Confirmation of OTC Warrant Transaction
Execution
Copy
| Date: | June 19, 2007 | |
| To: | Iconix Brand Group, Inc. (“Counterparty”) | |
|
Attention:
Chief
Executive Officer
Telephone
No.: 000-000-0000
Facsimile
No.: 000-000-0000
|
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| From: | Xxxxxxx Xxxxx International (“MLI”) |
MLI
Reference: 078173809
Dear
Sir
/ Madam:
The
definitions and provisions contained in the 2000 ISDA Definitions (the
“Swap
Definitions”)
and the
2002 ISDA Equity Derivatives Definitions (the “Equity
Definitions” and,
together with the Swap Definitions, the “Definitions”),
in
each
case as published by the International Swaps and Derivatives Association, Inc.,
are
incorporated into this Confirmation. In the event of any inconsistency between
the Swap Definitions and the Equity Definitions, the Equity Definitions will
govern, and in the event of any inconsistency between the Definitions and this
Confirmation, this Confirmation will govern. References herein to a
“Transaction” shall be deemed to be references to a “Share Option Transaction”
for the purposes of the Equity Definitions and to a “Swap Transaction” for the
purposes of the Swap Definitions. For purposes of this Transaction, “Warrant
Style”, “Warrant Type”, “Number of Warrants” and “Warrant Entitlement” (each as
defined below) shall be used herein as if such terms were referred to as “Option
Style”, “Option Type”, “Number of Options” and “Option Entitlement”,
respectively, in the Definitions.
This
Confirmation evidences a complete binding agreement between you and us as to
the
terms of the Transaction to which this Confirmation relates. This Confirmation
(notwithstanding anything to the contrary herein), shall be subject to, and
form
part of, an agreement in the 1992 form of the ISDA Master Agreement
(Multicurrency Cross Border) (the “Master
Agreement” or
“Agreement”)
as if we
had executed an agreement in such form (but without any Schedule and with
elections specified in the “ISDA Master Agreement” Section of this Confirmation)
on the Trade Date. In the event of any inconsistency between the provisions
of
that Agreement and this Confirmation, this Confirmation will prevail for the
purpose of this Transaction. The parties hereby agree that the Transaction
evidenced by this Confirmation shall be the only Transaction subject to and
governed by the Agreement.
The
terms
of the particular Transaction to which this Confirmation relates are as
follows:
1
Execution
Copy
General
Terms:
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Trade
Date:
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June
14, 2007
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Effective
Date:
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June
20, 2007 subject to cancellation of the OTC Warrant Transaction prior
to
5:00 p.m. (New York City time) on such date by the Counterparty.
In
the event of
such cancellation, any payments previously made hereunder, including
the
Premium, shall be returned to the person making such payment.
In
addition, Counterparty shall reimburse MLI for any costs or expenses
(including market losses) relating to the unwinding of its hedging
activities in connection with the Transaction (including any loss
or cost
incurred as a result of its terminating, liquidating, obtaining or
reestablishing any hedge or related trading position).
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Warrant
Style:
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The
Warrants shall be exercisable as set forth under “Procedures for Exercise”
below.
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Warrant
Type:
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Call
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Seller:
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Counterparty
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Buyer:
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MLI
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Shares:
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Shares
of common stock, $0.001 par
value, of Counterparty (Security Symbol: “ICON”).
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Number
of Warrants:
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6,259,076
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Daily
Number of Warrants:
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For
any day, the unexercised Number of Warrants on such day divided
by
the remaining number of Expiration Dates (including such day) and
rounded
down to the nearest whole number, with the balance of the Number
of
Warrants exercised on the final Expiration Date.
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Warrant
Entitlement:
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One
(1) Share per Warrant
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Strike
Price:
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$42.40
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Premium:
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$22,494,000.00
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Premium
Payment Date:
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The
Effective Date; provided no cancellation of the Transaction has occurred
prior
to 5:00 p.m. (New York City time) on such date by the
Counterparty.
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Exchange:
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NASDAQ
Global Market
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Related
Exchange(s):
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All
Exchanges
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Full
Exchange Business Day:
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A
Scheduled Trading Day that has a scheduled closing time for its regular
trading session at 4:00 p.m. (New York City time) or the then standard
closing time for regular trading on the Exchange and is not a Disrupted
Day.
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2
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Procedures
for Exercise:
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Expiration
Time:
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11:59
p.m. (New York City time).
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Expiration
Dates:
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The
75 consecutive Full Exchange Business Days beginning on and including
September
28, 2012 each
shall be the Expiration Date for a number of Warrants equal to the
Daily
Number of Warrants on such date.
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Exercise
Dates:
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Each
Expiration Date shall be an Exercise Date for a number of Warrants
equal
to the Daily Number of Warrants on such date.
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Automatic
Exercise:
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Applicable;
provided that Section 3.4(a) of the Equity Definitions shall apply
to Cash
Settlement and Net Physical Settlement; and provided further that,
unless
all Warrants have been previously exercised hereunder, a number of
Warrants for each Expiration Date equal to the Daily Number of Warrants
for such Expiration Date shall be deemed to be automatically
exercised.
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Counterparty’s
Telephone Number and Telex and/or Facsimile Number and Contact Details
for
purpose of Giving Notice:
|
Address: 0000
Xxxxxxxx
Xxx
Xxxx, Xxx Xxxx 00000
Attention: Chief
Executive Officer
Facsimile
No.: 000-000-0000
Telephone
No.: 000-000-0000
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Valuation:
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Valuation
Dates:
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Each
Exercise Date
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Settlement
Terms:
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Cash
Settlement:
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Applicable;
provided that it shall be a condition of Counterparty’s right to elect
Cash Settlement that Counterparty delivers to Buyer on the date of
the
Cash Settlement election a representation signed by Counterparty
that
Counterparty has publicly disclosed all material information necessary
for
Counterparty to be able to purchase or sell Shares in compliance
with
applicable federal securities laws. If Counterparty elects to settle
the
Transaction by Cash Settlement, Counterparty
represents and agrees that:
(i)
Counterparty is not, on the date of the Cash Settlement election,
and will
not be, on any day during the period from and including the first
Expiration Date to and including the final Expiration Date, engaged
in a
distribution, as such term is used in Regulation M under the Securities
Exchange Act of 1934, as amended (the “Exchange
Act”); and
(ii)
during the period from and including the first Expiration Date to
and
including the final Expiration Date, without the prior written consent
of
MLI, the Counterparty shall not, and shall cause its affiliates and
affiliated purchasers (each as defined in Rule 10b-18
under the Exchange Act) not to, directly or indirectly (including,
without
limitation, by means of a derivative instrument) purchase, offer
to
purchase, place any bid or limit order that would effect a purchase
of, or
commence any tender offer relating to, any Shares (or equivalent
interest,
including a unit of beneficial interest in a trust or limited partnership
or a depository share) or any security convertible into or exchangeable
for the Shares.
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3
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Settlement
Currency:
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USD
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Settlement
Price:
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For
each Valuation Date, the Volume Weighted Average Price of the Shares
(“VWAP”) calculated from 9:45 a.m. to 3:45 p.m., as observed under the
heading Bloomberg “VWAP” on Bloomberg page ICON <equity> AQR SEC (or
any successor thereto) (or if such volume-weighted average price
is
unavailable, the market value of one Share on such Valuation Date,
as
determined by the Calculation Agent); provided that if the scheduled
weekday closing time of the Exchange for any Valuation Date is later
than
4:00 p.m. (without regard to after hours or any other trading outside
of
the regular trading session hours) the VWAP shall be calculated for
such
Valuation Date from 9:45 a.m. until 15 minutes prior to such later
closing
time of the Exchange.
Section
6.3(a) of the Equity Definitions is hereby amended by replacing clause
(ii) in its entirety with “(ii) an Exchange Disruption, or” and inserting
immediately following clause (iii) the phrase “; in each case that the
Calculation Agent determines is material.”
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Cash
Settlement Payment Date:
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With
respect to each Valuation Date, three (3) Currency Business Days
after the
final
Valuation Date.
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Settlement
Method Election:
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Applicable
with respect to Cash Settlement or Net Physical Settlement
only.
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Electing
Party:
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Counterparty
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Settlement
Method Election Date:
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Ten
(10) Business Days prior to the first Expiration Date
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Default
Settlement Method:
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Net
Physical Settlement.
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Net
Physical Settlement:
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In
the event that the Counterparty elects, or is deemed to elect, to
settle
this Transaction by Net Physical Settlement, subject to “Conditions of Net
Physical Settlement” below, Counterparty shall deliver to MLI on the
Settlement Date a number of Shares (the “Delivered
Shares”) equal
to the Share Delivery Quantity, provided that in the event that the
number
of Shares calculated comprises any fractional Share, only whole Shares
shall be delivered and an amount in cash equal to the value of such
fractional share shall be payable by the Counterparty to MLI in lieu
of
such fractional Share.
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Share
Delivery Quantity:
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For
each Exercise Date, a number of Shares, as calculated by the Calculation
Agent, equal to the Net Physical Settlement Amount for such Exercise
Date
divided by the Settlement
Price
on
the Valuation Date in respect of such Settlement Date
plus an amount in cash in lieu of any fractional shares (based on
the
applicable
Settlement
Price).
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Net
Physical Settlement Amount:
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For
any Exercise Date, an amount equal to the product of (i) the Number
of
Warrants being exercised on the relevant Exercise Date, (ii) the
Strike
Price Differential for such Exercise Date and (iii) the Warrant
Entitlement.
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4
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Copy
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Strike
Price Differential:
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For
any Valuation Date, (i) if the Settlement Price is greater than the
Strike
Price, an amount equal to the excess of such Settlement Price over
the
Strike Price for such Valuation Date or (ii) if such Settlement Price
is
less than or equal to the Strike Price, zero.
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Settlement
Date:
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Settlement
with respect to each Exercise Date shall occur on the third (3rd)
Full
Exchange Business Day following the final Valuation Date, provided
that
MLI shall have the right to request by prior written notice to
Counterparty a Settlement Date with respect to any Exercise Date
and the
related Share Delivery Quantity that is three (3) Full Exchange Business
Days following such Exercise Date. Such request shall not unreasonably
be
denied.
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Conditions
to Net Physical Settlement:
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If,
in connection with or six months following delivery of Shares hereunder,
MLI notifies the Counterparty that MLI has reasonably determined
after
advice from counsel that there is a considered risk that such Shares
are
subject to restrictions on transfer in the hands of MLI pursuant
to the
rules and regulations promulgated under the Securities Act of 1933,
as
amended (the “Securities
Act”), then
Counterparty shall either (i) deliver Shares that are covered by
an
effective registration statement of Counterparty for immediate resale
by
MLI or (ii) agree to deliver additional Shares so that the value
of such
Shares as determined by the Calculation Agent to reflect an appropriate
liquidity discount, equals the value of the number of Shares that
would
otherwise be deliverable if such Shares were freely tradable upon
receipt
by MLI.
(A)
If Counterparty elects to deliver Shares as described in above clause
(i),
then promptly following such notification from MLI
(a) Counterparty
shall afford MLI a reasonable opportunity to conduct a
due diligence investigation with respect to Counterparty that is
customary
in scope for underwritten offerings of equity securities that yields
a
result reasonably satisfactory to MLI;
(b) Counterparty
shall as soon as practicable make available to MLI an effective
registration statement for immediate resale (the “Registration
Statement”)
in
form and content reasonably satisfactory to MLI and Counterparty
and filed
pursuant to Rule 415 under the Securities Act, and such prospectuses
as
MLI may reasonably request to comply with the applicable prospectus
delivery requirements (the “Prospectus”)
for the resale by MLI of such number of Shares as MLI shall reasonably
specify in accordance with this paragraph, such Registration Statement
to
be effective and Prospectus to be current until the earliest of the
date
on which (1) all Delivered Shares have been sold by MLI, (2) MLI
has
advised Counterparty that it no longer requires that such Registration
Statement be effective, (3) all remaining Delivered Shares could
be sold
by MLI without registration pursuant to Rule 144 promulgated under
the
Securities Act (the “Registration
Period”)
or
(4) Counterparty has provided a legal opinion in form and substance
satisfactory to MLI (with customary assumptions and exceptions) that
the
Shares issuable upon exercise of these Warrants will be freely tradable
under the Securities Act upon delivery to MLI and not subject to
any
legend restricting transferability. It is understood that the Registration
Statement and Prospectus will cover a number of Shares equal to the
aggregate number of Shares (if any) reasonably estimated by MLI to
be
potentially deliverable by Counterparty in connection with Net Physical
Settlement hereunder (not to exceed the Maximum Deliverable Share
Amount)
and shall be subject to the same suspension of sales during “blackout
dates” as provided in the following paragraph;
and
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5
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Copy
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(c) Counterparty
will enter into a registration rights agreement with MLI in form
and
substance reasonably acceptable to MLI and Counterparty, which agreement
will contain among other things, customary representations and warranties
and indemnification, restrictions on sales during “blackout dates” as
provided for in the registration rights agreement (the “Registration
Rights Agreement”)
entered into by Counterparty on or about the date hereof,
provide for delivery of comfort
letters and opinions
of counsel and other rights relating to the registration of a number
of
Shares equal to the number of Delivered Shares and other Shares
deliverable hereunder up to the Maximum Deliverable Share
Amount.
(d) Counterparty
shall promptly pay to MLI a $0.04 per Share fee with all Shares delivered
in connection with Net Physical Settlement pursuant to a Registration
Statement.
(B)
If Counterparty elects to deliver Shares as described in above clause
(ii), then promptly following such notification from MLI
(a) Counterparty
shall afford MLI and any potential institutional purchaser of any
Shares
identified by MLI a reasonable opportunity to conduct a due diligence
investigation with respect to Counterparty that is customary in scope
for
private placements of equity securities subject to execution of any
customary confidentiality agreements;
(b) Counterparty
shall enter into an agreement (a “Private
Placement Agreement”)
with MLI on commercially reasonable mutually acceptable terms in
connection with the private placement of such Shares by Counterparty
to
MLI or an affiliate and the private resale of such shares by MLI
or such
affiliate, substantially similar to private placement purchase agreements
customary for private placements of equity securities, in form and
substance commercially reasonably satisfactory to MLI and Counterparty,
which Private Placement Agreement shall include provisions relating
to the
indemnification of, and contribution in connection with the liability
of,
MLI and its affiliates, shall provide for the payment by Counterparty
of
all expenses
in connection with such resale, including all reasonable and documented
fees and expenses of counsel for MLI, shall
contain representations, warranties and agreements of Counterparty
reasonably necessary or advisable to establish and maintain the
availability of an exemption from the registration requirements of
the
Securities Act for such resales,
and shall use reasonable best efforts to provide for the delivery
of
accountants’ “comfort letters” to MLI or such affiliate with respect to
the financial statements and certain financial information contained
in or
incorporated by reference into the offering memorandum prepared for
the
resale of such Shares;
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6
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(c) MLI
shall sell the Delivered Shares in a commercially reasonable manner
until
the amount received by MLI for the sale of the Shares (the
“Proceeds
Amount”)
is
equal to the Net Physical Settlement Amount. Any remaining Delivered
Shares shall be returned to Counterparty. If the Proceeds Amount
is less
than the Net Physical Settlement Amount, Counterparty shall promptly
deliver upon notice from MLI additional Shares to MLI until the dollar
amount from the sale of such Shares by MLI equals the difference
between
the Net Physical Settlement Amount and the Proceeds Amount. In no
event
shall Counterparty be required to deliver to MLI a number of Shares
greater than the Maximum Deliverable Share Amount.
(C) Notwithstanding
the foregoing: (I) if Counterparty has elected to deliver Shares
as
described in clause (i) above and either (a) Counterparty does not
provide
for the sale of the Shares under the Registration Statement as provided
in
the Registration Rights Agreement or (b) some Shares cannot be registered
under the Registration Statement due to Rule 415(a)(4)
under the Securities Act, then the provisions of sub-paragraph (B)
shall
apply to the extent Counterparty has not satisfied its obligations
hereunder by the delivery of Shares pursuant to sub-paragraph (A).
(II) If
sub-paragraph (B) is applicable and Counterparty fails to satisfy
its
obligations under such sub-paragraph (B), then Counterparty may deliver
unregistered Shares of equivalent value to the Net Physical Settlement
Amount (or, if applicable, the unsatisfied portion thereof). The
value of
any unregistered Shares so delivered shall be discounted to reflect
an
appropriate liquidity discount (determined by MLI
in
a commercially reasonable manner, taking into account MLI’s policies and
determinations with respect to any transfer restrictions that MLI
deems it
advisable to observe in connection with sales of such Shares). (III)
If
some or all of the Delivered Shares cannot be used to close out stock
loans in the shares of Counterparty entered into to establish or
maintain
short positions by MLI in connection with this Transaction without
a
prospectus being required by applicable law to be delivered to such
lender, then the value of any such Delivered Shares shall reflect
the cost
(determined by
the Calculation Agent in good faith and
in
a commercially reasonable manner and taking into account the policies
and
determinations of MLI with respect to compliance with applicable
legal and
regulatory requirements) to MLI of trading Shares in order to close
out
its hedge position if any, in all cases for purposes of calculating
the
Delivered Shares. In no event shall Counterparty be required to top
up the
delivery in cash.
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Limitations
on Net Physical Settlement by Counterparty:
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Notwithstanding
anything herein or in the Agreement to the contrary, the number
of Shares that may be delivered at settlement by Counterparty shall
not
exceed 9,388,615 at any time (“Maximum
Deliverable Share Amount”),
as
adjusted by Calculation
Agent
to
account for any subdivision, stock-split, stock
combination, reclassification
or similar dilutive or
anti-dilutive event
with respect to the Shares.
Counterparty
represents and warrants that the number of Available Shares as of
the
Trade Date is greater than the Maximum Deliverable Share Amount.
Counterparty covenants and agrees that (i) Counterparty shall not
take any
action of corporate governance or otherwise to reduce the number
of
Available Shares below the Maximum Deliverable Share and (ii) Counterparty
shall use its reasonable efforts to cause the number of Available
Shares
at all times to be greater than the Maximum Deliverable Share
Amount.
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7
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For
this purpose, “Available
Shares” means
the number of Shares Counterparty currently has authorized (but not
issued
and outstanding) less the maximum number of Shares that may be required
to
be issued by Counterparty in connection with stock options, convertibles,
and other commitments of Counterparty that may require the issuance
or
delivery of Shares in connection therewith.
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Dividends:
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Extraordinary
Dividends
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Any
and all dividends declared by the Issuer for which the ex-dividend
date
occurs during the period from, and including, the Trade Date to,
and
including, the date on which Counterparty has fully performed its
obligations to deliver Shares hereunder.
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Adjustments:
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Method
of Adjustment:
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Calculation
Agent Adjustment
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Extraordinary
Events:
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Consequences
of Merger Events:
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(a)
Share-for-Share: Cancellation
and Payment (Calculation
Agent Determination)
(b)
Share-for-Other: Cancellation
and Payment (Calculation
Agent Determination)
(c)
Share-for-Combined: Cancellation
and Payment (Calculation
Agent Determination)
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Tender
Offer:
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Applicable
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Consequences
of Tender Offers:
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(a)
Share-for-Share: Modified
Calculation
Agent Adjustment
(b)
Share-for-Other: Cancellation
and Payment (Calculation
Agent Determination)
(b)
Share-for-Combined: Component
Adjustment (Calculation
Agent Determination)
With
respect to any Extraordinary Events hereunder, upon the occurrence
of
Cancellation and Payment in whole or in part, the parties agree that
the
amount to be paid, in accordance with the Equity Definitions, shall
constitute a Transaction Early Termination Amount, subject to satisfaction
by the payment or delivery of Shares or cash as set forth in the
Early
Termination section below.
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Nationalization,
Insolvency or Delisting:
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Cancellation
and Payment (Calculation Agent Determination) (subject to satisfaction
by
payment or delivery of Shares or cash as set forth in “Early
Termination”
below). In addition to the provisions of Section 12.6(a)(iii) of
the
Equity Definitions, it will also constitute a Delisting if the Exchange
is
located in the United States and the Shares are not immediately re-listed,
re-traded or re-quoted on any of the New York Stock Exchange, the
American
Stock Exchange,
the NASDAQ Global Market or
the
NASDAQ Global Select Market
(or their respective successors); if the Shares are immediately re-listed,
re-traded or re-quoted on any such exchange or quotation system,
such
exchange or quotation system shall thereafter be deemed to be the
Exchange.
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8
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Determining
Party:
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MLI,
acting in good faith and in a commercially reasonable
manner
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Additional
Disruption Events:
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Change
in Law:
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Applicable
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Failure
to Deliver:
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Not
Applicable
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Insolvency
Filing:
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Applicable
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Hedging
Disruption Event:
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Applicable
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Increased
Cost of Hedging:
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Not
Applicable
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Loss
of Stock Borrow:
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Applicable.
Section 12.9(b)(iv) of the Equity Definitions is hereby amended by
deleting the text from and including “(A)” to and including “(B)” and by
deleting the words “in each case”.
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Maximum
Stock Loan Rate:
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0.60
%
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Increased
Cost of Stock Borrow:
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Applicable;
provided that it shall be a condition to Counterparty’s right to make the
election described in clause (C) of Section 12.9(b)(v) of the Equity
Definitions that on the date of such election, none of Counterparty,
its
directors, executive officers, or any person controlling, or exercising
influence over, its decision to make such election is in possession
of any
material non-public information with respect to Counterparty or the
Shares; and provided further that, if Counterparty timely makes the
election described in clause (A) or (B) of Section 12.9(b)(v) of
the
Equity Definitions, Counterparty shall thereafter remain entitled,
subject
to the foregoing condition, to terminate the Transaction pursuant
to
Section 12.9(b)(v)(C) of the Equity Definitions upon ten Scheduled
Trading
Days’ notice to MLI. Section 12.9(b)(v) of the Equity Definitions is
hereby amended by deleting the text from and including “(X)” to and
including “(Y)”.
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Initial
Stock Loan Rate:
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0.25%
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Hedging
Party:
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MLI
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Determining
Party:
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MLI
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Non-Reliance:
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Applicable
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Agreements
and Acknowledgments Regarding Hedging Activities:
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Applicable
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Additional
Acknowledgments:
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Applicable
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9
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Other
Provisions:
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Additional
Agreements:
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If
Counterparty would be obligated to pay cash to MLI pursuant to the
terms
of this Agreement for any reason without having had the right (other
than
pursuant to this paragraph) to elect to deliver Shares in satisfaction
of
such payment obligation, then Counterparty may elect to deliver to
MLI a
number of Shares (whether registered or unregistered) having a cash
value
equal to the amount of such payment obligation.
Such
number of Shares to be delivered shall
be
the number of Shares,
determined by the Calculation Agent,
sufficient for MLI
to
realize the cash equivalent of such payment obligation
from proceeds of the sale of such number of Shares over a reasonable
period of time
taking into account any applicable discount (determined in a commercially
reasonable manner) to reflect any restrictions on transfer as well
as the
market value of the Shares). Settlement relating to any delivery
of Shares
pursuant to this paragraph shall occur within a reasonable period
of time.
The number of Shares delivered pursuant to this paragraph shall not
exceed
the Maximum Deliverable Share Amount and shall be subject to the
provisions under “Early Termination” hereof regarding Proceeds Amount and
the provisions set forth in subsection (c) under “Additional Agreements,
Representations and Covenants of Counterparty, Etc.”
below.
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Early
Termination:
|
Notwithstanding
any provision to the contrary, upon the designation of an Early
Termination Date or the occurrence of Cancellation and Payment in
whole or
in part hereunder, Counterparty’s payment obligation in respect of this
Transaction (which shall, in the case of an Early Termination Date
be
determined in accordance with Second Method and Loss
(which shall be determined using commercially reasonable procedures
in
order to produce a commercially reasonable result)) (the “Transaction
Early Termination Amount”)
may, at the option of Counterparty, be satisfied by the delivery
of a
number of Shares equal to the Transaction Early Termination Amount
divided
by the Termination Price (“Early
Termination Stock Settlement”);
provided, however, that Counterparty must notify MLI of its election
of
Early Termination Stock Settlement by the close of business on the
day
that is two Exchange Business Days following the day that the notice
designating the Early Termination Date, or notice that an Extraordinary
Event has resulted in the cancellation or termination of the Transaction
in whole or in part, is effective. “Termination
Price”
means the market
value per Share
on
the Early Termination Date, as determined by the Calculation Agent
in a
commercially reasonable manner taking into account any applicable
discount
to reflect any restrictions on transfer.
A
number of Shares calculated as being due in respect of any Early
Termination Stock Settlement will be deliverable on the third Clearance
System Business Day following the date that notice specifying the
number
of Shares deliverable is effective; provided
that,
if Counterparty is delivering Shares as a result of a Merger Event,
the
Settlement Date for such delivery will be immediately prior to the
effective time of the Merger Event and the Shares will be deemed
delivered
at such time such that MLI will be a holder of the Shares prior to
such
effective time. Section 6(d)(i) of the Agreement is hereby amended
by
adding the following words after the word “paid” in the fifth line
thereof: “or any delivery is to be made, as applicable.”
On
or prior to the Early Termination Date or date on which notice that
an
Extraordinary Event has resulted in the cancellation or termination
of the
Transaction in whole or in part is effective, as applicable, if Early
Termination Stock Settlement is elected and if so requested by MLI
upon
advice of counsel, Counterparty shall (subject to its right to make
the
election described in the immediately succeeding paragraph) enter
into a
registration rights agreement with MLI in form and substance reasonably
acceptable to MLI and Counterparty which agreement will contain among
other things, customary representations and warranties and
indemnification, restrictions on sales during “blackout dates” as provided
for in the Registration Rights Agreement and shall satisfy the conditions
contained therein and Counterparty shall file and diligently pursue
to
effectiveness a Registration Statement pursuant to Rule 415 under
the
Securities Act. If and when such Registration Statement shall have
been
declared effective by the Securities and Exchange Commission, Counterparty
shall have made available to MLI such Prospectuses as MLI may reasonably
request to comply with the applicable prospectus delivery requirements
for
the resale by MLI of such number of Shares as MLI shall specify (or,
if
greater, the number of Shares that Counterparty shall specify). Such
Registration Statement shall be effective and Prospectus shall be
current
until the earliest of the date on which (i) all Shares delivered
by
Counterparty in connection with an Early Termination Date
have been sold,
(ii) MLI has advised Counterparty that it no longer requires that
such
Registration Statement be effective or (iii) all remaining Shares
could be
sold by MLI without registration pursuant to Rule 144 promulgated
under
the Securities Act (the “Termination
Registration Period”).
It
is understood that the Registration Statement and Prospectus will
cover a
number of Shares equal to the number of Shares plus the aggregate
number
of Shares (if any) reasonably estimated by MLI to be potentially
deliverable by Counterparty in connection with Early Termination
Stock
Settlement hereunder, but in no event exceeding the Maximum Deliverable
Share Amount. On each day during the Termination Registration Period
Counterparty shall represent that each of its filings under the Securities
Act, the Exchange Act or other applicable securities laws that are
required to be filed have been filed and that, as of the respective
dates
thereof and as of the date of this representation, they do not
contain
any untrue statement of a material fact or omission of a material
fact
required to be stated therein or necessary to make the statements
made, in
the light of the circumstances under which they were made, not
misleading.
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If
Counterparty elects not to deliver Shares subject to an effective
Registration Statement (or if some or all of the Shares delivered
cannot
be used to close out stock loans in the shares of Counterparty entered
into to establish or maintain short positions by MLI in connection
with
this Transaction without a prospectus being required by applicable
law to
be delivered to such lender), the provisions of sub-paragraphs (B)
and (C)
set forth above under “Conditions to Net Physical Settlement” shall apply,
mutatis mutandis, as if the Net Physical Settlement Amount were the
Transaction Early Termination Amount. In no event shall Counterparty
be
required to deliver to MLI a number of Shares greater than the Maximum
Deliverable Share Amount.
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||
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Compliance
With Securities Laws:
|
Counterparty
represents and agrees that it has complied, and will comply, in connection
with this Transaction and all related or contemporaneous sales and
purchases of Shares, with the applicable provisions of the Securities
Act,
the Exchange Act and the rules and regulations promulgated thereunder,
including, without limitation, Rule 10b-5 and 13e and Regulation
M under
the Exchange Act.
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Each
party acknowledges that the offer and sale of the Transaction
to it is
intended to be exempt from registration under the Securities
Act by virtue
of Section 4(2) thereof. Accordingly, each party represents and
warrants
to the other party that (i) it has the financial ability to bear
the
economic risk of its investment in the Transaction and is able
to bear a
total loss of its investment, (ii) it is an “accredited investor” as that
term is defined in Regulation D as promulgated under the Securities
Act
and (iii) the disposition of the Transaction is restricted under
this
Confirmation, the Securities Act and state securities
laws.
Counterparty
further represents and warrants that:
(a) Counterparty
is not entering into this Transaction to create actual or apparent
trading
activity in the Shares (or any security convertible into or exchangeable
for Shares) or to raise or depress or otherwise manipulate the price
of
the Shares (or any security convertible into or exchangeable for
Shares);
(b) Counterparty
represents and acknowledges that as of the date hereof and without
limiting the generality of Section 13.1 of the Equity Definitions,
MLI is
not making any representations or warranties with respect to the
treatment
of the Transaction under FASB Statements 149 or 150, EITF Issue No.
00-19
(or any successor issue statements) or under FASB’s Liabilities &
Equity Project;
(c) Counterparty
is not, and after giving effect to the Transaction contemplated hereby,
will not be, an “investment company” as such term is defined in the
Investment Company Act of 1940, as amended;
(d) As
of the Trade Date and each date on which a payment or delivery is
made by
Counterparty hereunder, (i) the assets of Counterparty at their fair
valuation exceed the liabilities of Counterparty, including contingent
liabilities; (ii) the capital of Counterparty is adequate to conduct
its
business; and (iii) Counterparty has the ability to pay its debts
and
other obligations as such obligations mature and does not intend
to, or
believe that it will, incur debt or other obligations beyond its
ability
to pay as such obligations mature.
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||
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Account
Details:
|
Account
for payments to Counterparty:
To
be advised.
Account
for payments to MLI:
Chase
Manhattan Bank, New York
ABA#:
000-000-000
FAO:
ML Equity Derivatives
A/C:
066213118
Account
for delivery of Shares to MLI:
To
be advised.
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Agreement
Regarding Shares:
|
Counterparty
agrees that, in respect of any Shares delivered to MLI, such Shares
shall
be, upon such delivery, duly and validly authorized, issued and
outstanding, fully paid and non-assessable and subject to no adverse
claims of any other party. The issuance of such Shares does not and
will
not require the consent, approval, authorization, registration or
qualification of any government authority, except such as shall have
been
obtained on or before the delivery date of any Shares or as may be
required in connection with any Registration Statement filed with
respect
to any Shares.
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Bankruptcy
Rights:
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In
the event of Counterparty’s bankruptcy, MLI’s rights in connection with
this Transaction shall not exceed those rights held by common
shareholders. For the avoidance of doubt, the parties acknowledge
and
agree that MLI’s rights with respect to any other claim arising from this
Transaction prior to Counterparty’s bankruptcy shall remain in full force
and effect and shall not be otherwise abridged or modified in connection
herewith.
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Set-Off:
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Each
party waives any and all rights it may have to set-off,
whether arising under any agreement, applicable law or
otherwise.
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Transfer:
|
Neither
party may transfer its rights or delegate its obligations under this
Transaction without the prior written consent of the other party,
except
that MLI,
after payment in full of the Premium,
may assign its rights and delegate its obligations hereunder, in
whole or
in part, to any other person (an “Assignee”)
without the prior consent of the Counterparty, effective (the
“Transfer
Effective Date”)
upon delivery to Counterparty of an executed acceptance and assumption
by
the Assignee (an “Assumption”)
of the transferred obligations of MLI under this Transaction (the
“Transferred
Obligations”).
Notwithstanding any other provision in this Confirmation to the contrary
requiring or allowing MLI to purchase, sell, receive or deliver any
Shares
or other securities to or from Counterparty, MLI may designate any
of its
affiliates to purchase, sell, receive or deliver such Shares or other
securities and otherwise to perform MLI’s obligations in respect of this
Transaction and any such designee may assume such obligations. MLI
shall
be discharged of its obligations to Counterparty to the extent of
any such
performance.
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Regulation:
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MLI
is regulated by The Securities and Futures Authority
Limited.
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Indemnity:
|
Seller
agrees to indemnify MLI, its Affiliates and their respective directors,
officers, agents and controlling parties (each such person being
an
“Indemnified Party”) from and against any and all losses, claims, damages
and liabilities, joint and several, to which such Indemnified Party
may
become subject because of a breach of any representation or covenant
hereunder, in the Agreement or any other agreement relating to the
Agreement or Transaction and will reimburse Indemnified Party for
all
reasonable expenses (including reasonable legal fees and expenses)
as they
are incurred in connection with the investigation of, preparation
for, or
defense of, any pending or threatened claim or any action or proceeding
arising therefrom, whether or not such Indemnified Party is a party
thereto. Seller will not be liable to an Indemnified Party under
the
foregoing Indemnity provision to the extent that any loss, claim,
damage,
liability or expense is found in a final judgment by a court to have
resulted from that Indemnified Party’s gross negligence or willful
misconduct.
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Additional
Agreements, Representations and Covenants of Counterparty, Etc.:
|
(a)
|
Counterparty
hereby represents and warrants to MLI, on each day from the Trade
Date to
and including the earlier of (i) July 20, 2007 (ii) the date by which
MLI
is able to initially complete a hedge of its position created
by this Transaction, that:
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13
Execution
Copy
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(1)
|
it
will not, and will not permit any person or entity subject to its
control
to, bid for or purchase Shares during such period except pursuant
to
transactions or arrangements which have been approved by MLI or an
affiliate of MLI; and
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(2)
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it
has publicly disclosed all material information necessary for it
to be
able to purchase or sell Shares in compliance with applicable federal
securities laws.
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(b) No
collateral shall be required by either party for any reason in connection with
this Transaction.
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(c)
|
Notwithstanding
anything to the contrary herein, MLI shall not be entitled to exercise
any
Warrant or receive any Shares deliverable hereunder, and Automatic
Exercise shall not apply with respect to any Warrant to the extent
(but
only to the extent) that after such receipt of any Shares upon the
exercise of such Warrant or otherwise hereunder MLI, or its ultimate
parent entity would, directly or indirectly, be the beneficial owner
(as
such term is defined for purposes of Section 13(d) of the Exchange
Act) at
any time of more than 8.0 percent of the class of the Counterparty’s
outstanding equity securities that is comprised of the Shares (an
“Excess
Share Owner”).
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MLI
shall
provide prior notice to Counterparty if the exercise of any Warrant or delivery
of Shares hereunder would cause MLI to become directly or indirectly, an Excess
Share Owner; provided
that
the
failure of MLI to provide such notice shall not alter the effectiveness of
the
provisions set forth in the preceding sentence and any purported exercise or
delivery in violation of such provisions shall be void and have no effect.
If
any delivery owed to MLI hereunder is not made, in whole or in part, as a result
of this provision, Counterparty’s obligation to make such delivery shall not be
extinguished and Counterparty shall make such delivery as promptly as
practicable after MLI gives notice that such delivery would not result in MLI
being an Excess Share Owner.
If
MLI is
not entitled to exercise any Warrant because such exercise would cause MLI
to
become, directly or indirectly, an Excess Share Owner and MLI thereafter
disposes of Shares owned by it or any action is taken that would then permit
MLI
to exercise such Warrant without such exercise causing it to become, directly
or
indirectly, an Excess Share Owner, then MLI shall provide notice of the taking
of such action to Counterparty and such Warrant shall then become exercisable
by
MLI to the extent such Warrant is otherwise or had otherwise become exercisable
hereunder. In such event, the Expiration Date with respect to such Warrant
shall
be the date on which Counterparty receives such notice from MLI, and the related
Settlement Date shall be as soon as reasonably practicable after receipt of
such
notice but no more than three (3) Exchange Business Days thereafter (but in
no
event shall the Settlement Date occur prior to the date on which it would have
otherwise occurred but for the provisions of this subsection); provided
that
the
related Net Physical Settlement Amount shall be the same as the Net Physical
Settlement Amount but for the provisions of this subsection. In addition, within
30 calendar days of any Settlement Date, Counterparty shall use its reasonable
efforts to refrain from activities that could reasonably be expected to result
in MLI’s ownership of Shares exceeding 10% of all issued and outstanding
Shares.
Matters
Relating to Agent:
|
1.
|
MLPFS
will be responsible for the operational aspects of the Transactions
effected through it, such as record keeping, reporting, and confirming
Transactions to Counterparty and
MLI;
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2.
|
Unless
Counterparty is a “major U.S. institutional investor,” as defined in Rule
15a-6 of the Exchange Act, neither Counterparty nor
MLI will contact the other without the direct involvement of
MLPFS;
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3.
|
MLPFS’s
sole role under this Agreement and with respect to any Transaction
is as
an agent of Counterparty and MLI on a disclosed basis and MLPFS shall
have
no responsibility or liability to Counterparty or MLI hereunder except
for
gross negligence or willful misconduct in the performance of its
duties as
agent. MLPFS is authorized to act as agent for MLI, but only to the
extent
expressly required to satisfy the requirements of Rule 15a-6 under
the
Exchange Act in respect of the Options described hereunder. MLPFS
shall
have no authority to act as agent for Counterparty generally or with
respect to transactions or other matters governed by this Agreement,
except to the extent expressly required to satisfy the requirements
of
Rule 1 5a-6 or in accordance with express instructions from
Counterparty.
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14
Execution
Copy
ISDA
Master Agreement:
With
respect to the Agreement, MLI and Counterparty each agree as
follows:
“Specified
Entity” means
in
relation to Seller and in relation to Counterparty for purposes of this
Transaction: Not applicable.
The
definition of “Specified
Transaction” in
Section 14 of this Agreement is hereby amended by adding the text “commodity
transaction, credit derivative transaction, repurchase or reverse purchase
transaction, securities lending transaction, futures transaction, prime
brokerage or margin lending transaction” after the words “foreign exchange
transaction” in the sixth line thereof and by replacing the words “any other
similar transaction” in the eighth line thereof with the text “any other
transaction between the parties”. “Specified Transaction” shall exclude any
default under a Specified Transaction if caused solely by the general
unavailability of the currency in which payments under such Specified
Transaction are denominated due to exchange controls or other governmental
action.
The
“Cross
Default” provisions
of Section
5(a)(vi) of
the
Agreement will not apply to MLI and will not apply to Counterparty.
The
“Credit
Event Upon Merger” provisions
of Section
5(b)(iv) of
the
Agreement will not apply to MLI or
to
Counterparty.
Additional
Termination Event.
Without
limiting the generality of the definition of any Extraordinary Event hereunder,
the occurrence of any of the following shall constitute an Additional
Termination Event with respect to which the Transaction shall be the sole
Affected Transaction and Issuer shall be the sole Affected Party; provided
that
with respect to any Additional Termination Event, MLI may choose to treat part
of the Transaction as the sole Affected Transaction, and, upon the 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)
within the period commencing on the Trade Date and ending on the second
anniversary of the Premium Payment Date, Buyer reasonably determines that it
is
advisable to terminate a portion of the Transaction so that Buyer’s related
hedging activities will comply with applicable securities laws, rules or
regulations;
(ii)
the
sale, lease, transfer, conveyance or other disposition (other than by way of
merger or consolidation), in one or a series of related transactions, of all
or
substantially all of the properties and assets of the Issuer and its
subsidiaries taken as a whole to any “person” (as such term is used in Section
13(d)(3) of the Exchange Act) other than to one or more of the Issuer's
wholly-owned subsidiaries;
(iii)
the
adoption of a plan relating to the liquidation or dissolution of the Issuer;
(iv)
the
consummation of any transaction (including, without limitation, any merger
or
consolidation) the result of which is that any “person” or “group” (as such
terms are used in Sections 13(d) and 14(d) of the Exchange Act) becomes the
“beneficial owner” (as such term is defined in Rule 13d-3 and Rule 13d-5 under
the Exchange Act, except that a person shall be deemed to have “beneficial
ownership” of all securities that such person has the right to acquire, whether
such right is currently exercisable or is exercisable only upon the occurrence
of a subsequent condition), directly or indirectly, of more than 50% of the
Voting Stock of the Issuer (measured by voting power rather than number of
shares), other than any acquisition by the Issuer, any of the Issuer's
subsidiaries or any of the Issuer's employee benefit plans;
15
Execution
Copy
(iv)
the
first day on which a majority of the members of the Board of Directors of the
Issuer are not Continuing Directors; or
(v)
the
Issuer consolidates with, or merges with or into, any Person, or any Person
consolidates with, or merges with or into, the Issuer, in any such event
pursuant to a transaction in which any of the outstanding Voting Stock of the
Issuer is converted into or exchanged for cash, securities or other property,
other than any such transaction where the Voting Stock of the Issuer outstanding
immediately prior to such transaction is converted into or exchanged for Voting
Stock of the surviving or transferee Person constituting a majority of the
outstanding shares of such Voting Stock of such surviving or transferee Person
(immediately after giving effect to such issuance).
Notwithstanding
anything to the contrary set forth herein, an event described in clauses (ii)
through (v) above will not constitute an Additional Termination Event if 100%
of
the consideration for the Shares (excluding cash payments for fractional shares
and cash payments made in respect of dissenters' appraisal rights) in the
transaction or transactions otherwise constituting an Additional Termination
Event consists of common stock or American Depositary Shares representing shares
of common stock, in each case which are traded on any of the New York Stock
Exchange, the American Stock Exchange, the NASDAQ Global Market or the NASDAQ
Global Select Market (or their respective successors), or which will be so
traded or quoted when issued or exchanged in connection with such event;
provided that, with respect to an entity organized under the laws of a
jurisdiction outside the United States, such entity has a worldwide total market
capitalization of its equity securities of at least three times the market
capitalization of the Issuer before giving effect to the consolidation or
merger.
“Person”
means
any individual, corporation, partnership, limited liability company, joint
venture, association, joint-stock company, trust, unincorporated organization,
government or any agency or political subdivision thereof or any syndicate
or
group that would be deemed to be a “person” under Section 13(d)(3) of the
Exchange Act or any other entity. “Continuing
Directors”
means
any member of the board of directors of the Issuer who (i) was a member of
such
board of directors on the date hereof or (ii) was nominated for election or
elected to such board of directors with the approval of a majority of the
Continuing Directors who were members of such board at the time of such
nomination or election. “Voting
Stock”
of
a
Person means all shares of capital stock or other interests (including
partnership interests) of such Person normally entitled (without regard to
the
occurrence of any contingency within the control of such person to satisfy)
to
vote in elections of the board of directors, managers or trustees thereof.
The
“Automatic
Early Termination” provision
of Section
6(a) of
the
Agreement will not apply to MLI or to Counterparty.
Payments
on Early Termination. For
the
purpose of Section
6(e) of
the
Agreement: (i) Loss
(which
shall be determined using commercially reasonable procedures in order to produce
a commercially reasonable result) shall apply; and (ii) the Second Method shall
apply.
“Termination
Currency”
means
USD.
Tax
Representations.
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(I)
|
Payer
Representations. For
the purpose of Section 3(e) of the Agreement, each party represents
to the
other party that it is not required by any applicable law, as modified
by
the practice of any relevant governmental revenue authority, of any
Relevant Jurisdiction to make any deduction or withholding for or
on
account of any Tax from any payment (other than interest under Section
2(e), 6(d)(ii), or 6(e) of the Agreement) to be made by it to the
other
party under the Agreement. In making this representation, each party
may
rely on (i) the accuracy of any representations made by the other
party
pursuant to Section 3(f) of the Agreement, (ii) the satisfaction
of the
agreement contained in Section 4(a)(i) or 4(a)(iii) of the Agreement,
and
the accuracy and effectiveness of any document provided by the other
party
pursuant to Section 4(a)(i) or 4(a)(iii) of the Agreement, and (iii)
the
satisfaction of the agreement of the other party contained in Section
4(d)
of the Agreement; provided
that
it will not be a breach of this representation where reliance is
placed on
clause (ii) above and the other party does not deliver a form or
document
under Section 4(a)(iii) of the Agreement by reason of material prejudice
to its legal or commercial
position.
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16
Execution
Copy
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(II)
|
Payee
Representations. For
the purpose of Section 3(f) of the Agreement, each party makes the
following representations to the other
party:
|
(i) MLI
represents that it is a company organized under the laws of England
and Wales.
(ii)
MLI
represents that it is a “non-withholding foreign partnership” for United States
Federal income tax purposes and each partner of MLI is a “non-U.S. branch of a
foreign person” for purposes of section 1.1441-4(a)(3)(ii) of the United States
Treasury Regulations and a “foreign person” for purposes of section
1.6041-4(a)(4) of the United States Treasury Regulations.
(iii) MLI
represents that no partner of MLI is (i) a bank that has entered into this
Agreement in the ordinary course of its trade or business of making loans,
as
described in section 881(c)(3)(A) of the Internal Revenue Code of 1986, as
amended (the “Code”), (ii) a 10% shareholder of Counterparty within the meaning
of Code section 871(h)(3)(B), or (iii) a controlled foreign corporation with
respect to Counterparty within the meaning of Code section
881(c)(3)(C).
(iv) Counterparty
represents that it is a corporation incorporated in Delaware.
Delivery
Requirements. For
the
purpose of Sections
4(a)(i)
and
(ii)
of the
Agreement, each party agrees to deliver the following documents:
|
(a)
|
Tax
forms, documents or certificates to be
delivered are:
|
MLI
agrees to complete (accurately and in a manner reasonably satisfactory to
Counterparty),
execute, and deliver to Counterparty,
United States Internal Revenue Service Form W-8IMY and all required attachments,
or any successor of such form(s): (i) before the first payment date under this
agreement; (ii) promptly upon reasonable demand by Counterparty; and (iii)
promptly upon learning that any such Form previously provided by MLI has become
obsolete or incorrect.
Counterparty
agrees to complete (accurately and in a manner reasonably satisfactory to MLI),
execute, and deliver to MLI,
United
States Internal Revenue Service Form W-9 or W-8 BEN, or any successor of such
form(s): (i) before the first payment date under this agreement; (ii) promptly
upon reasonable demand by MLI;
and
(iii) promptly upon learning that any such form(s) previously provided by
Counterparty
has
become obsolete or incorrect.
(b) Other
documents to be delivered:
|
Party
Required to Deliver Document
|
Document
Required to be Delivered
|
When
Required
|
Covered
by Section 3(d) Representation
|
|
Counterparty
|
Evidence
of the authority and true signatures of each official or representative
signing this Confirmation
|
Upon
or before execution and delivery of this Confirmation
|
Yes
|
|
Counterparty
|
Certified
copy of the resolution of the Board of Directors or equivalent document
authorizing the execution and delivery of this Confirmation and such
other
certificate or certificates as MLI shall reasonably
request
|
Upon
or before execution and delivery of this Confirmation
|
Yes
|
|
MLI
|
Guarantee
of its Credit Support Provider, substantially in the form of Exhibit
A
attached hereto, together with evidence of the authority and true
signatures of the signatories, if applicable
|
Upon
or before execution and delivery of this Confirmation
|
No
|
17
Execution
Copy
Addresses
for Notices:
For the
purpose of Section
12(a) of
the
Agreement:
Address
for notices or communications to MLI for all purposes:
| Address: | Xxxxxxx Xxxxx International | |
| Xxxxxxx Xxxxx Financial Centre | ||
| 0 Xxxx Xxxxxx Xxxxxx | ||
| London EC1A 1HQ | ||
| Attention: | Manager, Fixed Income Settlements | |
| Facsimile No.: | 00 000 000 0000 | |
| Telephone No.: | 00 000 000 0000 |
Address
for notices or communications to Counterparty for all
purposes:
In
addition, in the case of notices or communications relating to Section 5, 6,
11
or 13 of this Agreement, a second copy of any such notice or communication
shall
be addressed to the attention of Counterparty’ General Counsel as
follows:
| Address: | 0000 Xxxxxxxx | |
| New York, NY 10018 | ||
| Attention: | General Counsel | |
| Facsimile No.: | 000-000-0000 | |
| Telephone No.: | 000-000-0000 | |
| With a copy to: | ||
| Firm: | Blank Rome LLP | |
| Address: | 000 Xxxxxxxxx Xxxxxx
Xxx
Xxxx, XX 00000
|
|
| Attention: | Xxxxxx X. Xxxxxxx, Esq. | |
| Facsimile No.: | 000-000-0000 | |
| Telephone No.: | 000-0000000 |
18
Execution
Copy
Process
Agent: For
the
purpose of Section 13(c) of the Agreement, MLI appoints as its process
agent:
| Address: | Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx Incorporated | |
| 000 Xxxxxxxx, 00xx Floor | ||
| New York, New York 10038 | ||
| Attention: | Litigation Department | |
| Counterparty does not appoint a Process Agent. | ||
Multibranch
Party. For
the
purpose of Section
10(c)
of the
Agreement: Neither MLI nor Counterparty is a Multibranch Party.
Calculation
Agent.
"Calculation Agent" means MLI, acting in good faith and in a commercially
reasonable manner.
Credit
Support Document.
MLI:
Guarantee of ML & Co. in the form attached hereto as Exhibit A.
Counterparty:
Not Applicable
Credit
Support Provider.
With
respect to MLI:
With
respect to Counterparty: Not Applicable.
Governing
Law. This
Confirmation will be governed by, and construed in accordance with, the laws
of
the State of New York.
Waiver
of Jury Trial. Each
party waives, to the fullest extent permitted by applicable law, any right
it
may have to a trial by jury in respect of any suit, action or proceeding
relating to this Transaction. Each party (i) certifies that no representative,
agent or attorney of the other party has represented, expressly or otherwise,
that such other party would not, in the event of such a suit, action or
proceeding, seek to enforce the foregoing waiver and (ii) acknowledges that
it
and the other party have been induced to enter into this Transaction, as
applicable, by, among other things, the mutual waivers and certifications
provided herein.
Netting
of Payments. The
provisions of Section
2(c) of
the
Agreement shall not be applicable to this Transaction.
Basic
Representations. Section
3(a) of
the
Agreement is hereby amended by the deletion of “and” at the end of Section
3(a)(iv); the
substitution of a semicolon for the period at the end of Section
3(a)(v) and
the
addition of Sections
3(a)(vi), as
follows:
Eligible
Contract Participant; Line of Business. Each
party agrees and represents that it is an “eligible contract participant” as
defined in Section 1 (a)(12)
of
the U.S. Commodity Exchange Act, as amended (“CEA”),
this
Agreement and the Transaction thereunder are subject to individual negotiation
by the parties and have not been executed or traded on a “trading facility” as
defined in Section 1(a)(33)
of
the CEA, and it has entered into this Confirmation and this Transaction in
connection with its business or a line of business (including financial
intermediation), or the financing of its business.
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Acknowledgements:
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(a)
|
The
parties acknowledge and agree that there are no other representations,
agreements or other undertakings of the parties in relation to this
Transaction, except as set forth in this
Confirmation.
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(b)
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The
parties hereto intend for:
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(i)
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Buyer
to be a “financial institution” as defined in Section 101(22) of Title 11
of the United States Code (the “Bankruptcy
Code”)
and this Transaction to be a “securities contract” as defined in Section
741(7) of the Bankruptcy Code and
a “swap agreement” as defined in Section 101(53C) of the Bankruptcy
Code, qualifying
for the protections of, among other sections, Sections 362(b)(6),
362
(b)(17), 546(e), 546(g), 555 and 560 of the Bankruptcy
Code;
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(ii)
|
a
party’s right to liquidate this Transaction and to exercise any other
remedies upon the occurrence of any Event of Default under the Agreement
with respect to the other party to constitute a “contractual right” as
defined in the Bankruptcy Code;
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(iii)
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all
payments for, under or in connection with this Transaction, all payments
for the Shares and the transfer
of such Shares to constitute “settlement payments” as defined in the
Bankruptcy Code.
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(c)
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The
parties acknowledge and agree that in the event of an Early Termination
Date as a result of an Event of Default that is within Counterparty’s
control, the amount payable under the Agreement will be a cash amount
calculated as described therein and that any delivery specified in
this
Transaction will no longer be
required.
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Amendment
of Section
6(d)(ii).
Section
6(d)(ii) of the Agreement is modified by deleting the words “on the day” in the
second line thereof and substituting therefor “on the day that is three Local
Business Days after the day”. Section
6(d)(ii)
is
further modified by deleting the words “two Local Business Days” in the fourth
line thereof and substituting therefor “three Local Business Days.”
Amendment
of Definition of Reference Market-Makers. The
definition of “Reference Market-Makers” in Section
14 is
hereby
amended by adding in clause (a) after the word “credit” and before the word
“and” the words “or to enter into transactions similar in nature to the
Transactions.”
Consent
to Recording. Each
party consents to the recording of the telephone conversations of trading and
marketing personnel of the parties and their Affiliates in connection with
this
Confirmation. To the extent that one party records telephone conversations
(the
“Recording Party”) and the other party does not (the “Non-Recording Party”), the
Recording Party shall in the event of any dispute, make a complete and unedited
copy of such party’s tape of the entire day’s conversations with the
Non-Recording Party’s personnel available to the Non-Recording Party. The
Recording Party’s tapes may be used by either party in any forum in which a
dispute is sought to be resolved and the Recording Party will retain tapes
for a
consistent period of time in accordance with the Recording Party’s policy unless
one party notifies the other that a particular transaction is under review
and
warrants further retention.
Disclosure.
Each
party hereby acknowledges and agrees that MLI has authorized Counterparty to
disclose this Transaction and any related hedging transaction between the
parties if and to the extent that Counterparty reasonably determines (after
consultation with MLI) that such disclosure is required by law or by the rules
of the New York Stock Exchange or any securities exchange. Notwithstanding
the
foregoing, effective from the date of commencement of discussions concerning
the
Transaction, Counterparty and each of its employees, representatives, or other
agents may disclose to any and all persons, without limitation of any kind,
the
tax treatment and tax structure of the Transaction and all materials of any
kind
(including opinions or other tax analyses) that are provided to Counterparty
relating to such tax treatment and tax structure.
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Severability.
If
any
term, provision, covenant or condition of this Confirmation, or the application
thereof to any party or circumstance, shall be held to be invalid or
unenforceable in whole or in part for any reason, the remaining terms,
provisions, covenants, and conditions hereof shall continue in full force and
effect as if this Confirmation had been executed with the invalid or
unenforceable provision eliminated, so long as this Confirmation as so modified
continues to express, without material change, the original intentions of the
parties as to the subject matter of this Confirmation and the deletion of such
portion of this Confirmation will not substantially impair the respective
benefits or expectations of parties to this Agreement; provided,
however, that
this
severability provision shall not be applicable if any provision of Section
2,
5,
6
or
13
of the
Agreement (or any definition or provision in Section
14 to
the
extent that it relates to, or is used in or in connection with any such Section)
shall be so held to be invalid or unenforceable.
Affected
Parties. For
purposes of Section
6(e) of
the
Agreement, each party shall be deemed to be an Affected Party in connection
with
Illegality and any Tax Event.
[Signatures
follow on separate page]
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Please
confirm that the foregoing correctly sets forth the terms of our agreement
by
executing the copy of this Confirmation enclosed for that purpose and returning
it to us.
Very
truly yours,
XXXXXXX
XXXXX INTERNATIONAL
By:
/s/ Xxxxxx
Xxxxxxxx
Name:
Xxxxxx Xxxxxxxx
Title:
Authorized Signatory
Confirmed
as of the date first above written:
By:
/s/ Xxxx
Xxxx
Name:
Xxxx Xxxx
Title:
Chairman, President and CEO
Acknowledged
and agreed as to matters to the Agent:
XXXXXXX
LYNCH, XXXXXX, XXXXXX & XXXXX INCORPORATED
Solely
in
its capacity as Agent hereunder
By:
/s/ Xxxxx
Xxxxxxx
Name:
Xxxxx Xxxxxxx
Title:
Authorized Signatory
Execution
Copy
EXHIBIT
A
GUARANTEE
OF XXXXXXX XXXXX & CO., INC.
FOR
VALUE
RECEIVED, receipt of which is hereby acknowledged, XXXXXXX XXXXX & CO.,
INC., a corporation duly organized and existing under the laws of the State
of
Delaware (“ML & Co.”), hereby unconditionally guarantees to Iconix Brand
Group, Inc. (the “Company”), the due and punctual payment of any and all amounts
payable by Xxxxxxx Xxxxx International, a company organized under the laws
of
England and Wales (“ML”), under the terms of the Confirmation of OTC Warrant
Transaction between the Company and ML (ML as Buyer), as amended and restated
as
of June 18, 2007 (the
“Confirmation”), including, in case of default, interest on any amount due, when
and as the same shall become due and payable, whether on the scheduled payment
dates, at maturity, upon declaration of termination or otherwise, according
to
the terms thereof. In case of the failure of ML punctually to make any such
payment, ML & Co. hereby agrees to make such payment, or cause such payment
to be made, promptly upon demand made by the Company to ML & Co.; provided,
however that delay by the Company in giving such demand shall in no event affect
ML & Co.’s obligations under this Guarantee. This Guarantee shall remain in
full force and effect or shall be reinstated (as the case may be) if at any
time
any payment guaranteed hereunder, in whole or in part, is rescinded or must
otherwise be returned by the Company upon the insolvency, bankruptcy or
reorganization of ML or otherwise, all as though such payment had not been
made.
ML
&
Co. hereby agrees that its obligations hereunder shall be unconditional,
irrespective of the validity, regularity or enforceability of the Confirmation;
the absence of any action to enforce the same; any waiver or consent by the
Company concerning any provisions thereof; the rendering of any judgment against
ML or any action to enforce the same; or any other circumstances that might
otherwise constitute a legal or equitable discharge of a guarantor or a defense
of a guarantor. ML covenants that this guarantee will not be discharged except
by complete payment of the amounts payable under the Confirmation. This
Guarantee shall continue to be effective if XX xxxxxx or consolidates with
or
into another entity, loses its separate legal identity or ceases to
exist.
ML
&
Co. hereby waives diligence; presentment; protest; notice of protest,
acceleration, and dishonor; filing of claims with a court in the event of
insolvency or bankruptcy of ML; all demands whatsoever, except as noted in
the
first paragraph hereof; and any right to require a proceeding first against
ML.
ML
&
Co. hereby certifies and warrants that this Guarantee constitutes the valid
obligation of ML & Co. and complies with all applicable laws.
This
Guarantee shall be governed by, and construed in accordance with, the laws
of
the State of New York.
This
Guarantee may be terminated at any time by notice by ML & Co. to the Company
given in accordance with the notice provisions of the Confirmation, effective
upon receipt of such notice by the Company or such later date as may be
specified in such notice; provided, however, that this Guarantee shall continue
in full force and effect with respect to any obligation of ML under the
Confirmation.
This
Guarantee becomes effective concurrent with the effectiveness of the
Confirmation, according to its terms.
Execution
Copy
IN
WITNESS WHEREOF, ML & Co. has caused this Guarantee to be executed in its
corporate name by its duly authorized representative.
XXXXXXX
XXXXX & CO., INC.
By:_________________________
Name:
Title:
Date:
