Exhibit 5
BT REFERENCE NO.: NY-4913
THIS OPTION AGREEMENT (the "Agreement") dated as of Janu-
ary 29,1997 is made by and between GOTHAM PARTNERS II, L.P.
(the "Buyer") and BANKERS TRUST COMPANY, LONDON BRANCH, (the
"Seller" or "BTCO").
1. PURPOSE; PAYMENTS
(a) In consideration of the payment by the Buyer to the
Seller of a Premium (all capitalized terms used herein without
definition shall have the respective meanings assigned to such
terms in Section 2) of USD 29,567.00 for value February 3, 1997
(to Seller's Account specified below), the Seller hereby grants
to the Buyer a cash-settled call option (the "Option") with
respect to 6,850 shares (the "Shares") of the common stock
("Stock") of First Union Real Estate Investments (the
"Issuer"). The Option is exercisable by the Buyer between the
hours of 9;00 A.M. and 12:00 P.M., New York City time, on any
Business Day during the Exercise Period upon notice given in
writing, or telephonically, confirmed in writing, to the
Seller. The Seller shall deem this Option to have been auto-
matically exercised on the Expiration Date if the Option is
"in-the-money" (as defined below) at the close of trading on
the Stock Exchange, unless the Seller receives notification to
the contrary from the Buyer before 1:00 P.M., New York City
time on the Expiration Date. For purposes of this Option, the
Option shall be deemed "in-the-money" if, at the time of the
determination, the Valuation Price exceeds the Exercise Price.
(b) Upon exercise of this Option, the Seller shall pay to
the Buyer an amount (the "Settlement Amount") equal to the pro-
duct of (1) the excess, if any, of the Valuation Price over the
Exercise Price and (2) the number of Shares. Settlement of
this Option shall be by cash payment only, and the Settlement
Amount shall be due and payable on the date (the "Settlement
Date") which is three Banking Days after the Exercise Date.
2. DEFINITIONS
"Banking Day" shall mean any day which is both (1) a day
other than a Saturday, Sunday or other day on which banks in
New York or London are authorized or required under applicable
law to remain closed and (2) an Exchange Business Day.
"Buyers Account" shall mean the account of Gotham Partners
II, L.P. which account details are to be provided by the Buyer
to the Seller in writing as soon as possible as the Seller will
otherwise be unable to make any payments to Buyer.
"Calculation Agent" shall mean BTCO.
"Exchange Business Day" shall mean a day other than a Sat-
urday or Sunday on which exchanges are open for the trading of
securities in New York and for the trading of options or
futures relating to the Stock in Chicago.
"Expiration Date" shall mean February 13, 1998.
"Exercise Date" shall mean the day, during the Exercise
Period, if any, on which the Option is or is deemed exercised.
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"Exercise Period" shall mean the period from and including
January 29, 1997 to and including the Expiration Date.
"Exercise Price" shall mean $10.80, subject to adjustment
as specified in Section 6.
"Premium" shall mean the amount specified in Section 1(a)
hereof as payable by the Buyer to the Seller as Consideration
for this Option.
"Seller's Termination Amount" shall have the meaning
specified in Exhibit A.
"Settlement Date" shall have the meaning set forth in Sec-
tion 1(b).
"Stock Exchange" shall mean the New York Stock Exchange.
"U.S. Dollar" and "$" shall mean the lawful currency of
the United States of America.
"Valuation Dates" means each of the first ten Banking Days
during the Valuation Period on which there is no Market Disrup-
tion Event, subject to the provisions of Section 7 hereof.
"Valuation Period" means (i) with respect to any Exercise
Date up to, and including the 10th Exchange Business Day prior
to the Expiration Date, each of the ten (10) Exchange Business
Days from and including that Exercise Date, and (ii) with
respect to any other Exercise Date, each of the ten (10)
Exchange Business Days prior to and including the Expiration
Date.
"Valuation Price" shall mean the arithmetic average or the
closing price for one share of Stock (as determined by the Cal-
culation Agent), as calculated and published by the Stock
Exchange, on each of the Valuation Dates.
3. REPRESENTATIONS AND WARRANTIES
(a) The Seller hereby represents and warrants to the
Buyer as follows:
(i) it is a corporation duly organized and validly
existing under the laws of the jurisdiction of its incorpora-
tion;
(ii) neither the execution and delivery of this
Agreement, nor the consummation of the transactions contem-
plated hereby, nor the performance of its obligations hereunder
violates (i) any law, regulation, decree or other legal re-
striction applicable to it, (ii) its charter, by-laws or other
constitutional documents or (iii) any material instrument or
agreement to which it or any of its assets is subject or by
which it is bound;
(iii) there is no legal requirement of any govern-
mental authority (including any requirement to make any decla-
ration, filing or registration or to obtain any consent,
approval, license or order) which is necessary to be met in
connection with its execution, delivery or performance of this
Agreement (any such legal requirement being herein called a
"Legal Requirement");
(iv) this Agreement has been duly authorized, exe-
cuted and delivered on its behalf and constitutes its legal,
valid and binding obligation, enforceable against it in accor-
dance with its terms
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except as such enforceability may be limited by bankruptcy,
insolvency or other laws of general applicability relating to
or affecting the rights of creditors and by general equitable
principles;
(v) no Event of Default (as defined in Section 5),
and no condition, event or act which with notice or the lapse
of time, or both, would constitute an Event of Default has
occurred and is continuing or will occur by reason of its
entering into or performing its obligations under this Agree-
ment; and
(vi) it is not on the date of execution of this
Agreement required to deduct or withhold any Taxes (as defined
in Section 8) with respect to any payment which is or could be
required to be made by it pursuant to this Agreement.
(b) The Buyer represents and warrants to the Seller as
follows:
(i) it is a sophisticated institutional investor
and is purchasing the Option for its own account for investment
and not with a view to any distribution or any other disposi-
tion thereof;
(ii) in the normal course of its business, the
Buyer invests in and purchases securities similar to the
Option;
(iii) the Buyer has had access to such information
concerning the Option and the Seller as it has requested and
has such knowledge and experience as to be able to evaluate the
merits and risks of purchasing the Option;
4. COVENANTS
The Seller hereby covenants and agrees that it will use
reasonable efforts to comply in all material respects with all
Legal Requirements which may arise from time to time after the
date of the Agreement if failure so to comply would materially
impair its ability to perform its obligations under this Agree-
ment.
5. EVENTS OF DEFAULT
(a) Each of the following events shall constitute an
Event of Default:
(i) the Seller shall fail to pay when due any
amount due and owing under this Agreement and such failure
shall continue for three Banking Days after receipt of notice
of such failure from the Buyer;
(ii) the Seller shall fail to perform, observe or
comply with any other term, covenant, condition or provision
contained in this Agreement and such failure shall continue for
30 days after receipt of notice of such failure from the Buyer;
(iii) any representation or warranty of the Seller
shall prove to have been incorrect or misleading in any mate-
rial respect when made or repeated or deemed to have been made
or repeated;
(iv) the occurrence of any event of default in
respect of the Seller under any other option agreement with the
Buyer or any affiliates of the Buyer;
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BT REFERENCE NO.: NY-4913
(v) (1) the occurrence or existence of any event
or condition in respect of the Seller under one or more agree-
ments or instruments relating to indebtedness for borrowed
money (excluding obligations in respect of deposits received in
the ordinary course of business) in an aggregate amount of not
less than 3% of the Seller's stockholders' equity as at the end
of its last fiscal year (the "Threshold Amount") which has
resulted in such indebtedness becoming, or becoming capable at
such time of being declared, due and payable under such agree-
ments or instruments, before it would otherwise have been due
and payable or (2) the failure by such party to make one or
more payments at maturity in an aggregate amount of not less
than the Threshold Amount under such agreements or instruments
(after giving effect to any applicable grace period);
(vi) the Seller (1) is dissolved; (2) becomes
insolvent or fails or is unable or admits in writing its
inability generally to pay its debts as they become due; (3)
makes a general assignment, arrangement or composition with or
for the benefit of its creditors; (4) institutes or has insti-
tuted against it a proceeding seeking a judgment of insolvency
or bankruptcy or any other relief under any bankruptcy or in-
solvency law or other similar law affecting creditors' rights,
or a petition is presented for the winding-up or liquidation of
the party and, in the case of any such proceeding or petition
instituted or presented against it, such proceeding or petition
(A) results in a judgment of insolvency or liquidation of the
party or (B) is not dismissed, discharged, stayed or restrained
in each case within 30 days of the institution or presentation
thereof; (5) has a resolution passed for its winding-up or
liquidation; (6) seeks or becomes subject to the appointment of
an administrator, receiver, trustee, custodian or other similar
official for it or for all or substantially all its assets
(regardless of how brief such appointment may be, or whether
any obligations are promptly assumed by another entity or
whether any other event described in this clause (6) has
occurred and is continuing); (7) any event occurs with respect
to the Seller which, under the applicable laws of any jurisdic-
tion, has an analogous effect to any of the events specified in
clauses (1) to (6) (inclusive); or (8) takes any action in fur-
therance of, or indicating its consent to, approval of, or
acquiescence in, any of the foregoing acts; other than in the
case of clause (1) or (5) or, to the extent it relates to those
clauses, clause (8), for the purpose of a consolidation, amal-
gamation or merger which would not constitute an event
described in (vii) below; or
(vii) the Seller consolidates or amalgamates with,
or merges with or transfers all or substantially all its assets
to, another entity and (1) at the time of such consolidation,
amalgamation, merger or transfer the resulting, surviving or
transferee entity fails to assume all the obligations of the
Seller under this Agreement by operation of law or pursuant to
an agreement reasonably satisfactory to the Buyer or (2) the
creditworthiness of the resulting, surviving or transferee
entity is materially weaker than that of the Seller immediately
prior to the taking of such action.
(b) If any Event of Default shall have occurred and be
continuing, the Buyer shall have the right to terminate this
Agreement by the giving of a notice declaring such termination
and specifying the Banking Day on which such early termination
shall occur (the "Early Termination Date"). Notwithstanding
the foregoing, if an Event of Default specified in clause (vi)
of Section 5(a) shall have occurred, the date of the occurrence
of such Event of Default shall be deemed to be an Early Termi-
nation Date without any action or notice from the Buyer.
(c) If this Agreement shall have been terminated pursuant
to the provisions of Section 5(b), on the Early Termination
Date (or, in the case of the deeming of an Early Termination
Date pursuant to the last sentence of Section 5(b), on demand
thereafter) the Seller shall pay to the Buyer the Seller's Ter-
mination Amount determined as set forth in Exhibit A plus any
amounts then due and payable hereunder by the Seller to the
Buyer (with interest as provided in Section 12, if applicable).
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(d) The parties agree that the amounts recoverable pursu-
ant to Section 5(c) are reasonable pre-estimates of loss and
are not penalties. Such amounts are payable as liquidated dam-
ages for the loss of a bargain and the loss of protection
against future risks and, without prejudice to the rights and
remedies of either party in respect of any other breach of this
Agreement or as otherwise specified herein, the Buyer shall not
be entitled to recover any additional damages hereunder as a
consequence of such losses.
(e) The Seller shall indemnify and hold harmless the
Buyer on demand from and against all legal fees and other out-
of-pocket expenses incurred by the Buyer in enforcing its
rights hereunder or as the result of the occurrence of an Early
Termination Date.
6. ORDINARY CASH DIVIDEND AND ANTI-DILUTION ADJUSTMENTS
All adjustments to be made by the Calculation Agent pursuant to
these Ordinary Cash Dividend and Anti-Dilution Adjustments pro-
visions will be subject to agreement by Buyer. In the event
that Buyer disagrees with any such adjustment (and notifies the
Seller of such disagreement on or before the relevant Exercise
Date), each of the Buyer and Seller will select a Reference
Market-maker to act as alternate Calculation Agent with respect
to such adjustment and each of those alternate Calculation
Agents will, independently of Buyer and Seller, select a third
Reference Market-maker to act as alternate Calculation Agent
with respect to such adjustment and the joint determination of
these three alternate Calculation Agents with respect to such
adjustment shall be binding in the absence of manifest error.
"Reference Market-maker" means a leading dealer in the
relevant market selected by a party from among dealers of
the highest credit standing which satisfy all the criteria
that such party applies generally at the time in deciding
whether to offer or to make an extension of credit.
In the event that, with respect to an Exercise Date, more than
one of the events described below has occurred during the
period from the Trade Date through, and including, the relevant
Exercise Date, the settlement terms of this Transaction shall
be adjusted as necessary to preserve the economic equivalent of
this Transaction including, without limitation, these adjust-
ment provisions, as it existed immediately prior to the occur-
rence of such events.
(a) Ordinary Cash Dividend Adjustments
On the Exercise Date, the Exercise Price shall be subject
to adjustment as follows:
If, Aggregate Dividends for the relevant Dividend
Period is greater than or equal to the relevant Divi-
dend Strike, the Exercise Price shall be decreased by
an amount equal to the Aggregate Dividend minus the
Dividend Strike,
If, Aggregate Dividends for the relevant Dividend
Period is less than the relevant Dividend Strike, the
Exercise Price shall be increased by an amount equal
to the Dividend Strike minus the Aggregate Dividend.
"DIVIDEND STRIKE" means, with respect to the
Exercise Date, the Dividend Strike specified in
the table below for period in which the Exercise
Date occurs:
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BT REFERENCE NO.: NY-4913
EXERCISE DATE
DIVIDEND FROM, BUT TO, AND
STRIKE EXCLUDING INCLUDING
$0.11 1/29/97 5/16/97
$0.22 5/15/97 8/15/97
$0.33 8/15/97 11/15/97
$0.44 11/15/97 2/2/98
"AGGREGATE DIVIDENDS" means, with respect to the
Dividend Period, the amount equal to the sum of
the USD values of all ordinary cash dividends
per share which are declared by the issuer dur-
ing the Dividend Period, provided that an ex-
dividend date with respect to such shares occurs
during the Dividend Period.
"DIVIDEND PERIOD" means, with respect to the
Exercise Date, the period from, but excluding,
the Trade Date to, and including the Exercise
Date.
(b) Anti-Dilution Adjustments
The Exercise Price, the Dividend Strike, and the number of
Shares subject to this Option shall be subject to adjustment as
follows:
(a) If prior to the Exercise Date any adjustment is made
by the Options Clearing Corporation or its successors ("OCC")
in the terms of outstanding OCC-issued options ("OCC Options")
on the Stock, an equivalent adjustment shall be made by the
Calculation Agent in the terms of this Option. Except as pro-
vided below, no adjustment shall be made in the terms of this
Option for any event that does not result in an adjustment to
the terms of such outstanding OCC Options. Without limiting
the generality of the foregoing, other than pursuant to the
Ordinary Cash Dividend Adjustments provision above, NO ADJUST-
MENT SHALL BE MADE IN THE TERMS OF THIS OPTION FOR ORDINARY
CASH DIVIDENDS. For indicative purposes, a summary of the terms
under which adjustments may be made by the OCC as in effect on
the date hereof is set forth below:
(i) Whenever there is a stock dividend, stock dis-
tribution, stock split, reverse stock split, rights offering,
distribution, reorganization, recapitalization, reclassifica-
tion, extraordinary cash dividend or similar event in respect
of the Stock, or a merger, consolidation, dissolution or liqui-
dation of the Issuer, the number of option contracts, the unit
of trading, the exercise price and the underlying amount of
Stock, or any of them, with respect to all outstanding option
contracts open for trading in the Stock may be adjusted.
(ii) All adjustments are made by the Securities
Committee of the OCC. The Securities Committee determines
whether to make adjustments to reflect particular events in
respect of the Stock, and the nature and extent of any such
adjustment, based on its judgement as to what is appropriate
for the protection of investors and the public interest, taking
into account such factors as fairness to holders and writers of
option contracts on the Stock, the maintenance of a fair and
orderly market in options on the Stock, consistency of inter-
pretation and practice, efficiency of exercise settlement pro-
cedures and the coordination with other clearing agencies of
the clearance and settlement of transactions in the Stock.
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(iii) In the case of a stock dividend, stock distri-
bution or stock split whereby one or more whole numbers of
shares are issued with respect to each outstanding share, each
option contract covering that share shall be increased by the
same number of additional option contracts as the number of
shares issued with respect to each share, the exercise price
per share in effect immediately prior to such event shall be
proportionately reduced, and the unit of trading shall remain
the same.
(iv) In the case of a stock dividend, stock distri-
bution or stock split whereby other than a whole number of
shares is issued in respect of each outstanding share, the
exercise price in effect immediately prior to such event shall
be proportionately reduced, and conversely, in the case of a
reverse stock split or combination of shares, the exercise
price in effect immediately prior to such event shall be pro-
portionately increased. Whenever the exercise price with
respect to an option contract has been reduced or increased,
the unit of trading shall be proportionately increased or
reduced, as the case may be.
(v) In the case of any distribution made with
respect to shares, other than cash dividends and other than
distributions for which adjustments are provided in subsections
(iii) or (iv) above, if an adjustment is determined by the
Securities Committee to be appropriate, (i) the exercise price
in effect immediately prior to such event shall be reduced by
the value per share of the distributed property, in which event
the unit of trading shall not be adjusted, or (ii) the unit of
trading in effect immediately prior to such event shall be
adjusted so as to include the amount of property distributed
with respect to the number of shares represented by such unit
of trading, in which event the exercise price shall not be
adjusted.
(vi) In the case of any event for which adjustment
is not provided in any of the foregoing paragraphs, the Securi-
ties Committee may make such adjustments, if any, it determines
to be reasonable under the circumstances.
(vii) Adjustments shall as a general rule become
effective on the "ex-date" established by the principal stock
exchange or market on which the Shares are open for trading.
(viii) All adjustments of the exercise price of an
outstanding option contract shall be rounded to the nearest 1/8
of a dollar, and all adjustments of the unit of trading shall
be rounded down to eliminate any fraction, and if the unit of
trading is rounded down to eliminate a fraction, the adjusted
exercise price shall be further adjusted, to the nearest 1/8 of
a dollar, to reflect any diminution in the value of the option
contract resulting from the elimination of the fraction.
(b) If at any time prior to the Exercise Date there shall
be no outstanding OCC Options on Stock, and an event shall
occur for which an adjustment might have been required under
the By-laws, Rules and stated policies of OCC applicable to the
adjustment of OCC Options, as described above (the "OCC Adjust-
ment Rules"), the Calculation Agent shall determine, in its
sole discretion, but applying the principles set forth in the
OCC Adjustment Rules then in effect, whether to adjust the
terms of this Option, and the nature of any such adjustment.
(c) The Calculation Agent shall notify the Buyer/Seller
of any adjustment pursuant to this Section 6 and the date of
its effectiveness.
(d) The Calculation Agent is not obligated to verify
whether the prerequisites for an adjustment pursuant to this
Section 6 exist or whether such adjustment has been correctly
calculated or
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whether the date of effectiveness has been correctly fixed. In
this connection, the Calculation Agent does not assume any
liability of any nature.
(e) Upon the consummation of a Merger Event in respect of
the Shares (as defined below), the Calculation Agent shall make
such adjustments (including, without limitation, cancelation
and payment) to this Option as it, in its sole discretion,
deems appropriate. "Merger Event" means, in respect of the
Shares, as of the date upon which holders become bound to
transfer such Shares held by them, any (i) reclassification or
change of such Shares (other than a change in par value, if
any, as a result of a subdivision or combination), (ii) con-
solidation, amalgamation or merger of the issuer of the rel-
evant Shares with or into another corporation (other than a
consolidation, amalgamation or merger in which that issuer of
Shares is the continuing corporation and which does not result
in any such reclassification or change of Shares) or (iii)
other takeover offer for such Shares that results in a transfer
of all such Shares (other than the Shares owned or controlled
by the offeror) on or before the Expiration Date.
7. VALUATION; MARKET DISRUPTION EVENTS
(a) If, in the opinion of the Calculation Agent, a Market
Disruption Event (as defined below) has occurred and is con-
tinuing on any Banking Day during the Valuation Period, then
such day shall not be deemed to be a Valuation Date provided,
however, that if there have been five such days on which Market
Disruption Events have occurred, then, notwithstanding such
Market Disruption Event, such day shall be deemed to be a Valu-
ation Date and the Calculation Agent shall determine the price
of one Share as of the normal closing time for the Stock
Exchange to be the price announced at such time by the Stock
Exchange (or, if trading in the Shares has been materially lim-
ited, its good faith estimate of the closing price for one
Share on the Stock Exchange that would have prevailed on such
date but for the Market Disruption Event). The Calculation
Agent shall use its reasonable efforts to give notice to the
Seller and the Buyer that a Market Disruption Event has
occurred.
(b) "Market Disruption Event" means the occurrence or
continuance on any Exchange Business Day of any suspension of
or limitation imposed on trading (by reason of movements in
price exceeding limits permitted by the relevant exchange or
otherwise) (i) on the Stock Exchange, in the Shares or securi-
ties generally or (ii) on the primary options exchange on which
options on the Shares are traded, in such options, in each case
if, in the determination of the Calculation Agent, such suspen-
sion or limitation is material.
8. TAXATION; ILLEGALITY
(a) All payments hereunder shall be made free and clear
of and without deduction or withholding for any Taxes (as here-
inafter defined) whatsoever. If applicable law should require
that any payment due from the Seller hereunder be subject to
withholding with respect to any Taxes whatsoever, the Seller
will, to the full extent then permitted by law, pay (i) the
full amount of such Taxes required to be deducted or withheld
(including the full amount required to be deducted or withheld
from any additional amounts paid pursuant to this Section 8(a))
and (ii) such additional amounts as may be necessary in order
that every net payment to the Buyer of all amounts due and
owing hereunder will not be less than the full amount the Buyer
would have received had no such deduction or withholding been
required. The Seller will furnish to the Buyer within 30 days
after the date on which the payment of any Taxes is due pursu-
ant to applicable law a written statement or other evidence
sufficient to document the fact and amount of withholding by
the Seller. As used in this Section 8, "Taxes" means any
present or future taxes, levies, duties, charges, fees, deduc-
tions or witholdings of any nature now or hereafter
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imposed, levied, collected, withheld or assessed by any taxing
authority whatsoever and all interest penalties and other similar
liabilities with respect thereto, other than (A) taxes in respect
of the overall net income of the payee imposed by the jurisdic-
tion in which its principal office is located or the jurisdic-
tion in which the relevant payment is received or (B) taxes
imposed as a result of such recipient being or having been a
citizen or resident of the jurisdiction of the government or
taxing authority imposing such tax, or being or having been
organized, present or engaged in a trade or business in such
jurisdiction, or having or having had a permanent establishment
or fixed place of business in such jurisdiction, but excluding
a connection arising solely from such recipient having exe-
cuted, delivered, performed its obligations or received a pay-
ment under, or enforced, this Agreement or any similar agree-
ment with the Seller.
(b) In the event that the Seller (i) is obligated at any
time to make any payment of additional amounts pursuant to this
Section 8 or (ii) shall have determined that its performance
under this Agreement shall have become unlawful in whole or in
part as a result of compliance in good faith by the Seller with
any applicable present or future law, rule, regulation, judg-
ment, order or directive of any governmental, administrative,
legislative or judicial authority, then the Seller shall give
notice thereof to the Buyer, and the parties hereto shall
thereupon promptly negotiate in good faith with a view to find-
ing a satisfactory alternative method of payment or performance
to avoid such illegality or such payment of additional amounts.
If at the end of a period of 30 days after the giving of such
notice (or such shorter period as may be reasonable under the
circumstances then prevailing) the parties have not agreed upon
such a satisfactory alternative method, either party may termi-
nate this Agreement within 30 days thereafter by designating an
Early Termination Date and otherwise following the procedures
for termination set forth in Section 5.
(c) If either party is required at any time to execute
any form of document in order for payments to it hereunder to
qualify for exemption from withholding tax or for withholding
tax at a reduced rate, such party shall execute such form or
document and deliver it on demand to the party required to make
such payments.
9. PAYMENT IN U.S. DOLLARS
It is of the essence of this Agreement that the payments
required hereunder be made in U.S. Dollars. The obligation of
either party to make each payment in U.S. Dollars shall not be
discharged or satisfied by any tender, or any recovery pursuant
to any judgment, which is expressed in or converted into any
other currency until and except to the extent such tender or
recovery shall result in the actual receipt by the other party
in U.S. Dollars of the amount expressed to be payable hereun-
der. The obligation of either party to make payments in U.S.
Dollars shall be enforceable as an alternative or additional
cause of action for the purpose of recovery in U.S. Dollars of
the amount (if any) by which such actual receipt shall fall
short of the full amount of U.S. Dollars required to be paid
hereunder and shall not be affected by judgment being obtained
for any other sums due under this Agreement.
10. JURISDICTION; SERVICE OF PROCESS; IMMUNITY
(a) With respect to any suit, action or proceedings
relating to this Agreement ("Proceedings"), each party irrevo-
cably submits to the non-exclusive jurisdiction of the courts
of the State of New York and the United States District Court
located in the Borough of Manhattan in New York City and waives
any objection which it may have at any time to the laying of
venue of any Proceedings brought in any such court, waives any
claim that such Proceedings have been brought in an inconve-
nient
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forum and further waives the right to object, with respect to
such Proceedings, that such court does not have jurisdiction
over such party. Nothing in this Agreement precludes either
party from bringing Proceedings in any other jurisdiction nor
will the bringing of Proceedings in any one or more juris-
dictions preclude the bringing of Proceedings in any other
jurisdiction.
(b) Each party confirms, if it does not have a place of
business in New York, that it has irrevocably appointed a pro-
cess agent in New York to receive, for it and on its behalf,
service of process in any Proceedings, and will provide evi-
dence of such appointment on request. If for any reason the
party's process agent is unable to act as such, such party will
promptly notify the other party and within 30 days appoint a
substitute process agent acceptable to the other party. The
parties irrevocably consent to service of process in the
manner provided for notices in Section 14. Nothing in this
Agreement will affect the right of either party to serve pro-
cess in any other manner permitted by law.
(c) Each party irrevocably waives, to the fullest extent
permitted by applicable law, with respect to itself and its
revenues and assets (irrespective of their use or intended
use), all immunity on the grounds of sovereignty or other simi-
lar grounds from (i) suit, (ii) jurisdiction of any court,
(iii) relief by way of injunction, order for specific perfor-
xxxxx; or for recovery of property, (iv) attachment of its
assets (whether before or after judgment) and (v) execution or
enforcement of any judgment to which it or its revenues or
assets might otherwise be entitled in any Proceedings in the
courts of any jurisdiction and irrevocably agrees, to the
extent permitted by applicable law, that it will not claim any
such immunity in any Proceedings.
11. DATES; COMPUTATIONS
(a) Whenever the Exercise Date would in accordance with
the terms hereof otherwise occur on a day which is not an
Exchange Business Day, such date shall be postponed to the next
succeeding Exchange Business Day.
(b) All percentages calculated pursuant to this Agreement
shall, if necessary, be rounded upwards to the next higher one
hundred thousandth of a percentage point and all currency
amounts will be rounded to the nearest whole currency unit
(with 1/2 of such unit being rounded up).
12. PAYMENTS
All payments to be made by the Seller hereunder shall be
made without offset or counterclaim in immediately available
funds by wire transfer to the account specified pursuant to
Section 14 below. Computations hereunder shall be on the basis
of a year of 360 days for the actual number of days elapsed.
Any amount not paid when due hereunder shall be payable on
demand and, to the extent permitted by law, will bear interest
from the due date until paid at a rate per annum which shall be
I% in excess of the Buyer's cost of funding such amount, as
certified by the Buyer.
13. ASSIGNMENT
This Confirmation shall be binding upon and inure to the
parties and their respective successors and permitted assigns.
Neither the rights nor obligations of a party hereunder may be
assigned without the prior written consent of the other party;
provided that Buyer may, with the prior consent of BTCO (such
consent not to be unreasonably withheld), assign its rights and
obligations to any financial institution which makes the repre-
sentations contained in Section 1(b)(i-iv) and Section
1(b)(vii-viii) hereof; provided further that BTCO may at any
time, without consent being required, assign its rights, duties
and obligations in respect of this Transaction to any affiliate
of BTCO (the rights, duties and
10
BT REFERENCE NO.: NY-4913
obligations so assigned to be guaranteed by BTCO). Any such
assignment or transfer by BTCO shall be fully effective to
transfer all the transferred rights and obligations of BTCO
upon notice to Buyer.
14. NOTICES
Notices hereunder shall be in writing and may be given by
personal delivery, by mail or by telex, effective upon receipt
(if given by personal delivery), five days after mailing, first
class postage pre-paid (if given by mail), or one Banking Day
after dispatch (if given by telex), addressed to the recipient
as follows or to such other address as the relevant party shall
have advised the other in writing:
- If to BTCO:
Bankers Trust Company
1 Bankers Trust Plaza
000 Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Equity Operations
Fax No.: (000) 000-0000
- If to the Buyer:
Gotham Partners, L.P.
Attention: Xxxx Xxxxxx, Xxxxx Xxxxxxxxx
Fax No.: 000-000-0000
15. AMENDMENTS
No amendment or waiver of any provision of this Agreement
nor consent to any departure therefrom by either party shall in
any event be effective unless the same shall be in writing and
signed by the other party, and then any such waiver or consent
shall be effective only in the specific instance and for the
specific purpose for which given and only for the specific time
period, if any, contemplated therein.
11
BT REFERENCE NO.: NY-4913
16. NON-WAIVER OF RIGHTS
No failure or delay by either party in exercising any
right, power or privilege hereunder shall operate as a waiver
and any explicit waiver of any breach of this Agreement shall
be without prejudice to any rights of such party to any other
or further breach.
17. COUNTERPART
This Agreement may be executed in counterparts, which
taken together shall be deemed to constitute one and the same
agreement.
18. GOVERNING LAW
This Agreement shall be governed by and construed in
accordance with the laws of the State of New York, without ref-
erence to choice of law doctrine.
IN WITNESS WHEREOF, the parties have caused this Agreement
to be executed by their respective representatives as of the
date specified in the first sentence above.
BANKERS TRUST COMPANY, LONDON
BRANCH
By: /s/ Xxxxxx Xxxxxx
Name: Xxxxxx Xxxxxx
Title: Vice President
GOTHAM PARTNERS II, L.P.
By Section M Partners, L.P.
By Karenina Corp.
By: /s/ Xxxxxxx X. Xxxxxx
Name: Xxxxxxx X. Xxxxxx
Title: President
12
BT REFERENCE NO.: NY-4913
EXHIBIT A
SELLER'S TERMINATION AMOUNT
"Seller's Termination Amount" means the amount in U.S.
Dollars equal to the arithmetic mean of the respective one-time
all-in fees (including documentation costs) communicated to the
Buyer not more than two Banking Days before an Early Termina-
tion Date (or, in the case of the deeming of an Early Termina-
tion Date pursuant to the last sentence of Section 5(b), on the
earliest practicable Banking Day following such deemed Early
Termination Date) by each of four leading commercial banks or
investment banking firms in London or New York selected in good
faith by the Buyer as the fee, payable on or as of such Early
Termination Date, as the case may be, that it would charge to
assume as of such Early Termination Date all of the obligations
of the Seller under this Option Agreement that would become due
and payable after such Early Termination Date (assuming that
this Option Agreement were to continue in effect until the
Exercise Date and that no Early Termination Date had occurred)
provided, however, that if any one such entity fails so to com-
municate such a fee, the Buyer is not required to seek another
such entity to obtain a quote and "Seller's Termination Amount"
shall be determined on the basis of the fee or fees so communi-
cated to the Buyer by the other three entities. In the event
that less than three such entities are able to provide such
quotes or that the "Seller's Termination Amount" cannot other-
wise be determined in accordance with the preceding sentence,
"Seller's Termination Amount" shall mean such amount, computed
in good faith by the Buyer, as may be required to compensate
the Buyer for any losses, costs and expenses whatsoever that
the Buyer may incur as a result of the early termination of
this Option Agreement.
13
GOTHAM PARTNERS, L.P.
First Transaction Amendment
BT Transaction Reference No.: NY-4913
Dear Sir/Madam:
The purpose of this letter is to set forth the terms and condi-
tions of the First Transaction Amendment (the "Amendment")
dated as of June 4, 1997 which has been agreed to between
Gotham Partners II, L.P. (the "Counterparty") and Bankers Trust
Company, London Branch. This Amendment relates to the above-
referenced transaction with an Expiration Date of February 13,
1998 (the "Amended Transaction").
In consideration of the mutual benefits to be derived from this
Amendment, BT and the Counterparty have agreed to amend the
above-referenced transaction to provide for physical settlement
of the underlying shares, to delete the 10-day averaging period
at maturity and to change the Expiration Date to February 2,
1998.
As specifically modified by this Amendment, all of the terms
and provisions of the Amended Transaction are hereby reaffirmed
and shall remain in full force and effect.
If the foregoing correctly states your understanding of these
matters, please indicate your agreement to this Amendment by
signing and returning the attached Confirmation which amends
and restates the terms of the Transaction to reflect the
changes set forth in this Amendment.
Yours Truly,
Bankers Trust Company, London Branch
By: _______________________
Name:
Title:
DATE: June 4, 1997
TO: GOTHAM PARTNERS, L.P.
ATTENTION: Xxxx Xxxxxx
FAX: 000 000-0000
FROM: BANKERS TRUST COMPANY, London Branch
FAX: 000 000-0000
BT REF: NY-4913 (as amended and restated to reflect the
changes specified in the First Transaction Amendment
dated as of June 4, 1997)
RE: Equity Derivative Transaction
As specifically modified by this Amendment, all of the terms
and provisions of the Amended Transaction and the Master Agree-
ment are hereby reaffirmed and shall remain in full force and
effect.
THIS OPTION AGREEMENT (the "Agreement") dated as of January 29,
1997 is made by and between GOTHAM PARTNERS II, L.P. (the
"Buyer") and BANKERS TRUST COMPANY, London Branch, (the
"Seller" or "BTCO").
1. Purpose; Payments
(a) In consideration of the payment by the Buyer to the
Seller of a Premium (all capitalized terms used herein without
definition shall have the respective meanings assigned to such
terms in Section 2) of USD 29,567.00 for value February 3, 1997
(to Seller's Account specified below), the Seller hereby grants
to the Buyer a physically-settled call option (the "Option")
with respect to 6,850 shares (the "Shares") of the common stock
("Stock") of First Union Real Estate Investments (the
"Issuer"). The Option is exercisable by the Buyer between the
hours of 9:00 A.M. and 12:00 P.M., New York City time, on any
Business Day during the Exercise Period upon notice given in
writing, or telephonically, confirmed in writing, to the
Seller.
(b) Upon exercise of this Option, Seller will deliver or
cause to be delivered to Buyer on the third Exchange Business
Day (the Settlement Date) a number of Shares (and the documen-
tation necessary to evidence transfer of legal and beneficial
ownership of such Shares) equal the number of Shares specified
in paragraph 1(a) above in accordance with the instructions
delivered with the notice of exercise against payment by Buyer
on the Settlement Date, in immediately available funds, of an
amount equal to the product of the number of Shares to be
delivered on such Settlement Date and the Exercise Price.
-2-
2. Definitions
"Banking Day" shall mean any day which is both (1) a day
other than a Saturday, Sunday or other day on which banks in
New York or London are authorized or required under applicable
law to remain closed and (2) an Exchange Business Day.
Buyers Account shall mean the account of Gotham Partners
II, L.P. which account details are to be provided by the Buyer
to the Seller in writing as soon as possible as the Seller will
otherwise be unable to make any payments to Buyer.
"Calculation Agent" shall mean BTCO.
"Exchange Business Day" shall mean a day other than a
Saturday or Sunday on which exchanges are open for the trading
of securities in New York and for the trading of options or
futures relating to the Stock in Chicago.
"Expiration Date" shall mean February 2, 1998.
Exercise Date shall mean the day, during the Exercise
Period, if any, on which the Option is or is deemed exercised.
Exercise Period shall mean the period from and including
January 29, 1997 to and including the Expiration Date.
"Exercise Price" shall mean $10.80, subject to adjustment
as specified in Section 6.
"Premium" shall mean the amount specified in Section 1(a)
hereof as payable by the Buyer to the Seller as Consideration
for this Option.
"Seller's Termination Amount" shall have the meaning
specified in Exhibit A.
"Settlement Date" shall have the meaning set forth in Sec-
tion 1(b).
"Stock Exchange" shall mean the New York Stock Exchange.
"U.S. Dollar" and "$" shall mean the lawful currency of
the United States of America.
3. Representations and Warranties
(a) The Seller hereby represents and warrants to the
Buyer as follows:
(i) it is a corporation duly organized and validly
existing under the laws of the jurisdiction of its incorpora-
tion;
(ii) neither the execution and delivery of this Agree-
ment, nor the consummation of the transactions contemplated
hereby, nor the performance of its obligations hereunder vio-
lates (i) any law, regulation, decree or other legal restric-
tion applicable to it, (ii) its charter, by-laws or other
-3-
constitutional documents or (iii) any material instrument or
agreement to which it or any of its assets is subject or by
which it is bound;
(iii) there is no legal requirement of any governmental
authority (including any requirement to make any declaration,
filing or registration or to obtain any consent, approval,
license or order) which is necessary to be met in connection
with its execution, delivery or performance of this Agreement
(any such legal requirement being herein called a "Legal Re-
quirement");
(iv) this Agreement has been duly authorized, executed
and delivered on its behalf and constitutes its legal, valid
and binding obligation, enforceable against it in accordance
with its terms except as such enforceability may be limited by
bankruptcy, insolvency or other laws of general applicability
relating to or affecting the rights of creditors and by general
equitable principles;
(v) no Event of Default (as defined in Section 5), and
no condition, event or act which with notice or the lapse of
time, or both, would constitute an Event of Default has oc-
curred and is continuing or will occur by reason of its enter-
ing into or performing its obligations under this Agreement;
and
(vi) it is not on the date of execution of this Agree-
ment required to deduct or withhold any Taxes (as defined in
Section 8) with respect to any payment which is or could be
required to be made by it pursuant to this Agreement.
(b) The Buyer represents and warrants to the Seller as
follows:
(i) it is a sophisticated institutional investor and is
purchasing the Option for its own account for investment and
not with a view to any distribution or any other disposition
thereof;
(ii) in the normal course of its business, the Buyer
invests in and purchases securities similar to the Option;
(iii) the Buyer has had access to such information con-
cerning the Option and the Seller as it has requested and has
such knowledge and experience as to be able to evaluate the
merits and risks of purchasing the Option;
4. Covenants
The Seller hereby covenants and agrees that it will use
reasonable efforts to comply in all material respects with all
Legal Requirements which may arise from time to time after the
date of the Agreement if failure so to comply would materially
impair its ability to perform its obligations under this Agree-
ment.
5. Events of Default
(a) Each of the following events shall constitute an
Event of Default:
-4-
(i) the Seller shall fail to pay when due any amount
due and owing under this Agreement and such failure shall con-
tinue for three Banking Days after receipt of notice of such
failure from the Buyer;
(ii) the Seller shall fail to perform, observe or comply
with any other term, covenant, condition or provision contained
in this Agreement and such failure shall continue for 30 days
after receipt of notice of such failure from the Buyer;
(iii) any representation or warranty of the Seller shall
prove to have been incorrect or misleading in any material
respect when made or repeated or deemed to have been made or
repeated;
(iv) the occurrence of any event of default in respect
of the Seller under any other option agreement with the Buyer
or any affiliate of the Buyer;
(v) (1) the occurrence or existence of any event or
condition in respect of the Seller under one or more agreements
or instruments relating to indebtedness for borrowed money (ex-
cluding obligations in respect of deposits received in the
ordinary course of business) in an aggregate amount of not less
than 3% of the Seller's stockholders' equity as at the end of
its last fiscal year (the "Threshold Amount") which has re-
sulted in such indebtedness becoming, or becoming capable at
such time of being declared, due and payable under such agree-
ments or instruments, before it would otherwise have been due
and payable or (2) the failure by such party to make one or
more payments at maturity in an aggregate amount of not less
than the Threshold Amount under such agreements or instruments
(after giving effect to any applicable grace period);
(vi) the Seller (1) is dissolved; (2) becomes insolvent
or fails or is unable or admits in writing its inability gener-
ally to pay its debts as they become due; (3) makes a general
assignment, arrangement or composition with or for the benefit
of its creditors; (4) institutes or has instituted against it a
proceeding seeking a judgment of insolvency or bankruptcy or
any other relief under any bankruptcy or insolvency law or
other similar law affecting creditors' rights, or a petition is
presented for the winding-up or liquidation of the party and,
in the case of any such proceeding or petition instituted or
presented against it, such proceeding or petition (A) results
in a judgment of insolvency or liquidation of the party or (B)
is not dismissed, discharged, stayed or restrained in each case
within 30 days of the institution or presentation thereof; (5)
has a resolution passed for its winding-up or liquidation; (6)
seeks or becomes subject to the appointment of an administra-
tor, receiver, trustee, custodian or other similar official for
it or for all or substantially all its assets (regardless of
how brief such appointment may be, or whether any obligations
are promptly assumed by another entity or whether any other
event described in this clause (6) has occurred and is continu-
ing); (7) any event occurs with respect to the Seller which,
under the applicable laws of any jurisdiction, has an analogous
effect to any of the events specified in clauses (1) to (6)
(inclusive); or (8) takes any action in furtherance of, or in-
dicating its consent to, approval of, or acquiescence in, any
of the foregoing acts; other than in the case of clause (1) or
(5) or, to the extent it relates to those clauses, clause (8),
for the purpose of a consolidation, amalgamation or merger
which would not constitute an event described in (vii) below;
or
-5-
(vii) the Seller consolidates or amalgamates with, or
merges with or transfers all or substantially all its assets
to, another entity and (1) at the time of such consolidation,
amalgamation, merger or transfer the resulting, surviving or
transferee entity fails to assume all the obligations of the
Seller under this Agreement by operation of law or pursuant to
an agreement reasonably satisfactory to the Buyer or (2) the
creditworthiness of the resulting, surviving or transferee en-
tity is materially weaker than that of the Seller immediately
prior to the taking of such action.
(b) If any Event of Default shall have occurred and be
continuing, the Buyer shall have the right to terminate this
Agreement by the giving of a notice declaring such termination
and specifying the Banking Day on which such early termination
shall occur (the "Early Termination Date"). Notwithstanding
the foregoing, if an Event of Default specified in clause (vi)
of Section 5(a) shall have occurred, the date of the occurrence
of such Event of Default shall be deemed to be an Early Termi-
nation Date without any action or notice from the Buyer.
(c) If this Agreement shall have been terminated pursuant
to the provisions of Section 5(b), on the Early Termination
Date (or, in the case of the deeming of an Early Termination
Date pursuant to the last sentence of Section 5(b), on demand
thereafter) the Seller shall pay to the Buyer the Seller's Ter-
mination Amount determined as set forth in Exhibit A plus any
amounts then due and payable hereunder by the Seller to the
Buyer (with interest as provided in Section 12, if applicable).
(d) The parties agree that the amounts recoverable pursu-
ant to Section 5(c) are reasonable pre-estimates of loss and
are not penalties. Such amounts are payable as liquidated dam-
ages for the loss of a bargain and the loss of protection
against future risks and, without prejudice to the rights and
remedies of either party in respect of any other breach of this
Agreement or as otherwise specified herein, the Buyer shall not
be entitled to recover any additional damages hereunder as a
consequence of such losses.
(e) The Seller shall indemnify and hold harmless the
Buyer on demand from and against all legal fees and other out-
of-pocket expenses incurred by the Buyer in enforcing its
rights hereunder or as the result of the occurrence of an Early
Termination Date.
6. Ordinary Cash Dividend and Anti-Dilution Adjustments
All adjustments to be made by the Calculation Agent pursu-
ant to these Ordinary Cash Dividend and Anti-Dilution Adjust-
ments provisions will be subject to agreement by Buyer. In the
event that Buyer disagrees with any such adjustment (and noti-
fies the Seller of such disagreement on or before the relevant
Exercise Date), each of the Buyer and Seller will select a Ref-
erence Market-maker to act as alternate Calculation Agent with
respect to such adjustment and each of those alternate Calcula-
tion Agents will, independently of Buyer and Seller, select a
third Reference Market-maker to act as alternate Calculation
Agent with respect to such adjustment and the joint determina-
tion of these three alternate Calculation Agents with respect
to such adjustment shall be binding in the absence of manifest
error.
-6-
Reference Market-maker means a leading dealer in the
relevant market selected by a party from among dealers of the
highest credit standing which satisfy all the criteria that
such party applies generally at the time in deciding whether to
offer or to make an extension of credit.
In the event that, with respect to an Exercise Date, more
than one of the events described below has occurred during the
period from the Trade Date through, and including, the relevant
Exercise Date, the settlement terms of this Transaction shall
be adjusted as necessary to preserve the economic equivalent
of this Transaction including, without limitation, these ad-
justment provisions, as it existed immediately prior to the
occurrence of such events.
(a) Ordinary Cash Dividend Adjustments
On the Exercise Date, the Exercise Price shall be
subject to adjustment as follows:
If, Aggregate Dividends for the relevant Dividend
Period is greater than or equal to the relevant Dividend
Strike, the Exercise Price shall be decreased by an amount
equal to the Aggregate Dividend minus the Dividend Strike.
If, Aggregate Dividends for the relevant Dividend
Period is less than the relevant Dividend Strike, the Exercise
Price shall be increased by an amount equal to the Dividend
Strike minus the Aggregate Dividend.
Dividend Strike means, with respect to the Exercise
Date, the Dividend Strike specified in the table below for
period in which the Exercise Date occurs:
Exercise Date
Dividend From, but To, and
Strike excluding including
$0.11 1/29/97 5/15/97
$0.22 5/15/97 8/15/97
$0.33 8/15/97 11/15/97
$0.44 11/15/97 2/2/98
Aggregate Dividends means, with respect to the Divi-
dend Period, the amount equal to the sum of the USD values of
all ordinary cash dividends per share which are declared by the
issuer during the Dividend Period, provided that an ex-dividend
date with respect to such shares occurs during the Dividend
Period.
Dividend Period means, with respect to the Exercise
Date, the period from, but excluding, the Trade Date to, and
including the Exercise Date.
(b) Anti-Dilution Adjustments
The Exercise Price, the Dividend Strike, and the
number of Shares subject to this Option shall be subject to
adjustment as follows:
a) If prior to the Exercise Date any adjustment is
made by the Options Clearing Corporation or its successors
("OCC") in the terms of outstanding OCC-issued options ("OCC
Options") on the Stock, an equivalent adjustment shall be made
by the Calculation Agent in the terms of this Option. Except
as
-7-
provided below, no adjustment shall be made in the terms of
this Option for any event that does not result in an adjustment
to the terms of such outstanding OCC Options. Without limiting
the generality of the foregoing, other than pursuant to the
Ordinary Cash Dividend Adjustments provision above, NO ADJUST-
MENT SHALL BE MADE IN THE TERMS OF THIS OPTION FOR ORDINARY
CASH DIVIDENDS. For indicative purposes, a summary of the
terms under which adjustments may be made by the OCC as in
effect on the date hereof is set forth below:
(i) Whenever there is a stock dividend, stock dis-
tribution, stock split, reverse stock split, rights offering,
distribution, reorganization, recapitalization, reclassifica-
tion, extraordinary cash dividend or similar event in respect
of the Stock, or a merger, consolidation, dissolution or liqui-
dation of the Issuer, the number of option contracts, the unit
of trading, the exercise price and the underlying amount of
Stock, or any of them, with respect to all outstanding option
contracts open for trading in the Stock may be adjusted.
(ii) All adjustments are made by the Securities
Committee of the OCC. The Securities Committee determines
whether to make adjustments to reflect particular events in
respect of the Stock, and the nature and extent of any such
adjustment, based on its judgment as to what is appropriate for
the protection of investors and the public interest, taking
into account such factors as fairness to holders and writers of
option contracts on the Stock, the maintenance of a fair and
orderly market in options on the Stock, consistency of inter-
pretation and practice, efficiency of exercise settlement pro-
cedures and the coordination with other clearing agencies of
the clearance and settlement of transactions in the Stock.
(iii) In the case of a stock dividend, stock distri-
bution or stock split whereby one or more whole numbers of
shares are issued with respect to each outstanding share, each
option contract covering that share shall be increased by the
same number of additional option contracts as the number of
shares issued with respect to each share, the exercise price
per share in effect immediately prior to such event shall be
proportionately reduced, and the unit of trading shall remain
the same.
(iv) In the case of a stock dividend, stock distri-
bution or stock split whereby other than a whole number of
shares is issued in respect of each outstanding share, the
exercise price in effect immediately
prior to such event shall be proportionately reduced, and con-
versely, in the case of a reverse stock split or combination of
shares, the exercise price in effect immediately prior to such
event shall be proportionately increased. Whenever the exer-
cise price with respect to an option contract has been reduced
or increased, the unit of trading shall be proportionately
increased or reduced, as the case may be.
(v) In the case of any distribution made with
respect to shares, other than cash dividends and other than
distributions for which adjustments are provided in subsections
(iii) or (iv) above, if an adjustment is determined by the
Securities Committee to be appropriate, (i) the exercise price
in effect immediately prior to such event shall be reduced by
the value per share of the distributed property, in which event
the unit of trading shall not be adjusted,
-8-
or (ii) the unit of trading in effect immediately prior to such
event shall be adjusted so as to include the amount of property
distributed with respect to the number of shares represented by
such unit of trading, in which event the exercise price shall
not be adjusted.
(vi) In the case of any event for which adjustment
is not provided in any of the foregoing paragraphs, the Securi-
ties Committee may make such adjustments, if any, it determines
to be reasonable under the circumstances.
(vii) Adjustments shall as a general rule become
effective on the "ex-date" established by the principal stock
exchange or market on which the Shares are open for trading.
(viii) All adjustments of the exercise price of an
outstanding option contract shall be rounded to the nearest 1/8
of a dollar, and all adjustments of the unit of trading shall
be rounded down to eliminate any fraction, and if the unit of
trading is rounded down to eliminate a fraction, the adjusted
exercise price shall be further adjusted, to the nearest 1/8 of
a dollar, to reflect any diminution in the value of the option
contract resulting from the elimination of the fraction.
(b) If at any time prior to the Exercise Date there shall
be no outstanding OCC Options on Stock, and an event shall
occur for which an adjustment might have been required under
the By-laws, Rules and stated policies of OCC applicable to the
adjustment of OCC Options, as described above (the "OCC Adjust-
ment Rules"), the Calculation Agent shall determine, in its
sole discretion, but applying the principles set forth in the
OCC Adjustment Rules then in effect, whether to adjust the
terms of this Option, and the nature of any such adjustment.
(c) The Calculation Agent shall notify the Buyer/Seller
of any adjustment pursuant to this Section 6 and the date of
its effectiveness.
(d) The Calculation Agent is not obligated to verify
whether the prerequisites for an adjustment pursuant to this
Section 6 exist or whether such adjustment has been correctly
calculated or whether the date of effectiveness has been cor-
rectly fixed. In this connection, the Calculation Agent does
not assume any liability of any nature.
(e) Upon the consummation of a Merger Event in respect of
the Shares (as defined below), the Calculation Agent shall make
such adjustments (including, without limitation, cancellation
and payment) to this Option as it, in its sole discretion,
deems appropriate. "Merger Event" means, in respect of the
Shares, as of the date upon which holders become bound to
transfer such Shares held by them, any (i) reclassification or
change of such Shares (other than a change in par value, if
any, as a result of a subdivision or combination), (ii) con-
solidation, amalgamation or merger of the issuer of the rele-
vant Shares with or into another corporation (other than a con-
solidation, amalgamation or merger in which that issuer of
Shares is the continuing corporation and which does not result
in any such reclassification or change of Shares) or (iii)
other takeover offer for such Shares that results in a transfer
of all such Shares (other than the Shares owned or controlled
by the offeror) on or before the Expiration Date.
-9-
7. Valuation; Market Disruption Events
(a) If, in the opinion of the Calculation Agent, a Market
Disruption Event (as defined below) has occurred and is con-
tinuing on any Banking Day during the Valuation Period, then
such day shall not be deemed to be a Valuation Date; provided,
however, that if there have been five such days on which Market
Disruption Events have occurred, then, notwithstanding such
Market Disruption Event, such day shall be deemed to be a Valu-
ation Date and the Calculation Agent shall determine the price
of one Share as of the normal closing time for the Stock Ex-
change to be the price announced at such time by the Stock Ex-
change (or, if trading in the Shares has been materially
limited, its good faith estimate of the closing price for one
Share on the Stock Exchange that would have prevailed on such
date but for the Market Disruption Event). The Calculation
Agent shall use its reasonable efforts to give notice to the
Seller and the Buyer that a Market Disruption Event has oc-
curred.
(b) "Market Disruption Event" means the occurrence or
continuance on any Exchange Business Day of any suspension of
or limitation imposed on trading (by reason of movements in
price exceeding limits permitted by the relevant exchange or
otherwise) (i) on the Stock Exchange, in the Shares or securi-
ties generally or (ii) on the primary options exchange on which
options on the Shares are traded, in such options, in each case
if, in the determination of the Calculation Agent, such suspen-
sion or limitation is material.
8. Taxation; Illegality
(a) All payments hereunder shall be made free and clear
of and without deduction or withholding for any Taxes (as here-
inafter defined) whatsoever. If applicable law should require
that any payment due from the Seller hereunder be subject to
withholding with respect to any Taxes whatsoever, the Seller
will, to the full extent then permitted by law, pay (i) the
full amount of such Taxes required to be deducted or withheld
(including the full amount required to be deducted or withheld
from any additional amounts paid pursuant to this Section 8(a))
and (ii) such additional amounts as may be necessary in order
that every net payment to the Buyer of all amounts due and ow-
ing hereunder will not be less than the full amount the Buyer
would have received had no such deduction or withholding been
required. The Seller will furnish to the Buyer within 30 days
after the date on which the payment of any Taxes is due pursu-
ant to applicable law a written statement or other evidence
sufficient to document the fact and amount of withholding by
the Seller. As used in this Section 8, "Taxes" means any
present or future taxes, levies, duties, charges, fees, deduc-
tions or withholdings of any nature now or hereafter imposed,
levied, collected, withheld or assessed by any taxing authority
whatsoever and all interest penalties and other similar lia-
bilities with respect thereto, other than (A) taxes in respect
of the overall net income of the payee imposed by the jurisdic-
tion in which its principal office is located or the jurisdic-
tion in which the relevant payment is received or (B) taxes
imposed as a result of such recipient being or having been a
citizen or resident of the jurisdiction of the government or
taxing authority imposing such tax, or being or having been
organized, present or engaged in a trade or business in such
jurisdiction, or having or having had a permanent establishment
or fixed place of business in such jurisdiction, but excluding
a connection arising solely from such
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recipient having executed, delivered, performed its obligations
or received a payment under, or enforced, this Agreement or any
similar agreement with the Seller.
(b) In the event that the Seller (i) is obligated at any
time to make any payment of additional amounts pursuant to this
Section 8 or (ii) shall have determined that its performance
under this Agreement shall have become unlawful in whole or in
part as a result of compliance in good faith by the Seller with
any applicable present or future law, rule, regulation, judg-
ment, order or directive of any governmental, administrative,
legislative or judicial authority, then the Seller shall give
notice thereof to the Buyer, and the parties hereto shall
thereupon promptly negotiate in good faith with a view to find-
ing a satisfactory alternative method of payment or performance
to avoid such illegality or such payment of additional amounts.
If at the end of a period of 30 days after the giving of such
notice (or such shorter period as may be reasonable under the
circumstances then prevailing) the parties have not agreed upon
such a satisfactory alternative method, either party may termi-
nate this Agreement within 30 days thereafter by designating an
Early Termination Date and otherwise following the procedures
for termination set forth in Section 5.
(c) If either party is required at any time to execute
any form of document in order for payments to it hereunder to
qualify for exemption from withholding tax or for withholding
tax at a reduced rate, such party shall execute such form or
document and deliver it on demand to the party required to make
such payments.
9. Payment in U.S. Dollars
It is of the essence of this Agreement that the payments
required hereunder be made in U.S. Dollars. The obligation of
either party to make each payment in U.S. Dollars shall not be
discharged or satisfied by any tender, or any recovery pursuant
to any judgment, which is expressed in or converted into any
other currency until and except to the extent such tender or
recovery shall result in the actual receipt by the other party
in U.S. Dollars of the amount expressed to be payable hereun-
der. The obligation of either party to make payments in U.S.
Dollars shall be enforceable as an alternative or additional
cause of action for the purpose of recovery in U.S. Dollars of
the amount (if any) by which such actual receipt shall fall
short of the full amount of U.S. Dollars required to be paid
hereunder and shall not be affected by judgment being obtained
for any other sums due under this Agreement.
10. Jurisdiction; Service of Process; Immunity
(a) With respect to any suit, action or proceedings
relating to this Agreement ("Proceedings"), each party irre-
vocably submits to the non-exclusive jurisdiction of the courts
of the State of New York and the United States District Court
located in the Borough of Manhattan in New York City and waives
any objection which it may have at any time to the laying of
venue of any Proceedings brought in any such court, waives any
claim that such Proceedings have been brought in an inconve-
nient forum and further waives the right to object, with
respect to such Proceedings, that such court does not have
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jurisdiction over such party. Nothing in this Agreement pre-
cludes either party from bringing Proceedings in any other
jurisdiction nor will the bringing of Proceedings in any one or
more jurisdictions preclude the bringing of Proceedings in any
other jurisdiction.
(b) Each party confirms, if it does not have a place of
business in New York, that it has irrevocably appointed a pro-
cess agent in New York to receive, for it and on its behalf,
service of process in any Proceedings, and will provide evi-
dence of such appointment on request. If for any reason the
party's process agent is unable to act as such, such party will
promptly notify the other party and within 30 days appoint a
substitute process agent acceptable to the other party. The
parties irrevocably consent to service of process in the manner
provided for notices in Section 14. Nothing in this Agreement
will affect the right of either party to serve process in any
other manner permitted by law.
(c) Each party irrevocably waives, to the fullest extent
permitted by applicable law, with respect to itself and its
revenues and assets (irrespective of their use or intended
use), all immunity on the grounds of sovereignty or other simi-
lar grounds from (i) suit, (ii) jurisdiction of any court,
(iii) relief by way of injunction, order for specific perfor-
xxxxx; or for recovery of property, (iv) attachment of its
assets (whether before or after judgment) and (v) execution or
enforcement of any judgment to which it or its revenues or
assets might otherwise be entitled in any Proceedings in the
courts of any jurisdiction and irrevocably agrees, to the
extent permitted by applicable law, that it will not claim any
such immunity in any Proceedings.
11. Dates; Computations
(a) Whenever the Exercise Date would in accordance with
the terms hereof otherwise occur on a day which is not an Ex-
change Business Day, such date shall be postponed to the next
succeeding Exchange Business Day.
(b) All percentages calculated pursuant to this Agreement
shall, if necessary, be rounded upwards to the next higher one
hundred thousandth of a percentage point and all currency
amounts will be rounded to the nearest whole currency unit
(with 1/2 of such unit being rounded up).
12. Payments
All payments to be made by the Seller hereunder shall be
made without offset or counterclaim in immediately available
funds by wire transfer to the account specified pursuant to
Section 14 below. Computations hereunder shall be on the basis
of a year of 360 days for the actual number of days elapsed.
Any amount not paid when due hereunder shall be payable on
demand and, to the extent permitted by law, will bear interest
from the due date until paid at a rate per annum which shall be
1% in excess of the Buyer's cost of funding such amount, as
certified by the Buyer.
13. Assignment
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This Confirmation shall be binding upon and inure to the
parties and their respective successors and permitted assigns.
Neither the rights nor obligations of a party hereunder may be
assigned without the prior written consent of the other party;
provided that Buyer may, with the prior consent of BTCO (such
consent not to be unreasonably withheld), assign its rights and
obligations to any financial institution which makes the repre-
sentations contained in Section 1(b)(i-iv) and Section
1(b)(vii-viii) hereof; provided further that BTCO may at any
time, without consent being required, assign its rights, duties
and obligations in respect of this Transaction to any affiliate
of BTCO (the rights, duties and obligations so assigned to be
guaranteed by BTCO). Any such assignment or transfer by BTCO
shall be fully effective to transfer all the transferred rights
and obligations of BTCO upon notice to Buyer.
14. Notices
Notices hereunder shall be in writing and may be given by
personal delivery, by mail or by telex, effective upon receipt
(if given by personal delivery), five days after mailing, first
class postage pre-paid (if given by mail), or one Banking Day
after dispatch (if given by telex), addressed to the recipient
as follows or to such other address as the relevant party shall
have advised the other in writing:
- If to BTCO:
Bankers Trust Company
1 Bankers Trust Plaza
000 Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attention: Equity Operations
Fax No.: (000) 000-0000
- If to the Buyer:
Gotham Partners II, L.P.
Attention: Xxxx Xxxxxx, Xxxxx Xxxxxxxxx
Fax No.: 000-000-0000
as follows or to such other address as the relevant party shall
have advised the other in writing:
15. Amendments
No amendment or waiver of any provision of this Agreement
nor consent to any departure therefrom by either party shall in
any event be effective unless the same shall be in writing and
signed by the other party, and then any such waiver or consent
shall be effective only in the specific instance and for the
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specific purpose for which given and only for the specific time
period, if any, contemplated therein.
16. Non-Waiver of Rights
No failure or delay by either party in exercising any
right, power or privilege hereunder shall operate as a waiver
and any explicit waiver of any breach of this Agreement shall
be without prejudice to any rights of such party to any other
or further breach.
17. Counterparts
This Agreement may be executed in counterparts, which
taken together shall be deemed to constitute one and the same
agreement.
18. Governing Law
This Agreement shall be governed by and construed in
accordance with the laws of the State of New York, without
reference to choice of law doctrine.
19. Performance by Designee
In the event that BTCO is required to purchase, sell,
receive or deliver any shares or other securities in accordance
with the terms of this Transaction, BTCO may designate any BTCO
Affiliate to exercise such rights and/or to perform such obli-
gations, as the case may be, in place of BTCO. Buyer need not
be notified of such designation. Upon performance of any such
obligation by any such designee, BTCO shall be discharged of
its obligations to Buyer to the extent of such performance. In
the event any such designee of BTCO fails to perform any such
obligation, BTCO shall remain liable for such non-performance
provided, however, that Buyer hereby waives the equitable
remedy of specific performance by BTCO of any such purchase,
sale, receipt or delivery obligation.
IN WITNESS WHEREOF, the parties have caused this Agreement
to be executed by their respective representatives as of the
date specified in the first sentence above.
BANKERS TRUST COMPANY, London Branch
By:
Name:
Title:
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XXXXXX XXXXXXXX XX, X.X.
By:
Name:
Title:
Exhibit A
SELLER'S TERMINATION AMOUNT
"Seller's Termination Amount" means the amount in U.S. Dollars
equal to the arithmetic mean of the respective one-time all-in
fees (including documentation costs) communicated to the Buyer
not more than two Banking Days before an Early Termination Date
(or, in the case of the deeming of an Early Termination Date
pursuant to the last sentence of Section 5(b), on the earliest
practicable Banking Day following such deemed Early Termination
Date) by each of four leading commercial banks or investment
banking firms in London or New York selected in good faith by
the Buyer as the fee, payable on or as of such Early
Termination Date, as the case may be, that it would charge to
assume as of such Early Termination Date all of the obligations
of the Seller under this Option Agreement that would become due
and payable after such Early Termination Date (assuming that
this Option Agreement were to continue in effect until the
Exercise Date and that no Early Termination Date had occurred)
provided, however, that if any one such entity fails so to
communicate such a fee, the Buyer is not required to seek
another such entity to obtain a quote and "Seller's Termination
Amount" shall be determined on the basis of the fee or fees so
communicated to the Buyer by the other three entities. In the
event that less than three such entities are able to provide
such quotes or that the "Seller's Termination Amount" cannot
otherwise be determined in accordance with the preceding
sentence, "Seller's Termination Amount" shall mean such amount,
computed in good faith by the Buyer, as may be required to
compensate the Buyer for any losses, costs and expenses
whatsoever that the Buyer may incur as a result of the early
termination of this Option Agreement.
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