1
EXHIBIT 2.K.(iii)
PURCHASE AGREEMENT
THIS AGREEMENT is made as of this ___ day of May, 1997
between [Selling Shareholder] ("Seller") and Automatic Common Exchange Security
Trust II, a trust organized under the laws of the State of New York under and
by virture of an Amended and Restated Trust Agreement, dated as of May __, 1997
(the "Trust Agreement") (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 $0.01
per share (the "Common Stock"), of Republic Industries, Inc., a Delaware
corporation (the "Company");
WHEREAS, Purchaser has filed with the Securities and Exchange
Commission a registration statement contemplating the offering of up to
9,934,235 Trust Automatic Common Exchange Securities (the "Securities"), the
terms of which contemplate delivery by Purchaser to the holders thereof of a
number of shares of Common Stock (or, at the option of Sellers, cash in lieu
thereof) on the Exchange Date referred to herein;
WHEREAS, Seller has agreed, pursuant to the Collateral
Agreement (the "Collateral Agreement") dated as of May __, 1997, among
Purchaser, Seller and The Bank of New York, as collateral agent (the
"Collateral Agent"), to grant Purchaser a security interest in the Common Stock
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 May __, 1997 (the "Underwriting Agreement"), among Purchaser,
Sellers, the Company and ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co. as representatives of the several
underwriters named therein (the "Underwriters"), to issue and sell to the
Underwriters an aggregate of 8,700,000 Securities (the "Firm Securities") and,
at the Underwriters' option, up to 1,234,235 additional Securities (the
"Optional Securities") to cover overallotments;
NOW, THEREFORE, in consideration of their mutual covenants
herein contained, the parties hereto, intending to be legally bound, hereby
mutually covenant and agree as follows:
2
DEFINITIONS
As used herein, the following words and phrases shall have
the following meanings:
"Additional Purchase Price" has the meaning provided in
Section 1.2(b).
"Additional Share Base Amount" means a number equal to the
number of Optional Securities that the Underwriters elect 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 Firm
Securities purchased by the Underwriters 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 at the Second Time of
Delivery.
"Administrator" means The Bank of New York, administrator for
Purchaser under the Administration Agreement dated as of May __, 1997, or any
successor thereto.
"Appreciation Threshold Price" has the meaning provided
in Section 1.1(c).
"Business Day" means any day on which commercial banks are
open for business in New York City and the New York Stock Exchange is not
closed.
"Calculation Period" means any period of Trading Days for
which an average security price must be determined pursuant to this Agreement.
"Cash Settlement Alternative" has the meaning provided
in Section 1.3(d).
"Closing Price" of the Common Stock on any date of
determination means the daily closing sale price (or, if no closing sale price
is reported, the last reported sale price) of the Common Stock as reported on
the Nasdaq Stock Market--National Market ("Nasdaq") on such date of
determination or, if the Common Stock is traded on Nasdaq on any such date, as
reported in the composite transactions for the principal United States
securities exchange on which the Common Stock is so listed, or if the Common
Stock is not so listed on a United States national or regional securities
exchange, the last quoted bid price for the Common Stock in the
over-the-counter market as reported by the National
3
Quotation Bureau or similar organization, provided that if any event that
results in an adjustment to the number of shares of Common Stock deliverable
hereunder pursuant to Section 6.1(e), occurs prior to the Exchange Date, the
Closing Price as determined pursuant to the foregoing will be appropriately
adjusted to reflect the occurrence of such event.
"Contract Shares" has the meaning provided in Section 1.1(b).
"Current Market Price" per share of Common Stock means the
average Closing Price of a share of Common Stock on the 20 Trading Days
immediately prior to but not including the Exchange Date.
"Custodian" means The Bank of New York, custodian for
Purchaser under the Custodian Agreement dated as of May __, 1997, or any
successor thereto.
"Dilution Adjustment" means any fraction or number by which
the Exchange Rate shall be multiplied pursuant to Section 6.1(a), (b), (c) or
(d).
"Event of Default" has the meaning provided in Article VII.
"Excess Purchase Payment" has the meaning provided in Section
6.1(d).
"Exchange Date" means __________, 2000.
"Exchange Rate" has the meaning provided in Section 1.1(c).
"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).
"First Time of Delivery" has the meaning provided in Section
1.3(a).
"Initial Price" has the meaning provided in Section 1.1(c).
"Marketable Securities" has the meaning provided in Section
6.2.
-3-
4
"Permitted Dividend" has the meaning provided in Section
6.1(d).
"Reorganization Event" has the meaning provided in Section
6.2.
"Second Time of Delivery" has the meaning provided in Section
1.1(b).
"Then-Current Market Price" of the Common Stock, for the
purpose of applying any adjustment pursuant to Section 6.1, means the average
Closing Price per share of the Common Stock for the Calculation Period of 5
Trading Days immediately prior to the time such adjustment is effected (or, in
the case of an adjustment effected at the opening of business on the Business
Day next following a record date as described in Section 6.1(f)(i), immediately
prior to the earlier of the time such adjustment is effected and the related
ex-date); provided that if no Closing Price for the Common Stock is determined
for one or more (but not all) of such Trading Days, such Trading Day shall be
disregarded in the calculation of the Then-Current Market Price (but no
additional trading days shall be added to the Calculation Period). If no
Closing Price for the Common Stock may be determined for any of such Trading
Days, the Then-Current Market Price shall be the Closing Price for the Common
Stock for the most recent Trading Day prior to such 5 Trading Days for which a
Closing Price for the Common Stock may be determined pursuant to the "Closing
Price" definition. The "ex-date" with respect to any dividend, distribution or
issuance shall mean the first date on which the shares of Common Stock trade
regular way on their principal market without the right to receive such
dividend, distribution or issuance.
"Trading Day" means a day on which the Common Stock (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.
"Trust Agreement" means the Amended and Restated Trust
Agreement constituting Automatic Common Exchange Security Trust II, dated as of
May __, 1997.
"U.S. Government Securities" has the meaning provided in the
Collateral Agreement.
-4-
5
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
shall have a right to purchase, a number of additional shares of Common Stock
(the "Additional Shares") equal to the product of the Exchange Rate and the
Additional Share Base Amount. If the Underwriters exercise their option to
purchase Optional Securities pursuant to the Underwriting Agreement, Purchaser
shall notify Seller in writing that Purchaser will purchase the Additional
Shares, which notice shall specify the Additional Share Base Amount and the
date on which Purchaser shall deliver the purchase price for the Additional
Shares, which shall be the Second Time of Delivery specified pursuant to
Section 2 of the Underwriting Agreement (the "Second Time of Delivery"). 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 Current Market Price is
less than $______ (the "Appreciation Threshold Price") but equal to or 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
lower 1/10,000th) equal to the Initial Price divided by the Current Market
Price; (ii) if the Current Market Price is equal to or greater than the
Appreciation Threshold Price, _________ and (iii) if the Current Market Price
is less than 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 Optional Securities and (2) the aggregate cost to Purchaser, as
notified by Purchaser to Seller at the Second Time of Delivery, of the
Additional
-5-
6
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 Firm Securities
purchased by the Underwriters under the Underwriting Agreement.
1.3 Payment for and Delivery of Contract Shares. (a) First
Time of Delivery. Upon the terms and subject to the conditions of this
Agreement, Purchaser shall deliver to Seller the Firm Purchase Price on
_________, 1997 (the "First Time of Delivery") at the offices of ▇▇▇▇▇▇▇▇ &
▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, or at such other place as
shall be agreed upon by Purchaser and Seller, paid by wire transfer to an
account designated by Seller, in Federal (immediately available) funds.
(b) Second Time of Delivery. Upon the terms and subject to
the conditions of this Agreement, Purchaser shall deliver to Seller the
Additional Purchase Price at the Second Time of Delivery at the offices of
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, or at such
other place as shall be agreed upon by Purchaser and Seller, paid by wire
transfer to an account designated by Seller, in Federal (immediately available)
funds.
(c) Delivery of Contract Shares. On the Exchange Date, Seller
agrees to deliver the Contract Shares to Purchaser. Delivery shall be effected
by delivery by the Collateral Agent to the Custodian, for the account of
Purchaser, of 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 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 Current Market Price. Notwithstanding the foregoing, if a
Reorganization Event shall have occurred prior to the Exchange Date then, in
lieu of the foregoing, delivery shall be effected as follows: (i) in the case
of any cash required to be delivered on the Exchange Date as provided in
Section 6.2, by wire transfer of immediately available funds to an account
designated by Purchaser; or (ii) in the case of any Marketable Securities
elected by Seller to be delivered in lieu of cash as provided in Section 6.2,
at Seller's election, by instruction to the Collateral Agent to deliver to the
Custodian, for the account of Purchaser, a specified number of Marketable
Securities then held as collateral under the Collateral Agreement, as provided
in Section 6(g) of the Collateral Agreement.
(d) Cash Settlement Alternative. At its option, Seller may
deliver to Purchaser on the Exchange Date, in lieu of
-6-
7
the Contract Shares, an amount in cash equal to the Current Market Price of the
Contract Shares (the "Cash Settlement Alternative"), paid by wire transfer to
an account designated by Custodian, in Federal (immediately available) funds.
Seller may request the Cash Settlement Alternative 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 35 days prior to the Exchange
Date. In the event Seller elects the Cash Settlement Alternative and so
notifies Purchaser, Purchaser shall provide notice of such election to the
holders of the Securities, together with a news release delivered to the Dow
▇▇▇▇▇ News Service announcing Seller's election of the Cash Settlement
Alternative, not less than thirty (30) nor more than sixty (60) days prior to
the Exchange Date.
II.
REPRESENTATIONS AND WARRANTIES OF SELLER
Seller represents and warrants to Purchaser that each
representation and warranty made by Seller pursuant to Section 1(b) of the
Underwriting Agreement is true and correct on the date hereof.
III.
REPRESENTATIONS AND WARRANTIES OF PURCHASER
Purchaser represents and warrants to Seller that each
representation and warranty made by Purchaser pursuant to Section 1(a) of the
Underwriting Agreement is true and correct on the date hereof.
IV.
CONDITIONS TO PURCHASER'S OBLIGATIONS
(a) The obligation of Purchaser to deliver the Firm Purchase
Price at the First Time of Delivery is subject to the condition that the
purchase by the Underwriters of the Firm Securities pursuant to the
Underwriting Agreement shall have been consummated as contemplated under the
Underwriting Agreement.
(b) The obligation of Purchaser to deliver the Additional
Purchase Price at the Second Time of Delivery is subject to the condition that
the purchase by the Underwriters of the Optional Securities shall have been
consummated as contemplated under the Underwriting Agreement.
-7-
8
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
pursuant hereto.
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 Marketable 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 Marketable 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 clause
(i) through (iii). Notwithstanding the preceding sentence, Seller may take any
action or position required by law, provided that Seller delivers to Purchaser
an unqualified opinion of counsel, nationally recognized as expert in 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 will not buy shares of Common Stock 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
-8-
9
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 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, 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.
VI.
ADJUSTMENT OF EXCHANGE RATE, APPRECIATION THRESHOLD PRICE,
INITIAL PRICE AND CLOSING PRICE
6.1 Dilution Adjustments. The Exchange Rate,
Appreciation Threshold Price and Initial Price shall be subject
to adjustment from time to time as follows:
(a) Stock Dividends, Splits, Reclassifications, Etc. If the
Company shall, after the date hereof,
(i) pay a stock dividend or make a distribution with respect
to Common Stock in shares of such stock;
(ii) subdivide or split the outstanding shares of Common
Stock into a greater number of shares of Common Stock;
(iii) combine the outstanding shares of Common Stock into a
smaller number of shares; or
(iv) issue by reclassification of shares of its Common Stock
any shares of other 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
-9-
10
Stock (or in the case of a reclassification referred to in clause (iv) above,
the number of shares of other common stock of the Company issued pursuant
thereto), 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. The Appreciation Threshold
Price and Initial Price shall also be adjusted in the manner described in
paragraph (e).
(b) Right or Warrant Issuances. If the Company shall, after
the date hereof, issue, or declare a record date in respect of an issuance of,
rights or warrants to all holders of Common Stock entitling them to subscribe
for or purchase shares of Common Stock at a price per share less than the
Then-Current Market Price of the Common Stock (other than rights to purchase
Common Stock pursuant to a plan for the reinvestment of dividends or interest),
then, in each such case, the Exchange Rate shall be multiplied by a Dilution
Adjustment equal to a fraction of which the numerator shall be the number of
shares of Common Stock outstanding immediately prior to the time the adjustment
is effected by reason of the issuance of such rights or warrants, plus the
number of additional shares of Common Stock offered for subscription or
purchase pursuant to such rights or warrants, and of which the denominator
shall be the number of shares of Common Stock outstanding immediately prior to
the time the adjustment is effected, plus the number of additional shares of
Common Stock which the aggregate offering price of the total number of shares
of Common Stock so offered for subscription or purchase pursuant to such rights
or warrants would purchase at the Then-Current Market Price of the Common
Stock, which shall be determined by multiplying the total number of shares so
offered for subscription or purchase by the exercise price of such rights or
warrants and dividing the product so obtained by such Then- Current Market
Price. To the extent that, after the expiration of such rights or warrants, the
shares of Common Stock offered thereby shall not have been delivered, the
Exchange Rate shall be further adjusted to equal the Exchange Rate which would
have been in effect had such adjustment 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. The Appreciation Threshold Price and Initial
Price shall also be adjusted in the manner described in paragraph (e).
(c) Distributions of Other Assets. If the Company shall,
after the date hereof, declare or pay a dividend or make a distribution to all
holders of Common Stock, in either case, of evidences of its indebtedness or
other non-cash assets (excluding any dividends or distributions referred to in
paragraph (a) above) or shall issue to all holders of Common Stock rights or
warrants to subscribe for or purchase any of its securities (other than rights
or warrants referred to in paragraph (b)
-10-
11
above), then, in each such case, the Exchange Rate shall be multiplied by a
Dilution Adjustment equal to a fraction, of which the numerator shall be the
Then-Current Market Price per share of the Common Stock, and of which the
denominator shall be such Then-Current Market Price per share less the fair
market value (as determined by a nationally recognized independent investment
banking firm retained for this purpose by the Administrator) as of the time the
adjustment is effected of the portion of the assets or evidences of
indebtedness so distributed or of such subscription rights or warrants
applicable to one share of Common Stock. The Appreciation Threshold Price and
Initial Price shall also be adjusted in the manner described in subparagraph
(e).
(d) Cash Dividends; Excess Purchase Payments. If, after the
date hereof, the Company declares a record date in respect of a distribution of
cash (other than any Permitted Dividend, any cash distributed in consideration
of fractional shares of Common Stock and any cash distributed in a
Reorganization Event), by dividend or otherwise, to all holders of Common
Stock, or makes an Excess Purchase Payment, then the Exchange Rate will be
multiplied by a Dilution Adjustment equal to a fraction, of which the numerator
shall be the Then-Current Market Price of the Common Stock on such record date,
and of which the denominator shall be such Then-Current Market Price less the
amount of such distribution applicable to one share of Common Stock which would
not be a Permitted Dividend (or in the case of an Excess Purchase Payment, less
the aggregate amount of such Excess Purchase Payment for which adjustment is
being made at such time divided by the number of shares of Common Stock
outstanding on such record date). For purposes of these adjustments, (A)
"Permitted Dividend" means any quarterly cash dividend in respect of the Common
Stock, other than a quarterly cash dividend that exceeds the immediately
preceding quarterly cash dividend, and then only to the extent that the per
share amount of such dividend results in an annualized dividend yield on the
Common Stock in excess of ____% and (B) "Excess Purchase Payment" means the
excess, if any, of (x) the cash and the value (as determined by a nationally
recognized independent investment banking firm retained for this purpose by the
Administrator, whose determination shall be final) of all other consideration
paid by the Company with respect to one share of Common Stock acquired in a
tender offer or exchange offer by the Company, over (y) the Then-Current Market
Price of the Common Stock. The Appreciation Threshold Price and Initial Price
shall also be adjusted in the manner described in subparagraph (e).
(e) Corresponding Adjustments to Initial Price, Appreciation
Threshold Price and Closing Price; Change in Principal Market. (i) If any
adjustment is made to the Exchange Rate pursuant to paragraph (a), (b), (c) or
(d) of this Section 6.1, an adjustment shall also be made to the Appreciation
-11-
12
Threshold Price and the Initial Price. The required adjustment shall be made by
dividing each of the Appreciation Threshold Price and the Initial Price by the
relevant Dilution Adjustment.
(ii) If, during any Calculation Period used in calculating
the Current Market Price, the Then-Current 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.
(f) Timing of Dilution Adjustments. Each Dilution Adjustment
shall be effected:
(i) in the case of any dividend, distribution or issuance,
at the opening of business on the Business Day next following the
record date for determination of holders of Common Stock entitled
to receive such dividend, distribution or issuance or, if the
announcement of any such dividend, distribution or issuance is after
such record date, at the time such dividend, distribution or issuance
shall be announced by the Company;
(ii) in the case of any subdivision, split, combination or
reclassification, on the effective date of such transaction;
(iii) in the case of any Excess Purchase Payment for which
the Company shall announce, at or prior to the time it commences the
relevant share repurchase, the repurchase price per share for shares
proposed to be repurchased, on the date of such announcement; and
(iv) in the case of any other Excess Purchase Payment, on the
date that the holders of the repurchased shares become entitled to
payment in respect thereof.
(g) General; Failure of Dilution Event to Occur. All Dilution
Adjustments shall be rounded upward or downward to the nearest 1/10,000th (or
if there is not a nearest 1/10,000th to the next lower 1/10,000th). No
adjustment in the Exchange Rate shall be required unless such adjustment would
require an increase or decrease of at least one percent therein; provided,
however, that any adjustments which by reason of this sentence are not required
to be made shall be carried forward and taken into account in any subsequent
adjustment. If any announcement or declaration of a record date in respect of a
dividend, distribution, issuance or repurchase requiring an adjustment pursuant
to this Section 6.1 shall subsequently be cancelled by
-12-
13
the Company, or such dividend, distribution, issuance or repurchase shall fail
to receive requisite approvals or shall fail to occur for any other reason,
then, upon such cancellation, failure of approval or failure to occur, the
Exchange Rate shall be further adjusted to the Exchange Rate which would then
have been in effect had adjustment for such event not been made. If a
Reorganization 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
Reorganization Event. In the event of (i) any consolidation or merger of the
Company, or any surviving entity or subsequent surviving entity of the Company
(a "Company Successor"), with or into another entity (other than a merger or
consolidation in which the Company is the continuing corporation and in which
the Common Stock outstanding immediately prior to the merger or consolidation
is not exchanged for cash, securities or other property of the Company or
another corporation), (ii) any sale, transfer, lease or conveyance to another
corporation of the property of the Company or any Company Successor as an
entirety or substantially as an entirety, (iii) any statutory exchange of
securities of the Company or any Company Successor with another corporation
(other than in connection with a merger or acquisition) or (iv) any
liquidation, dissolution or winding up of the Company or any Company Successor
(any such event described in clause (i), (ii), (iii) or (iv), a "Reorganization
Event"), the Exchange Rate shall be adjusted so that on the Exchange Date
Purchaser shall receive, in lieu of the Contract Shares, cash in an amount
equal to the product of (x) the Firm Share Base Amount plus the Additional
Share Base Amount (if any) and (y)(i) if the Transaction Value is less than the
Appreciation Threshold Price but equal to or greater than the Initial Price,
the Initial Price, (ii) if the Transaction Value is equal to or greater than
the Appreciation Threshold Price, _________ multiplied by the Transaction
Value, and (iii) if the Transaction Value is less than the Initial Price, the
Transaction Value. Notwithstanding the foregoing, if any Marketable Securities
are received by holders of Common Stock in such Reorganization Event, Seller
may, at its option, in lieu of delivering cash as described above, deliver an
equivalent amount (based on the value determined in accordance with clause (z)
of the following paragraph) of Marketable Securities, but not exceeding, as a
percentage of the total consideration required to be delivered, the percentage
of the total Transaction Value attributable to such Marketable Securities.
"Transaction Value" means the sum of: (x) for any cash
received in any such Reorganization Event, the amount of cash
-13-
14
received per share of Common Stock; (y) for any property other than cash or
Marketable Securities received in any such Reorganization Event, an amount
equal to the market value on the date the Reorganization Event is consummated
of such property received per share of Common Stock, as determined by a
nationally recognized independent investment banking firm retained for this
purpose by the Administrator; and (z) for any Marketable Securities received in
any such Reorganization Event, an amount equal to the average Closing Price per
share of such Marketable Securities for the Calculation Period of 20 Trading
Days immediately prior to the Exchange Date multiplied by the number of such
Marketable Securities received for each share of Common Stock; provided that if
no Closing Price for such Marketable Securities may be determined for one or
more (but not all) of such Trading Days such Trading Day shall be disregarded
in the calculation of such average Closing Price (but no additional trading
days shall be added to the Calculation Period). If no Closing Price for the
Marketable Securities may be determined for all such Trading Days, the
calculation in the preceding clause (z) shall be based on the most recently
available Closing Price for the Marketable Securities prior to such 20 Trading
Days.
"Marketable Securities" means any common equity securities
listed on a U.S. national securities exchange or reported by The Nasdaq
National Market. The number of shares of any Marketable Securities included in
the calculation of Transaction Value pursuant to the preceding clause (z) shall
be subject to adjustment if any event that would, had it occurred with respect
to the Common Stock or the Company, have required an adjustment pursuant to
Section 6.1, shall occur with respect to such Marketable Securities or the
issuer thereof subsequent to the date the Reorganization Event is consummated.
Adjustment for such subsequent events shall be as nearly equivalent as
practicable to the adjustments provided for in Section 6.1.
VII.
ACCELERATION
If one or more of the following events (each an "Event of
Default") shall occur:
(a) Seller shall commence a voluntary case or other
proceeding seeking a liquidation, reorganization or other relief with respect
to 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
-14-
15
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 the 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, and such involuntary case or other
proceeding shall remain undismissed and unstayed for a period of 60 days; or an
order for relief shall be entered against the 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, upon the occurrence of any such event, Seller shall become obligated to
deliver the Contract Shares (or, after a Reorganization Event, the Marketable
Securities or cash or a combination thereof deliverable in respect thereof), or
any U.S. Government Securities then pledged under the Collateral Agreement in
respect thereof. Purchaser and Seller agree that such amount is 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.
VIII.
MISCELLANEOUS
8.1 Adjustments of Exchange Rate; 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.
8.2 Notices. All notices and other communications hereunder
shall be in writing and shall be deemed to have been duly given if mailed or
transmitted by any standard forms of telecommunication. Notices to Purchaser
shall be directed to it
-15-
16
in care of the Administrator for Purchaser, The Bank of New York, at ▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Telecopy No: (▇▇▇) ▇▇▇-▇▇▇▇,
attention ▇▇▇▇▇▇ ▇▇▇▇▇▇; notices to Seller shall be directed to [him] [her] at
____________________________, Attention: _________ with a copy to ▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇ & ▇▇▇▇▇▇▇, 500 ▇▇▇▇▇▇▇ Building, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇,
Telecopy No.(▇▇▇) ▇▇▇-▇▇▇▇.
8.3 Governing Law; Severability. This Agreement shall be
governed by and construed in accordance with the laws of the State of New York.
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.
8.4 Entire Agreement. Except as expressly set forth herein,
this Agreement constitutes the entire agreement among the parties with respect
to the subject matter hereof and supersedes all prior agreements,
understandings and negotiations, both written and oral, among the parties with
respect to the subject matter of this Agreement.
8.5 Amendments; Waivers. Any provision of this Agreement may
be amended or waived if, and only if, such amendment or waiver is in writing
and signed, in the case of an amendment, by Purchaser and Seller or, in the
case of a waiver, by the party against whom the waiver is to be effective. No
failure or delay by either party in exercising any right, power or privilege
hereunder shall operate as a waiver thereof nor shall any single or partial
exercise thereof preclude any other or further exercise thereof or the exercise
of any other right, power or privilege. The rights and remedies herein provided
shall be cumulative and not exclusive of any rights or remedies provided by
law.
8.6 No Third Party Rights; Successors and Assigns. This
Agreement is not intended and shall not be construed to create any rights in
any person other than Seller and Purchaser and their respective successors and
assigns and no person shall assert any rights as third party beneficiary
hereunder. Whenever any of the parties hereto is referred to, such reference
shall be deemed to include the successors and assigns of such party. All the
covenants and agreements herein contained by or on behalf of the Seller and
Purchaser shall bind, and inure to the benefit of, their respective successors
and assigns whether so expressed or not, and shall be enforceable by and inure
to the benefit of Purchaser and its successors and assigns.
8.7 Counterparts. This Agreement may be signed in any number
of counterparts, each of which shall be an original, with
-16-
17
the same effect as if the signatures thereto and hereto were upon the same
instrument.
-17-
18
IN WITNESS WHEREOF, the parties have signed this Agreement as
of the date and year first above written.
SELLER:
-----------------------------------
-----------------------------------
-----------------------------------
---------------
------------------------------------
PURCHASER:
, as trustee,
-----------------------
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ III
, as trustee,
----------------------
▇▇▇▇▇ ▇. ▇'▇▇▇▇▇
, as trustee,
----------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
each as trustee of Automatic Common
Exchange Security Trust II