Exhibit 10.29

 

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THE PMI GROUP, INC.

 

and

 

THE BANK OF NEW YORK,

 

as Purchase Contract Agent

 

PURCHASE CONTRACT AGREEMENT

 

Dated as of November 3, 2003

 

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TABLE OF CONTENTS

 

ARTICLE 1      DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION     

Section 1.01.

  Definitions    1

Section 1.02.

  Compliance Certificates and Opinions    15

Section 1.03.

  Form of Documents Delivered to Purchase Contract Agent.    16

Section 1.04.

  Acts of Holders; Record Dates.    17

Section 1.05.

  Notices.    18

Section 1.06.

  Notice to Holders; Waiver.    19

Section 1.07.

  Effect of Headings and Table of Contents.    20

Section 1.08.

  Successors and Assigns.    20

Section 1.09.

  Separability Clause.    20

Section 1.10.

  Benefits Of Agreement.    20

Section 1.11.

  Governing Law.    20

Section 1.12.

  Legal Holidays.    20

Section 1.13.

  Counterparts.    21

Section 1.14.

  Inspection of Agreement.    21

Section 1.15.

  Appointment of Financial Institution as Agent for the Company.    21

Section 1.16.

  No Waiver.    21 ARTICLE 2      CERTIFICATE FORMS     

Section 2.01.

  Forms of Certificates Generally.    22

Section 2.02.

  Form of Purchase Contract Agent’s Certificate of Authentication.    23 ARTICLE
3      THE UNITS     

Section 3.01.

  Amount; Form and Denominations.    23

Section 3.02.

  Rights and Obligations Evidenced by the Certificates.    23

Section 3.03.

  Execution, Authentication, Delivery and Dating.    24

Section 3.04.

  Temporary Certificates.    25

Section 3.05.

  Registration; Registration of Transfer and Exchange.    26

Section 3.06.

  Book-Entry Interests.    27

Section 3.07.

  Notices to Holders.    28

Section 3.08.

  Appointment of Successor Depositary.    29

Section 3.09.

  Definitive Certificates.    29

Section 3.10.

  Mutilated, Destroyed, Lost and Stolen Certificates.    29

Section 3.11.

  Persons Deemed Owners.    31

 

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Section 3.12.

  Cancellation.    32

Section 3.13.

  Creation of Treasury Units by Substitution of Treasury Securities.    32

Section 3.14.

  Recreation of Corporate Units.    34

Section 3.15.

  Transfer of Collateral upon Occurrence of Termination Event.    36

Section 3.16.

  No Consent to Assumption.    37 ARTICLE 4      THE SENIOR NOTES AND APPLICABLE
OWNERSHIP INTERESTS IN THE TREASURY PORTFOLIO     

Section 4.01.

  Interest Payments; Rights to Interest Payments Preserved.    37

Section 4.02.

  Notice and Voting.    39

Section 4.03.

  Special Event Redemption.    39 ARTICLE 5      THE PURCHASE CONTRACTS     

Section 5.01.

  Purchase of Shares of Common Stock.    41

Section 5.02.

  Remarketing; Payment of Purchase Price.    44

Section 5.03.

  Issuance of Shares of Common Stock.    52

Section 5.04.

  Certain Adjustments.    53

Section 5.05.

  Notice of Adjustments and Certain Other Events.    63

Section 5.06.

  Termination Event; Notice.    64

Section 5.07.

  Early Settlement.    64

Section 5.08.

  Intentionally Omitted.    67

Section 5.09.

  No Fractional Shares.    67

Section 5.10.

  Charges and Taxes.    68

Section 5.11.

  Contract Adjustment Payments.    68 ARTICLE 6      REMEDIES     

Section 6.01.

  Unconditional Right of Holders to Receive Contract Adjustment Payments and to
Purchase Shares of Common Stock.    74

Section 6.02.

  Restoration of Rights and Remedies.    74

Section 6.03.

  Rights and Remedies Cumulative.    74

Section 6.04.

  Delay or Omission Not Waiver.    75

Section 6.05.

  Undertaking for Costs.    75

Section 6.06.

  Waiver of Stay or Extension Laws.    75 ARTICLE 7      THE PURCHASE CONTRACT
AGENT     

Section 7.01.

  Certain Duties and Responsibilities.    76

 

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Section 7.02.

  Notice of Default.    77

Section 7.03.

  Certain Rights of Purchase Contract Agent.    77

Section 7.04.

  Not Responsible for Recitals or Issuance of Units.    79

Section 7.05.

  May Hold Units.    79

Section 7.06.

  Money Held in Custody.    79

Section 7.07.

  Compensation and Reimbursement.    80

Section 7.08.

  Corporate Purchase Contract Agent Required, Eligibility.    80

Section 7.09.

  Resignation and Removal; Appointment of Successor.    81

Section 7.10.

  Acceptance Of Appointment By Successor.    83

Section 7.11.

  Merger, Conversion, Consolidation Or Succession To Business.    83

Section 7.12.

  Preservation of Information; Communications to Holders.    83

Section 7.13.

  No Obligations of Purchase Contract Agent.    84

Section 7.14.

  Tax Compliance.    84 ARTICLE 8      SUPPLEMENTAL AGREEMENTS     

Section 8.01.

  Supplemental Agreements Without Consent of Holders.    85

Section 8.02.

  Supplemental Agreements with Consent of Holders.    86

Section 8.03.

  Execution of Supplemental Agreements.    87

Section 8.04.

  Effect of Supplemental Agreements.    87

Section 8.05.

  Reference to Supplemental Agreements.    87 ARTICLE 9      CONSOLIDATION,
MERGER, CONVEYANCE, TRANSFER OR LEASE     

Section 9.01.

  Covenant Not to Consolidate, Merge, Convey, Transfer or Lease Property Except
under Certain Conditions.    88

Section 9.02.

  Rights and Duties of Successor Corporation.    88

Section 9.03.

  Officers’ Certificate and Opinion of Counsel Given to Purchase Contract Agent.
   89 ARTICLE 10      COVENANTS     

Section 10.01.

  Performance Under Purchase Contracts.    89

Section 10.02.

  Maintenance of Office or Agency.    89

Section 10.03.

  Company to Reserve Common Stock.    90

Section 10.04.

  Covenants as to Common Stock.    90

Section 10.05.

  Statements of Officers of the Company as to Default.    91

Section 10.06.

  ERISA.    91

Section 10.07.

  Tax Treatment    91

 

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EXHIBITS

 

Exhibit A – Form of Corporate Units Certificate

Exhibit B – Form of Treasury Units Certificate

Exhibit C – Instruction to Purchase Contract Agent

Exhibit D – Notice from Purchase Contract Agent to Holders

Exhibit E – Notice to Settle by Separate Cash

Exhibit F – Notice from Purchase Contract Agent to Collateral Agent

 

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PURCHASE CONTRACT AGREEMENT, dated as of November 3, 2003, between THE PMI
GROUP, INC., a Delaware corporation (the “Company”), and The Bank of New York, a
New York banking corporation, acting as purchase contract agent for the Holders
of Units (as defined herein) from time to time (the “Purchase Contract Agent”).

 

RECITALS

 

The Company has duly authorized the execution and delivery of this Agreement and
the Certificates evidencing the Units.

 

All things necessary to make the Purchase Contracts (as defined herein), when
the Certificates (as defined herein) are executed by the Company and
authenticated, executed on behalf of the Holders and delivered by the Purchase
Contract Agent, as provided in this Agreement, the valid obligations of the
Company, and to constitute these presents 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 Units by the Holders thereof, it is mutually
agreed as follows:

 

ARTICLE 1

DEFINITIONS AND OTHER PROVISIONS OF GENERAL APPLICATION

 

Section 1.01. 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, Exhibit or other subdivision; and

 

(d) the following terms have the meanings given to them in this Section 1.01(d):

 

“Accounting Event” has the meaning set forth in the Supplemental Indenture.

 

“Act” has the meaning, with respect to any Holder, set forth in Section 1.04(a).

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“Adjusted Applicable Market Value” has the meaning set forth in Section 5.01(a).

 

“Affiliate” of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
“control” when used with respect to any specified Person means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms “controlling” and “controlled” have meanings correlative to the
foregoing.

 

“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 set forth in Section 5.01(a).

 

“Applicable Ownership Interest” shall mean, with respect to a Corporate Unit and
the Treasury Portfolio contained in a Corporate Unit, (i) a 2.5% undivided
beneficial ownership interest in $1,000 face amount of U.S. treasury securities
(or principal or interest strips thereof) included in such Treasury Portfolio
that mature on or prior to November 15, 2006 and (ii) (x) for the scheduled
Payment Date on the Senior Notes that occurs on the Purchase Contract Settlement
Date, in the case of a Successful Remarketing prior to the Final Remarketing
Date, or (y) for each scheduled Payment Date on the Senior Notes that occurs
after the Special Event Redemption Date to and including the Purchase Contract
Settlement Date, in the case of a Special Event Redemption, a 0.01875% undivided
beneficial ownership interest in $1,000 face amount of U.S. treasury securities
(or principal or interest strips thereof) included in such Treasury Portfolio
that mature on or prior to the business day immediately preceding such scheduled
Payment Date.

 

“Applicable Principal Amount” means the aggregate principal amount of the Senior
Notes that are components of Corporate Units.

 

“Applicants” has the meaning set forth 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 Depositary or on the books of a Person maintaining an account with such
Depositary (directly as a Depositary Participant or as an indirect participant,
in each case in accordance with the rules of such Depositary).

 

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“Board of Directors” means the board of directors of the Company or a duly
authorized committee of that board.

 

“Board Resolution” means one or more resolutions of the Board of Directors, a
copy of which has been certified by the Secretary or an Assistant Secretary of
the Company, to have been duly adopted by the Board of Directors and to be in
full force and effect on the date of such certification and delivered to the
Purchase Contract Agent.

 

“Book-Entry Interest” means a beneficial interest in a Global Certificate,
registered in the name of a Depositary or a nominee thereof, ownership and
transfers of which shall be maintained and made through book entries by such
Depositary as described in Section 3.06.

 

“Business Day” or “business day” means any day other than a Saturday or Sunday
or any other day on which banking institutions and trust companies in New York
City, New York are permitted or required by applicable law to remain closed or a
day on which the Indenture Trustee or the Collateral Agent is closed for
business; provided that for purposes of the second paragraph of Section 1.12
only, the term “Business Day” shall also be deemed to exclude any day on which
DTC is closed.

 

“Cash Merger” has the meaning set forth in Section 5.04(b)(ii).

 

“Cash Merger Early Settlement” has the meaning set forth in Section 5.04(b)(ii).

 

“Cash Merger Early Settlement Date” has the meaning set forth in Section
5.04(b)(ii).

 

“Cash Settlement” has the meaning set forth in Section 5.02(b)(i).

 

“Certificate” means a Corporate Units Certificate or a Treasury Units
Certificate.

 

“Closing Price” has the meaning set forth in Section 5.01(a).

 

“Code” means the Internal Revenue Code of 1986, as amended.

 

“Collateral” has the meaning set forth in Section 1.01(d) of the Pledge
Agreement.

 

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“Collateral Account” has the meaning set forth in Section 1.01(d) 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” means (i) with respect to a Corporate Unit, (x) the
substitution for the Pledged Senior Note included in such Corporate Unit by
Treasury Securities or portions thereof in an aggregate principal amount at
maturity equal to the aggregate principal amount of such Pledged Senior Note, or
(y) the substitution for the Pledged Applicable Ownership Interest in the
Treasury Portfolio included in such Corporate Unit by Treasury Securities or
portions thereof in an amount equal to such Pledged Applicable Ownership
Interest in the Treasury Portfolio, or (ii) with respect to a Treasury Unit, (x)
the substitution for the Pledged Treasury Securities included in such Treasury
Unit (if the Applicable Ownership Interest in the Treasury Portfolio has not
replaced the Senior Note as a component of the Corporate Unit) by Senior Notes
in an aggregate principal amount equal to the aggregate principal amount at
stated maturity of the Pledged Treasury Securities, or (y) the substitution for
the Pledged Treasury Securities included in such Treasury Unit (if the
Applicable Ownership Interest in the Treasury Portfolio has replaced the Senior
Note as a component of the Corporate Unit) by the appropriate Applicable
Ownership Interest in the Treasury Portfolio.

 

“Common Stock” means the common stock, par value $0.01 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
provision of this Agreement, and thereafter “Company” shall mean such successor.

 

“Constituent Person” has the meaning set forth in Section 5.04(b)(i).

 

“Contract Adjustment Payments” means the payments payable by the Company on the
Payment Dates in respect of each Purchase Contract, at a rate per year of 2.875%
of the Stated Amount per Purchase Contract.

 

“Corporate Trust Office” means the office of the Purchase Contract Agent at
which, at any particular time, its corporate trust business shall be principally
administered, which office at the date hereof is located at 101 Barclay Street,
Floor 8W, New York, NY 10286.

 

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“Corporate Unit” means the collective rights and obligations of a Holder of a
Corporate Units Certificate in respect of the Senior Notes or an appropriate
Applicable Ownership Interest in the Treasury Portfolio, as the case may be,
subject in each case (except for the appropriate Applicable Ownership Interest
specified in clause (ii) of the definition of such term) to the Pledge thereof,
and the related Purchase Contract.

 

“Corporate Units Certificate” means a certificate evidencing the rights and
obligations of a Holder in respect of the number of Corporate Units specified on
such certificate.

 

“Coupon Rate” means the percentage rate per annum at which each Senior Note will
bear interest initially.

 

“Current Market Price” has the meaning set forth in Section 5.04(a)(viii).

 

“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.

 

“Depositary” means a clearing agency registered under Section 17A of the
Exchange Act that is designated to act as Depositary for the Units as
contemplated by Sections 3.06 and 3.08.

 

“Depositary Participant” means a broker, dealer, bank, other financial
institution or other Person for whom from time to time the Depositary effects
book-entry transfers and pledges of securities deposited with the Depositary.

 

“Dividend Threshold Amount” has the meaning set forth in Section 5.04(a).

 

“DTC” means The Depository Trust Company.

 

“Early Settlement” has the meaning set forth in Section 5.07(a).

 

“Early Settlement Amount” has the meaning set forth in Section 5.07(b).

 

“Early Settlement Date” has the meaning set forth in Section 5.07(b).

 

“Early Settlement Rate” has the meaning set forth in Section 5.07(c).

 

“ERISA” means the Employee Retirement Income Security Act of 1974, as amended.

 

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“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 set forth in Section 1.04(e).

 

“Expiration Time” has the meaning set forth in Section 5.04(a)(vi).

 

“Failed Final Remarketing” has the meaning set forth in Section 5.02(c)(iii).

 

“Failed Initial Remarketing” has the meaning set forth in Section 5.02(a)(i).

 

“Failed Remarketing” shall mean a Failed Initial Remarketing or a Failed Final
Remarketing.

 

“Final Remarketing” has the meaning set forth in Section 5.02(c)(i).

 

“Final Remarketing Date” means the third Business Day immediately preceding the
Purchase Contract Settlement Date.

 

“Final Remarketing Fee” has the meaning set forth in Section 5.02(c)(ii).

 

“Fixed Settlement Rate” means each of the Maximum Share Number and the Minimum
Share Number.

 

“Global Certificate” means a Certificate that evidences all or part of the Units
and is registered in the name of the Depositary or a nominee thereof.

 

“Holder” means, with respect to a Unit, the Person in whose name the Unit
evidenced by a Certificate is registered in the Security Register; provided,
however, that solely for the purpose of determining whether the Holders of the
requisite number of Units have voted on any matter (and not for any other
purpose hereunder), if the Unit remains in the form of one or more Global
Certificates and if the Depositary that is the registered holder of such Global
Certificate has sent an omnibus proxy assigning voting rights to the Depositary
Participants to whose accounts the Units are credited on the record date, the
term “Holder” shall mean such Depositary Participant acting at the direction of
the Beneficial Owners.

 

“Indenture” means the Indenture, dated as of November 3, 2003, between the
Company and the Indenture Trustee (including any provisions of the TIA that are
deemed incorporated therein), as supplemented by the Supplemental Indenture
pursuant to which the Senior Notes will be issued.

 

“Indemnitees” has the meaning set forth in Section 7.07(c).

 

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“Indenture Trustee” means The Bank of New York, as trustee under the Indenture,
or any successor thereto.

 

“Initial Remarketing” has the meaning set forth in Section 5.02(a)(i).

 

“Initial Remarketing Date” means the third Business Day immediately preceding
August 15, 2006.

 

“Issuer Order” or “Issuer Request” means a written order or request signed in
the name of the Company by (i) either its Chief Executive Officer, its President
or one of its Vice Presidents, and (ii) either its Corporate Secretary or one of
its Assistant Corporate Secretaries or its Treasurer or one of its Assistant
Treasurers, and delivered to the Purchase Contract Agent.

 

“Maximum Share Number” has the meaning set forth in Section 5.01(a)(i).

 

“Minimum Share Number” has the meaning set forth in Section 5.01(a)(iii).

 

“non-electing share” has the meaning set forth in Section 5.04(b)(i).

 

“NYSE” has the meaning set forth in Section 5.01(a).

 

“Officers’ Certificate” means a certificate signed by (i) either the Company’s
Chief Executive Officer, its President or one of its Vice Presidents, and (ii)
either the Company’s Corporate Secretary or one of its Assistant Corporate
Secretaries or its Treasurer or one of its Assistant Treasurers, and delivered
to the Purchase Contract Agent.

 

“Opinion of Counsel” means a written opinion of counsel, who may be counsel to
the Company (and who may be an employee of the Company), and who shall be
reasonably acceptable to the Purchase Contract Agent. An Opinion of Counsel may
rely on certificates as to matters of fact.

 

“Outstanding Units” means, with respect to any Unit and as of the date of
determination, all Units evidenced by Certificates theretofore authenticated,
executed and delivered under this Agreement, except:

 

(i) if a Termination Event has occurred, (x) Corporate Units for which the
underlying Senior Notes or Applicable Ownership Interests in the Treasury
Portfolio have been theretofore deposited with the Purchase Contract Agent in
trust for the Holders of such Corporate Units and (y) Treasury Units;

 

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(ii) Units evidenced by Certificates theretofore cancelled by the Purchase
Contract Agent or delivered to the Purchase Contract Agent for cancellation or
deemed cancelled pursuant to the provisions of this Agreement; and

 

(iii) 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 Purchase Contract Agent proof
satisfactory to it that such Certificate is held by a protected purchaser in
whose hands the Units evidenced by such Certificate are valid obligations of the
Company;

 

provided, however, that in determining whether the Holders of the requisite
number of the Units have given any request, demand, authorization, direction,
notice, consent or waiver hereunder, Units owned by the Company or any Affiliate
of the Company shall be disregarded and deemed not to be Outstanding Units,
except that, in determining whether the Purchase Contract Agent shall be
authorized and protected in relying upon any such request, demand,
authorization, direction, notice, consent or waiver, only Units that a
Responsible Officer of the Purchase Contract Agent actually knows to be so owned
shall be so disregarded. Units so owned that have been pledged in good faith may
be regarded as Outstanding Units if the pledgee establishes to the satisfaction
of the Purchase Contract Agent the pledgee’s right so to act with respect to
such Units and that the pledgee is not the Company or any Affiliate of the
Company.

 

“Payment Date” means each February 15, May 15, August 15 and November 15 of each
year, commencing February 15, 2004.

 

“Permitted Investments” has the meaning set forth in Section 1.01(d) of the
Pledge Agreement.

 

“Person” means a legal person, including any individual, corporation, estate,
partnership, joint venture, association, joint-stock company, limited liability
company, trust, unincorporated organization or government or any agency or
political subdivision thereof or any other entity of whatever nature.

 

“Plan” means an employee benefit plan that is subject to ERISA, a plan or
individual retirement account that is subject to Section 4975 of the Code or any
entity whose assets are considered assets of any such plan.

 

“Pledge” means the pledge under the Pledge Agreement of the Senior Notes, the
Treasury Securities or the appropriate Applicable Ownership Interest (as
specified in clause (i) of the definition of such term) in the Treasury
Portfolio, as the case may be, in each case constituting a part of the Units (it
being

 

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understood that the appropriate Applicable Ownership Interest (as specified in
clause (ii) of the definition of such term) in the Treasury Portfolio shall not
be subject to the Pledge).

 

“Pledge Agreement” means the Pledge Agreement, dated as of November 3, 2003,
among the Company, the Collateral Agent, the Custodial Agent, the Securities
Intermediary and the Purchase Contract Agent, on its own behalf and as
attorney-in-fact for the Holders from time to time of the Units, as amended from
time to time.

 

“Pledged Applicable Ownership Interests” has the meaning set forth in Section
1.01(d) of the Pledge Agreement.

 

“Pledged Senior Notes” has the meaning set forth in Section 1.01(d) of the
Pledge Agreement.

 

“Pledged Treasury Securities” has the meaning set forth in Section 1.01(d) of
the Pledge Agreement.

 

“Predecessor Certificate” means a Predecessor Corporate Units Certificate or a
Predecessor Treasury Units Certificate.

 

“Predecessor Corporate Units Certificate” of any particular Corporate Units
Certificate means every previous Corporate Units Certificate evidencing all or a
portion of the rights and obligations of the Company and the Holder under the
Corporate Units evidenced thereby; and, for the purposes of this definition, any
Corporate Units Certificate authenticated and delivered under Section 3.10 in
exchange for or in lieu of a mutilated, destroyed, lost or stolen Corporate
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 Corporate
Units Certificate.

 

“Predecessor Treasury Units Certificate” of any particular Treasury Units
Certificate means every previous Treasury Units Certificate evidencing all or a
portion of the rights and obligations of the Company and the Holder under the
Treasury Units evidenced thereby; and, for the purposes of this definition, any
Treasury Units Certificate authenticated and delivered under Section 3.10 in
exchange for or in lieu of a mutilated, destroyed, lost or stolen Treasury 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 Treasury
Units Certificate.

 

“Primary Treasury Dealer” shall mean a primary U.S. government securities
dealer.

 

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“Proceeds” has the meaning set forth in Section 1.01(d) of the Pledge Agreement.

 

“Prospectus” means the prospectus relating to the delivery of shares or any
securities in connection with an Early Settlement pursuant to Section 5.07 or a
Cash Merger Early Settlement of Purchase Contracts pursuant to Section
5.04(b)(ii), in the form in which first filed, or transmitted for filing, with
the Securities and Exchange Commission after the effective date of the
Registration Statement pursuant to Rule 424(b) under the Securities Act,
including the documents incorporated by reference therein as of the date of such
Prospectus.

 

“Purchase Contract” means, with respect to any Unit, the contract forming a part
of such Unit and obligating the Company to (i) sell, and the Holder of such Unit
to purchase, shares of Common Stock and (ii) pay the Holder thereof Contract
Adjustment Payments, in each case on the terms and subject to the conditions set
forth in Article 5 hereof.

 

“Purchase Contract Agent” means the Person named as the “Purchase Contract
Agent” in the first paragraph of this Agreement until a successor Purchase
Contract Agent shall have become such pursuant to the applicable provisions of
this Agreement, and thereafter “Purchase Contract Agent” shall mean such Person
or any subsequent successor who is appointed pursuant to this Agreement.

 

“Purchase Contract Settlement Date” means November 15, 2006.

 

“Purchase Contract Settlement Fund” has the meaning set forth in Section 5.03.

 

“Purchase Price” has the meaning set forth in Section 5.01(a).

 

“Purchased Shares” has the meaning set forth in Section 5.04(a)(vi).

 

“Put Right” has the meaning set forth in Section 8.05 of the Supplemental
Indenture.

 

“Quotation Agent” means any Primary Treasury Dealer selected by the Company.

 

“Record Date” for any distribution and Contract Adjustment Payment payable on
any Payment Date means, as to any Global Certificate or any other Certificate,
the first business day of the calendar month in which the relevant Payment Date
falls; provided that the Company may, at its option, select any other day as the
Record Date for any Payment Date so long as such Record Date selected is more
than one Business Day but less than sixty Business Days prior to such Payment
Date.

 

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“Redemption Amount” has the meaning set forth in Section 1.02(e) of the
Supplemental Indenture.

 

“Redemption Price” has the meaning set forth in Section 1.02(e) of the
Supplemental Indenture.

 

“Reference Dealer” means a dealer engaged in trading of convertible securities.

 

“Reference Price” has the meaning set forth in Section 5.01(a)(ii).

 

“Registration Statement” means a registration statement under the Securities Act
prepared by the Company covering, inter alia, the delivery by the Company of any
securities in connection with an Early Settlement on the Early Settlement Date
or a Cash Merger Early Settlement of Purchase Contracts on the Cash Merger Early
Settlement Date under Section 5.04(b)(ii), including all exhibits thereto and
the documents incorporated by reference in the prospectus contained in such
registration statement, and any post-effective amendments thereto.

 

“Remarketing” means the remarketing of the Senior Notes by the Remarketing Agent
pursuant to the Remarketing Agreement.

 

“Remarketing Agent” has the meaning set forth in the Remarketing Agreement.

 

“Remarketing Agreement” means the Remarketing Agreement, dated as of November 3,
2003 among the Company, Banc of America Securities LLC and the Purchase Contract
Agent, as amended from time to time.

 

“Remarketing Date” means the Initial Remarketing Date or the Final Remarketing
Date.

 

“Remarketing Fee” has the meaning set forth in Section 5.02(a)(i).

 

“Remarketing Per Senior Note Price” means the Treasury Portfolio Purchase Price
divided by the number of Senior Notes held as components of Corporate Units.

 

“Reorganization Event” has the meaning set forth in Section 5.04(b)(i).

 

“Reset Rate” has the meaning set forth in Section 1.02(e) of the Supplemental
Indenture.

 

“Responsible Officer” shall mean, when used with respect to the Purchase Contact
Agent, any officer within the corporate trust department of the

 

11

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Purchase Contract Agent, including any vice president, assistant vice president,
assistant secretary, assistant treasurer, trust officer or any other officer of
the Purchase Contract 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 shall have
direct responsibility for the administration of this Purchase Contract
Agreement.

 

“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, as Securities Intermediary
under the Pledge Agreement until a successor Securities Intermediary shall have
become such pursuant to the applicable provisions of the Pledge Agreement, and
thereafter “Securities Intermediary” shall mean such successor or any subsequent
successor who is appointed pursuant to the Pledge Agreement.

 

“Security Register” and “Security Registrar” have the respective meanings set
forth in Section 3.05.

 

“Senior Indebtedness” means indebtedness of any kind of the Company unless the
instrument under which such indebtedness is incurred expressly provides that it
is on a parity in right of payment with or subordinate in right of payment to
the Contract Adjustment Payments.

 

“Senior Notes” means the series of notes designated the senior notes due
November 15, 2008 to be issued by the Company under the Indenture.

 

“Separate Senior Notes” means Senior Notes that are no longer a component of
Corporate Units.

 

“Separate Senior Notes Purchase Price” means the amount in cash equal to the
product of the Remarketing Per Senior Note Price multiplied by the number of
Separate Senior Notes remarketed in the Initial Remarketing.

 

“Settlement Rate” has the meaning set forth in Section 5.01(a).

 

“Special Event” has the meaning set forth in Section 1.02(e) of the Supplemental
Indenture.

 

“Special Event Redemption” means the redemption of the Senior Notes pursuant to
the Indenture following the occurrence of a Special Event.

 

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“Special Event Redemption Date” means the date upon which a Special Event
Redemption is scheduled to occur pursuant to the Indenture.

 

“Stated Amount” means $25.00.

 

“Successful Final Remarketing” has the meaning set forth in Section 5.02(c)(ii).

 

“Successful Initial Remarketing” has the meaning set forth in Section
5.02(a)(i).

 

“Successful Remarketing” means a Successful Initial Remarketing or a Successful
Final Remarketing.

 

“Supplemental Indenture” means the Supplemental Indenture No. 1 dated as of the
date hereof between the Company and the Indenture Trustee.

 

“Tax Event” has the meaning set forth in Section 1.02(e) of the Supplemental
Indenture.

 

“Termination Date” means the date, if any, on which a Termination Event occurs.

 

“Termination Event” means the occurrence of any of the following events:

 

(i) at any time on or prior to the Purchase Contract Settlement Date, a
judgment, decree or court order shall have been entered granting relief under
the Bankruptcy Code, adjudicating the Company to be insolvent, or approving as
properly filed a petition seeking reorganization or liquidation of the Company
or any other similar applicable Federal or state law and if such judgment,
decree or order shall have been entered more than 60 days prior to the Purchase
Contract Settlement Date, such decree or order shall have continued undischarged
and unstayed for a period of 60 days;

 

(ii) at any time on or prior to the Purchase Contract Settlement Date, a
judgment, decree or court order for the appointment of a receiver or liquidator
or trustee or assignee in bankruptcy or insolvency of the Company or of its
property, or for the termination or liquidation of its affairs, shall have been
entered and if such judgment, decree or order shall have been entered more than
60 days prior to the Purchase Contract Settlement Date, such judgment, decree or
order shall have continued undischarged and unstayed for a period of 60 days; or

 

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(iii) at any time on or prior to the Purchase Contract Settlement Date, the
Company shall file a petition for relief under the Bankruptcy Code, or shall
consent to the filing of a bankruptcy proceeding against it, or shall file a
petition or answer or consent seeking reorganization or liquidation under the
Bankruptcy Code or any other similar applicable Federal or State law, or shall
consent to the filing of any such petition, or shall consent to the appointment
of a receiver or liquidator or trustee or assignee in bankruptcy or insolvency
of it or of its property, or shall make an assignment for the benefit of
creditors, or shall admit in writing its inability to pay its debts generally as
they become due.

 

“Threshold Appreciation Price” has the meaning set forth in Section 5.01(a).

 

“TIA” means the Trust Indenture Act of 1939, as amended from time to time, or
any successor legislation.

 

“Trading Day” has the meaning set forth in Section 5.01(a).

 

“Treasury Portfolio” means a portfolio of (1) U.S. treasury securities (or
principal or interest strips thereof) that mature on or prior to November 15,
2006 in an aggregate amount at maturity equal to the Applicable Principal
Amount, and (2) (x) in the case of a Successful Remarketing prior to the Final
Remarketing Date, for the scheduled Payment Date on the Senior Notes that occurs
on the Purchase Contract Settlement Date, U.S. treasury securities (or principal
or interest strips thereof) that mature on or prior to November 15, 2006 in an
aggregate amount at maturity equal to the aggregate interest payment (assuming
no reset of the interest rate) that would have been due on the Purchase Contract
Settlement Date on the Applicable Principal Amount, and (y) in the case of a
Special Event Redemption, for each scheduled Payment Date that occurs after the
Special Event Redemption Date to and including the Purchase Contract Settlement
Date, U.S. treasury securities (or principal or interest strips thereof) that
mature on or prior to the Business Day immediately preceding such scheduled
Payment Date in an aggregate amount at maturity equal to the aggregate interest
payment (assuming no reset of the interest rate) that would have been due on
such scheduled Payment Date on the Applicable Principal Amount.

 

“Treasury Portfolio Purchase Price” means the lowest aggregate ask-side price
quoted by a Primary Treasury Dealer to the Quotation Agent between 9:00 a.m. and
11:00 a.m. (New York City time) (i) in the case of a Special Event Redemption,
on the third Business Day immediately preceding the Special Event Redemption
Date for the purchase of the applicable Treasury Portfolio for settlement on the
Special Event Redemption Date, and (ii) in the case of any Successful
Remarketing prior to the Final Remarketing Date, on the date of such Successful
Remarketing for the purchase of the applicable Treasury Portfolio for settlement
on the third Business Day immediately following the date of such Successful
Remarketing.

 

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“Treasury Securities” means zero-coupon U.S. treasury securities that mature on
November 15, 2006 (CUSIP No. 912820GQ4).

 

“Treasury Unit” means, following the substitution of Treasury Securities for
Pledged Senior Notes or the Pledged Applicable Ownership Interest in the
Treasury Portfolio as collateral to secure a Holder’s obligations under the
Purchase Contract, the collective rights and obligations of a Holder of a
Treasury Units Certificate in respect of such Treasury Securities, subject to
the Pledge thereof, and the related Purchase Contract.

 

“Treasury Units Certificate” means a certificate evidencing the rights and
obligations of a Holder in respect of the number of Treasury Units specified on
such certificate.

 

“Underwriters” means the underwriters identified in Schedule A to the
Underwriting Agreement.

 

“Underwriting Agreement” means the Underwriting Agreement, dated October 28,
2003, among the Company and the Underwriters, relating to the issuance of
Corporate Units by the Company.

 

“Unit” means a Corporate Unit or a Treasury Unit, as the case may be.

 

“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 1.02. Compliance Certificates and Opinions. Except as otherwise
expressly provided by this Agreement, upon any application or request by the
Company to the Purchase Contract Agent to take any action in accordance with any
provision of this Agreement, the Company shall furnish to the Purchase Contract
Agent an Officers’ Certificate stating that all conditions precedent, if any,
provided for in this Agreement relating to the proposed action have been
complied with and, if reasonably requested by the Purchase Contract 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.

 

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Every certificate or opinion with respect to compliance with a condition or
covenant provided for in this Agreement (other than the Officers’ Certificate
provided for in Section 10.05) shall include:

 

(i) a statement that each individual signing such certificate or opinion has
read such covenant or condition and the definitions herein relating thereto;

 

(ii) 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;

 

(iii) a statement that, in the opinion of each such individual, he or she has
made such examination or investigation as is necessary to enable such individual
to express an informed opinion as to whether or not such covenant or condition
has been complied with; and

 

(iv) a statement as to whether, in the opinion of each such individual, such
condition or covenant has been complied with.

 

Section 1.03. Form of Documents Delivered to Purchase Contract Agent.

 

In any case where several matters are required to be certified by, or covered by
an opinion of, any specified Person, it is not necessary that all such matters
be certified by, or covered by the opinion of, only one such Person, or that
they be so certified or covered by only one document, but one such Person may
certify or give an opinion with respect to some matters and one or more other
such Persons as to other matters, and any such Person may certify or give an
opinion as to such matters in one or several documents. Any certificate or
opinion of an officer of the Company may be based, insofar as it relates to
legal matters, upon a certificate or opinion of, or representations by, counsel,
unless such officer knows, or in the exercise of reasonable care should know,
that the certificate or opinion or representations with respect to the matters
upon which its certificate or opinion is based are erroneous. Any such
certificate or Opinion of Counsel may be based, insofar as it relates to factual
matters, upon a certificate or opinion of, or representations by, an officer or
officers of the Company unless such counsel knows, or in the exercise of
reasonable care should know, that the certificate or opinion or representations
with respect to such matters are erroneous.

 

Where any Person is required to make, give or execute two or more applications,
requests, consents, certificates, statements, opinions or other instruments
under this Agreement, they may, but need not, be consolidated and form one
instrument.

 

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Section 1.04. 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 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 Purchase
Contract 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 7.01) conclusive in favor of the Purchase
Contract 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 that the Purchase Contract Agent deems
sufficient.

 

(c) The ownership of Units shall be proved by the Security Register.

 

(d) Any request, demand, authorization, direction, notice, consent, waiver or
other Act of the Holder of any Unit shall bind every future Holder of the same
Unit and the Holder of every Certificate evidencing such Unit 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 Purchase
Contract Agent or the Company in reliance thereon, whether or not notation of
such action is made upon such Certificate.

 

(e) The Company may set any date 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
Units. If any record date is set pursuant to this paragraph, the Holders of the
Outstanding Corporate Units and the Outstanding Treasury Units, as the case may
be, on such record date, and no other Holders, shall be entitled to take the
relevant action with respect to the Corporate Units or the Treasury 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
prior to or on 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 be of no effect), and nothing contained
in this paragraph shall be

 

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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 Purchase Contract Agent in writing
and to each Holder of Units in the manner set forth in Section 1.06.

 

With respect to any record date set pursuant to this Section 1.04(e), 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 Purchase Contract Agent in writing, and to each Holder of Units
in the manner set forth in Section 1.06, prior to or on 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 1.05. Notices.

 

Any notice or communication is duly given if in writing and delivered in Person
or mailed by first-class mail (registered or certified, return receipt
requested), telecopier (with receipt confirmed) or overnight air courier
guaranteeing next day delivery, to the others’ address; provided that notice
shall be deemed given to the Purchase Contract Agent only upon receipt thereof:

 

If to the Purchase Contract Agent:

 

The Bank of New York

101 Barclay Street, Floor 8W

New York, NY 10286

Attention: Corporate Trust Administration

Fax: 212-815-5707

 

If to the Company:

 

The PMI Group, Inc.

3003 Oak Road

Walnut Creek, California 94597

Telecopier No.: 925-658-6175

Attention: General Counsel

 

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If to the Collateral Agent:

 

The Bank of New York

101 Barclay Street, Floor 8W

New York, NY 10286

Attention: Corporate Trust Administration

Fax: 212-815-5707

 

If to the Indenture Trustee:

 

The Bank of New York

101 Barclay Street, Floor 8W

New York, NY 10286

Attention: Corporate Trust Administration

Fax: 212-815-5707

 

The Purchase Contract Agent shall send to the Indenture Trustee at the
telecopier number set forth above a copy of any notices in the form of Exhibits
C, D, E or F it sends or receives.

 

Section 1.06. Notice to Holders; Waiver.

 

Where this Agreement provides for notice to Holders of any event, such notice
shall be sufficiently given (unless otherwise herein expressly provided) if in
writing and mailed, first-class postage prepaid, to each Holder affected by such
event, at its address as it appears in the Security 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 Purchase
Contract Agent, but such filing shall not be a condition precedent to the
validity of any action taken in reliance upon such waiver.

 

In case by reason of the suspension of regular mail service or by reason of any
other cause it shall be impracticable to give such notice by mail, then such
notification as shall be made with the approval of the Purchase Contract Agent
shall constitute a sufficient notification for every purpose hereunder.

 

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Section 1.07. Effect of Headings and Table of Contents.

 

The Article and Section headings herein and the Table of Contents are for
convenience only and shall not affect the construction hereof.

 

Section 1.08. Successors and Assigns.

 

All covenants and agreements in this Agreement by the Company and the Purchase
Contract Agent shall bind their respective successors and assigns, whether so
expressed or not.

 

Section 1.09. Separability Clause.

 

In case any provision in this Agreement or in the 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 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 Units evidenced by their Certificates by
their acceptance of delivery of such Certificates.

 

Section 1.11. Governing Law.

 

This Agreement and the Units shall be governed by, and construed in accordance
with, the laws of the State of New York.

 

Section 1.12. Legal Holidays.

 

In any case where any Payment Date shall not be a Business Day (notwithstanding
any other provision of this Agreement or the Units), Contract Adjustment
Payments or other distributions shall not be paid on such date, but Contract
Adjustment Payments or such other distributions shall be paid on the next
succeeding Business Day with the same force and effect as if made on such
Payment Date, provided that if such Business Day is in the next succeeding
calendar year, then payment of the Contract Adjustment Payments or other
distributions will be made on the Business Day immediately preceding such
Business Day. No interest shall accrue or be payable by the Company or to any
Holder for the period from and after any such Payment Date.

 

In any case where the Purchase Contract Settlement Date or any Early Settlement
Date or Cash Merger Early Settlement Date shall not be a Business

 

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Day (notwithstanding any other provision of this Agreement or the Units),
Purchase Contracts shall not be performed and Early Settlement and Cash Merger
Early Settlement shall not be effected on such date, but Purchase Contracts
shall be performed or Early Settlement or Cash Merger Early Settlement shall be
effected, as applicable, on the next succeeding Business Day with the same force
and effect as if made on such Purchase Contract Settlement Date, Early
Settlement Date or Cash Merger Early Settlement Date, as applicable.

 

Section 1.13. Counterparts.

 

This Agreement may be executed in any number of counterparts by the parties
hereto on separate counterparts, each of which, when so executed and delivered,
shall be deemed an original, but all such counterparts shall together constitute
one and the same instrument.

 

Section 1.14. Inspection of Agreement.

 

A copy of this Agreement shall be available at all reasonable times during
normal business hours at the Corporate Trust Office for inspection by any Holder
or Beneficial Owner.

 

Section 1.15. Appointment of Financial Institution as Agent for the Company.

 

The Company may appoint a financial institution (which may be the Collateral
Agent) to act as its agent in performing its obligations and in accepting and
enforcing performance of the obligations of the Purchase Contract Agent and the
Holders, under this Agreement and the Purchase Contracts, by giving notice of
such appointment in the manner provided in Section 1.05 hereof. Any such
appointment shall not relieve the Company in any way from its obligations
hereunder.

 

Section 1.16. No Waiver.

 

No failure on the part of the Company, the Purchase Contract Agent, the
Collateral Agent, the Securities Intermediary or any of their respective agents
to exercise, and no course of dealing with respect to, and no delay in
exercising, any right, power or remedy hereunder shall operate as a waiver
thereof; nor shall any single or partial exercise by the Company, the Collateral
Agent, the Securities Intermediary or any of their respective 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.

 

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ARTICLE 2

CERTIFICATE FORMS

 

Section 2.01. Forms Of Certificates Generally.

 

The Certificates (including the form of Purchase Contract forming part of each
Unit evidenced thereby) shall be in substantially the form set forth in Exhibit
A hereto (in the case of Certificates evidencing Corporate Units) or Exhibit B
hereto (in the case of Certificates evidencing Treasury Units), 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 Units are listed
or any depositary therefor, or as may, consistently herewith, be determined by
the officers of the Company executing such Certificates, as evidenced by their
execution of the Certificates.

 

The definitive Certificates shall be produced in any manner as determined by the
officers of the Company executing the Units evidenced by such Certificates,
consistent with the provisions of this Agreement, as evidenced by their
execution thereof.

 

Every Global Certificate authenticated, executed on behalf of the Holders and
delivered hereunder shall bear a legend in substantially the following form:

 

THIS CERTIFICATE IS A GLOBAL CERTIFICATE WITHIN THE MEANING OF THE PURCHASE
CONTRACT AGREEMENT HEREINAFTER REFERRED TO AND IS REGISTERED IN THE NAME OF CEDE
& CO., AS NOMINEE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION (THE
“DEPOSITARY”), THE DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY. THIS
CERTIFICATE IS EXCHANGEABLE FOR CERTIFICATES REGISTERED IN THE NAME OF A PERSON
OTHER THAN THE DEPOSITARY OR ITS NOMINEE ONLY IN THE LIMITED CIRCUMSTANCES
DESCRIBED IN THE PURCHASE CONTRACT AGREEMENT AND NO TRANSFER OF THIS CERTIFICATE
(OTHER THAN A TRANSFER OF THIS CERTIFICATE AS A WHOLE BY THE DEPOSITARY TO A
NOMINEE OF THE DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR
ANOTHER NOMINEE OF THE DEPOSITARY) MAY BE REGISTERED EXCEPT IN LIMITED
CIRCUMSTANCES.

 

UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITARY FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND ANY

 

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CERTIFICATE ISSUED IS REQUESTED IN THE NAME OF CEDE & CO. OR SUCH OTHER NAME AS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITARY (AND ANY PAYMENT
HEREON IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF THE DEPOSITARY), 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.

 

Section 2.02. Form of Purchase Contract Agent’s Certificate of Authentication.

 

The form of the Purchase Contract Agent’s certificate of authentication of the
Units shall be in substantially the form set forth on the form of the applicable
Certificates.

 

ARTICLE 3

THE UNITS

 

Section 3.01. Amount; Form and Denominations.

 

The aggregate number of Units evidenced by Certificates authenticated, executed
on behalf of the Holders and delivered hereunder is limited to 12,000,000 (or
13,800,000 if the over-allotment option granted to the Underwriters pursuant to
the Underwriting Agreement is exercised in full), except for Certificates
authenticated, executed and delivered upon registration of transfer of, in
exchange for, or in lieu of, other Certificates pursuant to Section 3.04,
Section 3.05, Section 3.10, Section 3.13, Section 3.14 or Section 8.05.

 

The Certificates shall be issuable only in registered form and only in
denominations of a single Corporate Unit or Treasury Unit and any integral
multiple thereof.

 

Section 3.02. Rights and Obligations Evidenced by the Certificates.

 

Each Corporate Units Certificate shall evidence the number of Corporate Units
specified therein, with each such Corporate Unit representing (1) the ownership
by the Holder thereof of a beneficial interest in a Senior Note or the
Applicable Ownership Interest in the Treasury Portfolio, as the case may be,
subject to the Pledge of such Senior Note or the Applicable Ownership Interest
(as specified in clause (i) of the definition of such term) in the Treasury
Portfolio, as the case may be, by such Holder pursuant to the Pledge Agreement,
and (2) the rights and obligations of the Holder thereof and the Company under
one Purchase

 

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Contract. The Purchase Contract Agent is hereby authorized, as attorney-in-fact
for, and on behalf of, the Holder of each Corporate Unit, to pledge, pursuant to
the Pledge Agreement, the Senior Note and the Applicable Ownership Interest (as
specified in clause (i) of the definition of such term) in the Treasury
Portfolio, if any, forming a part of such Corporate Unit, to the Collateral
Agent for the benefit of the Company, and to grant to the Collateral Agent, for
the benefit of the Company, a security interest in the right, title and interest
of such Holder in such Senior Note and the Applicable Ownership Interest (as
specified in clause (i) of the definition of such term) in the Treasury
Portfolio, if any, to secure the obligation of the Holder under each Purchase
Contract to purchase shares of Common Stock.

 

Upon the formation of a Treasury Unit pursuant to Section 3.13, each Treasury
Unit Certificate shall evidence the number of Treasury Units specified therein,
with each such Treasury Unit representing (1) the ownership by the Holder
thereof of a 1/40 undivided beneficial interest in a Treasury Security with a
principal amount at maturity equal to $1,000, subject to the Pledge of such
interest by such Holder pursuant to the Pledge Agreement, and (2) the rights and
obligations of the Holder thereof and the Company under one Purchase Contract.
The Purchase Contract Agent is hereby authorized, as attorney-in-fact for, and
on behalf of, the Holder of each Treasury Unit, to pledge, pursuant to the
Pledge Agreement, such Holder’s interest in the Treasury Security forming a part
of such Treasury Unit to the Collateral Agent, for the benefit of the Company,
and to grant to the Collateral Agent, for the benefit of the Company, a security
interest in the right, title and interest of such Holder in such Treasury
Security to secure the obligation of the Holder under each Purchase Contract to
purchase shares of Common Stock.

 

Prior to the purchase of shares of Common Stock under each Purchase Contract,
such Purchase Contract shall not entitle the Holder of a Unit 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 a shareholder in respect of the meetings of shareholders or
for the election of directors of the Company or for any other matter, or any
other rights whatsoever as a shareholder of the Company.

 

Section 3.03. Execution, Authentication, Delivery and Dating.

 

Subject to the provisions of Section 3.13 and Section 3.14 hereof, upon the
execution and delivery of this Agreement, and at any time and from time to time
thereafter, the Company may deliver Certificates executed by the Company to the
Purchase Contract Agent for authentication, execution on behalf of the Holders
and delivery, together with its Issuer Order for authentication of such
Certificates, and the Purchase Contract Agent in accordance with such Issuer
Order shall authenticate, execute on behalf of the Holders and deliver such
Certificates.

 

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The Certificates shall be executed on behalf of the Company by its Chairman of
the Board of Directors, its Chief Executive Officer, its President, its
Treasurer or one of its Vice Presidents. The signature of any of these officers
on the Certificates may be manual or facsimile.

 

Certificates bearing the manual or facsimile signatures of individuals who were
at any time the proper officers of the Company shall bind the Company,
notwithstanding that such individuals or any of them have ceased to hold such
offices prior to the authentication and delivery of such Certificates or did not
hold such offices at the date of such Certificates.

 

No Purchase Contract evidenced by a Certificate shall be valid until such
Certificate has been executed on behalf of the Holder by the manual signature of
an authorized officer of the Purchase Contract Agent, as such Holder’s
attorney-in-fact. Such signature by an authorized officer of the Purchase
Contract Agent shall be conclusive evidence that the Holder of such Certificate
has entered into the Purchase Contracts evidenced by such Certificate.

 

Each Certificate shall be dated the date of its authentication.

 

No Certificate shall be entitled to any benefit under this Agreement or be valid
or obligatory for any purpose unless there appears on such Certificate a
certificate of authentication substantially in the form provided for herein
executed by an authorized officer of the Purchase Contract Agent by manual
signature, and such certificate upon any Certificate shall be conclusive
evidence, and the only evidence, that such Certificate has been duly
authenticated and delivered hereunder.

 

Section 3.04. Temporary Certificates.

 

Pending the preparation of definitive Certificates, the Company shall execute
and deliver to the Purchase Contract Agent, and the Purchase Contract Agent
shall authenticate, execute on behalf of the Holders, and deliver, in lieu of
such definitive Certificates, temporary Certificates that 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 Corporate Units or
Treasury Units, as the case may be, are listed, or as may, consistently
herewith, be determined by the officers of the Company executing such
Certificates, as evidenced by their execution of the Certificates.

 

If temporary Certificates are issued, the Company will cause definitive
Certificates to be prepared without unreasonable delay. After the preparation of
definitive Certificates, the temporary Certificates shall be exchangeable for

 

25

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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 Purchase Contract
Agent, and the Purchase Contract 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
Units 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 Units evidenced thereby as
definitive Certificates.

 

Section 3.05. Registration; Registration of Transfer and Exchange.

 

The Purchase Contract Agent shall keep at the Corporate Trust Office a register
(the “Security Register”) in which, subject to such reasonable regulations as it
may prescribe, the Purchase Contract Agent shall provide for the registration of
Certificates and of transfers of Certificates (the Purchase Contract Agent, in
such capacity, the “Security Registrar”). The Security Registrar shall record
separately the registration and transfer of the Certificates evidencing
Corporate Units and Treasury Units.

 

Upon surrender for registration of transfer of any Certificate at the Corporate
Trust Office, the Company shall execute and deliver to the Purchase Contract
Agent, and the Purchase Contract Agent shall authenticate, execute on behalf of
the designated transferee or transferees, and deliver, in the name of the
designated transferee or transferees, one or more new Certificates of any
authorized denominations, like tenor, and evidencing a like number of Corporate
Units or Treasury Units, as the case may be.

 

At the option of the Holder, Certificates may be exchanged for other
Certificates, of any authorized denominations and evidencing a like number of
Corporate Units or Treasury 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 Purchase Contract Agent, and the Purchase Contract Agent shall
authenticate, execute on behalf of the Holder, and deliver the Certificates that
the Holder making the exchange is entitled to receive.

 

All Certificates issued upon any registration of transfer or exchange of a
Certificate shall evidence the ownership of the same number of Corporate Units
or Treasury Units, as the case may be, and be entitled to the same benefits and
subject to the same obligations under this Agreement as the Corporate Units or
Treasury Units, as the case may be, evidenced by the Certificate surrendered
upon such registration of transfer or exchange.

 

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Every Certificate presented or surrendered for registration of transfer or
exchange shall (if so required by the Purchase Contract Agent) be duly endorsed,
or be accompanied by a written instrument of transfer in form satisfactory to
the Company and the Purchase Contract Agent duly executed, by the Holder thereof
or its attorney duly authorized in writing.

 

No service charge shall be made for any registration of transfer or exchange of
a Certificate, but the Company and the Purchase Contract 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
Section 3.04, Section 3.06 and Section 8.05 not involving any transfer.

 

Notwithstanding the foregoing, the Company shall not be obligated to execute and
deliver to the Purchase Contract Agent, and the Purchase Contract Agent shall
not be obligated to authenticate, execute on behalf of the Holder and deliver
any Certificate in exchange for any other Certificate presented or surrendered
for registration of transfer or for exchange on or after the Business Day
immediately preceding the earliest to occur of any Early Settlement Date with
respect to such Certificate, any Cash Merger Early Settlement Date with respect
to such Certificate, the Purchase Contract Settlement Date or 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 Purchase Contract
Agent shall:

 

(i) if the Purchase Contract Settlement Date (including upon any Cash
Settlement) or an Early Settlement Date or a Cash Merger Early Settlement Date
with respect to such other Certificate has occurred, deliver the shares of
Common Stock issuable in respect of the Purchase Contracts forming a part of the
Units evidenced by such other Certificate; or

 

(ii) if a Termination Event shall have occurred prior to the Purchase Contract
Settlement Date, transfer the Senior Notes, the Treasury Securities, or the
appropriate Applicable Ownership Interest in the Treasury Portfolio, as the case
may be, evidenced thereby, in each case subject to the applicable conditions and
in accordance with the applicable provisions of Section 3.15 and Article 5
hereof.

 

Section 3.06. 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, the Company. The Company hereby designates

 

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DTC as the initial Depositary. Such Global Certificates shall initially be
registered on the books and records of the Company in the name of Cede & Co.,
the nominee of the Depositary, and no Beneficial Owner will receive a definitive
Certificate representing such Beneficial Owner’s interest in such Global
Certificate, except as provided in Section 3.09. The Purchase Contract Agent
shall enter into an agreement with the Depositary if so requested by the
Company. Unless and until definitive, fully registered Certificates have been
issued to Beneficial Owners pursuant to Section 3.09:

 

(i) the provisions of this Section 3.06 shall be in full force and effect;

 

(ii) the Company shall be entitled to deal with the Depositary for all purposes
of this Agreement (including, without limitation, making Contract Adjustment
Payments and receiving approvals, votes or consents hereunder) as the Holder of
the Units and the sole holder of the Global Certificates and shall have no
obligation to the Beneficial Owners; provided that any Beneficial Owner may
directly enforce against the Company, without the involvement of the Depositary
or any other Person, its right to receive definitive Certificates pursuant to
Section 3.09;

 

(iii) to the extent that the provisions of this Section 3.06 conflict with any
other provisions of this Agreement, the provisions of this Section 3.06 shall
control; and

 

(iv) the rights of the Beneficial Owners shall be exercised only through the
Depositary and shall be limited to those established by law and agreements
between such Beneficial Owners and the Depositary or the Depositary
Participants; provided that any Beneficial Owner may directly enforce against
the Company, without the involvement of the Depositary or any other Person, its
right to receive definitive Certificates pursuant to Section 3.09.

 

Transfers of securities evidenced by Global Certificates shall be made through
the facilities of the Depositary, and any cancellation of, or increase or
decrease in the number of, such securities (including the creation of Treasury
Units and the recreation of Corporate Units pursuant to Section 3.13 and Section
3.14 respectively) shall be accomplished by making appropriate annotations on
the Schedule of Increases and Decreases for such Global Certificate.

 

Section 3.07. 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 Units

 

28

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registered in the name of the Depositary or the nominee of the Depositary, the
Company or the Company’s agent shall, except as set forth herein, have no
obligations to the Beneficial Owners.

 

Section 3.08. Appointment of Successor Depositary.

 

If the Depositary elects to discontinue its services as securities depositary
with respect to the Units, the Company may, in its sole discretion, appoint a
successor Depositary with respect to the Units.

 

Section 3.09. Definitive Certificates.

 

If:

 

(i) the Depositary notifies the Company that it is unwilling or unable to
continue its services as securities depositary with respect to the Units and no
successor Depositary has been appointed pursuant to Section 3.08 within 90 days
after such notice; or

 

(ii) the Depositary ceases to be a “clearing agency” registered under Section
17A of the Exchange Act when the Depositary is required to be so registered to
act as the Depositary and so notifies the Company, and no successor Depositary
has been appointed pursuant to Section 3.08 within 90 days after such notice;

 

(iii) any event of default has occurred and is continuing under the Notes or the
Purchase Contract Agreement; or

 

(iv) the Company determines in its discretion that the Global Certificates shall
be exchangeable for definitive Certificates,

 

then (x) definitive Certificates shall be prepared by the Company with respect
to such Units and delivered to the Purchase Contract Agent and (y) upon
surrender of the Global Certificates representing the Units by the Depositary,
accompanied by registration instructions, the Company shall cause definitive
Certificates to be delivered to Beneficial Owners in accordance with the
instructions of the Depositary. The Company and the Purchase Contract Agent
shall not be liable for any delay in delivery of such instructions and may
conclusively rely on and shall be authorized and protected in relying on, such
instructions. Each definitive Certificate so delivered shall evidence Units of
the same kind and tenor as the Global Certificate so surrendered in respect
thereof.

 

Section 3.10. Mutilated, Destroyed, Lost and Stolen Certificates.

 

If any mutilated Certificate is surrendered to the Purchase Contract Agent, the
Company shall execute and deliver to the Purchase Contract Agent, and the

 

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Purchase Contract Agent shall authenticate, execute on behalf of the Holder, and
deliver in exchange therefor, a new Certificate, evidencing the same number of
Corporate Units or Treasury Units, as the case may be, and bearing a Certificate
number not contemporaneously outstanding.

 

If there shall be delivered to the Company and the Purchase Contract Agent (i)
evidence to their satisfaction of the destruction, loss or theft of any
Certificate, and (ii) such security or indemnity 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 Purchase Contract Agent that such Certificate has
been acquired by a protected purchaser, the Company shall execute and deliver to
the Purchase Contract Agent, and the Purchase Contract 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 Corporate Units or Treasury Units, as the case may be, and bearing a
Certificate number not contemporaneously outstanding.

 

Notwithstanding the foregoing, the Company shall not be obligated to execute and
deliver to the Purchase Contract Agent, and the Purchase Contract 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 earliest of any Early Settlement Date with respect to such lost or mutilated
Certificate, any Cash Merger Early Settlement Date with respect to such lost or
mutilated Certificate, the Purchase Contract Settlement Date or 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 Purchase Contract
Agent shall:

 

(i) if the Purchase Contract Settlement Date or Early Settlement Date or Cash
Merger Early Settlement Date with respect to such lost, stolen, destroyed or
mutilated Certificate has occurred, deliver the shares of Common Stock issuable
in respect of the Purchase Contracts forming a part of the Units evidenced by
such Certificate; or

 

(ii) if a Cash Settlement with respect to such lost or mutilated Certificate or
if a Termination Event shall have occurred prior to the Purchase Contract
Settlement Date, transfer the Senior Notes, the Treasury Securities or the
appropriate Applicable Ownership Interest (as specified in clause (i) of the
definition of such term) in the Treasury Portfolio, as the case may be,
evidenced thereby, in each case subject to the applicable conditions and in
accordance with the applicable provisions of Section 3.15 and Article 5 hereof.

 

30

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Upon the issuance of any new Certificate under this Section, the Company and the
Purchase Contract Agent may require the payment by the Holder of a sum
sufficient to cover any tax or other governmental charge that may be imposed in
relation thereto and any other fees and expenses (including, without limitation,
the fees and expenses of the Purchase Contract Agent) connected therewith.

 

Every new Certificate issued pursuant to this Section in lieu of any destroyed,
lost or stolen Certificate shall constitute an original additional contractual
obligation of the Company and of the Holder in respect of the Units evidenced
thereby, whether or not the destroyed, lost or stolen Certificate (and the 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.

 

The provisions of this Section are exclusive and shall preclude, to the extent
lawful, all other rights and remedies with respect to the replacement or payment
of mutilated, destroyed, lost or stolen Certificates.

 

Section 3.11. Persons Deemed Owners.

 

Prior to due presentment of a Certificate for registration of transfer, the
Company and the Purchase Contract Agent, and any agent of the Company or the
Purchase Contract Agent, may treat the Person in whose name such Certificate is
registered as the owner of the Units evidenced thereby for purposes of (subject
to any applicable record date) any payment or distribution on the Senior Notes
or on the Applicable Ownership Interests (as specified in clause (ii) of the
definition of such term) in the Treasury Portfolio (if any), as applicable,
payment of Contract Adjustment Payments and performance of the Purchase
Contracts and for all other purposes whatsoever in connection with such Units,
whether or not such payment, distribution, or performance shall be overdue and
notwithstanding any notice to the contrary, and neither the Company nor the
Purchase Contract Agent, nor any agent of the Company or the Purchase Contract
Agent, shall be affected by notice to the contrary.

 

Notwithstanding the foregoing, with respect to any Global Certificate, nothing
contained herein shall prevent the Company, the Purchase Contract Agent or any
agent of the Company or the Purchase Contract Agent from giving effect to any
written certification, proxy or other authorization furnished by the Depositary
(or its nominee), as a Holder, with respect to such Global Certificate, or
impair, as between such Depositary and the related Beneficial Owner, the
operation of customary practices governing the exercise of rights of the
Depositary (or its nominee) as Holder of such Global Certificate. None of the
Company, the Purchase Contract Agent or any agent of the Company or the Purchase
Contract Agent will have any responsibility or liability for any aspect of the
records

 

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relating to or payments made on account of beneficial ownership interests of a
Global Certificate or maintaining, supervising or reviewing any records relating
to such beneficial ownership interests.

 

Section 3.12. Cancellation.

 

All Certificates surrendered for delivery of shares of Common Stock on or after
the Purchase Contract Settlement Date or upon the transfer of Senior Notes, or
for delivery of Senior Notes, the appropriate Applicable Ownership Interest in
the Treasury Portfolio or Treasury Securities, as the case may be, after the
occurrence of a Termination Event or pursuant to a Cash Settlement, an Early
Settlement or a Cash Merger Early Settlement, or upon the registration of
transfer or exchange of a Unit, or a Collateral Substitution or the recreation
of Corporate Units shall, if surrendered to any Person other than the Purchase
Contract Agent, be delivered to the Purchase Contract Agent along with
appropriate written instructions regarding the cancellation thereof and, if not
already cancelled, shall be promptly cancelled by it. The Company may at any
time deliver to the Purchase Contract Agent for cancellation any Certificates
previously authenticated, executed and delivered hereunder that the Company may
have acquired in any manner whatsoever, and all Certificates so delivered shall,
upon an Issuer Order, be promptly cancelled by the Purchase Contract 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 Purchase Contract Agent shall be disposed of in
accordance with its customary practices.

 

If the Company or any Affiliate of the Company shall acquire any Certificate,
such acquisition shall not operate as a cancellation of such Certificate unless
and until such Certificate is delivered to the Purchase Contract Agent cancelled
or for cancellation.

 

Section 3.13. Creation of Treasury Units by Substitution of Treasury Securities.

 

Unless the Treasury Portfolio has replaced the Senior Notes as a component of
the Corporate Units, and subject to the conditions set forth in this Agreement,
a Holder may, at any time from and after the date of this Agreement and on or
prior to 5:00 p.m. (New York City time) on the fifth Business Day immediately
preceding the Purchase Contract Settlement Date, effect a Collateral
Substitution and separate the Pledged Senior Notes from the related Purchase
Contracts in respect of all or a portion of such Holder’s Corporate Units by
substituting for such Pledged Senior Notes, Treasury Securities or portions
thereof in an aggregate principal amount at maturity equal to the aggregate
principal amount of such Pledged Senior Notes; provided that Holders may make
Collateral Substitutions only in integral multiples of 40 Corporate Units. To
effect such substitution, the Holder must:

 

  (1) deposit with the Securities Intermediary Treasury Securities having an
aggregate principal amount at maturity equal to the aggregate principal amount
of the Senior Notes comprising part of all such Corporate Units; and

 

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  (2) transfer the related Corporate Units to the Purchase Contract Agent
accompanied by a notice to the Purchase Contract Agent, substantially in the
form of Exhibit C hereto, (i) stating that the Holder has deposited the relevant
amount of Treasury Securities with the Securities Intermediary for credit to the
Collateral Account and (ii) instructing the Purchase Contract Agent to instruct
the Collateral Agent to release the Pledged Senior Notes underlying such
Corporate Units, whereupon the Purchase Contract Agent shall promptly provide an
instruction to such effect to the Collateral Agent, substantially in the form of
Exhibit A to the Pledge Agreement.

 

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 cause the Securities Intermediary to
effect the release of such Pledged Senior Notes from the Pledge and the transfer
of such Senior Notes to the Purchase Contract Agent on behalf of the Holder free
and clear of the Company’s security interest therein. Upon receipt of such
Senior Notes, the Purchase Contract Agent shall promptly:

 

(i) cancel the related Corporate Units;

 

(ii) transfer the Senior Notes to the Holder (such Senior Notes shall be
tradeable as a separate security, independent of the resulting Treasury Units);
and

 

(iii) authenticate, execute on behalf of such Holder and deliver Treasury Units
in book-entry form, or if applicable, in the form of a Treasury Units
Certificate executed by the Company in accordance with Section 3.03 evidencing
the same number of Purchase Contracts as were evidenced by the cancelled
Corporate Units.

 

Holders who elect to separate the Senior Notes from the related Purchase
Contracts and to substitute Treasury Securities for such Senior Notes shall be
responsible for any fees or expenses (including, without limitation, fees and
expenses payable to the Collateral Agent for its services as Collateral Agent)
in respect of the substitution, and neither the Company nor the Purchase
Contract Agent shall be responsible for any such fees or expenses.

 

33

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If the Treasury Portfolio has replaced the Senior Notes as a component of the
Corporate Units and subject to the conditions set forth in this Agreement, a
Holder may, at any time on or prior to the second Business Day immediately
preceding the Purchase Contract Settlement Date, substitute Treasury Securities
for the Applicable Ownership Interests in the Treasury Portfolio included in
such Corporate Units, but only in integral multiples of 16,000 Corporate Units.
In such an event, the Holder shall transfer Treasury Securities to the
Securities Intermediary, and the Purchase Contract Agent shall instruct the
Collateral Agent to release the Pledge of and transfer to the Holder the
appropriate Applicable Ownership Interests in the Treasury Portfolio in the
manner set forth above.

 

In the event a Holder making a Collateral Substitution pursuant to this Section
3.13 fails to effect a book-entry transfer of the Corporate Units or fails to
deliver Corporate Units Certificates to the Purchase Contract Agent after
depositing Treasury Securities with the Securities Intermediary, any
distributions on the Senior Notes or Applicable Ownership Interest in the
Treasury Portfolio constituting a part of such Corporate Units shall be held in
the name of the Purchase Contract Agent or its nominee in trust for the benefit
of such Holder, until such Corporate Units are so transferred or the Corporate
Units Certificate is so delivered, as the case may be, or, such Holder provides
evidence satisfactory to the Company and the Purchase Contract Agent that such
Corporate Units Certificate has been destroyed, lost or stolen, together with
any indemnity that may be required by the Purchase Contract Agent and the
Company.

 

Except as described in Section 5.02 or in this Section 3.13 or in connection
with a Cash Settlement, an Early Settlement, a Cash Merger Early Settlement or a
Termination Event, for so long as the Purchase Contract underlying a Corporate
Unit remains in effect, such Corporate Units shall not be separable into its
constituent parts, and the rights and obligations of the Holder in respect of
the Senior Notes or Applicable Ownership Interests in the Treasury Portfolio, as
the case may be, and the Purchase Contract comprising such Corporate Units may
be acquired, and may be transferred and exchanged, only as a Corporate Unit.

 

Section 3.14. Recreation of Corporate Units.

 

Unless the Treasury Portfolio has replaced the Senior Notes as a component of
the Corporate Units, and subject to the conditions set forth in this Agreement,
a Holder of Treasury Units may recreate Corporate Units at any time on or prior
to 5:00 p.m. (New York City time) on the fifth Business Day immediately
preceding the Purchase Contract Settlement Date; provided that Holders of
Treasury Units may only recreate Corporate Units in integral multiples of 40
Treasury Units. To recreate Corporate Units, the Holder must:

 

  (1) transfer to the Securities Intermediary Senior Notes having an aggregate
principal amount equal to the aggregate principal amount at stated maturity of
the Pledged Treasury Securities comprising part of the Treasury Units; and

 

34

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  (2) transfer the related Treasury Units to the Purchase Contract Agent
accompanied by a notice to the Purchase Contract Agent, substantially in the
form of Exhibit C hereto, (i) stating that the Holder has transferred the
relevant amount of Senior Notes to the Securities Intermediary for deposit in
the Collateral Account and (ii) instructing the Purchase Contract Agent to
instruct the Collateral Agent to release the Pledged Treasury Securities
underlying such Treasury Units, whereupon the Purchase Contract Agent shall
promptly provide an instruction to such effect to the Collateral Agent,
substantially in the form of Exhibit C to the Pledge Agreement.

 

Upon receipt of the Senior 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 cause the Securities Intermediary to
effect the release of the Pledged Treasury Securities having a corresponding
aggregate principal amount at maturity from the Pledge and the transfer thereof
to the Purchase Contract Agent on behalf of the Holder free and clear of the
Company’s security interest therein. Upon receipt of such Treasury Securities,
the Purchase Contract Agent shall promptly:

 

(i) cancel the related Treasury Units;

 

(ii) transfer the Treasury Securities to the Holder; and

 

(iii) authenticate, execute on behalf of such Holder and deliver Corporate Units
in book-entry form or, if applicable, in the form of a Corporate Units
Certificate executed by the Company in accordance with Section 3.03 evidencing
the same number of Purchase Contracts as were evidenced by the cancelled
Treasury Units.

 

Holders who elect to recreate Corporate Units shall be responsible for any fees
or expenses (including, without limitation, fees and expenses payable to the
Collateral Agent for its services as Collateral Agent) in respect of the
recreation, and neither the Company nor the Purchase Contract Agent shall be
responsible for any such fees or expenses.

 

35

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If the Treasury Portfolio has replaced the Senior Notes as a component of the
Corporate Units, a Holder of Treasury Units may at any time on or prior to the
second Business Day immediately preceding the Purchase Contract Settlement Date
substitute the Applicable Ownership Interests in the Treasury Portfolio for
Treasury Securities, but only in multiples of 16,000 Treasury Units. In such an
event, the Holder shall transfer the appropriate Applicable Ownership Interests
in the Treasury Portfolio to the Collateral Agent, and the Purchase Contract
Agent shall instruct the Collateral Agent to release the Pledge of and transfer
to the Holder Treasury Securities in the manner set forth above.

 

Except as provided in Section 5.02 or in this Section 3.14 or in connection with
a Cash Settlement, an Early Settlement, a Cash Merger Early Settlement or a
Termination Event, for so long as the Purchase Contract underlying a Treasury
Unit remains in effect, such Treasury Unit shall not be separable into its
constituent parts and the rights and obligations of the Holder of such Treasury
Unit in respect of the 1/40 of a Treasury Security and the Purchase Contract
comprising such Treasury Unit may be acquired, and may be transferred and
exchanged, only as a Treasury Unit.

 

Section 3.15. Transfer of Collateral upon Occurrence of Termination Event.

 

Upon the occurrence of a Termination Event and the transfer to the Purchase
Contract Agent of the Senior Notes, the appropriate Applicable Ownership
Interests in the Treasury Portfolio or the Treasury Securities, as the case may
be, underlying the Corporate Units and the Treasury Units, as the case may be,
pursuant to the terms of the Pledge Agreement, the Purchase Contract Agent shall
request transfer instructions with respect to such Senior Notes, the appropriate
Applicable Ownership Interests in the Treasury Portfolio or Treasury Securities,
as the case may be, from each Holder by written request, substantially in the
form of Exhibit D hereto, mailed to such Holder at its address as it appears in
the Security Register.

 

Upon book-entry transfer of the Corporate Units or the Treasury Units or
delivery of a Corporate Units Certificate or Treasury Units Certificate to the
Purchase Contract Agent with such transfer instructions, the Purchase Contract
Agent shall transfer the Senior Notes, the appropriate Applicable Ownership
Interests in the Treasury Portfolio or Treasury Securities, as the case may be,
underlying such Corporate Units or Treasury 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 of Corporate Units or Treasury
Units fails to effect such transfer or delivery, the Senior Notes, the
appropriate Applicable Ownership Interests in the Treasury Portfolio or Treasury
Securities, as the case may be, underlying such Corporate Units or Treasury
Units, as the case may be, and any distributions thereon, shall be held in the
name of the Purchase Contract Agent or its nominee in trust for the benefit of
such Holder, until the earlier to occur of:

 

(i) the transfer of such Corporate Units or Treasury Units or surrender of the
Corporate Units Certificate or Treasury Units Certificate or the receipt by the
Company and the Purchase Contract Agent from such Holder of satisfactory
evidence that such Corporate Units Certificate or Treasury Units Certificate has
been destroyed, lost or stolen, together with any indemnity that may be required
by the Purchase Contract Agent and the Company; and

 

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(ii) the expiration of the time period specified in the abandoned property laws
of the relevant State in which the Purchase Contract Agent holds such property.

 

Section 3.16. No Consent to Assumption.

 

Each Holder of a Unit, 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 or its trustee, receiver,
liquidator or a person or entity performing similar functions 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 4

THE SENIOR NOTES AND APPLICABLE OWNERSHIP INTERESTS IN THE TREASURY

PORTFOLIO

 

Section 4.01. Interest Payments; Rights to Interest Payments Preserved.

 

Any payment on any Senior Note or on the appropriate Applicable Ownership
Interests (as specified in clause (ii) 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 Purchase Contract Agent from the Company (in
the case of a Senior Note that is held in the name of the Purchase Contract
Agent) or from the Collateral Agent as provided by the terms of the Pledge
Agreement (in the case of Applicable Ownership Interests or a Senior Note that
is held in the name of the Collateral Agent), be paid by the Purchase Contract
Agent to the Person in whose name the Corporate Units Certificate (or one or
more Predecessor Corporate Units Certificates) of which such Senior Note or the
appropriate Applicable Ownership Interests in the Treasury Portfolio, as the
case may be, forms a part is registered at the close of business on the Record
Date for such Payment Date.

 

37

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Each Corporate Units Certificate evidencing Senior Notes or the appropriate
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 Corporate Units Certificate shall carry the right to accrued and unpaid
interest or distributions, and to accrue interest or distributions, which were
carried by the Senior Notes or the appropriate Applicable Ownership Interests in
the Treasury Portfolio underlying such other Corporate Units Certificate.

 

In the case of any Corporate Unit with respect to which (A) Cash Settlement of
the underlying Purchase Contract is properly effected pursuant to Section
5.02(b) or Section 5.02(e) hereof, (B) Early Settlement of the underlying
Purchase Contract is properly effected pursuant to Section 5.07 hereof, (C) Cash
Merger Early Settlement of the underlying Purchase Contract is properly effected
pursuant to Section 5.04(b)(ii) hereof, (D) a Collateral Substitution is
properly effected pursuant to Section 3.13, or (E) a Successful Initial
Remarketing occurs with respect to the Senior Note that is part of such
Corporate Unit, in each case on a date that is after any Record Date and prior
to or on the next succeeding Payment Date, interest on the Senior Notes or
distributions on the appropriate Applicable Ownership Interests in the Treasury
Portfolio, as the case may be, underlying such Corporate Unit otherwise payable
on such Payment Date shall be payable on such Payment Date notwithstanding such
Cash Settlement, Early Settlement, Cash Merger Early Settlement, Collateral
Substitution or Initial Remarketing, and such payment or distributions shall,
subject to receipt thereof by the Purchase Contract Agent, be payable to the
Person in whose name the Corporate Units Certificate (or one or more Predecessor
Corporate Units Certificates) was registered at the close of business on the
Record Date.

 

Except as otherwise expressly provided in the immediately preceding paragraph,
in the case of any Corporate Units with respect to which Cash Settlement, Early
Settlement or Cash Merger Early Settlement of the underlying Purchase Contract
is properly effected, or with respect to which a Collateral Substitution has
been effected, payments on the related Senior Notes or distributions on the
appropriate Applicable Ownership Interests in the Treasury Portfolio, as the
case may be, that would otherwise be payable or made after the Purchase Contract
Settlement Date, Early Settlement Date, Cash Merger Early Settlement Date or the
date of the Collateral Substitution, as the case may be, shall not be payable
hereunder to the Holder of such Corporate Units; provided, however, that to the
extent that such Holder continues to hold Separate Senior Notes or Applicable
Ownership Interest in the Treasury Portfolio that formerly comprised a part of
such Holder’s Corporate Units, such Holder shall be entitled to receive interest
on such Separate Senior Notes or distributions on the Applicable Ownership
Interests in the Treasury Portfolio.

 

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Section 4.02. Notice and Voting.

 

Under the terms of the Pledge Agreement, the Purchase Contract Agent will be
entitled to exercise the voting and any other consensual rights pertaining to
the Pledged Senior Notes, but only to the extent instructed in writing by the
Holders as described below. Upon receipt of notice of any meeting at which
holders of Senior Notes are entitled to vote or upon any solicitation of
consents, waivers or proxies of holders of Senior Notes, the Purchase Contract
Agent shall, as soon as practicable thereafter, mail, first class, postage
pre-paid, to the Holders of Corporate Units a notice:

 

(i) containing such information as is contained in the notice or solicitation;

 

(ii) stating that each Holder on the record date set by the Purchase Contract
Agent therefor (which, to the extent possible, shall be the same date as the
record date for determining the holders of Senior Notes, as the case may be,
entitled to vote) shall be entitled to instruct the Purchase Contract Agent as
to the exercise of the voting rights pertaining to such Senior Notes underlying
their Corporate Units; and

 

(iii) stating the manner in which such instructions may be given.

 

Upon the written request of the Holders of Corporate Units on such record date
received by the Purchase Contract Agent at least six days prior to such meeting,
the Purchase Contract 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 Senior Notes, as the case may be, as to which
any particular voting instructions are received. In the absence of specific
instructions from the Holder of a Corporate Unit, the Purchase Contract Agent
shall abstain from voting the Senior Notes underlying such Corporate Unit. The
Company hereby agrees, if applicable, to solicit Holders of Corporate Units to
timely instruct the Purchase Contract Agent in order to enable the Purchase
Contract Agent to vote such Senior Notes.

 

The Holders of Corporate Units and Treasury Units shall have no voting or other
rights in respect of Common Stock.

 

Section 4.03. Special Event Redemption.

 

(a) If the Company elects to redeem the Senior Notes on any Payment Date
following the occurrence of a Special Event as permitted by the Indenture, it
shall notify the Collateral Agent in writing that a Special Event has occurred
and that it intends to redeem the Senior Notes on the Special Event Redemption
Date. On the Special Event Redemption Date, the Collateral Agent shall surrender
the Pledged Senior Notes to the Indenture Trustee against delivery of an amount
equal to the aggregate Redemption Price for such Pledged Senior Notes.

 

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Thereafter, pursuant to the terms of the Pledge Agreement, the Collateral Agent
shall cause the Securities Intermediary to apply an amount equal to the
aggregate Redemption Amount of such funds to purchase on behalf of the Holders
of Corporate Units the Treasury Portfolio and promptly remit the remaining
portion of such funds to the Purchase Contract Agent for payment to the Holders
of such Corporate Units.

 

(b) Upon the occurrence of a Special Event Redemption, (i) the Applicable
Ownership Interests (as specified in clause (i) of the definition of such term)
in the Treasury Portfolio will be substituted as Collateral for the Pledged
Senior Notes and will be held by the Collateral Agent in accordance with the
terms of the Pledge Agreement to secure the obligation of each Holder of a
Corporate Unit to purchase Common Stock of the Company under the Purchase
Contract constituting a part of such Corporate Unit, (ii) the Applicable
Ownership Interests (as specified in clause (ii) of the definition of such term)
in the Treasury Portfolio will be transferred to the Purchase Contract Agent for
the benefit of the Holders of such Corporate Units, (iii) the Holders of
Corporate Units and the Collateral Agent shall have such security interest
rights and obligations with respect to such Applicable Ownership Interests (as
specified in clause (i) of the definition of such term) in the Treasury
Portfolio as the Holders of Corporate Units and the Collateral Agent had in
respect of the Senior Notes, as the case may be, subject to the Pledge thereof
as provided in the Pledge Agreement, (iv) any reference herein or in the
Certificates to the Senior Notes shall be deemed to be a reference to such
Applicable Ownership Interests (as specified in clause (i) of the definition of
such term) in the Treasury Portfolio and (v) any reference herein or in the
Certificates to interest on the Senior Notes shall be deemed to be a reference
to corresponding distributions on such Applicable Ownership Interests (as
specified in clause (ii) of the definition of such term) in the Treasury
Portfolio. The Company may cause to be made in any Corporate 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 Applicable
Ownership Interests (as specified in clause (i) of the definition of such term)
in the Treasury Portfolio for Senior Notes as Collateral.

 

(c) The Holders of Separate Senior Notes shall directly receive the Redemption
Price for the Separate Senior Notes in accordance with the terms of the
Indenture.

 

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ARTICLE 5

THE PURCHASE CONTRACTS

 

Section 5.01. Purchase of Shares of Common Stock.

 

(a) Each Purchase Contract shall obligate the Holder of the related Units to
purchase, and the Company to sell, on the Purchase Contract Settlement Date at a
price equal to the Stated Amount (the “Purchase Price”), a number of newly
issued shares of Common Stock (subject to Section 5.09) equal to the Settlement
Rate (as defined below) unless an Early Settlement, a Cash Merger Early
Settlement or a Termination Event with respect to the Unit of which such
Purchase Contract is a part shall have occurred. The “Settlement Rate” is equal
to:

 

(i) if the Adjusted Applicable Market Value (as defined below) is greater than
or equal to $47.37 (the “Threshold Appreciation Price”), 0.5278 shares of Common
Stock per Purchase Contract (such number of shares as adjusted from time to
time, the “Minimum Share Number”);

 

(ii) if the Adjusted Applicable Market Value is less than the Threshold
Appreciation Price but greater than $38.20 (the “Reference Price”), the number
of shares of Common Stock per Purchase Contract having a value equal to the
Stated Amount divided by the Applicable Market Value; and

 

(iii) if the Adjusted Applicable Market Value is less than or equal to the
Reference Price, 0.6545 shares of Common Stock per Purchase Contract (such
number of shares as adjusted from time to time, the “Maximum Share Number”).

 

in each case rounded upward or downward to the nearest 1/10,000th of a share.

 

The “Adjusted Applicable Market Value” means (i) prior to any adjustment of the
Fixed Settlement Rate pursuant to paragraph (i), (ii), (iii), (iv), (v), (vi),
(vii) or (x) of Section 5.04(a), the Applicable Market Value, and (ii) at the
time of and after any adjustment of the Fixed Settlement Rate pursuant to
paragraph (i), (ii), (iii), (iv), (v), (vi), (vii) or (x) of Section 5.04(a),
the Applicable Market Value multiplied by a fraction of which the numerator
shall be the Fixed Settlement Rate immediately after such adjustment pursuant to
paragraph (i), (ii), (iii), (iv), (v), (vi), (vii) or (x) of Section 5.04(a) and
the denominator shall be the Fixed Settlement Rate immediately prior to such
adjustment; provided, however, that if such adjustment to the Fixed Settlement
Rate is required to be made pursuant to the occurrence of any of the events
contemplated by paragraph (i), (ii), (iii), (iv), (v), (vi), (vii) or (x) of
Section 5.04(a) during the period taken into consideration for determining the
Applicable Market Value, appropriate and customary adjustments shall be made to
the Fixed Settlement Rate.

 

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 Purchase Contract Settlement Date.

 

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The “Closing Price” per share of Common Stock on any date of determination
means:

 

(i) the closing sale price as of the close of the principal trading session (or,
if no closing price is reported, the last reported sale price) per share on the
New York Stock Exchange, Inc. (the “NYSE”) on such date;

 

(ii) if the Common Stock is not listed for trading on the NYSE on any such date,
the closing sale price (or, if no closing price is reported, the last reported
sale price) per share as reported in the composite transactions for the
principal United States national or regional 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, the last reported sale price per share as reported
by the Nasdaq National Market, Inc.;

 

(iv) if the Common Stock is not so reported by the Nasdaq National Market, Inc.,
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 the bid price referred to in clause (iv) is not available, the market
value of Common Stock on such date as determined by a nationally recognized
independent investment banking firm retained by the Company for purposes of
determining the Closing Price.

 

A “Trading Day” means a day on which the Common Stock (1) 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 (2) 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.

 

(b) Each Holder of a Corporate Unit or a Treasury Unit, by its acceptance of
such Unit:

 

(i) irrevocably authorizes the Purchase Contract Agent to enter into and perform
the related Purchase Contract on its behalf as its attorney-in-fact (including,
without limitation, the execution of Certificates on behalf of such Holder);

 

(ii) agrees to be bound by the terms and provisions thereof;

 

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(iii) covenants and agrees to perform its obligations under such Purchase
Contract for so long as such Holder remains a Holder of a Corporate Unit or a
Treasury Unit;

 

(iv) consents to the provisions hereof;

 

(v) irrevocably authorizes the Purchase Contract Agent to enter into and perform
this Agreement and the Pledge Agreement on its behalf and in its name as its
attorney-in-fact;

 

(vi) consents to, and agrees to be bound by, the Pledge of such Holder’s right,
title and interest in and to the Collateral Account, including the Senior Notes
and the Applicable Ownership Interests (as specified in clause (i) of the
definition of such term) in the Treasury Portfolio or the Treasury Securities
pursuant to the Pledge Agreement; and

 

(vii) for United States federal, state and local income and franchise tax
purposes, agrees to (A) treat an acquisition of the Corporate Units as an
acquisition of the Senior Notes and Purchase Contracts constituting the
Corporate Units and (B) treat itself as the owner of the applicable interest in
the Collateral Account, including the Senior Notes and the Applicable Ownership
Interests in the Treasury Portfolio (as specified in clause (i) of the
definition of such term) or the Treasury Securities,

 

provided that upon a Termination Event, the rights of the Holder of such Units
under the Purchase Contract may be enforced without regard to any other rights
or obligations.

 

(c) Each Holder of a Corporate Unit or a Treasury Unit, by its acceptance
thereof, further covenants and agrees that to the extent and in the manner
provided in Section 5.02 hereof and the provisions of the Pledge Agreement, but
subject to the terms thereof, Proceeds of the Senior Notes, the Treasury
Securities or the Applicable Ownership Interests (as specified in clause (i) of
the definition of such term) in the Treasury Portfolio, as applicable, on the
Purchase Contract Settlement Date, shall be paid by the Collateral Agent to the
Company in satisfaction of such Holder’s obligations under such Purchase
Contract and such Holder shall acquire no right, title or interest in such
Proceeds.

 

(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)
by 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
Certificate so transferred and the Pledge Agreement. The Company covenants and
agrees, and each Holder of a Certificate, by its acceptance thereof, likewise
covenants and agrees, to be bound by the provisions of this paragraph.

 

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Section 5.02. Remarketing; Payment of Purchase Price.

 

(a) (i) Unless a Special Event Redemption has occurred prior to the Initial
Remarketing Date, the Company shall engage the Remarketing Agent pursuant to the
Remarketing Agreement for Remarketing the Senior Notes. By 11:00 a.m. (New York
City time) on the Business Day immediately preceding the Initial Remarketing
Date, the Collateral Agent shall notify the Remarketing Agent of the aggregate
principal amount of Pledged Senior Notes, and the Custodial Agent shall notify
the Remarketing Agent of the aggregate principal amount of Separate Senior Notes
(if any) that are to be remarketed pursuant to clause (ii) below. Concurrently,
the Custodial Agent will present for remarketing the Separate Senior Notes to
the Remarketing Agent. Upon receipt of such notice from the Collateral Agent and
Custodial Agent, and the Separate Senior Notes for remarketing from the
Custodial Agent, the Remarketing Agent will, on the Initial Remarketing Date,
use commercially reasonable efforts to remarket (based on the Reset Rate) (the
“Initial Remarketing”) such Pledged Senior Notes and Separate Senior Notes on
such date at a price of equal to approximately 100.25% of the sum of the
Treasury Portfolio Purchase Price plus the Separate Senior Notes Purchase Price,
as provided in the Remarketing Agreement. If the Remarketing Agent is able to
remarket the Pledged Senior Notes and Separate Senior Notes at a price equal to
or greater than 100% of the Treasury Portfolio Purchase Price plus the Separate
Senior Notes Purchase Price (a “Successful Initial Remarketing”), the Collateral
Agent shall, in accordance with the Pledge Agreement, cause the Securities
Intermediary to transfer the Pledged Senior Notes upon confirmation of deposit
by the Remarketing Agent of the proceeds of such Successful Remarketing in the
Collateral Account, and the portion of the proceeds from such Successful Initial
Remarketing equal to the Treasury Portfolio Purchase Price will be applied to
purchase the Treasury Portfolio. The Remarketing Agent may deduct as a
remarketing fee an amount not exceeding 25 basis points (.25%) of the sum of the
Treasury Portfolio Purchase Price plus the Separate Senior Notes Purchase Price
from any proceeds of the Successful Remarketing in excess of the Treasury
Portfolio Price plus the Separate Senior Notes Purchase Price. To the extent
that such excess proceeds are less than 25 basis points of the Treasury
Portfolio Purchase Price plus the Separate Senior Notes Purchase Price, the
Company shall pay an amount, as an additional remarketing fee, to the
Remarketing Agent equal to such shortfall (such amount, together with the amount
in the previous sentence, the “Remarketing Fee”). With respect to Pledged Senior
Notes upon a Successful Initial Remarketing, any proceeds of the Initial
Remarketing in excess of the sum of the Treasury Portfolio Purchase Price plus
the portion of Remarketing Fee attributable to such Pledged Senior Notes will be
remitted to the Purchase Contract Agent for payment to the Holders of the
related Corporate Units. The Treasury Portfolio will be substituted for the

 

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Pledged Senior Notes and the appropriate Applicable Ownership Interests (as
specified in clause (i) of the definition of such term) in the Treasury
Portfolio will be pledged to the Collateral Agent to secure the obligation of
the Holders of Corporate Units to pay the Purchase Price for the Common Stock
under the related Purchase Contracts on the Purchase Contract Settlement Date.
With respect to Separate Senior Notes upon a Successful Initial Remarketing, any
proceeds of the Initial Remarketing in excess of the portion of the Remarketing
Fee attributable to the Separate Senior Notes will be remitted to the Custodial
Agent for payment to the holders of Separate Senior Notes. None of the Company,
the Purchase Contract Agent, or any Holders of Corporate Units or holders of
Separate Senior Notes whose Senior Notes or Separate Senior Notes are so
remarketed will otherwise be responsible for the payment of any Remarketing Fee
in connection therewith.

 

Following the occurrence of a Successful Initial Remarketing, the Holders of
Corporate Units and the Collateral Agent shall have such security interests,
rights and obligations with respect to the Applicable Ownership Interests (as
specified in clause (i) of the definition of such term) in the Treasury
Portfolio as the Holders of Corporate Units and the Collateral Agent had in
respect of the Senior Notes, subject to the Pledge thereof as provided in the
Pledge Agreement, and any reference herein or in the Certificates to the Senior
Notes shall be deemed to be a reference to such Applicable Ownership Interests
(as specified in clause (i) of the definition of such term) in the Treasury
Portfolio and any reference herein or in the Certificates to interest on the
Senior Notes shall be deemed to be a reference to corresponding distributions on
such Applicable Ownership Interests in the Treasury Portfolio. The Company may
cause to be made in any Corporate 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 such Applicable Ownership Interests (as specified
in clause (i) of the definition of such term) in the Treasury Portfolio for
Senior Notes as Collateral.

 

If, in spite of using commercially reasonable efforts, the Remarketing Agent
cannot remarket the Pledged Senior Notes and the Separate Senior Notes (if any)
in the Initial Remarketing (other than to the Company) at a price not less than
100% of the sum of the Treasury Portfolio Purchase Price plus the Separate
Senior Notes Purchase Price or a condition precedent set forth in the
Remarketing Agreement is not fulfilled, the Initial Remarketing will be deemed
to have failed (a “Failed Initial Remarketing”). Upon a Failed Initial
Remarketing, the Remarketing Agent shall return the Separate Senior Notes (if
any) subject to such Remarketing to the Custodial Agent.

 

(ii) Prior to 5:00 p.m. (New York City time) on the fifth Business Day
immediately preceding the applicable Remarketing Date, but no earlier than the
Payment Date immediately preceding such date, Holders of Separate Senior Notes
may elect to have their Separate Senior

 

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Notes remarketed under the Remarketing Agreement by delivering their Separate
Senior Notes, along with a notice of such election, substantially in the form of
Exhibit F to the Pledge Agreement, to the Custodial Agent. The Custodial Agent
shall hold Separate Senior Notes in an account separate from the Collateral
Account in which the Pledged Senior Notes (as defined in the Pledge Agreement)
shall be held. Holders of Separate Senior Notes electing to have their Separate
Senior Notes remarketed will also have the right to withdraw that election by
written notice to the Custodial Agent, substantially in the form of Exhibit G to
the Pledge Agreement, on or prior to 5:00 p.m. (New York City time) on the fifth
Business Day immediately preceding the applicable Remarketing Date, upon which
notice the Custodial Agent shall return such Separate Senior Notes to such
Holder. Promptly after 11:00 a.m. on the Business Day immediately preceding the
applicable Remarketing Date, the Custodial Agent shall notify the Remarketing
Agent of the aggregate principal amount of the Separate Senior Notes to be
remarketed. After such time, such election shall become an irrevocable election
to have such Separate Senior Notes remarketed in such Remarketing.

 

(iii) Not later than seven calendar days nor more than 15 calendar days prior to
the applicable Remarketing Date, the Company shall request the Depositary or its
nominee to notify Depositary Participants holding Units and Separate Senior
Notes of the procedures to be followed in such Remarketing, including in the
case of a Failed Final Remarketing the procedures to be followed to exercise Put
Rights.

 

(iv) The Company agrees to use commercially reasonable efforts (A) to ensure
that, if required by applicable law, a registration statement with regard to the
full amount of the Senior Notes to be remarketed in the Initial Remarketing or
the Final Remarketing, as the case may be, shall be effective with the
Securities and Exchange Commission in a form that will enable the Remarketing
Agent to rely on it in connection with such Remarketing and (B) to provide a
Prospectus in connection therewith.

 

(v) The Company shall cause a notice of a Failed Remarketing to be published
(with a copy of such notice to be provided to the Purchase Contract Agent) on
the Business Day immediately following the applicable Remarketing Date, 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.

 

(b) (i) Unless a Special Event Redemption, an Early Settlement or a Cash Merger
Early Settlement has occurred prior to the Final Remarketing Date, if no
Successful Remarketing has occurred prior to the Final Remarketing Date,

 

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each Holder of Corporate Units shall have the right to satisfy such Holder’s
obligations under the Purchase Contract on the Purchase Contract Settlement Date
in cash by notifying the Purchase Contract Agent by use of a notice in
substantially the form of Exhibit E hereto of its intention to pay in cash
(“Cash Settlement”) on or prior to 5:00 p.m. (New York City time) on the fifth
Business Day immediately preceding the Purchase Contract Settlement Date.
Promptly following 5:00 p.m. (New York City time) on the fifth Business Day
immediately preceding the Purchase Contract Settlement Date, the Purchase
Contract Agent shall notify the Collateral Agent and the Indenture Trustee of
the receipt of such notices from Holders intending to make a Cash Settlement.

 

(ii) A Holder of a Corporate Unit who has so notified the Purchase Contract
Agent of its intention to effect a Cash Settlement shall pay the Purchase Price
to the Collateral Agent for deposit in the Collateral Account on or prior to
5:00 p.m. (New York City time) on the fourth Business Day immediately preceding
the Purchase Contract Settlement Date, in lawful money of the United States by
certified or cashiers’ check or wire transfer of immediately available funds
payable to or upon the order of the Securities Intermediary. Any cash so
received shall be invested promptly by the Securities Intermediary in Permitted
Investments and paid to the Company on the Purchase Contract Settlement Date in
settlement of the Purchase Contracts in accordance with the terms of this
Agreement and the Pledge Agreement. Any funds received by the Securities
Intermediary in respect of the investment earnings from such Permitted
Investments in excess of the Purchase Price for the shares of Common Stock to be
purchased by such Holder shall be distributed to the Purchase Contract Agent
when received for payment to the Holder.

 

(iii) If a Holder of a Corporate Unit does not notify the Purchase Contract
Agent of its intention to make a Cash Settlement in accordance with Section
5.02(b)(ii) above, or does notify the Purchase Contract Agent in accordance with
Section 5.02(b)(i) above but fails to make such payment as required by Section
5.02(b)(ii) above, such Holder shall be deemed to have consented to the
disposition of the Pledged Senior Notes pursuant to the Final Remarketing as
described in paragraph Section 5.02(c) below.

 

(iv) As soon as practicable after 5:00 p.m. (New York City time) on the fourth
Business Day preceding the Purchase Contract Settlement Date, the Collateral
Agent, based on cash payments received by the Collateral Agent pursuant to
Section 5.02(b)(ii) hereof, shall promptly notify the Purchase Contract Agent
and the Indenture Trustee of the aggregate principal amount of Senior Notes to
be tendered for purchase in the Remarketing in a notice pursuant to the terms of
the Pledge Agreement.

 

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(c) (i) Unless a Special Event Redemption, an Early Settlement or a Cash Merger
Early Settlement has occurred prior to the Final Remarketing Date, if a Failed
Initial Remarketing has occurred, the Senior Notes of such Holders of Corporate
Units who have not notified the Purchase Contract Agent of their intention to
effect a Cash Settlement as provided in Section 5.02(b)(i) above, or who have so
notified the Purchase Contract Agent in accordance with Section 5.02(b)(i) above
but have failed to make such payment as required by Section 5.02(b)(ii) above,
and the Separate Senior Notes of any holder who has elected for its Separate
Senior Notes to be remarketed pursuant to Section 5.02(a)(ii) will be remarketed
by the Remarketing Agent (the “Final Remarketing”) on the third Business Day
immediately preceding the Purchase Contract Settlement Date (the “Final
Remarketing Date”). In order to facilitate the Final Remarketing, the Purchase
Contract Agent, based on the notices specified in Section 5.02(b)(iv), and the
Collateral Agent, based on the notices specified in Section 5.02(a)(ii), shall
notify the Remarketing Agent, by 11:00 a.m. (New York City time) on the Business
Day immediately preceding the Final Remarketing Date, of the aggregate principal
amount of Pledged Senior Notes or aggregate principal amount of Separate Senior
Notes that are to be remarketed pursuant to Section 5.02(a)(ii), as the case may
be, to be remarketed. Concurrently, the Custodial Agent will present for
remarketing the Separate Senior Notes to the Remarketing Agent.

 

(ii) Upon receipt of such notice from the Purchase Contract Agent and the
Collateral Agent and the Separate Senior Notes (if any) from the Custodial
Agent, as set forth in clause (i) above, the Remarketing Agent shall, on the
Final Remarketing Date, use commercially reasonable efforts to remarket (based
on the Reset Rate) such Pledged Senior Notes and Separate Senior Notes on such
date at a price equal to approximately 100.25% of the aggregate principal amount
of such Senior Notes and Separate Senior Notes being remarketed, as provided in
the Remarketing Agreement. If the Remarketing Agent is able to remarket the
Pledged Senior Notes and Separate Senior Notes at a price equal to or greater
than 100% of the aggregate principal amount of the Pledged Senior Notes and
Separate Senior Notes (if any) (a “Successful Final Remarketing”), the
Collateral Agent shall, in accordance with the Pledge Agreement, cause the
Securities Intermediary to transfer the Pledged Senior Notes upon confirmation
of deposit by the Remarketing Agent of the proceeds of such Successful
Remarketing in the Collateral Account. The Remarketing Agent may deduct as the
remarketing fee an amount not exceeding 25 basis points (.25%) of the aggregate
principal amount of the remarketed Pledged Senior Notes and Separate Senior
Notes (if any) from any proceeds of the Successful Final Remarketing in excess
of the aggregate principal amount of the remarketed Pledged Senior Notes and
Separate Senior Notes. To the extent that such excess proceeds are less than 25

 

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basis points of the aggregate principal amount of the remarketed Pledged Senior
Notes and Separate Senior Notes, the Company shall pay an amount, as an
additional remarketing fee, equal to such shortfall (such amount, together with
the amount in the previous sentence, the “Final Remarketing Fee”). The proceeds
from the Remarketing remitted to the Collateral Agent shall be invested by the
Collateral Agent in Permitted Investments, in accordance with the Pledge
Agreement, and then applied to satisfy in full the obligations of such Holders
of Corporate Units to pay the Purchase Price for the shares of Common Stock
under the related Purchase Contracts on the Purchase Contract Settlement Date.
Any proceeds in excess of those required to pay the Purchase Price and the
portion of the Final Remarketing Fee attributable to the Senior Notes will be
remitted to the Purchase Contract Agent for payment to the Holders of the
related Corporate Units. With respect to Separate Senior Notes upon a Successful
Final Remarketing, any proceeds of the Final Remarketing in excess of the
portion of the Final Remarketing Fee attributable to the Separate Senior Notes
will be remitted to the Custodial Agent for payment to the holders of Separate
Senior Notes.

 

(iii) If, in spite of using commercially reasonable efforts, the Remarketing
Agent cannot remarket the Pledged Senior Notes and Separate Senior Notes (if
any) in the Final Remarketing at a price not less than 100% of the aggregate
principal amount of the Pledged Senior Notes and Separate Senior Notes to be
remarketed in the Final Remarketing (other than to the Company) or a condition
precedent set forth in the Remarketing Agreement is not fulfilled, the Final
Remarketing will be deemed to have failed (a “Failed Final Remarketing”).
Following a Failed Final Remarketing, as of the Purchase Contract Settlement
Date, each Holder of any Pledged Senior Notes unless such Holder has elected
Cash Settlement and delivered cash in accordance with Section 5.02(e)(ii) shall
be deemed to have exercised such Holder’s Put Right with respect to such Senior
Notes and to have elected to have a portion of the Proceeds of the Put Right
set-off against such Holder’s obligation to pay the aggregate Purchase Price for
the shares of Common Stock to be issued under the related Purchase Contracts in
full satisfaction of such Holders’ obligations under such Purchase Contracts.
Following such set-off, each such Holder’s obligations to pay the Purchase Price
for the shares of Common Stock will be deemed to be satisfied in full, and the
Collateral Agent shall cause the Securities Intermediary to release the Pledged
Senior Notes from the Collateral Account and shall promptly transfer the Pledged
Senior Notes to the Company. Thereafter, the Collateral Agent shall promptly
remit the remaining portion of the Proceeds of the Holder’s exercise of the Put
Right in excess of the aggregate Purchase Price for the shares of Common Stock
to be issued under such Purchase Contracts to the Purchase Contract Agent for
payment to the Holder of the Corporate Units to which such Senior Notes relate.

 

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(d) As soon as practicable after 5:00 p.m. (New York City time) on the fourth
Business Day preceding the Purchase Contract Settlement Date, the Collateral
Agent, based on cash payments received by the Collateral Agent pursuant to
Section 5.02(b)(ii) hereof, shall promptly notify the Purchase Contract Agent
and the Indenture Trustee of the aggregate principal amount of Senior Notes to
be tendered for purchase in the Final Remarketing in a notice pursuant to the
terms of the Pledge Agreement.

 

(e) (i) Each Holder of a Corporate Unit who intends to effect a Cash Settlement
of the underlying Purchase Contract following a Failed Final Remarketing shall
so notify the Purchase Contract Agent by use of a notice in substantially the
form of Exhibit E hereto prior to 11:00 a.m. (New York City time) on the second
Business Day immediately preceding the Purchase Contract Settlement Date.
Promptly following 11:00 a.m. (New York City time) on the second Business Day
immediately preceding the Purchase Contract Settlement Date, the Purchase
Contract Agent shall notify the Collateral Agent and the Indenture Trustee of
the receipt of such notices from Holders intending to make a Cash Settlement.

 

(ii) A Holder of a Corporate Unit who has so notified the Purchase Contract
Agent of its intention to effect a Cash Settlement shall pay the Purchase Price
to the Collateral Agent for deposit in the Collateral Account prior to 5:00 p.m.
(New York City time) on the Business Day immediately preceding the Purchase
Contract Settlement Date, in lawful money of the United States by certified or
cashiers’ check or wire transfer, in each case in immediately available funds
payable to or upon the order of the Securities Intermediary. Any cash so
received shall be invested promptly by the Securities Intermediary in Permitted
Investments and paid to the Company on the Purchase Contract Settlement Date in
settlement of the Purchase Contracts in accordance with the terms of this
Agreement and the Pledge Agreement. Any funds received by the Securities
Intermediary in respect of the investment earnings from such Permitted
Investments in excess of the Purchase Price for the shares of Common Stock to be
purchased by such Holder shall be distributed to the Purchase Contract Agent
when received for payment to the Holder.

 

(iii) In the event of a Failed Final Remarketing, if a Holder of a Corporate
Unit does not notify the Purchase Contract Agent of its intention to make a Cash
Settlement in accordance with Section 5.02(a)(i) above, or does notify the
Purchase Contract Agent in accordance with Section 5.02(a)(i) above but fails to
make such payment as required by Section 5.02(a)(ii) above, such Holder shall be
deemed to have automatically exercised such Holder’s Put Right following a
Failed Final Remarketing as described in paragraph Section 5.02(c)(iii) above.

 

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(f) As soon as practicable after 5:00 p.m. (New York city time) on the Business
Day preceding the Purchase Contract Settlement Date, the Collateral Agent, based
on cash payment received by the Collateral Agent pursuant to Section 5.02(e)(ii)
hereof, shall promptly notify the Purchase Contract Agent and the Indenture
Trustee of the aggregate principal amount of Senior Notes pursuant to which a
Put Right has been automatically exercised pursuant to Section 5.02(c)(iii)
hereof.

 

(g) Any distribution to Holders of any payments described above shall be payable
at the office of the Purchase Contract Agent in New York City maintained for
that purpose or, at the option of the Holder, by check mailed to the address of
the Person entitled thereto at such address as it appears on the Security
Register.

 

(h) Upon Cash Settlement of any Purchase Contract:

 

(i) the Collateral Agent will in accordance with the terms of the Pledge
Agreement cause the Pledged Senior Notes or the appropriate Applicable Ownership
Interests (as specified in clause (i) of the definition of such term) in the
Treasury Portfolio, as the case may be, underlying the relevant Units to be
released from the Pledge, free and clear of any security interest of the
Company, and transferred to the Purchase Contract Agent for delivery to the
Holder thereof or its designee as soon as reasonably practicable; and

 

(ii) subject to the receipt thereof, the Purchase Contract Agent shall, by
book-entry transfer or other appropriate procedures, in accordance with written
instructions provided by the Holder thereof, transfer such Senior Notes or the
appropriate Applicable Ownership Interests (as specified in clause (i) of the
definition of such term) in the Treasury Portfolio, as the case may be (or, if
no such instructions are given to the Purchase Contract Agent by the Holder, the
Purchase Contract Agent shall hold such Senior Notes or the appropriate
Applicable Ownership Interests (as specified in clause (i) of the definition of
such term) in the Treasury Portfolio, as the case may be, and any interest
payment thereon, in the name of the Purchase Contract Agent or its nominee in
trust for the benefit of such Holder until the expiration of the time period
specified in the abandoned property laws of the relevant state where such
property is held).

 

(i) The obligations of the Holders to pay the Purchase Price are non-recourse
obligations and, except to the extent satisfied by Early Settlement, Cash

 

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Merger Early Settlement or Cash Settlement, are payable solely out of the
proceeds of any Collateral pledged to secure the obligations of the Holders, and
in no event will Holders be liable for any deficiency between the Proceeds of
the disposition of Collateral and the Purchase Price.

 

(j) The Company shall not be obligated to issue any shares of Common Stock in
respect of a Purchase Contract or deliver any certificates thereof to the Holder
of the related Units unless the Company shall have received payment for the
Common Stock to be purchased thereunder in the manner herein set forth.

 

Section 5.03. Issuance of Shares of Common Stock.

 

Unless a Termination Event, an Early Settlement or a Cash Merger Early
Settlement shall have occurred, subject to Section 5.04(b)(ii), on the Purchase
Contract Settlement Date upon receipt of the aggregate Purchase Price payable on
all Outstanding Units, the Company shall issue and deposit with the Purchase
Contract Agent, for the benefit of the Holders of the Outstanding Units, one or
more certificates representing newly issued shares of Common Stock registered in
the name of the Purchase Contract Agent (or its nominee) as custodian for the
Holders (such certificates 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 Purchase Contract Settlement
Date, being hereinafter referred to as the “Purchase Contract Settlement Fund”)
to which the Holders are entitled hereunder.

 

Subject to the foregoing, upon surrender of a Certificate to the Purchase
Contract Agent on or after the Purchase Contract Settlement Date, Early
Settlement Date or Cash Merger Early Settlement Date, as the case may be,
together with settlement instructions thereon duly completed and executed, the
Holder of such Certificate shall be entitled to receive forthwith in exchange
therefor a certificate representing that number of newly issued whole shares of
Common Stock which such Holder is entitled to receive pursuant to the provisions
of this Article 5 (after taking into account all Units then held by such
Holder), together with cash in lieu of fractional shares as provided in Section
5.09 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 Purchase
Contract 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 (but excluding
any Depositary or nominee thereof), no such registration shall be made unless
the Person requesting such registration has paid any transfer and other taxes
required by reason of such registration in a name other than that of the
registered Holder of the Certificate evidencing such Purchase Contract or has
established to the satisfaction of the Company that such tax either has been
paid or is not payable.

 

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Section 5.04. Certain Adjustments.

 

(a) Adjustments for Dividends, Distributions, Stock Splits, Etc.

 

(i) In case the Company shall pay or make a dividend or other distribution on
Common Stock in Common Stock, each Fixed Settlement Rate in effect at the close
of business on the date fixed for the determination of shareholders entitled to
receive such dividend or other distribution shall be increased by dividing such
Fixed Settlement Rate by a fraction of which:

 

(A) 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

 

(B) the denominator shall be the sum of such number of shares and the total
number of shares constituting such dividend or other distribution,

 

such increase to become effective immediately at the opening of business on the
day following the date fixed for such determination. For the purposes of this
paragraph (i), the number of shares of Common Stock at any time outstanding
shall not include shares held in the treasury of the Company but shall include
any shares issuable in respect of any scrip certificates issued in lieu of
fractions of shares of Common Stock. The Company agrees that it shall not pay
any dividend or make any distribution on shares of Common Stock held in the
treasury of the Company.

 

(ii) In case the Company shall issue rights, warrants or options, other than
pursuant to any dividend reinvestment plans or share purchase plans, to all
holders of its Common Stock (not being available on an equivalent basis to
Holders of the Units upon settlement of the Purchase Contracts underlying such
Units) entitling them, for a period expiring within 45 days after the record
date for the determination of shareholders entitled to receive such rights,
warrants or options, to subscribe for or purchase shares of Common Stock at a
price per share less than the Current Market Price per share of Common Stock on
the date of announcement of such issuance, each Fixed Settlement Rate in effect
at the close of business on the date of such announcement shall be increased by
dividing such Fixed Settlement Rate by a fraction of which:

 

(A) the numerator shall be the number of shares of Common Stock outstanding at
the close of business on the date of such announcement plus the number of shares
of Common Stock that 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

 

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(B) the denominator shall be the number of shares of Common Stock outstanding at
the close of business on the date of such announcement plus the number of shares
of Common Stock so offered for subscription or purchase,

 

such increase to become effective immediately after the opening of business on
the Business Day following the date of such announcement. The Company agrees
that it shall notify the Purchase Contract Agent if any issuance of such rights,
warrants or options is cancelled or not completed following the announcement
thereof and each Fixed Settlement Rate shall thereupon be readjusted to the
Fixed Settlement Rate in effect immediately prior to the date of such
announcement. For the purposes of this paragraph (ii), the number of shares of
Common Stock at any time outstanding shall not include shares held in the
treasury of the Company but shall include any shares issuable in respect of any
scrip certificates issued in lieu of fractions of shares of Common Stock. The
Company agrees that it shall not issue any such rights, warrants or options in
respect of shares of Common Stock held in the treasury of the Company.

 

(iii) In case outstanding shares of Common Stock shall be subdivided or split
into a greater number of shares of Common Stock, each Fixed Settlement Rate in
effect at the close of business on the day preceding the day upon which such
subdivision or split becomes effective shall be proportionately increased, and,
conversely, in case outstanding shares of Common Stock shall each be combined
into a smaller number of shares of Common Stock, such Settlement Rate in effect
at the close of business on the day preceding the day upon which such
combination becomes effective shall be proportionately reduced, such increase or
reduction, as the case may be, to become effective immediately at the opening of
business on the day following the day upon which such subdivision, split or
combination becomes effective.

 

(iv) In case the Company shall, by dividend or otherwise, distribute to all
holders of its Common Stock evidences of its indebtedness or assets (including
shares of capital stock, securities, cash and property but excluding any rights,
warrants or options referred to in paragraph (ii) of this Section 5.04(a), any
dividend or distribution paid exclusively in cash and any dividend or
distribution referred to in paragraph (i) of this

 

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Section 5.04(a)), each Fixed Settlement Rate in effect at the close of business
on the date fixed for the determination of shareholders entitled to receive such
distribution shall be adjusted by dividing such rate by a fraction of which:

 

(A) the numerator shall be the Current Market Price per share of Common Stock on
the date fixed for such determination less the then fair market value (as
determined by the Board of Directors, whose determination shall be conclusive
and the basis for which shall be generally 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

 

(B) the denominator shall be such Current Market Price per share of Common
Stock,

 

such adjustment to become effective at the opening of business on the day
following the date fixed for the determination of shareholders entitled to
receive such distribution. In any case in which this paragraph (iv) is
applicable, paragraph (ii) of this Section 5.04(a) shall not be applicable. In
the event that such dividend or distribution is not so paid or made, each Fixed
Settlement Rate shall again be adjusted to be the Fixed Settlement Rate that
would then be in effect if such dividend or distribution had not been declared.

 

(v) In case the Company or any of its subsidiaries shall, by dividend or
otherwise, make distributions consisting exclusively of cash to all holders of
its Common Stock, excluding any cash dividend or distribution on the Common
Stock to the extent that the aggregate cash dividend or distribution per share
of Common Stock in any quarter does not exceed $0.0375 (the “Dividend Threshold
Amount”) (the Dividend Threshold Amount is subject to adjustment whenever the
Fixed Settlement Rate is adjusted, which adjustment shall be the inverse of the
adjustment made to the Fixed Settlement Rate, provided that no adjustment shall
be made to the Dividend Threshold Amount for any adjustment made pursuant to
this Section 5.04(a)(v)) then, in such case, each Fixed Settlement Rate in
effect at the close of business on the date fixed for the determination of
shareholders entitled to receive such distribution dividend or distribution
shall be adjusted by dividing such rate by a fraction of which:

 

(A) the numerator shall be the Current Market Price on such date less the amount
of cash so distributed applicable to one share of Common Stock in excess of the
Dividend Threshold Amount; and

 

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(B) the denominator shall be the Current Market Price on such date,

 

such adjustment to be effective at the opening of business on the day following
the date fixed for the determination of shareholders entitled to receive such
dividend or distribution; provided that if the portion of the cash so
distributed applicable to one share of Common Stock in excess of the Dividend
Threshold Amount is equal to or greater than the Current Market Price on such
date, in lieu of the foregoing adjustment, adequate provision shall be made so
that each holder of a Unit shall have the right to receive upon settlement of
the Units such excess amount. In the event that such dividend or distribution is
not so paid or made, each Fixed Settlement Rate shall again be adjusted to be
the Fixed Settlement Rate that would then be in effect if such dividend or
distribution had not been declared.

 

(vi) In case 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 of consideration per share of Common Stock having a
fair market value (as determined by the Board of Directors, whose determination
shall be conclusive and described in a resolution of the Board of Directors)
that as of the last time (the “Expiration Time”) tenders or exchanges may be
made pursuant to such tender or exchange offer (as it may be amended) exceeds
the Closing Price of a share of Common Stock on the Trading Day next succeeding
the Expiration Time, each Fixed Settlement Rate shall be increased so that the
same shall equal the rate determined by dividing such Fixed Settlement Rate in
effect immediately prior to the Expiration Time by a fraction,

 

(A) the numerator of which shall be equal to (A) the product of (I) the Current
Market Price of a share of Common Stock as of the Expiration Time and (II) the
number of shares of Common Stock outstanding (including any shares accepted in
terms of the tender or exchange offer, such shares being referred to as the
“Purchased Shares”) at the Expiration Time less (B) the fair market value
(determined by the Board of Directors as aforesaid) of the aggregate
consideration payable to stockholders for all Purchased Shares, and

 

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(B) the denominator of which shall be the product of the (x) number of shares of
Common Stock outstanding at the Expiration Time less any Purchased Shares and
(y) the Current Market Price of a share of Common Stock at the Expiration Time,

 

such adjustment to become effective immediately prior to the opening of business
on the day following the Expiration Time. If the Company is obligated to
purchase shares pursuant to any such tender or exchange offer, but the Company
is permanently prevented by applicable law from effecting any such purchases or
all such purchases are rescinded, each Fixed Settlement Rate shall again be
adjusted to be the Fixed Settlement Rate that would then be in effect if such
tender or exchange offer had not been made.

 

(vii) The reclassification of Common Stock into securities including securities
other than Common Stock (other than any reclassification upon a Reorganization
Event to which Section 5.04(b) applies) shall be deemed to involve:

 

(A) a distribution of such securities other than Common Stock to all holders of
Common Stock (and the effective date of such reclassification shall be deemed to
be “the date fixed for the determination of shareholders entitled to receive
such distribution” and the “date fixed for such determination” within the
meaning of paragraph (iv) of this Section); and

 

(B) a subdivision, split or combination, as the case may be, of the number of
shares of Common Stock outstanding immediately prior to such reclassification
into the number of shares of Common Stock outstanding immediately thereafter
(and the effective date of such reclassification shall be deemed to be “the day
upon which such subdivision or split becomes effective” or “the day upon which
such combination becomes effective”, as the case may be, and “the day upon which
such subdivision, split or combination becomes effective” within the meaning of
paragraph (iii) of this Section).

 

(viii) The “Current Market Price” per share of Common Stock on any date of
determination means the average of the daily Closing Prices for the ten Trading
Days ending on the earlier of such date of determination and the day before the
“ex date” with respect to the issuance or distribution requiring such
computation. For purposes of this paragraph, the term “ex date,” when used with
respect to any issuance or distribution, shall mean the first date on which
Common Stock trades regular way on such exchange or in such market without the
right to receive such issuance or distribution.

 

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(ix) All adjustments to the Fixed Settlement Rate shall be calculated to the
nearest 1/10,000th of a share of Common Stock (or if there is not a nearest
1/10,000th of a share, to the next lower 1/10,000th of a share).

 

(x) The Company may, but shall not be required to, make such increases in the
Fixed Settlement Rate, in addition to those required by this Section, as the
Board of Directors 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 reason. Any such adjustment to the Fixed Settlement Rate shall be
proportionally made to both the Maximum Share Number and the Minimum Share
Number.

 

(xi) If the Company has any stockholder rights plan in effect upon settlement of
the Purchase Contracts, a Holder shall be entitled to receive upon settlement of
its Purchase Contracts, in addition to the shares of Common Stock issuable upon
settlement of such Purchase Contract, the related rights for the Common Stock,
unless such rights under the stockholder rights plan have separated from the
Common Stock at the time of settlement, in which case each Fixed Settlement Rate
shall be adjusted as provided in this Section 5.04 on the date such rights
separate from the Common Stock.

 

(b) Adjustment for Consolidation, Merger or Other Reorganization Event.

 

(i) In the event of:

 

(A) 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 shares of Common Stock outstanding immediately
prior to the merger or consolidation are not exchanged for cash, securities or
other property of the Company or another corporation);

 

(B) any sale, transfer, lease or conveyance to another Person of the property of
the Company as an entirety or substantially as an entirety;

 

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(C) any statutory share exchange of the Company with another Person (other than
in connection with a merger or acquisition); or

 

(D) any liquidation, dissolution or termination of the Company other than as a
result of or after the occurrence of a Termination Event (any event described in
clauses (A), (B), (C) and (D), a “Reorganization Event”),

 

the Settlement Rate will be adjusted to provide that each Holder of Units will
receive on the Purchase Contract Settlement Date with respect to each Purchase
Contract forming a part thereof, the kind and amount of securities, cash and
other property receivable upon such Reorganization Event (without any interest
thereon, and without any right to dividends or distribution thereon which have a
record date that is prior to the Purchase Contract Settlement Date) by a Holder
of the one share of Common Stock (the “Exchange Property”). The kind and amount
of Exchange Property will be determined assuming such Holder of Common Stock is
not a Person with which the Company consolidated or into which the Company
merged or which merged into the Company or to which such sale or transfer was
made, as the case may be (any such Person, a “Constituent Person”), or an
Affiliate of a Constituent Person to the extent such Reorganization Event
provides for different treatment of Common Stock held by Affiliates of the
Company and non-affiliates and such Holder failed to exercise its rights of
election, if any, as to the kind or amount of securities, cash and other
property receivable upon such Reorganization Event (provided that if the kind or
amount of securities, cash and other property receivable upon such
Reorganization Event is not the same for each share of Common Stock held
immediately prior to such Reorganization Event by other than a Constituent
Person or an Affiliate thereof and in respect of which such rights of election
shall not have been exercised (“non-electing share”), then for the purpose of
this Section 5.04(b)(i) 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).

 

The actual amount of Exchange Property receivable upon settlement of each
Purchase Contract shall be (1) in the case of settlement on the Purchase
Contract Settlement Date or pursuant to Section 5.04(b)(ii), a variable amount
based upon the applicable Settlement Rate and the Applicable Market Value of the
Exchange Property at such time and (2) in the case of any Early Settlement,
determined in accordance with the procedures described under Section 5.07 using
the Settlement Rate that results in the minimum amount of Exchange Property
being delivered under such Purchase Contract.

 

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For purposes of this Section 5.04(b)(i) and Section 5.04(b)(ii), the term
“Applicable Market Value” shall be deemed to refer to the “Applicable Market
Value” of the Exchange Property, and such value shall be determined (A) with
respect to any publicly traded securities that compose all or part of the
Exchange Property, based on the Closing Price of such securities, (B) in the
case of any cash that composes all or part of the Exchange Property, based on
the amount of such cash and (C) in the case of any other property that composes
all or part of the Exchange Property, based on the value of such property, as
determined by a nationally recognized independent investment banking firm
retained by the Company for this purpose; provided that prior to the separation
of the Rights or any similar stockholder rights from the Common Stock, such
Rights or similar stockholder rights shall be deemed to have no value. The term
“Closing Price” shall be deemed to refer to the closing sale price, last quoted
bid price or mid-point of the last bid and ask prices, as the case may be, of
any publicly traded securities that comprise all or part of the Exchange
Property. The term “Trading Day” shall be deemed to refer to any publicly traded
securities that comprise all or part of the Exchange 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, dissolution or termination of the
Company, the Company or a liquidating trust created in connection therewith,
shall execute and deliver to the Purchase Contract Agent an agreement
supplemental hereto providing that each Holder of an Outstanding Unit shall have
the rights provided by this Section 5.04(b)(i). 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 5.04. The above
provisions of this Section 5.04 shall similarly apply to successive
Reorganization Events.

 

(ii) In the event of a consolidation or merger of the Company with or into
another Person (other than a consolidation or merger that does not result in any
reclassification, conversion, exchange or cancellation of outstanding shares of
Common Stock), in each case in which 30% or more of the total consideration paid
to the Company’s shareholders consists of cash or cash equivalents (a “Cash
Merger”), then a Holder of a Unit may settle (“Cash Merger Early Settlement”)
its Purchase Contract, upon the conditions set forth below, at the Settlement
Rate in effect immediately prior to the closing of the Cash Merger; provided
that (A) the Cash Merger Early Settlement Date (as defined below) is no later
than the fifth Business Day immediately preceding the Purchase Contract
Settlement Date and (B) no Cash Merger Early Settlement will be permitted
pursuant to this Section 5.04(b)(ii) unless, at the time such Cash Merger Early
Settlement is effected, there is an effective Registration Statement with
respect to any securities to be issued and delivered in connection with such
Cash Merger

 

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Early Settlement, if such a Registration Statement is required (in the view of
counsel, which need not be in the form of a written opinion, for the Company)
under the Securities Act. If such a Registration Statement is so required, the
Company covenants and agrees to use commercially reasonable efforts to (x) have
in effect a Registration Statement covering any securities to be delivered in
respect of the Purchase Contracts being settled and (y) provide a Prospectus in
connection therewith, in each case in a form that may be used in connection with
such Cash Merger Early Settlement.

 

Within five Business Days of the completion of a Cash Merger, the Company shall
provide written notice to Holders of Units of such completion of a Cash Merger,
which shall specify the deadline for submitting the notice to settle early in
cash pursuant to this Section 5.04(b)(ii), the date on which such Cash Merger
Early Settlement shall occur (which date shall be 10 days after the date of such
written notice by the Company, but which shall in no event be later than the
fifth Business Day immediately preceding the Purchase Contract Settlement Date)
(the “Cash Merger Early Settlement Date”), the applicable Settlement Rate and
the amount (per share of Common Stock) of cash, securities and other
consideration receivable by the Holder upon settlement. In addition, if a Holder
effects a Cash Merger Early Settlement of some or all of its Purchase Contracts,
such Holder shall be entitled to receive, on the Cash Merger Early Settlement
Date, the aggregate amount of any accrued and unpaid Contract Adjustment
Payments since the immediately preceding Payment Date with respect to such
Purchase Contracts. The Company shall pay such amount as a credit against the
amount otherwise payable by the Holders to effect such Cash Merger Early
Settlement.

 

Corporate Units Holders and Treasury Units Holders may only effect Cash Merger
Early Settlement pursuant to this Section 5.04(b)(ii) in integral multiples of
40 Corporate Units or Treasury Units, as the case may be. If the Treasury
Portfolio has replaced the Senior Notes as a component of the Corporate Units,
Corporate Units Holders may only effect Cash Merger Early Settlement pursuant to
this Section 5.04(b)(ii) in multiples of 16,000 Corporate Units. Other than the
provisions relating to timing of notice and settlement, which shall be as set
forth above, the provisions of Section 5.01(a) shall apply with respect to a
Cash Merger Early Settlement pursuant to this Section 5.04(b)(ii).

 

In order to exercise the right to effect Cash Merger Early Settlement with
respect to any Purchase Contracts, the Holder of the Certificate evidencing
Units shall deliver, no later than 5:00 p.m. (New York City time) on the third
Business Day immediately preceding the Cash Merger Early Settlement Date, such
Certificate to the Purchase

 

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Contract Agent at the Corporate Trust Office duly endorsed for transfer to the
Company or in blank with the form of Election to Settle Early on the reverse
thereof duly completed and accompanied by payment (payable to the Company in
immediately available funds) in an amount equal to the product of (A) the Stated
Amount times (B) the number of Purchase Contracts with respect to which the
Holder has elected to effect Cash Merger Early Settlement, less any credit in
respect of Contract Adjustment Payments as set forth above.

 

If a Holder properly effects an effective Cash Merger Early Settlement in
accordance with the provisions of this Section 5.04(b)(ii), the Company will
deliver (or will cause the Collateral Agent to deliver) to the Holder on the
Cash Merger Early Settlement Date:

 

(A) the kind and amount of securities, cash and other property receivable upon
such Cash Merger by a Holder of the number of shares of Common Stock issuable on
account of each Purchase Contract if the Purchase Contract Settlement Date had
occurred immediately prior to such Cash Merger (based on the Settlement Rate in
effect at such time), assuming such Holder of Common Stock is not a Constituent
Person or an Affiliate of a Constituent Person to the extent such Cash Merger
provides for different treatment of Common Stock held by Affiliates of the
Company and non-affiliates and such Holder failed to exercise its rights of
election, if any, as to the kind or amount of securities, cash and other
property receivable upon such Cash Merger (provided that if the kind or amount
of securities, cash and other property receivable upon such Cash Merger is not
the same for each non-electing share, then for the purpose of this Section
5.04(b)(ii), the kind and amount of securities, cash and other property
receivable upon such Cash Merger 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). For the avoidance of doubt, for the purposes of
determining the Adjusted Applicable Market Value (in connection with determining
the appropriate Settlement Rate to be applied in the foregoing sentence), the
date of the closing of the Cash Merger shall be deemed to be the Purchase
Contract Settlement Date;

 

(B) the Senior Notes, the Applicable Ownership Interests in the Treasury
Portfolio or Treasury Securities, as the case may be, related to the Purchase
Contracts with respect to which the Holder is effecting a Cash Merger Early
Settlement; and

 

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(C) if so required under the Securities Act, a Prospectus as contemplated by
this Section 5.04(b)(ii).

 

(c) All calculations and determinations pursuant to this Section 5.04 shall be
made by the Company or its agent and the Purchase Contract Agent shall have no
responsibility with respect thereto.

 

(d) The Corporate Units or the Treasury Units of the Holders who do not elect
Cash Merger Early Settlement in accordance with the foregoing will continue to
remain outstanding and be subject to settlement on the Purchase Contract
Settlement Date in accordance with the terms hereof.

 

Section 5.05. Notice of Adjustments and Certain Other Events.

 

(a) Whenever the Fixed Settlement Rate is adjusted as provided under Section
5.04(a), or the Settlement Rate is adjusted under Section 5.04(b), the Company
shall within 10 Business Days following the occurrence of an event that requires
such adjustment (or if the Company is not aware of such occurrence, as soon as
reasonably practicable after becoming so aware):

 

(i) compute the adjusted Fixed Settlement Rate or Settlement Rate, as the case
may be, in accordance with Section 5.04 and prepare and transmit to the Purchase
Contract Agent an Officers’ Certificate setting forth the Fixed Settlement Rate
or Settlement Rate, as the case may be, the method of calculation thereof in
reasonable detail, and the facts requiring such adjustment and upon which such
adjustment is based; and

 

(ii) provide a written notice to the Holders of the Units of the occurrence of
such event and a statement in reasonable detail setting forth the method by
which the adjustment to the Fixed Settlement Rate or Settlement Rate, as the
case may be, was determined and setting forth the adjusted Fixed Settlement Rate
or Settlement Rate, as the case may be.

 

(b) The Purchase Contract Agent shall not at any time be under any duty or
responsibility to any Holder of Units to determine whether any facts exist which
may require any adjustment of the Fixed Settlement Rate or Settlement Rate, as
the case may be, 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 Purchase Contract Agent shall be fully authorized and protected in
relying on any Officers’ Certificate delivered pursuant to Section 5.05(a)(i)
and any adjustment contained therein and the Purchase Contract Agent shall not
be deemed to have knowledge of any adjustment unless and until it has received
such certificate. The Purchase Contract Agent shall not be accountable with
respect to the validity or value (or the kind or amount) of any shares of Common
Stock, or of any securities or property, which may at the time be issued

 

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or delivered with respect to any Purchase Contract; and the Purchase Contract
Agent makes no representation with respect thereto. The Purchase Contract 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 5.06. Termination Event; Notice.

 

The Purchase Contracts and all obligations and rights of the Company and the
Holders thereunder, including, without limitation, the rights of the Holders to
receive and the obligation of the Company to pay any Contract Adjustment
Payments (including any accrued and unpaid Contract Adjustment Payments), if the
Company shall have such obligation, 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 Purchase Contract Agent
or the Company, if, prior to or on the Purchase Contract Settlement Date, a
Termination Event shall have occurred.

 

Upon and after the occurrence of a Termination Event, the Units shall thereafter
represent the right to receive the Senior Notes, the Treasury Securities or the
appropriate Applicable Ownership Interests in the Treasury Portfolio, as the
case may be, forming part of such Units, in accordance with the provisions of
Section 5.04 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 Purchase Contract Agent, the Collateral
Agent and the Holders, at their addresses as they appear in the Security
Register.

 

Section 5.07. Early Settlement.

 

(a) Subject to and upon compliance with the provisions of this Section 5.07, at
the option of the Holder thereof, Purchase Contracts underlying Units may be
settled early (“Early Settlement”) at any time on or prior to 5:00 p.m. (New
York City time) on the fifth Business Day immediately preceding the Purchase
Contract Settlement Date; provided that no Early Settlement will be permitted
pursuant to this Section 5.07 unless, at the time such Early Settlement is
effected, there is an effective Registration Statement with respect to any
securities to be issued and delivered in connection with such Early Settlement,
if such a Registration Statement is required (in the view of counsel, which need
not be in the form of a written opinion, for the Company) under the Securities
Act. If such a Registration Statement is so required, the Company covenants and
agrees to use commercially reasonable efforts to (i) have in effect a
Registration Statement covering any securities to be delivered in respect of the
Purchase Contracts being settled and (ii) provide a Prospectus in connection
therewith, in each case in a form that may be used in connection with such Early
Settlement.

 

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(b) In order to exercise the right to effect Early Settlement with respect to
any Purchase Contracts, the Holder of the Certificate evidencing Units shall
deliver, at any time prior to 5:00 p.m. (New York City time) on the fifth
Business Day immediately preceding the Purchase Contract Settlement Date, such
Certificate to the Purchase Contract Agent at the Corporate Trust Office duly
endorsed for transfer to the Company or in blank with the form of Election to
Settle Early on the reverse thereof duly completed and accompanied by payment
(payable to the Company in immediately available funds) in an amount (the “Early
Settlement Amount”) equal to the sum of:

 

(i) the product of (A) the Stated Amount times (B) the number of Purchase
Contracts with respect to which the Holder has elected to effect Early
Settlement, plus

 

(ii) if such delivery is made with respect to any Purchase Contracts during the
period from the close of business on any Record Date next preceding any Payment
Date to the opening of business on such Payment Date, an amount equal to the
Contract Adjustment Payments payable on such Payment Date with respect to such
Purchase Contracts.

 

Except as provided in the immediately preceding sentence, no payment shall be
made upon Early Settlement of any Purchase Contract on account of any Contract
Adjustment Payments accrued on such Purchase Contract or on account of any
dividends on the Common Stock issued upon such Early Settlement. If the
foregoing requirements are first satisfied with respect to Purchase Contracts
underlying any Units on or prior to 5:00 p.m. (New York City time) on a Business
Day, such day shall be the “Early Settlement Date” with respect to such Units
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 Units shall be the next succeeding
Business Day.

 

Upon the receipt of such Certificate and Early Settlement Amount from the
Holder, the Purchase Contract Agent shall pay to the Company such Early
Settlement Amount, the receipt of which payment the Company shall confirm in
writing. The Purchase Contract Agent shall then, in accordance with Section 5.06
of the Pledge Agreement, notify the Collateral Agent that (A) such Holder has
elected to effect an Early Settlement, which notice shall set forth the number
of such Purchase Contracts as to which such Holder has elected to effect Early
Settlement, (B) the Purchase Contract Agent has received from such Holder, and
paid to the Company as confirmed in writing by the Company, the related Early
Settlement Amount and (C) all conditions to such Early Settlement have been
satisfied.

 

Holders of Treasury Units may only effect Early Settlement pursuant to this
Section 5.07 in integral multiples of 40 Treasury Units. If the Treasury

 

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Portfolio has replaced the Senior Notes as a component of the Corporate Units,
Corporate Units Holders may only effect Early Settlement pursuant to this
Section 5.07 in integral multiples of 16,000 Corporate Units.

 

Upon Early Settlement of the Purchase Contracts, the rights of the Holders to
receive and the obligation of the Company to pay any Contract Adjustment
Payments (including any accrued and unpaid Contract Adjustment Payments) with
respect to such Purchase Contracts shall immediately and automatically
terminate.

 

(c) Upon Early Settlement of Purchase Contracts by a Holder of the related
Units, the Company shall issue, and the Holder shall be entitled to receive,
newly issued shares of Common Stock equal to the Minimum Share Number, as
adjusted from time to time pursuant to Section 5.04 on account of each Purchase
Contract as to which Early Settlement is effected (the “Early Settlement Rate”).

 

(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, together with payment in lieu of any
fraction of a share, as provided in Section 5.09; and

 

(ii) the related Pledged Senior Notes or the Applicable Ownership Interests in
the Treasury Portfolio (as specified in clause (i) of the definition of such
term), as applicable, in the case of Corporate Units, or the related Pledged
Treasury Securities, in the case of Treasury Units, to be released from the
Pledge by the Collateral Agent, free and clear of the Company’s security
interest therein, and transferred, in each case, to the Purchase Contract Agent
for delivery to the Holder thereof or its designee.

 

(e) Upon Early Settlement of any Purchase Contracts, and subject to receipt of
shares of Common Stock from the Company and the Senior Notes, the Applicable
Ownership Interests (as specified in clause (i) of the definition of such term)
in the Treasury Portfolio or Treasury Securities, as the case may be, from the
Securities Intermediary, as applicable, the Purchase Contract 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 Units:

 

(i) transfer to the Holder the Senior Notes, the Applicable Ownership Interests
(as specified in clause (i) of the Definition of such term) in the Treasury
Portfolio or Treasury Securities, as the case may be, forming a part of such
Units,

 

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(ii) deliver to the Holder a certificate or certificates for the full number of
shares of Common Stock issuable upon such Early Settlement, together with
payment in lieu of any fraction of a share, as provided in Section 5.09, and

 

(iii) if so required under the Securities Act, deliver a Prospectus for the
shares of Common Stock issuable upon such Early Settlement as contemplated by
(a).

 

(f) In the event that Early Settlement is effected with respect to Purchase
Contracts underlying less than all the Units evidenced by a Certificate, upon
such Early Settlement the Company shall execute and the Purchase Contract Agent
shall execute on behalf of the Holder, authenticate and deliver to the Holder
thereof, at the expense of the Company, a Certificate evidencing the Units as to
which Early Settlement was not effected.

 

(g) A Holder of a Unit who effects Early Settlement may elect to have the Senior
Notes no longer a part of a Corporate Unit remarketed in accordance with the
provisions of Section 5.02.

 

Section 5.08. Intentionally Omitted.

 

Section 5.09. No Fractional Shares.

 

No fractional shares or scrip representing fractional shares of Common Stock
shall be issued or delivered upon settlement on the Purchase Contract Settlement
Date, or upon Early Settlement or Cash 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 that 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
that would otherwise be deliverable upon settlement of any Purchase Contracts on
the Purchase Contract Settlement Date, or upon Early Settlement or Cash Merger
Early Settlement, the Company, through the Purchase Contract Agent, shall make a
cash payment in respect of such fractional interest in an amount equal to the
percentage of such fractional share times the Applicable Market Value calculated
as if the date of such settlement were the Purchase Contract Settlement Date.
The Company shall provide the Purchase Contract Agent from time to time with
sufficient funds to permit the Purchase Contract Agent to make all cash payments
required by this Section 5.09 in a timely manner.

 

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Section 5.10. 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, however, that the Company shall not be required to
pay any such tax or taxes which may be payable in respect of any exchange of or
substitution for a Certificate evidencing a Unit 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 Units evidenced thereby, other than in the name of
the Purchase Contract Agent, as custodian for such Holder, and the Company shall
not be required to issue or deliver such share certificates or Certificates
unless or until the Person or Persons requesting the transfer or issuance
thereof shall have paid to the Company the amount of such tax or shall have
established to the satisfaction of the Company that such tax has been paid.

 

Section 5.11. Contract Adjustment Payments.

 

(a) Subject to Section 5.11(d), the Company shall pay, on each Payment Date, the
Contract Adjustment Payments payable in respect of each Purchase Contract to the
Person in whose name a Certificate is registered at the close of business on the
Record Date relating to such Payment Date. The Contract Adjustment Payments will
be payable at the office of the Purchase Contract Agent in the Borough of
Manhattan, New York City maintained for that purpose. If the book-entry system
for the Units has been terminated, the Contract Adjustment Payments will be
payable, 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 Security
Register, or by wire transfer to the account designated by such Person by a
prior written notice to the Purchase Contract Agent. Contract Adjustment
Payments payable for any period will be computed on the basis of a 360-day year
of twelve 30-day months. The Contract Adjustment Payments will accrue from
November 3, 2003.

 

(b) Upon the occurrence of a Termination Event, the Company’s obligation to pay
future Contract Adjustment Payments (including any accrued Contract Adjustment
Payments) shall cease.

 

(c) 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 Corporate Units) any other
Certificate shall carry the right to accrued and unpaid Contract Adjustment
Payments, which right was carried by the Purchase Contracts underlying such
other Certificates.

 

(d) In the case of any Unit with respect to which Early Settlement or Cash
Merger Early Settlement of the underlying Purchase Contract is effected on a
date that is after any Record Date and prior to or on the next succeeding

 

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Payment Date, Contract Adjustment Payments otherwise payable on such Payment
Date shall be payable on such Payment Date notwithstanding such Early Settlement
or Cash Merger Early Settlement, and such Contract Adjustment Payments shall be
paid to the Person in whose name the Certificate evidencing such Unit is
registered at the close of business on such Record Date. Except as otherwise
expressly provided in the immediately preceding sentence, and the right to
receive accrued and unpaid Contract Adjustment Payments as set forth in Section
5.04(b)(ii), in the case of any Unit with respect to which Early Settlement or
Cash Merger Early Settlement of the underlying Purchase Contract is effected,
Contract Adjustment Payments that would otherwise be payable after the Early
Settlement or Cash Merger Early Settlement Date with respect to such Purchase
Contract shall not be payable.

 

(e) The Company’s obligations with respect to Contract Adjustment Payments, if
any, will be subordinated and junior in right of payment to the Company’s
obligations under any Senior Indebtedness.

 

(f) In the event (x) of any payment by, or distribution of assets of, the
Company of any kind or character, whether in cash, property or securities, to
creditors upon any dissolution, winding-up, liquidation or reorganization of the
Company, whether voluntary or involuntary or in bankruptcy, insolvency,
receivership or other proceedings, or (y) subject to the provisions of Section
5.11(h) below, that (i) a default shall have occurred and be continuing with
respect to the payment of principal, interest or any other monetary amounts due
and payable on any Senior Indebtedness and such default shall have continued
beyond the period of grace, if any, specified in the instrument evidencing such
Senior Indebtedness (and the Purchase Contract Agent shall have received written
notice thereof from the Company or one or more holders of Senior Indebtedness or
their representative or representatives or the trustee or trustees under any
indenture pursuant to which any such Senior Indebtedness may have been issued),
or (ii) the maturity of any Senior Indebtedness shall have been accelerated
because of a default in respect of such Senior Indebtedness (and the Purchase
Contract Agent shall have received written notice thereof from the Company or
one or more holders of Senior Indebtedness or their representative or
representatives or the trustee or trustees under any indenture pursuant to which
any such Senior Indebtedness may have been issued), then:

 

(i) the holders of all Senior Indebtedness shall first be entitled to receive,
in the case of clause (x) above, payment of all amounts due or to become due
upon all Senior Indebtedness and, in the case of subclauses (i) and (ii) of
clause (y) above, payment of all amounts due thereon, or provision shall be made
for such payment in money or money’s worth, before the Holders of any of the
Units are entitled to receive any Contract Adjustment Payments on the Purchase
Contracts underlying the Units;

 

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(ii) any payment by, or distribution of assets of, the Company of any kind or
character, whether in cash, property or securities, to which the Holders of any
of the Units would be entitled except for the provisions of Section 5.11(e)
through (q), including any such payment or distribution which may be payable or
deliverable by reason of the payment of any other indebtedness of the Company
being subordinated to the payment of such Contract Adjustment Payments on the
Purchase Contracts underlying the Units, shall be paid or delivered by the
Person making such payment or distribution, whether a trustee in bankruptcy, a
receiver or liquidating trustee or otherwise, directly to the representative or
representatives of the holders of Senior Indebtedness or to the trustee or
trustees under any indenture under which any instruments evidencing any of such
Senior Indebtedness may have been issued, ratably according to the aggregate
amounts remaining unpaid on account of such Senior Indebtedness held or
represented by each, to the extent necessary to make payment in full of all
Senior Indebtedness remaining unpaid after giving effect to any concurrent
payment or distribution (or provision therefor) to the holders of such Senior
Indebtedness, before any payment or distribution is made of such Contract
Adjustment Payments to the Holders of such Units; and

 

(iii) in the event that, notwithstanding the foregoing, any payment by, or
distribution of assets of, the Company of any kind or character, whether in
cash, property or securities, including any such payment or distribution which
may be payable or deliverable by reason of the payment of any other indebtedness
of the Company being subordinated to the payment of Contract Adjustment Payments
on the Purchase Contracts underlying the Units, shall be received by the
Purchase Contract Agent or the Holders of any of the Units when such payment or
distribution is prohibited pursuant to Section 5.11(e) through (q), such payment
or distribution shall be paid over to the representative or representatives of
the holders of Senior Indebtedness or to the trustee or trustees under any
indenture pursuant to which any instruments evidencing any such Senior
Indebtedness may have been issued, ratably as aforesaid, for application to the
payment of all Senior Indebtedness remaining unpaid until all such Senior
Indebtedness shall have been paid in full, after giving effect to any concurrent
payment or distribution (or provision therefor) to the holders of such Senior
Indebtedness.

 

(g) For purposes of Section 5.11(e) through (q), the words “cash, property or
securities” shall not be deemed to include shares of stock of the Company as
reorganized or readjusted, or securities of the Company or any other Person
provided for by a plan of reorganization or readjustment, the payment of which
is subordinated at least to the extent provided in Section 5.11(e) through (q)
with respect to such Contract Adjustment Payments on the Units to the payment of
all Senior Indebtedness which may at the time be outstanding; provided that (i)

 

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the indebtedness or guarantee of indebtedness, as the case may be, that
constitutes Senior Indebtedness is assumed by the Person, if any, resulting from
any such reorganization or readjustment, and (ii) the rights of the holders of
the Senior Indebtedness are not, without the consent of each such holder
adversely affected thereby, altered by such reorganization or readjustment;

 

(h) Any failure by the Company to make any payment on or perform any other
obligation under Senior Indebtedness, other than any indebtedness incurred by
the Company or assumed or guaranteed, directly or indirectly, by the Company for
money borrowed (or any deferral, renewal, extension or refunding thereof) or any
indebtedness or obligation as to which the provisions of Section 5.11(e) through
(q) shall have been waived by the Company in the instrument or instruments by
which the Company incurred, assumed, guaranteed or otherwise created such
indebtedness or obligation, shall not be deemed a default or event of default if
(i) the Company shall be disputing its obligation to make such payment or
perform such obligation and (ii) either (A) no final judgment relating to such
dispute shall have been issued against the Company which is in full force and
effect and is not subject to further review, including a judgment that has
become final by reason of the expiration of the time within which a party may
seek further appeal or review, and (B) in the event a judgment that is subject
to further review or appeal has been issued, the Company shall in good faith be
prosecuting an appeal or other proceeding for review and a stay of execution
shall have been obtained pending such appeal or review.

 

(i) Subject to the irrevocable payment in full of all Senior Indebtedness, the
Holders of the Units shall be subrogated (equally and ratably with the holders
of all obligations of the Company which by their express terms are subordinated
to Senior Indebtedness of the Company to the same extent as payment of the
Contract Adjustment Payments in respect of the Purchase Contracts underlying the
Units is subordinated and which are entitled to like rights of subrogation) to
the rights of the holders of Senior Indebtedness to receive payments or
distributions of cash, property or securities of the Company applicable to the
Senior Indebtedness until all such Contract Adjustment Payments owing on the
Units shall be paid in full, and as between the Company, its creditors other
than holders of such Senior Indebtedness and the Holders, no such payment or
distribution made to the holders of Senior Indebtedness by virtue of Section
5.11(e) through (q) that otherwise would have been made to the Holders shall be
deemed to be a payment by the Company on account of such Senior Indebtedness, it
being understood that the provisions of Section 5.11(e) through (q) are and are
intended solely for the purpose of defining the relative rights of the Holders,
on the one hand, and the holders of Senior Indebtedness, on the other hand.

 

(j) Nothing contained in Section 5.11(e) through (q) or elsewhere in this
Agreement or in the Units is intended to or shall impair, as among the Company,
its creditors other than the holders of Senior Indebtedness and the

 

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Holders, the obligation of the Company, which is absolute and unconditional, to
pay to the Holders such Contract Adjustment Payments on the Units as and when
the same shall become due and payable in accordance with their terms, or is
intended to or shall affect the relative rights of the Holders and creditors of
the Company other than the holders of Senior Indebtedness, nor shall anything
herein or therein prevent the Purchase Contract Agent or any Holder from
exercising all remedies otherwise permitted by applicable law upon default under
this Agreement, subject to the rights, if any, under Section 5.11(e) through
(q), of the holders of Senior Indebtedness in respect of cash, property or
securities of the Company received upon the exercise of any such remedy.

 

(k) Upon payment or distribution of assets of the Company referred to in Section
5.11(e) through (q), the Purchase Contract Agent and the Holders shall be
entitled to rely upon any order or decree made by any court of competent
jurisdiction in which any such dissolution, winding up, liquidation or
reorganization proceeding affecting the affairs of the Company is pending or
upon a certificate of the trustee in bankruptcy, receiver, assignee for the
benefit of creditors, liquidating trustee or Purchase Contract Agent or other
person making any payment or distribution, delivered to the Purchase Contract
Agent or to the Holders, for the purpose of ascertaining the Persons entitled to
participate in such payment or distribution, the holders of the Senior
Indebtedness and other indebtedness of the Company, the amount thereof or
payable thereon, the amount or amounts paid or distributed thereon and all other
facts pertinent thereto or to this Section 5.11(e) through (q).

 

(l) The Purchase Contract Agent shall be entitled to rely on the delivery to it
of a written notice by a Person representing himself to be a holder of Senior
Indebtedness (or a trustee or representative on behalf of such holder) to
establish that such notice has been given by a holder of Senior Indebtedness or
a trustee or representative on behalf of any such holder or holders. In the
event that the Purchase Contract Agent determines in good faith that further
evidence is required with respect to the right of any Person as a holder of
Senior Indebtedness to participate in any payment or distribution pursuant to
Section 5.11(e) through (q), the Purchase Contract Agent may request such Person
to furnish evidence to the reasonable satisfaction of the Purchase Contract
Agent as to the amount of Senior Indebtedness held by such Person, the extent to
which such Person is entitled to participate in such payment or distribution and
any other facts pertinent to the rights of such Person under Section 5.11(e)
through (q), and, if such evidence is not furnished, the Purchase Contract Agent
may defer payment to such Person pending judicial determination as to the right
of such Person to receive such payment.

 

(m) Nothing contained in Section 5.11(e) through (q) shall affect the
obligations of the Company to make, or prevent the Company from making, payment
of the Contract Adjustment Payments, except as otherwise provided in this
Section 5.11(e) through (q).

 

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(n) Each Holder of Units, by its acceptance thereof, authorizes and directs the
Purchase Contract Agent on its behalf to take such action as may be necessary or
appropriate to effectuate the subordination provided in Section 5.11(e) through
(q) and appoints the Purchase Contract Agent its attorney-in-fact, as the case
may be, for any and all such purposes.

 

(o) The Company shall give prompt written notice to the Purchase Contract Agent
of any fact known to the Company that would prohibit the making of any payment
of moneys to or by the Purchase Contract Agent in respect of the Units pursuant
to the provisions of this Section. Notwithstanding the provisions of Section
5.11(e) through (q) or any other provisions of this Agreement, the Purchase
Contract Agent shall not be charged with knowledge of the existence of any facts
that would prohibit the making of any payment of moneys to or by the Purchase
Contract Agent, or the taking of any other action by the Purchase Contract
Agent, unless and until the Purchase Contract Agent shall have received written
notice thereof mailed or delivered to the Purchase Contract Agent at its
Institutional Trust Services department from the Company, any Holder, or the
holder or representative of any Senior Indebtedness; provided that if at least
two Business Days prior to the date upon which by the terms hereof any such
moneys may become payable for any purpose, the Purchase Contract Agent shall not
have received with respect to such moneys the notice provided for in this
Section, then, anything herein contained to the contrary notwithstanding, the
Purchase Contract Agent shall have full power and authority to receive such
moneys and to apply the same to the purpose for which they were received and
shall not be affected by any notice to the contrary that may be received by it
within two Business Days prior to or on or after such date.

 

(p) The Purchase Contract Agent in its individual capacity shall be entitled to
all the rights set forth in this Section with respect to any Senior Indebtedness
at the time held by it, to the same extent as any other holder of Senior
Indebtedness and nothing in this Agreement shall deprive the Purchase Contract
Agent of any of its rights as such holder.

 

(q) No right of any present or future holder of any Senior Indebtedness to
enforce the subordination herein shall at any time or in any way be prejudiced
or impaired by any act or failure to act on the part of the Company or by any
noncompliance by the Company with the terms, provisions and covenants of this
Agreement, regardless of any knowledge thereof which any such holder may have or
be otherwise charged with.

 

(r) Nothing in this Section 5.11 shall apply to claims of, or payments to, the
Purchase Contract Agent under or pursuant to Section 7.07.

 

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(s) With respect to the holders of Senior Indebtedness, (i) the duties and
obligations of the Purchase Contract Agent shall be determined solely by the
express provisions of this Agreement; (ii) the Purchase Contract Agent shall not
be liable to any such holders if it shall, acting in good faith, mistakenly pay
over or distribute to the Holders or to the Company or any other Person cash,
property or securities to which any holders of Senior Indebtedness shall be
entitled by virtue of this Section 5.11 or otherwise; (iii) no implied covenants
or obligations shall be read into this Agreement against the Purchase Contract
Agent; and (iv) the Purchase Contract Agent shall not be deemed to be a
fiduciary as to such holders.

 

ARTICLE 6

REMEDIES

 

Section 6.01. Unconditional Right of Holders to Receive Contract Adjustment
Payments and to Purchase Shares of Common Stock.

 

Each Holder of a Unit shall have the right, which is absolute and unconditional,
(i) subject to Article 5, to receive each Contract Adjustment Payment with
respect to the Purchase Contract comprising part of such Unit on the respective
Payment Date for such Unit and (ii) except upon and following a Termination
Event, to purchase shares of Common Stock pursuant to such Purchase Contract
and, in each such case, to institute suit for the enforcement of any such right
to receive Contract Adjustment Payments and the right to purchase shares of
Common Stock, and such rights shall not be impaired without the consent of such
Holder.

 

Section 6.02. 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 6.03. Rights and Remedies Cumulative.

 

Except as otherwise provided with respect to the replacement or payment of
mutilated, destroyed, lost or stolen Certificates in the last paragraph of
Section 3.10, no right or remedy herein conferred upon or reserved to the
Holders is intended to be exclusive of any other right or remedy, and every
right and remedy shall, to the extent permitted by law, be cumulative and in
addition to every other

 

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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 6.04. Delay or Omission Not Waiver.

 

No delay or omission of any Holder to exercise any right upon a default or
remedy upon a default shall impair any such right or remedy or constitute a
waiver of any such right. Every right and remedy given by this Article or by law
to the Holders may be exercised from time to time, and as often as may be deemed
expedient, by such Holders.

 

Section 6.05. Undertaking for Costs.

 

All parties to this Agreement agree, and each Holder of a Unit, by its
acceptance of such Unit 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 Purchase Contract Agent for any
action taken, suffered or omitted by it as Purchase Contract 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 costs 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 Purchase Contract 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 interest on any Senior Notes or Contract
Adjustment Payments on or after the respective Payment Date therefor in respect
of any Unit held by such Holder, or for enforcement of the right to purchase
shares of Common Stock under the Purchase Contracts constituting part of any
Unit held by such Holder.

 

Section 6.06. Waiver of Stay or Extension Laws.

 

The Company covenants (to the extent that it may lawfully do so) that it will
not at any time insist upon, or plead, or in any manner whatsoever claim or take
the benefit or advantage of, any stay or extension law wherever enacted, now or
at any time hereafter in force, which may affect the covenants or the
performance of this Agreement; and the Company (to the extent that it may
lawfully do so) hereby expressly waives all benefit or advantage of any such law
and covenants that it will not hinder, delay or impede the execution of any
power herein granted to the Purchase Contract Agent or the Holders, but will
suffer and permit the execution of every such power as though no such law had
been enacted.

 

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ARTICLE 7

THE PURCHASE CONTRACT AGENT

 

Section 7.01. Certain Duties and Responsibilities.

 

(a) The Purchase Contract Agent:

 

(i) undertakes to perform, with respect to the Units, such duties and only such
duties as are specifically set forth in this Agreement, the Pledge Agreement and
the Remarketing Agreement and no implied covenants or obligations shall be read
into this Agreement, the Pledge Agreement or the Remarketing Agreement against
the Purchase Contract Agent; and

 

(ii) in the absence of bad faith or gross negligence on its part, may, with
respect to the Units, conclusively rely, as to the truth of the statements and
the correctness of the opinions expressed therein, upon certificates or opinions
furnished to the Purchase Contract Agent and conforming to the requirements of
this Agreement or the Pledge Agreement or the Remarketing Agreement, as
applicable, but in the case of any certificates or opinions which by any
provision hereof are specifically required to be furnished to the Purchase
Contract Agent, the Purchase Contract Agent shall be under a duty to examine the
same to determine whether or not they conform to the requirements of this
Agreement, the Pledge Agreement or the Remarketing Agreement, as applicable (but
need not confirm or investigate the accuracy of the mathematical calculations or
other facts stated therein).

 

(b) No provision of this Agreement, the Pledge Agreement or the Remarketing
Agreement shall be construed to relieve the Purchase Contract Agent from
liability for its own grossly negligent action, its own grossly negligent
failure to act, or its own willful misconduct, except that:

 

(i) this Subsection shall not be construed to limit the effect of subsection (a)
of this Section;

 

(ii) the Purchase Contract Agent shall not be liable for any error of judgment
made in good faith by a Responsible Officer, unless it shall be conclusively
determined by a court of competent jurisdiction that the Purchase Contract Agent
was grossly negligent in ascertaining the pertinent facts; and

 

(iii) no provision of this Agreement or the Pledge Agreement or the Remarketing
Agreement shall require the Purchase Contract Agent to expend or risk its own
funds or otherwise incur any financial liability in

 

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the performance of any of its duties hereunder, or in the exercise of any of its
rights or powers, if it shall have reasonable grounds for believing that
repayment of such funds or adequate indemnity against such risk or liability is
not reasonably assured to it.

 

(c) Whether or not therein expressly so provided, every provision of this
Agreement, the Pledge Agreement and the Remarketing Agreement relating to the
conduct or affecting the liability of or affording protection to the Purchase
Contract Agent shall be subject to the provisions of this Section.

 

(d) The Purchase Contract Agent is authorized to execute and deliver the Pledge
Agreement and the Remarketing Agreement in its capacity as Purchase Contract
Agent.

 

Section 7.02. Notice of Default.

 

Within 30 days after the occurrence of any default by the Company hereunder of
which a Responsible Officer of the Purchase Contract Agent has actual knowledge,
the Purchase Contract Agent shall transmit by mail to the Company and the
Holders of Units, as their names and addresses appear in the Security Register,
notice of such default hereunder, unless such default shall have been cured or
waived.

 

Section 7.03. Certain Rights of Purchase Contract Agent.

 

Subject to the provisions of Section 7.01:

 

(a) the Purchase Contract Agent may, in the absence of bad faith, 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, Senior Note, 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 Officers’ Certificate, Issuer Order or Issuer
Request, and any resolution of the Board of Directors of the Company may be
sufficiently evidenced by a Board Resolution;

 

(c) whenever in the administration of this Agreement, the Pledge Agreement or
the Remarketing Agreement the Purchase Contract Agent shall deem it desirable
that a matter be proved or established prior to taking, suffering or omitting to
take any action hereunder, the Purchase Contract Agent (unless other evidence be
herein specifically prescribed in this Agreement) may, in the absence of bad
faith on its part, conclusively rely upon an Officers’ Certificate of the
Company;

 

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(d) the Purchase Contract Agent may consult with counsel of its selection
appointed with due care by it hereunder 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 Purchase Contract 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 Purchase Contract 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 Purchase Contract Agent shall determine to make such further inquiry or
investigation, it shall be entitled to examine the relevant books, records and
premises of the Company, personally or by agent or attorney;

 

(f) the Purchase Contract Agent may execute any of the powers hereunder or
perform any duties hereunder either directly or by or through agents, attorneys,
custodians or nominees or an Affiliate and the Purchase Contract Agent shall not
be responsible for any misconduct or negligence on the part of any agent,
attorney, custodian or nominee or an Affiliate appointed with due care by it
hereunder;

 

(g) the Purchase Contract Agent shall be under no obligation to exercise any of
the rights or powers vested in it by this Agreement at the request or direction
of any of the Holders pursuant to this Agreement, unless such Holders shall have
offered to the Purchase Contract Agent security or indemnity reasonably
satisfactory to the Purchase Contract Agent against the costs, expenses and
liabilities which might be incurred by it in compliance with such request or
direction;

 

(h) the Purchase Contract Agent shall not be liable for any action taken,
suffered, or omitted to be taken by it in the absence of bad faith or gross
negligence by it;

 

(i) the Purchase Contract Agent shall not be deemed to have notice of any
default hereunder unless a Responsible Officer of the Purchase Contract Agent
has actual knowledge thereof or unless written notice of any event that is in
fact such a default is received by the Purchase Contract Agent at the Corporate
Trust Office of the Purchase Contract Agent, and such notice references the
Units and this Agreement;

 

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(j) the Purchase Contract Agent may request that the Company deliver an
Officers’ Certificate setting forth the names of individuals and/or titles of
officers authorized at such time to take specified actions pursuant to this
Agreement, which Officers’ Certificate may be signed by any person authorized to
sign an Officers’ Certificate, including any person specified as so authorized
in any such certificate previously delivered and not superseded;

 

(k) the rights, privileges, protections, immunities and benefits given to the
Purchase Contract Agent, including, without limitation, its right to be
indemnified, are extended to, and shall be enforceable by, the Purchase Contract
Agent in each of its capacities hereunder, and to each agent, custodian and
other Person employed to act hereunder; and

 

(l) The Purchase Contract Agent shall not be required to initiate or conduct any
litigation or collection proceedings hereunder and shall have no
responsibilities with respect to any default hereunder except as expressly set
forth herein.

 

Section 7.04. Not Responsible for Recitals or Issuance of Units.

 

The recitals contained herein, in the Pledge Agreement, the Remarketing
Agreement and in the Certificates shall be taken as the statements of the
Company, and the Purchase Contract Agent assumes no responsibility for their
accuracy or validity. The Purchase Contract Agent makes no representations as to
the validity or sufficiency of either this Agreement or of the Units, or of the
Pledge Agreement or the Pledge or the Collateral and shall have no
responsibility for perfecting or maintaining the perfection of any security
interest in the Collateral. The Purchase Contract Agent shall not be accountable
for the use or application by the Company of the proceeds in respect of the
Purchase Contracts.

 

Section 7.05. May Hold Units.

 

Any Security Registrar or any other agent of the Company, or the Purchase
Contract Agent and its Affiliates, in their individual or any other capacity,
may become the owner or pledgee of Units 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 Security Registrar or such other agent, or the Purchase
Contract Agent. The Company may become the owner or pledgee of Units.

 

Section 7.06. Money Held in Custody.

 

Money held by the Purchase Contract Agent in custody hereunder need not be
segregated from the Purchase Contract Agent’s other funds except to the extent
required by law or provided herein. The Purchase Contract Agent shall be under
no obligation to invest or pay interest on any money received by it hereunder
except as otherwise provided hereunder or agreed in writing with the Company.

 

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Section 7.07. Compensation and Reimbursement.

 

The Company agrees:

 

(a) to pay to the Purchase Contract Agent compensation for all services rendered
by it hereunder, under the Pledge Agreement and under the Remarketing Agreement
as the Company and the Purchase Contract Agent shall from time to time agree in
writing;

 

(b) except as otherwise expressly provided for herein, to reimburse the Purchase
Contract Agent upon its request for all reasonable expenses, disbursements and
advances incurred or made by the Purchase Contract Agent in accordance with any
provision of this Agreement, the Pledge Agreement and the Remarketing Agreement
(including the reasonable compensation and the expenses and disbursements of its
agents and counsel) in connection with the negotiation, preparation, execution
and delivery and performance of this Agreement, the Pledge Agreement and the
Remarketing Agreement and any modification, supplement or waiver of any of the
terms thereof, except any such expense, disbursement or advance as may be
attributable to its gross negligence, willful misconduct or bad faith; and

 

(c) to indemnify the Purchase Contract Agent and any predecessor Purchase
Contract Agent (and each of its directors, officers, agents and employees
(collectively, the “Indemnitees”) for, and to hold it harmless against, any
loss, claim, damage, fine, penalty, liability or expense (including reasonable
fees and expenses of counsel) 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 hereunder and under the Pledge
Agreement and the Remarketing Agreement, including the Indemnitees’ reasonable
costs and expenses of defending themselves 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 the Purchase Contract Agent’s powers or
duties hereunder or thereunder.

 

The provisions of this Section shall survive the resignation and removal of the
Purchase Contract Agent and the termination of this Agreement.

 

Section 7.08. Corporate Purchase Contract Agent Required, Eligibility.

 

There shall at all times be a Purchase Contract Agent hereunder which shall be a
Person organized and doing business under the laws of the United States of
America, any State thereof or the District of Columbia, authorized under

 

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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 a corporate trust office in the Borough of Manhattan, New York City,
if there be such a Person in the Borough of Manhattan, New York City, qualified
and eligible under this Article and willing to act on reasonable terms. If such
Person 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 Person 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 Purchase Contract 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 7.09. Resignation and Removal; Appointment of Successor.

 

(a) No resignation or removal of the Purchase Contract Agent and no appointment
of a successor Purchase Contract Agent pursuant to this Article shall become
effective until the acceptance of appointment by the successor Purchase Contract
Agent in accordance with the applicable requirements of Section 7.10.

 

(b) The Purchase Contract 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 Purchase Contract Agent required
by Section 7.10 shall not have been delivered to the Purchase Contract Agent
within 30 days after the giving of such notice of resignation, the resigning
Purchase Contract Agent may petition, at the expense of the Company, any court
of competent jurisdiction for the appointment of a successor Purchase Contract
Agent.

 

(c) The Purchase Contract Agent may be removed at any time by Act of the Holders
of a majority in number of the Outstanding Units delivered to the Purchase
Contract Agent and the Company. If the instrument of acceptance by a successor
Purchase Contract Agent required by Section 7.10 shall not have been delivered
to the Purchase Contract Agent within 30 days after such Act, the Purchase
Contract Agent being removed may petition any court of competent jurisdiction
for the appointment at the expense of the Company of a successor Purchase
Contract Agent.

 

(d) If at any time:

 

(i) the Purchase Contract Agent fails to comply with Section 310(b) of the TIA,
as if the Purchase Contract Agent were an indenture trustee under an indenture
qualified under the TIA, and shall fail to resign after written request therefor
by the Company or by any Holder who has been a bona fide Holder of a Unit for at
least six months;

 

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(ii) the Purchase Contract Agent shall cease to be eligible under Section 7.08
and shall fail to resign after written request therefor by the Company or by any
such Holder; or

 

(iii) the Purchase Contract Agent shall become incapable of acting or shall be
adjudged a bankrupt or insolvent or a receiver of the Purchase Contract Agent or
of its property shall be appointed or any public officer shall take charge or
control of the Purchase Contract Agent or of its property or affairs for the
purpose of rehabilitation, conservation or liquidation,

 

then, in any such case, (i) the Company by a Board Resolution may remove the
Purchase Contract Agent, or (ii) any Holder who has been a bona fide Holder of a
Unit 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
Purchase Contract Agent and the appointment of a successor Purchase Contract
Agent.

 

(e) If the Purchase Contract Agent shall resign, be removed or become incapable
of acting, or if a vacancy shall occur in the office of Purchase Contract Agent
for any cause, the Company, by a Board Resolution, shall promptly appoint a
successor Purchase Contract Agent and shall comply with the applicable
requirements of Section 7.10. If no successor Purchase Contract 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 a Unit for at
least six months, on behalf of itself and all others similarly situated, or the
Purchase Contract Agent may petition at the expense of the Company any court of
competent jurisdiction for the appointment of a successor Purchase Contract
Agent.

 

(f) The Company shall give, or shall cause such successor Purchase Contract
Agent to give, notice of each resignation and each removal of the Purchase
Contract Agent and each appointment of a successor Purchase Contract 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 Security
Register. Each notice shall include the name of the successor Purchase Contract
Agent and the address of its Corporate Trust Office.

 

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Section 7.10. Acceptance Of Appointment By Successor.

 

(a) In case of the appointment hereunder of a successor Purchase Contract Agent,
every such successor Purchase Contract Agent so appointed shall execute,
acknowledge and deliver to the Company and to the retiring Purchase Contract
Agent an instrument accepting such appointment, and thereupon the resignation or
removal of the retiring Purchase Contract Agent shall become effective and such
successor Purchase Contract Agent, without any further act, deed or conveyance,
shall become vested with all the rights, powers, agencies and duties of the
retiring Purchase Contract Agent; but, on the request of the Company or the
successor Purchase Contract Agent, such retiring Purchase Contract Agent shall,
upon payment of its charges, execute and deliver an instrument transferring to
such successor Purchase Contract Agent all the rights, powers and trusts of the
retiring Purchase Contract Agent and duly assign, transfer and deliver to such
successor Purchase Contract Agent all property and money held by such retiring
Purchase Contract Agent hereunder.

 

(b) Upon request of any such successor Purchase Contract Agent, the Company
shall execute any and all instruments for more fully and certainly vesting in
and confirming to such successor Purchase Contract Agent all such rights, powers
and agencies referred to in (a) of this Section.

 

(c) No successor Purchase Contract Agent shall accept its appointment unless at
the time of such acceptance such successor Purchase Contract Agent shall be
qualified and eligible under this Article.

 

Section 7.11. Merger, Conversion, Consolidation Or Succession To Business.

 

Any Person into which the Purchase Contract Agent may be merged or converted or
with which it may be consolidated, or any Person resulting from any merger,
conversion or consolidation to which the Purchase Contract Agent shall be a
party, or any Person succeeding to all or substantially all the corporate trust
business of the Purchase Contract Agent, shall be the successor of the Purchase
Contract Agent hereunder, provided that such Person shall be otherwise qualified
and eligible under this Article, without the execution or filing of any paper or
any further act on the part of any of the parties hereto. In case any
Certificates shall have been authenticated and executed on behalf of the
Holders, but not delivered, by the Purchase Contract Agent then in office, any
successor by merger, conversion or consolidation to such Purchase Contract Agent
may adopt such authentication and execution and deliver the Certificates so
authenticated and executed with the same effect as if such successor Purchase
Contract Agent had itself authenticated and executed such Units.

 

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Section 7.12. Preservation of Information; Communications to Holders.

 

(a) The Purchase Contract Agent shall preserve, in as current a form as is
reasonably practicable, the names and addresses of Holders received by the
Purchase Contract Agent in its capacity as Security Registrar.

 

(b) If three or more Holders (herein referred to as “Applicants”) apply in
writing to the Purchase Contract Agent, and furnish to the Purchase Contract
Agent reasonable proof that each such applicant has owned a Unit 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 Units and is accompanied by a
copy of the form of proxy or other communication which such applicants propose
to transmit, then the Purchase Contract 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 Purchase Contract
Agent of the materials to be mailed and of payment, or provision for the
payment, of the reasonable expenses of such mailing.

 

Section 7.13. No Obligations of Purchase Contract Agent.

 

Except to the extent otherwise expressly provided in this Agreement, the
Purchase Contract Agent assumes no obligations and shall not be subject to any
liability under this Agreement, the Pledge Agreement, the Remarketing Agreement
or any Purchase Contract in respect of the obligations of the Holder of any Unit
thereunder. The Company agrees, and each Holder of a Certificate, by its
acceptance thereof, shall be deemed to have agreed, that the Purchase Contract
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 Purchase Contract
Agent shall have no obligation to perform such Purchase Contracts on behalf of
the Holders, except to the extent expressly provided in Article Five hereof.
Anything contained in this Agreement to the contrary notwithstanding, in no
event shall the Purchase Contract Agent or its officers, directors, employees or
agents be liable under this Agreement, the Pledge Agreement or the Remarketing
Agreement to any third party for indirect, incidental, 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 Purchase
Contract Agent and regardless of the form of action.

 

Section 7.14. Tax Compliance.

 

(a) The Purchase Contract Agent, on its own behalf and on behalf of the Company,
will comply with all applicable certification, information reporting and
withholding (including “backup” withholding) requirements imposed by applicable
tax laws, regulations or administrative practice with respect to (i) any
payments made with respect to the Units or (ii) the issuance, delivery, holding,
transfer, redemption or exercise of rights under the Units. Such compliance
shall

 

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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 Purchase Contract Agent shall comply in accordance with the terms hereof
with any written direction received from the Company with respect to the
execution or certification of any required documentation and the application of
such requirements to particular payments or Holders or in other particular
circumstances, and may for purposes of this Agreement conclusively rely on any
such direction in accordance with the provisions of Section 7.01(a) hereof.

 

(c) The Purchase Contract 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 8

SUPPLEMENTAL AGREEMENTS

 

Section 8.01. Supplemental Agreements Without Consent of Holders.

 

Without the consent of any Holders, the Company, when authorized by a Board
Resolution, and the Purchase Contract 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 Purchase Contract Agent, to:

 

(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) evidence and provide for the acceptance of appointment hereunder by a
successor Purchase Contract Agent;

 

(c) add to the covenants of the Company for the benefit of the Holders, or
surrender any right or power herein conferred upon the Company;

 

(d) make provision with respect to the rights of Holders pursuant to the
requirements of Section 5.04(b);

 

(e) except as provided for in Section 5.04, cure any ambiguity (or formal
defect), or correct or supplement any provisions herein which may be
inconsistent with any other provisions herein; or

 

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(f) make any other provisions with respect to such matters or questions arising
under this Agreement, provided that such action shall not adversely affect the
interests of the Holders in any material respect.

 

Section 8.02. Supplemental Agreements with Consent of Holders.

 

With the consent of the Holders of not less than a majority of the Outstanding
Units voting together as one class, including without limitation the consent of
the Holders obtained in connection with a tender or an exchange offer, by Act of
said Holders delivered to the Company and the Purchase Contract Agent, the
Company, when duly authorized and the Purchase Contract Agent may enter into an
agreement or agreements supplemental hereto for the purpose of modifying in any
manner the terms of the Purchase Contracts, or the provisions of this Agreement
or the rights of the Holders in respect of the Units; provided, however, that,
except as contemplated herein, no such supplemental agreement shall, without the
unanimous consent of the Holders of each outstanding Purchase Contract affected
thereby,

 

(a) change any Payment Date;

 

(b) change the amount or the type of Collateral required to be Pledged to secure
a Holder’s obligations under the Purchase Contract, unless such change is not
adverse to the Holders, 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 or adversely alter the rights in or
to such Collateral;

 

(c) impair the right to institute suit for the enforcement of any Purchase
Contract or any Contract Adjustment Payments;

 

(d) reduce the number of shares of Common Stock or the amount of any other
property to be purchased pursuant to any Purchase Contract, increase the price
to purchase shares of Common Stock or any other property upon settlement of any
Purchase Contract or change the Purchase Contract Settlement Date or the right
to Early Settlement or Cash Merger Early Settlement or otherwise adversely
affect the Holder’s rights under the Purchase Contract;

 

(e) reduce any Contract Adjustment Payments or change any place where, or the
coin or currency in which, any Contract Adjustment Payment is payable; or

 

(f) reduce the percentage of the outstanding Purchase Contracts the consent of
whose Holders is required for any modification or amendment to the provisions of
this Agreement, the Purchase Contracts or the Pledge Agreement;

 

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provided that if any amendment or proposal referred to above would adversely
affect only the Corporate Units or the Treasury Units, then only the affected
class of Holders as of the record date for the Holders entitled to vote thereon
will be entitled to vote on such amendment or proposal, and such amendment or
proposal shall not be effective except with the consent of Holders of not less
than a majority of such class; and provided, further, that the unanimous consent
of the Holders of each outstanding Purchase Contract of such class affected
thereby shall be required to approve any amendment or proposal specified in
clauses (a) through (f) above.

 

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 8.03. 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 Purchase Contract Agent shall be provided, and
(subject to Section 7.01) shall be fully authorized and protected in relying
upon, an Officers’ Certificate and an Opinion of Counsel stating that the
execution of such supplemental agreement is authorized or permitted by this
Agreement and that any and all conditions precedent to the execution and
delivery of such supplemental agreement have been satisfied. The Purchase
Contract Agent may, but shall not be obligated to, enter into any such
supplemental agreement which affects the Purchase Contract Agent’s own rights,
duties or immunities under this Agreement or otherwise.

 

Section 8.04. 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 8.05. 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 Purchase Contract Agent, bear a notation in form
approved by the Purchase Contract 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 Purchase Contract 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 Purchase Contract Agent in exchange for outstanding Certificates.

 

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ARTICLE 9

CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE

 

Section 9.01. Covenant Not to Consolidate, Merge, Convey, Transfer or Lease
Property Except under Certain Conditions.

 

The Company covenants that it will not consolidate with, convert into, or merge
with and into, any other corporation or sell, assign, transfer, lease or convey
all or substantially all of its properties and assets to any Person, unless:

 

(a) either the Company shall be the continuing corporation, or the successor (if
other than the Company) shall be a corporation organized and existing under the
laws of the United States of America or a State thereof or the District of
Columbia and such corporation shall expressly assume all the obligations of the
Company under the Purchase Contracts, this Agreement, the Pledge Agreement, the
Indenture (including any supplement thereto) and the Remarketing Agreement by
one or more supplemental agreements in form reasonably satisfactory to the
Purchase Contract Agent and the Collateral Agent, executed and delivered to the
Purchase Contract Agent and the Collateral Agent by such corporation; and

 

(b) the Company or such successor corporation, as the case may be, shall not,
immediately after such consolidation, conversion, merger, sale, assignment,
transfer, lease or conveyance, be in default of payment obligations under the
Purchase Contracts, this Agreement, the Pledge Agreement, the Indenture
(including any supplement thereto) or the Remarketing Agreement or in material
default in the performance of any other covenants under any of the foregoing
agreements.

 

Section 9.02. Rights and Duties of Successor Corporation.

 

In case of any such merger, consolidation, share exchange, sale, assignment,
transfer, lease or conveyance and upon any such assumption by a successor
corporation in accordance with Section 9.01, such successor corporation shall
succeed to and be substituted for the Company with the same effect as if it had
been named herein as the Company. Such successor corporation thereupon may cause
to be signed, and may issue either in its own name or in the name of The PMI
Group, Inc., any or all of the Certificates evidencing Units issuable hereunder
which theretofore shall not have been signed by the Company and delivered to the
Purchase Contract Agent; and, upon the order of such successor corporation,
instead of the Company, and subject to all the terms,

 

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conditions and limitations in this Agreement prescribed, the Purchase Contract
Agent shall authenticate and execute on behalf of the Holders and deliver any
Certificates which previously shall have been signed and delivered by the
officers of the Company to the Purchase Contract Agent for authentication and
execution, and any Certificate evidencing Units which such successor corporation
thereafter shall cause to be signed and delivered to the Purchase Contract Agent
for that purpose. All the Certificates issued shall in all respects have the
same legal rank and benefit under this Agreement as the Certificates theretofore
or thereafter issued in accordance with the terms of this Agreement as though
all of such Certificates had been issued at the date of the execution hereof.

 

In case of any such merger, consolidation, share exchange, sale, assignment,
transfer, lease or conveyance, such change in phraseology and form (but not in
substance) may be made in the Certificates evidencing Units thereafter to be
issued as may be appropriate.

 

Section 9.03. Officers’ Certificate and Opinion of Counsel Given to Purchase
Contract Agent.

 

The Purchase Contract Agent, subject to Section 7.01 and Section 7.03, shall
receive an Officers’ Certificate and an Opinion of Counsel as conclusive
evidence that any such merger, consolidation, share exchange, sale, assignment,
transfer, lease or conveyance, and any such assumption, complies with the
provisions of this Article and that all conditions precedent to the consummation
of any such merger, consolidation, share exchange, sale, assignment, transfer,
lease or conveyance have been met.

 

ARTICLE 10

Covenants

 

Section 10.01. Performance Under Purchase Contracts.

 

The Company covenants and agrees for the benefit of the Holders from time to
time of the 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.

 

Section 10.02. Maintenance of Office or Agency.

 

The Company will maintain in the Borough of Manhattan, New York City an office
or agency where Certificates may be presented or surrendered for acquisition of
shares of Common Stock upon settlement of the Purchase Contracts on the Purchase
Contract Settlement Date or upon Early Settlement or Cash

 

89

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Merger Early Settlement and for transfer of Collateral upon occurrence of a
Termination Event, where Certificates may be surrendered for registration of
transfer or exchange, for a Collateral Substitution or recreation of Corporate
Units and where notices and demands to or upon the Company in respect of the
Units and this Agreement may be served. The Company will give prompt written
notice to the Purchase Contract Agent of the location, and any change in the
location, of such office or agency. The Company initially designates the
Corporate Trust Office of the Purchase Contract Agent as such office of the
Company. If at any time the Company shall fail to maintain any such required
office or agency or shall fail to furnish the Purchase Contract Agent with the
address thereof, such presentations, surrenders, notices and demands may be made
or served at the Corporate Trust Office, and the Company hereby appoints the
Purchase Contract Agent as its agent to receive all such presentations,
surrenders, notices and demands.

 

The Company may also from time to time designate one or more other offices or
agencies where Certificates may be presented or surrendered for any or all such
purposes and may from time to time rescind such designations; provided, however,
that no such designation or rescission shall in any manner relieve the Company
of its obligation to maintain an office or agency in the Borough of Manhattan,
New York City for such purposes. The Company will give prompt written notice to
the Purchase Contract 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 Units the Corporate Trust Office and
appoints the Purchase Contract Agent at its Corporate Trust Office as paying
agent in such city.

 

Section 10.03. Company to Reserve Common Stock.

 

The Company shall at all times prior to the Purchase Contract Settlement Date
reserve and keep available, free from preemptive rights, out of its authorized
but unissued Common Stock the full number of shares of Common Stock issuable
against tender of payment in respect of all Purchase Contracts constituting a
part of the Units evidenced by Outstanding Certificates.

 

Section 10.04. 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.

 

90

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Section 10.05. Statements of Officers of the Company as to Default.

 

The Company will deliver to the Purchase Contract Agent, within 120 days after
the end of each fiscal year of the Company (which as of the date hereof is
December 31) ending after the date hereof, an Officers’ Certificate, one of the
signers of which is the chief executive, chief financial or chief accounting
officer, stating whether or not to the knowledge of the signers 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 they may
have knowledge.

 

Section 10.06. ERISA.

 

Each Holder from time to time of the Units that is a Plan or who used assets of
a Plan to purchase Units hereby represents that either (i) no portion of the
assets used by such Holder to acquire the Corporate Units constitutes assets of
the Plan or (ii) the purchase or holding of the Corporate Units by such
purchaser or transferee will not constitute a non-exempt prohibited transaction
under Section 406 of ERISA or Section 4975 of the Code or similar violation
under any applicable laws.

 

Section 10.07. Tax Treatment. The Company covenants and agrees, for United
States federal, state and local income and franchise tax purposes, to (i) treat
a Holder’s acquisition of the Corporate Units as the acquisition of the Senior
Note and Purchase Contract constituting the Corporate Units and (ii) treat each
Holder as the owner of the applicable interest in the Collateral Account,
including the Senior Notes and Applicable Ownership Interests in the Treasury
Portfolio or the Treasury Securities.

 

SIGNATURES ON THE FOLLOWING PAGE

 

91

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed as of the day and year first above written.

 

THE PMI GROUP, INC.

By:

 

/s/ Donald P. Lofe, Jr.

--------------------------------------------------------------------------------

   

Name:

 

Donald P. Lofe, Jr.

   

Title:

  Executive Vice President and
Chief Financial Officer

THE BANK OF NEW YORK,

    as Purchase Contract Agent

By:

 

/s/ Michael Pitfick

--------------------------------------------------------------------------------

   

Name:

 

Michael Pitfick

   

Title:

 

Assistant Vice President

--------------------------------------------------------------------------------

EXHIBIT A

 

(FORM OF FACE OF CORPORATE UNITS CERTIFICATE)

 

For inclusion in Global Certificates only – THIS CERTIFICATE IS A GLOBAL
CERTIFICATE WITHIN THE MEANING OF THE PURCHASE CONTRACT AGREEMENT HEREINAFTER
REFERRED TO AND IS REGISTERED IN THE NAME OF CEDE & CO., AS THE NOMINEE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION (THE “DEPOSITARY”), THE
DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY. THIS CERTIFICATE IS
EXCHANGEABLE FOR CERTIFICATES REGISTERED IN THE NAME OF A PERSON OTHER THAN THE
DEPOSITARY OR ITS NOMINEE ONLY IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE
PURCHASE CONTRACT AGREEMENT AND NO TRANSFER OF THIS CERTIFICATE (OTHER THAN A
TRANSFER OF THIS CERTIFICATE AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE
DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER
NOMINEE OF THE DEPOSITARY) MAY BE REGISTERED EXCEPT IN LIMITED CIRCUMSTANCES.

 

UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITARY 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 DEPOSITARY (AND ANY PAYMENT
HEREON IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF THE DEPOSITARY), 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.]

 

No.                 

   CUSIP No.                 

 

Number of Corporate Units:                         

 

THE PMI GROUP, INC.

Corporate Units

 

This Corporate Units Certificate certifies that [Cede & Co.] is the registered
Holder of the number of Corporate Units set forth above [for inclusion in Global
Certificates only – or such other number of Corporate Units reflected in the
Schedule of Increases or Decreases in the Global Certificate attached hereto].
Each Corporate Unit consists of (i) either (a) the beneficial ownership by the

 

A-1

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Holder of $25 principal amount of Senior Notes due November 15, 2008 (the
“Senior Notes”) of The PMI Group, Inc., a Delaware corporation (the “Company”),
subject to the Pledge of such Senior Note by such Holder pursuant to the Pledge
Agreement, or (b) upon the occurrence of a Special Event Redemption prior to the
Purchase Contract Settlement Date or a Successful Remarketing of the Senior
Notes prior to the Final Remarketing Date, the Applicable Ownership Interests,
subject to the pledge of the appropriate Applicable Ownership Interests (as
specified in clause (i) of the definition of such term) in the Treasury
Portfolio by such Holder pursuant to the Pledge Agreement, and (ii) the rights
and obligations of the Holder under one Purchase Contract with the Company. All
capitalized terms used herein which are defined in the Purchase Contract
Agreement (as defined on the reverse hereof) have the meaning set forth therein.

 

Pursuant to the Pledge Agreement, the Senior Notes or the appropriate Applicable
Ownership Interests (as specified in clause (i) of the definition of such term)
in the Treasury Portfolio, as the case may be, constituting part of each
Corporate Unit evidenced hereby have been pledged to the Collateral Agent, for
the benefit of the Company, to secure the obligations of the Holder under the
Purchase Contract comprising part of such Corporate Unit.

 

The Pledge Agreement provides that all payments of the principal amount with
respect to any of the Pledged Senior Notes (as defined in the Pledge Agreement)
or the appropriate Applicable Ownership Interests (as specified in clause (i) of
the definition of such term) in the Treasury Portfolio, as the case may be, or
interest or distributions on any Pledged Senior Notes or the appropriate
Applicable Ownership Interests (as specified in clause (ii) of the definition of
such term) in the Treasury Portfolio, as the case may be, constituting part of
the Corporate Units received by the Securities Intermediary shall be paid by
wire transfer in same day funds (i) in the case of (A) interest on Pledged
Senior Notes or distributions with respect to the appropriate Applicable
Ownership Interests (as specified in clause (ii) of the definition of such term)
in the Treasury Portfolio, as the case may be, and (B) any payments of the
principal amount of any Senior Notes or with respect to the appropriate
Applicable Ownership Interests (as specified in clause (i) of the definition of
such term) in the Treasury Portfolio, as the case may be, that have been
released from the Pledge pursuant to the Pledge Agreement, to the Purchase
Contract Agent to the account designated by the Purchase Contract Agent, no
later than 2:00 p.m., New York City time, on the Business Day such payment is
received by the Securities Intermediary (provided that in the event such payment
is received by the Securities Intermediary on a day that is not a Business Day
or after 12:30 p.m., New York City time, on a Business Day, then such payment
shall be made no later than 10:30 a.m., New York City time, on the next
succeeding Business Day) and (ii) in the case of payments with respect to the
principal amount of the Pledged Senior Notes or with respect to the appropriate
Applicable Ownership Interests (as specified in clause (i) of the

 

A-2

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definition of such term) in the Treasury Portfolio, to the Company on the
Purchase Contract Settlement Date (as described herein) in accordance with the
terms of the Pledge Agreement, in full satisfaction of the respective
obligations of the Holders of the Corporate Units of which such Pledged Senior
Notes or the Applicable Ownership Interests (as specified in clause (i) of the
definition of such term) in the Treasury Portfolio, as the case may be, are a
part under the Purchase Contracts forming a part of such Corporate Units.
Interest on the Senior Notes and distributions on the appropriate Applicable
Ownership Interests (as specified in clause (ii) of the definition of such term)
in the Treasury Portfolio, as the case may be, forming part of a Corporate Units
evidenced hereby, which are payable quarterly in arrears on February 15, May 15,
August 15, and November 15 of each year, commencing February 15, 2004 (a
“Payment Date”), shall, subject to receipt thereof by the Purchase Contract
Agent from the Securities Intermediary, be paid to the Person in whose name this
Corporate Units Certificate (or a Predecessor Corporate 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 Corporate
Units Certificate to purchase, and the Company to sell, on November 15, 2006,
(the “Purchase Contract Settlement Date”), at a price equal to $25 (the “Stated
Amount”), a number of newly issued shares of common stock, par value $0.01 per
share (“Common Stock”), of the Company, equal to the Settlement Rate, unless on
or prior to the Purchase Contract Settlement Date there shall have occurred a
Termination Event or an Early Settlement or Cash Merger Early Settlement with
respect to such Purchase Contract, all as provided in the Purchase Contract
Agreement and more fully described on the reverse hereof. The purchase price
(the “Purchase Price”) for the shares of Common Stock purchased pursuant to each
Purchase Contract evidenced hereby, if not paid earlier, shall be paid on the
Purchase Contract Settlement Date by application of payment received in respect
of the principal amount with respect to any Pledged Senior Notes pursuant to the
Remarketing or the appropriate Applicable Ownership Interests (as specified in
clause (i) of the definition of such term) in the Treasury Portfolio, as the
case may be, pledged to secure the obligations under such Purchase Contract of
the Holder of the Corporate Units of which such Purchase Contract is a part.

 

Each Purchase Contract evidenced hereby obligates the holder to agree, for
United States federal, state and local income and franchise tax purposes, to (i)
treat an acquisition of the Corporate Units as an acquisition of the Senior
Notes and Purchase Contracts constituting the Corporate Units and (ii) treat
itself as owner of the applicable interest in the Collateral Account, including
the Senior Notes and the Applicable Ownership Interests (as specified in clause
(i) of the definition of such term) in the Treasury Portfolio.

 

A-3

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The Company shall pay, on each Payment Date, in respect of each Purchase
Contract forming part of a Corporate Unit evidenced hereby, an amount (the
“Contract Adjustment Payments”) equal to 2.875% per year of the Stated Amount.
Such Contract Adjustment Payments shall be payable to the Person in whose name
this Corporate Units Certificate is registered at the close of business on the
Record Date for such Payment Date.

 

Interest on the Senior Notes and distributions on the Applicable Ownership
Interests (as specified in clause (ii) of the definition of such term) and the
Contract Adjustment Payments will be payable at the office of the Purchase
Contract Agent in New York City. If the book-entry system for the Corporate
Units has been terminated, the Contract Adjustment Payments will be payable, 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 Security Register, or by
wire transfer to the account designated by such Person by a prior written notice
to the Purchase Contract Agent.

 

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
Purchase Contract Agent by manual signature, this Corporate 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-4

--------------------------------------------------------------------------------

IN WITNESS WHEREOF, the Company and the Holder specified above have caused this
instrument to be duly executed.

 

THE PMI GROUP, INC. By:  

 

--------------------------------------------------------------------------------

    Name:     Title: HOLDER SPECIFIED ABOVE (as to obligations of such Holder
under the Purchase Contracts) By:   THE BANK OF NEW YORK, not individually but
solely as attorney-in-fact of such Holder By:  

 

--------------------------------------------------------------------------------

    Name:     Title:

 

Dated:  

 

--------------------------------------------------------------------------------

 

A-5

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CERTIFICATE OF AUTHENTICATION

OF PURCHASE CONTRACT AGENT

 

This is one of the Corporate Units Certificates referred to in the within
mentioned Purchase Contract Agreement.

 

By:

 

THE BANK OF NEW YORK,

as Purchase Contract Agent

By:

 

 

--------------------------------------------------------------------------------

   

Name:

   

Title:

 

Dated:  

 

--------------------------------------------------------------------------------

 

A-6

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(FORM OF REVERSE OF CORPORATE UNITS CERTIFICATE)

 

Each Purchase Contract evidenced hereby is governed by a Purchase Contract
Agreement, dated as of November 3, 2003 (as may be supplemented from time to
time, the “Purchase Contract Agreement”), between the Company and The Bank of
New York, as Purchase Contract Agent (including its successors hereunder, the
“Purchase Contract 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 Purchase Contract Agent, the Company, and the Holders and of
the terms upon which the Corporate Units Certificates are, and are to be,
executed and delivered.

 

Each Purchase Contract evidenced hereby obligates the Holder of this Corporate
Units Certificate to purchase, and the Company to sell, on the Purchase Contract
Settlement Date at a price equal to the Stated Amount (the “Purchase Price”), a
number of shares of Common Stock equal to the Settlement Rate, unless an Early
Settlement, a Cash Merger Early Settlement or a Termination Event with respect
to the Units of which such Purchase Contract is a part shall have occurred. The
“Settlement Rate” is equal to:

 

(1) if the Adjusted Applicable Market Value (as defined below) is greater than
or equal to $47.37 (the “Threshold Appreciation Price”), 0.5278 shares of Common
Stock per Purchase Contract (such number of shares, as adjusted from time to
time, the “Minimum Share Number”);

 

(2) if the Adjusted Applicable Market Value is less than the Threshold
Appreciation Price but greater than $38.20 (the “Reference Price”), the number
of shares of Common Stock per Purchase Contract having a value equal to the
Stated Amount divided by the Applicable Market Value; and

 

(3) if the Adjusted Applicable Market Value is less than or equal to the
Reference Price, 0.6545 shares of Common Stock per Purchase Contract (such
number of shares, as adjusted from time to time, the “Maximum Share Number”),

 

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).

 

A-7

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No fractional shares of Common Stock will be issued upon settlement of Purchase
Contracts, as provided in Section 5.09 of the Purchase Contract Agreement.

 

Each Purchase Contract evidenced hereby, which is settled through Early
Settlement or Cash Merger Early Settlement, shall obligate the Holder of the
related Corporate Units 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 applicable Settlement
Rate (in the case of a Cash Merger Early Settlement).

 

The “Adjusted Applicable Market Value” means (i) prior to any adjustment of the
Fixed Settlement Rate pursuant to paragraph (i), (ii), (iii), (iv), (v), (vi),
(vii) or (x) of Section 5.04(a) of the Purchase Contract Agreement, the
Applicable Market Value, and (ii) at the time of and after any adjustment of the
Fixed Settlement Rate pursuant to paragraph (i), (ii), (iii), (iv), (v), (vi),
(vii) or (x) of Section 5.04(a) of the Purchase Contract Agreement, the
Applicable Market Value multiplied by a fraction, the numerator of which shall
be the Fixed Settlement Rate immediately after such adjustment pursuant to
paragraph (i), (ii), (iii), (iv), (v), (vi), (vii) or (x) of Section 5.04(a) of
the Purchase Contract Agreement and the denominator of which shall be the Fixed
Settlement Rate immediately prior to such adjustment; provided, however, that if
such adjustment to the Fixed Settlement Rate is required to be made pursuant to
the occurrence of any of the events contemplated by paragraph (i), (ii), (iii),
(iv), (v), (vi), (vii) or (x) of Section 5.04(a) of the Purchase Contract
Agreement during the period taken into consideration for determining the
Applicable Market Value, appropriate and customary adjustments shall be made to
the Fixed Settlement Rate.

 

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 Purchase Contract Settlement Date.

 

The “Closing Price” per share of Common Stock on any date of determination
means:

 

(1) the closing sale price as of the close of the principal trading session (or,
if no closing price is reported, the last reported sale price) per share on the
New York Stock Exchange, Inc. (the “NYSE”) on such date;

 

(2) if Common Stock is not listed for trading on the NYSE on any such date, the
closing sale price (or, if no closing price is reported, the last reported sale
price) per share as reported in the composite transactions for the principal
United States national or regional securities exchange on which Common Stock is
so listed;

 

A-8

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(3) if Common Stock is not so listed on a United States national or regional
securities exchange, the last closing sale price per share as reported by the
Nasdaq National Market, Inc.;

 

(4) if Common Stock is not so reported by the Nasdaq National Market, Inc., 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

 

(5) if the bid price referred to above is not available, the market value of
Common Stock on such date as determined by a nationally recognized independent
investment banking firm retained by the Company for purposes of determining the
Closing Price.

 

A “Trading Day” means a day on which Common Stock (1) 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 (2) 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 Common
Stock.

 

In accordance with the terms of the Purchase Contract Agreement, the Holder of
this Corporate Units Certificate may pay the Purchase Price for the shares of
Common Stock purchased pursuant to each Purchase Contract evidenced hereby by
effecting a Cash Settlement, an Early Settlement or, if applicable, a Cash
Merger Early Settlement or from the proceeds of the Applicable Ownership
Interests (as specified in clause (i) of the definition of such term) in the
Treasury Portfolio or a Remarketing of the related Pledged Senior Notes. Unless
the Treasury Portfolio has replaced the Senior Notes as a component of Corporate
Units, a Holder of Corporate Units who (1) does not, on or prior to 5:00 p.m.
(New York City time) on the fifth Business Day immediately preceding the
Purchase Contract Settlement Date, notify the Purchase Contract Agent of its
intention to effect a Cash Settlement, or who does so notify the Purchase
Contract Agent but fails to make an effective Cash Settlement on or prior to
5:00 p.m. (New York City time) on the fourth Business Day immediately preceding
the Purchase Contract Settlement Date, or (2) on or prior to 5:00 p.m. (New York
City time) on the fifth Business Day prior to the Purchase Contract Settlement
Date, does not make an effective Early Settlement, shall pay the Purchase Price
for the shares of Common Stock to be delivered under the related Purchase
Contract from the proceeds of the sale of the related Pledged Senior Notes held
by the Collateral Agent in the Remarketing unless the Holder has previously made
a Cash Merger Early Settlement. Unless the Treasury Portfolio has replaced the
Senior Notes as a component of Corporate Units, such sale will be made by the
Remarketing Agent pursuant to the terms of the Remarketing Agreement on the
Final Remarketing Date. If the Treasury Portfolio has replaced

 

A-9

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the Senior Notes as a component of Corporate Units, a Holder of Corporate Units
who does not notify the Purchase Contract Agent, on or prior to 5:00 p.m. (New
York City time) on the fifth Business Day immediately preceding the Purchase
Contract Settlement Date of its intention to effect a Cash Settlement shall pay
the Purchase Price for the shares of Common Stock to be delivered under the
related Purchase Contract from the proceeds at maturity of the Applicable
Ownership Interests (as defined in clause (i) of the definition of such term) in
the Treasury Portfolio.

 

As provided in the Purchase Contract Agreement, upon the occurrence of a Failed
Final Remarketing, unless a Holder of a Pledged Senior Note has notified the
Purchase Contract Agent of his intent to effect a Cash Settlement of the
Purchase Contract and delivered the Purchase Price to the Collateral Agent
pursuant to Section 5.02(e)(ii) of the Purchase Contract Agreement, such Holder
shall be deemed to have exercised such Holder’s Put Right and to have elected to
pay the Purchase Price under the Purchase Contract out of a portion of the
proceeds from the Put Right in full satisfaction of such Holder’s obligations
under the Purchase Contract. In the event of the Company’s failure to pay the
Put Price when due, the Company shall be deemed to have netted such Holder’s
obligation to pay the Company the Purchase Price under the Purchase Contracts
against the Company’s obligation to pay the Put Price, in full satisfaction of
such Holder’s obligation under the Purchase Contracts.

 

The Company shall not be obligated to issue any shares of Common Stock in
respect of a Purchase Contract or deliver any certificates therefor to the
Holder unless it shall have received payment of the aggregate Purchase Price for
the shares of Common Stock to be purchased thereunder in the manner set forth in
the Purchase Contract Agreement.

 

Under the terms of the Pledge Agreement and the Purchase Contract Agreement, the
Purchase Contract Agent will be entitled to exercise the voting and any other
consensual rights pertaining to the Pledged Senior Notes, but only to the extent
instructed in writing by the Holders. Upon receipt of notice of any meeting at
which holders of Senior Notes are entitled to vote or upon any solicitation of
consents, waivers or proxies of holders of Senior Notes, the Purchase Contract
Agent shall, as soon as practicable thereafter, mail, first class, postage
pre-paid, to the Corporate Units Holders a notice:

 

(1) containing such information as is contained in the notice or solicitation;

 

(2) stating that each Holder on the record date set by the Purchase Contract
Agent therefor (which, to the extent possible, shall be the same date as the
record date for determining the holders of Senior Notes, as the case may be,
entitled to vote) shall be entitled to instruct the Purchase Contract Agent as
to the exercise of the voting rights pertaining to the Senior Notes underlying
such Holder’s Corporate Units; and

 

A-10

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(3) stating the manner in which such instructions may be given.

 

Upon the written request of the Corporate Units Holders on such record date
received by the Purchase Contract Agent at least six days prior to such meeting,
the Purchase Contract 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 Senior Notes, as the case
may be, as to which any particular voting instructions are received. In the
absence of specific instructions from the Holder of a Corporate Unit, the
Purchase Contract Agent shall abstain from voting the Senior Note evidenced by
such Corporate Unit. The Company hereby agrees, if applicable, to solicit
Holders of Corporate Units to timely instruct the Purchase Contract Agent in
order to enable the Purchase Contract Agent to vote the Senior Notes. The
Holders of Corporate Units shall have no voting or other rights in respect of
Common Stock.

 

Upon the occurrence of a Special Event Redemption, the Collateral Agent shall
surrender the Pledged Senior Notes against delivery of an amount equal to the
aggregate Redemption Price of the Pledged Senior Notes and shall deposit the
funds in the Collateral Account in exchange for the Pledged Senior Notes.
Thereafter, pursuant to the terms of the Pledge Agreement, the Collateral Agent
shall cause the Securities Intermediary to apply an amount equal to the
aggregate Redemption Amount of such funds to purchase on behalf of the Holders
of Corporate Units the Treasury Portfolio and promptly (a) transfer the
Applicable Ownership Interests (as specified in clause (i) of the definition of
such term) in the Treasury Portfolio to the Collateral Account to secure the
obligations of each Holder of Corporate Units to purchase shares of Common Stock
under the Purchase Contracts constituting a part of such Corporate Units, (b)
transfer the Applicable Ownership Interests (as specified in clause (ii) of the
definition of such term) in the Treasury Portfolio to the Purchase Contract
Agent for the benefit of the Holders of such Corporate Units and (c) remit the
remaining portion of such funds to the Purchase Contract Agent for payment to
the Holders of such Corporate Units.

 

Upon the occurrence of a Successful Remarketing of Senior Notes prior to the
Final Remarketing Date, pursuant to the terms of the Remarketing Agreement, the
Remarketing Agent will apply an amount equal to the Treasury Portfolio Purchase
Price to purchase on behalf of the Holders of Corporate Units, the Treasury
Portfolio, and, after deducting all or a portion of the Remarketing Fee to the
extent permitted under the terms of the Remarketing Agreement, promptly remit
the remaining portion of such proceeds of such Successful Remarketing to the
Purchase Contract Agent for payment to the Holders of such Corporate Units.

 

A-11

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Following the occurrence of (i) a Special Event Redemption prior to the Purchase
Contract Settlement Date, or (ii) a Successful Remarketing of the Senior Notes
prior to the Final Remarketing Date, the Holders of Corporate Units and the
Collateral Agent shall have such security interest rights and obligations with
respect to the Applicable Ownership Interests (as specified in clause (i) of the
definition of such term) in the Treasury Portfolio as the Holder of Corporate
Units and the Collateral Agent had in respect of the Senior Notes, as the case
may be, subject to the Pledge of the Applicable Ownership Interest (as specified
in clause (i) of the definition of such term) as provided in the Pledge
Agreement and any reference herein to the Senior Notes shall be deemed to be a
reference to such Treasury Portfolio.

 

The Corporate Units Certificates are issuable only in registered form and only
in denominations of a single Corporate Unit and any integral multiple thereof.
The transfer of any Corporate Units Certificate will be registered and Corporate
Units Certificates may be exchanged as provided in the Purchase Contract
Agreement. The Security 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 Purchase Contract
Agent may require payment of a sum sufficient to cover any tax or other
governmental charge payable in connection therewith. A Holder who elects to
substitute a Treasury Security for a Senior Note, thereby creating Treasury
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 Corporate Units remains in effect, such
Corporate Units shall not be separable into its constituent parts, and the
rights and obligations of the Holder of such Corporate Units in respect of the
Senior Notes and Purchase Contract constituting such Corporate Units may be
transferred and exchanged only as a Corporate Unit.

 

Unless the Treasury Portfolio has replaced the Senior Notes as a component of
the Corporate Units, and subject to the conditions set forth in the Purchase
Contract Agreement, the Holder of Corporate Units may substitute, at any time on
or prior to 5:00 p.m. (New York City time) on the fifth Business Day immediately
preceding the Purchase Contract Settlement Date, for the Pledged Senior Notes
securing such Holder’s obligations under the related Purchase Contracts,
Treasury Securities in an aggregate principal amount at maturity equal to the
aggregate principal amount of the Pledged Senior Notes in accordance with the
terms of the Purchase Contract Agreement and the Pledge Agreement. From and
after such Collateral Substitution, each Unit for which such Pledged Treasury
Securities secures the Holder’s obligation under the Purchase Contract shall be
referred to as a “Treasury Unit”. A Holder may make such Collateral Substitution
only in integral multiples of 40 Corporate Units for 40 Treasury Units.

 

A-12

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If the Treasury Portfolio has replaced the Senior Notes as a component of the
Corporate Units, a Holder may, at any time on or prior to the second Business
Day immediately preceding the Purchase Contract Settlement Date, substitute
Treasury Securities for the Applicable Ownership Interests in the Treasury
Portfolio, but only in integral multiples of 16,000 Corporate Units. In such an
event, the Holder shall transfer Treasury Securities to the Collateral Agent,
and the Purchase Contract Agent shall instruct the Collateral Agent to release
the Pledge and transfer to the Holder the appropriate Applicable Ownership
Interests in the Treasury Portfolio.

 

The Company shall pay, on each Payment Date, the Contract Adjustment Payments
payable in respect of each Purchase Contract to the Person in whose name the
Corporate Units Certificate evidencing such Purchase Contract 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 Purchase Contract Agent
in New York City. If the book-entry system for the Corporate Units has been
terminated, the Contract Adjustment Payments will be payable, 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 Security Register, or by wire
transfer to the account designated by such Person by a prior written notice to
the Purchase Contract Agent.

 

The Purchase Contracts and all obligations and rights of the Company and the
Holders thereunder, including, without limitation, the rights of the Holders to
receive and the obligation of the Company to pay any Contract Adjustment
Payments, shall immediately and automatically terminate, without the necessity
of any notice or action by any Holder, the Purchase Contract Agent or the
Company, if, on or prior to the Purchase Contract Settlement Date, a Termination
Event shall have occurred. Upon the occurrence of a Termination Event, the
Company shall promptly but in no event later than two Business Days thereafter
give written notice to the Purchase Contract Agent, the Collateral Agent and the
Holders, at their addresses as they appear in the Security Register. Upon and
after the occurrence of a Termination Event, the Collateral Agent shall release
the Pledged Senior Notes or the appropriate Applicable Ownership Interests (as
specified in clause (i) of the definition of such term) (as defined in the
Pledge Agreement) in the Treasury Portfolio, as the case may be, in accordance
with the provisions of the Pledge Agreement. A Corporate Unit shall thereafter
represent the right to receive the Senior Note or the appropriate Applicable
Ownership Interests in the Treasury Portfolio forming a part of such Corporate
Unit in accordance with the terms of, and except as set forth in, the Purchase
Contract Agreement and the Pledge Agreement.

 

Subject to and upon compliance with the provisions of the Purchase Contract
Agreement, at the option of the Holder thereof, Purchase Contracts underlying
Units may be settled early (“Early Settlement”) at any time on or

 

A-13

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prior to 5:00 p.m. (New York City time) on the fifth Business Day immediately
preceding the Purchase Contract Settlement Date as provided in the Purchase
Contract Agreement. In order to exercise the right to effect Early Settlement
with respect to any Purchase Contract evidenced by this Certificate, the Holder
of this Corporate Units Certificate shall deliver to the Purchase Contract Agent
at the Corporate Trust Office prior to the time specified in the Purchase
Contract Agreement an Election to Settle Early form set forth below duly
completed and accompanied by payment in the form of immediately available funds
payable to the order of the Company in an amount (the “Early Settlement Amount”)
equal to the sum of:

 

(i) the product of (A) the Stated Amount times (B) the number of Purchase
Contracts with respect to which the Holder has elected to effect Early
Settlement, plus

 

(ii) if such delivery is made with respect to any Purchase Contracts during the
period from the close of business on any Record Date next preceding any Payment
Date to the opening of business on such Payment Date, an amount equal to the
Contract Adjustment Payments payable on such Payment Date with respect to such
Purchase Contracts.

 

Upon Early Settlement of Purchase Contracts by a Holder of the related Units,
the Pledged Senior Notes or Pledged Applicable Ownership Interests (as specified
in clause (i) of the definition of such term) underlying such Units shall be
released from the Pledge as provided in the Pledge Agreement and the Holder
shall be entitled to receive a number of shares of Common Stock on account of
each Purchase Contract forming part of a Corporate Unit as to which Early
Settlement is effected equal to the Minimum Share Number (the “Early Settlement
Rate”)as adjusted from time to time under Section 5.04 of the Purchase Contract
Agreement.

 

Upon the occurrence of a Cash Merger, a Holder of Corporate Units may effect
Cash Merger Early Settlement of the Purchase Contract underlying such Corporate
Units pursuant to the terms of Section 5.04(b)(ii) of the Purchase Contract
Agreement. Upon Cash Merger Early Settlement of Purchase Contracts by a Holder
of the related Corporate Units, the Pledged Senior Notes or Pledged Applicable
Ownership Interests (as specified in clause (i) of the definition of such term)
in the Treasury Portfolio underlying such Corporate Units shall be released from
the Pledge as provided in the Pledge Agreement.

 

Upon registration of transfer of this Corporate 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 Purchase Contract Agent
pursuant to the Purchase Contract Agreement), under the terms of the Purchase
Contract Agreement and the Purchase Contracts evidenced hereby and the

 

A-14

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transferor shall be released from the obligations under the Purchase Contracts
evidenced by this Corporate 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 Corporate Units Certificate, by its acceptance hereof,
irrevocably authorizes the Purchase Contract Agent to enter into and perform the
related Purchase Contracts forming part of the Corporate 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 thereof,
covenants and agrees to perform its obligations under such Purchase Contracts,
consents to the provisions of the Purchase Contract Agreement, irrevocably
authorizes the Purchase Contract Agent to enter into and perform the Purchase
Contract Agreement and the Pledge Agreement on its behalf as its
attorney-in-fact, and consents to, and agrees to be bound by, the Pledge of such
Holder’s right, title and interest in and to the Collateral Account, including
the Senior Notes or the appropriate Applicable Ownership Interests (as specified
in clause (i) of the definition of such term) in the Treasury Portfolio, as the
case may be, underlying this Corporate 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 with respect to the aggregate
principal amount of the Pledged Senior Notes or the appropriate Applicable
Ownership Interests (as specified in clause (i) of the definition of such term)
in the Treasury Portfolio, as the case may be, on the Purchase Contract
Settlement Date shall be paid by the Collateral Agent to the Company in
satisfaction of such Holder’s obligations under such Purchase Contract and such
Holder shall acquire no right, title or interest in such payments.

 

Subject to certain exceptions, the provisions of the Purchase Contract Agreement
may be amended with the consent of the Holders of a majority of the Purchase
Contracts.

 

The Purchase Contracts shall be governed by, and construed in accordance with,
the laws of the State of New York.

 

Prior to due presentment of this Certificate for registration of transfer, the
Company, the Purchase Contract Agent and its Affiliates and any agent of the
Company or the Purchase Contract Agent may treat the Person in whose name this
Corporate Units Certificate is registered as the owner of the Corporate Units
evidenced hereby for the purpose of receiving payments of interest payable on
the Senior Notes, receiving payments of Contract Adjustment Payments (subject to
any applicable record date), performance of the Purchase Contracts and for all

 

A-15

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other purposes whatsoever, whether or not any payments in respect thereof be
overdue and notwithstanding any notice to the contrary, and neither the Company,
the Purchase Contract 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 at the
offices of the Purchase Contract Agent.

 

A-16

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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 of     

                                                                               
                      

TENANT:    as tenants by the entireties JT TEN:    as joint tenants with right
of survivorship and not as tenants in common

 

 

Additional abbreviations may also be used though not in the above list.

FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and transfer(s)
unto                                                      

(Please insert Social Security or Taxpayer I.D. or other Identifying Number of
Assignee)

                                                                               
                                        
                                        
                                                            

(Please print or type name and address including Postal Zip Code of Assignee)

 

the within Corporate Units Certificates and all rights thereunder, hereby
irrevocably constituting and appointing attorney
                                        , to transfer said Corporate Units
Certificates on the books of The PMI Group, Inc., 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 Corporate Units Certificates in every
particular, without alteration or enlargement or any change whatsoever.

                                       
                                     Signature Guarantee:

--------------------------------------------------------------------------------

 

A-17

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SETTLEMENT INSTRUCTIONS

 

The undersigned Holder directs that a certificate for shares of Common Stock
deliverable upon settlement on or after the Purchase Contract Settlement Date of
the Purchase Contracts underlying the number of Corporate Units evidenced by
this Corporate 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 name
of and delivered to a Person other than the Holder, please (i) print such
Person’s name and address and (ii) provide a guarantee of your signature:   

REGISTERED HOLDER

 

Please print name and address of Registered Holder:

      

--------------------------------------------------------------------------------

  

--------------------------------------------------------------------------------

Name    Name

--------------------------------------------------------------------------------

  

--------------------------------------------------------------------------------

Address    Address

--------------------------------------------------------------------------------

  

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

  

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

  

--------------------------------------------------------------------------------

Social Security or other Taxpayer Identification Number, if any     

 

A-18

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ELECTION TO SETTLE EARLY/CASH MERGER EARLY SETTLEMENT

 

The undersigned Holder of this Corporate Units Certificate hereby irrevocably
exercises the option to effect [Early Settlement] [Cash Merger Early Settlement
following a Cash Merger] in accordance with the terms of the Purchase Contract
Agreement with respect to the Purchase Contracts underlying the number of
Corporate Units evidenced by this Corporate Units Certificate specified below.
The undersigned Holder directs that a certificate for shares of Common Stock or
other securities deliverable upon such [Early Settlement] [Cash Merger Early
Settlement] be registered in the name of, and delivered, together with a check
in payment for any fractional share and any Corporate Units Certificate
representing any Corporate Units evidenced hereby as to which [Early Settlement]
[Cash Merger Early Settlement] of the related Purchase Contracts is not
effected, to the undersigned at the address indicated below unless a different
name and address have been indicated below. Pledged Senior Notes or the
appropriate Applicable Ownership Interests in the Treasury Portfolio, as the
case may be, deliverable upon such [Early Settlement] [Cash Merger Early
Settlement] will be transferred in accordance with the transfer instructions set
forth below. If shares are to be registered in the name of a Person other than
the undersigned, the undersigned will pay any transfer tax payable incident
thereto.

 

Dated:

--------------------------------------------------------------------------------

  

Signature

--------------------------------------------------------------------------------

Signature Guarantee:

--------------------------------------------------------------------------------

    

 

A-19

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Number of Units evidenced hereby as to which [Early Settlement] [Cash Merger
Early Settlement] of the related Purchase Contracts is being elected:

 

If shares of Common Stock or Corporate Units Certificates are to be registered
in the name of and delivered to and Pledged Senior Notes or the Applicable
Ownership Interests in the Treasury Portfolio, as the case may be, are to be
transferred to a Person other than the Holder, please print such Person’s name
and address:    REGISTERED HOLDER      Please print name and address of
Registered Holder:

--------------------------------------------------------------------------------

  

--------------------------------------------------------------------------------

Name    Name

--------------------------------------------------------------------------------

  

--------------------------------------------------------------------------------

Address    Address

--------------------------------------------------------------------------------

  

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

  

--------------------------------------------------------------------------------

--------------------------------------------------------------------------------

  

--------------------------------------------------------------------------------

Social Security or other Taxpayer Identification Number, if any     

 

A-20

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Transfer Instructions for Pledged Senior Notes or the Applicable Ownership
Interests in the Treasury Portfolio, as the case may be, transferable upon
[Early Settlement] [Cash Merger Early Settlement] or a Termination Event:

 

--------------------------------------------------------------------------------

 

--------------------------------------------------------------------------------

 

--------------------------------------------------------------------------------

 

A-21

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TO BE ATTACHED TO GLOBAL CERTIFICATES]

 

SCHEDULE OF INCREASES OR DECREASES IN GLOBAL CERTIFICATE

 

The following increases or decreases in this Global Certificate have been made:

 

Date

--------------------------------------------------------------------------------

  

Amount of increase

in Number of

Corporate Units

evidenced by the

Global Certificate

--------------------------------------------------------------------------------

  

Amount of decrease

in Number of

Corporate Units
evidenced by the

Global Certificate

--------------------------------------------------------------------------------

  

Number of Corporate
Units evidenced by

this Global
Certificate following
such decrease or
increase

--------------------------------------------------------------------------------

   Signature of
authorized signatory
of Purchase Contract
Agent

--------------------------------------------------------------------------------

 

 

A-22

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EXHIBIT B

 

(FORM OF FACE OF TREASURY UNIT CERTIFICATE)

 

For inclusion in Global Certificate only – THIS CERTIFICATE IS A GLOBAL
CERTIFICATE WITHIN THE MEANING OF THE PURCHASE CONTRACT AGREEMENT HEREINAFTER
REFERRED TO AND IS REGISTERED IN THE NAME OF CEDE & CO., AS NOMINEE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION (THE “DEPOSITARY”), THE
DEPOSITARY OR ANOTHER NOMINEE OF THE DEPOSITARY. THIS CERTIFICATE IS
EXCHANGEABLE FOR CERTIFICATES REGISTERED IN THE NAME OF A PERSON OTHER THAN THE
DEPOSITARY OR ITS NOMINEE ONLY IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE
PURCHASE CONTRACT AGREEMENT AND NO TRANSFER OF THIS CERTIFICATE (OTHER THAN A
TRANSFER OF THIS CERTIFICATE AS A WHOLE BY THE DEPOSITARY TO A NOMINEE OF THE
DEPOSITARY OR BY A NOMINEE OF THE DEPOSITARY TO THE DEPOSITARY OR ANOTHER
NOMINEE OF THE DEPOSITARY) MAY BE REGISTERED EXCEPT IN LIMITED CIRCUMSTANCES.

 

UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITARY 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 DEPOSITARY (AND ANY PAYMENT
HEREON IS MADE TO CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF THE DEPOSITARY), 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.]

 

No.             

   CUSIP No.

Number of Treasury Units:                        

 

THE PMI GROUP, INC.

Treasury Units

 

This Treasury Units Certificate certifies that [Cede & Co.] is the registered
Holder of the number of Treasury Units set forth above [for inclusion in Global
Certificates only – or such other number of Treasury Units reflected in the
Schedule of Increases or Decreases in the Global Certificate attached hereto].
Each Treasury Unit consists of (i) a 1/40 undivided beneficial ownership
interest of a Treasury Security having a principal amount at maturity equal to
$1,000, subject to the Pledge of such Treasury Security by such Holder pursuant
to the

 

B-1

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Pledge Agreement, and (ii) the rights and obligations of the Holder under one
Purchase Contract with The PMI Group, Inc., a Delaware corporation (the
“Company”). All capitalized terms used herein which are defined in the Purchase
Contract Agreement (as defined on the reverse hereof) have the meaning set forth
therein.

 

Pursuant to the Pledge Agreement, the Treasury Securities constituting part of
each Treasury Unit evidenced hereby have been pledged to the Collateral Agent,
for the benefit of the Company, to secure the obligations of the Holder under
the Purchase Contract comprising part of such Treasury Unit.

 

Each Purchase Contract evidenced hereby obligates the Holder of this Treasury
Units Certificate to purchase, and the Company, to sell, on November 15, 2006
(the “Purchase Contract Settlement Date”), at a price equal to $25 (the “Stated
Amount”), a number of newly issued shares of common stock, par value $0.01 per
share (“Common Stock”), of the Company, equal to the Settlement Rate, unless
prior to or on the Purchase Contract Settlement Date there shall have occurred a
Termination Event, an Early Settlement or a Cash Merger Early Settlement with
respect to such Purchase Contract, all as provided in the Purchase Contract
Agreement and more fully described on the reverse hereof. The purchase price
(the “Purchase Price”) for the shares of Common Stock purchased pursuant to each
Purchase Contract evidenced hereby, if not paid earlier, shall be paid on the
Purchase Contract Settlement Date by application of the proceeds from the
Treasury Securities at maturity pledged to secure the obligations of the Holder
under such Purchase Contract of the Treasury Units of which such Purchase
Contract is a part.

 

Each Purchase Contract evidenced hereby obligates the holder to agree, for
United States federal, state and local income and franchise tax purposes, to (i)
treat an acquisition of the Treasury Units as an acquisition of the Treasury
Securities and Purchase Contracts constituting the Treasury Units and (ii) treat
itself as owner of the applicable interest in the Collateral Account, including
the Treasury Securities.

 

The Company shall pay, on each Payment Date, in respect of each Purchase
Contract forming part of a Treasury Unit evidenced hereby, an amount (the
“Contract Adjustment Payments”) equal to 2.875% per year of the Stated Amount.
Such Contract Adjustment Payments shall be payable to the Person in whose name
this Treasury 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 Purchase
Contract Agent in New York City. If the book-entry system for the Treasury Units
has been terminated, the Contract Adjustment Payments will be payable, at the
option of the Company, by check mailed to the address of the

 

B-2

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Person entitled thereto at such Person’s address as it appears on the Security
Register, or by wire transfer to the account designated by such Person by a
prior written notice to the Purchase Contract Agent.

 

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
Purchase Contract Agent by manual signature, this Treasury 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-3

--------------------------------------------------------------------------------

IN WITNESS WHEREOF, the Company and the Holder specified above have caused this
instrument to be duly executed.

 

THE PMI GROUP, INC.

By:

 

 

--------------------------------------------------------------------------------

   

Name:

   

Title:

HOLDER SPECIFIED ABOVE (as to obligations of such Holder under the Purchase
Contracts)

By:

  THE BANK OF NEW YORK, not individually but solely as attorney-in-fact or such
Holder

By:

 

 

--------------------------------------------------------------------------------

   

Name:

   

Title:

 

Dated:

 

 

--------------------------------------------------------------------------------

 

B-4

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CERTIFICATE OF AUTHENTICATION OF

PURCHASE CONTRACT AGENT

 

This is one of the Treasury Units referred to in the within-mentioned Purchase
Contract Agreement.

 

THE BANK OF NEW YORK,

    as Purchase Contract Agent

By:

 

 

--------------------------------------------------------------------------------

   

Name:

   

Title:

 

Dated:

 

 

--------------------------------------------------------------------------------

 

B-5

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(REVERSE OF TREASURY UNIT CERTIFICATE)

 

Each Purchase Contract evidenced hereby is governed by a Purchase Contract
Agreement, dated as of November 3, 2003 (as may be supplemented from time to
time, the “Purchase Contract Agreement”) between the Company and The Bank of New
York, as Purchase Contract Agent (including its successors thereunder, herein
called the “Purchase Contract Agent”), to which the Purchase Contract Agreement
and supplemental agreements thereto reference, is hereby made for a description
of the respective rights, limitations of rights, obligations, duties and
immunities thereunder of the Purchase Contract Agent, the Company and the
Holders and of the terms upon which the Treasury Units Certificates are, and are
to be, executed and delivered.

 

Each Purchase Contract evidenced hereby obligates the Holder of this Treasury
Units Certificate to purchase, and the Company to sell, on the Purchase Contract
Settlement Date at a price equal to the Stated Amount (the “Purchase Price”) a
number of newly issued shares of Common Stock equal to the Settlement Rate,
unless an Early Settlement, a Cash Merger Early Settlement or a Termination
Event with respect to the Units of which such Purchase Contract is a part shall
have occurred. The “Settlement Rate” is equal to:

 

(1) if the Adjusted Applicable Market Value (as defined below) is greater than
or equal to $47.37 (the “Threshold Appreciation Price”), 0.5278 shares of Common
Stock per Purchase Contract (such number of shares, as adjusted from time to
time, the “Minimum Share Number”);

 

(2) if the Adjusted Applicable Market Value is less than the Threshold
Appreciation Price but greater than $38.20 (the “Reference Price”), the number
of shares of Common Stock per Purchase Contract having a value equal to the
Stated Amount divided by the Applicable Market Value; and

 

(3) if the Adjusted Applicable Market Value is less than or equal to the
Reference Price, 0.6545 shares of Common Stock per Purchase Contract (such
number of shares, as adjusted from time to time, the “Maximum Share Number”),

 

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 Section 5.09 of the Purchase Contract Agreement.

 

B-6

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Each Purchase Contract evidenced hereby, which is settled through Early
Settlement or Cash Merger Early Settlement shall obligate the Holder of the
related Treasury Units 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 applicable Settlement
Rate (in the case of a Cash Merger Early Settlement).

 

The “Adjusted Applicable Market Value” means (i) prior to any adjustment of the
Fixed Settlement Rate pursuant to paragraph (i), (ii), (iii), (iv), (v), (vi),
(vii) or (x) of Section 5.04(a) of the Purchase Contract Agreement, the
Applicable Market Value, and (ii) at the time of and after any adjustment of the
Fixed Settlement Rate pursuant to paragraph (i), (ii), (iii), (iv), (v), (vi),
(vii) or (x) of Section 5.04(a) of the Purchase Contract Agreement, the
Applicable Market Value multiplied by a fraction, the numerator of which shall
be the Fixed Settlement Rate immediately after such adjustment pursuant to
paragraph (i), (ii), (iii), (iv), (v), (vi), (vii) or (x) of Section 5.04(a) of
the Purchase Contract Agreement and the denominator of which shall be the Fixed
Settlement Rate immediately prior to such adjustment; provided, however, that if
such adjustment to the Fixed Settlement Rate is required to be made pursuant to
the occurrence of any of the events contemplated by paragraph (i), (ii), (iii),
(iv), (v), (vi), (vii) or (x) of Section 5.04(a) of the Purchase Contract
Agreement during the period taken into consideration for determining the
Applicable Market Value, appropriate and customary adjustments shall be made to
the Fixed Settlement Rate.

 

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 Purchase Contract Settlement Date.

 

The “Closing Price” per share of Common Stock on any date of determination
means:

 

(1) the closing sale price as of the close of the principal trading session (or,
if no closing price is reported, the last reported sale price) per share on the
New York Stock Exchange, Inc. (the “NYSE”) on such date;

 

(2) if Common Stock is not listed for trading on the NYSE on any such date, the
closing sale price (or, if no closing price is reported, the last reported sale
price) per share as reported in the composite transactions for the principal
United States national or regional securities exchange on which Common Stock is
so listed;

 

(3) if Common Stock is not so listed on a United States national or regional
securities exchange, the last closing sale price per share as reported by the
Nasdaq National Market, Inc.;

 

B-7

--------------------------------------------------------------------------------

(4) if Common Stock is not so reported by the Nasdaq National Market, Inc., 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

 

(5) if the bid price referred to above is not available, the market value of
Common Stock on such date as determined by a nationally recognized independent
investment banking firm retained by the Company for purposes of determining the
Closing Price.

 

A “Trading Day” means a day on which Common Stock (1) 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 (2) 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 Common
Stock.

 

In accordance with the terms of the Purchase Contract Agreement, the Holder of
this Treasury Unit shall pay the Purchase Price for the shares of the Common
Stock purchased pursuant to each Purchase Contract evidenced hereby either by
effecting an Early Settlement or, if applicable, a Cash Merger Early Settlement
of each such Purchase Contract or by applying a principal amount of the Pledged
Treasury Securities underlying such Holder’s Treasury Unit equal to the Stated
Amount of such Purchase Contract to the purchase of the Common Stock. A Holder
of Treasury Units who (1) on or prior to 5:00 p.m. (New York City time) on the
fifth Business Day prior to the Purchase Contract Settlement Date, does not make
an effective Early Settlement or (2) on or prior to 5:00 p.m. (New York City
time) on the fifth Business Day prior to the Purchase Contract Settlement Date,
does not make an effective Cash Merger Early Settlement, shall pay the Purchase
Price for the shares of Common Stock to be issued under the related Purchase
Contract from the proceeds of the Pledged Treasury Securities.

 

The Company shall not be obligated to issue any shares of Common Stock in
respect of a Purchase Contract or deliver any certificates therefor to the
Holder unless it shall have received payment of the aggregate purchase price for
the shares of Common Stock to be purchased thereunder in the manner set forth in
the Purchase Contract Agreement.

 

The Treasury Units Certificates are issuable only in registered form and only in
denominations of a single Treasury Unit and any integral multiple thereof. The
transfer of any Treasury Units Certificate will be registered and Treasury Units
Certificates may be exchanged as provided in the Purchase Contract Agreement.
The Security 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

 

B-8

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registration of transfer or exchange, but the Company and the Purchase Contract
Agent may require payment of a sum sufficient to cover any tax or other
governmental charge payable in connection therewith. A Holder who elects to
substitute Senior Notes or Applicable Ownership Interests in the Treasury
Portfolio, for Treasury Securities, thereby recreating Corporate Units, shall be
responsible for any fees or expenses associated therewith. Except as provided in
the Purchase Contract Agreement, for so long as the Purchase Contract underlying
a Treasury Unit remains in effect, such Treasury Unit shall not be separable
into its constituent parts, and the rights and obligations of the Holder of such
Treasury Unit in respect of the Treasury Security and the Purchase Contract
constituting such Treasury Unit may be transferred and exchanged only as a
Treasury Unit.

 

Unless the Treasury Portfolio has replaced the Senior Notes as a component of
the Corporate Units and subject to the conditions set forth in the Purchase
Contract Agreement, a Holder of Treasury Units may recreate, at any time on or
prior to 5:00 p.m. (New York City time) on the fifth Business Day immediately
preceding the Purchase Contract Settlement Date, Corporate Units by delivering
to the Securities Intermediary Senior Notes with an aggregate principal amount,
equal to the aggregate principal amount at maturity of the Pledged Treasury
Securities in exchange for the release of such Pledged Treasury Securities in
accordance with the terms of the Purchase Contract Agreement and the Pledge
Agreement. From and after such substitution, the Holder’s Units shall be
referred to as a “Corporate Unit”. Any such creation of Corporate Units may be
effected only in multiples of 40 Treasury Units for 40 Corporate Units.

 

If the Treasury Portfolio has replaced the Senior Notes as a component of the
Corporate Units, a Holder may, at any time on or prior to the second Business
Day immediately preceding the Purchase Contract Settlement Date, substitute
Treasury Securities for the Applicable Ownership Interests in the Treasury
Portfolio, but only in integral multiples of 16,000 Treasury Units. In such an
event, the Holder shall transfer Treasury Securities to the Collateral Agent,
and the Purchase Contract Agent shall instruct the Collateral Agent to release
the Pledge of and transfer to the Holder the appropriate Applicable Ownership
Interests in the Treasury Portfolio.

 

The Company shall pay, on each Payment Date, the Contract Adjustment Payments
payable in respect of each Purchase Contract to the Person in whose name the
Treasury Units Certificate evidencing such Purchase Contract 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 Purchase Contract Agent
in New York City. If the book-entry system for the Corporate Units has been
terminated, the Contract Adjustment Payments will be payable, 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 Security Register, or by wire
transfer to the account designated by such Person by a prior written notice to
the Purchase Contract Agent.

 

B-9

--------------------------------------------------------------------------------

The Purchase Contracts and all obligations and rights of the Company and the
Holders thereunder, including, without limitation, the rights of the Holders to
receive and the obligation of the Company to pay any Contract Adjustment
Payments, shall immediately and automatically terminate, without the necessity
of any notice or action by any Holder, the Purchase Contract Agent or the
Company, if, on or prior to the Purchase Contract Settlement Date, a Termination
Event shall have occurred. Upon the occurrence of a Termination Event, the
Company shall promptly but in no event later than two Business Days thereafter
give written notice to the Purchase Contract Agent, the Collateral Agent and the
Holders, at their addresses as they appear in the Security Register. Upon and
after the occurrence of a Termination Event, the Collateral Agent shall release
the Pledged Treasury Securities (as defined in the Pledge Agreement) in
accordance with the provisions of the Pledge Agreement. A Treasury Unit shall
thereafter represent the right to receive the interest in the Treasury Security
forming a part of such Treasury Unit, in accordance with the terms of and except
as set forth in, the Purchase Contract Agreement and the Pledge Agreement.

 

Subject to and upon compliance with the provisions of the Purchase Contract
Agreement, at the option of the Holder thereof, Purchase Contracts underlying
Units may be settled early (“Early Settlement”) as provided in the Purchase
Contract Agreement. In order to exercise the right to effect Early Settlement
with respect to any Purchase Contract evidenced by this Certificate, the Holder
of this Treasury Units Certificate shall deliver to the Purchase Contract Agent
at the Corporate Trust Office an Election to Settle Early form set forth below
duly completed and accompanied by payment in the form of immediately available
funds payable to the order of the Company in an amount (the “Early Settlement
Amount”) equal to the sum of:

 

(i) the product of (A) the Stated Amount times (B) the number of Purchase
Contracts with respect to which the Holder has elected to effect Early
Settlement, plus

 

(ii) if such delivery is made with respect to any Purchase Contracts during the
period from the close of business on any Record Date next preceding any Payment
Date to the opening of business on such Payment Date, an amount equal to the
Contract Adjustment Payments payable on such Payment Date with respect to such
Purchase Contracts.

 

Upon Early Settlement of Purchase Contracts by a Holder of the related Units,
the Pledged Treasury Securities underlying such Units shall be released from the
Pledge as provided in the Pledge Agreement and the Holder shall be entitled to
receive a number of shares of Common Stock on account of each

 

B-10

--------------------------------------------------------------------------------

Purchase Contract forming part of a Treasury Unit as to which Early Settlement
is effected equal to the Minimum Share Number (the “Early Settlement Rate”)
adjusted from time to time under Section 5.04 of the Purchase Contract
Agreement.

 

Upon the occurrence of a Cash Merger, a Holder of Treasury Units may effect Cash
Merger Early Settlement of the Purchase Contract underlying such Treasury Units
pursuant to the terms of Section 5.04(b)(ii) of the Purchase Contract Agreement.
Upon Cash Merger Early Settlement of Purchase Contracts by a Holder of the
related Treasury Units, the Pledged Treasury Securities underlying such Treasury
Units shall be released from the Pledge as provided in the Pledge Agreement.

 

Upon registration of transfer of this Treasury 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 Purchase Contract Agent pursuant to
the Purchase Contract Agreement), under the terms of the Purchase Contract
Agreement and the Purchase Contracts evidenced hereby and the transferor shall
be released from the obligations under the Purchase Contracts evidenced by this
Treasury 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 Treasury Units Certificate, by its acceptance hereof,
authorizes the Purchase Contract Agent to enter into and perform the related
Purchase Contracts forming part of the Treasury 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 thereof,
covenants and agrees to perform its obligations under such Purchase Contracts,
consents to the provisions of the Purchase Contract Agreement, authorizes the
Purchase Contract Agent to enter into and perform the Purchase Contract
Agreement and the Pledge Agreement on its behalf as its attorney-in-fact, and
consents to the Pledge of the Treasury Securities underlying this Treasury 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 to the aggregate principal amount of the Pledged Treasury Securities
on the Purchase Contract Settlement Date shall be paid by the Collateral Agent
to the Company in satisfaction of such Holder’s obligations under such Purchase
Contract and such Holder shall acquire no right, title or interest in such
payments.

 

B-11

--------------------------------------------------------------------------------

Subject to certain exceptions, the provisions of the Purchase Contract Agreement
may be amended with the consent of the Holders of a majority of the Purchase
Contracts.

 

The Purchase Contracts shall for all purposes be governed by, and construed in
accordance with, the laws of the State of New York.

 

Prior to due presentment of this Certificate for registration or transfer, the
Company, the Purchase Contract Agent and its Affiliates and any agent of the
Company or the Purchase Contract Agent may treat the Person in whose name this
Treasury Units Certificate is registered as the owner of the Treasury Units
evidenced hereby for the purpose of receiving payments of interest on the
Treasury Securities, receiving payments of Contract Adjustment Payments (subject
to any applicable record date), performance of the Purchase Contracts and for
all other purposes whatsoever, whether or not any payments in respect thereof be
overdue and notwithstanding any notice to the contrary, and neither the Company,
the Purchase Contract 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 at the
offices of the Purchase Contract Agent.

 

B-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 of

                                           
                                                               

TENANT:

  

as tenants by the entireties

JT TEN:

   as joint tenants with right of survivorship and not as tenants in common

 

Additional abbreviations may also be used though not in the above list.

 

--------------------------------------------------------------------------------

 

FOR VALUE RECEIVED, the undersigned hereby sell(s), assign(s) and transfer(s)
unto                                                      

(Please insert Social Security or Taxpayer I.D. or other Identifying Number of
Assignee)

                                                                               
                                        
                                        
                                                            

(Please print or type name and address including Postal Zip Code of Assignee)

 

the within Treasury Units Certificates and all rights thereunder, hereby
irrevocably constituting and appointing attorney
                                        , to transfer said Treasury Units
Certificates on the books of The PMI Group, Inc., 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 Treasury Units Certificates in every
particular, without alteration or enlargement or any change whatsoever.

                                       
                                     Signature Guarantee:

--------------------------------------------------------------------------------

 

B-13

--------------------------------------------------------------------------------

SETTLEMENT INSTRUCTIONS

 

The undersigned Holder directs that a certificate for shares of Common Stock
deliverable upon settlement on or after the Purchase Contract Settlement Date of
the Purchase Contracts underlying the number of Treasury Units evidenced by this
Treasury 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:

--------------------------------------------------------------------------------

  

--------------------------------------------------------------------------------

If shares are to be registered in the name of and delivered to a Person other
than the Holder, please (i) print such Person’s name and address and (ii)
provide a guarantee of your signature:   

Signature

Signature Guarantee:

--------------------------------------------------------------------------------

(if assigned to another person)

 

REGISTERED HOLDER

    

Please print name and address of Registered Holder:

 

--------------------------------------------------------------------------------

  

--------------------------------------------------------------------------------

Name

  

Name

 

--------------------------------------------------------------------------------

  

--------------------------------------------------------------------------------

Address

  

Address

 

--------------------------------------------------------------------------------

  

--------------------------------------------------------------------------------

 

--------------------------------------------------------------------------------

  

--------------------------------------------------------------------------------

 

--------------------------------------------------------------------------------

  

--------------------------------------------------------------------------------

 

Social Security or other

Taxpayer Identification

Number, if any

 

 

B-14

--------------------------------------------------------------------------------

ELECTION TO SETTLE EARLY/CASH MERGER EARLY SETTLEMENT

 

The undersigned Holder of this Treasury Units Certificate hereby irrevocably
exercises the option to effect [Early Settlement] [Cash Merger Early Settlement
upon a Cash Merger] in accordance with the terms of the Purchase Contract
Agreement with respect to the Purchase Contracts underlying the number of
Treasury Units evidenced by this Treasury Units Certificate specified below. The
option to effect [Early Settlement] [Cash Merger Early Settlement] may be
exercised only with respect to Purchase Contracts underlying Treasury Units with
an aggregate Stated Amount equal to $1,000 or an integral multiple thereof. The
undersigned Holder directs that a certificate for shares of Common Stock or
other securities deliverable upon such [Early Settlement] [Cash Merger Early
Settlement] be registered in the name of, and delivered, together with a check
in payment for any fractional share and any Treasury Units Certificate
representing any Treasury Units evidenced hereby as to which Cash Merger Early
Settlement of the related Purchase Contracts is not effected, to the undersigned
at the address indicated below unless a different name and address have been
indicated below. Pledged Treasury Securities deliverable upon such [Early
Settlement] [Cash Merger Early Settlement] will be transferred in accordance
with the transfer instructions set forth below. If shares are to be registered
in the name of a Person other than the undersigned, the undersigned will pay any
transfer tax payable incident thereto.

 

Dated:

--------------------------------------------------------------------------------

  

Signature

--------------------------------------------------------------------------------

Signature Guarantee:

--------------------------------------------------------------------------------

    

 

B-15

--------------------------------------------------------------------------------

Number of Units evidenced hereby as to which [Early Settlement] [Cash Merger
Early Settlement] of the related Purchase Contracts is being elected:

 

If shares of Common Stock or Treasury Units Certificates are to be registered in
the name of and delivered to and Treasury Securities are to be transferred to a
Person other than the Holder, please print such Person’s name and address:  

REGISTERED HOLDER

   

Please print name and address of

Registered Holder:

 

--------------------------------------------------------------------------------

   

Name

       

 

--------------------------------------------------------------------------------

   

Name

 

--------------------------------------------------------------------------------

   

Address

   

 

--------------------------------------------------------------------------------

 

 

--------------------------------------------------------------------------------

 

--------------------------------------------------------------------------------

 

Address

 

--------------------------------------------------------------------------------

       

--------------------------------------------------------------------------------

   

--------------------------------------------------------------------------------

Social Security or other

 

--------------------------------------------------------------------------------

Taxpayer Identification

   

Number, if any

   

 

 

B-16

--------------------------------------------------------------------------------

Transfer Instructions for Pledged Treasury Securities Transferable upon [Early
Settlement] [Cash Merger Early Settlement] or a Termination Event:

 

--------------------------------------------------------------------------------

 

--------------------------------------------------------------------------------

 

--------------------------------------------------------------------------------

 

B-17

--------------------------------------------------------------------------------

TO BE ATTACHED TO GLOBAL CERTIFICATES

 

SCHEDULE OF INCREASES OR DECREASES IN GLOBAL CERTIFICATE

 

The following increases or decreases in this Global Certificate have been made:

 

Date

--------------------------------------------------------------------------------

 

Amount of increase

in Number of

Treasury Units
evidenced by the
Global Certificate

--------------------------------------------------------------------------------

 

Amount of decrease

in Number of

Treasury Units
evidenced by the

Global Certificate

--------------------------------------------------------------------------------

   Number of Treasury
Units evidenced by
this Global
Certificate following
such decrease or
increase

--------------------------------------------------------------------------------

   Signature of
authorized signatory
of Purchase Contract
Agent

--------------------------------------------------------------------------------

 

 

B-18

--------------------------------------------------------------------------------

EXHIBIT C

 

INSTRUCTION TO PURCHASE CONTRACT AGENT

 

The Bank of New York

The Purchase Contract Agent

101 Barclay Street, Floor 8W

New York, NY 10286

Attention: Corporate Trust Administration

Fax: 212-815-5707

 

Re:    [             Corporate Units] [             Treasury Units] of The PMI
Group, Inc., a Delaware corporation (the “Company”).

 

The undersigned Holder hereby notifies you that it has delivered to
[            ], as Securities Intermediary, for credit to the Collateral
Account, $             aggregate principal amount of [Senior Notes] [Treasury
Securities] in exchange for the [Pledged Senior Notes] [Pledged Treasury
Securities] [Pledged Applicable Ownership Interests] held in the Collateral
Account, in accordance with the Pledge Agreement, dated as of November 3, 2003
(the “Pledge Agreement”; unless otherwise defined herein, terms defined in the
Pledge Agreement are used herein as defined therein), between you, the Company,
the Collateral Agent, the Custodial Agent and the Securities Intermediary. The
undersigned Holder has paid all applicable fees and expenses 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 Senior
Notes] [Pledged Treasury Securities] related to such [Corporate Units] [Treasury
Units] [Pledged Applicable Ownership Interests].

 

Date:

--------------------------------------------------------------------------------

  

--------------------------------------------------------------------------------

    

Signature

Signature Guarantee:

--------------------------------------------------------------------------------

 

C-1

--------------------------------------------------------------------------------

Please print name and address of Registered Holder:

 

 

--------------------------------------------------------------------------------

  

 

--------------------------------------------------------------------------------

Name

  

Social Security or other Taxpayer

Identification Number, if any

Address

    

 

--------------------------------------------------------------------------------

    

 

--------------------------------------------------------------------------------

    

 

--------------------------------------------------------------------------------

    

 

--------------------------------------------------------------------------------

    

 

 

C-2

--------------------------------------------------------------------------------

EXHIBIT D

 

NOTICE FROM PURCHASE CONTRACT AGENT

TO HOLDERS

 

(Transfer of Collateral upon Occurrence of a Termination Event)

 

[HOLDER]

 

--------------------------------------------------------------------------------

 

--------------------------------------------------------------------------------

Attention:

Telecopy:                     

 

  Re: [             Corporate Units] [             Treasury Units] of The PMI
Group, Inc., a Delaware corporation (the “Company”)

 

Please refer to the Purchase Contract Agreement, dated as of November 3, 2003
(the “Purchase Contract Agreement”; unless otherwise defined herein, terms
defined in the Purchase Contract Agreement are used herein as defined therein),
between the Company and the undersigned, as Purchase Contract Agent and as
attorney-in-fact for the holders of Corporate Units and Treasury Units from time
to time.

 

We hereby notify you that a Termination Event has occurred and that [the Senior
Notes] [Applicable Ownership Interests (as specified in clause (i) of the
definition of such term) in the Treasury Portfolio] [the Treasury Securities]
compromising a portion of your ownership interest in              [Corporate
Units] [Treasury Units] have been released and are being held by us for your
account pending receipt of transfer instructions with respect to such [Senior
Notes][Applicable Ownership Interests][Treasury Securities] (the “Released
Securities”).

 

Pursuant to Section 3.15 of the Purchase Contract Agreement, we hereby request
written transfer instructions with respect to the Released Securities. Upon
receipt of your instructions and upon transfer to us of your [Corporate
Units][Treasury Units] effected through book-entry or by delivery to us of your
[Corporate Units Certificate][Treasury Units Certificate], we shall transfer the
Released Securities by book-entry transfer or other appropriate procedures, in
accordance with your instructions. In the event you fail to effect such transfer
or delivery, the Released Securities and any distributions thereon, shall be
held in our name, or a nominee in trust for your benefit, until such time as
such [Corporate Units][Treasury Units] are transferred or your [Corporate Units

 

D-1

--------------------------------------------------------------------------------

Certificate] [Treasury Units Certificate] is surrendered or satisfactory
evidence is provided that such [Corporate Units Certificate][Treasury Units
Certificate] has been destroyed, lost or stolen, together with any
indemnification that we or the Company may require.

 

Date:

     

By:    Bank of New York,

  as the Purchase Contract Agent

       

 

--------------------------------------------------------------------------------

       

Name:

       

Title:        Authorized Signatory

 

 

D-2

--------------------------------------------------------------------------------

EXHIBIT E

 

NOTICE TO SETTLE BY CASH

 

The Bank of New York

The Purchase Contract Agent

101 Barclay Street, Floor 8W

New York, NY 10286

Attention: Corporate Trust Administration

Fax: 212-815-5707

 

  Re:              Corporate Units of The PMI Group, Inc., a Delaware
corporation (the “Company”)

 

The undersigned Holder hereby irrevocably notifies you in accordance with
Section 5.02 of the Purchase Contract Agreement, dated as of November 3, 2003
(the “Purchase Contract Agreement”; unless otherwise defined herein, terms
defined in the Purchase Contract Agreement are used herein as defined therein),
between the Company and you, as Purchase Contract Agent and as attorney-in-fact
for the Holders of the Purchase Contracts, that such Holder has elected to pay
to the Securities Intermediary for deposit in the Collateral Account, on or
prior to 5:00 p.m. (New York City time) on the [fourth] Business Day immediately
preceding the Purchase Contract Settlement Date (in lawful money of the United
States by certified or cashiers’ check or wire transfer, in immediately
available funds), $             as the Purchase Price for the shares of Common
Stock issuable to such Holder by the Company with respect to             
Purchase Contracts on the Purchase Contract Settlement Date. The undersigned
Holder hereby instructs you to notify promptly the Collateral Agent of the
undersigned Holders’ election to make such Cash Settlement with respect to the
Purchase Contracts related to such Holder’s Corporate Units.

 

Date:

--------------------------------------------------------------------------------

  

 

--------------------------------------------------------------------------------

    

Signature

    

Signature Guarantee:

--------------------------------------------------------------------------------

Please print name and address of Registered Holder:

    

 

--------------------------------------------------------------------------------

    

 

--------------------------------------------------------------------------------

    

 

E-1

--------------------------------------------------------------------------------

EXHIBIT F

 

NOTICE FROM PURCHASE CONTRACT AGENT

TO COLLATERAL AGENT

(Settlement of Purchase Contract through Remarketing)

 

Bank of New York

The Collateral Agent

101 Barclay Street, Floor 8W

New York, NY 10286

Attention: Corporate Trust Administration

Fax: 212-815-5707

 

  Re:              Corporate Units of The PMI Group, Inc., a Delaware
corporation (the “Company”)

 

Please refer to the Purchase Contract Agreement, dated as of November 3, 2003
(the “Purchase Contract Agreement”; unless otherwise defined herein, terms
defined in the Purchase Contract Agreement are used herein as defined therein),
between the Company and the undersigned, as Purchase Contract Agent and as
attorney-in-fact for the Holders of Corporate Units from time to time.

 

In accordance with Section 5.02 of the Purchase Contract Agreement and, based on
notices of [Early Settlements][Cash Settlements] received from Holders of
Corporate Units as of 5:00 p.m. (New York City time), on the fifth Business Day
immediately preceding the [Initial] [Final] Remarketing Date, we hereby notify
you that an aggregate principal amount of $             Senior Notes are to be
tendered for purchase in the Remarketing.

 

Date:

     

By:

 

Bank of New York, as the Purchase Contract Agent

       

By:

 

 

--------------------------------------------------------------------------------

           

Name:

           

Title:        Authorized Signatory

 

F-1