EXHIBIT (k)(3)
FORM OF
FORWARD CONTRACT AGREEMENT
THIS AGREEMENT is made as of this December [ ], 2001 among [ ] , a
corporation organized under the laws of the State of Delaware ("Counterparty")
and Equity Securities Trust II, a business trust organized under the laws of the
State of Delaware under and by virtue of an amended and restated declaration of
trust, dated as of December [ ], 2001 (the "Declaration of Trust") (such trust
and the trustees thereof acting in their capacity as such being referred to
herein as the "Trust").
WHEREAS, Counterparty owns shares of Rainbow Media Group Class A
common stock, $.01 par value (the "Common Stock") of Cablevision Systems
Corporation, a Delaware corporation (including its successors) (the "Company");
WHEREAS, Trust has filed with the Securities and Exchange Commission
a registration statement contemplating the offering of up to [ ] Equity Trust
Securities (the "Equity Trust Securities"), the terms of which contemplate
delivery by the Trust to the holders thereof of a number of shares of Common
Stock (or, if the Counterparty exercises its cash settlement option, cash in
lieu thereof), on, or shortly after, [ ], 2004 (as further defined herein, the
"Exchange Date");
WHEREAS, in exchange for certain consideration to be paid by the
Trust hereunder, the Trust and Counterparty desire to provide for the future
acquisition, sale and delivery of all or a portion of the aggregate number of
shares of Common Stock, or the cash value thereof, contemplated to be delivered
by the Trust in respect of the Equity Trust Securities on the Exchange Date, at
a price to be established under this Agreement and such other agreements;
WHEREAS, Counterparty has agreed to enter into a Collateral
Agreement (the "Collateral Agreement") dated as of the date hereof, among the
Trust, Counterparty and The Bank of New York, as collateral agent (the
"Collateral Agent"), to grant the Trust a security interest in the shares of
Common Stock specified therein and in certain other circumstances certain other
collateral to secure the obligations of Counterparty hereunder;
WHEREAS, the Trust has agreed, pursuant to an underwriting
agreement, dated December [ ], 2001 (the "Underwriting Agreement"), among the
Trust, Counterparty, the Company, Xxxxxxx Xxxxx Xxxxxx Inc., Bear, Xxxxxxx & Co.
Inc. and Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx Incorporated (each an
"Underwriter", and collectively, the "Underwriters"), to issue and sell to the
Underwriters an aggregate of 8,514,206 Equity Trust Securities (together with
the [ ] Equity Trust Securities purchased by Xxxxxxx Xxxxx Barney Inc. in
connection with the organization of the Trust, the "Initial Equity Trust
Securities") and, at the Underwriters' option, up to 1,277,130 additional Equity
Trust Securities (the "Additional Equity Trust Securities") to cover
over-allotments, if any.
NOW, THEREFORE, in consideration of their mutual covenants herein
contained, the parties hereto, intending to be legally bound, hereby mutually
covenant and agree as follows:
DEFINITIONS
As used herein, the following words and phrases shall have the
following meanings:
"Acceleration Date" has the meaning provided in Article VII.
"Acceleration Value" has the meaning provided in Article VII.
"Act" means the Securities Act of 1933, as amended, and the rules
and regulations of the Commission promulgated thereunder.
"Additional Equity Trust Securities" has the meaning provided in the
recitals of this Agreement.
"Additional Contract Price" has the meaning provided in Section
1.2(b).
["Additional Share Base Amount" means a number equal to the number
of Additional Equity Trust Securities that the Underwriters elect to purchase
under the Underwriting Agreement.]
"Additional Shares" has the meaning provided in Section 1.1(b).
"Additional STRIPS" means the U.S. Treasury obligations purchased by
the Trust for settlement on the Option Closing Date.
"Adjustment Event" has the meaning provided in Section 6.2.
"Administrator" means The Bank of New York, administrator for the
Trust under the Administration Agreement dated as of December [ ], 2001, or any
successor thereto.
"Affiliate" means, as to any Person, any other Person that, directly
or indirectly, controls, is controlled by or is under common control with such
Person or is a partner in, or a trustee, settlor, beneficiary, member, manager,
director or officer of, such Person and, with respect to any Person that is a
natural person, further includes such Person's immediate family members,
including his father, mother, spouse and children, the spouses of his children,
his siblings and their spouses and children. For purposes of this definition,
"control" (including the terms "controlled by" or "under common control with")
means, as to any Person, the possession, direct or indirect, of the power to
vote ten percent or more of the corporate or beneficial interests of such Person
(or of the securities having ordinary voting power for the election of directors
of such Person), or the power to direct or cause the direction of the management
and policies of such Person, whether through ownership of voting securities or
by contract or otherwise.
"Bankruptcy Code" has the meaning provided in Section 8.7.
"Business Day" means any day that is not a Saturday, a Sunday or a
day on which the NYSE or banking institutions or trust companies in The City of
New York are authorized or obligated by law or executive order to close.
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"Calculation Period" means any period of Trading Days for which an
average security price must be determined pursuant to this Agreement.
"Cash Delivery Option" has the meaning provided in Section 1.3(d).
"Cash Equivalents" means (i) United States dollars, (ii) securities
issued or directly and fully guaranteed or insured by the United States
government or any agency or instrumentality thereof (provided that the full
faith and credit of the United States is pledged in support thereof) having
maturities of not more than six months from the date of acquisition, (iii)
certificates of deposit with maturities of six months or less from the date of
the acquisition, bankers' acceptances with maturities not exceeding six months
and overnight bank deposits, in each case with any domestic commercial bank
having capital and surplus in excess of $500 million and a Xxxxxxxx Bank Watch
Rating of "B" or better, (iv) repurchase obligations with a term of not more
than seven days for underlying securities of the types described in clause (ii)
above entered into with any financial institution meeting the qualifications
specified in clause (iii) above, (v) commercial paper having the highest rating
obtainable from Xxxxx'x Investors Service, Inc. or Standard & Poor's Ratings
Group and in each case maturing within six months after the date of acquisition
and (vi) money market funds at least 95% of the assets of which constitute Cash
equivalents of the kinds described in clauses (i)-(v) of this definition.
"Closing Price" means, for any security on any date of
determination, (i) the closing sale price (or, if no closing price is reported,
the last reported sale price) of such security (regular way) on the NYSE on such
date, (ii) if such security is not listed for trading on the NYSE on any such
date, as reported in the composite transactions for the principal United States
securities exchange on which such security is so listed, (iii) if such security
is not so listed on a United States national or regional securities exchange, as
reported by The NASDAQ Stock Market, (iv) if such security is not so reported,
the last quoted bid price for such security in the over-the-counter market as
reported by the National Quotation Bureau or similar organization, or (v) if
such security is not so quoted, the average of the mid-point of the last bid and
ask prices for such security from at least three nationally recognized
investment banking firms that the Administrator selects for such purpose. The
Closing Price as determined pursuant to the foregoing shall be subject to
adjustment in certain circumstances as provided in Section 6.1(c).
"Collateral" has the meaning provided in the Collateral Agreement.
"Collateral Agent" has the meaning provided in the recitals of this
Agreement.
"Collateral Agreement" has the meaning provided in the recitals of
this Agreement.
"Commission" means the Securities and Exchange Commission.
"Common Stock" has the meaning provided in the recitals of this
Agreement.
"Company" has the meaning provided in the recitals of this
Agreement.
"Contract Shares" has the meaning provided in Section 1.1.
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"Counterparty" has the meaning provided in the introductory
paragraph of this Agreement.
"Custodian" means The Bank of New York, custodian for the Trust
under the Custodian Agreement dated as of December [ ], 2001, or any successor
thereto.
"Declaration of Trust" has the meaning provided in the introductory
paragraph of this Agreement.
"Dilution Adjustment" means any fraction or number by which the
Exchange Rate shall be multiplied pursuant to Section 6.1(a) or (b) or by which
Closing Prices may be divided pursuant to Section 6.1(c).
"Equity Trust Securities" has the meaning provided in the recitals
of this Agreement.
"Event of Default" has the meaning provided in Article VII.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations of the Commission promulgated thereunder.
"Exchange Date" means [ ], 2004, subject to (i) extension [by
Counterparty] pursuant to Section 1.3(f) and (ii) subsequent acceleration [by
Counterparty] pursuant to Section 1.3(g).
"Exchange Price" means the average Closing Price per share of Common
Stock on the 20 Trading Days immediately prior to (but not including) the
Exchange Date; provided, however, that if there are not 20 Trading Days for the
Common Stock occurring later than the 60th calendar day immediately prior to,
but not including, the Exchange Date, Exchange Price shall mean the market value
per share of the Common Stock as of the Exchange Date as determined by a
nationally recognized independent investment banking firm retained for this
purpose by the Administrator; provided, further, that for purposes of
determining the payment required upon cash settlement of this Agreement in
connection with a Rollover Offering, "Exchange Price" means the Closing Price
per share of Common Stock on the Trading Day immediately preceding the date that
the Rollover Offering is priced (the "Pricing Date") or, if the Rollover
Offering is priced after 4:00 p.m., New York City time, on the Pricing Date, the
Closing Price per share of Common Stock on the Pricing Date. The Exchange Price
as determined pursuant to the foregoing shall be subject to adjustment in
certain circumstances as provided in Section 6.1(c).
"Exchange Rate" has the meaning provided in Section 1.1(c).
"Extension Amount" means the product of (i) $[ ] multiplied by [(ii)
a fraction, the numerator of which is the sum of the number of Initial Equity
Trust Securities and Additional Equity Trust Securities and the denominator of
which is the number of Initial Equity Trust Securities, multiplied by] (iii) a
fraction, the numerator of which is the sum of the Firm Share Base Amount and
the Additional Share Base Amount and the denominator of which is the number of
Initial Equity Trust Securities and Additional Equity Trust Securities.
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"Firm Payment Date" has the meaning provided in Section 1.3(a).
"Firm Contract Price" has the meaning provided in Section 1.2(a).
"Firm Share Base Amount" has the meaning provided in Section 1.1(a).
"Firm Shares" has the meaning provided in Section 1.1(a).
"Forward Contract Characterization" has the meaning provided in
Section 5.2(a).
"Independent Dealers" has the meaning provided in Article VII.
"Initial Equity Trust Securities" has the meaning provided in the
recitals of this Agreement.
"Initial Price" has the meaning provided in Section 1.1(c).
"Lien" has the meaning provided in the Collateral Agreement.
"Market Price" means, as of any date of determination, the average
Closing Price per share of Common Stock on the 20 Trading Days immediately prior
to (but not including) the date of determination; provided, however, that if
there are not 20 Trading Days for the Common Stock occurring later than the 60th
calendar day immediately prior to, but not including, such date, the Market
Price shall mean the market value per share of Common Stock as of such date as
determined by a nationally recognized investment banking firm retained for such
purpose by the Administrator.
"NYSE" means the New York Stock Exchange, Inc.
"Officer" shall mean the manager, trustee, president, any vice
president, the chief financial officer, the treasurer or the secretary of a
Person.
"Officer's Certificate" means a certificate signed by an Officer of
a Person.
"Opinion of Counsel" means a written opinion from legal counsel who
is acceptable to the Trust.
"Option Closing Date" means the settlement dates for the Additional
Equity Trust Securities under Section 5 of the Underwriting Agreement.
"Ordinary Cash Dividend" means, with respect to any consecutive
365-day period, any dividend with respect to Common Stock paid in cash to the
extent that the amount of such dividend, together with the aggregate amount of
all other dividends on the Common Stock paid in cash during such 365-day period,
does not exceed on a per share basis 10% of the average of the Closing Prices of
the Common Stock over such 365-day period; provided that, for purposes of the
foregoing definition, the amount of cash dividends paid on a per share basis
shall be appropriately adjusted to reflect the occurrence during such period of
any event described in Article VI.
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"Person" means an individual, partnership, corporation (including a
business trust), joint stock company, trust, unincorporated association, limited
liability company, joint venture or other entity, or a government or any
political subdivision or agency thereof.
"Reimbursement Agreement" means the reimbursement agreement, to be
dated as of December [ ], 2001 among Xxxxxxx Xxxxx Xxxxxx Inc., AT&T Broadband
CSC Holdings, Inc. and AT&T Broadband CSC II, Inc.
"Reported Securities" has the meaning provided in Section 6.2.
"Rollover Offering" means a reoffering or refinancing of the Equity
Trust Securities effected by the Counterparty not earlier than [ ], 2004 by
means of a completed public offering or offerings or another similar offering
(which may include one or more exchange offers), by or on behalf of such
Counterparty.
"Rollover Offering Election" means a written election made in
accordance with Section 1.3(e).
"Share Components" means the numbers of shares of Common Stock per
Equity Trust Security specified in clauses (i), (ii) and (iii) of Section
1.1(c).
"Threshold Appreciation Price" has the meaning provided in Section
1.1(c).
"Trading Day" means, with respect to any security the Closing Price
of which is being determined, a day on which such security (A) is not suspended
from trading on any national or regional securities exchange or association or
over-the-counter market at the close of business and (B) has traded at least
once on the national or regional securities exchange or association or
over-the-counter market that is the primary market for the trading of such
security.
"Transaction Value" has the meaning provided in Section 6.2.
"Trust" has the meaning provided in the introductory paragraph of
this Agreement.
"Underwriter" and "Underwriters" have the meaning provided in the
recitals of this Agreement.
"Underwriting Agreement" has the meaning provided in the recitals of
this Agreement.
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ARTICLE I
PAYMENT AND DELIVERY
1.1 Payment and Delivery.
(a) Firm Shares. Upon the terms and subject to the conditions of
this Agreement, the Trust agrees to pay Counterparty the Firm Contract Price (as
defined in Section 1.2(a)) on the Firm Payment Date (as defined in Section
1.3(a)), in exchange the Counterparty agrees to deliver to the Trust on the
Exchange Date the number of shares of Common Stock (the "Firm Shares") equal to
the product of (x) [ ] (the "Firm Share Base Amount") multiplied by (y) the
Exchange Rate (as defined in Section 1.1(c)).
[(b) Additional Shares. Upon the terms and subject to the
conditions of this Agreement, the Trust agrees to pay Counterparty the
Additional Contract Price on the Option Closing Date (as defined in Section
1.3(b)), and in exchange, the Counterparty agrees to deliver to the Trust on the
Exchange Date a number of additional shares of Common Stock (the "Additional
Shares") equal to the product of (x) the Additional Share Base Amount multiplied
by (y) the Exchange Rate. In addition to the other conditions set forth herein,
such payment and delivery shall be conditioned on the Underwriters' purchase of
the Additional Equity Trust Securities pursuant to the Underwriting Agreement on
the Option Closing Date. Promptly after receipt by the Trust of notice that the
Underwriters are exercising their option to purchase Additional Equity Trust
Securities, the Trust will provide Counterparty with written notice of such
exercise by the Underwriters, stating the related Additional Share Base Amount
and the date on which the Trust shall deliver the contract price for the
Additional Shares, which shall be the Option Closing Date for the Additional
Equity Trust Securities. The Firm Shares and the Additional Shares (if any) are
collectively referred to herein as the "Contract Shares".]
[(b)][(c)] Exchange Rate. The "Exchange Rate" shall be determined in
accordance with the following formula, subject to adjustment as a result of
certain events as provided in Article VI: (i) if the Exchange Price is greater
than $[ ] (the "Threshold Appreciation Price"), 0.[ ], (ii) if the Exchange
Price is less than or equal to the Threshold Appreciation Price but greater than
$[ ] (the "Initial Price"), a fraction (rounded upward or downward to the
nearest 1/10,000th or, if there is not a nearest 1/10,000th, to the next higher
1/10,000th) equal to the Initial Price divided by the Exchange Price and (iii)
if the Exchange Price is less than or equal to the Initial Price, 1.
1.2 Contract Price.
(a) Firm Contract Price. The price for the Firm Shares (the "Firm
Contract Price") shall be $[ ] in cash per share of Common Stock multiplied by
the Firm Share Base Amount.
[(b) Additional Contract Price. The price for the Additional Shares
(the "Additional Contract Price") shall be an amount equal to the difference
between (1) the aggregate proceeds to the Trust from the sale of the Additional
Equity Trust Securities and (2) the aggregate cost to the Trust, as notified by
the Trust to Counterparty on the Option Closing Date for the Additional Equity
Trust Securities, of the Additional STRIPS.]
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1.3 Payment for and Delivery of Contract Shares.
(a) Firm Payment Date. Upon the terms and subject to the
conditions of this Agreement, the Trust shall deliver to Counterparty the Firm
Contract Price on December [ ], 2001 (the "Firm Payment Date") at the offices of
Shearman & Sterling, 000 Xxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, or at such
other place as shall be agreed upon by the Trust and Counterparty, paid by wire
transfer of Federal (immediately available same-day) funds to an account
designated by Counterparty, against delivery by Counterparty to the Collateral
Agent of the number of shares of Common Stock and/or cash, securities and other
property necessary to comply with Counterparty's obligations under the
Collateral Agreement.
(b) Option Closing Date. Upon the terms and subject to the
conditions of this Agreement, the Trust shall deliver to Counterparty the
Additional Contract Price on the Option Closing Date at the offices of Shearman
& Sterling, 000 Xxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, or at such other
place as shall be agreed upon by the Trust and Counterparty, paid by wire
transfer of Federal (immediately available same-day) funds to an account
designated by Counterparty, against delivery by Counterparty to the Collateral
Agent of the additional number of shares of Common Stock and/or cash, securities
and other property necessary to comply with Counterparty's obligations under the
Collateral Agreement.
(c) Delivery of Contract Shares.
(i) Except as otherwise provided in this Agreement, Counterparty
agrees to deliver the Contract Shares to the Trust on the Exchange Date.
Counterparty shall be deemed to have instructed the Collateral Agent to
deliver to the Custodian, for the account of the Trust, shares of Common
Stock then held by the Collateral Agent as collateral under the Collateral
Agreement, in an amount equal to the number of Contract Shares, rounded
down to the nearest whole number. Instead of any fractional shares of
Common Stock that would otherwise be deliverable (prior to rounding) to
the Trust at the Exchange Date, Counterparty agrees to make a cash payment
in respect of such fractional shares of Common Stock in an amount equal to
the value thereof at the Exchange Price. Notwithstanding the foregoing, if
an Adjustment Event shall have occurred prior to the Exchange Date then,
in lieu of the foregoing, Counterparty shall be deemed to have instructed:
(A) in the case of any cash required to be delivered on the Exchange Date
as provided in Section 6.2, the Collateral Agent to deliver such cash by
wire transfer Federal (immediately available same-day) funds to an account
designated by the Trust; and (B) in the case of any Reported Securities
required to be delivered by Counterparty in lieu of cash as provided in
Section 6.2, the Collateral Agent to deliver to the Custodian, for the
account of the Trust, a specified number of Reported Securities then held
as collateral under the Collateral Agreement, as provided in Section 6(g)
of the Collateral Agreement.
(ii) In the event that by the Exchange Date any substitute
collateral delivered to the Collateral Agent pursuant to Section 6(b) of
the Collateral Agreement has not been replaced by shares of Common Stock
(and/or, after an Adjustment Event, cash or Reported Securities)
sufficient to meet Counterparty's obligations hereunder, delivery shall be
effected by delivery by the Collateral Agent to the Custodian, for the
account of the Trust, of the market value of the shares of Common Stock
required to be delivered
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hereunder, in the form of any shares of Common Stock then pledged by
Counterparty plus cash generated from the liquidation of U.S. Government
obligations then pledged by Counterparty (and/or, after an Adjustment
Event, the market value of the alternative consideration required to be
delivered hereunder, in the form of any Reported Securities then pledged,
plus any cash then pledged, plus cash generated from the liquidation of
U.S. Government obligations then pledged). In such event, Counterparty
shall be deemed to have instructed the Collateral Agent to liquidate and
turn into cash the U.S. Government obligations then pledged by
Counterparty to the extent necessary to satisfy Counterparty's obligations
hereunder.
(iii) Certificates representing Common Stock (or Reported
Securities) in registered form that are part of the Contract Shares shall
be registered in the Trust's name or in the name of a depositary or a
nominee of a depositary as requested by the Trust, unless such Common
Stock (and/or Reported Securities) is represented by one or more global
certificates registered in the name of a depositary or a nominee of a
depositary or are book entry securities, in which event the Trust's
interest in such securities shall be noted in a manner satisfactory to the
Trust and its counsel.
(iv) Counterparty's right to deliver (or cause to be delivered) to
the Trust hereunder Common Stock and Reported Securities shall be
conditioned upon such Common Stock and Reported Securities to be so
delivered being transferable (i) by Counterparty to the Trust in
accordance with the provisions hereof and in accordance with the terms of
any agreement among shareholders applicable to such Common Stock or
Reported Securities, and (ii) by the Trust, following receipt from
Counterparty, without any restrictions not generally applicable to all
holders of such Common Stock or Reported Securities, as the case may be.
If the conditions set forth in the preceding sentence shall not be
satisfied with respect to any Common Stock or Reported Securities to be
delivered by Counterparty, then, notwithstanding the provisions hereof,
Counterparty shall exercise the Cash Delivery Option.
(d) Cash Delivery Option. At its option, Counterparty may deliver
to the Trust on the Exchange Date (even if the Exchange Date is not extended
pursuant to Section 1.3(f)), in lieu of the Contract Shares, an amount in cash
equal to, subject to adjustment as provided in Section 6.2, the Exchange Price
of the Contract Shares (the "Cash Delivery Option"), paid by wire transfer to an
account designated by the Trust, in Federal (immediately available same-day)
funds; [provided, however, that Counterparty hereby waives its right to exercise
the Cash Delivery Option and agrees to be bound by the decision AT&T Broadband
CSC Holdings, Inc. ("Holdings") makes with respect to the Cash Delivery Option
under the Forward Contract Agreement, dated as of the date hereof by and between
the Trust and Holdings (the "Holdings Forward Contract");] provided[, further,]
that in connection with a Rollover Offering which is consummated and as to which
Counterparty has duly elected the Cash Delivery Option and has duly made a
Rollover Offering Election, such cash payment shall be made no later than the
fifth Business Day after the Exchange Date. [Counterparty may elect the Cash
Delivery Option in respect of all, but not less than all, of the Contract Shares
and may do so by notice to the Trust, the Collateral Agent and the Custodian not
less than 30 Business Days prior to the Exchange Date.] If [Counterparty]
[Holdings] elects the Cash Delivery Option and so notifies the Trust, the Trust
shall promptly notify The Depository Trust Company and publish
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a notice in a daily newspaper of national circulation stating whether the
holders of Equity Trust Securities will receive shares of Common Stock or cash
(and specifying whether any such cash settlement is being made in connection
with a Rollover Offering).
(e) Rollover Offering Election. The provisions of Sections 1.3(f)
and (g) shall be applicable if [the Counterparty] [Holdings] has made a Rollover
Offering Election by written notice given to the Trust not earlier than [ ],
2004 and not later than [ ], 2004. Any Rollover Offering Election made by
[Counterparty] [Holdings] (i) shall be irrevocable once made, and (ii) may be
made only if [the Counterparty] [Holdings] has also elected, or simultaneously
elects, the Cash Delivery Option.
(f) Extension of Exchange Date. At its option, Counterparty may,
by notice given to the Trust not earlier than [ ], 2004 and not later than [ ],
2004 elect to extend the Exchange Date to [ ], 2005; [provided, however, that
Counterparty hereby waives its right to extend the Exchange Date hereunder and
agrees to be bound by the decision Holdings makes with respect to extension of
the Exchange Date pursuant to Section 1.3(f) of the Holdings Forward Contract].
Any such extension shall be effective (i) only in connection with a Rollover
Offering as to which [the Counterparty] [Holdings] shall have duly made a
Rollover Offering Election and (ii) only if Counterparty shall have delivered to
the Collateral Agent, in pledge under the Collateral Agreement direct
obligations of the United States of America which through the scheduled payment
of principal and interest in accordance with their terms will provide, not later
than one Business Day before [ ], 2005, cash in an amount equal to not less than
the Extension Amount (the "Additional Government Securities"). Unless
[Counterparty] [Holdings] has duly elected, in connection with a Rollover
Offering, to accelerate the Exchange Date in accordance with Section 1.3(g)
hereof, Counterparty shall on such extended Exchange Date pay to the Trust by
wire transfer of Federal (immediately available same-day) funds an amount equal
to the Extension Amount.
In addition, Counterparty hereby covenants and agrees to take all
other actions necessary to cause the Trust to be a protected purchaser of such
Additional Government Securities, within the meaning of Article 8 of the New
York Uniform Commercial Code, as amended.
If Counterparty elects to extend the Exchange Date and so notifies
the Trust, the Trust shall promptly notify the Depository Trust Company and
publish a notice in a daily newspaper of national circulation stating that the
Counterparty has elected to extend the Exchange Date.
(g) Acceleration of Exchange Date. At any time after the Exchange
Date has been extended pursuant to Section 1.3(f) hereof, Counterparty may, at
its option but only in connection with the consummation of a Rollover Offering,
accelerate the Exchange Date to any date on or after [ ], 2004, by notice to the
Trust not later than 10:00 a.m. on the date to which the Exchange Date is
accelerated; [provided, however, that Counterparty hereby waives its right to
accelerate the Exchange Date hereunder and agrees to be bound by the decision
Holdings makes with respect to acceleration of the Exchange Date pursuant to
Section 1.3(g) of the Holdings Forward Contract]; provided[, further,] that such
acceleration shall be effective only if at or prior to 10:00 a.m. on such
accelerated Exchange Date, Counterparty has paid to the Trust,
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by wire transfer to an account designated by the Trust, in Federal (immediately
available same-day) funds, an amount not less than (i) the Extension Amount
multiplied by (ii) the number of days in the period from (and including) [ ] to
(but excluding) the Exchange Date as accelerated, calculated on the basis of a
360 day year consisting of twelve 30-day months divided by (iii) 90.
If Counterparty elects to accelerate the Exchange Date and so
notifies the Trust, the Trust shall provide notice of such election to the
holders of the Equity Trust Securities not later than the accelerated Exchange
Date.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF COUNTERPARTY
Counterparty represents and warrants to the Trust that each
representation and warranty made by Counterparty in Section 3 of the
Underwriting Agreement is true and correct on the date hereof.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE TRUST
The Trust represents and warrants to Counterparty that:
(a) each representation and warranty made by the Trust in Section
1 of the Underwriting Agreement is true and correct on the date hereof; and
(b) it acknowledges that the Common Stock delivered pursuant to
this Agreement and the Collateral Agreement may contain one or more of the type
of legends referred to in Section 3(e) of the Collateral Agreement (which legend
(i) will not be applicable to the delivery of any such Common Stock to the Trust
pursuant to this Agreement and the Collateral Agreement or to the delivery of
any such Common Stock by the Trust to the holders of Equity Trust Securities
pursuant to the Equity Trust Securities and (ii) will be removed at the request
of the Collateral Agent to the depository for the Common Stock prior to any such
delivery to holders of Equity Trust Securities).
ARTICLE IV
CONDITIONS TO THE TRUST'S OBLIGATIONS
(a) The obligation of the Trust to deliver the Firm Contract Price
on the Firm Payment Date is subject to the satisfaction of the following
conditions:
(i) the purchase by the Underwriters of the Equity Trust
Securities pursuant to the Underwriting Agreement shall have been
consummated as contemplated under the Underwriting Agreement;
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(ii) the representations and warranties of the Counterparty
contained in Article II hereof shall be true and correct as of the Firm
Payment Date;
(iii) the Collateral Agreement shall have been executed by the
Counterparty and the delivery of the Collateral thereunder shall have been
made; and
(iv) the Reimbursement Agreement shall have been executed by the
Counterparty.
(b) The obligation of the Trust to deliver the Additional Contract
Price on the Option Closing Date is subject to the satisfaction of the following
conditions:
(i) the purchase by the Underwriters of the Additional Equity
Trust Securities pursuant to the Underwriting Agreement shall have been
consummated as contemplated under the Underwriting Agreement;
(ii) the representations and warranties of the Counterparty
contained in Article II hereof shall be true and correct as of the Option
Closing Date (except to the extent that they refer to an earlier date, in
which case they shall be true and correct as of such earlier date); and
(iii) the delivery of any additional Collateral under the Collateral
Agreement shall have been made.
ARTICLE V
COVENANTS
5.1 Taxes. Counterparty shall pay any and all documentary, stamp,
transfer or similar taxes and charges that may be payable in respect of the
entry into this Agreement and the transfer and delivery of the Contract Shares,
cash or Reported Securities pursuant hereto.
5.2 Forward Contract. Each of the Trust and Counterparty hereby
agrees that:
(a) it will treat this Agreement in its entirety as a forward
contract for the delivery of the Contract Shares on the Exchange Date (including
as a result of acceleration or otherwise) (the "Forward Contract
Characterization"), under the terms of which contract (i) at the time of
issuance of the Equity Trust Securities, the Trust is required to pay the
Counterparty a fixed amount of cash equal to the Firm Contract Price of the
Equity Trust Securities, in consideration for the Counterparty's obligation to
deliver Common Stock (or cash in lieu of Common Stock) to the Trust at maturity,
and (ii) at maturity, the Counterparty will deliver to the Trust the number of
shares of Common Stock that the Trust is entitled to receive at that time
pursuant to the terms of the Equity Trust Securities (subject to the right of
the Counterparty to deliver cash in lieu of the Common Stock);
(b) it will treat the delivery of the Contract Shares, if any, as
occurring on the Exchange Date;
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(c) it will not treat this Agreement, any portion of this
Agreement or any obligation hereunder as giving rise to any interest income or
other inclusions of ordinary income (in the case of the Trust) or as giving rise
to any interest expense or other deductions of ordinary expense (in the case of
Counterparty);
(d) it will not treat the delivery of any portion of the Contract
Shares, cash or Reported Securities to be delivered pursuant to this Agreement
as the payment of interest or ordinary income; and
(e) it will not take any action (including filing any tax return
or form or taking any position in any tax proceeding) that is inconsistent with
the obligations contained in clauses (a) through (d), unless such action or
position is required by an applicable taxing authority or unless such action or
position is required by a change in statutory law or regulation or by a judicial
or other authoritative interpretation of the law enacted, promulgated or
published after the date of this Agreement.
5.3 Limitations on Trading During Certain Days. Counterparty
hereby agrees that it will not, and will cause each of its Affiliates that is
under its control not to, buy shares of Common Stock of the Company or Reported
Securities for its own account during the [ ] days prior to the Exchange Date.
5.4 Notices. Counterparty will cause to be delivered to the Trust:
(a) immediately upon the occurrence of any Event of Default
hereunder or under the Collateral Agreement; and
(b) promptly after Counterparty receives notice, or otherwise
obtains knowledge, at any time prior to the Exchange Date that any event
requiring that an adjustment be effected pursuant to Article VI hereof
shall have occurred or be pending;
a notice identifying such event and stating, if known to Counterparty, the date
on which such event is to occur and, if applicable, the record date relating to
such event. Counterparty shall cause further notices to be delivered to the
Trust if Counterparty shall subsequently receive notice, or shall otherwise
obtain knowledge, of any further or revised information regarding the terms or
timing of such event or any record date relating thereto.
5.5 Affirmative Covenants. During the term of this Agreement,
Counterparty covenants and agrees that it will:
(a) Comply in all material respects with all applicable laws,
rules, regulations and orders to the extent noncompliance would have a material
adverse effect on the ability of Counterparty to perform its obligations
hereunder or under the Collateral Agreement, such compliance to include, without
limitation, paying before the same become delinquent all taxes, assessments and
governmental charges imposed upon Counterparty or upon Counterparty's property,
including the collateral pledged under the Collateral Agreement, except to the
extent contested in good faith.
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(b) Furnish to the Trust as soon as possible and in any event
within twenty calendar days after Counterparty shall become aware of the
occurrence of any failure by Counterparty to comply with or perform any
agreement or obligation contained in this Agreement or the Collateral Agreement,
a statement of Counterparty describing such failure and setting forth details of
such failure and the action which Counterparty has taken and proposes to take
with respect thereto.
5.6 Further Assurances. From time to time on and after the date
hereof through the Exchange Date (or, if later, the date on which this Agreement
has been fully performed), each of the parties hereto shall use its best efforts
to take, or cause to be taken, all action and to do, or cause to be done, all
things necessary, proper and advisable to consummate and make effective as
promptly as practicable the transactions contemplated by this Agreement in
accordance with the terms and conditions hereof, including (i) using reasonable
best efforts to remove any legal impediment to the consummation of such
transactions and (ii) the execution and delivery of all such deeds, agreements,
assignments and further instruments of transfer and conveyance necessary, proper
or advisable to consummate and make effective the transactions contemplated by
the Agreement in accordance with the terms and conditions hereof.
ARTICLE VI
ADJUSTMENT OF EXCHANGE RATE, EXCHANGE PRICE AND CLOSING PRICE
6.1 Dilution Adjustments. The Exchange Rate, Exchange Price and
Closing Price shall be subject to adjustment successively from time to time as
follows:
(a) Stock Dividends, Splits, Reclassifications, Etc. If the
Company shall, after the date hereof,
(i) pay a stock dividend or make a distribution, in either case,
with respect to Common Stock in shares of such stock;
(ii) subdivide or split its outstanding shares of Common Stock into
a greater number of shares;
(iii) combine its outstanding shares of Common Stock into a smaller
number of shares; or
(iv) issue by reclassification (other than a reclassification
pursuant to clause (b), (c), (d) or (e) of the definition of Adjustment
Event) of its shares of Common Stock any other equity securities of the
Company;
then, the Exchange Rate shall be multiplied by a Dilution Adjustment equal to
the number of shares of Common Stock (or the fraction thereof) that a holder who
held one share of Common Stock immediately prior to such event would be entitled
solely by reason of such event to hold immediately after such event.
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In the case of the reclassification of any shares of Common Stock
into any other equity securities of the Company other than the Common Stock,
such other equity securities shall be deemed shares of Common Stock for all
purposes hereunder. The Exchange Price and Closing Price shall also be adjusted
in the manner described in paragraph (c) of this Section 6.1.
(b) Right or Warrant Issuances. If the Company shall, after the
date hereof, issue, or declare a record date in respect of an issuance of,
rights or warrants (other than rights to purchase Common Stock pursuant to a
plan for the reinvestment of dividends or interest) to all holders of Common
Stock entitling them to subscribe for or purchase shares of Common Stock at a
price per share less than the Market Price of the Common Stock on the Business
Day next following the record date for the determination of holders of Common
Stock entitled to receive such rights or warrants, then, in each such case, the
Exchange Rate shall be multiplied by the following Dilution Adjustment: a
fraction, of which the numerator shall be (A) the number of shares of Common
Stock outstanding on the record date for the issuance of such rights or warrants
plus (B) the number of additional shares of Common Stock offered for
subscription or purchase pursuant to such rights or warrants, and of which the
denominator shall be (x) the number of shares of Common Stock outstanding on the
record date for the issuance of such rights or warrants plus (y) the number
specified in clause (B) above multiplied by the quotient of the exercise price
of such rights or warrants divided by the Market Price of the Common Stock on
the Business Day next following the record date for the determination of holders
of Common Stock entitled to receive such rights or warrants; provided that the
Exchange Rate shall not be adjusted to more than one share of Common Stock per
Equity Trust Security. To the extent that such rights or warrants expire prior
to the Exchange Date and shares of Common Stock are delivered with respect to
less than all of such rights or warrants prior to such expiration, the Exchange
Rate shall be readjusted to the Exchange Rate which would then be in effect had
such adjustments for the issuance of such rights or warrants been made upon the
basis of delivery of only the number of shares of Common Stock actually
delivered pursuant to such rights or warrants. For purposes of this Section
6.1(b), dividends will be deemed to be paid as of the record date for such
dividend. The Exchange Price and Closing Price shall also be adjusted in the
manner described in paragraph (c) of this Section 6.1.
(c) Corresponding Adjustments to Exchange Price; Adjustment of
Closing Price in Certain Circumstances.
(i) If any adjustment is made to the Exchange Rate pursuant to
paragraph (a) or (b) of this Section 6.1, an adjustment shall also be made
to the Exchange Price as such term is used throughout the definition of
Exchange Rate. The required adjustment to the Exchange Price shall be made
at the Exchange Date by multiplying the Exchange Price by the cumulative
Dilution Adjustment.
(ii) If, during any Calculation Period used in calculating the
Exchange Price, the Market Price or the Transaction Value, there shall
occur any event requiring an adjustment to be effected pursuant to this
Section 6.1, then the Closing Price for each Trading Day in the
Calculation Period occurring prior to the day on which such adjustment is
effected shall be adjusted by being multiplied by the relevant Dilution
Adjustment.
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(d) Timing of Dilution Adjustments. Each Dilution Adjustment shall
be effected:
(i) in the case of any dividend, distribution, or issuance of
rights or warrants, at the opening of business on the Business Day next
following the record date for determination of holders of Common Stock
entitled to receive such dividend, distribution or issuance or, if the
announcement of any such dividend, distribution or issuance is after such
record date, at the time such dividend, distribution or issuance shall be
announced by the Company; and
(ii) in the case of any subdivision, split, combination or
reclassification, on the effective date of such transaction.
(e) General; Failure of Dilution Event to Occur. All Dilution
Adjustments shall be rounded upward or downward to the nearest 1/10,000th (or if
there is not a nearest 1/10,000th to the next higher 1/10,000th). No adjustment
in the Exchange Rate shall be required unless such adjustment would require an
increase or decrease of at least one percent therein; provided, however, that
any adjustments which by reason of this sentence are not required to be made
shall be carried forward and taken into account in any subsequent adjustment. If
any announcement or declaration of a record date in respect of a dividend,
distribution or issuance requiring an adjustment pursuant to this Section 6.1
shall subsequently be canceled by the Company, or such dividend, distribution or
issuance shall fail to receive requisite approvals or shall fail to occur for
any other reason, then, upon such cancellation, failure of approval or failure
to occur, the Exchange Rate shall be readjusted to the Exchange Rate which would
then have been in effect had adjustment for such event not been made. If an
Adjustment Event shall occur after the occurrence of one or more events
requiring an adjustment pursuant to this Section 6.1, the Dilution Adjustments
previously applied to the Exchange Rate in respect of such events shall not be
rescinded but shall be applied to the new Exchange Rate provided for under
Section 6.2.
6.2 Adjustment for Consolidation, Merger or Other Adjustment
Event. In the event of (a) any dividend or distribution by the Company to all
holders of Common Stock of evidences of its indebtedness or other assets
(excluding any dividends or distributions referred to in Section 6.1(a)(i), any
other equity securities issued pursuant to a reclassification referred to in
Section 6.1(a)(iv) and any Ordinary Cash Dividends) or any issuance by the
Company to all holders of Common Stock of rights or warrants to subscribe for or
purchase any of its securities (other than rights or warrants referred to in
Section 6.1(b)), (b) any consolidation or merger of the Company with or into
another entity (other than a merger or consolidation in which the Company is the
continuing corporation and in which the Common Stock outstanding immediately
prior to the merger or consolidation is not exchanged for cash, securities or
other property of the Company or another corporation), (c) any sale, transfer,
lease or conveyance to another corporation of the property of the Company as an
entirety or substantially as an entirety, (d) any statutory exchange of
securities of the Company with another corporation (other than in connection
with a merger or acquisition) or (e) any liquidation, dissolution or winding up
of the Company (any such event described in clause (a), (b), (c), (d) or (e), an
"Adjustment Event"), the Exchange Rate shall be adjusted so that on the Exchange
Date Counterparty shall deliver to the
16
Trust, in lieu of or (in the case of an Adjustment Event described in clause (a)
above) in addition to, the Contract Shares, cash in an amount equal to:
(A) if the Exchange Price is greater than the Threshold Appreciation
Price, 0.[ ] multiplied by the Transaction Value (as defined
below);
(B) if the Exchange Price is less than or equal to the Threshold
Appreciation Price but greater than the Initial Price, the product
of (x) the Initial Price divided by the Exchange Price multiplied by
(y) the Transaction Value; and
(C) if the Exchange Price is less than or equal to the Initial Price,
the Transaction Value;
provided, however, that if the consideration received by all holders
of Common Stock in such Adjustment Event does not and may not at the option of
such holders include Reported Securities, then (except in the case of an
Adjustment Event solely of the type described in clause (a) above) (i)
Counterparty's delivery obligations hereunder will be accelerated and promptly
upon consummation of the Adjustment Event Counterparty will be required to
deliver to the Trust cash in an amount equal to (x) if the Transaction Value is
greater than the Threshold Appreciation Price, 0.[ ] multiplied by the
Transaction Value, (y) if the Transaction Value is less than or equal to the
Threshold Appreciation Price but greater than Initial Price, the Initial Price,
and (z) if the Transaction Value is less than or equal to the Initial Price, the
Transaction Value.
If the consideration received by holders of Common Stock in an
Adjustment Event includes Reported Securities, and, to any extent, consideration
other than Reported Securities, and in the case of an Adjustment Event described
in (b), (c) or (d) of the definition of that term , the Transaction Value of the
consideration other than Reported Securities comprises 25% or more of the
aggregate Transaction Value for such Adjustment Event, then (a) Counterparty's
delivery obligations hereunder will be accelerated to the extent that the value
of the consideration received in such Adjustment Event does not derive from
Reported Securities and promptly upon consummation of the Adjustment Event
Counterparty will be required to deliver to the Trust cash in an amount equal to
(x) if the Transaction Value is greater than the Threshold Appreciation Price,
0.[ ] multiplied by (i) the Transaction Value and (ii) the percentage of the
value of the consideration received in connection with the Adjustment Event that
does not derive from Reported Securities, (y) if the Transaction Value is less
than or equal to the Threshold Appreciation Price but greater than the Initial
Price, the Initial Price multiplied by the percentage of the value of the
consideration received in connection with the Adjustment Event that does not
derive from Reported Securities, and (z) if the Transaction Value is less than
or equal to the Initial Price, the Transaction Value multiplied by the
percentage of the value of the consideration received in connection with the
Adjustment Event that does not derive from Reported Securities.
Following the occurrence of an Adjustment Event, the Exchange Price,
as such term is used throughout the definition of Exchange Rate, shall be deemed
to equal (A) if shares of Common Stock are outstanding at the Exchange Date, the
Exchange Price of the Common Stock, as adjusted pursuant to Section 6.1(c),
otherwise zero, plus (B) the Transaction Value.
17
Notwithstanding the foregoing, with respect to any Reported
Securities (as defined below) received by holders of Common Stock in an
Adjustment Event, Counterparty shall, in lieu of delivering cash in respect of
such Reported Securities as described above, deliver a number of such Reported
Securities with a value, as determined in accordance with clause (ii) of the
definition of Transaction Value, equal to all cash amounts that would otherwise
be deliverable in respect of Reported Securities received in such Adjustment
Event, except to the extent Counterparty has made an election to exercise the
Cash Delivery Option or such Reported Securities have not yet been delivered to
the holders entitled thereto following such Adjustment Event or any record date
with respect thereto. If, following any Adjustment Event, any Reported Security
ceases to qualify as a Reported Security, then (x) Counterparty shall not
deliver such Reported Security but instead shall deliver an equivalent amount of
cash and (y) notwithstanding clause (ii) of the definition of Transaction Value,
the Transaction Value of such Reported Security shall mean the fair market value
of such Reported Security on the date such security ceases to qualify as a
Reported Security, as determined by a nationally recognized investment banking
firm retained for this purpose by the Administrator.
"Transaction Value" means (i) for any cash received in any
Adjustment Event, the amount of cash received per share of Common Stock, (ii)
for any Reported Securities received in any Adjustment Event, an amount equal to
(x) the average Closing Price per security of such Reported Securities on the 20
Trading Days immediately prior to (but not including) the Exchange Date (except
in the case of a Rollover Offering, in which case the Closing Price on the
Trading Day immediately preceding the Pricing Date or, if the Rollover Offering
is priced after 4:00 p.m. New York City time on the Pricing Date, the Closing
Price on the Pricing Date shall be used for purposes of this clause) multiplied
by (y) the number of such Reported Securities (as adjusted pursuant to the
definition thereof) received per share of Common Stock and (iii) for any
property received in any Adjustment Event other than cash or Reported
Securities, an amount equal to the fair market value of the property received
per share of Common Stock on the date such property is received, as determined
by a nationally recognized investment banking firm retained for this purpose by
the Administrator; provided, however, that in the case of clause (ii), (x) with
respect to securities that are Reported Securities by virtue of only clause (iv)
of the definition of Reported Securities, Transaction Value with respect to any
such Reported Security means the average of the mid-point of the last bid and
ask prices for such Reported Security as of the Exchange Date from each of at
least three nationally recognized investment banking firms retained for such
purpose by the Administrator multiplied by the number of such Reported
Securities (as adjusted pursuant to the definition thereof) received per share
of Common Stock and (y) with respect to all Reported Securities other than
securities that are Reported Securities by virtue of only clause (iv) of the
definition of Reported Securities, if there are not 20 Trading Days for any
particular Reported Security occurring after the 60th calendar day immediately
prior to, but not including, the Exchange Date, Transaction Value with respect
to such Reported Security means the fair market value per security of such
Reported Security as of the Exchange Date as determined by a nationally
recognized investment banking firm retained for such purpose by the
Administrator multiplied by the number of such Reported Securities (as adjusted
pursuant to the definition thereof) received per share of Common Stock. For
purposes of calculating the Transaction Value, any cash, Reported Securities or
other property receivable in an Adjustment Event shall be deemed to have been
received immediately prior to the close of business on the record date for such
Adjustment Event or, if there is no record date for such
18
Adjustment Event, immediately prior to the close of business on the effective
date of such Adjustment Event.
"Reported Securities" means any securities received in an Adjustment
Event that (A) are (i) listed on a United States national securities exchange,
(ii) reported on a United States national securities system subject to last sale
reporting, (iii) traded in the over-the-counter market and reported on the
National Quotation Bureau or similar organization or (iv) for which bid and ask
prices are available from at least three nationally recognized investment
banking firms; and (B) are either (x) perpetual equity securities or (y)
non-perpetual equity or debt securities with a stated maturity after the
Exchange Date. The number of shares of any Reported Securities included in the
calculation of Transaction Value pursuant to clause (ii) of the definition
thereof shall be subject to adjustment if any event that would, had it occurred
with respect to the Common Stock or the Company, have required an adjustment
pursuant to Section 6.1 or 6.2, shall occur with respect to such Reported
Securities or the issuer thereof subsequent to the date the Adjustment Event is
consummated. Adjustment for such subsequent events shall be as nearly equivalent
as practicable to the adjustments provided for in Section 6.1 or 6.2, as
applicable.
ARTICLE VII
ACCELERATION
If one or more of the following events (each an "Event of Default")
shall occur:
(a) Counterparty shall commence a voluntary case or other
proceeding seeking a liquidation, reorganization or other relief with respect to
itself or its debts under any bankruptcy, insolvency or other similar law now or
hereafter in effect or seeking the appointment of a trustee, receiver,
liquidator, custodian or other similar official of it or any substantial part of
its property, or shall consent to any such relief or to the appointment of or
taking possession by any such official in an involuntary case or other
proceeding commenced against it, or shall take any action to authorize any of
the foregoing;
(b) an involuntary case or other proceeding shall be commenced
against Counterparty seeking liquidation, reorganization or other relief with
respect to it or its debts under any bankruptcy, insolvency or other similar law
now or hereafter in effect or seeking the appointment of a trustee, receiver,
liquidator, custodian or other similar official of it or any substantial part of
its property; or an order for relief shall be entered against Counterparty under
any bankruptcy, insolvency or other similar law as now or hereafter in effect;
or
(c) a Collateral Event of Default within the meaning of the
Collateral Agreement;
then an "Acceleration Date" shall occur, Counterparty's rights under Section
1.3(d), (e) (f) and (g) shall terminate immediately and (i) in the case of
clause (c), Counterparty shall become obligated to the extent permitted by law
to deliver to the Trust (and shall be deemed to instruct the Collateral Agent to
deliver to the Custodian, for the account of the Trust, and to liquidate and
19
turn into cash the U.S. Government obligations and Cash Equivalents then pledged
by Counterparty to the extent necessary to satisfy such obligation) the Firm
Share Base Amount plus the Additional Share Base Amount, if any, in the form of
the shares of Common Stock then pledged by Counterparty, or cash generated from
the liquidation of U.S. Government obligations and Cash Equivalents then pledged
by Counterparty, or a combination thereof (or, after an Adjustment Event, the
alternate consideration to be delivered, in the form of Reported Securities then
pledged, cash then pledged, cash generated from the liquidation of U.S.
Government obligations and Cash Equivalents then pledged, or a combination
thereof); or (ii) in the case of clauses (a) or (b), Counterparty shall become
obligated to the extent permitted by law to deliver to the Trust (and shall be
deemed to instruct the Collateral Agent to deliver to the Custodian, for the
account of the Trust, and to liquidate and turn into cash the U.S. Government
obligations and Cash Equivalents then pledged by Counterparty to the extent
necessary to satisfy such obligation) a number of shares of Common Stock, in the
form of the shares of Common Stock then pledged by Counterparty, or cash
generated from the liquidation of U.S. Government obligations and Cash
Equivalents then pledged by Counterparty, or a combination thereof (or, after an
Adjustment Event, the alternate consideration to be delivered, in the form of
Reported Securities then pledged, cash then pledged, cash generated from the
liquidation of U.S. Government obligations and Cash Equivalents then pledged, or
a combination thereof), with an aggregate value (based on the Closing Price on
the Acceleration Date) equal to the Acceleration Value (as defined below).
"Acceleration Value" means an amount determined by the Administrator
on the basis of quotations from Independent Dealers (as defined below). Each
quotation will be for an amount that would be paid to the relevant Independent
Dealer in consideration of an agreement between the Trust and such Independent
Dealer that would have the effect of preserving for the Trust the economic
equivalent of the payments and deliveries that the Trust would, but for the
occurrence of the Acceleration Date, have been entitled to receive after the
Acceleration Date hereunder (taking into account any adjustments to the Exchange
Rate that may have been effected on or prior to the Acceleration Date). On or as
soon as reasonably practicable following the Acceleration Date, the
Administrator will request each Independent Dealer to provide its quotation as
soon as reasonably practicable, but in any event within two Business Days. The
Administrator shall compute the Acceleration Value upon receipt of each
Independent Dealer's quotation, provided that if, at the close of business on
the fourth Business Day following the Acceleration Date, the Administrator shall
have received quotations from fewer than four of the Independent Dealers, the
Administrator shall compute the Acceleration Value using the quotations, if any,
it shall have received at or prior to such time. If four quotations are
provided, the Acceleration Value will be the arithmetic mean of the two
quotations remaining after disregarding the highest and lowest quotations. (For
this purpose, if more than one quotation has the same highest or lowest value,
then one of such quotations shall be disregarded.) If two or three quotations
are provided, the Acceleration Value will be the arithmetic mean of such
quotations. If one quotation is provided, the Acceleration Value will be equal
to such quotation. If no quotations are provided, the Acceleration Value will be
the aggregate value (based on the Closing Price on the Acceleration Date) of the
number of shares of Common Stock (or, after an Adjustment Event, Reported
Securities, cash or a combination thereof) that would be required to be
delivered hereunder on the Acceleration Date if the Exchange Date were redefined
to be the Acceleration Date.
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"Independent Dealers" means four nationally recognized independent
investment banking firms selected in good faith by the Administrator.
As promptly as reasonably practicable after receipt of the
quotations on which the Acceleration Value is based (or, as the case may be,
after failure to receive any such quotations within the time period prescribed
above), the Trust shall deliver to Counterparty and the Collateral Agent a
notice specifying the number of shares of Common Stock (or, after an Adjustment
Event, the alternate consideration) required to be delivered by Counterparty.
the Trust and Counterparty agree that the obligations contained in clauses (i)
and (ii) above are a reasonable pre-estimate of loss and not a penalty. Such
amount is payable for the loss of bargain and the Trust will not be entitled to
recover additional damage as a consequence of loss resulting from an Event of
Default.
ARTICLE VIII
MISCELLANEOUS
8.1 Adjustments; Selection of Independent Investment Banking Firm.
The Trust shall be responsible for the effectuation and calculation of any
adjustment pursuant to Article VI hereof and shall furnish Counterparty notice
of any such adjustment and shall provide Counterparty reasonable opportunity to
review the calculations pertaining to any such adjustment. If, pursuant to the
terms and conditions hereof, the Administrator shall be required to retain a
nationally recognized independent investment banking firm for any purpose
provided herein, such nationally recognized independent investment banking firm
shall be selected and retained by the Administrator only after consultation with
Counterparty; provided, however, that Counterparty shall be deemed to have
waived its right to consult if Counterparty fails to consult within five
Business Days of notice being sent by the Administrator to Counterparty seeking
consultation. the Trust may delegate the effectuation and calculation of any
such adjustments to its Administrator.
8.2 Notices. Notices to the Trust shall be directed to it in care
of the Administrator for the Trust, The Bank of New York, 0 Xxxx Xxxxx, 00xx
xxxxx, Xxx Xxxx, Xxx Xxxx 00000, Telephone: (000) 000-0000, Telecopier: (212)
896-7295; notices to Counterparty shall be directed to care of [ ],
[ ] (fax no.: [ ], Attention: Chief Financial Officer, copy to
[ ]. Notwithstanding the foregoing, notices to a party shall be
directed to such other address for such party as shall be specified by such
party in a like notice given pursuant to this Section 8.2. All notices and other
communications hereunder shall be in writing and shall be deemed to have been
duly given if either (i) personally delivered (including delivery by courier
service or by Federal Express or any other nationally recognized overnight
delivery service for next day delivery) to the offices specified in the
preceding sentence, in which case they shall be deemed received on the first
Business Day by which delivery shall have been made to said offices; or (ii)
sent by certified mail, return receipt requested, in accordance with the
preceding sentence, in which case they shall be deemed received when receipted
for unless acknowledgment is refused (in which case delivery shall be deemed to
have been received on the first Business Day on which such acknowledgment is
refused). Any notice, demand or other communication to be provided by or on
behalf of the Trust pursuant to this Agreement shall be sent to the address of
Counterparty, provided in this
21
Section 8.2. Any failure by Counterparty or any guardian, conservator, executor,
administrator or other similarly appointed person to receive any such notice,
demand or communication shall in no way abrogate, invalidate or otherwise affect
the validity or enforceability of the notice, demand or communication or the
matters set forth therein.
8.3 Counterparts. This Agreement may be signed in any number of
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.
8.4 Entire Agreement. Except as expressly set forth herein, this
Agreement constitutes the entire agreement among the parties with respect to the
subject matter hereof and supersedes all prior agreements, understandings and
negotiations, both written and oral, among the parties with respect to the
subject matter of this Agreement.
8.5 Amendments; Waivers. Any provision of this 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 the Trust and Counterparty, or, in the
case of a waiver, by the party or parties 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.
8.6 No Third Party Rights; Successors and Assigns. Except as
otherwise agreed in writing, this Agreement is not intended and shall not be
construed to create any rights in any person other than Counterparty and the
Trust and their respective successors and assigns and no person shall assert any
rights as third party beneficiary hereunder. Whenever any of the parties hereto
is referred to, such reference shall be deemed to include the successors and
permitted assigns of such party.
8.7 Application of Bankruptcy Code. The parties hereto acknowledge
and agree that the Collateral Agent is a "financial institution" within the
meaning of Section 101(22) of Title 11 of the United States Code (the
"Bankruptcy Code") and is acting as agent and custodian for the Trust in
connection with this Agreement and that the Trust is a "customer" of the
Collateral Agent within the meaning of said Section 101(22). The parties hereto
further acknowledge and agree that this Agreement is a "securities contract", as
such term is defined in Section 741(7) of the Bankruptcy Code, entitled to the
protection of Section 555 of the Bankruptcy Code.
8.8 Governing Law; Jurisdiction; Severability; Waiver of Jury
Trial. This Agreement shall be governed by and construed in accordance with the
laws of the State of New York. For the purpose of any suit, action or proceeding
arising out of or relating to this Agreement, the parties hereto hereby
expressly and irrevocably consent and submit to the non-exclusive jurisdiction
of any United States Federal or New York State court sitting in the Borough of
Manhattan, City and State of New York, and expressly and irrevocably waive, to
the extent permitted under applicable law, any immunity from the jurisdiction
thereof and any claim or defense in such suit, action or proceeding based on a
claim of improper venue, forum non
22
conveniens or any similar basis to which it might otherwise be entitled. To the
extent permitted by law, the unenforceability or invalidity of any provision or
provisions of this Agreement shall not render any other provision or provisions
herein contained unenforceable or invalid. TO THE EXTENT PERMITTED BY APPLICABLE
LAW, THE PARTIES HERETO HEREBY WAIVE AND COVENANT THAT THEY WILL NOT ASSERT
(WHETHER AS PLAINTIFF, DEFENDANT OR OTHERWISE) ANY RIGHT TO TRIAL BY JURY IN ANY
FORUM IN RESPECT OF ANY ISSUE, CLAIM, DEMAND, ACTION OR CAUSE OF ACTION ARISING
OUT OF OR BASED UPON THIS AGREEMENT OR THE SUBJECT MATTER HEREOF, IN EACH CASE
WHETHER NOW EXISTING OR HEREAFTER ARISING OR WHETHER IN CONTRACT OR TORT OR
OTHERWISE. EACH PARTY HERETO ACKNOWLEDGES THAT IT OR HE HAS BEEN INFORMED BY THE
OTHER PARTY HERETO THAT THE PROVISIONS OF THIS SECTION CONSTITUTE A MATERIAL
INDUCEMENT UPON WHICH SUCH OTHER PARTY HERETO HAS RELIED, IS RELYING AND WILL
RELY IN ENTERING INTO THIS AGREEMENT AND ANY DOCUMENT RELATED THERETO. EACH
PARTY HERETO MAY FILE AN ORIGINAL COUNTERPART OF THIS SECTION WITH ANY COURT AS
WRITTEN EVIDENCE OF THE CONSENT OF THE OTHER PARTY HERETO TO THE WAIVER OF ITS
OR HIS RIGHTS TO TRIAL BY JURY.
23
