STOCK OPTION AGREEMENT
This STOCK OPTION AGREEMENT dated as of March 6, 2000 is by and
between Mirage Resorts, Incorporated, a Nevada corporation (the "Company"),
and MGM Grand, Inc., a Delaware corporation (the "Grantee").
RECITALS
The Grantee, the Company and Merger Subsidiary propose to enter
into the Merger Agreement.
As a condition and inducement to the Grantee's willingness to
enter into the Merger Agreement, the Grantee has requested that the Company
agree, and the Company has agreed, to grant the Grantee the Option.
NOW, THEREFORE, in consideration of the foregoing and the
respective representations, warranties, covenants and agreements set forth
herein and in the Merger Agreement, the Company and the Grantee agree as
follows:
1. Capitalized Terms. Certain capitalized terms used in this
Agreement are defined in Annex A hereto and are used herein with the mean-
ings therein ascribed. Those capitalized terms used but not defined herein
(including in Annex A hereto) that are defined in the Merger Agreement are
used herein with the same meanings as ascribed to them therein; provided,
however, that, as used in this Agreement, "Person" shall have the meaning
specified in Sections 3(a)(9) and 13(d)(3) of the Exchange Act.
2. The Option.
(a) Grant of Option. Subject to the terms and conditions set forth
herein, the Company hereby grants to the Grantee an irrevocable option to
purchase, out of the authorized but unissued Shares, 22,841,091 Shares (as
adjusted as set forth herein) (the "Option Shares"), at the Exercise Price.
(b) Exercise Price. The exercise price (the "Exercise Price") of
the Option shall be $21.00 per Option Share.
Term. The Option shall be exercisable at any time and from time
to time following the occurrence of an Exercise Event and shall remain in
full force and effect until the earliest to occur of (i) the Effective
Time, (ii) the first anniversary of the receipt by Grantee of written
notice from the Company of the occurrence of an Exercise Event and (iii)
termination of the Merger Agreement in accordance with its terms other than
a termination with respect to which an Exercise Event shall occur (the
"Option Term"). If the Option is not theretofore exercised, the rights and
obligations set forth in this Agreement shall terminate at the expiration
of the Option Term. "Exercise Event" shall mean any of the events giving
rise to the obligation of the Company to pay the Termination Fee under
Section 5.11 of the Merger Agreement.
EXHIBIT 4.7
(c) Exercise of Option.
(i) The Grantee may exercise the Option, in whole or in part, at
any time and from time to time during the Option Term. Notwithstanding the
expiration of the Option Term, the Grantee shall be entitled to purchase
those Option Shares with respect to which it has exercised the Option in
accordance with the terms hereof prior to the expiration of the Option
Term.
(ii) If the Grantee wishes to exercise the Option, it shall send a
written notice (an "Exercise Notice") (the date of which being herein
referred to as the "Notice Date") to the Company specifying (i) the total
number of Option Shares it intends to purchase pursuant to such exercise
and (ii) a place and a date (the "Closing Date") not earlier than three
Business Days nor later than 15 Business Days from the Notice Date for the
closing of the purchase and sale pursuant to the Option (the "Closing").
(iii) If the Closing cannot be effected by reason of the applica-
tion of any Law, Regulation or Order, the Closing Date shall be extended to
the tenth Business Day following the expiration or termination of the
restriction imposed by such Law, Regulation or Order. Without limiting the
foregoing, if prior notification to, or Authorization of, any Governmental
Entity is required in connection with the purchase of such Option Shares by
virtue of the application of such Law, Regulation or Order, the Grantee
and, if applicable, the Company shall promptly file the required notice or
application for Authorization and the Grantee, with the cooperation of the
Company, shall expeditiously process the same.
(iv) Notwithstanding Section 2(c)(iii) if the Closing Date shall
not have occurred within nine months after the related Notice Date as a
result of one or more restrictions imposed by the application of any Law,
Regulation or Order, the exercise of the Option effected on the Notice Date
shall be deemed to have expired.
(d) Payment and Delivery of Certificates.
(i) At each Closing, the Grantee shall pay to the Company in
immediately available funds by wire transfer to a bank account designated
by the Company an amount equal to the Exercise Price multiplied by the
number of Option Shares to be purchased on such Closing Date.
(ii) At each Closing, simultaneously with the delivery of
immediately available funds as provided above, the Company shall deliver to
the Grantee a certificate or certificates representing the Option Shares to
be purchased at such Closing, which Option Shares shall be duly authorized,
validly issued, fully paid and nonassessable and free and clear of all
Liens, and the Grantee shall deliver to the Company its written agreement
that the Grantee will not offer to sell or otherwise dispose of such Option
Shares in violation of applicable Law or the provisions of this Agreement.
(e) Certificates. Certificates for the Option Shares delivered at
each Closing shall be endorsed with a restrictive legend that shall read
substantially as follows:
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THE TRANSFER OF THE STOCK REPRESENTED BY THIS CERTIFICATE IS
SUBJECT TO RESTRICTIONS ARISING UNDER THE SECURITIES ACT OF 1933,
AS AMENDED, AND PURSUANT TO THE TERMS OF A STOCK OPTION AGREEMENT
DATED AS OF MARCH 6, 2000. A COPY OF SUCH AGREEMENT WILL BE
PROVIDED TO THE HOLDER HEREOF WITHOUT CHARGE UPON RECEIPT BY THE
COMPANY OF A WRITTEN REQUEST THEREFOR.
A new certificate or certificates evidencing the same number of Shares will
be issued to the Grantee in lieu of the certificate bearing the above
legend, and such new certificate shall not bear such legend, insofar as it
applies to the Securities Act, if the Grantee shall have delivered to the
Company a copy of a letter from the staff of the Securities and Exchange
Commission, or an opinion of counsel in form and substance reasonably
satisfactory to the Company and its counsel, to the effect that such legend
is not required for purposes of the Securities Act.
(f) If at the time of issuance of any Common Shares pursuant to
any exercise of the Option, the Company shall have issued any share pur-
chase rights or similar securities to holders of Common Shares, then each
Option Share purchased pursuant to the Option shall also include rights
with terms substantially the same as and at least as favorable to the
Grantee as those issued to other holders of Common Shares.
3. Adjustment Upon Changes in Capitalization, Etc.
(a) In the event of any change in the Shares by reason of a stock
dividend, split-up, combination, recapitalization, exchange of shares or
similar transaction, the type and number of shares or securities subject to
the Option, and the Exercise Price therefor, shall be adjusted
appropriately, and proper provision shall be made in the agreements
governing such transaction, so that the Grantee shall receive upon exercise
of the Option the same class and number of outstanding shares or other
securities or property that Grantee would have received in respect of the
Shares if the Option had been exercised immediately prior to such event, or
the record date therefor, as applicable.
(b) If any additional Shares are issued after the date of this
Agreement (other than pursuant to an event described in Section 3(a)
above), the number of Shares then remaining subject to the Option shall be
adjusted so that, after such issuance of additional Shares, such number of
Shares then remaining subject to the Option, together with shares thereto-
fore issued pursuant to the Option, equals 12% of the number of Shares then
issued and outstanding.
(c) To the extent any of the provisions of this Agreement apply to
the Exercise Price, they shall be deemed to refer to the Exercise Price as
adjusted pursuant to this Section 3.
4. Repurchase at the Option of Grantee.
(a) At the request of the Grantee made at any time and from time
to time after the occurrence of an Exercise Event and prior to 120 days
after the expiration of the Option Term (the "Put Period"), the Company
(or any successor thereto) shall, at the election of the Grantee (the "Put
Right"), repurchase from the Grantee (i) that portion of the Option relat-
ing to all or any part of the Unexercised Option Shares (or as to which the
Option has been exercised but the Closing has not occurred) and (ii) all or
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any portion of the Shares purchased by the Grantee pursuant hereto and with
respect to which the Grantee then has ownership. The date on which the
Grantee exercises its rights under this Section 4 is referred to as the
"Put Date." Such repurchase shall be at an aggregate price (the "Put
Consideration") equal to the sum of:
(i) the aggregate Exercise Price paid by the Grantee for any
Option Shares which the Grantee owns and as to which the Grantee
is exercising the Put Right;
(ii) the excess, if any, of the Applicable Price over the
Exercise Price paid by the Grantee for each Option Share as to
which the Grantee is exercising the Put Right multiplied by the
number of such shares; and
(iii) the excess, if any, of (x) the Applicable Price per
Share over (y) the Exercise Price multiplied by the number of Un-
exercised Option Shares and Option Shares which have been
exercised but with respect to which the Closing has not yet
occurred.
(b) If the Grantee exercises its rights under this Section 4, the
Company shall, within ten Business Days after the Put Date, pay the Put
Consideration in immediately available funds to an account specified by the
Grantee, and the Grantee shall promptly thereupon surrender to the Company
the Option or portion of the Option and the certificates evidencing the
Shares purchased thereunder. The Grantee shall warrant to the Company
that, immediately prior to the repurchase thereof pursuant to this Section
4, the Grantee had sole record and Beneficial Ownership of the Option or
such shares, or both, as the case may be, and that the Option or such
shares, or both, as the case may be, were then held free and clear of all
Liens.
(c) If the Option has been exercised, in whole or in part, as to
any Option Shares subject to the Put Right but the Closing thereunder has
not occurred, the payment of the Put Consideration shall, to that extent,
render such exercise null and void.
(d) Notwithstanding any provision to the contrary in this Agree-
ment the Grantee may not exercise its rights pursuant to this Section 4 in
a manner that would result in Total Profit of more than the Profit Cap;
provided, however, that nothing in this sentence shall limit the Grantee's
ability to exercise the Option in accordance with its terms.
5. Repurchase at the Option of the Company.
(a) To the extent the Grantee shall not have previously exercised
its rights under Section 4, at the request of the Company made at any time
after the tenth day following the closing of the purchase and sale of any
Option Shares pursuant to Section 2 hereof and for a period ending 120-days
after the expiration of Option Term (the "Call Period"), the Company may
repurchase from the Grantee, and the Grantee shall sell, or cause to be
sold, to the Company, all (but not less than all) of the Shares acquired by
the Grantee pursuant hereto and with respect to which the Grantee has
ownership at the time of such repurchase at a price per share equal to the
greater of (A) the Current Market Price and (B) the Exercise Price per
share in respect of the shares so acquired (such price per share multiplied
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by the number of Shares to be repurchased pursuant to this Section 5 being
herein called the "Call Consideration"). The date on which the Company
exercises its rights under this Section 5 is referred to as the "Call
Date."
(b) If the Company exercises its rights under this Section 5, the
Company shall, within ten Business Days pay the Call Consideration in
immediately available funds, and the Grantee shall surrender to the Company
certificates evidencing the Shares purchased hereunder, and the Grantee
shall warrant to the Company that, immediately prior to the repurchase
thereof pursuant to this Section 5, the Grantee had sole record and
Beneficial Ownership of such shares and that such shares were then held
free and clear of all Liens.
(c) To the extent that the Grantee shall exercise the Option, the
Grantee shall, unless the Grantee shall exercise the Put Right or the
Company shall exercise the Call Right, retain sole ownership of the Shares
so acquired through the end of the Call Period.
(d) Notwithstanding any provision to the contrary in this Agree-
ment, the aggregate of the Call Consideration paid for all Option Shares
shall not exceed the Profit Cap.
6. Registration Rights.
(a) The Company shall, if requested by the Grantee at any time and
from time to time during the Registration Period, as expeditiously as
practicable, prepare, file and cause to be made effective up to two
registration statements under the Securities Act if such registration is
required in order to permit the offering, sale and delivery of any or all
Shares or other securities that have been acquired by or are issuable to
the Grantee upon exercise of the Option in accordance with the intended
method of sale or other disposition stated by the Grantee, including, at
the sole discretion of the Company, a "shelf" registration statement under
Rule 415 under the Securities Act or any successor provision, and the
Company shall use all reasonable efforts to qualify such shares or other
securities under any applicable state securities laws. The Company shall
use all reasonable efforts to cause each such registration statement to
become effective, to obtain all consents or waivers of other parties that
are required therefor and to keep such registration statement effective for
such period not in excess of 180 days from the day such registration
statement first becomes effective as may be reasonably necessary to effect
such sale or other disposition. The obligations of the Company hereunder
to file a registration statement and to maintain its effectiveness may be
suspended for one or more periods of time not exceeding 60 days in the
aggregate if the Board of Directors of the Company shall have determined in
good faith that the filing of such registration or the maintenance of its
effectiveness would require disclosure of nonpublic information that would
materially and adversely affect the Company. For purposes of determining
whether two requests have been made under this Section 6, only requests
relating to a registration statement that has become effective under the
Securities Act and pursuant to which the Grantee has disposed of all shares
covered thereby in the manner contemplated therein shall be counted.
Notwithstanding any other provision of this Section 6, any request for
registration shall permit the Company, upon notice given within 20 days of
the request for registration, to repurchase from the Grantee any shares as
to which the Grantee requests registration at a price per share equal to
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the Current Market Price at the date the Company notifies the Grantee of
its decision to so repurchase. The Registration Expenses shall be for the
account of the Company.
(b) The Grantee shall provide all information reasonably requested
by the Company for inclusion in any registration statement to be filed
hereunder. Grantee shall choose the managing underwriter in any registra-
tion contemplated by this Section 6. If during the Registration Period the
Company shall propose to register under the Securities Act the offering,
sale and delivery of Shares for cash for its own account or for any other
stockholder of the Company pursuant to a firm underwriting, it shall, in
addition to the Company's other obligations under this Section 6, allow the
Grantee the right to participate in such registration provided that the
Grantee participates in the underwriting; provided, however, that, if the
managing underwriter of such offering advises the Company in writing that
in its opinion the number of Shares requested to be included in such
registration exceeds the number that can be sold in such offering, the
Company shall, after fully including therein all securities to be sold by
the Company, include the shares requested to be included therein by Grantee
pro rata (based on the number of Shares intended to be included therein)
with the shares intended to be included therein by Persons other than the
Company.
(c) In connection with any offering, sale and delivery of Shares
pursuant to a registration statement effected pursuant to this Section 6,
the Company and the Grantee shall provide each other and each underwriter
of the offering with customary representations, warranties and covenants,
including covenants of indemnification and contribution and, with respect
to an underwritten offering, enter into an underwriting agreement and other
documents in form and substance customary for transactions of such type.
7. Profit Limitation.
(a) Notwithstanding any other provision of this Agreement in no
event shall the Grantee's Total Profit exceed the Profit Cap and, if it
otherwise would exceed such amount, (A) in connection with the Put Right or
any sale to a third party, the Grantee, at its sole election, shall either
(i) deliver to the Company for cancellation Option Shares previously
purchased by Grantee, (ii) pay cash or other consideration to the Company,
(iii) reduce the amount of the fee payable to Grantee under Section 5.11 of
the Merger Agreement or (iv) undertake any combination thereof, and (B) in
connection with the Call Right, Grantee shall deliver to the Company for
cancellation Option Shares (or other securities into which such Option
Shares are converted or exchanged), in either case, so that the Grantee's
Total Profit shall not exceed the Profit Cap after taking into account the
foregoing actions.
(b) Notwithstanding any other provision of this Agreement, this
Stock Option may not be exercised for a number of Option Shares that would,
as of the Notice Date, result in a Notional Total Profit of more than the
Profit Cap, and, if exercise of the Option otherwise would exceed the
Profit Cap, the Grantee, at its sole option, may reduce the number of
Option Shares as to which this Option is being exercised, increase the
Exercise Price for that number of Option Shares set forth in the Exercise
Notice so that the Notional Total Profit shall not exceed the Profit Cap;
provided, however, that nothing in this sentence shall restrict any
exercise of the Option otherwise permitted by this Section 7(b) on any sub-
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sequent date at the Exercise Price set forth in Section 2(b) if such
exercise would not then be restricted under this Section 7(b).
(c) If an Exercise Event shall occur, the Grantee may elect, in
lieu of receiving any portion of the Termination Fee, to exercise a portion
of the Option.
8. Listing. If the Shares or any other securities then subject to
the Option are then listed on the NYSE, the Company, upon the occurrence of
an Exercise Event, will promptly file an application to list on the NYSE
the Shares or other securities then subject to the Option and will use all
reasonable efforts to cause such listing application to be approved as
promptly as practicable.
9. Replacement of Agreement. Upon receipt by the Company of
evidence reasonably satisfactory to it of the loss, theft, destruction or
mutilation of this Agreement, and (in the case of loss, theft or destruc-
tion) of reasonably satisfactory indemnification, and upon surrender and
cancellation of this Agreement, if mutilated, the Company will execute and
deliver a new Agreement of like tenor and date.
10. Miscellaneous.
(a) Expenses. Except as otherwise provided in the Merger Agreement
or as otherwise expressly provided herein, each of the parties hereto shall
bear and pay all costs and expenses incurred by it or on its behalf in
connection with the transactions contemplated hereunder, including fees and
expenses of its own financial consultants, investment bankers, accountants
and counsel.
(b) Waiver and Amendment. Any provision of this Agreement may be
waived at any time by the party that is entitled to the benefits of such
provision. This Agreement may not be modified, amended, altered or supple-
mented except upon the execution and delivery of a written agreement
executed by the parties hereto.
(c) Entire Agreement; No Third Party Beneficiary; Severability.
Except as otherwise set forth in the Merger Agreement, this Agreement
(including the Merger Agreement and the other documents and instruments re-
ferred to herein and therein) (i) constitutes the entire agreement and
supersedes all prior agreements and understandings, both written and oral,
between the parties with respect to the subject matter hereof and (ii) is
not intended to confer upon any Person other than the parties hereto any
rights or remedies hereunder.
(d) Severability. If any term or other provision of this Agreement
is invalid, illegal or incapable of being enforced by any rule of law or
public policy, all other conditions and provisions of this Agreement shall
nevertheless remain in full force and effect so long as the economic or
legal substance of the transactions contemplated hereby is not affected in
any manner materially adverse to any party. Upon such determination that
any term or other provision is invalid, illegal or incapable of being
enforced, the parties hereto shall negotiate in good faith to modify this
Agreement so as to effect the original intent of the parties as closely as
possible in an acceptable manner to the end that transactions contemplated
hereby are fulfilled to the extent possible.
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(e) Governing Law. This Agreement shall be governed by, and con-
strued in accordance with, the Laws of the State of Nevada, regardless of
the Laws that might otherwise govern under applicable principles of con-
flicts of law.
(f) Descriptive Headings. The descriptive headings contained here-
in are for convenience of reference only and shall not affect in any way
the meaning or interpretation of this Agreement.
(g) Notices. All notices and other communications hereunder shall
be in writing and shall be deemed given if delivered personally, telecopied
(with confirmation) or mailed by registered or certified mail (return
receipt requested) to the parties at the following addresses or sent by
electronic transmission to the telecopier number specified below:
If to the Company to:
Mirage Resorts, Incorporated
0000 Xxx Xxxxx Xxxxxxxxx Xxxxx
Xxx Xxxxx, Xxxxxx 00000
Telecopy: (000) 000-0000
Attention: Xxxxx Xxxxx, Esq.
with a copy to:
Wachtell, Lipton, Xxxxx & Xxxx
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Telecopy: (000) 000-0000
Attention: Xxxxxx X. Xxxx, Esq.
If to Grantee to:
MGM Grand, Inc.
0000 Xxx Xxxxx Xxxxxxxxx Xxxxx
Xxx Xxxxx, Xxxxxx 00000
Telecopy: (000) 000-0000
Attention: Xxxxx Xxxxxxxx
with a copy to:
Christensen, Miller, Fink, Jacobs, Xxxxxx, Weil &
Xxxxxxx, LLP
2121 Avenue of the Stars
Xxxxxxxxxx Xxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000-0000
Telecopy: (000) 000-0000
Attention: Xxxx X. Xxxxxx, Esq.
(h) Counterparts. This Agreement and any amendments hereto may be
executed in counterparts, each of which shall be deemed an original and all
of which taken together shall constitute but a single document.
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(i) Assignment. Neither this Agreement nor any of the rights,
interests or obligations hereunder or under the Option shall be sold,
assigned or otherwise disposed of or transferred by either of the parties
hereto (whether by operation of law or otherwise) without the prior written
consent of the other party, except that the Grantee may assign this Agree-
ment to a wholly owned Subsidiary of the Grantee; provided, however, that
no such assignment shall have the effect of releasing the Grantee from its
obligations hereunder. Subject to the preceding sentence, this Agreement
shall be binding upon, inure to the benefit of and be enforceable by the
parties and their respective successors and assigns.
(j) Further Assurances. In the event of any exercise of the Option
by the Grantee, the Company and the Grantee shall execute and deliver all
other documents and instruments and take all other action that may be
reasonably necessary in order to consummate the transactions provided for
by such exercise.
(k) Specific Performance. The parties hereto hereby acknowledge
and agree that the failure of any party to this Agreement to perform its
agreements and covenants hereunder will cause irreparable injury to the
other party to this Agreement for which damages, even if available, will
not be an adequate remedy. Accordingly, each of the parties hereto hereby
consents to the granting of equitable relief (including specific perform-
ance and injunctive relief) by any court of competent jurisdiction to
enforce any party's obligations hereunder. The parties further agree to
waive any requirement for the securing or posting of any bond in connection
with the obtaining of any such equitable relief and that this provision is
without prejudice to any other rights that the parties hereto may have for
any failure to perform this Agreement.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be duly executed by their respective authorized officers as of the day
and year first above written.
MGM GRAND, INC.
/s/ Xxxxx X. Xxxxxx
-----------------------------------------------
Name: Xxxxx X. Xxxxxx
Title: President and Chief Financial Officer
MIRAGE RESORTS, INCORPORATED
/s/ Xxxxxxx X. Xxxx
-----------------------------------------------
Name: Xxxxxxx X. Xxxx
Title: Chairman, President and
Chief Executive Officer
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ANNEX A
SCHEDULE OF DEFINED TERMS
The following terms when used in the Stock Option Agreement shall
have the meanings set forth below unless the context shall otherwise
require:
"Agreement" shall mean this Stock Option Agreement.
"Applicable Price" means the highest of (i) the highest purchase
price per share paid pursuant to a third party's tender or exchange offer
made for Shares after the date hereof and on or prior to the Put Date, (ii)
the price per share to be paid by any third Person for Shares pursuant to
an agreement for a Business Combination Transaction entered into on or
prior to the Put Date, and (iii) the Current Market Price. If the
consideration to be offered, paid or received pursuant to either of the
foregoing clauses (i) or (ii) shall be other than in cash, the value of
such consideration shall be determined in good faith by an independent
nationally recognized investment banking firm jointly selected by the
Grantee and the Company, which determination shall be conclusive for all
purposes of this Agreement.
"Authorization" shall mean any and all permits, licenses,
authorizations, orders certificates, registrations or other approvals
granted by any Governmental Entity.
"Beneficial Ownership," "Beneficial Owner" and "Beneficially Own"
shall have the meanings ascribed to them in Rule 13d-3 under the Exchange
Act.
"Business Combination Transaction" shall mean (i) a
consolidation, exchange of shares or merger of the Company with any Person,
other than the Grantee or one of its subsidiaries, and, in the case of a
merger, in which the Company shall not be the continuing or surviving
corporation, (ii) a merger of the Company with a Person, other than the
Grantee or one of its Subsidiaries, in which the Company shall be the
continuing or surviving corporation but the then outstanding Shares shall
be changed into or exchanged for stock or other securities of the Company
or any other Person or cash or any other property or the shares of Company
Common Stock outstanding immediately before such merger shall after such
merger represent less than 70% of the common shares and common share
equivalents of the Company outstanding immediately after the merger or
(iii) a sale, lease or other transfer of all or substantially all the
assets of the Company to any Person, other than the Grantee or one of its
Subsidiaries.
"Business Day" shall mean a day other than Saturday, Sunday or a
federal holiday.
"Call Consideration" shall have the meaning ascribed to such term
in Section 5 herein.
"Call Date" shall have the meaning ascribed to such term in
Section 5 herein.
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"Call Period" shall have the meaning ascribed to such term in
Section 5 herein.
"Closing" shall have the meaning ascribed to such term in
Section 2 herein.
"Closing Date" shall have the meaning ascribed to such term in
Section 2 herein.
"Current Market Price" shall mean, as of any date, the average of
the closing prices (or, if such securities should not trade on any trading
day, the average of the bid and asked prices therefor on such day) of the
Shares as reported on the New York Stock Exchange Composite Tape during the
ten consecutive trading days ending on (and including) the trading day
immediately prior to such date or, if the Shares are not quoted thereon, on
The Nasdaq Stock Market or, if the Shares are not quoted thereon, on the
principal trading market (as defined in Regulation M under the Exchange
Act) on which such shares are traded as reported by a recognized source
during such ten Business Day period.
"Exercise Event" shall have the meaning ascribed to such term in
Section 2(c).
"Exercise Notice" shall have the meaning ascribed to such term in
Section 2(d) herein.
"Exercise Price" shall have the meaning ascribed to such term in
Section 2 herein.
"Law" shall mean all laws, statutes and ordinances of the United
States, any state of the United States, any foreign country, any foreign
state and any political subdivision thereof, including all decisions of
Governmental Entities having the effect of law in each such jurisdiction.
"Lien" shall mean any mortgage, pledge, security interest,
adverse claim, encumbrance, lien or charge of any kind (including any
agreement to give any of the foregoing), any conditional sale or other
title retention agreement, any lease in the nature thereof or the filing of
or agreement to give any financing statement under the Laws of any
jurisdiction.
"Merger Agreement" shall mean that certain Agreement and Plan of
Merger dated as of the date hereof among the Company, Grantee and Merger
Subsidiary.
"Notice Date" shall have the meaning ascribed to such term in
Section 2 herein.
"Notional Total Profit" shall mean, with respect to any number of
Option Shares as to which the Grantee may propose to exercise the Option,
the Total Profit determined as of the date of the Exercise Notice assuming
that the Option were exercised on such date for such number of Option
Shares and assuming such Option Shares, together with all other Option
Shares held by the Grantee and its Affiliates as of such date, were sold
for cash at the closing market price for the Shares as of the close of
business on the preceding trading day (less customary brokerage
commissions) and including all amounts theretofore received or concurrently
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being paid to the Grantee pursuant to clauses (i), (ii) and (iii) of the
definition of Total Profit.
"Option" shall mean the option granted by the Company to Grantee
pursuant to Section 2 herein.
"Option Shares" shall have the meaning ascribed to such term in
Section 2 herein.
"Option Term" shall have the meaning ascribed to such term in
Section 2 herein.
"Order" shall mean any judgment, order or decree of any
Governmental Entity.
"Profit Cap" shall mean $140 million.
"Put Consideration" shall have the meaning ascribed to such term
in Section 4 herein.
"Put Date" shall have the meaning ascribed to such term in
Section 4 herein.
"Put Period" shall have the meaning ascribed to such term in
Section 4 herein.
"Put Right" shall have the meaning ascribed to such term in
Section 4 herein.
"Registration Expenses" shall mean the expenses associated with
the preparation and filing of any registration statement pursuant to
Section 6 herein and any sale covered thereby (including any fees related
to blue sky qualifications and filing fees in respect of the National
Association of Securities Dealers, Inc.), but excluding underwriting
discounts or commissions or brokers' fees in respect to shares to be sold
by the Grantee and the fees and disbursements of the Grantee's counsel.
"Registration Period" shall mean the period of two years
following the first exercise of the Option by the Grantee.
"Regulation" shall mean any rule or regulation of any
Governmental Entity having the effect of Law or of any rule or regulation
of any self-regulatory organization, such as the NYSE.
"Total Profit" shall mean the aggregate (before income taxes) of
the following: (i) all amounts to be received by the Grantee or
concurrently being paid to the Grantee pursuant to Section 4 for the
repurchase of all or part of the unexercised portion of the Option, (ii)
(A) the amounts to be received by the Grantee or concurrently being paid to
the Grantee pursuant to the sale of Option Shares (or any other securities
into which such Option Shares are converted or exchanged), including sales
made pursuant to a registration statement under the Securities Act or any
exemption therefrom, less (B) aggregate Exercise Price paid by the Grantee
for such Option Shares and (iii) all amounts received by the Grantee from
the Company or concurrently being paid to the Grantee pursuant to Section
5.11 of the Merger Agreement.
A-3
"Unexercised Option Shares" shall mean, from and after the
Exercise Date until the expiration of the Option Term, those Option Shares
as to which the Option remains unexercised from time to time.
A-4
