eTrade 2005 Annual Report Download - page 294

on which any Purchase Contract is first settled in accordance with the provisions of this Agreement, the Company covenants to list
such Common Stock issuable upon settlement of the Purchase Contracts in accordance with the requirements of such exchange or
automated quotation system no later than at such time.
Section10.05
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 December31) ending after the date hereof, an
Officers’ Certificate, 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 of this Agreement, and if the Company shall be in default, specifying all
such defaults and the nature and status thereof of which they may have knowledge.
Section10.06
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 Section406 of ERISA or Section4975 of the Code or similar violation under any applicable laws.
Section10.07
Tax Treatment
. The Company covenants and agrees, and by acceptance of a Unit, each Holder will be deemed to have
agreed for U.S. federal income tax purposes (i)to treat each beneficial owner of a Corporate Unit or a Treasury Unit as the owner of the
applicable interests in the Collateral, including the Subordinated Notes underlying the Applicable Ownership Interests in Subordinated
Notes, the Applicable Ownership Interests in the Treasury Portfolio or the Treasury Securities, as applicable, (ii)not to treat the
Subordinated Notes as contingent payment debt instruments and (iii)to allocate a Holder’s purchase price for a Corporate Unit
between the Applicable Ownership Interests in Subordinated Notes and the Purchase Contract so that each Holder’s initial tax basis in
each Purchase Contract will be $0.8313 and each Holder’s initial tax basis in each Applicable Ownership Interest in Subordinated Notes
will be $24.1687.
ARTICLE 11
PLEDGE
Section11.01
Pledge
. Each Holder, acting through the Purchase Contract Agent as such Holder’s attorney-in-fact, and the Purchase
Contract Agent, acting solely as such attorney-in-fact, hereby pledges and grants to the Collateral Agent, as agent of and for the
benefit of the Company, a continuing first priority security interest in and to, and a lien upon and right of set-off against, all of such
Person’s right, title and interest in and to the Collateral to secure the prompt and complete payment and performance when due
(whether at stated maturity, by acceleration or otherwise) of the Obligations. The Collateral Agent 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 the Collateral Agent by this Agreement.
Section11.02
Termination
. As to each Holder, the Pledge created hereby shall terminate upon the satisfaction of such Holder’s
Obligations. Upon such termination, the Collateral Agent shall instruct the Securities Intermediary to Transfer such portion of the
Collateral attributable to such Holder to the Purchase Contract Agent for distribution to such Holder, free and clear of the Pledge
created hereby.
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