-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, Ldv+l0lPbiRc8EQS63O+R3aF5D8V3BK9gUzP29oKHcZoPPoRBOFTBxUq22jz8rng 0U3a8BrHxj0T03Go51Rfkg== 0000904454-02-000074.txt : 20020416 0000904454-02-000074.hdr.sgml : 20020416 ACCESSION NUMBER: 0000904454-02-000074 CONFORMED SUBMISSION TYPE: SC 13D/A PUBLIC DOCUMENT COUNT: 3 FILED AS OF DATE: 20020409 SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: TRIAD HOSPITALS INC CENTRAL INDEX KEY: 0001074771 STANDARD INDUSTRIAL CLASSIFICATION: SERVICES-GENERAL MEDICAL & SURGICAL HOSPITALS, NEC [8062] IRS NUMBER: 752816101 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D/A SEC ACT: 1934 Act SEC FILE NUMBER: 005-56393 FILM NUMBER: 02605263 BUSINESS ADDRESS: STREET 1: 13455 NOEL RD SUITE 2000 CITY: DALLAS STATE: TX ZIP: 75240 BUSINESS PHONE: 9727892732 MAIL ADDRESS: STREET 1: 13455 NOEL RD SUITE 2000 CITY: DALLAS STATE: TX ZIP: 75240 FORMER COMPANY: FORMER CONFORMED NAME: TRIAD HOSPITALS LLC DATE OF NAME CHANGE: 19981207 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: WELSH CARSON ANDERSON STOWE VIII LP CENTRAL INDEX KEY: 0001071870 STATE OF INCORPORATION: DE FILING VALUES: FORM TYPE: SC 13D/A BUSINESS ADDRESS: STREET 1: 320 PARK AVENUE STREET 2: SUITE 2500 CITY: NEW YORK STATE: NY ZIP: 10022 BUSINESS PHONE: 2128415755 MAIL ADDRESS: STREET 1: 320 PARK AVENUE STREET 2: SUITE 2500 CITY: NEW YORK STATE: NY ZIP: 10022 SC 13D/A 1 s13da_0408-2002triad.txt SCHEDULE 13D, AMENDMENT NO. 4 CUSIP No. 89579K 10 9 Page 1 of 5 Pages SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 SCHEDULE 13D (Rule 13d-101) INFORMATION TO BE INCLUDED IN STATEMENTS FILED PURSUANT TO RULE 13d-1(a) AND AMENDMENTS THERETO FILED PURSUANT TO RULE 13d-2(a) (Amendment No. 4)1 Triad Hospitals, Inc. - ---------------------------------------------------------------------------- (Name of Issuer) Common Stock, $.01 par value - ---------------------------------------------------------------------------- (Title of Class of Securities) 89579K 10 9 - ---------------------------------------------------------------------------- (CUSIP Number) Welsh, Carson, Anderson William J. Hewitt, Esq. & Stowe Reboul, MacMurray, Hewitt, 320 Park Avenue, Suite 2500 Maynard & Kristol New York, New York 10022 45 Rockefeller Plaza Attention: Jonathan M. Rather New York, New York 10111 Tel. (212) 893-9500 Tel. (212) 841-5700 - ---------------------------------------------------------------------------- (Name, Address and Telephone Number of Person Authorized to Receive Notices and Communications) March 28, 2002 - ---------------------------------------------------------------------------- (Date of Event Which Requires Filing of This Statement) If the filing person has previously filed a statement on Schedule 13G to report the acquisition which is the subject of this Schedule 13D, and is filing this schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g), check the following box [ ]. - -------- 1The remainder of this cover page shall be filled out for a reporting person's initial filing on this form with respect to the subject class of securities, and for any subsequent amendment containing information which would alter disclosures provided in a prior cover page. The information required on the remainder of this cover page shall not be deemed to be "filed" for the purpose of Section 18 of the Securities Exchange Act of 1934 or otherwise subject to the liabilities of that section of the Act but shall be subject to all other provisions of the Act. CUSIP No. 89579K 10 9 Page 2 of 5 Pages 1) Name of Reporting Person Welsh, Carson, Anderson and I.R.S. Identification & Stowe VIII, L.P. No. of Above Person, if an Entity (Voluntary) - ----------------------------------------------------------------------------- 2) Check the Appropriate Box (a) [ ] if a Member of a Group (b) [ ] - ----------------------------------------------------------------------------- 3) SEC Use Only - ----------------------------------------------------------------------------- 4) Source of Funds - ----------------------------------------------------------------------------- 5) Check if Disclosure of Legal Proceedings Is Not Applicable Required Pursuant to Items 2(d) or 2(e) - ----------------------------------------------------------------------------- 6) Citizenship or Place of Organization Delaware - ----------------------------------------------------------------------------- Number of 7) Sole Voting 5,762,726 shares of Shares Beneficially Power Common Stock Owned by Each Reporting Person ---------------------------------------- 8) Shared Voting Power -0- ---------------------------------------- 9) Sole Disposi- 5,762,726 shares of tive Power Common Stock ---------------------------------------- 10) Shared Dis- positive Power -0- ---------------------------------------- 11) Aggregate Amount Beneficially 5,762,726 shares of Owned by Each Reporting Person Common Stock ---------------------------------------- 12) Check if the Aggregate Amount in Row (11) Excludes Certain Shares - ------------------------------------------------------------------------------ 13) Percent of Class Represented by 8.0% Amount in Row (11) - ------------------------------------------------------------------------------ 14) Type of Reporting Person PN CUSIP No. 89579K 10 9 Page 3 of 5 Pages Amendment No. 4 to Schedule 13D ------------------------------- Reference is hereby made to the statement on Schedule 13D filed with the Commission on May 3, 2001, Amendment No. 1 thereto filed on September 5, 2001, Amendment No. 2 thereto filed on January 9, 2002 and Amendment No.3 thereto filed on March 20, 2002 (as so amended,the "Schedule 13D"). Terms defined in the Schedule 13D are used herein as so defined. Item 4. Purpose of Transaction. ---------------------- Item 4 is hereby amended by adding the following: Bruce K. Anderson entered into a PEACS Agreement and a Pledge Agreement (together, the "PEACS Agreements") on March 28, 2002 with Bank of America ("BofA") with respect to 200,000 shares of Common Stock, as described in the letter agreement of confirmation dated as of March 28, 2002 (the "Confirmation"). Pursuant to the Confirmation, Mr. Anderson has agreed to sell to BofA up to an aggregate 200,000 shares over the course of the year ending May 30, 2003 at a per share sale price of $43.6116. The actual number of shares of Common Stock to be delivered by Mr. Anderson will be determined pursuant to a formula described in Item 6 below. Item 6. Contracts, Arrangements, Understandings or Relationships With ------------------------------------------------------------- Respect to Securities of the Issuer. ----------------------------------- Item 6 is hereby amended and restated to read in its entirety as follows: Pursuant to the Confirmation, Bruce K. Anderson and BofA entered into the PEACS Agreements with respect to 200,000 shares of Common Stock. On the third business day following the Friday of each week commencing June 7, 2002 through May 30, 2003 (each a "Settlement Date"), Mr. Anderson will sell to BofA up to the number of shares of Common Stock (the "Delivered Shares") representing the product of (i)800 and (ii) the number of trading days in the period from the preceding Settlement Date up to and including the current Settlement Date upon which the closing price per share of Common Stock equaled or exceeded $36.1422. As payment for such Delivered Shares, on each Settlement Date BofA will pay to Mr. Anderson a purchase price of $43.6116 for each Delivered Share. In addition, as collateral for his obligation to deliver the "Delivered Shares," on March 28, 2002, Mr. Anderson and BofA entered into the Pledge Agreement whereby Mr. Anderson granted to BofA a security interest in the 200,000 shares of Common Stock. Item 7. Materials to be Filed as Exhibits. --------------------------------- Item 7 is hereby amended by adding the following: Exhibit A - Letter Agreement of Confirmation between Bruce K. Anderson and Bank of America, dated March 28, 2002. CUSIP No. 89579K 10 9 Page 4 of 5 Pages Exhibit B - Pledge Agreement between Bruce K. Anderson and Bank of America, dated March 28, 2002. CUSIP No. 89579K 10 9 Page 5 of 5 Pages Signature --------- After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. WELSH, CARSON, ANDERSON & STOWE VIII, L.P. By: WCAS VIII Associates, LLC, General Partner By: /s/ Jonathan Rather --------------------------- Managing Member Dated: April 9, 2002 EX-99.A4 3 exa_0408-2002triad.txt LETTER AGREEMENT EXHIBIT A March 15, 2002 To: Welsh, Carson, Anderson & Stowe VIII, L.P. 320 Park Avenue New York, NY 10022 Telephone: 212-893-9500 Facsimile: 212-893-9575 From: Bank of America, N.A. c/o Banc of America Securities LLC Equity Financial Products 9 West 57th Street, 40th floor New York, NY 10019 Telephone: 212-583-8373 Facsimile: 212-230-8610 Re: Forward Delivery Transaction Reference: NY-8535 The purpose of this letter agreement is to confirm the terms and conditions of the Transaction entered into between Bank of America, N.A. (either "BofA" or "Party A") and Welsh, Carson, Anderson & Stowe VIII, L.P. (either the "Counterparty" or "Party B") on the Trade Date specified below (the "Transaction"). This letter agreement constitutes a "Confirmation" as referred to in the ISDA Master Agreement specified below. The definitions and provisions contained in the 1996 ISDA Equity Derivatives Definitions (the "Equity Definitions"), as published by the International Swaps and Derivatives Association, Inc., are incorporated into this Confirmation. In the event of any inconsistency between the Equity Definitions and this Confirmation, this Confirmation shall govern. This Confirmation evidences a complete binding agreement between the Counterparty and BofA as to the terms of the Transaction to which this Confirmation relates. This Transaction shall be considered to be a Share Transaction for purposes of the Equity Definitions. Each party is hereby advised, and each such party acknowledges, that the other party has engaged in, or refrained from engaging in, substantial financial transactions and has taken other material actions in reliance upon the parties' entry into the Transaction to which this Confirmation relates on the terms and conditions set forth below. 1. If the Counterparty and BofA have entered into an ISDA Master Agreement (the "Agreement"), then this Confirmation supplements, forms a part of, and is subject to, that Agreement, as amended and supplemented from time to time. All provisions contained in the Agreement govern this Confirmation except as expressly modified below. If the Counterparty and BofA have not entered into an ISDA Master Agreement, then they agree to use all reasonable efforts to promptly negotiate, execute and deliver an agreement in the form of the ISDA Master Agreement (Multicurrency-Cross Border) (the "ISDA Form"), with such modifications as the Counterparty and BofA will in good faith agree. Upon the execution of such an agreement, this Confirmation will supplement, form a part of, and be subject to, that agreement. All provisions contained or incorporated by reference in that agreement upon its execution will govern this Confirmation except as expressly modified below. Until the parties execute and deliver that agreement, this Confirmation, together with all other documents relating to the ISDA Form (each a "Confirmation") confirming transactions (each a "Transaction") entered into between us (notwithstanding anything to the contrary in a Confirmation), shall supplement, form a part of, and be subject to an agreement in the form of the ISDA Form as if we had executed an agreement in such form (without any Schedule, but with the elections made herein) on the Trade Date of the first such Transaction between us (such agreement, or the ISDA Form, hereinafter the "Agreement"). In the event of any inconsistency between the provisions of the Agreement and this Confirmation, this Confirmation will prevail for the purpose of this Transaction. 2. The terms of the particular Transaction to which this Confirmation relates are as follows: (a) General Terms: Trade Date: March 15, 2002 Effective Date: May 20, 2002 Shares: The common shares of Triad Hospitals, Inc. (the "Issuer") (Exchange symbol "TRI") Exchange: New York Stock Exchange Related Exchanges: Chicago Board Options Exchange, Chicago Mercantile Exchange and Pacific Stock Exchange Maturity Date: The final Valuation Date (expected to be May 15, 2003) Exchange Business Day: Any day on which there is trading of the Shares on the Exchange Settlement Currency: USD Clearance System: The customary manner for delivery of Shares in certificated form bearing a Rule 145 restrictive legend. (b) Determination of Number of Shares to be Delivered: Number of Shares to be Delivered: For each Settlement Date, the sum of the Daily Forward Delivery Amounts for each Valuation Date that has occurred up to and including the Settlement Valuation Date with respect to such Settlement Date for which settlement has not occurred. Daily Forward Delivery Amount: For each Valuation Date on which a Forward Delivery Event occurs (on a per day, non-cumulative basis), 4,000 Shares. For each other Valuation Date, zero Shares. Forward Delivery Event: Any Valuation Date on which the Closing Price is greater than the Threshold Price. Closing Price: The closing price per Share on the Exchange at the Valuation Time on each Valuation Date Valuation Time: At the close of trading during the regular trading session on the Exchange Valuation Date: Each of the 250 Exchange Business Days immediately following the Effective Date, unless there is a Market Disruption Event on any such day. If there is a Market Disruption Event on such a day, then the Valuation Date that would have occurred on such day shall be postponed and shall be the first succeeding Exchange Business Day on which there is no Market Disruption Event, unless there is a Market Disruption Event on each of the five Exchange Business Days immediately following the original date that would have been the Valuation Date (the "Scheduled Valuation Date"). In that case, (i) that fifth Exchange Business Day shall be deemed to be the Valuation Date, for such Exchange Business Day and each of the five immediately preceding Exchange Business Days, notwithstanding the Market Disruption Event, (ii) the Calculation Agent shall determine whether or not a Forward Delivery Event has occurred for such Exchange Business Day and each of the five immediately preceding Exchange Business Days based on its good faith estimate of the closing price for the Share that would have prevailed but for that Market Disruption Event as of the Valuation Time on that fifth Exchange Business Day and such good faith estimate shall be the Closing Price. Any Valuation Dates that occur on the same day as a result of the postponements set forth hereof shall be counted separately for purposes of determining the Maturity Date. For the avoidance of doubt, the first two lines of Section 4.3(a) of the Equity Definitions are amended to read: 'Section 4.3 Market Disruption Event. (a) "Market Disruption Event" in relation to a Forward Delivery Transaction means:'. Threshold Price: U.S. $34.2278 Forward Delivery Price: U.S. $41.7905 (c) Physical Settlement Terms: Physical Settlement: Applicable, unless the Counterparty elects Cash Settlement in accordance with the terms set forth below. If Physical Settlement is applicable, on each Settlement Date, BofA shall pay to Counterparty an amount expressed in the Settlement Currency equal to the Settlement Price, and Counterparty shall deliver to BofA the Number of Shares to be Delivered through the Clearance System on a delivery versus payment basis. For the avoidance of doubt, it is understood that physical delivery of certificates for Shares bearing a Rule 145 restrictive legend will be an appropriate manner of delivery. Settlement Price: The Number of Shares to be Delivered multiplied by the Forward Delivery Price(subject to the Additional Conditions as set forth below) Settlement Valuation Date: The Friday of each week, from and including May 24, 2002, to and and including the Maturity Date, or if such day is not an Exchange Business Day, the next following Exchange Business Day, unless there is a Market Disruption Event on such day in which case the terms as set forth under the definition of "Valuation Date" shall apply Settlement Date: The third Clearance System Business Day following each Settlement Valuation Date, unless a Settlement Disruption Event prevents delivery of the Shares on such day. If a Settlement Disruption Event prevents delivery on such day, then the Settlement Date will be the first succeeding day on which delivery of the Shares can take place through the relevant Clearance System unless a Settlement Disruption Event prevents settlement on each of the 10 relevant Clearance System Business Days immediately following the original date that, but for the Settlement Disruption Event, would have been the Settlement Date. In that case, (a) if such Shares can be delivered in any other commercially reasonable manner, then the Settlement Date will be the first day on which settlement of a sale of Shares executed on that 10th relevant Clearance System Business Day customarily would take place using such other commercially reasonable manner of delivery (which other manner of delivery will be deemed the relevant Clearance System for the purposes of the delivery of the relevant Shares), and (b) if such Shares cannot be delivered in any other commercially reasonable manner, then the Settlement Date will be postponed until delivery can be effected through the relevant Clearance System or in any other commercially reasonable manner. With respect to each Settlement Date, the provisions of Sections 6.5, 6.6, 6.7, 6.8 and 6.10 of the Equity Definitions will be applicable, except that all references in such provisions to "Physically-Settled option Transaction" shall be read as references to a "Forward Delivery Transaction". Additional Conditions: If Physical Settlement is applicable the Counterparty shall to the satisfaction of BofA cause the Shares to be delivered on each Settlement Date without any legend restricting transfer on the certificate evidencing such Shares other than a Rule 145 restrictive legend. The Counterparty will use commercially reasonable efforts to assist BofA in obtaining the removal of any Rule 145 restrictive legend in order to effectuate the settlement of a resale of such Shares by BofA or an affiliate of BofA in a transaction effected in accordance with Rule 145(d)(1) or (2) under the Securities Act of 1933, as amended (a "Rule 145(d) Sale"), including but not limited to, the delivery of certificates or documents as to matters of fact regarding the Counterparty required by the Transfer Agent or the Issuer in connection with such sales. (d) Cash Settlement Terms: Option to Cash Settle: Counterparty shall have the right, but not the obligation, to cash settle any Daily Forward Delivery Amount, in whole, but not in part, by executing to and delivering written notice specifying that Cash Settlement applies on any Currency Business Day that is at least five (5) Currency Business Days prior to the applicable Settlement Valuation Date. Settlement Price: The Number of Shares to be Delivered multiplied by the Forward Delivery Price Cash Settlement: If Cash Settlement is applicable, BofA shall pay to the Counterparty the Settlement Price and Counterparty shall pay to BofA an amount equal to the Number of Shares to be Delivered times the Cash Settlement Price and such payment obligation shall be netted. Settlement Currency: U.S. Dollars Cash Settlement Price: The closing price per Share on the Exchange at the Valuation Time on the Settlement Valuation Date Cash Settlement Payment Date: Three Currency Business Days following each Settlement Valuation Date Adjustments: Method of Adjustment: Calculation Agent Adjustment, where following any Potential Adjustment Event, the Calculation Agent will determine whether such Potential Adjustment Event has a material effect on the theoretical value of the Transaction, and if so, will (i) make the corresponding adjustments, if any, to any one or more of, the Forward Delivery Price, Threshold Price, Settlement Price, Daily Forward Delivery Amount, Number of Shares to be Delivered, and any other variable relevant to the valuation, settlement or payment terms of this Transaction (including but not limited to the payment of any extraordinary dividends to BofA) as the Calculation Agent reasonably determines appropriate to account for that material effect and (ii) determine the effective date of the adjustment. Extraordinary Events: Consequence of Merger Events (a) Share-for-Share: Alternative Obligation, where on or after the relevant Merger Date, in the case of Forward Delivery Transaction, the number of New Shares to which a holder of the Forward Delivery Amounts would be entitled upon consummation of the Merger Event will be deemed to be the Forward Delivery Amounts, and the New Shares and their issuer will be deemed the "Shares" and the "Issuer" respectively, and if necessary, the Calculation Agent will adjust any of relevant terms accordingly. Notwithstanding the above, the Calculation Agent will determine if such Merger Event adjustment affects the theoretical value of the Transaction and if so, may in its reasonable discretion make any adjustments to the terms of the Transaction as it deems necessary to reflect the characteristics (including without limitation, the volatility, dividend practice and policy and liquidity) of the New Shares. (b) Share-for-Other: Cancellation and Payment (as defined below) (c) Share-for-Combined: Cancellation and Payment (as defined below) Nationalization, Insolvency or De-Listing Event: Cancellation and Payment (as defined below) "De-Listing Event" means that the Shares cease to be listed on, or quoted by, any of the New York Stock Exchange, the American Stock Exchange or the Nasdaq Stock Market (or their respective successors) for any reason (other than a Merger Event). Upon the occurrence of a De-Listing Event, Cancellation and Payment (as defined below) will apply, with the Announcement Date deemed to be the date that the De-Listing Event first occurs (as determined by the Calculation Agent). Cancellation and Payment means, in the case of a Forward Delivery Transaction, the Transaction will be cancelled as of the Merger Date, in the case of a Merger Event, or the Announcement Date in the case of a Nationalization, Insolvency or De-Listing Event, and Counterparty will pay to BofA or BofA shall pay to the Counterparty, as the case may be, an amount in cash equal to the "Termination Value", such payment to be made not later than three Currency Business Days following the determination by the Calculation Agent of such amount (denominated in the currency for settlement of the Transactions as determined by the Calculation Agent). The "Termination Value" shall be an amount as determined by the Calculation Agent representing the fair value to BofA and its affiliates and the Counterparty of an agreement that would preserve for BofA and its affiliates and the Counterparty the economic equivalent of the aggregate payment and deliveries in respect of the Forward Delivery Transaction that would have been required but for the occurrence of the Merger Event, Nationalization, Insolvency or De-Listing Event (taking into account any adjustment that may have been calculated on or prior to such date). The Calculation Agent shall calculate such amount based on the following factors (and such other factors as it deems appropriate) (i) the volatility of the Shares, (ii) dividends on the Shares, (iii) a value ascribed to the Shares equal to the consideration, if any, paid in respect of such Shares to holders of such Shares at the time of the Merger Event, Nationalization, Insolvency or De-Listing Event (iv) prevailing interest rates, and (v) a term equal to the number of days from the Announcement Date through and including the Maturity Date. For the avoidance of doubt, for purposes of calculating the value of this Transaction on any given day, such value shall be based on a number of Shares equal to the Maximum Number of Daily Forward Delivery Amounts for such Transaction. Maximum Number of Daily Forward Delivery Amounts means, for any day from but excluding the Trade Date, to and including the Maturity Date, an amount as determined by the Calculation Agent equal to the sum of the Daily Forward Delivery Amounts for each day up to and including the Maturity Date for which settlement has not occurred, assuming for purposes of calculating the Maximum Number of Daily Forward Delivery Amounts only that a Forward Delivery Event will occur on each Valuation Date until the Maturity Date. 3. Payments on Early Termination: Second Method and Loss 4. Calculation Agent: BofA 5. Account Details: Account for payments to Counterparty: United States Trust Company of New York ABA# 021-001-318 In favor of: Welsh, Carson, Anderson & Stowe VIII A/C # 69-86862 Attn: Dorothy Oertel, (212) 669-6143 Account for payments to BofA: Bank of America, NA San Francisco, CA SWIFT: BOFAUS6S Bank Routing: 121-000-358 Account Name: Bank of America Account Number: 12333-34172 Account for delivery of Shares to BofA: Will advise. 6. Offices and Notice Information: (a) The Office of BofA for the Transaction is: Charlotte Address for Notices: Bank of America, N.A. c/o Banc of America Securities LLC Equity Financial Products 9 West 57th Street, 40th floor New York, NY 10019 Telephone: 212-583-8373 Facsimile: 212-230-8610 (b) The Office of the Counterparty for the Transaction is: Inapplicable. Counterparty is not a Multibranch Party. Address for Notices: Welsh, Carson, Anderson & Stowe VIII, L.P. 320 Park Avenue New York, NY 10022 Telephone: 212-893-9500 Facsimile: 212-893-9575 7. Other Provisions: (a) Counterparty Representations. Counterparty represents and warrants to and for the benefit of BofA, as of the date hereof, and continuously until termination of this Agreement, as follows: (i) Non-affiliated representation. Counterparty represents and warrants to BofA, that it is not, and during the term of this Transaction, will not become an affiliate, within the meaning of Rule 144(a)(1) of the Securities Act of 1933, as amended (the "Securities Act"), of the Issuer. (ii) The Counterparty represents and warrants to BofA that it (i) is an "accredited investor" within the meaning of Rule 501(a)(1), (2), (3), (7) or (8) under the Securities Act, (ii) is acquiring the instruments described in the Transaction for its own account, and not with a view to distribution and (iii) understands and acknowledges that the Transaction has not and will not be registered under the Securities Act. (iii) No Information. The Counterparty represents and warrants to BofA that it is not entering into this Transaction while in possession of material, non-public information concerning the business, operations or prospects of the Issuer. "Material" information for these purposes is any information to which an investor would reasonably attach importance in reaching a decision to buy, sell, or hold securities of the Issuer. (iv) Counterparty has the legal capacity, power and right to execute, deliver, and perform its obligations under, and in accordance with the Agreement, any Credit Support Document to which Counterparty is a party, and this Transaction. (b) This confirmation shall be governed by the law of the State of New York without reference to the choice of law rules thereof. The parties hereto irrevocably submit to the exclusive jurisdiction of the courts of the State of New York and the United States Court for the Southern District of New York in connection with all matters relating hereto and waive any objection to the laying of venue in, and any claim of inconvenient forum with respect to, these courts. (c) WAIVER OF RIGHT TO TRIAL BY JURY. EACH PARTY HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHTS TO TRIAL BY JURY WITH RESPECT TO ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY TRANSACTION CONTEMPLATED HEREBY. (d) Counterparty and BofA hereby acknowledge and agree that BofA has authorized Counterparty to disclose this Transaction to any and all persons, and there are no express or implied agreements, arrangements or understandings to the contrary, and BofA hereby waives any and all claims to any proprietary rights with respect to this Transaction, and authorizes Counterparty to use any information which Counterparty receives or has received with respect to this Transaction in any manner. (e) Relationship Between Parties: Counterparty represents that: (i) Non-Reliance. It is acting for its own account, and it has made its own independent decision to enter into this Transaction and as to whether this Transaction is appropriate or proper for it based upon its own judgment and upon advice from such advisors as it has deemed necessary. It is not relying on any communication (written or oral) of the other party as investment advice or as a recommendation to enter into this Transaction; it being understood that information and explanations related to the terms and conditions of this Transaction shall not be considered investment advice or a recommendation to enter into this Transaction. It has not received from the other party any assurance or guarantee as to the expected results of this Transaction. (ii) Evaluation and Understanding. It is capable of evaluating and understanding (on its own behalf or through independent professional advice), and understands and accepts, the terms, conditions and risks of this Transaction. It is also capable of assuming, and assumes, the financial and other risks of this Transaction. (iii) Status of Parties. The other party is not acting as a fiduciary or an advisor for it in respect of this Transaction. (f) Additional Covenants of Counterparty. Counterparty covenants and agrees with BofA that: (i) if the Transaction relates to a position in restricted or control securities within the meaning and scope of Rule 144, promulgated under the Securities Act, Counterparty shall: (A) provide accurate and complete information upon request of BofA concerning the manner of acquisition, duration of holding period, or the size of such securities position, any affiliation with the Issuer, and prior or anticipated sales, agreements, rights, options, sales, lock-up arrangements, aggregation requirements, and/or any other information relating to such securities; (B) file or cause to be filed with the Securities and Exchange Commission or any other governmental, regulatory, or self-regulatory authority, any and all disclosure documents which may be required or appropriate, including, but not limited to, the disclosure documents required by Rule 144 and/or Sections 13 or 16 of the Securities Exchange Act of 1934, as amended; and (C) promptly advise BofA prior to making any sales of, or executing any other transaction or agreement involving, such securities which are the subject of this Transaction; and (ii) if the Transaction may involve, require or result in the delivery of securities or other financial assets, Counterparty is the legal and sole beneficial owner of the pledged Shares, and the same are free and clear of any all liens, charges, equities of redemption, rights of pre-emption, and any other security interests or encumbrances whatsoever other than Rule 145 restrictions; provided however, that if the pledged Shares are held through a Clearance System, (a) recordation of legal title in the name of such Clearance System or its nominee, and (b) liens on the pledged Shares of the type that are routinely imposed on all securities in such Clearance System, shall be permitted. (g) Each party represents that it is an "eligible contract participant" (as such term is defined in Section 1(a)(12) of the Commodity Exchange Act, as amended (the "CEA")) because one or more of the following under (x) or (y) is true: (x) such party is an individual who: (A) has total assets in excess of U.S. $10,000,000; or (B) has total assets in excess of U.S. $5,000,000 and has entered into this Transaction in order to manage the risk associated with an asset owned or liability incurred, or reasonably likely to be owned or incurred, by such party; or, (y) It is a corporation, partnership, proprietorship, organization, trust or other entity and: (A) It has total assets in excess of U.S. $10,000,000; or (B) The obligations of it hereunder are guaranteed, or otherwise supported by a letter of credit or keepwell, support or other agreement, by an entity of the type described in Section 1a(12)(A)(i) through (iv), 1a(12)(A)(v)(I), 1a(12)(A)(vii) or 1a(12)(C) of the CEA; or (C) it has a net worth in excess of U.S. $1,000,000 and has entered into this Transaction in connection with the conduct of its business or to manage the risk associated with an asset or liability owned or incurred or reasonably likely to be owned or incurred by it in the conduct of its business. (h) Counterparty acknowledges and agrees that it is not relying, and has not relied, upon BofA or any affiliate of BofA, with respect to the legal, accounting, tax or other implications of this Transaction and that it has conducted its own analyses of the legal, accounting, tax and other implications hereof. The Counterparty further acknowledges and agrees that neither BofA nor any affiliate of BofA has acted as advisor in any capacity in connection with this Transaction. The Counterparty is entering into this Transaction with a full understanding of all the terms and risks hereof (economic and otherwise), has adequate expertise in financial matters to evaluate those terms and risks and is capable of assuming (financially and otherwise) those risks. (i) Collateral Provisions. As collateral security for any amounts due to BofA with respect to this Transaction or pursuant to any document executed in connection therewith, the Counterparty granted to BofA a security interest in 1,000,000 Shares (such number of Shares, the "Collateral') pursuant to the Pledge Agreement dated March 15, 2002 by and between the Counterparty and BofA (the "Pledge Agreement"). The Pledge Agreement, any other pledge or security agreement executed by Counterparty in replacement or substitution of the Pledge Agreement, whether or not expressly referencing the Transaction, and any amendment, modification or replacement of or substitution therefor, shall constitute a Credit Support Document under the Agreement. (j) Certain Authorized Transfers. BofA may transfer or assign its rights and obligations in whole or in part to (i) any of its or (ii) any entities sponsored or organized by, or on behalf of or for the benefit of, BofA. (k) Additional Termination Events It shall be an Additional Termination Event with respect to Counterparty only and, with respect to such Additional Termination Event, Counterparty shall be the Affected Party and all Transactions shall be Affected Transactions: (i) Breach of Agreement, Dissolution of Partnership. (A) the General Partner materially breaches any provision of the Amended and Restated Agreement of Limited Partnership of Welsh, Carson, Anderson & Stowe VIII, L.P. (the "Partnership Agreement"); (B) any event shall occur pursuant to Section 7.01 or Section 7.02 of the Partnership Agreement; or (C) any occurrence or circumstance which in the reasonable opinion of BofA would prevent the Counterparty from performing any of its obligations under this Transaction. (ii) Any "Hedging Disruption Event", which term shall mean with respect to BofA any inability (which shall include an increase in costs) due to market illiquidity, illegality (as defined in the Agreement, but with respect to the Transaction hedge), or lack of availability of hedging transaction market participants or otherwise, to establish, re-establish or maintain any hedging transaction(s) necessary in the normal course of BofA's business of hedging the price and market risk of entering into and performing under the Transaction; provided, however, that, solely with respect to any such increase in costs, no Hedging Disruption Event shall be deemed to have occurred if Counterparty agrees to such adjustments to the terms of the Transaction as the Calculation Agent, in its sole discretion, deems necessary to compensate BofA for such increase in costs. (l) The "Cross Default" provisions of Section 5(a)(vi) of the Agreement will apply to the Counterparty and, and for such purpose "Specified Indebtedness" will have the meaning specified in Section 14, and the "Threshold Amount" in relation to the Counterparty shall be zero. (m) For purposes of the Agreement, "Specified Transaction" shall also include any transaction with respect to the forward sale or delivery of any security. (n) Designation by BofA. Notwithstanding any other provision in this Confirmation to the contrary requiring or allowing BofA to purchase, sell, receive or deliver any shares or other securities to or from the Counterparty, BofA may designate any of its affiliates to purchase, sell, receive or deliver such shares or other securities and otherwise to perform BofA obligations in respect of this Transaction and any such designee may assume such obligations. BofA shall be discharged of its obligations to the Counterparty to the extent of any such performance. (o) Set-off. In addition to any rights of set-off as specified in any Schedule to the Agreement now or hereafter executed between the parties, BofA shall have rights of set-off as specified in the applicable Pledge Agreement, any other Credit Support Document, or as otherwise provided by contract or law. (p) Additional Provisions. (i)Section 9.1(e) of the Equity Definitions shall be amended to add the new following subsection (vii) "(vii) any tender offer with respect to the Shares which is not a Merger Event as defined in Section 9.2 of the Equity Definitions and is deemed to be material in the determination of the Calculation Agent". (ii) Section 9.1(e)(vi) of the Equity Definitions is hereby amended by deleting the words "other similar" between "any" and "event"; deleting the words "diluting or concentrative" and replacing them with "material"; and adding the following words at the end of the sentence "or the Transaction". (iii) For purposes of Section 9.1(e)(iii) of the Equity Definitions, any dividend on the Shares for which the ex-dividend date occurs during the period from and excluding the Trade Date, to and including the Maturity Date, shall be deemed to be an extraordinary dividend. (q) Indemnity. In the event that BofA or any of its affiliates becomes involved in any capacity in any action, proceeding or investigation brought by or against any person in connection with any tax, regulatory or accounting position taken by Counterparty in connection with this Agreement, or the Pledge Agreement, the Counterparty shall reimburse BofA or such affiliate for its reasonable legal and other out-of-pocket expenses (including the cost of any investigation and preparation) incurred in connection therewith within 30 days of receipt of notice of such expenses, and shall indemnify and hold BofA or such affiliate harmless on an after-tax basis against any losses, claims, damages or liabilities to which BofA or such affiliate may become subject in connection with any such action, proceeding or investigation; provided, however, that notwithstanding anything in this sentence to the contrary, Counterparty shall have no liability under this paragraph (q) with respect to any regulatory violation of the Securities Act in connection with BofA's purchase of the Shares from Counterparty as a private placement not registered under the Securities Act. The reimbursement and indemnity obligations of the Counterparty under this paragraph shall be in addition to any liability that the Counterparty may otherwise have, shall extend upon the same terms and conditions to the partners, directors, officers, agents, employees and controlling persons (if any), as the case may be, of BofA and its affiliates and shall be binding upon and inure to the benefit of any successors, assigns, heirs and personal representatives of the Counterparty, BofA, any such affiliate and any such person. The Counterparty also agrees that neither BofA nor any of such affiliates, partners, directors, officers, agents, employees or controlling persons shall have any liability to the Counterparty for or in connection with any matter referred to in this Agreement or the Pledge Agreement except to the extent that any losses, claims, damages, liabilities or expenses incurred by the Counterparty result from the gross negligence or bad faith of BofA or a breach by BofA of any of its covenants or obligations hereunder. The foregoing provisions shall survive any termination or completion of this Agreement. (r) Counterparty consents to BofA or any of its affiliates or agents communicating and conferring with the Issuer, its attorneys, and its transfer agent in connection with the transfer of the Shares to BofA pursuant to the terms of this Transaction. (s) If, at any time after the Settlement Date, BofA shall consider or be advised that any assignments, assurances or any other similar actions or things are necessary or desirable to vest, perfect or confirm of record or otherwise in BofA its rights, title or interest in, to or under any of the Shares, Counterparty agrees to take such actions as may be reasonably necessary or desirable to vest in BofA and to perfect or confirm in respect of BofA any and all right, title and interest, in, to and under such Shares. The representations and warranties of the parties hereunder and the obligations of the parties to this Agreement under this Section 7(s) hereof shall survive termination of this Agreement and shall survive the Settlement Date. (t) BofA represents and warrants to and for the benefit of Counterparty that it is purchasing the Shares for its own account, not with a view towards resale or distribution in violation of the Securities Act. Please confirm your acceptance and agreement with the foregoing by immediately executing the copy of this Confirmation enclosed for that purpose and returning it to Bank of America, N.A. by facsimile at (212) 230-8610 (Attn: Debra Marvin). Very truly yours, Bank of America, N.A. By: ____________________ Authorized Signatory Name: Accepted and confirmed as of the Trade Date: Welsh, Carson, Anderson & Stowe VIII, L.P. By WCAS VIII Associates LLC, General Partner By: _____________________ Managing Member Name: EX-99.A4 4 exb_0408-2002triad.txt PLEDGE AGREEMENT EXHIBIT B PLEDGE AGREEMENT THIS PLEDGE AGREEMENT is made as of this 28 day of March, 2002, between Bruce K. Anderson, an individual ("Pledgor") and BANK OF AMERICA, N.A. ("Secured Party"). WHEREAS, Pledgor and Secured Party propose to enter into transactions from time to time; WHEREAS, Pledgor and Secured Party are entering into this Pledge Agreement and Pledgor is granting the pledge provided for herein in contemplation of such transactions; NOW, THEREFORE, in consideration of their mutual covenants contained herein and to secure the full and punctual observance and performance by Pledgor of all Secured Obligations (as defined herein), the parties hereto, intending to be legally bound, hereby mutually covenant and agree as follows: 1. Definitions. As used herein, the following words and phrases shall have the following meanings: "Additions and Substitutions" has the meaning provided in Section 2(a). "Authorized Officer" of Pledgor means, if Pledgor is not a natural person, any officer, trustee or general partner (or any officer thereof), as applicable, as to whom Pledgor shall have delivered notice to Secured Party that such trustee, general partner or officer is authorized to act hereunder on behalf of Pledgor. "Base Number" means, as of any date, the lesser of (x) 200,000- and (y) the Maximum Number of Daily Forward Delivery Amounts as of such date (as such term shall be defined in the Confirmation for the Forward Delivery Transaction to be entered into between Pledgor and Secured Party on or about the date hereof and which Confirmation shall refer to this Pledge Agreement in Section 7(i)). "Business Day" means any day on which commercial banks are open for business in New York City. "Calculation Agent" means Bank of America, N.A. "Collateral" has the meaning provided in Section 2(a). "Collateral Account" has the meaning provided in Section 5(c). "Collateral Event of Default" means, at any time, the occurrence of either of the following: (A) failure of the Collateral to include, as Eligible Collateral, Shares at least equal in number to the Base Number or (B) failure at any time of the Security Interests to constitute valid and perfected security interests in all of the Collateral, subject to no prior or equal Lien, or assertion of such by Pledgor in writing. "Control" means "control" as defined in Section 8-106 and Section 9-106 of the UCC. "Default Event" means any Collateral Event of Default or any event of default, termination event or similar event in connection with any Secured Transaction. "Eligible Collateral" means Shares provided that Pledgor has good and marketable title thereto, free of all Liens (other than the Security Interests) and Transfer Restrictions (other than any Existing Transfer Restrictions) and that Secured Party has a valid, first priority perfected security interest therein, a first lien thereon and Control with respect thereto. "Existing Transfer Restrictions" means Transfer Restrictions existing by virtue of Rule 145 under the Securities Act. "Issuer" means Triad Hospitals, Inc. "Lien" means any lien, mortgage, security interest, pledge, charge or encumbrance of any kind. "Location" means, with respect to any party, the place such party is "located" within the meaning of Section 9-307 of the UCC. "Person" means an individual, a corporation, a partnership, an association, a trust or any other entity or organization, including a government or political subdivision or an agency or instrumentality thereof. "Pledged Items" means, as of any date, any and all securities (or security entitlements in respect thereof) and instruments, cash or other assets delivered by Pledgor to be held by or on behalf of Secured Party under this Pledge Agreement as Collateral. "rehypothecate" has the meaning provided in Section 5(h). "Secured Obligations" means, at any time, any and all obligations, covenants and agreements (whether written or oral) of any kind whatsoever between Pledgor and Secured Party, including, but not limited to, any hedging transactions (including without limitation options, forwards, swaps or other equity derivative products) entered into between Pledgor and Secured Party together with any extensions or renewals thereof, any indebtedness or other obligations of Pledgor to Secured Party or any of ifs affiliates, whether with respect to the payment of money, delivery of securities or other instruments or property or otherwise, whether now in existence or hereafter contracted. "Secured Transaction" means any transaction of any kind whatsoever giving rise to a Secured Obligation. "Securities Act" means the Securities Act of 1933, as amended. 1 "Security Interests" means the security interests in the Collateral created hereby. "Shares" means shares of the common stock, par value $0.01, of the Issuer (and any security entitlements in respect thereof). "Transfer Restriction" means, with respect to any Shares or item of Collateral pledged under this Pledge Agreement, any condition to or restriction on the ability of the owner thereof to sell, assign or otherwise transfer such Shares or item of Collateral or to enforce the provisions thereof or of any document related thereto whether set forth in such item of Collateral itself or in any document related thereto, including, without limitation, (i) any requirement that any sale, assignment or other transfer or enforcement of such Shares or item of Collateral be consented to or approved by any Person, including, without limitation, the issuer thereof or any other obligor thereon, (ii) any limitations on the type or status, financial or otherwise, of any purchaser, pledgee, assignee or transferee of such Shares or item of Collateral, (iii) any requirement of the delivery of any certificate, consent, agreement, opinion of counsel, notice or any other document of any Person to the issuer of, any other obligor on or any registrar or transfer agent for, such Shares or item of Collateral, prior to the sale, pledge, assignment or other transfer or enforcement of such Shares or item of Collateral (iv) any registration or qualification requirement or prospectus delivery requirement for such Shares or item of Collateral pursuant to any federal, state or foreign securities law (including, without limitation, any such requirement arising as a result of the fact that such Shares or Collateral are "restricted securities" as defined in Rule 144 under the Securities Act, the fact that Pledgor is an "affiliate", as defined in Rule 144 under the Securities Act, of the relevant Issuer, or the fact that resale of such Shares or Collateral is subject to Rule 145 under the Securities Act) and (v) a Rule 145 restrictive legend on the certificates evidencing such Shares; provided that the required delivery of any assignment, instruction or entitlement order from the seller, pledgor, assignor or transferor of such Shares or item of Collateral, together with any evidence of the corporate or other authority of such Person, shall not constitute a "Transfer Restriction". "UCC" means the Uniform Commercial Code as in effect in the State of New York. 2. The Security Interests. In order to secure the full and punctual observance and performance by Pledgor of all Secured Obligations: (a) Pledgor hereby assigns and pledges to Secured Party and grants to Secured Party, security interests in and to, and a lien upon and right of set-off against, and transfers to Secured Party, as and by way of a security interest having priority over all other security interests, with power of sale, all of its right, title and interest in and to (i) the Pledged Items described in paragraph (b); (ii) all additions to and substitutions for such Pledged Items (including, without limitation, any securities, instruments or other property delivered or pledged pursuant to Section 4(a) or 5(b)) (such additions and substitutions, the "Additions and Substitutions"); (iii) all income, proceeds and collections received or to be received, or derived or to be derived, now or any time hereafter (whether before or after the commencement of any proceeding under applicable bankruptcy, insolvency or similar law, by or against Pledgor, with respect to Pledgor) from or in connection with the Pledged Items or the Additions and Substitutions (including, without limitation, any shares of capital stock issued by any Issuer in respect of any Shares constituting Collateral or any cash, securities or other property distributed in respect of or exchanged for any Shares constituting Collateral, or into which any such Shares are converted, in connection with any merger or similar event or otherwise, and any security entitlements in respect of any of the foregoing); and (iv) the Collateral Account and all securities and other financial assets (each as defined in Section 8-102 of the UCC), including the Pledged Items and the Additions and Substitutions, and other funds, property or assets from time to time held therein or credited thereto; and (v) all powers and rights now owned or hereafter acquired under or with respect to the Pledged Items or the Additions and Substitutions (such Pledged Items, Additions and Substitutions, proceeds, collections, powers, rights, Collateral Account and assets held therein or credited thereto being herein collectively called the "Collateral"). Secured Party shall have all of the rights, remedies and recourses with respect to the Collateral afforded a secured party by the UCC, in addition to, and not in limitation of, the other rights, remedies and recourses afforded to Secured Party by this Pledge Agreement. (b) Within 5 Business Days after the date hereof, Pledgor shall deliver to Secured Party in pledge hereunder Eligible Collateral consisting of a number of Shares equal to the Base Number on the date hereof, in the manner provided in Section 5(c). (c) The parties hereto expressly agree that all rights, assets and property at any time held in or credited to the Collateral Account shall be treated as financial assets (as defined in Section 8-102 of the UCC). 3. Representations and Warranties of Pledgor. Pledgor hereby represents and warrants to Secured Party that: (a) Pledgor (i) owns and, at all times prior to the release of the Collateral pursuant to the terms of this Pledge Agreement, will own the Collateral free and clear of any Liens (other than the Security Interests) or Transfer Restrictions (other than any Existing Transfer Restrictions) and (ii) is not and will not become a party to or otherwise bound by any agreement, other than this Pledge Agreement, that (x) restricts in any manner the rights of any present or future owner of the Collateral with respect thereto or (y) provides any person other than Pledgor, Secured Party or any securities intermediary through whom any Collateral is held (but in the case of any such securities intermediary only in respect of Collateral held through it) with Control with respect to any Collateral. (b) Other than financing statements or other similar or equivalent documents or instruments with respect to the Security Interests, no financing statement, security agreement or similar or equivalent document or instrument covering all or any part of the Collateral is on file or of record in any jurisdiction in which such filing or recording would be effective to perfect a Lien, security interest or other encumbrance of any kind on such Collateral. (c) All Shares at any time pledged hereunder (or in respect of which security entitlements are pledged hereunder) are and will be issued by an Issuer organized under the laws of the United States, any State thereof or the District of Columbia and (i) certificated (and the certificate or certificates in respect of such Shares are and will be located in the United States), and unless registered in the name of the Secured Party, registered in the name of Pledgor or held through a securities intermediary whose securities intermediary's jurisdiction (within the meaning of Section 8-110(e) of the UCC) is located in the United States or (ii) uncertificated and either registered in the name of Pledgor or held through a securities intermediary whose securities intermediary's jurisdiction (within the meaning of Section 8-110(e) of the UCC) is located in the United States; provided that this representation shall not be deemed to be breached if, at any time, any such Collateral is issued by an Issuer that is not organized under the laws of the United States, any State thereof or the District of Columbia, and the parties hereto agree to procedures or amendments hereto necessary to enable Secured Party to maintain a valid and continuously perfected security interest in such Collateral, in respect of which Secured Party will have Control, subject to no prior Lien. The parties hereto agree to negotiate in good faith any such procedures or amendments. 2 (d) (i) Upon the delivery of certificates evidencing any Shares to Secured Party in accordance with Section 5(c) (A) or the registration of uncertificated Shares in the name of Secured Party or its nominee in accordance with Section 5(c) (B), and, in each case, the crediting of such securities or financial assets to the Collateral Account, Secured Party will have a valid and, as long as Secured Party retains possession of such certificates or such uncertificated Shares remain so registered, perfected security interest therein, in respect of which Secured Party will have Control, subject to no prior Lien and (ii) upon the crediting of any Shares to the Collateral Account, Secured Party will have a valid and, so long as such Shares continue to be credited to the Collateral Account, perfected security interest in a securities entitlement in respect thereof, in respect of which Secured Party will have Control subject to no prior Lien. (e) No registration, recordation or filing with any governmental body, agency or official is required in connection with the execution and delivery of this Pledge Agreement or necessary for the validity or enforceability hereof or thereof or for the perfection or enforcement of the Security Interests. (f) Pledgor has not performed and will not perform any acts that might prevent Secured Party from enforcing any of the terms of this Pledge Agreement or that might limit Secured Party in any such enforcement. (g) The Location of Pledgor is the State of New Jersey, and under the Uniform Commercial Code as in effect in such Location, no filing other than with the Secretary of State of the State of New Jersey is required to perfect a security interest in collateral consisting of general intangibles. 4. Certain Covenants of Pledgor. Pledgor agrees that, so long as any Secured Obligation remains outstanding: (a) Pledgor shall ensure at all times that a Collateral Event of Default shall not occur, and shall pledge additional Collateral in the manner described in Sections 5(b) and 5(c) as necessary to cause such requirement to be met. (b) Pledgor shall, at the expense of Pledgor and in such manner and form as Secured Party may require, give, execute, deliver, file and record any financing statement, notice, instrument, document, agreement or other papers that may be necessary or desirable in order (i) to create, preserve, perfect, substantiate or validate any security interest granted pursuant hereto, (ii) to create or maintain Control with respect to any such security interests in any investment property (as defined in Section 9-102(49) of the UCC) or (iii) to enable Secured Party to exercise and enforce its rights hereunder with respect to such security interest. To the extent permitted by applicable law, Pledgor hereby authorizes Secured Party to execute and file, in the name of Pledgor or otherwise, UCC financing or continuation statements (which may be carbon, photographic, photostatic or other reproductions of this Pledge Agreement or of a financing statement relating to this Pledge Agreement) that Secured Party in its sole discretion may deem necessary or appropriate to further perfect, or maintain the perfection of, the Security Interests. (c) Pledgor shall warrant and defend its title to the Collateral, subject to the rights of Secured Party, against the claims and demands of all persons. Secured Party may elect, but without an obligation to do so, to discharge any Lien of any third party on any of the Collateral. (d) Pledgor agrees that it shall not change (1) its name or identity or, if Pledgor is not a natural person, its organizational structure in any manner or (2) its Location, unless in any such case (A) it shall have given Secured Party not less than 30 days' prior notice thereof and (B) such change shall not cause any of the Security Interests to become unperfected, cause Secured Party to cease to have Control in respect of any of the Security Interests in any Collateral consisting of investment property (as defined in Section 9-102(49) of the UCC) or subject any Collateral to any other Lien. (e) Pledgor agrees that it shall not (1) create or permit to exist any Lien (other than the Security Interests) or any Transfer Restriction (other than any Existing Transfer Restrictions) upon or with respect to the Collateral, (2) sell or otherwise dispose of, or grant any option with respect to, any of the Collateral or (3) enter into or consent to any agreement pursuant to which any person other than the Pledgor, the Secured Party and any securities intermediary through whom any of the Collateral is held (but in the case of any such securities intermediary only in respect of Collateral held through it) has or will have Control in respect of any Collateral. 5. Administration of the Collateral and Valuation of the Securities. (a) Secured Party shall determine on each Business Day whether a Collateral Event of Default shall have occurred. (b) Pledgor may pledge additional Eligible Collateral hereunder at any time. Concurrently with the delivery of any additional Eligible Collateral, Pledgor shall deliver to Secured Party a certificate of Pledgor or, if Pledgor is not a natural person, an Authorized Officer of Pledgor substantially in the form of Exhibit A hereto and dated the date of such delivery, (A) identifying the additional items of Eligible Collateral being pledged and (B) certifying that with respect to such items of additional Eligible Collateral the representations and warranties contained in paragraphs (a), (b), (c) and (d) of Section 3 hereunder are true and correct with respect to such Eligible Collateral on and as of the date thereof. Pledgor hereby covenants and agrees to take all actions required under Section 5(c) and any other actions necessary to create for the benefit of Secured Party a valid, first priority, perfected security interest in, and a first lien upon, such additional Eligible Collateral, as to which Secured Party will have Control. (c) Any delivery of Shares as Collateral to Secured Party by Pledgor shall be effected (A) in the case of Collateral consisting of certificated Shares registered in the name of Pledgor, by delivery of certificates representing such Shares to Secured Party, accompanied by any required transfer tax stamps, and in suitable form for transfer by delivery or accompanied by duly executed instruments of transfer or assignment in blank, with signatures appropriately guaranteed, all in form and substance satisfactory to Secured Party, and the crediting by Secured Party of such securities to a securities account (as defined in Section 8-501 of the UCC) (the "Collateral Account") of Secured Party maintained at Banc of America Securities LLC, (B) in the case of Collateral consisting of uncertificated Shares registered in the name of Pledgor, by transmission by Pledgor of an instruction to the Issuer of such Shares instructing such Issuer to register such Shares in the name of Secured Party or its nominee, accompanied by any required transfer tax stamps, the issuer's compliance with such instructions and the crediting by Secured Party of such securities to the Collateral Account, (C) in the case of Shares in respect of which security entitlements are held by Pledgor through a securities intermediary, by the crediting of such Shares, accompanied by any required transfer tax stamps, to a securities account of Secured Party at such securities intermediary or, at the option of Secured Party, at another securities intermediary satisfactory to Secured Party and the crediting by Secured Party of such securities to the Collateral Account or (D) in any case, by complying with such alternative delivery instructions which shall be appropriate taking into account Existing Transfer Restrictions, as Secured Party shall provide to Pledgor in writing. Upon delivery of any such Pledged Item under this Pledge Agreement, Secured Party shall examine such Pledged Item and any certificates delivered pursuant to Section 5(b) or otherwise pursuant to the terms hereof in connection therewith to determine that they comply as to form with the requirements for Eligible Collateral. 3 (d) If on any Business Day Secured Party determines that a Collateral Event of Default shall have occurred, Secured Party shall promptly notify Pledgor of such determination by telephone call to Pledgor or, if Pledgor is not a natural person, an Authorized Officer of Pledgor followed by a written confirmation of such call. (e) If on any Business Day Secured Party determines that no Default Event or failure by Pledgor to meet any of its obligations under Sections 4 or 5 hereof has occurred and is continuing, Pledgor may obtain the release from the Security Interests of any Collateral upon delivery to Secured Party of a written notice from Pledgor or, if Pledgor is not a natural person, an Authorized Officer of Pledgor indicating the items of Collateral to be released so long as, after such release, no Collateral Event of Default shall have occurred. If on the last Exchange Business Day of any month Secured Party determines that (i) no Default Event or failure by Pledgor to meet any of its obligations under Section 4 or 5 hereof has occurred and is continuing and (ii) the Collateral includes a number of Shares which exceeds the Base Number by 4,000 or more Shares, Secured Party shall release from the Security Interests a number of Shares equal to (x) the number of Shares included in this Collateral minus (y) the Base Number, so long as, after such release, no Collateral Event of Default shall have occurred. (f) Secured Party may at any time or from time to time, in its sole discretion, cause any or all of the Shares pledged hereunder registered in the name of Pledgor or its nominee to be transferred of record into the name of Secured Party or its nominee. Pledgor shall promptly give to Secured Party copies of any notices or other communications received by Pledgor with respect to Shares pledged hereunder registered, or held through a securities intermediary, in the name of Pledgor or Pledgor's nominee and Secured Party shall promptly give to Pledgor copies of any notices and communications received by Secured Party with respect to Shares pledged hereunder registered, or held through a securities intermediary, in the name of Secured Party or Secured Party's nominee. (g) Pledgor agrees that Pledgor shall forthwith upon demand pay to Secured Party: i. the amount of any taxes that Secured Party may have been required to pay by reason of the Security Interests or to free any of the Collateral from any Lien thereon, and ii. the amount of any and all out-of-pocket expenses, including the fees and disbursements of counsel and of any other experts, that Secured Party may incur in connection with (A) the enforcement of this Pledge Agreement, including such expenses as are incurred to preserve the value of the Collateral and the validity, perfection, rank and value of the Security Interests, (B) the collection, sale or other disposition of any of the Collateral, (C) the exercise by Secured Party of any of the rights conferred upon it hereunder or (D) any Default Event. Any such amount not paid on demand shall bear interest (computed on the basis of a year of 360 days and payable for the actual number of days elapsed) at a rate per annum equal to 5% plus the prime rate as published in The Wall Street Journal, Eastern Edition in effect from time to time during the period from the date hereof to the date of the termination of this Pledge Agreement. (h) Without limiting the rights and obligations of the parties under this Pledge Agreement, Secured Party shall, notwithstanding Section 9-207 of the UCC, upon the consent of Pledgor, have the right to sell, lend, pledge, rehypothecate, assign, invest, use, commingle or otherwise dispose of, or otherwise use in its business (collectively, "rehypothecate") any Collateral it holds in connection with a Secured Transaction, free from any claim or right of any nature whatsoever of Pledgor, including any equity or right of redemption by Pledgor, provided that Secured Party will, in each case in a manner consistent with industry practice for loans of equity securities, (i) replace any rehypothecated Collateral (with the same Collateral or identical substitute Collateral) upon three Business Days' notice from Pledgor, (ii) if not already replaced, replace such Collateral immediately prior to the time at which such Collateral ceases to be subject to the Security Interests and (iii) prior to replacement of such Collateral, pay Pledgor amounts equivalent to dividends paid or other distributions made on such Collateral., whereupon the amount so paid or the assets so delivered shall be proceeds of the Collateral and shall be subject to Section 6. All determinations related to the immediately preceding sentence shall be made by the Calculation Agent. For purposes of determining the occurrence of a Collateral Event of Default, the rehypothecation of any Collateral pledged hereunder shall not affect the status of such Collateral as Collateral or Eligible Collateral hereunder. (i) Pledgor hereby acknowledges that during such time as the Collateral is held by Secured Party pursuant to the terms of this Pledge Agreement, Pledgor will not receive periodic account statements with respect to the value thereof. (j) If, at any time, Pledgor is obligated pursuant to any Secured Transaction to deliver Shares to Secured Party or at the direction of Secured Party, unless Pledgor shall have otherwise delivered such Shares in respect of such obligation, Secured Party shall deliver or cause to be delivered to an affiliate of Secured Party designated by Secured Party from the Collateral Account, in whole or partial, as the case may be, satisfaction of Pledgor's obligation to deliver such Shares. Upon any such delivery, such affiliate of Secured Party shall hold such Shares absolutely and free from any claim or right whatsoever (including, without limitation, any claim or right of Pledgor). 6. Income and Voting Rights in Collateral. (a) Secured Party shall have the right to receive and retain as Collateral hereunder all proceeds (including, without limitation, ordinary cash dividends or interest) of the Collateral, and Pledgor shall take all such action as Secured Party shall deem necessary or appropriate to give effect to such right. All such proceeds that are received by Pledgor shall be received in trust for the benefit of Secured Party and, if Secured Party so directs, shall be segregated from other funds of Pledgor and shall, forthwith upon demand by Secured Party, be delivered over to Secured Party as Collateral in the same form as received (with any necessary endorsement). (b) Unless a Default Event shall have occurred and be continuing, Pledgor shall have the right, from time to time, to vote and to give consents, ratifications and waivers with respect to the Collateral (other than Collateral that has been rehypothecated by Secured Party pursuant to Section 5(h)) and Secured Party shall, upon receiving a written request from Pledgor accompanied by a certificate of Pledgor or, if Pledgor is not a natural person, an Authorized Officer of Pledgor stating that no Default Event has occurred and is continuing, deliver to Pledgor or as specified in such request such proxies, powers of attorney, consents, ratifications and waivers in respect of any of the Collateral that is registered, or held through a securities intermediary, in the name of Secured Party or its nominee as shall be specified in such request and shall be in form and substance satisfactory to Secured Party. (c) If a Default Event shall have occurred and be continuing, Secured Party shall have the right, to the extent permitted by law, and Pledgor shall take all such action as may be necessary or appropriate to give effect to such right, to vote and to give consents, ratifications and waivers, and to take any other action with respect to any or all of the Collateral with the same force and effect as if Secured Party were the absolute and sole owner thereof. 4 7. Remedies upon Default Events. (a) If any Default Event shall have occurred and be continuing, Secured Party may exercise all the rights of a secured party under the Uniform Commercial Code (whether or not in effect in the jurisdiction where such rights are exercised) and, in addition, without being required to give any notice, except as herein provided or as may be required by mandatory provisions of law, may (i) deliver or cause to be delivered to itself or to an affiliate from the Collateral Account, Collateral consisting of Shares with a value (as determined by the Calculation Agent) equal to the value (as determined by the Calculation Agent) of Pledgor's obligations hereunder and under any and all Secured Obligations to which a Default Event applies, whereupon Secured Party shall hold such Shares absolutely free from any claim or right of whatsoever kind, including any equity or right of redemption of Pledgor that may be waived or any other right or claim of Pledgor, and Pledgor, to the extent permitted by law, hereby specifically waives all rights of redemption, stay or appraisal that Pledgor has or may have under any law now existing or hereafter adopted; or (ii) sell such Collateral as may be necessary to generate proceeds sufficient to satisfy in full all Secured Obligations or hereunder, at public or private sale or at any broker's board or on any securities exchange, for cash, upon credit or for future delivery, and at such price or prices as Secured Party may deem satisfactory; or (iii) take any combination of the actions described in clauses (i) and (ii). Pledgor covenants and agrees that it will execute and deliver such documents and take such other action as Secured Party deems necessary or advisable in order that any such sale may be made in compliance with law. Upon any such sale Secured Party shall have the right to deliver, assign and transfer to the buyer thereof the Collateral so sold. Each buyer at any such sale shall hold the Collateral so sold absolutely and free from any claim or right of whatsoever kind, including any equity or right of redemption of Pledgor that may be waived or any other right or claim of Pledgor, and Pledgor, to the extent permitted by law, hereby specifically waives all rights of redemption, stay or appraisal that Pledgor has or may have under any law now existing or hereafter adopted. The notice (if any) of such sale required by Section 9-611 of the UCC shall (1) in case of a public sale, state the time and place fixed for such sale, (2) in case of sale at a broker's board or on a securities exchange, state the board or exchange at which such sale is to be made and the day on which the Collateral, or the portion thereof so being sold, will first be offered for sale at such board or exchange, and (3) in the case of a private sale, state the day after which such sale may be consummated. Any such public sale shall be held at such time or times within ordinary business hours and at such place or places as Secured Party may fix in the notice of such sale. At any such sale the Collateral may be sold in one lot as an entirety or in separate parcels, as Secured Party may determine. Secured Party shall not be obligated to make any such sale pursuant to any such notice. Secured Party may, without notice or publication, adjourn any public or private sale or cause the same to be adjourned from time to time by announcement at the time and place fixed for the sale, and such sale may be made at any time or place to which the same may be so adjourned. In case of any sale of all or any part of the Collateral on credit or for future delivery, the Collateral so sold may be retained by Secured Party until the selling price is paid by the buyer thereof, but Secured Party shall not incur any liability in case of the failure of such buyer to take up and pay for the Collateral so sold and, in case of any such failure, such Collateral may again be sold upon like notice. Secured Party, instead of exercising the power of sale herein conferred upon it, may proceed by a suit or suits at law or in equity to foreclose the Security Interests and sell the Collateral, or any portion thereof, under a judgment or decree of a court or courts of competent jurisdiction. (b) Pledgor hereby irrevocably appoints Secured Party its true and lawful attorney, with full power of substitution, in the name of Pledgor, Secured Party or otherwise, for the sole use and benefit of Secured Party, but at the expense of Pledgor, to the extent permitted by law, to exercise, at any time and from time to time while a Default Event has occurred and is continuing, all or any of the following powers with respect to all or any of the Collateral: i. to demand, sue for, collect, receive and give acquittance for any and all monies due or to become due upon or by virtue thereof, ii. to settle, compromise, compound, prosecute or defend any action or proceeding with respect thereto, iii. to sell, transfer, assign or otherwise deal in or with the same or the proceeds or avails thereof, as fully and effectually as if Secured Party were the absolute owner thereof (including, without limitation, the giving of instructions and entitlement orders in respect thereof), and iv. to extend the time of payment of any or all thereof and to make any allowance and other adjustments with reference thereto; provided that Secured Party shall give Pledgor not less than one day's prior written notice of the time and place of any sale or other intended disposition of any of the Collateral, except any Collateral that threatens to decline speedily in value, including, without limitation, equity securities, or is of a type customarily sold on a recognized market. Secured Party and Pledgor agree that such notice constitutes "reasonable authenticated notification" within the meaning of Section 9-611 of the UCC. (c) Upon any delivery or sale of all or any part of any Collateral made either under the power of delivery or sale given hereunder or under judgment or decree in any judicial proceedings for foreclosure or otherwise for the enforcement of this Pledge Agreement, Secured Party is hereby irrevocably appointed the true and lawful attorney of Pledgor, in the name and stead of Pledgor, to make all necessary deeds, bills of sale, instruments of assignment, transfer or conveyance of the property, and all instructions and entitlement orders in respect of the property, thus delivered or sold. For that purpose Secured Party may execute all such documents, instruments, instructions and entitlement orders. This power of attorney shall be deemed coupled with an interest, and Pledgor hereby ratifies and confirms that which Pledgor's attorney acting under such power, or such attorney's successors or agents, shall lawfully do by virtue of this Pledge Agreement. If so requested by Secured Party or by any buyer of the Collateral or a portion thereof, Pledgor shall further ratify and confirm any such delivery or sale by executing and delivering to Secured Party or to such buyer or buyers at the expense of Pledgor all proper deeds, bills of sale, instruments of assignment, conveyance or transfer, releases, instructions and entitlement orders as may be designated in any such request. (d) In the case of a Default Event, Secured Party may proceed to realize upon the security interest in the Collateral against any one or more of the types of Collateral, at any time, as Secured Party shall determine in its sole discretion subject to the foregoing provisions of this Section 7. The proceeds of any sale of, or other realization upon, or other receipt from, any of the Collateral shall be applied by Secured Party in the following order of priorities: first, to the payment to Secured Party of the expenses of such sale or other realization, including reasonable compensation to the agents and counsel of Secured Party, and all expenses, liabilities and advances incurred or made by Secured Party in connection therewith, including brokerage fees in connection with the sale by Secured Party of any Collateral; second, to the payment to Secured Party of the aggregate amount (or the value of any delivery or other performance) owed by Pledgor to Secured Party under all Secured Transactions; finally, if all of the obligations of Pledgor hereunder and under all Secured Transactions have been fully discharged or sufficient funds have been set aside by Secured Party at the request of Pledgor for the discharge thereof, any remaining proceeds shall be released to Pledgor. 5 8. Netting and Set-off. (a) If on any date, cash would otherwise be payable or Shares or other property would otherwise be deliverable (including, for the avoidance of doubt, the replacement, as required by Section 5(h), of Shares that have been rehypothecated pursuant to such Section) pursuant to any Secured Transaction or this Pledge Agreement by Secured Party to Pledgor and by Pledgor to Secured Party and the type of property required to be paid or delivered by each such party on such date is the same, then, on such date, each such party's obligation to make such payment or delivery will be automatically satisfied and discharged and, if the aggregate amount that would otherwise have been payable or deliverable by one such party exceeds the aggregate amount that would otherwise have been payable or deliverable by the other such party, replaced by an obligation upon the party by whom the larger aggregate amount would have been payable or deliverable to pay or deliver to the other party the excess of the larger aggregate amount over the smaller aggregate amount. (b) In addition to and without limiting any rights of set-off that Secured Party may have as a matter of law, pursuant to contract or otherwise, upon the occurrence of any Default Event, Secured Party shall have the right to terminate, liquidate and otherwise close out all Secured Transactions and this Pledge Agreement pursuant to the terms of such Secured Transactions and this Pledge Agreement, and to set off any obligation it may have to (i) release from the Security Interests or return to Pledgor any Collateral pursuant to Section 5(e) or (ii) replace any rehypothecated Collateral pursuant to Section 5(h), against any right Secured Party or any of its affiliates may have against Pledgor, including without limitation any right to receive a payment or delivery pursuant to any provision of any Secured Transaction. In the case of a set-off of any obligation to return or replace assets against any right to receive assets of the same type, such obligation and right shall be set off in kind. In the case of a set-off of any obligation to return or replace assets against any right to receive assets of any other type, the value of each of such obligation and such right shall be determined by the Calculation Agent and the result of such set-off shall be that the net obligor shall pay or deliver to the other party an amount of cash or assets, at the net obligor's option, with a value (determined, in the case of a delivery of assets, by the Calculation Agent) equal to that of the net obligation. In determining the value of any obligation to release or deliver Shares or right to receive Shares, the value at any time of such obligation or right shall be determined by reference to the market value of the Shares at such time. If an obligation or right is unascertained at the time of any such set-off, the Calculation Agent may in good faith estimate the amount or value of such obligation or right, in which case set-off will be effected in respect of that estimate, and the relevant party shall account to the other party at the time such obligation or right is ascertained. 9. Miscellaneous. Whenever any of the parties hereto is referred to, such reference shall be deemed to include the successors and assigns of such party. All the covenants and agreements herein contained by or on behalf of Pledgor and Secured Party shall bind, and inure to the benefit of, Pledgor's respective successors and assigns whether so expressed or not, and shall be enforceable by and inure to the benefit of Secured Party and its successors and assigns. (a) To the extent permitted by law, the unenforceability or invalidity of any provision or provisions of this Pledge Agreement shall not render any other provision or provisions herein contained unenforceable or invalid. (b) Any provision of this Pledge Agreement may be amended or waived if, and only if, such amendment or waiver is in writing and signed, in the case of an amendment, by Pledgor and Secured Party or, in the case of a waiver, by the party against whom the waiver is to be effective. No failure or delay by either party in exercising any right, power or privilege hereunder shall operate as a waiver thereof nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power or privilege. The rights and remedies herein provided shall be cumulative and not exclusive of any rights or remedies provided by law. (c) All notices and other communications hereunder shall be in writing and shall be deemed to have been duly given if mailed or transmitted by any standard forms of telecommunication. Notices to Pledgor shall be directed to Pledgor at 320 Park Avenue, New York, NY 10022, Telecopy No. 212.893.9575, Attention: Bruce K. Anderson; notices to Secured Party shall be directed to it care of Banc of America Securities LLC, 9 West 57th Street, New York, New York 10019, Telecopy No. 212-583-8569, Attention: Robert Dilworth. (d) This Pledge Agreement shall in all respects be construed in accordance with and governed by the laws of the State of New York (without reference to choice of law doctrine); provided that as to Pledged Items located in any jurisdiction other than the State of New York, Secured Party shall have, in addition to any rights under the laws of the State of New York, all of the rights to which a secured party is entitled under the laws of such other jurisdiction. The parties hereto hereby agree Secured Party's and Banc of America Securities LLC's jurisdiction, within the meaning of Section 8-110(e) of the UCC, insofar as it acts as a securities intermediary hereunder or in respect hereof, is the State of New York. (e) Each party hereby irrevocably and unconditionally submits to the non-exclusive jurisdiction of the Federal and state courts located in the Borough of Manhattan, in the City of New York in any suit or proceeding arising out of or relating to this Pledge Agreement or the transactions contemplated hereby. (f) Each party hereby irrevocably and unconditionally waives any and all right to trial by jury in any legal proceeding arising out of or related to this Pledge Agreement or the transactions contemplated hereby. (g) This Pledge Agreement may be executed, acknowledged and delivered in any number of counterparts and all such counterparts taken together shall be deemed to constitute one and the same agreement. 10. Termination of Pledge Agreement. This Pledge Agreement and the rights granted by Pledgor in the Collateral shall cease, terminate and be void upon fulfillment of all of the obligations of Pledgor under the Secured Obligations and hereunder. Any Collateral remaining at the time of such termination shall be fully released and discharged from the Security Interests and delivered to Pledgor by Secured Party, all at the request and expense of Pledgor. 6 IN WITNESS WHEREOF, the parties have signed this Pledge Agreement as of the date and year first above written. PLEDGOR: SECURED PARTY: Bruce K. Anderson BANK OF AMERICA, N.A. By: -------------------------------- By: ---------------------------- Bruce K. Anderson Name: Title 7 -----END PRIVACY-ENHANCED MESSAGE-----