Exhibit 10.50
OTC Issuer Stock Option Master Agreement
TERMS AND CONDITIONS
The terms and conditions below shall govern all transactions in Options
(as hereinafter defined) between Xxxxxxx Xxxxx & Co. ("GS&Co.") and the
undersigned (the Company). These terms and conditions are collectively referred
to as the "Agreement". Please acknowledge your agreement to and acceptance of
this Agreement by signing and returning the enclosed copy hereof. Until the
signed copy of this Agreement is received, any Option transactions entered into
between the Company and GS&Co. shall nevertheless be governed hereby.
1. Definitions.
(a) American Option: An Option which may be exercised on any Business Day,
except an the Expiration Date, between the hours of 9:00 A.M. and 2:30 PM. Now
York time, and on the Expiration Date between the hours of 9:00 A.M. and 4:30
P.M., New York time,
(b) Averaging Period: The number of consecutive Business Days indicated in the
Confirmation beginning on and including the Exercise Date,
(c) Business Day: Any day that (1) Federal Reserve Member Banks in New York, NY
are open for business, and (2) the primary market for trading the Option
Securities Is (or, but for the existence of a Market Disruption Event, would be)
open for business.
(d) Confirmation: The written evidence of an Option delivered by GS&CO, to the
Company, containing the specific terms with respect thereto. Each Confirmation,
signed by both the Company and GS&CO , together with this Agreement, shall
constitute the written agreement between the Company and GS&Co. with respect to
such Option. GS&Co. shall send the Confirmation to the Company by facsimile. on
the Trade Date and the Company shall immediately review the terms thereof for
accuracy and, if accurate, countersign and return the Confirmation (by
facsimile) to GS&Co. If the Confirmation is inaccurate, GS&Co. will promptly
correct the Confirmation and resend it to the Company for signature. Such
confirmation delivered by GS&Co. together with this Agreement shall constitute
the written agreement between the Company and GS&Co. with respect to such option
unless the Company notifies GS&Co. within three Business Days of its objections
to that Confirmation.
(e) Contracts: The 'Trading Unit" of an Option, consisting Initially of 100
shares of the Option Security, subject to adjustment as provided in Section 2.
(f) Early Termination Amount: The net amount payable by one party to the other,
calculated by the Non-Defaulting party by aggregating and setting-off, as
applicable:
(i) the outstanding payments due (or that would have been due but for
Section 6) under this Agreement to each party immediately prior to
the Early Termination Date;
(ii) the Replacement Value of Options to be settled under Section 9
which are unexercised immediately prior to the Early Termination Date;
(iii) the Non-Defaulting Party's Other Expenses; and
(iv) at the option of the Non-Defaulting party, any cash collateral or
the liquidation value of non-cash collateral.
(g) European Option, An Option which may be exercised only on the Expiration
Date between the hours of 9:00 A.M. and 4:30 PM. New York time.
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(h) Exercise Date; The Business Day on which exercise of an Option is, or is
deemed to be, effective.
(i)Exercise Price: The price per share, as set forth in a Confirmation, at which
an Option Security may be purchased or sold or otherwise settled upon exercise
of the related Option.
(j) Expiration Date: For an Option means 4:30 PM., New York time, on the date
identified as the Expiration Oats in the related Confirmation, at which time, if
an Option has not been exercised, the rights granted to the holder thereunder
expire and the Option is deemed terminated. If an Expiration Date is not a
Business Day, then the next succeeding Business Day shall be deemed to be the
Expiration Date for such Option.
(k) Major Dealer: A securities broker/dealer or bank other than an affiliate of
the Non-Defaulting Party selected by the Non-Defaulting Party, which has a net
worth of at least U.S.$200,000,000 (or its equivalent) and regularly makes
markets in Options on securities and indices,
(1) Market Disruption Event: The occurrence during the half hour period
immediately prior to the time at which valuation will take place of the material
suspension or material limitation of trading in (i) Option Securities on the
primary market or (ii) options or futures on Option Securities on the primary
market or on any other exchange on which such options or futures are traded. For
the purposes of this definition, (iii) a limitation on the hours and number of
days of trading will not constitute a Market Disruption Event if it results from
an announced change in the regular business hours of the primary market or other
relevant exchange and (iv) a limitation on trading imposed during the course of
a day by reason of movements in price otherwise exceeding levels permitted by
the primary market or other relevant stock exchange may, if GS&Co. so
determines, constitute a Market Disruption Event.
(m) Market Price; The closing sale price (or, if no closing sale price is
reported, the average of the bid and asked prices) reported on the Now York
Stock exchange or, in the event the Option Security is not listed on the New
York Stock Exchange, such other national or regional stock exchange upon which
the Option Security Is listed and principally traded. If the Option Security is
not listed on a national or regional securities exchange, then the Market Price
will be the average of the closing bid and asked prices reported by the National
Association of Securities Dealers Automated Quotation System ("NASDAQ").
(n) Option: The right, but not the obligation, of the holder (purchaser) of an
Option to purchase from the issuer (seller) of the Option (in the case of a
"Call Option") or to sell to its issuer (In the case of a "Put Option") the
number of Contracts set forth in the applicable Confirmation.
(o) Option Security: With respect to any Option, the security of the Company
identified in the related Confirmation for purchase or sale upon exercise of the
Option.
(p) Other Expenses, In relation to an Early Termination Date, all costs, losses
and expenses (including, without limitation, legal fees, stamp, registration,
documentation and similar taxes, and value added taxes but for the avoidance of
doubt, without duplication of any amounts failing within subparagraphs (i) and
(ii) of the definition of Early Termination Amount) incurred or suffered by the
Non-Defaulting Party as a result of the other party's default, any steps taken
by ft to implement, protect or enforce its rights under the Agreement and all
commercially reasonable steps taken by it as a result of the default (or in
contemplation of the impending default), including purchase or sale of Option
Securities pursuant to Options exercised but not settled, In order to unwind any
xxxxxx or cover any expenses,
(q) Premium., The purchase price of an Option specified in the Confirmation.
(r) Quotation., In respect of an Option, a quotation from a Major Dealer of the
amount that would be required to be paid by or to the Non-Defaulting Party for
an instrument that would have the effect of preserving the economic equivalent
of the payment and/or delivery obligations of the parties under
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the Option that would, but for the occurrence of the Early Termination Date,
otherwise have fallen due.
(s) Replacement Value: With respect to an Option, the value of the Option
calculated as an amount
equal to:
(i) the arithmetic mean of three Quotations; or
(ii) if only two Quotations are available to the Non-Defaulting Party,
the arithmetic mean of those two Quotations; or
(iii) if only one Quotation Is available, that Quotation; or
(iv) if no Quotation Is available, the amount reasonably
determined by the Non-Defaulting Party to be the value of the Option
on the Early Termination Date.
(t) Settlement Value; The amount In U.S. dollars by which the Exercise Price
exceeds the Market Price (in the case of a Put Option) or the Market Price
exceeds the Exercise Price (in the case of a Call Option) in either case
multiplied by the number of shares of the Option Security covered by an exercise
notice given pursuant to Section 3 below. The Market Price shall be determined
as of the Exercise Date, or, If an Averaging Period is indicated in the
Confirmation, the average of the Market Prices for each Business Day in the
Averaging Period.
2. Adjustments . The Exercise Price and the Trading Units of an Option are each
subject to adjustments as follows:
(a) During the term an Option is in effect (the "Exercise Period"), if any
adjustment is made by the Options Clearing Corporation or its successors ("OCC")
in the terms of outstanding OCC-issued options ("OCC Options") on the Option
Securities, an equivalent and pro rata adjustment shall be made in the terms of
such Option to the extent such adjustment is applicable on the date of any
exercise of such Option, Except as provided in Sub-paragraph (b) below, no
adjustments shall be made in the terms of such Option in any event that does not
result in an adjustment to the terms of outstanding OCC Options on Option
Securities. Without limiting the generality of the foregoing NO ADJUSTMENT SHALL
BE MADE IN THE TERMS OF ANY OPTION FOR ORDINARY CASH DIVIDENDS ON OPTION
SECURITIES. A summary of the terms under which the OCC may make adjustments is
set forth below:
(i) Whenever there is a dividend, stock dividend, stock distribution,
stock split, reverse stock split, rights offering, distribution, reorganization,
recapitalization, reclassification or similar event in respect of the Option
Securities or a merger, consolidation, dissolution or liquidation of the issuer
of the Option Securities, the number of option contracts, the unit of trading,
the exercise price, and the Option Securities, or any of them, with respect to
all outstanding option contracts open for trading in the Option Securities may
be adjusted.
(ii) All adjustments pursuant to this Section shall be made by GS&Co. by
reference to actions taken by the Securities Committee of the OCC and in
consultation with the Company, The Securities Committee determines whether to
make adjustments to reflect particular events in respect of the Option
Securities and the nature and extent of any such adjustment, based on Its
judgment as to what is appropriate for the protection of Investors and the
public Interest, taking into account such factors as fairness to holders and
writers of option contracts on the Option Securities, the maintenance of a fair
and orderly market in options on the Option Securities, consistency of
Interpretation and practice, efficiency of exercise settlement procedures, and
the coordination with other clearing agencies of the clearance and settlement of
transactions in the Option Securities. The Securities Committee of the OCC may,
in addition to determining adjustments on a case-by-case basis, adopt statements
of policy or interpretation having general application to specified types of
events.
(iii) In the case of a stock dividend, stock distribution or stock split
whereby one or more Option Securities are issued with respect to each
outstanding Option Security, each Option covering the Option Securities shall be
increased by the same number of additional rights as the number of shares Issued
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with respect to each Option Security under the Option. The Exercise Price per
share in effect immediately prior to such event' shall be proportionately
reduced, and the unit of trading shall remain the same.
(iv) In the case of a stock dividend, stock distribution or stock split
whereby other than a whole number of Option Securities are issued in respect of
each outstanding share, the Exercise Price in effect immediately prior to such
event shall be proportionately reduced, and conversely, in the case of a reverse
stock split or combination of shares of the Option Security, the Exercise Price
in effect immediately prior to such event shall be proportionately increased,
Whenever the Exercise Price with respect to an Option has been reduced or
increased in accordance with this Sub-paragraph (iv), the unit of trading shall
be proportionately increased or reduced, as the case may be.
(v) In the case of any distribution made with respect to Option
Securities, other than cash distributions subject to paragraph (a) and other
than distributions for which adjustments are provided in Sub-paragraphs (iii) or
(iv), if an adjustment is determined by the Securities Committee of the OCC to
be appropriate, 1) the Exercise Price in effect immediately prior to such event
shall be reduced by the value per share of the distributed property, in which
event the unit of trading shall not be adjusted, or 2) the unit of trading in
effect Immediately prior to such event shall be adjusted so as to include the
amount of property distributed with respect to the number of shares of the
Option Security represented by the unit of trading in affect prior to such
adjustment, in which event the Exercise Price shall not be adjusted.
(vi) Adjustments shall as a general rule become effective on the
"ex-date" established by the primary market on which the Option Securities are
open for trading.
(b) If at any time during the life of an Option there shall be no outstanding
OCC options on Option Securities, and an event shall occur for which an
adjustment might have been required under the ByLaws, Rules and stated policies
of the OCC applicable to the adjustment of OCC options, as described above, (the
"OCC Adjustment Rules"), Company and GS&Co. shall mutually determine, applying
the principles set forth in the OCC Adjustment Rules, whether to adjust the
terms of such Option), and the nature of any such adjustment.
(c) No adjustment of the Exercise Price shall be required unless such adjustment
would require an increase or decrease in such price of at least one U.S. cant:
provided that any adjustment which by reason of this Sub-paragraph (e) is not
required to be made shall be carried forward and taken into account (as if such
adjustment had been made at the time when it would have made but for the
provisions of this Sub-paragraph (c)) in any subsequent adjustment. All
calculations under this Subparagraph shall be made to the nearest U.S. cent with
five tenths or more of a U.S. cent to be considered (rounded up) a full cent.
(d) If the Exercise Date falls on or after a date with effect from which an
adjustment takes. retroactive affect pursuant to any of the provisions of this
Section 2 and such adjustment has not yet been reflected on such Exercise Date,
the Settlement Value will be adjusted to reflect the additional Option
Securities, being equal to the excess of the number of the Option Securities
which would have been used In the calculation of the Settlement Value at such
retroactively adjusted Exercise Price over the number of Option Securities
covered by the Option immediately prior to such adjustment.
3. Exercise Procedure; Automatic Exercise.
(a) An Option may be exercised by the holder thereof by giving notice of
exercise either orally or In writing to the person specified for such purpose in
the space provided below the signature block of this Agreement or as otherwise
notified in writing to the holder of such Option. Oral notice of exercise shall
be confirmed in writing within three Business Days. An Option may be exercised
only in whole and not in part unless "Exercisable in part" is speoff led in the
related Confirmation,
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(b) If the holder has not given notice of exercise or notice of intent not to
exercise to 'the writer by 4:30 P.M., New York time, on the Expiration Date, the
Option shall be deemed to have been exercised by the holder if such Option is
in-the-money based upon the Market Price on the Expiration Date. An Option is
"in the money" as of 4.30 P.M. on the Expiration Date if the Settlement Value of
the unexercised portion of such Option Is based on an amount equal to or greater
than twenty-five cents ($.25) per share. GS&Co. shall attempt to notify the
Company of such automatic exercise as soon as practicable but in any case by the
close of business in New York on the Business Day following the Expiration Date.
Failure or inability to give such notice will not affect the validity of the
exercise.
4. Exercise Limit. If an Option is an American style option, the maximum
aggregate number of shares of the Option Securitry as to which such Option and
any similar (i.e., put or call) Option then outstanding may be exercised by the
holder on any Business Day is the number of shares, if any, specified In the
related Confirmation as the "Exercise Limit".
5. Settlement upon Exercise.
(a) If "Physical Settlement" is specified In the related Confirmation,
within three Business Days following the Exercise Date (or such other period as
agreed to by the Company and GS&Co.) payment for the Option Securities shall be
made at the Exercise Price per share therefor in clearing house funds against
delivery of such Option Securities. Option Securities will be delivered in good
transferable form as is customary for that type of Option Security. Whenever an
Option security is transferable or deliverable by wire transfer or book entry at
a depository or clearing house at which both parties or their clearing agents
are members, such method will be used to effect transfer or delivery, Physical
delivery shall only be made if the foregoing cannot be affected.
(b) If "Net Share Settlement" is specified in the related Confirmation,
then the Company may elect to have the related Option settled by payment of the,
Settlement Value in shares of the Option Security by giving notice of such
election to GS&Co. at least two Business Days before the Exercise Date, provided
that, the Option Security shall be listed for trading on the Now York Stock
Exchange or Nasdaq at the time of such notice and on the Exercise Day.
If such election is made, settlement " be made by delivery of the number of
shares of the Option Security equal in value to the Settlement Value, with such
shares valued based on the average of the Market Prices for the consecutive
Business Days in the Net Share Valuation Period. The "Net Share Valuation
Period" shall commence on (but exclude) the final Business Day of any Averaging
Period and end on (and include) the date which follows it by the same number of
Business Days in the Averaging Period. If no Averaging Period is indicated on
the Confirmation, the Net Share Valuation Period shall be deemed to be the
Business Day following the Exercise Date. Delivery of such shares shall be made
"free" in good transferable form by the third Business Day following the Net
Share Valuation Period.
Net Share Settlement of an Option issued by the Company is subject to the
following conditions precedent being fulfilled on the Exercise Date: the Company
shall have (i) registered pursuant to an effective registration statement -filed
under the Securities Act of 1933. as amended, the offering and sale by Goldman
of not less than 125% of the shares of the Option Security necessary to fulfill
the delivery obligation by the Company assuming that the number of such shares
were determined on the basis of the average of the Market Price on the five (5)
Business Days prior to the Exercise Date; (ii) delivered to Goldnan such number
of prospectuses relating thereto as Goldman shall have reasonably requested and
(iii) entered into an indemnification agreement reasonably acceptable to Goldman
covering the information contained in such prospectus. If these conditions
precedent are not satisfied on the Exercise Date, Goldman may require such
Option to be physically settled pursuant to Section 5(a).
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(c) Settlement for Fair Value: On any Business Day prior to the Expiration Date
(the 'Notification Date"), the Company may irrevocably elect to Net Share Settle
an Option (in whole or in part) at the fair market value (as determined below)
by orally notifying GS&CQ. of the number of shares of the Option Security for
which such election applies, The Company shall deliver written notice of such
election by the close of business on the following Business Day by fax to Xxxxxx
Xxxxxxx at 000-000-0000. Upon receiving such notice, GS&Co. will quote to the
Company a "Settlement Warrant Price", and a "Settlement Share Price" both
expressed in dollars per share. If the Company accepts such Settlement Warrant
Price and Settlement Share Price, the "Settlement Value" shall be the product of
(i) the number of shares designated by the Company on its notice, multiplied by
(ii) the Settlement Warrant Price. Where an Option is to be settled by
Settlement for Fair Value, the options shall settle on the third Business Day
following the Notification Date by delivery of a number of shares to the holder
of such Option. Where the Company is the writer of such Option, then delivery at
shares under this provision is subject to the conditions precedent set forth In
paragraph 5 (d)
(d) With respect to any Option that is to be settled by Net Share Settlement, if
GS&Co. determines that a Market Disruption Event is occurring on what would
otherwise be the Exercise Date, then the Exercise Date shall be the next
Business Day on which a Market Disruption Event is not occurring, provided that
if a Market Disruption Event is still subsisting on the fifth Business Day after
the Exercise Date, then such fifth Business Day shall be the Exercise Date and
GS&Co. shall determine the Market Price as of such fifth day. In the event that
GS&Co. determines that a Market Disruption Event is occurring on a Business Day
in an Averaging Period or a Net Share Valuation Period, then such period shall
be extended so that the number of Business Days in such period on which a Market
Disruption Event is not occurring equals the number of days indicated in the
Confirmation for the Averaging Period, provided that if a Market Disruption
Event is subsisting for five Business Days, then such fifth Business Day shall
be deemed to conclude the Average Period or the Net Share Valuation Period.
6. No Default, Each obligation of a party In rasped of each Option to make a
payment or deliver Option Securities is subject to the condition precedent that
no Event of Default or event that, with the lapse Of time or the giving of
notice or both, would become an Event of Default by the other party has occurred
and is continuing.
7. Representations, Warranties and Covenants
(a) The Company and GS&Co each represent and warrant to and covenant with the
other with respect to this Agreement and each option entered into hereunder
that:
(i) This Agreement has been duly authorized, executed and delivered by
such party and constitutes its valid and legally binding obligation, enforceable
against such party In accordance with its terms; and the issuance sale and
purchase, as the case may be, of each Option will be duly authorized, executed
and, when delivered by such party, will constitute the valid and legally binding
obligation of such party enforceable against such party in accordance with the
terms thereof,
(ii) The execution and delivery of this Agreement by such party does not,
and the performance by it of its obligations hereunder and under each Option
will not, violate, conflict with or constitute a breach under any agreement or
instrument to which it is party or which is binding on any of its properties.
(b) Each party represents and warrants to the other that it has the right to
enter into the Option transactions entered into hereunder,
(c) In addition to the foregoing, the Company represents and warrants to Goldman
that (1) as of the trade date of each Option hereunder the Company's most recent
Annual Report on Form 10-K, together with all reports subsequently filed by the
Company pursuant to the Exchange Act, taken together, do not
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contain any untrue statement of a material fact or any omission of a material
fact required to be stated therein or necessary to make the statements therein,
In the light of the circumstances in which they were made, not misleading; and
(ii) it has taken such advice from its legal, tax and accounting advisors as it
has deemed necessary prior to entering into this Agreement, and is not relying
on Goldman for any such advice regarding this Agreement or any action either
party may take or refrain from taking thereunder.
8. Default. If any of the following events (each an "Event of Default") shall
occur with respect to a party to an Option (the "Defaulting Party"), the
party which is not in default (the "Non-Defaulting Party") shall have the
rights set forth in Section 9:
(i) the Defaulting Party fails to perform any obligation required to be
performed under this Agreement or any Option entered into hereunder, Including,
without limitation, the failure to pay any Premium when due, and such failure is
not cured within three Business Days after receipt of notice thereof;
(ii) the Defaulting Party repudiates any of Its obligations hereunder or
under any Option;
(iii) a case in bankruptcy shall be commenced or consented to or a petition
for the appointment of a receiver shall be filed by the Defaulting Party or
brought against the Defaulting Party or the Defaulting Party shall make a
general assignment for the benefit of creditors or admit in writing that it is
unable to pay its debts as they become due, or shall suspend the transaction of
its usual business or any material portion thereof or (if a corporation) shall
be dissolved or shall be a party, other than the surviving party, to a merger or
consolidation; or
(iv) the Non-Defaulting Party shall reasonably believe in good faith that
the Defaulting Party will be unable to meet its obligations when due for any
reason and the Defaulting Party fails, after 10 Business Days prior written
notice from the Non-Defaulting party to provide the Non-Defaulting Party with
adequate assurance of Its ability to perform.
9. Remedies.
(a) Upon the occurrence of an Event of Default and with respect to all unexpired
but unexercised Options (for which purpose a partially exercised Option is an
unexercised Option but only as to the unexercised portion), the Non-Defaulting
Party may by written notice to the Defaulting Party sent while the Event of
Default is continuing and a specifying the relevant Event of Default, elect to
terminate and settle all Options (but not some only) in accordance with this
Section 9 on the Early Termination Date, being the date specified in and no
earlier than the date of the notice.
(b) If an Early Termination Date occurs, the Non-Defaulting Party shall
calculate the Early Termination Amount payable by one party to the other and
shall as soon as reasonably practicable give to the Defaulting Party a statement
thereof (including details of any relevant Quotations).
(c) The Early Termination Amount shall be payable on the Business Day
immediately after notice of its amount Is given to the Defaulting Party and,
unless payable by the Non-Defaulting Party, shall be paid together with interest
thereon from (and including) the Early Termination Date to (but excluding) the
date of payment at the rate, to the extent permitted by applicable law, of 2 per
cent per annum above Xxxxxx Guaranty Trust Company's prime (or base) commercial
loan rate for short term borrowings as In effect from time to time.
The parties agree that the amounts recoverable under this Section 9 are a
reasonable preestimate of loss and not a penalty, Such amounts are payable for
the loss of bargain and the loss of protection against future risks.
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(e) The Non-Defaulting Party's rights under this Section 9 shall be in addition
to, and not in limitation or exclusion of, any other rights which the
Non-Defaulting Party may have (whether by agreement, operation of law or
otherwise) against the Defaulting Party.
10. Miscellaneous.
(a) A Confirmation sent by GS&Co. to the Company on a Business Day shall be
deemed to have been received by the Company on the same day (or, if sent on a
day which is not a Business Day, on the next succeeding Business Day) if sent by
same-day messenger, by telex or other telecommunication device capable of
transmitting or creating a written record of transmission, and on the third day
after the day It Is sent if by first class mail, postage prepaid (or, if mailed
on a day which is a Federal holiday, three days after the next succeeding day
which is not a Federal holiday). If the Company fails to object to the terms
contained in a Confirmation within three Business Days after receipt thereof,
the terms of such Option (as evidenced by the Confirmation) shall be deemed to
have been accepted,
(b) Neither this Agreement nor any Option may be assigned or transferred by
either party hereto without the consent of the other party, except for an
assignment and delegation of all of GS&Co.'s rights and obligations hereunder in
whatever form GS&Co. determiner, may be appropriate to a partnership,
corporation, trust or other organization in whatever form that succeeds to all
or substantially all of GS&Co.'s assets and business and that assumes such
obligations by contract, operation of law or otherwise. Upon any such delegation
and assumption of obligations, GS&Co. shall be relieved of and fully discharged
from all obligations hereunder, whether such obligations arose before or after
such delegation and assumption.
(c) This Agreement shall be governed by and construed In accordance with the
Internal laws of the State of Now York, United States of America without giving
effect to conflicts of law principles.
(d) This Agreement and each Option entered into hereunder shall be subject to
all laws, rules and regulations applicable thereto, including, but not by way of
limitation, the provisions of the Securities Act of 1933, and the Securities
Exchange Act of 1934, as amended and all rules and regulations, promulgated or
to be promulgated thereunder. The Company and GS&Co., each acknowledge that the
Options acquired by it from the other party hereunder will not be registered
under the Securities Act of 1933, as amended (the "Act") and will be sold by the
issuer of the Option in reliance upon the exemption for private placements
pursuant to Section 4(2) of the Act.
(e) The parties agree that this Agreement and the terms of each Option entered
into hereunder are confidential and may not be publicly disclosed by either
party except with the prior written consent of the other party or pursuant to
the demand or requirement of any court or regulatory agency having jurisdiction
over a party.
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(f) Each Option is being entered Into by the parties hereto acting as principal
for their respective own account. Subject to the termination of any Option by
expiration or full performance upon exercise, no failure on the part of either
party to exercise, and no delay In exercising, any contractual right prior to
termination of any such Option as aforesaid will operate as a waiver thereof,
nor will any single or partial exercise by either party of any right preclude
any other or future exercise thereof or the exercise of any other right. No
modification or waiver of any provision hereof nor any consent to any departure
by either party therefrom shall In any event be effective unless the same shall
be in writing, and then such waiver or consent shall be effective only in the
specific instance and for the purpose for which given, All written notices
hereunder shall be sent to a party at its address by mail, hand delivery or
facsimile transmission as set forth below, or to such other address or telex
number as a party shall have last notified the other party in writing, or to
such other address as either party shall have last notified the other party in
writing. For purposes of telephone notice, GS&Co.'s relevant telephone number
and the Company's relevant telephone number are set forth below and each of
GS&Co. and the Company shall notify the other in writing of any change thereof.
11. Arbitration.
(a) Arbitration Is final and binding on the Company and OS&CO.
(b) The Company and OS&CO. am waiving their right to seek remedies In court,
including the right to a jury trial.
(c) Pre-arbitration discovery is generally more limited than and different from
court proceedings.
(d) The arbitrator's award is not required to include factual findings or legal
reasoning and any party's right to appeal or to seek modification of rulings by
the arbitrators Is strictly limited.
(e) The panel of arbitrators will typically Include a minority of arbitrators
who were or are affiliated with the securities Industry.
Any controversy between or among GS&Co. or ft affiliates, or any of Its or
their partners, directors, agents or employees, on the one hand, and the Company
or Its agents and affiliates, on the other hand, arising out of or relating to
this Agreement or any Option entered into hereunder, shall be settled by
arbitration, In accordance with the then current rules of, at the Company's
election, the American Arbitration Association ("AAA',) or the Board of
Arbitration of the Now York Stock Exchange ("BANYSE"). If the Company does not
make such election by registered mail addressed to OS&CO. within five (5)
Business Days after receipt of notification from GS&Co. requesting such
election, then the Company Irrevocably authorizes OS&CO. to make such election
on behalf of the Company. The award of the arbitrators shall be final, and
judgment upon the award rendered may be entered in any court, state or Federal,
having jurisdiction.
Neither party shall bring a putative or certified class action to arbitration,
nor seek to enforce any pro-dispute arbitration agreement against any person who
has Initiated in court a putative class action; who is a member of a putative
class who has not opted out of the, class with respect to any claims encompassed
by the putative class action until:
(i) the class certification is denied;
(ii) the class is decertified; or
(iii) the customer is excluded from the class by the court.
Such forbearance to enforce an agreement to arbitrate shall not constitute a
waiver of any rights under this agreement except to the extent stated herein.
9
By signing below, the Company acknowledges receipt of a copy of this
Options Agreement A pre-dispute arbitration clause is contained in Section 11
hereof.
XXXXXXX, XXXXX & CO.
Name: Xxxx Xxxxxx
Address: 00 Xxxxx Xxxxxx Xxx Xxxx, Xxx Xxxx 00000
Telex No.:
Domestic: WU Tlex 12-5654 Goldsachs
International:ITT421344GOLSAX
TRT 177784 GSUT
WUI62506G0LSAC
Telefax No.: 000-000-0000
Telephone No.: 000-000-0000
Exercise Notice to: Equity Operations:
Options and Derivatives
Accepted and Agreed to this
9 day of September, 1998,
Premisys Communications, Inc.
By: /s/ Xxxx X. Xxxxxxxx
Xxxx X. Xxxxxxxx
00000 Xxxxxxx Xxxxx, Xxxxxxx, XX 00000
Telex No.:
Domestic:
International:
Telefax No.: 000-000-0000
Telephone No.: 000-000-0000
Xxxxxx X. Xxxxxx, VP and Corporate Controller
Exercise Notice to: ---------------------------------------------------------
Above address and fax number
10
Performance Assurance Amendment to
OTC Issuer Stock Option Master Agreement
Xxxxxxx, Xxxxx & Co. ("GS&Co.") and Premisys Communications, Inc. (the
"Company"), having entered into an OTC Issuer Stock Option Master Agreement
(the "Master Agreement"), agree that the Master Agreement is amended and
modified by adding the following subsections which shall form and be a part of
the Master Agreement as though included[ therein as of the date the Master
Agreement became effective.
1. Performance Assurance
(a) For each option, the Company's "Performance Assurance Requirement" as of
any day shall equal such Option's in-the-money amount on such day (if any)
provided that in no event shall the Performance Assurance Requirement for
an Option be less than zero.
(b) The Company's "Aggregate Performance Assurance Requirement" as of any day
shall equal the sum of (i) the Company's Basic Amount, plus (ii) the sum
of the Performance Assurance Requirements on such day for all outstanding
Options written by such party under the Master Agreement.
(c) "Basic Amount" shall mean 15% of the Aggregate Put Strike Price Value.
(d) "in-the-money" shall mean an amount equal to the product of the excess (if
any) of the Option Exercise price over the Market Price, multiplied by the
quantity of Option Securities in respect of such Option.
2. Payment/Delivery of Performance Assurance
(a) The Company will, on demand by GS&Co., pay or deliver to GS&Co.,
Performance Assurance equal to the Company's Aggregate Performance
Assurance Requirement;
(b) Performance Assurance is due by the close of business in New York on the
next Business Day following demand.
3. Grant of Security Interest
The Company hereby grants to GS&Co. a first priority security interest in and a
lien upon all Performance Assurance and all property included therein, together
with the proceeds thereof, any distributions thereon and any property delivered
in substitution therefor, as security for the satisfaction of the obligations of
the Company under the Master Agreement. In the event of a default by the
Company, GS&Co. shall have all of the rights With respect to the Performance
Assurance granted to a secured party under the Uniform Commercial Code as then
in effect in the State of New York. GS&Co. shall have the unrestricted right to
use any property included in the Performance Assurance (subject only to its
obligation to return such property, or property of the same class, Issue,
issuer, series, principal amount, maturity and value to Company in accordance
with the terms hereof), including but not limited to the fight to rehypothecate
or transfer such property to third parties.
Performance Assurance shall at all times remain the property of the Company
subject only to the extent of the interest and rights therein of GS&Co. as the
pledgee and secured party thereof.
4. Value of Performance Assurance
Performance Assurance shall be provided by the deposit with GS&Co. of cash
("Cash Performance Assurance") or securities reasonably acceptable to GS&Co.,
which shall consist of the following types and shall be valued at the current
market value as determined in good faith by GS&Co. less the percentage of the
current market value indicated below:
Securities issues or guaranteed by the united States or its Agencies
Less than one year to maturity 1%
One year but less than three years to maturity 2
Three years but less than five years to maturity 3
Five years but less than ten years to maturity 4
Ten years but less than twenty years to maturity 5
Twenty years or more to maturity 6
U.S. Dollar denominated commercial paper rated at least Al/PI With
less than 90 days to maturity (cannot constitute more than 20% of the
required Performance Assurance 5
U.S. Dollar denominated Municipal Bonds rated at least A3/A- Maximum of 30%
of Face Value
or 8% of
Market Value
Other Securities acceptable to GS&Co. (to be determined)
5. Return of Performance Assurance
If Performance Assurance held by GS&Co. exceeds the Company's Aggregate
Performance Assurance Requirement, then GS&Co. shall, at the Company's request,
return Performance Assurance to the Company sufficient to reduce the amount of
Performance Assurance hold by GS&Co. to an amount not less than the Company's
Aggregate Performance Assurance Requirement. GS&Co. will return all Performance
Assurance if the Company's Aggregate Performance Assurance Requirement is zero.
Agreed to on September 9, 1998
Xxxxxxx, Xxxxx & Co. Premisys Communications, Inc.
By: /s/ Xxxx Xxxxxxxx By: /s/ Xxxx X. Xxxxxxxx
Name Xxxx Xxxxxxxx Name Xxxx X. Xxxxxxxx
Title: Managing Director Title: VP/CFO
EQUITY OPTION CONFIRMATION
September 10, 1998
Trade Date
To: Premisys Communications, Inc. (the "Company")
Attention: Xxxx Xxxxxxxx
Ladies and Gentlemen:
This Confirmation of the option transaction described below supplements any
prior confirmation furnished to you in connection with such option transaction
and supplements, forms a part of, and is subject to the agreement entered into
between us containing terms and conditions governing over-the-counter options
transactions for ft above referenced account.
I. Transaction: The Company x bought _ sold
II. Option Security: The Company's Common Stock ("PRMS")
III. No. of Contracts: 7,500 (100 shares per contract)
IV. Expiration Date: January 29,1999
V. Exercise Price: $11.625 per share
VI. Premium: $1.67 per share, net Total: $1,250,000.00
Due and payable on September 15, 1999
VII. Type of Option: Put X Call
American X European
Exercise Limit:
VIII. Exercise: X Physical Settlement Cash Settlement
Net Share Settlement
IX. Exercise Notice: By telephone to writer's representative named
below at writer's telephone number indicated
below. Confirm in writing by fax to writer's
number, at writer's address below.
X. Special terms: Exercisable in whole only X Exercisable in part
X Net Share Settlement at Company's Election
The Exercise Price shall be increased by an amount per share equal to the
amount by which the Market Price on the Expiration Xxxx (if physically
settled) or the Market Price as used in determining the Settlement value
(if cash settled) exceeds $20.00 per share.
If Net Share Settlement is elected, the Market Price as used In determining
the Settlement Value will be the average of the Market Prices for the five
trading days commencing an (and including) the Expiration Xxxx. The options
will be settled on the third Business Day following the determination of
the Settlement Value.
Very truly yours, XXXXXXX, XXXXX & CO.
By: /s/ Xxxxxxx Xxxxxxx
Managing Director
Please sign and return a copy of this Confirmation to Xxxxxx Xxxxxxx at the
address below
Phone: 000-000-0000
Fax: 000-000-0000
Address: 0 Xxx Xxxx Xxxxx,00xx Xxxxx
Xxx Xxxx, XX 00000
Exercise Notice to:Equity Operations
Options & Derivatives
Attn: Xxxx Xxxxxx
Accepted and Agreed to on this
9th day of September, 1998
Premisys Communications, Inc.
By: /s/ Xxxx Xxxxxxxx
Name: Xxxx Xxxxxxx
Title: Chief Financial Officer, and Vice President, Finance
Phone: 000-000-0000
Fax: 000-000-0000
Exercise Notice to:
EQUITY OPTION CONFIRMATION
September 10, 1998
Trade Date
To: Premisys Communications, Inc. (the "Company")
Attention: Xxxx Xxxxxxxx
Ladies and Gentlemen:
This Confirmation of the option transaction described below supplements any
prior confirmation furnished to you in connection with such option transaction
and supplements, forms a part of, and is subject to the agreement entered into
between us containing terms and conditions governing over-the-counter options
transactions for ft above referenced account.
I. Transaction: The Company bought X sold
II. Option Security: The Company's Common Stock ("PRMS")
III. No. of Contracts: 10,000 (100 shares per contract)
IV. Expiration Date: January 29,1999
V. Exercise Price: $10.625 per share
VI. Premium: $1.25 per share, net Total: $1,250,000.00
Due and payable on September 15, 1999
VII. Type of Option: X Put Call
American X European
Exercise Limit:
VIII. Exercise: X Physical Settlement Cash Settlement
Net Share Settlement
IX. Exercise Notice:By telephone to writer's representative named below
at writer's telephone number indicated below.
Confirm in writing by fax to writer's number, at
writer's address below.
X. Special terms: Exercisable in whole only X Exercisable in part
X Net Share Settlement at Company's Election
The Exercise Price shall be increased by ft amount per share equal to the
amount by which the Market Price on the Expiration Xxxx (if physically
settled) or the Market Price as used in determining the Settlement value
(if cash settled) exceeds $20.00 per share.
If Net Share Settlement is elected, the Market Price as used In determining
the Settlement Value will be the average of the Market Prices for the five
trading days commencing an (and including) the Expiration Xxxx. The options
will be settled on the third Business Day following the determination of
the Settlement Value.
Very truly yours, XXXXXXX, XXXXX & CO.
By: /s/ Xxxxxxx Xxxxxxx
Managing Director
Please sign and return a copy of this Confirmation to Xxxxxx Xxxxxxx at the
address below
Phone: 000-000-0000
Fax: 000-000-0000
Address: 0 Xxx Xxxx Xxxxx,00xx Xxxxx
Xxx Xxxx, XX 00000
Exercise Notice to:Equity Operations
Options & Derivatives
Attn: Xxxx Xxxxxx
Accepted and Agreed to on this
9th day of September, 1998
Premisys Communications, Inc.
By: /s/ Xxxx Xxxxxxxx
Name: Xxxx Xxxxxxx
Title: Chief Financial Officer, and Vice President, Finance
Phone: 000-000-0000
Fax: 000-000-0000
Exercise Notice to:
EQUITY OPTION CONFIRMATION
September 10, 1998
Trade Date
To: Premisys Communications, Inc. (the "Company")
Attention: Xxxx Xxxxxxxx
Ladies and Gentlemen:
This Confirmation of the option transaction described below supplements any
prior confirmation furnished to you in connection with such option transaction
and supplements, forms a part of, and is subject to the agreement entered into
between us containing terms and conditions governing over-the-counter options
transactions for ft above referenced account.
I. Transaction: The Company x bought _ sold
II. Option Security: The Company's Common Stock ("PRMS")
III. No. of Contracts: 7,500 (100 shares per contract)
IV. Expiration Date: January 29,1999
V. Exercise Price: $11.625 per share
VI. Premium: $2.33 per share, net Total: $1,750,000.00
Due and payable on September 15, 1999
VII. Type of Option: Put X Call
American X European
Exercise Limit:
VIII. Exercise: X Physical Settlement Cash Settlement
Net Share Settlement
IX. Exercise Notice:By telephone to writer's representative named below
at writer's telephone number indicated below.
Confirm in writing by fax to writer's number, at
writer's address below.
X. Special terms: Exercisable in whole only X Exercisable in part
X Net Share Settlement at Company's Election
The Exercise Price shall be increased by ft amount per share equal to the
amount by which the Market Price on the Expiration Xxxx (if physically
settled) or the Market Price as used in determining the Settlement value
(if cash settled) exceeds $20.00 per share.
If Net Share Settlement is elected, the Market Price as used In determining
the Settlement Value will be the average of the Market Prices for the five
trading days commencing an (and including) the Expiration Xxxx. The options
will be settled on the third Business Day following the determination of
the Settlement Value.
Very truly yours, XXXXXXX, XXXXX & CO.
By: /s/ Xxxxxxx Xxxxxxx
Managing Director
Please sign and return a copy of this Confirmation to Xxxxxx Xxxxxxx at the
address below
Phone: 000-000-0000
Fax: 000-000-0000
Address:1 Xxx Xxxx Xxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Exercise Notice to:Equity Operations
Options & Derivatives
Attn: Xxxx Xxxxxx
Accepted and Agreed to on this
9th day of September, 1998
Premisys Communications, Inc.
By: /s/ Xxxx Xxxxxxxx
Name: Xxxx Xxxxxxx
Title: Chief Financial Officer, and Vice President, Finance
Phone: 000-000-0000
Fax: 000-000-0000
Exercise Notice to:
EQUITY OPTION CONFIRMATION
September 10, 1998
Trade Date
To: Premisys Communications, Inc. (the "Company")
Attention: Xxxx Xxxxxxxx
Ladies and Gentlemen:
This Confirmation of the option transaction described below supplements any
prior confirmation furnished to you in connection with such option transaction
and supplements, forms a part of, and is subject to the agreement entered into
between us containing terms and conditions governing over-the-counter options
transactions for ft above referenced account.
I. Transaction: The Company bought X sold
II. Option Security: The Company's Common Stock ("PRMS")
III. No. of Contracts: 10,000 (100 shares per contract)
IV. Expiration Date: January 29,1999
V. Exercise Price: $10.625 per share
VI. Premium: $1.75 per share, net Total: $1,750,000.00
Due and payable on September 15, 1999
VII. Type of Option: X Put Call
American X European
Exercise Limit:
VIII. Exercise: X Physical Settlement Cash Settlement
Net Share Settlement
lX. Exercise Notice:By telephone to writer's representative named below
at writer's telephone number indicated below.
Confirm in writing by fax to writer's number,
at writer's address below.
X. Special terms: Exercisable in whole only X Exercisable in part
X Net Share Settlement at Company's Election
The Exercise Price shall be increased by ft amount per share equal to the
amount by which the Market Price on the Expiration Xxxx (if physically
settled) or the Market Price as used in determining the Settlement value
(if cash settled) exceeds $20.00 per share.
If Net Share Settlement is elected, the Market Price as used In determining
the Settlement Value will be the average of the Market Prices for the five
trading days commencing an (and including) the Expiration Xxxx. The options
will be settled on the third Business Day following the determination of
the Settlement Value.
Very truly yours, XXXXXXX, XXXXX & CO.
By: /s/ Xxxxxxx J Xxxxx
Managing Director
Please sign and return a copy of this Confirmation to Xxxxxx Xxxxxxx at the
address below
Phone: 000-000-0000
Fax: 000-000-0000
Address:1 Xxx Xxxx Xxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Exercise Notice to:Equity Operations
Options & Derivatives
Attn: Xxxx Xxxxxx
Accepted and Agreed to on this
9th day of September, 1998
Premisys Communications, Inc.
By: /s/ Xxxx Xxxxxxxx
Name: Xxxx Xxxxxxx
Title: Chief Financial Officer, and Vice President, Finance
Phone: 000-000-0000
Fax: 000-000-0000
Exercise Notice to:
