Attached files
Exhibit 10.3(c)
RBC Capital Markets Corporation One Liberty Plaza 2nd Floor 165 Broadway New York, NY 10006-1404 Telephone: (212) 858-7000 |
DATE:
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November 10, 2009 | |
TO:
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TeleCommunication Systems, Inc. | |
ATTENTION:
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Bruce A. White | |
TELEPHONE:
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(410) 263-7616 | |
FACSIMILE:
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(410) 263-7617 | |
FROM:
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RBC Capital Markets Corporation as agent for |
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Royal Bank of Canada | ||
TELEPHONE:
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(212) 858-7000 | |
FACSIMILE:
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(212) 428-3053 | |
SUBJECT:
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Equity Derivatives Confirmation | |
REFERENCE NUMBER(S):
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NY-23215 to NY-23304 |
The purpose of this facsimile agreement (this Confirmation) is to confirm the terms and
conditions of the transaction entered into between Royal Bank of Canada (RBC) and
TeleCommunication Systems, Inc. (Counterparty) on the Trade Date specified below (the
Transaction). This Confirmation constitutes a Confirmation as referred to in the ISDA Master
Agreement specified below. This Confirmation constitutes the entire agreement and understanding of
the parties with respect to the subject matter and terms of the Transaction and supersedes all
prior or contemporaneous written and oral communications with respect thereto.
Disclosure of Agency Relationship
RBC has appointed as its agent, its indirect wholly-owned subsidiary, RBC Capital Markets
Corporation (RBCCM), for purposes of conducting on the Banks behalf, a business in privately
negotiated transactions in options and other derivatives. You hereby are advised that RBC, the
principal and stated counterparty in such transactions, duly has authorized RBCCM to market,
structure, negotiate, document, price, execute and hedge transactions in over-the-counter
derivative products.
The definitions contained in the 2002 ISDA Equity Derivatives Definitions (the Equity
Definitions), as published by the International Swaps and Derivatives Association, Inc., are
incorporated into this Confirmation. In the event of any inconsistency between the Equity
Definitions and the terms of this Confirmation, the terms of this Confirmation shall govern. For
the purposes of the Equity Definitions, each reference herein to a Warrant shall be deemed to be a
reference to a Call or an Option, as context requires.
This Confirmation evidences a complete and binding agreement between RBC and Counterparty 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 (the Agreement) in the form of the ISDA 2002
Master Agreement as if RBC and Counterparty had executed an
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agreement in such form (without any
Schedule but with the Cross-Default provisions of Section 5(a)(vi) applicable to
Counterparty with a Threshold Amount of $5,000,000 and with such other elections set forth in
this Confirmation). For the avoidance of doubt, the Transaction shall be the only transaction
under the Agreement.
The Transaction is a Warrant Transaction, which shall be considered a Share Option Transaction for
purposes of the Equity Definitions, and shall have the following terms:
General: |
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Trade Date:
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November 10, 2009. | |
Effective Date:
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November 16, 2009. | |
Components:
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The Transaction will be divided into individual Components, each with the terms set forth in this Confirmation, and, in particular, with the Number of Warrants and Expiration Date set forth in this Confirmation. The payments and deliveries to be made upon settlement of the Transaction will be determined separately for each Component as if each Component were a separate Transaction under the Agreement. | |
Warrant Style:
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European. | |
Warrant Type:
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Call. | |
Seller:
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Counterparty. | |
Buyer:
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RBC. | |
Shares:
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Class A common stock, par value USD 0.01 per share, of Counterparty. | |
Number of Warrants:
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For each Component, as provided in Annex C to this Confirmation. | |
Strike Price:
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As provided in Annex B to this Confirmation. | |
Premium:
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As provided in Annex B to this Confirmation. | |
Premium Payment Date:
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The Effective Date. | |
Exchange:
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The NASDAQ Global Market. | |
Related Exchanges:
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All Exchanges. | |
Calculation Agent:
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RBCCM, which is an affiliate of RBC, shall be the Calculation Agent, or any successor calculation agent thereto appointed by RBCCM. All determinations and calculations of the Calculation Agent shall be binding on the parties hereto in the absence of material manifest error. |
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Procedure for Exercise: |
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In respect of any Component: |
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Expiration Date:
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As provided in Annex C to this Confirmation (or, if such date is not a Scheduled Trading Day, the next following Scheduled Trading Day that is not already an Expiration Date for another Component); provided that if that date is a Disrupted Day, the Expiration Date for such Component shall be the first succeeding Scheduled Trading Day that is not a Disrupted Day and is not or is not deemed to be an Expiration Date in respect of any other Component of the Transaction hereunder; and provided further that if the Expiration Date has not occurred pursuant to the preceding proviso as of the Final Disruption Date, the Final Disruption Date shall be the Expiration Date (irrespective of whether such date is an Expiration Date in respect of any other Component for the Transaction) and, notwithstanding anything to the contrary in this Confirmation or the Equity Definitions, the Relevant Price for the Expiration Date shall be the prevailing market value per Share determined by the Calculation Agent in a commercially reasonable manner. Notwithstanding the foregoing and anything to the contrary in the Equity Definitions, if a Market Disruption Event occurs on any Expiration Date, the Calculation Agent may determine that such Expiration Date is a Disrupted Day only in part, in which case the Calculation Agent shall make adjustments to the number of Warrants for the relevant Component for which such day shall be the Expiration Date and shall designate the Scheduled Trading Day determined in the manner described in the immediately preceding sentence as the Expiration Date for the remaining Warrants for such Component. Section 6.6 of the Equity Definitions shall not apply to any Valuation Date occurring on an Expiration Date. Final Disruption Date has the meaning provided in Annex B to this Confirmation. | |
Automatic Exercise:
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Applicable. Each Warrant not previously exercised will be deemed to be automatically exercised on the Expiration Time on the relevant Expiration Date. | |
Market Disruption Event:
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Section 6.3(a) of the Equity Definitions is hereby amended by deleting the words 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, in clause (ii) thereof, and by replacing the words or (iii) an Early Closure. with (iii) an Early Closure or (iv) a Regulatory Disruption, in each case that the Calculation Agent determines is material. | |
Section 6.3(d) of the Equity Definitions is hereby amended by deleting the remainder of the provision following the term Scheduled Closing Time in the fourth line thereof. | ||
Regulatory Disruption:
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Any event that RBC, in its commercially reasonable discretion upon the advice of outside counsel, determines makes it appropriate with regard to any legal, regulatory or self-regulatory requirements or related policies and procedures (whether or not such requirements, |
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policies or procedures are imposed by law or have been voluntarily adopted by RBC, and including without limitation Rule 10b-18, Rule 10b-5, Regulation 13D-G and Regulation 14E under the U.S. Securities Exchange Act of 1934, as amended (the Exchange Act), and Regulation M and/or analyzing RBC as if RBC were the Issuer or an affiliated purchaser of the Issuer), for RBC to refrain from or decrease any market activity in connection with the Transaction. RBC shall notify Counterparty as soon as reasonably practicable that a Regulatory Disruption has occurred and the Expiration Dates affected by it. | ||
Settlement Terms: |
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In respect of any Component: |
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Net Share Settlement:
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On each Settlement Date, Counterparty shall deliver to RBC a number of Shares equal to the Net Share Amount for such Settlement Date to the account specified by RBC, and cash in lieu of any fractional shares valued at the Relevant Price for the Valuation Date corresponding to such Settlement Date. If, in the good faith reasonable judgment of RBC, the Shares deliverable hereunder would not be immediately freely transferable by RBC under Rule 144 (Rule 144) under the U.S. Securities Act of 1933, as amended (the Securities Act) or any successor provision, then RBC may elect to either (x) accept delivery of such Shares notwithstanding the fact that such Shares are not immediately freely transferable by RBC under Rule 144 or any successor provision or (y) require that such delivery take place pursuant to the provisions set forth opposite the caption Registration/Private Placement Procedures below. | |
Net Share Amount:
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For any Exercise Date, a number of Shares, as calculated by the Calculation Agent, equal to (x) the product of (i) the number of Warrants being exercised or deemed exercised on such Exercise Date, and (ii) the excess, if any, of the Relevant Price for the Valuation Date occurring on such Exercise Date over the Strike Price (such product, the Net Share Settlement Amount), divided by (y) such Relevant Price. | |
Relevant Price:
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On any Valuation Date, the volume weighted average price per Share for the regular trading session of the Exchange as displayed under the heading Bloomberg VWAP on Bloomberg Page TSYS <equity> AQR on such Valuation Date in respect of the period from 9:30 am to 4:00 p.m. (New York City time) on such Valuation Date (or if such volume weighted average price is not available, the Calculation Agents reasonable, good faith estimate of such price on such Valuation Date). | |
Settlement Currency:
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USD. |
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Other Applicable Provisions:
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The provisions of Sections 9.1(c), 9.8, 9.9, 9.10, 9.11 (except that the Representation and Agreement contained in Section 9.11 of the Equity Definitions shall be modified by excluding any representations therein relating to restrictions, obligations, limitations or requirements under applicable securities laws as a result of the fact that Counterparty is the Issuer of the Shares) and 9.12 of the Equity Definitions will be applicable, except that all references in such provisions to Physical Settlement and Physically-settled shall be read as references to Net Share Settlement and Net Share Settled. Net Share Settled in relation to any Warrant means that Net Share Settlement is applicable to such Warrant. | |
Dividends: |
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In respect of any Component: |
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Dividend Adjustments:
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Counterparty agrees to notify RBC promptly of the announcement of an ex-dividend date for any cash dividend by Counterparty. If an ex-dividend date for any cash dividend occurs at any time from, but excluding, the Trade Date to, and including, the Expiration Date, then in lieu of any adjustments as provided under Method of Adjustment below, the Calculation Agent shall make such adjustments to the Strike Price and/or the Number of Warrants as it deems appropriate to preserve for the parties the intended economic benefits of the Transaction. | |
Adjustments: |
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In respect of any Component: |
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Method of Adjustment:
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Calculation Agent Adjustment; provided, however, that the Equity Definitions shall be amended by replacing the words diluting or concentrative in Sections 11.2(a), 11.2(c) (in two instances) and 11.2(e)(vii) with the word material and by adding the words or the Transaction after the words theoretical value of the relevant Shares in Sections 11.2(a), 11.2(c) and 11.2(e)(vii); provided further that adjustments may be made to account for changes in expected volatility, expected dividends, expected correlation, expected stock loan rate and expected liquidity relative to the relevant Share. | |
Extraordinary Events: |
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New Shares:
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In the definition of New Shares in Section 12.1(i) of the Equity Definitions, the text in clause (i) thereof shall be deleted in its entirety and replaced with publicly quoted, traded or listed on any of the New York Stock Exchange, The NASDAQ Global Select Market or The NASDAQ Global Market (or their respective successors). | |
Modified Calculation Agent Adjustment:
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If, in respect of any Merger Event to which Modified Calculation Agent Adjustment applies, the adjustments to be made in accordance with Section 12.2(e)(i) of the Equity Definitions would result in Counterparty being different from the issuer of the Shares, then with |
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respect to such Merger Event, as a condition precedent to the adjustments contemplated in Section 12.2(e)(i) of the Equity Definitions, Counterparty and the issuer of the Shares shall, prior to the Merger Date, have entered into such documentation containing representations, warranties and agreements relating to securities law and other issues as requested by RBC that RBC has determined, in its reasonable discretion, to be reasonably necessary or appropriate to allow RBC to continue as a party to the Transaction, as adjusted under Section 12.2(e)(i) of the Equity Definitions, and to preserve its hedging or hedge unwind activities in connection with the Transaction in a manner compliant with applicable legal, regulatory or self-regulatory requirements, or with related policies and procedures applicable to RBC, and if such conditions are not met or if the Calculation Agent determines that no adjustment that it could make under Section 12.2(e)(i) of the Equity Definitions will produce a commercially reasonable result, then the consequences set forth in Section 12.2(e)(ii) of the Equity Definitions shall apply. | ||
For greater certainty, the definition of Modified Calculation Agent Adjustment in Sections 12.2 and 12.3 of the Equity Definitions shall be amended by adding the following italicized language to the stipulated parenthetical provision: (including adjustments to account for changes in expected volatility, expected dividends, expected correlation, expected stock loan rate or expected liquidity relevant to the Shares or to the Transaction) from the Announcement Date to the Merger Date (Section 12.2) or Tender Offer Date (Section 12.3). | ||
Announcement Event:
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If an Announcement Event occurs, the Calculation Agent will determine the economic effect of the Announcement Event on the theoretical value of each Component of the Transaction (including without limitation any change in expected volatility, expected dividends, expected correlation, expected stock loan rate or expected liquidity relevant to the Shares or to the Transaction) from the potential Announcement Date to the Expiration Date for such Component and, if such economic effect is material, the Calculation Agent will adjust the terms of the Transaction to reflect such economic effect. Announcement Event shall mean the occurrence of a potential Announcement Date of a Merger Event or Tender Offer, if the Merger Date or Tender Offer Date does not, or is not anticipated to, occur on or prior to the Expiration Date for, or any earlier termination of, the relevant Component. | |
Consequences of Merger Events: |
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(a) Share-for-Share:
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Modified Calculation Agent Adjustment. | |
(b) Share-for-Other:
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Cancellation and Payment (Calculation Agent Determination). | |
(c) Share-for-Combined:
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Component Adjustment. | |
Tender Offer:
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Applicable; provided that Section 12.1(d) of the Equity Definitions is hereby amended by adding , or of the outstanding Shares, before of the Issuer in the fourth line thereof. Sections 12.1(e) and 12.1(1)(ii) |
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of the Equity Definitions are hereby amended by adding or Shares, as applicable, after voting shares. | ||
Consequences of Tender Offers: |
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(a) Share-for-Share:
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Modified Calculation Agent Adjustment. | |
(b) Share-for-Other:
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Modified Calculation Agent Adjustment. | |
(c) Share-for-Combined:
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Modified Calculation Agent Adjustment. | |
Nationalization, Insolvency and Delisting:
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Cancellation and Payment (Calculation Agent Determination); provided that in addition to the provisions of Section 12.6(a)(iii) of the Equity Definitions, it shall 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 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 such exchange or quotation system, such exchange or quotation system shall be deemed to be the Exchange. For the avoidance of doubt, the occurrence of any event that is a Merger Event and would otherwise have been a Delisting will have the consequence specified for the relevant Merger Event. | |
Additional Disruption Events: |
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Change in Law:
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Applicable; provided that Section 12.9(a)(ii) of the Equity Definitions is hereby amended (i) by the replacement of the word Shares with Hedge Positions in clause (X) thereof; (ii) by adding the phrase or announcement immediately after the phrase due to the promulgation in the third line thereof and adding the phrase formal or informal before the word interpretation in the same line; and (iii) immediately following the word Transaction in clause (X) thereof, adding the phrase in the manner contemplated by the Hedging Party on the Trade Date, unless the illegality is due to an act or omission of the party seeking to elect termination of the Transaction. | |
Failure to Deliver:
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Inapplicable | |
Insolvency Filing:
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Applicable | |
Loss of Stock Borrow:
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Applicable | |
Maximum Stock Loan Rate:
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200 basis points per annum | |
Increased Cost of Stock Borrow:
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Applicable | |
Initial Stock Loan Rate:
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25 basis points per annum | |
Increased Cost of Hedging:
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Applicable |
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Hedging Disruption:
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Applicable | |
Hedging Party:
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RBC for all applicable Additional Disruption Events | |
Determining Party:
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RBC for all applicable Additional Disruption Events | |
Acknowledgements: |
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Non-Reliance:
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Applicable | |
Agreements and Acknowledgements
Regarding Hedging Activities:
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Applicable | |
Additional Acknowledgements:
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Applicable |
Mutual Representations: Each of RBC and Counterparty represents and warrants to, and agrees with, the other party
that:
(i) | Tax Disclosure. Notwithstanding anything to the contrary herein, in the Equity Definitions or in the Agreement, and notwithstanding any express or implied claims of exclusivity or proprietary rights, the parties (and each of their employees, representatives or other agents) are authorized to disclose to any and all persons, beginning immediately upon commencement of their discussions and 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 by either party to the other relating to such tax treatment and tax structure. | ||
(ii) | Commodity Exchange Act. It is an eligible contract participant within the meaning of Section 1a(12) of the U.S. Commodity Exchange Act, as amended (the CEA). The Transaction has been subject to individual negotiation by the parties. The Transaction has not been executed or traded on a trading facility as defined in Section 1a(33) of the CEA. It has entered into the Transaction with the expectation and intent that the Transaction shall be performed to its termination date. | ||
(iii) | Securities Act. It is a qualified institutional buyer as defined in Rule 144A under the Securities Act, or an accredited investor as defined under the Securities Act. | ||
(iv) | Investment Company Act. It is a qualified purchaser as defined under the U.S. Investment Company Act of 1940, as amended (the Investment Company Act). | ||
(v) | ERISA. The assets used in the Transaction (1) are not assets of any plan (as such term is defined in Section 4975 of the U.S. Internal Revenue Code (the Code)) subject to Section 4975 of the Code or any employee benefit plan (as such term is defined in Section 3(3) of the U.S. Employee Retirement Income Security Act of 1974, as amended (ERISA)) subject to Title I of ERISA, and (2) do not constitute plan assets within the meaning of Department of Labor Regulation 2510.3-101, 29 CFR Section 2510-3-101. |
Counterparty Representations: In addition to the representations and warranties in the Agreement and those contained
elsewhere herein, Counterparty represents, warrants, acknowledges and covenants that:
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(i) | Counterparty shall immediately provide written notice to RBC upon obtaining knowledge of the occurrence of any event that would constitute an Event of Default, a Potential Event of Default, a Potential Adjustment Event, a Merger Event or any other Extraordinary Event; provided, however, that should Counterparty be in possession of material non-public information regarding Counterparty, Counterparty shall not communicate such information to RBC in connection with this Transaction. | ||
(ii) | (A) Counterparty is acting for its own account, and it has made its own independent decisions to enter into the Transaction and as to whether the Transaction is appropriate or proper for it based upon its own judgment and upon advice from such advisers as it has deemed necessary, (B) Counterparty is not relying on any communication (written or oral) of RBC or any of its affiliates as investment advice or as a recommendation to enter into the Transaction (it being understood that information and explanations related to the terms and conditions of the Transaction shall not be considered investment advice or a recommendation to enter into the Transaction) and (C) no communication (written or oral) received from RBC or any of its affiliates shall be deemed to be an assurance or guarantee as to the expected results of the Transaction. | ||
(iii) | Counterparty is not entering into the Transaction for the purpose of (i) creating actual or apparent trading activity in the Shares (or any security convertible into or exchangeable for the Shares) or (ii) raising or depressing or otherwise manipulating the price of the Shares (or any security convertible into or exchangeable for the Shares), in either case in violation of the Exchange Act. | ||
(iv) | Counterpartys filings under the Securities Act, the Exchange Act, and other applicable securities laws that are required to be filed have been filed and, as of the respective dates thereof and as of the date of this representation, there is no misstatement of material fact contained therein or omission of a material fact required to be stated therein or necessary to make the statements made therein, in the light of the circumstances under which they were made, not misleading. | ||
(v) | Counterparty has not violated, and shall not directly or indirectly violate, any applicable law (including, without limitation, the Securities Act and the Exchange Act) in connection with the Transaction. | ||
(vi) | The representations and warranties of Counterparty set forth in Section 3 of the Agreement and Section 2 of the Purchase Agreement (the Purchase Agreement) dated as of the Trade Date between Counterparty and Oppenheimer & Co. Inc. and Raymond James & Associates are true and correct and are hereby deemed to be repeated to RBC as if set forth herein. | ||
(vii) | The Shares issuable upon exercise of all Warrants (the Warrant Shares) have been duly authorized and, when delivered pursuant to the terms of such Transaction, shall be validly issued, fully-paid and non-assessable, and such issuance of the Warrant Shares shall not be subject to any preemptive or similar rights and shall, upon such issuance, be accepted for listing or quotation on the Exchange. | ||
(viii) | Counterparty is not as of the Trade Date and as of the date on which Counterparty delivers any Termination Delivery Units, and shall not be after giving effect to the transactions contemplated hereby, insolvent (as such term is defined in Section 101(32) of the U.S. Bankruptcy Code (Title 11 of the United States Code) (the Bankruptcy Code)). | ||
(ix) | Counterparty is not, and after giving effect to the transactions contemplated hereby will not be, an investment company as such term is defined in the Investment Company Act. |
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(x) | Without limiting the generality of Section 13.1 of the Equity Definitions, Counterparty acknowledges that RBC is not making any representations or warranties with respect to the treatment of the Transaction under FASB Statements 128, 133, 149 or 150 (or under any successor statement), EITF Issue No. 00-19, 01-6, 03-6 or 07-5 (or any successor issue statements), under FASBs Liabilities & Equity Project, or under any other accounting guidance. | ||
(xi) | Counterparty understands, agrees and acknowledges that no obligations of RBC to it hereunder, if any, shall be entitled to the benefit of deposit insurance and that such obligations shall not be guaranteed by any affiliate of RBC or any governmental agency. | ||
(xii) | Counterparty shall deliver to RBC an opinion of counsel, dated as of the Trade Date and reasonably acceptable to RBC in form and substance, with respect to the matters set forth in Section 3(a) of the Agreement and such other matters as RBC may reasonably request. | ||
(xiii) | On each anniversary of the Trade Date, Counterparty shall deliver to RBC an officers certificate, signed by an authorized officer, stating the number of Available Shares (as defined in the provision titled Limitation On Delivery of Shares below). |
Miscellaneous:
Effectiveness. If, on or prior to the Effective Date, RBC
reasonably determines that it is advisable to cancel the
Transaction because of concerns that RBCs related hedging
activities could be viewed as not complying with applicable
securities laws, rules or regulations, the Transaction shall be
cancelled and shall not become effective, and neither party shall
have any obligation to the other party in respect of the
Transaction.
Netting and Set-Off. The parties hereto agree that the
Transaction shall not be subject to netting or set off with any
other transaction.
Qualified Financial Contracts. It is the intention of the parties
that, in respect of Counterparty, (a) the Transaction shall
constitute a qualified financial contract within the meaning of
12 U.S.C. Section 1821(e)(8)(D)(i) and (b) a Non-defaulting
Partys rights under Sections 5 and 6 of the Agreement constitute
rights of the kind referred to in 12 U.S.C. Section 1821(e)(8)(A).
Method of Delivery. Whenever delivery of funds or other assets is
required hereunder by or to Counterparty, such delivery shall be
effected through Agent. In addition, all notices, demands and
communications of any kind relating to the Transaction between RBC
and Counterparty shall be transmitted exclusively through Agent.
Status of Claims in Bankruptcy. RBC acknowledges and agrees that
this Confirmation is not intended to convey to RBC rights with
respect to the Transaction that are senior to the claims of common
stockholders in any U.S. bankruptcy proceedings of Counterparty;
provided that nothing herein shall limit or shall be deemed to
limit RBCs right to pursue remedies in the event of a breach by
Counterparty of its obligations and agreements with respect to the
Transaction; provided, further, that nothing herein shall limit or
shall be deemed to limit RBCs rights in respect of any
transactions other than the Transaction.
No Collateral. Notwithstanding any provision of this
Confirmation, the Agreement, Equity Definitions, or any other
agreement between the parties to the contrary, the obligations of
Counterparty under the Transaction are not secured by any
collateral.
Securities Contract; Swap Agreement. The parties hereto agree and
acknowledge that RBC is a financial institution, swap
participant and financial participant within the meaning of
Sections 101(22), 101(53C) and 101(22A) of the Bankruptcy Code.
The parties hereto further agree and acknowledge (A) that this
Confirmation is (i) a securities contract, as such term is
defined in Section 741(7) of the Bankruptcy Code, with respect to
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which each payment and delivery hereunder or in connection
herewith is a termination value, payment amount or other
transfer obligation within the meaning of Section 362 of the
Bankruptcy Code and a settlement payment or a transfer within
the meaning of Section 546 of the Bankruptcy Code, and (ii) a
swap agreement, as such term is defined in Section 101(53B) of
the Bankruptcy Code, with respect to which each payment and
delivery hereunder or in connection herewith is a termination
value, a payment amount or other transfer obligation within
the meaning of Section 362 of the Bankruptcy Code and a transfer
within the meaning of Section 546 of the Bankruptcy Code, and (B)
that RBC is entitled to the protections afforded by, among other
sections, Section 362(b)(6), 362(b)(17), 362(b)(27), 362(o),
546(e), 546(g), 546(j), 548(d)(2), 555, 560 and 561 of the
Bankruptcy Code.
Alternative Calculations and Counterparty Payment on Early
Termination and on Certain Extraordinary Events. If Counterparty
owes RBC any amount in connection with the Transaction pursuant to
Sections 12.2, 12.3, 12.6, 12.7 or 12.9 of the Equity Definitions
(except in the case of an Extraordinary Event in which the
consideration or proceeds to be paid to holders of Shares as a
result of such event consists solely of cash) or pursuant to
Section 6(d)(ii) of the Agreement (except in the case of an Event
of Default in which Counterparty is the Defaulting Party or a
Termination Event in which Counterparty is the Affected Party,
other than (x) an Event of Default of the type described in
Section 5(a)(iii), (v), (vi) or (vii) of the Agreement or (y) a
Termination Event of the type described in Section 5(b)(i), (ii),
(iii), (iv), (v) or (vi) of the Agreement that in the case of
either (x) or (y) resulted from an event or events outside
Counterpartys control) (a Counterparty Payment Obligation),
Counterparty shall have the right, in its sole discretion, to
satisfy any such Counterparty Payment Obligation by delivery of
Termination Delivery Units (as defined below) by giving
irrevocable telephonic notice to RBC, confirmed in writing within
one Scheduled Trading Day, between the hours of 9:00 a.m. and 4:00
p.m. New York time on the Early Termination Date or other date the
transaction is terminated, as applicable (Notice of Counterparty
Termination Delivery). Within a commercially reasonable period
of time following receipt of a Notice of Counterparty Termination
Delivery, Counterparty shall deliver to RBC a number of
Termination Delivery Units having a cash value equal to the amount
of such Counterparty Payment Obligation (such number of
Termination Delivery Units to be delivered to be determined by the
Calculation Agent as the number of whole Termination Delivery
Units that could be sold over a commercially reasonable period of
time to generate proceeds equal to the cash equivalent of such
payment obligation). In addition, if, in the good faith
reasonable judgment of RBC, for any reason, the Termination
Delivery Units deliverable pursuant to this paragraph would not be
immediately freely transferable by RBC under Rule 144 or any
successor provision, then RBC may elect either to (x) accept
delivery of such Termination Delivery Units notwithstanding any
restriction on transfer or (y) require that such delivery take
place pursuant to the provisions set forth opposite the caption
Registration/Private Placement Procedures below. If the
provisions set forth in this paragraph are applicable, the
provisions of Sections 9.8, 9.9, 9.10, 9.11 (modified as described
above) and 9.12 of the Equity Definitions shall be applicable,
except that all references to Shares shall be read as references
to Termination Delivery Units.
"Termination Delivery Unit means (a) in the case of a Termination
Event, an Event of Default or an Extraordinary Event (other than
an Insolvency, Nationalization, Merger Event or Tender Offer), one
Share or (b) in the case of an Insolvency, Nationalization, Merger
Event or Tender Offer, 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 Insolvency, Nationalization, Merger Event or Tender Offer.
If a Termination Delivery Unit consists of property other than
cash or New Shares and Counterparty provides irrevocable written
notice to the Calculation Agent on or prior to the Closing Date
that it elects to deliver cash, New Shares or a combination
thereof (in such proportion as Counterparty designates) in lieu of
such other property, the Calculation Agent shall replace such
property with cash, New Shares or a combination thereof as
components of a Termination Delivery Unit in such amounts, as
determined by the Calculation Agent in its discretion by
commercially reasonable means, as shall have a value equal to the
value of the property so replaced. If such Insolvency,
Nationalization, Merger Event or Tender Offer 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.
Registration/Private Placement Procedures. If, in the reasonable
opinion of RBC, following any delivery of Shares or Termination
Delivery Units to RBC hereunder, such Shares or Termination
Delivery Units would be in
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the hands of RBC subject to any
applicable restrictions with respect to any registration or
qualification requirement or prospectus delivery requirement for
such Shares or Termination Delivery Units 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 Termination Delivery
Units being restricted securities, as such term is defined in
Rule 144) (such Shares or Termination Delivery Units, Restricted
Shares), then delivery of such Restricted Shares shall be
effected pursuant to either clause (i) or (ii) of Annex A hereto
at the election of Counterparty, unless waived by RBC.
Notwithstanding the foregoing, solely in respect of any Warrants
exercised or deemed exercised on any Exercise Date, Counterparty
shall elect, prior to the first Settlement Date for the first
Exercise Date, a Private Placement Settlement (as defined in Annex
A hereto) or Registration Settlement (as defined in Annex A
hereto) for all deliveries of Restricted Shares for all such
Exercise Dates which election shall be applicable to all
Settlement Dates for such Warrants and the procedures in clause
(i) or clause (ii) of Annex A hereto 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 Settlement or Registration Settlement for such aggregate
Restricted Shares delivered hereunder. If the Private Placement
Settlement or the Registration Settlement shall not be effected as
set forth in clauses (i) or (ii) of Annex A, as applicable, then
failure to effect such Private Placement Settlement or such
Registration Settlement shall constitute an Event of Default with
respect to which Counterparty shall be the Defaulting Party.
Share Deliveries. Counterparty acknowledges and agrees that, to
the extent that RBC is not then an affiliate, as such term is used
in Rule 144, of Counterparty and has not been such an affiliate of
Counterparty for 90 days (it being understood that RBC shall not
be considered such an affiliate of Counterparty solely by reason
of its right to receive Shares pursuant to a Transaction
hereunder), any Shares or Termination Delivery Units delivered
hereunder at any time after one year from the Premium Payment Date
shall be eligible for resale under Rule 144 or any successor
provision, and Counterparty agrees to promptly remove, or cause
the transfer agent for such Shares or Termination Delivery Units
to remove, any legends referring to any restrictions on resale
under the Securities Act from the certificates representing such
Shares or Termination Delivery Units. Counterparty further agrees
that with respect to any Shares or Termination Delivery Units
delivered hereunder at any time after 6 months from the Premium
Payment Date but prior to 1 year from the Premium Payment Date, to
the extent that Counterparty then satisfies the current
information requirement of Rule 144, Counterparty shall promptly
remove, or cause the transfer agent for such Shares or Termination
Delivery Units to remove, any legends referring to any such
restrictions or requirements from the certificates representing
such Share or Termination Delivery Units upon delivery by RBC to
Counterparty or such transfer agent of any customary sellers and
brokers representation letters in connection with resales of such
Shares or Termination Delivery Units pursuant to Rule 144, 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 RBC. Counterparty further agrees and
acknowledges that RBC shall run a holding period under Rule 144
with respect to the Warrants and/or any Shares or Termination
Delivery Units delivered hereunder notwithstanding the existence
of any other transaction or transactions between Counterparty and
RBC relating to the Shares. Counterparty further agrees that
Shares or Termination Delivery Units delivered hereunder prior to
the date that is 6 months from the Premium Payment Date may be
freely transferred by RBC to its affiliates, and Counterparty
shall effect such transfer without any further action by RBC.
Notwithstanding anything to the contrary herein, Counterparty
agrees that any delivery of Shares or Termination Delivery Units
shall be effected by book-entry transfer through the facilities of
the Clearance System if, at the time of such delivery, the
certificates representing such Shares or Termination Delivery
Units would not contain any restrictive legend as described above.
Notwithstanding anything to the contrary herein, to the extent
the provisions of Rule 144 or any successor rule are amended, or
the applicable interpretation thereof by the Securities and
Exchange Commission or any court changes after the Trade Date, the
agreements of Counterparty herein shall be deemed modified to the
extent necessary, in the opinion of outside counsel of
Counterparty, to comply with Rule 144, including Rule 144(b) or
any successor provision, as in effect at the time of delivery of
the relevant Shares or Termination Delivery Units.
No Material Non-Public Information. On each day during the period
beginning on the Trade Date and ending on the day on which RBC has
informed Counterparty in writing that RBC has completed all
purchases or sales of Shares or other transactions to hedge
initially its exposure with respect to the Transaction,
Counterparty represents and warrants to RBC that it is not aware
of any material nonpublic information concerning itself or the
Shares.
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Limit on Beneficial Ownership. Notwithstanding any other
provisions hereof, RBC may not exercise any Warrant hereunder,
Automatic Exercise shall not apply with respect thereto, and no
delivery hereunder (including pursuant to provisions opposite the
headings Alternative Calculations and Counterparty Payments on
Early Termination and on Certain Extraordinary Events,
Registration/Private Placement Procedures, Limitation on
Delivery of Shares or Annex A) shall be made, to the extent (but
only to the extent) that the receipt of any Shares upon such
exercise or delivery would result in the Equity Percentage (as
defined below) exceeding 9% or an Ownership Trigger (as defined
below) being met. 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 the Equity Percentage exceeding 9%
or an Ownership Trigger being met. If any delivery owed to RBC or
exercise hereunder is not made, in whole or in part, as a result
of this provision, Counterpartys obligation to make such delivery
and RBCs right to exercise a Warrant shall not be extinguished
and Counterparty shall make such delivery as promptly as
practicable after, but in no event later than one Clearance System
Business Day after, RBC gives notice to Counterparty that such
exercise or delivery would not result in the Equity Percentage
exceeding 9% or an Ownership Trigger being met.
Repurchase Notices. Counterparty shall, on any day on which
Counterparty effects any repurchase of Shares, provide RBC with a
written notice of such repurchase (a Repurchase Notice) on such
day if, following such repurchase, the Warrant Equity Percentage
(as defined below) is (a) equal to or greater than 4.5% and (b)
greater by 0.5% or more than the Warrant Equity Percentage set
forth in the immediately preceding Repurchase Notice (or, in the
case of the first such Repurchase Notice, greater by 0.5% or more
than the Warrant Equity Percentage as of the date hereof). The
Warrant Equity Percentage as of any day is the fraction,
expressed as a percentage, of (1) the numerator of which is the
Number of Warrants, and (2) the denominator of which is the number
of Shares outstanding on such day. Counterparty agrees to
indemnify and hold harmless RBC and its affiliates and their
respective officers, directors, employees, affiliates, advisors,
agents and controlling person (each, an Indemnified Person) from
and against any and all losses (including losses relating to RBCs
hedging activities as a consequence of becoming, or of the risk of
becoming, an insider as defined under Section 16 of the Exchange
Act, 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 expense (including reasonable
attorneys fees), joint or several, which an Indemnified Person
actually may become subject to, as a result of Counterpartys
failure to provide RBC with a Repurchase Notice on the day and in
the manner specified herein, and to reimburse, upon written
request, each of such Indemnified Persons for any reasonable legal
or other expenses incurred in connection with investigating,
preparing for, providing testimony or other evidence in connection
with or defending any of the foregoing. If any suit, action,
proceeding (including any governmental or regulatory
investigation), claim or demand shall be brought or asserted
against the Indemnified Person, such Indemnified Person shall
promptly notify Counterparty in writing, and Counterparty, upon
request of the Indemnified Person, shall retain counsel reasonably
satisfactory to the Indemnified Person to represent the
Indemnified Person and any others Counterparty may designate in
such proceeding and shall pay the fees and expenses of such
counsel related to such proceeding. Counterparty shall be
relieved from liability to the extent that the Indemnified Person
fails promptly to notify Counterparty of any action commenced
against it in respect of which indemnity may be sought hereunder;
provided that failure to notify Counterparty (x) shall not relieve
Counterparty from any liability hereunder to the extent it is not
materially prejudiced as a result thereof and (y) shall not, in
any event, relieve Counterparty from any liability that it may
have otherwise than on account of this indemnity agreement.
Counterparty 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, Counterparty agrees to indemnify any Indemnified Person
from and against any loss
or liability by reason of such
settlement or judgment. Counterparty 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 includes an unconditional release of such
Indemnified Person from all liability on claims that are the
subject matter of such proceeding on terms reasonably satisfactory
to such 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 Counterparty, in lieu of
indemnifying such Indemnified Person thereunder, shall contribute
to the amount paid or payable by such
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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 that 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 the Transaction.
Limitation On Delivery of Shares. Notwithstanding anything herein
or in the Agreement to the contrary, in no event shall
Counterparty be required to deliver Shares in connection with the
Transaction in excess of 3,478,933 Shares (the Maximum Delivery
Amount). Counterparty represents and warrants (which shall be
deemed to be repeated on each day that the Transaction is
outstanding) that the Maximum Delivery Amount is equal to or less
than the number of authorized but unissued Shares of Counterparty
that are not reserved for future issuance in connection with
transactions in the Shares (other than the Transaction) on the
date of the determination of the Maximum Delivery Amount (such
Shares, the Available Shares). In the event Counterparty shall
not have delivered the full number of Shares otherwise deliverable
as a result of this paragraph (the resulting deficit, the Deficit
Shares), Counterparty shall be continually obligated to deliver,
from time to time until the full number of Deficit Shares have
been delivered pursuant to this paragraph, Shares when, and to the
extent, that (i) Shares are repurchased, acquired or otherwise
received by Counterparty 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) Counterparty additionally authorizes any unissued Shares
that are not reserved for other transactions. Counterparty shall
immediately notify RBC 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 Shares to be delivered)
and promptly deliver such Shares thereafter. Notwithstanding the
provisions of Section 5(a)(ii) of the Agreement, in the event of a
failure by Counterparty to comply with the agreement set forth in
this provision, there shall be no grace period for remedy of such
failure.
Additional Termination Event. The occurrence of any of the
following shall constitute an Additional Termination Event with
respect to which (1) Counterparty shall be the sole Affected Party
and (2) the Transaction shall be the sole Affected Transaction;
provided that with respect to any Additional Termination Event,
RBC may choose to treat part of the Transaction as the sole
Affected Transaction, and, upon termination of the Affected
Transaction, a Transaction with terms identical to those set forth
herein except with a Number of Warrants equal to the unaffected
number of Warrants shall be treated for all purposes as the
Transaction, which shall remain in full force and effect:
(i) RBC reasonably determines, upon advice of counsel, that it is
advisable to terminate a portion of the Transaction so that RBCs
related hedging activities will comply with applicable securities
laws, rules or regulations;
(ii) The Shares are not approved for listing on the New York Stock
Exchange, The NASDAQ Global Select Market or The NASDAQ Global
Market (or any of their respective successors);
(iii) any person or group (as such terms are used for purposes
of Sections 13(d) and 14(d) of the Exchange Act or any successor
provisions, including any group acting for the purpose of
acquiring, holding, voting or disposing of securities within the
meaning of Rule 13d-5(b)(1) under the Exchange Act or any
successor provision) is or becomes the beneficial owner (as that
term is used in Rule 13d-3 under the Exchange Act as in effect on
the Effective Date, except that the number of shares of
Counterpartys voting stock will be deemed to include, in addition
to all outstanding shares of Counterpartys voting stock and
shares of voting stock not outstanding that are subject to
options, warrants, rights to purchase or conversion privileges
exercisable within 60 days of the date of determination (unissued
shares) deemed to be held by the person or group or other
person with respect to which the determination is being made, all
unissued shares deemed to be held by all other persons), directly
or indirectly, of shares representing 50% or more of the total
voting power of all outstanding classes of Counterpartys capital
stock or other interests normally entitled (without regard to the
occurrence of any contingency) to vote in the election of the
board of directors, managers or trustees (voting stock) or has
the power, directly or indirectly, to elect a majority of the
members of Counterpartys board of directors, unless the exception
provided in clause (iv)(2) below applies;
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(iv) Counterparty consolidates with, enters into a binding share
exchange with, or merges with or into, another person, or
Counterparty sells, assigns, conveys, transfers, leases or
otherwise disposes of all or substantially all of its assets, or
any person consolidates with, or merges with or into,
Counterparty, in any such event, other than any transaction:
(1) pursuant to which the persons that beneficially owned,
directly or indirectly, the shares of Counterpartys voting stock
immediately prior to such transaction beneficially own, directly
or indirectly, shares of Counterpartys voting stock representing
at least a majority of the total voting power of all outstanding
classes of voting stock
of the surviving or transferee person and
such holders proportional voting power immediately after such
transaction vis-à-vis each other with respect to the securities
they receive in such transaction shall be in substantially the
same proportions as their respective voting power vis-à-vis each
other immediately prior to such transaction;
(2) in which at least 90% of the consideration paid for the Shares
(other than cash payments for fractional shares or pursuant to
dissenters appraisal rights) consists of shares of common stock
traded on the New York Stock Exchange, The NASDAQ Global Market or
The NASDAQ Global Select Market (or any of their respective
successors), or which will be so traded immediately following such
transaction; or
(3) which is effected solely to change Counterpartys jurisdiction
of incorporation and results in a reclassification, conversion or
exchange of outstanding Shares solely into shares of common stock
of the surviving person;
(v) (a) individuals who on the Effective Date constituted
Counterpartys board of directors and (b) any new directors whose
election to Counterpartys board of directors or whose nomination
for election by Counterpartys stockholders was approved by at
least a majority of the directors at the time of such election or
nomination still in office either who were directors on the
Effective Date or whose election or nomination for election was
previously so approved, cease for any reason to constitute a
majority of Counterpartys board of directors; or
(vi) the holders of Counterpartys capital stock approve any plan
or proposal for liquidation or dissolution of Counterparty.
Transfer or Assignment. Notwithstanding any provision of the
Agreement to the contrary, RBC may, subject to applicable law,
freely transfer and assign all of its rights and obligations under
the Transaction without the consent of Counterparty.
If, as determined in RBCs sole discretion, (a) at any time (1)
the Equity Percentage exceeds 8.0% (2) RBC, RBC Group (as defined
below) or any person whose ownership position would be aggregated
with that of RBC or RBC Group (RBC, RBC Group or any such person,
a RBC Person) under Sections 3-701 to 3-709 of the Maryland
Control Share Acquisition Act or other federal, state or local
laws, regulations or regulatory orders applicable to ownership of
Shares (Applicable Laws), owns, beneficially owns,
constructively owns, controls, holds the power to vote or
otherwise meets a relevant definition of ownership, or could be
reasonably viewed as meeting any of the foregoing, in excess of a
number of Shares equal to (x) the number of Shares that would give
rise to reporting, registration, filing or notification
obligations or other requirements (including obtaining prior
approval by a state or federal regulator) of a RBC Person under
Applicable Laws and with respect to which such requirements have
not been met or the relevant approval has not been received (this
clause (2)(x), the Ownership Trigger) minus (y) 1% of the number
of Shares outstanding on the date of determination, or (3) the
number of control shares (as such term is used in Section
3-701(d) of the Maryland Control Share Acquisition Act) owned by a
RBC Person divided by the number of Counterpartys outstanding
Shares exceeds 8.0%, (each of such conditions described in clause
(1), (2) or (3), an Excess Ownership Position), and (b) RBC is
unable, after commercially reasonable efforts, to effect a
transfer or assignment on pricing and terms and within a time
period reasonably acceptable to it of all or a portion of this
Transaction pursuant to the preceding paragraph such that an
Excess Ownership Position no longer exists, RBC may designate any
Scheduled Trading Day as an Early Termination Date with respect to
a portion (the Terminated Portion) of this Transaction, such
that an Excess Ownership Position no longer exists following such
partial termination. In the event that RBC so designates an Early
Termination Date with respect to a portion of this Transaction, a
payment shall be made pursuant to Section
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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 (allocated
among the Components thereof in the discretion of RBC), (ii)
Counterparty 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 set forth under the caption Alternative Calculations
and Counterparty Payment on Early Termination and on Certain
Extraordinary Events shall apply to any amount that is payable by
Counterparty to RBC pursuant to this sentence). The Equity
Percentage as of any day is the fraction, expressed as a
percentage, (A) the numerator of which is the number of Shares
that RBC and any of its affiliates subject to aggregation with RBC
for purposes of the beneficial ownership test under Section 13
of the Exchange Act and all persons who may form a group (within
the meaning of Rule 13d-5(b)(1) under the Exchange Act) with RBC
(collectively, RBC Group) beneficially own (within the meaning
of Section 13 of the Exchange Act) without duplication on such day
and (B) the denominator of which is the number of Shares
outstanding on such day.
Notwithstanding any other provision in this Confirmation to the
contrary requiring or allowing RBC to purchase, sell, receive or
deliver any shares or other securities to or from Counterparty,
RBC, acting in good faith and in a commercially reasonable manner,
may designate any of its affiliates to purchase, sell, receive or
deliver such shares or other securities and otherwise to perform
RBCs obligations in respect of the Transaction and any such
designee may assume such obligations. RBC shall be discharged of
its obligations to Counterparty to the extent of any such
performance.
Amendments to Equity Definitions. (a) Section 12.9(b)(iv) of the
Equity Definitions is hereby amended by: (i) 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); (ii) replacing will lend with lends in subsection (B);
and (iii) 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; and (b) Section 12.9(b)(v) of the
Equity Definitions is hereby amended by: (i) adding the word or
immediately before subsection (B) and deleting the comma at the
end of subsection (A); (ii) (1) deleting subsection (C) in its
entirety, (2) deleting the word or immediately preceding
subsection (C) and (3) deleting the penultimate 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; and (iii) deleting subsection (X) in its entirety and the
words or (Y) immediately following subsection (X).
Severability; Illegality. If compliance by either party with any
provision of the Transaction would be unenforceable or illegal,
(a) the parties shall negotiate in good faith to resolve such
unenforceability or illegality in a manner that preserves the
economic benefits of the transactions contemplated hereby and (b)
the other provisions of the Transaction shall not be invalidated,
but shall remain in full force and effect.
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 THE
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 THE TRANSACTION, AS APPLICABLE, BY, AMONG
OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS PROVIDED
HEREIN.
Payment by RBC. In the event that (i) an Early Termination Date
occurs or is designated with respect to the Transaction as a
result of a Termination Event or an Event of Default (other than
an Event of Default arising under Section 5(a)(ii) or 5(a)(iv) of
the Agreement) and, as a result, RBC owes to Company pursuant to
Section 6(d)(ii) of the Agreement an amount calculated under
Section 6(e) of the Agreement, or (ii) RBC owes to Company,
pursuant to Section 12.7 or Section 12.9 of the Equity Definitions
(including, for the avoidance of doubt, any amount payable in
connection with an Extraordinary Event), an amount calculated
under Section 12.8 of the Equity Definitions, such amount shall be
deemed to be zero.
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Governing law: The law of the State of New York.
Contact information. For purposes of the Agreement (unless otherwise specified in the Agreement),
the addresses for notice to the parties shall be:
(a) Counterparty
TeleCommunication Systems, Inc
275 West Street,
Annapolis, Maryland 21401
Attention: Bruce A. White
Facsimile: (410) 263-7617
275 West Street,
Annapolis, Maryland 21401
Attention: Bruce A. White
Facsimile: (410) 263-7617
(b) RBC
Whenever notices or other communications are required to be in writing as provided herein,
such notices shall be deemed duly given if given by facsimile with telephone confirmation of
receipt or by first class mail, postage prepaid.:
RBCs Address, Facsimile Number
and e-Mail Address for the
Purpose of Giving Notices:
|
Trade Affirmations and Settlements: RBC Capital Markets Corporation Attn: Back Office One Liberty Plaza 165 Broadway New York, NY 10006-1404 USA Facsimile Number: +1-212-858-7033 e-Mail Address: geda@rbccm.com |
|
Trade Confirmations: RBC Capital Markets Corporation Attn: Structured Derivatives Documentation Three World Financial Center 200 Vesey Street New York, NY 10281-1021 USA Facsimile Number: +1-212-428-3053 e-Mail Address: SDD@rbccm.com |
Any notice or other communication required or permitted to be given to RBC (for matters
other than operational matters) with respect to this Confirmation shall be delivered in
person or given by facsimile transmission to RBC and its agent, RBC Capital Markets
Corporation.
17
This Confirmation may be executed in several counterparts, each of which shall be deemed an
original but all of which together shall constitute one and the same instrument.
Counterparty hereby agrees to check this Confirmation and to confirm that the foregoing correctly
sets forth the terms of the Transaction by signing in the space provided below and returning to RBC
a facsimile of the fully-executed Confirmation to RBC at (212) 428-3053. Originals shall be
provided for your execution upon your request.
We are very pleased to have executed the Transaction with you and we look forward to completing
other transactions with you in the near future.
Very truly yours,
ROYAL BANK OF CANADA by its agent RBC Capital Markets Corporation |
||||
By: | /s/ Steven Milke | |||
Authorized Signatory | ||||
Name: | Steven Milke | |||
Title: | Managing Director | |||
Counterparty hereby agrees to, accepts and confirms the terms of the foregoing as of the Trade
Date.
TELECOMMUNICATION SYSTEMS, INC. |
||||
By: | /s/ Thomas M. Brandt, Jr. | |||
Authorized Signatory | ||||
Name: | Thomas M. Brandt, Jr. | |||
Title: | Senior Vice President and Chief Financial Officer |
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ANNEX A
Registration Settlement and Private Placement Settlement
(i) | If Counterparty elects to settle the Transaction pursuant to this clause (i) (a Private Placement Settlement), then delivery of Restricted Shares by Counterparty shall be effected in private placement procedures (customary for equity securities of the size of such private placement) with respect to such Restricted Shares reasonably acceptable to RBC; provided that Counterparty 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 Counterparty to RBC (or any affiliate designated by RBC) 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 RBC (or any such affiliate of RBC). The Private Placement Settlement of such Restricted Shares shall include customary representations, covenants, blue sky and other governmental filings and/or registrations, indemnities to RBC, due diligence rights (for RBC or any buyer of the Restricted Shares designated by RBC), opinions and certificates, and such other documentation as is customary for private placement agreements, all reasonably acceptable to RBC. In the event of a Private Placement Settlement, the Net Share Settlement Amount or the Counterparty Payment Obligation, respectively, shall be deemed to be the Net Share Settlement Amount or the Counterparty 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 Counterparty 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 RBC as provided herein) at a rate equal to the open Federal Funds Rate plus 100 basis points per annum for the period from, and including, such Settlement Date or the date on which the Counterparty 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. | |
(ii) | If Counterparty elects to settle the Transaction pursuant to this clause (ii) (a Registration Settlement), then Counterparty 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 RBC, to cover the resale of such Restricted Shares (and any Make-whole 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 RBC. If RBC, in its sole reasonable discretion, is not satisfied with such procedures and documentation, Private Placement Settlement shall apply. If RBC is satisfied with such procedures and documentation, it shall sell the Restricted Shares (and any Make-whole Shares) pursuant to such registration statement during a period (the Resale Period) commencing on the Exchange Business Day following delivery of such Restricted Shares (and any Make-whole Shares) and ending on the earliest of (i) the Exchange Business Day on which RBC completes the sale of all Restricted Shares or, in the case of settlement of Termination Delivery Units, a sufficient number of Restricted Shares so that the realized net proceeds of such sales exceed the Counterparty Payment Obligation, (ii) the date upon which all Restricted Shares (and any Make-whole Shares) have been sold or transferred pursuant to Rule 144 (or similar provisions then in force) and (iii) the date upon which all Restricted Shares (and any Make-whole Shares) may be sold or transferred by a non-affiliate pursuant to Rule 144 (or any similar provision then in force) without any further restriction whatsoever. | |
(iii) | If (ii) above is applicable and the Net Share Settlement Amount or the Counterparty Payment Obligation, as applicable, exceeds the realized net proceeds from such resale, or if (i) above is applicable and the Freely Tradeable Value (as defined below) of the Shares owed pursuant to the Net Share Settlement Amount, or the Counterparty Payment Obligation (in each case as adjusted pursuant to (i) above), as applicable, exceeds the realized net proceeds from such resale, Counterparty shall transfer to RBC by the open of the regular trading session on the Exchange on the Exchange Business Day immediately following the last day of the Resale Period the amount of such excess (the |
A-1
RBCCM Refs: NY-23215 to NY-23304
Tags: TSYS_E1-C1 to TSYS_E1-C90
Tags: TSYS_E1-C1 to TSYS_E1-C90
"Additional Amount), at its option, either in cash or in a number of Restricted Shares (Make-whole Shares, provided that the aggregate number of Restricted Shares and Make-whole Shares delivered shall not exceed the Maximum Delivery Amount) that, based on the Relevant Price on the last day of the Resale Period (as if such day was the Valuation Date for purposes of computing such Relevant Price), has a value equal to the Additional Amount. If Counterparty elects to pay the Additional Amount in Make-whole Shares, Counterparty shall elect whether the requirements and provisions for either Private Placement Settlement or Registration Settlement shall apply to such payment. This provision shall be applied successively until the Additional Amount is equal to zero, subject to Limitation on Delivery of Shares. Freely Tradeable Value means the value of the number of Shares delivered to RBC which such Shares would have if they were freely tradeable (without prospectus delivery) upon receipt by RBC, as determined by the Calculation Agent by reference to the Relevant Price for freely tradeable Shares as of the Valuation Date, or other date of valuation used to determine the delivery obligation with respect to such Shares, or by other commercially reasonable means. |
A-2
RBCCM Refs: NY-23215 to NY-23304
Tags: TSYS_E1-C1 to TSYS_E1-C90
Tags: TSYS_E1-C1 to TSYS_E1-C90
ANNEX B
The Strike Price, Premium and Final Disruption Date for the Transaction are set forth below.
Strike Price:
|
USD12.736 | |
Premium:
|
USD2,253,780 | |
Final Disruption Date:
|
July 7, 2015. |
B-1
RBCCM Refs: NY-23215 to NY-23304
Tags: TSYS_E1-C1 to TSYS_E1-C90
Tags: TSYS_E1-C1 to TSYS_E1-C90
ANNEX C
For each Component of the Transaction, the Number of Warrants and Expiration Date is set forth
below.
Component Number | Number of Warrants | Expiration Date | ||||||
1. | 19,327 | Fri, 02/13/15 | ||||||
2. | 19,327 | Tue, 02/17/15 | ||||||
3. | 19,327 | Wed, 02/18/15 | ||||||
4. | 19,327 | Thu, 02/19/15 | ||||||
5. | 19,327 | Fri, 02/20/15 | ||||||
6. | 19,327 | Mon, 02/23/15 | ||||||
7. | 19,327 | Tue, 02/24/15 | ||||||
8. | 19,327 | Wed, 02/25/15 | ||||||
9. | 19,327 | Thu, 02/26/15 | ||||||
10. | 19,327 | Fri, 02/27/15 | ||||||
11. | 19,327 | Mon, 03/02/15 | ||||||
12. | 19,327 | Tue, 03/03/15 | ||||||
13. | 19,327 | Wed, 03/04/15 | ||||||
14. | 19,327 | Thu, 03/05/15 | ||||||
15. | 19,327 | Fri, 03/06/15 | ||||||
16. | 19,327 | Mon, 03/09/15 | ||||||
17. | 19,327 | Tue, 03/10/15 | ||||||
18. | 19,327 | Wed, 03/11/15 | ||||||
19. | 19,327 | Thu, 03/12/15 | ||||||
20. | 19,327 | Fri, 03/13/15 | ||||||
21. | 19,327 | Mon, 03/16/15 | ||||||
22. | 19,327 | Tue, 03/17/15 | ||||||
23. | 19,327 | Wed, 03/18/15 | ||||||
24. | 19,327 | Thu, 03/19/15 | ||||||
25. | 19,327 | Fri, 03/20/15 | ||||||
26. | 19,327 | Mon, 03/23/15 | ||||||
27. | 19,327 | Tue, 03/24/15 | ||||||
28. | 19,327 | Wed, 03/25/15 | ||||||
29. | 19,327 | Thu, 03/26/15 | ||||||
30. | 19,327 | Fri, 03/27/15 | ||||||
31. | 19,327 | Mon, 03/30/15 | ||||||
32. | 19,327 | Tue, 03/31/15 | ||||||
33. | 19,327 | Wed, 04/01/15 | ||||||
34. | 19,327 | Thu, 04/02/15 | ||||||
35. | 19,327 | Mon, 04/06/15 | ||||||
36. | 19,327 | Tue, 04/07/15 | ||||||
37. | 19,327 | Wed, 04/08/15 | ||||||
38. | 19,327 | Thu, 04/09/15 | ||||||
39. | 19,327 | Fri, 04/10/15 |
C-1
RBCCM Refs: NY-23215 to NY-23304
Tags: TSYS_E1-C1 to TSYS_E1-C90
Tags: TSYS_E1-C1 to TSYS_E1-C90
Component Number | Number of Warrants | Expiration Date | ||||||
40. | 19,327 | Mon, 04/13/15 | ||||||
41. | 19,327 | Tue, 04/14/15 | ||||||
42. | 19,327 | Wed, 04/15/15 | ||||||
43. | 19,327 | Thu, 04/16/15 | ||||||
44. | 19,327 | Fri, 04/17/15 | ||||||
45. | 19,327 | Mon, 04/20/15 | ||||||
46. | 19,327 | Tue, 04/21/15 | ||||||
47. | 19,327 | Wed, 04/22/15 | ||||||
48. | 19,327 | Thu, 04/23/15 | ||||||
49. | 19,327 | Fri, 04/24/15 | ||||||
50. | 19,327 | Mon, 04/27/15 | ||||||
51. | 19,327 | Tue, 04/28/15 | ||||||
52. | 19,327 | Wed, 04/29/15 | ||||||
53. | 19,327 | Thu, 04/30/15 | ||||||
54. | 19,327 | Fri, 05/01/15 | ||||||
55. | 19,327 | Mon, 05/04/15 | ||||||
56. | 19,327 | Tue, 05/05/15 | ||||||
57. | 19,327 | Wed, 05/06/15 | ||||||
58. | 19,327 | Thu, 05/07/15 | ||||||
59. | 19,327 | Fri, 05/08/15 | ||||||
60. | 19,327 | Mon, 05/11/15 | ||||||
61. | 19,327 | Tue, 05/12/15 | ||||||
62. | 19,327 | Wed, 05/13/15 | ||||||
63. | 19,327 | Thu, 05/14/15 | ||||||
64. | 19,327 | Fri, 05/15/15 | ||||||
65. | 19,327 | Mon, 05/18/15 | ||||||
66. | 19,327 | Tue, 05/19/15 | ||||||
67. | 19,327 | Wed, 05/20/15 | ||||||
68. | 19,327 | Thu, 05/21/15 | ||||||
69. | 19,327 | Fri, 05/22/15 | ||||||
70. | 19,327 | Tue, 05/26/15 | ||||||
71. | 19,327 | Wed, 05/27/15 | ||||||
72. | 19,327 | Thu, 05/28/15 | ||||||
73. | 19,327 | Fri, 05/29/15 | ||||||
74. | 19,327 | Mon, 06/01/15 | ||||||
75. | 19,327 | Tue, 06/02/15 | ||||||
76. | 19,327 | Wed, 06/03/15 | ||||||
77. | 19,327 | Thu, 06/04/15 | ||||||
78. | 19,327 | Fri, 06/05/15 | ||||||
79. | 19,327 | Mon, 06/08/15 | ||||||
80. | 19,327 | Tue, 06/09/15 | ||||||
81. | 19,327 | Wed, 06/10/15 | ||||||
82. | 19,327 | Thu, 06/11/15 | ||||||
83. | 19,327 | Fri, 06/12/15 | ||||||
84. | 19,327 | Mon, 06/15/15 | ||||||
85. | 19,327 | Tue, 06/16/15 | ||||||
86. | 19,327 | Wed, 06/17/15 | ||||||
87. | 19,327 | Thu, 06/18/15 | ||||||
88. | 19,327 | Fri, 06/19/15 | ||||||
89. | 19,327 | Mon, 06/22/15 | ||||||
90. | 19,364 | Tue, 06/23/15 |
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