[CHASE LOGO]
The Chase Manhattan Bank
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
December 9, 1999
Xxxxxxxxx Telecommunications Holdings (USA) Limited
P.O. Box 957
Offshore Incorporations Centre
Road Town, Tortola,
British Virgin Islands
Attention: K.S. Chan
Re: Share Option Transaction (Our Reference No. 402197, 402198)
-----------------------------------------------------------
Ladies and Gentlemen:
The purpose of this letter (this "Confirmation") is to confirm the terms
and conditions of the Transaction entered into between The Chase Manhattan Bank
("Chase") and Xxxxxxxxx Telecommunications Holdings (USA) Limited (the
"Counterparty") on the Trade Date specified below (the "Transaction"). This
Confirmation amends and restates in its entirety the Confirmation of the
above-referenced Transaction dated November 29, 1999.
The definitions and provisions contained in the 1996 ISDA Equity
Derivatives Definitions (the "1996 Definitions") and the 1991 ISDA Definitions
(as amended by the 1998 Supplement), as published by the International Swaps and
Derivatives Association, Inc. ("ISDA") are incorporated into this Confirmation.
In the event of any inconsistency between the 1996 Definitions or the 1991
Definitions and this Confirmation, this Confirmation will govern. In the event
of any inconsistency between the 1996 Definitions and the 1991 Definitions, the
1996 Definitions will govern.
This Confirmation evidences a complete and binding agreement between Chase
and the Counterparty as to the terms of the Transaction to which this
Confirmation relates.
This Confirmation shall supplement, form a part of, and be subject to an
agreement (the "Agreement") in the form of the ISDA Master Agreement
(Multicurrency-Cross Border) (the "Master Form"), as if Chase and the
Counterparty had executed an agreement in the form of the Master Form on the
Trade Date with a Schedule specifying:
(i) the application of the Cross Default provisions of Section 5(a)(vi) of
the Master Form to Chase and the Counterparty. For purposes thereof,
"Specified Indebtedness" will have the meaning specified in Section
14, except that such term shall not include obligations in respect of
deposits received in the ordinary course of such party's banking
business, and "Threshold Amount" shall mean an amount equal to
US$25,000,000 in the case of the Counterparty and an amount equal to
one percent of its shareholders' equity in the case of Chase
(determined in accordance with generally accepted accounting
principles as at the end of its most recently completed fiscal year);
(ii) for purposes of Section 13(a) of the Master Form, the election of
English Law as the governing law (provided, however, that the laws of
the State of New York (without reference to choice of law doctrine)
shall govern Part L of the Confirmation); and
(iii) the election of United States dollars as the Termination Currency.
1
The parties agree that the obligation of the Counterparty to deliver Shares
in settlement of the Put Option or the Call Option, as the case may be
(including upon any automatic exercise under Part H hereof), on the one hand,
and the obligation of Chase to return the Company Stock (as defined in Part L of
this Confirmation) in the circumstances referred to in Part L, on the other
hand, are equal and opposite obligations and, without need for further action,
shall automatically be deemed satisfied and discharged upon payment by Chase to
the Counterparty of (i) the Settlement Price in respect of the Put Option or the
Call Option, as the case may be and (ii) the Additional Payment (as defined
below). Section 2(c)(ii) will not apply.
Each of the Counterparty and Chase shall, at the other's request, execute
such further documents as may reasonably be so requested to confirm that their
respective delivery and return obligations have been so satisfied and discharged
and that, as between the Counterparty and Chase, upon payment to the
Counterparty of the (i) the Settlement Price in respect of the Put Option or the
Call Option, as the case may be and (ii) the Additional Payment, Chase shall be
the owner of the Shares, without any right therein or claim thereto of the
Counterparty. It is further understood that the delivery and return obligations
referred to above (and their equal values stipulated above) shall not be subject
to Set-off or netting against any other obligation under any other agreements
between the parties hereto.
In the event of any inconsistency between the provisions of the Master Form
and this Confirmation, this Confirmation will prevail for the purpose of this
Transaction. References herein to the Put Option and the Call Option shall be
construed to mean, collectively, all the Put Options and Call Options hereunder,
respectively.
The terms of the particular Transaction to which this Confirmation relates
are as follows:
A. General Terms
Initial Hedging: During the Initial Hedging Period, Chase caused
an Affiliate of Chase (the "Chase Affiliate")
to sell short, in connection with this
Transaction, 388,888 Shares (as defined below)
(such number of Shares being referred to as the
"Hedge Number of Shares").
Initial Hedging Period: The period commencing on the Trade Date and
ending on the date hereof.
2
Initial Share Price: USD63.1988
Trade Date: November 29, 1999
Calculation Agent: Chase. Chase shall exercise its discretion in
relation to any of its obligations as
Calculation Agent in good faith, and only
after consultation with the Counterparty. The
Calculation Agent will only adjust the terms
of this Transaction so as to preserve the
economic equivalence of the parties'
obligations and having regard to the terms of
Part L hereof, where relevant, in any
calculation.
B. Put Option
Option Style: American, provided that the Put Option shall
only be exercisable from December 9, 1999 to
January 14, 2000.
Option Type: Put
Seller: Chase
Buyer: Counterparty
Shares: Class A Common Stock, no par value, of Western
Wireless Corporation (the "Issuer"), Cusip No.
00000X000
Number of Options: 388,888
Option Entitlement: One Share per Option
Multiple Exercise: Inapplicable
Strike Price: USD63.1988
Premium: Inapplicable
Exchange: NASDAQ
3
PAGE>
Clearance System: Depository Trust Company
C. Call Option
Option Style: American, provided that the Call Option shall
only be exercisable from January 24, 2000 to
February 4, 2000.
Option Type: Call
Seller: Counterparty
Buyer: Chase
Shares: Class A Common Stock, no par value, of the
Issuer, Cusip No. 00000X000
Number of Options: 388,888
Option Entitlement: One Share per Option
Multiple Exercise: Inapplicable
Strike Price: USD 63.1988
Premium: Inapplicable
Exchange: NASDAQ
Clearance System: Depository Trust Company
D. Terms Relating to Both Options:
1. Procedure for Exercise:
Commencement Date: In respect of the Put Option, December 9,
1999. In respect of the Call Option, January
24, 2000.
Expiration Time: 5:00 p.m. (local time in New York)
Latest Exercise Time: 5:00 p.m. (local time in New York)
Expiration Date: In respect of the Put Option, January 14,
2000. In respect of the Call Option, February
4, 2000, provided, however, that the Call
Option shall expire immediately upon any
exercise or deemed exercise of the Put Option
4
Automatic Exercise: Inapplicable. For avoidance of doubt, the
last paragraph of Part L hereunder shall
apply notwithstanding the fact that
"Automatic Exercise" has been specified as
"Inapplicable" hereunder.
In respect of the Put Option, Phone No.: 000-000-0000
Xxxxx'x Telephone Number and
for Purpose of Giving Notice: Facsimile No.: 000-000-0000
Attention: Xxxxxx XxXxxxxx
In respect of the Call Option, Phone No.: (000) 0000-0000
the Counterparty's Telephone
Number and Telex and/or
Facsimile Number and Contact Facsimile No.: (000) 0000-0000
Details for Purpose of Giving
Notice: Attention: K.S. Chan
E. Settlement Terms:
Physical Settlement: Applicable
Shares Delivered: Any Shares delivered by the Counterparty
to Chase must be unlegended and freely
transferable by Chase without any
restriction whatsoever (including, without
limitation, any restriction arising out of
any state or federal securities laws) and
must have been freely transferable without
restriction at all times since and
including the Trade Date.
Failure to Deliver: Inapplicable
Additional Payment: On the earliest (the "Final Settlement
Date") to occur of (i) the Settlement Date
in respect of the Exercise Date relating
to the Put Option, (ii) the Settlement
Date in respect of the Exercise Date
relating to the Call Option or (iii) the
Expiration Date of the Call Option if the
Call Option expires unexercised, Chase
shall pay to the Counterparty an amount
equal to the sum of the products for each
Exchange Business Day during the Initial
Hedging Period of (a) the sale proceeds
received by the Chase Affiliate in respect
of the Shares sold short by the Chase
Affiliate on such Exchange Business Day,
(b) a rate determined in accordance with
the definition of USD-BBA-LIBOR (provided
that the Reset Date in respect of the
relevant Exchange Business Day shall be
the corresponding Hedge Settlement Date
(as defined below) and the Designated
Maturity shall be one month) less 75 basis
points, and (c) the quotient of the number
of days from and including the day
5
(the "Hedge Settlement Date") on which the
short sale of the Shares executed by the
Chase Affiliate on such Exchange Business
Day settled to and excluding the Final
Settlement Date divided by 360.
F. Additional Termination Event:
Additional Termination Event: It shall constitute an Additional
Termination Event in respect of which the
Counterparty shall be the sole Affected
Party and this Transaction shall be the
sole Affected Transaction if at any time
(i) at the request of the Counterparty,
Shares must be delivered by Chase or the
Chase Affiliate to the Counterparty or
held by Chase to facilitate a vote in
respect of such Shares by the Counterparty
or the receipt of dividends on such Shares
by the Counterparty and (ii) Chase or the
Chase Affiliate determines that it is not
able to hedge its exposure in connection
with this Transaction on commercially
reasonable terms.
G. Adjustments:
Method of Adjustment: Calculation Agent Adjustment. For the
avoidance of doubt, the Calculation Agent
may, in its discretion, but subject to
"Cancellation and Payment" as provided for
under "Extraordinary Events" below, modify
the definition of the term "Shares" and
the definition of the term "Issuer" as
appropriate to reflect any distribution of
shares of capital stock of an entity other
than the Issuer made to holders of Shares.
H. Extraordinary Events:
Consequences of Merger Events:
(a) Share-for-Share: Options Exchange Adjustment
(b) Share-for-Other Cancellation and Payment
(c) Share-for-Combined: Cancellation and Payment
Options Exchange: Philadelphia Options Exchange
Nationalization or Insolvency: Cancellation and Payment
6
Share De-listing Event: If at any time during the period from and
including the Trade Date, to and including
the Expiration Date of the Call Option,
the Shares cease to be listed on the
Exchange for any reason (other than a
Merger Event) and are not immediately re-
listed, as of the date of such de-listing,
on another exchange in the same
jurisdiction as the Exchange (the
"Successor Exchange"), then Cancellation
and Payment shall apply, and the date of
the de-listing shall be deemed to be a
Merger Date for purposes of calculating
any payment due from Seller to Buyer or
Buyer to Seller, as the case may be, in
connection with the cancellation of this
Transaction. If the Shares are immediately
re-listed on a Successor Exchange upon
their de-listing from the Exchange, this
Transaction shall continue in full force
and effect, provided that the Successor
Exchange shall be deemed to be the
Exchange for all purposes. In addition,
the Calculation Agent shall make the
necessary adjustments to the terms of the
Transaction in accordance with Calculation
Agent Adjustment method as defined under
Section 9.1(c) of the 1996 Definitions.
Notwithstanding anything to the contrary herein, if any of the foregoing
events described in this Part H occurs (i) at any time prior to the Expiration
Date of the Put Option, the Put Option shall be deemed to be exercised
automatically as of the date of such event or (ii) between January 24, 2000 and
February 4, 2000, the Call Option shall be deemed to be automatically exercised
as of the date of such event (in each case, whether or not such option is then
In-the-Money).
I. Miscellaneous:
1. General:
Each party acknowledges that Chase Securities Inc. has acted as agent for
Chase in effecting this transaction.
Neither party shall be liable under Section 6.10 of the 1996 Definitions
for special, indirect or consequential damages, even if informed of the
possibility thereof.
Notwithstanding anything herein to the contrary, any obligation of Chase
hereunder to purchase, hold, sell, deliver, receive delivery of or otherwise
deal in Shares may be performed by an Affiliate of Chase or a third party
designated by Chase.
2. Dividends:
Without duplication of any other adjustments made by the Calculation Agent,
the Strike Prices of the Put Option and the Call Option will be decreased by the
Calculation Agent by the amount of any payments in respect of dividends per
Share made by Chase to the Counterparty in respect of dividends on the Company
Stock (as defined below) pursuant to Part L of this Confirmation.
7
3. Account for Payment:
Account for payments to Xxxxx Xxxxx
ABA# 000-000-000
Acct # 000-000-0000
Re: Share Option Transaction Reference No.
402197, 402198
Account for payments to Pay to: HSBC Bank USA, New York, FedWire
the Counterparty: #000000000 or CHIPS #0108, XXXXXX00
for A/C of: Xxxxxxxxx International
Limited
C/A No. 000-121797
Under telex advice to Hong Kong Bank, HK,
International Deposits Department, Attn:
Mrs. Xxxxx Xx (Tlx No. 73205 HSBC HK)
Offices: The Office of Chase for this Transaction
is London.
J. Additional Representations:
1. The Counterparty represents and warrants, which representations and
warranties shall (other than representation and warranty (iv) below) be deemed
to be repeated at all times during the term hereof, that:
(i) The Counterparty is not entering into this Confirmation to
facilitate a distribution of the Shares on behalf of the Issuer (or any security
convertible into or exchangeable for Shares) or in connection with a future
issuance of securities by the Issuer;
(ii) The Counterparty is not entering into this Confirmation to create
actual or apparent trading activity in the Shares (or any security convertible
into or exchangeable for Shares) on behalf of the Issuer or to raise or depress
or otherwise manipulate the price of the Shares (or any security convertible
into or exchangeable for Shares) by the Issuer;
(iii) Counterparty was not, on the Trade Date, and is not, on the date
hereof, in possession of any material nonpublic information regarding the
Issuer;
(iv) Together with its affiliates (as defined below), it does not own or
have the right to acquire more than 10% of the outstanding Shares of the Issuer.
No director or employee of the Counterparty or any affiliate of the Counterparty
is a director of the Issuer. The Counterparty does not otherwise possess,
directly or indirectly, the power to direct or cause the direction of the
management and policies of the Issuer, whether through the ownership or voting
of securities, by contract or otherwise, which in any case would cause the
Counterparty to be considered an "affiliate" of the Issuer as such term is
defined in Rule 405 and Rule 144 under the Securities Act of 1933, as amended
(the "Securities Act"). The Counterparty is not, has not been within the past
three months, and through the Expiration Date of the Call Option will not be,
such an "affiliate" of the Issuer;
8
(v) There is no internal policy, whether written or oral, of the
Counterparty that would prohibit the Counterparty from entering into any aspect
of this Transaction, including, but not limited to, the purchases of Shares to
be made by Chase or its Affiliates in connection herewith;
(vi) Upon delivery to Chase, the Company Stock (as defined below) will be
unlegended and freely transferable by Chase (assuming Chase is not an Affiliate
of the Issuer) without registration under the Securities Act;
(vii) The Counterparty purchased the Company Stock in an "offshore
transaction" (as defined in Regulation S) pursuant to Regulation S under the
Securities Act not involving any "directed selling efforts" (as defined in
Regulation S) in the United States; and
(viii) All the information and representations and warranties contained in
Section 4.02(d) of the Stock Subscription Agreement, dated as of October 14,
1997, by and among the Issuer, the Counterparty and Xxxxxxxxx Telecommunications
Limited, were true, accurate and complete.
2. Each party represents and warrants that:
(i) It is acting for its own account, and it has made its own
independent decisions to enter into this Transaction and as to whether this
Transaction is appropriate or proper for it based upon its own judgment and upon
advice from such advisers as it has deemed necessary;
(ii) It is not relying on any communication (written or oral) of the
other party as investment advice or as a recommendation to enter into this
Transaction; it being understood that information and explanations related to
the terms and conditions of this Transaction shall not be considered investment
advice or a recommendation to enter into this Transaction. No communication
(written or oral) received from the other party shall be deemed to be an
assurance or guarantee as to the expected results of this Transaction;
(iii) It is capable of assessing the merits of and understanding (on its
own behalf or through independent professional advice), and understands and
accepts, the terms, conditions and risks of this Transaction. It is also
capable of assuming, and assumes, the risks of this Transaction; and
(iv) The other party is not acting as a fiduciary for or an adviser to it
in respect of this Transaction.
K. Additional Covenants
Each party agrees that it has complied and will comply, in connection with
this Transaction and all related sales and purchases of the Shares, with the
applicable provisions of the Securities Act and the Securities Exchange Act of
1934, as amended, including but not limited to Rule 10b-5, provided that each
--------
party shall be entitled to rely conclusively on any information communicated by
the other party concerning such other party's market activities.
The Counterparty has made and will make all filings required on its part with
the Securities and Exchange Commission, any securities exchange or any other
regulatory body with respect to the transactions contemplated hereby.
The Counterparty covenants and agrees with Chase that any Shares delivered by
the Counterparty in connection with Physical Settlement will be duly authorized,
validly issued, fully paid and nonassessable and free of preemptive or similar
rights, and such delivery shall pass title thereto free and clear of any liens
or encumbrances, other than any in favor of Chase or its Affiliates.
The Counterparty shall promptly deliver to Chase an opinion of counsel, in
form and substance acceptable to Chase, to the effect that the Company Stock (as
defined below) may be transferred by Chase (assuming that Chase is not an
Affiliate of the Issuer) without registration under the Securities Act.
9
L. Security Interest
In order to secure the obligations of the Counterparty to Chase under the
Agreement (the "Obligations"), the Counterparty hereby pledges, transfers and
assigns to Chase, and grants to Chase a first priority security interest in, a
general lien upon and a right of set-off against, 388,888 Shares (the "Company
Stock"), together with all stock certificates, options or rights of any nature
whatsoever which may be issued or granted by the Issuer to the Counterparty in
respect of such Company Stock (collectively, the "Collateral"). The Counterparty
shall at its expense do, file, record, make, execute and deliver all such acts,
notices, instruments, statements, security agreements, and other documents as
Chase may reasonably request to evidence, create, perfect, preserve or otherwise
protect the security interest of Chase in the Collateral or any part thereof or
to give effect to the rights, powers and remedies of Chase hereunder.
The Counterparty shall deliver the stock certificate(s) representing the
Company Stock, together with an undated stock power covering each such
certificate(s), duly executed in blank with signature guaranteed, to Chase at
its office located at 000 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Xxxx
---------
Xxxxxxxx, 6th Floor, or shall make such delivery as otherwise directed by Chase.
The Company Stock shall be delivered and transferred free and clear of all
encumbrances, liens and security interests other than the lien and security
interest created hereunder. The Counterparty shall be deemed to represent and
warrant as of the date of its delivery of the Company Stock to Chase that it is
the owner of all such Company Stock, free and clear of all encumbrances, liens
and security interests other than the lien and security interest created
hereunder.
If the Counterparty shall, as a result of its ownership of any Company
Stock pledged hereunder, become entitled to receive or shall receive any stock
certificate (including, without limitation, any certificate representing a stock
dividend or a distribution in connection with any reclassification, increase or
reduction of capital or any certificate issued in connection with any
reorganization), option or rights, whether in addition to, in substitution of,
as a conversion of, or in exchange for any shares of such Company Stock, or
otherwise in respect thereof, the Counterparty shall accept the same as Xxxxx'x
agent, hold the same in trust for Chase and deliver the same forthwith to Chase
in the exact form received, together with an undated stock power covering each
such certificate duly executed in blank with signature guaranteed, to be held by
Xxxxx xxxxxxxxx as additional collateral security for the Obligations.
Provided that no Event of Default or Potential Event of Default in respect
of the Counterparty has occurred and is continuing, the Counterparty shall be
entitled to receive all payments of cash dividends or other dividends and
distributions (net of any withholding tax applicable to the Counterparty) in
respect of the Company Stock held as Collateral and shall be permitted to
exercise all voting and corporate rights with respect to the Company Stock,
provided that no vote shall be cast or corporate right exercised which would
impair the Collateral.
Provided that no Event of Default or Potential Event of Default has
occurred and is continuing in respect of Chase, Chase will, notwithstanding
Section 9-207 of the New York Uniform Commercial Code, but subject to the
requirement to return Collateral set forth in the immediately succeeding
paragraph, have the right to (i) sell, lend, pledge, repledge, hypothecate,
rehypothecate, assign, invest, use, commingle or otherwise dispose of, or
otherwise use in its business any Collateral it holds, free from any claim or
right of any nature whatsoever of the Counterparty, including any equity or
right of redemption by the Counterparty and (ii) register any Collateral in the
name of Chase or its nominee.
When no amounts or Shares are or thereafter may become payable or
deliverable by the Counterparty with respect to any Obligations, Chase will
transfer to the Counterparty any remaining Collateral or securities of the same
class, issue, pool, maturity, coupon rate and aggregate face amount as the
relevant Collateral. If, after the end of the Initial Hedging Period, the Hedge
Number of Shares shall at any time be less than the number of Shares held as
Collateral, Chase shall return the excess Shares within three Exchange Business
Days as instructed by the Counterparty. Chase will transfer to the Counterparty
any remaining Collateral or securities free and clear of all encumbrances, liens
and security interests and the Company Stock will be unlegended and freely
transferable by the Counterparty without registration under the Securities Act.
10
If at any time an Event of Default in respect of the Counterparty has occurred
and is continuing or an Early Termination Date has occurred or been designated
as the result of an Event of Default in respect of the Counterparty, Chase may
exercise all rights and remedies available to a secured party under applicable
law.
M. Indemnification
In addition to any remedies afforded Chase under the Agreement, the Counterparty
agrees to indemnify and hold harmless Chase and its officers, directors,
employees, Affiliates, advisors, agents and controlling persons (each, an
"Indemnified Person") from and against any and all losses, claims, damages and
liabilities, joint or several (collectively, "Damages"), to which an Indemnified
Person may become subject arising out of or in connection with any breach of the
representation contained in Part J.1.(vi) hereof or any claim, litigation,
investigation or proceeding relating thereto, regardless of whether any of such
Indemnified Persons is a party thereto, and to reimburse, within 30 days, upon
written request, each of such Indemnified Persons for any reasonable legal or
other expenses incurred in connection with investigation, preparation for,
providing evidence for or defending any of the foregoing, provided, however,
-------- -------
that the Counterparty shall not have any liability to any Indemnified Person to
the extent that such Damages (a) are finally determined by a court of competent
jurisdiction to have directly resulted from the gross negligence or willful
misconduct of such Indemnified Person or the breach by such Indemnified Person
of any covenant or obligation under the Agreement (and in such case, such
Indemnified Person shall promptly return to the Counterparty any amounts
previously expended by the Counterparty hereunder) or (b) are trading losses
incurred by Chase or its Affiliates as part of its purchases or sales of Shares
pursuant to this Confirmation.
Very truly yours,
THE CHASE MANHATTAN BANK
/s/ Xxxxxxxx Xxxxx
By: ________________________
Name: Xxxxxxxx Xxxxx
Title: Authorised Signatory
Accepted and confirmed as
of the date first written above:
XXXXXXXXX TELECOMMUNICATIONS HOLDINGS (USA) LIMITED
/s/ Xxxxx Xxxx
By: ________________________
Director
Title: ________________________
11
