Confirmation of OTC Convertible Note Hedge
EXHIBIT
99.1
| Date: |
November
16, 2006
|
| To: |
Chattem,
Inc. (“Counterparty”)
|
Attention:
Xxxxxxxx
X. Xxxxxxxxx, Xx., General Counsel
Telephone
No.: 000-000-0000
Facsimile
No.: 000-000-0000
| From: |
Xxxxxxx
Xxxxx International (“MLI”)
|
MLI
Reference: [________________]
Dear
Sir
/ Madam:
The
purpose of this letter agreement (this “Confirmation”)
is to
confirm the terms and conditions of the above-referenced transaction
entered
into
among Counterparty, MLI and Xxxxxxx Lynch, Xxxxxx, Xxxxxx & Xxxxx
Incorporated (the “Agent”
or
“MLPFS”)
on the
Trade Date specified below (the “Transaction”).
This
Confirmation constitutes a “Confirmation” as referred to in the Agreement
specified below.
The
definitions and provisions contained in the 2000 ISDA Definitions (the
“Swap
Definitions”)
and
the 2002 ISDA Equity Derivatives Definitions (the “Equity
Definitions”
and,
together with the Swap Definitions, the “Definitions”),
in
each case as published by the International Swaps and Derivatives Association,
Inc., are incorporated into this Confirmation. In the event of any inconsistency
between the Swap Definitions and the Equity Definitions, the Equity Definitions
will govern, and in the event of any inconsistency between the Definitions
and
this Confirmation, this Confirmation will govern. References herein to a
“Transaction” shall be deemed to be references to a “Share Option Transaction”
for purposes of the Equity Definitions and a “Swap Transaction” for the purposes
of the Swap Definitions.
This
Confirmation evidences a complete binding agreement between you and us as
to the
terms of the Transaction to which this Confirmation relates. This Confirmation
(notwithstanding anything to the contrary herein), shall be subject to, and
form
part of, an agreement in the 1992 form of the ISDA Master Agreement
(Multicurrency Cross Border) (the “Master
Agreement”
or
“Agreement”)
as if
we had executed an agreement in such form (but without any Schedule, with
the
elections specified in the “ISDA Master Agreement” Section of this Confirmation
and amended in the manner specified in Appendix B to the ISDA User’s Guide to
the 2002 Master Agreement to implement the “Close-out Amount”) on the Trade
Date. In the event of any inconsistency between the provisions of that agreement
and this Confirmation, this Confirmation will prevail for the purpose of
this
Transaction. The parties hereby agree that the Transaction evidenced by this
Confirmation shall be the only Transaction subject to and governed by the
Agreement.
The
terms
of the particular Transaction to which this Confirmation relates are as
follows:
General
Terms:
|
Trade
Date:
|
November
16, 2006
|
|
Effective
Date:
|
The
date of issuance of the Reference
Notes.
|
1
|
Option
Style:
|
Modified
American, as described under “Settlement Terms”
below.
|
|
Option
Type:
|
Call
|
|
Seller:
|
MLI
|
|
Buyer:
|
Counterparty
|
|
Shares:
|
The
shares of common stock, without par value, of Counterparty (Security
Symbol: “CHTT”) or such other securities or property into which the
Reference Notes are convertible on the date of
determination.
|
|
Premium:
|
$32,042,500
|
|
Premium
Payment Date:
|
November
22, 2006
|
|
Exchange:
|
NASDAQ
Global Market
|
|
Related
Exchange(s):
|
All
Exchanges
|
|
Reference
Notes:
|
2.00%
Convertible Senior Notes of Counterparty due 2013 in the original
amount
of $125,000,000.
|
|
Note
Indenture:
|
The
indenture, dated as of closing of the issuance of the Reference
Notes,
between Counterparty and U.S. Bank, National Association, as trustee
relating to the Reference Notes, as the same may be amended, modified
or
supplemented from time to time. Certain defined terms used herein
have the
meanings assigned to them in the Note
Indenture.
|
Procedures
for Exercise:
|
Potential
Exercise Dates:
|
Each
Conversion Date.
|
|
Conversion
Date:
|
Each
“conversion date” for any Reference Note pursuant to the terms of the Note
Indenture (the principal amount of Reference Notes so converted,
the
“Conversion
Amount”
with respect to such Conversion Date) occurring on or before the
Expiration Date.
|
|
If
the Conversion Amount for any Conversion Date is less than the
aggregate
principal amount of Reference Notes then outstanding, then the
terms of
this Transaction shall continue to apply, subject to the terms
and
conditions set forth herein, with respect to the remaining outstanding
principal amount of the Reference
Notes.
|
|
Expiration
Period:
|
The
period from and excluding the Trade Date to and including the Expiration
Date.
|
|
Expiration
Date:
|
The
earliest of (i) the maturity date of the Reference Notes, (ii)
the first
day on which none of such Reference Notes remain outstanding, whether
by
virtue of conversion, issuer repurchase or otherwise and (iii)
the
occurrence of an Additional Termination Event and designation of
an Early
Termination Date hereunder in respect of the termination of the
Transaction in whole but not in
part.
|
2
|
Exercise
Notice:
|
Notwithstanding
anything to the contrary in the Equity Definitions, in order to
exercise
any Options hereunder, Buyer shall provide Seller with written
notice
prior to 5:00 p.m. New York City time on the Exchange Business
Day prior
to the first Trading Day in the Conversion Reference Period (both
as
defined in the Note Indenture) relating to the Reference Notes
converted
on the relevant Conversion Date of (i) the number of Reference
Notes being
converted on the relevant Conversion Date, (ii) the first Trading
Day in
the relevant Conversion Reference Period for the Reference Notes
and (iii)
if any, the applicable Cash Percentage (as defined in the Note
Indenture);
provided that with respect to Reference Notes converted during
the period
beginning on October 15, 2013 and ending on the business day immediately
preceding the Maturity Date (as defined in the Note Indenture)
of the
Reference Notes, the related Exercise Notice shall be delivered
prior to
5:00 p.m. New York City time on such Maturity Date (as defined
in the Note
Indenture); and provided further that the delivery by Buyer of
an Exercise
Notice after the Conversion Reference Period has commenced but
prior to
the close of business on the fifth Trading Day of such Conversion
Reference Period shall be effective, in which case the Settlement
Method
shall be Net Share Settlement but without regard to subsection
(ii) of the
definition of Net Share Settlement and subject to adjustments to
the Net
Share Settlement Amount as specified
below.
|
|
Seller’s
Telephone
Number
and
Telex and/or Facsimile
Number
and Contact Details
for
purpose of Giving Notice:
|
Address:
Xxxxxxx Xxxxx International
Xxxxxxx
Xxxxx Financial Centre
0
Xxxx Xxxxxx Xxxxxx
Xxxxxx
XX0X 0XX
Attention:
Manager, Fixed Income Settlements
Facsimile
No.: x00 000 000 0000
Telephone
No.: x00 000 000 0000
|
Settlement
Terms:
|
Settlement
Method:
|
Net
Share Settlement or Net Cash Settlement consistent with Buyer’s election
with respect to the Reference Notes converted on the applicable
Conversion
Date, provided that Net Share Settlement shall apply in the event
that
Buyer elects to deliver any Shares in connection with the applicable
Conversion Date.
|
|
Settlement
Date:
|
Subject
to the delivery of an Exercise Notice to the Seller, the third
(3rd)
Exchange Business Day following the final Trading Day in the applicable
Conversion Reference Period in respect of the relevant Conversion
Date.
|
|
Net
Share Settlement:
|
This
paragraph shall apply where Xxxxx has elected to deliver Shares
and cash
upon a conversion of Reference Notes. In lieu of the obligations
set forth
in Sections 8.1 and 9.1 of the Equity Definitions, Seller shall
deliver to
Buyer on the related Settlement Date (i) a number of Shares equal
to the
related Net Share Settlement Amount, provided that in the event
that the
number of Shares calculated comprises any fractional Share, only
whole
Shares shall be delivered and an amount equal to the value of such
fractional Share shall be payable by Seller to Buyer in cash and
(ii) an
amount in cash equal to the cash amount, if any, paid by Buyer
in excess
of the principal amount of the applicable Reference Notes for such
Conversion Date under the Note Indenture, provided that the delivery
obligation set forth in clause (i) and (ii) of this paragraph shall
be
determined excluding any Shares or cash that Counterparty is obligated
to
deliver to holders of the applicable Reference Notes as a result
of
any
|
3
|
|
adjustments
to the Conversion Rate resulting from (i) a discretionary adjustment
to
the Conversion Rate by Counterparty or (ii)
an adjustment to the Conversion Rate as a result of a fundamental
change
or change of control as described in the Note Indenture.
The provisions of Sections 9.1(c), 9.8, 9.9, 9.10, 9.11 and 9.12
of the
Equity Definitions shall apply to any delivery of Shares hereunder,
provided that the Representation and Agreement in Section 9.11
of the
Equity Definitions shall be modified by excluding any representations
therein relating to restrictions, obligations, limitations or requirements
under applicable securities laws as a result of the fact that Buyer
is the
issuer of the Shares.
|
|
Net
Cash Settlement:
|
This
paragraph shall apply where Xxxxx has elected to deliver cash and
not
Shares upon a conversion of Reference Notes. In lieu of the obligations
set forth in Section 8.1 of the Equity Definitions, on the Settlement
Date
Seller shall deliver to Buyer an amount in cash equal to the related
Net
Cash Settlement Amount.
|
|
Net
Share Settlement Amount:
|
For
each Conversion Date, the number of Shares equal to the Shares
delivered
by Buyer for such Conversion Date under the Note Indenture, provided
that
if an Exercise Notice with respect to such Conversion Date has
not been
delivered to the Seller prior to the first Trading Day of the Conversion
Reference Period applicable to such Conversion Date, the Net Share
Settlement Amount for such Conversion Date shall be adjusted by
the
Calculation Agent to account for the reduced number of Trading
Days from
the delivery of the Exercise Notice to the end of the applicable
Conversion Reference Period with respect to such Conversion Date.
No
reduction of the Net Share Settlement Amount shall reduce the Net
Share
Settlement Amount below zero.
|
|
Net
Cash Settlement Amount:
|
For
each Conversion Date, an amount equal to the cash delivered by
the Buyer
in
excess of the principal amount of the applicable Reference
Notes
for such Conversion Date under the Note Indenture,
provided that such cash amount shall be determined excluding any
cash that
Counterparty is obligated to deliver to holders of the applicable
Reference Notes as a result of any adjustments to the Conversion
Rate
resulting from (i) a discretionary adjustment to the Conversion
Rate by
Counterparty or (ii)
an adjustment to the Conversion Rate as a result of a fundamental
change
or change of control as described in the Note Indenture.
|
Delivery
and Application of
|
Shares:
|
Counterparty
may designate by written notice to MLI that any Shares to be delivered
by
MLI hereunder shall be delivered to the Trustee under the Note
Indenture.
Counterparty agrees that it will use its commercially reasonable
efforts
to cause the Shares delivered hereunder by MLI to be applied to
satisfy
Counterparty’s obligations to deliver Shares upon conversion of the
Reference Notes.
|
Adjustments:
|
Method
of Adjustment:
|
Calculation
Agent Adjustment; provided
that the terms of this Transaction shall be adjusted in a manner
consistent with adjustments of the Conversion Rate of the Reference
Notes
as provided in the Note Indenture; provided
further
(without limitation of the provisions set forth above under “Net Share
Settlement” and “Net Cash Settlement Amount”) that no adjustment in
respect of any Potential Adjustment Event or Extraordinary Event
shall be
made hereunder as a result of any adjustments to the Conversion
Rate
resulting from (i) a discretionary adjustment to the Conversion
Rate by
Counterparty or (ii)
an adjustment to the Conversion Rate as a result of a fundamental
change
or change of control as described in the Note Indenture.
|
4
|
Potential
Adjustment Event:
|
Notwithstanding
Section 11.2(e) of the Equity Definitions, a “Potential Adjustment Event”
means, subject to the preceding paragraph, the occurrence of an
event or
condition that would result in an adjustment of the Conversion
Rate of the
Reference Notes pursuant to the Note
Indenture.
|
Extraordinary
Events:
|
Merger
Events:
|
Notwithstanding
Section 12.1(b) of the Equity Definitions, a “Merger Event” means the
occurrence of any event or condition set forth in Section 4.10
of the Note
Indenture.
|
Consequences
for Merger Events:
| Share-for-Share: |
The
Transaction will be adjusted consistent with the Reference Notes
as
provided in the Note Indenture.
|
| Share-for-Other: |
The
Transaction will be adjusted consistent with the Reference Notes
as
provided in the Note Indenture.
|
| Share-for-Combined: |
The
Transaction will be adjusted consistent with the Reference Notes
as
provided in the Note Indenture.
|
| Tender Offer: |
Applicable,
subject to “Consequences of Tender Offers” below. Notwithstanding
Section 12.1(d) of the Equity Definitions, a “Tender Offer” means the
occurrence of any event or condition set forth in Section 4.06(a)(8)
of
the Note Indenture.
|
| Consequences of Tender Offers: |
The
Transaction will be adjusted consistent with the Reference Notes
as
provided in the Note Indenture.
|
Nationalization,
Insolvency
| and Delisting: |
Cancellation
and Payment (Calculation Agent Determination), provided Buyer shall
determine whether payment shall be settled in cash or Shares. In
addition
to the provisions of Section 12.6(a)(iii) of the Equity Definitions,
it will also constitute a Delisting if the Exchange is located
in the
United States and the Shares are not immediately re-listed, re-traded
or
re-quoted on any of the New York Stock Exchange, the American Stock
Exchange or the NASDAQ National Market System (or their respective
successors, including without limitation the NASDAQ Global Market
and
NASDAQ Global Select Market); if the Shares are immediately re-listed,
re-traded or re-quoted on any such exchange or quotation system,
such
exchange or quotation system shall thereafter be deemed to be the
Exchange.
|
Additional
Disruption Events:
| Change in Law: |
Applicable;
provided that Section 12.9(a)(ii) of the Equity Definitions is
hereby
amended by replacing the phrase “will incur a materially increased cost in
performing” with the following text: “has become commercially
impracticable for it to perform”.
|
| Failure to Deliver: |
Applicable.
If there is inability in the market to deliver Shares due to illiquidity
on a day that would have been a Settlement Date, then the Settlement
Date
shall be the first succeeding Exchange Business Day on which there
is no
such inability to deliver, but in no such event shall the Settlement
Date
be later than the date that
|
5
|
is
two (2) Exchange Business Days immediately following what would
have been
the Settlement Date but for such inability to
deliver.
|
|
Insolvency
Filing:
|
Applicable
|
| Hedging Disruption Event: |
Applicable
|
| Increased Cost of Hedging: |
Not
Applicable
|
| Loss of Stock Borrow: |
Not
Applicable
|
| Increased Cost of Stock Borrow: |
Not
Applicable
|
| Hedging Party: |
Seller
|
| Determining Party: |
Seller
|
| Non-Reliance: |
Applicable
|
Agreements
and Acknowledgments
| Regarding Hedging Activities: |
Applicable
|
| Additional Acknowledgments: |
Applicable
|
Additional
Agreements, Representations and Covenants of Buyer,
Etc.:
|
1.
|
Buyer
hereby represents and warrants to Seller, on each day from the
Trade Date
to and including the earlier of (i) November 30, 2006 and (ii)
the date by
which Seller is able to initially complete a hedge of its position
relating to this Transaction, that:
|
|
a.
|
it
will effect (and cause any “affiliated purchaser” (as defined in Rule
10b-18 promulgated under the Securities Exchange Act of 1934, as
amended
(the “Exchange
Act”))
to effect) any purchases, direct or indirect (including by means
of any
cash-settled or other derivative instrument), of Shares or any
security
convertible into or exchangeable or exercisable for Shares solely
through
Agent and in a manner that would not cause any purchases by Seller
of its
hedge in connection with this Transaction not to comply with Rule
10b-18.
|
|
b.
|
it
will not engage in, or be engaged in, any “distribution,” as such term is
defined in Regulation M promulgated under the Exchange Act, other
than a
distribution meeting the requirements of the exceptions set forth
in
sections 101(b)(10) and 102(b)(7) of Regulation M (it being understood
that Xxxxx makes no representation pursuant to this clause in respect
of
any action or inaction taken by Seller or any purchaser of the
Reference
Notes); and
|
|
c.
|
Xxxxx
has publicly disclosed all material information necessary for Buyer
to be
able to purchase or sell Shares in compliance with applicable federal
securities laws and that it has publicly disclosed all material
information with respect to its condition (financial or
otherwise).
|
|
2.
|
If
Buyer would be obligated to pay cash to, or receive cash from,
Seller
pursuant to the terms of this Agreement for any reason without
having had
the right (other than pursuant to this paragraph (2)) to elect
to receive
Shares in satisfaction of such payment obligation, then Buyer may
elect
that such payment obligation shall be satisfied by the delivery
of a
number of Shares (or, if the Shares have been converted into other
securities or property in connection with an Extraordinary Event,
a number
or amount of such other securities or property as a holder of Shares
would
be entitled to receive upon the consummation or closing of such
Extraordinary Event) having a cash value equal to the amount of
such
payment obligation
|
6
|
|
(such
number or amount of Shares or other securities or property to
be delivered
to be determined by the Calculation Agent to determine the number
of
Shares or number or amount of such other securities or property
that could
be purchased or sold, as applicable, over a reasonable period
of time with
the cash equivalent of such payment obligation). Settlement relating
to
any delivery of Shares or other securities or property pursuant
to this
paragraph (2) shall occur within a reasonable period of
time.
|
|
3.
|
Notwithstanding
any provision in the Note Indenture, this Confirmation or the Agreement
to
the contrary, each of the “applicable Conversion Rate” (as such term is
used in the Note Indenture), the Net Share Settlement Amount, the
Net Cash
Settlement Amount and any other amount hereunder determined by
reference
to the applicable Conversion Rate shall be determined without regard
to
any provisions in the Note Indenture allowing Counterparty to unilaterally
increase the “applicable Conversion Rate” or any adjustments resulting
from a fundamental change or change of control.
|
|
4.
|
Counterparty
is not, and after giving effect to the Transaction contemplated
hereby,
will not be, an “investment company” as such term is defined in the
Investment Company Act of 1940, as
amended.
|
|
5.
|
As
of the Trade Date and each date on which a payment or delivery
is made by
Counterparty hereunder, (i) the assets of Counterparty at their
fair
valuation exceed the liabilities of Counterparty, including contingent
liabilities; (ii) the capital of Counterparty is adequate to conduct
its
business; and (iii) Counterparty has the ability to pay its debts
and
other obligations as such obligations mature and does not intend
to, or
believe that it will, incur debt or other obligations beyond its
ability
to pay as such obligations mature.
|
Additional
Termination Events:
The
occurrence of any of the following shall be an Additional Termination Event
for
purposes of this Transaction:
|
1.
|
Amendment
Event.
If an Amendment Event (as defined below) occurs, MLI shall have
the right
to designate an Early Termination Date pursuant to Section 6(b)
of the
Agreement and, notwithstanding anything to the contrary herein,
no
payments shall be required under this Agreement in connection with
such
Amendment Event.
|
“Amendment
Event”
means
that the Counterparty, without MLI’s consent, amends, modifies, supplements or
obtains a waiver of (a) any term of the Note Indenture (as in effect prior
to
such amendment, modification, supplement or waiver) or the Reference Notes
relating to the principal amount, coupon, maturity, repurchase obligation
of the
Counterparty or redemption right of the Counterparty, (b) any material term
relating to conversion of the Reference Notes (including changes to the
conversion price, conversion settlement dates or conversion conditions) or
(c)
any term that would require consent of the holders of 100% of the principal
amount of the Reference Notes to amend;
|
2.
|
Repayment
Event.
If
a
Repayment Event (as defined below) occurs, MLI shall have the right
to
designate an Early Termination Date pursuant to Section 6(b) of
the
Agreement with respect to this Transaction to the extent of the
principal
amount of Reference Notes that cease to be outstanding as a result
of such
Repayment Event and, notwithstanding anything to the contrary herein,
no
payments shall be required under this Agreement in connection with
such
Repayment Event.
|
“Repayment
Event”
means
that (a) any Reference Notes are repurchased (whether in connection with
or as a
result of a change of control, howsoever defined, or for any other reason)
by
the Counterparty, (b) any Reference Notes are delivered to the Counterparty
in
exchange for delivery of any property or assets of the Counterparty or any
of
its subsidiaries (howsoever described), other than as a result of and in
connection with a Conversion Date, (c) any principal of any of the
Reference Notes is repaid prior to the Final Maturity Date (as defined in
the
Note Indenture) (whether following acceleration of the Reference Notes or
otherwise), provided that no payments of cash made in respect of the conversion
of a Reference Note shall be deemed a payment of principal under this clause
(c), (d) any Reference Notes are exchanged by or for the benefit of the
holders thereof for any other securities of the Counterparty or any of its
Affiliates (or any other property, or any combination thereof) pursuant to
any
exchange offer or similar transaction or (e) any
7
of
the
Reference Notes is surrendered by Counterparty to the trustee for cancellation,
other than registration of a transfer of such Reference Notes or as a result
of
and in connection with a Conversion Date; or
|
3.
|
Initial
Purchase Event.
If
an Initial Purchase Event (as defined below) occurs, this Transaction
shall terminate automatically in its entirety and, notwithstanding
anything to the contrary herein, only the payments specified below
shall
be required hereunder in connection with such Initial Purchase
Event. Upon
the occurrence of an Initial Purchase Event, any payments previously
made
hereunder, including the Premium, shall be returned to the person
making
such payment. In addition, Counterparty shall reimburse MLI for
any costs
or expenses (including market losses) relating to the unwinding
of its
hedging activities in connection with the Transaction (including
any loss
or cost incurred as a result of its terminating, liquidating, obtaining
or
reestablishing any hedge or related trading position); provided
that in no
event shall the amount of such reimbursement exceed $3,125,000.
In the
event that MLI has any realized profit resulting from its hedge
positions
established in connection with the Transaction (net of all costs
and
expenses relating or allocable thereto, including any trading costs
and
funding charges), MLI shall pay such amount to Counterparty. The
amount of
any such payment shall be determined by MLI in its sole good faith
discretion, and the relevant party shall pay such amount in immediately
available funds no later than the Currency Business Day following
notification by MLI of its determination of such
amount.
|
|
“Initial
Purchase Event”
means that the transactions contemplated by the Securities Purchase
Agreement between the Counterparty and the purchasers of the reference
notes party thereto (the “Purchasers”)
dated as of November 16, 2006 relating to the purchase of the Reference
Notes (the “Purchase
Agreement”)
shall fail to close
|
Staggered
Settlement:
If
Seller
determines reasonably and in good faith that the number of Shares required
to be
delivered to Buyer hereunder on any Settlement Date would exceed 8.0% of
all
outstanding Shares, then Seller may, by notice to Buyer on or prior to such
Settlement Date (a “Nominal
Settlement Date”),
elect
to deliver the Shares comprising the related Net Share Settlement Amount
on two
or more dates (each, a “Staggered
Settlement Date”)
or at
two or more times on the Nominal Settlement Date as follows:
|
1.
|
in
such notice, Seller will specify to Buyer the related Staggered
Settlement
Dates (the first of which will be such Nominal Settlement Date
and the
last of which will be no later than twenty (20) Trading Days following
such Nominal Settlement Date) or delivery times and how it will
allocate
the Shares it is required to deliver hereunder among the Staggered
Settlement Dates or delivery times;
|
|
2.
|
the
aggregate number of Shares that Seller will deliver to Buyer hereunder
on
all such Staggered Settlement Dates or delivery times will equal
the
number of Shares that Seller would otherwise be required to deliver
on
such Nominal Settlement Date; and
|
|
3.
|
the
Net Share Settlement terms will apply on each Staggered Settlement
Date,
except that the Shares comprising the Net Share Settlement Amount
will be
allocated among such Staggered Settlement Dates or delivery times
as
specified by Seller in the notice referred to in clause (1)
above.
|
Notwithstanding
anything herein to the contrary, solely in connection with a Staggered
Settlement Date, Seller shall be entitled to deliver Shares to Buyer from
time
to time prior to the date on which Seller would be obligated to deliver them
to
Buyer pursuant to Net Share Settlement terms set forth above, and Xxxxx agrees
to credit all such early deliveries against Seller’s obligations hereunder in
the direct order in which such obligations arise. No such early delivery
of
Shares will accelerate or otherwise affect any of Buyer’s obligations to Seller
hereunder.
Disposition
of Hedge Shares:
Seller
intends to conduct its hedging activities in connection with the Transaction
in
a manner that it believes, based on its reasonable judgment, will not require
Counterparty to register under the Securities Act or any state securities
laws
the Shares (the “Hedge
Shares”)
acquired by Seller for the purpose of hedging its obligations pursuant to
the
8
Transaction.
In addition, Counterparty
hereby agrees that if, in the reasonable judgment of Seller
based on advice of counsel,
the
Hedge Shares cannot
be
sold in the U.S. public market by Seller
without
registration under the Securities Act, Counterparty shall, at its election:
(i)
in
order
to allow Seller to sell the Hedge Shares in a registered offering, make
available to Seller an effective registration statement under the Securities
Act
to cover the resale of such Hedge Shares and (a) enter into an agreement,
in
form and substance satisfactory to Seller, substantially in the form of an
underwriting agreement for a registered offering, (b)
provide accountant’s “comfort” letters in customary form for registered
offerings of equity securities, (c) provide disclosure opinions of nationally
recognized outside counsel to Counterparty reasonably acceptable to Seller,
(d)
provide other customary opinions, certificates and closing documents customary
in form for registered offerings of equity securities and (e) afford
Seller
a
reasonable opportunity to conduct a “due diligence” investigation with respect
to Counterparty customary in scope for underwritten offerings of equity
securities;
provided,
however,
that if
Seller, in its sole reasonable discretion, is not satisfied with access to
due
diligence materials, the results of its due diligence investigation, or the
procedures and documentation for the registered offering referred to above,
then
clause (ii) or clause (iii) of this Section shall apply at the election of
Counterparty; (ii) in order to allow Seller to sell the Hedge Shares in a
private placement, enter into a private placement agreement substantially
similar to private placement purchase agreements customary for private
placements of equity securities, in form and substance satisfactory to Seller,
including customary representations, covenants, blue sky and other governmental
filings and/or registrations, indemnities to Seller, due diligence rights
(for
Seller or any designated buyer of the Hedge Shares from Seller), opinions
and
certificates and such other documentation as is customary for private placements
agreements, all reasonably acceptable to Seller (in which case, the Calculation
Agent shall make any adjustments to the terms of the Transaction that are
necessary to compensate Seller for any discount from the public market price
of
the Shares incurred on the sale of Hedge Shares in a private placement);
or
(iii) purchase the Hedge Shares from Seller at the VWAP Price on such Exchange
Business Days, and in such amounts, as requested by Seller. “VWAP
Price”
means,
on any Exchange Business Day, the per Share volume-weighted average price
as
displayed under the heading “Bloomberg VWAP” on Bloomberg page CHTT
<equity> VAP (or any successor thereto) in respect of the period from 9:45
a.m. to 3:45
p.m.
(New York City time) on such Exchange Business Day (or if such volume-weighted
average price is unavailable, the market value of one Share on such Exchange
Business Day, as determined by the Calculation Agent using a volume-weighted
method).
Repurchase
Notices:
Counterparty
shall, on any day on which Counterparty effects any repurchase of Shares,
promptly give Seller a written notice of such repurchase (a “Repurchase
Notice”)
on
such day if following such repurchase, the Notice Percentage as determined
on
such day is (i) greater than 6% and (ii) greater by 0.5% than the Notice
Percentage included in the immediately preceding Repurchase Notice (or, in
the
case of the first such Repurchase Notice, greater than the Notice Percentage
as
of the date hereof). In the event that Counterparty fails to provide Seller
with
a Repurchase Notice on the day and in the manner specified in this section,
then
Counterparty agrees to indemnify and hold harmless Seller, its affiliates
and
their respective directors, officers, employees, agents and controlling persons
(Seller and each such person being an “Indemnified
Party”)
from
and against any and all losses, claims, damages and liabilities (or actions
in
respect thereof), joint or several, to which such Indemnified Party may become
subject under applicable securities laws, including without limitation, Section
16 of the Exchange Act, relating to or arising out of such failure. If for
any
reason the foregoing indemnification is unavailable to any Indemnified Party
or
insufficient to hold harmless any Indemnified Party, then Counterparty shall
contribute, to the maximum extent permitted by law, to the amount paid or
payable by the Indemnified Party as a result of such loss, claim, damage
or
liability. In
addition, Counterparty will reimburse any Indemnified Party for all reasonable
and documented expenses (including reasonable counsel fees and expenses)
as they
are incurred (after notice to Counterparty) in connection with the investigation
of, preparation for or defense or settlement of any pending or threatened
claim
or any action, suit or proceeding arising therefrom, whether or not such
Indemnified Party is a party thereto and whether or not such claim, action,
suit
or proceeding is initiated or brought by or on behalf of Counterparty.
This
indemnity shall survive the completion of the Transaction contemplated by
this
Confirmation and any assignment and delegation of the Transaction made pursuant
to this Confirmation or the Agreement shall inure to the benefit of any
permitted assignee of Seller. Counterparty will not be liable under this
Indemnity provision to the extent that any loss, claim, damage, liability
or
expense is found in a final judgment by a court to have resulted from MLI’s
gross negligence or willful misconduct. The “Notice
Percentage”
as
of
any day is the fraction, expressed as a percentage, (i) the numerator of
which
is the product of the number of outstanding Reference Notes and the number
of
Shares per Reference Note equal to the Conversion Rate (as defined in the
Note
Indenture) and (ii) the denominator of which is the number of Shares outstanding
on such day.
9
|
Compliance
with Securities Laws:
|
Each
party represents and agrees that, in connection with this Transaction
and
all related or contemporaneous sales and purchases of Shares by
either
party, Buyer, or in the case of Seller, the person(s) that directly
influences the specific trading decisions of Seller, has complied
and will
comply with the applicable provisions of the Securities Act of
1933, as
amended (the “Securities
Act”),
and the Exchange Act, and the rules and regulations each thereunder,
including, without limitation, Section 9(a) of, and Rules 10b-5
and 13e
and Regulation M under, the Exchange Act; 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.
|
|
Each
party acknowledges that the offer and sale of the Transaction to
it is
intended to be exempt from registration under the Securities Act
by virtue
of Section 4(2) thereof. Accordingly, Buyer represents and warrants
to
Seller that (i) it has the financial ability to bear the economic
risk of
its investment in the Transaction and is able to bear a total loss
of its
investment, (ii) it is an “accredited
investor”
as that term is defined in Regulation D as promulgated under the
Securities Act and (iii) the disposition of the Transaction is
restricted
under this Confirmation, the Securities Act and state securities
laws.
|
|
|
Buyer
further represents:
|
|
|
(a)
Buyer is not entering into this Transaction to create actual or
apparent
trading activity in the Shares (or any security convertible into
or
exchangeable for Shares) or to raise or depress or otherwise manipulate
the price of the Shares (or any security convertible into or exchangeable
for Shares);
|
|
|
(b)
Buyer acknowledges that as of the date hereof and without limiting
the
generality of Section 13.1 of the Equity Definitions, Seller is
not making
any representations or warranties with respect to the treatment
of the
Transaction under FASB Statements 149 or 150, EITF Issue No. 00-19
(or any
successor issue statements) or under FASB’s Liabilities & Equity
Project.
|
|
| Account Details: | Account for payments to Buyer: Bank of America, N.A |
|
Chattem,
Inc.
ABA#
000000000
AIC#
002006442400
|
|
|
Account
for payment to Seller: Chase
Manhattan Bank, New York
|
|
|
ABA#:
000-000-000
FAO:
ML Equity Derivatives
A/C:
066213118
|
|
| Accounts for deliveries of Shares: To be advised |
| Bankruptcy Rights: | In the event of Xxxxx’s bankruptcy, Seller’s rights in connection with this Transaction shall not exceed those rights held by common shareholders. For the avoidance of doubt, the parties acknowledge and agree that Xxxxxx’s rights with respect to any other claim arising from this Transaction prior to Xxxxx’s bankruptcy shall remain in full force and effect and shall not be otherwise abridged or modified in connection herewith. |
10
| Set-Off: | Each party waives any and all rights it may have to set-off, whether arising under any agreement, applicable law or otherwise. |
| Collateral: | None. |
| Transfer: | Buyer shall have the right to assign its rights and delegate its obligations hereunder with respect to any portion of this Transaction, subject to Seller’s consent, such consent not to be unreasonably withheld; provided that such assignment or transfer shall be subject to receipt by Seller of opinions and documents reasonably satisfactory to Seller and effected on terms reasonably satisfactory to the Seller with respect to any legal and regulatory requirements relevant to the Seller; provided further that Buyer shall not be released from its obligation to deliver a Exercise Notice. If, as determined in Seller’s sole discretion, (i) its “beneficial ownership” (within the meaning of Section 13 of the Exchange Act and rules promulgated thereunder) could be deemed to exceed 8% of Counterparty’s outstanding Shares or (ii) the quotient of (x) the product of (a) the Number of Options and (b) the Option Entitlement divided by (y) the number of Counterparty’s outstanding Shares (such quotient expressed as a percentage, the “Option Equity Percentage”) exceeds 9%, Seller may, without Counterparty’s consent, transfer or assign all or any part of its rights or obligations under this Transaction to reduce such “beneficial ownership” to 7.5% or such Option Equity Percentage to 8.5% to any third party with a rating for its (or, if applicable, its Credit Support Provider’s) long term, unsecured and unsubordinated indebtedness of A- or better by Standard & Poor’s Ratings Service or its successor (“S&P”), or A3 or better by Xxxxx’x Investors Service (“Moody’s”) or, if either S&P or Moody’s ceases to rate such debt, at least an equivalent rating or better by a substitute rating agency mutually agreed by Company and Seller. If after Seller’s commercially reasonable efforts, Seller is unable to effect such a transfer or assignment on pricing terms reasonably acceptable to Seller and within a time period reasonably acceptable to Seller of a sufficient number of Options to reduce (i) Seller’s “beneficial ownership” (within the meaning of Section 13 of the Exchange Act and rules promulgated thereunder) to 7.5% of Counterparty’s outstanding Shares or less or (ii) the Option Equity Percentage to 8.5% or less, Seller may designate any Exchange Business Day as an Early Termination Date with respect to a portion (the “Terminated Portion”) of this Transaction, such that (i) its “beneficial ownership” following such partial termination will be equal to or less than 7.5% or (ii) the Option Equity Percentage following such partial termination will be equal to or less than 8.5%. In the event that Seller so designates an Early Termination Date with respect to a portion of this Transaction, a payment shall be made pursuant to Section 6 of the Agreement as if (i) an Early Termination Date had been designated in respect of a Transaction having terms identical to this Transaction and a Number of Options equal to the Terminated Portion, (ii) Counterparty shall be the sole Affected Party with respect to such partial termination and (iii) such Transaction shall be the only Terminated Transaction. In circumstances in which the foregoing provisions relating to Seller’s right to transfer or assign its rights or obligations under the Transaction are not applicable, Seller may transfer any of its rights or delegate its obligations under this Transaction with the prior written consent of Buyer, which consent shall not be unreasonably withheld. |
| Regulation: | Seller is regulated by The Securities and Futures Authority Limited. |
Matters
Relating to Agent:
|
1.
|
MLPFS
will be responsible for the operational aspects of the Transactions
effected through it, such as record keeping, reporting, and confirming
Transactions to Xxxxx and Seller;
|
|
2.
|
Unless
Seller is a “major U.S. institutional investor,” as defined in Rule 15a-6
of the Exchange Act, neither Buyer nor Seller will contact the
other
without the direct involvement of
MLPFS;
|
11
|
3.
|
XXXXX’s
sole role under this Agreement and with respect to any Transaction
is as
an agent of Xxxxx and Xxxxxx on a disclosed basis and MLPFS shall
have no
responsibility or liability to Buyer or Seller hereunder except
for gross
negligence or willful misconduct in the performance of its duties
as
agent. MLPFS is authorized to act as agent for Buyer, but only
to the
extent expressly required to satisfy the requirements of Rule 15a-6
under
the Exchange Act in respect of the Options described hereunder.
MLPFS
shall have no authority to act as agent for Buyer generally or
with
respect to transactions or other matters governed by this Agreement,
except to the extent expressly required to satisfy the requirements
of
Rule 15a-6 or in accordance with express instructions from
Buyer.
|
ISDA
Master Agreement:
With
respect to the Agreement, Seller and Counterparty each agree as
follows:
“Specified
Entity”
means
in relation to Seller and in relation to Counterparty for purposes of this
Transaction: Not applicable.
“Specified
Transaction”
means
any transaction (whether now existing or hereinafter entered into, including
any
agreement with respect thereto) relating to Shares between Counterparty and
Seller that qualifies as ‘equity’ under applicable accounting
rules.
The
“Cross
Default”
provisions of Section
5(a)(vi)
of the
Agreement will not apply to Seller and will not apply to
Counterparty.
The
“Credit
Event Upon Merger”
provisions of Section
5(b)(iv)
of the
Agreement will not apply to Seller and Counterparty.
The
“Automatic
Early Termination”
provision of Section
6(a)
of the
Agreement will not apply to Seller or to Counterparty.
Payments
on Early Termination. For
the
purpose of Section
6(e)
of the
Agreement: (i) Close-out Amount shall apply; and (ii) the Second Method
shall apply.
“Termination
Currency”
means
USD.
Tax
Representations.
|
(a)
|
Payer
Representations. For
the purpose of Section 3(e) of the Agreement, each party represents
to the
other party that it is not required by any applicable law, as modified
by
the practice of any relevant governmental revenue authority, of
any
Relevant Jurisdiction to make any deduction or withholding for
or on
account of any Tax from any payment (other than interest under
Section
2(e), 6(d)(ii), or 6(e) of the Agreement) to be made by it to the
other
party under the Agreement. In making this representation, each
party may
rely on (i) the accuracy of any representations made by the other
party
pursuant to Section 3(f) of the Agreement, (ii) the satisfaction
of the
agreement contained in Section 4(a)(i) or 4(a)(iii) of the Agreement,
and
the accuracy and effectiveness of any document provided by the
other party
pursuant to Section 4(a)(i) or 4(a)(iii) of the Agreement, and
(iii) the
satisfaction of the agreement of the other party contained in Section
4(d)
of the Agreement; provided that it will not be a breach of this
representation where reliance is placed on clause (ii) above and
the other
party does not deliver a form or document under Section 4(a)(iii)
of the
Agreement by reason of material prejudice to its legal or commercial
position.
|
|
(b)
|
Payee
Representations. For
the purpose of Section 3(f) of the Agreement, each party makes
the
following representations to the other
party:
|
|
(i)
|
Seller
represents that it is a corporation organized under the laws of
England
and Wales.
|
|
(ii)
|
Counterparty
represents that it is a corporation incorporated
in Tennessee.
|
12
Delivery
Requirements.
For the
purpose of Sections
4(a)(i)
and
(ii)
of the
Agreement, each party agrees to deliver the following documents:
|
(a)
|
Tax
forms, documents or certificates to be delivered
are:
|
|
Each
party agrees to complete (accurately and in a manner reasonably
satisfactory to the other party), execute, and deliver to the other
party,
United States Internal Revenue Service Form W-9 or W-8 BEN, or
any
successor of such form(s): (i) before the first payment date under
this
agreement; (ii) promptly upon reasonable demand by the other party;
and (iii) promptly upon learning that any such form(s) previously
provided by the other party has become obsolete or
incorrect.
|
|
(b)
|
Other
documents to be delivered:
|
|
Party
Required to Deliver Document
|
Document
Required to be Delivered
|
When
Required
|
Covered
by Section 3(d) Representation
|
|
Counterparty
|
Evidence
of the authority and true signatures of each official or representative
signing this Confirmation
|
Upon
or before execution and delivery of this Confirmation
|
Yes
|
|
Counterparty
|
Certified
copy of the resolution of the Board of Directors or equivalent
document
authorizing the execution and delivery of this Confirmation and
such other
certificates as Seller shall reasonably request
|
Upon
or before execution and delivery of this Confirmation
|
Yes
|
|
Seller
|
Guarantee
of its Credit Support Provider, substantially in the form of Exhibit
A
attached hereto, together with evidence of the authority and true
signatures of the signatories, if applicable
|
Upon
or before execution and delivery of this Confirmation
|
Yes
|
Additional
Notice Requirements.
Counterparty hereby agrees to promptly deliver to Seller a copy of all notices
and other communications required or permitted to be given to the holders
of any
Reference Notes pursuant to the terms of the Note Indenture on the dates
so
required or permitted in the Note Indenture and all other notices given and
other communications made by Counterparty in respect of the Reference Notes
to
holders of any Reference Notes. Counterparty further covenants to Seller
that it
shall promptly notify Seller of each Conversion Date, Amendment Event (including
in such notice a detailed description of any such amendment) and Repayment
Event
(identifying in such notice the nature of such Repayment Event and the principal
amount at maturity of Reference Notes being paid).
Addresses
for Notices.
For the
purpose of Section
12(a)
of the
Agreement:
Address
for notices or communications to Seller for all purposes:
| Address: |
Xxxxxxx
Xxxxx International
|
|
| Xxxxxxx Xxxxx Financial Centre | ||
| 0 Xxxx Xxxxxx Xxxxxx | ||
| London EC1A 1HQ | ||
| Attention: |
Manager,
Fixed Income Settlements
|
|
| Facsimile No.: |
00
000 000 0000
|
|
| Telephone No.: |
00
000 000 0000
|
13
Additionally,
a copy of all notices pursuant to Sections
5,
6,
and
7
as well
as any changes to Counterparty’s address, telephone number or facsimile number
should be sent to:
| Address: | GMI Counsel | |
| Xxxxxxx Xxxxx World Headquarters | ||
| 4 World Financial Center | ||
| New York, New York 10080 | ||
| Attention: | Global Equity Derivatives | |
| Facsimile No.: | (000) 000-0000 | |
| Telephone No.: | (000) 000-0000 |
Address
for notices or communications to Counterparty for all
purposes:
| Address: | Chattem, Inc. | |
| 0000 Xxxx 00xx Xxxxxx | ||
| Chattanooga, TN 37409 | ||
| Attention: | Xxxxxxxx X. Xxxxxxxxx, Xx., General Counsel | |
| Facsimile No.: | 000-000-0000 | |
| Telephone No.: | 000-000-0000 |
Process
Agent.
For the
purpose of Section 13(c) of the Agreement, Seller appoints as its Process
Agent:
Multibranch
Party.
For the
purpose of Section
10(c)
of the
Agreement: Neither Seller nor Counterparty is a Multibranch Party.
Calculation
Agent. The
Calculation Agent is Seller, whose judgments, determinations and calculations
in
this Transaction and any related hedging transaction between the parties
shall
be made in good faith and in a commercially reasonable manner.
Credit
Support Document.
Seller:
Guarantee of ML & Co. in the form attached hereto as Exhibit A.
Counterparty:
Not Applicable
Credit
Support Provider.
With
respect to Seller: ML & Co.
With
respect to Counterparty: Not Applicable.
Governing
Law. This
Confirmation will be governed by, and construed in accordance with, the laws
of
the State of New York.
Waiver
of Jury Trial.
Each
party waives, to the fullest extent permitted by applicable law, any right
it
may have to a trial by jury in respect of any suit, action or proceeding
relating to this Transaction. Each party (i) certifies that no representative,
agent or attorney of the other party has represented, expressly or otherwise,
that such other party
14
would
not, in the event of such a suit, action or proceeding, seek to enforce the
foregoing waiver and (ii) acknowledges that it and the other party have been
induced to enter into this Transaction, as applicable, by, among other things,
the mutual waivers and certifications provided herein.
Netting
of Payments.
The
provisions of Section
2(c)
of the
Agreement shall not be applicable to this Transaction.
Basic
Representations. Section
3(a)
of the
Agreement is hereby amended by the deletion of “and” at the end of Section
3(a)(iv);
the
substitution of a semicolon for the period at the end of Section
3(a)(v)
and the
addition of Sections
3(a)(vi),
as
follows:
Eligible
Contract Participant; Line of Business. Each
party agrees and represents that it is an “eligible contract participant” as
defined in Section 1a(12) of the U.S. Commodity Exchange Act, as amended
(“CEA”),
this
Agreement and the Transaction thereunder are subject to individual negotiation
by the parties and have not been executed or traded on a “trading facility” as
defined in Section 1a(33) of the CEA, and it has entered into this Confirmation
and this Transaction in connection with its business or a line of business
(including financial intermediation), or the financing of its
business.
Acknowledgements:
|
(a)
|
The
parties acknowledge and agree that there are no other representations,
agreements or other undertakings of the parties in relation to
this
Transaction, except as set forth in this
Confirmation.
|
|
(b)
|
The
parties hereto intend for:
|
|
(i)
|
this
Transaction to be a “securities contract” as defined in Section 741(7) of
Title 11 of the United States Code (the “Bankruptcy
Code”),
qualifying for the protections under Section 555 of the Bankruptcy
Code;
|
|
(ii)
|
a
party’s right to liquidate this Transaction and to exercise any other
remedies upon the occurrence of any Event of Default under the
Agreement
with respect to the other party to constitute a “contractual right” as
defined in the Bankruptcy Code;
|
|
(iii)
|
all
payments for, under or in connection with this Transaction, all
payments
for the Shares and the transfer of such Shares to constitute “settlement
payments” as defined in the Bankruptcy
Code.
|
Amendment
of Section
6(d)(ii).
Section
6(d)(ii) of
the
Agreement is modified by deleting the words “on the day” in the second line
thereof and substituting therefore “on the day that is three Local Business Days
after the day.” Section
6(d)(ii)
is
further modified by deleting the words “two Local Business Days” in the fourth
line thereof and substituting therefore “three Local Business
Days.”
Amendment
of Definition of Reference Market-Makers.
The
definition of “Reference Market-Makers” in Section
14
is
hereby amended by adding in clause (a) after the word “credit” and before the
word “and” the words “or to enter into transactions similar in nature to the
Transaction.”
Consent
to Recording.
Each
party consents to the recording of the telephone conversations of trading
and
marketing personnel of the parties and their Affiliates in connection with
this
Confirmation. To the extent that one party records telephone conversations
(the
“Recording
Party”)
and
the other party does not (the “Non-Recording
Party”),
the
Recording Party shall in the event of any dispute, make a complete and unedited
copy of such party’s tape of the entire day’s conversations with the
Non-Recording Party’s personnel available to the Non-Recording Party. The
Recording Party’s tapes may be used by either party in any forum in which a
dispute is sought to be resolved and the Recording Party will retain tapes
for a
consistent period of time in accordance with the Recording Party’s policy unless
one party notifies the other that a particular transaction is under review
and
warrants further retention.
15
Disclosure.
Each
party hereby
acknowledges and agrees that Seller has authorized Counterparty to disclose
this
Transaction and any related hedging transaction between the parties if and
to
the extent that Counterparty reasonably determines (after consultation with
Seller) that such disclosure is required by law or by the rules of NASDQ
Global
Market or any securities exchange.
Severability.
If any
term, provision, covenant or condition of this Confirmation, or the application
thereof to any party or circumstance, shall be held to be invalid or
unenforceable in whole or in part for any reason, the remaining terms,
provisions, covenants, and conditions hereof shall continue in full force
and
effect as if this Confirmation had been executed with the invalid or
unenforceable provision eliminated, so long as this Confirmation as so modified
continues to express, without material change, the original intentions of
the
parties as to the subject matter of this Confirmation and the deletion of
such
portion of this Confirmation will not substantially impair the respective
benefits or expectations of parties to this Agreement; provided,
however,
that
this severability provision shall not be applicable if any provision of
Section
2,
5,
6
or
13
of the
Agreement (or any definition or provision in Section
14
to the
extent that it relates to, or is used in or in connection with any such Section)
shall be so held to be invalid or unenforceable.
Affected
Parties.
For
purposes of Section
6(e)
of the
Agreement, each party shall be deemed to be an Affected Party in connection
with
Illegality and any Tax Event.
[Signatures
follow on separate page]
16
Please
confirm that the foregoing correctly sets forth the terms of our agreement
by
executing the copy of this Confirmation enclosed for that purpose and returning
it to us.
| Very truly yours, | ||
| XXXXXXX XXXXX INTERNATIONAL | ||
| |
|
|
| By: | Xxxx Xxxxxxxx | |
|
Name: |
||
| Title | ||
Confirmed
as of the date first above written:
CHATTEM,
INC.
By:
/s/
Xxxxxx X. Xxxxxxxx
Name:
Xxxxxx X. Xxxxxxxx
Title:
President and Chief Operating Officer
Acknowledged
and agreed as to matters to the Agent:
XXXXXXX
LYNCH, XXXXXX, XXXXXX & XXXXX INCORPORATED,
Solely
in
its capacity as Agent hereunder
By: /s/ Xxxxx Xxxxxxx
Name:
Title:
17
EXHIBIT
A
GUARANTEE
OF XXXXXXX XXXXX & CO., INC.
FOR
VALUE
RECEIVED, receipt of which is hereby acknowledged, XXXXXXX XXXXX & CO.,
INC., a corporation duly organized and existing under the laws of the State
of
Delaware (“ML & Co.”), hereby unconditionally guarantees to Chattem, Inc.
(the “Company”), the due and punctual payment of any and all amounts payable by
Xxxxxxx Xxxxx International, a company organized under the laws of England
and
Wales (“ML”), under the terms of the Confirmation of OTC Convertible Note Hedge
between the Company and ML (ML as Seller), dated as of November 16, 2006
(the
“Confirmation”), including, in case of default, interest on any amount due, when
and as the same shall become due and payable, whether on the scheduled payment
dates, at maturity, upon declaration of termination or otherwise, according
to
the terms thereof. In case of the failure of ML punctually to make any such
payment, ML & Co. hereby agrees to make such payment, or cause such payment
to be made, promptly upon demand made by the Company to ML & Co.; provided,
however that delay by the Company in giving such demand shall in no event
affect
ML & Co.’s obligations under this Guarantee. This Guarantee shall remain in
full force and effect or shall be reinstated (as the case may be) if at any
time
any payment guaranteed hereunder, in whole or in part, is rescinded or must
otherwise be returned by the Company upon the insolvency, bankruptcy or
reorganization of ML or otherwise, all as though such payment had not been
made.
ML
&
Co. hereby agrees that its obligations hereunder shall be unconditional,
irrespective of the validity, regularity or enforceability of the Confirmation;
the absence of any action to enforce the same; any waiver or consent by the
Company concerning any provisions thereof; the rendering of any judgment
against
ML or any action to enforce the same; or any other circumstances that might
otherwise constitute a legal or equitable discharge of a guarantor or a defense
of a guarantor. ML covenants that this guarantee will not be discharged except
by complete payment of the amounts payable under the Confirmation. This
Guarantee shall continue to be effective if XX xxxxxx or consolidates with
or
into another entity, loses its separate legal identity or ceases to
exist.
ML
&
Co. hereby waives diligence; presentment; protest; notice of protest,
acceleration, and dishonor; filing of claims with a court in the event of
insolvency or bankruptcy of ML; all demands whatsoever, except as noted in
the
first paragraph hereof; and any right to require a proceeding first against
ML.
ML
&
Co. hereby certifies and warrants that this Guarantee constitutes the valid
obligation of ML & Co. and complies with all applicable laws.
This
Guarantee shall be governed by, and construed in accordance with, the laws
of
the State of New York.
This
Guarantee may be terminated at any time by notice by ML & Co. to the Company
given in accordance with the notice provisions of the Confirmation, effective
upon receipt of such notice by the Company or such later date as may be
specified in such notice; provided, however, that this Guarantee shall continue
in full force and effect with respect to any obligation of ML under the
Confirmation.
This
Guarantee becomes effective concurrent with the effectiveness of the
Confirmation, according to its terms.
18
IN
WITNESS WHEREOF, ML & Co. has caused this Guarantee to be executed in its
corporate name by its duly authorized representative.
|
XXXXXXX
XXXXX & CO., INC.
|
||
| |
|
|
| By: | /s/ Xxxxxxxx Xxxxxxxxxxxx | |
|
Name: Xxxxxxxx Xxxxxxxxxxxx |
||
| Title: Designated Signatory | ||
| Date: November 21, 2006 | ||
19
