UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. )*
American International Group, Inc.
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(Name of Issuer)
Common Stock
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(Title of Class of Securities)
026874-107
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(CUSIP Number)
Howard I. Smith
C. V. Starr & Co., Inc.
399 Park Avenue, 17th Floor
New York, New York 10022
(212) 230-5050
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(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
November 23, 2005
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(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition that is the subject of this Schedule 13D, and is filing this
schedule because of ss.ss.240.13d-1(e), 240.13d-1(f) or 240.13d-1(g), check the
following box. [ ]
Note: Schedules filed in paper format shall include a signed original and five
copies of the schedule, including all exhibits. See ss.240.13d-7 for other
parties to whom copies are to be sent.
* This Schedule 13D constitutes an initial Schedule 13D on behalf of Maurice R.
Greenberg, an initial Schedule 13D on behalf of Edward E. Matthews and
Amendment No. 2 to the Schedule 13D of Starr International Co., Inc., dated
October 2, 1978 (the "Starr International 13D") and Amendment No. 2 to the
Schedule 13D for C. V. Starr & Co., Inc., dated October 2, 1978 (the "CV Starr
13D"). This Schedule 13D constitutes a restatement of the Starr International
13D and the CV Starr 13D in their entirety.
The information required on the remainder of this cover page shall not be
deemed to be "filed" for the purpose of Section 18 of the Securities Exchange
Act of 1934 (the "Act") or otherwise subject to the liabilities of that section
of the Act but shall be subject to all other provisions of the Act (however,
see the Notes).
CUSIP No. 026874-107
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1. Name of Reporting Person. Maurice R. Greenberg
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2. Check the Appropriate Box if a Member of a Group (See
Instructions) (a) [X]
(b) [ ]
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3. SEC Use Only
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4. Source of Funds (See Instructions) PF
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5. Check if Disclosure of Legal Proceedings Is Required Pursuant
to Items 2(d) or 2(e) |_|
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6. Citizenship or Place of Organization
United States of America
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Number of
Shares 7. Sole Voting Power
Beneficially 3,109,351
Owned by ------------------------------------------------------------------
Each
Reporting 8. Shared Voting Power
Person With 90,794,699
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9. Sole Dispositive Power
3,109,351
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10. Shared Dispositive Power
90,794,699
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11. Aggregate Amount Beneficially Owned by Each Reporting Person
93,904,050
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12. Check if the Aggregate Amount in Row (11) Excludes Certain
Shares (See Instructions)
[X]
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13. Percent of Class Represented by Amount in Row (11)
3.6%
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14. Type of Reporting Person (See Instructions)
IN
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CUSIP No. 026874-107
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1. Name of Reporting Person. Edward E. Matthews
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2. Check the Appropriate Box if a Member of a Group (See
Instructions) (a) [X]
(b) [ ]
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3. SEC Use Only
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4. Source of Funds (See Instructions) PF
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5. Check if Disclosure of Legal Proceedings Is Required Pursuant
to Items 2(d) or 2(e) |_|
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6. Citizenship or Place of Organization
United States of America
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Number of
Shares 7. Sole Voting Power
Beneficially 1,991,635
Owned by ------------------------------------------------------------------
Each
Reporting 8. Shared Voting Power
Person With 18,667,178
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9. Sole Dispositive Power
1,991,635
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10. Shared Dispositive Power
18,667,178
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11. Aggregate Amount Beneficially Owned by Each Reporting Person
20,658,813
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12. Check if the Aggregate Amount in Row (11) Excludes Certain
Shares (See Instructions)
[X]
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13. Percent of Class Represented by Amount in Row (11)
0.8%
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14. Type of Reporting Person (See Instructions)
IN
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CUSIP No. 026874-107
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1. Name of Reporting Person. Starr International Co., Inc.
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2. Check the Appropriate Box if a Member of a Group (See
Instructions) (a) [X]
(b) [ ]
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3. SEC Use Only
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4. Source of Funds (See Instructions) WC
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5. Check if Disclosure of Legal Proceedings Is Required Pursuant
to Items 2(d) or 2(e) |_|
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6. Citizenship or Place of Organization
Panama
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Number of
Shares 7. Sole Voting Power
Beneficially 310,905,397
Owned by ------------------------------------------------------------------
Each
Reporting 8. Shared Voting Power
Person With 0
------------------------------------------------------------------
9. Sole Dispositive Power
310,905,397
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10. Shared Dispositive Power
0
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11. Aggregate Amount Beneficially Owned by Each Reporting Person
310,905,397
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12. Check if the Aggregate Amount in Row (11) Excludes Certain
Shares (See Instructions)
[X]
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13. Percent of Class Represented by Amount in Row (11)
12.0%
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14. Type of Reporting Person (See Instructions)
CO
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CUSIP No. 026874-107
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1. Name of Reporting Person.
C. V. Starr & Co., Inc.
I.R.S. Identification No. of above person.
13-5621350
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2. Check the Appropriate Box if a Member of a Group (See
Instructions) (a) [X]
(b) [ ]
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3. SEC Use Only
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4. Source of Funds (See Instructions)
WC
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5. Check if Disclosure of Legal Proceedings Is Required Pursuant
to Items 2(d) or 2(e) |_|
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6. Citizenship or Place of Organization
Delaware
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Number of
Shares 7. Sole Voting Power
Beneficially 0
Owned by ------------------------------------------------------------------
Each
Reporting 8. Shared Voting Power
Person With 47,337,246
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9. Sole Dispositive Power
0
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10. Shared Dispositive Power
47,337,246
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11. Aggregate Amount Beneficially Owned by Each Reporting Person
47,337,246
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12. Check if the Aggregate Amount in Row (11) Excludes Certain
Shares (See Instructions)
[X]
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13. Percent of Class Represented by Amount in Row (11)
1.8%
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14. Type of Reporting Person (See Instructions)
CO
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Item 1. Security and Issuer
This Schedule 13D relates to shares of common stock, par value $2.50
per share (the "Common Stock"), of American International Group, Inc., a
Delaware corporation (the "Issuer"). The address of the principal executive
offices of the Issuer is 70 Pine Street, New York, NY 10270.
Item 2. Identity and Background
(a), (b), (c) and (f): This Schedule 13D is being filed on behalf of
Maurice R. Greenberg, a United States citizen ("Mr. Greenberg"), Edward E.
Matthews, a United States citizen ("Mr. Matthews"), Starr International Co.,
Inc., a Panamanian corporation ("Starr International") and C. V. Starr & Co.,
Inc., a Delaware corporation ("CV Starr", and together with Mr. Greenberg, Mr.
Matthews and Starr International, the "Reporting Persons", and each, a
"Reporting Person").
The principal business address and office for Mr. Greenberg is 399
Park Avenue, 17th Floor, New York, NY 10022. The principal occupation of Mr.
Greenberg is serving as a director and Chairman of the Board of each of Starr
International and CV Starr, and as the Chief Executive Officer of CV Starr. Mr.
Greenberg is also a trustee of C. V. Starr & Co., Inc. Trust (the "Starr
Trust"), and a member, director and Chairman of the Board of The Starr
Foundation.
The principal business address and office for Mr. Matthews is 399 Park
Avenue, 17th Floor, New York, NY 10022. The principal occupation of Mr.
Matthews is serving as Managing Director of Starr International and a director
and President of CV Starr. Mr. Matthews is also a trustee of the Starr Trust,
and a member and director of The Starr Foundation.
Starr International is a holding company that operates in a number of
lines of business, including commercial real estate, owning and operating a
private golf club and maintaining an investment portfolio, including the Common
Stock. Starr International also previously operated a deferred compensation
profit participation plan for the benefit of executives of the Issuer. Starr
International's principal offices are Clifton House - Suite 59, Lower
Fitzwilliam Street, Dublin 2, Ireland and Mercury House - 101 Front Street,
Hamilton HM12 Bermuda. The following are the executive officers and directors
of Starr International, their addresses and their principal occupations:
Name and Address Office Principal Occupation
- ---------------- ------ --------------------
Maurice R. Greenberg Chairman of the Board (See above)
(See above)
Edward E. Matthews Managing Director (See above)
(See above)
Lawrence Michael Murphy President and Director President of Starr International
Mercury House
101 Front Street
Hamilton HM12
Bermuda
Houghton Freeman Director President, Freeman Foundation
499 Taber Hill Road
Stowe, VT 05672
Howard I. Smith Director Vice Chairman-Finance and
399 Park Avenue, 17th Floor Secretary of CV Starr
New York, NY 10022
John J. Roberts Director Senior Advisor, American
Concordia Farms International Group, Inc.
P.O. Box 703 Easton, MD 21601
Ernest Stempel Director Senior Advisor and Honorary
70 Pine Street, 29th Floor Director, American International
New York, NY 10270 Group, Inc.
Cesar Zalamea Director President and Chief Executive
Suite 1405-7 Officer of Starr International
Two Exchange Square Company (Asia), Limited
8 Connaught Place
Central, Hong Kong
Each of the above officers and directors of Starr International is a
United States citizen except Mr. Zalamea, who is a citizen of the Republic of
the Philippines.
CV Starr is a holding company that operates in a number of lines of
business, including owning a number of insurance agencies and holding an
investment portfolio, including the Common Stock. CV Starr's principal office
is 399 Park Avenue, 17th Floor, New York, NY 10022. The following are the
executive officers and directors of CV Starr, their addresses and their
principal occupations:
Name and Address Office Principal Occupation
- ---------------- ------ --------------------
Maurice R. Greenberg Chairman of the Board and Chief (See above)
(See above) Executive Officer
Howard I. Smith Vice Chairman-Finance and (See above)
(See above) Secretary
Edward E. Matthews President and Director (See above)
(See above)
J. Christopher Flowers Director Chairman of J.C. Flowers
717 Fifth Avenue, and Co. LLC
26th Floor
New York, NY 10022
Houghton Freeman Director (See above)
(See above)
Thomas Kempner Director Chairman and Chief Executive
61 Broadway, Room 2450 Officer of Loeb Partners
New York, NY 10006 Corporation
John J. Roberts Director (See above)
(See above)
Cesar Zalamea Director (See above)
(See above)
Each of the above officers and directors of CV Starr is a United
States citizen except Mr. Zalamea, who is a citizen of the Republic of the
Philippines.
(d) and (e): During the last five years, none of Mr. Greenberg, Mr.
Matthews, Starr International, CV Starr, or the other individuals disclosed in
Item 2(a) above has (i) been convicted in a criminal proceeding (excluding
traffic violations or similar misdemeanors) or (ii) been a party to a civil
proceeding of a judicial or administrative body of competent jurisdiction and
as a result of such proceeding has been or is subject to a judgment, decree or
final order enjoining future violations of, or prohibiting or mandating
activities subject to, federal or state securities laws or finding any
violation with respect to such laws.
Item 3. Source and Amount of Funds or Other Consideration
This Schedule 13D is being filed because, under the facts and
circumstances described in Items 2, 5 and 6, the Reporting Persons may be
deemed to be a group within the meaning of Section 13(d)(3) of the Act. This
filing is not being made as a result of any particular acquisitions of Common
Stock by the Reporting Persons.
Item 4. Purpose of Transaction
This Schedule 13D is being filed because, under the facts and
circumstances described in Items 2, 5 and 6, the Reporting Persons may be
deemed to be a group within the meaning of Section 13(d)(3) of the Act. This
filing is not being made as a result of any particular acquisitions of Common
Stock by the Reporting Persons.
Each of the Reporting Persons holds the securities reported herein for
investment purposes and reserves the right, in light of its ongoing evaluation
of the Issuer's financial condition, business, operations and prospects, the
market price of the Common Stock, conditions in the securities markets
generally, general economic and industry conditions, the Reporting Person's and
Issuer's respective business objectives, and other relevant factors, at any
time and as it deems appropriate, to change its plans and intentions, to
increase or decrease its investment in the Issuer, or to engage in discussions
with the Issuer and third parties or facilitate discussions between the Issuer
and third parties exploring such actions. In particular, any one or more of the
Reporting Persons may (a) purchase additional shares of Common Stock, (b) sell
or transfer shares of Common Stock in public or private transactions, (c) enter
into privately negotiated derivative transactions to hedge the market risk of
some or all of their positions in the Common Stock, and/or (d) take any other
action that might relate to or result in any of the actions set forth in
response to paragraphs (a) - (j) of Item 4 of Schedule 13D. Any such actions
may be effected at any time or from time to time, subject to any applicable
limitations imposed on the actions by the Securities Act of 1933, as amended,
or other applicable law.
Except as otherwise described in this Item 4 and in Item 5 below, no
Reporting Person has formulated any plans or proposals which relate to or would
result in any of the events or transactions described in Item 4(a) through (j)
of the General Instructions to Schedule 13D under the Act.
Item 5. Interest in Securities of the Issuer
(a) and (b): The Reporting Persons may be deemed to be a group within
the meaning of Section 13(d)(3) of the Act consisting of the Reporting Persons
as a result of the facts and circumstances described in Items 2, 5 and 6 of
this Schedule 13D. The Reporting Persons as a group may be deemed beneficially
to own in the aggregate 406,823,982 shares of Common Stock, representing
approximately 15.7% of the outstanding shares of Common Stock (based on
2,595,607,825 shares of Common Stock reported by the Issuer as outstanding as
of September 30, 2005, in the Issuer's Form 10-Q filed on November 14, 2005).
Each of Mr. Greenberg, Mr. Matthews, Starr International and CV Starr disclaims
beneficial ownership of the shares of Common Stock held by the other members of
such group.
Mr. Greenberg has the sole power to vote and direct the disposition of
3,109,351 shares of Common Stock, 52 shares of which are held directly by Mr.
Greenberg and 3,109,299 shares of which may be acquired pursuant to incentive
stock options previously granted by the Issuer to Mr. Greenberg as an officer
and director of the Issuer that are exercisable within 60 days of the date
hereof. Mr. Greenberg has shared power to vote and direct the disposition of
90,794,699 shares of Common Stock, 43,350,826 shares of which are held as a
tenant in common with Mr. Greenberg's wife, 106,627 shares of which are held in
family trusts of which Mr. Greenberg is a trustee, and 47,337,246 shares of
which are held by CV Starr (18,644,278 shares of which are held by the Starr
Trust, for which CV Starr is a beneficiary and Mr. Greenberg is a trustee). Mr.
Greenberg owns 12.8% of the voting common stock of CV Starr, and has
irrevocable proxies until January 17, 2006, to vote in the aggregate, together
with his direct ownership, 32.3% of the voting common stock of CV Starr. Based
on Mr. Greenberg's voting power in CV Starr, and the other facts and
circumstances described in Items 2, 5 and 6 of this Schedule 13D, Mr. Greenberg
may be deemed to beneficially own the shares of Common Stock held by CV Starr
and the Starr Trust. Mr. Greenberg disclaims beneficial ownership of the shares
of Common Stock held by CV Starr, the Starr Trust and the trusts described
above.
Mr. Matthews has the sole power to vote and direct the disposition of
1,991,635 shares of Common Stock, 1,569,135 of which are held directly by Mr.
Matthews and 422,500 shares of which may be acquired pursuant to incentive
stock options previously granted by the Issuer to Mr. Matthews as an officer
and director of the Issuer that are exercisable within 60 days of the date
hereof. Mr. Matthews has shared power to vote and direct the disposition of
18,667,178 shares of Common Stock, 22,900 shares of which are held by Mr.
Matthew's wife and 18,644,278 shares of which are held by the Starr Trust, for
which CV Starr is a beneficiary and Mr. Matthews is a trustee. Based on the
facts and circumstances described in Items 2, 5 and 6 of this Schedule 13D, Mr.
Matthews may be deemed to beneficially own the shares of Common Stock held by
the Starr Trust. Mr. Matthews disclaims beneficial ownership of the shares of
Common Stock held by the Starr Trust and by his wife.
Starr International has the sole power to vote and direct the
disposition of 310,905,397 shares of Common Stock held by Starr International.
CV Starr has the shared power to vote and direct the disposition of
47,337,246 shares of Common Stock held by CV Starr (18,644,278 shares of which
are held by the Starr Trust, of which CV Starr is a beneficiary).
Executive officers and directors of Starr International beneficially
owned shares of Common Stock and had rights to acquire shares of Common Stock
exercisable within 60 days as follows:
Owned Shares(1) %(2) Right to Acquire Shares(1) %(2)
--------------- -------------------------- ----
Maurice R. Greenberg (See above) (See above)
Edward E. Matthews (See above) (See above)
Lawrence Michael Murphy 50,000 (3) 0 0.0
Houghton Freeman 2,660,000 0.1 0 0.0
Howard I. Smith 70,000 (3) 0 0.0
John J. Roberts 3,600,000 0.1 0 0.0
Ernest Stempel 23,110,000 0.9 0 0.0
Cesar Zalamea (4) (3) 0 0.0
(1) Rounded to nearest 10,000 shares.
(2) Rounded to nearest 0.1%.
(3) Less than 0.1%.
(4) Less than 10,000 shares.
Executive officers and directors of CV Starr beneficially owned shares
of Common Stock and had rights to acquire shares of Common Stock exercisable
within 60 days as follows:
Owned Shares(1) %(2) Right to Acquire Shares(1) %(2)
--------------- -------------------------- ----
Maurice R. Greenberg (See above) (See above)
Howard I. Smith (See above) (See above)
Edward E. Matthews (See above) (See above)
J. Christopher Flowers 0 0.0 0 0.0
Houghton Freeman (See above) (See above)
Thomas Kempner (3) (4) 0 0.0
John J. Roberts (See above) (See above)
Cesar Zalamea (See above) (See above)
(1) Rounded to nearest 10,000 shares.
(2) Rounded to nearest 0.1%.
(3) Less than 10,000 shares.
(4) Less than 0.1%.
(c) On November 15, 2005, CV Starr entered into a variable pre-paid
forward sale contract (the "CSFB Contract") for up to 4,423,116 shares (the
"CSFB Maximum Number") of Common Stock pursuant to a letter agreement by and
among CV Starr, Credit Suisse First Boston LLC and Credit Suisse First Boston
Capital LLC ("CSFB"). The final terms of the CSFB Contract, including the CSFB
Maximum Number of shares deliverable by CV Starr upon settlement, were
determined in a block transaction between CV Starr and CSFB (or its affiliate),
acting as a block positioner, in accordance with the Securities and Exchange
Commission's interpretative letter to Goldman, Sachs & Co., dated December 20,
1999 (the "No Action Letter"). CV Starr has received aggregate proceeds of
$240,000,043 under the CSFB Contract.
The CSFB Contract provides that for each of the 10 Scheduled Trading
Days (as defined in the CSFB Contract) prior to and including November 20, 2008
(the "CSFB Settlement Dates"), CV Starr will deliver a number of shares of
Common Stock to CSFB (or, at the election of CV Starr, the cash equivalent of
such shares) determined with respect to each CSFB Settlement Date as follows:
(a) if the VWAP Price (as defined in the CSFB Contract) per share of the Common
Stock (the "CSFB Settlement Price") is less than or equal to $65.85 (the "CSFB
Forward Floor Price"), a delivery of 1/10 of the CSFB Maximum Number of shares
of Common Stock, subject to rounding; (b) if the CSFB Settlement Price is
greater than the CSFB Forward Floor Price but less than or equal to $85.61 per
share (the "CSFB Forward Cap Price"), a delivery of shares equal to the CSFB
Forward Floor Price/CSFB Settlement Price x 1/10 of the CSFB Maximum Number of
shares of Common Stock, subject to rounding; and (c) if the CSFB Settlement
Price is greater than the CSFB Forward Cap Price, a delivery of shares equal to
((CSFB Forward Floor Price + (CSFB Settlement Price - CSFB Forward Cap Price))
/ CSFB Settlement Price) x 1/10 of the CSFB Maximum Number of shares of Common
Stock, subject to rounding.
On November 21, 2005, CV Starr entered into a variable pre-paid
forward sale contract (the "Confirmation") for up to 2,917,916 shares (the
"Citi Maximum Number") of Common Stock pursuant to the Master Terms and
Conditions for Pre-Paid Forward Contracts, dated as of November 15, 2005
(together with the Confirmation, the "Citi Contract"), by and between CV Starr
and Citibank, N.A. ("Citibank"). The final terms of the Citi Contract,
including the Citi Maximum Number of shares that will be deliverable by CV
Starr upon settlement, were determined in unsolicited brokerage transactions by
Citibank (or its affiliate) over a specified execution period beginning on
November 18, 2005, in accordance with the No Action Letter. CV Starr has
received aggregate proceeds of $160,000,000 under the Citi Contract.
The Citi Contract provides that for each of the 10 Scheduled Trading
Days (as defined in the Citi Contract) prior to and including December 10, 2008
(the "Citi Settlement Dates"), CV Starr will deliver a number of shares of
Common Stock to Citibank (or, at the election of CV Starr, the cash equivalent
of such shares) determined with respect to each Citi Settlement Date as
follows: (a) if the Relevant Price (as defined in the Citi Contract) per share
of the Common Stock (the "Citi Settlement Price") is less than or equal to
$66.8540 (the "Citi Forward Floor Price"), a delivery of 1/10 of the Citi
Maximum Number of shares of Common Stock, subject to rounding; (b) if the Citi
Settlement Price is greater than the Citi Forward Floor Price but less than or
equal to $86.9102 per share (the "Citi Forward Cap Price"), a delivery of
shares equal to the Citi Forward Floor Price/Citi Settlement Price x 1/10 of
the Citi Maximum Number of shares of Common Stock, subject to rounding; and (c)
if the Citi Settlement Price is greater than the Citi Forward Cap Price, a
delivery of shares equal to ((Citi Forward Floor Price + (Citi Settlement Price
- - Citi Forward Cap Price)) / Citi Settlement Price) x 1/10 of the Citi Maximum
Number of shares of Common Stock, subject to rounding.
The descriptions of the CSFB Contract and the Citi Contract are
qualified in their entirety by the text of such contracts, copies of which are
attached as exhibits hereto.
To the knowledge of each of the Reporting Persons, there were no other
transactions in the Common Stock that were effected during the past sixty days
by the Reporting Persons.
(d) and (e): Not applicable.
Item 6. Contracts, Arrangements, Understandings or Relationships with Respect
to Securities of the Issuer
Items 2 and 5 disclose (i) certain relationships between the Reporting
Persons, (ii) the CSFB Contract and (iii) the Citi Contract, which disclosures
are hereby incorporated by reference into this Item 6. There are no contracts,
arrangements or understandings among the Reporting Persons, other than as
described in this Item 6 and in Item 7 below, with respect to the shares of
Common Stock reported on this Schedule 13D.
Item 7. Material to Be Filed as Exhibits
Exhibit A: Joint Filing Agreement, dated as of November 23, 2005, by and
among Mr. Greenberg, Mr. Matthews, Starr International and CV
Starr.
Exhibit B: Letter Agreement and Transaction Supplement, each dated as
of November 15, 2005, by and among CV Starr, Credit Suisse
First Boston LLC and Credit Suisse First Boston Capital LLC.
Exhibit C: Master Terms and Conditions for Pre-Paid Forward Contracts
and Pre-Paid Forward Contract Confirmation, dated as of
November 15, 2005 and November 21, 2005, respectively, by and
between CV Starr and Citibank, N.A.
There are no other written agreements, contracts, arrangements,
understandings, plans or proposals within the category of those described in
Item 7 of the General Instructions to Schedule 13D under the Act.
Signature
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Date: November 23, 2005
Signature: /s/ Maurice R. Greenberg
Name: Maurice R. Greenberg
STARR INTERNATIONAL CO., INC.
Signature: /s/ Howard I. Smith
By: Howard I. Smith
Title: Director
C. V. STARR & CO., INC.
Signature: /s/ Howard I. Smith
By: Howard I. Smith
Title: Vice Chairman-Finance and Secretary
Signature: /s/ Edward E. Matthews
Name: Edward E. Matthews
EXHIBIT A
JOINT FILING AGREEMENT
In accordance with Rule 13d-1(k) under the Securities Exchange Act of
1934, as amended, each of the undersigned hereby agrees to the joint filing on
behalf of each of them of a statement on Schedule 13D (including amendments
thereto) with respect to the Common Stock of American International Group,
Inc., and that this Agreement be included as an Exhibit to such joint filing.
Each of the undersigned acknowledges that each shall be responsible for the
timely filing of any statement (including amendments) on Schedule 13D, and for
the completeness and accuracy of the information concerning him or it contained
therein, but shall not be responsible for the completeness and accuracy of the
information concerning the other persons making such filings, except to the
extent that he or it knows or has reason to believe that such information is
inaccurate.
Date: November 23, 2005
Signature: /s/ Maurice R. Greenberg
Name: Maurice R. Greenberg
STARR INTERNATIONAL CO., INC.
Signature: /s/ Howard I. Smith
By: Howard I. Smith
Title: Director
C. V. STARR & CO., INC.
Signature: /s/ Howard I. Smith
By: Howard I. Smith
Title: Vice Chairman-Finance and Secretary
Signature: /s/ Edward E. Matthews
Name: Edward E. Matthews
EXHIBIT B
November 15, 2005
C. V. Starr & Co., Inc. 399 Park Avenue New York, NY 10002
Credit Suisse First Boston Capital LLC
Eleven Madison Avenue
New York, NY 10010
Deal ID: AIG#04
- ---------------------------------------------------------------------------
Dear Sir or Madam,
The purpose of this letter agreement (this "Confirmation") is to confirm
certain terms and conditions of the Transaction to be entered into between us
on the Trade Date specified below (the "Transaction"). The confirmation
applicable to the Transaction shall constitute a "Confirmation" for the
purposes of the Agreement and shall consist of this Confirmation as
supplemented by the trade details applicable to the Transaction set forth in
the Transaction Supplement attached hereto as Annex C.
In this Confirmation, "CSFB" means Credit Suisse First Boston Capital LLC,
"Counterparty" means C. V. Starr & Co., Inc. and "Agent" means Credit
Suisse First Boston LLC, solely in its capacity as agent for CSFB and
Counterparty.
1. The definitions and provisions contained in the 2000 ISDA Definitions
(the "2000 Definitions") and the 2002 ISDA Equity Derivatives
Definitions (the "2002 Definitions" and, together with the 2000
Definitions, the "Definitions"), each as published by the
International Swaps and Derivatives Association, Inc. ("ISDA"), are
incorporated into this Confirmation. In the event of any
inconsistency between the 2000 Definitions and the 2002 Definitions,
the 2002 Definitions will govern. In the event of any inconsistency
between the Definitions and this Confirmation, this Confirmation will
govern, and in the event of any inconsistency between this
Confirmation and the Transaction Supplement, the Transaction
Supplement shall govern. The Transaction shall be deemed to be a
Share Forward Transaction within the meaning set forth in the 2002
Definitions, and shall consist of individual Components as described
below.
This Confirmation shall supplement, form a part of and be subject to
an agreement (the "Agreement") in the form of the 1992 ISDA Master
Agreement (Multicurrency - Cross Border) (the "ISDA Form"), as
published by ISDA, as if CSFB and Counterparty had executed the ISDA
Form (without any Schedule thereto) on the date hereof. All
provisions contained in the Agreement are incorporated into and shall
govern this Confirmation except as expressly modified below. This
Confirmation evidences a complete and binding agreement between you
and us as to the terms of the Transaction to which it relates and
replaces any previous agreement between us with respect to the
subject matter hereof and together with the Transaction Supplement
shall constitute a "Confirmation" with respect to the Agreement. This
Confirmation, together with the Transaction Supplement and all other
confirmations or agreements between us referencing the ISDA Form,
shall be deemed to supplement, form part of and be subject to the
same, single Agreement.
If there exists any ISDA Master Agreement between CSFB and
Counterparty or any confirmation or other agreement between CSFB and
Counterparty pursuant to which an ISDA Master Agreement is deemed to
exist between CSFB and Counterparty, then notwithstanding anything to
the contrary in such ISDA Master Agreement, such confirmation or
agreement or any other agreement to which CSFB and Counterparty are
parties, this Transaction shall not be considered a Transaction
under, or otherwise governed by, such existing or deemed ISDA Master
Agreement.
2. The terms of the particular Transaction to which this Confirmation
relates are as follows:
General Terms:
Trade Date: As set forth in the Transaction
Supplement, to be the date of completion
of CSFB's Initial Hedge.
Seller: Counterparty
Buyer: CSFB
Shares: Common stock of American International
Group, Inc. (the "Issuer") (Exchange
Symbol: Ticker: "AIG").
Components: The Transaction will consist of
individual Components each with the
terms and conditions as set forth in
this Confirmation. The payments and
deliveries to be made upon settlement of
the Transaction shall be determined
separately for each Component as if such
Component were a separate Transaction.
Number of Shares: As set forth in the Transaction
Supplement. For purposes of determining
the payments and deliveries to be made
upon settlement of any Component, the
Number of Shares for each such Component
shall be 1/10th of the Number of Shares,
with any fractional share amount to be
included in the final Component.
Prepayment: Applicable
Conditions to CSFB's
Obligation to Pay
Prepayment Amount: It shall be a condition to CSFB's
obligation to pay any Prepayment Amount
hereunder on any Prepayment Date that
(i) the Transaction Supplement shall
have been executed by the parties hereto
and (ii) Counterparty shall have
performed its obligations under
paragraphs 4.a., "Delivery of
Collateral," and 5, "Agreements to
Deliver Documents," below.
Prepayment Amount: As specified in the Transaction
Supplement.
Variable Obligation: Applicable
Forward Floor Price: As specified in the Transaction
Supplement.
Forward Cap Price: As specified in the Transaction
Supplement.
CSFB's Initial Hedge: Upon the execution of this Confirmation,
CSFB (or an affiliate of CSFB) shall
promptly establish CSFB's initial hedge
of the price and market risk under the
Transaction.
CSFB's Initial Hedge shall be
established by selling shares in
transactions conforming to the
manner-of-sale conditions described in
Rule 144(f) and (g) under the Securities
Act of 1933, as amended.
Exchange: New York Stock Exchange
Related Exchange(s): All Exchanges
Valuation:
Valuation Date: For each Component, the date as set
forth in the Transaction Supplement (or,
if such date is not a Scheduled Trading
Day, the next following Scheduled
Trading Day that is not already a
Valuation Date for another Component);
provided that if such date is a
Disrupted Day, the Valuation Date for
such Component shall be the first
succeeding Scheduled Trading Day that is
not a Disrupted Day and that is not or
is not deemed to be a Valuation Date in
respect of any other Component under the
Transaction; and provided further that
if the Valuation Date for any Component
has not occurred pursuant to the
preceding proviso as of the eighth
Scheduled Trading Day following the last
Scheduled Valuation Date under the
Transaction, that eighth Scheduled
Trading Day shall be the Valuation Date
for such Component (irrespective of
whether such day is a Valuation Date in
respect of any other Component) and the
Calculation Agent shall determine its
good faith estimate of the value for the
Shares as of the Valuation Time on that
eighth Scheduled Trading Day.
Notwithstanding the foregoing and
anything to the contrary in the 2002
Definitions, if a Market Disruption
Event occurs on any Valuation Date, the
Calculation Agent may determine that
such Valuation Date is a Disrupted Day
only in part, in which case the
Calculation Agent shall make adjustments
to the number of Shares for the relevant
Component for which such day shall be
the Valuation Date and shall designate
the Scheduled Trading Day determined in
the manner described in the immediately
preceding sentence as the Valuation Date
for the remaining Shares for such
Component. Such determination and
adjustments will be based on, among
other factors, the duration of any
Market Disruption Event and the volume,
historical trading patterns and price of
the Shares.
Market Disruption Event: Section 6.3(a) of the 2002 Definitions
is hereby amended by replacing clause
(ii) thereof in its entirety with the
following: "(ii) an Exchange Disruption,
or" and inserting immediately following
clause (iii) thereof the following: ";
in each case that the Calculation Agent
determines is material."
Relevant Price: VWAP Price
VWAP Price: On any day, the "Volume Weighted Average
Price" per Share on such day, as
displayed on Bloomberg Page "AQR" (or
any successor thereto) for the Issuer
with respect to the period from 9:30
a.m. to 4:00 p.m. (New York City time)
on such day, as determined by the
Calculation Agent.
Settlement Terms:
Physical Settlement: Applicable
Settlement method Election: Applicable; provided that the
Settlement Method Election shall
apply to all Components
Electing Party: Counterparty
Settlement Method
Election Date: The date that is 10 Scheduled
Trading Days prior to the first
Valuation Date
Default Settlement Method: Physical Settlement
Settlement Price: The Relevant Price
Automatic Physical
Settlement: If (x) Counterparty has not elected
Cash Settlement, (y) by 10:00 a.m.,
New York City time, on the Settlement
Date, Counterparty has not otherwise
effected delivery of the Number of
Shares to be Delivered and (z) the
collateral then held hereunder by or
on behalf of CSFB includes Shares with
respect to which the Representation
and Agreement set forth in Section
9.11 of the 2002 Definitions are true
and satisfied (or, at the absolute
discretion of CSFB, Shares with
respect to which such Representation
and Agreement are not true or
satisfied), then the delivery required
by Section 9.2 of the Equity
Definitions shall be effected, in
whole or in part, as the case may be
by delivery from the Collateral
Account (as defined below under
"Collateral Provisions") to CSFB of a
number of Shares equal to the Number
of Shares to be Delivered.
Settlement Currency: USD
Dividends:
Extraordinary Dividend: Any dividend or distribution on the
Shares (other than any dividend or
distribution of the type described in
Section 11.2(e)(i) or Section
11.2(e)(ii)(A) or (B) of the 2002
Definitions) the amount or value of
which exceeds the Ordinary Dividend
Amount for such dividend or
distribution, as determined by the
Calculation Agent.
Ordinary Dividend Amount: The amount paid in respect of any
dividend or distribution on the Shares
for which the ex-dividend date falls
within any quarterly period set forth
in the table below, in an aggregate
amount up to, but not exceeding, the
amount specified for each such
quarterly period (with the
corresponding dates subject to
adjustment upon determination of the
Trade Date).
4th calendar quarter 2005: USD 0.150
1st calendar quarter 2006: USD 0.150
2nd calendar quarter 2006: USD 0.150
3rd calendar quarter 2006: USD 0.168
4th calendar quarter 2006: USD 0.168
1st calendar quarter 2007: USD 0.168
2nd calendar quarter 2007: USD 0.168
3rd calendar quarter 2007: USD 0.188
4th calendar quarter 2007: USD 0.188
1st calendar quarter 2008: USD 0.188
2nd calendar quarter 2008: USD 0.188
3rd calendar quarter 2008: USD 0.211
Payment Obligation in
Respect of Extraordinary
Dividends: In the event of any Extraordinary
Dividend received by Counterparty,
Counterparty shall make a cash payment
to CSFB, on the date such
Extraordinary Dividend is paid to
holders of Shares, in an amount equal
to the product of (i) the Number of
Shares on the ex-dividend date for
such Extraordinary Dividend and (ii)
the excess, if any, of the per share
amount or value of such Extraordinary
Dividend over the Ordinary Dividend
Amount for such Extraordinary
Dividend, as determined by the
Calculation Agent.
Excess Dividend Amount: For the avoidance of doubt, all
references to the Excess Dividend
Amount shall be deleted from Section
8.4(b) and 9.2(a)(iii) of the 2002
Definitions.
Share Adjustments:
Potential Adjustment
Events: If an event occurs that constitutes
both a Potential Adjustment Event
under Section 11.2(e)(ii)(C) of the
2002 Definitions and a Spin-off as
described below, it shall be treated
hereunder as a Spin-off and not as a
Potential Adjustment Event.
Method of Adjustment: Calculation Agent Adjustment
Spin-off: A distribution of New Shares (the
"Spin-off Shares") of a subsidiary of
the Issuer (the "Spin-off Issuer") to
holders of the Shares (the "Original
Shares"). With respect to a Spin-off,
"New Shares" shall have the meaning
provided in Section 12.1(i) of the
2002 Definitions except that the
phrase immediately preceding clause
(i) thereof shall be replaced by the
following: "`New Shares" means
ordinary or common shares of the
Spin-off Issuer that are, or that as
of the ex-dividend date of such
Spin-off are scheduled promptly to
be,".
Consequences of Spin-offs: As of the ex-dividend date of a
Spin-off, (i) "Shares" shall mean the
Original Shares and the Spin-off
Shares; (ii) the Transaction shall
continue but as a Share Basket Forward
Transaction with a Number of Baskets
equal to the Number of Shares prior to
such Spin-off, and each Basket shall
consist of one Original Share and a
number of Spin-off Shares that a
holder of one Original Share would
have been entitled to receive in such
Spin-off; and (iii) the Calculation
Agent shall make such adjustments to
the exercise, settlement, payment or
any other terms of the Transaction as
the Calculation Agent determines
appropriate to account for the
economic effect on the Transaction of
such Spin-off (provided that no
adjustments will be made to account
solely for changes in volatility,
expected dividends, stock loan rate or
liquidity relevant to the Shares or to
the Transaction), which may, but need
not, be determined by reference to the
adjustment(s) made in respect of such
Spin-off by an options exchange to
options on the Shares traded on such
options exchange. As of the
ex-dividend date of any subsequent
Spin-off, the Calculation Agent shall
make adjustments to the composition of
the Basket and other terms of the
Transaction in accordance with the
immediately preceding sentence.
Extraordinary Events:
Consequences of Merger Events:
Share-for-Share: Calculation Agent Adjustment
Share-for-Other: Cancellation and Payment
Share-for-Combined: Component Adjustment
Composition of
Combined
Consideration: Not Applicable
Tender Offer: Applicable
Consequences of Tender Offers:
Share-for-Share: Calculation Agent Adjustment
Share-for-Other: Calculation Agent Adjustment
Share-for-Combined: Calculation Agent Adjustment
Nationalization,
Insolvency
or Delisting: Cancellation and Payment
Additional Disruption Events:
Change in Law: Applicable
Failure to Deliver: Not Applicable
Insolvency Filing: Applicable
Hedging Disruption: Not Applicable
Increased Cost of Hedging: Not Applicable
Loss of Stock Borrow: Applicable, provided that the phrase
"at a rate equal to or less than the
Maximum Stock Loan Rate" at the end of
the definition of Loss of Stock Borrow
shall be deleted, and, for the
avoidance of doubt, for purposes of
determining any Cancellation Amount
payable as the result of a Loss of
Stock Borrow, the Determining Party
may take into account any amounts
payable by the Hedging Party under any
buy-in provisions contained in any
securities loan agreements governing
loans of Shares borrowed in respect of
the Transaction.
Maximum Stock Loan Rate: Not Applicable
Increased Cost of Stock
Borrow: Not Applicable
Hedging Party: CSFB
Determining Party: CSFB
Non-Reliance: Applicable
Agreements and Acknowledgments
Regarding Hedging Activities: Applicable
Additional Acknowledgments: Applicable
Credit Support Documents: Section 4 shall be a Credit Support
Document under the Agreement with
respect to Counterparty.
Guarantee dated May 16, 2001 made by
Credit Suisse First Boston (USA),
Inc., a Delaware corporation, in
favour of each and every counterparty
to one or more Financial Transactions
(as defined therein) with CSFB shall
be a Credit Support Document under the
Agreement with respect to CSFB.
Credit Support Provider
for CSFB: Credit Suisse First Boston (USA),
Inc.
Account Details:
Payments to CSFB: To be advised under separate cover
prior to the Trade Date
Payments to Counterparty: Bank: The Bank of New York
Bank Address: 1 Wall Street,
New York, NY 10286
ABA Number: 021000018
Beneficiary: Pershing LLC
Beneficiary Account Number:
890-051238-5 (Pershing LLC)
Ultimate Beneficiary: C. V. Starr
& Co., Inc.
Ultimate Beneficiary Account Number:
216-546325
Delivery of Shares
to CSFB: Credit Suisse First Boston LLC
DTC# 355
Reference A/C # 2P0WN0
Account Name: Special Custody
Account for Credit
Suisse First
Boston Capital LLC
Ref. Sub-A/C # 2P0P90
Ref. Sub-A/C
Name: C. V. Starr &
Co., Inc.
Office: CSFB is acting through its New York
Office for the purposes of the
Transaction; Counterparty is not a
Multibranch Party.
Calculation Agent: CSFB. The Calculation Agent will have
no responsibility for good faith
errors or omissions in any
determination under the Transaction.
3. Other Provisions:
Reimbursement Obligation:
Counterparty shall make monthly cash payments to CSFB from
time to time in an amount sufficient to reimburse CSFB for
any costs exceeding 0.55% for the borrowing of Shares in
connection with hedging CSFB's exposure to the Transaction;
provided, however, that such incurred costs are in effect
for a period exceeding 5 (five) days and if Counterparty
fails to make such payments, CSFB may declare an Early
Termination Date with Counterparty as the sole Affected
Party and this Transaction as the only Terminated
Transaction.
Termination by Counterparty:
At any time, Counterparty may terminate the Transaction in
whole or in part upon 35 Exchange Business Days' prior
written notice to CSFB (the termination date specified in
such notice, the "Optional Termination Date"). If
Counterparty terminates the Transaction in whole,
Counterparty shall make a cash payment (or deliver
equivalent value in Shares from the Collateral Account (as
defined below)) to CSFB on the Optional Termination Date in
an amount equal to the amount that would be payable under
Section 6 of the Agreement if (i) such Optional Termination
Date were an Early Termination Date (without regard to the
provisions set forth under "Payment on Early Termination"
below), (ii) Counterparty were the sole Affected Party and
(iii) the Transaction were the only Terminated Transaction.
If Counterparty terminates the Transaction in part,
Counterparty shall specify the number of Shares with respect
to which the Transaction is to be terminated and
Counterparty shall make a cash payment (or deliver
equivalent value in Shares from the Collateral Account (as
defined below)) to CSFB on the Optional Termination Date in
an amount equal to the amount that would be payable under
Section 6 of the Agreement if (i) such Optional Termination
Date were an Early Termination Date (without regard to the
provision set forth under "Payments on Early Termination"
below), (ii) Counterparty were the sole Affected Party and
(iii) the Transaction were the only Terminated Transaction;
provided that (a) for purposes of such calculation, the
Number of Shares shall be deemed to be such number of Shares
with respect to which the Transaction is to be terminated,
(b) the Number of Shares shall be reduced by such number of
Shares with respect to which such Transaction is to be
terminated, and (c) the Number of Shares with respect to
each Component shall also be reduced proportionately.
Additional Representations, Warranties and Acknowledgements of
Counterparty:
Counterparty hereby represents, warrants or acknowledges, as
the case may be, to CSFB that:
1. From the date three months prior to the date hereof, and as of
every day from the date hereof to and including the Trade
Date, neither Counterparty nor any person who would be
considered to be the same "person" as Counterparty or "acting
in concert" with Counterparty (as such terms are used in
clauses (a)(2) and (e)(3)(vi) of Rule 144 under the Securities
Act of 1933, as amended (the "Securities Act")) has, without
the written consent of CSFB, sold any Shares or hedged
(through swaps, options, short sales or otherwise) any long
position in the Shares, except in connection with the sale of
up to 3,282,377 Shares pursuant to the Master Terms and
Conditions for Pre-Paid Forward Contracts, dated as of
November 15, 2005 (the "Citibank Master Confirmation"), by and
between C. V. Starr & Co., Inc. and Citibank, N.A.
Counterparty does not know or have any reason to believe that
the Issuer has not complied with the reporting requirements
contained in Rule 144(c)(1) under the Securities Act.
2. As of every day from the date hereof to and including the
Trade Date, Counterparty is an "eligible contract participant"
as such term is defined in Section 1a(12) of the Commodity
Exchange Act, as amended.
3. As of the date hereof Counterparty is not in possession of any
material non-public information for purposes of the
prohibition on insider trading under the federal securities
laws ("MNPI") regarding the Issuer and, in the event that
Counterparty obtains MNPI regarding the Issuer prior to, and
including, the Trade Date, Counterparty shall immediately
inform CSFB without specifying the nature of such MNPI and
Counterparty acknowledges that CSFB (or its affiliate) shall
immediately cease selling shares in connection with CSFB's
Initial Hedge.
4. As of the date hereof and as of the Trade Date, 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 of 1940, as
amended.
5. As of the date hereof and as of the Trade Date, Counterparty
is solvent and able to pay its debts as they come due, with
assets, excluding the Initial Pledged Items, and all assets
pledged under the Uncommitted Revolving Secured Advance Note,
dated as of April 21, 2005, by C.V. Starr & Co., Inc. in favor
of HSBC Bank USA, National Association, as extended pursuant
to the letter agreement dated as of June 27, 2005, the related
Pledge and Security Agreement, dated as of June 2, 1999, by
C.V. Starr & Co., Inc. in favor of HSBC Bank USA, N.A., as
amended on October 18, 2005, and the related Pledge and
Security Agreement, dated as of December 6, 2000, by C.V.
Starr & Co., Inc. in favor of HSBC Bank USA, N.A., as amended
on November 2, 2005, as well as all assets pledged under the
$70,000,000 Consolidating Promissory Note, dated as of
September 25, 1995, by C.V. Starr & Co., Inc. in favor of The
Bank of New York and the related General Loan and Security
Agreement, dated as of September 25, 1995, by C.V. Starr &
Co., Inc. in favor of The Bank of New York, as amended by
Amendment No. 1, dated as of October 7, 2005, between C.V.
Starr & Co., Inc. and The Bank of New York, as well as assets
pledged under the Citibank Master Confirmation, having a fair
value greater than liabilities and with capital sufficient to
carry on the businesses in which it engages.
6. Counterparty (a) has timely filed, caused to be timely filed
or will timely file or cause to be timely filed all material
tax returns that are required to be filed by it as of the date
hereof and (b) has as of the date hereof paid all material
taxes shown to be due and payable on said returns or on any
assessment made against it or any of its property and all
other material taxes, assessments, fees, liabilities or other
charges imposed on it or any of its property by any
governmental authority, unless in each case the same are being
contested in good faith. For purposes of determining whether a
tax return has been timely filed, any extensions shall be
taken into account.
7. Counterparty's holding period (calculated in accordance with
Rule 144(d) under the Securities Act) with respect to the
Initial Pledged Items commenced on a date at least two years
prior to the date hereof.
8. As of the Trade Date other than financing statements or other
similar or equivalent documents or instruments with respect to
the security interests in the Collateral created by Section 4
below, no financing statement, security agreement or similar
or equivalent document or instrument covering all or any part
of the Collateral is on file or of record in any jurisdiction
in which such filing or recording would be effective to
perfect a lien, security interest or other encumbrance of any
kind on such Collateral.
9. As of the Trade Date all Collateral consisting of securities
and all financial assets underlying Collateral consisting of
security entitlements (each as defined in Section 8-102 of the
UCC) at any time pledged hereunder is and will be issued by an
issuer organized under the laws of the United States, any
State thereof or the District of Columbia and is and will be
(i) certificated (and the certificate or certificates in
respect of such securities or financial assets are and will be
located in the United States) and registered in the name of
Counterparty or held through a securities intermediary whose
securities intermediary's jurisdiction (within the meaning of
Section 8-110(e) of the UCC) is located in the United States
or (ii) uncertificated and either registered in the name of
Counterparty or held through a securities intermediary whose
securities intermediary's jurisdiction (within the meaning of
Section 8-110(e) of the UCC) is located in the United States;
provided that this representation shall not be deemed to be
breached if, at any time, any such Collateral is issued by an
issuer that is not organized under the laws of the United
States, any State thereof or the District of Columbia, and the
parties hereto agree to procedures or amendments hereto
necessary to enable CSFB to maintain a valid and continuously
perfected security interest in such Collateral, in respect of
which CSFB will have Control, subject to no prior Lien. The
parties hereto agree to negotiate in good faith any such
procedures or amendments.
10. As of the Trade Date no registration, recordation or filing
with any governmental body, agency or official is required or
necessary for the validity or enforceability hereof or for the
perfection or enforcement of the security interests in the
Collateral created by Section 4 below, other than the filing
of financing statement in any appropriate jurisdiction.
11. As of the Trade Date Counterparty has not performed and will
not perform any acts that might prevent CSFB from enforcing
any of the terms of Section 4, "Collateral Provisions," or
that might limit CSFB in any such enforcement.
12. As of the Trade Date no financial statements of the
Counterparty have been prepared for the period between
December 31, 2004 and the Trade Date and as of November 2,
2005 the net worth of the Counterparty is greater than USD
1,950,000,000.
13. As of the date hereof and as of the Trade Date there are no
other transactions entered into by Counterparty or that
Counterparty is contemplating entering into, that may
materially affect Counterparty's ability to perform its
obligations hereunder.
14. Schedule I sets forth a true, correct and complete list of all
the Material Contracts in effect as of the date hereof.
"Material Contract" means any contract or other arrangement to
which the Counterparty is a party that requires or would
reasonably be expected to require an aggregate payment of the
Counterparty exceeding $25,000,000.
15. With respect to the sale of the Shares by Citibank, N.A.
pursuant to the Citibank Master Confirmation, Citibank, N.A.
has advised that the terms and conditions of the Citibank
Master Confirmation and the nature of the transaction entered
into pursuant to the Citibank Master Confirmation are not
materially different from the agreements and transactions
described in the No-Action Letter (defined below).
Representations, Warranties and Covenants of CSFB:
1. CSFB represents to Counterparty that an affiliate of CSFB (the
"CSFB Affiliate") is registered as a broker and a dealer with
the Securities and Exchange Commission and is a "market maker"
or a "block positioner", as such terms are used in Rule 144
under the Securities Act, with respect to the Shares.
2. CSFB agrees that CSFB Affiliate shall, as promptly as
practicable consistent with market conditions, introduce into
the public market a quantity of securities of the same class
as the Shares equal to the Number of Shares minus the number
of securities of such class sold in connection with CSFB's
Initial Hedge position.
Mutual Representations:
Each of CSFB and Counterparty hereby represents and warrants
to the other party as of the date hereof that:
1. It is an "accredited investor" (as defined in Regulation D
under the Securities Act) and has such knowledge and
experience in financial and business matters as to be capable
of evaluating the merits and risks of the Transaction, and it
is able to bear the economic risk of the Transaction.
2. It is entering into the Transaction for its own account and
not with a view to the distribution or resale of the
Transaction or its rights thereunder except pursuant to a
registration statement declared effective under, or an
exemption from the registration requirements of, the
Securities Act.
Covenants of Counterparty:
1. Counterparty agrees that Counterparty will comply with all
applicable disclosure or reporting requirements in respect of
the Transaction, including, without limitation, any
requirement imposed by Section 13 or Section 16 of the
Securities and Exchange Act of 1934, as amended, if any, and
Counterparty will provide CSFB with a copy of any report filed
in respect of the Transaction promptly upon filing thereof.
2. Counterparty is aware of and agrees to be bound by the rules
of the National Association of Securities Dealers, Inc.
("NASD") applicable to option trading and is aware of and
agrees not to violate, either alone or in concert with others,
the position or exercise limits established by the NASD.
3. Counterparty will file on the date hereof and in the manner
contemplated by Rule 144(h) under the Securities Act a notice
on Form 144 relating to the Transaction contemplated hereby in
form and substance that CSFB has informed Counterparty is
acceptable to CSFB.
4. Counterparty agrees that Counterparty has not (i) created or
permitted to exist any Lien (as defined in Section 4 below,
other than the security interests in the collateral created by
Section 4) or any Transfer Restriction (other than the
Existing Transfer Restrictions, as defined in Section 4 below)
upon or with respect to the Collateral, (ii) sold or otherwise
disposed of, or granted any option with respect to, any of the
Collateral or (iii) entered into or consented to any agreement
(other than, in the case of clause (x), this Confirmation) (x)
that restricts in any manner the rights of any present or
future owner of any Collateral with respect thereto or (y)
pursuant to which any person other than Counterparty, CSFB and
any securities intermediary through whom any of the Collateral
is held (but in the case of any such securities intermediary
only in respect of Collateral held through it) has or will
have Control in respect of any Collateral. "Control" means
"control" as defined in Section 8-106 and 9-106 of the Uniform
Commercial Code as in effect in the State of New York ("UCC").
Binding Commitment:
The parties intend that this Confirmation constitutes a
"preliminary agreement" and, upon execution of the
Transaction Supplement, a "Final Agreement" as described in
the letter dated December 14, 1999 submitted by Robert W.
Reeder and Alan L. Beller to Michael Hyatte of the staff of
the Securities and Exchange Commission (the "Staff") to
which the Staff responded in an interpretative letter dated
December 20, 1999 (the "No-Action Letter").
Payments on Early Termination:
Upon (x) the occurrence or effective designation of an Early
Termination Date in respect of the Transaction or (y) the
occurrence of an Extraordinary Event that results in the
cancellation or termination of the Transaction pursuant to
Section 12.2, 12.3, 12.6 or 12.9 of the 2002 Definitions
(any such event as described in clause (x) or (y) above, an
"Early Termination Event"), if Counterparty would owe any
amount to CSFB pursuant to Section 6(d)(ii) of the Agreement
(determined as if the Transaction were the only Transaction
under the Agreement) or any Cancellation Amount pursuant to
Section 12.2, 12.3, 12.6 or 12.9 of the 2002 Definitions
(any such amount, a "Counterparty Payment Amount" and any
Early Termination Event that would so result in Counterparty
owing any such amount, a "Counterparty Payment Event"),
then, except to the extent that CSFB proceeds to realize
upon the Collateral and to apply the proceeds of such
realization to any obligation of Counterparty hereunder and
under the Agreement:
(i) on the date on which any Counterparty Payment Amount is
due, in lieu of any payment or delivery of such
Counterparty Payment Amount, Counterparty shall deliver
to CSFB a number of freely tradable, without any
existing transfer restrictions, Shares (or, if the
Shares have been converted into other securities or
property in connection with an Extraordinary Event, a
number or amount of such securities or property) with a
value equal to the Counterparty Payment Amount based on
the market value of the Shares (or such other
securities or property) as of the Early Termination
Date or the date as of which the Cancellation Amount is
determined, as the case may be, as determined by the
Calculation Agent; and
(ii) for purposes of determining any Loss under Section 6(e)
of the Agreement in respect of any other Transactions
under the Agreement, the Transaction shall be deemed
not to be a Transaction under the Agreement; provided
that, for the avoidance of doubt, if Counterparty fails
to deliver Shares pursuant to clause (i) above at the
time required, then, the Transaction (including such
delivery obligation) shall be included for the purpose
of determining CSFB's Loss for all Transactions
(including the Transaction) under the Agreement.
Securities Contract:
The parties hereto acknowledge and agree that each of CSFB
and the Custodian (as defined in Section 4 below) is a
"stockbroker" within the meaning of Section 101 (53A) of
Title 11 of the United States Code (the "Bankruptcy Code")
and that the Custodian is acting as agent and custodian for
CSFB in connection with the Transaction and that CSFB is a
"customer" of the Custodian within the meaning of Section
741(2) of the Bankruptcy Code. The parties hereto further
recognize that the Transaction is a "securities contract",
as such term is defined in Section 741(7) of the Bankruptcy
Code, entitled to the protection of, among other provisions,
Sections 555 and 362(b)(6) of the Bankruptcy Code, and that
each payment or delivery of cash, Shares or other property
or assets hereunder is a "settlement payment" within the
meaning of Section 741(8) of the Bankruptcy Code.
Assignment:
The rights and duties under this Confirmation may not be
assigned or transferred by any party hereto without the
prior written consent of the other parties hereto, such
consent not to be unreasonably withheld; provided that (i)
CSFB may assign or transfer any of its rights or duties
hereunder to any of its affiliates without the prior written
consent of Counterparty and (ii) the Agent may assign or
transfer any of its rights or duties hereunder without the
prior written consent of the other parties hereto to any
affiliate of Credit Suisse First Boston, so long as, in the
case of each of (i) and (ii), such affiliate is a
broker-dealer registered with the Securities and Exchange
Commission.
Non-Confidentiality:
The parties hereby agree that (i) effective from the date of
commencement of discussions concerning the Transaction,
Counterparty 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, provided by CSFB and its
affiliates to Counterparty relating to such tax treatment
and tax structure (provided that the foregoing does not
constitute an authorization to disclose the identity of CSFB
or its affiliates, agents or advisers, or, except to the
extent relating to such tax structure or tax treatment, any
specific pricing terms or commercial or financial
information) and (ii) CSFB does not assert any claim of
proprietary ownership in respect of any description
contained herein or therein relating to the use of any
entities, plans or arrangements to give rise to a particular
United States federal income tax treatment for Counterparty.
Matters relating to Credit Suisse First Boston Capital LLC and
Credit Suisse First Boston LLC:
1. Agent shall act as "agent" for CSFB and Counterparty in
connection with the Transaction.
2. Agent will furnish to Counterparty upon written request a
statement as to the source and amount of any remuneration
received or to be received by Agent in connection herewith.
3. Agent has no obligation hereunder, by guaranty, endorsement or
otherwise, with respect to performance of CSFB's obligations
hereunder or under the Agreement.
4. CSFB is an "OTC derivatives dealer" as such term is defined in
the Exchange Act and is an affiliate of Agent.
5. CSFB is not a member of the Securities Investor Protection
Corporation.
4. Collateral Provisions:
a. Delivery of Collateral:
Prior to the Trade Date, Counterparty shall deliver to CSFB in pledge
hereunder, Eligible Collateral consisting of a number of Shares equal
to the Number of Shares (the "Initial Pledged Items"). "Eligible
Collateral" means Shares or, if Counterparty shall have elected to
substitute securities issued by the United States government
("Government Securities") for Share Collateral in accordance with
this Section 4, Government Securities; provided that Counterparty has
good and marketable title thereto, free of all of any and all lien,
mortgage, interest, pledge, charge or encumbrance of any kind (other
than the security interests in the Collateral created hereby, a
"Lien") and Transfer Restrictions (other than, solely for the purpose
of the Initial Pledged Items, the Existing Transfer Restrictions) and
that CSFB has a valid, first priority perfected security interest
therein, a first lien thereon and Control with respect thereto.
"Transfer Restriction" means, with respect to any item of collateral
pledged hereunder, any condition to or restriction on the ability of
the owner thereof to sell, assign or otherwise transfer such item of
collateral or enforce the provisions thereof or of any document
related thereto whether set forth in such item of collateral itself
or in any document related thereto, including, without limitation,
(i) any requirement that any sale, assignment or other transfer or
enforcement of such item of collateral be consented to or approved by
any Person, including, without limitation, the issuer thereof or any
other obligor thereon, (ii) any limitations on the type or status,
financial or otherwise, of any purchaser, pledgee, assignee or
transferee of such item of collateral, (iii) any requirement of the
delivery of any certificate, consent, agreement, opinion of counsel,
notice or any other document of any Person to the issuer of, any
other obligor on or any registrar or transfer agent for, such item of
collateral, prior to the sale, pledge, assignment or other transfer
or enforcement of such item of collateral and (iv) any registration
or qualification requirement or prospectus delivery requirement for
such item of collateral pursuant to any federal, state or foreign
securities law (including, without limitation, any such requirement
arising under Section 5 of the Securities Act as a result of such
security being a "restricted security" or Counterparty potentially
being considered to be an "affiliate" of the issuer of such security,
as such terms are defined in Rule 144 under the Securities Act, or as
a result of the sale of such security being subject to paragraph (c)
of Rule 145 under the Securities Act); provided that the required
delivery of any assignment, instruction or entitlement order from the
seller, Counterparty, assignor or transferor of such item of
collateral, together with any evidence of the corporate or other
authority of such Person, shall not constitute a "Transfer
Restriction". "Existing Transfer Restrictions" means Transfer
Restrictions existing with respect to any securities by virtue of the
fact that Counterparty may be considered to be an "affiliate", within
the meaning of Rule 144 under the Securities Act, of the Issuer by
virtue of the fact that such securities may be considered to be
"restricted securities", within the meaning of Rule 144 under the
Securities Act. "Person" means an individual, a corporation, a
limited liability company, a partnership, an association, a trust or
any other entity or organization, including a government or political
subdivision or an agency or instrumentality thereof.
Any delivery of any securities or security entitlements (each as
defined in Section 8-102 of the UCC) as Collateral to CSFB by
Counterparty shall be effected (A) in the case of Collateral
consisting of certificated securities registered in the name of
Counterparty, by delivery of certificates representing such
securities to the Custodian, accompanied by any required transfer tax
stamps, and in suitable form for transfer by delivery or accompanied
by duly executed instruments of transfer or assignment in blank all
in form and substance satisfactory to CSFB, and the crediting by the
Custodian of such securities to a securities account (as defined in
Section 8-501 of the UCC) (the "Collateral Account") of CSFB
maintained by the Custodian, (B) in the case of Collateral consisting
of uncertificated securities registered in the name of Counterparty,
by transmission by Counterparty of an instruction to the issuer of
such securities instructing such issuer to register such securities
in the name of the Custodian or its nominee, accompanied by any
required transfer tax stamps, the issuer's compliance with such
instructions and the crediting by the Custodian of such securities to
the Collateral Account, (C) in the case of securities in respect of
which security entitlements are held by Counterparty through a
securities intermediary, by the crediting of such securities,
accompanied by any required transfer tax stamps, to a securities
account of the Custodian at such securities intermediary or, at the
option of CSFB, at another securities intermediary satisfactory to
CSFB and the crediting by the Custodian of such securities to the
Collateral Account or (D) in any case, by complying with such
alternative delivery instructions as CSFB shall provide to
Counterparty in writing. "Custodian" means Credit Suisse First Boston
LLC, or any other custodian appointed by CSFB and identified to
Counterparty.
b. Grant of Security Interests in the Collateral:
In order to secure the full and punctual observance and performance
of the covenants and agreements contained in this Confirmation, the
Transaction Supplement, and in the Agreement, Counterparty hereby
assigns and pledges to CSFB, and grants to CSFB, as secured party,
security interests in and to, and a lien upon and right of set-off
against, and transfers to CSFB, as and by way of a security interest
having priority over all other security interests, with power of
sale, all of Counterparty's right, title and interest in and to (i)
the Initial Pledged Items; (ii) all additions to and substitutions
for the Initial Pledged Items (including, without limitation, any
securities, instruments or other property delivered or pledged
hereunder) (such additions and substitutions, the "Additions and
Substitutions"); (iii) the Collateral Account of CSFB maintained by
the Custodian and all securities and other financial assets (each as
defined in Section 8-102 of the UCC) and other funds, property or
assets from time to time held therein or credited thereto; and (iv)
all income, proceeds and collections received or to be received, or
derived or to be derived, at the time that the Initial Pledged Items
were delivered to the Custodian or any time thereafter (whether
before or after the commencement of any proceeding under applicable
bankruptcy, insolvency or similar law, by or against Counterparty,
with respect to Counterparty) from or in connection with the Initial
Pledged Items or the Additions and Substitutions, excluding any
Excluded Proceeds (collectively, the "Collateral"). The parties
hereto expressly agree that all rights, assets and property at any
time held in or credited to the Collateral Account shall be treated
as financial assets (as defined in Section 8-102 of the UCC).
"Excluded Proceeds" means Ordinary Dividend Amounts unless a Default
Event has occurred and is continuing.
c. Certain Covenants of Counterparty relating to the Collateral:
Counterparty agrees that, so long as any of Counterparty's
obligations under the Agreement remain outstanding:
1. Counterparty shall ensure at all times that a Collateral Event of
Default shall not occur, and shall pledge additional Collateral in
the manner described hereunder as necessary to cause such
requirement to be met. "Collateral Event of Default" means, at any
time, the occurrence of either of the following: (A) failure of
the Collateral to include, as Eligible Collateral, a number of
Shares at least equal to the Number of Shares (or, if Counterparty
has elected to substitute Government Securities for Share
Collateral in accordance with this Section 4, the amount of
Government Securities required thereby) or (B) failure at any time
of the security interests in the Collateral created hereby to
constitute valid and perfected security interests in all of the
Collateral, subject to no prior, equal or junior Lien, and, with
respect to any Collateral consisting of securities or security
entitlements (each as defined in Section 8-102 of the UCC), as to
which CSFB has Control, or, in each case, assertion of such by
Counterparty in writing.
2. Counterparty shall, at its own expense and in such manner and form
as CSFB may reasonably require, give, execute, deliver, file and
record any financing statement, notice, instrument, document,
agreement or other papers that may be necessary or desirable in
order to (i) create, preserve, perfect, substantiate or validate
any security interest granted pursuant hereto, (ii) create or
maintain Control with respect to any such security interests in
any investment property (as defined in Section 9-102(a) of the
UCC) or (iii) enable CSFB to exercise and enforce its rights
hereunder with respect to such security interest.
3. Counterparty shall warrant and defend Counterparty's title to
the Collateral, subject to the rights of CSFB, against the
claims and demands of all persons. CSFB may elect, but without
an obligation to do so, to discharge any Lien of any third party
on any of the Collateral.
4. Counterparty agrees that Counterparty shall not change (i)
Counterparty's name in any manner or (ii) Counterparty's
"location" (as defined in Section 9-307 of UCC), unless
Counterparty shall have given CSFB not less than 10 days' prior
notice thereof.
5. Counterparty agrees that Counterparty shall not (i) create or
permit to exist any lien (other than the security interests in the
Collateral created hereby) or any Transfer Restriction upon or
with respect to the Collateral, (ii) sell or otherwise dispose of,
or grant any option with respect to, any of the Collateral or
(iii) enter into or consent to any agreement (x) that restricts in
any manner the rights of any present or future owner of any
Collateral with respect thereto (other than this Confirmation) or
(y) pursuant to which any person other than Counterparty, CSFB and
any securities intermediary through whom any of the Collateral is
held (but in the case of any such securities intermediary only in
respect of Collateral held through it) has or will have Control in
respect of any Collateral.
d. Administration of the Collateral and Valuation of Securities:
1. CSFB shall determine on each Business Day whether a Collateral
Event of Default shall have occurred. If on any Business Day CSFB
determines that a Collateral Event of Default shall have occurred,
CSFB shall promptly notify Counterparty of such determination by
telephone call to Counterparty followed by a written confirmation
of such call. If on any Business Day CSFB determines that no
Default Event or failure by Counterparty to meet any of
Counterparty's obligations under "Certain Covenants of
Counterparty relating to the Collateral" or under this section has
occurred and is continuing, Counterparty may obtain the release
from the security interests in the Collateral created hereby of
any Collateral upon delivery to CSFB of a written notice from
Counterparty indicating the items of Collateral to be released so
long as, after such release, no Collateral Event of Default shall
have occurred. "Default Event" means any Collateral Event of
Default, any Event of Default with respect to Counterparty or any
Termination Event with respect to which Counterparty is the
Affected Party or an Affected Party or an Extraordinary Event that
results in an obligation of Counterparty to pay an amount pursuant
to Section 12.7 or Section 12.9 of the 2002 Definitions;
2. Counterparty may pledge additional Eligible Collateral hereunder
at any time by delivering the same pursuant to the provisions of
"Delivery of Collateral" above. Concurrently with the delivery of
any additional Eligible Collateral, Counterparty shall deliver to
CSFB a certificate, dated the date of such delivery, (i)
identifying the additional items of Eligible Collateral being
pledged and (ii) certifying that with respect to such items of
additional Eligible Collateral the representations and warranties
relating to collateral under Additional Representations and
Warranties above are true and correct with respect to such
Eligible Collateral on and as of the date thereof.
3. Counterparty may at any time, so long as no Default Event has
occurred and is continuing, substitute Government Securities for
all (but not less than all) of the Collateral consisting of Shares
then held in or credited to the Collateral Account (the "Share
Collateral") on the terms set forth below:
(i) At least five Business Days prior to the date of any such
substitution, Counterparty shall notify CSFB in writing that
Counterparty intends to effect such substitution;
(ii) Counterparty shall deliver to CSFB, in a manner reasonably
acceptable to CSFB, Government Securities having a value at
least equal to 150% of the market value of the Share
Collateral on the date of such delivery (as determined by
the Calculation Agent);
(iii) Counterparty shall take all such other actions as CSFB may
reasonably require to create for the benefit of CSFB a valid
and perfected security interest in such Government
Securities, in respect of which CSFB will have Control,
subject to no prior Lien; and
(iv) Counterparty shall make mark to market deliveries of
additional Government Securities on a daily basis, and CSFB
shall release Government Securities previously pledged upon
the request of Counterparty, so that the value of the
Government Securities pledged is at all times at least equal
to 150% of the market value of the Share Collateral for such
Transaction that would otherwise have been pledged hereunder
at such time (as determined by the Calculation Agent), in
each case, pursuant to terms mutually acceptable to CSFB and
Counterparty.
4. CSFB shall cause the Collateral to be transferred of record into
the name of Custodian or CSFB's nominee and be held in the Account
for the Delivery of Shares to CSFB specified in Section 2 herein.
Counterparty shall promptly give to CSFB copies of any notices or
other communications received by Counterparty with respect to
Collateral that is registered, or held through a securities
intermediary, in the name of Counterparty or Counterparty's
nominee and CSFB shall promptly give to Counterparty copies of any
notices and communications received by CSFB with respect to
Collateral that is registered, or held through a securities
intermediary, in the name of Custodian, CSFB or its nominee.
5. Counterparty agrees that Counterparty shall forthwith upon demand
pay to CSFB:
(i) the amount of any taxes that CSFB or the Custodian may have
been required to pay by reason of the security interests in
the Collateral created hereby or to free any of the
Collateral from any Lien thereon; and
(ii) the amount of any and all costs and expenses, including the
reasonable and documented fees and disbursements of counsel
and of any other experts, that CSFB or the Custodian may
incur in connection with (A) the enforcement of this pledge,
including such expenses as are incurred to preserve the
value of the Collateral and the validity, perfection, rank
and value of the security interests in the Collateral
created hereby, (B) the collection, sale or other
disposition of any of the Collateral, (C) the exercise by
CSFB of any of the rights conferred upon it hereunder or (D)
any Default Event.
Any such amount not paid on demand shall bear interest (computed
on the basis of a year of 360 days and payable for the actual
number of days elapsed) at a rate per annum equal to 2.5% plus
the prime rate as published from time to time in The Wall Street
Journal, Eastern Edition.
e. No Rehypothecation of Collateral:
The parties hereto agree that CSFB may not sell, lend, pledge,
rehypothecate, assign, invest, use, commingle or otherwise dispose
of, or otherwise use in its business any Collateral.
f. Income and Voting Rights in Collateral:
CSFB shall have the right to receive and retain as Collateral
hereunder all proceeds, excluding any Excluded Proceeds, but
including, without limitation, any Extraordinary Dividend in excess
of the Ordinary Dividend Amount and interest of the Collateral;
provided that CSFB shall have such right with respect to any and all
proceeds, including without limitation any Excluded Proceeds, after
the occurrence and during the continuance of a Default Event (such
proceeds as CSFB shall have the right to receive and retain at any
time, "Retained Proceeds"), and Counterparty shall take all such
action as CSFB shall deem necessary or appropriate to give effect to
such right. All such Retained Proceeds that are received by
Counterparty shall be received in trust for the benefit of CSFB and,
if CSFB so directs, shall be segregated from other funds of
Counterparty and shall, forthwith upon demand by CSFB, be delivered
over to the Custodian on behalf of CSFB as Collateral in the same
form as received (with any necessary endorsement).
Unless a Default Event shall have occurred and be continuing,
Counterparty shall have the right, from time to time, to vote and to
give consents, ratifications and waivers with respect to the
Collateral.
If a Default Event shall have occurred and be continuing, CSFB shall
have the right, to the extent permitted by law, and Counterparty
shall take all such action as may be necessary or appropriate to give
effect to such right, to vote and to give consents, ratifications and
waivers, and to take any other action with respect to any or all of
the Collateral with the same force and effect as if CSFB were the
absolute and sole owner thereof.
g. Remedies upon Counterparty Payment Events:
If any Counterparty Payment Event shall have occurred, CSFB may
exercise all the rights of a secured party under the UCC (whether or
not in effect in the jurisdiction where such rights are exercised).
Counterparty hereby irrevocably appoints CSFB as Counterparty's true
and lawful attorney (which power of attorney is coupled with an
interest), with full power of substitution, in the name of
Counterparty, CSFB or otherwise, for the sole use and benefit of
CSFB, but at the expense of Counterparty, to the extent permitted by
law, to exercise, at any time and from time to time while a
Counterparty Payment Event has occurred, all or any of the following
powers with respect to all or any of the Collateral:
(i) to demand, sue for, collect, receive and give acquittance
for any and all monies due or to become due upon or by
virtue thereof;
(ii) to settle, compromise, compound, prosecute or defend any
action or proceeding with respect thereto;
(iii) to sell, transfer, assign or otherwise deal in or with the
same or the proceeds or avails thereof, as fully and
effectually as if CSFB were the absolute owner thereof and
in connection therewith, to make all necessary deeds, bills
of sale, instruments of assignment, transfer or conveyance
of the property, and all instructions and entitlement orders
in respect of the property thus to be (or that is being or
has been) sold, transferred, assigned or otherwise dealt in;
and
(iv) to extend the time of payment of any or all thereof and to
make any allowance and other adjustments with reference
thereto;
provided that CSFB shall give Counterparty not less than one day's
prior written notice of the time and place of any sale or other
intended disposition of any of the Collateral, except any Collateral
that (A) threatens to decline speedily in value, including, without
limitation, equity securities, or (B) is of a type customarily sold
on a recognized market. CSFB and Counterparty agree that such notice
constitutes "reasonable authenticated notification" within the
meaning of Section 9-611(b) of the UCC.
h. Termination:
The rights hereby granted by Counterparty in the Collateral shall
cease, terminate and be void upon fulfilment of all of the
obligations of Counterparty under this Confirmation and the
Transaction Supplement. Any Collateral remaining at the time of such
termination shall be fully released and discharged from the security
interests in the Collateral created hereby and delivered to
Counterparty by CSFB, all at the request and expense of Counterparty.
5. The Agreement is further supplemented by the following provisions:
Termination Provisions.
1. "Specified Entity" means in relation to CSFB, none, and in
relation to Counterparty, none.
2. "Specified Transaction" will have the meaning specified in Section
14 of the Agreement.
3. The "Cross Default" provision of Section 5(a)(vi) of the Agreement
will not apply to CSFB and will apply to Counterparty.
For the purpose of such provision:
"Specified Indebtedness" means any obligation (whether present or
future, contingent or otherwise, as principal or surety or
otherwise) (a) in respect of borrowed money, or (b) in respect of
any Specified Transaction (except that, for this purpose only, the
words "and any other entity" shall be substituted for the words
"and the other party to the Agreement (or any Credit Support
Provider of such other party or any applicable Specified Entity of
such other party)" where they appear in the definition of
Specified Transaction).
"Threshold Amount" means USD 25,000,000 (including the United
States Dollar equivalent of obligations stated in any other
currency or currency unit).
4. The "Credit Event Upon Merger" provisions of Section 5(b)(iv) of
the Agreement will not apply to CSFB and will apply to
Counterparty.
5. The "Automatic Early Termination" provisions of Section 6(a) of
the Agreement will not apply to CSFB and Counterparty.
6. Payments on Early Termination. For the purpose of Section 6(e) of
the Agreement, Second Method and Loss will apply.
7. "Termination Currency" means United States Dollars.
8. Set-Off. In addition to and without limiting any rights of set-off
that a party hereto may have as a matter of law, pursuant to
contract or otherwise, upon the occurrence of an Early Termination
Event, such Party ("Party X") shall have the right to terminate,
liquidate and otherwise close out the transactions contemplated by
this Confirmation pursuant to the terms hereof, and to set off any
obligation that Party X or any affiliate of Party X may have to
the other party ("Party Y") hereunder, thereunder or otherwise,
including without limitation any obligation to make any release,
delivery or payment to Party Y pursuant to this Confirmation or
any other agreement between Party X or any of its affiliates and
Party Y, against any right Party X or any of its affiliates may
have against Party Y, including without limitation any right to
receive a payment or delivery pursuant to this Confirmation or any
other agreement between Party X or any of its affiliates and Party
Y. In the case of a set-off of any obligation to release, deliver
or pay assets against any right to receive assets of the same
type, such obligation and right shall be set off in kind. In the
case of a set-off of any obligation to release, deliver or pay
assets against any right to receive assets of any other type, the
value of each of such obligation and such right shall be
determined by the Calculation Agent and the result of such set-off
shall be that the net obligor shall pay or deliver to the other
party an amount of cash or assets, at the net obligor's option,
with a value (determined, in the case of a delivery of assets, by
the Calculation Agent) equal to that of the net obligation. In
determining the value of any obligation to release or deliver
Shares or right to receive Shares, the value at any time of such
obligation or right shall be determined by reference to the market
value of the Shares at such time. If an obligation or right is
unascertained at the time of any such set-off, the Calculation
Agent may in good faith estimate the amount or value of such
obligation or right, in which case set-off will be effected in
respect of that estimate, and the relevant party shall account to
the other party at the time such obligation or right is
ascertained.
Tax Representations. For the purpose of Section 3(f) of the Agreement,
CSFB (including any successor thereof and each assignee of CSFB's rights
and duties hereunder) makes the following representations:
CSFB is a Delaware limited liability company that is a disregarded
entity for all U.S. federal income tax purposes and its sole
member is Credit Suisse First Boston (USA), Inc. ("CSFB USA"), a
Delaware corporation taxable under subchapter C of the Internal
Revenue Code. Any successor of CSFB or CSFB USA or any assignee of
CSFB's rights and duties hereunder will be a "U.S. person" (within
the meaning of Section 7701(a)(30) of the U.S. Internal Revenue
Code of 1986, as amended, and will not be treated as a "foreign
person" (including within the meaning of Treasury Regulations
ss.ss. 1.1441-1 to -9 and 1.6041-4(a)(4)) for all U.S. federal
income tax purposes.
Agreements to Deliver Documents. For the purpose of Sections 4(a)(i) and
(ii) of the Agreement, each of CSFB and Counterparty agrees to deliver
the following documents, as applicable:
1. Counterparty will deliver to CSFB, upon execution of this
Confirmation, an opinion of nationally recognized counsel
acceptable to CSFB to the effect set forth in Annex A hereto.
2. The Issuer shall have executed and delivered to CSFB, upon
execution of this Confirmation, an Issuer Acknowledgment in the
form attached as Annex B hereto.
3. Counterparty will deliver to CSFB, prior to or upon execution of
this Confirmation, evidence reasonably satisfactory to CSFB as to
the names, true signatures and authority of the officers or
officials signing this Confirmation on its behalf.
4. Counterparty will deliver to CSFB, prior to or upon execution of
this Confirmation, its most recent annual financial statements
audited in accordance with the Amended and Restated Stockholders
Agreement dated as of January 1, 2004, among Counterparty and the
holders of Counterparty's stock.
5. Counterparty will deliver to CSFB, prior to or upon execution of
this Confirmation, officer's certificate stating that no financial
statements of Counterparty have been prepared for the period
between December 31, 2004 and the date hereof.
Such documents shall be covered by the representation set forth in
Section 3(d) of the Agreement.
Miscellaneous:
1. Addresses for Notices. For the purpose of Section 12(a) of the
Agreement:
Address for notices or communications to CSFB (other than by
facsimile) (for all purposes):
Address: Credit Suisse First Boston Capital LLC
c/o Credit Suisse First Boston LLC
Eleven Madison Avenue
New York, NY 10010
Attn: Senior Legal Officer
Tel: (212) 538-2616
Fax: (212) 325-8036
With a copy to: Credit Suisse First Boston LLC
One Madison Avenue, 8th Floor
New York, New York 10010
For payments and deliveries:
Attn: Vincent Larkin
Tel: (212) 538-3295
Fax: (212) 325-8175
For all other communications:
Attn: John Ryan
Tel.: (212) 325-8681
Fax: (212) 538-8898
Designated responsible employee for the purposes of Section
12(a)(iii) of the Agreement:
Senior Legal Officer
Address for notices or communications to Counterparty:
C. V. Starr & Co., Inc
Address: 399 Park Avenue
New York, NY 10002
Attention: Treasurer
Tel: 212-759-5630
Fax: 212-759-5580
2. The date and time of the Transaction will be furnished by CSFB to
Counterparty upon written request by Counterparty.
3. Waiver of Right to Trial by Jury. Each party waives, to the
fullest extent permitted by applicable law, any right it may have
to a trial by jury in respect of any suit, action or proceeding
relating to this Confirmation or any Credit Support Document. Each
party (i) certifies that no representative, agent or attorney of
the other party has represented, expressly or otherwise, that such
other party would not, in the event of such a suit action or
proceeding, seek to enforce the foregoing waiver and (ii)
acknowledges that it and the other party have been induced to
enter into this Confirmation by, among other things, the mutual
waivers and certifications in this Section.
4. Service of Process. The parties irrevocably consent to service of
process given in the manner provided for notices in Section in
paragraph 1 immediately above. Nothing in this Confirmation will
affect the right of either party to serve process in any other
manner permitted by law.
5. THE AGREEMENT AND EACH CONFIRMATION THEREUNDER WILL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK
WITHOUT REFERENCE TO CHOICE OF LAW DOCTRINE (PROVIDED THAT AS TO
PLEDGED ITEMS LOCATED IN ANY JURISDICTION OTHER THAN THE STATE OF
NEW YORK, CSFB SHALL, IN ADDITION TO ANY RIGHTS UNDER THE LAWS OF
THE STATE OF NEW YORK, HAVE ALL OF THE RIGHTS TO WHICH A SECURED
PARTY IS ENTITLED UNDER THE LAWS OF LAW OF SUCH OTHER
JURISDICTION). EACH PARTY HEREBY SUBMITS TO THE JURISDICTION OF
THE COURTS OF THE STATE OF NEW YORK. THE PARTIES HERETO HEREBY
AGREE THAT THE CUSTODIAN'S JURISDICTION, WITHIN THE MEANING OF
SECTION 8-110(e) OF THE UCC, INSOFAR AS IT ACTS AS A SECURITIES
INTERMEDIARY HEREUNDER OR IN RESPECT HEREOF, IS THE STATE OF NEW
YORK.
6. This Confirmation is not intended and shall not be construed to
create any rights in any person other than Counterparty, CSFB and
their respective successors and assigns and no other person shall
assert any rights as third-party beneficiary hereunder. Whenever
any of the parties hereto is referred to, such reference shall be
deemed to include the successors and assigns of such party. All
the covenants and agreements herein contained by or on behalf of
Counterparty and CSFB shall bind, and inure to the benefit of,
their respective successors and assigns whether so expressed or
not.
7. Any provision of this Confirmation may be amended or waived if,
and only if, such amendment or waiver is in writing and signed,
and in the case of an amendment, by Counterparty and CSFB or, in
the case of a waiver, by the party against whom the waiver is to
be effective.
8. Absence of Litigation Representation. The words "or any of its
Affiliates" is deleted from Section 3(c) of the Agreement.
Please confirm that the foregoing correctly sets forth the terms of our
agreement by signing and returning this Confirmation.
Yours faithfully,
CREDIT SUISSE FIRST BOSTON CAPITAL LLC
By: /s/ Christy Grant
---------------------------------------
Name: Christy Grant
Title: Assistant Vice President Operations
Confirmed as of the date first written above:
C. V. STARR & CO., INC.
By: /s/ Howard I. Smith
-----------------------------------------
Name: Howard I. Smith
Title: Vice Chairman-Finance and Secretary
CREDIT SUISSE FIRST BOSTON LLC,
as Agent
By: /s/ John Ryan
-----------------------
Name: John Ryan
Title: A.V.P. Operations
ANNEX A
[Form of Opinion of Boies, Schiller & Flexner LLP]
November [ ], 2005
Credit Suisse First Boston Capital LLC
c/o Credit Suisse First Boston LLC
Eleven Madison Avenue
New York, New York 10010
Ladies and Gentlemen:
We have acted as special New York counsel to C. V. Starr & Co., Inc.,
a Delaware corporation (the "Seller"), in connection with the letter
agreement, dated as of November [ ], 2005, by and among the Seller, Credit
Suisse First Boston Capital LLC ("CSFB") and Credit Suisse First Boston LLC
(the "Confirmation"). This opinion is being delivered pursuant to the
requirement of clause 1 under the heading "Agreements to Deliver Documents" in
paragraph 5 of the Confirmation. Capitalized terms used but not defined herein
have the meanings assigned to them in the Confirmation.
In that connection, we have examined originals or copies, certified
or otherwise identified to our satisfaction, of such documents (including (i)
the Confirmation and (ii) the Agreement), corporate records, certificates of
officers of the Seller and public officials and other instruments and have
conducted such other investigations of fact and law as we have deemed
necessary or appropriate for purposes of this opinion. The documents described
in clauses (i) and (ii) of the immediately preceding sentence are referred to
herein as the "Forward Sale Documents". We have also relied upon
representations of the Seller as to certain factual matters contained in the
Forward Sale Documents and have assumed compliance by the Seller with the
terms of the Forward Sale Documents.
Based upon the foregoing, and subject to the qualifications
hereinafter set forth, we are of the opinion that:
1. Based solely on a certificate from the Secretary of State of the
State of Delaware, the Seller is validly existing as a corporation and in good
standing under the laws of the State of Delaware.
2. The Seller has (i) the corporate power and authority to execute,
deliver and perform its obligations under the Forward Sale Documents, (ii) taken
all corporate action necessary to authorize the execution, delivery and
performance of the Forward Sale Documents and (iii) duly executed and delivered
the Forward Sale Documents.
3. Each of the Forward Sale Documents constitutes a legal, valid and
binding obligation of the Seller, enforceable against the Seller in accordance
with its terms, subject to applicable bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium and similar laws of general applicability
relating to or affecting creditors' rights and general equity principles,
regardless of whether considered in a proceeding in equity or at law.
4. The execution and delivery by the Seller of, and the performance by
the Seller of its obligations under, the Forward Sale Documents will not (i)
violate the certificate of incorporation or by-laws of the Seller, (ii) violate
any Federal law of the United States, law of the State of New York or the
General Corporation Law of the State of Delaware that in our experience is
normally applicable to general business corporations in relation to transactions
of the type contemplated by the Forward Sale Documents, or to our knowledge, any
order or decree of any court or governmental agency or instrumentality, or (iii)
breach or result in a default under any agreement or instrument listed on
Schedule I hereto.
5. No authorization, approval or other action by, and no notice to, or
filing with, any United States Federal, New York or, to the extent required
under the General Corporation Law of the State of Delaware, Delaware
governmental authority is required in connection with the execution, delivery
and performance by the Seller of the Forward Sale Documents, other than (i)
those that have been made or obtained and are in full force and effect, (ii)
those that are required from time to time to create or perfect liens, pledges or
security interests in the Collateral and (iii) those that may be required by
laws affecting the offering and sale of securities in connection with any sale
or disposition of any securities pursuant to the Forward Sale Documents.
6. To our knowledge, there is no pending or threatened in writing
action, suit or proceeding before any court or governmental agency or authority
or arbitrator involving the Seller that is likely to affect the legality,
validity or enforceability against it of the Forward Sale Documents or its legal
ability to perform its obligations under the Forward Sale Documents.
7. The Seller is not an "investment company" under the Investment
Company Act of 1940, as amended.
Our opinion set forth above is subject to the following qualifications:
(a) we express no opinion as to any provision of the Forward Sale
Documents that purports to (i) provide indemnification to any
person to the extent inconsistent with public policy or otherwise
contrary to law, (ii) waive rights that may not be effectively
waived or (iii) confer subject matter jurisdiction on any court;
(b) we express no opinion as to the applicability or effect of any
Federal laws of the United States or state laws relating to
fraudulent transfer, preference or similar laws on the Forward
Sale Documents or any transactions contemplated thereby; and
(c) certain provisions of the Forward Sale Documents relating to the
Collateral may be limited or unenforceable in whole or in part
under applicable law, provided that the inclusion of such
provision does not, in our opinion (but subject to the other
comments and qualifications set forth in this opinion letter),
make the remedies and procedures that will be afforded to CSFB
inadequate for the practical realization of the principal
benefits purported to be provided to CSFB by the Forward Sale
Documents.
The foregoing opinion is limited to the Federal laws of the United
States, the laws of the State of New York and the General Corporation Law of
the State of Delaware.
This opinion is being furnished only to you in connection with the
above matter and is solely for your benefit and is not to be used, circulated,
quoted or otherwise referred to for any other purpose or relied upon by any
other person for any purpose.
Very truly yours,
Boies, Schiller & Flexner LLP
Schedule I
1. $70,000,000 Consolidating Promissory Note, dated as of September 25, 1995,
by C.V. Starr & Co., Inc. in favor of The Bank of New York.
2. General Loan and Security Agreement, dated as of September 25, 1995, by
C.V. Starr & Co., Inc. in favor of The Bank of New York, as amended by
Amendment No. 1, dated as of October 7, 2005, between C.V. Starr & Co., Inc.
and The Bank of New York.
3. The letter, dated as of April 21, 2005, from HSBC Bank USA, National
Association to C.V. Starr & Co., Inc. and the accompanying Uncommitted
Revolving Secured Advance Note, dated as of April 21, 2005, by C.V. Starr &
Co., Inc. in favor of HSBC Bank USA, National Association, as extended
pursuant to the letter agreement dated as of June 27, 2005.
4. Pledge and Security Agreement, dated as of June 2, 1999, by C.V. Starr &
Co., Inc. in favor of HSBC Bank USA, N.A., as amended on October 18, 2005.
5. Pledge and Security Agreement, dated as of December 6, 2000, by C.V. Starr
& Co., Inc. in favor of HSBC Bank USA, N.A., as amended on November 2, 2005.
6. Master Terms and Conditions for Pre-Paid Forward Contracts, dated as of
November 15, 2005, by and between C. V. Starr & Co., Inc. and Citibank, N.A.
ANNEX B
Issuer Acknowledgment
November 3, 2005
Credit Suisse First Boston Capital LLC
c/o Credit Suisse First Boston LLC
Eleven Madison Avenue
New York, New York 10010
Re: Proposed transaction by C. V. Starr & Co., Inc.:
Ladies and Gentlemen:
American International Group, Inc. (the "Company") understands that
C. V. Starr & Co., Inc. ("CV Starr") proposes to enter into a hedging
transaction (the "Transaction") with Credit Suisse First Boston Capital LLC
("CSFB") with respect to the common stock of the Company (the "Common Stock").
Specifically, the Company understands that CV Starr proposes to enter into a
variable forward sale transaction with CSFB, pursuant to which CSFB will
advance cash to CV Starr shortly after the date of execution of the
Transaction and receipt of CV Starr's share pledge. At the maturity of the
Transaction, CV Starr will deliver to CSFB up to 7,250,000 shares (the
"Shares") of Common Stock, or the cash equivalent, pursuant to the terms and
conditions set forth within the confirmation evidencing the Transaction. The
Company understands that CV Starr will pledge shares of Common Stock owned by
it to CSFB to secure CV Starr's obligations under the Transaction.
The Company agrees to instruct the transfer agent for the common
stock to remove the restrictive legend from the Shares upon receipt of an
opinion of Boies, Schiller & Flexner LLP substantially in the form attached
and issue shares that do not bear any restrictive legend referring to the Act
in order to permit the transfer of Shares as contemplated by such opinion. Any
residual shares from any certificate(s) presented, if any, shall retain all
restrictive legends of the original certificate(s) presented to the transfer
agent.
AMERICAN INTERNATIONAL GROUP, INC.
By:
----------------------------
Name:
Title:
ANNEX C
External ID: [ ] - Risk ID: [ ]
Original Deal ID: AIG#04
Tranche ID: AIG#04 - [ ]
TRANSACTION SUPPLEMENT
This Transaction Supplement supplements the Confirmation entered into
between CSFB, the Counterparty and the Agent on the Trade Date set forth
below. Capitalized terms used and not otherwise defined herein shall have the
meanings given to them in the Confirmation.
The purpose of this communication is to confirm certain terms and
conditions of the Transaction.
The terms of the Transaction to which this Transaction Supplement relates
are as follows:
Trade Date: [Date Initial Hedge Complete]
Number of Shares: [__________] in the aggregate with respect
to the Transaction. For purposes of
determining the payments and deliveries to
be made upon settlement of any Component,
the Number of Shares for such Component shall
be as set forth below:
Component No. 1 [_________]
Component No. 2 [_________]
Component No. 3 [_________]
Component No. 4 [_________]
Component No. 5 [_________]
Component No. 6 [_________]
Component No. 7 [_________]
Component No. 8 [_________]
Component No. 9 [_________]
Component No. 10 [_________]
Prepayment Amount: USD [__________] in the aggregate for all
Components
Prepayment Date: The third Exchange Business Day following
the Trade Date
Initial Price: USD [__________]
Forward Floor Price: USD [__________]
Forward Cap Price: USD [__________]
Valuation Date: Component No. 1 _______, 2008
Component No. 2 _______, 2008
Component No. 3 _______, 2008
Component No. 4 _______, 2008
Component No. 5 _______, 2008
Component No. 6 _______, 2008
Component No. 7 _______, 2008
Component No. 8 _______, 2008
Component No. 9 _______, 2008
Component No. 10 _______, 2008
Please confirm your agreement to be bound by the terms of the foregoing by
executing a copy of this Transaction Supplement and returning it to us at the
contact information listed above.
Yours faithfully,
CREDIT SUISSE FIRST BOSTON CAPITAL LLC
By:_____________________________
Name:
Title:
Confirmed as of the date first written above:
C. V. STARR & CO., INC.
By:________________________________
Name:
Title:
CREDIT SUISSE FIRST BOSTON LLC,
as Agent
By:________________________________
Name:
Title:
Schedule I
1. $70,000,000 Consolidating Promissory Note, dated as of September 25, 1995,
by C.V. Starr & Co., Inc. in favor of The Bank of New York.
2. General Loan and Security Agreement, dated as of September 25, 1995, by
C.V. Starr & Co., Inc. in favor of The Bank of New York, as amended by
Amendment No. 1, dated as of October 7, 2005, between C.V. Starr & Co., Inc.
and The Bank of New York.
3. The letter, dated as of April 21, 2005, from HSBC Bank USA, National
Association to C.V. Starr & Co., Inc. and the accompanying Uncommitted
Revolving Secured Advance Note, dated as of April 21, 2005, by C.V. Starr &
Co., Inc. in favor of HSBC Bank USA, National Association, as extended
pursuant to the letter agreement dated as of June 27, 2005.
4. Pledge and Security Agreement, dated as of June 2, 1999, by C.V. Starr &
Co., Inc. in favor of HSBC Bank USA, N.A., as amended on October 18, 2005.
5. Pledge and Security Agreement, dated as of December 6, 2000, by C.V. Starr
& Co., Inc. in favor of HSBC Bank USA, N.A., as amended on November 2, 2005.
6. Master Terms and Conditions for Pre-Paid Forward Contracts, dated as of
November 15, 2005, by and between C. V. Starr & Co., Inc. and Citibank, N.A.
External ID: 50136263 - Risk ID: 40071790
Original Deal ID: AIG#04 / AIG001A
TRANSACTION SUPPLEMENT
This Transaction Supplement supplements the Confirmation entered into
between CSFB, the Counterparty and the Agent on the Trade Date set forth
below. Capitalized terms used and not otherwise defined herein shall have the
meanings given to them in the Confirmation.
The purpose of this communication is to confirm certain terms and
conditions of the Transaction.
The terms of the Transaction to which this Transaction Supplement relates
are as follows:
Trade Date: November 15, 2005
Number of Shares: 4,423,116 in the aggregate with respect
to the Transaction. For purposes of
determining the payments and deliveries
to be made upon settlement of any
Component, the Number of Shares for such
Component shall be as set forth below:
Component No. 1 442,311
Component No. 2 442,311
Component No. 3 442,311
Component No. 4 442,311
Component No. 5 442,311
Component No. 6 442,311
Component No. 7 442,311
Component No. 8 442,311
Component No. 9 442,311
Component No. 10 442,317
Prepayment Amount: USD 240,000,043.41 in the aggregate for all
Components
Prepayment Date: The third Exchange Business Day following
the Trade Date
Initial Price: USD 65.8500
Forward Floor Price: USD 65.8500
Forward Cap Price: USD 65.6050
Valuation Date: Component No. 1 November 3, 2008
Component No. 2 November 4, 2008
Component No. 3 November 5, 2008
Component No. 4 November 6, 2008
Component No. 5 November 7 2008
Component No. 6 November 10, 2008
Component No. 7 November 12, 2008
Component No. 8 November 13, 2008
Component No. 9 November 14, 2008
Component No. 10 November 17, 2008
Please confirm your agreement to be bound by the terms of the foregoing by
executing a copy of this Transaction Supplement and returning it to us at the
contact information listed above.
Yours faithfully,
CREDIT SUISSE FIRST BOSTON CAPITAL LLC
By: /s/ Christy Grant
----------------------------------------
Name: Christy Grant
Title: Assistant Vice President Operations
Confirmed as of the date first written above:
C. V. STARR & CO., INC.
By: /s/ Howard I. Smith
------------------------------------------
Name: Howard I. Smith
Title: Vice Chairman-Finance and Secretary
CREDIT SUISSE FIRST BOSTON LLC,
as Agent
By: /s/ John Ryan
---------------------
Name: John Ryan
Title: A.V.P. Operations
EXHIBIT C
MASTER CONFIRMATION
PRE-PAID FORWARD CONTRACTS
2002 ISDA EQUITY DEFINITIONS
MASTER TERMS AND CONDITIONS FOR PRE-PAID FORWARD CONTRACTS
ISSUED BY C. V. STARR & CO., INC.
The purpose of this Master Terms and Conditions for Pre-Paid
Forward Contracts (the "Master Confirmation"), dated as of November 15, 2005,
is to set forth certain terms and conditions for pre-paid contracts that C. V.
Starr & Co., Inc. ("Issuer") will issue to Holder (as defined herein). Each
contract that is issued by Issuer (a "Contract") that is to be subject to this
Master Confirmation shall be evidenced by a written confirmation substantially
in the form of Exhibit A hereto (a "Confirmation"). This Master Confirmation
constitutes, and this Master Confirmation as supplemented by each Confirmation
constitutes, a "Confirmation" as referred to in the Agreement specified below.
This Master Confirmation and a Confirmation evidence a
complete binding agreement between Issuer and Holder as to the terms of the
Contract to which this Master Confirmation and such Confirmation relates. This
Master Confirmation and each Confirmation hereunder, together with all other
documents referring to the 1992 ISDA Master Agreement (Multicurrency-Cross
Border) (the "ISDA Agreement") confirming Contracts issued by Issuer
(notwithstanding anything to the contrary in a Confirmation), shall
supplement, form a part of, and be subject to an agreement (the "Agreement")
in the form of the ISDA Agreement as if Issuer and Holder had executed an
agreement in such form on the Trade Date of the first such Contract issued by
Issuer. A copy of the ISDA Agreement has been, or promptly after the date
hereof will be, delivered to Issuer.
The definitions and provisions contained in the 2002 ISDA
Equity Derivatives Definitions (the "Definitions") as published by the
International Swaps and Derivatives Association, Inc. ("ISDA") are
incorporated into this Master Confirmation.
THIS MASTER CONFIRMATION WILL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REFERENCE TO
CHOICE OF LAW DOCTRINE. THE PARTIES HERETO IRREVOCABLY SUBMIT TO THE EXCLUSIVE
JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK AND THE UNITED STATES
COURT FOR THE SOUTHERN DISTRICT OF NEW YORK IN CONNECTION WITH ALL MATTERS
RELATING HERETO AND WAIVE ANY OBJECTION TO THE LAYING OF VENUE IN, AND ANY
CLAIM OF INCONVENIENT FORUM WITH RESPECT TO, THESE COURTS.
1. In the event of any inconsistency between this Master
Confirmation, on the one hand, and the Definitions or the Agreement, on the
other hand, this Master Confirmation will control for the purpose of the
Contract to which a Confirmation relates. With respect to a Contract,
capitalized terms used herein that are not otherwise defined shall have the
meaning assigned to them in the Confirmation relating to such Contract. For
purposes of the Agreement and the Definitions, each Contract shall be a
"Transaction" and a "Share Forward Transaction" thereunder. For the avoidance
of doubt, all references to "the Issuer" in the Definitions shall be deemed to
be references to "the Company".
2. Each party will make each payment specified in this
Master Confirmation or a Confirmation as being payable by such party, not
later than the due date for value on that date in the place of the account
specified below or otherwise specified in writing, in freely transferable
funds and in a manner customary for payments in the required currency.
3. During the period (the "Hedging Period") beginning on
November 18, 2005 and ending on the Hedging Completion Date (as defined
below), Holder (or an affiliate of Holder) shall establish Holder's initial
hedge of the price and market risk under one or more Contracts hereunder by
selling Shares in accordance with the instructions provided by Issuer from
time to time in such number as Holder (or an affiliate of Holder) considers
necessary or appropriate to hedge the initial price and market risk under such
Contract (for any Contract, "Holder's Initial Hedge" for such Contract).
For any Contract, the date on which the execution of
Holder's Initial Hedge for such Contract shall be complete (for such Contract,
the "Hedge Completion Date") shall be the earliest of (w) the date on which
the total aggregate Prepayment Amount, calculated on the basis of the total
aggregate Number of Shares (as defined below) for such Contract and all other
Contracts hereunder for which the Holder's Initial Hedge has been completed,
equals USD 160,000,000, (x) the date that is exactly one month after the first
date on which Holder (or an affiliate of Holder) executes sales of Shares in
connection with Holder's Initial Hedge for such Contract and (y) the date on
which the total aggregate Number of Shares for such Contract and all other
Contracts hereunder for which Holder's Initial Hedge has been completed equals
the Maximum Number of Shares (as defined below). As of the Hedge Completion
Date for each Contract, Holder shall determine the Number of Shares, the
Execution Price, the Forward Floor Price, the Forward Cap Price, the Valuation
Date, the Final Disruption Date and the Prepayment Amount for such Contract in
the manner set forth below based on Holder's Initial Hedge for such Contract,
and shall promptly deliver the Confirmation for such Contract to Issuer
following the completion of Holder's Initial Hedge for such Contract. Holder's
Initial Hedge for each Contract shall be established by selling Shares in
transactions conforming to the manner-of-sale conditions described in Rule 144
(f) and (g) under the Securities Act of 1933, as amended (the "Securities
Act").
Issuer acknowledges that it may not be possible for Holder
(or an affiliate of Holder) to sell Shares on any day during the Hedging
Period due to: (a) a legal or contractual restriction applicable to Issuer
and/or to Holder or an affiliate of Holder, (b) a market disruption (including
without limitation a halt or suspension of trading in the Shares imposed by a
court, governmental agency or self-regulatory organization), (c) rules
governing order execution priority on the Exchange (as defined below) or (d)
the failure of a sale to comply (or the likelihood in the reasonable opinion
of Holder's counsel of non-compliance) with Rule 144, 145 or 701 under the
Securities Act. All such determinations shall be made by Holder in its
reasonable judgment (or, in the case of the parenthetical in clause (d) above,
in the reasonable opinion of Holder's counsel).
4. Confirmations:
--------------
This Master Confirmation and the Agreement, together with
the Confirmation relating to a Contract, shall constitute the written
agreement between Issuer and Holder with respect to such Contract.
General Terms:
- --------------
Trade Date: For any Contract, the Hedge Completion Date for
such Contract, as provided in the Confirmation
for such Contract.
Seller: Issuer
Buyer: Holder
Holder: Citibank, N.A. and, subsequently, any person to
whom Citibank, N.A. transfers all or any part of
a Contract pursuant to the terms hereof.
Company: American International Group, Inc.
Shares: The common stock of the Company (Symbol: AIG).
Tranches: Each Contract will be divided into individual
Tranches, each with the terms set forth in this
Master Confirmation and the Confirmation for
such Contract, and in particular with the Number
of Shares and Valuation Date set forth in the
Confirmation for such Contract. The payments and
deliveries to be made upon settlement of each
Contract will be determined separately for each
Tranche as if each Tranche were a separate
Contract under the Agreement. Each Contract will
have ten Tranches with an equal number of Shares
(subject to rounding by the Calculation Agent to
avoid odd lots).
Number of Shares: For each Contract, 1.45 multiplied by the number
of Shares sold in connection with the execution
of Holder's Initial Hedge, as determined by the
Calculation Agent and provided in the
Confirmation for such Contract. In no event
shall the Number of Shares in the aggregate for
all Contracts exceed 3,282,377 (the "Maximum
Number of Shares").
Execution Price: For any Contract, the weighted average price at
which Holder (or an affiliate of Holder)
executes Holder's Initial Hedge for such
Contract, as provided in the Confirmation for
such Contract.
Variable Obligation: Applicable
Forward Floor Price: For any Contract, 100% of the Execution Price
for such Contract, as provided in the
Confirmation for such Contract.
Forward Cap Price: For any Contract, 130% of the Execution Price
for such Contract, as provided in the
Confirmation for such Contract.
Settlement Currency: USD
Exchange: New York Stock Exchange
Related Exchange(s): All Exchanges
Prepayment:
- -----------
Prepayment: Applicable
Conditions to Holder's
Obligation to Pay
Prepayment Amount: It shall be a condition to
Holder's obligation to pay any
Prepayment Amount hereunder on any
Prepayment Date, or to make the
Early Prepayment described below,
that Issuer shall have performed its
obligations under paragraph 6(a)
below and shall have delivered to
Holder an opinion of nationally
recognized counsel to Issuer
covering the matters set forth in
Annex B in form and substance
reasonably satisfactory to Holder.
Prepayment Amount: For any Contract, 82.02% of the product of the
Execution Price for such Contract and the Number
of Shares for such Contract, as provided in the
Confirmation for such Contract.
Prepayment Date: For any Contract, the third Currency Business
Day following the Trade Date for such Contract.
Early Prepayment: On November 21, 2005, Holder will pay to Issuer
USD 160,000,000 as an early prepayment of the
Prepayment Amount for the first Contract
hereunder. If the Prepayment Amount for the
first Contract hereunder exceeds such amount,
Holder will pay to Issuer such excess, or, if
such amount exceeds such Prepayment Amount,
Issuer will pay to Holder such excess, in either
case on the Prepayment Date for the first
Contract hereunder.
Valuation:
- ----------
In respect of any Contract:
---------------------------
Valuation Time: The Scheduled Closing Time on the relevant
Exchange on the relevant Valuation Date for such
Contract.
Valuation Dates: For each Tranche of such Contract, the
corresponding one of the ten consecutive
Scheduled Trading Days beginning on, and
including, the Scheduled Trading Day thirty-six
months after the Trade Date for such Contract,
as provided in the relevant Confirmation for
such Contract; provided that if any such date is
a Disrupted Day, such Valuation Date shall be
the first succeeding Scheduled Trading Day that
is not a Disrupted Day and that is not or is not
deemed to be a Valuation Date in respect of any
other Tranche of such Contract or any other
Contract under this Master Confirmation;
provided, further, that if any such Valuation
Date has not occurred pursuant to the preceding
proviso as of the Final Disruption Date for such
Contract, that Final Disruption Date shall be
the Valuation Date for such Tranche
(irrespective of whether such day is a Valuation
Date in respect of any other Tranche of such
Contract or any other Contract under this Master
Confirmation) and the Settlement Price for such
Tranche shall be the price determined by the
Calculation Agent in its discretion.
Market Disruption Events: Notwithstanding Section 6.3(a) of the
Definitions, "Market Disruption Event" means the
occurrence or existence of (i) a Trading
Disruption, (ii) an Exchange Disruption or (iii)
an Early Closure, if, in the determination of
Holder, such event is material.
Holder shall, as soon as reasonably
practicable under the circumstances,
notify the other party of the
occurrence or existence of a Market
Disruption Event on any day that but
for the occurrence or existence of a
Market Disruption Event would have
been a Valuation Date.
Final Disruption Date: The tenth Exchange Business Day following the
final Valuation Date for such Contract.
Settlement Terms:
- -----------------
In respect of each Tranche of any Contract:
-------------------------------------------
Settlement Method Election: Applicable; provided that, notwithstanding
anything to the contrary in the Definitions,
a single settlement method election shall
apply to each Tranche in such Contract;
provided further that notwithstanding
anything to the contrary in the Definitions,
the notice of such election shall be in
writing and be given no later than the
Settlement Method Election Date; provided
further that if Issuer is unable to satisfy
the Conditions to Physical Settlement prior
to the first Valuation Date for such
Contract, then Holder shall be entitled but
not required, in its discretion, to deem that
Physical Settlement shall not apply and Cash
Settlement shall be applicable.
Electing Party: Issuer
Settlement Method
Election Date: The fifth Scheduled Trading Day prior to the
scheduled Valuation Date for the Tranche of
such Contract with the earliest scheduled
Valuation Date.
Default Settlement Method: Physical Settlement
Settlement Date/Cash
Settlement Payment Date: As provided in Sections 9.4 and 8.8 of the
Definitions, respectively, or such other
date as the parties may agree.
Condition to Physical
Settlement: It shall be a condition to Issuer's right to
elect Physical Settlement for such Contract
that any Shares delivered to Holder in
connection with such Physical Settlement shall
be Shares that do not bear any restrictive
legends.
Representation and
Agreement: Section 9.11 of the Definitions shall be
applicable.
Dividends:
- ----------
In respect of each Tranche of any Contract:
-------------------------------------------
Dividends: If, at any time from, and including, the
third Scheduled Trading Day after the Trade
Date for such Contract to, but excluding, the
Settlement Date or Cash Settlement Payment
Date, as the case may be, for such Tranche, a
record date with respect to an Extraordinary
Dividend occurs, the Method of Adjustment
provided below shall apply; provided that any
adjustment in respect of an Extraordinary
Dividend shall be made only to the Forward
Cap Price for such Contract, except that if,
in the determination of the Calculation
Agent, no such adjustment could be made that
would be appropriate to account for such
Extraordinary Dividend, then in lieu of such
adjustment, Issuer will pay Holder in cash on
the payment date therefor an amount equal to
100% of the Extraordinary Dividend Amount
multiplied by the number of Shares
constituting Holder's hedge of such Tranche
on the relevant record date (or, if such
amount is negative, Holder will pay the
absolute value thereof to Issuer). The last
sentence of Section 10.1 of the Definitions
is hereby deleted.
Extraordinary Dividend: Any dividend or distribution on the Shares
the per Share amount or value of which
differs from the Ordinary Dividend Amount for
such dividend or distribution.
Ordinary Dividend Amount: For the first dividend or distribution on the
Shares for which the record date occurs
during any "Dividend Period" of the Company
as shown on Annex A hereto, the amount
corresponding to such "Dividend Period" as
set forth under the column "Ordinary Dividend
Amount" on Annex A hereto, and, for any
subsequent dividend or distribution on the
Shares for which the record date occurs
during the same regular dividend period of
the Company, zero.
Extraordinary Dividend For any dividend or distribution on the
Amount: Shares, the per Share amount or value of
such dividend or distribution minus the
Ordinary Dividend Amount for such dividend
or distribution.
Excess Dividend Amount: All references to the Excess Dividend Amount
shall be deleted from the Definitions,
including, without limitation from Sections
8.4(b) and 9.2(a)(iii) thereof.
Adjustments:
Potential Adjustment Event: If any event occurs that constitutes both a
Potential Adjustment Event under Section
11.2(e)(ii)(C) of the Definitions and a
Spin-off as described below, it shall be
treated hereunder as a Spin-off and not as a
Potential Adjustment Event.
Method of Adjustment: Calculation Agent Adjustment; provided that,
in addition to the terms of Section 11.2(c)
of the Definitions, in connection with any
Extraordinary Dividend, the Calculation Agent
may also adjust to account solely for changes
in volatility relevant to the Shares or to
the Contract. The Calculation Agent shall
provide prompt notice of any adjustment(s),
including a schedule or other reasonably
detailed explanation of the basis for and
determination of each adjustment. If as a
result of such adjustments the Calculation
Agent determines that an amount is owed to
Holder by Issuer, the Calculation Agent shall
notify Issuer of such amount, which Issuer
shall pay to Holder within three (3) Currency
Business Days following the receipt of such
notice.
Spin-off: "Spin-off" means a distribution of Spin-off
Shares to holders of the Shares (the
"Original Shares"). "Spin-off Shares" means
ordinary or common shares of a subsidiary of
the Company or any other corporation in which
the Company has an equity investment (the
"Spin-off Company") that are, or that as of
the ex-dividend date of a distribution of
such shares to holders of Shares, are
scheduled promptly to be (i) publicly quoted,
traded or listed on any of the New York Stock
Exchange, the American Stock Exchange or the
NASDAQ National Market System (or their
respective successors) and (ii) not subject
to any currency exchange controls, trading
restrictions or other trading limitations.
Consequences of Spin-offs: As of the ex-dividend date of a Spin-off, (i)
"Shares" shall mean the Original Shares and
the Spin-off Shares; (ii) each Contract shall
continue but as a Share Basket Forward
Transaction with a Number of Baskets equal to
the Number of Shares prior to such Spin-off,
and each Basket shall consist of one Original
Share and a number of Spin-off Shares that a
holder of one Original Share would have been
entitled to receive in such Spin-off; and
(iii) the Calculation Agent shall make such
adjustments to the valuation, settlement,
payment or any other terms of each Contract
as the Calculation Agent determines
appropriate to account for the economic
effect on each Contract of such Spin-off,
which may, but need not, be determined by
reference to the adjustment(s) made in
respect of such Spin-off by an options
exchange to options on the Shares traded on
such options exchange. As of the ex-dividend
date of any subsequent Spin-off, the
Calculation Agent shall make adjustments to
the composition of the Basket and other terms
of each Contract in accordance with the
immediately preceding sentence. The
Calculation Agent shall provide prompt notice
of any adjustment(s), including a schedule or
other reasonably detailed explanation of the
basis for and determination of each
adjustment.
Extraordinary Events:
- ---------------------
New Shares: In the definition of New Shares in Section
12.1(i) of the 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 American Stock Exchange or the
NASDAQ National Market System (or their
respective successors)".
Consequences
of Merger Events:
(a) Share-for-Share: Alternative Obligation.
(b) Share-for-Other: Cancellation and Payment.
(c) Share-for-Combined: Component Adjustment.
Determining Party: Holder
Tender Offer: Applicable
Consequences of
Tender Offers:
(a) Share-for-Share: Modified Calculation Agent Adjustment.
(b) Share-for-Other: Modified Calculation Agent Adjustment.
(c) Share-for-Combined: Modified Calculation Agent Adjustment.
Determining Party: Holder
Composition of Combined
Consideration: Not Applicable
Nationalization,
Insolvency or Cancellation and Payment
Delisting: (where the Holder is the Determining
Party), with the Contract cancelled
at the election of Holder at any
time after public announcement of
the event that is or, when
consummated, would be, a
Nationalization, Insolvency or
Delisting.
Notwithstanding the Definitions, "Insolvency"
means an event of the type described in
Section 5(a)(vii) of the Agreement has
occurred with respect to the Company (without
regard to any grace periods included
therein).
In addition to the provisions of Section
12.6(a)(iii) of the Definitions, it will also
constitute a Delisting if the Exchange is
located in the United States and the Shares
are not immediately re-listed, re-traded or
re-quoted on any of the New York Stock
Exchange, the American Stock Exchange or the
NASDAQ National Market System (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
thereafter be deemed to be the Exchange.
Additional Disruption Events:
- -----------------------------
Change in Law: Applicable
Insolvency Filing: Applicable
Hedging Disruption: Applicable
Increased Cost of
Hedging: Applicable
Hedging Party: For all applicable Additional Disruption
Events, Holder
Determining Party: For all applicable Additional Disruption
Events, Holder
Non-Reliance: Applicable
Agreements and Acknowledgments
Regarding Hedging Activities: Applicable
Additional Acknowledgments: Applicable
5. Calculation Agent:
------------------
Holder is the Calculation Agent and shall make all
calculations, adjustments and determinations required pursuant to a Contract,
reasonably and in good faith, and such calculations, adjustments and
determinations shall be binding absent manifest error.
6. Collateral:
----------
(a) (i) On or prior to the date hereof, Issuer shall deliver
a number of Shares equal to 3,282,377 (the "Initial Collateral Shares") (if
such Shares are in certificated form, together with proper instruments of
assignment duly executed in favor of Holder or its designee or in blank) to
Holder or its designee, in each case in a manner acceptable to Holder. If, as
of the Hedge Completion Date for the first Contract hereunder, the Number of
Shares for such Contract is less than the number of Initial Collateral Shares,
then Holder shall return to Issuer a number of Shares equal to such difference
(the "Returned Collateral Shares"). If as of the Hedge Completion Date for any
Contract (including, for the avoidance of doubt, the first Contract
hereunder), the Number of Shares for such Contract and all previous Contracts
hereunder is greater than the number of Initial Collateral Shares minus any
Returned Collateral Shares, then Issuer shall deliver a number of Shares equal
to such excess (if such Shares are in certificated form, together with proper
instruments of assignment duly executed in favor of Holder or its designee or
in blank) to Holder or its designee, in each case in a manner acceptable to
Holder (the "Additional Collateral Shares"), prior to the Prepayment Date for
such Contract. The Initial Collateral Shares, together with any Additional
Collateral Shares, but excluding any Returned Collateral Shares, are referred
to herein as the "Collateral Shares". Issuer hereby grants Holder a continuing
first priority, perfected security interest in and right of setoff against the
Collateral Shares, all distributions thereon and rights relating thereto, and
any other collateral acceptable to Holder in its sole discretion that may be
delivered by or on behalf of Issuer in connection with any Contract, and all
proceeds of any of the foregoing (collectively, "Collateral"), as security for
the prompt and complete payment and performance when due (whether on an Early
Termination Date or otherwise) of all of Issuer's payment and performance
obligations under the Contracts hereunder and the Agreement (the "Secured
Obligations"). Holder may reregister the Collateral Shares and any other
Collateral in its name or the name of its nominee at any time and, if such
Shares or such other Collateral are in certificated form, Issuer agrees to use
reasonable best efforts (including, without limitation, providing at Issuer's
expense any opinion of counsel required by the Company) to cause the Company
to promptly remove any restrictive legend from any certificates representing
the Collateral Shares and effect such reregistration. Holder agrees and
acknowledges that Issuer's counsel may rely on Holder's representations and
warranties set forth in this Master Confirmation in rendering any opinion
required by the Company for purposes of removing any restrictive legend from
any certificates representing the Collateral Shares.
(b) Issuer represents, on each date on which Issuer delivers
or Holder otherwise receives Collateral, that (i) Issuer is the owner of all
Collateral free of any lien, security interest, charge, adverse claim,
restriction on transfer or other encumbrance, other than the Permitted
Securities Law Restrictions, (ii) Issuer has the power and authority and has
obtained all of the necessary consents and approvals to grant a first priority
security interest to Holder in the Collateral, (iii) upon the delivery of the
Collateral Shares as described above and any other Collateral in a manner
acceptable to Holder, Holder will have a valid and perfected first priority
security interest in the Collateral Shares and the other Collateral, (iv) none
of Issuer's entry into this Master Confirmation or Holder's exercise of any of
its rights and remedies hereunder will violate or conflict with the terms of
any agreement made by or applicable to Issuer or will violate or conflict with
any law, rule, policy or order applicable to Issuer or the Collateral, and (v)
Issuer has furnished Holder with copies of all agreements, contracts or
instruments that relate to the Collateral Shares. "Permitted Securities Law
Restrictions" means restrictions with respect to any securities by virtue of
the fact that Issuer may be an "affiliate", within the meaning of Rule 144
under the Securities Act, of the Company.
(c) In addition to the rights granted to a secured party
under the Uniform Commercial Code (whether or not in effect in the
jurisdiction where such rights are exercised), Holder shall be entitled to
hold the Collateral as collateral to the extent set forth below until the date
all of Issuer's obligations in connection with each Contract hereunder,
whether absolute or contingent, have been fully performed (the "Termination
Date"). If Issuer defaults on any obligation to Holder under this Master
Confirmation, Holder may exercise all rights with respect to the Collateral,
sell or liquidate the Collateral to satisfy any of Issuer's obligations to
Holder and set off any amounts payable by Issuer with respect to any Secured
Obligations against any Collateral held by Holder or the cash equivalent of
any Collateral (or any obligation of Holder to deliver any Collateral to
Issuer). Issuer acknowledges and agrees that the Collateral may decline
speedily in value and is of a type customarily sold on a recognized market
and, therefore, that following a default, Holder is not required to send any
notice of its intention to sell or otherwise dispose of the Collateral
hereunder, except any notice that is required under applicable law and cannot
be waived (in which case Issuer agrees that ten days' prior written notice
shall be commercially reasonable). Following a default, Holder may, in its
sole and absolute discretion, sell Collateral in a private sale in such manner
and under such circumstances as Holder may deem necessary or advisable (with
Holder or its affiliate having the right to purchase any or all of the
Collateral Shares to be sold) and notwithstanding that a registration
statement for all or any of such Collateral has been or could be filed or is
not required under the Securities Act. Issuer acknowledges that such sale
shall be deemed to have been made in a commercially reasonable manner,
notwithstanding that any such sale may be for a price less than that which
might have been obtained had such Collateral been so registered or otherwise
publicly sold. Without limiting the foregoing, upon request of Holder
following such default, Issuer shall use reasonable best efforts to procure
the registration by the Company of the Collateral Shares. Holder shall apply
the Collateral or the net proceeds of any such collection, exercise or sale to
the payment in whole or in part of the Secured Obligations in such order as
Holder shall determine in the exercise of its sole discretion. Issuer shall
remain fully liable to Holder for any amounts that remain outstanding after
Holder has liquidated and/or sold the Collateral and deducted its reasonable
attorney fees and other costs and expenses incurred in connection therewith
plus interest thereon at the Default Rate from the date incurred to the date
paid (which shall be Secured Obligations). For the avoidance of doubt, in
connection with the exercise of any remedies by Holder with respect to the
Collateral, Holder shall be under no obligation to, and shall not, consult
with Issuer in any way with respect to the exercise of such remedies, and
Issuer shall have no right to control or influence Holder's exercise of such
remedies.
(d) Unless a Potential Event of Default, an Event of Default
or a Termination Event has occurred and is continuing with respect to Issuer
or an Early Termination Date has occurred or been designated as a result of an
Event of Default or Termination Event with respect to Issuer, Issuer shall be
entitled to exercise any and all voting and other consensual rights pertaining
to the Collateral or any part thereof for any purpose not inconsistent with
the terms of this Master Confirmation.
(e) Any cash Excluded Distribution which results in a
payment obligation by Issuer to Holder under "Dividends" above shall be
retained by Holder in satisfaction of Issuer's payment obligation under the
relevant provision, and any other Excluded Distribution shall be retained by
Holder as Collateral. Any Excluded Distribution, if received by Issuer, shall
promptly be paid or delivered to Holder in the manner directed by Holder to be
held as Collateral hereunder or to be applied to cover Issuer's payment
obligation under "Dividends" above and shall be deemed held in trust for
Holder until so paid or delivered. For purposes of this provision, "Excluded
Distribution" shall mean any dividend or other distribution in respect of the
Collateral whose receipt constitutes a Potential Adjustment Event, that is a
cash dividend or distribution or that is made in connection with a Merger
Event.
(f) Unless Issuer satisfies Issuer's obligations under any
Contract through delivery of Shares other than the Collateral Shares, Issuer
hereby authorizes Holder on the Settlement Date for such Contract to apply
Collateral in the form of Shares to satisfy Issuer's delivery obligations, if
any, under such Contract; provided that in no event shall (i) Holder be
required to make such application and (ii) this provision be construed as
altering in any way Issuer's obligations to satisfy all conditions to, or
representations regarding, physical settlement under this Master Confirmation
or the Definitions. If so requested by a party, the other party agrees to
cooperate in good faith (subject, in the case of Holder, to such terms and
conditions as it deems appropriate) in efforts to have the Collateral Shares
deposited into the Clearance System.
(g) Issuer will faithfully preserve and protect Holder's
security interest in the Collateral, will defend Holder's right, title, lien
and security interest in and to the Collateral against the claims and demands
of all persons whomsoever, and will do all such acts and things and deliver
all such documents and instruments, including without limitation further
pledges, assignments, account control agreements, financing statements and
continuation statements, as Holder in its sole discretion may deem reasonably
necessary or advisable from time to time in order to preserve, protect and
perfect such security interest or to enable Holder to exercise or enforce its
rights with respect to any Collateral. Issuer hereby irrevocably appoints
Holder as Issuer's attorney-in-fact for the purpose of taking any action and
executing any instrument which Holder may deem necessary or advisable to
accomplish the purposes of the pledge contemplated by this Master
Confirmation. Holder shall exercise reasonable care of the Collateral to the
extent required by applicable law and in any event shall be deemed to have
exercised reasonable care if it exercises at least the same degree of care as
it would exercise with respect to its own property. Except as specified in the
preceding sentence, Holder shall have no duty with respect to the Collateral,
including, without limitation, any duty to collect any distributions thereon
or enforce or preserve any rights in the Collateral pertaining thereto.
(h) Issuer will not permit any lien, security interest,
charge, adverse claim, restriction on transfer or other encumbrance, other
than the lien and security interest Issuer created hereby in favor of Holder
and the Permitted Securities Law Restrictions, to exist upon any of the
Collateral. Issuer will not take any action that could in any way be
reasonably expected to limit or adversely affect the ability of Holder to
realize upon its rights in the Collateral. Issuer will promptly pay when due
all taxes, assessments or charges of any nature that are imposed with respect
to the Collateral, or income or distributions in respect of the Collateral,
upon becoming aware of the same other than for such taxes, assessments or
charges, not to exceed USD 25,000,000 in the aggregate, that Issuer is
contesting in good faith. Notwithstanding the foregoing sentence, if Issuer
wishes to contest in good faith any taxes, assessments or charges prior to
paying such taxes, assessments or charges in the aggregate in excess of USD
25,000,000, Issuer shall so notify Holder, and unless within five Exchange
Business Days of receipt of such notice Holder determines, and notifies Issuer
of such determination, that there is a substantial likelihood that failure to
so pay prior to contesting such taxes, assessments or charges would result in
a tax lien on the Collateral, Issuer need not comply with the covenant in the
preceding sentence with respect to such taxes, assessments or charges.
Notwithstanding anything to the contrary elsewhere in the Agreement or any
Confirmation, all payments and all deliveries of Collateral, or income or
distributions in respect of Collateral, pursuant to the Agreement shall be
made and the value of any Collateral, or income or distributions in respect of
Collateral, shall be calculated net of any and all present or future taxes,
levies, imposts, duties, charges, assessments or fees of any nature (including
interest, penalties and additions thereto) that are imposed by any government
or other taxing authority in respect thereof.
(i) When no amounts are or thereafter may become payable or
Shares deliverable by Issuer with respect to any Secured Obligations (except
for any potential liability under Section 2(d) of the Agreement), Holder will
return to Issuer all Collateral, if any. When (x) no amounts are or thereafter
may become payable or Shares deliverable by Issuer with respect to any Secured
Obligations relating to a particular Contract (except for any potential
liability under Section 2(d) of the Agreement), (y) no Potential Event of
Default, Event of Default or Termination Event has occurred and is continuing
with respect to Issuer and (z) no Early Termination Date has occurred or been
designated as the result of an Event of Default or Termination Event with
respect to Issuer, Holder will return to Issuer all Collateral relating to
such Contract, if any, as determined by Holder.
(j) The provisions of this Section 6 constitute a Credit
Support Document with respect to Issuer. The Contracts hereunder shall be
disregarded for purposes of determining Exposure under any Credit Support
Annex between the parties and any Collateral delivered to or received by
Holder under this Master Confirmation shall constitute neither Posted
Collateral nor an Independent Amount under any such Credit Support Annex.
7. Securities Law Representations and Agreements:
----------------------------------------------
(a) Issuer hereby represents, warrants and agrees in favor
of Holder on the date hereof, on each day on which Issuer delivers any
Additional Collateral Shares and, solely in the case of clause (vii) below, on
each day during the Hedging Period on which Issuer has not instructed Holder
(or an affiliate of Holder) not to sell Shares in connection with Holder's
Initial Hedge that:
(i) Issuer's "holding period" for the Collateral
Shares, determined in accordance with Rule 144(d) under the
Securities Act, commenced on or prior to November 1, 2003. The pledge
of the Collateral Shares constitutes a bona fide pledge with full
recourse to Issuer.
(ii) Neither Issuer, nor, to Issuer's knowledge,
any other person or entity considered to be the same "person" as
Issuer within the meaning of paragraph (a)(2) of Rule 144 under the
Securities Act (each such other person or entity, an "Associated
Person"), has any reason to believe that the Company has not complied
with the reporting requirements as outlined in Rule 144(c) under the
Securities Act.
(iii) Neither Issuer nor any Associated Person
have, within the three-month period immediately preceding the date
hereof, (i) sold, pledged or otherwise disposed of (including by way
of any cash-settled or other derivative) any shares issued by the
Company that are of the same class as the Shares or any securities
issued by the Company that are convertible into shares of such class
or any interest in such shares or securities or (ii) acted in concert
with any person in connection with any such sale, pledge or other
disposition, except for transactions with one or more third parties
during such three-month period relating to the sale, pledge or
disposition of an aggregate number of Shares that when added to the
Maximum Number of Shares does not exceed the number of Shares that
Issuer would be permitted to sell pursuant Rule 144(e)(1) under the
Securities Act.
(iv) Until the Hedging Completion Date, Issuer will
not, nor will Issuer permit any Associated Person to (i) sell, pledge
or otherwise dispose of (including by way of any cash-settled or
other derivative) any number of shares issued by the Company that are
of the same class as the Shares (or any securities issued by the
Company that are convertible into or exchangeable for shares of such
class or any interest in such shares or securities) that would, at
the time of such sale, pledge or other disposition, if added to the
number of Collateral Shares, exceed one percent of the number of
Shares outstanding at such time as shown by the most recent report or
statement published by the Company or (ii) act in concert with any
person in connection with any such sale, pledge or other disposition.
(v) Issuer has not solicited or arranged for the
solicitation of, and will not solicit or arrange for the solicitation
of, orders to buy Shares in anticipation of or in connection with any
sales of Shares that Holder or an affiliate of Holder effects in
establishing Holder's Initial Hedge with respect to any Contract.
(vi) Except as provided herein, Issuer has not
made, will not make, and has not arranged for, any payment to any
person in connection with any sales of Shares that Holder or an
affiliate of Holder effects in establishing Holder's Initial Hedge
with respect to any Contract.
(vii) On the date hereof, neither Issuer nor, to
Issuer's knowledge, any Associated Person is aware of or in
possession of any material non-public information regarding the
Company or any of its securities (including the Shares). "Material"
information for these purposes means information to which an investor
would reasonably attach importance in reaching a decision to buy,
sell or hold securities of the Company.
(viii) Issuer will not offer or sell, directly or
indirectly, any Shares pursuant to a registration statement under
Section 5 of the Securities Act during the period from, and
including, the fifth Exchange Business Day prior to, and including,
on the fifth Exchange Business Day after the Valuation Date for any
Tranche of any Contract hereunder or any other date of termination or
unwind of a Contract in whole or in part.
(ix) Issuer understands and will comply with
Issuer's responsibilities under applicable securities laws in
connection with the Contracts including, but not limited to, the
provisions of Rule 144 under the Securities Act and the filing
requirements (to the extent applicable) of Sections 13 and 16 of the
Exchange Act of 1934, as amended (the "Exchange Act"), and Issuer
agrees to make all filings required by the Securities Act and the
Exchange Act in connection with the Contracts. Without limiting the
generality of the foregoing, Issuer shall file or cause to be filed,
on the date hereof in the manner contemplated by Rule 144(h) under
the Securities Act, a notice on Form 144 relating to the Contracts
contemplated hereby in form and substance that Holder has informed
Issuer is acceptable to Holder. Issuer is solely responsible for
complying with Section 16 of the Exchange Act in connection with the
Contracts, and will be solely responsible if the Contracts result in
Issuer being liable for "short-swing profits" under Section 16(b) of
the Exchange Act. Holder will not be required to: (i) make any
filings on Issuer's behalf, (ii) review any filing made by Issuer, or
(iii) determine whether any filing by Issuer has been made on a
timely basis. Holder will not be responsible for any misstatement,
omission or defect in any of these filings.
(x) There is no litigation, arbitration or other
proceeding pending or, to Issuer's knowledge, threatened that would
prevent or interfere with the consummation of the Contracts,
including without limitation any sale of Shares pursuant to
instructions from Issuer in connection with Holder's Initial Hedge.
(xi) Issuer owns (as such term is used in Rule
16c-4 under the Exchange Act) a number of Shares (including the
Collateral Shares), after subtracting the number of Shares to which
any put equivalent positions (as defined in Rule 16a-1(h) under the
Exchange Act) have been established or are maintained by Issuer
(other than any put equivalent position established as a result of
this Contract), at least equal to the Maximum Number of Shares.
(xii) Issuer is not subject to any legal,
regulatory, or contractual restriction or undertaking that would
prevent Issuer, Holder or their respective affiliates from conducting
sales of Shares throughout the Hedging Period. Issuer agrees to
notify Holder as soon as practicable if at any time during the
Hedging Period Issuer becomes aware of any legal, contractual or
regulatory restrictions applicable to Issuer or Issuer's affiliates
that would prohibit sales, pledges or transfers of Shares by Issuer
or would prevent Holder or its affiliates from executing sales of the
Shares (other than any such restriction relating to Issuer's
possession or alleged possession of material nonpublic information
relating to the Company or its securities). Such notice shall be
directed to Mr. Steven J. Keltz at Citibank, N.A., c/o Citigroup
Global Markets, Inc., 250 West Street, 10th Floor, New York, NY 10013
and shall indicate the anticipated duration of the restriction, but
shall not include any other information about the nature of the
restrictions or its applicability to Issuer or Holder or its
affiliates. In any event, Issuer shall not communicate any material
nonpublic information relating to the Company or its securities to
Holder or any of Holder's affiliates.
(xiii) Issuer 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 of
1940, as amended.
(b) Holder hereby represents, warrants and agrees in favor
of Issuer on the date hereof, on the Trade Date for each Contract that:
(i) An affiliate of Holder ("Holder Affiliate") is
registered as a broker and a dealer with the Securities and Exchange
Commission and is a "market maker" or a "block positioner", as such
terms are used in Rule 144 under the Securities Act, with respect to
the Shares.
(ii) In respect of any Contract, Holder Affiliate
shall, as promptly as practicable following the Trade Date for such
Contract and consistent with market conditions, introduce into the
public market in transactions conforming to the manner-of-sale
conditions described in Rule 144 (f) and (g) under the Securities Act
a quantity of securities of the same class as the Shares equal to the
Number of Shares for such Contract minus the number of securities of
such class sold in connection with Holder's Initial Hedge with
respect to such Contract.
(iii) Neither Holder nor Holder Affiliate has
solicited or arranged for the solicitation of, and will not solicit
or arrange for the solicitation of, orders to buy Shares in
anticipation of or in connection with the execution of Holder's
Initial Hedge for such Contract except as permitted by paragraph (g)
of Rule 144 under the Securities Act.
(iv) Neither Holder nor Holder Affiliate is aware,
after reasonable inquiry, of any circumstances indicating that the
Issuer is an underwriter with respect to the Shares or that such
Contract is part of a distribution of securities of the Company.
(v) In its capacity as broker in connection with
such Contract in the manner contemplated by this Master Confirmation
and the Interpretive Letter (as defined below), Holder Affiliate has
received no more than the usual and customary broker's commission (it
being understood that the terms of any Contract may give rise to
additional items of profit or loss for either party).
(vi) Neither Holder nor Holder Affiliate has reason
to believe that the Company has not complied with the requirements of
paragraph (c) of Rule 144 under the Securities Act.
(vii) Neither Holder nor Holder Affiliate is an
"affiliate" of the Company for purposes of Section 2(a)(11) of the
Securities Act.
(c) The parties intend that, for each Contract, this Master
Confirmation constitutes a "Preliminary Agreement" and, upon delivery of the
Confirmation for such Contract, a "Final Agreement," both as described in the
letter dated December 14, 1999 submitted by Robert W. Reeder and Alan L.
Beller to Michael Hyatte of the Securities and Exchange Commission staff (the
"Staff") to which the Staff responded in an interpretive letter dated December
20, 1999 (the "Interpretive Letter").
8. Additional Representations and Agreements:
------------------------------------------
(a) In connection with this Master Confirmation, each
Confirmation, each Contract to which a Confirmation relates and any other
documentation relating to the Agreement, each party represents and
acknowledges to the other party on the date hereof, on the Trade Date of each
Contract and on each day on which Issuer delivers any Additional Collateral
Shares to Holder that:
(i) Such party is acting as principal for such
party's own account and not as agent when entering into such
Contract.
(ii) Such party has sufficient knowledge and
expertise to enter into such Contract and such party is entering into
such Contract in reliance upon such tax, accounting, regulatory,
legal, and financial advice as such party deems necessary and not
upon any view expressed by the other. Such party has made such
party's own independent decision to enter into such Contract, is
acting at arm's length and is not relying on any communication
(written or oral) of the other party as a recommendation or
investment advice regarding such Contract. Such party has the
capability to evaluate and understand (on such party's own behalf or
through independent professional advice), and does understand, the
terms, conditions and risks of such Contract and is willing to accept
those terms and conditions and to assume (financially and otherwise)
those risks. Such party acknowledges and agrees that the other party
is not acting as a fiduciary or advisor to such party in connection
with such Contract. Such party is entering into such Contract for the
purposes of hedging such party's underlying assets or liabilities or
in connection with a line of business, and not for purposes of
speculation.
(iii) Such party is an "accredited investor" as
defined in Section 2(a)(15)(ii) of the Securities Act.
(iv) Such party is an "eligible contract
participant" as defined in Section 1a(12) of the Commodity Exchange
Act, as amended (the "CEA"), and this Master Confirmation and each
Contract hereunder is subject to individual negotiation by the
parties and has not been executed or traded on a "trading facility"
as defined in Section 1a(33) of the CEA.
(b) In connection with this Master Confirmation, each
Confirmation, each Contract to which a Confirmation relates and any other
documentation relating to the Agreement, Issuer represents and acknowledges
to, and agrees with, Holder on the date hereof, on the Trade Date of each
Contract and on each day on which Issuer delivers any Additional Collateral
Shares to Holder that:
(i) Issuer understands no obligations of Holder to
Issuer hereunder will be entitled to the benefit of deposit insurance
and that such obligations will not be guaranteed by any affiliate of
Holder or any governmental agency.
(ii) Issuer's financial condition is such that
Issuer has no need for liquidity with respect to Issuer's investment
in such Contract and no need to dispose of any portion thereof to
satisfy any existing or contemplated undertaking or indebtedness.
Issuer's investments in and liabilities in respect of such Contract,
which Issuer understands are not readily marketable, is not
disproportionate to Issuer's net worth, and Issuer is able to bear
any loss in connection with such Contract, including the loss of
Issuer's entire investment in such Contract.
(iii) ISSUER UNDERSTANDS THAT SUCH CONTRACT IS
SUBJECT TO COMPLEX RISKS WHICH MAY ARISE WITHOUT WARNING AND MAY AT
TIMES BE VOLATILE AND THAT LOSSES MAY OCCUR QUICKLY AND IN
UNANTICIPATED MAGNITUDE AND IS WILLING TO ACCEPT SUCH TERMS AND
CONDITIONS AND ASSUME (FINANCIALLY AND OTHERWISE) SUCH RISKS.
(iv) Issuer is entering into such Contract for
Issuer's own account and not with a view to transfer, resale or
distribution and understands that such Contract may involve the
purchase or sale of a security as defined in the Securities Act and
the securities laws of certain states, that any such security has not
been registered under the Securities Act or the securities laws of
any state and, therefore, may not be sold, pledged, hypothecated,
transferred or otherwise disposed of unless such security is
registered under the Securities Act and any applicable state
securities law, or an exemption from registration is available.
(v) Issuer is aware and acknowledges that Holder,
its affiliates or any entity with which Holder hedges such Contract
may from time to time take positions in instruments that are
identical or economically related to such Contract or the Shares or
have an investment banking or other commercial relationship with the
Company. In addition, Issuer acknowledges that the proprietary
trading and other activities and transactions of Holder, its
affiliates or any entity with which Holder hedges such Contract,
including purchases and sales of the Shares in connection with, or in
anticipation of, such Contract, may affect the trading price of the
Shares.
(vi) Issuer will immediately inform Holder of any
changes in the information set forth herein occurring prior to the
Settlement Date for such Contract.
(vii) Issuer will immediately notify Holder of the
occurrence of an Event of Default under the Agreement where Issuer is
the Defaulting Party, or the occurrence of any event that with the
giving of notice, the lapse of time or both would be such an Event of
Default.
(viii) Issuer was not insolvent at the time any
Contract hereunder was consummated, and was not rendered insolvent as
a result thereof. At the time of any transfer to or for the benefit
of Holder, Issuer did not intend to incur, and did not incur, debts
that were beyond the ability of Issuer to pay as they mature.
(ix) Issuer is not, and will not during the term of
any Contract become, an Affiliate of the Company within the meaning
of the Bankruptcy Code (as defined below). "Affiliate" means, for
purposes of the Bankruptcy Code and the immediately preceding
sentence only, a person who directly or indirectly controls or holds
the power to vote, 20 percent or more of the outstanding voting
securities of the Company.
(c) For the purpose of Section 3(f) of the Agreement,
Citibank N.A. (including any successor thereof and each assignee of Citibank,
N.A's rights and duties hereunder) represents and warrants that Citibank, N.A,
any successor of Citibank, N.A. and any assignee of Citibank, N.A.'s rights
and duties under this Master Confirmation will be a "U.S. person" (within the
meaning of Section 7701(a)(30) of the U.S. Internal Revenue Code of 1986, as
amended), and will not be treated as a "foreign person" (including within the
meaning of Treasury Regulations ss.ss. 1.1441-1 to -9 and 1.6041-4(a)(4)) for
all U.S. federal income tax purposes.
9. Acknowledgments:
----------------
The parties hereto intend for:
(a) Each Contract hereunder to be a "securities contract" or
a "swap agreement" as defined in the Bankruptcy Code (Title 11 of the United
States Code) (the "Bankruptcy Code"), and the parties hereto are entitled to
the protections afforded by, among other Sections, Sections 362(b)(6), 555 and
560 of the Bankruptcy Code.
(b) A party's right to liquidate a Contract 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.
(c) Any cash, securities or other property provided as
performance assurance, credit support or collateral with respect to a Contract
to constitute "margin payments" and "transfers" under a "securities contract"
or a "swap agreement" as defined in the Bankruptcy Code.
(d) All payments for, under or in connection with a
Contract, all payments for the Shares and the transfer of such Shares to
constitute "settlement payments" and "transfers" under a "securities contract"
or a "swap agreement" as defined in the Bankruptcy Code.
10. Other Provisions:
-----------------
(a) Early Termination. The parties agree that for purposes
of Section 6(e) of the Agreement, Second Method and Loss will apply to each
Contract under this Master Confirmation.
(b) Transfer. Notwithstanding any provision of the ISDA
Agreement to the contrary, upon the written consent of Issuer (which consent
shall not be unreasonably withheld), Holder may transfer any Contract, in
whole or in part, to any person who is a qualified purchaser, as such term is
defined in Section 2(a)(51) of the Investment Company Act. Any purported
transfer without the written consent of Issuer shall be void. In addition,
without the consent of Issuer, Holder may assign its rights and obligations
hereunder to make or receive cash payments and transfer of Shares and other
related rights to one or more entities, including, but not limited to,
Citigroup Global Markets Inc., that are wholly-owned, directly or indirectly,
by Citigroup Inc., or any successor thereto (each, a "Holder Affiliate");
provided that Issuer shall have recourse to Holder in the event of the failure
by a Holder Affiliate to perform any of such obligations hereunder.
Notwithstanding the foregoing, recourse to Holder shall be limited to
recoupment of Issuer's monetary damages and Issuer hereby waives any right to
seek specific performance by Holder of its obligations hereunder. Such failure
after any applicable grace period shall be an Additional Termination Event
with the Contract to which the failure relates as the sole Affected
Transaction and Holder as the sole Affected Party. For purposes of Section
8-102(15) of the New York Uniform Commercial Code (the "NYUCC"), the Contracts
shall be divisible into a class of obligations of Issuer. If any Contract is
transferred pursuant to this paragraph, the transferee shall become Holder
under such transferred Contract (or the transferred portion thereof, as the
case may be), and Issuer, Holder and such transferee shall execute an
agreement of transfer making such transferee a party hereto.
(c) Contract Register. Issuer shall maintain books for the
purpose of registering transfers of all or any portion of each Contract under
this Master Confirmation.
(d) NYUCC Article 8 Status. Issuer and Holder intend that
each Contract hereunder be a medium for investment, and agree that each
Contract shall be a "security" governed by Article 8 of the NYUCC.
(e) Consent to Recording. Each party (i) consents to the
recording of the telephone conversations of trading and marketing personnel of
the parties and their affiliates in connection with this Master Confirmation
and (ii) agrees to obtain any necessary consent of, and give notice of such
recording to, such personnel of such party and such party's affiliates.
(f) Severability; Illegality. If compliance by either party
with any provision of a Contract would be unenforceable or illegal, (i) 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 (ii) the other provisions of such
Contract shall not be invalidated, but shall remain in full force and effect.
(g) Waiver of Trial by Jury. EACH OF ISSUER AND HOLDER
HEREBY IRREVOCABLY WAIVES (ON SUCH PARTY'S OWN BEHALF AND, TO THE EXTENT
PERMITTED BY APPLICABLE LAW, ON BEHALF OF SUCH PARTY'S STOCKHOLDERS) ALL RIGHT
TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR COUNTERCLAIM (WHETHER BASED ON
CONTRACT, TORT OR OTHERWISE) ARISING OUT OF OR RELATING TO THIS MASTER
CONFIRMATION OR THE ACTIONS OF HOLDER OR ITS AFFILIATES IN THE NEGOTIATION,
PERFORMANCE OR ENFORCEMENT HEREOF.
(h) Confidentiality. Holder and Issuer agree that (i) Issuer
is not obligated to Holder to keep confidential from any and all persons or
otherwise limit the use of any element of Holder's descriptions relating to
tax aspects of the Contracts hereunder and any part of the structure necessary
to understand those tax aspects, and (ii) Holder does not assert any claim of
proprietary ownership in respect of such descriptions contained herein of the
use of any entities, plans or arrangements to give rise to significant U.S.
federal income tax benefits for Issuer.
(i) Conditions Precedent. The condition precedent set forth
in clause (1) of Section 2(a)(iii) of the Agreement shall not apply to
payments or deliveries scheduled to be made by Issuer to Holder under this
Master Confirmation.
(j) Binding Contract.
-----------------
(i) As a condition to the execution of Holder's
Initial Hedge, Issuer accepts and agrees to be bound by the contractual terms
and conditions set forth in any Confirmation delivered as contemplated by this
Master Agreement. Upon receipt of any Confirmation Issuer shall promptly execute
and return such Confirmation, to Holder; provided that Issuer's failure to so
execute and return any Confirmation shall not affect the binding nature of such
Confirmation; and the terms set forth therein shall be binding on Issuer to the
same extent, and with the same force and effect, as if Issuer had executed a
written version of such Confirmation.
(ii) Each of Issuer and Holder agrees and
acknowledges that (A) any Contract to be entered into pursuant to this Master
Confirmation and the Confirmation relating to such Contract will be entered into
in reliance on the fact that this Master Confirmation and such Confirmation form
a single agreement between Issuer and Holder, and Holder would not otherwise
enter into such Contract, (B) this Master Confirmation, as supplemented by any
Confirmation is a "qualified financial contract", as such term is defined in
Section 5-701(b)(2) of the General Obligations Law of New York (the "General
Obligations Law"); (C) any Confirmation, regardless of whether such Confirmation
or is transmitted electronically or otherwise, constitutes a "confirmation in
writing sufficient to indicate that a contract has been made between the
parties" hereto, as set forth in Section 5-701(b)(3)(b) of the General
Obligations Law; and (D) this Master Confirmation constitutes a prior "written
contract", as set forth in Section 5-701(b)(1)(b) of the General Obligations
Law, and each party hereto intends and agrees to be bound by this Master
Confirmation, as supplemented by any Confirmation.
(iii) Issuer and Holder further agree and
acknowledge that this Master Confirmation, as supplemented by
any Confirmation, constitutes a contract "for the sale or purchase of a
security", as set forth in Section 8-113 of the Uniform Commercial Code of New
York.
(k) Limit on Beneficial Ownership. Notwithstanding any other
provisions hereof, Holder shall not be entitled to receive Shares hereunder,
and any delivery hereunder shall not be made, to the extent (but only to the
extent) that the receipt of any Shares upon such receipt or delivery would
result in Holder's ultimate parent entity directly or indirectly beneficially
owning (as such term is defined for purposes of Section 13(d) of the Exchange
Act) at any time in excess of 4.9% of the outstanding Shares. 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 Holder's ultimate parent entity
directly or indirectly so beneficially owning in excess of 4.9% of the
outstanding Shares. If any delivery owed to Holder hereunder is not made, in
whole or in part, as a result of this provision, Issuer's obligation to make
such delivery shall not be extinguished and Issuer shall make such delivery as
promptly as practicable after, but in no event later than one Exchange
Business Day after, Holder gives notice to Issuer that such delivery would not
result in Holder's ultimate parent entity directly or indirectly so
beneficially owning in excess of 4.9% of the outstanding Shares. For the
avoidance of doubt, in no event shall this Section 10(k) limit in any way
Issuer's right to elect Physical Settlement with respect to any Contract
hereunder.
11. Set-off:
--------
Any amount (an "Early Termination Amount") payable to one
party (the "Payee") by the other party (the "Payer") under Section 6(e) of the
ISDA Agreement, in circumstances where there is a Defaulting Party or where
there is one Affected Party in the case where either a Credit Event Upon
Merger has occurred or any other Termination Event in respect of which all
outstanding Transactions or Contracts are Affected Transactions has occurred,
will, at the option of the Non-defaulting Party or the non-Affected Party, as
the case may be ("X") (and without prior notice to the Defaulting Party or the
Affected Party, as the case may be), be reduced by its set-off against any
other amounts ("Other Amounts") payable by the Payee to the Payer (whether or
not arising under the Agreement, matured or contingent and irrespective of the
currency, place of payment or place of booking of the obligation). To the
extent that any Other Amounts are so set off, those Other Amounts will be
discharged promptly and in all respects. X will give notice to the other party
of any set-off effected under this Section 11. For this purpose, either the
Early Termination Amount or the Other Amounts (or the relevant portion of such
amounts) may be converted by X into the currency in which the other is
denominated at the rate of exchange at which such party would be able, in good
faith and using commercially reasonable procedures, to purchase the relevant
amount of such currency. If an obligation is unascertained, X may in good
faith estimate that obligation and set off in respect of the estimate, subject
to the relevant party accounting to the other when the obligation is
ascertained. Nothing in this Section 11 will be effective to create a charge
or other security interest. This Section 11 will be without prejudice and in
addition to any right of set-off, offset, combination of accounts, lien, right
of retention or withholding or similar right or requirement to which any party
is at any time otherwise entitled or subject (whether by operation of law,
contract or otherwise).
12. Addresses for Notice:
---------------------
If to Holder: Citibank, N.A.
390 Greenwich Street
New York, NY 10013
Attention: Equity Derivatives
Facsimile: (212) 723-8328
Telephone: (212) 723-7357
with a copy to: Citibank, N.A.
250 West Street, 10th Floor
New York, NY 10013
Attention: GCIB Legal Group--Derivatives
Facsimile: (212) 801-4109
Telephone: (212) 723-3837
If to Issuer: C. V. Starr & Co., Inc.
399 Park Avenue
New York, NY 10002
Attention: Treasurer
Facsimile: (212)-759-5580
Telephone: (212)-759-5630
13. Accounts for Payment:
---------------------
To Holder: Citibank, N.A.
ABA #021000089
DDA 00167679
Ref: Equity Derivatives
To Issuer: State Street Bank and Trust Company
ABA #: 011-0000-28
CitiFunds Mutual Funds
DDA #: 9902-904-3
For further credit to:
Citi Instit Cash Reserves Class O, Fund # 193
Reference: Account # 817093
14. Delivery Instructions:
----------------------
Unless otherwise directed in writing, any Shares to be
delivered hereunder shall be delivered as follows:
To Holder: To be advised.
Yours sincerely,
CITIBANK, N.A.
By: /s/ Herman Hirsch
--------------------------
Authorized Representative
Confirmed as of the date first above written:
C. V. STARR & CO., INC.
By: /s/ Howard I. Smith
------------------------------------------
Name: Howard I. Smith
Title: Vice Chairman-Finance and Secretary
EXHIBIT A
FORM OF PRE-PAID
FORWARD CONTRACT
CONFIRMATION
CONFIRMATION
------------
Date: __________________
To: C. V. Starr & Co., Inc. ("Issuer")
------
Telefax No.: __________________
Attention: __________________
From: Citibank, N.A. ("Holder")
------
Telefax No.: __________________
The purpose of this communication is to set forth the terms and
conditions of the Contract entered into on the Trade Date specified below
between Issuer and Holder. This communication constitutes a "Confirmation" as
referred to in the Master Confirmation.
1. This Confirmation supplements, forms a part of, and is subject to
the Master Terms and Conditions for Pre-Paid Forward Contracts dated as of
November 15, 2005 (the "Master Confirmation") between Issuer and Holder. All
provisions contained in the Agreement (as modified and as defined in the
Master Confirmation) shall govern this Confirmation.
2. The terms of the particular Contract to which this Confirmation
relates are as follows:
Transaction Reference No.: [______]
Trade Date: [______]
Execution Price: [______]
Forward Floor Price: [______]
Forward Cap Price: [______]
Prepayment Amount: USD[______]
The Number of Shares and Valuation Date for each Tranche of the Contract is
set forth below.
Tranche Number Number of Shares Valuation Date
-------------- ---------------- --------------
1. [ ] [ ]
2. [ ] [ ]
3. [ ] [ ]
4. [ ] [ ]
5. [ ] [ ]
6. [ ] [ ]
7. [ ] [ ]
8. [ ] [ ]
9. [ ] [ ]
10. [ ] [ ]
Yours sincerely,
CITIBANK, N.A.
By:
------------------------
Name:
Title:
Receipt confirmed:
C. V. STARR & CO., INC.
By:
--------------------------------------------
Name:
Title:
ANNEX A
- ------------------------------------------------------------ ---------------------------------------------------------
Dividend Period Ordinary Dividend Amount
- ------------------------------------------------------------ ---------------------------------------------------------
From (and including) November 18, 2005 to (and including)
February 6, 2006 USD 0.150
- ------------------------------------------------------------ ---------------------------------------------------------
From (and including) February 7, 2006 to (and including)
May 8, 2006 USD 0.150
- ------------------------------------------------------------ ---------------------------------------------------------
From (and including) May 9, 2006 to (and including) August
7, 2006 USD 0.150
- ------------------------------------------------------------ ---------------------------------------------------------
From (and including) August 8, 2006 to (and including)
November 6, 2006 USD 0.168
- ------------------------------------------------------------ ---------------------------------------------------------
From (and including) November 7, 2006 to (and including)
February 5, 2007 USD 0.168
- ------------------------------------------------------------ ---------------------------------------------------------
From (and including) February 6, 2007 to (and including)
May 7, 2007 USD 0.168
- ------------------------------------------------------------ ---------------------------------------------------------
From (and including) May 8, 2007 to (and including) August
6, 2007 USD 0.168
- ------------------------------------------------------------ ---------------------------------------------------------
From (and including) August 7, 2007 to (and including)
November 5, 2007 USD 0.188
- ------------------------------------------------------------ ---------------------------------------------------------
From (and including) November 6, 2007 to (and including)
February 4, 2008 USD 0.188
- ------------------------------------------------------------ ---------------------------------------------------------
From (and including) February 5, 2008 to (and including)
May 5, 2008 USD 0.188
- ------------------------------------------------------------ ---------------------------------------------------------
From (and including) May 6, 2008 to (and including) August
4, 2008 USD 0.188
- ------------------------------------------------------------ ---------------------------------------------------------
From (and including) August 5, 2008 to (and including)
November 3, 2008 USD 0.211
- ------------------------------------------------------------ ---------------------------------------------------------
On or after November 4, 2008 USD 0.00
- ------------------------------------------------------------ ---------------------------------------------------------
ANNEX B
[Form of Opinion of Boies, Schiller & Flexner LLP, Counsel for C. V.
Starr & Co. ("Issuer")]
November 15, 2005
Citibank, N.A.
390 Greenwich Street
New York, New York 10013
Ladies and Gentlemen:
We have acted as special New York counsel to C. V. Starr & Co., Inc.,
a Delaware corporation (the "Seller"), in connection with the Master Terms and
Conditions for Pre-Paid Forward Contracts, dated as of November 15, 2005, by
and between the Seller and Citibank, N.A. ("Citi") (the "Master
Confirmation"). This opinion is being delivered pursuant to the requirements
set forth in "Conditions to Holder's Obligation to Pay Prepayment Amount" in
paragraph 4 of the Master Confirmation. Capitalized terms used but not defined
herein have the meanings assigned to them in the Master Confirmation.
In that connection, we have examined originals or copies, certified
or otherwise identified to our satisfaction, of such documents (including (i)
the Master Confirmation and (ii) the Agreement), corporate records,
certificates of officers of the Seller and public officials and other
instruments and have conducted such other investigations of fact and law as we
have deemed necessary or appropriate for purposes of this opinion. The
documents described in clauses (i) and (ii) of the immediately preceding
sentence are referred to herein as the "Forward Sale Documents". We have also
relied upon representations of the Seller as to certain factual matters
contained in the Forward Sale Documents and have assumed compliance by the
Seller with the terms of the Forward Sale Documents.
Based upon the foregoing, and subject to the qualifications
hereinafter set forth, we are of the opinion that:
1. Based solely on a certificate from the Secretary of State of the
State of Delaware, the Seller is validly existing as a corporation and in good
standing under the laws of the State of Delaware.
2. The Seller has (i) the corporate power and authority to execute,
deliver and perform its obligations under the Forward Sale Documents, (ii)
taken all corporate action necessary to authorize the execution, delivery and
performance of the Forward Sale Documents and (iii) duly executed and
delivered the Forward Sale Documents.
3. Each of the Forward Sale Documents constitutes a legal, valid and
binding obligation of the Seller, enforceable against the Seller in accordance
with its terms, subject to applicable bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium and similar laws of general applicability
relating to or affecting creditors' rights and general equity principles,
regardless of whether considered in a proceeding in equity or at law.
4. The execution and delivery by the Seller of, and the performance
by the Seller of its obligations under, the Forward Sale Documents will not
(i) violate the certificate of incorporation or by-laws of the Seller, (ii)
violate any Federal law of the United States, law of the State of New York or
the General Corporation Law of the State of Delaware that in our experience is
normally applicable to general business corporations in relation to
transactions of the type contemplated by the Forward Sale Documents, or to our
knowledge, any order or decree of any court or governmental agency or
instrumentality, or (iii) breach or result in a default under any agreement or
instrument listed on Schedule I hereto.
5. No authorization, approval or other action by, and no notice to,
or filing with, any United States Federal, New York or, to the extent required
under the General Corporation Law of the State of Delaware, Delaware
governmental authority is required in connection with the execution, delivery
and performance by the Seller of the Forward Sale Documents, other than (i)
those that have been made or obtained and are in full force and effect, (ii)
those that are required from time to time to create or perfect liens, pledges
or security interests in the Collateral, (iii) those that may be required by
laws affecting the offering and sale of securities in connection with any
disposition of any portion of the Collateral from time to time and (iv) those
that may be required under Rule 144 of the Securities Act of 1933, as amended,
or Section 13 or 16 of the Exchange Act of 1934, as amended.
6. To our knowledge, there is no pending or threatened in writing
action, suit or proceeding before any court or governmental agency or
authority or arbitrator involving the Seller that is likely to affect the
legality, validity or enforceability against it of the Forward Sale Documents
or its legal ability to perform its obligations under the Forward Sale
Documents.
7. The Seller is not an "investment company" under the Investment
Company Act of 1940 by virtue of the provisions of Section 3(c)(1) thereof.
Our opinion set forth above is subject to the following
qualifications:
(a) we express no opinion as to any provision of the Forward Sale
Documents that purports to (i) provide indemnification to any
person to the extent inconsistent with public policy or
otherwise contrary to law, (ii) waive rights that may not be
effectively waived or (iii) confer subject matter jurisdiction
on any court;
(b) we express no opinion as to the applicability or effect of any
Federal laws of the United States or state laws relating to
fraudulent transfer, preference or similar laws on the Forward
Sale Documents or any transactions contemplated thereby; and
(c) certain provisions of the Forward Sale Documents relating to
the Collateral may be limited or unenforceable in whole or in
part under applicable law, provided that the inclusion of such
provision does not, in our opinion (but subject to the other
comments and qualifications set forth in this opinion letter),
make the remedies and procedures that will be afforded to Citi
inadequate for the practical realization of the principal
benefits purported to be provided to Citi by the Forward Sale
Documents.
The foregoing opinion is limited to the Federal laws of the United
States, the laws of the State of New York and the General Corporation Law of
the State of Delaware.
This opinion is being furnished only to you in connection with the
above matter and is solely for your benefit and is not to be used, circulated,
quoted or otherwise referred to for any other purpose or relied upon by any
other person for any purpose.
Very truly yours,
Boies, Schiller & Flexner LLP
CONFIRMATION
Date: November 21, 2005
To: C. V. Starr & Co., Inc. ("Issuer")
Telefax No.: (212)-759-5580
Attention: Treasurer
From: Citibank, N.A. ("Holder")
Telefax No.: (212) 723-8328
The purpose of this communication is to set forth the terms and
conditions of the Contract entered into on the Trade Date specified below
between Issuer and Holder. This communication constitutes a "Confirmation" as
referred to in the Master Confirmation.
1. This Confirmation supplements, forms a part of, and is subject to
the Master Terms and Conditions for Pre-Paid Forward Contracts dated as of
November 15, 2005 (the "Master Confirmation") between Issuer and Holder. All
provisions contained in the Agreement (as modified and as defined in the Master
Confirmation) shall govern this Confirmation.
2. The terms of the particular Contract to which this Confirmation
relates are as follows:
Transaction Reference No.: For each Tranche, as shown on the
table below.
Trade Date: November 21, 2005
Execution Price: USD 66.8540
Forward Floor Price: USD 66.8540
Forward Cap Price: USD 86.9102
Prepayment Amount: USD 160,000,000
The Number of Shares and Valuation Date for each Tranche of the Contract is set
forth below.
Tranche Number Transaction Reference No. Number of Shares Valuation Date
-------------- ------------------------- ---------------- --------------
1. E05-02073 291,792 November 21, 2008
2. E05-02074 291,792 November 24, 2008
3. E05-02075 291,792 November 25, 2008
4. E05-02076 291,792 November 26, 2008
5. E05-02077 291,792 November 28, 2008
6. E05-02078 291,792 December 1, 2008
7. E05-02079 291,792 December 2, 2008
8. E05-02080 291,792 December 3, 2008
9. E05-02081 291,792 December 4, 2008
10. E05-02082 291,788 December 5, 2008
Yours sincerely,
CITIBANK, N.A.
By: /s/ Herman Hirsch
-------------------------------
Name: Herman Hirsch
Title: Authorized Representative
Receipt confirmed:
C. V. STARR & CO., INC.
By: /s/ Howard I. Smith
---------------------------------
Name: Howard I. Smith
Title: Vice Chairman-Finance and
Secretary