Exhibit 2.k.3
FORM OF
PURCHASE AGREEMENT
THIS AGREEMENT is made as of this __day of May, 1998 between Luckygold
18A Limited, a company incorporated in the British Virgin Islands ("Seller"),
and Peak TrENDS Trust (such trust and the trustees thereof acting in their
capacity as such being referred to herein as the "Trust" or "Purchaser").
WHEREAS, Purchaser has filed with the Securities and Exchange
Commission a registration statement contemplating the offering of up to
[6,900,000] Trust Enhanced Dividend Securities (the "TrENDS"), the terms of
which contemplate delivery by Purchaser to the holders thereof of a number of
ordinary shares, $.01 par value per share (the "Common Stock"), of Peak
International Limited, a Bermuda holding company (the "Company")(or, at the
option of the Seller, the equivalent in cash equal to the Reference Market
Price), on ________, 2001 (the "Exchange Date");
WHEREAS, Seller has agreed, pursuant to the Collateral Agreement (the
"Collateral Agreement") dated as of May ___, 1998, among Purchaser, Seller and
The Bank of New York, as collateral agent (the "Collateral Agent"), to grant
Purchaser a security interest in a specified amount of Common Stock and/or U.S.
Treasury securities and in certain other circumstances certain other collateral
to secure the obligations of the Seller hereunder;
WHEREAS, Purchaser has agreed, pursuant to an underwriting
agreement, dated May ____, 1998 (the "Underwriting Agreement"), among
Purchaser, Seller, and Xxxxxxxxx, Xxxxxx & Xxxxxxxx Securities Corporation and
BancAmerica Xxxxxxxxx Xxxxxxxx, on behalf of themselves and the several
underwriters named therein (the "Underwriters"), to issue and sell to the
Underwriters an aggregate of [6,000,000] TrENDS ("the Initial TrENDS") and, at
the Underwriters' option, all or any part of [900,000] additional TrENDS (the
"Additional TrENDS") to cover overallotments;
NOW, THEREFORE, in consideration of their mutual covenants herein
contained, the parties hereto, intending to be legally bound, hereby mutually
covenant and agree as follows:
DEFINITIONS
As used herein, the following words and phrases shall have the
following meanings:
"Acceleration Amount" has the meaning provided in Article VII.
"Acceleration Amount Notice" has the meaning provided in Article VII.
"Acceleration Date" has the meaning provided in Article VII.
"Acceleration Value" has the meaning provided in Article VII.
"Additional Purchase Price" has the meaning provided in Section
1.2(b).
"Additional Share Base Amount" means the number of Additional TrENDS
that the Underwriters shall elect to purchase under the Underwriting Agreement.
"Additional Shares" has the meaning provided in Section 1.1(b).
"Additional STRIPS" means the U.S. Treasury obligations purchased by
Purchaser for settlement on the Option Closing Date.
"Adjustment Event" has the meaning provided in Section 6.2.
"Administrator" means The Bank of New York, administrator for
Purchaser under the Administration Agreement dated as of [May] ____, 1998, or
any successor thereto.
"Aggregate Acceleration Value" has the meaning provided in Article
VII.
"Business Day" means: (i) as used in Article VI, any day on which
commercial banks are open for business in New York City and (ii) as used in
Article VII, any day on which commercial banks are open for business in New York
City and none of the New York Stock Exchange, American Stock Exchange or Nasdaq
National Market is closed.
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"Calculation Period" means any period of Trading Days for which an
average security price must be determined pursuant to this Agreement.
"Cash Settlement Alternative" has the meaning provided in Section
1.3(d).
"Closing Price" means, for any security on any Trading Day, (i) the
last reported executed trade price (regular way) of such security on the
principal trading market for such security on such date; (ii) if no regular way
executed trade price for such security is reported on the principal trading
market for such security on such date, the average of the closing bid and
offered prices for such security as reported by the principal trading market for
such security on such date; (iii) if no regular way executed traded price or
closing bid and offered prices for such security are reported on the principal
trading market for such security on such date, the Closing Price (as determined
in accordance with clauses (i) or (ii)) for the next succeeding Trading Day (if
any) within the relevant Calculation Period on which the Closing Price may be so
determined; or (iv) if such security is no longer listed or admitted to trading
on any exchange or in the over-the-counter market, the average of the closing
bid and offered prices for such day as furnished by a member firm of the most
recent principal trading market for such security. The Closing Price shall be
subject to adjustment in certain events as provided in Section 6.1(d).
"Contract Shares" has the meaning provided in Section 1.1(b).
"Custodian" means The Bank of New York, custodian for Purchaser under
the Custodian Agreement dated as of [May] ____, 1998, or any successor thereto.
"Dilution Adjustment" means any fraction or number by which the
Exchange Rate shall be multiplied pursuant to Section 6.1(a), (b) or (c).
"Event of Default" has the meaning provided in Article VII.
"Excess Purchase Payment" has the meaning provided in Section 6.1(c).
"Exchange Rate" has the meaning provided in Section 1.1(c).
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"Firm Share Base Amount" has the meaning provided in Section 1.1(a).
"Firm Shares" has the meaning provided in Section 1.1(a).
"Firm Purchase Price" has the meaning provided in Section 1.2(a).
"Floor Price" has the meaning provided in Section 1.1(c).
"Independent Dealer" has the meaning provided in Article VII.
"Marketable Securities" has the meaning provided in Section 6.2.
"Option Closing Date" has the meaning provided in Article IV of the
Underwriting Agreement.
"Payment Date" has the meaning provided in Section 1.3(a).
"Permitted Dividend" has the meaning provided in Section 6.2.
"Purchase Price" means the sum of the Firm Purchase Price and the
Additional Purchase Price (if any).
"Reference Market Price" means the average Closing Price per share of
the Common Stock for a Calculation Period of 20 Trading Days immediately prior
to (but not including) the Exchange Date, provided that if no Closing Price
may be determined for one or more (but not all) of such Trading Days, such
Trading Day shall be disregarded in the calculation of the Reference Market
Price (but no additional Trading Day shall be added to the Calculation Period).
If no Closing Price may be determined for any of such Trading Days, the
Reference Market Price shall be the Closing Price per share of the Common Stock
for the most recent Trading Day prior to such 20 Trading Days for which a
Closing Price for the Common Stock may be determined.
"Then-Reference Market Price" of the Common Stock, for the purpose of
applying any adjustment pursuant to Section 6.1, means the average Closing Price
per share of the Common Stock for the Calculation Period of five Trading Days
immediately prior to
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the time such adjustment is calculated (or, in the case of an adjustment
calculated at the opening of business on the Business Day next following a
record date as described in Section 6.1(e)(i), immediately prior to the earlier
of the time such adjustment is calculated and the related "ex-date"); provided
that if no Closing Price for the Common Stock is determined for one or more (but
not all) of such Trading Days, such Trading Day shall be disregarded in the
calculation of the Then-Reference Market Price (but no additional Trading Days
shall be added to the Calculation Period). If no Closing Price for the Common
Stock may be determined for any of such Trading Days, the Then-Reference Market
Price shall be the Closing Price for the Common Stock for the most recent
Trading Day prior to such five Trading Days for which a Closing Price for the
Common Stock may be determined. The "ex-date" with respect to any dividend,
distribution or issuance shall mean the first date on which the Common Stock
trade regular way on their principal market without the right to receive such
dividend, distribution or issuance.
"Threshold Appreciation Price" has the meaning provided in Section
1.1(c).
"Trading Day" means, with respect to any security, a day on which the
principal trading market for such security is open for trading or quotation.
"Transaction Value" has the meaning provided in Section 6.2.
"Trust Agreement" means the Declaration of Trust of the Peak TrENDS
Trust dated as of _____________, 1998, as amended and restated as of
____________, 1998.
I.
SALE AND PURCHASE
1.1 Sale and Purchase. (a) Firm Shares. Upon the terms and subject
to the conditions of this Agreement, Seller agrees to sell to Purchaser, and
Purchaser agrees to purchase and acquire from Seller on the Exchange Date (as
defined herein), the amount of Common Stock (the "Firm Shares") equal to the
product of _________ (the "Firm Share Base Amount") and the Exchange Rate.
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(b) Additional Shares. Upon the terms and subject to the conditions
of this Agreement, Seller agrees to sell to Purchaser, and Purchaser shall have
a right to purchase, a number of additional Shares (the "Additional Shares")
equal to the product of the Exchange Rate and the Additional Share Base Amount.
If the Underwriters exercise their option to purchase Additional TrENDS pursuant
to the Underwriting Agreement, Purchaser shall forthwith upon such exercise
notify Seller in writing that Purchaser will purchase the Additional Shares,
which notice shall specify the Additional Share Base Amount and the date on
which Purchaser shall deliver the purchase price for the Additional Shares,
which shall be the Option Closing Date. The Firm Shares and the Additional
Shares (if any) are collectively referred to herein as the "Contract Shares".
(c) Exchange Rate. The "Exchange Rate" shall be determined in
accordance with the following formula, subject to adjustment as a result of
certain events relating to the Common Stock as provided in Article VI: (i) if
the Reference Market Price is less than $_____ (the "Threshold Appreciation
Price") but equal to or greater than $______ (the "Floor Price"), a number or
fractional number (rounded upward or downward to the nearest 1/10,000th or, if
there is not a nearest 1/10,000th, to the next lower 1/10,000th) which when
multiplied by the Reference Market Price is equal to the Floor Price, (ii) if
the Reference Market Price is equal to or greater than the Threshold
Appreciation Price, ______ and (iii) if the Reference Market Price is less than
the Floor Price, 1.0.
1.2 Purchase Price. (a) Firm Purchase Price. The purchase price
for the Firm Shares (the "Firm Purchase Price") shall be $___________ in the
aggregate in cash in U.S. dollars (approximately $_____ per share initially
subject hereto ).
(b) Additional Purchase Price. The purchase price for the Additional
Shares (the "Additional Purchase Price") shall be an amount in U.S. dollars
equal to the difference between: (i) the aggregate proceeds to Purchaser from
the sale of the Additional TrENDS; and (ii) the aggregate purchase cost to
Purchaser of the Additional STRIPS, as notified by Purchaser to Seller on the
Option Closing Date by way of a written notice giving reasonable details of the
Additional STRIPS.
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1.3 Payment for and Delivery of Contract Shares. (a) Payment Date.
Upon the terms and subject to the conditions of this Agreement, Purchaser shall
deliver to Seller the Firm Purchase Price on __________, 1998 (the "Payment
Date") at the offices of Xxxx, Weiss, Rifkind, Xxxxxxx & Xxxxxxxx, 1285 Avenue
of the Americas, New York, N.Y. 10019-6064, or at such other place as shall be
agreed upon by Purchaser and Seller, paid by wire transfer to an account
designated by Seller, in New York Clearing House Funds (i.e., next-day funds).
(b) Option Closing Date. Upon the terms and subject to the
conditions of this Agreement, Purchaser shall deliver to Seller the Additional
Purchase Price on the Option Closing Date at the offices of Xxxx, Weiss,
Rifkind, Xxxxxxx & Xxxxxxxx, 1285 Avenue of the Americas, New York, N.Y. 10019-
6064, or at such other place as shall be agreed upon by Purchaser and Seller,
paid by wire transfer to an account designated by Seller, in New York Clearing
House Funds.
(c) Delivery of Contract Shares. On the Exchange Date, Seller
shall, subject to the Purchaser having complied with its obligations under
Section 1.3(a) and, if applicable, Section 1.3(b), deliver the Contract Shares
to Purchaser. Delivery shall be effected by delivery by the Collateral Agent to
the Custodian, for the account of Purchaser, of Common Stock then held by the
Collateral Agent as collateral under the Collateral Agreement, in an amount
representing a number of shares equal to the number of Contract Shares, rounded
down to the nearest whole number. Instead of any fractional share that would
otherwise be deliverable to Purchaser at the Exchange Date, Seller shall make a
cash payment in respect of such fractional share in an amount equal to the value
thereof at the Reference Market Price. Notwithstanding the foregoing, if an
Adjustment Event shall have occurred prior to the Exchange Date then, in lieu of
the foregoing, delivery shall be effected as follows: (i) in the case of any
cash required to be delivered on the Exchange Date as provided in Section 6.2,
by wire transfer of immediately available funds to an account designated by
Purchaser; or (ii) in the case of any shares of Marketable Securities elected by
Seller to be delivered in lieu of cash as provided in Section 6.2, at Seller's
election, by instruction to the Collateral Agent to deliver to the Custodian,
for the account of Purchaser, a specified number of shares of Marketable
Securities then held as collateral under the Collateral Agreement, as provided
in Section 6(g) of the Collateral Agreement.
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(d) Cash Settlement Alternative. At its option, Seller may
deliver to Purchaser on the Exchange Date, in lieu of the Contract Shares, an
amount in cash equal to the product of the Reference Market Price and the
Contract Shares (the "Cash Settlement Alternative"), paid by wire transfer to an
account designated by Custodian, in New York Clearing House Funds. Seller may
elect the Cash Settlement Alternative in respect of all, but not less than all,
Contract Shares by notice to Purchaser, the Collateral Agent and the Custodian
not less than 20 Trading Days immediately prior to (but not including) the
Exchange Date.
II.
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to Purchaser as follows:
(a) Seller has been duly incorporated and is validly existing as
a company under the laws of the British Virgin Islands.
(b) This Agreement has been duly authorized, executed and
delivered by Seller and, assuming due authorization, execution and delivery by
Purchaser, is a legal, valid and binding agreement of Seller, enforceable under
New York law against Seller in accordance with its terms except as (i) such
enforceability may be limited by applicable bankruptcy, insolvency or similar
laws affecting creditors' rights generally and (ii) the availability of
equitable remedies may be limited by equitable principles of general
applicability.
(c) The execution and delivery by Seller of, and the performance
by Seller of its obligations under, this Agreement will not contravene any
provision of applicable law or memorandum or articles of association of Seller
or any agreement or other instrument binding upon Seller or any judgment, order
or decree of any governmental body, agency or court having jurisdiction over
Seller as at the date hereof, whether foreign or domestic, and no consent,
approval, authorization, order of, or qualification with, any governmental body,
agency, self-regulatory organization or court or other tribunal, whether foreign
or domestic is or will be required as at the date hereof for the execution,
delivery and performance by Seller of this Agreement.
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(d) As of the date hereof, the Seller has good and valid title to
_______________ shares of Common Stock of the Company, free and clear of all
liens, encumbrances, equities, restrictions, legends or claims other than those
provided for under the bylaws of the Company or created pursuant to the
Collateral Agreement; all consents, approvals, authorizations and orders
necessary for the Seller to pledge and assign the Common Stock to be pledged and
assigned by the Seller pursuant to this Agreement and the Collateral Agreement
have been obtained; and upon delivery of such Common Stock on the Exchange Date,
good and valid title to such Common Stock, free and clear of all liens,
encumbrances, equities, restrictions, legends or claims will, subject to the
provisions of the bylaws of the Company, pass to the Purchaser.
(e) Immediately prior to the Payment Date, the Seller has no
creditors and debts, whether or not such debts are liquidated, unliquidated,
fixed, contingent, matured, unmatured, disputed, undisputed, legal or equitable.
(f) Since its incorporation, the Seller did not engage in any
business activity except any activity relating to (i) the issuance of shares of
the Seller and appointment of directors, (ii) the acquisition and disposal of
the Common Stock, (iii) the exercise of its rights as the owner of the Common
Stock or other property distributed with respect to the Common Stock, and (iv)
the offering of the TrENDS.
(g) Since its incorporation, the Seller has maintained corporate
records and books of account which at all times were, and will continue to be
separate from those of any other person or entity.
(h) Since its incorporation up to the date hereof, the Seller has and
will continue to observe all applicable corporate formalities in the conduct of
its affairs and with respect to the ownership, encumbrances or transfer of any
material assets or the incurrence of any material indebtedness.
(i) Both immediately before and after the Payment Date (a) the fair
value of the Seller's assets will exceed its liabilities, (b) the present fair
saleable value of the Seller's assets would be greater than its probable
liability on its existing debts as such debts become absolute and matured, (c)
the Seller would be able to pay its debts as they fall due, and (d) the Seller's
remaining capital would not be unreasonably small for the business in which it
is engaged.
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(j) Since its incorporation, the Seller has and will continue to
conduct its business solely in its own name or through its authorized agents, in
a manner which is not likely to mislead any third party as to the legal entity
with which they are dealing.
(k) Since its incorporation, the Seller's assets have not been
presented in consolidated financial statements or otherwise, as available for
distribution to creditors of any other person or entity, and such practice will
continue through and including the Exchange Date.
(l) The Seller's funds and assets, at all times since its
incorporation, have not been and will continue not to be commingled with those
of any other person or entity, and shall be clearly and properly accounted for
and traceable at all times and in all transactions.
(m) Since its incorporation, the Seller has and will continue to use
stationary and other business forms containing its name identifiably separate
and distinct from those of any other person or entity.
III.
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser represents and warrants to Seller as follows:
(a) Purchaser has been duly created and is validly existing as a
statutory business trust under the laws of the State of Delaware.
(b) This Agreement has been duly authorized, executed and delivered
by Purchaser and, assuming due authorization, execution and delivery by Seller,
is a legal, valid and binding agreement of Purchaser, enforceable against
Purchaser in accordance with its terms except as (i) such enforceability may be
limited by applicable bankruptcy, insolvency or similar laws affecting
creditors' rights generally and (ii) the availability of equitable remedies may
be limited by equitable principles of general applicability.
(c) The execution and delivery by Purchaser of, and the performance
by Purchaser of its obligations under, this
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Agreement will not contravene any provision of applicable law or the Trust
Agreement, Administration Agreement, Paying Agent Agreement, Custodian Agreement
or any other agreement or other instrument binding upon Purchaser or any
judgment, order or decree of any governmental body, agency or court having
jurisdiction over Purchaser, whether foreign or domestic, and no consent,
approval, authorization, order of, or qualification with, any governmental body
or agency, self-regulatory organization or court or other tribunal, whether
foreign or domestic is or will be required for the execution, delivery and
performance by Purchaser of this Agreement.
IV.
CONDITIONS TO PURCHASER'S OBLIGATIONS
(a) The obligation of Purchaser to deliver the Purchase Price
on the Payment Date is subject to the satisfaction of the following conditions:
(i) the purchase by the Underwriters of the Initial TrENDS
pursuant to the Underwriting Agreement shall have been consummated as
contemplated therein; and
(ii) the representations and warranties of Seller contained in
Article II hereof shall be true and correct as of the Payment Date.
(b) The obligation of Purchaser to deliver the Additional
Purchase Price on the Option Closing Date is subject to the condition that the
purchase by the Underwriters of the Additional TrENDS pursuant to the
Underwriting Agreement shall have been consummated as contemplated therein.
(c) If the conditions in this Article IV are not fulfilled or
waived by the Purchaser by the Exchange Date (or such later date as the parties
hereto may agree in writing), all rights, obligations and liabilities of the
parties hereunder shall be terminated and no party hereto will have any further
claim against any other party except claims, if any, in respect of any
antecedent breach hereof.
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V.
COVENANTS
5.1 Taxes. Seller shall pay any and all documentary, stamp, transfer
or similar taxes and charges that may be payable in respect of the entry into
this Agreement and the transfer and delivery of the Contract Shares, Marketable
Securities and any other property pursuant hereto.
5.2 Forward Contract. Seller hereby agrees that: (i) it will not
treat this Agreement, any portion of this Agreement, or any obligation
hereunder as giving rise to any interest income or other inclusions of ordinary
income; (ii) it will not treat the delivery of any portion of the Contract
Shares or cash or, if an Adjustment Event shall have occurred, Marketable
Securities or cash to be delivered pursuant to this Agreement as the payment of
interest or ordinary income; (iii) it will treat this Agreement in its entirety
as a forward contract for the delivery of such Contract Shares or cash or, if an
Adjustment Event shall have occurred, Marketable Securities or cash; and (iv) it
will not take any action (including filing any tax return or form or taking any
position in any tax proceeding) that is inconsistent with the obligations
contained in (i) through (iii). Notwithstanding the preceding sentence, Seller
may take any action or position required by law, provided that Seller delivers
to Purchaser an unqualified opinion of counsel, nationally recognized as expert
in United States federal tax matters, to the effect that such action or position
is required by a statutory change, United States Treasury regulation or
applicable court decision published after the date of this Agreement.
5.3 Limitations on Trading During Certain Days. Seller hereby agrees
that it will not buy Common Stock for its own account during the 60 days prior
to the Exchange Date; provided, however, that if any adjustment is made to the
Exchange Rate pursuant to Section 6.1(c) during the 65 days prior to the
Exchange Date the Seller may buy a maximum number of shares of Common Stock
equal to the increase in the number of Contract Shares deliverable by the Seller
on the Exchange Date solely as a result of such adjustment; provided, further,
that in no event may the Seller buy Common Stock for its own account on and
after the date on which the Seller has elected the Cash Settlement Alternative.
5.4 Notices. Seller will cause to be delivered to Purchaser:
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(a) Promptly upon the occurrence of any Event of Default
hereunder or under the Collateral Agreement, or upon Seller obtaining knowledge
that any of the conditions or events described in paragraph (a) or (b) of
Article VII shall have occurred with respect to the Seller, notice of such
occurrence; and
(b) In case at any time prior to the Exchange Date Seller
receives notice, or obtains knowledge, that any event requiring that an
adjustment be effected pursuant to Article VI hereof shall have occurred or will
occur, then Seller shall promptly cause to be delivered to Purchaser a notice
identifying such event and stating, if known to Seller, the date on which such
event is to occur or has occurred and, if applicable, the record date relating
to such event. Seller shall cause further notices to be delivered to Purchaser
if Seller subsequently receives notice, or obtains knowledge, of any further or
revised information regarding the terms or timing of such event or any record
date relating thereto.
5.5 Additional Covenants.
(a) The Seller shall not incur, directly or indirectly, any Debt
other than Debt existing as of the date hereof; provided, however, that the
Seller may incur reasonable fees and expenses in connection with this Agreement
and the transactions contemplated hereby; provided further that the Seller may
declare and distribute dividends to its shareholders, with the Purchase Price
paid by the Purchaser, in accordance with the laws of the British Virgin
Islands. For purposes of this paragraph, "Debt" means the principal of and
premium (if any) in respect of (i) any indebtedness of the Seller for money
borrowed, (ii) indebtedness evidenced by notes, debentures, bonds or other
similar instruments for the payment of which the Seller is responsible or liable
and (iii) all obligations of the type referred to in (i) and (ii) above of other
person of which Seller is responsible or liable, directly or indirectly, as
obligor, guarantor or otherwise [and (iv) any other indebtedness].
(b) The Seller will not create or suffer to exist, or enter into
any agreement, issue any power of attorney or otherwise confer on any person the
power to create or suffer to exist, any Lien upon any of its property or assets
now owned or hereafter acquired by it securing any obligation, except for (i)
the Lien existing as of the date hereof listed on Schedule ______ attached
hereto and (ii) the Lien created pursuant to the Collateral Agreement. For
purposes of this paragraph, "Lien" means any lien, mortgage, hypothecation,
pledge, security inter-
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est (including, without limitation, a fiduciary transfer or assignment),
conditional sale or other title retention agreement or other similar lien (other
than those arising solely by operation of law).
(c) The Seller will not engage in any business activity or
undertake any other activity, except any activity (i) contemplated by this
Agreement, (ii) permitted under its memorandum and articles of association,
which shall not be amended prior to the Exchange Date without the prior written
consent of the trustees of the Purchaser or (iii) any activity relating to the
exercise of its rights as owner of the Common Stock of the Company or other
property distributed with respect to such shares of the Company.
(d) Nothing contained in this Article shall limit or effect in
any way the representations and warranties of Seller contained in Article II of
this Agreement.
5.6 Further Assurances. From time to time on and after the date
hereof through the Exchange Date, each of the parties hereto shall use its
reasonable best efforts to take, or cause to be taken, all action and to do, or
cause to be done, all things necessary, proper and advisable to consummate and
make effective as promptly as practicable the transactions contemplated by
this Agreement in accordance with the terms and conditions hereof, including (i)
using reasonable best efforts to remove any legal impediment to the consummation
of such transactions and (ii) the execution and delivery of all such deeds,
agreements, assignments and further instruments of transfer and conveyance
necessary, proper or advisable to consummate and make effective the transactions
contemplated by this Agreement in accordance with the terms and conditions
hereof.
5.7 Survival of Representations and Warranties. The Seller's
representations and warranties contained in this Agreement, including but not
limited to Article II of this Agreement, shall survive the Payment Date and the
Option Closing Date.
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VI.
ADJUSTMENT OF EXCHANGE RATE, THRESHOLD PRICES,
INITIAL VALUE AND CLOSING PRICE
6.1 Dilution Adjustments. The Exchange Rate, Threshold
Appreciation Price, Floor Price and the Initial Value shall be subject to
adjustment from time to time as follows:
(a) Stock Dividends, Splits, Reclassifications, etc. If the
Company shall, after the date hereof,
(i) pay a stock dividend or make a distribution with respect
to Common Stock in such Common Stock;
(ii) subdivide or split the outstanding Common Stock into a
greater number of shares in the capital of the Company;
(iii) combine the outstanding Common Stock into a smaller number
of shares in the capital of the Company; or
(iv) issue by reclassification of Common Stock any shares in
the capital of the Company;
then, in each such case, the Exchange Rate shall be multiplied by a Dilution
Adjustment equal to the number of shares of Common Stock (or in the case of a
reclassification referred to in clause (iv) above, the number of shares in the
capital of the Company issued pursuant thereto) (or the fraction thereof) that a
holder who held one Common Stock immediately prior to such event would be
entitled solely by reason of such event to hold immediately after such event.
Upon any such adjustment the Threshold Appreciation Price and Floor Price
shall also be adjusted in the manner described in Section 6.1(d).
(b) Right or Warrant Issuances. If the Company shall, after the date
hereof, issue, or declare a record date in respect of an issuance of, rights or
warrants to all holders of Common Stock entitling them to subscribe for or
purchase Common Stock (other than rights to purchase Common Stock pursuant to a
plan for the reinvestment of dividends or interest) at a price per share less
than the Then-Reference Market Price of the Common Stock, then, in each such
case, the Exchange Rate shall be multiplied by the following Dilution
Adjustment: a fraction of which the numerator shall be the number of shares of
Common Stock outstanding immediately prior to the time the adjustment is
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effected, plus the number of additional shares of Common Stock offered for
subscription or purchase pursuant to such rights or warrants, and of which the
denominator shall be the number of shares of Common Stock outstanding
immediately prior to the time as of which the adjustment is effected plus the
number of additional shares of Common Stock which the aggregate offering price
of the total number of shares of Common Stock so offered for subscription or
purchase pursuant to such rights or warrants would purchase at the Then-
Reference Market Price of the Common Stock, which shall be determined by
multiplying the total number of shares so offered for subscription or purchase
by the exercise price of such rights or warrants and dividing the product so
obtained by such Then-Reference Market Price. To the extent that, after
expiration of such rights and warrants, shares of Common Stock are not delivered
in connection with exercises of such rights or warrants, the Exchange Rate shall
be readjusted to the Exchange Rate which would then be in effect had such
adjustments for the issuance of such rights or warrants been made upon the basis
of delivery of only the number of shares of Common Stock actually delivered.
Upon any such adjustment the Threshold Appreciation Price and Floor Price shall
also be adjusted in the manner described in Section 6.1(d).
(c) Excess Purchase Payments. If, after the date hereof, the Company
makes an Excess Purchase Payment, then the Exchange Rate will be multiplied by a
fraction of which the numerator shall be the Then-Reference Market Price of the
Common Stock, and of which denominator shall be such Then-Reference Market Price
less the amount of such distribution applicable to one share of Common Stock
which would not be a Permitted Dividend (as defined below), (or in the case of
an Excess Purchase Payment, less the aggregate amount of such Excess Purchase
Payments for which adjustment is being made at such time divided by the number
of outstanding shares of Common Stock on the date the adjustment is effected).
For purposes of this Agreement, "Excess Purchase Payment" means the excess, if
any, of (x) the cash and the value (as determined by a nationally recognized
independent investment banking firm retained for this purpose by Purchaser) of
all other consideration paid by the Company with respect to one share of Common
Stock acquired in any share repurchase (excluding share repurchases by the
Company effected in compliance with Rule 10b-18 under the Securities Exchange
Act of 1934, as amended) whether made by the Company in the open market, by
private purchase, by tender offer, by exchange offer or otherwise, over (y)
the Then-Reference Market Price of the Common Stock. Notwithstanding the
foregoing, the Company may pay up to $____________ in aggregate consideration in
respect of share
16
repurchases without any adjustment pursuant to this Section 6.1(c) being
required, provided that no such repurchase involves an Excess Purchase Payment
of more than five percent of the Then-Reference Market Price of the Common Stock
on the date an adjustment therefor would otherwise be required to be effected.
Upon any such adjustment the Threshold Appreciation Price and Floor Price shall
also be adjusted in the manner described in Section 6.1(d).
(d) Corresponding Adjustments to Initial Value, Threshold
Appreciation Price, Floor Price and Closing Price.
(i) If any adjustment is made to the Exchange Rate pursuant to
Section 6.1 (a), (b) or (c), an adjustment shall also be made to the
Threshold Appreciation Price and the Floor Price. The required adjustment
shall be made by dividing each of the Threshold Appreciation Price and the
Floor Price by the relevant Dilution Adjustment.
(ii) If, during any Calculation Period used in calculating the
Reference Market Price, the Then-Reference Market Price or the Transaction
Value, there shall occur any event requiring an adjustment to be effected
pursuant to this Section 6.1, then the Closing Price for each Trading Day
in the Calculation Period occurring prior to the day on which such
adjustment is effected shall be adjusted by being divided by the relevant
Dilution Adjustment.
(e) Timing of Dilution Adjustments. Each Dilution Adjustment
required hereunder shall be effected:
(i) in the case of any dividend, distribution or issuance, at
the opening of business on the Business Day next following the record date
for determination of holders of Common Stock entitled to receive such
dividend, distribution or issuance or, if the announcement of any such
dividend, distribution or issuance is after such record date, at the time
such dividend, distribution or issuance shall be announced by the Company;
(ii) in the case of any subdivision, split, combination or
reclassification, on the effective date of such transaction;
(iii) in the case of any Excess Purchase Payment for which the
Company shall announce, at or prior to the time it commences the relevant
share repurchase, the repur-
17
chase price per share for shares proposed to be repurchased, on the date of
such announcement; and
(iv) in the case of any other Excess Purchase Payment, on the
date that the holders of the repurchased shares become entitled to payment
in respect thereof.
(f) General; Failure of Dilution Event to Occur. All Dilution
Adjustments shall be rounded upward or downward to the nearest 1/10,000th or if
there is not a nearest 1/10,000th to the next lower 1/10,000th). No adjustment
in the Exchange Rate shall be required unless such adjustment would require an
increase or decrease of at least one percent therein; provided, however, that
any adjustments which by reason of this sentence are not required to be made
shall be carried forward and taken into account in any subsequent adjustment. If
any announcement or declaration of a record date in respect of a dividend,
distribution, issuance or repurchase requiring an adjustment pursuant to this
Section 6.1 shall subsequently be cancelled by the Company, or such dividend,
distribution, issuance or repurchase shall fail to receive requisite approvals
or shall fail to occur for any other reason, then, upon such cancellation,
failure of approval or failure to occur, the Exchange Rate shall be readjusted
to the Exchange Rate which would then have been in effect had adjustment for
such event not been made. If an Adjustment Event shall occur after the
occurrence of one or more events requiring an adjustment pursuant to this
Section 6.1, the Dilution Adjustments previously applied to the Exchange Rate in
respect of such events shall not be rescinded but shall be applied to the new
Exchange Rate provided for under Section 6.2.
6.2 Adjustment for Consolidation, Merger or Other Adjustment Event.
In the event of (i) any dividend or distribution by the Company to all holders
of Common Stock of evidences of its indebtedness or other assets (excluding (i)
dividends or distributions referred to in Section 6.1(a)(i), (ii) any shares of
other common stock of the Company issued in a reclassification referred to in
Section 6.1(a)(iv) and (iii) Permitted Dividends), or any issuance by the
Company to all holders of Common Stock of rights and warrants (other than rights
or warrants referred to in Section 6(b)), (ii) any consolidation or merger of
the Company, or any surviving entity or subsequent surviving entity of the
Company (a "Company Successor"), with or into another entity (other than a
merger or consolidation in which the Company is the continuing corporation and
in which the Common Stock outstanding immediately prior to the merger or
consolidation is not exchanged for cash, securities or other property of the
Company or another
18
entity), (iii) any sale, transfer, lease or conveyance to another entity of the
property of the Company or any Company Successor as an entirety or substantially
as an entirety, (iv) any statutory exchange of securities of the Company or any
Company Successor with another entity (other than in connection with a merger or
acquisition) or (v) any liquidation, dissolution or winding up of the Company or
any Company Successor (any such event described in clause (i), (ii), (iii), (iv)
or (v), an "Adjustment Event"), the Exchange Rate shall be adjusted so that on
the Exchange Date Purchaser shall receive, in lieu of, or (in the case of an
Adjustment Event described in Section 6.2(i)) in addition to, the Contract
Shares, cash in an amount equal to the product of (x) the Firm Share Base Amount
plus the Additional Share Base Amount (if any) and (i) if the Reference Market
Price is greater than or equal to the Threshold Appreciation Price, [______]
multiplied by the Transaction Value, (ii) if the Reference Market Price is less
than the Threshold Appreciation Price but is equal to or greater than the Floor
Price, the product of (A) the Floor Price divided by the Reference Market Price
multiplied by (B) the Transaction Value and (iii) if the Reference Market Price
is less than the Floor Price, the Transaction Value. Following an Adjustment
Event, the Reference Market Price, as such term is used herein, shall be deemed
to equal (A) the Reference Market Price of the Common Stock, as adjusted
pursuant to Section 6.1(d); plus (B) the Transaction Value. Notwithstanding the
foregoing, if any Marketable Securities are received in such Adjustment Event,
Seller may, at its option, in lieu of delivering cash as described above,
deliver an equivalent amount (based on the value determined in accordance with
clause (z) of the following paragraph) of Marketable Securities, but not
exceeding, as a percentage of the total consideration required to be delivered,
the percentage of the total Transaction Value attributable to such Marketable
Securities; provided, however, that (i) if such option is exercised, the Seller
shall deliver Marketable Securities in respect of all, but not less than all,
cash amounts that would otherwise be deliverable in respect of Marketable
Securities received in an Adjustment Event, (ii) the Seller may not exercise
such option if the Seller has elected to deliver cash in lieu of the Common
Stock, if any, deliverable upon the Exchange Date or if such Marketable
Securities have not yet been delivered to the holders entitled thereto following
such Adjustment Event or any record date with respect thereto, and (iii) subject
to clause (ii) of this proviso, the Seller must exercise such option if the
Seller does not elect to deliver cash in lieu of Common Stock, if any,
deliverable upon the Exchange Date. If the Seller elects to deliver Marketable
Securities, each holder of a TrENDS will be responsible for the payment of any
and all brokerage and other
19
transaction costs upon the sale of such Marketable Securities. If, following any
Adjustment Event, any Marketable Security ceases to qualify as a Marketable
Security, then (x) the Seller may no longer elect to deliver such Marketable
Security in lieu of an equivalent amount of cash and (y) notwithstanding clause
(z) of the definition of Transaction Value, the Transaction Value of such
Marketable Security shall mean the fair market value of such Marketable Security
on the date such security ceases to qualify as a Marketable Security, as
determined by a nationally recognized investment banking firm retained for this
purpose by the Seller.
"Permitted Dividend" means any cash dividend in respect of the Common
Stock, other than a cash dividend that, together with any other cash dividends
during the preceding 12 months, exceeds 10% of the average of the Closing Prices
during such 12-month period.
"Transaction Value" means the sum of: (x) for any cash received in
any such Adjustment Event, the amount of cash received per share of Common
Stock; (y) for any property other than cash or Marketable Securities received in
any such Adjustment Event, an amount equal to the market value on the date the
Adjustment Event is consummated of such property received per share of Common
Stock, as determined by a nationally recognized independent investment banking
firm retained for this purpose by the Administrator; and (z) for any Marketable
Securities received in any such Adjustment Event, an amount equal to the average
Closing Price per share of such Marketable Securities for the Calculation Period
of 20 Trading Days immediately prior to the Exchange Date multiplied by the
number of such shares received for each share of Common Stock; provided that if
no Closing Price for such Marketable Securities may be determined for one or
more (but not all) of such Trading Days, such Trading Day shall be disregarded
in the calculation of such average Closing Price (but no additional Trading Days
shall be added to the Calculation Period). If no Closing Price for the
Marketable Securities may be determined for all such Trading Days, the
calculation in the preceding clause (z) shall be based on the most recently
available Closing Price for the Marketable Securities prior to such 20 Trading
Days.
"Marketable Securities" means any securities that (A) are (i) listed
on a United States national securities exchange, (ii) reported on a United
States national securities system subject to last sale reporting, (iii) traded
in the over-the-counter market and reported on the National Quotation Bureau or
20
similar organization or (iv) for which bid and ask prices are available from at
least three nationally recognized investment banking firms and (B) are either
(x) perpetual equity securities or (y) non-perpetual equity or debt securities
with a stated maturity after the stated maturity of the TrENDS. The number of
such Marketable Securities included in the calculation of Transaction Value
pursuant to the clause (z) of the preceding paragraph, and the Threshold
Appreciation Price, Floor Price and Initial Value, shall be subject to
adjustment if any event that would, had it occurred with respect to the Common
Stock or the Company, have required an adjustment pursuant to Section 6.1, shall
occur with respect to such Marketable Securities or the issuer thereof
subsequent to the date the Adjustment Event is consummated. Adjustment for such
subsequent events shall be as nearly equivalent as practicable to the
adjustments provided for in Section 6.1.
VII
ACCELERATION
If one or more of the following events (each an "Event of Default")
shall occur:
(a) Seller shall commence a voluntary case or other proceeding
seeking a liquidation, reorganization or other relief with respect to itself or
its debts under any bankruptcy, insolvency or other similar law now or hereafter
in effect or in that connection seeking the appointment of a trustee, receiver,
liquidator, custodian or other similar official of it or any substantial part of
its property, or shall consent to any such relief or to the appointment of or
taking possession by any such official in an involuntary case or other
proceeding commenced against it, or shall take any corporate action to authorize
any of the foregoing;
(b) an involuntary case or other proceeding shall be commenced
against Seller seeking liquidation, reorganization or other relief with respect
to it or its debts under any bankruptcy, insolvency or other similar law now
or hereafter in effect or in that connection seeking the appointment of a
trustee, receiver, liquidator, custodian or other similar official of it or
any substantial part of its property, and such involuntary case or other
proceeding shall remain undismissed and unstayed for a period of 60 days
following the Company becoming aware of it (at the end of which a Collateral
Event of Default
21
for the purposes of section (c) below shall be deemed to have occurred; or
(c) a Collateral Event of Default within the meaning of the
Collateral Agreement;
then, upon the occurrence of any such event, an Acceleration Date shall occur,
and Seller shall become obligated to deliver immediately upon receipt of the
Acceleration Amount Notice (as defined below), the Acceleration Amount. The
"Acceleration Amount" means that number of shares of Common Stock determined by
dividing: (i) the Aggregate Acceleration Value by (ii) the Closing Price of the
Common Stock on the Acceleration Date. If an Adjustment Event shall have
occurred on or before the Acceleration Date, then in lieu of the Acceleration
Amount, Seller shall deliver cash, Marketable Securities or a combination
thereof, as the case may be, having an aggregate value, based on the Closing
Price per share or the value of a debt security of the Marketable Securities
on the Acceleration Date, equal to the Aggregate Acceleration Value; provided
that the percentage of such aggregate value that may be delivered in the form of
Marketable Securities shall not exceed the percentage of the Transaction Value
that would be attributable to Marketable Securities if the Exchange Date were
the Acceleration Date.
The "Aggregate Acceleration Value" means the product obtained by
multiplying (i) the Acceleration Value (as defined below) by (ii) the quotient
obtained by dividing (A) the sum of the Firm Share Base Amount and the
Additional Share Base Amount (if any) by (B) 1,000; except that, if no
quotations for the determination of the Acceleration Value are obtained as
described below, the Aggregate Acceleration Value shall be (x) the Closing Price
on the Acceleration Date times the number of shares of Common Stock that would
be required to be delivered by Seller on such date under this Agreement if the
Exchange Date were the Acceleration Date or (y) after an Adjustment Event, the
value of the alternative consideration that would be required to be delivered on
such date under the Agreement if the Exchange Date were the Acceleration Date.
The "Acceleration Value" means an amount determined on the basis of
quotations from up to four Independent Dealers, as defined below. Each
quotation will be for the amount that would be paid to the relevant Independent
Dealer in consideration of an agreement between Purchaser and such Independent
Dealer that would have the effect of preserving for Purchaser the economic
equivalent of the payments and deliveries that Purchaser would,
22
but for the occurrence of the Acceleration Date, have been entitled to receive
after the Acceleration Date under Article I hereof (taking into account any
adjustments to the Exchange Rate that may have been effected on or prior to the
Acceleration Date) provided that, for purposes of determining the payments and
deliveries to which Purchaser is entitled under Article I hereto, the Additional
Share Base Amount shall be redefined to be zero and the Firm Share Base Amount
shall be redefined to be 1,000. On or as soon as reasonably practicable
following the date on which Purchaser receives notice, or obtains knowledge of,
such Acceleration Date, Purchaser will request each Independent Dealer to
provide its quotation as soon as reasonably practicable, but in any event within
two Business Days. Purchaser shall compute Acceleration Value upon receipt of
each Independent Dealer's quotation, provided that if, at the close of business
on the fourth Business Day following the date on which Purchaser receives
notice, or obtains knowledge of, such Acceleration Date, Purchaser shall have
received quotations from fewer than four of the Independent Dealers, Purchaser
shall compute the Acceleration Value using the quotations, if any, it shall have
received at or prior to such time. If four quotations are provided, the
Acceleration Value will be the arithmetic mean of the two quotations remaining
after disregarding the highest and lowest quotations. (For this purpose, if more
than one quotation has the same highest or lowest value, then one of such
quotations shall be disregarded.) If two or three quotations are provided, the
Acceleration Value will be the arithmetic mean of such quotations. If one
quotation is provided, the Acceleration Value will be equal to such quotation.
If no quotations are provided, the Acceleration Value will not be determined and
the Aggregate Acceleration Value will be determined as provided above.
"Independent Dealer" means a nationally recognized independent
investment banking firm selected in good faith by Purchaser.
As promptly as reasonably practicable after receipt of the quotations
on which the Acceleration Value is based (or, as the case may be, after failure
to receive any such quotations within the time period prescribed above,
Purchaser shall deliver to Seller a notice (the "Acceleration Amount Notice")
specifying the Acceleration Amount of Shares required to be delivered by Seller.
Purchaser and Seller agree that the Aggregate Acceleration Value is
a reasonable pre-estimate of loss and not a penalty. Such amount is payable for
the loss of bargain and
23
Purchaser will not be entitled to recover additional damages as a consequence of
loss resulting from an Event of Default.
VIII.
MISCELLANEOUS
8.1 Adjustments of Exchange Rate; Selection of Independent Investment
Banking Firm. Purchaser shall be responsible for effectuating and calculating or
obtaining the calculation of any adjustment pursuant to Article VI hereof and
shall furnish Seller notice of any such adjustment and shall provide Seller
reasonable opportunity to review the calculations pertaining to any such
adjustment. If, pursuant to the terms and conditions hereof, Purchaser shall be
required to retain a nationally recognized independent investment banking firm
for any purpose provided herein, such nationally recognized independent
investment banking firm shall be selected and retained by Purchaser only after
consultation with Seller. Purchaser may delegate the selection of any such firm,
or the effectuation and calculation of any such adjustments, to the
Administrator. The Administrator may retain a nationally recognized firm of
independent certified public accountants (which may be the independent auditors
of the Company), selected after consultation with Seller, to calculate any
dilution adjustments to the Exchange Rate required by Article VI hereof. The
fees and expenses of any such nationally recognized independent investment
banking firm or firm of nationally recognized independent auditors retained by
the Administrator shall be borne by Seller.
8.2 Notices. Any notice provided for herein, unless otherwise
specified, shall be in writing (including transmittal by telex or telecopier)
and shall be given to a party at the address set forth opposite such party's
name on the signature pages hereto or at such other address as may be designated
by notice duly given in accordance with this Section 8.2 to each other party
hereto. Any notice to the Seller of legal process in the United States should
be sent to CT Corporation, the registered agent of the Seller in the United
States, at 0000 Xxxxxxxx, Xxx Xxxx, Xxx Xxxx 00000.
8.3 Governing Law; Submission to Jurisdictions; Severability. This
Agreement shall be governed by and construed in accordance with the laws of the
State of New York, without regard to its principles of conflicts of laws. The
Seller hereby submits to the non-exclusive jurisdiction of the United States
00
Xxxxxxxx Xxxxx for the Southern District of New York and any New York state
court sitting in New York City for the purposes of all legal proceedings arising
out of or relating to this Agreement or the transactions contemplated hereby.
The Seller hereby irrevocably waives, to the fullest extent permitted by
applicable law, any objection that it may now or hereafter have to laying of the
venue of any such proceedings brought in such a court and any claim that any
such proceeding brought in such a court has been brought in an inconvenient
forum. To the extent permitted by law, the unenforceability or invalidity of
any provision or provisions of this Agreement shall not render any other
provision or provisions herein contained unenforceable or invalid. [The Seller
hereby irrevocably waives, to the fullest extent permitted by applicable law,
trial by jury].
8.4 Entire Agreement. Except as expressly set forth herein, this
Agreement constitutes the entire agreement among the parties with respect to the
subject matter hereof and supersedes all prior agreements, understandings and
negotiations, both written and oral, among the parties with respect to the
subject matter of this Agreement.
8.5 Amendments; Waivers. Any provision of this Agreement may be
amended or waived if, and only if, such amendment or waiver is in writing and
signed, in the case of an amendment, by Purchaser and Seller or, in the case of
a waiver, by the party against whom the waiver is to be effective. No failure
or delay by either party in exercising any right, power or privilege hereunder
shall operate as a waiver thereof nor shall any single or partial exercise
thereof preclude any other or further exercise thereof or the exercise of any
other right power or privilege. The rights and remedies herein provided shall
be cumulative and not exclusive of any rights or remedies provided by law.
8.6 No Third Party Rights; Successors and Assigns. This Agreement is
not intended and shall not be construed to create any rights in any person other
than Seller and Purchaser and their respective successors and assigns and no
person shall assert any rights as third party beneficiary hereunder. Whenever
any of the parties hereto is referred to, such reference shall be deemed to
include the successors and assigns of such party. All the covenants and
agreements herein contained by or on behalf of Seller and Purchaser shall bind,
and inure to the benefit of, their respective successors and assigns whether so
expressed or not, and shall be enforceable by and inure to the benefit of
Purchaser and its successors and assigns.
25
8.7 Counterparts. This Agreement may be executed acknowledged and
delivered in any number of counterparts, and such counterparts taken together
shall constitute one and the same instrument.
26
IN WITNESS WHEREOF, the parties have signed this Agreement as of the
date and year first above written.
SELLER:
LUCKYGOLD 18A LIMITED
By
--------------------------------------
Address for Notices:
CT Corporation
Attention:
-------------------------------
PURCHASER:
-----------------------------------------
as Trustee
-----------------------------------------
as Trustee
-----------------------------------------
as Trustee
each as trustee of PEAK TrENDS TRUST
Address for Notices:
000 Xxxxxxx Xxxxxx
Xxxxx 000
Xxxxxx, XX 00000
Attention: Xxxxxx X. Xxxxxxx
27