EXHIBIT 10.3
JPMorgan Chase Bank, National Association
P.O. Box 161
60 Victoria Embankment
London EC4Y 0JP
England
May 8, 2007
To: Chemed Corporation
2600 Chemed Center
255 East Fifth Street
Cincinnati, OH 45202
Attention: Chief Financial Officer
Telephone No.: (513) 762-6901
Facsimile No.: (513) 287-6713
Re: Warrants
The purpose of this letter agreement (this "CONFIRMATION") is to
confirm the terms and conditions of the Warrants issued by Chemed Corporation
("COMPANY") to JPMorgan Chase Bank, National Association, London Branch
("JPMORGAN") on the Trade Date specified below (the "TRANSACTION"). This letter
agreement constitutes a "Confirmation" as referred to in the ISDA Master
Agreement specified below. This Confirmation shall replace any previous
agreements and serve as the final documentation for this Transaction.
The definitions and provisions contained in the 2002 ISDA Equity
Derivatives Definitions (the "EQUITY DEFINITIONS"), as published by the
International Swaps and Derivatives Association, Inc. ("ISDA"), are incorporated
into this Confirmation. In the event of any inconsistency between the Equity
Definitions and this Confirmation, this Confirmation shall govern.
Each party is hereby advised, and each such party acknowledges, that
the other party has engaged in, or refrained from engaging in, substantial
financial transactions and has taken other material actions in reliance upon the
parties' entry into the Transaction to which this Confirmation relates on the
terms and conditions set forth below.
1. This Confirmation evidences a complete and binding agreement between
JPMorgan and Company as to the terms of the Transaction to which this
Confirmation relates. This Confirmation shall supplement, form a part
of, and be subject to an agreement in the form of the 2002 ISDA Master
Agreement (the "AGREEMENT") as if JPMorgan and Company had executed an
agreement in such form (but without any Schedule except for the
election of the laws of the State of New York as the governing law) on
the Trade Date. In the event of any inconsistency between provisions of
that Agreement and this Confirmation, this Confirmation will prevail
for the purpose of the Transaction to which this Confirmation relates.
The parties hereby agree that no Transaction other than the Transaction
to which this Confirmation relates shall be governed by the Agreement.
2. The Transaction is a Warrant Transaction, which shall be considered a
Share Option Transaction for purposes of the Equity Definitions. The
terms of the particular Transaction to which this Confirmation relates
are as follows:
JPMORGAN CHASE BANK, NATIONAL ASSOCIATION ORGANISED
UNDER THE LAWS OF THE UNITED STATES AS A NATIONAL BANKING ASSOCIATION.
MAIN OFFICE 1111 POLARIS PARKWAY, COLUMBUS, OHIO 43271
REGISTERED AS A BRANCH IN ENGLAND & WALES BRANCH NO. BR000746. REGISTERED
BRANCH OFFICE 125 LONDON WALL, LONDON EC2Y 5AJ
AUTHORISED AND REGULATED BY THE FINANCIAL SERVICES AUTHORITY
General Terms:
Trade Date: May 8, 2007
Warrants: Equity call warrants, each giving the holder the right to purchase
one Share at the Strike Price, subject to the Settlement Terms set
forth below. For the purposes of the Equity Definitions, each
reference to a Warrant herein shall be deemed to be a reference to
a Call Option.
Warrant Style: European
Seller: Company
Buyer: JPMorgan
Shares: The capital stock of Company, par value USD 1 per Share
(Exchange symbol "CHE")
Number of Warrants: 1,114,862, subject to adjustment as provided herein; provided
that the Number of Warrants shall be automatically increased as
of the date of exercise (the "Greenshoe Exercise") by J.P.
Morgan Securities Inc. and Citigroup Global Markets Inc. as
representatives of the Initial Purchasers (as defined in the
Purchase Agreement dated as of May 8, 2007 between Company, J.P.
Morgan Securities Inc. and Citigroup Global Markets Inc. as
representatives of the Initial Purchasers party thereto (the
"Purchase Agreement")), of their option pursuant to Section 1 of
the Purchase Agreement by the number of additional Warrants in
proportion to the increase in the number of 1.875% Convertible
Senior Notes due 2014 (the "Convertible Notes"), in
denominations of USD 1,000 principal amount issued pursuant to
such exercise (such Convertible Notes, the "Additional
Convertible Notes") (the "Additional Warrants").
Warrant Entitlement: One Share per Warrant
Strike Price: USD 105.4400
Premium: USD 12,426,300 (Premium per Warrant: USD 11.1460); provided that
if the Number of Warrants is increased pursuant to the proviso
to the definition of "Number of Warrants" above, there shall be
an additional Premium equal to the product of the number of
Additional Warrants and the Premium per Warrant (the "Additional
Premium"), and such Additional Premium shall be paid by JPMorgan
to Company on the Additional Premium Payment Date.
Premium Payment Date: May 14, 2007
Additional Premium Payment Date: The closing date for the purchase and sale of the Additional
Convertible Notes.
Exchange: The New York Stock Exchange
Related Exchange(s): All Exchanges
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Procedures for Exercise:
Expiration Time: The Valuation Time
Expiration Date(s): Each Scheduled Trading Day during the period from and including
the First Expiration Date and to and including the 79th
Scheduled Trading Day following the First Expiration Date shall
be an "Expiration Date" for a number of Warrants equal to the
Daily Number of Warrants on such date; provided that,
notwithstanding anything to the contrary in the Equity
Definitions, if any such date is a Disrupted Day, the
Calculation Agent shall make adjustments, if applicable, to the
Daily Number of Warrants or shall reduce such Daily Number of
Warrants to zero for which such day shall be an Expiration Date
and shall designate a Scheduled Trading Day or a number of
Scheduled Trading Days as the Expiration Date(s) for the
remaining Daily Number of Warrants or a portion thereof for the
originally scheduled Expiration Date; and provided further that
if such Expiration Date has not occurred pursuant to this clause
as of the eighth Scheduled Trading Day following the last
scheduled Expiration Date under this Transaction, the
Calculation Agent shall have the right to declare such Scheduled
Trading Day to be the final Expiration Date and the Calculation
Agent shall determine its good faith estimate of the fair market
value for the Shares as of the Valuation Time on that eighth
Scheduled Trading Day or on any subsequent Scheduled Trading
Day, as the Calculation Agent shall determine using commercially
reasonable means.
First Expiration Date: August 15, 2014 (or if such day is not a Scheduled Trading Day,
the next following Scheduled Trading Day), subject to Market
Disruption Event below.
Multiple Exercise: Applicable
Minimum Number of Warrants: 1
Daily Number of Warrants: For any Expiration Date, the Number of Warrants that have not
expired or been exercised as of such day, divided by the
remaining number of Expiration Dates (including such day),
rounded down to the nearest whole number, subject to adjustment
pursuant to the provisos to "Expiration Date(s)".
Maximum Number of Warrants: All warrants remaining unexercised as of the remaining Exercise
Date(s).
Automatic Exercise: Applicable; and means that, unless all Warrants have been
previously exercised hereunder, a number of Warrants for each
Expiration Date equal to the Daily Number of Warrants (as
adjusted pursuant to the terms hereof) for such Expiration Date
will be deemed to be automatically exercised; provided that
"In-the-Money" means that the Relevant Price for such Expiration
Date exceeds the Strike Price for such Expiration Date; and
provided further that all references in Section 3.4(b) of the
Equity Definitions to "Physical Settlement" shall be read as
references to "Net Share Settlement".
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Market Disruption Event: Section 6.3(a)(ii) of the Equity Definitions is hereby amended
by replacing clause (ii) in its entirety with "(ii) an Exchange
Disruption, or" and inserting immediately following clause (iii)
the phrase "; in each case that the Calculation Agent determines
is material."
Valuation:
Valuation Time: Scheduled Closing Time.
Valuation Date: Each Exercise Date.
Settlement Terms:
Settlement Method: Net Share Settlement.
Net Share Settlement: On the relevant Settlement Date, Company shall deliver to
JPMorgan the Share Delivery Quantity of Shares for such
Settlement Date to the account specified hereto free of payment
through the Clearance System.
Share Delivery Quantity: For any Settlement Date, a number of Shares, as calculated by
the Calculation Agent, equal to the Net Share Settlement Amount
for such Settlement Date divided by the Settlement Price on the
Valuation Date in respect of such Settlement Date, rounded down
to the nearest whole number plus any Fractional Share Amount.
Net Share Settlement Amount: For any Settlement Date, an amount equal to the product of (i)
the Number of Warrants exercised or deemed exercised on the
relevant Exercise Date, (ii) the Strike Price Differential for
such Settlement Date and (iii) the Warrant Entitlement.
Settlement Price: For any Valuation Date, the per Share volume-weighted average
price as displayed under the heading "Bloomberg VWAP" on
Bloomberg page CHE.N [equity] AQR (or any successor thereto) in
respect of the period from the scheduled opening time of the
Exchange to the Scheduled Closing Time on such Valuation Date
(or if such volume-weighted average price is unavailable, the
market value of one Share on such Valuation Date, as determined
by the Calculation Agent). Notwithstanding the foregoing, if (i)
any Expiration Date is a Disrupted Day and (ii) the Calculation
Agent determines that such Expiration Date shall be an
Expiration Date for fewer than the Daily Number of Warrants, as
described above, then the Settlement Price for the relevant
Valuation Date shall be the volume-weighted average price per
Share on such Valuation Date on the Exchange, as determined by
the Calculation Agent based on such sources as it deems
appropriate using a volume-weighted methodology, for the portion
of such Valuation Date for which the Calculation Agent
determines there is no Market Disruption Event.
Settlement Date(s): As determined in reference to Section 9.4 of the Equity
Definitions, subject to Section 9(m)(i) hereof.
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Other Applicable Provisions: The provisions of Sections 9.1(c), 9.8, 9.9, 9.11, 9.12 and 10.5
of the Equity Definitions will be applicable, except that all
references in such provisions to "Physically-settled" shall be
read as references to "Net Share Settled." "Net Share Settled"
in relation to any Warrant means that Net Share Settlement is
applicable to that Warrant.
Representation and Agreement: Notwithstanding Section 9.11 of the Equity Definitions, the
parties acknowledge that any Shares delivered to JPMorgan may
be, upon delivery, subject to restrictions and limitations
arising from Company's status as issuer of the Shares under
applicable securities laws.
3. Additional Terms applicable to the Transaction:
Adjustments applicable to the Warrants:
Method of Adjustment: Calculation Agent Adjustment. For the avoidance of doubt, in
making any adjustments under the Equity Definitions, the
Calculation Agent may make adjustments, if any, to any one or
more of the Strike Price, the Number of Warrants, the Daily
Number of Warrants and the Warrant Entitlement. Notwithstanding
the foregoing, any cash dividends or distributions on the
Shares, whether or not extraordinary, shall be governed by
Section 9(h) of this Confirmation in lieu of Article 10 or
Section 11.2(c) of the Equity Definitions. The Calculation
Agent shall promptly thereafter notify JPMorgan and Company of
any such adjustment.
Extraordinary Events applicable to the Transaction:
New Shares: Section 12.1(i) of the Equity Definitions is hereby amended by
deleting the text in clause (i) in its entirety and replacing it
with the phrase "publicly quoted, traded or listed on any of the
New York Stock Exchange, the American Stock Exchange, The NASDAQ
Global Select Market or The NASDAQ Global Market (or their
respective successors)".
Consequence of Merger Events:
Share-for-Share: Modified Calculation Agent Adjustment
Share-for-Other: Cancellation and Payment (Calculation Agent Determination)
Share-for-Combined: Cancellation and Payment (Calculation Agent Determination);
provided that JPMorgan may elect, in its commercially reasonable
judgment, Component Adjustment (Calculation Agent Determination).
Consequence of Tender Offers:
Tender Offer: Applicable; provided however that if an event occurs that
constitutes both a Tender Offer under Section 12.1(d) of the
Equity Definitions and Additional Termination Event under
Section 9(j)(ii)(C) of this Confirmation, JPMorgan may elect, in
its commercially reasonable judgment, whether the provisions of
Section 12.3 of the Equity Definitions or Section 9(j)(ii)(C)
will apply.
Share-for-Share: Modified Calculation Agent Adjustment
Share-for-Other: Modified Calculation Agent Adjustment
Share-for-Combined: Modified Calculation Agent Adjustment
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Nationalization, Insolvency or Cancellation and Payment (Calculation Agent Determination);
Delisting: provided that, in addition to the provisions of Section
12.6(a)(iii) of the Equity Definitions, it will also constitute
a Delisting if the Exchange is located in the United States and
the Shares are not immediately re-listed, re-traded or re-quoted
on any of the New York Stock Exchange, the American Stock
Exchange, The NASDAQ Global Select Market or The NASDAQ Global
Market (or their respective successors); if the Shares are
immediately re-listed, re-traded or re-quoted on any of The New
York Stock Exchange, the American Stock Exchange, The NASDAQ
Global Select Market or The NASDAQ Global Market (or their
respective successors), such exchange or quotation system shall
thereafter be deemed to be the Exchange.
Additional Disruption Events:
Change in Law: Applicable
Failure to Deliver: Not Applicable
Insolvency Filing: Applicable
Hedging Disruption: Applicable
Increased Cost of Hedging: Not Applicable
Loss of Stock Borrow: Applicable
Maximum Stock Loan Rate: 250 bps
Increased Cost of Stock Borrow: Applicable
Initial Stock Loan Rate: 0 bps
Hedging Party: JPMorgan for all applicable Additional
Disruption Events
Determining Party: JPMorgan for all applicable Additional
Disruption Events
Non-Reliance: Applicable
Agreements and Acknowledgments
Regarding Hedging Activities: Applicable
Additional Acknowledgments: Applicable
4. Calculation Agent: JPMorgan. The Calculation Agent shall, upon request by the
Company, provide a written explanation of any calculation
made by it including, where applicable, a description of the
methodology and data applied.
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5. Account Details:
(a) Account for payments to Company:
JP Morgan Chase Bank
ABA# 021000021
Acct: Chemed Corporation
Acct No.: 94-13065
Account for delivery of Shares from Company:
To be provided by Company
(b) Account for payments to JPMorgan:
JPMorgan Chase Bank, N.A., New York
ABA: 021 000 021
Favour: JPMorgan Chase Bank N.A., London
A/C: 0010962009
CHASUS33
Account for delivery of Shares to JPMorgan:
DTC 0060
6. Offices:
The Office of Company for the Transaction is: Inapplicable, Company is not a
Multibranch Party.
The Office of JPMorgan for the Transaction is: London
JPMorgan Chase Bank, National Association
London Branch
P.O. Box 161
60 Victoria Embankment
London EC4Y 0JP
England
7. Notices: For purposes of this Confirmation:
(a) Address for notices or communications to Company: Chemed
Corporation 2600 Chemed Center 255 East Fifth Street
Cincinnati, OH 45202
Attention: Chief Financial Officer
Telephone No.: (513) 762-6901
Facsimile No.: (513) 287-6713
(b) Address for notices or communications to JPMorgan:
JPMorgan notice information to follow:
JPMorgan Chase Bank, National Association
277 Park Avenue, 11th Floor
New York, NY 10172
Attention: Eric Stefanik
Title: Operations Analyst
EDG Corporate Marketing
Telephone No: (212) 622-5814
Facsimile No: (212) 622-8534
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8. Representations and Warranties
(i) Representations and Warranties of Company
The representations and warranties of Company set forth in Section 3 of the
Purchase Agreement are true and correct and are hereby deemed to be repeated to
JPMorgan as if set forth herein. Company hereby further represents and warrants
to JPMorgan that:
(a) Company has all necessary corporate power and authority to execute,
deliver and perform its obligations in respect of this Transaction;
such execution, delivery and performance have been duly authorized by
all necessary corporate action on Company's part; and this
Confirmation has been duly and validly executed and delivered by
Company and constitutes its valid and binding obligation, enforceable
against Company in accordance with its terms, subject to applicable
bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and similar laws affecting creditors' rights and remedies
generally, and to general principles of equity, including principles
of commercial reasonableness, good faith and fair dealing (regardless
of whether enforcement is sought in a proceeding at law or in equity)
and except that rights to indemnification and contribution hereunder
may be limited by federal or state securities laws or public policy
relating thereto.
(b) Neither the execution and delivery of this Confirmation nor the
incurrence or performance of obligations of Company hereunder will (i)
conflict with or result in a breach of the certificate of
incorporation or by-laws (or any equivalent documents) of Company, or
any applicable law or regulation, or any order, writ, injunction or
decree of any court or governmental authority or agency, or any
agreement or instrument to which Company or any of its subsidiaries is
a party or by which Company or any of its subsidiaries is bound or to
which Company or any of its subsidiaries is subject (including, but
not limited to, any agreements and contracts of Counterparty or any of
its subsidiaries filed as exhibits to Company's Annual Report on Form
10-K for the year ended December 31, 2006, incorporated by reference
in the Offering Memorandum), or (ii) constitute a default under, or
result in the creation of any lien under, any such agreement or
instrument.
(c) No consent, approval, authorization, or order of, or filing with, any
governmental agency or body or any court is required in connection
with the execution, delivery or performance by Company of this
Confirmation, except such as have been obtained or made and such as
may be required under the Securities Act of 1933, as amended (the
"SECURITIES ACT") or state securities laws.
(d) The Shares of Company initially issuable upon exercise of the Warrant
by the net share settlement method (the "WARRANT SHARES") have been
reserved for issuance by all required corporate action of Company. The
Warrant Shares have been duly authorized and, when delivered against
payment therefor (which may include Net Share Settlement in lieu of
cash) and otherwise as contemplated by the terms of the Warrant
following the exercise of the Warrant in accordance with the terms and
conditions of the Warrant, will be validly issued, fully-paid and
non-assessable, and the issuance of the Warrant Shares will not be
subject to any preemptive or similar rights.
8
(e) Company is an "eligible contract participant" (as such term is defined
in Section 1a(12) of the Commodity Exchange Act, as amended (the
"CEA")) because one or more of the following is true:
Company is a corporation, partnership, proprietorship,
organization, trust or other entity and:
(A) Company has total assets in excess of USD 10,000,000;
(B) the obligations of Company hereunder are guaranteed,
or otherwise supported by a letter of credit or
keepwell, support or other agreement, by an entity of
the type described in Section 1a(12)(A)(i) through
(iv), 1a(12)(A)(v)(I), 1a(12)(A)(vii) or 1a(12)(C) of
the CEA; or
(C) Company has a net worth in excess of USD 1,000,000
and has entered into this Agreement in connection
with the conduct of Company's business or to manage
the risk associated with an asset or liability owned
or incurred or reasonably likely to be owned or
incurred by Company in the conduct of Company's
business.
(f) Company and each of its controlled affiliates is not, on the date
hereof, in possession of any material non-public information with
respect to Company.
(ii) Additional representations and warranties
(a) JPMorgan represents that it is an "eligible contract participant" as
defined in Section 1a(12) of the CEA.
(b) Each of JPMorgan and Company acknowledges that the offer and sale of
the Transaction to it is intended to be exempt from registration under
the Securities, by virtue of Section 4(2) thereof.
9. Other Provisions:
(A) OPINIONS. Company shall deliver an opinion of counsel, dated as of the
Trade Date, to JPMorgan, with respect to the matters set forth in
Sections 8(i)(a) through (d) of this Confirmation.
(B) RESERVED
(C) REPURCHASE NOTICES. Company shall, on any day on which Company effects
any repurchase of Shares, promptly give JPMorgan a written notice of
such repurchase (a "REPURCHASE NOTICE") on such day if following such
repurchase, the number of outstanding Shares on such day, subject to
any adjustments provided herein, is (i) less than 21 million (in the
case of the first such notice) or (ii) thereafter more than 1.60
million less than the number of Shares included in the immediately
preceding Repurchase Notice. Company agrees to indemnify and hold
harmless JPMorgan and its affiliates and their respective officers,
directors, employees, affiliates, advisors, agents and controlling
persons (each, an "INDEMNIFIED PERSON") from and against any and all
losses (including losses relating to JPMorgan's hedging activities as
a consequence of becoming, or of the risk of becoming, a Section 16
"insider", including without limitation, any forbearance from hedging
activities or cessation of hedging activities and any losses in
connection therewith with respect to this Transaction), claims,
damages, judgments, liabilities and expenses (including reasonable
attorney's fees), joint or several, which an Indemnified Person
actually may become subject to, as a result of Company's failure to
provide JPMorgan with a Repurchase Notice on the day and in the manner
specified in this paragraph, and to reimburse, within 30 days, upon
written request, each of such Indemnified Persons for any reasonable
legal or other expenses incurred in connection with investigating,
preparing for, providing testimony or other evidence in connection
with or defending any of the foregoing. If any suit, action,
9
proceeding (including any governmental or regulatory investigation),
claim or demand shall be brought or asserted against the Indemnified
Person, such Indemnified Person shall promptly notify Company in
writing, and Company, upon request of the Indemnified Person, shall
retain counsel reasonably satisfactory to the Indemnified Person to
represent the Indemnified Person and any others Company may designate
in such proceeding and shall pay the fees and expenses of such counsel
related to such proceeding. Company shall not be liable for any
settlement of any proceeding effected without its written consent, but
if settled with such consent or if there be a final judgment for the
plaintiff, Company agrees to indemnify any Indemnified Person from and
against any loss or liability by reason of such settlement or
judgment. Company shall not, without the prior written consent of the
Indemnified Person, effect any settlement of any pending or threatened
proceeding in respect of which any Indemnified Person is or could have
been a party and indemnity could have been sought hereunder by such
Indemnified Person, unless such settlement (x) includes an
unconditional release of such Indemnified Person, in form and
substance reasonably satisfactory to such Indemnified Person, from all
liability on claims that are the subject matter of such proceeding and
(y) does not include any statement as to or any admission of fault,
culpability or a failure to act by or on behalf of any Indemnified
Person. If the indemnification provided for in this paragraph is
unavailable to an Indemnified Person or insufficient in respect of any
losses, claims, damages or liabilities referred to therein, then
Company under such paragraph, in lieu of indemnifying such Indemnified
Person thereunder, shall contribute to the amount paid or payable by
such Indemnified Person as a result of such losses, claims, damages or
liabilities. The remedies provided for in this paragraph are not
exclusive and shall not limit any rights or remedies which may
otherwise be available to any Indemnified Person at law or in equity.
The indemnity and contribution agreements contained in this paragraph
shall remain operative and in full force and effect regardless of the
termination of this Transaction.
(D) REGULATION M. Company is not on the date hereof engaged in a
distribution, as such term is used in Regulation M under the
Securities Exchange Act of 1934, as amended (the "EXCHANGE ACT"), of
any securities of Company, other than a distribution meeting the
requirements of the exception set forth in Rules 101(b)(10) and
102(b)(7) of Regulation M. Company shall not, until the second
Scheduled Trading Day immediately following the Trade Date, engage in
any such distribution.
(E) NO MANIPULATION. Company is not entering into this Transaction to
create actual or apparent trading activity in the Shares (or any
security convertible into or exchangeable for the Shares) or to raise
or depress or otherwise manipulate the price of the Shares (or any
security convertible into or exchangeable for the Shares) or otherwise
in violation of the Exchange Act.
(F) TRANSFER OR ASSIGNMENT. Company may not transfer any of its rights or
obligations under this Transaction without the prior written consent
of JPMorgan. JPMorgan may, without Company's consent, transfer or
assign all or any part of its rights or obligations under this
Transaction to any third party. If after JPMorgan's commercially
reasonable efforts, JPMorgan is unable to effect such a transfer or
assignment on pricing terms reasonably acceptable to JPMorgan and
within a time period reasonably acceptable to JPMorgan of a sufficient
number of Warrants to reduce (i) JPMorgan's "beneficial ownership"
(within the meaning of Section 13 of the Exchange Act and rules
promulgated thereunder) to 7.5% of Company's outstanding Shares or
less or (ii) the quotient of (x) the product of (a) the Number of
Warrants and (b) the Warrant Entitlement divided by (y) the number of
Company's outstanding Shares (such quotient expressed as a percentage,
the "WARRANT EQUITY PERCENTAGE") to 14.5% or less, JPMorgan may
designate any Exchange Business Day as an Early Termination Date with
respect to a portion (the "TERMINATED PORTION") of this Transaction,
such that (i) its "beneficial ownership" following such partial
termination will be equal to or less than 7.5% or (ii) the Warrant
Equity Percentage following such partial termination will be equal to
or less than 14.5%. In the event that JPMorgan so designates an Early
Termination Date with respect to a portion of this Transaction, a
payment shall be made pursuant to Section 6 of the Agreement as if (i)
an Early Termination Date had been designated in respect of a
Transaction having terms identical to this Transaction and a Number of
Warrants equal to the Terminated Portion, (ii) Company shall be the
sole Affected Party with respect to such partial termination and (iii)
such Transaction shall be the only Terminated Transaction (and, for
the avoidance of doubt, the provisions of paragraph 9(l) shall apply
to any amount that is payable by JPMorgan to Company pursuant to this
sentence). Notwithstanding any other provision in this Confirmation to
the contrary requiring or allowing JPMorgan to purchase, sell, receive
or deliver any Shares or other securities to or from Company, JPMorgan
may designate any of its affiliates to purchase, sell, receive or
deliver such Shares or other securities and otherwise to perform
JPMorgan's obligations in respect of this Transaction and any such
designee may assume such obligations. JPMorgan shall be discharged of
its obligations to Company to the extent of any such performance.
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(G) EARLY UNWIND. In the event the sale of Convertible Notes (or, in
respect of the Greenshoe Exercise, the Additional Convertible Notes)
is not consummated with the initial purchasers for any reason by the
close of business in New York on May 14, 2007 (or, in respect of the
Greenshoe Exercise, the third Clearance System Business Day following
the date of the Greenshoe Exercise (the "ADDITIONAL CLOSING DATE"))
(or such later date as agreed upon by the parties) (May 14, 2007 or
such later date, if any, as agreed upon being or, in respect of the
Greenshoe Exercise, the Additional Closing Date, the "EARLY UNWIND
Date"), this Transaction (or, in respect of the Greenshoe Exercise,
the Additional Warrants) shall automatically terminate (the "EARLY
UNWIND"), on the Early Unwind Date and (i) the Transaction (or, in
respect of the Greenshoe Exercise, the Additional Warrants) and all of
the respective rights and obligations of JPMorgan and Company under
the Transaction (or, in respect of the Greenshoe Exercise, the
Additional Warrants) shall be cancelled and terminated and (ii) each
party shall be released and discharged by the other party from and
agrees not to make any claim against the other party with respect to
any obligations or liabilities of the other party arising out of and
to be performed in connection with the Transaction (or, in respect of
the Greenshoe Exercise, the Additional Warrants) either prior to or
after the Early Unwind Date; PROVIDED that Company, unless the sale of
the Convertible Notes or the Additional Convertible Notes, as
applicable, is not consummated due to a breach of the Purchase
Agreement by the Initial Purchasers, shall purchase from JPMorgan on
the Early Unwind Date all Shares purchased by JPMorgan or one or more
of its affiliates and shall, notwithstanding anything to the contrary
in the Equity Definitions, reimburse JPMorgan for any commercially
reasonable costs or expenses (including market losses) relating to the
unwinding of its hedging activities in connection with the Transaction
(or, in respect of the Greenshoe Exercise, the Additional Warrants)
(including any loss or cost incurred as a result of its terminating,
liquidating, obtaining or reestablishing any hedge or related trading
position). The amount of any such reimbursement shall be determined by
JPMorgan in its sole good faith discretion. JPMorgan shall notify
Company of such amount and Company shall pay such amount in
immediately available funds on the Early Unwind Date. JPMorgan and
Company represent and acknowledge to the other that, subject to the
proviso included in this Section, upon an Early Unwind, all
obligations with respect to the Transaction shall be deemed fully and
finally discharged.
(H) DIVIDENDS. If at any time during the period from but excluding the
Trade Date, to and including the Expiration Date, (i) an ex-dividend
date for a cash dividend occurs with respect to the Shares (an
"EX-DIVIDEND DATE"), and that dividend differs from the Regular
Dividend on a per Share basis or (ii) if no Ex-Dividend Date for a
cash dividend occurs with respect to the Shares in any quarterly
dividend period of Company, then the Calculation Agent will adjust any
of the Strike Price, Number of Warrants and/or Daily Number of
Warrants to preserve the fair value of the Options to JPMorgan after
taking into account such dividend or lack thereof. "REGULAR DIVIDEND"
shall mean for any calendar quarter, USD 0.06 for the first cash
dividend or distribution on the Shares for which the Ex-Dividend Date
falls within such calendar quarter, and zero for any subsequent
dividend or distribution on the Shares for which the Ex-Dividend Date
falls within the same calendar quarter.
(I) ROLE OF AGENT. Each party agrees and acknowledges that (i) J.P. Morgan
Securities Inc., an affiliate of JPMorgan ("JPMSI"), has acted solely
as agent and not as principal with respect to this Transaction and
(ii) JPMSI has no obligation or liability, by way of guaranty,
endorsement or otherwise, in any manner in respect of this Transaction
(including, if applicable, in respect of the settlement thereof). Each
party agrees it will look solely to the other party (or any guarantor
in respect thereof) for performance of such other party's obligations
under this Transaction.
11
(J) ADDITIONAL PROVISIONS.
(i) Amendments to the Equity Definitions:
(A) Section 11.2(a) of the Equity Definitions is hereby amended
by deleting the words "diluting or concentrative" and
replacing them with the words "material".
(B) Section 11.2(c) of the Equity Definitions is hereby amended
by (x) replacing the words "diluting or concentrative" with
"an" and (y) deleting the phrase "(provided that no
adjustments will be made to account solely for changes in
volatility, expected dividends, stock loan rate or liquidity
relative to the relevant Shares)" and replacing it with the
phrase "(and, for the avoidance of doubt, adjustments may be
made to account solely for changes in volatility, expected
dividends, stock loan rate or liquidity relative to the
relevant Shares)."
(C) Section 11.2(e)(vii) of the Equity Definitions is hereby
amended by deleting the words "diluting or concentrative"
and replacing them with the word "material"; and adding the
phrase "or Warrants" at the end of the sentence.
(D) Section 12.6(a)(ii) of the Equity Definitions is hereby
amended by (1) deleting from the fourth line thereof the
word "or" after the word "official" and inserting a comma
therefor, and (2) deleting the semi-colon at the end of
subsection (B) thereof and inserting the following words
therefor "or (C) at JPMorgan's option, the occurrence of any
of the events specified in Section 5(a)(vii) (1) through (9)
of the ISDA Master Agreement with respect to that Issuer."
(E) Section 12.9(b)(iv) of the Equity Definitions is hereby
amended by:
(x) deleting (1) subsection (A) in its entirety,
(2) the phrase "or (B)" following subsection (A)
and (3) the phrase "in each case" in subsection
(B); and
(y) deleting the phrase "neither the Non-Hedging
Party nor the Lending Party lends Shares in the
amount of the Hedging Shares or" in the
penultimate sentence.
(F) Section 12.9(b)(v) of the Equity Definitions is hereby
amended by:
(x) adding the word "or" immediately before
subsection "(B)" and deleting the comma at the
end of subsection (A); and
(y) (1) deleting subsection (C) in its entirety,
(2) deleting the word "or" immediately preceding
subsection (C) and (3) deleting the final
sentence in its entirety and replacing it with
the sentence "The Hedging Party will determine
the Cancellation Amount payable by one party to
the other."
(ii) Notwithstanding anything to the contrary in this Confirmation,
upon the occurrence of one of the following events, with respect
to this Transaction, (1) JPMorgan shall have the right to
designate such event an Additional Termination Event and
designate an Early Termination Date pursuant to Section 6(b) of
the Agreement, and (2) Company shall be deemed the sole Affected
Party and the Transaction shall be deemed the sole Affected
Transaction:
(A) Consummation of (A) any recapitalization,
reclassification or change of the Shares (other than
changes resulting from a subdivision or combination) as
a result of which the Shares would be converted into,
or exchanged for, stock, other securities, other
property or assets or (B) any consolidation with or
merger of the Company with or into another person
pursuant to which Shares will be converted into cash,
securities or other property or any conveyance,
transfer or lease of all or substantially all of
Company's properties and assets to any person other
than one of its subsidiaries; PROVIDED, HOWEVER, that a
transaction where the holders of more than 50% of all
classes of common equity of the Company immediately
prior to such transaction own, directly or indirectly,
more than 50% of all classes of common equity of the
continuing or surviving corporation or transferee
immediately after such event shall not be an Additional
Termination Event.
12
(B) There is a default by Company or any subsidiary in the
payment of the principal or interest on any mortgage,
agreement or other instrument under which there may be
outstanding, or by which there may be secured or
evidenced any indebtedness for money borrowed in excess
of $20 million in the aggregate of Company and/or any
subsidiary, whether such indebtedness now exists or
shall hereafter be created resulting in such
indebtedness becoming or being declared due and
payable.
(C) Any "person" or "group" within the meaning of Section
13(d) of the Exchange Act other than the Company, any
of its subsidiaries or its employee benefit plans,
files a Schedule TO or any schedule, form or report
under the Exchange Act disclosing that such person or
group has become the direct or indirect ultimate
"beneficial owner", as defined in Rule 13d-3 under the
Exchange Act, of the capital stock of the Company
representing more than 50% of the voting power of such
capital stock.
(D) JPMorgan, despite using commercially reasonable
efforts, is unable or reasonably determines that it is
impractical or illegal, to hedge its obligations
pursuant to this Transaction in the public market
without registration under the Securities Act or as a
result of any legal, regulatory or self-regulatory
requirements or related policies and procedures
(whether or not such requirements, policies or
procedures are imposed by law or have been voluntarily
adopted by JPMorgan).
Notwithstanding the forgoing, a transaction set forth
in clauses (A) or (C) above will not constitute an
Additional Termination Event if 100% of the
consideration, excluding cash payments for fractional
shares, in such transaction or transactions consists
of shares of capital stock listed on a national
securities exchange or quoted on The NASDAQ Global
Market or The NASDAQ Global Select Market or will be
so listed or quoted when issued or exchanged in
connection with such transaction or transactions.
(K) NO COLLATERAL OR SETOFF. Notwithstanding any provision of
the Agreement or any other agreement between the parties to
the contrary, the obligations of Company hereunder are not
secured by any collateral. Obligations under this
Transaction shall not be set off by Company against any
other obligations of the parties, whether arising under the
Agreement, this Confirmation, under any other agreement
between the parties hereto, by operation of law or
otherwise. Any provision in the Agreement with respect to
the satisfaction of Company's payment obligations to the
extent of JPMorgan's payment obligations to Company in the
same currency and in the same Transaction (including,
without limitation Section 2(c) thereof) shall not apply to
Company and, for the avoidance of doubt, Company shall fully
satisfy such payment obligations notwithstanding any payment
obligation to Company by JPMorgan in the same currency and
in the same Transaction. In calculating any amounts under
Section 6(e) of the Agreement, notwithstanding anything to
the contrary in the Agreement, (1) separate amounts shall be
calculated as set forth in such Section 6(e) with respect to
(a) this Transaction and (b) all other Transactions, and (2)
such separate amounts shall be payable pursuant to Section
6(d)(ii) of the Agreement.
(L) ALTERNATIVE CALCULATIONS AND PAYMENT ON EARLY TERMINATION
AND ON CERTAIN EXTRAORDINARY EVENTS. If, in respect of this
Transaction, an amount is payable by Company to JPMorgan,
(i) pursuant to Section 12.7 or Section 12.9 of the Equity
Definitions (except in the event of an Insolvency,
Nationalization, Tender Offer or Merger Event in which the
consideration or proceeds to be paid to holders of shares
consists solely of cash) or (ii) pursuant to Section
6(d)(ii) of the Agreement (except in the event of an Event
of Default in which Company is the Defaulting Party or a
Termination Event in which Company is the Affected Party,
other than an Event of Default of the type described in (x)
Section 5(a)(iii), (v), (vi), (vii) or (viii) of the
Agreement or (y) a Termination Event of the type described
13
in Section 5(b) of the Agreement, in the case of both (x)
and (y), resulting from an event or events outside Company's
control) (a "PAYMENT OBLIGATION"), Company shall have the
right, in its sole discretion, to satisfy any such Payment
Obligation by the Share Termination Alternative (as defined
below) by giving irrevocable telephonic notice to JPMorgan,
confirmed in writing within one Scheduled Trading Day, no
later than 12:00 p.m. New York local time on the Merger
Date, Tender Offer Date, Announcement Date (in the case of a
Nationalization, Insolvency or Delisting), Early Termination
Date or date of cancellation, as applicable; PROVIDED that
if Company does not validly elect to satisfy its Payment
Obligation by the Share Termination Alternative, JPMorgan
shall have the right to require Company to satisfy its
Payment Obligation by the Share Termination Alternative.
Notwithstanding the foregoing, Company's or JPMorgan's right
to elect satisfaction of a Payment Obligation in the Share
Termination Alternative as set forth in this clause shall
only apply to Transactions under this Confirmation and,
notwithstanding anything to the contrary in the Agreement,
(1) separate amounts shall be calculated with respect to (a)
Transactions hereunder and (b) all other Transactions under
the Agreement, and (2) such separate amounts shall be
payable pursuant to Section 6(d)(ii) of the Agreement,
subject to, in the case of clause (a), Company's Share
Termination Alternative right hereunder.
Share Termination Alternative: If applicable, Company shall
deliver to JPMorgan the Share
Termination Delivery Property on
the date (the "SHARE TERMINATION
PAYMENT DATE") on which the
Payment Obligation would otherwise
be due pursuant to Section 12.7 or
Section 12.9 of the Equity
Definitions or Section 6(d)(ii)
and 6(e) of the Agreement, subject
to paragraph (m)(i) below, in
satisfaction, subject to paragraph
(m)(ii) below, of the Payment
Obligation in the manner
reasonably requested by JPMorgan
free of payment.
Share Termination Delivery Property: A number of Share Termination
Delivery Units, as calculated by
the Calculation Agent, equal to
the Payment Obligation divided by
the Share Termination Unit Price.
The Calculation Agent shall adjust
the amount of Share Termination
Delivery Property by replacing any
fractional portion of a security
therein with an amount of cash
equal to the value of such
fractional security based on the
values used to calculate the Share
Termination Unit Price.
Share Termination Unit Price: The value to JPMorgan of property
contained in one Share Termination
Delivery Unit on the date such
Share Termination Delivery Units
are to be delivered as Share
Termination Delivery Property, as
determined by the Calculation
Agent in its discretion by
commercially reasonable means.
The Calculation Agent shall notify
Company of such Share Termination
Unit Price at the time of
notification of the Payment
Obligation. In the case of a
Private Placement of Share
Termination Delivery Units that
are Restricted Shares (as defined
below), as set forth in paragraph
14
(m)(i) below, the Share
Termination Unit Price shall be
determined by the discounted price
applicable to such Share
Termination Delivery Units. In
the case of a Registration
Settlement of Share Termination
Delivery Units that are Restricted
Shares (as defined below) as set
forth in paragraph (m)(ii) below,
the Share Termination Unit Price
shall be the Settlement Price on
the Merger Date, the Announcement
Date (in the case of a
Nationalization, Insolvency or
Delisting) or the Early
Termination Date, as applicable.
Share Termination Delivery Unit: In the case of a Termination
Event, Event of Default or
Delisting, one Share or, in the
case of Nationalization,
Insolvency, Tender Offer or Merger
Event, a unit consisting of the
number or amount of each type of
property received by a holder of
one Share (without consideration
of any requirement to pay cash or
other consideration in lieu of
fractional amounts of any
securities) in such
Nationalization, Insolvency,
Tender Offer or Merger Event. If
such Nationalization, Insolvency,
Tender Offer or Merger Event
involves a choice of consideration
to be received by holders, such
holder shall be deemed to have
elected to receive the maximum
possible amount of cash.
Failure to Deliver: Inapplicable
Other applicable provisions: If Share Termination Alternative
is applicable, the provisions of
Sections 9.8, 9.9, 9.11, 9.12 and
10.5 (as modified above) of the
Equity Definitions will be
applicable, except that all
references in such provisions to
"Physically-settled" shall be read
as references to "Share
Termination Settled" and all
references to "Shares" shall be
read as references to "Share
Termination Delivery Units".
"Share Termination Settled" in
relation to this Transaction means
that Share Termination Alternative
is applicable to this Transaction.
(M) REGISTRATION/PRIVATE PLACEMENT PROCEDURES. If, in the
reasonable opinion of JPMorgan, following any delivery of
Shares or Share Termination Delivery Property to JPMorgan
hereunder, such Shares or Share Termination Delivery
Property would be in the hands of JPMorgan subject to any
applicable restrictions with respect to any registration or
qualification requirement or prospectus delivery requirement
for such Shares or Share Termination Delivery Property
pursuant to any applicable federal or state securities law
(including, without limitation, any such requirement arising
under Section 5 of the Securities Act as a result of such
Shares or Share Termination Delivery Property being
"restricted securities", as such term is defined in Rule 144
under the Securities Act, or as a result of the sale of such
Shares or Share Termination Delivery Property being subject
to paragraph (c) of Rule 145 under the Securities Act) (such
Shares or Share Termination Delivery Property, "RESTRICTED
SHARES"), then delivery of such Restricted Shares shall be
effected pursuant to either clause (i) or (ii) below at the
election of Company, unless JPMorgan waives the need for
registration/private placement procedures set forth in (i)
and (ii) below. Notwithstanding the foregoing, solely in
respect of any Daily Number of Warrants exercised or deemed
exercised on any Expiration Date, Company shall elect, prior
to the first Settlement Date for the first Expiration Date,
a Private Placement Settlement or Registration Settlement
for all deliveries of Restricted Shares for all such
Expiration Dates which election shall be applicable to all
Settlement Dates for such Warrants and the procedures in
clause (i) or clause (ii) below shall apply for all such
delivered Restricted Shares on an aggregate basis commencing
after the final Settlement Date for such Warrants. The
Calculation Agent shall make reasonable adjustments to
settlement terms and provisions under this Confirmation to
reflect a single Private Placement or Registration
Settlement for such aggregate Restricted Shares delivered
hereunder.
15
(i) If Company elects to settle the Transaction pursuant to
this clause (i) (a "PRIVATE PLACEMENT SETTLEMENT"),
then delivery of Restricted Shares by Company shall be
effected in customary private placement procedures with
respect to such Restricted Shares reasonably acceptable
to JPMorgan; PROVIDED that Company may not elect a
Private Placement Settlement if, on the date of its
election, it has taken, or caused to be taken, any
action that would make unavailable either the exemption
pursuant to Section 4(2) of the Securities Act for the
sale by Company to JPMorgan (or any affiliate
designated by JPMorgan) 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 JPMorgan (or any such affiliate of JPMorgan). The
Private Placement Settlement of such Restricted Shares
shall include customary representations, covenants,
blue sky and other governmental filings and/or
registrations, indemnities to JPMorgan, due diligence
rights (for JPMorgan or any designated buyer of the
Restricted Shares by JPMorgan), opinions and
certificates, and such other documentation as is
customary for private placement agreements, all
reasonably acceptable to JPMorgan. In the case of a
Private Placement Settlement, JPMorgan shall determine
the appropriate discount to the Share Termination Unit
Price (in the case of settlement of Share Termination
Delivery Units pursuant to paragraph (l) above) or any
Settlement Price (in the case of settlement of Shares
pursuant to Section 2 above) applicable to such
Restricted Shares in a commercially reasonable manner
and appropriately adjust the number of such Restricted
Shares to be delivered to JPMorgan hereunder; PROVIDED
that in no event shall such number be greater than
3,700,000 (the "MAXIMUM AMOUNT"). Notwithstanding the
Agreement or this Confirmation, the date of delivery of
such Restricted Shares shall be the Exchange Business
Day following notice by JPMorgan to Company, of such
applicable discount and the number of Restricted Shares
to be delivered pursuant to this clause (i). For the
avoidance of doubt, delivery of Restricted Shares shall
be due as set forth in the previous sentence and not be
due on the Share Termination Payment Date (in the case
of settlement of Share Termination Delivery Units
pursuant to paragraph (l) above) or on the Settlement
Date for such Restricted Shares (in the case of
settlement in Shares pursuant to Section 2 above).
In the event Company shall not have delivered the full
number of Restricted Shares otherwise applicable as a
result of the proviso above relating to the Maximum
Amount (such deficit, the "DEFICIT RESTRICTED SHARES"),
Company shall be continually obligated to deliver, from
time to time until the full number of Deficit
Restricted Shares have been delivered pursuant to this
paragraph, Restricted Shares when, and to the extent,
that (i) Shares are repurchased, acquired or otherwise
received by Company or any of its subsidiaries after
the Trade Date (whether or not in exchange for cash,
fair value or any other consideration), (ii) authorized
and unissued Shares reserved for issuance in respect of
other transactions prior to such date which prior to
the relevant date become no longer so reserved and
(iii) Company additionally authorizes any unissued
Shares that are not reserved for other transactions.
Company shall immediately notify JPMorgan of the
occurrence of any of the foregoing events (including
the number of Shares subject to clause (i), (ii) or
(iii) and the corresponding number of Restricted Shares
to be delivered) and promptly deliver such Restricted
Shares thereafter.
In the event of a Private Placement Settlement, the Net
Share Settlement Amount or the Payment Obligation,
respectively, shall be deemed to be the Net Share
Settlement Amount or the Payment Obligation,
respectively, plus an additional amount (determined
from time to time by the Calculation Agent in its
commercially reasonable judgment) attributable to
interest that would be earned on such Net Share
Settlement Amount or the Payment Obligation,
respectively, (increased on a daily basis to reflect
the accrual of such interest and reduced from time to
time by the amount of net proceeds received by JPMorgan
as provided herein) at a rate equal to the open Federal
Funds Rate plus the Spread for the period from, and
including, such Settlement Date or the date on which
the Payment Obligation is due, respectively, to, but
excluding, the related date on which all the Restricted
Shares have been sold and calculated on an Actual/360
basis. The foregoing provision shall be without
prejudice to JPMorgan's rights under the Agreement
(including, without limitation, Sections 5 and 6
thereof).
16
As used in this Section, "SPREAD" means, with respect
to any Net Share Settlement Amount or Payment
Obligation, respectively, the credit spread over the
applicable overnight rate that would be imposed if
JPMorgan were to extend credit to Company in an amount
equal to such Net Share Settlement Amount, all as
determined by the Calculation Agent using its
commercially reasonable judgment as of the related
Settlement Date or the date on which the Payment
Obligation is due, respectively. Commercial
reasonableness shall take into consideration all
factors deemed relevant by the Calculation Agent, which
are expected to include, among other things, the credit
quality of Company (and any relevant affiliates) in the
then-prevailing market and the credit spread of similar
companies in the relevant industry and other companies
having a substantially similar credit quality.
(ii) If Company elects to settle the Transaction pursuant to
this clause (ii) (a "REGISTRATION SETTLEMENT"), then
Company shall promptly (but in any event no later than
the beginning of the Resale Period) file and use its
reasonable best efforts to make effective under the
Securities Act a registration statement or supplement
or amend an outstanding registration statement in form
and substance reasonably satisfactory to JPMorgan, to
cover the resale of such Restricted Shares in
accordance with customary resale registration
procedures, including covenants, conditions,
representations, underwriting discounts (if
applicable), commissions (if applicable), indemnities,
due diligence rights, opinions and certificates, and
such other documentation as is customary for equity
resale underwriting agreements, all reasonably
acceptable to JPMorgan. If JPMorgan, in its sole
reasonable discretion, is not satisfied with such
procedures and documentation Private Placement
Settlement shall apply. If JPMorgan is satisfied with
such procedures and documentation, it shall sell the
Restricted Shares pursuant to such registration
statement during a period (the "RESALE PERIOD")
commencing on the Exchange Business Day following
delivery of such Restricted Shares (which, for the
avoidance of doubt, shall be (x) any Settlement Date in
the case of an exercise of Warrants prior to the first
Expiration Date pursuant to Section 2 above, (y) the
Share Termination Payment Date in case of settlement in
Share Termination Delivery Units pursuant to paragraph
(l) above or (z) the Settlement Date in respect of the
final Expiration Date for all Daily Number of Warrants)
and ending on the earliest of (i) the Exchange Business
Day on which JPMorgan completes the sale of all
Restricted Shares or, in the case of settlement of
Share Termination Delivery Units, a sufficient number
of Restricted Shares so that the realized net proceeds
of such sales equals or exceeds the Payment Obligation
(as defined above), (ii) the date upon which all
Restricted Shares have been sold or transferred
pursuant to Rule 144 (or similar provisions then in
force) or Rule 145(d)(1) or (2) (or any similar
provision then in force) under the Securities Act and
(iii) the date upon which all Restricted Shares may be
sold or transferred by a non-affiliate pursuant to Rule
144(k) (or any similar provision then in force) or Rule
145(d)(3) (or any similar provision then in force)
under the Securities Act. If the Payment Obligation
exceeds the realized net proceeds from such resale,
Company shall transfer to JPMorgan by the open of the
regular trading session on the Exchange on the Exchange
Trading Day immediately following the last day of the
Resale Period the amount of such excess (the
"ADDITIONAL Amount") in cash or in a number of Shares
("MAKE-WHOLE SHARES") in an amount that, based on the
Settlement Price on the last day of the Resale Period
(as if such day was the "Valuation Date" for purposes
of computing such Settlement Price), has a dollar value
equal to the Additional Amount. The Resale Period shall
continue to enable the sale of the Make-whole Shares.
If Company elects to pay the Additional Amount in
Shares, the requirements and provisions for
Registration Settlement shall apply. This provision
shall be applied successively until the Additional
Amount is equal to zero. In no event shall Company
deliver a number of Restricted Shares greater than the
Maximum Amount.
17
(iii) Without limiting the generality of the foregoing,
Company agrees that any Restricted Shares delivered to
JPMorgan, as purchaser of such Restricted Shares, (i)
may be transferred by and among JPMorgan and its
affiliates and Company shall effect such transfer
without any further action by JPMorgan and (ii) after
the minimum "holding period" within the meaning of Rule
144(d) under the Securities Act has elapsed after any
Settlement Date for such Restricted Shares, Company
shall promptly remove, or cause the transfer agent for
such Restricted Shares to remove, any legends referring
to any such restrictions or requirements from such
Restricted Shares upon delivery by JPMorgan (or such
affiliate of JPMorgan) to Company or such transfer
agent of seller's and broker's representation letters
customarily delivered by JPMorgan in connection with
resales of restricted securities pursuant to Rule 144
under the Securities Act, without any further
requirement for the delivery of any certificate,
consent, agreement, opinion of counsel, notice or any
other document, any transfer tax stamps or payment of
any other amount or any other action by JPMorgan (or
such affiliate of JPMorgan).
If the Private Placement Settlement or the Registration
Settlement shall not be effected as set forth in clauses (i)
or (ii), as applicable, then failure to effect such Private
Placement Settlement or such Registration Settlement shall
constitute an Event of Default with respect to which Company
shall be the Defaulting Party.
(N) LIMIT ON BENEFICIAL OWNERSHIP. Notwithstanding any other
provisions hereof, JPMorgan may not exercise any Warrant
hereunder or be entitled to take delivery of any Shares
deliverable hereunder, and Automatic Exercise shall not
apply with respect to any Warrant hereunder, to the extent
(but only to the extent) that, after such receipt of any
Shares upon the exercise of such Warrant or otherwise
hereunder, JPMorgan Chase & Co. would directly or indirectly
beneficially own (as such term is defined for purposes of
Section 13(d) of the Exchange Act) in excess of 8.0% of the
outstanding Shares. Any purported delivery hereunder shall
be void and have no effect to the extent (but only to the
extent) that, after such delivery, JPMorgan Chase & Co.
would directly or indirectly so beneficially own in excess
of 8.0% of the outstanding Shares. If any delivery owed to
JPMorgan hereunder is not made, in whole or in part, as a
result of this provision, Company's obligation to make such
delivery shall not be extinguished and Company shall make
such delivery as promptly as practicable after, but in no
event later than one Business Day after, JPMorgan gives
notice to Company that, after such delivery, JPMorgan Chase
& Co. would not directly or indirectly so beneficially own
in excess of 8.0% of the outstanding Shares. No additional
compensation or amounts shall be due JPMorgan as a
consequence of such delayed settlement.
(O) SHARE DELIVERIES. Company acknowledges and agrees that, to
the extent the holder of this Warrant is not then an
affiliate and has not been an affiliate for 90 days (it
being understood that JPMorgan will not be considered an
affiliate under this paragraph solely by reason of its
receipt of Shares pursuant to this Transaction), and
otherwise satisfies all holding period and other
requirements of Rule 144 of the Securities Act applicable to
it, any delivery of Shares or Share Termination Property
hereunder at any time after 2 years from the Trade Date
shall be eligible for resale under Rule 144(k) of the
Securities Act and Company agrees to promptly remove, or
cause the transfer agent for such Shares or Share
Termination Property, to remove, any legends referring to
any restrictions on resale under the Securities Act from the
Shares or Share Termination Property. Company further
agrees, for any delivery of Shares or Share Termination
Property hereunder at any time after 1 year from the Trade
Date but within 2 years of the Trade Date, to the to the
extent the holder of this Warrant then satisfies the holding
period and other requirements of Rule 144 of the Securities
Act, to promptly remove, or cause the transfer agent for
such Restricted Share to remove, any legends referring to
any such restrictions or requirements from such Restricted
Shares. Such Restricted Shares will be de-legended upon
delivery by JPMorgan (or such affiliate of JPMorgan) to
Company or such transfer agent of customary seller's and
broker's representation letters in connection with resales
18
of restricted securities pursuant to Rule 144 of the
Securities Act, without any further requirement for the
delivery of any certificate, consent, agreement, opinion of
counsel, notice or any other document, any transfer tax
stamps or payment of any other amount or any other action by
JPMorgan (or such affiliate of JPMorgan). Company further
agrees that any delivery of Shares or Share Termination
Delivery Property prior to the date that is 1 year from the
Trade Date, may be transferred by and among JPMorgan and its
affiliates and Company shall effect such transfer without
any further action by JPMorgan. Notwithstanding anything to
the contrary herein, Company agrees that any delivery of
Shares or Share Termination Delivery Property shall be
effected by book-entry transfer through the facilities of
DTC, or any successor depositary, if at the time of
delivery, such class of Shares or class of Share Termination
Delivery Property is in book-entry form at DTC or such
successor depositary and such Shares or Share Termination
Delivery Property are not "restricted securities" for
purposes of the Securities Act. Notwithstanding anything to
the contrary herein, to the extent the provisions of Rule
144 of the Securities Act or any successor rule are amended,
or the applicable interpretation thereof by the Securities
and Exchange Commission or any court change after the Trade
Date, the agreements of Company herein shall be deemed
modified to the extent necessary, in the opinion of outside
counsel of Company, to comply with Rule 144 of the
Securities Act, including Rule 144(k) as in effect at the
time of delivery of the relevant Shares or Share Termination
Property.
(P) GOVERNING LAW. New York law (without reference to choice of
law doctrine).
(Q) WAIVER OF JURY TRIAL. Each party waives, to the fullest
extent permitted by applicable law, any right it may have to
a trial by jury in respect of any suit, action or proceeding
relating to this Transaction. Each party (i) certifies that
no representative, agent or attorney of the other party has
represented, expressly or otherwise, that such other party
would not, in the event of such a suit, action or
proceeding, seek to enforce the foregoing waiver and (ii)
acknowledges that it and the other party have been induced
to enter into this Transaction, as applicable, by, among
other things, the mutual waivers and certifications provided
herein.
(R) TAX DISCLOSURE. Effective from the date of commencement of
discussions concerning the Transaction, Company and each of
its employees, representatives, or other agents may disclose
to any and all persons, without limitation of any kind, the
tax treatment and tax structure of the Transaction and all
materials of any kind (including opinions or other tax
analyses) that are provided to Company relating to such tax
treatment and tax structure.
(S) MAXIMUM SHARE DELIVERY. Notwithstanding any other provision
of this Confirmation or the Agreement, in no event will
Company be required to deliver more than the Maximum Amount
of Shares in the aggregate to JPMorgan in connection with
this Transaction, subject to the provisions regarding
Deficit Restricted Shares
(T) RIGHT TO EXTEND. JPMorgan may postpone, in whole or in part,
any Expiration Date or any other date of valuation or
delivery with respect to some or all of the relevant
Warrants (in which event the Calculation Agent shall make
appropriate adjustments to the Daily Number of Warrants with
respect to one or more Expiration Dates) if JPMorgan
determines, in its commercially reasonable judgment, that
such extension is reasonably necessary or appropriate to
preserve JPMorgan's hedging or hedge unwind activity
hereunder in light of existing liquidity conditions or to
enable JPMorgan to effect purchases of Shares in connection
with its hedging, hedge unwind or settlement activity
hereunder in a manner that would, if JPMorgan were Issuer or
an affiliated purchaser of Issuer, be in compliance with
applicable legal, regulatory or self-regulatory
requirements, or with related policies and procedures
applicable to JPMorgan.
(U) STATUS OF CLAIMS IN BANKRUPTCY. JPMorgan acknowledges and
agrees that this Confirmation is not intended to convey to
JPMorgan rights against Company with respect to the
Transaction that are senior to the claims of common
stockholders of Company in any U.S. bankruptcy proceedings
of Company; provided that nothing herein shall limit or
shall be deemed to limit JPMorgan's right to pursue remedies
in the event of a breach by Company of its obligations and
agreements with respect to the Transaction; PROVIDED,
FURTHER, that nothing herein shall limit or shall be deemed
to limit JPMorgan's rights in respect of any transactions
other than the Transaction.
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(V) SECURITIES CONTRACT; SWAP AGREEMENT. The parties hereto
intend for: (a) the Transaction to be a "securities
contract" and a "swap agreement" as defined in the
Bankruptcy Code (Title 11 of the United States Code) (the
"BANKRUPTCY Code"), and the parties hereto to be entitled to
the protections afforded by, among other Sections, Sections
362(b)(6), 362(b)(17), 546(e), 546(g), 555 and 560 of the
Bankruptcy Code; (b) a party's right to liquidate the
Transaction and to exercise any other remedies upon the
occurrence of any Event of Default under the Agreement with
respect to the other party to constitute a "contractual
right" as described in the Bankruptcy Code; and (c) each
payment and delivery of cash, securities or other property
hereunder to constitute a "margin payment" or "settlement
payment" and a "transfer" as defined in the Bankruptcy Code.
[signature page follows]
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Please confirm that the foregoing correctly sets forth the terms of our
agreement by executing this Confirmation and returning it to EDG Confirmation
Group, J.P. Morgan Securities Inc., 277 Park Avenue, 11th Floor, New York, NY
10172-3401, or by fax to (212) 622 8519.
Very truly yours,
J.P. MORGAN SECURITIES INC., AS
AGENT FOR JPMORGAN CHASE BANK,
NATIONAL ASSOCIATION
By: /s/ Sudheer Tegulapalle
---------------------------------------
Authorized Signatory
Name: Sudheer Tegulapalle
Accepted and confirmed
as of the Trade Date:
CHEMED CORPORATION
By: /s/ David P. Williams
----------------------------------------
Authorized Signatory
Name: David P. Williams
JPMORGAN CHASE BANK, NATIONAL ASSOCIATION ORGANISED
UNDER THE LAWS OF THE UNITED STATES AS A NATIONAL BANKING ASSOCIATION.
MAIN OFFICE 1111 POLARIS PARKWAY, COLUMBUS, OHIO 43271
REGISTERED AS A BRANCH IN ENGLAND & WALES BRANCH NO. BR000746. REGISTERED
BRANCH OFFICE 125 LONDON WALL, LONDON EC2Y 5AJ
AUTHORISED AND REGULATED BY THE FINANCIAL SERVICES AUTHORITY
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