Forward Purchase Agreement - Bear Stearns Companies Inc.
FORWARD PURCHASE AGREEMENT
THIS FORWARD PURCHASE AGREEMENT ("Agreement") is made as of this 7th day
of September, 2004, between [ ], an individual ("Seller"), and The Bear Stearns
Companies Inc., a corporation organized under the laws of the State of Delaware
("Purchaser").
WITNESSETH
WHEREAS, Seller has agreed to sell and Purchaser has agreed to purchase,
pursuant to the terms of this Agreement, a number of shares of common stock (the
"Shares") of Purchaser previously credited to the account of Seller in the form
of CAP Units and to be received by Seller upon the expiration of the Deferral
Period of Purchaser in the current Plan Year under the terms of The Bear Stearns
Companies Inc. Capital Accumulation Plan for Senior Managing Directors (the "CAP
Plan");
WHEREAS, Purchaser and Seller (each a "Party to this Agreement" and
together the "Parties to this Agreement") intend that any gain or loss realized
by Seller under the terms of this Agreement will adjust the compensation income
recognized by Seller under the terms of the CAP Plan; and
WHEREAS, all capitalized terms used but not otherwise defined herein shall
have the meanings specified in the CAP Plan;
NOW, THEREFORE, in consideration of their mutual covenants herein
contained, the parties hereto, intending to be legally bound, hereby mutually
covenant and agree as follows:
ARTICLE 1
SALE AND PURCHASE
1.1 Sale Quantity.
(A) Upon the terms and subject to the conditions of this
Agreement, Seller agrees to sell and Purchaser agrees to
purchase and acquire from the Seller the number of Shares as
determined in Section 1.1(B) hereof (the "Sale Quantity") for
the purchase price determined under Section 1.2 (A) of this
Agreement (the "Purchase Price").
(B) The Sale Quantity shall be determined by multiplying (i) the
amount of shares the Purchaser has set forth on Schedule I
hereto by (ii) a fraction, the numerator of which is the
number of trading days on which the Daily Volume Weighted
Average Price on the New York Stock Exchange is equal
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to or between $75 and $95 per share and the denominator of
which is 59, the number of trading days for the period from
September 7, 2004, through November 29, 2004.
1.2 Purchase Price and Delivery of Shares.
(A) In consideration for delivery of the Sale Quantity, the
Purchaser shall pay to Seller the Purchase Price in cash on or
promptly following the Settlement Date (as defined in Section
1.3 of this Agreement). The Purchase Price shall be equal to
the average of the Daily Volume Weighted Average Prices on the
New York Stock Exchange equal to or between $75 and $95 per
share during the 59 day period from September 7, 2004 through
November 29, 2004, less $.05 per share.
(B) The Purchase Price shall be paid in U.S. dollars to the
account of Seller maintained at Bear, Stearns Securities Corp.
("Bear Stearns"). The distribution of the Shares by Purchaser
to Seller pursuant to the CAP Plan shall be made on the
Settlement Date by the transfer of the Shares to the account
of Seller at Bear Stearns, and this Agreement shall also
constitute Seller's direction to Bear Stearns to transfer the
Shares to Purchaser promptly following receipt of such shares
by Bear Stearns.
1.3 Settlement Date. The "Settlement Date" of this Agreement shall be as
of the close of trading on the New York Stock Exchange on November 30, 2004.
1.4 Terms of Settlement. Purchaser's obligation to pay the Purchase Price
and Seller's obligation to deliver the Sale Quantity of Shares in accordance
herewith is not subject to any condition other than as provided specifically in
this Agreement, including the satisfaction of the Conditions specified in
Article 2 below ("Conditions"). Purchaser and Seller further acknowledge and
agree that (a) this Agreement may be settled only with the Shares, and (b) the
entire Sale Quantity of Shares delivered to Purchaser under this Agreement will
consist of Shares to be distributed to Seller upon expiration of the Deferral
Period ending on the Settlement Date (as specified in Section 1.3 of this
Agreement).
1.5 Effective Date. The "Effective Date" of this Agreement shall be the
date stated in the opening paragraph of this Agreement.
ARTICLE 2
CONDITIONS
2.1 Performance Goals. Notwithstanding any other provision in this
Agreement, the rights and obligations of Seller and Purchaser under this
Agreement will terminate and be of no
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force or effect if Purchaser fails to meet the performance goals ("Performance
Goals") previously established by Purchaser's Compensation Committee as
necessary to comply with the requirements of the CAP Plan, as set forth in
Schedule I hereto, and certified by the Compensation Committee in writing as
having been satisfied prior to the relevant Settlement Date.
2.2 Continued Employment. If on Settlement Date the Seller is no longer an
employee of the Purchaser and/or its subsidiaries, the Purchaser shall have the
right, but not the obligation, to terminate this Agreement as of the Settlement
Date by oral or written notice to Seller, but only if the purchase price per
share determined under Section 1.2 (A) of this Agreement is greater than the
closing price per share of Purchaser's common stock as reported on the New York
Stock Exchange Composite Tape on the last trading day prior to the Settlement
Date.
2.3 Effect of Termination. If this Agreement is terminated under Section
2.1 or Section 2.2, this Agreement shall be treated as if it was null and void
as of the Effective Date and, accordingly, neither Seller nor Purchaser shall
have any rights or obligations hereunder.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES
3.1 Seller Representations. Seller represents and warrants that: (a)
Seller is duly authorized to execute and deliver this Agreement and to perform
his/her obligations hereunder and has taken all necessary action to authorize
such execution, delivery and performance; (b) Seller has obtained all relevant
authorizations, if any, required in connection with the sale of Shares and such
authorizations are in full force and effect; (c) this Agreement constitutes
Seller's legal, valid and binding obligation enforceable in accordance with the
terms hereof; (d) Seller's execution and delivery and performance of this
Agreement does not and will not violate any law, regulation, ordinance, charter,
by-law or rule applicable to Seller or any agreement by which Seller is bound or
by which any of Seller's assets are affected; (e) Seller is knowledgeable of and
experienced in the investment risks of entering into this Agreement, capable of
evaluating the merits and risks of this Agreement and able to bear the economic
risks associated with this Agreement, and (f) upon acquisition by Purchaser of
control of the Shares being purchased hereunder, Purchaser will acquire such
Shares free of any adverse claim (as the terms "control" and "adverse claim" are
defined in Article 8 of the Uniform Commercial Code in effect in the State of
New York). Seller shall be deemed to repeat all of the foregoing representations
and warranties on each day prior to and including the Settlement Date.
3.2 Purchaser Representations. Purchaser represents and warrants that: (a)
Purchaser is duly authorized to execute and deliver this Agreement and to
perform its obligations hereunder and has taken all necessary action (corporate
and otherwise) to authorize such execution, delivery and performance; (b) the
person signing this Agreement on Purchaser's behalf, as of the date hereof, is
duly authorized to do so; (c) Purchaser has obtained all authorizations of any
governmental body required in connection with this Agreement and such
authorizations are in full
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force and effect; (d) this Agreement constitutes Purchaser's legal, valid and
binding obligation and is enforceable in accordance with the terms hereof; and
(e) Purchaser's execution, delivery and performance of this Agreement does not
and will not violate any law, regulation, ordinance, charter, by-law or rule
applicable to Purchaser or any agreement by which Purchaser is bound or by which
any of Purchaser's assets are affected. Purchaser shall be deemed to repeat all
of the foregoing representations and warranties on each day prior to and
including the Settlement Date.
ARTICLE 4
ADJUSTMENTS
4.1 Discretionary Adjustments. Purchaser shall make the adjustments
described in Section 4.2 of this Agreement to the relevant terms of this
Agreement if it determines in its sole discretion that such adjustments are
necessary to implement the intent of this Agreement, and will undertake to make
such adjustments, if any, in a commercially reasonable manner.
4.2 Adjustment Events. Purchaser shall make an adjustment in the following
circumstances: (a) in the event of a stock split or reverse stock split, the
Sale Quantity and the Purchase Price of the Shares shall be adjusted
proportionately; (b) in the event of any extraordinary dividend, spin-off, or
other distribution of cash, assets or securities by Purchaser, such cash, assets
or securities shall be distributed on the Settlement Date in proportion to and
with the Shares to be delivered; (c) in the event of a merger of Purchaser into
another entity, with such other entity being the surviving entity, the
consideration that would have been received in the merger shall be distributed
on the Settlement Date in proportion to and with the Shares to be delivered and
the number and kind of Shares to be delivered shall be adjusted to those shares,
if any, received in the merger; and (d) in the event of any other similar
occurrence that may have a diluting or concentrative effective on the value of
the Shares, any of the Sale Quantity and the Purchase Price or the kind of
Shares to be delivered shall be adjusted accordingly.
ARTICLE 5
EVENTS OF DEFAULT
5.1 Consequences of Default. Upon any Event of Default, the nondefaulting
Party to this Agreement shall be entitled (without limiting any other rights or
remedies the nondefaulting party may have under applicable law or regulation or
by reason of normal business practice) to (a) cancel and otherwise liquidate and
close out this Agreement after prior notice to the defaulting Party to this
Agreement, whereupon the defaulting Party shall be liable to the nondefaulting
Party for any resulting loss, damage, cost and expense (including, but not
limited to, attorney's fees), including loss equal to the cost of entering into
replacement transactions; (b) set off any obligation, or loss resulting from
such default, including any delivery or payment obligation, of the defaulting
Party to the nondefaulting Party against assets or accounts of the defaulting
party held by the nondefaulting party, or against any obligation, including any
delivery or payment obligation, of the nondefaulting Party to the defaulting
Party; and (c) take any other action
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necessary or appropriate to protect and enforce its rights and preserve the
benefit of its bargain under this Agreement.
5.2 Events of Default. For purposes hereof, an "Event of Default" means
(a) the occurrence of an Insolvency Event (as defined below), (b) any
representation made by a Party to this Agreement being incorrect or untrue in
any material respect when made or repeated or deemed to have been made or
repeated or (c) a Party to this Agreement disaffirms, rejects or repudiates any
of its obligations under this Agreement.
5.3 Insolvency Events. For purposes hereof, "Insolvency Event" means (i)
the commencement by a Party to this Agreement as debtor of any case or
proceeding under any bankruptcy, insolvency, rehabilitation, delinquency,
reorganization, liquidation, dissolution or similar law, or the seeking by a
Party to this Agreement of the appointment of a receiver, conservator,
administrator, rehabilitator, custodian, liquidator, trustee or similar official
for such party or any part of such party's property; (ii) the commencement of
any such case or proceeding against a Party to this Agreement, or the seeking of
such an appointment by another, or the filing against a Party to this Agreement,
of an application for a protective decree under the provisions of the Securities
Investor Protection Act of 1970; or (iii) an acknowledgement by a Party to this
Agreement that such Party has a negative net worth or is insolvent or is not
paying or is unable to pay its debts as they become due.
ARTICLE 6
MISCELLANEOUS
6.1 Notices. Any and all notices, statements, demands or other
communications hereunder may be sent by one Party to this Agreement to the other
Party to this Agreement by mail, facsimile, telegraph, messenger or otherwise to
the address for notices specified in the Letter of Instructions accompanying
this Agreement, or so sent to such Party at any other place specified in a
notice of change of address hereafter received by the other. All notices and
requests hereunder may be made orally, to be confirmed promptly in writing.
6.2 Governing Law. This Agreement shall be deemed to have been made in the
State of New York and shall be construed in accordance with the internal laws of
the State of New York, without giving effect to conflicts of law principles.
6.3 Waiver of Jury Trial. Controversies arising between the parties to
this Agreement shall be determined in accordance with the "Arbitration
Provisions" of the Customer Agreement to which Seller is a party with Bear
Stearns. The Parties to this Agreement hereby waive trial by jury in any
judicial proceeding in any way involving any matter arising out of this
Agreement.
6.4 Counterparts. This Agreement may be executed in one or more
counterparts, and such counterparts shall constitute but one and the same
agreement.
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6.5 Assignment. This Agreement shall inure to the benefit of and be
binding upon the parties hereto and their respective successors, and no other
person shall have any right or obligation hereunder. This Agreement shall not be
assignable by either party hereto without the prior written consent of the other
party, and the rights of the Seller may not be transferred, pledged, encumbered
or otherwise disposed of, either voluntarily or by operation of law, without the
prior written consent of the Purchaser. Any assignment or other disposition
contrary to the terms hereof shall be null and void and of no force or effect.
6.6 Amendments. This Agreement represents the entire understanding and
agreement between the parties hereto with respect to the subject matter hereof
and can be amended, supplemented or changed, and any provision hereof can be
waived, only by written instrument making specific reference to this Agreement
signed by the party against whom enforcement of any such amendment, supplement,
modification or waiver is sought.
IN WITNESS WHEREOF, the parties hereto have caused this Forward Purchase
Agreement to be executed and delivered as of the date first written above.
The Bear Stearns Companies Inc.
By:
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Lawrence Rogers
Senior Managing Director
Seller:
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[Signature of Seller]
------------------------------------------
[Name of Seller]
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[Bear Stearns Brokerage Account Number]
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SCHEDULE I
1. Sale Quantity: _______________ shares, based on the Purchase Price per
share as determined under Section 1.2 (A) of this Agreement.
2. Performance Goals: The performance goals applicable to the fiscal period
ending November 30, 2004 pursuant to Section 8.7 of the CAP Plan shall be
deemed to be satisfied to the extent that the Purchaser shall have
positive consolidated net income (as determined in accordance with
generally accepted accounting principles in the United States of America
as in effect from time to time) for the 9-month period ended August 31,
2004.
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