Conformed Copy
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EXHIBIT 10
STOCK OPTION AGREEMENT
This STOCK OPTION AGREEMENT dated as of March 6, 2000 is by and
between Mirage Resorts, Incorporated, a Nevada corporation (the "Company"), and
MGM Grand, Inc., a Delaware corporation (the "Grantee").
RECITALS
The Grantee, the Company and Merger Subsidiary propose to enter into
the Merger Agreement.
As a condition and inducement to the Grantee's willingness to enter
into the Merger Agreement, the Grantee has requested that the Company agree, and
the Company has agreed, to grant the Grantee the Option.
NOW, THEREFORE, in consideration of the foregoing and the respective
representations, warranties, covenants and agreements set forth herein and in
the Merger Agreement, the Company and the Grantee agree as follows:
1. Capitalized Terms. Certain capitalized terms used in this
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Agreement are defined in Annex A hereto and are used herein with the meanings
therein ascribed. Those capitalized terms used but not defined herein
(including in Annex A hereto) that are defined in the Merger Agreement are used
herein with the same meanings as ascribed to them therein; provided, however,
that, as used in this Agreement, "Person" shall have the meaning specified in
Sections 3(a)(9) and 13(d)(3) of the Exchange Act.
2. The Option.
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(a) Grant of Option. Subject to the terms and conditions set forth
herein, the Company hereby grants to the Grantee an irrevocable option to
purchase, out of the authorized but unissued Shares, 22,841,091 Shares (as
adjusted as set forth herein) (the "Option Shares"), at the Exercise Price.
(b) Exercise Price. The exercise price (the "Exercise Price") of the
Option shall be $21.00 per Option Share.
Term. The Option shall be exercisable at any time and from time to
time following the occurrence of an Exercise Event and shall remain in full
force and effect until the earliest to occur of (i) the Effective Time, (ii) the
first anniversary of the receipt by Grantee of written notice from the Company
of the occurrence of an Exercise Event and (iii) termination of the Merger
Agreement in accordance with its terms other than a termination with respect to
which an Exercise Event shall occur (the "Option Term"). If the Option is not
theretofore exercised, the rights and obligations set forth in this Agreement
shall terminate at the expiration of the Option Term. "Exercise Event" shall
mean any of the events giving rise to the obligation of the Company to pay the
Termination Fee under Section 5.11 of the Merger Agreement.
(c) Exercise of Option.
(i) The Grantee may exercise the Option, in whole or in part, at any
time and from time to time during the Option Term. Notwithstanding the
expiration of the Option Term, the Grantee shall be entitled to purchase those
Option Shares with respect to which it has exercised the Option in accordance
with the terms hereof prior to the expiration of the Option Term.
(ii) If the Grantee wishes to exercise the Option, it shall send a
written notice (an "Exercise Notice") (the date of which being herein referred
to as the "Notice Date") to the Company specifying (i) the total number of
Option Shares it intends to purchase pursuant to such exercise and (ii) a place
and a date (the "Closing Date") not earlier than three Business Days nor later
than 15 Business Days from the Notice Date for the closing of the purchase and
sale pursuant to the Option (the "Closing").
(iii) If the Closing cannot be effected by reason of the application
of any Law, Regulation or Order, the Closing Date shall be extended to the tenth
Business Day following the expiration or termination of the restriction imposed
by such Law, Regulation or Order. Without limiting the foregoing, if prior
notification to, or Authorization of, any Governmental Entity is required in
connection with the purchase of such Option Shares by virtue of the application
of such Law, Regulation or Order, the Grantee and, if applicable, the Company
shall promptly file the required notice or application for Authorization and the
Grantee, with the cooperation of the Company, shall expeditiously process the
same.
(iv) Notwithstanding Section 2(c)(iii) if the Closing Date shall not
have occurred within nine months after the related Notice Date as a result of
one or more restrictions imposed by the application of any Law, Regulation or
Order, the exercise of the Option effected on the Notice Date shall be deemed to
have expired.
(d) Payment and Delivery of Certificates.
(i) At each Closing, the Grantee shall pay to the Company in
immediately available funds by wire transfer to a bank account designated by the
Company an amount equal to the Exercise Price multiplied by the number of Option
Shares to be purchased on such Closing Date.
(ii) At each Closing, simultaneously with the delivery of immediately
available funds as provided above, the Company shall deliver to the Grantee a
certificate or certificates representing the Option Shares to be purchased at
such Closing, which Option Shares shall be duly authorized, validly issued,
fully paid and nonassessable and free and clear of all Liens, and the Grantee
shall deliver to the Company its written agreement that the Grantee will not
offer to sell or otherwise dispose of such Option Shares in violation of
applicable Law or the provisions of this Agreement.
(e) Certificates. Certificates for the Option Shares delivered at
each Closing shall be endorsed with a restrictive legend that shall read
substantially as follows:
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THE TRANSFER OF THE STOCK REPRESENTED BY THIS CERTIFICATE IS
SUBJECT TO RESTRICTIONS ARISING UNDER THE SECURITIES ACT OF 1933,
AS AMENDED, AND PURSUANT TO THE TERMS OF A STOCK OPTION AGREEMENT
DATED AS OF MARCH 6, 2000. A COPY OF SUCH AGREEMENT WILL BE
PROVIDED TO THE HOLDER HEREOF WITHOUT CHARGE UPON RECEIPT BY THE
COMPANY OF A WRITTEN REQUEST THEREFOR.
A new certificate or certificates evidencing the same number of Shares will be
issued to the Grantee in lieu of the certificate bearing the above legend, and
such new certificate shall not bear such legend, insofar as it applies to the
Securities Act, if the Grantee shall have delivered to the Company a copy of a
letter from the staff of the Securities and Exchange Commission, or an opinion
of counsel in form and substance reasonably satisfactory to the Company and its
counsel, to the effect that such legend is not required for purposes of the
Securities Act.
(f) If at the time of issuance of any Common Shares pursuant to any
exercise of the Option, the Company shall have issued any share purchase rights
or similar securities to holders of Common Shares, then each Option Share
purchased pursuant to the Option shall also include rights with terms
substantially the same as and at least as favorable to the Grantee as those
issued to other holders of Common Shares.
3. Adjustment Upon Changes in Capitalization, Etc.
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(a) In the event of any change in the Shares by reason of a stock
dividend, split-up, combination, recapitalization, exchange of shares or similar
transaction, the type and number of shares or securities subject to the Option,
and the Exercise Price therefor, shall be adjusted appropriately, and proper
provision shall be made in the agreements governing such transaction, so that
the Grantee shall receive upon exercise of the Option the same class and number
of outstanding shares or other securities or property that Grantee would have
received in respect of the Shares if the Option had been exercised immediately
prior to such event, or the record date therefor, as applicable.
(b) If any additional Shares are issued after the date of this
Agreement (other than pursuant to an event described in Section 3(a) above), the
number of Shares then remaining subject to the Option shall be adjusted so that,
after such issuance of additional Shares, such number of Shares then remaining
subject to the Option, together with shares theretofore issued pursuant to the
Option, equals 12% of the number of Shares then issued and outstanding.
(c) To the extent any of the provisions of this Agreement apply to
the Exercise Price, they shall be deemed to refer to the Exercise Price as
adjusted pursuant to this Section 3.
4. Repurchase at the Option of Grantee.
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(a) At the request of the Grantee made at any time and from time to
time after the occurrence of an Exercise Event and prior to 120 days after the
expiration of the Option Term (the "Put Period"), the Company (or any successor
thereto) shall, at the election of the Grantee (the "Put Right"), repurchase
from the Grantee (i) that portion of the Option relating to all or any part of
the Unexercised Option Shares (or as to which the Option has been exercised
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but the Closing has not occurred) and (ii) all or any portion of the Shares
purchased by the Grantee pursuant hereto and with respect to which the Grantee
then has ownership. The date on which the Grantee exercises its rights under
this Section 4 is referred to as the "Put Date." Such repurchase shall be at an
aggregate price (the "Put Consideration") equal to the sum of:
(i) the aggregate Exercise Price paid by the Grantee for any
Option Shares which the Grantee owns and as to which the Grantee is
exercising the Put Right;
(ii) the excess, if any, of the Applicable Price over the
Exercise Price paid by the Grantee for each Option Share as to which
the Grantee is exercising the Put Right multiplied by the number of
such shares; and
(iii) the excess, if any, of (x) the Applicable Price per Share
over (y) the Exercise Price multiplied by the number of Unexercised
Option Shares and Option Shares which have been exercised but with
respect to which the Closing has not yet occurred.
(b) If the Grantee exercises its rights under this Section 4, the
Company shall, within ten Business Days after the Put Date, pay the Put
Consideration in immediately available funds to an account specified by the
Grantee, and the Grantee shall promptly thereupon surrender to the Company the
Option or portion of the Option and the certificates evidencing the Shares
purchased thereunder. The Grantee shall warrant to the Company that,
immediately prior to the repurchase thereof pursuant to this Section 4, the
Grantee had sole record and Beneficial Ownership of the Option or such shares,
or both, as the case may be, and that the Option or such shares, or both, as the
case may be, were then held free and clear of all Liens.
(c) If the Option has been exercised, in whole or in part, as to any
Option Shares subject to the Put Right but the Closing thereunder has not
occurred, the payment of the Put Consideration shall, to that extent, render
such exercise null and void.
(d) Notwithstanding any provision to the contrary in this Agreement
the Grantee may not exercise its rights pursuant to this Section 4 in a manner
that would result in Total Profit of more than the Profit Cap; provided,
however, that nothing in this sentence shall limit the Grantee's ability to
exercise the Option in accordance with its terms.
5. Repurchase at the Option of the Company.
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(a) To the extent the Grantee shall not have previously exercised its
rights under Section 4, at the request of the Company made at any time after the
tenth day following the closing of the purchase and sale of any Option Shares
pursuant to Section 2 hereof and for a period ending 120-days after the
expiration of Option Term (the "Call Period"), the Company may repurchase from
the Grantee, and the Grantee shall sell, or cause to be sold, to the Company,
all (but not less than all) of the Shares acquired by the Grantee pursuant
hereto and with respect to which the Grantee has ownership at the time of such
repurchase at a price per share equal to the greater of (A) the Current Market
Price and (B) the Exercise Price per share in respect of the shares so acquired
(such price per share multiplied by the number of Shares to be
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repurchased pursuant to this Section 5 being herein called the "Call
Consideration"). The date on which the Company exercises its rights under this
Section 5 is referred to as the "Call Date."
(b) If the Company exercises its rights under this Section 5, the
Company shall, within ten Business Days pay the Call Consideration in
immediately available funds, and the Grantee shall surrender to the Company
certificates evidencing the Shares purchased hereunder, and the Grantee shall
warrant to the Company that, immediately prior to the repurchase thereof
pursuant to this Section 5, the Grantee had sole record and Beneficial Ownership
of such shares and that such shares were then held free and clear of all Liens.
(c) To the extent that the Grantee shall exercise the Option, the
Grantee shall, unless the Grantee shall exercise the Put Right or the Company
shall exercise the Call Right, retain sole ownership of the Shares so acquired
through the end of the Call Period.
(d) Notwithstanding any provision to the contrary in this Agreement,
the aggregate of the Call Consideration paid for all Option Shares shall not
exceed the Profit Cap.
6. Registration Rights.
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(a) The Company shall, if requested by the Grantee at any time and
from time to time during the Registration Period, as expeditiously as
practicable, prepare, file and cause to be made effective up to two registration
statements under the Securities Act if such registration is required in order to
permit the offering, sale and delivery of any or all Shares or other securities
that have been acquired by or are issuable to the Grantee upon exercise of the
Option in accordance with the intended method of sale or other disposition
stated by the Grantee, including, at the sole discretion of the Company, a
"shelf" registration statement under Rule 415 under the Securities Act or any
successor provision, and the Company shall use all reasonable efforts to qualify
such shares or other securities under any applicable state securities laws. The
Company shall use all reasonable efforts to cause each such registration
statement to become effective, to obtain all consents or waivers of other
parties that are required therefor and to keep such registration statement
effective for such period not in excess of 180 days from the day such
registration statement first becomes effective as may be reasonably necessary to
effect such sale or other disposition. The obligations of the Company hereunder
to file a registration statement and to maintain its effectiveness may be
suspended for one or more periods of time not exceeding 60 days in the aggregate
if the Board of Directors of the Company shall have determined in good faith
that the filing of such registration or the maintenance of its effectiveness
would require disclosure of nonpublic information that would materially and
adversely affect the Company. For purposes of determining whether two requests
have been made under this Section 6, only requests relating to a registration
statement that has become effective under the Securities Act and pursuant to
which the Grantee has disposed of all shares covered thereby in the manner
contemplated therein shall be counted. Notwithstanding any other provision of
this Section 6, any request for registration shall permit the Company, upon
notice given within 20 days of the request for registration, to repurchase from
the Grantee any shares as to which the Grantee requests registration at a price
per share equal to the Current Market Price at the date the Company notifies the
Grantee of its decision to so repurchase. The Registration Expenses shall be
for the account of the Company.
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(b) The Grantee shall provide all information reasonably requested by
the Company for inclusion in any registration statement to be filed hereunder.
Grantee shall choose the managing underwriter in any registration contemplated
by this Section 6. If during the Registration Period the Company shall propose
to register under the Securities Act the offering, sale and delivery of Shares
for cash for its own account or for any other stockholder of the Company
pursuant to a firm underwriting, it shall, in addition to the Company's other
obligations under this Section 6, allow the Grantee the right to participate in
such registration provided that the Grantee participates in the underwriting;
provided, however, that, if the managing underwriter of such offering advises
the Company in writing that in its opinion the number of Shares requested to be
included in such registration exceeds the number that can be sold in such
offering, the Company shall, after fully including therein all securities to be
sold by the Company, include the shares requested to be included therein by
Grantee pro rata (based on the number of Shares intended to be included therein)
with the shares intended to be included therein by Persons other than the
Company.
(c) In connection with any offering, sale and delivery of Shares
pursuant to a registration statement effected pursuant to this Section 6, the
Company and the Grantee shall provide each other and each underwriter of the
offering with customary representations, warranties and covenants, including
covenants of indemnification and contribution and, with respect to an
underwritten offering, enter into an underwriting agreement and other documents
in form and substance customary for transactions of such type.
7. Profit Limitation.
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(a) Notwithstanding any other provision of this Agreement in no event
shall the Grantee's Total Profit exceed the Profit Cap and, if it otherwise
would exceed such amount, (A) in connection with the Put Right or any sale to a
third party, the Grantee, at its sole election, shall either (i) deliver to the
Company for cancellation Option Shares previously purchased by Grantee, (ii) pay
cash or other consideration to the Company, (iii) reduce the amount of the fee
payable to Grantee under Section 5.11 of the Merger Agreement or (iv) undertake
any combination thereof, and (B) in connection with the Call Right, Grantee
shall deliver to the Company for cancellation Option Shares (or other securities
into which such Option Shares are converted or exchanged), in either case, so
that the Grantee's Total Profit shall not exceed the Profit Cap after taking
into account the foregoing actions.
(b) Notwithstanding any other provision of this Agreement, this Stock
Option may not be exercised for a number of Option Shares that would, as of the
Notice Date, result in a Notional Total Profit of more than the Profit Cap, and,
if exercise of the Option otherwise would exceed the Profit Cap, the Grantee, at
its sole option, may reduce the number of Option Shares as to which this Option
is being exercised, increase the Exercise Price for that number of Option Shares
set forth in the Exercise Notice so that the Notional Total Profit shall not
exceed the Profit Cap; provided, however, that nothing in this sentence shall
restrict any exercise of the Option otherwise permitted by this Section 7(b) on
any subsequent date at the Exercise Price set forth in Section 2(b) if such
exercise would not then be restricted under this Section 7(b).
(c) If an Exercise Event shall occur, the Grantee may elect, in lieu
of receiving any portion of the Termination Fee, to exercise a portion of the
Option.
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8. Listing. If the Shares or any other securities then subject to
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the Option are then listed on the NYSE, the Company, upon the occurrence of an
Exercise Event, will promptly file an application to list on the NYSE the Shares
or other securities then subject to the Option and will use all reasonable
efforts to cause such listing application to be approved as promptly as
practicable.
9. Replacement of Agreement. Upon receipt by the Company of
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evidence reasonably satisfactory to it of the loss, theft, destruction or
mutilation of this Agreement, and (in the case of loss, theft or destruction) of
reasonably satisfactory indemnification, and upon surrender and cancellation of
this Agreement, if mutilated, the Company will execute and deliver a new
Agreement of like tenor and date.
10. Miscellaneous.
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(a) Expenses. Except as otherwise provided in the Merger Agreement or
as otherwise expressly provided herein, each of the parties hereto shall bear
and pay all costs and expenses incurred by it or on its behalf in connection
with the transactions contemplated hereunder, including fees and expenses of its
own financial consultants, investment bankers, accountants and counsel.
(b) Waiver and Amendment. Any provision of this Agreement may be
waived at any time by the party that is entitled to the benefits of such
provision. This Agreement may not be modified, amended, altered or supplemented
except upon the execution and delivery of a written agreement executed by the
parties hereto.
(c) Entire Agreement; No Third Party Beneficiary; Severability.
Except as otherwise set forth in the Merger Agreement, this Agreement (including
the Merger Agreement and the other documents and instruments referred to herein
and therein) (i) constitutes the entire agreement and supersedes all prior
agreements and understandings, both written and oral, between the parties with
respect to the subject matter hereof and (ii) is not intended to confer upon any
Person other than the parties hereto any rights or remedies hereunder.
(d) Severability. If any term or other provision of this Agreement is
invalid, illegal or incapable of being enforced by any rule of law or public
policy, all other conditions and provisions of this Agreement shall nevertheless
remain in full force and effect so long as the economic or legal substance of
the transactions contemplated hereby is not affected in any manner materially
adverse to any party. Upon such determination that any term or other provision
is invalid, illegal or incapable of being enforced, the parties hereto shall
negotiate in good faith to modify this Agreement so as to effect the original
intent of the parties as closely as possible in an acceptable manner to the end
that transactions contemplated hereby are fulfilled to the extent possible.
(e) Governing Law. This Agreement shall be governed by, and construed
in accordance with, the Laws of the State of Nevada, regardless of the Laws that
might otherwise govern under applicable principles of conflicts of law.
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(f) Descriptive Headings. The descriptive headings contained herein
are for convenience of reference only and shall not affect in any way the
meaning or interpretation of this Agreement.
(g) Notices. All notices and other communications hereunder shall be
in writing and shall be deemed given if delivered personally, telecopied (with
confirmation) or mailed by registered or certified mail (return receipt
requested) to the parties at the following addresses or sent by electronic
transmission to the telecopier number specified below:
If to the Company to:
Mirage Resorts, Incorporated
0000 Xxx Xxxxx Xxxxxxxxx Xxxxx
Xxx Xxxxx, Xxxxxx 00000
Telecopy: (000) 000-0000
Attention: Xxxxx Xxxxx, Esq.
with a copy to:
Wachtell, Lipton, Xxxxx & Xxxx
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopy: (000) 000-0000
Attention: Xxxxxx X. Xxxx, Esq.
If to Grantee to:
MGM Grand, Inc.
0000 Xxx Xxxxx Xxxxxxxxx Xxxxx
Xxx Xxxxx, Xxxxxx 00000
Telecopy: (000) 000-0000
Attention: Xxxxx Xxxxxxxx
with a copy to:
Christensen, Miller, Fink, Jacobs, Xxxxxx, Weil & Xxxxxxx,
LLP
2121 Avenue of the Stars
Xxxxxxxxxx Xxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000-0000
Telecopy: (000) 000-0000
Attention: Xxxx X. Xxxxxx, Esq.
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(h) Counterparts. This Agreement and any amendments hereto may be
executed in counterparts, each of which shall be deemed an original and all of
which taken together shall constitute but a single document.
(i) Assignment. Neither this Agreement nor any of the rights,
interests or obligations hereunder or under the Option shall be sold, assigned
or otherwise disposed of or transferred by either of the parties hereto (whether
by operation of law or otherwise) without the prior written consent of the other
party, except that the Grantee may assign this Agreement to a wholly owned
Subsidiary of the Grantee; provided, however, that no such assignment shall have
the effect of releasing the Grantee from its obligations hereunder. Subject to
the preceding sentence, this Agreement shall be binding upon, inure to the
benefit of and be enforceable by the parties and their respective successors and
assigns.
(j) Further Assurances. In the event of any exercise of the Option by
the Grantee, the Company and the Grantee shall execute and deliver all other
documents and instruments and take all other action that may be reasonably
necessary in order to consummate the transactions provided for by such exercise.
(k) Specific Performance. The parties hereto hereby acknowledge and
agree that the failure of any party to this Agreement to perform its agreements
and covenants hereunder will cause irreparable injury to the other party to this
Agreement for which damages, even if available, will not be an adequate remedy.
Accordingly, each of the parties hereto hereby consents to the granting of
equitable relief (including specific performance and injunctive relief) by any
court of competent jurisdiction to enforce any party's obligations hereunder.
The parties further agree to waive any requirement for the securing or posting
of any bond in connection with the obtaining of any such equitable relief and
that this provision is without prejudice to any other rights that the parties
hereto may have for any failure to perform this Agreement.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed by their respective authorized officers as of the day and year
first above written.
MGM GRAND, INC.
/s/ Xxxxx X. Xxxxxx
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Name: Xxxxx X. Xxxxxx
Title: President and Chief Financial Officer
MIRAGE RESORTS, INCORPORATED
/s/ Xxxxxxx X. Xxxx
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Name: Xxxxxxx X. Xxxx
Title: Chairman, President and
Chief Executive Officer
[Signature Page to Stock Option Agreement]
ANNEX A
SCHEDULE OF DEFINED TERMS
The following terms when used in the Stock Option Agreement shall have
the meanings set forth below unless the context shall otherwise require:
"Agreement" shall mean this Stock Option Agreement.
"Applicable Price" means the highest of (i) the highest purchase price
per share paid pursuant to a third party's tender or exchange offer made for
Shares after the date hereof and on or prior to the Put Date, (ii) the price per
share to be paid by any third Person for Shares pursuant to an agreement for a
Business Combination Transaction entered into on or prior to the Put Date, and
(iii) the Current Market Price. If the consideration to be offered, paid or
received pursuant to either of the foregoing clauses (i) or (ii) shall be other
than in cash, the value of such consideration shall be determined in good faith
by an independent nationally recognized investment banking firm jointly selected
by the Grantee and the Company, which determination shall be conclusive for all
purposes of this Agreement.
"Authorization" shall mean any and all permits, licenses,
authorizations, orders certificates, registrations or other approvals granted by
any Governmental Entity.
"Beneficial Ownership," "Beneficial Owner" and "Beneficially Own"
shall have the meanings ascribed to them in Rule 13d-3 under the Exchange Act.
"Business Combination Transaction" shall mean (i) a consolidation,
exchange of shares or merger of the Company with any Person, other than the
Grantee or one of its subsidiaries, and, in the case of a merger, in which the
Company shall not be the continuing or surviving corporation, (ii) a merger of
the Company with a Person, other than the Grantee or one of its Subsidiaries, in
which the Company shall be the continuing or surviving corporation but the then
outstanding Shares shall be changed into or exchanged for stock or other
securities of the Company or any other Person or cash or any other property or
the shares of Company Common Stock outstanding immediately before such merger
shall after such merger represent less than 70% of the common shares and common
share equivalents of the Company outstanding immediately after the merger or
(iii) a sale, lease or other transfer of all or substantially all the assets of
the Company to any Person, other than the Grantee or one of its Subsidiaries.
"Business Day" shall mean a day other than Saturday, Sunday or a
federal holiday.
"Call Consideration" shall have the meaning ascribed to such term in
Section 5 herein.
"Call Date" shall have the meaning ascribed to such term in Section 5
herein.
"Call Period" shall have the meaning ascribed to such term in Section
5 herein.
"Closing" shall have the meaning ascribed to such term in Section 2
herein.
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"Closing Date" shall have the meaning ascribed to such term in Section
2 herein.
"Current Market Price" shall mean, as of any date, the average of the
closing prices (or, if such securities should not trade on any trading day, the
average of the bid and asked prices therefor on such day) of the Shares as
reported on the New York Stock Exchange Composite Tape during the ten
consecutive trading days ending on (and including) the trading day immediately
prior to such date or, if the Shares are not quoted thereon, on The Nasdaq Stock
Market or, if the Shares are not quoted thereon, on the principal trading market
(as defined in Regulation M under the Exchange Act) on which such shares are
traded as reported by a recognized source during such ten Business Day period.
"Exercise Event" shall have the meaning ascribed to such term in
Section 2(c).
"Exercise Notice" shall have the meaning ascribed to such term in
Section 2(d) herein.
"Exercise Price" shall have the meaning ascribed to such term in
Section 2 herein.
"Law" shall mean all laws, statutes and ordinances of the United
States, any state of the United States, any foreign country, any foreign state
and any political subdivision thereof, including all decisions of Governmental
Entities having the effect of law in each such jurisdiction.
"Lien" shall mean any mortgage, pledge, security interest, adverse
claim, encumbrance, lien or charge of any kind (including any agreement to give
any of the foregoing), any conditional sale or other title retention agreement,
any lease in the nature thereof or the filing of or agreement to give any
financing statement under the Laws of any jurisdiction.
"Merger Agreement" shall mean that certain Agreement and Plan of
Merger dated as of the date hereof among the Company, Grantee and Merger
Subsidiary.
"Notice Date" shall have the meaning ascribed to such term in Section
2 herein.
"Notional Total Profit" shall mean, with respect to any number of
Option Shares as to which the Grantee may propose to exercise the Option, the
Total Profit determined as of the date of the Exercise Notice assuming that the
Option were exercised on such date for such number of Option Shares and assuming
such Option Shares, together with all other Option Shares held by the Grantee
and its Affiliates as of such date, were sold for cash at the closing market
price for the Shares as of the close of business on the preceding trading day
(less customary brokerage commissions) and including all amounts theretofore
received or concurrently being paid to the Grantee pursuant to clauses (i), (ii)
and (iii) of the definition of Total Profit.
"Option" shall mean the option granted by the Company to Grantee
pursuant to Section 2 herein.
"Option Shares" shall have the meaning ascribed to such term in
Section 2 herein.
A-2
"Option Term" shall have the meaning ascribed to such term in Section
2 herein.
"Order" shall mean any judgment, order or decree of any Governmental
Entity.
"Profit Cap" shall mean $140 million.
"Put Consideration" shall have the meaning ascribed to such term in
Section 4 herein.
"Put Date" shall have the meaning ascribed to such term in Section 4
herein.
"Put Period" shall have the meaning ascribed to such term in Section 4
herein.
"Put Right" shall have the meaning ascribed to such term in Section 4
herein.
"Registration Expenses" shall mean the expenses associated with the
preparation and filing of any registration statement pursuant to Section 6
herein and any sale covered thereby (including any fees related to blue sky
qualifications and filing fees in respect of the National Association of
Securities Dealers, Inc.), but excluding underwriting discounts or commissions
or brokers' fees in respect to shares to be sold by the Grantee and the fees and
disbursements of the Grantee's counsel.
"Registration Period" shall mean the period of two years following the
first exercise of the Option by the Grantee.
"Regulation" shall mean any rule or regulation of any Governmental
Entity having the effect of Law or of any rule or regulation of any self-
regulatory organization, such as the NYSE.
"Total Profit" shall mean the aggregate (before income taxes) of the
following: (i) all amounts to be received by the Grantee or concurrently being
paid to the Grantee pursuant to Section 4 for the repurchase of all or part of
the unexercised portion of the Option, (ii) (A) the amounts to be received by
the Grantee or concurrently being paid to the Grantee pursuant to the sale of
Option Shares (or any other securities into which such Option Shares are
converted or exchanged), including sales made pursuant to a registration
statement under the Securities Act or any exemption therefrom, less (B)
aggregate Exercise Price paid by the Grantee for such Option Shares and (iii)
all amounts received by the Grantee from the Company or concurrently being paid
to the Grantee pursuant to Section 5.11 of the Merger Agreement.
"Unexercised Option Shares" shall mean, from and after the Exercise
Date until the expiration of the Option Term, those Option Shares as to which
the Option remains unexercised from time to time.
A-3
