EXHIBIT 7(8)
Option Right Exercise Agreement
OPTION RIGHT EXERCISE AGREEMENT
This Option Right Exercise Agreement (the "Agreement") is entered into
as of November 26, 1996, by and among FRANKLIN RESOURCES, INC., a Delaware
corporation (the "Parent"), XXXXXXXXX WORLDWIDE, INC., a Delaware corporation
(the "Company" and, with Parent, the "Issuer"), XXXXXXX & XXXXXXXX CAPITAL
PARTNERS II, L.P., a California limited partnership ("HFCP II"), H&F ORCHARD
PARTNERS, L.P., a California limited partnership ("Orchard Partners"), H&F
INTERNATIONAL PARTNERS, L.P., a California limited partnership ("International
Partners"), and MAGELLAN PTE. LTD., a corporation formed under the laws of
Singapore ("Magellan" and, with HFCP II, Orchard Partners and International
Partners, collectively the "Sellers").
BACKGROUND
1. The Sellers are presently the holders of an aggregate of One
Hundred Fifty Million Dollars ($150,000,000) face amount of 6.25% Subordinated
Debentures due 2002 (the "Debentures"), which Debentures were issued pursuant to
an indenture among the Company, Parent and the Chase Manhattan Bank (the
"Trustee") dated as of July 30, 1992 (the "Indenture"). Each Debenture was
issued by the Company and guaranteed by the Parent as contemplated by the
Indenture. Each Debenture has attached thereto an Option Right (as defined in
the Indenture) issued by the Parent, which Option Right affords the holder of
the Debenture the right to acquire shares of the Parent's common stock, par
value ten cents ($.10) per share (the "Common Stock").
2. The Parent, the Company and the Sellers have entered into this
Agreement to provide for the exercise of the Option Rights (the "Associated
Option Rights") associated with Debentures having an aggregate face amount of
Seventy-five million, fifteen thousand six dollars and thirty cents
$75,015,006.30) pursuant to Section 1202 of the Indenture by means of the
surrender for redemption of such Debentures pursuant to Section 1113 of the
Indenture; the proceeds of such redemption are to be delivered by the Company to
the Parent to be applied, pursuant to the Indenture, to payment of the Option
Price. At the closing of the transactions contemplated by this Agreement,
Parent will deliver to the Sellers shares of Parent's Common Stock, together
with the Cash Payment as provided herein. Schedule I sets forth the face amount
of the Redeemed Debentures to be surrendered and the number of shares of the
Parent's Common Stock to be delivered upon exercise of the Associated Option
Rights, Schedule II sets forth the aggregate Cash Payment payable to HFCP II,
Orchard and International, and Schedule III sets forth the Cash Payment payable
to Magellan.
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Capitalized terms used without definition herein shall have the
meaning ascribed to them in the Indenture.
NOW, THEREFORE, the parties hereto agree as follows:
Section 1. EXERCISE OF ASSOCIATED OPTION RIGHTS. Subject to the
satisfaction of the Option Exercise Conditions set forth in Section 4, the
Sellers severally agree to exercise the Associated Option Rights pursuant to
Section 1202 of the Indenture. Schedule I sets forth the face amount of the
Redeemed Debentures to which the Associated Option Rights relate and the number
of shares of Parent's Common Stock to be delivered upon exercise of the
Associated Option Rights. The Option Price shall be paid by delivery of the
Redeemed Debentures for redemption by the Company as contemplated by Sections
1101, 1111, 1113 and 1202 of the Indenture. Such Redeemed Debentures shall be
redeemed by the Company on the Closing Date (as defined below) as provided in
the Indenture and the proceeds thereof remitted by the Company to the Parent in
full payment of the aggregate Option Price payable for exercise of the
Associated Option Rights as provided in the Indenture. The Parent shall deliver
to the Sellers on the Closing Date, against exercise of the Associated Option
Rights by the Sellers and payment of the Option Price by the Company on the
Seller's behalf, an aggregate of Two million three hundred sixty-one thousand
one hundred ninety (2,361,190) shares of Common Stock of Parent as provided in
Associated Option Rights, together with an aggregate cash payment (the "Cash
Payment") in an amount set forth on Schedule II (in the case of HFCP II, Orchard
and International) and Schedule III (in the case of Magellan). The Cash Payment
payable to HFCP II, Orchard and International shall be divided among them as
provided in written instructions provided to Parent prior to the Closing Date
(as defined below). The closing of the transactions contemplated hereby shall
take place on the second business day after the satisfaction of the Option
Exercise Conditions, or on such other date as is mutually agreed by the parties
(the "Closing Date"). Notwithstanding any provisions in the Indenture to the
contrary, neither party will make any payment to the other party in respect of
interest on the Redeemed Debentures surrendered pursuant to this Agreement other
than (a) if the transaction has not closed on or before December 15, 1996, the
interest payment then payable, and (b) as reflected in the calculation of the
Cash Payment.
Section 2. REPRESENTATIONS AND WARRANTIES OF SELLERS. Each Seller
severally represents and warrants that at the Closing: (a) the execution,
delivery and performance by each such Seller of this Agreement (i) are within
the corporate or partnership power and authority, as appropriate, of each such
Seller, (ii) have been duly authorized by all necessary action on the part of
such Seller, (iii) do not conflict with, or result in a breach of the terms,
conditions or provisions of, or constitute a default under, a limited
partnership agreement or
-2-
organizational document of such Seller or any material contract or agreement to
which such Seller is a party, and (iv) will not violate any order, writ,
injunction, decree, judgment, ruling, law, rule or other regulation of any court
or governmental authority, domestic or foreign, applicable to such Seller or its
properties; (b) this Agreement constitutes a legal, valid and binding agreement
of such Seller enforceable against such Seller in accordance with its terms; and
(c) the delivery of the Purchased Securities to the Parent pursuant to this
Agreement will transfer to Parent legal and valid title thereto free and clear
of all claims, liens, charges or encumbrances of any kind or nature whatsoever
created by Sellers.
Section 3. REPRESENTATIONS AND WARRANTIES OF THE ISSUERS. Each
Issuer represents and warrants that at the Closing: (a) the execution, delivery
and performance by each Issuer of this Agreement (i) are within the corporate
power and authority of each Issuer, (ii) has been duly authorized by all
necessary corporate or other action on the part of each Issuer, (iii) does not
conflict with, or result in a breach of the terms, conditions or provisions of,
or constitute a default under, the certificate of incorporation, as amended, or
bylaws of either Issuer or any material contract or agreement to which such
Issuer or any material contract or agreement to which either Issuer is a party,
and (iv) will not violate any order, writ, injunction, decree, judgment, ruling,
law, rule or regulation of any court or governmental authority, domestic or
foreign, applicable to either Issuer or their subsidiaries or any of their
respective properties; and (b) this Agreement constitutes a legal, valid and
binding agreement of each Issuer enforceable against it in accordance with its
terms.
Section 4. CONDITIONS TO OPTION EXERCISE. The obligations of the
Sellers and the Issuers to complete the transactions contemplated by Section 1
hereof are subject to the following conditions (the "Option Exercise
Conditions":
(a) The parties shall have filed, to the extent required,
notification under the Xxxx-Xxxxx-Xxxxxx Antitrust Trust Improvements
Act (which filing shall be made by November 27, 1996) or been
terminated and any waiting period under such act shall have expired;
(b) The representations and warranties of each party to the other set
forth in Sections 2 and 3 hereof shall continue to be true and correct
on and as of the Closing Date, and each party shall deliver to the
other a certificate confirming such fact executed by a duly authorized
officer of such party; and
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(c) The conditions to each parties' obligations to close the
transactions contemplated by the Debenture Repurchase Agreement of
even date herewith shall have been satisfied or waived.
If the Closing Date has not occurred prior to January 1, 1997, this Agreement
shall terminate and be of no further force or effect.
Section 5. COUNTERPARTS. This Agreement may be executed in any
number of counterparts, each of which shall be deemed to be an original and all
of which together shall be deemed to be one and the same instrument.
Section 6. GOVERNING LAW. This Agreement shall be governed in all
respects by the laws of the State of California as such laws are applied to
agreements between California residents entered into and performed entirely
within California.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed as of the date first written above.
FRANKLIN RESOURCES, INC.
By: /s/ Illegible
-------------------------
Title: Senior Vice President
----------------------
XXXXXXXXX WORLDWIDE, INC.
By: /s/ Illegible
-------------------------
Title: Executive Vice President
----------------------
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XXXXXXX & XXXXXXXX CAPITAL PARTNERS II, L.P.
By: Xxxxxxx & Xxxxxxxx Investors, L.P.,
its general partner
By: Xxxxxxx & Xxxxxxxx Investors, Inc.,
its general partner
By: /s/ Xxxxxx X. Xxxxxxxxxxxx
---------------------------------------
Title: Vice President
------------------------------------
H&F ORCHARD PARTNERS, L.P.
By: H&F Orchard Investors, L.P.,
its general partner
By: H&F Orchard Investors, Inc.,
its general partner
By: /s/ Xxxxxx X. Xxxxxxxxxxxx
---------------------------------------
Title: Vice President
------------------------------------
H&F INTERNATIONAL PARTNERS, L.P.
By: H&F International Investors, L.P.,
its general partner
By: H&F International Investors, Inc.,
its general partner
By: /s/ Xxxxxx X. Xxxxxxxxxxxx
---------------------------------------
Title: Vice President
------------------------------------
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MAGELLAN PTE. LTD.
By: /s/ Kunnasagaran Xxxxxxxx
---------------------------------------
Title: Director
------------------------------------
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SCHEDULE I
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-------------------------------------------------------
SELLER REDEEMED SHARES SUBJECT TO
DEBENTURES ASSOCIATED OPTION
(IN $) RIGHTS
-------------------------------------------------------
HFCP II 46,494,314.82 1,463,466
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Orchard 2,930,591.88 92,244
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International 585,108.09 18,417
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Magellan 25,004,991.51 787,063
-------------------------------------------------------
TOTAL: 75,015,006.30 2,361,190
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-------------------------------------------------------
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SCHEDULE II
CASH PAYMENT BY CLOSING DATE
(H & F ENTITIES)
--------------------------------------
Current shares: 3.147624
Shares sold: 1.573497
Remaining shares: 1.574127
--------------------------------------
--------------------------------------
Discount rate: 10.0%
Assumed days in year: 360
--------------------------------------
Cash
Payment
$
Day:
11/15/96 $2,987,628
11/16/96 $2,988,419
11/17/96 $2,989,211
11/18/96 $2,990,002
11/19/96 $2,990,794
11/20/96 $2,991,586
11/21/96 $2,992,378
11/22/96 $2,993,170
11/23/96 $2,993,963
11/24/96 $2,994,756
11/25/96 $2,995,548
11/26/96 $2,996,342
11/27/96 $2,997,135
11/28/96 $2,997,929
11/29/96 $2,998,722
11/30/96 $2,999,516
12/01/96 $3,000,311
12/02/96 $3,001,105
12/03/96 $3,001,900
12/04/96 $3,002,695
12/05/96 $3,003,490
12/06/96 $3,004,285
12/07/96 $3,005,080
12/08/96 $3,005,876
12/09/96 $3,006,672
12/10/96 $3,007,468
12/11/96 $3,008,265
12/12/96 $3,009,061
12/13/96 $3,009,858
12/14/96 $3,010,655
12/15/96 $3,011,452
12/16/96 $1,281,855
12/17/96 $1,282,194
12/18/96 $1,282,534
12/19/96 $1,282,873
12/20/96 $1,283,213
12/21/96 $1,283,553
12/22/96 $1,283,893
12/23/96 $1,284,233
12/24/96 $1,284,573
12/25/96 $1,284,913
12/26/96 $1,285,253
12/27/96 $1,285,593
12/28/96 $1,285,934
12/29/96 $1,286,274
12/30/96 $1,286,615
12/31/96 $1,286,956
01/01/97 $1,475,493
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SCHEDULE III
CASH PAYMENT BY CLOSING DATE
(MAGELLAN)
--------------------------------------
Current shares: 1.573812
Shares sold: 0.786749
Remaining shares: 0.787063
--------------------------------------
--------------------------------------
Discount rate: 10.0%
Assumed days in year: 360
--------------------------------------
Cash
Payment
Day $
11/15/96 $1,330,299
11/16/96 $1,330,652
11/17/96 $1,331,004
11/18/96 $1,331,357
11/19/96 $1,331,709
11/20/96 $1,332,062
11/21/96 $1,332,414
11/22/96 $1,332,767
11/23/96 $1,333,120
11/24/96 $1,333,473
11/25/96 $1,333,826
11/26/96 $1,334,179
11/27/96 $1,334,533
11/28/96 $1,334,886
11/29/96 $1,335,239
11/30/96 $1,335,593
12/01/96 $1,335,947
12/02/96 $1,336,300
12/03/96 $1,336,654
12/04/96 $1,337,008
12/05/96 $1,337,362
12/06/96 $1,337,716
12/07/96 $1,338,070
12/08/96 $1,338,425
12/09/96 $1,338,779
12/10/96 $1,339,134
12/11/96 $1,339,488
12/12/96 $1,339,843
12/13/96 $1,340,198
12/14/96 $1,340,553
12/15/96 $1,340,907
12/16/96 $559,650
12/17/96 $559,798
12/18/96 $559,946
12/19/96 $560,094
12/20/96 $560,243
12/21/96 $560,391
12/22/96 $560,539
12/23/96 $560,688
12/24/96 $560,836
12/25/96 $560,985
12/26/96 $561,133
12/27/96 $561,282
12/28/96 $561,430
12/29/96 $561,579
12/30/96 $561,728
12/31/96 $561,877
01/01/97 $656,123
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