EXHIBIT 52
Execution Copy
STOCK PURCHASE AGREEMENT
dated as of
February 27, 2002
between
GSB INVESTMENTS CORP.
and
JPMORGAN CHASE BANK,
by X.X. XXXXXX SECURITIES INC., as its Agent
TABLE OF CONTENTS
PAGE
ARTICLE 1
DEFINITIONS
SECTION 1.01. Definitions......................................................................1
ARTICLE 2
SALE AND PURCHASE
SECTION 2.01. Sale and Purchase................................................................9
SECTION 2.02. Purchase Price...................................................................9
SECTION 2.03. Payment for and Delivery of Contract Shares......................................9
SECTION 2.04. Cash Settlement Option..........................................................10
SECTION 2.05. Dividend Payment................................................................10
ARTICLE 3
TERMINATION BY SELLER
SECTION 3.01. Termination by Seller...........................................................11
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF SELLER AND BUYER
SECTION 4.01. Representations and Warranties of Seller........................................12
SECTION 4.02. Representations and Warranties of Buyer.........................................14
ARTICLE 5
CONDITIONS TO BUYER'S OBLIGATIONS
SECTION 5.01. Conditions......................................................................15
ARTICLE 6
COVENANTS
SECTION 6.01. Taxes...........................................................................17
SECTION 6.02. Forward Contract................................................................18
SECTION 6.03. Notices.........................................................................19
SECTION 6.04. Further Assurances..............................................................19
SECTION 6.05. Securities Contract.............................................................20
SECTION 6.06. Sales of Securities.............................................................20
ARTICLE 7
ADJUSTMENTS
SECTION 7.01. Dilution Adjustments............................................................20
SECTION 7.02. Reorganization Events...........................................................22
SECTION 7.03. Provisions Relating to Reorganization Events and Spin-Offs......................23
SECTION 7.04. Termination and Payment.........................................................23
ARTICLE 8
ACCELERATION
SECTION 8.01. Acceleration....................................................................23
ARTICLE 9
MISCELLANEOUS
SECTION 9.01. Notices.........................................................................26
SECTION 9.02. Governing Law; Submission to Jurisdiction; Severability; Waiver
of Jury Trial; Service of Process...............................................27
SECTION 9.03. Entire Agreement; Other.........................................................27
SECTION 9.04. Amendments, Waivers.............................................................27
SECTION 9.05. No Third Party Rights, Successors and Assigns...................................28
SECTION 9.06. Calculation Agent...............................................................28
SECTION 9.07. Netting and Set-off.............................................................28
SECTION 9.08. Matters Related to Agent........................................................29
SECTION 9.09. Counterparts....................................................................30
STOCK PURCHASE AGREEMENT
THIS AGREEMENT is made as of this 27th day of February 2002,
between GSB INVESTMENTS CORP., a Delaware corporation ("Seller"), and
JPMORGAN CHASE BANK, ("Buyer"), by X.X. XXXXXX SECURITIES INC., a Delaware
corporation, as agent (in such capacity, the "Agent").
WHEREAS, Seller owns shares of common stock, par value $1.00 per
share, of Golden State Bancorp Inc., a Delaware corporation (the "Issuer"),
or security entitlements in respect thereof (the "Common Stock");
WHEREAS, Seller, Mafco Holdings Inc. ("Mafco"), Buyer and the
Agent have entered into an agreement entitled "Terms and Conditions for
PrISM" (the "Term Sheet") dated as of February 21, 2002, pursuant to which
Seller and Buyer have agreed to enter into certain transactions relating to
the Common Stock at the time and on the terms set forth therein;
WHEREAS, the Term Sheet provides that the transactions described
therein may be executed in one or more tranches (each, a "Tranche");
WHEREAS, the Term Sheet provides that the parties thereto will
enter into final documentation, consisting of a Stock Purchase Agreement
and a Pledge Agreement, relating to each Tranche; and
WHEREAS, pursuant to the Pledge Agreement (as defined herein),
Seller has granted, at the time of delivery of the Initial Pledged Items
(as defined in the Pledge Agreement), Buyer a security interest in certain
shares of Common Stock to secure the obligations of Seller hereunder;
NOW, THEREFORE, in consideration of their mutual covenants herein
contained, the parties hereto, intending to be legally bound, hereby
mutually covenant and agree as follows:
ARTICLE 1
DEFINITIONS
SECTION 1.01. Definitions. As used herein, the following words and
phrases shall have the following meanings:
"Acceleration Amount" has the meaning provided in Section 8.01.
"Acceleration Amount Notice" has the meaning provided in Section
8.01.
"Acceleration Date" has the meaning provided in Section 8.01.
"Acceleration Event" has the meaning provided in Section 8.01.
"Alternative Merger Payment" means the Replacement Value
(calculated in the manner set forth in Section 8.01 as if the
Reorganization Termination Date were the Acceleration Date and expressed as
a cash amount); provided that for purposes of such calculation, the Base
Amount shall be equal to the product of (I) the Base Amount immediately
prior to consummation of the Reorganization Event, times (II) the Non-Stock
Percentage).
"Bankruptcy Code" has the meaning provided in Section 6.05
"Base Amount" has the meaning provided in Section 2.01.
"Business Day" means any day on which commercial banks are open
for business in New York City.
"Calculation Agent" means JPMorgan Chase Bank.
"Cash Settlement Amount" means an amount of cash equal to the
product of the Maturity Price and the number of shares of Common Stock
equal to the product of (i) the Base Amount and (ii) the Exchange Rate.
"Change in Tax Law" has the meaning provided in Section
6.01(a)(i).
"Closing Price" of any security on any date of determination means
the closing sale price (or, if no closing sale price is reported, the last
reported sale price) of such security on the Exchange for the regular
trading session on such date or, if such security is not listed on a
national securities exchange or quoted on a national automated quotation
system, the last quoted bid price for such security in the over-the-counter
market for the regular trading session on such date, as reported by the
National Quotation Bureau or similar organization, or, if such bid price is
not available, the market value of such security on such date as determined
by the Calculation Agent in a commercially reasonable manner.
"Collateral" has the meaning provided in the Pledge Agreement.
"Collateral Account" has the meaning provided in the Pledge
Agreement.
"Contract Share Amount" has the meaning provided in Section
2.03(b).
"Contract Shares" has the meaning provided in Section 2.03(b).
"Dividend Payment Amount" has the meaning provided in Section
2.05.
"Dividend Payment Date" has the meaning provided in Section 2.05.
"Exchange" means, at any time, the principal national securities
exchange or automated quotation system, if any, on which the Common Stock
is listed or quoted at such time.
"Exchange Business Day" means any day that is (or, but for the
occurrence of a Market Disruption Event, would have been) a trading day on
the Exchange, other than a day on which trading on the Exchange is
scheduled to close prior to its regular weekday closing time.
"Exchange Rate" has the meaning provided in Section 2.03(c).
"Extraordinary Cash Dividend" means, with respect to the Common
Stock for any given fiscal quarterly period, any cash dividends paid in
respect of the Common Stock during such period in excess of the maximum
amount of dividends per share that would constitute an Ordinary Cash
Dividend.
"Free Stock" means Common Stock that is not subject to any
Transfer Restrictions in the hands of Seller immediately prior to delivery
to Buyer (or an affiliate of Buyer) hereunder and would not upon delivery
to Buyer (or an affiliate of Buyer) be subject to any Transfer Restrictions
in the hands of Buyer.
"Government Securities" has the meaning provided in the Pledge
Agreement.
"Initial Pledged Items" has the meaning provided in the Pledge
Agreement.
"Initial Sold Shares" has the meaning provided in Section 4.02(g).
"Interpolated LIBOR Rate" means, (i) for any period of less than
12 months, the rate determined by the Calculation Agent using linear
interpolation between USD-LIBOR-BBA for the Designated Maturity (as such
terms are defined in the 1991 ISDA Definitions published by the
International Swaps and Derivatives Association, Inc.) that corresponds
most closely to, but is longer than, such period, and USD-LIBOR-BBA for the
Designated Maturity that corresponds most closely to, but is shorter than,
such period and (ii) for any period of more than 12 months, the rate
determined by the Calculation Agent using linear interpolation between the
"offer side" U.S. Dollar Swap rate posted on Bloomberg Financial Markets
("Bloomberg") Page "SWYC23" (or any successor or replacement page) for the
Designated Maturity that corresponds most closely to, but is longer than,
such period, and the "offer side" U.S. Dollar Swap rate posted on Bloomberg
Page "SWYC23" for the Designated Maturity that corresponds most closely to,
but is shorter than, such period; provided that, in either case, the
Calculation Agent shall make such adjustments to such rates as are
appropriate to reflect continuous compounding (and not semi-annual, or
other method of, compounding) over such period.
"Investment Company Act" means the Investment Company Act of 1940,
as amended.
"Lien" means any lien, mortgage, security interest, pledge, charge
or encumbrance of any kind.
"Market Disruption Event" means the occurrence or the existence on
any Exchange Business Day during the one-half hour period ending at the
close of the regular trading session on the relevant exchange of any
suspension of or limitation in trading (by reason of movements in price
exceeding limits permitted by the relevant exchange or otherwise) in the
Common Stock or in listed options on the Common Stock, if any, if, in the
determination of the Calculation Agent, such suspension or limitation is
material.
"Market Value" means, as of any date with respect to any share of
Common Stock, the Closing Price per share of Common Stock for the Exchange
Business Day prior to such date.
"Marketable Securities" means shares of common stock of a
Publicly- Traded Entity that are not subject to any Transfer Restrictions.
"Maturity Date" means February 27, 2004, or, if such day is not a
Trading Day, the next succeeding Trading Day.
"Maturity Price" means the average of the Closing Prices per share
of the Common Stock on the 20 Trading Days beginning 30 Exchange Business
Days immediately prior to the Maturity Date; provided that if there are not
20 Trading Days during the period beginning 30 Exchange Business Days
immediately prior to the Maturity Date and ending on the Exchange Business
Day immediately prior to the Maturity Date, the Maturity Price shall be
1/20th of the sum of (i) the Closing Prices per share of the Common Stock
on each of the Trading Days during such period and (ii) the product of (x)
the market value of the Common Stock as of the Maturity Date as determined
by the Calculation Agent and (y) the difference between 20 and the number
of Trading Days during such period.
"Merger Payment" means an amount equal to:
(SA x BA x NSP) + (PV x NSP)
where:
SA = the Supplemental Amount;
BA = the Base Amount immediately prior to consummation of
the Reorganization Event;
NSP = the Non-Stock Percentage; and
PV = the present value on the Reorganization
Termination Date, as determined by the
Calculation Agent using the Interpolated LIBOR
Rate, of a payment on the Maturity Date of an
amount equal to the product of (A) the Base
Amount immediately prior to consummation of the
Reorganization Event, times (B) the Reference
Price.
"Merger Payment Amount Notice" has the meaning provided in Section
7.04.
"New Common Stock" has the meaning provided in Section 7.01(c).
"Non-Stock Consideration" has the meaning provided in Section
7.02.
"Non-Stock Percentage" means, with respect to any Reorganization
Event in which the consideration received by holders of Common Stock
includes, or consists solely of, Non-Stock Consideration, a percentage
equal to the percentage of the value of the per share consideration
received by holders of Common Stock represented by Non-Stock Consideration,
as determined by the Calculation Agent.
"Optional Termination Date" has the meaning provided in Section
3.01.
"Ordinary Cash Dividends" means, with respect to the Common Stock
for any given quarterly fiscal period, cash dividends paid in respect of
the Common Stock during such period, but only to the extent that the
aggregate per share amount paid during such period does not exceed $0.10.
"Original Common Stock" has the meaning provided in Section
7.01(c).
"Payment Date" has the meaning provided in Section 2.03(a).
"Person" means an individual, a corporation, a partnership, an
association, a trust or any other entity or organization, including a
government or political subdivision or an agency or instrumentality
thereof.
"Pledge Agreement" means the Pledge Agreement dated as of the date
hereof between Seller and Buyer, as amended from time to time.
"Potential Adjustment Event" has the meaning provided in Section
7.01.
"Publicly-Traded Entity" means a surviving or continuing
corporation of the Issuer (or any successor) following a Reorganization
Event, or a corporation the capital stock of which is distributed in a
Spin-Off, the common stock of which is traded on any national securities
exchange or automatic interdealer quotation system in the United States;
provided that in the case of a Reorganization Event, the product of (i) the
Closing Price of such surviving or continuing corporation's common stock on
the Exchange Business Day immediately succeeding such Reorganization Event
multiplied by (ii) the number of shares of such surviving or continuing
corporation's common stock held by non-affiliates of such corporation shall
not be less than the product of (A) the Closing Price of the Common Stock
on the Exchange Business Day immediately preceding such Reorganization
Event and (B) the number of shares of Common Stock held by non-affiliates
of the Issuer.
"Purchase Price" has the meaning provided in Section 2.02.
"Registration Agreement" means the Registration Agreement dated as
of February 21, 2002 among Seller, Mafco, the Issuer, Buyer and Agent, as
amended from time to time.
"Reference Price" has the meaning provided in Section 2.03(c).
"Reimbursement Amount" has the meaning provided in the Pledge
Agreement.
"Reimbursement Payment Date" has the meaning provided in the
Pledge Agreement.
"Reorganization Event" has the meaning provided in Section 7.02.
"Reorganization Termination Date" has the meaning provided in
Section 7.02.
"Replacement Value" has the meaning provided in Section 8.01.
"Required Payment Date" has the meaning provided in Section
6.01(a)(i).
"Securities Act" means the Securities Act of 1933, as amended.
"Share Collateral" has the meaning provided in the Pledge
Agreement.
"Spin-Off" has the meaning provided in Section 7.01.
"Supplemental Amount" means (x) if the value of the consideration
received per share of Common Stock in a Reorganization Event, as determined
by the Calculation Agent (the "Consideration Amount"), is greater than the
Threshold Price, the Consideration Amount minus the Threshold Price, (y) if
the Consideration Amount is less than the Reference Price, the
Consideration Amount minus the Reference Price and (z) if the Consideration
Amount is less than or equal to the Threshold Price and greater than or
equal to the Reference Price, zero (0).
"Taxes" has the meaning provided in Section 6.01(a).
"Threshold Price" has the meaning provided in Section 2.03(c).
"Trading Day" is defined as any Exchange Business Day on which
there is not a Market Disruption Event.
"Transfer Restriction" means, with respect to any share of Common
Stock or item of collateral pledged under the Pledge Agreement, any
condition to or restriction on the ability of the owner thereof to sell,
assign or otherwise transfer such share of Common Stock or item of
collateral or to enforce the provisions thereof or of any document related
thereto whether set forth in such item of collateral itself or in any
document related thereto, including, without limitation, (i) any
requirement that any sale, assignment or other transfer or enforcement of
such share of Common Stock or item of collateral be consented to or
approved by any Person, including, without limitation, the issuer thereof
or any other obligor thereon, (ii) any limitations on the type or status,
financial or otherwise, of any purchaser, pledgee, assignee or transferee
of such share of Common Stock or item of collateral, (iii) any requirement
of the delivery of any certificate, consent, agreement, opinion of counsel,
notice or any other document of any Person to the issuer of, any other
obligor on or any registrar or transfer agent for, such share of Common
Stock or item of collateral, prior to the sale, pledge, assignment or other
transfer or enforcement of such share of Common Stock or item of collateral
and (iv) any prospective registration or qualification requirement or
prospectus delivery requirement for such share of Common Stock or item of
collateral pursuant to any federal, state or foreign securities law
(including, without limitation, any such requirement arising as a result of
Rule 144 or Rule 145 under the Securities Act); provided that the required
delivery of any assignment, instruction or entitlement order from the
seller, pledgor, assignor or transferor of such share of Common Stock or
item of collateral, together with any evidence of the corporate or other
authority of such Person, shall not constitute a "Transfer Restriction".
"Treasury Rate" means, on any given date for any given period, the
rate for the auction held on such date of direct obligations of the United
States ("Treasury Bills") having a maturity comparable to such period that
appears on Telerate Page 56 (or such other page as may replace such page on
such service for the purpose of displaying such rate) or Page 57 (or such
other page as may replace such page on such service for the purpose of
displaying such rate) by 3:00 p.m., New York City time, on such date or, if
such period does not so appear, the rate obtained by linear interpolation
between the rates that appear for the next longer period and the next
shorter period. If the Treasury Rate does not appear on Telerate Page 56 or
Page 57 by 3:00 p.m. on such date, the Treasury Rate for such date will be
the auction rate of such Treasury Bills, as published in H.15(519) under
the heading "Treasury Bills-auction average (investment)" or, if not so
published by 3:00 p.m., New York City time, on such date, the auction
average rate on such date (expressed as a bond equivalent, on the basis of
a year of 365 or 366 days, as applicable, and applied on a daily basis) as
otherwise announced by the United States Department of the Treasury. In the
event that the results of the auction of Treasury Bills having a maturity
comparable to such period is not displayed, published or reported as
provided above by 3:00 p.m., New York City time, on such date or if no such
auction is held on such date, then the Treasury Rate will be calculated by
the Calculation Agent and shall be a yield to maturity (expressed as a bond
equivalent, on the basis of a year of 365 or 366 days, as applicable, and
applied on a daily basis) calculated using the arithmetic mean of the
secondary market bid rates, as of approximately 3:30 p.m., New York City
time, on such date, of three leading primary United States government
securities dealers selected by the Calculation Agent for the issue of
Treasury Bills with a remaining maturity closest to such period.
ARTICLE 2
SALE AND PURCHASE
SECTION 2.01. Sale and Purchase. Upon the terms and subject to the
conditions of this Agreement, Seller agrees to sell to Buyer (or an
affiliate of Buyer designated by Buyer), and Buyer agrees to purchase and
acquire from Seller, the number of shares of Common Stock equal to the
product of 1,000,000 (the "Base Amount") and the Exchange Rate.
SECTION 2.02. Purchase Price. The purchase price (the "Purchase
Price") shall be $19,683,803.06 in cash.
SECTION 2.03. Payment for and Delivery of Contract Shares. (a)
Upon the terms and subject to the conditions of this Agreement, Buyer shall
deliver the Purchase Price to, or for the account of, Seller on February
27, 2002 (the "Payment Date") at the offices of Xxxxx Xxxx & Xxxxxxxx, 000
Xxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, or at such other place as shall
be agreed upon by Buyer and Seller, paid by certified or official bank
check or checks duly endorsed to, or payable to the order of, Seller, or in
immediately available funds by wire transfer to an account designated by
Seller.
(b) On the Maturity Date, Seller agrees, subject to Section 2.04,
to deliver to Buyer (or an affiliate of Buyer designated by Buyer) (i) a
number of shares of Free Stock (the "Contract Shares") equal to the product
(the "Contract Share Amount"), rounded down to the nearest whole number, of
(A) the Base Amount and (B) the Exchange Rate and (ii) cash in an amount
equal to the value (based on the Maturity Price) of any fractional share
not delivered as a result of such rounding. If (x) by 10:00 A.M., New York
City time on the Maturity Date, Seller has not otherwise effected such
delivery of Common Stock or delivered cash in lieu thereof pursuant to
Section 2.04 and (y) the Common Stock then held by Buyer as collateral
under the Pledge Agreement is Free Stock, then (i) Seller shall be deemed
not to have elected to deliver cash in lieu of shares of Free Stock
pursuant to Section 2.04 (notwithstanding any notice by Seller to the
contrary) and (ii) the delivery provided by this Section 2.03(b) shall be
effected by delivery to Buyer from the Collateral Account in the manner set
forth in the Pledge Agreement of a number of shares of Free Stock then held
by Buyer as collateral under the Pledge Agreement equal to the number
thereof required to be delivered by Seller to Buyer pursuant to this
Section 2.03(b); provided that, notwithstanding the foregoing and without
limiting the generality of Section 8.01, if Seller gives notice of Seller's
election to deliver cash in lieu of shares of Free Stock on the Maturity
Date pursuant to Section 2.04 and fails to deliver the Cash Settlement
Amount on the Maturity Date as provided in Section 2.04, Seller shall be in
breach of this Agreement and shall be liable to Buyer for any losses
incurred by Buyer or its affiliates as a result of such breach, including
without limitation any aggregate net losses incurred in connection with any
decrease in the Closing Price of the Common Stock subsequent to the 30th
Exchange Business Day immediately preceding the Maturity Date.
(c) The "Exchange Rate" shall be determined by the Calculation
Agent in accordance with the following formula: (i) if the Maturity Price
is less than or equal to $49.83 (the "Threshold Price") but greater than
$24.92 (the "Reference Price"), the Exchange Rate shall be a ratio (rounded
upward or downward to the nearest 1/10,000th or, if there is not a nearest
1/10,000th, to the next lower 1/10,000th) equal to the Reference Price
divided by the Maturity Price, (ii) if the Maturity Price is greater than
the Threshold Price, the Exchange Rate shall be a ratio (rounded upward or
downward to the nearest 1/10,000th or, if there is not a nearest
1/10,000th, to the next lower 1/10,000th) equal to one (1) minus a
fraction, the numerator of which shall equal the excess of the Threshold
Price over the Reference Price and the denominator of which shall equal the
Maturity Price and (iii) if the Maturity Price is equal to or less than the
Reference Price, the Exchange Rate shall be one (1).
SECTION 2.04. Cash Settlement Option. Seller may, upon written
notice delivered to Buyer at least 35 Exchange Business Days prior to the
Maturity Date, elect to deliver the Cash Settlement Amount to Buyer (or an
affiliate of Buyer designated by Buyer) on the Maturity Date by wire
transfer of immediately available funds to an account designated by Buyer,
in lieu of the shares of Common Stock to be delivered on the Maturity Date
pursuant to Section 2.03(b).
SECTION 2.05. Dividend Payment. Seller shall pay to Buyer (or an
affiliate of Buyer designated by Buyer) on the Business Day following the
payment of any Extraordinary Cash Dividend (each, a "Dividend Payment
Date") with respect to the Common Stock an amount in cash equal to the
product (the "Dividend Payment Amount" with respect to such Dividend
Payment Date) of (i) the per share amount of such dividend and (ii) the
Base Amount on the ex- dividend date for such dividend.
ARTICLE 3
TERMINATION BY SELLER
SECTION 3.01. Termination by Seller. At any time on or after the
date six months following the Payment Date, Seller may terminate this
Agreement in whole or in part upon 35 Exchange Business Days' prior written
notice to Buyer. Any such notice shall specify (i) the date on which this
Agreement is to be terminated (the "Optional Termination Date"), (ii)
whether Seller elects to deliver cash or shares of Free Stock in respect of
the portion of this Agreement that is to be terminated and (iii) the number
of shares of Common Stock with respect to which this Agreement is to be
terminated. If Seller terminates this Agreement in whole, (A) the
Calculation Agent shall deliver to Seller a notice specifying the
Replacement Value (calculated in the manner set forth in Section 8.01 as if
the Optional Termination Date were the Acceleration Date, and expressed
either as a cash amount or as a number of shares of Common Stock, in
accordance with Seller's election to deliver cash or shares of Free Stock),
(B) Seller shall deliver to Buyer (or an affiliate of Buyer designated by
Buyer) on the Optional Termination Date a cash payment, by wire transfer of
immediately available funds to an account designated by Buyer, in an amount
equal to the Replacement Value or a number of shares of Free Stock equal to
the Replacement Value, as the case may be. If Seller terminates this
Agreement in part, (1) the Calculation Agent shall deliver to Seller a
notice specifying the Replacement Value with respect to the part of this
Agreement so terminated (calculated in the manner set forth in Section 8.01
as if the Optional Termination Date were the Acceleration Date, and
expressed either as a cash amount or as a number of shares of Common Stock,
in accordance with Seller's election to deliver cash or shares of Free
Stock), provided that for purposes of such calculation, the Base Amount
shall be deemed to be the number of shares of Common Stock with respect to
which this Agreement is to be terminated), (2) Seller shall deliver to
Buyer (or an affiliate of Buyer designated by Buyer) on the Optional
Termination Date a cash payment, by wire transfer of immediately available
funds to an account designated by Buyer, in an amount equal to such
Replacement Value or a number of shares of Free Stock equal to such
Replacement Value, as the case may be, and (3) the Base Amount shall be
reduced by such number of shares of Common Stock with respect to which this
Agreement is to be terminated.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF SELLER AND BUYER
SECTION 4.01. Representations and Warranties of Seller. Seller
represents and warrants to Buyer that:
(a) Seller is a corporation duly organized and existing in good
standing under the laws of the State of Delaware and has the requisite
corporate power to own its properties and to carry on its business as now
being conducted.
(b) The execution and delivery of this Agreement and the Pledge
Agreement and the performance by Seller of Seller's obligations hereunder
and thereunder do not violate or conflict with any provision of the
certificate of incorporation or bylaws of Seller, any law applicable to
Seller, any order or judgment of any court or other agency of government
applicable to Seller or any of Seller's assets or any contractual
restriction binding on or affecting Seller or any of Seller's assets (it
being understood that the existence at any time prior to the payment of the
Purchase Price pursuant to Section 2.03 of factual contingencies to the
effectiveness of any consent required to be obtained under any agreement
binding on or affecting Seller or any of Seller's assets shall not be
deemed to give rise to a breach of this representation or warranty).
(c) All government and other consents that are required to have
been obtained by Seller with respect to this Agreement or the Pledge
Agreement have been obtained and are in full force and effect and all
conditions of any such consents have been complied with (it being
understood that the existence at any time prior to the payment of the
Purchase Price pursuant to Section 2.03 of factual contingencies to the
effectiveness of any consent required to be obtained under any agreement
binding on or affecting Seller or any of Seller's assets shall not be
deemed to give rise to a breach of this representation or warranty). Seller
has complied and will comply in all material respects with all applicable
disclosure or reporting requirements in respect of the transactions
contemplated hereby and by the Pledge Agreement, including without
limitation any requirements imposed by Section 13 or Section 16 of the
Securities Exchange Act of 1934, as amended, or the rules and regulations
thereunder.
(d) Seller has the requisite corporate power and authority to
enter into and perform this Agreement and the Pledge Agreement and to
deliver the Contract Shares in accordance with the terms hereof. The
execution and delivery of this Agreement and the Pledge Agreement by Seller
and the consummation by Seller of the transactions contemplated hereby and
thereby (including the delivery by Seller of the Contract Shares) have been
duly authorized by all necessary corporate action. This Agreement and the
Pledge Agreement have been duly executed and delivered by Seller. Seller's
obligations under this Agreement and the Pledge Agreement constitute
Seller's legal, valid and binding obligations, enforceable in accordance
with their respective 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)).
(e) No Acceleration Event or event that, with the giving of notice
or the lapse of time or both, would constitute an Acceleration Event has
occurred and is continuing and no such event would occur as a result of
Seller's entering into or performing Seller's obligations under this
Agreement or the Pledge Agreement.
(f) There is not pending or, to Seller's knowledge, threatened
against Seller or any of its affiliates any action, suit or proceeding at
law or in equity or before any court, tribunal, governmental body, agency
or official or any arbitrator (including without limitation any bankruptcy,
insolvency or similar proceeding) that is likely to affect the legality,
validity or enforceability against Seller of this Agreement or the Pledge
Agreement or Seller's ability to perform Seller's obligations under this
Agreement or the Pledge Agreement.
(g) Seller is acting for Seller's own account, and has made
Seller's own independent decision to enter into this Agreement and the
Pledge Agreement and as to whether this Agreement and the Pledge Agreement
are appropriate or proper for Seller based upon Seller's own judgment and
upon advice of such advisors as Seller deems necessary. Seller acknowledges
and agrees that Seller is not relying, and has not relied, upon any
communication (written or oral) of Buyer or any affiliate, employee or
agent of Buyer with respect to the legal, accounting, tax or other
implications of this Agreement and the Pledge Agreement and that Seller has
conducted Seller's own analyses of the legal, accounting, tax and other
implications hereof and thereof; it being understood that information and
explanations related to the terms and conditions of this Agreement or the
Pledge Agreement shall not be considered investment advice or a
recommendation to enter into this Agreement or the Pledge Agreement. Seller
is entering into this Agreement and the Pledge Agreement with a full
understanding of all of the terms and risks hereof and thereof (economic
and otherwise) and is capable of evaluating and understanding (on Seller's
own behalf or through independent professional advice), and understands and
accepts, the terms, conditions and risks. Seller is also capable of
assuming (financially and otherwise), and assumes, those risks. Seller
acknowledges that neither Buyer nor any affiliate, employee or agent of
Buyer is acting as a fiduciary for or an advisor to Seller in respect of
this Agreement or the Pledge Agreement.
(h) Delivery of shares of Common Stock by Seller pursuant to this
Agreement will pass to Buyer title (or security entitlements) to such
shares free and clear of any Liens or Transfer Restrictions, except for
those created pursuant to the Pledge Agreement.
(i) Seller has a valid business purpose for entering into this
Agreement, and the transaction contemplated hereby is consistent with
Seller's overall investment strategy.
(j) All representations and warranties of Seller contained in the
Term Sheet were true and correct as of the times such representations and
warranties were made or repeated or deemed to be made or repeated under the
Term Sheet and Seller has performed all of the covenants and obligations to
be performed by Seller on or prior to the date hereof under the Term Sheet.
(k) The terms hereof have been negotiated, and the transactions
contemplated hereby shall be executed, on an arm's length basis.
(l) Seller is not in possession of any material non-public
information regarding the Issuer.
(m) Seller is not and, after giving effect to the transactions
contemplated hereby, will not be an "investment company", as such term is
defined in the Investment Company Act, required to be registered under the
Investment Company Act.
(n) Seller has total assets exceeding $10,000,000.
SECTION 4.02. Representations and Warranties of Buyer. Buyer
represents and warrants to Seller that:
(a) Buyer is a banking corporation duly formed and existing in
good standing under the laws of the State of New York and has the requisite
corporate power to own its properties and to carry on its business as now
being conducted.
(b) The execution and delivery of this Agreement and the Pledge
Agreement and the performance by Buyer of Buyer's obligations hereunder and
thereunder do not violate or conflict with any provision of the
constitutive documents of Buyer, any law applicable to Buyer, any order or
judgment of any court or other agency of government, applicable to Buyer or
any of Buyer's assets or any contractual restriction binding on or
affecting Buyer or any of Buyer's assets.
(c) All government and other consents that are required to have
been obtained by Buyer with respect to this Agreement or the Pledge
Agreement have been obtained and are in full force and effect and all
conditions of any such consents have been complied with.
(d) Buyer has the requisite corporate power and authority to enter
into and perform this Agreement and the Pledge Agreement. The execution and
delivery by Buyer of this Agreement and the Pledge Agreement and the
consummation by Buyer of the transactions contemplated hereby and thereby
have been duly authorized by all necessary action. This Agreement and the
Pledge Agreement have been duly executed and delivered by Buyer. Buyer's
obligations under this Agreement and the Pledge Agreement constitute
Buyer's legal, valid and binding obligations, enforceable in accordance
with their respective 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)).
(e) There is not pending or, to Buyer's knowledge, threatened
against Buyer any action, suit or proceeding at law or in equity or before
any court, tribunal, governmental body, agency or official or any
arbitrator (including without limitation any bankruptcy, insolvency or
similar proceeding) that is likely to affect the legality, validity or
enforceability against Buyer of this Agreement or the Pledge Agreement or
Buyer's ability to perform Buyer's obligations under this Agreement or the
Pledge Agreement.
(f) Buyer has total assets exceeding $10,000,000.
(g) In connection with the transactions contemplated hereby, an
affiliate of Buyer registered as a broker and dealer with the Securities
and Exchange Commission, has introduced into the public market a quantity
of securities of the same class as the Common Shares (the shares so
introduced, the "Initial Sold Shares") in transactions registered under the
Securities Act.
ARTICLE 5
CONDITIONS TO BUYER'S OBLIGATIONS
SECTION 5.01. Conditions. The obligation of Buyer to deliver the
Purchase Price on the Payment Date is subject to the satisfaction of the
following conditions:
(a) The representations and warranties of Seller contained in
Section 4.01 and in the Pledge Agreement shall be true and correct as of
the Payment Date.
(b) The representations and warranties of Seller and the Issuer
contained in the Registration Agreement and any certificate delivered
pursuant thereto shall be true and correct as if made as of the Payment
Date and each of Seller and the Issuer shall have performed all of the
obligations required to be performed by it under the Registration Agreement
on or prior to the Payment Date.
(c) On each Representation Date (as defined in the Registration
Agreement) that shall have occurred prior to the Payment Date, Xxxxx Xxxx &
Xxxxxxxx, counsel to Buyer, in its professional judgment, shall have been
able to provide an opinion to Buyer relating to the disclosure in the
Registration Statement (as defined in the Registration Agreement) in form
and substance acceptable to Buyer.
(d) The Pledge Agreement shall have been executed by the parties
thereto.
(e) Buyer shall have received evidence acceptable to Buyer that
any and all consents required to be obtained under any agreement in
connection with the execution of this Agreement and the Pledge Agreement
and the consummation by Seller of the transactions contemplated hereby and
thereby have been obtained and are in full force and effect and the
conditions of any such consent have been satisfied.
(f) Buyer shall have received evidence acceptable to Buyer that,
immediately upon delivery of the Purchase Price, a number of shares of
Common Stock equal to the Base Amount shall be delivered to Buyer as
Collateral under the Pledge Agreement free and clear from any Liens or
Transfer Restrictions.
(g) Seller shall have performed all of the covenants and
obligations to be performed by Seller hereunder and under the Pledge
Agreement on or prior to the Payment Date.
(h) Seller shall have delivered to Buyer on or prior to the
Payment Date (i) an opinion of Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP to
the effect set forth in Annex A hereto and (ii) an opinion of Xxxx, Weiss,
Rifkind, Xxxxxxx & Xxxxxxxx to the effect set forth in Annex B hereto.
ARTICLE 6
COVENANTS
SECTION 6.01. Taxes. (a) Seller shall pay any and all documentary,
stamp, transfer or similar taxes and charges that may be payable in respect
of the entry into this Agreement and the transfer and delivery of any
Common Stock pursuant hereto. Seller intends to make all payments in
respect of this Agreement free and clear of, and without withholding or
deduction for or on account of, any present or future taxes, duties, fines,
penalties, assessments or other governmental charges of whatsoever nature
(or interest on any taxes, duties, fines, penalties, assessments or other
governmental charges of whatsoever nature) ("Taxes") imposed, levied,
collected, withheld or assessed by, within or on behalf of the United
States or any political subdivision or governmental authority thereof or
therein having power to tax. If any payment or delivery that Seller is
required to make to Buyer hereunder or under the Pledge Agreement will be
subject to such withholding or deduction (based on law as in effect at the
time such payment or delivery is required to be made), the following
provisions shall apply:
(i) Seller shall notify Buyer of such requirement at
least 180 days prior to date on which such payment is required to
be made (the "Required Payment Date"); provided that if Seller is
unable to provide Buyer with 180 days' notice of such requirement
as a result of a statutory change or a Treasury regulation,
notice, announcement, ruling or other Treasury publication or
applicable court decision published after the date hereof (each, a
"Change in Tax Law") or as a result of a transfer by Buyer of its
rights and obligations in respect of this Agreement and the Pledge
Agreement pursuant to Section 9.05, (A) Seller shall notify Buyer
of such requirement as promptly as practicable following such
Change in Tax Law or the effective date of any such transfer and
(B) Buyer shall have the right to postpone the Required Payment
Date for any such payment for as long as reasonably necessary to
effect the transfer contemplated by paragraphs (ii) and (iv) below
(but in no event shall Buyer postpone the Required Payment Date to
a date later than the date 180 days following the date such notice
is given). In the event that the Required Payment Date for any
such payment is postponed, Seller shall deliver such payment to
Buyer on the postponed Required Payment Date, together with
interest thereon for the period from and including the original
Required Payment Date to but excluding such postponed Required
Payment Date at a per annum rate equal to the three-month Treasury
Rate as of the original Required Payment Date.
(ii) Upon receipt of such notice, Buyer shall use its
reasonable best efforts to transfer its rights and obligations in
respect of this Agreement and the Pledge Agreement to another
entity such that (A) such payment would not be subject to
withholding or deduction and (B) neither Buyer nor any of its
affiliates would be subject to increased costs (including balance
sheet costs) as a result of such transfer.
(iii) If Buyer is unable to effect a transfer of the type
contemplated by paragraph (ii) Seller shall indemnify Buyer for
the full amount of any withholding or deduction, as well as any
liability (including penalties, interest and expenses) arising
therefrom or with respect thereto; provided that if it is
reasonably practicable for Buyer to transfer its rights and
obligations in respect of this Agreement and the Pledge Agreement
to another entity such that such payment would not be subject to
such withholding and deduction, then (A) Buyer shall notify Seller
of the aggregate amount of increased costs (including balance
sheet costs) to which Buyer and its affiliates would be subject as
a result of such transfer, (B) Seller shall notify Buyer prior to
the date sixty Business Days preceding the Required Payment Date,
whether or not Seller elects that such transfer be effected and
(C) if Seller elects that such transfer be effected, Seller shall
reimburse Buyer for the aggregate amount of any increased costs
(including balance sheet costs) to which Buyer and its affiliates
would be subject as a result of such transfer and, if Seller does
not elect that such transfer be effected, Seller shall indemnify
Buyer for the full amount of any withholding or deduction, as well
as any liability (including penalties, interest and expenses)
arising therefrom or with respect thereto.
(b) If Seller makes any payment or delivery in respect of this
Agreement or the Pledge Agreement from or through any non-United States
jurisdiction, Seller shall make such payment or delivery free and clear of,
and without withholding or deduction for or on account of, any Taxes
imposed, levied, collected, withheld or assessed by, within or on behalf of
such non-United States jurisdiction, or any political subdivision or
governmental authority thereof or therein having power to tax. In the event
such withholding or deduction is imposed, Seller agrees to indemnify Buyer
for the full amount of such withholding or deduction, as well as any
liability (including penalties, interest and expenses) arising therefrom or
with respect thereto.
SECTION 6.02. Forward Contract. (a) Seller hereby agrees that: (i)
Seller will not treat this Agreement, any portion of this Agreement, or any
obligation hereunder as giving rise to any interest income or other
inclusions of ordinary income; (ii) Seller will not treat the delivery of
any portion of the shares of Common Stock or cash to be delivered pursuant
to this Agreement as the payment of interest or ordinary income; (iii)
Seller will treat this Agreement in its entirety as a forward contract for
the delivery of such shares of Common Stock or cash; and (iv) Seller will
not take any action (including filing any tax return or form or taking any
position in any tax proceeding) that is inconsistent with the obligations
contained in (i) through (iii). Notwithstanding the preceding sentence,
Seller may take any action or position required by law, provided that
Seller delivers to Buyer an unqualified opinion of counsel, nationally
recognized as expert in Federal tax matters and acceptable to Buyer, to the
effect that such action or position is required as a result of a Change in
Tax Law published after the date of this Agreement.
(b) Buyer hereby agrees, for United States federal income tax
purposes, including without limitation tax information reporting purposes,
to treat this Agreement in a manner consistent with Seller's obligations
under this Section 6.02.
SECTION 6.03. Notices. Seller will cause to be delivered to Buyer:
(a) Immediately upon the occurrence of any Acceleration Event
hereunder, notice of such occurrence; and
(b) In case at any time prior to the Maturity Date, Seller or any
officer of Seller receives notice that any event requiring that an
adjustment be calculated pursuant to Article 7 hereof shall have occurred
or be pending, then Seller shall promptly cause to be delivered to Buyer a
notice identifying such event and stating, if known to Seller, the date on
which such event occurred or is to occur and, if applicable, the record
date relating to such event. Seller shall cause further notices to be
delivered to Buyer if Seller or any officer of Seller shall subsequently
receive notice of any further or revised information regarding the terms or
timing of such event or any record date relating thereto.
SECTION 6.04. Further Assurances. From time to time from and after
the date hereof through the Maturity Date, each of the parties hereto shall
use such party's reasonable best efforts to take, or cause to be taken, all
actions and to do, or cause to be done, all things necessary, proper and
advisable to consummate and make effective as promptly as practicable the
transactions contemplated by this Agreement in accordance with the terms
and conditions hereof, including (i) using reasonable best efforts to
remove any legal impediment to the consummation of such transactions and
(ii) the execution and delivery of all such deeds, agreements, assignments
and further instruments of transfer and conveyance necessary, proper or
advisable to consummate and make effective the transactions contemplated by
this Agreement in accordance with the terms and conditions hereof.
SECTION 6.05. Securities Contract. The parties hereto agree and
acknowledge that (a) Buyer is a "financial institution" within the meaning
of Section 101(22) of Title 11 of the United States Code (the "Bankruptcy
Code"), (b) this Agreement is a "securities contract," as such term is
defined in Section 741(7) of the Bankruptcy Code, (c) each and every
transfer of funds, securities and other property under this Agreement is a
"settlement payment" or a "margin payment," as such terms are used in
Sections 362(b)(6) and 546(e) of the Bankruptcy Code, and (d) the rights
given to Buyer hereunder upon an Acceleration Event constitute the rights
to cause the liquidation of a securities contract and to set off mutual
debts and claims in connection with a securities contract, as such terms
are used in Sections 555 and 362(b)(6) of the Bankruptcy Code.
SECTION 6.06. Sales of Securities. In connection with the
transactions contemplated hereby, such affiliate of Buyer registered as a
broker and dealer with the Securities and Exchange Commission referred to
in Section 4.02(g) promptly will introduce into the public market a
quantity of securities of the same class as the Common Stock in
transactions registered under the Securities Act that, when added to (a)
the Initial Sold Shares and (b) other securities of the same class as the
Common Stock introduced by such affiliate into the public market in
transactions registered under the Securities Act after such transactions
referred to in Section 4.02(g) to and including the date hereof, shall
equal the Base Amount.
ARTICLE 7
ADJUSTMENTS
SECTION 7.01. Dilution Adjustments. (a) Following the declaration
by the Issuer of the terms of any Potential Adjustment Event occurring
prior to the Maturity Date, the Calculation Agent will determine whether
such Potential Adjustment Event has a diluting or concentrative effect on
the theoretical value of the Common Stock and, if so, will (i) make the
corresponding adjustment, if any, to any one or more of the Base Amount,
the Exchange Rate, the Threshold Price, the Reference Price, the Maturity
Price, the Cash Settlement Amount, any Closing Price and any other variable
relevant to the exercise, settlement or payment terms hereof or of the
Pledge Agreement as the Calculation Agent determines appropriate to account
for that diluting or concentrative effect and (ii) determine the effective
date of the adjustment; provided that in the case of a Potential Adjustment
Event of the type described in clause (iii) of Section 7.01(b), any such
adjustment shall be made to variables other than the Base Amount. The
Calculation Agent may (but need not) determine the appropriate adjustment
by reference to the adjustment in respect of such Potential Adjustment
Event made by an options exchange to options on the Common Stock traded on
that options exchange.
(b) For these purposes, "Potential Adjustment Event" means any of
the following:
(i) a subdivision, consolidation or reclassification of
shares of Common Stock (which does not constitute a Reorganization
Event), or a free distribution or dividend of any shares of Common
Stock to existing holders of Common Stock by way of bonus,
capitalization or similar issue;
(ii) a distribution or dividend to existing holders of
Common Stock of (A) shares of Common Stock, (B) other share
capital or securities granting the right to payment of dividends
and/or the proceeds of liquidation of the Issuer equally or
proportionately with such payments to holders of Common Stock or
(C) other types 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 Cash Dividend;
(iv) a call by the Issuer in respect of shares of Common
Stock that are not fully paid;
(v) a repurchase by the Issuer of shares of Common Stock,
whether out of profits or capital and whether the consideration
for such repurchase is cash, securities or otherwise; or
(vi) any other similar event that may have a diluting or
concentrative effect on the theoretical value of the Common Stock
(other than an Ordinary Cash Dividend).
Without limiting the foregoing, the parties acknowledge that the
Calculation Agent will make adjustments to the Exchange Rate, the Threshold
Price, the Reference Price, the Maturity Price, the Cash Settlement Amount,
any Closing Price and any other variable relevant to the exercise,
settlement or payment terms hereof or of the Pledge Agreement (other than
the Base Amount) as the Calculation Agent determines appropriate to account
for the value of all Extraordinary Cash Dividends.
(c) Notwithstanding the foregoing, in the event of a distribution
of shares of capital stock of a subsidiary of the Issuer that is a
Publicly-Traded Entity (a "Spin-Off") made to holders of shares of Common
Stock, (i) the "Contract Shares" shall include, in addition to the number
of shares of Free Stock equal to the Contract Share Amount, a number of
shares of New Common Stock equal to the product of (A) the Base Amount
immediately prior to the consummation of the Spin-Off and (B) the number of
shares of New Common Stock that a holder of one share of Original Common
Stock would have owned or been entitled to receive immediately following
such Spin-Off and (ii) the "Maturity Price" shall be equal to the sum of
(A) the Maturity Price of the Original Common Stock and (B) the product of
(x) the Maturity Price of the New Common Stock and (y) the number of shares
of New Common Stock that a holder of one share of Original Common Stock
would have owned or been entitled to receive immediately following such
Spin-Off. Following a Spin-Off, "Original Common Stock" shall mean the
common stock of the entity that is the Issuer immediately prior to the
Spin-Off and "New Common Stock" shall mean the common equity securities of
the Publicly-Traded Entity resulting from such Spin-Off.
SECTION 7.02. Reorganization Events. In the event of (i) any
consolidation or merger of the Issuer with or into another entity (other
than a merger or consolidation in which the Issuer is the continuing
corporation and in which the Common Stock outstanding immediately prior to
the merger or consolidation is not exchanged for cash, securities or other
property of the Issuer or another corporation), (ii) any sale, transfer,
lease or conveyance of the property of the Issuer as an entirety or
substantially as an entirety, (iii) any statutory exchange of securities of
the Issuer with another corporation (other than in connection with a merger
or acquisition) or (iv) any liquidation, dissolution or winding up of the
Issuer (any such event, a "Reorganization Event"), then (A) if there is a
surviving or continuing corporation and such surviving or continuing
corporation is a Publicly-Traded Entity, "Base Amount" shall mean the
product of (x) the Base Amount immediately prior to the consummation of the
Reorganization Event and (y) the number of shares of common stock of the
Publicly-Traded Entity that a holder of one share of Common Stock would
have owned or been entitled to receive immediately following such
Reorganization Event and, if the consideration received by holders of
Common Stock includes cash or property other than common stock of the
Publicly-Traded Entity ("Non- Stock Consideration"), Seller shall make a
cash payment, by wire transfer of immediately available funds to an account
designated by Buyer, to Buyer (or an affiliate of Buyer designated by
Buyer) on the date on which the Reorganization Event is consummated (the
"Reorganization Termination Date") in an amount equal to the Merger Payment
or (B) if there is no surviving or continuing corporation in such
Reorganization Event, if any surviving or continuing corporation is not a
Publicly-Traded Entity or if the consideration received by holders of
Common Stock consists solely of Non-Stock Consideration, this Agreement
shall terminate and Seller shall make a payment or delivery to Buyer (or an
affiliate of Buyer designated by Buyer) as provided in Section 7.04.
SECTION 7.03. Provisions Relating to Reorganization Events and
Spin-Offs. If a Reorganization Event occurs and clause (B) of Section 7.02
does not apply, (a) the surviving or continuing corporation shall be deemed
to be the "Issuer" and the common equity securities of such corporation
shall be deemed to be the "Common Stock" and (b) the Calculation Agent
shall calculate corresponding adjustments, if any, to the Base Amount, the
Exchange Rate, the Threshold Price, the Reference Price, the Maturity
Price, the Cash Settlement Amount, any Closing Price and any other variable
relevant to the exercise, settlement or payment terms hereof as the
Calculation Agent determines appropriate to account for such event. If a
Spin-Off occurs, the entity that is the Issuer immediately prior to the
Spin-Off and the Publicly-Traded Entity resulting from the Spin-Off shall
each be deemed to be the "Issuer" and the Original Common Stock and the New
Common Stock shall each be deemed to be the "Common Stock". Following any
Spin-Off, the Calculation Agent shall calculate further adjustments
pursuant to this Article 7 by applying the methodology set forth in this
Article 7 to both the Original Common Stock and the New Common Stock.
SECTION 7.04. Termination and Payment. Following termination of
this Agreement pursuant to clause (B) of Section 7.02 as a result of any
Reorganization Event, the Calculation Agent shall determine the Merger
Payment. As promptly as reasonably practicable after calculation of the
Merger Payment, the Calculation Agent shall deliver to Buyer and Seller a
notice (the "Merger Payment Amount Notice") specifying the Merger Payment.
Not later than three Business Days following delivery of a Merger Payment
Amount Notice, Seller shall make a cash payment, by wire transfer of
immediately available funds to an account designated by Buyer, to Buyer (or
an affiliate of Buyer designated by Buyer) in an amount equal to the Merger
Payment. Notwithstanding the foregoing, to the extent that any Marketable
Securities are received by holders of Common Stock in such Reorganization
Event, then in lieu of delivering cash as provided in the immediately
preceding sentence, Seller may deliver Marketable Securities with an equal
value (as determined by the Calculation Agent in its discretion in a
commercially reasonable manner).
ARTICLE 8
ACCELERATION
SECTION 8.01. Acceleration. If one or more of the following events
(each an "Acceleration Event") shall occur:
(a) any legal proceeding shall have been instituted or any other
event shall have occurred or condition shall exist that would be reasonably
likely to have a material adverse effect on the financial condition of
Seller or on Seller's ability to perform Seller's obligations hereunder, or
that calls into question the validity or binding effect of any agreement of
Seller hereunder or under the Pledge Agreement;
(b) Seller makes an assignment for the benefit of creditors, files
a petition in bankruptcy, is adjudicated insolvent or bankrupt, petitions
or applies to any tribunal for any receiver of or any trustee for Seller or
any substantial part of Seller's property, commences any proceeding
relating to Seller under any reorganization, arrangement, readjustment of
debt, dissolution or liquidation law or statute of any jurisdiction,
whether now or hereafter in effect, or there is commenced against or with
respect to Seller or any substantial portion of Seller's property any such
proceeding and an order for relief is issued or such proceeding remains
undismissed for a period of 30 days;
(c) at any time (i) any representation or warranty made by Seller
under this Agreement or the Pledge Agreement would be incorrect or
misleading in any material respect if made or repeated as of such time or
(ii) any certificate delivered by Seller pursuant to this Agreement or the
Pledge Agreement is incorrect or misleading in any respect that is
material, in light of the transactions contemplated hereby and by the
Pledge Agreement taken as a whole;
(d) Seller fails to deliver (i) shares of Common Stock (or the
Cash Settlement Amount) on the Maturity Date, (ii) the Replacement Value on
any Optional Termination Date, (iii) the Merger Payment on any
Reorganization Termination Date, (iv) any Reimbursement Amount on any
Reimbursement Date, (v) any Dividend Payment Amount on any Dividend Payment
Date or (vi) any payment or delivery due on any postponed Required Payment
Date where the original Required Payment Date was the Maturity Date, a
Reorganization Termination Date, an Optional Termination Date, a Dividend
Payment Date or a Reimbursement Date, in any case, as required by this
Agreement;
(e) Seller fails to fulfill or discharge when due any of Seller's
obligations, covenants or agreements under or relating to this Agreement or
the Pledge Agreement (other than the obligations referred to in Section
8.01(d) and Section 8.01(f)) such failure remains unremedied for 60 days
following notice from Buyer;
(f) Seller fails to fulfill or discharge when due any of Seller's
obligations, covenants or agreements under or relating to Section 1(b) of
the Pledge Agreement;
(g) due to the adoption of, or any change in, any applicable law
after the date hereof, 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 the date hereof, it
becomes unlawful for Seller to perform any absolute or contingent
obligation to make payment or delivery hereunder or to comply with any
other material provision of this Agreement or the Pledge Agreement;
(h) there occurs a default under any indebtedness for money
borrowed that is incurred or guaranteed by Mafco, Seller or any direct or
indirect wholly owned subsidiary of Mafco in the chain of ownership between
Mafco and Seller, whether such indebtedness now exists or shall hereafter
be created, which indebtedness, individually or in the aggregate, is in
excess of $10,000,000 principal amount, which default shall constitute a
failure to pay any portion of the principal of such indebtedness when due
and payable after the expiration of any applicable grace or cure period
with respect thereto or shall have resulted in such indebtedness becoming
or being declared due and payable prior to the date on which it would
otherwise have become due and payable;
(i) a Collateral Event of Default within the meaning of the Pledge
Agreement shall occur; or
(j) in the reasonable judgment of the Calculation Agent, Buyer is
unable to hedge Buyer's exposure to this Agreement because of the lack of
sufficient shares of Common Stock (not to exceed the Base Amount) being
made available for share borrowing by lenders, including, without
limitation, lenders identified by Seller with whom Buyer shall consult;
then, upon notice to Seller from Buyer at any time following an
Acceleration Event, an "Acceleration Date" shall occur, and Seller shall
become obligated to deliver to Buyer (or an affiliate of Buyer designated
by Buyer) immediately upon receipt of the Acceleration Amount Notice a
number of shares of Free Stock equal to the Acceleration Amount; provided
that if Seller shall have elected to substitute Government Securities for
Share Collateral pursuant to Section 5(j) of the Pledge Agreement, Seller
shall be obligated to deliver an amount of cash equal to the Replacement
Value on the Acceleration Date in lieu of such shares; and provided further
that if Secured Party proceeds to realize upon any collateral pledged under
the Pledge Agreement and to apply the proceeds of such realization as
provided in the second paragraph of Section 7(d) thereof, then, to the
extent of such application of proceeds, Seller's obligation to deliver Free
Stock pursuant to this paragraph shall be deemed to be an obligation to
deliver an amount of cash equal to the aggregate market value (determined
by reference to the amount of such proceeds) of such Free Stock on the
Acceleration Date. The "Acceleration Amount" means the Replacement Value,
expressed as a number of shares of Common Stock.
The "Replacement Value" means an amount determined by the
Calculation Agent representing the fair replacement value (which may be
expressed by the Calculation Agent as a cash amount or as a number of
shares of Common Stock, and which shall include both intrinsic and time
value) to Buyer of an agreement with terms that would preserve for Buyer
the economic equivalent of the payments and deliveries that Buyer and its
affiliates would, but for the occurrence of the Acceleration Date, have
been entitled to receive after the Acceleration Date hereunder (determined
as if all references in Sections 7.02 and 7.04 to "Merger Payment" were
references instead to "Alternative Merger Payment"), including any loss of
bargain, cost of funding or, without duplication, loss or cost incurred as
a result of the termination, liquidation, establishment or reestablishment
of any hedge or related trading position (whether such hedge or related
trading position was maintained by Buyer (or an affiliate of Buyer) or by a
counterparty to a transaction entered into by Buyer (or an affiliate of
Buyer) to hedge Buyer's exposure to this Agreement) (or any gain resulting
from any of them).
As promptly as reasonably practicable after calculation of the
Replacement Value, the Calculation Agent shall deliver to Seller and Buyer
a notice (the "Acceleration Amount Notice") specifying the Acceleration
Amount of shares of Common Stock required to be delivered by Seller.
ARTICLE 9
MISCELLANEOUS
SECTION 9.01. Notices. All notices and other communications
hereunder shall be in writing and shall be deemed to have been duly given
if mailed or transmitted by any standard forms of telecommunication.
Notices to Buyer shall be directed to JPMorgan Chase Bank, 000 Xxxx Xxxxxx
- 00xx Xxxxx, Xxx Xxxx, XX 00000, Attention: EDG Corporate Marketing (Xxxx
Xxxx), Telephone: (000) 000-0000, Telecopy: (000) 000-0000, with a copy to
JPMorgan Chase Bank, 000 Xxxxxxx Xxxxxxxxxx Xxxx, Xxxxxx, XX 00000-0000,
Attention: Collateral Ops, 3 OPS 2, Telephone: (000) 000-0000, Telecopy:
(000) 000-0000; notices to Seller shall be directed to Seller at 00 Xxxx
00xx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Telecopy No. (000) 000-0000,
Attention: Chief Financial Officer.
SECTION 9.02. Governing Law; Submission to Jurisdiction;
Severability; Waiver of Jury Trial; Service of Process. (a) This Agreement
shall be governed by and construed in accordance with the laws of the State
of New York without reference to choice of law doctrine and each party
hereto submits to the jurisdiction of the Courts of the State of New York
and the United States District Court located in the Borough of Manhattan in
New York City and waives, to the fullest extent permitted by law, any
objection that it may now or hereafter have to the laying of the venue of
any suit, action or proceeding arising out of or in connection with this
Agreement in any such court or that any such suit, action or proceeding
brought in any such court has been brought in an inconvenient forum.
(b) To the extent permitted by law, the unenforceability or
invalidity of any provision or provisions of this Agreement shall not
render any other provision or provisions herein contained unenforceable or
invalid.
(c) Seller and Buyer hereby irrevocably and unconditionally waive
any and all right to trial by jury in any legal proceeding arising out of
or related to this Agreement or the transactions contemplated hereby.
(d) The parties irrevocably consent to service of process given in
the manner provided for notices in Section 9.01. Nothing in this Agreement
will affect the right of either party to serve process in any other manner
permitted by law.
SECTION 9.03. Entire Agreement; Other. Except as expressly set
forth herein, this Agreement constitutes the entire agreement and
understanding among the parties with respect to the subject matter hereof
and supersedes all oral communications and prior writings with respect
thereto. The parties hereby agree that (i) Seller is not obligated to keep
confidential or otherwise limit the use of any element of any description
contained in this Agreement or the Pledge Agreement that is necessary to
understand or support any United States federal income tax treatment and
(ii) Buyer does not assert any claim of proprietary ownership in respect of
any description contained herein or therein relating to the use of any
entities, plans or arrangements to give rise to a particular United States
federal income tax treatment for Seller.
SECTION 9.04. Amendments, Waivers. Any provision of this Agreement
may be amended or waived if, and only if, such amendment or waiver is in
writing and signed, in the case of an amendment, by Buyer and Seller or, in
the case of a waiver, by the party against whom the waiver is to be
effective. No failure or delay by either party in exercising any right,
power or privilege hereunder shall operate as a waiver thereof nor shall
any single or partial exercise thereof preclude any other or further
exercise thereof or the exercise of any other right, power or privilege.
The rights and remedies herein provided shall be cumulative and not
exclusive of any rights or remedies provided by law.
SECTION 9.05. No Third Party Rights, Successors and Assigns. This
Agreement is not intended and shall not be construed to create any rights
in any person other than Seller, Buyer and their respective successors and
assigns and no other person shall assert any rights as third party
beneficiary hereunder. Whenever any of the parties hereto is referred to,
such reference shall be deemed to include the successors and assigns of
such party. All the covenants and agreements herein contained by or on
behalf of Seller and Buyer shall bind, and inure to the benefit of, their
respective successors and assigns whether so expressed or not, and shall be
enforceable by and inure to the benefit of Buyer and its successors and
assigns. The rights and duties under this Agreement may not be assigned or
transferred by any party hereto; provided that (i) Buyer may assign any of
its rights or duties hereunder with the prior written consent of Seller
(which consent shall not be unreasonably withheld) and (ii) Buyer may
assign or transfer any of its rights hereunder to receive any shares of
Common Stock, other securities and cash without the prior written consent
of Seller.
SECTION 9.06. Calculation Agent. The determinations and
calculations of the Calculation Agent shall be made in good faith and in a
commercially reasonable manner and shall be binding in the absence of
manifest error. The Calculation Agent will have no responsibility for good
faith errors or omissions in the determination of the Base Amount, the
Exchange Rate, the Threshold Price, the Reference Price, the Maturity
Price, the Cash Settlement Amount, any Closing Price or any other amount as
provided herein.
SECTION 9.07. Netting and Set-off. (a) If on any date cash would
otherwise be payable or shares of Common Stock or other property would
otherwise be deliverable (including, for the avoidance of doubt, the
return, as required by Section 5(i) of the Pledge Agreement, of shares of
Common Stock that have been rehypothecated pursuant to such Section)
pursuant to this Agreement or the Pledge Agreement by Buyer to Seller and
by Seller to Buyer (or an affiliate of Buyer designated by Buyer) and the
type of property required to be paid or delivered by each such party on
such date is the same, then, on such date, each such party's obligation to
make such payment or delivery will be automatically satisfied and
discharged and, if the aggregate amount that would otherwise have been
payable or deliverable by one such party exceeds the aggregate amount that
would otherwise have been payable or deliverable by the other such party,
replaced by an obligation upon the party by whom the larger aggregate
amount would have been payable or deliverable to pay or deliver to the
other party the excess of the larger aggregate amount over the smaller
aggregate amount.
(b) In addition to and without limiting any rights of set-off that
a party hereto may have as a matter of law, pursuant to contract or
otherwise, upon the occurrence of a Reorganization Termination Date to
which clause (B) of Section 7.02 applies or an Acceleration Date, Buyer
shall have the right to terminate, liquidate and otherwise close out the
transactions contemplated by this Agreement and the Pledge Agreement
pursuant to the terms of this Agreement and the Pledge Agreement, and to
set off any obligation that Buyer or any affiliate of Buyer may have to
Seller, including without limitation any obligation to make any release,
delivery or payment to Seller pursuant to the Pledge Agreement, against any
right Buyer or any of its affiliates may have against Seller, including
without limitation any right to receive a payment or delivery pursuant to
Section 2.03(b), Section 2.04, Section 2.05, Section 3.01, Section 7.02,
Section 7.04 or Section 8.01 or any other provision of this Agreement. In
the case of a set-off of any obligation to release, deliver or pay assets
against any right to receive assets of the same type, such obligation and
right shall be set off in kind. In the case of a set-off of any obligation
to release, deliver or pay assets against any right to receive assets of
any other type, the value of each of such obligation and such right shall
be determined by the Calculation Agent and the result of such set-off shall
be that the net obligor shall pay or deliver to the other party an amount
of cash or assets, at the net obligor's option, with a value (determined,
in the case of a delivery of assets, by the Calculation Agent) equal to
that of the net obligation. In determining the value of any obligation to
release or deliver Common Stock or right to receive Common Stock, the value
at any time of such obligation or right shall be determined by reference to
the market value of the Common Stock at such time. If an obligation or
right is unascertained at the time of any such set-off, the Calculation
Agent may in good faith estimate the amount or value of such obligation or
right, in which case set-off will be effected in respect of that estimate,
and the relevant party shall account to the other party at the time such
obligation or right is ascertained.
SECTION 9.08. Matters Related to Agent. (a) The Agent is acting
solely as agent of Buyer on a disclosed basis with respect to the
transactions contemplated hereby.
(b) The Agent shall have no responsibility or liability
(including, without limitation, by way of guarantee, endorsement or
otherwise) to Buyer or Seller or otherwise in respect of this Agreement or
the Pledge Agreement, including, without limitation, in respect of the
failure of Buyer to pay or perform under this Agreement or the Pledge
Agreement, except for its gross negligence or willful misconduct in
performing its duties as Agent hereunder or thereunder.
(c) Each of Buyer and Seller agrees to proceed solely against the
other to collect or recover any securities or money owing to Buyer or
Seller, as the case may be, in connection with or as a result of this
Agreement or the Pledge Agreement.
SECTION 9.09. Counterparts. This Agreement may be executed in any
number of counterparts, and all such counterparts taken together shall be
deemed to constitute one and the same agreement.
IN WITNESS WHEREOF, the parties have signed this Agreement as of
the date and year first above written.
SELLER:
GSB INVESTMENTS CORP.
By: /s/ Xxxx X. Xxxxxxx
-------------------------------
Name: Xxxx X. Xxxxxxx
Title: Executive Vice President and
Chief Financial Officer
BUYER:
JPMORGAN CHASE BANK, by
X.X. XXXXXX SECURITIES INC.,
as Agent
By: /s/ Xxxxxx Xxxx
-------------------------------
Name: Xxxxxx Xxxx
Title: Vice President
ANNEX A
(a) Seller is a corporation duly organized and existing in good
standing under the laws of its jurisdiction of incorporation.
(b) The execution and delivery of this Agreement and the Pledge
Agreement and the performance by Seller of Seller's obligations hereunder
and thereunder do not violate or conflict with any provision of the
certificate of incorporation or bylaws of Seller, any law applicable to
Seller, any order or judgment of any court or other agency of government
known to such counsel applicable to Seller or any of Seller's assets or any
contractual restriction known to such counsel binding on or affecting
Seller or any of Seller's assets. Such counsel need not express any opinion
with respect to whether the execution or delivery by Seller of, or the
performance by Seller of its obligations under, this Agreement and the
Pledge Agreement violates or conflicts with any restriction or provision
with respect to financial ratios or tests any aspect of the financial
condition or results of operations of Seller.
(c) All government and other consents that are known to such
counsel to be required to have been obtained by Seller with respect to this
Agreement or the Pledge Agreement have been obtained and are in full force
and effect and all conditions of any such consents have been complied with.
(d) Seller has the requisite corporate power and authority to
enter into and perform this Agreement and the Pledge Agreement and to
deliver the Contract Shares in accordance with the terms hereof. The
execution and delivery of this Agreement and the Pledge Agreement by Seller
and the consummation by Seller of the transactions contemplated hereby and
thereby (including the delivery by Seller of the Contract Shares) have been
duly authorized by all necessary corporate action by Seller. This Agreement
and the Pledge Agreement have been duly executed and delivered by Seller.
Seller's obligations under this Agreement and the Pledge Agreement
constitute Seller's legal, valid and binding obligations, enforceable in
accordance with their respective 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)).
(e) No registration, recordation or filing with any governmental
body, agency or official is required in connection with the execution and
delivery of this Agreement or necessary for the validity or enforceability
hereof.
(f) Seller is not and, after giving effect to the transactions
contemplated hereby, will not be an "investment company", as such term is
defined in the Investment Company Act, required to be registered under the
Investment Company Act.
ANNEX B
(a) The execution and delivery of this Agreement and the Pledge
Agreement and the performance by Seller of Seller's obligations hereunder
and thereunder do not constitute a violation of, or result in a breach or
default under, any agreement or instrument listed on a schedule to such
opinion.
