EXHIBIT 10.2
February 22, 2007
To: MEDICAL PROPERTIES TRUST, INC.
1000 Urban Center Drive, Suite 501
Birmingham, Alabama 35242
From: WACHOVIA BANK, NATIONAL ASSOCIATION
c/o Wachvoia Capital Markets, LLC
375 Park Avenue
New York, NY 10152
From: WACHOVIA CAPITAL MARKETS, LLC,
SOLELY AS AGENT
tel: (212) 214-6100
fax: (212) 214-5913
Dear Sirs,
The purpose of this letter agreement (this "Confirmation") is to confirm the
terms and conditions of the transaction entered into between us on the Trade
Date specified below (the "Transaction"). This Confirmation constitutes a
"Confirmation" as referred to in the ISDA Master Agreement specified below.
1. The definitions and provisions contained in the 2000 ISDA Definitions (the
"2000 Definitions") and the 2002 ISDA Equity Derivatives Definitions (the
"2002 Definitions" and, together with the 2000 Definitions, the
"Definitions"), each as published by the International Swaps and
Derivatives Association, Inc., are incorporated into this Confirmation. In
the event of any inconsistency between the 2002 Definitions and the 2000
Definitions, the 2002 Definitions will govern. In the event of any
inconsistency between the Definitions and this Confirmation, this
Confirmation will govern.
This Confirmation evidences a complete and binding agreement between Party
A and Party B as to the terms of the Transaction to which this
Confirmation relates. This Confirmation shall supplement, form a part of,
and be subject to an agreement in the form of the 2002 ISDA Master
Agreement (the "Agreement") as if Party A and Party B had executed an
agreement in such form on the Trade Date (but without any Schedule except
for (i) the election of the laws of the State of New York as the governing
law and (ii) United States dollars as the Termination Currency). In the
event of any inconsistency between provisions of that Agreement and this
Confirmation, this Confirmation will prevail for the purpose of the
Transaction to which this Confirmation relates. The parties hereby agree
that no Transaction other than the Transaction to which this Confirmation
relates shall be governed by the Agreement. For purposes of the 2002
Definitions, the Transaction is a Share Forward Transaction.
Party A and Party B each represents to the other that it has entered into
this Transaction in reliance upon such tax, accounting, regulatory, legal,
and financial advice as it deems necessary and not upon any view expressed
by the other.
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2. The terms of the particular Transaction to which this Confirmation relates
are as follows:
General Terms:
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Party A: Wachovia Bank, National Association
Party B: Medical Properties Trust, Inc.
Trade Date: February 22, 2007
Effective Date: February 28, 2007
Base Amount: Initially, 1,500,000 Shares. On each Settlement Date, the Base Amount shall
be reduced by the number of Settlement Shares for such Settlement Date.
Maturity Date: February 28, 2008 (or, if such date is not a Scheduled Trading Day, the next
following Scheduled Trading Day).
Forward Price: On the Effective Date, the Initial Forward Price, and on any other day,
the Forward Price as of the immediately preceding calendar day multiplied
by the sum of (i) 1 and (ii) the Daily Rate for such day; provided that on
each Forward Price Reduction Date, the Forward Price in effect on such
date shall be the Forward Price otherwise in effect on such date minus the
Forward Price Reduction Amount for such Forward Price Reduction Date.
Initial Forward Price: USD $14.82 per Share.
Daily Rate: For any day, (i)(A) USD-Federal Funds Rate for such day MINUS (B) the Spread
DIVIDED by (ii) 365.
USD-Federal Funds Rate For any day, the rate set forth for such day opposite the
caption "Federal funds", as such rate is displayed on the page
"FedsOpen [Index] [GO]" on the BLOOMBERG Professional Service, or
any successor page; provided that if no rate appears for any day on
such page, the rate for the immediately preceding day for which a
rate appears shall be used for such day.
Spread: 1.00%
Forward Price Reduction Date: March 29, 2007, June 14, 2007, September 14, 2007, and December 13, 2007.
Forward Price Reduction
Amount: As set forth in Schedule I hereto
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Shares: Common Stock, $0.001 par value per share, of Party B (also referred to herein
as the "Issuer") (Exchange identifier: "MPW").
Exchange: The New York Stock Exchange.
Related Exchange(s): All Exchanges.
Clearance System: DTC.
Calculation Agent: Wachovia Bank, National Association
Settlement Terms:
-----------------
Settlement Date: Any Scheduled Trading Day following the Effective Date and up to and
including the Maturity Date, as designated (a) by Party B in a
written notice (a "Settlement Notice") that satisfies the Settlement
Notice Requirements and is delivered to Party A (i) at least three
Scheduled Trading Days prior to such Settlement Date, which may be
the Maturity Date, if Physical Settlement applies, and (ii) a number
of Scheduled Trading Days prior to such Settlement Date, which may
be the Maturity Date, equal to the greater of (A) 10 and (B) the
product, rounded up to the nearest whole number, of (1) the number
of Shares to be settled on such date, divided by the initial Base
Amount, and (2) 40, if Cash Settlement applies; provided that (i)
the Maturity Date shall be a Settlement Date if on such date the
Base Amount is greater than zero, (ii) if Cash Settlement applies
and Party A shall have fully unwound its hedge during an Unwind
Period by a date that is more than three Scheduled Trading Days
prior to a Settlement Date specified above, Party A may, by written
notice to Party B, specify any Scheduled Trading Day prior to such
originally specified Settlement Date as the Settlement Date, (iii)
if the Unwind Period for two Settlement Dates would overlap, the
Unwind Period for the later Settlement Date shall not begin until
the earlier settlement date has occurred and (iv) the Settlement
Date may be modified as provided under "Unwind Period" below; or (b)
by Party A pursuant to "Termination Settlement" below.
Settlement Shares: With respect to any Settlement Date, a number of Shares, not
to exceed the Base Amount, designated as such by Party B in the
related Settlement Notice or by Party A pursuant to "Termination
Settlement" below; provided that Party B may not deliver more than
two such notices during the Term of this Transaction and no such
notice shall be delivered with respect to less than 500,000 Shares;
and provided further that on the Maturity Date the number of
Settlement Shares shall be equal to the Base Amount on such date.
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Settlement: Physical Settlement or Cash Settlement, at the election of Party B
as set forth in a Settlement Notice that satisfies the Settlement
Notice Requirements; provided that Physical Settlement shall apply
(i) if no Settlement Method is validly selected, (ii) with respect
to any Settlement Shares in respect of which Party A is unable, in
its judgment, to unwind its hedge by the end of the Unwind Period in
a manner that, in the judgment of Party A, is consistent with the
requirements for qualifying for the safe harbor provided by Rule
10b-18 under the Exchange Act or due to the lack of sufficient
liquidity in the Shares on any Scheduled Trading Day during the
Unwind Period, (iii) if, at the time of electing Cash Settlement or
as a result of such election, Party B would be in default under the
Credit Agreement, dated as of October 27, 2005, as amended, by and
among MPT Operating Partnership L.P., as borrower, Merrill Lynch
Capital, a division of Merrill Lynch Business Financial Services,
Inc., as administrative agent and lender, and the additional lenders
from time to time party thereto (the "Credit Agreement"), and (iv)
to any Termination Settlement Date (as defined below under
"Termination Settlement").
Settlement Notice
Requirements: Notwithstanding any other provision hereof, a Settlement Notice
delivered by Party B that specifies Cash Settlement will not be
effective to establish a Settlement Date or require Cash Settlement
unless Party B delivers to Party A with such Settlement Notice a
representation signed by Party B substantially in the following
form: "As of the date of this Settlement Notice, Party B is not
aware of any material nonpublic information concerning itself or the
Shares, and is designating the date contained herein as a Settlement
Date in good faith and not as part of a plan or scheme to evade
compliance with the federal securities laws."
Unwind Period: Each Scheduled Trading Day that is not a Disrupted Day
during the period from and including the first Scheduled Trading Day
following the date Party B validly elects Cash Settlement in respect
of a Settlement Date through the third Scheduled Trading Day
preceding such Settlement Date; subject to "Termination Settlement"
below.
Exchange Act: The Securities Exchange Act of 1934, as amended from time to time.
Physical Settlement: On any Settlement Date in respect of which Physical Settlement
applies, Party B shall deliver to Party A through the Clearance
System the Settlement Shares for such Settlement Date, and Party A
shall deliver to Party B, by wire transfer of immediately available
funds to an account designated by Party B, an amount in cash equal
to the Physical Settlement Amount for such Settlement Date, on a
delivery versus payment basis.
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Physical Settlement Amount: For any Settlement Date in respect of which Physical Settlement
applies, an amount in cash equal to the product of (i) the Forward
Price on such Settlement Date and (ii) the number of Settlement
Shares for such Settlement Date.
Cash Settlement: On any Settlement Date in respect of which Cash Settlement applies,
if the Cash Settlement Amount for such Settlement Date is a positive
number, Party A will pay such Cash Settlement Amount to Party B. If
the Cash Settlement Amount is a negative number, Party B will pay
the absolute value of such Cash Settlement Amount to Party A. Such
amounts shall be paid on the Settlement Date.
Cash Settlement Amount: For any Settlement Date in respect of which Cash Settlement applies,
an amount determined by the Calculation Agent equal to the
difference between (1) the product of (i) (A) the Forward Price on
the first day of the applicable Unwind Period minus (B) the weighted
average of the 10b-18 VWAPs per Share for each Scheduled Trading Day
at which Party A actually purchases Shares during such Unwind Period
to unwind its hedge, multiplied by (ii) the number of Settlement
Shares for such Settlement Date, minus (2) the product of (i) the
Forward Price Reduction Amount for any Forward Price Reduction Date
that occurs during such Unwind Period multiplied by (ii) the number
of Shares with respect to which Party A has not unwound its hedge as
of such Forward Price Reduction Date.
10b-18 VWAP: For any Scheduled Trading Day during the Unwind Period which is not
a Disrupted Day, the volume-weighted average price at which the
Shares trade as reported in the composite transactions for the
Exchange on such Scheduled Trading Day, excluding (i) trades that do
not settle regular way, (ii) opening (regular way) reported trades
on the Exchange on such Scheduled Trading Day, (iii) trades that
occur in the last ten minutes before the scheduled close of trading
on the Exchange on such Scheduled Trading Day and ten minutes before
the scheduled close of the primary trading session in the market
where the trade is effected, and (iv) trades on such Scheduled
Trading Day that do not satisfy the requirements of Rule
10b-18(b)(3), as determined in good faith by the Calculation Agent.
Party B acknowledges that Party A may refer to the Bloomberg Page
"MPW [Equity] AQR SEC" (or any successor thereto), in its
discretion, for such Scheduled Trading Day to determine the 10b-18
VWAP.
Settlement Currency: USD.
Failure to Deliver: Inapplicable.
Adjustments:
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Method of Adjustment: Calculation Agent Adjustment; notwithstanding anything to the
contrary in the 2002 Definitions, but without affecting Calculation
Agent's obligations contained in Section 1.40 of the 2002
Definitions, in effecting any adjustments contemplated by Section
11.2(c) of the 2002 Definitions, the Calculation Agent may make an
adjustment pursuant to Calculation Agent Adjustment to any one or
more of the Base Amount, the Forward Price and any other variable
relevant to the settlement or payment terms of the Transaction.
Additional Adjustment: If, in Party A's sole judgment, the actual cost to Party A, over any
one month period, of borrowing a number of Shares equal to the Base
Amount to hedge its exposure to the Transaction exceeds a weighted
average rate equal to 100 basis points per annum, the Calculation
Agent shall reduce the Forward Price in order to compensate Party A
for the amount by which such cost exceeded a weighted average rate
equal to 100 basis points per annum during such period. The
Calculation Agent shall notify Party B prior to making any such
adjustment to the Forward Price and, upon the request of Party B,
Party A shall provide an itemized list of its stock loan costs for
the applicable one month period.
Account Details:
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Payments to Party A: ABA: 053-000-219
Wachovia Bank, National Association
Charlotte, NC
A/C: 04659360009768
Attn: Equity Derivatives
Payments to Party B: To be advised under separate cover or telephone confirmed prior to each
Settlement Date.
Delivery of Shares to Party A: DTC Settlement Instructions:
DTC Number: 2072
Agent ID: 52196
Institution ID: 52196
Delivery of Shares to Party B: To be advised.
3. Other Provisions:
Conditions to Effectiveness:
The effectiveness of this Confirmation on the Effective Date shall
be subject to (i) the condition that the respective representations
and warranties of Wachovia Capital Markets, LLC (the "Agent") and
Party B contained in the Underwriting Agreement dated the date
hereof among Party B, Party A and UBS Securities LLC and the Agent
as Representatives of the Several Underwriters (the "Underwriting
Agreement") and any certificate delivered pursuant thereto by the
Agent or Party B are true and correct on the Effective Date as if
made as of the Effective Date, (ii) the condition that the Agent and
Party B have performed all of their respective obligations required
to
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be performed by them under the Underwriting Agreement on or prior to
the Effective Date, (iii) the condition that Party B has delivered
to Party A resolutions of the Board of Directors of Party B
authorizing the Transaction, in form and substance satisfactory to
Party A, (iv) the satisfaction of all of the conditions set forth in
Section 7 of the Underwriting Agreement and (v) the condition that
neither of the following has occurred (A) Party A is unable to
borrow and deliver for sale a number of Shares equal to the Base
Amount, or (B) in Party A's sole judgment either it is impracticable
to do so or Party A would incur a weighted average stock loan cost
of more than a rate equal to 150 basis points per annum to do so (in
either of which events this Confirmation shall be effective but the
Base Amount for this Transaction shall be the number of Shares Party
A is required to deliver in accordance with Section 1 of the
Underwriting Agreement).
Representations and Agreements of Party B:
Party B (i) has such knowledge and experience in financial and
business affairs as to be capable of evaluating the merits and risks
of entering into this Transaction; (ii) has consulted with its own
legal, financial, accounting and tax advisors in connection with
this Transaction; and (iii) is entering into this Transaction for a
bona fide business purpose.
Party B is not and has not been the subject of any civil proceeding
of a judicial or administrative body of competent jurisdiction that
could reasonably be expected to impair materially Party B's ability
to perform its obligations hereunder.
Party B will by the next succeeding New York Business Day notify
Party A upon obtaining knowledge of the occurrence of any event that
would constitute an Event of Default, a Potential Event of Default
or a Potential Adjustment Event.
Additional Representations, Warranties and Agreements of Party B:
Party B hereby represents and warrants to, and agrees with, Party A
as of the date hereof that:
(a) Any Shares, when issued and delivered in accordance with the
terms of the Transaction, will be duly authorized and validly
issued, fully paid and nonassessable, and the issuance thereof
will not be subject to any preemptive or similar rights.
(b) Party B has reserved and will keep available at all times,
free from preemptive rights, out of its authorized but
unissued Shares, solely for the purpose of issuance upon
settlement of the Transaction as herein provided, the full
number of Shares as shall be issuable at such time upon
settlement of the Transaction. All Shares so issuable shall,
upon such issuance, be accepted for listing or quotation on
the Exchange.
(c) Subject to the last sentence of this paragraph, Party B agrees
to provide Party A at least 30 days' written notice (an
"Issuer Repurchase Notice") prior to executing any repurchase
of Shares by Party B or any of its subsidiaries (or entering
into any contract that would require, or give the option to,
Party B or any of its subsidiaries, to purchase or repurchase
Shares), whether out of profits or capital or whether the
consideration for such repurchase is cash, securities or
otherwise (an "Issuer Repurchase"), that alone or in the
aggregate would result in the Base Amount Percentage (as
defined below) being (i) equal to or greater than 4.5% of the
outstanding Shares and (ii) greater by 0.5% or more than the
Base Amount Percentage at the time of the immediately
preceding Issuer Repurchase Notice (or in the case of the
first such Issuer Repurchase Notice, greater than the Base
Amount Percentage as of the later of the date hereof or the
immediately preceding Settlement Date, if any). The "Base
Amount Percentage" as of any day is the fraction (1) the
numerator of which is the Base Amount and (2) the denominator
of which is the number of Shares outstanding on such day. If
Party B
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reasonably determines that compliance with any notice
obligations of Party B contained in this paragraph any delay
of related repurchase of Shares could jeopardize Party B's
status as a "real estate investment trust" within the meaning
of the Internal Revenue Code of 1986, as amended, and the
Treasury Regulations promulgated thereunder, then,
notwithstanding any such notice obligations, Party B shall be
entitled to immediately effect any repurchases of Shares
contemplated by Party B's charter ("Charter Repurchases")
reasonable necessary to maintain such status and shall use its
best efforts to simultaneously notify Party A of such
repurchases.
(d) Neither the execution and delivery of this Confirmation nor
the incurrence or performance of obligations of Party B
hereunder will conflict with or result in a breach of the
Amended and Restated Articles of Incorporation of Party B, as
amended and restated as of the date hereof (the "Articles of
Incorporation") or by-laws (or any equivalent documents) of
Party B, or any applicable law or regulation, including any
provisions of the Maryland General Corporation Law, or any
order, writ, injunction or decree of any court or governmental
authority or agency, or any agreement or instrument to which
the Party B or any of its subsidiaries is a party or by which
the Party B or any of its subsidiaries is bound or to which
the Party B or any of its subsidiaries is subject, including
the Credit Agreement, or constitute a default under, or result
in the creation of any lien under, any such agreement or
instrument, or breach or constitute a default under any
agreements and contracts of the Counterparty and the
significant subsidiaries filed as exhibits to the
Counterparty's Annual Report on Form 10-K.
(e) No filing with, or approval, authorization, consent, license
registration, qualification, order or decree of, any court or
governmental authority or agency, domestic or foreign, is
necessary or required for the execution, delivery and
performance by Party B of this Confirmation and the
consummation of the Transaction (including, without
limitation, the issuance and delivery of Shares on any
Settlement Date) except (i) such as have been obtained under
the Securities Act, and (ii) as may be required to be obtained
under state securities laws.
(f) Party B is not insolvent, nor will Party B be rendered
insolvent as a result of this Transaction.
(g) Neither Party B nor any of its affiliates shall take or
refrain from taking any action (including, without limitation,
any direct purchases by Party B or any of its affiliates or
any purchases by a party to a derivative transaction with
Party B or any of its affiliates), either under this
Confirmation, under an agreement with another party or
otherwise, that might cause any purchases of Shares by Party A
or any of its affiliates in connection with any Cash
Settlement of this Transaction not to meet the requirements of
the safe harbor provided by Rule 10b-18 under the Exchange Act
if such purchases were made by Party B.
(h) Party B will not engage in any "distribution" (as defined in
Regulation M under the Exchange Act) that would cause a
"restricted period" (as defined in Regulation M) to occur
during any Unwind Period.
(i) Party B is an "eligible contract participant" (as such term is
defined in Section 1(a)(12) of the Commodity Exchange Act, as
amended).
(j) In addition to any other requirements set forth herein, Party
B agrees not to elect Physical Settlement or Cash Settlement
if, in the reasonable judgment of either Party A or Party B,
such settlement or Party A's related market activity would
result in a violation of the U.S. federal securities laws or
any other federal or state law or regulation applicable to
Party B.
Covenant of Party B:
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The parties acknowledge and agree that any Shares delivered by Party
B to Party A on any Settlement Date will be newly issued Shares and
when delivered by Party A (or an affiliate of Party A) to securities
lenders from whom Party A (or an affiliate of Party A) borrowed
Shares in connection with hedging its exposure to the Transaction
will be freely saleable without further registration or other
restrictions under the Securities Act of 1933, as amended (the
"Securities Act"), in the hands of those securities lenders,
irrespective of whether such stock loan is effected by Party A or an
affiliate of Party A. Accordingly, Party B agrees that the
Settlement Shares that it delivers to Party A on each Settlement
Date will not bear a restrictive legend and that such Settlement
Shares will be deposited in, and the delivery thereof shall be
effected through the facilities of, the Clearance System.
Covenants of Party A:
(a) Unless the provisions set forth below under "Private Placement
Procedures" shall be applicable, Party A shall use any Shares
delivered by Party B to Party A on any Settlement Date to
return to securities lenders to close out open stock loans, if
any, with respect to Shares.
(b) In connection with bids and purchases of Shares in connection
with any Cash Settlement of this Transaction, Party A shall
use its reasonable best efforts to conduct its activities, or
cause its affiliates to conduct their activities, in a manner
consistent with the requirements of the safe harbor provided
by Rule 10b-18 under the Exchange Act, as if such provisions
were applicable to such purchases.
Insolvency Filing:
Notwithstanding anything to the contrary herein, in the Agreement or
in the Definitions, upon any Insolvency Filing in respect of the
Issuer, the Transaction shall automatically terminate on the date
thereof without further liability of either party to this
Confirmation to the other party (except for any liability in respect
of any breach of representation or covenant by a party under this
Confirmation prior to the date of such Insolvency Filing).
Extraordinary Dividends:
If an ex-dividend date for an Extraordinary Dividend occurs on or
after the Trade Date and on or prior to the Maturity Date, Party B
shall pay an amount, as determined by the Calculation Agent, in cash
equal to the product of such Extraordinary Dividend and the Base
Amount on the record date for such dividend to Party A on the
earlier of (i) the date on which such Extraordinary Dividend is paid
by the Issuer to holders of record of the Shares or (ii) the
Maturity Date. "Extraordinary Dividend" means the per Share amount
of any cash dividend or distribution declared by the Issuer with
respect to the Shares that is specified by the board of directors of
the Issuer as an "extraordinary" dividend.
Acceleration Events:
The following events shall each constitute an "Acceleration Event":
(a) Stock Borrow Events. In the reasonable judgment of Party A (i)
Party A is unable to hedge Party A's exposure to the
Transaction because (A) of the lack of sufficient Shares being
made available for Share borrowing by lenders, or (B) it is
otherwise commercially impracticable or (ii) Party A would
incur a cost to borrow Shares to hedge its exposure to the
Transaction that is greater than a rate equal to 150 basis
points per annum (each of (i) and (ii) a "Stock Borrow
Event");
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(b) Dividends and Other Distributions. On any day occurring after
the Trade Date Party B declares a distribution, issue or
dividend to existing holders of the Shares of (i) any cash
dividend (other than an Extraordinary Dividend) to the extent
all cash dividends having an ex-dividend date during the
period from and including any Forward Price Reduction Date
(with each of the Trade Date and the Maturity Date being a
Forward Price Reduction Date having a Forward Price Reduction
Amount equal to $0.00 for purposes of this clause (b) only) to
but excluding the next subsequent Forward Price Reduction Date
exceeds, on a per Share basis, the sum of the Forward Price
Reduction Amount and $0.01, or (ii) share capital or
securities of another issuer acquired or owned (directly or
indirectly) by Party B as a result of a spin-off or other
similar transaction or (iii) any other type of securities
(other than Shares), rights or warrants or other assets, for
payment (cash or other consideration) at less than the
prevailing market price as determined by Party A;
(d) ISDA Early Termination Date. Either Party A or Party B has the
right to designate an Early Termination Date pursuant to
Section 6 of the Agreement;
(e) Other ISDA Events. The occurrence of an Announcement Date in
respect of an Extraordinary Event; the occurrence of any
Change in Law or Delisting; provided that in case of a
Delisting, in addition to the provisions of Section
12.6(a)(iii) of the 2002 Definitions, it will also constitute
a Delisting if the Exchange is located in the United States
and the Shares are not immediately re-listed, re-traded or
re-quoted on any of the New York Stock Exchange, the American
Stock Exchange or the NASDAQ National Market (or their
respective successors); or
(f) Issuer Repurchases. Party B publicly announces or discloses
any Issuer Repurchase (whether or not subsequently amended)
that alone, or in the aggregate, results in, or could result
in, the Base Amount representing more than 4.5% of the total
outstanding Shares (assuming the consummation of such proposed
Issuer Repurchase).
Termination Settlement:
Upon the occurrence of any Acceleration Event, Party A shall have
the right to designate, upon at least one Scheduled Trading Day's
notice, any Scheduled Trading Day following such occurrence to be a
Settlement Date hereunder (a "Termination Settlement Date") to which
Physical Settlement shall apply, and to select the number of
Settlement Shares relating to such Termination Settlement Date;
provided that (i) in the case of an Acceleration Event arising out
of a Stock Borrow Event, the number of Settlement Shares so
designated by Party A shall not exceed the number of Shares as to
which such Stock Borrow Event exists and (ii) in the case of an
Acceleration Event arising out of an Issuer Repurchase, the number
of Settlement Shares so designated by Party A shall not exceed the
number of Shares necessary to cause the Base Amount to be less than
4.5% of the total outstanding Shares (assuming consummation of such
proposed Issuer Repurchase). If, upon designation of a Termination
Settlement Date by Party A pursuant to the preceding sentence, Party
B fails to deliver the Settlement Shares relating to such
Termination Settlement Date when due, such failure shall constitute
an Event of Default with respect to Party B and Section 6 of the
Agreement shall apply. If an Acceleration Event occurs during an
Unwind Period relating to a number of Settlement Shares to which
Cash Settlement applies, then on the Termination Settlement Date
relating to such Acceleration Event, notwithstanding any election to
the contrary by Party B, Cash Settlement shall apply to the portion
of the Settlement Shares relating to such Unwind Period as to which
Party A has unwound its hedge and Physical Settlement shall apply in
respect of the remainder (if any) of such Settlement Shares, in
addition to the Settlement Shares designated by Party A in respect
of such Termination Settlement Date.
Private Placement Procedures
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If Party B is unable to comply with the provisions of "Covenant of
Party B" above because of a change in law or a change in the policy
of the Securities and Exchange Commission or its staff, or Party A
otherwise determines that in its reasonable opinion any Settlement
Shares to be delivered to Party A by Party B may not be freely
returned by Party A or its affiliates to securities lenders as
described under "Covenant of Party B" above, then delivery of any
such Settlement Shares (the "Restricted Shares") shall be effected
pursuant to Annex A hereto, unless waived by Party A.
Rule 10b5-1:
It is the intent of Party A and Party B that following any election
of Cash Settlement by Party B, the purchase of Shares by Party A
during any Unwind Period comply with the requirements of Rule
10b5-1(c)(1)(i)(B) of the Exchange Act and that this Confirmation
shall be interpreted to comply with the requirements of Rule
10b5-1(c).
Party B acknowledges that (i) during any Unwind Period Party B does
not have, and shall not attempt to exercise, any influence over how,
when or whether to effect purchases of Shares by Party A (or its
agent or affiliate) in connection with this Confirmation and (ii)
Party B is entering into the Agreement and this Confirmation in good
faith and not as part of a plan or scheme to evade compliance with
federal securities laws including, without limitation, Rule 10b-5
promulgated under the Exchange Act.
Party B hereby agrees with Party A that during any Unwind Period
Party B shall not communicate, directly or indirectly, any Material
Non-Public Information (as defined herein) to any EDG Personnel (as
defined below). For purposes of this Transaction, "Material
Non-Public Information" means information relating to Party B or the
Shares that (a) has not been widely disseminated by wire service, in
one or more newspapers of general circulation, by communication from
Party B to its shareholders or in a press release, or contained in a
public filing made by Party B with the Securities and Exchange
Commission and (b) a reasonable investor might consider to be of
importance in making an investment decision to buy, sell or hold
Shares. For the avoidance of doubt and solely by way of
illustration, information should be presumed "material" if it
relates to such matters as dividend increases or decreases, earnings
estimates, changes in previously released earnings estimates,
significant expansion or curtailment of operations, a significant
increase or decline of orders, significant merger or acquisition
proposals or agreements, significant new products or discoveries,
extraordinary borrowing, major litigation, liquidity problems,
extraordinary management developments, purchase or sale of
substantial assets, or other similar information. For purposes of
this Transaction, "EDG Personnel" means any employee on the trading
side of the Equity Derivatives Group of the Agent (or any other
person or persons designated from time to time by the respective
Compliance Groups of Party A).
Maximum Share Delivery:
Notwithstanding any other provision of this Confirmation, in no
event will Party B be required to deliver on any Settlement Date,
whether pursuant to Physical Settlement, Termination Settlement or
any Private Placement Settlement, more than 6,000,000 Shares to
Party A, subject to reduction by the amount of any Shares delivered
by Party B on any prior Settlement Date.
Market Disruption Event:
Section 6.3(a) of the 2002 Definitions is amended by deleting the
words "at any time during the one hour period that ends at the
relevant Valuation Time, Latest Exercise Time, Knock-in Valuation
Time or Knock-out Valuation Time, as the case may be,".
11
Assignment:
Party A may assign or transfer any of its rights or delegate any of
its duties hereunder to any affiliate of Party A or any entity
organized or sponsored by Party A without the prior written consent
of Party B. Notwithstanding any other provision of this Confirmation
to the contrary requiring or allowing Party A to purchase or receive
any Shares from Party B, Party A may designate any of its affiliates
to purchase or receive such Shares or otherwise to perform Party A's
obligations in respect of this Transaction and any such designee may
assume such obligations, and Party A shall be discharged of its
obligations to Party B solely to the extent of any such performance.
Matters Relating to Agent:
(a) The Agent is registered as a broker-dealer with the U.S.
Securities and Exchange Commission and the National Association of
Securities Dealers, is acting hereunder for and on behalf of Party A
solely in its capacity as agent for Party A pursuant to instructions
from Party A, and is not and will not be acting as the
Counterparty's agent, broker, advisor or fiduciary in any respect
under or in connection with this Transaction.
(b) In addition to acting as Party A's agent in executing this
Transaction, the Agent is authorized from time to time to give
written payment and/or delivery instructions to the Counterparty
directing it to make its payments and/or deliveries under this
Transaction to an account of the Agent for remittance to Party A (or
its designee), and for that purpose any such payment or delivery by
the Counterparty to the Agent shall be treated as a payment or
delivery to Party A.
(c) Except as otherwise provided herein, any and all notices,
demands, or communications of any kind transmitted in writing by
either Party A or the Counterparty under or in connection with this
Transaction will be transmitted exclusively by such party to the
other party through the Agent at the following address:
Wachovia Capital Markets, LLC
201 South College Street, 6th Floor
Charlotte, NC 28288-0601
Facsimile No.: (704) 383-8425
Telephone No.: (704) 715-8086
Attention: Equity Derivatives
(d) The Agent shall have no responsibility or liability to Party A
or the Counterparty for or arising from (i) any failure by either
Party A or the Counterparty to perform any of their respective
obligations under or in connection with this Transaction, (ii) the
collection or enforcement of any such obligations, or (iii) the
exercise of any of the rights and remedies of either Party A or the
Counterparty under or in connection with this Transaction. Each of
Party A and the Counterparty agrees to proceed solely against the
other to collect or enforce any such obligations, and the Agent
shall have no liability in respect of this Transaction except for
its gross negligence or willful misconduct in performing its duties
as the agent of Party A.
(e) Upon written request, the Agent will furnish to Party A and the
Counterparty the date and time of the execution of this Transaction
and a statement as to the source and amount of any remuneration
received or to be received by the Agent in connection with this
Transaction.
12
Indemnity
Party B agrees to indemnify Party A and its affiliates and their
respective directors, officers, agents and controlling parties
(Party A and each such affiliate or person being an "Indemnified
Party") from and against any and all losses, claims, damages and
liabilities incurred by or asserted against such Indemnified Party
arising out of, in connection with, or relating to, any breach of
any covenant or representation made by Party B in this Confirmation
or the Agreement, the consummation of the transactions contemplated
hereby or any breach of the Articles of Incorporation, and will
reimburse any Indemnified Party for all reasonable expenses
(including reasonable legal fees and expenses) as they are incurred
in connection with the investigation of, preparation for, or defense
of any pending or threatened claim or any action or proceeding
arising therefrom, whether or not such Indemnified Party is a party
thereto. Party B will not be liable under this Indemnity paragraph
to the extent that any loss, claim, damage, liability or expense is
found in a judgment by a court to have resulted from Party A's gross
negligence, willful misconduct or breach of any representation or
covenant of Party A contained in this Confirmation of the Agreement.
Notice
Non-Reliance: Applicable
Additional Acknowledgments: Applicable
Agreements and Acknowledgments
Regarding Hedging Activities: Applicable
4. The Agreement is further supplemented by the following provisions:
No Collateral or Setoff.:
Notwithstanding Section 6(f) or any other provision of the Agreement
or any other agreement between the parties to the contrary, the
obligations of Party B hereunder are not secured by any collateral.
Obligations under this Transaction shall not be set off against any
other obligations of the parties, whether arising under the
Agreement, this Confirmation, under any other agreement between the
parties hereto, by operation of law or otherwise, and no other
obligations of the parties shall be set off against obligations
under this Transaction, whether arising under the Agreement, this
Confirmation, under any other agreement between the parties hereto,
by operation of law or otherwise, and each party hereby waives any
such right of setoff. In calculating any amounts under Section 6(e)
of the Agreement, notwithstanding anything to the contrary in the
Agreement, (a) separate amounts shall be calculated as set forth in
such Section 6(e) with respect to (i) this Transaction and (ii) all
other Transactions, and (b) such separate amounts shall be payable
pursuant to Section 6(d)(ii) of the Agreement.
Status of Claims in Bankruptcy:
Party A acknowledges and agrees that this confirmation is not
intended to convey to Party A rights with respect to the
transactions contemplated hereby that are senior to the claims of
common stockholders in any U.S. bankruptcy proceedings of Party B;
provided, however, that nothing herein shall limit or shall be
deemed to limit Party A's right to pursue remedies in the event of a
breach by Party B of its obligations and agreements with respect to
this Confirmation and the Agreement; and provided further, that
nothing herein shall limit or shall be deemed to limit Party A's
rights in respect of any transaction other than the Transaction.
13
Limit on Beneficial Ownership:
Notwithstanding any other provisions hereof, Party A shall not be
entitled to receive Shares or any other class of voting securities
of the Issuer hereunder (whether in connection with the purchase of
Shares on any Settlement Date or any Termination Settlement Date,
any Private Placement Settlement or otherwise) to the extent (but
only to the extent) that such receipt would result in Party A or any
of its affiliates or associates directly or indirectly beneficially
owning (as such term is defined for purposes of Section 13(d) of the
Exchange Act) at any time in excess of 4.5% of the outstanding
Shares or any other class of voting securities of the Issuer. Any
purported delivery hereunder shall be void and have no effect to the
extent (but only to the extent) that such delivery would result in
Party A or any of its affiliates or associates directly or
indirectly so beneficially owning in excess of 4.5% of the
outstanding Shares or any other class of voting securities of the
Issuer. If any delivery owed to Party A hereunder is not made, in
whole or in part, as a result of this provision, Party B's
obligation to make such delivery shall not be extinguished and Party
B shall make such delivery as promptly as practicable after, but in
no event later than one Clearance System Business Day after, Party A
gives notice to Party B that such delivery would not result in Party
A or any of its affiliates or associates directly or indirectly so
beneficially owning in excess of 4.5% of the outstanding Shares or
any other class of voting securities of the Issuer.
Miscellaneous:
(a) Addresses for Notices. For the purpose of Section 12(a) of the
Agreement:
Address for notices or communications to Party A:
Address: Wachovia Bank, National Association
375 Park Avenue
New York, NY 10152
Attention: Head of Documentation
Telephone No.: (212) 214-6100
Facsimile No.: (212) 214-5913
With a copy to:
Address: Wachovia Capital Markets, LLC
201 South College Street, 6th Floor
Charlotte, NC 28288-0601
Attention: Equity Derivatives
Telephone No.: (704) 715-8086
Facsimile No.: (704) 383-8425
Address for notices or communications to Party B:
Address: Medical Properties Trust, Inc.
1000 Urban Center Drive, Suite 501
Birmingham, Alabama 35242
Attention: Charles Lambert
Telephone No.: (205) 969-3755
Facsimile No.: (205) 969-3756
14
(b) WAIVER OF RIGHT TO TRIAL BY JURY. EACH PARTY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY
HAVE TO A TRIAL BY JURY IN RESPECT OF ANY SUIT, ACTION OR
PROCEEDING RELATING TO THIS CONFIRMATION. Each party (i)
certifies that no representative, agent or attorney of the
other party has represented, expressly or otherwise, that such
other party would not, in the event of such a suit action or
proceeding, seek to enforce the foregoing waiver and (ii)
acknowledges that it and the other party have been induced to
enter into this Confirmation by, among other things, the
mutual waivers and certifications herein.
Acknowledgments.
The parties hereto intend for:
(a) this Transaction to be a "securities contract" as defined in
Section 741(7) of Title 11 of the United States Code (the
"Bankruptcy Code"), qualifying for the protections under
Section 555 of the Bankruptcy Code;
(b) a party's right to liquidate this Transaction and to exercise
any other remedies upon the occurrence of any Event of Default
under the Agreement with respect to the other party to
constitute a "contractual right" as defined in the Bankruptcy
Code;
(c) Party A to be a "financial institution" within the meaning of
Section 101(22) of the Bankruptcy Code; and
(d) all payments for, under or in connection with this
Transaction, all payments for the Shares and the transfer of
such Shares to constitute "settlement payments" as defined in
the Bankruptcy Code.
Severability.
If any term, provision, covenant or condition of this Confirmation,
or the application thereof to any party or circumstance, shall be
held to be invalid or unenforceable in whole or in part for any
reason, the remaining terms, provisions, covenants, and conditions
hereof shall continue in full force and effect as if this
Confirmation had been executed with the invalid or unenforceable
provision eliminated, so long as this Confirmation as so modified
continues to express, without material change, the original
intentions of the parties as to the subject matter of this
Confirmation and the deletion of such portion of this Confirmation
will not substantially impair the respective benefits or
expectations of parties to this Agreement; provided, however, that
this severability provision shall not be applicable if any provision
of Section 2, 5, 6 or 13 of the Agreement (or any definition or
provision in Section 14 to the extent that it relates to, or is used
in or in connection with any such Section) shall be so held to be
invalid or unenforceable.
[Remainder of page intentionally left blank]
15
Please confirm that the foregoing correctly sets forth the terms of our
agreement by executing a copy of this Confirmation and returning it to us by
facsimile at 212-214-5913 (Attention: Equity Division Documentation Unit, by
telephone contact 212-214-6100).
Very truly yours,
WACHOVIA CAPITAL MARKETS, LLC, WACHOVIA BANK, NATIONAL ASSOCIATION
acting solely in its capacity as Agent By: Wachovia Capital Markets, LLC,
of Wachovia Bank, National Association acting solely in its capacity as its Agent
By: /s/ Cathleen Burke By: /s/ Cathleen Burke
---------------------------- ----------------------------
Name: Cathleen Burke Name: Cathleen Burke
Title: Managing Director Title: Managing Director
Accepted and confirmed as of the date first above written:
MEDICAL PROPERTIES TRUST, INC.
By: /s/ R. Steven Hamner
--------------------------
Name: R. Steven Hamner
Title: Executive Vice President & CFO
SCHEDULE I
Forward Price Forward Price
Reduction Date Reduction Amount
- -------------- ----------------
March 29, 2007 $0.27
June 14, 2007 $0.28
September 14, 2007 $0.31
December 13, 2007 $0.32
ANNEX A
PRIVATE PLACEMENT PROCEDURES
(i) If Party B delivers the Restricted Shares pursuant to this clause (i) (a
"Private Placement Settlement"), then delivery of Restricted Shares by
Party B shall be effected in customary private placement procedures with
respect to such Restricted Shares reasonably acceptable to Party A;
provided that if , on or before the date that a Private Placement
Settlement would occur, Party B has taken, or caused to be taken, any
action that would make unavailable either the exemption pursuant to
Section 4(2) of the Securities Act for the sale by Party B to Party A (or
any affiliate designated by Party A) of the Restricted Shares or the
exemption pursuant to Section 4(1) or Section 4(3) of the Securities Act
for resales of the Restricted Shares by Party A (or any such affiliate of
Party A) or Party B fails to deliver the Restricted Shares when due or
otherwise fails to perform obligations within its control in respect of a
Private Placement Settlement, it shall be an Event of Default with respect
to Party B and Section 6 of the Agreement shall apply. The Private
Placement Settlement of such Restricted Shares shall include customary
representations, covenants, blue sky and other governmental filings and/or
registrations, indemnities to Party A, due diligence rights (for Party A
or any designated buyer of the Restricted Shares by Party A), opinions and
certificates, and such other documentation as is customary for private
placement agreements, all reasonably acceptable to Party A. In the case of
a Private Placement Settlement, Party A shall, in its good faith
discretion, adjust the amount of Restricted Shares to be delivered to
Party A hereunder in a commercially reasonable manner to reflect the fact
that such Restricted Shares may not be freely returned to securities
lenders by Party A and may only be saleable by Party A at a discount to
reflect the lack of liquidity in Restricted Shares. Notwithstanding the
Agreement or this Confirmation, the date of delivery of such Restricted
Shares shall be the Clearance System Business Day following notice by
Party A to Party B of the number of Restricted Shares to be delivered
pursuant to this clause (i). For the avoidance of doubt, delivery of
Restricted Shares shall be due as set forth in the previous sentence and
not be due on the Settlement Date or Termination Settlement Date that
would otherwise be applicable.
(ii) If Party B delivers any Restricted Shares in respect of the Transaction,
Party B agrees that (i) such Shares may be transferred by and among the
Agent and its affiliates and (ii) after the minimum "holding period"
within the meaning of Rule 144(d) under the Securities Act has elapsed
after the applicable Settlement Date, Party B shall promptly remove, or
cause the transfer agent for the Shares to remove, any legends referring
to any transfer restrictions from such Shares upon delivery by Party A (or
such affiliate of Party A) to Party B or such transfer agent of seller's
and broker's representation letters customarily delivered by Party A or
its affiliates in connection with resales of restricted securities
pursuant to Rule 144 under the Securities Act, each without any further
requirement for the delivery of any certificate, consent, agreement,
opinion of counsel, notice or any other document, any transfer tax stamps
or payment of any other amount or any other action by Party A (or such
affiliate of Party A).