Document:

asr.htm

	
MORGAN STANLEY

	
MORGAN STANLEY & CO. LLC

1585 BROADWAY

NEW YORK, NY  10036-8293

(212) 761-4000

August 14, 2014

Fixed Dollar Accelerated Share Repurchase Transaction

PTC Inc.

140 Kendrick Street

Needham, MA 02494

___________________________________________________________________________________

Dear Sir/Madam:

The purpose of this letter agreement (this “Confirmation”) is to confirm the terms and conditions of the Transaction entered into between Morgan Stanley & Co. LLC (“MSCO”) and PTC Inc. (“Issuer”) on the Trade Date specified below (the “Transaction”).  This confirmation constitutes a “Confirmation” as referred to in the Agreement specified below.

The definitions and provisions contained in the 2002 ISDA Equity Derivatives Definitions (as published by the International Swaps and Derivatives Association, Inc. (“ISDA”)) (the “Equity Definitions”) are incorporated into this Confirmation.  The Transaction is a Share Forward Transaction for purposes of the Equity Definitions.  Any reference to a currency shall have the meaning contained in Section 1.7 of the 2006 ISDA Definitions, as published by ISDA.

1.  This Confirmation evidences a complete and binding agreement between MSCO and Issuer as to the terms of the Transaction to which this Confirmation relates and shall supersede all prior or contemporaneous written or oral communications with respect thereto.  This Confirmation shall be subject to an agreement (the “Agreement”) in the form of the 2002 ISDA Master Agreement as if MSCO and Issuer had executed an agreement in such form without any Schedule but with the elections set forth in this Confirmation (and the election of USD as the Termination Currency).

The Transaction shall be the only transaction under the Agreement.  If there exists any ISDA Master Agreement between MSCO and Issuer or any confirmation or other agreement between MSCO and Issuer pursuant to which an ISDA Master Agreement is deemed to exist between MSCO and Issuer, then, notwithstanding anything to the contrary in such ISDA Master Agreement, such confirmation or agreement or any other agreement to which MSCO and Issuer are parties, the Transaction shall not be considered a transaction under, or otherwise governed by, such existing or deemed to be existing ISDA Master Agreement.

If there is any inconsistency between the Agreement, this Confirmation and the Equity Definitions, the following will prevail for purposes of the Transaction in the order of precedence indicated: (i) this Confirmation; (ii) the Equity Definitions; and (iii) the Agreement.

2.  The terms of the particular Transaction to which this Confirmation relates are as follows:

GENERAL TERMS:

	
Trade Date:

	
As specified in Schedule I

	
Buyer:

	
Issuer

 

 

  

  

  

 

 

	
Seller:

	
MSCO

	
Shares:

	
Common Stock, par value USD 0.01 per share, of Issuer (Ticker: PTC)

	  	  

	
Forward Price:

	
A price per Share (as determined by the Calculation Agent) equal to (i) the arithmetic mean (not a weighted average) of the 10b-18 VWAP on each Trading Day during the Calculation Period minus (ii) the Discount.

	  	  
	
Discount:

	
As specified in Schedule I

	  	  
	  	  
	  	  
	  	  
	  	  
	
10b-18 VWAP:

	
On any Trading Day, a price per Share equal to the volume-weighted average price of the Rule 10b-18 eligible trades in the Shares for the entirety of such Trading Day as determined by the Calculation Agent by reference to the screen entitled “PTC <Equity> AQR SEC” or any successor page as reported by Bloomberg L.P. or any successor (without regard to pre-open or after-hours trading outside of any regular trading session for such Trading Day or block trades (as defined in Rule 10b-18(b)(5) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) on such Trading Day) or, if the price displayed on such screen is clearly erroneous, as determined by the Calculation Agent in good faith and in a commercially reasonable manner

	  	  
	  	  

	
Calculation Period:

	
The period from, and including, the first Trading Day that occurs on or after the Prepayment Date to, but excluding, the relevant Valuation Date; provided, however, that if the Valuation Date is the Scheduled Valuation Date, then the Valuation Date shall be included in the Calculation Period.

	
Trading Day:

	
Any Exchange Business Day that is not a Disrupted Day in whole

	
Initial Shares:

	
As specified in Schedule I

	  	  
	
Initial Share Delivery Date:

	
One Exchange Business Day following the Trade Date.  On the Initial Share Delivery Date, Seller shall deliver to Buyer a number of Shares equal to the Initial Shares in accordance with Section 9.4 of the Equity Definitions, with the Initial Share Delivery Date being deemed to be a “Settlement Date” for purposes of such Section 9.4.

	
Prepayment:

	
Applicable

 

 

  

2

  

 

	
Prepayment Amount:

	
As specified in Schedule I

	  	  
	
Commission Amount:

	
As specified in Schedule I

	  	  
	
Adjustment Amount:

	
As specified in Schedule I

	  	  
	
Structuring Fee:

	
As specified in Schedule I

	
Prepayment Date:

	
One Exchange Business Day following the Trade Date.  On the Prepayment Date, Buyer shall pay to Seller the Prepayment Amount, the Commission Amount, the Adjustment Amount and the Structuring Fee.

	
Exchange:

	
NASDAQ

	
Related Exchange:

	
All Exchanges

	
Market Disruption Event:

	
The definition of “Market Disruption Event” in Section 6.3(a) of the Equity Definitions is hereby amended by deleting the words “at any time during the one-hour period that ends at the relevant Valuation Time, Latest Exercise Time, Knock-in Valuation Time or Knock-out Valuation Time, as the case may be,” starting in the third line thereof.

 

Section 6.3(d) of the Equity Definitions is hereby amended by deleting the remainder of the provision following the term “Scheduled Closing Time” in the fourth line thereof.

 

Notwithstanding anything to the contrary in the Equity Definitions, if any Exchange Business Day in the  Calculation Period is a Disrupted Day, the Calculation Agent shall have the option in its good faith and commercially reasonable discretion to take one or more of the following actions: (i) determine that such Exchange Business Day is a Disrupted Day in part, in which case the Calculation Agent shall (x) determine the 10b-18 VWAP on such Exchange Business Day based on Rule 10b-18 eligible trades in the Shares on such day taking into account the nature and duration of the relevant Market Disruption Event and the volume, historical trading patterns and price of the Shares and (y) determine the  Forward Price using an appropriately weighted average of 10b-18 VWAPs instead of an arithmetic mean, and/or (ii) elect to postpone the Scheduled Valuation Date by up to one Scheduled Trading Day for every Trading Day that is a Disrupted Day during the Calculation Period.  For the avoidance of doubt, if the Calculation Agent takes the action described in clause (i) above, then such Disrupted Day shall be a Trading Day for purposes of calculating the  Forward Price.

 

Any Exchange Business Day on which, as of the date hereof, the Exchange is scheduled to close prior to its normal close of trading shall be deemed not to be an Exchange Business Day; 

 

 

  

3

  

 

	 	 if a closure of the Exchange prior to its normal close of trading on any Exchange Business Day is scheduled following the date hereof, then such Exchange Business Day shall be deemed to be a Disrupted Day in full. 
 

If a Disrupted Day occurs during the Calculation Period and each of the nine immediately following Scheduled Trading Days is a Disrupted Day, then the Calculation Agent may, in its good faith and commercially reasonable discretion, deem such ninth Scheduled Trading Day to be an Exchange Business Day that is not a Disrupted Day and determine the volume-weighted average price of the Rule 10b-18 eligible trades in the Shares for such ninth Scheduled Trading Day using its good faith and commercially reasonable estimate of the value of the Shares on such ninth Scheduled Trading Day based on the volume, historical trading patterns and price of the Shares and such other factors as it deems appropriate.

 

VALUATION:

	
Valuation Date:

	
The earlier of (i) the Scheduled Valuation Date and (ii) any earlier accelerated Valuation Date as a result of MSCO’s election in accordance with the immediately succeeding paragraph.

 

MSCO shall have the right, in its absolute discretion but subject to the limitation set forth in the immediately succeeding paragraph, to accelerate the Valuation Date, in whole or in part, to any Exchange Business Day that is on or after the Lock-Out Date and prior to the Scheduled Valuation Date by notice (each such notice, an “Acceleration Notice”) to Issuer by 9:00 p.m., New York City time, on the Valuation Date.

 

MSCO shall specify in each Acceleration Notice the portion of the Prepayment Amount that is subject to acceleration (which may be less than the full Prepayment Amount, but only so long as such portion is not less than USD 125,000,000).  If the portion of the Prepayment Amount that is subject to acceleration is less than the full Prepayment Amount, then the Calculation Agent shall adjust the terms of the Transaction as appropriate in order to take into account the occurrence of such accelerated Valuation Date (including cumulative adjustments to take into account all prior accelerated Valuation Dates).

 

On each Valuation Date, the Calculation Agent shall calculate the Settlement Amount.

	  	  
	
Scheduled Valuation Date:

	
As specified in Schedule I, subject to postponement in accordance with “Market Disruption Event” above

	  	  
	
Lock-Out Date:

	
As specified in Schedule I

	  	  

 

 

  

4

  

 

SETTLEMENT TERMS:

	
Physical Settlement:

 

 

 

	
Applicable.

 

On the Settlement Date, Seller shall deliver to Buyer a number of Shares equal to (a) (i) the Prepayment Amount  divided by (ii) the Forward Price, minus (b) the Initial Shares (such number of Shares, the “Settlement Amount”), rounded to the nearest whole number of Shares; provided, however, that if the Settlement Amount is less than zero, then Buyer shall deliver to Seller a number of Shares equal to 102% of the absolute value of the Settlement Amount (such number of Shares, the “Payment Shares”).

 

Notwithstanding the proviso above, if the Settlement Amount is less than zero, Buyer may cash settle its obligation to deliver the Payment Shares by delivering to Seller a notice by no later than the Valuation Date (or, if later, the date on which MSCO delivers an Acceleration Notice) electing to cash settle its obligation to deliver the Payment Shares.  Any such cash settlement shall be effected in accordance with “Cash Settlement of Payment Shares” below.

	
Settlement Currency:

	
USD

	  	  
	
Settlement Date:

	
The date that falls one Settlement Cycle after the relevant Valuation Date

	  	  
	
Cash Settlement of Payment Shares:

	
If Buyer elects to cash settle its obligation to deliver Payment Shares, then on the Valuation Date a notional Share balance (the “Settlement Balance”) shall be created with an initial balance equal to the absolute value of the Settlement Amount.  On the Settlement Date, Buyer shall deliver to Seller an amount in USD equal to the Payment Shares multiplied by a price per Share as reasonably determined by the Calculation Agent (such cash amount, the “Initial Cash Settlement Amount”).  On the Exchange Business Day immediately following the Valuation Date, Seller may begin purchasing Shares in a commercially reasonable manner (all such Shares purchased, “Cash Settlement Shares”) and a notional cash balance (the “Cash Balance”) shall be created with an initial balance equal to the Initial Cash Settlement Amount.  At the end of each Exchange Business Day on which Seller purchases Cash Settlement Shares, Seller shall reduce (i) the Settlement Balance by the number of Cash Settlement Shares purchased on such Exchange Business Day and (ii) the Cash Balance by the aggregate purchase price (including commissions) of the Cash Settlement Shares purchased on such Exchange Business Day.  If, on any Exchange Business Day, the Cash Balance is reduced to or below zero but the Settlement Balance is greater than zero, the Buyer shall (i) deliver to Seller or as directed by Seller on the next Currency Business Day after such Exchange Business Day an additional amount in USD (an “Additional Cash Settlement 

 

 

 

  

5

  

 

	  	  
Amount”) equal to the Settlement Balance as of such Exchange Business Day multiplied by a price per Share as reasonably determined by the Calculation Agent, and the Cash Balance shall be increased by such amount.  This provision shall be applied successively until the Settlement Balance is reduced to zero.  On the Currency Business Day immediately following the Exchange Business Day that the Settlement Balance is reduced to zero, Seller shall return to Buyer an amount in USD equal to the remaining Cash Balance, if any, as of such Exchange Business Day.  In making any purchases of Cash Settlement Shares contemplated by this paragraph, MSCO shall use commercially reasonable efforts to purchase such Shares in a manner that would qualify for the safe harbor provided by Rule 10b-18 under the Exchange Act (“Rule 10b-18”) if such purchases were made by or on behalf of Issuer.  The period until the Settlement Balance is reduced to zero shall be considered to be part of the Calculation Period for purposes of the representations, warranties and covenants and other provisions herein as the context requires (but, for the avoidance of doubt, not for purposes of determining the Forward Price).

 

	
Other Applicable Provisions:

	
The last sentence of Section 9.2, Sections 9.8, 9.9, 9.10 and 9.11 (except that the Representation and Agreement contained in Section 9.11 of the Equity Definitions shall be modified by excluding any representations therein relating to restrictions, obligations, limitations or requirements under applicable securities laws arising as a result of the fact that Buyer is the issuer of the Shares) and Section 9.12 of the Equity Definitions will be applicable to the Transaction.

SHARE ADJUSTMENTS:

	
Potential Adjustment Event:

	
Notwithstanding anything to the contrary in Section 11.2(e) of the Equity Definitions, an Extraordinary Dividend shall not constitute a Potential Adjustment Event.

 

It shall constitute a Potential Adjustment Event if a Disrupted Day occurs or, pursuant to Section 11 below, is deemed to occur (in whole or in part) on any Trading Day on or prior to the Valuation Date.

	  	  
	
Extraordinary Dividend:

	
Any dividend or distribution on the Shares with an ex-dividend date occurring during the period from, and including, the Trade Date to, and including, the last day of the Calculation Period (other than any dividend or distribution of the type described in Section 11.2(e)(i), Section 11.2(e)(ii)(A) or Section 11.2(e)(ii)(B) of the Equity Definitions).

	
Method of Adjustment:

	
Calculation Agent Adjustment

EXTRAORDINARY EVENTS:

 

 

  

6

  

Consequences of Merger Events:

	
Share-for-Share:

	
Modified Calculation Agent Adjustment

	
Share-for-Other:

	
Cancellation and Payment on that portion of the Other Consideration that consists of cash; Modified Calculation Agent Adjustment on the remainder of the Other Consideration

	
Share-for-Combined:

	
Component Adjustment

	  	  
	
Tender Offer:

	
Applicable; provided that Section 12.1(d) of the Equity

Definitions is hereby amended by replacing “10%” with

“20%” in the third line thereof.

Consequences of Tender Offers:

	
Share-for-Share:

	
Modified Calculation Agent Adjustment

	
Share-for-Other:

	
Modified Calculation Agent Adjustment

	
Share-for-Combined:

	
Modified Calculation Agent Adjustment

	  	  
	
New Shares:

	
In the definition of New Shares in Section 12.1(i) of the Equity Definitions, the text in clause (i) thereof shall be deleted in its entirety (including the word “and” following such clause (i)) and replaced with “publicly quoted, traded or listed on any of the New York Stock Exchange, The NASDAQ Global Select Market or The NASDAQ Global Market (or their respective successors)”.

For purposes of the Transaction,

	
  

	
(i)

	
the definition of Merger Date in Section 12.1(c) of the Equity Definitions shall be amended to read, “Merger Date shall mean the Announcement Date.”;

	
  

	
(ii)

	
the definition of Tender Offer Date in Section 12.1(e) of the Equity Definitions shall be amended to read, “Tender Offer Date shall mean the Announcement Date.”;

	
  

	
(iii)

	
the definition of “Announcement Date” in Section 12.1(l) of the Equity Definitions is hereby amended by (a) replacing the words “a firm” with the word “any” in the second and fourth lines thereof, (b) replacing the word “leads to the” with the words “, if completed, would lead to a” in the third and the fifth lines thereof, (c) replacing the words “voting shares” with the word “Shares” in the fifth line thereof, (d) inserting the words “by any entity” after the word “announcement” in the second and the fourth lines thereof, (e) inserting the words “or to explore the possibility of engaging in” after the words “engage in” in the second line thereof and (f) inserting the words “or to explore the possibility of purchasing or otherwise obtaining” after the word “obtain” in the fourth line thereof; and

	
  

	
(iv)

	
Section 12.2 of the Equity Definitions is hereby amended by inserting the words “Announcement Date in respect of any Merger Event or any potential” before the words “Merger Event” in the final line thereof.

Composition of Combined Consideration:                                                                                     Not Applicable

 

 

  

7

  

	
Nationalization, Insolvency or Delisting:

	
Cancellation and Payment; provided that in addition to the provisions of Section 12.6(a)(iii) of the Equity Definitions, it shall constitute a Delisting if the Exchange is located in the United States and the Shares are not immediately re-listed, re-traded or re-quoted on any of the New York Stock Exchange, The NASDAQ Global Market or The NASDAQ Global Select Market (or their respective successors); if the Shares are immediately re-listed, re-traded or re-quoted on any such exchange or quotation system, such exchange or quotation system shall thereafter be deemed to be the Exchange.

Additional Disruption Events:

	
Change in Law:

	
Applicable; provided that (i) any determination as to whether (A) the adoption of or any change in any applicable law or regulation (including, for the avoidance of doubt and without limitation, (x) any tax law or (y) adoption or promulgation of new regulations authorized or mandated by existing statute) or (B) the promulgation of or any change in the interpretation by any court, tribunal or regulatory authority with competent jurisdiction of any applicable law or regulation (including any action taken by a taxing authority), in each case, constitutes a “Change in Law” shall be made without regard to Section 739 of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 or any similar legal certainty provision in any legislation enacted, or rule or regulation promulgated, on or after the Trade Date, and (ii) Section 12.9(a)(ii) of the Equity Definitions is hereby amended by replacing the parenthetical beginning after the word “regulation” in the second line thereof the words “(including, for the avoidance of doubt and without limitation, (x) any tax law or (y) adoption or promulgation of new regulations authorized or mandated by existing statute)”.

	
Failure to Deliver:

	
Applicable

	
Insolvency Filing:

	
Applicable

	
Hedging Disruption:

	
Applicable

	
Increased Cost of Hedging:

	
Applicable

	  	  
	
Loss of Stock Borrow:

	
Applicable

	  	  
	
Maximum Stock Loan Rate:

	
1200 bps

	
Increased Cost of Stock Borrow:

	
Applicable

	  	  
	
Initial Stock Loan Rate:

	
33 bps

	
Determining Party:

	
For all applicable events, MSCO; provided that when making any determination or calculation as “Determining Party,” 

 

 

  

8

  

 

	 	 MSCO shall be bound by the same obligations relating to required acts of the Calculation Agent as set forth in Section 1.40 of the Equity Definitions and the Confirmation as if the Determining Party were the Calculation Agent.

	
Hedging Party:

	
For all applicable events, MSCO;.

	
Non-Reliance:

	
Applicable

	
Agreements and Acknowledgements Regarding Hedging Activities:

	
 

Applicable

	
Additional Acknowledgments:

	
Applicable

	
3.  Calculation Agent:

	
MSCO; provided that following any determination or calculation hereunder, upon a written request by Issuer, the Calculation Agent will promptly provide to Issuer, by email to the email address provide by Issuer in such written request, a report (in a commonly used file format for the storage and manipulation of financial data) displaying, in reasonable detail, the basis for such determination or calculation, it being understood that the Calculation Agent shall not be obligated to disclose any proprietary models or other confidential information used by it for such determination or calculation.

4.  Account Details and Notices:

(a)           Account for delivery of Shares to Issuer:

American Stock Transfer & Trust Company, LLC

Transfer Agent #2941

(b)           Account for payments to Issuer:

Bank:           Wells Fargo Bank, NA

ABA:           121000248

Acct:           PTC Inc.

No:           2079900121445

 

 

(c)           Account for payments to MSCO:

Citibank, NY

ABA 021000089

Acct Name:  Morgan Stanley & Co.

Acct No:  38890774

PTC Inc.

Account # 023-05260

(d)           For purposes of this Confirmation:

(i)           Address for notices or communications to Issuer:

Mr. Steve Bouchard, SVP Tax, Treasurer

PTC Inc.

140 Kendrick Street

 

 

  

9

  

 

Needham, MA 02494

(ii)           Address for notices or communications to MSCO:

Morgan Stanley & Co. LLC

1585 Broadway

New York, New York 10036-8293

Attention: David Oakes

Telephone: (212) 761-5319

Facsimile: 212-404-9480

With a copy to:

Morgan Stanley & Co. LLC

1585 Broadway

4th Floor

New York, NY 10036

Attention: Joshua Birbach

Telephone: 212-761-1719

Facsimile: 212-507-8717

Email: Joshua.birbach@morganstanley.com

5.  Amendments to the Equity Definitions.

(a)           Section 9.2(a)(iii) of the Equity Definitions is hereby amended by deleting the words “the Excess Dividend Amount, if any, and”.

(b)           Section 11.2(a) of the Equity Definitions is hereby amended by deleting the words “a diluting or concentrative effect on the theoretical value of the relevant Shares” and replacing them with the words “a material economic effect on the relevant Transaction”.

(c)           The first sentence of Section 11.2(c) of the Equity Definitions, prior to clause (A) thereof, is hereby amended to read as follows: ‘(c) If “Calculation Agent Adjustment” is specified as the Method of Adjustment in the related Confirmation of a Share Option Transaction or Share Forward Transaction, then, following the announcement or occurrence of any Potential Adjustment Event, the Calculation Agent will determine whether such Potential Adjustment Event has a material economic effect on the Transaction and, if so, will (i) make appropriate adjustment(s), if any, to any one or more of:’ and the portion of such sentence immediately preceding clause (ii) thereof is hereby amended by deleting the words “diluting or concentrative” and the words “(provided that no adjustments will be made to account solely for changes in volatility, expected dividends, stock loan rate or liquidity relative to the relevant Share)” and replacing such latter phrase with the words “(including adjustments to account for changes in volatility, stock loan rate or liquidity relevant to the Shares or to the Transaction)”.

(d)           Section 11.2(e)(vii) of the Equity Definitions is hereby amended by deleting the words “diluting or concentrative effect on the theoretical value of the relevant Shares” and replacing them with the words “material economic effect on the relevant Transaction”.

(e)           Section 12.6(c)(ii) of the Equity Definitions is hereby amended by replacing the words “the Transaction will be cancelled,” in the first line with the words “MSCO will have the right to cancel the Transaction,”.

(f)           Section 12.9(b)(iv) of the Equity Definitions is hereby amended by (A) deleting (1) subsection (A) in its entirety, (2) the phrase “or (B)” following subsection (A) and (3) the phrase “in each case” in subsection (B); and (B) deleting the phrase “neither the Non-Hedging Party nor the Lending Party lends Shares in the amount of the Hedging Shares or” in the penultimate sentence.

 

 

  

10

  

(g)           Section 12.9(b)(v) of the Equity Definitions is hereby amended by (A) adding the word “or” immediately before subsection “(B)” and deleting the comma at the end of subsection (A); and (B)(1) deleting subsection (C) in its entirety, (2) deleting the word “or” immediately preceding subsection (C) and (3) replacing in the penultimate sentence the words “either party” with “the Hedging Party” and (4) deleting clause (X) in the final sentence.

6.  Certain Payments and Deliveries by MSCO.

 

Notwithstanding anything to the contrary herein, or in the Equity Definitions, if at any time (i) an Early Termination Date occurs and MSCO would be required to make a payment pursuant to Section 6 of the Agreement or (ii) an Extraordinary Event occurs and MSCO would be required to make a payment pursuant to Article 12 of the Equity Definitions (the amount of any such payment obligation described in Section 6(i) or (ii) above, an “MSCO Payment Amount”), then Issuer shall have the right, by prior written notice to MSCO, to require MSCO to settle such payment obligation in Shares in lieu of cash; provided, however, that Issuer shall not have the right to so elect in the event of (i) an Insolvency, a Nationalization, a Merger Event or a Tender Offer, in each case, in which the consideration or proceeds to be paid to holders of Shares consists solely of cash or (ii) an Event of Default in which Issuer is the Defaulting Party or a Termination Event in which Issuer is an Affected Party, which Event of Default or Termination Event resulted from an event or events within Issuer’s control.  If Issuer does not so elect for MSCO to settle an MSCO Payment Amount in Shares, then MSCO shall have the right, in its sole discretion, to elect to settle such MSCO Payment Amount in Shares.  If either Issuer or MSCO so elects, then MSCO shall deliver to Issuer, on or within a commercially reasonable time following the date on which such MSCO Payment Amount would have been due, a number of Shares with a market value, as determined by the Calculation Agent, equal to all or a portion (which portion may be zero) of the MSCO Payment Amount.  If the market value of such Shares equals a portion, but not all, of the MSCO Payment Amount, then, on the date such MSCO Payment Amount is due, a notional balance (the “Settlement Balance”) shall be established equal to the remaining portion of the MSCO Payment Amount, and MSCO shall commence purchasing Shares for delivery to Issuer.  At the end of each Trading Day on which MSCO purchases Shares pursuant to this Section 6, MSCO shall reduce the Settlement Balance by the amount paid by MSCO to purchase the Shares purchased on such Trading Day.  MSCO shall deliver any Shares purchased on a Trading Day pursuant to this Section 6 to Issuer on the third Exchange Business Day following such Trading Day.  MSCO shall continue so purchasing and delivering Shares until the Settlement Balance has been reduced to zero.  In making any purchases of Shares contemplated by this Section 6, MSCO shall use commercially reasonable efforts to purchase such Shares in a manner that would qualify for the safe harbor provided by Rule 10b-18 under the Exchange Act (“Rule 10b-18”) if such purchases were made by or on behalf of Issuer.  The period until the Settlement Balance is reduced to zero shall be considered to be part of the Calculation Period for purposes of the representations, warranties and covenants and other provisions herein as the context requires.

7.  Certain Payments and Deliveries by Issuer.

Notwithstanding anything to the contrary herein, or in the Equity Definitions, if at any time (i) an Early Termination Date occurs and Issuer would be required to make a payment pursuant to Section 6 of the Agreement or (ii) an Extraordinary Event occurs and Issuer would be required to make a payment pursuant to Article 12 of the Equity Definitions (any such payment described in Section 7(i) or (ii) above, an “Early Settlement Payment”), then Issuer shall have the right, by prior written notice to MSCO, in lieu of making such cash payment, to settle such payment obligation in Shares (such Shares, “Early Settlement Shares”); provided, however, that Issuer shall not have the right to so elect in the event of (i) an Insolvency, a Nationalization, a Merger Event or a Tender Offer, in each case, in which the consideration or proceeds to be paid to holders of Shares consists solely of cash or (ii) an Event of Default in which Issuer is the Defaulting Party or a Termination Event in which Issuer is an Affected Party, which Event of Default or Termination Event resulted from an event or events within Issuer’s control.  In order to elect to deliver Early Settlement Shares, (i) Issuer must notify MSCO of its election by no later than 4:00 p.m., New York City time, on the date that is three Exchange Business Days before the date that the Early Settlement Payment is due, (ii) Issuer must specify whether such Early Settlement Shares are to be sold by means of a registered offering or by means of a 

 

 

  

11

  

private placement and (iii) Issuer must comply with Section 8 below.  If Issuer fails to give the notice described in clause (i) of the preceding sentence by the deadline specified in such clause, such Early Settlement Shares shall be deemed to be sold by means of a private placement.

8.  Provisions Relating to Delivery of Early Settlement Shares.

(a)           Issuer may deliver Early Settlement Shares and Make-Whole Shares (as defined below) by means of a registered offering only if the following conditions are satisfied:

(i)           On the later of (A) the Trading Day following Issuer’s election to deliver Early Settlement Shares and any Make-Whole Shares by means of a registered offering (the “Registration Notice Date”), and (B) the date on which the Registration Statement is declared effective by the SEC or becomes effective, but in no event later than the date the Early Settlement Payment is due, Issuer shall deliver to MSCO a number of Early Settlement Shares equal to the quotient of (I) the relevant Early Settlement Payment divided by (II) a price per Share as reasonably determined by the Calculation Agent (the date of such delivery, the “Registered Share Delivery Date”).

(ii)           Promptly following the Registration Notice Date, Issuer shall file with the SEC a registration statement (“Registration Statement”) covering the public sale by MSCO of the Early Settlement Shares and any Make-Whole Shares (collectively, the “Registered Securities”) on a continuous or delayed basis pursuant to Rule 415 (or any similar or successor rule), if available, under the Securities Act of 1933, as amended (the “Securities Act”); provided that no such filing shall be required pursuant to this paragraph (ii) if Issuer shall have filed a similar registration statement with unused capacity at least equal to the relevant Early Settlement Payment and such registration statement has become effective or been declared effective by the SEC on or prior to the Registration Notice Date and no stop order is in effect with respect to such registration statement as of the Registration Notice Date, in which case such registration statement shall be the Registration Statement.  Issuer shall use its commercially reasonable efforts to file the Registration Statement as an automatic shelf registration statement or have the Registration Statement declared effective by the SEC as promptly as possible.  The Registration Statement shall be effective and subject to no stop order as of the Registered Share Delivery Date.

(iii)           Promptly following the Registration Notice Date, Issuer shall afford MSCO a reasonable opportunity to conduct a due diligence investigation with respect to Issuer customary in scope for underwritten offerings of equity securities of similar size (including, without limitation, the availability of senior management to respond to questions regarding the business and financial condition of Issuer and the right to have made available to MSCO for inspection all financial and other records, pertinent corporate documents and other information reasonably requested by MSCO), and MSCO shall be satisfied in all material respects with the results of such due diligence investigation of Issuer.  For the avoidance of doubt, Issuer shall not have the right to deliver Shares pursuant to this Section 8(a) (and the conditions to delivery of Early Settlement Shares specified in this Section 8(a) shall not be satisfied) unless and until MSCO is satisfied in all material respects with the results of such due diligence investigation of Issuer.

(iv)           From the effectiveness of the Registration Statement until all Registered Securities have been sold by MSCO, Issuer shall, at the request of MSCO, make available to MSCO a printed prospectus relating to the Registered Securities in form and substance (including, without limitation, any sections describing the plan of distribution) reasonably satisfactory to MSCO (a “Prospectus”, which term shall include any prospectus supplement thereto), in such quantities as MSCO shall reasonably request.

(v)           Issuer shall use its commercially reasonable efforts to avoid or prevent the issuance of any stop order suspending the effectiveness of the Registration Statement or of any order preventing or suspending the use of any Prospectus and, if any such order is issued, to obtain the lifting thereof as 

 

 

  

12

  

 

soon thereafter as is practicably possible.  If the Registration Statement, the Prospectus or any document incorporated therein by reference contains a misstatement of a material fact or omits to state a material fact required to be stated therein or necessary to make any statement therein not misleading, Issuer shall as promptly as practicable file any required document and prepare and furnish to MSCO a reasonable number of copies of such supplement or amendment thereto as may be necessary so that the Prospectus, as thereafter delivered to the purchasers of the Registered Securities, will not contain a misstatement of a material fact or omit to state a material fact required to be stated therein or necessary to make any statement therein not misleading.

(vi)           On or prior to the Registered Share Delivery Date, Issuer shall enter into an agreement (a “Transfer Agreement”) with MSCO (or any affiliate of MSCO designated by MSCO) relating to the public sale of the Registered Securities and substantially similar to underwriting agreements customary for underwritten offerings of equity securities of similar size, in form and substance reasonably satisfactory to MSCO (or such affiliate), which Transfer Agreement shall (without limiting the foregoing) contain provisions substantially similar to those contained in such underwriting agreements relating to:

(A)           the indemnification of, and contribution in connection with the liability of, MSCO and its affiliates,

(B)           the delivery to MSCO (or such affiliate) of customary letters and opinions (including, without limitation, accountants’ comfort letters, opinions relating to the due authorization, valid issuance and fully paid and non-assessable nature of the Registered Securities and letters of counsel relating to the lack of material misstatements and omissions in the Registration Statement, the Prospectus and Issuer’s filings under the Exchange Act); and

(C)           the payment by Issuer of all fees and expenses in connection with such resale, including all registration costs and all reasonable fees and expenses of one counsel for MSCO (or such affiliate).

(vii)           On the Registered Share Delivery Date, a notional balance (the “Early Settlement Balance”) shall be established with an initial balance equal to the amount of the Early Settlement Payment.  Following the delivery of Early Settlement Shares or any Make-Whole Shares, MSCO shall sell all such Early Settlement Shares or Make-Whole Shares in a commercially reasonable manner.

(viii)           At the end of each day on which sales have been made pursuant to paragraph 8(a)(vii) above, the Early Settlement Balance shall be (A) reduced by an amount equal to the net proceeds to be received by MSCO upon settlement of such sales, and (B) increased by an amount (as reasonably determined by the Calculation Agent) equal to MSCO’s funding cost with respect to the Early Settlement Balance as of the close of business on the day one Settlement Cycle prior to such day.

(ix)           If, on any date, the Settlement Balance has been reduced to zero but not all of the Early Settlement Shares have been sold, no additional Early Settlement Shares shall be sold and MSCO shall promptly deliver to Issuer (A) any remaining Early Settlement Shares and (B) if the Early Settlement Balance has been reduced to an amount less than zero, an amount in cash equal to the absolute value of the then-current Early Settlement Balance.

(x)            If, on any date, all of the Early Settlement Shares have been sold and the Settlement Balance has not been reduced to zero, Issuer shall, at its election, either pay the remaining Early Settlement Balance to MSCO in cash or promptly deliver to MSCO an additional number of Shares (“Make-Whole Shares”) equal to (A) the Settlement Balance as of such date divided by (B) a price per Share as reasonably determined by the Calculation Agent, or, if Issuer so elects, pay the remaining 

 

 

  

13

  

Early Settlement Balance to MSCO in cash.  This clause (x) shall be applied successively until the Settlement Balance is reduced to zero.

(xi)           If at any time the number of Shares covered by the Registration Statement is less than the number of Registered Securities required to be delivered pursuant to this Section 8(a), Issuer shall, at the request of MSCO, file additional registration statement(s) to register the sale of all Registered Securities required to be delivered to MSCO.

(xii)           Issuer shall cooperate with MSCO and use its commercially reasonable efforts to take any other action necessary to effect the intent of the provisions set forth in this Section 8(a).

(xiii)           The provisions of Section 8(b) shall apply to any then-current Early Settlement Balance if (i) on any given day, Issuer cannot satisfy any of the conditions set forth in this Section 8(a) or (ii) for a period of at least 10 consecutive Exchange Business Days, MSCO has determined that it is inadvisable to effect sales of Registered Securities, unless in either case Issuer pays such then-current Early Settlement Balance to MSCO in cash pursuant to the Registration Statement.

      (b)           If Issuer timely elects to deliver (i) Shares pursuant to the “Physical Settlement” provision of this Confirmation, (ii)   Early Settlement Shares or (iii) Make-Whole Shares by means of a private placement, the following provisions shall apply:

          (i)           All Shares, Early Settlement Shares and Make-Whole Shares shall be delivered to MSCO (or any affiliate of MSCO designated by MSCO) pursuant to the exemption from the registration requirements of the Securities Act provided by Section 4(a)(2) thereof.

(ii)            Issuer shall afford MSCO and any potential purchaser of any such Shares from MSCO (or any affiliate of MSCO designated by MSCO) identified by MSCO a commercially reasonable opportunity to conduct a due diligence investigation with respect to Issuer customary in scope for private placements of equity securities of similar size (including, without limitation, the right to have made available to them for inspection all financial and other records, pertinent corporate documents and other information reasonably requested by them) and Issuer shall not disclose material non-public information in connection with such due diligence investigation.

 

(iii)           Issuer shall enter into an agreement (a “Private Placement Agreement”) with MSCO (or any affiliate of MSCO designated by MSCO) in connection with the private placement of such Shares by Issuer to MSCO (or any such affiliate) and the private resale of such Shares by MSCO (or any such affiliate), substantially similar to private placement purchase agreements customary for private placements of equity securities of similar size, in form and substance commercially reasonably satisfactory to MSCO and Issuer, which Private Placement Agreement shall include, without limitation, provisions substantially similar to those contained in such private placement purchase agreements relating to the indemnification of, and contribution in connection with the liability of, MSCO and its affiliates, and shall provide for the payment by Issuer of all fees and expenses in connection with such resale, including all reasonable fees and expenses of one counsel for MSCO but not including any underwriter or broker discounts and commissions, and shall contain representations, warranties and agreements of Issuer and MSCO reasonably necessary or advisable to establish and maintain the availability of an exemption from the registration requirements of the Securities Act for such resales.

(iv)           Issuer will use commercially reasonable efforts to not take or cause to be taken any action that would make unavailable either (A) the exemption set forth in Section 4(a)(2) of the Securities Act for the sale of any, Shares, Early Settlement Shares or Make-Whole Shares by Issuer to MSCO or (B) an exemption from the registration requirements of the Securities Act reasonably acceptable to MSCO for resales of Shares, Early Settlement Shares and Make-Whole Shares by MSCO.

 

 

  

14

  

(v)            On the date requested by MSCO, Issuer shall deliver a number of Early Settlement Shares equal to the quotient of (A) the amount of the Early Settlement Payment divided by (B) a per Share value, determined by MSCO in a commercially reasonable manner, which value shall take into account transfer restrictions applicable to such Shares and may be based on indicative bids from institutional “accredited investors” (as defined in Rule 501 under the Securities Act), and the provisions of Section 8(a)(vii) through (x) shall apply to the Early Settlement Shares delivered pursuant to this Section 8(b)(v).  For purposes of applying the foregoing, the Registered Share Delivery Date referred to in Section 8(a)(vii) shall be the date on which Issuer delivers the Early Settlement Shares.

(c)           If Issuer elects to deliver Early Settlement Shares to settle its obligation to make an Early Settlement Payment, then, if necessary, Issuer shall use its commercially reasonable efforts to cause the number of authorized but unissued Shares of Common Stock to be increased to an amount sufficient to permit Issuer to fulfill its obligations under Sections 8(a) and/or 8(b) above.

9.  Special Provisions for Merger Transactions.

Notwithstanding anything to the contrary herein or in the Equity Definitions:

(a)           Issuer agrees that:

(i)           It will not during the term of the Transaction make, or, to the extent within its control, permit to be made, any public announcement (as defined in Rule 165(f) under the Securities Act) of any Merger Transaction or potential Merger Transaction unless such public announcement is made prior to the open or after the close of the regular trading session on the Exchange for the Shares.

(ii)           To the extent that an announcement of a potential Merger Transaction occurs during the term of the Transaction and such announcement does not cause the Transaction to be cancelled or terminated in whole pursuant to “Extraordinary Events” in Section 2 above, then as soon as practicable following such announcement (but in any event prior to the next opening of the regular trading session on the Exchange), Issuer shall provide MSCO with written notice of such announcement; promptly (but in any event prior to the next opening of the regular trading session on the Exchange), Issuer shall provide MSCO with written notice specifying (x) Issuer’s average daily “Rule 10b-18 purchases” (as defined in Rule 10b-18) during the three full calendar months immediately preceding the Announcement Date that were not effected through MSCO or its affiliates and (y) the number of Shares purchased pursuant to the block purchase proviso in Rule 10b-18(b)(4) under the Exchange Act for the three full calendar months preceding the Announcement Date.  Such written notice shall be deemed to be a certification by Issuer to MSCO that such information is true and correct.  Issuer understands that MSCO will use this information in calculating the trading volume for purposes of Rule 10b-18.  In addition, Issuer shall promptly notify MSCO of the earlier to occur of the completion of such transaction and the completion of the vote by target shareholders.  Issuer acknowledges that any such public announcement may trigger the provision set forth in Section 11 below.  Accordingly, Issuer acknowledges that its actions in relation to any such announcement or transaction must comply with the standards set forth in Section 13(b) below.

(b)           Upon the occurrence of any such public announcement, MSCO in its good faith discretion may (i) apply the provisions of Section 11 below and/or (ii) treat the occurrence of such announcement as an Additional Termination Event with respect to which the Transaction shall be the sole Affected Transaction, Issuer shall be the sole Affected Party and MSCO shall be the party entitled to designate an Early Termination Date pursuant to Section 6(b) of the Agreement.

“Merger Transaction” means any merger, acquisition or similar transaction involving a recapitalization of Issuer as contemplated by Rule 10b-18(a)(13)(iv) under the Exchange Act.

 

 

  

15

  

 

10.  Special Provisions for Acquisition Transaction Announcements.

(a)           If an Acquisition Transaction Announcement occurs on or prior to the final Valuation Date, then the Forward Price shall be determined as if  the words “minus (ii) the Discount” were deleted from the definition thereof. If an Acquisition Transaction Announcement occurs after the Trade Date but prior to the Lock-Out Date, the Lock-Out Date shall be deemed to be the date of such Acquisition Transaction Announcement.

(b)           “Acquisition Transaction Announcement” means (i) the announcement of an Acquisition Transaction, (ii) an announcement that Issuer or any of its subsidiaries has entered into an agreement, a letter of intent or an understanding designed to result in an Acquisition Transaction, (iii) the announcement of the intention to solicit or enter into, or to explore strategic alternatives or other similar undertaking that may include, an Acquisition Transaction or (iv) any announcement subsequent to an Acquisition Transaction Announcement relating to an amendment, extension, withdrawal or other change to the subject matter of the previous Acquisition Transaction Announcement. For the avoidance of doubt, the term “announcement” as used in the definition of Acquisition Transaction Announcement refers to any public announcement whether made by Issuer or a third party.

(c)           “Acquisition Transaction” means (i) any Merger Event (for purposes of this definition, the definition of Merger Event shall be read with the references therein to “100%” being replaced by “20%” and to “50%” by “75%” and without reference to the clause beginning immediately following the definition of Reverse Merger therein to the end of such definition), Tender Offer or Merger Transaction or any other transaction involving the merger of Issuer with or into any third party, (ii) the sale or transfer of all or substantially all of the assets or liabilities of Issuer, (iii) a recapitalization, reclassification, binding share exchange or other similar transaction, (iv) any acquisition, lease, exchange, transfer, disposition (including by way of spin-off or distribution) of assets or liabilities (including any capital stock or other ownership interests in subsidiaries) or other similar event by Issuer or any of its subsidiaries where the aggregate consideration transferable or receivable by or to Issuer or its subsidiaries exceeds 20% of the market capitalization of Issuer and (v) any transaction with respect to which Issuer or its board of directors has a legal obligation to make a recommendation to its shareholders in respect of such transaction (whether pursuant to Rule 14e-2 under the Exchange Act or otherwise).

11.  MSCO Adjustments.

In the event that MSCO reasonably determines based on the advice of counsel that it is appropriate with regard to any legal, regulatory or self-regulatory requirements or related policies and procedures (so long as such requirements, policies and procedures are generally applicable to transactions similar to the Transaction, and whether or not such requirements, policies or procedures are imposed by law or have been voluntarily adopted by MSCO, and including, without limitation, Rule 10b-18, Rule 10b-5, Regulations 13D-G and Regulations 14 D-E under the Exchange Act), for MSCO to refrain from purchasing Shares or engaging in other market activity or to purchase fewer than the number of Shares or to engage in fewer or smaller other market transactions than MSCO would otherwise purchase or engage in on any Trading Day on or prior to the last day of the Calculation Period, then MSCO may, in its commercially reasonable discretion, elect that a Market Disruption shall be deemed to have occurred on such Trading Day.  For the avoidance of doubt, such Trading Day shall be treated as a Disrupted Day in full for the purposes of Article 6 of the Equity Definitions.  MSCO shall notify Issuer upon the exercise of MSCO’s rights pursuant to this Section 11 and shall subsequently notify Issuer on the day MSCO believes that the circumstances giving rise to such exercise have changed.

12.  Covenants.

Issuer covenants and agrees that:

 

 

  

16

  

 

(a)           Until the end of the Potential Purchase Period (as defined below), neither it nor any of its affiliated purchasers (as defined in Rule 10b-18 under the Exchange Act) shall directly or indirectly (which shall be deemed to include the writing or purchase of any cash-settled or other derivative or structured Share repurchase transaction with a hedging period, calculation period or settlement valuation period or similar period that overlaps with the Transaction) purchase, offer to purchase, place any bid or limit order relating to a purchase of or commence any tender offer relating to Shares (or any security convertible into or exchangeable for Shares) without the prior written approval of MSCO (other than (w) purchases of Shares that do not constitute “Rule 10b-18 purchases” under subparagraphs (ii) or (iii) of Rule 10b-18(a)(13) and that are not reasonably expected to result in purchases of Shares in the market, (x) withholding of Shares from holders of employee stock options to cover amounts payable (including tax liabilities and/or payment of exercise price) in respect of the exercise of such employee stock options, (y) purchases of Shares from employees to satisfy obligations under employee compensation agreements with such employees and (z) privately negotiated off-exchange repurchases of Shares that are not reasonably expected to result in purchases of Shares in the market) or take any other action that would cause the purchase by MSCO of any Shares in connection with this Agreement not to qualify for the safe harbor provided in Rule 10b-18 under the Exchange Act (assuming for the purposes of this paragraph that such safe harbor were otherwise available for such purchases).  “Potential Purchase Period” means the period from, and including, the Trade Date to, and including, the latest of (i) the last day of the Calculation Period, (ii) the earlier of (A) the date ten Exchange Business Days immediately following the last day of the Calculation Period and (B) the Scheduled Valuation Date and (iii) if an Early Termination Date occurs or the Transaction is cancelled pursuant to Article 12 of the Equity Definitions, a date determined by MSCO in its commercially reasonable discretion and communicated to Issuer no later than the Exchange Business Day immediately following such date.

(b)           It will comply with all laws, rules and regulations applicable to it (including, without limitation, the Securities Act and the Exchange Act) in connection with the transactions contemplated by this Confirmation.

(c)           Without limiting the generality of Section 13.1 of the Equity Definitions, it is not relying, and has not relied, upon MSCO or any of its representatives or advisors with respect to the legal, accounting, tax or other implications of this Agreement and that it has conducted its own analyses of the legal, accounting, tax and other implications of this Agreement, and that MSCO and its affiliates may from time to time effect transactions for their own account or the account of customers and hold positions in securities or options on securities of Issuer and that MSCO and its affiliates may continue to conduct such transactions during the term of this Agreement.  Without limiting the generality of the foregoing, Issuer acknowledges that MSCO is not making any representations or warranties or taking any position or expressing any view with respect to the treatment of the Transaction under any accounting standards including ASC Topic 260, Earnings Per Share, ASC Topic 815, Derivatives and Hedging, or ASC Topic 480, Distinguishing Liabilities from Equity and ASC 815-40, Derivatives and Hedging – Contracts in Entity’s Own Equity (or any successor issue statements) or under FASB’s Liabilities & Equity Project.

(d)           Neither it nor any affiliates shall take any action that would cause a restricted period (as defined in Regulation M under the Exchange Act (“Regulation M”)) to be applicable to any purchases of Shares, or of any security for which Shares is a reference security (as defined in Regulation M), by Issuer or any affiliated purchasers (as defined in Regulation M) of Issuer during the Potential Purchase Period unless Issuer has delivered written notice to MSCO of the relevant restricted period (as defined in Regulation M) not later than the Scheduled Trading Day immediately preceding the first day of such restricted period, in which case an Additional Termination Event shall occur with the Transaction as the sole Affected Transaction and Issuer as the sole Affected Party and MSCO shall be the party entitled to designate an Early Termination Date pursuant to Section 6(b) of the Agreement; Issuer acknowledges that, in addition, delivery of any such notice may cause a Disrupted Day to occur pursuant to Section 11 above.

(e)           It shall not declare or pay any Extraordinary Dividend until the earlier of (i) the Scheduled Valuation Date or (ii) the date ten Exchange Business Days immediately following the Valuation Date.

 

 

  

17

  

 

13.  Representations, Warranties and Acknowledgments.

(a)           Issuer hereby represents and warrants to MSCO on the date hereof and on and as of the Initial Share Delivery Date that:

(i)           (A) None of Issuer and its officers and directors is aware of any material nonpublic information regarding Issuer or the Shares, and Issuer is entering into the Transaction in good faith and not as part of a plan or scheme to evade the prohibitions of federal securities laws, including, without limitation, Rule 10b-5 under the Exchange Act and (B) Issuer agrees not to alter or deviate from the terms of the Agreement or enter into or alter a corresponding or hedging transaction or position with respect to the Shares (including, without limitation, with respect to any securities convertible or exchangeable into the Shares) during the term of the Agreement.  Without limiting the generality of the foregoing, all reports and other documents filed by Issuer with the Securities and Exchange Commission pursuant to the Exchange Act when considered as a whole (with the more recent such reports and documents deemed to amend inconsistent statements contained in any earlier such reports and documents) do not contain any untrue statement of a material fact or any omission of a material fact required to be stated therein or necessary to make the statements therein, in the light of the circumstances in which they were made, not misleading.

(ii)           The transactions contemplated by this Confirmation have been authorized under Issuer’s publicly announced program to repurchase Shares and, prior to the Trade Date, MSCO shall deliver to Issuer a resolution of Issuer’s board of directors authorizing the Transaction and such other certificate or certificates as MSCO shall reasonably request.

(iii)           Issuer is not entering into this Agreement to facilitate a distribution of the Shares (or any security convertible into or exchangeable for Shares) or in connection with a future issuance of securities.

(iv)           Issuer is not entering into this Agreement to create actual or apparent trading activity in the Shares (or any security convertible into or exchangeable for Shares) or to raise or depress the price of the Shares (or any security convertible into or exchangeable for Shares) in violation of the federal securities laws.

(v)           There have been no purchases of Shares in Rule 10b-18 purchases of blocks pursuant to the once-a-week block exception contained in Rule 10b-18(b)(4) by or for Issuer or any of its affiliated purchasers during each of the four calendar weeks preceding the Trade Date and during the calendar week in which the Trade Date occurs (“Rule 10b-18 purchase”, “blocks” and “affiliated purchaser” each being used as defined in Rule 10b-18).

(vi)           Issuer is as of the date hereof, and immediately after giving effect to the transactions contemplated hereby will be, Solvent.  As used in this paragraph, the term “Solvent” means, with respect to a particular date, that on such date (A) the present fair market value (or present fair saleable value) of the assets of Issuer is not less than the total amount required to pay the liabilities of Issuer on its total existing debts and liabilities (including contingent liabilities) as they become absolute and matured, (B) Issuer is able to realize upon its assets and pay its debts and other liabilities, contingent obligations and commitments as they mature and become due in the normal course of business, (C) assuming consummation of the transactions as contemplated by this Agreement, Issuer is not incurring debts or liabilities beyond its ability to pay as such debts and liabilities mature, (D) Issuer is not engaged in any business or transaction, and does not propose to engage in any business or transaction, for which its property would constitute unreasonably small capital after giving due consideration to the prevailing practice in the industry in which Issuer is engaged, (E) Issuer is not a defendant in any civil action that could reasonably be expected to result in a judgment that Issuer is or would become unable to satisfy, (F) Issuer is not “insolvent” (as such term is defined under Section 101(32) of the U.S. Bankruptcy Code (Title 11 of the United States Code) (the “Bankruptcy Code”)) 

 

 

  

18

  

 

and (G) Issuer would be able to purchase Shares with an aggregate purchase price equal to the Prepayment Amount in compliance with the corporate laws of the jurisdiction of its incorporation.

(vii)           Issuer is not, and after giving effect to the transactions contemplated hereby will not be, required to register as an “investment company” as such term is defined in the Investment Company Act of 1940, as amended.

(viii)           No state or local (including non-U.S. jurisdictions) law, rule, regulation or regulatory order applicable to the Shares would give rise to any reporting, consent, registration or other requirement (including without limitation a requirement to obtain prior approval from any person or entity) as a result of MSCO or its affiliates owning or holding (however defined) Shares.

(b)           Issuer acknowledges and agrees that the Initial Shares  may be sold short to Issuer. Issuer further acknowledges and agrees that MSCO may purchase Shares in connection with the Transaction, which Shares may be used to cover all or a portion of such short sale or may be delivered to Issuer.  Such purchases and any other market activity by MSCO will be conducted independently of Issuer by MSCO as principal for its own account.  All of the actions to be taken by MSCO in connection with the Transaction shall be taken by MSCO independently and without any advance or subsequent consultation with Issuer.  It is the intent of the parties that the Transaction comply with the requirements of Rule 10b5-1(c)(1)(i)(B) of the Exchange Act, and the parties agree that this Confirmation shall be interpreted to comply with the requirements of such Rule, and Issuer shall not take any action that results in the Transaction not so complying with such requirements.  Without limiting the generality of the preceding sentence, Issuer acknowledges and agrees that (A) Issuer does not have, and shall not attempt to exercise, any influence over how, when or whether MSCO effects any market transactions in connection with the Transaction and (B) neither Issuer nor its officers or employees shall, directly or indirectly, communicate any information regarding Issuer or the Shares to any employee of MSCO or its Affiliates, other than employees identified by MSCO to Issuer in writing as employees not responsible for executing market transactions in connection with the Transaction.  Issuer also acknowledges and agrees that any amendment, modification, waiver or termination of this Confirmation must be effected in accordance with the requirements for the amendment or termination of a “plan” as defined in Rule 10b5-1(c) under the Exchange Act.  Without limiting the generality of the foregoing, any such amendment, modification, waiver or termination shall be made in good faith and not as part of a plan or scheme to evade the prohibitions of Rule 10b-5 under the Exchange Act, and no such amendment, modification or waiver shall be made at any time at which Issuer or any officer or director of Issuer is aware of any material nonpublic information regarding Issuer or the Shares.

(c)           Each of Issuer and MSCO represents and warrants to the other that it is an “eligible contract participant” as defined in Section 1a(12) of the U.S. Commodity Exchange Act, as amended.

(d)           Each of Issuer and MSCO acknowledges that the offer and sale of the Transaction to it is intended to be exempt from registration under the Securities Act by virtue of Section 4(2) thereof.  Accordingly, it represents and warrants to the other party that (i) it has the financial ability to bear the economic risk of its investment in the Transaction and is able to bear a total loss of its investment, (ii) it is an “accredited investor” as that term is defined in Regulation D as promulgated under the Securities Act, (iii) it is entering into the Transaction for its own account and without a view to the distribution or resale thereof and (iv) the assignment, transfer or other disposition of the Transaction has not been and will not be registered under the Securities Act and is restricted under this Confirmation, the Securities Act and state securities laws.

14.  Acknowledgements of Issuer Regarding Hedging and Market Activity.

Issuer agrees, understands and acknowledges that:

(a)            during the period from (and including) the Trade Date to (and including) the Settlement Date, MSCO and its Affiliates may buy or sell Shares or other securities or buy or sell options or futures contracts or 

 

 

  

19

  

 

enter into swaps or other derivative transactions in order to adjust its Hedge Position with respect to the Transaction;

(b)            MSCO and its Affiliates also may be active in the market for the Shares or options, futures contracts, swaps or other derivative transactions relating to the Shares other than in connection with hedging activities in relation to the Transaction;

(c)            MSCO shall make its own determination as to whether, when and in what manner any hedging or market activities in Issuer’s securities or other securities or transactions shall be conducted and shall do so in a manner that it deems appropriate to hedge its price and market risk with respect to the Transaction; and

(d)            any such market activities of MSCO and its Affiliates may affect the market price and volatility of the Shares, including the 10b-18 VWAP and the Forward Price, each in a manner that may be adverse to Issuer.

15.  Other Provisions.

(a)            Issuer agrees and acknowledges that MSCO is a “financial institution” and “financial participant” within the meaning of Sections 101(22) and 101(22A) of the Bankruptcy Code.  The parties hereto further agree and acknowledge that it is the intent of the parties that (A) this Confirmation is a “securities contract,” as such term is defined in Section 741(7) of the Bankruptcy Code, with respect to which each payment and delivery hereunder or in connection herewith is a “termination value,” “payment amount” or “other transfer obligation” within the meaning of Section 362 of the Bankruptcy Code and a “settlement payment,” within the meaning of Section 546 of the Bankruptcy Code, and (B) MSCO is entitled to the protections afforded by, among other sections, Sections 362(b)(6), 362(b)(17), 362(o), 546(e), 555 and 561 of the Bankruptcy Code.

(b)            MSCO and Issuer hereby agree and acknowledge that MSCO has authorized Issuer to disclose the Transaction to any and all persons, and there are no express or implied agreements, arrangements or understandings to the contrary, and authorizes Issuer to use any information that Issuer receives or has received with respect to the Transaction in any manner.

(c)            In the event Issuer becomes the subject of proceedings (“Bankruptcy Proceedings”) under the Bankruptcy Code or any other applicable bankruptcy or insolvency statute, any rights or claims of MSCO hereunder in respect of the Transaction shall rank for all purposes no higher than, but on a parity with, the rights or claims of holders of Shares, and MSCO hereby agrees that its rights and claims hereunder shall be subordinated to those of all parties with claims or rights against Issuer (other than common stockholders) to the extent necessary to assure such ranking. Without limiting the generality of the foregoing, after the commencement of Bankruptcy Proceedings, the claims of MSCO hereunder shall for all purposes have rights equivalent to the rights of a holder of a percentage of the Shares equal to the aggregate amount of such claims (the “Claim Amount”) taken as a percentage of the sum of (i) the Claim Amount and (ii) the aggregate fair market value of all outstanding Shares on the record date for distributions made to the holders of such Shares in the related Bankruptcy Proceedings.  Notwithstanding any right it might otherwise have to assert a higher priority claim in any such Bankruptcy Proceedings, MSCO shall be entitled to receive a distribution solely to the extent and only in the form that a holder of such percentage of the Shares would be entitled to receive in such Bankruptcy Proceedings, and, from and after the commencement of such Bankruptcy Proceedings, MSCO expressly waives (i) any other rights or distributions to which it might otherwise be entitled in such Bankruptcy Proceedings in respect of its rights and claims hereunder and (ii) any rights of setoff it might otherwise be entitled to assert in respect of such rights and claims.

(d)            Notwithstanding any provision of this Confirmation or any other agreement between the parties to the contrary, neither the obligations of Issuer nor the obligations of MSCO hereunder are secured by any collateral, security interest, pledge or lien.

 

 

  

20

  

 

(e)            Each party waives any and all rights it may have to set off obligations arising under the Agreement and the Transaction against other obligations between the parties, whether arising under any other agreement, applicable law or otherwise.

(f)            Notwithstanding anything to the contrary herein, MSCO may, by prior notice to Issuer, satisfy its obligation to deliver any Shares or other securities on any date due (an “Original Delivery Date”) by making separate deliveries of Shares or such securities, as the case may be, at more than one time on or prior to such Original Delivery Date, so long as the aggregate number of Shares and other securities so delivered on or prior to such Original Delivery Date is equal to the number required to be delivered on such Original Delivery Date.

(g)            It shall constitute an Additional Termination Event with respect to which the Transaction is the sole Affected Transaction and Issuer is the sole Affected Party and MSCO shall be the party entitled to designate an Early Termination Date pursuant to Section 6(b) of the Agreement if, on any Exchange Business Day on or prior to the Valuation Date, the closing price per Share on the Exchange, as determined by the Calculation Agent, is at or below the Threshold Price (as specified in Schedule I).

16.  Share Cap.

Notwithstanding any other provision of this Confirmation or the Agreement to the contrary, in no event shall Issuer be required to deliver to MSCO in the aggregate a number of Shares that exceeds the Share Cap as of the date of delivery (as specified in Schedule I).

17.  Transfer and Assignment.

MSCO may transfer or assign its rights and obligations hereunder and under the Agreement, in whole or in part, to any of its Affiliates of equivalent credit quality (or whose obligations are guaranteed by an entity of equivalent credit quality) without the consent of Issuer.

18.  Governing Law; Jurisdiction; Waiver.

THIS CONFIRMATION AND ANY CLAIM, CONTROVERSY OR DISPUTE ARISING UNDER OR RELATED TO THIS CONFIRMATION SHALL BE GOVERNED BY THE LAWS OF THE STATE OF NEW YORK.  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.

EACH PARTY HEREBY IRREVOCABLY WAIVES (ON ITS OWN BEHALF AND, TO THE EXTENT PERMITTED BY APPLICABLE LAW, ON BEHALF OF ITS 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 THE TRANSACTION OR THE ACTIONS OF ISSUER OR ITS AFFILIATES IN THE NEGOTIATION, PERFORMANCE OR ENFORCEMENT HEREOF.

Remainder of Page Intentionally Blank

  

21

  

_________________________________________________________________________________

Please confirm that the foregoing correctly sets forth the terms of our agreement by executing this Confirmation and returning it to us by facsimile to the number provided on the attached facsimile cover page.

Confirmed as of the date first written above:

	
PTC Inc.

	
MORGAN STANLEY & CO. LLC

	
By:           /s/ Jeffrey D. Glidden____

Name:  Jeffrey D. Glidden

Title:  EVP and CEO

	
By:           /s/ Sebastian Crapanzano___

Name: Sebastian Crapanzano

Title:  Managing Director

 

	  	  
	  	  

  

22

  

Schedule I

For the purposes of the Transaction, the following terms shall have the following values or meanings:

The Trade Date shall be August 14, 2014.

The Discount equals (i) the official closing price of the Shares on the Exchange on the Trade Date multiplied by (ii) 155 bps.

The Initial Shares equal 2,300,210 Shares.

The Prepayment Amount equals USD 125,000,000.

The Commission Amount equals USD 0.00.

The Adjustment Amount equals USD 0.00.

The Structuring Fee equals USD 0.00.

The Scheduled Valuation Date shall be February 17, 2015.

The Lock-Out Date shall be November 11, 2014.

Ordinary Dividend Amount:  USD 0.00

Ordinary Dividend Record Dates:  N/A

Threshold Price:  USD 19.02

As of any date, the Share Cap  shall equal the lesser of (i) 25 million Shares and (ii) 20% of the total number of Shares that Issuer has outstanding as of such date.EXHIBIT 10.5

 

EXECUTIVE RESIGNATION AGREEMENT 
 AND GENERAL RELEASE OF CLAIMS

 

THIS EXECUTIVE RESIGNATION AGREEMENT AND GENERAL RELEASE OF CLAIMS (this “Agreement”), is made and entered into by and between Christopher E. Olofson (“Executive”) and Epiq Systems, Inc., a Missouri corporation (“Epiq”), each a (“Party”) and collectively, (the “Parties”).

 

1.                                      Executive shall resign his employment with Epiq and each of its affiliates and subsidiaries (collectively, “Epiq Systems”) (including any and all positions that Executive holds as a Director / Board Member of any Epiq subsidiary) effective as of 5:00 p.m. Central Standard Time on June 30, 2014 (the “Resignation Date”), and in connection with such resignation, the parties are entering into this Agreement to provide for among other things a general release of claims in exchange for the consideration set forth herein.  If Executive is re-elected to Epiq’s Board of Directors, he is not resigning from that position as part of this Agreement.  Epiq has paid and/or will pay Executive’s base salary and accrued vacation, if any, earned through the Resignation Date (less required payroll deductions and withholdings).  As of the Resignation Date, and except as expressly provided in the Executive Consulting Advisory Agreement between Executive and Epiq, to be effective July 1, 2014 (subject to this Agreement being effective) (the “Advisory Agreement”), it is agreed that Executive will be relieved of all duties associated with Executive’s employment (including without limitation as set forth above), and that Executive will not, and has no actual or apparent authority to, take any actions or incur any liability on behalf of Epiq Systems.  Executive agrees that for the time period that begins on the Resignation Date and continues through the six month anniversary of the Resignation Date, Executive shall promptly provide Epiq written notification regarding any new employment (including with respect to any consulting arrangement, except as between Executive and Epiq) accepted by Executive including the name and principal address of the new company and the job title of Executive’s new employment (or consulting arrangement, as applicable) with such company or person.  Notwithstanding anything in this Agreement to the contrary, from the Effective Date through the six month anniversary of the Resignation Date, Executive hereby grants consent to Epiq to notify any new employer of Executive or other person regarding Executive’s non-compete and/or non-solicitation obligations under this Agreement.

 

2.                                      Executive acknowledges and agrees that on and after the Effective Date of this Agreement, Executive shall continue to comply with and be bound by all obligations set forth in Exhibit A hereto, which shall control over any directly conflicting provisions in any employment-related agreement between Executive and Epiq (the “Post-Termination Obligations”).

 

3.                                      In consideration for the mutual promises contained herein, subject to this Agreement becoming effective as set forth in Section 13 below, Epiq will provide Executive with the following lump sum payments and benefits (collectively, the “Special Consideration”):

 

(a) four severance payments of One Million, Nine Hundred Forty-Five Thousand Dollars and Zero Cents ($1,945,000.00)(less withholding for federal tax, state tax, and other standard deductions) each; such payments will be made via electronic transfer to Executive on each of:  (i) on the later of (x) July 1, 2014 or (y) five (5) business days following the Effective Date (as defined below); (ii) no later than January 2, 2015; (iii) no later than July 3,

 

 

2015; and (iv) no later than January 5, 2016 in connection with the execution by Executive and delivery to Epiq of the release certificate annexed hereto as Exhibit B (the “Additional Release”); provided that Epiq delivers the Additional Release to Executive and Executive signs the Additional Release on or after December 15, 2015 and not later than the close of business on December 21, 2015 and promptly delivers such signed Additional Release to Epiq; and (b) with respect to that certain automobile lease (the “Lease”) for the company car (VIN #WBAFR9C58CC271464) (the “Automobile”) wherein Epiq is the lessee and the Automobile was a perquisite provided to Executive during the term of Executive’s employment, Epiq shall:  (x) provide Executive with exclusive use of the Automobile after the Resignation Date and through termination of the Lease and continue to maintain and timely pay all required payments under the Lease through the termination of the Lease including but not limited to lease, tax, title, and insurance, such insurance to be consistent with coverage currently in place, (y) cause updated evidence of insurance cards to be timely provided to Executive during the Lease term, and (z) upon the conclusion of the Lease (or earlier in Epiq’s discretion pursuant to the Lease), buy out the Lease and purchase the Automobile including to pay any applicable taxes and other fees and cause the ownership of the Automobile including the certificate of title to be transferred to Executive, provided that upon and following such transfer of ownership Epiq shall not have any further liability for or obligation pertaining to the Automobile including but not limited to sales, tax, title and/or insurance.

 

The Special Consideration will not be paid, granted and performed until on and after the Effective Date.  The Parties understand and agree that in the event of a Change in Control (as defined in the Epiq 2004 Equity Incentive Plan), the timing of the payments of any as yet unpaid installments of the Special Consideration set forth above shall accelerate in full such that any remaining unpaid installments of the Special Consideration shall be paid to Executive on the later of five (5) business days after the closing of such Change in Control, or five (5) business days following the Effective Date of the Additional Release annexed hereto as Exhibit B.

 

The Special Consideration will not be considered compensation for purposes of any employee benefit plan, program, policy or arrangement maintained or hereafter established by Epiq Systems.  Executive acknowledges that the Special Consideration represents consideration for signing and abiding by this Agreement, including the Release (as defined below), and continued compliance with the Post-Termination Obligations, and is not salary, wages or benefits to which Executive was otherwise entitled.  Epiq and Executive agree that Epiq will have paid Executive all salary, benefits, perquisites, and compensation of any nature, due and owing in accordance with the payroll schedule in existence as of the Resignation Date.  No additional salary, benefits, perquisites, or compensation of any nature are payable unless specifically provided for herein.

 

In addition, Epiq agrees to pay Executive for all of Executive’s accrued but unused vacation pay (accrued through the Resignation Date), if any.  Executive further specifically acknowledges and agrees that the Agreement does not provide for, and that Executive is ineligible for continued participation in any 401(k) retirement savings or disability insurance plan following the Resignation Date.

 

2

 

Executive acknowledges and agrees that any unvested stock options Executive had or may have been entitled to have as of the Resignation Date will not be accelerated or vested and will be automatically terminated and forfeited as of the Resignation Date.

 

Executive’s rights with respect to any equity awards (such as stock options or grants of restricted stock) shall be determined in accordance with the terms of such equity awards and the applicable equity award plans and/or agreements, which are not modified in any way by this Agreement; provided that Executive acknowledges and agrees that the one hundred twenty-five thousand (125,000) restricted shares of common stock of Epiq awarded to Executive on or about January 28, 2014, by the Compensation Committee of the Board of Directors of Epiq, pursuant to the Epiq 2004 Equity Incentive Plan, as amended (the “2004 Plan”), the vesting of which was contingent upon among other things the achievement by Epiq of certain performance-based objectives for fiscal year 2014 (the “Award”), has been forfeited pursuant to the Plan as of the Resignation Date, and in connection therewith, that certain Restricted Stock Award Agreement between Executive and Epiq, which was entered into in connection with such Award, is void and of no effect.  Executive understands and acknowledges that Executive shall not be entitled to any payments or benefits (including, but not limited to, any bonus or other compensation for Epiq’s 2014 fiscal year) from Epiq other than those expressly set forth in this Section 3.

 

4.                                      Executive acknowledges and agrees that Executive will not be eligible after the Resignation Date for any other compensation, bonus, insurance coverage (other than that for which the Executive may be eligible for under COBRA), pay, or benefits (cash or non-cash) from Epiq.  Executive understands that Executive shall not accrue vacation, sick or personal days after the Resignation Date.  Executive waives and forever discharges the Released Parties (as defined below) from any liability for any payment or benefits of any kind which might otherwise be payable as a result of Executive’s employment with Epiq or termination therefrom (other than any obligations of Epiq under the Advisory Agreement, the Indemnification Agreement, the Articles of Incorporation or the Bylaws, as defined below), it being the intention of the parties to convert and merge all such claims and rights into this Agreement.

 

4.5.                            Following the Resignation Date, and subject to Executive’s personal and professional obligations and upon reasonable notice and at reasonable times, Executive agrees to reasonably assist Epiq Systems and its attorneys in any litigation or arbitration related to Epiq Systems’ (or any of its) businesses in which Executive is named as a party or of which Executive has unique specific and relevant knowledge, documents or expertise.  Executive acknowledges and agrees that such reasonable assistance may include, but will not be limited to, providing background information regarding any matter on which Executive previously worked, aiding in the drafting of declarations, executing declarations or similar documents, testifying or otherwise appearing at investigation interviews, depositions, arbitrations or court hearings and preparation for the above-described or similar activities.  Executive’s reasonable assistance will be provided at reasonable times and scheduled in such a manner as to accommodate Executive’s personal and professional commitments.  Executive understands and agrees that for so long as he is receiving payments of the Special Consideration, Executive will receive no additional compensation for Executive’s reasonable assistance beyond the Special Consideration, except that Epiq agrees to reimburse Executive for any reasonable costs and expenses that are incurred by Executive in providing such assistance, including but not limited to airfare, meals, and accommodations.  Following January 1, 2016, to the extent that Epiq Systems requires Executive’s assistance pursuant to this Section 4.5, in addition to

 

3

 

reimbursement for any reasonable costs and expenses as described above, Epiq will also pay Executive on an hourly consulting basis at a rate of pay to be mutually agreed to by the Parties. If Executive is contacted by a third party in regard to any dispute, potential dispute, litigation or potential litigation adverse to Epiq, Executive will first contact the chief legal officer of the Epiq Legal Department (the “Epiq CLO”) before further communicating with such person or persons, and will allow legal counsel of Epiq’s choosing without expense to Executive to participate in any such communication.  For the duration of Executive’s employment and continuing after the Resignation Date, Executive promises not to encourage, counsel or assist (directly or indirectly) any current or former employee, or third-party in the preparation, prosecution or defense of any civil dispute, difference, grievance, claim, charge or complaint adverse to Epiq Systems unless compelled to do so by valid legal process. If Executive receives notice that Executive is required to provide testimony or confidential information in any context about Epiq Systems to any third party, Executive agrees to inform the Epiq CLO.  Executive, thereafter, agrees to reasonably cooperate with Epiq Systems and its attorneys in responding to (if necessary) such legal process. In that regard, Executive agrees not to testify or provide any information in circumstances described in this paragraph unless: (a) Epiq first provides its written consent to Executive to provide testimony; or (b) after Executive informs the Epiq CLO that he has been served with a subpoena or court order that may require him to testify about matters subject to this paragraph, Epiq has informed Executive in writing that it has fully and within all legally available timeframes exhausted its efforts to challenge any request, subpoena or court order requiring Executive’s testimony. If Executive is required to provide testimony in any such context, Executive is, of course, expected to testify truthfully.  If, at any time after the Resignation Date, Executive is required to give testimony in any legal proceeding adverse to Epiq Systems, or regarding Executive’s employment with Epiq, Epiq agrees to provide without expense to the Executive, and Executive agrees to retain, Epiq’s outside counsel engaged in connection with the matter; provided, however, should there be an actual or potential legal conflict of interest preventing such outside counsel from representing both Epiq (and any of its affiliates) and Executive, then Epiq shall provide Executive substitute counsel of Executive’s choosing and which is reasonably agreed upon by Epiq, without expense to Executive.

 

Executive will continue to be indemnified for Executive’s actions and omissions taken while employed by Epiq and under that certain Indemnification Agreement effective as of July 29, 2009, between Epiq and Executive (the “Indemnification Agreement”) and to the same extent as other then-current officers of Epiq under the Epiq Amended and Restated Articles of Incorporation and Bylaws, each as amended through the date hereof and then in effect (respectively, the “Articles of Incorporation” and “Bylaws”), and Executive will continue to be covered by the Epiq directors and officers liability insurance policy as in effect from time to time for Executive’s actions and omissions taken while employed by Epiq to the same extent as other then-current directors and officers of Epiq, each subject to the requirements of applicable law.  Further, the Released Parties (defined below), fully release and forever discharge Executive from any and all claims that they have or may claim to have as of the date this Agreement is executed related to Executive’s actions or omissions as an employee, officer or director of Epiq to the extent such claims are fully covered by applicable insurance.  The Released Parties represent that as of the date of this Agreement, they are not aware of any Claims (defined below) of potential liability against Executive arising out of Executive’s employment with Epiq.

 

4

 

5.                                      In consideration for the Special Consideration described in Section 3 above, Executive on behalf of Executive and all of Executive’s heirs and/or personal representatives hereby releases and forever discharges Epiq Systems and each of their respective successors, assigns, and all of their respective current or former:  employees, officers, directors, members, owners, shareholders, insurers, re-insurers, investors, attorneys, agents, representatives, and employee benefit programs, and the trustees, administrators and insurers of such programs (sometimes referred to herein as the “Released Parties”), of and from any and all claims for relief of any kind, whether known or unknown, including any act, omission, claim, demand, judgment, loss, damage, counterclaim, liability, obligation, complaint, charge, suit, action or cause of action of any kind or nature whatsoever (collectively, “Claims”) which Executive may have had, or may now have, relating to matters occurring on or before the date hereof, except those Claims (i) arising out of the performance of this Agreement; (ii) relating to Executive’s rights to indemnification under the Indemnification Agreement, the Articles of Incorporation and/or the Bylaws; and (iii) Executive’s rights under employee benefit plans of Epiq Systems.  Any claims Executive may have or claim to have in his capacity as a shareholder of Epiq Systems which arise as of the date this Agreement is executed, are also hereby expressly waived; however Executive is not waiving any prospective claims of shareholder rights.  Without limiting in any way the generality of the foregoing general release, Executive specifically releases the Released Parties from any Claims which may have existed or which may now exist from the beginning of time to the date of this Agreement, including, without limitation:  any claims Executive may have arising from or relating to Executive’s position as a member of the Board of Directors of Epiq (excluding all rights to indemnification and insurance coverage as specified in Section 4.5 above), a shareholder of Epiq, and his employment with or termination from employment with Epiq, including but not limited to breach of contract, wrongful termination, constructive discharge, harassment, discrimination, retaliation, fraud, defamation, and infliction of emotional distress; a release of any rights or claims Executive may have under Title VII of the Civil Rights Act of 1964, as amended, and the Civil Rights Act of 1991 (which prohibit discrimination in employment based upon race, color, sex, religion and national origin); the Age Discrimination in Employment Act of 1967, as amended (which prohibits age discrimination in employment); the Older Workers’ Benefit Protection Act (which prohibits age discrimination in employment); the Americans with Disabilities Act of 1990, as amended, and the Rehabilitation Act of 1973 (which prohibit discrimination based upon disability); the Family and Medical Leave Act of 1993 (which prohibits discrimination based on requesting or taking a family or medical leave); Section 1981 of the Civil Rights Act of 1866 (which prohibits discrimination based upon race); Section 1985(3) of the Civil Rights Act of 1871 (which prohibits conspiracies to discriminate); the Employee Retirement Income Security Act of 1974, as amended (which prohibits discrimination with regard to benefits); Section 4980B of the Internal Revenue Code of 1986, as amended (except as expressly set forth in herein); the National Labor Relations Act, as amended; the Occupational Safety and Health Act of 1970, as amended; the Sarbanes-Oxley Act of 2002, as amended; the Fair Labor Standards Act, as amended; the Equal Pay Act of 1963, as amended; New York, California, Florida, Illinois, Kansas and Missouri state, city, or local statutes or common law, as amended; and any other federal, state, city or local (or other) laws of any kind or nature.  This includes a release by Executive of any claims for wrongful discharge, constructive discharge, harassment, discrimination, retaliation, whistleblowing, breach of contract, failure to receive proper notices as a Board of Directors member, torts or any other claims in any way related to Executive’s employment with, resignation from, or termination from employment with Epiq.  Executive further releases any and all claims of whatever nature or source whether known or unknown which arise either partially or entirely from any other action or inaction by any Released Party up to the execution date of this Agreement (such releases

 

5

 

provided for in this Agreement by Executive for the benefit of the Released Parties collectively being the “Release”).  Nothing in this Release or this Agreement shall constitute a release of any Claim that Executive may hereafter have (i) arising out of the performance of this Agreement; (ii) relating to Executive’s rights under employee benefit plans of Epiq Systems; or (iii) relating to Executive’s rights to indemnification under the Indemnification Agreement, the Articles and/or the Bylaws.

 

6.                                      Executive warrants, with the understanding that such warranty is material to this transaction, that Executive has not asserted, and no person or entity has asserted on Executive’s behalf, any claim, demand, cause of action or lawsuit arising out of or related in any way to the Executive’s employment with, resignation from, or termination from Epiq or regarding any of the Released Parties herein.  Executive specifically agrees that Executive will not in the future file any complaint, charge or lawsuit including to seek private remedies based on actions or omissions that are the subject of the Release, with any court or any other tribunal; nor will Executive file or assert any claim, complaint or charge seeking individual relief with any local, state or federal governmental agency.  Nothing in this Section 6 shall limit the right of Executive to pursue any Claim against Epiq (i) arising out of the performance of this Agreement; (ii) relating to Executive’s rights under employee benefit plans of Epiq Systems; or (iii) relating to Executive’s rights to indemnification under the Indemnification Agreement, the Articles and/or the Bylaws.

 

7.                                      Executive agrees that if the Executive does file any complaint, charge or lawsuit in violation of Section 6 above, then Epiq and/or any of the Released Parties, as applicable, shall be entitled to recover from Executive the entire monetary value as of the Effective Date of the Special Consideration described in Section 3 above, as well as its/their costs and expenses incurred in defense of such complaint, charge or lawsuit, including reasonable attorneys’ fees (except as provided in Section 8 below).  Nothing in this section prohibits Executive from participating in and cooperating with any investigation by a governmental agency.

 

8.                                      Notwithstanding anything herein to the contrary, the parties acknowledge and agree that although Executive has specifically agreed to release any claim of age discrimination under the ADEA pursuant to Section 5 above, the remedies described in Section 7 above shall not apply to any complaint, charge or lawsuit under the ADEA challenging the validity of Executive’s agreement to release any ADEA claim.  Accordingly, if Executive breaches this Agreement by filing and/or asserting a complaint, charge or lawsuit against Epiq and/or any of the Released Parties under the ADEA, or if Executive files a lawsuit or complaint to challenge the validity of Executive’s release of any ADEA claim, then Epiq and/or the Released Parties, as applicable, will not be entitled to recover from Executive any amount of the Special Consideration, nor any of its/their costs, expenses or attorneys’ fees incurred in defense of such action, except as may be specifically authorized under federal law; provided, however, that the release set forth herein may be pleaded as a full and complete defense to any such action, suit, administrative claim or other proceeding which may be instituted, prosecuted or attempted in breach of this Agreement.

 

9.                                      Executive covenants and agrees, with the understanding that such covenant is material to this Agreement, not to:  (i) publicize or disclose in any way any terms of this Agreement, except to Executive’s spouse or partner, attorneys and/or financial or tax advisors (provided such financial and/or tax advisors agree to keep such information confidential), and as may be required by law; or (ii) make any disparaging or derogatory statements to anyone regarding any Released Party or regarding any of Epiq Systems’ products and/or services unless such statements are made truthfully and only in response to a subpoena or other legal process.  It is expressly understood these covenants

 

6

 

do not apply to any communications made (i) only directly to a family member of Executive, or his spouse or partner; or (ii) to Epiq Board Members in Executive’s capacity as a member of the Board of Directors and in furtherance of Executive’s fiduciary duties; or (iii) that are consistent with the talking points developed per Section 9.5 below.  Epiq, on behalf of Epiq Systems and its respective directors, officers and employees, covenants and agrees, with the understanding that such covenant is material to this Agreement, not to (i) publicize or disclose in any way the terms of this Agreement, except to its employees with a business need to know, attorneys, financial and/or tax advisors (including its external auditor) with a business need to know, until Epiq is required to disclose, and discloses, this Agreement and the Advisory Agreement and/or the material terms of such agreements in connection with legal or regulatory requirements; and (ii) make any disparaging, derogatory, or otherwise unfavorable statements to any third party regarding Executive unless such statements are made truthfully and only in response to a subpoena or other legal process.

 

9.5                               Executive agrees to direct all requests for references or inquiries regarding Executive’s employment with Epiq to Epiq’s President and Chief Operating Officer, who will provide a positive reference that is consistent with publicly filed documents and highlights Executive’s contributions to the Company during his years of service.  Executive and Epiq agree to work cooperatively to prepare a list of questions and mutually agreeable talking points related to any inquiries regarding Executive’s employment at and departure from Epiq and agree that any communications made consistent with such talking points shall not be a breach of this Agreement.  Nothing in this section shall prevent either Party from referring to Epiq’s publicly filed documents related to Executive’s employment and the conclusion of that employment, including but not limited to any related SEC filings or Company press releases.  A copy of Epiq’s press release is annexed hereto as Exhibit C.

 

10.                               Executive warrants and agrees that he will make available for pick up, delete and or destroy all Epiq property and information as soon as reasonably practicable.  This includes, but it not limited to any and all hard copies, any and all electronic copies, and all Confidential Information (as defined in Exhibit A) in Executive’s possession, custody or control on the Effective Date.  Promptly following the execution of this Agreement, Executive will provide an inventory list to Epiq’s CLO of all equipment located in his Chicago home or to which he has immediate access to facilitate a discussion regarding making available for pick up by an Epiq representative of all Epiq Systems’ property, or “wiping” of all related electronic resources.  If Executive inadvertently does not return, delete and/or destroy Epiq Systems’ documents or property that should have been returned, deleted and/or destroyed earlier, then Executive will promptly make available for pick up by an Epiq representative, delete and/or destroy any such items upon discovering them. Notwithstanding the foregoing, Executive shall be allowed to retain such Confidential Information as mutually agreed to by the Parties solely as it pertains to his duties and responsibilities as a member of Epiq’s Board of Directors or in order to fulfill his duties and responsibilities under the Advisory Agreement. Executive agrees that if he is reelected at the next annual shareholder meeting, he will not receive any compensation for his services as a member of the Epiq Board of Directors.

 

11.                               Executive also agrees to provide Epiq, on or before the Resignation Date: (a) all passwords or other codes of which he is aware are necessary for Epiq to gain access to any and all software or data maintained or stored in Epiq-owned information technology assets; (b) all keys and key fobs to any Epiq office or facility including any leased corporate apartment; and (c) employee identification cards used for any Epiq Systems office.  Notwithstanding the foregoing, Executive

 

7

 

shall be provided certain computer equipment as reasonably necessary pertaining to his duties and responsibilities as a member of Epiq’s Board of Directors or in order to fulfill his duties and responsibilities under the Advisory Agreement.

 

12.                               The Releases may be pleaded as a full and complete defense to any Claim or other proceeding that may be instituted, prosecuted, alleged or attempted in breach of this Agreement.

 

13.                               Besides the provisions contained herein, and by execution of this document, Executive expressly waives any and all rights to claims arising under the Age Discrimination in Employment Act of 1967 (the “ADEA”), as amended, and the Older Workers’ Benefit Protection Act (the “OWBPA”) that may exist as of the date this Agreement is executed and:

 

(a)                                 Executive acknowledges that Executive’s waiver of rights or claims arising under the ADEA is in writing, written in a manner calculated to be understood, and is understood by Executive;

 

(b)                                 Executive expressly understands this waiver refers to rights or claims arising under the ADEA;

 

(c)                                  Executive expressly understands that by execution of this document, Executive does not waive any ADEA rights or claims that may arise after the date this Agreement is executed;

 

(d)                                 Executive acknowledges that the waiver of Executive’s rights of claims arising under the ADEA is in exchange for the consideration outlined above;

 

(e)                                  Executive has been advised and encouraged in writing (via this Agreement) to consult with an attorney prior to signing this Agreement;

 

(f)                                   Executive has been given twenty-one (21) days after receipt of this Agreement (“Waiting Period”) in which to consider it (after which time this Agreement, if not accepted by execution by the Executive, shall be null and void), although Executive is free to sign the Agreement before then, but further acknowledges that by electing to execute this Agreement prior to the expiration of the Waiting Period, Executive has waived Executive’s right to consider this Agreement for the entire Waiting Period;

 

(g)                                  Executive understands that this Agreement, including the Release, shall not become effective and enforceable until the eighth day following execution of the Agreement (such date upon which this Agreement becomes effective being the “Effective Date”), and that at any time prior to such day Executive may revoke this Agreement.

 

14.                               Executive agrees that no promise or agreement not herein expressed has been made by Epiq or any Released Party; that this Agreement is not executed in reliance upon any statement or representation made by Epiq or any Released Party; that the mutual promises contained in this Agreement are the sole and only consideration for this Agreement and are accepted in full compromise and settlement and in satisfaction of any and every such Claim; that this Agreement is not to be construed as an admission of liability by Executive, Epiq or any Released Party, all liability being expressly denied by such parties; and that the terms and conditions hereof are contractual and not mere recitals.

 

8

 

15.                               THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF ILLINOIS. THE PARTIES AGREE THAT ANY DISPUTES ARISING OUT OF OR RELATED TO THIS AGREEMENT SHALL BE SETTLED BY MEDIATION AND/OR ARBITRATION TO BE HELD IN ACCORDANCE WITH THE EMPLOYMENT DISPUTE RESOLUTION RULES THEN IN EFFECT OF THE AMERICAN ARBITRATION ASSOCIATION (“AAA”).  THE MEDIATION AND/OR ARBITRATION SHALL BE CONDUCTED IN THE CHICAGO AREA.  UPON RECEIVING A DEMAND FOR MEDIATION OR ARBITRATION (OR BOTH), THE PARTIES WILL ATTEMPT TO MUTUALLY AGREE TO THE SELECTED MEDIATOR OR ARBITRATOR.  MEDIATION WILL ONLY OCCUR IF BOTH PARTIES AGREE TO PARTICIPATE.  IF THE PARTIES CANNOT MUTUALLY AGREE ON AN ARBITRATOR WITHIN THIRTY (30) DAYS, AAA WILL PROVIDE THE PARTIES WITH A LIST OF POTENTIAL ARBITRATORS.  THE PARTIES WILL ALTERNATELY STRIKE NAMES FROM THE LIST, WITH EPIQ GOING FIRST, UNTIL ONLY ONE NAME RERMAINS.  THE PARTIES AGREE THAT, BY ENTERING INTO THIS AGREEMENT, THE PARTIES ARE WAIVING A RIGHT TO TRIAL BY JURY.  THE ARBITRATOR MAY GRANT INJUNCTIONS OR OTHER RELIEF IN SUCH DISPUTE.  THE DECISION OF THE ARBITRATOR SHALL BE FINAL, CONCLUSIVE AND BINDING ON THE PARTIES TO THE ARBITRATION.  JUDGMENT MAY BE ENTERED ON THE ARBITRATOR’S DECISION IN ANY COURT OF COMPETENT JURISDICTION.  EPIQ WILL PAY:  (1) AAA’S FILING AND OTHER ADMINISTRATIVE FEES (LESS $100); (2) THE ARBITRATOR’S FEE AND REASONABLE TRAVEL EXPENSES; AND (3) THE COST OF RENTING AN ARBITRATION HEARING ROOM. EXECUTIVE WILL PAY $100 TOWARD SUCH FILING AND ADMINISTRATIVE COSTS TO EPIQ (UPON REQUEST BY EXECUTIVE, THE ARBITRATOR MAY DETERMINE THAT THE FEE SHOULD BE REFUNDED TO EXECUTIVE).  EACH PARTY SHALL PAY ITS OR HIS OR HER OWN EXPERTS’ AND/OR ATTORNEYS’ FEES, UNLESS THE ARBITRATOR AWARDS REASONABLE EXPERTS’ AND/OR ATTORNEYS’ FEES AS A “PREVAILING PARTY” UNDER APPLICABLE LAW.  EACH PARTY’S PROMISE TO RESOLVE CLAIMS BY ARBITRATION IN ACCORDANCE WITH THE PROVISIONS OF THIS AGREEMENT, RATHER THAN THROUGH THE COURTS, IS CONSIDERATION FOR OTHER PARTY’S LIKE PROMISE.  IN THE EVENT IT BECOMES NECESSARY FOR ANY AGGRIEVED PARTY (INCLUDING ANY RELEASED PARTY) TO BRING LEGAL ACTION AGAINST THE OTHER PARTY TO ENFORCE THE TERMS OF THIS AGREEMENT, WHETHER FOR INJUNCTIVE RELIEF OR DAMAGES, THE PARTIES AGREE THAT THE PREVAILING PARTY IN SUCH ACTION (IN WHOLE OR IN PART) SHALL BE ENTITLED TO RECOVER ITS COSTS AND EXPENSES INCURRED IN SUCH ACTION, INCLUDING REASONABLE ATTORNEYS’ FEES AND EXPENSES FROM THE NON-PREVAILING PARTY (EXCEPT AS PROVIDED IN SECTION 8 ABOVE).

 

16.                               Executive shall be solely responsible for payment of any and all applicable income, employment, excise or other taxes related to payments under this Agreement; provided, however, that Epiq shall be responsible for paying any employer-taxes related to payments under this Agreement. Epiq may withhold from any amounts payable under this Agreement such taxes as shall be required to be withheld pursuant to any applicable federal, state or local law or regulation. Executive represents and warrants to Epiq that Executive has had the opportunity to obtain Executive’s own legal and tax counsel in connection with the negotiation and drafting of this Agreement and that Executive has not relied upon Epiq, its officers, directors, employees, agents,

 

9

 

including its counsel, for legal or tax advice.  To the extent applicable, this Agreement is intended to comply with Section 409A of the Internal Revenue Code of 1986, as amended, and it shall be interpreted in a manner that complies with such section to the fullest extent possible. Epiq and Executive agree that Epiq shall, with Executive’s written consent, which shall not be unreasonably withheld, have the power to adjust the timing or other details relating to the payments described in this Agreement if Epiq determines that such adjustments are necessary in order to comply with or become exempt from the requirements of Section 409A.

 

17.                               The majority of the independent directors (as defined by applicable NASDAQ rules) of Epiq’s Board of Directors shall pre-approve the filing and commencement of any lawsuit, complaint or similar action against Executive by Epiq Systems (on behalf of itself or any Released Party) arising out of or related to this Agreement.

 

18.                               The provisions of this Agreement are severable, and if any provision, section or paragraph or part of any provision, section or paragraph contained herein is found to be unenforceable or inoperable, then the other provisions, sections or paragraphs, or the remainder of the particular provision, section or paragraph, whichever applies, shall remain fully valid and enforceable.

 

19.                               This Agreement, including the Exhibits, contain the entire agreement between Executive and Epiq concerning the foregoing matters and no change, modification or waiver of any provision hereof will be valid unless in writing and signed by all of the parties to be bound.

 

20.                               This Agreement may be executed in separate counterparts, each of which is deemed to be the original and all of which taken together constitute one and the same Agreement.

 

21.                               EXECUTIVE EXPRESSLY UNDERSTANDS AND AGREES THAT THE CONSIDERATION SPECIFICALLY STATED HEREIN IS THE SOLE CONSIDERATION FOR THIS AGREEMENT AND ACKNOWLEDGES THAT EXECUTIVE HAS READ THIS AGREEMENT AND UNDERSTANDS ALL OF ITS TERMS.  EXECUTIVE EXECUTES THIS AGREEMENT VOLUNTARILY WITH THE FULL KNOWLEDGE OF ITS SIGNIFICANCE AND INTENDS TO BE LEGALLY BOUND HEREBY. FURTHERMORE, IT IS AGREED THAT EXECUTIVE SHALL HAVE THE RIGHT TO REVOKE ASSENT TO THIS AGREEMENT BY WRITTEN NOTICE TO EPIQ TO THE UNDERSIGNED, WITHIN THE SEVEN (7)-DAY PERIOD FOLLOWING EXECUTIVE’S EXECUTION OF THIS AGREEMENT, AND THAT THIS AGREEMENT SHALL NOT BECOME EFFECTIVE OR ENFORCEABLE UNTIL SUCH SEVEN (7)-DAY PERIOD HAS EXPIRED.

 

10

 

IN WITNESS WHEREOF, the undersigned have executed this Agreement on the date indicated under their respective signatures below.

 

 

	
EPIQ   SYSTEMS, INC.
    	
 
    	
EXECUTIVE
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Signed:
    	
/s/   Brad D. Scott
    	
 
    	
Signed:
    	
/s/   Christopher Olofson
    
	
 
    	
 
    	
 
    	
 
    	
 
    
	
Name:
    	
Brad   D. Scott
    	
 
    	
 
    
	
 
    	
 
    	
 
    	
Date:   June 6, 2014
    
	
Title:
    	
President   and COO
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
Date:   June 6, 2014
    	
 
    	
 
    

 

11

 

EXHIBIT A

POST-TERMINATION OBLIGATIONS

 

1.              Definitions.

 

“Confidential Information” shall mean and include any and all confidential and/or proprietary information of Epiq Systems and/or its customers and suppliers, including but not limited to information relating to the following:  proprietary information; technical data, inventions, trade secrets, intellectual property, know-how, software, developments, processes, formulas, technology, designs, drawings, engineering, hardware configuration; business matters, business strategies, affairs, finances, sales, financial condition, operations; marketing, product information, research, product plans, products, services, customer lists, customers, markets; former, current, or prospective clients, vendors or employees;  and other information in any form of a similar nature not available to the public.

 

2.              Confidential Information.  Executive acknowledges that while employed by Epiq, Executive had access to, acquired and/or assisted in the development of Confidential Information.  Executive agrees not to use or disclose, and confirms Executive’s continuing obligation not to use or disclose, directly or indirectly, any Confidential Information at any time without the prior written authorization of the Epiq Chairman and/or Chief Executive Officer or the Board of Directors, or until the information otherwise becomes public knowledge without violation of this Agreement by Executive.  Nothing in this Agreement shall supersede nor relieve Executive of confidentiality and/or nondisclosure obligations stemming from any prior confidentiality agreement with Epiq, at common law or pursuant to the attorney-client privilege.  Executive further agrees to arrange for pick up, delete and/or destroy any and all hard copies, and delete and/or destroy any and all electronic copies of all Epiq Systems’ confidential documents relating to Epiq Systems’ business that Executive received while in Epiq’s employ, including email; to identify all other Epiq Systems’ property Executive has in Executive’s possession, custody and/or control promptly; and to arrange for pick up such other property as requested by Epiq.  If Executive discovers that Executive inadvertently did not return, delete and/or destroy Epiq Systems’ documents or property that should have been returned, deleted and/or destroyed earlier, Executive will promptly arrange for pick up, delete and/or destroy any such items upon discovering it.  Executive agrees to the reasonableness of the restraint imposed under this paragraph.

 

3.              Non-solicitation/Competition.  Executive agrees that for the time period that begins on the Resignation Date and continues through the six (6) month anniversary of the Resignation Date, Executive will not, directly or indirectly: (i) compete against Epiq Systems or engage in employment with or provide independent contractor or consulting services for any person, corporation, firm or other entity which directly competes with Epiq Systems within its territories as of the Resignation Date; (ii) either on Executive’s own behalf or on behalf of any person or entity other than Epiq Systems, hire or attempt to hire, solicit, induce, recruit or encourage any other employees, contractors or suppliers of Epiq Systems to terminate their relationship with Epiq Systems in order to work for any person,

 

12

 

corporation, firm, company or business entity other than Epiq Systems; or (iii) either on behalf of Executive or for any other person, corporation, firm, company or other business entity, do any of the following acts: (a) solicit, serve or cater to any of Epiq Systems’ customers whom Executive solicited, served or catered to on behalf of Epiq Systems or with whom Executive became acquainted during the course of Executive’s employment with Epiq for the purpose of engaging in competition against the businesses of Epiq Systems within its territories as of the Resignation Date; (b) divert or attempt to divert any of Epiq Systems’ customers or any of the business or patronage of such customers; or (c) call upon, influence or attempt to influence any of Epiq Systems’ customers to transfer their business or patronage from Epiq Systems to Executive or to any other person, corporation, firm, company or business entity engaged in a directly competitive business within its territories as of the Resignation Date.  Executive agrees to the reasonableness of the restraint imposed under this paragraph.

 

13

 

EXHIBIT B

ADDITIONAL RELEASE

 

CERTIFICATE

 

I, Christopher E. Olofson (“Executive”), in consideration for the mutual promises made in that certain Executive Resignation Agreement and General Release of Claims, dated                       , between Executive and Epiq Systems, Inc., a Missouri corporation (“Agreement”), hereby state that, as of the date of Executive’s signature on this Certificate, and as evidenced thereby, the following paragraphs 1 through 8 are true and correct, and Executive is in agreement with this Certificate.

 

1.             Capitalized terms used but not defined in this Certificate have the meanings set forth in the Agreement.

 

2.             Executive has signed this Certificate on or after December 15, 2015 and not later than the close of business on December 21, 2015.  Executive has promptly delivered this signed Certificate to Epiq.

 

3.             From the Effective Date of the Agreement through and including the date Executive has signed and delivered this Certificate below, Executive on behalf of Executive and all of Executive’s heirs and/or personal representatives hereby release and forever discharge the Released Parties of and from any and all Claims which Executive may have had, or may now have, relating to matters occurring on or before the date hereof, except those Claims (i) arising out of the performance of the Agreement; (ii) relating to Executive’s right to indemnification under the Indemnification Agreement; (iii) Executive’s rights under employee benefit plans of Epiq Systems.  Without limiting in any way the generality of the foregoing general release, Executive specifically releases the Released Parties from any Claims which may have existed or which may now exist from the beginning of time to the date of this Agreement, including, without limitation:  any claims Executive may have arising from or relating to Executive’s position as a member of the Board of Directors or Epiq (excluding all rights to indemnification and insurance coverage as specified in Section 4.5 above), a shareholder of Epiq, and his employment with or termination (including any constructive discharge) from employment with Epiq, including but not limited to breach of contract, wrongful termination, constructive discharge, harassment, discrimination, retaliation, fraud, defamation, and infliction of emotional distress; a release of any rights or claims Executive may have under Title VII of the Civil Rights Act of 1964, as amended, and the Civil Rights Act of 1991 (which prohibit discrimination in employment based upon race, color, sex, religion and national origin); the Age Discrimination in Employment Act of 1967, as amended (which prohibits age discrimination in employment); the Older Workers’ Benefit Protection Act (which prohibits age discrimination in employment); the Americans with Disabilities Act of 1990, as amended, and the Rehabilitation Act of 1973 (which prohibit discrimination based upon disability); the Family and Medical Leave Act of 1993 (which prohibits discrimination based on requesting or taking a family or medical leave); Section 1981 of the Civil Rights Act of 1866 (which prohibits discrimination based upon race); Section 1985(3) of the Civil Rights Act of 1871 (which prohibits conspiracies to discriminate); the Employee Retirement Income Security Act of 1974, as amended (which prohibits discrimination with regard to benefits); Section 4980B of the Internal Revenue Code of 1986, as amended (except as expressly set forth in herein); the National Labor Relations Act, as amended; the Occupational Safety and Health Act of 1970, as amended; the Sarbanes-Oxley Act of 2002, as amended; the Fair Labor Standards Act, as amended; the Equal Pay

 

14

 

Act of 1963, as amended; New York, California, Florida, Illinois, Kansas and Missouri state, city, or local statutes or common law, as amended; and any other federal, state, city or local (or other) laws of any kind or nature.  This includes a release by Executive of any claims for wrongful discharge, constructive discharge, harassment, discrimination, retaliation, whistleblowing, failure to receive timely notices as a member of the Board of Directors, breach of contract, torts or any other claims in any way related to Executive’s employment with, resignation from, or termination from employment with Epiq.  Executive further releases any and all claims of whatever nature or source whether known or unknown which arise either partially or entirely from any other action or inaction by any Released Party.  Nothing in this Release or this Agreement shall constitute a release of any Claim that Executive may have or may hereafter have (i) arising out of the performance of this Agreement; (ii) relating to Executive’s rights under employee benefit plans of Epiq Systems; or (iii) relating to Executive’s rights to indemnification under the Indemnification Agreement, the Articles or the Bylaws.  Further, any claims Executive may have or claim to have in his capacity as a shareholder of Epiq Systems which arise as of the date this Certificate is executed, are also hereby expressly waived; however, Executive is not waiving any prospective claims of shareholder rights.

 

3.5          Further, the Released Parties fully release and forever discharge Executive from any and all claims that they have or may claim to have as of the date this Certificate is executed related to Executive’s actions or omissions as an employee, officer or director of Epiq to the extent such claims are fully covered by applicable insurance. The Released Parties represent that as of the date of this Agreement, they are not aware of any Claims (defined below) of potential liability against Executive arising out of Executive’s employment with Epiq.

 

4.             Save as permitted by Section 8 of the Agreement and this Certificate, Executive warrants, with the understanding that such warranty is material to this transaction, that Executive has not asserted, and no person or entity has asserted on Executive’s behalf, any claim, demand, cause of action or lawsuit arising out of or related in any way to the Executive’s employment with, resignation from, or termination from Epiq or regarding any of the Released Parties herein.  Executive specifically agrees that Executive will not in the future file any complaint, charge or lawsuit including to seek private remedies based on actions or omissions released herein against any Released Party, with any court or any other tribunal; nor will Executive file or assert any claim, complaint or charge seeking individual relief with any local, state or federal governmental agency.

 

5.             Executive warrants that the Post-Termination Obligations remain in full force and effect, and nothing in the Agreement or this Certificate relieves Executive of complying with the Post-Termination Obligations.

 

6.             Executive warrants and agrees that Epiq has paid Executive all salary, benefits, and compensation of any nature, due and owing in accordance with the payroll schedule in existence as of the Resignation Date.

 

7.             Executive acknowledges and agrees that:

 

(a)           Executive’s waiver of rights or claims arising under the ADEA is in writing, written in a manner calculated to be understood, and is understood by Executive;

 

(b)           Executive expressly understands that this waiver refers to rights or claims arising under the ADEA;

 

15

 

(c)           Executive expressly understands that by execution of this Certificate, Executive does not waive any ADEA rights or claims that may arise after the date this Certificate is executed by Executive;

 

(d)           Executive acknowledges that the waiver of Executive’s rights or claims arising under the ADEA is in exchange for the consideration outlined in the Agreement;

 

(e)           Executive has been advised and encouraged in writing (via this Certificate) to consult with an attorney prior to signing this Certificate;

 

(f)            Executive was provided a copy of this Certificate as Exhibit B to the Agreement and, as such, has been given more than twenty-one (21) days to consider this Certificate;

 

(g)           Executive understands that this Certificate, including the Release, shall not become effective and enforceable until the eighth day following execution of this Certificate (“Revocation Period”), and that at any time prior to such day Executive may revoke this Certificate; and

 

(f)            Nothing in this Certificate is intended to supersede the parties’ respective rights and obligations contained in the Agreement, and that the Agreement shall survive and remain in full force and effect following Executive’s execution of this Certificate.

 

8.             Notwithstanding anything herein to the contrary, the parties acknowledge and agree that although Executive has specifically agreed to release any claim of age discrimination under the ADEA pursuant to Section 3 above, the remedies described in Section 4 above shall not apply to any complaint, charge or lawsuit under the ADEA challenging the validity of Executive’s agreement to release any ADEA claim.  Accordingly, if Executive breaches this Agreement by filing and/or asserting a complaint, charge or lawsuit against Epiq and/or any of the Released Parties under the ADEA, or if Executive files a lawsuit or complaint to challenge the validity of Executive’s release of any ADEA claim, then Epiq and/or the Released Parties, as applicable, will not be entitled to recover from Executive any amount of the Special Consideration, nor any of its/their costs, expenses or attorneys’ fees incurred in defense of such action, except as may be specifically authorized under federal law; provided, however, that the release set forth herein may be pleaded as a full and complete defense to any such action, suit, administrative claim or other proceeding which may be instituted, prosecuted or attempted in breach of this Agreement.

 

THIS CERTIFICATE has been agreed to as of the date below by the Executive.

 

SIGNED BY THE EXECUTIVE:

 

	
 
    	
 
    	
 
    
	
Christopher   E. Olofson
    	
 
    	
Date
    

 

16

 

EXHIBIT C

DRAFT PRESS RELEASE

 

Epiq Systems Announces Christopher E. Olofson Will Resign as an Executive Officer and Continue as a Board Member and Senior Advisor to the Company

 

Kansas City, KS (              , 2014) — Epiq Systems, Inc. (NASDAQ:  EPIQ), a leading provider of managed technology for the global legal profession, today announced the resignation of Christopher E. Olofson as an executive officer of the company, effective June 30, 2014.  Mr. Olofson will continue to serve as a member of the Board of Directors and provide six months of consulting services as a senior advisor.

 

Mr. Olofson joined Epiq in 1988.  During his career, he has served the company in a variety of executive positions, including president and chief operating officer.

 

Tom W. Olofson, chairman and chief executive officer said, “Chris’s vision and long commitment have been integral to the company’s growth, and we look forward to his continued service as a senior advisor and member of our Board of Directors.  Chris has made many significant contributions to the company over the years.  His leadership has been instrumental in building our top-ranked global eDiscovery, bankruptcy and settlements businesses, and his contributions to our business strategy, operations practices, technology and culture will benefit Epiq for years to come.  All of our associates have enjoyed working with Chris, and everyone wishes him the very best. “

 

17

Source: [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00234-of-00352.parquet"}, [{"source": "alea-institute/alea-institute/kl3m-data-edgar-agreements/train-00234-of-00352.parquet"}]]