STOCK PURCHASE AGREEMENT dated as of March 15, 2010 Between Starr International Company, Inc. and UBS SECURITIES LLC
Exhibit
5
UBS
Reference No. _______________
dated as
of
March 15,
2010
Between
Starr
International Company, Inc.
and
UBS
SECURITIES LLC
TABLE OF
CONTENTS
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ARTICLE
1 Definitions
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Section
1.1. Definitions
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………………………………………………………1
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ARTICLE
2 Sale and Purchase
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Section
2.1. Sale and
Purchase
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………………………………………………………4
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Section
2.2. Payment
and Terms
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………………………………………………………4
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Section
2.3. Cash
Settlement Option
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………………………………………………………6
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Section
2.4. Early
Termination
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………………………………………………………6
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Section
2.5. Transactions Involving Common
Stock
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………………………………………………………6
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Section
2.6. Related
Compensation
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………………………………………………………6
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ARTICLE
3 Representations and Warranties of Seller
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Section
3.1. Representations and Warranties
of Seller
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………………………………………………………6
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ARTICLE
4 Representations and Warranties of Buyer
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Section
4.1. Representations and Warranties
of Buyer
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………………………………………………………7
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ARTICLE
5 Conditions to Buyer’s Obligations
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Section
5.1. Conditions
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ARTICLE
6 Covenants
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Section
6.1. Taxes
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Section
6.2. Forward
Contract
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………………………………………………………9
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Section
6.3. Notices
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………………………………………………………9
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Section
6.4. Further
Assurances
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………………………………………………………9
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Section
6.5. Intentionally
Omitted
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………………………………………………………9
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Section
6.6. No Sales
of Common Stock
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………………………………………………………9
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Section
6.7. Securities
Contract
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Section
6.8. SEC
Filings
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………………………………………………………9
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Section 6.9. Material Non-public
Information
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………………………………………………………9
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ARTICLE
7 Adjustments
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Section
7.1. Dilution
Adjustments
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………………………………………………………10
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Section
7.2. Merger
Events, Tender Offer Events Nationalization, or
Insolvency
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………………………………………………………10
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Section
7.3. Payments
on Termination
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………………………………………………………11
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Section 7.4. Cash
Dividends
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………………………………………………………11
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Section
7.5. Spin-offs
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Section 7.6. Miscellaneous
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ARTICLE
8 Acceleration
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Section
8.1. Acceleration
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ARTICLE
9 Miscellaneous
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Section
9.1. Notices
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………………………………………………………14
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Section
9.2. Governing Law; Severability;
Submission to Jurisdiction; Waiver of Jury Trial
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………………………………………………………14
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Section
9.3. Service
of Process
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………………………………………………………14
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Section
9.4. Entire
Agreement
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………………………………………………………14
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Section
9.5. Amendments,
Waivers
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………………………………………………………14
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Section
9.6. No Third
Party Rights, Successors and Assigns
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………………………………………………………14
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Section
9.7. Assignment
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………………………………………………………15
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Section
9.8. Counterparts
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………………………………………………………15
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THIS
AGREEMENT is made as of March 15, 2010 between the Seller (as defined herein)
and UBS SECURITIES LLC, a Delaware limited liability company (“Buyer”).
WHEREAS,
Seller owns shares of common stock (the “Common Stock”) of the Company
(as defined herein), or security entitlements in respect thereof;
WHEREAS,
Seller has agreed, pursuant to the Pledge Agreement (as defined herein) to grant
Buyer a security interest in certain Common Stock to secure the obligations of
Seller hereunder;
WHEREAS,
Seller and Buyer are willing to sell and purchase such shares of Common Stock,
or security entitlements in respect thereof at the time and on the terms set
forth herein;
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:
ARTICLE
1
Definitions
Section 1.1. Definitions. .As used herein,
the following words and phrases shall have the following meanings:
“Acceleration Amount” has the
meaning provided in Section 8.1.
“Acceleration Amount Notice”
has the meaning provided in Section 8.1.
“Acceleration Date” has the
meaning provided in Section 8.1.
“Acceleration Value” has the
meaning provided in Section 8.1.
“Bankruptcy Code” has the
meaning provided in Section 6.7.
“Base Amount” means the maximum
number of shares of Common Stock that Seller agrees to sell, and Buyer agrees to
purchase, pursuant to this Agreement, and shall equal the number of shares of
Common Stock sold in Initial Short Sales pursuant to Section 2.2(b). The Base
Amount shall be subject to adjustment in connection with Potential Adjustment
Events and Merger Events as provided in Article 7.
“Bloomberg Screen Volume at Price
Page” shall mean the display designated as page “AIG Equity AQR” on the
Bloomberg Financial Service or such page as may replace the Volume at Price page
on that service for the purpose of displaying daily volume and volume-weighted
trading prices of equity securities during the normal trading hours of 9:30 a.m.
to 4:00 p.m., New York Time or, if such service does not then publish daily
volume and volume-weighted trading prices of the Common Stock, such other page
and services selected by the Buyer that reports daily volume and weighted
trading prices of the Common Stock.
“Business Day” means any day on
which commercial banks are open for business in New York City and the New York
Stock Exchange is not closed.
“Cap Level” has the meaning
provided in Section 2.2(d). The Cap Level shall be subject to adjustment in
connection with Potential Adjustment Events and Merger Events as provided in
Article 7.
“Cash Dividend” means any cash
dividend paid in respect of shares of Common Stock by the Company.
“Cash Settlement Amount” means
an amount of cash equal to the product of the Settlement Price and the number of
shares of Common Stock (or security entitlements in respect thereof) required to
be delivered (but for Section 2.3) pursuant to Section 2.2(e) on the Settlement
Date.
“Closing Price” means, for any
security for any Trading Day (the “Reference Date”), (i) the last reported
executed trade price (regular way) of such security on the principal trading
market for such security on the Reference Date; (ii) if no regular way executed
trade price for such security is reported on the principal trading market for
such security on the Reference Date, the average of the closing bid and offered
prices for such security as reported by the principal trading market for such
security on the Reference Date; (iii) if no regular way executed trade price or
closing bid and offered prices
1
for
such security are reported on the principal trading market for such security on
the Reference Date, the Closing Price (as determined in accordance with clause
(i) or (ii)) for the next succeeding Trading Day (if any) within the two
scheduled Trading Days immediately succeeding the Reference Date on which the
Closing Price may be so determined; or (iv) if the Closing Price may not be
determined in accordance with clause (i) or (ii) on either of such two
immediately succeeding Trading Days, the price determined in good faith by Buyer
to be the fair market price of such security as of the close of business on the
Reference Date; provided that if such security is no longer listed or admitted
to trading on any exchange or in the over-the-counter market on the Reference
Date, the Closing Price shall be the average of the closing bid and offered
prices for the Reference Date as furnished by a member firm of the most recent
principal trading market for such security. The Closing Price shall be subject
to adjustment in certain events as provided in Article 7.
“Collateral” has the meaning
provided in the Pledge Agreement.
“Collateral Agent” has the
meaning provided in the Pledge Agreement.
“Company” means American
International Group, Inc., a Delaware corporation.
“Dividend Interest Period”
means:
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(a)
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For
a Cash Dividend that is paid on or prior to
the Maturity Date, the period from, and including, the date that such Cash
Dividend is paid to holders of Common Stock generally to, but excluding,
the Maturity Date; and
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(b)
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For
a Cash Dividend that is scheduled to be paid after the Maturity Date, the
period from, and including, the Maturity Date to, but excluding, the
scheduled payment date for such Cash
Dividend.
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“Dividend Period” means the
period after the Trade Date and on or before the Maturity Date.
“Event of Default” has the
meaning provided in Section 8.1.
“Exchange Act” means the
Securities Exchange Act of 1934, as amended.
“Floor Level” has the meaning
provided in Section 2.2(d). The Floor Level shall be subject to adjustment in
connection with Potential Adjustment Events and Merger Events as provided in
Article 7.
“Hedging Period” has the
meaning provided in Section 2.2(b).
“Initial Share Price” has the
meaning provided in Section 2.2(d).
“Initial Short Position” has
the meaning provided in Section 2.2(d).
"Initial Short Sales" has the
meaning provided in Section 2.2(b).
“Initial Stock Loan Rate” means
zero (0) basis points.
“Interpretive Letter” means the
interpretive letter from the SEC to Xxxxxxx, Xxxxx & Co. dated December 20,
1999.
“Insolvency” has the meaning
provided in Section 7.2(c).
“Lien” means any lien,
mortgage, security interest, pledge, charge or encumbrance of any
kind.
“Market Value” means, as of any
date with respect to any share of Common Stock, the Closing Price per share of
Common Stock for the Trading Day prior to such date.
“Maturity Date” has the meaning
provided in Section 2.2(d).
“Merger Date” has the meaning
provided in Section 7.2.
“Merger Event” has the meaning
provided in Section 7.2.
“Nationalization” has the
meaning provided in Section 7.2(c).
“Net Future Value”
means:
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(a)
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with
respect to a Cash Dividend that is paid on or prior to
the Maturity Date, a number determined as
follows:
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(i)
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Multiply the
Relevant Rate by a fraction, the numerator of which is the actual number
of days during the Dividend Interest Period and the denominator of which
is 360;
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(ii)
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Add the product
from clause (i) to the number 1 (e.g., if the
product from clause (i) were 0.50, the result in this clause (ii) would be
1.50); and
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(iii)
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Multiply the
Cash Dividend per share of Common Stock by the amount determined in clause
(ii);
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(b)
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with
respect to a Cash Dividend that is scheduled to be paid after the
Maturity Date, a number determined by performing the same two calculations
as in clauses (a)(i) and (ii) but then dividing
(rather than multiplying) the Cash Dividend per share of Common Stock by
the amount so determined.
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“Notice Date” has the meaning
provided in Section 2.2(c).
“Payment Date” has the meaning
provided in Section 2.2(d).
“Person” means an individual, a
corporation, a partnership, an association, a trust or any other entity or
organization, including a government or political subdivision or an agency or
instrumentality thereof.
“Pledge Agreement” means the
Pledge Agreement dated as of the date hereof among Seller, Buyer, the Securities
Intermediary and the Collateral Agent, as amended from time to
time.
“Potential Adjustment Event”
has the meaning provided in Section 7.1.
“Pricing Schedule” has the
meaning provided in Section 2.2(c).
“Relevant Rate” means the zero
coupon rate with a maturity equal to the actual number of days during the
Dividend Interest Period as determined by Buyer in a commercially reasonable
manner from the mid-market U.S. Dollar swap curve.
“Rule 144” means Rule 144 under
the Securities Act.
“SEC” means the Securities and
Exchange Commission.
“Securities Act” means the
Securities Act of 1933, as amended.
“Securities Intermediary” has
the meaning provided in the Pledge Agreement.
“Seller” means Starr
International Company, Inc., a Panamanian corporation.
“Settlement Date” means the
third Business Day immediately following the Maturity Date.
“Settlement Price” means the
arithmetic mean of the daily volume weighted average price per share of Common
Stock over the five (5) Business Day period ending on, and including, the
Maturity Date, determined by Buyer with reference to the Bloomberg Screen Volume
at Price Page.
“Settlement Ratio” has the
meaning provided in Section 2.2(f).
“Spin-off” means a
distribution to holders of the Common Stock of ordinary or common shares of a
subsidiary of the Company that are, or that as of the ex-dividend date of such
distribution are scheduled promptly to be, (a) publicly quoted, traded, or
listed on an exchange or quotation system in the United States and (b) not
subject to any currency exchange controls, trading restrictions or other trading
limitations.
“Spin-off Share” means a share
distributed as part of a Spin-off.
“Stock Basket” has the meaning
provided in Section 7.5.
“Tender Offer Date” has the
meaning provided in Section 7.2.
“Tender Offer
Event” has the meaning provided in Section 7.2.
3
“Termination Amount” has the
meaning provided in Section 7.3.
“Termination Amount Notice” has
the meaning provided in Section 7.3.
“Termination Date” has the
meaning provided in Section 7.3.
“Terms of Sale” has the meaning
provided in Section 2.2(b).
“Trading Day” means, with
respect to any security, a day on which the principal trading market for such
security is open for trading or quotation.
“Transfer Restriction” means,
with respect to any share of Common Stock (or security entitlements in respect
thereof) or other item of collateral pledged under the Pledge Agreement, any
condition to or restriction on the ability of the holder thereof to sell, assign
or otherwise transfer such share of Common Stock (or security entitlements in
respect thereof) or other item of collateral or to enforce the provisions
thereof or of any document related thereto whether set forth in such item of
Collateral itself or in any document related thereto, including, without
limitation, (i) any requirement that any sale, assignment or other transfer or
enforcement of such share of Common Stock (or security entitlements in respect
thereof) or other item of collateral be consented to or approved by any Person,
including, without limitation, the issuer thereof or any other obligor thereon,
(ii) any limitations on the type or status, financial or otherwise, of any
buyer, pledgee, assignee or transferee of such share of Common Stock (or
security entitlements in respect thereof) or other item of collateral, (iii) any
requirement of the delivery of any certificate, consent, agreement, opinion of
counsel, notice or any other document of any Person to the issuer of, any other
obligor on or any registrar or transfer agent for, such share of Common Stock
(or security entitlements in respect thereof) or other item of collateral, prior
to the sale, pledge, assignment or other transfer or enforcement of such share
of Common Stock (or security entitlements in respect thereof) or other item of
collateral and (iv) any registration or qualification requirement or prospectus
delivery requirement for such share of Common Stock (or security entitlements in
respect thereof) or other item of collateral pursuant to any federal, state or
foreign securities law (including, without limitation, any such requirement
arising as a result of Rule 144 or Rule 145 under the Securities Act); provided
that the required delivery of any assignment, instruction or entitlement order
from the seller, pledgor, assignor or transferor of such share of Common Stock
(or security entitlements in respect thereof) or other item of collateral,
together with any evidence of the corporate or other authority of such Person,
shall not constitute a “Transfer
Restriction”.
“Unrestricted Stock” means
Common Stock (or security entitlements in respect thereof) that is not subject
to any Transfer Restriction in the hands of Seller immediately prior to delivery
to Buyer (other than any Transfer Restriction referred to in clause (iv) of the
definition of Transfer Restriction arising as a result of the fact that Seller
may be considered an affiliate (as such term is defined in Rule 144) of the
Company or that the Common Stock may be considered restricted securities (as
such term is defined in Rule 144)) and would not be subject to any Transfer
Restriction in the hands of Buyer upon delivery to Buyer.
“Upfront Proceeds” has the
meaning provided in Section 2.2(d).
ARTICLE
2
Sale
and Purchase
Section 2.1. Sale and Purchase. Upon the
terms and subject to the conditions of this Agreement, Seller agrees to sell to
Buyer, and Buyer agrees to purchase and acquire from Seller, the number of
shares of Common Stock (or security entitlements in respect thereof) equal to
the product of the Base Amount and the Settlement Ratio.
Section 2.2. Payment and Terms of
Sale.
(a) Payment.
Upon the terms and subject to the conditions of this Agreement, Buyer shall
deliver to Seller the Upfront Proceeds on the Payment Date at the offices of
Buyer, 000 Xxxxxxxxxx Xxxx., Xxxxxxxx, XX 00000, or at such other place as shall
be agreed upon by Buyer and Seller, paid by certified or official bank check or
checks duly endorsed to, or payable to the order of, Seller, or by wire transfer
to an account designated by Seller, in New York Clearing House
Funds.
(b) Establishing the
Terms of Sale.
Buyer shall determine the Upfront Proceeds, the Payment Date, the Base
Amount, the Initial Share Price, the Floor Level, the Cap Level and the Maturity
Date (collectively, the “Terms
of Sale”) based on the amounts and prices at which and dates on which it
effects short sales (the “Initial Short Sales”) of
shares of Common Stock in establishing Buyer’s Initial Short Position (the dates
on which such short sales are effected being collectively referred to as the
“Hedging Period”) and
otherwise in accordance with the respective formulas for such Terms of Sale
set forth below; provided
that, if at any time after the date hereof Seller becomes aware of any
material non-public
4
information
regarding the Company, Seller shall immediately notify Buyer that it cannot make
the representation and warranty set forth in Section 3.1(k) and shall direct
Buyer immediately to cease effecting any further hedging activities related to
the Common Stock including, without limitation, the Initial Short
Sales.
(c) Pricing
Schedule. Within two Business Days after the Initial Short Position has
been established, Buyer shall deliver to Seller the pricing schedule (the “Pricing Schedule”),
substantially in the form attached hereto as Exhibit A, setting forth the Terms
of Sale. The date of delivery of the Pricing Schedule shall be referred to as
the “Notice
Date”.
(d) Related
Definitions. As used herein, the following words and phrases have the
following meanings:
(i)
“Upfront Proceeds”
means, as set forth in the Pricing Schedule, an amount equal to the product of
(i) the Base Amount, (ii) the Initial Share Price and (iii) 80.30% (rounded
upward or downward to the nearest cent or, if there is not a nearest cent, to
the next lower cent).
(ii)
“Payment Date” means, as
set forth in the Pricing Schedule, the third Business Day following the Notice
Date.
(iii)
“Initial Share Price”
means, as set forth in the Pricing Schedule, the volume weighted average of the
per share prices (rounded upward or downward to the nearest 1/10,000th or, if
there is not a nearest 1/10,000th, to the next lower 1/10,000th) at which Buyer
sells short shares of Common Stock in establishing Buyer’s Initial Short
Position.
(iv)
“Initial Short Position”
means the number of shares of Common Stock that Buyer sells short on or after
the date hereof but prior to March 16, 2010 to establish its initial hedge of
the price and market risk undertaken by Buyer under this Agreement, provided
that the Initial Short Position shall not exceed 2,500,000 shares of Common
Stock.
(v)
“Floor Level” means, as
set forth in the related Pricing Schedule, the Initial Share Price multiplied by
90% (rounded upward or downward to the nearest 1/10,000th or, if there is not a
nearest 1/10,000th, to the next lower 1/10,000th), as adjusted in accordance
with the provisions of Article 7.
(vi)
“Cap Level” means the
Initial Share Price multiplied by 135% (rounded upward or
downward to the nearest 1/10,000th or, if there is not a nearest 1/10,000th, to
the next lower 1/10,000th), as adjusted in accordance with the provisions of
Article 7.
(vii)
“Maturity Date” means
the date designated as the Maturity Date in the Pricing Schedule, which shall be
a date falling on approximately the 37.5 month anniversary of the Payment
Date.
(e) Delivery on
Settlement Date. Seller agrees, subject to Section 2.3, to deliver to
Buyer on the Settlement Date a number of shares of Unrestricted Stock equal to
the product of (A) the Base Amount and (B) the Settlement Ratio, rounded down to
the nearest whole number, and cash in an amount equal to the value (based on the
Settlement Price) of any fractional share not delivered as a result of such
rounding plus any amounts that Buyer is obligated to pay as a result of
physically settling a derivative contract pursuant to Section 31 of the Exchange
Act. If (x) by 10:00 A.M., New York City time on the Settlement Date, Seller has
not otherwise effected such delivery of Common Stock (or security entitlements
in respect thereof) or delivered cash in lieu thereof pursuant to Section 2.3
and (y) the Common Stock and security entitlements in respect thereof then held
by the Securities Intermediary as collateral under the Pledge Agreement is
Unrestricted Stock, then (i) Seller shall be deemed not to have elected to
deliver cash in lieu of shares of Unrestricted Stock pursuant to Section 2.3
(notwithstanding any notice by Seller to the contrary) and (ii) the delivery
provided by this Section 2.2(e) shall be effected by delivery by the Securities
Intermediary to Buyer of a number of shares of Unrestricted Stock then held by
the Securities Intermediary as collateral under the Pledge Agreement equal to
the number thereof required to be delivered by Seller to Buyer pursuant to this
Section 2.2(e); provided that, notwithstanding the foregoing and without
limiting the generality of Section 8.1, if Seller gives notice of its election
to deliver cash in lieu of shares of Unrestricted Stock on the Settlement Date
pursuant to Section 2.3 and fails to deliver the Cash Settlement Amount on the
Settlement Date as provided in Section 2.3, Seller shall be in breach of this
Agreement and shall be liable to Buyer for any losses incurred by Buyer or such
holder as a result of such breach, including without limitation losses incurred
in connection with any decrease in the Closing Price of the Common Stock
subsequent to the Maturity Date.
(f) Settlement Ratio.
The “Settlement
Ratio” shall be determined in accordance with the following formula and
is subject to adjustment as a result of certain events as provided in Article 7:
(i) if the Settlement Price is less than the Cap Level but greater than the
Floor Level, the Settlement Ratio shall be a ratio (rounded upward or downward
to the nearest 1/10,000th or, if there is not a nearest 1/10,000th, to the next
lower 1/10,000th) equal to the Floor Level divided by the Settlement
Price, (ii) if the Settlement Price is equal to or greater than the Cap Level,
the Settlement Ratio shall be a ratio
5
(rounded
upward or downward to the nearest 1/10,000th or, if there is not a nearest
1/10,000th, to the next lower 1/10,000th) equal to a fraction with a numerator
equal to the sum of (A) the Floor Level and (B) the excess, if any, of the
Settlement Price over the Cap Level, and a denominator equal to the Settlement
Price, and (iii) if the Settlement Price is equal to or less than the Floor
Level, the Settlement Ratio shall be one (1).
(g) Interpretive
Letter. Seller and Buyer intend that, upon the execution of
this Agreement, this Agreement shall constitute a “Preliminary Agreement” within
the meaning of the Interpretive Letter and that, upon the execution of the
Pricing Schedule, this Agreement shall constitute a “Final Agreement” within the
meaning of the Interpretive Letter.
Section 2.3. Cash Settlement Option.
Seller may, upon written notice delivered to Buyer at least 10 Trading Days
prior to the Maturity Date, elect to deliver the Cash Settlement Amount to Buyer
on the Settlement Date by wire transfer of immediately available funds to an
account designated by Buyer, in lieu of the shares of Common Stock (or security
entitlements in respect thereof) to be delivered on the Settlement Date pursuant
to Section 2.2(e).
Section 2.4. Early Termination. With the
prior written consent of Buyer, Seller may terminate this Agreement in whole or
in part at any time prior to the Settlement Date upon such terms as Buyer and
Seller may agree in writing.
Section 2.5. Transactions Involving Common
Stock. To hedge its exposure to the Common Stock under this Agreement,
Buyer or an affiliate thereof may from time to time effect purchases, long sales
or short sales (including without limitation the Initial Short Sales) of shares
of Common Stock or options or other derivatives in respect thereof (or
combinations of such transactions). Except as set forth in Section 2.2(b) and
(d), all such hedging transactions shall be effected by Buyer or any of its
affiliates solely for their benefit and Seller shall not have any financial
interest in, or any right to direct the timing or amount of, any such
transactions.
Section
2.6. Related
Compensation. In connection with this Agreement, Buyer has
paid a commission to UBS Financial Services, Inc.
ARTICLE
3
Representations
and Warranties of Seller
Section 3.1. Representations and Warranties of
Seller. Seller represents and warrants to Buyer and the Agent
that:
(a) Seller
has been duly incorporated and is validly existing as a corporation in good
standing under the laws of its jurisdiction of incorporation.
(b) Each
of this Agreement, the Pledge Agreement and each other document relating hereto
or thereto to which Seller is a party or that Seller is required to deliver is
within its corporate powers, has been duly authorized, executed and delivered by
or on behalf of Seller and is a valid and binding agreement of Seller,
enforceable against Seller in accordance with its terms, subject to applicable
bankruptcy, insolvency or similar laws affecting creditors’ rights generally and
equitable principles of general applicability.
(c) The
execution and delivery by Seller of, and the performance by Seller of its
obligations under, this Agreement and the Pledge Agreement (i) will not
contravene or constitute a default under any provision of applicable law or
regulation, the applicable constitutive documents of Seller, any agreement or
other instrument binding upon Seller or any of its subsidiaries (if any) or
assets or any judgment, order or decree of any governmental body, agency,
official or court having jurisdiction over Seller, whether foreign or domestic,
and (ii) do not require any consent, approval, authorization or order of, or
filing or qualification with, any governmental body, agency, official,
self-regulatory organization or court or other tribunal, whether foreign or
domestic other than (A) those that are required from time to time to create or
perfect liens in the Collateral and (B) those that may be required under Rule
144 of the Securities Act or Section 13 or 16 of the Exchange Act.
(d)
Seller is acting for its own account and has made its own independent decisions
to enter into this Agreement and the Pledge Agreement and as to whether this
Agreement or the Pledge Agreement is appropriate or proper for Seller based upon
its own judgment and upon advice from such advisers as Seller has deemed
necessary. Seller is not relying on any communication (written or
oral) of Buyer, or any of its affiliates, officers or employees as investment
advice or as a recommendation to enter into this Agreement or the Pledge
Agreement, it being understood that information and explanations related to the
terms and conditions of this Agreement or the Pledge Agreement shall not be
considered investment advice or a recommendation to enter into this Agreement or
the Pledge Agreement. No communication (written or oral) received from Buyer or
any of its affiliates, officers or employees shall be deemed to be an assurance
or guarantee as to the expected results of this Agreement.
6
(e)
Seller is capable of assessing the merits of and understanding (on its own
behalf or through independent professional advice), and understands and accepts,
the terms, conditions and risks of this Agreement and the Pledge
Agreement.
(f)
Seller understands that Buyer, its affiliates, officers or employees are not
acting as a fiduciary for or an adviser to Seller in respect of this Agreement
or the Pledge Agreement.
(g)
Seller has not, without the written consent of Buyer, sold any shares of Common
Stock (or security entitlements in respect thereof) or hedged (through swaps,
options, short sales or otherwise) any long position in the Common Stock (or
security entitlements in respect thereof) at any time during the period
beginning on the date three months prior to the date hereof and ending on the
date hereof except as disclosed in that Form 4 filed with the SEC by Seller on
January 5, 2010, and that Form 4 filed with the SEC on February 24, 2010. For
purposes of this Section, Section 2(n) and Section 6.6, Common Stock shall be
deemed to include securities convertible into or exchangeable or exercisable for
Common Stock.
(h)
Seller does not know or have any reason to believe that the Company has not
complied with the reporting requirements contained in Rule 144(c)(1) under the
Securities Act.
(i)
Delivery of shares of Common Stock (or security entitlements in respect thereof)
by Seller pursuant to this Agreement will pass to Buyer title to such shares (or
security entitlements) free and clear of any Liens, except for those created
pursuant to the Pledge Agreement.
(j)
Seller has a valid business purpose for entering into this Agreement, and the
transaction contemplated hereby is consistent with Seller’s overall investment
strategy.
(k)
Seller is not, on the date hereof, in possession or aware of any material
non-public information regarding the Company.
(l)
Seller acknowledges and agrees that Buyer and its affiliates may engage in
proprietary trading for their own accounts and the accounts of their affiliates
in the shares of Common Stock or in securities that are convertible, exercisable
or exchangeable into or for shares of Common Stock (including such trading as
Buyer or its affiliates deem appropriate in their sole discretion to hedge its
or their market risk in any transaction, whether between Buyer and Seller or
with other third parties) and that such trading may affect the value of the
shares of Common Stock.
(m)
Seller has not solicited or arranged for the solicitation of, and will not
solicit or arrange for the solicitation of, orders to buy shares of Common Stock
in anticipation of or in connection with any short sales of shares of Common
Stock which Buyer or an affiliate of Buyer effects, for the account of Buyer, in
establishing Buyer’s Initial Short Position.
(n)
Except as provided herein, Seller has not made, will not make, and has not
arranged for, any payment to any person in connection with the short sales of
shares of Common Stock which Buyer or an affiliate of Buyer effects, for the
account of Buyer, in establishing Buyer’s Initial Short Position.
ARTICLE
4
Representations
and Warranties of Buyer
Section 4.1. Representations and Warranties of
Buyer. Buyer represents and warrants to Seller as follows:
(a) This
Agreement has been duly authorized, executed and delivered by Buyer and is a
valid and binding agreement of Buyer, enforceable against Buyer in accordance
with its terms, subject to applicable bankruptcy, insolvency or similar laws
affecting creditors’ rights generally and equitable principles of general
applicability.
(b) The
execution and delivery by Buyer of, and the performance by Buyer of its
obligations under, this Agreement (i) will not contravene or constitute a
default under any provision of applicable law or regulation or any constitutive
document of Buyer or any agreement or other instrument binding upon Buyer or any
of its assets or any judgment, order or decree of any governmental body, agency,
official or court having jurisdiction over Buyer, whether foreign or domestic,
and (ii) do not require any consent, approval, authorization order of or
qualification with any governmental body, agency, official, self-regulatory
organization or court or other tribunal, whether foreign or
domestic.
(c) Buyer
has a valid business purpose for entering into this Agreement, and the
transaction contemplated hereby is consistent with Buyer’s overall investment
strategy.
7
(d) Buyer
will conduct the Initial Short Sales as described in Section 2.2(b) in
accordance with the Interpretive Letter, it being understood that Buyer will
introduce into the public market a quantity of securities of the same class
equal to the maximum number of shares deliverable on settlement of this
Agreement in a manner consistent with the manner-of-sale conditions described in
Rule 144(f) and (g) under the Securities Act.
(e) Buyer
is registered as a broker and a dealer with the SEC and is a “market maker” or a
“block positioner”, as such terms are used in Rule 144 under the Securities Act,
with respect to the Common Stock.
(f) Buyer
has not solicited or arranged for the solicitation of, and will not solicit or
arrange for the solicitation of, orders to buy shares of Common Stock in
anticipation of or in connection with any short sales of shares of Common Stock
which Buyer or an affiliate of Buyer effects, for the account of Buyer, in
establishing Buyer’s Initial Short Position except as permitted under Rule
144(g) under the Securities Act.
(g) In
its capacity as broker in connection with this Agreement in the manner
contemplated by this Agreement and the Interpretive Letter, Buyer has received
no more than the usual and customary broker’s commission.
(h) Buyer
does not know or have any reason to believe that the Company has not complied
with the reporting requirements contained in Rule 144(c)(1) under the Securities
Act.
(i) Buyer
is not an “affiliate” of the Company for purposes of Section 2(a)(11) of the
Securities Act.
(j) Buyer
is acting for its own account and has made its own independent decisions to
enter into this Agreement and the Pledge Agreement and as to whether this
Agreement and the Pledge Agreement is appropriate or proper for Buyer based upon
its own judgment and upon advice from such advisers as Buyer has deemed
necessary. Buyer is not relying on any communication (written or
oral) of Seller, or any of its affiliates, officers or employees as investment
advice or as a recommendation to enter into this Agreement or the Pledge
Agreement; it being understood that information and explanation related to the
terms and conditions of this Agreement or the Pledge Agreement shall not be
considered investment advice or a recommendation to enter into this Agreement or
the Pledge Agreement. No communication (written or oral) received
from Seller or any of its affiliates, officers or employees shall be deemed to
be an assurance or guarantee as to the expected results of this
Agreement.
(k) Buyer
is capable of assessing the merits of and understanding (on its own behalf or
through independent professional advice), and understands and accepts, the
terms, conditions and risks of this Agreement and the Pledge
Agreement.
(l) Buyer
is an “accredited investor” as defined in Section 2(a)(15)(ii) of the Securities
Act.
ARTICLE
5
Conditions
to Buyer’s Obligations
Section 5.1. Conditions. The obligation of
Buyer to deliver the Upfront Proceeds on the Payment Date is subject to the
satisfaction of the following conditions:
(a) The
representations and warranties of Seller contained in Article 3 and in the
Pledge Agreement shall be true and correct as if made as of the Payment
Date.
(b) The
Pledge Agreement shall have been executed by the parties thereto, and Seller
shall have delivered to the Securities Intermediary in accordance therewith the
collateral required to be delivered pursuant to Section 1(b)
thereof.
(c)
Seller shall have performed all of the covenants and obligations to be performed
by it hereunder and under the Pledge Agreement on or prior to the Payment
Date.
(d)
Seller shall have filed, or shall have caused to be filed, in the manner
contemplated by Rule 144(h) under the Securities Act, a notice on Form 144
relating to the transactions contemplated hereby in form and substance
acceptable to Buyer.
ARTICLE
6
Covenants
Section 6.1. Taxes. Seller 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 any Common Stock (or security entitlements in respect thereof)
pursuant hereto. Seller further agrees to make all payments in respect of this
Agreement free and clear of, and without withholding or deduction for or on
account of, any present or future taxes, duties, fines,
penalties,
8
assessments
or other governmental charges of whatsoever nature (or interest on any taxes,
duties, fines, penalties, assessments or other governmental charges of
whatsoever nature) imposed, levied, collected, withheld or assessed by, within
or on behalf of (a) the United States or any political subdivision or
governmental authority thereof or therein having power to tax or (b) any
jurisdiction from or through which payment on the Agreement is made by Seller,
or any political subdivision or governmental authority thereof or therein having
power to tax. In the event such withholding or deduction is imposed, Seller
agrees to indemnify Buyer for the full amount of such withholding or deduction,
as well as any liability (including penalties, interest and expenses) arising
therefrom or with respect thereto.
Section 6.2. Forward Contract. Seller
hereby agrees that for U.S. federal income tax purposes (if applicable): (i) 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; (ii) it will not treat the delivery of any portion of the shares of
Common Stock (or security entitlements in respect thereof) or cash to be
delivered pursuant to this Agreement as the payment of interest or ordinary
income; (iii) it will treat this Agreement in its entirety as a forward contract
for the delivery of such shares of Common Stock (or security entitlements in
respect thereof) or cash; and (iv) 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 (i) through (iii).
Notwithstanding the preceding sentence, Seller may take any action or position
required by law, provided that Seller delivers to Buyer an unqualified opinion
of counsel, nationally recognized as expert in Federal tax matters and
acceptable to Buyer, to the effect that such action or position is required by a
statutory change or a Treasury regulation or applicable court decision published
after the date of this Agreement.
Section 6.3. Notices.
(a)
Immediately upon the occurrence of any Event of Default hereunder or under the
Pledge Agreement (or any event that with the giving of notice, the lapse of time
or both would constitute an Event of Default hereunder or under the Pledge
Agreement) Seller will cause to be delivered to Buyer notice thereof;
and
(b) In
case at any time prior to the Settlement Date either party hereto receives
notice, or obtains knowledge, that any event requiring that an adjustment be
calculated pursuant to Section 7.1 or 7.2 hereof or any Merger Event,
Nationalization or Insolvency shall have occurred then such party shall promptly
cause to be delivered to the other party a notice identifying such event and
stating, if known to such party, the date on which such event occurred and, if
applicable, the record date relating to such event. Such party shall cause
further notices to be delivered to the other party if such party shall
subsequently receive notice, or shall obtain knowledge, of any further or
revised information regarding the terms or timing of such event or any record
date relating thereto.
Section 6.4. Further Assurances. From time
to time from and after the date hereof through the Settlement Date, each of the
parties hereto shall use its reasonable best efforts to take, or cause to be
taken, all actions 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 this Agreement in accordance with the
terms and conditions hereof.
Section 6.5.
Intentionally Omitted
Section 6.6. No Sales of Common Stock.
Seller shall not, without the prior written consent of Buyer, sell any shares of
Common Stock or hedge (through swaps, options, short sales or otherwise) any
long position in the Common Stock (i) from the date hereof until the Notice
Date, and (ii) until three months after the Notice Date, in each case that
would, at the time of such sale or hedge, if added to the Base Amount, exceed
the number of shares of Common Stock that Seller would be permitted to sell
pursuant to Rule 144(e)(1) under the Securities Act.
Section 6.7. Securities Contract. The
parties hereto agree and acknowledge that (a) Buyer is a “financial institution”
as such term is defined in Section 101(22) of Title 11 of the United States Code
(the “Bankruptcy Code”)
and (b) this Agreement is a “securities contract” as such term is defined in
Section 741(7) of the Bankruptcy Code, and the parties hereto are entitled to
the protections afforded by, among other Sections, sections 362(b)(6) and 555 of
the Bankruptcy Code.
Section 6.8. SEC Filings. On the date
hereof, Seller shall file, or shall cause to be filed, in the manner
contemplated by Rule 144(h) under the Securities Act, a notice on Form 144
relating to the transactions contemplated hereby in form and substance
acceptable to Buyer.
9
Section 6.9. Material Non-public
Information. If at any time prior to the delivery of the Pricing Schedule
to Seller, Seller (or any Authorized Officer of Seller, if any) shall come into
possession or become aware of any material non-public information regarding the
Company, Seller shall immediately direct Buyer to cease its hedging activities
pursuant to Section 2.2(b) and (d).
ARTICLE
7
Adjustments
Section
7.1. Dilution
Adjustments. Following the declaration by the Company of the
terms of any Potential Adjustment Event, (a) Buyer will determine whether such
Potential Adjustment Event would have a dilutive or concentrative effect on the
theoretical value of the Common Stock and, if so, Buyer will (i) calculate the
corresponding adjustment, if any, to be made to any one or more of the Base
Amount, the Cap Level and the Floor Level, any Closing Price and any other
variable relevant to the settlement terms of this Agreement (including, without
limitation, the amount or type of property to be delivered hereunder) as Buyer
determines appropriate to account for that dilutive or concentrative effect
provided that no changes will be made to account solely for changes in
volatility, expected dividends or liquidity relative to the Common Stock;
provided, further, that the foregoing proviso shall not apply to any obligations
in respect of any Merger Event or Tender Offer Event pursuant to Section 7.2, or
in respect of any Spin-Off pursuant to Section 7.5 and (ii) determine the
effective date of that adjustment. Buyer may (but need not) determine
the appropriate adjustment by reference to the adjustment in respect of such
Potential Adjustment Event made by an options exchange to options on the Common
Stock traded on that options exchange. Before finalizing any such
determination, Buyer shall provide Seller with the basis for such determination
in reasonable detail, including any calculations, and allow Seller the
opportunity, and a reasonable amount of time, to review such basis and consult
with Buyer thereon.
For these
purposes, “Potential Adjustment
Event” means the declaration by the Company of the terms of any of the
following:
(a) a
subdivision, consolidation or reclassification of shares of Common Stock (other
than a Merger Event), or a free distribution or dividend of any shares of Common
Stock to existing holders of Common Stock by way of bonus, capitalization or
similar issue;
(b) a
distribution or dividend to existing holders of Common Stock of (i) shares of
Common Stock; or (ii) other share capital or securities granting the right to
payment of dividends and/or the proceeds of liquidation of the Company equally
or proportionately with such payments to holders of Common Stock; or (iii) any
rights or warrants to purchase securities described in (i) or (ii) of this
paragraph (b) for payment (cash or other) at less than the prevailing market
price as determined by Buyer;
(c) a
dividend or distribution to existing holders of Common Stock consisting of any
property except
for (y) securities of a type described in paragraph (b) of this Section
7.1, or (z) cash dividends and distributions on shares of Common
Stock. However, cash dividends and distributions on shares of Common
Stock that are either (A) Cash Dividends, (B) Spin-off Shares or (C)
consideration in connection with a Merger Event are subject to special treatment
as described below. For purposes of clarification:
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(i)
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A
Cash Dividend is not a Potential Adjustment Event, and will be treated in
the manner provided in Section 7.4;
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(ii)
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A
dividend of Spin-off Shares shall be treated in accordance with Section
7.5 rather than pursuant to this Section 7.1;
and
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(iii)
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Cash
distributions on shares of Common Stock as consideration in connection
with a Merger Event shall be treated in accordance with Section 7.2 rather
than pursuant to this Section 7.1.
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(d) a
call in respect of shares of Common Stock that are not fully paid;
(e) a
repurchase by the Company of shares of Common Stock, whether out of profits or
capital and whether the consideration for such repurchase is cash, securities or
otherwise; or
(f) any
other similar event that may have a dilutive or concentrative effect on the
theoretical value of the Common Stock.
Section 7.2. Merger Events, Tender Offer Events, Nationalization,
or Insolvency.
10
(a) If
any Merger Event shall occur prior to the Settlement Date, and the consideration
shall be:
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(i)
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ordinary
or common shares, whether of an entity or person (other than the Company)
involved in the Merger Event that are, or that as of the Merger Date are
promptly scheduled to be, (x) publicly quoted, traded or listed on an
exchange or quotation system located in the United States and (y) not
subject to any currency exchange controls, trading restrictions or other
trading limitations, then, except in respect
of a reverse merger, on or after the relevant Merger Date, the ordinary or
common shares distributed as consideration (as subsequently modified in
accordance with any relevant terms and including the proceeds of any
redemption, if applicable) and their issuer shall be deemed the “Common
Stock” and the “Company”, respectively, the amount of new Common Stock
that would be distributed upon the consummation of the Merger Event to a
holder of the Base Amount immediately prior to the Merger Event shall be
deemed the “Base Amount” and, if necessary, the Buyer will adjust any
relevant terms, provided, however, that any such adjustments shall be of
the types, and subject to the restrictions, described in Section
7.1;
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(ii)
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any
consideration other than that described in Section 7.2(a)(i), then this Agreement
shall be terminated as of the Merger Date, and Seller shall make a payment
to Buyer as provided in Section 7.3;
or
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(iii)
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a
combination of consideration described in Section 7.2(a)(i) and (ii),
then the
consequences specified in Section 7.1(a)(i) shall apply to that portion of
the consideration that is of the type described therein, and the
consequences specified in Section 7.1(a)(ii) shall apply to that portion
of the consideration that is of the type described
therein.
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“Merger Event” means any (A)
reclassification, change or other offer of or for the Common Stock that results
in a transfer of or an irrevocable commitment to transfer all of the outstanding
shares of Common Stock to another entity or person or (B) consolidation,
amalgamation or merger of the Company with or into another entity (other than a
consolidation, amalgamation or merger in which the Company is the continuing
entity and which does not result in reclassification or change of all such
Common Stock outstanding).
“Merger Date” means, in respect
of any Merger Event, the closing date of such Merger
Event.
“Tender Offer Event” means a
takeover, tender offer, exchange offer, solicitation, proposal or other event by
any entity or person that results in such entity or person purchasing, or
otherwise obtaining or having the right to obtain, by conversion or other means,
greater than 20% and less than 100% of the outstanding voting shares of the
Company, as determined by the Buyer, based upon the making of filings with
governmental or self-regulatory agencies or such other information as the Buyer
deems relevant.
“Tender Offer Date” means the
date on which such tender offer is publicly announced.
(b) If
any Tender Offer Event shall occur prior to the Settlement Date, then on the
Tender Offer Date Buyer shall determine whether such Tender Offer Event would
have a dilutive or concentrative effect on the theoretical value of the Common
Stock, and, if so, will adjust any relevant terms of this Agreement to account
for the economic effect of such Tender Offer Event; provided that any such
adjustments shall be of the types, and subject to the limitations, of Section
7.1.
(c) If,
prior to the Settlement Date, (i) all the outstanding shares of Common Stock or
all the assets or substantially all the assets of the Company are nationalized,
expropriated or are otherwise required to be transferred to any governmental
agency, authority or entity (a “Nationalization”); or (ii) by
reason of the voluntary or involuntary liquidation, bankruptcy or insolvency of
or any analogous proceeding affecting the Company (an “Insolvency”): (A) all of the
outstanding shares of Common Stock are required to be transferred to a trustee,
liquidator or other similar official; or (B) holders of shares of Common Stock
become legally prohibited from transferring them, then, in any such event, Buyer
shall have the right, upon the public announcement of such event, to notify
Seller of such event and terminate this Agreement as of a date set forth in such
notice, following which Seller shall make a payment to Buyer as provided in
Section 7.3.
Section 7.3. Payments on Termination.
Following termination of this Agreement as a result of any Merger Event,
Nationalization or Insolvency as provided in Section 7.2, Seller and Buyer shall
agree as to the amount (the “Termination Amount”) of the
cash payment to be made by Seller to Buyer in settlement of this Agreement. If
Seller and Buyer shall not so agree prior to 5:00 P.M., New York City time, on
the Business Day following the termination of this Agreement, the Termination
Amount shall equal the Acceleration Value (calculated, for purposes of this
Section 7.3, as if the Termination Date were the Acceleration Date, calculated
on the basis of, in addition to the factors indicated in Section 8.1, a value
ascribed
to the Common Stock equal to the consideration, if any, paid in respect of the
Common Stock at the time of the Merger Event, Nationalization or Insolvency). As
promptly as reasonably practicable after reaching agreement with
Seller
11
as
to the Termination Amount or after calculation of the Acceleration Value, as the
case may be, Buyer shall deliver to Seller a notice (the “Termination Amount Notice”)
specifying the Termination Amount. Not later than three Business Days following
delivery of a Termination Amount Notice by Buyer, Seller shall make a cash
payment, by wire transfer of immediately available funds to an account
designated by Buyer, to Buyer in an amount equal to the Termination
Amount.
“Termination Date” means (i) in
respect of a Nationalization or Insolvency, the date on which this Agreement
terminates pursuant to Section 7.2(c) and (ii) in the case of a Merger Event,
the Merger Date.
Section 7.4. Cash Dividends. If a Cash
Dividend with an ex-dividend date occurring during the Dividend Period is paid
on the Common Stock:
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(a)
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If
the Net Future Value of the Cash Dividend is less than or equal
to the Floor Level:
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(x)
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Effective
as of the ex-dividend date of such Cash Dividend, Buyer shall reduce both
the Cap Level and the Floor Level by the Net Future Value of the Cash
Dividend; and
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(y)
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Seller
shall pay to Buyer an amount in cash equal to the per share amount of the
Cash Dividend multiplied by the Base Amount. Seller shall make
such payment promptly (but in any case within seven days) following the
date on which such Cash Dividend is paid to holders of Common Stock
generally.
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(b) If
the Net Future Value of the Cash Dividend is greater than the
Floor Level but less
than or equal to the Cap Level:
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(x)
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Effective
as of the ex-dividend date of such Cash Dividend, Buyer shall reduce the
Floor Level to zero (such reduction amount, the “Actual Downside Reduction
Amount”);
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(y)
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Effective
as of the ex-dividend date of such Cash Dividend, Buyer shall reduce the
Cap Level by the Net Future Value of the Cash Dividend;
and
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(z)
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Seller
shall pay to Buyer an amount in cash equal to (1) the per share amount of
the Cash Dividend multiplied by the Base Amount multiplied by (2) a
fraction, the numerator of which is the Actual Downside Reduction Amount
and the denominator of which is the Net Future Value of the Cash
Dividend. Seller shall make such payment promptly (but in any
case within seven days) following the date on which such Cash Dividend is
paid to holders of Common Stock
generally.
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(c) If
the Net Future Value of the Cash Dividend is greater than the Cap
Level:
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(x)
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Effective
as of the ex-dividend date of such Cash Dividend, Buyer shall reduce the
Floor Level to zero (such reduction amount, the “Actual Downside Reduction
Amount”);
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(y)
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Effective
as of the ex-dividend date of such Cash Dividend, Buyer shall reduce the
Cap Level to zero (such reduction amount, the “Actual Threshold Reduction
Amount”); and
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(z)
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Seller
shall pay to Buyer an amount in cash equal
to:
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(1) the
per share amount of the Cash Dividend multiplied by the Base Amount multiplied
by (2) a fraction, the numerator of which is the Actual Downside Reduction
Amount and the denominator of which is the Net Future Value of the Cash
Dividend, plus
(3) the
per share amount of the Cash Dividend multiplied by the Base Amount multiplied
by (4) a fraction, the numerator of which is the excess of the Net Future Value
of the Cash Dividend over the Actual Threshold Reduction Amount and the
denominator of which is the Net Future Value of the Cash Dividend.
Seller
shall make such payment promptly (but in any case within seven days) following
the date on which such Cash Dividend is paid to holders of Common Stock
generally.
Section
7.5. Spin-offs. As of
the ex-dividend date of a Spin-off, (a) “Stock Basket” shall mean a
basket consisting of one share of Common Stock and the number of Spin-off Shares
that a holder of one share of Common Stock would have been entitled to receive
in such Spin-off, (b) the Base Amount shall be expressed as a number of Stock
Baskets equal to the number of shares of Common Stock it previously equaled, (c)
all ongoing provisions of this Agreement and the Pledge Agreement with respect
to Common Stock shall instead apply to Stock Baskets, mutatis mutandis, except
where the context clearly requires otherwise, and (d) the Buyer shall make
adjustments of the types, and subject to the limitations, provided in Section
7.1 as it determines appropriate to account for the economic effect of such
Spin-off. Before finalizing any such determination,
Buyer shall provide Seller with the basis for such determination in reasonable
detail, including any calculations, and allow the Seller opportunity, and a
reasonable amount of time, to review such basis and consult with
12
Buyer
thereon. As of the ex-dividend date of any subsequent Spin-off, the
Buyer shall make adjustments to the composition of the Stock Basket and other
terms in accordance with the immediately preceding two sentences.
Section 7.6. Miscellaneous. For the
avoidance of doubt, for the purposes of this Section, Article 7 generally and
Section 8.1(f), without limitation as to applicability to any other provision of
this Agreement or the Pledge Agreement, unless the context otherwise requires,
(i) any reference to Common Stock shall be deemed to apply severally to any
class of securities, cash or other property which shall have been distributed
with respect to the Common Stock or into which Common Stock shall have been
converted or otherwise exchanged (whether as a result of a Potential Adjustment
Event, a Merger Event or otherwise) and any such other class of securities, cash
or other property resulting from the successive application of this sentence and
(ii) should any reference to the Common Stock be deemed to apply under clause
(i) to other property, any reference to the Company shall be deemed to apply
accordingly to the issuer(s) (as applicable) of such Common Stock.
ARTICLE
8
Acceleration
Section 8.1. Acceleration. If one or more
of the following events (each an “Event of Default”) shall
occur:
(a)
failure by Seller to make, when due, any payment or delivery under this
Agreement, including Seller’s obligations to deliver shares of Common Stock (or
security entitlements in respect thereof) or cash on the Settlement Date, if
such failure is not remedied on or before the third Business Day after notice of
such failure is given to Seller;
(b)
Seller makes an assignment for the benefit of creditors, files a petition in
bankruptcy, is adjudicated insolvent or bankrupt, petitions or applies to any
tribunal for any receiver of or any trustee for Seller or any substantial part
of Seller’s property, commences any proceeding relating to Seller under any
reorganization, arrangement, readjustment of debt, dissolution or liquidation
law or statute of any jurisdiction, whether now or hereafter in effect, or there
is commenced against or with respect to Seller or any substantial portion of its
property any such proceeding and an order for relief is issued or such
proceeding remains undismissed for a period of 30 days;
(c) at
any time, any representation made or repeated or deemed to have been made or
repeated by Seller under this Agreement or the Pledge Agreement or any
certificate delivered pursuant hereto or thereto would be incorrect or
misleading in any material respect if made or repeated as of such
time;
(d)
Seller fails to fulfill or discharge when due any of its obligations, covenants
or agreements under or relating to this Agreement or the Pledge Agreement (other
than such failures covered by Section 8.1(a)) and such failure remains
unremedied for 30 days following notice thereof to Seller;
(e) due
to the adoption of, or any change in, any applicable law after the date hereof,
or due to the promulgation of, or any change in, the interpretation by any
court, tribunal or regulatory authority with competent jurisdiction of any
applicable law after the date hereof, it becomes unlawful for Seller to perform
any absolute or contingent obligation to make payment or delivery hereunder or
to comply with any other material provision of this Agreement or the Pledge
Agreement;
(f) in
the reasonable judgment of Buyer, it becomes impracticable to freely trade (long
or short) in the market for the Common Stock or any other securities deliverable
hereunder as a result of the application of Article 7 or borrow, at a rate less
than or equal to the Initial Stock Loan Rate, the Common Stock or any other
securities deliverable hereunder as a result of the application of Article 7;
provided, however, if Buyer is unable
to borrow the Common Stock at a rate less than or equal to the Initial Stock
Loan Rate, Buyer shall give prompt notice to Seller that (i) its stock borrow
costs have increased and (ii) Seller may pay to Buyer an amount determined by
Buyer that corresponds to such increased cost. Seller shall, within
two (2) Business Days of receipt of such notice, notify Buyer that it elects
either (A) to pay to Buyer such amount as Buyer has determined, in which case an
Event of Default with respect to an increased cost of stock borrow shall be
deemed not to have occurred, or (B) terminate this Agreement, in which case an
Event of Default will be deemed to have occurred, and the provisions of this
Section 8.1 shall apply. If such notice is not given by Seller to Buyer by the
end of that second Business Day, then an Event of Default shall be deemed to
have occurred and the provisions of this Section 8.1 shall apply.
(g) a
Collateral Event of Default within the meaning of the Pledge Agreement shall
occur; or
(h) if
Seller is dissolved, liquidated, terminated or takes any action to effect its
dissolution, liquidation or termination,
13
then,
upon notice to Seller from Buyer at any time following an Event of Default, an
“Acceleration Date”
shall occur, and Seller shall become obligated to deliver immediately upon
receipt of the Acceleration Amount Notice (as defined below) a number of shares
of Unrestricted Stock equal to the Acceleration Amount; provided that if the
Collateral Agent proceeds to realize upon any collateral pledged under the
Pledge Agreement and to apply the proceeds of such realization as provided in
paragraph second of Section 10(d) thereof, then, to the extent of such
application of proceeds, Seller’s obligation to deliver Unrestricted Stock
pursuant to this paragraph shall be deemed to be an obligation to deliver an
amount of cash equal to the aggregate Market Value of such Unrestricted Stock on
the Acceleration Date. The “Acceleration Amount” means the
quotient obtained by dividing: (i) the Acceleration Value, as defined below, by
(ii) the Market Value per share of the Common Stock on the Acceleration
Date.
The
“Acceleration Value”
means an amount determined by Buyer representing the fair value to Buyer of an
agreement with terms that would preserve for Buyer the economic equivalent of
the payments and deliveries that Buyer would, but for the occurrence of the
Acceleration Date, have been entitled to receive after the Acceleration Date
under Article 2 (taking into account any adjustments pursuant to Section 7.1
that may have been calculated on or prior to the Acceleration
Date). Buyer shall calculate such amount based on the following
factors (and such other factors as it deems appropriate): (i) the volatility of
the Common Stock, (ii) dividends on the Common Stock and (iii) prevailing
interest rates, but in no event shall the Acceleration Value exceed the product
of (x) the Base Amount and (y) the Market Value per share of the Common Stock on
the Acceleration Date.
Before
finalizing the determination of the Acceleration Value, Buyer shall provide
Seller with the basis for such determination in reasonable detail, including any
calculations, and allow Seller the opportunity, and a reasonable amount of time,
to review such basis and consult with Buyer thereon. As promptly as reasonably
practicable after final determination of the Acceleration Value, Buyer shall
deliver to Seller a notice (the “Acceleration Amount Notice”)
specifying the Acceleration Amount of shares of Common Stock (or security
entitlements in respect thereof) required to be delivered by
Seller.
Buyer and
Seller agree that the Acceleration Value is a reasonable pre-estimate of loss
and not a penalty. Such amount is payable for the loss of bargain and, if Seller
delivers the Acceleration Amount in the manner provided above, Buyer will not be
entitled to recover any additional damages as a consequence of loss resulting
from an Event of Default, a Nationalization or an Insolvency.
ARTICLE
9
Miscellaneous
Section 9.1. Notices. All notices and
other communications hereunder shall be in writing and shall be deemed to have
been duly given if mailed or transmitted by any standard forms of
telecommunication. Notices to Buyer shall be directed to 000 Xxxxxxxxxx Xxxx.,
Xxxxxxxx, XX 00000, Telecopy No. (000) 000-0000; Attention: Equities Legal with
copies to the attention: High Net Worth Derivatives (Telecopy: 203-326-2756) and
Legal Affairs (Equities) (Telecopy: 203-719-7317); notices to Seller shall be
directed to it at 000 Xxxxxxxxxxxxx, XX0000, Xxx, Xxxxxxxxxxx V841; Attention:
Xxxxxx Xxxxxxx, with copies to the attention of Bertil Lundqvist at X.X Xxxxx
& Co., Inc., 000 Xxxx Xxxxxx, 00xx
Xxxxx, Xxx Xxxx, XX 00000, and Xxxxxxx Xxxxxxx at X.X Xxxxx & Co., Inc., 000
Xxxx Xxxxxx, 0xx
Xxxxx, Xxx Xxxx, XX 00000.
Section 9.2. Governing Law; Severability;
Submission to Jurisdiction; Waiver of Jury Trial.
(a) This
Agreement shall be governed by and construed in accordance with the laws of the
State of New York (without reference to choice of law doctrine).
(b) 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.
(c) Each party hereto irrevocably submits
to the extent permitted under applicable law to the non-exclusive jurisdiction
of the federal and state courts located in the Borough of Manhattan, State of
New York.
(d) 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 Agreement or the
Pledge Agreement. Each party certifies (i) that no representative, agent or
attorney of the other party has represented, expressly or otherwise, that such
other party would not seek to enforce the foregoing waiver in the event of any
such suit, action or proceeding and (ii) acknowledges that it and the other
party have entered into this Agreement and the Pledge Agreement, as applicable,
in reliance on, among other things, the mutual waivers and certifications in
this Section.
14
Section 9.3. Service of
Process. The parties irrevocably consent to service of process
given in the manner provided for notices in Section 9.1. Nothing in this
Agreement will affect the right of either party to serve process in any other
manner permitted by law.
Section 9.4. Entire Agreement. Except as
expressly set forth herein, this Agreement constitutes the entire agreement and
understanding among the parties with respect to its subject matter and
supersedes all oral communications and prior writings with respect
thereto. The parties hereto agree that (i) Seller is not obligated to
keep confidential or otherwise limit the use of any element of description
contained in this Agreement or the Pledge Agreement that is necessary to
understand or support any United Sates federal income tax treatment and (ii)
Buyer does not assert any claim of proprietary ownership in respect of any
description contained herein and therein relating to the use of any entities,
plans or arrangements to give rise to a particular United Sates federal income
tax treatment for Seller.
Section 9.5. 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
Buyer and Seller or, in the case of a waiver, by the party 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.
Section 9.6. No Third Party Rights, Successors
and Assigns. This Agreement is not intended and shall not be construed to
create any rights in any Person other than Seller, Buyer and their respective
successors and assigns and no other Person shall assert any rights as a third
party beneficiary hereunder. Whenever any of the parties hereto is referred to,
such reference shall be deemed to include the successors of such party and any
assigns of such party permitted under Section 9.7. All the covenants and
agreements herein contained by or on behalf of Seller and Buyer shall bind, and
inure to the benefit of, their respective successors and assigns whether so
expressed or not, and shall be enforceable by and inure to the benefit of Buyer
and its successors and assigns.
Section 9.7. Assignment.
(a)
Except as expressly provided herein, neither this Agreement nor any interest
herein or obligation hereunder may be transferred by Buyer without the prior
written consent of Seller (other than pursuant to a consolidation or
amalgamation with, or merger with or into, or transfer of all or substantially
all of Buyer’s assets to, another entity) and any purported transfer without
such consent will be void. Notwithstanding the foregoing, Buyer may transfer
this Agreement or any of its interests herein or obligations hereunder to
another of Buyer’s offices, branches or affiliates on one Business Days’ prior
written notice to Seller. In the event of any transfer by Buyer of this
Agreement or any of Buyer’s interests herein or obligations hereunder to any
such entity (an “Assignee”), (i) UBS Securities
LLC shall act as Seller’s “agent” with respect to such transfer and “agent” for
Assignee and Seller within the meaning of Rule 15a-6 under the Exchange Act upon
such assignment, (ii) Assignee shall appoint UBS Securities LLC as process agent
to receive for it and on its behalf service of process in any action, suit or
other proceeding arising out of this Agreement or any transaction contemplated
hereby and (ii) UBS Securities LLC shall act as the United States contact on
behalf of Assignee if Assignee is located outside the United
States.
(b)
Neither this Agreement nor any interest herein or obligation hereunder may be
transferred by Seller without the prior written consent of Buyer and any
purported transfer without such consent will be void.
Section 9.8. Counterparts. This Agreement
may be executed in any number of counterparts, and all such counterparts taken
together shall be deemed to constitute one and the same agreement.
15
IN
WITNESS WHEREOF, the parties have signed this Agreement as of the date and year
first above written.
SELLER:
Starr
International Company, Inc.
By: /s/Xxxxxx X.
Xxxxx
Name: Xxxxxx X.
Xxxxx
Title: Attorney-in-Fact
BUYER:
UBS
SECURITIES LLC
By: /s/ Xxxx
Xxxxx
Name: Xxxx
Xxxxx
Title: Executive Director
Equities
By: /s/Xxxx
Xxxxx
Name: Xxxx
Xxxxx
Title: Director
Equities
16
FORM
OF PRICING SCHEDULE
UBS
Securities LLC
000
Xxxxxxxxxx Xxxxxxxxx
Xxxxxxxx,
XX 00000
[Notice
Date]
Starr
International Company, Inc.
[address/fax/attention]
Ladies
and Gentlemen:
This
Pricing Schedule is the Pricing Schedule within the meaning of Section 2.2(c) of
the Stock Purchase Agreement dated as of March 15, 2010 (the “Stock Purchase Agreement”)
between Starr International Company, Inc. and UBS Securities LLC. Capitalized
terms used herein have the meanings set forth in the Stock Purchase
Agreement.
For all
purposes under the Stock Purchase Agreement, the Terms of Sale for the Base
Amount of Common Stock shall be as follows:
1. Base Amount:
___________.
2. Upfront Proceeds:
___________.
3. Payment Date: ___________,
being the third Business Day following the Notice Date.
4. Initial Share Price:
____________.
5. Floor Level:
__________.
6. Cap Level:
__________.
7. Maturity Date:
___________.
Very
truly yours,
UBS
SECURITIES LLC
By: _________________
Name:
Title:
By: _________________
Name:
Title:
Acknowledged
and Confirmed:
Starr
International Company, Inc.
By:
Name:
Title:
