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EXHIBIT 9
SAILS MANDATORILY EXCHANGEABLE SECURITIES CONTRACT
dated as of
December 19, 2000
among
GSB INVESTMENTS CORP.,
CREDIT SUISSE FIRST BOSTON INTERNATIONAL
and
CREDIT SUISSE FIRST BOSTON CORPORATION, as Agent
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TABLE OF CONTENTS
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ARTICLE 1
DEFINITIONS
SECTION 1.01. Definitions.................................................1
ARTICLE 2
SALE AND PURCHASE
SECTION 2.01. Sale and Purchase...........................................7
SECTION 2.02. Purchase Price..............................................7
SECTION 2.03. Payment for and Delivery of Contract Shares.................7
SECTION 2.04. Cash Settlement Option......................................8
SECTION 2.05. Dividend Payment............................................9
ARTICLE 3
TERMINATION BY SELLER
SECTION 3.01. Termination by Seller.......................................9
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF SELLER AND BUYER
SECTION 4.01. Representations and Warranties of Seller...................10
SECTION 4.02. Representations and Warranties of Buyer....................12
ARTICLE 5
CONDITIONS TO BUYER'S OBLIGATIONS
SECTION 5.01. Conditions.................................................13
ARTICLE 6
COVENANTS
SECTION 6.01. Taxes......................................................14
SECTION 6.02. Forward Contract...........................................16
SECTION 6.03. Notices....................................................17
SECTION 6.04. Further Assurances.........................................17
SECTION 6.05. Securities Contract........................................17
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ARTICLE 7
ADJUSTMENTS
SECTION 7.01. Dilution Adjustments.......................................18
SECTION 7.02. Reorganization Events......................................20
SECTION 7.03. Provisions Relating to Reorganization Events and Spin-Offs.20
SECTION 7.04. Termination and Payment....................................21
ARTICLE 8
ACCELERATION
SECTION 8.01. Acceleration...............................................21
ARTICLE 9
MISCELLANEOUS
SECTION 9.01. Notices....................................................24
SECTION 9.02. Governing Law; Submission to Jurisdiction; Severability;
Waiver of Jury Trial; Service of Process..................24
SECTION 9.03. Entire Agreement; Other....................................25
SECTION 9.04. Amendments, Waivers........................................25
SECTION 9.05. No Third Party Rights, Successors and Assigns..............25
SECTION 9.06. Calculation Agent..........................................26
SECTION 9.07. Set-off....................................................26
SECTION 9.08. Matters Related to Credit Suisse First Boston Corporation,
as Agent..................................................27
SECTION 9.09. Counterparts...............................................28
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SAILS MANDATORILY EXCHANGEABLE SECURITIES CONTRACT
THIS AGREEMENT is made as of this 19th day of December, 2000 among GSB
INVESTMENTS CORP., a Delaware corporation ("SELLER"), CREDIT SUISSE FIRST BOSTON
CORPORATION, as agent (in such capacity, the "AGENT") hereunder, and CREDIT
SUISSE FIRST BOSTON INTERNATIONAL ("BUYER").
WHEREAS, Seller owns shares of common stock, par value $1.00 per share,
of Golden State Bancorp Inc., a Delaware corporation (the "ISSUER"), or security
entitlements in respect thereof (the "COMMON STOCK");
WHEREAS, Seller, Mafco Holdings Inc. ("MAFCO"), Buyer and the Agent
have entered into an agreement entitled "Terms and Conditions for Private SAILS"
(the "TERM SHEET") dated as of December 12, 2000, pursuant to which Seller and
Buyer have agreed to enter into certain transactions relating to the Common
Stock at the time and on the terms set forth therein;
WHEREAS, the Term Sheet provides that the transactions described
therein may be executed in one or more tranches (each, a "TRANCHE");
WHEREAS, the Term Sheet provides that the parties thereto will enter
into final documentation, consisting of a SAILS Mandatorily Exchangeable
Securities Contract and a SAILS Pledge Agreement, relating to each Tranche;
WHEREAS, pursuant to the Pledge Agreement (as defined herein), Seller
has granted Buyer a security interest in certain shares of Common Stock to
secure the obligations of Seller hereunder;
NOW, THEREFORE, in consideration of their mutual covenants herein
contained, the parties hereto, intending to be legally bound, hereby mutually
covenant and agree as follows:
ARTICLE 1
DEFINITIONS
SECTION 1.01. Definitions. As used herein, the following words and
phrases shall have the following meanings:
"ACCELERATION AMOUNT" has the meaning provided in Section 8.01.
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"ACCELERATION AMOUNT NOTICE" has the meaning provided in Section 8.01.
"ACCELERATION DATE" has the meaning provided in Section 8.01.
"ACCELERATION EVENT" has the meaning provided in Section 8.01.
"BANKRUPTCY CODE" has the meaning provided in Section 6.05
"BASE AMOUNT" has the meaning provided in Section 2.01.
"BUSINESS DAY" means any day on which commercial banks are open for
business in New York City.
"CALCULATION AGENT" means Credit Suisse First Boston International.
"CASH SETTLEMENT AMOUNT" means an amount of cash equal to the product
of the Maturity Price and the number of shares of Common Stock equal to the
product of (i) the Base Amount and (ii) the Exchange Rate.
"CHANGE IN TAX LAW" has the meaning provided in Section 6.01(a)(i).
"CLOSING DATE" means the date of this Agreement.
"CLOSING PRICE" of any security on any date of determination means the
closing sale price (or, if no closing sale price is reported, the last reported
sale price) of such security on the Exchange for the regular trading session on
such date or, if such security is not listed on a national securities exchange
or quoted on a national automated quotation system, the last quoted bid price
for such security in the over-the-counter market for the regular trading session
on such date, as reported by the National Quotation Bureau or similar
organization, or, if such bid price is not available, the market value of such
security on such date as determined by the Calculation Agent in a commercially
reasonable manner.
"COLLATERAL" has the meaning provided in the Pledge Agreement.
"COLLATERAL ACCOUNT" has the meaning provided in the Pledge Agreement.
"CONTRACT SHARE AMOUNT" has the meaning provided in Section 2.03(b).
"CONTRACT SHARES" has the meaning provided in Section 2.03(b).
"CSFB" has the meaning provided in Section 6.01(a).
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"CUSTODIAN" has the meaning provided in the Pledge Agreement.
"DIVIDEND PAYMENT AMOUNT" has the meaning provided in Section 2.05.
"DIVIDEND PAYMENT DATE" has the meaning provided in Section 2.05.
"EXCHANGE" means, at any time, the principal national securities
exchange or automated quotation system, if any, on which the Common Stock is
listed or quoted at such time.
"EXCHANGE BUSINESS DAY" means any day that is (or, but for the
occurrence of a Market Disruption Event, would have been) a trading day on the
Exchange, other than a day on which trading on the Exchange is scheduled to
close prior to its regular weekday closing time.
"EXCHANGE RATE" has the meaning provided in Section 2.03(c).
"EXTRAORDINARY CASH DIVIDEND" means, with respect to the Common Stock
for any given fiscal quarterly period, any cash dividends paid in respect of the
Common Stock during such period in excess of the maximum amount of dividends per
share that would constitute an Ordinary Cash Dividend.
"FREE STOCK" means Common Stock that is not subject to any Transfer
Restrictions in the hands of Seller immediately prior to delivery to Buyer
hereunder and would not upon delivery to Buyer be subject to any Transfer
Restrictions in the hands of Buyer.
"GOVERNMENT SECURITIES" has the meaning provided in the Pledge
Agreement.
"INITIAL PLEDGED ITEMS" has the meaning provided in the Pledge
Agreement.
"INVESTMENT COMPANY ACT" means the Investment Company Act of 1940, as
amended
"ISSUE PRICE" has the meaning provided in Section 2.03(c).
"LIEN" means any lien, mortgage, security interest, pledge, charge or
encumbrance of any kind.
"MARKET DISRUPTION EVENT" means the occurrence or the existence on any
Exchange Business Day during the one-half hour period ending at the close of
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the regular trading session on the relevant exchange of any suspension of or
limitation in trading (by reason of movements in price exceeding limits
permitted by the relevant exchange or otherwise) in the Common Stock or in
listed options on the Common Stock, if any, if, in the determination of the
Calculation Agent, such suspension or limitation is material.
"MARKET VALUE" means, as of any date with respect to any share of
Common Stock, the Closing Price per share of Common Stock for the Exchange
Business Day prior to such date.
"MARKETABLE SECURITIES" means shares of common stock of a
Publicly-Traded Entity that are not subject to any Transfer Restrictions.
"MATURITY DATE" means December 19, 2002.
"MATURITY PRICE" means the average of the Closing Prices per share of
the Common Stock on the 20 Trading Days beginning 30 Exchange Business Days
immediately prior to the Maturity Date; provided that if there are not 20
Trading Days during the period beginning 30 Exchange Business Days immediately
prior to the Maturity Date and ending on the Exchange Business Day immediately
prior to the Maturity Date, the Maturity Price shall be 1/20th of the sum of (i)
the Closing Prices per share of the Common Stock on each of the Trading Days
during such period and (ii) the product of (x) the market value of the Common
Stock as of the Maturity Date as determined by the Calculation Agent and (y) the
difference between 20 and the number of Trading Days during such period.
"NEW COMMON STOCK" has the meaning provided in Section 7.01(c).
"NON-STOCK CONSIDERATION" has the meaning provided in Section 7.02.
"OPTIONAL TERMINATION DATE" has the meaning provided in Section 3.01.
"ORDINARY CASH DIVIDENDS" means, with respect to the Common Stock for
any given quarterly fiscal period, cash dividends paid in respect of the Common
Stock during such period, but only to the extent that the aggregate per share
amount paid during such period does not exceed $0.10.
"ORIGINAL COMMON STOCK" has the meaning provided in Section 7.01(c).
"PAYMENT DATE" has the meaning provided in Section 2.03(a).
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"PERSON" means an individual, a corporation, a partnership, an
association, a trust or any other entity or organization, including a government
or political subdivision or an agency or instrumentality thereof.
"PLEDGE AGREEMENT" means the SAILS Pledge Agreement dated as of the
date hereof among Seller, Buyer and the Agent, as amended from time to time.
"POTENTIAL ADJUSTMENT EVENT" has the meaning provided in Section 7.01.
"PUBLICLY-TRADED ENTITY" means a surviving or continuing corporation of
the Issuer (or any successor) following a Reorganization Event, or a corporation
the capital stock of which is distributed in a Spin-Off, the common stock of
which is traded on any national securities exchange or automatic interdealer
quotation system in the United States; provided that in the case of a
Reorganization Event, the product of (i) the Closing Price of such surviving or
continuing corporation's common stock on the Exchange Business Day immediately
succeeding such Reorganization Event multiplied by (ii) the number of shares of
such surviving or continuing corporation's common stock held by non-affiliates
of such corporation shall not be less than the product of (A) the Closing Price
of the Common Stock on the Exchange Business Day immediately preceding such
Reorganization Event and (B) the number of shares of Common Stock held by
non-affiliates of the Issuer.
"PURCHASE PRICE" has the meaning provided in Section 2.02.
"REGISTRATION AGREEMENT" means the Registration Agreement dated as of
December 13, 2000 among Seller, Mafco, the Issuer, Buyer and Credit Suisse First
Boston Corporation, as amended from time to time.
"REORGANIZATION EVENT" has the meaning provided in Section 7.02.
"REORGANIZATION TERMINATION DATE" has the meaning provided in Section
7.02.
"REPLACEMENT VALUE" has the meaning provided in Section 8.01.
"REQUIRED PAYMENT DATE" has the meaning provided in Section 6.01(a)(i).
"SECURED PARTY" has the meaning provided in the Pledge Agreement.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
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"SPIN-OFF" has the meaning provided in Section 7.01.
"TAXES" has the meaning provided in Section 6.01(a).
"TERMINATION AMOUNT NOTICE" has the meaning provided in Section 7.04.
"THRESHOLD PRICE" has the meaning provided in Section 2.03(c).
"TRADING DAY" is defined as any Exchange Business Day on which there is
not a Market Disruption Event.
"TRANSFER RESTRICTION" means, with respect to any share of Common Stock
or item of collateral pledged under the Pledge Agreement, any condition to or
restriction on the ability of the owner thereof to sell, assign or otherwise
transfer such share of Common Stock or item of collateral or to enforce the
provisions thereof or of any document related thereto whether set forth in such
item of collateral itself or in any document related thereto, including, without
limitation, (i) any requirement that any sale, assignment or other transfer or
enforcement of such share of Common Stock or item of collateral be consented to
or approved by any Person, including, without limitation, the issuer thereof or
any other obligor thereon, (ii) any limitations on the type or status, financial
or otherwise, of any purchaser, pledgee, assignee or transferee of such share of
Common Stock or item of collateral, (iii) any requirement of the delivery of any
certificate, consent, agreement, opinion of counsel, notice or any other
document of any Person to the issuer of, any other obligor on or any registrar
or transfer agent for, such share of Common Stock or item of collateral, prior
to the sale, pledge, assignment or other transfer or enforcement of such share
of Common Stock or item of collateral and (iv) any prospective registration or
qualification requirement or prospectus delivery requirement for such share of
Common Stock or item of collateral pursuant to any federal, state or foreign
securities law (including, without limitation, any such requirement arising as a
result of Rule 144 or Rule 145 under the Securities Act); provided that the
required delivery of any assignment, instruction or entitlement order from the
seller, pledgor, assignor or transferor of such share of Common Stock or item
of collateral, together with any evidence of the corporate or other authority of
such Person, shall not constitute a "TRANSFER RESTRICTION".
"TREASURY RATE" means, on any given date for any given period, the rate
for the auction held on such date of direct obligations of the United States
("TREASURY BILLS") having a maturity comparable to such period that appears on
Telerate Page 56 (or such other page as may replace
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such page on such service for the purpose of displaying such rate) or Page 57
(or such other page as may replace such page on such service for the purpose of
displaying such rate) by 3:00 p.m., New York City time, on such date or, if such
period does not so appear, the rate obtained by linear interpolation between the
rates that appear for the next longer period and the next shorter period. If the
Treasury Rate does not appear on Telerate Page 56 or Page 57 by 3:00 p.m. on
such date, the Treasury Rate for such date will be the auction rate of such
Treasury Bills, as published in H.15(519) under the heading "Treasury
Bills-auction average (investment)" or, if not so published by 3:00 p.m., New
York City time, on such date, the auction average rate on such date (expressed
as a bond equivalent, on the basis of a year of 365 or 366 days, as applicable,
and applied on a daily basis) as otherwise announced by the United States
Department of the Treasury. In the event that the results of the auction of
Treasury Bills having a maturity comparable to such period is not displayed,
published or reported as provided above by 3:00 p.m., New York City time, on
such date or if no such auction is held on such date, then the Treasury Rate
will be calculated by the Calculation Agent and shall be a yield to maturity
(expressed as a bond equivalent, on the basis of a year of 365 or 366 days, as
applicable, and applied on a daily basis) calculated using the arithmetic mean
of the secondary market bid rates, as of approximately 3:30 p.m., New York City
time, on such date, of three leading primary United States government securities
dealers selected by the Calculation Agent for the issue of Treasury Bills with a
remaining maturity closest to such period.
ARTICLE 2
SALE AND PURCHASE
SECTION 2.01. Sale and Purchase. Upon the terms and subject to the
conditions of this Agreement, Seller agrees to sell to Buyer, and Buyer agrees
to purchase and acquire from Seller, the number of shares of Common Stock equal
to the product of 3,000,000 (the "BASE AMOUNT") and the Exchange Rate.
SECTION 2.02. Purchase Price. The purchase price (the "PURCHASE PRICE")
shall be $65,444,400 in cash.
SECTION 2.03. Payment for and Delivery of Contract Shares. (a) Upon the
terms and subject to the conditions of this Agreement, Buyer shall deliver the
Purchase Price to, or for the account of, Seller on December 19, 2000 (the
"PAYMENT DATE") at the offices of Davis Polk & Wardwell, 450 Lexington Avenue,
New York, New York 10017, or at such other place as shall be agreed upon by
Buyer and Seller, paid by certified or official bank check or checks duly
endorsed to, or payable to the order of, Seller, or in immediately available
funds by wire transfer to an account designated by Seller.
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(b) On the Maturity Date, Seller agrees, subject to Section 2.04, to
deliver to Buyer (i) a number of shares of Free Stock (the "CONTRACT SHARES")
equal to the product (the "CONTRACT SHARE AMOUNT"), rounded down to the nearest
whole number, of (A) the Base Amount and (B) the Exchange Rate and (ii) cash in
an amount equal to the value (based on the Maturity Price) of any fractional
share not delivered as a result of such rounding. If (x) by 10:00 A.M., New York
City time on the Maturity Date, Seller has not otherwise effected such delivery
of Common Stock or delivered cash in lieu thereof pursuant to Section 2.04 and
(y) the Common Stock then held by or on behalf of Secured Party as collateral
under the Pledge Agreement is Free Stock, then (i) Seller shall be deemed not to
have elected to deliver cash in lieu of shares of Free Stock pursuant to Section
2.04 (notwithstanding any notice by Seller to the contrary) and (ii) the
delivery provided by this Section 2.03(b) shall be effected by delivery to Buyer
from the Collateral Account in the manner set forth in the Pledge Agreement of a
number of shares of Free Stock then held by or on behalf of Secured Party as
collateral under the Pledge Agreement equal to the number thereof required to be
delivered by Seller to Buyer pursuant to this Section 2.03(b); provided that,
notwithstanding the foregoing and without limiting the generality of Section
8.01, if Seller gives notice of Seller's election to deliver cash in lieu of
shares of Free Stock on the Maturity Date pursuant to Section 2.04 and fails to
deliver the Cash Settlement Amount on the Maturity Date as provided in Section
2.04, Seller shall be in breach of this Agreement and shall be liable to Buyer
for any losses incurred by Buyer or its affiliates as a result of such breach,
including without limitation any aggregate net losses incurred in connection
with any decrease in the Closing Price of the Common Stock subsequent to the
30th Exchange Business Day immediately preceding the Maturity Date.
(c) The "EXCHANGE RATE" shall be determined by the Calculation Agent in
accordance with the following formula: (i) if the Maturity Price is less than or
equal to $31.80 (the "THRESHOLD PRICE") but greater than $26.50 (the "ISSUE
PRICE"), the Exchange Rate shall be a ratio (rounded upward or downward to the
nearest 1/10,000th or, if there is not a nearest 1/10,000th, to the next lower
1/10,000th) equal to the Issue Price divided by the Maturity Price, (ii) if the
Maturity Price is greater than the Threshold Price, the Exchange Rate shall be a
ratio (rounded upward or downward to the nearest 1/10,000th or, if there is not
a nearest 1/10,000th, to the next lower 1/10,000th) equal to one (1) minus a
fraction, the numerator of which shall equal the excess of the Threshold Price
over the Issue Price and the denominator of which shall equal the Maturity Price
and (iii) if the Maturity Price is equal to or less than the Issue Price, the
Exchange Rate shall be one (1).
SECTION 2.04. Cash Settlement Option. Seller may, upon written notice
delivered to Buyer at least 35 Exchange Business Days prior to the Maturity
Date,
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elect to deliver the Cash Settlement Amount to Buyer on the Maturity Date by
wire transfer of immediately available funds to an account designated by Buyer,
in lieu of the shares of Common Stock to be delivered on the Maturity Date
pursuant to Section 2.03(b).
SECTION 2.05. Dividend Payment. Seller shall pay to Buyer on the
Business Day following the payment of any Extraordinary Cash Dividend (each, a
"DIVIDEND PAYMENT DATE") with respect to the Common Stock an amount in cash
equal to the product (the "DIVIDEND PAYMENT AMOUNT" with respect to such
Dividend Payment Date) of (i) the per share amount of such dividend and (ii) the
Base Amount on the ex-dividend date for such dividend.
ARTICLE 3
TERMINATION BY SELLER
SECTION 3.01. Termination by Seller. At any time on or after the date
six months following the Closing Date, Seller may terminate this Agreement in
whole or in part upon 35 Exchange Business Days' prior written notice to Buyer.
Any such notice shall specify (i) the date on which this Agreement is to be
terminated (the "OPTIONAL TERMINATION DATE"), (ii) whether Seller elects to
deliver cash or shares of Free Stock in respect of the portion of this Agreement
that is to be terminated and (iii) the number of shares of Common Stock with
respect to which this Agreement is to be terminated. If Seller terminates this
Agreement in whole, (A) the Calculation Agent shall deliver to Seller a notice
specifying the Replacement Value (calculated in the manner set forth in Section
8.01 as if the Optional Termination Date were the Acceleration Date, and
expressed either as a cash amount or as a number of shares of Common Stock, in
accordance with Seller's election to deliver cash or shares of Free Stock), (B)
Seller shall deliver to Buyer on the Optional Termination Date a cash payment,
by wire transfer of immediately available funds to an account designated by
Buyer, in an amount equal to the Replacement Value or a number of shares of Free
Stock equal to the Replacement Value, as the case may be. If Seller terminates
this Agreement in part, (A) the Calculation Agent shall deliver to Seller a
notice specifying the Replacement Value (calculated in the manner set forth in
Section 8.01 as if the Optional Termination Date were the Acceleration Date, and
expressed either as a cash amount or as a number of shares of Common Stock, in
accordance with Seller's election to deliver cash or shares of Free Stock),
provided that for purposes of such calculation, the Base Amount shall be deemed
to be the number of shares of Common Stock with respect to which this Agreement
is to be terminated), (B) Seller shall deliver to Buyer on the Optional
Termination Date a cash payment, by wire transfer of immediately available funds
to an account
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designated by Buyer, in an amount equal to the Replacement Value or a number of
shares of Free Stock equal to the Replacement Value, as the case may be, and (C)
the Base Amount shall be reduced by such number of shares of Common Stock with
respect to which this Agreement is to be terminated.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES OF SELLER AND BUYER
SECTION 4.01. Representations and Warranties of Seller. Seller
represents and warrants to Buyer that:
(a) Seller is a corporation duly organized and existing in good
standing under the laws of the State of Delaware and has the requisite corporate
power to own its properties and to carry on its business as now being conducted.
(b) The execution and delivery of this Agreement and the Pledge
Agreement and the performance by Seller of Seller's obligations hereunder and
thereunder do not violate or conflict with any provision of the certificate of
incorporation or bylaws of Seller, any law applicable to Seller, any order or
judgment of any court or other agency of government applicable to Seller or any
of Seller's assets or any contractual restriction binding on or affecting Seller
or any of Seller's assets.
(c) All government and other consents that are required to have been
obtained by Seller with respect to this Agreement or the Pledge Agreement have
been obtained and are in full force and effect and all conditions of any such
consents have been complied with. Seller has complied and will comply in all
material respects with all applicable disclosure or reporting requirements in
respect of the transactions contemplated hereby and by the Pledge Agreement,
including without limitation any requirements imposed by Section 13 or Section
16 of the Securities Exchange Act of 1934, as amended, or the rules and
regulations thereunder.
(d) Seller has the requisite corporate power and authority to enter
into and perform this Agreement and the Pledge Agreement and to deliver the
Contract Shares in accordance with the terms hereof. The execution and delivery
of this Agreement and the Pledge Agreement by Seller and the consummation by
Seller of the transactions contemplated hereby and thereby (including the
delivery by Seller of the Contract Shares) have been duly authorized by all
necessary corporate action. This Agreement and the Pledge Agreement have been
duly executed and delivered by Seller. Seller's obligations under this Agreement
and
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the Pledge Agreement constitute Seller's legal, valid and binding obligations,
enforceable in accordance with their respective terms (subject to applicable
bankruptcy, reorganization, insolvency, moratorium or similar laws affecting
creditors' rights generally and subject, as to enforceability, to equitable
principles of general application (regardless of whether enforcement is sought
in a proceeding in equity or at law)).
(e) No Acceleration Event or event that, with the giving of notice or
the lapse of time or both, would constitute an Acceleration Event has occurred
and is continuing and no such event would occur as a result of Seller's entering
into or performing Seller's obligations under this Agreement or the Pledge
Agreement.
(f) There is not pending or, to Seller's knowledge, threatened against
Seller or any of its affiliates any action, suit or proceeding at law or in
equity or before any court, tribunal, governmental body, agency or official or
any arbitrator (including without limitation any bankruptcy, insolvency or
similar proceeding) that is likely to affect the legality, validity or
enforceability against Seller of this Agreement or the Pledge Agreement or
Seller's ability to perform Seller's obligations under this Agreement or the
Pledge Agreement.
(g) Seller is acting for Seller's own account, and has made Seller's
own independent decision to enter into this Agreement and the Pledge Agreement
and as to whether this Agreement and the Pledge Agreement are appropriate or
proper for Seller based upon Seller's own judgment and upon advice of such
advisors as Seller deems necessary. Seller acknowledges and agrees that Seller
is not relying, and has not relied, upon any communication (written or oral) of
Buyer or any affiliate, employee or agent of Buyer with respect to the legal,
accounting, tax or other implications of this Agreement and the Pledge Agreement
and that Seller has conducted Seller's own analyses of the legal, accounting,
tax and other implications hereof and thereof; it being understood that
information and explanations related to the terms and conditions of this
Agreement or the Pledge Agreement shall not be considered investment advice or a
recommendation to enter into this Agreement or the Pledge Agreement. Seller is
entering into this Agreement and the Pledge Agreement with a full understanding
of all of the terms and risks hereof and thereof (economic and otherwise) and is
capable of evaluating and understanding (on Seller's own behalf or through
independent professional advice), and understands and accepts, the terms,
conditions and risks. Seller is also capable of assuming (financially and
otherwise), and assumes, those risks. Seller acknowledges that neither Buyer nor
any affiliate, employee or agent of Buyer is acting as a fiduciary for or an
advisor to Seller in respect of this Agreement or the Pledge Agreement.
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(h) Delivery of shares of Common Stock by Seller pursuant to this
Agreement will pass to Buyer title (or security entitlements) to such shares
free and clear of any Liens or Transfer Restrictions, except for those created
pursuant to the Pledge Agreement.
(i) Seller has a valid business purpose for entering into this
Agreement, and the transaction contemplated hereby is consistent with Seller's
overall investment strategy.
(j) All representations and warranties of Seller contained in the Term
Sheet were true and correct as of the times such representations and warranties
were made or repeated or deemed to be made or repeated under the Term Sheet and
Seller has performed all of the covenants and obligations to be performed by
Seller on or prior to the date hereof under the Term Sheet.
(k) The terms hereof have been negotiated, and the transactions
contemplated hereby shall be executed, on an arm's length basis.
(l) Seller is not in possession of any material non-public information
regarding the Issuer.
(m) Seller is not and, after giving effect to the transactions
contemplated hereby, will not be an "investment company", as such term is
defined in the Investment Company Act, required to be registered under the
Investment Company Act.
SECTION 4.02. Representations and Warranties of Buyer. Buyer represents
and warrants to Seller that:
(a) Buyer is a company duly organized and existing in good standing
under the laws of its jurisdiction of incorporation and has the requisite
corporate power to own its properties and to carry on its business as now being
conducted.
(b) The execution and delivery of this Agreement and the Pledge
Agreement and the performance by Buyer of Buyer's obligations hereunder and
thereunder do not violate or conflict with any provision of the constitutive
documents of Buyer, any law applicable to Buyer, any order or judgment of any
court or other agency of government, applicable to Buyer or any of Buyer's
assets or any contractual restriction binding on or affecting Buyer or any of
Buyer's assets.
(c) All government and other consents that are required to have been
obtained by Buyer with respect to this Agreement or the Pledge Agreement have
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been obtained and are in full force and effect and all conditions of any such
consents have been complied with.
(d) Buyer has the requisite corporate power and authority to enter into
and perform this Agreement and the Pledge Agreement. The execution and delivery
by Buyer of this Agreement and the Pledge Agreement and the consummation by
Buyer of the transactions contemplated hereby and thereby have been duly
authorized by all necessary action. This Agreement and the Pledge Agreement have
been duly executed and delivered by Buyer. Buyer's obligations under this
Agreement and the Pledge Agreement constitute Buyer's legal, valid and binding
obligations, enforceable in accordance with their respective terms (subject to
applicable bankruptcy, reorganization, insolvency, moratorium or similar laws
affecting creditors' rights generally and subject, as to enforceability, to
equitable principles of general application (regardless of whether enforcement
is sought in a proceeding in equity or at law)).
(e) There is not pending or, to Buyer's knowledge, threatened against
Buyer any action, suit or proceeding at law or in equity or before any court,
tribunal, governmental body, agency or official or any arbitrator (including
without limitation any bankruptcy, insolvency or similar proceeding) that is
likely to affect the legality, validity or enforceability against Buyer of this
Agreement or the Pledge Agreement or Buyer's ability to perform Buyer's
obligations under this Agreement or the Pledge Agreement.
ARTICLE 5
CONDITIONS TO BUYER'S OBLIGATIONS
SECTION 5.01. Conditions. The obligation of Buyer to deliver the
Purchase Price on the Closing Date is subject to the satisfaction of the
following conditions:
(a) The representations and warranties of Seller contained in Section
4.01 and in the Pledge Agreement shall be true and correct as of the Closing
Date.
(b) The representations and warranties of Seller and the Issuer
contained in the Registration Agreement and any certificate delivered pursuant
thereto shall be true and correct as if made as of the Closing Date and each of
Seller and the Issuer shall have performed all of the obligations required to be
performed by it under the Registration Agreement on or prior to the Closing
Date.
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(c) On each Representation Date (as defined in the Registration
Agreement) that shall have occurred prior to the Closing Date, Davis Polk &
Wardwell, counsel to Buyer, in its professional judgment, shall have been able
to provide an opinion to Buyer relating to the disclosure in the Registration
Statement in form and substance acceptable to Buyer.
(d) The Pledge Agreement shall have been executed by the parties
thereto.
(e) Buyer shall have received evidence acceptable to Buyer that any and
all consents required to be obtained under any agreement in connection with the
execution of this Agreement and the Pledge Agreement and the consummation by
Seller of the transactions contemplated hereby and thereby have been obtained
and are in full force and effect and the conditions of any such consent have
been satisfied.
(f) Buyer shall have received evidence acceptable to Buyer that,
immediately upon delivery of the Purchase Price, a number of shares of Common
Stock equal to the Base Amount shall be delivered to Buyer as Collateral under
the Pledge Agreement free and clear from any Liens or Transfer Restrictions.
(g) Seller shall have performed all of the covenants and obligations to
be performed by Seller hereunder and under the Pledge Agreement on or prior to
the Closing Date.
(h) Seller shall have delivered to Buyer on or prior to the Closing
Date (i) an opinion of Skadden, Arps, Slate, Meagher & Flom LLP to the effect
set forth in Annex A hereto and (ii) an opinion of Paul, Weiss, Rifkind, Wharton
& Garrison to the effect set forth in Annex B hereto.
ARTICLE 6
COVENANTS
SECTION 6.01. Taxes. (a) Seller shall pay any and all documentary,
stamp, transfer or similar taxes and charges that may be payable in respect of
the entry into this Agreement and the transfer and delivery of any Common Stock
pursuant hereto. Seller intends to make all payments in respect of this
Agreement free and clear of, and without withholding or deduction for or on
account of, any present or future taxes, duties, fines, penalties, assessments
or other governmental charges of whatsoever nature (or interest on any taxes,
duties, fines, penalties, assessments or other governmental charges of
whatsoever nature) ("TAXES") imposed, levied,
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collected, withheld or assessed by, within or on behalf of the United States or
any political subdivision or governmental authority thereof or therein having
power to tax. If any payment or delivery that Seller is required to make to
Buyer hereunder or under the Pledge Agreement will be subject to such
withholding or deduction (based on law as in effect at the time such payment or
delivery is required to be made), the following provisions shall apply:
(i) Seller shall notify Buyer of such requirement at least 180
days prior to date on which such payment is required to be made (the
"REQUIRED PAYMENT DATE"); provided that if Seller is unable to provide
Buyer with 180 days' notice of such requirement as a result of a
statutory change or a Treasury regulation, notice, announcement,
ruling or other Treasury publication or applicable court decision
published after the date hereof (each, a "CHANGE IN TAX LAW") or as a
result of a transfer by Buyer of its rights and obligations in respect
of this Agreement and the Pledge Agreement pursuant to Section 9.05,
(A) Seller shall notify Buyer of such requirement as promptly as
practicable following such Change in Tax Law or the effective date of
any such transfer and (B) Buyer shall have the right to postpone the
Required Payment Date for any such payment for as long as reasonably
necessary to effect the transfer contemplated by paragraphs (ii) and
(iv) below (but in no event shall Buyer postpone the Required Payment
Date to a date later than the date 180 days following the date such
notice is given). In the event that the Required Payment Date for any
such payment is postponed, Seller shall deliver such payment to Buyer
on the postponed Required Payment Date, together with interest thereon
for the period from and including the original Required Payment Date
to but excluding such postponed Required Payment Date at a per annum
rate equal to the three-month Treasury Rate as of the original
Required Payment Date.
(ii) Upon receipt of such notice, Buyer shall use its reasonable
best efforts to transfer its rights and obligations in respect of this
Agreement and the Pledge Agreement to another entity such that (A)
such payment would not be subject to withholding or deduction and (B)
neither Credit Suisse First Boston ("CSFB") nor any of its affiliates
would be subject to increased costs (including balance sheet costs) as
a result of such transfer.
(iii) If Buyer is unable to effect a transfer of the type
contemplated by paragraph (ii) Seller shall indemnify Buyer for the
full amount of any withholding or deduction, as well as any liability
(including penalties, interest and expenses) arising therefrom or with
respect thereto; provided that if it is reasonably practicable for
Buyer to transfer its rights
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and obligations in respect of this Agreement and the Pledge Agreement
to another entity such that such payment would not be subject to such
withholding and deduction, then (A) Buyer shall notify Seller of the
aggregate amount of increased costs (including balance sheet costs) to
which CSFB and its affiliate would be subject as a result of such
transfer, (B) Seller shall notify Buyer prior to the date sixty
Business Days preceding the Required Payment Date, whether or not
Seller elects that such transfer be effected and (C) if Seller elects
that such transfer be effected, Seller shall reimburse Buyer for the
aggregate amount of any increased costs (including balance sheet
costs) to which CSFB and its affiliates would be subject as a result
of such transfer and, if Seller does not elect that such transfer be
effected, Seller shall indemnify Buyer for the full amount of any
withholding or deduction, as well as any liability (including
penalties, interest and expenses) arising therefrom or with respect
thereto.
(b) If Seller makes any payment or delivery in respect of this
Agreement or the Pledge Agreement from or through any non-United States
jurisdiction, Seller shall make such payment or delivery free and clear of, and
without withholding or deduction for or on account of, any Taxes imposed,
levied, collected, withheld or assessed by, within or on behalf of such
non-United States jurisdiction, or any political subdivision or governmental
authority thereof or therein having power to tax. In the event such withholding
or deduction is imposed, Seller agrees to indemnify Buyer for the full amount of
such withholding or deduction, as well as any liability (including penalties,
interest and expenses) arising therefrom or with respect thereto.
SECTION 6.02. Forward Contract. (a) Seller hereby agrees that: (i)
Seller will not treat this Agreement, any portion of this Agreement, or any
obligation hereunder as giving rise to any interest income or other inclusions
of ordinary income; (ii) Seller will not treat the delivery of any portion of
the shares of Common Stock or cash to be delivered pursuant to this Agreement as
the payment of interest or ordinary income; (iii) Seller will treat this
Agreement in its entirety as a forward contract for the delivery of such shares
of Common Stock or cash; and (iv) Seller will not take any action (including
filing any tax return or form or taking any position in any tax (roceeding) that
is inconsistent with the obligations contained in (i) through (iii).
Notwithstanding the preceding sentence, Seller may take any action or position
required by law, provided that Seller delivers to Buyer an unqualified opinion
of counsel, nationally recognized as expert in Federal tax matters and
acceptable to Buyer, to the effect that such action or position is required as a
result of a Change in Tax Law published after the date of this Agreement.
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(b) Buyer hereby agrees, for United States federal income tax purposes,
including without limitation tax information reporting purposes, to treat this
Agreement in a manner consistent with Seller's obligations under this Section
6.02.
SECTION 6.03. Notices. Seller will cause to be delivered to Buyer:
(a) Immediately upon the occurrence of any Acceleration Event
hereunder, notice of such occurrence; and
(b) In case at any time prior to the Maturity Date, Seller or any
officer of Seller receives notice that any event requiring that an adjustment be
calculated pursuant to Article 7 hereof shall have occurred or be pending, then
Seller shall promptly cause to be delivered to Buyer a notice identifying such
event and stating, if known to Seller, the date on which such event occurred or
is to occur and, if applicable, the record date relating to such event. Seller
shall cause further notices to be delivered to Buyer if Seller or any officer of
Seller shall subsequently receive notice of any further or revised information
regarding the terms or timing of such event or any record date relating thereto.
SECTION 6.04. Further Assurances. From time to time from and after the
date hereof through the Maturity Date, each of the parties hereto shall use such
party's reasonable best efforts to take, or cause to be taken, all actions and
to do, or cause to be done, all things necessary, proper and advisable to
consummate and make effective as promptly as practicable the transactions
contemplated by this Agreement in accordance with the terms and conditions
hereof, including (i) using reasonable best efforts to remove any legal
impediment to the consummation of such transactions and (ii) the execution and
delivery of all such deeds, agreements, assignments and further instruments of
transfer and conveyance necessary, proper or advisable to consummate and make
effective the transactions contemplated by this Agreement in accordance with the
terms and conditions hereof.
SECTION 6.05. Securities Contract. The parties hereto recognize that
the Custodian 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 Buyer in connection with this Agreement and that Buyer
is a "customer" of the Custodian within the meaning of said Section 101(22). The
parties hereto further recognize 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, among other provisions, Sections 555 and 362(b)(6) of the
Bankruptcy Code, and that each payment or delivery of cash, shares of Common
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Stock or other property or assets hereunder is a "settlement payment" within the
meaning of Section 741(8) of the Bankruptcy Code.
ARTICLE 7
ADJUSTMENTS
SECTION 7.01. Dilution Adjustments. (a) Following the declaration by
the Issuer of the terms of any Potential Adjustment Event occurring prior to the
Maturity Date, the Calculation Agent will determine whether such Potential
Adjustment Event has a diluting or concentrative effect on the theoretical value
of the Common Stock and, if so, will (i) make the corresponding adjustment, if
any, to any one or more of the Base Amount, the Exchange Rate, the Threshold
Price, the Issue Price, the Maturity Price, the Cash Settlement Amount, any
Closing Price and any other variable relevant to the exercise, settlement or
payment terms hereof or of the Pledge Agreement as the Calculation Agent
determines appropriate to account for that diluting or concentrative effect and
(ii) determine the effective date of the adjustment; provided that in the case
of a Potential Adjustment Event of the type described in clause (iii) of Section
7.01(b), any such adjustment shall be made to variables other than the Base
Amount. The Calculation Agent may (but need not) determine the appropriate
adjustment by reference to the adjustment in respect of such Potential
Adjustment Event made by an options exchange to options on the Common Stock
traded on that options exchange.
(b) For these purposes, "POTENTIAL ADJUSTMENT EVENT" means any of the
following:
(i) a subdivision, consolidation or reclassification of shares of
Common Stock (which does not constitute a Reorganization Event), or a
free distribution or dividend of any shares of Common Stock to
existing holders of Common Stock by way of bonus, capitalization or
similar issue;
(ii) a distribution or dividend to existing holders of Common
Stock of (A) shares of Common Stock, (B) other share capital or
securities granting the right to payment of dividends and/or the
proceeds of liquidation of the Issuer equally or proportionately with
such payments to holders of Common Stock or (C) other types of
securities, rights or warrants or other assets, in any case for
payment (cash or other) at less than the prevailing market price as
determined by the Calculation Agent;
(iii) an Extraordinary Cash Dividend;
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(iv) a call by the Issuer in respect of shares of Common Stock
that are not fully paid;
(v) a repurchase by the Issuer of shares of Common Stock, whether
out of profits or capital and whether the consideration for such
repurchase is cash, securities or otherwise; or
(vi) any other similar event that may have a diluting or
concentrative effect on the theoretical value of the Common Stock
(other than an Ordinary Cash Dividend).
Without limiting the foregoing, the parties acknowledge that the Calculation
Agent will make adjustments to the Exchange Rate, the Threshold Price, the Issue
Price, the Maturity Price, the Cash Settlement Amount, any Closing Price and any
other variable relevant to the exercise, settlement or payment terms hereof or
of the Pledge Agreement (other than the Base Amount) as the Calculation Agent
determines appropriate to account for the value of all Extraordinary Cash
Dividends.
(c) Notwithstanding the foregoing, in the event of a distribution of
shares of capital stock of a subsidiary of the Issuer that is a Publicly-Traded
Entity (a "SPIN-OFF") made to holders of shares of Common Stock, (i) the
"Contract Shares" shall include, in addition to the number of shares of Free
Stock equal to the Contract Share Amount, a number of shares of New Common Stock
equal to the product of (A) the Base Amount immediately prior to the
consummation of the Spin-Off and (B) the number of shares of New Common Stock
that a holder of one share of Original Common Stock would have owned or been
entitled to receive immediately following such Spin-Off and (ii) the "Maturity
Price" shall be equal to the sum of (A) the Maturity Price of the Original
Common Stock and (B) the product of (x) the Maturity Price of the New Common
Stock and (y) the number of shares of New Common Stock that a holder of one
share of Original Common Stock would have owned or been entitled to receive
immediately following such Spin-Off. Following a Spin-Off, "ORIGINAL COMMON
STOCK" shall mean the common stock of the entity that is the Issuer immediately
prior to the Spin-Off and "NEW COMMON STOCK" shall mean the common equity
securities of the Publicly-Traded Entity resulting from such Spin-Off.
SECTION 7.02. Reorganization Events. In the event of (i) any
consolidation or merger of the Issuer with or into another entity (other than a
merger or consolidation in which the Issuer is the continuing corporation and in
which the Common Stock outstanding immediately prior to the merger or
consolidation is not exchanged for cash, securities or other property of the
Issuer
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or another corporation), (ii) any sale, transfer, lease or conveyance of the
property of the Issuer as an entirety or substantially as an entirety, (iii) any
statutory exchange of securities of the Issuer with another corporation (other
than in connection with a merger or acquisition) or (iv) any liquidation,
dissolution or winding up of the Issuer (any such event, a "REORGANIZATION
EVENT"), then (A) if there is a surviving or continuing corporation and such
surviving or continuing corporation is a Publicly-Traded Entity, "Base Amount"
shall mean the product of (x) the Base Amount immediately prior to the
consummation of the Reorganization Event and (y) the number of shares of common
stock of the Publicly-Traded Entity that a holder of one share of Common Stock
would have owned or been entitled to receive immediately following such
Reorganization Event and, if the consideration received by holders of Common
Stock includes cash or property other than common stock of the Publicly-Traded
Entity ("NON-STOCK CONSIDERATION"), Seller shall make a cash payment, by wire
transfer of immediately available funds to an account designated by Buyer, to
Buyer on the date on which the Reorganization Event is consummated (the
"REORGANIZATION TERMINATION DATE") in an amount equal to the Replacement Value
(expressed as a cash amount and calculated in the manner set forth in Section
8.01 as if the Reorganization Termination Date were the Acceleration Date;
provided that for purposes of such calculation, the Base Amount shall be equal
to the product of (I) the Base Amount immediately prior to consummation of the
Reorganization Event and (II) the percentage of the value of the consideration
received by holders of Common Stock represented by the Non-Stock Consideration,
as determined by the Calculation Agent in a commercially reasonable manner) or
(B) if there is no surviving or continuing corporation in such Reorganization
Event, if any surviving or continuing corporation is not a Publicly-Traded
Entity or if the consideration received by holders of Common Stock consists
solely of Non-Stock Consideration, this Agreement shall terminate and Seller
shall make a payment or delivery to Buyer as provided in Section 7.04.
SECTION 7.03. Provisions Relating to Reorganization Events and
Spin-Offs. If a Reorganization Event occurs and clause (B) of Section 7.02 does
not apply, (a) the surviving or continuing corporation shall be deemed to be the
"Issuer" and the common equity securities of such corporation shall be deemed to
be the "Common Stock" and (b) the Calculation Agent shall calculate
corresponding adjustments, if any, to the Base Amount, the Exchange Rate, the
Threshold Price, the Issue Price, the Maturity Price, the Cash Settlement
Amount, any Closing Price and any other variable relevant to the exercise,
settlement or payment terms hereof as the Calculation Agent determines
appropriate to account for such event. If a Spin-Off occurs, the entity that is
the Issuer immediately prior to the Spin-Off and the Publicly-Traded Entity
resulting from the Spin-Off shall each be deemed to be the "Issuer" and the
Original Common Stock and the New Common Stock shall each be deemed to be the
"Common Stock". Following any
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Spin-Off, the Calculation Agent shall calculate further adjustments pursuant to
this Article 7 by applying the methodology set forth in this Article 7 to both
the Original Common Stock and the New Common Stock.
SECTION 7.04. Termination and Payment. Following termination of this
Agreement pursuant to clause (B) of Section 7.02 as a result of any
Reorganization Event, the Calculation Agent shall determine the Replacement
Value in the manner provided in Section 8.01 (calculated, for purposes of this
Section 7.04, as if the Reorganization Termination Date were the Acceleration
Date and expressed as a cash amount, and representing the fair replacement value
(including both intrinsic and time value) to Buyer of an agreement with terms
that would preserve for Buyer the economic equivalent of the payments and
deliveries that Buyer and its affiliates would, but for the occurrence of the
Reorganization Event, have been entitled to receive after the Reorganization
Termination Date hereunder). As promptly as reasonably practicable after
calculation of the Replacement Value, the Calculation Agent shall deliver to
Buyer and Seller a notice (the "TERMINATION AMOUNT NOTICE") specifying the
Replacement Value. Not later than three Business Days following delivery of a
Termination Amount Notice, Seller shall make a cash payment, by wire transfer of
immediately available funds to an account designated by Buyer, to Buyer in an
amount equal to the Replacement Value. Notwithstanding the foregoing, to the
extent that any Marketable Securities are received by holders of Common Stock in
such Reorganization Event, then in lieu of delivering cash as provided in the
immediately preceding sentence, Seller may deliver Marketable Securities with an
equal value (as determined by the Calculation Agent in its discretion in a
commercially reasonable manner).
ARTICLE 8
ACCELERATION
SECTION 8.01. Acceleration. If one or more of the following events
(each an "ACCELERATION EVENT") shall occur:
(a) any legal proceeding shall have been instituted or any other event
shall have occurred or condition shall exist that would be reasonably likely to
have a material adverse effect on the financial condition of Seller or on
Seller's ability to perform Seller's obligations hereunder, or that calls into
question the validity or binding effect of any agreement of Seller hereunder or
under the Pledge Agreement;
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(b) Seller makes an assignment for the benefit of creditors, files a
petition in bankruptcy, is adjudicated insolvent or bankrupt, petitions or
applies to any tribunal for any receiver of or any trustee for Seller or any
substantial part of Seller's property, commences any proceeding relating to
Seller under any reorganization, arrangement, readjustment of debt, dissolution
or liquidation law or statute of any jurisdiction, whether now or hereafter in
effect, or there is commenced against or with respect to Seller or any
substantial portion of Seller's property any such proceeding and an order for
relief is issued or such proceeding remains undismissed for a period of 30 days;
(c) at any time (i) any representation or warranty made by Seller under
this Agreement or the Pledge Agreement would be incorrect or misleading in any
material respect if made or repeated as of such time or (ii) any certificate
delivered by Seller pursuant to this Agreement or the Pledge Agreement is
incorrect or misleading in any respect that is material, in light of the
transactions contemplated hereby and by the Pledge Agreement taken as a whole;
(d) Seller fails to deliver (i) shares of Common Stock (or the Cash
Settlement Amount) on the Maturity Date, (ii) the Replacement Value on any
Reorganization Termination Date or any Optional Termination Date, (iii) any
Dividend Payment Amount on any Dividend Payment Date or (iv) any payment or
delivery due on any postponed Required Payment Date where the original Required
Payment Date was the Maturity Date, a Reorganization Termination Date, an
Optional Termination Date or a Dividend Payment Date, in any case, as required
by this Agreement;
(e) Seller fails to fulfill or discharge when due any of Seller's
obligations, covenants or agreements under or relating to this Agreement or the
Pledge Agreement (other than the obligations referred to in Section 8.01(d) and
Section 8.01(f)) such failure remains unremedied for 60 days following notice
from Buyer;
(f) Seller fails to fulfill or discharge when due any of Seller's
obligations, covenants or agreements under or relating to Section 1(b) of the
Pledge Agreement;
(g) due to the adoption of, or any change in, any applicable law after
the date hereof, or due to the promulgation of, or any change in, the
interpretation by any court, tribunal or regulatory authority with competent
jurisdiction of any applicable law after the date hereof, it becomes unlawful
for Seller to perform any absolute or contingent obligation to make payment or
delivery hereunder or to comply with any other material provision of this
Agreement or the Pledge Agreement;
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(h) there occurs a default under any indebtedness for money borrowed
that is incurred or guaranteed by Mafco, Seller or any direct or indirect wholly
owned subsidiary of Mafco in the chain of ownership between Mafco and Seller,
whether such indebtedness now exists or shall hereafter be created, which
indebtedness, individually or in the aggregate, is in excess of $10,000,000
principal amount, which default shall constitute a failure to pay any portion of
the principal of such indebtedness when due and payable after the expiration of
any applicable grace or cure period with respect thereto or shall have resulted
in such indebtedness becoming or being declared due and payable prior to the
date on which it would otherwise have become due and payable; or
(i) a Collateral Event of Default within the meaning of the Pledge
Agreement shall occur;
then, upon notice to Seller from Buyer at any time following an Acceleration
Event, an "ACCELERATION DATE" shall occur, and Seller shall become obligated to
deliver to Buyer immediately upon receipt of the Acceleration Amount Notice a
number of shares of Free Stock equal to the Acceleration Amount; provided that
if Seller shall have elected to substitute Government Securities for Share
Collateral pursuant to Section 5(i) of the Pledge Agreement, Seller shall be
obligated to deliver an amount of cash equal to the Replacement Value on the
Acceleration Date in lieu of such shares; and provided further that if Secured
Party proceeds to realize upon any collateral pledged under the Pledge Agreement
and to apply the proceeds of such realization as provided in the second
paragraph of Section 7(d) thereof, then, to the extent of such application of
proceeds, Seller's obligation to deliver Free Stock pursuant to this paragraph
shall be deemed to be an obligation to deliver an amount of cash equal to the
aggregate market value (determined by reference to the amount of such proceeds)
of such Free Stock on the Acceleration Date. The "ACCELERATION AMOUNT" means the
Replacement Value, expressed as a number of shares of Common Stock.
The "REPLACEMENT VALUE" means an amount determined by the Calculation
Agent representing the fair replacement value (which may be expressed by the
Calculation Agent as a cash amount or as a number of shares of Common Stock, and
which shall include both intrinsic and time value) to Buyer of an agreement with
terms that would preserve for Buyer the economic equivalent of the payments and
deliveries that Buyer and its affiliates would, but for the occurrence of the
Acceleration Date, have been entitled to receive after the Acceleration Date
hereunder (taking into account any adjustments pursuant to Section 7.01 that may
have been calculated on or prior to the Acceleration Date), including any loss
of bargain, cost of funding or, without duplication, loss or cost incurred as a
result of the termination, liquidation, establishment or
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reestablishment of any hedge or related trading position (whether such hedge or
related trading position was maintained by Buyer or by a counterparty to a
transaction entered into by Buyer to hedge Buyer's exposure to this Agreement)
(or any gain resulting from any of them).
As promptly as reasonably practicable after calculation of the
Replacement Value, the Calculation Agent shall deliver to Seller and Buyer a
notice (the "ACCELERATION AMOUNT NOTICE") specifying the Acceleration Amount of
shares of Common Stock required to be delivered by Seller.
ARTICLE 9
MISCELLANEOUS
SECTION 9.01. Notices. All notices and other communications hereunder
shall be in writing and shall be deemed to have been duly given if mailed or
transmitted by any standard forms of telecommunication. Notices to Buyer shall
be directed to it care of Credit Suisse First Boston Corporation, Eleven Madison
Avenue, New York, New York 10010, Telecopy No. (212) 325-8175, Attention:
Ricardo Harewood; notices to Seller shall be directed to Seller at 35 East 62nd
Street, New York, New York 10021, Telecopy No.(212) 572-5965, Attention: Chief
Financial Officer.
SECTION 9.02. Governing Law; Submission to Jurisdiction; Severability;
Waiver of Jury Trial; Service of Process. (a) This Agreement shall be governed
by and construed in accordance with the laws of the State of New York without
reference to choice of law doctrine and each party hereto submits to the
jurisdiction of the Courts of the State of New York and the United States
District Court located in the Borough of Manhattan in New York City and waives,
to the fullest extent permitted by law, any objection that it may now or
hereafter have to the laying of the venue of any suit, action or proceeding
arising out of or in connection with this Agreement in any such court or that
any such suit, action or proceeding brought in any such court has been brought
in an inconvenient forum.
(b) To the extent permitted by law, the unenforceability or invalidity
of any provision or provisions of this Agreement shall not render any other
provision or provisions herein contained unenforceable or invalid.
(c) SELLER AND BUYER HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE ANY
AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATED
TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
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(d) The parties irrevocably consent to service of process given in the
manner provided for notices in Section 9.01. Nothing in this Agreement will
affect the right of either party to serve process in any other manner permitted
by law.
SECTION 9.03. Entire Agreement; Other. Except as expressly set forth
herein, this Agreement constitutes the entire agreement and understanding among
the parties with respect to the subject matter hereof and supersedes all oral
communications and prior writings with respect thereto; provided that the
provisions of the Term Sheet shall survive in their entirety with respect to up
to a number of Underlying Shares (as defined in the Term Sheet) equal to the
excess of (x) the number of Underlying Shares set forth in the Term Sheet over
(y) the sum of the Base Amounts (as defined in the Term Sheet) for all Tranches
consummated on or prior to the date hereof. The parties hereby agree that (i)
Seller is not obligated to keep confidential or otherwise limit the use of any
element of any description contained in this Agreement or the Pledge Agreement
that is necessary to understand or support any United States federal income tax
treatment and (ii) Buyer does not assert any claim of proprietary ownership in
respect of any description contained herein or therein relating to the use of
any entities, plans or arrangements to give rise to a particular United States
federal income tax treatment for Seller.
SECTION 9.04. Amendments, Waivers. Any provision of this Agreement may
be amended or waived if, and only if, such amendment or waiver is in writing and
signed, in the case of an amendment, by Buyer and Seller or, in the case of a
waiver, by the party against whom the waiver is to be effective. No failure or
delay by either party in exercising any right, power or privilege hereunder
shall operate as a waiver thereof nor shall any single or partial exercise
thereof preclude any other or further exercise thereof or the exercise of any
other right, power or privilege. The rights and remedies herein provided shall
be cumulative and not exclusive of any rights or remedies provided by law.
SECTION 9.05. No Third Party Rights, Successors and Assigns. This
Agreement is not intended and shall not be construed to create any rights in any
person other than Seller, Buyer and their respective successors and assigns and
no other person shall assert any rights as third party beneficiary hereunder.
Whenever any of the parties hereto is referred to, such reference shall be
deemed to include the successors and assigns of such party. All the covenants
and agreements herein contained by or on behalf of Seller and Buyer shall bind,
and inure to the benefit of, their respective successors and assigns whether so
expressed or not, and shall be enforceable by and inure to the benefit of Buyer
and its successors and assigns. The rights and duties under this Agreement may
not be assigned or transferred by any party hereto; provided that (i) Buyer may
assign any
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of its rights or duties hereunder with the prior written consent of Seller
(which consent shall not be unreasonably withheld) and (ii) Agent may assign or
transfer any of its rights or duties hereunder without the prior written consent
of the other parties hereto to any affiliate of Credit Suisse First Boston, so
long as such affiliate is a broker-dealer registered with the Securities and
Exchange Commission.
SECTION 9.06. Calculation Agent. The determinations and calculations of
the Calculation Agent shall be made in good faith and in a commercially
reasonable manner and shall be binding in the absence of manifest error. The
Calculation Agent will have no responsibility for good faith errors or omissions
in the determination of the Base Amount, the Exchange Rate, the Threshold Price,
the Issue Price, the Maturity Price, the Cash Settlement Amount, any Closing
Price or any other amount as provided herein.
SECTION 9.07. Set-off. In addition to and without limiting any rights
of set-off that a party hereto may have as a matter of law, pursuant to contract
or otherwise, upon the occurrence of a Reorganization Termination Date to which
clause (B) of Section 7.02 applies or an Acceleration Date, Buyer shall have the
right to terminate, liquidate and otherwise close out the transactions
contemplated by this Agreement and the Pledge Agreement pursuant to the terms of
this Agreement and the Pledge Agreement, and to set off any obligation that
Buyer or any affiliate of Buyer may have to Seller, including without limitation
any obligation to make any release, delivery or payment to Seller pursuant to
the Pledge Agreement, against any right Buyer or any of its affiliates may have
against Seller, including without limitation any right to receive a payment or
delivery pursuant to Section 2.03(b), Section 2.04, Section 2.05, Section 3.01,
Section 7.02, Section 7.04 or Section 8.01 or any other provision of this
Agreement. In the case of a set-off of any obligation to release, deliver or pay
assets against any right to receive assets of the same type, such obligation and
right shall be set off in kind. In the case of a set-off of any obligation to
release, deliver or pay assets against any right to receive assets of any other
type, the value of each of such obligation and such right shall be determined by
the Calculation Agent and the result of such set-off shall be that the net
obligor shall pay or deliver to the other party an amount of cash or assets, at
the net obligor's option, with a value (determined, in the case of a delivery of
assets, by the Calculation Agent) equal to that of the net obligation. In
determining the value of any obligation to release or deliver Common Stock or
right to receive Common Stock, the value at any time of such obligation or right
shall be determined by reference to the market value of the Common Stock at such
time. If an obligation or right is unascertained at the time of any such
set-off, the Calculation Agent may in good faith estimate the amount or value of
such obligation or right, in which case set-off
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will be effected in respect of that estimate, and the relevant party shall
account to the other party at the time such obligation or right is ascertained.
SECTION 9.08. Matters Related to Credit Suisse First Boston
Corporation, as Agent. (a) Credit Suisse First Boston Corporation shall act as
"agent" for Buyer and Seller within the meaning of Rule 15a-6 under the
Securities Exchange Act of 1934 in connection with the transactions contemplated
by this Agreement and by the Pledge Agreement.
(b) The Agent shall have no responsibility or liability (including,
without limitation, by way of guarantee, endorsement or otherwise) to Buyer or
Seller or otherwise in respect of this Agreement or the Pledge Agreement,
including, without limitation, in respect of the failure of Buyer or Seller to
pay or perform under this Agreement or the Pledge Agreement, except for its
gross negligence or willful misconduct in performing its duties as Agent
hereunder or thereunder.
(c) Each of Buyer and Seller agrees to proceed solely against the other
to collect or recover any securities or money owing to Buyer or Seller, as the
case may be, in connection with or as a result of this Agreement or the Pledge
Agreement.
(d) As a broker-dealer registered with the Securities and Exchange
Commission, Credit Suisse First Boston Corporation, in its capacity as Agent,
will be responsible for (i) effecting the transactions contemplated by this
Agreement and the Pledge Agreement, (ii) issuing all required notices,
confirmations and statements to Buyer and Seller and (iii) maintaining books and
records relating to this Agreement and the Pledge Agreement.
SECTION 9.09. Counterparts. This Agreement may be executed in any
number of counterparts, and all such counterparts taken together shall be deemed
to constitute one and the same agreement.
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IN WITNESS WHEREOF, the parties have signed this Agreement as of the
date and year first above written.
SELLER:
GSB INVESTMENTS CORP.
By: /s/ Todd J. Slotkin
------------------------------------
Name: Todd J. Slotkin
Title: Executive Vice President and
Chief Financial Officer
BUYER:
CREDIT SUISSE FIRST BOSTON
INTERNATIONAL
By: /s/ Edmond Curtin
------------------------------------
Name: Edmond Curtin
Title: Director-Legal and Compliance
Department
By: /s/ John Biggs
------------------------------------
Name: John Biggs
Title: Vice President-Legal and
Compliance Department
AGENT:
CREDIT SUISSE FIRST BOSTON
CORPORATION
By: /s/ Timothy D. Bock
------------------------------------
Name: Timothy D. Bock
Title: Managing Director
<PAGE>
ANNEX A
(a) Seller is a corporation duly organized and existing in good
standing under the laws of its jurisdiction of incorporation.
(b) The execution and delivery of this Agreement and the Pledge
Agreement and the performance by Seller of Seller's obligations hereunder and
thereunder do not violate or conflict with any provision of the certificate of
incorporation or bylaws of Seller, any law applicable to Seller, any order or
judgment of any court or other agency of government known to such counsel
applicable to Seller or any of Seller's assets or any contractual restriction
known to such counsel binding on or affecting Seller or any of Seller's assets.
Such counsel need not express any opinion with respect to whether the execution
or delivery by Seller of, or the performance by Seller of its obligations under,
this Agreement and the Pledge Agreement violates or conflicts with any
restriction or provision with respect to financial ratios or tests any aspect of
the financial condition or results of operations of Seller.
(c) All government and other consents that are known to such counsel
to be required to have been obtained by Seller with respect to this Agreement or
the Pledge Agreement have been obtained and are in full force and effect and all
conditions of any such consents have been complied with.
(d) Seller has the requisite corporate power and authority to enter
into and perform this Agreement and the Pledge Agreement and to deliver the
Contract Shares in accordance with the terms hereof. The execution and delivery
of this Agreement and the Pledge Agreement by Seller and the consummation by
Seller of the transactions contemplated hereby and thereby (including the
delivery by Seller of the Contract Shares) have been duly authorized by all
necessary corporate action by Seller. This Agreement and the Pledge Agreement
have been duly executed and delivered by Seller. Seller's obligations under this
Agreement and the Pledge Agreement constitute Seller's legal, valid and binding
obligations, enforceable in accordance with their respective terms (subject to
applicable bankruptcy, reorganization, insolvency, moratorium or similar laws
affecting creditors' rights generally and subject, as to enforceability, to
equitable principles of general application (regardless of whether enforcement
is sought in a proceeding in equity or at law)).
(e) No registration, recordation or filing with any governmental body,
agency or official is required in connection with the execution and delivery of
this Agreement or necessary for the validity or enforceability hereof.
(f) Seller is not and, after giving effect to the transactions
contemplated hereby, will not be an "investment company", as such term is
defined in the Investment Company Act, required to be registered under the
Investment Company Act.
<PAGE>
ANNEX B
(a) The execution and delivery of this Agreement and the Pledge
Agreement and the performance by Seller of Seller's obligations hereunder and
thereunder do not constitute a violation of, or result in a breach or default
under, any agreement or instrument listed on a schedule to such opinion.
