Exhibit 1.4
November [22], 2005
Morgan Stanley & Co.
Incorporated
1585 Broadway
New York, NY 10036
The Bank of New York
101 Barclay Street, Floor 8W
New York, NY 10286
Attention: Corporate Trust Division-Corporate
Finance Unit
Ladies and Gentlemen:
This Agreement is dated as of
November [22], 2005 (the “Agreement”) by and among
E*TRADE Financial Corporation, a Delaware corporation (the
“Company”), Morgan Stanley & Co. Incorporated,
as the remarketing agent (the “Remarketing Agent”), and
The Bank of New York, a New York banking corporation, not
individually but solely as Purchase Contract Agent (the
“Purchase Contract Agent”) and as attorney-in-fact of
the holders of Purchase Contracts (as defined in the Purchase
Contract and Pledge Agreement referred to below).
Section 1.
Definitions.
(a) Capitalized terms used and not
defined in this Agreement shall have the meanings set forth in the
Purchase Contract and Pledge Agreement, dated as of November [22],
2005, among the Company, The Bank of New York as Purchase Contract
Agent and attorney-in-fact for the Holders of the Purchase
Contracts, and The Bank of New York as Collateral Agent, Custodial
Agent and Securities Intermediary, as amended from time to time
(the “Purchase Contract and Pledge
Agreement”).
(b) As used in this Agreement, the
following terms have the following meanings:
“Agreement” has the
meaning specified in the first paragraph of this Remarketing
Agreement.
“Commencement Date” has
the meaning specified in Section 3.
“Commission” means the
Securities and Exchange Commission.
“Company” has the
meaning specified in the first paragraph of this Remarketing
Agreement.
“Final Remarketing” has
the meaning specified in Section 2(c).
“Final Remarketing Date”
has the meaning specified in Section 2(c).
“indemnified party” has
the meaning specified in Section 7(c).
“indemnifying party” has
the meaning specified in Section 7(c).
“Initial Remarketing”
has the meaning specified in Section 2(b).
“Initial Remarketing
Date” has the meaning specified in
Section 2(b).
“Preliminary Prospectus”
means any preliminary prospectus relating to the Remarketed Notes
included in the Registration Statement, including the documents
incorporated by reference therein as of the date of such
Preliminary Prospectus; and any reference to any amendment or
supplement to such Preliminary Prospectus shall be deemed to refer
to and include any documents filed after the date of such
Preliminary Prospectus under the Exchange Act and incorporated by
reference in such Preliminary Prospectus.
“Prospectus” means the
prospectus relating to the Remarketed Notes, in the form in which
first filed, or transmitted for filing, with the Commission after
the effective date of the Registration Statement pursuant to Rule
424(b), including the documents incorporated by reference therein
as of the date of such Prospectus; and any reference to any
amendment or supplement to such Prospectus shall be deemed to refer
to and include any documents filed after the date of such
Prospectus, under the Exchange Act, and incorporated by reference
in such Prospectus.
“Purchase Contract and Pledge
Agreement” has the meaning specified in
Section 1(a).
“Registration Statement”
means a registration statement under the Securities Act prepared by
the Company covering, inter alia, the Remarketing of the Remarketed
Notes pursuant to Section 5(a) hereunder, including all
exhibits thereto and the documents incorporated by reference in the
prospectus contained in such registration statement, and any
post-effective amendments thereto.
“Remarketed Notes” means
the Subordinated Notes underlying the Pledged Applicable Ownership
Interests in Subordinated Notes and the Separate Subordinated
Notes, if any, subject to Remarketing as identified to the
Remarketing Agent by the Purchase Contract Agent and the Custodial
Agent, respectively, as of 5:00 p.m., New York City time, on the
seventh Business Day immediately preceding the Purchase Contract
Settlement Date, as modified in connection with the Remarketing,
and shall include: (a) the
Subordinated Notes underlying the Pledged
Applicable Ownership Interests in Notes of the Holders of Corporate
Units who have not notified the Purchase Contract Agent prior to
5:00 p.m., New York City time, on the seventh Business Day
immediately preceding the Purchase Contract Settlement Date of
their intention to effect a Cash Settlement of the related Purchase
Contracts pursuant to the terms of the Purchase Contract and Pledge
Agreement or who have so notified the Purchase Contract Agent but
failed to make the required cash payment on the sixth Business Day
immediately preceding the Purchase Contract Settlement Date
pursuant to the terms of the Purchase Contract and Pledge
Agreement, and (b) the Separate Notes of the holders of
Separate Notes, if any, who have elected to have their Separate
Notes remarketed in such Remarketing pursuant to the terms of the
Purchase Contract and Pledge Agreement.
“Remarketing” means the
remarketing of the Remarketed Notes pursuant to this Remarketing
Agreement on any of the Initial Remarketing Date, the Second
Remarketing Date or the Final Remarketing Date.
“Remarketing Fee” has
the meaning specified in Section 4.
“Remarketing Materials”
means the Preliminary Prospectus, the Prospectus or any other
information furnished by the Company to the Remarketing Agent for
distribution to investors in connection with the
Remarketing.
“Remarketing Settlement
Date” means the Purchase Contract Settlement Date.
“Reset Rate” has the
meaning specified in Section 2(d).
“Second Remarketing” has
the meaning specified in Section 2(c).
“Second Remarketing
Date” has the meaning specified in
Section 2(c).
“Securities” has the
meaning specified in Section 10.
“Notes” means the series
of subordinated notes, as modified in connection with the
Remarketing, designated [ ]% Notes
due 2010 of the Company.
“Transaction Documents”
means this Agreement, the Purchase Contract and Pledge Agreement
and the Indenture, in each case as amended or supplemented from
time to time.
“Underwriting Agreement”
has the meaning specified in Section 3(a).
Section 2.
Appointment and Obligations of
the Remarketing Agent.
(a) The Company hereby appoints
Morgan Stanley & Co. Incorporated as the exclusive
Remarketing Agent, and, subject to the terms and conditions set
forth
herein, Morgan Stanley & Co.
Incorporated hereby accepts appointment as Remarketing Agent, for
the purpose of (i) remarketing the Remarketed Notes on behalf
of the holders thereof, (ii) determining, in consultation with
the Company, in the manner provided for herein and in the Purchase
Contract and Pledge Agreement and the Indenture, the Reset Rate for
the Notes, and (iii) performing such other duties as are
assigned to the Remarketing Agent in the Transaction
Documents.
(b) Unless a Special Event
Redemption or a Termination Event has occurred prior to such date,
on the fifth Business Day immediately preceding the Purchase
Contract Settlement Date (the “Initial Remarketing
Date”), the Remarketing Agent shall use its reasonable
efforts to remarket (“Initial Remarketing”) the
Remarketed Notes, at the Remarketing Price.
(c) In the case of a Failed
Remarketing on the Initial Remarketing Date and unless a Special
Event Redemption or a Termination Event has occurred prior to such
date, on the fourth Business Day immediately preceding the Purchase
Contract Settlement Date (the “Second Remarketing
Date”), the Remarketing Agent shall use its reasonable
efforts to remarket (the “Second Remarketing”) the
Remarketed Notes at the Remarketing Price. In the case of a Failed
Remarketing on the Second Remarketing Date and unless a Special
Event Redemption or a Termination Event has occurred prior to such
date, on the third Business Day immediately preceding the Purchase
Contract Settlement Date (the “Final Remarketing
Date”), the Remarketing Agent shall use its reasonable
efforts to remarket (the “Final Remarketing”) the
Remarketed Notes at the Remarketing Price. It is understood and
agreed that the Remarketing on any Remarketing Date will be
considered successful and no further attempts will be made if the
resulting proceeds are at least equal to the Remarketing
Price.
(d) In connection with each
Remarketing, the Remarketing Agent shall determine, in consultation
with the Company, the terms of the notes, including those which may
be modified in connection with the remarketing pursuant to the
Indenture, including the rate per annum, rounded to the nearest
one-thousandth (0.001) of one percent per annum, that the Notes
should bear (the “Reset Rate”) in order for the
Remarketed Notes to have an aggregate market value equal to the
Remarketing Price and that in the sole reasonable discretion of the
Remarketing Agent will enable it to remarket all of the Remarketed
Notes at the Remarketing Price in such Remarketing; provided that
such rate shall not exceed the maximum interest rate permitted by
applicable law.
(e) If, by 4:00 p.m., New York City
time, on the applicable Remarketing Date, (1) the Remarketing
Agent is unable to remarket all of the Remarketed Notes, other than
to the Company, at the Remarketing Price pursuant to the terms and
conditions hereof or (2) the Remarketing did not occur on such
Remarketing Date because one of the conditions set forth in
Section 6 hereof was not satisfied, a Failed Remarketing shall
be deemed to have occurred, and the Remarketing Agent shall advise
by telephone the Depositary, the Purchase Contract Agent and the
Company. Whether or not there has been a Failed Remarketing will be
determined in the sole reasonable discretion of the Remarketing
Agent.
(f) In the event of a Successful
Remarketing, by approximately 4:30 p.m., New York City time, on the
applicable Remarketing Date, the Remarketing Agent shall advise, by
telephone:
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(1)
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the Depositary,
the Purchase Contract Agent and the Company of the Reset Rate
determined by the Remarketing Agent in such Remarketing and the
number of Remarketed Notes sold in such Remarketing;
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(2)
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each purchaser
(or the Depositary Participant thereof) of Remarketed Notes of the
Reset Rate and the number of Remarketed Notes such purchaser is to
purchase;
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(3)
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each such
purchaser (if other than a Depositary Participant) to give
instructions to its Depositary Participant to pay the purchase
price on the Remarketing Settlement Date in same day funds against
delivery of the Remarketed Notes purchased through the facilities
of the Depositary; and
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(4)
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each such
purchaser (or Depositary Participant thereof) that the Remarketed
Notes will not be delivered until the Remarketing Settlement Date,
and, in the case of the Initial Remarketing Date or the Second
Remarketing, the Remarketing Settlement Date will be five Business
Days or four Business Days, respectively, following the date of
such Remarketing and that if such purchaser wishes to trade the
Remarketed Notes that it has purchased prior to the third Business
Day preceding the Remarketing Settlement Date, such purchaser will
have to specify an alternative settlement cycle at the time of any
such trade to prevent failed settlement.
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The Remarketing Agent shall also, if
required by the Securities Act, deliver, in conformity with the
requirements of the Securities Act, to each purchaser a Prospectus
in connection with the Remarketing.
(g) The proceeds from a Successful
Remarketing (i) with respect to the Notes underlying the
Applicable Ownership Interests in Notes that are components of the
Corporate Units, shall be paid to the Collateral Agent in
accordance with Section 5.02 of the Purchase Contract and
Pledge Agreement and (ii) with respect to the Separate Notes,
shall be paid to the Custodial Agent for payment to the holders of
such Separate Notes in accordance with Section 5.02 of the
Purchase Contract and Pledge Agreement.
(h) The right of each holder of
Remarketed Notes to have such Remarketed Notes remarketed and sold
on any Remarketing Date shall be subject to the conditions that
(i) the Remarketing Agent conducts (A) an Initial
Remarketing, (B) a Second Remarketing in the event of a Failed
Remarketing on the Initial Remarketing Date
and (C) a Final Remarketing in the event of
a Failed Remarketing on the Second Remarketing Date, each pursuant
to the terms of this Agreement, (ii) neither a Special Event
Redemption nor a Termination Event has occurred prior to such
Remarketing Date, (iii) the Remarketing Agent is able to find
a purchaser or purchasers for Remarketed Notes at the Remarketing
Price based on the Reset Rate, and (iv) such purchaser or
purchasers deliver the purchase price therefor to the Remarketing
Agent as and when required.
(i) It is understood and agreed that
the Remarketing Agent shall not have any obligation whatsoever to
purchase any Remarketed Notes, whether in the Remarketing or
otherwise, and shall in no way be obligated to provide funds to
make payment upon tender of Remarketed Notes for Remarketing or to
otherwise expend or risk its own funds or incur or to be exposed to
financial liability in the performance of its duties under this
Agreement. Neither the Company nor the Remarketing Agent shall be
obligated in any case to provide funds to make payment upon tender
of the Remarketed Notes for Remarketing.
Section 3.
Representations and Warranties
of the Company.
The Company represents and warrants
(i) on and as of the date any Remarketing Materials are first
distributed in connection with the Remarketing (the
“Commencement Date”), (ii) on and as of the
applicable Remarketing Date and (iii) on and as of the
Remarketing Settlement Date, that:
(a) Each of the representations and
warranties of the Company as set forth in Section 1 (other
than those made in subsection (k), (m) and (n)) of the
Underwriting Agreement dated as of November [16], 2005 (the
“Underwriting Agreement”) among the Company and Morgan
Stanley & Co. Incorporated and J.P. Morgan Securities
Inc., as representatives of the Underwriters identified in Schedule
I thereto, is true and correct as if made on each of the dates
specified above; provided that for purposes of this
Section 3(a), (A) any reference in such sections of the
Underwriting Agreement to (i) the “Registration
Statement” and the “Prospectus” shall be deemed
to refer to such terms as defined herein, (ii) the
“Closing Date” shall be deemed to refer to the
Remarketing Settlement Date, (iii) the
“Securities” shall be deemed to refer to the Remarketed
Notes, (iv) the “preliminary prospectus” shall be
deemed to refer to the “Preliminary Prospectus,”
(v) “Agreement” shall be deemed to refer to this
Agreement and (B) the term “Named Subsidiary” as
used in Section 1(d) of the Underwriting Agreement shall be
deemed to include any subsidiaries of the Company that are, on each
of the dates specified above, “significant
subsidiaries” of the Company within the meaning of Regulation
S-X.
(b) The Notes and the Indenture
conform in all material respects to the description thereof
contained in the preliminary prospectus and the Prospectus under
the headings “Description of the Remarketed
Notes.”
(c) No default or an event of
default, and no event that with the passage of time or the giving
of notice or both would become an event of default, shall occur and
be continuing, under any of the Securities Agreements (as defined
in the Underwriting Agreement).
Section 4.
Fees.
In the event of a Successful
Remarketing of the Remarketed Notes, the Company shall pay the
Remarketing Agent a remarketing fee equal to 0.25% of the principal
amount of the Remarketed Notes (the “Remarketing Fee”).
Such Remarketing Fee shall be paid by the Company on the
Remarketing Settlement Date in cash by wire transfer of immediately
available funds to an account designated by the Remarketing
Agent.
Section 5.
Covenants of the
Company.
The Company covenants and agrees as
follows:
(a) If and to the extent the
Remarketed Notes are required (in the view of counsel, which need
not be in the form of a written opinion, for either the Remarketing
Agent or the Company) to be registered under the Securities Act as
in effect at the time of the Remarketing,
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(1)
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to prepare the
Registration Statement and the Prospectus, in a form approved by
the Remarketing Agent, to file any such Prospectus pursuant to the
Securities Act within the period required by the Securities Act and
the rules and regulations thereunder and to use commercially
reasonable efforts to cause the Registration Statement to be
declared effective by the Commission prior to the second Business
Day immediately preceding the applicable Remarketing
Date;
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(2)
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to file
promptly with the Commission any amendment to the Registration
Statement or the Prospectus or any supplement to the Prospectus
that may, in the reasonable judgment of the Company or the
Remarketing Agent, be required by the Securities Act or requested
by the Commission;
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(3)
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to advise the
Remarketing Agent, promptly after it receives notice thereof, of
the time when any amendment to the Registration Statement has been
filed or becomes effective or any supplement to the Prospectus or
any amended Prospectus has been filed and to furnish the
Remarketing Agent with copies thereof;
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(4)
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to file
promptly all reports and any definitive proxy or information
statements required to be filed by the Company with the Commission
pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange
Act subsequent to the date of the Prospectus and for so long as the
delivery of a Prospectus is required in connection with the
offering or sale of the Remarketed Notes;
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(5)
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to advise the
Remarketing Agent, promptly after it receives notice thereof, of
the issuance by the Commission of any stop order or of any order
preventing or suspending the use of the Prospectus, of the
suspension of the qualification of any of the Remarketed Notes for
offering or sale in any jurisdiction, of the initiation or
threatening of any proceeding for any such purpose, or of any
request by the Commission for the amending or supplementing of the
Registration Statement or the Prospectus or for additional
information, and, in the event of the issuance of any stop order or
of any order preventing or suspending the use of any Prospectus or
suspending any such qualification, to use promptly its best efforts
to obtain its withdrawal;
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(6)
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to furnish
promptly to the Remarketing Agent such copies of the following
documents as the Remarketing Agent shall reasonably request:
(A) conformed copies of the Registration Statement as
originally filed with the Commission and each amendment thereto (in
each case excluding exhibits); (B) the Preliminary Prospectus
and any amended or supplemented Preliminary Prospectus;
(C) the Prospectus and any amended or supplemented Prospectus;
and (D) any document incorporated by reference in the
Prospectus (excluding exhibits thereto); and, if at any time when
delivery of a prospectus is required in connection with the
Remarketing, any event shall have occurred as a result of which the
Prospectus as then amended or supplemented would include any untrue
statement of a material fact or omit to state any material fact
necessary in order to make the statements therein, in the light of
the circumstances under which they were made when such Prospectus
is delivered, not misleading, or if for any other reason it shall
be necessary during such same period to amend or supplement the
Prospectus or to file under the Exchange Act any document
incorporated by reference in the Prospectus in order to comply with
the Securities Act or the Exchange Act, to notify the Remarketing
Agent and, upon its request, to file such document and to prepare
and furnish without charge to the Remarketing Agent and to any
dealer in securities as
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many copies as the Remarketing Agent
may from time to time reasonably request of an amended or
supplemented Prospectus that will correct such statement or
omission or effect such compliance;
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(7)
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prior to filing
with the Commission (A) any amendment to the Registration
Statement or supplement to the Prospectus or (B) any
Prospectus pursuant to Rule 424 under the Securities Act, to
furnish a copy thereof to the Remarketing Agent; and not to file
any such amendment or supplement that shall be reasonably
disapproved by the Remarketing Agent;
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(8)
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as soon as
practicable, but in any event not later than eighteen months, after
the date of a Successful Remarketing, to make “generally
available to its security holders” an “earnings
statement” of the Company and its subsidiaries complying with
(which need not be audited) Section 11(a) of the Securities
Act and the rules and regulations thereunder (including, at the
option of the Company, Rule 158). The terms “generally
avail
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