[EXECUTION COPY]
STOCK PURCHASE AGREEMENT
dated as of
March 5, 2002
between
PERSEUS CAPITAL, LLC
and
JPMORGAN CHASE BANK,
by ▇.▇. ▇▇▇▇▇▇ SECURITIES INC., as its Agent
TABLE OF CONTENTS
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PAGE
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ARTICLE 1
DEFINITIONS
SECTION 1.01. DEFINITIONS.....................................................1
ARTICLE 2
SALE AND PURCHASE; PAYMENT; ESTABLISHMENT OF TRANCHES
SECTION 2.01. SALE AND PURCHASE...............................................6
SECTION 2.02. PAYMENT, ESTABLISHMENT OF TRANCHES..............................7
SECTION 2.03. SETTLEMENT DATE................................................10
SECTION 2.04. CASH SETTLEMENT OPTION.........................................10
ARTICLE 3
REPRESENTATIONS AND WARRANTIES
SECTION 3.01. REPRESENTATIONS AND WARRANTIES OF SELLER.......................12
SECTION 3.02. REPRESENTATIONS AND WARRANTIES OF BUYER........................16
ARTICLE 4
CONDITIONS
SECTION 4.01. CONDITIONS TO EFFECTIVENESS OF THIS AGREEMENT..................17
SECTION 4.02. CONDITIONS TO BUYER'S OBLIGATIONS..............................18
ARTICLE 5
COVENANTS
SECTION 5.01. TAXES..........................................................18
SECTION 5.02. FORWARD CONTRACT...............................................19
SECTION 5.03. NOTICES........................................................19
SECTION 5.04. FURTHER ASSURANCES.............................................19
SECTION 5.05. NO SALES OF COMMON STOCK.......................................20
SECTION 5.06. SECURITIES CONTRACT............................................20
SECTION 5.07. BORROW COST....................................................20
SECTION 5.08. FORM 144 FILING................................................21
SECTION 5.09. INDEMNIFICATION................................................22
ARTICLE 6
ADJUSTMENTS
SECTION 6.01. DILUTION ADJUSTMENTS...........................................22
SECTION 6.02. MERGER EVENTS..................................................24
SECTION 6.03. NATIONALIZATION AND INSOLVENCY.................................25
SECTION 6.04. TERMINATION AND PAYMENT........................................25
ARTICLE 7
ACCELERATION
SECTION 7.01. ACCELERATION...................................................26
ARTICLE 8
MISCELLANEOUS
SECTION 8.01. NOTICES........................................................29
SECTION 8.02. GOVERNING LAW; SEVERABILITY; SUBMISSION TO JURISDICTION;
WAIVER OF JURY TRIAL.................................................29
SECTION 8.03. SET-OFF........................................................30
SECTION 8.04. ENTIRE AGREEMENT...............................................30
SECTION 8.05. AMENDMENTS, WAIVERS............................................30
SECTION 8.06. ASSIGNMENT BY BUYER; NO THIRD PARTY RIGHTS, SUCCESSORS
AND ASSIGNS..........................................................30
SECTION 8.07. COUNTERPARTS...................................................31
SECTION 8.08. NON-CONFIDENTIALITY............................................31
SECTION 8.09. OVERDUE AMOUNTS................................................31
SECTION 8.10. MATTERS RELATED TO AGENT.......................................31
SECTION 8.11. CALCULATION AGENT..............................................31
EXHIBIT A Form of Pre-pricing Acknowledgment
EXHIBIT B Form of Pricing Schedule
ii
STOCK PURCHASE AGREEMENT
THIS AGREEMENT is made as of this 5th day of March, 2002 between
PERSEUS CAPITAL, LLC, a Delaware limited liability company ("SELLER"), and
JPMORGAN CHASE BANK, a New York banking corporation ("BUYER"), by ▇.▇. ▇▇▇▇▇▇
SECURITIES INC., a Delaware corporation, as its agent ("AGENT").
WHEREAS, Seller owns shares of common stock, par value $.002 per share,
or security entitlements in respect thereof ("COMMON STOCK"), of ViroPharma
Incorporated, a Delaware corporation (the "ISSUER");
WHEREAS, Seller and Buyer are willing to sell and purchase shares of
Common Stock at the times and on the terms set forth herein; and
WHEREAS, Seller has agreed, pursuant to the Pledge Agreement (as
defined herein), to grant Buyer a security interest in certain shares of Common
Stock to secure the obligations of Seller hereunder;
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:
ARTICLE 1
DEFINITIONS
SECTION 1.01. DEFINITIONS. (a) The following terms, as used herein,
have the following meanings:
"BUSINESS DAY" means any day on which commercial banks are open for
business in New York City and the Exchange is not closed.
"CALCULATION AGENT" means JPMorgan Chase Bank.
"CLOSING PRICE" means, with respect to any security on any Valuation
Date or any other Trading Day, the closing sale price (or, if no closing sale
price is reported, the last reported sale price) of such security on the
Exchange on such day or, if such price is not so reported, the last quoted bid
price for such security in the over-the-counter market on such day as reported
by Pink Sheets LLC (formerly known as the National Quotation Bureau) or similar
organization or, if
such bid price is not available, the market value of such security on such day
as determined by the Calculation Agent, in each case determined as of the close
of regular session trading on the Exchange); PROVIDED that if such close of
regular session trading on the Exchange is extended to later than 4:00 p.m. (New
York time), then the time as of which the relevant sale or bid price shall be
determined shall be selected by the Calculation Agent in consultation with the
Seller; PROVIDED further that the proviso contained in the definition of
Valuation Date shall apply to the price determined on any other Trading Day
mutatis mutandis.
"COLLATERAL AGENT" means JPMorgan Chase Bank, as collateral agent under
the Pledge Agreement.
"EFFECTIVE DATE" means the later of the date hereof and such subsequent
date on which all the conditions set forth in Section 4.01 are either satisfied
or waived.
"EXCHANGE" means, with respect to any security at any time, the
principal national securities exchange or automated quotation system, if any, on
which such security is listed or quoted at such time.
"FREE STOCK" means Common Stock that is not subject to any Transfer
Restrictions (other than any Transfer Restrictions arising solely from the fact
that Seller is an "affiliate" within the meaning of Rule 144 under the
Securities Act of the Issuer) in the hands of Seller immediately prior to
delivery to an affiliate of Buyer designated by Buyer hereunder and such Common
Stock would not be subject to any Transfer Restrictions in the hands of such
affiliate of Buyer upon delivery to such affiliate of Buyer.
"HEDGING TERMINATION DATE" means the date one (1) month from the date
hereof.
"INSOLVENCY PROCEEDING" means any case or any judicial, administrative
or other proceeding, or the filing of any petition or the taking of any similar
action, (i) seeking a judgment of or arrangement for insolvency, bankruptcy,
winding-up, liquidation, reorganization, composition, rehabilitation,
administration or similar relief with respect to Seller or its debts or assets,
(ii) seeking the appointment or election of a conservator, trustee, receiver,
liquidator, administrator, custodian or similar official for Seller or any
substantial part of its assets, or (iii) which has an effect similar or
analogous to the foregoing.
"LIEN" means any lien, mortgage, security interest, pledge, charge,
adverse claim or encumbrance of any kind.
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"MARKET DISRUPTION EVENT" means, with respect to any Tranche, in
relation to any Valuation Date for such Tranche, as determined by the
Calculation Agent, the occurrence or existence during the one-half hour period
that ends at the close of the regular session of trading on the Exchange of any
material suspension of or material limitation imposed on trading in (i) the
Common Stock or in stocks generally on the Exchange or (ii) options contracts or
futures contracts related to the Common Stock on the primary exchange on which
such contracts are traded; PROVIDED that a limitation on the hours and number of
days of trading resulting from a change in the regular business hours of the
Exchange or such options exchange will not constitute a "Market Disruption
Event".
"PERSON" means an individual, a corporation, a limited liability
company, a partnership, an association, a trust or any other entity or
organization, including a government or political subdivision or an agency or
instrumentality thereof.
"PLEDGE AGREEMENT" means the Pledge Agreement dated as of the date
hereof among Seller, Buyer and the Collateral Agent, as amended from time to
time.
"PUBLICLY-TRADED ENTITY" means a corporation incorporated under the
laws of the United States or any state thereof the common stock of which is (i)
issued in connection with a Merger Event and (ii) listed or traded on any
national securities exchange in the United States or on the NASDAQ National
Market System.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
"SETTLEMENT DATE" means, with respect to any Tranche, the third
Business Day immediately following the last Valuation Date for such Tranche.
"SETTLEMENT PRICE" means, with respect to any Tranche, the arithmetic
mean of the relevant Closing Prices per share of Common Stock on each Valuation
Date for such Tranche.
"SETTLEMENT RATIO" means, with respect to any Tranche, 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 and determined in accordance with the following
formula, and is subject to adjustment as a result of certain events as provided
in Article 6:
(i) if the Settlement Price for such Tranche is equal to
or less than the Hedged Value for such Tranche, the Settlement Ratio
for such Tranche shall be one (1);
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(ii) if the Settlement Price for such Tranche is greater
than the Hedged Value for such Tranche but less than the Upside Limit
for such Tranche, the Settlement Ratio for such Tranche shall be a
ratio equal to the Hedged Value for such Tranche divided by the
Settlement Price for such Tranche;
(iii) if the Settlement Price for such Tranche is equal to
or greater than the Upside Limit for such Tranche but less than the
Upside Trigger for such Tranche, the Settlement Ratio for such Tranche
shall be a ratio equal to the sum of (A) the Hedged Value for such
Tranche DIVIDED by the Settlement Price for such Tranche and (B) a
fraction the numerator of which is equal to the difference between the
Settlement Price for such Tranche and the Upside Limit for such Tranche
and the denominator of which is equal to the Settlement Price for such
Tranche; and
(iv) if the Settlement Price for such Tranche is equal to
or greater than the Upside Trigger for such Tranche, the Settlement
Ratio for such Tranche shall be a ratio equal to (A) the Hedged Value
for such Tranche PLUS the Upside Trigger for such Tranche MINUS the
Upside Limit for such Tranche DIVIDED by (B) the Settlement Price for
such Tranche.
"TRADING DAY" means, with respect to any security, a day on which the
Exchange for such security is open for trading or quotation.
"TRANSFER RESTRICTION" means, with respect to any security or other
property, any condition to or restriction on the ability of the holder thereof
to sell, assign or otherwise transfer such security or other property or to
enforce the provisions thereof or of any document related thereto whether set
forth in such security or other property itself or in any document related
thereto, including, without limitation, (i) any requirement that any sale,
assignment or other transfer or enforcement of such security or other property
be consented to or approved by any Person, including, without limitation, the
issuer thereof or any other obligor thereon, (ii) any limitations on the type or
status, financial or otherwise, of any purchaser, pledgee, assignee or
transferee of such security or other property, (iii) any requirement of the
delivery of any certificate, consent, agreement, opinion of counsel, notice or
any other document of any Person to the issuer of, any other obligor on or any
registrar or transfer agent for, such security or other property, prior to the
sale, pledge, assignment or other transfer or enforcement of such security or
other property and (iv) any registration or qualification requirement or
prospectus delivery requirement for such security or other property pursuant to
any federal, state or foreign securities law (including, without limitation, any
such requirement arising as a result of Rule 144 or Rule 145 under the
Securities Act);
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PROVIDED that the required delivery of any assignment, instruction or
entitlement order from the seller, pledgor, assignor or transferor of such
security or other property, together with any evidence of the corporate or other
authority of such Person, shall not constitute a "Transfer Restriction".
"VALUATION DATE" means, with respect to any Tranche, each of the five
Trading Days preceding and including the Maturity Date for such Tranche;
PROVIDED that if there is a Market Disruption Event on any Valuation Date for
such Tranche, then such Valuation Date for such Tranche shall be the first
succeeding Trading Day on which there is no Market Disruption Event and on which
another Valuation Date does not or is not deemed to occur, unless such first
succeeding Trading Day has not occurred as of the fifth Trading Day immediately
following the Maturity Date for such Tranche, in which case (i) such Valuation
Date for such Tranche shall be that fifth Trading Day, notwithstanding the
Market Disruption Event or that another Valuation Date occurs or is deemed to
occur on such fifth Trading Day and (ii) notwithstanding the definition of
"Closing Price", the Calculation Agent shall determine the Closing Price for
such Tranche as of that fifth Trading Day in its discretion.
(b) Each of the following terms is defined in the Section set
forth opposite such term:
TERM SECTION
---- -------
Acceleration Amount......................... 7.01
Acceleration Amount Notice.................. 7.01
Acceleration Date........................... 7.01
Acceleration Value.......................... 7.01
Advance Rate................................ 2.02(d)
Bankruptcy Code............................. 5.06
Base Amount................................. 2.02(d)
Cash Settlement Amount...................... 2.04
CEA......................................... 3.01(n)
Contract Shares............................. 2.03(a)
Damages..................................... 5.09
Downside Rate............................... 2.02(d)
Event of Default............................ 7.01
Excess Borrow Cost.......................... 5.07(b)
Extraordinary Dividend...................... 6.01(b)
Fixed Borrow Cost........................... 5.07(b)
Hedged Value................................ 2.02(d)
Hedging Period.............................. 2.02(b)
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TERM SECTION
---- -------
Indemnified Person.......................... 5.09
Initial Share Price......................... 2.02(d)
Initial Short Position...................... 2.02(d)
Insolvency.................................. 6.03
Maturity Date............................... 2.02(d)
Maximum Base Amount......................... 2.02(d)
Maximum Number.............................. 2.02(b)
Merger Date................................. 6.02(c)
Merger Event................................ 6.02(c)
Monthly Borrow Period....................... 5.07(b)
Nationalization............................. 6.03
New Shares.................................. 6.02(c)
Payment Date................................ 2.02(d)
Potential Adjustment Event.................. 6.01(b)
Prepayment Amount........................... 2.04
Prepayment Determination Price.............. 2.04
Prepayment Determination Ratio.............. 2.04
Pre-pricing Acknowledgment.................. 2.02(b)
Pricing Schedule............................ 2.02(c)
Purchase Price.............................. 2.02(d)
Share-for-Share Merger Event................ 6.02(c)
Termination Amount.......................... 6.04
Termination Amount Notice................... 6.04
Termination Date............................ 6.04
Terms of Tranche............................ 2.02(b)
Tranche..................................... 2.02(b)
Trigger Rate................................ 2.02(d)
Upside Limit................................ 2.02(d)
Upside Trigger.............................. 2.02(d)
Upside Rate................................. 2.02(d)
ARTICLE 2
SALE AND PURCHASE; PAYMENT; ESTABLISHMENT OF TRANCHES
SECTION 2.01. SALE AND PURCHASE. Upon the terms and subject to the
conditions of this Agreement, Seller agrees to sell to Buyer, and Buyer agrees
to purchase and acquire from Seller, a number of shares of Common Stock for each
Tranche established hereunder.
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SECTION 2.02. PAYMENT, ESTABLISHMENT OF TRANCHES.
(a) PAYMENT. Upon the terms and subject to the conditions of this
Agreement, Buyer shall deliver to Seller the Purchase Price for each Tranche on
the Payment Date for such Tranche in immediately available funds by wire
transfer to an account designated by Seller.
(b) ESTABLISHMENT OF TRANCHES. This Agreement may be effected in
one or more tranches (each, a "TRANCHE") with respect to up to an aggregate of
800,000 shares of Common Stock (the "MAXIMUM NUMBER"). From the date hereof
until the Hedging Termination Date, Buyer and Seller may execute and deliver one
or more pre-pricing acknowledgments to establish a Tranche substantially in the
form attached hereto as Exhibit A (for such Tranche, the "PRE- PRICING
ACKNOWLEDGMENT") and set forth the Maximum Base Amount, the Advance Rate, the
Downside Rate, the Upside Rate and the Trigger Rate for such Tranche. From the
date of the Pre-pricing Acknowledgment for any Tranche to the Hedging
Termination Date, Buyer shall determine the Base Amount, the Hedged Value, the
Initial Share Price, the Initial Short Position, the Maturity Date, the Payment
Date, the Purchase Price, the Upside Limit and the Upside Trigger for such
Tranche (collectively, the "TERMS OF TRANCHE") based on the amounts and prices
at which, and dates on which, an affiliate of Buyer effects, for the account of
Buyer, short sales of shares of Common Stock in establishing Buyer's Initial
Short Position for such Tranche (the dates on which such short sales for such
Tranche are effected being collectively referred to as the "HEDGING PERIOD" for
such Tranche) and otherwise in accordance with the respective formulas for Terms
of Tranche set forth below; PROVIDED that:
(i) if at any time after the Pre-pricing Acknowledgment
with respect to any Tranche is delivered and prior to the establishment
by Buyer (or its affiliate) of Buyer's Initial Short Position with
respect to such Tranche, Seller becomes aware of any material
non-public information regarding the Issuer, Seller shall immediately
notify Buyer that it cannot make the representation and warranty set
forth in Section 3.01(k) without specification of the reason thereof
and shall direct Buyer (or its affiliate) to immediately cease
effecting any further short sales of the Common Stock; and
(ii) it is understood and acknowledged that, with respect
to each Tranche, in order to hedge Buyer's exposure with respect to the
Base Amount for such Tranche and as part of the proprietary trading
activities of Buyer or affiliates of Buyer unrelated to this Agreement,
in addition to short sales in connection with establishing its Initial
Short Position for such Tranche, Buyer and its affiliates may from time
to time effect for
7
their own accounts purchases, long sales or short sales of shares of
Common Stock or options or other derivatives in respect thereof (or
combinations of such transactions) that may affect the trading price of
the Common Stock.
(c) PRICING SCHEDULE. Within two Business Days after the
establishment of its Initial Short Position for each Tranche, Buyer shall
deliver to Seller the related pricing schedule (the "PRICING SCHEDULE"),
substantially in the form attached hereto as Exhibit B, setting forth the Terms
of Tranche for such Tranche, and Seller shall execute and deliver a copy of such
Pricing Schedule to Buyer.
(d) RELATED DEFINITIONS. As used herein, the following words and
phrases have the following meanings:
(i) "ADVANCE RATE" means, with respect to any Tranche,
the percentage rate set forth as such in the Pre-pricing Acknowledgment
for such Tranche.
(ii) "BASE AMOUNT" means, with respect to any Tranche, as
set forth in the Pricing Schedule for such Tranche, a number of shares
of Common Stock as determined by Buyer with respect to which Buyer (or
an affiliate of Buyer) has established Buyer's Initial Short Position
for such Tranche, but in no event in excess of the Maximum Base Amount
for such Tranche, as adjusted in accordance with the provisions of
Article 6.
(iii) "DOWNSIDE RATE" means, with respect to any Tranche,
the percentage rate set forth as such in the Pre-pricing Acknowledgment
for such Tranche.
(iv) "HEDGED VALUE" means, with respect to any Tranche, as
set forth in the Pricing Schedule for such Tranche, an amount equal to
the Initial Share Price for such Tranche MULTIPLIED BY the Downside
Rate for such Tranche, as adjusted in accordance with the provisions of
Article 6.
(v) "INITIAL SHARE PRICE" means, with respect to any
Tranche, as set forth in the Pricing Schedule for such Tranche, the
volume weighted average of the per share prices at which Buyer (or an
affiliate of Buyer) sells short shares of Common Stock in establishing
Buyer's Initial Short Position for such Tranche.
(vi) "INITIAL SHORT POSITION" means, with respect to any
Tranche, as set forth in the Pricing Schedule for such Tranche, the
number of shares of Common Stock that Buyer (or an affiliate of Buyer)
sells short to
8
establish its initial hedge of the price and market risk undertaken by
Buyer with respect to such Tranche under this Agreement, but, for the
avoidance of doubt, shall not include any additional shares of Common
Stock being introduced into the market with respect to such Tranche in
excess of Buyer's initial hedge in order to ensure compliance with
Buyer's representation in Section 3.02(d).
(vii) "MATURITY DATE" means, with respect to any Tranche,
with respect to any Tranche, the date set forth as such in the
Pre-pricing Acknowledgment for such Tranche.
(viii) "MAXIMUM BASE AMOUNT" means, with respect to any
Tranche, as set forth in the Pre-pricing Acknowledgment for such
Tranche, a number of shares of Common Stock which, if added to the Base
Amounts for all the previously established Tranches, does not exceed
the Maximum Number.
(ix) "PAYMENT DATE" means, with respect to any Tranche, as
set forth in the Pricing Schedule for such Tranche, the third Business
Day immediately following the last day of the Hedging Period for such
Tranche.
(x) "PURCHASE PRICE" means, with respect to any Tranche,
as set forth in the Pricing Schedule for such Tranche, an amount equal
to the product of (A) the Base Amount for such Tranche, (B) the Initial
Share Price for such Tranche and (C) the Advance Rate for such Tranche.
(xi) "TRIGGER RATE" means, with respect to any Tranche,
the percentage rate set forth as such in the Pre-pricing Acknowledgment
for such Tranche.
(xii) "UPSIDE LIMIT" means, with respect to any Tranche, as
set forth in the Pricing Schedule for such Tranche, an amount equal to
the Initial Share Price for such Tranche MULTIPLIED BY the Upside Rate
for such Tranche, as adjusted in accordance with the provisions of
Article 6.
(xiii) "UPSIDE RATE" means, with respect to any Tranche, the
percentage rate set forth as such in the Pre-pricing Acknowledgment for
such Tranche.
(xiv) "UPSIDE TRIGGER" means, with respect to any Tranche,
as set forth in the Pricing Schedule for such Tranche, an amount equal
to the
9
Initial Share Price for such Tranche MULTIPLIED BY the Trigger Rate for
such Tranche, as adjusted in accordance with the provisions of Article
6.
SECTION 2.03. SETTLEMENT DATE. (a) On the Settlement Date for each
Tranche, Seller shall deliver to an affiliate of Buyer designated by Buyer a
number of shares of Free Stock (for each Tranche, the "CONTRACT SHARES" of such
Tranche) equal to the product of (A) the Base Amount for such Tranche and (B)
the Settlement Ratio for such Tranche, rounded down to the nearest whole number,
and cash in an amount equal to the value (based on the Settlement Price for such
Tranche) of any fractional share not delivered as a result of such rounding.
(b) If (x) by 10:00 A.M., New York City time, on the Settlement
Date for any Tranche, Seller has not otherwise effected such delivery of the
Contract Shares and cash in lieu of any fractional share pursuant to Section
2.03(a) or delivered cash in lieu thereof pursuant to Section 2.04 for such
Tranche and (y) the Common Stock then held by the Collateral Agent as collateral
under the Pledge Agreement is Free Stock (which requirement may be waived by
Buyer in its sole discretion), then (i) Seller shall be deemed not to have
elected to deliver cash in lieu of shares of Free Stock for such Tranche,
pursuant to Section 2.04 (notwithstanding any notice by Seller to the contrary)
and (ii) the delivery provided by this Section 2.03(a) shall be effected by
delivery by the Collateral Agent to an affiliate of Buyer designated by Buyer of
a number of shares of Common Stock then held by the Collateral Agent as
collateral under the Pledge Agreement equal to the number of Contract Shares
required to be delivered by Seller for such Tranche pursuant to Section 2.03(a)
and cash, if any, then held by the Collateral Agent as collateral under the
Pledge Agreement in an amount equal to the cash in lieu of any fractional share
required to be delivered by Seller pursuant to Section 2.03(a); PROVIDED that,
notwithstanding the foregoing and without limiting the generality of Section
7.01, if Seller gives notice of Seller's election to deliver cash in lieu of
shares of Free Stock on the Settlement Date for such Tranche pursuant to Section
2.04 and fails to deliver the Cash Settlement Amount for such Tranche on the
Settlement Date for such Tranche as provided in Section 2.04, Seller shall be in
breach of this Agreement and shall be liable to Buyer for any losses incurred by
Buyer or such affiliate of Buyer as a result of such breach, including without
limitation losses incurred in connection with any decrease in the Closing Price
of the Common Stock subsequent to the last Valuation Date for such Tranche.
SECTION 2.04. CASH SETTLEMENT OPTION. (a) Seller may, with respect to
any Tranche, upon written notice delivered to Buyer, at least ten calendar days
prior to the first Valuation Date, for such Tranche, in lieu of delivering the
Contract Shares and cash in lieu of any fractional share pursuant to Section
10
2.03(a), elect to settle such delivery obligation in cash in an amount (the
"CASH SETTLEMENT AMOUNT") equal to the product of (x) the Settlement Price for
such Tranche and (y) a number of shares equal to the product of the Base Amount
for such Tranche and the Settlement Ratio for such Tranche; PROVIDED that,
Seller shall only be deemed to have validly elected such payment in cash in lieu
of its delivery obligations under Section 2.03(a) if Seller shall have delivered
to Buyer, at least seven calendar days prior to the first Valuation Date for
such Tranche, an amount of cash with respect to such Tranche (the "PREPAYMENT
AMOUNT") equal to the product of (i) the Closing Price per share of Common Stock
on the last Trading Day prior to the delivery date of such notice on which there
was no Market Disruption Event (the "PREPAYMENT DETERMINATION PRICE"), (ii) the
Base Amount for such Tranche and (iii) the Prepayment Determination Ratio for
such Tranche, by wire transfer of immediately available funds to an account
designated by Buyer.
(b) If the cash settlement option has been validly elected by
Seller with respect to any Tranche in accordance with the preceding sentence,
then on the Settlement Date for such Tranche, (i) if the Cash Settlement Amount
for such Tranche is greater than the Prepayment Amount for such Tranche, Seller
shall deliver to Buyer the amount of cash by which the Cash Settlement Amount
for such Tranche exceeds the Prepayment Amount for such Tranche, (ii) if the
Prepayment Amount for such Tranche is greater than the Cash Settlement Amount
for such Tranche, Buyer shall deliver to Seller the amount of cash by which the
Prepayment Amount for such Tranche exceeds the Cash Settlement Amount for such
Tranche and (iii) if the Prepayment Amount for such Tranche is equal to the Cash
Settlement Amount for such Tranche, no deliveries shall be made in respect of
such Tranche pursuant to Section 2.04(b).
(c) The "PREPAYMENT DETERMINATION RATIO" shall be determined, with
respect to any Tranche, in accordance with the following formula, and is subject
to adjustment as a result of certain events as provided in Article 6:
(i) if the Prepayment Determination Price for such
Tranche is equal to or less than the Hedged Value for such Tranche, the
Prepayment Determination Ratio for such Tranche shall be one (1);
(ii) if the Prepayment Determination Price for such
Tranche is greater than the Hedged Value for such Tranche but less than
the Upside Limit for such Tranche, the Prepayment Determination Ratio
for such Tranche shall be a ratio equal to the Hedged Value for such
Tranche divided by the Prepayment Determination Price for such Tranche;
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(iii) if the Prepayment Determination Price for such
Tranche is equal to or greater than the Upside Limit for such Tranche
but less than the Upside Trigger for such Tranche, the Prepayment
Determination Ratio for such Tranche shall be a ratio equal to the sum
of (A) the Hedged Value for such Tranche DIVIDED by the Prepayment
Determination Price for such Tranche and (B) a fraction the numerator
of which is equal to the difference between the Prepayment
Determination Price for such Tranche and the Upside Limit for such
Tranche and the denominator of which is equal to the Prepayment
Determination Price for such Tranche; and
(iv) if the Prepayment Determination Price for such
Tranche is equal to or greater than the Upside Trigger for such
Tranche, the Prepayment Determination Ratio for such Tranche shall be a
ratio equal to (A) the Hedged Value for such Tranche PLUS the Upside
Trigger for such Tranche MINUS the Upside Limit for such Tranche
DIVIDED by (B) the Prepayment Determination Price for such Tranche.
Each of the ratios expressed in clause (ii), (iii) and (iv) above 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.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES
SECTION 3.01. REPRESENTATIONS AND WARRANTIES OF SELLER. Seller
represents and warrants to Buyer that:
(a) Seller has been duly formed and is validly existing as a
limited liability company in good standing under the laws of the State of
Delaware. Perseus Management, L.L.C. is the sole manager of Seller. Perseus,
L.L.C. is the sole manager of Perseus Management, L.L.C. Rappahanock Investment
Company is the sole manager of Perseus, L.L.C.
(b) Seller has all limited liability company power to enter into
this Agreement and the Pledge Agreement and to consummate the transactions
contemplated hereby and thereby. Each of this Agreement and the Pledge Agreement
has been duly authorized, validly executed and delivered by Seller and
constitutes a valid and legally binding obligation of Seller enforceable against
Seller in accordance with its terms, subject to applicable bankruptcy,
insolvency and similar laws affecting creditors' rights generally and to general
equitable principles.
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(c) The execution and delivery by Seller of, and the compliance by
Seller with all of the provisions of, this Agreement and the Pledge Agreement,
and the consummation of the transactions herein and therein contemplated, will
not (i) conflict with or result in a breach of any of the terms or provisions
of, or constitute a default under, any indenture, mortgage, deed of trust, loan
agreement, stockholders agreement, lock-up agreement, registration rights
agreement, co-sale agreement or any other agreement or instrument to which
Seller or any of its affiliates Seller is a party or by which Seller or any of
its affiliates is bound or to which any of the property or assets of Seller or
any of its affiliates is subject, nor will such action result in any violation
of the provisions of the limited liability company agreement or other
constitutive documents of Seller or any law or statute or any order, judgment,
decree, rule or regulation of any court or governmental agency or body having
jurisdiction over Seller or any of Seller's properties, except for any such
conflict, breach, violation or default that would not reasonably be expected to
have a material adverse effect on Seller or Seller's ability to enter into or
perform its obligations under this Agreement or the Pledge Agreement, or (ii)
require any consent, approval, authorization or order of, or filing or
qualification with, any governmental body, agency, official, self-regulatory
organization or court or other tribunal, whether foreign or domestic, or any
other Person, except for any such consent, approval, authorization, order,
filing or qualification the failure of which to make or receive would not
reasonably be expected to have a material adverse effect on Seller or Seller's
ability to enter into or perform its obligations under this Agreement or the
Pledge Agreement.
(d) There is not pending or, to Seller's knowledge, threatened
against it or any of its affiliates any action, suit or proceeding at law or in
equity or before any court, tribunal, government body, agency or official or any
arbitrator that is likely to affect the legality, validity or enforceability
against it of this Agreement or the Pledge Agreement or its ability to perform
its obligations hereunder or thereunder.
(e) Seller is entering into this Agreement and the Pledge
Agreement as principal (and not as agent or in any other capacity). Neither
Buyer nor any of Buyer's agents or affiliates are acting as a fiduciary for
Seller. Seller is not relying, and has not relied, upon any communication
(written or oral) of Buyer or any agent or affiliate of Buyer with respect to
the legal, accounting, tax or other implications of this Agreement or the Pledge
Agreement. Seller has conducted Seller's own analysis of the legal, accounting,
tax and other implications of this Agreement and the Pledge Agreement. Seller
has consulted with Seller's own legal, regulatory, tax, business, investment,
financial, and accounting advisors to the extent Seller has deemed necessary.
Seller has made Seller's own independent investment, hedging, and trading
decisions to enter into this Agreement and the
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Pledge Agreement and as to whether this Agreement and the Pledge Agreement are
appropriate or proper for Seller based upon Seller's own judgment and upon any
advice from such advisors as Seller has deemed necessary and not upon any view
expressed by Buyer or any of Buyer's agents or affiliates. Seller acknowledges
and agrees that information and explanations related to the terms and conditions
of this Agreement or the Pledge Agreement shall not be considered investment
advice or a recommendation to enter into this Agreement or the Pledge Agreement.
No communication (written or oral) received from Buyer or any affiliate of Buyer
shall be deemed to be an assurance or guarantee as to the expected results of
this Agreement or the Pledge Agreement.
(f) Seller is entering into this Agreement and the Pledge
Agreement with a full understanding of all of the terms, conditions and risks
hereof and thereof (economic and otherwise), is capable of evaluating and
understanding (on Seller's own behalf or through independent professional
advice) and of assuming, and understands and accepts, such terms, conditions and
risks.
(g) Seller acknowledges that neither Buyer nor any affiliate of
Buyer is acting as a fiduciary for or an advisor to Seller in respect of this
Agreement or the Pledge Agreement, and all decisions of Seller have been the
result of arm's length negotiations between Seller and Buyer.
(h) Since the date three months prior to the date hereof, neither
Seller nor any Person who would be considered to be the same "Person" as Seller
or "acting in concert" with Seller (as such terms are used in clauses (e)(3)(vi)
or (a)(2) of Rule 144 under the Securities Act), individually or in the
aggregate, has sold a number of shares of Common Stock or hedged (through swaps,
options, short sales, stock loans or otherwise) any long position in a number of
shares of Common Stock that would, if added to the Maximum Number of shares of
Common Stock, exceed the number of shares of Common Stock that Seller could sell
pursuant to Rule 144 under the Securities Act on the date hereof. For the
purposes of this Section 3.01(h), Common Stock shall be deemed to include
securities convertible into, exchangeable or exercisable for Common Stock.
(i) Seller does not know or have any reason to believe that the
Issuer has not complied with the reporting requirements contained in Rule
144(c)(1) under the Securities Act.
(j) Delivery of shares of Common Stock by Seller pursuant to this
Agreement will pass to an affiliate of Buyer designated by Buyer title to such
shares free and clear of any Liens, except for those created pursuant to the
Pledge Agreement.
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(k) Neither Seller nor any of its managers or affiliates is on the
date hereof, or will be during each Hedging Period, aware of any material
non-public information regarding the Issuer. None of the transactions
contemplated herein or in the Pledge Agreement will violate any corporate policy
of the Issuer or other rules or regulations of the Issuer applicable to Seller,
including, but not limited to, the Issuer's window period policy.
(l) Seller is and will be in compliance with its reporting
obligations, if any, under Section 16, Section 13(d) and Section 13(g) of the
Securities Exchange Act of 1934, as amended, and Seller will provide Buyer with
a copy of any report filed thereunder in respect of the transactions
contemplated hereby promptly upon filing thereof.
(m) Seller is not and after giving effect to application of the
Purchase Price for any Tranche will not be, required to register as an
"investment company" as such term is defined in the Investment Company Act of
1940, as amended.
(n) Seller is an "eligible contract participant" (as such term is
defined in Section 1(a)(12) of the Commodity Exchange Act, as amended (the
"CEA")) because it is a corporation, partnership, proprietorship, organization,
trust or other entity and:
(i) it has total assets in excess of $10,000,000;
(ii) its obligations hereunder are guaranteed, or
otherwise supported by a letter of credit or keep well, 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
(iii) it has a net worth in excess of $1,000,000 and has
entered into this Agreement in connection with the conduct of its
business or to manage the risk associated with an asset or liability
owned or incurred or reasonably likely to be owned or incurred by it in
the conduct of its business.
(o) Neither Seller nor any of its affiliates has solicited or
arranged for the solicitation of, or will solicit or arrange for the
solicitation of, orders to buy shares of Common Stock in anticipation of or in
connection with any short sales of shares of Common Stock which an affiliate of
Buyer effects, for the account of Buyer, in establishing Buyer's Initial Short
Position for any Tranche.
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(p) Except as provided herein, neither Seller nor any of its
affiliates has made, will make, or has arranged for, any payment to any Person
in connection with the short sales of shares of Common Stock that an affiliate
of Buyer effects, for the account of Buyer, in establishing Buyer's Initial
Short Position for any Tranche.
(q) Seller has a bona fide intention to sell, to cause to be sold
or to cause to be subject to a prepaid forward agreement between Seller and
Buyer the securities referred to in any notice on Form 144 relating to the
transactions contemplated hereunder filed pursuant to Section 4.01(c) or Section
5.08 within a reasonable time after the filing of such notice on Form 144.
(r) Seller was formed as a limited liability company under the
laws of Delaware pursuant to a Limited Liability Company Agreement dated as of
January 1, 1997 by and among Perseus Management, L.L.C. and each of the members
of Seller, as amended and restated by the First Amended and Restated Limited
Liability Company Agreement for Seller dated as of March 13, 1999 (the "LLC
AGREEMENT"). No amendment has been made to the LLC Agreement since August 31,
1998. Seller has provided true and complete copies of the LLC Agreement and the
Certificate of Formation of the Seller to Buyer prior to the date hereof.
SECTION 3.02. REPRESENTATIONS AND WARRANTIES OF BUYER. Buyer represents
and warrants to Seller that:
(a) Buyer is a banking corporation, duly formed, validly existing
and in good standing under the laws of the State of New York, and has all powers
and all material governmental licenses, authorizations, consents and approvals
required to enter into, and perform its obligations under, this Agreement.
(b) Each of this Agreement and the Pledge Agreement has been duly
authorized and validly executed and delivered by Buyer and constitutes a valid
and legally binding obligation of Buyer enforceable against Buyer in accordance
with its terms, subject to applicable bankruptcy, insolvency and similar laws
affecting creditors' rights generally and to general equitable principles.
(c) The execution and delivery by Buyer of, and the compliance by
Buyer with all of the provisions of, this Agreement and the Pledge Agreement,
and the consummation of the transactions herein and therein contemplated, will
not require any consent, approval, authorization or order of, or filing or
qualification with, any governmental body, agency, official, self-regulatory
organization or court or other tribunal, whether foreign or domestic.
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(d) Buyer (or its affiliate) will conduct its hedging activities
as described herein in accordance with the interpretive letter from the
Securities and Exchange Commission to ▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co. dated December 20,
1999, it being understood that Buyer will introduce into the public market a
quantity of securities of the same class as the Common Stock equal to the Base
Amount in a manner consistent with the manner-of-sale conditions described in
Rule 144(f) and (g) under the Securities Act.
ARTICLE 4
CONDITIONS
SECTION 4.01. CONDITIONS TO EFFECTIVENESS OF THIS AGREEMENT. This
Agreement shall become effective on the Effective Date upon satisfaction or
waiver of each of the following conditions:
(a) The Pledge Agreement shall have been executed by the parties
thereto and Seller shall have delivered to the Collateral Agent in accordance
therewith the collateral required to be delivered pursuant to Section 1(b)
thereof.
(b) Buyer shall have received an opinion (in form and substance
satisfactory to Buyer and its counsel), dated as of the date hereof, of ▇▇▇▇,
Weiss, Rifkind, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇, counsel for Seller, substantially in the
form attached hereto as Exhibit C.
(c) Seller shall have delivered to Buyer a signed, true and
complete copy of a notice on Form 144 relating to the transactions contemplated
hereunder, as of the Effective Date, naming Seller as seller and ▇.▇. ▇▇▇▇▇▇
Securities Inc. as broker, and containing a footnote next to the amount in
column 3(d) of Form 144 to the following effect: "Some or all of the
above-referenced shares are expected to be subject to a prepaid forward
agreement between the seller named in 2(a) above and an affiliate of the broker
or dealer named in 3(b) above," three copies of which shall have been mailed to
the Securities and Exchange Commission, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇., ▇▇▇▇▇▇▇▇▇▇, ▇.▇.
▇▇▇▇▇ and one copy of which shall have been mailed to the Exchange not later
than on the Effective Date, all in the manner contemplated by Rule 144(h).
Alternatively, Seller shall have delivered to Buyer sufficient signed copies of
such Form 144 to be filed by Buyer (or its affiliate) as set forth above, prior
to or on the Effective Date. In such case, Seller has furnished Buyer (or its
affiliate) with all information necessary for Buyer (or its affiliate) to file a
true and complete Form 144 relating to such sales of shares in connection with
such prepaid forward agreement.
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(d) Buyer shall have received all documents it may reasonably
request relating to the existence of Seller and the authority of Seller with
respect to this Agreement and the Pledge Agreement, all in form and substance
reasonably satisfactory to Buyer.
SECTION 4.02. CONDITIONS TO BUYER'S OBLIGATIONS. Without limiting the
generality of Section 4.01, the obligation of Buyer to deliver the Purchase
Price for each Tranche on the Payment Date for such Tranche is subject to the
satisfaction of the following conditions:
(a) The representations and warranties of Seller contained in
Article 3 and in the Pledge Agreement shall be true and correct as of such
Payment Date as if made on and as of such date.
(b) No Event of Default shall have occurred and be continuing.
(c) Seller shall have performed all of the covenants and
obligations to be performed by it hereunder and under the Pledge Agreement.
ARTICLE 5
COVENANTS
SECTION 5.01. 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 any Common Stock
pursuant hereto. Seller further agrees to (a) make all payments in respect of
this Agreement free and clear of, and without withholding or deduction for or on
account of, any present or future taxes, duties, fines, penalties, assessments
or other governmental charges of whatsoever nature (or interest on any taxes,
duties, fines, penalties, assessments or other governmental charges of
whatsoever nature) imposed, levied, collected, withheld or assessed by, within
or on behalf of (i) the United States or any political subdivision or
governmental authority thereof or therein having power to tax or (ii) any
jurisdiction from or through which payment on the Agreement is made by the
Seller, or any political subdivision or governmental authority thereof or
therein having power to tax, and (b) indemnify Buyer for the full amount of such
withholding or deduction, as well as any liability (including penalties,
interest and expenses) arising therefrom or with respect thereto, in the event
such withholding or deduction is imposed; PROVIDED that this Section 5.01 shall
apply to backup withholding under Section 3406 of the Internal Revenue Code of
1986, as amended (or any successor provision), only to the extent that
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Buyer provides Seller with any forms that may be necessary to avoid such backup
withholding.
SECTION 5.02. FORWARD CONTRACT. Seller hereby agrees that: (i) Seller
will not treat this Agreement or any Tranche hereunder, any portion of this
Agreement or any Tranche hereunder, or any obligation hereunder as giving rise
to any interest income or other inclusions of ordinary income; (ii) Seller will
not treat the delivery of any portion of the shares of Common Stock or cash to
be delivered pursuant to this Agreement with respect to any Tranche as the
payment of interest or ordinary income; (iii) Seller will treat each Tranche
under this Agreement as a forward contract for the delivery of such shares of
Common Stock or cash; and (iv) Seller will not take any action (including filing
any tax return or form or taking any position in any tax proceeding) that is
inconsistent with the obligations contained in (i) through (iii).
Notwithstanding the preceding sentence, Seller may take any action or position
required by law, provided that Seller delivers to Buyer an unqualified opinion
of counsel, nationally recognized as expert in Federal tax matters and
acceptable to Buyer, to the effect that such action or position is required by a
statutory change, Treasury regulation, or applicable court decision, Treasury
ruling or other administrative determination published after the date of this
Agreement.
SECTION 5.03. NOTICES. Seller will cause to be delivered to Buyer:
(a) immediately upon the occurrence of any Event of Default
hereunder or under the Pledge Agreement, or upon any manager of Seller obtaining
knowledge that any condition or event of the type described in Section 7.01(b)
or 7.01(c) shall have occurred with respect to the Issuer, notice of such
occurrence; and
(b) promptly, in case at any time prior to the Settlement Date for
the last Tranche, Seller receives notice, or any manager of Seller obtains
knowledge, that any event requiring that an adjustment be calculated pursuant to
Section 6.01 or 6.02 hereof or any Nationalization or Insolvency shall have
occurred or be pending, a notice identifying such event and stating, if known to
Seller or any manager of Seller, the date on which such event occurred or is to
occur and, if applicable, the record date relating to such event. Seller shall
cause further notices to be delivered to Buyer if Seller shall subsequently
receive notice, or any manager of Seller shall obtain knowledge, of any further
or revised information regarding the terms or timing of such event or any record
date relating thereto.
SECTION 5.04. FURTHER ASSURANCES. From time to time from and after the
date hereof through the Settlement Date for the last Tranche, Seller shall use
its reasonable best efforts to take, or cause to be taken, all actions and to
do, or cause
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to be done, all things necessary, proper and advisable to consummate and make
effective as promptly as practicable the transactions contemplated by this
Agreement and the Pledge Agreement in accordance with the terms and conditions
hereof and thereof, including (i) the removal of any legal impediment to the
consummation of such transactions and (ii) the execution and delivery of all
such deeds, agreements, assignments and further instruments of transfer and
conveyance necessary, proper or advisable to consummate and make effective the
transactions contemplated by this Agreement and the Pledge Agreement in
accordance with the terms and conditions hereof and thereof.
SECTION 5.05. NO SALES OF COMMON STOCK. Neither Seller nor any Person
who would be considered to be the same "Person" as Seller or "acting in concert"
with Seller (as such terms are used in clauses (e)(3)(vi) or (a)(2) of Rule 144
under the Securities Act), individually or in the aggregate, shall, without the
prior written consent of Buyer, sell a number of shares of Common Stock or hedge
(through swaps, options, short sales, stock loans or otherwise) any long
position in a number of shares of Common Stock that would, at the time of such
sale or hedge, if added to the Maximum Number of shares of Common Stock, exceed
the number of shares of Common Stock that Seller could have sold pursuant to
Rule 144 under the Securities Act at such time until the last day of the Hedging
Period. For purposes of this Section 5.05, Common Stock shall be deemed to
include securities convertible into, exchangeable or exercisable for Common
Stock.
SECTION 5.06. SECURITIES CONTRACT. The parties hereto agree and
acknowledge that (a) Buyer is a "financial institution" within the meaning of
Section 101(22) of Title 11 of the United States Code (the "BANKRUPTCY CODE"),
(b) this Agreement is a "securities contract," as such term is defined in
Section 741(7) of the Bankruptcy Code, (c) each and every transfer of funds,
securities and other property under this Agreement is a "settlement payment" or
a "margin payment," as such terms are used in Sections 362(b)(6) and 546(e) of
the Bankruptcy Code, and (d) the rights given to Buyer hereunder upon an Event
of Default by Seller constitute the rights to cause the liquidation of a
securities contract and to set off mutual debts and claims in connection with a
securities contract, as such terms are used in Sections 555 and 362(b)(6) of the
Bankruptcy Code.
SECTION 5.07. BORROW COST. (a) With respect to any Tranche and within
two Business Days following its receipt of request from Buyer with respect to
such Tranche, Seller shall pay to Buyer (or an affiliate designated by Buyer)
the amount of Excess Borrow Cost for such Tranche with respect to any Monthly
Borrow Period for such Tranche, PROVIDED that Buyer shall have consulted with
Seller with respect to sources of available stock borrowing prior to incurring
such Excess Borrow Cost.
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(b) For the purposes of this Section 5.07, the following terms
shall have the following meanings:
"EXCESS BORROW COST" means, with respect to any Tranche, as determined
by the Calculation Agent with respect to any Monthly Borrow Period for such
Tranche, an amount by which the direct or indirect aggregate cost of borrowing
shares of Common Stock for the purpose of hedging Buyer's risk with respect to
such Tranche hereunder for such Monthly Borrow Period exceeds the Fixed Borrow
Cost for such Tranche for such Monthly Borrow Period, irrespective of whether
such borrowing is effected by Buyer, an affiliate of Buyer or a counterparty to
a transaction entered into by Buyer or such affiliate to hedge Buyer's exposure
to such Tranche hereunder.
"FIXED BORROW COST" means, with respect to any Tranche, as determined
by the Calculation Agent with respect to any Monthly Borrow Period for such
Tranche, an amount equal to the product of (i) 10 basis points PER ANNUM, (ii)
the weighted average number of shares of Common Stock borrowed by Buyer during
such Monthly Borrow Period to hedge Buyer's risk with respect to such Tranche
hereunder, irrespective of whether such borrowing is effected by Buyer, an
affiliate of Buyer or a counterparty to a transaction entered into by Buyer or
such affiliate to hedge Buyer's exposure to such Tranche hereunder, and (iii)
the weighted average Closing Price per share of Common Stock for each Trading
Day during such Monthly Borrow Period.
"MONTHLY BORROW PERIOD" means, with respect to any Tranche, the period
beginning on the thirtieth day after the end of the Hedging Period for such
Tranche (such period beginning on the thirtieth day, the first Monthly Borrow
Period for such Tranche) or on the first day of any calendar month (in the case
of each subsequent Monthly Borrow Period for such Tranche) and ending on the
last day of such calendar month or on the last Valuation Date for such Tranche
(in the case of the last Monthly Borrow Period for such Tranche).
SECTION 5.08. FORM 144 FILING. On or prior to the Effective Date and
subsequently on or prior to the dates at three-month intervals following the
Effective Date (and at such other times at which Buyer (or its affiliate) shall
reasonably request), Seller shall file, or shall cause to be filed, in the
manner contemplated by Rule 144(h) under the Securities Act and Section 4.01(c),
a notice on Form 144 (with a true and complete copy delivered to Buyer) relating
to the transactions contemplated hereunder, as of the date of such filing, all
in form and substance acceptable to Buyer. In addition, Seller shall have
delivered to Buyer sufficient signed copies of such Form 144 to be filed by
Buyer (or its affiliate) as set forth above, prior to or on the Effective Date
and subsequently on or prior to the dates at three-month intervals following the
Effective Date (and at
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such other times at which Buyer (or its affiliate) shall request). In such case,
Seller shall have furnished Buyer (or its affiliate) with all information
necessary for Buyer (or its affiliate) to file a true and complete Form 144
relating to such sales of shares in connection with such prepaid forward
agreement.
SECTION 5.09. INDEMNIFICATION. In addition to any remedies afforded
Buyer under this Agreement or the Pledge Agreement, Seller agrees to indemnify
and hold harmless Buyer 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, claims,
damages, judgments, liabilities and expenses (including reasonable attorney's
fees), joint or several (collectively, "DAMAGES"), to which an Indemnified
Person may become subject arising out of or in connection with any breach of any
covenant or representation made by Seller in this Agreement or in the Pledge
Agreement or any claim, litigation, investigation or proceeding relating
thereto, regardless of whether any of such Indemnified Persons is a party
thereto, 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, PROVIDED,
however, that Seller shall not have any liability to any Indemnified Person to
the extent that such Damages are finally determined by a court of competent
jurisdiction to have directly resulted from the gross negligence or willful
misconduct of such Indemnified Person (and in such case, such Indemnified Person
shall promptly return to Seller any amounts previously expended by Seller under
this Section 5.09).
ARTICLE 6
ADJUSTMENTS
SECTION 6.01. DILUTION ADJUSTMENTS. (a) Following the declaration by
the Issuer of the terms of any Potential Adjustment Event, (A) in the case of
each Potential Adjustment Event other than an Extraordinary Dividend, the
Calculation Agent will (i) determine whether such Potential Adjustment Event has
a diluting or concentrative effect on the theoretical value of the Common Stock,
and, if there is such an effect, the Calculation Agent will make corresponding
adjustment(s), if any, with respect to each Tranche, to any one or more of the
Base Amount for such Tranche, the Settlement Ratio for such Tranche, the Hedged
Value for such Tranche, the Upside Limit for such Tranche, the Upside Trigger
for such Tranche, any Closing Price and any other variable relevant to the
exercise, settlement or
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payment terms of such Tranche, as the Calculation Agent determines appropriate
to account for that diluting or concentrative effect and (ii) determine the
effective date(s) of the adjustment(s) or (B) in the case of any Potential
Adjustment Event that is an Extraordinary Dividend, Seller shall pay to Buyer or
an affiliate of Buyer designated by Buyer (or, in the event such Extraordinary
Dividend consists of property other than cash, cause to be distributed or
delivered to Buyer or an affiliate of Buyer designated by Buyer) such
Extraordinary Dividend on the date such Extraordinary Dividend is paid by the
Issuer to holders of Common Stock. The Calculation Agent may (but need not)
determine the appropriate adjustment(s) by reference to the adjustment(s) in
respect of such Potential Adjustment Event made by an options exchange to
options on the Common Stock traded on that options exchange.
(b) For these purposes, "POTENTIAL ADJUSTMENT EVENT" means any of
the following:
(i) a subdivision, consolidation or reclassification of
shares of Common Stock (unless a Merger Event), or, a free distribution
or dividend of any shares of Common Stock to existing holders of Common
Stock by way of bonus, capitalization or similar issue;
(ii) a distribution or dividend to existing holders of
Common Stock of (A) shares of Common Stock, or (B) other share capital
or securities granting the right to payment of dividends and/or the
proceeds of liquidation of the Issuer equally or proportionately with
such payments to holders of Common Stock, or (C) any other type of
securities, rights or warrants or other assets, in any case for payment
(cash or other) at less than the prevailing market price as determined
by the Calculation Agent;
(iii) a dividend or distribution consisting of cash and/or
other property in excess of $0.00 (an "EXTRAORDINARY DIVIDEND");
(iv) a call by the Issuer in respect of shares of Common
Stock that are not fully paid;
(v) a repurchase by the Issuer of shares of Common Stock,
whether out of profits or capital and whether the consideration for
such repurchase is cash, securities or otherwise;
(vi) the happening of a contingency that causes rights
attached to shares of Common Stock to become exercisable in the hands
of less than all existing holders of Common Stock; or
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(vii) any other similar event that may have a diluting or
concentrative effect on the theoretical value of the Common Stock.
SECTION 6.02. MERGER EVENTS. (a) If any Share-for-Share Merger Event
shall occur, effective as of the Merger Date, with respect to each Tranche, the
number of New Shares to which a holder of a number of shares of Common Stock
equal to the Base Amount for such Tranche would be entitled upon consummation of
the Share-for-Share Merger Event will be deemed the "Base Amount" for such
Tranche, the New Shares and their issuer will be deemed the "Common Stock" and
the "Issuer", respectively, and the Calculation Agent will make appropriate
adjustments, if any, on account of such Share-for-Share Merger Event to any one
or more of the Base Amount for each Tranche, the Settlement Ratio for each
Tranche, the Hedged Value for each Tranche, the Upside Limit for each Tranche,
the Upside Trigger for each Tranche, any Closing Price and any other variable
relevant to the exercise, settlement or payment terms of each Tranche.
(b) Buyer shall have the right, upon becoming aware of the
occurrence of any Merger Event (as defined below, except any Share-for-Share
Merger Event), to notify Seller of such event and terminate one or more of the
remaining Tranches, following which Seller shall make a payment to Buyer as
provided in Section 6.04.
(c) "MERGER EVENT" means, in respect of shares of Common Stock,
any (A) reclassification or change of shares of Common Stock that results in a
transfer of or an irrevocable commitment to transfer more than 50% of the
outstanding shares of Common Stock, (B) consolidation, amalgamation or merger of
the Issuer with or into another entity (other than a consolidation, amalgamation
or merger in which the Issuer is the continuing entity and which does not result
in any such reclassification or change of more than 50% of the outstanding
shares of Common Stock), or (C) other takeover offer for shares of Common Stock
that results in a transfer of or an irrevocable commitment to transfer more than
50% of the shares of Common Stock (other than the shares of Common Stock owned
or controlled by the offeror), in each case if the Merger Date is on or before
the Settlement Date for the last Tranche hereunder. "MERGER DATE" means, in
respect of a Merger Event, the date upon which holders of the necessary number
of shares of Common Stock (other than, in the case of a takeover offer, shares
of Common Stock owned or controlled by the offeror) have agreed or have
irrevocably become obligated to transfer their shares of Common Stock. In
respect of each Merger Event, the following terms have the meanings given below:
(i) "SHARE-FOR-SHARE MERGER EVENT" means a Merger Event
in which the consideration for the Common Stock consists (or, at the
option of the holder of such Common Stock, may consist) solely of New
Shares;
24
(ii) "NEW SHARES" means shares of common stock (whether of
the offeror or a third party) issued by a Publicly-Traded Entity
received in connection with a Merger Event.
SECTION 6.03. NATIONALIZATION AND INSOLVENCY. If, prior to the
Settlement Date for the last Tranche hereunder, all the shares of Common Stock
or all or substantially all the assets of the Issuer are nationalized,
expropriated or are otherwise required to be transferred to any governmental
agency, authority or entity (a "NATIONALIZATION"); or by reason of the voluntary
or involuntary liquidation, bankruptcy or insolvency of or any analogous
proceeding affecting the Issuer, (a) all the shares of Common Stock are required
to be transferred to a trustee, liquidator or other similar official or (b)
holders of the shares of Common Stock become legally prohibited from
transferring them (an "INSOLVENCY"), then, in any such event, Buyer shall have
the right, upon becoming aware of the occurrence of a Nationalization or
Insolvency, as the case may be, to notify Seller of such event and terminate
each remaining Tranche as of the date set forth in such notice, following which
Seller shall make payment to Buyer as provided in Section 6.04.
SECTION 6.04. TERMINATION AND PAYMENT. Following termination of any
Tranche as a result of any Merger Event, Nationalization or Insolvency, Seller
shall pay to Buyer an amount in cash (the "TERMINATION AMOUNT") equal to the
Acceleration Value for such Tranche (calculated, for purposes of this Section
6.04, as if the Termination Date for such Tranche were the Acceleration Date for
such Tranche, and on the basis of, in addition to the factors indicated in
Section 7.01, a value ascribed to the Common Stock equal to the value of the
consideration, if any, paid in respect of the Common Stock at the time of the
Merger Event, Nationalization or Insolvency, as the case may be) in settlement
of such Tranche; PROVIDED that in the case of a Nationalization or Insolvency,
the Termination Amount shall not be in excess of the value of the Collateral. As
promptly as reasonably practicable after calculation of the Acceleration Value
for such Tranche, Buyer shall deliver to Seller a notice (the "TERMINATION
AMOUNT NOTICE" for such Tranche) specifying the Termination Amount for such
Tranche. Not later than three Business Days following delivery of a Termination
Amount Notice for such Tranche by Buyer, Seller shall make a cash payment, by
wire transfer of immediately available funds to an account designated by Buyer,
to Buyer in an amount equal to the Termination Amount for such Tranche.
Notwithstanding the foregoing, to the extent that shares of common stock of a
Publicly-Traded Entity are received by holders of Common Stock in any Merger
Event, then in lieu of delivering cash to Buyer as provided in the immediately
preceding sentence, Seller may deliver a pro rata portion of such shares of
common stock with an equal value (as determined by the Calculation Agent),
25
PROVIDED that, in the event that such shares of common stock have not been
received by holders of Common Stock on or prior to the Termination Date, then in
lieu of delivering such shares of Common Stock to Buyer, Seller may deliver a
pro rata portion of shares of Free Stock (which may include shares of Free Stock
held by the Collateral Agent as collateral under the Pledge Agreement) with an
equal value (as determined by the Calculation Agent).
"TERMINATION DATE" means (i) in respect of a Merger Event, the Merger
Date, (ii) in respect of a Nationalization, the date of the first public
announcement of a firm intention to nationalize and (iii) in respect of an
Insolvency, the earlier of the date the shares of Common Stock are required to
be transferred to a trustee, liquidator or other similar official and the date
the holders of shares of Common Stock become legally prohibited from
transferring the shares of Common Stock that, in the case of a Nationalization
or an Insolvency (whether or not amended or on the terms originally announced),
leads to the Nationalization or the Insolvency, as the case may be, in each case
as determined by Buyer.
ARTICLE 7
ACCELERATION
SECTION 7.01. ACCELERATION. If one or more of the following events
(each an "EVENT OF DEFAULT") shall occur:
(a) any legal proceeding shall have been instituted or any other
event shall have occurred or condition shall exist that in Buyer's judgment
could have a material adverse effect on Seller's ability to perform Seller's
obligations hereunder, or that calls into question the validity or binding
effect of any agreement of Seller hereunder or under the Pledge Agreement (which
shall include, without limitation, any repudiation by Seller of this Agreement
or the Pledge Agreement);
(b) Seller (i) is adjudicated insolvent or bankrupt, (ii) makes an
assignment for the benefit of creditors or commences an Insolvency Proceeding
with respect to itself or any of its debts or assets in any jurisdiction and
under any applicable law, whether now or hereafter in effect, (iii) becomes
insolvent or admits in writing its inability generally to pay its debts as they
become due, or (iv) is dissolved, wound-up, liquidated or terminated;
(c) the commencement of any Insolvency Proceeding with respect to
Seller (i) by a governmental, regulatory or supervisory authority,
self-regulatory organization, government-sponsored corporation or similar entity
having primary
26
jurisdiction over it or its assets, or over Insolvency Proceedings in respect of
it or its assets, in the jurisdiction of its incorporation or organization or
the jurisdiction of its head or home office; or (ii) by any other Person if such
Insolvency Proceeding (A) is consented to or not timely contested by the party
against whom it was commenced, (B) results in the entry of a judgment of
insolvency or bankruptcy or the entry of an order for winding-up, liquidation,
reorganization, composition, rehabilitation, administration or other similar
relief or the appointment of a conservator, trustee, receiver, liquidator,
administrator, custodian or similar official, or (C) is not dismissed within
fifteen (15) Business Days;
(d) any representation made or repeated or deemed to have been
made or repeated by Seller under this Agreement or the Pledge Agreement or any
certificate delivered pursuant hereto or thereto was incorrect or misleading in
any material respect when made or repeated;
(e) Seller fails to fulfill or discharge when due any of Seller's
obligations, covenants or agreements under or relating to this Agreement or the
Pledge Agreement, including Seller's obligations to deliver shares of Common
Stock or cash on the Settlement Date for any Tranche;
(f) due to the adoption of, or any change in, any applicable law
after the date hereof, or due to the promulgation of, or any change in, the
interpretation by any court, tribunal or regulatory authority with competent
jurisdiction of any applicable law after the date hereof, it becomes unlawful
for Seller to perform any absolute or contingent obligation to make payment or
delivery hereunder or to comply with any other material provision of this
Agreement or the Pledge Agreement;
(g) Seller fails to make any payment in respect of any debt or
other obligation having a principal amount or other amount payable of $1,000,000
or more in the aggregate, in each case when due or within any applicable grace
period, or any event or condition shall occur which results in the acceleration
of the maturity of any such debt or such other obligation, as the case may be,
or enables (or, with the giving of notice or lapse of time or both, would
enable) the holder of any such debt, as the case may be, or any Person acting on
such holder's behalf to accelerate the maturity or other due date for the
payment thereof;
(h) Buyer determines in its discretion that it is unable to
establish, re-establish or maintain in an economically efficient manner any
hedging transactions necessary or desirable in the normal course of such party's
business of hedging the price and market risk of entering into and performing
under any Tranche hereunder, due to market illiquidity, illegality, lack of
availability of
27
hedging transaction market participants or any other factor (including, without
limitation, the insufficient availability of stock lenders willing and able to
lend shares of Common Stock with a borrow cost not significantly greater than
the cost as of the date hereof and otherwise on terms consistent with those as
of the date hereof); PROVIDED that prior to making any such determination, the
Calculation Agent shall consult with Seller with respect to sources of available
stock borrowing; or
(i) a Collateral Event of Default within the meaning of the Pledge
Agreement shall occur;
then, upon notice to Seller from Buyer at any time following an Event of Default
(which, in the case of an Event of Default set forth in Section 7.01(h), shall
identify one or more Tranches to which that notice relates), an "ACCELERATION
DATE" shall occur with respect to each Tranche (or, in the case of an Event of
Default set forth in Section 7.01(h), each Tranche identified in such notice),
and Seller shall become obligated to deliver to an affiliate of Buyer designated
by Buyer immediately upon receipt of the Acceleration Amount Notice for all
remaining Tranches (or, in the case of an Event of Default set forth in Section
7.01(h), each Tranche identified in such notice), a number of shares of Free
Stock equal to the Acceleration Amount for each such Tranche; PROVIDED that if
the Collateral Agent proceeds to realize upon any collateral pledged under the
Pledge Agreement and to apply the proceeds of such realization with respect to
any such Tranche as provided in paragraph second of Section 8(d) thereof, then,
to the extent of such application of proceeds, Seller's obligation to deliver
Free Stock for such Tranche pursuant to this paragraph shall be deemed to be an
obligation to deliver an amount of cash equal to the aggregate market value per
share of such Free Stock on the Acceleration Date for such Tranche. The
"ACCELERATION AMOUNT" means, with respect to any Tranche, the quotient obtained
by dividing: (i) the Acceleration Value for such Tranche, as defined below, by
(ii) the market value per share of the Common Stock on the Acceleration Date for
such Tranche.
The "ACCELERATION VALUE" means, with respect to any Tranche, an amount
determined by the Calculation Agent representing the fair value to Buyer and its
affiliates of an agreement with terms that would preserve for Buyer the economic
equivalent of the payments and deliveries in respect of such Tranche that Buyer
and its affiliates would, but for the occurrence of the Acceleration Date for
such Tranche, have been entitled to receive after such Acceleration Date under
this Agreement (taking into account any adjustments pursuant to Article 6 that
may have been calculated with respect to such Tranche on or prior to such
Acceleration Date), including any loss of bargain, cost of funding or, without
duplication, loss or cost incurred as a result of the termination, liquidation,
establishment or reestablishment of any hedge or related trading position
(whether such hedge or
28
related trading position was maintained by Buyer or one of its affiliates or by
a counterparty to a transaction entered into by Buyer or one of its affiliates
to hedge Buyer's exposure to such Tranche). The Calculation Agent shall
calculate such amount based on the following factors (and such other factors as
it deems appropriate): (i) the volatility of the Common Stock, (ii) dividends on
the Common Stock and (iii) prevailing interest rates.
As promptly as reasonably practicable after calculation of the
Acceleration Value with respect to any Tranche, the Calculation Agent shall
deliver to Seller a notice for such Tranche (the "ACCELERATION AMOUNT NOTICE")
specifying the Acceleration Amount of shares of Common Stock required to be
delivered by Seller with respect to such Tranche.
ARTICLE 8
MISCELLANEOUS
SECTION 8.01. 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 form of telecommunication. Notices to Buyer shall be
directed to JPMorgan Chase Bank, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇
▇▇▇▇, ▇▇▇▇▇, Attention: EDG Corporate Marketing (▇▇▇▇ ▇▇▇▇), Telephone No.
▇▇▇-▇▇▇-▇▇▇▇, Telecopy No. ▇▇▇-▇▇▇-▇▇▇▇ with a copy to JPMorgan Chase Bank, ▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇, Attention: Collateral Ops, 3 Ops
2, Telephone No. ▇▇▇-▇▇▇-▇▇▇▇, Telecopy No. 302-634- 3208; notices to Seller
shall be directed to ▇/▇ ▇▇▇▇▇▇▇, ▇.▇.▇., ▇▇▇▇▇ ▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇.,
▇.▇., ▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇, Telephone No. ▇▇▇- ▇▇▇-▇▇▇▇, Telecopy No.
▇▇▇-▇▇▇-▇▇▇▇, Attention: ▇▇▇▇ ▇▇▇▇▇▇▇.
SECTION 8.02. GOVERNING LAW; SEVERABILITY; SUBMISSION TO JURISDICTION;
WAIVER OF JURY TRIAL. (a) This Agreement shall be governed by and construed in
accordance with the laws of the State of New York (without reference to choice
of law doctrine).
(b) 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.
(c) SELLER AND BUYER HEREBY IRREVOCABLY AND UNCONDITIONALLY SUBMIT
TO THE NON-EXCLUSIVE JURISDICTION OF THE FEDERAL AND STATE COURTS LOCATED IN THE
BOROUGH OF MANHATTAN IN THE CITY OF NEW YORK IN ANY SUIT OR PROCEEDING
29
ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED
HEREBY.
(d) SELLER AND BUYER HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVE
ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR
RELATED TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY.
SECTION 8.03. SET-OFF. The parties hereto acknowledge and agree that
each of them may elect to set-off any or all of its obligations to the other
party under any agreement to which the parties hereto are parties against any or
all of its rights to obtain performance from such other party under any other
agreement to which such parties are party.
SECTION 8.04. ENTIRE AGREEMENT. Except as expressly set forth herein or
in another written agreement dated on or after the date hereof among the parties
hereto, this Agreement constitutes the entire agreement and understanding among
the parties with respect to its subject matter and supersedes all oral
communications and prior writings with respect thereto.
SECTION 8.05. 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 Buyer 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.
SECTION 8.06. ASSIGNMENT BY BUYER; NO THIRD PARTY RIGHTS, SUCCESSORS
AND ASSIGNS. Neither Buyer nor Seller may assign its rights or delegate its
obligations under this Agreement or any Tranche hereunder, except with the prior
written consent of the other party hereto, and any purported assignment or
delegation without such prior written consent shall be void and of no effect;
PROVIDED that, notwithstanding any other provision of this Agreement or the
Pledge Agreement to the contrary requiring Buyer to purchase, sell, receive or
deliver any shares of Common Stock or other securities to or from Seller, Buyer
may designate any of its affiliates that is a "United States person" for U.S.
federal income tax purposes to purchase, sell, receive or deliver such shares or
other securities or otherwise to perform Buyer's obligations in respect of the
transactions contemplated hereunder and under the Pledge Agreement and any such
designee may assume such obligations; PROVIDED that Buyer shall not be
discharged of its obligations to Seller hereunder or under the Pledge Agreement
30
except to the extent so performed by Buyer or such affiliate designated by
Buyer. This Agreement is not intended and shall not be construed to create any
rights in any Person other than Seller, Buyer, an affiliate of Buyer designated
hereunder and their respective successors and assigns and no other Person shall
assert any rights as third party beneficiary hereunder. Whenever any of the
parties hereto is referred to, such reference shall be deemed to include the
successors and assigns of such party. All the covenants and agreements herein
contained by or on behalf of Seller and Buyer 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 Buyer and its successors
and assigns.
SECTION 8.07. COUNTERPARTS. This Agreement may be executed in any
number of counterparts, and all such counterparts taken together shall be deemed
to constitute one and the same agreement.
SECTION 8.08. NON-CONFIDENTIALITY. Seller and Buyer hereby acknowledge
and agree that Buyer has authorized Seller to disclose this Agreement (and any
materials of any kind provided to Seller in connection herewith) to any and all
Persons without limitation of any kind, and there are no express or implied
agreements, arrangements or understandings to the contrary, and Buyer hereby
waives any and all claims or any proprietary rights with respect to this
Agreement, and authorizes Seller to use any information which Seller receives or
has received with respect to this Agreement.
SECTION 8.09. OVERDUE AMOUNTS. Any amounts not paid when due hereunder
shall bear interest (computed on the basis of a year of 360 days and payable for
the actual number of days elapsed) at a rate per annum equal to 2% plus the rate
announced from time to time by JPMorgan Chase Bank as its prime rate.
SECTION 8.10. MATTERS RELATED TO AGENT. Each party agrees and
acknowledges that (i) the Agent acts solely as agent on a disclosed basis with
respect to the transactions contemplated hereunder, and (ii) the Agent has no
obligation, by guaranty, endorsement or otherwise, with respect to the
obligations of either Seller or Buyer hereunder, either with respect to the
delivery of cash or shares of Common Stock, either at the beginning or the end
of the transactions contemplated hereby. In this regard, each of Seller and
Buyer acknowledges and agrees to look solely to the other for performance with
respect to each Tranche hereunder, and not to the Agent.
SECTION 8.11. CALCULATION AGENT. The determinations and calculations of
the Calculation Agent shall be made in good faith and in a commercially
reasonable manner, and shall be binding in the absence of manifest error.
31
IN WITNESS WHEREOF, the parties have signed this Agreement as of the
date and year first above written.
SELLER:
PERSEUS CAPITAL, LLC
By: PERSEUS MANAGEMENT, L.L.C.,
as its Manager
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇
---------------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇▇
Title: Secretary and Treasurer
BUYER:
JPMORGAN CHASE BANK
By: ▇.▇. ▇▇▇▇▇▇ SECURITIES INC.,
as its Agent
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇
---------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇
Title: Vice President
FORM OF PRE-PRICING ACKNOWLEDGMENT-- TRANCHE NO. 1
March 5, 2002
This Pre-pricing Acknowledgment is a Pre-pricing Acknowledgment within
the meaning of Section 2.02(b) of the Stock Purchase Agreement dated as of March
5, 2002 (the "STOCK PURCHASE AGREEMENT") between Perseus Capital, LLC ("SELLER")
and JPMorgan Chase Bank ("BUYER"), by ▇.▇. ▇▇▇▇▇▇ Securities Inc., as its agent.
This Pre-pricing Acknowledgment relates to Tranche No. 1. Capitalized terms used
herein have the meanings set forth in the Stock Purchase Agreement. Upon the
terms and subject to the conditions of the Stock Purchase Agreement, the parties
hereto hereby acknowledge and agree as follows with respect to Tranche No. 1:
(i) DESIGNATION OF TRANCHE: Tranche No. 1.
(ii) ADVANCE RATE: 69.00%.
(iii) DOWNSIDE RATE: 80.00%.
(iv) MAXIMUM BASE AMOUNT: 800,000 shares.
(v) UPSIDE RATE: 113.00%.
(vi) TRIGGER RATE: 145.00%.
(vii) MATURITY DATE: July 5, 2002.
This Pre-pricing Acknowledgment shall be governed by the laws of New
York and may be executed in any number of counterparts, and all such
counterparts taken together shall be deemed to constitute one and the same
agreement.
IN WITNESS WHEREOF, the parties have signed this Pre-pricing
Acknowledgment as of the date and year first above written.
SELLER:
PERSEUS CAPITAL, LLC
By: PERSEUS MANAGEMENT, L.L.C.,
as its Manager
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇
---------------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇▇
Title: Secretary and Treasurer
BUYER:
JPMORGAN CHASE BANK
By: ▇.▇. ▇▇▇▇▇▇ SECURITIES INC.,
as its Agent
By: /s/ ▇▇▇▇▇▇ ▇▇▇▇
---------------------------------------
Name: ▇▇▇▇▇▇ ▇▇▇▇
Title: Vice President
A-2
EXHIBIT B
FORM OF PRICING SCHEDULE-- TRANCHE NO. [___]
JPMorgan Chase Bank
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
[Date]
Perseus Capital, LLC c/o Perseus, L.L.C.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇., ▇.▇., ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
[Ladies and Gentlemen / Mr. __________]:
This Pricing Schedule is a Pricing Schedule within the meaning of
Section 2.02(c) of the Stock Purchase Agreement dated as of March 5, 2002 (the
"STOCK PURCHASE AGREEMENT") between Perseus Capital, LLC ("SELLER") and JPMorgan
Chase Bank ("BUYER"), by ▇.▇. ▇▇▇▇▇▇ Securities Inc., as its agent. Capitalized
terms used herein have the meanings set forth in the Stock Purchase Agreement.
This Pricing Schedule relates to Tranche No. [__]. Upon the terms and
subject to the conditions of the Stock Purchase Agreement, the Terms of Tranche
with respect to Tranche No. [___] shall be as follows:
1. DESIGNATION OF TRANCHE: Tranche No. [___].
2. PURCHASE PRICE: [___________].
3. PAYMENT DATE: [___________].
4. INITIAL SHARE PRICE: [____________].
5. INITIAL SHORT POSITION: [_______________].
6. HEDGED VALUE: [__________].
7. UPSIDE LIMIT: [__________].
B-1
8. UPSIDE TRIGGER: [__________].
9. BASE AMOUNT: [____________].
10. THE LAST DAY OF HEDGING PERIOD: [________].
Very truly yours,
JPMORGAN CHASE BANK
By: ▇.▇. ▇▇▇▇▇▇ SECURITIES INC.,
as its Agent
By:
---------------------------------------
Name:
Title:
Acknowledged and Confirmed:
PERSEUS CAPITAL, LLC
By: PERSEUS MANAGEMENT, L.L.C.,
as its Manager
By:
---------------------------
Name:
Title:
C-1