Confirmation of OTC Convertible Note Hedge between Morgans Hotel Group Co. and Merrill Lynch Financial Markets, Inc.
This agreement confirms the terms of an over-the-counter (OTC) convertible note hedge transaction between Morgans Hotel Group Co. and Merrill Lynch Financial Markets, Inc., with Merrill Lynch, Pierce, Fenner & Smith Incorporated acting as agent. The hedge is linked to Morgans Hotel Group’s 2.375% Senior Subordinated Convertible Notes due 2014. The agreement outlines the purchase of call options by Morgans Hotel Group to hedge potential dilution from note conversions, specifies payment terms, exercise procedures, and references the related note indenture. The agreement is governed by ISDA definitions and a deemed ISDA Master Agreement.
Date: | October 11, 2007 | |
To: | Morgans Hotel Group Co. (Counterparty) | |
Attention: | ||
Telephone No.: | ||
Facsimile No.: | ||
From: | Merrill Lynch Financial Markets, Inc. (Dealer) |
Trade Date: | October 11, 2007 | |
Effective Date: | The date of issuance of the Reference Notes. | |
Option Style: | Modified American, as described under Settlement Terms below. | |
Option Type: | Call | |
Seller: | Dealer | |
Buyer: | Counterparty | |
Shares: | The shares of Common Stock, $0.01 par value, of Counterparty (Security Symbol: MHGC) or such other securities or property (including cash) into which the Reference Notes are convertible on the date of determination. | |
Number of Options: | The number of Convertible Notes in denominations of USD1,000 principal amount issued by Counterparty on the closing date for the initial issuance of the Convertible Notes; provided that the Number of Options shall be automatically increased as of the date of exercise by Merrill Lynch, Pierce, Fenner & Smith Incorporated of the Initial Purchasers (as such term is defined in the Purchase Agreement) option to purchase additional Convertible Notes pursuant to Section 2(b) of the Purchase Agreement related to the purchase and sale of the Convertible Notes dated as of October 11, 2007 among Counterparty and the Initial Purchasers (the Purchase Agreement) by the number of Convertible Notes in denominations of USD1,000 principal amount issued pursuant to such exercise (such Convertible Notes, the Additional Convertible Notes). | |
Number of Shares: | The product of the Applicable Percentage, the Number of Options and the Conversion Rate (as defined in the Note Indenture), but without regard to any adjustment to the Conversion Rate as a result of the Excluded Provisions. | |
Premium: | $33,750,000; provided that if the Number of Options is increased pursuant to the proviso to the definition of Number of Options above, an additional Premium equal to the product of the number of Options by which the Number of Options is so increased and $337.50 shall be paid on the Additional Premium Payment Date. | |
Premium Payment Date: | The date of issuance of the Reference Notes. | |
Additional Premium Payment Date: | The closing date for the purchase and sale of the Additional Convertible Notes. | |
Exchange: | Nasdaq Global Market | |
Related Exchange(s): | All Exchanges | |
Reference Notes: | 2.375% Senior Subordinated Convertible Notes due 2014 of Counterparty |
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Applicable Percentage: | 662/3% | |
Note Indenture: | The indenture, dated as of closing of the issuance of the Reference Notes, between Counterparty and The Bank of New York, 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 occurring before the Expiration Date. | |
Required Exercise on Conversion Dates: | On each Conversion Date, a number of Options equal to the number of Convertible Notes in denominations of $1,000 principal amount submitted for conversion on such Conversion Date in accordance with the terms of the Note Indenture shall be automatically exercised. | |
Exercise Period: | The period from and excluding the Effective 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. | |
Multiple Exercise: | Applicable, as provided above under Required Exercise on Conversion Dates. | |
Minimum Number of Options: | Zero | |
Maximum Number of Options: | Number of Options | |
Automatic Exercise: | As provided above under Required Exercise on Conversion Dates. | |
Exercise Notice: | Notwithstanding the exercise of any Options hereunder, Buyer shall be entitled to receive the deliveries provided under Settlement Terms below only if Buyer shall have notified Seller in writing prior to 5:00 PM, New York City time, on the Business Day, as defined in the Note Indenture, prior to the first Scheduled Valid Day of the Conversion Reference Period relating to the Convertible Notes converted on the Conversion Date occurring on the relevant Exercise Date (such time, the Notice Deadline) of (i) the number of Options being exercised, (ii) the first Scheduled Valid Day of the Conversion Reference Period and (iii) the scheduled settlement date under the Note Indenture for the Convertible Notes converted on the Conversion Date occurring on the Exercise Date for such exercise; provided that, notwithstanding the foregoing, such notice (and the related automatic exercise of Options) shall be effective if given after the relevant Notice Deadline but prior to 5:00 PM New York City time, on the fifth Scheduled Valid Day following the Notice Deadline, in which event the Calculation Agent shall have the right to adjust the Delivery Obligation (as |
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defined below) as appropriate to reflect the additional costs (including, but not limited to, hedging mismatches and market losses) and reasonable expenses incurred by Seller in connection with its hedging activities (including the unwinding of any hedge position) as a result of its not having received such notice prior to the applicable Notice Deadline. Notwithstanding the foregoing, in respect of Options with a related Exercise Date on or after July 15, 2014, the Notice Deadline shall be 5:00 PM, New York City time, on the Business Day prior to the Final Maturity Date (as defined in the Note Indenture) and the related Exercise Notice need not contain the information specified in clause (ii) above. |
Sellers Telephone Number and Telex and/or Facsimile Number and Contact Details for purpose of Giving Notice: | Address: | Merrill Lynch Financial Markets, Inc. 4 World Financial Center, 17th Floor New York, New York 10080 Merrill Lynch Financial Centre | ||
Attention: | Manager of Equity Documentation | |||
Facsimile No.: | (917) 778-0835 | |||
Telephone No.: | (212) 449-1951 | |||
Settlement Terms: | ||||
Settlement Date: | As defined in the Note Indenture. |
Delivery Obligation: | In lieu of the obligations set forth in Sections 8.1 and 9.1 of the Equity Definitions, and subject to Exercise Notice above, in respect of an Exercise Date occurring on a Conversion Date, Seller will deliver to Buyer on the related Settlement Date the product of (x) the Applicable Percentage, (y) the number of Options exercised or deemed exercised on such Exercise Date and (z) the sum of the quotients, for each Valid Day during the Conversion Reference Period for such Exercise Date, of (A) the product of (I) excess, if any, of the Relevant Price less the Conversion Price on such Valid Day and (II) the Conversion Rate on such Valid Day divided by (B) such Relevant Price, divided by (z) the number of Valid Days in the Conversion Reference Period (such number of Shares, the Convertible Obligation); provided that such Convertible Obligation shall be determined without regard to any adjustments to the Conversion Rate or the Conversion Price pursuant to the to the Excluded Provisions of the Note Indenture. | |
Any fractional Shares to be delivered with respect to any Delivery Obligation shall be valued at the Relevant Price for the last Valid Day of the Conversion Reference Period, and Dealer shall deliver cash in lieu thereof. | ||
Excluded Provisions: | Section 4.06(g) of the Note Indenture. | |
Conversion Reference Period: | For any Exercise Date, the conversion reference period as defined in the Note Indenture with respect to the Conversion Date occurring on such Exercise Date. | |
Valid Day: | A day on which (i) there is no Market Disruption Event and (ii) trading in the Shares generally occurs on the Exchange or, if the Shares are not then listed on the Exchange, on the principal other U.S. national or regional securities exchange on which the Shares are then listed or, if the Shares are not then listed on a U.S. national or regional securities exchange, on the principal other market on which the Shares are then traded. If the Shares (or other security for which a Relevant Price must be determined) is not so listed or quoted, a Valid Day means a Business Day |
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Scheduled Valid Day: | A day that is scheduled to be a Valid Day. | |
Market Disruption Event: | Section 6.3(a) of the Equity Definitions is hereby replaced in its entirety by the following: | |
Market Disruption Event means in respect of a Share, (i) a failure by the Exchange or, if the Shares are not then listed on the Exchange, by the principal other U.S. national or regional securities exchange on which the Shares are then listed or, if the Shares are not then listed on a U.S. national or regional securities exchange, by the principal other market on which the Shares are then traded, to open for trading during its regular trading session or (ii) the occurrence or existence on any trading day for the Shares of any suspension or limitation imposed on trading (by reason of movements in price exceeding limits permitted by the stock exchange or otherwise) in the Shares or in any options, contracts or future contracts relating to the Shares that, in each case, for more than one half-hour period in the aggregate on such trading day. | ||
Relevant Price: | The VWAP Price (as defined below under Disposition of Hedge Shares). | |
Other Applicable Provisions: | To the extent Seller is obligated to deliver Shares hereunder, the provisions of Sections 9.1(c), 9.8, 9.9, 9.10, 9.11 (except that the Representation and Agreement contained 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) and 9.12 of the Equity Definitions will be applicable as if Physical Settlement applied to the Transaction. | |
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 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 a discretionary adjustment to the Conversion Rate by Counterparty. | |
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 to which Section 4.10 of the Note Indenture applies. | |
Consequences for Merger Events: |
Share-for-Share: | The Transaction will be adjusted in a manner corresponding to the adjustments to the Reference Notes as provided in the Note Indenture. |
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Share-for-Other: | The Transaction will be adjusted in a manner corresponding to the adjustments to the Reference Notes as provided in the Note Indenture. | |||
Share-for-Combined: | The Transaction will be adjusted in a manner corresponding to the adjustments to the Reference Notes as provided in the Note Indenture. | |||
Notice of Merger Consideration: | Upon the occurrence of a Merger Event that causes the Shares to be converted into the right to receive more than a single type of consideration (determined based in part upon any form of stockholder election), Buyer shall reasonably promptly (but in any event prior to the third Exchange Business Day prior to the effective date of such Merger Event) notify the Calculation Agent of the weighted average of the types and amounts of consideration (a) received by the holders of Shares entitled to receive cash, securities or other property or assets with respect to or in exchange for such Shares in any Merger Event who affirmatively make such an election and (b) selected by holders of the Reference Notes as the form of consideration into which the Reference Notes shall be convertible from and after the effective date of such Merger Event. | |||
Tender Offer: | Applicable, subject to Consequences of Tender Offers below. Notwithstanding Section 12.1(d) of the Equity Definitions, Tender Offer means the occurrence of any event or condition set forth in Section 4.06(e) of the Note Indenture. | |||
Consequences of Tender Offers: | The Transaction will be adjusted in a manner corresponding to the adjustments to the Reference Notes as provided in the Note Indenture. | |||
Nationalization, Insolvency and Delisting: | Cancellation and Payment (Calculation Agent Determination); provided that 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, the NASDAQ Global Market or the NASDAQ Global Select Market (or their respective successors); 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 | |||
Failure to Deliver: | Applicable. | |||
Insolvency Filing: | Applicable | |||
Hedging Disruption Event: | Applicable | |||
Increased Cost of Hedging: | Not Applicable | |||
Loss of Stock Borrow: | Not Applicable |
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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 |
1. | Buyer hereby represents and warrants to Seller, on each day from the Trade Date to and including the earlier of (i) November 17, 2007 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 in a manner that would not cause any purchases by Seller of its hedge in connection with this Transaction not to comply applicable securities laws; | ||
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 Buyer makes no representation pursuant to this clause in respect of any action or inaction taken by Seller or any initial purchaser of the Reference Notes); and | ||
c. | Buyer has publicly disclosed all material information necessary for Buyer to be able to purchase or sell Shares in compliance with applicable federal securities laws. |
2. | If Buyer would be obligated to pay cash (other than payment of the Premium and except in the case of an Event of Default in which Buyer is the Defaulting Party or a Termination Event in which Buyer is the Affected Party, other than an (x) Event of Default of the type described in Section 5(a)(iii), (v), (vi) or (vii) of the Master Agreement or (y) a Termination Event of the type described in Section 5(b)(i), (ii), (iii), (iv), or (v) of the Master Agreement that in the case of either (x) or (y) resulted from an event or events outside Buyers control) 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), but including (x) the right to deliver Shares under the Note Indenture upon conversion of the Reference Notes or (y) the right to deliver or receive Shares in any other document or agreement that would result, directly or indirectly, in a cash payment hereunder) to elect to deliver or receive Shares in satisfaction of such payment obligation, then Buyer may elect (by giving notice to Seller no later than 8 a.m. New York time on the Exchange Business Day immediately following the date of occurrence of the event giving rise to such payment obligation) 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 |
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to receive upon the consummation or closing of such Extraordinary Event) having a cash value equal to the amount of such payment obligation. Such number of Shares or amount of other securities or property to be delivered shall be determined by the Calculation Agent to be the number of Shares 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 or producing 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. Notwithstanding anything herein or in the Agreement to the contrary, the aggregate number of Shares that Counterparty may be required to deliver to Dealer under this Transaction shall not exceed the product of (a) 1.5 and (b) the Number of Shares, as adjusted by the Calculation Agent to account for any subdivision, stock-split, stock combination, reclassification or similar dilutive or anti-dilutive event with respect to the Shares. | ||
3. | 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. | |
4. | 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. | |
5. | The representations and warranties set forth in Section 1 of the Purchase Agreement (as defined herein) are hereby deemed to be repeated to Dealer as if set forth herein. |
1. | Amendment Event means that the Counterparty, without Dealers 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 term relating to conversion of the Reference Notes, including, without limitation, any 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 means that (a) any Reference Notes are repurchased (whether in connection with or as a result of a fundamental change or 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 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. |
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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. | |
Initial Purchase Event means that the transactions contemplated by the Purchase Agreement shall fail to close for any reason by the closing date for the offering of the Reference Notes as specified in the Purchase Agreement. | ||
If an Initial Purchase Event occurs for any reason other than due to a breach of the Purchase Agreement by the Initial Purchasers, then all payments previously made hereunder shall be returned to the person making such payment, including the Premium, less an amount equal to the product of (a) the Number of Shares, (b) 0.50 and (c) an amount equal to the excess, if any, of the closing price of the Shares on the Trade Date over the closing price of the Shares on the date of the Termination Event (the Break Expense); provided that any negative amount shall be replaced by zero and provided further that to the extent the Premium has not been paid, Buyer shall promptly pay Seller the Break Expense. Seller and Buyer agree that actual damages would be difficult to ascertain under these circumstances and that the amount of liquidated damages resulting from the determination in the preceding sentence is a good faith estimate of such damages and not a penalty. | ||
If an Initial Purchase Event occurs due to a breach of the Purchase Agreement by the Initial Purchasers, then all payments previously made hereunder, including the Premium, promptly shall be returned to the person making such payment and no payments shall be required hereunder in connection with such Initial Purchase Event. |
1. | in such notice, Seller will specify to Buyer the related Staggered Settlement Dates (each of which will be such Nominal Settlement Date and the last of which will be no later than twenty (20) Valid 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 procedures set forth above under the heading Settlement Terms will apply on each Staggered Settlement Date, except that the Shares comprising the Delivery Obligation will be allocated among such Staggered Settlement Dates or delivery times as specified by Seller in the notice referred to in clause (1) above. |
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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 partys 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 FASBs Liabilities & Equity Project. | ||
Account Details: | Account for payments to Buyer: To be advised | |
Account for payment to Seller: To be advised | ||
Accounts for deliveries of Shares: To be advised | ||
Bankruptcy Rights: | In the event of Buyers bankruptcy, Sellers 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 Sellers rights with respect to any other claim arising from this Transaction prior to Buyers bankruptcy shall remain in full force and effect and shall not be otherwise abridged or modified in connection herewith. |
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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 Sellers 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 any Exercise Notice or its obligations pursuant to Disposition of Hedge Shares, Repurchase Notices or Conversion Rate Adjustment Notices above. | |
Seller may transfer any of its rights or delegate its obligations under this Transaction with the prior written consent of Buyer, such consent not to be unreasonably withheld. In addition, if, as determined in Sellers sole discretion, its beneficial ownership (within the meaning of Section 13 of the Exchange Act and rules promulgated thereunder) could be deemed to exceed 8% of Counterpartys outstanding Shares, Seller may, without Counterpartys consent, transfer or assign all or any part of its rights or obligations under this Transaction to reduce such beneficial ownership to 7.5% to any third party with a rating for its (or, if applicable, its Credit Support Providers) long term, unsecured and unsubordinated indebtedness of AA or better by Standard & Poors Ratings Service or its successor (S&P), or Aa3 or better by Moodys Investors Service (Moodys) or, if either S&P or Moodys 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 Sellers 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 Sellers beneficial ownership (within the meaning of Section 13 of the Exchange Act and rules promulgated thereunder) to 7.5% of Counterpartys outstanding Shares 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 its beneficial ownership following such partial termination will be equal to or less than 7.5%. 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. |
1. | Agent will be responsible for the operational aspects of the Transactions effected through it, such as record keeping, reporting, and confirming Transactions to Buyer and Seller; | |
2. | Unless Buyer 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 Agent; | |
3. | Agents sole role under this Agreement and with respect to any Transaction is as an agent of Buyer and |
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(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) | Dealer represents that it is a company incorporated in a jurisdiction within the United States. | ||
(ii) | Counterparty represents that it is a corporation incorporated in Delaware. |
(a) | Tax forms, documents or certificates to be delivered are: | |
Dealer agrees to complete (accurately and in a manner reasonably satisfactory to Counterparty), execute, and deliver to Counterparty, United States Internal Revenue Service Form W-9 and all required attachments, or any successor of such form(s): (i) before the first payment date under this agreement; (ii) promptly upon reasonable demand by Counterparty; and (iii) promptly upon learning that any such Form previously provided by Dealer has become obsolete or incorrect. | ||
Counterparty agrees to complete (accurately and in a manner reasonably satisfactory to Dealer), execute, and deliver to Dealer, 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 Dealer; and (iii) promptly upon learning that any such form(s) previously provided by Counterparty has become obsolete or incorrect. | ||
(b) | Other documents to be delivered: |
Covered by | ||||||
Party Required to | Section 3(d) | |||||
Deliver Document | Document Required to be Delivered | When Required | 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 |
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Covered by | ||||||
Party Required to | Section 3(d) | |||||
Deliver Document | Document Required to be Delivered | When Required | Representation | |||
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 | No |
Address: | Merrill Lynch Financial Markets, Inc. | |||
4 World Financial Center, 17th Floor | ||||
New York, New York 10080 | ||||
Merrill Lynch Financial Centre | ||||
Attention: | Manager of Equity Documentation | |||
Facsimile No.: | (917)  ###-###-#### | |||
Telephone No.: | (212)  ###-###-#### |
Address: | Merrill Lynch Financial Markets, Inc. | |||
4 World Financial Center, 17th Floor | ||||
New York, New York 10080 | ||||
Merrill Lynch Financial Centre | ||||
Attention: | Manager of Equity Documentation | |||
Facsimile No.: | (917)  ###-###-#### | |||
Telephone No.: | (212)  ###-###-#### |
Address: | To be advised. | |||
Attention: | ||||
Facsimile No.: | ||||
Telephone No.: |
Address: | To be advised. |
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Attention: | ||||
Facsimile No.: | ||||
Telephone No.: |
Address: | Merrill Lynch, Pierce, Fenner & Smith Incorporated 222 Broadway, 16th Floor New York, New York 10038 | |||
Attention: | Litigation Department | |||
Counterparty does not appoint a Process Agent. |
Multibranch Party. | For the purpose of Section 10(c) of the Agreement: Neither Seller nor Counterparty is a Multibranch Party. | |
Calculation Agent. | Seller; provided that all determinations made by the Calculation Agent shall be made in good faith and in a commercially reasonable manner. |
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(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) | Seller to be a financial institution as defined in Section 101(22) of Title 11 of the United States Code (the Bankruptcy Code) and this Transaction to be a securities contract as defined in Section 741(7) of the Bankruptcy Code and a swap agreement as defined in Section 101(53C) of the Bankruptcy Code, qualifying for the protections of, among other sections, Sections 362(b)(6), 362 (b)(17), 546(e), 546(g), 555 and 560 of the Bankruptcy Code; | ||
(ii) | a partys 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. |
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Very truly yours, MERRILL LYNCH FINANCIAL MARKETS, INC. | ||||
By: | /s/ Fran Jacobson | |||
Name: | Fran Jacobson | |||
Title: | Authorized Signatory | |||
By: | /s/ Marc Gordon | |||
Name: | ||||
Title: | Chief Investment Officer & | |||
Executive Vice President of Capital Markets |
By: | /s/ Angelina Lopes | |||
Name: | ||||
Title: | Authorized Signatory |
MERRILL LYNCH & CO., INC. | ||||
By: | /s/ Patricia Kroplewnicki | |||
Name: | Patricia Kroplewnicki | |||
Title: | Designated Signatory | |||
Date: | October 11, 2007 | |||