EXHIBIT 10.1
COLLARED ACCELERATED SHARE REPURCHASE MASTER AGREEMENT
August 28, 2002
PSS WORLD MEDICAL, INC.
0000 Xxxxxxxxxx Xxxxxxxxx
Xxxxxxxxxxxx, XX 00000
Ladies and Gentlemen:
This letter sets forth the terms and conditions of the collared accelerated
share repurchase master agreement (the "Master Agreement") between Xxxxxxx,
Xxxxx & Co. ("Xxxxxxx Sachs") a broker-dealer registered under the Securities
Exchange Act of 1934, as amended (the "Exchange Act") and PSS World Medical,
Inc. (the "Company") and is intended to supplement the terms and provisions of
certain share repurchase transactions (each a "Transaction") entered into from
time to time between Xxxxxxx Xxxxx and the Company. This Master Agreement, taken
alone, is neither a commitment by either party to enter into any Transaction nor
evidence of a Transaction. The terms of any particular Transaction shall be set
forth in a trade supplement (each a "Trade Supplement") in the form of Appendix
A hereto and which references this Master Agreement, in which event the terms
and provisions of this Master Agreement shall be deemed to be incorporated into
and made part of each such Trade Supplement. All provisions contained in this
Master Agreement shall govern a Trade Supplement relating to a Transaction
except as expressly modified below or in the related Trade Supplement. With
respect to any relevant Transaction, this Master Agreement and the related Trade
Supplement shall represent the entire agreement and understanding of the parties
with respect to the subject matter and terms of such Transaction and shall
supersede all prior or contemporaneous written or oral communications with
respect thereto. If, in relation to any Transaction to which this Master
Agreement and related Trade Supplement relate, there is any inconsistency
between this Master Agreement and such Trade Supplement, the Trade Supplement
shall govern.
1. Terms
"Assumed Shares" means, for any date of determination, an amount equal
to (i) the number of shares in the Portfolio minus (ii) the sum of, for each
Exchange Business Day in the Valuation Period up to and including the third
Exchange Business Day prior to such date, the number of shares in the Portfolio
divided by the total number of Exchange Business Days in the Valuation Period
(the "Daily Amount"). The Daily Amount will be deemed to be zero for each day on
which the Valuation Period is suspended in accordance with Sections 3(b),(c) and
(d) hereof. In the event that the Valuation Period is extended pursuant to
2
Section 5(b) hereof, the Calculation Agent may make corresponding adjustments to
the amount of Assumed Shares in relation to the Aggregate Weight (as defined
herein) determined for the related Transaction.
"Calculation Agent" means Xxxxxxx Sachs provided that in the event that
Xxxxxxx Xxxxx is the Defaulting Party, the Company (or an agent selected by the
Company) and Xxxxxxx Sachs shall be joint Calculation Agents.
"Capped Settlement Amount" means, for each Transaction, as set forth in
the related Trade Supplement.
"Cash Dividend" means the gross dividend declared and paid by the
Company to holders generally of record of a single Underlying Security on the
relevant record date during the period from and including the third Exchange
Business Day following the Trade Date to but excluding the Settlement Date. For
the avoidance of doubt, the "gross dividend" shall represent a sum before the
withholding or deduction of any taxes at the source by or on behalf of any
applicable authority having power to tax in respect of such a dividend, and
shall exclude any imputation or other credits, refunds or deductions granted by
any applicable authority having power to tax in respect of such dividend and any
taxes, credits, refunds or benefits imposed, withheld, assessed or levied
thereon.
"Default Termination Amount" means the net amount payable in the case
of an Event of Default by one party to the other, calculated by the
Non-Defaulting Party by aggregating and setting-off, as applicable:
(i) the payments due (or that would have been due but for Section 7)
under this Master Agreement to each party immediately prior to the
Default Termination Date;
(ii) the Replacement Value of the transaction to be settled under
Section 11; and
(iii) the Non-Defaulting Party's Other Expenses.
"Dividend Adjustment Amount" means the product of:
(x) the Cash Dividend multiplied by
(y) the Assumed Shares on the record date for such Cash Dividend.
"Early Termination Amount" means the net amount payable in the case of
an Early Termination Event by one party to the other, calculated by Xxxxxxx
Xxxxx by aggregating and setting-off, as applicable:
(i) the payments due (or that would have been due but for Section 7)
under this Master Agreement to each party immediately prior to the
Early Termination Date; and
(ii) the Replacement Value of the transaction to be settled under
Section 11.
"Exchange" means the Nasdaq National Market.
3
"Exchange Business Day" means any day that each Exchange and each
Related Exchange are open for trading unless the Calculation Agent determines
that any failure of such Exchange or Related Exchange to open does not have a
material effect on the trading market for the Underlying Securities. Each such
day shall be an Exchange Business Day notwithstanding any such Exchange or
Related Exchange closing prior to its regular weekday closing time.
"Final Portfolio Value" means the sum of (i) the average of the Market
Prices for the Underlying Security for each Exchange Business Day in the
Valuation Period, multiplied by the number of shares in the Portfolio, plus (ii)
except to the extent that the payment of the underlying Cash Dividend has been
reflected in an adjustment made pursuant to paragraph 5, the Dividend Adjustment
Amount.
"Floored Settlement Amount" means, for each Transaction, as set forth
in the related Trade Supplement.
"Market Disruption Event" means the occurrence or existence at any time
during the regular trading session, including any extensions thereof and without
regard to pre-open or after hours trading outside of such regular trading
session, on any Exchange Business Day of any material (as determined by the
Calculation Agent) suspension, limitation imposed on, or impairment occurring
with respect to trading (by the relevant Exchange or Related Exchange or
otherwise or by reason of movements in price exceeding limits permitted by the
relevant exchange or otherwise) in (x) the Underlying Securities on the Exchange
or (y) any options contracts or futures contracts relating to the Underlying
Securities on any Related Exchange if, in any such case, the Calculation Agent
determines that such material suspension, limitation or impairment has a
material effect on the trading market for the affected financial instruments or
(B) of a System Disruption. In addition it shall be a Market Disruption Event if
the Exchange or Related Exchange closes prior to their scheduled closing time
(if, in any such case, the Calculation Agent determines that such earlier
closing has a material effect on the trading market for the affected financial
instruments). A "scheduled closing time" is any regular weekday closing time or
any closing time announced by the Exchange or Related Exchange, as the case may
be, prior to the close of the regular trading session on such Exchange or
Related Exchange on the previous Exchange Business Day.
"Market Price" means, on any day, the volume weighted average daily
price of the Underlying Security for the regular trading session (including any
extensions thereof and without regard to pre-open or after hours trading outside
of such regular trading session) as published by Bloomberg at 4:15 p.m. New York
time on such date.
"Merger Date" means the closing date of the Merger Event, provided,
that for a Tender Offer, the Merger Date is the date on which shares in the
amount of the applicable percentage threshold are actually purchased (as
determined by the Calculation Agent).
"Merger Event" means (i) any consolidation, amalgamation or merger of
the Company with or into another entity (other than the consolidation,
amalgamation or merger in which the Company is the continuing corporation and
which does not result in reclassification or change of Underlying Securities),
4
(ii) the consummation of any other takeover transaction for the Underlying
Securities that results in a transfer of or an irrevocable commitment to
transfer all such Underlying Securities, (iii) any reclassification or change of
the Underlying Securities that results in a transfer of or an irrevocable
commitment to transfer all the Underlying Securities outstanding, (iv) any event
specified in (i) through (iii) above where the Company is the continuing
corporation but the holders of the outstanding shares of the Underlying Security
immediately prior to the Merger Event collectively own less than 50% of the
outstanding shares of the Underlying Security immediately after such Merger
Event, or (v) the consummation of any Tender Offer for 50% or more of the
outstanding voting shares of any class of the Company.
"Nationalization" means that all the Underlying Securities or all or
substantially all the assets of the Company are nationalized, expropriated or
are otherwise required to be transferred to any governmental agency or entity.
"Notional Amount" means, for each Transaction, as set forth in the
related Trade Supplement.
"Other Expenses" means, in relation to an Event of Default, all costs,
losses, expenses, damages or liabilities (including, without limitation, loss of
bargain, costs of funding, legal fees, stamp, registration, documentation and
similar taxes, and value added taxes) incurred or suffered by a party as a
result of (i) the occurrence of an Event of Default with respect to or by the
other party or (ii) the other party's breach of its obligations hereunder,
including, without limitation, the costs and expenses of all steps taken by the
Non-Defaulting Party to implement, protect or enforce its rights under the
Master Agreement and all commercially reasonable steps taken by the
Non-Defaulting Party, including, without limitation, the purchase or sale of
Underlying Securities or other securities in order to unwind any xxxxxx or cover
any market positions, provided, however, that except as otherwise expressly
recoverable hereunder, neither party hereto shall be entitled, in the event of
the occurrence of an Event of Default, to recovery from the other of any
consequential or punitive damages.
"Portfolio" means, for each Transaction, as set forth in the related
Trade Supplement.
"Potential Adjustment Event" means any of the following: (i) a
subdivision, consolidation or reclassification of the Underlying Securities
(unless a Merger Event), or a free distribution or dividend of any such
Underlying Securities to existing holders by way of bonus, capitalization or
similar issue; (ii) a distribution or dividend to existing holders of the
Underlying Securities of (A) such Underlying Securities, or (B) other share
capital or securities granting the right to payment of dividends and/or the
proceeds of liquidation of the Company equally or proportionately with such
payments to holders of such Underlying Securities, or (C) any other type of
securities, rights or warrants or other assets, in any case for payment (cash or
other) at less than the prevailing market price as determined by the Calculation
Agent; (iii) an extraordinary dividend; (iv) a call by the Company in respect of
the Underlying Securities that is not fully paid; (v) a repurchase by the
Company of the Underlying Securities, whether out of profits or capital and
whether the consideration for such repurchase is cash, securities or otherwise;
(vi) an event that results in any shareholder rights pursuant to a shareholder
rights agreement or other plan or arrangement of the type commonly referred to
as a "poison pill" being distributed or becoming separated from shares of common
stock or other shares of the capital stock of the Company (provided, that any
5
adjustment effected as a result of such an event shall be readjusted upon any
redemption of such rights); (vii) the occurrence of a Tender Offer for more than
10% but less than 50% of the outstanding voting shares of any class of the
Company; or (viii) any other similar event that may have a diluting or
concentrative effect on the theoretical value of the Underlying Securities.
"Reference Price" means, on any day, if the Underlying Security is
listed on the New York Stock Exchange, the American Stock Exchange (or their
respective successors) or any other auction exchange that has a price as of the
Valuation Time at which any trade can be submitted for execution, the price of
the Underlying Security as of the Valuation Time as reported in the official
real-time price dissemination mechanism, and if the Underlying Security is
quoted on The Nasdaq National Market (or its successor) or any other dealer
exchange or dealer quotation system, the mid-point of the best bid and ask
prices quoted as of the Valuation Time (or the last such prices quoted
immediately before the Valuation Time) without regard to quotations that lock or
cross the dealer exchange or quotation system.
"Related Exchange" means the principal exchange or quotation system on
which option contracts and futures contracts on the Underlying Securities trade
or any successor to such exchange or quotation system.
"Replacement Value" means the amount, calculated by the Non-Defaulting
Party, that would be required to be paid by or to the Non-Defaulting Party for
an instrument that would have the effect of preserving the economic equivalent
of the payment and/or delivery obligations of the parties under this Master
Agreement that would, but for the occurrence of an Event of Default or an Early
Termination Event, otherwise have fallen due.
"Settlement Business Day" means a day on which the clearance system for
trades in the Underlying Security is open for acceptance and execution of
settlement instructions.
"Settlement Date" means, in the event a Transaction is settled in cash,
the third Settlement Business Day following the Termination Date, and in the
event a Transaction is settled in shares pursuant to Section 2, the third
Settlement Business Day following the Net Share Valuation Date (as defined in
Section 2(b) below).
"Settlement Disruption Event" means an event beyond the control of the
parties as a result of which the relevant clearance system cannot clear the
transfer of the shares.
"Suspension Period" means the Exchange Business Days during which the
Valuation Period is suspended, and the Termination Date consequently extended,
under Sections 3(b),(c) and (d) hereof.
"System Disruption" means any event that materially disrupts (as
determined by the Calculation Agent) the ability to effect transactions in the
Underlying Securities on the Exchange or in options contracts or futures
relating to the Underlying Securities on the Related Exchange(s). The types of
disruptions contemplated by this provision include, but are not limited to, (a)
the temporary closure and re-opening of the Exchange(s) or Related Exchange(s)
at any point during the regular trading session and (b) a material systems
failure of the trading, communications and connectivity systems to the
Exchange(s) or Related Exchange(s).
6
"Tender Offer" means a tender offer by any entity or person to purchase
the outstanding voting shares of any class of the Company, as determined by the
Calculation Agent, based upon the making of filings with governmental agencies
and/or the nature and terms of the offer.
"Termination Date" means, for each Transaction, as set forth in the
related Trade Supplement and any subsequent date which results from a suspension
or extension of the Valuation Period as provided herein, and if not an Exchange
Business Day, the next succeeding Exchange Business Day thereafter.
"Time of the Order" means the time at which the Company places an order
with Xxxxxxx Xxxxx to enter into a Transaction.
"Trade Date" means, for each Transaction, as set forth in the related
Trade Supplement.
"Underlying Security" means the common stock of PSS World Medical,
Inc., par value $0.01 per share.
"Valuation Period" means each Exchange Business Day during the period
commencing on and including either (i) in the event that the Time of the Order
is prior to open of the Exchange on the Trade Date, the Trade Date or (ii) in
the event that the Time of the Order is after the open of the Exchange on the
Trade Date, the first succeeding Exchange Business Day following the Trade Date
to, and including, the Termination Date (but excluding any day on which the
Valuation Period is suspended in accordance with Sections 3(b), (c) and (d)
hereof and including any day(s) by which the Valuation Period is extended in
accordance with Section 5(b) hereof).
"Valuation Time" means the close of the regular trading session
(including any extensions thereof) on the Exchange without
regard to pre-open or after hours trading outside of such regular trading
session.
2. Settlement
(a) Cash Settlement
Unless the Company has notified Xxxxxxx Sachs at least 10 Exchange
Business Days prior to the originally scheduled Termination Date (the
"Notification Date") of its election to settle by a share settlement ("Share
Settlement") as provided in Section 2(b) below in the case where the Final
Portfolio Value is greater than the Notional Amount and has satisfied the
conditions to effecting a Share Settlement set forth in Section 2(b) below, the
parties will settle a Transaction in cash on the Settlement Date as follows:
(i) If the Final Portfolio Value is less than the Notional Amount,
then Xxxxxxx Xxxxx shall pay to the Company an amount equal to (i) the
lesser of (a) the Notional Amount minus the Final Portfolio Value and
(b) the Floored Settlement Amount or (ii) to the extent that the Trade
Supplement specifies that the Floored Settlement Amount is "Not
Applicable", the Notional Amount minus the Final Portfolio Value;
7
(ii) If the Final Portfolio Value is greater than the Notional Amount,
then the Company shall pay to Xxxxxxx Sachs an amount equal to (i) the
lesser of (x) the Final Portfolio Value minus the Notional Amount and
(y) the Capped Settlement Amount or (ii) to the extent that the Trade
Supplement specifies that the Capped Settlement Amount is "Not
Applicable", the Final Portfolio Value minus the Notional Amount; and
(iii) If the Final Portfolio Value is equal to the Notional Amount, no
payment is made.
In the case of (i) or (ii), the amount due to a party (the "Final Settlement
Amount") shall be paid in immediately available funds to the account of such
party as each shall specify in writing.
(b) Share Settlement
In the event that the Company owes Xxxxxxx Xxxxx the Final Settlement
Amount and the Company has elected Share Settlement in each case pursuant to
Section 2(a) above, then the settlement procedure shall be as follows:
Settlement shall be made by delivery of the number of shares of the Underlying
Security equal in value to the Final Settlement Amount (the "Settlement
Shares"), with such shares' value based on the Reference Price of the Underlying
Securities on the Net Share Valuation Date. The "Net Share Valuation Date" is
the Exchange Business Day immediately following the Termination Date. Delivery
of such shares shall be made free of any contractual or other restrictions in
good transferable form by the third Exchange Business Day following the Net
Share Valuation Date unless a Settlement Disruption Event prevents delivery of
such shares on that day. If a Settlement Disruption Event does prevent delivery
on that day, then the Settlement Date will be the first succeeding day on which
delivery of the shares can take place (through the relevant clearance system or
in any other commercially reasonable manner). In addition, such delivery shall
be made free and clear of any lien, encumbrance, claim, pledge, charge,
restriction or impediment to transfer of any nature whatsoever (other than under
the Securities Act of 1933, as amended (the "Securities Act") with respect to
any Unregistered Share (as defined below)), the Company warranting to Xxxxxxx
Sachs at the time of such delivery that it has good, valid and marketable title
or right to sell and transfer all such Underlying Securities to Xxxxxxx Xxxxx
under the terms of this Master Agreement. Xxxxxxx Sachs or any affiliate of
Xxxxxxx Xxxxx designated by Xxxxxxx Sachs (Xxxxxxx Xxxxx or such affiliate,
"GS") shall resell the Settlement Shares during a period (the "Resale Period")
commencing on the first Exchange Business Day immediately following the Exchange
Business Day on which the Settlement Shares are delivered. GS shall use it good
faith, commercially reasonable efforts to sell the Settlement Shares as promptly
as possible at commercially reasonable prices based on prevailing market
conditions for the Underlying Securities and the Company.
The Resale Period shall end on the Exchange Business Day on which GS
completes the sale of all Settlement Shares or a sufficient number of Settlement
Shares so that the realized proceeds of such sales exceed the Final Settlement
Amount. Notwithstanding the foregoing, if resale by GS of the Settlement Shares
would, as determined by GS in its sole discretion (i) occur during a
distribution for purposes of Regulation M under the Exchange Act ("Regulation
M") and if GS would be subject to the restrictions of Rule 101 of Regulation M
in connection with such distribution, the Resale Period will be postponed or
tolled, as the case may be, until the Exchange Business Day immediately
following the end of any "restricted period" as such term is defined in
8
Regulation M with respect to such distribution under Regulation M or (ii)
conflict with any legal, regulatory or self-regulatory requirements or related
policies and procedures applicable to GS (whether or not such requirements,
policies or procedures are imposed by law or have been voluntarily adopted by
GS), the Resale Period will be postponed or tolled, as the case may be, until
such conflict is no longer applicable. During the Resale Period, if the net
proceeds from the resale of the Settlement Shares exceed the Final Settlement
Amount, GS shall refund such excess in cash to the Company by the close of
business on the third Exchange Business Day immediately following the last day
of the Resale Period. If the Final Settlement Amount exceeds the net proceeds
from such resale, the Company shall transfer to GS by the close of business on
the third Exchange Business Day immediately following the last day of the Resale
Period the amount of such excess (the "Additional Amount") in cash or in the
number of shares of the Underlying Security ("Make-whole Shares") in an amount
that, based on the Reference Price on the last day of the Resale Period, has a
dollar value equal to the Additional Amount. Resale of the Make-whole Shares of
the Underlying Security shall be made during the period commencing on the
Exchange Business Day immediately following the delivery of the Make-whole
Shares. If the Company elects to pay the Additional Amount in shares of the
Underlying Security, the requirements set forth in this Section 2(b) shall
apply. This provision shall be applied successively until the Additional Amount
is equal to zero.
Share Settlement of a Transaction by the Company is subject to the
following conditions: the Company at its sole expense shall (i) have, prior to
the Termination Date, registered pursuant to an effective registration statement
reasonably satisfactory to GS (the "Registration Statement") filed under the
Securities Act the offering and sale by GS of not less than 150% of the shares
of the Underlying Security necessary to fulfill the Share Settlement delivery
obligation by the Company (determining the number of such shares to be
registered on the basis of the average of the Reference Prices on the five (5)
Exchange Business Days prior to the Termination Date); (ii) maintain the
effectiveness of the Registration Statement from the Termination Date until the
date GS has sold all shares to be delivered by the Company in satisfaction of
its Share Settlement obligations; (iii) have afforded GS a reasonable
opportunity to conduct a due diligence investigation of the Company customary in
scope for transactions in which GS acts as underwriter of equity securities, and
GS shall have been satisfied (with the approval of its Commitments Committee in
accordance with its customary review process) with the results of such
investigation; (iv) shall have negotiated and entered into an agreement with GS
providing for such covenants, conditions, representations and warranties, and
indemnities and contribution rights as are customary for GS equity underwriting
agreements, together with customary certificates and opinions of counsel and
letters of independent auditors of the Company to be delivered to GS prior to
the Termination Date, covering the shares to be delivered by the Company in
satisfaction of its Net Share Settlement obligations; (v) have delivered to GS,
prior to the Termination Date, such number of prospectuses relating thereto as
GS shall have reasonably requested and shall promptly update and provide GS with
replacement prospectuses as necessary to ensure the prospectus does not contain
any untrue statement of a material fact or omit any material fact required to be
stated therein or necessary to make the statements therein, in the light of the
circumstances in which they were made, not misleading; (vi) have retained for
GS, nationally-recognized underwriting counsel acceptable to GS (in its sole
discretion) with broad experience in similar registered securities offerings and
such counsel shall have agreed to act as such; (vii) have taken all steps
necessary for the shares sold by GS to be listed or quoted on the Exchange that
the Underlying Securities are listed or quoted on; (viii) have paid all
reasonable and actual out-of-pocket costs and expenses of GS and all reasonable
9
and actual fees and expenses of GS's outside counsel and other independent
experts in connection with the foregoing and (ix) take such action as is
required to ensure that GS's sale of the Underlying Securities does not violate,
or result in a violation of, the federal or state securities laws.
If any of these conditions are not satisfied prior to the Termination
Date then the Company may deliver Unregistered Shares (as defined below) to GS
in accordance with the following conditions. If GS and the Company can agree on
acceptable pricing, procedures and documentation relating to the sale of such
Unregistered Shares (including without limitation, applicable requirements in
(iii) through (ix) above and insofar as pertaining to private offerings), then
such Unregistered Shares shall be deemed to be the "Settlement Shares" for the
purposes of this Master Agreement and the settlement procedure specified in this
Section 2(b) shall be followed except that in the event that the Final
Settlement Amount exceeds the proceeds from the sale of such Unregistered
Shares, then for the purpose of calculating the number of "Make-whole Shares" to
be delivered by the Company, GS shall determine the discount to the Reference
Price at which it can sell the Unregistered Shares. Notwithstanding the delivery
of such Unregistered Shares, the Company shall endeavor in good faith to have a
Registration Statement declared effective by the SEC as soon as practical. In
the event that GS has not sold sufficient Unregistered Shares to satisfy the
Company's obligations to GS contained herein at the time that such Registration
Statement is declared effective, GS shall return all unsold Unregistered Shares
to the Company and the Company shall deliver such number of shares of the
Underlying Security covered by the effective Registration Statement equal to
150% of the amount then owed to GS based on the Reference Price on the Exchange
Business Day that the Registration Statement was declared effective. Such shares
shall be deemed to be the "Settlement Shares" for the purposes of this Master
Agreement and the settlement procedure specified in this Section 2(b) shall be
followed. In all cases GS shall be entitled to take any and all required actions
in the course of its sales of the Settlement Shares, including without
limitation making sales of the Unregistered Shares only to "Qualified
Institutional Buyers" (as such term is defined under the Securities Act), to
ensure that the sales of the Unregistered Shares and the Settlement Shares
covered by the Registration Statement are not integrated resulting in a
violation of the securities laws and the Company agrees to take all actions
requested by GS in furtherance thereof. If GS and the Company cannot agree on
acceptable pricing and documentation relating to the sales of such Unregistered
Shares then the number of Unregistered Shares to be delivered to GS shall not be
based on the Reference Price but rather GS shall determine the value attributed
to each Unregistered Share in a commercially reasonable manner and based on such
value the Company shall deliver a number of Shares equal to the Final Settlement
Amount.
For the purposes hereof "Unregistered Shares" means shares of the
Underlying Security that have not been registered pursuant to an effective
registration statement under the Securities Act and any state securities laws
("Blue Sky Laws") and that cannot be sold, transferred, pledged or otherwise
disposed of without registration under the Securities Act or under applicable
Blue Sky Laws unless such sale, transfer, pledge or other disposition is made in
a transaction exempt from registration thereunder.
In the event that the Company delivers Unregistered Shares pursuant to
an election of Share Settlement then the Company agrees to indemnify and hold
harmless GS, its affiliates and its assignees and their respective directors,
officers, employees, agents and controlling persons (GS and each such person
10
being an "Indemnified Party") from and against any and all losses, claims,
damages and liabilities, joint or several, to which such Indemnified Party may
become subject, relating to or arising out of any of the transactions
contemplated by this Master Agreement concerning Share Settlement with the
Unregistered Shares. The foregoing indemnity shall exclude losses that GS incurs
solely by reason of the proceeds from the sale of the Capped Number (as defined
below) of Unregistered Shares being less than the Final Settlement Amount,
Default Termination Amount or Early Termination Amount. The Company will not be
liable under the foregoing indemnification provision to the extent that any
loss, claim, damage, liability or expense is found in a nonappealable judgment
by a court of competent jurisdiction to have resulted from GS's willful
misconduct, gross negligence or bad faith in performing the services that are
subject of this Master Agreement or from information provided in writing by GS
for inclusion in the Registration Statement. If for any reason the foregoing
indemnification is unavailable to any Indemnified Party or insufficient to hold
harmless any Indemnified Party, then the Company shall contribute, to the
maximum extent permitted by law, to the amount paid or payable by the
Indemnified Party as a result of such loss, claim, damage or liability. In
addition, the Company will reimburse any Indemnified Party for all expenses
(including reasonable counsel fees and expenses) as they are incurred (after
notice to the Company) in connection with the investigation of, preparation for
or defense or settlement of any pending or threatened claim or any action, suit
or proceeding arising therefrom, whether or not such Indemnified Party is a
party thereto and whether or not such claim, action, suit or proceeding is
initiated or brought by or on behalf of the Company. The Company also agrees
that no Indemnified Party shall have any liability to the Company or any person
asserting claims on behalf of or in right of the Company in connection with or
as a result of any matter concerning Share Settlement with the Unregistered
Shares except to the extent that any losses, claims, damages, liabilities or
expenses incurred by the Company result from the gross negligence, willful
misconduct or bad faith of the Indemnified Party.
In no event shall the number of Settlement Shares (including, without
duplication, any Unregistered Shares) and any Make-whole Shares be greater than
450,000 Underlying Securities (the "Reserved Shares") minus the amount of
Underlying Securities actually delivered under any other Transaction(s) under
the Master Agreement (the "Capped Number"). The Reserved Shares may be increased
or decreased in a Trade Supplement and the provisions in such Trade Supplement
shall govern in the event of any inconsistency. The Company represents and
warrants (which shall be deemed to be repeated on each day that a Transaction is
outstanding) that the Capped Number (as amended from time to time in a Trade
Supplement) is equal to or less than the number of Underlying Securities
determined according to the following formula:
A - B
Where A = the number of authorized but unissued Underlying
Securities that are not reserved for future issuance
on the date of the determination of the Capped
Number; and
B = the maximum number of Underlying Securities
required to be delivered to third parties if the
Company elected Share Settlement of all transactions
in the Underlying Securities (other than Transactions
under this Master Agreement) with all third parties
that are then currently outstanding and unexercised.
11
(c) Any cash amount owed by one party to another party and not paid in
immediately available funds on the third Exchange Business Day following the
Termination Date shall accrue interest commencing on (and including) the third
Exchange Business Day following the Termination Date to (but excluding) the date
of payment at the rate, to the extent permitted by applicable law, of 2 per cent
per annum above Xxxxxx Guaranty Trust Company's prime (or base) commercial loan
rate for short term borrowings as in effect from time to time. For the avoidance
of doubt the Company may elect to pay such interest amount by electing Share
Settlement with respect to such amount in accordance with the provisions of
Section 2(b).
3. Xxxxxxx Sachs Hedging Transactions
(a) The Company acknowledges that during the Valuation Period Xxxxxxx Xxxxx
may, in its discretion, purchase shares of the Underlying Security to hedge
market risk under this Master Agreement and agreements with third parties. These
purchases will be conducted independently of the Company. The Company will not
in any way direct the timing of such purchases, the price paid per share of the
Underlying Security or the manner in which such purchases are made. The timing
of such purchases by Xxxxxxx Sachs, the price paid per share of the Underlying
Security and the manner in which such purchases are made shall be within the
sole discretion of Xxxxxxx Xxxxx. Xxxxxxx Xxxxx shall make such purchases for
its own account and shall not act as the Company's agent.
(b) If the Company concludes that it will be engaged in a distribution of
the Underlying Security for purposes of Regulation M, the Company agrees that it
will, on one Exchange Business Day's written notice, direct Xxxxxxx Sachs not to
purchase Underlying Securities in connection with hedging this transaction
during the "restricted period" (as defined in Regulation M). If on any Exchange
Business Day the Company delivers written notice (and confirms by telephone) by
8:30 a.m. New York Time (the "Notification Time") then such notice shall be
effective to suspend the Valuation Period as of such Notification Time. In the
event that the Company delivers notice and/or confirms by telephone after the
Notification Time, then the Valuation Period shall be suspended effective as of
8:30 a.m. New York Time on the following Exchange Business Day or as otherwise
required by law or agreed between the Company and Xxxxxxx Xxxxx. The Valuation
Period shall be suspended and the Termination Date extended for each Exchange
Business Day in such Suspension Period.
(c) In the event that Xxxxxxx Sachs concludes, in its sole discretion, that
it is appropriate with respect to any legal, regulatory or self-regulatory
requirements or related policies and procedures (whether or not such
requirements, policies or procedures are imposed by law or have been voluntarily
adopted by Xxxxxxx Xxxxx), for it to refrain from purchasing Underlying
Securities on any Exchange Business Day during the Valuation Period, Xxxxxxx
Sachs shall use its good faith efforts to give one (1) Exchange Business Day's
advance (if permitted by applicable law, regulations, policies and procedures)
written notice to the Company elect to suspend the Valuation Period for such
number of Exchange Business Days as is specified in the notice. The notice shall
not specify, and Xxxxxxx Xxxxx shall not otherwise communicate to the Company,
the reason for Xxxxxxx Sachs' election of a Suspension Period. The Valuation
12
Period shall be suspended and the Termination Date extended for each Exchange
Business Day in such Suspension Period.
(d) On no more than two occasions and upon written notice to Xxxxxxx Xxxxx
prior to 8:30 a.m. New York time on any Exchange Business Day during the
Valuation Period, the Company may elect to suspend the Valuation Period for such
number of Exchange Business Days as is specified in the notice up to a maximum
of 30 calendar days. The notice shall not specify, and the Company shall not
otherwise communicate to Xxxxxxx Sachs, the reason for the Company's election of
a Suspension Period. The Valuation Period shall be suspended and the Termination
Date extended for each Exchange Business Day in such Suspension Period.
(e) In the event that the Valuation Period is suspended pursuant to
Sections 3(b) or (c) above during the regular trading session on the Exchange
then the Calculation Agent shall, in calculating the Final Portfolio Value,
calculate the Market Price for such Exchange Business Day based on the time
during such Exchange Business Day that the Valuation Period was not suspended
and the historical volume of trades executed during this period.
4. Company Purchases
(a) Except with respect to block purchases conducted pursuant to
subparagraph (b) below, the Company (or any "affiliated purchaser" as defined in
Rule 10b-18 under the Exchange Act ("Rule 10b-18")) shall not without the prior
written consent of Xxxxxxx Xxxxx purchase any Underlying Securities, or
securities that are convertible into, or exchangeable or exercisable for the
Underlying Securities during any Valuation Period. During this time, any
purchases of Underlying Securities by the Company shall be made through Xxxxxxx
Sachs, and in compliance with Rule 10b-18 or otherwise in a manner that the
Company and Xxxxxxx Xxxxx believe is in compliance with applicable requirements.
Xxxxxxx Sachs agrees that any fees or charges to the Company in connection with
such purchases shall be reasonable. Each such purchase by the Company of the
Underlying Securities shall be disregarded for purposes of determining the Final
Portfolio Value. This subparagraph (a) shall not restrict any purchases by the
Company of Underlying Securities effected during any suspension of any Valuation
Period in accordance with Section 3(b) and, as provided in the definition of
Final Portfolio Value, purchases during such suspension shall be disregarded in
calculating the Final Portfolio Value.
(b) The Company may, through Xxxxxxx Xxxxx, effect purchases of blocks (as
defined in Rule 10b-18) of the Underlying Securities in transactions intended to
comply with Rule 10b-18 (including blocks available on stock exchanges) during
the term of this Master Agreement. In any such case, the Company will advise
Xxxxxxx Sachs prior to it or any affiliated purchaser conducting such purchases,
and Xxxxxxx Xxxxx will cease its purchases of the Underlying Securities
contained in such block. Each such block purchase by the Company of the
Underlying Securities shall be disregarded for purposes of determining the Final
Portfolio Value. The Company may also, without the prior consent of Xxxxxxx
Sachs, effect purchases of blocks of the Underlying Securities that are not
solicited by or on behalf of the Company or an affiliated purchaser (as provided
in Rule 10b-18(b)(1)(i)). The Company will advise Xxxxxxx Xxxxx promptly
following any such purchase, and such purchase will be disregarded for purposes
of determining the Final Portfolio Value.
13
(c) The Company is entering into this Master Agreement in good faith and
not as part of a plan or scheme to evade the prohibitions of Rule 10b5-1 under
the Exchange Act ("Rule 10b5-1"). It is the intent of the parties that this
Master Agreement comply with the requirements of Rule 10b5-1(c)(1)(i)(A) and (B)
and this Master Agreement shall be interpreted to comply with the requirements
of Rule 10b5-1(c). The Company will not seek to control or influence Xxxxxxx
Sachs to make "purchases or sales" (within the meaning of Rule
10b5-1(c)(1)(i)(B)(3)) under this Master Agreement, including, without
limitation, Xxxxxxx Xxxxx' decision to enter into any hedging transactions. The
Company represents and warrants that it has consulted with its own advisors as
to the legal aspects of its adoption and implementation of this Master Agreement
under Rule 10b5-1.
5. Adjustment of Terms
(a) If at any time after the date of this Master Agreement, a Potential
Adjustment Event shall occur, the Calculation Agent will determine whether such
Potential Adjustment Event has a diluting or concentrative effect on the
theoretical value of the Underlying Securities, and if so, then the Calculation
Agent will: (i) make the corresponding adjustment(s) to the number of Underlying
Securities, the Notional Amount and the Final Portfolio Value and, in any case,
any other variable relevant to the exercise, settlement or payment terms of this
Master Agreement as the Calculation Agent determines appropriate to account for
that diluting or concentrative effect and (ii) determine the effective date(s)
of the adjustment(s); provided that all adjustments will be made pro rata based
on the number of Exchange Business Days having elapsed in the Valuation Period
up to the effective date of the event as referenced above. The Calculation Agent
may (but need not) determine the appropriate adjustment(s) by reference to the
adjustment(s) in respect of such Potential Adjustment Event made by an options
exchange to options on the relevant Underlying Securities traded on that options
exchange. The determinations of the Calculation Agent so selected will, absent
bad faith or manifest error, be final.
(b) The Termination Date (as adjusted for any Suspension Period elected by
the Company) will be postponed if any Market Disruption Event(s) occur. In the
event that one or more Market Disruption Events shall occur, the Calculation
Agent, in calculating the Final Portfolio Value (i) shall determine the Market
Price for the relevant Exchange Business Day(s) on which the Market Disruption
Event(s) occurred by reducing the weight of such day(s) based on the duration of
the relevant Market Disruption Event(s) and the historical volume of trades
executed during the period of such Market Disruption Event(s) and (ii) shall
calculate the Market Price for the aggregate weight of the reductions
attributable to Market Disruption Events (the "Aggregate Weight") by allocating,
subject to the proviso below, the Aggregate Weight to the Exchange Business Day
following the scheduled Termination Date provided that to the extent that the
aggregate weight allocated to such day exceeds the "Daily Maximum Weight," the
Calculation Agent shall add additional Exchange Business Days to the Valuation
Period such that no more than the Daily Maximum Weight is assigned to each such
day. To the extent that a Market Disruption Event has occurred on 5 consecutive
Exchange Business Days during the Valuation Period, then, notwithstanding the
occurrence of a Market Disruption Event, the Calculation Agent shall (after
consultation with the Company) either determine the Market Price using its good
faith estimate of the Market Price that would have prevailed but for the
occurrence of the Market Disruption Event(s) or elect to further extend the
Valuation Period as it deems necessary. The "Daily Maximum Weight" is equal to
14
the product of the Portfolio multiplied by a fraction, the numerator of which is
one and the denominator of which is the number of Exchange Business Days in the
Valuation Period.
(c) In the event that any price published on the Exchange and which is
utilized for any calculation or determination made under any Transaction is
subsequently corrected and published by the Exchange within 3 Exchange Business
Days of the previously published price, either party may notify the other party
of (i) that correction and (ii) the amount that is payable as a result of that
correction and to the extent necessary the Calculation Agent will adjust the
terms of such Transaction to account for such correction.
6. Representations, Warranties and Agreements
(a) The Company and Xxxxxxx Sachs each represent and warrant to and
covenant with the other that:
(i) each party is duly organized and validly existing under the laws of the
jurisdiction of its organization or incorporation and, if relevant under
such laws, in good standing;
(ii) this Master Agreement and each Trade Supplement has been duly
authorized, executed and delivered by such party and constitutes its valid
and legally binding obligation, enforceable against such party in
accordance with its terms (subject to applicable bankruptcy,
reorganization, insolvency, moratorium or similar laws affecting creditors'
rights generally and subject, as to enforceability, to equitable principles
of general application (regardless of whether enforcement is sought in a
proceeding in equity or at law));
(iii) the execution and delivery of this Master Agreement and each Trade
Supplement by such party does not, and the performance by it of its
obligations hereunder will not, violate, conflict with or constitute a
breach under any law applicable to it, any provision of its constitutional
documents, any order or judgment of any court or other agency of government
applicable to it or any agreement or instrument to which it is party or
which is binding on any of its properties or any of its internal policies
or procedures;
(iv) all governmental and other consents that are required to have been
obtained by it with respect to this Master Agreement and each Trade
Supplement have been obtained and are in full force and effect and all
conditions of any such consents have been complied with;
(v) no Event of Default or, to its knowledge, no Early Termination Event
with respect to it has occurred and is continuing and no such event or
circumstance would occur as a result of its entering into or performing its
obligations under this Master Agreement;
(vi) there is not pending or, to its knowledge, threatened against it any
action, suit or proceeding at law or in equity or before any court,
tribunal,
15
governmental body, agency or official or any arbitrator that is likely to
affect the legality, validity or enforceability against it of this Master
Agreement or its ability to perform its obligations under this Master
Agreement; and
(vii) it is an "eligible contract participant," as defined in the U.S.
Commodity Exchange Act, as amended, and is entering into this Master
Agreement hereunder as principal and not for the benefit of any third
party.
(b) In addition to the foregoing, the Company represents and warrants to,
and covenants with, Xxxxxxx Xxxxx that (i) as of the date hereof and (ii) for
the period from the Time of the Order for each Transaction until the time that
each party has fully performed all of its obligations under the related
Transaction:
(i) the Company is in compliance with its reporting obligations under the
Exchange Act and its most recent Annual Report on Form 10-K, together with
all reports subsequently filed by the Company pursuant to the Exchange Act,
taken together and as amended and supplemented to the date of this
representation, do not contain any untrue statement of a material fact or
omit any material fact required to be stated therein or necessary to make
the statements therein, in the light of the circumstances in which they
were made, not misleading;
(ii) the entering into of each Transaction will not violate Rule 13e-1 or
Rule 13e-4 under the Exchange Act; (iii) it is not entering into any
Transaction on the basis of any material non-public information with
respect to the Underlying Securities or in anticipation of, in connection
with, or to facilitate, a distribution of its securities, a self tender
offer or a third-party tender offer;
(iv) it is not entering into any Transaction to create, and will not engage
in any other securities or derivative transaction to create, a false or
misleading appearance of active trading or market activity in the
Underlying Securities (or any security convertible into or exchangeable for
the Underlying Securities), or which would otherwise violate the Exchange
Act;
(v) each Transaction is being entered into pursuant to a publicly disclosed
share buy-back program and its Board of Directors has approved the use of
an accelerated share repurchase program to effect the share buy-back
program;
(vi) it is acting for its own account, and is capable of and has made its
own independent decisions to enter into each Transaction and as to whether
such Transaction is appropriate or proper for it based upon its own
judgment and upon advice from such advisers (including, without limitation,
legal, tax and accounting) as it has deemed necessary, including advice
from its tax advisor regarding the tax implications of each Transaction. No
communication (written or oral) received from Xxxxxxx Sachs shall be deemed
to be an assurance or guarantee as to the expected results of any
Transaction. In particular Xxxxxxx Xxxxx is not making any representations
or warranties with respect to
16
the treatment of any Transaction under EITF 00-19 (or any successor issue
statement) or under FASB's Equities & Liabilities Project;
(vii) it has been given the opportunity to obtain information from Xxxxxxx
Sachs concerning the terms and conditions of each Transaction necessary in
order for it to evaluate the merits and risks of such Transaction.
Notwithstanding the foregoing, it is not relying on any communication
(written or oral) of Xxxxxxx Xxxxx as investment advice or as a
recommendation to enter into any Transaction; it being understood that
information and explanations related to the terms and conditions of a
Transaction are made incidental to Xxxxxxx Sachs' business and shall not be
considered investment advice or a recommendation to enter any Transaction;
(viii) Xxxxxxx Xxxxx is not acting as a fiduciary for or an adviser to it
in respect of any Transaction;
(ix) (A) the Underlying Securities or securities that are convertible into,
or exchangeable or exercisable for Underlying Securities are not subject to
a "restricted period" as such term is defined in Regulation M and (B) the
Company (or any "affiliated purchaser" as defined in Rule 10b-18) shall not
purchase any Underlying Securities, or securities that are convertible
into, or exchangeable or exercisable for the Underlying Securities other
than in transactions effected through Xxxxxxx Sachs;
(x) the information concerning the total number of shares of the Underlying
Securities or securities that are convertible into, or exchangeable or
exercisable for Underlying Securities, purchased by or for the Company or
any of its affiliated purchasers during the four full calendar weeks
immediately preceding the commencement of any Valuation Period, will be
complete and correct in all respects;
(xi) it has not, and during any Valuation Period (as extended pursuant to
the provisions of Section 3 and/or Section 5 herein) will not, enter into
agreements similar to the Transactions described herein where the valuation
period in such other transaction will overlap at any time (including as a
result of extensions in such valuation period as provided in the relevant
agreements) with any Valuation Period (as extended pursuant to the
provisions of Section 3 and/or Section 5 herein) under this Master
Agreement. In the event that the valuation period in any other similar
transaction overlaps with a Valuation Period as a result of any extension
made pursuant to Section 3 and/or Section 5 herein, the Company shall
promptly amend such transaction to avoid any such overlap; and
(xii) Upon entering into each Transaction the Company covenants that it
will immediately retire the number of shares of the Underlying Security in
the relevant Portfolio purchased by it in connection with the relevant
Transaction from an entity affiliated with Xxxxxxx Xxxxx.
17
7. No Event of Default or Early Termination Event
Each obligation of a party under this Master Agreement to make a
payment or deliver Underlying Securities is subject to the condition precedent
that no Event of Default or Early Termination Event (or event that, with the
lapse of time or the giving of notice or both, would become an Event of
Default), in each case by or with respect to the other party, has occurred and
is continuing. Upon the occurrence of an Event of Default or Early Termination
Event, the provisions of Sections 9, 10 and 11 shall govern.
8. Accelerated Expiration
Upon the occurrence of a Merger Event or a Nationalization, with
respect to that portion of any consideration received for the Underlying
Securities that consists of cash, Xxxxxxx Sachs may, in its discretion, upon one
Business Day's notice to the Company, terminate and settle (effective on the
Merger Date, or in the case of a Nationalization, the date of the first public
announcement of a firm intention to nationalize as determined by Xxxxxxx Xxxxx)
all (but not less than all) of the portion of the Portfolio represented by the
cash consideration. For the purpose of determining such portion, consideration
for Underlying Securities upon a Merger Event when a holder of Underlying
Securities may elect the type of merger consideration received following a
Merger Event shall be deemed cash consideration to the fullest extent possible.
In exercising such right, Xxxxxxx Sachs shall have the rights and obligations of
the Non-Defaulting Party and the Company shall have the rights and obligations
of the Defaulting Party, each as set forth in Section 11(b) through Section
11(e) except that the Early Termination Amount shall only be payable in cash as
provided in Section 11 with the proviso that the penultimate sentence in Section
11(c) shall not apply in the case of an early termination pursuant to this
section.
9. Termination
(a) If any of the following events (each an "Early Termination Event") shall
occur, then a party shall have the right to terminate and settle this Master
Agreement by providing written notice of such election to the Affected Party.
The date of such notice shall be the "Early Termination Date". The party
exercising its termination rights pursuant to this Section 9 shall have the
rights and obligations of the Non-Defaulting Party and the other party shall
have the rights and obligations of the Defaulting Party, each as set forth in
Section 11(b) through Section 11(e):
(i) the price of the Underlying Securities on the Exchange at any time
falls below the Termination Price (as specified in the related Trade
Supplement) provided (for the avoidance of doubt only) that such Early
Termination Event shall be an Early Termination Event only with respect to
the Transaction documented in such related Trade Supplement. For purposes
of this paragraph, the Company shall be the "Affected Party";
(ii) the unsecured and unsubordinated long-term obligations of the Company
(which will be the "Affected Party") are rated either below "B+" by
18
Standard & Poor's Rating Services or below "B2" by Xxxxx'x Investors
Services, Inc. (or their successors);
(iii) the occurrence of a or a Nationalization (effective on the date of
the first public announcement of a firm intention to nationalize as
determined by the Calculation Agent) in respect of which the consideration
received for the Underlying Securities does not consist of cash. For the
avoidance of doubt, in the event that cash and other consideration are
received for the Underlying Securities, this Early Termination Event shall
only apply with respect to the portion of the Portfolio remaining after
giving effect to the calculations pursuant to Section 8 this Master
Agreement. For purposes of this paragraph, the Company shall be the
"Affected Party";
(iv) the Underlying Securities cease to be listed or quoted by any of the
New York Stock Exchange, Inc., the American Stock Exchange or The Nasdaq
National Market (or their respective successors) and are not immediately
re-listed (as determined by the Calculation Agent) for any reason (other
than a Merger Event). For purposes of this paragraph, the Company shall be
the "Affected Party"; or
(v) it becomes unlawful to perform for the Company or Xxxxxxx Sachs (such
party to be the "Affected Party") any absolute or contingent obligation to
make a payment or delivery or to receive a payment or delivery in respect
of this Master Agreement or to comply with any other material provision of
this Master Agreement, due to the adoption of, or any change in, applicable
law after the date on which this Master Agreement is entered into, or due
to the promulgation of, or any change in, the interpretation by any court,
tribunal or regulatory authority with competent jurisdiction of any
applicable law after such date.
(b) The Company shall have the right to terminate this Master Agreement at
any time after the Termination Date by providing written notice to Xxxxxxx
Xxxxx.
10. Default
If any of the following events (each an "Event of Default") shall occur
with respect to a party to this Master Agreement (the "Defaulting Party"), the
party which is not in default (the "Non-Defaulting Party") shall have the rights
set forth in Section 11(a) through Section 11(e):
(i) the Defaulting Party fails to perform any obligation required to be
performed under this Master Agreement or under any other agreement between
the Company and Xxxxxxx Sachs or its affiliated entities and such failure
is not cured within one (1) Exchange Business Day after receipt of notice
thereof;
(ii) the Defaulting Party repudiates any of its obligations hereunder;
(iii) a party or any guarantor of such Defaulting Party (i) is
dissolved (other than pursuant to a consolidation, amalgamation or
merger); (ii) becomes bankrupt, insolvent or fails or is unable or
admits in writing its inability generally to pay its debts as they
become due; (iii) makes a general assignment, arrangement or
19
composition with or for the benefit of its creditors; (iv) 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 its winding-up or liquidation, 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 bankruptcy or the entry of an order for relief or the
making of an order for its winding-up or liquidation or (B) is not
dismissed, discharged, stayed or restrained in each case within
fifteen (15) days of the institution or presentation thereof; (v) has
a resolution passed for its winding-up, official management or
liquidation (other than pursuant to a consolidation, amalgamation or
merger); (vi) seeks or becomes subject to the appointment of an
administrator, provisional liquidator, conservator, receiver, trustee,
custodian or other similar official for it or for all or substantially
all it assets; (vii) has a secured party take possession of all or
substantially all of its assets or has a distress, execution,
attachment, sequestration or other legal process levied, enforced or
sued on or against all or substantially all its assets and such
secured party maintains possession, or any such process is not
dismissed, discharged, stayed or restrained, in each case within
fifteen (15) days thereafter; (viii) causes or is subject to any event
with respect to it which, under the applicable laws of any
jurisdiction, has an analogous effect to any of the events specified
in clause (i) to (vii) (inclusive); or (ix) takes any action in
furtherance of, or indicating its consent to, approval of, or
acquiescence in, any of the foregoing acts;
(iv) a representation made or repeated or deemed to have been made or
repeated by a party proves to have been incorrect or misleading in any
material respect when made or repeated or deemed to have been made or
repeated; or
(v) a default, event of default or other similar condition or event in
respect of the Defaulting Party under one or more agreements or
instruments relating to indebtedness of the Defaulting Party in an
aggregate amount in excess of $50,000,000 which has resulted in such
indebtedness becoming due and payable before it would otherwise have
been due and payable shall have occurred; or a default by the
Defaulting Party in making one or more payments on the due date
thereof in an aggregate amount in excess of $50,000,000 under such
agreements or instruments (after giving effect to any applicable
notice requirement or grace period) shall have occurred.
11. Remedies
(a) Upon the occurrence of an Event of Default, the Non-Defaulting Party
may by written notice to the Defaulting Party sent at any time while an Event of
Default is continuing and specifying the Event of Default, elect to terminate
and settle this Master Agreement in accordance with this Section 11 on the date
specified in (which shall be no later than 20 days after receipt by the
Defaulting Party of the notice)and no earlier than the date of the notice (the
"Default Termination Date").
20
(b) If a Default Termination Date or Early Termination Date (as the case
may be) occurs, (i) the Non-Defaulting Party shall calculate the Replacement
Value and shall give the other party Company written notice thereof (including
reasonable detail of the calculation thereof) and (ii) the Non-Defaulting Party
shall calculate the Default Termination Amount or Early Termination Amount (as
the case may be) payable by one party to the other and shall as soon as
reasonably practicable give to the Defaulting Party a statement thereof.
(c) The Default Termination Amount or Early Termination Amount (as the case
may be) shall be payable on the Exchange Business Day immediately after notice
of its amount is given to the Defaulting Party and, unless payable by the
Non-Defaulting Party, shall be paid in cash (subject to the next sentence) in
immediately available funds together with interest thereon from (and including)
the Default Termination Date or Early Termination Date (as the case may be) to
(but excluding) the date of payment at the rate, to the extent permitted by
applicable law, of two (2) per cent per annum above Xxxxxx Guaranty Trust
Company's prime (or base) commercial loan rate for short term borrowings as in
effect from time to time. Except in the case of an early termination of this
Master Agreement pursuant to Section 8 hereof, the Company shall have the right,
in its sole discretion and by giving notice to Xxxxxxx Sachs within one (1)
Exchange Business Day after the notice fixing an Early Termination Date or
Default Termination Date (as the case may be) is effective, to make the payment
of the Default Termination Amount or the Early Termination Amount (in each case,
including any interest thereon) by electing to Share Settle the transaction in
accordance with the terms and conditions for Share Settlement herein. The
parties intend that this Master Agreement be a "securities contract" as defined
in Section 741(11) of the U.S. Bankruptcy Code.
(d) The parties hereby agree that the amounts recoverable under this
Section 11 are a reasonable pre-estimate of loss and not a penalty. Such amounts
are payable for the loss of bargain.
(e) The Non-Defaulting Party's rights under this Section 11 shall be
cumulative and in addition to, and not in limitation or exclusion of, any other
rights which the Non-Defaulting Party may have (whether by agreement, operation
of law or otherwise) against the Defaulting Party.
12. Assignment and Transfer
This Master Agreement and any Transaction(s) may not be assigned or
transferred by either party hereto without the consent of the other party,
except that Xxxxxxx Xxxxx may transfer this Master Agreement and any
Transaction(s) without the consent of the Company pursuant to an assignment and
delegation of all of Xxxxxxx Sachs' rights and obligations hereunder in whatever
form Xxxxxxx Xxxxx determines may be appropriate to a partnership, corporation,
trust or other organization in whatever form that succeeds to all or
substantially all of Xxxxxxx Sachs' assets and business and that assumes such
obligations by contract, operation of law or otherwise and provided that an
adverse tax event for the Company would not result other than with respect to a
transfer to an entity that the income of which is subject to tax only in the
United States. Upon any such delegation and assumption or transfer of
obligations, Xxxxxxx Xxxxx shall be relieved of and fully discharged from all
obligations hereunder, whether such obligations arose before or after such
delegation and assumption.
21
13. Additional Provisions
(a) No interest in Option Securities or Hedge. This Master Agreement and
each Transaction entered into hereunder do not create any obligation on the part
of Xxxxxxx Sachs or any of its affiliates to invest in the Underlying Securities
or to otherwise hedge its obligations hereunder. To the extent that any such
investment or hedge is made by Xxxxxxx Xxxxx or any of its affiliates, such
investment or hedge will be on its behalf only, and each of Xxxxxxx Sachs and
the Company acknowledges that this Master Agreement and each Transaction entered
into hereunder will not create for the Company either a direct or indirect
interest in the Underlying Securities or any such hedge or investment.
(b) No Collateral. Xxxxxxx Xxxxx and the Company acknowledge that with
respect to this Master Agreement and each Transaction entered into hereunder the
obligations of the Company are not secured by any collateral that would
otherwise secure the obligations of the Company to Xxxxxxx Sachs under any other
agreement.
(c) Status of Claims in Bankruptcy. Xxxxxxx Xxxxx acknowledges and agrees
that this Master Agreement and each Trade Supplement entered into hereunder are
not intended to, and do not, convey to Xxxxxxx Sachs rights with respect to the
Transactions hereunder that are senior to the claims of holders of the
Underlying Securities in any U.S. bankruptcy proceedings with respect to the
Company.
14. Governing Law
This Master Agreement and each related Trade Supplement shall be governed
by the laws of the State of New York, without reference to its choice of laws
rules. 15. Notices
Notices under this Master Agreement may be made by phone and confirmed in
writing or by facsimile to the addresses or facsimile numbers show below:
To the Company:
Attn: Xxxxx Xxxxxxx, Chief Financial Officer
0000 Xxxxxxxxxx Xxxxxxxxx
Xxxxxxxxxxxx, Xxxxxxx 00000
Phone: (000) 000-0000
Fax: (000) 000-0000
with a copy to:
Xxxxxxx Xxxx & Xxxxxxxxx
000 Xxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxxxx X. Xxxxx, Xx.
Phone: (000) 000-0000
Fax: (000) 000-0000
22
To Xxxxxxx Xxxxx:
Xxxxxxx, Sachs & Co.
Xxx Xxx Xxxx Xxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxx Xxxxxxxx
Phone: (000) 000-0000
Fax: (000) 000-0000
with a copy to:
Xxxxxxx, Sachs & Co.
00 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attn: Compliance Control Room
Phone: (000) 000-0000
Fax:(000) 000-0000
16. Calculations
The Calculation Agent shall, in good faith, make all calculations required
by this Master Agreement.
17. Arbitration
(a) Arbitration is final and binding on the Company and Xxxxxxx Xxxxx
(b) The Company and Xxxxxxx Sachs are waiving their right to seek remedies
in court, including the right to a jury trial.
(c) Pre-arbitration discovery is generally more limited than and different
from court proceedings.
(d) The arbitrator's award is not required to include factual findings or
legal reasoning and any party's right to appeal or to seek modification of
rulings by the arbitrators is strictly limited.
(e) The panel of arbitrators will typically include a minority of
arbitrators who were or are affiliated with the securities industry.
Any controversy between or among Xxxxxxx Xxxxx or its affiliates, or any of
its or their partners, directors, agents or employees, on the one hand, and the
Company or its agents and affiliates, on the other hand, arising out of or
relating to this Master Agreement or any transaction entered into hereunder,
shall be settled by arbitration, in accordance with the then current rules of,
at the Company's election, the American Arbitration Association ("AAA") or the
Board of Arbitration of the New York Stock Exchange, Inc. ("BANYSE"). If the
Company does not make such election by registered mail addressed to Xxxxxxx
Sachs within five (5) Exchange Business Days after receipt of notification from
23
Xxxxxxx Xxxxx requesting such election, then the Company irrevocably authorizes
Xxxxxxx Sachs to make such election on behalf of the Company. The award of the
arbitrators shall be final, and judgment upon the award rendered may be entered
in any court, state or Federal, having jurisdiction.
Neither party shall bring a putative or certified class action to
arbitration, nor seek to enforce any pre-dispute arbitration agreement against
any person who has initiated in court a putative class action; who is a member
of a putative class who has not opted out of the class with respect to any
claims encompassed by the putative class action until:
(i) the class certification is denied;
(ii) the class is decertified; or
(iii) the party is excluded from the class by the court.
Such forbearance to enforce an agreement to arbitrate shall not constitute a
waiver of any rights under this Master Agreement except to the extent stated
herein.
24
Company hereby agrees (a) to check this Master Agreement carefully and
immediately upon receipt so that errors or discrepancies can be promptly
identified and rectified and (b) to confirm that the foregoing (in the exact
form provided by Xxxxxxx Xxxxx) correctly sets forth the terms of the agreement
between Xxxxxxx Sachs and Company with respect to this Master Agreement and each
Transaction thereunder, by manually signing this Master Agreement or this page
thereof as evidence of agreement to such terms and providing the other
information requested herein and immediately returning an executed copy to
Equity Derivatives Documentation Department, Facsimile No. 000-000-0000/1983. A
pre-dispute arbitration clause is contained in Section 17 hereof.
Yours truly,
XXXXXXX, XXXXX & CO.
By: /s/ Xxxxx Xxxx, Managing Director
_________________________________
Authorized Signatory
Accepted and agreed this 28th
day of August, 2002
PSS WORLD MEDICAL, INC.
By: /s/ Xxxxx X. Xxxxxxx
____________________________
Vice President and Treasurer
Appendix A
TRADE SUPPLEMENT
To: PSS World Medical, Inc.
0000 Xxxxxxxxxx Xxxxxxxxx
Xxxxxxxxxxxx, XX 00000
From: Xxxxxxx, Sachs & Co.
Subject: Accelerated Share Repurchase Transaction
Ref. No:
Date:
--------------------------------------------------------------------------------
The purpose of this Trade Supplement is to confirm the terms and conditions
of the Transaction entered into between Xxxxxxx, Xxxxx & Co. ("Xxxxxxx Sachs")
and PSS WORLD MEDICAL, INC. ("Company") (together, the "Contracting Parties") on
the Trade Date specified below. This Trade Supplement is a binding contract
between Xxxxxxx Xxxxx and the Company as of the relevant Trade Date for the
Transaction referenced below.
The definitions and provisions contained in the Master Agreement specified
below are incorporated into this Trade Supplement. In the event of any
inconsistency between those definitions and provisions and this Trade
Supplement, this Trade Supplement will govern.
1. This Trade Supplement supplements, forms part of, and is subject to the
Accelerated Share Repurchase Master Agreement dated as of August 28, 2002 (the
"Master Agreement") between the Contracting Parties, as amended and supplemented
from time to time. All provisions contained in the Master Agreement govern this
Trade Supplement except as expressly modified below.
2. The terms of the Transaction to which this Trade Supplement relates are
as follows:
Trade Date:
Fee:
Capped Settlement Amount: [$[ ] U.S. Dollars.]1 [Not Applicable]2
Floored Settlement Amount: [$[ ] U.S. Dollars.]3 [Not Applicable]4
Notional Amount: $[ ] U.S. Dollars.
A-1
Portfolio: [ ] shares of the Underlying Security.
Termination Date:
Termination Price:
Capped Number:
3. Company represents and warrants to Xxxxxxx Sachs that set forth below is
the total number of Underlying Securities or securities that are convertible
into, or exchangeable or exercisable for, Underlying Securities purchased by or
for the Company or any of its affiliated purchasers in Rule 10b-18 purchases of
blocks (as defined in Rule 10b-18 under the Exchange Act ("Rule 10b-18")) during
the four full calendar weeks immediately preceding the date of this Trade
Supplement:
Monday's Date Friday's Date Share Number
Week 4:
Week 3:
Week 2:
Week 1:
The Company understands that Xxxxxxx Xxxxx will use this information in
calculating trading volume for the purposes of Rule 10b-18.
A-2
Company hereby agrees (a) to check this Trade Supplement carefully and
immediately upon receipt so that errors or discrepancies can be promptly
identified and rectified and (b) to confirm that the foregoing (in the exact
form provided by Xxxxxxx Sachs) correctly sets forth the terms of the agreement
between Xxxxxxx Xxxxx and Company with respect to this Transaction, by manually
signing this Trade Supplement or this page thereof as evidence of agreement to
such terms and providing the other information requested herein and immediately
returning an executed copy to Equity Derivatives Documentation Department,
facsimile No. 000-000-0000/83.
Yours sincerely,
XXXXXXX, SACHS & CO.
By:
___________________________________
Authorized Signatory
Agreed and Accepted
By: PSS WORLD MEDICAL, INC.
By:
___________________________________
Name: Xxxxx X. Xxxxxxx
Title: Vice President and Treasurer
A-3
