Exhibit 4.3
JPMorgan Chase Bank, National Association
X.X. Xxx 000
60 Victoria Embankment
Xxxxxx XX0X 0XX
England
December 23, 2004
To: Scientific Games Corporation
000 Xxxxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attention: Treasurer
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
Re: Warrants
The purpose of this letter agreement is to confirm the terms and
conditions of the Warrants issued by Scientific Games Corporation (the
"Company") to JPMorgan Chase Bank, N.A., London Branch ("JPMorgan") on the Trade
Date specified below (the "Transaction"). This letter agreement constitutes a
"Confirmation" as referred to in the ISDA Master Agreement specified below. This
Confirmation shall replace any previous letter and serve as the final
documentation for this Transaction.
The definitions and provisions contained in the 1996 ISDA Equity
Derivatives Definitions (the "Equity Definitions"), as published by the
International Swaps and Derivatives Association, Inc., are incorporated into
this Confirmation. In the event of any inconsistency between the Equity
Definitions and this Confirmation, this Confirmation shall govern. This
Transaction shall be deemed to be a Share Option Transaction within the meaning
set forth in the Equity Definitions.
Each party is hereby advised, and each such party acknowledges, that the
other party has engaged in, or refrained from engaging in, substantial financial
transactions and has taken other material actions in reliance upon the parties'
entry into the Transaction to which this Confirmation relates on the terms and
conditions set forth below.
1. This Confirmation evidences a complete and binding agreement between
JPMorgan and the Company as to the terms of the Transaction to which this
Confirmation relates. This Confirmation shall supplement, form a part of,
and be subject to an agreement in the form of the 2002 ISDA Master
Agreement (the "Agreement") as if JPMorgan and the Company had executed an
agreement in such form (but without any Schedule except for the election
of the laws of the State of New York as the governing law and United
States dollars as the Termination Currency) on the Trade Date. In the
event of any inconsistency between provisions of that Agreement and this
Confirmation, this Confirmation will prevail for the purpose of the
Transaction to which this Confirmation relates. The parties hereby agree
that no Transaction other than the Transaction to which this Confirmation
relates shall be governed by the Agreement.
2. The terms of the particular Transaction to which this Confirmation relates
are as follows:
General Terms:
Trade Date: December 23, 2004
Warrants: Equity call warrants on the terms hereof, each
giving the holder the right to purchase one
Share at the Strike Price, subject to the
Settlement Terms set forth below. For the
purposes of the Equity Definitions, each
reference to a Warrant shall be deemed to be a
reference to a Call Option.
Warrant Style: European
Buyer: JPMorgan
Seller: Company
Shares: The Class A Common Stock of the Company, par
value USD 0.01 per Share (Exchange symbol
"SGMS")
Number of Warrants: 4,295,532
Daily Number of Warrants: 71,592.20, subject to adjustments provided
herein.
Warrant Entitlement: One Share per Warrant
Strike Price: USD 37.248
Premium: USD 17,130,000
Premium Payment Date: December 23, 2004
Exchange: The NASDAQ National Market System
Related Exchange(s): The principal exchange(s) for options
contracts or futures contracts, if any, with
respect to the Shares
Exercise and Valuation:
Expiration Time: The Valuation Time
First Expiration Date: June 1, 2010, subject to Market Disruption
Event below.
Expiration Date: For any Daily Number of Warrants, each of the
60 Exchange Business Days beginning on and
including the First Expiration Date.
Automatic Exercise: Applicable; and means that a number of
Warrants for each Expiration Date equal to the
Daily Number of Warrants (as adjusted pursuant
to the terms hereof) for such Expiration Date
will be deemed to be automatically exercised.
For the avoidance of doubt, Automatic Exercise
shall apply separately to each Expiration
Date.
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Market Disruption Event: Modified Postponement (as if each Expiration
Date were an Averaging Date for the purposes
of Section 4.4(d)(iii)(A) of the Equity
Definitions and for the purposes of the
definition of "Valid Date"); provided that
references in Section 4.4(d)(iii)(A) to "fifth
Exchange Business Day" shall be replaced by
"eighth Exchange Business Day".
Valuation applicable to each Warrant:
Valuation Time: At the close of trading of the regular
trading session on the Exchange; provided
that if the principal trading session is
extended, the Calculation Agent shall
determine the Valuation Time in its
reasonable discretion.
Valuation Date: Each Exercise Date.
Settlement Terms applicable to the Transaction:
Method of Settlement: Net Share Settlement; and means that, on each
Settlement Date, Company shall deliver to
JPMorgan, the Share Delivery Quantity of
Shares for such Settlement Date to the account
specified hereto free of payment through the
Clearance System.
Share Delivery Quantity: For any Settlement Date, a number of Shares,
as calculated by the Calculation Agent, equal
to the Net Share Settlement Amount for such
Settlement Date divided by the Settlement
Price on the Valuation Date in respect of such
Settlement Date, plus cash in lieu of any
fractional shares (based on such Settlement
Price).
Net Share Settlement Amount: For any Settlement Date, any amount equal to
(i) the Number of Warrants being exercised on
the relevant Exercise Date multiplied by (ii)
the Strike Price Differential for such
Settlement Date.
Strike Price Differential: (a) If the Settlement Price for any Valuation
Date is greater than the Strike Price, an
amount equal to the excess of such Settlement
Price over the Strike Price; or
(b) If such Settlement Price is less than or
equal to the Strike Price, zero.
Settlement Price: For any Valuation Date, the official closing
price per Share quoted by the Exchange (or, if
no closing price is so quoted, the last
reported sale price) as of the Valuation Time
on such Valuation Date.
Settlement Date: For any Exercise Date, the date defined as
such in Section 6.2 of the Equity Definitions,
subject to Section 9(o)(i) hereof.
Failure to Deliver: Inapplicable
Other Applicable Provisions: The provisions of Sections 6.6, 6.7, 6.8, 6.9
and 6.10 of the Equity Definitions will be
applicable, except that all references in such
provisions to "Physically-Settled" shall be
read as references to "Net Share Settled".
"Net Share Settled" in relation to any Warrant
means that Net Share Settlement is applicable
to that Warrant.
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3. Additional Terms applicable to the Transaction:
Adjustments applicable to the Warrants:
Method of Adjustment: Calculation Agent Adjustment. For avoidance of
doubt, in making any adjustments under the
Equity Definitions, the Calculation Agent may
adjust the Daily Number of Warrants.
Notwithstanding the foregoing, any cash
dividends or distributions, whether or not
extraordinary, shall be governed by Section
9(j) of this Confirmation and not by Section
9.1(c) of the Equity Definitions.
Extraordinary Events applicable to the Transaction:
Consequence of Merger Events
(a) Share-for-Share: Alternative Obligation; provided that the
Calculation Agent will determine if the Merger
Event affects the theoretical value of the
Transaction and if so JPMorgan in its sole
discretion may elect to make adjustments to
the Strike Price and any other term necessary
to reflect the characteristics (including
volatility, dividend practice, borrow cost,
and policy and liquidity) of the New Shares.
Notwithstanding the foregoing, Cancellation
and Payment shall apply in the event the New
Shares are not publicly traded on a United
States national securities exchange or quoted
on the NASDAQ National Market System.
(b) Share-for-Other: Cancellation and Payment
(c) Share-for-Combined: Cancellation and Payment
Nationalization or Cancellation and Payment
Insolvency:
4. Calculation Agent: JPMorgan, whose calculations and
determinations shall be made in good faith and
in a commercially reasonable manner.
5. Account Details:
(a) Account for payments to Company:
Scientific Games Management Corp., Agent
The Bank of New York
New York, NY
ABA # 000-000-000
CHIPS # 0001
SWIFT Code IRVUS3N
Account Number 6302386623
Reference: Scientific Games Corp.
Account for delivery of Shares to Company:
As notified to JPMorgan by Company in writing from time to time.
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(b) Account for payments to JPMorgan:
JPMorgan Chase Bank, N.A., New York
ABA: 021 000 021
Favour: JPMorgan Chase Bank, N.A. - London
A/C: 0010962009
XXXXXX00
Account for delivery of Shares from JPMorgan:
DTC 060
6. Offices:
The Office of Company for the Transaction is: Inapplicable, Company is not a
Multibranch Party.
The Office of JPMorgan for the Transaction is: New York
JPMorgan Chase Bank, N.A.
London Branch
P.O. Box 161
60 Victoria Embankment
London EC4Y 0JP
England
7. Notices: For purposes of this Confirmation:
(a) Address for notices or communications to Company:
000 Xxxxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attention: Treasurer
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
Address for notices or communications to JPMorgan:
JPMorgan Chase Bank, N.A.
000 Xxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attention: Xxxxx X. Xxxxx
EDG Corporate Marketing
Telephone No: (000) 000-0000
Facsimile No: (000) 000-0000
8. Representations and Warranties of the Company and Other Matters
(a) The Company hereby represents and warrants to JPMorgan that the
Company and each of its subsidiaries have been duly organized and
are validly existing and in good standing under the laws of their
respective jurisdictions of organization, are duly qualified to do
business and are in good standing in each jurisdiction in which
their respective ownership or lease of property or the conduct of
their respective businesses requires such qualification, and have
all power and authority necessary to own or hold their respective
properties and to conduct the businesses in which they are engaged,
except where the failure to be so qualified or have such power or
authority would not, individually or in the aggregate, have a
material adverse effect on the business, properties,
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management, financial position, results of operations or prospects
of the Company and its subsidiaries taken as a whole or on the
performance by the Company of its obligations under the Transaction
(a "Material Adverse Effect").
(b) The Company hereby represents and warrants to JPMorgan that the
Company has all necessary corporate power and authority to execute,
deliver and perform its obligations in respect of this Transaction;
such execution, delivery and performance have been duly authorized
by all necessary corporate action on the Company's part; and this
Confirmation has been duly and validly executed and delivered by the
Company and constitutes its valid and binding obligation,
enforceable against the Company in accordance with its terms,
subject to applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and similar laws affecting creditors'
rights and remedies generally, and subject, as to enforceability, to
general principles of equity, including principles of commercial
reasonableness, good faith and fair dealing (regardless of whether
enforcement is sought in a proceeding at law or in equity) and
except that rights to indemnification and contribution thereunder
may be limited by federal or state securities laws or public policy
relating thereto.
(c) The Company hereby represents and warrants to JPMorgan that neither
the Company nor any of its subsidiaries is (i) in violation of its
charter or by-laws or similar organizational documents; (ii) in
default, and no event has occurred that, with notice or lapse of
time or both, would constitute such a default, in the due
performance or observance of any term, covenant or condition
contained in any indenture, mortgage, deed of trust, loan agreement
or other agreement or instrument to which the Company or any of its
subsidiaries is a party or by which the Company or any of its
subsidiaries is bound or to which any of the property or assets of
the Company or any of its subsidiaries is subject; or (iii) in
violation of any applicable law or statute or any judgment, order,
rule or regulation of any court or arbitrator or governmental or
regulatory authority having jurisdiction over the Company or any of
its subsidiaries or any of their properties, as applicable, except,
in the case of clauses (ii) and (iii) above, for any such default or
violation that would not, individually or in the aggregate, have a
Material Adverse Effect.
(d) The Company hereby represents and warrants to JPMorgan that the
execution, delivery and performance by the Company of this
Confirmation and compliance by the Company with the terms hereof and
the consummation of the Transaction will not (i) conflict with or
result in a breach or violation of any of the terms or provisions
of, or constitute a default under, or result in the creation or
imposition of any lien, charge or encumbrance upon any property or
assets of the Company or any of its subsidiaries pursuant to, any
indenture, mortgage, deed of trust, loan agreement (including but
not limited to the Credit Agreement dated as of December 23, 2004
among the Counterparty, as borrower, the several lenders from time
to time thereto and JPMorgan, as administrative agent) or other
agreement or instrument to which the Company or any of its
subsidiaries is a party or by which the Company or any of its
subsidiaries is bound or to which any of the property or assets of
the Company or any of its subsidiaries is subject, (ii) result in
any violation of the provisions of the charter or by-laws or similar
organizational documents of the Company or any of its subsidiaries
or (iii) result in the violation of any applicable law or statute or
any judgment, order, rule or regulation of any court or arbitrator
or governmental or regulatory authority having jurisdiction over the
Company or any of its subsidiaries or any of their properties, as
applicable, except, in the case of clauses (i) and (iii) above, for
any such conflict, breach or violation that would not, individually
or in the aggregate, have a Material Adverse Effect.
(e) The Company hereby represents and warrants to JPMorgan that the
Shares of the Company initially issuable upon exercise of the
Warrant by the net share settlement method (the "Warrant Shares")
have been reserved for issuance by all required corporate action of
the Company. The Warrant Shares have been duly authorized and, when
delivered against payment therefor (which may include Net Share
Settlement in lieu of cash) and otherwise as contemplated by the
terms of the Warrant following the exercise of the Warrant in
accordance with the terms and conditions of
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the Warrant, will be validly issued, fully-paid and non-assessable,
and the issuance of the Warrant Shares will not be subject to any
preemptive or similar rights.
(f) The Company hereby represents and warrants to JPMorgan that except
as set forth or incorporated by reference in the Company's Annual
Report on Form 10-K for the year ended December 31, 2003 (the
"Company's 10-K"), as updated by any subsequent filings, there are
no legal, governmental or regulatory investigations, actions, suits
or proceedings pending to which the Company or any of its
subsidiaries is or may be a party or to which any property of the
Company or any of its subsidiaries is or may be the subject that,
individually or in the aggregate, if determined adversely to the
Company or any of its subsidiaries, could reasonably be expected to
have a Material Adverse Effect; and no such investigations, actions,
suits or proceedings are threatened or, to the knowledge of the
Company, are contemplated by any governmental or regulatory
authority or threatened in writing by others.
(g) The Company hereby represents and warrants to JPMorgan that the
Company's 10-K, as updated by any subsequent filings, does not, as
of the Trade Date, contain an untrue statement of a material fact or
omit to state a material fact required to be stated therein or
necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading.
(h) The Company hereby represents and warrants to JPMorgan that it is an
"eligible contract participant" (as such term is defined in Section
1(a)(12) of the Commodity Exchange Act, as amended (the "CEA")
because one or more of the following is true:
The Company is a corporation, partnership, proprietorship,
organization, trust or other entity and:
(A) the Company has total assets in excess of USD 10,000,000;
(B) the obligations of Company hereunder are guaranteed, or
otherwise supported by a letter of credit or keepwell, support
or other agreement, by an entity of the type described in
Section 1a(12)(A)(i) through (iv), 1a(12)(A)(v)(I),
1a(12)(A)(vii) or 1a(12)(C) of the CEA; or
(C) the Company has a net worth in excess of USD 1,000,000 and has
entered into this Agreement in connection with the conduct of
Company's business or to manage the risk associated with an
asset or liability owned or incurred or reasonably likely to
be owned or incurred by Company in the conduct of Company's
business.
(i) The Company hereby represents and warrants to JPMorgan that neither
the Company nor any of its subsidiaries is an "investment company"
or an entity "controlled" by an "investment company" within the
meaning of the Investment Company Act of 1940, as amended, and the
rules and regulations of the Commission thereunder.
(j) The Company hereby represents and warrants to JPMorgan that the
Company and its subsidiaries possess all licenses, certificates,
permits and other authorizations issued by, and have made all
declarations and filings with, the appropriate federal, state, local
or foreign governmental or regulatory authorities that are necessary
for the ownership or lease of their respective properties or the
conduct of their respective businesses as described in the Company's
10-K, as updated by any subsequent filings, except where the failure
to possess or make the same would not, individually or in the
aggregate, have a Material Adverse Effect; and except as described
in the Company's 10-K, as updated by any subsequent filings, neither
the Company nor any of its subsidiaries has received written notice
of any revocation or modification of any such license, certificate,
permit or authorization or has any reason to believe that any such
license, certificate, permit or authorization will not be renewed in
the ordinary course.
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(k) The Company hereby represents and warrants to JPMorgan that no
order, consent, approval, license, authorization or validation of,
or filing, recording, qualification or registration with, or
exemption or waiver by, any governmental authority or other person
with responsibility for regulating gaming laws having jurisdiction
over the Company or its subsidiaries, is required for the execution,
delivery and performance by the Company of this Confirmation, other
than the Order of the West Virginia State Lottery Commission dated
and obtained December 7, 2004 and a waiver by the New Jersey Casino
Control Commission (the "New Jersey Commission") of the requirement
that JPMorgan satisfy the applicable qualification provisions of the
New Jersey Casino Control Act and the regulations promulgated
thereunder by the New Jersey Commission; further, subject to
compliance with the requirements described above, the execution,
delivery and performance of this Confirmation does not and will not
result in a violation in any material respect of any gaming law or
regulation.
(l) The Company represents and warrants to JPMorgan that each of it and
its affiliates is not, on the date hereof, in possession of any
material non-public information with respect to Company.
(m) The Company shall deliver an opinion of counsel, dated as of the
Trade Date, to JPMorgan in the forms attached as Exhibit A, Exhibit
B and Exhibit C.
(n) If the Initial Purchasers party to the Purchase Agreement among the
Company and X.X. Xxxxxx Securities Inc. and Bear, Xxxxxxx & Co., as
representatives of the Initial Purchasers, dated as of December 1,
2004, relating to the purchase of the Convertible Notes exercise
their right to receive additional Convertible Notes pursuant to the
Initial Purchasers' option to purchase additional Convertible Notes,
then, at the discretion of the Company, JPMorgan and the Company
will amend this Confirmation (substantially in the form attached as
Exhibit D to this Confirmation) to provide for such increase in
Convertible Notes (such amendment to this Confirmation to provide
for the payment by the Company to JPMorgan of the additional premium
related thereto).
9. Other Provisions:
(a) No Reliance, etc. Each party represents that (i) it is entering into
the Transaction evidenced hereby as principal (and not as agent or
in any other capacity); (ii) neither the other party or parties nor
any of its or their agents are acting as a fiduciary for it; (iii)
it is not relying upon any representations except those expressly
set forth in the Agreement or this Confirmation; (iv) it has not
relied on the other party or parties for any legal, regulatory, tax,
business, investment, financial, and accounting advice, and it has
made its own investment, hedging, and trading decisions based upon
its own judgment and not upon any view expressed by the other party
or parties or any of its or their agents; and (v) it is entering
into this Transaction with a full understanding of the terms,
conditions and risks thereof and it is capable of and willing to
assume those risks.
(b) Share De-listing Event. If at any time during the period from and
including the Trade Date, to and including the final Valuation Date,
the Shares cease to be listed or quoted on the Exchange for any
reason (other than a Merger Event as a result of which all of the
property underlying the Options consists of shares of common stock
that are listed or quoted on The New York Stock Exchange, The
American Stock Exchange or the NASDAQ National Market System (or
their respective successors) (the "Successor Exchange")) and are not
immediately re-listed or quoted as of the date of such de-listing on
the Successor Exchange, then Cancellation and Payment (as defined in
Section 9.6 of the Equity Definitions treating the "Announcement
Date" as the date of first public announcement that the Share
De-Listing will occur and the "Merger Date" as the date of the Share
De-Listing) shall apply, and the date of the de-listing shall be
deemed the date of termination for purposes of calculating any
payment due from one party to any of the others in connection with
the cancellation of this Transaction. If the Shares are immediately
re-listed on a Successor Exchange upon their de-listing from the
Exchange, this Transaction shall continue in full force and effect,
provided that the Successor Exchange shall be deemed to be the
Exchange for
8
all purposes hereunder. In addition, the Calculation Agent shall
make any adjustments it deems necessary to the terms of the
Transaction in accordance with Calculation Agent Adjustment method
as defined under Section 9.1(c) of the Equity Definitions.
(c) Repurchase Notices. Company shall, on any day on which Company
effects any repurchase of Shares, promptly give JPMorgan a written
notice of such repurchase (a "Repurchase Notice") on such day if
following such repurchase, the Warrants Equity Percentage as
determined on such day is (i) equal to or greater than 7.5% and (ii)
greater by 0.5% than the Warrants Equity Percentage included in the
immediately preceding Repurchase Notice (or, in the case of the
first such Repurchase Notice, greater than the Warrants Equity
Percentage as of the date hereof). The "Warrants Equity Percentage"
as of any day is the fraction (A) the numerator of which is the
product of the Number of Warrants and the Warrant Entitlement and
(B) the denominator of which is the number of Shares outstanding on
such day. Company agrees to indemnify and hold harmless JPMorgan and
its affiliates and their respective officers, directors, employees,
affiliates, advisors, agents and controlling persons (each, an
"Indemnified Person") from and against any and all losses (including
losses relating to JPMorgan's hedging activities as a consequence of
becoming, or of the risk of becoming, a Section 16 "insider",
including without limitation, any forbearance from hedging
activities or cessation of hedging activities and any losses in
connection therewith with respect to this Transaction), claims,
damages, judgments, liabilities and expenses (including reasonable
attorney's fees), joint or several, which an Indemnified Person
actually may become subject to, a result of Company's failure to
provide JPMorgan with a Repurchase Notice on the day and in the
manner specified in this Section 9(c), and to reimburse, within 30
days, upon written request, each of such Indemnified Persons for any
reasonable legal or other expenses incurred in connection with
investigating, preparing for, providing testimony or other evidence
in connection with or defending any of the foregoing. If any suit,
action, proceeding (including any governmental or regulatory
investigation), claim or demand shall be brought or asserted against
the Indemnified Person, such Indemnified Person shall promptly
notify the Company in writing, and the Company, upon request of the
Indemnified Person, shall retain counsel reasonably satisfactory to
the Indemnified Person to represent the Indemnified Person and any
others the Company may designate in such proceeding and shall pay
the fees and expenses of such counsel related to such proceeding.
Company shall not be liable for any settlement of any proceeding
effected without its written consent, but if settled with such
consent or if there be a final judgment for the plaintiff, Company
agrees to indemnify any Indemnified Person from and against any loss
or liability by reason of such settlement or judgment. Company shall
not, without the prior written consent of the Indemnified Person,
effect any settlement of any pending or threatened proceeding in
respect of which any Indemnified Person is or could have been a
party and indemnity could have been sought hereunder by such
Indemnified Person, unless such settlement includes an unconditional
release of such Indemnified Person from all liability on claims that
are the subject matter of such proceeding on terms reasonably
satisfactory to such Indemnified Person. If the indemnification
provided for in this paragraph (c) is unavailable to an Indemnified
Person or insufficient in respect of any losses, claims, damages or
liabilities referred to therein, then Company under such paragraph,
in lieu of indemnifying such Indemnified Person thereunder, shall
contribute to the amount paid or payable by such Indemnified Person
as a result of such losses, claims, damages or liabilities. The
remedies provided for in this paragraph (c) are not exclusive and
shall not limit any rights or remedies which may otherwise be
available to any Indemnified Person at law or in equity. The
indemnity and contribution agreements contained in this paragraph
(c) shall remain operative and in full force and effect regardless
of the termination of this Transaction.
(d) Regulation M. The Company was not on the Trade Date and is not on
the date hereof engaged in a distribution, as such term is used in
Regulation M under the Securities Exchange Act of 1934, as amended
("Exchange Act"), of any securities of Company, other than a
distribution of securities meeting the requirements of the exception
set forth in sections 101(b)(10) and 102(b)(7) of Regulation M. The
Company shall not, until the fifth Exchange Business Day immediately
following the Trade Date, engage in any such distribution.
9
(e) No Manipulation. The Company is not entering into this Transaction
to create actual or apparent trading activity in the Shares (or any
security convertible into or exchangeable for the Shares) or to
raise or depress or otherwise manipulate the price of the Shares (or
any security convertible into or exchangeable for the Shares).
(f) Board Authorization. Company represents that it is entering into the
Transaction, solely for the purposes stated in the board resolution
authorizing this Transaction and in its public disclosure. Company
further represents that there is no internal policy, whether written
or oral, of Company that would prohibit Company from entering into
any aspect of this Transaction, including, but not limited to, the
purchases of Shares to be made pursuant hereto.
(g) Transfer or Assignment. Company may not transfer any of its rights
or obligations under this Transaction without the prior written
consent of JPMorgan. JPMorgan may transfer or assign all or any
portion of its rights or obligations under this Transaction without
consent of the Company. If JPMorgan, in its sole discretion,
determines that its "beneficial ownership" (within the meaning of
Section 16 of the Exchange Act and rules promulgated thereunder)
exceeds 8% or more of the Company's outstanding Shares and, in its
sole discretion, JPMorgan is unable after its commercially
reasonable efforts to effect a transfer or assignment on pricing
terms and in a time period reasonably acceptable to JPMorgan that
would reduce its "beneficial ownership" to 7.5%, JPMorgan may
designate any Exchange Business Day as an Early Termination Date
with respect to a portion (the "Terminated Portion") of this
Transaction, such that the its "beneficial ownership" following such
partial termination will be equal to or less than 8%. In the event
that JPMorgan 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 Warrants equal to the
Terminated Portion, (ii) the Company and JPMorgan shall both be
Affected Parties with respect to such partial termination and (iii)
such Transaction shall be the only Terminated Transaction. For the
avoidance of doubt, if JPMorgan assigns or terminates any Warrants
hereunder, each Daily Number of Warrants not previously settled
shall be reduced proportionally, as calculated by the Calculation
Agent. Notwithstanding any other provision in this Confirmation to
the contrary requiring or allowing JPMorgan to purchase, sell,
receive or deliver any shares or other securities to or from
Company, JPMorgan may designate any of its affiliates to purchase,
sell, receive or deliver such shares or other securities and
otherwise to perform JPMorgan's obligations in respect of this
Transaction and any such designee may assume such obligations.
JPMorgan shall be discharged of its obligations to Company to the
extent of any such performance.
(h) Amendment. Paragraph (i) of Section 9.7(b) of the Equity Definitions
is hereby amended for purposes of this Transaction by replacing
"two-year" with "90 calendar day".
(i) Damages. Neither party shall be liable under Section 6.10 of the
Equity Definitions for special, indirect or consequential damages,
even if informed of the possibility thereof.
(j) Dividends. If at any time during the period from and including the
Trade Date, to but excluding the Expiration Date, an ex-dividend
date for a cash dividend occurs with respect to the Shares (an
"Ex-Dividend Date"), and that dividend is greater than the Regular
Dividend on a per Share basis then the Calculation Agent will adjust
the Strike Price to preserve the fair value of the Warrant to
JPMorgan after taking into account such dividend. "Regular Dividend"
shall mean USD 0.00 per Share per quarter.
(k) Role of Agent. Each party agrees and acknowledges that (i) X.X.
Xxxxxx Securities Inc., an affiliate of JPMorgan ("JPMSI"), has
acted solely as agent and not as principal with respect to this
Transaction and (ii) JPMSI has no obligation or liability, by way of
guaranty, endorsement or otherwise, in any manner in respect of this
Transaction (including, if applicable, in respect of the settlement
thereof). Each party agrees it will look solely to the other party
(or any guarantor in respect thereof) for performance of such other
party's obligations under this Transaction.
10
(l) Additional Provisions.
---------------------
(i) The first paragraph of Section 9.1(c) of the Equity Definitions
is hereby amended to read as follows: (c) `If "Calculation Agent
Adjustment" is specified as the method of adjustment in the
Confirmation of a Share Option Transaction, then following the
declaration by the Issuer of the terms of any Potential Adjustment
Event, the Calculation Agent will determine whether such Potential
Adjustment Event has a material effect on the theoretical value of
the relevant Shares or Warrants and, if so, will (i) make
appropriate adjustment(s), if any, to any one or more of:' and, the
sentence immediately preceding Section 9.1(c)(ii) is hereby amended
by deleting the words "diluting or concentrative".
(ii) Section 9.1(e)(vi) of the Equity Definitions is hereby amended
by deleting the words "other similar" between "any" and "event";
deleting the words "diluting or concentrative" and replacing them
with "material"; and adding the following words at the end of the
sentence "or Warrants".
(iii) Section 9.6(a)(ii) of the Equity Definitions is hereby amended
by (1) deleting from the third line thereof the word "or" after the
word "official" and inserting a comma therefor, and (2) deleting the
period at the end of subsection (ii) thereof and inserting the
following words therefor " or (C) at JPMorgan's option, the
occurrence of any of the events specified in Section 5(a)(vii) (1)
through (9) of the ISDA Master Agreement with respect to that
Issuer."
(iv) Notwithstanding Section 9.7 of the Equity Definitions,
everything in the first paragraph of Section 9.7(b) of the Equity
Definitions after the words "Calculation Agent" in the third line
through the remainder of such Section 9.7 shall be deleted and
replaced with the following:
"based on an amount representing the Calculation Agent's
determination of the fair value to Buyer of an option with terms
that would preserve for Buyer the economic equivalent of any payment
or delivery (assuming satisfaction of each applicable condition
precedent) by the parties in respect of the relevant Transaction
that would have been required after that date but for the occurrence
of the Merger Event, Nationalization, Insolvency or De-Listing
Event, as the case may be."
(m) No Collateral, Netting or Setoff. Notwithstanding any provision of
the Agreement or any other agreement between the parties to the
contrary, the obligations of the Company hereunder are not secured
by any collateral. Obligations under this Transaction shall not be
netted or set off against any other obligations of the parties,
whether arising under the Agreement, this Confirmation, under any
other agreement between the parties hereto, by operation of law or
otherwise. Any provision in the Agreement with respect to the
satisfaction of the Company's payment obligations to the extent of
JPMorgan's payment obligations to the Company in the same currency
and in the same Transaction (including, without limitation Section
2(c) thereof) shall not apply to the Company and, for the avoidance
of doubt, the Company shall fully satisfy such payment obligations
notwithstanding any payment obligation to the Company by JPMorgan in
the same currency and in the same Transaction. In calculating any
amounts under Section 6(e) of the Agreement, notwithstanding
anything to the contrary in the Agreement, (i) separate amounts
shall be calculated as set forth in such Section 6(e) with respect
to (a) this Transaction and (ii) all other Transactions, and (2)
such separate amounts shall be payable pursuant to Section 6(d)(ii)
of the Agreement.
(n) Alternative Calculations and Payment on Early Termination and on
Certain Extraordinary Events. If, in respect of this Transaction, an
amount is payable by the Company to JPMorgan, (i) pursuant to
Section 9.7 of the Equity Definitions (except in the event of a
Nationalization or Insolvency or a Merger Event, in each case, in
which the consideration to be paid to holders of Shares consists
solely of cash) or (ii) pursuant to Section 6(d)(ii) of the
Agreement (except in the event of an Event of Default in which
Company is the Defaulting Party or a Termination Event in which
Company is the Affected Party, other than an Event of Default of the
type described in
11
Section 5(a)(iii), (v), (vi) or (vii) of the Agreement or a
Termination Event of the type described in Section 5(b)(i), (ii),
(iii), (iv),(v) or (vi) of the Agreement that resulted from an event
or events outside Company's control) (a "Payment Obligation"),
Company may, in its sole discretion, satisfy any such Payment
Obligation by the Share Termination Alternative (as defined below)
and shall give irrevocable telephonic notice to JPMorgan, confirmed
in writing within one Currency Business Day, between the hours of
9:00 a.m. and 4:00 p.m. New York local time on the Merger Date, the
date of the occurrence of the Nationalization or Insolvency, or
Early Termination Date, as applicable ("Notice of Share
Termination"). Upon Notice of Share Termination no later than 8:00
a.m. on the Exchange Business Day immediately following the Merger
Date, the date of the occurrence of the Nationalization or
Insolvency, or Early Termination Date, as applicable, the following
provisions shall apply:
Share Termination Alternative: Applicable and means that Company
shall deliver to JPMorgan the Share
Termination Delivery Property on the
date (the "Share Termination Payment
Date") when the Payment Obligation
would otherwise be due, subject to
paragraph (o)(i) below, in
satisfaction, subject to paragraph
(o)(ii) below, of the Payment
Obligation in the manner reasonably
requested by JPMorgan free of
payment.
Share Termination Delivery A number of Share Termination
Property: Delivery Units, as calculated by the
Calculation Agent, equal to the
Payment Obligation divided by the
Share Termination Unit Price. The
Calculation Agent shall adjust the
Share Termination Delivery Property
by replacing any fractional portion
of a security therein with an amount
of cash equal to the value of such
fractional security based on the
values used to calculate the Share
Termination Unit Price.
Share Termination Unit Price: The value to JPMorgan of property
contained in one Share Termination
Delivery Unit on the date such Share
Termination Delivery Units are to be
delivered as Share Termination
Delivery Property, as determined by
the Calculation Agent in its
discretion by commercially reasonable
means and notified by the Calculation
Agent to Company at the time of
notification of the Payment
Obligation. In the case of a Private
Placement of Share Termination
Delivery Units that are Restricted
Shares (as defined below) as set
forth in paragraph (o)(i) below, the
Share Termination Unit Price shall be
determined by the discounted price
applicable to such Share Termination
Delivery Units. In the case of a
Registered Settlement of Share
Termination Delivery Units that are
Restricted Shares (as defined below)
as set forth in paragraph (o)(ii)
below, the Share Termination Unit
Price shall be the Settlement Price
on the Merger Date, the date of the
occurrence of the Nationalization or
Insolvency, or Early Termination
Date, as applicable.
Share Termination Delivery In the case of a Termination Event or
Unit: Event of Default, one Share or, in
the case of Nationalization or
Insolvency or a Merger Event, a unit
consisting of
12
the number or amount of each type of
property received by a holder of one
Share (without consideration of any
requirement to pay cash or other
consideration in lieu of fractional
amounts of any securities) in such
Nationalization or Insolvency or such
Merger Event. If a Share Termination
Delivery Unit consists of property
other than cash or New Shares, the
Calculation Agent will replace such
property with cash, New Shares or a
combination thereof as components of
a Share Termination Delivery Unit in
such amounts, as determined by the
Calculation Agent in its discretion
by commercially reasonable means, as
shall have a value equal to the value
of the property so replaced. If such
Merger Event involves a choice of
consideration to be received by
holders, such holder shall be deemed
to have elected to receive the
maximum possible amount of cash.
Other applicable provisions: If this Transaction is to be Share
Termination Settled, the provisions
of Sections 6.6, 6.7, 6.8, 6.9 and
6.10 (as modified above) of the
Equity Definitions will be
applicable, except that all
references in such provisions to
"Physically-Settled" shall be read as
references to "Share Termination
Settled" and all references to
"Shares" shall be read as references
to "Share Termination Delivery
Units". "Share Termination Settled"
in relation to this Transaction means
that Share Termination Settlement is
applicable to this Transaction.
(o) Registration/Private Placement Procedures. If, in the reasonable
opinion of JPMorgan, following any delivery of Shares or Share
Termination Delivery Property to JPMorgan hereunder, such Shares or
Share Termination Delivery Property would be in the hands of
JPMorgan subject to any applicable restrictions with respect to any
registration or qualification requirement or prospectus delivery
requirement for such Shares or Share Termination Delivery Property
pursuant to any applicable federal or state securities law
(including, without limitation, any such requirement arising under
Section 5 of the Securities Act as a result of such Shares or Share
Termination Delivery Property being "restricted securities", as such
term is defined in Rule 144 under the Securities Act, or as a result
of the sale of such Shares or Share Termination Delivery Property
being subject to paragraph (c) of Rule 145 under the Securities Act)
(such Shares or Share Termination Delivery Property, "Restricted
Shares"), then delivery of such Restricted Shares shall be effected
pursuant to either clause (i) or (ii) below at the election of
Company, unless waived by JPMorgan. Notwithstanding the foregoing,
solely in respect of any Daily Number of Warrants exercised or
deemed exercised on any Expiration Date, the Company shall elect,
prior to the first Settlement Date for the first Expiration Date, a
Private Placement Settlement or Registered Settlement for all
deliveries of Restricted Shares for all such Expiration Dates which
election shall be applicable to all Settlement Dates for such Daily
Number of Warrants and the procedures in clause (i) or clause (ii)
below shall apply for all such delivered Restricted Shares on an
aggregate basis commencing after the final Settlement Date for such
Daily Number of Warrants. The Calculation Agent shall make
reasonable adjustments to settlement terms and provisions under this
Confirmation to reflect a single Private Placement or Registered
Settlement for such aggregate Restricted Shares delivered hereunder.
13
(i) If the Company elects to settle the Transaction pursuant to
this clause (i) (a "Private Placement Settlement"), then
delivery of Restricted Shares by the Company shall be
effected in customary private placement procedures with
respect to such Restricted Shares reasonably acceptable to
JPMorgan; provided that the Company may not elect a Private
Placement Settlement if, on the date of its election, it has
taken, or caused to be taken, any action that would make
unavailable either the exemption pursuant to Section 4(2) of
the Securities Act for the sale by the Company to JPMorgan
(or any affiliate designated by JPMorgan) of the Restricted
Shares or the exemption pursuant to Section 4(1) or Section
4(3) of the Securities Act for resales of the Restricted
Shares by JPMorgan (or any such affiliate of JPMorgan). The
Private Placement Settlement of such Restricted Shares shall
include customary representations, covenants, blue sky and
other governmental filings and/or registrations, indemnities
to JPMorgan, due diligence rights (for JPMorgan or any
designated buyer of the Restricted Shares by JPMorgan),
opinions and certificates, and such other documentation as is
customary for private placement agreements, all reasonably
acceptable to JPMorgan. In the case of a Private Placement
Settlement, JPMorgan shall determine the appropriate discount
to the Share Termination Unit Price (in the case of
settlement of Share Termination Delivery Units pursuant to
paragraph (n) above) or any Settlement Price (in the case of
settlement of Shares pursuant to Section 2 above) applicable
to such Restricted Shares in a commercially reasonable manner
and appropriately adjust the amount of such Restricted Shares
to be delivered to JPMorgan hereunder; provided that in no
event shall such number be greater than 49,619,010 (the
"Maximum Amount"). Notwithstanding the Agreement or this
Confirmation, the date of delivery of such Restricted Shares
shall be the Exchange Business Day following notice by
JPMorgan to the Company, of such applicable discount and the
number of Restricted Shares to be delivered pursuant to this
clause (i). For the avoidance of doubt, delivery of
Restricted Shares shall be due as set forth in the previous
sentence and not be due on the Share Termination Payment Date
(in the case of settlement of Share Termination Delivery
Units pursuant to paragraph (n) above) or on the Settlement
Date for such Restricted Shares (in the case of settlement of
Shares pursuant to Section 2 above).
In the event of a Private Placement, the Net Share Settlement
Amount or the Payment Obligation, respectively, shall be
deemed to be the Net Share Settlement Amount or the Payment
Obligation, respectively, plus an additional amount
(determined from time to time by the Calculation Agent in its
commercially reasonable judgment) attributable to interest
that would be earned on such Net Share Settlement Amount or
the Payment Obligation, respectively, (increased on a daily
basis to reflect the accrual of such interest and reduced
from time to time by the amount of net proceeds received by
JPMorgan as provided herein) at a rate equal to the open
Federal Funds Rate plus the Spread for the period from, and
including, such Settlement Date or the date on which the
Payment Obligation is due, respectively, to, but excluding,
the related date on which all the Restricted Shares have been
sold and calculated on an Actual/360 basis. The foregoing
provision shall be without prejudice to JPMorgan's rights
under the Agreement (including, without limitation, Sections
5 and 6 thereof).
As used in this Section 9(o)(i), "Spread" means, with respect
to any Net Share Settlement Amount or Payment Obligation,
respectively, the credit spread over the applicable overnight
rate that would be imposed if JPMorgan were to extend credit
to Company in an amount equal to such Net Share Settlement
Amount, all as determined by the Calculation Agent using its
commercially reasonable judgment as of the related Settlement
Date or the date on which the Payment Obligation is due,
respectively. Commercial reasonableness shall take into
consideration all factors deemed relevant by the Calculation
Agent, which are expected to include, among other things, the
credit quality of the Company (and any relevant affiliates)
in the then-prevailing market and the credit spread of
similar companies in the relevant industry and other
companies having a substantially similar credit quality.
14
(ii) If the Company elects to settle the Transaction pursuant to
this clause (ii) (a "Registration Settlement"), then the
Company shall promptly (but in any event no later than the
beginning of the Resale Period) file and use its reasonable
best efforts to make effective under the Securities Act a
registration statement or supplement or amend an outstanding
registration statement in form and substance reasonably
satisfactory to JPMorgan, to cover the resale of such
Restricted Shares in accordance with customary resale
registration procedures, including covenants, conditions,
representations, underwriting discounts (if applicable),
commissions (if applicable), indemnities due diligence
rights, opinions and certificates, and such other
documentation as is customary for equity resale underwriting
agreements, all reasonably acceptable to JPMorgan. If
JPMorgan, in its sole reasonable discretion, is not satisfied
with such procedures and documentation Private Placement
Settlement shall apply. If JPMorgan is satisfied with such
procedures and documentation, it shall sell the Restricted
Shares pursuant to such registration statement during a
period (the "Resale Period") commencing on the Exchange
Business Day following delivery of such Restricted Shares
(which, for the avoidance of doubt, shall be (x) the Share
Termination Payment Date in case of settlement of Share
Termination Delivery Units pursuant to paragraph (n) above or
(y) the Settlement Date in respect of the final Expiration
Date for all Daily Number of Warrants) and ending on the
earliest of (i) the Exchange Business Day on which JPMorgan
completes the sale of all Restricted Shares or, in the case
of settlement of Share Termination Delivery Units, a
sufficient number of Restricted Shares so that the realized
net proceeds of such sales exceed the Payment Obligation (as
defined above), (ii) the date upon which all Restricted
Shares have been sold or transferred pursuant to Rule 144 (or
similar provisions then in force) or Rule 145(d)(1) or (2)
(or any similar provision then in force) under the Securities
Act and (iii) the date upon which all Restricted Shares may
be sold or transferred by a non-affiliate pursuant to Rule
144(k) (or any similar provision then in force) or Rule
145(d)(3) (or any similar provision then in force) under the
Securities Act. If the Payment Obligation exceeds the
realized net proceeds from such resale, Company shall
transfer to JPMorgan by the open of the regular trading
session on the Exchange on the Exchange Trading Day
immediately following the last day of the Resale Period the
amount of such excess (the "Additional Amount") in cash or in
a number of Shares ("Make-whole Shares") in an amount that,
based on the Settlement Price on the last day of the Resale
Period (as if such day was the "Valuation Date" for purposes
of computing such Settlement Price), has a dollar value equal
to the Additional Amount. The Resale Period shall continue to
enable the sale of the Make-whole Shares. If Company elects
to pay the Additional Amount in Shares, the requirements and
provisions for Registration Settlement shall apply. This
provision shall be applied successively until the Additional
Amount is equal to zero. In no event shall the Company
deliver a number of Restricted Shares greater than the
Maximum Amount.
(iii) Without limiting the generality of the foregoing, Company
agrees that any Restricted Shares delivered to JPMorgan, as
purchaser of such Restricted Shares, (i) may be transferred
by and among JPMorgan Chase Bank and its affiliates and
Company shall effect such transfer without any further action
by JPMorgan and (ii) after the minimum "holding period"
within the meaning of Rule 144(d) under the Securities Act
has elapsed after any Settlement Date for such Restricted
Shares, Company shall promptly remove, or cause the transfer
agent for such Restricted Shares to remove, any legends
referring to any such restrictions or requirements from such
Restricted Shares upon delivery by JPMorgan (or such
affiliate of JPMorgan) to Company or such transfer agent of
seller's and broker's representation letters customarily
delivered by JPMorgan in connection with resales of
restricted securities pursuant to Rule 144 under the
Securities Act, without any further requirement for the
delivery of any certificate, consent, agreement, opinion of
counsel, notice or any other document, any transfer tax
stamps or payment of any other amount or any other action by
JPMorgan (or such affiliate of JPMorgan).
15
If the Private Placement Settlement or the Registration Settlement
shall not be effected as set forth in clauses (i) or (ii), as
applicable, then failure to effect such Private Placement
Settlement or such Registration Settlement shall constitute an
Event of Default with respect to which Company shall be the
Defaulting Party.
(p) Limit on Beneficial Ownership. Notwithstanding any other provisions
hereof, JPMorgan may not exercise any Warrant hereunder, and
Automatic Exercise shall not apply with respect thereto, to the
extent (but only to the extent) that such receipt would result in
JPMorgan directly or indirectly beneficially owning (as such term
is defined for purposes of Section 13(d) of the Exchange Act) at
any time in excess of 9.0% of the outstanding Shares. Any purported
delivery hereunder shall be void and have no effect to the extent
(but only to the extent) that such delivery would result in
JPMorgan directly or indirectly so beneficially owning in excess of
9.0% of the outstanding Shares. If any delivery owed to JPMorgan
hereunder is not made, in whole or in part, as a result of this
provision, the Company's obligation to make such delivery shall not
be extinguished and the Company shall make such delivery as
promptly as practicable after, but in no event later than one
Business Day after, JPMorgan gives notice to the Company that such
delivery would not result in JPMorgan directly or indirectly so
beneficially owning in excess of 9.0% of the outstanding Shares.
(q) Share Deliveries. The Company acknowledges and agrees that, to the
extent the holder of this Warrant is not then an affiliate and has
not been an affiliate for 90 days (it being understood that
JPMorgan will not be considered an affiliate under this Section
9(q) solely by reason of its receipt of Shares pursuant to this
Transaction), and otherwise satisfies all holding period and other
requirements of Rule 144 of the Securities Act applicable to it,
any delivery of Shares or Share Termination Property hereunder at
any time after 2 years from the Trade Date shall be eligible for
resale under Rule 144(k) of the Securities Act and the Company
agrees to promptly remove, or cause the transfer agent for such
Shares or Share Termination Property, to remove, any legends
referring to any restrictions on resale under the Securities Act
from the Shares or Share Termination Property. The Company further
agrees, for any delivery of Shares or Share Termination Property
hereunder at any time after 1 year from the Trade Date but within 2
years of the Trade Date, to the to the extent the holder of this
Warrant then satisfies the holding period and other requirements of
Rule 144 of the Securities Act, to promptly remove, or cause the
transfer agent for such Restricted Share to remove, any legends
referring to any such restrictions or requirements from such
Restricted Shares. Such Restricted Shares will be de-legended upon
delivery by JPMorgan (or such affiliate of JPMorgan) to the Company
or such transfer agent of customary seller's and broker's
representation letters in connection with resales of restricted
securities pursuant to Rule 144 of the Securities Act, without any
further requirement for the delivery of any certificate, consent,
agreement, opinion of counsel, notice or any other document, any
transfer tax stamps or payment of any other amount or any other
action by JPMorgan (or such affiliate of JPMorgan). The Company
further agrees that any delivery of Shares or Share Termination
Delivery Property prior to the date that is 1 year from the Trade
Date, may be transferred by and among JPMorgan and its affiliates
and the Company shall effect such transfer without any further
action by JPMorgan. Notwithstanding anything to the contrary
herein, the Company agrees that any delivery of Shares or Share
Termination Delivery Property shall be effected by book-entry
transfer through the facilities of DTC, or any successor
depositary, if at the time of delivery, such class of Shares or
class of Share Termination Delivery Property is in book-entry form
at DTC or such successor depositary. Notwithstanding anything to
the contrary herein, to the extent the provisions of Rule 144 of
the Securities Act or any successor rule are amended, or the
applicable interpretation thereof by the Securities and Exchange
Commission or any court change after the Trade Date, the agreements
of the Company herein shall be deemed modified to the extent
necessary, in the opinion of outside counsel of the Company, to
comply with Rule 144 of the Securities Act, including Rule 144(k)
as in effect at the time of delivery of the relevant Shares or
Share Termination Property.
(r) Hedging Disruption Event. The occurrence of a Hedging Disruption
Event will constitute an Additional Termination Event under the
Agreement permitting JPMorgan to terminate the
16
Transaction, with Counterparty as the sole Affected Party and the
Transaction as the sole Affected Transaction.
"Hedging Disruption Event" means with respect to JPMorgan, as
determined in its reasonable discretion, the inability or
impracticality, due to market illiquidity, illegality, lack of
hedging transactions, credit worthy market participants or other
similar events, to establish, re-establish or maintain any
transactions necessary or advisable to hedge, directly or
indirectly, the equity price risk of entering into and performing
under the Transaction on terms including costs reasonable to
JPMorgan or an affiliate in its reasonable discretion, including the
event that at any time JPMorgan reasonably concludes that it or any
of its affiliates are unable to establish, re-establish or maintain
a full hedge of its position in respect of the Transaction through
share borrowing arrangements on terms including costs deemed
reasonable to JPMorgan in its reasonable discretion. For the
avoidance of doubt, the parties hereto agree that if (i) JPMorgan
reasonably determines that it is unable to borrow Shares to hedge
its exposure with respect to the Transaction at a stock loan rebate
rate equal to or in excess of zero; or (ii) the prevailing stock
loan rebate rate for the Shares, as determined by the Calculation
Agent, is less than zero, an Additional Termination Event under the
Agreement shall occur with Counterparty as the sole Affected Party
and the Transaction as the sole Affected Transaction.
(s) Gaming Laws. If, in connection with the Transaction or in
connection with acquiring, establishing, re-establishing,
substituting, maintaining, unwinding or disposing of any
transactions or assets JPMorgan or any of its affiliates in its
reasonable discretion deems necessary or desirable to hedge the
equity price risk of entering into and performing its obligations
with respect to the Transaction, or in performing such obligations
themselves, or in connection with holding any interest that would
be considered an ownership interest in the Company's securities for
purposes of any gaming law, rule or regulation, JPMorgan or any of
its affiliates determines in its sole good faith discretion that it
is, or is reasonably likely to be, (A) in violation of any gaming
law, rule or regulation, (B) obligated to register with or provide
notification or information to any gaming authority, and that such
registration or notification or the provision of such information,
when viewed in the aggregate for all relevant gaming authorities,
would be Unduly Burdensome, or (C) incurring additional risk,
liability or cost as a result of gaming laws or rules or
regulations (except to the extent such costs have been paid or
reimbursed by the Company, and except for up to $250,000 of costs
that have not yet been paid or reimbursed by the Company but are
paid or reimbursed by the Company within 60 days following the
Company's receipt of an invoice therefor); then, subject to the
third following paragraph, such event shall constitute an
Additional Termination Event applicable to this Transaction and,
with respect to such event, (i) the Company shall be deemed to be
the sole Affected Party and JPMorgan shall be deemed to be the
party that is not the Affected Party and (ii) JPMorgan shall be the
party entitled to designate an Early Termination Date pursuant to
Section 6(b) of the Agreement solely with respect to this
Transaction. The Company shall indemnify JPMorgan and its
affiliates on an as-incurred basis for any costs, expenses, losses
or liabilities or losses incurred by them in connection with any
gaming law, rule or regulation (including, for the avoidance of
doubt, any filing fees or costs, legal fees and regulatory
investigation fees), in each case incurred in connection with this
Transaction.
Any determination made by JPMorgan in respect of clause (A) or (C),
or (B) (as to the obligation to register or provide notification or
information), above shall be made on the advice of counsel, and any
determination made by JPMorgan in respect of clause (C) above shall
also be made after consultation with the Company.
"Unduly Burdensome" means (i) any registration or notification or
provision of information which is more burdensome to JPMorgan or
any of its affiliates or any of their employees, officers,
directors and agents in any particular instance than any of the
Known Filings, (ii) registrations, notifications or provision of
information to in excess of 20 jurisdictions, (iii) any obligation
to disclose information which JPMorgan and/or any of its affiliates
is not otherwise required to disclose to the general public in
generally available filings (other than information that is readily
and generally publicly available) or to disclose any information
earlier or more frequently than it otherwise does or would
otherwise be obligated to do, or (iv) any registration of,
or provision of
17
information by or in respect of, any employee, officer or director
or agents of JPMorgan or any of its affiliates, other than the
provision of such information as JPMorgan and/or any of its
affiliates is otherwise required to disclose to the general public
in generally available filings and other readily and generally
publicly available information, or (v) any requirement in respect
of the gaming laws of any jurisdiction which, in the sole good
faith discretion of JPMorgan, would cause undue hardship on, injury
to the business or reputation of, or disclosure of confidential
information of JPMorgan or any of its affiliates or any of their
employees, officers, directors and agents. "Known Filings" means
initial filings with the States of New Jersey and West Virginia in
form and substance contemplated by JPMorgan as of December 1, 2004.
Prior to declaring an Additional Termination Event with respect to
the events described in clause (B) or (C) above, JPMorgan shall use
commercially reasonable efforts to transfer or assign all or a
portion of this Transaction to any third party or parties each with
a rating for its long term, unsecured and unsubordinated
indebtedness of A+ or better by Standard and Poor's Rating Group,
Inc. or its successor ("S&P"), or A1 or better by Xxxxx'x Investor
Service, Inc. or its successor ("Moody's") or, if either S&P or
Moody's ceases to rate such debt, at least an equivalent rating or
better by a substitute agency rating mutually agreed by the Company
and JPMorgan. If, in the discretion of JPMorgan, JPMorgan is unable
to effect such transfer or assignment after its commercially
reasonable efforts on pricing terms reasonably acceptable to
JPMorgan and within a time period reasonably acceptable to
JPMorgan, JPMorgan may designate any Exchange Business Day as an
Early Termination Date.
Notwithstanding any provision of the Agreement or any other
agreement between the parties to the contrary, if, with respect to
any Transaction relating to Shares under another 2002 ISDA Master
Agreement between JPMorgan and the Company (any such other
Transaction, an "Other Transaction"), JPMorgan or its successor or
assign designates an Early Termination Date thereunder due to the
occurrence of an Additional Termination Event substantially similar
to the Additional Termination Event set forth in this Section 9(s),
and JPMorgan does not deliver a notice designating an Early
Termination Date in respect of this Transaction due to the
occurrence of the Additional Termination Event set forth in this
Section 9(s) within 5 Exchange Business Days of the date of
delivery of the notice designating an Early Termination Date in
respect of any Other Transaction, then the Company has the right to
deliver a written notice to JPMorgan instructing JPMorgan to
designate an Early Termination Date under the Agreement with
respect to this Transaction. JPMorgan hereby agrees to comply with
such instruction and, for the avoidance of doubt, such event shall
constitute an Additional Termination Event applicable solely with
respect to this Transaction and the Company shall be deemed to be
the sole Affected Party and JPMorgan shall be deemed to be the
party that is not the Affected Party. For the avoidance of doubt,
the parties hereto agree that the occurrence of any event which
constitutes an Additional Termination Event as set forth in this
Section 9(s) will also constitute an Additional Termination Event
with respect to any Other Transactions the confirmation for which
contains an Additional Termination Event substantially similar to
that set forth in this Section 9(s), such that JPMorgan has the
right to declare an Additional Termination Event in respect of such
Other Transaction and this Transaction.
(t) Governing Law. New York law (without reference to choice of law
doctrine).
(u) Waiver of Jury Trial. Each party waives, to the fullest extent
permitted by applicable law, any right it may have to a trial by
jury in respect of any suit, action or proceeding relating to this
Transaction. Each party (i) certifies that no representative, agent
or attorney of the other party has represented, expressly or
otherwise, that such other party would not, in the event of such a
suit, action or proceeding, seek to enforce the foregoing waiver
and (ii) acknowledges that it and the other party have been induced
to enter into this Transaction, as applicable, by, among other
things, the mutual waivers and certifications provided herein.
(v) Tax Disclosure. Company acknowledges and understands that, in
connection with certain disclosure and list maintenance regulations
promulgated by the Internal Revenue Service (the "IRS"), JPMorgan
will retain documents related to this Transaction and other
information. The
18
relevant regulations cover many transactions, including certain
transactions that create book-tax differences. Upon request from
the IRS, JPMorgan expects to provide such documents and information
to the IRS. In addition, Company shall consult with its tax
advisors with respect to any disclosure obligations that Company
may have.
19
Please confirm that the foregoing correctly sets forth the terms of our
agreement by executing this Confirmation and returning it to EDG Confirmation
Group, X.X. Xxxxxx Securities Inc., 000 Xxxx Xxxxxx, 00xx Xxxxx, Xxx Xxxx, XX
00000-0000, or by fax on 000 000 0000.
Very truly yours,
X.X. Xxxxxx Securities Inc., as
agent for JPMorgan Chase Bank, N.A.
By: _________________________
Authorized Signatory
Name:
Accepted and confirmed
as of the Trade Date:
Scientific Games Corporation
By:____________________________
Authorized Signatory
Name:
ANNEX A
PRICING GRID
Execution Price Premium Execution Price Premium
--------------- ------- --------------- -------
$22.00 $1,407,265.00 $24.00 $1,810,504.50
$22.10 $1,426,331.00 $24.10 $1,831,846.00
$22.20 $1,445,515.00 $24.20 $1,853,296.50
$22.30 $1,464,816.50 $24.30 $1,874,856.00
$22.40 $1,484,235.50 $24.40 $1,896,523.50
$22.50 $1,503,771.00 $24.50 $1,918,298.00
$22.60 $1,523,423.00 $24.60 $1,940,180.50
$22.70 $1,543,190.50 $24.70 $1,962,169.00
$22.80 $1,563,073.50 $24.80 $1,984,264.00
$22.90 $1,583,071.50 $24.90 $2,006,465.00
$23.00 $1,603,183.50 $25.00 $2,028,771.00
$23.10 $1,623,410.00 $25.10 $2,051,182.00
$23.20 $1,643,750.00 $25.20 $2,073,697.50
$23.30 $1,664,203.00 $25.30 $2,096,317.00
$23.40 $1,684,769.00 $25.40 $2,119,039.50
$23.50 $1,705,447.00 $25.50 $2,141,865.50
$23.60 $1,726,236.50 $25.60 $2,164,793.50
$23.70 $1,747,138.00 $25.70 $2,187,824.00
$23.80 $1,768,149.50 $25.80 $2,210,956.00
$23.90 $1,789,274.00 $25.90 $2,234,189.00
