Without Cash Settlement Option Draft of 5/10/98
PURCHASE AGREEMENT
THIS AGREEMENT is made as of this ____ day of May __, 1998
between __________________, a ____________ ("Seller") and Xxxxx Xxxxxx
Automatic Common Exchange Security Trust, a trust organized under the laws of
the State of New York under and by virtue of an Amended and Restated Trust
Agreement, dated as of May __, 1998 (the "Trust Agreement") (such trust and
the trustees thereof acting in their capacity as such being referred to herein
as "Purchaser").
WHEREAS, Seller owns shares of Class A Common Stock, par
value $.01 per share (the "Common Stock"), of The Xxxxx Xxxxxx Companies Inc.,
a Delaware corporation (the "Company");
WHEREAS, Purchaser has filed with the Securities and
Exchange Commission a registration statement contemplating the offering of up
to ___________ Trust Automatic Common Exchange Securities (the "Securities"),
the terms of which contemplate delivery by Purchaser to the holders thereof of
a number of shares of Common Stock on the Exchange Date referred to herein;
WHEREAS, Seller has agreed, pursuant to the Collateral
Agreement (the "Collateral Agreement") dated as of May __, 1998, among
Purchaser, Seller, as Pledgor and ______________, as collateral agent (the
"Collateral Agent"), to grant Purchaser a security interest in shares of
Common Stock and in certain circumstances certain other collateral to secure
the obligations of Seller hereunder;
WHEREAS, Purchaser has agreed, pursuant to an underwriting
agreement, dated May __, 1998 (the "Underwriting Agreement"), among Purchaser,
the Sellers named therein, the Company and Xxxxxxx Xxxxx & Co. and Xxxxxxx
Lynch, Pierce, Xxxxxx & Xxxxx Incorporated as representatives of the several
underwriters named therein (the "Underwriters"), to issue and sell to the
Underwriters an aggregate of _____________ Securities (the "Firm Securities")
and, at the Underwriters' option, up to ____________ additional Securities
(the "Optional Securities") to cover overallotments;
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:
DEFINITIONS
As used herein, the following words and phrases shall have
the following meanings:
"Additional Purchase Price" has the meaning provided in
Section 1.2(b).
"Additional Share Base Amount" means a number equal to the
number of Optional Securities that the Underwriters elect to purchase under
the Underwriting Agreement multiplied by a fraction, the numerator of which is
the Firm Share Base Amount and the denominator of which is the number of Firm
Securities.
"Additional Shares" has the meaning provided in Section
1.1(b).
"Additional STRIPS" means the U.S. Treasury obligations
purchased by Purchaser for settlement at the Second Time of Delivery.
"Administrator" means ________________________, administrator
for Purchaser under the Administration Agreement dated as of May __, 1998, or
any successor thereto.
"Appreciation Threshold Price" has the meaning provided in
Section 1.1(c).
"Average Market Price" per share of Common Stock on any date
means the average Closing Price of a share of Common Stock on the 20 Trading
Days immediately prior to but not including such date.
"Business Day" means any day on which commercial banks are
open for business in New York City and the New York Stock Exchange is not
closed.
"Calculation Period" means any period of Trading Days for
which an average security price must be determined pursuant to this Agreement.
"Closing Price" of any common equity security (including the
Common Stock or any Marketable Securities) on any date of determination means
the daily closing sale price (or, if no closing sale price is reported, the last
reported sale price) of such common equity security as reported on the NYSE
Consolidated Tape on such date of determination or, if such common equity
security is not listed for trading on the NYSE on any such date, as reported in
the composite transactions for the principal United States securities exchange
on which such common equity security is so listed, or if such common equity
security is not so listed on a United States national or regional securities
exchange, as reported by The NASDAQ National Market or, if such common equity
security Stock is not so reported, the last quoted bid price for such common
equity security in the over-the-counter market as reported by the National
Quotation Bureau or similar organization, provided that if any event that
results in an adjustment to the number of shares of Common Stock deliverable
hereunder pursuant to Section 6.1 occurs prior to the Exchange Date, the Closing
Price of the Common Stock as determined pursuant to the foregoing will be
appropriately adjusted to reflect the occurrence of such event.
"Collateral Agreement" means the Collateral Agreement among
Seller, as Pledgor, _________, as Collateral Agent and Purchaser, dated as of
May __, 1998.
"common equity security" means any security of any class of
capital stock which has no preference in respect of dividends or of amounts
payable in the event of any voluntary or involuntary liquidation, dissolution
or winding up of the issuer thereof and which is not subject to redemption by
the issuer thereof.
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"Company Successor" has the meaning provided in Section 6.2.
"Contract Shares" has the meaning provided in Section 1.1(b).
"Custodian" means ___________________, custodian for
Purchaser under the Custodian Agreement dated as of ____________, 1998, or any
successor thereto.
"Dilution Adjustment" means any fraction or number by which
the Exchange Rate shall be multiplied pursuant to Section 6.1(a), (b), (c) or
(d).
"Event of Default" has the meaning provided in Article VII.
"Excess Purchase Payment" has the meaning provided in Section
6.1(d).
"Exchange Date" means May __, 2001, subject to (i) extension
by Seller pursuant to Section 1.3(d) and (ii) subsequent acceleration by Seller
pursuant to Section 1.3(e).
"Exchange Rate" has the meaning provided in Section 1.1(c).
"Firm Purchase Price" has the meaning provided in Section
1.2(a).
"Firm Share Base Amount" has the meaning provided in Section
1.1(a).
"Firm Shares" has the meaning provided in Section 1.1(a).
"First Time of Delivery" has the meaning provided in Section
1.3(a).
"Initial Price" has the meaning provided in Section 1.1(c).
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"Liens" has the meaning provided in the Collateral Agreement.
"Marketable Securities" has the meaning provided in Section
6.2.
"NYSE" means the New York Stock Exchange, Inc.
"Permitted Dividend" has the meaning provided in Section
6.1(d).
"Reorganization Event" has the meaning provided in Section
6.2.
"Rollover Offering" means a reoffering or refinancing of all
(but not less than all) of the Securities effected not earlier than May __,
2001 by means of a completed public offering or offerings (which may include
one or more exchange offers) by or on behalf of Seller and the other sellers
that have entered into purchase agreements with the Purchaser.
"Second Time of Delivery" has the meaning provided in Section
1.1(b).
"Then-Current Market Price" of the Common Stock, for the
purpose of applying any adjustment pursuant to Section 6.1, means the average
Closing Price per share of the Common Stock for the Calculation Period of 5
Trading Days immediately prior to the time such adjustment is effected (or, in
the case of an adjustment effected at the opening of business on the Business
Day next following a record date as described in Section 6.1(f)(i),
immediately prior to the earlier of the time such adjustment is effected and
the related ex-date); provided that if no Closing Price for the Common Stock
is determined for one or more (but not all) of such Trading Days, such Trading
Day shall be disregarded in the calculation of the Then-Current Market Price
(but no additional Trading Days shall be added to the Calculation Period). If
no Closing Price for the Common Stock may be determined for any of such
Trading Days, the Then-Current Market Price shall be the Closing Price for the
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Common Stock for the most recent Trading Day prior to such 5 Trading Days for
which a Closing Price for the Common Stock may be determined pursuant to the
"Closing Price" definition. The "ex-date" with respect to any dividend,
distribution or issuance shall mean the first date on which the shares of
Common Stock trade regular way on their principal market without the right to
receive such dividend, distribution or issuance.
"Trading Day" in respect of any common equity security means
a day on which such common equity security (A) is not suspended from trading
on any national or regional securities exchange or association or
over-the-counter market at the close of business and (B) has traded at least
once on the national or regional securities exchange or association or
over-the-counter market that is the primary market for the trading of such
security.
"Transaction Value" has the meaning provided in Section 6.2.
"Transfer Restrictions" has the meaning provided in the
Collateral Agreement.
"Transferred Security" has the meaning provided in Section
1.3(f).
"Trust Agreement" means the Amended and Restated Trust
Agreement constituting Xxxxx Xxxxxx Automatic Common Exchange Security Trust,
dated as of May __, 1998.
"U.S. Government Securities" has the meaning provided in the
Collateral Agreement.
I.
SALE AND PURCHASE
1.1 Sale and Purchase. (a) Firm Shares. Upon the terms and
subject to the conditions of this Agreement, Seller agrees to sell to
Purchaser on the Exchange Date, and
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Purchaser agrees to purchase and acquire from Seller on the Exchange Date, the
number of shares of Common Stock (the "Firm Shares") equal to the product of
________ (the "Firm Share Base Amount") and the Exchange Rate.
(b) Additional Shares. Upon the terms and subject to the
conditions of this Agreement, Seller agrees to sell to Purchaser on the
Exchange Date, and Purchaser shall have a right to purchase on the Exchange
Date, a number of additional shares of Common Stock (the "Additional Shares")
equal to the product of the Exchange Rate and the Additional Share Base
Amount. If the Underwriters exercise their option to purchase Optional
Securities pursuant to the Underwriting Agreement, Purchaser shall notify
Seller in writing that Purchaser will purchase the Additional Shares on the
Exchange Date, which notice shall specify the Additional Share Base Amount and
the date on which Purchaser shall deliver the purchase price for the
Additional Shares, which shall be the Second Time of Delivery specified
pursuant to Section 2 of the Underwriting Agreement (the "Second Time of
Delivery"). The Firm Shares and the Additional Shares (if any) are
collectively referred to herein as the "Contract Shares".
(c) Exchange Rate. The "Exchange Rate" shall be determined
in accordance with the following formula, subject to adjustment as a result of
certain events as provided in Article VI: (i) if the Average Market Price is
less than $_____ (the "Appreciation Threshold Price") but equal to or
greater than $_______ (the "Initial Price"), a fraction (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 Initial Price divided by the
Average Market Price; (ii) if the Average Market Price is equal to or greater
than the Appreciation Threshold Price, _______ and (iii) if the Average Market
Price is less than the Initial Price, 1.
1.2 Purchase Price. (a) Firm Purchase Price. The purchase
price for the Firm Shares (the "Firm Purchase Price") shall be
$_________________ in cash.
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(b) Additional Purchase Price. The purchase price for the
Additional Shares (the "Additional Purchase Price") shall be an amount equal
to (i) the difference between (1) the aggregate proceeds to Purchaser from the
sale of the Optional Securities and (2) the aggregate cost to Purchaser, as
notified by Purchaser to Seller at the Second Time of Delivery, of the
Additional STRIPS, multiplied by (ii) a fraction, the numerator of which is
the Firm Share Base Amount and the denominator of which is the number of Firm
Securities.
1.3 Payment for and Delivery of Contract Shares. (a) First
Time of Delivery. Upon the terms and subject to the conditions of this
Agreement, Purchaser shall deliver to Seller the Firm Purchase Price on May
__, 1998 (the "First Time of Delivery") at the offices of Xxxxxxxx & Xxxxxxxx,
000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, or at such other place as shall be
agreed upon by Purchaser and Seller, paid by wire transfer to an account
designated by Seller, in Federal (immediately available) funds.
(b) Second Time of Delivery. Upon the terms and subject to
the conditions of this Agreement, Purchaser shall deliver to Seller the
Additional Purchase Price at the Second Time of Delivery at the offices of
Xxxxxxxx & Xxxxxxxx, 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, or at such
other place as shall be agreed upon by Purchaser and Seller, paid by wire
transfer to an account designated by Seller, in Federal (immediately
available) funds.
(c) Sale and Delivery of Contract Shares. On the Exchange
Date, Seller agrees to sell and deliver the Contract Shares to Purchaser. Sale
and delivery shall be effected by delivery by the Collateral Agent to the
Custodian, for the account of Purchaser, of shares of Common Stock then held
by the Collateral Agent as collateral under the Collateral Agreement, in an
amount equal to the number of Contract Shares, rounded down to the nearest
whole number. Instead of any fractional shares of Common Stock that would
otherwise be deliverable to Purchaser at the Exchange Date, Seller agrees to
make a cash payment in respect of such fractional shares of Common Stock in an
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amount equal to the value thereof at the Average Market Price. Notwithstanding
the foregoing, if a Reorganization Event shall have occurred prior to the
Exchange Date then, in lieu of the foregoing, delivery shall be effected as
follows: (i) in the case of any cash required to be delivered on the Exchange
Date as provided in Section 6.2, by wire transfer of immediately available
funds to an account designated by Purchaser; or (ii) in the case of any
Marketable Securities elected by Seller to be delivered in lieu of cash as
provided in Section 6.2, at Seller's election, by instruction to the
Collateral Agent to deliver to the Custodian, for the account of Purchaser, a
specified number of Marketable Securities then held as collateral under the
Collateral Agreement, as provided in Section 6(g) of the Collateral Agreement.
(d) Extension of Exchange Date. At its option, Seller may,
by notice given to Purchaser not earlier than March __, 2001 and not later
than April __, 2001, elect to extend the Exchange Date to August __, 2001,
provided that such extension shall be effective only if [(A) all other sellers
that have entered into purchase agreements with the Trust elect to extend such
purchase agreements to August __, 2001 and (B)] Seller shall have:
(i) delivered to the Custodian, for the account of and
subject to the exclusive control of Purchaser, free of any adverse
claims, U.S. Government Securities which through the scheduled
payment of principal and interest in accordance with their terms will
provide, not later than one Business Day before August __, 2001,
money in an amount equal to not less than the product of (1) $______
and (2) a fraction, the numerator of which is the sum of the Firm
Share Base Amount and the Additional Share Base Amount and the
denominator of which is the number of Firm Securities; and
(ii) delivered to Purchaser (1) a certificate of
Seller substantially in the form of Exhibit A hereto
and dated the date of such delivery (A) identifying the U.S.
Government Securities being transferred, (B) certifying that with
respect to such U.S. Government
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Securities the representations and warranties contained in such
Exhibit A hereto are true and correct on and as of the date thereof
and (C) certifying that such U.S. Government Securities satisfy the
condition set forth in paragraph 1.3(d)(i), and (2) an opinion,
dated the date of such delivery, of counsel addressed to Purchaser
confirming the representations contained in the second sentence of
paragraph 2(c) to Exhibit A hereto.
In addition, Seller hereby covenants and agrees to take all other actions
necessary to cause Purchaser to be a protected purchaser of such U.S.
Government Securities, within the meaning of Article 8 of the New York Uniform
Commercial Code, as amended.
If Seller elects to extend the Exchange Date and so notifies
Purchaser, Purchaser shall provide notice of such election to the holders of
the Securities not later than April __, 2001.
(e) Acceleration of Exchange Date. At any time after the
Exchange Date has been extended pursuant to Section 1.3(d) hereof, Seller may,
at its option in connection with the consummation of a Rollover Offering,
accelerate the Exchange Date to any date on or after May __, 2001, by notice
to Purchaser not later than ____ a.m. on the date to which the Exchange Date
is accelerated; provided that such acceleration shall be effective only if
[(A) all other sellers that have entered into purchase agreements with the
Trust elect to accelerate such purchase agreements to the same date and (B)]
at or prior to ___ a.m. on such accelerated Exchange Date, Seller has paid to
Purchaser, by wire transfer to an account designated by Custodian, in Federal
(immediately available) funds, an amount equal to the product of (i) the
aggregate accrued and unpaid quarterly distributions on all outstanding
Securities (computed on the basis of an aggregate quarterly distribution of
$______ and a 360-day year comprised of 12 30-day months) and (ii) a fraction,
the numerator of which is the sum of the Firm Share Base Amount and the
Additional Share Base Amount and the denominator of which is the number
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of Firm Securities. Upon receipt of such amount in immediately available funds,
Purchaser shall promptly deliver to Seller, free of any adverse claim, the U.S.
Government Securities previously delivered by Seller to Purchaser pursuant to
Section 1.3(d) (together with any payments theretofore received by Purchaser in
respect thereof).
If Seller elects to accelerate the Exchange Date and so
notifies Purchaser, Purchaser shall provide notice of such election to the
holders of the Securities not later than the accelerated Exchange Date.
(g) Satisfaction of Obligations. Notwithstanding any other
provision of this Article I, if on or prior to the Exchange Date, Seller
transfers Securities (any Securities so transferred being hereinafter referred
to as the "Transferred Securities") to Purchaser, free and clear of any
adverse claim, for cancellation, then the number of Contract Shares
deliverable by Seller pursuant to this Agreement shall be reduced by a number
equal to the product of (i) the number of Contract Shares and (ii) a fraction,
the numerator of which is the number of Transferred Securities and the
denominator of which is the sum of the Firm Share Base Amount and the
Additional Share Base Amount.
II.
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to Purchaser that each
representation and warranty made by Seller pursuant to Section 1(b) of the
Underwriting Agreement is true and correct on the date hereof.
III.
REPRESENTATIONS AND WARRANTIES OF PURCHASER
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Purchaser represents and warrants to Seller that each
representation and warranty made by Purchaser pursuant to Section 1(a) of the
Underwriting Agreement is true and correct on the date hereof.
IV.
CONDITIONS TO PURCHASER'S OBLIGATIONS
(a) The obligation of Purchaser to deliver the Firm Purchase
Price at the First Time of Delivery is subject to the condition that the
purchase by the Underwriters of the Firm Securities pursuant to the
Underwriting Agreement shall have been consummated as contemplated under the
Underwriting Agreement.
(b) The obligation of Purchaser to deliver the Additional
Purchase Price at the Second Time of Delivery is subject to the condition that
the purchase by the Underwriters of the Optional Securities shall have been
consummated as contemplated under the Underwriting Agreement.
V.
COVENANTS
5.1 Taxes. 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 the Contract Shares
pursuant hereto.
5.2 Forward Contract. Seller hereby agrees that: (i) it 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) it will not treat the delivery of any portion of the
Contract Shares, cash or Marketable Securities to be delivered pursuant to
this Agreement as the payment of interest or ordinary income; (iii) it will
treat this
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Agreement in its entirety as a forward contract for the delivery of such
Contract Shares, cash or Marketable Securities; and (iv) it 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 clause
(i) through (iii). Notwithstanding the preceding sentence, Seller may take any
action or position required by law, provided that Seller delivers to Purchaser
an unqualified opinion of counsel, nationally recognized as expert in Federal
tax matters, to the effect that such action or position is required by a
statutory change, Treasury regulation, or applicable court decision published
after the date of this Agreement.
5.3 Limitations on Trading During Certain Days. Seller
hereby agrees that it will not buy shares of Common Stock for its own account
during the 60 days prior to the Exchange Date.
5.4 Notices. Seller will cause to be delivered to Purchaser:
(a) Immediately upon the occurrence of any Event of Default
hereunder or under the Collateral Agreement, or upon Seller's obtaining
knowledge that any of the conditions or events described in paragraph (a) or
(b) of Article VII shall have occurred with respect to the Company, notice of
such occurrence; and
(b) In case at any time prior to the Exchange Date Seller
receives notice, or otherwise obtains knowledge, that any event requiring that
an adjustment be effected pursuant to Article VI hereof shall have occurred or
be pending, then Seller shall promptly cause to be delivered to Purchaser a
notice identifying such event and stating, if known to Seller, the date on
which such event is to occur and, if applicable, the record date relating to
such event. Seller shall cause further notices to be delivered to Purchaser if
Seller shall subsequently receive notice, or otherwise obtain knowledge, of
any further or revised information regarding the terms or timing of such event
or any record date relating thereto.
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5.5 Further Assurances. From time to time on and after the
date hereof through the Exchange Date, each of the parties hereto shall use its
reasonable best efforts to take, or cause to be taken, all action 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 the Agreement in accordance with the terms and conditions
hereof.
VI.
ADJUSTMENT OF EXCHANGE RATE, APPRECIATION THRESHOLD PRICE,
INITIAL PRICE AND CLOSING PRICE
6.1 Dilution Adjustments. The Exchange Rate, Appreciation
Threshold Price and Initial Price shall be subject to adjustment from time to
time as follows:
(a) Stock Dividends, Splits, Reclassifications, Etc. If the
Company shall, after the date hereof,
(i) pay a stock dividend or make a distribution with respect
to the Common Stock in shares of such stock;
(ii) subdivide or split the outstanding shares of Common
Stock into a greater number of shares of Common Stock;
(iii) combine the outstanding shares of Common Stock into a
smaller number of shares; or
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(iv) issue by reclassification of shares of its Common Stock
any shares of other common stock of the Company;
then, in each such case, the Exchange Rate shall be multiplied by a Dilution
Adjustment equal to the number of shares of Common Stock (or in the case of a
reclassification referred to in clause (iv) above, the number of shares of
other common stock of the Company issued pursuant thereto), or the fraction
thereof, that a holder who held one share of Common Stock immediately prior to
such event would be entitled solely by reason of such event to hold
immediately after such event. The Appreciation Threshold Price and Initial
Price shall also be adjusted in the manner described in paragraph (e).
(b) Right or Warrant Issuances. If the Company shall, after
the date hereof, issue, or declare a record date in respect of an issuance of,
rights or warrants to all holders of Common Stock entitling them to subscribe
for or purchase shares of Common Stock at a price per share less than the
Then-Current Market Price of the Common Stock (other than rights to purchase
Common Stock pursuant to a plan for the reinvestment of dividends or interest),
then, in each such case, the Exchange Rate shall be multiplied by a Dilution
Adjustment equal to a fraction of which the numerator shall be the number of
shares of Common Stock outstanding immediately prior to the time the adjustment
is effected by reason of the issuance of such rights or warrants, plus the
number of additional shares of Common Stock offered for subscription or purchase
pursuant to such rights or warrants, and of which the denominator shall be the
number of shares of Common Stock outstanding immediately prior to the time the
adjustment is effected, plus the number of additional shares of Common Stock
which the aggregate offering price of the total number of shares of Common Stock
so offered for subscription or purchase pursuant to such rights or warrants
would purchase at the Then-Current Market Price of the Common Stock, which shall
be determined by multiplying the total number of shares so offered for
subscription or purchase by the exercise price of such rights or warrants and
dividing the product so
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obtained by such Then-Current Market Price. To the extent that, after the
expiration of such rights or warrants, the shares of Common Stock offered
thereby shall not have been delivered, the Exchange Rate shall be further
adjusted to equal the Exchange Rate which would have been in effect had such
adjustment for the issuance of such rights or warrants been made upon the basis
of delivery of only the number of shares of Common Stock actually delivered. The
Appreciation Threshold Price and Initial Price shall also be adjusted in the
manner described in paragraph (e).
(c) Distributions of Other Assets. If the Company shall,
after the date hereof, declare or pay a dividend or make a distribution to all
holders of Common Stock, in either case, of evidences of its indebtedness or
other non-cash assets (excluding any dividends or distributions referred to in
paragraph (a) above) or shall issue to all holders of Common Stock rights or
warrants to subscribe for or purchase any of its securities (other than rights
or warrants referred to in paragraph (b) above), then, in each such case, the
Exchange Rate shall be multiplied by a Dilution Adjustment equal to a
fraction, of which the numerator shall be the Then-Current Market Price per
share of the Common Stock, and of which the denominator shall be such
Then-Current Market Price per share less the fair market value (as determined by
a nationally recognized independent investment banking firm retained for this
purpose by the Administrator) as of the time the adjustment is effected of the
portion of the assets or evidences of indebtedness so distributed or of such
subscription rights or warrants applicable to one share of Common Stock. The
Appreciation Threshold Price and Initial Price shall also be adjusted in the
manner described in subparagraph (e).
(d) Cash Dividends; Excess Purchase Payments. If the Company
shall, after the date hereof, declare a record date in respect of a
distribution of cash (other than any Permitted Dividend, any cash distributed
in consideration of fractional shares of Common Stock and any cash distributed
in a Reorganization Event), by dividend or otherwise, to all holders of Common
Stock, or make an Excess Purchase Payment, then the Exchange Rate will be
multiplied by a Dilution
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Adjustment equal to a fraction, of which the numerator shall be the Then-Current
Market Price of the Common Stock on such record date, and of which the
denominator shall be such Then-Current Market Price less the amount of such
distribution applicable to one share of Common Stock which would not be a
Permitted Dividend (or in the case of an Excess Purchase Payment, less the
aggregate amount of such Excess Purchase Payment for which adjustment is being
made at such time divided by the number of shares of Common Stock outstanding on
such record date). For purposes of these adjustments, (A) "Permitted Dividend"
means any quarterly cash dividend in respect of the Common Stock, other than a
quarterly cash dividend that exceeds the immediately preceding quarterly cash
dividend, and then only to the extent that the per share amount of such dividend
results in an annualized dividend yield on the Common Stock in excess of
_______% and (B) "Excess Purchase Payment" means the excess, if any, of (x) the
cash and the value (as determined by a nationally recognized independent
investment banking firm retained for this purpose by the Administrator, whose
determination shall be final) of all other consideration paid by the Company
with respect to one share of Common Stock acquired in a tender offer or exchange
offer by the Company, over (y) the Then-Current Market Price of the Common
Stock. The Appreciation Threshold Price and Initial Price shall also be
adjusted in the manner described in subparagraph (e).
(e) Corresponding Adjustments to Initial Price, Appreciation
Threshold Price and Closing Price; Change in Principal Market. (i) If any
adjustment is made to the Exchange Rate pursuant to paragraph (a), (b), (c) or
(d) of this Section 6.1, an adjustment shall also be made to the Appreciation
Threshold Price and the Initial Price. The required adjustment shall be made by
dividing each of the Appreciation Threshold Price and the Initial Price by the
relevant Dilution Adjustment.
(ii) If, during any Calculation Period used in calculating
the Average Market Price, the Then-Current Market Price or the Transaction
Value, there shall occur any event requiring an adjustment to be effected
pursuant to
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this Section 6.1, then the Closing Price for each Trading Day in the Calculation
Period occurring prior to the day on which such adjustment is effected shall be
adjusted by being divided by the relevant Dilution Adjustment.
(f) Timing of Dilution Adjustments. Each Dilution Adjustment
shall be effected:
(i) in the case of any dividend, distribution or issuance,
at the opening of business on the Business Day next following the
record date for determination of holders of Common Stock entitled to
receive such dividend, distribution or issuance or, if the
announcement of any such dividend, distribution or issuance is after
such record date, at the time such dividend, distribution or issuance
shall be announced by the Company;
(ii) in the case of any subdivision, split, combination or
reclassification, on the effective date of such transaction;
(iii) in the case of any Excess Purchase Payment for which
the Company shall announce, at or prior to the time it commences the
relevant share repurchase, the repurchase price per share for shares
proposed to be repurchased, on the date of such announcement; and
(iv) in the case of any other Excess Purchase Payment, on
the date that the holders of the repurchased shares become entitled
to payment in respect thereof.
(g) General; Failure of Dilution Event to Occur. All Dilution
Adjustments shall be 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). No adjustment
in the Exchange Rate shall be required unless such adjustment would require an
increase or decrease of at least one percent therein; provided, however, that
any adjustments which by reason of this sentence are not required to be made
shall be carried forward and taken into account in any
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subsequent adjustment. If any announcement or declaration of a record date in
respect of a dividend, distribution, issuance or repurchase requiring an
adjustment pursuant to this Section 6.1 shall subsequently be cancelled by the
Company, or such dividend, distribution, issuance or repurchase shall fail to
receive requisite approvals or shall fail to occur for any other reason, then,
upon such cancellation, failure of approval or failure to occur, the Exchange
Rate shall be further adjusted to the Exchange Rate which would then have been
in effect had adjustment for such event not been made. If after an announcement
of a share repurchase requiring an adjustment pursuant to this Section 6.1, the
Company reduces the repurchase price or repurchases fewer shares than announced,
then upon completion of such share repurchase the Exchange Rate shall be further
adjusted to equal the Exchange Rate that would have been in effect had the
adjustment for such repurchase been based on the actual price and amount
repurchased. If a Reorganization Event shall occur after the occurrence of one
or more events requiring an adjustment pursuant to this Section 6.1, the
Dilution Adjustments previously applied to the Exchange Rate in respect of such
events shall not be rescinded but shall be applied to the new Exchange Rate
provided for under Section 6.2.
6.2 Adjustment for Consolidation, Merger or Other
Reorganization Event. In the event of (i) any consolidation or merger of the
Company, or any surviving entity or subsequent surviving entity of the Company
(a "Company Successor"), with or into another entity (other than a merger or
consolidation in which the Company 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 Company or
another corporation), (ii) any sale, transfer, lease or conveyance to another
corporation of the property of the Company or any Company Successor as an
entirety or substantially as an entirety, (iii) any statutory exchange of
securities of the Company or any Company Successor with another corporation
(other than in connection with a merger or acquisition) or (iv) any liquidation,
dissolution or winding up of the Company or any
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Company Successor (any such event described in clause (i), (ii), (iii) or (iv),
a "Reorganization Event"), the Exchange Rate shall be adjusted so that on the
Exchange Date Purchaser shall receive, in lieu of the Contract Shares, cash in
an amount equal to the product of (x) the Firm Share Base Amount plus the
Additional Share Base Amount and (y)(i) if the Transaction Value is less than
the Appreciation Threshold Price but equal to or greater than the Initial Price,
the Initial Price, (ii) if the Transaction Value is equal to or greater than the
Appreciation Threshold Price, 0.______ multiplied by the Transaction Value, and
(iii) if the Transaction Value is less than the Initial Price, the Transaction
Value. Notwithstanding the foregoing, (A) if the consideration received by
holders of Common Stock in such Reorganization Event does not include Marketable
Securities, then the Seller's delivery obligation under this Agreement will be
accelerated, and the Seller will deliver the Transaction Value to Purchaser
promptly upon consummation of the Reorganization Event; and (B) if any
Marketable Securities are received by holders of Common Stock in such
Reorganization Event, Seller may, at its option, in lieu of delivering cash as
described above, deliver an equivalent amount (based on the value determined in
accordance with clause (z) of the following paragraph) of Marketable Securities,
but not exceeding, as a percentage of the total consideration required to be
delivered, the percentage of the total Transaction Value attributable to such
Marketable Securities.
"Transaction Value" means the sum of: (x) for any cash
received in any such Reorganization Event, the amount of cash received per
share of Common Stock; (y) for any property other than cash or Marketable
Securities received in any such Reorganization Event, an amount equal to the
market value on the date the Reorganization Event is consummated of such
property received per share of Common Stock, as determined by a nationally
recognized independent investment banking firm retained for this purpose by
the Administrator; and (z) for any Marketable Securities received in any such
Reorganization Event, an amount equal to the average Closing Price per share
of such Marketable
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Securities for the Calculation Period of 20 Trading Days immediately prior to
the Exchange Date multiplied by the number of such Marketable Securities
received for each share of Common Stock; provided that if no Closing Price for
such Marketable Securities may be determined for one or more (but not all) of
such Trading Days, such Trading Day shall be disregarded in the calculation of
such average Closing Price (but no additional Trading Days shall be added to the
Calculation Period). If no Closing Price for the Marketable Securities may be
determined for all such Trading Days, the calculation in the preceding clause
(z) shall be based on the most recently available Closing Price for the
Marketable Securities prior to such 20 Trading Days.
"Marketable Securities" means any common equity securities
listed on a U.S. national securities exchange or reported by The Nasdaq
National Market. The number of shares of any Marketable Securities included in
the calculation of Transaction Value pursuant to the preceding clause (z)
shall be subject to adjustment if any event that would, had it occurred with
respect to the Common Stock or the Company, have required an adjustment
pursuant to Section 6.1, shall occur with respect to such Marketable
Securities or the issuer thereof between the time of the Reorganization Event
and the Exchange Date. Adjustment for such subsequent events shall be as
nearly equivalent as practicable to the adjustments provided for in Section
6.1.
VII.
ACCELERATION
If one or more of the following events (each an "Event of
Default") shall occur:
(a) Seller shall commence a voluntary case or other
proceeding seeking a liquidation, reorganization or other relief with respect
to itself or its debts under any bankruptcy, insolvency or other similar law
now or hereafter in effect or seeking the appointment of a trustee, receiver,
liquidator, custodian or other similar official of it or any
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substantial part of its property, or shall consent to any such relief or to the
appointment of or taking possession by any such official in an involuntary case
or other proceeding commenced against it, or shall take any action to authorize
any of the foregoing;
(b) an involuntary case or other proceeding shall be commenced
against the Seller seeking liquidation, reorganization or other relief with
respect to it or its debts under any bankruptcy, insolvency or other similar law
now or hereafter in effect or seeking the appointment of a trustee, receiver,
liquidator, custodian or other similar official of it or any substantial part of
its property, and such involuntary case or other proceeding shall remain
undismissed and unstayed for a period of 60 days; or an order for relief shall
be entered against the Seller under the federal bankruptcy laws as now or
hereafter in effect; or
(c) a Collateral Event of Default within the meaning of the
Collateral Agreement;
then, upon the occurrence of any such event, Seller shall become obligated to
deliver the Contract Shares (or, after a Reorganization Event, the Marketable
Securities or cash or combination thereof deliverable in respect thereof), or
any U.S. Government Securities then pledged under the Collateral Agreement in
respect thereof. Purchaser and Seller agree that such amount is a reasonable
pre-estimate of loss and not a penalty. Such amount is payable for the loss of
bargain and Purchaser will not be entitled to recover additional damages as a
consequence of loss resulting from an Event of Default.
VIII.
MISCELLANEOUS
8.1 Adjustments of Exchange Rate; Selection of Independent
Investment Banking Firm. Purchaser shall be responsible for the effectuation
and calculation of any
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adjustment pursuant to Article VI hereof and shall furnish Seller notice of any
such adjustment and shall provide Seller reasonable opportunity to review the
calculations pertaining to any such adjustment. If, pursuant to the terms and
conditions hereof, the Administrator shall be required to retain a nationally
recognized independent investment banking firm for any purpose provided herein,
such nationally recognized independent investment banking firm shall be selected
and retained by the Administrator only after consultation with Seller.
8.2 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 Purchaser
shall be directed to it in care of the Administrator for Purchaser,
____________________, at _____________________________________________, Telecopy
No. _____________, attention _________________; notices to Seller shall be
directed to it at _______________________________, Telecopy No. ______________.
8.3 Governing Law; Severability. This Agreement shall be
governed by and construed in accordance with the laws of the State of New
York. 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.
8.4 Entire Agreement. Except as expressly set forth herein,
this Agreement constitutes the entire agreement among the parties with respect
to the subject matter hereof and supersedes all prior agreements,
understandings and negotiations, both written and oral, among the parties with
respect to the subject matter of this Agreement.
8.5 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
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an amendment, by Purchaser 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.
8.6 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 and Purchaser and their respective successors and
assigns and no 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 the Seller and
Purchaser 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 Purchaser and its successors and assigns.
8.7 Counterparts. This Agreement may be signed in any number
of counterparts, each of which shall be an original, with the same effect as
if the signatures thereto and hereto were upon the same instrument.
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IN WITNESS WHEREOF, the parties have signed this Agreement
as of the date and year first above written.
SELLER:
___________________________________
PURCHASER:
______________________, as trustee,
______________________, as trustee,
______________________, as trustee,
each as trustee of Xxxxx Xxxxxx
Automatic Common Exchange Security
Trust
Exhibit A
to
Purchase Agreement
CERTIFICATE FOR EXTENSION OF EXCHANGE DATE
The undersigned, ___________________ ("Seller), hereby
certifies, pursuant to Section 1.3(e) of the Purchase Agreement, dated as of
May __, 1998, among Seller and Xxxxx Xxxxxx AUTOMATIC COMMON EXCHANGE SECURITY
TRUST (the "Purchase Agreement"; terms defined in the Purchase Agreement being
used herein as defined therein), that:
1. Seller is transferring the following U.S. Government
Securities to Purchaser:
2. Seller hereby represents and warrants to Purchaser that:
(a) Consents to Transfer. No Transfer Restrictions exist
with respect to or otherwise apply to the transfer by Seller of such U.S.
Government Securities to Purchaser.
(b) Delivery. Seller has delivered to the Custodian, for the
account of and subject to the exclusive control of Purchaser, free of any
adverse claims, U.S. Government Securities which through the scheduled payment
of principal and interest in accordance with their terms will provide, not
later than one Business Day before August __, 2001, money in an amount equal
to not less than the product of (1) $______ and (2) a fraction, the numerator
of which is the sum of the Firm Share Base Amount and the Additional Share
Base Amount and the denominator of which is the number of Firm Securities.
(c) Title. Seller has good and marketable title to such U.S.
Government Securities, free of all Liens and Transfer Restrictions. Upon
delivery of such U.S. Government Securities to Purchaser, Purchaser will obtain
good and marketable title to such U.S. Government Securities free of any
adverse claims.
IN WITNESS WHEREOF, the undersigned has executed this
certificate this ____ day of ____________, _____.
________________________________
Name:
Title:
