CGSH Draft of 9/12/97
PURCHASE AGREEMENT*
THIS AGREEMENT is made as of this ___ day of
_________, 1997 between [Selling Shareholder] ("Seller" and,
together with the Other Sellers (as defined below), "Sellers")
and DECS Trust, a business trust organized under the laws of the
State of Delaware under and by virtue of an Amended and Restated
Declaration of Trust, dated as of _________, 1997 (the
"Declaration of Trust") (such trust and the trustees thereof
acting in their capacity as such being referred to herein as
"Purchaser").
WHEREAS, Seller owns shares of common stock, par value
$__ per share (the "Common Stock"), of DIMON Incorporated, a
Virginia corporation (including its successors, the "Company");
WHEREAS, Purchaser has filed with the Securities and
Exchange Commission a registration statement contemplating the
offering of up to 3,484,104 DECS (the "DECS"), the terms of which
contemplate delivery by Purchaser to the holders thereof of a
number of shares of Common Stock (or, if some or all of the
Sellers exercise their cash settlement option, cash in lieu of
part or all thereof), on _________, 2000 (the "Exchange Date");
WHEREAS, in exchange for certain consideration to be
paid by Purchaser hereunder and under other similar agreements,
Purchaser and Sellers desire to provide for the future
acquisition, sale and delivery of the aggregate number of shares
of Common Stock contemplated to be delivered by Purchaser in
respect of the DECS on the Exchange Date, at a price to be
established under this Agreement and such other agreements;
WHEREAS, Seller has agreed, pursuant to the Collateral
Agreement (the "Collateral Agreement") dated as of
______________, 1997, among Purchaser, Seller and The Bank of New
York, as collateral agent (the "Collateral Agent"), to grant
Purchaser a security interest in the shares of Common Stock
specified therein and in certain other circumstances certain
other collateral to secure the obligations of Seller hereunder;
WHEREAS, Purchaser has agreed, pursuant to an
underwriting agreement, dated ___________, 1997 (the
"Underwriting Agreement"), among Purchaser, Seller, the other
persons and entities named as "Sellers" therein (collectively,
the "Other Sellers"), the Company and Salomon Brothers Inc (the
"Underwriter"), to issue and sell to the Underwriter an aggregate
of ______ DECS (the "Initial DECS") and, at the Underwriter's
option, up to ________ additional DECS (the "Additional DECS") to
cover overallotments, if any;
___________________
* This is a form of Purchase Agreement. A substantially identical agreement
will be entered into by each Seller.
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 Date" has the meaning provided in Article VII.
"Acceleration Value" has the meaning provided in Article VII.
"Additional DECS" has the meaning provided in the recitals of this
Agreement.
"Additional Purchase Price" has the meaning provided in
Section 1.2(b).
"Additional Share Base Amount" means a number equal to
the number of Additional DECS that the Underwriter elects to
purchase under the Underwriting Agreement multiplied by a
fraction, the numerator of which is the Firm Share Base Amount
and the denominator of which is the number of Initial DECS
purchased by the Underwriter 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 ________________, 1997, or any successor thereto.
"Affiliate" means, as to any Person, any other Person
that, directly or indirectly, controls, is controlled by or is
under common control with such Person or is a partner in, or a
director or officer of, such Person and, with respect to any
Seller that is a natural person, further includes such Seller's
immediate family members, including his or her father, mother,
spouse and children, the spouses of his or her children, his or
her siblings and their spouses and children. For purposes of this
definition, "control" (including the terms "controlled by" or
"under common control with") means, as to any Person, the
possession, direct or indirect, of the power to vote ten percent
or more of the securities having ordinary voting power for the
election of directors of such Person or the power to direct or
cause the direction of the management and policies of such
Person, whether through ownership of voting securities or by
contract or otherwise.
"Bankruptcy Code" has the meaning provided in Section 8.7.
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"Business Day" means any day that is not a Saturday, a
Sunday or a day on which the NYSE or banking institutions or
trust companies in The City of New York are authorized or
obligated by law or executive order to close.
"Calculation Period" means any period of Trading Days
for which an average security price must be determined pursuant
to this Agreement.
"Cash Delivery Option" has the meaning provided in Section 1.3(d).
"Closing Price" means, for any security on any date of
determination, (i) the closing sale price (or, if no closing
price is reported, the last reported sale price) of such security
(regular way) on the NYSE on such date, (ii) if such security is
not listed for trading on the NYSE on any such date, as reported
in the composite transactions for the principal United States
securities exchange on which such security is so listed, (iii) if
such security is not so listed on a United States national or
regional securities exchange, as reported by The Nasdaq Stock
Market, (iv) if such security is not so reported, the last quoted
bid price for such security in the over-the-counter market as
reported by the National Quotation Bureau or similar organization
or (v) if such security is not so quoted, the average of the
mid-point of the last bid and ask prices for such security from
at least three nationally recognized investment banking firms
selected by the Administrator for such purpose. The Closing Price
as determined pursuant to the foregoing shall be subject to
adjustment in certain circumstances as provided in Section
6.1(c).
"Collateral Agent" has the meaning provided in the
recitals of this Agreement.
"Collateral Agreement" has the meaning provided in the
recitals of this Agreement.
"Common Stock" has the meaning provided in the
recitals of this Agreement.
"Company" has the meaning provided in the recitals of
this Agreement.
"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
______________, 1997, or any successor thereto.
"Declaration of Trust" has the meaning provided in the
introductory paragraph of this Agreement.
"DECS" has the meaning provided in the recitals of this Agreement.
"Dilution Adjustment" means any fraction or number by
which the Exchange Rate shall be multiplied pursuant to Section
6.1(a) or (b) or by which Closing Prices may be divided pursuant
to Section 6.1(c).
"Event of Default" has the meaning provided in Article VII.
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"Exchange Date" has the meaning provided in the
recitals of this Agreement.
"Exchange Price" means the average Closing Price per
share of Common Stock on the 20 Trading Days immediately prior to
(but not including) the Exchange Date; provided, however, that if
there are not 20 Trading Days for the Common Stock occurring
later than the 60th calendar day immediately prior to, but not
including, the Exchange Date, Exchange Price shall mean the
market value per share of the Common Stock as of the Exchange
Date as determined by a nationally recognized independent
investment banking firm retained for this purpose by the
Administrator. The Exchange Price as determined pursuant to the
foregoing shall be subject to adjustment in certain circumstances
as provided in Section 6.1(c).
"Exchange Rate" has the meaning provided in Section 1.1(c).
"Firm Payment Date" has the meaning provided in Section 1.3(a).
"Firm Purchase Price" has the meaning provided in Section 1.2(a).
"Firm Share Base Amount" has the meaning provided in
Section 1.1(a).
"Firm Shares" has the meaning provided in Section 1.1(a).
"Independent Dealers" has the meaning provided in Article VII.
"Initial DECS" has the meaning provided in the
recitals of this Agreement.
"Initial Price" has the meaning provided in Section 1.1(c).
"Market Price" means, as of any date of determination,
the average Closing Price per share of Common Stock on the 20
Trading Days immediately prior to (but not including) the date of
determination; provided, however, that if there are not 20
Trading Days for the Common Stock occurring later than the 60th
calendar day immediately prior to, but not including, such date,
the Market Price shall mean the market value per share of Common
Stock as of such date as determined by a nationally recognized
investment banking firm retained for such purpose by the
Administrator.
"NYSE" means the New York Stock Exchange.
"Option Closing Date" means the settlement dates for
the Additional DECS under Section 5 of the Underwriting
Agreement.
"Ordinary Cash Dividend" means, with respect to any
consecutive 365-day period, any dividend with respect to Common
Stock paid in cash to the extent that the amount of such
dividend, together with the aggregate amount of all other
dividends on the Common Stock paid in cash during such 365-day
period, does not exceed on a per share basis 10% of the average
of the Closing Prices of the Common Stock over such 365-day
period; provided that, for purposes of the foregoing definition,
the amount of cash dividends paid on a per share basis shall
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be appropriately adjusted to reflect the occurrence
during such period of any event described in Article VI.
"Other Sellers" has the meaning provided in the
recitals of this Agreement.
"Person" means an individual, partnership, corporation
(including a business trust), joint stock company, trust,
unincorporated association, limited liability company, joint
venture or other entity, or a government or any political
subdivision or agency thereof.
"Purchaser" has the meaning provided in the
introductory paragraph of this Agreement.
"Reported Securities" has the meaning provided in Section 6.2.
"Seller" and "Sellers" have the meaning provided in
the introductory paragraph of this Agreement.
"Threshold Appreciation Price" has the meaning
provided in Section 1.1(c).
"Trading Day" means, with respect to any security the
Closing Price of which is being determined, a day on which such
security (A) is not suspended from trading on any national or
regional securities exchange or association or over-the-counter
market at the close of business and (B) has traded at least once
on the national or regional securities exchange or association or
over-the-counter market that is the primary market for the
trading of such security.
"Transaction Value" has the meaning provided in Section 6.2.
"Underwriter" has the meaning provided in the recitals
of this Agreement.
"Underwriting Agreement" has the meaning provided in
the recitals of this Agreement.
ARTICLE 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, the
number of shares of Common Stock (the "Firm Shares") equal to the
product of ________ (the "Firm Share Base Amount") and the
Exchange Rate.
(b) Additional 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
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Seller, a number of additional shares of Common Stock (the
"Additional Shares") equal to the product of the Additional Share
Base Amount and the Exchange Rate. In addition to
the other conditions set forth herein, such purchase and sale
shall be conditioned on the Underwriter's purchase of the
Additional Share Base Amount of Additional Shares pursuant to the
Underwriting Agreement on the Option Closing Date. Promptly after
receipt by Purchaser of notice that the Underwriter is exercising
its option to purchase Additional DECS, Purchaser will provide
Seller with written notice of such exercise by the Underwriter,
stating the related 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 for the
Additional DECS. 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 as provided in Article
VI: (i) if the Exchange Price is greater than $________ (the
"Threshold Appreciation Price"), [_____], (ii) if the Exchange
Price is less than or equal to the Threshold Appreciation Price
but greater than $______ (the "Initial Price"), a fraction
(rounded upward or downward to the nearest 1/10,000th or, if
there is not a nearest 1/10,000th, to the next higher 1/10,000th)
equal to the Initial Price divided by the Exchange Price and
(iii) if the Exchange Price is less than or equal to the Initial
Price, 1.
1.2 Purchase Price.
(a) Firm Purchase Price. The purchase price for the
Firm Shares (the "Firm Purchase Price") shall be $_______ in
cash.
(b) Additional Purchase Price. The purchase price for
the Additional Shares (the "Additional Purchase Price") shall be
an amount equal to (i) the difference between (1) the aggregate
proceeds to Purchaser from the sale of the Additional DECS and
(2) the aggregate cost to Purchaser, as notified by Purchaser to
Seller on the Option Closing Date for the Additional DECS, of the
Additional STRIPS, multiplied by (ii) a fraction, the numerator
of which is the Firm Share Base Amount and the denominator of
which is the number of Initial DECS purchased by the Underwriter
under the Underwriting Agreement.
1.3 Payment for and Delivery of Contract Shares.
(a) Firm Payment Date. Upon the terms and subject to
the conditions of this Agreement, Purchaser shall deliver to
Seller the Firm Purchase Price on ____________, 1997 (the "Firm
Payment Date") at the offices of Cleary, Gottlieb, Xxxxx &
Xxxxxxxx, Xxx Xxxxxxx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, or at such
other place as shall be agreed upon by Purchaser and Seller, paid
by wire transfer of Federal (immediately available) funds to an
account designated by Seller, against delivery by Seller to the
Collateral Agent of the number of shares of Common Stock and/or
cash, securities and other property necessary to comply with
Seller's obligations under the Collateral Agreement.
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(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 Cleary, Gottlieb, Xxxxx & Xxxxxxxx, Xxx Xxxx,
Xxx Xxxx 00000, or at such other place as shall be agreed upon by
Purchaser and Seller, paid by wire transfer of Federal
(immediately available) funds to an account designated by Seller,
against delivery by Seller to the Collateral Agent of the
additional number of shares of Common Stock and/or cash,
securities and other property necessary to comply with Seller's
obligations under the Collateral Agreement.
(c) Delivery of Contract Shares.
(i) On the Exchange Date, Seller agrees to deliver the
Contract Shares to Purchaser. Seller shall be deemed to
have instructed the Collateral Agent to deliver to the
Custodian, for the account of Purchaser, shares of Common
Stock then held by the Collateral Agent as collateral under
the Collateral Agreement, in an amount equal to the number
of Contract Shares, rounded down to the nearest whole
number. Instead of any fractional shares of Common Stock
that would otherwise be deliverable (prior to rounding) to
Purchaser at the Exchange Date, Seller agrees to make a
cash payment in respect of such fractional shares of Common
Stock in an amount equal to the value thereof at the
Exchange Price. Notwithstanding the foregoing, if an
Adjustment Event shall have occurred prior to the Exchange
Date then, in lieu of the foregoing, Seller shall be deemed
to have instructed: (A) in the case of any cash required to
be delivered on the Exchange Date as provided in Section
6.2, the Collateral Agent to wire transfer Federal
(immediately available) funds to an account designated by
Purchaser; and (B) in the case of any Reported Securities
required to be delivered by Seller in lieu of cash as
provided in Section 6.2, the Collateral Agent to deliver to
the Custodian, for the account of Purchaser, a specified
number of Reported Securities then held as collateral under
the Collateral Agreement, as provided in Section 6(g) of
the Collateral Agreement.
(ii) In the event that by the Exchange Date any
substitute collateral has not been replaced by shares of
Common Stock (or, after an Adjustment Event, cash or
Reported Securities) sufficient to meet Seller's
obligations hereunder, delivery shall be effected by
delivery by the Collateral Agent to the Custodian, for the
account of Purchaser, of the market value of the shares of
Common Stock required to be delivered hereunder, in the
form of any shares of Common Stock then pledged by Seller
plus cash generated from the liquidation of U.S. Government
obligations then pledged by Seller (or, after an Adjustment
Event, the market value of the alternative consideration
required to be delivered hereunder, in the form of any
Reported Securities then pledged, plus any cash then
pledged, plus cash generated from the liquidation of U.S.
Government obligations then pledged). In such event, Seller
shall be deemed to have instructed the Collateral Agent to
liquidate and turn into cash the U.S. Government
obligations then pledged by Seller to the extent necessary
to satisfy Seller's obligations hereunder.
(iii) Certificates representing Common Stock (or
Reported Securities) in registered form that are part of
the Contract Shares shall be registered in Purchaser's name
or in the name of a depositary or a nominee of a depositary
as requested by
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Purchaser, unless such Common Stock (or Reported
Securities) is represented by one or more global
certificates registered in the name of a depositary or a
nominee of a depositary or are book entry securities, in
which event Purchaser's interest in such securities shall
be noted in a manner satisfactory to Purchaser and its
counsel.
(iv) Seller's right to deliver (or cause to be
delivered) to Purchaser hereunder Common Stock and Reported
Securities shall be conditioned upon such Common Stock and
Reported Securities to be so delivered being transferable
by Purchaser, following receipt from Seller, without any
restrictions not generally applicable to all holders of
such Common Stock or Reported Securities, as the case may
be. If the condition set forth in the preceding sentence
shall not be satisfied with respect to any Common Stock or
Reported Securities to be delivered by Seller, then,
notwithstanding the provisions hereof, Seller shall
exercise the Cash Delivery Option.
(d) Cash Delivery Option. At his or her option, Seller
may deliver to Purchaser on the Exchange Date, in lieu of the
Contract Shares, an amount in cash equal to, subject to
adjustment as provided in Section 6.2, the Exchange Price of the
Contract Shares (the "Cash Delivery Option"), paid by wire
transfer to an account designated by Purchaser, in Federal
(immediately available) funds. Seller may elect the Cash Delivery
Option in respect of all, but not less than all, Contract Shares
and may do so by notice to Purchaser, the Collateral Agent and
the Custodian not less than 25 Business Days prior to the
Exchange Date. If Seller elects the Cash Delivery Option and so
notifies Purchaser, Purchaser shall promptly notify The
Depository Trust Company and publish a notice in a daily
newspaper of national circulaion stating whether the holders of
DECS will receive shares of Common Stock, cash or a combination
thereof and, if a combination of Common Stock and cash, the
relative proportion of each.
(e) Seller represents, and Purchaser acknowledges,
that it is Seller's current intention to deliver Contract Shares
to the Purchaser on the Exchange Date and not to exercise the
Cash Delivery Option; however, Seller intends to consider all
relevant economic and market factors in ultimately determining
whether to deliver Contract Shares on the Exchange Date or to
exercise the Cash Delivery Option.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF SELLER
----------------------------------------
Seller represents and warrants to Purchaser that each
representation and warranty made by Seller in Section 3 of the
Underwriting Agreement is true and correct on the date hereof.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF PURCHASER
-------------------------------------------
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Purchaser represents and warrants to Seller that each
representation and warranty made by Purchaser in Section 1 of the
Underwriting Agreement is true and correct on the date hereof.
ARTICLE IV
CONDITIONS TO PURCHASER'S OBLIGATIONS
-------------------------------------
(a) The obligation of Purchaser to deliver the Firm
Purchase Price on the Firm Payment Date is subject to the
satisfaction of the following conditions:
(i) the purchase by the Underwriter of the Initial
DECS pursuant to the Underwriting Agreement shall have been
consummated as contemplated under the Underwriting
Agreement;
(ii) the representations and warranties of Seller
contained in Article II hereof shall be true and correct as
of the Firm Payment Date; and
(iii) the Collateral Agreement shall have been
executed by Seller and the delivery of the Collateral
thereunder shall have been made.
(b) The obligation of Purchaser to deliver the
Additional Purchase Price on the Option Closing Date is subject
to the satisfaction of the following conditions:
(i) the purchase by the Underwriter of the Additional
DECS pursuant to the Underwriting Agreement shall have been
consummated as contemplated under the Underwriting
Agreement;
(ii) the representations and warranties of Seller
contained in Article II hereof shall be true and correct as
of the Option Closing Date; and
(iii) the delivery of any additional Collateral under
the Collateral Agreement shall have been made.
ARTICLE 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, cash or Reported Securities
pursuant hereto.
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5.2 Forward Contract. Seller hereby agrees that: (i)
he 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) he will not treat
the delivery of any portion of the Contract Shares, cash or
Reported Securities to be delivered pursuant to this Agreement as
the payment of interest or ordinary income; (iii) he will treat
this Agreement in its entirety as a forward contract for the
delivery of such Contract Shares, cash or Reported Securities;
and (iv) he 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 clauses (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,
acceptable to Purchaser and nationally recognized as expert in
Federal tax matters, to the effect that such action or position
is required by a statutory change, 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 he or she will not, and will cause each of his
Affiliates that is under his or her control not to, buy or sell
shares of Common Stock or Reported Securities for his own account
during the 60 days prior to the Exchange Date.
5.4 Notices. Seller will cause to be delivered to Purchaser:
(a) Immediately upon the occurrence of any Event of
Default hereunder or under the Collateral Agreement, or upon
Seller's 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 Company, notice of such occurrence;
and
(b) In case at any time prior to the Exchange Date
Seller receives notice, or otherwise obtains knowledge, that any
event requiring that an adjustment be effected pursuant to
Article VI hereof shall have occurred or be pending, 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 and, if applicable, the record
date relating to such event. Seller shall cause further notices
to be delivered to Purchaser if Seller shall subsequently receive
notice, or shall otherwise obtain knowledge, of any further or
revised information regarding the terms or timing of such event
or any record date relating thereto.
5.5 Further Assurances. From time to time on and after
the date hereof through the Exchange Date (or, if later, the date
on which this Agreement has been fully performed), each of the
parties hereto shall use its or his 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
the Agreement in accordance with the terms and conditions hereof.
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5.6. Affirmative Covenants. During the term of this
Agreement, Seller covenants and agrees that he will:
(a) Comply in all material respects with all
applicable laws, rules, regulations and orders to the extent
noncompliance would have a material adverse effect on the ability
of Seller to perform his obligations hereunder or under the
Collateral Agreement, such compliance to include, without
limitation, paying before the same become delinquent all taxes,
assessments and governmental charges imposed upon him or upon his
property, including the collateral pledged under the Collateral
Agreement, except to the extent contested in good faith.
(b) Furnish to Purchaser as soon as possible and in
any event within twenty calendar days after Seller shall become
aware of the occurrence of any failure by such Seller to comply
with or perform any agreement or obligation contained in this
Agreement or the Collateral Agreement, a statement of Seller
describing such failure and setting forth details of such failure
and the action which Seller has taken and proposes to take with
respect thereto.
ARTICLE VI
ADJUSTMENT OF EXCHANGE RATE, EXCHANGE PRICE AND CLOSING PRICE
6.1 Dilution Adjustments. The Exchange Rate, Exchange
Price and Closing Price shall be subject to adjustment
successively 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, in
either case, with respect to Common Stock in shares of such
stock;
(ii) subdivide or split its outstanding shares of Common Stock
into a greater number of shares;
(iii) combine its outstanding shares of Common Stock into
a smaller number of shares; or
(iv) issue by reclassification (other than a
reclassification pursuant to clause (b), (c), (d) or (e) of
the definition of Adjustment Event) of its shares of Common
Stock any shares of common stock 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 the fraction thereof) that a holder who
held one share of Common Stock immediately prior to such event
would be entitled solely by reason of such event to hold
immediately after such event. In the case of the reclassification
of any shares of Common Stock into any shares of common stock of
the Company other than the Common Stock, such shares of common
stock shall be deemed shares of Common Stock for all purposes
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hereunder. The Exchange Price and Closing Price shall also be
adjusted in the manner described in paragraph (c).
(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 (other than rights to
purchase Common Stock pursuant to a plan for the reinvestment of
dividends or interest) to all holders of Common Stock entitling
them to subscribe for or purchase shares of Common Stock at a
price per share less than the Market Price of the Common Stock on
the Business Day next following the record date for the
determination of holders of Common Stock entitled to receive such
rights or warrants, then, in each such case, the Exchange Rate
shall be multiplied by the following Dilution Adjustment: a
fraction, of which the numerator shall be (A) the number of
shares of Common Stock outstanding on the record date for the
issuance of such rights or warrants plus (B) 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 (x) the number of shares of Common Stock
outstanding on the record date for the issuance of such rights or
warrants plus (y) the number specified in clause (B) above
multiplied by the quotient of the exercise price of such rights
or warrants divided by the Market Price of the Common Stock on
the Business Day next following the record date for the
determination of holders of Common Stock entitled to receive such
rights or warrants. To the extent that such rights or warrants
expire prior to the Exchange Date and shares of Common Stock are
delivered with respect to less than all of such rights or
warrants prior to such expiration, 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 pursuant to such rights or
warrants. The Exchange Price and Closing Price shall also be
adjusted in the manner described in paragraph (c).
(c) Corresponding Adjustments to Exchange Price;
Adjustment of Closing Price in Certain Circumstances.
(i) If any adjustment is made to the Exchange Rate
pursuant to paragraph (a) or (b) of this Section 6.1, an
adjustment shall also be made to the Exchange Price as such
term is used throughout the definition of Exchange Rate.
The required adjustment to the Exchange Price shall be made
at the Exchange Date by multiplying the Exchange Price by
the cumulative Dilution Adjustment.
(ii) If, during any Calculation Period used in
calculating the Exchange Price, the 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.
(d) Timing of Dilution Adjustments. Each Dilution
Adjustment shall be effected:
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(i) in the case of any dividend, distribution, or
issuance of rights or warrants, 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;
and
(ii) in the case of any subdivision, split,
combination or reclassification, on the effective date of
such transaction.
(e) 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 higher 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 or issuance requiring an adjustment pursuant to this
Section 6.1 shall subsequently be canceled by the Company, or
such dividend, distribution or issuance 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 (a) any dividend or
distribution by the Company to all holders of Common Stock of
evidences of its indebtedness or other assets (excluding any
dividends or distributions referred to in Section 6.1(a)(i), any
shares of common stock issued pursuant to a reclassification
referred to in Section 6.1(a)(iv) and any Ordinary Cash
Dividends) or any issuance by the Company to all holders of
Common Stock of rights or warrants to subscribe for or purchase
any of its securities (other than rights or warrants referred to
in Section 6.1(b)), (b) any consolidation or merger of the
Company 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 corporation), (c) any
sale, transfer, lease or conveyance to another corporation of the
property of the Company as an entirety or substantially as an
entirety, (d) any statutory exchange of securities of the Company
with another corporation (other than in connection with a merger
or acquisition) or (e) any liquidation, dissolution or winding up
of the Company (any such event described in clause (a), (b), (c),
(d) or (e), an "Adjustment Event"), the Exchange Rate shall be
adjusted so that on the Exchange Date Seller shall deliver to
Purchaser, in lieu of or (in the case of an Adjustment Event
described in clause (a) above) in addition to, the Contract
Shares, cash in an amount equal to the product of the number of
Contract Shares and the Transaction Value (as defined below).
Following an Adjustment Event, the Exchange Price, as
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such term is used throughout the definition of Exchange
Rate, shall be deemed to equal (A) if shares of Common
Stock are outstanding at the Exchange Date, the Exchange Price of
the Common Stock, as adjusted pursuant to Section 6.1(c),
otherwise zero, plus (B) the Transaction Value.
Notwithstanding the foregoing, with respect to any
Reported Securities (as defined below) received by holders of
Common Stock in an Adjustment Event, Seller shall, in lieu of
delivering cash in respect of such Reported Securities as
described above, deliver a number of such Reported Securities
with a value, as determined in accordance with clause (ii) of the
definition of Transaction Value, equal to all cash amounts that
would otherwise be deliverable in respect of Reported Securities
received in such Adjustment Event, unless Seller has made an
election to exercise the Cash Delivery Option or such Reported
Securities have not yet been delivered to the holders entitled
thereto following such Adjustment Event or any record date with
respect thereto. If, following any Adjustment Event, any Reported
Security ceases to qualify as a Reported Security, then (x)
Seller shall not deliver such Reported Security but instead shall
deliver of an equivalent amount of cash and (y) notwithstanding
clause (ii) of the definition of Transaction Value, the
Transaction Value of such Reported Security shall mean the fair
market value of such Reported Security on the date such security
ceases to qualify as a Reported Security, as determined by a
nationally recognized investment banking firm retained for this
purpose by the Administrator.
"Transaction Value" means (i) for any cash received in
any Adjustment Event, the amount of cash received per share of
Common Stock, (ii) for any Reported Securities received in any
Adjustment Event, an amount equal to (x) the average Closing
Price per security of such Reported Securities on the 20 Trading
Days immediately prior to (but not including) the Exchange Date
multiplied by (y) the number of such Reported Securities (as
adjusted pursuant to the definition thereof) received per share
of Common Stock and (iii) for any property received in any
Adjustment Event other than cash or Reported Securities, an
amount equal to the fair market value of the property received
per share of Common Stock on the date such property is received,
as determined by a nationally recognized investment banking firm
retained for this purpose by the Administrator; provided,
however, that in the case of clause (ii), (x) with respect to
securities that are Reported Securities by virtue of only clause
(iv) of the definition of Reported Securities, Transaction Value
with respect to any such Reported Security means the average of
the mid-point of the last bid and ask prices for such Reported
Security as of the Exchange Date from each of at least three
nationally recognized investment banking firms retained for such
purpose by the Administrator multiplied by the number of such
Reported Securities (as adjusted pursuant to the definition
thereof) received per share of Common Stock and (y) with respect
to all other Reported Securities, if there are not 20 Trading
Days for any particular Reported Security occurring after the
60th calendar day immediately prior to, but not including, the
Exchange Date, Transaction Value with respect to such Reported
Security means the fair market value per security of such
Reported Security as of the Exchange Date as determined by a
nationally recognized investment banking firm retained for such
purpose by the Administrator multiplied by the number of such
Reported Securities (as adjusted pursuant to the definition
thereof) received per share of Common Stock. For purposes of
calculating the Transaction Value, any cash, Reported Securities
or other property receivable in an Adjustment Event shall be deemed to
14
have been received immediately prior to the close of business on
the record date for such Adjustment Event or, if there is no
record date for such Adjustment Event, immediately prior to the
close of business on the effective date of such Adjustment Event.
"Reported Securities" means any securities received in
an Adjustment Event 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 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 Exchange Date.
The number of shares of any Reported Securities included in the
calculation of Transaction Value pursuant to clause (ii) of the
definition thereof 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
or 6.2, shall occur with respect to such Reported 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 or 6.2, as applicable.
ARTICLE 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 himself or his debts under any bankruptcy,
insolvency or other similar law now or hereafter in effect or
seeking the appointment of a trustee, receiver, liquidator,
custodian or other similar official of him or any substantial
part of his 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 him, or
shall take any 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 him or his debts under any
bankruptcy, insolvency or other similar law now or hereafter in
effect or seeking the appointment of a trustee, receiver,
liquidator, custodian or other similar official of him or any
substantial part of his property; or an order for relief shall be
entered against Seller under the federal bankruptcy laws as now
or hereafter in effect; or
(c) a Collateral Event of Default within the meaning
of the Collateral Agreement;
then an "Acceleration Date" shall occur, Seller's rights
under Section 1.3(d) shall terminate immediately and (i) in
the case of clause (c), Seller shall become obligated to
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the extent permitted by law to deliver to Purchaser
(and shall be deemed to instruct the Collateral
Agent to deliver to the Custodian, for the account of
Purchaser, and to liquidate and turn into cash the U.S.
Government obligations then pledged by Seller to the extent
necessary to satisfy such obligation) the Contract Shares,
in the form of the shares of Common Stock then pledged by
Seller, or cash generated from the liquidation of U.S.
Government obligations then pledged by Seller, or a
combination thereof (or, after an Adjustment Event, the
alternate consideration to be delivered, in the form of
Reported Securities then pledged, cash then pledged, cash
generated from the liquidation of U.S. Government
obligations then pledged, or a combination thereof); or
(ii) in the case of clauses (a) or (b), Seller shall
become obligated to deliver to Purchaser (and shall be
deemed to instruct the Collateral Agent to deliver to the
Custodian, for the account of Purchaser, and to liquidate
and turn into cash the U.S. Government obligations then
pledged by Seller to the extent necessary to satisfy such
obligation) a number of shares of Common Stock, in the form
of the shares of Common Stock then pledged by Seller, or
cash generated from the liquidation of U.S. Government
obligations then pledged by Seller, or a combination
thereof (or, after an Adjustment Event, the alternate
consideration to be delivered, in the form of Reported
Securities then pledged, cash then pledged, cash generated
from the liquidation of U.S. Government obligations then
pledged, or a combination thereof), with an aggregate value
(based on the Closing Price on the Acceleration Date) equal
to the Acceleration Value (as defined below).
"Acceleration Value" means an amount determined by the
Administrator on the basis of quotations from Independent Dealers
(as defined below). Each quotation will be for an 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, but for the occurrence of the Acceleration Date, have been
entitled to receive after the Acceleration Date hereunder (taking
into account any adjustments to the Exchange Rate that may have
been effected on or prior to the Acceleration Date). On or as
soon as reasonably practicable following the Acceleration Date,
the Administrator will request each Independent Dealer to provide
its quotation as soon as reasonably practicable, but in any event
within two Business Days. The Administrator shall compute the
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 Acceleration Date, the
Administrator shall have received quotations from fewer than four
of the Independent Dealers, the Administrator 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 be the aggregate value (based on the
Closing Price on the Acceleration Date) of the number of shares
of Common Stock (or, after an
16
Adjustment Event, Reported Securities, cash or a
combination thereof) that would be required to be delivered
hereunder on the Acceleration Date if the Exchange Date were
redefined to be the Acceleration Date.
"Independent Dealers" means four nationally recognized
independent investment banking firms selected in good faith by
the Administrator.
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 and the Collateral Agent a notice specifying the number
of shares of Common Stock (or, after an Adjustment Event, the
alternate consideration) required to be delivered by Seller.
Purchaser and Seller agree that the obligations contained in
clauses (i) and (ii) above are a reasonable pre-estimate of loss
and not a penalty. Such amount is payable for the loss of bargain
and Purchaser will not be entitled to recover additional damage
as a consequence of loss resulting from an Event of Default.
ARTICLE VIII
MISCELLANEOUS
-------------
8.1 Adjustments; Selection of Independent Investment
Banking Firm. Purchaser shall be responsible for the effectuation
and 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, the Administrator 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 the Administrator only after consultation with
Seller; provided, however, that Seller shall be deemed to have
waived his right to consult if Seller fails to consult within five
Business Days of notice being sent by the Administrator to Seller
seeking consultation. Purchaser may delegate the effectuation and
calculation of any such adjustments to its Administrator.
8.2 Notices. Notices to Purchaser shall be directed to
it in care of the Administrator for Purchaser, The Bank of New
York, at 000 Xxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Telephone:
000-000-0000, Telecopier: 000-000-0000; notices to Seller shall
be directed to him or her at ______________________, with a copy
to Skadden, Arps, Slate, Xxxxxxx & Xxxx LLP, 000 Xxxxx Xxxxxx,
Xxx Xxxx, Xxx Xxxx 00000, Attention: Xxxxxxx Xxxxx, Esq.
Notwithstanding the foregoing, notices to a party shall be
directed to such other address for such party as shall be
specified by such party in a like notice given pursuant to this
Section 8.2. All notices and other communications hereunder shall
be in writing and shall be deemed to have been duly given if
either (i) personally delivered (including delivery by courier
service or by Federal Express or any other nationally recognized
overnight delivery service for next day delivery) to the offices
specified in the preceding sentence, in which case they shall be
17
deemed received on the first Business Day by which delivery shall
have been made to said offices; or (ii) sent by certified mail,
return receipt requested, in accordance with the preceding
sentence, in which case they shall be
deemed received when receipted for unless acknowledgment
is refused (in which case delivery shall be deemed
to have been received on the first Business Day on which such
acknowledgment is refused). Any notice, demand or other
communication to be provided by or on behalf of Purchaser
pursuant to this Agreement shall be sent to the address of Seller
provided in this Section 8.2 notwithstanding the death of Seller,
the adjudication of Seller as incompetent or the appointment of a
guardian with respect to the affairs of Seller. Any failure by
Seller or any guardian, conservator, executor, administrator or
other similarly appointed person to receive any such notice,
demand or communication shall in no way abrogate, invalidate or
otherwise affect the validity or enforceability of the notice,
demand or communication or the matters set forth therein.
8.3 Counterparts. This Agreement may be signed in any
number of counterparts, each of which shall be an original, with
the same effect as if the signatures thereto and hereto were upon
the same instrument.
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 permitted assigns of such
party.
8.7. Application of Bankruptcy Code. The parties
hereto acknowledge and agree that the Collateral Agent is a
"financial institution" within the meaning of Section 101(22) of
Title 11 of the United States Code (the "Bankruptcy Code") and is
acting as agent and custodian for Purchaser in connection with
this Agreement and that Purchaser is a "customer" of the
Collateral Agent within the meaning of said Section 101(22). The
parties hereto further acknowledge and agree that this Agreement
is a "securities contract", as such term is defined in Section
741(7) of the Bankruptcy Code, entitled to the protection of
Section 555 of the Bankruptcy Code.
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8.8 Governing Law; Jurisdiction; Severability; Waiver
of Jury Trial. This Agreement shall be governed by and construed
in accordance with the laws of the State of New York. For the
purpose of any suit, action or proceeding arising out of or
relating to this Agreement, the parties hereto hereby expressly
and irrevocably consent and submit to the non-exclusive
jurisdiction of any United States Federal or New York State court
sitting in the Borough of Manhattan, City and State of New York,
and expressly and irrevocably waive, to the extent permitted
under applicable law, any immunity from the jurisdiction thereof
and any claim or defense in such suit, action or proceeding based
on a claim of improper venue, forum non conveniens or any similar
basis to which it or he might otherwise be entitled. 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. TO THE EXTENT PERMITTED BY APPLICABLE LAW, THE
PARTIES HERETO HEREBY WAIVE AND COVENANT THAT THEY WILL NOT
ASSERT (WHETHER AS PLAINTIFF, DEFENDANT OR OTHERWISE) ANY RIGHT
TO TRIAL BY JURY IN ANY FORUM IN RESPECT OF ANY ISSUE, CLAIM,
DEMAND, ACTION OR CAUSE OF ACTION ARISING OUT OF OR BASED UPON
THIS AGREEMENT OR THE SUBJECT MATTER HEREOF, IN EACH CASE WHETHER
NOW EXISTING OR HEREAFTER ARISING OR WHETHER IN CONTRACT OR TORT
OR OTHERWISE. EACH PARTY HERETO ACKNOWLEDGES THAT IT OR HE HAS
BEEN INFORMED BY THE OTHER PARTY HERETO THAT THE PROVISIONS OF
THIS SECTION CONSTITUTE A MATERIAL INDUCEMENT UPON WHICH SUCH
OTHER PARTY HERETO HAS RELIED, IS RELYING AND WILL RELY IN
ENTERING INTO THIS AGREEMENT AND ANY DOCUMENT RELATED THERETO.
EACH PARTY HERETO MAY FILE AN ORIGINAL COUNTERPART OF THIS
SECTION WITH ANY COURT AS WRITTEN EVIDENCE OF THE CONSENT OF THE
OTHER PARTY HERETO TO THE WAIVER OF ITS OR HIS RIGHTS TO TRIAL BY
JURY.
IN WITNESS WHEREOF, the parties have signed this
Agreement as of the date and year first above written.
PURCHASER: SELLER:
DECS TRUST
By:________________________
Name:
Title:
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