DATE: September 24, 2009 TO: Gaylord Entertainment Company One Gaylord Drive Nashville, Tennessee 37214 ATTENTION: General Counsel TELEPHONE: (615) 316-6000 FACSIMILE: (615) 316-6854 FROM: Citibank N.A. 390 Greenwich Street New York, NY 10013...
Exhibit 10.7
EXECUTION COPY
DATE:
|
September 24, 2009 | |
TO:
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Xxxxxxx Entertainment Company | |
| Xxx Xxxxxxx Xxxxx | ||
| Xxxxxxxxx, Xxxxxxxxx 00000 | ||
ATTENTION:
|
General Counsel | |
TELEPHONE:
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(000) 000-0000 | |
FACSIMILE:
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(000) 000-0000 | |
FROM:
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Citibank N.A. | |
| 000 Xxxxxxxxx Xxxxxx | ||
| Xxx Xxxx, XX 00000 | ||
ATTENTION:
|
Equity Derivatives | |
TELEPHONE:
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(000) 000-0000 | |
FACSIMILE:
|
(000) 000-0000 | |
SUBJECT:
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Equity Derivatives Confirmation | |
REFERENCE NUMBER(S):
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[ ] |
The purpose of this facsimile agreement (this “Confirmation”) is to confirm the terms and
conditions of the transaction entered into between Citibank N.A. (“Citi”) and Xxxxxxx Entertainment
Company (“Counterparty”) on the Trade Date specified below (the “Transaction”). This Confirmation
constitutes a “Confirmation” as referred to in the ISDA Master Agreement specified below. This
Confirmation constitutes the entire agreement and understanding of the parties with respect to the
subject matter and terms of the Transaction and supersedes all prior or contemporaneous written and
oral communications with respect thereto.
The definitions contained in the 2002 ISDA Equity Derivatives Definitions (the “Equity
Definitions”), as published by the International Swaps and Derivatives Association, Inc., are
incorporated into this Confirmation. In the event of any inconsistency between the Equity
Definitions and the terms of this Confirmation, the terms of this Confirmation shall govern. For
the purposes of the Equity Definitions, each reference herein to a Warrant shall be deemed to be a
reference to a Call or an Option, as context requires.
This Confirmation evidences a complete and binding agreement between Citi and Counterparty as to
the terms of the Transaction to which this Confirmation relates. This Confirmation shall
supplement, form a part of, and be subject to an agreement (the “Agreement”) in the form of the
ISDA 2002 Master Agreement as if Citi and Counterparty had executed an agreement in such form
(without any Schedule but with the “Cross-Default” provisions of Section 5(a)(vi) applicable to
Counterparty with a “Threshold Amount” of U.S.$35 million and with such other elections set forth
in this Confirmation). For the avoidance of doubt, the Transaction shall be the only transaction
under the Agreement.
The Transaction is a Warrant Transaction, which shall be considered a Share Option Transaction for
purposes of the Equity Definitions, and shall have the following terms:
General:
Trade Date:
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September 24, 2009. | |
Effective Date:
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September 29, 2009. | |
Components:
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The Transaction will be divided into individual Components, each |
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| with the terms set forth in this Confirmation, and, in particular, with the Number of Warrants and Expiration Date set forth in this Confirmation. The payments and deliveries to be made upon settlement of the Transaction will be determined separately for each Component as if each Component were a separate Transaction under the Agreement. | ||
Warrant Style:
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European. | |
Warrant Type:
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Call. | |
Seller:
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Counterparty. | |
Buyer:
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Citi. | |
Shares:
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The common stock, par value USD $.01 per share, of Counterparty. | |
Number of Warrants:
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For each Component, as provided in Annex C to this Confirmation. | |
Strike Price:
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As provided in Annex B to this Confirmation. | |
Premium:
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As provided in Annex B to this Confirmation. | |
Premium Payment Date:
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The Effective Date. | |
Exchange:
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The New York Stock Exchange. | |
Related Exchanges:
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All Exchanges. | |
Calculation Agent:
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Citi. The Calculation Agent shall, upon written request by the Counterparty, provide a written explanation of any calculation or adjustment made by it including, where applicable, a description of the methodology and data applied. | |
Procedure for Exercise: |
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In respect of any Component: |
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Expiration Date:
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As provided in Annex C to this Confirmation (or, if such date is not a Scheduled Trading Day, the next following Scheduled Trading Day that is not already an Expiration Date for another Component); provided that if that date is a Disrupted Day, the Expiration Date for such Component shall be the first succeeding Scheduled Trading Day that is not a Disrupted Day and is not or is not deemed to be an Expiration Date in respect of any other Component of the Transaction hereunder; and provided further that if the Expiration Date has not occurred pursuant to the preceding proviso as of the Final Disruption Date, the Final Disruption Date shall be the Expiration Date (irrespective of whether such date is an Expiration Date in respect of any other Component for the Transaction) and, notwithstanding |
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| anything to the contrary in this Confirmation or the Equity Definitions, the Relevant Price for the Expiration Date shall be the prevailing market value per Share determined by the Calculation Agent in a commercially reasonable manner. Notwithstanding the foregoing and anything to the contrary in the Equity Definitions, if a Market Disruption Event occurs on any Expiration Date, the Calculation Agent may determine that such Expiration Date is a Disrupted Day only in part, in which case the Calculation Agent shall make adjustments to the number of Warrants for the relevant Component for which such day shall be the Expiration Date and shall designate the Scheduled Trading Day determined in the manner described in the immediately preceding sentence as the Expiration Date for the remaining Warrants for such Component. Section 6.6 of the Equity Definitions shall not apply to any Valuation Date occurring on an Expiration Date. “Final Disruption Date” has the meaning provided in Annex B to this Confirmation. | ||
Automatic Exercise:
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Applicable. Each Warrant not previously exercised will be deemed to be automatically exercised on the Expiration Time on the relevant Expiration Date. | |
Market Disruption Event:
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Section 6.3(a) of the Equity Definitions is hereby amended by deleting the words “during the one hour period that ends at the relevant Valuation Time, Latest Exercise Time, Knock-in Valuation Time or Knock-out Valuation Time, as the case may be,” in clause (ii) thereof, and by replacing the words “or (iii) an Early Closure.” with “(iii) an Early Closure or (iv) a Regulatory Disruption, in each case that the Calculation Agent determines is material.” | |
| Section 6.3(d) of the Equity Definitions is hereby amended by deleting the remainder of the provision following the term “Scheduled Closing Time” in the fourth line thereof. | ||
Regulatory Disruption:
|
Any event that Citi, in its reasonable discretion, determines makes it appropriate with regard to any legal, regulatory or self-regulatory requirements or related policies and procedures (whether or not such requirements, policies or procedures are imposed by law or have been voluntarily adopted by Citi, and including without limitation Rule 10b-18, Rule 10b-5, Regulation 13D-G and Regulation 14E under the U.S. Securities Exchange Act of 1934, as amended (the “Exchange Act”), and Regulation M and/or analyzing Citi as if Citi were the Issuer or an affiliated purchaser of the Issuer), for Citi to refrain from or decrease any market activity in connection with the Transaction. Citi shall notify Counterparty as soon as reasonably practicable that a Regulatory Disruption has occurred and the Expiration Dates affected by it. | |
Settlement Terms: |
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In respect of any Component: |
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Net Share Settlement:
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On each Settlement Date, Counterparty shall deliver to Citi a number of Shares equal to the Net Share Amount for such Settlement Date to the account specified by Citi, and cash in lieu of any fractional shares valued at the Relevant Price for the Valuation Date corresponding to such Settlement Date. If, in the good faith reasonable judgment of Citi based on the advice of counsel, the Shares deliverable hereunder would not be immediately freely transferable by Citi under Rule 144 (“Rule 144”) under the U.S. Securities Act of 1933, as amended (the “Securities Act”) or any successor provision, then Citi may elect to either (x) accept delivery of such Shares notwithstanding the fact that such Shares are not immediately freely transferable by Citi under Rule 144 or any successor provision or (y) require that such delivery take place pursuant to the provisions set forth opposite the caption “Registration/Private Placement Procedures” below. | |
Net Share Amount:
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For any Exercise Date, a number of Shares, as calculated by the Calculation Agent, equal to (x) the product of (i) the number of Warrants being exercised or deemed exercised on such Exercise Date, and (ii) the excess, if any, of the Relevant Price for the Valuation Date occurring on such Exercise Date over the Strike Price (such product, the “Net Share Settlement Amount”), divided by (y) such Relevant Price. | |
Relevant Price:
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On any Valuation Date, the volume weighted average price per Share for the regular trading session of the Exchange as displayed under the heading “Bloomberg VWAP” on Bloomberg Page GET.N <equity> AQR on such Valuation Date in respect of the period from 9:30 am to 4:00 p.m. (New York City time) on such Valuation Date (or if such volume weighted average price is not available, the Calculation Agent’s reasonable, good faith estimate of such price on such Valuation Date). | |
Settlement Currency:
|
USD. | |
Other Applicable Provisions:
|
The provisions of Sections 9.1(c), 9.8, 9.9, 9.10, 9.11 (except that the Representation and Agreement contained 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 Counterparty is the Issuer of the Shares) and 9.12 of the Equity Definitions will be applicable, except that all references in such provisions to “Physical Settlement” and “Physically-settled” shall be read as references to “Net Share Settlement” and “Net Share Settled”. “Net Share Settled” in relation to any Warrant means that Net Share Settlement is applicable to such Warrant. | |
Dividends: |
||
In respect of any Component: |
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Dividend Adjustments:
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Counterparty agrees to notify Citi promptly of the announcement of an ex-dividend date for any cash dividend by Counterparty. If an ex-dividend date for any cash dividend occurs at any time from, but excluding, the Trade Date to, and including, the Expiration Date, then in lieu of any adjustments as provided under “Method of Adjustment” below, the Calculation Agent shall make such adjustments to the Strike Price and/or the Number of Warrants as it deems appropriate to preserve for the parties the intended economic benefits of the Transaction. | |
Adjustments: |
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In respect of any Component: |
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Method of Adjustment:
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Calculation Agent Adjustment; provided, however, that the Equity Definitions shall be amended by replacing the words “diluting or concentrative” in Sections 11.2(a), 11.2(c) (in two instances) and 11.2(e)(vii) with the word “material” and by adding the words “or the Transaction” after the words “theoretical value of the relevant Shares” in Sections 11.2(a), 11.2(c) and 11.2(e)(vii); provided further that adjustments may be made to account for changes in expected volatility, expected dividends, expected correlation, expected stock loan rate and expected liquidity relative to the relevant Share. | |
Extraordinary Events: |
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New Shares:
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In the definition of New Shares in Section 12.1(i) of the Equity Definitions, the text in clause (i) thereof shall be deleted in its entirety and replaced with “publicly quoted, traded or listed on any of the New York Stock Exchange, The NASDAQ Global Select Market or The NASDAQ Global Market (or their respective successors)”. | |
Modified Calculation Agent Adjustment:
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If, in respect of any Merger Event to which Modified Calculation Agent Adjustment applies, the adjustments to be made in accordance with Section 12.2(e)(i) of the Equity Definitions would result in Counterparty being different from the issuer of the Shares, then with respect to such Merger Event, as a condition precedent to the adjustments contemplated in Section 12.2(e)(i) of the Equity Definitions, Counterparty and the issuer of the Shares shall, prior to the Merger Date, have entered into such documentation containing representations, warranties and agreements relating to securities law and other issues as requested by Citi that Citi has determined, in its reasonable discretion, to be reasonably necessary or appropriate to allow Citi to continue as a party to the Transaction, as adjusted under Section 12.2(e)(i) of the Equity Definitions, and to preserve its hedging or hedge unwind activities in connection with the Transaction in a manner compliant with applicable legal, regulatory or self-regulatory requirements, or with related policies and procedures applicable to Citi, and if such conditions are not met or if the Calculation Agent determines that no adjustment that it could make under Section 12.2(e)(i) of the Equity Definitions will produce a commercially reasonable result, then the consequences set forth in |
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| Section 12.2(e)(ii) of the Equity Definitions shall apply. | ||
| For greater certainty, the definition of “Modified Calculation Agent Adjustment” in Sections 12.2 and 12.3 of the Equity Definitions shall be amended by adding the following italicized language to the stipulated parenthetical provision: “(including adjustments to account for changes in expected volatility, expected dividends, expected correlation, expected stock loan rate or expected liquidity relevant to the Shares or to the Transaction) from the Announcement Date to the Merger Date (Section 12.2) or Tender Offer Date (Section 12.3)”. | ||
Announcement Event:
|
If an Announcement Event occurs, the Calculation Agent will determine the economic effect of the Announcement Event on the theoretical value of each Component of the Transaction (including without limitation any change in expected volatility, expected dividends, expected correlation, expected stock loan rate or expected liquidity relevant to the Shares or to the Transaction) from the potential Announcement Date to the Expiration Date for such Component and, if such economic effect is material, the Calculation Agent will adjust the terms of the Transaction to reflect such economic effect. “Announcement Event” shall mean the occurrence of a potential Announcement Date of a Merger Event or Tender Offer, if the Merger Date or Tender Offer Date does not, or is not anticipated to, occur on or prior to the Expiration Date for, or any earlier termination of, the relevant Component. | |
Consequences of Merger Events: |
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(a) Share-for-Share:
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Modified Calculation Agent Adjustment. | |
(b) Share-for-Other:
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Cancellation and Payment (Calculation Agent Determination). | |
(c) Share-for-Combined:
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Component Adjustment. | |
Tender Offer:
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Applicable; provided that Section 12.1(d) of the Equity Definitions is hereby amended by adding “, or of the outstanding Shares,” before “of the Issuer” in the fourth line thereof. Sections 12.1(e) and 12.1(1)(ii) of the Equity Definitions are hereby amended by adding “or Shares, as applicable,” after “voting shares”. | |
Consequences of Tender Offers: |
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(a) Share-for-Share:
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Modified Calculation Agent Adjustment. | |
(b) Share-for-Other:
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Modified Calculation Agent Adjustment. | |
(c) Share-for-Combined:
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Modified Calculation Agent Adjustment. | |
Nationalization, Insolvency and Delisting:
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Cancellation and Payment (Calculation Agent Determination); provided that in addition to the provisions of Section 12.6(a)(iii) of the Equity Definitions, it shall also constitute a Delisting if the Exchange is located in the United States and the Shares are not immediately re- |
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| listed, re-traded or re-quoted on any of the New York Stock Exchange, The NASDAQ Global Select Market or The NASDAQ Global 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 be deemed to be the Exchange. For the avoidance of doubt, the occurrence of any event that is a Merger Event and would otherwise have been a Delisting will have the consequence specified for the relevant Merger Event. | ||
Additional Disruption Events: |
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Change in Law:
|
Applicable; provided that Section 12.9(a)(ii) of the Equity Definitions is hereby amended (i) by the replacement of the word “Shares” with “Hedge Positions” in clause (X) thereof; (ii) by adding the phrase “or announcement” immediately after the phrase “due to the promulgation” in the third line thereof and adding the phrase “formal or informal” before the word “interpretation” in the same line; and (iii) immediately following the word “Transaction” in clause (X) thereof, adding the phrase “in the manner contemplated by the Hedging Party on the Trade Date, unless the illegality is due to an act or omission of the party seeking to elect termination of the Transaction”. | |
Failure to Deliver:
|
Inapplicable | |
Insolvency Filing:
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Applicable | |
Loss of Stock Borrow:
|
Applicable | |
Maximum Stock Loan Rate:
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200 basis points per annum | |
Increased Cost of Stock Borrow:
|
Applicable | |
Initial Stock Loan Rate:
|
25 basis points per annum | |
Increased Cost of Hedging:
|
Applicable | |
Hedging Disruption:
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Applicable | |
Hedging Party:
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Citi for all applicable Additional Disruption Events | |
Determining Party:
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Citi for all applicable Additional Disruption Events | |
Acknowledgements: |
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Non-Reliance:
|
Applicable | |
Agreements and Acknowledgements
Regarding Hedging Activities:
|
Applicable | |
Additional Acknowledgements:
|
Applicable |
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Mutual Representations: Each of Citi and Counterparty represents and warrants to, and agrees with, the other party that:
| (i) | Tax Disclosure. Notwithstanding anything to the contrary herein, in the Equity Definitions or in the Agreement, and notwithstanding any express or implied claims of exclusivity or proprietary rights, the parties (and each of their employees, representatives or other agents) are authorized to disclose to any and all persons, beginning immediately upon commencement of their discussions and 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 by either party to the other relating to such tax treatment and tax structure. | ||
| (ii) | Commodity Exchange Act. It is an “eligible contract participant” within the meaning of Section 1a(12) of the U.S. Commodity Exchange Act, as amended (the “CEA”). The Transaction has been subject to individual negotiation by the parties. The Transaction has not been executed or traded on a “trading facility” as defined in Section 1a(33) of the CEA. It has entered into the Transaction with the expectation and intent that the Transaction shall be performed to its termination date. | ||
| (iii) | Securities Act. It is a “qualified institutional buyer” as defined in Rule 144A under the Securities Act, or an “accredited investor” as defined under the Securities Act. | ||
| (iv) | Investment Company Act. It is a “qualified purchaser” as defined under the U.S. Investment Company Act of 1940, as amended (the “Investment Company Act”). | ||
| (v) | ERISA. The assets used in the Transaction (1) are not assets of any “plan” (as such term is defined in Section 4975 of the U.S. Internal Revenue Code (the “Code”)) subject to Section 4975 of the Code or any “employee benefit plan” (as such term is defined in Section 3(3) of the U.S. Employee Retirement Income Security Act of 1974, as amended (“ERISA”)) subject to Title I of ERISA, and (2) do not constitute “plan assets” within the meaning of Department of Labor Regulation 2510.3-101, 29 CFR Section 0000-0-000. |
Counterparty Representations: In addition to the representations and warranties in the Agreement and those contained
elsewhere herein, Counterparty represents, warrants, acknowledges and covenants that:
| (i) | Counterparty shall provide written notice to Citi within 24 hours of obtaining knowledge of the occurrence of any event that would constitute an Event of Default, a Potential Event of Default, a Potential Adjustment Event, a Merger Event or any other Extraordinary Event; provided, however, that should Counterparty be in possession of material non-public information regarding Counterparty, Counterparty shall not communicate such information to Citi in connection with this Transaction. | ||
| (ii) | (A) Counterparty is acting for its own account, and it has made its own independent decisions to enter into the Transaction and as to whether the Transaction is appropriate or proper for it based upon its own judgment and upon advice from such advisers as it has deemed necessary, (B) Counterparty is not relying on any communication (written or oral) of Citi or any of its affiliates as investment advice or as a recommendation to enter into the Transaction (it being understood that information and explanations related to the terms and conditions of the Transaction shall not be considered investment advice or a recommendation to enter into the Transaction) and (C) no communication (written or oral) received from Citi or any of its affiliates shall be deemed to be an assurance or guarantee as to the expected results of the Transaction. |
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| (iii) | Counterparty is not entering into the Transaction for the purpose of (i) creating actual or apparent trading activity in the Shares (or any security convertible into or exchangeable for the Shares) or (ii) raising or depressing or otherwise manipulating the price of the Shares (or any security convertible into or exchangeable for the Shares), in either case in violation of the Exchange Act. | ||
| (iv) | Counterparty’s filings under the Securities Act, the Exchange Act, and other applicable securities laws that are required to be filed have been filed and, as of the respective dates thereof and as of the date of this representation, there is no misstatement of material fact contained therein or omission of a material fact required to be stated therein or necessary to make the statements made therein, in the light of the circumstances under which they were made, not misleading. | ||
| (v) | Without limiting the generality of Section 3(a)(iii) of the Agreement, Counterparty has not violated, and shall not directly or indirectly violate, any applicable law (including, without limitation, the Securities Act and the Exchange Act and the regulations promulgated thereunder, including Rule 13e-1 and Rule 13e-4 under the Exchange Act) in connection with the Transaction. | ||
| (vi) | The representations and warranties of Counterparty set forth in Section 3 of the Agreement and Section 2 of the Purchase Agreement dated as of the Trade Date between Counterparty and Citi Bank Securities Inc. as representative of the initial purchasers party thereto (the “Purchase Agreement”) are true and correct as of the Trade Date and the Effective Date, and are hereby deemed to be repeated to Citi as of such dates as if set forth herein. | ||
| (vii) | The Shares issuable upon exercise of all Warrants (the “Warrant Shares”) have been duly authorized and, when delivered pursuant to the terms of such Transaction, shall be validly issued, fully-paid and non-assessable, and such issuance of the Warrant Shares shall not be subject to any preemptive or similar rights and shall, upon such issuance, be accepted for listing or quotation on the Exchange. | ||
| (viii) | Counterparty is not as of the Trade Date and as of the date on which Counterparty delivers any Termination Delivery Units, and shall not be after giving effect to the transactions contemplated hereby, “insolvent” (as such term is defined in Section 101(32) of the U.S. Bankruptcy Code (Title 11 of the United States Code) (the “Bankruptcy Code”)). | ||
| (ix) | Counterparty is not, and after giving effect to the transactions contemplated hereby will not be, an “investment company” as such term is defined in the Investment Company Act. | ||
| (x) | Without limiting the generality of Section 13.1 of the Equity Definitions, Counterparty acknowledges that Citi is not making any representations or warranties with respect to the treatment of the Transaction under FASB Statements 128, 133, 149 or 150 (or under any successor statement), EITF Issue No. 00-19, 01-6, 03-6 or 07-5 (or any successor issue statements), under FASB’s Liabilities & Equity Project, or under any other accounting guidance. | ||
| (xi) | Counterparty understands, agrees and acknowledges that no obligations of Citi to it hereunder, if any, shall be entitled to the benefit of deposit insurance and that such obligations shall not be guaranteed by any affiliate of Citi or any governmental agency. | ||
| (xii) | Counterparty shall deliver to Citi an opinion of counsel, dated as of the Trade Date, and reasonably acceptable to Citi in form and substance, with respect to the matters set forth in Section 3(a) of the Agreement and such other matters as Citi may reasonably request. |
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| (xiii) | On each anniversary of the Trade Date, Counterparty shall deliver to Citi an officer’s certificate, signed by an authorized officer, stating the number of Available Shares (as defined in the provision titled “Limitation On Delivery of Shares” below). |
Miscellaneous:
Effectiveness. If, on or prior to the Effective Date, Citi reasonably determines that it is
advisable to cancel the Transaction because of concerns that Citi’s related hedging
activities could be viewed as not complying with applicable securities laws, rules or
regulations, the Transaction shall be cancelled and shall not become effective, and neither
party shall have any obligation to the other party in respect of the Transaction.
Netting and Set-Off. The parties hereto agree that the Transaction shall not be subject to
netting or set off with any other transaction.
Qualified Financial Contracts. It is the intention of the parties that, in respect of
Counterparty, (a) the Transaction shall constitute a “qualified financial contract” within
the meaning of 12 U.S.C. Section 1821(e)(8)(D)(i) and (b) a Non-defaulting Party’s rights
under Sections 5 and 6 of the Agreement constitute rights of the kind referred to in 12
U.S.C. Section 1821(e)(8)(A).
Method of Delivery. Whenever delivery of funds or other assets is required hereunder by or
to Counterparty, such delivery shall be effected through Agent. In addition, all notices,
demands and communications of any kind relating to the Transaction between Citi and
Counterparty shall be transmitted exclusively through Agent.
Status of Claims in Bankruptcy. Citi acknowledges and agrees that this Confirmation is not
intended to convey to Citi rights with respect to the Transaction that are senior to the
claims of common stockholders in any U.S. bankruptcy proceedings of Counterparty; provided
that nothing herein shall limit or shall be deemed to limit Citi’s right to pursue remedies
in the event of a breach by Counterparty of its obligations and agreements with respect to
the Transaction; provided, further, that nothing herein shall limit or shall be deemed to
limit Citi’s rights in respect of any transactions other than the Transaction.
No Collateral. Notwithstanding any provision of this Confirmation, the Agreement, Equity
Definitions, or any other agreement between the parties to the contrary, the obligations of
Counterparty under the Transaction are not secured by any collateral.
Securities Contract; Swap Agreement. The parties hereto agree and acknowledge that Citi is a
“financial institution,” “swap participant” and “financial participant” within the meaning of
Sections 101(22), 101(53C) and 101(22A) of the Bankruptcy Code. The parties hereto further
agree and acknowledge (A) that this Confirmation is (i) a “securities contract,” as such term
is defined in Section 741(7) of the Bankruptcy Code, with respect to which each payment and
delivery hereunder or in connection herewith is a “termination value,” “payment amount” or
“other transfer obligation” within the meaning of Section 362 of the Bankruptcy Code and a
“settlement payment” or a “transfer” within the meaning of Section 546 of the Bankruptcy
Code, and (ii) a “swap agreement,” as such term is defined in Section 101(53B) of the
Bankruptcy Code, with respect to which each payment and delivery hereunder or in connection
herewith is a “termination value,” a “payment amount” or “other transfer obligation” within
the meaning of Section 362 of the Bankruptcy Code and a “transfer” within the meaning of
Section 546 of the Bankruptcy Code, and (B) that Citi is entitled to the protections afforded
by, among other sections, Section 362(b)(6), 362(b)(17), 362(b)(27), 362(o), 546(e), 546(g),
546(j), 548(d)(2), 555, 560 and 561 of the Bankruptcy Code.
Alternative Calculations and Counterparty Payment on Early Termination and on Certain
Extraordinary Events. If Counterparty owes Citi any amount in connection with the
Transaction pursuant to Sections 12.2, 12.3, 12.6, 12.7 or 12.9 of the Equity Definitions
(except in the case of an Extraordinary Event in which the consideration or proceeds to be
paid to holders of Shares as a result of such event consists solely of cash) or pursuant to
Section 6(d)(ii) of the Agreement (except in the case of an Event of Default in which
Counterparty is the Defaulting Party or a Termination Event in which Counterparty is the
Affected Party, other than (x) an Event of Default of the type described in Section
5(a)(iii), (v), (vi) or (vii) of the Agreement or (y) a Termination Event
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of the type
described in Section 5(b)(i), (ii), (iii), (iv), (v) or (vi) of the Agreement that in the
case of either (x) or (y) resulted from an event or events outside Counterparty’s control) (a
“Counterparty Payment Obligation”), Counterparty shall have the right, in its sole
discretion, to satisfy any such Counterparty Payment Obligation by delivery of Termination
Delivery Units (as defined below) by giving irrevocable telephonic notice to Citi, confirmed
in writing within one Scheduled Trading Day, between the hours of 9:00 a.m. and 4:00 p.m. New
York time on the Early Termination Date or other date the transaction is terminated, as
applicable (“Notice of Counterparty Termination Delivery”); provided that if Counterparty
does not elect to satisfy the Counterparty Payment Obligation by delivery of Termination
Delivery Units, Citi shall have the right, in its sole discretion, to require Counterparty to
satisfy the Counterparty Payment Obligation by such delivery. Within a commercially
reasonable period of time following receipt of a Notice of Counterparty Termination Delivery,
Counterparty shall deliver to Citi a number of Termination Delivery Units having a cash value
equal to the amount of such Counterparty Payment Obligation (such number of Termination
Delivery Units to be delivered to be determined by the Calculation Agent as the number of
whole Termination Delivery Units that could be sold over a commercially reasonable period of
time to generate proceeds equal to the cash equivalent of such payment obligation). In
addition, if, in the good faith reasonable judgment of Citi, for any reason, the Termination
Delivery Units deliverable pursuant to this paragraph would not be immediately freely
transferable by Citi under Rule 144 or any successor provision, then Citi may elect either to
(x) accept delivery of such Termination Delivery Units notwithstanding any restriction on
transfer or (y) require that such delivery take place pursuant to the provisions set forth
opposite the caption “Registration/Private Placement Procedures” below. If the provisions
set forth in this paragraph are applicable, the provisions of Sections 9.8, 9.9, 9.10, 9.11
(modified as described above) and 9.12 of the Equity Definitions shall be applicable, except
that all references to “Shares” shall be read as references to “Termination Delivery Units”.
“Termination Delivery Unit” means (a) in the case of a Termination Event, an Event of Default
or an Extraordinary Event (other than an Insolvency, Nationalization, Merger Event or Tender
Offer), one Share or (b) in the case of an Insolvency, Nationalization, Merger Event or
Tender Offer, a unit consisting of the number or amount of each type of property received by
a holder of one Share (without consideration of any requirement to pay cash or other
consideration in lieu of fractional amounts of any securities) in such Insolvency,
Nationalization, Merger Event or Tender Offer. If a Termination Delivery Unit consists of
property other than cash or New Shares and Counterparty provides irrevocable written notice
to the Calculation Agent on or prior to the Closing Date that it elects to deliver cash, New
Shares or a combination thereof (in such proportion as Counterparty designates) in lieu of
such other property, the Calculation Agent shall replace such property with cash, New Shares
or a combination thereof as components of a Termination Delivery Unit in such amounts, as
determined by the Calculation Agent in its discretion by commercially reasonable means, as
shall have a value equal to the value of the property so replaced. If such Insolvency,
Nationalization, Merger Event or Tender Offer involves a choice of consideration to be
received by holders, such holder shall be deemed to have elected to receive the maximum
possible amount of cash.
Delivery or Receipt of Cash. For the avoidance of doubt, nothing in this Confirmation shall
be interpreted as requiring Counterparty to cash settle this Transaction, except in
circumstances where such cash settlement is within Counterparty’s control (including, without
limitation, where Counterparty elects to deliver or receive cash, where Counterparty fails
timely to provide the Notice of Counterparty Termination Delivery, or where Counterparty has
made Private Placement Settlement unavailable due to the occurrence of events within its
control ) or in those circumstances in which holders of the Shares would also receive cash.
Registration/Private Placement Procedures. If, in the reasonable opinion of Citi, following
any delivery of Shares or Termination Delivery Units to Citi hereunder, such Shares or
Termination Delivery Units would be in the hands of Citi subject to any applicable
restrictions with respect to any registration or qualification requirement or prospectus
delivery requirement for such Shares or Termination Delivery Units pursuant to any applicable
federal or state securities law (including, without limitation, any such requirement arising
under Section 5 of the Securities Act as a result of such Shares or Termination Delivery
Units being “restricted securities”, as such term is defined in Rule 144) (such Shares or
Termination Delivery Units, “Restricted Shares”), then delivery of such Restricted Shares
shall be effected pursuant to either clause (i) or (ii) of Annex A hereto at the election of
Counterparty, unless waived by Citi. Notwithstanding the foregoing, solely in respect of any
Warrants exercised or deemed exercised on any Exercise Date, Counterparty shall elect, prior
to the first Settlement Date for the first
11
Exercise Date, a Private Placement Settlement (as
defined in Annex A hereto) or Registration Settlement (as defined in Annex A hereto) for all
deliveries of Restricted Shares for all such Exercise Dates which election shall be
applicable to all Settlement Dates for such Warrants and the procedures in clause (i) or
clause (ii) of Annex A hereto shall apply for all such delivered Restricted Shares on an
aggregate basis commencing after the final Settlement Date for such Warrants. The Calculation
Agent shall make reasonable adjustments to settlement terms and provisions under this
Confirmation to reflect a single Private Placement Settlement or Registration Settlement for
such aggregate Restricted Shares delivered hereunder. If the Private Placement Settlement or
the Registration Settlement shall not be effected as set forth in clauses (i) or (ii) of
Annex A, as applicable, then failure to effect such Private Placement Settlement or such
Registration Settlement shall constitute an Event of Default with respect to which
Counterparty shall be the Defaulting Party.
Share Deliveries. Counterparty acknowledges and agrees that, to the extent that Citi is not
then an affiliate, as such term is used in Rule 144, of Counterparty and has not been such an
affiliate of Counterparty for 90 days (it being understood that Citi shall not be considered
such an affiliate of Counterparty solely by reason of its right to receive Shares pursuant to
a Transaction hereunder), any Shares or Termination Delivery Units delivered hereunder at any
time after one year from the Premium Payment Date shall be eligible for resale under Rule 144
or any successor provision, and Counterparty agrees to promptly remove, or cause the transfer
agent for such Shares or Termination Delivery Units to remove, any legends referring to any
restrictions on resale under the Securities Act from the certificates representing such
Shares or Termination Delivery Units. Counterparty further agrees that with respect to any
Shares or Termination Delivery Units delivered hereunder at any time after 6 months from the
Premium Payment Date but prior to 1 year from the Premium Payment Date, to the extent that
Counterparty then satisfies the current information requirement of Rule 144, Counterparty
shall promptly remove, or cause the transfer agent for such Shares or Termination Delivery
Units to remove, any legends referring to any such restrictions or requirements from the
certificates representing such Share or Termination Delivery Units upon delivery by Citi to
Counterparty or such transfer agent of any customary seller’s and broker’s representation
letters in connection with resales of such Shares or Termination Delivery Units pursuant to
Rule 144, without any further requirement for the delivery of any certificate, consent,
agreement, opinion of counsel, notice or any other document, any transfer tax stamps or
payment of any other amount or any other action by Citi. Counterparty further agrees and
acknowledges that Citi shall run a holding period under Rule 144 with respect to the Warrants
and/or any Shares or Termination Delivery Units delivered hereunder notwithstanding the
existence of any other transaction or transactions between Counterparty and Citi relating to
the Shares. Counterparty further agrees that Shares or Termination Delivery Units delivered
hereunder prior to the date that is 6 months from the Premium Payment Date may be freely
transferred by Citi to its affiliates, and Counterparty shall effect such transfer without
any further action by Citi. Notwithstanding anything to the contrary herein, Counterparty
agrees that any delivery of Shares or Termination Delivery Units shall be effected by
book-entry transfer through the facilities of the Clearance System if, at the time of such
delivery, the certificates representing such Shares or Termination Delivery Units would not
contain any restrictive legend as described above. Notwithstanding anything to the contrary
herein, to the extent the provisions of Rule 144 or any successor rule are amended, or the
applicable interpretation thereof by the Securities and Exchange Commission or any court
changes after the Trade Date, the agreements of Counterparty herein shall be deemed modified
to the extent necessary, in the opinion of outside counsel of Counterparty, to comply with
Rule 144, including Rule 144(b) or any successor provision, as in effect at the time of
delivery of the relevant Shares or Termination Delivery Units.
No Material Non-Public Information. On each day during the period beginning on the Trade
Date and ending on the earlier of the December 7, 2009 and the day on which Citi has informed
Counterparty in writing that Citi has completed all purchases or sales of Shares or other
transactions to hedge initially its exposure with respect to the Transaction, Counterparty
represents and warrants to Citi that it is not aware of any material nonpublic information
concerning itself or the Shares.
Limit on Beneficial Ownership; Share Accumulation Condition. Notwithstanding any other
provisions hereof, Citi may not exercise any Warrant hereunder, Automatic Exercise shall not
apply with respect thereto, and no delivery hereunder (including pursuant to provisions
opposite the headings “Alternative Calculations and Counterparty Payments on Early
Termination and on Certain Extraordinary Events,” “Registration/Private Placement
Procedures,” “Limitation on Delivery of Shares” or Annex A) shall be made, to the extent (but
only to the extent) that the receipt of any Shares upon such exercise or delivery would
12
result in the Equity Percentage (as defined below) exceeding 4.9% or an Ownership Trigger (as
defined below) being met. In addition, Citi agrees that if at any time a delivery of Shares
hereunder would result in a Share Accumulation Condition, it shall so notify Counterparty and
instruct Counterparty to defer such delivery to the extent necessary to avoid the existence
of a Share Accumulation Condition. Any purported delivery hereunder shall be void and have
no effect to the extent (but only to the extent) that such delivery would result in the
Equity Percentage exceeding 4.9% or an Ownership Trigger being met. If any delivery owed to
Citi or exercise hereunder is not made, in whole or in part, as a result of this provision,
Counterparty’s obligation to make such delivery and Citi’s right to exercise a Warrant shall
not be extinguished and Counterparty shall make such delivery as promptly as practicable
after, but in no event later than one Clearance System Business Day after, Citi gives notice
to Counterparty that such exercise or delivery would not result in the Equity Percentage
exceeding 4.9%, an Ownership Trigger being met, or a Share Accumulation Condition, as
applicable. “Share Accumulation Condition” means that, at any time of determination, the
number of Shares previously delivered to Citi pursuant to the exercise of Warrants and then
still owned by Citi is greater than 2,048,975 (as such number may be adjusted from time to
time 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.)
Repurchase Notices. Counterparty shall, on any day on which Counterparty effects any
repurchase of Shares, provide Citi with a written notice of such repurchase (a “Repurchase
Notice”) on such day if, following such repurchase, the Warrant Equity Percentage (as defined
below) is greater by 0.5% or more than the Warrant Equity Percentage set forth in the
immediately preceding Repurchase Notice (or, in the case of the first such Repurchase Notice,
greater by 0.5% or more than the Warrant Equity Percentage as of the date hereof). The
“Warrant Equity Percentage” as of any day is the fraction, expressed as a percentage, of (1)
the numerator of which is the Number of Warrants, and (2) the denominator of which is the
number of Shares outstanding on such day. Counterparty agrees to indemnify and hold harmless
Citi and its affiliates and their respective officers, directors, employees, affiliates,
advisors, agents and controlling person (each, an “Indemnified Person”) from and against any
and all losses (including losses relating to Citi’s hedging activities as a consequence of
becoming, or of the risk of becoming, an “insider” as defined under Section 16 of the
Exchange Act, including without limitation, any forbearance from hedging activities or
cessation of hedging activities and any losses in connection therewith with respect to this
Transaction), claims, damages, judgments, liabilities and expense (including reasonable
attorney’s fees), joint or several, which an Indemnified Person actually may become subject
to, as a result of Counterparty’s failure to provide Citi with a Repurchase Notice on the day
and in the manner specified herein, and to reimburse, upon written request, each of such
Indemnified Persons for any reasonable legal or other expenses incurred in connection with
investigating, preparing for, providing testimony or other evidence in connection with or
defending any of the foregoing. If any suit, action, proceeding (including any governmental
or regulatory investigation), claim or demand shall be brought or asserted against the
Indemnified Person, such Indemnified Person shall promptly notify Counterparty in writing,
and Counterparty, upon request of the Indemnified Person, shall retain counsel reasonably
satisfactory to the Indemnified Person to represent the Indemnified Person and any others
Counterparty may designate in such proceeding and shall pay the fees and expenses of such
counsel related to such proceeding. Counterparty shall be relieved from liability to the
extent that the Indemnified Person fails promptly to notify Counterparty of any action
commenced against it in respect of which indemnity may be sought hereunder; provided that
failure to notify Counterparty (x) shall not relieve Counterparty from any liability
hereunder to the extent it is not materially prejudiced as a result thereof and (y) shall
not, in any event, relieve Counterparty from any liability that it may have otherwise than on
account of this indemnity agreement. Counterparty shall not be liable for any settlement of
any proceeding effected without its written consent, but if settled with such consent or if
there be a final judgment for the plaintiff, Counterparty agrees to indemnify any Indemnified
Person from and against any loss or liability by reason of such settlement or judgment.
Counterparty shall not, without the prior written consent of the Indemnified Person, effect
any settlement of any pending or threatened proceeding in respect of which any Indemnified
Person is or could have been a party and indemnity could have been sought hereunder by such
Indemnified Person, unless such settlement includes an unconditional release of such
Indemnified Person from all liability on claims that are the subject matter of such
proceeding on terms reasonably satisfactory to such Indemnified Person. If the
indemnification provided for in this paragraph is unavailable to an Indemnified Person or
insufficient in respect of any losses, claims, damages or liabilities referred to therein,
then Counterparty, in lieu of indemnifying such Indemnified Person thereunder, shall
contribute to the amount paid or payable by such Indemnified Person as a result of such
losses, claims, damages or liabilities. The remedies provided for in this paragraph are not
exclusive and shall not limit any rights or
13
remedies that may otherwise be available to any
Indemnified Person at law or in equity. The indemnity and contribution agreements contained
in this paragraph shall remain operative and in full force and effect regardless of the
termination of the Transaction.
Foreign Ownership Notices. Promptly following any determination by Counterparty of the
percentage (“Foreign Ownership Percentage”) of its “capital stock” owned of record or voted
by “aliens” and other persons described in Section 310 (b)(4) of the Communications Act of
1934 (or any successor provisions) (in each case within the meaning of such Section
310(b)(4)) and on any date on which Counterparty is obligated to deliver a Repurchase Notice,
Counterparty shall provide Citi with a written notice setting out the Foreign Ownership
Percentage and the Pro Forma Foreign Ownership Percentage; provided, however, that should
Counterparty be in possession of material non-public information regarding Counterparty,
Counterparty shall not communicate such information to Citi in connection with this
Transaction. “Pro Forma Foreign Ownership Percentage” means the Foreign Ownership Percentage
determined as if Citi owned a number of Shares equal to the Number of Warrants.
Limitation On Delivery of Shares. Notwithstanding anything herein or in the Agreement to the
contrary, in no event shall Counterparty be required to deliver Shares in connection with the
Transaction in excess of 4,403,664 Shares (the “Maximum Delivery Amount”). Counterparty
represents and warrants (which shall be deemed to be repeated on each day that the
Transaction is outstanding) that the Maximum Delivery Amount is equal to or less than the
number of authorized but unissued Shares of Counterparty that are not reserved for future
issuance in connection with transactions in the Shares (other than the Transaction) on the
date of the determination of the Maximum Delivery Amount (such Shares, the “Available
Shares”). In the event Counterparty shall not have delivered the full number of Shares
otherwise deliverable as a result of this paragraph (the resulting deficit, the “Deficit
Shares”), Counterparty shall be continually obligated to deliver, from time to time until the
full number of Deficit Shares have been delivered pursuant to this paragraph, Shares when,
and to the extent, that (i) Shares are repurchased, acquired or otherwise received by
Counterparty or any of its subsidiaries after the Trade Date (whether or not in exchange for
cash, fair value or any other consideration), (ii) authorized and unissued Shares reserved
for issuance in respect of other transactions prior to such date which prior to the relevant
date become no longer so reserved and (iii) Counterparty additionally authorizes any unissued
Shares that are not reserved for other transactions. Counterparty shall immediately notify
Citi of the occurrence of any of the foregoing events (including the number of Shares subject
to clause (i), (ii) or (iii) and the corresponding number of Shares to be delivered) and
promptly deliver such Shares thereafter. Notwithstanding the provisions of Section 5(a)(ii)
of the Agreement, in the event of a failure by Counterparty to comply with the agreement set
forth in this provision, there shall be no grace period for remedy of such failure.
Additional Termination Event. The occurrence of any of the following shall constitute an
Additional Termination Event with respect to which (1) Counterparty shall be the sole
Affected Party and (2) the Transaction shall be the sole Affected Transaction; provided that
with respect to any Additional Termination Event, Citi may choose to treat part of the
Transaction as the sole Affected Transaction, and, upon termination of the Affected
Transaction, a Transaction with terms identical to those set forth herein except with a
Number of Warrants equal to the unaffected number of Warrants shall be treated for all
purposes as the Transaction, which shall remain in full force and effect:
(i) Citi reasonably determines based on the advice of counsel that it is advisable to
terminate a portion of the Transaction so that Citi’s related hedging activities will comply
with applicable securities laws, rules or regulations;
(ii) The Shares are not approved for listing on the New York Stock Exchange, The NASDAQ
Global Select Market or The NASDAQ Global Market (or any of their respective successors);
(iii) any “person” or “group” (as such terms are used for purposes of Sections 13(d) and
14(d) of the Exchange Act or any successor provisions, including any group acting for the
purpose of acquiring, holding, voting or disposing of securities within the meaning of Rule
13d-5(b)(1) under the Exchange Act or any successor provision) is or becomes the “beneficial
owner” (as that term is used in Rule 13d-3 under the Exchange Act), directly or indirectly,
of shares representing 50% or more of the total voting power of all outstanding classes of
14
Counterparty’s capital stock or other interests normally entitled (without regard to the
occurrence of any contingency) to vote in the election of the board of directors, managers or
trustees (“voting stock”) or has the power, directly or indirectly, to elect a majority of
the members of Counterparty’s board of directors;
(iv) Counterparty consolidates with, enters into a binding share exchange with, or merges
with or into, another person, or Counterparty sells, assigns, conveys, transfers, leases or
otherwise disposes in one transaction or a series of transactions of all or substantially all
of its assets, or any person consolidates with, or merges with or into, Counterparty, in any
such event, other than any transaction:
(1) pursuant to which the persons that “beneficially owned,” directly or indirectly, the
shares of Counterparty’s voting stock immediately prior to such transaction “beneficially
own,” directly or indirectly, shares of Counterparty’s voting stock representing at least a
majority of the total voting power of all outstanding classes of voting stock of the
surviving or transferee person and such holders’ proportional voting power immediately after
such transaction vis-à-vis each other with respect to the securities they receive in such
transaction shall be in substantially the same proportions as their respective voting power
vis-à-vis each other immediately prior to such transaction; or
(2) in which at least 95% of the consideration paid for the Shares (other than cash payments
for fractional shares or pursuant to dissenters’ appraisal rights) consists of shares of
common stock traded on the New York Stock Exchange, The NASDAQ Global Market or The NASDAQ
Global Select Market (or any of their respective successors) (or which will be so traded
immediately following such transaction);
(v) (a) individuals who on the Effective Date constituted Counterparty’s board of directors
and (b) any new directors whose election to Counterparty’s board of directors or whose
nomination for election by Counterparty’s stockholders was approved by at least a majority of
the directors at the time of such election or nomination still in office either who were
directors on the Effective Date or whose election or nomination for election was previously
so approved, cease for any reason to constitute a majority of Counterparty’s board of
directors;
(vi) the holders of Counterparty’s capital stock approve any plan or proposal for liquidation
or dissolution of Counterparty; or
(vii) a determination by Counterparty that Citi is a “Disqualified Person” or any action by
Counterparty to cause any shares owned by Citi to be subject to redemption or to any
suspension of rights of stock ownership (in each case pursuant to or within the meaning of
Article IV(D) of the Restated Certificate of Incorporation of Counterparty or any analogous
or successor provisions).
Transfer or Assignment. Notwithstanding any provision of the Agreement to the contrary, Citi
may, subject to applicable law, freely transfer and assign all of its rights and obligations
under the Transaction without the consent of Counterparty.
If, as determined in Citi’s sole discretion, (a) at any time (1) the Equity Percentage
exceeds 4.9% or the Pro Forma Foreign Ownership Percentage exceeds 22.0% or (2) Citi, Citi
Group (as defined below) or any person whose ownership position would be aggregated with that
of Citi or Citi Group (Citi, Citi Group or any such person, a “Citi Person”) under Section
203 of the Delaware General Corporation Law (the “DGCL Takeover Statute”) or other federal,
state or local laws, regulations or regulatory orders applicable to ownership of Shares
(“Applicable Laws”) or the Amended and Restated Rights Agreement between Xxxxxxx
Entertainment Company and Computershare Trust Company, N.A., dated as of March 9, 2009 (as
may be amended, modified or supplemented from time to time, the “Rights Agreement”), owns,
beneficially owns, constructively owns, controls, holds the power to vote or otherwise meets
a relevant definition of ownership, or could be reasonably viewed as meeting any of the
foregoing, in excess of a number of Shares equal to (x) the number of Shares that would give
rise to (I) reporting, registration, filing or notification obligations or other requirements
(including obtaining prior approval by a state or federal regulator) of a Citi Person under
Applicable Laws (including, without limitation, “interested shareholder” or “acquiring
Person” status under the DGCL Takeover Statute) and with respect to which such requirements
have not been met or the relevant approval has not been received, (II) a distribution date
(or other event with similar consequences) under the Rights Agreement or (III) give rise to a
15
designation of Citi as a “Disqualified Person” or cause any shares owned by Citi to be
subject to redemption or to any suspension of rights of stock ownership (in each case
pursuant to or within the meaning of Article IV(D) of the Restated Certificate of
Incorporation of Counterparty or any analogous or successor provisions) (this clause (2)(x),
the “Ownership Trigger”) minus (y) 1% of the number of Shares outstanding on the date of
determination (either such condition described in clause (1) or (2), an “Excess Ownership
Position”), and (b) Citi is unable, after commercially reasonable efforts, to effect a
transfer or assignment on pricing and terms and within a time period reasonably acceptable to
it of all or a portion of this Transaction pursuant to the preceding paragraph such that an
Excess Ownership Position no longer exists, Citi may designate any Scheduled Trading Day as
an Early Termination Date with respect to a portion (the “Terminated Portion”) of this
Transaction, such that an Excess Ownership Position no longer exists following such partial
termination. In the event that Citi 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 Warrants equal to the Terminated Portion
(allocated among the Components thereof in the discretion of Citi), (ii) Counterparty shall
be the sole Affected Party with respect to such partial termination and (iii) such
Transaction shall be the only Terminated Transaction (and, for the avoidance of doubt, the
provisions set forth under the caption “Alternative Calculations and Counterparty Payment on
Early Termination and on Certain Extraordinary Events” shall apply to any amount that is
payable by Counterparty to Citi pursuant to this sentence). The “Equity Percentage” as of
any day is the fraction, expressed as a percentage, (A) the numerator of which is the number
of Shares that Citi and any of its affiliates subject to aggregation with Citi for purposes
of the “beneficial ownership” test under Section 13 of the Exchange Act and all persons who
may form a “group” (within the meaning of Rule 13d-5(b)(1) under the Exchange Act) with Citi
(collectively, “Citi Group”) “beneficially own” (within the meaning of Section 13 of the
Exchange Act) without duplication on such day and (B) the denominator of which is the number
of Shares outstanding on such day.
Notwithstanding any other provision in this Confirmation to the contrary requiring or
allowing Citi to purchase, sell, receive or deliver any shares or other securities to or from
Counterparty, Citi may designate any of its affiliates to purchase, sell, receive or deliver
such shares or other securities and otherwise to perform Citi’s obligations in respect of the
Transaction and any such designee may assume such obligations. Citi shall be discharged of
its obligations to Counterparty to the extent of any such performance.
Amendments to Equity Definitions. (a) Section 12.9(b)(iv) of the Equity Definitions is
hereby amended by: (i) deleting (1) subsection (A) in its entirety, (2) the phrase “or (B)”
following subsection (A) and (3) the phrase “in each case” in subsection (B); (ii) replacing
“will lend” with “lends” in subsection (B); and (iii) deleting the phrase “neither the
Non-Hedging Party nor the Lending Party lends Shares in the amount of the Hedging Shares or”
in the penultimate sentence; and (b) Section 12.9(b)(v) of the Equity Definitions is hereby
amended by: (i) adding the word “or” immediately before subsection “(B)” and deleting the
comma at the end of subsection (A); (ii) (1) deleting subsection (C) in its entirety, (2)
deleting the word “or” immediately preceding subsection (C) and (3) deleting the penultimate
sentence in its entirety and replacing it with the sentence “The Hedging Party will determine
the Cancellation Amount payable by one party to the other”; and (iii) deleting subsection (X)
in its entirety and the words “or (Y)” immediately following subsection (X).
Severability; Illegality. If compliance by either party with any provision of the
Transaction would be unenforceable or illegal, (a) the parties shall negotiate in good faith
to resolve such unenforceability or illegality in a manner that preserves the economic
benefits of the transactions contemplated hereby and (b) the other provisions of the
Transaction shall not be invalidated, but shall remain in full force and effect.
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 THE 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 THE
TRANSACTION, AS APPLICABLE, BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND
16
CERTIFICATIONS PROVIDED HEREIN.
Governing law: The law of the State of New York.
Contact information. For purposes of the Agreement (unless otherwise specified in the Agreement),
the addresses for notice to the parties shall be:
(a) Counterparty
Xxxxxxx Entertainment Company
Xxx Xxxxxxx Xxxxx
Xxxxxxxxx, XX 00000
Attention: General Counsel
Xxx Xxxxxxx Xxxxx
Xxxxxxxxx, XX 00000
Attention: General Counsel
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Facsimile: (000) 000-0000
with a copy to:
Bass, Xxxxx & Xxxx PLC
000 Xxxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxx, Xxxxxxxxx 00000
000 Xxxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxx, Xxxxxxxxx 00000
Attention: F. Xxxxxxxx Xxxxxx, Xx.
Telephone: (000) 000-0000
Email: xxxxxxx@xxxxxxxxx.xxx
Email: xxxxxxx@xxxxxxxxx.xxx
(b) Citi
Citibank N.A.
000 Xxxxxxxxx Xxxxxx.
Xxx Xxxx, XX 00000
Attention: Equity Derivatives
000 Xxxxxxxxx Xxxxxx.
Xxx Xxxx, XX 00000
Attention: Equity Derivatives
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Facsimile: (000) 000-0000
with a copy to:
Citibank N.A.
000 Xxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: GCIB Legal Group — Derivatives
000 Xxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: GCIB Legal Group — Derivatives
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
Facsimile: (000) 000-0000
Hard copies of the confirmation should be returned to:
Citibank N.A.
000 Xxxx 00xx Xxxxxx
000 Xxxx 00xx Xxxxxx
00
0xx Xxxxx
Xxx Xxxx, XX 00000
Attention: Confirmation Unit
Xxx Xxxx, XX 00000
Attention: Confirmation Unit
This Confirmation may be executed in several counterparts, each of which shall be deemed an
original but all of which together shall constitute one and the same instrument.
Counterparty hereby agrees to check this Confirmation and to confirm that the foregoing correctly
sets forth the terms of the Transaction by signing in the space provided below and returning to
Citi a facsimile of the fully-executed Confirmation to Citi at (000) 000-0000. Originals shall be
provided for your execution upon your request.
We are very pleased to have executed the Transaction with you and we look forward to completing
other transactions with you in the near future.
[SIGNATURE PAGES FOLLOW]
18
Very truly yours,
CITIBANK N.A.
By:
|
/s/ Xxxxx Xxxxxxxxx | |||
| Title: Authorized Signatory |
[Signature Page to Warrant Confirmation]
Counterparty hereby agrees to, accepts and confirms the terms of the foregoing as of the Trade
Date.
XXXXXXX ENTERTAINMENT COMPANY
By:
|
/s/ Xxxxxx X. Xxxx | |||
| Title: EVP and General Counsel |
[Counterparty Signature Page to Warrant Confirmation]
ANNEX A
Registration Settlement and Private Placement Settlement
| (i) | If Counterparty elects to settle the Transaction pursuant to this clause (i) (a “Private Placement Settlement”), then delivery of Restricted Shares by Counterparty shall be effected in customary private placement procedures with respect to such Restricted Shares reasonably acceptable to Citi; provided that Counterparty may not elect a Private Placement Settlement if, on the date of its election, it has taken, or caused to be taken, any action that would make unavailable either the exemption pursuant to Section 4(2) of the Securities Act for the sale by Counterparty to Citi (or any affiliate designated by Citi) of the Restricted Shares or the exemption pursuant to Section 4(1) or Section 4(3) of the Securities Act for resales of the Restricted Shares by Citi (or any such affiliate of Citi). The Private Placement Settlement of such Restricted Shares shall include customary representations, covenants, blue sky and other governmental filings and/or registrations, indemnities to Citi, due diligence rights (for Citi or any buyer of the Restricted Shares designated by Citi), opinions and certificates, and such other documentation as is customary for private placement agreements for private placements of equity securities of issuers of its size, all reasonably acceptable to Citi. In the event of a Private Placement Settlement, the Net Share Settlement Amount or the Counterparty Payment Obligation, respectively, shall be deemed to be the Net Share Settlement Amount or the Counterparty Payment Obligation, respectively, plus an additional amount (determined from time to time by the Calculation Agent in its commercially reasonable judgment) attributable to interest that would be earned on such Net Share Settlement Amount or the Counterparty Payment Obligation, respectively, (increased on a daily basis to reflect the accrual of such interest and reduced from time to time by the amount of net proceeds received by Citi as provided herein) at a rate equal to the open Federal Funds Rate plus 100 basis points per annum for the period from, and including, such Settlement Date or the date on which the Counterparty Payment Obligation is due, respectively, to, but excluding, the related date on which all the Restricted Shares have been sold and calculated on an Actual/360 basis. |
| (ii) | If Counterparty elects to settle the Transaction pursuant to this clause (ii) (a “Registration Settlement”), then Counterparty shall promptly (but in any event no later than the beginning of the Resale Period) file and use its reasonable best efforts to make effective under the Securities Act a registration statement or supplement or amend an outstanding registration statement in form and substance reasonably satisfactory to Citi, to cover the resale of such Restricted Shares (and any Make-whole Shares) in accordance with customary resale registration procedures, including covenants, conditions, representations, underwriting discounts (if applicable), commissions (if applicable), indemnities, due diligence rights, opinions and certificates, and such other documentation as is customary for equity underwriting agreements for resales of equity securities of issuers of its size, all reasonably acceptable to Citi. If Citi, in its sole reasonable discretion, is not satisfied with such procedures and documentation, Private Placement Settlement shall apply. If Citi is satisfied with such procedures and documentation, it shall sell the Restricted Shares (and any Make-whole Shares) pursuant to such registration statement during a period (the “Resale Period”) commencing on the Exchange Business Day following delivery of such Restricted Shares (and any Make-whole Shares) and ending on the earliest of (i) the Exchange Business Day on which Citi completes the sale of all Restricted Shares or, in the case of settlement of Termination Delivery Units, a sufficient number of Restricted Shares so that the realized net proceeds of such sales exceed the Counterparty Payment Obligation, (ii) the date upon which all Restricted Shares (and any Make-whole Shares) have been sold or transferred pursuant to Rule 144 (or similar provisions then in force) and (iii) the date upon which all Restricted Shares (and any Make-whole Shares) may be sold or transferred by a non-affiliate pursuant to Rule 144 (or any similar provision then in force) without any further restriction whatsoever. |
| (iii) | If (ii) above is applicable and the Net Share Settlement Amount or the Counterparty Payment Obligation, as applicable, exceeds the realized net proceeds from such resale, or if (i) above is applicable and the Freely Tradeable Value (as defined below) of the Shares owed pursuant to the Net Share Settlement Amount, or the Counterparty Payment Obligation (in each case as adjusted pursuant to (i) above), as applicable, exceeds the realized net proceeds from such resale, Counterparty shall transfer to Citi by the open of the regular trading session on the Exchange on |
A-1
| the Exchange Business Day immediately following the last day of the Resale Period the amount of such excess (the “Additional Amount”), at its option, either in cash or in a number of Restricted Shares (“Make-whole Shares”, provided that the aggregate number of Restricted Shares and Make-whole Shares delivered shall not exceed the Maximum Delivery Amount) that, based on the Relevant Price on the last day of the Resale Period (as if such day was the “Valuation Date” for purposes of computing such Relevant Price), has a value equal to the Additional Amount. If Counterparty elects to pay the Additional Amount in Make-whole Shares, Counterparty shall elect whether the requirements and provisions for either Private Placement Settlement or Registration Settlement shall apply to such payment. This provision shall be applied successively until the Additional Amount is equal to zero, subject to “Limitation on Delivery of Shares”. “Freely Tradeable Value” means the value of the number of Shares delivered to Citi which such Shares would have if they were freely tradeable (without prospectus delivery) upon receipt by Citi, as determined by the Calculation Agent by reference to the Relevant Price for freely tradeable Shares as of the Valuation Date, or other date of valuation used to determine the delivery obligation with respect to such Shares, or by other commercially reasonable means. |
A-2
ANNEX B
The Strike Price, Premium and Final Disruption Date for the Transaction are set forth below.
Strike Price:
|
USD32.70 | |
Premium:
|
USD7,290,000 | |
Final Disruption Date:
|
June 24, 2015 |
B-1
ANNEX C
For each Component of the Transaction, the Number of Warrants and Expiration Date is set forth
below.
| Component Number | Number of Warrants | Expiration Date | ||
| 1. | 24,465 | 01/02/15 | ||
| 2. | 24,465 | 01/05/15 | ||
| 3. | 24,465 | 01/06/15 | ||
| 4. | 24,465 | 01/07/15 | ||
| 5. | 24,465 | 01/08/15 | ||
| 6. | 24,465 | 01/09/15 | ||
| 7. | 24,465 | 01/12/15 | ||
| 8. | 24,465 | 01/13/15 | ||
| 9. | 24,465 | 01/14/15 | ||
| 10. | 24,465 | 01/15/15 | ||
| 11. | 24,465 | 01/16/15 | ||
| 12. | 24,465 | 01/20/15 | ||
| 13. | 24,465 | 01/21/15 | ||
| 14. | 24,465 | 01/22/15 | ||
| 15. | 24,465 | 01/23/15 | ||
| 16. | 24,465 | 01/26/15 | ||
| 17. | 24,465 | 01/27/15 | ||
| 18. | 24,465 | 01/28/15 | ||
| 19. | 24,465 | 01/29/15 | ||
| 20. | 24,465 | 01/30/15 | ||
| 21. | 24,465 | 02/02/15 | ||
| 22. | 24,465 | 02/03/15 | ||
| 23. | 24,465 | 02/04/15 | ||
| 24. | 24,465 | 02/05/15 | ||
| 25. | 24,465 | 02/06/15 | ||
| 26. | 24,465 | 02/09/15 | ||
| 27. | 24,465 | 02/10/15 | ||
| 28. | 24,465 | 02/11/15 | ||
| 29. | 24,465 | 02/12/15 | ||
| 30. | 24,465 | 02/13/15 | ||
| 31. | 24,465 | 02/17/15 | ||
| 32. | 24,465 | 02/18/15 | ||
| 33. | 24,465 | 02/19/15 | ||
| 34. | 24,465 | 02/20/15 | ||
| 35. | 24,465 | 02/23/15 | ||
| 36. | 24,465 | 02/24/15 | ||
| 37. | 24,465 | 02/25/15 | ||
| 38. | 24,465 | 02/26/15 | ||
| 39. | 24,465 | 02/27/15 |
C-1
| Component Number | Number of Warrants | Expiration Date | ||
| 40. | 24,465 | 03/02/15 | ||
| 41. | 24,465 | 03/03/15 | ||
| 42. | 24,465 | 03/04/15 | ||
| 43. | 24,465 | 03/05/15 | ||
| 44. | 24,465 | 03/06/15 | ||
| 45. | 24,465 | 03/09/15 | ||
| 46. | 24,465 | 03/10/15 | ||
| 47. | 24,465 | 03/11/15 | ||
| 48. | 24,465 | 03/12/15 | ||
| 49. | 24,465 | 03/13/15 | ||
| 50. | 24,465 | 03/16/15 | ||
| 51. | 24,465 | 03/17/15 | ||
| 52. | 24,465 | 03/18/15 | ||
| 53. | 24,465 | 03/19/15 | ||
| 54. | 24,465 | 03/20/15 | ||
| 55. | 24,465 | 03/23/15 | ||
| 56. | 24,465 | 03/24/15 | ||
| 57. | 24,465 | 03/25/15 | ||
| 58. | 24,465 | 03/26/15 | ||
| 59. | 24,465 | 03/27/15 | ||
| 60. | 24,465 | 03/30/15 | ||
| 61. | 24,465 | 03/31/15 | ||
| 62. | 24,465 | 04/01/15 | ||
| 63. | 24,465 | 04/02/15 | ||
| 64. | 24,465 | 04/06/15 | ||
| 65. | 24,465 | 04/07/15 | ||
| 66. | 24,465 | 04/08/15 | ||
| 67. | 24,465 | 04/09/15 | ||
| 68. | 24,465 | 04/10/15 | ||
| 69. | 24,465 | 04/13/15 | ||
| 70. | 24,465 | 04/14/15 | ||
| 71. | 24,465 | 04/15/15 | ||
| 72. | 24,465 | 04/16/15 | ||
| 73. | 24,465 | 04/17/15 | ||
| 74. | 24,465 | 04/20/15 | ||
| 75. | 24,465 | 04/21/15 | ||
| 76. | 24,465 | 04/22/15 | ||
| 77. | 24,465 | 04/23/15 | ||
| 78. | 24,465 | 04/24/15 | ||
| 79. | 24,465 | 04/27/15 | ||
| 80. | 24,465 | 04/28/15 | ||
| 81. | 24,465 | 04/29/15 | ||
| 82. | 24,465 | 04/30/15 | ||
| 83. | 24,465 | 05/01/15 | ||
| 84. | 24,465 | 05/04/15 | ||
| 85. | 24,465 | 05/05/15 |
C-2
| Component Number | Number of Warrants | Expiration Date | ||
| 86. | 24,465 | 05/06/15 | ||
| 87. | 24,465 | 05/07/15 | ||
| 88. | 24,465 | 05/08/15 | ||
| 89. | 24,465 | 05/11/15 | ||
| 90. | 24,447 | 05/12/15 |
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