior to the applicable Payment Date. (b) 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 recreation of an Equity Security Unit) any other Certificate shall carry the rights to Contract Adjustment Payments, if any, accumulated and unpaid, and to accumulate Contract Adjustment Payments, if any, which were carried by the Purchase Contracts underlying such other Certificates. (c) Upon the occurrence of a Termination Event, the Company's obligation to pay Contract Adjustment Payments (including any accumulated Deferred Contract Adjustment Payments), if any, shall cease. (d) Subject to Sections 5.9 and 5.10, in the case of any Equity Security Units or Stripped Units, as the case may be, with respect to which Early Settlement or Merger Early Settlement of the underlying Purchase Contract is effected on an Early Settlement Date or a Merger Early Settlement Date, respectively, that is after any Record Date and on or prior to the next succeeding Payment Date, Contract Adjustment Payments on the Purchase Contract underlying such Equity Security Units or Stripped Units, as the case may be, otherwise payable on such Payment Date shall be payable on such Payment Date notwithstanding such Early Settlement or Merger Early Settlement, and such Contract Adjustment Payments shall be paid to the Person in whose name the Certificate evidencing such Equity Security Units or Stripped Units (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 Equity Security Units or Stripped Units with respect to which Early Settlement or Merger Early Settlement of the underlying Purchase Contracts is effected on an Early Settlement Date or Merger Early Settlement Date, respectively, Contract Adjustment Payments that would otherwise be payable after the Early Settlement Date, or Merger Early Settlement Date, as the case may be, with respect to such Purchase Contracts shall not be payable. 35 (e) The Company's obligations with respect to the Contract Adjustment Payments will rank equally with all of the Company's existing and future unsecured and unsubordinated indebtedness. Section 5.3 Deferral of Contract Adjustment Payments. (a) The Company shall have the right, at any time prior to the Stock Purchase Date, to defer the payment of any or all of the Contract Adjustment Payments otherwise payable on any Payment Date, but only if the Company shall give the Holders and the Agent written notice of its election to defer each such deferred Contract Adjustment Payment (specifying the amount to be deferred) at least ten Business Days prior to the earlier of (i) the next succeeding Payment Date and (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 Equity Security Units and Stripped Units, but in any event not less than one Business Day prior to such Record Date. Any Contract Adjustment Payments so deferred shall, to the extent permitted by law, bear additional Contract Adjustment Payments thereon at the rate of 6.14% per year (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, being 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 this Section 5.3. No Contract Adjustment Payments may be deferred to a date that is after the Stock Purchase Date and no such deferral period may end other than on a Payment Date. If the Purchase Contracts are terminated upon the occurrence of a Termination Event, the Holder's right to receive Contract Adjustment Payments, if any, and Deferred Contract Adjustment Payments, if any, will terminate. (b) In the event that the Company elects to defer the payment of Contract Adjustment Payments on the Purchase Contracts until a Payment Date prior to the Stock Purchase Date, then all Deferred Contract Adjustment Payments, if any, shall be payable to the registered Holders as of the close of business on the Record Date immediately preceding such Payment Date. (c) In the event that the Company elects to defer the payment of Contract Adjustment Payments on the Purchase Contracts until the Stock Purchase Date, the Company may elect to pay each Holder on the Stock Purchase Date in respect of the Deferred Contract Adjustment Payments, in lieu of a cash payment, a number of shares of Common Stock (in addition to the number of shares of Common Stock equal to the Settlement Rate) equal to (A) the aggregate amount of Deferred Contract Adjustment Payments payable to such Holder (net of any required tax withholding on such Deferred Contract Adjustment Payments, which shall be remitted to the appropriate taxing jurisdiction) divided by (B) the Applicable Market Value. (d) No fractional shares will be issued by the Company with respect to the payment of Deferred Contract Adjustment Payments on the Stock Purchase 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 5.12. 36 (e) 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 the Company's Common Stock other than: (i) purchases, redemptions or acquisitions of shares of Common Stock in connection with any employment contract, benefit plan or other similar arrangement with or for the benefit of employees, officers or directors or a stock purchase or dividend reinvestment plan, or the satisfaction by the Company of its obligations pursuant to any contract or security outstanding on the date the Company exercises its right to defer the Contract Adjustment Payments; (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 of the Common Stock pursuant to the conversion or exchange provisions of such Common Stock or the security being converted or exchanged; (iv) dividends or distributions in any series of the Company's Common Stock (or rights to acquire Common Stock) or repurchases, acquisitions or redemptions of Common Stock in connection with the issuance or exchange of the Common Stock (or securities convertible into or exchangeable for shares of the Company's Common Stock); or (v) redemptions, exchanges or repurchases of any rights outstanding under a shareholder rights plan or the declaration or payment thereunder of a dividend or distribution of or with respect to rights in the future. Section 5.4 Payment of Purchase Price; Remarketing. (a) (i) Unless a Tax Event Redemption, successful remarketing or Termination Event has occurred or a Merger Early Settlement or Early Settlement has been effected, each Holder of an Equity Security Unit may pay in cash ("Cash Settlement") the Purchase Price for the shares of Common Stock to be purchased pursuant to a Purchase Contract if such Holder notifies the Agent by use of a notice in substantially the form of Exhibit E hereto of its intention to make a Cash Settlement. Such notice shall be made not earlier than 9:00 a.m., New York City time, on the tenth Business Day immediately preceding the Stock Purchase Date and not later than 5:00 p.m., New York City time, on the ninth Business Day immediately preceding the Stock Purchase 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 Equity Security Unit who has so notified the Agent of its intention to make a Cash Settlement by use of a notice in substantially the form of Exhibit E hereto is required to pay the Purchase Price to the Collateral Agent not later than 11:00 a.m., New York City time, on the eighth Business Day immediately preceding the Stock Purchase Date in lawful 37 money of the United States by certified or cashiers' check or wire transfer, in each case in immediately available funds and payable to or upon the order of the Company. The Collateral Agent shall promptly notify the Remarketing Agent of the amount of cash received pursuant to this Section 5.4(a)(ii), which will consequently reduce the aggregate number of Pledged Notes to be remarketed that the Collateral Agent had previously notified the Remarketing Agent of pursuant to Section 5.4(b). Any cash received by the Collateral Agent will be paid to the Company on the Stock Purchase Date in settlement of the Purchase Contract in accordance with the terms of this Agreement and the Pledge Agreement. (iii) If a Holder of an Equity Security Unit notifies the Agent as provided in this Section 5.4(a)(i) of its intention to pay the Purchase Price in cash, but fails to make such payment as required by Section 5.4(a)(ii), the Holder shall be deemed to have consented to the disposition of the Pledged Notes pursuant to the remarketing as described in Section 5.4(b). (b) The Company has engaged the Remarketing Agent to sell the Notes of (A) Holders of Equity Security Units and (B) holders of Separate Notes that have elected to participate in the remarketing pursuant to the procedures set forth in Section 2.06 of the Supplemental Indenture and Section 4.5(d) of the Pledge Agreement. On the seventh Business Day prior to the Initial Remarketing Date or the first day of any subsequent Remarketing Period, as applicable, the Company shall give holders of Separate Notes notice of the upcoming remarketing in a daily newspaper in the English language of general circulation in The City of New York, which is expected to be The Wall Street Journal. In addition, the Company will request not later than seven nor more than 15 calendar days prior to the Initial Remarketing Date or the first day of any subsequent Remarketing Period, as applicable, that the Depositary notify, directly or indirectly, each Beneficial Owner or Clearing Agency Participant holding an Equity Security Unit or Stripped Units and each Beneficial Owner of a Separate Note of the upcoming remarketing and of the procedures that must be followed in connection with the upcoming remarketing, as applicable. At any time after the Payment Date immediately preceding the last Payment Date before the Stock Purchase Date and prior to 11:00 a.m., New York City time, on the fourth Business Day immediately preceding the Initial Remarketing Date or the first day of any subsequent Remarketing Period, as applicable, holders of Separate Notes may elect to have their Separate Notes remarketed by Transferring such Separate Notes and delivering a notice of such election, substantially in the form of Exhibit C to the Pledge Agreement, to the Custodial Agent. Pursuant to the terms of the Pledge Agreement, the Custodial Agent will hold such Separate Notes in an account separate from the Collateral Account. A holder of Separate Notes electing to have its Separate Notes remarketed will also have the right to withdraw such election by written notice to the Custodial Agent, substantially in the form of Exhibit D to the Pledge Agreement, prior to 11:00 a.m., New York City time, on the fourth Business Day immediately preceding the Initial Remarketing Date or the first day of any subsequent Remarketing Period, as applicable, upon which notice the Custodial Agent will return such Separate Notes to such holder. On the third Business Day immediately preceding the Initial Remarketing Date or the first day of any subsequent Remarketing Period, as applicable, not later than 10:00 a.m., New York City time, pursuant to the terms of the Pledge Agreement, the Custodial Agent will notify the Remarketing Agent of the aggregate number of Separate Notes to be remarketed. On the third Business Day immediately preceding the Initial Remarketing Date or the first day of any subsequent Remarketing Period, as applicable, not later than 10:00 a.m., New York City time, pursuant to the terms of the Pledge Agreement, the Collateral Agent will notify the Remarketing Agent of the 38 aggregate number of Pledged Notes to be remarketed. On the third Business Day immediately preceding the Initial Remarketing Date or the first day of any subsequent Remarketing Period, as applicable, the Collateral Agent and the Custodial Agent, pursuant to the terms of the Pledge Agreement, will deliver to the Remarketing Agent for remarketing all Notes to be remarketed. (c) Upon receipt of such notice from the Collateral Agent and the Custodial Agent and such Notes from the Collateral Agent and the Custodial Agent, the Remarketing Agent will, on the Initial Remarketing Date, use its commercially reasonable best efforts to (i) establish the Reset Rate (as defined in clause (i) of the definition of such term) and (ii) sell the Notes participating in such remarketing on such date at a price equal to approximately, but not less than, 100.5% of the Remarketing Value. (d) If, despite using its commercially reasonable best efforts, the Remarketing Agent cannot, on the Initial Remarketing Date, establish the Reset Rate (as defined in clause (i) of the definition of such term) and remarket the Notes participating in the remarketing at a price equal to approximately, but not less than, 100.5% of the Remarketing Value, the Remarketing Agent will again attempt to establish the Reset Rate (as defined in clause (i) of the definition of such term) and remarket the Notes participating in such remarketing at a price equal to approximately, but not less than, 100.5% of the Remarketing Value on each of the two next succeeding Business Days. If the Remarketing Agent cannot remarket the Notes participating in the remarketing at a price equal to approximately, but not less than, 100.5% of the Remarketing Value on either of those days, it will attempt to establish the Reset Rate (as defined in clause (i) of the definition of such term) and remarket the Notes participating in the remarketing at a price equal to approximately, but not less than, 100.5% of the Remarketing Value on each of the three Business Days immediately preceding July 1, 2005. If the Remarketing Agent cannot establish the Reset Rate (as defined in clause (i) of the definition of such term) and remarket the Notes participating in the remarketing at a price equal to approximately, but not less than, 100.5% of the Remarketing Value either on the Initial Remarketing Date or any of the two Business Days next succeeding the Initial Remarketing Date or on any of the three Business Days immediately preceding July 1, 2005, the remarketing in each such remarketing period will be deemed to have failed (each, a "Failed Remarketing"). If there have been two Failed Remarketings, the Remarketing Agent will further attempt to establish the Reset Rate (as defined in clause (i) of the definition of such term) and remarket the Notes participating in the remarketing at a price equal to approximately, but not less than, 100.5% of the Remarketing Value on each of the seventh, sixth and fifth Business Days immediately preceding the Stock Purchase Date. If, despite using its commercially reasonable best efforts, the Remarketing Agent fails to remarket the Notes participating in the remarketing at a price equal to approximately, but not less than, 100.5% of the Remarketing Value by 4:00 p.m., New York City time, on the fifth Business Day immediately preceding the Stock Purchase Date, the "Last Failed Remarketing" will be deemed to have occurred. (e) Upon the occurrence of a successful remarketing, the Remarketing Agent shall, by approximately 4:30 p.m., New York City time, on the date of the successful remarketing, advise, by telephone (promptly confirmed in writing) the Company, the Agent, the Collateral Agent, the Custodial Agent, the Securities Intermediary, the Depositary and the Trustee of the Reset Rate determined in the remarketing in accordance with clause (i) of the definition of Reset Rate, and shall use the proceeds from the successful remarketing attributable to the Pledged Notes to purchase the appropriate U.S. Treasury securities (the "Treasury Consideration") with the CUSIP 39 numbers, if any, selected by the Remarketing Agent, described in clauses (1) and (2) of the definition of Remarketing Value. On the date of settlement of the successful remarketing, which shall be the third Business Day following the Initial Remarketing Date or any Subsequent Remarketing Date, as the case may be, the Remarketing Agent shall deliver such Treasury Consideration to the Agent, which shall thereupon deliver such Treasury Consideration to the Collateral Agent. Upon receipt of such Treasury Consideration from the Agent, the Collateral Agent, for the benefit of the Company, will thereupon apply such Treasury Consideration, in accordance with the Pledge Agreement, to secure such Equity Security Units Holders' obligations under the Purchase Contracts and to fund the quarterly payment due to Equity Security Units Holders on the Stock Purchase Date in an amount equal to the quarterly interest payment on the Notes, calculated at the initial annual interest rate. On the third Business Day following such Initial Remarketing Date or Subsequent Remarketing Date, as the case may be, the Remarketing Agent also shall: (i) deduct and retain for itself as a remarketing fee an amount not exceeding 25 basis points (0.25%) of the total proceeds from the remarketing (the "Remarketing Fee"); (ii) remit the remaining portion of the proceeds from the successful remarketing attributable to the Separate Notes to the Custodial Agent for payment to the holders of Separate Notes that were remarketed; and (iii) remit the remaining portion, if any, of the proceeds to the Agent for payment to the Holders of the Equity Security Units. Holders whose Notes are so remarketed will not otherwise be responsible for the payment of any Remarketing Fee in connection therewith. (f) Upon the occurrence of a Failed Remarketing, the Remarketing Agent shall notify by telephone the Company, the Agent, the Collateral Agent, the Custodial Agent and the Trustee that a Failed Remarketing has occurred, whereupon the Company shall notify the Depositary, by telephone, that a Failed Remarketing has occurred. The Company also shall cause a notice of the Failed Remarketing to be published not later than the fourth Business Day following the last day of such Remarketing Period by means of Bloomberg and Reuters newswires and a daily newspaper in the English language of general circulation in The City of New York, which is expected to be The Wall Street Journal. The Remarketing Agent also shall, within three Business Days following the last day of such Remarketing Period, return the Pledged Notes that were to be remarketed to the Collateral Agent and the Separate Notes that were to be remarketed to the Custodial Agent for redelivery to such holders of such Separate Notes. (g) Upon the occurrence of the Last Failed Remarketing, the Remarketing Agent shall notify by telephone the Company, the Agent, the Collateral Agent, the Custodial Agent and the Trustee that the Last Failed Remarketing has occurred, whereupon the Company shall notify the Depositary that the Last Failed Remarketing has occurred. The Company also shall cause a notice of the Last Failed Remarketing to be published not later than the fourth Business Day following the fifth Business Day immediately preceding the Stock Purchase Date by means of Bloomberg and Reuters newswires and a daily newspaper in the English language of general circulation in the City of New York, which is expected to be The Wall Street Journal. The Remarketing Agent also 40 shall, within three Business Days following the fifth Business Day immediately preceding the Stock Purchase Date, return the Pledged Notes to the Collateral Agent and the Separate Notes that were to be remarketed to the Custodial Agent for redelivery to such holders of such Separate Notes. The Collateral Agent, for the benefit of the Company, may exercise its rights as a secured party with respect to the Pledged Notes, including those actions specified in Section 5.4(h) below, and the Holders of Equity Security Units, by their acceptance of the Equity Security Units shall be deemed to have agreed to such exercise by the Collateral Agent in such case; provided, that if upon the Last Failed Remarketing, the Collateral Agent delivers any Notes to the Company in full satisfaction of the Holder's obligation under the related Purchase Contracts, any accrued and unpaid interest on such Notes will become payable by the Company to the Agent for payment to the Holder of the Equity Security Units to which such Notes relate. Such payment will be made by the Company not later than 11:00 a.m., New York City time, on the Stock Purchase Date in lawful money of the United States by certified or cashier's check or wire transfer in immediately available funds payable to or upon the order of the Agent. (h) Upon the occurrence of the Last Failed Remarketing, pursuant to the written direction of the Company, 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 Section 5.4(k) below, will sell or deliver the Pledged Notes in accordance with the Company's written direction to satisfy in full, from any such sale or delivery, such Holders' obligations under the related Purchase Contracts to pay the Purchase Price for the Common Stock and the Holders of the Equity Security Units, by their acceptance of the Equity Security Units shall be deemed to have agreed to such action by the Collateral Agent. (i) Upon the maturity of the Pledged Treasury Consideration (as defined in clause (2) of the definition of Remarketing Value) or Pledged Applicable Ownership Interests (as defined in clause (A) of the definition of Applicable Ownership Interest) in the Treasury Portfolio, as the case may be, underlying the Equity Security Units, and the Pledged Treasury Securities underlying the Stripped Units on the Stock Purchase Date, the Collateral Agent shall remit to the Company an amount equal to the aggregate Purchase Price applicable to such Equity Security Units and Stripped Units, as payment for the Common Stock issuable upon settlement thereof without receiving any instructions from the Holders of such Equity Security Units and Stripped Units. In the event the payments in respect of the Pledged Treasury Consideration or Pledged Applicable Ownership Interest in the Treasury Portfolio underlying an Equity Security Unit or Pledged Treasury Securities underlying Stripped Units are in excess of the Purchase Price under the Purchase Contract(s) being settled thereby, the Collateral Agent will distribute such excess to the Agent for the benefit of the Holders of such Equity Security Units or Stripped Units when received. (j) Any distribution to Holders of excess funds and interest described in Section 5.4(e), (g) and (i) 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 or the holder of Separate Notes, as applicable, by check mailed to the address of the Person entitled thereto at such address as it appears on the relevant Register or by wire transfer to an account specified by the Holder or the holder of Separate Notes, as applicable. 41 (k) The obligations of each Holder to pay the Purchase Price are non-recourse obligations and except to the extent paid by Cash Settlement, Early Settlement or Merger Early Settlement, are payable solely out of the proceeds of any Collateral pledged to secure the obligations of the Holder, and in no event will any Holder be liable for any deficiency between such proceeds and the Purchase Price. (l) Notwithstanding anything to the contrary contained herein, the Company shall not be obligated to issue any Common Stock in respect of a Purchase Contract or deliver any certificates therefor to the Holder of the related Equity Security Units or Stripped Units, as the case may be, unless the Company shall have received payment in full for the shares of Common Stock to be purchased thereunder by such Holder in the manner herein set forth, which payment, in the case of Equity Security Units upon the occurrence of the Last Failed Remarketing, shall occur by the resale or retention and cancellation of such Pledged Notes. Section 5.5 Issuance of Shares of Common Stock. Unless a Termination Event shall have occurred on or prior to the Stock Purchase Date or Early Settlement or Merger Early Settlement shall have been effected with respect to all of the outstanding Equity Security Units and Stripped Units, on the Stock Purchase Date, upon its receipt of payment for the shares of Common Stock purchased by the Holders pursuant to the provisions of this Article and subject to Section 5.4, including payment in the case of Equity Security Units upon the occurrence of the Last Failed Remarketing by the resale or retention and cancellation of such Pledged Notes, the Company shall issue and deposit with the Agent, for the benefit of the Holders of the Outstanding Units, one or more certificates or book-entry interests 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 or book-entry interests for shares of Common Stock, together with any dividends or distributions for which a record date and payment date for such dividend or distribution has occurred after the Stock Purchase 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 the Stock Purchase 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 or book-entry interest representing that number of whole shares of Common Stock which such Holder is entitled to receive pursuant to the provisions of this Article V (after taking into account all Equity Security Units and Stripped Units then held by such Holder) together with cash in lieu of fractional shares as provided in Section 5.12 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 cancelled. 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 such Certificate or has established to the satisfaction of the Company that such tax either has been paid or is not payable. 42 Section 5.6 Adjustment of Settlement Rate. (a) Adjustments for Dividends, Distributions, Stock Splits, Etc. (1) Stock Dividends. In case the Company shall pay or make a dividend or other distribution on the Common Stock in Common Stock, the Settlement Rate and Early Settlement Rate 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 or Early Settlement Rate, as applicable, 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 increases to become effective immediately after the opening of business on the day following the date fixed for such determination. If any dividend or distribution of the type described in this Section 5.6(a)(1) is declared but not so paid or made, the Settlement Rate and Early Settlement Rate shall be readjusted to the Settlement Rate and Early Settlement Rate which would then be in effect if such dividend or distribution had not been declared. For the purposes of this Section 5.6(a)(1), the number of shares of Common Stock at the 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) Stock Purchase Rights. In case the Company shall issue rights, options or warrants to all holders of its Common Stock (not being available on an equivalent basis to Holders of the Equity Security Units and Stripped Units upon settlement of the Purchase Contracts underlying such Equity Security Units and Stripped Units) entitling them 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, share purchase or similar plan), the Settlement Rate and Early Settlement Rate in effect at the opening of business on the day following the date fixed for the determination of stockholders entitled to receive such rights, options or warrants shall be increased by dividing such Settlement Rate or Early Settlement Rate, as applicable, 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 increases to become effective immediately after the opening of business on the day following the date fixed for such determination. To the extent that shares of Common Stock are not delivered pursuant to such rights, options or warrants, upon the expiration or termination of such rights, options or warrants, the Settlement Rate and Early Settlement Rate shall be readjusted to be the Settlement Rate and Early Settlement Rate which would then be in effect had the adjustments made upon the issuance of such rights, options and warrants been made on the basis of delivery of only the number of shares of Common Stock actually delivered. For the purposes of this Section 5.6(a)(2), the number of shares of Common 43 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) Stock Splits; Reverse Splits. In case outstanding shares of Common Stock shall be subdivided or split into a greater number of shares of Common Stock, the Settlement Rate and Early 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 be combined into a smaller number of shares of Common Stock, the Settlement Rate or Early Settlement Rate, as applicable, in effect at the opening of business on the day following the day upon which such combination becomes effective shall be proportionately reduced, such increases or reductions, 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) Debt or Asset Distributions. (i) 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 Section 5.6(a)(2), any dividend or distribution paid exclusively in cash and any dividend, shares of capital stock of any class or series, or similar equity interests, of or relating to a subsidiary or other business unit in the case of a Spin-Off referred to in the next paragraph, or distribution referred to in Section 5.6(a)(1), the Settlement Rate and Early Settlement Rate in effect at the opening of business on the day following the date fixed for the determination of stockholders entitled to receive such distribution shall be adjusted by dividing such Settlement Rate or Early Settlement Rate, as applicable, by a fraction, of which the numerator shall be the Current Market Price per share of the Common Stock on the day following 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) 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 adjustments to become effective immediately after the opening of business on the day following the date fixed for such determination of stockholders entitled to receive such distribution. In any case in which this Section 5.6(a)(4) is applicable, Section 5.6(a)(2) of this Section shall not be applicable. (ii) In the case of a Spin-Off, the Settlement Rate and Early Settlement Rate in effect immediately before the close of business on the record date fixed for determination of stockholders entitled to receive that distribution will be increased by multiplying the Settlement Rate or Early Settlement Rate, as applicable, by a fraction, of which the numerator is the Current Market Price per share of the Common Stock plus the Fair Market Value of the portion of those shares of Capital Stock or similar equity interests so distributed applicable to one share of Common Stock and the denominator is the Current Market Price per share of the Common Stock. Any adjustment to the Settlement Rate and Early Settlement Rate under this Section 5.6(a)(4)(ii) will occur at the earlier of (1) the tenth Trading Day from, and including, the effective date of the Spin-Off and (2) the date of the securities being offered in the Initial Public Offering of the Spin-Off, if that Initial Public Offering is effected simultaneously with the Spin-Off. 44 (5) Cash Distributions. 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 Section 5.6(a)(4) 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 Section 5.6(a)(5) or Section 5.6(a)(6) has been made and (iii) the aggregate of any cash plus the fair market value as of the date of the expiration of the tender or exchange offer referred to below (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 Section 5.6(a)(5) or Section 5.6(a)(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 stockholders 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 and Early Settlement Rate in effect at the opening of business on the day following the date fixed for determination of the stockholders entitled to receive such distribution shall be increased by dividing such Settlement Rate or Early Settlement Rate, as applicable, by a fraction, of which (A) the numerator 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 (B) the denominator shall be equal to the Current Market Price per share of the Common Stock on such date for determination. (6) Tender Offers. 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 Section 5.6(a)(5) or this Section 5.6(a)(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 Section 5.6(a)(5) or this Section 5.6(a)(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) at the Expiration Time, then, and in each such case, 45 the Settlement Rate and Early Settlement Rate in effect at the opening of business on the day following the date of the Expiration Time shall be adjusted by dividing such Settlement Rate or Early Settlement Rate, as applicable, by a fraction, of which (A) the numerator shall be equal to (x) 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) at the Expiration Time less (y) 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 (B) the denominator shall be equal to the product of (x) the Current Market Price per share of the Common Stock as of the Expiration Time and (y) 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) Reclassification. 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 (i) 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 (ii) 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) "Current Market Price". The "Current Market Price" of the Common Stock means: (a) on any day the average of the Sales Prices for the five consecutive Trading Days preceding the earlier of the day preceding the day in question and the day before the "ex date" with respect to the issuance or distribution requiring computation; (b) in the case of any Spin-Off that is effected simultaneously with an Initial Public Offering of the securities being distributed in the Spin-Off, the Sale Price of the Common Stock on the Trading Day on which the Initial Public Offering price of the securities being distributed in the Spin-Off is determined; and (c) in the case of any other Spin-Off, the average of the Sale Prices of the Common Stock over the first ten Trading Days after the effective date of such Spin-Off. 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 the relevant exchange or in the relevant market without the right to receive such issuance or distribution. 46 (9) Calculation of Adjustments. All adjustments to the Settlement Rate or Early Settlement Rate, as applicable, 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 or Early Settlement Rate, as applicable, shall be required unless such adjustment would require an increase or decrease of at least one percent therein; provided, 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 or Early Settlement Rate, as applicable, 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 (i), (ii) or (iii) of the definition of Settlement Rate or Early Settlement Rate, as applicable, in Section 5.1(a) will apply on the Stock Purchase Date. Such adjustment shall be made by multiplying the Applicable Market Value by a fraction, the numerator of which shall be the Settlement Rate or Early Settlement Rate, as applicable, 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 of which shall be the Settlement Rate or Early Settlement Rate, as applicable, immediately before such adjustment; provided, that if such adjustment to the Settlement Rate or Early Settlement Rate, as applicable, 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 or Early Settlement Rate, as applicable. (10) Increase of Settlement Rate. The Company may make such increases in the Settlement Rate or Early Settlement Rate, as applicable, in addition to those required by this Section, as it considers to be advisable in order to avoid or diminish 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: (1) 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), (2) any sale, transfer, lease or conveyance to another Person of the property of the Company as an entirety or substantially as an entirety, (3) any statutory exchange of securities of the Company with another Person (other than in connection with a merger or acquisition), or (4) 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"), 47 each share of Common Stock covered by each Purchase Contract forming a part of an Equity Security Unit or Stripped Unit, as the case may be, immediately prior to such Reorganization Event shall, after such Reorganization Event, be converted for purposes of the Purchase Contract into the kind and amount of securities, cash and other property receivable in such Reorganization Event (without any interest thereon, and without any right to dividends or distributions thereon which have a record date that is prior to the Stock Purchase Date) per share of Common Stock by a holder of Common Stock that (i) 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 (ii) failed to exercise his 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). On the Stock Purchase Date, the Settlement Rate then in effect will be applied to the value on the Stock Purchase Date of such securities, cash or other property. 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 Holder of each Outstanding Unit 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 and the Early Settlement Rate are adjusted as herein provided, the Company shall: (i) forthwith compute the Settlement Rate, the Early Settlement Rate and the Applicable Market Value in accordance with Section 5.6 and prepare and transmit to the Agent an Officer's Certificate setting forth the Settlement Rate, the Early Settlement Rate and the Applicable Market Value, the method of calculation thereof in reasonable detail, and the facts requiring such adjustment and upon which such adjustment is based; and (ii) within ten Business Days following an adjustment to the Settlement Rate and the Early Settlement Rate, pursuant to Section 5.6, provide a written notice to the Holders of the Equity Security Units and Stripped Units of the adjustment and a statement in reasonable detail setting forth the method by which the adjustment to the Settlement 48 Rate, the Early Settlement Rate and the Applicable Market Value was determined and setting forth the adjusted Settlement Rate, the Early Settlement Rate and the Applicable Market Value. (b) The Agent shall not at any time be under any duty or responsibility to any Holder of Equity Security Units and Stripped Units to determine whether any facts exist which may require any adjustment of the Settlement Rate, the Early Settlement Rate and the Applicable Market Value, 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 any 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 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 Stock Purchase Date, a Termination Event shall have occurred. Upon and after the occurrence of a Termination Event, the Equity Security Units shall thereafter represent the right to receive the Notes, the Treasury Consideration or the Applicable Ownership Interests in the Treasury Portfolio, as the case may be, forming a part of such Equity Security Units, and the Stripped Units shall thereafter represent the right to receive the Treasury Securities forming a part of such Stripped Units, in each case 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 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) Subject to and upon compliance with the provisions of this Section 5.9, a Holder may settle Purchase Contracts underlying Equity Security Units or Stripped Units early ("Early Settlement") at any time from and after the date of this Agreement (i) other than during the period that commences at 5:00 p.m., New York City time, on May 5, 2005 and ends at 9:00 a.m., New York City time, on May 19, 2005 and during the period that commences at 5:00 p.m., New York City time, on June 22, 2005 and ends at 9:00 a.m., New York City time, on July 6, 2005 and (ii) not later than 11:00 a.m., New York City time, on the eleventh Business Day immediately preceding the Stock Purchase Date. In order to exercise the right to effect Early Settlement with respect to any Purchase Contracts, the Holder must deliver to the Agent at the Corporate Trust Office: (1) the form of "Election to Settle Early" set forth in Exhibit F hereto properly completed and executed (or if such Holder's Equity Security Units or Stripped Units are held in certificated form, the Certificate(s) evidencing the related Equity Security Units or 49 Stripped Units, as the case may be, 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 (2) payment payable to the Company in immediately available funds in an amount (the "Early Settlement Amount") equal to: (A) the product of (i) the Stated Amount of such Equity Security Units or Stripped Units, as the case may be, multiplied by (ii) the number of Purchase Contracts with respect to which the Holder has elected to effect Early Settlement, plus (B) 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, if any, payable on such Payment Date with respect to such Purchase Contracts; provided that no payment shall be required pursuant to clause (B) of this sentence if the Company shall have elected to defer the Contract Adjustment Payments that would otherwise be payable on such Payment Date; and provided, further, that, at that time, if so required by the United States federal securities laws, a registration statement is in effect and a prospectus is available covering the shares of Common Stock to be delivered in respect of the Purchase Contracts being settled. Except as provided in the immediately preceding sentence and subject to Section 5.2(d), no payment or adjustment shall be made upon Early Settlement of any Purchase Contract on any Contract Adjustment Payments accumulated on such Purchase Contract or on account of any dividends on the Common Stock issued upon such Early Settlement. If the foregoing requirements are first satisfied with respect to Purchase Contracts underlying any Equity Security Units or Stripped Units, as the case may be, not later than 5:00 p.m., New York City time, on a Business Day, such day shall be the "Early Settlement Date" with respect to such Equity Security Units or Stripped Units, as the case may be, and if such requirements are first satisfied after 5:00 p.m., New York City time, on a Business Day or on a day that is not a Business Day, the "Early Settlement Date" with respect to such Equity Security Units or Stripped Units, as the case may be, shall be the next succeeding Business Day. (b) Holders of Equity Security Units that include Notes and Stripped Units may effect Early Settlement only in units of 20 and integral multiples of 20. If a successful remarketing or a Tax Event Redemption has occurred, Holders of Equity Security Units may effect Early Settlement pursuant to this Section 5.9 only in units of 400,000 and integral multiples of 400,000. (c) Upon Early Settlement of any Purchase Contract by the Holder of the related Equity Security Units or Stripped Units, as the case may be, the Company shall issue, and the Holder shall be entitled to receive, 2.0886 shares of Common Stock for each Equity Security Unit or Stripped Unit on account of such Purchase Contract (the "Early Settlement Rate"). 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 or book-entry interest for the full number of 50 shares of Common Stock issuable upon such Early Settlement together with payment in lieu of any fraction of a share, as provided in Section 5.12. (d) 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 Pledged Notes, Pledged Treasury Consideration or Pledged Applicable Ownership Interests in the Treasury Portfolio, in the case of Equity Security Units, or the related Pledged Treasury Securities, in the case of Stripped Units, 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 the Holder's designee. (e) Upon Early Settlement of any Purchase Contracts, and subject to receipt of shares of Common Stock from the Company and the Pledged Notes, Pledged Treasury Consideration, Pledged Applicable Ownership Interests in the Treasury Portfolio or Pledged 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" (i) transfer to the Holder the Pledged Notes, Pledged Treasury Consideration, Pledged Applicable Ownership Interests in the Treasury Portfolio or Pledged Treasury Securities, as the case may be, forming a part of such Equity Security Units or Stripped Units, as the case may be, and (ii) deliver to the Holder a certificate or certificates or book-entry interest 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 5.12. (f) In the event that Early Settlement is effected with respect to Purchase Contracts underlying less than all the Equity Security Units or Stripped Units, as the case may be, evidenced by a Certificate, upon such Early Settlement the Company shall execute and the Agent shall authenticate, execute on behalf of the Holder thereof and deliver to the Holder thereof, at the expense of the Company, a Certificate evidencing the Equity Security Units or Stripped Units, as the case may be, as to which Early Settlement was not effected. (g) Upon Early Settlement of any Purchase Contracts, Contract Adjustment Payments that would otherwise be payable after the Early Settlement Date with respect to such Purchase Contracts shall not be payable. Section 5.10 Early Settlement Upon Merger. (a) In the event of a merger or consolidation of the Company of the type described in clause (1) of Section 5.6(b) in which the Common Stock outstanding immediately prior to such merger or consolidation is exchanged for consideration consisting of at least 30% cash or cash equivalents (any such event a "Cash Merger"), then the Holder of each Equity Security Unit or Stripped Unit, as the case may be, will have the right to settle the Purchase Contract underlying such Equity Security Units or Stripped Units, as the case may be, prior to the Stock Purchase Date ("Merger Early Settlement") as provided herein; provided, however, that, at that time, if so required under the United States federal securities laws, a registration statement is in effect and a prospectus is available covering the shares of Common Stock to be delivered in respect of the Purchase Contracts being settled. On or before the fifth Business Day after the completion of a Cash Merger, the Company or, at the request and expense of the Company, the Agent, shall give 51 all Holders notice of the occurrence of the Cash Merger and of the right of Merger Early Settlement arising as a result thereof. The Company shall also deliver a copy of such notice to the Agent and the Collateral Agent. Each such notice shall contain: (i) the date, which shall be not less than 20 nor more than 30 calendar days after the date of such notice, on which the Merger Early Settlement will be effected (the "Merger Early Settlement Date"); (ii) the date, which shall be one Business Day immediately preceding the Merger Early Settlement Date, by which the Merger Early Settlement right must be exercised; (iii) the Settlement Rate in effect as a result of such Cash Merger and the kind and amount of securities, cash and other property receivable by the Holder upon settlement of each Purchase Contract pursuant to Section 5.6(b); (iv) a statement to the effect that all or a portion of the Purchase Price payable by the Holder to settle the Purchase Contract will be offset against the amount of cash so receivable upon exercise of Merger Early Settlement, as applicable; and (v) the instructions a Holder must follow to exercise the Merger Early Settlement right. (b) To exercise a Merger Early Settlement right, a Holder shall deliver to the Agent at the Corporate Trust Office not later than 5:00 p.m., New York City time, on the date specified in the notice: (1) the form of "Election to Settle Early" set forth in Exhibit F hereto properly completed and executed (or if such Holder's Equity Security Units or Stripped Units, as the case may be, are held in certificated form, the Certificate(s) evidencing the related Equity Security Units or Stripped Units, as the case may be, with respect to which the Merger Early Settlement right is being exercised 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 (2) payment payable to the Company in immediately available funds in an amount equal to the Early Settlement Amount; provided, that, to the extent that the merger consideration consists of cash or cash equivalents, the Company may provide (and so specify in the notice pursuant to Section 5.10(a)) that the Purchase Price payable per Purchase Contract will be offset against the amount of cash and cash equivalents that will be receivable by such Holder upon settlement of the Purchase Contracts as described in the notice to Holders in accordance with Section 5.10(a) (the Early Settlement Amount less the cash offset, if any, the "Merger Early Settlement Amount"). (c) Holders of Equity Security Units that include Notes and Stripped Units may effect Merger Early Settlement only in units of 20 and multiples of 20. If a successful remarketing or a 52 Tax Event Redemption has occurred, Holders of Equity Security Units may effect Merger Early Settlement pursuant to this Section 5.10 only in units of 400,000 and integral multiples of 400,000. (d) On the Merger Early Settlement Date, the Company shall deliver or cause to be delivered (i) the net cash, securities and other property to be received by such exercising Holder, equal to the Settlement Rate as adjusted pursuant to Section 5.6, in respect of the number of Purchase Contracts for which such Merger Early Settlement right was exercised, and (ii) the related Pledged Notes, Pledged Treasury Consideration or Pledged Applicable Ownership Interests in the Treasury Portfolio, in the case of Equity Security Units, or Pledged Treasury Securities, in the case of Stripped Units, 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. (e) Upon Merger Early Settlement of any Purchase Contracts, and subject to receipt of such net cash, securities or other property from the Company and the Pledged Notes, Pledged Treasury Consideration, Pledged Applicable Ownership Interests in the Treasury Portfolio or Pledged 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 Equity Security Units or Stripped Units, as the case may be, (i) transfer to the Holder the Pledged Notes, Pledged Treasury Consideration, Pledged Applicable Ownership Interests in the Treasury Portfolio or Pledged Treasury Securities, as the case may be, forming a part of such Equity Security Units or Stripped Units, as the case may be, and (ii) deliver to the Holder such net cash, securities or other property issuable upon such Merger Early Settlement together with payment in lieu of any fraction of a share, as provided in Section 5.12. (f) In the event that Merger Early Settlement is effected with respect to Purchase Contracts underlying less than all the Equity Security Units or Stripped Units, as the case may be, evidenced by a Certificate, upon such Merger Early Settlement the Company (or the successor to the Company hereunder) shall execute and the Agent shall authenticate, execute on behalf of the Holder thereof and deliver to the Holder thereof, at the expense of the Company, a Certificate evidencing the Equity Security Units or Stripped Units, as the case may be, as to which Merger Early Settlement was not effected. (g) Upon Merger Early Settlement of any Purchase Contracts, Contract Adjustment Payments that would otherwise be payable after the Merger Early Settlement Date with respect to such Purchase Contracts shall not be payable. 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; provided, 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 Equity Security Units or Stripped Units 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 Equity Security Units and Stripped Units 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 book-entry interest in Common Stock 53 or Certificates unless and 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. Section 5.12 No Fractional Shares. No fractional shares or scrip representing fractional shares of Common Stock shall be issued or delivered upon settlement on the Stock Purchase Date or upon Early Settlement or Merger 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 the Stock Purchase Date or upon Early Settlement or Merger Early Settlement, the Company, through the Agent, shall make a cash payment in respect of such fractional share in an amount equal to the value of such fractional share times the Closing Price on the date of such settlement. 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 5.12 in a timely manner. Section 5.13 Tax Treatment. The Company covenants and agrees and each Holder, by purchasing an Equity Security Unit, agrees to: (i) treat a Holder's acquisition of an Equity Security Unit as the acquisition of the Note and Purchase Contract constituting the Equity Security Unit; (ii) treat a Holder's ownership of Stripped Units as the ownership of the Treasury Securities and Purchase Contracts constituting the Stripped Units; (iii) treat each Holder as the owner of the applicable interest in the Collateral Account, including the Note, Treasury Consideration, Applicable Ownership Interest in the Treasury Portfolio or Treasury Securities, as the case may be; and (iv) allocate the purchase price of each Equity Security Unit between the Note and Purchase Contract as $50 and $0, respectively. Section 5.14 ERISA. Each Holder, by purchasing an Equity Security Unit or Stripped Unit, represents and warrants on each day from and including the date of its acquisition of the Equity Security Unit or Stripped Unit through and including the date of the satisfaction of the obligations under the Purchase Contract and/or the disposition of such Equity Security Unit or Stripped Unit that either (i) no portion of the assets used by such Holder to acquire the Equity Security Unit or Stripped Unit constitutes the assets of any Plan or (ii) the acquisition, holding and disposition of the Equity Security Unit or Stripped Unit by such Holder does not and will not constitute a non-exempt 54 prohibited transaction under ERISA or Section 4975 of the Code or a violation of any Similar Laws. ARTICLE VI. REMEDIES Section 6.1 Unconditional Right of Holders to Purchase Common Stock. (a) The Holder of any Equity Security Units or Stripped Units, as the case may be, 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, and to the forfeiture of any Deferred Contract Adjustment Payments upon Early Settlement pursuant to Section 5.9(a), upon Merger Early Settlement pursuant to Section 5.10 or upon the occurrence of a Termination Event, to receive payment of each installment of the Contract Adjustment Payments, if any, with respect to the Purchase Contracts constituting a part of such Equity Security Units or Stripped Units, as the case may be, on the respective Payment Dates for such Equity Security Units or Stripped Units, as the case may be, and (b) Subject to Sections 5.6 and 5.8, the Holder of any Equity Security Units or Stripped Units, as the case may be, shall have the right, which is absolute and unconditional, to purchase Common Stock pursuant to the Purchase Contract constituting a part of such Equity Security Units or Stripped Units and to institute suit for the enforcement of any such right to purchase Common Stock, and such right 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 Section 3.10(f), 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 55 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 Equity Security Units or Stripped Units, as the case may be, by its acceptance of such Equity Security Units or Stripped Units, as the case may be, 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 and expenses, 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 Units, or to any suit instituted by any Holder for the enforcement of distributions on any Notes or any Purchase Contract on or after the respective Payment Date therefor in respect of any Equity Security Units or Stripped Units, as the case may be, held by such Holder, or for enforcement of the right to purchase shares of Common Stock under the Purchase Contract constituting part of any Equity Security Units or Stripped Units, as the case may be, 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 in 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, but will suffer and permit the execution of every power of the Agent and the Holders as though no such law had been enacted. ARTICLE VII. THE AGENT Section 7.1 Certain Duties, Rights and Immunities. (a) The Agent shall act as agent and attorney-in-fact for the Holders of the Equity Security Units and Stripped Units hereunder with such powers as are specifically vested in the Agent by the terms of this Agreement, the Pledge Agreement, the Remarketing Agreement, the Notes, the Equity Security Units and Stripped Units, and any documents evidencing them or related thereto (the "Transaction Documents"), together with such other powers as are reasonably incidental thereto. The Agent: (1) shall have no duties or responsibilities except those expressly set forth in the Transaction Documents and no implied covenants or obligations shall be inferred from any Transaction Documents against the Agent, nor shall the Agent be bound by the provisions of any agreement by any party hereto beyond the specific terms hereof; 56 (2) shall be entitled to conclusively rely upon (x) any certificate, order, judgment, opinion, notice or other communication (including, without limitation, any thereof by telephone or facsimile) reasonably 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), (y) the truth of the statements and the correctness of the opinions expressed therein and (z) advice and statements of legal counsel and other experts selected by the Agent; (3) shall in all cases be fully protected in acting, or in refraining from acting, hereunder or under any Transaction Documents in accordance with instructions given by the Company or the Holders in accordance herewith or with the Transaction Documents; (4) shall not be responsible for any recitals contained in any Transaction Document, or in any certificate or other document referred to or provided for in, or received by it under, any Transaction Document or the Equity Security Units or Stripped Units, or for the value, validity, effectiveness, genuineness, enforceability or sufficiency of any Transaction Document (other than as against the Agent) or the Equity Security Units or Stripped Units or any other document referred to or provided for herein or therein or for any failure by the Company, any Holder or any other Person (except the Agent) to perform any of its obligations hereunder or thereunder or for the perfection, priority or, except as expressly required hereby, existence, validity, perfection or maintenance of any security interest created under the Pledge Agreement, or for the use or application by the Company of the proceeds in respect of the Purchase Contracts; (5) shall not be required to initiate or conduct any litigation or collection proceedings hereunder; (6) shall not be responsible for any action taken or omitted to be taken by it hereunder or under the Transaction Documents or any other document or instrument referred to or provided for herein or therein or in connection herewith or therewith, except for its own negligence, bad faith or willful misconduct; and (7) 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 Equity Security Units or Stripped Units or other rights under any Transaction Document. (b) No provision of any Transaction Document shall be construed to relieve the Agent from liability for its own negligent action, its own negligent failure to act, its own bad faith, or its own willful misconduct, except that: (1) this paragraph (b) shall not be construed to limit the effect of paragraph (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 grossly negligent in ascertaining the pertinent facts; and (3) in no event shall the Agent be required to expend or risk its own funds or otherwise incur any financial liability in the performance of any of its duties hereunder. 57 (c) In no event shall the Agent or its officers, employees or agents be liable for any special, indirect, individual, punitive or consequential loss or damages, lost profits or loss of business, arising in connection with any Transaction Document, whether or not the likelihood of such loss or damage was known to the Agent, and regardless of the form of action. (d) Whether or not therein expressly so provided, every provision of every Transaction Document relating to the conduct or affecting the liability of or affording protection to the Agent shall be subject to the provisions of this Section. (e) The Agent is authorized to execute and deliver the Pledge Agreement and the Remarketing Agreement and any supplement thereto in its capacity as Agent. 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, omitted to be taken or suffered by the Agent pursuant to the Pledge Agreement or the Remarketing Agreement. (f) The Agent shall have no liability whatsoever for the action or inaction of any Clearing Agency or any book-entry system thereof. In no event shall any Clearing Agency or any book-entry system thereof be deemed an agent or subcustodian of the Agent. (g) The Agent shall not be responsible or liable for any failure or delay in the performance of its obligations under any Transaction Document arising out of or caused, directly or indirectly, by circumstances beyond its reasonable control, including, without limitation, acts of God; acts of terrorism; earthquakes; fires; floods; wars; civil or military disturbances; sabotage; epidemics; riots; interruptions, loss or malfunctions of utilities, computer (hardware or software) or communications service; accidents; labor disputes; acts of civil or military authority; governmental actions; or inability to obtain labor, material, equipment or transportation. Section 7.2 Notice of Default. Within 30 days after the occurrence of any default by the Company of its obligations hereunder or under one or more Purchase Contracts of which a Responsible Officer of the Agent has actual knowledge, the Agent shall transmit by mail to the Company and the Holders of Equity Security Units and Stripped Units, as their names and addresses appear in the Register, notice of such default hereunder, unless such default shall have been cured or waived. Section 7.3 Certain Rights of Agent. Subject to the provisions of Section 7.1: (a) the Agent may conclusively rely and shall be fully 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 an Officer's 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; 58 (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 an Officer's Certificate of the Company; (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; (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 of the Agent 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; (g) the rights, privileges, protections, immunities and benefits given to the Agent, including, but not limited to, its right to be indemnified, are extended to, and shall be enforceable by, the Agent in each of its capacities hereunder, and to each custodian and other person employed to act hereunder; (h) the Agent shall not be charged with knowledge of any default by the Company hereunder unless a Responsible Officer of the Agent shall have received at the Corporate Trust Office of the Agent written notice of such default; and (i) the permissive right of the Agent to do things enumerated in this Agreement shall not be construed as a duty. Section 7.4 Not Responsible For Recitals, Etc. The recitals contained herein, in any other Transaction Documents 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 any other Transaction Documents. The Agent shall not be accountable for the use or application by the Company of the proceeds in respect of the Equity Security Units or Stripped Units or the Purchase Contracts and shall not be responsible for the perfection, priority or maintenance of any security interests created or intended to be created under the Pledge Agreement. 59 Section 7.5 May Hold Equity Security Units and Stripped Units and Other Dealings. 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 Equity Security Units or Stripped Units, as the case may be, 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. The Agent and its Affiliates may (without having to account therefor to the Company or any Holder of Equity Security Units or Stripped Units or holder of Separate Notes) accept deposits from, lend money to, make other investments in and generally engage in any kind of banking, trust or other business with the Company, any Holder of Equity Security Units or Stripped Units and any holder of Separate Notes (and any of their respective subsidiaries or Affiliates) as if it were not acting as the Agent and the Agent and its Affiliates may accept fees and other consideration from the Company, any Holder of Equity Security Units or Stripped Units or any holder of Separate Notes without having to account for the same to any such Person. Section 7.6 Money Held In Custody. Money held by the Agent in custody hereunder need not be segregated from the Agent's 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 to: (a) pay to the Agent from time to time compensation for all services rendered by it hereunder or under the Transaction Documents as shall be agreed in writing between the Company and the Agent; (b) 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 or the other Transaction Documents (including the reasonable compensation and the reasonable expenses and disbursements of its agents and counsel), except any such expense, disbursement or advance as may be attributable to its gross negligence, willful misconduct or bad faith; and (c) indemnify the Agent for, and to hold it harmless against, any loss, liability or reasonable out-of-pocket expense incurred without gross negligence, willful misconduct or bad faith on its part, arising out of or in connection with the acceptance or administration of its duties under the other Transaction Documents, including the costs and expenses (including reasonable fees and expenses of counsel) of defending itself against any claim, whether asserted by the Company, a Holder or any other Person, or liability in connection with the exercise or performance of any of its powers or duties under the Transaction Documents. The Agent shall promptly notify the Company of any third party claim which may give rise to the 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, provided that any failure to give any such notice shall not affect the obligation of the Company under this Section. The 60 provisions of this Section 7.7 shall survive the termination of any and all Transaction Documents, the satisfaction or discharge of the Equity Security Units or Stripped Units and/ or the Separate Notes or the resignation or removal of the Agent. Section 7.8 Corporate Agent Required; Eligibility. There shall at all times be an Agent hereunder which shall be 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, subject to supervision or examination by federal or state authority and having (or being a member of a bank holding company having) a Corporate Trust Office in the Borough of Manhattan, the City of New York, if there be such a corporation, qualified and eligible under this Article and willing to act on reasonable terms. 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, at the expense of the Company, 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 Units upon delivery of a written notice to the Agent and the Company. 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 removal, the Agent to be removed may petition, at the expense of the Company, any court of competent jurisdiction for the appointment of a successor Agent. (d) If at any time: (1) the Agent has a "conflicting interest" (as defined in Section 310(b) of the TIA) and fails to eliminate the conflicting interest or resign pursuant to Section 310(b) of the TIA upon written request therefor by the Company or by any Holder who has been a bona fide Holder of an Equity Security Unit or a Stripped Unit for at least six months, as if this Agreement were an indenture qualified under the TIA; or 61 (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, (x) the Company by a Board Resolution may remove the Agent, or (y) any Holder who has been a bona fide Holder of Equity Security Units or Stripped Equity Units 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, any Holder who has been a bona fide Holder of Equity Security Units or Stripped Equity Units 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. 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, trusts 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, agencies, trusts and duties of the retiring Agent and 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, agencies, trusts and duties 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. 62 Section 7.11 Merger, Conversion, Consolidation or Succession to Business. Any corporation into which the Agent may be merged or converted or with which it may be consolidated, or any corporation resulting from any merger, conversion or consolidation to which the Agent shall be a party, or any corporation succeeding to all or substantially all the corporate trust business of the Agent, shall be the successor of the Agent hereunder, provided such corporation 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 shall 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 Equity Security Units and Stripped Units. 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 Equity Security Units or Stripped Units, as the case may be, 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 Equity Security Units or Stripped Units, as the case may be, 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, in the absence of bad faith, satisfactory to the Agent for the payment, of the reasonable expenses of such mailing. Section 7.13 Failure to Act. In the event of any ambiguity in the provisions of any Transaction Document or any dispute between or conflicting claims by or among the parties hereto or any other Person, the Agent shall be entitled, after prompt notice to the Company and the Holders of Equity Security Units and Stripped Units, at its sole option, to refuse to comply with any and all such claims, demands or instructions so long as such dispute or conflict shall continue, and the Agent shall not be or become liable in any way to any of the parties hereto for its failure or refusal to comply with such conflicting claims, demands or instructions. The 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, reasonably satisfactory to the Agent, or (ii) the Agent shall have received security or an indemnity reasonably satisfactory to the Agent sufficient to save the Agent harmless from and against any and all loss, liability or reasonable out-of-pocket expense which the Agent may incur by reason of its acting without bad faith, willful misconduct or gross negligence. The Agent may in addition elect to commence an interpleader action or seek other judicial relief or 63 orders as the Agent may deem necessary. Notwithstanding anything contained herein to the contrary, the Agent shall not be required to take any action that is in its opinion contrary to law or to the terms of any Transaction Document, or which would in its opinion subject it or any of its officers, employees or directors to liability. Section 7.14 No Obligations of Agent. Except to the extent otherwise provided in this Agreement, the Agent assumes no obligation 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 Equity Security Units or Stripped Units thereunder. The Company agrees, and each Holder of a Certificate, by such Holder's 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 V. Anything contained in this Agreement to the contrary notwithstanding, in no event shall the Agent or its officers, employees or agents be liable for indirect, special, punitive, or consequential loss or damage of any kind whatsoever, including, but not limited to, lost profits, whether or not the likelihood of such loss or damage was known to the Agent and regardless of the form of action. Section 7.15 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 on it as a paying agent by applicable tax laws, regulations or administrative practice with respect to any payments made with respect to the Equity Security Units and Stripped Units. 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 reasonable written direction timely received from the Company with respect to the application of such requirements to particular payments to Holders or in other particular circumstances, and may for purposes of this Agreement rely on any such direction in accordance with Section 7.1(a)(2). (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 (when authorized by a Board Resolution) 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, to: 64 (a) 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; (b) add to the covenants of the Company for the benefit of the Holders, or surrender any right or power herein conferred upon the Company; (c) evidence and provide for the acceptance of appointment hereunder by a successor Agent; (d) make provision with respect to the rights of Holders pursuant to the requirements of Section 5.6(b) or 5.10; 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. (a) With the consent of the Holders of not less than a majority of the Outstanding Units, with the Equity Security Units and Stripped Units voting together as one class, by Act of such Holders delivered to the Company and the Agent, the Company (when authorized by a Board Resolution) and the Agent may enter into one or more agreements supplemental hereto, in form satisfactory to the Company and the Agent, 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 Equity Security Units and Stripped Units; provided, however, that, no such supplemental agreement shall, without the consent of the Holder of each Equity Security Unit and Stripped Unit affected thereby (in addition to the consent of the Holders of at least a majority of the Outstanding Units, with the Equity Security Units and Stripped Units voting together as one class): (1) change any Payment Date; (2) 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, or otherwise adversely affect the Holder's rights in or to such Collateral; (3) change any place where, or the coin or currency (or, as provided in Section 5.3(c), Common Stock) in which, any amounts are payable in respect of the Equity Security Units and Stripped Units, increase any amounts payable by Holders in respect of the Equity Security Units and Stripped Units or decrease any other amounts receivable by Holders in respect of the Equity Security Units and Stripped Units; (4) reduce any Contract Adjustment Payments, if any, or any Deferred Contract Adjustment Payment, or change any place where, or the coin or currency (or, as provided in Section 5.3(c), Common Stock) in which, any Contract Adjustment Payment is payable; (5) impair the right to institute suit for the enforcement of any Purchase Contract; 65 (6) reduce the number of shares of Common Stock to be purchased pursuant to any Purchase Contract, increase the Purchase Price, change the Stock Purchase Date or otherwise materially adversely affect the Holder's rights under any Purchase Contract; or (7) reduce the percentage of the outstanding Equity Security Units and Stripped Units 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 Equity Security Units or the Stripped Units, then only the affected class of Holder as of the record date for the Holders entitled to vote thereon will be entitled to vote on such amendment or proposal; provided further, however, that no agreement, whether with or without the consent of Holders shall affect Section 3.16. (b) 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 provided 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. 66 ARTICLE IX. CONSOLIDATION, MERGER, SALE OR CONVEYANCE Section 9.1 Company May Consolidate, Etc., Only on Certain Terms. The Company shall not (a) consolidate with or merge with or into any other Person or (b) sell, lease or transfer its properties and assets as, or substantially as, an entirety to, any Person (other than one or more of the Company's direct or indirect wholly-owned subsidiaries), unless: (i) the Person formed by such consolidation or into which the Company is merged or the Person which acquires by sale, lease or transfer the properties and assets of the Company as, or substantially as, an entirety shall be a corporation, partnership, limited liability company or trust, shall be organized and validly existing under the laws of the United States of America, any State thereof or the District of Columbia and shall expressly assume every covenant of this Agreement, the Equity Security Units, the Stripped Units, the Notes, the Remarketing Agreement and the Pledge Agreement on the part of the Company to be performed or observed 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 Person; (ii) immediately after giving effect to such transaction, no default under this Agreement, the Equity Security Units, the Stripped Units, the Notes, the Remarketing Agreement or the Pledge Agreement shall have happened and be continuing; and (iii) the Company has delivered to the Agent an Officer's Certificate and an Opinion of Counsel, each stating that such consolidation, merger, conveyance, transfer or lease and such supplemental agreement(s) comply with this Section 9.1 and that all conditions precedent herein provided for relating to such transaction have been complied with. Notwithstanding anything contained herein to the contrary, a direct or indirect wholly-owned subsidiary of the Company to whom the Company has sold, leased or transferred its properties and assets as, or substantially as, an entirety shall be required to expressly assume by a supplemental agreement executed and delivered to the Agent, in form satisfactory to the Agent, all the obligations of the Company under Section 7.7. This Section 9.1 shall not apply to any merger or consolidation in which the Company is the surviving corporation. Section 9.2 Successor Substituted. (a) Upon any consolidation with, or merger of the Company into, any other Person, or any sale, lease or transfer of the properties and assets of the Company as, or substantially as, an entirety in accordance with Section 9.1, the successor Person formed by such consolidation or into which the Company is merged or to which such sale, lease or transfer is made shall succeed to, and be substituted for, and may exercise every right and power of, the Company under this Agreement with the same effect as if such successor Person had been named as the Company herein, and thereafter, except in the case of a lease, the predecessor Person shall be relieved of all obligations 67 and covenants under this Agreement, the Equity Security Units, the Stripped Units, the Notes, the Remarketing Agreement and the Pledge Agreement. (b) 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 Equity Security Units and Stripped Units thereafter to be issued as may be appropriate. ARTICLE X. COVENANTS Section 10.1 Performance Under Purchase Contracts and this Agreement. The Company covenants and agrees for the benefit of the Holders from time to time of the Equity Security Units and Stripped Units 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. In the case of Early Settlement pursuant to Section 5.9 or Merger Early Settlement pursuant to Section 5.10, if the United States federal securities laws so require, the Company will use commercially reasonable efforts to (i) have in effect a registration statement covering the shares of Common Stock to be delivered in respect of the Purchase Contracts being settled and (ii) provide a prospectus in connection therewith, in each case that may be used in connection with such Early Settlement or Merger Early Settlement. In addition, if required by applicable law, the Company will use commercially reasonable efforts to ensure that a registration statement covering the full amount of the Notes to be remarketed on the Initial Remarketing Date or any Subsequent Remarketing Date shall be effective in a form that will enable the Remarketing Agent to rely on it in connection with one or more remarketings, as necessary. Section 10.2 Maintenance of Office or Agency. (a) 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 payment of Contract Adjustment Payments, acquisition of shares of Common Stock upon settlement of the Purchase Contracts on any Settlement Date 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 recreation of Equity Security Units and where notices and demands to or upon the Company in respect of the Equity Security Units and Stripped Units 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, Office of the Agent in The City of New York, and the Company hereby appoints the Agent as its agent to receive all such presentations, surrenders, notices and demands. (b) 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, that no such designation or rescission shall in any manner relieve the Company of its obligation to maintain an office or agency in the 68 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 Equity Security Units and Stripped Units the Office of the Agent in The City of New York and appoints the Agent at the Office of the Agent in The City of New York as paying agent in such city. Section 10.3 Company to Reserve Common Stock. The Company shall at all times prior to the Stock Purchase 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 Equity Security Units and Stripped Units 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 Units will, upon issuance, be duly authorized, validly issued, fully paid and nonassessable. Section 10.5 Statements of Officer of the Company as to Default. The Company will deliver to the Agent, within 120 days after the end of each fiscal year of the Company ending after the date hereof, an Officer's Certificate, stating whether or not to the best knowledge of the signer thereof the Company is in default in the performance and observance of any of the terms, provisions and conditions hereof, and if the Company shall be in default, specifying all such defaults and the nature and status thereof of which such officer may have knowledge. [SIGNATURE PAGES FOLLOW] 69 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the day and year first above written. EL PASO CORPORATION By: /s/ John J. Hopper -------------------------------- Name: John J. Hopper Title: Vice President and Treasurer JPMORGAN CHASE BANK, as Purchase Contract Agent By: /s/ R. Lorenzen -------------------------------- Name: R. Lorenzen Title: Assistant Vice President EXHIBIT A FORM OF EQUITY SECURITY UNITS CERTIFICATE [FOR INCLUSION IN GLOBAL EQUITY SECURITY UNITS CERTIFICATES ONLY -- 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 DEPOSITORY TRUST COMPANY 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 THE DEPOSITORY TRUST COMPANY 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.] (Form of Face of Equity Security Units Certificate) No.:______________ CUSIP No.: 28336L 20 8 Number of Equity Security Units:____________ EL PASO CORPORATION EQUITY SECURITY UNITS This Equity Security Units Certificate certifies that [For inclusion in Global Equity Security Units Certificates only -- Cede & Co., as nominee for The Depository Trust Company] is the registered Holder of the number of Equity Security Units set forth above [For inclusion in Global Certificates only - or such other number of Equity Security Units reflected in the Schedule of Increases or Decreases in Global Certificate attached hereto]. Each Equity Security Unit represents (i) (a) beneficial ownership by the Holder of one Senior Note Due August 16, 2007 (the "Note") of El Paso Corporation, a Delaware corporation (the "Company"), having a principal amount of $50, subject to the Pledge of such Note by such Holder pursuant to the Pledge Agreement, or (b) if the Note has been remarketed by the Remarketing Agent, the Treasury Consideration, subject to the Pledge of such Treasury Consideration by such Holder pursuant to the Pledge Agreement, or (c) if a Tax Event Redemption has occurred, the Applicable Ownership Interest in the Treasury Portfolio subject to the Pledge of such Applicable Ownership Interest in the Treasury Portfolio 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 which are defined in the Purchase Contract Agreement have the meaning set forth therein. A-1 Pursuant to the Pledge Agreement, the Note, the Treasury Consideration or the Applicable Ownership Interest in the Treasury Portfolio, as the case may be, constituting part of each Equity Security Unit evidenced hereby has 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 part of such Equity Security Unit. The Pledge Agreement provides that all payments in respect of the Pledged Notes, Pledged Treasury Consideration or Pledged Applicable Ownership Interests in the Treasury Portfolio 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) quarterly cash distributions on Equity Security Units which include Pledged Notes, Pledged Treasury Consideration or Pledged Applicable Ownership Interests in the Treasury Portfolio and (B) any payments in respect of the Notes, Treasury Consideration or Applicable Ownership Interests 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, not later than 10:00 a.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 9:00 a.m., New York City time, on a Business Day, then such payment shall be made no later than 9:30 a.m., New York City time, on the next succeeding Business Day) and (ii) in the case of payments in respect of any Pledged Notes, Pledged Treasury Consideration or Pledged Applicable Ownership Interests in the Treasury Portfolio, as the case may be, to be paid upon settlement of such Holder's obligations to purchase Common Stock under the Purchase Contract, to the Company on the Stock Purchase 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 Equity Security Units of which such Pledged Notes, Pledged Treasury Consideration or Pledged Applicable Ownership Interests in the Treasury Portfolio, as the case may be, are a part under the Purchase Contracts forming a part of such Equity Security Units. Quarterly distributions on Equity Security Units which include Pledged Notes, Pledged Treasury Consideration or Pledged Applicable Ownership Interests in the Treasury Portfolio, as the case may be, which are payable quarterly in arrears on February 16, May 16, August 16 and November 16 each year (each, a "Payment Date"), commencing August 16, 2002, shall, subject to receipt thereof by the Agent from the Collateral Agent (if the Collateral Agent is the registered owner thereof), be paid by the Agent to the Person in whose name this Equity Security Units Certificate (or a Predecessor Equity Security Units 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 Equity Security Units Certificate to purchase, and the Company to sell, on August 16, 2005 (the "Stock Purchase Date"), at a price equal to $50 (the "Stated Amount"), a number of newly issued shares of common stock, par value $3.00 per share ("Common Stock"), of the Company, equal to the Settlement Rate unless on or prior to the Stock Purchase Date there shall have occurred a Termination Event or an A-2 Early Settlement or Merger Early Settlement with respect to the Equity Security Units of which such Purchase Contract is a part, all as provided in the Purchase Contract Agreement and more fully described on the reverse hereof. The Purchase Price (as defined herein) for the shares of Common Stock purchased pursuant to each Purchase Contract evidenced hereby, if not paid earlier, shall be paid on the Stock Purchase Date by application of payments received in respect of the Pledged Notes, Pledged Treasury Consideration or Pledged Applicable Ownership Interests in the Treasury Portfolio, as the case may be, pledged to secure the obligations of the Holder under such Purchase Contract in accordance with the terms of the Pledge Agreement. Payments on the Notes, the Treasury Consideration or the Applicable Ownership Interests in the Treasury Portfolio, as the case may be, 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 Equity Security Units Register or by wire transfer to an account specified by such Person at least five Business Days prior to the applicable Payment Date. The Company shall pay on each Payment Date in respect of each Purchase Contract forming part of an Equity Security Unit evidenced hereby an amount (the "Contract Adjustment Payment") equal to 2.86% per year of the Stated Amount, computed 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 on the reverse hereof. Such Contract Adjustment Payments shall be payable to the Person in whose name this Equity Security Units Certificate (or a Predecessor Equity Security Units 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 Equity Security Units Register or by wire transfer to the account designated to the Agent by a prior written notice by such Person delivered at least five Business Days prior to the applicable Payment Date. Reference is hereby made to the further provisions 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 Agent by manual signature, this Equity Security Units 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. A-3 IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed. EL PASO CORPORATION By: -------------------------------- Name: Title: HOLDER SPECIFIED ABOVE (as to obligations of such Holder under the Purchase Contracts evidenced hereby) By: JPMORGAN CHASE BANK, not individually but solely as Attorney-in-Fact of such Holder By: -------------------------------- Authorized Officer Dated: A-4 AGENT'S CERTIFICATE OF AUTHENTICATION This is one of the Equity Security Units Certificates referred to in the within-mentioned Purchase Contract Agreement. JPMORGAN CHASE BANK, as Purchase Contract Agent Dated: By: -------------------------------------- Authorized Officer A-5 (Form of Reverse of Equity Security Units Certificate) Each Purchase Contract evidenced hereby is governed by a Purchase Contract Agreement, dated as of June 26, 2002 (as may be amended or supplemented from time to time, the "Purchase Contract Agreement"), between the Company and JPMorgan Chase Bank, as Purchase Contract Agent (including its successors 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 Equity Security Units Certificates are executed and delivered. Each Purchase Contract evidenced hereby obligates the Holder of this Equity Security Units Certificate to purchase, and the Company to sell, on the Stock Purchase Date at a price equal to $50 (the "Purchase Price"), a number of shares of Common Stock of the Company equal to the Settlement Rate, unless, on or prior to the Stock Purchase Date, there shall have occurred a Termination Event with respect to the Equity Security Units of which such Purchase Contract is a part. The "Settlement Rate" is equal to: (a) if the Applicable Market Value (as defined below) is greater than or equal to $23.94 (the "Threshold Appreciation Price"), 2.0886 shares of Common Stock per Purchase Contract; (b) if the Applicable Market Value is less than the Threshold Appreciation Price but is greater than $19.95 (the "Reference Price"), the number of shares of Common Stock per Purchase Contract equal to the Stated Amount of the related Equity Security Units divided by the Applicable Market Value; and (c) if the Applicable Market Value is less than or equal to the Reference Price, 2.5063 shares of Common Stock per Purchase Contract, in each case subject to adjustment as provided in the Purchase Contract Agreement (and in each case rounded upward or downward to the nearest 1/10,000th of a share). No fractional shares of Common Stock will be issued upon settlement of Purchase Contracts, as provided in the Purchase Contract Agreement. The "Applicable Market Value" 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 the Stock Purchase Date; provided, that, in the case of a Merger Early Settlement, the 20 consecutive Trading Days shall end on the date of completion of the Cash Merger. 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, as A-6 reported by the NASDAQ Stock Market, or, if the Common Stock is not so reported, 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. Each Purchase Contract evidenced hereby may be settled prior to the Stock Purchase Date through Early Settlement or Merger Early Settlement. Each Purchase Contract evidenced hereby which is settled either through Early Settlement or Merger Early Settlement shall obligate the Holder of the related Equity Security Unit to purchase at the Purchase Price, and the Company to sell, a number of newly issued shares of Common Stock equal to the Early Settlement Rate (in the case of an Early Settlement) or the applicable Settlement Rate (in the case of a Merger Early Settlement). In accordance with the terms of the Purchase Contract Agreement, the Holder of this Equity Security Units Certificate shall pay the Purchase Price for the shares of Common Stock purchased pursuant to each Purchase Contract evidenced hereby: (i) by effecting a Cash Settlement, Early Settlement or Merger Early Settlement; (ii) by application of cash received in respect of the Pledged Treasury Consideration acquired from the proceeds of the successful remarketing of the related Pledged Notes underlying the Equity Security Units represented by this Equity Security Units Certificate; (iii) if a Tax Event Redemption has occurred prior to the date of the successful remarketing of the Notes, by application of cash received in respect of the Pledged Applicable Ownership Interest (as specified in clause (A) of the definition of Applicable Ownership Interest) in the Treasury Portfolio purchased by the Collateral Agent on behalf of the Holder of this Equity Security Units Certificate; or (iv) upon the occurrence of the Last Failed Remarketing, by the retention by the Company of the Pledged Note underlying the Equity Security Units represented by this Equity Security Units Certificate. If, as provided in the Purchase Contract Agreement, upon the occurrence of the Last Failed Remarketing, the Collateral Agent, for the benefit of the Company, exercises its rights as a secured creditor with respect to the Pledged Notes related to this Equity Security Units Certificate, any accrued and unpaid interest on such Pledged Notes will become payable by the Company to the Holder of this Equity Security Units Certificate in the manner provided for in the Purchase Contract Agreement. A-7 The Company shall not be obligated to issue any shares of Common Stock in respect of a Purchase Contract or deliver any certificates or book-entry interest 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, which payment, in the case of Equity Security Units upon the occurrence of the Last Failed Remarketing, shall occur by the resale or retention and cancellation of such Pledged Notes. Under the terms of the Pledge Agreement, the Agent will be entitled to exercise the voting and any other consensual rights pertaining to the Pledged Notes, but only to the extent instructed by the Holders as described below. Upon receipt of notice of any meeting at which holders of Notes are entitled to vote or upon the solicitation of consents, waivers or proxies of holders of Notes, the Agent shall, as soon as practicable thereafter, mail to the Holders of Equity Security Units a notice: (a) containing such information as is contained in the notice or solicitation, (b) stating that each such 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 Notes entitled to vote) shall be entitled to instruct the Agent as to the exercise of the voting rights pertaining to the Pledged Notes constituting a part of such Holder's Equity Security Units and (c) stating the manner in which such instructions may be given. Upon the written request of the Holders of Equity Security Units on such record date received by the Agent at least six days prior to such meeting, 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 aggregate principal amount of Pledged Notes as to which any particular voting instructions are received. In the absence of specific instructions from the Holder of an Equity Security Unit, the Agent shall abstain from voting the Pledged Note evidenced by such Equity Security Unit. The Equity Security Units Certificates are issuable only in registered form and only in denominations of a single Equity Security Unit and any integral multiple thereof. The transfer of any Equity Security Units Certificate will be registered and Equity Security Units Certificates may be exchanged as provided in the Purchase Contract Agreement. The Equity Security Units 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 Equity Security Units may substitute for the Pledged Notes securing its obligations under the related Purchase Contracts Treasury Securities in accordance with the terms of, and subject to the limitations set forth in, the Purchase Contract Agreement and the Pledge Agreement. Holders may make Collateral Substitutions only in integral multiples of 20 Equity Security Units. From and after such Collateral Substitution, the Units for which such Pledged A-8 Treasury Securities secure the Holder's obligation under the Purchase Contract shall be referred to as "Stripped Units." A Holder that elects to substitute a Treasury Security for Pledged Notes thereby creating Stripped Units, shall be responsible for any fees or expenses payable in connection therewith. Except as provided in the Purchase Contract Agreement, for so long as the Purchase Contract underlying an Equity Security Unit remains in effect, the rights and obligations of the Holder of such Equity Security Unit in respect of the Pledged Note, Pledged Treasury Consideration or Pledged Applicable Ownership Interest in the Treasury Portfolio, as the case may be, and Purchase Contract constituting such Equity Security Unit may be transferred and exchanged only as an Equity Security Unit. A Holder of Stripped Units may recreate Equity Security Units by delivering to the Collateral Agent Notes in exchange for the release of the Pledged Treasury Securities in accordance with the terms of, and subject to the limitations set forth in, the Purchase Contract Agreement and the Pledge Agreement. Subject to the next succeeding paragraph, the Company shall pay on each Payment Date, the Contract Adjustment Payments, if any, payable in respect of each Purchase Contract to the Person in whose name the Equity Security Units Certificate evidencing such Purchase Contract is registered at the close of business on the Record Date for such Payment Date. Contract Adjustment Payments, if any, 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 at such address as it appears on the Equity Security Units Register or by wire transfer to the account designated by such Person in writing at least five Business Days prior to the applicable Payment Date. The Company shall have the right, at any time prior to the Stock Purchase Date, to defer the payment of any or all of the Contract Adjustment Payments otherwise payable on any Payment Date, but only if the Company shall give the Holders and the Agent written notice of its election to defer Contract Adjustment Payments as provided in the Purchase Contract Agreement. Any Contract Adjustment Payments so deferred shall, to the extent permitted by law, bear additional Contract Adjustment Payments thereon at the rate of 6.14% per year (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, if any, 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 Stock Purchase Date and no such deferral period may end other than on a Payment Date. In the event that the Company elects to defer the payment of Contract Adjustment Payments on the Purchase Contracts until a Payment Date prior to the Stock Purchase Date, then all Deferred Contract Adjustment Payments, if any, shall be payable to the registered Holders as of the close of business on the Record Date immediately preceding such Payment Date. In the event that the Company elects to defer the payment of Contract Adjustment Payments on the Purchase Contracts until the Stock Purchase Date, the Company may elect to pay A-9 each Holder on the Stock Purchase Date in respect of the Deferred Contract Adjustment Payments, in lieu of a cash payment, a number of shares of Common Stock (in addition to the number of shares of Common Stock equal to the Settlement Rate) equal to (A) the aggregate amount of Deferred Contract Adjustment Payments payable to such Holder (net of any required tax withholding on such Deferred Contract Adjustment Payments, which shall be remitted to the appropriate taxing jurisdiction) divided by (B) the Applicable Market Value. 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 Common Stock other than: (i) purchases, redemptions or acquisitions of shares of Common Stock in connection with any employment contract, benefit plan or other similar arrangement with or for the benefit of employees, officers or directors or a stock purchase or dividend reinvestment plan, or the satisfaction by the Company of its obligations pursuant to any contract or security outstanding on the date the Company exercises its rights to defer the Contract Adjustment Payments; (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 any series of the Company's Common Stock pursuant to the conversion or exchange provisions of such Common Stock or the security being converted or exchanged; (iv) dividends or distributions in any series of the Company's Common Stock (or rights to acquire Common Stock) or repurchases, acquisitions or redemptions of Common Stock in connection with the issuance or exchange of any series of Common Stock (or securities convertible into or exchangeable for shares of the Company's Common Stock); or (v) redemptions, exchanges or repurchases of any rights outstanding under a shareholder rights plan or the declaration or payment thereunder of a dividend or distribution of or with respect to rights in the future. The Purchase Contracts and all obligations and rights of the Company and the Holders thereunder, including, without limitation, the rights and obligations of the Holders to receive and the obligation of the Company to pay Contract Adjustment Payments, if any, or any Deferred Contract Adjustment Payments, and the rights 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 Stock Purchase 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 Equity Security Units Register. Upon and after the occurrence of a Termination Event, the Collateral Agent shall release the A-10 Pledged Notes, Pledged Treasury Consideration or Pledged Applicable Ownership Interests in the Treasury Portfolio, as the case may be, from the Pledge in accordance with the provisions of the Pledge Agreement. Upon registration of transfer of this Equity Security Units 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), by 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 Equity Security Units Certificate. The Company covenants and agrees, and the Holder, by its acceptance hereof, likewise covenants and agrees, to be bound by the provisions of this paragraph. The Holder of this Equity Security Units Certificate, by its acceptance hereof, authorizes the Agent to enter into and perform the related Purchase Contracts forming part of the Equity Security Units 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 of the Purchase Contracts, covenants and agrees to perform such Holder's obligations under such Purchase Contracts, consents to the provisions of the Purchase Contract Agreement, irrevocably authorizes the Agent to enter into and perform the Pledge Agreement on such Holder's behalf as attorney-in-fact, and consents to and agrees to be bound by the Pledge of the Notes, the Treasury Consideration or Applicable Ownership Interests in the Treasury Portfolio, as the case may be, underlying this Equity Security Units 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 Notes, Pledged Treasury Consideration or Pledged Applicable Ownership Interests in the Treasury Portfolio, as the case may be, to be paid upon settlement of such Holder's obligations to purchase Common Stock under the Purchase Contract, shall be paid on the Stock Purchase Date 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 Company and each Holder of an Equity Security Unit, and each Beneficial Owner thereof, by its acceptance thereof or of its interest therein, further agrees to treat: (i) the purchase of the Equity Security Unit as the purchase of the Note and the Purchase Contract constituting the Equity Security Unit and to allocate the purchase price of the Equity Security Unit between the Note and the Purchase Contract as $50 and $0, respectively; and (ii) the Holder as the owner of the applicable interest in the Collateral Account, including the Notes, Treasury Consideration or Applicable Ownership Interests in the Treasury Portfolio, as the case may be. Each Holder of an Equity Security Unit represents and warrants on each day from and including the date of its acquisition of the Equity Security Unit through and including the date of the satisfaction of the obligations under the Purchase Contract and/or the disposition of such A-11 Equity Security Unit that either (i) no portion of the assets used by such Holder to acquire the Equity Security Unit constitutes the assets of any Plan or (ii) the acquisition, holding and disposition of the Equity Security Unit by such Holder does not and will not constitute a non-exempt prohibited transaction under ERISA or Section 4975 of the Code or a violation of any Similar Laws. 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 Outstanding Units, with the Equity Security Units and Stripped Units voting together as one class. The Purchase Contracts shall for all purposes be governed by, and construed in accordance with, the laws of the State of New York. Each Holder of an Equity Security Unit, by its acceptance thereof, the Company and the Agent each submit to the jurisdiction of the courts of the State of New York and the courts of the United States of America, in each case located in the Borough of Manhattan, City of New York and State of New York over any suit, action or proceeding with respect to this Agreement or the transactions contemplated hereby. Each Holder of an Equity Security Unit, by its acceptance thereof, the Company and the Agent each waive any objection that any of them may have to the venue of any suit, action or proceeding with respect to this Agreement or the transactions contemplated hereby in the courts of the State of New York or the courts of the United States of America, in each case located in the Borough of Manhattan, City of New York and State of New York, or that such suit, action or proceeding brought in the courts of the State of New York or the courts of the United States of America, in each case located in the Borough of Manhattan, City of New York and State of New York, was brought in an inconvenient court and agrees not to plead or claim the same. Each Holder of an Equity Security Unit, by its acceptance thereof, the Company and the Agent each acknowledge and agree that any controversy which may arise under this Agreement is likely to involve complicated and difficult issues, and therefore irrevocably and unconditionally waive any right it may have to a trial by jury in respect of any litigation directly or indirectly arising out of relating to this Agreement or the transactions contemplated hereby. The Company, the Agent and any agent of the Company or the Agent may treat the Person in whose name this Equity Security Units Certificate is registered as the owner of the Equity Security Units evidenced hereby for the purpose of receiving quarterly payments on the Notes, the Treasury Consideration or the Applicable Ownership Interests in the Treasury Portfolio, as the case may be, receiving payments of Contract Adjustment Payments, if any, and any Deferred Contract Adjustment Payments, performance of the Purchase Contracts and for all other purposes whatsoever (subject to the Record Date provisions hereof), 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, 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 by any Holder at the Corporate Trust Office. A-12 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. A-13 ASSIGNMENT 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 Equity Security Units Certificate and all rights thereunder, hereby irrevocably constituting and appointing ___________________________ attorney to transfer said Equity Security Units Certificate on the books of El Paso Corporation 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 Equity Security Units Certificate in every particular, without alteration or enlargement or any change whatsoever. Signature Guarantee: . --------------------------- A-14 SETTLEMENT INSTRUCTIONS The undersigned Holder directs that a certificate or book-entry interest for shares of Common Stock deliverable upon settlement on or after the Stock Purchase Date of the Purchase Contracts underlying the number of Equity Security Units evidenced by this Equity Security Units 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) If shares are to be registered in the REGISTERED HOLDER name of and delivered to a Person other than the Holder, please (i) print such Please print name and address of Person's name and address and (ii) Registered Holder: provide a guarantee of your signature: Name Name Address Address Social Security or other Taxpayer Identification Number, if any A-15 ELECTION TO SETTLE EARLY The undersigned Holder of this Equity Security Units Certificate hereby irrevocably exercises the option to effect Early Settlement or Merger Early Settlement, as applicable, in accordance with the terms of the Purchase Contract Agreement with respect to the Purchase Contracts underlying the number of Equity Security Units evidenced by this Equity Security Units Certificate specified below. Holders of Equity Security Units that include Notes may effect Early Settlement or Merger Early Settlement only in units of 20 and integral multiples of 20. If a successful remarketing or a Tax Event Redemption has occurred, Holders of Equity Security Units may effect Early Settlement or Merger Early Settlement only in units of 400,000 and integral multiples of 400,000. The undersigned Holder directs that a certificate or book-entry interest for shares of Common Stock deliverable upon such Early Settlement or Merger Early Settlement, as applicable, be registered in the name of, and delivered, together with a check in payment for any fractional share and any Equity Security Units Certificate representing any Equity Security Units evidenced hereby as to which Early Settlement or Merger Early Settlement, as applicable, of the related Purchase Contracts is not effected, be registered in the name of, and delivered, to the undersigned at the address indicated below unless a different name and address have been indicated below. The Pledged Notes, Pledged Treasury Consideration or Pledged Applicable Ownership Interests in the Treasury Portfolio, as the case may be, deliverable upon such Early Settlement or Merger Early Settlement, as applicable, 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. Check one: [ ] Early Settlement [ ] Merger Early Settlement Dated: Signature: -------------------- --------------------------- Signature Guarantee: ----------------- Number of Equity Security Units evidenced hereby as to which Early Settlement or Merger Early Settlement, as applicable, of the related Purchase Contracts is being elected: A-16 If shares of Common Stock are to be registered REGISTERED HOLDER in the name of and delivered to, and Pledged Notes, Pledged Treasury Consideration or Please print name and Pledged Applicable Ownership Interests in the address of Registered Treasury Portfolio, as the case may be, are to Holder: be transferred to, a Person other than the Holder, please print such Person's name and address: Name Name Address Address Social Security or other Taxpayer Identification Number, if any Transfer instructions for Pledged Notes, Pledged Treasury Consideration or the Pledged Applicable Ownership Interests in the Treasury Portfolio, as the case may be, transferable upon Early Settlement or a Merger Early Settlement: A-17 [TO BE ATTACHED TO GLOBAL EQUITY SECURITY UNITS CERTIFICATES ONLY] SCHEDULE OF INCREASES OR DECREASES IN GLOBAL CERTIFICATE The following increases or decreases in this Global Equity Security Units Certificate have been made:
Stated Amount of the Amount of Decrease in Amount of Increase in Global Equity Security Stated Amount of the Stated Amount of the Units Certificate Global Equity Security Global Equity Security Following Such Decrease Signature of Date Units Certificate Units Certificate or Increase Authorized Officer ---- ---------------------- ---------------------- ----------------------- ------------------
A-18 EXHIBIT B FORM OF STRIPPED UNITS CERTIFICATE [FOR INCLUSION IN GLOBAL STRIPPED UNITS CERTIFICATES ONLY -- 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 DEPOSITORY TRUST COMPANY 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 THE DEPOSITORY TRUST COMPANY 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.] (Form of Face of Stripped Units Certificate) No.:______________ CUSIP No.: 28336L 30 7 Number of Stripped Units:____________ EL PASO CORPORATION STRIPPED UNITS This Stripped Units Certificate certifies that [For inclusion in Global Stripped Units Certificates only -- Cede & Co., as nominee for The Depository Trust Company] is the registered Holder of the number of Stripped Units set forth above [For inclusion in Global Certificates only - or such other number of Stripped Units reflected in the Schedule of Increases or Decreases in Global Certificate attached hereto]. Each Stripped Unit represents (i) a 1/20 undivided beneficial ownership interest in a Treasury Security, subject to the Pledge of such interest in 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 El Paso Corporation, a Delaware corporation (the "Company"). All capitalized terms used herein which are defined in the Purchase Contract Agreement have the meaning set forth therein. Pursuant to the Pledge Agreement, the Treasury Security constituting part of each Stripped Unit evidenced hereby has 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 part of such Stripped Units. B-1 Each Purchase Contract evidenced hereby obligates the Holder of this Stripped Units Certificate to purchase, and the Company to sell, on the Stock Purchase Date, at a price equal to $50 (the "Stated Amount"), a number of shares of common stock, par value $3.00 per share ("Common Stock"), of the Company, equal to the Settlement Rate, unless on or prior to the Stock Purchase Date there shall have occurred a Termination Event or an Early Settlement or Merger Early Settlement with respect to the Stripped Units of which such Purchase Contract is a part, all as provided in the Purchase Contract Agreement and more fully described on the reverse hereof. The Purchase Price (as defined herein) for the shares of Common Stock purchased pursuant to each Purchase Contract evidenced hereby, if not paid earlier, shall be paid on the Stock Purchase Date by application of payments received in respect of the Pledged Treasury Securities pledged to secure the obligations under such Purchase Contract in accordance with the terms of the Pledge Agreement. The Company shall pay on each Payment Date in respect of each Purchase Contract forming part of a Stripped Units evidenced hereby an amount (the "Contract Adjustment Payments") equal to 2.86% per year of the Stated Amount, computed 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 on the reverse hereof. Such Contract Adjustment Payments shall be payable to the Person in whose name this Stripped Units Certificate (or a Predecessor Stripped Units Certificate) is registered at the close of business on the Record Date for such Payment Date. Contract Adjustment Payments, if any, 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 at such address as it appears on the Stripped Units Register or by wire transfer to the account designated by such Person in writing at least five Business Days prior to the applicable Payment Date. Reference is hereby made to the further provisions 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 Agent by manual signature, this Stripped Units 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. B-2 IN WITNESS WHEREOF, the Company has caused this instrument to be duly executed. EL PASO CORPORATION By: ------------------------------------- Name: Title: HOLDER SPECIFIED ABOVE (as to obligations of such Holder under the Purchase Contracts) By: JPMORGAN CHASE BANK, not individually but solely as Attorney-in-Fact of such Holder By: ------------------------------------- Authorized Officer Dated: B-3 AGENT'S CERTIFICATE OF AUTHENTICATION This is one of the Stripped Units Certificates referred to in the within-mentioned Purchase Contract Agreement. JPMORGAN CHASE BANK, as Purchase Contract Agent Dated: By: -------------------------------------- Authorized Officer B-4 (Reverse of Stripped Units Certificate) Each Purchase Contract evidenced hereby is governed by a Purchase Contract Agreement, dated as of June 26, 2002 (as may be amended or supplemented from time to time, the "Purchase Contract Agreement"), between the Company and JPMorgan Chase Bank, as Purchase Contract Agent (including its successors 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 Stripped Units Certificates are executed and delivered. Each Purchase Contract evidenced hereby obligates the Holder of this Stripped Units Certificate to purchase, and the Company to sell, on the Stock Purchase Date at a price equal to $50 (the "Purchase Price"), a number of shares of Common Stock of the Company equal to the Settlement Rate, unless, on or prior to the Stock Purchase Date, there shall have occurred a Termination Event with respect to the Stripped Units of which such Purchase Contract is a part. The "Settlement Rate" is equal to: (a) if the Applicable Market Value (as defined below) is greater than or equal to $23.94 (the "Threshold Appreciation Price"), 2.0886 shares of Common Stock per Purchase Contract; (b) if the Applicable Market Value is less than the Threshold Appreciation Price but is greater than $19.95 (the "Reference Price"), the number of shares of Common Stock per Purchase Contract equal to the Stated Amount of the related Stripped Units divided by the Applicable Market Value; and (c) if the Applicable Market Value is less than or equal the Reference Price, 2.5063 shares of Common Stock per Purchase Contract, in each case subject to adjustment as provided in the Purchase Contract Agreement (and in each case rounded upward or downward to the nearest 1/10,000th of a share). No fractional shares of Common Stock will be issued upon settlement of Purchase Contracts, as provided in the Purchase Contract Agreement. The "Applicable Market Value" 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 the Stock Purchase Date; provided, that, in the case of a Merger Early Settlement, the 20 consecutive Trading Days shall end on the date of completion of the Cash Merger. 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, as B-5 reported by the NASDAQ Stock Market, or, if the Common Stock is not so reported, 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. Each Purchase Contract evidenced hereby may be settled prior to the Stock Purchase Date through Early Settlement or Merger Early Settlement. Each Purchase Contract evidenced hereby which is settled either through Early Settlement or Merger Early Settlement shall obligate the Holder of the related Stripped Unit to purchase at the Purchase Price, and the Company to sell, a number of newly issued shares of Common Stock equal to the Early Settlement Rate (in the case of an Early Settlement) or the applicable Settlement Rate (in the case of a Merger Early Settlement). In accordance with the terms of the Purchase Contract Agreement, the Holder of this Stripped Units Certificate shall pay the Purchase Price for the shares of Common Stock purchased pursuant to each Purchase Contract evidenced hereby: (i) by effecting an Early Settlement, Merger Early Settlement or Cash Settlement; or (ii) by application of payments received in respect of the Pledged Treasury Securities underlying the Stripped Units represented by this Stripped Units Certificate. The Company shall not be obligated to issue any shares of Common Stock in respect of a Purchase Contract or deliver any certificates or book-entry interest 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 Stripped Units Certificates are issuable only in registered form and only in denominations of a single Stripped Units and any integral multiple thereof. The transfer of any Stripped Units Certificate will be registered and Stripped Units Certificates may be exchanged as provided in the Purchase Contract Agreement. The Stripped Units 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 Stripped Units may substitute for the Pledged Treasury Securities securing its obligations under the related Purchase Contracts Notes in accordance with the terms of, and subject to the limitations set forth in, the Purchase Contract Agreement and the Pledge Agreement. Holders may recreate Equity Security Units only in integral multiples of 20 Stripped Units. From and after such substitution, the Units for which such Pledged Notes secure the Holder's obligation B-6 under the Purchase Contract shall be referred to as "Equity Security Units." A Holder that elects to substitute Notes for Pledged Treasury Securities, thereby recreating Equity Security Units, shall be responsible for any fees or expenses payable in connection therewith. Except as provided in the Purchase Contract Agreement, for so long as the Purchase Contract underlying a Stripped Unit remains in effect, the rights and obligations of the Holder of such Stripped Units in respect of the Pledged Treasury Security and the Purchase Contract constituting such Stripped Units may be transferred and exchanged only as a Stripped Unit. Subject to the next succeeding paragraph, the Company shall pay on each Payment Date, the Contract Adjustment Payments, if any, payable in respect of each Purchase Contract to the Person in whose name the Stripped Units Certificate evidencing such Purchase Contract is registered at the close of business on the Record Date for such Payment Date. Contract Adjustment Payments, if any, 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 at such address as it appears on the Stripped Units Register or by wire transfer to the account designated by such Person in writing at least five Business Days prior to the applicable Payment Date. The Company shall have the right, at any time prior to the Stock Purchase Date, to defer the payment of any or all of the Contract Adjustment Payments otherwise payable on any Payment Date, but only if the Company shall give the Holders and the Agent written notice of its election to defer Contract Adjustment Payments as provided in the Purchase Contract Agreement. Any Contract Adjustment Payments so deferred shall, to the extent permitted by law, bear additional Contract Adjustment Payments thereon at the rate of 6.14% per year (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, if any, 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 Stock Purchase Date and no such deferral period may end other than on a Payment Date. In the event that the Company elects to defer the payment of Contract Adjustment Payments on the Purchase Contracts until a Payment Date prior to the Stock Purchase Date, then all Deferred Contract Adjustment Payments, if any, shall be payable to the registered Holders as of the close of business on the Record Date immediately preceding such Payment Date. In the event that the Company elects to defer the payment of Contract Adjustment Payments on the Purchase Contracts until the Stock Purchase Date, the Company may elect to pay each Holder on the Stock Purchase Date in respect of the Deferred Contract Adjustment Payments, in lieu of a cash payment, a number of shares of Common Stock (in addition to the number of shares of Common Stock equal to the Settlement Rate) equal to (A) the aggregate amount of Deferred Contract Adjustment Payments payable to such Holder (net of any required tax withholding on such Deferred Contract Adjustment Payments, which shall be remitted to the appropriate taxing jurisdiction) divided by (B) the Applicable Market Value. B-7 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 Common Stock other than: (i) purchases, redemptions or acquisitions of shares of Common Stock in connection with any employment contract, benefit plan or other similar arrangement with or for the benefit of employees, officers or directors or a stock purchase or dividend reinvestment plan, or the satisfaction by the Company of its obligations pursuant to any contract or security outstanding on the date the Company exercises its rights to defer the Contract Adjustment Payments; (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 any series of the Company's Common Stock pursuant to the conversion or exchange provisions of such Common Stock or the security being converted or exchanged; (iv) dividends or distributions in any series of the Company's Common Stock (or rights to acquire Common Stock) or repurchases, acquisitions or redemptions of Common Stock in connection with the issuance or exchange of any series of Common Stock (or securities convertible into or exchangeable for shares of the Company's Common Stock; or (v) redemptions, exchanges or repurchases of any rights outstanding under a shareholder rights plan or the declaration or payment thereunder of a dividend or distribution of or with respect to rights in the future. The Purchase Contracts and all obligations and rights of the Company and the Holders thereunder, including, without limitation, the rights and obligations of Holders to receive and the obligation of the Company to pay Contract Adjustment Payments, if any, or any 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 Stock Purchase 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 Stripped Units Register. Upon and after the occurrence of a Termination Event, the Collateral Agent shall release the Pledged Treasury Securities from the Pledge in accordance with the provisions of the Pledge Agreement. Upon registration of transfer of this Stripped Units 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), by the terms of the Purchase Contract Agreement and the Purchase Contracts evidenced hereby and the transferor shall be B-8 released from the obligations under the Purchase Contracts evidenced by this Stripped Units Certificate. The Company covenants and agrees, and the Holder, by its acceptance hereof, likewise covenants and agrees, to be bound by the provisions of this paragraph. The Holder of this Stripped Units Certificate, by its acceptance hereof, authorizes the Agent to enter into and perform the related Purchase Contracts forming part of the Stripped Units 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 of the Purchase Contracts, covenants and agrees to perform such Holder's obligations under such Purchase Contracts, consents to the provisions of the Purchase Contract Agreement, irrevocably authorizes the Agent to enter into and perform the Pledge Agreement on such Holder's behalf as attorney-in-fact, and consents to and agrees to be bound by the Pledge of the Treasury Securities underlying this Stripped Units 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, to be paid upon settlement of such Holder's obligations to purchase Common Stock under the Purchase Contract, shall be paid on the Stock Purchase Date 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 Company and each Holder of any Stripped Units, and each Beneficial Owner thereof, by its acceptance thereof or of its interest therein, further agrees to treat: (i) the ownership of Stripped Units as the ownership of the Purchase Contract and the Treasury Securities; and (ii) the Holder as the owner of the applicable interest in the Collateral Account, including the Treasury Securities. Each Holder of a Stripped Unit represents and warrants on each day from and including the date of its acquisition of the Stripped Unit through and including the date of the satisfaction of the obligation under the Purchase Contract and/or the disposition of such Stripped Unit that either (i) no portion of the assets used by such Holder to acquire the Stripped Unit constitute the assets of any Plan or (ii) the acquisition, holding and disposition of the Stripped Unit by such Holder does not and will not constitute a non-exempt prohibited transaction under ERISA or Section 4975 of the Code or a violation of any Similar Laws. 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 Outstanding Units, with the Equity Security Units and Stripped Units voting together as one class. The Purchase Contracts shall for all purposes be governed by, and construed in accordance with, the laws of the State of New York. Each Holder of a Stripped Unit, by its acceptance thereof, the Company and the Agent each submit to the jurisdiction of the courts of the State of New York and the courts of the United States B-9 of America, in each case located in the Borough of Manhattan, City of New York and State of New York over any suit, action or proceeding with respect to this Agreement or the transactions contemplated hereby. Each Holder of a Stripped Unit, by its acceptance thereof, the Company and the Agent each waive any objection that any of them may have to the venue of any suit, action or proceeding with respect to this Agreement or the transactions contemplated hereby in the courts of the State of New York or the courts of the United States of America, in each case located in the Borough of Manhattan, City of New York and State of New York, or that such suit, action or proceeding brought in the courts of the State of New York or the courts of the United States of America, in each case located in the Borough of Manhattan, City of New York and State of New York, was brought in an inconvenient court and agrees not to plead or claim the same. Each Holder of a Stripped Unit, by its acceptance thereof, the Company and the Agent each acknowledge and agree that any controversy which may arise under this Agreement is likely to involve complicated and difficult issues, and therefore irrevocably and unconditionally waive any right it may have to a trial by jury in respect of any litigation directly or indirectly arising out of relating to this Agreement or the transactions contemplated hereby. The Company, the Agent and any agent of the Company or the Agent may treat the Person in whose name this Stripped Units Certificate is registered as the owner of the Stripped Units evidenced hereby for the purpose of receiving any Contract Adjustment Payments and any Deferred Contract Adjustment Payments, performance of the Purchase Contracts and for all other purposes whatsoever (subject to the Record Date provisions hereof), 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, 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 by any Holder at the Corporate Trust Office. B-10 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. B-11 ASSIGNMENT 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 Stripped Units Certificate and all rights thereunder, hereby irrevocably constituting and appointing ____________________________ attorney to transfer said Stripped Units Certificate on the books of El Paso Corporation 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 Stripped Units Certificate in every particular, without alteration or enlargement or any change whatsoever. Signature Guarantee: --------------------------------------------------- B-12 SETTLEMENT INSTRUCTIONS The undersigned Holder directs that a certificate or book-entry interest for shares of Common Stock deliverable upon settlement on or after the Stock Purchase Date of the Purchase Contracts underlying the number of Stripped Units evidenced by this Stripped Units 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) If shares are to be registered in the REGISTERED HOLDER name of and delivered to a Person other than the Holder, please (i) print such Please print name and address of Person's name and address and (ii) Registered Holder: provide a guarantee of your signature: Name Name Address Address Social Security or other Taxpayer Identification Number, if any B-13 ELECTION TO SETTLE EARLY The undersigned Holder of this Stripped Units Certificate hereby irrevocably exercises the option to effect Early Settlement or Merger Early Settlement, as applicable, in accordance with the terms of the Purchase Contract Agreement with respect to the Purchase Contracts underlying the number of Stripped Units evidenced by this Stripped Units Certificate specified below. Holders of Stripped Units may effect Early Settlement or Merger Early Settlement only in units of 20 and integral multiples of 20. The undersigned Holder directs that a certificate or book-entry interest for shares of Common Stock deliverable upon such Early Settlement or Merger Early Settlement, as applicable, be registered in the name of, and delivered, together with a check in payment for any fractional share and any Stripped Units Certificate representing any Stripped Units evidenced hereby as to which Early Settlement or Merger Early Settlement, as applicable, of the related Purchase Contracts is not effected, be registered in the name of and delivered, 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 or Merger Early Settlement, as applicable, 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. Check one: [ ] Early Settlement [ ] Merger Early Settlement Dated: Signature: ------------------- ----------------------------------- Signature Guarantee: ------------------------- Number of Stripped Units evidenced hereby as to which Early Settlement or Merger Early Settlement, as applicable, of the related Purchase Contracts is being elected: If shares of Common Stock are to be REGISTERED HOLDER registered in the name of and delivered to, and Pledged Treasury Securities are to be Please print name and address of transferred to, a Person other than the Registered Holder: Holder, please print such Person's name and address: 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 Merger Early Settlement: B-14 [TO BE ATTACHED TO GLOBAL STRIPPED UNITS CERTIFICATES ONLY] SCHEDULE OF INCREASES OR DECREASES IN GLOBAL CERTIFICATE The following increases or decreases in this Global Stripped Units Certificate have been made:
Stated Amount of the Amount of Decrease in Amount of Increase in Global Stripped Units Stated Amount of the Stated Amount of the Certificate Following Global Stripped Units Global Stripped Units Such Decrease or Signature of Authorized Date Certificate Certificate Increase Officer ---- ---------------------- --------------------- --------------------- -----------------------
B-15 EXHIBIT C INSTRUCTION FROM PURCHASE CONTRACT AGENT TO COLLATERAL AGENT REGARDING CREATION OF STRIPPED UNITS OR RECREATION OF EQUITY SECURITY UNITS The Bank of New York, as Collateral Agent 101 Barclay Street New York, New York 10286 Attention: Corporate Trust Department Facsimile: (212) 328-8243 Re: Equity Security Units and Stripped Units of El Paso Corporation (the "Company") We hereby notify you in accordance with Section [4.1] [4.2] of the Pledge Agreement, dated as of June 26, 2002, (the "Pledge Agreement") among you, as Collateral Agent, Custodial Agent and Securities Intermediary, the Company and us, as Purchase Contract Agent and as attorney-in-fact of the Holders from time to time of the Equity Security Units and Stripped Units, that the Holder of [Equity Security Units] [Stripped Units] listed below (the "Holder") has elected to substitute [$_____ aggregate principal amount of Treasury Securities (CUSIP No. 912803 AG 8)] [$_______ aggregate principal amount of Notes] in exchange for the related [Pledged Notes] [Pledged Treasury Securities] held by you in accordance with the Pledge Agreement and has delivered to us a notice stating that the Holder has Transferred [Treasury Securities] [Notes] to you, as Collateral Agent. We hereby instruct you, upon receipt of such [Pledged Treasury Securities] [Pledged Notes], and upon the payment by such Holder of any applicable fees, to release the [Notes] [Treasury Securities] related to such [Equity Security Units] [Stripped Units] to us in accordance with the Holder's instructions. Capitalized terms used herein but not defined shall have the meaning set forth in the Pledge Agreement. Date: --------------------- JPMORGAN CHASE BANK, as Purchase Contract Agent By: --------------------------------- Name: Title: C-1 Please print name and address of Registered Holder electing to substitute [Treasury Securities] [Notes] for the [Pledged Notes] [Pledged Treasury Securities]: Name: Social Security or other Taxpayer Identification Number, if any: Address: C-2 EXHIBIT D INSTRUCTION FROM HOLDER TO PURCHASE CONTRACT AGENT REGARDING CREATION OF STRIPPED UNITS OR RECREATION OF EQUITY SECURITY UNITS JPMorgan Chase Bank, as Purchase Contract Agent 450 West 33rd Street New York, New York 10001 Attention: Institutional Trust Services Facsimile: (212) 946-8159 Re: Equity Security Units and Stripped Units of El Paso Corporation (the "Company") The undersigned Holder hereby [instructs you, in your capacity as custodian for the Depositary, to decrease the number of [Equity Security Units evidenced by the Global Equity Security Units Certificate(s)] [Stripped Units evidenced by the Global Stripped Units Certificate(s)] and] notifies you that it has delivered to The Bank of New York, as Collateral Agent, Custodial Agent and Securities Intermediary [$_______ aggregate principal amount of Treasury Securities (CUSIP No. 912803 AG 8)] [$_______ aggregate principal amount of Notes] in exchange for the related [Pledged Notes] [Pledged Treasury Securities] held by the Collateral Agent, in accordance with Section [4.1] [4.2] of the Pledge Agreement, dated June 26, 2002 (the "Pledge Agreement"), among you, as Purchase Contract Agent and as attorney-in-fact of the Holders from time to time of the Equity Security Units and Stripped Units, the Company, the Collateral Agent, Custodial Agent and Securities Intermediary. The undersigned Holder has paid the Collateral Agent all applicable fees relating to such exchange. The undersigned Holder hereby instructs you to instruct the Collateral Agent to release to you on behalf of the undersigned Holder the [Pledged Notes] [Pledged Treasury Securities] related to such [Equity Security Units] [Stripped Units]. Capitalized terms used herein but not defined shall have the meaning set forth in the Pledge Agreement. Date: Signature ------------------------ ------------------------------ Signature Guarantee: -------------------- Please print name and address of Registered Holder: Name: Social Security or other Taxpayer Identification Number, if any: Address: D-1 EXHIBIT E NOTICE TO SETTLE BY CASH JPMorgan Chase Bank, as Purchase Contract Agent 450 West 33rd Street New York, New York 10001 Attention: Institutional Trust Services Facsimile: (212) 946-8159 Re: Equity Security Units of El Paso Corporation (the "Company") The undersigned Holder hereby irrevocably notifies you in accordance with Section 5.4 of the Purchase Contract Agreement dated as of June 26, 2002 between the Company and you, as Purchase Contract Agent, that such Holder has elected to pay to the Collateral Agent, prior to 11:00 a.m., New York City time, on the eighth Business Day immediately preceding the Stock Purchase Date (in lawful money of the United States by [certified check] [cashiers check] [wire transfer], in each case 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 Stock Purchase Date. The undersigned Holder hereby instructs you to notify promptly the Collateral Agent of the undersigned Holder's election to make such Cash Settlement with respect to the Purchase Contracts related to such Holder's Equity Security Units. Date: ------------------------ ---------------------------------------- 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: Social Security or other Taxpayer Identification Number, if any: E-1 EXHIBIT F ELECTION TO SETTLE EARLY JPMorgan Chase Bank, as Purchase Contract Agent 450 West 33rd Street New York, New York 10001 Attention: Institutional Trust Services Facsimile: (212) 946-8159 Re: Equity Security Units and Stripped Units of El Paso Corporation (the "Company") The undersigned Holder of [Equity Security Units evidenced by the Global Equity Security Units Certificate(s)] [Stripped Units Evidenced by the Global Stripped Units Certificate(s)] hereby irrevocably exercises the option to effect Early Settlement or Merger Early Settlement, as applicable, in accordance with [Section 5.9] [Section 5.10] of the Purchase Contract Agreement dated as of June 26, 2002 between the Company and you, as Purchase Contract Agent, with respect to the Purchase Contracts underlying the number of [Equity Security Units][Stripped Units] specified below. Holders of Equity Security Units that include Notes and Stripped Units may effect Early Settlement or Merger Early Settlement only in units of 20 and integral multiples of 20. If a successful remarketing or a Tax Event Redemption has occurred, Holders of Equity Security Units may effect Early Settlement or Merger Early Settlement only in units of 400,000 and integral multiples of 400,000. The undersigned Holder directs that a certificate or book-entry interest for shares of Common Stock deliverable upon such Early Settlement or Merger Early Settlement, as applicable, 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. [Pledged Notes, Pledged Treasury Consideration or Pledged Applicable Ownership Interests in the Treasury Portfolio] [Pledged Treasury Securities] deliverable upon such Early Settlement or Merger Early Settlement, as applicable, 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. Check one: [ ] Early Settlement [ ] Merger Early Settlement Date: Signature ------------------------ ------------------------------ Signature Guarantee: -------------------- Number of [Equity Security Units] [Stripped Units] as to which Early Settlement or Merger Early Settlement, as applicable, of the related Purchase Contracts is being elected: F-1 If shares of Common Stock are to be registered in REGISTERED HOLDER the name of and delivered to, and [Pledged Notes, Pledged Treasury Consideration or Pledged Please print name Applicable Ownership Interests in the Treasury and address of Portfolio] [Pledged Treasury Securities] are to be Registered Holder: transferred to, a Person other than the Holder, please print such Person's name and address: Name Name Address Address Social Security or other Taxpayer Identification Number, if any Transfer instructions for [Pledged Notes, Pledged Treasury Consideration or Pledged Applicable Ownership Interests in the Treasury Portfolio] [Pledged Treasury Securities] transferable upon Early Settlement or Merger Early Settlement: F-2 EX-4.C 7 h97915exv4wc.txt PLEDGE AGREEMENT DATED 6/26/2002 EXHIBIT 4.C EL PASO CORPORATION, THE BANK OF NEW YORK, AS COLLATERAL AGENT, CUSTODIAL AGENT AND SECURITIES INTERMEDIARY AND JPMORGAN CHASE BANK AS PURCHASE CONTRACT AGENT AND ATTORNEY-IN-FACT OF THE HOLDERS FROM TIME TO TIME OF THE EQUITY SECURITY UNITS AND STRIPPED UNITS PLEDGE AGREEMENT DATED AS OF JUNE 26, 2002 TABLE OF CONTENTS
Page ---- ARTICLE I DEFINITIONS SECTION 1.1 Definitions..........................................................2 ARTICLE II PLEDGE; CONTROL AND PERFECTION SECTION 2.1 The Pledge...........................................................4 SECTION 2.2 Control and Perfection...............................................5 ARTICLE III PAYMENTS ON PLEDGED COLLATERAL SECTION 3.1 Payments.............................................................8 SECTION 3.2 Application of Payments..............................................9 ARTICLE IV SUBSTITUTION, RELEASE, REPLEDGE AND SETTLEMENT OF NOTES SECTION 4.1 Collateral Substitution and the Creation of Stripped Units...........9 SECTION 4.2 The Recreation of Equity Security Units.............................11 SECTION 4.3 Termination Event...................................................12 SECTION 4.4 Early Settlement; Merger Early Settlement; Cash Settlement..........12 SECTION 4.5 Remarketing; Application of Proceeds; Settlement....................13 ARTICLE V VOTING RIGHTS -- NOTES SECTION 5.1 Exercise by Purchase Contract Agent.................................15 ARTICLE VI RIGHTS AND REMEDIES; TAX EVENT REDEMPTION SECTION 6.1 Rights and Remedies of the Collateral Agent.........................16 SECTION 6.2 Substitutions.......................................................17 SECTION 6.3 Tax Event Redemption................................................17
-i- ARTICLE VII REPRESENTATIONS AND WARRANTIES; COVENANTS SECTION 7.1 Representations and Warranties......................................18 SECTION 7.2 Covenants...........................................................19 ARTICLE VIII THE COLLATERAL AGENT, THE CUSTODIAL AGENT AND THE SECURITIES INTERMEDIARY SECTION 8.1 Appointment, Powers and Immunities..................................19 SECTION 8.2 Instructions of the Company.........................................21 SECTION 8.3 Reliance............................................................21 SECTION 8.4 Rights in Other Capacities..........................................21 SECTION 8.5 Non-Reliance on Collateral Agent....................................22 SECTION 8.6 Compensation and Indemnity..........................................22 SECTION 8.7 Failure to Act......................................................23 SECTION 8.8 Resignation.........................................................24 SECTION 8.9 Right to Appoint Agent or Advisor...................................25 SECTION 8.10 Survival............................................................25 SECTION 8.11 Exculpation.........................................................26 ARTICLE IX AMENDMENT SECTION 9.1 Amendment Without Consent of Holders................................26 SECTION 9.2 Amendment with Consent of Holders...................................26 SECTION 9.3 Execution of Amendments.............................................27 SECTION 9.4 Effect of Amendments................................................27 SECTION 9.5 Reference to Amendments.............................................28 ARTICLE X MISCELLANEOUS SECTION 10.1 No Waiver..........................................................28 SECTION 10.2 Governing Law; Submission to Jurisdiction..........................28 SECTION 10.3 Notices............................................................29 SECTION 10.4 Successors and Assigns.............................................29 SECTION 10.5 Counterparts.......................................................29 SECTION 10.6 Severability.......................................................29 SECTION 10.7 Expenses, Etc......................................................30 SECTION 10.8 Security Interest Absolute.........................................30 SECTION 10.9 Waiver of Jury Trial...............................................31
-ii- EXHIBITS Exhibit A Instruction from Purchase Contract Agent to Collateral Agent Regarding Creation of Stripped Units or Recreation of Equity Security Units Exhibit B Instruction from Holder to Purchase Contract Agent Regarding Creation of Stripped Units or Recreation of Equity Security Units Exhibit C Instruction from Holder of Separate Notes to Custodial Agent Regarding Remarketing Exhibit D Instruction from Holder of Separate Notes to Custodial Agent Regarding Withdrawal from Remarketing -iii- PLEDGE AGREEMENT PLEDGE AGREEMENT, dated as of June 26, 2002 (this "Agreement"), among El Paso Corporation, a Delaware corporation (the "Company"), The Bank of New York, 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 "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 JPMorgan Chase Bank, a New York banking corporation, not individually but solely as purchase contract agent (in such capacity, together with its successors in such capacity, the "Purchase Contract Agent") and as attorney-in-fact of the Holders from time to time of the Equity Security Units and Stripped Units under the Purchase Contract Agreement (as defined herein). RECITALS WHEREAS, 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 10,000,000 Equity Security Units of the Company (up to 11,500,000 Equity Security Units if the over-allotment option of the Underwriters (as defined in the Underwriting Agreement) is exercised pursuant to the Underwriting Agreement), each having a Stated Amount of $50. WHEREAS, each Equity Security Unit will be comprised of (a) a Purchase Contract and (b) either beneficial ownership of (i) a Note, (ii) following the successful remarketing of the Notes in accordance with the Purchase Contract Agreement and the Remarketing Agreement, the Treasury Consideration or (iii) following a Tax Event Redemption in accordance with the Purchase Contract Agreement, an Applicable Ownership Interest in the Treasury Portfolio. WHEREAS, in accordance with the terms of the Purchase Contract Agreement, a Holder of Equity Security Units may withdraw the Notes from the related Purchase Contracts by substituting for such Notes Treasury Securities that will pay in the aggregate an amount equal to the amount due on the Stock Purchase Date under such Purchase Contracts. Upon such substitution, the Equity Security Units will become Stripped Units. Each Stripped Unit will be comprised of (a) a Purchase Contract and (b) a 1/20 undivided beneficial interest in a Treasury Security. WHEREAS, pursuant to the terms of the Purchase Contract Agreement and the Purchase Contracts, the Holders, from time to time, of the Equity Security Units and Stripped Units 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 Notes, any Treasury Consideration, any Applicable Ownership Interests in the Treasury Portfolio and any Treasury Securities to secure each Holder's obligations under the related Purchase Contracts, as provided herein and subject to the terms hereof. NOW, THEREFORE, 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 Equity Security Units and Stripped Units, agree as follows: ARTICLE I DEFINITIONS SECTION 1.1 Definitions. For all purposes of this Agreement, except as otherwise expressly provided or unless the context otherwise requires: (a) capitalized terms used but not defined herein are used as defined in the Purchase Contract Agreement; (b) the defined terms in this Agreement have the meanings assigned to them in this Article and include the plural as well as the singular; and (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. "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. "Code" has the meaning specified in Section 6.1(a) hereof. "Collateral" has the meaning specified in Section 2.1(a) hereof. "Collateral Account" means the securities account (number 188353) maintained at The Bank of New York in the name "JPMorgan Chase Bank, a New York banking corporation, as Purchase Contract Agent on behalf of the holders of certain securities of El Paso Corporation, Collateral Account subject to the Pledge in favor of El Paso Corporation, as pledgee" and any successor account. "Collateral Agent" has the meaning specified in the first paragraph of this Agreement. "Collateral Substitution" has the meaning specified in Section 4.1(a) hereof. "Company" means the Person named as the "Company" in the first paragraph of this Agreement until a successor shall have become such pursuant to the applicable 2 provisions of the Purchase Contract Agreement, and thereafter "Company" shall mean such successor. "Custodial Agent" has the meaning specified in the first paragraph of this Agreement. "Intermediary" means any entity that in the ordinary course of its business maintains securities accounts for others and is acting in that capacity. "Pledge" has the meaning specified in Section 2.1(c) hereof. "Pledged Applicable Ownership Interests in the Treasury Portfolio" has the meaning specified in Section 2.1(c) hereof. "Pledged Notes" has the meaning specified in Section 2.1(c) hereof. "Pledged Treasury Consideration" has the meaning specified in Section 2.1(c) hereof. "Pledged Treasury Securities" has the meaning specified in Section 2.1(c) hereof. "Proceeds" has the meaning specified in Section 9-102(a)(64) of the Code, including, without limitation, 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 Agent" has the meaning specified in the first paragraph of this Agreement. "Purchase Contract Agreement" 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 specified in Section 8-102(a)(17) of the Code. "Separate Notes" means any Notes that are not Pledged Notes. "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: 3 (i) in the case of Collateral consisting of securities which cannot be delivered by book-entry or which the parties agree are to be delivered in physical form, delivery in appropriate physical form to the recipient accompanied by any duly executed instruments of transfer, assignments in blank, transfer tax stamps and any other documents necessary to constitute a legally valid transfer to the recipient; (ii) in the case of Collateral consisting of securities maintained in book-entry form, delivery by causing a "securities intermediary" (as defined in Section 8-102(a)(14) of the Code) to (a) credit a Security Entitlement 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 (b) 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. In addition, any Transfer of Treasury Consideration, Applicable Ownership Interests in the Treasury Portfolio and Treasury Securities hereunder shall be made in accordance with the TRADES Regulations and other applicable law. ARTICLE II PLEDGE; CONTROL AND PERFECTION SECTION 2.1 The Pledge. (a) 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 continuing first priority perfected security interest in, and lien upon and right of set off against, all of the right, title and interest of the Purchase Contract Agent and such Holders in and to: (i) (A) the Notes, Treasury Consideration, Applicable Ownership Interests in the Treasury Portfolio and Treasury Securities constituting a part of the Equity Security Units or Stripped Units, (B) any Treasury Securities delivered in exchange for any Notes in accordance with Section 4.1 hereof, and (C) any Notes delivered in exchange for any Treasury Securities in accordance with Section 4.2 hereof, in each case that have been Transferred to or otherwise received by the Collateral Agent and not released by the Collateral Agent to such Holders under the provisions of this Agreement; (ii) the Collateral Account and all securities, financial assets, security entitlements, cash and other property credited thereto and all Security Entitlements related thereto; and 4 (iii) all Proceeds of the foregoing (all of the foregoing, collectively, the "Collateral"). (b) Prior to or concurrently with the execution and delivery of this Agreement, the Purchase Contract Agent, on behalf of the initial Holders of the Equity Security Units, shall cause the Notes comprising a part of the Equity Security Units to be Transferred to the Collateral Agent for the benefit of the Company, for credit to the Collateral Account and the Securities Intermediary shall indicate by book-entry that a Securities Entitlement to such Notes has been credited to the Collateral Account. (c) The pledge provided in this Section 2.1 is herein referred to as the "Pledge" and the Notes (or the Notes that are delivered pursuant to Section 4.2 hereof), Treasury Consideration, Applicable Ownership Interests in the Treasury Portfolio or Treasury Securities subject to the Pledge, excluding any Notes or Treasury Securities released from the Pledge as provided in Sections 4.1, 4.2 and 4.3 hereof, respectively, are herein referred to as "Pledged Notes," "Pledged Treasury Consideration," "Pledged Applicable Ownership Interests in the Treasury Portfolio" or "Pledged Treasury Securities" respectively. Subject to the Pledge and Section 2.2 hereof, the Holders from time to time shall have full beneficial ownership of the Collateral. 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. Whenever directed by the Collateral Agent acting on behalf of the Company, the Securities Intermediary shall have the right to reregister in its name the Notes or any other securities held in physical form. (d) Except as may be required in order to release Notes in connection with a Tax Event Redemption or with a Holder's election to create Stripped Units from Equity Security Units, or except as otherwise required to release Notes as specified herein, neither the Collateral Agent nor the Securities Intermediary shall relinquish physical possession of any certificate evidencing a Note prior to the termination of this Agreement. If it becomes necessary for the Securities Intermediary to relinquish physical possession of a certificate in order to release a portion of the Notes evidenced thereby from the Pledge, the Company or the Purchase Contract Agent shall use its commercially reasonable best efforts to arrange for the Securities Intermediary to obtain physical possession of a replacement certificate evidencing any Notes remaining subject to the Pledge hereunder registered to the Securities Intermediary or endorsed in blank within fifteen days of the date the Securities Intermediary relinquished possession. The Securities Intermediary shall promptly notify the Company and the Collateral Agent of the Securities Intermediary's 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 5 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 may deliver with respect to the Collateral Account, the Collateral credited thereto and any Security Entitlements with respect thereto. In the event the Securities Intermediary receives from the Holders or the Purchase Contract Agent entitlement orders which conflict with entitlement orders received from the Collateral Agent, the Securities Intermediary shall follow the entitlement orders received from the Collateral Agent. Instructions and entitlement orders may, without limitation, direct the Securities Intermediary to transfer, redeem, assign, or otherwise deliver the Notes, the Treasury Consideration, the Applicable Ownership Interests in the Treasury Portfolio, the Treasury Securities and any Security Entitlements with respect thereto or sell, liquidate or dispose of such assets through a broker designated by the Company, and to pay and deliver any income, proceeds or other funds derived therefrom to the Company. The Holders from time to time acting through the Purchase Contract Agent hereby further authorize and direct the Collateral Agent itself, as agent of the Company, to 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 only in accordance with the terms hereof. Without limiting the generality of the foregoing, the Collateral Agent shall issue entitlement orders to the Securities Intermediary as directed in writing 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, or its nominee, endorsed to the Securities Intermediary, or its nominee, or in blank and in no case will any financial asset credited to the Collateral Account be registered in the name of the Purchase Contract Agent, the Collateral Agent as such, the Company or any Holder, payable to the order of, or specially endorsed to, the Purchase Contract Agent, the Collateral Agent as such, the Company or any Holder except to the extent the foregoing have been specially endorsed to the Securities Intermediary or in blank; (ii) all property delivered to the Securities Intermediary pursuant to this Agreement (including, without limitation, any Notes, Treasury Consideration, Applicable Ownership Interests in 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, comply with entitlement orders originated by the Collateral 6 Agent on behalf of the Company without further consent by the Purchase Contract Agent; (iv) the Securities Intermediary has not entered into, and until the termination of this Agreement will not enter into, any agreement with any other Person relating to the Collateral Account and/or any financial assets credited thereto pursuant to which it has agreed to comply with entitlement orders (as defined in Section 8-102(a)(8) of the Code) of such other Person; (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; (vi) 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; and (vii) 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. (c) 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. Notwithstanding the foregoing, in no event shall the Collateral Agent or Securities Intermediary be responsible for the preparation or filing of any financing or continuation statements in the appropriate jurisdictions or responsible for maintenance or perfection of any security interest hereunder. (d) The Purchase Contract Agent shall file with the Internal Revenue Service and deliver to the Holders Forms 1099 (or successor or comparable forms), to the extent required by law, with respect to payments to the Holders. Neither the Securities Intermediary nor the Collateral Agent shall have any tax reporting duties hereunder. 7 ARTICLE III PAYMENTS ON PLEDGED COLLATERAL SECTION 3.1 Payments. So long as the Purchase Contract Agent is the registered owner of the Pledged Notes, Pledged Treasury Consideration, Pledged Applicable Ownership Interests in the Treasury Portfolio or Pledged Treasury Securities, it shall receive all payments thereon, but nevertheless subject to the Pledge thereof pursuant to Section 2.1 hereof. If the Pledged Notes are reregistered, such that the Collateral Agent becomes the registered holder, all payments of the principal of, or interest or other amounts on, the Pledged Notes and all payments of the principal of, or cash distributions on, any Pledged Treasury Consideration, Pledged Applicable Ownership Interests in the Treasury Portfolio or Pledged Treasury Securities that are received by the Collateral Agent and 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) any interest payments with respect to the Pledged Notes, the Pledged Treasury Consideration (as specified in clause (1) of the definition of Remarketing Value) or the Pledged Applicable Ownership Interests (as specified in clause (B) of the definition of Applicable Ownership Interest) in the Treasury Portfolio, as the case may be, with respect to Equity Security Units which include Pledged Notes, Pledged Treasury Consideration or Pledged Applicable Ownership Interests in the Treasury Portfolio, as the case may be, and (B) any payments of principal with respect to any Notes, Treasury Consideration (as specified in clause (2) of the definition of Remarketing Value) or Applicable Ownership Interests (as specified in clause (A) of the definition of Applicable Ownership Interest) 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 Holders of the Equity Security Units, to the account designated by the Purchase Contract Agent for such purpose, which shall be ABA #021000021, Account #323332749, Registered Bond Incoming Wire A/C, not later than 10:00 a.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 9:00 a.m., New York City time, on a Business Day, then such payment shall be made not later than 9:30 a.m., New York City time, on the next succeeding Business Day); (ii) in the case of any 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 Stripped Units to the accounts designated by the Purchase Contract Agent in writing for such purpose not 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 8 not a Business Day or after 10:00 a.m., New York City time, on a Business Day, then such payment shall be made not later than 10:30 a.m., New York City time, on the next succeeding Business Day); and (iii) in the case of payments in respect of any Pledged Notes, Pledged Treasury Consideration (as specified in clause (2) of the definition of Remarketing Value), the Pledged Applicable Ownership Interests (as specified in clause (A) of the definition of Applicable Ownership Interest) in the Treasury Portfolio or Pledged Treasury Securities, as the case may be, to be paid upon settlement of the Holders' obligations to purchase Common Stock under the Purchase Contract, to the Company on the Stock Purchase Date in accordance with the procedure set forth in Section 4.5(a) or 4.5(b) hereof, in full satisfaction of the respective obligations of the Holders under the related Purchase Contracts. SECTION 3.2 Application of Payments. 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 Note, Treasury Consideration (as specified in clause (2) of the definition of Remarketing Value) or Applicable Ownership Interest (as specified in clause (A) of the definition of Applicable Ownership Interest) in the Treasury Portfolio, as applicable, that, at the time of such payment, is a Pledged Note, Pledged Treasury Consideration (as specified in clause (2) of the definition of Remarketing Value) or Pledged Applicable Ownership Interest (as specified in clause (A) of the definition of Applicable Ownership Interest) in the Treasury Portfolio, as the case may be, or a Holder of Stripped Units 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. ARTICLE IV SUBSTITUTION, RELEASE, REPLEDGE AND SETTLEMENT OF NOTES SECTION 4.1 Collateral Substitution and the Creation of Stripped Units. (a) Unless a successful remarketing or a Tax Event Redemption has occurred, at any time (i) other than during the period that commences at 5:00 p.m., New York City time, on May 5, 2005 and ends at 9:00 a.m., New York City time, on May 19, 2005 and during the period that commences at 5:00 p.m., New York City time, on June 22, 2005 and ends at 9:00 a.m., New York City time, on July 7, 2005 and (ii) prior to 5:00 p.m., New York City time, on the eleventh Business Day immediately preceding the Stock 9 Purchase Date, a Holder of Equity Security Units shall have the right to substitute Treasury Securities for the Pledged Notes securing such Holder's obligations under the Purchase Contracts comprising a part of such Equity Security Units (a "Collateral Substitution"), in integral multiples of 20 Equity Security Units by (a) Transferring to the Collateral Agent Treasury Securities having an aggregate principal amount equal to the aggregate Stated Amount of such Equity Security Units and (b) delivering instructions to the Purchase Contract Agent, in its capacity as custodian for the Depositary, to decrease the number of Equity Security Units evidenced by the Global Equity Security Units Certificate(s) (or, if the Equity Security Units are held in certificated form, such Equity Security Units) to the Purchase Contract Agent, accompanied by a notice, substantially in the form of Exhibit B hereto, to the Purchase Contract Agent stating that such Holder has Transferred Treasury Securities to the Collateral Agent pursuant to clause (a) above (stating the principal amount and the CUSIP numbers of the Treasury Securities Transferred by such Holder) and requesting that the Purchase Contract Agent instruct the Collateral Agent to release from the Pledge the Pledged Notes related to such Equity Security Units, whereupon the Purchase Contract Agent shall promptly give such instruction in writing to the Collateral Agent in the form provided in Exhibit A. Upon receipt of Treasury Securities from a Holder of Equity Security Units and the related written instruction from the Purchase Contract Agent, the Collateral Agent shall release the Pledged Notes and shall promptly Transfer such Pledged Notes free and clear of any lien, pledge or security interest created hereby, to the Purchase Contract Agent. All items Transferred and/or substituted by any Holder pursuant to this Section 4.1, Section 4.2 or any other Section of this Agreement shall be Transferred and/or substituted free and clear of all liens, claims and encumbrances. (b) Holders who elect to withdraw the Pledged Notes from the related Purchase Contracts by substituting Treasury Securities for such Pledged Notes 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. (c) In the event a Holder making a Collateral Substitution fails to effect a book-entry transfer of the Equity Security Units or fails to deliver an Equity Security Units Certificate to the Purchase Contract Agent after depositing Treasury Securities with the Collateral Agent, the Pledged Notes constituting a part of such Equity Security Units, and any distributions on such Pledged Notes shall be held in the name of the Purchase Contract Agent or its nominee in trust for the benefit of such Holder, until such Equity Security Units are so transferred or the Equity Security Units Certificate is so delivered, as the case may be, or, with respect to an Equity Security Units Certificate, such Holder provides evidence satisfactory to the Company and the Purchase Contract Agent that such Equity Security Units Certificate has been destroyed, lost or stolen, together with any indemnity that may be required by the Purchase Contract Agent and the Company. 10 SECTION 4.2 The Recreation of Equity Security Units. (a) Unless a successful remarketing or a Tax Event Redemption has occurred, at any time (i) other than during the period that commences at 5:00 p.m., New York City time, on May 5, 2005 and ends at 9:00 a.m., New York City time, on May 19, 2005 and during the period that commences at 5:00 p.m., New York City time, on June 22, 2005 and ends at 9:00 a.m., New York City time, on July 7, 2005 and (ii) prior to 5:00 p.m., New York City time, on the eleventh Business Day immediately preceding the Stock Purchase Date, a Holder of Stripped Units shall have the right to recreate Equity Security Units consisting of the Purchase Contracts and Notes in integral multiples of 20 Equity Security Units by (x) Transferring to the Collateral Agent Separate Notes having an aggregate principal amount equal to the aggregate stated amount of such Stripped Units and (y) delivering instructions to the Purchase Contract Agent, in its capacity as custodian for the Depositary, to decrease the number of Stripped Units evidenced by the Global Stripped Units Certificate(s) (or, if the Stripped Units are held in certificated form, such Stripped Units) to the Purchase Contract Agent, accompanied by a notice, substantially in the form of Exhibit B hereto, to the Purchase Contract Agent stating that such Holder has Transferred Notes to the Collateral Agent pursuant to clause (x) above and requesting that the Purchase Contract Agent instruct the Collateral Agent to release from the Pledge the Pledged Treasury Securities related to such Stripped Units, whereupon the Purchase Contract Agent shall give such instruction to the Collateral Agent in the form provided in Exhibit A. Upon receipt of the Separate Notes from such Holder and the instruction from the Purchase Contract Agent, the Collateral Agent shall release the Pledged Treasury Securities and shall promptly Transfer such Pledged Treasury Securities, free and clear of any lien, pledge or security interest created hereby, to the Purchase Contract Agent. (b) Holders of Stripped Units who recreate Equity Security Units by substituting Notes for the 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. (c) In the event a Holder who recreates Equity Security Units fails to effect a book-entry transfer of the Stripped Units or fails to deliver a Stripped Units Certificate to the Purchase Contract Agent after depositing Notes with the Collateral Agent, the Treasury Securities constituting a part of such Stripped Units, and any distributions on such Treasury Securities shall be held in the name of the Purchase Contract Agent or its nominee in trust for the benefit of such Holder, until such Stripped Units are so transferred or the Stripped Units Certificate is so delivered, as the case may be, or, with respect to a Stripped Units Certificate, such Holder provides evidence satisfactory to the Company and the Purchase Contract Agent that such Stripped Units Certificate has been destroyed, lost or stolen, together with any indemnity that may be required by the Purchase Contract Agent and the Company. 11 SECTION 4.3 Termination Event. (a) 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 Notes, Pledged Treasury Consideration or Pledged Applicable Ownership Interests in the Treasury Portfolio, as the case may be, and Pledged Treasury Securities to the Purchase Contract Agent for the benefit of the Holders of the Equity Security Units and the Stripped Units, respectively, free and clear of any lien, pledge or security interest or other interest created hereby. (b) 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 Notes, Pledged Treasury Consideration, Pledged Applicable Ownership Interests in the Treasury Portfolio, or Pledged Treasury Securities, as the case may be, as provided by this Section 4.3, the Purchase Contract Agent shall: (i) use its best efforts to obtain, at the expense of the Company, 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 Notes, Pledged Treasury Consideration, Pledged Applicable Ownership Interests in the Treasury Portfolio or 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 Notes, Pledged Treasury Consideration, Pledged Applicable Ownership Interests in the Treasury Portfolio or Pledged Treasury Securities, as the case may be, as provided by this Section 4.3; or (ii) commence an action or proceeding like that described in subsection (i)(z) hereof within ten days after the occurrence of such Termination Event. SECTION 4.4 Early Settlement; Merger Early Settlement; Cash Settlement. Upon written notice to the Collateral Agent by the Purchase Contract Agent that one or more Holders of Equity Security Units or Stripped Units have elected to effect 12 Early Settlement, Merger Early Settlement or Cash Settlement of their respective obligations under the Purchase Contracts forming a part of such Equity Security Units or Stripped Units in accordance with the terms of the Purchase Contract Agreement (setting forth the number of such Purchase Contracts as to which such Holders have elected to effect Early Settlement, Merger Early Settlement or Cash Settlement), and that, with respect to Early Settlement and Merger Early Settlement, the Purchase Contract Agent has received and, with respect to Cash Settlement, the Collateral Agent has received from such Holders, and paid to the Company, the related Early Settlement Amounts, Merger Early Settlement Amounts or Cash Settlement Amounts, as the case may be, pursuant to the terms of the Purchase Contract Agreement and that all conditions to such Early Settlement or Merger Early Settlement or Cash Settlement, as the case may be, have been satisfied, then the Collateral Agent shall release from the Pledge (a) Pledged Notes, Pledged Treasury Consideration or Pledged Applicable Ownership Interests in the Treasury Portfolio, as the case may be, in the case of a Holder of Equity Security Units or (b) Pledged Treasury Securities, in the case of a Holder of Stripped Units, relating to such Purchase Contracts as to which such Holders have elected to effect Early Settlement, Merger Early Settlement or Cash Settlement, and shall Transfer all such Pledged Notes, Pledged Treasury Consideration, Pledged Applicable Ownership Interests 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 Holders. SECTION 4.5 Remarketing; Application of Proceeds; Settlement. (a) The Collateral Agent shall notify, not later than 10:00 a.m., New York City time, on the third Business Day preceding the Initial Remarketing Date or the first day of any subsequent Remarketing Period, as applicable, the Remarketing Agent of the aggregate number of Pledged Notes to be remarketed. The Collateral Agent shall, not later than 10:00 a.m., New York City time, on the third Business Day immediately preceding the Initial Remarketing Date or the first day of any subsequent Remarketing Period, as applicable, without any instruction from Holders of Equity Security Units, Transfer the Pledged Notes to the Remarketing Agent for remarketing. Upon the occurrence of a successful remarketing, the Remarketing Agent will deliver the Treasury Consideration purchased from the proceeds of the successful remarketing attributable to the Pledged Notes to the Purchase Contract Agent, which shall thereupon deliver such Treasury Consideration to the Collateral Agent. Upon receipt of such Treasury Consideration from the Purchase Contract Agent, the Collateral Agent, for the benefit of the Company, shall thereupon hold in the Collateral Account such Treasury Consideration to secure such Equity Security Units Holders' obligations under the Purchase Contracts and to fund the quarterly payment due to Equity Security Units Holders on the Stock Purchase Date in an amount equal to the quarterly interest payment on the Notes, calculated at the initial annual interest rate. On the Stock Purchase Date, the Collateral Agent shall, at the direction of the Company, (i) apply that portion of the payments received in respect of the Pledged Treasury Consideration equal to the aggregate Stated Amount of the related Equity Security Units to satisfy in full the obligations of such Equity Security Units Holders to pay the Purchase Price under the 13 related Purchase Contracts and (ii) apply the remaining portion to pay the quarterly payment due to Equity Security Units Holders on such Stock Purchase Date in an amount equal to the quarterly interest payment on the Notes, calculated at the initial annual interest rate. (b) The Remarketing Agent shall make one or more attempts to remarket the Notes in accordance with the procedures set forth in the Purchase Contract Agreement and the Remarketing Agreement. If by 4:00 p.m., New York City time, on the fifth Business Day immediately preceding the Stock Purchase Date, the Remarketing Agent has failed to remarket the Notes at approximately, but not less than, 100.5% of the Remarketing Value, the Last Failed Remarketing shall be deemed to have occurred. Within three Business Days following the Last Failed Remarketing, the Pledged Notes delivered to the Remarketing Agent pursuant to Section 4.5(a) hereof shall be returned to the Collateral Agent. In this case, the Remarketing Agent shall advise the Collateral Agent in writing that it cannot remarket the related Pledged Notes of such Holders of Equity Security Units, and the Holders of Equity Security Units that have not made an Early Settlement, Merger Early Settlement or Cash Settlement shall be deemed to have directed the Company to sell or deliver the Pledged Notes in full satisfaction of their obligations under the Purchase Contracts. Pursuant to the written direction of the Company, the Collateral Agent, for the benefit of the Company, will sell or deliver the Pledged Notes in accordance with the Company's written direction to satisfy in full, from any such sale or delivery, such Holders' obligations under the related Purchase Contracts to pay the Purchase Price for the Common Stock; provided, that if upon the Last Failed Remarketing, the Collateral Agent sells or delivers the Pledged Notes in accordance with the written direction of the Company, any accrued and unpaid interest on such Notes will become payable by the Company to the Purchase Contract Agent for payment to the Holders of the Equity Security Units to which such Notes relate in accordance with the Purchase Contract Agreement. (c) In the event a Holder of Stripped Units has not effected a Cash Settlement, Early Settlement or Merger Early Settlement of the Purchase Contracts underlying its Stripped Units, such Holder shall be deemed to have elected to pay for the shares of Common Stock to be issued under such Purchase Contracts from the payments received in respect of the related Pledged Treasury Securities. Without receiving any instruction from any such Holder, the Collateral Agent shall apply such payments to the settlement of such Purchase Contracts on the Stock Purchase Date pursuant to the written instruction of the Purchase Contract Agent. In the event the payments received in respect of the related Pledged Treasury Securities are in excess of the aggregate Purchase Price under the Purchase Contracts being settled thereby, the Collateral Agent shall distribute such excess, when received, to the Purchase Contract Agent for the benefit of such Holders of the Stripped Units. (d) At any time after the Payment Date immediately preceding the Initial Remarketing Date and prior to 11:00 a.m., New York City time, on the fourth Business Day immediately preceding the Initial Remarketing Date or the first day of any subsequent Remarketing Period, as applicable, holders of Separate Notes may elect to 14 have their Separate Notes remarketed by Transferring their Separate Notes and delivering a notice of such election, substantially in the form of Exhibit C hereto, to the Custodial Agent. On the third Business Day immediately preceding the Initial Remarketing Date or the first day of any subsequent Remarketing Period, as applicable, by 10:00 a.m., New York City time, the Custodial Agent shall notify the Remarketing Agent of the number of such Separate Notes to be remarketed. The Custodial Agent will hold such Separate Notes in an account separate from the Collateral Account. A holder of Separate Notes electing to have its Separate Notes 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, prior to 11:00 a.m., New York City time, on the fourth Business Day immediately preceding the Initial Remarketing Date or first day of a subsequent Remarketing Period, as applicable, upon which notice the Custodial Agent will return such Separate Notes to such holder. On the third Business Day immediately preceding the Initial Remarketing Date or the first day of any subsequent Remarketing Period, as applicable, the Custodial Agent at the written direction of the Remarketing Agent will deliver to the Remarketing Agent for remarketing all Separate Notes delivered to the Custodial Agent pursuant to this Section 4.5(d) and not withdrawn pursuant to the terms hereof. After deducting as the remarketing fee an amount not exceeding 25 basis points (0.25%) of the total proceeds of such remarketing of such Separate Notes, the Remarketing Agent will remit to the Custodial Agent the portion of the proceeds from such remarketing, if successful, equal to the amount calculated in respect of such Separate Notes as set forth in Section 2.06 of the Supplemental Indenture. If, despite using its commercially reasonable best efforts, the Remarketing Agent advises the Custodial Agent in writing that there has been a Failed Remarketing, the Remarketing Agent will promptly return such Separate Notes to the Custodial Agent for redelivery to such holders of such Separate Notes. The Custodial Agent shall be entitled to rely without further inquiry on any written instructions received from a holder of Separate Notes and shall have no liability with respect thereto. For purposes of this Section 4.5(d), a "holder" of a Separate Note shall mean the Person in whose name such Separate Note is registered on the books of the registrar for the Notes. ARTICLE V VOTING RIGHTS -- NOTES SECTION 5.1 Exercise by Purchase Contract Agent. Subject to the terms of the Purchase Contract Agreement, the Purchase Contract Agent may exercise, or refrain from exercising, any and all voting and other consensual rights pertaining to the Pledged Notes 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 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 Notes, including notice of any meeting at which holders of Notes are entitled to vote or 15 solicitation of consents, waivers or proxies of holders of Notes, 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 Notes (in form and substance satisfactory to the Collateral Agent) as are prepared by the Purchase Contract Agent with respect to the Pledged Notes. ARTICLE VI RIGHTS AND REMEDIES; TAX EVENT REDEMPTION SECTION 6.1 Rights and Remedies of the Collateral Agent. (a) In addition to the rights and remedies available at law or in equity, after an event of default (as specified in Section 6.1(b)) hereunder, the Collateral Agent on behalf of the Company 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 Notes or other Collateral in full satisfaction of the Holders' obligations under the Purchase Contracts or (ii) sale of the Pledged Notes or other Collateral in one or more public or private sales, in each case at the written direction of the Company. (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 any Pledged Treasury Consideration, Pledged Applicable Ownership Interests in the Treasury Portfolio or Pledged Treasury Securities as provided in Article III hereof in satisfaction of the obligations of the Holder of the Equity Security Units or Stripped Units of which such Pledged Treasury Consideration, Pledged Applicable Ownership Interests in the Treasury Portfolio or Pledged Treasury Securities, as applicable, are a part under the related Purchase Contracts, the inability to make such payments shall constitute an event of default hereunder and the Collateral Agent on behalf of the Company shall have and may exercise, with reference to such Pledged Treasury Consideration, Pledged Applicable Ownership Interests in the Treasury Portfolio or Pledged Treasury Securities, 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. 16 (c) Without limiting any rights or powers otherwise granted by this Agreement to the Collateral Agent, the Collateral Agent on behalf of the Company is hereby irrevocably authorized to receive and collect all payments of (i) the principal amount of, or interest on, the Pledged Notes, or (ii) the principal amount of, or interest (if any) on, the Pledged Treasury Consideration, Pledged Applicable Ownership Interests in the Treasury Portfolio or Pledged Treasury Securities, subject, in each case, to the provisions of Article III, and as otherwise granted herein. (d) The Purchase Contract Agent, individually and as attorney-in-fact for each Holder of Equity Security Units and Stripped Units, agrees that, from time to time, upon the written request of the Company or the Collateral Agent (acting upon the written request of the Company), the Purchase Contract Agent or such Holder shall execute and deliver such further documents and do such other acts and things as the Company or the Collateral Agent (acting upon the written request of the Company) 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. Notwithstanding the foregoing, in no event shall the Purchase Contract Agent be responsible for the preparation or filing of financing or continuation statements in the appropriate jurisdictions or responsible for maintenance or perfection of any security interest hereunder. The Purchase Contract Agent shall have no liability to any Holder for executing any documents or taking any such acts requested by the Company or the Collateral Agent (acting upon the written request of the Company) hereunder, except for liability for its own negligent act, its own negligent failure to act, its bad faith or its own willful misconduct. SECTION 6.2 Substitutions. Whenever a Holder has the right to substitute Treasury Securities or Notes for Collateral held by the Collateral Agent, such substitution shall not constitute a novation of the security interest created hereby. SECTION 6.3 Tax Event Redemption. Upon the occurrence of a Tax Event Redemption prior to the earlier of the date of a successful remarketing of the Pledged Notes or the Stock Purchase Date, the aggregate Redemption Price payable on the Tax Event Redemption Date with respect to such Pledged Notes shall be delivered to the Collateral Agent by the Trustee at or prior to 12:00 p.m., New York City time, by wire transfer in immediately available funds at such place and at such account as may be designated by the Collateral Agent in exchange for the Pledged Notes. In the event the Collateral Agent receives such Redemption Price, the Collateral Agent will, at the written direction of the Company, apply an amount, out of such Redemption Price, equal to the aggregate Redemption Amount with respect to the Pledged Notes 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 Equity Security Units. The Collateral Agent shall Transfer the Treasury Portfolio to the Collateral Account to secure the obligation of all Holders of Equity Security Units to purchase Common Stock of the Company under the Purchase 17 Contracts constituting a part of such Equity Security Units, in substitution for the Pledged Notes. 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 Notes as provided in Articles II, III, IV, V and VI, and any reference herein to the Notes shall be deemed to be a reference to such Treasury Portfolio, and any reference herein to interest on the Notes shall be deemed to be a reference to distributions on such Treasury Portfolio. ARTICLE VII 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 and the Company, 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 2.1 hereof; (c) upon the Transfer of the Collateral to the Collateral Account, the Collateral Agent, for the benefit of the Company, will have a valid and perfected first priority security interest therein (assuming that any central clearing operation or any Intermediary or other entity not within the control of the Holder involved in the Transfer of the Collateral, including the Collateral Agent, gives the notices and takes the action required of it hereunder and under applicable law for perfection of that interest and assuming the establishment and exercise of control pursuant to Section 2.2 hereof); and (d) the execution and performance by 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 2.1 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. 18 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 and the Company 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 sale or other disposition of the Equity Security Units and Stripped Units. ARTICLE VIII THE COLLATERAL AGENT, THE CUSTODIAL AGENT AND THE SECURITIES INTERMEDIARY SECTION 8.1 Appointment, Powers and Immunities. (a) The Collateral Agent, the Custodial Agent and the Securities Intermediary shall act as agent for the Company hereunder with such powers as are specifically vested in the Collateral Agent, the Custodial Agent and the Securities Intermediary by the terms of this Agreement, together with such other powers as are reasonably incidental thereto, and shall have no duties, fiduciary or otherwise, to any other Person. Each of the Collateral Agent, the Custodial Agent and the Securities Intermediary: (i) 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; (ii) 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 Equity Security Units or Stripped Units 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 Custodial Agent or the Securities Intermediary, as the case may be), the Equity Security Units or Stripped Units 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, 19 as the case may be) to perform any of its obligations hereunder or thereunder or for the attachment, perfection, priority or, except as expressly required hereby, existence, validity, perfection or maintenance of any lien or security interest created hereunder; (iii) shall not be required to initiate or conduct any litigation or collection proceedings hereunder (except in the case of the Collateral Agent, pursuant to written directions furnished under Section 8.2 hereof, subject to Section 8.6 hereof); (iv) 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 gross negligence or willful misconduct; and (v) 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 Equity Security Units or Stripped Units 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. (b) 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 or for any special, indirect, individual or consequential damages or lost profits or loss of business, arising in connection with this Agreement even if the Collateral Agent, the Custodial Agent or the Securities Intermediary has been advised of the likelihood of such loss or damage being incurred and regardless of the form of action. Notwithstanding the foregoing, the Collateral Agent, the Custodial Agent, the Purchase Contract Agent and the Securities Intermediary, each in its individual capacity, hereby waive any right of setoff, banker's lien, liens or perfection rights as securities intermediary or any counterclaim with respect to any of the Collateral. (c) The Collateral Agent, Custodial Agent and Securities Intermediary shall have no liability whatsoever for the action or inaction of any Clearing Agency or any book-entry system thereof. In no event shall any Clearing Agency or any book-entry system thereof be deemed an agent or subcustodian of the Collateral Agent, Custodial Agent and Securities Intermediary. The Collateral Agent, Custodial Agent and Securities Intermediary shall not be responsible or liable for any failure or delay in the performance of its obligations under this Agreement arising out of or caused, directly or indirectly, by circumstances beyond its reasonable control, including, without limitation, acts of God; earthquakes; fires; floods; war (whether declared or undeclared); terrorism; civil or 20 military disturbances; sabotage; epidemics; riots; interruptions, loss or malfunctions of utilities, computer (hardware or software) or communications service; accidents; labor disputes; acts of civil or military authority; governmental actions; or inability to obtain labor, material, equipment or transportation. (d) Notwithstanding anything to the contrary contained in this Article VIII, the Securities Intermediary shall have the duties and responsibilities of a securities intermediary under Article 8 of the Code, including without limitation, Sections 8-504, 8-505, 8-506, 8-507, 8-508 and 8-509. 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 each receive indemnity reasonably satisfactory to it as provided herein. Nothing contained 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. Each of the Collateral Agent, the Custodial Agent and the Securities Intermediary shall be entitled conclusively to rely upon any certification, order, judgment, opinion, notice or other communication (including, without limitation, any thereof by telephone or facsimile) reasonably 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 investments in and generally engage in any kind of banking, trust or other business with the Purchase Contract Agent, any Holder of Equity Security 21 Units or Stripped Units and any holder of Separate Notes (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, any Holder of Equity Security Units or Stripped Units or any holder of Separate Notes without having to account for the same to the Company; provided that each of the Collateral Agent, the Custodial Agent and the Securities Intermediary covenants and agrees with the Company that, except as provided in this Agreement, it shall not accept, receive or permit there to be created in favor of itself (and waives any right of set-off or banker's lien with respect to) 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 and the Collateral shall not be commingled with any other assets of any such Person. SECTION 8.5 Non-Reliance on Collateral Agent. None of the Collateral Agent, the Custodial Agent or the Securities Intermediary shall be required to keep itself informed as to the performance or observance by the Purchase Contract Agent or any Holder of Equity Security Units or Stripped Units of this Agreement, the Purchase Contract Agreement, the Equity Security Units or Stripped Units 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 Equity Security Units or Stripped Units. The Collateral Agent, the Custodial Agent and the Securities Intermediary shall not have any duty or responsibility to provide the Company or the Remarketing Agent with any credit or other information concerning the affairs, financial condition or business of the Purchase Contract Agent, any Holder of Equity Security Units or Stripped Units or any holder of Separate Notes (or any of their respective subsidiaries or 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 to: (a) pay each of the Collateral Agent, the Custodial Agent and the Securities Intermediary from time to time such compensation as shall be agreed in writing between the Company and the Collateral Agent, the Custodial Agent or the Securities Intermediary, as the case may be, for all services rendered by each of them hereunder, and (b) indemnify the Collateral Agent, the Custodial Agent, the Securities Intermediary and their officers, directors and agents for, and to hold each of them harmless from and against, any loss, liability or reasonable out-of-pocket expense incurred without gross negligence or willful misconduct 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 22 reasonable fees and expenses of counsel) incurred enforcing the Company's indemnification obligation hereunder or defending itself against any claim or liability in connection with the exercise or performance of such powers and duties or collecting such amounts. 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 the indemnity hereunder and give the Company the opportunity to participate in the defense of such claim with counsel reasonably satisfactory to the indemnified party (provided, however, that if there shall exist a conflict or potential conflict of interest between the Company on the one hand and the Collateral Agent, the Custodial Agent or the Securities Intermediary on the other hand, in the conduct of any such defense which makes it impracticable for a single counsel to represent the Company and the Collateral Agent, the Custodial Agent or the Securities Intermediary, each of the Collateral Agent, the Custodial Agent or the Securities Intermediary, as the case may be, shall have the right to select separate counsel to participate in the defense of such claim), and no such claim shall be settled without the written consent of the Company, which consent shall not be unreasonably withheld. The provisions of this Section 8.6 shall survive the resignation or removal of the Collateral Agent, the Custodial Agent and the Securities Intermediary or the termination of this Agreement. 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, the Custodial Agent and the Securities Intermediary 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 none of the Collateral Agent, the Custodial Agent or the Securities Intermediary 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, the Custodial Agent and the Securities Intermediary 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, reasonably satisfactory to the Collateral Agent, the Custodial Agent or the Securities Intermediary, as the case may be; or (ii) the Collateral Agent, the Custodial Agent or the Securities Intermediary, as the case may be, shall have received security or an indemnity reasonably satisfactory to the Collateral Agent, the Custodial Agent or the Securities Intermediary, as the case may be, sufficient to save the Collateral Agent, the Custodial Agent or the Securities Intermediary, as the case may be, harmless from and against any and all loss, liability or reasonable out-of-pocket expense which the Collateral Agent, the Custodial Agent or the Securities 23 Intermediary, as the case may be, may incur by reason of its acting without willful misconduct or gross negligence. The Collateral Agent, the Custodial Agent or the Securities Intermediary may in addition elect to commence an interpleader action or seek other judicial relief or orders as the Collateral Agent, the Custodial Agent or the Securities Intermediary, as the case may be, may deem necessary. Notwithstanding anything contained herein to the contrary, none of the Collateral Agent, the Custodial Agent or the Securities Intermediary 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. Subject to the appointment and acceptance of a successor Collateral Agent, the Custodial Agent or Securities Intermediary, as provided below: (a) the Collateral Agent, Custodial Agent and the Securities Intermediary 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 Equity Security Units and Stripped Units; (b) the Collateral Agent, the Custodial Agent and the Securities Intermediary may be removed at any time by the Company; and (c) if the Collateral Agent, the Custodial Agent or the Securities Intermediary 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, the Custodial Agent or the Securities Intermediary may be removed by the Purchase Contract Agent. The Purchase Contract Agent shall promptly notify the Company of any removal of the Collateral Agent, the Custodial Agent or the Securities Intermediary pursuant to clause (c) of the immediately preceding sentence. The Company shall promptly notify the Purchase Contract Agent of any removal of the Collateral Agent, the Custodial Agent or the Securities Intermediary pursuant to clause (b) of the second preceding sentence. Upon notice of any such resignation or removal, the Company shall have the right to appoint a successor Collateral Agent, Custodial Agent or Securities Intermediary, as the case may be and shall give the Purchase Contract Agent prompt notice thereof. If no successor Collateral Agent, Custodial Agent or Securities Intermediary, 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, the Custodial Agent's or Securities Intermediary's giving of notice of resignation or such removal, then the retiring Collateral Agent, the Custodial Agent or Securities Intermediary, as the case may be, may at the Company's expense petition any court of competent jurisdiction for the appointment of a successor Collateral Agent, the Custodial Agent or Securities Intermediary, as the case may be. Each of the Collateral Agent, the Custodial Agent and the Securities Intermediary shall be a bank 24 which has an office in New York, New York with a combined capital and surplus of at least $50,000,000 or any affiliate of a bank holding company having such capital and surplus. Upon the acceptance of any appointment as Collateral Agent, Custodial Agent or Securities Intermediary, as the case may be, hereunder by a successor Collateral Agent, Custodial Agent or Securities Intermediary, 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, Custodial Agent or Securities Intermediary, as the case may be, and the retiring Collateral Agent, Custodial Agent or Securities Intermediary, 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 after the payment of any outstanding fees, expenses and indemnities due and owing to such retiring party. The retiring Collateral Agent, Custodial Agent or Securities Intermediary shall, upon such succession, be discharged from its duties and obligations as Collateral Agent, Custodial Agent or Securities Intermediary hereunder. After any retiring Collateral Agent's, Custodial Agent's or Securities Intermediary's resignation hereunder as Collateral Agent, Custodial Agent or Securities Intermediary, the provisions of this Section 8.8, and Section 8.6 hereof, 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, Custodial Agent or Securities Intermediary. 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 hereunder. Any corporation into which the Collateral Agent, the Custodial Agent or the Securities Intermediary, in its individual capacity, may be merged or converted or with which it may be consolidated, or any corporation resulting from any merger, conversion or consolidation to which the Collateral Agent in its individual capacity shall be a party, or any corporation to which substantially all of the corporate trust business of the Collateral Agent in its individual capacity may be transferred, shall be the Collateral Agent, the Custodial Agent, the Securities Intermediary, as the case may be respectively, under this Agreement without further act. SECTION 8.9 Right to Appoint Agent or Advisor. The Collateral Agent shall have the right to appoint or consult with 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 (other than legal counsel) 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 Article VIII shall survive termination of this Agreement and the resignation or removal of the Collateral Agent, the Custodial Agent or the Securities Intermediary. 25 SECTION 8.11 Exculpation. Anything contained 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, and regardless of the form of action. ARTICLE IX AMENDMENT SECTION 9.1 Amendment Without Consent of Holders. Without the consent of any Holders or the holders of any Separate Notes, the Company (when authorized by a Board Resolution), 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 to: (i) evidence the succession of another Person to the Company, and the assumption by any such successor of the covenants of the Company; (ii) add to the covenants of the Company for the benefit of the Holders, or surrender any right or power herein conferred upon the Company so long as such covenants or such surrender does not adversely affect the validity, perfection or priority of the security interests granted or created hereunder; (iii) evidence and provide for the acceptance of appointment hereunder by a successor Collateral Agent, Custodial Agent, Securities Intermediary or Purchase Contract Agent; or (iv) cure any ambiguity, correct or supplement any provisions herein which may be inconsistent with any other provisions herein, or 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 Outstanding Units (with the Equity Security Units and Stripped Units voting together as one class), by Act of such Holders delivered to the Company, the Purchase Contract Agent or the Collateral Agent, as the case may be, the Company (when duly authorized by a Board Resolution), the Purchase Contract Agent, the Collateral Agent, the Custodial Agent and the Securities Intermediary may amend this Agreement for the purpose of modifying in 26 any manner the provisions of this Agreement or the rights of the Holders in respect of the Equity Security Units or Stripped Units; provided, however, that no amendment shall, without the consent of the Holder of each Equity Security Unit and Stripped Unit affected thereby (in addition to the consent of the holders of at least a majority of the Outstanding Units, with the Equity Security Units and Stripped Units voting together as one class), (i) change the amount or type of Collateral underlying an Equity Security Unit or a Stripped Unit, impair the right of the Holder of any Equity Security Units or Stripped Units to receive distributions on the underlying Collateral, or otherwise adversely affect the Holder's rights in or to such Collateral; (ii) otherwise effect any action that would require the consent of the Holder of each Equity Security Unit and Stripped Unit affected thereby pursuant to the Purchase Contract Agreement if such action were effected by an amendment thereto; or (iii) reduce the percentage of Equity Security Units and Stripped Units 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 receive and (subject to Section 8.1 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 Officer's Certificate and 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 and, in the case of an amendment pursuant to Section 9.1, that such amendment does not adversely affect the validity, perfection or priority of the security interests granted or created hereunder. SECTION 9.4 Effect of Amendments. Upon the execution of any amendment under this Article IX, 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. 27 SECTION 9.5 Reference to Amendments. 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 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 Certificates. ARTICLE X MISCELLANEOUS SECTION 10.1 No Waiver. No failure on the part of any party hereto 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 any party hereto 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; Submission to Jurisdiction. This Agreement shall be governed by, and construed in accordance with, the laws of the State of New York. Without limiting the foregoing, the above choice of law is expressly agreed to by the Securities Intermediary, the Collateral Agent, the Custodial 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, which law, for purposes of the Code, shall be deemed to be the law governing all Security Entitlements related thereto. In addition, such parties agree that, for purposes of the Code, New York shall be the Securities Intermediary's jurisdiction. The Company, the Collateral Agent, and the Holders from time to time of Equity Security Units and Stripped Units, acting through the Purchase Contract Agent as their attorney-in-fact, each submit to the jurisdiction of the courts of the State of New York and the courts of the United States of America, in each case located in the Borough of Manhattan, City of New York and State of New York over any suit, action or proceeding with respect to this Agreement or the transactions contemplated hereby. The Company, the Collateral Agent, and the Holders from time to time of Equity Security Units and Stripped Units, acting through the Purchase Contract Agent as their attorney-in-fact, each waive any objection that any of them may have to the venue of any suit, action or proceeding with respect to this Agreement or the transactions contemplated hereby in the courts of the 28 State of New York or the courts of the United States of America, in each case located in the Borough of Manhattan, City of New York and State of New York, or that such suit, action or proceeding brought in the courts of the State of New York or the courts of the United States of America, in each case located in the Borough of Manhattan, City of New York and State of New York, was brought in an inconvenient court and agrees not to plead or claim the same. SECTION 10.3 Notices. Unless otherwise stated herein, 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 facsimile) delivered to the intended recipient at the "Address for Notices" specified below its name on the signature pages hereof or, as to any party, at such other address as shall be designated by such party in a notice to the other parties. Except as otherwise provided in this Agreement, all such communications shall be deemed to have been duly given when personally delivered or, in the case of a mailed notice or notice transmitted by facsimile, upon receipt, in each case given or addressed as aforesaid. SECTION 10.4 Successors and Assigns. This Agreement shall be binding upon and inure to the benefit of the Company, the Collateral Agent, the Custodial Agent, the Securities Intermediary and the Purchase Contract Agent and their respective successors and assigns, and the Holders from time to time of the Equity Security Units and Stripped Units, 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. 29 SECTION 10.7 Expenses, Etc. The Company agrees to reimburse the Collateral Agent, the Securities Intermediary and the Custodial Agent for: (a) all reasonable out-of-pocket costs and all reasonable expenses of the Collateral Agent, the Custodial Agent and the Securities Intermediary (including, without limitation, the reasonable fees and expenses of counsel to the Collateral Agent, the Custodial Agent and the Securities Intermediary), 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 Equity Security Units or Stripped Units to satisfy its obligations under the Purchase Contracts forming a part of the Equity Security Units and Stripped Units 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 Company 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 Equity Security Units or Stripped Units 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 Equity Security Units or Stripped Units under the related Purchase Contracts, or any other amendment or waiver of any term of, or any consent to any departure from any requirement of, the Purchase Contract Agreement or any Purchase Contract or any other agreement or instrument relating thereto; or (c) any other circumstance which might otherwise constitute a defense available to, or discharge of, a borrower, a guarantor or a pledgor. 30 SECTION 10.9 Waiver of Jury Trial. Each party acknowledges and agrees that any controversy which may arise under this Agreement is likely to involve complicated and difficult issues, and therefore it hereby irrevocably and unconditionally waives any right it may have to a trial by jury in respect of any litigation directly or indirectly arising out of or relating to this Agreement or the transactions contemplated hereby. 31 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed as of the day and year first above written. EL PASO CORPORATION By: /s/ John J. Hopper ------------------------------------- Name: John J. Hopper Title: Vice President and Treasurer Address for Notices: El Paso Corporation 1001 Louisiana Street Houston, Texas 77002 Attention: Legal Department Facsimile: (713) 420-4099 JPMORGAN CHASE BANK, as Purchase Contract Agent and as attorney-in-fact of the Holders from time to time of the Equity Security Units and Stripped Units By: /s/ R. Lorenzen ------------------------------------- Name: R. Lorenzen Title: Assistant Vice President Address for Notices: 450 West 33rd Street New York, New York 10001 Attention: Institutional Trust Services Facsimile: (212) 946-8159 32 THE BANK OF NEW YORK, as Collateral Agent, Custodial Agent and Securities Intermediary By: /s/ Remo J. Reale ------------------------------------- Name: Remo J. Reale Title: Vice President Address for Notices: 101 Barclay Street New York, New York 10286 Attention: Corporate Trust Department Facsimile: (212) 328-8243 33 EXHIBIT A INSTRUCTION FROM PURCHASE CONTRACT AGENT TO COLLATERAL AGENT REGARDING CREATION OF STRIPPED UNITS OR RECREATION OF EQUITY SECURITY UNITS The Bank of New York, as Collateral Agent 101 Barclay Street New York, New York 10286 Attention: Corporate Trust Department Facsimile: (212) 328-8243 Re: Equity Security Units of El Paso Corporation (the "Company") We hereby notify you in accordance with Section [4.1] [4.2] of the Pledge Agreement, dated as of June 26, 2002 (the "Pledge Agreement"), among you, as Collateral Agent, Custodial Agent and Securities Intermediary, the Company and us, as Purchase Contract Agent and as attorney-in-fact for the Holders from time to time of the Equity Security Units and Stripped Units, that the holder of Equity Security Units or Stripped Units listed below (the "Holder") has elected to substitute [$_____ aggregate principal amount of Treasury Securities (CUSIP No. 912803 AG 8)] [$_____ aggregate principal amount of Notes] in exchange for the related [Pledged Notes] [Pledged Treasury Securities] held by you in accordance with the Pledge Agreement and has delivered to us a notice stating that the Holder has Transferred [Treasury Securities] [Notes] to you, as Collateral Agent. We hereby instruct you, upon receipt of such [Pledged Treasury Securities] [Pledged Notes], and upon the payment by such Holder of any applicable fees, to release the [Notes] [Treasury Securities] related to such [Equity Security Units] [Stripped Units] to us in accordance with the Holder's instructions. Capitalized terms used herein but not defined shall have the meaning set forth in the Pledge Agreement. Date: ------------------------------- JPMORGAN CHASE BANK, as Purchase Contract Agent By: ------------------------------------- Name: Title: A-1 Please print name, Social Security or other Taxpayer Identification Number, if any, and address of registered Holder electing to substitute [Treasury Securities] [Notes] for the [Pledged Notes] [Pledged Treasury Securities]: Name: Social Security or other Taxpayer Identification Number, if any: Address: A-2 EXHIBIT B INSTRUCTION FROM HOLDER TO PURCHASE CONTRACT AGENT REGARDING CREATION OF STRIPPED UNITS OR RECREATION OF EQUITY SECURITY UNITS JPMorgan Chase Bank, as Purchase Contract Agent 450 West 33rd Street New York, New York 10001 Attention: Institutional Trust Services Facsimile: (212) 946-8159 Re: Equity Security Units and Stripped Units of El Paso Corporation (the "Company") The undersigned Holder hereby [instructs you, in your capacity as custodian for the Depositary, to decrease the number of [Equity Security Units evidenced by the Global Equity Security Units Certificate(s)][Stripped Units evidenced by the Global Stripped Units Certificate(s)] and] notifies you that it has delivered to The Bank of New York, as Collateral Agent, Custodial Agent and Securities Intermediary [$_______ aggregate principal amount of Treasury Securities (CUSIP No. 912803 AG 8)] [$_______ aggregate principal amount of Notes] in exchange for the related [Pledged Notes] [Pledged Treasury Securities] held by the Collateral Agent, in accordance with Section [4.1] [4.2] of the Pledge Agreement, dated June 26, 2002 (the "Pledge Agreement"), among you, as Purchase Contract Agent and as attorney-in-fact of the Holders from time to time of the Equity Security Units and Stripped Units, the Company and the Collateral Agent, the Custodial Agent and the Securities Intermediary. The undersigned Holder has paid the Collateral Agent all applicable fees relating to such exchange. The undersigned Holder hereby instructs you to instruct the Collateral Agent to release to you on behalf of the undersigned Holder the [Pledged Notes] [Pledged Treasury Securities] related to such [Equity Security Units] [Stripped Units]. Capitalized terms used herein but not defined shall have the meaning set forth in the Pledge Agreement. Date: Signature: --------------------- ----------------------------- Signature Guarantee: ------------------- Please print name and address of Registered Holder: Name: Social Security or other Taxpayer Identification Number, if any: Address: B-1 EXHIBIT C INSTRUCTION FROM HOLDER OF SEPARATE NOTES TO CUSTODIAL AGENT REGARDING REMARKETING The Bank of New York, as Custodial Agent 101 Barclay Street New York, New York 10286 Attention: Corporate Trust Department Facsimile: (212) 328-8243 Re: Notes of El Paso Corporation (the "Company") The undersigned hereby notifies you in accordance with Section 4.5(d) of the Pledge Agreement, dated as of June 26, 2002 (the "Pledge Agreement"), among you, as Collateral Agent, Securities Intermediary and Custodial Agent, the Company and JPMorgan Chase Bank, as Purchase Contract Agent and as attorney-in-fact of the Holders from time to time of the Equity Security Units and Stripped Units, that the undersigned elects to deliver $________ aggregate principal amount of Notes for delivery to the Remarketing Agent prior to 11:00 a.m., New York City time, on the fourth Business Day immediately preceding [the Initial Remarketing Date] [the first day of any subsequent Remarketing Period] for remarketing pursuant to Section 4.5(d) 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 Notes tendered hereby. The undersigned hereby instructs you, upon receipt of the proceeds of such remarketing, if successful, from the Remarketing Agent, net of amounts payable to the Remarketing Agent in accordance with the Pledge Agreement, 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 a Failed Remarketing, upon receipt of the Notes tendered herewith from the Remarketing Agent, to deliver the Notes in accordance with the instructions 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 Notes tendered hereby and that the undersigned is the record owner of any Notes tendered herewith in physical form or a participant in The Depository Trust Company ("DTC") and the beneficial owner of any Notes tendered herewith by book-entry transfer to your account at DTC and (ii) agrees to be bound by the terms and conditions of Section 4.5(d) of the Pledge Agreement. Capitalized terms used herein but not defined shall have the meaning set forth in the Pledge Agreement. C-1 Date: Signature: -------------------------- ------------------------------ Signature Guarantee: -------------------- Name: Social Security or other Taxpayer Identification Number, if any: Address: A. PAYMENT INSTRUCTIONS Proceeds of the remarketing should be paid by check in the name of the person(s) set forth below and mailed to the address set forth below. Name(s): -------------------------------------- (Please Print) Address: -------------------------------------- (Zip Code) (Please Print) (Taxpayer Identification or Social Security Number): B. DELIVERY INSTRUCTIONS In the event of a Failed Remarketing, Notes which are in physical form should be mailed to the person(s) set forth below at the address set forth below. Name(s): -------------------------------------- (Please Print) Address: -------------------------------------- (Zip Code) (Please Print) (Taxpayer Identification or Social Security Number): C-2 In the event of a Failed Remarketing, Notes which are in book-entry form should be credited to the account at The Depository Trust Company set forth below. Name of Account Party: DTC Account Number: C-3 EXHIBIT D INSTRUCTION FROM HOLDER OF SEPARATE NOTES TO CUSTODIAL AGENT REGARDING WITHDRAWAL FROM REMARKETING The Bank of New York, as Collateral Agent 101 Barclay Street New York, New York 10286 Attention: Corporate Trust Department Facsimile: (212) 328-8243 Re: Notes of El Paso Corporation (the "Company") The undersigned hereby notifies you in accordance with Section 4.5(d) of the Pledge Agreement, dated as of June 26, 2002 (the "Pledge Agreement"), among you, as Collateral Agent, Securities Intermediary and Custodial Agent, the Company and JPMorgan Chase Bank, as Purchase Contract Agent and as attorney-in-fact of the Holders from time to time of the Equity Security Units and Stripped Units, that the undersigned elects to withdraw the $_____ aggregate principal amount of Notes delivered to the Custodial Agent on ___________, ____ for remarketing pursuant to Section 4.5(d) of the Pledge Agreement. The undersigned hereby instructs you to return such Notes in accordance with the instructions indicated herein under "Delivery Instructions." With this notice, the undersigned hereby agrees to be bound by the terms and conditions of Section 4.5(d) of the Pledge Agreement. Capitalized terms used herein but not defined shall have the meaning set forth in the Pledge Agreement. Name(s): -------------------------------------- (Please Print) Address: -------------------------------------- (Zip Code) (Please Print) (Taxpayer Identification or Social Security Number): D-1 DELIVERY INSTRUCTIONS Notes which are in physical form should be mailed to the person(s) set forth below at the address set forth below. Name(s): -------------------------------------- (Please Print) Address: -------------------------------------- (Zip Code) (Please Print) (Taxpayer Identification or Social Security Number): Notes which are in book-entry form should be credited to the account at The Depository Trust Company set forth below. Name of Account Party: DTC Account Number: D-2 EX-4.D 8 h97915exv4wd.txt REMARKETING AGREEMENT DATED 6/26/2002 EXHIBIT 4.D EL PASO CORPORATION REMARKETING AGREEMENT REMARKETING AGREEMENT, dated as of June 26, 2002 (the "Agreement") between El Paso Corporation, a Delaware corporation (the "Company"), and Credit Suisse First Boston Corporation (the "Remarketing Agent"), and confirmed and accepted by JPMorgan Chase Bank, not individually but solely as Purchase Contract Agent (the "Purchase Contract Agent") and as attorney-in-fact of the Holders of Purchase Contracts (as defined in the Purchase Contract Agreement (as defined herein)). RECITALS WHEREAS, the Company issued 10,000,000 (up to 11,500,000 if the over-allotment option of the Underwriters (as such term is defined in the Underwriting Agreement) is exercised pursuant to the Underwriting Agreement) Equity Security Units (the "Equity Security Units") under the Purchase Contract Agreement, dated as of June 26, 2002, between the Purchase Contract Agent and the Company (the "Purchase Contract Agreement"); WHEREAS, the $500,000,000 (up to $575,000,000 if the Underwriters over-allotment option is exercised) aggregate principal amount of Senior Notes Due August 16, 2007 of the Company (the "Notes") initially forming a part of the Equity Security Units have been issued under the Indenture, dated as of May 10, 1999, between the Company and JPMorgan Chase Bank, as Trustee (the "Trustee"), as supplemented by the Eighth Supplemental Indenture, dated as of June 26, 2002, between the Company and the Trustee, and pledged pursuant to the Pledge Agreement (the "Pledge Agreement"), dated as of June 26, 2002, among the Company, The Bank of New York, as collateral agent (the "Collateral Agent"), custodial agent and securities intermediary and the Purchase Contract Agent, as Purchase Contract Agent and attorney-in-fact of the Holders from time to time of the Equity Security Units and Stripped Units to secure the obligations of Holders of Equity Security Units under the related Purchase Contracts; WHEREAS, the Remarketing Agent will attempt on the Initial Remarketing Date to remarket all of (i) the Notes of Holders of Equity Security Units and (ii) the Separate Notes of Holders who elect to participate in the remarketing, pursuant to the procedures set forth in Section 5.4(b) of the Purchase Contract Agreement, Section 4.5(d) of the Pledge Agreement and Section 2.06 of the Supplemental Indenture (each of which Sections is incorporated herein by reference); WHEREAS, in the event the remarketing on the Initial Remarketing Date is unsuccessful, the Remarketing Agent will remarket the Notes to be included in the remarketing on each of the two Business Days next succeeding the Initial Remarketing Date, and, if necessary, will attempt to remarket such Notes on each of the three Business Days immediately preceding July 1, 2005 and, if necessary, will further attempt to remarket such Notes on the seventh, sixth and fifth Business Days immediately preceding the Stock Purchase Date; WHEREAS, in the event of a successful remarketing on the Initial Remarketing Date or any Subsequent Remarketing Date, as the case may be, the applicable interest rate on the Notes will be reset on the settlement date of such Initial Remarketing Date or Subsequent Remarketing Date to the Reset Rate (as defined in clause (i) of the definition of such term) determined in the remarketing; WHEREAS, the Company has requested Credit Suisse First Boston Corporation to act as the Remarketing Agent, and as such to perform the services described herein; and WHEREAS, Credit Suisse First Boston Corporation is willing to act as the Remarketing Agent and as such to perform such duties on the terms and conditions expressly set forth herein. NOW, THEREFORE, for and in consideration of the covenants herein made, and subject to the conditions herein set forth, the parties hereto agree as follows: Section 1. Definitions. Capitalized terms used and not defined in this Agreement, in the recitals hereto or in the paragraph preceding such recitals shall have the meanings assigned to them in the Purchase Contract Agreement or, if not therein defined, the Pledge Agreement or the Eighth Supplemental Indenture. Section 2. Appointment and Obligations of Remarketing Agent. (a) The Company hereby appoints Credit Suisse First Boston Corporation, and Credit Suisse First Boston Corporation hereby accepts such appointment, as the Remarketing Agent to: (i) determine, in consultation with the Company, in the manner provided for herein, in the Purchase Contract Agreement and in the Eighth Supplemental Indenture, the Reset Rate as defined in clause (i) of the definition of such term, provided that the Remarketing Agent shall have no obligation to determine whether there is any limitation under applicable law on the Reset Rate or, if there is any such limitation, the maximum permissible Reset Rate on the Notes and it shall rely solely upon written notice from the Company (which the Company agrees to provide prior to the eighth Business Day immediately preceding the Initial Remarketing Date) as to whether or not there is any such limitation and, if so, the maximum permissible Reset Rate; (ii) remarket the Notes participating in the remarketing on the Initial Remarketing Date or during any subsequent Remarketing Period, as applicable, at a price equal to approximately, but not less than, 100.5% of the Remarketing Value; and (iii) in the event the Last Failed Remarketing shall have occurred or in the event there were no Equity Security Units outstanding on the Initial Remarketing Date or any Subsequent Remarketing Date and none of the Holders of Separate Notes elected during any Remarketing Period to have their Separate Notes participate in a remarketing, to determine, in consultation with the Company, as applicable, the Reset Rate as defined in clause (ii) of the definition of such term, provided that the Remarketing Agent shall have no obligation to determine whether there is any limitation under applicable law on the Reset Rate or, if there is any such limitation, the maximum permissible Reset Rate on the Notes and it shall rely solely upon written notice from the Company (which the Company agrees to provide prior to the eighth Business Day immediately preceding the -2- Initial Remarketing Date) as to whether or not there is any such limitation and, if so, the maximum permissible Reset Rate. The Remarketing Agent shall have the right, on 15 Business Days' notice to the Company, to appoint one or more additional remarketing agents so long as any such additional remarketing agents shall be reasonably acceptable to the Company. Upon any such appointment, the parties shall enter into an appropriate amendment to this Agreement to reflect the addition of any such additional remarketing agent. (b) Subject to the terms and conditions set forth herein and in the Purchase Contract Agreement, the Remarketing Agent shall use its commercially reasonable best efforts to remarket on the Initial Remarketing Date the Notes that the Collateral Agent and the Custodial Agent shall have notified the Remarketing Agent, not later than 10:00 a.m., New York City time, on the third Business Day immediately preceding the Initial Remarketing Date, are to be remarketed by establishing the Reset Rate (as defined in clause (i) of the definition of such term) and remarketing the Notes participating in the remarketing at a price equal to approximately, but not less than, 100.5% of the Remarketing Value. If, despite using its commercially reasonable best efforts, the Remarketing Agent cannot, on the Initial Remarketing Date, establish the Reset Rate (as defined in clause (i) of the definition of such term) and remarket the Notes participating in the remarketing at a price equal to approximately, but not less than, 100.5% of the Remarketing Value, it will again attempt to remarket on each of the two Business Days next succeeding the Initial Remarketing Date and, if necessary, on each of the three Business Days immediately preceding July 1, 2005 and, if necessary, on each of the seventh, sixth and fifth Business Days immediately preceding the Stock Purchase Date, the Notes that the Collateral Agent and the Custodial Agent shall have notified the Remarketing Agent, not later than 10:00 a.m., New York City time, on the third Business Day immediately preceding the first day of any subsequent Remarketing Period, are to be remarketed, in each case by establishing the Reset Rate (as defined in clause (i) of the definition of such term) and remarketing the Notes participating in the remarketing at a price equal to approximately, but not less than, 100.5% of the Remarketing Value. Upon the occurrence of a successful remarketing, by approximately 4:30 p.m., New York City time, on the date of the successful remarketing, the Remarketing Agent shall advise, by telephone (promptly confirmed in writing in the case of clause (i)): (i) the Company, the Purchase Contract Agent, the Collateral Agent, the Custodial Agent, the Securities Intermediary, DTC and the Trustee of the Reset Rate determined in the remarketing in accordance with clause (i) of the definition of Reset Rate; (ii) each purchaser (or the Clearing Agency Participant thereof) of Notes in the remarketing of the Reset Rate and the number of Notes such purchaser is to purchase; and (iii) each purchaser to give instructions to its Clearing Agency Participant to pay the purchase price on the date of settlement for such remarketing in same day funds against delivery of the remarketed Notes purchased through the facilities of DTC. -3- The Remarketing Agent also shall, in accordance with the Purchase Contract Agreement and the Remarketing Agreement use the proceeds from the successful remarketing attributable to the Pledged Notes to purchase the Treasury Consideration with the CUSIP numbers, if any, selected by the Remarketing Agent, described in clauses (1) and (2) of the definition of Remarketing Value. On the date of settlement of the successful remarketing, which shall be the third Business Day following the Initial Remarketing Date or such Subsequent Remarketing Date, as the case may be, the Remarketing Agent shall deliver such Treasury Consideration to the Purchase Contract Agent, which shall thereupon deliver such Treasury Consideration to the Collateral Agent. The Collateral Agent, for the benefit of the Company, shall thereupon apply such Treasury Consideration, in accordance with the Pledge Agreement, to secure such Holders' obligations under the Purchase Contracts related to Equity Security Units. On the third Business Day following such Initial Remarketing Date or Subsequent Remarketing Date, as the case may be, the Remarketing Agent also shall: (i) deduct and retain for itself the Remarketing Fee; (ii) remit the remaining portion of the proceeds from the successful remarketing attributable to the Separate Notes to the Custodial Agent for payment to the holders of Separate Notes that were remarketed; and (iii) remit the remaining portion, if any, of the proceeds to the Purchase Contract Agent for payment to the Holders of the Equity Security Units. Upon the occurrence of a Failed Remarketing, the Remarketing Agent shall: (i) notify by telephone the Company, the Purchase Contract Agent, the Collateral Agent, the Custodial Agent and the Trustee that a Failed Remarketing has occurred, whereupon the Company shall notify DTC, by telephone, that a Failed Remarketing has occurred; and (ii) within three Business Days following the last day of such Remarketing Period, return the Pledged Notes that were to be remarketed to the Collateral Agent and the Separate Notes that were to be remarketed to the Custodial Agent for redelivery to such holders of such Separate Notes. Upon the occurrence of the Last Failed Remarketing, the Remarketing Agent shall: (i) notify by telephone the Company, the Purchase Contract Agent, the Collateral Agent, the Custodial Agent and the Trustee that the Last Failed Remarketing has occurred, whereupon the Company shall notify DTC that the Last Failed Remarketing has occurred; (ii) within three Business Days following the fifth Business Day immediately preceding the Stock Purchase Date, return the Pledged Notes to the Collateral Agent and the Separate Notes that were to be remarketed to the Custodial Agent for redelivery to such holders of such Separate Notes; and -4- (iii) notify the Company, the Custodial Agent and the Trustee of the Reset Rate as determined in accordance with clause (ii) of the definition of Reset Rate and the Notes will begin bearing interest at such Reset Rate. The right of each Holder of Equity Security Units or Separate Notes to have Notes participate in any remarketing shall be subject to the conditions that: (i) the Remarketing Agent conducts a remarketing on such date pursuant to the terms of this Agreement; (ii) the Notes participating in a remarketing have not been called for redemption upon the occurrence of a Tax Event; (iii) the Remarketing Agent is able to find a purchaser or purchasers for all of the Notes participating in a remarketing at a Reset Rate such that the then current aggregate market value of such Notes is equal to approximately, but not less than, 100.5% of the Remarketing Value; and (iv) such purchaser or purchasers deliver the purchase price therefor to the Remarketing Agent as and when required. (c) It is understood and agreed that the Remarketing Agent shall not have any obligation whatsoever to purchase any Notes, whether in a remarketing held on the Initial Remarketing Date or on any Subsequent Remarketing Date or otherwise, and shall in no way be obligated to provide funds to make payment upon tender of Notes for remarketing or to otherwise expend or risk its own funds or incur or be exposed to financial liability in the performance of its duties under this Agreement. The Company shall not be obligated in any case to provide funds to make payment upon delivery of Notes for remarketing. Section 3. Fees. In the event of a successful remarketing, the Remarketing Agent shall retain as a remarketing fee (the "Remarketing Fee") an amount not exceeding 25 basis points (0.25%) of the total proceeds received in connection with the remarketing in accordance with Section 5.4(d) of the Purchase Contract Agreement and Sections 2.05 and 2.06 of the Supplemental Indenture. Section 4. Replacement and Resignation of Remarketing Agent. (a) The Company may in its absolute discretion replace Credit Suisse First Boston Corporation as the Remarketing Agent by giving notice prior to 3:00 p.m., New York City time, on: (i) the eleventh Business Day immediately preceding the Initial Remarketing Date in the case of a remarketing to occur on the Initial Remarketing Date or either of the two Business Days next succeeding the Initial Remarketing Date; (ii) the seventh Business Day immediately preceding July 1, 2005 in the case of a remarketing to occur on a Subsequent Remarketing Date immediately following a -5- Failed Remarketing on any of the two Business Days next succeeding the Initial Remarketing Date; or (iii) the fourteenth Business Day immediately preceding the Stock Purchase Date in the case of a remarketing to occur on any of the seventh, sixth or fifth Business Days immediately preceding the Stock Purchase Date. Any such replacement shall become effective upon the Company's appointment of a successor to perform the services that would otherwise be performed hereunder by the Remarketing Agent. Upon providing such notice, the Company shall use all reasonable efforts to appoint such a successor and to enter into a remarketing agreement with such successor as soon as reasonably practicable. (b) Credit Suisse First Boston Corporation may resign at any time and be discharged from its duties and obligations hereunder as the Remarketing Agent by giving notice prior to 3:00 p.m., New York City time, on: (i) the eleventh Business Day immediately preceding the Initial Remarketing Date in the case of a remarketing to occur on the Initial Remarketing Date or either of the two Business Days next succeeding the Initial Remarketing Date; (ii) the seventh Business Day immediately preceding July 1, 2005 in the case of a remarketing to occur on a Subsequent Remarketing Date immediately following a Failed Remarketing on any of the two Business Days next succeeding the Initial Remarketing Date; or (iii) the fourteenth Business Day immediately preceding the Stock Purchase Date in the case of a remarketing to occur on any of the seventh, sixth or fifth Business Days immediately preceding the Stock Purchase Date. Any such resignation shall become effective upon the Company's appointment of a successor to perform the services that would otherwise be performed hereunder by the Remarketing Agent. Upon receiving notice from the Remarketing Agent that it wishes to resign hereunder, the Company shall use all reasonable efforts to appoint such a successor and enter into a remarketing agreement with it as soon as reasonably practicable. (c) The Company shall give the Purchase Contract Agent, the Collateral Agent, the Custodial Agent and the Trustee prompt written notice of any replacement of the Remarketing Agent pursuant to this section. Section 5. Dealing in the Securities. The Remarketing Agent, when acting hereunder or when acting in its individual or any other capacity, may, to the extent permitted by law, buy, sell, hold or deal in any of the Notes, Equity Security Units, Stripped Units or any other securities of the Company; provided, however, that in buying, selling, holding, or dealing in any of the Notes, Equity Security Units, Stripped Units or any other securities of the Company, the Remarketing Agent may not violate any of its duties under this Agreement. With respect to any Notes, Equity Security Units, Stripped Units or any other securities of the Company owned by it, the Remarketing Agent may -6- exercise any vote or join in any action with like effect as if it did not act in any capacity hereunder. The Remarketing Agent, in its individual capacity, either as principal or agent, may also engage in or have an interest in any financial or other transaction with the Company as freely as if it did not act in any capacity hereunder. The Company or its affiliates may, to the extent permitted by law, purchase any Notes that are remarketed by the Remarketing Agent. Section 6. Registration Statement and Prospectus. (a) In connection with any remarketing to occur on the Initial Remarketing Date or any Subsequent Remarketing Date, if and to the extent required, in the view of counsel (which need not be an opinion) for each of the Remarketing Agent and the Company, by applicable law, regulations or interpretations in effect at the time of the Initial Remarketing Date or Subsequent Remarketing Date, as the case may be, the Company: (i) shall use its reasonable efforts (A) to have a registration statement relating to the Notes effective under the Securities Act of 1933, as amended (the "Securities Act") and (B) to furnish a current preliminary prospectus or, if applicable, a current preliminary prospectus supplement (in such quantities as the Remarketing Agent may reasonably request), to be used by the Remarketing Agent in a remarketing hereunder, in each case by a date that is no later than (x) seven Business Days immediately preceding the Initial Remarketing Date in the case of a remarketing to occur on the Initial Remarketing Date or on any of the two Business Days next succeeding the Initial Remarketing Date, (y) ten Business Days immediately preceding July 1, 2005 in the case of a remarketing to occur on any of the three Business Days immediately preceding July 1, 2005 or (z) fourteen Business Days immediately preceding the Stock Purchase Date in the case of a remarketing to occur on any of the seventh, sixth or fifth Business Days immediately preceding the Stock Purchase Date (or in each such case, at such earlier date as the Remarketing Agent may reasonably request); and (ii) if requested by the Remarketing Agent, shall furnish a current final prospectus or, if applicable, a final prospectus supplement, to be used by the Remarketing Agent in the remarketing hereunder, by a date that is no later than (x) five Business Days immediately preceding the Initial Remarketing Date in the case of a remarketing to occur on the Initial Remarketing Date or on any of the two Business Days next succeeding the Initial Remarketing Date, (y) eight Business Days immediately preceding July 1, 2005 in the case of a remarketing to occur on any of the three Business Days immediately preceding July 1, 2005 or (z) twelve Business Days immediately preceding the Stock Purchase Date in the case of a remarketing to occur on any of the seventh, sixth or fifth Business Days immediately preceding the Stock Purchase Date (or in each such case, at such earlier date as the Remarketing Agent may reasonably request). The Company shall pay all expenses relating thereto. (b) If in connection with any remarketing, it shall not be possible, in the view of counsel (which need not be an opinion) for each of the Remarketing Agent and the Company, under applicable law, regulations or interpretations in effect as of the Initial Remarketing Date or -7- subsequent Remarketing Period, as the case may be, to register the offer and sale by the Remarketing Agent of the Notes under the Securities Act as otherwise contemplated by this Section 6, the Company: (i) shall use its reasonable efforts to take, or cause to be taken, all action and to do, or cause to be done, all things necessary, proper and advisable to permit and effectuate the offer and sale of the Notes in connection with any remarketing hereunder without registration under the Securities Act pursuant to an exemption therefrom, if available, including the exemption afforded by Rule 144A promulgated under the Securities Act by the Securities and Exchange Commission, and (ii) if requested by the Remarketing Agent, shall furnish a current preliminary remarketing memorandum and a current final remarketing memorandum (in such quantities as the Remarketing Agent may reasonably request) to be used by the Remarketing Agent in any remarketing hereunder, in each case by a date that is not later than (A) seven Business Days immediately preceding the Initial Remarketing Date in the case of a remarketing to occur on the Initial Remarketing Date or on any of the two Business Days next succeeding the Initial Remarketing Date, and (B) ten Business Days immediately preceding July 1, 2005 in the case of a remarketing to occur on any of the three Business Days immediately preceding July 1, 2005 or (C) fourteen Business Days immediately preceding the Stock Purchase Date in the case of a remarketing to occur on any of the seventh, sixth or fifth Business Days immediately preceding the Stock Purchase Date (or in either case such earlier date as the Remarketing Agent may reasonably request). The Company shall pay all expenses relating thereto. (c) The Company shall also take all reasonable actions as may (upon advice of counsel to the Company or the Remarketing Agent) be necessary or desirable under state securities or blue sky laws in connection with any remarketing. Section 7. Conditions to the Remarketing Agent's Obligations. (a) The obligations of the Remarketing Agent under this Agreement shall be subject to the terms and conditions hereof, including, without limitation, the following conditions: (i) the Notes to be included in any remarketing have not been called for redemption upon the occurrence of a Tax Event; (ii) the Remarketing Agent is able to find a purchaser or purchasers for all of the Notes participating in any remarketing at a price equal to approximately, but not less than, 100.5% of the Remarketing Value; (iii) the Purchase Contract Agent, the Collateral Agent, the Custodial Agent, the Securities Intermediary, the Company and the Trustee shall have performed their respective obligations in connection with any remarketing hereunder and pursuant to the Purchase Contract Agreement, the Pledge Agreement, the Supplemental Indenture and this Agreement (including, without limitation, the Collateral Agent's and the Custodial Agent's giving the Remarketing Agent notice of the aggregate number of Notes to be remarketed, not later than 10:00 a.m., New York City time, on the third Business Day -8- immediately preceding the Initial Remarketing Date or the first Business Day of any subsequent Remarketing Period, as applicable, and concurrently delivering the Notes to be remarketed to the Remarketing Agent); (iv) no Event of Default (as defined in the Indenture) shall have occurred and be continuing; (v) the performance by the Company of its covenants and other obligations included herein; and (vi) the satisfaction of the other conditions set forth in this Agreement. (b) If at any time during the term of this Agreement, any Event of Default (as defined in the Indenture) or default that with the passage of time or the giving of notice or both would become an Event of Default has occurred and is continuing under the Indenture, then the obligations and duties of the Remarketing Agent under this Agreement shall be suspended until such default or Event of Default has been cured. The Company will promptly give the Remarketing Agent notice of all such defaults and Events of Default of which the Company is aware. Section 8. Termination of Remarketing Agreement. This Agreement shall terminate as to any Remarketing Agent which is replaced on the effective date of its replacement pursuant to Sections 4(a) or 4(b) hereof. Notwithstanding the foregoing, the obligations set forth in Section 3 hereof shall survive and remain in full force and effect until all amounts payable under Section 3 shall have been paid in full; provided, however, that if any Remarketing Agent resigns, then, with respect to such Remarketing Agent, the obligations set forth in Section 3 hereof shall not survive the termination of this Agreement and no fee shall be payable to such Remarketing Agent in such capacity. In addition, each current and former Remarketing Agent shall be entitled to the rights and benefits under Sections 9, 10 and 12(b) of this Agreement notwithstanding the replacement or resignation of such Remarketing Agent or termination of this Agreement. Section 9. Remarketing Agent's Performance; Duty of Care. The duties and obligations of the Remarketing Agent shall be determined solely by the express provisions hereof. No implied covenants or obligations of or against the Remarketing Agent shall be read into this Agreement. In the absence of a final judicial determination of willful misconduct, bad faith or gross negligence on the part of the Remarketing Agent, the Remarketing Agent may conclusively rely upon any document furnished to it which purports to conform to the requirements hereunder as to the truth of the statements expressed therein. The Remarketing Agent shall be protected in acting upon any document or communication reasonably believed by it to be signed, presented or made by the proper party or parties. The Remarketing Agent shall not have any obligation to determine whether there is any limitation under applicable law on the Reset Rate on the Notes or, if there is any such limitation, the maximum permissible Reset Rate on the Notes, and it shall rely solely upon timely written notice from the Company pursuant to Section 2(a) hereof as to whether there is any such limitation and, if so, the maximum permissible Reset Rate. The Remarketing Agent shall not incur any liability -9- under this Agreement to any beneficial owner or holder of Notes, or other securities, either in its individual capacity or as Remarketing Agent, as the case may be, for any action or failure to act in connection with the remarketing of the Notes or otherwise in connection with the transactions contemplated by this Agreement, except to the extent that such liability has, by final judicial determination, resulted from the willful misconduct, bad faith or gross negligence of the Remarketing Agent or from its failure to fulfill its express obligations hereunder. The provisions of this Section 9 shall survive any termination of this Agreement and shall also continue to apply to every Remarketing Agent notwithstanding its resignation or removal. The Remarketing Agent will act as the agent of the Holders. Section 10. Indemnification. The Company agrees to indemnify the Remarketing Agent and its directors, officers, employees, agents, affiliates and each person, if any, who controls the Remarketing Agent within the meaning of Section 15 of the Securities Act or Section 20 of the Securities Exchange Act for, and to hold it harmless from and against, any and all losses, claims, damages, liabilities or reasonable out-of-pocket expenses incurred without gross 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 or collecting such amounts. The Remarketing Agent shall promptly notify the Company of any third party claim which may give rise to the 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 11. Governing Law. This Agreement shall be governed by, and construed in accordance with, the laws of the State of New York. Section 12. Term of Agreement. (a) Unless otherwise terminated in accordance with the provisions hereof and except as otherwise provided herein, this Agreement shall remain in full force and effect from the date hereof until the third Business Day immediately following the earlier of (i) a successful remarketing and (ii) the Stock Purchase Date. Anything contained herein to the contrary notwithstanding, the provisions of the second and third sentences of Section 8 hereof and the provisions of Sections 3, 9, 10 and 12(b) hereof shall survive any termination of this Agreement and remain in full force and effect; provided, however, that if any Remarketing Agent resigns, then the obligations set forth in Section 3 hereof shall not survive the termination of this Agreement and no fee shall be payable to such remarketing agent in such capacity. (b) All representations and warranties included in this Agreement or contained in certificates of officers of the Company submitted pursuant hereto shall remain operative and in full force and effect, regardless of any investigation made by or on behalf of the Remarketing -10- Agent or any of its controlling persons, or by or on behalf of the Company or the Purchase Contract Agent, and shall survive the termination of this Agreement. Section 13. Successors and Assigns. The rights and obligations of the Company and the Purchase Contract Agent (both in its capacity as Purchase Contract Agent and as attorney-in-fact for the Holders) hereunder may not be assigned or delegated to any other person (except pursuant to Sections 7.9, 7.10 and 7.11 and Article IX of the Purchase Contract Agreement) without the prior written consent of the Remarketing Agent, which consent shall not be unreasonably withheld. The rights and obligations of the Remarketing Agent hereunder may not be assigned or delegated to any other person without the prior written consent of the Company, except that the Remarketing Agent shall have the right to appoint additional remarketing agents as provided herein. This Agreement shall inure to the benefit of and be binding upon the Company, the Purchase Contract Agent and the Remarketing Agent and their respective successors and permitted assigns. The terms "successors" and "assigns" shall not include any purchaser of Notes merely because of such purchase. Section 14. Headings. Section headings have been inserted in this Agreement as a matter of convenience of reference only, and such section headings are not a part of this Agreement and will not be used in the interpretation of any provision of this Agreement. Section 15. Severability. If any provision of this Agreement is invalid, inoperative or unenforceable as applied in any particular case in any or all jurisdictions because it conflicts with any provisions of any constitution, statute, rule or public policy or for any other reason, then, to the extent permitted by law, such circumstances shall not have the effect of rendering the provision in question invalid, inoperative or unenforceable in any other case, circumstances or jurisdiction, or of rendering any other provision or provisions of this Agreement, as the case may be, invalid, inoperative or unenforceable to any extent whatsoever. Section 16. Counterparts. This Agreement may be executed in counterparts, each of which shall be regarded as an original and all of which shall constitute one and the same document. Section 17. Amendments. This Agreement may be amended only by an instrument in writing signed by the parties hereto. Section 18. Notices. Unless otherwise specified, any notices, requests, consents or other communications given or made hereunder shall be made in writing or transmitted by any standard form of telecommunication, including telephone or telecopy, and confirmed in writing. All written -11- notices and confirmations of notices by telecommunication shall be deemed to have been validly given or made when delivered or mailed, registered or certified mail, return receipt requested and postage prepaid. All such notices, requests, consents or other communications shall be addressed as follows: (i) if to the Company, to El Paso Corporation, 1001 Louisiana Street, Houston, Texas 77002; Attention: Legal Department (telefax: 713-420-4099); (ii) if to the Remarketing Agent, to Credit Suisse First Boston Corporation, Eleven Madison Avenue, New York, New York 10010, fax number (212) 325-4296, Attention: Transactions Advisory Group; and (iii) if to the Purchase Contract Agent, to JPMorgan Chase Bank, 450 West 33rd Street, New York, New York 10001, fax number: (212) 946-8159, Attention: Institutional Trust Services, or to such other address as any of the above shall specify to the others in writing. Section 19. Information. The Company agrees to furnish the Remarketing Agent with such information and documents as the Remarketing Agent may reasonably request in connection with the transactions contemplated by this Remarketing Agreement, and if the remarketing is effected pursuant to a registration statement in accordance with Section 6 hereof, make reasonably available to the Remarketing Agent and any accountant, attorney or other advisor retained by the Remarketing Agent such information that parties would customarily require in connection with a due diligence investigation conducted in accordance with applicable securities laws and cause the Company's officers, directors, employees and accountants to participate in such discussions and to supply all such information reasonably requested by the Remarketing Agent and its advisors in connection with such investigation. -12- IN WITNESS WHEREOF, each of the Company, the Purchase Contract Agent and the Remarketing Agent has caused this Agreement to be executed in its name and on its behalf by one of its duly authorized signatories as of the date first above written. EL PASO CORPORATION By: /s/ John J. Hopper ----------------------------------- Name: John J. Hopper Title: Vice President and Treasurer CREDIT SUISSE FIRST BOSTON CORPORATION, as Remarketing Agent By: /s/ Paul A. Davis ----------------------------------- Name: Paul A. Davis Title: Director CONFIRMED AND ACCEPTED: JPMORGAN CHASE BANK not individually but solely as Purchase Contract Agent and as attorney-in-fact for the Holders of the Purchase Contracts By: /s/ R. Lorenzen ------------------------------- Name: R. Lorenzen Title: Assistant Vice President -13- EX-5.A 9 h97915exv5wa.txt OPINION OF LOCKE LIDDELL & SAPP LLP - COMMON STOCK EXHIBIT 5.A [LOCKE LIDDELL & SAPP LLP LETTERHEAD] June 26, 2002 Board of Directors El Paso Corporation 1001 Louisiana Street Houston, Texas 77002 Gentlemen: We have acted as counsel to El Paso Corporation, a Delaware corporation (the "Company"), in connection with the offer and sale by the Company of an aggregate of 51,750,000 shares of the Company's common stock, par value $3.00 per share (the "Securities"), pursuant to the Company's Registration Statement on Form S-3 (Registration No. 333-82412) declared effective by the Securities and Exchange Commission on February 27, 2002 (the "Registration Statement"), as supplemented by the Prospectus Supplement dated June 20, 2002 (the "Prospectus Supplement"). As the basis for the opinions hereinafter expressed, we have examined such statutes, regulations, corporate records and documents, certificates of corporate and public officials, and other instruments as we have deemed necessary or advisable for the purposes of this opinion. In such examinations, we have assumed the authenticity of all documents submitted to us as originals and the conformity with the original documents of all documents submitted to us as copies. Without limiting the foregoing, we have examined the Underwriting Agreement, dated June 20, 2002 (the "Underwriting Agreement"), by and between the Company and Credit Suisse First Boston Corporation and J.P. Morgan Securities Inc. as representatives of the several underwriters named therein. Based on the foregoing and subject to the qualifications and limitations set forth below, we are of the opinion that the Securities have been duly authorized and, when issued and paid for as described in the Registration Statement, as supplemented by the Prospectus Supplement relating to the offer and sale of the Securities, and the Underwriting Agreement, will be duly authorized, validly issued, fully paid and nonassessable. This opinion is limited in all respects to the federal laws of the United States, the Delaware General Corporation Law, and the Constitution of the State of Delaware, as interpreted by the courts of the State of Delaware and of the United States (without regard to unreported decisional case law of the State of Delaware), and we are expressing no opinion as to the effect of laws of any other jurisdiction. Board of Directors El Paso Corporation June 26, 2002 Page 2 We hereby consent to the filing of this opinion letter as an exhibit to a Current Report on Form 8-K of the Company and the incorporation by reference of this opinion by the Registration Statement. In giving this consent, we do not thereby admit that we are within the category of persons whose consent is required under Section 7 of the Securities Act of 1933, as amended, or under the rules and regulations of the Securities Exchange Commission relating thereto. Very truly yours, Locke Liddell & Sapp LLP EX-5.B 10 h97915exv5wb.txt OPINION OF LOCKE LIDDELL & SAPP LLP - UNITS EXHIBIT 5.B [LOCKE LIDDELL & SAPP LLP LETTERHEAD] June 26, 2002 Board of Directors El Paso Corporation 1001 Louisiana Street Houston, Texas 77002 Gentlemen: We have acted as counsel to El Paso Corporation, a Delaware corporation (the "Company"), in connection with the offer and sale by the Company of an aggregate of 11,500,000 Equity Security Units (the "Securities"), each initially consisting of (1) a purchase contract (collectively, the "Purchase Contracts") to purchase shares of the Company's common stock, par value $3.00 per share ("Common Stock") and (2) a Senior Note Due August 16, 2007 (the "Notes"), pursuant to the Company's Registration Statement on Form S-3 (Registration No. 333-82412) declared effective by the Securities and Exchange Commission on February 27, 2002 (the "Registration Statement"), as supplemented by the Prospectus Supplement dated June 20, 2002 (the "Prospectus Supplement"). The Purchase Contracts are to be issued pursuant to a Purchase Contract Agreement (the "Purchase Contract Agreement") dated as of June 26, 2002 between the Company and JPMorgan Chase Bank, as Purchase Contract Agent (the "Purchase Contract Agent"). The Notes are to be issued pursuant to the Eighth Supplemental Indenture dated as of June 26, 2002 (the "Eighth Supplemental Indenture"), which supplements the Indenture dated as of May 10, 1999 (as so supplemented, the "Indenture"), between the Company and JPMorgan Chase Bank (formerly known as The Chase Manhattan Bank), as indenture trustee (the "Trustee"). As the basis for the opinions hereinafter expressed, we have examined such statutes, regulations, corporate records and documents, certificates of corporate and public officials, and other instruments as we have deemed necessary or advisable for the purposes of this opinion. In such examinations, we have assumed the authenticity of all documents submitted to us as originals and the conformity with the original documents of all documents submitted to us as copies. Without limiting the foregoing, we have examined the Underwriting Agreement, dated June 20, 2002 (the "Underwriting Agreement"), by and between the Company and Credit Suisse First Boston Corporation and J.P. Morgan Securities Inc. as representatives of the several underwriters named therein. Board of Directors El Paso Corporation June 26, 2002 Page 2 Based on the foregoing and subject to the qualifications and limitations set forth below, we are of the opinion that: 1. with respect to the shares of Common Stock to be issued and sold by the Company pursuant to the settlement of the Purchase Contracts, when issued and delivered in accordance with the terms of the Purchase Contract Agreement, the shares of Common Stock will be duly and validly issued, fully paid and non-assessable; 2. with respect to the Securities, assuming (a) due execution of the Securities by the Purchase Contract Agent, as attorney-in-fact of the holders thereof, (b) due authentication of the Securities by the Purchase Contract Agent and (c) due authentication of the Notes by the Trustee, upon payment and delivery thereof in accordance with the Underwriting Agreement, the Securities will constitute valid and legally binding obligations of the Company enforceable against the Company in accordance with their terms and entitled to the benefits of the Purchase Contract Agreement, except to the extent that enforcement thereof may be limited by the effects of bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance and other similar laws relating to or affecting creditors' rights generally, general equitable principles (whether considered in a proceeding in equity or at law) or an implied covenant of good faith and fair dealing; 3. with respect to the Senior Notes, assuming due authentication thereof by the Trustee, and upon payment thereof by the Underwriters in accordance with the Underwriting Agreement, the Senior Notes will constitute valid and legally binding obligations of the Company enforceable against the Company in accordance with their terms, except to the extent that enforcement thereof may be limited by the effects of bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance and other similar laws relating to or affecting creditors' rights generally, general equitable principles (whether considered in a proceeding in equity or at law) or an implied covenant of good faith and fair dealing; and 4. with respect to the Purchase Contracts, assuming due authentication of the Securities by the Purchase Contract Agent, upon payment and delivery thereof in accordance with the Purchase Contract Agreement, the Purchase Contracts will constitute valid and legally binding obligations of the Company enforceable against the Company in accordance with their terms and entitled to the benefits of the Purchase Contract Agreement, except to the extent that enforcement thereof may be limited by the effects of bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance and other similar laws relating to or affecting creditors' rights generally, general equitable principles (whether considered in a proceeding in equity or at law) or an implied covenant of good faith and fair dealing. Board of Directors El Paso Corporation June 26, 2002 Page 3 This opinion is limited in all respects to the federal laws of the United States, the laws of the State of New York and Texas (other than, in each case, municipal and local ordinances and regulations), the Delaware General Corporation Law, and the Constitution of the State of Delaware, as interpreted by the courts of the State of Delaware and of the United States (without regard to unreported decisional case law of the State of Delaware). We hereby consent to the filing of this opinion letter as an exhibit to a Current Report on Form 8-K of the Company and the incorporation by reference of this opinion by the Registration Statement. In giving this consent, we do not thereby admit that we are within the category of persons whose consent is required under Section 7 of the Securities Act of 1933, as amended, or under the rules and regulations of the Commission relating thereto. Very truly yours, Locke Liddell & Sapp LLP EX-8.A 11 h97915exv8wa.txt TAX OPINION OF LOCKE LIDDELL & SAPP LLP EXHIBIT 8.A [LOCKE LIDDELL & SAPP LLPLETTERHEAD] June 26, 2002 El Paso Corporation 1001 Louisiana Street Houston, Texas 77002 Ladies and Gentlemen: We have acted as tax counsel to El Paso Corporation, a Delaware corporation (the "Issuer"), in connection with the preparation of the Prospectus Supplement, dated June 20, 2002 (the "Prospectus Supplement"), to the Prospectus dated February 27, 2002 (the "Prospectus"), relating to the issuance and sale of 10,000,000 of the Issuer's 9.00% equity security units (the "Units"), initially consisting of (a) purchase contracts (the "Purchase Contracts"), which obligate the holders of the Units to purchase from the Issuer shares of the Issuer's common stock, $3 par value per share (the "Common Stock"), and (b) senior notes due August 16, 2007 issued by the Issuer (the "Notes"). The Units are to be issued pursuant to a senior indenture, dated May 10, 1999, between the Issuer and JP Morgan Chase Bank (formerly The Chase Manhattan Bank), as trustee (the "Indenture"). The terms of the Units, which are set forth in the Prospectus Supplement are incorporated herein by reference. For purposes of the opinion set forth below, we have examined: (i) the Prospectus; (ii) the Prospectus Supplement; (iii) the Indenture; and (iv) forms of the following documents relating to the Units: (a) the supplemental indenture, dated as of June 26, 2002, to the Indenture; (b) the global note representing the Notes; (c) the global normal units certificates; (d) the global stripped units certificates; (e) the purchase contract agreement; (f) the pledge agreement; and El Paso Corporation June 26, 2002 Page 2 (g) the remarketing agreement. We also have examined and relied upon originals, or duplicates or certified or conformed copies, of such records of the Issuer and such other documents, certificates, representations and records as we have deemed necessary or appropriate as a basis for the opinions set forth herein. We have assumed the authenticity of all documents submitted to us as originals, the conformity to original documents of all documents submitted to us as drafts or as duplicates or certified or conformed copies, and the authenticity of the originals of such latter documents. In addition, we also have assumed that factual representations made to us are true, correct and complete and that the transactions related to the issuance of the Units, the Notes and the Common Stock will be consummated in accordance with the terms of the documents and forms of documents described herein. If any of our assumptions are untrue for any reason or if the issuance of the Units is consummated in a manner that is inconsistent with the manner in which it is described in the Prospectus Supplement, our opinion as expressed below may be adversely affected and may not be relied upon. Based upon the foregoing, and subject to the qualifications and limitations stated therein, we confirm that the statements made in the Prospectus Supplement under the caption "United States Federal Income Tax Consequences", insofar as they constitute legal conclusions with respect to matters of United States federal income tax law, constitute our opinion as to the material United States federal income tax consequences of the purchase, ownership and disposition of the Units, the Notes, and the Common Stock acquired under the Purchase Contracts. We express no opinion with respect to the transactions referred to herein or in the Prospectus other than as expressly set forth herein. Our opinion is based upon the Internal Revenue Code of 1986, as amended, the Treasury regulations promulgated thereunder and other relevant authorities and law, all as in effect on the date hereof. Consequently, future changes in the law may cause the tax treatment of the transactions referred to herein to be materially different from that described in the Prospectus Supplement. We disclaim any undertaking to advise you of any subsequent changes of the matters stated, represented or assumed herein or any subsequent changes in applicable law, regulations or interpretations thereof. The attorneys responsible for preparing this opinion are members of the State Bar of Texas, and we do not express any opinion herein concerning any law other than United States federal income tax law. Pursuant to the provisions of Rule 436 promulgated by the Securities and Exchange Commission under the Securities Act of 1933, as amended, we hereby consent to the filing of this letter as an exhibit to the registration statement containing the Prospectus and to the El Paso Corporation June 26, 2002 Page 3 reference to us under the caption "United States Federal Income Tax Consequences" in the Prospectus Supplement. Very truly yours, LOCKE LIDDELL & SAPP LLP By: /s/ James Howard --------------------------------- Name: James Howard ------------------------------- -----END PRIVACY-ENHANCED MESSAGE-----