EXHIBIT 10.4
May 8, 2007
From: Citibank, N.A.
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Equity Derivatives
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
To: Chemed Corporation
2600 Chemed Center
000 Xxxx Xxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
Attention: Chief Financial Officer
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
Re: Warrants
The purpose of this letter agreement (this "Confirmation") is to confirm
the terms and conditions of the Warrants issued by Chemed Corporation
("Company") to Citibank, N.A. ("Citibank") on the Trade Date specified below
(the "Transaction"). This letter agreement constitutes a "Confirmation" as
referred to in the ISDA Master Agreement specified below. This Confirmation
shall replace any previous agreements and serve as the final documentation for
this Transaction.
The definitions and provisions contained in the 2002 ISDA Equity
Derivatives Definitions (the "Equity Definitions"), as published by the
International Swaps and Derivatives Association, Inc. ("ISDA"), are incorporated
into this Confirmation. In the event of any inconsistency between the Equity
Definitions and this Confirmation, this Confirmation shall govern.
Each party is hereby advised, and each such party acknowledges, that the
other party has engaged in, or refrained from engaging in, substantial financial
transactions and has taken other material actions in reliance upon the parties'
entry into the Transaction to which this Confirmation relates on the terms and
conditions set forth below.
1. This Confirmation evidences a complete and binding agreement between
Citibank and Company as to the terms of the Transaction to which this
Confirmation relates. This Confirmation shall supplement, form a part of,
and be subject to an agreement in the form of the 2002 ISDA Master
Agreement (the "Agreement") as if Citibank and Company had executed an
agreement in such form (but without any Schedule except for the election of
the laws of the State of New York as the governing law) on the Trade Date.
In the event of any inconsistency between provisions of that Agreement and
this Confirmation, this Confirmation will prevail for the purpose of the
Transaction to which this Confirmation relates. The parties hereby agree
that no Transaction other than the Transaction to which this Confirmation
relates shall be governed by the Agreement.
2. The Transaction is a Warrant Transaction, which shall be considered a Share
Option Transaction for purposes of the Equity Definitions. The terms of the
particular Transaction to which this Confirmation relates are as follows:
General Terms:
Trade Date: May 8, 2007
Warrants: Equity call warrants, each giving the holder the right to purchase
one Share at the Strike Price, subject to the Settlement Terms set
forth below. For the purposes of the Equity Definitions, each
reference to a Warrant herein shall be deemed to be a reference to
a Call Option.
Warrant Style: European
Seller: Company
Buyer: Citibank
Shares: The capital stock of Company, par value USD 1 per Share
(Exchange symbol "CHE")
Number of Warrants: 1,114,862, subject to adjustment as provided herein; provided
that the Number of Warrants shall be automatically increased as
of the date of exercise (the "Greenshoe Exercise") by X.X.
Xxxxxx Securities Inc. and Citigroup Global Markets Inc. as
representatives of the Initial Purchasers (as defined in the
Purchase Agreement dated as of May 8, 2007 between Company,
X.X. Xxxxxx Securities Inc. and Citigroup Global Markets Inc.
as representatives of the Initial Purchasers party thereto (the
"Purchase Agreement")), of their option pursuant to Section 1
of the Purchase Agreement by the number of additional Warrants
in proportion to the increase in the number of 1.875%
Convertible Senior Notes due 2014 (the "Convertible Notes"), in
denominations of USD 1,000 principal amount issued pursuant to
such exercise (such Convertible Notes, the "Additional
Convertible Notes") (the "Additional Warrants").
Warrant Entitlement: One Share per Warrant
Strike Price: USD 105.4400
Premium: USD 12,426,300 (Premium per Warrant: USD 11.1460); provided
that if the Number of Warrants is increased pursuant to the
proviso to the definition of "Number of Warrants" above, there
shall be an additional Premium equal to the product of the
number of Additional Warrants and the Premium per Warrant (the
"Additional Premium"), and such Additional Premium shall be paid
by Citibank to Company on the Additional Premium Payment Date.
Premium Payment Date: May 14, 2007
Additional Premium Payment Date: The closing date for the purchase and sale of the Additional
Convertible Notes.
Exchange: The New York Stock Exchange
Related Exchange(s): All Exchanges
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Procedures for Exercise:
Expiration Time: The Valuation Time
Expiration Date(s): Each Scheduled Trading Day during the period from and including
the First Expiration Date and to and including the 79th
Scheduled Trading Day following the First Expiration Date shall
be an "Expiration Date" for a number of Warrants equal to the
Daily Number of Warrants on such date; provided that,
notwithstanding anything to the contrary in the Equity
Definitions, if any such date is a Disrupted Day, the
Calculation Agent shall make adjustments, if applicable, to the
Daily Number of Warrants or shall reduce such Daily Number of
Warrants to zero for which such day shall be an Expiration Date
and shall designate a Scheduled Trading Day or a number of
Scheduled Trading Days as the Expiration Date(s) for the
remaining Daily Number of Warrants or a portion thereof for the
originally scheduled Expiration Date; and provided further that
if such Expiration Date has not occurred pursuant to this
clause as of the eighth Scheduled Trading Day following the
last scheduled Expiration Date under this Transaction, the
Calculation Agent shall have the right to declare such
Scheduled Trading Day to be the final Expiration Date and the
Calculation Agent shall determine its good faith estimate of
the fair market value for the Shares as of the Valuation Time
on that eighth Scheduled Trading Day or on any subsequent
Scheduled Trading Day, as the Calculation Agent shall determine
using commercially reasonable means.
First Expiration Date: August 15, 2014 (or if such day is not a Scheduled Trading Day,
the next following Scheduled Trading Day), subject to Market
Disruption Event below.
Multiple Exercise: Applicable
Minimum Number of Warrants: 1
Daily Number of Warrants: For any Expiration Date, the Number of Warrants that have not
expired or been exercised as of such day, divided by the
remaining number of Expiration Dates (including such day),
rounded down to the nearest whole number, subject to adjustment
pursuant to the provisos to "Expiration Date(s)".
Maximum Number of Warrants: All warrants remaining unexercised as of the remaining Exercise
Date(s).
Automatic Exercise: Applicable; and means that, unless all Warrants have been
previously exercised hereunder, a number of Warrants for each
Expiration Date equal to the Daily Number of Warrants (as
adjusted pursuant to the terms hereof) for such Expiration Date
will be deemed to be automatically exercised; provided that
"In-the-Money" means that the Relevant Price for such Expiration
Date exceeds the Strike Price for such Expiration Date; and
provided further that all references in Section 3.4(b) of the
Equity Definitions to "Physical Settlement" shall be read as
references to "Net Share Settlement".
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Market Disruption Event: Section 6.3(a)(ii) of the Equity Definitions is hereby amended
by replacing clause (ii) in its entirety with "(ii) an Exchange
Disruption, or" and inserting immediately following clause
(iii) the phrase "; in each case that the Calculation Agent
determines is material."
Valuation:
Valuation Time: Scheduled Closing Time.
Valuation Date: Each Exercise Date.
Settlement Terms:
Settlement Method: Net Share Settlement.
Net Share Settlement: On the relevant Settlement Date, Company shall deliver to
Citibank the Share Delivery Quantity of Shares for such
Settlement Date to the account specified hereto free of payment
through the Clearance System.
Share Delivery Quantity: For any Settlement Date, a number of Shares, as calculated by
the Calculation Agent, equal to the Net Share Settlement Amount
for such Settlement Date divided by the Settlement Price on the
Valuation Date in respect of such Settlement Date, rounded down
to the nearest whole number plus any Fractional Share Amount.
Net Share Settlement Amount: For any Settlement Date, an amount equal to the product of (i)
the Number of Warrants exercised or deemed exercised on the
relevant Exercise Date, (ii) the Strike Price Differential for
such Settlement Date and (iii) the Warrant Entitlement.
Settlement Price: For any Valuation Date, the per Share volume-weighted average
price as displayed under the heading "Bloomberg VWAP" on
Bloomberg page CHE.N [equity] AQR (or any successor thereto) in
respect of the period from the scheduled opening time of the
Exchange to the Scheduled Closing Time on such Valuation Date
(or if such volume-weighted average price is unavailable, the
market value of one Share on such Valuation Date, as determined
by the Calculation Agent). Notwithstanding the foregoing, if
(i) any Expiration Date is a Disrupted Day and (ii) the
Calculation Agent determines that such Expiration Date shall be
an Expiration Date for fewer than the Daily Number of Warrants,
as described above, then the Settlement Price for the relevant
Valuation Date shall be the volume-weighted average price per
Share on such Valuation Date on the Exchange, as determined by
the Calculation Agent based on such sources as it deems
appropriate using a volume-weighted methodology, for the
portion of such Valuation Date for which the Calculation Agent
determines there is no Market Disruption Event.
Settlement Date(s): As determined in reference to Section 9.4 of the Equity
Definitions, subject to Section 9(m)(i) hereof.
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Other Applicable Provisions: The provisions of Sections 9.1(c), 9.8, 9.9, 9.11, 9.12 and
10.5 of the Equity Definitions will be applicable, except that
all references in such provisions to "Physically-settled" shall
be read as references to "Net Share Settled." "Net Share
Settled" in relation to any Warrant means that Net Share
Settlement is applicable to that Warrant.
Representation and Agreement: Notwithstanding Section 9.11 of the Equity Definitions, the
parties acknowledge that any Shares delivered to Citibank may
be, upon delivery, subject to restrictions and limitations
arising from Company's status as issuer of the Shares under
applicable securities laws.
3. Additional Terms applicable to the Transaction:
Adjustments applicable to the Warrants:
Method of Adjustment: Calculation Agent Adjustment. For the avoidance of doubt, in
making any adjustments under the Equity Definitions, the
Calculation Agent may make adjustments, if any, to any one or
more of the Strike Price, the Number of Warrants, the Daily
Number of Warrants and the Warrant Entitlement.
Notwithstanding the foregoing, any cash dividends or
distributions on the Shares, whether or not extraordinary,
shall be governed by Section 9(h) of this Confirmation in lieu
of Article 10 or Section 11.2(c) of the Equity Definitions.
The Calculation Agent shall promptly thereafter notify Citibank
and Company of any such adjustment.
Extraordinary Events applicable to the Transaction:
New Shares: Section 12.1(i) of the Equity Definitions is hereby amended by
deleting the text in clause (i) in its entirety and replacing
it with the phrase "publicly quoted, traded or listed on any of
the New York Stock Exchange, the American Stock Exchange, The
NASDAQ Global Select Market or The NASDAQ Global Market (or
their respective successors)".
Consequence of Merger Events:
Share-for-Share: Modified Calculation Agent Adjustment
Share-for-Other: Cancellation and Payment (Calculation Agent Determination)
Share-for-Combined: Cancellation and Payment (Calculation Agent Determination);
provided that Citibank may elect, in its commercially
reasonable judgment, Component Adjustment (Calculation Agent
Determination).
Consequence of Tender Offers:
Tender Offer: Applicable; provided however that if an event occurs that
constitutes both a Tender Offer under Section 12.1(d) of the
Equity Definitions and Additional Termination Event under
Section 9(j)(ii)(C) of this Confirmation, Citibank may elect,
in its commercially reasonable judgment, whether the provisions
of Section 12.3 of the Equity Definitions or Section
9(j)(ii)(C) will apply.
5
Share-for-Share: Modified Calculation Agent Adjustment
Share-for-Other: Modified Calculation Agent Adjustment
Share-for-Combined: Modified Calculation Agent Adjustment
Nationalization, Insolvency or Delisting: Cancellation and Payment (Calculation Agent Determination);
provided that, in addition to the provisions of Section
12.6(a)(iii) of the Equity Definitions, it will also constitute
a Delisting if the Exchange is located in the United States and
the Shares are not immediately re-listed, re-traded or
re-quoted on any of the New York Stock Exchange, the American
Stock Exchange, The NASDAQ Global Select Market or The NASDAQ
Global Market (or their respective successors); if the Shares
are immediately re-listed, re-traded or re-quoted on any of The
New York Stock Exchange, the American Stock Exchange, The
NASDAQ Global Select Market or The NASDAQ Global Market (or
their respective successors), such exchange or quotation system
shall thereafter be deemed to be the Exchange.
Additional Disruption Events:
Change in Law: Applicable
Failure to Deliver: Not Applicable
Insolvency Filing: Applicable
Hedging Disruption: Applicable
Increased Cost of Hedging: Not Applicable
Loss of Stock Borrow: Applicable
Maximum Stock Loan Rate: 250 bps
Increased Cost of Stock Borrow: Applicable
Initial Stock Loan Rate: 0 bps
Hedging Party: Citibank for all applicable Additional Disruption Events
Determining Party: Citibank for all applicable Additional Disruption Events
Non-Reliance: Applicable
Agreements and Acknowledgments
Regarding Hedging Activities: Applicable
Additional Acknowledgments: Applicable
4. Calculation Agent: Citibank. The Calculation Agent shall, upon request by the
Company, provide a written explanation of any calculation made
by it including, where applicable, a description of the
methodology and data applied.
6
5. Account Details:
(a) Account for payments to Company:
XX Xxxxxx Xxxxx Bank
ABA# 000000000
Acct: Chemed Corporation
Acct No.: 94-13065
Account for delivery of Shares from Company:
To be provided by Company
(b) Account for payments to Citibank:
Citibank, N.A.
ABA #000000000
DDA 00167679
Ref: Equity Derivatives
Account for delivery of Shares to Citibank:
DTC 418
6. Offices:
The Office of Company for the Transaction is: Inapplicable, Company is not a
Multibranch Party.
The Office of Citibank for the Transaction is: 000 Xxxxxxxxx Xxxxxx, Xxx Xxxx,
XX 00000
7. Notices: For purposes of this Confirmation:
(a) Address for notices or communications to Company:
Chemed Corporation
2600 Chemed Center
000 Xxxx Xxxxx Xxxxxx
Xxxxxxxxxx, XX 00000
Attention: Chief Financial Officer
Telephone No.: (000) 000-0000
Facsimile No.: (000) 000-0000
(b) Address for notices or communications to Citibank:
Citibank notice information to follow:
To: Citibank, N.A.
000 Xxxxxxxxx Xxxxxx, 0xx Xxxxx
Xxx Xxxx, XX 00000
Attention: Equity Derivatives
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
To: Citibank, N.A.
0000 Xxxxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attention: CIB Legal Group--Derivatives
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
7
8. Representations and Warranties
(i) Representations and Warranties of Company
The representations and warranties of Company set forth in Section 3 of the
Purchase Agreement are true and correct and are hereby deemed to be repeated to
Citibank as if set forth herein. Company hereby further represents and warrants
to Citibank that:
(a) Company has all necessary corporate power and authority to execute,
deliver and perform its obligations in respect of this Transaction;
such execution, delivery and performance have been duly authorized by
all necessary corporate action on Company's part; and this
Confirmation has been duly and validly executed and delivered by
Company and constitutes its valid and binding obligation, enforceable
against Company in accordance with its terms, subject to applicable
bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and similar laws affecting creditors' rights and remedies
generally, and to general principles of equity, including principles
of commercial reasonableness, good faith and fair dealing (regardless
of whether enforcement is sought in a proceeding at law or in equity)
and except that rights to indemnification and contribution hereunder
may be limited by federal or state securities laws or public policy
relating thereto.
(b) Neither the execution and delivery of this Confirmation nor the
incurrence or performance of obligations of Company hereunder will (i)
conflict with or result in a breach of the certificate of
incorporation or by-laws (or any equivalent documents) of Company, or
any applicable law or regulation, or any order, writ, injunction or
decree of any court or governmental authority or agency, or any
agreement or instrument to which Company or any of its subsidiaries is
a party or by which Company or any of its subsidiaries is bound or to
which Company or any of its subsidiaries is subject (including, but
not limited to, any agreements and contracts of Counterparty or any of
its subsidiaries filed as exhibits to Company's Annual Report on Form
10-K for the year ended December 31, 2006, incorporated by reference
in the Offering Memorandum), or (ii) constitute a default under, or
result in the creation of any lien under, any such agreement or
instrument.
(c) No consent, approval, authorization, or order of, or filing with, any
governmental agency or body or any court is required in connection
with the execution, delivery or performance by Company of this
Confirmation, except such as have been obtained or made and such as
may be required under the Securities Act of 1933, as amended (the
"Securities Act") or state securities laws.
(d) The Shares of Company initially issuable upon exercise of the Warrant
by the net share settlement method (the "Warrant Shares") have been
reserved for issuance by all required corporate action of Company. The
Warrant Shares have been duly authorized and, when delivered against
payment therefor (which may include Net Share Settlement in lieu of
cash) and otherwise as contemplated by the terms of the Warrant
following the exercise of the Warrant in accordance with the terms and
conditions of the Warrant, will be validly issued, fully-paid and
non-assessable, and the issuance of the Warrant Shares will not be
subject to any preemptive or similar rights.
(e) Company is an "eligible contract participant" (as such term is defined
in Section 1a(12) of the Commodity Exchange Act, as amended (the
"CEA")) because one or more of the following is true:
Company is a corporation, partnership, proprietorship, organization, trust or
other entity and:
(A) Company has total assets in excess of USD 10,000,000;
(B) the obligations of Company hereunder are guaranteed, or otherwise
supported by a letter of credit or keepwell, support or other
agreement, by an entity of the type described in Section
1a(12)(A)(i) through (iv), 1a(12)(A)(v)(I), 1a(12)(A)(vii) or
1a(12)(C) of the CEA; or
(C) Company has a net worth in excess of USD 1,000,000 and has
entered into this Agreement in connection with the conduct of
Company's business or to manage the risk associated with an asset
or liability owned or incurred or reasonably likely to be owned
or incurred by Company in the conduct of Company's business.
(f) Company and each of its controlled affiliates is not, on the date
hereof, in possession of any material non-public information with
respect to Company.
(ii) Additional representations and warranties
(a) Citibank represents that it is an "eligible contract participant" as
defined in Section 1a(12) of the CEA.
(b) Each of Citibank and Company acknowledges that the offer and sale of
the Transaction to it is intended to be exempt from registration under
the Securities, by virtue of Section 4(2) thereof.
9. Other Provisions:
(a) Opinions. Company shall deliver an opinion of counsel, dated as of the
Trade Date, to Citibank, with respect to the matters set forth in
Sections 8(i)(a) through (d) of this Confirmation.
(b) Reserved
(c) Repurchase Notices. Company shall, on any day on which Company effects
any repurchase of Shares, promptly give Citibank a written notice of
such repurchase (a "Repurchase Notice") on such day if following such
repurchase, the number of outstanding Shares on such day, subject to
any adjustments provided herein, is (i) less than 21 million (in the
case of the first such notice) or (ii) thereafter more than 1.60
million less than the number of Shares included in the immediately
preceding Repurchase Notice. Company agrees to indemnify and hold
harmless Citibank and its affiliates and their respective officers,
directors, employees, affiliates, advisors, agents and controlling
persons (each, an "Indemnified Person") from and against any and all
losses (including losses relating to Citibank's hedging activities as
a consequence of becoming, or of the risk of becoming, a Section 16
"insider", including without limitation, any forbearance from hedging
activities or cessation of hedging activities and any losses in
connection therewith with respect to this Transaction), claims,
damages, judgments, liabilities and expenses (including reasonable
attorney's fees), joint or several, which an Indemnified Person
actually may become subject to, as a result of Company"s failure to
provide Citibank with a Repurchase Notice on the day and in the manner
specified in this paragraph, and to reimburse, within 30 days, upon
written request, each of such Indemnified Persons for any reasonable
legal or other expenses incurred in connection with investigating,
preparing for, providing testimony or other evidence in connection
with or defending any of the foregoing. If any suit, action,
proceeding (including any governmental or regulatory investigation),
claim or demand shall be brought or asserted against the Indemnified
Person, such Indemnified Person shall promptly notify Company in
writing, and Company, upon request of the Indemnified Person, shall
retain counsel reasonably satisfactory to the Indemnified Person to
represent the Indemnified Person and any others Company may designate
in such proceeding and shall pay the fees and expenses of such counsel
related to such proceeding. Company shall not be liable for any
settlement of any proceeding effected without its written consent, but
if settled with such consent or if there be a final judgment for the
plaintiff, Company agrees to indemnify any Indemnified Person from and
against any loss or liability by reason of such settlement or
judgment. Company shall not, without the prior written consent of the
Indemnified Person, effect any settlement of any pending or threatened
proceeding in respect of which any Indemnified Person is or could have
been a party and indemnity could have been sought hereunder by such
Indemnified Person, unless such settlement (x) includes an
unconditional release of such Indemnified Person, in form and
substance reasonably satisfactory to such Indemnified Person, from all
liability on claims that are the subject matter of such proceeding and
(y) does not include any statement as to or any admission of fault,
culpability or a failure to act by or on behalf of any Indemnified
Person. If the indemnification provided for in this paragraph is
unavailable to an Indemnified Person or insufficient in respect of any
losses, claims, damages or liabilities referred to therein, then
Company under such paragraph, in lieu of indemnifying such Indemnified
Person thereunder, shall contribute to the amount paid or payable by
such Indemnified Person as a result of such losses, claims, damages or
liabilities. The remedies provided for in this paragraph are not
exclusive and shall not limit any rights or remedies which may
otherwise be available to any Indemnified Person at law or in equity.
The indemnity and contribution agreements contained in this paragraph
shall remain operative and in full force and effect regardless of the
termination of this Transaction.
9
(d) Regulation M. Company is not on the date hereof engaged in a
distribution, as such term is used in Regulation M under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), of
any securities of Company, other than a distribution meeting the
requirements of the exception set forth in Rules 101(b)(10) and
102(b)(7) of Regulation M. Company shall not, until the second
Scheduled Trading Day immediately following the Trade Date, engage in
any such distribution.
(e) No Manipulation. Company is not entering into this Transaction to
create actual or apparent trading activity in the Shares (or any
security convertible into or exchangeable for the Shares) or to raise
or depress or otherwise manipulate the price of the Shares (or any
security convertible into or exchangeable for the Shares) or otherwise
in violation of the Exchange Act.
(f) Transfer or Assignment. Company may not transfer any of its rights or
obligations under this Transaction without the prior written consent
of Citibank. Citibank may, without Company's consent, transfer or
assign all or any part of its rights or obligations under this
Transaction to any third party. If after Citibank's commercially
reasonable efforts, Citibank is unable to effect such a transfer or
assignment on pricing terms reasonably acceptable to Citibank and
within a time period reasonably acceptable to Citibank of a sufficient
number of Warrants to reduce (i) Citibank's "beneficial ownership"
(within the meaning of Section 13 of the Exchange Act and rules
promulgated thereunder) to 7.5% of Company's outstanding Shares or
less or (ii) the quotient of (x) the product of (a) the Number of
Warrants and (b) the Warrant Entitlement divided by (y) the number of
Company's outstanding Shares (such quotient expressed as a percentage,
the "Warrant Equity Percentage") to 14.5% or less, Citibank may
designate any Exchange Business Day as an Early Termination Date with
respect to a portion (the "Terminated Portion") of this Transaction,
such that (i) its "beneficial ownership" following such partial
termination will be equal to or less than 7.5% or (ii) the Warrant
Equity Percentage following such partial termination will be equal to
or less than 14.5%. In the event that Citibank so designates an Early
Termination Date with respect to a portion of this Transaction, a
payment shall be made pursuant to Section 6 of the Agreement as if (i)
an Early Termination Date had been designated in respect of a
Transaction having terms identical to this Transaction and a Number of
Warrants equal to the Terminated Portion, (ii) Company shall be the
sole Affected Party with respect to such partial termination and (iii)
such Transaction shall be the only Terminated Transaction (and, for
the avoidance of doubt, the provisions of paragraph 9(l) shall apply
to any amount that is payable by Citibank to Company pursuant to this
sentence). Notwithstanding any other provision in this Confirmation to
the contrary requiring or allowing Citibank to purchase, sell, receive
or deliver any Shares or other securities to or from Company, Citibank
may designate any of its affiliates to purchase, sell, receive or
deliver such Shares or other securities and otherwise to perform
Citibank's obligations in respect of this Transaction and any such
designee may assume such obligations. Citibank shall be discharged of
its obligations to Company to the extent of any such performance.
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(g) Early Unwind. In the event the sale of Convertible Notes (or, in
respect of the Greenshoe Exercise, the Additional Convertible Notes)
is not consummated with the initial purchasers for any reason by the
close of business in New York on May 14, 2007 (or, in respect of the
Greenshoe Exercise, the third Clearance System Business Day following
the date of the Greenshoe Exercise (the "Additional Closing Date"))
(or such later date as agreed upon by the parties) (May 14, 2007 or
such later date, if any, as agreed upon being or, in respect of the
Greenshoe Exercise, the Additional Closing Date, the "Early Unwind
Date"), this Transaction (or, in respect of the Greenshoe Exercise,
the Additional Warrants) shall automatically terminate (the "Early
Unwind"), on the Early Unwind Date and (i) the Transaction (or, in
respect of the Greenshoe Exercise, the Additional Warrants) and all of
the respective rights and obligations of Citibank and Company under
the Transaction (or, in respect of the Greenshoe Exercise, the
Additional Warrants) shall be cancelled and terminated and (ii) each
party shall be released and discharged by the other party from and
agrees not to make any claim against the other party with respect to
any obligations or liabilities of the other party arising out of and
to be performed in connection with the Transaction (or, in respect of
the Greenshoe Exercise, the Additional Warrants) either prior to or
after the Early Unwind Date; provided that Company, unless the sale of
the Convertible Notes or the Additional Convertible Notes, as
applicable, is not consummated due to a breach of the Purchase
Agreement by the Initial Purchasers, shall purchase from Citibank on
the Early Unwind Date all Shares purchased by Citibank or one or more
of its affiliates and shall, notwithstanding anything to the contrary
in the Equity Definitions, reimburse Citibank for any commercially
reasonable costs or expenses (including market losses) relating to the
unwinding of its hedging activities in connection with the Transaction
(or, in respect of the Greenshoe Exercise, the Additional Warrants)
(including any loss or cost incurred as a result of its terminating,
liquidating, obtaining or reestablishing any hedge or related trading
position). The amount of any such reimbursement shall be determined by
Citibank in its sole good faith discretion. Citibank shall notify
Company of such amount and Company shall pay such amount in
immediately available funds on the Early Unwind Date. Citibank and
Company represent and acknowledge to the other that, subject to the
proviso included in this Section, upon an Early Unwind, all
obligations with respect to the Transaction shall be deemed fully and
finally discharged.
(h) Dividends. If at any time during the period from but excluding the
Trade Date, to and including the Expiration Date, (i) an ex-dividend
date for a cash dividend occurs with respect to the Shares (an
"Ex-Dividend Date"), and that dividend differs from the Regular
Dividend on a per Share basis or (ii) if no Ex-Dividend Date for a
cash dividend occurs with respect to the Shares in any quarterly
dividend period of Company, then the Calculation Agent will adjust any
of the Strike Price, Number of Warrants and/or Daily Number of
Warrants to preserve the fair value of the Options to Citibank after
taking into account such dividend or lack thereof. "Regular Dividend"
shall mean for any calendar quarter, USD 0.06 for the first cash
dividend or distribution on the Shares for which the Ex-Dividend Date
falls within such calendar quarter, and zero for any subsequent
dividend or distribution on the Shares for which the Ex-Dividend Date
falls within the same calendar quarter.
(i) Reserved
(j) Additional Provisions.
(i) Amendments to the Equity Definitions:
(A) Section 11.2(a) of the Equity Definitions is hereby amended
by deleting the words "diluting or concentrative" and
replacing them with the words "material".
(B) Section 11.2(c) of the Equity Definitions is hereby amended
by (x) replacing the words "diluting or concentrative" with
"an" and (y) deleting the phrase "(provided that no
adjustments will be made to account solely for changes in
volatility, expected dividends, stock loan rate or liquidity
relative to the relevant Shares)" and replacing it with the
phrase "(and, for the avoidance of doubt, adjustments may be
made to account solely for changes in volatility, expected
dividends, stock loan rate or liquidity relative to the
relevant Shares)."
11
(C) Section 11.2(e)(vii) of the Equity Definitions is hereby
amended by deleting the words "diluting or concentrative"
and replacing them with the word "material"; and adding the
phrase "or Warrants" at the end of the sentence.
(D) Section 12.6(a)(ii) of the Equity Definitions is hereby
amended by (1) deleting from the fourth line thereof the
word "or" after the word "official" and inserting a comma
therefor, and (2) deleting the semi-colon at the end of
subsection (B) thereof and inserting the following words
therefor "or (C) at Citibank's option, the occurrence of any
of the events specified in Section 5(a)(vii) (1) through (9)
of the ISDA Master Agreement with respect to that Issuer."
(E) Section 12.9(b)(iv) of the Equity Definitions is hereby
amended by:
(x) deleting (1) subsection (A) in its entirety, (2) the
phrase "or (B)" following subsection (A) and (3) the
phrase "in each case" in subsection (B); and
(y) deleting the phrase "neither the Non-Hedging Party nor
the Lending Party lends Shares in the amount of the
Hedging Shares or" in the penultimate sentence.
(F) Section 12.9(b)(v) of the Equity Definitions is hereby
amended by:
(x) adding the word "or" immediately before subsection
"(B)" and deleting the comma at the end of subsection
(A); and
(y) (1) deleting subsection (C) in its entirety, (2)
deleting the word "or" immediately preceding subsection
(C) and (3) deleting the final sentence in its entirety
and replacing it with the sentence "The Hedging Party
will determine the Cancellation Amount payable by one
party to the other."
(ii) Notwithstanding anything to the contrary in this Confirmation,
upon the occurrence of one of the following events, with respect to
this Transaction, (1) Citibank shall have the right to designate such
event an Additional Termination Event and designate an Early
Termination Date pursuant to Section 6(b) of the Agreement, and (2)
Company shall be deemed the sole Affected Party and the Transaction
shall be deemed the sole Affected Transaction:
(A) Consummation of (A) any recapitalization, reclassification or
change of the Shares (other than changes resulting from a
subdivision or combination) as a result of which the Shares would
be converted into, or exchanged for, stock, other securities,
other property or assets or (B) any consolidation with or merger
of the Company with or into another person pursuant to which
Shares will be converted into cash, securities or other property
or any conveyance, transfer or lease of all or substantially all
of Company's properties and assets to any person other than one
of its subsidiaries; provided, however, that a transaction where
the holders of more than 50% of all classes of common equity of
the Company immediately prior to such transaction own, directly
or indirectly, more than 50% of all classes of common equity of
the continuing or surviving corporation or transferee immediately
after such event shall not be an Additional Termination Event.
(B) There is a default by Company or any subsidiary in the payment of
the principal or interest on any mortgage, agreement or other
instrument under which there may be outstanding, or by which
there may be secured or evidenced any indebtedness for money
borrowed in excess of $20 million in the aggregate of Company
and/or any subsidiary, whether such indebtedness now exists or
shall hereafter be created resulting in such indebtedness
becoming or being declared due and payable.
12
(C) Any "person" or "group" within the meaning of Section 13(d) of
the Exchange Act other than the Company, any of its subsidiaries
or its employee benefit plans, files a Schedule TO or any
schedule, form or report under the Exchange Act disclosing that
such person or group has become the direct or indirect ultimate
"beneficial owner", as defined in Rule 13d-3 under the Exchange
Act, of the capital stock of the Company representing more than
50% of the voting power of such capital stock.
(D) Citibank, despite using commercially reasonable efforts, is
unable or reasonably determines that it is impractical or
illegal, to hedge its obligations pursuant to this Transaction in
the public market without registration under the Securities Act
or as a result of any legal, regulatory or self-regulatory
requirements or related policies and procedures (whether or not
such requirements, policies or procedures are imposed by law or
have been voluntarily adopted by Citibank).
Notwithstanding the forgoing, a transaction set forth in clauses
(A) or (C) above will not constitute an Additional Termination
Event if 100% of the consideration, excluding cash payments for
fractional shares, in such transaction or transactions consists
of shares of capital stock listed on a national securities
exchange or quoted on The NASDAQ Global Market or The NASDAQ
Global Select Market or will be so listed or quoted when issued
or exchanged in connection with such transaction or transactions.
(k) No Collateral or Setoff. Notwithstanding any provision of the
Agreement or any other agreement between the parties to the contrary,
the obligations of Company hereunder are not secured by any
collateral. Obligations under this Transaction shall not be set off by
Company against any other obligations of the parties, whether arising
under the Agreement, this Confirmation, under any other agreement
between the parties hereto, by operation of law or otherwise. Any
provision in the Agreement with respect to the satisfaction of
Company's payment obligations to the extent of Citibank's payment
obligations to Company in the same currency and in the same
Transaction (including, without limitation Section 2(c) thereof) shall
not apply to Company and, for the avoidance of doubt, Company shall
fully satisfy such payment obligations notwithstanding any payment
obligation to Company by Citibank in the same currency and in the same
Transaction. In calculating any amounts under Section 6(e) of the
Agreement, notwithstanding anything to the contrary in the Agreement,
(1) separate amounts shall be calculated as set forth in such Section
6(e) with respect to (a) this Transaction and (b) all other
Transactions, and (2) such separate amounts shall be payable pursuant
to Section 6(d)(ii) of the Agreement.
(l) Alternative Calculations and Payment on Early Termination and on
Certain Extraordinary Events. If, in respect of this Transaction, an
amount is payable by Company to Citibank, (i) pursuant to Section 12.7
or Section 12.9 of the Equity Definitions (except in the event of an
Insolvency, Nationalization, Tender Offer or Merger Event in which the
consideration or proceeds to be paid to holders of shares consists
solely of cash) or (ii) pursuant to Section 6(d)(ii) of the Agreement
(except in the event of an Event of Default in which Company is the
Defaulting Party or a Termination Event in which Company is the
Affected Party, other than an Event of Default of the type described
in (x) Section 5(a)(iii), (v), (vi), (vii) or (viii) of the Agreement
or (y) a Termination Event of the type described in Section 5(b) of
the Agreement, in the case of both (x) and (y), resulting from an
event or events outside Company's control) (a "Payment Obligation"),
Company shall have the right, in its sole discretion, to satisfy any
such Payment Obligation by the Share Termination Alternative (as
defined below) by giving irrevocable telephonic notice to Citibank,
confirmed in writing within one Scheduled Trading Day, no later than
12:00 p.m. New York local time on the Merger Date, Tender Offer Date,
Announcement Date (in the case of a Nationalization, Insolvency or
Delisting), Early Termination Date or date of cancellation, as
applicable; provided that if Company does not validly elect to satisfy
its Payment Obligation by the Share Termination Alternative, Citibank
shall have the right to require Company to satisfy its Payment
Obligation by the Share Termination Alternative. Notwithstanding the
foregoing, Company's or Citibank's right to elect satisfaction of a
Payment Obligation in the Share Termination Alternative as set forth
in this clause shall only apply to Transactions under this
Confirmation and, notwithstanding anything to the contrary in the
Agreement, (1) separate amounts shall be calculated with respect to
(a) Transactions hereunder and (b) all other Transactions under the
Agreement, and (2) such separate amounts shall be payable pursuant to
Section 6(d)(ii) of the Agreement, subject to, in the case of clause
(a), Company's Share Termination Alternative right hereunder.
13
Share Termination Alternative: If applicable, Company shall deliver to Citibank
the Share Termination Delivery Property on the date
(the "Share Termination Payment Date") on which the
Payment Obligation would otherwise be due pursuant
to Section 12.7 or Section 12.9 of the Equity
Definitions or Section 6(d)(ii) and 6(e) of the
Agreement, subject to paragraph (m)(i) below, in
satisfaction, subject to paragraph (m)(ii) below,
of the Payment Obligation in the manner reasonably
requested by Citibank free of payment.
Share Termination Delivery Property: A number of Share Termination Delivery Units, as
calculated by the Calculation Agent, equal to the
Payment Obligation divided by the Share Termination
Unit Price. The Calculation Agent shall adjust the
amount of Share Termination Delivery Property by
replacing any fractional portion of a security
therein with an amount of cash equal to the value
of such fractional security based on the values
used to calculate the Share Termination Unit Price.
Share Termination Unit Price: The value to Citibank of property contained in one
Share Termination Delivery Unit on the date such
Share Termination Delivery Units are to be
delivered as Share Termination Delivery Property,
as determined by the Calculation Agent in its
discretion by commercially reasonable means. The
Calculation Agent shall notify Company of such
Share Termination Unit Price at the time of
notification of the Payment Obligation. In the
case of a Private Placement of Share Termination
Delivery Units that are Restricted Shares (as
defined below), as set forth in paragraph (m)(i)
below, the Share Termination Unit Price shall be
determined by the discounted price applicable to
such Share Termination Delivery Units. In the case
of a Registration Settlement of Share Termination
Delivery Units that are Restricted Shares (as
defined below) as set forth in paragraph (m)(ii)
below, the Share Termination Unit Price shall be
the Settlement Price on the Merger Date, the
Announcement Date (in the case of a
Nationalization, Insolvency or Delisting) or the
Early Termination Date, as applicable.
Share Termination Delivery Unit: In the case of a Termination Event, Event of
Default or Delisting, one Share or, in the case of
Nationalization, Insolvency, Tender Offer or Merger
Event, a unit consisting of the number or amount of
each type of property received by a holder of one
Share (without consideration of any requirement to
pay cash or other consideration in lieu of
fractional amounts of any securities) in such
Nationalization, Insolvency, Tender Offer or Merger
Event. If such Nationalization, Insolvency, Tender
Offer or Merger Event involves a choice of
consideration to be received by holders, such
holder shall be deemed to have elected to receive
the maximum possible amount of cash.
14
Failure to Deliver: Inapplicable
Other applicable provisions: If Share Termination Alternative is applicable, the
provisions of Sections 9.8, 9.9, 9.11, 9.12 and
10.5 (as modified above) of the Equity Definitions
will be applicable, except that all references in
such provisions to "Physically-settled" shall be
read as references to "Share Termination Settled"
and all references to "Shares" shall be read as
references to "Share Termination Delivery Units".
"Share Termination Settled" in relation to this
Transaction means that Share Termination
Alternative is applicable to this Transaction.
(m) Registration/Private Placement Procedures. If, in the reasonable
opinion of Citibank, following any delivery of Shares or Share
Termination Delivery Property to Citibank hereunder, such Shares or
Share Termination Delivery Property would be in the hands of Citibank
subject to any applicable restrictions with respect to any
registration or qualification requirement or prospectus delivery
requirement for such Shares or Share Termination Delivery Property
pursuant to any applicable federal or state securities law (including,
without limitation, any such requirement arising under Section 5 of
the Securities Act as a result of such Shares or Share Termination
Delivery Property being "restricted securities", as such term is
defined in Rule 144 under the Securities Act, or as a result of the
sale of such Shares or Share Termination Delivery Property being
subject to paragraph (c) of Rule 145 under the Securities Act) (such
Shares or Share Termination Delivery Property, "Restricted Shares"),
then delivery of such Restricted Shares shall be effected pursuant to
either clause (i) or (ii) below at the election of Company, unless
Citibank waives the need for registration/private placement procedures
set forth in (i) and (ii) below. Notwithstanding the foregoing, solely
in respect of any Daily Number of Warrants exercised or deemed
exercised on any Expiration Date, Company shall elect, prior to the
first Settlement Date for the first Expiration Date, a Private
Placement Settlement or Registration Settlement for all deliveries of
Restricted Shares for all such Expiration Dates which election shall
be applicable to all Settlement Dates for such Warrants and the
procedures in clause (i) or clause (ii) below shall apply for all such
delivered Restricted Shares on an aggregate basis commencing after the
final Settlement Date for such Warrants. The Calculation Agent shall
make reasonable adjustments to settlement terms and provisions under
this Confirmation to reflect a single Private Placement or
Registration Settlement for such aggregate Restricted Shares delivered
hereunder.
(i) If Company elects to settle the Transaction pursuant to this
clause (i) (a "Private Placement Settlement"), then delivery of
Restricted Shares by Company shall be effected in customary
private placement procedures with respect to such Restricted
Shares reasonably acceptable to Citibank; provided that Company
may not elect a Private Placement Settlement if, on the date of
its election, it has taken, or caused to be taken, any action
that would make unavailable either the exemption pursuant to
Section 4(2) of the Securities Act for the sale by Company to
Citibank (or any affiliate designated by Citibank) of the
15
Restricted Shares or the exemption pursuant to Section 4(1) or
Section 4(3) of the Securities Act for resales of the Restricted
Shares by Citibank (or any such affiliate of Citibank). The
Private Placement Settlement of such Restricted Shares shall
include customary representations, covenants, blue sky and other
governmental filings and/or registrations, indemnities to
Citibank, due diligence rights (for Citibank or any designated
buyer of the Restricted Shares by Citibank), opinions and
certificates, and such other documentation as is customary for
private placement agreements, all reasonably acceptable to
Citibank. In the case of a Private Placement Settlement, Citibank
shall determine the appropriate discount to the Share Termination
Unit Price (in the case of settlement of Share Termination
Delivery Units pursuant to paragraph (l) above) or any Settlement
Price (in the case of settlement of Shares pursuant to Section 2
above) applicable to such Restricted Shares in a commercially
reasonable manner and appropriately adjust the number of such
Restricted Shares to be delivered to Citibank hereunder; provided
that in no event shall such number be greater than 3,700,000 (the
"Maximum Amount"). Notwithstanding the Agreement or this
Confirmation, the date of delivery of such Restricted Shares
shall be the Exchange Business Day following notice by Citibank
to Company, of such applicable discount and the number of
Restricted Shares to be delivered pursuant to this clause (i).
For the avoidance of doubt, delivery of Restricted Shares shall
be due as set forth in the previous sentence and not be due on
the Share Termination Payment Date (in the case of settlement of
Share Termination Delivery Units pursuant to paragraph (l) above)
or on the Settlement Date for such Restricted Shares (in the case
of settlement in Shares pursuant to Section 2 above).
In the event Company shall not have delivered the full number of
Restricted Shares otherwise applicable as a result of the proviso
above relating to the Maximum Amount (such deficit, the "Deficit
Restricted Shares"), Company shall be continually obligated to
deliver, from time to time until the full number of Deficit
Restricted Shares have been delivered pursuant to this paragraph,
Restricted Shares when, and to the extent, that (i) Shares are
repurchased, acquired or otherwise received by Company or any of
its subsidiaries after the Trade Date (whether or not in exchange
for cash, fair value or any other consideration), (ii) authorized
and unissued Shares reserved for issuance in respect of other
transactions prior to such date which prior to the relevant date
become no longer so reserved and (iii) Company additionally
authorizes any unissued Shares that are not reserved for other
transactions. Company shall immediately notify Citibank of the
occurrence of any of the foregoing events (including the number
of Shares subject to clause (i), (ii) or (iii) and the
corresponding number of Restricted Shares to be delivered) and
promptly deliver such Restricted Shares thereafter.
In the event of a Private Placement Settlement, the Net Share
Settlement Amount or the Payment Obligation, respectively, shall
be deemed to be the Net Share Settlement Amount or the Payment
Obligation, respectively, plus an additional amount (determined
from time to time by the Calculation Agent in its commercially
reasonable judgment) attributable to interest that would be
earned on such Net Share Settlement Amount or the Payment
Obligation, respectively, (increased on a daily basis to reflect
the accrual of such interest and reduced from time to time by the
amount of net proceeds received by Citibank as provided herein)
at a rate equal to the open Federal Funds Rate plus the Spread
for the period from, and including, such Settlement Date or the
date on which the Payment Obligation is due, respectively, to,
but excluding, the related date on which all the Restricted
Shares have been sold and calculated on an Actual/360 basis. The
foregoing provision shall be without prejudice to Citibank's
rights under the Agreement (including, without limitation,
Sections 5 and 6 thereof).
As used in this Section, "Spread" means, with respect to any Net
Share Settlement Amount or Payment Obligation, respectively, the
credit spread over the applicable overnight rate that would be
imposed if Citibank were to extend credit to Company in an amount
equal to such Net Share Settlement Amount, all as determined by
the Calculation Agent using its commercially reasonable judgment
as of the related Settlement Date or the date on which the
Payment Obligation is due, respectively. Commercial
reasonableness shall take into consideration all factors deemed
relevant by the Calculation Agent, which are expected to include,
among other things, the credit quality of Company (and any
relevant affiliates) in the then-prevailing market and the credit
spread of similar companies in the relevant industry and other
companies having a substantially similar credit quality.
16
(ii) If Company elects to settle the Transaction pursuant to this
clause (ii) (a "Registration Settlement"), then Company
shall promptly (but in any event no later than the beginning
of the Resale Period) file and use its reasonable best
efforts to make effective under the Securities Act a
registration statement or supplement or amend an outstanding
registration statement in form and substance reasonably
satisfactory to Citibank, to cover the resale of such
Restricted Shares in accordance with customary resale
registration procedures, including covenants, conditions,
representations, underwriting discounts (if applicable),
commissions (if applicable), indemnities, due diligence
rights, opinions and certificates, and such other
documentation as is customary for equity resale underwriting
agreements, all reasonably acceptable to Citibank. If
Citibank, in its sole reasonable discretion, is not
satisfied with such procedures and documentation Private
Placement Settlement shall apply. If Citibank is satisfied
with such procedures and documentation, it shall sell the
Restricted Shares pursuant to such registration statement
during a period (the "Resale Period") commencing on the
Exchange Business Day following delivery of such Restricted
Shares (which, for the avoidance of doubt, shall be (x) any
Settlement Date in the case of an exercise of Warrants prior
to the first Expiration Date pursuant to Section 2 above,
(y) the Share Termination Payment Date in case of settlement
in Share Termination Delivery Units pursuant to paragraph
(l) above or (z) the Settlement Date in respect of the final
Expiration Date for all Daily Number of Warrants) and ending
on the earliest of (i) the Exchange Business Day on which
Citibank completes the sale of all Restricted Shares or, in
the case of settlement of Share Termination Delivery Units,
a sufficient number of Restricted Shares so that the
realized net proceeds of such sales equals or exceeds the
Payment Obligation (as defined above), (ii) the date upon
which all Restricted Shares have been sold or transferred
pursuant to Rule 144 (or similar provisions then in force)
or Rule 145(d)(1) or (2) (or any similar provision then in
force) under the Securities Act and (iii) the date upon
which all Restricted Shares may be sold or transferred by a
non-affiliate pursuant to Rule 144(k) (or any similar
provision then in force) or Rule 145(d)(3) (or any similar
provision then in force) under the Securities Act. If the
Payment Obligation exceeds the realized net proceeds from
such resale, Company shall transfer to Citibank by the open
of the regular trading session on the Exchange on the
Exchange Trading Day immediately following the last day of
the Resale Period the amount of such excess (the "Additional
Amount") in cash or in a number of Shares ("Make-whole
Shares") in an amount that, based on the Settlement Price on
the last day of the Resale Period (as if such day was the
"Valuation Date" for purposes of computing such Settlement
Price), has a dollar value equal to the Additional Amount.
The Resale Period shall continue to enable the sale of the
Make-whole Shares. If Company elects to pay the Additional
Amount in Shares, the requirements and provisions for
Registration Settlement shall apply. This provision shall be
applied successively until the Additional Amount is equal to
zero. In no event shall Company deliver a number of
Restricted Shares greater than the Maximum Amount.
(iii) Without limiting the generality of the foregoing, Company
agrees that any Restricted Shares delivered to Citibank, as
purchaser of such Restricted Shares, (i) may be transferred
by and among Citibank and its affiliates and Company shall
effect such transfer without any further action by Citibank
and (ii) after the minimum "holding period" within the
meaning of Rule 144(d) under the Securities Act has elapsed
after any Settlement Date for such Restricted Shares,
Company shall promptly remove, or cause the transfer agent
for such Restricted Shares to remove, any legends referring
to any such restrictions or requirements from such
Restricted Shares upon delivery by Citibank (or such
affiliate of Citibank) to Company or such transfer agent of
seller's and broker's representation letters customarily
delivered by Citibank in connection with resales of
restricted securities pursuant to Rule 144 under the
Securities Act, without any further requirement for the
delivery of any certificate, consent, agreement, opinion of
counsel, notice or any other document, any transfer tax
stamps or payment of any other amount or any other action by
Citibank (or such affiliate of Citibank).
17
If the Private Placement Settlement or the Registration
Settlement shall not be effected as set forth in clauses (i) or
(ii), as applicable, then failure to effect such Private
Placement Settlement or such Registration Settlement shall
constitute an Event of Default with respect to which Company
shall be the Defaulting Party.
(n) Limit on Beneficial Ownership. Notwithstanding anything to the
contrary in the Agreement or this Confirmation, in no event shall
Citibank be entitled to receive, or shall be deemed to receive, any
Shares if, upon such receipt of such Shares, the "beneficial
ownership" (within the meaning of Section 13 of the Exchange Act and
the rules promulgated thereunder) of Shares by Citibank or any entity
that directly or indirectly controls Citibank (collectively, "Citibank
Group") would be equal to or greater than 4.5% or more of the
outstanding Shares. If any delivery owed to Citibank hereunder is not
made, in whole or in part, as a result of this provision, Company's
obligation to make such delivery shall not be extinguished and Company
shall make such delivery as promptly as practicable after, but in no
event later than one Exchange Business Day after, Citibank gives
notice to Issuer that such delivery would not result in Citibank Group
directly or indirectly so beneficially owning in excess of 4.5% of the
outstanding Shares. No additional compensation or amounts shall be due
Citibank as a consequence of such delayed settlement.
(o) Share Deliveries. Company acknowledges and agrees that, to the extent
the holder of this Warrant is not then an affiliate and has not been
an affiliate for 90 days (it being understood that Citibank will not
be considered an affiliate under this paragraph solely by reason of
its receipt of Shares pursuant to this Transaction), and otherwise
satisfies all holding period and other requirements of Rule 144 of the
Securities Act applicable to it, any delivery of Shares or Share
Termination Property hereunder at any time after 2 years from the
Trade Date shall be eligible for resale under Rule 144(k) of the
Securities Act and Company agrees to promptly remove, or cause the
transfer agent for such Shares or Share Termination Property, to
remove, any legends referring to any restrictions on resale under the
Securities Act from the Shares or Share Termination Property. Company
further agrees, for any delivery of Shares or Share Termination
Property hereunder at any time after 1 year from the Trade Date but
within 2 years of the Trade Date, to the to the extent the holder of
this Warrant then satisfies the holding period and other requirements
of Rule 144 of the Securities Act, to promptly remove, or cause the
transfer agent for such Restricted Share to remove, any legends
referring to any such restrictions or requirements from such
Restricted Shares. Such Restricted Shares will be de-legended upon
delivery by Citibank (or such affiliate of Citibank) to Company or
such transfer agent of customary seller's and broker's representation
letters in connection with resales of restricted securities pursuant
to Rule 144 of the Securities Act, without any further requirement for
the delivery of any certificate, consent, agreement, opinion of
counsel, notice or any other document, any transfer tax stamps or
payment of any other amount or any other action by Citibank (or such
affiliate of Citibank). Company further agrees that any delivery of
Shares or Share Termination Delivery Property prior to the date that
is 1 year from the Trade Date, may be transferred by and among
Citibank and its affiliates and Company shall effect such transfer
without any further action by Citibank. Notwithstanding anything to
the contrary herein, Company agrees that any delivery of Shares or
Share Termination Delivery Property shall be effected by book-entry
transfer through the facilities of DTC, or any successor depositary,
if at the time of delivery, such class of Shares or class of Share
Termination Delivery Property is in book-entry form at DTC or such
successor depositary and such Shares or Share Termination Delivery
Property are not "restricted securities" for purposes of the
Securities Act. Notwithstanding anything to the contrary herein, to
the extent the provisions of Rule 144 of the Securities Act or any
successor rule are amended, or the applicable interpretation thereof
by the Securities and Exchange Commission or any court change after
the Trade Date, the agreements of Company herein shall be deemed
modified to the extent necessary, in the opinion of outside counsel of
Company, to comply with Rule 144 of the Securities Act, including Rule
144(k) as in effect at the time of delivery of the relevant Shares or
Share Termination Property.
18
(p) Governing Law. New York law (without reference to choice of law
doctrine).
(q) Waiver of Jury Trial. Each party waives, to the fullest extent
permitted by applicable law, any right it may have to a trial by jury
in respect of any suit, action or proceeding relating to this
Transaction. Each party (i) certifies that no representative, agent or
attorney of the other party has represented, expressly or otherwise,
that such other party would not, in the event of such a suit, action
or proceeding, seek to enforce the foregoing waiver and (ii)
acknowledges that it and the other party have been induced to enter
into this Transaction, as applicable, by, among other things, the
mutual waivers and certifications provided herein.
(r) Tax Disclosure. Effective from the date of commencement of discussions
concerning the Transaction, Company and each of its employees,
representatives, or other agents may disclose to any and all persons,
without limitation of any kind, the tax treatment and tax structure of
the Transaction and all materials of any kind (including opinions or
other tax analyses) that are provided to Company relating to such tax
treatment and tax structure.
(s) Maximum Share Delivery. Notwithstanding any other provision of this
Confirmation or the Agreement, in no event will Company be required to
deliver more than the Maximum Amount of Shares in the aggregate to
Citibank in connection with this Transaction, subject to the
provisions regarding Deficit Restricted Shares
(t) Right to Extend. Citibank may postpone, in whole or in part, any
Expiration Date or any other date of valuation or delivery with
respect to some or all of the relevant Warrants (in which event the
Calculation Agent shall make appropriate adjustments to the Daily
Number of Warrants with respect to one or more Expiration Dates) if
Citibank determines, in its commercially reasonable judgment, that
such extension is reasonably necessary or appropriate to preserve
Citibank's hedging or hedge unwind activity hereunder in light of
existing liquidity conditions or to enable Citibank to effect
purchases of Shares in connection with its hedging, hedge unwind or
settlement activity hereunder in a manner that would, if Citibank were
Issuer or an affiliated purchaser of Issuer, be in compliance with
applicable legal, regulatory or self-regulatory requirements, or with
related policies and procedures applicable to Citibank.
(u) Status of Claims in Bankruptcy. Citibank acknowledges and agrees that
this Confirmation is not intended to convey to Citibank rights against
Company with respect to the Transaction that are senior to the claims
of common stockholders of Company in any U.S. bankruptcy proceedings
of Company; provided that nothing herein shall limit or shall be
deemed to limit Citibank's right to pursue remedies in the event of a
breach by Company of its obligations and agreements with respect to
the Transaction; provided, further, that nothing herein shall limit or
shall be deemed to limit Citibank's rights in respect of any
transactions other than the Transaction.
(v) Securities Contract; Swap Agreement. The parties hereto intend for:
(a) the Transaction to be a "securities contract" and a "swap
agreement" as defined in the Bankruptcy Code (Title 11 of the United
States Code) (the "Bankruptcy Code"), and the parties hereto to be
entitled to the protections afforded by, among other Sections,
Sections 362(b)(6), 362(b)(17), 546(e), 546(g), 555 and 560 of the
Bankruptcy Code; (b) a party's right to liquidate the Transaction and
to exercise any other remedies upon the occurrence of any Event of
Default under the Agreement with respect to the other party to
constitute a "contractual right" as described in the Bankruptcy Code;
and (c) each payment and delivery of cash, securities or other
property hereunder to constitute a "margin payment" or "settlement
payment" and a "transfer" as defined in the Bankruptcy Code.
[signature page follows]
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Please confirm that the foregoing correctly sets forth the terms of our
agreement by executing this Confirmation and returning an executed copy to
Equity Derivatives, Citibank, N.A., 000 Xxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx
00000, Facsimile No. (000) 000-0000.
Very truly yours,
CITIBANK, N.A.
/s/ Xxxxxxx Xxxxxx
---------------------
Authorized Signatory
Accepted and confirmed
as of the Trade Date:
CHEMED CORPORATION
By: /s/ Xxxxx X. Xxxxxxxx
------------------------------------------
Authorized Signatory
Name: Xxxxx X. Xxxxxxxx
20
