Confirmation of OTC Convertible Note Hedge
Execution
Copy
| Date: | June 19, 2007 | |
| To: | Iconix Brand Group, Inc.
(“Counterparty”)
Attention:
Chief Executive Officer
Telephone
No.: 000
000 0000
Facsimile
No.: 000
000 0000
|
|
| From: | Xxxxxxx Xxxxx International (“MLI”) |
MLI
Reference: 078173808
Dear
Sir
/ Madam:
The
purpose of this letter agreement (this “Confirmation”)
is
to
amend and restate the terms and conditions of the above-referenced transaction
entered into among Counterparty, MLI and Xxxxxxx Lynch, Xxxxxx, Xxxxxx &
Xxxxx Incorporated (the “Agent”
or
“MLPFS”)
on
the
Trade Date specified below (the “Transaction”).
This
Confirmation amends, restates and supercedes in its entirety the Confirmation
in
respect of the Transaction dated as of June 14, 2007. This Confirmation
constitutes a “Confirmation” as referred to in the Agreement specified
below.
The
definitions and provisions contained in the 2000 ISDA Definitions (the
“Swap
Definitions”)
and
the
2002 ISDA Equity Derivatives Definitions (the “Equity
Definitions” and,
together with the Swap Definitions, the “Definitions”),
in
each
case as published by the International Swaps and Derivatives Association,
Inc.
are
incorporated into this Confirmation. In the event of any inconsistency between
the Swap Definitions and the Equity Definitions, the Equity Definitions will
govern, and in the event of any inconsistency between the Definitions and this
Confirmation, this Confirmation will govern. References herein to a
“Transaction” shall be deemed to be references to a “Share Option Transaction”
for purposes of the Equity Definitions and a “Swap Transaction” for the purposes
of the Swap Definitions.
This
Confirmation evidences a complete binding agreement between you and us as to
the
terms of the Transaction
to which this Confirmation relates. This Confirmation (notwithstanding anything
to the contrary herein),
shall be subject to, and form part of, an agreement in the 1992 form of the
ISDA
Master Agreement (Multicurrency Cross Border) (the “Master
Agreement”
or
“Agreement”)
as
if we
had executed an agreement in such
form
(but without any Schedule and with the elections specified in the “ISDA Master
Agreement” Section of this Confirmation) on the Trade Date. In the event of any
inconsistency between the provisions of that Agreement and
this
Confirmation, this Confirmation will prevail for the purpose of this
Transaction. The parties hereby agree that
the
Transaction evidenced by this Confirmation shall be the only Transaction subject
to and governed by the Agreement.
The
parties acknowledge that this Confirmation is entered into on the date hereof
with the understanding that the provisions of the Note Indenture (as defined
below) that are referred to herein will conform to the descriptions thereof
in
the Offering Memorandum dated June 14, 2007 (the "Offering Memorandum") relating
to the Reference Notes (as defined below). The parties agree that in the event
of any inconsistency between the Note Indenture and Offering Memorandum, the
parties will amend this Confirmation in good faith to preserve the intent of
the
parties.
The
terms
of the particular Transaction to which this Confirmation relates are as follows:
General
Terms:
|
Trade
Date:
|
June
14, 2007
|
|
Effective
Date:
|
The
date of issuance of the Reference Notes.
|
|
Option
Style:
|
Modified
American, as described under “Settlement Terms” below.
|
|
Option
Type:
|
Call
|
|
Seller:
|
MLI
|
|
Buyer:
|
Counterparty
|
|
Shares:
|
The
shares of common stock, $0.001 par
value, of Counterparty (Security Symbol: “ICON” or such other securities
or property into which the Reference Notes are convertible on the
date of
determination in accordance with the Note Indenture.
|
|
Premium:
|
$45,781,500.00
|
|
Premium
Payment Date:
|
The
Effective Date.
|
|
Exchange:
|
NASDAQ
Global Market
|
|
Related
Exchange(s):
|
All
Exchanges
|
|
Reference
Notes:
|
1.875%
Convertible Senior Subordinated Notes due 2012, original principal
amount
$287,500,000
|
|
Applicable
Portion of the Reference
Notes:
|
60.00%.
For the avoidance of doubt, the Calculation Agent shall, as it deems
necessary, take into account the Applicable Portion of the Reference
Notes
in determining
or calculating any delivery or payment obligations hereunder, whether
upon a Conversion Date (as defined below) or otherwise.
|
|
Note
Indenture:
|
The
indenture, dated as of closing of the issuance of the Reference Notes,
between Counterparty and The Bank of New York, as trustee relating
to the
Reference Notes, as
the same may be amended, modified or supplemented from time to time.
Certain defined terms used herein have the meanings assigned to them
in
the Note
Indenture.
|
|
Procedures
for Exercise:
|
|
|
Potential
Exercise Dates:
|
As
specified below under “Exercise
Notice”.
|
-
2
-
|
Conversion
Date:
|
Each
“conversion date” for any Reference Note pursuant to the terms of the Note
Indenture occurring
before the Expiration Date.
The
principal amount of Reference Notes converted
on
each Conversion Date shall be
the “Conversion
Amount”
for
such Conversion Date.
If
the Conversion Amount for any Conversion Date is less than the aggregate
principal amount of Reference Notes then outstanding, then the terms
of
this Transaction shall continue to apply, subject to the terms and
conditions set forth herein,
with respect to the remaining outstanding principal amount of the
Reference
Notes. For the avoidance of doubt, an exchange in lieu of conversion
pursuant to Section 4.02(d) of the Note Indenture shall not be considered
a conversion of the Reference Notes surrendered to a financial institution
pursuant to such Section 4.02(d).
|
|
Exercise
Period:
|
The
period from and excluding the Effective Date to and including the
Expiration Date.
|
|
Expiration
Date:
|
The
earliest of (i) the maturity date of the Reference Notes, (ii) the
first
day on which none of such Reference Notes remain outstanding, whether
by
virtue of conversion, issuer repurchase or otherwise and (iii) the
designation
of an Early Termination Date hereunder in respect of the termination
of
the Transaction
in whole but not in part in accordance with this
Agreement.
|
|
Exercise
Notice:
|
Notwithstanding
anything to the contrary in the Equity Definitions, in
order to exercise any Options hereunder, Buyer shall provide Seller
with
written notice (“Exercise
Notice”)
prior to 5:00 p.m. New York City time on the Scheduled Trading Day
prior
to the first Trading Day in the Conversion Reference Period (both
as
defined in the Note Indenture) relating to the Reference Notes converted
on the relevant Conversion Date of (i) the number of Reference Notes
being
converted on the relevant Conversion Date, (ii) the first Trading
Day in
the relevant Conversion Reference Period for the Reference Notes,
and
(iii) the applicable Cash Percentage (as defined in the Note Indenture),
if any; provided
that with respect to Reference Notes converted during the period
beginning
on June 1, 2012 and ending on the business day immediately preceding
the
Final Maturity Date (as defined in the Note Indenture) of the Reference
Notes, the related Exercise Notice need not contain the information
specified in clause (i) of this sentence and, in order to exercise
any
Options hereunder, Buyer shall deliver to Seller prior to 5:00 p.m.
New
York City time on the Scheduled Trading Day prior to such Final Maturity
Date a written notice (“Supplemental
Exercise Notice”)
setting forth the number of Reference Notes converted during such
period;
and provided
further
that the delivery by Buyer of an Exercise Notice after the Conversion
Reference Period has commenced but prior to the close of business
on the
fifth Trading Day of such Conversion Reference Period shall be effective,
in which case the Settlement Method shall be Net Share Settlement
but
without regard to subsection (ii) of the definition of Net Share
Settlement and subject to adjustments to the Net Share Settlement
Amount
as specified below.
|
-
3
-
|
Seller’s
Telephone Number and Telex and/or Facsimile Number and Contact Details
for
purpose of Giving Notice:
|
Address:
Xxxxxxx Xxxxx International
Xxxxxxx
Xxxxx Financial Centre
0
Xxxx Xxxxxx Xxxxxx
Xxxxxx
XX0X 0XX
Attention:
Manager, Fixed Income Settlements Facsimile No.: x00 000 000
0000
Telephone
No.: x00 000 000 0000
|
|
Settlement
Terms:
|
|
|
Settlement
Method
Election:
|
Net
Share Settlement or Net Cash Settlement consistent with Buyer’s election
with respect to the Reference Notes converted on the applicable Conversion
Date; provided that Net Share Settlement shall apply in the event
that
Buyer elects to deliver any Shares in connection with the applicable
Conversion Date; and provided further that it shall be a condition
for
Buyer’s right to elect Net Cash Settlement or settlement pursuant to
clause (ii) of Net Share Settlement that Buyer delivers to Seller
with the
related Exercise Notice a representation signed by Xxxxx that Xxxxx
has
publicly disclosed all material information necessary for Buyer to
be able
to purchase or sell Shares in compliance with applicable federal
securities laws.
|
|
Electing
Party:
|
Buyer
|
|
Settlement
Date:
|
Subject
to the delivery of an Exercise Notice and, if applicable, a Supplemental
Exercise Notice to the Seller, the third (3rd) Exchange Business
Day
following the final Trading Day in the applicable Conversion Reference
Period in respect of the relevant Conversion
Date.
|
-
4
-
|
Net
Share Settlement:
|
In
lieu of the obligations set forth in Sections 8.1 and 9.1 of the
Equity
Definitions, Seller shall deliver to Buyer on the related Settlement
Date
(i) a number of Shares equal to the related Net Share Settlement
Amount,
provided that in the event that the number of Shares calculated comprises
any fractional Share, only whole Shares shall be delivered and an
amount
equal to the value of such fractional Share shall be payable by Seller
to
Buyer in cash and (ii) (x) an amount in cash equal to the cash amount,
if
any, paid by Buyer in excess of the principal amount of the applicable
Reference Notes for such Conversion Date under the Note Indenture
multiplied by (y) the Applicable Portion of the Reference Notes,
provided
that the delivery obligation set forth in clause (i) and (ii) of
this
paragraph shall be determined excluding any Shares or cash that
Counterparty is obligated to deliver to holders of the applicable
Reference Notes as a result of (a) any discretionary adjustments
to the
Conversion Rate by
Counterparty or (b) in the event of a make-whole adjustment to the
Conversion Rate following a specified accounting change as described
in
the Offering Memorandum under “Description of Notes - Make whole premium
upon a specified accounting change,” such portion of such adjustment as is
set forth in clause (B) of the final sentence of the first paragraph
under
“Description of Notes - Make whole premium upon a specified accounting
change” (corresponding to an additional number of Shares equivalent to $20
per $1,000 principal amount of Reference Notes). The provisions of
Sections 9.1(c), 9.8, 9.9, 9.10, 9.11 and 9.12 of the Equity Definitions
shall apply to any delivery of Shares hereunder, provided that the
Representation and Agreement in Section 9.11 of the Equity Definitions
shall be modified by excluding any representations therein relating
to
restrictions, obligations, limitations or requirements under applicable
securities laws as a result of the fact that Buyer is the issuer
of the
Shares.
|
|
Net
Cash Settlement:
|
In
lieu of the obligations set forth in Section 8.1 of the Equity
Definitions, on the Settlement Date Seller shall deliver to Buyer
an
amount in cash equal to the related Net Cash Settlement
Amount.
|
|
Net
Share Settlement Amount:
|
For
each Conversion Date, the number of Shares equal to the Shares delivered
by Buyer for such Conversion Date as required under the Note Indenture
multiplied by the Applicable Portion of the Reference Notes; provided
that
if an Exercise Notice with respect to such Conversion Date has not
been
delivered to the Seller prior to the first Trading Day of the Conversion
Reference Period applicable to such Conversion Date, the Net Share
Settlement Amount for such Conversion Date shall be adjusted by the
Calculation Agent to account for the consequences of the reduced
number of
Trading Days from the delivery of the Exercise Notice to the end
of the
applicable Conversion Reference Period with respect to such Conversion
Date. No reduction of the Net Share Settlement Amount shall reduce
the Net
Share Settlement Amount below zero.
|
|
Net
Cash Settlement Amount:
|
For
each Conversion Date, an amount equal to the cash delivered by the
Buyer
in
excess of the principal amount of the applicable Reference Notes
for such
Conversion
Date as required under the Note Indenture multiplied by the Applicable
Portion of
the Reference Notes, provided that such cash amount shall be determined
excluding any cash that Counterparty is obligated to deliver to holders
of
the applicable
Reference Notes as a result of any adjustments to the Conversion
Rate
described in clauses (a) or (b) under “Net Share Settlement” above.
|
|
Adjustments:
|
-
5
-
|
Method
of Adjustment:
|
Calculation
Agent Adjustment; provided that the terms of this Transaction shall
be
adjusted in accordance with adjustments of the Conversion Rate of
the
Reference Notes as provided in the Note Indenture; provided further
(without limitation of the provisions set forth above under “Net Share
Settlement” and “Net Cash Settlement Amount”) that no adjustment in
respect of any Potential Adjustment Event or Extraordinary Event
shall be
made hereunder as a result of any adjustments to the Conversion Rate
described in clauses (a) or (b) under “Net Share Settlement” above.
|
|
Potential
Adjustment Event:
|
Notwithstanding
Section 11.2(e) of the Equity Definitions, a “Potential Adjustment Event”
means, subject to the preceding paragraph, the occurrence of an event
or
condition that would result in an adjustment of the Conversion Rate
of the
Reference Notes pursuant to the Note Indenture.
|
|
Extraordinary
Events:
|
|
|
Merger
Events:
|
Notwithstanding
Section 12.1(b) of the Equity Definitions, a “Merger Event” means the
occurrence of any event or condition to which Section 4.10 of the
Note
Indenture applies.
|
|
Consequences
for Merger Events:
|
|
|
Share-for-Share:
|
The
Transaction will be adjusted in accordance with the Reference Notes
as
provided in the Note Indenture.
|
|
Share-for-Other:
|
The
Transaction will be adjusted in accordance with the Reference Notes
as
provided in the Note Indenture.
|
|
Share-for-Combined:
|
The
Transaction will be adjusted in accordance with the Reference Notes
as
provided in the Note Indenture.
|
|
Tender
Offer:
|
Applicable,
subject to “Consequences of Tender Offers” below.
Notwithstanding
Section 12.1(d) of the Equity Definitions, “Tender Offer” means the
occurrence of any event or condition set forth in Section 4.06(a)(7)
of
the Note Indenture.
|
|
Consequences
of Tender Offers:
|
The
Transaction will be adjusted in accordance with the Reference Notes
as
provided in the Note Indenture.
|
|
Nationalization,
Insolvency and Delisting:
|
Cancellation
and Payment (Calculation Agent Determination), provided that Buyer
shall
have the right to elect in its sole discretion whether any Cancellation
Amount shall be settled in cash or Shares. In addition to the provisions
of Section 12.6(a)(iii) of the Equity Definitions, it will also constitute
a Delisting if the Exchange is located in the United States and the
Shares
are not immediately re-listed, re-traded or re-quoted on any of the
New
York Stock Exchange, the American Stock Exchange,
the NASDAQ Global Market or
the
NASDAQ Global Select Market
(or their respective successors); if the Shares are immediately re-listed,
re-traded or re-quoted on any such exchange or quotation system,
such
exchange or quotation system shall thereafter be deemed to be the
Exchange.
|
|
Additional
Disruption Events:
|
-
6
-
|
Change
in Law:
|
Applicable
|
|
Failure
to Deliver:
|
Applicable
as amended by this Agreement. If there is inability in the market
to
deliver Shares due to illiquidity on a day that would have been a
Settlement Date, then the Settlement Date shall be the first succeeding
Exchange Business Day on which there is no such inability to deliver,
but
in no such event shall the Settlement Date be later than the date
that is
two (2) Exchange Business Days immediately following what would have
been
the Settlement Date but for such inability to deliver.
|
|
Insolvency
Filing:
|
Applicable
|
|
Hedging
Disruption Event:
|
Not
Applicable
|
|
Increased
Cost of Hedging:
|
Not
Applicable
|
|
Loss
of Stock Borrow:
|
Not
Applicable
|
|
Increased
Cost of Stock Borrow:
|
Not
Applicable
|
|
Hedging
Party:
|
Not
Applicable
|
|
Determining
Party:
|
Seller
|
|
Non-Reliance:
|
Applicable
|
|
Agreements
and Acknowledgments Regarding Hedging Activities:
|
Applicable
|
|
Additional
Acknowledgments:
|
Applicable
|
Additional
Agreements, Representations and Covenants of Buyer, Etc.:
|
1.
|
Buyer
hereby represents and warrants to Seller, on each day from the Trade
Date
to and including the earlier of (i) July 20, 2007 and (ii) the date
by
which Seller is able to initially complete a hedge of its position
relating
to this Transaction, that:
|
|
a.
|
it
will effect (and cause any “affiliated purchaser” (as defined in Rule
10b-18
promulgated under the Securities Exchange Act of 1934, as amended
(the
“Exchange
Act”))
to
effect) any purchases, direct or indirect (including by means of
any
cash-settled or other derivative instrument), of Shares or
any security convertible into or exchangeable or exercisable for
Shares
solely through Agent in a manner that would not cause any purchases
by
Seller of its hedge in connection with this Transaction
not to comply applicable securities
laws;
|
|
b.
|
it
will not engage in, or be engaged in, any “distribution,” as such term is
defined in Regulation M promulgated under the Exchange Act, other
than a
distribution meeting the requirements of the exceptions
set forth in sections 101(b)(10)
and 102(b)(7)
of Regulation M (it being understood that
Xxxxx makes no representation pursuant to this clause in respect
of any
action or inaction taken
by Seller or any initial purchaser of the Reference Notes);
and
|
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7
-
|
c.
|
Xxxxx
has publicly disclosed all material information necessary for Buyer
to be
able to purchase or sell
Shares in compliance with applicable federal securities laws.
|
|
2.
|
If
Buyer would be obligated to pay cash (other than payment of the Premium)
to, receive cash from, Seller pursuant to the terms of this Agreement
for any reason without having had the right (other than pursuant
to this
paragraph (2)) to elect to
deliver or receive Shares in satisfaction of such payment obligation,
then
Buyer may elect (by giving notice to Seller no later than 8 a.m.
New York
time on the Exchange Business Day immediately following the date
of
occurrence of the event giving rise to such payment obligation) that
such
payment obligation shall be satisfied by the delivery of a number
of
Shares (or, if the Shares have been converted
into other securities or property in connection with an Extraordinary
Event, a number or amount of
such other securities or property as a holder of Shares would be
entitled
to receive upon the consummation
or closing of such Extraordinary Event) having a cash value equal
to the
amount of such payment obligation.
Such
number or amount of Shares or other securities or property to be
delivered
shall
be
determined by the Calculation Agent
to
be
the number of Shares or number or amount of such other securities
or property that could be purchased or sold, as applicable, over
a
reasonable period of time with the
cash equivalent of such payment obligation). Settlement relating
to any
delivery of Shares or other securities or property pursuant to this
paragraph (2) shall occur within a reasonable period of time.
Notwithstanding anything herein or in the Agreement to the contrary,
the
aggregate number of Shares that Counterparty may be required to deliver
to
MLI under this Transaction shall not exceed 9, 388, 615 Shares, as
adjusted by the Calculation Agent to account for any subdivision,
stock-split, stock combination, reclassification or similar dilutive
or
anti-dilutive event with respect to the
Shares.
|
|
3.
|
Notwithstanding
any provision in the Note Indenture, this Confirmation or the Agreement
to
the contrary, each
of the “Applicable
Conversion Rate” (as such term is defined in the Note Indenture), the Net
Share Settlement
Amount, the Net Cash Settlement Amount and any other amount hereunder
determined by reference to the Applicable
Conversion Rate shall be determined without regard to any provisions
in
the Note
Indenture allowing Counterparty to unilaterally increase the “Applicable
Conversion Rate.”
|
|
4.
|
Counterparty
is not, and after giving effect to the Transaction contemplated hereby,
will not be, an “investment company” as such term is defined in the
Investment Company Act of 1940, as
amended.
|
|
5.
|
As
of the Trade Date and each date on which a payment or delivery is
made by
Counterparty hereunder, (i) the
assets of Counterparty at their fair valuation exceed the liabilities
of
Counterparty, including contingent liabilities; (ii) the capital
of
Counterparty is adequate to conduct its business; and (iii) Counterparty
has the ability
to pay its debts and other obligations as such obligations mature
and does
not intend to, or believe that
it will, incur debt or other obligations beyond its ability to pay
as such
obligations mature.
|
|
6.
|
The
representations and warranties set forth in Section 1 of the Purchase
Agreement (as defined below) are hereby deemed to be repeated to
MLI as if
set forth herein.
|
Additional
Termination Events:
The
occurrence of any of the following shall be an Additional Termination Event
for
purposes of this Transaction:
|
1.
|
Amendment
Event. If
an Amendment Event (as defined below) occurs, MLI shall have the
right to
designate an Early Termination Date pursuant to Section 6(b) of the
Agreement
with respect to this Transaction only and, notwithstanding anything
to the
contrary herein, no payments shall be required hereunder in
connection with such Amendment
Event.
|
-
8
-
“Amendment
Event”
means
that the Counterparty, without MLI’s consent, amends, modifies, supplements or
obtains a waiver of (a) any term
of
the Note Indenture (as in effect prior to such amendment, modification,
supplement or waiver) or the Reference Notes relating to the principal amount,
coupon,
maturity, repurchase obligation of the Counterparty or redemption right of
the
Counterparty, (b) any term relating to conversion of the Reference Notes,
including, without limitation, any changes to the conversion price, conversion
settlement dates or conversion conditions or (c) any term that would require
consent of the holders
of 100% of the principal amount of the Reference Notes to amend;
|
2.
|
Repayment
Event. If
a Repayment Event (as defined below) occurs, MLI shall have the right
to
designate an Early Termination Date pursuant to Section 6(b) of the
Agreement with respect to this Transaction only to
the extent of the principal amount of Reference Notes that cease
to be
outstanding as a result of such Repayment Event and, notwithstanding
anything to the contrary herein, no payments shall be required hereunder
in connection with such Repayment
Event.
|
“Repayment
Event” means
that (a) any Reference Notes are repurchased (whether in connection with or
as
a
result of a fundamental change, howsoever defined, or for any other reason)
by
the Counterparty, (b) any Reference Notes are delivered to the Counterparty
in
exchange for delivery of any property or assets of the Counterparty
or any of its subsidiaries (howsoever described), other than as a result of
and
in connection with
a
Conversion Date, (c) any principal of any of the Reference Notes is repaid
prior
to the Final Maturity Date (as defined in the Note Indenture) (whether following
acceleration of the Reference Notes or otherwise),
provided that no payments of cash made in respect of the conversion of a
Reference Note shall be
deemed
a payment of principal under this clause (c), (d) any Reference Notes are
exchanged by or for the benefit of the holders thereof for any other securities
of the Counterparty or any of its Affiliates (or any other property, or any
combination thereof) pursuant to any exchange offer or similar transaction
or
(e) any of the Reference Notes is surrendered by Counterparty to the trustee
for
cancellation, other than registration of
a
transfer of such Reference Notes or as a result of and in connection with a
Conversion Date.
|
3.
|
Initial
Purchase Event. If
an Initial Purchase Event (as defined below) occurs, this Transaction
shall terminate
automatically in its entirety and, notwithstanding anything to the
contrary herein, only the payments
specified below shall be required hereunder in connection with such
Initial Purchase Event.
|
“Initial
Purchase Event”
means
that the transactions contemplated by the Purchase Agreement between the
Counterparty, Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx Incorporated and Xxxxxx
Brothers Inc.,
dated as
of June 14, 2007, (the
“Purchase
Agreement”)
shall
fail to close for any reason by the closing date for the offering of the
Reference Notes as specified in the Purchase Agreement.
If
an
Initial Purchase Event occurs for any reason other than a breach of the Purchase
Agreement by the Initial Purchasers, then all payments previously made hereunder
shall be returned to the person making such payment,
including the Premium, less an amount equal to the sum of (X) the product of
(a)
5,442,675 Shares,
(b) 0.50 and (c)
an
amount equal to the excess, if any, of the closing price of the Shares on the
Trade Date over the closing
price of the Shares on the date of the Termination Event plus (Y) the
product of (a) 816,401 Shares,
(b) 0.50 and (c)
an
amount equal to the excess, if any, of the closing price of the Shares on the
date hereof over the closing
price of the Shares on the date of the Termination Event (such sum, the
“Break
Expense”);
provided that any negative amount shall be replaced by zero and provided further
that to the extent the Premium has not been paid,
Buyer shall promptly pay Seller the Break Expense. Seller and Xxxxx agree that
actual damages would be difficult to ascertain under these circumstances and
that the amount of liquidated damages resulting
from the determination in the preceding sentence is a good faith estimate of
such damages and not a penalty.
If
an
Initial Purchase Event occurs due to a breach of the Purchase Agreement by
the
Initial Purchasers, then all payments previously made hereunder, including
the
Premium, promptly shall be returned to the person making
such payment and no payments shall be required hereunder in connection with
such
Initial Purchase
Event.
-
9
-
Staggered
Settlement:
If
Seller
determines reasonably and in good faith that the number of Shares required
to be
delivered to Buyer hereunder on any Settlement Date would exceed 8.0% of all
outstanding Shares, then Seller may, by notice to Buyer on
or
prior to such Settlement Date (a “Nominal
Settlement Date”),
elect
to
deliver the Shares comprising the related
Net Share Settlement Amount on two or more dates (each, a “Staggered
Settlement Date”)
or
at two
or more
times on the Nominal Settlement Date as follows:
|
1.
|
in
such notice, Seller will specify to Buyer the related Staggered Settlement
Dates (the first of which will be
such Nominal Settlement Date and the last of which will be no later
than
twenty (20) Trading Days following such Nominal Settlement Date)
or
delivery times and how it will allocate the Shares it is required
to
deliver hereunder among the Staggered Settlement Dates or delivery
times;
|
|
2.
|
the
aggregate number of Shares that Seller will deliver to Buyer hereunder
on
all such Staggered Settlement Dates or delivery times will equal
the
number of Shares that Seller would otherwise be required to deliver
on
such Nominal Settlement Date; and
|
|
3.
|
the
Net Share Settlement terms will apply on each Staggered Settlement
Date,
except that the Shares comprising
the Net Share Settlement Amount will be allocated among such Staggered
Settlement Dates or delivery times as specified by Seller in the
notice
referred to in clause (1) above.
|
Notwithstanding
anything herein to the contrary, solely in connection with a Staggered
Settlement Date, Seller shall be
entitled to deliver Shares to Buyer from time to time prior to the date on
which
Seller would be obligated to deliver
them to Buyer pursuant to Net Share Settlement terms set forth above, and Xxxxx
agrees to credit all such early deliveries against Seller’s obligations
hereunder in the direct order in which such obligations arise. No such early
delivery of Shares will accelerate or otherwise affect any of Buyer’s
obligations to Seller hereunder.
Disposition
of Hedge Shares:
Counterparty
hereby agrees that if, in the reasonable judgment of Seller based on advice
of
counsel,
the
Shares
acquired
by Seller for the purpose of hedging its obligations pursuant to the Transaction
(the “Hedge
Shares”)
cannot
be sold in the U.S. public market by Seller without registration under the
Securities Act, Counterparty shall, at its election: (i) in order to allow
Seller to sell the Hedge Shares in a registered offering,
make available to Seller an effective registration statement under the
Securities Act to cover the resale of such Hedge Shares and (a) enter into
an
agreement, in form and substance mutually acceptable to Buyer and Seller,
substantially in the form of an underwriting agreement for a registered
offering, (b) provide accountant’s “comfort” letters in customary form for
registered offerings of equity securities, (c) provide disclosure opinions
of
nationally recognized outside counsel
to Counterparty reasonably acceptable to Seller, (d) provide other customary
opinions, certificates and closing documents customary in form for registered
offerings of equity securities and (e) afford Seller a reasonable opportunity
to
conduct a “due diligence” investigation with respect to Counterparty customary
in scope for underwritten offerings of equity securities; provided,
however, that
if
Seller, in its reasonable discretion, is not satisfied with access to due
diligence materials, the results of its due diligence investigation, or the
procedures and documentation
for the registered offering referred to above, then clause (ii) or clause (iii)
of this Section shall apply at the election of Counterparty; (ii) in order
to
allow Seller to sell the Hedge Shares in a private placement, enter into a
private placement agreement substantially similar to private placement purchase
agreements customary for private placements of equity securities, in form and
substance mutually acceptable to Buyer and Seller, including customary
representations, covenants, blue sky and other governmental filings and/or
registrations, indemnities to Seller, due diligence rights (for Seller or any
designated buyer of the Hedge Shares from Seller), opinions and certificates
and
such other documentation as is customary for private placements agreements,
all
reasonably acceptable to Seller (in which case, the Calculation Agent shall
make
any adjustments to the terms of the Transaction that are necessary to compensate
Seller for any discount from the public market price of the Shares incurred
on
the sale of Hedge Shares in a private placement);
or (iii) purchase the Hedge Shares from Seller at the VWAP Price on such
Exchange Business Days, and
in
the amounts, requested by Seller. “VWAP
Price”
means,
on any Exchange Business Day, the per Share volume-weighted
average price as displayed under the heading “Bloomberg VWAP” on Bloomberg page
ICON
<equity>
VAP (or any successor thereto) in respect of the period from 9:30 a.m. to 4:00
p.m. (New York City time) on such Exchange Business Day (or if such
volume-weighted average price is unavailable, the market value of one Share
on
such Exchange Business Day, as determined by the Calculation Agent using a
volume-weighted method).
-
10
-
Repurchase
Notices:
Counterparty
shall, on any day on which Counterparty effects any repurchase of Shares,
promptly give Seller a written notice of such repurchase (a “Repurchase
Notice”)
on
such
day if following such repurchase, the Notice Percentage as determined on such
day is (i) greater than 6% and (ii) greater by 0.5% than the Notice Percentage
included
in the immediately preceding Repurchase Notice (or, in the case of the first
such Repurchase Notice, greater than the Notice Percentage as of the date
hereof). In the event that Counterparty fails to provide Seller with
a
Repurchase Notice on the day and in the manner specified in this section, then
Counterparty agrees to indemnify and hold harmless Seller, its affiliates and
their respective directors, officers, employees, agents and controlling persons
(Seller and each such person being an “Indemnified
Party”)
from
and
against any and all losses, claims, damages and liabilities (or actions in
respect thereof), joint or several, to which such Indemnified Party may become
subject under applicable securities laws, including without limitation, Section
16 of the Exchange Act, relating to or arising
out of such failure. If for any reason the foregoing indemnification is
unavailable to any Indemnified Party or
insufficient to hold harmless any Indemnified Party, then Counterparty shall
contribute, to the maximum extent permitted by law, to the amount paid or
payable by the Indemnified Party as a result of such loss, claim, damage or
liability.
In addition, Counterparty will reimburse any Indemnified Party for all
reasonable and documented expenses
(including reasonable counsel fees and expenses) as they are incurred (after
notice to Counterparty) in connection
with the investigation of, preparation for or defense or settlement of any
pending or threatened claim or any
action, suit or proceeding arising therefrom, whether or not such Indemnified
Party is a party thereto and whether
or not such claim, action, suit or proceeding is initiated or brought by or
on
behalf of Counterparty. This indemnity
shall survive the completion of the Transaction contemplated by this
Confirmation and any assignment and delegation of the Transaction made pursuant
to this Confirmation or the Agreement shall inure to the benefit of any
permitted assignee of Seller. Counterparty will not be liable to an Indemnified
Party under this Indemnity provision to the extent that any
loss,
claim, damage, liability or expense is found in a final judgment by a court
to
have resulted from that Indemnified Party’s gross
negligence or willful misconduct. The “Notice
Percentage”
as of
any day is the fraction, expressed as a percentage, (i) the numerator of which
is the product of (a) the Applicable Portion of the Reference Notes, (b) the
number of outstanding Reference Notes and (c) a number of
Shares
per Reference Note equal to the Conversion Rate (as defined in the Note
Indenture) and (ii) the denominator
of which is the number of Shares outstanding on such day.
Conversion
Rate Adjustment Notices
In
connection with any adjustments to the Conversion Rate under the terms of the
Note Indenture, Counterparty shall provide to MLI a copy of the notice of
adjustment required to be delivered to the Trustee pursuant to Section 4.08
of
the Note Indenture concurrently with filing of such notice with the Trustee.
-
11
-
|
Compliance
with Securities Laws:
|
Each
party represents and agrees that, in connection with this Transaction
and
all related or contemporaneous sales and purchases of Shares by either
party, Buyer, or in the case of Seller, the person(s) that directly
influences the specific trading decisions
of Seller, has complied
and will comply with the applicable provisions of the Securities
Act of
1933,
as amended (the “Securities
Act”),
and
the Exchange Act, and
the rules and regulations each thereunder, including, without limitation,
Section 9(a)
of, and Rules 10b-5 and 13e and Regulation M under, the Exchange
Act;
provided that each party shall be entitled to rely conclusively on
any
information communicated by the other party concerning such other
party’s
market activities.
Each
party acknowledges that the offer and sale of the Transaction to
it is
intended to be exempt from registration under the Securities Act
by virtue
of Section 4(2) thereof. Accordingly, Buyer represents and warrants
to
Seller that (i) it has the financial ability to bear the economic
risk of
its investment in the Transaction and is able to bear
a total loss of its investment, (ii) it is an “accredited investor” as
that term is defined
in Regulation D as promulgated under the Securities Act and (iii)
the
disposition
of the Transaction is restricted under this Confirmation, the Securities
Act and state securities laws.
|
|
Buyer
further represents:
(a) Buyer
is not entering into this Transaction to create actual or apparent
trading
activity in the Shares (or any security convertible into or exchangeable
for Shares) or to raise or depress or otherwise manipulate the price
of
the Shares (or any security convertible into or exchangeable for
Shares);
(b) Buyer
acknowledges that as of the date hereof and without limiting the
generality of Section 13.1 of the Equity Definitions, Seller is not
making
any representations or warranties
with respect to the treatment of the Transaction under FASB Statements
149
or 150, EITF Issue No. 00-19 (or any successor issue statements)
or under
FASB’s
Liabilities & Equity Project.
|
|
|
Account
Details:
|
Account
for payments to Buyer: To
be advised.
Account
for payment to Seller: To
be advised.
Accounts
for deliveries of Shares: To
be advised.
|
|
Bankruptcy
Rights:
|
In
the event of Xxxxx’s bankruptcy, Seller’s rights in connection with this
Transaction shall
not exceed those rights held by common shareholders. For the avoidance
of
doubt, the
parties acknowledge and agree that Xxxxxx’s rights with respect to any
other claim arising from this Transaction prior to Xxxxx’s bankruptcy
shall remain in full force and effect
and shall not be otherwise abridged or modified in connection
herewith.
|
|
Set-Off:
|
Each
party waives any and all rights it may have to set-off, whether arising
under any agreement,
applicable law or otherwise.
|
|
Collateral:
|
None.
|
-
12
-
|
Transfer:
|
Buyer
shall have the right to assign its rights and delegate its
obligations hereunder
with respect
to any portion of this Transaction, subject to Seller’s consent, such
consent not to be unreasonably withheld; provided that such assignment
or
transfer shall be subject to receipt by Seller of opinions and documents
reasonably satisfactory to Seller and effected on terms reasonably
satisfactory to the Seller with respect to any legal and regulatory
requirements relevant to the Seller; provided further that Buyer
shall not
be released from its obligation to deliver any Exercise Notice or
its
obligations pursuant to “Disposition of Hedge Shares”, “Repurchase
Notices” or “Conversion Rate Adjustment Notices” above. Buyer agrees that
it shall not be unreasonable for Seller to withhold its consent to
any
assignment or transfer if Seller determines, based upon the advice
of
outside counsel, that the assignment or transfer would be inadvisable
because it could cause the hedging activities of Seller, or of Buyer’s
transferee, related to the transactions contemplated in connection
with
the issuance of the Reference Notes to fail to comply with applicable
securities laws or regulations.
If,
as determined in Seller’s sole discretion, its “beneficial ownership”
(within the meaning of Section 13 of the Exchange Act and rules
promulgated thereunder) could be deemed to exceed 8% of Counterparty’s
outstanding Shares,
Seller may, without Counterparty’s consent, transfer or assign all or any
part of its rights or obligations under this Transaction to reduce
such
“beneficial ownership” to 7.5% to any third party with a rating for its
(or, if applicable, its Credit Support Provider’s) long term, unsecured
and unsubordinated indebtedness of AA
or
better by Standard & Poor’s Ratings Service or its successor
(“S&P”), or
Aa3
or better by Xxxxx’x Investors Service (“Moody’s”) or,
if either S&P or Moody’s ceases to rate such debt, at least an
equivalent rating or better by a substitute rating agency mutually
agreed
by Company and Seller. If after Seller’s commercially reasonable efforts,
Seller is unable to effect such a transfer or assignment on pricing
terms
reasonably acceptable to Seller and within a time period reasonably
acceptable to Seller of a sufficient number of Options to reduce
Seller’s
“beneficial ownership” (within the meaning of Section 13 of the Exchange
Act and rules promulgated thereunder) to 7.5% of Counterparty’s
outstanding Shares or less, Seller may designate any Exchange Business
Day
as an Early Termination Date with respect to a portion (the “Terminated
Portion”) of
this Transaction, such that its “beneficial ownership” following such
partial termination will be equal to or less than 7.5%. In the event
that
Seller so designates an Early Termination Date with respect to a
portion
of this Transaction, a payment shall be made pursuant to Section
6 of the
Agreement as if (i) an Early Termination Date had been designated
in
respect of a Transaction having terms identical to this Transaction
and a
Number of Options equal to the Terminated Portion, (ii) Counterparty
shall
be the sole Affected Party with respect to such partial termination
and
(iii) such Transaction shall be the only Terminated Transaction;
provided
that if the circumstances giving rise to such partial termination
arose
primarily due to the actions of MLI, then MLI and Counterparty both
shall
be Affected Parties. In circumstances in which the foregoing provisions
relating to Seller’s right to transfer or assign its rights or obligations
under the Transaction are not applicable, Seller may transfer any
of its
rights or delegate its obligations under this Transaction with the
prior
written consent of Buyer, which consent shall not be unreasonably
withheld.
|
|
Regulation:
|
Seller
is regulated by The Securities and Futures Authority
Limited.
|
Matters
Relating to Agent:
|
1.
|
MLPFS
will be responsible for the operational aspects of the Transactions
effected through it, such as record keeping, reporting, and confirming
Transactions to Xxxxx and Seller;
|
-
13
-
|
2.
|
Unless
Buyer is a “major U.S. institutional investor,” as defined in Rule 15a-6
of the Exchange Act, neither Buyer nor Seller will contact the other
without the direct involvement of
MLPFS;
|
|
3.
|
XXXXX’s
sole role under this Agreement and with respect to any Transaction
is as
an agent of Xxxxx and Xxxxxx on a disclosed basis and MLPFS shall
have no
responsibility or liability to Buyer or Seller hereunder except for
gross
negligence or willful misconduct in the performance of its duties
as
agent. MLPFS is authorized to act as agent for Buyer, but only to
the
extent expressly required to satisfy the requirements of Rule 15a-6
under
the Exchange Act in respect of the Options described hereunder. MLPFS
shall have no authority to act as agent for Buyer generally or with
respect to transactions or other matters governed by this
Agreement, except to the extent expressly required to satisfy the
requirements of Rule 15a-6 or in accordance
with express instructions from
Buyer.
|
ISDA
Master Agreement:
With
respect to the Agreement, Seller and Counterparty each agree as
follows:
“Specified
Entity” means
in
relation to Seller and in relation to Counterparty for purposes of this
Transaction: Not applicable.
The
definition of “Specified
Transaction” in
Section 14 of this Agreement is hereby amended by adding the text “commodity
transaction, credit derivative transaction, repurchase or reverse purchase
transaction, securities lending transaction, futures transaction, prime
brokerage or margin lending transaction” after the words “foreign exchange
transaction” in the sixth line thereof and by replacing the words “any other
similar transaction” in the eighth line thereof with the text “any other
transaction between the parties”. “Specified Transaction” shall exclude any
default under a Specified Transaction if caused solely by the general
unavailability of the currency in which payments under such Specified
Transaction are denominated due to exchange controls or other governmental
action.
The
“Cross
Default” provisions
of Section
5(a)(vi) of
the
Agreement will not apply to Seller and will not apply to
Counterparty.
The
“Credit
Event Upon Merger” provisions
of Section
5(b)(iv) of
the
Agreement will not apply to Seller and will
not
apply to Counterparty.
The
“Automatic
Early Termination” provision
of Section
6(a) of
the
Agreement will not apply to Seller or to Counterparty.
Payments
on Early Termination. For
the
purpose of Section
6(e) of
the
Agreement: (i) Loss
(which
shall be determined using commercially reasonable procedures in order to produce
a commercially reasonable result) shall apply; and (ii) the
Second Method shall apply.
“Termination
Currency” means
USD.
Tax
Representations.
|
(a)
|
Payer
Representations. For
the purpose of Section 3(e) of the Agreement, each party represents
to the
other party that it is not required by any applicable law, as modified
by
the practice of any relevant governmental revenue authority, of any
Relevant Jurisdiction to make any deduction or withholding for or
on
account of any Tax from any payment (other than interest under Section
2(e), 6(d)(ii), or 6(e) of the Agreement)
to be made by it to the other party under the Agreement. In making
this
representation, each party may rely on (i) the accuracy of any
representations made by the other party pursuant to Section 3(f)
of the
Agreement, (ii) the satisfaction of the agreement contained in Section
4(a)(i) or 4(a)(iii) of the Agreement, and the accuracy and effectiveness
of any document provided by the other party pursuant to Section 4(a)(i)
or
4(a)(iii) of the Agreement, and (iii) the satisfaction of the agreement
of
the other party contained in Section 4(d) of the Agreement; provided
that
it will not be a breach of this representation where reliance is
placed on
clause (ii) above and the other party does not deliver a form or
document
under Section
4(a)(iii) of the Agreement by reason of material prejudice to its
legal or
commercial position.
|
-
14
-
|
(b)
|
Payee
Representations. For
the purpose of Section 3(f) of the Agreement, each party makes the
following representations to the other
party:
|
(i) MLI
represents that it is a company organized under the laws of England
and Wales.
(ii)
MLI
represents that it is a “non-withholding foreign partnership” for United States
Federal income tax purposes and each partner of MLI is a “non-U.S. branch of a
foreign person” for purposes of section 1.1441-4(a)(3)(ii) of the United States
Treasury Regulations and a “foreign person” for purposes of section
1.6041-4(a)(4) of the United States Treasury Regulations.
(iii) MLI
represents that no partner of MLI is (i) a bank that has entered into this
Agreement in the ordinary course of its trade or business of making loans,
as
described in section 881(c)(3)(A) of the Internal Revenue Code of 1986, as
amended (the “Code”), (ii) a 10% shareholder of Counterparty within the meaning
of Code section 871(h)(3)(B), or (iii) a controlled foreign corporation with
respect to Counterparty within the meaning of Code section
881(c)(3)(C).
(iv) Counterparty
represents that it is a corporation incorporated in Delaware.
Delivery
Requirements. For
the
purpose of Sections
4(a)(i)
and
(ii)
of the
Agreement, each party agrees to deliver the following documents:
|
(a)
|
Tax
forms, documents or certificates to be delivered
are:
|
MLI
agrees to complete (accurately and in a manner reasonably satisfactory to
Counterparty),
execute, and deliver to Counterparty,
United States Internal Revenue Service Form W-8 IMY and all required
attachments, or any successor of such form(s): (i) before the first payment
date
under this agreement; (ii) promptly upon reasonable demand by Counterparty;
and
(iii) promptly upon learning that any such Form previously provided by MLI
has
become obsolete or incorrect.
Counterparty
agrees to complete (accurately and in a manner reasonably satisfactory to MLI),
execute, and deliver to MLI,
United
States Internal Revenue Service Form W-9 or W-8 BEN, or any successor of such
form(s): (i) before the first payment date under this agreement; (ii) promptly
upon reasonable demand by MLI;
and
(iii) promptly upon learning that any such form(s) previously provided by
Counterparty
has
become obsolete or incorrect.
|
(b)
|
Other
documents to be delivered:
|
|
Party
Required to Deliver Document
|
Document
Required to be Delivered
|
When
Required
|
Covered
by Section 3(d) Representation
|
|
Counterparty
|
Evidence
of the authority and true signatures of each official or representative
signing this Confirmation
|
Upon
or before execution and delivery of this Confirmation
|
Yes
|
|
Counterparty
|
Certified
copy of the resolution of the Board of Directors or equivalent document
authorizing the execution and delivery of this Confirmation and such
other
certificates as Seller shall reasonably request
|
Upon
or before execution and delivery of this Confirmation
|
Yes
|
|
Seller
|
Guarantee
of its Credit Support Provider, substantially in the form of Exhibit
A
attached hereto, together with evidence of the authority and true
signatures of the signatories, if applicable
|
Upon
or before execution and delivery of this Confirmation
|
No
|
-
15
-
Additional
Notice Requirements. Counterparty
hereby agrees to promptly deliver to Seller a copy of all notices and other
communications required or permitted to be given to the holders of any Reference
Notes pursuant to the terms of the Note Indenture on the dates so required
or
permitted in the Note Indenture and all other notices given and
other
communications made by Counterparty in respect of the Reference Notes to holders
of any Reference Notes.
Counterparty further covenants to Seller that it shall promptly notify Seller
of
each Conversion Date, Amendment Event (including in such notice a detailed
description of any such amendment) and Repayment Event (identifying in such
notice the nature of such Repayment Event and the principal amount at maturity
of Reference Notes being paid).
Addresses
for Notices. For
the
purpose of Section
12(a) of
the
Agreement: Address
for notices or communications to Seller for all purposes:
| Address: | Xxxxxxx Xxxxx International | |
| Xxxxxxx Xxxxx Financial Centre | ||
| 0 Xxxx Xxxxxx Xxxxxx | ||
| London EC1A 1HQ | ||
| Attention: | Manager, Fixed Income Settlements | |
| Facsimile No.: | 00 000 000 0000 | |
| Telephone No.: | 00 000 000 0000 |
Additionally,
a copy of all notices pursuant to Sections
5,
6,
and
7
as well
as any changes to Counterparty’s address, telephone number or facsimile number
should be sent to:
Address
for notices or communications to Counterparty for all
purposes:
| Address: | 0000 Xxxxxxxx, 0xx Xxxxx | |
| New York, NY 10018 | ||
| Attention: | Chief Executive Officer | |
| Facsimile No.: | 000 000 0000 | |
| Telephone No.: | 000 000 0000 |
-
16
-
In
addition, in the case of notices or communications
relating to Section
5,
6,
11
or
13
of this
Agreement, a second copy of any such notice or communication shall be addressed
to the attention of Counterparty’ General Counsel as
follows:
| Address: | 0000 Xxxxxxxx, 0xx Xxxxx | |
| New York, NY 10018 | ||
| Attention: | General Counsel | |
| Facsimile No.: | 000 000 0000 | |
| Telephone No.: | 000 000 0000; | |
| and |
| Firm: | Blank Rome LLP | |
| Address: | 000 Xxxxxxxxx Xxxxxx
Xxx
Xxxx, XX 00000
|
|
| Attention: | Xxxxxx X. Xxxxxxx, Esq. | |
| Facsimile No.: | 000 000 0000 | |
| Telephone No.: | 000 000 0000 |
Process
Agent. For
the
purpose of Section 13(c) of the Agreement, Seller appoints as its Process
Agent:
| Address: | Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx
Incorporated
000
Xxxxxxxx, 00xx
Xxxxx
Xxx
Xxxx, Xxx Xxxx 00000
|
|
| Attention: | Litigation Department | |
| Counterparty does not appoint a Process Agent. | ||
Multibranch
Party. For
the
purpose of Section
10(c) of
the
Agreement: Neither Seller nor Counterparty is a Multibranch
Party.
Calculation
Agent. "Calculation
Agent" means MLI, acting in good faith and in a commercially reasonable
manner.
Credit
Support Document.
Seller:
Guarantee of ML&Co. in the form attached hereto as Exhibit A.
Counterparty:
Not Applicable
Credit
Support Provider.
With
respect to Seller: ML&Co.
With
respect to Counterparty: Not Applicable.
Governing
Law. This
Confirmation will be governed by, and construed in accordance with, the laws
of
the State of New York.
Waiver
of Jury Trial. Each
party waives, to the fullest extent permitted by applicable law, any right
it
may have to a trial by jury in respect of any suit, action or proceeding
relating to this Transaction. Each party (i) certifies that no representative,
agent or attorney of the other party has represented, expressly or otherwise,
that such other party would
not, in the event of such a suit, action or proceeding, seek to enforce the
foregoing waiver and (ii) acknowledges
that it and the other party have been induced to enter into this Transaction,
as
applicable, by, among other
things, the mutual waivers and certifications provided herein.
-
17
-
Netting
of Payments. The
provisions of Section
2(c) of
the
Agreement shall not be applicable to this Transaction.
Basic
Representations. Section
3(a) of
the
Agreement is hereby amended by the deletion of “and” at the end of Section
3(a)(iv); the
substitution of a semicolon for the period at the end of Section
3(a)(v) and
the
addition of Sections
3(a)(vi), as
follows:
Eligible
Contract Participant; Line of Business. Each
party agrees and represents that it is an “eligible contract participant” as
defined in Section 1a(12)
of
the U.S. Commodity Exchange Act, as amended (“CEA”),
this
Agreement and the Transaction thereunder are subject to individual negotiation
by the parties and have not been executed or traded on a “trading facility” as
defined in Section 1a(33)
of
the CEA, and it has entered into this Confirmation and this Transaction in
connection with its business or a line of business (including financial
intermediation), or the financing of its business.
Acknowledgements:
|
(a)
|
The
parties acknowledge and agree that there are no other representations,
agreements or other undertakings
of the parties in relation to this Transaction, except as set forth
in
this Confirmation.
|
|
(b)
|
The
parties hereto intend for:
|
|
(i)
|
Seller
to be a “financial institution” as defined in Section 101(22) of Title 11
of the United States Code (the “Bankruptcy
Code”)
and this Transaction to be a “securities contract” as defined in Section
741(7) of the Bankruptcy Code and
a “swap agreement” as defined in Section 101(53C) of the Bankruptcy
Code, qualifying
for the protections of, among other sections, Sections 362(b)(6),
362
(b)(17), 546(e), 546(g), 555 and 560 of the Bankruptcy
Code;
|
|
(ii)
|
a
party’s right to liquidate this Transaction and to exercise any other
remedies upon the occurrence of any Event of Default under the Agreement
with respect to the other party to constitute a “contractual right” as
defined in the Bankruptcy Code;
|
|
(iii)
|
all
payments for, under or in connection with this Transaction, all payments
for the Shares and the transfer of such Shares to constitute “settlement
payments” as defined in the Bankruptcy
Code.
|
Amendment
of Section 6(d)(ii). Section
6(d)(ii) of
the
Agreement is modified by deleting the words “on the day” in
the
second line thereof and substituting therefore “on the day that is three Local
Business Days after the day.” Section
6(d)(ii)
is
further modified by deleting the words “two Local Business Days” in the fourth
line thereof and substituting therefore “three Local Business
Days.”
Amendment
of Definition of Reference Market-Makers. The
definition of “Reference Market-Makers” in Section
14
is
hereby amended by adding in clause (a) after the word “credit” and before the
word “and” the words “or to enter into transactions similar in nature to the
Transaction.”
Consent
to Recording. Each
party consents to the recording of the telephone conversations of trading and
marketing personnel of the parties and their Affiliates in connection with
this
Confirmation. To the extent that one party records telephone conversations
(the
“Recording Party”) and
the
other party does not (the “Non-Recording Party”),
the Recording Party shall in the event of any dispute, make a complete and
unedited copy of such party’s tape of the entire day’s conversations with the
Non-Recording Party’s personnel available to the Non-Recording Party. The
Recording Party’s tapes may be used by either party in any forum in which a
dispute is sought to be resolved and the Recording Party will retain tapes
for a
consistent period of time in accordance with the Recording Party’s policy unless
one party notifies the other that a particular transaction is under review
and
warrants further retention.
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18
-
Disclosure.
Each
party hereby acknowledges and agrees that Seller has authorized Counterparty
to
disclose this Transaction and any related hedging transaction between the
parties if and to the extent that Counterparty reasonably determines
(after consultation with Seller) that such disclosure is required by law or
by
the rules of the NASDAQ Global Market or
any
securities exchange. Notwithstanding the foregoing, effective from the date
of
commencement of discussions concerning the Transaction, Counterparty and each
of
its employees, representatives, or other agents may disclose to any and all
persons, without limitation of any kind, the tax treatment and tax structure
of
the Transaction and all materials of any kind (including opinions or other
tax
analyses) that are provided to Counterparty relating to such tax treatment
and
tax structure.
Severability.
If
any
term, provision, covenant or condition of this Confirmation, or the application
thereof to any party
or
circumstance, shall be held to be invalid or unenforceable in whole or in part
for any reason, the remaining terms, provisions, covenants, and conditions
hereof shall continue in full force and effect as if this Confirmation had
been
executed with the invalid or unenforceable provision eliminated, so long as
this
Confirmation as so modified continues to express, without material change,
the
original intentions of the parties as to the subject matter of this Confirmation
and the deletion of such portion of this Confirmation will not substantially
impair the respective benefits or expectations of parties to this Agreement;
provided,
however, that
this
severability provision shall not be applicable
if any provision of Section
2,
5,
6
or
13
of the
Agreement (or any definition or provision in Section
14 to
the
extent that it relates to, or is used in or in connection with any such Section)
shall be so held to be invalid or unenforceable.
Affected
Parties. For
purposes of Section
6(e) of
the
Agreement, each party shall be deemed to be an Affected Party in connection
with
Illegality and any Tax Event.
[Signatures
follow on separate page]
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19
-
Please confirm that the foregoing correctly sets forth the terms of our agreement by executing the copy of this Confirmation enclosed for that purpose and returning it to us.
Very
truly yours,
XXXXXXX
XXXXX INTERNATIONAL
By:
/s/ Xxxxxx
Xxxxxxxx
Name:
Xxxxxx Xxxxxxxx
Title:
Authorized Signatory
Confirmed
as of the date first above written:
By:
/s/ Xxxx
Xxxx
Name:
Xxxx Xxxx
Title:
Chairman, President and CEO
Acknowledged
and agreed as to matters to the Agent:
XXXXXXX
LYNCH, XXXXXX, XXXXXX & XXXXX INCORPORATED,
Solely
in
its capacity as Agent hereunder
By:
/s/ Xxxxx
Xxxxxxx
Name:
Xxxxx Xxxxxxx
Title:
Authorized Signatory
Execution
Copy
EXHIBIT
A
GUARANTEE
OF XXXXXXX XXXXX & CO., INC.
FOR
VALUE
RECEIVED, receipt of which is hereby acknowledged, XXXXXXX XXXXX & CO.,
INC., a corporation duly organized and existing under the laws of the State
of
Delaware (“ML & Co.”), hereby unconditionally guarantees to Iconix Brand
Group, Inc. (the “Company”), the due and punctual payment of any and all amounts
payable by Xxxxxxx Xxxxx International, a company organized under the laws
of
England and Wales (“ML”), under the terms of the Confirmation of OTC Convertible
Note Hedge between the Company and ML (ML as Seller), amended and restated
as of
June 18, 2007 (the “Confirmation”), including, in case of default, interest on
any amount due, when and as the same shall become due and payable, whether
on
the scheduled payment dates, at maturity, upon declaration of termination or
otherwise, according to the terms thereof. In case of the failure of ML
punctually to make any such payment, ML & Co. hereby agrees to make such
payment, or cause such payment to be made, promptly upon demand made by the
Company to ML & Co.; provided, however that delay by the Company in giving
such demand shall in no event affect ML & Co.’s obligations under this
Guarantee. This Guarantee shall remain in full force and effect or shall be
reinstated (as the case may be) if at any time any payment guaranteed hereunder,
in whole or in part, is rescinded or must otherwise be returned by the Company
upon the insolvency, bankruptcy or reorganization of ML or otherwise, all as
though such payment had not been made.
ML
&
Co. hereby agrees that its obligations hereunder shall be unconditional,
irrespective of the validity, regularity or enforceability of the Confirmation;
the absence of any action to enforce the same; any waiver or consent by the
Company concerning any provisions thereof; the rendering of any judgment against
ML or any action to enforce the same; or any other circumstances that might
otherwise constitute a legal or equitable discharge of a guarantor or a defense
of a guarantor. ML covenants that this guarantee will not be discharged except
by complete payment of the amounts payable under the Confirmation. This
Guarantee shall continue to be effective if XX xxxxxx or consolidates with
or
into another entity, loses its separate legal identity or ceases to
exist.
ML
&
Co. hereby waives diligence; presentment; protest; notice of protest,
acceleration, and dishonor; filing of claims with a court in the event of
insolvency or bankruptcy of ML; all demands whatsoever, except as noted in
the
first paragraph hereof; and any right to require a proceeding first against
ML.
ML
&
Co. hereby certifies and warrants that this Guarantee constitutes the valid
obligation of ML & Co. and complies with all applicable laws.
This
Guarantee shall be governed by, and construed in accordance with, the laws
of
the State of New York.
This
Guarantee may be terminated at any time by notice by ML & Co. to the Company
given in accordance with the notice provisions of the Confirmation, effective
upon receipt of such notice by the Company or such later date as may be
specified in such notice; provided, however, that this Guarantee shall continue
in full force and effect with respect to any obligation of ML under the
Confirmation.
This
Guarantee becomes effective concurrent with the effectiveness of the
Confirmation, according to its terms.
IN
WITNESS WHEREOF, ML & Co. has caused this Guarantee to be executed in its
corporate name by its duly authorized representative.
XXXXXXX
XXXXX & CO., INC.
By:_________________________
Name:
Title:
Date:
