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Exhibit (k)(3)
CGSH Draft of 1/5/99
FORWARD PURCHASE AGREEMENT
Between
HYUNDAI ELECTRONICS AMERICA,
As Seller,
and
DECS TRUST IV, As Purchaser
Dated as of
, 1999
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FORWARD PURCHASE AGREEMENT
THIS AGREEMENT is made as of this ________ day of ________, 1999
between Hyundai Electronics America, a corporation organized under the law of
the State of ("Seller") and DECS Trust IV, a business trust organized under the
law of the State of Delaware under and by virtue of an amended and restated
declaration of trust, dated as of ________, 1999 (the "Declaration of Trust")
(such trust and the trustees thereof acting in their capacity as such being
referred to herein as "Purchaser").
WHEREAS, Seller owns shares of common stock, $.01 par value (the
"Common Stock"), of Maxtor Corporation, a Delaware corporation (including its
successors, the "Company");
WHEREAS, Purchaser has filed with the Securities and Exchange
Commission a registration statement contemplating the offering of up to
________ DECS (the "DECS"), the terms of which contemplate delivery by Purchaser
to the holders thereof of a number of shares of Common Stock (or, if Seller
exercises its cash settlement option, cash in lieu thereof), on , 2002 (the
"Exchange Date");
WHEREAS, in exchange for certain consideration to be paid by
Purchaser hereunder, Purchaser and Seller desire to provide for the future
acquisition, sale and delivery of the aggregate number of shares of Common Stock
contemplated to be delivered by Purchaser in respect of the DECS on the Exchange
Date, at a price to be established under this Agreement;
WHEREAS, Seller has agreed to enter into a Collateral Agreement (the
"Collateral Agreement") to be dated as of ________, 1999, among Purchaser,
Seller and The Bank of New York, as collateral agent (the "Collateral Agent"),
to grant Purchaser a security interest in the shares of Common Stock specified
therein and in certain other circumstances certain other collateral to secure
the obligations of Seller hereunder;
WHEREAS, Purchaser has agreed, pursuant to an underwriting
agreement, dated ________, 1999 (the "Underwriting Agreement"), among Purchaser,
Seller, the Company and Xxxxxxx Xxxxx Xxxxxx Inc. and ____________ (each an
"Underwriter", and collectively, the "Underwriters"), to issue and sell to the
Underwriters an aggregate of ________ DECS (the "Initial DECS") and, at the
Underwriters' option, up to ________ additional DECS (the "Additional DECS") to
cover over-allotments, if any;
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:
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"Acceleration Date" has the meaning provided in Article VII.
"Acceleration Value" has the meaning provided in Article VII.
"Act" means the Securities Act of 1933, as amended, and the rules
and regulations of the Commission promulgated thereunder.
"Additional DECS" has the meaning provided in the recitals of this
Agreement.
"Additional Purchase Price" has the meaning provided in Section
1.2(b).
"Additional Share Base Amount" means a number equal to the number of
Additional DECS that the Underwriters elect to Purchase under the Underwriting
Agreement.
"Additional Shares" has the meaning provided in Section 1.1(b).
"Additional STRIPS" means the U.S. Treasury obligations purchased by
Purchaser for settlement on the Option Closing Date.
"Adjustment Event" has the meaning provided in Section 6.2.
"Administrator" means The Bank of New York, administrator for
Purchaser under the Administration Agreement to be dated as of , 1999, or any
successor thereto.
"Affiliate" means, as to any Person, any other Person that, directly
or indirectly, controls, is controlled by or is under common control with such
Person or is a partner in, or a director or officer of, such Person. For
purposes of this definition, "control" (including the terms "controlled by" or
"under common control with") means, as to any Person, the possession, direct or
indirect, of the power to vote ten percent or more of the securities having
ordinary voting power for the election of directors of such Person, or the power
to direct or cause the direction of the management and policies of such Person,
whether through ownership of voting securities or by contract or otherwise.
"Bankruptcy Code" has the meaning provided in Section 10.7.
"Business Day" means any day that is not a Saturday, a Sunday or a
day on which the NYSE or banking institutions or trust companies in The City of
New York are authorized or obligated by law or executive order to close.
"Calculation Period" means any period of Trading Days for which an
average security price must be determined pursuant to this Agreement.
"Cash Delivery Option" has the meaning provided in Section 1.3(d).
"Closing Price" means, for any security on any date of
determination, (i) the closing sale price (or, if no closing price is reported,
the last reported sale price) of such security (regular way) on the NYSE on such
date, (ii) if such security is not listed for trading on the
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NYSE on any such date, as reported in the composite transactions for the
principal United States securities exchange on which such security is so listed,
(iii) if such security is not so listed on a United States national or regional
securities exchange, as reported by The Nasdaq Stock Market, (iv) if such
security is not so reported, as reported in the composite transactions for the
principal United States regional securities exchange on which such security is
so listed, (v) if such security is not so reported, the last quoted bid price
for such security in the over-the-counter market as reported by the National
Quotation Bureau or similar organization or (vi) if such security is not so
quoted, the average of the mid-point of the last bid and ask prices for such
security from at least three nationally recognized investment banking firms
selected by the Administrator for such purpose. The Closing Price as determined
pursuant to the foregoing shall be subject to adjustment in certain
circumstances as provided in Section 6.1(c).
"Collateral" has the meaning provided in the Collateral Agreement.
"Collateral Agent" has the meaning provided in the recitals of this
Agreement.
"Collateral Agreement" has the meaning provided in the recitals of
this Agreement.
"Commission" means the Securities and Exchange Commission.
"Common Stock" has the meaning provided in the recitals of this
Agreement.
"Company" has the meaning provided in the recitals of this
Agreement.
"Contract Shares" has the meaning provided in Section 1.1.
"Custodian" means The Bank of New York, custodian for Purchaser
under the Custodian Agreement dated as of ________, 1999, or any successor
thereto.
"Declaration of Trust" has the meaning provided in the introductory
paragraph of this Agreement.
"DECS" has the meaning provided in the recitals of this Agreement.
"Dilution Adjustment" means any fraction or number by which the
Exchange Rate shall be multiplied pursuant to Section 6.1(a) or (b) or by which
Closing Prices may be divided pursuant to Section 6.1(c).
"Event of Default" has the meaning provided in Article VII.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations of the Commission promulgated thereunder.
"Exchange Date" has the meaning provided in the recitals of this
Agreement.
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"Exchange Price" means the average Closing Price per share of Common
Stock on the 20 Trading Days immediately prior to (but not including) the
Exchange Date; provided, however, that if there are not 20 Trading Days for the
Common Stock occurring later than the 60th calendar day immediately prior to,
but not including, the Exchange Date, Exchange Price shall mean the market value
per share of the Common Stock as of the Exchange Date as determined by a
nationally recognized independent investment banking firm retained for this
purpose by the Administrator. The Exchange Price as determined pursuant to the
foregoing shall be subject to adjustment in certain circumstances as provided in
Section 6.1(c).
"Exchange Rate" has the meaning provided in Section 1.1(c).
"Firm Payment Date" has the meaning provided in Section 1.3(a).
"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).
"Forward Purchase Contract Characterization" has the meaning
provided in Section 5.2(a).
"Independent Dealers" has the meaning provided in Article VII.
"Initial DECS" has the meaning provided in the recitals of this
Agreement.
"Initial Price" has the meaning provided in Section 1.1(c).
"Market Price" means, as of any date of determination, the average
Closing Price per share of Common Stock on the 20 Trading Days immediately prior
to (but not including) the date of determination; provided, however, that if
there are not 20 Trading Days for the Common Stock occurring later than the 60th
calendar day immediately prior to, but not including, such date, the Market
Price shall mean the market value per share of Common Stock as of such date as
determined by a nationally recognized investment banking firm retained for such
purpose by the Administrator.
"NYSE" means the New York Stock Exchange Inc.
"Officer" shall mean the manager, trustee, president, any vice
president, the chief financial officer, the treasurer or the secretary of a
Person.
"Officer's Certificate" means a certificate signed by an Officer of
a Person.
"Opinion of Counsel" means a written opinion from legal counsel who
is acceptable to the Trust.
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"Option Closing Date" means the settlement dates for the Additional
DECS under Section 5 of the Underwriting Agreement.
"Ordinary Cash Dividend" means, with respect to any consecutive
365-day period, any dividend with respect to Common Stock paid in cash to the
extent that the amount of such dividend, together with the aggregate amount of
all other dividends on the Common Stock paid in cash during such 365-day period,
does not exceed on a per share basis 10% of the average of the Closing Prices of
the Common Stock over such 365-day period; provided that, for purposes of the
foregoing definition, the amount of cash dividends paid on a per share basis
shall be appropriately adjusted to reflect the occurrence during such period of
any event described in Article VI.
"Parent" has the meaning provided in Section 2(b) of this Agreement.
"Person" means an individual, partnership, corporation (including a
business trust), joint stock company, trust, unincorporated association, limited
liability company, joint venture or other entity, or a government or any
political subdivision or agency thereof.
"Purchaser" has the meaning provided in the introductory paragraph
of this Agreement.
"Reimbursement Agreement" means the reimbursement agreement, to be
dated as of , 1999 among Xxxxxxx Xxxxx Barney Inc. and Seller.
"Reported Securities" has the meaning provided in Section 6.2.
"Seller" has the meaning provided in the introductory paragraph of
this Agreement.
"Significant Subsidiary" has the meaning provided in Section 7(a).
"Threshold Appreciation Price" has the meaning provided in Section
1.1(c).
"Trading Day" means, with respect to any security the Closing Price
of which is being determined, a day on which such 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.
"Underwriter" and "Underwriters" have the meaning provided in the
recitals of this Agreement.
"Underwriting Agreement" has the meaning provided in the recitals of
this Agreement.
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ARTICLE 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, and Purchaser agrees to
purchase and acquire from Seller, 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, and Purchaser
agrees to purchase and acquire from Seller, a number of additional shares of
Common Stock (the "Additional Shares") equal to the product of the Additional
Share Base Amount and the Exchange Rate. In addition to the other conditions set
forth herein, such purchase and sale shall be conditioned on the Underwriters'
purchase of the Additional Share Base Amount of Additional DECS pursuant to the
Underwriting Agreement on the Option Closing Date. Promptly after receipt by
Purchaser of notice that the Underwriters are exercising their option to
purchase Additional DECS, Purchaser will provide Seller with written notice of
such exercise by the Underwriters, stating the related Additional Share Base
Amount and the date on which Purchaser shall deliver the purchase price for the
Additional Shares, which shall be the Option Closing Date for the Additional
DECS. 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 Exchange Price is greater
than $_______ (the "Threshold Appreciation Price"), 0._______, (ii) if the
Exchange Price is less than or equal to the Threshold Appreciation Price but
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 higher 1/10,000th) equal to the Initial Price divided by the Exchange
Price and (iii) if the Exchange Price is less than or equal to 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 $[Y x Firm Share Base Amount] in cash.
(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 Additional DECS and (2) the aggregate cost to Purchaser, as notified by
Purchaser to Seller on the Option Closing Date for the Additional DECS, 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 Initial
DECS purchased by the Underwriters under the Underwriting Agreement.
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1.3 Payment for and Delivery of Contract Shares.
(a) Firm Payment Date. Upon the terms and subject to the
conditions of this Agreement, Purchaser shall deliver to Seller the Firm
Purchase Price on ________, 1999 (the "Firm Payment Date") at the offices of
Cleary, Gottlieb, Xxxxx & Xxxxxxxx, Xxx Xxxxxxx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000,
or at such other place as shall be agreed upon by Purchaser and Seller, paid by
wire transfer of Federal (immediately available) funds to an account designated
by Seller, against delivery by Seller to the Collateral Agent of the number of
shares of Common Stock and/or cash, securities and other property necessary to
comply with Seller's obligations under the Collateral Agreement.
(b) Option Closing Date. Upon the terms and subject to the
conditions of this Agreement, Purchaser shall deliver to Seller the Additional
Purchase Price on the Option Closing Date at the offices of Cleary, Gottlieb,
Xxxxx & Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000, or at such other place as shall be
agreed upon by Purchaser and Seller, paid by wire transfer of Federal
(immediately available) funds to an account designated by Seller, against
delivery by Seller to the Collateral Agent of the additional number of shares of
Common Stock and/or cash, securities and other property necessary to comply with
Seller's obligations under the Collateral Agreement.
(c) Delivery of Contract Shares.
(i) Seller will deliver the Contract Shares to Purchaser on the
Exchange Date. Seller shall be deemed to have instructed the Collateral
Agent to deliver to the Custodian, for the account of Purchaser, 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 (prior to rounding) to
Purchaser at the Exchange Date, Seller agrees to make a cash payment in
respect of such fractional shares of Common Stock in an amount equal to
the value thereof at the Exchange Price. Notwithstanding the foregoing, if
an Adjustment Event shall have occurred prior to the Exchange Date then,
in lieu of the foregoing, Seller shall be deemed to have instructed: (A)
in the case of any cash required to be delivered on the Exchange Date as
provided in Section 6.2, the Collateral Agent to wire transfer Federal
(immediately available) funds to an account designated by Purchaser; and
(B) in the case of any Reported Securities required to be delivered by
Seller in lieu of cash as provided in Section 6.2, the Collateral Agent to
deliver to the Custodian, for the account of Purchaser, a specified number
of Reported Securities then held as collateral under the Collateral
Agreement, as provided in Section 6(g) of the Collateral Agreement.
(ii) In the event that by the Exchange Date any substitute
collateral has not been replaced by shares of Common Stock (and/or, after
an Adjustment Event, cash or Reported Securities) sufficient to meet
Seller's obligations hereunder, delivery shall be effected by delivery by
the Collateral Agent to the Custodian, for the account of Purchaser, of
the market value of the shares of Common Stock required to be delivered
hereunder, in the form of any shares of Common Stock then pledged by
Seller plus cash
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generated from the liquidation of U.S. Government obligations then pledged
by Seller (and/or, after an Adjustment Event, the market value of the
alternative consideration required to be delivered hereunder, in the form
of any Reported Securities then pledged, plus any cash then pledged, plus
cash generated from the liquidation of U.S. Government obligations then
pledged). In such event, Seller shall be deemed to have instructed the
Collateral Agent to liquidate and turn into cash the U.S. Government
obligations then pledged by Seller to the extent necessary to satisfy
Seller's obligations hereunder.
(iii) Certificates representing Common Stock (or Reported
Securities) in registered form that are part of the Contract Shares shall
be registered in Purchaser's name or in the name of a depositary or a
nominee of a depositary as requested by Purchaser, unless such Common
Stock (and/or Reported Securities) is represented by one or more global
certificates registered in the name of a depositary or a nominee of a
depositary or are book entry securities, in which event Purchaser's
interest in such securities shall be noted in a manner satisfactory to
Purchaser and its counsel.
(iv) Seller's right to deliver (or cause to be delivered) to
Purchaser hereunder Common Stock and Reported Securities shall be
conditioned upon such Common Stock and Reported Securities to be so
delivered being transferable by Purchaser, following receipt from Seller,
without any restrictions not generally applicable to all holders of such
Common Stock or Reported Securities, as the case may be. If the condition
set forth in the preceding sentence shall not be satisfied with respect to
any Common Stock or Reported Securities to be delivered by Seller, then,
notwithstanding the provisions hereof, Seller shall exercise the Cash
Delivery Option.
(d) Cash Delivery Option. At its option, Seller may deliver to
Purchaser on the Exchange Date, in lieu of the Contract Shares, an amount in
cash equal to, subject to adjustment as provided in Section 6.2, the Exchange
Price of the Contract Shares (the "Cash Delivery Option"), paid by wire transfer
to an account designated by Purchaser, in Federal (immediately available) funds.
Seller may elect the Cash Delivery Option in respect of all, but not less than
all, Contract Shares and may do so by notice to Purchaser, the Collateral Agent
and the Custodian not less than 25 Business Days prior to the Exchange Date. If
Seller elects the Cash Delivery Option and so notifies Purchaser, Purchaser
shall promptly notify The Depository Trust Company and publish a notice in a
daily newspaper of national circulation stating whether the holders of DECS will
receive shares of Common Stock or cash.
(e) Seller represents, and Purchaser acknowledges, that it is
Seller's current intention to deliver Contract Shares to the Purchaser on the
Exchange Date and not to exercise the Cash Delivery Option; however, Seller
intends to consider all relevant economic, market and business factors in
ultimately determining whether to deliver Contract Shares on the Exchange Date
or to exercise the Cash Delivery Option.
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ARTICLE II
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to Purchaser that each representation
and warranty made by Seller in Section 3 of the Underwriting Agreement is true
and correct on the date hereof.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser represents and warrants to Seller that:
(a) each representation and warranty made by Purchaser in Section
1 of the Underwriting Agreement is true and correct on the date hereof; and
(b) it acknowledges that the Common Stock delivered pursuant to
this Agreement and the Collateral Agreement may contain one or more of the type
of legends referred to in Section 3(e) of the Collateral Agreement (which legend
(i) will not be applicable to the delivery of any such Common Stock to the Trust
pursuant to this Agreement and the Collateral Agreement or to the delivery of
any such Common Stock by the Trust to the holders of DECS pursuant to the DECS
and (ii) will be removed at the request of the Collateral Agent to the transfer
agent for the Common Stock prior to any such delivery to holders of DECS).
ARTICLE IV
CONDITIONS TO PURCHASER'S OBLIGATIONS
(a) The obligation of Purchaser to deliver the Firm Purchase Price
on the Firm Payment Date is subject to the satisfaction of the following
conditions:
(i) the purchase by the Underwriters of the Initial DECS pursuant
to the Underwriting Agreement shall have been consummated as contemplated
under the Underwriting Agreement;
(ii) the representations and warranties of Seller contained in
Article II hereof shall be true and correct as of the Firm Payment Date;
(iii) the Collateral Agreement shall have been executed by Seller
and the delivery of the Collateral thereunder shall have been made; and
(iv) the Reimbursement Agreement shall have been executed by
Seller.
(b) The obligation of Purchaser to deliver the Additional Purchase
Price on the Option Closing Date is subject to the satisfaction of the following
conditions:
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(i) the purchase by the Underwriter of the Additional DECS
pursuant to the Underwriting Agreement shall have been consummated as
contemplated under the Underwriting Agreement;
(ii) the representations and warranties of Seller contained in
Article II hereof shall be true and correct as of the Option Closing Date;
and
(iii) the delivery of any additional Collateral under the Collateral
Agreement shall have been made.
ARTICLE 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,
cash or Reported Securities pursuant hereto.
5.2 Forward Purchase Contract. Each of Purchaser and Seller hereby
agrees that
(a) it will treat this Agreement in its entirety as a forward
purchase contract for the delivery of the Contract Shares on the Exchange Date
(including as a result of acceleration or otherwise) (the "Forward Purchase
Contract Characterization"), under the terms of which contract (i) at the time
of issuance of the DECS Purchaser deposits irrevocably with Seller a fixed
amount of cash equal to the Firm Purchase Price (plus, if the Underwriters
exercise their option to purchase Additional DECS, the Additional Purchase
Price) to assure the fulfillment of Purchaser's purchase obligation described in
clause (ii) below, which deposit will unconditionally and irrevocably be applied
at the Exchange Date to satisfy such obligation and (ii) at the Exchange Date
such cash deposit unconditionally and irrevocably will be applied by Seller in
full satisfaction of Purchaser's obligation under the forward purchase contract,
and Seller will deliver to Purchaser the number of Contract Shares that
Purchaser is entitled to receive at that time pursuant to the terms of this
Agreement (subject to Seller's right to deliver cash and/or other property as
provided in this Agreement in lieu of the Contract Shares);
(b) it will treat, consistent with the above characterization,
amounts paid to Seller in respect of this Agreement as allocable in their
entirety to the amount of the cash deposit attributable to such Agreement;
(c) 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 (in the case of Purchaser) or as giving rise
to any interest expense or other deductions of ordinary expense (in the case of
Seller);
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(d) it will not treat the delivery of any portion of the Contract
Shares, cash or Reported Securities to be delivered pursuant to this Agreement
as the payment of interest or ordinary income; and
(e) 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 clauses (a) through (d), unless such action or
position is required by an applicable taxing authority or unless such action or
position is required by a change in statutory law or regulation or by a judicial
or other authoritative interpretation of the law enacted, promulgated or
published after the date of this Agreement.
5.3 Limitations on Trading During Certain Days. Seller hereby
agrees that it will not, and will cause each of its Affiliates that is under its
control not to, buy or sell shares of Common Stock of the Company or Reported
Securities 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 shall otherwise obtain knowledge, of any further
or revised information regarding the terms or timing of such event or any record
date relating thereto.
5.5. Affirmative Covenants. During the term of this Agreement,
Seller covenants and agrees that it will:
(a) Comply in all material respects with all applicable laws,
rules, regulations and orders to the extent noncompliance would have a material
adverse effect on the ability of Seller to perform its obligations hereunder or
under the Collateral Agreement, such compliance to include, without limitation,
paying before the same become delinquent all taxes, assessments and governmental
charges imposed upon Seller or upon Seller's property, including the collateral
pledged under the Collateral Agreement, except to the extent contested in good
faith.
(b) Furnish to Purchaser as soon as possible and in any event
within twenty calendar days after Seller shall become aware of the occurrence of
any failure by Seller to comply with or perform any agreement or obligation
contained in this Agreement or the
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Collateral Agreement, a statement of Seller describing such failure and setting
forth details of such failure and the action which Seller has taken and proposes
to take with respect thereto.
(c) Continue to be validly existing as a corporation under the law
of its jurisdiction of incorporation.
5.6 Further Assurances. From time to time on and after the date
hereof through the Exchange Date (or, if later, the date on which this Agreement
has been fully performed), 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.
ARTICLE VI
ADJUSTMENT OF EXCHANGE RATE, EXCHANGE PRICE AND CLOSING PRICE
6.1 Dilution Adjustments. The Exchange Rate, Exchange Price and
Closing Price shall be subject to adjustment successively 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, in either case,
with respect to Common Stock in shares of such stock;
(ii) subdivide or split its outstanding shares of Common Stock into
a greater number of shares;
(iii) combine its outstanding shares of Common Stock into a smaller
number of shares; or
(iv) issue by reclassification (other than a reclassification
pursuant to clause (b), (c), (d) or (e) of the definition of Adjustment
Event) of its shares of Common Stock any other equity securities 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 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. In the case of the reclassification of any shares of Common
Stock into any other equity securities of the Company other than the Common
Stock,
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such other equity securities shall be deemed shares of Common Stock for all
purposes hereunder. The Exchange Price and Closing Price shall also be adjusted
in the manner described in paragraph (c).
(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 (other than rights to purchase Common Stock pursuant to a
plan for the reinvestment of dividends or interest) 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 Market Price of the Common Stock on the Business
Day next following the record date for the determination of holders of Common
Stock entitled to receive such rights or warrants, then, in each such case, the
Exchange Rate shall be multiplied by the following Dilution Adjustment: a
fraction, of which the numerator shall be (A) the number of shares of Common
Stock outstanding on the record date for the issuance of such rights or warrants
plus (B) 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 (x) the number of shares of Common Stock outstanding on the
record date for the issuance of such rights or warrants plus (y) the number
specified in clause (B) above multiplied by the quotient of the exercise price
of such rights or warrants divided by the Market Price of the Common Stock on
the Business Day next following the record date for the determination of holders
of Common Stock entitled to receive such rights or warrants. To the extent that
such rights or warrants expire prior to the Exchange Date and shares of Common
Stock are delivered with respect to less than all of such rights or warrants
prior to such expiration, the Exchange Rate shall be readjusted to the Exchange
Rate which would then be in effect had such adjustments 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 pursuant to such rights or warrants.
The Exchange Price and Closing Price shall also be adjusted in the manner
described in paragraph (c).
(c) Corresponding Adjustments to Exchange Price; Adjustment of
Closing Price in Certain Circumstances.
(i) If any adjustment is made to the Exchange Rate pursuant to
paragraph (a) or (b) of this Section 6.1, an adjustment shall also be made
to the Exchange Price as such term is used throughout the definition of
Exchange Rate. The required adjustment to the Exchange Price shall be made
at the Exchange Date by multiplying the Exchange Price by the cumulative
Dilution Adjustment.
(ii) If, during any Calculation Period used in calculating the
Exchange Price, the Market Price or the Transaction Value, there shall
occur any event requiring an adjustment to be effected pursuant to 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.
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(d) Timing of Dilution Adjustments. Each Dilution Adjustment shall
be effected:
(i) in the case of any dividend, distribution, or issuance of
rights or warrants, 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; and
(ii) in the case of any subdivision, split, combination or
reclassification, on the effective date of such transaction.
(e) 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 higher 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 subsequent adjustment. If
any announcement or declaration of a record date in respect of a dividend,
distribution or issuance requiring an adjustment pursuant to this Section 6.1
shall subsequently be canceled by the Company, or such dividend, distribution or
issuance 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 readjusted to the Exchange Rate which would
then have been in effect had adjustment for such event not been made. If an
Adjustment 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 Adjustment
Event. In the event of (a) any dividend or distribution by the Company to all
holders of Common Stock of evidences of its indebtedness or other assets
(excluding any dividends or distributions referred to in Section 6.1(a)(i), any
other equity securities issued pursuant to a reclassification referred to in
Section 6.1(a)(iv) and any Ordinary Cash Dividends) or any issuance by the
Company to all holders of Common Stock of rights or warrants to subscribe for or
purchase any of its securities (other than rights or warrants referred to in
Section 6.1(b)), (b) any consolidation or merger of the Company 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), (c) any sale, transfer,
lease or conveyance to another corporation of the property of the Company as an
entirety or substantially as an entirety, (d) any statutory exchange of
securities of the Company with another corporation (other than in connection
with a merger or acquisition) or (e) any liquidation, dissolution or winding up
of the Company (any such event described in clause (a), (b), (c), (d) or (e), an
"Adjustment Event"), the Exchange Rate shall be adjusted so that on the Exchange
Date Seller shall deliver to Purchaser,
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in lieu of or (in the case of an Adjustment Event described in clause (a) above)
in addition to, the Contract Shares, cash in an amount equal to the product of
the number of Contract Shares and the Transaction Value (as defined below).
Following an Adjustment Event, the Exchange Price, as such term is used
throughout the definition of Exchange Rate, shall be deemed to equal (A) if
shares of Common Stock are outstanding at the Exchange Date, the Exchange Price
of the Common Stock, as adjusted pursuant to Section 6.1(c), otherwise zero,
plus (B) the Transaction Value.
Notwithstanding the foregoing, with respect to any Reported
Securities (as defined below) received by holders of Common Stock in an
Adjustment Event, Seller shall, in lieu of delivering cash in respect of such
Reported Securities as described above, deliver a number of such Reported
Securities with a value, as determined in accordance with clause (ii) of the
definition of Transaction Value, equal to all cash amounts that would otherwise
be deliverable in respect of Reported Securities received in such Adjustment
Event, unless Seller has made an election to exercise the Cash Delivery Option
or such Reported Securities have not yet been delivered to the holders entitled
thereto following such Adjustment Event or any record date with respect thereto.
If, following any Adjustment Event, any Reported Security ceases to qualify as a
Reported Security, then (x) Seller shall not deliver such Reported Security but
instead shall deliver of an equivalent amount of cash and (y) notwithstanding
clause (ii) of the definition of Transaction Value, the Transaction Value of
such Reported Security shall mean the fair market value of such Reported
Security on the date such security ceases to qualify as a Reported Security, as
determined by a nationally recognized investment banking firm retained for this
purpose by the Administrator.
"Transaction Value" means (i) for any cash received in any
Adjustment Event, the amount of cash received per share of Common Stock, (ii)
for any Reported Securities received in any Adjustment Event, an amount equal to
(x) the average Closing Price per security of such Reported Securities on the 20
Trading Days immediately prior to (but not including) the Exchange Date
multiplied by (y) the number of such Reported Securities (as adjusted pursuant
to the definition thereof) received per share of Common Stock and (iii) for any
property received in any Adjustment Event other than cash or Reported
Securities, an amount equal to the fair market value of the property received
per share of Common Stock on the date such property is received, as determined
by a nationally recognized investment banking firm retained for this purpose by
the Administrator; provided, however, that in the case of clause (ii), (x) with
respect to securities that are Reported Securities by virtue of only clause (iv)
of the definition of Reported Securities, Transaction Value with respect to any
such Reported Security means the average of the mid-point of the last bid and
ask prices for such Reported Security as of the Exchange Date from each of at
least three nationally recognized investment banking firms retained for such
purpose by the Administrator multiplied by the number of such Reported
Securities (as adjusted pursuant to the definition thereof) received per share
of Common Stock and (y) with respect to all other Reported Securities, if there
are not 20 Trading Days for any particular Reported Security occurring after the
60th calendar day immediately prior to, but not including, the Exchange Date,
Transaction Value with respect to such Reported Security means the fair market
value per security of such Reported Security as of the Exchange Date as
determined by a nationally recognized investment banking firm retained for such
purpose by the Administrator multiplied
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by the number of such Reported Securities (as adjusted pursuant to the
definition thereof) received per share of Common Stock. For purposes of
calculating the Transaction Value, any cash, Reported Securities or other
property receivable in an Adjustment Event shall be deemed to have been received
immediately prior to the close of business on the record date for such
Adjustment Event or, if there is no record date for such Adjustment Event,
immediately prior to the close of business on the effective date of such
Adjustment Event.
"Reported Securities" means any securities received in an Adjustment
Event that (A) are (i) listed on a United States national securities exchange,
(ii) reported on a United States national securities system subject to last sale
reporting, (iii) traded in the over-the-counter market and reported on the
National Quotation Bureau or similar organization or (iv) for which bid and ask
prices are available from at least three nationally recognized investment
banking firms and (B) are either (x) perpetual equity securities or (y)
non-perpetual equity or debt securities with a stated maturity after the
Exchange Date. The number of shares of any Reported Securities included in the
calculation of Transaction Value pursuant to clause (ii) of the definition
thereof 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 or 6.2, shall occur with respect to such Reported
Securities or the issuer thereof subsequent to the date the Adjustment Event is
consummated. Adjustment for such subsequent events shall be as nearly equivalent
as practicable to the adjustments provided for in Section 6.1 or 6.2, as
applicable.
ARTICLE VII
ACCELERATION
If one or more of the following events (each an "Event of Default")
shall occur:
(a) Seller or any "significant subsidiary" of the Seller (as
defined in Rule 1-02(w) of Securities and Exchange Commission Rule S-X) (a
"Significant Subsidiary") 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 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 him or it, or shall take any action to authorize any of the
foregoing;
(b) an involuntary case or other proceeding shall be commenced
against Seller or any Significant Subsidiary 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 for it or any
substantial part of its property and, in the case of a proceeding against a
Significant Subsidiary, shall not have been dismissed within sixty days; or an
order for relief shall be entered
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against Seller or any Significant Subsidiary under any bankruptcy, insolvency or
other similar law as now or hereafter in effect; or
(c) a Collateral Event of Default within the meaning of the
Collateral Agreement;
then an "Acceleration Date" shall occur, Seller's rights under
Section 1.3(d) shall terminate immediately and (i) in the case of clause
(c), Seller shall become obligated to the extent permitted by law to
deliver to Purchaser (and shall be deemed to instruct the Collateral Agent
to deliver to the Custodian, for the account of Purchaser, and to
liquidate and turn into cash the U.S. Government obligations then pledged
by Seller to the extent necessary to satisfy such obligation) the Contract
Shares, in the form of the shares of Common Stock then pledged by Seller,
or cash generated from the liquidation of U.S. Government obligations then
pledged by Seller, or a combination thereof (or, after an Adjustment
Event, the alternate consideration to be delivered, in the form of
Reported Securities then pledged, cash then pledged, cash generated from
the liquidation of U.S. Government obligations then pledged, or a
combination thereof); or
(ii) in the case of clauses (a) or (b), Seller shall become
obligated to the extent permitted by law to deliver to Purchaser (and
shall be deemed to instruct the Collateral Agent to deliver to the
Custodian, for the account of Purchaser, and to liquidate and turn into
cash the U.S. Government obligations then pledged by Seller to the extent
necessary to satisfy such obligation) a number of shares of Common Stock,
in the form of the shares of Common Stock then pledged by Seller, or cash
generated from the liquidation of U.S. Government obligations then pledged
by Seller, or a combination thereof (or, after an Adjustment Event, the
alternate consideration to be delivered, in the form of Reported
Securities then pledged, cash then pledged, cash generated from the
liquidation of U.S. Government obligations then pledged, or a combination
thereof), with an aggregate value (based on the Closing Price on the
Acceleration Date) equal to the Acceleration Value (as defined below).
"Acceleration Value" means an amount determined by the Administrator
on the basis of quotations from Independent Dealers (as defined below). Each
quotation will be for an amount that would be paid to the relevant Independent
Dealer in consideration of an agreement between Purchaser and such Independent
Dealer that would have the effect of preserving for Purchaser the economic
equivalent of the payments and deliveries that Purchaser would, but for the
occurrence of the Acceleration Date, have been entitled to receive after the
Acceleration Date hereunder (taking into account any adjustments to the Exchange
Rate that may have been effected on or prior to the Acceleration Date). On or as
soon as reasonably practicable following the Acceleration Date, the
Administrator will request each Independent Dealer to provide its quotation as
soon as reasonably practicable, but in any event within two Business Days. The
Administrator shall compute the Acceleration Value upon receipt of each
Independent Dealer's quotation, provided that if, at the close of business on
the fourth Business Day following the Acceleration Date, the Administrator shall
have received quotations from fewer than four of the Independent Dealers, the
Administrator shall compute the Acceleration Value using the
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quotations, if any, it shall have received at or prior to such time. If four
quotations are provided, the Acceleration Value will be the arithmetic mean of
the two quotations remaining after disregarding the highest and lowest
quotations. (For this purpose, if more than one quotation has the same highest
or lowest value, then one of such quotations shall be disregarded.) If two or
three quotations are provided, the Acceleration Value will be the arithmetic
mean of such quotations. If one quotation is provided, the Acceleration Value
will be equal to such quotation. If no quotations are provided, the Acceleration
Value will be the aggregate value of the number of shares of Common Stock (or,
after an Adjustment Event, Reported Securities, cash or a combination thereof)
that would be required to be delivered hereunder on the Acceleration Date if the
Exchange Date were redefined to be the Acceleration Date.
"Independent Dealers" means four nationally recognized independent
investment banking firms selected in good faith by the Administrator.
As promptly as reasonably practicable after receipt of the
quotations on which the Acceleration Value is based (or, as the case may be,
after failure to receive any such quotations within the time period prescribed
above), Purchaser shall deliver to Seller and the Collateral Agent a notice
specifying the number of shares of Common Stock (or, after an Adjustment Event,
the alternate consideration) required to be delivered by Seller. Purchaser and
Seller agree that the obligations contained in clauses (i) and (ii) above are 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
damage as a consequence of loss resulting from an Event of Default.
ARTICLE VIII
MISCELLANEOUS
8.1 Adjustments; Selection of Independent Investment Banking Firm.
Purchaser shall be responsible for the effectuation and calculation of any
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; provided,
however, that Seller shall be deemed to have waived its right to consult if
Seller fails to consult within five Business Days of notice being sent by the
Administrator to Seller seeking consultation. Purchaser may delegate the
effectuation and calculation of any such adjustments to its Administrator.
8.2 Notices. Notices to Purchaser shall be directed to it in care
of the Administrator for Purchaser, The Bank of New York, 000 Xxxxxxx Xxxxxx,
Xxx Xxxx, Xxx Xxxx 00000, Telephone: (000) 000-0000, Telecopier: (000) 000-0000;
notices to Seller shall be directed to Hyundai Electronics America, Telephone:
________, Telecopier: _______, with a copy to
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Xxxx, Xxxx, Xxxx & Friedenrich, Telephone: 000-000-0000, Telecopier:
000-000-0000, Attention: Xxxxx X. Xxxxx, Esq. Notwithstanding the foregoing,
notices to a party shall be directed to such other address for such party as
shall be specified by such party in a like notice given pursuant to this Section
8.2. All notices and other communications hereunder shall be in writing and
shall be deemed to have been duly given if either (i) personally delivered
(including delivery by courier service or by Federal Express or any other
nationally recognized overnight delivery service for next day delivery) to the
offices specified in the preceding sentence, in which case they shall be deemed
received on the first Business Day by which delivery shall have been made to
said offices; or (ii) sent by certified mail, return receipt requested, in
accordance with the preceding sentence, in which case they shall be deemed
received when receipted for unless acknowledgment is refused (in which case
delivery shall be deemed to have been received on the first Business Day on
which such acknowledgment is refused).
8.3 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.
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 an amendment, by Purchaser or 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 permitted assigns of such party.
8.7. Application of Bankruptcy Code. The parties hereto acknowledge
and agree that the Collateral Agent is a "financial institution" within the
meaning of Section 101(22) of Title 11 of the United States Code (the
"Bankruptcy Code") and is acting as agent and custodian for Purchaser in
connection with this Agreement and that Purchaser is a "customer" of the
Collateral Agent within the meaning of said Section 101(22). The parties hereto
further acknowledge and agree that this Agreement is a "securities contract", as
such term is defined in Section 741(7) of the Bankruptcy Code, entitled to the
protection of Section 555 of the Bankruptcy Code.
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8.8 Governing Law; Jurisdiction; Severability; Waiver of Jury
Trial. This Agreement shall be governed by and construed in accordance with the
law of the State of New York. For the purpose of any suit, action or proceeding
arising out of or relating to this Agreement, the parties hereto hereby
expressly and irrevocably consent and submit to the non-exclusive jurisdiction
of any United States Federal or New York State court sitting in the Borough of
Manhattan, City and State of New York, and expressly and irrevocably waive, to
the extent permitted under applicable law, any immunity from the jurisdiction
thereof and any claim or defense in such suit, action or proceeding based on a
claim of improper venue, forum non conveniens or any similar basis to which it
might otherwise be entitled. 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. TO THE EXTENT PERMITTED BY APPLICABLE LAW, THE PARTIES
HERETO HEREBY WAIVE AND COVENANT THAT THEY WILL NOT ASSERT (WHETHER AS
PLAINTIFF, DEFENDANT OR OTHERWISE) ANY RIGHT TO TRIAL BY JURY IN ANY FORUM IN
RESPECT OF ANY ISSUE, CLAIM, DEMAND, ACTION OR CAUSE OF ACTION ARISING OUT OF OR
BASED UPON THIS AGREEMENT OR THE SUBJECT MATTER HEREOF, IN EACH CASE WHETHER NOW
EXISTING OR HEREAFTER ARISING OR WHETHER IN CONTRACT OR TORT OR OTHERWISE. EACH
PARTY HERETO ACKNOWLEDGES THAT IT HAS BEEN INFORMED BY THE OTHER PARTY HERETO
THAT THE PROVISIONS OF THIS SECTION CONSTITUTE A MATERIAL INDUCEMENT UPON WHICH
SUCH OTHER PARTY HERETO HAS RELIED, IS RELYING AND WILL RELY IN ENTERING INTO
THIS AGREEMENT AND ANY DOCUMENT RELATED THERETO. EACH PARTY HERETO MAY FILE AN
ORIGINAL COUNTERPART OF THIS SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THE
CONSENT OF THE OTHER PARTY HERETO TO THE WAIVER OF ITS RIGHTS TO TRIAL BY JURY.
IN WITNESS WHEREOF, the parties have signed this Agreement as of the
date and year first above written.
PURCHASER: SELLER:
DECS TRUST IV: HYUNDAI ELECTRONICS
AMERICA
By:_______________________________ By:___________________________________
Name: Name:
Title: Title
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